Synthos Finance AB (Publ) E350,000,000 4.000% Senior Notes Due 2021 Guaranteed on a Senior Basis by Synthos S.A

OFFERING MEMORANDUM

9SEP201411041283 Synthos Finance AB (publ) E350,000,000 4.000% Senior Notes due 2021 guaranteed on a senior basis by Synthos S.A. and certain of its wholly-owned subsidiaries

Synthos Finance AB (publ), a public limited liability company incorporated under the laws of Sweden (the ‘‘Issuer’’), is offering (the ‘‘Offering’’) A350,000,000 in aggregate principal amount of its 4.000% Senior Notes due 2021 (the ‘‘Notes’’). The maturity date of the Notes is September 30, 2021. The Issuer will pay interest on the Notes semi-annually in arrears on March 30 and September 30 of each year, commencing on March 30, 2015. The Issuer may redeem the Notes in whole or in part at any time on or after September 30, 2018 at the redemption prices specified in this Offering Memorandum (the ‘‘Offering Memorandum’’). Prior to September 30, 2018, some or all of the Notes may be redeemed at any time at a price equal to 100% of the principal amount thereof plus accrued and unpaid interest and additional amounts, if any, plus the applicable ‘‘make-whole’’ premium as described herein. Prior to September 30, 2018, the Issuer may also redeem up to 35% of the Notes using the proceeds of certain equity offerings at the redemption price specified herein. Additionally, the Issuer may redeem all, but not less than all, of the Notes upon the occurrence of certain changes in applicable tax law. In the event of a change of control triggering event or sale of certain of our assets, the Issuer may be required to make an offer to purchase the Notes. The Notes will be general senior obligations of the Issuer and will be pari passu in right of payment with all existing and future indebtedness of the Issuer that is not subordinated in right of payment to the Notes and senior in right of payment to all existing and future indebtedness of the Issuer that is subordinated in right of payment to the Notes. The Notes will be guaranteed on a senior unsecured basis by Synthos S.A. (the ‘‘Parent Guarantor’’) and by certain of our existing and future subsidiaries (each, a ‘‘Guarantor,’’ and, collectively, the ‘‘Guarantors’’), subject to limitations and statutory preferences under applicable law. The guarantees of the Notes by each of the Guarantors (each, a ‘‘Guarantee,’’ and, collectively, the ‘‘Guarantees’’) will be pari passu in right of payment with all of the existing and future indebtedness of such Guarantor that is not subordinated in right of payment to the Guarantees and senior in right of payment to all existing and future indebtedness of such Guarantor that is subordinated in right of payment to the Guarantees. The Notes and the Guarantees will also be effectively subordinated to all existing and future secured debt of the Issuer and each of the Guarantors to the extent of the value of the assets securing such debt and to all existing and future debt of all of the subsidiaries of the Issuer that do not guarantee the Notes. This Offering Memorandum includes information on the terms of the Notes and the Guarantees, including redemption and purchase prices, security, covenants and transfer restrictions. There is currently no public market for the Notes. This document constitutes the Offering Memorandum. The Irish Stock Exchange plc (the ‘‘Irish Stock Exchange’’) has approved this document as Listing Particulars (‘‘Listing Particulars’’). Application has been made to the Irish Stock Exchange for the Notes to be admitted to the Official List and to trading on the Global Exchange Market, which is the exchange regulated market of the Irish Stock Exchange. The Global Exchange Market is not a regulated market for the purposes of Directive 2004/39/EC. The Notes will be in registered form in denominations of A100,000 and integral multiples of A1,000 in excess thereof. We expect that the Notes will be issued in the form of one or more global notes in registered form. Delivery of the notes in book-entry form through Euroclear Bank SA/NV (‘‘Euroclear’’) and Clearstream Banking, soci´et´e anonyme (‘‘Clearstream’’) will be made on or about September 30, 2014 (the ‘‘Issue Date’’). See ‘‘Book-Entry, Delivery and Form.’’ Investing in the Notes involves a high degree of risk. See ‘‘Risk Factors’’ beginning on page 18. Price: 100.000% plus accrued interest, if any, from the Issue Date The Notes and the Guarantees have not been, and will not be registered under U.S. federal securities laws or the securities laws of any other jurisdiction. The Notes are being offered and sold only to qualified institutional buyers in the United States in accordance with Rule 144A (‘‘Rule 144A’’) under the U.S. Securities Act of 1933, as amended (the ‘‘U.S. Securities Act’’) and to certain non-U.S. persons outside the United States in accordance with Regulation S (‘‘Regulation S’’) under the U.S. Securities Act. You are hereby notified that sellers of the Notes may be relying on the exemption from registration requirements of Section 5 of the U.S. Securities Act provided by Rule 144A. See ‘‘Notice to Investors’’ for additional information about eligible offerees and transfer restrictions.

September 30, 2014 TABLE OF CONTENTS

SUMMARY ...... 1 SUMMARY CORPORATE AND FINANCING STRUCTURE ...... 7 THE OFFERING ...... 9 SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA AND OTHER INFORMATION ...... 13 RISK FACTORS ...... 18 USE OF PROCEEDS ...... 42 CAPITALIZATION ...... 43 SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION ...... 44 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ...... 47 INDUSTRY OVERVIEW ...... 73 BUSINESS ...... 83 REGULATORY OVERVIEW ...... 99 MANAGEMENT...... 103 PRINCIPAL SHAREHOLDERS ...... 108 CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS ...... 109 DESCRIPTION OF EXISTING INDEBTEDNESS ...... 111 DESCRIPTION OF THE NOTES ...... 112 BOOK-ENTRY, DELIVERY AND FORM ...... 172 CERTAIN TAX CONSIDERATIONS ...... 176 CERTAIN ERISA CONSIDERATIONS ...... 188 LIMITATIONS ON VALIDITY AND ENFORCEABILITY OF THE GUARANTEES ...... 190 PLAN OF DISTRIBUTION ...... 202 NOTICE TO INVESTORS ...... 205 LEGAL MATTERS ...... 209 INDEPENDENT AUDITORS ...... 210 AVAILABLE INFORMATION ...... 211 ENFORCEMENT OF CIVIL LIABILITIES ...... 212 LISTING AND GENERAL INFORMATION ...... 215 GLOSSARY...... 218 INDEX TO FINANCIAL STATEMENTS ...... F-1

i IMPORTANT INFORMATION The Issuer and the Guarantors have prepared this Offering Memorandum based on information they have or have obtained from sources they believe to be reliable. Summaries of documents contained in this Offering Memorandum may not be complete. We will make copies of certain actual documents available to you upon request. Save for the Issuer, no other party has made an independent verification of the information contained in this Offering Memorandum in connection with the issue or offering of the Notes and no representation or warranty, express or implied, is made by BNP Paribas, Citigroup Global Markets Limited, Deutsche Bank AG, London Branch, Banco Santander, S.A., ING Bank N.V., London Branch, Powszechna Kasa Oszcz˛edno´sci Bank Polski SA or UniCredit Bank AG (collectively, the ‘‘Initial Purchasers’’) with respect to the accuracy or completeness of such information. Nothing contained in this Offering Memorandum is to be construed as, or shall be relied upon as, a promise, warranty or representation, whether to the past or the future, by the Initial Purchasers or any of their respective directors, affiliates, advisers or agents in any respect. The contents of this Offering Memorandum are not to be construed as, and should not be relied on as, legal, business or tax advice and each prospective investor should consult their own legal, business, tax and other advisers regarding an investment in the Notes. No Initial Purchaser accepts any responsibility for the contents of this Offering Memorandum or for any other statement made or purported to be made by it, or on its behalf, in connection with the Issuer, the Guarantors, the Group (as defined herein), the Notes or the Guarantees. Each of the Initial Purchasers accordingly disclaims all and any liability whether arising in tort, contract or otherwise which it might otherwise have in respect of this Offering Memorandum or any such statement. You should base your decision to invest in the Notes solely on information contained in this Offering Memorandum. Neither the Issuer, the Guarantors nor the Initial Purchasers have authorized anyone to provide you with any different information. Neither the Issuer nor the Guarantors have authorized any dealer, salesperson or other person to give any information or represent anything to you other than the information contained in this Offering Memorandum. You must not rely on unauthorized information or representations. This Offering Memorandum does not offer to sell or ask for offers to buy any Notes in any jurisdiction where it is unlawful to do so, where the person making the offer is not qualified to do so, or to any person who cannot legally be offered the Notes. The information in this Offering Memorandum is current only as of the date on its cover, and our business or financial condition or other information in this Offering Memorandum may change after that date. For any time after the cover date of this Offering Memorandum, the Issuer and the Guarantors do not represent that their affairs are the same as described or that the information in this Offering Memorandum is correct, nor do they imply those things by delivering this Offering Memorandum or selling Notes to you. This Offering Memorandum may only be used for the purposes for which it has been published. The Issuer is offering the Notes, and the Guarantors are issuing the Guarantees, in reliance on an exemption from registration under the U.S. Securities Act for an offer and sale of securities that does not involve a public offering. If you purchase the Notes, you will be deemed to have made certain acknowledgments, representations and warranties as detailed under ‘‘Notice to Investors.’’ You may be required to bear the financial risk of an investment in the Notes for an indefinite period of time. Neither the Issuer, the Guarantors, nor the Initial Purchasers are making an offer to sell the Notes in any jurisdiction where the offer and sale of the Notes is prohibited. Neither the Issuer, the Guarantors nor the Initial Purchasers make any representation to you that the Notes are a legal investment for you. No action has been, or will be, taken to permit a public offering in any jurisdiction where action would be required for that purpose. Each prospective purchaser of the Notes must comply with all applicable laws and rules and regulations in force in any jurisdiction in which it purchases, offers or sells the Notes and must obtain any consent, approval or permission required by it for the purchase, offer or sale by it of the Notes under the laws and regulations in force in any jurisdiction to which it is subject or in which it makes such purchases, offers or sales, and neither the Issuer, the Guarantors nor the Initial Purchasers shall have any responsibility therefor. Neither the U.S. Securities and Exchange Commission, any U.S. state securities commission nor any non-U.S. securities authority nor other authority has approved or disapproved of the Notes, nor have any of the foregoing authorities determined if this Offering Memorandum is truthful or complete. Any representation to the contrary is a criminal offense.

ii Each of the Issuer and the Guarantors accepts responsibility for the information contained in this Offering Memorandum. To the best of the knowledge and belief of the Issuer and the Guarantors (who have taken all reasonable care to ensure that such is the case), such information is in accordance with the facts and does not omit anything likely to affect the import of such information. The Issuer and the Guarantors have prepared this Offering Memorandum solely for use in connection with the offer of the Notes and the Guarantees to qualified institutional buyers under Rule 144A under the U.S. Securities Act and to non-U.S. persons (within the meaning of Regulation S under the U.S. Securities Act) outside the United States under Regulation S under the U.S. Securities Act. You agree that you will hold the information contained in this Offering Memorandum and the transactions contemplated hereby in confidence. You may not distribute this Offering Memorandum to any person, other than a person retained to advise you in connection with the purchase of the Notes. The Issuer, the Guarantors and the Initial Purchasers may reject any offer to purchase the Notes in whole or in part, sell less than the entire principal amount of the Notes offered hereby or allocate to any purchaser less than all of the Notes for which it has subscribed. The information contained under the caption ‘‘Exchange Rate Information’’ includes extracts from information and data publicly released by official sources and Bloomberg. The Issuer and the Guarantor have accurately reproduced the information in relation to the exchange rate information and as far as the Issuer and the Guarantor are aware and able to ascertain, no facts have been omitted which would render the reproduced information inaccurate or misleading. The information set out in relation to sections of this Offering Memorandum describing clearing and settlement arrangements, including the section entitled ‘‘Book-Entry, Delivery and Form,’’ is subject to change in or reinterpretation of the rules, regulations and procedures of Euroclear Bank SA/NV (‘‘Euroclear’’) or Clearstream Banking, soci´et´e anonyme (‘‘Clearstream’’) currently in effect. The Issuer and the Guarantors have accurately reproduced the information in relation to Euroclear and Clearstream, and as far as the Issuer and the Guarantors are aware and able to ascertain, no facts have been omitted which would render the reproduced information inaccurate or misleading. We cannot guarantee that our application for the admission of the Notes to trading on the Global Exchange Market and to listing on the Official List of the Irish Stock Exchange Limited (the ‘‘Irish Stock Exchange’’), will be approved as of the settlement date for the Notes or at any time thereafter, and settlement of the Notes is not conditional on obtaining this listing. The Notes are subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under the U.S. Securities Act and applicable securities laws of any other jurisdiction pursuant to registration or exemption therefrom. Prospective purchasers should be aware that they may be required to bear the financial risks of this investment for an indefinite period of time. See ‘‘Notice to Investors.’’

STABILIZATION IN CONNECTION WITH THIS OFFERING DEUTSCHE BANK AG, LONDON BRANCH (THE ‘‘STABILIZING MANAGER’’) (OR PERSONS ACTING ON BEHALF OF THE STABILIZING MANAGER) MAY OVER-ALLOT NOTES OR EFFECT TRANSACTIONS WITH A VIEW TO SUPPORTING THE MARKET PRICE OF THE NOTES AT A LEVEL HIGHER THAN THAT WHICH MIGHT OTHERWISE PREVAIL. HOWEVER, THERE IS NO ASSURANCE THAT THE STABILIZING MANAGER (OR PERSONS ACTING ON BEHALF OF THE STABILIZING MANAGER) WILL UNDERTAKE STABILIZATION ACTION. ANY STABILIZATION ACTION MAY BEGIN ON OR AFTER THE DATE ON WHICH ADEQUATE PUBLIC DISCLOSURE OF THE FINAL TERMS OF THE OFFER OF THE NOTES IS MADE AND, IF BEGUN, MAY BE ENDED AT ANY TIME, BUT IT MUST END NO LATER THAN THE EARLIER OF 30 DAYS AFTER THE ISSUE DATE OF THE NOTES AND 60 DAYS AFTER THE DATE OF THE ALLOTMENT OF THE NOTES. ANY STABILIZATION ACTION OR OVER- ALLOTMENT MUST BE CONDUCTED BY THE STABILIZING MANAGER (OR PERSON ACTING ON BEHALF OF THE STABILIZING MANAGER) IN ACCORDANCE WITH ALL APPLICABLE LAWS AND REGULATIONS.

iii NOTICE TO NEW HAMPSHIRE RESIDENTS NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE OF THE STATE OF NEW HAMPSHIRE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE OF THE STATE OF NEW HAMPSHIRE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER, OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.

NOTICE TO U.S. INVESTORS The Notes and the Guarantees have not been and will not be registered under the U.S. Securities Act or the securities laws of any state of the United States, and may not be offered or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act. Each purchaser of the Notes will be deemed to have made the representations, warranties and acknowledgements that are described in this Offering Memorandum under ‘‘Notice to Investors.’’ The offering of the Notes is being made only to ‘‘qualified institutional buyers’’ (as defined in Rule 144A under the U.S. Securities Act) and to certain non-U.S. persons (within the meaning of Regulation S) outside the United States in offshore transactions (as defined in Regulation S) in reliance on Regulation S. Prospective purchasers that are qualified institutional buyers are hereby notified that the Initial Purchasers of the Notes may be relying on an exemption from the provisions of Section 5 of the U.S. Securities Act provided by Rule 144A. For a description of certain further restrictions on resale or transfer of the Notes, see ‘‘Notice to Investors.’’ The Notes and the Guarantees described in this Offering Memorandum have not been registered with, recommended by or approved by the SEC, any state securities commission in the United States or any other securities commission or regulatory authority, nor has the SEC, any state securities commission in the United States or any such securities commission or authority passed upon the accuracy or adequacy of this Offering Memorandum. Any representation to the contrary is a criminal offense. The Notes and the Guarantees may not be offered to the public within any jurisdiction. By accepting delivery of this Offering Memorandum, you agree not to offer, sell, resell, transfer or deliver, directly or indirectly, any Note or Guarantee to the public.

NOTICE TO CERTAIN EUROPEAN INVESTORS European Economic Area This Offering Memorandum has been prepared on the basis that all offers of the Notes will be made pursuant to an exemption under Article 3 of Directive 2003/71/EC (the ‘‘Prospectus Directive’’), as implemented in member states of the European Economic Area (the ‘‘EEA’’), from the requirement to produce a prospectus for offers of the Notes. Accordingly, any person making or intending to make any offer within the EEA of the Notes should only do so in circumstances in which no obligation arises for the Issuer, or any of the Initial Purchasers to produce a prospectus for such offer. Neither the Issuer nor the Initial Purchasers have authorized, nor do they authorize, the making of any offer of Notes through any financial intermediary, other than offers made by the Initial Purchasers, which constitute the final placement of the Notes contemplated in this Offering Memorandum. In relation to each Member State of the European Economic Area that has implemented the Prospectus Directive (each, a ‘‘Relevant Member State’’), with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State, the offer is not being made and will

iv not be made to the public of any Notes which are the subject of the Offering contemplated by this Offering Memorandum in that Relevant Member State, other than: (a) to any legal entity which is a qualified investor as defined in the Prospectus Directive; (b) to fewer than 100 or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive, 150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the relevant Dealer or Dealers nominated by the Issuer for any such offer; or (c) in any other circumstances falling within Article 3(2) of the Prospectus Directive. For the purposes of this provision, the expression an ‘‘offer of Notes to the public’’ in relation to the Notes in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the Notes to be offered so as to enable an investor to decide to purchase or subscribe the Notes, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State, the term ‘‘Prospectus Directive’’ means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in each Relevant Member State and the term ‘‘2010 PD Amending Directive’’ means Directive 2010/73/EU. Each subscriber for or purchaser of the Notes in the Offering located within a member state of the EEA will be deemed to have represented, acknowledged and agreed that it is a ‘‘qualified investor’’ within the meaning of Article 2(1)(e) of the Prospectus Directive. The Issuer, the Initial Purchasers and their affiliates, and others will rely upon the trust and accuracy of the foregoing representation, acknowledgement and agreement. Notwithstanding the above, a person who is not a qualified investor and who has notified the Initial Purchasers of such fact in writing may, with the consent of the Initial Purchasers, be permitted to subscribe for or purchase the Notes in the Offering.

Czech Republic This Offering Memorandum has not been approved by or notified to the Czech National Bank (the ‘‘CNB’’), and does not constitute an offering of the Notes to the public in the Czech Republic. No notification and/or application has been made, and no approval or permit has been sought or obtained from the CNB or any other authority, for (i) accepting the Notes to trading on a regulated market in the Czech Republic under Act No. 256/2004 Coll., on Conducting Business in Capital Markets, as amended (the ‘‘Czech Capital Markets Act’’), or (ii) public offering of the Notes in the Czech Republic under the Czech Capital Markets Act. Any offering of the Notes in the Czech Republic and/or any distribution of this Offering Memorandum in the Czech Republic can only be made under one or more exemptions from the obligation to publish a prospectus available under Section 35(2) of the Czech Capital Markets Act, including, but not limited to, offering and/or distribution addressed exclusively to ‘‘qualified investors’’ as defined in the Czech Capital Markets Act.

Poland No permit has been obtained from the Polish Financial Supervisory Authority (the ‘‘PFSA’’) in relation to the issue of Notes nor has the issues of Notes been notified to the PFSA in accordance with applicable procedures. Accordingly, Notes may not be publicly offered in the Republic of Poland (‘‘Poland’’) as defined in the Polish Act on Public Offerings, the Conditions Governing the Introduction of Financial Instruments to Organized Trading System and Public Companies dated July 20, 2005 (as amended) as communication made in any form and by any means, directed at 150 or more people or at any unnamed addressee containing information on the securities and the term of their acquisition sufficient to enable an investor to decide on the securities acquisition (the ‘‘Public Offering’’). Acquisition and holding of Notes by residents of Poland may be subject to restrictions imposed by Polish law (including foreign exchange regulations) and that the offers and sales of Notes to Polish residents or within Poland in secondary trading may also be subject to restrictions.

Sweden This Offering Memorandum is not a prospectus and has not been prepared in accordance with the prospectus requirements provided for in the Swedish Financial Instruments Trading Act (Sw. lagen (1991:980) om handel med finansiella instrument) (the ‘‘Trading Act’’) nor any other Swedish enactment. Neither the Swedish Financial Supervisory Authority (Sw. Finansinspektionen) nor any other Swedish

v public body has examined, approved or registered this Offering Memorandum. Accordingly, this Offering Memorandum may not be made available nor may the Notes otherwise be marketed or offered for subscription or sale in Sweden other than in circumstances that constitute an exemption from the requirement to prepare a prospectus under the Trading Act.

United Kingdom The issue and distribution of this Offering Memorandum is restricted by law. This Offering Memorandum is not being distributed by, nor has it been approved for the purposes of section 21 of the Financial Services and Markets Act 2000 by, a person authorized under the Financial Services and Markets Act 2000. This Offering Memorandum is directed solely at persons who (i) are outside the United Kingdom or (ii) have professional experience in matters relating to investments (being investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended, the ‘‘Financial Promotion Order’’) (iii) are persons falling within Article 49(2)(a) to (d) (high net worth companies, unincorporated associations etc.) of the Financial Promotion Order or (iv) are persons to whom an invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000) in connection with the issue or sale of any Notes may otherwise lawfully be communicated or caused to be communicated (all such persons together being referred to as ‘‘relevant persons’’). This Offering Memorandum must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this Offering Memorandum relates is available only to relevant persons and will be engaged in only with relevant persons. Any person who is not a relevant person should not act or rely on this Offering Memorandum or any of its contents. No part of this Offering Memorandum should be published, reproduced, distributed or otherwise made available in whole or in part to any other person without the prior written consent of the Issuer. The Notes are not being offered or sold to any person in the United Kingdom, except in circumstances which will not result in an offer of securities to the public in the United Kingdom within the meaning of Part VI of the Financial Services and Markets Act 2000. THIS OFFERING MEMORANDUM CONTAINS IMPORTANT INFORMATION WHICH YOU SHOULD READ BEFORE YOU MAKE ANY DECISION WITH RESPECT TO AN INVESTMENT IN THE NOTES.

vi MARKET AND INDUSTRY DATA In this Offering Memorandum, we rely on and refer to information regarding our business and the markets in which we operate and compete. The market data and certain economic and industry data and forecasts used in this Offering Memorandum were obtained from governmental and other publicly available information, independent industry publications and reports prepared by trade associations and industry consultants, including IHS Chemical (‘‘Chemical Economics Handbook, Polybutadiene Elastomers,’’ ‘‘Chemical Economics Handbook, Styrene-Butadiene Elastomers,’’ ‘‘CEH Marketing Research Report, Polystyrene’’), Trading Economics, LMC International (‘‘Outlook for Natural & Synthetic Rubbers, 2013 Report’’), Eurostat, Business Monitor International, the Polish Central Statistical Office, the European Tyre & Rubber Manufacturers Association and the Polish Institute of Market Economy (‘‘Economic situation and forecast,’’ July 2014). Third party information included in this Offering Memorandum has been accurately reproduced and, to the best of our knowledge, no facts have been omitted which would render the reproduced information inaccurate or misleading. In addition to the foregoing, certain information regarding markets, market size, market share, market position, growth rates and other industry data pertaining to our business contained in this Offering Memorandum was estimated or derived based on assumptions we deem reasonable and from our own research, surveys or studies conducted by third parties, including trade associations, and other industry or general publications. Industry publications and forecasts generally state that the information they contain has been obtained from sources believed to be reliable, but that the accuracy and completeness of such information is not guaranteed. While we believe that each of these studies and publications is reliable, neither we nor the Initial Purchasers have independently verified such data and cannot guarantee their accuracy or completeness. In many cases, there is no readily available external information (whether from trade associations, government bodies or other organizations) to validate market related analyses and estimates, requiring us to rely on our own internally developed estimates regarding the industry in which we operate, our position in the industry, our market share and the market shares of various industry participants based on our experience, our own investigation of market conditions and our review of industry publications, including information made available to the public by our competitors. In particular, we derive our overall market shares in the industry in which we operate by calculating the overall market size and our sales in the market; however, we do not calculate our competitors’ market share for single product families. None of the Company, the Group or the Initial Purchasers can assure you of the accuracy and completeness of, or take any responsibility for, such data. Similarly, while we believe our internal estimates to be reasonable, these estimates have not been verified by any independent sources and neither we nor the Initial Purchasers can assure you as to their accuracy or the accuracy of the underlying assumptions used to estimate such data. Our estimates involve risks and uncertainties and are subject to change based on various factors. See ‘‘Risk Factors,’’ ‘‘Industry Overview’’ and ‘‘Business’’ for further discussion of these factors.

FORWARD-LOOKING STATEMENTS This Offering Memorandum contains forward-looking statements regarding future financial performance and results and other statements that are not historical facts. The words ‘‘believe,’’ ‘‘anticipate,’’ ‘‘plan,’’ ‘‘expect,’’ ‘‘project,’’ ‘‘estimate,’’ ‘‘predict,’’ ‘‘intend,’’ ‘‘target,’’ ‘‘assume,’’ ‘‘may,’’ ‘‘could,’’ ‘‘will’’ and similar expressions are intended to identify such forward-looking statements. Such statements are made on the basis of assumptions and expectations that we believe to be reasonable as at the date of this Offering Memorandum, but may prove to be erroneous. By their nature, such forward-looking statements involve known and unknown risks and uncertainties and other factors which may cause our actual results, financial condition, performance or achievements or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, those more fully described in ‘‘Risk Factors’’ and elsewhere in this Offering Memorandum. In addition, even if our results of operations, including our financial condition and liquidity and the development of the industry in which we operate, are consistent with the forward-looking statements contained in this Offering Memorandum, those results or developments may not be indicative of results or developments in subsequent periods. The risks and uncertainties we face going forward which could affect the accuracy of these forward-looking statements include, but are not limited to: • adverse and uncertain global economic and financial market conditions; • price fluctuations in the cost of raw materials and disruptions in the supply of raw materials;

vii • the cyclical and highly variable nature of our business and its sensitivity to changes in supply and demand; • our reliance on a limited number of suppliers for certain of our key raw materials; • our reliance on a limited number of key customers; • our anticipated or current capital expenditures, acquisitions, or other projects; • the competitive nature of our industry; • our ability to meet our customers’ changing requirements in a timely manner; • the availability of substitute products; • our ability to maintain relevant licenses; • our ability to consummate future acquisitions; • risk relating to fluctuations in currency exchange rates; • shutdown of crackers in Europe; • overcapacity of synthetic rubber in China; • changes in fuel costs; • the influence of our main shareholder on our business, or the effect of him ceasing to control our business; • failure to comply with EU regulations in relation to subsidy grants; • our ability to comply with current or future laws and regulations relating to environmental, health and safety matters, including in particular in relation to greenhouse gas emissions, and the related costs of maintaining compliance and addressing liabilities; • operational interruptions at our facilities due to events that are outside of our control that may interrupt or damage our operations or the impact of scheduled outages on our results of operations; • operational risks, including the risk of environmental contamination and potential product liability claims; • failure to implement our strategies; • the loss of key management, technical or other personnel; • the failure to protect our intellectual property rights; • our ability to maintain an effective system of internal controls; and • the other factors discussed in more detail in this Offering Memorandum. We urge you to read the sections of this Offering Memorandum entitled ‘‘Risk Factors,’’ ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations,’’ ‘‘Industry Overview’’ and ‘‘Business’’ for a more complete discussion of the factors that could affect our future performance and the markets in which we operate. In light of these risks, uncertainties and assumptions, the forward-looking events described in this Offering Memorandum may not occur. These forward-looking statements speak only as of the date on which the statements were made. We undertake no obligation to update or revise any forward-looking statement or risk factors, whether as a result of new information, future events or developments or otherwise. We disclose important factors that could cause our actual results to differ materially from our expectations in this Offering Memorandum. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf. When we indicate that an event, condition or circumstance could or would have an adverse effect on us, we mean to include effects upon our business, financial and other conditions, results of operations and our ability to make payments on the Notes.

viii CERTAIN DEFINITIONS ‘‘ATEX Directives’’ means Directive 1999/92/EC of the European Parliament and of the Council of December 16, 1999 on minimum requirements for improving the safety and health protection of workers potentially at risk from explosive atmospheres (15th individual Directive within the meaning of Article 16(1) of Directive 89/391/EEC), as amended, and Directive 94/9/EC of the European Parliament and the Council of March 23, 1994 on the approximation of the laws of the Member States concerning equipment and protective systems intended for use in potentially explosive atmospheres, as amended. ‘‘CAGR’’ means Compound Annual Growth Rate. ‘‘CEE’’ means Central and Eastern Europe. ‘‘CLP Regulation’’ means Regulation (EC) No 1272/2008 of the European Parliament and of the Council of December 16, 2008 on classification, labelling and packaging of substances and mixtures, amending and repealing Directives 67/548/EEC and 1999/45/EC, and amending Regulation (EC) No 1907/2006, as amended. ‘‘Company,’’ ‘‘Parent Guarantor’’ or ‘‘Synthos’’ means Synthos S.A. ‘‘Condensed Consolidated Interim Financial Statements’’ means the unaudited condensed consolidated interim financial statements of the Synthos Group as at and for the six months ended June 30, 2014. ‘‘Consolidated Annual Financial Statements’’ means the audited consolidated financial statements of the Synthos Group as at and for the years ended December 31, 2013, December 31, 2012 and December 31, 2011. ‘‘Consolidated Financial Statements’’ means the Consolidated Annual Financial Statements and the Condensed Consolidated Interim Financial Statements. ‘‘CZK’’ or ‘‘czech koruna’’ means the lawful currency of the Czech Republic. ‘‘Environmental Liability Directive’’ means Directive 2004/35/EC of the European Parliament and of the Council of April 21, 2004 on environmental liability with regards to the prevention and remediation of environmental damage, as amended. ‘‘EU’’ means the European Union. ‘‘EUR,’’ ‘‘euro,’’ or ‘‘E’’ means the single currency of the participating member states of the European and Monetary Union of the Treaty Establishing the European Community, as amended from time to time. ‘‘GBP,’’ ‘‘pounds sterling’’ or ‘‘£’’ means the lawful currency of the United Kingdom. ‘‘GEM’’ means the Global Exchange Market, the exchange-regulated market of the Irish Stock Exchange. ‘‘Guarantees’’ collectively means the joint and several senior unsecured guarantees of the Guarantors in favor of the Notes. ‘‘Guarantors’’ means SYNTHOS Kralupy a.s., TAMERO INVEST s.r.o., SYNTHOS PBR s.r.o, Synthos S.A. and Synthos Dwory 7. ‘‘IED Directive’’ means Directive 2010/75/EU of the European Parliament and of the Council of November 24, 2010 on industrial emissions (integrated pollution prevention and control). ‘‘IFRS’’ means the International Financial Reporting Standards, as adopted by the European Union. ‘‘Indenture’’ means the indenture to be dated on or about the Issue Date between, among others, the Issuer, the Guarantors and the Trustee. ‘‘Initial Purchasers’’ means BNP Paribas, Citigroup Global Markets Limited, Deutsche Bank AG, London Branch, Banco Santander, S.A., ING Bank N.V., London Branch, Powszechna Kasa Oszcz˛edno´sci Bank Polski SA and UniCredit Bank AG. ‘‘IPPC Directive’’ means Directive 2008/1/EC of the European Parliament and of the Council of January 15, 2008 concerning integrated pollution prevention and control, as amended. ‘‘Issue Date’’ means September 30, 2014. ‘‘Issuer’’ means Synthos Finance AB (publ).

ix ‘‘LCP Directive’’ means Directive 2001/80/EC on the limitation of emissions of certain pollutants into the air from large combustion plants, as amended. ‘‘NBP’’ means the National Bank of Poland. ‘‘Notes’’ means the A350 million aggregate principal amount of the Issuer’s 4.000% senior notes due 2021 being offered hereby. ‘‘Offering’’ means the offering of the Notes by the Issuer. ‘‘Offering Memorandum’’ means this offering memorandum. ‘‘PFSA’’ means Polish Financial Supervision Authority. ‘‘PLN,’’ ‘‘złoty’’ or ‘‘zł’’ each means the lawful currency of Poland. ‘‘Proceeds Bond’’ means the intercompany bonds issued by Synthos S.A. to the Issuer for the aggregate principal amount of the Notes. ‘‘REACH Regulation’’ means Regulation (EC) No 1907/2006 of the European Parliament and of the Council of December 18, 2006 concerning the Registration, Evaluation, Authorization and Restriction of Chemicals (REACH), establishing a European Chemicals Agency, amending Directive 1999/45/EC and repealing Council Regulation (EEC) No 793/93 and Commission Regulation (EC) No 1488/94, as well as Council Directive 76/769/EEC and Commission Directives 91/155/EEC, 93/67/EEC, 93/105/EC and 2000/21/EC, as amended. ‘‘SEC’’ means the U.S. Securities and Exchange Commission. ‘‘Senior Credit Facilities’’ means the loan agreement (i) between Synthos S.A., SYNTHOS Kralupy a.s., TAMERO INVEST s.r.o. and Synthos Dwory 7, as borrowers, and Powszechna Kasa Oszcz˛edno´sci Bank Polski S.A., as lender, dated December 31, 2013; (ii) between to Synthos S.A. and Synthos Dwory 7, as borrowers, and Bank Pekao S.A. dated June 20, 2012; (iii) between Synthos Dwory 7 sp. z o.o. s.k.a., as borrower, and Bank Zachodni WBK S.A., as lender, dated May 24, 2013; and (iv) between Synthos S.A., SYNTHOS Kralupy a.s., TAMERO INVEST s.r.o. and Synthos Dwory 7, as borrowers, and BNP Paribas Bank Polska S.A., as lender, dated March 5, 2014. ‘‘U.S. Dollars,’’ ‘‘$’’ or ‘‘USD’’ each means the lawful currency of the United States. ‘‘U.S. Exchange Act’’ means the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder. ‘‘U.S. Securities Act’’ means the U.S. Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder. ‘‘Seveso II Directive’’ means Council Directive 96/82/EC of December 9, 1996 on the control of major accident hazards involving dangerous substances, as amended. ‘‘Synthos Dwory 7’’ means Synthos Dwory 7 społka´ z ograniczon˛a odpowiedzialno´sci˛a sp.j. ‘‘Synthos Group,’’ ‘‘Group’’ ‘‘we,’’ ‘‘us’’ or ‘‘our’’ each means Synthos S.A. and its consolidated subsidiaries, unless the context otherwise requires or such other meaning is clear from the context. ‘‘Transactions’’ refers collectively to the Offering and use of proceeds therefrom as described under ‘‘Use of Proceeds,’’ including the cancellation of certain of our existing credit facilities and the reduction of commitments under the Senior Credit Facilities that will remain in place following the Issue Date. ‘‘Trustee’’ means Citibank, N.A., London Branch. ‘‘U.S. GAAP’’ means the generally accepted accounting principles in the United States. ‘‘United Kingdom’’ or ‘‘U.K.’’ means the United Kingdom of Great Britain and Northern Ireland. ‘‘United States’’ or ‘‘U.S.’’ means the United States of America. ‘‘Water Framework Directive’’ means Directive 2000/60/EC of the European Parliament and of the Council of October 23, 2000 establishing a framework for the Community action in the field of water policy, as amended.

x PRESENTATION OF FINANCIAL AND OTHER INFORMATION Financial Information The Issuer, Synthos Finance AB (publ), is a public limited liability company incorporated under the laws of Sweden. The Issuer is a finance company and its sole purpose is issuing the Notes offered hereby. It has no material assets or liabilities and has not engaged in any activities other than those related to its formation and the issuance of the Notes. The Issuer is a wholly-owned subsidiary of the Company. We do not present any financial information for the Issuer in this Offering Memorandum. The financial information presented in this Offering Memorandum is the historical consolidated financial information of the Synthos Group, which includes both Guarantor and non-Guarantor subsidiaries. This Offering Memorandum includes the following financial statements: • the audited consolidated financial statements of the Synthos Group as at and for the years ended December 31, 2013, December 31, 2012 and December 31, 2011 including the accompanying notes (the ‘‘Consolidated Annual Financial Statements’’); and • the unaudited condensed consolidated interim financial statements of the Synthos Group as at and for the six months ended June 30, 2014, including the comparative data as at and for the six months ended June 30, 2013 and the accompanying notes (the ‘‘Condensed Consolidated Interim Financial Statements’’). The Consolidated Annual Financial Statements together with the Condensed Consolidated Interim Financial Statements are referred to as the ‘‘Consolidated Financial Statements.’’ The Consolidated Financial Statements in this Offering Memorandum are not intended to comply with the SEC’s reporting requirements and have been prepared in accordance with IFRS, which differs in various significant respects from U.S. GAAP. The Consolidated Annual Financial Statements have been prepared in accordance with IFRS as adopted by the EU, which differs to some extent from IFRS issued by the International Accounting Standards Board. The Condensed Consolidated Interim Financial Statements have been prepared in accordance with International Accounting Standard 34 ‘‘Interim Financial Reporting’’ as adopted by the EU. Presentation of financial information in accordance with IFRS requires our management to make various estimates and assumptions which may have an impact on the values shown in the financial statements and notes thereto. The actual values may differ from such assumptions. Areas involving a higher degree of judgment or complexity or where assumptions and estimates are significant to the Consolidated Financial Statements are disclosed therein. In making an investment decision, you should rely upon your own examination of the terms of the Offering and the financial information contained in this Offering Memorandum. You should consult your own professional advisors for an understanding of the differences between IFRS and U.S. GAAP and how those differences could affect the financial information contained in this Offering Memorandum. The Consolidated Annual Financial Statements were audited, and the Condensed Consolidated Interim Financial Statements are unaudited but were reviewed, by PricewaterhouseCoopers sp. z o.o., with its registered office in Warsaw (see ‘‘Independent Auditors’’). The Consolidated Financial Statements are presented in thousands of PLN, PLN being the Group’s presentation currency. Unless otherwise indicated, financial data included in this Offering Memorandum are stated in millions of PLN. We have also presented certain unaudited financial information for the twelve months ended June 30, 2014 (the ‘‘twelve months ended June 30, 2014’’ or ‘‘LTM’’). The unaudited consolidated financial information for the twelve months ended June 30, 2014 was calculated by adding the unaudited consolidated statement of comprehensive income for the six months ended June 30, 2014 (as shown in the Condensed Consolidated Interim Financial Statements), and the unaudited consolidated statement of comprehensive income for the year ended December 31, 2013 (as shown in the Condensed Consolidated Interim Financial Statements), and subtracting the unaudited consolidated statement of comprehensive income for the six months ended June 30, 2013 (as shown in the Condensed Consolidated Interim Financial Statements). The data used to compile the summary unaudited financial information for the twelve months ended June 30, 2014 includes financial results for the year ended December 31, 2013 derived from the Condensed Consolidated Interim Financial Statements in order to keep the results between the periods of 2013 and 2014 comparable. The financial results for the year ended December 31, 2013 in the Condensed Consolidated Interim Financial Statements have been restated as compared to the financial results for the

xi year ended December 31, 2013 as stated in Consolidated Annual Financial Statements to reflect the adoption of IFRS 11 Joint Arrangements and the changed method of accounting for interest in Butadien Kralupy a.s. For more details please see ‘‘—Change in the presentation of comparative financial data with respect to Butadien Kralupy a.s. in the Consolidated Financial Statements.’’ This LTM data has been prepared solely for the purpose of this Offering Memorandum, has not been prepared in the ordinary course of our financial reporting and has not been audited or reviewed. The financial information for the six months and twelve months ended June 30, 2014 is not necessarily indicative of the results that may be expected for the year ended December 31, 2014, and should not be used as the basis for or prediction of an annualized calculation. The unaudited pro forma data presented in the Offering Memorandum has been prepared to illustrate the effect of the Transactions on certain data as at and for the twelve months ended June 30, 2014. This information, which has been produced for illustrative purposes only, by its nature addresses a hypothetical situation and, therefore, does not represent our actual financial position or results, nor do they purport to project our financial position at any future date or our results of operations for any future period. The actual results may differ significantly from those reflected in the unaudited pro forma data for a number of reasons, including, but not limited to, differences in assumptions used to prepare the unaudited pro forma data. In this Offering Memorandum, unless otherwise indicated references to ‘‘PLN’’ or ‘‘złoty’’ are to the lawful currency of Poland, references to ‘‘$,’’ ‘‘USD’’ or ‘‘U.S. dollars’’ are to the lawful currency of the United States, references to ‘‘E,’’ ‘‘EUR’’ or ‘‘euro’’ are to the euro, the lawful currency of a member state of the European Economic and Monetary Union, references to ‘‘GBP’’ are to the lawful currency of the United Kingdom, and references to ‘‘CZK’’ are to the lawful currency of the Czech Republic. For definitions of certain terms used in the Offering Memorandum, see ‘‘Certain Definitions.’’ For a glossary of other industry terms used in this Offering Memorandum, see ‘‘Glossary.’’

Change in the presentation of comparative financial data with respect to Butadien Kralupy a.s. in the Consolidated Financial Statements New IFRS standards and interpretations became effective January 1, 2014, in particular IFRS 11 Joint Arrangements, which outlines the accounting by entities that jointly control an arrangement. The new standard limits the types of joint arrangements to two, joint operations and joint ventures. The new standards have been adopted by the Group in the Condensed Consolidated Interim Financial Statements. As a result of the application of these new standards, the Group has changed the accounting method for its interest in Butadien Kralupy a.s. from the equity method, and now, with respect to its interest in joint operations, the Group accounts for: • its assets, including its share of any assets held jointly, • its liabilities, including its share of any liabilities incurred jointly, • its revenue from the sale of its share of the output arising from the joint operation, its share of the revenue from the sale of the output by the joint operation, and • its expenses, including its share of any expenses incurred jointly. The financial information presented in this Offering Memorandum as at June 30, 2014 and for the six months ended June 30, 2014 and 2013 reflects changes in IFRS 11 Joint Arrangements. However, the financial information of the Group as at and for the years ended December 31, 2013, 2012 and 2011 has been extracted or derived from the Consolidated Annual Financial Statements prepared before the adoption of the abovementioned standards, and thus are not fully comparable to the financial information as at and for the six months ended June 30, 2014 and 2013. The financial information of the Group as at and for the year ended December 31, 2013 will be restated in the Group’s 2014 annual IFRS financial statements to show the full-year effect of the new IFRS standards and interpretations effective January 1, 2014. See ‘‘Note 25 to the Condensed Consolidated Interim Financial Statements’’ for the effect of the change in the Group’s accounting policy due to the application of IFRS 11 Joint Arrangements on the Group’s statement of financial position as at December 31, 2013 and 2012 and statement of comprehensive income for the year ended December 31, 2013 and for the six months ended June 30, 2013. The table below presents the effect of the change in the Group’s accounting policy due to the application of IFRS 11 Joint Arrangements on the selected positions of the Group’s statement of financial position as at

xii December 31, 2013 and 2012 and statement of comprehensive income for the year ended December 31, 2013:

Statement of financial position

As at December 31, 2013 As published, before restatement Restatement Restated (PLN million) Total assets ...... 4,067.2 (44.1) 4,023.1 Total equity ...... 2,291.3 — 2,291.3 Total long-term liabilities ...... 566.8 9.4 576.2 Total short-term liabilities ...... 1,209.1 (53.5) 1,155.6 Total liabilities ...... 1,775.9 (44.1) 1,731.8

As at December 31, 2012 As published, before restatement Restatement Restated (PLN million) Total assets ...... 4,557.4 (46.0) 4,511.4 Total equity ...... 2,928.1 — 2,928.1 Total long-term liabilities ...... 600.5 26.7 627.2 Total short-term liabilities ...... 1,028.8 (72.7) 956.1 Total liabilities ...... 1,629.3 (46.0) 1,583.3

Statement of comprehensive income

Year ended December 31, 2013 As published, before restatement Restatement Restated (PLN million) Revenues from Sales ...... 5,359.3 (370.4) 4,988.9 Cost of sales ...... (4,619.6) 391.6 (4,228.0) Gross profit/Loss on sales ...... 739.7 21.2 760.9 Other operating income ...... 31.5 — 31.5 Selling costs ...... (141.5) — (141.5) General and administrative expenses ...... (148.8) — (148.8) Other operating expenses ...... (31.9) — (31.9) Profit on fixed assets disposal ...... 4.0 — 4.0 Operating profit/loss ...... 453.0 21.2 474.2 Financial income ...... 23.7 — 23.7 Financial costs ...... (26.7) — (26.7) Net financial costs ...... (3.0) — (3.0) Interest in profits of entities recognized under the equity method ...... 17.2 (17.2) — Profit before tax ...... 467.2 4.0 471.2 Income tax ...... (49.9) (4.0) (53.9) Net profit ...... 417.3 — 417.3

Change in the presentation of cash and cash equivalents In 2013, our Management Board changed its accounting principles concerning the presentation of the balance of cash and cash equivalents as reported in the consolidated statement of cash flows. Prior to January 1, 2013, the balance of cash and cash equivalents as reported in the consolidated statement of cash flows consisted of cash and cash equivalents, less outstanding bank overdrafts. From January 1, 2013 onwards, the balance of cash and cash equivalents as reported in the consolidated statement of cash flows consisted only of cash and cash equivalents. As a result of this change, the data for the comparative period as at and for the year ended December 31, 2012 has been restated, which resulted in the following two changes to the consolidated statement of cash flows for the year ended December 31, 2012: (1) cash at the end of the period decreased by PLN 48.9 million in overdrafts incurred and (2) overdrafts incurred increased by PLN 48.9 million. In this Offering Memorandum, cash flow data for the year ended December 31, 2012, is provided on a restated basis.

xiii Non-IFRS Financial Measures In this Offering Memorandum, we present certain non-IFRS measures and ratios, including EBITDA, EBITDA margin, net working capital, the ratio of net debt to EBITDA, the ratio of total debt to EBITDA, pro forma cash interest expense, pro forma cash and cash equivalents, pro forma total debt, pro forma net debt, the ratio of pro forma total debt to EBITDA, the ratio of pro forma net debt to EBITDA and the ratio of EBITDA to pro forma cash interest expense that are not required by, or presented in accordance with, IFRS. As used in this Offering Memorandum, the following terms have the following meanings: •‘‘EBITDA’’ refers to operating profit plus depreciation of property, plant and equipment and amortization of intangible assets. EBITDA calculated for the years ended December 31, 2013, 2012 and 2011 does not include the Group’s interest in Butadien Kralupy a.s. accounted for using the equity method and presented as the share in profits of companies recognized under the equity method (not included in the operating profit) in the Consolidated Annual Financial Statements. EBITDA calculated for the twelve months ended June 30, 2014, six months ended June 30, 2014 and six months ended June 30, 2013 includes the Group’s interest in Butadien Kralupy a.s. accounted for in accordance with IFRS 11 Joint Arrangements, which came into force on January 1, 2014 and reflecting the Group’s share in the assets and liabilities and related revenues and expenses of the joint operation. •‘‘EBITDA margin’’ refers to ratio of EBITDA to revenues from sales. •‘‘Net working capital’’ refers to inventories plus accounts receivables (trade, tax and other) minus accounts payables (trade, tax and other). •‘‘Ratio of net debt to EBITDA’’ refers to the ratio of current and non-current liabilities under loans, borrowings and other debt instruments plus overdrafts (‘‘total debt’’) less cash and cash equivalents to EBITDA. •‘‘Ratio of total debt to EBITDA’’ refers to the ratio of total debt to EBITDA. •‘‘Pro forma cash interest expense’’ is cash interest expense calculated by giving pro forma effect for the Offering as if it had occurred on July 1, 2013. •‘‘Pro forma cash and cash equivalents’’ is cash and cash equivalents calculated by giving effect to the Offering as if it had occurred on June 30, 2014. •‘‘Pro forma total debt’’ is current and non-current liabilities under loans, borrowings and other debt instruments plus overdrafts calculated by giving effect to the Offering as if it had occurred on June 30, 2014. •‘‘Pro forma net debt’’ is calculated by deducting pro forma cash and cash equivalents from pro forma total debt. •‘‘Ratio of pro forma total debt to EBITDA’’ refers to the ratio of total debt to EBITDA calculated by giving pro forma effect to the Offering, as if it had occurred on June 30, 2014. •‘‘Ratio of pro forma net debt to EBITDA’’ refers to the ratio of net debt to EBITDA calculated by giving pro forma effect to the Offering, as if it had occurred on June 30, 2014. •‘‘Ratio of EBITDA to pro forma cash interest expense’’ refers to the ratio of EBITDA to cash interest expense calculated by giving pro forma effect to the Offering, as if it had occurred on July 1, 2013. Our management believes that the presentation of these non-IFRS measures is helpful to investors because these and other similar measures are widely used by certain investors, security analysts and other interested parties as supplemental measures of performance and liquidity. We believe EBITDA facilitates operating performance comparisons from period to period and company to company by eliminating potential differences caused by variations in capital structures (affecting interest expense), tax positions (the impact on periods or companies of a change in effective tax rates or net operating losses) and the age and book value of tangible assets (affecting related depreciation expense). We believe EBITDA-based measures are useful to investors because these measures (i) provide investors with financial measures on which management bases financial, operational, compensation and planning decisions; and (ii) present measurements that investors and other interested parties in our industry have indicated to management are useful to them in assessing a company and its results of operations. Since EBITDA-based measures are not determined in accordance with IFRS and thus are susceptible to varying interpretations and calculations, the measures we present may not necessarily be comparable to

xiv similarly-titled measures used by other companies, limiting their usefulness as comparative measures. However, EBITDA, EBITDA margin, net working capital, ratio of pro forma total debt to EBITDA, ratio of pro forma net debt to EBITDA, ratio of EBITDA to pro forma cash interest expense, pro forma cash interest expense, pro forma cash and cash equivalents, pro forma total debt and pro forma net debt should not be considered in isolation and you should not construe these non-IFRS measures as an alternative to net income determined in accordance with IFRS or to cash flows from operations, investing activities, financing activities or other measures of performance as defined by IFRS. Non-IFRS measures and ratios such as EBITDA, EBITDA margin, net working capital, pro forma cash interest expense, pro forma cash and cash equivalents, pro forma total debt and pro forma net debt and leverage ratios are not measurements of performance or liquidity under IFRS and should not be considered as alternatives to IFRS measures of total comprehensive income or cash flows or any other performance measures derived in accordance with IFRS or any other generally accepted accounting principles or as alternatives to cash flow from operating, investing or financing activities as measures of our liquidity. They have not been prepared in accordance with SEC requirements, IFRS or the accounting standards of any other jurisdiction. The financial information included in this Offering Memorandum is not intended to comply with the reporting requirements of the SEC and will not be subject to review by the SEC. The non-IFRS measures we present may also be defined differently than the corresponding terms under the Indenture. Some of the limitations of these non-IFRS measures are: • they do not reflect cash expenditures, or future requirements, for capital expenditures or contractual commitments; • they do not reflect changes in, or cash requirements for, working capital needs; • they do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments on debts; • although depreciation, amortization and impairment are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future and these measures do not reflect any cash requirements that would be required for such replacements; • some of the exceptional items eliminated in calculating these measures reflect cash payments, such as termination costs and asset impairments and write-offs that were made, or will be made, in the future; • they do not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations; and • other companies in our industry may calculate such measures differently than we do, limiting their usefulness as a comparative measure.

Non-Financial Operating Data Certain key performance indicators and other non-financial operating data included in this Offering Memorandum are derived from management estimates, are not part of our financial statements or financial accounting records, and have not been audited or otherwise reviewed by outside auditors, consultants or experts. Our use or computation of these terms may not be comparable to the use or computation of similarly titled measures reported by other companies. Any or all of these terms should not be considered in isolation or as an alternative measure of performance under IFRS.

xv EXCHANGE RATE INFORMATION The following tables set forth, for the periods indicated, certain information regarding the indicated exchange rates, as reported by the National Bank of Poland (‘‘NBP’’). These rates may differ from the actual rates used in the preparation of the financial statements and other financial information appearing in this Offering Memorandum. We make no representation that the currency amounts referred to in this Offering Memorandum have been, could have been or could, in the future, be converted at any particular rate, if at all. On September 23, 2014, the NBP exchange rate of the U.S. dollar was PLN 3.2430 per $1.00.

Period End Average High Low PLN per $1.00 Year 2009 ...... 2.8503 3.1181 3.8978 2.7093 2010 ...... 2.9641 3.0179 3.4916 2.7449 2011 ...... 3.4174 2.9634 3.5066 2.6458 2012 ...... 3.1538 3.2570 3.5777 3.0690 2013 ...... 3.0120 3.1608 3.3724 3.0105 Month in 2014 January ...... 3.1288 3.0650 3.1288 3.0315 February ...... 3.0254 3.0613 3.1370 3.0250 March ...... 3.0344 3.0378 3.0508 3.0185 April ...... 3.0440 3.0293 3.0446 3.0086 May...... 3.0435 3.0415 3.0620 3.0042 June ...... 3.0473 3.0425 3.0654 3.0067 July ...... 3.1094 3.0597 3.1094 3.0322 August ...... 3.1965 3.1478 3.1965 3.1114 September (through September 23) ...... 3.2430 3.2350 3.2605 3.1912 On September 23, 2014, the NBP exchange rate of the euro was PLN 4.1775 per A1.00.

Period End Average High Low PLN per E1.00 Year 2009 ...... 4.1082 4.3282 4.8999 3.9170 2010 ...... 3.9603 3.9939 4.1770 3.8356 2011 ...... 4.4168 4.1198 4.5642 3.8403 2012 ...... 4.0882 4.1850 4.5135 4.0465 2013 ...... 4.1472 4.1975 4.3432 4.0671 Month in 2014 January ...... 4.2368 4.1776 4.2368 4.1522 February ...... 4.1602 4.1786 4.2375 4.1450 March ...... 4.1713 4.1972 4.2334 4.1677 April ...... 4.1994 4.1841 4.2112 4.1657 May...... 4.1420 4.1790 4.2056 4.1385 June ...... 4.1609 4.1369 4.1609 4.0998 July ...... 4.1640 4.1446 4.1640 4.1272 August ...... 4.2129 4.1918 4.1679 4.2184 September (through September 23) ...... 4.1775 4.1946 4.2120 4.1775

xvi On September 23, 2014, the NBP exchange rate of the CZK was PLN 0.1518 per CZK 1.00.

Period End Average High Low PLN per CZK 1.00 Year 2009 ...... 0.1554 0.1637 0.1744 0.1501 2010 ...... 0.1580 0.1581 0.1638 0.1505 2011 ...... 0.1711 0.1675 0.1810 0.1570 2012 ...... 0.1630 0.1665 0.1751 0.1605 2013 ...... 0.1513 0.1617 0.1681 0.1506 Month in 2014 January ...... 0.1540 0.1521 0.1540 0.1511 February ...... 0.1520 0.1522 0.1540 0.1512 March ...... 0.1520 0.1532 0.1548 0.1520 April ...... 0.1530 0.1524 0.1534 0.1518 May...... 0.1508 0.1523 0.1533 0.1506 June ...... 0.1515 0.1507 0.1515 0.1493 July ...... 0.1512 0.1509 0.1514 0.1503 August ...... 0.1516 0.1507 0.1516 0.1497 September (through September 23) ...... 0.1518 0.1518 0.1523 0.1513

xvii SUMMARY This summary highlights information contained elsewhere in this Offering Memorandum. The summary below is not complete and does not contain all the information that you should consider before investing in the Notes. The following overview should be read in conjunction with, and the following overview is qualified in its entirety by, the more detailed information included in this Offering Memorandum, including the Consolidated Financial Statements. You should read the Offering Memorandum carefully in its entirety to understand the business of the Group, the nature and terms of the Notes and the tax and other considerations which are important to your decision to invest in the Notes, including the sections entitled ‘‘Risk Factors,’’ ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations,’’ ‘‘Industry,’’ ‘‘Business,’’ ‘‘Regulatory Overview’’ and the Consolidated Financial Statements included elsewhere in this Offering Memorandum, before making an investment decision. Please see ‘‘Glossary’’ for a glossary of technical terms used in this Offering Memorandum.

Overview We are one of the leading manufacturers of chemical raw materials in Central and Eastern Europe (‘‘CEE’’), headquartered in Poland with our main production operations located in Poland and the Czech Republic. We are the leading producer of synthetic rubber and the leading producer of expendable and extruded polystyrene in Europe, based on data provided by IHS Chemical. Our upstream integration with a stable source of raw materials, including C4 fraction, butadiene, benzene and ethylene, which we source mainly from regional crackers, has allowed us to achieve a leading cost position in the synthetic rubber industry. We have a broad and diverse customer base across a wide range of industries, including the automotive, construction and packaging industries, which accounted for approximately 43%, 27% and 12% of product volumes sold for the year ended December 31, 2013, respectively. We have developed long-term relationships with our key customers, which include market leaders such as Michelin and Goodyear, many of which have lasted over several decades. Over the years, we have successfully leveraged our key proprietary technologies and transformed ourselves into a modern synthetic rubber and styrenics producer with global operations. Our shares have been listed on the Warsaw Stock Exchange since 2004, and we have been a member of the blue chip WIG20 index on the Warsaw Stock Exchange since 2012. As at June 30, 2014, we had a market capitalization of PLN 5,849 million. For the twelve months ended June 30, 2014, we generated consolidated revenues from sales of PLN 4,745.4 million and EBITDA of PLN 625.4 million. Our business is divided into three main business segments: butadiene, rubber and latex (the ‘‘Synthetic Rubber and Latex Segment’’), styrene and styrene derivatives (the ‘‘Styrene Plastics Segment’’) and dispersions and adhesives (the ‘‘Dispersions and Adhesives Segment’’). Other sources of revenues include auxiliary operations related to the production and distribution of thermal energy from our own power plants, as well as revenues derived from the trading and distribution of electricity (‘‘Other Operations,’’ including ‘‘Energy,’’ which is reported as a separate segment in the Consolidated Financial Statements). Other Operations also include income and costs not allocated to any segments.

Percentage of revenues by segment for the twelve Percentage of EBITDA by segment for the twelve months ended June 30, 2014 months ended June 30, 2014 (unaudited) (unaudited)

Synthetic Rubber Synthetic Rubber and Latex Segment and Latex Segment 50.0% 43.0% Styrene Plastics Segment 42.5% Styrene Plastics Segment 35.0% Dispersions and Adhesives Segment Dispersions and 2.5% Adhesives Segment Other Operations 1.1% (including energy) Other Operations 5.0% (including energy) 29SEP20141835539920.9% 29SEP201418354857

1 Our operations are comprised of the following three core business segments: Synthetic Rubber and Latex Segment Our Synthetic Rubber and Latex Segment is our core business segment. 78% of the volume of products sold in this segment is attributable to large tire industry participants, including Michelin, Continental, Bridgestone, Goodyear and Pirelli. The remaining 22% of the volume of products sold in this segment is derived from other markets, including those involved in the production of technical rubber, soles for footwear, flexible cables and transmission belts. For the twelve months ended June 30, 2014, our Synthetic Rubber and Latex Segment generated revenues from sales of PLN 2,374.1 million and EBITDA of PLN 268.7 million.

Styrene Plastics Segment Our Styrene Plastics Segment produces three main types of products, which differ in their application. The first is expandable polystyrene (‘‘EPS’’), which is primarily used in the production of thermal insulation boards, a basic thermal insulation material used in Central Europe. The second includes general purpose polystyrenes (‘‘GPPS’’) and high impact polystyrenes (‘‘HIPS’’), which are primarily used in the food packaging industry. Polystyrene is also used for making disposable tableware, cups, and containers for dairy products, trays and cutlery. It is also used as a raw material in the production of shower cubicles, jewelry packaging, and other materials requiring a stiff but transparent packaging material. The third is extruded polystyrene board (‘‘XPS’’), which is produced by our new production line for extruded polystyrene. XPS is used primarily in the construction industry, as a thermal insulation material for the perimeters of buildings, roofs with reverse layer sequences, flooring and in thermal bridges and cavity walls. For the twelve months ended June 30, 2014, our Styrene Plastics Segment generated revenues of PLN 2,016.3 million and EBITDA of PLN 218.9 million.

Dispersions and Adhesives Segment Our Dispersions and Adhesives Segment produces acrylic, styrene and acrylic, and vinyl acetate polymer dispersions. The main application for these materials is in the production of high-quality paints, acrylic plasters, primers, sealers and other chemicals used in the construction industry. Polyvinyl acetate dispersions are used in the manufacturing of adhesives for wood and in the paper, textile and construction industries. Our adhesives are used mainly in the wood, furniture and paper industries. For the twelve months ended June 30, 2014, our Dispersions and Adhesives Segment generated revenues from sales of PLN 116.0 million and EBITDA of PLN 6.8 million.

Our Strengths We believe we have a number of competitive strengths that differentiate us from our competitors, including:

Leading position in the European markets with attractive growth prospects We are the largest Western and Central European producer of high-quality commodity grades of emulsion styrene butadiene rubber (‘‘ESBR’’) in terms of production capacity, with a 42% market share based on data provided by IHS Chemical and our production capacity. We are the second-largest Western and Central European producer of neodymium butadiene rubber (‘‘NdBR’’) and the second-largest combined European producer of styrene-butadiene rubber (‘‘SBR’’), based on data provided by IHS Chemical. We are also the third-largest producer of EPS in Europe and the fifth-largest European producer of general purpose polystyrenes and high impact polystyrenes as at December 31, 2013, based on data provided by IHS Chemical. We have a significant market share of XPS in Central Europe and strong local market positions in wood adhesives and water dispersions. We attribute our strong positions in these markets to our consistently high-quality products and advantageous cost position, as well as long-standing and close customer relationships, which are supported by our proximity to our customers’ production facilities. Our synthetic rubber products are used primarily in the tire industry, which is driven largely by increasing demand for higher quality and ‘‘green tires’’ in Western Europe, a growing tire replacement market, new car sales in emerging markets and tire production facilities in CEE. The global passenger car tire market increased by 5.2% CAGR between 2009 and 2013, with a stable increase in standard tires and rapid growth in premium tires (4.4% and 12.9% 2009-2013 CAGR, respectively).

2 Upstream integration and strategic collaboration with suppliers We believe access to a stable source of attractively priced raw materials is a key advantage for our business and we strive to produce a significant portion of our key monomer inputs internally. As a result of our close strategic cooperation and long-term contracts with key suppliers, we have integrated most of our supply of raw materials with our production facilities in the Czech Republic and Poland. Our upstream integration via a joint venture with Unipetrol in the Czech Republic, through which we manage our own butadiene production, provides us with a stable and low-cost supply of key raw materials for our synthetic rubber production and allows us to generate greater profits on our finished products. In addition, we source feedstock such as C4 fraction, butadiene, benzene and ethylene from regional refineries, including Unipetrol, PKN Orlen, Sabic and OMV, primarily on the basis of long-term volume contracts. Our C4 fraction contracts are linked to naphtha prices, while our butadiene, benzene and ethylene contracts are based on international price quotations (e.g., the Independent Chemical Information Service). As a result of the prevalence of naphtha crackers throughout Europe, the proximity of several C4 fraction suppliers to our operations and limited local competition for butadiene, we are able to negotiate attractive terms and volumes in our raw materials contracts. Furthermore, we also benefit from a pipeline link with Unipetrol through which we obtain C4 fraction and ethylbenzene for our production facility in the Czech Republic, which enables us to save on storage and transportation costs, while still retaining the flexibility to source materials from other suppliers in the event of an outage. We are also planning to put in place a pipeline with Braskem through which we will obtain butadiene for our new production facility in Brazil, which is scheduled to start operating within the next few years, subject to the entrance into force of raw materials supply agreements, including a butadiene supply agreement with Braskem executed in October 2013. We can make no assurances that such contracts will enter into force and that construction of the planned NdBR production facility in Brazil will commence at such point. Moreover, we are the only producer of styrene in Central Europe, which provides us with a logistical advantage over our competitors from Western Europe and Russia as we benefit from lower transportation costs. Our production processes also require significant amounts of energy. We own power plants at each of our main production sites, which allows us to reduce energy costs (as we do not need to purchase it from third-party suppliers), as well as to earn extra revenue by selling heat and energy to third parties.

Strategic location with proximity to long-standing customers We sell our rubber products predominantly to global tire producers such as Michelin, Pirelli, Goodyear, Bridgestone and Continental. Our production facilities are strategically located near these key customers in Central and Eastern Europe with easy access to their tire plants. For example, Michelin, Goodyear and Bridgestone have plants in Poland that are located on average within 419 km of our plant in Poland, and Continental and the Czech Rubber Company have plants in the Czech Republic that are located on average within 225 km of our plant in the Czech Republic. In addition, due to our favorable cost position and the low freight rates applicable to North East Asia, which amounts to approximately USD 50 to 60 per metric ton, we are able to provide our products to customers in Asia at competitive rates. We have long-standing relationships with many of these key customers and are an integral part of their supply chain. We have supplied each of Michelin, Pirelli, Goodyear, Bridgestone and Continental with our products for more than 20 years and believe we have developed these strong relationships through our highly collaborative process, whereby we work closely with our customers to develop products that meet their critical needs. As part of this process, we test our products at our customer’s sites and work with them to optimize and customize our product offerings. As a result, we benefit from the modern technology and global presence of our key customers, which in return provides us with a global platform to supply our products.

3 across key industry operational benchmarks, according to our internal books which reflect our analysis of the financial statements of our main competitors, such as EBITDA margin, revenues from sales, number of employees, return on assets and their return on equity. We also benefit from significant financial flexibility with operational cash flows for the six months ended June 30, 2014 of PLN 227.3 million and for the years ended December 31, 2013, December 31, 2012 and December 31, 2011 of PLN 649.2 million, PLN 702.9 million and PLN 748.6 million, respectively, which we believe gives us significant headroom to further develop our production capacity and technologies, as well as to actively pursue potential acquisitions, over the coming years.

Strong and diversified product portfolio with proven and growing research and development (‘‘R&D’’) capabilities We started development of our R&D capabilities in 2008. In 2009, we constructed a modern R&D center, which currently employs 54 scientists and promotes innovation and adaptation to evolving client requirements. We work closely with established universities and institutions, such as the University of New Hampshire, to gain access to the most advanced research in our field. Our R&D activities focus on three strategic areas: synthetic rubber, polystyrene plastics and dispersions/adhesives. We own key intellectual property and know-how in all three of these main business segments, which we believe allows us to attract and retain our customers due to the high quality, performance and reliability of our products, which are critical factors in customers’ decision-making. Over the last five years, we have been gradually transforming our portfolio from commodity-type products to research and development-based specialty products across all of our business segments. In 2011, we entered the market for producing high-performance rubber and we are currently in the process of building another production unit for high-performance solution styrene butadiene rubber. As we are among the few producers of synthetic rubber who maintain close relationships with the major global tire brands, we continue to benefit from access to their proprietary technologies. For example, we have acquired proprietary technology from Michelin and Goodyear of infinite duration that enables us to expand our product offerings. We are the holder of a license for Michelin’s market-leading NdBR technology, which makes us one of the few producers in the world to employ this technology and in 2011, we completed construction of a new plant employing this NdBR technology. This plant supplies rubber products to Michelin via a long-term contract, while the remainder of its production is sold under our own Synthos brand to other manufacturers in Europe and around the world. We have also acquired solution styrene- butadiene rubber (‘‘SSBR’’) / lithium polybutadiene (‘‘Li-PBR’’) technology through a Goodyear license. Within our Styrene Plastics Segment, we continue to improve our product parameters and introduce what we believe are some of the most cost-efficient thermal insulation solutions in the market. We are also constantly introducing new product offerings, which increase our margins and extend our value chain as we are able to offer more specialized products. An example of one of our recent innovations is InSphere (expandable polystyrene with improved thermal insulation properties). Additionally, we believe that we are able to absorb periods of lower profitability in styrene production as a result of our favorable margins on our derivatives. We have also been changing our portfolio of water dispersions and wood adhesives by the ongoing replacement of existing products with advanced tailor made products. Within our Dispersions and Adhesives Segment, our recent innovations include Osakryl AP 40 (acrylic dispersion for the production of mediums with improved penetrating power) and Woodmax FF 12.47 (an adhesive for wood applications).

Experienced management team with strong track record We benefit from our experienced and proven executive leadership team, who have used their significant industry experience to maintain operational excellence. Our team has a successful track record of implementing significant strategic objectives, including overseeing the construction of our NdBR plant in the Czech Republic, product portfolio upgrades in styrenics, dispersions and adhesives, and the ongoing development of our SSBR plant in Poland.

Our Strategy Our strategy is to expand on our strong existing position in order to increase our revenues from sales, enhance our profitability and increase our cash flow by pursuing the strategies set forth below.

4 Maintain strategic capital investment program We plan to make strategic capital investments in what we believe are the most attractive market segments in order to extend our leadership in these segments and meet growing demand. EU regulations encouraging ‘‘green tires,’’ i.e., tires with lower rolling resistance and higher efficiency resulting in lower fuel consumption, have led to an increase in demand for NdBR and SSBR. Demand for such specialty tires is expected to expand outside the European Union, with countries such as Brazil, Japan, the United States and South Korea contemplating or introducing their own systems of regulating and rating tires for their environmental impact. In 2013, we started the construction of a new 90kt per year production line for advanced SSBR and Li-BR rubber under a Goodyear license, with the aim of expanding our portfolio and introducing new products in the market. On July 2, 2014, we obtained permission to operate in the Krakow´ Special Economic Zone. Operations within the Krakow´ Special Economic Zone will also benefit from state tax incentives. We are also planning to build a 90kt per year NdBR plant in Brazil, which is scheduled to start its operations within the next few years, subject to the entrance into force of raw materials supply agreements, including a butadiene supply agreement with Braskem executed in October 2013. In relation to our planned Brazilian plant, we have entered into off-take arrangements with Michelin and Pirelli involving pre-sold volumes of NdBR to support future production capacity. We can make no assurances that such contracts will enter into force and that construction of the planned NdBR production facility in Brazil will commence at such point. In addition to projects aimed at increasing our production capacity, we also intend to implement projects aimed at reducing costs and improving our environmental footprint, such as the potential construction of two new boilers at our Kralupy facility, an installation for the desulphurization of exhaust gases and the reduction of nitrogen oxides from our K9 steam boiler and a fluidized bed steam boiler at the O´swi˛ecim facility. We may also continue to actively pursue opportunistic acquisitions in order to widen our current product portfolio or to provide further geographic or product diversification of our business segments. For example, in April 2014, we acquired 68% of the share capital in Zakład Do´swiadczalny ‘‘Organika’’ sp. z o.o. in Nowa Sarzyna for PLN 7.5 million, our R&D company specializing in plant protection products (‘‘PPP’’), which will allow us to develop manufacturing of PPP.

Expansion into international markets We believe that markets such as North America, Latin and South America and Asia represent significant opportunities for our business to expand our distribution network and our production facilities, both organically and through strategic acquisitions. For the year ended December 31, 2013, our revenue from sales came from Poland (24%), the Czech Republic and Slovakia (24%), other European countries (35%), Asia (13%) and the rest of the world (4%). For example, we are currently implementing strategic investments in Brazil, subject to certain conditions, to expand our local capabilities in order to capitalize on growing domestic demand for our products and broaden our customer base. Brazil is the seventh-largest economy in the world and the largest economy in South America, based on data from Trading Economics, and we believe that it presents a good opportunity for growth among emerging market economies. In addition, we believe that limited existing competition, availability of butadiene, high import duties, our close proximity to newly-constructed tire plants and the strong net import position of PBR all combine to make it a very attractive market for us. We are also considering further geographical diversification of our rubber business. We envisage future expansion in North America, which we consider to be a very attractive market due to the broad range of tire manufacturing plant investment projects currently underway.

5 As part of this strategy, we are developing the following key initiatives: • we are exploring new methods of butadiene production with the aim of securing a consistent butadiene supply and decreasing the cost of production by using an alternative feedstock (other than one derived from oil), either via a sugar fermentation process or via a chemical process using ethanol; • we are developing new technology for SSBR production, with the goal of increasing its dynamic properties, therefore reducing the rolling resistance of tires; and • we are introducing new synthetic rubber products for tire producers, particularly in our SSBR and functional NdBR product ranges. We expect to continually add new products to our portfolio, including new types of EPS for the production of very low conductivity and energy-efficient styrofoam boards, new dispersions for the paint and building chemical industries, as well as new hot melt adhesives. We are also considering diversification of our portfolio into new special chemical products which are less dependent on hydrocarbon derivatives. We are contemplating introducing new PPP based on a recently acquired technology to produce herbicides.

Capitalize and expand on long-term relationships with strategic partners We will continue to develop our relationships with our customers by providing high-quality products tailored to their specific needs, by working closely with our customers to develop new products, as well as to improve upon our existing products. We will also continue to pursue joint R&D product development programs with our key customers to ensure we maintain close alignment with their objectives. We also plan to maintain modern production facilities strategically located in close proximity to key clients in order to reduce their costs and ensure a quick response time to their needs, which includes our new production facility in Brazil that is scheduled to start its operations within the next few years, subject to the execution of the butadiene supply agreement with Braskem in the next few months. We plan to reinforce our strategic partnerships with suppliers of key raw materials to increase our potential for organic growth and facilitate further expansion in international markets. In addition, we also intend to continue a high level of backward integration by producing our own monomers and utilities, as well as by leveraging our strong partnerships with key feedstock suppliers.

Recent Developments On August 7, 2014, we signed an agreement, subject to the conclusion of additional agreements with suppliers of raw materials, with a Polish company for the purchase of intellectual property rights in relation to plant protection products, including industrial property rights, copyrights, product formulas and chemical industry trademarks. The transaction value was PLN 43.2 million. On July 18, 2014, we concluded an agreement with SPV Boryszew 3 sp. z o.o. to purchase 100% of the shares in Oristano Investment, which is a manufacturer of dispersions and adhesives. The value of the transaction was PLN 40 million, and it closed on August 12, 2014. This acquisition constitutes part of our strategy to further solidify our position as a market leader in the supply of dispersions and adhesives products.

6 SUMMARY CORPORATE AND FINANCING STRUCTURE The following chart shows a simplified summary of our corporate and financing structure, adjusted to give effect to the Transactions. The following is provided for indicative and illustrative purposes only and should be read in conjunction with the information contained in this Offering Memorandum as a whole. The chart does not include all entities within the Synthos Group. Unless otherwise indicated, the subsidiaries included in the simplified structure below are directly or indirectly wholly-owned by the Company. For a summary of our material debt obligations identified in this diagram, please refer to the sections entitled ‘‘Description of the Notes,’’ ‘‘Description of Existing Indebtedness’’ and ‘‘Capitalization.’’

Restricted Group

(1)(3)(4) Synthos S.A. Proceeds (the “Company” or the Bond “Parent Guarantor”) (Poland)

100% Synthos Finance AB (publ)(2) €350 million (the “Issuer”) 4.000% Senior Notes (Sweden) offered hereby

Synthos Dwory 7 spólka z SYNTHOS Kralupy ograniczona˛ SYNTHOS PBR s.r.o.(3)(6) Non-Guarantor a.s.(3)(4)(6) odpowiedzialnos´cia˛ sp. j.(3)(4)(6) (Czech Republic) subsidiaries(5) (Poland) (Czech Republic)

TAMERO INVEST s.r.o.(3)(4)(6) (Czech Republic)

Guarantor Non-Guarantor 29SEP201418354718

(1) Synthos S.A. is the parent of the Issuer and a Guarantor of the Notes offered hereby (the ‘‘Parent Guarantor’’). All covenants in respect of the Notes apply to the Parent Guarantor and its subsidiaries. For information on the shareholders of the Parent Guarantor, see the section entitled ‘‘Principal Shareholders.’’ The Guarantors will guarantee the Issuer’s obligations under the Notes on a senior unsecured basis. As at and for the six months ended June 30, 2014 and the year ended December 31, 2013, the Guarantors represented PLN 2,340.2 million, or 99.6%, and PLN 5,341.1 million, or 99.7%, of our consolidated revenues, respectively, PLN 307.1 million, or 93.1%, and PLN 595.3 million, or 98.3%, of our consolidated EBITDA, respectively, and PLN 1,857.3 million, or 92.3%, and PLN 2,204.0 million, or 96.2%, of our consolidated net assets, respectively. (2) Synthos Finance AB (publ), a public limited liability company organized under the laws of Sweden, is a wholly-owned direct subsidiary of the Company. It is a finance company with no business operations or significant assets other than the Proceeds Bond to be issued by it to the Company, and which was formed on September 1, 2014. Consequently, as at and for the six months ended June 30, 2014 and the year ended December 31, 2013, the Issuer represented 0% of our consolidated EBITDA and 0% of our consolidated net assets. After giving effect to the Transactions, the only debt outstanding of the Issuer will be the Notes offered hereby, and the Issuer will have no significant liabilities other than the Notes. The Issuer will loan the proceeds of the Offering to the Parent Guarantor via the Proceeds Bond. The Issuer will be dependent on the ability of the Parent Guarantor to make payments under the Proceeds Bond to make payments under the Notes. The ability of the Parent Guarantor to make payments on the Proceeds Bond is dependent on the ability of its subsidiaries to make distributions to the Parent Guarantor whether through dividend payments, loans or otherwise, which are subject to restrictions under applicable laws. Please see ‘‘Risk Factors—Risks Relating to the Notes—The ability of the Issuer to make payments under the Notes is dependent on the ability of the Parent Guarantor to make payments to the Issuer under the Proceeds Bond, which in turn depends, to a certain extent, on the ability of its subsidiaries to make distributions to the Parent Guarantor.’’ (3) The Guarantors of the Notes comprise of Synthos S.A., Synthos Dwory 7, SYNTHOS Kralupy a.s., TAMERO INVEST s.r.o. and SYNTHOS PBR s.r.o. As at and for the six months ended June 30, 2014 and the year ended December 31, 2013, Synthos Dwory 7 represented PLN 1,038.4 million, or 44.2%, and PLN 2,336.0 million, or 43.6%, of our consolidated revenues, respectively, PLN 118.7 million, or 36.0%, and PLN 269.7 million, or 44.6%, of our consolidated EBITDA, respectively, and PLN 949.6 million, or 47.2%, and PLN 760.2 million, or 33.2%, of our consolidated net assets, respectively. As at and for the six months ended June 30, 2014 and, the year ended December 31, 2013, SYNTHOS Kralupy a.s. represented PLN 974.5 million, or 41.5%, and PLN 2,351.0 million, or 43.9%, of our consolidated revenues, respectively, PLN 93.8 million, or 28.4%, and PLN 158.9 million, or 26.3%, of our consolidated EBITDA, respectively, and PLN 367.1 million, or 18.2%, and PLN 820.6 million, or 35.8%, of our consolidated net assets, respectively. The remaining Guarantors each do not represent more than 20% of each of

7 their net assets, revenues and EBITDA. For the twelve months ended June 30, 2014, pro forma for the Transactions, the Guarantors would have had PLN 1,484.7 million of indebtedness outstanding (including the Notes) and the non-Guarantor subsidiaries of Synthos S.A. would have had no indebtedness outstanding. See ‘‘Description of Existing Indebtedness.’’ (4) Indicates that entities are parties to the following Senior Credit Facilities: (i) a loan agreement between Synthos S.A., SYNTHOS Kralupy a.s., TAMERO INVEST s.r.o. and Synthos Dwory 7, as borrowers, and Powszechna Kasa Oszcz˛edno´sci Bank Polski S.A., as lender, dated December 31, 2013; (ii) a loan agreement between to Synthos S.A. and Synthos Dwory 7, as borrowers, and Bank Pekao S.A., as lender, dated June 20, 2012; (iii) a loan agreement between Synthos Dwory 7 sp. z o.o. s.k.a., as borrower, and Bank Zachodni WBK S.A., as lender, dated May 24, 2013; and (iv) a loan agreement between Synthos S.A., SYNTHOS Kralupy a.s., TAMERO INVEST s.r.o., and Synthos Dwory 7, as borrowers, and BNP Paribas Bank Polska S.A., as lender, dated March 5, 2014, all of which will be repaid in connection with the Transactions. See ‘‘Use of Proceeds.’’ All of our other indebtedness (other than certain customs and trade guarantees and our existing financial leases) will be repaid and cancelled. On the Closing Date or shortly after, we also anticipate reducing the availability under our Senior Credit Facilities, such that pro forma for the application of proceeds therefrom, we will have a total of PLN 624.1 million available for drawing thereunder. See ‘‘Description of Existing Indebtedness—Senior Credit Facilities.’’ (5) For the year ended December 31, 2013, the non-Guarantors represented PLN 18.2 million, or 0.3%, of our consolidated revenues, PLN 10.0 million, or 1.7%, of our consolidated EBITDA and PLN 86.1 million, or 3.8%, of our consolidated net assets, respectively. (6) The Guarantees will be subject to certain limitations under applicable law, as described under ‘‘Risk Factors—Risks Relating to the Notes—The Guarantees will be subject to certain limitations on enforcement and may be limited by applicable laws or subject to certain defenses that may limit its validity and enforceability.’’

8 THE OFFERING The following is a brief overview of certain terms of this Offering. Certain of the terms and conditions described below are subject to important limitations and exceptions. It may not contain all the information that is important to you. For a more complete description of the terms of the Notes, including certain definitions used in this overview, see ‘‘Description of the Notes’’ and ‘‘Description of Existing Indebtedness.’’

Issuer ...... Synthos Finance AB (publ). Notes Offered ...... A350 million aggregate principal amount of 4.000% Senior Notes due 2021 (the ‘‘Notes’’). Issue Date ...... September 30, 2014 (the ‘‘Issue Date’’). Issue Price ...... 100.000% (plus accrued and unpaid interest from the Issue Date). Maturity Date ...... September 30, 2021. Interest Payments ...... The interest rate of the Notes will be 4.000%. Interest on the Notes will be paid semi-annually in arrears on March 30 and September 30 of each year, commencing on March 30, 2015. Interest will accrue from the Issue Date. Form and Denomination ...... The Notes will be issued only in registered global form and in denominations of A100,000 and any integral multiple of A1,000 in excess thereof. Notes in denominations of less than A100,000 will not be available. Except in limited circumstances, definitive registered Notes in certificated form will not be issued. Guarantees ...... The Notes will be guaranteed on a senior basis by Synthos S.A., Synthos Dwory 7, SYNTHOS Kralupy a.s., TAMERO INVEST s.r.o. and SYNTHOS PBR s.r.o. (together, the ‘‘Guarantors’’). The Guarantors also guarantee our obligations under the certain of our existing credit facilities. The Guarantees will be subject to contractual, legal and regulatory limitations, and may be released under certain circumstances. See ‘‘Risk Factors—Risks Related to the Notes and our Structure’’ and ‘‘Description of the Notes—Guarantees.’’ Ranking of the Notes ...... The Notes will: • be general senior unsecured obligations of the Issuer; • rank pari passu in right of payment with any existing and future indebtedness of the Issuer that is not subordinated in right of payment to the Notes; • rank senior in right of payment to any existing and future obligations of the Issuer that are expressly subordinated in right of payment to the Notes; • be effectively subordinated to any existing and future secured indebtedness of the Issuer and the Group that is secured by property or assets that do not secure the Notes, to the extent of the value of the property and assets securing such indebtedness (including indebtedness outstanding under the Senior Credit Facilities); • be fully and unconditionally guaranteed on a senior, joint and several basis by the Guarantors, subject to limitations under applicable law as set forth under ‘‘Limitations on Validity and Enforceability of the Guarantees;’’ and

9 • be structurally subordinated to any existing and future indebtedness of each member of the Group that does not provide Guarantees. Ranking of the Guarantees ...... Each of the Guarantees will: • be a general senior unsecured obligation of the relevant Guarantor; • rank pari passu in right of payment with any and all of the relevant Guarantor’s existing and future indebtedness that is not subordinated in right of payment to the Guarantee; • rank senior in right of payment to any and all of the relevant Guarantor’s existing and future obligations that are expressly subordinated in right of payment to the Guarantee; • be effectively subordinated in right of payment to all of such Guarantor’s existing and future indebtedness that is secured by property or assets that do not secure the Guarantees (including indebtedness outstanding under the Senior Credit Facilities) to the extent of the value of the property and assets securing such indebtedness; and • be structurally subordinated to all existing and future obligations of such Guarantor’s subsidiaries that do not provide Guarantees. Additional Amounts ...... If any withholding of taxes by certain relevant tax jurisdictions were at any time to be required, the Issuer or applicable Guarantor is required to pay the additional amounts necessary so that the net amount received by the holders of the Notes after the withholding (including any withholding in respect of the additional amounts) is not less than the amount that the holders of the Notes would have received in the absence of the withholding. See ‘‘Description of the Notes—Additional Amounts.’’ Optional Redemption ...... Prior to September 30, 2018, the Issuer will be entitled at its option to redeem all or a portion of the Notes at a redemption price equal to 100% of the principal amount of the Notes plus the applicable ‘‘make-whole’’ premium described in this Offering Memorandum and accrued and unpaid interest, and additional amounts, if any, to the redemption date. See ‘‘Description of the Notes—Optional Redemption.’’ On or after September 30, 2018, the Issuer will be entitled at its option to redeem all or a portion of the Notes at the redemption prices set forth under the caption ‘‘Description of the Notes— Optional Redemption’’ plus accrued and unpaid interest and additional amounts, if any, to the redemption date. Prior to September 30, 2018, the Issuer will be entitled at its option to redeem up to 35% of the aggregate principal amount of the Notes using the proceeds of certain equity offerings at the redemption price of 104.000% of the principal amount of the Notes redeemed, plus accrued and unpaid interest and additional amounts, if any, to the redemption date; provided that at least 65% of the Notes outstanding as of the Issue Date, remain outstanding after the redemption. See ‘‘Description of the Notes—Optional Redemption.’’

10 Optional Redemption for Tax Reasons In the event of certain developments affecting taxation (with respect to the Notes), the Issuer may redeem the Notes, in whole, but not in part, at 100% of the principal amount thereof, plus accrued and unpaid interest, and additional amounts, if any, to the date of redemption. See ‘‘Description of the Notes— Redemption for Changes in Taxes.’’ Change of Control and Rating Decline ...... Upon the occurrence of certain events constituting a ‘‘change of control,’’ combined with a rating decline (together, a ‘‘Change of Control Triggering Event’’) the Issuer will be required to offer to repurchase all outstanding Notes at a purchase price in cash equal to 101% of the principal amount thereof on the date of purchase plus accrued and unpaid interest to the date of repurchase. See ‘‘Description of the Notes—Repurchase at the Option of Holders—Change of Control.’’ Certain Covenants ...... The Indenture will contain covenants that will, among other things, limit the ability of the Parent Guarantor and its restricted subsidiaries to: • incur or guarantee additional indebtedness and issue certain preferred stock; • create or incur certain liens; • make certain payments, including dividends or other distributions; • prepay or redeem subordinated debt or equity; • make certain investments; • create encumbrances or restrictions on the payment of dividends or other distributions, loans or advances to and on the transfer of assets to the Parent Guarantor or any of its restricted subsidiaries; • sell, lease or transfer certain assets including stock of restricted subsidiaries; • engage in certain transactions with affiliates; and • consolidate or merge with other entities. Each of these covenants is subject to significant exceptions and qualifications. See ‘‘Description of the Notes—Certain Covenants.’’ Transfer Restrictions ...... The Notes and the Guarantees have not been, and will not be, registered under the U.S. Securities Act or the securities laws of any other jurisdiction and are subject to restrictions on transferability and resale. See ‘‘Notice to Investors.’’ Absence of Public Market for the Notes ...... The Notes will be new securities for which there is no existing market. Accordingly, there can be no assurance that an active trading market will develop or be maintained for the Notes. Listing ...... The Issuer has applied to list the Notes on the Official List of the Irish Stock Exchange and to admit the Notes to trading on the Global Exchange Market thereof. No certainty can be given that the application will be accepted. The Global Exchange Market is not a regulated market for the purposes of Directive 2004/39/EC.

11 Use of Proceeds ...... We intend to use the proceeds from the issue of the Notes to repay in full all amounts outstanding under our existing indebtedness, to pay fees and expenses in relation to the Offering and for general corporate purposes of the Group, including the Parent Guarantor and other Guarantors. See ‘‘Use of Proceeds.’’ Trustee ...... Citibank, N.A., London Branch. Paying Agent and Transfer Agent .... Citibank, N.A., London Branch. Registrar ...... Citigroup Global Markets Deutschland AG. Listing Agent ...... Arthur Cox Listing Services Limited. Governing Law ...... The Indenture, the Notes and the Guarantees will be governed by New York law, and the Proceeds Bond will be governed by Polish law. Risk Factors ...... Investing in the Notes involves substantial risks. Please see the ‘‘Risk Factors’’ section for a description of certain of the risks you should carefully consider before deciding to invest in the Notes. Certain ERISA Considerations ..... Subject to the considerations and requirements described in ‘‘Certain ERISA Considerations,’’ the Notes may be purchased and held by Plans (as defined in ‘‘Certain ERISA Considerations’’).

12 SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA AND OTHER INFORMATION Summary historical consolidated financial data The tables below set forth certain of our summary historical consolidated financial data and other data as at the dates and for the periods indicated. The summary consolidated statement of financial position, consolidated statement of comprehensive income and consolidated statement of cash flow set forth below as at and for the years ended December 31, 2013, 2012 and 2011 have been derived without material adjustments from our Consolidated Annual Financial Statements, included elsewhere in this Offering Memorandum. The summary unaudited condensed consolidated interim statement of financial position, consolidated statement of comprehensive income and consolidated statement of cash flow set forth below as at and for the six months ended June 30, 2014 and 2013 have been derived without material adjustments from our Condensed Consolidated Interim Financial Statements, included elsewhere in this Offering Memorandum. Our consolidated historical financial statements and the condensed consolidated historical financial information presented below were prepared on the basis of IFRS, which differs in certain respects from U.S. GAAP. The condensed financial information and other data below include certain non-IFRS measures used to evaluate our operating and financial performance. These measures are not identified as accounting measures under IFRS and therefore should not be considered as an alternative measure to evaluate the performance of the Group. See ‘‘Presentation of Financial and Other Information.’’ In addition to the above, this Offering Memorandum includes certain unaudited financial information for the twelve months ended June 30, 2014 (the ‘‘twelve months ended June 30, 2014’’ or ‘‘LTM’’). The unaudited consolidated financial information for the twelve months ended June 30, 2014 was calculated by adding the unaudited consolidated statement of comprehensive income for the six months ended June 30, 2014 (as shown in the Condensed Consolidated Interim Financial Statements) and the unaudited consolidated statement of comprehensive income for the year ended December 31, 2013 (as shown in the Condensed Consolidated Interim Financial Statements) and subtracting the unaudited consolidated statement of comprehensive income for the six months ended June 30, 2013 (as shown in the Condensed Consolidated Interim Financial Statements). The data used to compile the summary unaudited financial information for the twelve months ended June 30, 2014 includes financial results for the year ended December 31, 2013 restated to reflect the adoption of IFRS 11 Joint Arrangements and derived from the Condensed Consolidated Interim Financial Statements in order to keep the results between the periods of 2013 and 2014 comparable. The financial results for the year ended December 31, 2013 in the Condensed Consolidated Interim Financial Statements have been restated as compared to the financial results for the year ended December 31, 2013 as stated in Consolidated Annual Financial Statements to reflect the adoption of IFRS 11 Joint Arrangements and changed method of accounting for interest in Butadien Kralupy a.s. This LTM data has been prepared solely for the purpose of this Offering Memorandum, has not been prepared in the ordinary course of our financial reporting and has not been audited or reviewed. The financial information for the twelve months ended June 30, 2014 is not necessarily indicative of the results that may be expected for the year ended December 31, 2014, and should not be used as the basis for or prediction of an annualized calculation. For more details please see ‘‘Presentation of Financial and Other Information—Change in the presentation of comparative financial data with respect to Butadien Kralupy a.s. in the Consolidated Financial Statements.’’ The unaudited pro forma data presented in this section has been prepared to illustrate the effect of the Transactions on certain consolidated financial information as at and for the twelve months ended June 30, 2014. This information, which has been produced for illustrative purposes only, by its nature addresses a hypothetical situation and, therefore, does not represent our actual financial position or results, nor does it purport to project our financial position at any future date or our results of operations for any future period. The actual results may differ significantly from those reflected in the unaudited pro forma data for a number of reasons, including, but not limited to, differences in assumptions used to prepare the unaudited pro forma data. The Group’s consolidated historical financial information and other data should be read in conjunction with the information contained in ‘‘Use of Proceeds,’’ ‘‘Capitalization,’’ ‘‘Selected Historical Consolidated Financial Information,’’ ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations’’ and the Consolidated Financial Statements included elsewhere in this Offering Memorandum.

13 Summary Statement of Comprehensive Income

For the For the twelve months twelve months For the ended ended six months For the year ended June 30, June 30, ended June 30, December 31, 2014(1) 2014(2) 2014 2013 2013 2012 2011 (unaudited) (unaudited) (unaudited) (EUR million) (PLN million) Revenues from Sales ...... 1,140.5 4,745.4 2,350.0 2,593.5 5,359.3 6,206.6 5,440.7 Cost of sales ...... (961.5) (4,000.9) (1,956.0) (2,183.1) (4,619.6) (5,166.3) (4,182.7) Gross profit/Loss on sales ...... 178.9 744.5 394.0 410.4 739.7 1,040.3 1,258.0 Other operating income ...... 8.0 33.2 13.0 11.3 31.5 79.0 49.1 Selling costs ...... (33.1) (137.9) (66.6) (70.2) (141.5) (149.6) (112.1) General and administrative expenses ..... (36.2) (150.7) (79.8) (77.8) (148.8) (157.9) (152.3) Other operating expenses(3) ...... (5.9) (24.4) (8.4) (16.0) (31.9) (37.2) (15.7) Profit/(Loss) on sale of property, plant and equipment ...... 1.0 4.0 — — 4.0 1.5 2.0 Profit from the sale of shares ...... — — ————3.3 Operating profit/loss ...... 112.6 468.7 252.2 257.7 453.0 776.1 1,032.3 Financial income ...... 4.8 19.8 2.3 6.2 23.7 15.4 52.4 Financial costs ...... (9.4) (39.0) (22.3) (10.1) (26.7) (44.1) (26.4) Net financial costs ...... (4.6) (19.2) (20.0) (3.9) (3.0) (28.7) 26.0 Impairment loss for financial assets available for sale ...... — — — — — (154.6) — Share in profits of companies recognized under the equity method ...... — — — — 17.2 24.5 21.1 Profit before tax ...... 108.0 449.5 232.2 253.8 467.2 617.3 1,079.4 Income tax ...... (21.0) (87.3) (63.3) (29.8) (49.9) (32.1) (118.6) Net profit ...... 87.0 362.2 168.9 224.0 417.3 585.2 960.8

(1) For your convenience, we have translated certain złoty amounts into euro. The exchange rate for the convenience translations is PLN 4.1609 per A1.00 which was the National Bank Exchange Rate per euro as at June 30, 2014. You should not view such translations as a representation that such euro amounts actually represent such złoty amounts, or could be or could have been converted into euro at the rate indicated or at any other rate. (2) The unaudited consolidated financial information for the twelve months ended June 30, 2014 was calculated by adding the unaudited consolidated statement of comprehensive income for the six months ended June 30, 2014 (as shown in the Condensed Consolidated Interim Financial Statements) and the unaudited consolidated statement of comprehensive income for the year ended December 31, 2013 (as shown in the Condensed Consolidated Interim Financial Statements) and subtracting the unaudited consolidated statement of comprehensive income for the six months ended June 30, 2013 (as shown in the Condensed Consolidated Interim Financial Statements). The data used to compile the summary unaudited financial information for the twelve months ended June 30, 2014 includes financial results for the year ended December 31, 2013 restated to reflect the adoption of IFRS 11 Joint Arrangements and derived from the Condensed Consolidated Interim Financial Statements in order to keep the results between the periods of 2013 and 2014 comparable. (3) Other operating expenses include, among other items, revaluation of provisions, establishment of impairment losses for

receivables, cost of unused production capacity, current assets written off, receivables written off, and utilization of CO2 emission allowances and costs of decommissioning of inactive facilities.

Summary Statement of Financial Position

As at June 30, As at December 31, 2014 2013 2012 2011 (unaudited) (PLN million) Total assets ...... 3,871.8 4,067.2 4,557.4 4,562.0 Total equity ...... 2,012.5 2,291.3 2,928.1 2,938.6 Total non-current liabilities ...... 757.1 566.8 600.5 785.9 Total current liabilities ...... 1,102.2 1,209.1 1,028.8 837.5 Total liabilities ...... 1,859.3 1,775.9 1,629.3 1,623.4 Total equity and liabilities ...... 3,871.8 4,067.2 4,557.4 4,562.0

14 Summary Statement of Cash Flows

For the For the twelve months twelve months For the ended ended six months For the year ended June 30, June 30, ended June 30, December 31, 2014(1) 2014(2) 2014 2013 2013 2012 2011 (unaudited) (unaudited) (unaudited) (EUR million) (PLN million) Net cash from operating activities ...... 167.4 696.7 227.3 215.6 649.2 702.9 748.6 Net cash used in investing activities ...... (63.1) (262.4) (146.1) (140.0) (223.2) (202.2) (310.8) Net cash used in financing activities ...... (214.9) (894.1) (350.9) (193.6) (733.9) (767.8) (99.6)

Summary Other Financial Data

As at and for As at and for As at and for As at and for the twelve months the twelve months the six months the year ended ended June 30, ended June 30, ended June 30, December 31, 2014(1) 2014(2) 2014 2013 2013 2012 2011 (unaudited) (unaudited) (unaudited) (EUR million) (PLN million) Capital expenditures(4) ...... 78.8 327.8 144.3 118.2 300.3 205.2 302.7 EBITDA (unaudited for all periods)(5) ...... 150.3 625.4 330.0 337.3 605.3 932.1 1,182.3 Ratio of net debt to EBITDA(6) ...... — 1.4x — — 0.9x (0.1)x (0.2)x Ratio of total debt to EBITDA(7) ...... — 1.7x — — 1.6x 0.7x 0.7x Pro forma cash interest expense (unaudited for all periods)(8) ...... 14.0 58.3 — — — — — Pro forma cash and cash equivalents (unaudited for all periods)(9) ...... 128.7 535.6 — — — — — Pro forma total debt (unaudited for all periods)(10) . 359.4 1,495.3 — — — — — Pro forma net debt (unaudited for all periods)(11) . . 230.6 959.7 — — — — — Ratio of pro forma total debt to EBITDA (unaudited for all periods)(12) ...... — 2.4x — — — — — Ratio of pro forma net debt to EBITDA (unaudited for all periods)(13) ...... — 1.5x — — — — — Ratio of EBITDA to pro forma cash interest expense (unaudited for all periods)(14) ...... — 10.7x — — — — — Net working capital(15) ...... 236.3 983.2 983.2 1,184.7 831.9 924.3 882.7

(4) Capital expenditures represent payments to acquire intangible assets and property, plant and equipment, as recorded on our consolidated cash flow statement. (5) EBITDA represents operating profit plus depreciation of property, plant and equipment and amortization of intangible assets. EBITDA calculated for the years ended December 31, 2013, 2012 and 2011 does not include the Group’s interest in Butadien Kralupy a.s. accounted for using the equity method and presented as Share in profits of companies recognized under the equity method (not included in the operating profit) in the Consolidated Annual Financial Statements. EBITDA calculated for the twelve months ended June 30, 2014, six months ended June 30, 2014 and six months ended June 30, 2013 includes the Group’s interest in Butadien Kralupy a.s. accounted for in accordance with IFRS 11 Joint Arrangements and reflecting the Group’s share in the assets and liabilities and related revenues and expenses of the joint operation. EBITDA is not a measure of liquidity or performance calculated in accordance with IFRS and should be viewed as a supplement to, not a substitute for, our results of operations presented in accordance with IFRS. See ‘‘Presentation of Financial and Other Information.’’ We believe that EBITDA is a useful indicator of our ability to incur and service our indebtedness and can assist securities analysts, investors and other parties to evaluate us. EBITDA and similar measures are used by different companies for differing purposes and are often

15 calculated in ways that reflect the circumstances of those companies. You should exercise caution in comparing our EBITDA to EBITDA of other companies. The reconciliation of net profit to EBITDA is as follows for the periods indicated:

For the For the twelve For the twelve six months months ended months ended ended For the year ended June 30, June 30, June 30, December 31, 2014(1) 2014(2) 2014 2013 2013 2012 2011 (unaudited) (unaudited) (unaudited) (unaudited) (EUR million) (PLN million) Net profit ...... 87.0 362.2 168.9 224.0 417.3 585.2 960.8 Income tax ...... 21.0 87.3 63.3 29.8 49.9 32.1 118.6 Share in profits of companies recognized under the equity method ...... — — — (17.2) (24.5) (21.1) Impairment loss for financial assets available for sale ...... — — — — 154.6 — Financial income ...... (4.8) (19.8) (2.3) (6.2) (23.7) (15.4) (52.4) Financial costs ...... 9.4 39.0 22.3 10.1 26.7 44.1 26.4 Operating profit ...... 112.6 468.7 252.2 257.7 453.0 776.1 1,032.3 Depreciation and amortization ...... 37.7 156.7 77.8 79.6 152.3 156.0 150.0 EBITDA (unaudited for all periods) ...... 150.3 625.4 330.0 337.3 605.3 932.1 1,182.3

(6) Represents the ratio of current and non-current liabilities under loans, borrowings and other debt instruments plus overdrafts (‘‘total debt’’), less cash and cash equivalents, to EBITDA. (7) Represents the ratio of total debt to EBITDA. (8) Pro forma cash interest expense is calculated by giving pro forma effect for the Offering as if it had occurred on July 1, 2013 and does not include indebtedness at Butadien Kralupy a.s., a joint venture established together with Unipetrol in which we own 49%, which is accounted for according to IFRS 11 Joint Arrangements, which came into force on January 1, 2014, or indebtedness under certain customs guarantees and our existing financial leases, which will remain outstanding following the Offering. See ‘‘Capitalization.’’ Pro forma cash interest expense has been presented for illustrative purposes only and does not purport to represent what our interest expense would have actually been had the Offering occurred on the date assumed, nor does it purport to project our interest expenses for any future period or our financial condition at any future date. (9) Pro forma cash and cash equivalents is cash and cash equivalents calculated by giving effect to the Offering as if it had occurred on June 30, 2014. (10) Pro forma total debt is current and non-current liabilities under loans, borrowings and other debt instruments plus overdrafts calculated by giving effect to the Offering as if it had occurred on June 30, 2014. (11) Pro forma net debt is calculated by deducting pro forma cash and cash equivalents from pro forma total debt. (12) Ratio of pro forma total debt to EBITDA refers to the ratio of total debt to EBITDA calculated by giving pro forma effect to the Offering, as if it had occurred on June 30, 2014. (13) Ratio of pro forma net debt to EBITDA refers to the ratio of net debt to EBITDA calculated by giving pro forma effect to the Offering, as if it had occurred on June 30, 2014. (14) Ratio of EBITDA to pro forma cash interest expense refers to the ratio of EBITDA to cash interest expense calculated by giving pro forma effect to the Offering, as if it had occurred on July 1, 2013. (15) Net working capital refers to inventories plus accounts receivables (trade, tax and other) minus accounts payables (trade, tax, and other). EBITDA and EBITDA margin by segment are as follows for the periods indicated:

EBITDA by segment For the twelve For the twelve For the months ended months ended six months For the year ended June 30, June 30, ended June 30, December 31, 2014(1) 2014 2014 2013 2013 2012 2011 (unaudited) (unaudited) (unaudited) (unaudited) (EUR million) (PLN million) Synthetic Rubber and Latex Segment . 64.6 268.7 169.0 239.2 311.6 663.7 903.4 Styrene Plastics Segment ...... 52.6 218.9 99.6 41.0 160.2 112.0 107.1 Dispersions and Adhesives Segment . . 1.6 6.8 3.0 3.8 7.6 6.5 4.6 Other Operations(2) ...... 31.5 131.0 58.4 53.3 125.9 149.9 167.2 Total ...... 150.3 625.4 330.0 337.3 605.3 932.1 1,182.3

16 EBITDA margin by segment For the twelve For the six months ended months ended For the year ended June 30, June 30, December 31, 2014 2014 2013 2013 2012 2011 (unaudited) (unaudited) (unaudited) Synthetic Rubber and Latex Segment ...... 11.3% 14.1% 16.2% 10.5% 16.8% 27.4% Styrene Plastics Segment ...... 10.9% 10.2% 4.5% 8.2% 5.9% 6.2% Dispersions and Adhesives Segment ...... 5.7% 4.7% 6.8% 7.1% 6.4% 4.3% Other Operations(1) ...... 54.8% 49.9% 38.8% 40.2% 54.0% 53.4% Total ...... 13.2% 14.0% 13.0% 11.3% 15.0% 21.7%

(1) For Other Operations, EBITDA also include income and costs not allocated to any of segments. Revenues from sales by business segment and revenues from sales by region are as follows for the periods indicated:

Revenues from sales by segment (external customers) For the twelve For the twelve For the months ended months ended six months For the year ended June 30, June 30, ended June 30, December 31, 2014(1) 2014(2) 2014 2013 2013 2012 2011 (unaudited) (unaudited) (unaudited) (EUR million) (PLN million) Synthetic Rubber and Latex Segment . 570.6 2,374.1 1,194.9 1,480.7 2,976.3 3,943.5 3,301.2 Styrene Plastics Segment ...... 484.6 2,016.3 973.8 919.6 1,962.1 1,883.9 1,719.7 Dispersions and Adhesives Segment . . 27.9 116.0 64.2 55.7 107.6 101.7 106.9 Other Operations ...... 57.4 239.0 117.1 137.5 313.4 277.4 312.9 Total revenues from sales ...... 1,140.5 4,745.4 2,350.0 2,593.5 5,359.4 6,206.5 5,440.7

Revenues from sales by region For the twelve For the twelve months ended months ended For the six months For the year ended June 30, June 30, ended June 30, December 31, 2014(1) 2014(2) 2014 2013 2013 2012 2011 (unaudited) (unaudited) (unaudited) (EUR million) (PLN million) Domestic sales(3) ...... 527.5 2,194.7 1,057.3 1,105.8 2,613.7 2,781.5 2,691.7 Other countries(4) ...... 613.0 2,550.7 1,292.7 1,487.7 2,745.6 3,425.1 2,749.0 Total revenues from sales .... 1,140.5 4,745.4 2,350.0 2.593.5 5,359.3 6,206.6 5,440.7

(1) For your convenience, we have translated certain złoty amounts into euro. The exchange rate for the convenience translations is PLN 4.1609 per A1.00 which was the National Bank Exchange Rate per euro as at June 30, 2014. You should not view such translations as a representation that such euro amounts actually represent such złoty amounts, or could be or could have been converted into euro at the rate indicated or at any other rate. (2) The unaudited consolidated financial information for the twelve months ended June 30, 2014 was calculated by adding the unaudited consolidated statement of comprehensive income for the six months ended June 30, 2014 (as shown in the Condensed Consolidated Interim Financial Statements), and the unaudited consolidated statement of comprehensive income for the year ended December 31, 2013 (as shown in the Condensed Consolidated Interim Financial Statements), and subtracting the unaudited consolidated statement of comprehensive income for the six months ended June 30, 2013 (as shown in the Condensed Consolidated Interim Financial Statements). The data used to compile the summary unaudited financial information for the twelve months ended June 30, 2014 includes financial results for the year ended December 31, 2013 restated to reflect the adoption of IFRS 11 Joint Arrangements and derived from the Condensed Consolidated Interim Financial Statements in order to keep the results between the periods of 2013 and 2014 comparable. (3) Domestic sales cover all types of sales (production, trade, services) of the Group in Poland, the Czech Republic and Slovakia. (4) Other countries cover all types of sales of the Group in all countries of the world except for Poland, the Czech Republic and Slovakia.

17 RISK FACTORS An investment in the Notes involves risks, including the risks described below and elsewhere in this Offering Memorandum. Before investing in the Notes, you should consider carefully the following risk factors and all information contained in this Offering Memorandum. The risks and uncertainties we describe below are not the only ones we have. Additional risks and uncertainties of which we are not aware or that we currently believe are immaterial may also adversely affect our business, financial condition, liquidity, results of operations or prospects. If any of these events occur, our business, financial condition, liquidity, results of operations or prospects could be materially and adversely affected, we may not be able to pay interest or principal on the Notes when due and you could lose all or part of your investment. This Offering Memorandum also contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including, but not limited to, the risks described below and elsewhere in this Offering Memorandum.

Risks Related to Our Business and Industry Disruptions in the global economy and the financial markets in which we operate may adversely impact our business. Our business is largely based on the sales of chemical products used as raw materials and intermediate products in a wide range of industries, including, in particular, the automotive, packaging and construction industries. Demand for our customers’ products is affected by general economic conditions and other factors, including conditions in the automotive and packaging industries, labor and energy costs, currency changes, fluctuations in interest rates and other factors beyond our control. As a result, the volume and profitability of our sales depend upon these fluctuations, as well as the economic situation in Poland, the Czech Republic, Europe and worldwide. The recent economic downturn in our end markets and the geographic areas where we sell our products, including the automotive industries in Europe, has substantially reduced demand for our products and resulted in decreased sales volumes. While demand for certain of our products began to recover in 2010 despite the Eurozone crisis, we cannot assure you that events having an adverse effect on the industries and markets in which we operate, such as a downturn in the Polish, European or global economies, increases in interest rates, unfavorable currency fluctuations or other factors, will not occur or continue. Any significant downturn in our customers’ businesses or in Polish, European or global economic conditions could result in a reduction in demand for our products and could adversely affect our business, results of operations, financial condition or prospects.

Price fluctuations in the cost of raw materials used to manufacture our products or disruptions in the supply of raw materials may adversely affect our production costs. Our manufacturing costs may be directly affected by volatility in the cost of our raw materials and fuel, which are subject to global supply and demand and other factors beyond our control. Our principal raw materials (C4 fraction, butadiene, benzene, ethylene or styrene) together represented PLN 2.7 billion, or 58.2% of our total cost of goods sold for the year ended December 31, 2013. We expect our raw materials cost in 2014 to be approximately the same percentage of total cost of goods sold for the year ended December 31, 2013. As a significant portion of our cost of goods sold is represented by these raw materials, our gross profit and margins could be adversely affected by changes in the cost of these raw materials if we are unable to pass any increased costs on to our customers. The probability of such a risk may be greater if suppliers accumulate considerable stock and, as a consequence, temporarily limit their orders. Although in the long term, changes in the prices of raw materials will be reflected in product prices, in the short term, raw material cost volatility poses a challenge as we may be unable to manage passing cost increases on to our customers in a timely manner by adjusting our prices. We believe that rapid changes in pricing may also affect customer demand. In extraordinary cases, such as the notification of a force majeure event by a key supplier, we may find ourselves with insufficient materials to produce our products. Alternatively, if the availability of any of our principal raw materials is limited, we may be unable to produce some of our products in the quantities demanded by our customers, which could have an adverse effect on plant utilization and the sales of our products requiring such raw materials. In addition, our production process requires significant amounts of energy and fuel. We use thermal coal and natural gas to generate electricity, operate our facilities and generate heat and steam for our various manufacturing processes. For the year ended December 31, 2013, the costs of thermal coal and natural gas accounted for 6.2% of our cost of sales, compared to 5.0% for the year ended December 31, 2012 and

18 4.6% for the year ended December 31, 2011. Thermal coal and natural gas prices have experienced significant volatility in the past several years, and we may not be able to pass on any increased costs of production and distribution of our products to our customers. Any disruptions in the thermal coal or natural gas supply to our production facilities could severely impact our business, results of operations, financial condition or prospects.

The chemicals industry is subject to cyclicality, which may cause fluctuations in our results of operations. Our operations are subject to the cyclical and, more importantly, variable nature of the supply and demand balance in the chemicals industry, and our future results of operations may continue to be affected by this cyclicality and variability. Historically, the chemicals industry as a whole has experienced alternating periods of capacity shortages leading to tight supply conditions and increasing prices and margins, followed by periods when substantial capacity was added resulting in oversupply, declining capacity utilization rates and declining prices and profit margins. Several factors that have historically contributed to volatile margins in the chemicals industry, and in our business particularly, most of which are beyond our control, include: • exchange rate fluctuations for producers with a global manufacturing footprint or distribution; • oversupply due to capacity expansions by existing or new competitors; • short-term utilization rate fluctuations due to planned turnarounds and unplanned production downtime; • regulatory requirements driving required technology and manufacturing changes; and • political and economic conditions, which drive rapid changes in prices for our key raw materials, including C4 fraction, butadiene, benzene, ethylene or styrene. Given the current uncertainty in the global economic environment (that could result in lower demand) and the implications of the variable supply and demand balance in the chemicals industry, increasing supply could increase pressure on our margins and could materially adversely affect our business, results of operations, financial condition or prospects.

We are highly dependent on a limited number of regional suppliers of our main raw materials and our revenue and profit could decrease significantly if we lose one or more of these suppliers. Our operations require substantial amounts of raw materials, including C4 fraction, butadiene, benzene, ethylene and styrene, which we source mainly from regional crackers such as PKN Orlen (which together with Unipetrol forms one group), Sabic and OMV who deliver raw materials to our production facilities in the Czech Republic and Poland. Our regional production facilities are also linked through pipelines with certain of our suppliers, including a pipeline with Unipetrol through which we obtain C4 fraction, ethylene and benzene for our production facility in the Czech Republic, and a pipeline with Braskem through which we will obtain butadiene for our new production facility in Brazil, which is scheduled to start operating within the next few years, subject to the entrance into force of raw materials supply agreements, including a butadiene supply agreement with Braskem executed in October 2013. We can make no assurances that such contracts will enter into force and that construction of the planned NdBR production facility in Brazil will commence at such point. In addition, we own 49% in a joint venture established together with Unipetrol, which provides us with approximately 50% of our annual requirements for butadiene, which is the key raw material for our synthetic rubber production. The nature of our business depends on regular deliveries of raw materials to our production facilities, which means that we might not always be able to avoid reliance on a single supplier. Any disruption or delay in the supply of raw materials from a particular supplier, or the loss of a supplier where we are unable to find a suitable alternative within a required time frame, could force us to curtail our production. If any one of our suppliers becomes unable to meet its delivery requirements for any reason (for example, due to insolvency, destruction of production plants or refusal to perform a contract), we may be unable to source input products from other suppliers at the required volume, and/or at the same or lower prices. The realization of any of these risks could have a material adverse effect on our business, results of operations, financial condition or prospects.

19 We depend on certain key customers for a significant proportion of our sales volumes, and our revenue and profits could decrease significantly if we lose one or more of these key customers. We derive a substantial portion of our revenue from sales from certain key customers. For example, for the six months ended June 30, 2014, our top five customers accounted for 26.9% of our revenues from sales, four of which are car tire manufacturers. As a result, it is critical that we maintain close relationships with our key customers. The deterioration in or termination of these relationships could lead to a material decline in sales, revenues, profitability and cash flows and impair our business and reputation. Furthermore, we are exposed to credit risk, which relates to the non-payment or non-performance by customers with respect to trade and other receivables. The failure of our customers to perform their obligations or the possibility that they may terminate their agreements with us could result in our being unable to meet our working capital requirements. Financial difficulties experienced by customers, including bankruptcies, restructurings and liquidations, or potential financial weakness in the industry, increase this risk. The failure of a customer to pay outstanding amounts owed to us could have a materially adverse effect on our business, results of operations, financial condition or prospects. The credit terms that we offer to our customers extend up to 120 days and are usually met by our customers, given the quality of our customer base. As at June 30, 2014, the amount of receivables for which credit terms extends beyond 120 days is PLN 12.8 million. Although we have adopted procedures and policies aimed at minimizing this risk, such as insuring receivables, monitoring credit exposures and assigning credit limits to customers, these credit procedures and policies may not be adequate, and they may not protect us against the risk of non-payment and/or non-performance by customers.

Our ability to manufacture our key specialty products may be impaired by our failure to maintain relevant licenses and we cannot assure you that we will be able to renew all necessary certificates, approvals and permits for our operations. Our ability to manufacture key specialty products requires licenses to use certain patents, patent applications and other intellectual property. In July 2011, we launched the production of NdBR (required for production of high performance tires) under a license agreement with Michelin at our production facility in the Czech Republic. In June 2012, we signed a license agreement with Goodyear under which we gained access to the technology for producing advanced SSBR rubber. These licenses are for an infinite period and will continue in full force insofar we do not comply with their requirements, which may include the payment of royalties, maintenance of confidentiality, obeying any restrictions on not use and construction of additional capacity. We cannot assure you that we will be able to maintain our licenses, including the license agreements we have with Michelin and Goodyear. If we are unable to maintain or secure alternative licenses on acceptable terms or develop our own proprietary technology, which does not infringe intellectual property rights of third parties, we may not be able to sell certain of our products, which could have a material adverse effect on our business, results of operations, financial condition or prospects. Our operations are subject to various certificates, approvals and permits in various jurisdictions. We cannot assure you that we will be able to renew our certificates, approvals and permits upon their expiration. The eligibility criteria for such certificates, approvals and permits may change from time to time and may become more stringent. In addition, new requirements for certificates, approvals and permits may come into effect in the future. The introduction of any new or more stringent laws, regulations, certification requirements, approvals and permits relevant to our business may significantly escalate our compliance and maintenance costs, preclude us from continuing our existing operations or limit or prohibit us from expanding our business. Any such event may have an adverse effect on our business, financial results and future prospects.

The commodity organic chemicals industry is highly competitive and we may struggle to maintain our current market position. Our industry is highly competitive and we face significant competition from large international producers, as well as from smaller regional competitors. Our most significant competitors in the synthetic rubber market include Lanxess, Trinseo and Versalis. In the styrenics market, our competitors include Styrolution and INEOS. Competition is based on a number of factors, such as product quality, service and price. Our competitors may improve their competitive position in our core end-use markets by successfully introducing new

20 products, improving their manufacturing processes or expanding their capacity or manufacturing facilities. In addition, if we are forced to increase the prices of our principal synthetic rubber, latex raw materials, polystyrene plastics, or butadiene, other manufacturers who offer similar products made with less expensive raw materials for example, as a result of a different chemical composition, may be able to improve their market position and force us to lower our prices in order to compete with them. Competition between styrene-based chemical products and other products within the end-use markets in which we compete is intense. Supply (production capacity) exceeds potential demand in this market and we may need to adjust our prices to meet competitors’ offers. In addition, increased competition from existing or new products may reduce demand for our products in the future and our customers may decide on alternate sources to meet their requirements. The long-term impact of competition for these products is unclear. Some of our competitors may be able to drive down prices for our products if they have lower operating costs. Alternatively, some of our competitors may have greater financial, technological and other resources, enabling them to better withstand cost and demand changes in the market. Such competitors may be better able to withstand changes in market conditions than us. Our competitors may also be able to respond more quickly than we can to new or emerging technologies or changes in customer requirements. If we are unable to keep pace with our competitors’ product and manufacturing process innovations, we may be unable to maintain our current market position. In addition, consolidation of our competitors or customers may result in reduced demand for our products or make it more difficult for us to compete with our competitors. If we are unable to successfully compete with other producers of styrene-based chemical products or if other products can be successfully substituted for our products, our sales may decline.

We may not be able to adjust our products or technologies to address our customers’ changing requirements or competitive challenges in a timely manner, and our customers may substitute our products with other products that we do not offer. The market segments where our customers compete are subject to periodic technological changes, ongoing product improvements, product substitution and changes in customer requirements. Increased competition from existing or newly developed products offered by our competitors or companies whose products offer a similar functionality to our products may negatively affect demand for our products. For example, in the EPS industry, where competition between producers leads to the constant introduction of improved grades with lower thermal conductivity, which requires us to adjust our products in order to address our customers’ requirements and sustain market demand for our products. We work to identify, develop and market innovative products on a timely basis to meet our customers’ changing requirements and competitive challenges. However if we are unable to substantially maintain or further develop our product portfolio, customers may elect to source comparable products from competitors which could have a detrimental impact on our business, results of operations, financial condition or prospects. We may not be able to develop products that adequately address our customers’ needs. In addition, the timely commercialization of products that we are developing may be disrupted or delayed by manufacturing or other technical difficulties, industry acceptance or insufficient industry size to support a new product, competitors’ new products, and difficulties in moving from the experimental stage to the production stage, which is usual for the process of product development, especially during the scale up from laboratory to semi-technical stage. These disruptions or delays could adversely affect our business, results of operations, financial condition or prospects. We cannot be certain that the investments we make in our technology department and research and development department will result in proportional increases in net sales or profits. Our research and development and application technology teams work closely with our customers to develop high-quality, innovative products and applications that are tailored to meet their specific requirements. In addition, alternative materials, procedures or technologies may be developed, or existing ones may be improved, and replace those we currently offer. For example, substitute products may affect the demand for our products, in particular for emulsion rubber and polystyrene. Production advances, including increased demand for substitute end products, which use different materials, and increases in the quality of competing substitute materials used in the production of current end products, as well as product and raw

21 material price fluctuations, may increase the comparative advantage of substitute products and result in a decline in demand for our products as customers may switch to substitutes. For example, the tire labelling regulations in the EU have led to increased demand for higher-performance SSBR/NdBR tires for personal vehicles with better properties than emulsion rubber, which is our main product offering. Polystyrene is also subject to substitution risks. Competing materials, such as other polymers, particularly polypropylene, polylactic acid and paper, can also be used in packaging applications. While the cost of switching to one of these alternatives is relatively low, as modern conversion lines can generally switch between polymers, additional investment may be required to process polyethylene terephthalate, and in some cases, polypropylene. If such newly developed, improved products or alternative products are being offered at lower prices, have preferable features or other advantages, particularly from a regulatory perspective, and we are not able to offer similar new or improved products, we may lose substantial business, which could have an adverse effect on our business, results of operations, financial condition or prospects.

Any future acquisitions may prove difficult for us to consummate. We have a history of making acquisitions, including as recently as in July 18, 2014, with our acquisition of 100% of the shares in Oristano Investment, which is a manufacturer of dispersions and adhesives, and we will likely to continue acquire companies or assets engaged in similar or complementary businesses if we identify appropriate acquisition targets. To finance future permitted acquisitions, we may need to borrow money, which will increase our debt service requirements and could impact our ability to make payments on the Notes, and we may not be able to obtain acquisition finance on favorable terms, if at all. In order to manage any acquisitions we successfully complete, we will need to expand and continue to improve our operational, financial and management information systems and our increased leverage may limit our ability to do so. Our excess cash may be limited, and we may not be able to invest in the acquired company to achieve the desired synergies. We have in the past and may continue to pursue opportunistic acquisitions in order to widen our current product portfolio or to provide further geographic or product diversification of our business segments, which could be subject to a number of risks, including: • problems with the effective integration of operations; • the inability to maintain key pre-acquisition business relationships; • increased operating costs; • costs related to achieving or maintaining compliance with laws, rules or regulations, including in particular in relation to any expansion into new markets; • the loss of key employees of the acquired company; • exposure to unanticipated liabilities; and • difficulties in realizing projected efficiencies, synergies and cost savings. We cannot assure you that any acquisition we consummate will ultimately provide the benefits we originally anticipate. Furthermore, we may not succeed in identifying attractive acquisition candidates or financing or completing potential acquisitions on favorable terms.

Fluctuations in currency exchange rates may significantly impact our results of operations and may significantly affect the comparability of our results between financial periods. We conduct our operations in a number of different countries. Our results are reported in relevant foreign currencies and then translated into Polish złoty at the applicable exchange rates for inclusion in our consolidated financial statements. The main currencies to which we are exposed are the euro, Polish złoty, U.S. dollar and Czech koruna. The exchange rates between these currencies and the Polish złoty in recent years have fluctuated significantly and may continue to do so in the future. A depreciation of these currencies against the złoty will decrease the złoty equivalent of the amounts derived from these operations reported in our consolidated financial statements. An appreciation of these currencies will result in a corresponding increase in such amounts. Because most of our raw material costs are procured in euro or U.S. dollar, an appreciation of the złoty against euro or U.S. dollar may have an adverse effect on our profit margins or our reported results of operations. Additionally, to the extent that we are selling our products in foreign currencies, the appreciation of złoty against foreign currencies will tend to negatively

22 impact our results of operations. In addition, currency fluctuations may affect the comparability of our results of operations between financial periods. As a result of the currency composition of our purchases of raw materials, product sales, loans and borrowings raised and cash in foreign currencies, we have been and expect to continue to be exposed to foreign exchange rate fluctuations, which could materially affect our results of operations, assets and liabilities, and cash flows as reported in złoty. In 2013, 70.6% of our revenues and 91.7% of our costs related to transactions settled in foreign currencies (mainly in euro and in the U.S. dollar). Fluctuations of exchange rates have an impact on the volume of sales revenue and purchase costs of raw materials. Strengthening of the domestic currency has a negative impact on export profitability and domestic sales; however, changes in revenues from export or from domestic sales valued on the basis of listing, caused by fluctuations of exchange rates, are balanced by changes in the costs of import of raw materials (or valued on the basis of foreign currency quotations), mitigating, to a great extent, our exposure to currency exchange risk. We incur currency transaction risk whenever we enter into either a purchase or sale transaction using a currency other than the local currency of the transacting entity. Given the volatility of exchange rates, we cannot assure you that we will be able to effectively manage our currency transaction risks or that any volatility in currency exchange rates will not have a material adverse effect on our business, results of operations, financial condition or prospects.

The shutdown of crackers may impact the ethylene and butadiene market. As producers adapt to meet market demand, cheap ethylene or polyethylene imported from the United States or the Middle East may decrease the profitability of European crackers and subsequently lead to closures of the least competitive ones. In addition, switching the European crackers to a light feed (ethane) could also impact the butadiene market. According to figures from IHS Chemical, in the period from 2008 to 2012, crackers representing approximately 0.5 million mt/year of capacity, or 2.3%, have closed in Western Europe. In 2013, this trend continued and Versalis shut one of its two lines in Priolo, Italy with a capacity of 300,000 mt/year. As a result of narrow margins, petrochemical plant operators have started to drive down their fixed costs. Shutdowns of European crackers may result in limited availability of butadiene and ethylene and increased shipment costs from non-European countries. As a consequence, it may become economically less viable to purchase raw materials from crackers outside of Europe. As a result, our manufacturing costs could increase which may impact our business, results of operations, financial condition or prospects.

Overcapacity of synthetic rubber in China may adversely impact our business. China is one of the world’s most dynamic synthetic rubber markets and has a significant impact on the global synthetic rubber market. In recent years, the overall volume levels of the Chinese synthetic rubber market have improved significantly, increasing industrial concentration and leading to the rapid growth of production capacity. The capacity of the synthetic rubber industry in China has far exceeded actual market demand and the carrying capacity of the market has been unable to fully digest total production in the industry. Therefore, China may export its products to the EU at a competitive price, which would increase the quantity of synthetic rubber offered in Europe. This could result in decreased demand for our products which could adversely affect our business, results of operations, financial condition or prospects.

Many of our contracts with suppliers contain terms that may limit the amount of raw materials delivered to us in force majeure circumstances. Many of our contracts with suppliers contain provisions that allow them to limit the amount of raw materials delivered to us below the contracted amount in force majeure circumstances. If we are required to obtain alternative sources for raw materials because a supplier is unwilling or unable to perform its obligations under a raw material supply agreement or if a supplier terminates its agreements with us, we may not be able to obtain these raw materials from alternative suppliers in a timely manner on terms comparable or favorable to us, which could have a material adverse effect on our business, results of operations, financial condition or prospects.

23 Our main shareholder may influence actions, such as dividend distributions, which benefit shareholders at the expense of creditors, or might cease to control our business. Mr. Michał Sołowow directly and indirectly owns 62.46% of our shares and controls our business as at June 30, 2014. Mr. Sołowow is able to exert considerable influence over the appointment of our supervisory board and the management board and may take actions that favor the interests of our shareholders over those of our creditors, including decisions with respect to dividend payments. Additionally, Mr. Sołowow could cause us to incur additional indebtedness or to sell certain material assets, insofar as the Indenture permits. Incurring additional indebtedness would increase our debt service obligations and selling assets could reduce our ability to generate revenues, each of which could adversely affect holders of the Notes. The dividend payout ratio on our shares amounted to 98% of our statutory consolidated net profit for 2013, 172% of our statutory consolidated net profit for 2012 and 69% of our statutory consolidated net profit for 2011 and we may continue to distribute dividends in line with our internal policies and the restrictions of our Senior Credit Facilities and the Indenture. Dividends distributed from our retained earnings, which may be significantly higher than the net profits generated by us in future periods, could weaken our capital strength, reduce our cash flow and impact our ability to repay our debt. We are also subject to restrictive debt covenants that may limit our ability to finance our future operations and capital needs and to pursue business opportunities and activities. In addition, if Mr. Sołowow were to sell all or part of his shareholding, any new controlling shareholder could pursue a strategy which is different from that of our business at the date of this Offering Memorandum. Any influence or instability in corporate governance matters relating to our business could have a material adverse effect on our business, results of operations, financial condition or prospects.

Failure to comply with the regulations related to subsidy grants may impact our business. We have been approved to receive certain EU and state budget subsidies for our investment and R&D projects which amounted to approximately PLN 293.8 million as at June 30, 2014 and will be disbursed in the next few years. In 2012, we received PLN 207.9 million, including PLN 43.3 million from the Operational Program ‘‘Innovative Economy,’’ to finance our R&D Center in O´swi˛ecim and PLN 146.8 million for the ‘‘Implementation of an innovative technology for manufacturing SSBR X3 rubbers in Synthos Dwory 7’’ project, in relation to which we started construction of a new 90kt per year production line for advanced SSBR and Li-BR rubbers as part of our aim to expand our portfolio by introducing new innovative products. We have also been granted subsidies from the National Fund for Environmental Protection and Water Management (Narodowy Fundusz Ochrony Srodowiska´ i Gospodarki Wodnej). In order to maintain the grants we have obtained, we are required to fulfill strict regulatory obligations, such as promotion of the project, maintaining the integrity of a project during the five years following completion and reaching the employment rate targets set out in the program application. If we fail to fulfill our obligations, we will be required to return the grants we have received with statutory interest. Non-compliance with such regulations may impact our business, results of operations, financial condition or prospects.

We are subject to different tax regulations, customs, international trade, export control, antitrust, zoning and occupancy and labor and employment laws that could require us to modify our current business practices and incur increased costs. We are subject to numerous regulations, including customs and international trade laws, export/import control laws, and associated regulations. These laws and regulations limit the countries in which we can do business, the persons or entities with whom we can do business, the products which we can buy or sell, and the terms under which we can do business, including exposure to anti-dumping restrictions and investigations. In addition, we are subject to antitrust laws, zoning and occupancy laws that regulate manufacturers generally and govern the importation, promotion and sale of our products, the operation of factories and warehouse facilities and our relationship with our customers, suppliers and competitors. If any of these laws or regulations were to change or were violated by our management, employees, suppliers, buying agents or trading companies, the costs of certain goods could increase, we could experience delays in shipments of our goods, be subject to fines or penalties, or suffer reputational harm, all of which could reduce demand for our products and hurt our business and negatively impact results of operations. For example, we face the risk of dumping prices of products from China or India, where the prices charged are below the prices charged in China or India, or below the cost of production, which may harm our

24 competitive position and business. In addition, in some areas we benefit from certain trade protections, including anti-dumping protection and the EU’s Authorized Economic Operator program, which provides expedited customs treatment for materials crossing national borders. If we were to lose these protections, our results of operations could be adversely affected. In addition, changes in statutory minimum wage laws and other laws relating to employee benefits could cause us to incur additional wage and benefits costs, which could negatively impact our profitability. We exercise significant judgment in calculating our worldwide provision for income taxes and other tax liabilities, and we believe our tax estimates are reasonable. However, the accuracy of such tax estimates may be reduced, because we file tax returns in many jurisdictions in which we do not have a deep knowledge of tax regulations. We may be subject to audits by tax authorities in the future and the tax authorities may disagree with our tax treatment of certain material items, including past or future acquisitions and/or dispositions, and thereby require us to recalculate and potentially increase our tax liability. In addition, changes in existing laws may also increase our effective tax rate. We may also be subject to new tax regulations that may affect our tax structure, in particular the expected substance-over-form regulations and CFC regulations (controlled foreign companies) which may have a negative impact on our business. A substantial increase in our tax burden could have a material adverse effect on our business, results of operations, financial condition or prospects. Legal requirements are frequently changed and subject to interpretation, and we are unable to predict the ultimate cost of compliance with these requirements or their effects on our operations. We may be required to make significant expenditures or modify our business practices to comply with existing or future laws and regulations, which may increase our costs and materially limit our ability to operate our business.

Failure to fulfill the conditions of the state tax incentive programs may affect our business results. SYNTHOS PBR s.r.o, our Czech entity, benefits from state tax incentive programs in the form of tax relief granted by the Czech government for the years 2011-2015, during which it is exempt from income corporate tax. This tax relief is only effective if SYNTHOS PBR s.r.o fulfills the requirements imposed by the Czech and EU law and the Czech Government, otherwise we may lose any unused relief and be required to pay back the relief already used including any applicable penalties, which could affect our business, results of operations, financial condition or prospects. In addition, on July 2, 2014 we were granted three permits to operate in the Krakow´ Special Economic Zone, which allows us to benefit from Polish state tax incentives. However, benefits related to this admission to the Special Economic Zone will apply only if we fulfill certain requirements as set out in the rules on regional aid in the EU. If the expected investment expenditures are not realized and investment in the region for which the permit was obtained are not maintained for at least five years, our permits could be withdrawn and we would no longer benefit from state tax incentives which may impact our business, results of operations, financial condition or prospects. Furthermore, under current Polish regulations Special Economic Zones are scheduled to cease to exist in 2026.

We could be held liable in connection with pollution. A large number of our current, past or discontinued production facilities have a long history of industrial use which may include chemical processing, hazardous substances and waste storage and related activities such as landfill activities. As a result, soil and groundwater contamination can occur due to releases of hazardous substances in the future as has occurred at certain facilities in the past, and it is possible that further contamination could be discovered at these sites or other sites in the future. Certain environmental laws, regulations and court decisions impose liability for contamination on present and former owners, operators or users of facilities and sites, whether on or from such facilities and sites without regard to causation, negligence or knowledge of contamination. At any time, we could be responsible for investigating and remediating contamination that originated at our facilities or was caused by operations at our facilities, which could result in substantial unanticipated costs. The occurrence of future releases of hazardous materials, the discovery of previously unknown contamination, or the imposition of new obligations to investigate or remediate contamination at our facilities, could result in substantial unanticipated costs. We may also become obligated to pay fines or fees if our emissions and/or other activities are in excess of regulatory limits, and we have paid such fines and/or fees in the past.

25 Our financial results may also be adversely affected if environmental liability arises for which we are not adequately indemnified. Although we believe the indemnities given by the selling parties from whom we have acquired assets or businesses will help to defray the cost associated with pre-acquisition environmental liabilities, our financial results may still be adversely affected to the extent (i) the sellers do not fulfill their respective indemnification obligations, and/or (ii) we breach our obligations not to undertake certain activities that may aggravate existing conditions or to mitigate associated losses. Additionally, we could be required to establish or substantially increase financial reserves for obligations or liabilities in relation to remediation costs. If we fail to accurately predict the amount or timing of such costs, the related impact on our business, results of operations or financial condition, in any period in which such costs need to be incurred, may be material. In addition, in certain jurisdictions, authorities are empowered to impose liens on real estate and attach to accounts of the property operator to cover remediation costs.

Provisions for environmental liabilities may be insufficient. We regularly review all of our environmental risks and the provisions made for such risks. A provision is recorded when we have a present obligation as a result of a past event, the amount of the obligation can be reliably estimated, and it is probable that an outflow of resources of economic value will be required to settle the obligation. Provisions are determined based on, among other factors, known events, the type and scope of pollution, site rehabilitation techniques, applicable laws and regulations, and estimated risks, at each balance sheet date and adjusted as needed at subsequent balance sheet dates. Since such determinations are based on a range of factors, many of which may change and are subject to unforeseeable or unpredictable circumstances, we cannot assure you that such provisions will be sufficient. For example, from time to time we may incur remediation costs at our current facilities and newly acquired facilities. If environmental harm is found to have occurred as a result of our current or historical operations (as a successor), we may incur significant remediation costs and be required to pay substantial fines. Should provisions made for environmental liabilities fall short of any unforeseen environmental compliance costs and/or liabilities, we may have to make additional payments, which could have a material adverse effect on our business, financial condition and results of operations.

Compliance with extensive and evolving environmental, health and safety laws may require substantial expenditures. We use large quantities of hazardous substances, generate hazardous wastes and emit wastewater and air pollutants during the course of our manufacturing operations. Consequently, our operations are subject to extensive environmental, health and safety laws and regulations at both the national and local level in multiple jurisdictions. Many of these laws and regulations have become more stringent over time and the costs of compliance with these requirements may increase further, including costs associated with any capital investments for pollution control facilities. In addition, our production facilities require operating permits that are subject to periodic renewal and, in circumstances of noncompliance, may be subject to revocation. The necessary permits may not be issued or continue in effect, and any issued permits may contain more stringent limitations that restrict our operations or that require further expenditures to meet the permit requirements. For example, in connection with the EU’s Registration, Evaluation, Authorization and Restriction of Chemicals (the ‘‘REACH Regulation’’), or the new EU Classification, Labeling and Packaging Regulation (the ‘‘CLP Regulation’’), any key raw material, chemical or substance, including our products, could be classified as having a toxicological or health-related impact on the environment, on users of our products or on our employees. The REACH Regulation imposes significant obligations on the chemicals industry as a whole with respect to the testing, evaluation, assessment and registration of basic chemicals and chemical intermediates. Any delay in implementing the full registration of substances in accordance with these requirements could result in penalties for violation of these laws and regulations or the inability to sell our products containing them. The REACH Regulation processes are expensive and time-consuming and lead to increased production costs and reduced operating margins for chemical products. During 2014, the new Polish Environmental Protection Act (‘‘EPA’’), the Industrial Emissions Directive of the European Parliament (‘‘IED Directive’’) and additional regulations on land, soil and underground water contamination are all expected to be implemented in Poland. The EPA introduces new, lower emission standards for the energy industry and new responsibilities for the land owner with regards to research and reclamation of contaminated land. We expect to have expenditures in order to comply with

26 the requirements of the EPA for the year ended December 31, 2014, both for research and activities connected with land reclamation itself, and have already begun to make relevant investments. Our necessary investments are in progress with the first such expenditures expected in 2014. Compliance with more stringent environmental requirements could also increase our costs of transportation and storage of raw materials and finished products, as well as the costs of storage and disposal of wastes. Additionally, we may incur substantial costs, including penalties, fines, damages, criminal or civil sanctions and remediation costs, or experience interruptions in our operations for failure to comply with these laws or permit requirements.

Compliance with current and future regulations targeting greenhouse gas emissions may cause us to incur significant additional operating and capital expenses. Emissions such as carbon dioxide, methane and other greenhouse gases (‘‘GHG’’) are a standard by-product of our production process. Over the past few decades, concerns about the relationship between GHG and global climate change have resulted in increased levels of scrutiny from regulators and the public alike, and have led to proposed and enacted regulations on both national and supranational levels, to monitor, regulate and control carbon dioxide and other GHG emissions. In the EU, our emissions are regulated under the European Union Emissions Trading Scheme (‘‘EU ETS’’), an EU-wide trading system for industrial GHG emissions. We have been subject to the EU ETS since January 1, 2013. We have obtained emission allowances for the period from 2014 to 2020, and it is likely that we will be required to purchase additional CO2 emission allowances in the future. The EU ETS is anticipated to become progressively more stringent over time. If the current proposals are implemented this could have an impact on our costs of compliance under the EU ETS. At the international level, the international community continues to negotiate a binding treaty that would require reductions in GHG emissions by developed countries. In addition, a number of further measures addressing greenhouse gas emissions may be implemented, for example a successor international agreement, if any, to the Kyoto Protocol and the EU’s proposal to consider raising its commitment to reduce carbon emissions by 2020 to 30% rather than the current rate of 20%. Compliance with current or future GHG regulations governing our operations, including those discussed above may result in increased capital expenditures for measures such as capital expenditures to install more environmentally efficient technology or the purchase of allowances to emit carbon dioxide or other greenhouse gases. On January 6, 2011, the IED Directive came into effect. The IED Directive limits the amount of gas emissions at new and existing large fuel combustion plants, with existing plants subject to stricter requirements and consequently the IED Directive provides a transitional period to bring existing plants into compliance. The IED Directive is expected to be adopted into Polish law by the second half of 2014. We are currently in the process of implementing a modernization program and investing in new equipment to bring the heat and power plant at Synthos Dwory 7 into compliance with these new limits and expect this to be completed by 2015. As part of this process, we are building a new installation for desulphurization and dust removal in one of the existing boilers, a new installation for denitrogenation of flue gases in one of the existing boilers, and a new fluidized bed boiler. Any delay in the implementation of the processes described above could result in penalties for violation of these regulations. There is no way to predict the form that future regulations may take or to estimate any costs that we may be required to incur with respect to these or any other future requirements. In addition to the increased expenditures outlined above, such requirements could also adversely affect our energy supply, or the costs (and types) of raw materials we use for fuel, and ultimately reduce demand for our products. The realization of any or all of these consequences could have a material adverse impact on our business, results of operations, financial condition or prospects.

Regulatory and statutory changes in jurisdictions where we manufacture and sell our products could lead to increased costs or decreased demand. Our products are also used in a variety of end-uses that have specific regulatory requirements, such as those relating to products that have contact with food used in the packaging industry or those used in the automotive industry. Many of the applications for the products in the end markets in which we sell our products are regulated by various national and local rules, laws and regulations. For example, materials

27 such as aromatic compounds like benzene and styrene, as well as more complex compounds such as antioxidants and plasticizers, are used in the manufacturing of our products and have come under increased regulatory scrutiny due to potentially significant or perceived health and safety concerns. Changes in regulations could result in additional compliance costs, seizures, confiscations, recall or monetary fines, any of which could prevent or inhibit the development, distribution and sale of our products. Changes in environmental and safety laws and regulations banning or restricting the use of these residual materials in our products, or our customers’ products, could adversely affect our business, results of operations, financial condition or prospects. Failure to appropriately manage safety, human health, product liability and environmental risks associated with our products, product life cycles and production processes could adversely impact employees, communities, stakeholders, our reputation and the results of our operations.

Production at our manufacturing facilities could be disrupted for a variety of reasons and any disruptions could expose us to significant losses or liabilities. Due to the nature of our business, we are exposed to the hazards associated with chemical manufacturing and the related storage and transportation of raw materials, products and wastes. These hazards could lead to an interruption or suspension of our operations and have an adverse effect on the productivity and profitability of a particular manufacturing facility or on us as a whole. These potential risks of disruption include, but are not necessarily limited to: • pipeline and storage tank leaks and ruptures; • explosions and fires; • inclement weather, including floods, and natural disasters; • terrorist attacks; • failure of mechanical, process safety and pollution control equipment; • contamination, chemical spills and other discharges or releases of toxic or hazardous substances or gases; and • exposure to toxic chemicals. In the course of our operations we have experienced such hazards and disruptions as listed above (except for terrorist attacks), which are customarily associated with chemical manufacturing. For example, we experienced a downtime lasting a few days caused by flooding at our production plant in Kralupy in June 2013, and we believe our Kralupy plant remains at a potential risk of flooding due to its location. We also experienced a fire at our production plant in O´swi˛ecim in February 2014. Moreover, our production plant in Poland is listed by the Polish State Fire Service as a plant ‘‘with an increased or high risk of the occurrence of fire hazard.’’ As our facilities operate close to large population centers, any fires could affect the nearby communities. In 2010, we also experienced a leakage of our rainwater sewer system which was caused by insufficient care taken to manage oil tank levels by an unaffiliated company whose place of business was on our premises, which caused us to incur expenses for the clean-up of such incident. Following this incident, we invested in a special protection system to avoid the re-occurrence of the problem in the future. All the above hazards could also expose employees, customers, the community and others to toxic chemicals and other hazards, contaminate the environment, damage property, result in personal injury or death, lead to an interruption or suspension of operations, damage our reputation and adversely affect the productivity and profitability of a particular manufacturing facility or us as a whole, and result in the need for remediation, governmental enforcement, regulatory shutdowns, the imposition of government fines and penalties and claims brought by governmental entities or third parties. Legal claims and regulatory actions could subject us to both civil and criminal penalties, which could affect our product sales, reputation and profitability. We cannot be certain that our environmental, health and safety compliance, management and response systems currently in place will be sufficient to prevent such potential risks or to remedy any such disruption or incident. Moreover, the type of activities performed by our employees during the production process and resultant contact with harmful and hazardous substances could increase the risk of accidents. Despite our best efforts to promote awareness through trainings and briefings and ensure safe working conditions for our employees, we cannot be certain the safety measures and programs we have implemented will prevent

28 accidents occurring onsite or employees contracting occupational diseases, which may have a negative impact on our operating activities and financial performance. In the event that an individual successfully brings a claim against us, we may not have adequate insurance to cover such claims or may not have sufficient cash flow to pay for such claims. Such outcomes could have a material adverse effect on our business, results of operations, financial condition or prospects. If any disruptions occur, alternative facilities with sufficient capacity or capabilities may not be available, may cost substantially more or may take a significant amount of time to start production. Each of these scenarios could negatively affect our business, results of operations, financial condition or prospects. If one of our key manufacturing facilities is unable to produce our products for an extended period of time, our sales may be reduced by the shortfall caused by the disruption and we may not be able to meet our customers’ needs, which could cause them to seek out other suppliers. Furthermore, to the extent a production disruption occurs at a manufacturing facility that has been operating at or near full capacity, the resulting shortage of our product could be particularly harmful because production at the manufacturing facility may not be able to reach levels achieved prior to the disruption. Although we maintain property, environmental impairment and comprehensive general liability insurance, among others, of the types and in the amounts that we believe are customary for the industry, we do not currently maintain business interruption insurance and furthermore may not be fully insured against all potential causes of disruption due to limitations and exclusions in our policies. While the hazards associated with chemical manufacturing have not resulted in incidents that have significantly disrupted our operations or exposed us to significant losses or liabilities to date, we cannot assure you that we will not suffer such losses in the future.

We are dependent on the continued service and recruitment of key executives, the loss of any of whom could adversely affect our business. Our ability to maintain our competitive position and to implement our business strategy is dependent to a large degree on our senior management team. The loss or diminution in the services of members of our senior management team, or the inability to attract and retain additional senior management personnel could have a material adverse effect on our business, results of operations, financial condition or prospects. Competition for personnel with relevant expertise is intense due to the relatively small pool of qualified individuals, and this affects our ability to retain existing senior management and attract additional qualified senior management personnel. If any of our key senior managers leave, we may have difficulty replacing them, and additional costs and expenses may be incurred in securing their replacement. We do not maintain key person life insurance on any of our executive officers and do not intend to purchase any in the near future. We also rely on our ability to recruit, retain and train skilled managerial, sales, marketing, administration, operating, research and development and other personnel. The nature of our business and operations and our research and development activities require the employment of personnel who are skilled and qualified in chemistry and other scientific and technical fields. Qualified and skilled technical personnel, including chemists, remain in high demand, and the competition among potential employers is intense. If these qualified and skilled employees leave or if we are unable to attract, retain, train and motivate additional qualified and skilled employees, this could have a material adverse effect on our business, results of operations, financial condition or prospects.

We may be unable to implement our business strategies. Our future financial performance and success largely depend on our ability to implement our business strategies successfully. We cannot assure you that we will successfully implement the business strategies described in this Offering Memorandum or those to be developed by our management or that implementing these strategies will sustain or improve and not harm our results of operations in targeted sectors. Our business strategies are based on assumptions about future demand for our current products and the new products and applications we are developing, as well as on our continuing ability to produce our products profitably. Our ability to implement our business strategies depends on, among other things, our ability to divest businesses or discontinue product lines on favorable terms and with minimal disruptions, finance our operations and product development activities, maintain high quality and efficient manufacturing operations, respond to competitive and regulatory changes, access quality raw materials in a cost-effective and timely manner, and retain and attract highly-skilled technical, managerial, marketing and finance personnel.

29 We may be unable to implement our business strategies, including the expansion into new markets such as South America and North America. Preparations for the expansion of our product portfolio may not be economically viable or the introduction of our innovative products may be difficult to achieve. In addition, the costs involved in implementing our strategies may be significantly greater that we currently anticipate and the costs involved in our own research may not be fully recovered. Any failure to develop, revise or implement our business strategies in a timely and effective manner could have a material adverse effect on our business, results of operations, financial condition, prospects and cash flows.

The success of our business is inextricably linked to our ability to maintain and protect our intellectual property. We rely on a combination of patents, trade secrets, copyrights and trademarks to establish and protect our intellectual property rights in our products and processes for the development, manufacture and marketing of our products. We use non-patented know-how, trade secrets, processes and other proprietary information and employ various methods to protect this proprietary information. These methods include confidentiality agreements, invention assignment agreements, and agreements with employees, independent sales agents, distributors, consultants, universities and research units with whom we have partnerships. However, these agreements may be breached. Governmental agencies or other national and state regulatory bodies may require the disclosure of such information in order for us to obtain the right to market a product. An agency or regulator may also disclose such information on its own initiative if it decides that such information is not confidential business or trade secret information. Trade secrets, know-how and other unpatented proprietary technology may also otherwise become known to, or independently developed by, our competitors. In addition, we hold patents related to a number of our components and products and have patent applications pending with respect to other components and products. We also apply for additional patents in the ordinary course of our business, as we deem appropriate. However, these precautions offer only limited protection, and would not, for example, protect against our proprietary information becoming known to, or being independently developed by, competitors. We cannot assure you that our existing or future patents, if any, will afford us adequate protection or any competitive advantage, that any future patent applications will result in issued patents or that our patents will not be circumvented, invalidated or declared unenforceable. Furthermore, our proprietary rights in intellectual property may be challenged, which could have a material adverse effect on our business, results of operations, financial condition or prospects. In some cases, intellectual property litigation may be used to gain a competitive advantage. We have in the past and may in the future become a party to lawsuits involving patents or other intellectual property. If a third- party brings a legal action against us, we may incur substantial costs in defending ourselves, and we cannot assure you that such an action would be resolved in our favor. If such a dispute were to be resolved against us, we may be subject to significant damages, and the testing, manufacture or sale of one or more of our technologies or products may be enjoined. Any proceedings before a national patent or trademark governmental authority or in a national or state court could result in adverse decisions as to the priority of our inventions and the narrowing or invalidation of claims in issued and pending patents. We could also incur substantial costs in any such proceedings. In addition, the laws of some of the countries in which our products are or may be sold may not protect our products and intellectual property to the same extent as in Europe, if at all. We may also be unable to protect our rights in trade secrets, trademarks and unpatented proprietary technology in certain countries.

Our products may infringe the intellectual property rights of others, which may cause us to incur unexpected costs or prevent us from selling our products. We continually seek to improve our business processes and develop new products and applications. Many of our competitors have a substantial amount of intellectual property that we must continually monitor to avoid infringement. Although it is our policy and intention not to infringe valid patents, whether present or future and other intellectual property rights belonging to others, we cannot assure you that our processes and products do not and will not infringe issued patents. If patents belonging to others already exist that cover our products, processes, or technologies, or are subsequently issued, it is possible that we could be liable for infringement of such patents and we could be required to take remedial or curative actions to continue our manufacturing and sales activities with respect to products that are found to be infringing. Intellectual property litigation is often expensive and time-consuming, regardless of the merits of any claim, and our involvement in such litigation could divert our management’s attention away from operating

30 our business. If we were to discover that any of our processes, technologies or products infringe the valid intellectual property rights of others, we might seek to obtain licenses from the owners of such rights or substantially re-engineer our products in order to avoid infringement. We may not be able to obtain the necessary licenses on acceptable terms, or at all, or be able to re-engineer our products in a manner that is successful in avoiding infringement. Moreover, if we are sued for infringement and lose, we could be required to pay substantial damages or be prohibited from using and selling the infringing products or technology. Any of the foregoing could cause us to incur significant costs and prevent us from selling our products.

Failure to maintain an effective system of internal controls could adversely impact our ability to both timely and accurately report our financial results. We have established and maintain internal controls necessary to provide reliable financial results and to assist in the effective prevention of fraud. We have not identified any material weaknesses as at June 30, 2014. We continue to evaluate and enhance our internal controls over financial reporting, however, we cannot assure you that any measures we have taken to date, or any measures we may take in the future, will be sufficient to avoid potential control deficiencies which could materially adversely affect our ability to comply with applicable financial reporting requirements.

A deterioration in our relationships with our employees or trade unions or a failure to extend, renew or renegotiate on favorable terms our collective bargaining agreements could have an adverse impact on our business. As at June 30, 2014, we had 2,122 full-time equivalent employees. Maintaining good relationships with our employees, unions and other employee representatives is crucial to our operations. As a result, any deterioration in our relationships with our employees, unions and other employee representatives could have an adverse effect on our business, results of operations, financial condition or prospects. Some of our employees are covered by national collective bargaining agreements. These agreements typically complement applicable statutory provisions in respect of, among other things, the general working conditions of our employees such as maximum working hours, holidays, termination, retirement, welfare and incentives. National collective bargaining agreements and company-specific agreements also contain provisions that could affect our ability to restructure our operations and facilities or terminate employees. We may not be able to extend existing company-specific agreements, renew them on their current terms or, upon the expiration of such agreements, negotiate such agreements in a favorable and timely manner or without work stoppages, strikes or similar industrial actions. We may also become subject to additional company-specific agreements or amendments to the existing national collective bargaining agreements. Such additional company-specific agreements or amendments may increase our operating costs and have an adverse effect on our business, results of operations, financial condition or prospects.

Legal proceedings filed by or against us and adverse outcomes may harm our business. We cannot predict with certainty the cost of prosecution, the cost of defense or the ultimate outcome of litigation and other proceedings filed by or against us, including remedies and damage awards. We have been, and in the future may be, involved in litigation and other proceedings relating to intellectual property, commercial arrangements, environmental, health and safety, labor and employment or other harms, including claims resulting from the actions of individuals or entities outside of our control. In the case of intellectual property litigation and proceedings, adverse outcomes could include the cancellation, invalidation or other loss of material intellectual property rights used in our business and injunctions prohibiting our use of business processes or technology that are subject to third party patents or other third party intellectual property rights. Litigation based on environmental contamination or exposure to hazardous substances in the workplace or from our products could result in material liability for us. Adverse outcomes in any litigation or other proceeding could have a material adverse effect on our business, results of operations, financial condition or prospects.

Our business involves risk of exposure to product liability claims. Even though we are generally a materials supplier rather than a manufacturer of finished goods, the development, manufacture and sales of specialty emulsion polymers and other materials by us involve inherent risks of exposure to product liability claims, product recalls and related adverse publicity. While we attempt to protect ourselves from such claims and exposures in our adherence to standards and specifications and contractual negotiations, we cannot assure you that our efforts in this regard will

31 ultimately protect us from any such claims. For instance, a customer may attempt to seek contribution from us due to a product liability claim brought against them by a consumer, or a consumer may bring a product liability claim directly against us. A product liability claim or judgment against us could result in substantial and unexpected expenditures, affect consumer or customer confidence in our products, and divert management’s attention from other responsibilities. A successful product liability claim or series of claims against us in excess of our insurance coverage payments, for which we are not otherwise indemnified, could have a material adverse effect on our business, results of operations, financial condition or prospects.

The insurance that we maintain may not fully cover all potential exposures. We maintain insurance typical of similarly situated companies in our industry but such insurance may not cover all risks associated with the operation of our business or our manufacturing process and the related use, storage and transportation of raw materials, products and wastes in or from our manufacturing sites or our distribution centers. While we have purchased what we deem to be adequate limits of coverage and broadly worded policies, our coverage is subject to limitations, including higher self-insured retentions or deductibles and maximum limits and liabilities covered. Notwithstanding diligent efforts to successfully procure specialty coverage for environmental liability and remediation, we may incur losses beyond the limits or outside the terms of coverage of our insurance policies, including liabilities for environmental remediation. In addition, from time to time, various types of insurance for companies in the specialty chemicals industry have not been available on commercially acceptable terms or, in some cases, at all. We are potentially at additional risk if one or more of our insurance carriers fail. Additionally, severe disruptions in the domestic and global financial markets could adversely impact the ratings and survival of some insurers. Future downgrades in the ratings of enough insurers could adversely impact both the availability of appropriate insurance coverage and its cost. In the future, we may not be able to obtain coverage at current levels, if at all, and our premiums may increase significantly on coverage that we maintain.

We may be subject to information technology systems failures, network disruptions and breaches of data security. Information technology systems failures, including risks associated with upgrading our systems, network disruptions and breaches of data security could disrupt our operations by impeding our operational efficiencies, delaying processing of transactions and inhibiting our ability to protect customer or internal information. Our computer systems, including our back-up systems, could be damaged or interrupted by power outages, computer and telecommunications failures, computer viruses, internal or external security breaches, events such as fires, earthquakes, floods, and/or errors by our employees. Although we have taken steps to address these concerns by implementing sophisticated network security, back-up systems and internal control measures, we cannot assure you that a system failure or data security breach will not have a material adverse effect on our business, results of operations, financial condition or prospects.

Risks Related to our Financial Profile Our substantial leverage and debt service obligations could adversely affect our business and prevent us from fulfilling each of our obligations with respect to the Notes and the Guarantees. Following the issuance of the Notes we will be highly leveraged. As at June 30, 2014, after giving effect to the Transactions, our total borrowings would have been approximately PLN 1,495.3 million, and we would have had PLN 624.1 million available for drawing under our Senior Credit Facilities. In addition, we will be permitted to incur additional indebtedness, subject to certain limitations under the Indenture. The degree to which we will be leveraged following the Transactions could have important consequences to holders of the Notes, including, but not limited, to: • making it difficult for us to satisfy our obligations with respect to the Notes or other indebtedness; • increasing our vulnerability to, and reducing our flexibility to respond to, general adverse economic and industry conditions; • requiring the dedication of a substantial portion of our cash flow from operations to the payment of principal of, and interest on, indebtedness, thereby reducing the availability of such cash flow to fund working capital, capital expenditures, acquisitions, joint ventures, product research and development, subscriber acquisition costs or other general corporate purposes;

32 • limiting our flexibility in planning for, or reacting to, changes in our business and the competitive environment and the industry in which we operate; • placing us at a competitive disadvantage as compared to our competitors, to the extent that they are not as highly leveraged; and • limiting our ability to borrow additional funds and increasing the cost of any such borrowing. The occurrence of any of these events could have a material adverse effect on our business, results of operations, financial condition, prospects and ability to satisfy our obligations under the Notes or the Guarantees. Moreover, we may incur substantial additional indebtedness in the future, including indebtedness in connection with any future acquisition. Although the Indenture will contain restrictions governing the incurrence of additional indebtedness, the restrictions are subject to a number of significant qualifications and exceptions and, under certain circumstances, the amount of indebtedness that could be incurred in compliance with these restrictions could be substantial. If we or our subsidiaries incur new debt or other obligations, the related risks that we now face, as described above and elsewhere in these ‘‘Risk Factors,’’ could intensify. For further information regarding our substantial leverage and for more information about our outstanding indebtedness, see also ‘‘Description of the Notes’’ and ‘‘Description of Existing Indebtedness.’’

We are subject to restrictive debt covenants that may limit our ability to finance our future operations and capital needs and to pursue business opportunities and activities. The Indenture will contain covenants, which will restrict, among other things, our ability to: • incur or guarantee additional indebtedness and issue certain preferred stock; • create or incur certain liens; • make certain payments, including dividends or other distributions and certain other payments; • prepay or redeem subordinated debt or equity; • make certain investments; • undertake certain activities by the Issuer; • create encumbrances or restrictions on the payment of dividends or other distributions, loans or advances to and on the transfer of assets to the Parent Guarantor or any of its restricted subsidiaries; • sell, lease or transfer certain assets, including stock of restricted subsidiaries; • engage in certain transactions with affiliates; and • consolidate or merge with other entities. All of these limitations will be subject to significant exceptions and qualifications. See ‘‘Description of the Notes—Certain Covenants.’’ The covenants to which we are subject could limit our ability to finance our future operations and capital needs and our ability to pursue business opportunities and activities that may be in our interest. The restrictions contained in the Indenture could affect our ability to operate our business and may limit our ability to react to market conditions or take advantage of potential business opportunities as they arise.

We are exposed to risks associated with cross default provisions contained in our credit agreements. Our Senior Credit Facilities contain cross-default provisions providing that a default under one of our other credit or other financial agreements, whether or not that facility would otherwise be breached. Since most of these cross-default provisions do not provide for any materiality threshold, there is a risk that even a minor breach of any of our credit or other financial agreements could result in a default under all of our Senior Credit Facilities, which contain such cross default provisions. Furthermore, certain of our Senior Credit Facilities require us, among other things, to maintain certain financial ratios, which impose certain operational and financial restrictions on us. Any breach of these financial ratios or other restrictive covenants could lead to an event of default under the applicable credit facility and thereby any credit facility containing cross-default provisions, and, if such breaches were continuing, our lenders could require the immediate repayment of such credit facilities, including all accrued interest and, in certain cases, a pre-payment premium. If there were a necessity to resolve

33 breaches under our Senior Credit Facilities, we would have to separately negotiate on a bilateral basis an acceptable resolution with each of our banks, each of whom may have differing interests. A default under one of our agreements may lead to one or more of our facilities requiring mandatory prepayment which could have a material adverse effect on our business, results of operations, financial condition or prospects.

We may incur additional indebtedness, including at the level of our subsidiaries, which could increase our risk exposure from debt and could decrease your share in any proceeds. Subject to restrictions in the Indenture, we and our subsidiaries may incur additional indebtedness, including debt that will effectively rank senior in right of payment to the Notes by virtue of being secured by certain of our assets. Any indebtedness that we incur in the future at a non-Guarantor subsidiary level would be structurally senior to the Notes. Additionally, we could raise additional debt that could mature prior to the Notes. Although the Indenture will contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of significant qualifications and exceptions, and under certain circumstances, the amount of indebtedness that could be incurred in compliance with those restrictions could be substantial. If new debt is added to our and our subsidiaries’ existing debt levels, the related risks that we now face would increase. In addition, the Indenture will not prevent us from incurring obligations that do not constitute indebtedness under those agreements.

We will require a significant amount of cash to service our debt and sustain our operations. Our ability to generate sufficient cash depends on many factors beyond our control, and we may be forced to take other actions to satisfy our debt obligations, which may not always be successful. Our ability to make payments on and to refinance our debt, and to fund working capital and capital expenditures, will depend on our future operating performance and ability to generate sufficient cash. This depends, to some extent, on the success of our business strategy and on general economic, financial, competitive, market, legislative, regulatory and other factors, as well as the other factors discussed in these ‘‘Risk Factors,’’ many of which are beyond our control. We cannot assure you that our business will generate sufficient cash flow from operations or that future debt and equity financing will be available to us in an amount sufficient to enable us to pay our debts when due, including the Notes, or to fund our other liquidity needs. If our future cash flow from operations and other capital resources are insufficient to pay our obligations as they mature or to fund our liquidity needs, we may be forced to: • reduce or delay our business activities and capital expenditures; • sell assets; • obtain additional debt or equity capital; or • restructure or refinance all or a portion of our debt, including the Notes, on or before maturity. We cannot assure you that we would be able to accomplish any of these alternatives on a timely basis or on commercially reasonable terms, if at all. In particular, our ability to restructure or refinance our debt will depend in part on our financial condition at such time. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business, results of operations, financial condition or prospects. Furthermore, we may be unable to find alternative financing, and even if we could obtain alternative financing it might not be on terms that are favorable or acceptable to us. If we are unable to satisfy our obligations through alternative financing, we may not be able to satisfy our debt obligations, including under the Notes. In that event, borrowings under other debt agreements or instruments that contain cross acceleration or cross default provisions, including the Notes, may become payable on demand, and we may not have sufficient funds to repay all our debts, including the Notes. Any failure to make payments on the Notes on a timely basis would likely result in a reduction of our credit rating, which could also harm our ability to incur additional indebtedness. In addition, the terms of our debt, including the Notes and any future debt may limit our ability to pursue any of these alternatives. In the absence of such operating results and resources, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations. The terms of our debt, including under the Indenture, restrict our ability to transfer or sell assets. In addition, there can be no assurance that any assets which we could be required to dispose of can be sold or that, if

34 sold, the timing of such sale and the amount of proceeds realized from such sale will be acceptable. If we are unsuccessful in any of these efforts, we may not have sufficient cash to meet our obligations.

We are exposed to interest rate risk which may affect our financial results. We finance our activity mainly through interest-bearing debt. The margin on our Senior Credit Facilities is calculated based on a fixed spread to a floating interest rate, and therefore, the corresponding expenditure borne by us is dependent on such reference rate and margin. Therefore, we are exposed to the risk of a change in financial costs due to changing interest on existing debt. This may result in increased financial costs and consequently lead to a deterioration of our financial results. While we may utilize swap contracts to hedge against exposure to changes in interest rates by swapping a floating interest rate for a fixed interest rate, we cannot be certain that these will be sufficient. See ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations—Interest Rate Risk.’’

Risks Related to the Notes The ability of the Issuer to make payments under the Notes is dependent on the ability of the Parent Guarantor to make payments to the Issuer under the Proceeds Bond, which in turn depends, to a certain extent, on the ability of its subsidiaries to make distributions to the Parent Guarantor. The Issuer is a wholly-owned special purpose finance subsidiary of the Parent Guarantor with no business operations, significant cash generating assets or other sources of revenue other than its entitlement to payments of principal and interest by the Parent Guarantor under the Proceeds Bond for which the Issuer subscribes with the proceeds of the Offering on or about the Issue Date. While the terms of interest and principal payment under the Proceeds Bond will closely mirror the payment terms of the Notes, the Issuer’s ability to make payments under the Notes is wholly dependent on the Parent Guarantor’s timely payment of interest and principal under the Proceeds Bond and therefore its ability to generate sufficient cash. A substantial portion of our revenues are generated by subsidiaries of the Parent Guarantor. The payment of dividends and the making of loans and advances by its subsidiaries to the Parent Guarantor, may be subject to various restrictions under the laws of the relevant jurisdictions in which such subsidiaries are organized or located, including financial assistance rules, corporate benefit laws and other legal restrictions or otherwise under contractual arrangements to which any such subsidiary is subject, or may become subject to in the future. Any of the restrictions above could make it more difficult for the Parent Guarantor to service its obligations under the Proceeds Bond. Delays on the Parent Guarantor’s payments to the Issuer, or its inability to make such payments at all, would therefore also result in failure of the Issuer to partially or fully meet its payment obligations under the Notes, and holders of the Notes may have limited recourse against the Parent Guarantor. Furthermore, the Indenture will prohibit the Issuer from engaging in activities other than certain limited activities permitted under the heading ‘‘Description of the Notes—Certain Covenants—Limitation on Issuer Activities.’’ If the Issuer is not able to make payments on the Notes, holders of the Notes would have to rely on claims for payment under the Guarantees, which are subject to the risks and limitations described herein. We cannot assure you that arrangements with our subsidiaries will provide the Issuer with sufficient dividends, distributions or loans to service scheduled payments of interest, principal or other amounts due under the Notes. Any of the situations described above could adversely affect the ability of the Issuer to service its obligations in respect of the Notes.

The Notes are effectively subordinated to our secured debt. The Notes will be effectively subordinated in right of payment to any of our present and future secured indebtedness to the extent of the value of the assets securing such indebtedness, including indebtedness under the Senior Credit Facilities. In the event of our bankruptcy, liquidation, reorganization or other winding up, our assets that secure debt ranking senior or equal in right of payment to the Notes will be available to pay obligations on the Notes only after the secured debt has been repaid in full from these assets. There may not be sufficient assets remaining to pay amounts due on any or all of the Notes then outstanding. The Indenture governing the Notes will not prohibit us from incurring additional secured debt, nor will it prohibit any of our subsidiaries from incurring additional liabilities.

35 There are circumstances other than repayment or discharge of the Notes under which the Guarantees will be released automatically without your consent or the consent of the Trustee. In addition, under various circumstances, any guarantee of the Notes (including the Guarantees) will be fully and unconditionally released, including but not limited to: • in connection with any sale or other disposition of all or substantially all of the assets of a restricted subsidiary that is a guarantor (including by way of merger, consolidation, amalgamation or combination) to a person that is not (either before or after giving effect to such transaction) the Issuer or a restricted subsidiary, if the sale or other disposition does not violate the ‘‘Asset Sale’’ provisions of the Indenture; • in connection with any sale or other disposition of capital stock of a restricted subsidiary that is a guarantor to a person that is not (either before or after giving effect to such transaction) the Issuer or a restricted subsidiary, if the sale or other disposition does not violate the ‘‘Asset Sale’’ provisions of the Indenture and the Guarantor ceases to be a restricted subsidiary as a result of the sale or other disposition; • if the Issuer designates any restricted subsidiary that is a guarantor to be an unrestricted subsidiary in accordance with the applicable provisions of the Indenture; • in connection with certain enforcement actions taken by the creditors under certain of our secured Indebtedness; • upon legal defeasance, covenant defeasance or satisfaction and discharge of the Indenture as provided under ‘‘Description of the Notes—Legal Defeasance and Covenant Defeasance’’ and ‘‘Description of the Notes—Satisfaction and Discharge;’’ • upon the full and final payment of the Notes and performance of all Obligations of the Issuer and the Guarantor under the Indenture and the Notes; or • as described under ‘‘Description of the Notes—Amendment, Supplement and Waiver.’’ See ‘‘Description of Existing Indebtedness’’ and ‘‘Description of the Notes.’’

We may not have the ability to raise the funds necessary to finance an offer to repurchase Notes upon the occurrence of a change of control and rating decline as required by the Indenture. Upon the occurrence of Change of Control Triggering Event we will be required to offer to repurchase all outstanding Notes at a purchase price in cash equal to 101% of the principal amount thereof on the date of purchase, plus accrued and unpaid interest, if any, to the date of purchase. If a Change of Control Triggering Event were to occur, we cannot assure you that we would have sufficient funds available at such time to pay the purchase price of the outstanding Notes or our other then-existing contractual obligations would allow us to make such required repurchases. A Change of Control Triggering Event may result in an event of default and/or mandatory prepayment obligation under, or acceleration of, the Notes and other indebtedness. The repurchase of the Notes pursuant to such an offer could cause a default under our other indebtedness, even if the Change of Control Triggering Event itself does not. Our ability to receive cash from our subsidiaries to allow the Issuer to pay cash to the holders of the Notes following the occurrence of a change of control may be limited by our then-existing financial resources. Sufficient funds may not be available when necessary to make any required repurchases. In addition, we expect that we would require third-party financing to make an offer to repurchase the Notes upon a Change of Control Triggering Event. We cannot assure you that we would be able to obtain such financing. Any failure by us to offer to purchase the Notes would constitute a default under the Indenture which would, in turn, constitute a default under certain other indebtedness. See ‘‘Description of the Notes—Repurchase at the Option of Holders—Change of Control and Rating Decline.’’ The change of control provisions contained in the Indenture may not necessarily afford you protection in the event of certain important corporate events, including a reorganization, restructuring or other similar transactions involving us that may adversely affect you, because such corporate events may not involve a shift in voting power or beneficial ownership or, even if they do, may not constitute a ‘‘change of control’’ as defined in the Indenture. Except as described under ‘‘Description of the Notes—Repurchase at the Option of Holders—Change of Control and Rating Decline,’’ the Indenture will not contain provisions that would require us to offer to repurchase or redeem the Notes in the event of a reorganization, restructuring, recapitalization or similar transaction.

36 The definition of ‘‘change of control’’ in the Indenture will include a disposition of all or substantially all of the assets of the Parent Guarantor and its restricted subsidiaries, taken as a whole, to any person. Although there is a limited body of case law interpreting the phrase ‘‘all or substantially all,’’ there is no precise established definition of the phrase under applicable law. Accordingly, in certain circumstances, there may be a degree of uncertainty as to whether a particular transaction would involve a disposition of ‘‘all or substantially all’’ of the Parent Guarantor’s assets and its restricted subsidiaries taken as a whole. As a result, it may be unclear as to whether a change of control has occurred and whether the Issuer is required to make an offer to repurchase the Notes.

The Guarantees will be subject to certain limitations on enforcement and may be limited by applicable laws or subject to certain defenses that may limit its validity and enforceability. As at the Issue Date, the Guarantors will guarantee the payment of the Notes on a senior basis. The Guarantees will provide the relevant holders of the Notes with a direct claim against the relevant Guarantor. However, the Indenture will provide that enforcement of the Guarantees will be subject to certain generally available defenses. These laws and defenses include those that relate to corporate benefit, fraudulent conveyance or transfer, voidable preference, financial assistance, corporate purpose, capital maintenance or similar laws, regulations or defenses affecting the rights of creditors generally. If one or more of these laws and defenses are applicable, a Guarantor may have no liability or decreased liability under its Guarantee depending on the amounts of its other obligations and applicable law. Limitations on the enforceability of judgments obtained in New York courts in such jurisdictions could limit the enforceability of any Guarantees against any Guarantor. Although laws differ among various jurisdictions, in general, under fraudulent conveyance and other laws, a court could (i) subordinate, make ineffective or void all or a portion of a Guarantor’s obligations under the relevant Guarantee, (ii) if payment had already been made under the relevant Guarantee, require that the recipient return the payment to the relevant Guarantor or (iii) take other action that is detrimental to you, typically if the court found that: • the relevant Guarantee was incurred with actual intent to hinder, delay or defraud creditors or shareholders of the Guarantor or, in certain jurisdictions, even when the recipient was simply aware that the Guarantor was insolvent when it granted the relevant Guarantee. See also ‘‘Limitations on Validity and Enforceability of the Guarantees;’’ • the Guarantor did not receive fair consideration or reasonably equivalent value for the relevant Guarantee and the Guarantor was: (i) insolvent or rendered insolvent because of the relevant Guarantee; (ii) undercapitalized or became undercapitalized because of the relevant Guarantee; or (iii) intended to incur, or believed that it would incur, indebtedness beyond its ability to pay at maturity; • the granting of the relevant Guarantee was held to exceed the corporate objects of the Guarantor or not to be in the best interests or for the corporate benefit of the Guarantor; or • the aggregate amounts paid or payable under the relevant Guarantee or enforcement proceeds was in excess of the maximum amount permitted under applicable law. In addition, Czech private law was recodified as of January 1, 2014. The previous Civil Code (Act No. 40/1964 Coll., as amended), the Commercial Code (Act No. 513/1991 Coll., as amended), the Private International Law and Procedure Act (Act No. 97/1963 Coll.) and other laws and regulations were repealed or amended by a new Civil Code (Czech Act No. 89/2012 Coll., the ‘‘Czech Civil Code’’), Act on Corporations (Czech Act No. 90/2012 Coll., the ‘‘Czech Act on Corporations’’) and Act on Private International Law (Czech Act No. 91/2012 Coll., the ‘‘Czech Act on PIL’’) and other related laws and regulations. The new legislation introduces new legal concepts and phraseology and it is currently uncertain how this new legislation will be applied and interpreted by the Czech courts. The liability of each Guarantor under its Guarantee will be limited to the amount that will result in such Guarantee not constituting a preference, fraudulent conveyance or improper corporate distribution or otherwise being set aside. However, there can be no assurance as to what standard a court will apply in making a determination of the maximum liability of each Guarantor. There is a possibility that the entire Guarantee may be set aside, in which case the entire liability may be extinguished. If a court decided that the issuance of the Notes or a Guarantee was a preference, fraudulent transfer or conveyance and voided such Guarantee, or held it unenforceable for any other reason, you may cease to have any claim in respect of the relevant guarantor and would be a creditor solely of the Issuer, or the

37 guarantor and, if applicable, of any other guarantor under the relevant Guarantee that has not been declared void. In the event that any Guarantee is invalid or unenforceable, in whole or in part, or to the extent the agreed limitation of the Guarantee obligations apply, the Notes would be effectively subordinated to all liabilities of the Guarantor, and if we cannot satisfy our obligations under the Notes or any Guarantees are found to be a preference, fraudulent transfer or conveyance or is otherwise set aside, we cannot assure you that we can ever repay in full any amounts outstanding under the Notes.

Polish, Czech and Swedish insolvency laws and the insolvency laws of other jurisdictions may not be as favorable to you as the U.S. bankruptcy laws or the bankruptcy laws of other EU states and may preclude holders of the Notes from recovering payments due on the Notes. The Issuer is incorporated under the laws of Sweden and the Guarantors are organized under the laws of Poland and the Czech Republic. Consequently, in the event of the insolvency of either the Issuer or any one of the Guarantors, insolvency proceedings would be likely to proceed under, and be governed by Swedish, Czech or Polish insolvency law. The insolvency laws of Sweden, the Czech Republic or Poland may not be as favorable to your interests as creditors as the laws of the United States or other jurisdictions with which you may be familiar, in particular with respect to priority of creditors, ability to obtain post-petition interest and the duration of the insolvency proceedings. The application of these laws could adversely affect your ability to enforce your rights under the Guarantee or the Collateral in these jurisdictions and limit any amounts that you may receive. See also ‘‘Limitations on Validity and Enforceability of the Guarantees’’ for additional information on the insolvency laws of the European Union, Sweden, the Czech Republic and Poland.

You may be unable to recover in civil proceedings for U.S. securities laws violations. The Issuer and the Guarantors are organized outside the United States and our business is conducted entirely outside the United States. Our directors, officers and other executives are neither residents nor citizens of the United States. Furthermore, a substantial portion of our assets are located outside the United States. As a result, it may not be possible for investors to effect service of process within the United States upon such persons or us or to enforce against them or us judgments of U.S. courts predicated upon the civil liability provisions of U.S. federal or state securities laws despite the fact that, pursuant to the terms of the Indenture, we and the Guarantors have appointed, or will appoint, an agent for the service of process in New York. In addition, there is doubt as to the enforceability in Sweden and the home jurisdictions of the Guarantors of civil liabilities predicated upon the federal securities laws of the United States, either in original actions or in actions for enforcement of judgments of U.S. courts. See ‘‘Enforcement of Civil Liabilities.’’

Credit ratings may not reflect all risks, are not recommendations to buy or hold securities and may be subject to revision, suspension or withdrawal at any time. One or more independent credit rating agencies may assign credit ratings to the Notes. The ratings may not reflect the potential impact of all risks related to the structure, market, additional risk factors discussed herein and other factors that may affect the value of the Notes. A credit rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal by the rating agency at any time. No assurance can be given that a credit rating will remain constant for any given period of time or that a credit rating will not be lowered or withdrawn entirely by the credit rating agency if, in its judgment, circumstances in the future so warrant. A suspension, reduction or withdrawal at any time of the credit rating assigned to the Notes by one or more of the credit rating agencies may adversely affect the cost and terms and conditions of our financings and could adversely affect the value and trading of the Notes.

Certain covenants may be suspended upon the occurrence of a change in the Group’s ratings. The Indenture will provide that, if at any time following the date of the Indenture, the Notes receive a rating of ‘‘Baa3’’ or better by Moody’s and a rating of ‘‘BBB’’ or better by S&P and no default or event of default has occurred and is continuing, then beginning that day and continuing until such time, if any, at which such Notes cease to have such ratings, certain covenants will cease to be applicable to such Notes. See ‘‘Description of the Notes—Certain Covenants—Suspension of Certain Covenants When Notes Rated Investment Grade.’’ If these covenants were to cease to be applicable, the Group would be able to incur additional debt or make payments, including dividends or investments, which may conflict with the

38 interests of holders of the Notes. There can be no assurance that the Notes will ever achieve an investment grade rating or that any such rating will be maintained.

There may not be an active trading market for the Notes, in which case your ability to sell the Notes may be limited. We cannot assure you as to: • the liquidity of any market in the Notes; • your ability to sell your Notes; or • the prices at which you would be able to sell your Notes. Future trading prices for the Notes will depend on many factors, including, among other things, prevailing interest rates, our operating results and the market for similar securities. Historically, the market for non-investment grade securities has been subject to disruptions that have caused substantial volatility in the prices of securities similar to the Notes. The liquidity of a trading market for the Notes may be adversely affected by a general decline in the market for similar securities and is subject to disruptions that may cause volatility in prices. The trading market for the Notes may attract different investors and this may affect the extent to which the Notes may trade. It is possible that the market for the Notes will be subject to disruptions. Any such disruption may have a negative effect on you, as a holder of the Notes, regardless of our prospects and financial performance. As a result, there is no assurance that there will be an active trading market for the Notes. If no active trading market develops, you may not be able to resell your holding of the Notes at a fair value, if at all. Although an application has been made to the Irish Stock Exchange for the Notes to be admitted to the Official List and to trading on the Global Exchange Market, we cannot assure you that the Notes will become or remain listed. Although no assurance is made as to the liquidity the Notes as a result of the admission to trading on the Global Exchange Market, failure to be approved for listing or the delisting of the Notes, as applicable, from the Official List of the Irish Stock Exchange may have a material effect on a holder’s ability to resell the Notes in the secondary market. In addition, subject to certain limitations, the Indenture will allow us to issue additional notes in the future which could adversely impact the liquidity of the Notes.

The transfer of the Notes is restricted, which may adversely affect their liquidity and the price at which they may be sold. The Notes and the Guarantees have not been, and will not be, registered under the U.S. Securities Act or the securities laws of any state or any other jurisdiction and, unless so registered, may not be offered or sold except pursuant to an exemption from, or a transaction not subject to, the registration requirements of the U.S. Securities Act and any other applicable securities laws of any state or any other jurisdiction. The Notes are not being offered for sale in the United States except to ‘‘qualified institutional buyers’’ in accordance with Rule 144A. See ‘‘Notice to Investors.’’ We have not agreed to or otherwise undertaken to register the Notes or the Guarantee with the U.S. Securities and Exchange Commission (including by way of exchange offer). It is the obligation of holders of Notes to ensure that their offers and sales of the Notes within the United States and other countries comply with applicable securities laws.

Provisions of the EU Savings Directive and other legislation may adversely affect your investment in the Notes. Under EC Council Directive 2003/48/EC on the taxation of savings income (the ‘‘Savings Directive’’), each Member State is required to provide to the tax authorities of another Member State details of payments of interest or other similar income paid by a person within its jurisdiction to, or collected by such a person for, an individual resident or certain limited types of entities established in that other Member State; however, for a transitional period, Austria and Luxembourg may instead apply a withholding system in relation to such payments, deducting tax at 35%. The transitional period is to terminate at the end of the first full fiscal year following agreement by certain non-EU countries to the exchange of information relating to such payments. The Luxembourg Ministry of Finance announced on April 10, 2013 that the transitional withholding system in Luxembourg would be replaced by automatic exchange of information from January 1, 2015. A number of non-EU countries, and certain dependent or associated territories of certain Member States, have adopted similar measures (either provision of information or transitional withholding) in relation to payments made by a person within its jurisdiction to, or collected by such a person for, an individual

39 resident or certain limited types of entity established in a Member State. In addition, the Member States have entered into provision of information or transitional withholding arrangements with certain of those dependent or associated territories in relation to payments made by a person in a Member State to, or collected by such a person for, an individual resident or certain limited types of entity established in one of those territories. The Council of the European Union formally adopted a Council Directive amending the Directive on March 24, 2014 (the ‘‘Amending Directive’’). The Amending Directive broadens the scope of the requirements described above. Member States have until January 1, 2016 to adopt the national legislation necessary to comply with the Amending Directive. Investors who are in any doubt as to their position should consult their professional advisers. If a payment to an individual were to be made or collected through an EU Member State which has opted for a withholding system and an amount of, or in respect of, tax were to be withheld from that payment pursuant to the Savings Directive or any other directive implementing the conclusions of the ECOFIN Council meeting of November 26-27, 2000 on the taxation of savings income or any law implementing or complying with or introduced in order to conform to such directive, neither the Issuer nor any paying agent nor any other person would be obligated to pay additional amounts with respect to any Note as a result of the imposition of such withholding tax. The Issuer will use reasonable endeavors to maintain a paying agent with a specified office in an EU Member State that is not obligated to withhold or deduct tax pursuant to any law implementing the Savings Directive or any other directive implementing the conclusions of the ECOFIN Council meeting of November 26-27, 2000.

The Notes will initially be held in book-entry form, and therefore you must rely on the procedures of the relevant clearing systems to exercise any rights and remedies. Unless and until Notes in definitive registered form, or definitive registered Notes are issued in exchange for book-entry interests (which may occur only in very limited circumstances), owners of book-entry interests will not be considered owners or holders of Notes. The common depositary (or its nominee) for Euroclear and Clearstream will be the sole registered holder of the Global Notes. Payments of principal, interest and other amounts owing on or in respect of the relevant Global Notes representing the Notes will be made to Citibank, N.A., London Branch, as Paying Agent, which will make payments to Euroclear and Clearstream. Thereafter, these payments will be credited to participants’ accounts that hold book-entry interests in the Global Notes representing the Notes and credited by such participants to indirect participants. After payment to Euroclear and Clearstream, we will have no responsibility or liability for the payment of interest, principal or other amounts to the owners of book-entry interests. Accordingly, if you own a book-entry interest in the relevant Notes, you must rely on the procedures of Euroclear and Clearstream and if you are not a participant in Euroclear and/or Clearstream on the procedures of the participant through which you own your interest, to exercise any rights and obligations of a holder of the Notes under the Indenture. Unlike the holders of the Notes themselves, owners of book-entry interests will not have any direct rights to act upon any solicitations for consents, requests for waivers or other actions from holders of the Notes. Instead, if you own a book-entry interest, you will be permitted to act only to the extent you have received appropriate proxies to do so from Euroclear and Clearstream or, if applicable, from a participant. There can be no assurance that procedures implemented for the granting of such proxies will be sufficient to enable you to vote on any matters or timely basis. Similarly, upon the occurrence of an event of default under the Indenture, unless and until the relevant definitive registered Notes are issued in respect of all book-entry interests, if you own a book-entry interest, you will be restricted to acting through Euroclear and Clearstream. We cannot assure you that the procedures to be implemented through Euroclear and Clearstream will be adequate to ensure the timely exercise of rights under the Notes.

Certain Notes, the denominations of which involve integral multiples, may be illiquid and difficult to trade. As the Notes have a denomination consisting of the minimum denomination plus a higher integral multiple of another smaller amount, it is possible that the Notes may be traded in amounts in excess of A100,000 (or its equivalent) that are not integral multiples of A100,000 (or its equivalent). In such case, a holder of the Notes who, as a result of trading such amounts, holds a principal amount of less than the minimum denomination may not receive a definitive Note in respect of such holding (should definitive Notes be

40 printed) and would need to purchase a principal amount of Notes such that its holding amounts to the minimum denomination.

You may face foreign exchange risks by investing in the Notes. The Notes will be denominated and payable in euros. If you measure your investment returns by reference to a currency other than euros, an investment in the Notes will entail foreign exchange related risks due to, among other factors, possible significant changes in the value of the euro relative to the currency by reference to which you measure the return on your investments because of economic, political and other factors over which we have no control. Depreciation of the euro against the currency by reference to which you measure the return on your investments could cause a decrease in the effective yield of the Notes below their stated coupon rates and could result in a loss to you when the return on the Notes is translated into the currency by reference to which you measure the return on your investments. There may be tax consequences for you as a result of any foreign exchange gains resulting from an investment in the Notes. You should consult your tax advisor concerning the tax consequences to you of acquiring, holding and disposing of the Notes. See ‘‘Certain Tax Considerations.’’

41 USE OF PROCEEDS The following table sets forth our expected estimated sources and uses of funds from the issuance of the Notes. Actual amounts may vary from estimated amounts depending on several factors, including differences between estimated and actual fees and expenses (including any additional interest accruing on the loans being repaid with the proceeds of the Offering) and fluctuations in the exchange rate between the złoty and the euro.

Sources of funds E in millions Uses of funds E in millions Repayment of existing indebtedness Notes offered hereby ...... 350.0 of the Group(1) ...... 258.6 Cash for general corporate purposes of the Group, including the Parent Guarantor and other Guarantors . . 85.4 Estimated fees and expenses(2) ..... 6.0 Total ...... 350.0 Total ...... 350.0

(1) All of our indebtedness (other than certain customs and trade guarantees and our existing financial leases) will be repaid with the proceeds of the Offering, and certain of our existing credit facilities (other than the Senior Credit Facilities) will be cancelled. See ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Contractual Obligations and Commercial Commitments—Existing Credit Faculties.’’ The BNP Paribas group, Powszechna Kasa Oszcz˛edno´sci Bank Polski SA, the Banco Santander, S.A. group and the UniCredit Bank AG group will receive a certain portion of the proceeds from the issuance of the Notes in its capacity as a lender under one of the Senior Credit Facilities. On or around the Closing Date we also anticipate reducing the availability under our Senior Credit Facilities, such that pro forma for the application of proceeds therefrom, we will have a total of PLN 624.1 million available for drawing thereunder. See ‘‘Description of Existing Indebtedness—Senior Credit Facilities.’’ (2) Reflects our preliminary estimate of fees and other expenses associated with this Offering, including discounts and other commissions, advisory and other professional fees and other transaction costs.

42 CAPITALIZATION The following table sets forth certain information on the consolidated capitalization of the Group as at June 30, 2014 on an actual basis, and on an as adjusted basis to give effect to the Offering as if it had occurred on June 30, 2014. The following table should be read in conjunction with ‘‘The Offering,’’ ‘‘Use of Proceeds,’’ ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations’’ and the Consolidated Financial Statements included elsewhere in this Offering Memorandum. Except as set forth below, there have been no other material changes to our capitalization since June 30, 2014.

As at June 30, 2014 Actual As Adjusted (PLN million) (EUR million)(1) (PLN million) (EUR million)(1) Cash and cash equivalents ...... 180.2 43.3 535.6 128.7 Existing bank debt(2) ...... 1,086.6 261.2 10.6(3) 2.5(3) Existing financial leases ...... 28.4 6.8 28.4 6.8 Notes offered hereby ...... — — 1,456.3 350.0 Total debt ...... 1,115.0 268.0 1,495.3 359.4 Total equity ...... 2,012.5 483.7 2,012.5 483.7 Total capitalization (total debt plus total equity) ...... 3,127.5 751.7 3,507.8 843.0

(1) For your convenience, we have translated certain złoty amounts into euro. The exchange rate for the convenience translations is PLN 4.1609 per A1.00 which was the National Bank Exchange Rate per euro as at June 30, 2014. You should not view such translations as a representation that such euro amounts actually represent such złoty amounts, or could be or could have been converted into euro at the rate indicated or at any other rate. (2) All of our indebtedness (other than certain customs and trade guarantees and our existing financial leases) will be repaid with the proceeds of this Offering, and certain of our existing credit facilities (other than the Senior Credit Facilities) will be cancelled. On or around the Closing Date, we also anticipate reducing the availability under our Senior Credit Facilities, such that pro forma for the application of proceeds therefrom, we will have a total of PLN 624.1 million available for drawing thereunder. See ‘‘Description of Existing Indebtedness—Senior Credit Facilities.’’ (3) Relates to indebtedness at Butadien Kralupy a.s., a joint venture established together with Unipetrol in which we own 49%, which is accounted for according to IFRS 11 Joint Arrangements, which came into force on January 1, 2014. See ‘‘Presentation of Financial and Other Information—Change in the presentation of comparative financial data with respect to Butadien Kralupy a.s. in the Consolidated Financial Statements.’’

43 SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION Selected historical consolidated financial data The tables below set forth certain of our selected historical consolidated financial data and other data as at the dates and for the periods indicated. The selected consolidated statement of financial position, consolidated statement of comprehensive income and consolidated statement of cash flow set forth below as at and for the years ended December 31, 2013, 2012 and 2011 have been derived without material adjustments from our Consolidated Annual Financial Statements, included elsewhere in this Offering Memorandum. The selected unaudited condensed consolidated interim statement of financial position, consolidated statement of comprehensive income and consolidated statement of cash flow set forth below as at and for the six months ended June 30, 2014 and 2013 have been derived without material adjustments from our Condensed Consolidated Interim Financial Statements, included elsewhere in this Offering Memorandum. Our consolidated historical financial statements and the condensed consolidated historical financial information presented below were prepared on the basis of IFRS, which differs in certain respects from U.S. GAAP. The condensed financial information and other data below include certain non-IFRS measures used to evaluate our operating and financial performance. These measures are not identified as accounting measures under IFRS and therefore should not be considered as an alternative measure to evaluate the performance of the Group. See ‘‘Presentation of Financial and Other Information.’’ In addition to the above, this Offering Memorandum includes certain unaudited financial information for the twelve months ended June 30, 2014 (the ‘‘twelve months ended June 30, 2014’’ or ‘‘LTM’’). The unaudited consolidated financial information for the twelve months ended June 30, 2014 was calculated by adding the unaudited consolidated statement of comprehensive income for the six months ended June 30, 2014 (as shown in the Condensed Consolidated Interim Financial Statements) and the unaudited consolidated statement of comprehensive income for the year ended December 31, 2013 (as shown in the Condensed Consolidated Interim Financial Statements) and subtracting the unaudited consolidated statement of comprehensive income for the six months ended June 30, 2013 (as shown in the Condensed Consolidated Interim Financial Statements). The data used to compile the summary unaudited financial information for the twelve months ended June 30, 2014 includes financial results for the year ended December 31, 2013 restated to reflect the adoption of IFRS 11 Joint Arrangements and derived from the Condensed Consolidated Interim Financial Statements in order to keep the results between the periods of 2013 and 2014 comparable. The financial results for the year ended December 31, 2013 in the Condensed Consolidated Interim Financial Statements have been restated as compared to the financial results for the year ended December 31, 2013 as stated in Consolidated Annual Financial Statements to reflect adoption of IFRS 11 Joint Arrangements and changed method of accounting for interest in Butadien Kralupy a.s. This LTM data has been prepared solely for the purpose of this Offering Memorandum, has not been prepared in the ordinary course of our financial reporting and has not been audited or reviewed. The financial information for the twelve months ended June 30, 2014 is not necessarily indicative of the results that may be expected for the year ended December 31, 2014, and should not be used as the basis for or prediction of an annualized calculation. For more details please see ‘‘Presentation of Financial and Other Information—Change in the presentation of comparative financial data with respect to Butadien Kralupy a.s. in the Consolidated Financial Statements.’’ The Group’s consolidated historical financial information and other data should be read in conjunction with the information contained in ‘‘Use of Proceeds,’’ ‘‘Capitalization,’’ ‘‘Selected Historical Consolidated Financial Information,’’ ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations’’ and the Consolidated Financial Statements included elsewhere in this Offering Memorandum.

44 Selected Statement of Comprehensive Income

For the For the twelve months six months ended For the year ended ended June 30, December 31, June 30, 2014 2014 2013 2013 2012 2011 (unaudited)(1) (unaudited) (PLN million) Revenues from Sales ...... 4,745.4 2,350.0 2,593.5 5,359.3 6,206.6 5,440.7 Cost of sales ...... (4,000.9) (1,956.0) (2,183.1) (4,619.6) (5,166.3) (4,182.7) Gross profit/Loss on sales ...... 744.5 394.0 410.4 739.7 1,040.3 1,258.0 Other operating income ...... 33.2 13.0 11.3 31.5 79.0 49.1 Selling costs ...... (137.9) (66.6) (70.2) (141.5) (149.6) (112.1) General and administrative expenses ...... (150.7) (79.8) (77.8) (148.8) (157.9) (152.3) Other operating expenses(2) ...... (24.4) (8.4) (16.0) (31.9) (37.2) (15.7) Profit/(Loss) on sale of property, plant and equipment ...... 4.0 — — 4.0 1.5 2.0 Profit from the sale of shares ..... — — — — — 3.3 Operating profit/loss ...... 468.7 252.2 257.7 453.0 776.1 1,032.3 Financial income ...... 19.8 2.3 6.2 23.7 15.4 52.4 Financial costs ...... (39.0) (22.3) (10.1) (26.7) (44.1) (26.4) Net financial costs ...... (19.2) (20.0) (3.9) (3.0) (28.7) 26.0 Impairment loss for financial assets available for sale ...... — — — — (154.6) — Share in profits of companies recognized under the equity method ...... — — — 17.2 24.5 21.1 Profit before tax ...... 449.5 232.2 253.8 467.2 617.3 1,079.4 Income tax ...... (87.3) (63.3) (29.8) (49.9) (32.1) (118.6) Net profit ...... 362.2 168.9 224.0 417.3 585.2 960.8

(1) The unaudited consolidated financial information for the twelve months ended June 30, 2014 was calculated by adding the unaudited consolidated statement of comprehensive income for the six months ended June 30, 2014 (as shown in the Condensed Consolidated Interim Financial Statements), and the unaudited consolidated statement of comprehensive income for the year ended December 31, 2013 (as shown in the Condensed Consolidated Interim Financial Statements), and subtracting the unaudited consolidated statement of comprehensive income for the six months ended June 30, 2013 (as shown in the Condensed Consolidated Interim Financial Statements). The data used to compile the summary unaudited financial information for the twelve months ended June 30, 2014 includes financial results for the year ended December 31, 2013 restated to reflect the adoption of IFRS 11 Joint Arrangements and derived from the Condensed Consolidated Interim Financial Statements in order to keep the results between the periods of 2013 and 2014 comparable. (2) Other operating expenses include, among other items, revaluation of provisions, establishment of impairment losses for

receivables, cost of unused production capacity, current assets written off, receivables written off, and utilization of CO2 emission allowances and costs of decommissioning of inactive facilities.

Selected Statement of Financial Position

45 Selected Statement of Cash Flows

For the For the twelve months six months For the year ended ended ended June 30, December 31, June 30, 2014 2014 2013 2013 2012 2011 (unaudited) (unaudited) (PLN million) Net cash from operating activities ...... 696.7 227.3 215.6 649.2 702.9 748.6 Net cash used in investing activities ...... (262.4) (146.1) (140.0) (223.2) (202.2) (310.8) Net cash used in financing activities ...... (894.1) (350.9) (193.6) (733.9) (767.8) (99.6)

46 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following is a discussion and analysis of our results of operations and financial condition based on the Consolidated Financial Statements. We encourage you to read the following discussion in conjunction with the sections entitled ‘‘Presentation of Financial and Other Information’’ and ‘‘Selected Consolidated Financial and Other Information’’ as well as with the Consolidated Financial Statements, included elsewhere in this Offering Memorandum. The following discussion includes forward-looking statements which, although based on assumptions and/or estimates that we consider reasonable, are subject to risks and uncertainties which could cause actual events or conditions to differ materially from those expressed or implied by the forward-looking statements. For a discussion of some of those risks and uncertainties please refer to the sections entitled ‘‘Forward-Looking Statements’’ and ‘‘Risk Factors.’’

Overview We are one of the leading manufacturers of chemical raw materials in Central and Eastern Europe (‘‘CEE’’), headquartered in Poland with our main production operations located in Poland and the Czech Republic. We are the leading producer of synthetic rubber and the leading producer of expandable and extruded polystyrene in Europe, based on data provided by IHS Chemical. Our upstream integration with a stable source of raw materials, including C4 fraction, butadiene, benzene and ethylene, which we source mainly from regional crackers, has allowed us to achieve a leading cost position in the synthetic rubber industry. We have a broad and diverse customer base across a wide range of industries, including the automotive, construction and packaging industries, which accounted for approximately 43%, 27% and 12% of product volumes sold for the year ended December 31, 2013, respectively. We have developed long-term relationships with our key customers, which include market leaders such as Michelin and Goodyear, many of which have lasted over several decades. Over the years, we have successfully leveraged our key proprietary technologies and transformed ourselves into a modern synthetic rubber and styrenics producer with global operations. Our shares have been listed on the Warsaw Stock Exchange since 2004, and we have been a member of the blue chip WIG20 index on the Warsaw Stock Exchange since 2012. As at June 30, 2014, we had a market capitalization of PLN 5,849 million. For the twelve months ended June 30, 2014, we generated consolidated revenues from sales of PLN 4,745.4 million and EBITDA of PLN 625.4 million. Our business is divided into three main business segments: butadiene, rubber and latex (the ‘‘Synthetic Rubber and Latex Segment’’), styrene and styrene derivatives (the ‘‘Styrene Plastics Segment’’) and dispersions and adhesives (the ‘‘Dispersions and Adhesives Segment’’). Other sources of revenues include auxiliary operations related to the production and distribution of thermal energy from our own power plants, as well as revenues derived from the trading and distribution of electricity (‘‘Other Operations,’’ including ‘‘Energy,’’ which is reported as a separate segment in the Consolidated Financial Statements). Other Operations also include income and costs not allocated to any segment.

Our operations are comprised of the following three core business segments: Synthetic Rubber and Latex Segment Our Synthetic Rubber and Latex Segment is our core business segment. 78% of the volume of products sold in this segment is attributable to large tire industry participants, including Michelin, Continental, Bridgestone, Goodyear and Pirelli. The remaining 22% of the volume of products sold in this segment is derived from other markets, including those involved in the production of technical rubber, soles for footwear, flexible cables and transmission belts. For the twelve months ended June 30, 2014, our Synthetic Rubber and Latex Segment generated revenues from sales of PLN 2,374.1 million and EBITDA of PLN 268.7 million.

47 products, trays and cutlery. It is also used as a raw material in the production of shower cubicles, jewelry packaging, and other items requiring a stiff but transparent packaging material. The third is extruded polystyrene board (‘‘XPS’’), which is produced by our new production line for extruded polystyrene. XPS is used primarily in the construction industry, as a thermal insulation material for the perimeters of buildings, roofs with reverse layer sequences, flooring and in thermal bridges and cavity walls. For the twelve months ended June 30, 2014, our Styrene Plastics Segment generated revenues of PLN 2,016.3 million and EBITDA of PLN 218.9 million.

Recent Developments On August 7, 2014, we signed an agreement, subject to the conclusion of additional agreements with suppliers of raw materials, with a Polish company for the purchase of intellectual property rights in relation to plant protection products, including industrial property rights, copyrights, product formulas and chemical industry trademarks. The transaction value was PLN 43.2 million. On July 18, 2014, we concluded an agreement with SPV Boryszew 3 sp. z o.o. to purchase 100% of the shares in Oristano Investment, which is a manufacturer of dispersions and adhesives. The value of the transaction is PLN 40 million, and it closed on August 12, 2014, we transferred 100% of the shares in Oristano Investment. This acquisition constitutes part of our strategy to further solidify our position as a market leader in the supply of dispersions and adhesives products.

Key Factors Influencing Our Results of Operations Our results of operations are driven by a combination of factors, many of which affect the chemicals industry generally, such as: global supply and demand in the end-markets where our customers compete, prices of raw materials, general economic conditions and compliance with environmental legislation. Our results of operations and cash flow are also affected by company-specific structural and operational factors. The following discussion highlights the factors and market trends that we believe have significantly affected our results of operations for the periods under review, and we expect that such factors and trends may continue to significantly impact our results of operations in the future. Certain of the below factors have historically been cyclical or volatile, much of which is due to circumstances that are beyond our control. As a result, past performance will not necessarily be indicative of future performance. In addition, important factors that could cause our actual operations or financial condition to differ materially from those expressed or implied below also include, but are not limited to, factors indicated in this Offering Memorandum under ‘‘Risk Factors.’’

Economic environment, demand and cyclicality in the chemicals end-markets Our business is dependent on the sales of chemical products, which are used in a wide range of industries, including in particular the automotive, packaging and construction industries. Such industries, and therefore the ensuing demand for our products, are affected by general economic conditions. Our operations are also subject to the cyclical and, more importantly, variable nature of the supply and demand balance in the chemicals industry, and our future results of operations may continue to be affected by this cyclicality and variability. Our revenue growth is dependent on the broader European and global economic environments, as well as the overall condition of Poland. In the past, our results of operations were affected by, and we expect that our financial results will continue to be affected by, key macroeconomic factors such as GDP growth, inflation, interest rates, currency exchange rates, unemployment rates, rate of corporate insolvencies and financial condition of our competitors. During the recent economic downturn, the Polish economy performed better than many of the other European economies and was the only economy in the EU to

48 continue to grow in each year from 2008 to 2010, according to Eurostat. Generally, weak economic conditions in Europe, including in Poland, may weigh on the growth prospects of our markets. Prospects for GDP growth in Europe, including in Poland, and other macroeconomic factors are by their nature uncertain and strongly dependent upon, among other factors, the general economic environment. Our markets can also be affected by the rate of economic development in other countries, as demonstrated by the negative impact of the declining Chinese growth rate on the global bulk petrochemical industry, especially during the second half of 2013. Chinese growth remained comparatively low during the first quarter of 2014, as GDP increased by only 7.4%, as compared to a 7.7% increase over the same period in 2013, according to Trading Economics. Such limited growth has affected our ability to make advances into the Chinese market.

Automotive and construction industry Our business is largely based on the market conditions of the industries which use our raw materials and intermediate products, including, in particular, the automotive and construction industries. The weak situation in the global automotive industry in 2013, especially in China and in the EU, resulted in reduced demand for tires in Europe and developing countries which resulted in decreased sales volumes of our synthetic rubber. Most of the demand for tires in 2013 came from developing countries, as developed countries in Europe continued to suffer from the economic downturn. In 2013, our financial results in our Synthetic Rubber and Latex Segment, were affected by lower prices of synthetic rubber resulted in low margins. However, our reduced operating cost helped us to profit in this segment. Tire sales are expected to grow globally, especially in emerging markets, during the period from 2014 to 2018 at the average annual rate of 4.5%. In developed countries, it is expected that the demand will grow for high performance tires, according to LMC International. Also, we noted higher market demand in 2013 for the change of tires in Europe. Market demand in relation to passenger cars increased by 8% in the first half of 2014, according to the European Tyre & Rubber Manufacturers Association. In 2013, our financial results, in particular in our Dispersions and Adhesives Segment and our Styrene Plastics Segment, were affected by the difficult situation in the construction industry. Other adverse circumstances included delayed energy investments, which were further exacerbated by adverse weather conditions in a number of our markets which made commencement of construction works unfavorable in the first four months of 2013. During this period, the construction industry remained the economic sector most affected by the economic crisis in Europe, as value added in construction declined by 9% in 2013 as compared to 2012. The construction industry has been improving slowly during the first half of 2014, supported by the favorable weather conditions associated with spring, which are conducive to commencing construction works. Construction and assembly production in the first quarter of 2014 increased by 10.6%, as compared to the first quarter of 2013, and by 9.8% in the second quarter of 2014, as compared to the second quarter of 2013, according to the Polish Central Statistical Office, which has a positive impact on our Styrene and Plastics Segment, particularly EPS products. It is estimated that in 2014, the added value of the construction industry will be 6.1% as compared to the decrease of 9.0% in 2013 from 2012, according to the Polish Institute of Market Economy. In addition, Business Monitor International estimates that the Polish construction market will grow by 12% and 11% in 2015 and 2016, respectively.

Fluctuations in the prices of raw materials The costs of raw materials constitute a significant component of the operating costs of our business. For the year ended December 31, 2013, raw materials constituted 59% of our total revenue from sales. Our principal raw materials are butadiene, styrene, ethylbenzene, butyl acrylate, vinyl acetate monomer, ethylene and benzene and C4 fraction. Our results of operations are therefore directly affected by any volatility in the cost of our raw materials, which are subject to global supply and demand and other factors beyond our control. The prices of our raw materials are to a certain extent correlated with the global price of crude oil because crude oil is the source of feedstock for European crackers, which in turn provides us with raw materials. In Europe, the prices of our raw materials depend only to a small extent on the price of gas. We generally seek to pass on to our customers increases in raw material prices. However, due to pricing and other competitive or market pressures we may be unable to do so completely or at all. Furthermore, volatility in the cost of these raw materials makes it more challenging to manage pricing and we may experience a time lag between an increase in raw material prices and any increase in our prices to our customers. Although changes in the prices of raw materials usually translate to changes in product prices in

49 the long run, prices of our products may not immediately reflect changes in the prices of raw materials as a result of our pricing mechanisms or delays in updating our product prices. This impacts our ability to pass the increases on to our customers in a timely manner. Accordingly, fluctuations in the prices of raw materials can have a significant impact on our gross profits, gross margins and other operating results. Furthermore, in order to minimize the price fluctuations in our long-term contracts for supplies of raw materials, the price formulas in our long-term contracts reflect the current situation on the raw material market. The formulas reduce the risk of large deviations of contracted purchase prices from market prices. Backward integration and obtaining long-term supply contracts at attractive prices are key factors for controlling the costs of raw materials. In the first half of 2014, the prices of basic types of polystyrenes, i.e. GPPS and HIPS were characterized by high raw material prices, which enabled us to obtain more favorable margins. Changes in the prices of raw materials have a direct impact on our working capital levels. In general, increases in prices lead to an increase in our working capital requirements and decreases lead to a decrease in our working capital requirements.

Fluctuations in margins and supply and demand for our products The margins in our markets are strongly influenced by industry utilization, which is affected by supply and demand for products and the costs of principal raw materials. Certain markets, such as those for plastic and synthetic rubber products, are more mature, so their overall growth tends to correlate closely with global GDP growth. As demand for products increases and approaches available supply, utilization rates rise, and prices and margins typically increase. Supply in our markets tends to be cyclical, generally characterized by periods of limited supply, resulting in higher operating rates and margins, followed by periods of oversupply, typically stimulated by the creation of additional capacity, resulting in lower operating rates and margins. In addition to being cyclical, our margins are also susceptible to potentially significant swings in the short term due to various factors, including planned or unplanned plant outages, political or economic conditions affecting prices and changes in inventory management policies by customers (such as inventory building or de-stocking in periods of expected price increases).

Current and future environmental regulatory considerations We are subject to extensive environmental, health and safety regulations at both the national and European levels. There are numerous laws that affect our business, and we have incurred, and expect to continue to incur, substantial on-going capital expenditures to ensure compliance with current and future laws and regulations. We may also incur remediation, decommissioning and ongoing upgrade or compliance costs in connection with our production facilities and other properties. However, we believe that the potential remediation costs would not be high, and we do not anticipate that they could influence our results of operations. The REACH Regulation imposes significant obligations on us and the chemicals industry as a whole with respect to the testing, evaluation, assessment and registration of basic chemicals and chemical intermediates. The EU Classification, Labeling and Packaging Regulation (‘‘CLP’’) imposes on us significant obligations with respect to the testing, evaluation, assessment and registration of basic chemicals, which are expensive, time consuming and lead to increased production costs and reduced operating margins of our products. Over the next few years, we expect to be affected by new legal requirements related to environmental protection, resulting from, among others, the Directive on Industrial Emissions (‘‘IED’’) and the EU Emissions Trading System (‘‘EU ETS’’). We keep up with the growing eco-awareness among our customers by producing NdBR, which is used in high performance tires that minimize fuel consumption. Additionally, we are involved in development of alternative routes for obtaining butadiene from renewable sources. Finally, we are considering the construction of an incineration plant for municipal waste, which will be in line with Polish national regulations concerning waste management. See ‘‘Risk Factors—Risks Related to our Business and Industry—Compliance with extensive and evolving environmental, health and safety laws may require substantial expenditures, ‘‘Risk Factors—Risks Related to our Business and Industry— Compliance with current and future regulations targeting greenhouse gas emissions may cause us to incur significant additional operating and capital expenses’’ and ‘‘Regulatory Overview’’ for a discussion of these directives and their impact on our operations.

50 Foreign currency exchange rate fluctuations We operate internationally and as a result, are exposed to various currency risks and exposures, including in particular, in relation to the euro, Polish złoty, U.S. dollar and Czech koruna. Although our reporting currency is the złoty, in 2013, 70.6% of our revenues and 91.7% of our costs related to transactions settled in a currency other than Polish złoty. We are therefore affected by both the transaction effects and translation effects of foreign currency exchange rate fluctuations. In recent years, the exchange rates between these currencies and the złoty have fluctuated significantly and may continue to do so in the future. A depreciation of these currencies against the złoty will decrease the złoty equivalent of the amounts derived from these operations reported in our consolidated financial statements. An appreciation of these currencies will result in a corresponding increase in such amounts. Because most of our raw material costs are procured in euro or U.S. dollar, a depreciation of the złoty against the euro or U.S. dollar may have an adverse effect on our profit margins or our reported results of operations. Fluctuations in exchange rates have an impact on the volume of revenue from sales and purchase costs of raw materials. While an increase in the relative strength of the złoty against other currencies may have a negative impact on the profitability of our export and domestic sales, changes in our revenues from export and domestic sales caused by exchange rate fluctuations are offset in part by changes in the costs of raw material imports. As a result of our purchases of raw materials, product sales, loans and borrowings and cash in foreign currencies, we have been, and expect to continue to be, exposed to foreign exchange rate fluctuations, which could materially affect our results of operations, assets and liabilities, and cash flows as reported in złoty. Variability in exchange rates could also significantly impact the comparability of our results of operations between periods. For a further discussion of the effects of currency exchange rate fluctuations on the Polish złoty to euro and other relevant foreign currency conversions, see ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations—Quantitative and Qualitative Disclosure about Market Risk—Exchange Rate Exposure’’ below.

Hazards and risks of disruption associated with chemical manufacturing We are exposed to the typical hazards and risks of disruption associated with chemical manufacturing and the related storage and transportation of raw materials, products and wastes. These potential risks of disruption include, among others, explosions and fires, inclement weather and natural disasters, and failure of mechanical, process safety and pollution control equipment. In 2013, we experienced two such disruptions. In June 2013, we experienced a temporary shutdown in our manufacturing facility located in Kralupy upon Vltavou in the Czech Republic due to flooding in the region for a few days, and in September 2013, the Unipetrol cracker in Litvinov, Czech Republic experienced unplanned shutdowns for a few days, which resulted in a shortage of raw material supplies, as we rely on it as a source of C4 fraction, ethylene and benzene. When such disruptions occur, alternative facilities with sufficient capacity or capabilities may not be available, may cost substantially more or may take a significant time to start production, which could negatively affect our business and financial performance. Although these kinds of events are standard, they occur infrequently, usually not more than once or twice per year, and are typically short-lived.

Note regarding the presentation of financial information with respect to Butadien Kralupy a.s. in the Consolidated Financial Statements On January 1, 2014, we adopted new IFRS standards and interpretations, for the preparation of the Condensed Consolidated Interim Financial Statements, in particular, IFRS 11 Joint Arrangements, which outlines the accounting by entities that jointly control an arrangement. The new standard limits the types of joint arrangements to two, joint operations and joint ventures. As a result of the application of these new standards, we changed the accounting method for our interest in Butadien Kralupy a.s. from the equity method to accounting for our interest by accounting our share in the assets and liabilities and related revenues and expenses of the joint operation. The financial information presented in this Offering Memorandum as at June 30, 2014, and for the six months ended June 30, 2014 and 2013, reflects these changes in IFRS. However, the financial information of the Group as at and for the years ended December 31, 2013, 2012 and 2011 has been extracted or derived from the Consolidated Annual Financial Statements prepared before the adoption of the abovementioned standards, and thus are not fully comparable to the financial information as at and for the six months ended June 30, 2014 and 2013. The financial information of the Group as at and for the year ended December 31, 2013 will be restated in the Group’s 2014 annual IFRS financial statements to show the full-year effect of the new IFRS standards and

51 interpretations effective January 1, 2014. See ‘‘Note 25 to the Condensed Consolidated Interim Financial Statements’’ for the effect of the change in the Group’s accounting policy due to the application of IFRS 11 Joint Arrangements on the Group’s statement of financial position as at December 31, 2013 and 2012 and statement of comprehensive income for the year ended December 31, 2013 and for the six months ended June 30, 2013.

Presentation of Financial Information For the purposes of the following discussion of our results of operations, the key line items from the statement of comprehensive income include the following: revenues from sales, cost of sales, selling costs, other operating income, general and administrative expenses, other operating expenses, financial income, financial costs, income tax and net profit. The following discussion also refers to our EBITDA and segment results.

Revenues from sales Revenues from sales are comprised of revenues from the sales of goods and finished products, provision of services, materials and income from lease of investment properties.

Segment results Segment results are comprised of revenues from each segment’s sales minus total cost allocated to such segment. Reconciliation of the segment results to profit before tax was included in the Consolidated Financial Statements.

Cost of sales Cost of sales includes, among others, consumption of materials and energy, salaries, costs of goods and materials sold.

Selling costs Selling costs are comprised of, among others, transportation, loading and unloading costs, duty fees, trade fees and cargo insurance.

Other operating income Other operating income includes, among others, income associated with the sale of fixed assets, reversal of provisions, impairment losses, compensation from insurance companies and contractual penalties.

General and Administrative Expenses General and administrative expenses include general administrative costs associated with the maintenance of our management board and general production costs related to the maintenance and operation of general purpose units, e.g. laboratories.

Other operating expenses Other operating expenses include, among others, revaluations of provisions, impairment losses, write offs, costs of unused production capacity, utilization of CO2 allowances and decommissioning costs.

Financial income Financial income comprises income from valuation of derivatives, interest at amortized cost using the effective interest rate, surplus of foreign exchange gains over losses on cash, loans and borrowings as well as other assets and liabilities.

Financial costs Financial costs primarily comprise, among others interest charges determined on the basis of the effective interest rate and a surplus of foreign exchange rate differences over the positive exchange rate differences on cash assets, loans and borrowings as well as other assets and liabilities.

52 Income tax Income tax comprises current and deferred income tax expense.

Net profit Net profit comprise total revenues minus total expenses.

EBITDA EBITDA is calculated as operating profit plus depreciation of property, plant and equipment and amortization of intangible assets. See also ‘‘—Presentation of Financial and Other Information—Non-IFRS Financial Measures’’.

Our Results of Operations The following table sets forth our consolidated results of operations for each of the periods indicated.

For the six months For the year ended ended June 30, December 31, 2014 2013 2013 2012 2011 (unaudited) (PLN million) Revenues from Sales ...... 2,350.0 2,593.5 5,359.3 6,206.6 5,440.7 Cost of sales ...... (1,956.0) (2,183.1) (4,619.6) (5,166.3) (4,182.7) Gross profit/Loss on sales ...... 394.0 410.4 739.7 1,040.3 1,258.0 Other operating income ...... 13.0 11.3 31.5 79.0 49.1 Selling costs ...... (66.6) (70.2) (141.5) (149.6) (112.1) General and administrative expenses ...... (79.8) (77.8) (148.8) (157.9) (152.3) Other operating expenses ...... (8.4) (16.0) (31.9) (37.2) (15.7) Profit/(Loss) on sale of property, plant and equipment . — — 4.0 1.5 2.0 Profit from the sale of shares ...... ————3.3 Operating profit/loss ...... 252.2 257.7 453.0 776.1 1,032.3 Financial income ...... 2.3 6.2 23.7 15.4 52.4 Financial costs ...... (22.3) (10.1) (26.7) (44.1) (26.4) Net financial costs ...... (20.0) (3.9) (3.0) (28.7) 26.0 Impairment loss for financial assets available for sale . .———(154.6) — Share in profits of companies recognized under the equity method ...... — — 17.2 24.5 21.1 Profit before tax ...... 232.2 253.8 467.2 617.3 1,079.4 Income tax ...... (63.3) (29.8) (49.9) (32.1) (118.6) Net profit ...... 168.9 224.0 417.3 585.2 960.8 Other comprehensive income that may be later reclassified to profit or loss Foreign exchange differences on subordinated entities . . 11.2 24.1 (118.7) (81.7) 79.1 Valuation of financial assets available for sale ...... (48.7) 41.6 71.4 147.7 (140.2) Other (net) comprehensive income ...... (37.5) 65.7 (47.3) 66.0 (61.1) Total comprehensive income ...... 131.4 289.7 370.0 651.2 899.7 Profit attributable to: Equity holders of the parent ...... 168.8 223.7 416.9 586.3 960.3 Non-controlling interests ...... 0.1 0.3 0.4 (1.1) 0.5 Net profit for the period ...... 168.9 224.0 417.3 585.2 960.8 Comprehensive income attributable to: Equity holders of the parent ...... 131.3 289.4 369.6 652.3 899.2 Non-controlling interests ...... 0.1 0.3 0.4 (1.1) 0.5 Comprehensive income for the period ...... 131.4 289.7 370.0 651.2 899.7

53 Six months ended June 30, 2014 compared to six months ended June 30, 2013 Revenues from Sales Revenues from sales for the six months ended June 30, 2014 were PLN 2,350.0 million, a decrease of PLN 243.5 million, or 9.4%, from PLN 2,593.5 million for the six months ended June 30, 2013. This decrease was driven mainly by the lower market prices of styrene and butadiene as key drivers for product pricing. The following table sets forth our revenues from sales for the six months ended June 30, 2014 and 2013.

For the six months ended June 30, 2014 2013 (unaudited) (PLN million) Revenues from sales of products ...... 2,225.3 2,464.0 Revenues from sales of services ...... 12.4 11.7 Revenues from sales of materials and goods ...... 111.7 116.8 Income from rental of investment properties ...... 0.6 1.0 Total ...... 2,350.0 2,593.5

Segment analysis for the six months ended June 30, 2014 compared to the six months ended June 30, 2013 Total segment results for the six months ended June 30, 2014 were PLN 247.7 million, a decrease of PLN 14.8 million, or 5.6%, from PLN 262.5 million for the six months ended June 30, 2013. This decrease was driven mainly by the performance of our Synthetic Rubber and Latex Segment. The following table sets forth our historical results by business segment for the six months ended June 30, 2014 and 2013.

For the six months ended June 30, 2014 2013 (unaudited) (PLN million) Revenues from sales Synthetic Rubber and Latex Segment ...... 1,194.9 1,480.7 Styrene Plastics Segment ...... 973.8 919.6 Dispersions and Adhesives Segment ...... 64.2 55.7 Other Operations ...... 117.1 137.5 Total revenues from sales ...... 2,350.0 2,593.5 Costs by segment Synthetic Rubber and Latex Segment ...... 1,043.6 1,260.2 Styrene Plastics Segment ...... 904.5 912.4 Dispersions and Adhesives Segment ...... 64.2 54.6 Other Operations ...... 90.0 103.8 Total costs ...... 2,102.3 2,331.0 Segment results Synthetic Rubber and Latex Segment ...... 151.3 220.5 Styrene Plastics Segment ...... 69.3 7.2 Dispersions and Adhesives Segment ...... (0.06) 1.1 Other Operations ...... 27.1 33.7 Total segment results ...... 247.7 262.5

Synthetic Rubber and Latex Segment The segment result in our Synthetic Rubber and Latex Segment for the six months ended June 30, 2014 was PLN 151.3 million, a decrease of PLN 69.2 million, or 31.4%, from PLN 220.5 million for the six months ended June 30, 2013.

54 This decrease was driven mainly by lower market margins and lower butadiene margins.

Styrene Plastics Segment The segment result in our Styrene Plastics Segment for the six months ended June 30, 2014 was PLN 69.3 million, an increase of PLN 62.1 million, or 862.5%, from PLN 7.2 million for the six months ended June 30, 2013. This increase was driven mainly by the significantly higher level of market margins and higher sales volume which resulted from increased demand.

Dispersions and Adhesives Segment The segment result in our Dispersions and Adhesives Segment for the six months ended June 30, 2014 was negative and amounted to PLN 0.06 million, as compared to a positive segment result of PLN 1.1 million for the six months ended June 30, 2013. This decrease was due to the significant increase in the prices of our main raw material prices, such as vinyl acetate and butyl acrylate.

Other Operations The segment result from our Other Operations for the six months ended June 30, 2014 was PLN 27.1 million, a decrease of PLN 6.6 million, or 19.6%, from PLN 33.7 million for the six months ended June 30, 2013. This decrease was mainly due to lower sales volume of energy products and lower prices of electric energy.

Cost of Sales Cost of sales for the six months ended June 30, 2014 were PLN 1,956.0 million, a decrease of PLN 227.1 million, or 10.4%, from PLN 2,183.1 million for the six months ended June 30, 2013. This decrease was largely attributable to the decrease in sales volume of synthetic rubber and latex products and the lower quotation of butadiene. In the first half of 2014, the average quotation of butadiene was lower by A376 per ton as compared to the first half of 2013.

Other Operating Income Other operating income for the six months ended June 30, 2014 was PLN 13.0 million, an increase of PLN 1.7 million, or 15.0%, from PLN 11.3 million for the six months ended June 30, 2013. This increase was primarily attributable to the gain on disposal of property, plant and equipment and the reversal of the impairment for receivables. The table below sets forth our other operating income for the six months ended June 30, 2014 and 2013.

For the six months ended June 30, 2014 2013 (unaudited) (PLN million) Gain on disposal of property, plant and equipment ...... 1.8 0.05 Reversal of impairment losses for receivables ...... 2.8 1.3 Reversal of impairment losses for property, plant and equipment ...... 0.1 — Reversal of other provisions ...... — 0.05 Compensations received from insurance companies ...... 1.7 0.3 Contractual penalties received ...... 5.3 7.8 Other ...... 1.3 1.8 Total ...... 13.0 11.3

Selling Costs Selling costs for the six months ended June 30, 2014 were PLN 66.6 million, a decrease of PLN 3.6 million, or 5.1%, from PLN 70.2 million for the six months ended June 30, 2013. The decrease in our selling costs

55 was mainly due to the decrease in sales volumes of synthetic rubber and latex products by 4% and lower share of spot sales combined with higher transportation costs.

General and Administrative Expenses General and administrative expenses for the six months ended June 30, 2014 were PLN 79.8 million, an increase of PLN 2.0 million, or 2.6%, from PLN 77.8 million for the six months ended June 30, 2013. This increase in our general and administrative expenses was mainly due to a PLN 1.2 million increase in depreciation, which was mainly related to intangible assets in the IT department (as a result of the implementation of software for reporting purposes and the depreciation of the Michelin license for PBR production) and the increase in the cost of salaries by PLN 1.0 million.

Other Operating Expenses Other operating expenses for the six months ended June 30, 2014 were PLN 8.4 million, a decrease of PLN 7.6 million, or 47.5%, from PLN 16.0 million for the six months ended June 30, 2013. This decrease in our other operating expenses was mainly due to the establishment of lower impairment losses for receivables. The table below sets forth our other operating expenses for the six months ended June 30, 2014 and 2013.

For the six months ended June 30, 2014 2013 (unaudited) (PLN million) Revaluation of provisions ...... 0.05 0.06 Establishment of impairment losses for receivables ...... 1.9 8.4 Cost of unused production capacity ...... 0.9 0.5 Current assets written off ...... 0.7 1.0 Receivables written off ...... 2.0 0.5 Costs of decommissioning of inactive facilities ...... 1.2 1.4 Other ...... 1.7 4.1 Total ...... 8.4 16.0

Financial Income Financial income for the six months ended June 30, 2014 was PLN 2.3 million, a decrease of PLN 3.9 million, or 62.9%, from PLN 6.2 million for the six months ended June 30, 2013, mainly reflecting an increase in the amount of deposits held in our bank accounts.

Financial Costs Financial costs for the six months ended June 30, 2014 were PLN 22.3 million, an increase of PLN 12.2 million, or 120.8%, from PLN 10.1 million for the six months ended June 30, 2013. This increase in financial costs was mainly due to foreign exchange losses.

Income Tax Income tax for the six months ended June 30, 2014 was PLN 63.3 million, an increase of PLN 33.5 million, or 112.4%, from PLN 29.8 million for the six months ended June 30, 2013. Our effective tax rate (calculated as income tax divided by profit before tax) for each of the six months ended June 30, 2014 and 2013 was 27.3% and 11.8%. As at June 30, 2014, we revaluated our estimate regarding the recoverability of the deferred tax assets recognized on tax relief in Synthos PBR s.r.o. Taking into consideration current market conditions, we estimated that the assessed amount to be utilized until the end of 2015 amounted to PLN 42.9 million. Due to revaluated assumptions, a deferred tax write-off in the amount of PLN 36.6 million was recognized in profit for the current period.

56 The following table sets forth our historical income tax for the six months ended June 30, 2014 and 2013.

For the six months ended June 30, 2014 2013 (unaudited) (PLN million) Income tax Income tax expense for the current period ...... 12.7 21.1 Adjustment of tax for previous years ...... — — Total ...... 12.7 21.1 Deferred tax Recognition / Utilization / Release of deferred tax ...... 14.0 8.7 Derecognition of deferred tax asset on tax relief ...... 36.6 — Total deferred tax ...... 50.6 8.7 Income tax reported in the statement of comprehensive income ...... 63.3 29.8

Net profit For the reasons discussed above, our net profit for the six months ended June 30, 2014 was PLN 168.9 million, a decrease of PLN 55.1 million, or 24.6%, from PLN 224.0 million for the six months ended June 30, 2013.

EBITDA Our EBITDA for the six months ended June 30, 2014 was PLN 330.0 million, a decrease of PLN 7.3 million, or 2.2%, from PLN 337.3 million for the six months ended June 30, 2013. The decrease in EBITDA was primarily due to the performance of our main Synthetic Rubber and Latex Segment. The following table sets forth EBITDA by segment for the six months ended June 30, 2014 and 2013.

For the six months ended June 30, 2014 2013 (unaudited) (PLN million) Synthetic Rubber and Latex Segment ...... 169.0 239.2 Styrene Plastics Segment ...... 99.6 41.0 Dispersions and Adhesives Segment ...... 3.0 3.8 Other Operations(1) ...... 58.4 53.3 Total ...... 330.0 337.3

(1) For Other Operations, EBITDA also include income and costs not allocated to any of segments

Year Ended December 31, 2013 Compared to Year Ended December 31, 2012 Revenues from Sales Total revenues from sales for the year ended December 31, 2013 were PLN 5,359.3 million, a decrease of PLN 847.3 million, or 13.7%, from PLN 6,206.6 million for the year ended December 31, 2012. The decrease was driven mainly by challenging market conditions including the slow recovery of the EU economy and the lower than expected growth in the Chinese economy, stagnation in the automotive industry, headwinds to growth in the construction industry as a result of reduced investments in the CEE construction industry and the low prices of butadiene and synthetic rubber.

57 The following table sets forth our historical revenues from sales for the years ended December 31, 2013 and 2012.

For the year ended December 31, 2013 2012 (PLN million) Revenues from sales of products ...... 4,771.2 5,299.1 Revenues from sales of services ...... 33.6 38.3 Revenues from sales of materials and goods ...... 552.5 867.2 Income from rental of investment properties ...... 2.0 2.0 Total ...... 5,359.3 6,206.6

Segment analysis for the year ended December 31, 2013 compared to the year ended December 31, 2012 Segment results for the year ended December 31, 2013 were PLN 449.4 million, a decrease of PLN 283.3 million, or 38.7%, from PLN 732.7 million for the year ended December 31, 2012. The decrease was driven mainly by a decrease in the results of our Synthetic Rubber and Latex Segment which were PLN 280.6 million for the year ended December 31, 2013, a decrease of PLN 350.5 million, or 55.5%, from PLN 631.1 million for the year ended December 31, 2012). The following table sets forth our historical results by business segment for the years ended December 31, 2013 and 2012.

For the year ended December 31, 2013 2012 (PLN million) Revenues from sales Synthetic Rubber and Latex Segment ...... 2,976.3 3,943.5 Styrene Plastics Segment ...... 1,962.1 1,883.9 Dispersions and Adhesives Segment ...... 107.6 101.7 Other Operations ...... 313.3 277.5 Total revenues from sales ...... 5,359.3 6,206.6 Costs by segment Synthetic Rubber and Latex Segment ...... 2,695.7 3,312.4 Styrene Plastics Segment ...... 1,868.1 1,838.4 Dispersions and Adhesives Segment ...... 105.6 100.4 Other Operations ...... 240.5 222.7 Total costs ...... 4,909.9 5,473.9 Segment results Synthetic Rubber and Latex Segment ...... 280.6 631.1 Styrene Plastics Segment ...... 94.0 45.5 Dispersions and Adhesives Segment ...... 2.0 1.3 Other Operations ...... 72.8 54.8 Total segment results ...... 449.4 732.7

Synthetic Rubber and Latex Segment The segment results in our Synthetic Rubber and Latex Segment for the year ended December 31, 2013 were PLN 280.6 million, a decrease of PLN 350.5 million, or 55.5%, from PLN 631.1 million for the year ended December 31, 2012. The decrease was driven mainly by low synthetic rubber prices which were related to the lower cost of butadiene and lower margins, and low demand for synthetic rubber in Asian countries, particularly in China.

58 Styrene Plastics Segment The segment results in our Styrene Plastics Segment for the year ended December 31, 2013 were PLN 94.0 million, an increase of PLN 48.5 million, or 106.6%, from PLN 45.5 million for the year ended December 31, 2012. The increase was driven mainly by higher market margins for polystyrene and better upstream margin (relation of cost of our styrene production to market price), the introduction of new products and technologies, including an offer by EPS InSphere to increase insulation capacity and use environmentally- friendly products.

Dispersions and Adhesives Segment The segment results in our Dispersions and Adhesives Segment for the year ended December 31, 2013 were PLN 2.0 million, an increase of PLN 0.7 million, or 53.8%, from PLN 1.3 million for the year ended December 31, 2012. The increase was driven mainly by investments in the expansion of our facilities and growth in volume of sales (by 77% for the year ended December 31, 2013 compared to the year ended December 31, 2012), of a new group of adhesives products launched in 2013, such as Papermax WP 10.46K.

Other Operations The segment results for our Other Operations for the year ended December 31, 2013 were PLN 72.8 million, an increase of PLN 18.0 million, or 32.8%, from PLN 54.8 million for the year ended December 31, 2012. This increase was driven mainly by an increase in the volume of energy sold, which was approximately 73% higher for the year ended December 31, 2013 as compared to the year ended December 31, 2012, as well as higher prices for selling heat and the reclassification of sales of raffinate by Synthos Dwory 7. For the year ended December 31, 2013, our revenues from sales and costs of sales were presented as part of our Synthetic Rubber and Latex Segment, whereas for the year ended December 31, 2012, they were partially recorded as Other Operations. Our Other Operations also include results of selling goods, materials and service, which did not change significantly between 2012 and 2013.

Cost of Sales Cost of sales for the year ended December 31, 2013 was PLN 4,619.6 million, a decrease of PLN 546.7 million, or 10.6%, from PLN 5,166.3 million for the year ended December 31, 2012. This decrease was related to changes in the quotation of butadiene. In 2013, the average quotation of butadiene was A665/t below the level in 2012. Therefore the cost of purchased butadiene used to produce rubber was significantly lower than in 2012. Additionally, sales volume of EPS and polystyrene products was lower by 5%. Our variable production cost for the year ended December 31, 2013 for ESBR consisted of 49% butadiene costs, 21% styrene costs, 17% auxiliary raw materials and 13% other costs (electricity, packaging, steam, other costs). For the year ended December 31, 2013, our variable production cost for EPS consisted of 80% styrene, 10% auxiliary raw materials and 10% other costs.

Other Operating Income Other operating income for the year ended December 31, 2013 was PLN 31.5 million, a decrease of PLN 47.5 million, or 60.1%, from PLN 79.0 million for the year ended December 31, 2012. The decrease was primarily attributable to additional one-off transactions during 2012, primarily due to a reversal of provision in the amount of PLN 20.4 million for the liquidation of our electrolysis department. In addition, in 2012 we made a reversal of a write-down on the value of the XPS production line in SYNTHOS Kralupy a.s. and Synthos Dwory 7. As at December 31, 2012, the total value of the reversal of a write-down on the above items of property amounted to PLN 31.2 million in relation to SYNTHOS Kralupy a.s. and PLN 9.8 million in relation to Synthos Dwory 7, respectively.

59 The following table sets forth our historical other operating income for the years ended December 31, 2013 and 2012.

For the year ended December 31, 2013 2012 (PLN million) Reversal of provisions for electrolysis ...... — 20.4 Reversal of impairment losses for receivables ...... 5.4 3.8 Reversal of impairment losses for property, plant and equipment ...... — 41.1 Reversal of other provisions ...... 0.02 0.6 Compensations received from insurance companies ...... 3.2 5.4 Contractual penalties received ...... 13.1 — Other ...... 9.8 7.7 Total ...... 31.5 79.0

Selling costs Selling costs for the year ended December 31, 2013 were PLN 141.5 million, a decrease of PLN 8.1 million, or 5.4%, from PLN 149.6 million for the year ended December 31, 2012. The decrease in selling costs was mainly due to lower spot sales for synthetic rubber combined with higher costs of transportation as well as lower sales volumes for styrenics.

General and Administrative Expenses General and administrative expenses for the year ended December 31, 2013 were PLN 148.8 million, an decrease of PLN 9.1 million, or 5.8%, from PLN 157.9 million for the year ended December 31, 2012. The decrease in general and administrative expenses was mainly due to the additional cost of banking provisions of PLN 3.7 million resulting from the intention to acquire Zakłady Azotowe Puławy, lower depreciation cost and lower maintenance cost.

Other Operating Expenses Other operating expenses for the year ended December 31, 2013 were PLN 31.9 million, a decrease of PLN 5.3 million, or 14.2%, from PLN 37.2 million for the year ended December 31, 2012. The decrease in other operating expenses was mainly due to the impairment charge relating to our waste incineration plant in the amount of PLN 7.2 million incurred in 2012. The following table sets forth our historical other operating expenses for the years ended December 31, 2013 and 2012.

For the year ended December 31, 2013 2012 (PLN million) Revaluation of provisions ...... 0.1 0.1 Establishment of impairment losses for receivables ...... 14.7 5.8 Cost of unused production capacity ...... 1.7 3.7 Establishment of impairment losses for property, plants and equipment ...... — 7.2 Current assets written off ...... — 3.2 Receivables written off ...... 3.6 6.9

Utilization of CO2 emission allowance ...... 1.6 3.7 Costs of decommissioning of inactive facilities ...... 2.5 — Other ...... 7.7 6.6 Total ...... 31.9 37.2

60 Financial Income Financial income for the year ended December 31, 2013 was PLN 23.7 million, an increase of PLN 8.3 million, or 53.9%, from PLN 15.4 million for the year ended December 31, 2012. The increase of financial income was mainly due to net foreign exchange gains and income from the valuation of financial derivative instruments.

Financial Costs Our financial costs for the year ended December 31, 2013 were PLN 26.7 million, a decrease of PLN 17.4 million, or 39.5%, from PLN 44.1 million for the year ended December 31, 2012. The decrease in financial costs was mainly due to net foreign exchange losses for the year ended December 31, 2012 and the lower cost of the valuation of financial derivatives for the year ended December 31, 2013 as compared to the year ended December 31, 2012.

Income Tax Income tax for the year ended December 31, 2013 was PLN 49.9 million, an increase of PLN 17.8 million, or 55.5%, from PLN 32.1 million for the year ended December 31, 2012. Our effective tax rate for each of the years ended December 31, 2013 and 2012 was 10.7% and 5.2%, respectively, mainly due to the legal restructurings of companies within our Group, which allowed for certain income tax exemptions, and because in 2012 our Group recognized a deferred tax asset with respect of investment relief in our subsidiary, SYNTHOS PBR s.r.o. The following table sets forth our historical income tax for the years ended December 31, 2013 and 2012.

For the year ended December 31, 2013 2012 (PLN million) Income tax Income tax expense for the current period ...... 37.1 74.6 Adjustment of tax for previous years ...... 1.2 (13.9) Total ...... 38.3 60.7 Deferred tax Creation / reversal of temporary differences ...... 11.6 (28.6) Total deferred tax ...... 11.6 (28.6) Income tax reported in the statement of comprehensive income ...... 49.9 32.1

Net profit For the reasons discussed above, our net profit for the year ended December 31, 2013 was PLN 417.3 million, a decrease of PLN 167.9 million, or 28.7%, from PLN 585.2 million for the year ended December 31, 2012.

EBITDA Our EBITDA for the year ended December 31, 2013 was PLN 605.3 million, a decrease of PLN 326.8 million, or 35.1%, from PLN 932.1 million for the year ended December 31, 2012. The decrease in EBITDA was primarily due to low prices for synthetic rubber during 2013, as described further above.

61 The following table sets forth our historical EBITDA by segment for the years ended December 31, 2013 and 2012.

For the year ended December 31, 2013 2012 (unaudited) (PLN million) Synthetic Rubber and Latex Segment ...... 311.6 663.7 Styrene Plastics Segment ...... 160.2 112.0 Dispersions and Adhesives Segment ...... 7.6 6.5 Other Operations(1) ...... 125.9 149.9 Total ...... 605.3 932.1

(1) For Other Operations, EBITDA also include income and costs not allocated to any of segments

Year ended December 31, 2012 compared to year ended December 31, 2011 Revenues from Sales Total revenues from sales for the year ended December 31, 2012 were PLN 6,206.6 million, an increase of PLN 765.9 million, or 14.1%, from PLN 5,440.7 million for the year ended December 31,2011. The increase was driven mainly by the substantial growth in the volume of polybutadiene rubber sold in 2012, which was caused by the launch of a new production unit (Synthos PBR) in the second half of 2011 and an increase in demand for our products from the automotive and construction industries during the second half of 2012. The following table sets forth our historical revenues from sales for the years ended December 31, 2012 and 2011.

For the year ended December 31, 2012 2011 (PLN million) Revenues from sales of products ...... 5,299.1 4,906.5 Revenues from sales of services ...... 38.3 32.5 Revenues from sales of materials and goods ...... 867.2 499.7 Income from rental of investment properties ...... 2.0 2.0 Total ...... 6,206.6 5,440.7

Segment analysis for the year ended December 31, 3012 compared to the year ended December 31, 2011 Segment results for the year ended December 31, 2012 were PLN 732.7 million, a decrease of PLN 260.9 million, or 26.3%, from PLN 993.6 million for the year ended December 31, 2011. The decrease was driven mainly by a decrease in the results of our Synthetic Rubber and Latex Segment, which were PLN 631.1 million for the year ended December 31, 2012, a decrease of PLN 249.8 million, or 28.4%, from PLN 880.9 million for the year ended December 31, 2011.

62 The following table sets forth our historical revenues from sales and results by business segment for the years ended December 31, 2012 and 2011.

For the year ended December 31, 2012 2011 (PLN million) Revenues from sales Synthetic Rubber and Latex Segment ...... 3,943.5 3,301.2 Styrene Plastics Segment ...... 1,883.9 1,719.7 Dispersions and Adhesives Segment ...... 101.7 106.9 Other Operations ...... 277.5 312.9 Total revenues from sales ...... 6,206.6 5,440.7 Costs by segment Synthetic Rubber and Latex Segment ...... 3,312.4 2,420.3 Styrene Plastics Segment ...... 1,838.4 1,690.6 Dispersions and Adhesives Segment ...... 100.4 104.7 Other Operations ...... 222.7 231.5 Total costs ...... 5,473.9 4,447.1 Segment results Synthetic Rubber and Latex Segment ...... 631.1 880.9 Styrene Plastics Segment ...... 45.5 29.1 Dispersions and Adhesives Segment ...... 1.3 2.2 Other Operations ...... 54.8 81.4 Total segment results ...... 732.7 993.6

Synthetic Rubber and Latex Segment The segment results in our Synthetic Rubber and Latex Segment for the year ended December 31, 2012 were PLN 631.1 million, a decrease of PLN 249.8 million, or 28.4%, from PLN 880.9 million for the year ended December 31, 2011. This decrease was mainly due to significantly lower margins for our products, particularly from spot customers and customers with negotiable terms contracts and lower results from upstream integration (relation of cost of our butadiene production to market price).

Styrene Plastics Segment The segment results in our Styrene Plastics Segment for the year ended December 31, 2012 were PLN 45.5 million, an increase of PLN 16.4 million, or 56.4%, from PLN 29.1 million for the year ended December 31, 2011. The increase was driven mainly by significantly higher market prices for styrene, which is a key driver for the prices of our products.

Dispersions and Adhesives Segment The segment results in our Dispersions and Adhesives Segment for the year ended December 31, 2012 were PLN 1.3 million, a decrease of PLN 0.9 million, or 40.9%, from PLN 2.2 million for the year ended December 31, 2011. This decrease resulted from the introduction of new research and development projects in this segment, which increased costs, as well as lower sales volume due to reduced demand for our products in the CEE construction industry for the year ended December 31, 2012.

Other Operations The segment results from our Other Operations Segment for the year ended December 31, 2012 was PLN 54.8 million, a decrease of PLN 26.6 million, or 32.7%, from PLN 81.4 million for the year ended December 31, 2011.

63 The decrease, despite the improvement of our margins on electric energy products as a result of higher prices of electric energy sold in the Czech Republic for the year ended December 31, 2012, reflected mainly the way we present energy produced internally and used in the production of chemical products. For the year ended December 31, 2012, the margin realized on selling energy was allocated to main segments while, for the year ended December 31, 2011, it was separately presented as Other Operations.

Cost of Sales Cost of sales for the year ended December 31, 2012 was PLN 5,166.3 million, an increase of PLN 983.6 million, or 23.5%, from PLN 4,182.7 million for the year ended December 31, 2011. This increase was mainly due to a greater sales volume of rubber, the launch of a new product (polydutadiene rubber), higher level quotation of raw materials such as styrene, benzene and ethylene, causing us to buy raw materials at higher prices than in 2011.

Other Operating Income Other operating income for the year ended December 31, 2012 was PLN 79.0 million, an increase of PLN 29.9 million, or 60.9%, from PLN 49.1 million for the year ended December 31, 2011. The increase was primarily attributable to a reversal of impairment losses for property, plant and equipment in the amount of PLN 41.1 million and to a reversal of provision in the amount of PLN 20.4 million for the liquidation of our electrolysis department in order to satisfy environmental legal requirements and to comply with our electrolysis department’s integrated permit. These increases were partly offset by a drop in the amount of return of penalties paid, from PLN 41.0 million in 2011 to nil in 2012. The following table sets forth our historical other operating income for the years ended December 31, 2012 and 2011.

For the year ended December 31, 2012 2011 (PLN million) Reversal of provisions for electrolysis ...... 20.4 — Reversal of impairment losses for receivables ...... 3.8 — Reversal of impairment losses for property, plant and equipment ...... 41.1 — Reversal of other provisions ...... 0.6 — Compensations received from insurance companies ...... 5.4 2.5 Contractual penalties received ...... — — Return of penalties paid ...... — 41.0 Other ...... 7.7 5.6 Total ...... 79.0 49.1

Selling costs Selling costs for the year ended December 31, 2012 were PLN 149.6 million, an increase of PLN 37.5 million, or 33.5%, from PLN 112.1 million for the year ended December 31, 2011. The increase in selling costs was mainly due to increased sales of synthetic rubber, particularly polybutadiene rubber, and higher spot volumes with higher costs of transportation.

General and Administrative Expenses General and administrative expenses for the year ended December 31, 2012 were PLN 157.9 million, an increase of PLN 5.6 million, or 3.7%, from PLN 152.3 million for the year ended December 31, 2011. The increase in general and administrative expenses was mainly due to the additional cost of banking provisions in the amount of PLN 3.7 million resulting from the intention to acquire Zakłady Azotowe Puławy, the increase in depreciation by PLN 2.6 million mainly on intangible assets in the IT department (as a result of the implementation of software for reporting purposes) and the increase in maintenance costs by PLN 1.5 million.

64 Other Operating Expenses Other operating expenses for the year ended December 31, 2012 were PLN 37.2 million, an increase of PLN 21.5 million, or 136.9%, from PLN 15.7 million for the year ended December 31, 2011. The increase in other operating expenses was mainly due to the impairment and write-off of receivables. The following table sets forth our historical other operating expenses for the years ended December 31, 2012 and 2011.

For the year ended December 31, 2012 2011 (PLN million) Revaluation of provisions ...... 0.1 0.3 Establishment of impairment losses for receivables ...... 5.8 — Cost of unused production capacity ...... 3.7 3.8 Establishment of impairment losses for property, plants and equipment ...... 7.2 — Current assets written off ...... 3.2 2.6 Receivables written off ...... 6.9 1.7

Utilization of CO2 emission allowance ...... 3.7 — Other ...... 6.6 7.3 Total ...... 37.2 15.7

Financial Income Financial income for the year ended December 31, 2012 was PLN 15.4 million, a decrease of PLN 37.0 million, or 70.6%, from PLN 52.4 million for the year ended December 31, 2011. The decrease in financial income was mainly due to net foreign exchange losses.

Financial Costs Financial costs for the year ended December 31, 2012 were PLN 44.1 million, an increase of PLN 17.7 million, or 67.0%, from PLN 26.4 million for the year ended December 31, 2011. The increase in financial income was mainly due to net foreign exchange gains.

Income Tax Income tax for the year ended December 31, 2012 was PLN 32.1 million, a decrease of PLN 86.5 million, or 72.9%, from PLN 118.6 million for the year ended December 31, 2011. Our effective tax rate for each of the years ended December 31, 2012 and 2011 was 5.2% and 11.0%, respectively. This was mainly due to the legal restructurings of companies within our Group which allowed for certain income tax exemptions. The following table sets forth our historical income tax for the years ended December 31, 2012 and 2011.

For the year ended December 31, 2012 2011 (PLN million) Income tax Income tax expense for the current period ...... 74.6 133.0 Adjustment of tax for previous years ...... (13.9) — Total ...... 60.7 133.0 Deferred tax Creation / reversal of temporary differences ...... (28.6) (14.4) Total deferred tax ...... (28.6) (14.4) Income tax reported in the statement of comprehensive income ...... 32.1 118.6

65 Net Profit For the reasons discussed above, our operating profit for the year ended December 31, 2012 was PLN 585.2 million, a decrease of PLN 375.6 million, or 39.1%, from PLN 960.8 million for the year ended December 31, 2011.

EBITDA Our EBITDA for the year ended December 31, 2012 was PLN 932.1 million, a decrease of PLN 250.2 million, or 21.2%, from PLN 1,182.3 million for the year ended December 31, 2011. The decrease in EBITDA was primarily due to consistently low prices for synthetic rubber as described above. The following table sets forth our historical EBITDA by segment for the years ended December 31, 2012 and 2011.

For the year ended December 31, 2012 2011 (unaudited) (PLN million) Synthetic Rubber and Latex Segment ...... 663.7 903.4 Styrene Plastics Segment ...... 112.0 107.1 Dispersions and Adhesives Segment ...... 6.5 4.6 Other Operations(1) ...... 149.9 167.2 Total ...... 932.1 1,182.3

(1) For Other Operations, EBITDA also include income and costs not allocated to any of segments

Liquidity and Capital Resources Historically, our liquidity needs have arisen primarily from the need to fund capital expenditures and working capital and service our debt obligations. Our principal sources of liquidity have been cash generated from our operations, bank loans and facilities, disposal of assets, and EU grants for capital expenditures.

Cash Flow The following table sets forth our consolidated cash flow data for each of the periods indicated.

For the six months For the year ended ended June 30, December 31, 2014 2013 2013 2012 2011 (unaudited) (PLN million) Net cash from / (used in) operating activities ...... 227.3 215.6 649.2 702.9 748.6 Net cash from / (used in) investing activities ...... (146.1) (140.0) (223.2) (202.2) (310.8) Net cash from / (used in) financing activities ...... (350.9) (193.6) (733.9) (767.8) (99.6)

Net Cash from Operating Activities Net cash from operating activities for the six months ended June 30, 2014 was PLN 227.3 million, an increase of PLN 11.7 million, or 5.4%, from PLN 215.6 million for the six months ended June 30, 2013. This increase was principally due to the higher tax paid in the first half of 2013. Net cash from operating activities for the year ended December 31, 2013 was PLN 649.2 million, a decrease of PLN 53.7 million, or 7.6%, from PLN 702.9 million for the year ended December 31, 2012. This decrease was principally due to a decrease in the profitability of the business during 2013 because of lower sales due to the lower prices of butadiene and synthetic rubber and therefore operating profit. Net cash from operating activities for the year ended December 31, 2012 was PLN 702.9 million, a decrease of PLN 45.7 million, or 6.1%, from PLN 748.6 million for the year ended December 31, 2011. This decrease resulted principally from a decrease in the profitability of the business during 2012 due to

66 severely lowered margins for our products, particularly from spot customers and customers without long term contracts and lower profits from butadiene production for our own use because of reduced market prices during the period as well as low synthetic rubber prices at the end of the second quarter and during the entire second half of the year.

Net Cash used in Investing Activities Net cash used in investing activities for the six months ended June 30, 2014 was PLN 146.1 million, a slight increase of PLN 6.1 million, or 4.4%, from PLN 140.0 million for the six months ended June 30, 2013. This increase was principally due to higher expenditures on the purchase of intangible assets and property, plant and equipment. Net cash used in investing activities for the year ended December 31, 2013 was PLN 223.2 million, an increase of PLN 21.0 million, or 10.4%, from PLN 202.2 million for the year ended December 31, 2012, principally due to higher capital expenditures in 2013, including the construction of a gas turbine at our production facility in Kralupy, Czech Republic and the installation of an SSBR rubber plant in O´swi˛ecim, Poland. Net cash used in investing activities for the year ended December 31, 2012 was PLN 202.2 million, a decrease of PLN 108.6 million, or 34.9%, from PLN 310.8 million for the year ended December 31, 2011, principally due to a reduced capital expenditures.

Net Cash used in Financing Activities Net cash used in financing activities for the six months ended June 30, 2014 was PLN 350.9 million, an increase of PLN 157.3 million, or 81.3%, from PLN 193.6 million for the nine months ended June 30, 2013. This increase was principally due to the lower amount of overdrafts that were drawn. Net cash used in financing activities for the year ended December 31, 2013 was PLN 733.9 million, a decrease of PLN 33.9 million, or 4.4%, from PLN 767.8 million for the year ended December 31, 2012. This decrease was mainly due to the incurrence of bank loans in the amount of PLN 524.4 million that was primarily offset by higher dividend payments in 2013 and higher expenditures on the repayment of borrowings. Net cash used in financing activities for the year ended December 31, 2012 was PLN 767.8 million, an increase of PLN 668.2 million, or 670.9%, from PLN 99.6 million for the year ended December 31, 2011, mainly due to higher dividend payments made in 2012 and the incurrence of fewer bank loans and borrowings.

Working Capital Requirements We define our net working capital as inventories plus accounts receivables (trade, tax and other) minus accounts payables (trade, tax and other). Our net working capital requirements primarily depend on the prices of raw materials and the management of receivables, liabilities and stock. As of December 31, 2013, net working capital was PLN 831.9 million, a decrease of PLN 92.4 million, from PLN 924.3 million as of 2012. This decrease resulted mainly from lower raw material prices and better inventory management.

Off-Balance Sheet Arrangements As at June 30, 2014, we did not have any contingent liabilities in relation to unrelated entities.

Contractual Obligations and Commercial Commitments The following table summarizes our contractual obligations and commitments as at December 31, 2013. The table does not include outstanding purchase contracts with suppliers, payments due under

67 arrangements related to provisions, maintenance and contingent liabilities entered into in the ordinary course of business.

Total Up to 1 year 1 - 5 years Above 5 years (PLN million) Payments due by period Bank loans(1) ...... 548.1 128.1 393.6 26.4 Overdraft(1) ...... 456.2 456.2 — — Trade payables and other ...... 596.1 596.1 — — Interest rate swaps(2) ...... 4.7 4.7 — — Total ...... 1,605.1 1,185.1 393.6 26.4

(1) The bank loans and overdrafts will be refinanced in connection Offering. (2) As at June 30, 2014, we had three open interest rate swaps: (i) between SYNTHOS Kralupy a.s. and BNP Paribas for the amount of EUR 15 million with settlement on December 15, 2015, (b) between SYNTHOS Kralupy a.s. and RBS for the amount of EUR 15 million with the settlement on December 15, 2015, and (c) between SYNTHOS PBR s.r.o. and HSBC in the amount of EUR 15.1 million with the settlement on June 30, 2017.

Existing Credit Facilities As at June 30, 2014, we had nine loan agreements with five different banks outstanding. All of our bank loans will be repaid in connection with Offering, although only the following five will be cancelled: (i) a loan agreement between Synthos S.A. and SYNTHOS Kralupy a.s., as borrowers, and Powszechna Kasa Oszcz˛edno´sci Bank Polski S.A., as lender, dated November 20, 2013, for a term facility in a maximum amount of EUR 95 million; (ii) a loan agreement between Synthos S.A. and SYNTHOS PBR s.r.o., as borrowers, and Bank Polska Kasa Opieki S.A., as lender, dated December 18, 2013 for a term facility in a maximum amount of EUR 51.4 million; (iii) a loan agreement between Energetyka Dwory sp. z o.o., as borrower, and ING Bank Sl˛´ aski S.A., as lender, dated November 8, 2007, for a term facility in a maximum amount of PLN 86 million; (iv) a loan agreement between SYNTHOS DWORY 4 sp. z o.o., as borrower, and ING Bank Sl˛´ aski S.A., as lender, dated November 15, 2010, for a term facility in a maximum amount of PLN 14 million; and (v) a loan agreement between SYNTHOS DWORY 5 sp. z o.o., as borrower, and ING Bank Sl˛´ aski S.A., as lender, dated November 15, 2010, for a term facility in a maximum amount of PLN 7 million. We will remain party to four Senior Credit Facilities, although the maximum amounts available for borrowing thereunder will be reduced in connection with the Transactions. For further details, see ‘‘Description of Existing Indebtedness’’ and ‘‘Use of Proceeds.’’ As at December 31, 2013, our existing bank loans amounted to PLN 548.1 million with PLN 128.1 million currently outstanding. Our bank loans were secured by mortgages on real estate property and pledges on plant and equipment, as well as assignments of receivables and other security interests. See ‘‘Description of Existing Indebtedness.’’

Bank Guarantees The Royal Bank of Scotland plc has issued several customs guarantees in order to secure the consumer tax obligations of SYNTHOS Kralupy a.s. in a total amount of CZK 47 million, which are valid until October 31, 2015. BNP Paribas Bank Polska S.A. has issued a customs guarantee in order to secure the payment of taxes and other charges required by customs law to be made by Synthos Dwory 7 społka´ z ograniczon˛a odpowiedzialno´sci˛a SKA in the maximum amount of PLN 300 million which are valid until July 31, 2015.

Capital Expenditures Our capital expenditures were PLN 144.3 million for the six months ended June 30, 2014. Our capital expenditures for the year ended December 31, 2013, 2012 and 2011 were PLN 300.3 million, PLN 205.2 million and PLN 302.7 million, respectively.

68 The following table sets forth our capital expenditures by business segment for the periods indicated.

For the six months ended For the year ended June 30, December 31, 2014 2013 2012 2011 (unaudited) (PLN million) Synthetic Rubber and Latex Segment ...... 85.6 126.4 81.7 150.9 Styrene Plastics Segment ...... 9.4 23.2 36.5 47.6 Dispersions and Adhesives Segment ...... 0.6 3.8 7.2 23.0 Other Operations ...... 48.7 146.9 79.8 81.2 Total ...... 144.3 300.3 205.2 302.7

We have an extensive capital expenditure program in place to fund the construction, maintenance and improvement of our production facilities. Significant capital expenditures are required to maintain our plants’ current production, meet the requirements of new regulations, and retain our licenses to operate. Additional capital expenditures are further required to upgrade aging or obsolete equipment, improve energy efficiency, increase production capabilities, and improve process control. We expect our aggregate capital expenditure for the year ended December 31, 2014 to amount to approximately PLN 700 million, and we expect our capital expenditure for the year ended December 31, 2015 to be approximately PLN 800 million. Our largest single current investment project is the construction of a SSBR rubber plant in O´swi˛ecim, Poland, which we are committed to complete. We expect our total investment in this project to be approximately PLN 555.0 million upon completion in 2015. Our other significant investment projects are the construction of an NdBR production facility and additional SSBR rubber production capacity at the Triunfo Petrochemical Complex in Rio Grande do Sul, Brazil. We expect our total investment in this project to be approximately PLN 520.0 million. All of our stated investment figures are only estimates and are subject to change or amendment at any time. Additional ongoing projects may include: (i) the construction of a fluid boiler in O´swi˛ecim, Poland; (ii) a

DeNOx DeSOx installation to treat exhaust gas at our production facility in O´swi˛ecim; and (iii) the construction of a fluid boiler in our utilities production facility in Kralupy.

Quantitative and Qualitative Disclosure about Market Risk Our activities expose us to a variety of market risks. Our primary market risk exposures relate to: (i) interest rates, (ii) exchange rates and (iii) commodity prices. The following discussion and analysis only addresses our market risk and does not address other financial risks which we face in the ordinary course of business, including credit risk and liquidity risk. Please see Note 29 of our Consolidated Annual Financial Statements for the year ended December 31, 2013 for a further discussion of our financial risk management policies and market risk.

Interest Rate Risk We are exposed to interest rate risk in relation to our interest-bearing assets, liabilities and borrowings. Our financial costs are therefore dependent on the fluctuations in the variable interest rates associated with our financial assets and liabilities, which may result in increased costs. Our exposure to fluctuations in interest rates relates primarily to cash, cash equivalents and investments as well as bank loans with variable interest rates. We use swap contracts to hedge against exposure to changes in interest rates by swapping a floating interest rate for a fixed interest rate.

69 The following tables present the sensitivity profile (maximum exposure) to interest rate risk of the Group by presenting financial instruments broken down by variable interest rates (in PLN million):

December 31, 2013 Base interest rate WIBOR PRIBOR EURIBOR USDLIBOR Instruments with a variable interest rate Loans granted ...... 0.7 24.3 — — Cash and cash equivalents ...... 99.4 76.6 219.0 52.2 Loan liabilities ...... (25.9) — (978.5) — Total ...... 74.2 100.9 (759.5) 52.2

December 31, 2012 Base interest rate WIBOR PRIBOR EURIBOR USDLIBOR Instruments with a variable interest rate Borrowings ...... 0.5 59.9 — — Cash and cash equivalents ...... 299.3 295.0 100.4 51.9 Loan liabilities ...... (90.6) — (604.7) — Total ...... 209.2 354.9 (504.3) 51.9

December 31, 2011 Base interest rate WIBOR PRIBOR EURIBOR USDLIBOR Instruments with a variable interest rate Financial assets ...... 444.6 180.4 435.3 90.2 Financial liabilities ...... (47.5) — (784.2) — Total ...... 397.1 180.4 (348.9) 90.2

Exchange Rate Exposure For the year ended December 31, 2013, 70.6% of our revenues and 91.7% of our costs related to transactions settled in a currency other than our reporting currency (Polish złoty). We are therefore affected by both the transaction effects and translation effects of foreign currency exchange rate fluctuations. Fluctuations in exchange rates have an impact on the volume of revenue from sales and purchase costs of raw materials. While an increase in the relative strength of the złoty against other currencies may have a negative impact on the profitability of our export and domestic sales, changes in our revenues from export and domestic sales caused by exchange rate fluctuations are offset in part by changes in the costs of raw material imports. As a result of our purchases of raw materials, product sales, loans and borrowings and cash in foreign currencies, we have been, and expect to continue to be, exposed to foreign exchange rate fluctuations, which could materially affect our results of operations, assets and liabilities, and cash flows as reported in the złoty. Variability in exchange rates could also significantly impact the comparability of our results of operations between periods. As at December 31, 2013, we had forward contracts for the sale of euros in the amount A18.0 million; these contracts were realized in the first half of 2014.

70 The following tables present our sensitivity profile to the risk of changes in exchange rates by presenting financial instruments broken down by currencies in which they are denominated (as reflected by the balance sheet exposure as at December 31, 2013, 2012 and 2011 data in PLN millions):

December 31, 2013 Functional Foreign currency items currency items EUR USD GBP CZK PLN Trade and other receivables ...... 498.8 138.5 — 99,9 120.7 Cash and cash equivalents ...... 219.0 52.2 — 76.6 99.4 Trade and other payables ...... (290.0) (84.6) — (104.4) (117.0) Loan liabilities ...... (978.5) — — — (25.9) Balance sheet exposure to foreign currency risk ...... (505.7) 106.1 — N/A N/A

December 31, 2012 Functional Foreign currency items currency items EUR USD GBP CZK PLN Trade and other receivables ...... 524.4 134.8 2.7 158.2 135.3 Cash and cash equivalents ...... 100.4 51.9 — 295.0 299.3 Trade and other payables ...... (315.0) (67.9) — (208.6) (180.2) Loan liabilities ...... (604.7) — — — (90.6) Balance sheet exposure to foreign currency risk ...... (294.9) 118.8 2.7 N/A N/A

December 31, 2011 Functional Foreign currency items currency items EUR USD GBP CZK PLN Trade and other receivables ...... 564.4 143.0 2.3 186.3 186.4 Cash and cash equivalents ...... 435.3 90.2 0.7 109.7 424.5 Trade and other payables ...... (187.7) (30.4) — (183.9) (180.2) Loan liabilities ...... (784.2) — — — (47.5) Balance sheet exposure to foreign currency risk ...... 27.8 202.8 3.0 N/A N/A

The table below presents the impact that the strengthening or weakening of our functional currencies by 10% in relation to all currencies would have on our financial results. The analysis was performed under the assumption that all other variables, such as interest rates, remain unchanged.

Profit or loss 10% increase in foreign 10% decrease in foreign exchange rates exchange rates December 31, 2013 ...... (44.5) 44.5 December 31, 2012 ...... (17.3) 17.3 December 31, 2011 ...... 23.4 (23.4)

Commodity Price Risk A significant portion of our activity is the import and export of chemical raw materials. We are exposed to the risk of rising prices of supplies of chemical raw materials during contract execution in relation to the pricing originally budgeted for the contract. Significant fluctuations in demand and prices of chemical raw materials can therefore have a negative effect on our operations. We minimize such risk and protect budgeted contract margins by using the following methods: including provisions in our sales contracts that directly tie the prices of products sold by us to the manufacturing costs, i.e., market prices of raw materials.

Critical Accounting Policies The preparation of our financial statements in compliance with IFRS requires our Management Board to exercise professional judgment and make estimates and assumptions that impact the adopted accounting

71 principles and the value of assets, liabilities, revenues and costs presented. All estimates and related assumptions are based on historical experience and various other factors considered reasonable under the given circumstances. Actual results may therefore differ from these estimates under different assumptions or conditions. The estimates and related assumptions are subject to regular verification. Changes in accounting estimates are recognized in the period in which they are made, if such changes apply solely to that period, or in the current period and future periods, if such changes apply both to the current and future periods. Our significant accounting principles are set out in our financial statements included elsewhere in the Offering Memorandum.

72 INDUSTRY OVERVIEW We operate in the Synthetic Rubber and Latex, Styrene Plastics and Dispersions and Adhesives Segments, which comprised 55.5%, 36.6% and 2.0%, respectively, of our sales to external customers in 2013. The remaining 5.9% of our revenues to external customers are attributable to energy generation and other operations.

Synthetic rubber We produce both main types of synthetic rubber: styrene butadiene rubber (‘‘SBR’’) and polybutadiene rubber (‘‘PBR’’). SBR is a vulcanizable elastomer made by the copolymerization of butadiene and styrene. SBR is the largest-volume synthetic rubber in the world due to its high performance characteristics, which comprise better processability, slightly better heat aging and better abrasion resistance than natural rubber. There are two major types of SBR: emulsion styrene butadiene rubber (‘‘ESBR’’) and solution styrene- butadiene rubber (‘‘SSBR’’). ESBR is produced in either hot or cold processes. Hot ESBR tends to process more easily and accept higher loadings than cold ESBR. Hot ESBR is used in cements, adhesives, chewing gum base, certain coated fabrics and molded and mechanical goods. Cold ESBR, because of improved physical properties, has replaced hot ESBR in tire treads. ESBR is the most commoditized of all synthetic rubber types. It is consumed in all regions of the world, though demand levels in North America, Western Europe, and Northeast Asia—especially China—are particularly high. The majority of ESBR is used to produce tires, though its demand in other sectors is also significant. SSBR is similar to ESBR in tensile strength, modulus and elongation, but it has better flex resistance, lower heat buildup, higher resilience and lower rolling resistance in tires and therefore is better able to meet increasingly-stringent specifications of high-performance tires. PBR is the second largest volume synthetic rubber produced. Vulcanized butadiene rubber exhibits high resilience (the ability to recover size and shape after stress), abrasion resistance and resistance to cut growth (growth in size of an initial cut in the cured rubber). PBR can be produced in many forms by different manufacturing processes and different catalysts. Polymer molecules, including those of PBR and SBR, tend to form isomers, i.e., have the same molecular formulas but different chemical structures. Different manufacturing processes tend to have different yields of various isomers. NdBR is manufactured using neodymium catalyst in a process, which yields the highest (95-99%) share of ‘‘cis’’ isomers, which are the most important from a commercial perspective because high ‘‘cis’’ PBRs influence the properties of tires by maintaining the level of wet grip and decreasing rolling resistance at the same time. Different tire materials (SBR, PBR and neodymium rubber) are used to make tire parts. SBR is the main component of tire treads, while PBR is used to manufacture tread and sidewall tire components.

Global SBR overview The global SBR market demand was estimated to be 5,212kt in 2013, according to LMC International, and forecast to grow broadly in line with global GDP growth rates at 3.7% per year until 2020 driven by a combination of automotive production, tire replacement demand, fuel efficiency standards improvements, as well as tire labelling regulations. ESBR demand comprised 81% of overall global demand for SBR in 2013 and is forecasted to grow by 2.8% per year through 2020, but to decline as a share of overall demand to approximately 76% in 2020. SSBR demand, which constituted 19% of global SBR demand, is forecasted to grow at 7.3% per year through 2020. The SBR market is global with inter-regional trade flows balancing supply and demand. The largest region is Asia, which accounted for 55% of global demand in 2013, while North America Western and Central Europe and South America accounted for 16%, 14% and 6%, respectively, with the remainder coming from the rest of the world. Western and Central European SBR demand is forecast to grow at 1.3% per year until 2020, South American by 3.8% per year, North American by 1.0% per year, while Asian by 5.0% per year through 2020. In 2013, global ESBR and SSBR capacities were 6,321kt and 1,841kt, respectively according to LMC International. They are expected to increase to 7,689kt and 2,954kt, respectively, in 2020 according to LMC International. The bulk of new ESBR and SSBR capacity is expected to come on stream in Asia (929kt and 609kt, or 68% and 55% of net capacity additions, respectively according to LMC International).

73 In 2013, Western and Central European ESBR and SSBR capacities were 805kt and 429kt, representing approximately 13% and 23% of global capacities, respectively. European ESBR capacity is forecast to grow to 979kt in 2020 (representing 13% of net global capacity additions), while European SSBR capacity is expected to grow to 698kt in 2020, representing 24% of net global capacity additions) according to LMC International.

Global PBR overview The global PBR demand was estimated to be 3,256kt in 2013. The PBR market is global with inter-regional trade flows balancing supply and demand. The largest region is Asia, which accounted for 56% of global demand in 2013, while having approximately 57% of global PBR capacity. North America Western and Central Europe and South America each accounted for 17%, 16% and 5% of global demand, respectively, while having 20%, 11% and 2% of global capacity, respectively, based on LMC International data. Global PBR demand is forecast to grow broadly in line with GDP growth rates and slightly faster than SBR at 4.0% per year until 2020 driven by a combination of strong automotive production, tire replacement demand, fuel efficiency standards improvements, as well as tire labelling regulations. Western and Central European PBR demand is forecast to grow by 0.9% per year until 2020, South American by 4.1% per year, North American by 0.9% per year, while Asian by 5.5% per year through 2020, based on LMC International data.

Key End Markets Tire manufacturing is the largest end market for synthetic rubber, accounting for approximately 76% and 89% of ESBR and SSBR outputs, respectively. Other end uses include non-tire automotive applications, conveyor belts, industrial hoses, various molded and extruded rubber goods, footwear and other consumer goods. Some grades of SBR, such as those that are waterproof and free from impurities, are also utilized in the cable industry. Similarly, tire manufacturing is the largest PBR end market, accounting for approximately 72% of global consumption, based on IHS Chemical data. Industrial products, where PBR is incorporated with other materials to make various automotive parts (hoses and belts), industrial products (conveyor belts) and a few consumer products (for example, centers of golf balls), comprise 16% of global consumption. Impact modifiers for acrylonitrile butadiene styrene and high-impact polystyrene comprise the balance. In both Europe (including Russia) and South America, the two regions where we are either already present (the Czech Republic and Poland), or where we are planning to construct a manufacturing facility (Brazil), tires and tire products make up a larger share of overall consumption at 74% and 75%, respectively, based on IHS Chemical data. The three largest tire manufacturers are Bridgestone, Michelin and Goodyear, which had a combined share of 40.6% of the global tire market in 2011. Approximately 87% of the global tire market is for passenger car and light truck tires, while 13% is for other truck tires such as earthmover, two-wheel, agricultural and aircraft vehicles, based on the Global Tire Report—2012, European Rubber Journal.

Trends Factors which can influence SBR and PBR demand are global tire and automotive production, price of the raw material butadiene, high demand in emerging markets, global economic status and outlook, competition with other rubber, improving fuel efficiency standards and tire labelling legislation. Tire demand comprises of original equipment manufacturers demand for new vehicles (‘‘OEM’’) and replacement tire demand. The replacement market remains one of the main drivers for underlying rubber demand as the original equipment tires wear out, being less sensitive to macro headwinds and providing a stable demand for synthetic rubber. While tire sales growth slowed in 2012, in the longer term, light vehicle ownership increases as incomes rise, leading to increased demand for tires. According to LMC International, production of tires is estimated to increase by 5% CAGR between 2013 and 2020. In recent years, emerging markets have grown with large rises in vehicle ownership as new vehicle sales have increased. In contrast, developed markets have seen only slow growth in vehicle ownership as these markets are approaching saturation point. Emerging market ownership levels are still low though, when compared to the developed markets, which is reflected in the difference in the structure of demand. In mature markets, 20% of tires are OEM, while 80% are replacement, whereas in the emerging markets 40% of tires are OEM and 60% are replacement. As incomes rise, vehicle ownership levels in emerging

74 markets will continue to grow. The implications for the tire market (and elastomer demand) are that growing vehicle ownership will increase demand (both for OEM and replacement tires), and this growth will be dominated by emerging markets, particularly India and China. Furthermore, the expansion of tire manufacturers in CEE will drive rubber demand in Europe (stable growth of approximately 2% per year, according to LMC International data), with expected expansions of Continental (Slovakia, announced planned investment of US$135 million to add 400k truck capacity), Bridgestone (Hungary, announced planned investment of US$346 million to triple daily capacity by 2017) and Michelin (Poland, announced planned investment of US$138 million to expand agricultural tire capacity), Nexen (Czech Republic, announced planned investment of US$1.1 billion to open first plant in the EU), Apollo Tyre (Hungary, announced planned investment of A442 million greenfield tire production project), Hankook Tire (Hungary, announced planned investment of US$400 million to boost capacity by 42%). Compulsory tire labelling was introduced into Europe and Korea in November 2012, with other regions expected to follow. Brazil will adopt tire labelling in 2016, while in the United States, tire labelling proposals are being considered. Tire labelling increases consumer awareness and choice when buying a tire. In developed markets, the implementation of low rolling resistance light vehicle tires has led to a marked reduction in the use of natural rubber and ESBR in the tread compounds of light vehicle tires. These elastomers have been replaced by compounds based on SSBR and silica reinforcement. Introduction of tire labelling and increased focus on fuel efficiency standards and lower CO2 emissions have also had a positive impact on NdBR, which can be used to manufacture high-performance ‘‘green’’ tires. Demand for these low rolling resistance tires now covers the European light vehicle market and an increasing proportion of replacement sales. Demand is also increasing in other regions as vehicle and tire manufacturers seek to reduce CO2 emissions.

Competitive landscape SBR In Western and Central Europe, the bulk of the synthetic rubber industry is controlled by a small number of chemical companies: Lanxess, Trinseo (formerly Styron) and Versalis (formerly Polimeri Europa). In addition, Michelin operates a captive plant in France and in Serbia. Western and Central European ESBR capacity is dominated by Versalis and us. We have the largest capacity, with 42% market share. We operate plants in Poland and the Czech Republic, with nameplate capacity close to 295kt. The second largest producer Versalis operates plants in Italy and the United Kingdom with nameplate capacity of approximately 195kt, based on IHS Chemical data. Demand growth for high-performance and low rolling resistance tires has led to a strong increase in SSBR demand, which is expected to translate into new capacity additions. Michelin and Trinseo are the largest Western and Central European SSBR producers, with 170kt capacity each at their respective sites in France and Germany. Lanxess has a 40kt unit in France, while Versalis has a 30kt unit in the UK, based on IHS Chemical data. We will be a new entrant with the 90kt plant which we expect to come on stream in 2015 at our site in O´swi˛ecim, Poland and which we plan to use to expand our portfolio with the introduction of a new innovative SSBR rubber product to the market. Tire industry development in Central Europe is expected to continue to be the main driver of increasing demand for butadiene derivatives, primarily synthetic rubber. Concerns over toxicity of highly aromatic oils used as extender oils by the tire industry led to the EU banning the use of distillate aromatic extracts forcing manufacturers of synthetic rubber, typically SBR, to seek alternative extender oils. The need to produce SBR containing non-distillate aromatic extracts processing oils, such as treated distillate aromatic extract has led to an increase in trade as synthetic rubber manufacturers, who are able to produce these products, have increased exports. Most noticeably, oil extended SBR imports to China have increased strongly between 2009 and 2012. Europe is a net exporter of SBR and China, East Asia and Southeast Asia are the main export destinations. In North America, ESBR capacity is dominated by three U.S. producers: ISP / Ashland, Lion Copolymer and Goodyear, with a combined nameplate capacity of 770kt. In Mexico, Dynasol operates a 96kt plant. SSBR nameplate capacity is estimated to be 320kt in North America. Much of this capacity is first generation SSBR, according to LMC International data. This reflects tire life and rolling resistance as key drivers of demand in North America, compared to traction and rolling resistance in Europe. The United States dominates SSBR production in North America, with four producers: Firestone, Goodyear, American Synthetic / Michelin and Lanxess. North America has been a net exporter of SBR since 2006,

75 although net exports have fallen since 2007 due to lower ESBR demand and lower production (as a result of a butadiene shortage). In contrast to the United States, where capacity for SSBR is concentrated in major tire players, there is only one captive producer in Europe (Michelin). Europe’s SSBR plants are generally much smaller than those of their counterparts in North America. This is largely because these plants produce the second and third generation and functionalized SSBR for Europe’s tire industry, which is more difficult to manage and produce than first generation SSBR. In South America, Lanxess is the largest producer, with 285kt ESBR and 40kt SSBR nameplate capacity. It is planning to switch its 110kt capacity in Triunfo from ESBR to SSBR. South America is a net importer of SBR. In Asia, the bulk of ESBR and SSBR capacity is in North East Asia (2,635kt or 50% of global ESBR capacity and 546kt or 39% of global SSBR capacity) of which China comprises majority (1,460kt or 28% of global SSBR capacity and 142kt or 10% of global SSBR capacity), according to IHS Chemical. In Korea, Kumho Petrochemical has the largest ESBR facility in the world, with nameplate capacity of 565kt, according to IHS Chemical. East Asia is a net exporter of SBR. Bridgestone is the only large global tire player with production capacity in China (50kt), based on IHS Chemical data. In SSBR, production capacity is held by two producers. China is a net importer of SBR, primarily from East Asia. This is due to increased demand for non-DAE extended oil SBR in tires for export to Europe.

NdBR As with SBR, Western and Central European PBR capacity is controlled by a small number of chemical companies: Trinseo, Lanxess, Synthos and Versalis. In addition, Michelin operates a captive plant, although much of its capacity has switched to SSBR. Western and Central European PBR nameplate capacity is over 500kt based on IHS Chemical data, however, it is difficult to precisely allocate capacities at four multi-purpose plants. Lanxess is the largest producer, with capacity of over 175kt, and specializes in NdBR. Capacity has been increased by de-bottlenecking at its Dormagen plant. Versalis operates plants in the United Kingdom and Italy with total nameplate capacity of 130kt, a portion of which is also NdBR. Trinseo and Synthos occupy a joint third/fourth place in Europe. Trinseo operates an 81kt plant while we opened an 80kt NdBR plant in the Czech Republic in mid-2011. We have 15% of European PBR production capacity and are the second-largest Western and Central European producer of NdBR by production capacity. Michelin used to manufacture NdBR at its plant in Bassens. Following a seven-year agreement with Synthos to supply NdBR to Michelin, the latter ceased NdBR production in favor of SSBR at that plant. Lanxess is South America’s sole producer of PBR, with estimated nameplate capacity of 106kt. South America is a net importer of PBR, primarily from North America and East Asia. We are constructing an 90kt facility in Brazil, which is expected to come on stream within the next few years, subject to the entrance into force of raw materials supply agreements, including butadiene supply agreement with Braskem executed in October 2013. We can make no assurances that such contracts will be implemented and that construction of the planned NdBR production facility in Brazil will commence at such point. New future butadiene rubber capacity additions globally are likely to be based on neodymium catalyst technology, however, there is potential for rationalization of existing facilities in advanced markets, where capacity utilization is low. 65% of nameplate capacity in North America is captive. Goodyear is the largest PBR producer, with 250kt capacity, followed by Firestone Polymers (165kt) and American Synthetic / Michelin. The one independent producer, Lanxess, has 215kt of capacity. North America is a net exporter of PBR, primarily to Europe and South America. China accounts for more than 50% of PBR capacity in Asia, with Sinopec and Petrochemical China dominating production. China is a large net importer of PBR, although imports have been falling as capacity is added. China is expected to add a significant amount of capacity over the next few years, which could result in increases to the quantity of synthetic rubber offered in Europe and any overcapacity could result in decreased demand for our products.

76 Prices and spreads Regional ESBR price and margin ($/t)

6,000 1,600 1,400 5,000 1,200 4,000 1,000 800 3,000 600 2,000 400 eSBR price ($/t) eSBR margin ($/t) 200 1,000 0 0 (200) Jan-99 Jan-01 Jan-99 Jan-01 Jan-03 Jan-03 Jan-05 Jan-05 Jan-07 Jan-07 Jan-09 Jan-09 Jan-11 Jan-11 Jan-13 Jan-13 Sep-99 Sep-01 Sep-99 Sep-01 Sep-03 Sep-03 Sep-05 Sep-05 Sep-07 Sep-07 Sep-09 Sep-09 Sep-11 Sep-11 Sep-13 Sep-13 May-00 May-00 May-02 May-02 May-04 May-04 May-06 May-06 May-08 May-08 May-10 May-10 May-12 May-12 May-14 May-14

Western Europe North America 29SEP201418355128

Note: Western Europe: market domestic contract price less production cash cost North America: market contract medium buyer average price less production cash cost Source: IHS Chemical Consumption and prices of ESBR in Western Europe fell during the 2008-09 recession. The increase following the start of the global economic recovery in 2010-2011 led to peak prices, before they fell on softening demand and renewed concern over the sovereign debt crisis. Following the global recovery post-financial crisis and peak ESBR demand, margins reached approximately $1,400 per ton in Western Europe. Subsequent concerns over the Eurozone’s sovereign debt crisis reduced both SBR and butadiene prices and narrowed the margins. ESBR margins expected to decrease in the medium term from current levels. Following the 2008-09 worldwide recession, the U.S. SBR market somewhat stabilized and prices duly increased from a significantly depressed market (especially in 2009). In 2010-2011, ESBR prices increased by 66%. These large price increases were due to the supply/demand situation, but more importantly to the shortness in butadiene supply coupled with high butadiene raw material cost. However, in 2011-2013, SBR prices dropped due to a slowdown in demand, especially in the automotive and tire industries. Most of the large U.S. tire manufacturers cut tire production significantly in 2012 and 2013. Nevertheless, in the first half of 2014, sales of NdBR began to grow again.

Regional PBR price and margin ($/t)

6,000 1,400 1,200 5,000 1,000 800 4,000 600 3,000 400 200

PBR price ($/t) 2,000 PBR margin ($/t) 0 (200) 1,000 (400) 0 (600) Jan-11 Jan-07 Jan-13 Jan-09 Jan-05 Jan-99 Jan-03 Jan-01 Jan-13 Jan-11 Jan-09 Jan-07 Jan-05 Jan-03 Jan-99 Jan-01 Sep-13 Sep-09 Sep-05 Sep-07 Sep-11 Sep-03 Sep-01 Sep-99 Sep-13 Sep-11 Sep-09 Sep-07 Sep-05 Sep-03 Sep-99 Sep-01 May-14 May-12 May-04 May-10 May-06 May-08 May-02 May-14 May-00 May-12 May-10 May-08 May-06 May-04 May-02 May-00

Western Europe North America Asia 29SEP201418355263

Note: Western Europe: market contract price less production cash cost North America: market contract medium buyer average price less production cash cost Asia: spot price less production cash cost Source: IHS Chemical

77 Consumption and prices of PBR follow the SBR trend across the regions. Given that PBR prices in Western Europe are expected to grow at a faster rate than SBR prices, PBR margins are likely to expand over the forecast period. The main reason for this situation is that there is greater demand for high performance tires in Europe which increases the overall demand for PBR. There is also a greater proportion of NdBR in EU than in the U.S. or Asia and therefore the margins of average PBR are higher in the EU.

Raw materials availability Butadiene is the main raw material needed to produce SBR and PBR. See section ‘‘Business—Raw Materials’’ for further information.

Operating Rates SBR Europe is a net exporter of SBR, with approximately 20% of production sold outside of the region. As European SBR capacity is expected to grow at a faster pace than European production, utilization rates are expected to fall. The ESBR operating rate is forecast to decrease from 79% in 2012 to 68% in 2020, while SSBR utilization is forecast to decrease more steeply from 94% to 54% over the same period, based on the LMC International. Our ESBR operating rate is estimated to be greater than 90% in 2014-2015, due to more cost-efficient production facilities and strong demand growth in ‘‘green’’ high-performance tires. After the commencement of our new SSBR plant, the operating rate for SBR may decrease slightly due to partial utilization of the new plant capacity.

NdBR The current global NdBR market is well supplied. New capacity coming on stream in fast-growing markets means that capacity utilization levels are expected to fall in the short term, before rising again to 68% over the forecast period. However, this hides changes in demand by catalyst which will mean higher capacity utilization levels for some catalysts over others. In particular, the growth in demand for low rolling resistance tires is leading to strong growth for NdBR which is used in both the tread and sidewall compounds of these tires. Western and Central Europe are net importers of PBR, primarily from Russia, although, with the opening of the plant in 2011, net imports fell to 214kt in 2012, from 302kt in 2011, based on LMC International data. With the opening of our plant and lower demand, capacity utilization levels have fallen and are expected to remain under pressure. Our PBR operating rate of 70% in 2013 is forecasted to increase to 90% in 2015. South America’s rubber imports, primarily from North America and East Asia, rose to over 100kt in 2012, their highest level to date. Given limited production capacity (there is only one PBR plant in the region), growth in demand is expected to exceed growth in production through 2017, resulting in increasing net imports. Our new capacity in Brazil may reverse this trend.

Polystyrene Polystyrene (‘‘PS’’) is a polymer obtained from the polymerization of styrene monomer. GPPS is a clear crystal polymer that can have different properties, such as melt flow index and chemical resistance. HIPS contains about 7% of polybutadiene, which is grafted onto the styrene polymer. EPS beads are used in the production of molded foam products and are offered in two grades (e.g., regular and modified) and in a range of bead sizes. We produce EPS (210kt of capacity), as well as HIPS and GPPS (combined 130kt of capacity) primarily for the European market.

Global PS overview The global polystyrene demand was estimated at 15.5 million tons in 2013, with GPPS and HIPS comprising 63% and EPS comprising the balance. Northeast Asia has the greatest consumption of EPS, which accounted for 59% of global consumption in 2013. Western Europe and CEE accounted for 25% of global consumption in 2013.

78 In 2013, global EPS, and GPPS and HIPS capacities were 10,433kt and 14,974kt, respectively.

Key End Markets The largest GPPS and HIPS end market, accounting for approximately 29% of global consumption in 2010 was electrical and electronic segment, followed by packaging (28%), consumer and institutional applications (12%), as well as construction, thermal insulation in particular (3%) while other applications, such as custom molded articles, made up the balance, according to, based on IHS Chemical data. The largest EPS end market, accounting for approximately 45% of global consumption in 2010, is building insulation, followed by packaging (33%) and other (23%), such as cups and bowls and loose-fill beads used in packaging and cushions and bean bag chairs, based on IHS Chemical.

Trends The downstream portions of the supply chain of styrene and polystyrene have always been susceptible to compression and/or volatility caused by the underlying raw materials, which move to vastly different market dynamics. The result was the rise of more integrated polystyrene companies and styrenics ventures, such as Trinseo or Styrolution. Such industry consolidation is likely to continue. Since no significant new capacity is expected, this should support recovery of pricing as demand grows. Leading manufacturers will continue to seek new partnerships and opportunities to expand into growth markets in Asia, Eastern Europe and the Middle East. As indicated above many of these partnerships will not only have a market thrust to expand or deepen coverage but also to increase integration. Older and more inefficient units will continue to be closed down and newer, more efficient facilities will be debottlenecked and expanded to create economies of scale and to maintain a competitive edge. Major world producers continue to focus on differentiation and value-added products. Where prior objectives were to gain only market share, the focus is now shifting to competition, by providing higher- value products in existing markets while extending and expanding existing markets via new applications. Energy savings initiatives are becoming increasingly important. The Kyoto Protocol requires the EU to reduce energy consumption by 20% by 2020. Reduction in building energy use is considered as a key area for savings. Increased focus on building standards means higher growth in insulation than in the overall construction market. The EU Directive on the Energy Performance of Buildings (‘‘EPBD’’) sets high standards of energy conservation. Thermal insulation initiatives have attractive economics for end-users. Improved insulation performance leads to lower utility bills, which tend to outweigh implementation costs. The expected recovery in the CEE construction market is likely to improve housing standards in the region, aligning it with Western Europe. Increasing demand for quality insulation is also influenced by the prospect of growing energy prices. Thermal insulation demand in construction and thermomodernization will be the main driver to EPS demand.

Competitive landscape INEOS was the largest European EPS producer, with 420kt in capacity in 2013 across its sites in France, Germany and Netherlands. It shut down its c100kt German facility at the end of 2013. BASF was the second largest European EPS producer, with 300kt of capacity in 2013 across its sites in Germany. We were the third-largest European and the largest Central European EPS producer, with 210kt of capacity in 2013 across our sites in Poland and the Czech Republic (11% market share of European production capacity) and are also the only styrene producer in Central Europe, according to IHS Chemical data. In GPPS and HIPS, Styrolution was the largest European PS producer, with 710kt of capacity in 2013, followed by Total PC with 473kt and Trinseo with 440kt, based on IHS Chemical. We were the fifth-largest European (6% market share of European production capacity) and the largest central European PS producer, with 130kt of capacity in 2013. Western Europe is a mature market, which has undergone significant capacity rationalization. Its styrene capacity decreased by approximately 20% between 2008 and 2013, to 5,192kt, which was due to the overcapacity of styrene in this period. However, a capacity decrease was a positive factor for other

79 producers of polystyrene because it led to better capacity utilization. GPPS and HIPS capacity contracted by nearly 500kt during this time as PS sees important end-use applications erode and is struggling to compete on a price basis against other polymers. Polypropylene, which is the main polystyrene competitor, is cheaper and has slightly better physical properties. EPS, on the other hand, continues to grow because of the increasing environmental awareness and high cost of energy, which causes customers to invest in the thermal insulation of their houses.

Raw materials availability Styrene is the main polystyrene raw material. Please see section ‘‘Business-Raw Materials’’ for further information.

Operating Rates As a region, CEE, is a long-term net importer of polystyrene resin. Most of the polystyrene imports come from intraregional trade. Intraregional trade is supplemented with EPS imports from Western Europe, the Republic of Korea, Finland and China, and GPPS and HIPS imports from Western Europe and the Middle East. In 2010, net 382kt of polystyrene were imported to CEE, of which 317kt comprised EPS. CEE EPS production was 202kt in 2010, resulting in the highest regional operating rate of 76% based on IHS Chemical data. We expect the EPS demand growth is forecast to significantly outstrip capacity growth in CEE, both the operating rates and net imports are likely to increase from current levels.

Butadiene Butadiene is a monomer used in the production of polymers and as a chemical intermediate for several specialty products. The single largest use for butadiene is in the production of synthetic elastomers, including SBR and PBR. It is also copolymerized into plastics, the largest being acrylonitrile-butadiene- styrene resins, which are used in various applications. Steam cracking of hydrocarbon feedstocks is the primary source of butadiene. Two other sources of butadiene are being developed: on-purpose butadiene and bio-butadiene, which are not expected to become commercial before 2020. Due to the global nature of butadiene production and its diverse applications, it is impacted by various dynamics including changes in the production of ethylene, fluctuations in energy markets and general economic cycles. Butadiene is our key raw material / monomer and is used in Poland and the Czech Republic in the production of SBRs and NdBR. In the Czech Republic, nearly the entire local butadiene requirement is met by the production output of our joint-venture with Unipetrol, while in Poland, it is purchased for a major local refinery PKN Orlen. Historically, butadiene price changes were driven by volatility in oil prices. Since 2011, volatility in butadiene, driven by reduced availability, exceeded that of crude oil. Butadiene price volatility impacts variability in producers’ margins. The availability of butadiene is globally becoming a more important issue in determining the location of new synthetic rubber capacity. In Central Europe, butadiene production is based on crude C4 extraction from local naphtha steam crackers. Regional production thus is limited to facilities located in the Czech Republic and Poland. In Poland, PKN Orlen at Plock recovers butadiene from a captive ethylene co-product crude C4 fraction. In the Czech Republic, Butadien Kralupy a.s. started a butadiene extraction unit in 2010. This butadiene is supplied to the Group. A new 130kt butadiene capacity constructed by MOL/TVK is scheduled to start operations in Hungary in 2015. Butadiene demand in Central Europe is dominated by ESBR with only marginal quantities consumed in the production of other derivatives, such as ABS, NBR and SBL. In 2011, PBR became the second largest butadiene derivative in the region as SYNTHOS Kralupy a.s. started up a new 80kt unit in the Czech Republic. A further 90kt SSBR unit is to be completed in 2015 in the Krakow region, Poland. Over the next five years, Central Europe is likely to import butadiene as local demand rises significantly, driven by tire production. Several large tire producers are increasing their presence in the region.

80 For SSBR, imports will continue until the new production unit comes on stream, at which point a large proportion of SSBR will be produced from domestic sources. In South America, butadiene production currently is located exclusively in Brazil, where Braskem is the only producer. COMPERJ project, which includes a 150kt butadiene extraction unit, is not expected to come on-stream until much later in the decade. Crude C4 supplies in the region exceed local demand, requiring the destruction or hydrogenation of surplus C4 fraction, with occasional quantities exported to the United States on a spot basis. Butadiene in South America is mainly consumed in the production of commodity synthetic rubber. Demand from SBR production accounted for 57% of overall demand in 2012, excluding exports, while PBR consumption accounted for 26%, based on IHS Chemical data. The region’s butadiene trade position recently changed from a more or less balanced to a net export position, since exports to the United States and, to a lesser extent, Asia, has increased significantly. Argentina remains the only butadiene importing country in South America. The region will continue to be a net importer of butadiene derivatives, particularly PBR and SBR. Capacity expansion by Braskem in 2012 in Brazil made additional butadiene monomer available for export. Although shale gas revolution had a significant positive impact on the chemical market in North America, by providing a cheap source of energy and feedstock, it has had a negative impact on butadiene outlook. Closure of steam crackers, due to the switch from naphtha to lighter cost-advantaged feedstocks, has significant reduced the supply of butadiene. Demand for butadiene has been declining since 2004, mainly due to limited supply. The expected startup of butane dehydrogenation based on-purpose butadiene production will allow some derivative demand growth, however, this is not expected until 2018. Northeast Asia is by far the largest producing and consuming region for butadiene, accounting for almost 45% of the global butadiene extraction capacity and an estimated 48% of global demand. China, in 2010, overtook the United States as the largest producing country and, by 2023, is projected to contribute over 25% of global production.

Prices and spreads Regional butadiene price and margin ($/t)

4,500 2,500

4,000 2,000 3,500 1,500 3,000 2,500 1,000

2,000 500 1,500 0 Butadiene price ($/t)

1,000 Butadiene margin ($/t) 500 (500)

0 (1,000) Jul-00 Jul-03 Jul-06 Jul-09 Jul-12 Jan-99 Jan-01 Jan-03 Jan-05 Jan-09 Jan-07 Jan-11 Jan-13 Sep-99 Sep-03 Sep-01 Sep-05 Sep-07 Sep-09 Sep-11 Sep-13 Oct-99 Apr-01 Oct-02 Apr-04 Oct-05 Apr-07 Oct-08 Apr-10 Oct-11 Apr-13 Jan-99 Jan-02 Jan-05 Jan-08 Jan-11 Jan-14 May-00 May-02 May-06 May-08 May-04 May-10 May-12 May-14

Western Europe North America 29SEP201418354990

Note: Western Europe: market domestic contract price less production cash cost co crack value CC4 North America: market contract price less production cash cost 3rd party CC4s Source: IHS Chemical A tight Western Europe butadiene market following the start of global economic recovery and resumption of growth in the automotive industry in 2010-2011 led to record prices in 2011, before dropping on softening demand and renewed concerns over the Eurozone’s sovereign debt crisis. With global recovery taking hold and relatively small capacity additions, the butadiene market is expected to remain tight over the next several years.

81 Styrene Styrene is our key raw material monomer in the production of polystyrene. Styrene is a clear colorless liquid with a low odor threshold. It is one of the highest volume commodity chemicals traded. The conventional method of producing styrene, the main raw material in the production of polystyrene, is alkylation of benzene with ethylene to produce ethylbenzene, followed by dehydrogenation of ethylbenzene to produce styrene. An alternative method involves co-producing propylene oxide and styrene monomer from propylene and ethylbenzene. The Central European styrene market is heavily dependent upon imports, with only one domestic supplier. There are two styrene units in Poland and the Czech Republic, both owned by us. Both of these units use conventional technology, though upstream integration is not matched as the Czech Republic ethylbenzene capacity is oversized, relative to the styrene unit, and ethylbenzene is transported to Poland. There have been no capacity changes over the past five years, and operating rates have fallen as imports have increased. Styrene demand in Central Europe over the past five years has grown at a faster rate than GDP and is driven almost entirely by EPS. Regional demand growth is projected to be stable until growth starts to slow in 2017, supported by the very strong growth expected for EPS production. Only two countries have styrene capacity and all countries have some level of styrene demand, so there is much intra-regional trade in Central Europe. Hungary is the largest importer of this material, which comes primarily from West Europe. Despite having their own production, Poland and the Czech Republic are also major net importers of styrene. Total imports to the region account for more than half of the supply and are projected to continue to increase, driven by the fact that styrene capacity is not forecasted to rise in Central Europe and at the same time demand is forecasted to rise steadily. Most of Central Europe’s styrene needs will be covered by styrene producers from Western Europe.

82 BUSINESS Overview We are one of the leading manufacturers of chemical raw materials in Central and Eastern Europe (‘‘CEE’’), headquartered in Poland with our main production operations located in Poland and the Czech Republic. We are the leading producer of synthetic rubber and the leading producer of expandable and extruded polystyrene in Europe, based on data provided by IHS Chemical. Our upstream integration with a stable source of raw materials, including C4 fraction, butadiene, benzene and ethylene, which we source mainly from regional crackers, has allowed us to achieve a leading cost position in the synthetic rubber industry. We have a broad and diverse customer base across a wide range of industries, including the automotive, construction and packaging industries, which accounted for approximately 43%, 27% and 12% of product volumes sold for the year ended December 31, 2013, respectively. We have developed long-term relationships with our key customers, which include market leaders such as Michelin and Goodyear, many of which have lasted over several decades. Over the years, we have successfully leveraged our key proprietary technologies and transformed ourselves into a modern synthetic rubber and styrenics producer with global operations. Our shares have been listed on the Warsaw Stock Exchange since 2004, and we have been a member of the blue chip WIG20 index on the Warsaw Stock Exchange since 2012. As at June 30, 2014, we had a market capitalization of PLN 5,849 million. For the twelve months ended June 30, 2014, we generated consolidated revenues from sales of PLN 4,745.4 million and EBITDA of PLN 625.4 million. Our business is divided into three main business segments: butadiene, rubber and latex (the ‘‘Synthetic Rubber and Latex Segment’’), styrene and styrene derivatives (the ‘‘Styrene Plastics Segment’’) and dispersions and adhesives (the ‘‘Dispersions and Adhesives Segment’’). Other sources of revenues include auxiliary operations related to the production and distribution of thermal energy from our own power plants, as well as revenues derived from the trading and distribution of electricity (‘‘Other Operations,’’ including ‘‘Energy,’’ which is reported as a separate segment in the Consolidated Financial Statements). Other Operations also include income and costs not allocated to any segments.

Percentage of revenues by segment for the Percentage of EBITDA by segment for the twelve months ended June 30, 2014 twelve months ended June 30, 2014 (unaudited) (unaudited)

Our operations are comprised of the following three core business segments: Synthetic Rubber and Latex Segment Our Synthetic Rubber and Latex Segment is our core business segment. 78% of the volume of products sold a this segment is attributable to large tire industry participants, including Michelin, Continental, Bridgestone, Goodyear and Pirelli. The remaining 22% of the volume of products sold in this segment is derived from other markets, including those involved in the production of technical rubber, soles for footwear, flexible cables and transmission belts. For the twelve months ended June 30, 2014, our Synthetic Rubber and Latex Segment generated revenues from sales of PLN 2,374.1 million and EBITDA of PLN 268.7 million.

83 Styrene Plastics Segment Our Styrene Plastics Segment produces three main types of products, which differ in their application. The first is expandable polystyrene (‘‘EPS’’), which is primarily used in the production of thermal insulation boards, a basic thermal insulation material used in Central Europe. The second includes general purpose polystyrenes (‘‘GPPS’’) and high impact polystyrenes (‘‘HIPS’’), which are primarily used in the food packaging industry. Polystyrene is also used for making disposable tableware, cups, and containers for dairy products, trays and cutlery. It is also used as a raw material in the production of shower cubicles, jewelry packaging, and other materials requiring a stiff but transparent packaging material. The third is extruded polystyrene board (‘‘XPS’’), which is produced by our new production line for extruded polystyrene. XPS is used primarily in the construction industry, as a thermal insulation material for the perimeters of buildings, roofs with reverse layer sequences, flooring and in thermal bridges and cavity walls. For the twelve months ended June 30, 2014, our Styrene Plastics Segment generated revenues of PLN 2,016.3 million and EBITDA of PLN 218.9 million.

Our Strengths We believe we have a number of competitive strengths that differentiate us from our competitors, including:

Upstream integration and strategic collaboration with suppliers We believe access to a stable source of attractively priced raw materials is a key advantage for our business and we strive to produce a significant portion of our key monomer inputs internally. As a result of our close strategic cooperation and long-term contracts with key suppliers, we have integrated most of our supply of raw materials with our production facilities in the Czech Republic and Poland. Our upstream integration via a joint venture with Unipetrol in the Czech Republic, through which we manage our own butadiene production, provides us with a stable and low-cost supply of key raw materials for our synthetic rubber production and allows us to generate greater profits on our finished products.

84 In addition, we source feedstock such as C4 fraction, butadiene, benzene and ethylene from regional refineries, including Unipetrol, PKN Orlen, Sabic and OMV, primarily on the basis of long-term volume contracts. Our C4 fraction contracts are linked to naphtha prices, while our butadiene, benzene and ethylene contracts are based on international price quotations (e.g., the Independent Chemical Information Service). As a result of the prevalence of naphtha crackers throughout Europe, the proximity of several C4 fraction suppliers to our operations and limited local competition for butadiene, we are able to negotiate attractive terms and volumes in our raw materials contracts. Furthermore, we also benefit from a pipeline link with Unipetrol through which we obtain C4 fraction and ethylbenzene for our production facility in the Czech Republic, which enables us to save on storage and transportation costs, while still retaining the flexibility to source materials from other suppliers in the event of an outage. We are also planning to put in place a pipeline with Braskem through which we will obtain butadiene for our new production facility in Brazil, which is scheduled to start operating within the next few years, subject to the entrance into force of raw materials supply agreements, including a butadiene supply agreement with Braskem executed in October 2013. We can make no assurances that such contracts will enter into force and that construction of the planned NdBR production facility in Brazil will commence at such point. Moreover, we are the only producer of styrene in Central Europe, which provides us with a logistical advantage over our competitors from Western Europe and Russia as we benefit from lower transportation costs. Our production processes also require significant amounts of energy. We own power plants at each of our main production sites, which allows us to reduce energy costs (as we do not need to purchase it from third-party suppliers), as well as to earn extra revenue by selling heat and energy to third-parties.

Robust financial profile We conduct a portion of our sales under contracts with a cost-plus-fee mechanism, whereby any increases in the cost of raw materials are passed on to our customers, which reduce volatility of our margins. Our backward integration and lean fixed costs base provide us with an attractive cost position in the synthetic rubber industry. In addition, we believe our approach of making ongoing improvements to our processes, combined with rigorous cost control and efficiency programs, enables us to effectively compete across key industry operational benchmarks, according to our internal books which reflect our analysis of the financial statements of our main competitors, such as EBITDA margin, revenues from sales, number of employees, return on assets and their return on equity. We also benefit from significant financial flexibility with operational cash flows for the six months ended June 30, 2014 of PLN 227.3 million and for the years ended December 31, 2013, December 31, 2012 and December 31, 2011 of PLN 649.2 million, PLN 702.9 million and PLN 748.6 million, respectively, which we believe gives us significant headroom to further develop our production capacity and technologies, as well as to actively pursue potential acquisitions, over the coming years.

85 Strong and diversified product portfolio with proven and growing research and development (‘‘R&D’’) capabilities We started development of our R&D capabilities in 2008. In 2009, we constructed a modern R&D center, which currently employs 54 scientists and promotes innovation and adaptation to evolving client requirements. We work closely with established universities and institutions, such as the University of New Hampshire, to gain access to the most advanced research in our field. Our R&D activities focus on three strategic areas: synthetic rubber, polystyrene plastics and dispersions/adhesives. We own key intellectual property and know-how in all three of these main business segments, which we believe allows us to attract and retain our customers due to the high quality, performance and reliability of our products, which are critical factors in customers’ decision-making. Over the last five years, we have been gradually transforming our portfolio from commodity-type products to research and development-based specialty products across all of our business segments. In 2011, we entered the market for producing high-performance rubber and we are currently in the process of building another production unit for high-performance solution styrene butadiene rubber. As we are among the few producers of synthetic rubber who maintain close relationships with the major global tire brands, we continue to benefit from access to their proprietary technologies. For example, we have acquired proprietary technology from Michelin and Goodyear of infinite duration that enables us to expand our product offerings. We are the holder of a license for Michelin’s market-leading NdBR technology, which makes us one of the few producers in the world to employ this technology and in 2011, we completed construction of a new plant employing this NdBR technology. This plant supplies rubber products to Michelin via a long-term contract, while the remainder of its production is sold under our own Synthos brand to other manufacturers in Europe and around the world. We have also acquired solution styrene- butadiene rubber (‘‘SSBR’’) / lithium polybutadiene (‘‘Li-PBR’’) technology through a Goodyear license. Within our Styrene Plastics Segment, we continue to improve our product parameters and introduce what we believe are some of the most cost-efficient thermal insulation solutions in the market. We are also constantly introducing new product offerings, which increase our margins and extend our value chain as we are able to offer more specialized products. An example of one of our recent innovations is InSphere (expandable polystyrene with improved thermal insulation properties). Additionally, we believe that we are able to absorb periods of lower profitability in styrene production as a result of our favorable margins on our derivatives. We have also been changing our portfolio of water dispersions and wood adhesives by the ongoing replacement of existing products with advanced tailor made products. Within our Dispersions and Adhesives Segment, our recent innovations include Osakryl AP 40 (acrylic dispersion for the production of mediums with improved penetrating power) and Woodmax FF 12.47 (an adhesive for wood applications).

Maintain strategic capital investment program We plan to make strategic capital investments in what we believe are the most attractive market segments in order to extend our leadership in these segments and meet growing demand. EU regulations encouraging ‘‘green tires,’’ i.e., tires with lower rolling resistance and higher efficiency resulting in lower fuel consumption, have led to an increase in demand for NdBR and SSBR. Demand for such specialty tires is expected to expand outside the European Union, with countries such as Brazil, Japan, the United States and South Korea contemplating or introducing their own systems of regulating and rating tires for their environmental impact. In 2013, we started the construction of a new 90kt per year production line for advanced SSBR and Li-BR rubber under a Goodyear license, with the aim of expanding our portfolio and introducing new products in

86 the market. On July 2, 2014, we obtained permission to operate in the Krakow´ Special Economic Zone. Operations within the Krakow´ Special Economic Zone will also benefit from state tax incentives. We are also planning to build a 90kt per year NdBR plant in Brazil, which is scheduled to start its operations within the next few years, subject to the entrance into force of raw materials supply agreements, including a butadiene supply agreement with Braskem executed in October 2013. In relation to our planned Brazilian plant, we have entered into off-take arrangements with Michelin and Pirelli involving pre-sold volumes of NdBR to support our future production capacity. We can make no assurances that such contracts will enter into force and that construction of the planned NdBR production facility in Brazil will commence at such point. In addition to projects aimed at increasing our production capacity, we also intend to implement projects aimed at reducing costs and improving our environmental footprint, such as the potential construction of two new boilers at our Kralupy facility, an installation for the desulphurization of exhaust gases and the reduction of nitrogen oxides from our K9 steam boiler and a fluidized bed steam boiler at our O´swi˛ecim facility. We may also continue to actively pursue opportunistic acquisitions in order to widen our current product portfolio or to provide further geographic or product diversification of our business segments. For example, in April 2014, we acquired 68% of the share capital in Zakład Do´swiadczalny ‘‘Organika’’ sp. z o.o. in Nowa Sarzyna for PLN 7.5 million, our R&D company specializing in plant protection products (‘‘PPP’’), which will allow us to develop manufacturing of PPP.

Expansion into international markets We believe that markets such as North America, Latin and South America, North America and potentially Asia represent significant opportunities for our business. For the year ended December 31, 2013, our revenue from sales came from Poland (24%), the Czech Republic and Slovakia (24%), other European countries (35%), Asia (13%) and the rest of the world (4%). For example, we are currently implementing strategic investments in Brazil, subject to certain conditions, to expand our local capabilities in order to capitalize on growing domestic demand for our products and broaden our customer base. Brazil is the seventh-largest economy in the world and the largest economy in South America, based on data from Trading Economics, and we believe that it presents a good opportunity for growth among emerging market economies. In addition, we believe that limited existing competition, availability of butadiene, high import duties, our close proximity to newly-constructed tire plants and the strong net import position of PBR all combine to make it a very attractive market for us. We are also considering further geographical diversification of our rubber business. We envisage future expansion (of distribution channels in) North America, which we consider to be a very attractive market due to the broad range of tire manufacturing plant investment projects currently underway.

Continue process and product innovation to maintain industry competitiveness We continue to make significant investments in our R&D capabilities to provide innovative and high quality products to our customers. We are expanding our R&D facilities and at the beginning of 2014, we started our R&D activities in the analytical laboratory in our new second R&D center in O´swi˛ecim, Poland. As part of this strategy, we are developing the following key initiatives: • we are exploring new methods of butadiene production with the aim of securing a consistent butadiene supply and decreasing the cost of production by using an alternative feedstock (other than one derived from oil), either via a sugar fermentation process or via a chemical process using ethanol; • we are developing new technology for SSBR production, with the goal of increasing its dynamic properties, therefore reducing the rolling resistance of tires; and • we are introducing new synthetic rubber products for tire producers, particularly in our SSBR and functional NdBR product ranges. We expect to continually add new products to our portfolio, including new types of EPS for the production of very low conductivity and energy-efficient styrofoam boards, new dispersions for the paint and building chemical industries, as well as new hot melt adhesives.

87 We are also considering diversification of our portfolio into new special chemical products which are less dependent on hydrocarbon derivatives. We are contemplating creating new PPP based on a recently acquired technology to produce herbicides.

Recent Developments On August 7, 2014, we signed an agreement, subject to the conclusion of additional agreements with suppliers of raw materials, with a Polish company for the purchase of intellectual property rights in relation to plant protection products, including industrial property rights, copyrights, product formulas and chemical industry trademarks. The transaction value was PLN 43 million. On July 18, 2014, we concluded an agreement with SPV Boryszew 3 sp. z o.o. to purchase 100% of the shares in Oristano Investment, which is a manufacturer of dispersions and adhesives. The value of the transaction value was PLN 40 million, and it closed on August 12, 2014. This acquisition constitutes part of our strategy to further solidify our position as a market leader in the supply of dispersions and adhesives products.

Our History We were founded in 1945 as the Factory of Synthetic Fuels in O´swi˛ecim, Poland. During the 1950s and 1960s, we completed construction of a synthetic rubber plant, and in June 1959 we started emulsion synthetic rubber production. We continued to grow our business, reaching full productivity and production of high employment levels in the 1970s. In 1996, we were privatized, with 60% of our shares transferred to the Polish National Investment Fund. In December 2004, our shares were listed on the Warsaw Stock Exchange and in 2006 our controlling shareholder Michał Sołowow increased his controlling shareholding in the Company to over 50%. In July 2007, we became the owner of 100% of the shares of the Czech company Kaucuk a.s., one of our biggest competitors in CEE. In 2007, we also signed a NdBR license agreement with Michelin relating to polybutadiene rubber production technology as well as a commercial contract for deliveries of this type of rubber. In June 2010, we launched a butadiene production plant in Kralupy through a joint venture with Unipetrol. We own 49% of this joint venture and operationally co-manage butadiene production in the plant, which has a production capacity of 130,000 tons per year. In the third quarter of 2011, we started production of NdBR polybutadiene rubber in Kralupy. In March 2012, we were included as a member of the blue chip WIG20 index on the Warsaw Stock Exchange. In the same year, we signed a license agreement with Goodyear, under which we were granted a license for advanced SSBR rubber production technology. In 2013, we started construction of our SSBR plant in Poland. We also opened a research and development center in Poland for the purpose of researching new product technologies and further developing our existing products. In March 2014, we announced our plan to construct a neodymium polybutadiene rubber plant in Brazil.

88 Our Operations Synthetic Rubber and Latex Segment Overview Our Synthetic Rubber and Latex Segment is our core business segment. We produce synthetic rubber using emulsion technology through the polymerization of butadiene and styrene (or other chemicals such as acrylonitrile or the appropriate organic acid). For the twelve months ended June 30, 2014, our annual production capacity for synthetic rubber and latex amounted to approximately 295,000 tons. For the twelve months ended June 30, 2014 our Synthetic Rubber and Latex Segment generated revenues from sales of PLN 2,374.1 million and EBITDA of PLN 268.7 million. We produce three different types of synthetic rubber: styrene butadiene rubber, high-styrene rubber and polybutadiene, as well as NBR nitrile-butadiene rubber and two different types of synthetic latex: concentrated styrene butadiene and styrene butadiene carboxylic latex.

Main Products and End-Uses Our Synthetic Rubber and Latex Segment consists of the following products: • Styrene butadiene rubber is produced in a low-temperature emulsion copolymerization process and is coagulated using the acid-synthetic coagulant system. Some types of styrene butadiene rubber contain aromatic oils. Staining or non-staining antioxidants are used for stabilization of styrene rubber. Styrene butadiene rubber is used for the production of tires, tire tubes, conveyor belts, shoes, cables, hoses and other technical rubber products. The non-staining rubber types are used for floor coverings in light colors, bicycle tires and tubes, shoes, toys, cables, hoses and other rubber products in light, pastel colors. ESBR is the most commoditized of all synthetic rubber types. Although consumed in all regions of the world, demand levels in North America, Western Europe, and Northeast Asia, especially China, are particularly high. The majority of ESBR is used to produce tires, though other demand sectors are also significant. We sell our styrene butadiene rubber under the trade names KER and KRALEX. KER synthetic rubber is manufactured at our production plant in Poland and KRALEX synthetic rubber is manufactured at our production plant in the Czech Republic. • High-styrene rubber and resins are appropriate for the production of floor finishes, cables, toys and micro porous rubber for footwear industry and to produce hard rubber articles. We produce high-styrene rubber KER 1904, which is standard-grade high-styrene rubber. It is produced by mixing styrene- butadiene latex and high styrene resin in appropriate proportions. It is coagulated with the use of synthetic coagulant and is stabilized by a non-staining antioxidant. We also produce high-styrene rubber KER 1909 which is an off-grade high-styrene rubber. It is stabilized with a non-staining stabilizer. High styrene resin KER 9000 is obtained via the emulsion copolymerization of styrene and butadiene and coagulated with the use of aluminum sulphate. Both are stabilized with a non-staining stabilizer. We sell our high-styrene rubber and resins under the trademark KER, which is manufactured at our plant in Poland. • Polybutadiene rubber is produced in the polymerization process in a solution based on a neodymium catalyst system. It contains no plasticizer and is stabilized with a non-staining anti-oxidant. Polybutadiene rubber has become the second largest type of synthetic rubber we produce in terms of volume after ESBR. In the year ended June 30, 2014, our annual production capacity amounted to approximately 80,000 tons. Car tires (mainly the treads and sidewalls), are the most important application of PBR, and account for approximately 70% of global PBR consumption. Other PBR applications include technical products, such as hoses, belts, soles for footwear, golf balls, and modified styrene plastics. Due to its low polydispersity and glass transition temperature, it is preferred for tires with low rolling resistance, so-called ‘‘green’’ tires, which result in lower fuel consumption. Regulations promoting the production of these ‘‘green’’ tires have already been introduced in Western Europe and have led to a significant increase in demand for PBR. We sell our butadiene rubber under the trade name SYNTECA, which is manufactured at our plant in the Czech Republic. • Nitrile (acrylonitrile-butadiene) rubber are produced by the cold emulsion copolymerization of butadiene and acrylonitrile, and coagulated by a system of acid and synthetic coagulant, stabilized by non-staining antioxidant. Nitrile rubber is appropriate for the production of technical items resistant to oils and liquid fuels. They contain a non-staining stabilizer and consequently can be used for the

89 production of goods in light colors. We sell our nitrile rubber under the trademark KER, which is produced in Poland. • Concentrated styrene-butadiene latex (‘‘LBS’’) and styrene-butadiene carboxylic latex (‘‘LBSK’’) are used mainly in the production of elastic latex foam and latex mattresses, gelled or non-gelled foam carpet backings, adhesive floor coverings and other carpet backing, as well as for fabric finishing. Latex is also used for the production of bitumen emulsion (construction isolation material) and reinforcement meshes (modification of fiber glass). We currently offer 11 varieties of latex.

Customers Our main customers are car tire manufacturers, who represent 78% of our customers in our Synthetic Rubber and Latex Segment. We supply international car tire manufacturers such as Continental, Michelin, Goodyear, Bridgestone and Pirelli, delivering rubber mainly to their European factories. We also supply rubber to smaller tire manufacturers, including Nokian Tyres, Trelleborg and Vredestein. Other customers include manufacturers of technical rubber products, conveyor belts, rubber floor covering, shoe soles and various rubber mixtures, such as Kraiburg (Austria), Metso (Sweden), Fenner Dunlop (the Netherlands), Semperit (Austria), Geyer & Hosaja Mielec, Sempertrans Bełchatow´ (Semperit group), Stomil Sanok and Fagumit. For the twelve months ended June 30, 2014 and the year ended December 31, 2013, we sold 59.3% and 57.9%, respectively, of our manufactured synthetic rubber in Europe, with the remaining amount in Asia and the Americas. Our synthetic latex sold by us is supplied primarily to customers who manufacture floor coverings and carpets, foam products (foam latex and mattresses) and bitumen emulsions for the construction industry. Our major customers include Artilat (Belgium) and SAPSA (France).

Raw Materials and Energy The main raw materials required for the production of synthetic rubber are butadiene and styrene. Butadiene is a product obtained from C4 fraction during the steam cracking process. The amount of butadiene yielded is highly dependent on a cracker’s feedstock, i.e., the higher the molar mass of the feedstock, the greater the possibility of obtaining butadiene. We produce butadiene from C4 fraction through an extraction process. Most European steam crackers are currently running on heavier feedstock, such as naphtha or LPG, which produces a stable supply of butadiene. With the development of shale gas exploration, more crackers are shifting towards lighter feedstock, such as ethane, as it offers higher profit margins, but produces lower yields of butadiene. This shift is especially evident in North America, which has experienced a butadiene deficit in recent years. Our strong relationships with major petrochemicals suppliers have enabled us to secure long-term contracts for both C4 fraction and butadiene. We have also started developing our own purpose-built monomer production technology from renewable feedstock. In addition, we produce styrene from ethylene and benzene and use it for our own derivatives, such as polystyrene, EPS and synthetic rubber. We reduce production costs through relatively low labor costs, favorable feedstock supply agreements and low energy costs due to our in-house power plant. Moreover, we are the only producer of styrene in CEE, which gives us a logistical advantage over competitors with operations in Western Europe or Russia. In addition, styrene as a raw material is available from external sources in significant volumes from both European and overseas producers. Therefore, we always have the possibility to conclude long-term agreements for significant volumes of styrene at prices that vary depending on the scale of purchases.

Competition We were the largest European producer of high-quality commodity grades of emulsion synthetic rubber and the second largest European producer of neodymium butadiene rubber in Europe by production capacity in 2013. Most of our products have been known in our markets for decades, with our KER, KRALEX and SYNTECA trademarks having been marketed for over 50 years. Our main competitors include Lanxess, a German chemicals producer that offers a range of products for the tire and general rubber goods industries, Versalis, one of the top European rubber producers, Trinseo, international manufacturer of plastics, latex and rubber and Kumho Petrochemical, a multinational chemical company based in South Korea which focuses on synthetic rubber, synthetic resins, specialty chemicals, electronic chemicals, energy, building materials and advanced materials.

90 Styrene Plastics Segment Overview We were one of the top polystyrene and expandable polystyrene producers in Europe in 2013. Our Styrene Plastics segment produces four main types of products obtained in the styrene polymerization process, which each differ in their application: EPS, GPPS, HIPS and XPS. For the twelve months ended June 30, 2014 our Styrene Plastics Segment generated revenues of PLN 2,016.3 million and EBITDA of PLN 218.9 million.

Main Products and End-Uses EPS is a polymer compound which is used as a feedstock for styrofoam production. EPS may contain additives enhancing the process or giving the foam specific properties, for example fire-retardant properties, agents for reducing heat transfer and water absorption, external lubricants for enhanced processing, and colorants. Our EPS products are sold under the brand name Synthos InVento, InSphere and SYNTHOS EPS F. • Synthos InVento is self-extinguishing expandable polystyrene with low thermal conductivity and a reduced amount of blowing agent. The material is formed by spherical polystyrene particles that contain a flame retardant system and a hydrocarbon blowing agent. Their surface is treated against gluing during processing and the formation of electrostatic charges. InVento 0814FR is mainly used in the production of thermal insulation blocks for heating buildings. • InSphere type 0513F, 0814F and 1020F is self-extinguishing EPS with a reduced thermal conductivity. InSphere type 0513FR-P is self-extinguishing EPS with a reduced water absorption and reduced amount of hydrocarbon blowing agent. The materials are formed by spherical polystyrene particles that contain a flame retardant system and a hydrocarbon blowing agent and their surfaces are treated against gluing during processing and the formation of electrostatic charge. InSphere 0513F is mainly used for the production of shipping packaging for glass and electrical goods, building bricks, floor and roof shaped parts and other thermal insulation products. InSphere 0814F is mainly used for the production of thermal insulation blocks and in packaging technology. InSphere1020F and 1640F is mainly used for the production of thermal insulation blocks. InSphere 0513FR-P is mainly used for perimetric and skirting boards shipping packaging for glass and electrical goods, building bricks, floor and roof shaped parts; and other thermal insulation products. • Synthos EPS F (KOPLEN F and OWIPIAN FS) are self-extinguishing EPS products. The product takes the form of spherical polystyrene ‘‘pearls’’ containing flame retardants and a hydrocarbon-based blowing agent in a concentration below 7% weight. SYNTHOS EPS FR (KOPLEN FR) is a self-extinguishing type of expanded polystyrene with reduced hydrocarbon-based blowing agent. The product comes in a form of polystyrene ‘‘pearls’’ containing a flame retardant and hydrocarbon-based blowing agent in a concentration below 5% weight. SYNTHOS EPS FR is an environmentally-friendly alternative to EPS for its considerably lower amount of blowing agent released to the atmosphere (by around 30%). Low residual content of the blowing agent in the finished products allows also a considerable reduction of the stabilization time. SYNTHOS EPS S (KOPLEN S) is a standard (combustible) expanded polystyrene product in a form spherical ‘‘pearls,’’ containing below 7% hydrocarbon blowing agent, but contains no flame retardants. Our GPPS and HIPS products are as follows: • SYNTHOS PS GP 137, 152, 535, 154, 525, 171, 585C, 174 and 545 GPPS with high-specification optical properties, gloss and increased heat resistance. It is a thermoplastic material designed for injection molding, extrusion, thermoforming and blow extrusion. SYNTHOS PS GP 585A is a GPPS with excellent optical properties, gloss, high heat resistance and mechanical strength. It is a thermoplastic material designed for extrusion, thermoforming and injection molding. SYNTHOS PS GP 585X is a GPPS of high-specification t heat resistance and good rheological properties. It is a thermoplastic material designed for extrusion, thermoforming and injection molding. • SYNTHOS PS HI 336M is a high-impact polystyrene (HIPS) with very easy flow, making it easy to process. It is a thermoplastic material designed for injection molding. SYNTHOS PS HI 552M is high-impact polystyrene (HIPS) with a balanced combination of rheological, mechanical and thermal properties, suitable for use in general applications. It is a thermoplastic material designed for injection molding and extrusion. SYNTHOS PS HI 562E and 945E is a type of HIPS with properties suitable for extrusion and

91 thermoforming. SYNTHOS PS HI 662E is a type of HIPS with a matte appearance and properties that are suitable for extrusion and thermoforming. Our XPS products are as follows: • Synthos XPS PRIME and Synthos XPS PRIME S are modern ecological insulation products, with a formula that is based on Synthos XPS white board.

Customers In the Styrene Plastics Segment, we focus our operations mainly on servicing the construction industry, manufacturers of EPS and XPS packaging. Our main customers in this product group include Arbet (Koszalin), Yetico (Olsztyn), Termo Organika (Krakow),´ Austrotherm (O´swi˛ecim), Bachl (Germany), Lippstaedter (Germany) and Swisspor (Switzerland). GPPS and HIPS are sold mainly to the packaging industry, primarily to operators in the food sector. Our main customers in this product group are Krakchemia (Krakow),´ Huhtamaki Foodservice group (Skierniewice), Paccor Coveris group (France), Greiner (Austria) and DFI (Italy). We sell XPS boards using two channels: wholesalers of building materials and EPS converters, who buy raw material for the production of EPS boards, and also to resell finished XPS insulation boards.

Raw Materials and Energy We produce styrene from ethylene and benzene and use it to manufacture our own derivatives, i.e., polystyrene, EPS and synthetic rubber. XPS is produced on the basis of our own raw materials, such as GPPS. We also purchase a certain volume of styrene at the market and as a result of the large amounts we purchase, we are able to negotiate favorable prices with price formulas.

Competition We were the third combined largest manufacturer of EPS in Europe and largest manufacturer of XPS in CEE in 2013. Our main competitors are Styrolution and INEOS. Styrolution is a joint venture set up by BASF and INEOS, which focuses mainly on synergies resulting from asset consolidation and price synergies achieved by virtue of the large scale of its operations, vertical integration and large-scale production plants. INEOS is one of the largest chemical companies globally in terms of revenues and Europe’s largest producer of EPS, with a focus on delivering products with excellent insulation properties, is vertically integrated, and has a large product portfolio.

Dispersions and Adhesives Segment Overview Our Dispersions and Adhesives segment produces acrylic dispersions, styrene and acrylic dispersions and dispersions of vinyl acetate polymers. The main application of these materials is the production of high quality paints, acrylic plasters, primers, sealers and many other construction chemicals. Polyvinyl acetate dispersions are used in the manufacture of adhesives for wood and in the paper, textile and construction industries. The textile industry and the construction industry use polyvinyl acetate dispersions to enhance textile fabrics and for the modification of concrete and paint production, respectively. Our adhesives are used mainly in the wood, furniture-making and paper industries. For the twelve months ended June 30, 2014 our Dispersions and Adhesives Segment generated revenues from sales of PLN 116.0 million and EBITDA of PLN 6.8 million.

Main Products and End-Uses Our current portfolio of dispersions offered on the market includes 18 products sold under the registered trade names Osakryl and Winacet. • Osakryl is the registered trade name for a range of water-based acrylic, styrene-acrylic and vinyl-acrylic copolymer dispersions, obtained with the addition of ionic or nonionic surfactants. The Osakryl range may be used at either its full concentration, or diluted with water. The products are miscible with other polymer and copolymer dispersions, with inorganic fillers and pigments as well as with other additives intended for water-based products. Once the water has evaporated, a uniform, transparent film is

92 formed, with good adhesive properties when applied to various types of mineral substrates, particularly cement, cement-lime, wood and other porous materials. • Winacet is the registered trade name of a range of products we manufacture based on polyvinyl acetate. The Winacet range is an aqueous dispersion, obtained by a process entailing the emulsion polymerization of vinyl acetate using polyvinyl alcohol as a protective colloid or nonionic emulsifiers. Some products in the range also contain a plasticizing agent. Plasticized products do not contain phthalate plasticizers. We offer dispersion adhesives under two brand names: Woodmax and Papermax. Currently, sale targets have been are realized for the portfolio of adhesives containing 16 products.

Customers For the twelve months ended June 30, 2014 and the year ended December 31, 2013, 62.8% and 63.8% of dispersions, respectively, in terms of volume, were sold in the Polish market and the remaining range is an aqueous dispersion, obtained in a process entailing the emulsion polymer. Our main customers for dispersions are the leading manufacturers of liquid chemical products for the construction industry, including Snie´ ˙zka, Saint-Gobain, Atlas, Knauf, PPG, Henkel and Tikkurila. Our main markets also include Ukraine, Belarus, Italy, Slovakia, Romania, Bulgaria, the Baltic countries and Greece. WOODMAX adhesives are mainly sold to manufacturers of furniture and doors and windows. PAPERMAX adhesives are designed for the paper industry and sold to manufacturers of paper, cardboard and paper packaging, among others

Raw Materials and Energy Our water dispersions are manufactured on the basis of acetate-vinyl and acrylate dispersions, styrene- acrylate dispersions, and copolymers of acrylate monomers, along with other monomers for construction chemical producers. We purchase these raw materials under both long-term and short-term agreements.

Competition Our leading competitors in this segment are large international chemical companies such as BASF, DOW and Momentive that have large and diversified product portfolios.

Other Operations We engage in auxiliary operations related to the production and distribution of thermal energy, heat and electricity generation and electricity trading and distribution. Our power plants are located on our industrial sites in O´swi˛ecim (Poland) and Kralupy (the Czech Republic). In O´swi˛ecim, our main fuel is hard coal bought from local mines. In addition, we derive a portion of our energy from ‘‘coal bed methane’’ (fuel gas extracted in some underground mines in order to make coal extraction). In the Czech Republic, our main energy sources are natural gas and, to a certain extent, fuel oil. In 2013, total fuel costs for our power plants amounted to PLN 332.1 million of the total cost of goods sold. In addition, we are involved in a limited number of other activities, including maintenance services, logistics, laboratory services and warehouse leasing. For the twelve months ended June 30, 2014 our Other Operations (including energy) generated revenues from sales of PLN 239.0 million and EBITDA of PLN 131.0 million, respectively.

Sales and Marketing We sell synthetic rubber predominantly to global producers of tires, such as Michelin, Pirelli, Goodyear, Bridgestone and Continental, many of which are well known market leaders. Our production facilities are strategically located near these key customers in Central Europe with easy access to their tire plants, as well as to areas of growing demand. Our marketing team is comprised of five people. Our marketing strategy is initiated by our global marketing team, with specific market activities further developed and implemented within our segments. In particular, our global marketing team is responsible for general market analyses and advertisement and promotion, while each segment’s marketing team tailors and implements this marketing strategy within its segment by conducting market analyses, monitoring customer satisfaction, analyzing competition, promoting our products in new markets outside Europe and developing effective sales plans.

93 Raw Materials Our main raw materials are butadiene, C4 fraction, ethylene, benzene and styrene, of which butadiene is most significant for our business. For the year ended December 31, 2013, butadiene accounted for 36.9% of our total raw materials expenses. We buy or derive butadiene from C4 fraction. Another important raw material for our business is styrene which we produce from ethylene and benzene (through ethylbenzene) at our Czech site. In Poland, we produce styrene from ethylbenzene which is transported from our plant in the Czech Republic. For the year ended December 31, 2013, our self-sufficiency in key inputs were as follows: approximately 71%, 76%, 101%, 186% and 207% for butadiene, styrene, ethylbenzene, heat and electricity, respectively. Our main suppliers include European petrochemical producers such as PKN Orlen (which together with Unipetrol forms one group), Sabic and OMV, who deliver raw materials to our production facilities in the Czech Republic and Poland. Our regional production facilities are also linked through pipelines with some of our suppliers, including a pipeline with Unipetrol through which we obtain C4 fraction and ethylbenzene for our production facility in the Czech Republic, or our pipeline with Braskem through which we will obtain butadiene for our production facility in Brazil. In addition, Butadien Kralupy a.s., our joint venture with Unipetrol, provided us with approximately 51% of our annual supply of butadiene for the year ended December 31, 2013, which is the key raw material for our synthetic rubber production at our production facility in the Czech Republic. The recent trend relating to the shutdowns of European crackers may have an impact on the availability of our ethylene and butadiene market. See ‘‘Risk Factors— The shutdown of crackers may impact the ethylene and butadiene market’’ for more detailed information. The following is a detailed list of the contractual arrangements under which we source our main raw materials: • Purchases of butadiene, which is used for the production of synthetic rubber and latex, are carried out primarily under long-term contracts with suppliers with stable market positions. These long-term contracts are from three to ten years or are concluded for an undefined period. Certain of them include the provisions of renewal of rights. Raw materials purchased are based on pricing formulas related to butadiene quotations. In addition to securing raw material supplies through long-term agreements, we purchase small amounts of butadiene under short-term contracts. • Vinyl acetate monomer, which is used for the manufacture of vinyl and vinyl-acrylic dispersions, is purchased under annual as well as short-term contracts with suppliers offering the best commercial terms at a given time. • Ethylene and benzene used for ethylbenzene production is purchased primarily under long-term contracts concluded with Unipetrol, which are valid until the end of 2017, with prices based on the pricing formulas related to ethylene and benzene quotations. Additionally, small amounts of benzene are purchased under short-term contracts at the current market price. • Purchases of C4 fraction used in the production of butadiene are made under long-term contracts with prices based on the pricing formulas related to naphtha quotations. • Auxiliary raw materials for all types of chemical production, due to their relatively high level of availability, are purchased mainly under short-term contracts in order to obtain the best commercial terms at a given time. We choose our raw material suppliers from among the most reliable producers and suppliers offering the most competitive terms. All our raw material suppliers are subject to constant reviews and assessments.

Key sources of energy Our power plants are located on our industrial sites in O´swi˛ecim, Poland and Kralupy, Czech Republic. In O´swi˛ecim, our main fuel is hard coal bought from local mines. In addition, we derive a portion of our energy from ‘‘coal bed methane,’’ which is fuel gas extracted in some underground mines used for coal extraction. In the Czech Republic, our main energy sources are natural gas and, to a certain extent, fuel oil. For the year ended December 31, 2013, our energy costs accounted for 7.2% of our total operating expenses.

94 Our Production Facilities We operate two production facilities in Central Europe for the production of synthetic rubber and styrenics. The table below provides an overview of our production facilities and the main products manufactured at each production facility as at June 30, 2014 (except for the utilization rate, which is for the year ended December 31, 2013):

Production Utilization Number of Country Location Area (ha) Segment Main Products Capacity (kt/y) Rate (2013) Owned Employees Poland ...... O´swi˛ecim 240 Synthetic Rubber ESBR, NBR. HSR 185 (mainly ESBR, but 97% Yes 532 NBR is produced on the same lines, HSR on a separate line) EPS EPS 95 80% XPS XPS 165 km3/y 91% PS HIPS, GPPS 50 102% Dispersions & Dispersions, Adhesives 48 59% Adhesives Latices Latex 16 46% Czech Republic . . Kralupy 120 Synthetic Rubber ESBR 110 85% Yes 308 upon NdBR 80 70% Vltavou EPS EPS 105 79% XPS XPS 165 km3/y 82% PS HIPS, GPPS 80 97% In 2013, we started work on a production facility for modern SSBR rubber in O´swi˛ecim, Poland. At the beginning of 2014, we began installation works, including the construction of a chemical and storm drain system. As at July 30, 2014, we have completed earthworks, reinforcement, concrete and insulation works, as well as the construction of a reinforced concrete structure for the plant. We believe that the plant could be ready to begin production in the third quarter of 2015. In addition, we own 49% in a joint venture established together with Unipetrol, which provided us with 51% of our annual requirements for butadiene for the year ended December 31, 2013, which is the key raw material for our synthetic rubber production at our production facility in the Czech Republic. We are also planning to build an NdBR facility in Rio Grande do Sul, Brazil, which is scheduled to start operations within the next few years. This production facility would produce NdBR for high-performance car and truck tires with enhanced properties and various technical rubber products based on a license granted by Michelin. The planned capacity of the production facility is expected to be up to 90,000 tons per year. Commencement of construction is contingent on entrance into force of raw materials supply agreements, including butadiene supply agreement with Braskem executed in October 2013. We have also entered into off-take arrangements with Michelin and Pirelli involving pre-sold volumes of NdBR from our Brazilian facility to support our future production capacities. We can make no assurances that such contracts will enter into force and that construction of the planned NdBR production facility in Brazil will commence at such point.

Research and Development We consider research and development activities an important tool for competing effectively and we commit significant resources to such activities. Our research and development team is based both in Poland and the Czech Republic. The department of 52 people focuses mainly on three strategic areas: synthetic rubber, polystyrene (expandable) plastics as well as dispersions and adhesives. We own key intellectual property and know-how in these fields. Our R&D department has many ongoing research collaborations with external institutes, which range from outsourcing of non-core activities to co-development. We currently maintain an international network with reputable institutes, e.g. University of New Hampshire (USA), Global Bioenergies (France), Fraunhofer Polymer Pilot Plant Center (Germany), Akron Rubber Development Laboratory (USA), Elastomer Research Testing BV (Holland), University of Bath (UK) and VSCHT (Czech Republic). This allows us to develop the innovative products in a timely and cost-effective manner, guided by our clients’ preferences and specifications. Our recent new product introductions include: • New polystyrene products: Koplen S (expandable polystyrene product in the form of spherical ‘‘pearls,’’ containing less than 7% of hydrocarbon blowing agent, but containing no flame retardants; very low-benzene product; used in manufacturing packaging.), InSphere (expandable polystyrene with

95 improved thermal insulation properties; mainly used in the production of shipping packaging for glass and electrical goods, building bricks, production of thermal insulation blocks and in packaging technology and for perimetric and skirting boards shipping packaging for glass and electrical goods) and InSphere P (expandable polystyrene with reduced water absorption and reduced amount of hydrocarbon blowing agent; used for manufacturing perimetric boards) • New adhesive products: Osakryl AP 40 (a water dispersion of acrylic copolymer produced in the presence of emulsifying system composed of ionic and non-ionic surface active agents; designed for the formulation of deep penetrating primers and wood stains or impregnations) and Woodmax FF 12.47 (an adhesive based on water dispersion of polyvinyl acetate and enriching additives for wood applications). In 2013, we completed another stage of construction of our new research and development center in O´swi˛ecim, Poland, which allowed us to commence synthesis processes (laboratory and semi-technical scale) in the main laboratories, and analytical and application research. At the beginning of 2014, we started our R&D activities in the analytical laboratory of our new R&D center in O´swi˛ecim. The new research and development center will allow us to develop new products and gradually transition from producing commodity chemical products to more specialized products with higher margins. The main goal of the research and development center is to develop and implement new and innovative products, with a particular focus on producing new types of styrene-butadiene synthetic rubber through polymerization in solution. This new type of synthetic rubber will allow tire manufacturers to develop products with a much lower rolling resistance and improved adhesion to surfaces, which will translate into a significant reduction in fuel consumption and improved safety. The research and development center will also focus on developing new technology for manufacturing raw materials, such as butadiene, for the synthesis of the new synthetic rubber that is to be developed. This technology will be based on renewable raw materials, which will allow us to be less dependent on oil, for which prices can be more volatile prices. In addition, we have also recently established a cooperation agreement a French biotechnology company to develop a biobutadiene manufacturing technology through the direct fermentation of sugar. Our investment in developing a biotechnological method of obtaining butadiene will insulate us from the high prices of butadiene, as we could obtain at lower prices from biofeedstock. Additionally, we will be able to reduce our exposure to the risk of a limited supply of petrochemical butadiene, for example if naphtha crackers were to close due to the expansion shale gas exploration.

Information Technology We use several business support applications. An enterprise resource planning (‘‘ERP’’) platform supports most of our basic management and business processes, and supports our process of forecasting and budgeting, both in terms of sales, production, purchasing, as well as fixed and variable costs and cash flow. Budgeted activities are recorded operationally in different operational modules, which allow us to oversee processes and at the same time monitor and block undesirable actions (such as exceeding customer credit limits, late payments or shortages/surplus in inventory levels). In addition to our ERP system, we use tools for analyzing and reporting data such as the MicroStrategy Business Intelligence system. Moreover, advanced warehouse management, registration of manufactured goods and preparation of customer shipments are carried out using the Warehouse Management System— Oprtipromag. We have not had any significant information technology problems in the past.

Intellectual Property We have developed and maintain an extensive portfolio of registered patents and trademarks. Proprietary protection of our processes, apparatuses, and other technology and inventions is important to our business. In addition to our patents, patent applications, trademarks and know-how, we are party to certain licensing arrangements and other agreements authorizing us to use trade secrets, know-how and related technology or operate within the scope of certain patents owned by other entities. Because of the breadth and nature of our intellectual property rights and our business, we are not wholly dependent on any single intellectual property right. We are not aware of any threatened, proposed or actual proceedings that have or will be brought against us for infringement of third party rights or any infringement of our rights by third parties that if successfully prosecuted would have a material adverse effect upon our business, results of operations, financial condition or prospects.

96 Environmental, Health and Safety Matters Environmental Performance Like other chemical manufacturers, our operations are subject to a broad range of environmental laws and regulations. Our manufacturing processes use many chemicals, gases and other hazardous substances. We strive to minimize the impact of our operations on the environment through an efficient use of raw materials and energy, waste management and the development and application of solutions aimed at reducing air, water and soil emissions, and improving the security of our technological installations. We are also subject to increasingly stringent environmental, health and safety (‘‘EHS’’) laws and regulations, including those governing air emissions; water supply, water use and discharge into the water; the construction and operation of sites; the use, management, storage and disposal of waste and other hazardous materials; the health and safety of our employees; the investigation and remediation of contaminated land; and the health and safety impact of our products. See ‘‘Regulatory Overview.’’ We are required to obtain and periodically renew permits or licenses for industrial operations that result in discharge into the soil, air or water as well as the use and handling of waste and other hazardous materials. Such permits and licenses establish limitations and standards with respect to our operations that require compliance. We maintain the highest standard of care and employ adequate staffing to properly dispose of waste. Our sites are regularly audited and inspected by governmental bodies in each of Poland and the Czech Republic. Among other EHS laws and regulations, we expect that our business will be affected, over the next few years, by new legal requirements under the IED, the EU ETS, the environmental liability directive (‘‘ELD’’) and the REACH Regulation which imposes significant obligations on our business with respect to the testing, evaluation, assessment and registration of basic chemicals and chemical intermediates. The IED and EU ETS directives aim at reducing the emission of pollutants and greenhouse gases into the air. In particular, the IED will introduce tighter emissions standards for SO2, NOx and dust from existing heat and power plants such as ours, effective from January 1, 2016. See ‘‘Regulatory Overview.’’ We expect capital expenditures for environmental issues in the near term to be allocated to eco-innovative and energy-saving solutions. We estimate that we will spend approximately PLN 95.9 million in 2014.

Health and Safety Our main environmental initiative is in relation to our energy sources, such as the installation for desulphurization and NOx removal. In addition, our new coal boilers in Poland and the Czech Republic will comply with all European and Polish environmental requirements. In addition, we are committed to manufacturing safe products and achieving an incident-free workplace. To protect employees, we have established health and safety policies, programs and processes at all our sites. Our employees’ safety is one of our priorities. We constantly monitor work conditions, making improvements as necessary. Our employees play a key role in this process by providing suggestions for improvement during risk assessments, which are reported under our specialty management system KAIZEN. During the last five years, we have not had any fatal accidents and accidents causing serious injury.

Employees As at June 30, 2014, we had 2,122 full-time equivalent employees, principally located in Poland and the Czech Republic, of which 1,320 were located in Poland and 802 were located in the Czech Republic.

97 The following table sets forth the total number of employees by segment as at the dates indicated.

As at June 30, As at December 31, 2014 2013 2012 2011 Synthetic Rubber and Latex Segment ...... 437 436 433 441 Styrene Plastics Segment ...... 325 329 341 319 Dispersions and Adhesives Segment ...... 58 58 59 56 Other(1) ...... 1,302 1,253 1,324 1,363 Total number of employees ...... 2,122 2,076 2,157 2,179

(1) Other employees include employees in management and corporate functions as well as auxiliary staff required to run an industrial site, such as the power plant, maintenance crews, and fire brigades. As a result of the technical nature of our business, we maintain a highly qualified and skilled workforce and emphasize the importance of regular training and development by participating in training programs. We also promote employee development through our annual bonus scheme. We believe that our labor relations are good. Our conditions of employment are negotiated with trade unions each year. Negotiations usually start in the third quarter of the year and finish with the signing of an agreement which outlines the new conditions that become part of our internal labor law. In Poland, we are also subject to certain Polish wage regulations and some of our employees are party to a collective bargaining agreement. In the Czech Republic, we operate under collective bargaining agreements. We generally aim to systemize and standardize our wages, with minor distinctions, in compliance with legal regulations. 54% of our employees in Poland and 29% in the Czech Republic are trade unions representatives. In the last five years, we have not been involved in any disputes with trade unions.

Insurance We believe that the types and amounts of insurance coverage we currently maintain are in line with customary practice in our segments of the chemicals industry and are adequate for the conduct of our business. More specifically, we have insurance policies with a number of international and local insurance companies relating to certain operating risks, including certain property damage, operational and product liability, cargo in transit insurance (for certain companies), rolling stock and vehicles insurance (in certain locations) and receivables insurance (for certain receivables).

Legal Proceedings We are involved in a number of legal proceedings in connection with our operations in the ordinary course of our business. These may include actions by regulatory authorities, tax authorities, suppliers and customers, employment-related claims, contractual disputes, claims for personal injury or property damage that occur in connection with our services performed relating to projects or construction sites, tax assessments, environmental claims and other matters. Many of our contracts contain provisions relating to alternative dispute resolution proceedings in order to settle any contract disputes. If the parties to the contract are unable to reach an agreement, legal proceedings may be necessary to resolve the dispute. Except as disclosed herein, we have not, during the previous twelve months been involved in any governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which we are aware), which have had in the recent past, or may have, significant effect on our financial condition and profitability.

98 REGULATORY OVERVIEW Overview Our business is highly regulated in all of the jurisdictions in which we operate. Our production facilities and operations are subject to both national and international regulatory regimes. In the Member States of the European Union, the regulatory environment of our business activities is shaped by EU directives and regulations, which are either implemented by the individual Member States through national legislation or have direct application to the states or individuals. Regulations that affect our operations mostly relate to areas of environmental protection, product safety and quality, occupational health and safety, industrial hygiene and plant safety. EHS laws and regulations govern our facilities and our operations, including: (i) the storage, handling, treatment and disposal of hazardous substances and waste; (ii) water intake and sewage discharges; (iii) air emissions; (iv) human health and safety; (v) the clean-up and remediation of contaminated sites; and (vi) the sale and use of the products we manufacture. Many of our operations require permits and controls to monitor or prevent pollution. We have incurred, and will continue to incur, substantial on-going capital and operating expenditures to ensure compliance with current and future EHS laws and regulations, which tend to become more stringent over time, and the more stringent enforcement of these laws and regulations. Our environmental management systems are intended to ensure that we both comply with applicable environmental requirements and minimize environmental risk by promoting environmental protection activities and initiatives. We actively address legal compliance issues in connection with our operations and properties, and we believe that we have systems in place to ensure that environmental costs and liabilities will not have a material adverse impact on us. Nevertheless, estimates of future environmental costs and liabilities are inherently imprecise, and the imposition of new or unanticipated costs or obligations could have a material adverse effect on our business, financial condition or results of operations. The following provides a brief overview of certain selected areas of regulation applicable to our facilities and operations.

The Integrated Pollution Prevention and Control (‘‘IPPC’’) Directive, Large Combustion Plant (‘‘LCP’’) Directive and the Industrial Emissions Directive (‘‘IED Directive’’) The IPPC Directive (Directive 2008/1/EC) mandates a single integrated permit for air and water discharges, waste management activities, energy efficiency, noise, use of raw materials, prevention of accidents, impact of operations on the environment, and restoration of a plant site upon closure. Our operations are also subject to the LCP Directive (Directive 2001/80/EC). This directive applies to plants with a thermal input of 50 MW or greater and establishes strict limits on specific emissions values, including for sulfur dioxide, nitrogen oxides and particulates. The provisions of the IPPC Directive as well as the LCP Directive have been implemented into Polish national law by the Environmental Protection Act of April 27, 2011 (the ‘‘EPA’’) and associated secondary legislation (in particular, the ordinance of the Minister of Environment transposing Annex 1 to the IPPC Directive listing installations for which an integrated permit is required). In the Czech Republic, requirements of the IPPC Directive have been implemented into national law primarily by the Integrated Prevention Act (Act on integrated pollution prevention and control, on the integrated pollution register and on amendment to some laws) of March 1, 2002, and the pertinent secondary legislation. In January 2011, the IED Directive entered into force and as at January 7, 2014 replaced the IPPC Directive and other sectoral directives (the LCP Directive will be replaced starting from January 1, 2016). The IED Directive has been implemented by Polish legislation, as an amendment of the EPA, which came into force on September 5, 2014. In the Czech Republic, the IED Directive was implemented primarily by the Act No. 201/2012 Coll., Clean Air Act, as amended. As at January 7, 2014, all existing installations, except for LCP installations, are required to comply with the IED Directive. LCP installations, such as ours, must comply with the new requirements, including the new emission standards, by January 1, 2016 (subject to derogation mechanisms provided in the IED Directive). The IED Directive seeks to prevent or reduce emissions from industrial installations to air, land and water. It requires, among other things, that operators of industrial installations, which fall within the scope of the

99 IED Directive, ensure that their permits comply with ‘‘Best Available Techniques’’ conclusions. Certain Best Available Techniques conclusions are still undergoing study and have not been implemented or released. Accordingly, there is uncertainty as to the amount of additional capital expenditures that will be required to ensure compliance.

The Registration, Evaluation and Authorization of Chemicals (‘‘REACH’’) Regulation and the Classification, Labeling and Packaging Regulation (‘‘CLP’’) The EU requires control of the use of chemical products within the EU by imposing on all affected industries the responsibility for ensuring and demonstrating the safe manufacture, use and disposal of chemicals. The REACH Regulation (Regulation (EC) No. 1907/2006), which came into effect in 2007, requires the registration of all chemicals manufactured in or imported into the EU (either alone, in mixtures or in products) with the new European Chemicals Agency (‘‘ECHA’’), which is located in Helsinki, Finland. The second registration period for substances manufactured or imported in quantities of 100 to 1000 metric tons per year ended on May 31, 2013. Substances in quantities of more than one metric ton per year need to be registered during the current third registration period with the ECHA by May 31, 2018. The REACH Regulation requires formal documentation of the relevant data required for hazard assessments for each substance registered as well as development of risk assessments for their registered uses. Under certain circumstances, the performance of a chemical safety assessment is mandatory and a chemical safety report assuring the safe use of the substance must be submitted. If there is no (pre-) registration of the substance, it is impermissible to produce this chemical in the EU or to import it (i.e., ‘‘no data no market’’ principle). Therefore, registration is vital for the future use of any substance used in technically important processes by manufacturers or importers. The data by importers or manufacturers is collected in substance information exchange forums to allow a vital exchange among producers and users of chemicals. Therefore, purchasers of registered chemicals must inform their sellers about the intended use of the chemicals, as the importer or producer must add this information to its documentation. Most uses of high hazard substances such as carcinogens will require authorization by ECHA. Furthermore, the REACH Regulation contains prohibition rules on bringing substances to market that have been identified as ‘‘substances of very high concern.’’ If necessary, raw materials or its manufactured substances will be listed on the so-called candidate list or on Annex XIV to the REACH Regulation, which may mean a full ban or requirement for authorization by the ECHA and European Commission. In parallel with the REACH Regulation, the EU has adopted the CLP Regulation (Regulation (EC) No. 1272/2008) to harmonize the EU’s system of classifying, labeling and packaging chemical substances with the United Nation’s Globally Harmonized System. The CLP Regulation is expected to globally standardize communication of hazard information of chemicals and to promote regulatory efficiency. It introduces new classification criteria, hazard symbols and labeling phrases, while taking account of elements that are part of the current EU legislation. Obligations under the CLP Regulation apply to manufacturers, importers, downstream users, distributors and persons who use substances caught by the CLP Regulation as a component of a larger product. The obligations under the CLP Regulation depend on the role of the party in this supply chain. For example, manufactures and importers are obligated to ensure that their substances are classified, labeled and packaged in accordance with the CLP Regulation before they are placed on the market. These classification and notification elements should be standardized to the classification and labeling inventory established by the ECHA. The manufacturer and importer is also required to take all reasonable steps available to it to be aware of any new scientific or technical information that may affect the classification of the substance and if required by this information, to undertake a new evaluation of the classification and labeling of the substance. The manufacturer and importer also have an ongoing obligation to update the classification and labeling of a substance if required. We currently estimate that our spending on compliance with the REACH Regulation will be approximately PLN 2.0 million over the course of the next five years. Our cost estimates assume that there will be no material changes in our product line. Moreover, ECHA, depending on the outcome of its on-going and future analyses, may designate a few of our products as ‘‘substances of very high concern’’ and thereby require authorization and a strict safety evaluation for them under the REACH Regulation. Besides the REACH Regulation and the CLP Regulation, our operations are within the scope of national chemical regulations. For example, in Poland, the Act on Chemical Substances and Compounds of

100 Chemical Substances of February 25, 2011 regulates the conditions of production, the introduction to trading and the application of chemical substances in their pure forms, as ingredients of compounds or in products, which are not otherwise regulated under EU regulations, such as the REACH Regulation. In the Czech Republic, the Act On Chemical Substances and Chemical Preparations of October 27, 2011, sets forth the rights and obligations of legal entities and individual entrepreneurs at the time of production, classification, testing, hazardous properties, packaging, labeling, marketing, use, export and import of chemical substances or substances contained in preparations or articles. The Act also governs laboratory practice standards and the competence of administrative authorities in providing protection against harmful effects of substances and preparations.

EU Emissions Trading Scheme (‘‘ETS’’) Our operations are covered by the EU ETS (Directive 2003/87/EC), which is an EU-wide system of trading allowances that are allocated by Member States to cover industrial greenhouse gas emissions. Industrial sites to which the EU ETS applies receive a certain number of allowances to emit carbon dioxide or other greenhouse gases and must surrender one allowance for each ton of a greenhouse gas emitted. Sites that emit fewer tons of greenhouse gases than their allowances cover are able to sell the excess allowances in the open market, whereas those that emit more must buy additional allowances through the EU ETS. Non-compliance is subject to penalties. Phase I of the EU ETS covered emissions in calendar years 2005 to 2007, and the Phase II covered the period from 2008 to 2012. The EU has extended the EU ETS for a third phase covering emissions from calendar years 2013 to 2020. Additional facilities of our business will be covered by the EU ETS in this phase. The main changes for Phase III include the introduction of a single EU-wide cap on emissions which will decrease annually, extending the system over other industrial sectors, and the gradual replacement of free allocation of allowances with an auctioning system. Given these changes, we anticipate that we will need to increase the number of allowances that we purchase in the market.

Water Framework Directive The Water Framework Directive (Directive 2006/60/EC), which has been in force in all EU Member States since 2003, establishes a framework for managing the consumption and quality of inland and coastal waters across regional and national boundaries and requires that certain waters achieve ‘‘good’’ status by 2015. The provisions of the Water Framework Directive have been implemented in Poland by the provisions of the Water Law of July 18, 2001 and its secondary legislation. The provisions of the Water Framework Directive have been implemented into Czech legislation primarily through the Water Act of June 28, 2001, as further amended, and the pertinent secondary legislation.

Prevention of Major Accidents/Seveso II Directive The Seveso II Directive (Directive 96/82/EC), an EU directive on the control of major accident hazards, regulates facilities that present a risk of accidents involving dangerous substances and imposes specific plans and procedures on such facilities, particularly for the production and storage of such substances. The directive provides for control measures aimed at preventing and limiting the consequences of major accidents involving dangerous substances (such as emissions, fires and larger explosions), and to limit detrimental consequences in the event of an accident. The degree of additional safety requirements depends on the amount of various classes of hazardous substances stored in the relevant facility. The Seveso II Directive was implemented into Polish legislation by the provisions of the EPA of April 27, 2011 and into Czech legislation primarily by the Act on the Prevention of Major Accidents Caused by Selected Dangerous Chemical Substances or Chemical Preparations of February 2, 2006, and the pertinent secondary legislation. The Seveso II Directive will be amended and replaced by Directive 2012/18/EU (‘‘Seveso III Directive’’), which must be transposed into national law by the member states by June 2015.

Environmental Liability Directive The Environmental Liability Directive (Directive 2004/35/EC) implements a ‘‘polluter pays’’ principle for remedying environmental damage. Its fundamental aim is to hold operators financially responsible for

101 remedying environmental damage they have caused. In addition, the directive holds those whose activities caused an imminent threat of environmental damage liable to taking preventative actions. The Environmental Liability Directive was implemented in Poland by the provisions of the Act on Preventing and Remedying Damage to the Environment of April 13, 2007. Prior to the implementation of the Environmental Liability Directive, the regime for contaminated land was set forth in the provisions of the EPA. As a result, there are currently two separate environmental liability regimes in Poland: while the EPA contaminated land regime applies to ‘‘damage to the environment’’ (soil and subsoil) which occurred before April 30, 2007, the 2007 Act is applicable to an ‘‘imminent threat of damage’’ or ‘‘damage to the environment’’ occurring after April 30, 2007. The relationship between the two acts is complex and not easily reconciled. This directive was implemented into Czech law by the Act on Prevention and Remedying Environmental Damage and Amendment on Some Laws of April 22, 2008, as amended. The obligation to adopt preventive measures or remedial measures or to bear the costs of their adoption pursuant to this Act can be imposed only in specific cases and only if the environmental damage was caused by an event or emission that occurred after the date of entry of this Act into force. Where the environmental damage occurred before this date, or in other cases to which the Act does not apply, the procedure in remedying and elimination of adverse consequences thereof will be governed by the Act on Waters of June 28, 2001.

ATEX Directives Since July 2003, organizations in the EU have been required to follow the ATEX Directives. ATEX 95 (Directive 94/9/EC) regulates safety devices and equipment intended for use in potentially explosive atmospheres. As a result, all protective equipment at our facilities must conform with these requirements. ATEXT 137 (Directive 99/92/EC) governs the minimum requirements for improving the safety and health protection of workers potentially at risk from explosive atmospheres to protect their employees from explosion risk in areas with an explosive atmosphere. Employers must ensure the health and safety of workers by taking all organizational and/or technical measures to prevent the formation of an explosive environment or, where the nature of the activity precludes this, to remove sources of ignition, and mitigate the detrimental effects of an explosion. Where necessary, these measures are to be combined and/or supplemented with measures to prevent the propagation of explosions. Essentially, employers are required to classify areas where hazardous explosive atmospheres may occur at their facilities into zones. The classification given to an area relates to the chances of an explosive atmosphere occurring and being maintained. The employer is also required to produce an ‘‘Explosion Protection Document’’ which, among other things, is required to demonstrate that explosion risks have been determined and assessed, hazardous areas have been classified into zones and appropriate signs displayed, workplace and work equipment designed, operated and maintained with due regard for safety, and that procedures are in place for the safe use of equipment. The provisions of the ATEX Directive were implemented under Polish law by the secondary legislation (ordinances) under the Labor Code of June 26, 1974. In the Czech Republic the ATEX Directives were implemented primarily by Government Decree No. 23/2003, which sets forth the technical requirements for equipment and protective systems intended for use in potentially explosive atmospheres and Government Decree No. 406/2004, which specifies detailed requirements regarding occupational safety and health in a potentially explosive atmosphere.

102 MANAGEMENT Synthos S.A. In accordance with Polish corporate law, we conduct our decision-making processes through the general shareholders’ meeting, the Supervisory Board and the Management Board. The powers of, and relationships among, these governing bodies are governed by the applicable provisions of the Commercial Companies Code, our articles of association and internal by-laws including Management Board and Supervisory Board by-laws.

Supervisory Board As at the date of this Offering Memorandum, our Supervisory Board is comprised of the following members:

Name Age Position Jarosław Grodzki ...... 47 Chairman Mariusz Waniołka ...... 47 Vice Chairman Krzysztof Kwapisz ...... 54 Vice Chairman Grzegorz Mironski´ ...... 46 Secretary Robert Oskard ...... 52 Member The following is a summary of the business experience of the members of our Supervisory Board: Jarosław Grodzki is a graduate of the Faculty of Finance and Statistics at the Warsaw School of Economics. In 1994 he graduated from the Postgraduate School of Taxation at the Warsaw School of Economics. From 1992 to December 1997 he worked at Bank Handlowy w Warszawie S.A. He participated in the organization of Centrum Operacji Kapitałowych Banku Handlowego w Warszawie S.A., and then worked in the Department of Issuance of Securities of the Commercial Bank, initially as department head and then as Division Chief. In 1996, he was appointed Director of Financial Advisory Services. In the first half of 1998, Mr. Grodzki was employed at Hydrocentrum S.A. as the Advisor to the CEO. Later that year he joined Echo Investment S.A, initially as Director of Sales, then as Vice-President of the Board, and served as President of the Board from 2007 - 2008 as President of the Board of Echo Investment S.A. From 2002 to 2007 and from 2007 to 2008 he was a proxy and President of the Board of Est On Property Management sp. z o.o., respectively. Since 2010 he has been the Managing Director of Columbus Prime sp. z o.o. Since 2011, he has been a Managing Director of FTF Galleon S.A. and since 2012 of Columbus Pro sp. z o.o. Mariusz Waniołka is a graduate from the Krakow´ University of Economics. Between September 1992 and May 1994, he worked at Sando sp.z o.o. From May 1994 to August 1994, he was employed with Pilkington Sandoglass sp. z o.o. From 1994 to 1996, he worked at the Warsaw-based company PepsiCo Trading sp. z o.o., most recently in the position of Finance Director. Between November 1996 and June 2001, he worked as Finance Director for the Kielce-based company NOMI S.A. where from December 1997 he also held the post of Vice-Chairman of the Management Board of NOMI S.A. In 2005, he was temporarily relocated for a period of three months to perform certain duties as a member of the Management Board of Synthos S.A. and in 2007 he was temporarily relocated for a period of three months to perform duties as a member of the Management Board of Echo Investment S.A. Currently, Mr. Mariusz Waniołka holds the post of Administrative Director at Pro-Service sp. z o.o. based in Kielce and is also a member of the supervisory boards of: Rovese S.A., Barlinek S.A., Megastore.pl. S.A., Sklepy Komfort S.A., North Food Polska S.A., Ustra S.A. and Echo Investment S.A. He was also a member of Synthos S.A.’s Supervisory Board during its fifth and sixth term of office. Krzysztof Kwapisz is a graduate of the Mechanical Engineering Department at the Kielce University of Technology. In 1987, he started work at Przedsi˛ebiorstwo Wielobran˙zowe in Kielce as Deputy Chief Technical Officer. From 1990, he worked at Przedsi˛ebiorstwo Wielobran˙zowe ‘‘Sigma,’’ initially as Vice-President and later as President. Beginning in 1993, he worked at Echo Investment S.A. in Kielce, initially as Chief Business Development Officer and then from January 1, 1995 to 1998 as Finance Director, then Managing Director until 2004. He is currently a proxy of Echo Investment S.A. He was Chief Business Development Officer at Przedsi˛ebiorstwo Budowlane ‘‘Mitex’’ from 1994-1998. Previously, Mr. Kwapisz was a member of the supervisory boards of: Cersanit S.A, Barlinek S.A. and Ultra Pack S.A. From 2006 to 2010, he was a Chairman of the Management Board at Magellan Pro-Equity Fund I, S.A. Grzegorz Mironski´ is a lawyer. He studied law at the Department of Law and Administration of Jagiellonian University and graduated in 1992. Since 1997, he has provided legal services to many companies, some of

103 which are listed on the Warsaw Stock Exchange. In 1997 he started his relationship with Echo Investment S.A., where he advised on the company’s largest investment projects, many of its financing arrangements and also on its current operations. Moreover, Mr. Grzegorz Mironski´ has worked for companies such as Cersanit S.A., Barlinek S.A., and Media Projekt sp. z o.o., where he worked on their investment and financing projects. Mr. Grzegorz Mironski´ also runs a law firm and is a member of the supervisory boards of the following companies: Barlinek S.A, Rovese S.A., Sklepy Komfort S.A., North Food S.A., Ustra S.A. and Megastore.pl S.A. Mr. Grzegorz Mironski´ is currently a member of Synthos S.A.’s Supervisory Board and he also held this position during its fifth term of office until October 10, 2007. Robert Oskard is a graduate of the Warsaw University of Technology, Faculty of Technical Physics and Applied Mathematics. From 1987 to 1990, he worked at Fabryka Ło˙zysk Tocznych Iskra as an IT designer and programmer, and between 1990 and 1992, at the Province Office in Kielce as the Head of IT. From 1992 to 2000, he was employed at Exbus S.A. as Director of Financial analysis and Planning, Corporate Development Director and Director of the Management Systems. From 2000 to 2002, he worked as Strategic Projects Director at Echo Investment S.A. After which, he was the Managing Director at Columbus Pro-Equity Fund II Sp. z o.o., Magellan Pro-Equity Fun I S.A. and Columbus Prime sp. z o.o. Currently, he is the Managing and Commercial Director at Columbus Pro sp. z o.o. In the past, Mr. Oskard was the president or a member of several other supervisory boards, some of which were public companies, such as North Food S.A. from 2007-2011. Currently, in addition to Synthos S.A., Mr. Robert Oskard is a member of the supervisory boards of: Echo Investment S.A., SYNTHOS Kralupy a.s., Barlinek S.A., Rovese S.A., Sklepy Komfort S.A., Megastore.pl S.A. and Ustra S.A.

Supervisory Board Practices The Supervisory Board is responsible for supervising the Company’s activities in accordance with the provisions of the Polish Commercial Companies Code and other laws. The Supervisory Board is also authorized to conclude on behalf of the Company agreements with members of the Management Board and represent the Company in disputes with the members of the Management Board. The Supervisory Board may authorize, by resolution, one or more members to perform such legal actions. Pursuant to Article 17 of the Company’s articles of association, the Supervisory Board consists of not less than five members. The maximum number of Supervisory Board members is seven. The composition of the Supervisory Board is determined in each case by the General Meeting of the Company. The Supervisory Board is appointed for a joint term of three years. Pursuant to Article 385 of the Commercial Companies Code, the Management Board of the Company appoints and revokes the Supervisory Board. The Company’s articles of association do not provide any other manner of appointing and revoking members of the Supervisory Board. Pursuant to the articles of association, the Supervisory Board elects from its members the President and one or two Vice-Presidents and the Secretary. For the proper performance of its activities, the Supervisory Board may appoint special teams and experts from outside the Supervisory Board in order to develop relevant opinions or expert reports. The Supervisory Board performs its tasks and competences collectively at the meetings of the Supervisory Board by written vote and through supervisory and control activities in the form of: (i) a right to request the Management Board and the employees of the Company submit all documents, reports and explanations concerning the Company’s operations and (ii) the right to review the state of the Company’s assets. The Supervisory Board holds meetings when needed, but at least on a quarterly basis. The meetings of the Supervisory Board are convened by the President of the Supervisory Board and if he is unable to do so due to objective reasons, by one of the Vice-Presidents, on his own initiative, or at the request of the Management Board or one of its members. The Supervisory Board prepares and submits to the General Meeting a report on the results of the Company’s financial statements and the Management Board’s proposal regarding the distribution of profit/ loss coverage, together with the report on the activities of the Supervisory Board. The address of the Supervisory Board is the registered office of Synthos S.A., at Chemikow´ 1, 32-600 O´swi˛ecim, Poland.

104 Board Committees No committees operate under the Supervisory Board. Matters are addressed collectively by our Supervisory Board and decisions are made in the same manner. The members who sit on the Supervisory Board have the knowledge and competence appropriate to their position.

Management Board As at the date of this Offering Memorandum, our Management Board is comprised of the following members:

Name Age Position Tomasz Kalwat ...... 37 President Tomasz Piec ...... 45 Member Zbigniew Lange ...... 44 Member Zbigniew Warmuz ...... 50 Vice-President Jarosław Rogo˙za...... 41 Member The following is a summary of the business experience of the members of our Management Board: Tomasz Kalwat is a lawyer. He graduated from the Warsaw University Faculty of Law, School of Economics and the Banking and Finance and University of Ottawa, where he was a recipient of the Edward Berry McDougall Scholarship. In 2001-2006, he was a lecturer at the Warsaw University Faculty of Law. He has previously worked at Altehimer & Gray (2001-2002), GleissLutz (2002-2003), Baker & McKenzie (2004-2006). He joined Synthos S.A. in 2006, initially as a consultant and then from 2009-2011 he was the Chairman of the Synthos S.A. Supervisory Board during its sixth term. He has been the President of the Management Board since May 13, 2011. Zbigniew Warmuz is a graduate of Silesian University of Technology, specializing in business management. In 2004, he graduated from the Academy of Economics in Katowice. Between 1984 - 2006 he worked at POCH S.A., initially as a mechanic, and later as a master in the Department of Organic Production. In 1999, he became Product Manager for products for the heavy industry and electroplating. Until 2002 he worked as Head of Sales and Marketing and then became Chief Engineer and then Director of Production. He also served as a proxy in the Company. Since 2007, he has worked in the Group. Tomasz Piec received his Master’s Degree from Krakow´ University of Economics, Management and Marketing, in 1994. He graduated from the University of Copenhagen in Business Management in 1992. He graduated from the Academy of Gastronomy and Wines D’Orsay in 1990. Since 1993, he has been employed at Elector sp. z o.o. in Krakow.´ Since 1994, he was the Regional Director of the REMY COINTREAU GROUP Polska. From 1995 to 2001, he was the Regional Manager at COLGATE PALMOLIVE Polska, and from 2001 to 2003, the Head of Sales at COLGATE PALMOLIVE Adria a.s. in the Balkans. Since 2003, he has been employed at Tchibo Polska as Sales Director. From 2004 to 2007, he was a board member of SIGMA-KALON DECO Polska sp. z o.o. and in 2007, he was a board member of SIGMA-KALON Deco Eastern a.s. in Prague. Since 2008, he has been associated with the Group as Director of Sales. Zbigniew Lange is a graduate of the Economics Section of the Faculty of Social Sciences at the Catholic University of Lublin. In 1994, he started as an economics specialist at Lubelskie Zakłady Zielarskie sp. z o.o. From October 1995 until September 1996, he worked in the Financial Analysis Department of Lublin’s Przedsi˛ebiorstwo Przemysłu Chłodniczego S.A., becoming the department’s director in February 1996. At that time, he was also working with Biuro Konsultingowe TIM sp. z o.o. in Lublin, drawing up investment plans and financial analyses. Between 1996-1997, he was the Head of the Finance Department at the Lublin branch of Pepsico Trading sp. z o.o. From October 1997 to May 1998, he provided management services, incorporating the duties of Financial Director, to Cersanit-Krasnystaw S.A., with its registered office in Krasynstaw. In June 1998, he became a member of the management board of Cersanit S.A. and Cersanit Capital Group S.A. and was responsible for the company’s financial affairs. From December 2002 to December 2004, he performed the duties of Chairman of the Cersanit S.A. Management Board. Following this, he worked as Financial Director for Polmos Lublin S.A. and Medi-Sept sp. z o.o. In February 2007, he assumed the role of Financial Director for Opoczno S.A. and from 2007 to 2008, he performed the duties of Chairman of the Opoczno S.A. Management Board. Since 2008, he has worked in the Group and has been responsible for financial matters.

105 Jarosław Rogo˙za is a graduate of the University of Technology, where in 2001 he earned his PhD in Chemical Technology. He is also a graduate of the Executive MBA program run by the School of Banking in Poznan´ and of the Helsinki School of Economics, from which he graduated in 2004.From 2000-2006, he worked at GlaxoSmithKline Pharmaceuticals S.A., starting as a technologist in the manufacturing division, then, beginning in 2002, as Manager of Research and Development Projects in the Research and Development Division. From 2006-2009, he worked as Director of Research and Development and SHEQ at PPG Deco Poland sp. z o.o., where he was responsible for, in addition to research and development, quality management, environmental protection and health and safety. Since September 2009, he has worked for the Group as Director of Research and Development.

Management Board Practices The Management Board exercises all the powers of management of the Company with the exception of the powers reserved by law or by the Company’s articles of association for other governing bodies of the Company. The Commercial Companies Code and the articles of association determine the competences and functions of the Management Board. Functions of the Management Board, as well as the matters that can be assigned to its members and the competences and responsibilities of individual members of the Management Board, are detailed by the Rules and Regulations of the Management Board, adopted by the Management Board and approved by the Supervisory Board. The employees of the Company are subject to the Management Board. The Management Board concludes and resolves employment agreements and determines their remuneration, pursuant to the rules determined by the Management Board and applicable law. Pursuant to the Company’s articles of association, the Management Board consists of one or more members. The Management Board is appointed for a joint term of three years. The President of the Board and other Members of the Management Board are appointed by the Supervisory Board, which also determines the number of members of the Management Board. The Supervisory Board may dismiss the President of the Board, member of the Board or the whole Management Board before the expiration of the term of the Management Board. In addition, the members of the Management Board may be revoked or suspended at any time by the General Meeting. Pursuant to the Rules and Regulations, the Management Board makes decisions at meetings by the adoption of resolutions. The Management Board holds meetings when needed, but at least once a month. Meetings of the Management Board are convened by the President of the Management Board. The President of the Management Board establishes the agenda and chairs the meeting of the Management Board. The Vice-President of the Management Board exercises the rights of the President of the Management Board in the case of the expiry of the mandate of the President of the Management Board, until the new President of the Management Board is chosen, as well as during his illness or temporary inability to perform the function in the Management Board. The Management Board may adopt a resolution only if the meeting is attended by at least half of its Members, provided that all members of the Management Board were duly notified of the meeting. Resolutions of the Management Board are adopted by an absolute majority of votes cast. In the event of equal split of votes, the Management Board President’s vote prevails. The appointment of proxy requires the consent of all the Members of the Management Board. Each Member of the Board may revoke the proxy. The address of the Management Board is the registered office of Synthos S.A., at Chemikow´ 1, 32-600 O´swi˛ecim, Poland.

The Issuer The Issuer was incorporated as a public limited liability company under the laws of Sweden on September 1, 2014, with registration number 556981-2927. As at the date of this Offering Memorandum, the board of directors of the Issuer is comprised of the following members:

Name Position Carl Henrick Hugo Nordenfelt ...... Managing Director Sten Axel Christian Wegenius ...... Member Zbigniew Lange ...... Chairman

106 The business address of Synthos Finance AB (publ) is Stureplan 4C, 4tr., 114 35 Stockholm, Sweden. The Board of Directors of the Issuer is responsible for managing the business of the Issuer in accordance with Swedish law and the Issuer’s articles of association. The Board of Directors also represents the Issuer in its dealings with third parties and in court. There are no potential conflicts of interest between any duties of the directors of the Issuer, and their private interests and/or other duties. Administrative and corporate tasks will be performed by the employees of the Issuer and by a corporate service provider.

107 PRINCIPAL SHAREHOLDERS As at June 30, 2014, our issued share capital amounted to PLN 39,697,500 and was divided into 1,323,250,000 ordinary bearer shares with a par value of PLN 0.03 each. We are a public company and our shares are listed on the regulated market of the Warsaw Stock Exchange. Therefore, we do not have detailed information on all of our shareholders. We receive information on our significant shareholders only if these shareholders comply with the notification requirements prescribed by Polish law. The following table sets forth the list of shareholders as at June 30, 2014, based on their notifications of holding at least 5% of votes at the shareholders meeting of Synthos.

Percentage of voting rights Number of votes at the at general general Percentage of shareholders’ shareholders’ Shareholder Number of shares share capital (%) meeting meeting Michał Sołowow, indirectly through subsidiaries:...... 826,559,009 62.46% 826,559,009 62.46% FTF Galleon S.A ...... 772,559,009 58.38% 772,559,009 58.38% Barcocapital Investment Limited .... 54,000,000 4.08% 54,000,000 4.08% Others(1) ...... 496,690,991 37.54% 496,690,991 37.54% Total ...... 1,323,250,000 100% 1,323,250,000 100%

(1) Other than the shareholders set forth in the table above and based on notifications of holding received at the shareholders meeting, no shareholder owns more than 5% of the shares in the Company.

108 CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS Transactions with related parties From time to time, we enter into transactions with our related parties. These transactions are entered into on arm’s length terms as part of the current business of the contracting companies with the nature and terms of those transactions determined by day to day operations.

Joint Venture between SYNTHOS Kralupy a.s. and Unipetrol, a.s. On June 9, 2010, we set up a butadiene production plant on the premises of SYNTHOS Kralupy a.s. The plant was built by Butadien Kralupy a.s., a company whose shareholders are Unipetrol, a.s. (51% of shares) and SYNTHOS Kralupy a.s. (49% of shares). Through the joint venture with Unipetrol we operationally co-manage butadiene production with production capacity of 130,000 tons per year. We constitute the only recipient of butadiene from Unipetrol, a.s. This joint venture stabilizes our raw material supply base and allows us to capture some of the upstream profitability embedded in butadiene prices. The total value of transactions with Butadien Kralupy a.s. as at and for the periods ending December 31, 2011, 2012 and 2013 are set out below:

Revenues Receivables Liabilities Costs (PLN million) As at and for the year ended December 31, 2013 ...... 370.3 71.2 102.4 625.1 December 31, 2012 ...... 509.6 116.2 98.4 749.1 December 31, 2011 ...... 391.5 123.6 75.7 590.0 On January 1, 2014, we adopted new IFRS standards and interpretations, for the preparation of the Condensed Consolidated Interim Financial Statements, in particular, IFRS 11 Joint Arrangements, which outlines the accounting by entities that jointly control an arrangement. As a result of the application of IFRS 11 Joint Arrangements, we changed the accounting method for our interest in Butadien Kralupy a.s. from the equity method to accounting for our interest by accounting our share in the assets and liabilities and related revenues and expenses of the joint operation. We did not disclose separately the total value of transactions with Butadien Kralupy a.s. as at and for the six months ended June 30, 2014 in the Condensed Consolidated Interim Financial Statements.

Agreement with AVE Kralupy s.r.o. We concluded an agreement with AVE Kralupy s.r.o. in relation to the incineration of hazardous waste. The total value of transactions with AVE Kralupy s.r.o. as at and for the years ended December 31, 2011, 2012 and 2013 are set out below:

Revenues Receivables Liabilities Costs (PLN million) As at and for the year ended December 31, 2013 ...... 5.2 1.0 0.3 4.7 December 31, 2012 ...... 5.7 1.0 0.2 5.7 December 31, 2011 ...... 5.6 1.0 0.5 6.4

Marketing agreement with Klub Sportowy Cersanit We have entered into an agreement with Klub Sportowy Cersanit, a sport club controlled by Mr. Michał Sołowow, our principal shareholder, in relation to the marketing and promotion of our Group and products.

109 The total value of transactions with Klub Sportowy Cersanit as at and for the years ended December 31, 2013, 2012 and 2011 are set out below:

Revenues Receivables Liabilities Costs (PLN million) As at and for the year ended December 31, 2013 ...... — — — 3.0 December 31, 2012 ...... — — — 3.1 December 31, 2011 ...... — — — 2.2

Relationship with Columbus Prime We have entered into an agreement with Columbus Prime, a chemical raw materials supplier controlled by Mr. Michał Sołowow, our principal shareholder, in relation to the purchase of raw materials. The total value of transactions with Columbus Prime as at and for the years ended December 31, 2013, 2012 and 2011 are set out below:

Revenues Receivables Liabilities Costs (PLN million) As at and for the year ended December 31, 2013 ...... — — — — December 31, 2012 ...... — — — 3.7 December 31, 2011 ...... — — — 5.9

110 DESCRIPTION OF EXISTING INDEBTEDNESS The following summary of the material terms of certain financing arrangements that we expect to be outstanding at the Issue Date. The summaries below do not purport to be complete and are subject, and are qualified in their entirety by reference to, the underlying documents. As of June 30, 2014, after giving pro forma effect to the Offering and the use of proceeds therefrom, we would have had total financial liabilities of PLN 1,495.3 million, with PLN 624.1 million available for drawing under the Senior Credit Facilities described below.

Senior Credit Facilities All of the outstanding amounts under the Senior Credit Facilities presented below will be repaid in connection with the Offering and the amounts available for borrowing thereunder will be reduced (together, the ‘‘Transactions’’). We are a party to the following Senior Credit Facilities with four different lenders, under the following agreements: • a loan agreement between Synthos S.A., SYNTHOS Kralupy a.s., TAMERO INVEST s.r.o. and Synthos Dwory 7, as borrowers, and Powszechna Kasa Oszcz˛edno´sci Bank Polski S.A., as lender, dated December 31, 2013, with a maximum credit limit of PLN 300 million, maturing on September 30, 2016; • a loan agreement between Synthos S.A. and Synthos Dwory 7, as borrowers, and Bank Pekao S.A., as lender, dated June 20, 2012, with a maximum credit limit of PLN 500 million, maturing on December 31, 2016; • a loan agreement between Synthos Dwory 7 sp. z o.o. s.k.a., as borrowers, and Bank Zachodni WBK S.A., as lender, dated May 24, 2013, with a maximum credit limit of PLN 250 million, maturing on May 24, 2015; and • a loan agreement between Synthos S.A., SYNTHOS Kralupy a.s., TAMERO INVEST s.r.o. and Synthos Dwory 7, as borrowers, and BNP Paribas Bank Polska S.A., as lender, dated March 5, 2014, with a maximum credit limit of PLN 250 million, maturing on March 30, 2016. The Senior Credit Facilities are executed on a bilateral basis and have similar covenants and security principles. Our Senior Credit Facilities include financial maintenance covenants including, inter alia, the following: (i) net debt to be no greater than 3.75 of our EBITDA for the period; (ii) debt service coverage ratio to be no lower than 1.1 for the period; and (iii) our equity capital to total assets to be no lower than 30% for the period. Our Senior Credit Facilities are secured by certain security interests, including: (i) an assignment of receivables; (ii) a registered pledge on current and future receivables arising out of the bank accounts; (iii) a power of attorney regarding management of our bank accounts maintained with the banks; (iv) guarantees granted by our group companies; and (v) declarations of voluntary submission to enforcement proceedings. Our Senior Credit Agreements provide for interest rates based on WIBOR or EURIBOR, respectively, plus a margin, which varies by agreement, and certain mandatory fees, if applicable. Our Senior Credit Facilities include certain events of default which may be caused by, among other things, non-payment of principal or interest, breach of obligations under the agreement, cross-defaults caused by other agreements, specified events which constitute a material adverse change, and insolvency. In some cases, a ‘‘material adverse change’’ (as determined by the lender) may trigger an event of default. See ‘‘Risk Factors—Risks Relating to our Financial Profile—We are exposed to risks associated with cross default provisions contained in our credit agreements.’’

111 DESCRIPTION OF THE NOTES Synthos Finance AB (publ), a public limited liability company incorporated under the laws of Sweden, having its registered office at Stureplan 4C, 4tr., 114 35 Stockholm, Sweden (the ‘‘Issuer’’) will issue A350,000,000 in aggregate principal amount of 4.000% Senior Notes due 2021 (the ‘‘Notes’’) under an indenture (the ‘‘Indenture’’) between, among others, the Issuer, Synthos S.A., a joint stock company organized under the laws of Poland (‘‘Społka´ akcyjna’’) having its registered office at Chemikow´ 1, 32-600 O´swi˛ecim, Poland, as parent guarantor (the ‘‘Parent Guarantor’’), certain subsidiaries of the Parent Guarantor that guarantee the Notes, as subsidiary guarantors (the ‘‘Subsidiary Guarantors’’ and, together with the Parent Guarantor, the ‘‘Guarantors’’) and Citibank, N.A., London Branch, as trustee (the ‘‘Trustee’’) in a private transaction that is not subject to the registration requirements of the U.S. Securities Act of 1933, as amended (the ‘‘U.S. Securities Act’’). Unless the context requires otherwise, references in this ‘‘Description of the Notes’’ to the Notes include the Notes and any additional Notes having identical terms and conditions to the Notes (the ‘‘Additional Notes’’) that are issued. The terms of the Notes include those set forth in the Indenture. The Indenture will not incorporate or include or be subject to any of the provisions of the U.S. Trust Indenture Act of 1939, as amended. The Issuer will issue Notes in this Offering in an aggregate principal amount of A350,000,000. The gross proceeds of the Offering of the Notes sold on the Issue Date will be used as set forth in this Offering Memorandum under the caption ‘‘Use of Proceeds.’’ The following description is a summary of the material provisions of the Indenture and the Notes. This does not restate those agreements in their entirety. We urge you to read the Indenture and the Notes because they, and not this description, define your rights as holders of the Notes. Copies of the Indenture and the form of Note will be available as set forth below under ‘‘—Additional Information.’’ Certain defined terms used in this description but not defined below under ‘‘—Certain Definitions’’ have the meanings assigned to them in the Indenture. You can find the definitions of certain terms used in this description under the subheading ‘‘—Certain Definitions.’’ In this description, the term ‘‘Issuer’’ refers only to Synthos Finance AB (publ) and its successors and not to any of its Subsidiaries, the term ‘‘Parent Guarantor’’ refers only to Synthos S.A. and its successors and not to any of its Subsidiaries. The registered holder of a Note will be treated as the owner of it for all purposes. Only registered holders will have rights under the Indenture. The Notes will be issued only in fully registered form, without coupons, in minimum denominations of A100,000 and any integral multiple of A1,000 in excess thereof.

Brief Description of the Notes and the Guarantees The Notes The Notes: • will be general senior unsecured obligations of the Issuer; • will rank pari passu in right of payment with all existing and future Indebtedness of the Issuer that is not subordinated in right of payment to the Notes; • will rank senior in right of payment to all existing and future Indebtedness of the Issuer that is expressly subordinated in right of payment to the Notes; • will be effectively subordinated to any existing and future Indebtedness of the Issuer that is secured by property and assets that do not secure the Notes, to the extent of the value of the property and assets securing such Indebtedness; and • will be fully and unconditionally guaranteed by the Guarantors.

The Guarantees The Notes will be guaranteed by the Guarantors. The Guarantee of each Guarantor: • will be general senior unsecured obligations of that Guarantor; • will rank pari passu in right of payment with all existing and future Indebtedness of such Guarantor that is not subordinated in right of payment to such Guarantee;

112 • will rank senior in right of payment to all existing and future Indebtedness of such Guarantor that is expressly subordinated in right of payment to such Guarantee; • will be effectively subordinated to any existing and future Indebtedness of that Guarantor that is secured by property and assets that do not secure the Notes, to the extent of the value of the property and assets securing such Indebtedness, including, with respect to certain property and assets of certain Guarantors, that guarantee obligations under certain existing Credit Facilities; and • will be structurally subordinated to all obligations of that Guarantor’s Subsidiaries that are not Guarantors. After giving effect to the Transactions, as of June 30, 2014, the Guarantors would have had total Indebtedness of approximately PLN 1,484.7 million and would have had available up to PLN 624.1 million under existing Credit Facilities. In addition, the Indenture will permit the Guarantors to incur additional Indebtedness in the future. Not all of the Parent Guarantor’s Subsidiaries will guarantee the Notes. In the event of a bankruptcy, liquidation or reorganization of any of these non-guarantor Subsidiaries, the non-guarantor Subsidiaries will pay the holders of their debt and their trade creditors before they will be able to distribute any of their assets to the Parent Guarantor. As at and for the six months ended June 30, 2014 and the year ended December 31, 2013, the Guarantors represented PLN 2,340.2 million or 99.6% and PLN 5,341.1 million or 99.7% of our consolidated revenues, respectively, PLN 307.1 million or 93.1% and PLN 595.3 million or 98.3% of our consolidated EBITDA, respectively, and PLN 1,857.3 million or 92.3% and PLN 2,204.0 million or 96.2% of our consolidated net assets, respectively. The Issuer is a finance company that has no subsidiaries. Upon completion of the issuance of the Notes, the only significant asset of the Issuer will be the Proceeds Bond. As such, the Issuer will be dependent on payments by the Parent Guarantor on the Proceeds Bond in order to service its Indebtedness. As of the Issue Date, certain subsidiaries of the Parent Guarantor will not guarantee the Notes. Any right of any Guarantor to receive assets of any of its non-guarantor Subsidiaries upon that non-guarantor Subsidiary’s liquidation or reorganization (and the consequent right of the holders of the Notes to participate in those assets) will be effectively subordinated to the claims of that non-guarantor Subsidiary’s creditors, except to the extent that such Guarantor is itself recognized as a creditor of the non-guarantor Subsidiary, in which case the claims of such Guarantor would still be subordinated in right of payment to any security in the assets of the non-guarantor Subsidiary and any Indebtedness of the non-guarantor Subsidiary senior to that held by such Guarantor. As of June 30, 2014, after giving effect to the issuance of the Notes, on a consolidated basis, our Subsidiaries that will not guarantee the Notes have had no debt outstanding. In addition, the Guarantors guarantee on a senior basis certain existing Credit Facilities and provide security in respect of the obligations thereunder. As of the Issue Date, all of the Parent Guarantor’s Subsidiaries will be ‘‘Restricted Subsidiaries’’ for the purposes of the Indenture. However, under the circumstances described below under the caption ‘‘— Certain Covenants—Designation of Restricted and Unrestricted Subsidiaries,’’ the Parent Guarantor will be permitted to designate Restricted Subsidiaries (other than the Issuer) as ‘‘Unrestricted Subsidiaries.’’ The Parent Guarantor’s Unrestricted Subsidiaries will not be subject to many of the restrictive covenants in the Indenture. The Parent Guarantor’s Unrestricted Subsidiaries will not guarantee the Notes.

Principal, Maturity and Interest On the Issue Date, the Issuer will issue A350,000,000 in aggregate principal amount of Notes. The Issuer may issue Additional Notes under the Indenture from time to time after the Issue Date. Any issuance of Additional Notes will be subject to all of the covenants in the Indenture, including the covenant described below under the caption ‘‘—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock.’’ The Notes and any Additional Notes subsequently issued under the Indenture will be treated as a single class for all purposes under the Indenture, including, without limitation, waivers, amendments, redemptions and offers to purchase, except as otherwise provided in the Indenture; provided that unless such Additional Notes are issued with a separate CUSIP or ISIN, such Additional Notes shall be fungible with the relevant series of Notes offered hereby for U.S. federal income tax purposes. The Issuer will issue Notes in denominations of A100,000 and integral multiples of A1,000 in excess thereof. The Notes will mature on September 30, 2021. Interest on the Notes will accrue at the rate of 4.000% per annum. Interest on the Notes will be payable semi-annually in arrears on each March 30 and September 30, commencing on March 30, 2015. Interest on

113 overdue principal and interest, including Additional Amounts (as defined herein), if any, will accrue at a rate that is 1% higher than the interest rate on the Notes. The Issuer will make each interest payment to the holders of record on the immediately preceding March 15 and September 15. Interest on the Notes will accrue from the date of original issuance or, if interest has already been paid, from the date it was most recently paid. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months and, in the case of an incomplete month, the number of days elapsed. Interest on overdue principal and interest will accrue at a rate that is 1% higher than the then applicable interest rate on the Notes. In no event will the rate of interest on the Notes be higher than the maximum rate permitted by applicable law.

Paying Agent and Registrar for the Notes The Issuer will maintain one or more paying agents (each, a ‘‘Paying Agent’’) for the Notes in the City of London. The Issuer will ensure that it maintains a Paying Agent in a member state of the European Union that will not be obliged to withhold or deduct tax pursuant to the European Union Directive 2003/48/EC (as amended from time to time) or any other directive implementing the conclusions of the ECOFIN Council meeting of 26 and 27 November 2000 on the taxation of savings income, or any law implementing, or complying with or introduced in order to conform to, such directive. The initial Paying Agent will be Citibank, N.A., London Branch, in London (the ‘‘Paying Agent’’ or ‘‘Principal Paying Agent’’). The Issuer will also maintain one or more registrars (each, a ‘‘Registrar’’) for so long as the Notes are listed on the Irish Stock Exchange and its rules so require. The Issuer will also maintain a transfer agent in London. The initial Registrar will be Citigroup Global Markets Deutschland AG. The initial transfer agent will be Citibank, N.A., London Branch. The Registrar will maintain a register reflecting ownership of the Notes in the form of definitive registered notes (the ‘‘Definitive Registered Notes’’) outstanding from time to time and will make payments on and facilitate transfers of Definitive Registered Notes on behalf of the Issuer. The Issuer may change the Paying Agent, the Registrars or the transfer agents without prior notice to the holders. For so long as the Notes are listed on the Official List of the Irish Stock Exchange and admitted for trading on the Global Exchange Market and the rules of the Irish Stock Exchange so require, the Issuer will publish a notice of any change of Paying Agent, Registrar or transfer agent in a newspaper having a general circulation in Dublin (which is expected to be the Irish Times) or, to the extent and in the manner permitted by such rules, post such notice on the official website of the Irish Stock Exchange (www.ise.ie).

Transfer and Exchange Notes sold within the United States to qualified institutional buyers pursuant to Rule 144A under the U.S. Securities Act (‘‘Rule 144A’’) will initially be represented by one or more global notes in registered form without interest coupons attached (the ‘‘144A Global Note’’), and Notes outside the United States pursuant to Regulation S under the U.S. Securities Act (‘‘Regulation S’’) will initially be represented by one or more global notes in registered form without interest coupons attached (the ‘‘Regulation S Global Note’’ and, together with the 144A Global Notes, the ‘‘Global Notes’’). During the 40-day distribution compliance period (as such term is defined in Rule 902 of Regulation S), Book-Entry Interests in the Regulation S Global Note may be transferred only to non-U.S. Persons under Regulation S or to persons whom the transferor reasonably believes are ‘‘qualified institutional buyers’’ within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A or otherwise in accordance with applicable transfer restrictions and any applicable securities laws of any state of the United States or any other jurisdiction. The Notes will be subject to certain other restrictions on transfer and certification requirements, as described under ‘‘Notice to Investors.’’ Ownership of interests in the Global Notes (the ‘‘Book-Entry Interests’’) will be limited to persons that have accounts with Euroclear SA/NV (‘‘Euroclear’’) or Clearstream Banking, soci´et´e anonyme (‘‘Clearstream’’) or Persons that may hold interests through such participants. Ownership of interests in the Book-Entry Interests and transfers thereof will be subject to the restrictions on transfer and certification requirements summarized below and described more fully under ‘‘Notice to Investors.’’ In addition, transfers of Book-Entry Interests between participants in Euroclear or Clearstream will be effected by Euroclear or Clearstream pursuant to customary procedures and subject to the applicable rules and procedures established by Euroclear or Clearstream and their respective participants.

114 Book-Entry Interests in the 144A Global Note may be transferred to a person who takes delivery in the form of Book-Entry Interests in the Regulation S Global Note only upon delivery by the transferor of a written certification (in the form to be provided in the Indenture) to the effect that such transfer is being made in accordance with Regulation S. Any Book-Entry Interest that is transferred as described in the immediately preceding paragraphs will, upon transfer, cease to be a Book-Entry Interest in the Global Note from which it was transferred and will become a Book-Entry Interest in the Global Note to which it was transferred. Accordingly, from and after such transfer, it will become subject to all transfer restrictions, if any, and other procedures applicable to Book-Entry Interests in the Global Note to which it was transferred. If Definitive Registered Notes are issued, they will be issued only in minimum denominations of A100,000 and integral multiples of A1,000 in excess thereof, upon receipt by the relevant Registrar of instructions relating thereto and any certificates and other documentation required by the Indenture. It is expected that such instructions will be based upon directions received by Euroclear or Clearstream, as applicable, from the participant which owns the relevant Book-Entry Interests. Definitive Registered Notes issued in exchange for a Book-Entry Interest will, except as set forth in the Indenture or as otherwise determined by the Issuer in compliance with applicable law, be subject to, and will have a legend with respect to, the restrictions on transfer summarized below and described more fully under ‘‘Notice to Investors.’’ Subject to the restrictions on transfer referred to above, Notes issued as Definitive Registered Notes may be transferred or exchanged, in whole or in part, in minimum denominations of A100,000 and integral multiples of A1,000 in excess thereof, to persons who take delivery thereof in the form of Definitive Registered Notes. In connection with any such transfer or exchange, the Indenture will require the transferring or exchanging holder to, among other things, furnish appropriate endorsements and transfer documents, furnish information regarding the account of the transferee at Euroclear or Clearstream, where appropriate, furnish certain certificates and opinions, and pay any Taxes in connection with such transfer or exchange. Any such transfer or exchange will be made without charge to the holder, other than any Taxes payable in connection with such transfer or exchange. Notwithstanding the foregoing, the Issuer is not required to register the transfer of any Definitive Registered Notes: (1) for a period of 15 days prior to any date fixed for the redemption of the Notes; (2) for a period of 15 days immediately prior to the date fixed for selection of Notes to be redeemed in part; (3) for a period of 15 days prior to the record date with respect to any interest payment date; or (4) which the holder has tendered (and not withdrawn) for repurchase in connection with a Change of Control Offer or an Asset Sale Offer.

Additional Amounts All payments made by or on behalf of the Issuer under or with respect to the Notes (whether or not in the form of Definitive Registered Notes) or any of the Guarantors with respect to any Guarantee will be made free and clear of and without withholding or deduction for, or on account of, any present or future Taxes unless the withholding or deduction of such Taxes is then required by law. If any deduction or withholding for, or on account of, any Taxes imposed or levied by or on behalf of (1) any jurisdiction in which the Issuer or any Guarantor is then incorporated, organized, engaged in business for tax purposes or otherwise resident for tax purposes or any political subdivision thereof or therein or (2) any jurisdiction from or through which payment is made by or on behalf of the Issuer or any Guarantor or any political subdivision thereof or therein (each, a ‘‘Tax Jurisdiction’’) will at any time be required to be made from any payments made by or on behalf of the Issuer under or with respect to the Notes or any of the Guarantors under or with respect to any Guarantee, including payments of principal, redemption price, purchase price, interest or premium, the Issuer or the relevant Guarantor, as applicable, will pay such additional amounts (the ‘‘Additional Amounts’’) as may be necessary in order that the net amounts received in respect of such payments by each holder after such withholding, deduction or imposition (including any such withholding, deduction or imposition from such Additional Amounts) will equal the respective amounts that would have

115 been received in respect of such payments in the absence of such withholding or deduction; provided, however, that no Additional Amounts will be payable with respect to: (1) any Taxes, to the extent such Taxes would not have been imposed but for the existence of any actual or deemed (pursuant to applicable Tax law of the relevant Tax Jurisdiction, such as, if applicable, a connection of a partnership that is attributed to the partners/beneficial owners) present or former connection between the holder or the beneficial owner of the Notes and the relevant Tax Jurisdiction (including being a resident of such jurisdiction for Tax purposes), other than the holding of such Note, the enforcement of rights under such Note or under a Guarantee or the receipt of any payments in respect of such Note or a Guarantee; (2) any Taxes, to the extent such Taxes were imposed as a result of the presentation of a Note for payment (where Notes are in the form of Definitive Registered Notes and presentation is required) more than 30 days after the relevant payment is first made available for payment to the holder (except to the extent that the holder would have been entitled to Additional Amounts had the Note been presented on the last day of such 30 day period); (3) any estate, inheritance, gift, sales, personal property, transfer or similar Taxes; (4) any Taxes withheld, deducted or imposed on a payment to an individual that are required to be made pursuant to European Council Directive 2003/48/EC or any other directive implementing the conclusions of the ECOFIN Council meeting of November 26 and 27, 2000 on the taxation of savings income, or any law implementing or complying with or introduced in order to conform to, such directive; (5) Taxes imposed on or with respect to a payment made to a holder or beneficial owner of Notes who would have been able to avoid such withholding or deduction by presenting the relevant Note to another Paying Agent in a member state of the European Union; (6) any Taxes payable other than by deduction or withholding from payments under, or with respect to, the Notes or with respect to any Guarantee; (7) any Taxes, to the extent such Taxes were imposed or withheld by reason of the failure of the holder or beneficial owner of Notes to comply with any reasonable written request of the Issuer addressed to the holder or beneficial owner and made at least 30 days before any such withholding or deduction would be payable to satisfy any certification, identification, information or other reporting requirements, whether required by statute, treaty, regulation or administrative practice of a Tax Jurisdiction, as a precondition to exemption from, or reduction in the rate of deduction or withholding of, Taxes imposed by the Tax Jurisdiction (including, without limitation, a certification that the holder or beneficial owner is not resident in the Tax Jurisdiction), but in each case, only to the extent the holder or beneficial owner is legally entitled to provide such certification or documentation; (8) any Taxes imposed on or with respect to any payment by the Issuer or the relevant Guarantor to the holder if such holder is a fiduciary or partnership or person other than the sole beneficial owner of such payment to the extent that Taxes would not have been imposed on such payment had such holder been the sole beneficial owner of such Note; (9) any Taxes, to the extent such Taxes were imposed pursuant to Section 1471(b) of the U.S. Internal Revenue Code of 1986, as amended (the ‘‘Code’’), or otherwise imposed pursuant to Sections 1471 through 1474 of the Code, any regulations or agreements thereunder, official interpretations thereof, or any law implementing an intergovernmental approach thereto; or (10) any combination of items (1) through (9) above. In addition to the foregoing, the Issuer and the Guarantors will also pay and indemnify the holder for any present or future stamp, issue, registration, court or documentary Taxes, or any other excise or property Taxes, charges or similar levies (including penalties, interest and any other reasonable expenses related thereto) which are levied by any Tax Jurisdiction on the execution, delivery, issuance, or registration of any of the Notes, the Indenture, any Guarantee or any other document or instrument referred to therein, or the receipt of any payments with respect thereto, or enforcement of, any of the Notes or any Guarantee (other than on or in connection with a transfer of the Notes that is not part of the initial resale of the Notes by the Initial Purchasers), or the receipt of any payments with respect thereto, or enforcement of, any of the Notes, any Guarantee or the Indenture.

116 If the Issuer or any Guarantor, as the case may be, becomes aware that it will be obligated to pay Additional Amounts with respect to any payment under or with respect to the Notes or any Guarantee, each of the Issuer or the relevant Guarantor, as the case may be, will deliver to the Trustee on a date that is at least 30 days prior to the date of that payment (unless the obligation to pay Additional Amounts arises less than 45 days prior to that payment date, in which case the Issuer or the relevant Guarantor shall notify the Trustee promptly thereafter) an Officer’s Certificate stating the fact that Additional Amounts will be payable and the amount estimated to be so payable. The Officer’s Certificate(s) must also set forth any other information necessary to enable the Paying Agent to pay such Additional Amounts to holders on the relevant payment date. The Issuer and the relevant Guarantor will provide the Trustee with documentation satisfactory to the Trustee evidencing the payment of Additional Amounts. The Trustee shall be entitled to rely solely on such Officer’s Certificate as conclusive proof that such payments are necessary. The Issuer or the relevant Guarantor will make all withholdings and deductions required by law and will remit the full amount deducted or withheld to the relevant Tax authority in accordance with applicable law. The Issuer or the relevant Guarantor will use its reasonable efforts to obtain Tax receipts from each Tax authority evidencing the payment of any Taxes so deducted or withheld. The Issuer or the relevant Guarantor will furnish to the Trustee, within a reasonable time after the date the payment of any Taxes so deducted or withheld is made, certified copies of Tax receipts evidencing payment by the Issuer or a Guarantor, as the case may be, or if, notwithstanding such entity’s efforts to obtain receipts, receipts are not obtained, other evidence of payments (reasonably satisfactory to the Trustee) by such entity. Upon reasonable request, copies of Tax receipts or other evidence of payments, as the case may be, will be made available by the Trustee to the holders and beneficial owners of the Notes. Whenever in the Indenture or in this ‘‘Description of the Notes’’ there is mentioned, in any context, the payment of amounts based upon the principal amount of the Notes or of principal, interest or of any other amount payable under, or with respect to, any of the Notes or any Guarantee, such mention shall be deemed to include mention of the payment of Additional Amounts to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof. The above obligations will survive any termination, defeasance or discharge of the Indenture, any transfer by a holder or beneficial owner of its Notes, and will apply, mutatis mutandis, to any jurisdiction in which any successor Person to the Issuer or any Guarantor is incorporated, organized, engaged in business for tax purposes, or otherwise resident for tax purposes or any jurisdiction from or through which such Person makes any payment on the Notes (or any Guarantee) and any department or political subdivision thereof or therein.

The Proceeds Bond General On the Issue Date, the Issuer will loan the proceeds of the offering of Notes to the Parent Guarantor pursuant to intercompany bonds (each, a ‘‘Proceeds Bond’’) issued by the Parent Guarantor and subscribed for by the Issuer (each, a ‘‘Proceeds Bond Document’’) to be dated the Issue Date. Each Proceeds Bond will be denominated in euro and will bear interest at a rate at least equal to the interest rate of the Notes. Interest on each Proceeds Bond will be payable semi-annually in arrears with sufficient time in advance to permit the Issuer to make payments of interest on the Notes. Each Proceeds Bond Document will provide that the Parent Guarantor will pay to the lender thereunder interest and principal that becomes payable on the Notes and any additional amounts and premium, if any, due thereunder. The maturity date of each Proceeds Bond will be the same maturity date as the maturity date of the Notes. Except as otherwise required by law, all payments under each Proceeds Bond Document will be made without deductions or withholding for, or on account of, any applicable Tax. In the event that the Parent Guarantor is required to make any such deduction or withholding, it shall gross-up each payment to the Issuer to ensure that the Issuer receives and retains a net payment equal to the payment which it would have received had no such deduction or withholding been made. Each Proceeds Bond Document provides that all payments made pursuant thereto will be made by the Parent Guarantor thereunder on a timely basis in order to ensure that the Issuer can satisfy its payment obligations under the Notes and the Indenture.

117 Each Proceeds Bond will be a general senior unsecured obligation of the Parent Guarantor and will be effectively subordinated to any existing and future Indebtedness of the Parent Guarantor that is secured by property and assets that do not secure the Proceeds Bond, to the extent of the value of the property and assets securing such Indebtedness.

Guarantees The Notes will be guaranteed by the Guarantors. On the Issue Date, the Guarantors will consist of the Parent Guarantor and Synthos Dwory 7 społka´ z ograniczon˛a odpowiedzialno´sci˛a sp.j., SYNTHOS Kralupy a.s., TAMERO INVEST s.r.o. and SYNTHOS PBR s.r.o. (each a ‘‘Subsidiary Guarantor’’). The Guarantees of the Guarantors will be joint and several obligations of the Guarantors. Each Guarantee is a full and unconditional guarantee of the Issuer’s obligations under the Notes, subject to the contractual limitations discussed below. The obligations of the Guarantors will be contractually limited under the applicable Guarantees to reflect limitations under applicable law with respect to maintenance of share capital, corporate benefit, fraudulent conveyance and other legal restrictions applicable to the Guarantors and their respective shareholders, directors and general partners. For a description of such contractual limitations, see ‘‘Certain Insolvency and Enforceability Considerations.’’

Release of the Guarantees The Guarantee of a Subsidiary Guarantor will be released: (1) in connection with any sale or other disposition of all or substantially all of the assets of that Subsidiary Guarantor (including by way of merger, consolidation, amalgamation or combination) to a Person that is not (either before or after giving effect to such transaction) the Parent Guarantor or a Restricted Subsidiary, if the sale or other disposition does not violate the ‘‘Asset Sale’’ provisions of the Indenture; (2) in connection with any sale or other disposition of Capital Stock of that Subsidiary Guarantor to a Person that is not (either before or after giving effect to such transaction) the Parent Guarantor or a Restricted Subsidiary, if the sale or other disposition does not violate the ‘‘Asset Sale’’ provisions of the Indenture and the Subsidiary Guarantor ceases to be a Restricted Subsidiary as a result of the sale or other disposition; (3) if the Parent Guarantor designates any Restricted Subsidiary that is a Subsidiary Guarantor to be an Unrestricted Subsidiary in accordance with the applicable provisions of the Indenture; (4) upon legal defeasance, covenant defeasance or satisfaction and discharge of the Indenture as provided below under the captions ‘‘—Legal Defeasance and Covenant Defeasance’’ and ‘‘—Satisfaction and Discharge;’’ (5) upon the full and final payment of the Notes and performance of all Obligations of the Issuer and the Guarantors under the Indenture and the Notes; (6) as described under the caption ‘‘—Amendment, Supplement and Waiver;’’ (7) with respect to an additional Guarantee given under the covenant captioned ‘‘—Certain Covenants— Additional Guarantees,’’ upon release of the guarantee that gave rise to the requirement to issue such additional guarantee so long as no Default or Event of Default would arise as a result thereof and no other Indebtedness that would give rise to an obligation to give an additional Guarantee is at that time guaranteed by the relevant Subsidiary Guarantor; and (8) as a result of a transaction permitted by ‘‘—Merger, Consolidation or Sale of Assets.’’ In addition, the Guarantee of the Parent Guarantor will be released in the circumstances described in clauses (4), (5), (6) and (8) above. Upon any occurrence giving rise to a release of a Guarantee, as specified above, the Trustee, subject to receipt of certain documents from the Issuer and/or Guarantor, will execute any documents reasonably required in order to evidence or effect such release, discharge and termination in respect of such Guarantee. Neither the Issuer, the Trustee nor any Guarantor will be required to make a notation on the Notes to reflect any such release, discharge or termination.

118 Optional Redemption At any time prior to September 30, 2018, the Issuer may on any one or more occasions redeem up to 35% of the aggregate principal amount of Notes issued under the Indenture, upon not less than 10 nor more than 60 days’ prior written notice to the holders, at a redemption price equal to 104.000% of the principal amount of the Notes redeemed, plus accrued and unpaid interest and Additional Amounts, if any, to the date of redemption (subject to the rights of holders of Notes on the relevant record date to receive interest on the relevant interest payment date), with the net cash proceeds of an Equity Offering of (i) the Parent Guarantor or (ii) any Parent Holdco of the Parent Guarantor to the extent the proceeds from such Equity Offering are contributed to the Parent Guarantor’s common equity capital or are paid to the Issuer as consideration for the issuance of ordinary shares of the Parent Guarantor or as Subordinated Shareholder Debt; provided that: (1) at least 65% of the aggregate principal amount of the Notes originally issued under the Indenture (excluding Notes held by the Parent Guarantor and its Subsidiaries) remains outstanding immediately after the occurrence of such redemption; and (2) the redemption occurs within 120 days of the date of the closing of such Equity Offering. At any time prior to September 30, 2018, the Issuer may on any one or more occasions redeem all or a part of the Notes upon not less than 10 nor more than 60 days’ prior written notice to the holders, at a redemption price equal to 100% of the principal amount of the Notes redeemed, plus the Applicable Premium as of, and accrued and unpaid interest and Additional Amounts, if any, to the date of redemption, subject to the rights of holders of the Notes on the relevant record date to receive interest due on the relevant interest payment date. Except pursuant to the preceding two paragraphs and except pursuant to ‘‘—Redemption for Changes in Taxes,’’ the Notes will not be redeemable at the Issuer’s option prior to September 30, 2018. On or after September 30, 2018, the Issuer may on any one or more occasions redeem all or a part of Notes upon not less than 10 nor more than 60 days’ notice, at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest and Additional Amounts, if any, on the Notes redeemed, to the applicable date of redemption, if redeemed on or after the dates indicated below, subject to the rights of holders of Notes on the relevant record date to receive interest on the relevant interest payment date:

Date Redemption Price September 30, 2018 ...... 102.000% September 30, 2019 ...... 101.000% September 30, 2020 and thereafter ...... 100.000% Unless the Issuer defaults in the payment of the redemption price, interest will cease to accrue on the Notes or portions thereof called for redemption on the applicable redemption date. Any redemption and notice may, in the Issuer’s discretion, be subject to the satisfaction of one or more conditions precedent.

Redemption for Changes in Taxes The Issuer may redeem the Notes, in whole but not in part, at its discretion at any time upon giving not less than 10 nor more than 60 days’ prior written notice to the holders of the Notes (which notice will be irrevocable and given in accordance with the procedures described in ‘‘—Selection and Notice’’), at a redemption price equal to 100% of the aggregate principal amount thereof, together with accrued and unpaid interest, if any, to the date fixed by the Issuer for redemption (a ‘‘Tax Redemption Date’’) and all Additional Amounts (if any) then due and which will become due on the Tax Redemption Date as a result of the redemption or otherwise (subject to the right of holders of the Notes on the relevant record date to receive interest due on the relevant interest payment date and Additional Amounts (if any) in respect thereof), if on the next date on which any amount would be payable in respect of the Notes, the Issuer is or would be required to pay Additional Amounts, and the Issuer cannot avoid any such payment obligation by taking reasonable measures available, and the requirement arises as a result of: (1) any amendment to, or change in, the laws or any regulations or rulings promulgated thereunder of a relevant Tax Jurisdiction which change or amendment is publicly announced as formally proposed and

119 becomes effective on or after the Issue Date (or, if the applicable Tax Jurisdiction became a Tax Jurisdiction on a date after the Issue Date, such later date); or (2) any amendment to, or change in, an official written interpretation or application of such laws, regulations or rulings (including by virtue of a holding, judgment, order by a court of competent jurisdiction or a change in published administrative practice) which amendment or change is publicly announced as formally proposed and becomes effective on or after the Issue Date (or, if the applicable Tax Jurisdiction became a Tax Jurisdiction on a date after the Issue Date, such later date) (each of the foregoing clauses (1) and (2), a ‘‘Change in Tax Law’’). The Issuer will not give any such notice of redemption earlier than 60 days prior to the earliest date on which the Issuer would be obligated to make such payment or withholding if a payment in respect of the Notes was then due, and the obligation to pay Additional Amounts must be in effect at the time such notice is given. Prior to the publication or, where relevant, mailing of any notice of redemption of the Notes pursuant to the Indenture, the Issuer will deliver to the Trustee (a) an Officer’s Certificate stating that obligation to pay such Additional Amounts cannot be avoided by the Issuer taking reasonable measures available to it; and (b) a written opinion of independent tax counsel to the Issuer of recognized standing qualified under the laws of the relevant Tax Jurisdiction and reasonably satisfactory to the Trustee (such approval not to be unreasonably withheld) to the effect that the Issuer has or will become obligated to pay such Additional Amounts as a result of a Change in Tax Law. The Trustee will accept and shall be entitled to rely on such Officer’s Certificate and opinion of counsel as sufficient evidence of the existence and satisfaction of the conditions precedent as described above, in which event it will be conclusive and binding on the holders.

Mandatory Redemption The Issuer is not required to make mandatory redemption payments or sinking fund payments with respect to the Notes.

Repurchase at the Option of Holders Change of Control and Rating Decline If a Change of Control Triggering Event occurs, each holder of Notes will have the right to require the Issuer to repurchase all or any part (equal to A100,000 or in integral multiples of A1,000 in excess thereof, if applicable; provided that Notes of A100,000 or less may only be redeemed in whole and not in part) of that holder’s Notes pursuant to a Change of Control Offer on the terms set forth in the Indenture. In the Change of Control Offer, the Issuer will offer a payment in cash equal to 101% of the aggregate principal amount of Notes repurchased, plus accrued and unpaid interest and Additional Amounts, if any, on the Notes repurchased to the date of purchase (the ‘‘Change of Control Payment’’), subject to the rights of holders of Notes on the relevant record date to receive interest due on the relevant interest payment date. Within 30 days following any Change of Control Triggering Event, the Issuer will mail (or cause to be mailed) a notice to each holder, with a copy to the Trustee, of the Notes at such holder’s registered address or otherwise deliver a notice in accordance with the procedures described under ‘‘—Selection and Notice,’’ stating that a Change of Control Offer is being made and offering to repurchase Notes on the date (the ‘‘Change of Control Payment Date’’) specified in the notice, which date will be no earlier than 30 days and no later than 60 days from the date such notice is mailed or delivered, pursuant to the procedures required by the Indenture and described in such notice. The Issuer will comply with the requirements of Rule 14e-1 under the U.S. Securities Exchange Act of 1934, as amended (the ‘‘U.S. Exchange Act’’) and any other applicable securities laws and regulations to the extent those laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with the Change of Control provisions of the Indenture, the Issuer will comply with any applicable securities laws and regulations and will not be deemed to have breached its obligations under the Indenture by virtue of such compliance. On the Change of Control Payment Date, the Issuer will, to the extent lawful: (1) accept for payment all Notes or portions of Notes properly tendered pursuant to the Change of Control Offer; (2) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions of Notes properly tendered; and

120 (3) deliver or cause to be delivered to the Trustee the Notes properly accepted together with an Officer’s Certificate stating the aggregate principal amount of Notes or portions of Notes being purchased by the Issuer. The Paying Agent will promptly mail (or cause to be delivered) to each holder of Notes properly tendered the Change of Control Payment for such Notes, and the Trustee (or an authentication agent appointed by it, upon receipt of an authentication order from the Issuer) will promptly authenticate and mail (or cause to be transferred by book-entry) to each holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any. The Issuer will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. The provisions described above that require the Issuer to make a Change of Control Offer following a Change of Control Triggering Event will be applicable whether or not any other provisions of the Indenture are applicable. Except as described above with respect to a Change of Control Triggering Event, the Indenture will not contain provisions that permit the holders of the Notes to require that the Issuer repurchase or redeem the Notes in the event of a takeover, recapitalization or similar transaction. The ability of the Issuer to repurchase Notes pursuant to a Change of Control Offer may be limited by a number of factors. The occurrence of certain of the events that constitute a Change of Control may constitute a mandatory prepayment event under our Credit Facilities. In addition, certain events that may constitute a change of control under our Credit Facilities may not constitute a Change of Control under the Indenture. Future Indebtedness of the Parent Guarantor and its Subsidiaries may also contain prohibitions of certain events that would constitute a Change of Control or require such Indebtedness to be repurchased upon a Change of Control. Accordingly, prior to complying with any of the provisions of this ‘‘Change of Control and Rating Decline’’ covenant, the Issuer may be required to repay all such Indebtedness or obtain the requisite consents, if any, under all agreements governing outstanding Senior Indebtedness to permit the repurchase of Notes required by this covenant. Moreover, the exercise by the holders of the Notes of their right to require the Issuer to repurchase the Notes could cause a default under such Indebtedness, even if the Change of Control itself does not, due to the financial effect of such repurchase on the Parent Guarantor and its subsidiaries (including the Issuer). Finally, the ability of the Issuer to pay cash to the holders of the Notes, and any other Indebtedness then becoming payable, upon a repurchase may be limited by its then-existing financial resources. The Issuer will be dependent upon the Parent Guarantor and its Restricted Subsidiaries that are the main operating subsidiaries of the group and, as such, will be subject to their then existing financial resources. There can be no assurance that sufficient funds will be available when necessary to make any required repurchases. See ‘‘Risk Factors—Risks Related to the Notes—We may not have the ability to raise the funds necessary to finance an offer to repurchase Notes upon the occurrence of a change of control triggering event as required by the Indenture.’’ The Issuer will not be required to make a Change of Control Offer upon a Change of Control Triggering Event if (1) a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change of Control Offer made by the Issuer and purchases all Notes properly tendered and not withdrawn under the Change of Control Offer, or (2) a notice of redemption has been given pursuant to the Indenture as described above under the caption ‘‘—Optional Redemption,’’ unless and until there is a default in payment of the applicable redemption price. Notwithstanding anything to the contrary contained herein, a Change of Control Offer may be made in advance of a Change of Control, conditioned upon the consummation of such Change of Control, if a definitive agreement is in place for the Change of Control at the time the Change of Control Offer is made. The definition of Change of Control includes a phrase relating to the direct or indirect sale, lease, transfer, conveyance or other disposition of ‘‘all or substantially all’’ of the properties or assets of the Parent Guarantor and its Restricted Subsidiaries taken as a whole. Although there is a limited body of case law interpreting the phrase ‘‘substantially all,’’ there is no precise established definition of the phrase under applicable law. Accordingly, the ability of a holder of Notes to require the Issuer to repurchase its Notes as a result of a sale, lease, transfer, conveyance or other disposition of less than all of the assets of the Parent Guarantor and its Restricted Subsidiaries taken as a whole to another Person or group may be uncertain. In addition, the definitions of ‘‘Change of Control’’ and ‘‘Permitted Holders’’ expressly permit a third party to obtain control of the Parent Guarantor without any obligation to make a Change of Control Offer unless a Change of Control Triggering Event also occurs.

121 The provisions under the Indenture relating to the Issuer’s obligation to make an offer to repurchase the Notes as a result of a Change of Control Triggering Event may be waived or modified with the consent of the holders of a majority in principal amount of the Notes. If and for so long as the Notes are listed on the Official List of the Irish Stock Exchange and admitted for trading on the Global Exchange Market, the Issuer will publish notices relating to the Change of Control Offer in a leading newspaper of general circulation in Dublin (which is expected to be the Irish Times) or, to the extent and in the manner permitted by such rules, post such notices on the official website of the Irish Stock Exchange (www.ise.ie).

Asset Sales The Parent Guarantor will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, consummate an Asset Sale unless: (1) the Parent Guarantor (or the Restricted Subsidiary, as the case may be) receives consideration at the time of the Asset Sale at least equal to the Fair Market Value (determined at the time of contracting such Asset Sale) of the assets or Equity Interests issued or sold or otherwise disposed of; and (2) at least 75% of the consideration received in the Asset Sale by the Issuer or such Restricted Subsidiary is in the form of cash or Cash Equivalents. For purposes of this provision, each of the following will be deemed to be cash: (a) any liabilities, as recorded on the balance sheet of the Parent Guarantor or any Restricted Subsidiary (other than contingent liabilities), that are assumed by the transferee of any such assets and as a result of which the Issuer and its Restricted Subsidiaries are no longer obligated with respect to such liabilities or are indemnified against further liabilities; (b) any securities, notes or other obligations received by the Parent Guarantor or any such Restricted Subsidiary from such transferee that are converted by the Parent Guarantor or such Restricted Subsidiary into cash or Cash Equivalents within 90 days following the closing of the Asset Sale, to the extent of the cash or Cash Equivalents received in that conversion; (c) any Capital Stock or assets of the kind referred to in clauses (3) or (5) of the next paragraph of this covenant; (d) Indebtedness of any Restricted Subsidiary that is no longer a Restricted Subsidiary as a result of such Asset Sale, to the extent that the Parent Guarantor and each Restricted Subsidiary are released from any guarantee of such Indebtedness in connection with such Asset Sale; (e) consideration consisting of Indebtedness of the Issuer or any Guarantor received from Persons who are not the Parent Guarantor or any Restricted Subsidiary that is cancelled; and (f) any Designated Non-Cash Consideration received by the Parent Guarantor or any of its Restricted Subsidiaries in such Asset Sales having an aggregate Fair Market Value, when taken together with all other Designated Non-Cash Consideration received pursuant to this clause (f) that is at that time outstanding, not to exceed the greater of PLN 50 million or 1.3% of Total Assets, measured at the time of the receipt of such Designated Non-Cash Consideration (with the Fair Market Value of each item of Designated Non-Cash Consideration being measured at the time received and without giving effect to subsequent changes in value). Within 365 days after the receipt of any Net Proceeds from an Asset Sale, the Parent Guarantor (or the applicable Restricted Subsidiary, as the case may be) may apply such Net Proceeds (at the option of the Parent Guarantor or such Restricted Subsidiary) to: (1) (a) prepay, repay, repurchase or redeem any Senior Indebtedness; (b) with respect to assets of a Restricted Subsidiary that is not the Issuer or a Guarantor, prepay, repay, repurchase or redeem any of its Indebtedness; or (c) prepay, repay, repurchase or redeem any Indebtedness that is secured on the asset which is subject to the relevant Asset Sale (and in each of (a), (b) and (c), other than Indebtedness that is owed to the Parent Guarantor or a Restricted Subsidiary); or (d) to prepay, repay or purchase Pari Passu Indebtedness at a price of no more than 100% of the principal amount of such Pari Passu Indebtedness plus accrued and unpaid interest to the date of such prepayment, repayment or purchase; provided that the Parent Guarantor shall redeem, repay or repurchase Pari Passu Indebtedness that is Public Debt pursuant to this clause (d) only if the Issuer makes (at such time or subsequently in compliance with this covenant) an offer to all holders of the Notes to purchase their

122 Notes in accordance with the provisions set forth below for an Asset Sale Offer for an aggregate principal amount of Notes at least equal to the proportion that (x) the total aggregate principal amount of Notes outstanding bears to (y) the sum of the total aggregate principal amount of Notes outstanding plus the total aggregate principal amount outstanding of such Pari Passu Indebtedness; (2) purchase Notes pursuant to an offer to all holders of the Notes at a purchase price in cash equal to at least 100% of the principal amount thereof, plus accrued and unpaid interest to, but not including, the date of purchase (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date) (a ‘‘Notes Offer’’); (3) acquire all or substantially all of the assets of, or any Capital Stock of, another Permitted Business, if, after giving effect to any such acquisition of Capital Stock, the Permitted Business is or becomes a Restricted Subsidiary; (4) make a capital expenditure; (5) acquire other assets (other than Capital Stock) not classified as current assets under IFRS that are used or useful in a Permitted Business; (6) enter into a commitment approved by the Board of Directors or otherwise binding on the Parent Guarantor to apply the Net Proceeds pursuant to clause (3), (4) or (5) of this paragraph; provided that such commitment shall be treated as a permitted application of the Net Proceeds from the date of such commitment until the earlier of (x) the date on which such acquisition or expenditure is consummated, and (y) the 180th day following the expiration of the aforementioned 365 day period; or (7) any combination of the foregoing. Pending the final application of any Net Proceeds, the Parent Guarantor (or the applicable Restricted Subsidiary) may temporarily reduce revolving credit borrowings or otherwise invest the Net Proceeds in any manner that is not prohibited by the Indenture. Any Net Proceeds from Asset Sales that are not applied or invested as provided in the second paragraph of this covenant will constitute ‘‘Excess Proceeds.’’ When the aggregate amount of Excess Proceeds exceeds PLN 150 million, within ten Business Days thereof, or at any earlier time at the Issuer’s election, the Issuer will make an offer (an ‘‘Asset Sale Offer’’) to all holders of Notes and may, to the extent the Issuer so elects, make an offer to holders of Pari Passu Indebtedness to purchase, prepay or redeem with the proceeds of sales of assets to purchase, prepay or redeem the maximum principal amount of Notes and such other Pari Passu Indebtedness (plus all accrued interest on the Indebtedness and the amount of all fees and expenses, including premiums, incurred in connection therewith) that may be purchased, prepaid or redeemed out of the Excess Proceeds. The offer price for the Notes in any Asset Sale Offer will be equal to (i) solely in the case of the Notes, 100% of the principal amount, which shall be repurchased in integral multiples of A1,000; provided that Notes of A100,000 or less may only be redeemed in whole and not in part; and (ii) solely in the case of any other Pari Passu Indebtedness, no greater than 100% of the principal amount, plus, in the case of (i) and (ii), accrued and unpaid interest and Additional Amounts, if any, to the date of purchase, prepayment or redemption, subject to the rights of holders of Notes on the relevant record date to receive interest due on the relevant interest payment date, and will be payable in cash. If any Excess Proceeds remain after consummation of an Asset Sale Offer, the Parent Guarantor and its Restricted Subsidiaries may use those Excess Proceeds for any purpose not otherwise prohibited by the Indenture. If the aggregate principal amount of Notes and other Pari Passu Indebtedness tendered into (or to be prepaid or redeemed in connection with) such Asset Sale Offer exceeds the amount of Excess Proceeds, or if the aggregate principal amount of Notes tendered pursuant to an Asset Sale Offer that is an application of Net Proceeds pursuant to clause (1) of the second paragraph of this covenant exceeds the amount of the Net Proceeds so applied the Trustee or the Registrar, as applicable will select the Notes and such other Pari Passu Indebtedness, if applicable, to be purchased on a pro rata basis (or in the manner described under ‘‘—Selection and Notice’’), based on the amounts tendered or required to be prepaid or redeemed in integral multiples of A1,000; provided that Notes of A100,000 or less may only be redeemed in whole and not in part. Upon completion of each Asset Sale Offer, the amount of Excess Proceeds will be reset at zero. Neither the Trustee nor the Registrar shall be liable for any selections made by it in accordance with this paragraph. The Issuer will comply with the requirements of Rule 14e-1 under the U.S. Exchange Act and any other applicable securities laws and regulations to the extent those laws and regulations are applicable in

123 connection with each repurchase of Notes pursuant to a Change of Control Offer, an Asset Sale Offer or a Notes Offer. To the extent that the provisions of any securities laws or regulations conflict with the Change of Control or Asset Sale provisions of the Indenture, the Issuer will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Change of Control or Asset Sale provisions of the Indenture by virtue of such compliance.

Selection and Notice If less than all of the Notes are to be redeemed at any time, the Trustee (or the Registrar, as applicable) will select Notes for redemption on a pro rata basis (or, in the case of Notes issued in global form as discussed under ‘‘Book-entry, delivery and form,’’ based on a method that most nearly approximates a pro rata selection in accordance with the rules of Euroclear and Clearstream as the Trustee or the Registrar deems fair and appropriate), unless otherwise required by law or applicable stock exchange or depository requirements. Neither the Trustee nor the Registrar shall be liable for any selections made by it in accordance with this paragraph. No Notes of A100,000 or less can be redeemed in part. Notices of redemption will be mailed by first class mail at least 10 but not more than 60 days before the redemption date to each holder of Notes to be redeemed at its registered address, except that redemption notices may be mailed more than 60 days prior to a redemption date if the notice is issued in connection with a defeasance of the Notes or a satisfaction and discharge pursuant to the Indenture. If any Note is to be redeemed in part only, the notice of redemption that relates to that Note will state the portion of the principal amount of that Note that is to be redeemed. A new Note in principal amount equal to the unredeemed portion of the original Note will be issued in the name of the holder of Notes upon cancellation of the original Notes. Notes called for redemption become due on the date fixed for redemption. On and after the redemption date, interest ceases to accrue on Notes or portions of Notes called for redemption. For Notes which are represented by global certificates held on behalf of Euroclear or Clearstream, notices may be given by delivery of the relevant notices to Euroclear or Clearstream for communication to entitled account holders in substitution for the aforesaid mailing. So long as any Notes are listed on the Official List of the Irish Stock Exchange and admitted for trading on the Global Exchange Market and the rules of the Irish Stock Exchange so require, any such notice to the holders of the relevant Notes shall also be published in a newspaper having a general circulation in Dublin (which is expected to be the Irish Times) or, to the extent and in the manner permitted by such rules, posted on the official website of the Irish Stock Exchange (www.ise.ie) and, in connection with any redemption, the Issuer will notify the Irish Stock Exchange of any change in the principal amount of Notes outstanding.

Certain Covenants Restricted Payments The Parent Guarantor will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly: (1) declare or pay any dividend or make any other payment or distribution on account of the Parent Guarantor’s Equity or any of its Restricted Subsidiaries’ Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving the Parent Guarantor or any of its Restricted Subsidiaries) or to the direct or indirect holders of the Parent Guarantor’s or any of its Restricted Subsidiaries’ Equity Interests in their capacity as holders (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock or Designated Preference Shares of the Parent Guarantor) other than dividends or distributions payable to the Parent Guarantor or a Restricted Subsidiary); (2) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving the Parent Guarantor) any Equity Interests of the Parent Guarantor or any Parent Holdco of the Parent Guarantor; (3) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Subordinated Obligations (excluding any intercompany Indebtedness between or among the Parent Guarantor and any of its Restricted Subsidiaries), except (i) payment of interest or principal at the Stated Maturity thereof or (ii) the purchase, repurchase or other acquisition of

124 Indebtedness purchased in anticipation of satisfying a sinking fund obligation, principal installment or scheduled maturity, in each case due within one year of the date of such purchase, repurchase or other acquisition; (4) make any payment (except through capitalization) on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Subordinated Shareholder Debt; or (5) make any Restricted Investment, (all such payments and other actions set forth in these clauses (1) through (5) above being collectively referred to as ‘‘Restricted Payments’’), unless, at the time of any such Restricted Payment: (a) no Default or Event of Default has occurred and is continuing or would occur as a consequence of such Restricted Payment; (b) the Parent Guarantor would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four quarter period for which internal financial statements are available, have been permitted to incur at least PLN 1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described below under the caption ‘‘—Incurrence of Indebtedness and Issuance of Preferred Stock;’’ and (c) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Parent Guarantor and its Restricted Subsidiaries since the Issue Date (excluding Restricted Payments permitted by clauses (2), (3), (4), (5), (6), (7), (8), (9), (10), (11)(b), (12), (15) and (17) of the next succeeding paragraph), is less than the sum, without duplication, of: (i) 50% of the Consolidated Net Income of the Parent Guarantor for the period (taken as one accounting period) from the beginning of the quarter commencing immediately prior to the Issue Date to the end of the Parent Guarantor’s most recently ended quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit); plus (ii) 100% of the aggregate net cash proceeds and the Fair Market Value of marketable securities or other property received by the Parent Guarantor since the Issue Date as a contribution to its common equity capital or from the issue or sale of Equity Interests of the Parent Guarantor (other than Disqualified Stock, Excluded Contributions and Designated Preference Shares) or from the issue or sale of convertible or exchangeable Disqualified Stock of the Parent Guarantor or convertible or exchangeable debt securities of the Parent Guarantor, in each case that have been converted into or exchanged for Equity Interests of the Parent Guarantor (other than Equity Interests (or Disqualified Stock, Designated Preference Shares or debt securities) sold to a Subsidiary of the Parent Guarantor) or from the issuance or sale of Subordinated Shareholder Debt (other than an issuance or sale to a Subsidiary of the Parent Guarantor); plus (iii) to the extent that any Restricted Investment that was made after the Issue Date is (a) sold, disposed of or otherwise cancelled, liquidated or repaid, 100% of the aggregate amount received in cash and the Fair Market Value of the property and marketable securities or other property received by the Parent Guarantor or any Restricted Subsidiary, or (b) made in an entity that subsequently becomes a Restricted Subsidiary, 100% of the Fair Market Value of the Restricted Investment of the Parent Guarantor and its Restricted Subsidiaries as of the date such entity becomes a Restricted Subsidiary; plus (iv) to the extent that any Unrestricted Subsidiary of the Parent Guarantor designated as such after the Issue Date is redesignated as a Restricted Subsidiary or is merged or consolidated into the Parent Guarantor or a Restricted Subsidiary, or all of the assets of such Unrestricted Subsidiary are transferred to the Parent Guarantor or a Restricted Subsidiary, the Fair Market Value of the property received by the Parent Guarantor or Restricted Subsidiary or the Parent Guarantor’s Restricted Investment in such Subsidiary as of the date of such redesignation, merger, consolidation or transfer of assets, to the extent such investments reduced the restricted payments capacity under this clause (c) and were not previously repaid or otherwise reduced; plus (v) 100% of any dividends or distributions received by the Parent Guarantor or a Restricted Subsidiary after the Issue Date from an Unrestricted Subsidiary, to the extent that such dividends or distributions were not otherwise included in the Consolidated Net Income of the Parent Guarantor for such period; plus

125 (vi) upon the full and unconditional release of a Restricted Investment that is a guarantee made by the Parent Guarantor or one of its Restricted Subsidiaries to any Person, an amount equal to the amount of such guarantee. Notwithstanding the foregoing, any amounts (such amounts, the ‘‘Excluded Amounts’’) that would otherwise be included in the calculation of the amount available for Restricted Payments pursuant to the preceding clause (c) will be excluded to the extent (1) such amounts result from the receipt of net cash proceeds or property or marketable securities received in contemplation of, or in connection with, an event that would otherwise constitute a Change of Control pursuant to the definition thereof and (2) no Change of Control Offer is made in connection with such Change of Control in accordance with the requirements of the Indenture. The preceding provisions will not prohibit: (1) the payment of any dividend or the consummation of any redemption within 60 days after the date of declaration of the dividend or giving of the redemption notice, as the case may be, if at the date of declaration or notice, the dividend or redemption payment would have complied with the provisions of the Indenture; (2) the making of any Restricted Payment in exchange for, or out of or with the net cash proceeds of the substantially concurrent sale or issuance (other than to a Subsidiary of the Parent Guarantor) of, Equity Interests of the Parent Guarantor (other than Disqualified Stock, Designated Preference Shares or Excluded Amounts), Subordinated Shareholder Debt or from the substantially concurrent contribution of common equity capital to the Parent Guarantor; provided that the amount of any such net cash proceeds that are utilized for any such Restricted Payment will be excluded from clause (c)(ii) of the preceding paragraph and will not be considered to be net cash proceeds from an Equity Offering for purposes of the ‘‘Optional Redemption’’ provisions of the Indenture; (3) the repurchase, redemption, defeasance or other acquisition or retirement for value of Subordinated Obligations made in exchange for, or out of the proceeds of a substantially concurrent sale of, Permitted Refinancing Indebtedness; (4) any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Subordinated Obligations: (a) (i) from Net Proceeds to the extent permitted under ‘‘—Asset Sales’’ below, but only if the Issuer shall have first complied with the terms described under ‘‘—Asset Sales’’ and purchased all Notes tendered pursuant to any offer to repurchase all the Notes required thereby, prior to purchasing, repurchasing, redeeming, defeasing or otherwise acquiring or retiring such Subordinated Obligations and (ii) at a purchase price not greater than 100% of the principal amount of such Subordinated Obligations plus accrued and unpaid interest; (b) to the extent required by the agreement governing such Subordinated Obligations, following the occurrence of a Change of Control (or other similar event described therein as a ‘‘change of control’’), but only (i) if the Issuer shall have first complied with the terms described under ‘‘—Change of Control and Rating Decline’’ and purchased all Notes tendered pursuant to the offer to repurchase all the Notes required thereby, prior to purchasing, repurchasing, redeeming, defeasing or otherwise acquiring or retiring such Subordinated Obligations and (ii) at a purchase price not greater than 101% of the principal amount of such Subordinated Indebtedness plus accrued and unpaid interest; or (c) (i) consisting of Acquired Indebtedness (other than Indebtedness Incurred (A) to provide all or any portion of the funds utilized to consummate the transaction or series of related transactions pursuant to which such Person became a Restricted Subsidiary or was otherwise acquired by the Parent Guarantor or a Restricted Subsidiary or (B) otherwise in connection with or contemplation of such acquisition) and (ii) at a purchase price not greater than 100% of the principal amount of such Subordinated Obligations plus accrued and unpaid interest and any premium required by the terms of any Acquired Indebtedness; (5) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Parent Guarantor or any Restricted Subsidiary held by any current or former officer, director, employee or consultant of the Parent Guarantor or any of its Restricted Subsidiaries pursuant to any equity subscription agreement, stock option agreement, restricted stock grant, shareholders’ agreement or similar agreement; provided that the aggregate price paid for all such repurchased,

126 redeemed, acquired or retired Equity Interests may not exceed PLN 15 million per annum (with unused amounts in any calendar year being carried over to the next succeeding two calendar years subject to a maximum unused amount of PLN 30 million in the aggregate); and provided, further, that such amount in any calendar year may be increased by an amount not to exceed the cash proceeds from the sale of Equity Interests of the Parent Guarantor or a Restricted Subsidiary received by the Parent Guarantor or a Restricted Subsidiary during such calendar year, in each case to members of management, directors or consultants of the Parent Guarantor, any of its Restricted Subsidiaries or any Parent Holdco of the Parent Guarantor to the extent the cash proceeds from the sale of Equity Interests have not otherwise been applied to the making of Restricted Payments pursuant to clause (c)(ii) of the preceding paragraph or clause (2) of this paragraph and are not Excluded Contributions or Excluded Amounts; (6) the repurchase of Equity Interests deemed to occur upon the exercise of stock options to the extent such Equity Interests represent a portion of the exercise price of those stock options; (7) the declaration and payment of regularly scheduled or accrued dividends to holders of any class or series of Disqualified Stock of the Parent Guarantor or any preferred stock of any Restricted Subsidiary issued on or after the Issue Date in accordance with the covenant described below under the caption ‘‘—Incurrence of Indebtedness and Issuance of Preferred Stock;’’ (8) payments of cash, dividends, distributions, advances or other Restricted Payments by the Parent Guarantor or any of its Restricted Subsidiaries to allow the payment of cash in lieu of the issuance of fractional shares upon (a) the exercise of options or warrants or (b) the conversion or exchange of Capital Stock of any such Person; (9) advances or loans to (a) any future, present or former officer, director, employee or consultant of the Parent Guarantor or a Restricted Subsidiary to pay for the purchase or other acquisition for value of Equity Interests of the Parent Guarantor (other than Disqualified Stock or Designated Preference Shares), or any obligation under a forward sale agreement, deferred purchase agreement or deferred payment arrangement pursuant to any management equity plan or stock option plan or any other management or employee benefit or incentive plan or other agreement or arrangement or (b) any management equity plan, employee benefit trust or stock option plan or any other management or employee benefit or incentive plan or unit trust or the trustees of any such plan or trust to pay for the purchase or other acquisition for value of Equity Interests of the Parent Guarantor (other than Disqualified Stock or Designated Preference Shares); provided that the total aggregate amount of Restricted Payments made under this clause (9) does not exceed PLN 12.5 million at any one time outstanding; (10) the payment of any dividend (or, in the case of any partnership or limited liability company, any similar distribution) by a Restricted Subsidiary to the holders of its Equity Interests (other than the Parent Guarantor or any Restricted Subsidiary) then entitled to participate in such dividends on a pro rata basis or otherwise in compliance with the terms of the instruments governing such Equity Interests; (11) dividends, loans, advances or distributions to any Parent Holdco or other payments by the Parent Guarantor or any Restricted Subsidiary in an amount equal to (without duplication) (a) the amounts required to make Permitted Parent Payments; or (b) amounts constituting or to be used for purposes of making payments (i) in connection with the issuance of the Notes or disclosed in the Offering Memorandum under the caption ‘‘Use of Proceeds’’ on or after the Issue Date; or (ii) to the extent specified in clauses (1), (4), (5) and (10) of the second paragraph under ‘‘—Transactions with Affiliates;’’ (12) Restricted Payments that are made with Excluded Contributions; (13) so long as no Default or Event of Default has occurred and is continuing, the payment of Advisory Fees; (14) so long as no Default or Event of Default has occurred and is continuing or would be caused thereby, following a Public Equity Offering that results in a Public Market of the Capital Stock of the Parent Guarantor or a Parent Holdco, the payment of dividends on the Capital Stock of the Parent Guarantor up to the greater of (a) 6% per annum of the net cash proceeds received by the Parent Guarantor in any such Public Equity Offering or any subsequent Public Equity Offering of such Capital Stock, or the net cash proceeds of any such Public Equity Offering or subsequent Public

127 Equity Offering of such Capital Stock of any Parent Holdco that are contributed in cash to the Parent Guarantor’s equity (other than through the issuance of Disqualified Stock, Designated Preference Shares, Excluded Amounts or Excluded Contributions); provided, that if such Public Equity Offering was of Capital Stock of a Parent Holdco, the net proceeds of any such dividend are used to fund a corresponding dividend in equal or greater amount on the Capital Stock of such Parent Holdco; and (b) following the Public Equity Offering, an amount equal to the greater of (X) 7% of the Market Capitalization and (Y) 7% of the IPO Market Capitalization; provided that after giving pro forma effect to such loans, advances, dividends or distributions, the Consolidated Leverage Ratio for the Parent Guarantor and its Restricted Subsidiaries shall be equal to or less than 3.0 to 1.0; (15) the declaration and payment of dividends to holders of any class or series of Designated Preference Shares of the Parent Guarantor issued after the Issue Date; provided, however, that, the amount of all dividends declared or paid pursuant to this clause (15) shall not exceed the Net Proceeds received by the Parent Guarantor or the aggregate amount contributed in cash to the equity (other than through the issuance of Disqualified Stock or an Excluded Contribution or Excluded Amounts) of the Parent Guarantor or contributed as Subordinated Shareholder Debt to the Parent Guarantor, as applicable, from the issuance or sale of such Designated Preference Shares; (16) so long as no Default or Event of Default has occurred and is continuing (or would result therefrom), any Restricted Payment; provided that the Consolidated Leverage Ratio on a pro forma basis after giving effect to any such dividend, distribution, advance, loan or other payment does not exceed 2.5 to 1.0; (17) payment of Receivables Fees and purchases of Receivables Assets pursuant to a Receivables Repurchase Obligation in connection with a Qualified Receivables Financing; and (18) so long as no Default or Event of Default has occurred and is continuing, other Restricted Payments in an aggregate amount not to exceed the greater of PLN 100 million and 2.6% of Total Assets since the Issue Date. The amount of all Restricted Payments (other than cash) will be the Fair Market Value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Parent Guarantor or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. Unsecured Indebtedness shall not be deemed to be subordinate or junior to secured Indebtedness by virtue of its nature as unsecured Indebtedness.

Incurrence of Indebtedness and Issuance of Preferred Stock The Parent Guarantor will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, ‘‘incur’’) any Indebtedness (including Acquired Debt), and the Parent Guarantor will not issue any Disqualified Stock and will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Parent Guarantor may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock and the Issuer and any Subsidiary Guarantor may incur Indebtedness (including Acquired Debt) and issue preferred stock, if on the date on which such additional Indebtedness is incurred or such Disqualified Stock or preferred stock is issued, as the case may be, the Fixed Charge Coverage Ratio for the Parent Guarantor’s most recently ended four full quarters for which financial statements are available immediately preceding the date of incurrence of such Indebtedness taken as one period would have been at least 2.00 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or preferred stock had been issued, as the case may be, at the beginning of such four-quarter period. The first paragraph of this covenant will not prohibit the incurrence of any of the following items of Indebtedness (collectively, ‘‘Permitted Debt’’): (1) the incurrence by the Issuer and the Guarantors of Indebtedness under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1) not to exceed the greater of (i) A220 million and 24% of Total Assets, plus (ii) in the case of any refinancing of any Indebtedness permitted under this clause (1) or any portion thereof, the aggregate amount of fees, underwriting discounts, premiums and other costs and expenses incurred in connection with such refinancing;

128 (2) Indebtedness outstanding on the Issue Date after giving pro forma effect to the issuance of the Notes and the application of the proceeds therefrom (other than Indebtedness described in clauses (1) and (3)); (3) the incurrence by the Issuer and the Guarantors of Indebtedness represented by the Notes (other than Additional Notes), the related Guarantees (including any future Guarantees) and each Proceeds Bond; (4) the incurrence by the Parent Guarantor or any Restricted Subsidiary of Indebtedness representing Capital Lease Obligations, mortgage financings or purchase money obligations incurred for the purpose of financing all or any part of the purchase price, lease expense, rental payments or cost of design, construction, installation or improvement of property, plant or equipment or other assets (including Capital Stock) used in the business of the Parent Guarantor or any of its Restricted Subsidiaries, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred or issued to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), not to exceed the greater of PLN 100 million or 2.6% of Total Assets (measured at the time of incurrence) at any time outstanding; (5) the incurrence by the Parent Guarantor or any Restricted Subsidiary of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) incurred under the first paragraph of this covenant or clause (2), (3), (5) or (12) of this paragraph; (6) the incurrence by the Parent Guarantor or any Restricted Subsidiary of intercompany Indebtedness between or among the Parent Guarantor or any Restricted Subsidiary; provided that: (a) if the Issuer or any Guarantor is the obligor on such Indebtedness and the payee is not the Issuer or a Guarantor, such Indebtedness must be unsecured and ((i) except in respect of the intercompany current liabilities incurred in the ordinary course of business in connection with the cash management operations of the Parent Guarantor and its Restricted Subsidiaries and (ii) only to the extent legally permitted (the Parent Guarantor and its Restricted Subsidiaries having completed all procedures required in the reasonable judgment of directors of officers of the obligee or obligor to protect such Persons from any penalty or civil or criminal liability in connection with the subordination of such Indebtedness)) expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Issuer, or the Guarantee, in the case of a Guarantor; and (b) (i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Parent Guarantor or a Restricted Subsidiary and (ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Parent Guarantor or a Restricted Subsidiary, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Parent Guarantor or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6); (7) the issuance by any Restricted Subsidiary to the Parent Guarantor or to any of its Restricted Subsidiaries of preferred stock; provided that: (a) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Parent Guarantor or a Restricted Subsidiary; and (b) any sale or other transfer of any such preferred stock to a Person that is not either the Parent Guarantor or a Restricted Subsidiary, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7); (8) the incurrence by the Parent Guarantor or any Restricted Subsidiary of Hedging Obligations not for speculative purposes (as determined in good faith by the Parent Guarantor or such Restricted Subsidiary, as the case may be); (9) the guarantee by the Parent Guarantor or any Restricted Subsidiary of Indebtedness of the Parent Guarantor or any Restricted Subsidiary to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this covenant; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes or a Guarantee, then the guarantee must be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;

129 (10) the incurrence by the Parent Guarantor or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, captive insurance companies, bankers’ acceptances, performance and surety bonds in the ordinary course of business; (11) Indebtedness represented by guarantees of any Management Advances; (12) Indebtedness of any Person outstanding on the date on which such Person becomes a Restricted Subsidiary or is merged, consolidated, amalgamated or otherwise combined with (including pursuant to any acquisition of assets and assumption of related liabilities) the Parent Guarantor or any Restricted Subsidiary (other than Indebtedness incurred to provide all or any portion of the funds used to consummate the transaction or series of related transactions pursuant to which such Person became a Restricted Subsidiary or was otherwise acquired by the Parent Guarantor or a Restricted Subsidiary or otherwise in connection with, or in contemplation of, such acquisition) or Indebtedness of the Issuer or any Guarantor incurred in relation to any such acquisition, merger, consolidation, amalgamation or combination; provided, however, with respect to this clause (12), that at the time of the acquisition or other transaction pursuant to which such Indebtedness was incurred or deemed to be incurred (a) the Parent Guarantor would have been able to incur PLN 1.00 of additional Indebtedness pursuant to the first paragraph of this covenant after giving effect to the incurrence of such Indebtedness pursuant to this clause (12) calculated on a pro forma basis or (b) the Fixed Charge Coverage Ratio would not be less than it was immediately prior to giving effect to such acquisition or other transaction on a pro forma basis; (13) Indebtedness arising from agreements of the Parent Guarantor or a Restricted Subsidiary providing for customary indemnification, obligations in respect of earnouts or other adjustments of purchase price or, in each case, similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets or Person or any Equity Interests of a Subsidiary, provided that the maximum liability of the Parent Guarantor and its Restricted Subsidiaries in respect of all such Indebtedness shall at no time exceed the gross proceeds, including the Fair Market Value of non-cash proceeds (measured at the time received and without giving effect to any subsequent changes in value), actually received by the Parent Guarantor and its Restricted Subsidiaries in connection with such disposition; (14) Indebtedness of the Parent Guarantor and its Restricted Subsidiaries in respect of (a) letters of credit, surety, performance or appeal bonds, completion guarantees, judgment, advance payment, customs, VAT or other tax guarantees or similar instruments issued in the ordinary course of business of such Person or in respect of any governmental requirement and not in connection with the borrowing of money, including letters of credit or similar instruments in respect of self-insurance and workers compensation obligations, and (b) any customary cash management, cash pooling or netting or setting off arrangements, including customary credit card facilities, entered into in the ordinary course of business; provided, however, that upon the drawing of such letters of credit or other instrument, such obligations are reimbursed within 30 days following such drawing; (15) (a) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within 30 Business Days of Incurrence; (b) customer deposits and advance payments received in the ordinary course of business from customers for goods or services purchased in the ordinary course of business; (c) Indebtedness owed on a short-term basis of no longer than 30 days to banks and other financial institutions incurred in the ordinary course of business of the Parent Guarantor and its Restricted Subsidiaries with such banks or financial institutions that arises in connection with ordinary banking arrangements to manage cash balances of the Parent Guarantor and its Restricted Subsidiaries; and (d) Indebtedness incurred by a Restricted Subsidiary in connection with bankers acceptances, discounted bills of exchange or the discounting or factoring of receivables for credit management of bad debt purposes, in each case incurred or undertaken in the ordinary course of business; (16) Indebtedness of the Issuer and the Guarantors in an aggregate outstanding principal amount which, when taken together with any Permitted Refinancing Indebtedness in respect thereof and the

130 principal amount of all other Indebtedness incurred pursuant to this clause (16) and then outstanding, will not exceed 100% of the Net Proceeds received by the Parent Guarantor from the issuance or sale (other than to a Restricted Subsidiary) of its Subordinated Shareholder Debt or Capital Stock (other than Disqualified Stock, Designated Preference Shares or an Excluded Contribution) or otherwise contributed to the equity (other than through the issuance of Disqualified Stock, Designated Preference Shares, Excluded Amounts or an Excluded Contribution) of the Parent Guarantor, in each case, subsequent to the Issue Date; provided, however, that (i) any such Net Proceeds that are so received or contributed shall be excluded for purposes of making Restricted Payments under the first paragraph and clauses (2), (5) and (13) of the second paragraph of the covenant described below under ‘‘—Restricted Payments’’ to the extent the Parent Guarantor and its Restricted Subsidiaries incur Indebtedness in reliance thereon and (ii) any Net Proceeds that are so received or contributed shall be excluded for purposes of incurring Indebtedness pursuant to this clause (16) to the extent the Parent Guarantor or any of its Restricted Subsidiaries makes a Restricted Payment under the first paragraph and clauses (2), (5) and (13) of the second paragraph of the covenant described below under ‘‘—Restricted Payments’’ in reliance thereon; (17) guarantees by the Parent Guarantor or any Restricted Subsidiary granted to any trustee of any management equity plan or stock option plan or any other management or employee benefit or incentive plan or unit trust scheme approved by the Board of Directors of the Parent Guarantor, so long as the proceeds of the Indebtedness so guaranteed are used to purchase Equity Interests of the Parent Guarantor (other than Disqualified Stock); provided that the amount of any net cash proceeds from the sale of such Equity Interests of the Parent Guarantor will be excluded from clause (c)(ii) of the first paragraph of the covenant described above under the caption ‘‘—Restricted Payments’’ and will not be considered to be net cash proceeds from an Equity Offering for purposes of the ‘‘Optional Redemption’’ provisions of the Indenture; (18) Indebtedness Incurred by a Receivables Subsidiary in a Qualified Receivables Financing; and (19) the incurrence of Indebtedness by the Parent Guarantor or any of its Restricted Subsidiaries in an aggregate principal amount at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (19), not to exceed the greater of PLN 160 million or 4.2% of Total Assets (measured at the time of incurrence) at any time outstanding. For purposes of determining compliance with this ‘‘Incurrence of Indebtedness and Issuance of Preferred Stock’’ covenant, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (19) above, or is entitled to be incurred pursuant to the first paragraph of this covenant, the Parent Guarantor, in its sole discretion, will be permitted to classify such item of Indebtedness on the date of its incurrence and only be required to include the amount and type of such Indebtedness in one of such clauses and will be permitted on the date of such incurrence to divide and classify an item of Indebtedness in more than one of the types of Indebtedness described in the first and second paragraphs of this covenant, from time to time to reclassify all or a portion of such item of Indebtedness, in any manner that complies with this covenant; provided, however, that all Indebtedness incurred under clause (1) of the second paragraph of this covenant may not be reclassified. All Indebtedness under any revolving credit facility shall be deemed to have been incurred under clause (1) of the second paragraph of this covenant and may not be reclassified. The accrual of interest or preferred stock dividends, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on preferred stock or Disqualified Stock in the form of additional shares of the same class of preferred stock or Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of preferred stock or Disqualified Stock for purposes of this covenant. For purposes of determining compliance with any Polish zloty-denominated restriction on the incurrence of Indebtedness, the Polish zloty equivalent principal amount of Indebtedness denominated in a different currency shall be utilized, calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred; provided, however, that (i) if such Indebtedness denominated in currency other than Polish zloty is subject to a Currency Exchange Protection Agreement with respect to Polish zloty the amount of such Indebtedness expressed in Polish zloty will be calculated so as to take account of the effects of such Currency Exchange Protection Agreement; and (ii) the Polish zloty equivalent of the principal amount of any such Indebtedness outstanding on the Issue Date shall be calculated based on the

131 relevant currency exchange rate in effect on the Issue Date. The principal amount of any refinancing Indebtedness incurred in the same currency as the Indebtedness being refinanced will be the Polish zloty equivalent of the Indebtedness refinanced determined on the date such Indebtedness was originally incurred, except that to the extent that: (1) such Polish zloty equivalent was determined based on a Currency Exchange Protection Agreement, in which case the refinancing Indebtedness will be determined in accordance with the preceding sentence; and (2) the principal amount of the refinancing Indebtedness exceeds the principal amount of the Indebtedness being refinanced, in which case the Polish zloty equivalent of such excess will be determined on the date such refinancing Indebtedness is being incurred. Notwithstanding any other provision of this covenant, the maximum amount of Indebtedness that the Parent Guarantor or any Restricted Subsidiary may incur pursuant to this covenant shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be: (1) in the case of any Indebtedness issued with original issue discount, the amount of the liability in respect thereof determined in accordance with IFRS; (2) the principal amount of the Indebtedness, in the case of any other Indebtedness; (3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of: (a) the Fair Market Value of such assets at the date of determination; and (b) the amount of the Indebtedness of the other Person; (4) any ‘‘parallel debt’’ obligation relating to Indebtedness that is otherwise included in the determination of a particular amount of Indebtedness shall not be included; and (5) the principal amount of any Disqualified Stock of the Parent Guarantor or a Restricted Subsidiary, or preferred stock of a Restricted Subsidiary, which will be equal to the greater of the maximum mandatory redemption or repurchase price (not including, in either case, any redemption or repurchase premium) or the liquidation preference thereof.

Anti-Layering Neither the Issuer nor any Guarantor will incur any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Issuer or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee and, if such Guarantor is the issuer of Proceeds Bonds, such Proceeds Bonds, on substantially identical (or more favorable) terms. Notwithstanding the foregoing, no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Issuer or any Guarantor solely (1) by virtue of being unsecured, (2) by virtue of being secured with different collateral, (3) by virtue of being secured on a junior priority basis, (4) by virtue of not being guaranteed or (5) by virtue of the application of waterfall or other payment ordering provisions affecting different tranches of Indebtedness under Credit Facilities.

Liens The Parent Guarantor will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or otherwise cause or suffer to exist or become effective any Lien (an ‘‘Initial Lien’’) of any kind securing Indebtedness upon any of their property or assets, now owned or hereafter acquired, except (1) Permitted Liens; or (2) if such Lien is not a Permitted Lien, to the extent that all obligations due under the Indenture, the Notes and the Guarantees are, in each case, secured on an equal and ratable basis or on a priority basis with the obligations secured by the Initial Lien (and on a priority basis if such obligations secured by the Initial Lien are subordinated in right of payment to either the Notes or any Guarantee).

132 Any such Lien created in favor of the Notes will be automatically and unconditionally released and discharged upon the release and discharge of the Initial Lien to which it relates under the paragraph above.

Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries The Parent Guarantor will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, create or permit to exist or become effective any consensual encumbrance or restriction on the ability of (a) the issuer of each Proceeds Bond to make payments on the Proceeds Bond issued by it or (b) any Restricted Subsidiary to: (1) pay dividends or make any other distributions on its Capital Stock to the Parent Guarantor or any Restricted Subsidiary, or with respect to any other interest or participation in, or measured by, its profits, or pay any Indebtedness owed to the Parent Guarantor or any Restricted Subsidiary; (2) make loans or advances to the Parent Guarantor or any Restricted Subsidiary; or (3) sell, lease or transfer any of its properties or assets to the Parent Guarantor or any Restricted Subsidiary, provided that (x) the priority of any preferred stock in receiving dividends or liquidating distributions prior to dividends or liquidating distributions being paid on common stock and (y) the subordination of (including the application of any standstill period to) loans or advances made to the Parent Guarantor or any Restricted Subsidiary to other Indebtedness incurred by the Parent Guarantor or any Restricted Subsidiary, in each case, shall not be deemed to constitute such an encumbrance or restriction. However, the preceding restrictions will not apply to encumbrances or restrictions existing under or by reason of: (1) (a) any agreements as in effect on the Issue Date or (b) any other agreement or instrument with respect to the Parent Guarantor or any Restricted Subsidiary in effect or entered into on the Issue Date and any amendments, restatements, modifications, renewals, supplements, refundings, replacements or refinancings of those agreements referred to in clauses (a) and (b) above; provided that the amendments, restatements, modifications, renewals, supplements, refundings, replacements or refinancings are not materially more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in those agreements on the Issue Date (as determined in good faith by the Parent Guarantor) or would not, in the good faith determination of the Parent Guarantor, materially impair the ability of the Issuer to make payments on the Notes; (2) the Indenture, the Notes, the Guarantees; (3) agreements governing other Indebtedness permitted to be incurred under the provisions of the covenant described above under the caption ‘‘—Incurrence of Indebtedness and Issuance of Preferred Stock’’ and any amendments, restatements, modifications, renewals, supplements, refundings, replacements or refinancings of those agreements; provided that the restrictions therein are not materially less favorable to the holders of the Notes than is customary in comparable financings (as determined in good faith by the Parent Guarantor); (4) applicable law, rule, regulation or order or the terms of any license, authorization, concession or permit; (5) any instrument governing Indebtedness or Capital Stock of a Person acquired by the Parent Guarantor or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness or Capital Stock was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired; provided that, in the case of Indebtedness, such Indebtedness was permitted by the terms of the Indenture to be incurred; (6) customary non-assignment and similar provisions in contracts, leases and licenses entered into in the ordinary course of business; (7) purchase money obligations for property acquired in the ordinary course of business and Capital Lease Obligations that impose restrictions on the property purchased or leased of the nature described in clause (3) of the preceding paragraph;

133 (8) any agreement for the sale or other disposition of the Capital Stock or all or substantially all of the property and assets of a Restricted Subsidiary that restricts distributions by that Restricted Subsidiary pending its sale or other disposition; (9) Permitted Refinancing Indebtedness; provided that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are not materially more restrictive, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced as determined in good faith by the Parent Guarantor or would not in the good faith determination of the Parent Guarantor, materially impair the ability of the Issuer to make payments on the Notes; (10) Liens permitted to be incurred under the provisions of the covenant described above under the caption ‘‘—Liens’’ that limit the right of the debtor to dispose of the assets subject to such Liens; (11) customary provisions limiting the disposition or distribution of assets or property in joint venture agreements, asset sale agreements, sale-leaseback agreements, stock sale agreements and other similar agreements in the ordinary course of business (including agreements entered into in connection with a Restricted Investment), which limitation is applicable only to the assets that are the subject of such agreements; (12) restrictions on cash or other deposits or net worth imposed by customers or suppliers or required by insurance, surety or bonding companies, in each case, under contracts entered into in the ordinary course of business; (13) restrictions effected in connection with a Qualified Receivables Financing that, in the good faith determination of an Officer or the Board of Directors of the Parent Guarantor, are necessary or advisable to effect such Qualified Receivables Financing; or (14) any encumbrance or restriction arising or agreed to in the ordinary course of business, not relating to any Indebtedness, and that do not individually or in the aggregate, (x) detract from the value of the property or assets of the Parent Guarantor or any Restricted Subsidiary in any manner material to the Parent Guarantor or any Restricted Subsidiary or (y) materially affect the Issuer’s ability to make future principal or interest payments on the Notes in each case, as determined in good faith by the Parent Guarantor; and (15) any encumbrance or restriction existing under any agreement that extends, renews, refinances or replaces the agreements containing the encumbrances or restrictions in the foregoing clauses (1) through (14), or in this clause (15); provided that the terms and conditions of any such encumbrances or restrictions are no more restrictive in any material respect than those under or pursuant to the agreement so extended, renewed, refinanced or replaced or would not in the good faith determination of the Parent Guarantor, materially impair the ability of the Issuer to make payments on the Notes.

Merger, Consolidation or Sale of Assets Parent Guarantor The Parent Guarantor will not, directly or indirectly: (1) consolidate or merge with or into another Person (whether or not it is the surviving corporation) or (2) sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of the properties or assets of (a) the Parent Guarantor and its Restricted Subsidiaries taken as a whole, in either case, in one or more related transactions, to another Person, unless: (1) either: (a) the Parent Guarantor is the surviving Person, as the case may be; or (b) the Person formed by or surviving any such consolidation or merger (if other than the Parent Guarantor) or to which such sale, assignment, transfer, conveyance, lease or other disposition has been made is an entity organized or existing under the laws of any member state of the European Union, Switzerland, Canada, any state of the United States or the District of Columbia; (2) the Person formed by or surviving any such consolidation or merger with the Parent Guarantor (if other than the Parent Guarantor) or the Person to which such sale, assignment, transfer, conveyance, lease or other disposition has been made assumes all the obligations of the Parent Guarantor under its Guarantee and the Indenture; (3) immediately after such transaction, no Default or Event of Default exists; (4) the Parent Guarantor or the Person formed by or surviving any such consolidation or merger (if other than the Parent Guarantor), or to which such sale, assignment, transfer, conveyance, lease or other

134 disposition has been made would, on the date of such transaction after giving pro forma effect thereto and any related financing transactions as if the same had occurred at the beginning of the applicable four-quarter period for which internal financial statements are available (a) be permitted to incur at least PLN 1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described above under the caption ‘‘—Incurrence of Indebtedness and Issuance of Preferred Stock’’ or (b) have a Fixed Charge Coverage Ratio not less than it was immediately prior to giving effect to such transaction; and (5) the Parent Guarantor delivers to the Trustee, in form and substance reasonably satisfactory to the Trustee, an Officer’s Certificate and opinion of counsel, in each case, stating that such consolidation, merger or transfer and such supplemental indenture comply with this covenant and that all conditions precedent in the Indenture relating to such transaction have been satisfied and that the Indenture and the Guarantee constitutes legal, valid and binding obligations of the Parent Guarantor or the Person formed by or surviving any such consolidation or merger (as applicable) enforceable in accordance with their terms.

The Issuer The Issuer will not (1) consolidate or merge with or into another Person (whether or not it is the surviving corporation) or (2) sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties and assets in one or more related transactions, to another Person, unless: (1) either: (a) the Issuer is the surviving Person; or (b) the Person formed by or surviving any such consolidation or merger (if other than the Issuer) or to which such sale, assignment, transfer, conveyance, lease or other disposition has been made is an entity organized or existing under the laws of any member state of the European Union, Switzerland, Canada, any state of the United States or the District of Columbia; (2) the Person formed by or surviving any such consolidation or merger with the Issuer (if other than the Issuer) or the Person to which such sale, assignment, transfer, conveyance, lease or other disposition has been made assumes all the obligations of the Issuer under the Notes, the Indenture and each Proceeds Bond; (3) immediately after such transaction, no Default or Event of Default exists; (4) the Issuer or the Person formed by or surviving any such consolidation or merger (if other than the Issuer), or to which such sale, assignment, transfer, conveyance, lease or other disposition has been made would, on the date of such transaction after giving pro forma effect thereto and any related financing transactions as if the same had occurred at the beginning of the applicable four- quarter period for which internal financial statements are available (a) be permitted to incur at least PLN 1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described above under the caption ‘‘—Incurrence of Indebtedness and Issuance of Preferred Stock’’ or (b) have a Fixed Charge Coverage Ratio not less than it was immediately prior to giving effect to such transaction; and (5) the Issuer delivers to the Trustee, in form and substance reasonably satisfactory to the Trustee, an Officer’s Certificate and opinion of counsel, in each case, stating that such consolidation, merger or transfer and such supplemental indenture comply with this covenant and that all conditions precedent in the Indenture relating to such transaction have been satisfied and that the Indenture and the Notes constitutes legal, valid and binding obligations of the Issuer, or the Person formed by or surviving any such consolidation or merger (as applicable) enforceable in accordance with their terms.

Subsidiary Guarantors A Subsidiary Guarantor (other than any other Subsidiary Guarantor whose Guarantee is to be released in accordance with the terms of the Guarantee and the Indenture as described under ‘‘—Guarantees’’) will not, directly or indirectly: (1) consolidate or merge with or into another Person (whether or not such Subsidiary Guarantor is the surviving corporation) or (2) sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of the properties or assets of such Subsidiary Guarantor and its

135 Subsidiaries that are Restricted Subsidiaries taken as a whole, in one or more related transactions, to another Person, unless: (1) either: (a) such Subsidiary Guarantor is the surviving Person; or (b) the Person formed by or surviving any such consolidation or merger (if other than such Subsidiary Guarantor) or the Person to which such sale, assignment, transfer, conveyance, lease or other disposition has been made assumes all the obligations of such Subsidiary Guarantor under its Guarantee, the Indenture and each Proceeds Bond; (2) immediately after giving pro forma effect to such transaction or transactions (and treating any Indebtedness which becomes an obligation of the surviving corporation as a result of such transaction as having been incurred by the surviving corporation at the time of such transaction or transactions), no Default or Event of Default exists; and (3) the Parent Guarantor delivers to the Trustee an Officer’s Certificate and opinion of counsel, in each case, stating that such consolidation, merger or transfer and such supplemental indenture comply with this covenant and that all conditions precedent in the Indenture relating to such transaction have been satisfied and that the Indenture and the Guarantee constitute legal, valid and binding obligations of the Subsidiary Guarantor or the Person formed by or surviving any such consolidation and merger (as applicable) enforceable in accordance with their terms. In addition, none of the Issuer or any Guarantor will, directly or indirectly, lease all or substantially all of the properties and assets of it and its Subsidiaries which are Restricted Subsidiaries taken as a whole, in one or more related transactions, to any other Person.

General This ‘‘Merger, Consolidation or Sale of Assets’’ covenant will not apply to (a) any consolidation or merger of any Restricted Subsidiary that is not a Guarantor with and into the Issuer or a Guarantor; (b) any consolidation or merger of any Subsidiary Guarantor with or into any other Subsidiary Guarantor; and (c) any consolidation or merger of the Parent Guarantor with or into any other Guarantor; and, in each case, clauses (2) and (5) of the first and second paragraphs of this covenant (as applicable) will be complied with. Clauses (3) and (4) of the first and second paragraphs and clause (2) of the third paragraph of this covenant will not apply to any merger or consolidation of the Parent Guarantor or any Subsidiary Guarantor with or into an Affiliate solely for the purpose of reincorporating the Parent Guarantor or such Subsidiary Guarantor in another jurisdiction.

Transactions with Affiliates The Parent Guarantor will not, and will not cause or permit any of its Restricted Subsidiaries to, make any payment to or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate of the Parent Guarantor (each, an ‘‘Affiliate Transaction’’) involving aggregate payments or consideration in excess of PLN 20 million, unless: (1) the Affiliate Transaction is on terms that are no less favorable to the Parent Guarantor or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Parent Guarantor or such Restricted Subsidiary with an unrelated Person; and (2) the Parent Guarantor delivers to the Trustee: (a) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of PLN 40 million, a resolution of the Board of Directors of the Parent Guarantor set forth in an Officer’s Certificate certifying that such Affiliate Transaction complies with this covenant and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors of the Parent Guarantor; and, in addition, (b) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of PLN 250 million, a written opinion of an accounting, appraisal or investment banking firm of international standing, or other recognized independent expert of international standing with experience appraising the terms and conditions of the type

136 of transaction or series of related transactions for which an opinion is required, stating that the transaction or series of related transactions is (i) fair from a financial point of view taking into account all relevant circumstances or (ii) on terms not less favorable than might have been obtained in a comparable transaction at such time on an arm’s length basis from a Person who is not an Affiliate. The following items will not be deemed to be Affiliate Transactions and, therefore, will not be subject to the provisions of the prior paragraph: (1) any issuance or sale of Capital Stock, options, other equity-related interests or other securities, or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, or entering into, or maintenance of, any employment, consulting, collective bargaining or benefit plan, program, agreement or arrangement, related trust or other similar agreement and other compensation arrangements, options, warrants or other rights to purchase Capital Stock of the Parent Guarantor, any Restricted Subsidiary or any Parent Holdco, restricted stock plans, long-term incentive plans, stock appreciation rights plans, participation plans or similar employee benefits or consultants’ plans or indemnities provided on behalf of officers, employees, directors or consultants approved by the Board of Directors of the Parent Guarantor, in each case in the ordinary course of business; (2) transactions between or among the Parent Guarantor and/or its Restricted Subsidiaries, or between and among Restricted Subsidiaries and any Receivables Subsidiary; (3) any transaction in the ordinary course of business between or among the Parent Guarantor or any Restricted Subsidiary and any Affiliate of the Parent Guarantor that would constitute an Affiliate Transaction solely because the Parent Guarantor or a Restricted Subsidiary or any Affiliate of the Parent Guarantor or a Restricted Subsidiary or any Affiliate of any Permitted Holder owns an equity interest in or otherwise controls such Affiliate; (4) payment of reasonable and customary fees and reimbursements of expenses (pursuant to indemnity arrangements or otherwise) of officers, directors, employees or consultants of the Parent Guarantor or any of its Restricted Subsidiaries; (5) the execution, delivery and performance (without duplication of any Permitted Parent Payments) of any Tax Sharing Agreement or any arrangement pursuant to which the Parent Guarantor or any of its Restricted Subsidiaries is required or permitted to file a consolidated tax return, or the formation and maintenance of any consolidated group for tax, accounting or cash pooling or management purposes in the ordinary course of business; (6) any Restricted Payment that is permitted pursuant to the covenant described above under the caption ‘‘—Restricted Payments’’ (other than pursuant to clause (11)(b)(ii) of the fourth paragraph of the covenant described under ‘‘—Restricted Payments’’); (7) any Permitted Investment (other than Permitted Investments described in clauses (3) and (16) of the definition thereof); (8) (a) issuances or sales of Capital Stock (other than Disqualified Stock or Designated Preference Shares) of the Parent Guarantor or options, warrants or other rights to acquire such Capital Stock or Subordinated Shareholder Debt; provided that the interest rate and other financial terms of such Subordinated Shareholder Debt are approved by a majority of the members of the Board of Directors of the Parent Guarantor in their reasonable determination and (b) any amendment, waiver or other transaction with respect to any Subordinated Shareholder Debt in compliance with the other provisions of the Indenture; (9) transactions pursuant to, or contemplated by any agreement in effect on the Issue Date and transactions pursuant to any amendment, modification or extension to such agreement, so long as such amendment, modification or extension, taken as a whole, is not materially more disadvantageous to the holders of the Notes than the original agreement as in effect on the Issue Date; (10) Management Advances; (11) transactions with customers, clients, suppliers, purchasers, sellers or providers of goods or services or providers of employees or other labor, in each case in the ordinary course of business and otherwise in compliance with the terms of the Indenture that are fair to the Parent Guarantor or the Restricted Subsidiaries, in the reasonable determination of the members of the Board of Directors of the Parent

137 Guarantor or the senior management thereof, or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated Person; (12) payment to any Permitted Holder of reasonable out-of-pocket expenses incurred by such Permitted Holder in connection with its direct or indirect investment in the Parent Guarantor and its Subsidiaries; and (13) any transaction effected as part of a Qualified Receivables Financing.

Additional Guarantees The Parent Guarantor will not cause or permit any of its Restricted Subsidiaries that is not the Issuer or a Subsidiary Guarantor, directly or indirectly, to guarantee the payment of, assume or in any manner become liable with respect to any other Indebtedness of the Issuer or a Guarantor incurred under Credit Facilities or that constitutes Public Debt unless such Restricted Subsidiary simultaneously executes and delivers a supplemental indenture providing for the guarantee of the payment of the Notes by such Restricted Subsidiary, which Guarantee will be senior to or pari passu with such Restricted Subsidiary’s guarantee of such other Indebtedness. Notwithstanding the foregoing paragraphs in this covenant: (1) the Guarantee by such Restricted Subsidiary may be limited in amount to the extent required by (a) any breach or violation of statutory limitations, corporate benefit, financial assistance, fraudulent preference, thin capitalization rules, capital maintenance rules, guidance and coordination rules or the laws rules or regulations (or analogous restriction) of any applicable jurisdiction; (b) any risk or liability for the officers, directors or (except in the case of a Restricted Subsidiary that is a partnership) shareholders of such Restricted Subsidiary (or, in the case of a Restricted Subsidiary that is a partnership, directors or shareholders of the partners of such partnership); or (c) any material cost, expense, liability or obligation (including with respect to any Taxes but excluding any obligation under the Guarantee itself) that cannot be avoided by reasonable measures available to the Parent Guarantor other than reasonable out of pocket expenses (but, in such a case (a) each of the Parent Guarantor and the Restricted Subsidiaries will use their reasonable best efforts to overcome the relevant legal limit and will procure that the relevant Restricted Subsidiary undertakes all whitewash or similar procedures which are legally available to eliminate the relevant limit); (2) for so long as it is not permissible under applicable law or regulation for a Restricted Subsidiary to become a Subsidiary Guarantor, such Restricted Subsidiary need not become a Subsidiary Guarantor (but, in such a case, each of the Parent Guarantor and the Restricted Subsidiaries will use their reasonable best efforts to overcome the relevant legal prohibition precluding the giving of the guarantee and will procure that the relevant Restricted Subsidiary undertakes all whitewash or similar procedures which are legally available to eliminate the relevant legal prohibition, and shall give such guarantee at such time (and to the extent) that it thereafter becomes permissible); and (3) This covenant shall not be applicable to any guarantees by any Restricted Subsidiary: (a) that existed at the time such Person became a Restricted Subsidiary if the guarantee was not incurred in connection with, or in contemplation of, such Person becoming a Restricted Subsidiary; or (b) given to a bank or trust company having combined capital and surplus and undivided profits of not less than A500 million, whose debt has a rating, at the time such guarantee was given, of at least ‘‘A’’ or the equivalent thereof by S&P and at least ‘‘A2’’ or the equivalent thereof by Moody’s in connection with the operation of cash management programs established for the Parent Guarantor’s benefit or that of any Restricted Subsidiary.

Limitation on Issuer Activities Notwithstanding anything contained in the Indenture to the contrary, the Parent Guarantor will not permit the Issuer to, and the Issuer will not, engage in any business activity or undertake any other activity, except: (1) any activity relating to the offering, issuance and servicing, purchase, redemption, refinancing or retirement of the Notes, the incurrence of other Indebtedness permitted by the terms of the Indenture (and the application of the proceeds therefrom) or performance of the terms and conditions of such Indebtedness, to the extent such activities are otherwise permissible under the Indenture, the lending

138 or otherwise advancing the proceeds of such Indebtedness as contemplated in this Offering Memorandum and any other activities in connection therewith and the granting of Liens permitted pursuant to the covenant described above under the caption ‘‘—Liens;’’ (2) any activity undertaken with the purpose of, and directly related to, exercising any rights and fulfilling any obligations arising under (a) the Notes, the Indenture, each Proceeds Bond and any other document (including, without limitation, any purchase agreement) relating to the Notes or Guarantees (including Additional Notes issued in accordance with the Indenture) or (b) any document governing Indebtedness permitted to be incurred by the terms of the Indenture or any other document (including, without limitation, any security or guarantee documents or purchase agreement) entered into in connection with the incurrence of such Indebtedness; (3) any activity related to investing amounts received by the Issuer in such manner not otherwise prohibited by the Indenture; (4) any activity directly related to the establishment and/or maintenance of the Issuer’s corporate existence and the issuance of the Notes or involving the provision of administrative services; (5) any activity reasonably related to the foregoing; or (6) other activities not specifically enumerated above that are de minimis in nature. The Parent Guarantor will not permit the Issuer to, and the Issuer shall not: (1) issue any Equity Interests other than the issuance of its ordinary shares to the Parent Guarantor (other than directors’ qualifying shares or shares (or Capital Stock) required by applicable law to be held by a Person other than the Parent Guarantor); (2) merge, consolidate, amalgamate or otherwise combine with or into another Person (whether or not the Issuer is the surviving corporation) other than as permitted by the covenant under the caption ‘‘—Merger, Consolidation or Sale of Assets;’’ (3) other than in connection with the incurrence of a Permitted Lien, sell, assign, transfer, lease, convey or otherwise dispose of any material property or assets to any Person in one or more related transactions; or (4) create, incur, assume or suffer to exist any Lien in respect of borrowed money of any kind against or upon any of its property or assets, or any proceeds therefrom, except for Liens to secure the payment or performance of the Notes or other Liens securing Indebtedness of the Issuer which are not prohibited under the Indenture. The Parent Guarantor shall cause the Issuer to, and the Issuer shall, at all times remain a Wholly-Owned Restricted Subsidiary of the Parent Guarantor (other than directors’ qualifying shares or shares (or Capital Stock) required by applicable law to be held by a Person other than the Parent Guarantor). For so long as any Notes are outstanding, the Parent Guarantor will not, and will not permit any of its Restricted Subsidiaries to, commence or take any action to facilitate a winding-up, liquidation or other analogous proceeding in respect of the Issuer.

Limitation on Amendments to, or Prepayments of, Proceeds Bonds Neither a Restricted Subsidiary that is the issuer of any Proceeds Bond, nor the Issuer will, with respect to any Proceeds Bond to which it is a party, except in accordance with ‘‘—Amendment, Supplement and Waiver’’ below: (1) change the Stated Maturity of any Proceeds Bond; (2) reduce the rate of interest on any Proceeds Bond; (3) change the currency for payment of any amount under any Proceeds Bond; (4) prepay or otherwise reduce or permit the prepayment or reduction of any Proceeds Bond (other than to facilitate a corresponding payment of principal on the Notes or to reflect any repayment, redemption or reduction in the outstanding principal amount of the Notes); (5) assign or novate any Proceeds Bond or any rights or obligations under any Proceeds Bond Document, as the case may be, (other than to secure the Notes and the Guarantees or in any transaction effected in compliance with the covenant under the caption ‘‘—Merger, Consolidation or Sale of Assets’’); or (6) amend, modify or alter any Proceeds Bond or Proceeds Bond Document, as the case may be, in any manner materially adverse to the holders of the Notes (other than in any transaction effected in compliance with the covenant under the caption ‘‘—Merger, Consolidation or Sale of Assets’’). Notwithstanding the foregoing, any Proceeds Bond may be prepaid or reduced to facilitate or otherwise accommodate or reflect a repayment, redemption or repurchase of outstanding Notes. Each issuer of Proceeds Bond should make payments under and in accordance with the Proceeds Bond to which it has issued and the Issuer shall accept such payments.

139 Designation of Restricted and Unrestricted Subsidiaries The Board of Directors of the Parent Guarantor may designate any Restricted Subsidiary (other than the Issuer) to be an Unrestricted Subsidiary if that designation would not cause a Default. If a Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate Fair Market Value of all outstanding Investments owned by the Parent Guarantor and its Restricted Subsidiaries in the Subsidiary designated as an Unrestricted Subsidiary will be deemed to be an Investment made as of the time of the designation and will reduce the amount available for Restricted Payments under the covenant described above under the caption ‘‘—Restricted Payments’’ or under one or more clauses of the definition of Permitted Investments, as determined by the Parent Guarantor. That designation will only be permitted if the Investment would be permitted at that time and if the Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. The Parent Guarantor may redesignate any Unrestricted Subsidiary to be a Restricted Subsidiary if that redesignation would not cause a Default. Any designation of a Subsidiary of the Parent Guarantor as an Unrestricted Subsidiary will be evidenced to the Trustee by filing with the Trustee a copy of a resolution of the Parent Guarantor’s Board of Directors giving effect to such designation and an Officer’s Certificate certifying that such designation complies with the preceding conditions and was permitted by the covenant described above under the caption ‘‘— Restricted Payments.’’ If, at any time, any Unrestricted Subsidiary would fail to meet the preceding requirements as an Unrestricted Subsidiary, it will thereafter cease to be an Unrestricted Subsidiary for purposes of the Indenture and any Indebtedness of such Subsidiary will be deemed to be incurred by a Restricted Subsidiary as of such date and, if such Indebtedness is not permitted to be incurred as of such date under the covenant described under the caption ‘‘—Incurrence of Indebtedness and Issuance of Preferred Stock,’’ the Parent Guarantor will be in default of such covenant. The Board of Directors of the Parent Guarantor may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such designation will be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of any outstanding Indebtedness of such Unrestricted Subsidiary, and such designation will only be permitted if (1) such Indebtedness is permitted under the covenant described under the caption ‘‘— Incurrence of Indebtedness and Issuance of Preferred Stock,’’ calculated on a pro forma basis as if such designation had occurred at the beginning of the applicable reference period; and (2) no Default or Event of Default would be in existence following such designation.

Payments for Consent The Parent Guarantor will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration to or for the benefit of any holder of Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of the Indenture or the Notes unless such consideration is offered to be paid and is paid to all holders of the Notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement. Notwithstanding the foregoing, the Parent Guarantor and its Restricted Subsidiaries shall be permitted, in any offer or payment of consideration for, or as an inducement to, any consent, waiver or amendment of any of the terms or provisions of the Indenture or the Notes, to exclude holders in any jurisdiction or any category of holders of Notes where (1)(a) the solicitation of such consent, waiver or amendment, including in connection with any tender offer or exchange offer, or (b) the payment of the consideration therefor could reasonably be interpreted as requiring the Parent Guarantor or any of its Restricted Subsidiaries to file a registration statement, prospectus or similar document under any applicable securities laws or listing requirements (including, but not limited to, the United States federal securities laws and the laws of the European Union or any of its member states), which the Parent Guarantor in its sole discretion determines (acting in good faith) would be materially burdensome (it being understood that it would not be materially burdensome to file the consent document(s) used in other jurisdictions, any substantially similar documents or any summary thereof with the securities or financial services authorities in such jurisdiction); or (2) such solicitation would otherwise not be permitted under applicable law in such jurisdiction or with respect to such category of holders of Notes.

Maintenance of Listing The Issuer will use its commercially reasonable efforts to obtain and maintain the listing of the Notes on the Global Exchange Market for so long as such Notes are outstanding; provided that if at any time the Issuer determines that it will not maintain such listing, it will obtain prior to the delisting of the Notes from

140 the Global Exchange Market, and thereafter use its best efforts to maintain, a listing of such Notes on another ‘‘recognized stock exchange’’ as defined in Section 1005 of the Income Tax Act 2007 of the United Kingdom.

Reports For so long as any Notes are outstanding, the Parent Guarantor will furnish to the Trustee the following reports: (1) within 120 days after the end of the Parent Guarantor’s fiscal year beginning with the fiscal year ending December 31, 2014, annual reports containing the following information: (a) audited consolidated balance sheet of the Parent Guarantor as of the end of the two most recent fiscal years and audited consolidated income statements and statements of cash flow of the Parent Guarantor for the two most recent fiscal years, including complete footnotes to such financial statements and the report of the independent auditors on the financial statements; (b) pro forma income statement and balance sheet information of the Parent Guarantor (which need not comply with Article 11 of Regulation S-X under the U.S. Exchange Act), together with explanatory footnotes, for any material acquisitions, dispositions or recapitalizations that have occurred since the beginning of the most recently completed fiscal year as to which such annual report relates (unless such pro forma information has been provided in a previous report pursuant to clause 2 or 3 below (provided that such pro forma financial information will be provided only to the extent available without unreasonable expense, in which case, the Parent Guarantor will provide, in the case of a material acquisition, acquired company financial statements)); (c) an operating and financial review of the audited financial statements, including a discussion of the results of operations, a discussion of financial condition and liquidity and capital resources, and a discussion of material commitments and contingencies and critical accounting policies; (d) a description of the business, management and shareholders of the Parent Guarantor, material affiliate transactions and material debt instruments; and (e) material risk factors and material recent developments; (2) within 60 days following the end of each of the first three quarters in each fiscal year of the Parent Guarantor beginning with the quarter ending March 31, 2015, quarterly reports containing the following information: (a) an unaudited condensed consolidated balance sheet as of the end of such quarter and unaudited condensed statements of income and cash flow for the quarterly and year to date periods ending on the unaudited condensed balance sheet date, and the comparable prior year periods for the Parent Guarantor, together with condensed footnote disclosure; (b) pro forma income statement and balance sheet information of the Parent Guarantor (which need not comply with Article 11 of Regulation S-X under the U.S. Exchange Act), together with explanatory footnotes, for any material acquisitions, dispositions or recapitalizations that have occurred since the beginning of the most recently completed quarter as to which such quarterly report relates (provided that such pro forma financial information will be provided only to the extent available without unreasonable expense, in which case, the Parent Guarantor will provide, in the case of a material acquisition, acquired company financial statements); (c) an operating and financial review of the unaudited financial statements, including a discussion of the consolidated financial condition and results of operations of the Parent Guarantor, and any material change between the current quarterly period and the corresponding period of the prior year; and (d) material recent developments; and (3) promptly after the occurrence of any material acquisition, disposition or restructuring of the Parent Guarantor and the Restricted Subsidiaries, taken as a whole, or any changes of the Chief Executive Officer or Chief Financial Officer at the Parent Guarantor or change in auditors of the Parent Guarantor or any other material event that the Parent Guarantor or any of its Restricted Subsidiaries announces publicly, a report containing a description of such event, provided, however, that the reports set forth in clauses (1), (2) and (3) above will not be required to (i) contain any reconciliation to U.S. generally accepted accounting principles or (ii) include separate financial statements for any Guarantors or non-guarantor Subsidiaries of the Parent Guarantor. In addition, if the Parent Guarantor has designated any of its Subsidiaries as Unrestricted Subsidiaries and such Subsidiaries are Significant Subsidiaries, then the quarterly and annual financial information required by the preceding paragraph will include a reasonably detailed presentation, either on the face of the financial statements or in the footnotes thereto, of the financial condition and results of operations of the Parent Guarantor and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the Parent Guarantor.

141 All financial statements will be prepared in accordance with IFRS. Except as provided for above, no report need include separate financial statements for the Parent Guarantor or Subsidiaries of the Parent Guarantor or any disclosure with respect to the results of operations or any other financial or statistical disclosure not of a type included in this Offering Memorandum. In addition, for so long as any Notes remain outstanding, the Parent Guarantor has agreed that it will furnish to the holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the U.S. Securities Act. Substantially concurrently with the issuance to the Trustee of the reports specified in (1), (2) and (3) above, the Parent Guarantor shall also (a) use its commercially reasonable efforts (i) to post copies of such reports on such website as may be then maintained by the Parent Guarantor and its Subsidiaries or (ii) otherwise to provide substantially comparable availability of such reports to holders (as determined by the Parent Guarantor in good faith) or (b) to the extent the Parent Guarantor determines in good faith that it cannot make such reports available in the manner described in the preceding clause (a) owing to applicable law or after the use of its commercially reasonable efforts, furnish such reports to the holders and, upon their request, prospective purchasers of the Notes. The Parent Guarantor will also make available copies of all reports required by clauses (1) through (3) of the first paragraph of this covenant, if and so long as the Notes are listed on the Official List of the Irish Stock Exchange and admitted for trading on the Global Exchange Market and the rules of the Irish Stock Exchange so require, at the offices of the listing agent in Ireland.

Suspension of Certain Covenants when Notes Rated Investment Grade If on any date following the Issue Date: (1) the Notes have achieved Investment Grade Status; and (2) no Default or Event of Default shall have occurred and be continuing on such date, then, beginning on that day and continuing until such time, if any, at which the Notes cease to have Investment Grade Status (such period, the ‘‘Suspension Period’’), the covenants specifically listed under the following captions in this Offering Memorandum will no longer be applicable to the Notes and any related default provisions of the Indenture will cease to be effective and will not be applicable to the Parent Guarantor and its Restricted Subsidiaries: (1) ‘‘—Repurchase at the Option of Holders—Asset Sales;’’ (2) ‘‘—Restricted Payments;’’ (3) ‘‘—Incurrence of Indebtedness and Issuance of Preferred Stock;’’ (4) ‘‘—Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries;’’ (5) ‘‘—Designation of Restricted and Unrestricted Subsidiaries;’’ (6) ‘‘—Transactions with Affiliates;’’ and (7) clause (4) of the first and second paragraphs of the covenant described under ‘‘—Merger, Consolidation or Sale of Assets.’’ Such covenants will not, however, be of any effect with regard to the actions of Parent Guarantor and the Restricted Subsidiaries properly taken during the continuance of the Suspension Period; provided that (1) with respect to the Restricted Payments made after any such reinstatement, the amount of Restricted Payments will be calculated as though the covenant described under the caption ‘‘—Restricted Payments’’ had been in effect prior to, but not during, the Suspension Period and (2) all Indebtedness incurred, or Disqualified Stock or preferred stock issued, during the Suspension Period will be classified to have been incurred or issued pursuant to clause (2) of the second paragraph of the caption ‘‘—Incurrence of Indebtedness and Issuance of Preferred Stock.’’ Upon the occurrence of a Suspension Period, the amount of Excess Proceeds shall be reset at zero. The Parent Guarantor shall notify the Trustee in writing that the two conditions set forth in the first paragraph under this covenant have been satisfied, provided that such notification shall not be a condition for the suspension of the covenants set forth above to be effective. The Trustee shall not be obliged to notify holders of such event. There can be no assurance that the Notes will ever achieve or maintain an Investment Grade Status.

142 Events of Default and Remedies Each of the following is an ‘‘Event of Default’’: (1) default for 30 days in the payment when due of interest or Additional Amounts, if any, with respect to the Notes; (2) default in the payment when due (at maturity, upon redemption or otherwise) of the principal of, or premium, if any, on, the Notes; (3) failure by the Issuer or relevant Guarantor to comply with the provisions described under the caption ‘‘—Certain Covenants—Merger, Consolidation or Sale of Assets;’’ (4) failure by the Issuer or relevant Guarantor for 60 days after written notice (i) to the Issuer by the Trustee or (ii) to the Issuer and the Trustee by the holders of at least 25% in aggregate principal amount of the Notes then outstanding voting as a single class to comply with any of the agreements in the Indenture (other than a default in performance, or breach, or a covenant or agreement which is specifically dealt with in clauses (1), (2) or (3)); (5) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Parent Guarantor or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Parent Guarantor or any of its Restricted Subsidiaries), whether such Indebtedness or guarantee now exists, or is created after the Issue Date, if that default: (a) is caused by a failure to pay principal of such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default (a ‘‘Payment Default’’); or (b) results in the acceleration of such Indebtedness prior to its express maturity, and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates PLN 100 million or more; (6) failure by the Issuer, the Parent Guarantor or any Restricted Subsidiary that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary, to pay final judgments entered by a court or courts of competent jurisdiction aggregating in excess of PLN 100 million (exclusive of any amounts that a solvent insurance company has acknowledged liability for), which judgments shall not have been discharged or waived and there shall have been a period of 60 consecutive days during which a stay of enforcement of such judgment or order, by reason of an appeal, waiver or otherwise, shall not have been in effect; (7) except as permitted by the Indenture (including with respect to any limitations), any Guarantee of a Guarantor that is a Significant Subsidiary or any group of Guarantors that, taken together, would constitute a Significant Subsidiary is held in any judicial proceeding to be unenforceable or invalid or ceases for any reason to be in full force and effect, or any Guarantor that is a Significant Subsidiary or any group of Guarantors that, taken together, would constitute a Significant Subsidiary, or any Person acting on behalf of any such Guarantor or Guarantors, denies or disaffirms its obligations under its Guarantee; (8) certain events of bankruptcy or insolvency described in the Indenture with respect to the Issuer, the Parent Guarantor or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of its Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary. In the case of an Event of Default arising from certain events of bankruptcy or insolvency, with respect to the Issuer, the Parent Guarantor or any Subsidiary Guarantor that is a Significant Subsidiary or any group of Subsidiary Guarantors that, taken together, would constitute a Significant Subsidiary, all outstanding Notes will become due and payable immediately without further action or notice or other act on the part of the Trustee or any holders of Notes. If any other Event of Default occurs and is continuing, the Trustee or the holders of at least 25% in aggregate principal amount of the then outstanding Notes by written notice to the Issuer (and to the Trustee if such notice is given by the holders) may and the Trustee, upon the written request of such holders, shall declare all amounts in respect of the Notes to be due and payable immediately. In the event of a declaration of acceleration of the Notes because an Event of Default described in clause (5) under ‘‘Events of Default’’ has occurred and is continuing, the declaration of acceleration of the Notes shall be automatically annulled if the event of default or payment default

143 triggering such Event of Default pursuant to clause (5) shall be remedied or cured, or waived by the holders of the Indebtedness, or the Indebtedness that gave rise to such Event of Default shall have been discharged in full, within 30 days after the declaration of acceleration with respect thereto and if (1) the annulment of the acceleration of the Notes would not conflict with any judgment or decree of a court of competent jurisdiction and (2) all existing Events of Default, except nonpayment of principal, premium or interest on the Notes that became due solely because of the acceleration of the Notes, have been cured or waived. Subject to certain limitations, holders of a majority in aggregate principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from holders of the Notes notice of any continuing Default or Event of Default if it determines that withholding notice is in their interest, except a Default or Event of Default relating to the payment of principal, interest or Additional Amounts or premium, if any. Subject to the provisions of the Indenture relating to the duties of the Trustee, in case an Event of Default occurs and is continuing, the Trustee will be under no obligation to exercise any of the rights or powers under the Indenture at the request or direction of any holders of Notes unless such holders have offered to the Trustee indemnity and/or security satisfactory to the Trustee against any loss, liability or expense. Except (subject to the provisions described under ‘‘—Amendment, Supplement and Waiver’’) to enforce the right to receive payment of principal, premium, if any, or interest or Additional Amounts when due, no holder of a Note may pursue any remedy with respect to the Indenture or the Notes unless: (1) such holder has previously given the Trustee written notice that an Event of Default is continuing; (2) holders of at least 25% in aggregate principal amount of the then outstanding Notes have requested, in writing, that the Trustee pursue the remedy; (3) such holders have offered the Trustee security and/or indemnity satisfactory to the Trustee against any loss, liability or expense; (4) the Trustee has not complied with such written request within 60 days after the receipt of the request and the offer of security and/or indemnity; and (5) holders of a majority in aggregate principal amount of the then outstanding Notes have not given the Trustee a direction inconsistent with such request within such 60-day period. The holders of not less than a majority in aggregate principal amount of the Notes outstanding may, on behalf of the holders of all outstanding Notes, waive any past default under the Indenture and its consequences, except a continuing default in the payment of the principal of premium, if any, any Additional Amounts or interest on any Note held by a non-consenting holder (which may only be waived with the consent of holders of at least 90% of the aggregate principal amount of the then outstanding Notes). As soon as practicable (but in any event no later than 30 days) upon becoming aware of any Default or Event of Default, the Parent Guarantor shall deliver written notice to the Trustee specifying such Default or Event of Default. The Parent Guarantor will be required to deliver to the Trustee after the end of each financial year, an Officer’s Certificate regarding compliance with the indenture and indicating whether the signors thereof know of any Default that occurred during the previous year.

No Personal Liability of Directors, Officers, Employees and Stockholders No director, officer, employee, incorporator or stockholder of the Issuer or any Guarantor, as such, will have any liability for any obligations of the Issuer or the Guarantors under the Notes, the Indenture or the Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each holder of Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. The waiver may not be effective to waive liabilities under applicable securities laws.

Legal Defeasance and Covenant Defeasance The Issuer may at any time, at the option of its Board of Directors evidenced by a resolution set forth in an Officer’s Certificate, elect to have all of its obligations discharged with respect to the outstanding Notes

144 and all obligations of the Guarantors discharged with respect to their Guarantees (‘‘Legal Defeasance’’) except for: (1) the rights of holders of outstanding Notes to receive payments in respect of the principal of, or interest (including Additional Amounts) or premium, if any, on, such Notes when such payments are due from the trust referred to below; (2) the Issuer’s obligations with respect to the Notes concerning issuing temporary Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an office or agency for payment and money for security payments held in trust; (3) the rights, powers, trusts, duties and immunities of the Trustee and the Issuer’s and the Guarantors’ obligations in connection therewith; and (4) the ‘‘Legal Defeasance and Covenant Defeasance’’ provisions of the Indenture. In addition, the Issuer may, at its option and at any time, elect to have the obligations of the Issuer and the Guarantors released with respect to certain covenants (including its obligation to make Change of Control Offers and Asset Sale Offers) that will be described in the Indenture (‘‘Covenant Defeasance’’) and thereafter any omission to comply with those covenants will not constitute a Default or Event of Default with respect to the Notes. In the event Covenant Defeasance occurs, all Events of Default described under ‘‘—Events of Default and Remedies’’ (except those relating to payments on the Notes or, solely with respect to the Issuer, bankruptcy or insolvency events) will no longer constitute an Event of Default with respect to the Notes. In order to exercise either Legal Defeasance or Covenant Defeasance: (1) the Issuer must irrevocably deposit with the Trustee (or such entity designated by the Trustee for this purpose), in trust, for the benefit of the holders of the Notes, cash in euro, non-callable euro-denominated Government Securities or a combination of cash in euro and non-callable euro-denominated Government Securities, in amounts as will be sufficient, in the opinion of a nationally recognized investment bank, appraisal firm or firm of independent public accountants, to pay the principal of, or interest (including Additional Amounts and premium, if any) on the outstanding Notes on the stated date for payment thereof or on the applicable redemption date, as the case may be, and the Issuer must specify whether the Notes are being defeased to such stated date for payment or to a particular redemption date; (2) in the case of Legal Defeasance, the Issuer must deliver to the Trustee an opinion reasonably acceptable to the Trustee of United States tax counsel of recognized standing confirming that (a) the Issuer has received from, or there has been published by, the U.S. Internal Revenue Service a ruling or (b) since the Issue Date, there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and based thereon such opinion of tax counsel will confirm that, the holders of the outstanding Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Legal Defeasance and will be subject to tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (3) in the case of Covenant Defeasance, the Issuer must deliver to the Trustee an opinion reasonably acceptable to the Trustee of United States tax counsel confirming that the holders of the outstanding Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Covenant Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (4) the Issuer must deliver to the Trustee an Officer’s Certificate stating that the deposit was not made by the Issuer with the intent of preferring the holders of Notes over the other creditors of the Issuer or the Guarantors with the intent of defeating, hindering, delaying or defrauding any creditors of the Issuer, the Guarantors or others; and (5) the Issuer must deliver to the Trustee an Officer’s Certificate and an opinion of counsel, subject to customary assumptions and qualifications, each stating that all conditions precedent relating to the Legal Defeasance or the Covenant Defeasance have been complied with.

145 Amendment, Supplement and Waiver Except as provided otherwise in the succeeding paragraphs, the Indenture, the Notes and the Guarantees may be amended or supplemented with the consent of the holders of at least a majority in aggregate principal amount of the Notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes), and any existing Default or Event of Default or compliance with any provision of the Indenture, the Notes or the Guarantees may be waived with the consent of the holders of a majority in aggregate principal amount of the then outstanding Notes (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, the Notes). Unless consented to by the holders of at least 90% of the aggregate principal amount of then outstanding Notes (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes), without the consent of each holder of Notes affected, an amendment, supplement or waiver may not (with respect to any Notes held by a non-consenting holder): (1) reduce the principal amount of Notes whose holders must consent to an amendment, supplement or waiver; (2) reduce the principal of or change the fixed maturity of any Note or alter the provisions with respect to the redemption of the Notes (other than provisions relating to the covenants described above under the caption ‘‘—Repurchase at the Option of Holders’’); (3) reduce the rate of or change the time for payment of interest, including default interest, on any Note; (4) impair the right of any holder of Notes to receive payment of principal of and interest on such holder’s Notes on or after the due dates therefore or to institute suit for the enforcement of any payment on or with respect to such holder’s Notes or any guarantee in respect thereof; (5) waive a Default or Event of Default in the payment of principal of, or interest, Additional Amounts or premium, if any, on, the Notes (except pursuant to a rescission of acceleration of the Notes by the holders of at least a majority in aggregate principal amount of the then outstanding Notes and a waiver of the Payment Default that resulted from such acceleration); (6) make any Note payable in money other than that stated in the Notes; (7) make any change in the provisions of the Indenture relating to waivers of past Defaults or the rights of holders of Notes to receive payments of principal of, or interest, Additional Amounts or premium, if any, on, the Notes; (8) waive a redemption payment with respect to any Note (other than a payment required by one of the covenants described above under the caption ‘‘—Repurchase at the Option of Holders’’); (9) release any Guarantor from any of its obligations under its Guarantee or the Indenture, except in accordance with the terms of the Indenture; or (10) make any change in the preceding amendment and waiver provisions. Notwithstanding the preceding two paragraphs, without the consent of any holder of Notes, the Issuer, the Guarantors and the Trustee may amend or supplement the Indenture, the Notes or the Guarantees: (1) to cure any ambiguity, defect or inconsistency; (2) to provide for the assumption of the Issuer’s or a Guarantor’s obligations to holders of Notes and Guarantees in the case of a merger or consolidation or sale of all or substantially all of the Issuer’s or such Guarantor’s assets, as applicable; (3) to make any change that would provide any additional rights or benefits to the holders of Notes or that does not adversely affect the legal rights under the Indenture of any such holder in any material respect; (4) to conform the text of the Indenture, the Guarantees or the Notes to any provision of this Description of the Notes to the extent that such provision in this Description of the Notes was intended to be a verbatim recitation of a provision of the Indenture, the Guarantees and the Notes; (5) to release any Guarantee in accordance with the terms of the Indenture;

146 (6) to provide for the issuance of Additional Notes in accordance with the limitations set forth in the Indenture as of the Issue Date; (7) to allow any Guarantor to execute a supplemental indenture and/or a Guarantee with respect to the Notes; (8) to provide for uncertificated Notes in addition to or in place of certificated Notes (provided that the uncertificated Notes are issued in registered form for purposes of Section 163(f) of the Code); or (9) to evidence and provide the acceptance of the appointment of a successor Trustee under the Indenture. The consent of the holders of Notes will not be necessary under the Indenture to approve the particular form of any proposed amendment. It is sufficient if such consent approves the substance of the proposed amendment. In formulating its opinion on such matters, the Trustee shall be entitled to rely absolutely on such evidence as it deems appropriate, including an opinion of counsel and an Officer’s Certificate.

Satisfaction and Discharge The Indenture will be discharged and will cease to be of further effect as to all Notes issued thereunder, when: (1) either: (a) all Notes that have been authenticated and delivered, except lost, stolen or destroyed Notes that have been replaced or paid and Notes for whose payment money has been deposited in trust and thereafter repaid to the Issuer or discharged from such trust as provided for in the Indenture, have been delivered to the Trustee for cancellation; or (b) all Notes that have not been delivered to the Principal Paying Agent for cancellation have become due and payable by reason of the mailing of a notice of redemption by the Principal Paying Agent in the name, and at the expense, of the Issuer or otherwise or will become due and payable within one year and the Issuer or any Guarantor has irrevocably deposited or caused to be deposited with the Trustee (or such other entity designated by the Trustee for this purpose) as trust funds in trust solely for the benefit of the holders, cash in euro, non-callable euro-denominated Government Securities or a combination of cash in euro and non-callable euro-denominated Government Securities, in amounts as will be sufficient, without consideration of any reinvestment of interest, to pay and discharge the entire Indebtedness on the Notes not delivered to the Principal Paying Agent for cancellation for principal, premium and Additional Amounts, if any, and accrued interest to the date of maturity or redemption; (2) the Issuer or any Guarantor has paid or caused to be paid all sums payable by the Issuer and the Guarantors under the Indenture; and (3) the Issuer has delivered irrevocable instructions to the Trustee under the Indenture to apply the deposited money toward the payment of the Notes at maturity or on the redemption date, as the case may be. In addition, the Issuer must deliver an Officer’s Certificate and an opinion of independent counsel to the Trustee stating that all conditions precedent in the Indenture relating to satisfaction and discharge of the Indenture have been satisfied; provided that any such counsel may rely on any Officer’s Certificate as to matters of fact (including as to compliance with the foregoing clauses (1), (2) and (3)).

Judgment Currency Any payment on account of an amount that is payable in euro which is made to or for the account of any holder or the Trustee in lawful currency of any other jurisdiction (the ‘‘Judgment Currency’’), whether as a result of any judgment or order or the enforcement thereof or the liquidation of the Issuer or any Guarantor, shall constitute a discharge of the Issuer or the Guarantor’s obligation under the Indenture and the Notes or Guarantee, as the case may be, only to the extent of the amount of euros that such holder or the Trustee, as the case may be, could purchase in the London foreign exchange markets with the amount of the Judgment Currency in accordance with normal banking procedures at the rate of exchange prevailing on the first Business Day following receipt of the payment in the Judgment Currency. If the

147 amount of euros that could be so purchased is less than the amount of euro originally due to such holder or the Trustee, as the case may be, the Issuer and the Guarantors shall indemnify and hold harmless the holder or the Trustee, as the case may be, from and against all loss or damage arising out of, or as a result of, such deficiency. This indemnity shall constitute an obligation separate and independent from the other obligations contained in the Indenture or the Notes, shall give rise to a separate and independent cause of action, shall apply irrespective of any indulgence granted by any holder or the Trustee from time to time and shall continue in full force and effect notwithstanding any judgment or order for a liquidated sum in respect of an amount due hereunder or under any judgment or order.

Concerning the Trustee The Issuer shall promptly (but in any event no later than 30 days) deliver written notice to the Trustee after becoming aware of the occurrence of a Default or an Event of Default. If the Trustee becomes a creditor of the Issuer or any Guarantor, the Indenture limits the right of the Trustee to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The Trustee will be permitted to engage in other transactions; however, if it acquires any conflicting interest it must eliminate such conflict within 90 days or resign as Trustee. The holders of a majority in aggregate principal amount of the then outstanding Notes will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee, subject to certain exceptions. The Indenture will provide that in case an Event of Default occurs and is continuing, the Trustee will be required, in the exercise of its power, to use the degree of care of a prudent man in the conduct of his own affairs. Subject to such provisions, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request of any holder of Notes, unless such holder has offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense. The Issuer and the Guarantors jointly and severally will indemnify the Trustee for certain claims, liabilities and expenses incurred without gross negligence, willful misconduct or fraud on its part, arising out of or in connection with its duties.

Listing Application has been made to list the Notes on the Official List of the Irish Stock Exchange and to admit the Notes to trading on the Global Exchange Market. There can be no assurance that the application to list the Notes on the Official List of the Irish Stock Exchange and to admit the Notes for trading on the Global Exchange Market will be approved and settlement of the Notes is not conditioned on obtaining this listing.

Additional Information Anyone who receives this Offering Memorandum may, following the Issue Date, obtain a copy of the Indenture and the form of Note without charge by writing to the Issuer. So long as the Notes are listed on the Official List of the Irish Stock Exchange and admitted for trading on the Global Exchange Market and the rules of the Irish Stock Exchange so require, copies, current and future, of all of the Parent Guarantor’s annual audited consolidated financial statements and or the Parent Guarantor’s unaudited consolidated interim financial statements, as applicable, and this Offering Memorandum may be obtained, free of charge, during normal business hours at the offices of the listing agent in Ireland.

Governing Law The Indenture, the Notes and the Guarantees will be governed by, and construed in accordance with, the laws of the State of New York.

Consent to Jurisdiction and Service of Process The Indenture will provide that the Issuer and each Guarantor, will appoint Corporation Service Company, as its agent for service of process in any suit, action or proceeding with respect to the Indenture, the Notes and the Guarantees brought in any U.S. federal or New York state court located in the City of New York and will submit to such jurisdiction.

148 Enforceability of Judgments Since a substantial portion of the assets of the Issuer and the Guarantors are outside the United States, any judgment obtained in the United States against the Issuer or any Guarantor, may not be collectable within the United States. See ‘‘Enforcement of civil liabilities.’’

Prescription Claims against the Issuer or any Guarantor for the payment of principal or Additional Amounts, if any, on the Notes will be prescribed ten years after the applicable due date for payment thereof. Claims against the Issuer or any Guarantor for the payment of interest on the Notes will be prescribed six years after the applicable due date for payment of interest.

Certain Definitions Set forth below are certain defined terms used in the Indenture. Reference is made to the Indenture for a full disclosure of all defined terms used therein, as well as any other capitalized terms used herein for which no definition is provided. ‘‘Acquired Debt’’ means, with respect to any specified Person: (1) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, whether or not such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Restricted Subsidiary; and (2) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person. ‘‘Advisory Fees’’ means customary fees and related expenses for the performance of transaction, management, consulting, financial or other advisory services or underwriting, placement or other investment banking activities, including in connection with mergers, acquisitions, dispositions or joint ventures, by any Permitted Holder or any of its Affiliates for the Parent Guarantor or any Restricted Subsidiary, which payments have been approved by a majority of the Board of Directors of the Parent Guarantor; provided that such fees will not, in the aggregate, exceed PLN 10 million per annum. ‘‘Affiliate’’ of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, ‘‘control,’’ as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise. For purposes of this definition, the terms ‘‘controlling,’’ ‘‘controlled by’’ and ‘‘under common control with’’ have correlative meanings. ‘‘Applicable Premium’’ means, with respect to any Note on any redemption date, the greater of: (1) 1.0% of the principal amount of the Note; or (2) the excess of: (a) the present value at such redemption date of (i) the redemption price of the Note at September 30, 2018 (such redemption price being set forth in the table appearing above under the caption ‘‘—Optional Redemption’’), plus (ii) all required interest payments due on the Note through September 30, 2018 (excluding accrued but unpaid interest to the redemption date), computed using a discount rate equal to the Bund Rate as of such redemption date plus 50 basis points; over (b) the principal amount of the Note, as calculated by the Issuer or on behalf of the Issuer by such Person as the Issuer may engage. For the avoidance of doubt, calculation of the Applicable Premium shall not be a duty or obligation of the Trustee, the Registrar or any Paying Agent. ‘‘Asset Sale’’ means: (1) the sale, lease, conveyance or other disposition of any assets by the Parent Guarantor or any of its Restricted Subsidiaries; provided that the sale, lease, conveyance or other disposition of all or substantially all of the assets of the Parent Guarantor and its Restricted Subsidiaries taken as a whole

149 will be governed by the provisions of the Indenture described above under the caption ‘‘—Repurchase at the Option of Holders—Change of control and Rating Decline’’ and/or the provisions described above under the caption ‘‘—Certain Covenants—Merger, Consolidation or Sale of Assets’’ and not by the provisions described under the caption ‘‘—Repurchase at the Option of Holders—Asset Sales;’’ and (2) the issuance of Equity Interests by any Restricted Subsidiary or the sale by the Parent Guarantor or any of its Restricted Subsidiaries of Equity Interests in any Subsidiary of the Parent Guarantor (in each case, other than directors’ qualifying shares). Notwithstanding the preceding, none of the following items will be deemed to be an Asset Sale: (1) any single transaction or series of related transactions that involves assets having a Fair Market Value of less than PLN 50 million; (2) a transfer of assets or Equity Interests between or among the Parent Guarantor and any Restricted Subsidiary; (3) an issuance of Equity Interests by a Restricted Subsidiary to the Parent Guarantor or to another Restricted Subsidiary; (4) the sale, lease or other transfer of accounts receivable, inventory or other assets in the ordinary course of business and any sale or other disposition of damaged, worn-out or obsolete assets or assets that are no longer useful in the conduct of the business of the Parent Guarantor and its Restricted Subsidiaries; (5) licenses and sublicenses by the Issuer or any of its Restricted Subsidiaries in the ordinary course of business; (6) any surrender or waiver of contract rights or settlement, release, recovery on or surrender of contract, tort or other claims in the ordinary course of business; (7) the granting of Liens not prohibited by the covenant described above under the caption ‘‘—Certain Covenants—Liens;’’ (8) the sale or other disposition of cash or Cash Equivalents; (9) a Restricted Payment that does not violate the covenant described above under the caption ‘‘—Certain Covenants—Restricted Payments,’’ a Permitted Investment or any transaction specifically excluded from the definition of Restricted Payment; (10) the disposition of receivables in connection with the compromise, settlement or collection thereof in the ordinary course of business or in bankruptcy or similar proceedings and exclusive of factoring or similar arrangements; (11) the foreclosure, condemnation or any similar action with respect to any property or other assets or a surrender or waiver of contract rights or the settlement, release or surrender of contract, tort or other claims of any kind; (12) the disposition of assets to a Person who is providing services (the provision of which have been or are to be outsourced by the Parent Guarantor or any Restricted Subsidiary to such Person) related to such assets; and (13) sales or dispositions of receivables in connection with any Qualified Receivables Financing or any factoring transaction or in the ordinary course of business. ‘‘Asset Sale Offer’’ has the meaning assigned to that term in the Indenture. ‘‘Balance Sheet Cash’’ means, on any date of determination, cash and Cash Equivalents of the Parent Guarantor and its Restricted Subsidiaries on a consolidated basis (excluding (1) any amounts available for drawing (but not drawn) under any Credit Facility and (2) any amounts designated as for ‘‘general corporate purposes’’ under the caption ‘‘Use of Proceeds’’ of the Offering Memorandum). ‘‘Beneficial Owner’’ has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the U.S. Exchange Act, except that in calculating the beneficial ownership of any particular ‘‘person’’ (as that term is used in Section 13(d)(3) of the U.S. Exchange Act), such ‘‘person’’ will be deemed to have beneficial ownership of all securities that such ‘‘person’’ has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only after the passage of time. The terms ‘‘Beneficially Owns,’’ ‘‘Beneficially Owned’’ and ‘‘Beneficial Ownership’’ have corresponding meanings.

150 ‘‘Board of Directors’’ means: (1) with respect to a corporation, the board of directors of the corporation or any committee thereof duly authorized to act on behalf of such board (which, with respect to the Parent Guarantor or any Restricted Subsidiary, shall refer to the management board thereof so long as it is organized in Poland, the Czech Republic, or any jurisdiction with a similar corporate governance structure); (2) with respect to a partnership, the board of directors of the general partner of the partnership; (3) with respect to a limited liability company, the managing member or members or any controlling committee of managing members thereof; and (4) with respect to any other Person, the board or committee of such Person serving a similar function. ‘‘Bund Rate’’ as selected by the Parent Guarantor, means the yield to maturity at the time of computation of direct obligations of the Federal Republic of Germany (Bunds or Bundesanleihen) with a constant maturity (as officially compiled and published in the most recent financial statistics that has become publicly available at least two Business Days (but not more than five Business Days) prior to the redemption date (or, if such financial statistics are not so published or available, any publicly available source of similar market data selected in good faith by the Board of Directors of the Parent Guarantor) most nearly equal to the period from the redemption date to September 30, 2018; provided, however, that if the period from the redemption date to September 30, 2018 is not equal to the constant maturity of a direct obligation of the Federal Republic of Germany for which a weekly average yield is given, the Bund Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of direct obligations of the Federal Republic of Germany for which such yields are given, except that if the period from such redemption date to September 30, 2018 is less than one year, the weekly average yield on actually traded direct obligations of the Federal Republic of Germany adjusted to a constant maturity of one year shall be used. ‘‘Business Day’’ means a day other than a Saturday, Sunday or other day on which banking institutions in London or New York, Warsaw, the jurisdiction of incorporation of the Issuer or a place of payment under the Indenture are authorized or required by law to close. ‘‘Capital Lease Obligation’’ means, at the time any determination is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized on a balance sheet (excluding the footnotes thereto) prepared in accordance with IFRS as in effect on the Issue Date (other than any notional liabilities that may be required to be so treated in accordance with IFRS in respect of any usufruct or similar encumbrance that is customarily given in connection with real estate or other property), and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be prepaid by the lessee without payment of a penalty. ‘‘Capital Stock’’ means: (1) in the case of a corporation, corporate stock; (2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock; (3) in the case of a partnership or limited liability company, partnership interests (whether general or limited), shares or membership interests; and (4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person, but excluding from all of the foregoing any debt securities convertible into Capital Stock, whether or not such debt securities include any right of participation with Capital Stock. ‘‘Cash Equivalents’’ means: (1) direct obligations (or certificates representing an interest in such obligations) issued by, or unconditionally guaranteed by, the government of a member state of the Pre-Expansion European Union (other than Greece, Portugal or Spain), the Republic of Poland, the Czech Republic, the United States of America or Switzerland (including, in each case, any agency or instrumentality thereof), as the case may be, the payment of which is backed by the full faith and credit of the relevant member state of the Pre-Expansion European Union (other than Greece, Portugal or Spain), the

151 Republic of Poland, the Czech Republic or the United States of America or Switzerland, as the case may be, and which are not callable or redeemable at the Parent Guarantor’s option; (2) overnight bank deposits, time deposit accounts, certificates of deposit, banker’s acceptances and money market deposits with maturities (and similar instruments) of 12 months or less from the date of acquisition issued by a bank or trust company which is organized under, or authorized to operate as a bank or trust company under, the laws of a member state of the Pre-Expansion European Union (other than Greece, Portugal or Spain), the Republic of Poland, the Czech Republic or of the United States of America or any state thereof or Switzerland; provided that such bank or trust company has capital, surplus and undivided profits aggregating in excess of A250,000,000 (or the foreign currency equivalent thereof as of the date of such investment) and whose long-term debt is rated ‘‘A-1’’ or higher by Moody’s or ‘‘A+’’ or higher by S&P or the equivalent rating category of another internationally recognized rating agency; (3) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clauses (1) and (2) above entered into with any financial institution meeting the qualifications specified in clause (2) above; (4) commercial paper having one of the two highest ratings obtainable from Moody’s or S&P and, in each case, maturing within one year after the date of acquisition; and (5) money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (1) through (4) of this definition. ‘‘Change of Control’’ means the occurrence of any of the following: (1) the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Parent Guarantor and its Subsidiaries, taken as a whole, to any Person (including any ‘‘person’’ (as that term is used in Section 13(d)(3) of the U.S. Exchange Act)) other than the Permitted Holders (other than any such sale, lease, transfer, conveyance or other disposition of all or substantially all of the assets of the Parent Guarantor to an Affiliate of the Parent Guarantor for the purpose of reincorporating the Parent Guarantor in another jurisdiction; provided that such transaction complies with the covenant described under the caption ‘‘—Certain Covenants—Merger, Consolidation or Sale of Assets’’); (2) the adoption of a plan relating to the liquidation or dissolution of the Parent Guarantor or the Issuer; (3) the consummation of any transaction (including, without limitation, any merger or consolidation), the result of which is that any Person (including any ‘‘person’’ (as defined above), other than the Permitted Holders, becomes the Beneficial Owner, directly or indirectly, of more than 50% of the Voting Stock of the Parent Guarantor, measured by voting power rather than number of shares; provided that any Voting Stock of which any Permitted Holder is the ‘‘beneficial owner’’ (other than deemed beneficial ownership derived from membership in a ‘‘group’’) shall not be included in any Voting Stock of which any such person or group is the ‘‘beneficial owner’’ (as so defined), unless that person or group is not an affiliate of a Permitted Holder and has greater voting power with respect to that Voting Stock; (4) after an Initial Public Offering of the Parent Guarantor or any Parent Holdco of the Parent Guarantor the first day on which a majority of the members of the Board of Directors of the Parent Guarantor does not consist of Continuing Directors; or (5) the first day on which the Parent Guarantor fails to directly own 100% of the issued and outstanding Capital Stock and Voting Stock of the Issuer (other than directors’ qualifying shares or shares (or Capital Stock) required by applicable law to be held by a Person other than the Parent Guarantor). ‘‘Change of Control Offer’’ has the meaning assigned to that term in the Indenture. ‘‘Change of Control Triggering Event’’ means the occurrence of either (i) a Change of Control within the meaning of clause (2) or (5) of the definition thereof or (ii) both (x) a Change of Control within the meaning of either clause (1), (3) or (4) of the definition thereof and (y) a Rating Decline.

152 ‘‘Consolidated EBITDA’’ means, with respect to any specified Person for any period, the Consolidated Net Income of such Person for such period plus the following to the extent deducted in calculating such Consolidated Net Income, without duplication: (1) provision for taxes based on income or profits of such Person and its Subsidiaries which are Restricted Subsidiaries for such period; plus (2) without double counting, the Consolidated Interest Expense of such Person and its Subsidiaries which are Restricted Subsidiaries for such period and Receivables Fees; plus (3) depreciation, amortization (including, without limitation, amortization of intangibles and deferred financing fees) and other non-cash charges and expenses (including without limitation write downs and impairment of property, plant, equipment and intangibles and other long-lived assets and the impact of purchase accounting on the Parent Guarantor and its Restricted Subsidiaries for such period) of the Parent Guarantor and its Restricted Subsidiaries (excluding any such non-cash charge or expense to the extent that it represents an accrual of or reserve for cash charges or expenses in any future period or amortization of a prepaid cash charge or expense that was paid in a prior period) for such period; plus (4) any expenses, charges or other costs related to the issuance of any Capital Stock, any Permitted Investment, acquisition, disposition, recapitalization, listing or the incurrence of Indebtedness permitted to be incurred under the covenant described above under the caption ‘‘—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock’’ (including refinancing thereof) whether or not successful, including (i) such fees, expenses, commissions or charges related to any incurrence of Indebtedness issuance (including such fees, expenses, commissions or charges related to the issuance of the Notes) and (ii) any amendment or other modification of any incurrence; plus (5) any foreign currency translation losses (including losses related to currency remeasurements of Indebtedness) of the Parent Guarantor and its Restricted Subsidiaries; plus (6) the amount of any minority interest expense consisting of subsidiary income attributable to minority equity interests of third parties in any non-Wholly-Owned Subsidiary in such period or any prior period, except to the extent of dividends declared or paid on, or other cash payments in respect of, Equity Interests held by such parties; plus (7) all expenses incurred directly in connection with any early extinguishment of Indebtedness; minus (8) any foreign currency translation gains (including gains related to currency remeasurements of Indebtedness) of the Parent Guarantor and its Restricted Subsidiaries; minus (9) any extraordinary, exceptional or unusual gain; minus (10) non-cash items increasing such Consolidated Net Income for such period (other than any non-cash items increasing such Consolidated Net Income pursuant to clauses (1) through (11) of the definition of Consolidated Net Income), other than the reversal of a reserve for cash charges in a future period in the ordinary course of business, in each case, on a consolidated basis and determined in accordance with IFRS. ‘‘Consolidated Interest Expense’’ means, for any period (in each case, determined on the basis of IFRS), the consolidated net interest income/expense of the Parent Guarantor and its Restricted Subsidiaries, whether paid or accrued (excluding debt issuance costs but including, without limitation, amortization of original issue discount, Additional Amounts, non-cash interest payments, the interest component of any deferred payment obligations (which shall be deemed to be equal to the principal of any such payment obligation less the amount of such principal discounted to net present value at an interest rate (equal to the interest rate on one-year EURIBOR at the date of determination) on an annualized basis), plus or including (without duplication) any interest, costs and charges consisting of: (1) interest expense attributable to Capitalized Lease Obligations; (2) amortization of debt discount, debt issuance cost and premium; (3) non-cash interest expense; (4) commissions, discounts and other fees and charges owed with respect to financings not included in clause (2) above;

153 (5) costs associated with Hedging Obligations; (6) dividends on other distributions in respect of all Disqualified Stock of the Parent Guarantor and all preferred stock of any Restricted Subsidiary, to the extent held by Persons other than the Parent Guarantor or a Subsidiary of the Parent Guarantor; (7) the consolidated interest expense that was capitalized during such period; and (8) interest actually paid by the Issuer or any Restricted Subsidiary under any Guarantee of Indebtedness or other obligation of any other Person. Notwithstanding any of the foregoing, Consolidated Interest Expense shall not include (i) any interest accrued, capitalized or paid in respect of Subordinated Shareholder Debt, (ii) any commissions, discounts, yield and other fees and charges related to Qualified Receivables Financing and (iii) any payments on any operating leases, including without limitation any payments on any lease, concession or license of property (or Guarantee thereof) which would be considered an operating lease under IFRS as in effect on the Issue Date. ‘‘Consolidated Leverage Ratio’’ means, as of any date of determination, the ratio of (a) the Consolidated Net Leverage of the Parent Guarantor on such date to (b) the aggregate amount of Consolidated EBITDA of the Parent Guarantor for the most recently ended four full quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or another transaction for which the Consolidated Leverage Ratio is being calculated is completed. In the event that the specified Person or any of its Restricted Subsidiaries incurs, assumes, guarantees, repays, repurchases, redeems, defeases or otherwise discharges any Indebtedness (other than ordinary working capital borrowings, unless the same are permanently repaid or cancelled) or issues, repurchases or redeems Disqualified Stock or preferred stock subsequent to the commencement of the period for which the Consolidated Leverage Ratio is being calculated and on or prior to the date on which the event for which the calculation of the Consolidated Leverage Ratio is made (the ‘‘Calculation Date’’), then the Consolidated Leverage Ratio will be calculated giving pro forma effect (as determined in good faith by a responsible accounting or financial officer of the Parent Guarantor) to such incurrence, assumption, guarantee, repayment, repurchase, redemption, defeasance or other discharge of Indebtedness, or such issuance, repurchase or redemption of Disqualified Stock or preferred stock, and the use of the proceeds therefrom, as if the same had occurred at the beginning of the applicable four-quarter reference period; provided, however, that the pro forma calculation of the Consolidated Leverage Ratio shall not give effect to (i) any Indebtedness incurred on the Calculation Date pursuant to the provisions described in the second paragraph under the caption ‘‘—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock’’ or (ii) the discharge on the Calculation Date of any Indebtedness to the extent that such discharge results from the proceeds incurred pursuant to the provisions described in the second paragraph under the caption ‘‘—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock.’’ In addition, for purposes of calculating the Consolidated EBITDA for such period: (1) acquisitions that have been made by the specified Person or any of its Subsidiaries which are Restricted Subsidiaries, including through mergers or consolidations, or by any Person or any of its Subsidiaries which are Restricted Subsidiaries acquired by the specified Person or any of its Subsidiaries which are Restricted Subsidiaries, and including all related financing transactions and including increases in ownership of Subsidiaries which are Restricted Subsidiaries, during the four-quarter reference period or subsequent to such reference period and on or prior to the relevant Calculation Date, or that are to be made on the relevant Calculation Date, will be given pro forma effect (as determined in good faith by a responsible accounting or financial officer of the Parent Guarantor and may include anticipated cost synergies and expense and cost reductions) as if they had occurred on the first day of the four-quarter reference period; (2) the Consolidated EBITDA attributable to discontinued operations, as determined in accordance with IFRS, and operations or businesses (and ownership interests therein) disposed of prior to the relevant Calculation Date, will be excluded on a pro forma basis as if such disposition occurred on the first day of such period; (3) any Person that is a Restricted Subsidiary on the relevant Calculation Date will be deemed to have been a Restricted Subsidiary at all times during such four-quarter period; (4) any Person that is not a Restricted Subsidiary on the relevant Calculation Date will be deemed not to have been a Restricted Subsidiary at any time during such four-quarter period; and

154 (5) if any Indebtedness bears a floating rate of interest, the interest expense on such Indebtedness will be calculated as if the rate in effect on the Calculation Date had been the applicable rate for the entire period (taking into account any Hedging Obligation applicable to such Indebtedness if such Hedging Obligation has a remaining term as at the Calculation Date in excess of 12 months, or, if shorter, at least equal to the remaining term of such Indebtedness). ‘‘Consolidated Net Income’’ means, with respect to any specified Person for any period, the aggregate of the net income (loss) of such Person and its Subsidiaries which are Restricted Subsidiaries for such period, on a consolidated basis (excluding the net income (loss) of any Unrestricted Subsidiary), determined in accordance with IFRS and without any reduction in respect of preferred stock dividends; provided that: (1) the net income (loss) of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting will be included only to the extent of the amount of dividends or similar distributions paid in cash to the specified Person or a Restricted Subsidiary which is a Subsidiary of the Person; (2) solely for the purpose of determining the amount available for Restricted Payments under clause (c)(i) of the first paragraph under the caption ‘‘—Certain Covenants—Restricted Payments,’’ any net income of any Restricted Subsidiary (other than any Guarantor) will be excluded if such Subsidiary is subject to restrictions, directly or indirectly, on the payment of dividends or the making of distributions by such Restricted Subsidiary, directly or indirectly, to the Parent Guarantor (or the Issuer or any Guarantor that holds the Equity Interests of such Restricted Subsidiary, as applicable) by operation of the terms of such Restricted Subsidiary’s charter or any agreement, instrument, judgment, decree, order, statute or governmental rule or regulation applicable to such Restricted Subsidiary or its shareholders (other than (a) restrictions that have been waived or otherwise released, (b) restrictions pursuant to the Notes or the Indenture, (c) contractual restrictions in effect on the Issue Date with respect to the Restricted Subsidiary and other restrictions with respect to such Restricted Subsidiary that taken as a whole, are not materially less favorable to the holders of the Notes than such restrictions in effect on the Issue Date or (d) restrictions pursuant to applicable law, rule, regulation or order or the terms of any license, authorization, concession or permit), except that the Parent Guarantor’s equity in the net income of any such Restricted Subsidiary for such period will be included in such Consolidated Net Income up to the aggregate amount of cash or Cash Equivalents actually distributed or that could have been distributed by such Restricted Subsidiary during such period to the Parent Guarantor or another Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend to another Restricted Subsidiary (other than any Guarantor or the Issuer), to the limitation contained in this clause); (3) any net gain (or loss) realized upon the sale or other disposition of any asset or disposed operations of the Parent Guarantor or any Restricted Subsidiaries (including pursuant to any sale leaseback transaction) which is not sold or otherwise disposed of in the ordinary course of business (as determined in good faith by the Parent Guarantor) will be excluded; (4) any one time non-cash charges or any amortization or depreciation resulting from purchase accounting, in each case, in relation to any acquisition of, or merger or consolidation with, another Person or business or resulting from any reorganization or restructuring involving the Parent Guarantor or its Subsidiaries will be excluded; (5) the cumulative effect of a change in accounting principles will be excluded; (6) any extraordinary, exceptional or nonrecurring gains or losses or any charges in respect of any restructuring, redundancy or severance (in each case as determined in good faith by the Parent Guarantor) will be excluded; (7) any unrealized gains or losses in respect of Hedging Obligations or any ineffectiveness recognized in earnings related to qualifying hedge transactions or the fair value or changes therein recognized in earnings for derivatives that do not qualify as hedge transactions, in each case, in respect of Hedging Obligations will be excluded; (8) any non-cash compensation charge or expenses arising from any grant of stock, stock options or other equity-based awards will be excluded; (9) any goodwill or other intangible asset impairment charges will be excluded;

155 (10) all deferred financing costs written off and premium paid in connection with any early extinguishment of Indebtedness and any net gain or loss from any write-off or forgiveness of Indebtedness will be excluded; and (11) the impact of any capitalized interest (including accreting or pay-in-kind interest) on any Subordinated Shareholder Debt will be excluded. ‘‘Consolidated Net Leverage’’ means (x) the sum of the aggregate outstanding Indebtedness of the Parent and its Restricted Subsidiaries (excluding Hedging Obligations) minus (y) Balance Sheet Cash. ‘‘Contingent Obligations’’ means, with respect to any Person, any obligation of such Person guaranteeing in any manner, whether directly or indirectly, any operating lease, dividend or other obligation that, in each case, does not constitute Indebtedness (‘‘primary obligations’’) of any other Person (the ‘‘primary obligor’’), including any obligation of such Person, whether or not contingent: (1) to purchase any such primary obligation or any property constituting direct or indirect security therefore; (2) to advance or supply funds: (a) for the purchase or payment of any such primary obligation; or (b) to maintain the working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor; or (3) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation against loss in respect thereof. ‘‘continuing’’ means, with respect to any Default or Event of Default, that such Default or Event of Default has not been cured or waived. ‘‘Continuing Directors’’ means, as of any date of determination, any member of the Board of Directors of the Parent Guarantor who: (1) was a member of such Board of Directors on the Issue Date; or (2) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board of Directors at the time of such nomination or election. ‘‘Credit Facility’’ means, one or more debt facilities, instruments or arrangements incurred (including overdraft facilities) or commercial paper facilities or indentures or trust deeds or note purchase agreements, in each case, with banks, other institutions, funds or investors, providing for revolving credit loans, term loans, performance guarantees, receivables financing (including through the sale of receivables to such institutions or to special purpose entities formed to borrow from such institutions against such receivables), letters of credit, bonds, notes debentures or other corporate debt instruments or other Indebtedness, in each case, as amended, restated, modified, renewed, refunded, replaced, restructured, refinanced, repaid, increased or extended in whole or in part from time to time (and whether in whole or in part and whether or not with the original administrative agent and lenders or another administrative agent or agents or trustees or other banks or institutions and whether provided under a revolving credit facility or one or more other credit or other agreements, indentures, financing agreements or otherwise) and in each case including all agreements, instruments and documents executed and delivered pursuant to or in connection with the foregoing (including any notes and letters of credit issued pursuant thereto and any guarantee and collateral agreement, patent and trademark security agreement, mortgages or letter of credit applications and other guarantees, pledges, agreements, security agreements and collateral documents). Without limiting the generality of the foregoing, the term ‘‘Credit Facilities’’ shall include any agreement or instrument (1) changing the maturity of any Indebtedness incurred thereunder or contemplated thereby, (2) adding Subsidiaries of the Parent Guarantor as additional borrowers, issuers or guarantors thereunder, (3) increasing the amount of Indebtedness incurred thereunder or available to be borrowed thereunder or (4) otherwise altering the terms and conditions thereof. ‘‘Currency Exchange Protection Agreement’’ means, in respect of any Person, any foreign exchange contract, currency swap agreement, currency option, cap, floor, ceiling or collar or agreement or other similar agreement or arrangement designed to protect such Person against fluctuations in currency exchange rates as to which such Person is a party.

156 ‘‘Default’’ means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default. ‘‘Designated Non-Cash Consideration’’ means the Fair Market Value of non-cash consideration received by the Parent Guarantor or one of its Restricted Subsidiaries in connection with an Asset Sale that is so designated as ‘‘Designated Non-Cash Consideration’’ pursuant to an Officer’s Certificate, setting forth the basis of such valuation, less the amount of cash or Cash Equivalents received in connection with a subsequent sale of such Designated Non-Cash Consideration. ‘‘Designated Preference Shares’’ means, with respect to the Parent Guarantor or any Parent Holdco of the Parent Guarantor, preferred stock (other than Disqualified Stock) (a) that is issued for cash (other than to the Parent Guarantor or a Subsidiary of the Parent Guarantor or an employee stock ownership plan or trust established by the Parent Guarantor or any such Subsidiary for the benefit of their employees to the extent funded by the Parent Guarantor or such Subsidiary) and (b) that is designated as ‘‘Designated Preference Shares’’ pursuant to an Officer’s Certificate of the Parent Guarantor at or prior to the issuance thereof, the Net Proceeds of which are excluded from the calculation set forth in clause (c)(ii) of the first paragraph of the covenant described under ‘‘—Restricted Payments.’’ ‘‘Disqualified Stock’’ means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case, at the option of the holder of the Capital Stock), or upon the happening of any event, (1) matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder of the Capital Stock, in whole or in part, on or prior to the six-month anniversary of the date that the Notes mature or (2) provides for, either mandatorily or at the option of the holder of the Capital Stock, the payment of dividends or distributions (other than in the form of Equity Interests that are not Disqualified Stock). Notwithstanding the preceding sentence, any Capital Stock that would constitute Disqualified Stock solely because the holders of the Capital Stock have the right to require the issuer thereof to repurchase such Capital Stock upon the occurrence of a Change of Control or an Asset Sale will not constitute Disqualified Stock if the terms of such Capital Stock provide that the issuer thereof may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with the covenant described above under the caption ‘‘—Certain Covenants—Restricted Payments.’’ For purposes hereof, the amount of Disqualified Stock which does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Stock as if such Disqualified Stock were purchased on any date on which Indebtedness shall be required to be determined pursuant to the Indenture, and if such price is based upon, or measured by, the Fair Market Value of such Disqualified Stock, such Fair Market Value to be determined as set forth herein. ‘‘Equity Interests’’ means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). ‘‘Equity Investors’’ means Mr. Michal Solowow and his Affiliates and any trust, fund, company, partnership or other Person owned, managed, sponsored or advised by Mr. Michal Solowow. ‘‘Equity Offering’’ means an underwritten sale of Capital Stock (other than Disqualified Stock or Designated Preference Shares) of the Parent Guarantor or a Parent Holdco of the Parent Guarantor pursuant to which the net cash proceeds are contributed to the Parent Guarantor in the form of a subscription for, or a capital contribution in respect of, Capital Stock (other than Disqualified Stock) of the Parent Guarantor or as Subordinated Shareholder Debt of the Parent Guarantor. ‘‘Excluded Contributions’’ means the net cash proceeds, property or assets received by the Parent Guarantor after the Issue Date (other than any such cash proceeds, property or assets that are Excluded Amounts) from: (1) contributions to its Equity Interests; and (2) the sale (other than to a Subsidiary of the Parent Guarantor) of Capital Stock (other than Disqualified Stock or Designated Preference Shares) of the Parent Guarantor, in each case designated as ‘‘Excluded Contributions’’ pursuant to an Officer’s Certificate (which shall be designated no later than the date on which such Excluded Contribution has been received by the Parent Guarantor), the net cash proceeds of which are excluded from the calculation set forth in the clause (c)(ii) of the first paragraph of the covenant described under the caption ‘‘—Certain Covenants—Restricted Payments’’ hereof.

157 ‘‘Fair Market Value’’ means the value that would be paid by a willing buyer to an unaffiliated willing seller in a transaction not involving distress of either party, determined in good faith by the Parent Guarantor’s Chief Executive Officer, Chief Financial Officer or a responsible accounting or financial officer of the Parent Guarantor. ‘‘Fixed Charge Coverage Ratio’’ means, with respect to any specified Person for any period, the ratio of the Consolidated EBITDA of such Person for such period to the Consolidated Interest Expense of such Person for such period. In the event that the specified Person or any of its Subsidiaries incurs, assumes, guarantees, repays, repurchases or redeems any Indebtedness (other than ordinary working capital borrowings, unless the same are permanently repaid or cancelled) or issues, repurchases or redeems preferred stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated and on or prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the ‘‘Calculation Date’’), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such incurrence, assumption, guarantee, repayment, repurchase or redemption of Indebtedness, or such issuance, repurchase or redemption of preferred stock, and the use of the proceeds therefrom as if the same had occurred at the beginning of the applicable four-quarter reference period; provided, however, that the pro forma calculation of Consolidated Interest Expense shall not give effect to any Permitted Debt (as defined in ‘‘—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock’’) incurred on the date of determination or to any discharge on the date of determination of any Indebtedness to the extent such discharge results from the proceeds of Permitted Debt. In addition, for purposes of calculating the Fixed Charge Coverage Ratio: (1) acquisitions that have been made by the specified Person or any of its Subsidiaries, including through mergers or consolidations and including any related financing transactions, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date shall be given pro forma effect as if they had occurred on the first day of the four-quarter reference period and Consolidated EBITDA for such reference period shall be calculated on a pro-forma basis, but without giving effect to clause (2) of the proviso set forth in the definition of Consolidated Net Income; (2) the Consolidated EBITDA attributable to discontinued operations, as determined in accordance with IFRS, and operations or businesses disposed of or the operations of which are substantially terminated prior to the Calculation Date, shall be excluded; (3) the Consolidated Interest Expense attributable to discontinued operations, as determined in accordance with IFRS, and operations or businesses disposed of prior to the Calculation Date, shall be excluded, but only to the extent that the obligations giving rise to such Consolidated Interest Expense will not be obligations of the specified Person or any of its Subsidiaries following the Calculation Date; and (4) any Person that is a Restricted Subsidiary on the Calculation Date will be deemed to have been a Restricted Subsidiary at all times during such four-quarter period; and any Person that is not a Restricted Subsidiary on the Calculation Date will be deemed not to have been a Restricted Subsidiary at any time during such four-quarter period. For purposes of this definition, whenever pro forma effect is to be given to an acquisition of assets, the amount of income or earnings relating thereto and the amount of Consolidated Interest Expense associated with any Indebtedness incurred in connection therewith, the pro forma calculations shall be determined in good faith by a responsible financial or accounting officer of the relevant Person. If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period (taking into account any Hedging Obligation applicable to such Indebtedness). For purposes of this definition, whenever pro forma effect is to be given to any Indebtedness incurred pursuant to a revolving credit facility, the amount outstanding on the date of such calculation will be computed based on (1) the average daily balance of such Indebtedness during such four quarters or such shorter period for which the facility was outstanding or (2) if such facility was created after the end of such four quarters, the average daily balance of such Indebtedness during the period from the date of creation of such facility to the date of such calculation. Interest on Indebtedness that may optionally be determined at an interest rate based on a prime or similar rate, a euro interbank offered rate, or other rate, shall be deemed to have been based upon the rate actually chosen or, if none, then based upon such optional rate chosen as the relevant Person may designate.

158 ‘‘Government Securities’’ means direct non-callable and non-redeemable obligations of, or obligations guaranteed by, a member state of the European Union, and the payment for which such member state of the European Union pledges its full faith and credit. ‘‘guarantee’’ means a guarantee other than by endorsement of negotiable instruments for collection or deposit in the ordinary course of business, of all or any part of any Indebtedness (whether arising by agreements to keep-well, to take or pay or to maintain financial statement conditions, pledges of assets or otherwise). ‘‘Guarantors’’ means each of the Parent Guarantor, Synthos Dwory 7 społka´ z ograniczon˛a odpowiedzialno´sci˛a sp.j., SYNTHOS Kralupy a.s., TAMERO INVEST s.r.o. and SYNTHOS PBR s.r.o. and any other Subsidiary of the Parent Guarantor that executes a supplemental indenture in accordance with the provisions of the Indenture, and their respective successors and assigns, in each case, until the Guarantee of such Person has been released in accordance with the provisions of the Indenture. ‘‘Hedging Obligations’’ means, with respect to any specified Person, the obligations of such Person under: (1) interest rate swap agreements, (whether from fixed to floating or from floating to fixed), interest rate cap agreements and interest rate collar agreements; (2) other agreements or arrangements designed to manage interest rates or interest rate risk; and (3) other agreements or arrangements designed to protect such Person against fluctuations in currency exchange rates, including Currency Exchange Protection Agreements, or commodity prices. ‘‘IFRS’’ means International Financial Reporting Standards (formerly International Accounting Standards) (‘‘IFRS’’) endorsed from time to time by the European Union or any variation thereof with which the Parent Guarantor or its Restricted Subsidiaries comply. Except as otherwise set forth in the Indenture, all ratios and calculations based on IFRS contained in the Indenture shall be computed in accordance with IFRS as in effect from time to time. ‘‘Indebtedness’’ means, with respect to any specified Person, any indebtedness of such Person (excluding accrued expenses and trade payables): (1) in respect of borrowed money; (2) evidenced by bonds, notes, debentures or similar instruments for which such Person is responsible or liable; (3) representing reimbursement obligations in respect of letters of credit, bankers’ acceptances or similar instruments (except to the extent such reimbursement obligations relate to trade payables and such obligations are satisfied within 30 days of incurrence); (4) representing Capital Lease Obligations; (5) representing the balance deferred and unpaid of the purchase price of any property or services due more than one year after such property is acquired or such services are completed; (6) representing any Hedging Obligations in respect of interest rate or currency hedging (the amount of any such obligations to be equal at any time to the termination value of such agreement or arrangement giving rise to such obligation that would be payable by such Person at such time); and (7) the principal component of all obligations, or liquidation preferences, with respect to any Disqualified Stock or, with respect to any Restricted Subsidiary, any preferred stock (but excluding, in each case, any accrued dividends), if and to the extent any of the preceding items (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet (excluding the footnotes thereto) of the specified Person prepared in accordance with IFRS. In addition, the term ‘‘Indebtedness’’ includes all Indebtedness of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person) and, to the extent not otherwise included, the guarantee by the specified Person of any Indebtedness of any other Person. The term ‘‘Indebtedness’’ shall not include: (1) Subordinated Shareholder Debt; (2) any lease, concession or license of property which would be considered an operating lease under IFRS and any guarantee given by the Parent Guarantor or a Restricted Subsidiary in the ordinary course of

159 business solely in connection with, and in respect of, the obligations of the Parent Guarantor or a Restricted Subsidiary under any operating lease; (3) Contingent Obligations in the ordinary course of business; (4) in connection with the purchase by the Parent Guarantor or any Restricted Subsidiary of any business, any post-closing payment adjustments to which the seller may become entitled to the extent such payment is determined by a final closing balance sheet or such payment depends on the performance of such business after the closing; (5) obligations under or in respect of Qualified Receivables Financing to the extent such obligations are non-recourse to the Parent Guarantor or any Restricted Subsidiary; or (6) for the avoidance of doubt, any contingent obligations in respect of workers’ compensation claims, early retirement or termination obligations, pension fund obligations or contributions or similar claims, obligations or contributions or social security or wage Taxes. ‘‘Initial Public Offering’’ means an Equity Offering as a result of which the shares of common stock or other common equity interests the IPO Entity in such offering are listed on an internationally recognized exchange or traded on an internationally recognized market. ‘‘Investment Grade Status’’ shall occur when the Notes are rated ‘‘Baa3’’ or better by Moody’s and ‘‘BBB-’’ or better by S&P and ‘‘BBB-’’ or better by Fitch (or, if either such entity ceases to rate the Notes, the equivalent investment grade credit rating from any other ‘‘nationally recognized statistical rating organization’’ within the meaning of Rule 15c3-1(c)(2)(vi)(F) under the U.S. Exchange Act selected by the Parent Guarantor as a replacement agency). ‘‘Investments’’ means, with respect to any Person, all direct or indirect investments by such Person in other Persons (including Affiliates) in the forms of loans (including guarantees or other obligations, but excluding advances or extensions of credit to customers or suppliers made in the ordinary course of business), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as Investments on a balance sheet (excluding the footnotes) prepared in accordance with IFRS. If the Issuer or any Restricted Subsidiary sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted Subsidiary such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary, the Parent Guarantor will be deemed to have made an Investment on the date of any such sale or disposition equal to the Fair Market Value of the Parent Guarantor’s Investments in such Restricted Subsidiary that were not sold or disposed of in an amount determined as provided in the final paragraph of the covenant described above under the caption ‘‘—Certain Covenants—Restricted Payments.’’ The acquisition by the Parent Guarantor or any Restricted Subsidiary of a Person that holds an Investment in a third Person will be deemed to be an Investment by the Parent Guarantor or such Restricted Subsidiary in such third Person in an amount equal to the Fair Market Value of the Investments held by the acquired Person in such third Person in an amount determined as provided in the final paragraph of the covenant described above under the caption ‘‘—Certain Covenants—Restricted Payments.’’ Except as otherwise provided in the Indenture, the amount of an Investment will be determined at the time the Investment is made and without giving effect to subsequent changes in value and, to the extent applicable, shall be determined based on the equity value of such Investment. ‘‘IPO Entity’’ means the Parent Guarantor or any Parent Holdco that has issued stock in a Public Equity Offering. ‘‘IPO Market Capitalization’’ means an amount equal to (i) the total number of issued and outstanding shares of common stock or common equity interests of the IPO Entity at the time of closing of the Initial Public Offering multiplied by (ii) the price per share at which such shares of common stock or common equity interests are sold in such Initial Public Offering. ‘‘Issue Date’’ means September 30, 2014. ‘‘Lien’’ means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement or any lease in the nature thereof.

160 ‘‘Management Advances’’ means loans or advances not exceeding in aggregate outstanding amount PLN 8.0 million, and in each case made to, or guarantees with respect to loans or advances made to, directors, officers or employees of any Parent Guarantor or any Restricted Subsidiary: (1) in respect of travel, entertainment or moving related expenses incurred in the ordinary course of business; (2) in respect of moving related expenses incurred in connection with any closing or consolidation of any facility or office; or (3) in the ordinary course of business. ‘‘Market Capitalization’’ means an amount equal to (i) the total number of issued and outstanding shares of common stock or common equity interests of the IPO Entity on the date of the declaration of the relevant dividend multiplied by (ii) the arithmetic mean of the closing prices per share of such common stock or common equity interests for the 30 consecutive trading days immediately preceding the date of declaration of such dividend. ‘‘Moody’s’’ means Moody’s Investors Service, Inc. ‘‘Net Proceeds’’ means the aggregate cash proceeds received by the Parent Guarantor or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration or Cash Equivalents substantially concurrently received in any Asset Sale), net of (1) the direct costs relating to such Asset Sale, including, without limitation, legal, accounting and investment banking fees, and sales commissions, and any relocation expenses incurred as a result of the Asset Sale, (2) taxes paid or payable as a result of the Asset Sale, (3) all distributions and other payments required to be made to minority interest holders (other than the Parent Guarantor or any of its Subsidiaries) in Subsidiaries or joint ventures as a result of such Asset Sale, (4) any reserve for adjustment or indemnification obligations in respect of the sale price of such asset or assets established in accordance with IFRS. ‘‘Non-Recourse Debt’’ means Indebtedness as to which neither the Parent Guarantor nor any of its Restricted Subsidiaries (1) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness) or (2) is directly or indirectly liable as a guarantor or otherwise. ‘‘Guarantee’’ means the guarantee by each Guarantor of the Issuer’s obligations under the Indenture and the Notes, executed pursuant to the provisions of the Indenture. ‘‘Obligations’’ means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness. ‘‘Offering Memorandum’’ means this offering memorandum, dated September 24, 2014, relating to the sale of the Notes. ‘‘Officer’’ means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, director, manager or a responsible accounting or financial officer of such Person. ‘‘Officer’s Certificate’’ means a certificate signed by an Officer. ‘‘Parent Holdco’’ means any Person (other than a natural person) which legally and beneficially owns more than 50% of the Voting Stock and/or Capital Stock of another Person, either directly or through one or more Subsidiaries. ‘‘Pari Passu Indebtedness’’ means any Indebtedness of the Issuer or any Guarantor which does not constitute the Issuer’s or such Guarantor’s (as applicable) Subordinated Obligation. ‘‘Permitted Business’’ means (1) any businesses activities engaged in by the Parent Guarantor or any of its Subsidiaries on the Issue Date and (2) any businesses, services and activities engaged in by the Parent Guarantor or any of the Restricted Subsidiaries that are related, complementary, incidental, ancillary or similar to any of the foregoing or are extensions or developments of any thereof. ‘‘Permitted Holders’’ means the Equity Investors and their Affiliates and Related Parties. Any person or group whose acquisition of beneficial ownership constitutes a Change of Control in respect of which a Change of Control Offer is made in accordance with the requirements of the Indenture will thereafter, together with its Affiliates, constitute an additional Permitted Holder. ‘‘Permitted Investments’’ means: (1) any Investment in the Parent Guarantor or in a Restricted Subsidiary;

161 (2) any Investment in cash and Cash Equivalents; (3) any Investment by the Parent Guarantor or any Restricted Subsidiary in a Person, if as a result of such Investment: (a) such Person becomes a Restricted Subsidiary; or (b) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Parent Guarantor or a Restricted Subsidiary; (4) any Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with the covenant described above under the caption ‘‘—Repurchase at the Option of Holders—Asset Sales;’’ (5) any acquisition of assets or Capital Stock solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Parent Guarantor or Subordinated Shareholder Debt; (6) any Investments received in compromise or resolution of (a) obligations of trade creditors or customers that were incurred in the ordinary course of business of the Parent Guarantor or any of its Restricted Subsidiaries, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer; or (b) litigation, arbitration or other disputes; (7) Investments in receivables owing to the Parent Guarantor or any Restricted Subsidiary created or acquired in the ordinary course of business; (8) Investments represented by Hedging Obligations, which obligations are permitted by clause (8) of the second paragraph of the covenant entitled ‘‘—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock;’’ (9) Investments in the Notes and any other Indebtedness of the Parent Guarantor or any Restricted Subsidiary (other than Indebtedness constituting Subordinated Obligations); (10) any guarantee of Indebtedness permitted to be incurred by the covenant described above under the caption ‘‘—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock;’’ (11) any Investment existing on, or made pursuant to binding commitments existing on, the Issue Date by the Parent Guarantor or any Restricted Subsidiary of the Parent Guarantor and any Investment consisting of an extension, modification or renewal of any such Investment existing on, or made pursuant to a binding commitment existing on, the Issue Date; provided that the amount of any such Investment may be increased (a) as required by the terms of such Investment as in existence on the Issue Date or (b) as otherwise permitted under the Indenture; (12) Investments acquired after the Issue Date as a result of the acquisition by the Parent Guarantor or any Restricted Subsidiary of another Person, including by way of a merger, amalgamation or consolidation with or into the Parent Guarantor or any of its Restricted Subsidiaries in a transaction that is not prohibited by the covenant described above under the caption ‘‘—Certain Covenants—Merger, Consolidation or Sale of Assets’’ after the Issue Date to the extent that such Investments were not made in contemplation of such acquisition, merger, amalgamation or consolidation and were in existence on the date of such acquisition, merger, amalgamation or consolidation; (13) Management Advances; (14) any Investment to the extent made using as consideration Capital Stock of the Parent Guarantor (other than Disqualified Stock), Subordinated Shareholder Debt or Capital Stock of any Parent Holdco; (15) so long as no Default or Event of Default of the type specified in clause (1) or (2) under ‘‘—Events of Default’’ has occurred and is continuing, any Investments made in the ordinary course of, and of a nature that is or shall become customary in the business of chemical production, including but not limited to investments in joint ventures, agreements, transactions, interests or arrangements, in each case formed or entered into, for the purposes of (i) research and development related to a Permitted Business, in an aggregate amount not to exceed PLN 25 million per annum (with unused amounts in any calendar year being carried over to the next succeeding calendar years), (ii) the production of raw materials used in a Permitted Business or (iii) permitting the Parent Guarantor and its Restricted Subsidiaries to satisfy objectives customarily achieved through the conduct of the business of chemical

162 production jointly with third parties in an entity in which the direct or indirect interest of the Parent Guarantor or any Restricted Subsidiary is greater than 20%; provided that to the extent the Parent Guarantor or a Restricted Subsidiary receives cash or Cash Equivalents in consideration for such Investment, that such cash or Cash Equivalents are applied in a manner consistent with the second paragraph of the covenant described under the heading ‘‘Certain Covenants—Asset Sales,’’ and provided further, that with respect to any Investments made in reliance on clause (iii) hereof, the Consolidated Leverage Ratio on a pro forma basis after giving effect to any such Investment does not exceed 3.50 to 1.0; and (16) other Investments in any Person having an aggregate Fair Market Value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (16) that are at the time outstanding not to exceed the greater of (a) PLN 250 million and (b) 6.5% of Total Assets; provided that if an Investment is made pursuant to this clause in a Person that is not a Restricted Subsidiary and such Person subsequently becomes a Restricted Subsidiary or is subsequently designated a Restricted Subsidiary pursuant to the covenant described above under the caption ‘‘—Certain Covenants— Restricted Payments,’’ such Investment shall thereafter be deemed to have been made pursuant to clause (1) or (3) of the definition of ‘‘Permitted Investments’’ and not this clause. ‘‘Permitted Liens’’ means: (1) Liens on the assets of the Issuer or any Guarantor securing Indebtedness permitted to be incurred pursuant to clause (1) of the definition of ‘‘Permitted Debt’’; (2) Liens in favor of the Parent Guarantor or any Restricted Subsidiary; (3) Liens on property (including Capital Stock) of a Person existing at the time such Person becomes a Restricted Subsidiary or is merged with or into or consolidated with the Parent Guarantor or any Restricted Subsidiary; provided that such Liens do not extend to any assets other than those of the Person that becomes a Restricted Subsidiary or is merged with or into or consolidated with the Parent Guarantor or any Restricted Subsidiary; (4) Liens to secure the performance of statutory obligations, trade contracts, insurance, surety or appeal bonds, workers compensation obligations, leases (including, without limitation, statutory and common law landlord’s liens), performance bonds, surety and appeal bonds or other obligations of a like nature incurred (including Liens to secure letters of credit issued to assure payment of such obligations) or Liens in connection with bids, tenders, contracts or leases to secure licenses, public or statutory obligations, in each case, incurred in the ordinary course of business; (5) Liens to secure Indebtedness permitted by clause (4) of the second paragraph of the covenant entitled ‘‘—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock’’ covering only the assets acquired with or financed by such Indebtedness; (6) Liens securing Indebtedness under Hedging Obligations, which obligations are permitted by clause (8) of the second paragraph of the covenant described above under the caption ‘‘—Certain Covenants— Incurrence of Indebtedness and Issuance of Preferred Stock;’’ (7) Liens existing on the Issue Date after giving effect to the offering of the Notes and the application of proceeds therefrom as described in this Offering Memorandum under the caption ‘‘Use of Proceeds;’’ (8) Liens for taxes, assessments or governmental charges or claims that (a) are not yet due and payable or (b) are being contested in good faith by appropriate proceedings; (9) Liens imposed by law, such as carriers’, warehousemen’s, landlord’s and mechanics’ Liens, in each case, incurred in the ordinary course of business; (10) survey exceptions, easements or reservations of, or rights of others for, licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real property that were not incurred in connection with Indebtedness and that do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person; (11) Liens created for the benefit of (or to secure) the Notes (or the Guarantees);

163 (12) Liens to secure any Permitted Refinancing Indebtedness (excluding Liens to secure Permitted Refinancing Indebtedness initially secured pursuant to clause (31) of this definition) permitted to be incurred under the Indenture; provided, however, that: (a) the new Lien is limited to all or part of the same property and assets that secured or, under the written agreements pursuant to which the original Lien arose, could secure the original Lien (plus improvements and accessions to such property or proceeds or distributions thereof); and (b) the Indebtedness secured by the new Lien is not increased to any amount greater than the sum of (i) the outstanding principal amount, or, if greater, committed amount, of the Indebtedness renewed, refunded, refinanced, replaced, defeased or discharged with such Permitted Refinancing Indebtedness and (ii) an amount necessary to pay any fees and expenses, including premiums, related to such renewal, refunding, refinancing, replacement, defeasance or discharge; (13) Liens on insurance policies and proceeds thereof, or other deposits, to secure insurance premium financings; (14) filing of Uniform Commercial Code financing statements under U.S. state law (or similar filings under other applicable laws) in connection with operating leases in the ordinary course of business; (15) bankers’ Liens, rights of setoff or similar rights and remedies as to deposit accounts, Liens arising out of judgments or awards not constituting an Event of Default and notices of lis pendens and associated rights related to litigation being contested in good faith by appropriate proceedings and for which adequate reserves have been made; (16) Liens on cash, Cash Equivalents or other property arising in connection with the defeasance, discharge or redemption of Indebtedness; (17) Liens on specific items of inventory or other goods (and the proceeds thereof) of any Person securing such Person’s obligations in respect of bankers’ acceptances issued or created in the ordinary course of business for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods; (18) leases (including operating leases), licenses, subleases and sublicenses of assets in the ordinary course of business; (19) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of assets entered into in the ordinary course of business; (20) (a) mortgages, liens, security interests, pledges, restrictions, encumbrances or any other matters of record that have been placed by any developer, landlord or other third party on property over which the Parent Guarantor or any Restricted Subsidiary has easement rights or on any real property leased by the Parent Guarantor or any Restricted Subsidiary and subordination or similar agreements relating thereto and (b) any condemnation or eminent domain proceedings or compulsory purchase order affecting real property; (21) Liens on property or assets under construction (and related rights) in favor of a contractor or developer or arising from progress or partial payments by a third party relating to such property or assets; (22) (a) Liens securing or arising by reason of any netting or set-off arrangement entered into in the ordinary course of banking or other trading activities; or (b) Liens in connection with specified bank accounts (and cash therein) in connection with the incurrence and repayment of Indebtedness under any daylight facilities permitted to be incurred under the caption ‘‘—Certain covenants—Incurrence of Indebtedness and Issuance of Preferred Stock;’’ (23) Liens (including put and call arrangements) on Capital Stock or other securities of any Unrestricted Subsidiary that secure Indebtedness of such Unrestricted Subsidiary; (24) pledges of goods, the related documents of title and/or other related documents arising or created in the ordinary course of the Parent Guarantor or any Restricted Subsidiary’s business or operations as Liens only for Indebtedness to a bank or financial institution directly relating to the goods or documents on or over which the pledge exists; (25) Liens over cash paid into an escrow account pursuant to any purchase price retention arrangement as part of any permitted disposal by the Parent Guarantor or a Restricted Subsidiary on condition that

164 the cash paid into such escrow account in relation to a disposal does not represent more than 15% of the net proceeds of such disposal; (26) limited recourse Liens in respect of the ownership interests in, or assets owned by, any joint ventures which are not Restricted Subsidiaries securing obligations of such joint ventures; (27) Liens created on any asset of the Parent Guarantor or a Restricted Subsidiary established to hold assets of any stock option plan or any other management or employee benefit or incentive plan or unit trust of the Parent Guarantor or a Restricted Subsidiary securing any loan to finance the acquisition of such assets; (28) Liens on escrowed proceeds for the benefit of the related holders of debt securities or other Indebtedness (or the underwriters or arrangers thereof) or on cash set aside at the time of the incurrence of any Indebtedness or government securities purchased with such cash, in either case to the extent such cash or government securities prefund the payment of interest on such Indebtedness and are held in an escrow account or similar arrangement to be applied for such purpose; (29) Liens on Receivables Assets Incurred in connection with a Qualified Receivables Financing or Liens securing Indebtedness or other obligations of a Receivables Subsidiary; (30) Liens on property or assets of a Restricted Subsidiary that is not a Guarantor to secure Indebtedness of such Restricted Subsidiary or any other Restricted Subsidiary that is not a Guarantor; and (31) Liens incurred in the ordinary course of business of the Parent Guarantor or any Restricted Subsidiary securing Indebtedness of the Parent Guarantor and its Restricted Subsidiaries that does not exceed the greater of PLN 80 million and 2.1% of Total Assets at any one time outstanding. ‘‘Permitted Parent Payments’’ means, without duplication as to amounts, payments to any Parent Holdco of the Parent Guarantor to permit such entity to pay: (1) customary indemnification obligations of any Parent Holdco owing to directors, officers, employees or other Persons under its charter or by-laws or pursuant to written agreements with any such Person to the extent relating to the Parent Guarantor and its Subsidiaries; (2) obligations of any Parent Holdco in respect of directors’ fees, remuneration and expenses (including director and officer insurance (including premiums therefore)) to the extent relating to the Parent Guarantor and its Subsidiaries; (3) professional fees and expenses of any Parent Holdco related to the ownership of the Capital Stock of the Parent Guarantor and, indirectly through the Parent Guarantor, its Subsidiaries (including, without limitation, accounting, legal, audit corporate reporting, and administrative expenses and other reasonable and normal course expenses required to establish and/or maintain such Parent Holdco’s corporate existence or its holding of the Capital Stock of the Parent Guarantor); (4) expenses incurred by any Parent Holdco in connection with any public offering or other sale of Capital Stock or Indebtedness, whether consummated or not, (a) where the net proceeds of such offering or sale are intended to be received by or contributed to the Parent Guarantor or a Subsidiary of the Parent Guarantor; or (b) in a pro-rated amount of such expenses in proportion to the amount of such net proceeds intended to be so received or contributed; and (5) any Related Taxes. ‘‘Permitted Refinancing Indebtedness’’ means any Indebtedness of the Parent Guarantor or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, exchange, defease or discharge other Indebtedness of the Parent Guarantor or any of its Restricted Subsidiaries (other than intercompany Indebtedness (other than any proceeds loan)); provided that: (1) the aggregate principal amount (or accreted value, if applicable), or if issued with original issue discount, aggregate issue price) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable, or if issued with original issue discount, aggregate issue price) of the Indebtedness renewed, refunded, refinanced, replaced, exchanged, defeased or discharged (plus all accrued interest on the Indebtedness and the amount of all fees and expenses, including premiums, incurred in connection therewith);

165 (2) such Permitted Refinancing Indebtedness has (a) a final maturity date that is either (i) no earlier than the final maturity date of the Indebtedness being renewed, refunded, refinanced, replaced, exchanged, defeased or discharged or (ii) after the final maturity date of the Notes and (b) has a Weighted Average Life to Maturity that is equal to or greater than the Weighted Average Life to Maturity of the Indebtedness being renewed, refunded, refinanced, replaced, defeased or discharged; (3) if the Indebtedness being renewed, refunded, refinanced, replaced, defeased or discharged is expressly, contractually subordinated in right of payment to the Notes or a Guarantee, such Permitted Refinancing Indebtedness is subordinated in right of payment to the Notes or such Guarantee, as the case may be, on terms at least as favorable to the holders of Notes, as those contained in the documentation governing the Indebtedness being renewed, refunded, refinanced, replaced, exchanged, defeased or discharged; and (4) if the Issuer or any Guarantor was the obligor on the Indebtedness being renewed, refunded, refinanced, replaced, defeased or discharged, such Indebtedness is incurred either by the Issuer or a Guarantor. ‘‘Person’’ means any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization, limited liability company or government or other entity. ‘‘PLN’’ or ‘‘Polish zloty’’ means Polish zloty, the lawful currency of the Republic of Poland. ‘‘Pre-Expansion European Union’’ means the European Union as of January 1, 2004, including the countries of Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Sweden and the United Kingdom, but not including any country which became or becomes a member of the European Union after January 1, 2004. ‘‘Proceeds Bond’’ means any loan made by the Issuer to the Parent Guarantor, or any notes issued by the Parent Guarantor to the Issuer, in each case, for the aggregate amount of the gross proceeds received by the Issuer from the offering of the Notes on the Issue Date or from the offering of Additional Notes, pursuant to the Proceeds Bond Document. ‘‘Proceeds Bond Document’’ means that certain bond document, dated as of the Issue Date (or any subsequent bond document documenting a Proceeds Bond in connection with the proceeds of Additional Notes), by and between the Issuer, as lender, and the Parent Guarantor, as borrower. ‘‘Public Debt’’ means any Indebtedness consisting of bonds, debentures, notes or other similar debt securities issued in (a) a public offering registered under the U.S. Securities Act or (b) a private placement to institutional investors that is underwritten for resale in accordance with Rule 144A under the U.S. Securities Act or Regulation S under the U.S. Securities Act, whether or not it includes registration rights entitling the holders of such securities to registration thereof with the SEC for public resale. ‘‘Public Equity Offering’’ means, with respect to any Person, a bona fide underwritten public offering of the ordinary shares or common equity of such Person (other than a registration statement on Form S-8 or otherwise relating to Equity Interests issued or issuable under any employee benefit plan). ‘‘Public Market’’ shall be deemed to exist any time after: (1) a Public Equity Offering has been consummated; and (2) at least 20% of the total issued and outstanding ordinary shares or common equity of the Parent Guarantor (or a Parent Holdco of the Parent Guarantor) has been distributed to investors other than the Equity Investors or any other direct or indirect shareholders of the Parent Guarantor as of the Issue Date. ‘‘Qualified Receivables Financing’’ means any Receivables Financing of a Receivables Subsidiary that meets the following conditions: (1) an Officer or the Board of Directors of the Parent Guarantor shall have determined in good faith that such Qualified Receivables Financing (including financing terms, covenants, termination events and other provisions) is in the aggregate economically fair and reasonable to the Parent Guarantor and the Receivables Subsidiary, (2) all sales of accounts receivable and related assets to the Receivables Subsidiary are made at fair market value (as determined in good faith by an Officer or the Board of Directors of the Parent Guarantor), and (3) the financing terms, covenants, termination events and other provisions thereof shall be on market terms (as determined in good faith by the Parent Guarantor) and may include Standard Securitization Undertakings.

166 The grant of a security interest in any accounts receivable of the Parent Guarantor or any of its Restricted Subsidiaries (other than a Receivables Subsidiary) to secure Indebtedness under Credit Facilities or Indebtedness in respect of the Notes shall not be deemed a Qualified Receivables Financing. ‘‘Rating Agency’’ means S&P, Fitch or Moody’s or, in the event that S&P, Fitch or Moody’s no longer assigns a rating to the Notes, any other ‘‘nationally recognized statistical rating organization’’ that assigns a rating to the Notes in lieu of the ratings by S&P, Fitch or Moody’s. ‘‘Rating Decline’’ means the occurrence on any date within the 120-day period immediately following the occurrence of an event specified in the definition of Change of Control (which period shall be extended so long as the rating of the Notes is under publicly announced consideration for possible downgrade by any of the Rating Agencies) of any of the following events: (1) any Rating Agency shall issue or confirm ratings on the Notes which ratings are at least one notch below the rating of the Notes issued by such Rating Agency as in effect immediately prior to the Change of Control event; or (2) any Rating Agency shall withdraw its rating of the Notes; or (3) the Notes are no longer rated by any Rating Agency. In determining how many notches the rating of the Notes has decreased, gradation with respect to rating categories will be taken into account (e.g. with respect to S&P, a decline in a rating from BBB—to BB+, will constitute a decrease of one notch). ‘‘Receivable’’ means a right to receive payment arising from a sale or lease of goods or services by a Person pursuant to an arrangement with another Person pursuant to which such other Person is obligated to pay for goods or services under terms that permit the purchase of such goods and services on credit, as determined on the basis of IFRS. ‘‘Receivables Assets’’ means any assets that are or will be the subject of a Qualified Receivables Financing. ‘‘Receivables Fees’’ means distributions or payments made directly or by means of discounts with respect to any participation interest issued or sold in connection with, and other fees paid to a Person that is not a Restricted Subsidiary in connection with, any Receivables Financing. ‘‘Receivables Financing’’ means any transaction or series of transactions that may be entered into by the Parent Guarantor or any of its Subsidiaries pursuant to which the Parent Guarantor or any of its Subsidiaries may sell, convey or otherwise transfer to (1) a Receivables Subsidiary (in the case of a transfer by the Parent Guarantor or any of its Subsidiaries), or (2) any other Person (in the case of a transfer by a Receivables Subsidiary), or may grant a security interest in, any accounts receivable (whether now existing or arising in the future) of the Parent Guarantor or any of its Subsidiaries, and any assets related thereto, including all collateral securing such accounts receivable, all contracts and all guarantees or other obligations in respect of such accounts receivable, proceeds of such accounts receivable and other assets which are customarily transferred or in respect of which security interest are customarily granted in connection with asset securitization transactions involving accounts receivable and any Hedging Obligations entered into by the Parent Guarantor or any such Subsidiary in connection with such accounts receivable. ‘‘Receivables Repurchase Obligation’’ means any obligation of a seller of receivables in a Qualified Receivables Financing to repurchase receivables arising as a result of a breach of a representation, warranty or covenant or otherwise, including as a result of a receivable or portion thereof becoming subject to any asserted defense, dispute, off-set or counterclaim of any kind as a result of any action taken by, any failure to take action by or any other event relating to the seller. ‘‘Receivables Subsidiary’’ means a Wholly-Owned Subsidiary of the Parent Guarantor (or another Person formed for the purposes of engaging in a Qualified Receivables Financing with the Parent Guarantor in which the Parent Guarantor or any Subsidiary of the Parent Guarantor makes an Investment and to which the Parent Guarantor or any Subsidiary of the Parent Guarantor transfers accounts receivable and related assets) which engages in no activities other than in connection with the financing of accounts receivable of the Parent Guarantor and its Subsidiaries, all proceeds thereof and all rights (contractual or other), collateral and other assets relating thereto, and any business or activities incidental or related to such

167 business, and which is designated by the Board of Directors of the Parent Guarantor (as provided below) as a Receivables Subsidiary and: (1) no portion of the Indebtedness or any other obligations (contingent or otherwise) of which (a) is guaranteed by the Parent Guarantor or any other Restricted Subsidiary of the Parent Guarantor (excluding guarantees of obligations (other than the principal of, and interest on, Indebtedness) pursuant to Standard Securitization Undertakings), (b) is subject to terms that are substantially equivalent in effect to a guarantee of any losses on securitized or sold receivables by the Parent Guarantor or any other Restricted Subsidiary of the Parent Guarantor, (c) is recourse to or obligates the Parent Guarantor or any other Restricted Subsidiary of the Parent Guarantor in any way other than pursuant to Standard Securitization Undertakings, or (d) subjects any property or asset of the Parent Guarantor or any other Restricted Subsidiary of the Parent Guarantor, directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to Standard Securitization Undertakings, (2) with which neither the Parent Guarantor nor any other Restricted Subsidiary of the Parent Guarantor has any contract, agreement, arrangement or understanding other than on terms which the Parent Guarantor reasonably believes to be no less favorable to the Parent Guarantor or such Restricted Subsidiary than those that might be obtained at the time from Persons that are not Affiliates of the Parent Guarantor, and (3) to which neither the Parent Guarantor nor any other Restricted Subsidiary of the Parent Guarantor has any obligation to maintain or preserve such entity’s financial condition or cause such entity to achieve certain levels of operating results. Any such designation by the Board of Directors of the Parent Guarantor shall be evidenced to the Trustee by filing with the Trustee a copy of the resolution of the Board of Directors of the Parent Guarantor giving effect to such designation and an Officer’s Certificate certifying that such designation complied with the foregoing conditions. ‘‘Related Parties’’ means: (1) any controlling stockholder, partner or member, or any 50% (or more) owned Subsidiary of such Person; (2) in the case of an individual, any spouse, family member or relative of such individual, any trust or partnership for the benefit of one or more of such individual and any such spouse, family member or relative, or the estate, executor, administrator, committee or beneficiaries of any thereof; (3) any trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners, owners or Persons beneficially holding a 50% or more controlling interest of which consist of any one or more Equity Investors and/or such other Persons referred to in the immediately preceding clause; or (4) any investment fund or vehicle managed, sponsored or advised by such Person or any successor thereto, or by any Affiliate of such Person or any such successor. ‘‘Related Taxes’’ means: (1) any Taxes required to be paid (provided such Taxes are in fact paid) by any Parent Holdco by virtue of its: (a) being organized or having Capital Stock outstanding (but not by virtue of owning stock or other equity interests of any corporation or other entity other than, directly or indirectly, the Parent Guarantor or any of the Parent Guarantor’s Subsidiaries); (b) issuing or holding Subordinated Shareholder Debt; or (c) being a holding company parent, directly or indirectly, of the Parent Guarantor or any of the Parent Guarantor’s Subsidiaries; and (2) if and for so long as the Parent Guarantor is a member of a group filing a consolidated or combined tax return with any Parent Holdco, any consolidated or combined Taxes measured by income for which such Parent Holdco is liable up to an amount not to exceed the lesser of the amount of any such Taxes that the Parent Guarantor and its Subsidiaries would have been required to pay on (i) a separate company basis or (i) on a consolidated basis if the Parent Guarantor and its Subsidiaries had paid tax on a consolidated, combined, group, affiliated or unitary basis on behalf of an affiliated group

168 consisting only of the Parent Guarantor and its Subsidiaries; provided that distributions shall be permitted in respect of the income of an Unrestricted Subsidiary only to the extent such Unrestricted Subsidiary distributed cash for such purpose to the Parent Guarantor or its Restricted Subsidiaries. ‘‘Restricted Investment’’ means an Investment other than a Permitted Investment. ‘‘Restricted Subsidiary’’ means any Subsidiary of the Parent Guarantor that is not an Unrestricted Subsidiary. ‘‘S&P’’ means Standard & Poor’s Ratings Group. ‘‘SEC’’ means the U.S. Securities and Exchange Commission. ‘‘Senior Indebtedness’’ means: (1) any Indebtedness of any Guarantor permitted to be incurred under the terms of this Indenture, unless the instrument or other relevant finance document relating to such Indebtedness expressly provides that it is on parity with or subordinated in right of payment to any Guarantee; and (2) all Obligations with respect to the items listed in the preceding clause (1). Notwithstanding anything to the contrary in the preceding sentence, Senior Indebtedness will not include: (1) any intercompany Indebtedness of the Parent Guarantor or any of its Subsidiaries to the Parent Guarantor or any of its Affiliates; (2) any liability for national, federal, state, local or other taxes owed or owing by the Parent Guarantor or any Subsidiary of the Parent Guarantor; (3) any accounts payable or other liability to trade creditors arising in the ordinary course of business (including guarantees thereof or instruments evidencing such liabilities); (4) any Indebtedness that is incurred in violation of the Indenture; (5) Indebtedness which is classified as non-recourse in accordance with IFRS or any unsecured claim arising in respect of insolvency proceedings; (6) any Capital Stock and other Equity Interests; or (7) any Subordinated Obligations and any Subordinated Shareholder Debt. ‘‘Significant Subsidiary’’ means, at the date of determination, any Restricted Subsidiary that together with its Subsidiaries that are Restricted Subsidiaries (1) for the most recent fiscal year, accounted for more than 10% of the consolidated revenues of the Parent Guarantor or (2) as of the end of the most recent fiscal year, was the owner of more than 10% of Total Assets (after intercompany eliminations). ‘‘Standard Securitization Undertakings’’ means representations, warranties, covenants, indemnities and guarantees of performance entered into by the Parent Guarantor or any Subsidiary of the Parent Guarantor which the Parent Guarantor has determined in good faith to be customary in a Receivables Financing, including those relating to the servicing of the assets of a Receivables Subsidiary, it being understood that any Receivables Repurchase Obligation shall be deemed to be a Standard Securitization Undertaking. ‘‘Stated Maturity’’ means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which the payment of interest or principal was scheduled to be paid in the documentation governing such Indebtedness as of the Issue Date, and will not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof. ‘‘Subordinated Obligation’’ means, in the case of the Issuer, any Indebtedness of the Issuer (whether outstanding on the Issue Date or thereafter incurred) which is expressly subordinate or junior in right of payment to the Notes pursuant to a written agreement and, in the case of a Guarantor, any Indebtedness of such Guarantor (whether outstanding on the Issue Date or thereafter incurred) which is expressly subordinate or junior in right of payment to the Guarantee of such Guarantor pursuant to a written agreement. ‘‘Subordinated Shareholder Debt’’ means, collectively, any debt provided to the Parent Guarantor by any direct or indirect Parent Holdco of the Parent Guarantor or any Permitted Holder, in exchange for or pursuant to any security, instrument or agreement other than Capital Stock, together with any such

169 security, instrument or agreement and any other security or instrument other than Capital Stock issued in payment of any obligation under any Subordinated Shareholder Debt; provided that such Subordinated Shareholder Debt: (1) does not (including upon the happening of any event) mature or require any amortization or other payment of principal prior to the first anniversary of the maturity of the Notes (other than through conversion or exchange of any such security or instrument for Equity Interests of the Parent Guarantor (other than Disqualified Stock) or for any other security or instrument meeting the requirements of the definition); (2) does not (including upon the happening of any event) require the payment of cash interest prior to the first anniversary of the maturity of the Notes; (3) does not (including upon the happening of any event) provide for the acceleration of its maturity nor confers on its shareholders any right (including upon the happening of any event) to declare a default or event of default or take any enforcement action, in each case, prior to the first anniversary of the maturity of the Notes; (4) is not secured by a Lien on any assets of the Parent Guarantor or a Restricted Subsidiary and is not guaranteed by the Parent Guarantor or any Subsidiary of the Parent Guarantor; (5) is subordinated in right of payment to the prior payment in full in cash of the Notes in the event of any default, bankruptcy, reorganization, liquidation, winding up or other disposition of assets of the Parent Guarantor; or (6) is not (including upon the happening of any event) mandatorily convertible or exchangeable, or convertible or exchangeable at the option of the holder, in whole or in part, prior to the date on which the Notes mature other than into or for Capital Stock (other than Disqualified Stock) of the Parent Guarantor, provided, however, that any event or circumstance that results in such Indebtedness ceasing to qualify as Subordinated Shareholder Debt, such Indebtedness shall constitute an incurrence of such Indebtedness by the Parent Guarantor, and any and all Restricted Payments made through the use of the net proceeds from the incurrence of such Indebtedness since the date of the original issuance of such Subordinated Shareholder Debt shall constitute new Restricted Payments that are deemed to have been made after the date of the original issuance of such Subordinated Shareholder Debt. ‘‘Subsidiary’’ means, with respect to any specified Person: (1) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency and after giving effect to any voting agreement or stockholders’ agreement that effectively transfers voting power) to vote in the election of directors, managers or trustees of the corporation, association or other business entity is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and (2) any partnership or limited liability company of which (a) more than 50% of the capital accounts, distribution rights, total equity and voting interests or general and limited partnership interests, as applicable, are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof, whether in the form of membership, general, special or limited partnership interests or otherwise, and (b) such Person or any Subsidiary of such Person is a controlling general partner or otherwise controls such entity. ‘‘Tax’’ means any tax, duty, levy, impost, assessment or other governmental charge (including penalties, interest and any other additions thereto, and, for the avoidance of doubt, including any withholding or deduction for or on account of Tax). ‘‘Taxes’’ and ‘‘Taxation’’ shall be construed to have corresponding meanings. ‘‘Tax Sharing Agreement’’ means any tax sharing or profit and loss pooling or similar agreement with customary or arm’s length terms entered into with any Parent Holdco of the Parent Guarantor or Unrestricted Subsidiary, as the same may be amended, supplemented, waived or otherwise modified from time to time in accordance with the terms thereof and of the Indenture.

170 ‘‘Total Assets’’ means the consolidated total assets of the Parent Guarantor and its Restricted Subsidiaries as shown on the consolidated balance sheet of the Parent Guarantor prepared in accordance with, and as provided for by, IFRS. ‘‘Unrestricted Subsidiary’’ means any Subsidiary of the Parent Guarantor (other than the Issuer and any Parent Holdco that is a Subsidiary of the Parent Guarantor) that is designated by the Board of Directors of the Parent Guarantor as an Unrestricted Subsidiary pursuant to a resolution of the Board of Directors but only to the extent that such Subsidiary: (1) at the time of such designation, has no Indebtedness other than Non-Recourse Debt; (2) except as permitted by the covenant described above under the caption ‘‘—Certain Covenants— Transactions with Affiliates,’’ is not party to any agreement, contract, arrangement or understanding with the Parent Guarantor or any Restricted Subsidiary unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Parent Guarantor or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Parent Guarantor; and (3) is a Person with respect to which neither the Parent Guarantor nor any Restricted Subsidiary has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results. ‘‘Voting Stock’’ of any specified Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person. ‘‘Weighted Average Life to Maturity’’ means, when applied to any Indebtedness at any date, the number of years obtained by dividing: (1) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect of the Indebtedness, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by (2) the then outstanding principal amounts of such Indebtedness. ‘‘Wholly-Owned Subsidiary’’ means a Restricted Subsidiary of the Parent Guarantor, all of the Capital Stock of which (other than directors’ qualifying shares or shares required by any applicable law or regulation to be held by a Person other than the Parent Guarantor or another Wholly-Owned Subsidiary) is owned by the Parent Guarantor or another Wholly-Owned Subsidiary.

171 BOOK-ENTRY, DELIVERY AND FORM General Notes sold within the United States to ‘‘qualified institutional buyers’’ pursuant to Rule 144A under the U.S. Securities Act will initially be represented by a global note in registered form without interest coupons attached (the ‘‘Rule 144A Global Note’’). Notes sold outside the United States pursuant to Regulation S under the U.S. Securities Act will initially be represented by a global note in registered form without interest coupons attached (the ‘‘Regulation S Global Note’’ and, together with the Rule 144A Global Note, the ‘‘Global Notes’’). The Global Notes will be deposited, on the closing date, with, or on behalf of, a common depositary and registered in the name of the nominee of the common depositary for the accounts of Euroclear and Clearstream. Except as set forth below, the Notes will be issued in registered global form in minimum denominations of A100,000 and integral multiples of A1,000 thereof. Ownership of interests in the Rule 144A Global Note (the ‘‘Rule 144A Book-Entry Interests’’) and ownership of interests in the Regulation S Global Note (the ‘‘Regulation S Book-Entry Interests’’ and, together with the Rule 144A Book-Entry Interests, the ‘‘Book-Entry Interests’’) will be limited to persons that have accounts with Euroclear and/or Clearstream or persons that may hold interests through such participants. The Book-Entry Interests will be shown on, and transfers thereof will be effected only through, records maintained in book-entry form by Euroclear and Clearstream and their participants. Except under the limited circumstances described below, the Book-Entry Interests will not be held in definitive form. Instead, Euroclear and Clearstream will credit on their respective book-entry registration and transfer systems a participant’s account with the interest beneficially owned by such participant. The laws of some jurisdictions, including certain states of the United States, may require that certain purchasers of securities take physical delivery of such securities in definitive form. The foregoing limitations may impair your ability to own, transfer or pledge Book-Entry Interests. In addition, owners of interest in the Global Notes will not have the Notes registered in their names, will not receive physical delivery of the Notes in certificated form and will not be considered the registered owners or ‘‘holders’’ of Notes under the Indenture for any purpose. So long as the Notes are held in global form, the common depositary for Euroclear and Clearstream (or its nominees), as applicable, will be considered the sole holder of the Global Notes for all purposes under the Indenture. In addition, participants must rely on the procedures of Euroclear and Clearstream, and indirect participants must rely on the procedures of Euroclear and Clearstream and the participants through which they own Book-Entry Interests, to transfer their interests or to exercise any rights of holders of Notes under the Indenture. None of us, the Paying Agent, the Transfer Agent, the Registrar or the Trustee will have any responsibility, or be liable, for any aspect of the records relating to the Book-Entry Interests.

Definitive Registered Notes Under the terms of the Indenture, owners of the Book-Entry Interests will receive definitive registered Notes in certificated form (‘‘Definitive Registered Notes’’) only in the following circumstances: (1) if either Euroclear or Clearstream notifies us that it is unwilling or unable to continue to act as depositary and a successor depositary is not appointed by the Issuer within 120 days; or (2) if the owner of a Book-Entry Interest requests such exchange in writing delivered through Euroclear or Clearstream following an event of default under the Indenture and enforcement action is being taken in respect thereof under the Indenture. In such an event, the Issuer will instruct the Registrar to issue Definitive Registered Notes, registered in the name or names and issued in any approved denominations, requested by or on behalf of Euroclear, Clearstream or us, as applicable (in accordance with their respective customary procedures and based upon directions received from participants reflecting the beneficial ownership of Book-Entry Interests), and such Definitive Registered Notes will bear the restrictive legend as provided in the Indenture, unless that legend is not required by the Indenture or applicable law. To the extent permitted by law, we, the Trustee, the Paying Agent, the Transfer Agent and the Registrar shall be entitled to treat the registered holder of any Global Note as the absolute owner thereof and no person will be liable for treating the registered holder as such. Ownership of the Global Notes will be

172 evidenced through registration from time to time at the registered office of the Issuer, and such registration is a means of evidencing title to the Notes. We will not impose any fees or other charges in respect of the Notes; however, owners of the Book-Entry Interests may incur fees normally payable in respect of the maintenance and operation of accounts in Euroclear and Clearstream.

Redemption of the Global Notes In the event that any Global Note (or any portion thereof) is redeemed, Euroclear and/or Clearstream, as applicable, will distribute the amount received by it in respect of the Global Notes so redeemed to the owners of the Book-Entry Interests in such Global Note from the amount received by them in respect of the redemption of such Global Note. The redemption price payable in connection with the redemption of such Book-Entry Interests will be equal to the amount received by Euroclear and Clearstream, as applicable, in connection with the redemption of such Global Note (or any portion thereof). We understand that, under the existing practices of Euroclear and Clearstream, if fewer than all of the Notes are to be redeemed at any time, Euroclear and Clearstream will credit their participants’ accounts on a proportionate basis (with adjustments to prevent fractions), by lot or on such other basis as they deem fair and appropriate (including the pool factor); provided, however, that no Book-Entry Interest of less than A100,000 principal amount at maturity, or less, may be redeemed in part.

Payments on Global Notes We will make payments of any amounts owing in respect of the Global Notes (including principal, premium, interest, additional interest and additional amounts) to the Paying Agent. The Paying Agent will, in turn, make such payments to Euroclear or Clearstream, which will distribute such payments to participants in accordance with their respective procedures. Under the terms of the Indenture, we, the Trustee, the Registrar, the Transfer Agent and the Paying Agent will treat the registered holder of the Global Notes (i.e., Euroclear or Clearstream (or their respective nominees)) as the owner thereof for the purpose of receiving payments and for all other purposes. Consequently, none of us, the Trustee, the Paying Agent, the Transfer Agent, the Registrar or any of their respective agents has or will have any responsibility or liability for: • be structurally subordinated to any existing and future indebtedness of each member of the Group that does not provide Guarantees; • any aspect of the records of (or maintaining, supervising or reviewing the records of) Euroclear, Clearstream or any participant or indirect participant relating to, or payments made on account of, a Book-Entry Interest, for any such payments made by Euroclear, Clearstream or any participant or indirect participant, or for maintaining, supervising or reviewing; • any other matter relating to the actions and practices of Euroclear, Clearstream or any participants or indirect participants; • the records of Euroclear, Clearstream or any participant or indirect participant relating to, or payments made on account of, a Book-Entry Interest; or • the common depositary, Euroclear, Clearstream or any participant or indirect participant. Payments by participants to owners of Book-Entry Interests held through participants are the responsibility of such participants.

Currency and Payment for the Global Notes The principal of, premium, if any, and interest on, and all other amounts payable in respect of, the Global Notes, will be paid to holders of interest in such Notes through Euroclear and/or Clearstream in euro.

Action by Owners of Book-Entry Interests Euroclear and Clearstream have advised us that they will take any action permitted to be taken by a holder of Notes only at the direction of one or more participants to whose account the Book-Entry Interests in the Global Notes are credited and only in respect of such portion of the aggregate principal amount of Notes as to which such participant or participants has or have given such direction. Euroclear and Clearstream will not exercise any discretion in the granting of consents, waivers or the taking of any other action in

173 respect of the Global Notes. However, if there is an event of default under the Notes, each of Euroclear and Clearstream reserves the right to exchange the Global Notes for Definitive Registered Notes in certificated form, and to distribute such Definitive Registered Notes to their respective participants.

Transfers The Global Notes will bear a legend to the effect set forth in ‘‘Notice to Investors’’ below. Book-Entry Interests in the Global Notes will be subject to the restrictions on transfer referred to in ‘‘Notice to Investors.’’ Book-Entry Interests in the 144A Global Note may be transferred to a person who takes delivery in the form of Book-Entry Interests in the Regulation S Global Note only upon delivery by the transferor of a written certification (in the form provided in the Indenture) to the effect that such transfer is being made in accordance with Regulation S under the U.S. Securities Act. Prior to 40 days after the date of initial issuance of the Notes, ownership of Regulation S Book-Entry Interests will be limited to persons that have accounts with Euroclear or Clearstream or persons who hold interests through Euroclear or Clearstream, and any sale or transfer of such interest to U.S. persons shall not be permitted during such periods unless such resale or transfer is made pursuant to Rule 144A under the U.S. Securities Act. Regulation S Book-Entry Interests may be transferred to a person who takes delivery in the form of 144A Book-Entry Interests only upon delivery by the transferor of a written certification (in the form provided in the Indenture) to the effect that such transfer is being made to a person who the transferor reasonably believes is a ‘‘qualified institutional buyer’’ within the meaning of Rule 144A under the U.S. Securities Act in a transaction meeting the requirements of Rule 144A under the U.S. Securities Act or otherwise in accordance with the transfer restrictions described under ‘‘Notice to Investors’’ and in accordance with any applicable securities laws of any other jurisdiction. Subject to the foregoing, and as set forth in ‘‘Notice to Investors,’’ Book-Entry Interests may be transferred and exchanged as described under ‘‘Description of the Notes—Transfer and Exchange.’’ Any Book-Entry Interest in one of the Global Notes that is transferred to a person who takes delivery in the form of a Book-Entry Interest in the other Global Note will, upon transfer, cease to be a Book- Entry Interest in the first-mentioned Global Note and become a Book-Entry Interest in the other Global Note, and accordingly, will thereafter be subject to all transfer restrictions, if any, and other procedures applicable to Book-Entry Interests in such other Global Note for as long as that person retains such a Book-Entry Interest. Definitive Registered Notes may be transferred and exchanged for Book-Entry Interests in a Global Note only as described under ‘‘Description of the Notes—Transfer and Exchange’’ and, if required, only if the transferor first delivers to the Trustee a written certificate (in the form provided in the Indenture) to the effect that such transfer will comply with the appropriate transfer restrictions applicable to such Notes. See ‘‘Notice to Investors.’’

Information Concerning Euroclear and Clearstream All Book-Entry Interests will be subject to the operations and procedures of Euroclear or Clearstream, as applicable. We have provided the summaries of those operations and procedures provided in this Offering Memorandum solely for the convenience of investors. The operations and procedures of each settlement system are controlled by that settlement system and may be changed at any time. Neither us nor the Initial Purchasers are responsible for those operations or procedures. Euroclear and Clearstream hold securities for participating organizations. They also facilitate the clearance and settlement of securities transactions between their respective participants through electronic book-entry changes in the accounts of such participants. Euroclear and Clearstream provide various services to their participants, including, among other things, the safekeeping, administration, clearance, settlement, lending and borrowing of internationally traded securities. Euroclear and Clearstream interface with domestic securities markets. Euroclear and Clearstream participants are financial institutions such as underwriters, securities brokers and dealers, banks, trust companies and certain other organizations. Indirect access to Euroclear and Clearstream is also available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Euroclear and Clearstream participant, either directly or indirectly. Because Euroclear and Clearstream can only act on behalf of participants, who in turn act on behalf of indirect participants and certain banks, the ability of an owner of a beneficial interest to pledge such interest to persons or entities that do not participate in the Euroclear or Clearstream systems, or otherwise take actions in respect of such interest, may be limited by the lack of a definite certificate for that interest. The laws of some jurisdictions require that certain persons take physical delivery of securities in definitive

174 form. Consequently, the ability to transfer beneficial interests to such person may be limited. In addition, owners of beneficial interests through the Euroclear or Clearstream systems will receive distributions attributable to the 144A Global Notes only through Euroclear or Clearstream participants.

Global Clearance and Settlement under the Book-Entry System The Notes represented by the Global Notes are expected to be listed on the official list of the Irish Stock Exchange and admitted for trading on the Global Exchange Market thereof. Transfers of interests in the Global Notes between participants in Euroclear or Clearstream will be effected in the ordinary way in accordance with their respective system’s rules and operating procedures. Although Euroclear and Clearstream currently follow the foregoing procedures in order to facilitate transfers of interests in the Global Notes among participants in Euroclear or Clearstream, they are under no obligation to perform or continue to perform such procedures, and such procedures may be discontinued or modified at any time. None of the Issuer, any Guarantor, the Initial Purchasers, the Trustee, the Transfer Agent, the Registrar or the Paying Agent will have any responsibility for the performance by Euroclear, Clearstream or their participants or indirect participants of their respective obligations under the rules and procedures governing their operations.

Initial Settlement Initial settlement for the Notes will be made in euro. Book-Entry Interests owned through Euroclear or Clearstream accounts will follow the settlement procedures applicable to conventional Eurobonds in registered form. Book- Entry Interests will be credited to the securities custody accounts of Euroclear and Clearstream holders on the business day following the settlement date against payment for value on the settlement date.

Secondary Market Trading The Book-Entry Interests will trade through participants of Euroclear or Clearstream and will settle in same-day funds. Since the purchase determines the place of delivery, it is important to establish at the time of trading of any Book-Entry Interests where both the purchaser’s and the seller’s accounts are located to ensure that settlement can be made on the desired value date.

Special Timing Considerations You should be aware that investors will only be able to make and receive deliveries, payments and other communications involving Notes through Euroclear and/or Clearstream, as applicable, on days when those systems are open for business. In addition, because of time-zone differences, there may be complications with completing transactions involving Euroclear and/or Clearstream on the same business day as in the United States. U.S. investors who wish to transfer their interests in the Notes, or to receive or make a payment or delivery of Notes, on a particular day, may find that the transactions will not be performed until the next business day in Brussels if Euroclear is used or Luxembourg if Clearstream is used.

175 CERTAIN TAX CONSIDERATIONS European Union Directive on the Taxation of Savings Interest On June 3, 2003 the European Union Council of Economic and Finance Ministers adopted the Council Directive 2003/48/EC on taxation of savings income in the form of interest payments (the ‘‘Savings Directive’’). The Savings Directive has been applied by Member States of the European Union since July 1, 2005. Under the Savings Directive each Member State will be required to provide to the tax authorities of another Member State details of payments of interest or other similar income (including certain distributions and redemption payments referable to a UCITS according to the Directive 2009/65/EC or entities who opt to be treated as such) paid by a paying agent within the meaning of the Savings Directive (‘‘Paying Agent’’) to an individual resident or certain types of entities called ‘‘residual entities,’’ within the meaning of the Savings Directive (the ‘‘Residual Entities’’), established in that other Member State. However, for a transitional period, Austria and Luxembourg may instead apply (unless during that period they elect otherwise) an optional information reporting system whereby if a beneficial owner, within the meaning of the Savings Directive, does not comply with one of the procedures for information reporting, the relevant Member State will levy a withholding tax on payments to such beneficial owner. This rate is currently 35% (since July 1, 2011) and will apply until the end of the transitional period. The transitional period is to terminate at the end of the first full fiscal year following agreement by certain non-EU countries to the exchange of information relating to such payments. A number of non-EU countries (Switzerland, Andorra, Liechtenstein, Monaco and San Marino) have agreed to adopt similar measures (either provision of information or transitional withholding) in relation to payments made by a Paying Agent within its jurisdiction to, or collected by such a Paying Agent for, an individual resident or a Residual Entity established in a Member State. In addition, Luxembourg has entered into reciprocal provision of information or transitional withholding arrangements with certain of those dependent or associated territories (Jersey, Guernsey, Isle of Man, Montserrat, British Virgin Islands, Turks and Caicos Islands, Anguilla, Cayman Islands, Aruba and the former Netherlands Antilles, i.e., Bonaire, Cura¸cao, Saba, Sint Eustatius and Sint Maarten) in relation to payments made by a Paying Agent in a Member State to, or collected by such a paying agent for, an individual resident or a Residual Entity established in one of those territories. The Council of the European Union formally adopted a Council Directive amending the Directive on March 24, 2014 (the ‘‘Amending Directive’’). The Amending Directive broadens the scope of the requirements described above. Member States have until January 1, 2016 to adopt the national legislation necessary to comply with the Amending Directive. The changes made under the Amending Directive include extending the scope of the Directive to payments made to, or collected for, certain other entities and legal arrangements. They also broaden the definition of ‘‘interest payment’’ to cover income that is equivalent to interest. If a payment were to be made or collected through a Member State which has opted for a withholding system and an amount of, or in respect of, tax were to be withheld from that payment, neither the Issuer nor any paying agent nor any other person would be obligated to pay additional amounts to the holder of the Notes or to otherwise compensate the holder of Notes for the reduction in the amounts that they will receive as a result of the imposition of such withholding tax.

Certain Material U.S. Federal Income Tax Considerations The following is a description of certain U.S. federal income tax consequences of the acquisition, ownership, retirement or other disposition of Notes by a holder thereof. This description only applies to Notes held as capital assets by a ‘‘U.S. Holder’’ (as defined below) and does not address, except as set forth below, aspects of U.S. federal income taxation that may be applicable to holders that are subject to special tax rules, such as: • financial institutions; • insurance companies; • real estate investment trusts; • regulated investment companies; • grantor trusts; • tax-exempt organizations;

176 • persons that will own the Notes through partnerships or other pass-through entities; • dealers or traders in securities or currencies; • certain former citizens or long-term residents of the United States; • holders that will hold a Note as part of a position in a straddle or as part of a hedging, conversion or integrated transaction for U.S. federal income tax purposes; or • holders that have a functional currency other than the U.S. dollar. Moreover, this description does not address the U.S. federal estate and gift tax or alternative minimum tax consequences of the acquisition, ownership, retirement or other disposition of Notes and does not address the U.S. federal income tax treatment of holders that do not acquire Notes as part of the initial distribution at their initial issue price. The ‘‘issue price’’ of a series of Notes is generally equal to the first price at which a substantial amount of such series of Notes are sold for money to investors (excluding sales to bond houses, brokers or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers). Each prospective purchaser should consult its tax advisor with respect to the U.S. federal, state, local and foreign tax consequences of acquiring, holding and disposing of Notes. This description is based on the Internal Revenue Code of 1986, as amended, or the ‘‘Code,’’ existing and proposed U.S. Treasury Regulations, or the ‘‘Regulations,’’ administrative pronouncements and judicial decisions, each as available and in effect on the date hereof. All of the foregoing are subject to change, possibly with retroactive effect, or differing interpretations which could affect the tax consequences described herein. For purposes of this description, a ‘‘U.S. Holder’’ is a beneficial owner of Notes who, for U.S. federal income tax purposes, is: • an individual who is a citizen or resident of the United States; • a corporation (or any other entity that is treated as a corporation for U.S. federal income tax purposes) organized in or under the laws of the United States, any state thereof or the District of Columbia; • an estate the income of which is subject to U.S. federal income taxation regardless of its source; or • a trust (1) that has a valid election in effect to be treated as a U.S. person for U.S. federal income tax purposes or (2)(a) the administration over which a U.S. court can exercise primary supervision and (b) all of the substantial decisions of which one or more U.S. persons have the authority to control. If a partnership (or any other entity that is treated as a partnership for U.S. federal income tax purposes) holds Notes, the tax treatment of the partnership and a partner in such partnership generally will depend on the status of the partner and the activities of the partnership. Such partner or partnership should consult its own tax advisor as to its consequences.

Interest In certain circumstances, the Issuer may be obligated to pay amounts in excess of the stated interest or principal on the Notes. Under the contingent payment debt Regulations (‘‘CPDI Regulations’’), if based on all the facts and circumstances as of the date on which the Notes are issued, there is a remote likelihood that these contingent events will occur and such payments will be made, it is assumed that such events will not occur and such payments will not be made. The Issuer believes that, based on all the facts and circumstances as of the expected issue date of the Notes, there is a remote likelihood the contingencies will occur; therefore, the Issuer does not intend to treat the Notes as contingent payment debt instruments (‘‘CPDIs’’). The Issuer’s determination, however, is not binding on the Internal Revenue Service (‘‘IRS’’), and if the IRS were to challenge this determination, a U.S. Holder may be required to accrue income on the Notes that such holder owns in excess of stated interest, and to treat as ordinary income rather than capital gain any income realized on the taxable disposition of such Notes before the resolution of the contingency. In the event that any such payments were made, it would affect the amount and timing of the income that a U.S. Holder recognizes. U.S. Holders are urged to consult their tax advisors regarding the potential application to the Notes of the CPDI Regulations and the consequences thereof. This discussion assumes that the Notes will not be treated as CPDIs. It is expected and this discussion assumes that each series of the Notes will be issued with less than a de minimis amount of original issue discount (‘‘OID’’) for U.S. federal income tax purposes and therefore treated as issued without OID. Therefore, stated interest paid to a U.S. Holder on a Note will generally be

177 includible in such holder’s gross income as ordinary interest income in accordance with such holder’s usual method of tax accounting. In addition, interest on the Notes will be treated as foreign source income for U.S. federal income tax purposes. Subject to certain conditions and limitations, foreign taxes, if any, withheld on interest payments may be treated as foreign taxes eligible for credit against such holder’s U.S. federal income tax liability. The limitation on foreign taxes eligible for the U.S. foreign tax credit is calculated separately with respect to specific ‘‘baskets’’ of income. Interest on the Notes, generally will constitute ‘‘passive category income,’’ or, in the case of certain U.S. Holders, ‘‘general category income.’’ As an alternative to the tax credit, a U.S. Holder may elect to deduct such taxes (the election would then apply to all foreign income taxes such U.S. Holder paid in that taxable year). The rules governing the foreign tax credit are complex. U.S. Holders are urged to consult their tax advisors regarding the availability of the foreign tax credit under their particular circumstances. Any stated interest paid in foreign currency will be included in a U.S. Holder’s gross income in an amount equal to the U.S. dollar value of such foreign currency, including the amount of any withholding tax thereon, regardless of whether the foreign currency is converted into U.S. dollars. Generally, a U.S. Holder that uses the cash method of tax accounting will determine such U.S. dollar value using the spot rate of exchange on the date of receipt. A cash method U.S. Holder generally will not realize foreign currency gain or loss on the receipt of the interest payment but may have foreign currency gain or loss attributable to the actual disposition of the foreign currency received. Generally, a U.S. Holder that uses the accrual method of tax accounting will determine the U.S. dollar value of accrued interest income using the average rate of exchange for the accrual period (or, with respect to an accrual period that spans two taxable years, at the average rate for the partial period within the U.S. Holder’s taxable year). Alternatively, an accrual basis U.S. Holder may make an election (which must be applied consistently to all debt instruments from year to year and cannot be changed without the consent of the IRS) to translate accrued interest income into U.S. dollars at the spot rate of exchange on the last day of the accrual period (or the last day of the taxable year in the case of a partial accrual period) or the spot rate on the date of receipt, if that date is within five business days of the last day of the accrual period. A U.S. Holder that uses the accrual method of accounting for tax purposes will recognize foreign currency gain or loss on the receipt of an interest payment if the exchange rate in effect on the date the payment is received differs from the rate applicable to an accrual of that interest. The amount of foreign currency gain or loss to be recognized by such U.S. Holder will be an amount equal to the difference between the U.S. dollar value of the foreign currency interest payment (determined on the basis of the spot rate on the date the interest income is received) in respect of the accrual period and the U.S. dollar value of the interest income that has accrued during the accrual period (as determined above) regardless of whether the payment is in fact converted to U.S. dollars. This foreign currency gain or loss will be ordinary income or loss and generally will not be treated as an adjustment to interest income or expense. Foreign currency gain or loss generally will be U.S. source provided that the residence of the U.S. Holder is considered to be the United States for these purposes.

Sale, exchange, retirement or other taxable disposition Upon the sale, exchange, retirement or other taxable disposition of a Note, a U.S. Holder will recognize taxable gain or loss equal to the difference, if any, between (i) the amount realized on the sale, exchange, retirement or other taxable disposition, other than the amount allocable to accrued but unpaid interest not previously included in income, which will be taxable as interest, and (ii) such U.S. Holder’s adjusted tax basis in the Note. A U.S. Holder’s adjusted tax basis in a Note generally will equal the U.S. dollar cost of such Note to such holder, and, subject to the discussion below regarding foreign currency gain or loss, any such gain or loss will be capital gain or loss. If a U.S. Holder purchases the Note with foreign currency, the U.S. dollar cost of the Note will generally be the U.S. dollar value of the purchase price on the date of purchase calculated at the spot rate of exchange on that date. The amount realized upon the disposition of a Note will generally be the U.S. dollar value of the amount received on the date of the disposition calculated at the spot rate of exchange on that date. However, if a U.S. Holder is a cash basis taxpayer, or an accrual basis taxpayer, if it so elects, and the Note is traded on an established securities market, the U.S. dollar cost of the Note and the amount realized on its disposition will be the U.S. dollar value of the purchase price or disposition proceeds on the settlement date of the purchase or disposition, respectively. The election available to accrual basis U.S. Holders in respect of the purchase and disposition of Notes traded on an established securities market must be applied consistently to all debt instruments from year to year and cannot be changed without the consent of the IRS. For a non-corporate U.S. Holder, the maximum marginal U.S. federal income tax rate applicable to any capital gain will generally be lower than the maximum marginal U.S. federal income tax rate applicable to

178 ordinary income (other than certain dividends) if such U.S. Holder’s holding period for the Note exceeds one year (i.e., such gain is long-term capital gain). Any gain or loss realized on the sale, exchange, retirement or other taxable disposition of a Note generally will be treated as U.S. source gain or loss, as the case may be. The deductibility of capital losses is subject to limitations. Gain or loss that a U.S. Holder recognizes on the sale, exchange, retirement or other taxable disposition of a Note will generally be treated as U.S. source ordinary income or loss to the extent that the gain or loss is attributable to changes in foreign currency exchange rates during the period in which such holder held such Note. Such foreign currency gain or loss will equal the difference between (i) the U.S. dollar value of the U.S. Holder’s foreign currency purchase price for the Note calculated at the spot rate of exchange on the date of the sale, exchange, retirement or other taxable disposition and (ii) the U.S. dollar value of the holder’s foreign currency purchase price for the Note calculated at the spot rate of exchange on the date of purchase of the Note. The realization of any foreign currency gain or loss will be limited to the amount of overall gain or loss realized on the disposition of the Note.

Information reporting and backup withholding Information reporting generally will apply to payments of interest on, and to proceeds from the sale or redemption of, Notes made within the United States, or by a U.S. payor or U.S. middleman, to a U.S. Holder (other than an exempt recipient and certain other persons). The payor may be required to backup withhold on payments on a Note to a U.S. Holder, other than an exempt recipient, if the holder fails to furnish its correct taxpayer identification number or otherwise fails to comply with, or establish an exemption from, the backup withholding requirements. Backup withholding is not an additional tax. A U.S. Holder generally will be entitled to credit any amounts withheld under the backup withholding rules against such holder’s U.S. federal income tax liability provided the required information is furnished to the IRS in a timely manner.

Foreign asset reporting Certain U.S. Holders who are individuals are required to report information relating to an interest in the Notes, subject to certain exceptions (including an exception for Notes held in accounts maintained by certain financial institutions). U.S. Holders are urged to consult their tax advisors regarding their information reporting obligations, if any, with respect to their ownership and disposition of the Notes.

Medicare tax A U.S. Holder that is an individual or estate, or a trust that does not fall into a special class of trusts that is exempt from such tax, is subject to a 3.8% tax on the lesser of (1) such U.S. Holder’s ‘‘net investment income’’ (or undistributed ‘‘net investment income’’ in the case of estates and trusts) for the relevant taxable year and (2) the excess of such U.S. Holder’s modified adjusted gross income for the taxable year over a certain threshold (which in the case of individuals will be between $125,000 and $250,000, depending on the individual’s circumstances). A U.S. Holder’s net investment income will generally include its gross interest income and its net gains from the disposition of the Notes, unless such interest or net gains are derived in the ordinary course of the conduct of a trade or business (other than a trade or business that consists of certain passive or trading activities). U.S. Holders that are individuals, estates or trusts are urged to consult their tax advisor regarding the applicability of this tax to their income and gains in respect of their investment in the Notes.

Swedish Taxation THE FOLLOWING SUMMARY OUTLINES CERTAIN SWEDISH TAX CONSEQUENCES RELATING TO HOLDERS OF NOTES AND TO PAYMENTS BY THE GUARANTORS UNDER THE GUARANTEES. THE SUMMARY IS BASED ON THE LAWS OF SWEDEN AS CURRENTLY IN EFFECT AND IS INTENDED TO PROVIDE GENERAL INFORMATION ONLY. THE SUMMARY DOES NOT ADDRESS SITUATIONS WHERE NOTES ARE HELD IN AN INVESTMENT SAVINGS ACCOUNT (SW. INVESTERINGSSPARKONTO) OR THE RULES REGARDING REPORTING OBLIGATIONS FOR, AMONG OTHERS, PAYERS OF INTEREST. INVESTORS SHOULD CONSULT THEIR PROFESSIONAL TAX ADVISORS REGARDING THE SWEDISH TAX AND OTHER TAX CONSEQUENCES (INCLUDING THE APPLICABILITY AND EFFECT OF TAX TREATIES FOR THE AVOIDANCE OF DOUBLE TAXATION) OF ACQUIRING, OWNING AND DISPOSING OF NOTES IN THEIR PARTICULAR CIRCUMSTANCES.

179 Holders Not Resident in Sweden Payments of any principal amount or any amount that is considered to be interest for Swedish tax purposes to the holder of any Note should not be subject to Swedish income tax, provided that such a holder is not resident in Sweden for Swedish tax purposes and provided that such a holder does not have a permanent establishment in Sweden to which the Notes are effectively connected. Swedish withholding tax, or Swedish tax deduction, is not imposed on payments of any principal amount or any amount that is considered to be interest for Swedish tax purposes, except for certain payments of interest (and other return on Notes) to a private individual (or an estate of a deceased individual) with residence in Sweden for Swedish tax purposes (see ‘‘Holders Resident in Sweden’’ below).

Holders Resident in Sweden Generally, for Swedish corporations and private individuals (and estates of deceased individuals) with residence in Sweden for Swedish tax purposes, all capital income (e.g., income that is considered to be interest for Swedish tax purposes and capital gains on Notes) will be taxable. Specific tax consequences, may however, be applicable to certain categories of corporations, e.g., life insurance companies. Further, specific tax consequences may be applicable if, and to the extent, a holder of Notes realizes a capital loss on the Notes and to any currency exchange gains or losses. If amounts that are considered to be interest for Swedish tax purposes are paid by a legal entity domiciled in Sweden, including a Swedish branch, to a private individual (or an estate of a deceased individual) with residence in Sweden for Swedish tax purposes, Swedish preliminary taxes are normally withheld by the legal entity on such payments. Swedish preliminary taxes should normally also be withheld on other return on receivables (but not capital gains), if the return is paid out together with an amount that is considered to be interest for Swedish tax purposes.

Payments under the Guarantees As for payments by Guarantors under the Guarantees considered to be interest for Swedish tax purposes to holders of Notes not resident in Sweden for Swedish tax purposes, please refer to the section ‘‘Holders Not Resident in Sweden’’ above regarding the tax treatment of holders of Notes. As for payments by Guarantors under the Guarantees considered to be interest for Swedish tax purposes (and other return on Notes) to holders of Notes resident in Sweden for Swedish tax purposes, please refer to the section ‘‘Holders Resident in Sweden’’ above regarding the tax treatment of holders of Notes.

Polish Taxation THE FOLLOWING IS A SUMMARY OF THE PRINCIPAL POLISH TAX CONSEQUENCES FOR INVESTORS IN THE NOTES. THIS SUMMARY IS NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF THE TAX CONSEQUENCES UNDER POLISH LAW OF THE ACQUISITION, OWNERSHIP AND DISPOSAL OF THE NOTES OR THE RECEIPT OF INTEREST AND ACCRUAL OF DISCOUNT (INCLUDING FOR THESE PURPOSES ANY PREMIUM PAYABLE ON REDEMPTION) ON THE NOTES OR PAYMENTS BY THE POLISH GUARANTORS UNDER THE GUARANTEES. POTENTIAL INVESTORS SHOULD, THEREFORE, CONSULT THEIR OWN TAX ADVISORS REGARDING THE TAX CONSEQUENCES UNDER POLISH LAW INCLUDING THE APPLICATION OF ANY TAX TREATY BETWEEN POLAND AND THEIR COUNTRY OF RESIDENCE. ALL REFERENCES TO A REPURCHASE OR REDEMPTION OF THE NOTES ARE TO A REPURCHASE OR REDEMPTION OF THE NOTES BY THE ISSUER OF THE NOTES AND SHALL MEAN A ‘‘REPURCHASE’’ OF THE NOTES FOR POLISH TAX LAW PURPOSES.

Tax Residence Individuals are subject to tax liability in Poland affecting all their income (revenues) regardless of the location of the source of such revenues (unlimited tax liability) if they have their place of residence within the territory of Poland (Article 3 Section 1 and 1a of the PIT Act).

180 A person whose place of residence is in Poland is an individual who: • has his/her center of personal or economic interests (center of life interests) within the territory of Poland; or • stays within the territory of Poland longer than 183 days in a tax year (Article 3 Section 1a of the PIT Act). These rules apply without prejudice to double taxation conventions signed by Poland (Article 4a of the PIT Act). In particular, these conventions may define the ‘‘place of residence’’ in a different manner or further clarify the notion of the ‘‘center of life interests.’’ Individuals whose place of residence is not located in Poland are subject to tax liability only with respect to the income (revenues) generated within the territory of Poland (limited tax liability) (Article 3 Section 2a of the PIT Act). The entities subject to the corporate income tax in Poland (the ‘‘Corporate Taxpayers’’) are legal persons, limited joint stock partnerships, companies under organization and organizations with no legal personality (other than the companies and partnerships which are not afforded legal personality and are deemed transparent for income tax purposes in Poland). The Corporate Taxpayers are also partnerships having their seats or management offices in other states if they are treated as legal persons under tax law provisions of a given state and they are liable to tax on the total amount of their incomes, irrespective of the place where they are earned (Article 1 Section 1 and 2 of the CIT Act). The Corporate Taxpayers that have their registered office or place of management in Poland are subject to tax liability with respect to all their income, wherever generated (Article 3 Section 1 of the CIT Act). Corporate Taxpayers who have neither their seat nor their place of management in Poland are subject to tax liability only with respect to the income (revenues) earned within the territory of Poland (limited tax liability) (Article 3 Section 2 of the CIT Act). All references to ‘‘residence’’ for the purposes of this section are to residence for the purposes of Polish tax law and applicable double taxation conventions. For the purposes of this section, references to a ‘‘Polish Individuals’’ or ‘‘Polish Corporate Taxpayers’’ are, respectively, to (a) individuals or (b) legal persons, limited joint stock partnerships, companies under organization and organizations with no legal personality (other than companies and partnerships which are not afforded legal personality and are deemed transparent for income tax purposes in Poland) resident in Poland for tax purposes (subject to unlimited tax liability in Poland). For the purposes of this section, references to ‘‘Foreign Individuals’’ or to ‘‘Foreign Corporate Taxpayers’’ are, respectively, to (a) individuals or (b) legal persons or other legal entities, including partnerships having their seats or management offices in other states if they are treated as legal persons under tax law provisions of a given state and they are liable to tax on the total amount of its incomes, irrespective of the place where they are earned, not resident in Poland for tax purposes (subject to limited tax liability in Poland).

Taxation of Polish Individuals and Polish Corporate Taxpayers (subject to unlimited tax liability in Poland) Interest and discount on the Notes Interest and discount on the Notes paid by the Issuer will, for Polish taxation purposes, be treated as income earned in Sweden. Pursuant to the convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income entered into between Sweden and Poland (the ‘‘Convention’’), interest or discount on the Notes earned in Sweden by Polish Individuals and Polish Corporate Taxpayers may be taxed only in the state of residence, i.e., Poland (Sweden does not have the right of taxation). The above rules do not apply if the noteholder carries on a trade or business in Sweden through a permanent establishment situated therein with which the Notes are effectively connected. Interest and discount on the Notes earned by Polish Individuals and Polish Corporate Taxpayers are subject to income tax in Poland at the rate of 19%.

Polish Individuals Pursuant to Article 30a of the PIT Act, a flat 19% tax rate is applied to income earned from interest and/or discounts on securities, regardless of the territory in which it has been generated. The income is not

181 reduced by the cost of generating such income (Article 30a Section 6 of the PIT Act). This income is not aggregated with other income taxable pursuant to general rules, i.e., which is subject to the progressive tax rates of 18% and 32% (Article 30a Section 7 of the PIT Act).

Polish Corporate Taxpayers Interest and discount on the Notes obtained by Polish Corporate Taxpayers shall be taxed under the CIT Act together with all other income earned by the taxpayer in a given tax year, and shall be subject to the basic tax rate of 19% (Article 19 Section 1 of the CIT Act). Income is the surplus of total revenues earned by a taxpayer in the fiscal year over the costs of generating these revenues (Article 7 Section 2 of the CIT Act).

Sale, Repurchase and Redemption of the Notes Pursuant to the Convention, income from the sale of the Notes or repurchase or redemption of the Notes by the Issuer arising to Polish Individuals and Polish Corporate Taxpayers is subject to taxation only in Poland unless the noteholder carries on business in Sweden through a permanent establishment situated therein with which the Notes are effectively connected. In such cases, tax is payable on the difference between the proceeds of sale, repurchase or redemption and the acquisition cost of the relevant Notes (capital gains).

Polish Individuals With respect to Polish Individuals, capital gains generated on disposal of the Notes are subject to the flat 19% tax rate (Article 30b of the PIT Act). Income on disposal of the Notes for consideration is the difference between total revenues earned on such activity in the calendar year and the costs of generating these revenues, calculated pursuant to the PIT Act (Article 30b Section 2 item 1 in conjunction with Section 6 of the PIT Act). The revenue on the disposal of the Notes for consideration is the value expressed as the price in the relevant agreement. However, if for no good reason the price set out in the agreement significantly deviates from the market value of the transferred Notes, the revenue on the disposal of the Notes for consideration will be assessed by the relevant tax authority or tax inspection authority at the level of the market value of these Notes (Article 19 Section 1 in conjunction with Article 17 Section 2 of the PIT Act). The revenue on the disposal of the Notes for consideration is the revenue due, even if not yet received (Article 17 Section 1 item 6 letter a of the PIT Act). The tax-deductible costs of generating revenue on the disposal of the Notes for a consideration are the expenses incurred on acquiring the Notes. These costs can only be deducted when revenue is generated on the disposal of the relevant Notes for consideration (Article 23 Section 1 item 38 of the PIT Act). No tax advances are payable upon realization of the capital gain during a calendar year. After the end of the fiscal year the taxpayer is obligated to report the income generated during the fiscal year on the disposal of the Notes for consideration and—where taxable income was generated—calculate the relevant income tax charge in a tax return reporting his/her income earned (loss incurred) during the fiscal year (Article 30b Section 6 of the PIT Act). The return referred to in the preceding paragraph should be filed by April 30 of the year following the fiscal year in which the revenue on the disposal of the Notes for consideration was earned. By the same date the taxpayer should pay the tax due, as disclosed in the tax return. Where income is generated on the disposal of the Notes for consideration, such income is not amalgamated with income generated from other sources of revenues (Article 30b Section 5 of the PIT Act). Losses incurred on disposing of the Notes for consideration in one fiscal year can be deducted from income generated from the source of revenues referred to in Article 30b of the Pit Act in the following five consecutive fiscal years, provided that the deduction in any of these years cannot exceed 50% of the amount of the loss. Losses incurred on this activity cannot be amalgamated with losses incurred by the taxpayer on other sources of revenues (Article 9 Section 6 of the PIT Act). The above principles do not apply if the Notes are transferred for consideration in the course of professional business activity conducted by the taxpayer (Article 30b Section 4 of the PIT Act). In such

182 case these revenues will qualify as regular revenues from business activity and should be accounted for pursuant to the principles applicable to that source of revenues.

Polish Corporate Taxpayers With respect to Polish Corporate Taxpayers, capital gains generated on disposal of the Notes are subject to the flat 19% tax rate (Article 19 Section 1 of the CIT Act). Income is the surplus of total revenues earned on such activity in the fiscal year over the costs of generating these revenues (Article 7 Section 1 of the CIT Act). The revenue on the disposal of the Notes for consideration is the value expressed as the price in the relevant agreement. However, if for no good reason the price set out in the agreement significantly deviates from the market value of the transferred Notes, the revenue on the disposal of the Notes for a consideration will be assessed by the relevant tax authority or tax inspection authority at the level of the market value of these Notes (Article 14 Section 1 of the CIT Act). The tax-deductible costs of generating revenue on the disposal of the Notes for consideration are the expenses incurred on acquiring or otherwise taking up the Notes. These costs can only be deducted when revenue is generated on the disposal of the relevant Notes for consideration (Article 16 Section 1 item 8 of the CIT Act). Income on the disposal of the Notes for consideration is amalgamated with income generated from other sources. Polish Corporate Taxpayers are obligated to pay the tax upon the realization of the capital gain (relevant tax advance is payable in accordance with one of the specific methods provided for in the CIT Act chosen by the taxpayer).

Taxation of Foreign Individuals and Foreign Corporate Taxpayers (Subject to Limited Tax Liability in Poland) Taxation of interest and discount on the Notes and sale and repurchase of the Notes Foreign Individuals and Foreign Corporate Taxpayers will not be liable to taxation in Poland on interest or discount paid or accruing on the Notes nor on income arising from the sale or repurchase of the Notes (save as described below in relation to payments by Synthos Finance AB (publ) under the Guarantees).

Payments under the Guarantees Payments made by the Guarantors under the Guarantees could be treated as a fulfillment of the liabilities of the Issuer to the investors under the Notes. As such, they should be classified as the same type of income as the Notes, i.e., repurchase/redemption of the Notes or a payment of interest under the Notes. However, the possibility cannot be entirely excluded that the Polish tax authorities may attempt to reclassify the payments under the Guarantees as constituting, for Polish tax purposes, an independent type of income, e.g., ‘‘income from other sources.’’ Any entity resident in Poland (including the Guarantors) which pays interest on the Notes to a Foreign Individual or a Foreign Corporate Taxpayer is obligated to withhold Polish income tax at the rate of 20% in the case of Foreign Corporate Taxpayers and 19% in the case of Foreign Individuals from such payments on the date of payment thereof. However, the rate of withholding tax may be reduced pursuant to an applicable double tax treaty, provided that the Foreign Individual or, respectively, Foreign Corporate Taxpayer obtains a certificate confirming its place of residence for tax purposes issued by the appropriate tax administration (a certificate of tax residence) and delivers it to the Guarantor prior to the payment of interest on the Notes. Should the Polish tax authorities reclassify the streams of payments under the Guarantees into ‘‘income from other sources,’’ then Foreign Individual or, respectively, Foreign Corporate Taxpayer would be subject to taxation on such income on principles provided for Polish Individuals or, respectively, Polish Corporate Taxpayer (as described above), unless a relevant double tax treaty provides otherwise.

Withholding tax exemption (Article 21 Section 3 of the CIT Act) Under some exceptions and specific additional requirements, interest paid between the parent company and its subsidiary is exempt from withholding tax, if the following conditions are met: • the company receiving the interest income directly holds at least 25% of shares in the capital of the company which pays such income (for a period of two years before or after the payment of interest),

183 • the company receiving the interest income is an income tax payer in one of the EU or EEA countries and does not benefit from exemption on its worldwide income irrespective of where the income is obtained, • the interest income is paid by a company being a corporate income tax payer having its registered office in Poland, and • the interest income cannot be recognized as revenues from participation in profits or repayment of capital, or revenues resulting from receivables carrying a right to a share in the debtor’s profits, or from receivables that entitle the creditor to exchange their entitlement to receive interest for a right to participate in the debtor’s profits, or form receivables that do not result in an obligation to repay the principal amount thereof, or where repayment falls due after no less than 50 years from the date the receivables came into being. The above exemption applies respectively to interest paid between companies having the same shareholder being the resident of an EU or EEA country which holds at least 25% of shares in the share capital of the creditor and the debtor.

Tax remitter’s liability Under Article 30 Section 1 of the Tax Code, a tax remitter failing to fulfill its duty to calculate, withhold or pay tax to a relevant tax authority is liable for the tax that has not been withheld or that has been withheld but not paid, up to the value of all its assets. The tax remitter is not liable if the relevant provisions provide otherwise or the tax has not been withheld due to the tax payer’s fault. In such a case, the relevant tax authority issues a decision concerning the tax payer’s liability and not the tax remitter’s liability.

Tax on Civil Law Transactions on Transfer of the Notes The tax on civil law transactions is payable on agreements concerning the sale or exchange of property rights (including the Notes) if the items subject to such agreements are: • property rights enforceable in the territory of Poland; or • property rights enforceable abroad, if the purchaser of the property rights has its residence or seat in Poland and the transfer is executed in Poland (Article 1 Section 1 letter a) in conjunction with Article 1 Section 4 of the Act on Tax on Civil Law Transactions). However, the sale of securities (including the Notes) (i) to investment firms or foreign investment firms, (ii) made with the intermediation of investment firms or foreign investment firms, (iii) made through organized trading, or (iv) outside the organized trading by investment firms or foreign investment firms if securities had been acquired by such firms as a part of organized trading, as defined in the Act on Trading in Financial Instruments, is exempt from the Tax on Civil Law Transactions. The tax base is the market value of the property or the property rights (Article 6 Section 1 item 1) of the Act on Tax on Civil Law Transactions). The tax liability resulting from a sale agreement is borne by the buyer and arises upon the finalization of the civil law transaction (Article 4 item 1 and Article 3 Section 1 item 1 of the Act on Tax on Civil Law Transactions). The taxpayers are required to file, without any additional request from the tax office, a transfer tax return and calculate and remit the due tax within 14 days following the day on which the tax liability arose. This obligation does not apply if the transaction is executed in the form of a notarial deed where the Tax on Civil Law Transactions is collected by the notary who, in this case, acts as the tax remitter (Article 10 Section 1 and 2 of the Act on Tax on Civil Law Transactions). The rate of this tax is 1% of the market value of the property rights. The in-kind contribution of the Notes to a company or partnership may be subject to tax on civil law transactions if the company/partnership has its seat in Poland (Article 1 Section 3 of the Act on Tax on Civil Law Transactions in conjunction with Article 1 Section 5 of the Act on Tax on Civil Law Transactions). The applicable tax rate would be 0.5% payable on the value of the nominal share capital issued (in the case of companies) or value of the contributed Notes (in the case of partnerships) (Article 7 Section 1 item 9 of the Act on Tax Civil Law Transactions).

Inheritance and Donations Tax The acquisition of property rights (such as the Notes) by individuals through an inheritance (in different legal forms) or donation, is subject to a tax on inheritance and donations, if the acquisition relates to:

184 (i) property rights exercisable in the territory of the Poland or (ii) property rights exercisable abroad. The acquisition of property rights exercised abroad is subject to tax only if at the time of opening the inheritance or concluding the donation agreement the acquirer of property rights was a Polish citizen or was permanently domiciled in Poland (Article 1(1), Article 2 and Article 3(1) of the Inheritance and Donations Tax Act). The tax liability is borne by the person acquiring the property rights (Article 5 of the Inheritance and Donations Tax Act). The tax rates on inheritances and donations vary and are determined by the degree of consanguinity or affinity or any other personal relationship between the decedent and the heir or the donor and the beneficiary. The tax rates grow progressively from 3% to 20% of the tax base, depending on the tax group in which the acquirer qualifies (Article 15(1) of the Inheritance and Donations Tax Act). There is a tax free amount defined for each of these groups. The tax base is, in principle, the value of acquired property rights after deducting debts and encumbrances (net value), established in accordance with the balance of property rights on the acquisition day and the market prices as at the day the tax obligation arose (Article 7(1) of the Inheritance and Donations Tax Act). The taxpayers are required to file with the head of the relevant tax office, within one month of the date on which the tax liability arose, a tax return that discloses the acquisition of the property rights on an appropriate form (Article 17a(1) of the Inheritance and Donations Tax Act). The tax is payable within 14 days from the receipt date of the decision issued by the head of tax office and determining the amount of tax obligation (Article 14(1) of the Tax Code). If the agreement is executed in the form of a notarial deed, the tax on inheritances and donations is collected and paid to the competent tax authority by the public notary acting as the tax remitter (Article 18(1) of the Inheritance and Donations Tax Act). Property rights acquired by close relatives (a spouse, descendants, ascendants, stepchildren, siblings, stepfather and stepmother) are tax-exempt subject to filing an appropriate notice with the head of the relevant tax office in due time. The aforementioned exemption applies if, at the time of acquisition, the acquirer was a citizen of any of the EU (EEA) member state.

The Proposed Financial Transactions Tax (FTT) On February 14, 2013, the European Commission published a proposal (the Commission’s Proposal) for a Directive for a common FTT in Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia (the participating Member States). The Commission’s Proposal has very broad scope and could, if introduced, apply to certain dealings in the Notes (including secondary market transactions) in certain circumstances. Under the Commission’s Proposal the FTT could apply in certain circumstances to persons both within and outside of the participating Member States. Generally, it would apply to certain dealings in the Notes where at least one party is a financial institution, and at least one party is established in a participating Member State. A financial institution may be, or be deemed to be, ‘‘established’’ in a participating Member State in a broad range of circumstances, including (a) by transacting with a person established in a participating Member State or (b) where the financial instrument which is subject to the dealings is issued in a participating Member State. A joint statement issued in May 2014 by ten of the eleven participating Member States indicated an intention to implement the FTT progressively, such that it would initially apply to shares and certain derivatives, with this initial implementation occurring by 1 January 2016. The FTT, as initially implemented on this basis, may not apply to dealings in the Notes. The FTT proposal remains subject to negotiation between the participating Member States. It may therefore be altered prior to any implementation. Additional EU Member States may decide to participate. Prospective holders of the Notes are advised to seek their own professional advice in relation to the FTT.

Taxation in the Czech Republic THE FOLLOWING IS A SUMMARY OF CERTAIN TAX ASPECTS OF CZECH LAWS REGARDING THE ACQUISITION, OWNERSHIP, DISPOSITION AND RETIREMENT OF THE NOTES. IT DOES NOT PURPORT TO BE A COMPLETE ANALYSIS OF ALL TAX CONSIDERATIONS RELATING TO THE NOTES, WHETHER IN THE RELEVANT COUNTRIES OR ELSEWHERE. THIS SUMMARY DOES NOT TAKE INTO ACCOUNT OR DISCUSS THE TAX LAWS OF ANY COUNTRY OTHER THAN THE

185 CZECH REPUBLIC NOR DOES IT TAKE INTO ACCOUNT SPECIFIC DOUBLE TAXATION TREATIES, CREDIT OF FOREIGN TAXES, INDIVIDUAL CIRCUMSTANCES, STATUS AND FINANCIAL SITUATION OR INVESTMENT OBJECTIVES OF AN INVESTOR. THE TAX POSITION OF CERTAIN CATEGORIES OF HOLDERS OF THE NOTES (‘‘HOLDERS’’) WHO ARE SUBJECT TO SPECIAL RULES SUCH AS, FOR EXAMPLE, DEALERS IN SECURITIES, INSURANCE COMPANIES AND COLLECTIVE INVESTMENT SCHEMES, AND HOLDERS WHO HAVE (OR ARE DEEMED TO HAVE) ACQUIRED THEIR NOTES BY VIRTUE OF AN OFFICE OR EMPLOYMENT, IS NOT CONSIDERED. THIS SUMMARY DOES NOT SPECIFICALLY COMMENT ON OR TAKE INTO ACCOUNT THE IMPACT OF THE U.S. FOREIGN ACCOUNT TAX COMPLIANCE ACT (‘‘FATCA’’), EUROPEAN UNION FINANCIAL TRANSACTION TAX OR ANY OF ITS ASPECTS. THIS SUMMARY IS BASED UPON THE TAX LAWS OF THE CZECH REPUBLIC AS IN EFFECT ON THE DATE OF THIS PROSPECTUS AND IS SUBJECT TO ANY CHANGE IN LAW THAT MAY TAKE EFFECT AFTER SUCH DATE. IT IS RECOMMENDED THAT PARTIES INTERESTED IN ACQUIRING THE NOTES CONSULT THEIR LEGAL AND TAX ADVISORS WITH REGARD TO THE TAX, FOREIGN EXCHANGE AND LEGAL CONSEQUENCES OF ACQUIRING, HOLDING AND DISPOSING OF THE NOTES AND RECEIVING PAYMENTS UNDER THE TAX AND FOREIGN EXCHANGE LEGISLATION IN EFFECT IN THE CZECH REPUBLIC AND THE COUNTRIES WHERE SUCH PARTIES RESIDE, AS WELL AS COUNTRIES IN WHICH PROCEEDS FROM HOLDING OR SELLING THE NOTES COULD BE TAXED.

Taxation of Interest Income by Czech Holders Interest income (which may include also the difference between the selling price of the Notes and their issue price if the Notes are sold to the Issuer) from the Notes realized generally on a cash basis by (a) an individual Holder resident in the Czech Republic for tax purposes (‘‘Czech Individual Holder’’) or by (b) an individual Holder not resident in the Czech Republic for tax purposes (‘‘Non-Czech Individual Holder’’) holding the Notes through a permanent establishment in the Czech Republic, is taxed in the general tax base and subject to personal income tax of 15%. Interest income realized generally on an accrual basis by (a) a corporate Holder resident in the Czech Republic for tax purposes (‘‘Czech Corporate Holder’’) or (b) a corporate Holder not resident in the Czech Republic for tax purposes (‘‘Non-Czech Corporate Holder’’) holding the Notes through a permanent establishment in the Czech Republic, is generally subject to Czech corporate income tax of 19%. All Holders are generally obliged to declare such income in their annual tax returns on a self-assessment basis. Interest income of certain taxpayers (e.g. foundations, Securities Traders Guarantee Fund, investment funds) may be tax exempt under certain conditions or subject to a lower rate of tax.

Taxation of Capital Gains and Losses by Czech Residents With the exception of Capital Gains and Losses from the sale of the Notes by an Individual Holder to the Issuer which is treated as interest income for Czech individual income tax purposes, all other Capital Gains and Losses are treated as other income for Czech income tax purposes. Income realized by a Non-Czech Holder, not holding the Notes through a permanent establishment in the Czech Republic, from the sale of the Notes to another Non-Czech Holder, not acquiring the Notes through a permanent establishment in the Czech Republic, will not be subject to Czech income tax. Income realized by a Non-Czech Holder, holding the Notes through a permanent establishment in the Czech Republic, from the sale of the Notes will be, unless exempt, subject to taxation in the Czech Republic. Income realized by a Non-Czech Holder, not holding the Notes through a permanent establishment in the Czech Republic, from the sale of the Notes to (a) a Czech Holder or (b) a Non-Czech Holder acquiring the Notes through a permanent establishment in the Czech Republic will be subject to taxation in the Czech Republic unless (i) the Non-Czech Holder realizing that income is resident in a country within the meaning of a double taxation treaty between such country and the Czech Republic, pursuant to the terms of which the right to tax that income is conferred exclusively to the former country, or (ii) in the case of a Non-Czech Holder who is an individual, such income is exempt from tax.

186 If income realized by a Non-Czech Holder from the sale of the Notes is subject to taxation in the Czech Republic (as discussed in the foregoing paragraphs), a Czech Holder or a permanent establishment in the Czech Republic of a Non-Czech Holder paying the income will be obliged to withhold tax security of 1% on a gross basis, unless the Non-Czech Holder is tax resident in a European Union or European Economic Area member state, or unless such obligation is waived pursuant to a prior decision of Czech tax authorities. This tax security could be, subsequently, credited against the final Czech tax liability of the Non-Czech Holder. Income realized by a Czech Holder and income realized by a Non-Czech Holder from the sale of the Notes which is subject to taxation in the Czech Republic as described above is generally subject to Czech corporate income tax of 19% or personal income tax of 15%. In the specific case of (a) a Czech Individual Holder who holds the Notes as part of their business property or (b) a Non-Czech Individual Holder holding the Notes through a permanent establishment in the Czech Republic who holds the Notes as part of their business property, income in excess of 48-times the average wage (CZK 1,245,216 for 2014) is additionally subject to a solidarity surcharge tax of 7% and also to other social security and health insurance levies. All Holders are generally obliged to declare such taxable income in their annual tax returns on a self-assessment basis. Income realized by a Czech Individual Holder or a Non-Czech Individual Holder from the sale of the Notes acquired on or after 1 January 2014 is exempt from Czech personal income tax provided that the holding period of the Notes exceeded three years and the Notes have not been held as part of business property of such individual, or, if so, the Notes will not be sold prior to the expiry of a three year period following the termination of that individual’s business activities. Furthermore, income from the sale of the Notes realized by individuals is exempt from taxation, if the annual (worldwide) income of that individual from the sale of all securities (including the Notes) does not exceed the amount of CZK 100,000. For Czech Holders and permanent establishments of Non-Czech Holders who keep books and hold the Notes as part of their business property (generally all legal entities and certain individuals) losses upon a sale of the Notes will generally be tax deductible. By contrast, losses incurred by Czech Holders and Non-Czech Holders (other than those mentioned in the previous sentence) are generally non-deductible, although losses attributable to taxable income from the sale of the Notes could be deducted from other taxable capital gains realized on the Notes or arguably also other securities within the same calendar year. Czech Holders and permanent establishments of Non-Czech Holders who are subject to Czech accounting standards for entrepreneurs or to Czech accounting standards for financial institutions may be required to revalue the Notes to fair value for accounting purposes, whereby the unrealized gains and losses would be accounted for as revenue or expense, respectively. Such revenue is generally taxable and the corresponding expense is generally tax deductible for Czech tax purposes.

Payment under the Guarantees Payments by the Guarantors under the Guarantees received by Holders are generally applied for taxation purposes towards the fulfillment of the underlying receivable of Holders from the Notes and taxed (or not taxed) with the Holders in the Czech Republic accordingly as described above. In addition, taxation at source of the payments made by the Czech Guarantors under the Guarantees may arise in the Czech Republic, in particular if the legal nature of the payment under the Guarantees is the fulfillment of the liability of the Issuer to pay interest, penalty interest or similar income on the Notes. In such a case, the Guarantor would be obliged to withhold from the payment the Czech withholding tax of 15% or 35% depending on the tax residency of the Note Holder, unless a relevant double taxation treaty provides otherwise.

187 CERTAIN ERISA CONSIDERATIONS General ERISA imposes certain requirements on employee benefit plans subject to Title I of ERISA and on entities that are deemed to hold the assets of such plans (‘‘ERISA Plans’’) and on those persons who are fiduciaries with respect to ERISA Plans. Investments by ERISA Plans are subject to ERISA’s general fiduciary requirements, including, but not limited to, the requirement of investment prudence and diversification and the requirement that an ERISA Plan’s investments be made in accordance with the documents governing the plan. Section 406 of ERISA and Section 4975 of the Code prohibit certain transactions involving the assets of an ERISA Plan (as well as those plans that are not subject to ERISA but which are subject to Section 4975 of the Code, such as individual retirement accounts (together with ERISA Plans, ‘‘Plans’’) and certain persons (referred to as ‘‘parties in interest’’ or ‘‘disqualified persons’’) having certain relationships to such Plans, unless a statutory or administrative exemption is applicable to the transaction. A party in interest or disqualified person who engages in a prohibited transaction may be subject to excise taxes and other penalties and liabilities under ERISA and the Code. Any Plan fiduciary which proposes to cause a Plan to purchase the Notes should consult with its counsel regarding the applicability of the fiduciary responsibility and prohibited transaction provisions of ERISA and Section 4975 of the Code to such an investment, and to confirm that such purchase and holding will not constitute or result in a non-exempt prohibited transaction or any other violation of an applicable requirement of ERISA. Non-U.S. plans, governmental plans and certain church plans, while not subject to the fiduciary responsibility provisions of ERISA or the prohibited transaction provisions of ERISA and Section 4975 of the Code, may nevertheless be subject to non-U.S., state, local or other federal laws or regulations that are substantially similar to the foregoing provisions of ERISA and the Code (‘‘Similar Law’’). Fiduciaries of any such plans should consult with their counsel before purchasing the Notes to determine the need for, and the availability, if necessary, of any exceptive relief under any such law or regulations.

Prohibited Transaction Exemptions The fiduciary of a Plan that proposes to purchase and hold any Notes should consider, among other things, whether such purchase and holding may involve (i) the direct or indirect extension of credit to a party in interest or a disqualified person (ii) the sale or exchange of any property between a Plan and a party in interest or a disqualified person; or (iii) the transfer to, or use by or for the benefit of, a party in interest or disqualified person, of any Plan assets. Such parties in interest or disqualified persons could include, without limitation, the Issuer, the Initial Purchasers, the Trustee, the Transfer Agent or any of their respective affiliates. Depending on the satisfaction of certain conditions which may include the identity of the Plan fiduciary making the decision to acquire or hold the Notes on behalf of a Plan, Section 408(b)(17) of ERISA and Section 4975(d)(20) of the Code or Prohibited Transaction Class Exemption (‘‘PTCE’’) 84-14 (relating to transactions effected by a ‘‘qualified professional asset manager’’) PTCE 90-1 (relating to investments by insurance company pooled separate accounts), PTCE 91-38 (relating to investments by bank collective investment funds), PTCE 95-60 (relating to investments by insurance company general accounts) or PTCE 96-23 (relating to transactions directed by an in-house asset manager) (collectively, the ‘‘Class Exemptions’’) could provide an exemption from the prohibited transaction provisions of ERISA and Section 4975 of the Code. However, there can be no assurance that any of these Class Exemptions or any other exemption will be available with respect to any particular transaction involving the Notes.

Representation and warranty Accordingly, each purchaser and subsequent transferee of a Note will be deemed to have represented and warranted that either (i) no portion of the assets used by such purchaser or transferee to acquire and hold the Notes constitutes assets of any Plan or plan subject to Similar Law, or any entity whose underlying assets are considered to include ‘‘plan assets’’ (within the meaning of Section 2510.3-101 of Title 29 of the United States Code of Federal Regulations, as modified by Section 3(42) of ERISA) of any such Plan or plan or (ii) the purchase and holding of the Notes does not and will not constitute or result in a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code or a violation under any applicable Similar Law.

188 The foregoing discussion is general in nature and is not intended to be all inclusive. Due to the complexity of these rules and the penalties that may be imposed upon persons involved in non-exempt prohibited transactions, it is particularly important that each Plan fiduciary (and each fiduciary for non-U.S., governmental or church plans subject to Similar Law) consult with its legal advisor concerning the potential consequences to the Plan or plan under ERISA, the Code or such Similar Laws of an investment in the Notes. The sale of any Notes by or to any Plan or plan is in no respect a representation by the Issuer or any of their affiliates or representatives that such an investment meets all relevant legal requirements with respect to investments by such Plans or plans generally or any particular Plan or plan, or that such an investment is appropriate for such Plans or plans generally or any particular Plan or plan.

189 LIMITATIONS ON VALIDITY AND ENFORCEABILITY OF THE GUARANTEES Set out below is a summary of certain limitations on the validity, effectiveness and enforceability of the Guarantees in each of the jurisdictions in which the Guarantors are organized. In particular, the following includes a brief description of certain aspects of bankruptcy, insolvency and certain other applicable regulations in the EU, Sweden, Poland and the Czech Republic. It is a summary only and does not include a full description of all regulations which may limit the validity, effectiveness and enforceability of the Guarantees. It should be noted that bankruptcy, insolvency or a similar proceedings, schemes and/or events, could be conducted or could occur in any of these jurisdictions, as well as in other jurisdictions. The application of these various laws in multiple jurisdictions could trigger disputes over which jurisdictions’ law should apply and could adversely affect your ability to enforce your rights and to collect payment in full under the Notes or the Guarantees. In particular, under EU regulations and regulations of EU member states, the insolvency (bankruptcy) proceedings may be initiated not only in the country where the entity is registered (incorporated) but also in other European Union member states where the bankrupt entity conducts its business activity or has assets. See ‘‘—European Union’’. Irrespective of the attempts to harmonize the bankruptcy regulations in EU member states, the regulations in various member states differ and insolvency (bankruptcy) proceedings conducted in more than one member state may create additional legal risks and costs for you. In the event that the Issuer or any or several of the Guarantors experience financial difficulty, it is not possible to predict with certainty in which jurisdiction or jurisdictions bankruptcy, insolvency or similar proceedings would be commenced, or the outcome of such proceedings.

European Union The Guarantors in Poland and in the Czech Republic are organized under the laws of member states of the EU. Pursuant to Council Regulation (EC) no. 1346/2000 on insolvency proceedings (the ‘‘EU Insolvency Regulation’’), which applies within the EU, other than Denmark, the court which shall have jurisdiction to open insolvency proceedings in relation to a company is the court of the member state (other than Denmark) where the company concerned has its ‘‘center of main interests’’ (as that term is used in Article 3(1) of the EU Insolvency Regulation). The determination of where a company has its ‘‘center of main interests’’ is a question of fact on which the courts of the different Member States may have differing and even conflicting views. Furthermore, ‘‘center of main interests’’ is not a static concept and may change from time to time. Although under Article 3(1) of the EU Insolvency Regulation there is a rebuttable presumption that a company would have its respective ‘‘center of main interests’’ in the Member State in which it has its registered office, Preamble 13 of the EU Insolvency Regulation states that the ‘‘center of main interests’’ of a debtor should correspond to the place where the debtor conducts the administration of its interests on a regular basis and ‘‘is therefore ascertainable by third parties.’’ The European Court of Justice has ruled in a recent judgment that a debtor company’s main center of interests must be determined by attaching greater importance to the place of the company’s central administration, as may be established by objective factors which are ascertainable by third parties. Where the bodies responsible for the management and supervision of a company are in the same place as its registered office and the management decisions of the company are taken in a manner that is ascertainable by third parties the presumption, that the center of the company’s main interests is located in that place, shall be irrefutable. Where a company’s central administration is, however, not in the same place as its registered office, the presence of company assets and existence of contracts for the financial exploitation of those assets in a member state other than that in which the registered office is situated cannot be regarded as sufficient factors to rebut the abovementioned presumption, unless a comprehensive assessment of all relevant factors makes it possible to establish, in a manner that is ascertainable by third parties, that the company’s actual center of management and supervision and of the management of its interests is located in that other member state. The factors to be taken into account include, in particular, all the places in which the debtor company pursues economic activities and all those in which it holds assets, in so far as they are ascertainable by third parties. If the center of main interests of a company is and will remain located in the state in which it has its registered office, the main insolvency proceedings in respect of such company under the EU Insolvency

190 Regulation would be commenced in such jurisdiction and accordingly a court in such jurisdiction would be entitled to commence the types of insolvency proceedings referred to in Annex A to the EU Insolvency Regulation. Insolvency proceedings opened in one Member State under the EU Insolvency Regulation are to be recognized in the other Member States (other than Denmark), although secondary proceedings may be opened in another Member State. If the ‘‘center of main interests’’ of a debtor is in one Member State (other than Denmark) under Article 3(2) of the EU Insolvency Regulation, the courts of another Member State (other than Denmark) have jurisdiction to open ‘‘territorial proceedings’’ only in the event that such debtor has an ‘‘establishment’’ in the territory of such other Member State. The effects of those territorial proceedings are restricted to the assets of the debtor located in the territory of such other Member State. If the company does not have an establishment in any other Member State, no court of any other Member State has jurisdiction to open territorial proceedings in respect of such issuer or guarantor under the EU Insolvency Regulation. Irrespective of whether the insolvency proceedings are main or territorial proceedings, such proceedings will always, subject to certain exemptions, be governed by the lex fori concursus, i.e., the local insolvency law of the court which has assumed jurisdiction for the insolvency proceedings of the debtor. In the event that the Issuers or any provider of collateral experiences financial difficulty, it is not possible to predict with certainty in which jurisdiction or jurisdictions insolvency or similar proceedings will be commenced, or the outcome of such proceedings. Applicable insolvency laws may affect the enforceability of the obligations of the Issuers and the collateral provided by the Issuers or any other company. The insolvency, administration and other laws of the jurisdictions in which the respective companies are organized or operate may be materially different from, or conflict with, each other and there is no assurance as to how the insolvency laws of the potentially involved jurisdictions will be applied in relation to one another.

Sweden Applicable Insolvency Law A Swedish party will in principle be subject to insolvency proceedings covered by the EU Insolvency Regulation if it has its ‘‘center of main interest’’ in Sweden. The Issuer is incorporated under the laws of Sweden and as such any insolvency proceedings applicable to the Issuer including any and all of its assets (in Sweden and abroad) will, as a starting point and by virtue of Article 4 of the EU Insolvency Regulation, be governed by Swedish insolvency law (lex fori concursus).

Insolvency proceedings under Swedish law Under Swedish law, a debtor company may be subject to one of two types of insolvency proceedings: bankruptcy pursuant to the Swedish Bankruptcy Act (Sw. konkurslagen (1987:672)), as amended (the ‘‘Swedish Bankruptcy Act’’), and reorganization pursuant to the Swedish Company Reorganization Act (Sw. lagen (1996:764) om foretagsrekonstruktion¨ ), as amended (the ‘‘Swedish Reorganization Act’’).

Bankruptcy pursuant to the Swedish Bankruptcy Act General Pursuant to the Swedish Bankruptcy Act, if a company is unable to pay its debts when they fall due and such inability is not merely temporary, it is deemed insolvent and can be declared bankrupt following a bankruptcy petition filed with the court by the debtor or by a creditor of the debtor (who does not have satisfactory security for its claim). In the event of bankruptcy the court will appoint a receiver in bankruptcy (Sw. konkursforvaltare¨ ) who will work in the interest of all creditors with the objective of selling the debtor’s assets and distributing the proceeds among the creditors. The purpose of bankruptcy proceedings is to wind up the company in such a way that the company’s creditors receive as high a proportion of their claims as possible. The receiver in bankruptcy is required to safeguard the assets and can decide to continue the business for a certain period or to close it down, depending on what is best for all creditors. In general, the receiver in bankruptcy is required to sell the assets of the debtor as soon as possible and to distribute the proceeds in accordance with the mandatory priority rules. In the interim, the receiver will take over the management and control of the company. The company’s directors and/or managing director will no longer be entitled to represent the company or dispose of the company’s assets.

191 Effect of Bankruptcy on the Bankruptcy Debtor’s Contracts The declaration of bankruptcy does not automatically terminate existing contracts; instead, the receiver may, in relation to certain contracts, in its discretion choose to have the bankruptcy estate itself become party to any such existing contracts. A clause in such a contract which provides that the contract is terminated by reason of a bankruptcy petition or similar proceeding is likely to be deemed unenforceable. If the estate enters into such a contract and performance by the creditor is due, the creditor may generally demand that the estate perform its obligations as well or, if a grace period has been granted, request that the estate, without unreasonable delay, provides acceptable security for its performance. If performance by the creditor is not due, the creditor may request security where this is necessary in order to protect the creditor against loss. If the estate does not enter into the contract within a reasonable time after the creditor’s demand or if it does not comply with the creditor’s request to provide security, the creditor may terminate the contract.

Order of Priorities When distributing the proceeds, the receiver must follow the mandatory provisions of the Swedish Rights of Priority Act (Sw. form¨ ansr˚ attslagen¨ (1970:979)), as amended (the ‘‘Swedish Rights of Priority Act’’), which states the order in which creditors have a right to be paid. As a general principle, in bankruptcy proceedings competing claims have equal right to payment in relation to the size of the amount claimed from the debtor’s assets. However, preferential or secured creditors have the benefit of payment before other creditors. Moreover, the priority of a claim could also be affected if it is subordinated, e.g. if the creditor has entered into an agreement stipulating such subordination. There are two types of preferential rights: specific and general. Specific preferential rights apply to certain specific property in the event of execution of a debt and bankruptcy and give the creditor a right to payment from such property. General preferential rights cover all property belonging to the insolvent company’s estate in bankruptcy, which is not covered by specific preferential rights, and give the creditor a right to payment derived from such property. Claims that do not carry any of the above mentioned preferential rights or exceed the value of the security provided for such claim (to the extent of such excess), are non-preferential and are of equal standing as against each other.

Reorganization of a company pursuant to the Swedish Reorganization Act General The Swedish Reorganization Act provides companies facing difficulty in meeting their payment obligations with an opportunity to resolve these obligations without being declared bankrupt. The debtor or a creditor of a debtor may petition for company reorganization. If a creditor petitions for company reorganization the debtor’s consent to the reorganization is required. Prerequisites for an approval of a petition for company reorganization are that it can be assumed that the debtor is unable to pay its due debts or such inability will occur shortly and there is a possibility that the reorganization will be successful in resolving the company’s financial difficulties. Corporate reorganization proceedings shall, as a main rule, terminate within three months from commencement but may under certain conditions be extended for up to one year.

Administrator An administrator (Sw. rekonstruktor¨ ) is appointed by the court and supervises the day-to-day activities of the debtor in order to accomplish the reorganization. The administrator safeguards the interests of creditors as well as the debtor. In distinction from bankruptcy the debtor remains in full possession of the business except that the consent of the administrator is required for important decisions such as (i) paying a debt or granting security for a debt that arose prior to the order of reorganization, (ii) assuming new obligations or (iii) transferring, pledging or granting rights in respect of assets of significant importance to the business. However, the absence of such consent does not affect the validity of the transaction.

Reorganization Plan, Creditors’ Meeting and Creditors’ Committee Upon opening of corporate reorganization proceedings, the administrator must notify the creditors of the reorganization proceedings and draw up a reorganization plan specifying the proposed action to be taken to resolve the debtor’s financial difficulties. A creditors’ meeting will be held at which the creditors will be given the opportunity to express their opinions as to whether the reorganization should continue. Upon the request of any of the creditors, the court shall appoint a creditors’ committee. The administrator shall, if possible, consult with the creditors’ committee prior to taking any significant decisions.

192 Moratorium The corporate reorganization proceedings do not have the effect of terminating existing contracts with the debtor. Furthermore, the opening of corporate reorganization proceedings entails limitations on the contracting party’s right to terminate a contract, e.g., due to the debtor’s delay in payment. Such limitations are similar to what is stated above in respect of a bankruptcy estate’s right to enter into existing contracts. However, the limitations are not applicable where a creditor has security over, inter alia, financial instruments or receivables originating from a loan granted by a credit institution. During the reorganization procedure, the debtor’s business activities continue in the ordinary course of business. However, the procedure includes a suspension of payments to creditors and any petition for bankruptcy in respect of the debtor will, subject to certain exceptions, be stayed. Moreover, the debtor may not pay a debt that fell due prior to the reorganization order without the consent of the administrator. Such consent may only be granted should there be exceptional reasons for doing so.

Public Composition Proceedings A debtor may apply to the court requesting public composition proceedings (Sw. offentligt ackord), which means that the amount of a creditor’s claim may be reduced. The proposal for a public composition must meet certain requirements, such as that a sufficient proportion of the creditors which are allowed to vote in respect of a sufficient proportion of the outstanding claims, vote in favour of such public composition. Creditors with set-off rights and secured creditors will not participate in the composition unless they wholly or partly waive their set-off rights or priority rights. Should the security not cover a secured creditor’s full claim, the remaining claim will, however, be part of the composition. A specific creditors’ meeting is convened to vote on the proposed composition. The public composition is binding on all creditors that were entitled to participate, i.e., also creditors who have not attended the creditors’ meeting.

Recovery in bankruptcy and in reorganization In bankruptcy and—if certain conditions are met—company reorganization proceedings, transactions can (in certain circumstances and subject to a time limit) be reversed and the assets shall then be returned to the bankruptcy estate or the company subject to company reorganization. Broadly, these transactions include, among others and subject to further prerequisites, situations where the debtor has (a) conveyed property fraudulently or preferentially to one creditor to the detriment of its other creditors, (b) created a new security interest, granted a guarantee or security that was either not stipulated at the time when the secured obligation arose or not perfected without delay after such time and the delay is not considered to be ordinary or (c) paid a debt that is not due or that is considerable compared to the value of the debtor’s assets or if the payment is made by using unusual means of payment. In the majority of situations, a claim for recovery can be made concerning actions that were made during the three months preceding the commencement of the relevant insolvency proceedings. In certain situations longer time limits apply. These include, among others, situations where the other party to an agreement or other arrangement is deemed to be a closely related party to the debtor, such as a subsidiary or parent company.

Liquidation due to capital deficiency Pursuant to the Swedish Companies Act (Sw. aktiebolagslagen (2005:551)), as amended (the ‘‘Swedish Companies Act’’), whenever a company’s board of directors has a reason to assume that, as a result of losses or reductions in the value of the company’s assets or any other event, the company’s equity is less than half the registered share capital, the company’s board of directors shall prepare a balance sheet for liquidation purposes (Sw. kontrollbalansrakning¨ ) and have it examined by the company’s auditors. The same obligation arises if the company in connection with enforcement pursuant to Chapter 4 of the Swedish Enforcement Code (Sw. utsokningsbalken¨ (1981:774)) is found to lack seizable assets. If the balance sheet for liquidation purposes shows that the equity of such company is less than half of the registered share capital, the board of directors shall, as soon as possible, issue notice to attend a shareholders’ meeting which shall consider whether the company shall go into liquidation (initial shareholders’ meeting). The balance sheet for liquidation purposes and an auditor’s report with respect thereto shall be presented at the initial shareholders’ meeting. If the balance sheet for liquidation purposes presented at the initial shareholders’ meeting fails to show that, on the date of such meeting, the equity of the company amounts to the registered share capital and the initial shareholders’ meeting has not resolved that the company shall go into liquidation, the shareholders’ meeting shall, within eight months of the initial shareholders’ meeting, reconsider the issue whether the company shall go into liquidation (second

193 shareholders’ meeting). Prior to the second shareholders’ meeting, the board of directors shall prepare a new balance sheet for liquidation purposes and cause such to be reviewed by the company’s auditors. The new balance sheet for liquidation purposes and an auditor’s report thereon shall be presented at the second shareholders’ meeting. A shareholders’ resolution on liquidation of the company shall be registered with the Swedish Companies Registration Office (Sw. Bolagsverket), which shall appoint a liquidator. Should the shareholders not resolve on such voluntary liquidation where required (which are where (i) a second shareholders’ meeting is not held within the period of time stated above, or (ii) the new balance sheet for liquidation purposes which was presented at the second shareholders’ meeting was not reviewed by the company’s auditor or fails to show that, on the date of such meeting, the equity of the company amounts to at least the registered share capital), the court may put the company into compulsory liquidation and appoint a liquidator. The liquidator takes over management and control of the company and shall sell the company’s assets and settle the company’s debts with the proceeds. The liquidator shall give notice to the company’s unknown creditors and creditors that have not lodged their claims with the liquidator within six months following such notice will have forfeited their rights to their claims. If the board of directors fails to comply with the requirements relating to liquidation due to capital deficiency (such as failure to prepare a balance sheet for liquidation purposes and have the auditors examine it in case there are reasons to assume that the company’s equity is less than half of its registered share capital), the members of the board of directors may be liable for obligations incurred by the company during the period of such failure to act. Also, any person who conducts business on the company’s behalf with knowledge of the board of directors’ failure to act may incur a similar liability. Liability shall however not be incurred by any person (including any member of the board of directors) who proves that he or she was not negligent.

Poland Insolvency The Issuer’s obligations under the Notes are or will be guaranteed by Synthos S.A. and Synthos Dwory 7 incorporated in Poland (the ‘‘Polish Guarantors’’) and SYNTHOS Kralupy a.s., TAMERO INVEST s.r.o. and SYNTHOS PBR s.r.o. (the ‘‘Czech Guarantors,’’ together with the Polish Guarantors, the ‘‘Guarantors’’). If a Guarantor’s center of main interests is in Poland, then pursuant to the Polish Bankruptcy Law and the EU Insolvency Regulation, bankruptcy proceedings of that Guarantor should be conducted before a Polish court. The EU Insolvency Regulation states that the place of the registered office is presumed to be the center of its main interests in the absence of proof to the contrary. Consequently, in the event of the insolvency of a Polish Guarantor, bankruptcy proceedings would be governed by Polish law. Any judgment opening insolvency proceedings granted by a Polish court will be recognized in all other EU member states (except for Denmark) from the time that judgment becomes effective in Poland. Recognition of these bankruptcy proceedings will not preclude the opening of secondary bankruptcy proceedings describe in more detail below. Pursuant to the Insolvency Regulation, in certain circumstances, bankruptcy proceedings may be initiated not only in a EU member state where there is a Guarantor’s center of main interests but also in other EU member state where a Guarantor has its ‘‘establishment,’’ i.e., any place of operations where the debtor carries out a non-transitory economic activity with human means and goods. The effects of those bankruptcy proceedings will be restricted to the assets of that Guarantor situated in the territory of that other EU member state. If bankruptcy proceedings have been opened in a EU member state where there is a Guarantor’s center of main interests, any bankruptcy proceedings opened subsequently in other EU member state where that Guarantor has its establishment will be secondary bankruptcy proceedings. Those secondary bankruptcy proceedings will be opened without that Guarantor’s insolvency being examined in that other EU member state. As a general rule, the law applicable to secondary bankruptcy proceedings will be that of the EU member state within the territory of which the secondary proceedings are opened. According to the Polish Bankruptcy Law, a Polish Guarantor as a debtor will be declared bankrupt: (i) if it does not fulfill its due and payable (wymagalne) pecuniary obligations, or (ii) if its liabilities exceed the total value of its assets (even if it discharges those liabilities on a current basis). Each individual who has the right to represent the Polish Guarantor (whether alone or with others) is obligated to file a motion to declare the Polish Guarantor bankrupt within two weeks from when the grounds for declaration of bankruptcy above are met. In practice, it is difficult to determine the day from which the two-week

194 time-limit for filing the motion should be counted. Additionally, each of the Polish Guarantor’s creditors may file for bankruptcy of the relevant Polish Guarantor. There are two types of bankruptcy proceedings under Polish law: (i) ‘‘liquidation’’ bankruptcy proceedings, the principal aim of which is the satisfaction of the creditors from the proceeds obtained after sale of the debtor’s assets (such bankruptcy proceedings would result in dissolution of the debtor’s company unless otherwise permitted by law), and (ii) ‘‘arrangement’’ bankruptcy proceedings essentially aimed at satisfaction of the creditors through a settlement with the debtor (such bankruptcy proceedings could allow the debtor to continue its business activity also following the completion of these proceedings).

Liquidation bankruptcy proceedings In the event of liquidation bankruptcy proceedings, the court appoints a bankruptcy receiver (syndyk) who takes over the management of the bankrupt’s assets. From this moment on, the debtor—the bankrupt entity is replaced by the receiver who administers the bankrupt entity’s assets and represents the bankrupt entity. The bankrupt entity’s assets become bankruptcy assets which will be liquidated to pay off creditors. The receiver prepares a list of the assets. Upon the declaration of bankruptcy all of the debtor’s debts become due and payable. Interest may be satisfied from the bankruptcy estate only for the period up to the date of the declaration of bankruptcy.

Arrangement bankruptcy proceedings In the event of arrangement bankruptcy proceedings, the court appoints a court supervisor (nadzorca s˛adowy) or an administrator (zarz˛adca) instead of the bankruptcy receiver. A court supervisor is appointed in a situation where the debtor will continue to manage its assets, whereas an administrator is appointed where the debtor is deprived of the right to manage its assets. If the required majority of creditors vote in favor of an arrangement, the arrangement is accepted and then approved by the court, unless the arrangement is contrary to the rules of law or it is obvious that it will not be performed. The court’s decision approving the arrangement may be appealed. The accepted arrangement is binding on all creditors, whose receivables are covered by the arrangement in accordance with the provisions of the Polish Bankruptcy Law. However, Polish law provides for exclusions of certain receivables from the arrangement. These include, inter alia: (i) receivables secured with mortgages, pledges, registered pledges, treasury pledges and/or maritime pledges; (ii) receivables under derivative or repo transactions; and (iii) receivables under employment contracts. Rules on which the bankrupt entity’s debts will be repaid are stipulated in the arrangement. The most typical arrangement involves a situation where the creditors are paid a portion of the debts and the bankrupt entity continues its operations. It is also possible, however, to accept a so-called liquidation arrangement where a determination is made how the bankrupt entity’s assets and the business will be liquidated. Once bankruptcy is declared (irrespective of its type), no mortgage, pledge, registered pledge, treasury pledge and/or maritime mortgage can be established over the bankrupt entity’s assets in order to secure a receivable debt arisen before the declaration of bankruptcy. This does not apply to a mortgage where a motion for entering a mortgage was filed with the court within the six months preceding the filing of the bankruptcy petition. Provisions of a contract which provide, in the event of the declaration of bankruptcy, for a revision or for the termination of a legal relationship to which the bankrupt entity is a party, are invalid. A provision of a contract to which the bankrupt entity is a party, which provision renders the achievement of the goal of the bankruptcy proceedings impossible or difficult are ineffective against the bankruptcy estate. If court proceedings against the bankrupt entity are pending on the day of the bankruptcy declaration in any common courts, then such proceedings are in some cases discontinued. If proceedings were pending in which the bankrupt entity was the plaintiff, the receiver or the administrator replaces the bankrupt entity. If a court supervisor is appointed, he acts together with the bankrupt entity in the proceedings. If enforcement proceedings regarding the receivables included in the arrangement by operation of law and initiated prior to the declaration of bankruptcy were pending against the bankrupt entity on the date of the bankruptcy declaration, they are suspended with effect from the date of the bankruptcy declaration and the proceeds received are transferred to the bankruptcy estate after the decision on the declaration of bankruptcy becomes final. Finally, all the arbitration clauses expire with effect from the date of the bankruptcy declaration and if arbitration proceedings were pending on the date of the bankruptcy declaration, such proceedings are discontinued.

195 Creditors have a right to submit their claims within the time limit indicated in a decision declaring bankruptcy. Claims supported by evidence of claims are usually admitted, i.e., included in the list of liabilities. If a claim is not included in the list, then a creditor has a right to appeal. The procedural requirements for submitting a claim are very formalistic. In case of liquidation bankruptcy proceedings, creditors under the Guarantee will be satisfied from the proceeds obtained from the sale of a Polish Guarantor’s assets. When the repayment of receivables arising under the Guarantee become part of an arrangement in arrangement bankruptcy proceedings, there is a possibility that such receivables may be decreased on the basis of a decision of the creditors (such decisions would be subject to certain mandatory rules of the Polish Bankruptcy Law). The proceeds separated for satisfaction of a receivable whose repayment depends on a condition precedent will be handed out to the creditor if he proves that the condition has been fulfilled; otherwise this amount will be deposited with the court. The proceeds separated for satisfaction of a receivable which is not yet enforceable shall be deposited with the court. As a rule, creditors’ receivables towards a Polish Guarantor will be divided into five categories and creditors having their receivables in a lower ranking category may not obtain satisfaction before all receivables in the higher ranking category have been fully satisfied. The first three categories concern, inter alia, the following receivables: (i) the costs of bankruptcy proceedings; (ii) payments due under contracts of employment for the period before the date of declaration of bankruptcy; and (iii) payments to the state such as taxes and social security obligations concerning the employees. The fourth category includes, inter alia, commercial receivables which do not fall within the fifth category, together with interest for the year before the date of the bankruptcy declaration. The last category includes, inter alia, interest which does not belong to any of the higher categories. Within each category, each receivable is satisfied pro rata to the total value of receivables listed in such category. If an asset owned by the bankrupt entity (i.e., a Polish Guarantor) is subject to a mortgage, pledge, registry pledge, treasury pledge or a maritime mortgage, then a creditor in whose favor the security has been established has a right to receive proceeds from the sale of that asset before other creditors (with few exceptions relating to mortgages and maritime mortgages such as, for instance, a certain portion of alimony claims or employee salaries). Where a number of mortgages have been established on a real estate which considerably exceed its value, creditors are repaid from such real estate according to their priority.

Effectiveness of the Guarantee in case of a Polish Guarantor’s bankruptcy Under the Polish Bankruptcy Law, the Guarantees granted by the Polish Guarantors may be declared ineffective or deemed to be ineffective in certain situations relating to the hardening periods set forth in the Polish Bankruptcy Law. In particular, ineffective towards the bankruptcy assets are security and the payment of an unenforceable debt (dług niewymagalny), given or made by the bankrupt entity within two months before the filing of the bankruptcy petition. However, one who received the payment may, by bringing an action or charge, seek the recognition of such acts as effective if at the time when the same were performed he was unaware of the existence of grounds for the declaration of bankruptcy. Furthermore, ineffective towards the bankruptcy assets are Guarantees granted within six months before the filing of the bankruptcy petition if made by the bankrupt entity with its partners or shareholders, their representatives or spouses of the same, or affiliates, their partners or shareholders, representatives, or spouses of the same as well as with another company, in the event of either being the controlling company. The Guarantees granted within one year before the filing of the motion for bankruptcy will also be deemed ineffective towards the bankruptcy estate if the value of the Guarantees significantly (w ra˙z˛acym stopniu) exceeded consideration for a Polish Guarantor, or there was no consideration for a Polish Guarantor. Furthermore, if a Polish Guarantor is declared a subject of liquidation bankruptcy proceedings, its debts arising under the Guarantee will become immediately due and payable.

Limitations on Validity and Enforceability of the Guarantees Polish law does not provide for specific limitations on financial assistance with respect to a limited liability company (sp. z o.o.). However, a Polish limited liability company should comply with both the general corporate laws and the insolvency laws which may provide for certain limitations on the enforcement of the Guarantees.

196 In accordance with Article 189 section 2 of the Polish Commercial Companies Code (Kodeks Spolek´ Handlowych) of September 15, 2000 (Journal of Laws no. 94, item 1037, as amended), shareholders may not receive, on whatever account, payments out of a company’s assets which are necessary for the share capital to be fully paid up. A breach of this rule results in the shareholders’ obligation to return the payments up to the amount of the share capital. Therefore, any guarantee under the Guarantees by any of the Guarantors incorporated under Polish law will be affected, or could be set aside, to the extent it would result in a reduction of its assets necessary to cover in full its share capital in breach of Article 189 section 2 of the Polish Commercial Companies Code. In relation to a Polish joint stock company (społka´ akcyjna), Article 344 of the Polish Commercial Companies Code stipulates that no payments for shares may be reimbursed to a shareholder, either fully or partially, except as allowed by the law throughout the duration of the company. The obligations under the Guarantees by any of the Guarantors incorporated under Polish law are also subject to the application of laws on bankruptcy and insolvency, and the laws on rehabilitation proceedings, as set out in the Polish Bankruptcy Law. Specifically, pursuant to Article 11 section 2 of the Polish Bankruptcy Law, a corporate entity is deemed to be insolvent if its liabilities exceed the value of its assets (property), even if it discharges those liabilities on a current basis. Given certain legal controversies regarding the application of this rule, and in order to mitigate the possibility that a Polish Guarantor could be declared bankrupt under this rule, the liability of certain Guarantors incorporated under Polish law on account of payments under the Guarantees may be limited to the amount equivalent to the Polish Guarantor’s net positive assets.

Perfection requirements Under Polish law certain security interests, such as registered pledges, financial pledges and mortgages will be validly established after the fulfillment of certain perfection requirements. The registered pledge will be established upon entering such pledge into the registry of pledges maintained by the pertinent court. There will be a time lapse between (a) filing of the application for the entry of certain security interests and (b) the fulfillment of additional perfection requirements. For example, in the case of registered pledges, the time lapse typically takes from one to four weeks, in all cases depending on a given register and provided that the applications were properly filed and paid for. Moreover, the pledge over shares of the Polish Guarantors will become effective against the Polish Guarantor once the Polish Guarantor is notified of the establishment of such pledge.

Czech Republic The Issuer’s obligations under the Notes are or will be guaranteed by Synthos S.A. and Synthos Dwory 7 incorporated in Poland (the ‘‘Polish Guarantors’’) and SYNTHOS Kralupy a.s., TAMERO INVEST s.r.o. and SYNTHOS PBR s.r.o. (the ‘‘Czech Guarantors’’ together with the Polish Guarantors (the ‘‘Guarantors’’). The Czech Guarantors are incorporated under the laws of the Czech Republic and, in the event of an insolvency event affecting these entities, insolvency proceedings may be initiated in the Czech Republic in respect of the respective Czech Guarantors or their assets. If Czech Guarantors become insolvent, there is a risk that holders of Notes may not be able to fully enforce their rights under the Notes and the Guarantees provided by the Czech Guarantors in the Czech Republic and that the enforcement of such rights may be considerably delayed. Czech insolvency laws are set out in the Czech Act No. 182/2006 Coll. on insolvency and methods of its resolution (as amended, the ‘‘Insolvency Act’’). Additionally, despite recent legislative developments, the interpretation of certain provisions of Czech law, in particular, the Insolvency Act, are not well established due to the limited amount of precedents involving sophisticated commercial and financial transactions between private parties. Finally, obtaining judicial enforcement of creditors’ rights under Czech law involves a process that could take several years to complete. Information relating to the insolvency proceedings initiated in respect of debtors in the Czech Republic is publicly accessible in the insolvency register maintained in electronic form by the Czech Ministry of Justice. Furthermore, EU insolvency law may be applicable as set out above. With effect from January 1, 2014, the Czech Civil Code and Czech Act on Corporations (as well as amendments to the Insolvency Act) became effective in the Czech Republic and replaced the original Czech Civil Code and Czech Commercial Code and substantially changed Czech civil law (and some of the insolvency rules as well as financial assistance regulations). Such legislation is based on the principle of discontinuity from the previous legal regime, introduces new legal concepts and phraseology and it is currently uncertain how this new legislation will be applied and interpreted by the Czech Courts.

197 Definition of Insolvency Insolvency in the Czech Republic is regulated by the Insolvency Act and insolvency proceedings are held before the insolvency courts. Insolvency proceedings are generally applicable to all persons, including legal entities. Under the Insolvency Act, a debtor is insolvent (upadek´ ) in two situations: (i) if it is unable to meet its monetary obligations (platebn´ı neschopnost), or (ii) if it is over-indebted (pˇredluˇzen´ı). A debtor is unable to meet its monetary obligations (platebn´ı neschopnost) if it (a) has at least two creditors, (b) has monetary obligations overdue for more than 30 days and (c) is unable to satisfy such obligations. A debtor is deemed unable to satisfy its monetary obligations in the event that (i) the debtor has failed to make payments on a substantial part of its monetary obligations, or (ii) the debtor is in default of payment of its monetary obligations for more than three months, or (iii) satisfaction of some of the claims against the debtor by means of a court enforcement or execution by a court appointed executor is impossible or (iv) the debtor fails to submit lists of its property, obligations and employees to the insolvency court following a request from such court. Over-indebtedness (pˇredluˇzen´ı) means that the debtor has at least two creditors and the sum of its liabilities exceeds the value of its assets. For the purposes of the debtor’s asset valuation, the manner in which a debtor conducts its business and manages its assets on an on-going basis and anticipated cash flow are taken into consideration, if it can be reasonably expected that the debtor will be able to continue to manage its assets or operate its business. As there is no exact guidance as to calculation of the value of a debtor’s assets, it may be, in certain instances, difficult to determine whether the debtor meets the over-indebtedness criterion and the views of the debtor and its creditors may vary in this regard. Moreover, in the Czech insolvency practice, it is unclear whether over-indebtedness (pˇredluˇzen´ı) of a debtor should be determined on the basis of the debtor’s financial statements, the real market value of the debtor’s assets or other criteria. Over-indebtedness (pˇredluˇzen´ı) as a situation constituting insolvency applies only to individuals carrying on business activities for profit (an ‘‘entrepreneur’’) or legal entities (whether or not such legal entities are entrepreneurs). The Insolvency Act also governs an impending insolvency (hroz´ıc´ı upadek´ ), which applies when it is reasonable to expect, in light of all relevant circumstances, that the debtor will be unable to satisfy a substantial part of its monetary obligations in a due and timely manner.

Commencement of the Insolvency Proceeding Insolvency proceedings are commenced upon an insolvency petition being filed by either the debtor or a creditor. A debtor who is an entrepreneur or a legal entity is required under the Insolvency Act to file an insolvency petition after it learns, or should have learned, while acting with due care, of its insolvency. Such obligation also applies to the statutory representatives of the debtor, its statutory bodies and liquidators. In the event that the insolvency petition is not duly filed, the debtor, its statutory representatives, its statutory body or the liquidator shall be liable for damages suffered by the creditors as a result of such failure. Only the debtor may file the insolvency petition for an impending insolvency (hroz´ıc´ı upadek´ ). Upon the commencement of insolvency proceedings, the debtor’s right to dispose of its property and the creditor’s right to enforcement are both limited pursuant to the Insolvency Act. The insolvency court shall decide on the insolvency petition without undue delay following its delivery to the insolvency court and, in the case of an insolvency petition filed by the debtor, within 15 days following its delivery to the insolvency court. Together with the decision on insolvency, the insolvency court may (when applicable) decide on the method of its resolution or issue a separate decision on the method of insolvency resolution no later than three months following the decision on insolvency but not, in any event, prior to the creditors’ meeting summoned by the resolution on insolvency.

Insolvency Resolution The Insolvency Act provides for the following types of insolvency resolution: (i) bankruptcy (konkurs), (ii) reorganization (reorganizace) and (iii) the debt discharge (oddluˇzen´ı). Bankruptcy is the most frequent method of dealing with a debtor’s insolvency. The general purpose of bankruptcy is liquidation of the debtor’s business (although it should be noted that the debtor’s business may, subject to the conditions set out in the Insolvency Act, be continued by the insolvency trustee during bankruptcy and sold as a going concern) and satisfaction of creditors from the debtor’s assets forming the estate property (majetkova´ podstata) (the ‘‘Estate Property’’). Upon declaration of bankruptcy, non-mature claims become due and payable and court or arbitration, administrative or other proceedings concerning

198 the Estate Property involving the debtor are suspended, unless the Insolvency Act stipulates otherwise. The Insolvency Act further provides for specific provisions concerning the termination of particular types of agreements as a result of the declaration of bankruptcy. With respect to executory contracts (i.e., agreements containing unperformed acts of both the debtor and the contracting party at the time of the declaration of bankruptcy), the insolvency trustee shall be entitled to perform such agreement on behalf of the debtor or it may refuse to perform such agreements. In bankruptcy, the debtor’s assets are realized (sold) at a (public or judicial) auction or outside an auction (i.e., direct sale) and the proceeds of such realization are distributed among debtor’s creditors in accordance with the Insolvency Act. Creditors with secured claims, whether a pledge or right of retention or other security recognized by the Insolvency Act, shall generally be satisfied within the bankruptcy from the proceeds of the sale of the relevant secured assets (after deduction of costs and fees as described below) with priority over creditors with unsecured claims. The Insolvency Act grants certain rights to secured creditors, including the right to instruct the insolvency trustee (or the person entitled to dispose with the Estate Property respectively) in the administration and sale of the secured assets subject to the terms of the Insolvency Act. Any proceeds received from the sale of the secured asset are reduced by the costs and fees associated with enforcement and administration, which are, in principle, capped at 5.0% and 4.0% (unless the insolvency court rules otherwise), respectively, of the proceeds of such enforcement, and by remuneration of the insolvency trustee set forth in the regulation of the Czech Ministry of Justice No. 313/2007 Coll. (i.e., currently between 1.0% and 9.0% of the net proceeds of such enforcement, depending on the value of the security in question). The general purpose of reorganization is the preservation of the debtor’s business as a going concern and the restructuring of its debt. Reorganization is only available to an entrepreneur debtor and, with certain exceptions, solely with respect to debtors with at least 50 employees or a total annual net turnover of at least CZK 50 million for the accounting period immediately preceding the filing of the insolvency petition. The reorganization may be proposed by either the debtor or a creditor within prescribed statutory periods. All details of the reorganization, including restructuring of the debtor’s indebtedness and any corporate restructuring, divestment of assets or other steps required to effect the reorganization, are included in a restructuring plan. The restructuring plan is subject to general approval of creditors formed in classes for the purposes of plan approval. The plan needs to comply with statutory requirements, including the fairness of the plan and its approval by all classes of creditors. Final approval on the restructuring plan lies with the insolvency court, which can confirm the plan not approved by all classes, provided that certain statutory requirements are met. The resolution of the insolvency court may be contested by the dissenting creditors (i.e., those which voted against the plan) if it fails to comply with the statutory requirements. Debt discharge is not available to legal entities that are entrepreneurs and is therefore not described further.

Claim Registration in Insolvency After an insolvency petition has been filed and the insolvency court declares a debtor insolvent, its creditors must register their claims within two months. Claims in a foreign currency shall be converted into CZK at the official exchange rate issued by the Czech National Bank as of the date of the commencement of insolvency proceedings or, if earlier, as of the due date of the relevant claim. Claims registered after the deadline has expired will not be satisfied in the insolvency proceedings. Specific regime applies to known creditors from the EU (apart from Denmark). Registered claims are subject to review and challenge by the insolvency trustee and by the debtor’s other creditors (effective only in bankruptcy) and the debtor itself (fully effective only in reorganization). Challenged claims are to be determined in separate court proceedings (so called incidental disputes). If the insolvency court determines that a creditor’s legitimate claim is less than 50% of the amount registered by such creditor, such claim is disallowed in its entirety in the insolvency proceeding, unless the amount of the claim was dependent on the expert valuation or the court’s consideration. Upon the proposal of the insolvency trustee, a creditor may be ordered by the insolvency court to pay to the Estate Property a sum not exceeding the difference between the amount registered by such creditor and the amount determined by the insolvency court to be such creditor’s legitimate claim. Under the Insolvency Act, the person who signed the application to the insolvency court on behalf of such creditor is jointly liable for such obligation. Similar sanctions are applicable for secured creditors if the insolvency court determines that the secured creditor has the right for compensation in the extent lower than 50% of the amount of the registered secured claim or that the security is of worse priority than registered.

199 Limitations of and Challenges to Guarantees Under Czech law, a transaction (including granting of security or provision of a guarantee) may be voidable (ineffective vis-a-vis` creditors) or may be otherwise set aside under certain circumstances including under the Insolvency Act or the Czech Civil Code (as defined above).

Insolvency Certain acts or omissions of a debtor can be voided under the Insolvency Act if (i) the debtor disposes of Estate Property following the commencement of an insolvency proceeding in breach of the limitations stipulated by the Insolvency Act; or (ii) the debtor acts in a manner (a ‘‘legal act’’) which decreases the possibility that its creditors will be satisfied or by which the debtor favors certain creditors over others, namely if: • the debtor provides performance to a counterparty without consideration or for consideration which is substantially lower than usual price for the performance provided by the debtor (a transaction at undervalue); • as a result of the debtor’s legal act a particular creditor receives, to the detriment of the other creditors, more favorable recovery than it would have been entitled to in bankruptcy (a preference); and • the debtor knowingly acts in a manner which is detrimental to the interests of a particular creditor if such intention was known to the other party or must have been known with reference to all the circumstances (a fraudulent transfer). In relation to the above legal acts, the insolvency trustee may make an application to the insolvency court challenging the effectiveness of such legal acts within one year following the day on which the resolution on insolvency (upadek´ ) took effect. The standard claw-back period is one year for preferences and undervalues and five years for transactions with actual fraudulent intent. For preferences and undervalues, the insolvency trustee must prove that the debtor was either insolvent or became insolvent as the result of the transaction. For transactions with affiliated parties, the claw-back period for preferences and undervalues is extended to three years and the debtor’s insolvency will be presumed. It should be noted that there is no consistent case law identifying specific legal acts deemed challengeable as described above. In each case, the insolvency court would weigh the facts and circumstances of the specific case. Some courts may not have adequate experience or sophistication with syndicated, parallel or other complex debt structures and may be inclined to interpret certain legal acts (including undertakings under facilities agreements) as legal acts potentially resulting in the decrease of satisfaction of creditors. To the extent that a security interest or a guarantee is voided as a transaction at undervalue, a preference or fraudulent transfer, such secured party would lose the benefit of such collateral and may also be required to repay any amounts received with respect to the collateral prior to adjudication by the court.

Civil Code Pursuant to the Czech Civil Code (as defined above), a creditor who has an enforceable claim against the debtor may challenge the debtor’s transaction with a third party if such transaction occurred (i) within the last five years and the debtor intended to adversely prejudice another creditor and the third party had knowledge of this intent, (ii) within the last two years and the debtor intended to adversely prejudice another creditor and the third party must have had knowledge of this intent, (iii) within the last two years, the debtor prejudiced another creditor and such transaction was made between the debtor and an affiliated party (or in its benefit), as specified by the Czech Civil Code, unless such affiliated party did not know or could not have known about that debtor’s intent to prejudice such creditor, or (iv) within the last two years in case of transaction without consideration. A Czech court has the power, among other things, to declare the relevant transaction ineffective vis-a-vis` the prejudiced creditor and such creditor may request that its receivables are satisfied from the property which was subject to such challenged transaction or (if it is not possible to seek such satisfaction) request compensation against the beneficiary of the challenged transaction.

Financial Assistance Limitations Under Czech financial assistance rules, a Czech limited liability company or a Czech joint stock company may not (i) provide any advance payment, loan and/or credit for the purpose of acquiring any ownership interest in that company and/or (ii) provide any security and/or guarantee in respect of any such loan

200 and/or credit, unless certain procedures are complied with and certain conditions (so-called whitewash procedure) are fulfilled. The relevant conditions, unless the Memorandum of Association or Articles of Association, respectively, of the respective company set forth further conditions, are that (i) the financial assistance is provided on fair terms, (ii) a written report is prepared by an executive or board of directors, respectively, of the company with summary of reasons (including reasons why the financial assistance is in the company’s interests or is not in conflict with such interests), benefits and risks of the provision of the financial assistance and its conditions, (iii) such financial assistance is provided with prior consent of the company’s general meeting, and (iv) such financial assistance will not result in the company becoming insolvent), and in case of a Czech joint stock company, also that (i) the board of directors duly investigates the financial standing of the entity to which the financial assistance should be provided, (ii) the financial assistance will not result in decrease of company’s equity below certain specified level, (iii) a specified reserve fund is created in the amount of the financial assistance provided, and (iv) in case of financial assistance provided to a related entity, review of the report of the board of directors by an independent expert appointed by the supervisory board. Czech law does not expressly extend the above limitations to the provision of an advance payment, loan, credit or security or guarantee for the purpose of acquisition of an ownership interest in a person directly or indirectly controlling the relevant company. However, a considerable part of the market is of the view that the relevant limitations should nevertheless apply even in such situation and that not complying with those limitations would amount to circumvention of law. The financial assistance rules would therefore apply to the Guarantees provided by the Czech Guarantors if any of the Guarantees is provided with respect to debt used for the purposes of acquisition of any ownership interest or shares, respectively, in the respective Czech Guarantor and arguably also for the purposes of acquisition of any ownership interest or shares in any person directly or indirectly controlling the respective Czech Guarantor. A breach of the financial assistance rules could cause the respective Guarantee provided by the respective Czech Guarantors to be invalid.

201 PLAN OF DISTRIBUTION The Issuer, the Guarantors and BNP Paribas, Citigroup Global Markets Limited, Deutsche Bank AG, London Branch, Banco Santander, S.A., ING Bank N.V., London Branch, Powszechna Kasa Oszcz¸ednosci´ Bank Polski SA and UniCredit Bank AG (together, the ‘‘Initial Purchasers’’), have entered into a purchase agreement dated September 24, 2014 (the ‘‘Purchase Agreement’’) with respect to the Notes. Subject to the terms and conditions set forth in the Purchase Agreement between the Issuer has agreed to sell to the Initial Purchasers and the Initial Purchasers have agreed, severally and not jointly, to purchase from the Issuer, all the Notes offered hereby. The Purchase Agreement provides that the obligations of the Initial Purchasers to pay for and accept delivery of the Notes are subject to, among other conditions, the delivery of certain legal opinions. The Initial Purchasers have advised us that they propose to offer the Notes initially at the price indicated on the cover page of this Offering Memorandum. After the initial offering, the offering price and other selling terms of the Notes may be varied by the Initial Purchasers at any time without notice. Sales of the Notes may be made through affiliates of the Initial Purchasers or through registered broker-dealers. The Purchase Agreement provides that the Issuer will indemnify and hold harmless the Initial Purchasers against certain liabilities, including liabilities under the U.S. Securities Act, and will contribute to payments that the Initial Purchasers may be required to make in respect thereof. The Issuer has agreed to pay the Initial Purchasers certain customary fees for their services in connection with this Offering and to reimburse them for certain out-of-pocket expenses. Persons who purchase Notes from the Initial Purchasers may be required to pay stamp duty, taxes and other charges in accordance with the laws and practice of the country of purchase in addition to the offering price set forth on the cover page hereof.

The Notes and the Guarantees are not being registered under the U.S. Securities Act The Notes and the Guarantees have not been and will not be registered under the U.S. Securities Act and may not be offered or sold in the United States or to, or for account or benefit of, U.S. persons except to (i) ‘‘qualified institutional buyers’’ (as defined in Rule 144A under the U.S. Securities Act (‘‘Rule 144A’’)) in reliance on Rule 144A and (ii) to certain non-U.S. persons (as defined in Regulation S under the U.S. Securities Act (‘‘Regulation S’’)) outside the United States in offshore transactions in reliance on Regulation S. In addition, with respect to the Notes initially sold outside the United States in compliance with Regulation S, until the expiration of 40 days after the commencement of this Offering, an offer or sale of the Notes within the United States by a broker/dealer (whether or not participating in this offering) may violate the registration requirements of the U.S. Securities Act if such offer or sale is made otherwise than in accordance with Rule 144A under the U.S. Securities Act or pursuant to another exemption from registration under the U.S. Securities Act. Resales of the Notes are restricted as described under ‘‘Notice to Investors.’’ Each purchaser of the Notes will be deemed to have made acknowledgments, representations and agreements as described under ‘‘Notice to Investors.’’ No action has been taken in any jurisdiction, including the United States and the United Kingdom, by any of the Issuer or the Initial Purchasers that would permit a public offering of the Notes or the possession, circulation or distribution of this Offering Memorandum or any other material relating to us or the Notes in any jurisdiction where action for this purpose is required. Accordingly, the Notes may not be offered or sold, directly or indirectly, and neither this Offering Memorandum nor any other offering material or advertisements in connection with the Notes may be distributed or published, in or from any country or jurisdiction, except in compliance with any applicable rules and regulations of any such country or jurisdiction. This Offering Memorandum does not constitute an offer to sell or a solicitation of an offer to purchase in any jurisdiction where such offer or solicitation would be unlawful. Persons into whose possession this Offering Memorandum comes are advised to inform themselves about and to observe any restrictions relating to the Offering, the distribution of this Offering Memorandum and resale of Notes. See ‘‘Notice to Certain European Investors.’’ The Issuer has also agreed that it will not at any time offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any securities under circumstances in which such offer, sale, pledge,

202 contract or disposition would cause the exemption afforded by Section 4(2) of the U.S. Securities Act or the safe harbor of Rule 144A and Regulation S under the U.S. Securities Act to cease to be applicable to the offer and sale of the Notes.

United Kingdom In the Purchase Agreement, each Initial Purchaser has, severally and not jointly, also represented and agreed that: (i) it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or instrument to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000) received by it in connection with the issue or sale of any Notes in circumstances in which Section 21(1) of the Financial Services and Markets Act 2000 does not apply to the Issuer or the Guarantor; and (ii) it has complied and will comply with all applicable provisions of the Financial Services and Markets Act 2000 with respect to anything done by it in relation to the Notes in, from or otherwise involving the United Kingdom.

No Sale of Similar Securities We have agreed, subject to certain exceptions that we will not offer, sell, contract to sell, issue or otherwise dispose of any debt securities that are substantially similar to the Notes, issued or guaranteed by the Issuer or any of the Guarantors or their respective subsidiaries and having a term of more than one year (other than the Notes and the Guarantees), for a period of 90 days from the date the Notes are issued without first obtaining the written consent of BNP Paribas, Citigroup Global Markets Limited and Deutsche Bank AG, London Branch.

New Issue of Notes The Notes are a new issue of securities with no established trading market. We have applied to have the Notes listed on the Official List of the Irish Stock Exchange and admitted to trading on the Global Exchange Market of that exchange, though we cannot assure you that the Notes will be approved for listing or that such listing will be maintained. We cannot assure you that any market for the Notes will develop, or that it will be liquid if it does develop, or that you will be able to sell any Notes at a particular time or at a price which will be favorable to you. See ‘‘Risk Factors—Risks Related to the Notes—There may not be an active trading market for the Notes, in which case your ability to sell the Notes may be limited.’’

Price Stabilization In connection with the issue of the Notes, Deutsche Bank AG, London Branch (the ‘‘Stabilizing Manager’’) (or persons acting on behalf of the Stabilizing Manager) may over allot Notes or effect transactions with a view to supporting the price of the Notes at a level higher than that which might otherwise prevail. However, there is no assurance that the Stabilizing Manager (or persons acting on behalf of the Stabilizing Manager) will undertake stabilization action. Any stabilization action may begin on or after the date on which adequate public disclosure of the terms of the offer of the Notes is made and, if begun, may be ended at any time, but it must end no later than the earlier of 30 days after the issue date of the Notes and 60 days after the date of the allotment of the Notes. Any stabilization action or over-allotment must be conducted by the Stabilizing Manager (or persons acting on behalf of the Stabilizing Manager) in accordance with all applicable laws and rules.

Initial Settlement It is expected that delivery of the Notes will be made against payment on the Notes on or about the date specified on the cover page of this Offering Memorandum, which will be four business days (as such term is used for purposes of Rule 15c6-1 of the U.S. Exchange Act) following the date of pricing of the Notes (this settlement cycle being referred to as ‘‘T+4’’). Under Rule 15c6-1 of the U.S. Exchange Act, trades in the secondary market generally are required to settle in three business days unless the parties to any such trade expressly agree otherwise. Accordingly, purchasers who wish to trade the Notes on the date of this Offering Memorandum will be required to specify an alternative settlement cycle at the time of any such trade to prevent a failed settlement. Purchasers of the Notes who wish to make such trades should consult their own advisors.

203 Other Relationships The Initial Purchasers or their respective affiliates, from time to time, have engaged in, and may in the future engage in, investment banking and other commercial dealings in the ordinary course of business with us and our affiliates. They have received, and expect to receive, customary fees and commissions in connection these transactions. The Initial Purchasers or their respective affiliates may also receive allocations of the Notes. A portion of the proceeds of the Notes will be used to repay existing indebtedness, and, as a result, the BNP Paribas group, Powszechna Kasa Oszcz˛edno´sci Bank Polski SA, the Banco Santander, S.A. group and the UniCredit Bank AG group will receive a certain portion of the proceeds from the issuance of the Notes in its capacity as a lender under one of the Senior Credit Facilities. See ‘‘Use of Proceeds’’ and ‘‘Description of Existing Indebtedness.’’

204 NOTICE TO INVESTORS You are advised to consult legal counsel prior to making any offer, resale, pledge or other transfer of any of the Notes offered hereby. The Notes and the Guarantees have not been and will not be registered under the U.S. Securities Act or the securities laws of any other jurisdiction, and, unless so registered, may not be offered or sold except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act or the securities laws of any other jurisdiction. Accordingly, the Notes offered hereby are being offered and sold only to (i) ‘‘qualified institutional buyers’’ (‘‘QIBs’’) (as defined in Rule 144A under the U.S. Securities Act) in reliance on an exemption from the registration requirements of the U.S. Securities Act provided by Rule 144A under the U.S. Securities Act; or (ii) non U.S. persons outside the United States in offshore transactions in reliance on Regulation S under the U.S. Securities Act. We use the terms ‘‘offshore transaction,’’ ‘‘United States’’ and ‘‘U.S. Person’’ with the meanings given to them in Regulation S under the U.S. Securities Act. Each purchaser of the Notes hereunder (other than each of the Initial Purchasers) will be deemed to have acknowledged, represented and agreed with us, the Issuer and the Initial Purchasers as follows: (1) it understands and acknowledges that the Notes and the Guarantee have not been registered under the U.S. Securities Act or any other applicable securities laws and that the Notes are being offered for resale in transactions not requiring registration under the U.S. Securities Act or any other securities laws, including sales pursuant to Rule 144A under the U.S. Securities Act, and, unless so registered, may not be offered, sold or otherwise transferred except in compliance with the registration requirements of the U.S. Securities Act and any other applicable securities laws or pursuant to an exemption therefrom and in each case in compliance with the conditions for transfer set forth in paragraphs (4) and (5) below; (2) it is not an ‘‘affiliate’’ (as defined in Rule 144 under the U.S. Securities Act) of the Issuer or acting on the Issuer’s behalf and it is either (a) a qualified institutional buyer and is aware that any sale of these Notes to it will be made in reliance on Rule 144A under the U.S. Securities Act, and such acquisition will be for its own account or for the account of a qualified institutional buyer; or (b) it is not a U.S. person (and is not purchasing the Notes for the account or benefit of a U.S. person) and is purchasing the Notes in an offshore transaction pursuant to Regulation S; (3) it acknowledges that none of the Initial Purchasers, the Issuer or we, nor any person representing the Initial Purchasers, the Issuer or us has made any representation to it with respect to us, the Issuer or the offer or sale of any Notes, other than the information contained in this Offering Memorandum, which Offering Memorandum has been delivered to it and upon which it is relying in making its investment decision with respect to the Notes. It has had access to such financial and other information concerning us, the Issuer and the Notes as it has deemed necessary in connection with its decision to purchase any of the Notes, including an opportunity to ask questions of, and request information from, the Initial Purchasers and us. It acknowledges that no person other than the Issuer makes any representation or warranty as to the accuracy or completeness of this Offering Memorandum; (4) it is purchasing the Notes for its own account, or for an account with respect to which it exercises sole investment discretion and for which it is acting as a fiduciary or agent, in each case for investment, and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of the U.S. Securities Act or any other applicable securities laws, subject to any requirement of law that the disposition of its property or the property of such investor account or accounts be at all times within its or their control and subject to its or their ability to resell such Notes pursuant to Rule 144A or Regulation S or any other exemption from registration available under the U.S. Securities Act; (5) it understands and agrees that if in the future it decides to resell, pledge or otherwise transfer any Notes or any beneficial interests in any Notes it will do so only (i) to the Issuer, (ii) pursuant to a registration statement which has been declared effective under the U.S. Securities Act, (iii) for so long as the Notes are eligible for resale pursuant to Rule 144A under the U.S. Securities Act, to a person it reasonably believes is a QIB that purchases for its own account or for the account of a QIB to whom notice is given that the transfer is being made in reliance on Rule 144A under the U.S. Securities Act, (iv) to persons other than U.S. persons, outside the United States in an offshore transaction in reliance on Regulation S under the U.S. Securities Act and (v) pursuant to any other available

205 exemption from the registration requirements of the U.S. Securities Act, and in the case of (iii) and (iv) the purchaser will, and each subsequent holder is required to, notify the subsequent purchaser of the Notes from it of the resale restrictions applicable to the Notes; (6) it understands that the Notes will bear a legend substantially in the following form: THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE ‘‘U.S. SECURITIES ACT’’), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT. THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF, (1) REPRESENTS THAT (A) IT IS A ‘‘QUALIFIED INSTITUTIONAL BUYER’’ (AS DEFINED IN RULE 144A (‘‘RULE 144A’’) UNDER THE U.S. SECURITIES ACT OR (B) IT IS ACQUIRING THIS NOTE IN AN ‘‘OFFSHORE TRANSACTION’’ TO A PERSON WHO IS NOT A U.S. PERSON WITHIN THE MEANING OF REGULATION S UNDER THE U.S. SECURITIES ACT (‘‘REGULATION S’’) IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S, AND IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE NOTES REPRESENTED HEREBY IN RESPECT HEREOF OF THE RESALE RESTRICTIONS REFERRED TO ABOVE, (2) AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR FOR WHICH IT HAS PURCHASED SECURITIES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE WHICH IS IN THE CASE OF RULE 144A NOTES: ONE YEAR AND IN THE CASE OF REGULATION S NOTES: 40 DAYS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF THIS NOTE) ONLY (A) TO THE ISSUER, THE GUARANTOR OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE U.S. SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE U.S. SECURITIES ACT (‘‘RULE 144A’’), TO A PERSON IT REASONABLY BELIEVES IS A ‘‘QUALIFIED INSTITUTIONAL BUYER’’ AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION S UNDER THE U.S. SECURITIES ACT, OR (E) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT, SUBJECT IN EACH OF THE FOREGOING CASES TO ANY REQUIREMENT OF LAW THAT THE DISPOSITION OF ITS PROPERTY OR THE PROPERTY OF SUCH INVESTOR ACCOUNT OR ACCOUNTS BE AT ALL TIMES WITHIN ITS OR THEIR CONTROL AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS, AND ANY APPLICABLE LOCAL LAWS AND REGULATIONS, AND FURTHER SUBJECT TO THE ISSUER’S AND THE TRUSTEE’S RIGHTS PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (I) PURSUANT TO CLAUSE (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, (II) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE REVERSE OF THIS NOTE IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE; AND (III) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS AND COVENANTS THAT EITHER (A) IT IS NOT AND FOR SO LONG AS IT HOLDS THE NOTE REPRESENTED HEREBY (OR ANY INTEREST HEREIN) WILL NOT BE (I) AN ‘‘EMPLOYEE BENEFIT

206 PLAN’’ AS DEFINED IN SECTION 3(3) OF THE U.S. EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (‘‘ERISA’’) THAT IS SUBJECT TO TITLE I OF ERISA, (II) A ‘‘PLAN’’ AS DEFINED IN AND SUBJECT TO SECTION 4975 OF THE U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE ‘‘CODE’’), (III) AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE THE ASSETS OF ANY SUCH EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR OTHER PLAN SUBJECT TO SECTION 4975 OF THE CODE (WITHIN THE MEANING OF 29 C.F.R. SECTION 2510.3-103 AS MODIFIED BY SECTION 3(42) OF ERISA OR OTHERWISE) (EACH SUCH PLAN OR ENTITY, A ‘‘BENEFIT PLAN INVESTOR’’), OR (IV) A GOVERNMENTAL, CHURCH OR NON-U.S. PLAN WHICH IS SUBJECT TO ANY STATE, LOCAL, OTHER FEDERAL LAW OF THE UNITED STATES OR NON-U.S. LAW THAT IS SUBSTANTIALLY SIMILAR TO THE PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE, AND NO PORTION OF THE ASSETS USED BY IT TO ACQUIRE AND HOLD THE NOTES CONSTITUTES ASSETS OF ANY BENEFIT PLAN INVESTOR OR SUCH OTHER PLAN, OR (B) ITS ACQUISITION, HOLDING AND DISPOSITION OF THE NOTE REPRESENTED HEREBY DOES NOT AND WILL NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE, OR, IN THE CASE OF SUCH A GOVERNMENTAL, CHURCH OR NON-U.S. PLAN, ANY SUCH SUBSTANTIALLY SIMILAR STATE, LOCAL, OTHER FEDERAL LAW OF THE UNITED STATES OR NON-U.S. LAW, FOR WHICH AN EXEMPTION IS NOT AVAILABLE. If it purchases Notes, it will also be deemed to acknowledge that the foregoing restrictions apply to holders of beneficial interests in these Notes as well as to holders of these Notes. (7) it agrees that it will, and each subsequent holder is required to, give to each person to whom it transfers Notes, notice of any restrictions on the transfer of such Notes; (8) if a purchaser in a sale that occurs outside the United States within the meaning of Regulation S, it acknowledges that until the expiration of the ‘‘distribution compliance period’’ (as defined below), you shall not make any offer or sale of Notes to a U.S. person or for the account or benefit of a U.S. person within the meaning of Rule 902 under the U.S. Securities Act. The ‘‘distribution compliance period’’ means the 40-day period following the Issue Date for the Notes. (9) it acknowledges that until the expiration of 40 days after the commencement of the Offering, any offer or sale of the Notes within the United States by a broker/dealer (whether or not participating in the offering) may violate the registration requirements of the U.S. Securities Act if such offer or sale is made otherwise than in accordance with Rule 144A under the U.S. Securities Act or pursuant to another exemption from registration under the U.S. Securities Act; (10) it acknowledges that the registrar will not be required to accept for registration of transfer any Notes acquired by it except upon presentation of evidence satisfactory to us and the registrar that the restrictions set forth therein have been complied with; (11) it represents and covenants that: (a) it is not and for so long as it holds a Note (or any interest therein) will not be (i) an ‘‘employee benefit plan’’ as defined in Section 3(3) of ERISA that is subject to Title I of ERISA, (ii) a ‘‘plan’’ as defined in and subject to Section 4975 of the Internal Revenue Code of 1986, as amended to the date hereof (the ‘‘Code’’), (iii) an entity whose underlying assets include the assets of any such employee benefit plan subject to ERISA or other plan subject to Section 4975 of the Code (within the meaning of 29 C.F.R. Section 2510.3-103 as modified by Section 3(42) of ERISA or otherwise) (each such plan or entity, as a ‘‘Benefit Plan Investor’’), or (iv) a governmental, church or non-U.S. plan which is subject to any state, local, other federal law of the United States or non-U.S. law that is substantially similar to the provisions of Section 406 of ERISA or Section 4975 of the Code, and no portion of the assets used by it to acquire and hold the Notes constitutes assets of any Benefit Plan Investor or such other plan, or (b) its acquisition, holding and disposition of the Notes (or any interest therein) does not and will not constitute or result in a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code, or, in the case of such a governmental, church or non-U.S. plan, any such substantially similar state, local, other federal law of the United States or non-U.S. law, for which an exemption is not available.

207 (c) it will not sell or otherwise transfer any Note (or any interest therein) otherwise than to a purchaser or transferee that is deemed to make these same representations and covenants with respect to its acquisition, holding and disposition of such Note and any interest therein. (12) it acknowledges that the Initial Purchasers, the Issuer and others will rely upon the truth and accuracy of its acknowledgements, representations, warranties and agreements and agrees that if any of the acknowledgements, representations, warranties and agreements deemed to have been made by its purchase of the Notes cease to be accurate and complete, it shall promptly notify us and the Initial Purchasers in writing. If it is acquiring any Notes (as a fiduciary or agent for one or more investor accounts), it represents that it has sole investment discretion with respect to each such investor account and that it has full power to make the foregoing acknowledgements, representations and agreements on behalf of each such investor account; and (13) it understands that no action has been taken in any jurisdiction (including the United States) by the Initial Purchasers, the Issuer or us that would result in a public offering of the Notes or the possession, circulation or distribution of this Offering Memorandum or any other material relating to us or the Notes in any jurisdiction where action for such purpose is required. Consequently, any transfer of Notes will be subject to the selling restrictions set forth in this section of the Offering Memorandum and/or in the front of the Offering Memorandum under ‘‘Notice to U.S. Investors,’’ ‘‘Notice to Certain European Investors,’’ ‘‘Notice to New Hampshire Residents’’ and ‘‘Plan of Distribution.’’

208 LEGAL MATTERS Certain legal matters in connection with the Offering will be passed upon for the Issuer and the other Guarantors by White & Case LLP as to matters of United States federal law and New York state law, by White & Case P. Pietkiewicz, M. Studniarek i Wspolnicy-Kancelaria´ Prawna sp.k. as to matters of Polish law, White & Case (Europe) LLP as to matters of Czech law and by White & Case Advokat AB as to certain matters of Swedish law. Certain legal matters in connection with the Offering will be passed upon for the Initial Purchasers by Clifford Chance LLP with respect to United States federal law and New York state law, by Clifford Chance Janicka, Kruzewski, Namiotkiewicz i Wspolnicy´ sp. k with respect to matters of Polish law, by Clifford Chance Prague LLP, organizaˇın´ı sloˇzka as to matters of Czech law and by Advokatfirman Vinge KB with respect to matters of Swedish law.

209 INDEPENDENT AUDITORS The Company’s statutory auditors are PricewaterhouseCoopers sp. z o.o., Al. Armii Ludowej 14 00-638 Warsaw, Poland. The Consolidated Annual Financial Statements included in this Offering Memorandum have been audited by PwC, independent auditors, as stated in their opinions appearing herein. The Condensed Consolidated Interim Financial Statements included in this Offering Memorandum have been reviewed by PwC, independent auditors, as stated in their report appearing herein. PricewaterhouseCoopers sp. z o.o. reported that they have applied limited procedures in accordance with professional standards for a review of such information. However, their report states that they did not audit and they do not express an opinion on the Condensed Consolidated Interim Financial Statements. Accordingly, the degree of reliance on their report should be restricted in light of the limited nature of the review procedures applied. PricewaterhouseCoopers sp. z o.o. is registered in the register of auditors held by the National Chamber of Statutory Auditors in Poland under No. 144.

210 AVAILABLE INFORMATION Each purchaser of Notes from the Initial Purchasers will be furnished a copy of this Offering Memorandum and any related amendments or supplements to this Offering Memorandum. Each person receiving this Offering Memorandum and any related amendments or supplements to the Offering Memorandum acknowledges that: (1) such person has been afforded an opportunity to request from us and to review and has received, all additional information considered by it to be necessary to verify the accuracy and completeness of the information herein; (2) such person has not relied on the Initial Purchasers or any person affiliated with the Initial Purchasers in connection with its investigation of the accuracy of such information or its investment decision; and (3) except as provided pursuant to clause (1) above, no person has been authorized to give any information or to make any representation concerning the Notes or each Guarantee offered hereby other than those contained herein and, if given or made, such other information or representation should not be relied upon as having been authorized by either us or the Initial Purchasers. For so long as any of the Notes remain outstanding and are ‘‘restricted securities’’ within the meaning of Rule 144(a)(3) under the U.S. Securities Act, we will, during any period in which we are not subject to Section 13 or 15(d) under the U.S. Exchange Act, nor exempt from reporting thereunder pursuant to Rule 12g3-2(b), make available to any holder or beneficial holder of a Note, or to any prospective purchaser of a Note designated by such holder or beneficial holder, the information specified in, and meeting the requirements of, Rule 144A(d)(4) under the U.S. Securities Act upon the written request of any such holder or beneficial owner. Any such request should be directed to the Issuer at Synthos Finance AB (publ), c/o Synthos S.A., attention Zbigniew Lange. We are not currently subject to the periodic reporting and other information requirements of the U.S. Exchange Act.

211 ENFORCEMENT OF CIVIL LIABILITIES The Issuer is incorporated in Sweden. None of the members of the Issuer’s board of directors or management are residents of the United States as of the date of this Offering Memorandum, and all of the members of the Issuer’s board of directors and management and all of the Issuer’s assets are located outside the United States. The Guarantors are incorporated in Poland and in the Czech Republic. The members of their boards of directors and management are not residents of the United States as of the date of this Offering Memorandum, and all of the assets of the Guarantors are located outside of the United States. As a result, it may be difficult or impossible for U.S. investors to effect service of process within the United States upon the Issuer’s or the Guarantors’ management or directors or to enforce judgments obtained in U.S. courts predicated upon the federal securities laws of the United States or the securities or blue sky laws of any state within the United States, against the Issuer’s or the Guarantor’s management or directors. If a judgment is obtained in a U.S. court against the Issuer or a Guarantor, investors will need to enforce such judgment in jurisdictions where the relevant company has assets. You should consult with your own advisors in any pertinent jurisdictions as needed to enforce a judgment in those countries or elsewhere outside the United States.

Enforcement of Judgments in Sweden Pursuant to the provisions of the Council Regulation (EC) No. 44/2001 of 22 December, 2000 on jurisdiction, recognition and enforcement of judgments in civil and commercial matters (the ‘‘Brussels Regulation’’), a judgment rendered against a party in the courts of a Member State (as defined therein, i.e., all member states of the EU) and which is enforceable in such a Member State, will be directly enforceable in the Kingdom of Sweden only upon the satisfaction of the following requirements: (a) that a motion for enforcement has been filed with and granted by the Svea Court of Appeal (Sw. Svea hovratt)¨ in Stockholm; and (b) that the formal requirements in the Brussels Regulation have been fulfilled. The Svea Court of Appeal or the Swedish Supreme Court (Sw. Hogsta¨ domstolen), if leave to appeal is granted, may, on the application of the party against whom enforcement is sought, stay the enforcement proceedings if an ordinary appeal has been lodged against the judgment in the Member State of origin or if the time for such an appeal has not yet expired. With regards to the provisions of the 1988 and 2007 Lugano Conventions on the Recognition of Judgments in Civil and Commercial Matters (the ‘‘Lugano Convention’’), a judgment rendered against a party in the courts of a Contracting State (as defined in the Lugano Convention) and which is enforceable in such a state, will be enforceable in the Kingdom of Sweden upon the satisfaction of the following requirements: (a) that a motion for enforcement has been filed with and granted by the Svea Court of Appeal in Stockholm; and (b) that the requirements specified in the Lugano Convention have been fulfilled. The Svea Court of Appeal or the Swedish Supreme Court, if leave to appeal is granted, may, on the application of the party against whom enforcement is sought, stay the enforcement proceedings if an ordinary appeal has been lodged against the judgment in the Member State of origin or if the time for such an appeal has not yet expired. Judgments in commercial matters entered against a Swedish party in the courts of a state which is not a member state under the terms of the Brussels Regulation or a Contracting State under the terms of the Lugano Convention (the ‘‘Conventions’’) (e.g., the United States of America), would in general not be recognized or enforceable in Sweden without retrial on the merits. If the party in whose favor the foreign final judgment has been rendered brings a new suit in a competent court in Sweden, the party may however submit to the Swedish court the foreign final judgment. A judgment by a foreign court will be regarded by a court, administrative tribunal or executive or other public authority of the Kingdom of Sweden only as evidence of the outcome of the dispute to which the judgment relates, and a Swedish court may choose to rehear the dispute ab initio. However, there is Swedish case law to indicate that such judgments: • that are based on a contract which expressly exclude the jurisdiction of the courts of the Kingdom of Sweden; • that were rendered under observance of due process of law; • against which there lies no further right to appeal; and

212 • the recognition of which would not manifestly contravene fundamental principles of the legal order or the public policy of the Kingdom of Sweden, should be acknowledged without retrial on their merits. It is not established under Swedish law if a power of attorney can be made irrevocable as it is unclear whether or not any power of attorney, including any appointment as process agent for service of process is irrevocable. In any event such power of attorney or appointment of process agent will terminate upon bankruptcy of the Issuer. See ‘‘Limitations on Validity and Enforceability of the Guarantees—Sweden.’’

Enforcement of Judgments in Poland Enforcement of judgments of foreign courts in Poland is subject to the 2007 Lugano Convention on the Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (the ‘‘Lugano Convention’’), the Council Regulation (EC) No. 44/2001 of December 22, 2000 on jurisdiction, recognition and enforcement of judgments in civil and commercial matters (the ‘‘Regulation 44/2001’’), and other relevant treaties or conventions, including relevant bilateral treaties and the rules of the Polish Code of Civil Procedure. There is no treaty between the United States of America and Poland providing for the reciprocal recognition and enforcement of judgments (other than arbitration awards) rendered in civil and commercial matters. Therefore, to judgments of U.S. courts, the rules of the Polish Code of Civil Procedure shall apply. Those rules provide for enforcement of foreign judgments concerning matters which may be settled by Polish civil courts if the judgment is enforceable in the country where it has been rendered. In addition the following requirements must be satisfied: • the judgment is final in the jurisdiction in which it was issued; • the case does not belong to the exclusive jurisdiction of the Polish courts; • summons has been served on the defendant, who was not engaged in the dispute on the matter, in due time for his defense; • the party has not been deprived of the possibility of defending itself in judicial proceedings; • a case regarding the same claim between the same parties was not pending in Poland earlier than before a court of the foreign country; • the judgment is not contrary to an earlier final judgment of a Polish court or an earlier final judgment of a foreign court satisfying the conditions for its recognition in Poland, which was rendered in a case regarding the same claim between the same parties; and • the recognition of the judgment is not contrary to the fundamental principles of the legal order of Poland. Rulings of foreign state courts in civil and commercial matters which may be enforced by execution become enforceable titles when their enforcement is confirmed by a Polish court. Enforcement is confirmed, if a ruling is enforceable in the state where the judgment has been passed and is not blocked by the obstacles referred hereinabove.

Enforcement of Judgments in the Czech Republic The recognition and enforcement of foreign judgments of civil courts in the Czech Republic is governed by EU law, public international treaties and domestic legislation. In relations among EU Member States (other than Denmark), Regulation (EC) 44/2001, referred to as Brussels I Regulation, is the governing law on the recognition and enforcement of foreign judgments. In the case of a foreign judgment from a non-EU country, the Czech Act on PIL applies, unless there is a multilateral international treaty or bilateral international agreement in place between the Czech Republic and the country of forum, the provisions of which would prevail over the Czech Act on PIL. There is no applicable treaty in effect between the United States and the Czech Republic. Foreign decisions are generally recognized and enforced by Czech bodies. Nonetheless, there are some exceptions, whereby foreign decisions cannot be recognized and enforced. Under the Czech Act on PIL, the following exceptions are regulated: • the decided matter falls under the exclusive jurisdiction of the bodies of the Czech Republic, or in cases where the proceedings would not be allowed to be conducted before any body of a foreign state if the Czech provisions regarding jurisdiction of the courts were used to assess the jurisdiction of a foreign

213 body, unless a party to the proceedings, against which the decision is to be recognized, has voluntarily submitted to the jurisdiction of the respective body of a foreign state; or • in the same legal matter, the proceedings are being conducted before a body of the Czech Republic; provided that such proceedings have been initiated before the foreign proceedings within which the respective foreign decision was issued; or • in the same legal matter, a decision by a body of the Czech Republic has been issued or a decision of a third state’s body has been recognized in the Czech Republic; or • a party to the proceedings, against which the decision is to be recognized, has been denied the possibility to duly participate in the proceedings by a procedure of a foreign body, in particular if the party has not been duly summoned for the purpose of the commencement of the proceedings; or • the recognition of the foreign decision would be manifestly contrary to the public order of the Czech Republic; or • the reciprocity of the recognition and the enforcement of decisions is not ensured (reciprocity is not required if the foreign decision does not affect a citizen of the Czech Republic or a legal entity existing under the laws of the Czech Republic). A foreign decision in property matters is not recognized by a court decision but only by being taken into consideration by a Czech body. This means that the Czech body treats such foreign decision as if it were a Czech decision and deals with potential questions of recognition only in the reasoning of its decision in the particular matter. However, to be enforced, the enforcement of a foreign decision must be ordered by a Czech court. The foreign decision is not reviewed regarding the merits of the case (au fond). As a result, U.S. judgments of civil and commercial courts against foreign citizens and entities shall be recognized and enforced in the Czech Republic, unless one of the above exemptions under the Czech Act on PIL were to apply. However, in the event of a U.S. judgment against a Czech citizen or legal entity, it is rather unlikely that such U.S. judgment would currently be recognized and enforced in the Czech Republic, since there is no international treaty or exchange of diplomatic notes between the Czech Republic and the U.S. on the basis of which reciprocity could be established and verified by Czech courts. The Czech Act on PIL provides that the Ministry of Justice of the Czech Republic shall provide the court with information on whether reciprocity is established between the Czech Republic and such foreign country. The United States is not listed on the website of the Czech Ministry of Justice among those countries with which reciprocity is deemed to be established. That being said, if the Party in whose favor the final U.S. judgment is rendered commences a new suit in a competent court in the Czech Republic, such party may submit the final U.S. judgment to the Czech court. Such U.S. judgment would be regarded by the Czech court in this new suit as factual evidence.

214 LISTING AND GENERAL INFORMATION Listing Information The Irish Stock Exchange has approved this Offering Memorandum as Listing Particulars. Application has been made for the Notes to be admitted to the Official List of the Irish Stock Exchange and for trading on the Global Exchange Market which is the exchange-regulated market of the Irish Stock Exchange. There can be no assurance that any such application will be successful or that any such listing will be granted or maintained. The Global Exchange Market is not a regulated market for the purposes of Directive 2004/39/EC. Notice of any change of control, change in the rate of interest payable on the Notes or early redemption of the Notes will be published in an Irish newspaper of general circulation (which is expected to be The Irish Times) or on the website of the Irish Stock Exchange, at www.ise.ie. For so long as the Notes are listed on the Global Exchange Market and the rules of the Irish Stock Exchange so require, copies of the following documents (together with English translations thereof, as applicable) may be inspected in physical form and obtained by holders at the specified office of the listing agent in Ireland during normal business hours on any weekday: • the organizational documents of the Company; • the organizational documents of each of the Guarantors; • the memorandum and articles of association of the Issuer; • the Indenture (which includes the form of the Notes and the Guarantees); • the financial statements included in this Offering Memorandum; and • the Company’s most recent annual audited consolidated financial statements and any unaudited interim consolidated financial statements published by the Company. We accept responsibility for the information contained in this Offering Memorandum. To the best of our knowledge, the information contained in this Offering Memorandum is in accordance with the facts and does not omit anything likely to affect the import of this Offering Memorandum. There has been no significant change in the financial or trading position of the Group since June 30, 2014 and no material adverse change in the financial position or prospects of the Group and the Issuer since December 31, 2013. Arthur Cox Listing Services Limited is acting solely in its capacity as listing agent for the Issuer in in relation to the Notes and is not itself seeking admission of the Notes to the Official List of the Irish Stock Exchange or to trading on the Global Exchange Market of the Irish Stock Exchange. The estimated total expenses in relation to the admission of the Notes to trading on the Global Exchange Market of the Irish Stock Exchange are A5,000.00.

Clearing Information The Notes sold pursuant to Regulation S and Rule 144A have been accepted for clearance through the facilities of Euroclear and Clearstream. The ISIN and Common Code for the Notes sold pursuant to Regulation S are XS1115183359 and 111518335 respectively. The ISIN and Common Code for the Notes sold pursuant to Rule 144A are XS1115199868 and 111519986, respectively.

Issuer Legal Information Synthos Finance AB (publ) (the ‘‘Issuer’’) was incorporated as a public limited liability company in Stockholm, Sweden on September 1, 2014 and was registered with the Swedish Commercial Register under number 556981-2927 and was acquired by the Company as a finance company with no business operations or assets. The Issuer’s registered office and principal business address is Stureplan 4C, 4tr., 114 35 Stockholm, Sweden and its telephone number is +46 8 463 10 44. The Issuer is directly owned by the Company. The Issuer has obtained all necessary consents, approvals and authorizations in the jurisdiction of its incorporation in connection with the issuance and performance of the Notes. The object of the Issuer’s business is conducting financial activities primarily through the borrowing of funds by way of issuance of bonds and other financial instruments to institutional and private investors and through the direct lending of such funds to group companies, granting credit loan facilities and loans, and

215 conducting any other activities compatible therewith or to provide related services. The Issuer is not conducting activities that constitute operations which would require a license or permit from the Swedish Financial Supervisory Authority or any other company. The Issuer is not involved in any governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened) which may have, or have had a significant effect on the financial position or profitability of the Issuer during the twelve months preceding the date of this Offering Memorandum.

Company Legal Information Synthos S.A. (the ‘‘Company’’) was incorporated as a joint stock company in Poland on 2001 and was registered with the Polish National Register under number 0000038981. The Company’s registered office and principal business address is Chemikow´ 1, 32 600 O´swi˛ecim, Poland, and its telephone number is + 48 33 844 18 21. The Company has obtained all necessary consents, approvals and authorizations in the jurisdiction of its incorporation in connection with the issuance and performance of the Notes. The Company is not involved in any governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened) which may have, or have had a significant effect on the financial position or profitability of the Company during the twelve months preceding the date of this Offering Memorandum.

Guarantor Legal Information Synthos S.A. was incorporated as a joint stock company in Poland on 2001 and was registered with the Polish National Register under number 0000038981. The Company’s registered office and principal business address is Chemikow´ 1, 32 600 O´swi˛ecim, Poland, and its telephone number is + 48 33 844 18 21. The principal business of Synthos S.A. is the manufacture of chemicals and chemical products. Synthos Dwory 7 was incorporated as a limited liability company general partnership in Poland on November 25, 2013 and was registered with the Polish National Register under number 0000490507. Its registered office and principal business address is Chemikow´ 1, 32 600 O´swi˛ecim, Poland, and its telephone number is +48 33 844 18 21. The principal business of Synthos Dwory 7 is the manufacture of chemicals and chemical products. SYNTHOS Kralupy a.s., was incorporated as a Czech joint stock company in the Czech Republic on January 2, 2008 and was registered in the Commercial Register maintained by with the Municipality Court in Prague under number, file B 13451. Its registered office and principal business address is O. Wichterleho 810, 278 01 Kralupy nad Vltavou, the Czech Republic, its identification number is 28214790, and its telephone number is +420 315 711 111. The principal business of SYNTHOS Kralupy a.s. is the manufacture of chemicals and chemical products. TAMERO INVEST s.r.o. was incorporated as a Czech limited liability company in the Czech Republic on December 15, 2010 and was registered in the Commercial Register maintained by the Municipality Court in Prague, file C 173747. Its registered office and principal business address is O. Wichterleho 810, 278 01 Kralupy under Vltavou, the Czech Republic, its identification number is 24781452, and its telephone number is +315 714 270. The principal business of TAMERO INVEST s.r.o. is the production and distribution of electricity. SYNTHOS PBR s.r.o. was incorporated as a Czech limited liability company in the Czech Republic on February 26, 2008 and was registered in the Commercial Register maintained by the Municipality Court in Prague, file C 135452. Its registered office and principal business address is O. Wichterleho 810, 278 01 Kralupy nad Vltavou, the Czech Republic, its identification number is 28252012, and its telephone number is +420 315 711 111. The principal business of SYNTHOS PBR s.r.o. is the manufacture of chemicals and chemical products. There are no risks specific to each of the Guarantors that could impact their perspective Guarantees and no encumbrances on the assets of each of the Guarantors that could materially affect their ability to meet their respective obligations under the Guarantees. Each of the Guarantors has obtained all necessary consents, approvals and authorizations in connection with the issue and performance of the Guarantees.

216 None of the Guarantors is involved in any governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened), which may have, or have had a significant effect on the financial position or profitability of any such Guarantor during the twelve months preceding the date of this Offering Memorandum.

217 GLOSSARY Unless otherwise required by the context, the following definitions shall apply throughout the document:

‘‘benzene’’ ...... Benzene is the main raw material for styrene (through its use in ethylbenzene) and is mainly produced from refinery processes or as a co-product of steam cracker operations. ‘‘butadiene’’ ...... Butadiene is a flammable, colorless gas used extensively for various polymerizations for plastics manufacturing. Butadiene can be produced in two ways: as a byproduct of the steam cracking process used to produce ethylene and other olefins, or from ethanol. Butadiene is available within integrated chemical complexes and is also available on the open market with shipment by pipeline, ship, road or train. ‘‘C4 fraction’’ ...... C4 fraction is a mixture of liquefied hydrocarbons with prevailing content of four carbon atoms in their molecules. It is manufactured by fractional distillation of pyrolysis gases from steam cracking of oil fractions. It is an easily volatile, flammable and combustible substance of characteristic odor. ‘‘ethylene’’ ...... Ethylene is a flammable gas obtained in a process called cracking, in which hydrocarbons are heated, causing chemical reactions that split the carbon- hydrogen or carbon-carbon bonds of the feedstock. Ethylene is a key building block of the petrochemical industry and is used to produce a large number of higher value-added chemicals, including styrene. ‘‘general purpose polystyrene (GPPS)’’ . . GPPS is a clear, hard, usually colorless thermoplastic resin. GPPS is a crystal- clear amorphous product utilized in packaging, foamed containers, foam insulation, cutlery, medical lab-ware, clear cups and containers. ‘‘high-impact polystyrene (HIPS)’’ ...... HIPS, one of the most widely used thermoplastics, has dimensional strength, high performance and balanced properties of impact strength and heat resistance, is easily processed, and is relatively low in cost. HIPS is essentially GPPS with approximately 5% to 10% rubber incorporated through a grafting process prior to polymerization to enhance the mechanical properties. HIPS products are used in refrigerator liners and parts, vending cups and lids, dairy containers, appliance components, cosmetics cases, toys and various consumer products. HIPS is translucent and resistant to breaks. ‘‘polystyrene’’ ...... Polystyrene is a thermoplastic resin produced by the polymerization of styrene. It exists in solid state at room temperature but melts if heated and becomes solid again once cooled. It is converted through extrusion, thermoforming, stamping or injection molding into end products for a wide range of end applications, including packaging, electronics and appliances, building and construction, medical equipment, toys and office supplies. ‘‘raffinate 1’’ ...... Raffinate 1 is the hydrocarbon (butane-butene) gas mixture. It is extremely flammable, colorless gas, with slight aromatic odor. Raffinate 1 is the remain of C4 fraction after the extraction of 1.3-butadiene. ‘‘styrene’’ ...... Styrene is a hydrocarbon that under normal conditions is a flammable liquid. Styrene is produced from ethylene and benzene, typically brought together in a reaction with a catalyst to form the intermediate ethylbenzene.

218 INDEX TO FINANCIAL STATEMENTS

Page Synthos S.A. unaudited condensed interim consolidated financial statements as at and for the six months ended June 30, 2014 Independent auditor’s report ...... F-3 Unaudited consolidated statement of comprehensive income ...... F-8 Unaudited consolidated statement of financial position ...... F-9 Unaudited statement of changes in consolidated equity ...... F-11 Unaudited consolidated cash flow statement ...... F-12 Explanatory Notes to the unaudited condensed interim consolidated financial statements ..... F-14 Synthos S.A. consolidated financial statements as at and for the year ended December 31, 2013 Independent auditor’s opinion ...... F-41 Consolidated statement of comprehensive income ...... F-46 Consolidated statement of financial position ...... F-47 Consolidated statement of changes in equity ...... F-49 Consolidated statement of cash flows ...... F-50 Notes to the consolidated financial statements ...... F-52 Synthos S.A. consolidated financial statements as at and for the year ended December 31, 2012 Independent auditor’s opinion ...... F-110 Consolidated statement of comprehensive income ...... F-116 Consolidated statement of financial position ...... F-117 Consolidated statement of changes in equity ...... F-119 Consolidated statement of cash flows ...... F-120 Notes to the consolidated financial statements ...... F-122 Synthos S.A. consolidated financial statements as at and for the year ended December 31, 2011 Independent auditor’s opinion ...... F-175 Consolidated statement of comprehensive income ...... F-180 Consolidated statement of financial position ...... F-181 Consolidated statement of changes in equity ...... F-183 Consolidated cash flow statement ...... F-184 Notes to the consolidated financial statements ...... F-186 Information referred to above and included in this Offering Memorandum was derived from regulatory filings of the Group and contains references to other elements of such filings. Such other referred documents do not form part of this Offering Memorandum.

F-1 THE SYNTHOS S.A. GROUP O´swi˛ecim, ul. Chemikow´ 1 Condensed interim consolidated financial statements for the 6 months ended 30 June 2014

O´swi˛ecim, 25 August 2014

F-2 29OCT201215590808

TRANSLATORS’ EXPLANATORY NOTE The following document is a free translation of the registered auditor’s report of the below-mentioned Polish Company. In Poland statutory accounts must be prepared and presented in accordance with Polish legislation and in accordance with the accounting principles and practices generally used in Poland. The accompanying translated report has not been reclassified or adjusted in any way to conform to accounting principles generally accepted in countries other than in Poland, but certain terminology current in Anglo-Saxon countries has been adopted to the extent practicable. In the event of any discrepancy in interpreting the terminology, the Polish version is binding.

Independent registered auditor’s report on the review of the interim condensed consolidated financial statements for the period from 1 January to 30 June 2014 To the Shareholders and the Supervisory Board of Synthos SA We have reviewed the accompanying interim condensed consolidated financial statements of Synthos S.A. Group (hereinafter called the Group), in which Synthos S.A., O´swi˛ecim, Chemikow´ 1 Street, is the parent company (hereinafter referred to as ‘‘the Parent Company’’), comprising the consolidated statement of comprehensive income for the period from 1 January to 30 June 2014, the consolidated statement of financial position as at 30 June 2014, the consolidated statement of changes in equity, the consolidated statement of cash flows for the period from 1 January to 30 June 2014 and selected explanatory notes. The Parent Company’s Management Board is responsible for the preparation of interim condensed consolidated financial statements which comply with the International Financial Reporting Standards adopted by the European Union concerning interim reporting (IAS 34). Our responsibility was to issue a report on these interim condensed consolidated financial statements based on our review. We conducted our review in accordance with the requirements of the national standards of auditing issued by the National Chamber of Registered Auditors. These standards require us to plan and perform the review to obtain moderate assurance that the interim condensed consolidated financial statements are free of material misstatements. We conducted the review mainly by analysing the data in the consolidated financial statements, inspecting the accounting records, and making use of information obtained from the Parent Company’s Management Board and persons responsible for financial and accounting matters in the Group. The scope and methodology of the review of interim condensed consolidated financial statements is significantly different from the scope of an audit aimed at expressing an opinion on compliance of the consolidated financial statements with the applicable accounting policies and their fairness and clarity, therefore we cannot express an opinion on the attached financial statements. Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim condensed consolidated financial statements have not been prepared, in all material respects, in accordance with International Accounting Standard 34: Interim Financial Reporting.

F-3 Conducting the review on behalf of PricewaterhouseCoopers Sp. z o.o. Registered Audit Company No. 144:

Tomasz Reinfuss Key Registered Auditor No. 90038 25 August 2014

Address: PricewaterhouseCoopers Sp. z o.o., ul. Sciegiennego 3, 40-001 Katowice, Poland Telephone: +48 32 604 0200, Facsimile: +48 32 604 0300, www.pwc.pl

PricewaterhouseCoopers Sp. z o.o. is entered into the National Court Register maintained by the District Court for the Capital City of Warsaw, under KRS number 0000044655, NIP 526-021-02-28. The share capital is PLN 10,363,900. The seat of the Company is in Warsaw at Al. Armii Ludowej 14. 10SEP201400553643

F-4 The Synthos S.A. Group The condensed interim consolidated financial statements for the 6 months ended 30 June 2014 (in PLN ‘000 unless otherwise indicated)

STATEMENT OF THE MANAGEMENT CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE 6 MONTHS ENDED 30 JUNE 2014 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2014 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2014 (CONT.) STATEMENT OF CHANGES IN CONSOLIDATED EQUITY FOR THE 6 MONTHS ENDED 30 JUNE 2014 CONSOLIDATED CASH FLOW STATEMENT FOR THE 6 MONTHS ENDED 30 JUNE 2014 CONSOLIDATED CASH FLOW STATEMENT FOR THE 6 MONTHS ENDED 30 JUNE 2014 (CONT.) Note 1. Accounting policies Note 2. Selected major accounting policies Note 3. Segment reporting Note 4. Explanations concerning the seasonal or cyclical nature of the operations Note 5. Financial risk management Note 6. Other operating expenses Note 7. Net finance income / costs Note 8. Income tax Note 9. Property, plant and equipment Note 10. Intangible assets Note 11. Long-term investments Note 12. Trade receivables and other receivables Note 13. Trade payables and other payables Note 14. Share capital Note 15. Earnings per share Note 16. Liabilities in respect of loans, borrowings, finance lease and other debt instruments Note 17. Overdrafts drawn Note 18. Dividends paid Note 19. Other liabilities Note 20. Investment liabilities Note 21. Contingent liabilities, guaranties and warranties Note 22. Fair value of financial instruments Note 23. Transactions with related entities Note 24. Post balance sheet events Note 25. Change in the accounting policies resulting from the application of IFRS 11 Note 26. Accounting estimates, assumptions and judgements Note 27. Approval of the financial statements

F-5 The Synthos S.A. Group The condensed interim consolidated financial statements for the 6 months ended 30 June 2014 (in PLN ‘000 unless otherwise indicated)

STATEMENT OF THE MANAGEMENT The Management Board of Synthos S.A. hereby presents the consolidated financial statements for the six months ended 30.06.2014, which comprise: • the consolidated statement of comprehensive income for the period from 1.01.2014 to 30.06.2014; • the consolidated statement of financial position as at 30.06.2014; • the statement of changes in consolidated equity for the period from 1.01.2014 to 30.06.2014; • the consolidated cash flow statement for the period from 1.01.2014 to 30.06.2014; • the explanatory notes. The condensed interim consolidated and separate financial statements have been prepared in accordance with the requirements of the International Accounting Standard 34 Interim Financial Reporting as approved by the European Union and they present the financial position and results of operations of Synthos S.A. and the Group in a true and fair manner. The Directors’ Report of the Group presents a true view of the Group’s development, achievements and situation, including a description of risks and threats. The entity authorized to audit consolidated financial statements which performed the review and audit of the consolidated financial statements has been appointed in compliance with the law. This entity, as well as the registered auditors performing the review and audit, satisfied the conditions for issuing an unbiased and independent audit opinion and review report, in accordance with the professional regulations and standards.

F-6 The Synthos S.A. Group The condensed interim consolidated financial statements for the 6 months ended 30 June 2014 (Continued) (in PLN ‘000 unless otherwise indicated)

This does not exclude the possibility of making retrospective changes to the financial statements in order to correct errors or in connection with changes in the accounting policies in accordance with IAS 8.

Signatures of the Management Board Members

/s/ TOMASZ KALWAT /s/ MICHAŁ WATOŁA Tomasz Kalwat Michał Watoła President of the Board Person responsible for preparing the consolidated financial statements

/s/ ZBIGNIEW WARMUZ Zbigniew Warmuz Vice-President of the Board

/s/ ZBIGNIEW LANGE Zbigniew Lange Board Member

/s/ TOMASZ PIEC Tomasz Piec Board Member

/s/ JAROSŁAW ROGOZA˙ Jarosław Rogo˙za Board Member

O´swi˛ecim, 25 August 2014

F-7 The Synthos S.A. Group The condensed interim consolidated financial statements for the 6 months ended 30 June 2014 (in PLN ‘000 unless otherwise indicated)

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE 6 MONTHS ENDED 30 JUNE 2014

01.01.2013 - 30.06.2013 01.01.2014 - 30.06.2014 restated Sales ...... 2,349,977 2,593,495 Cost of sales ...... (1,955,963) (2,183,051) Gross profit from sales ...... 394,014 410,444 Other operating income ...... 12,987 11,304 Selling costs ...... (66,548) (70,165) Administrative expenses ...... (79,800) (77,841) Other operating expenses ...... 6 (8,437) (16,020) Operating profit ...... 252,216 257,722 Finance income ...... 7 2,313 6,194 Finance costs ...... 7 (22,315) (10,075) Net finance income / costs ...... 7 (20,002) (3,881) Profit before tax ...... 232,214 253,841 Income tax ...... 8 (63,307) (29,876) Net profit ...... 168,907 223,965 Other comprehensive income that may be reclassified to profit or loss Foreign exchange gains/ (losses) on translation of subsidiaries and joint operations ...... 11,265 24,118 Measurement of available-for-sale financial assets ...... (48,725) 41,595

Other comprehensive income (net) ...... (37,460) 65,713 Total comprehensive income ...... 131,447 289,678 Profit attributable to: Shareholders of the parent company ...... 168,756 223,722 Non-controlling interests ...... 151 243 Net profit for the period ...... 168,907 223,965 Comprehensive income attributable to: Shareholders of the parent company ...... 131,296 289,435 Non-controlling interests ...... 151 243 Comprehensive income for the period ...... 131,447 289,678 Profit per share attributable to the Company’s shareholders during the period (in PLN per share) Basic (PLN) ...... 0.13 0.17 Diluted (PLN) ...... 0.13 0.17

The consolidated statement of comprehensive income should be analysed together with the explanatory notes which are an integral part of the consolidated financial statements.

F-8 The Synthos S.A. Group The condensed interim consolidated financial statements for the 6 months ended 30 June 2014 (in PLN ‘000 unless otherwise indicated)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2014

31.12.2013 31.12.2012 30.06.2014 restated restated Assets Non-current assets Property, plant and equipment ...... 9 1,702,625 1,646,299 1,623,196 Intangible assets ...... 161,554 151,393 133,943 Investment property ...... 456 483 3,432 Shares in subsidiaries ...... 11 2,295 2,106 2,115 Loans granted ...... 11 1,067 726 512 Goodwill ...... 4,475 — — Available-for-sale financial assets ...... 11 210,520 258,715 187,280 Deferred tax assets ...... 29,929 81,894 98,121 Total non-current assets ...... 2,112,921 2,141,616 2,048,599 Current assets Inventories ...... 442,903 454,931 623,099 Income tax receivables ...... 73,429 66,296 22,229 Trade receivables and other receivables ...... 12 1,062,340 913,208 1,070,923 Cash and cash equivalents ...... 180,191 447,055 746,601 Total current assets ...... 1,758,863 1,881,490 2,462,852 Total assets ...... 3,871,784 4,023,106 4,511,451

The consolidated statement of financial position should be analysed together with the explanatory notes which are an integral part of the consolidated financial statements.

F-9 The Synthos S.A. Group The condensed interim consolidated financial statements for the 6 months ended 30 June 2014 (Continued) (in PLN ‘000 unless otherwise indicated)

Consolidated statement of financial position as at 30 June 2014 (Continued)

31.12.2013 31.12.2012 30.06.2014 restated restated Equity and liabilities Equity Share capital ...... 39,698 39,698 39,698 Revaluation reserve ...... 26,512 75,237 3,832 Foreign exchange gains and losses on translation of subordinated entities ...... 2,629 (8,636) 110,044 Other reserves ...... — — 252,875 Retained earnings, including: ...... 1,929,688 2,171,139 2,507,043 net profit for the current period ...... 15 168,756 416,891 586,345 Equity attributable to the parent company’s shareholders .... 1,998,527 2,277,438 2,913,492 Non-controlling interests ...... 13,974 13,823 14,617 Total equity ...... 2,012,501 2,291,261 2,928,109 Liabilities Liabilities in respect of loans, borrowings and other debt instruments ...... 16 587,267 428,873 501,383 Liabilities in respect of employee benefits ...... 3,765 3,816 4,288 Deferred income and income from government subsidies . . . 66,141 42,761 17,781 Provisions ...... 30,260 30,260 30,260 Deferred income tax liabilities ...... 41,253 42,147 43,001 Other liabilities ...... 19 28,400 28,363 30,556 Total long-term liabilities ...... 757,086 576,220 627,269 Overdrafts ...... 17 371,071 456,231 48,901 Liabilities in respect of loans, borrowings, finance lease and other debt instruments ...... 16 128,248 131,644 175,459 Liabilities in respect of employee benefits ...... 150 150 218 Income tax liabilities ...... 1,402 3,969 15,984 Trade payables and other payables ...... 13 593,944 554,954 701,420 Provisions ...... 3,992 3,951 4,164 Derivative instruments ...... 3,390 4,726 9,927 Total short-term liabilities ...... 1,102,197 1,155,625 956,073 Total liabilities ...... 1,859,283 1,731,845 1,583,342 Total equity and liabilities ...... 3,871,784 4,023,106 4,511,451

The consolidated statement of financial position should be analysed together with the explanatory notes which are an integral part of the consolidated financial statements.

F-10 rt of the 11,265 (48,725) — (37,460) 24,118 41,595 — 65,713 168,756168,756 — 11,265 (48,725) — 151 151 131,447 168,907 Retained exchange differences Foreign Revaluation to Attributable Total 223,722223,722 — 24,118 41,595 — 243 243 289,678 223,965 (410,208) — — — (410,208) Retained exchange differences Foreign Revaluation to Attributable (1,005,670) — — — (1,005,670) Attributable to shareholders of the Company Attributable Attributable to shareholders of the Company Attributable (252,875) 252,875 — — — — The Synthos S.A. Group consolidated financial statements. 39,698 — 2,171,13939,698 (8,636) — 1,929,688 75,237 2,629 13,823 2,291,261 26,512 13,974 2,012,501 for the 6 months ended 30 June 2014 39,698 252,875 2,507,04339,698 110,044 — 3,832 1,977,970 14,617 134,162 2,928,109 45,427 14,860 2,212,117 Share capital Other reserves earnings on translation reserve non-controlling interests equity (in PLN ‘000 unless otherwise indicated) Share capital Other reserves earnings on translation reserve non-controlling interests equity Total The condensed interim consolidated financial statements STATEMENT OF CHANGES IN CONSOLIDATED EQUITY FOR THE 6 MONTHS ENDED 30 JUNE 2014 OF CHANGES IN CONSOLIDATED STATEMENT ...... — — ...... — — ...... — — ...... — — ...... — ...... — — — ...... —...... — — ...... The statement of changes in consolidated equity should be analysed together with the explanatory notes which are an integral pa ...... — — ...... — — Dividend distribution Reclassification Net profit Other income Comprehensive income 30 June 2013 1 January 2014 1 January 2013 Dividend distribution Net profit Other income Comprehensive income 30 June 2014

F-11 The Synthos S.A. Group The condensed interim consolidated financial statements for the 6 months ended 30 June 2014 (in PLN ‘000 unless otherwise indicated)

CONSOLIDATED CASH FLOW STATEMENT FOR THE 6 MONTHS ENDED 30 JUNE 2014

01.01.2013 - 01.01.2014 - 30.06.2013 30.06.2014 restated Profit before tax ...... 232,214 253,841 Adjustments Amortization and depreciation ...... 77,776 79,577 Foreign exchange (gains)/ losses ...... 7,672 6,377 Losses on investing activities ...... (452) 2,997 (Gains)/ losses on disposal of fixed assets ...... (1,881) 39 Interest ...... 7,993 4,384 Other ...... 599 — Operating profit before changes in working capital ...... 323,921 347,215 Change in receivables ...... (104,598) (101,278) Change in inventories ...... 14,862 6,696 Change in trade payables, other payables and government subsidies ...... 15,342 10,911 Change in provisions ...... 36 159 Change in liabilities in respect of employee benefits ...... (51) — Net cash generated in operating activities ...... 249,512 263,703 Tax paid ...... (22,244) (48,118) Net cash from operating activities ...... 227,268 215,585

The consolidated cash flow statement should be analysed together with the explanatory notes which are an integral part of the consolidated financial statements.

F-12 The Synthos S.A. Group The condensed interim consolidated financial statements for the 6 months ended 30 June 2014 (in PLN ‘000 unless otherwise indicated)

CONSOLIDATED CASH FLOW STATEMENT FOR THE 6 MONTHS ENDED 30 JUNE 2014 (Continued)

01.01.2013 - 01.01.2014 - 30.06.2013 30.06.2014 restated Cash flows from investing activities Disposal of intangible assets and property, plant and equipment ...... 1,727 395 Interest received ...... 1,750 4,984 Subsidies received (Note 9) ...... 23,074 — Proceeds from forward transactions realized ...... 2,272 — Purchase of intangible assets and property, plant and equipment ...... (144,323) (118,225) Purchase of shares in subsidiaries ...... (7748) — Loans granted ...... (317) — Cash pool received/(granted) ...... (22,571) (27,116) Net cash from investing activities ...... (146,136) (139,962) Cash flows from financing activities Loans and borrowings received ...... 276,122 — Overdrafts (repaid)/taken ...... (84,489) 567,430 Dividends and other payments to shareholders ...... (410,191) (661,587) Outflows in respect of swap transactions ...... (3,076) (2,997) Outflows on repayment of loans and borrowings ...... (119,219) (87,301) Interest paid ...... (10,024) (9,109) Net cash from financing activities ...... (350,877) (193,564) Net increase/(decrease) in cash and cash equivalents ...... (269,745) (117,941) Change in cash and cash equivalents in the balance sheet, including: ...... (266,864) (113,540) Cash and cash equivalents at the beginning of the period ...... 447,055 746,601 Effect of changes resulting from foreign exchange differences on cash and cash equivalents ...... 2,881 4,401 Cash and cash equivalents at the end of the period ...... 180,191 633,061

The consolidated cash flow statement should be analysed together with the explanatory notes which are an integral part of the consolidated financial statements.

F-13 The Synthos S.A. Group Explanatory notes to the condensed interim consolidated financial statements for the 6 months ended 30 June 2014 (in PLN ‘000 unless otherwise indicated)

Information about the Group The Synthos S.A. Group (formerly Grupa Kapitałowa Firmy Chemicznej ‘‘Dwory’’ S.A., hereinafter called ‘‘the Group’’) consists of the parent company and subsidiaries. The parent company of the Group is Synthos S.A. (hereinafter called ‘‘the Company’’ or ‘‘the Parent Company’’), which is a joint stock company registered in Poland. The Parent Company is listed on the Warsaw Stock Exchange. The Parent Company’s registered office is located in O´swi˛ecim, ul. Chemikow´ 1. Basic data of the Parent Company: Telephone: telephone information (33) 844 18 21 to 25 Fax: (33) 842 42 18 E-mail: [email protected] Webpage: www.synthosgroup.com The Company was entered in the National Court Register, the Register of Businesses, on 27 August 2001 with the number KRS 0000038981. NIP 549-00-02-108 REGON 070472049 The Group’s activities include in particular: • business and management consultancy activities; • accounting and bookkeeping activities; • manufacture of plastic products PKD 24.16.z; • manufacture of synthetic rubber PKD 24.17.z; • manufacture of other inorganic basic chemicals PKD 24.13.z; • manufacture of other organic basic chemicals PKD 24.14.z; • manufacture of other chemical products not elsewhere classified PKD 24.66.z; • production and distribution of electricity PKD 40.11.Z, 40.13.Z; • production and distribution of heat (steam and hot water) PKD 40.30.A, 40.30.B; • sewage treatment services; • waste storage and treatment services. In accordance with the Memorandum of Association, the duration of the Group companies is unlimited.

The Company’s Management Board: Tomasz Kalwat — President Zbigniew Warmuz — Vice-President Zbigniew Lange — Board Member Tomasz Piec — Board Member Jarosław Rogo˙za — Board Member Supervisory Board: Jarosław Grodzki — Chairman Mariusz Waniołka — Vice-Chairman Krzysztof Kwapisz — Vice-Chairman Grzegorz Mironski´ — Secretary Robert Oskard — Member

F-14 The Synthos S.A. Group Explanatory notes to the condensed interim consolidated financial statements for the 6 months ended 30 June 2014 (Continued) (in PLN ‘000 unless otherwise indicated)

Basic information on the consolidated subsidiaries and joint ventures is presented below:

% of share capital held Name and legal form of the entity Registered office Core operations and votes Subsidiaries Miejsko-Przemysłowa Oczyszczalnia Sciek´ ow´ Sp. z o.o. O´swi˛ecim collection, treatment and disposal 76.79% of sewage, treatment of waste, providing sanitary services and similar services Synthos Dwory 7 społka´ z ograniczon˛a odpowiedzialno´sci˛a społka´ jawna ...... O´swi˛ecim manufacture of chemical products 100% Synthos Dwory 4 Sp. z o.o...... O´swi˛ecim production of electricity 100% Synthos Dwory 5 Sp. z o.o...... O´swi˛ecim production of electricity 100% Synthos Dwory 7 Sp. z o.o...... O´swi˛ecim manufacture of chemical products 100% Synthos Dwory 7 Społka´ z ograniczon˛a odpowiedzialno´sci˛a Holding S.K.A...... O´swi˛ecim investing and equity activities 100% Synthos Dwory 8 Sp. z o.o...... O´swi˛ecim production of electricity 100% Synthos Kralupy a.s...... Kralupy nad manufacture of chemical products 100% Vltavou—the Czech Republic Tamero Invest s.r.o...... Kralupy nad production and distribution of 100% Vltavou—the electricity Czech Republic Synthos PBR s.r.o ...... Kralupy nad manufacture of chemical products 100% Vltavou—the Czech Republic Red Chilli Ltd...... Nicosia investing and equity activities 100% Calgeron Investment LTD ...... Cyprus investing and equity activities 99.87% Zakład Do´swiadczalny ‘‘Organika’’ Sp. z o.o...... Nowa Sarzyna manufacture of chemical products 68% Joint arrangements (joint operations) Butadien Kralupy a.s...... Kralupy nad manufacture of chemical products 49% Vltavou—the Czech Republic In the reporting period the Group acquired 68% of the shares in Zakład Do´swiadczalny ‘‘Organika’’ Sp. z o.o. in Nowa Sarzyna (the transaction value was PLN 7,488 thousand; the book value of net assets acquired amounted to PLN 3,013 thousand (provisional amount was adopted for the purpose of settlement of the acquisition) and provisionally recognized goodwill amounted to PLN 4,475 thousand). The process of accounting for this transaction is pending and for the purposes of these financial statements this acquisition has been accounted for on a provisional basis. There were no other changes in the Group structure or in percentage of share capital held in subsidiaries (and votes). Moreover, the method of accounting for a jointly controlled entity (Butadien Kralupy a.s.) has been changed due to the application of IFRS 11 as of 1 January 2014 (more information can be found in Note 25).

F-15 The Synthos S.A. Group Explanatory notes to the condensed interim consolidated financial statements for the 6 months ended 30 June 2014 (in PLN ‘000 unless otherwise indicated)

Note 1. Accounting policies 1. The basis for preparation of the consolidated financial statements These condensed interim consolidated financial statements have been prepared under IAS 34 Interim Financial Reporting as approved by the European Union. The condensed interim consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended 31 December 2013 prepared in accordance with the IFRS as approved in the European Union. Data in the consolidated financial statements is provided in Polish zloty, which is the Group’s presentation currency, in full thousands. Items included in the financial statements of the individual Group companies are measured in the currency of the primary economic environment in which a given entity operates (‘‘the functional currency’’). The consolidated financial statements have been prepared on the historical cost basis, with the exception of the following assets and liabilities measured at fair value: available-for-sale financial assets and financial instruments measured at fair value through profit or loss. The preparation of financial statements in accordance with IAS 34 requires the Management Board to make judgements, estimations and assumptions affecting the principles adopted and the presented amounts of assets, liabilities, revenues and costs. The actual amounts may differ from the estimates. Significant estimates and judgements used in the preparation of these interim financial statements are the same as presented in the annual consolidated financial statements for the financial year ended 31 December 2013, with the exception of the estimation required to determine deferred tax based on the effective tax rate and the judgement concerning classification of joint arrangement in connection with the application of IFRS 11 (for more information, see Note 25). The accounting policies used in the preparation of these condensed interim consolidated financial statements are consistent with those applied in the preparation of the last annual financial statements and were applied consistently for all periods presented in the consolidated financial statements, with the exception of the change in the accounting policies discussed in Note 25.

2. Going concern assumption The consolidated financial statements of the Group have been prepared on the assumption that the Group will continue in operation as a going concern in the foreseeable future. There are no circumstances that would indicate any threats to the Group’s going concern status.

3. New and amended accounting standards and interpretations New and amended standards and interpretations used: The following new and amended standards and interpretations that entered into force as of 1 January 2014 were applied in these financial statements for the first time: a) IFRS 10 Consolidated Financial Statements The new standard replaces the guidelines on control and consolidation contained in IAS 27, Consolidated and Separate Financial Statements, and in SIC 12, Consolidation—Special Purpose Entities. IFRS 10 changes the definition of control so that the same control criteria are applicable to all entities. The changed definition is accompanied by extensive application guidelines. The standard does not affect the consolidated financial statements of the Group.

F-16 The Synthos S.A. Group Explanatory notes to the condensed interim consolidated financial statements for the 6 months ended 30 June 2014 (Continued) (in PLN ‘000 unless otherwise indicated)

Note 1. Accounting policies (Continued) b) IFRS 11 Joint Arrangements The new standard replaces IAS 31, Interests In Joint Ventures, and SIC 13, Jointly Controlled Entities— Non-monetary Contributions by Venturers. Due to changes in definitions, the number of types of joint arrangements was reduced to two: joint operations and joint ventures. At the same time, the possibility of choosing proportionate consolidation for jointly controlled entities has been eliminated. All participants in joint arrangements are now required to recognize them under the equity method. The implications of applying this standard and its effect on the consolidated financial statements of the Group are presented in Note 25. c) IFRS 12 Disclosure of Interests in Other Entities The new standard applies to entities which hold interests in subsidiaries, joint arrangements, associates or unconsolidated structured entities. The standard replaces the disclosure requirements presently contained in IAS 27, Consolidated and Separate Financial Statements, IAS 28, Investments in Associates, and IAS 31, Interests in Joint Ventures. IFRS 12 requires entities to disclose information which will help the users of financial statements assess the nature, risk and financial effect of investments in subsidiaries, associates, joint arrangements and unconsolidated structured entities. For this purpose, the new standard requires entities to disclose information on many areas, including significant judgements and assumptions adopted to determine whether the entity controls, jointly controls or has significant influence on other entities; extensive information on the effect of non-controlling interests on the group’s activities and cash flows; summary financial information on subsidiaries with significant non-controlling interests, as well as detailed information on interests in non-consolidated structured entities. Disclosures required under this standard will be presented in the annual consolidated financial statements for the financial year ended 31 December 2014. This standard will result in increasing the scope of disclosures. Other amendments applicable in the financial year from 1 January 2014 do not affect the Group’s consolidated financial statements.

Published standards and interpretations, which are not yet mandatory and have not been adopted early by the Group The Group has not decided to adopt the following published standards, interpretations or amendments to the existing standards in the preparation of these financial statements before their entry into force: a) IFRS 9 Financial instruments IFRS 9 replaces IAS 39. The standard introduces a single model providing for two categories of financial assets only: measured at fair value and measured at amortized cost. Classification is performed at initial recognition and depends on the model of financial instruments management adopted by the entity and on the characteristics of contractual cash flows from such instruments. IFRS 9 introduces a new model for recognizing write-downs—the expected credit loss model. Most IAS 39 requirements concerning classification and measurement of financial liabilities were transferred to IFRS 9 without any changes. An important change is the requirement to present the effects of changes in credit risk on financial liabilities designated for measurement at fair value through profit or loss in other comprehensive income. As far as hedge accounting is concerned, the changes were aimed at better adaptation of hedge accounting to risk management purposes. The standard enters into force on 1 January 2018. The Group will apply IFRS 9 after its approval by the European Union.

F-17 The Synthos S.A. Group Explanatory notes to the condensed interim consolidated financial statements for the 6 months ended 30 June 2014 (Continued) (in PLN ‘000 unless otherwise indicated)

Note 1. Accounting policies (Continued) In the Group’s opinion, the standard will not have a material effect on the consolidated financial statements. As at the date of preparation of these consolidated financial statements, IFRS 9 had not been approved by the European Union. b) IFRS 15 Revenue from Contracts with Customers IFRS 15 Revenue from Contracts with Customers was published by the International Accounting Standards Board on 28 May 2014 and is mandatory for annual periods beginning on or after 1 January 2017. The principles provided in IFRS 15 will apply to all contracts that generate revenues. The fundamental principle introduced by the new standard is recognizing revenues at the moment of transfer of goods or services to the customer, at the transaction price. All goods or services sold in packages, which can be distinguished within a given package, should be accounted for separately. Moreover, all discounts applicable to the transaction price should as a rule be allocated to the individual package components. If the amount of consideration is variable, under the new standard variable amounts are recognized as revenues, provided that a reversal of revenue recognition in the future due to remeasurement is highly unlikely. Moreover, under IAS 15, the costs incurred to obtain and secure a contract with a customer should be activated and accounted for over the period of consumption of benefits from such a contract. The Group will apply IFRS 15 from 1 January 2017. The Group is currently analysing the effect of this standard on the consolidated financial statements. As at the date of preparation of these consolidated financial statements, IFRS 15 had not been approved by the European Union. The other new and amended standards and interpretations will not affect the consolidated financial statements of the Group.

Note 2. Selected major accounting policies The accounting policies used in the preparation of the condensed interim consolidated financial statements are consistent with the policies used in the preparation of the last annual financial statements, with the exception of a change in the accounting policies resulting from the application of new standards applicable in 2014 (the changes in accounting policies are presented below) and the application of the IAS 34 requirements for the purpose of determining the amount of income tax in the interim financial statements.

Joint arrangements As at 1 January 2013, the Group applied IFRS 11 to all joint arrangements. In accordance with the requirements of IFRS 11, investments in joint arrangements are classified as joint operations or joint ventures depending on the contractual rights and obligations of every investor. The Group assessed the nature of its joint arrangements carried out in an entity which has a separate legal personality and on the basis of other facts and circumstances determined that they constituted joint operations in accordance with IFRS 11, paragraph B29-B33. With respect to the Group’s interest in joint operation, the Group accounts: • its assets, including its share of any assets held jointly, • its liabilities, including its share of any liabilities incurred jointly, • its revenue from the sale of its share of the output arising from the joint operation, its share of the revenue from the sale of the output by the joint operation, • its expenses, including its share of any expenses incurred jointly.

F-18 The Synthos S.A. Group Explanatory notes to the condensed interim consolidated financial statements for the 6 months ended 30 June 2014 (Continued) (in PLN ‘000 unless otherwise indicated)

Note 2. Selected major accounting policies (Continued) The Group determines attributable Group’s share of the assets and liabilities and income and expenses not related to operating activities from joint operations on the basis of its share in jointly controlled entity. The Group determines attributable Group’s share of the income and expenses related to operating activities from joint operations on the basis of its share in purchased production from joint operation. The intercompany transactions and balances were excluded in consolidated financial statement of The Group. The change in the accounting policies results from applying IFRS 10. The application of the new standard did not affect the conclusion as to which entities are controlled by the Group. The subsidiaries are the entities controlled by the Parent Company. The Group controls an entity when it is exposed or has a right to variable returns from its exposure to that entity and when it can affect such returns by exercising power over that entity. Subsidiaries are consolidated by the acquisition accounting method in the period from assuming control over them by the parent company to the cessation of this control. Assets, liabilities and identifiable contingent liabilities of a subsidiary as at the date of assuming control are recognized at fair value. A positive difference between the acquisition price, the value of non-controlling shares and the fair value of previously held shares on the one hand, and the fair value of acquired assets, liabilities and contingent liabilities on the other hand represents goodwill, which is shown as a separate item of the consolidated statement of financial position. A negative difference between the acquisition price, the value of non-controlling shares and the fair value of previously held shares on the one hand, and the fair value of assets, liabilities and contingent liabilities on the other hand is charged directly to profit or loss.

Deferred tax Deferred tax for the half-year period has been determined in accordance with IAS 34 using the effective tax rate expected to be applicable to the annual profit.

Note 3. Segment reporting Pursuant to IFRS 8, the Management Board has determined operating segments that are used in making strategic decisions. Information prepared for the persons in the Group who decide about the allocation of assets and assess the financial results of segments are focused on the groups of products by industry. The change described in Note 25, which results from the first-time application of IFRS 11, affects the composition of two segments: rubber and latex and the power segment. The change in the accounting treatment of joint operations changed the method of analysing joint operation’s results by the main operating decision-making body within the Group, ie. joint operation is part of the segment ‘rubber and latex’ and ‘power segment’ and in the previous year was not considered as part of these operating segments, thus the share of profits accounted at equity method were not allocated to segment reporting. Except for the change discussed above, in the half-year period there were no changes relating to the segments, the assessment of their results and the measurement of the segments’ assets in relation to the last annual financial statements. Therefore, the Group’s segments reported under IFRS 8 are as follows:

Rubbers and latexes The production and sale of synthetic rubbers is one of the Group’s key business areas. The Group manufactures synthetic rubbers in the emulsion technology (ESBR) by polymerization of butadiene and

F-19 The Synthos S.A. Group Explanatory notes to the condensed interim consolidated financial statements for the 6 months ended 30 June 2014 (Continued) (in PLN ‘000 unless otherwise indicated)

Note 3. Segment reporting (Continued) other chemicals (styrene, acrylonitrile or appropriate organic acid), the Group manufactures rubber in two basic types (15xx and 17xx). Synthetic rubbers, currently 14 varieties, are sold under the reserved brand name KER and KRALEX. The majority of synthetic rubbers are sold to tyre manufacturers, such as: Michelin, Continental, Bridgestone, Goodyear and Pirelli. Moreover, rubbers are raw materials used in the production of floor covering, conveyors, technical rubber goods (in particular for the automotive industry) and elements of footwear. The tyre industry is the key driver for demand for ESBR and has a ca. 80% share in the Group’s sales of elastomers. The remaining sales of ESBR come from markets other than the tyre market, e.g. from the production of technical rubber, shoe soles, flexible cables and conveyor belts. The Group also manufactures a new type of rubber PBR Nd (neodymium polybutadiene rubber). The most important application of PBR are tyres, mainly tyre treads and side faces which account for 70% of PBR global consumption. Other applications of PBR comprise technical goods (hoses, belts, shoe soles, golf balls, modification of styrene plastics). Regulations aimed at so-called ‘‘green’’ tyres with lower rolling resistance, and thus higher effectiveness which contributes to lower fuel consumption, implemented primarily in Western Europe, led to a significant increase in the demand for PBR, in particular in the neodymium technology which is used, among others, by Synthos. This change will continue in the future, also in other countries outside the EU and other regions outside Europe which will implement tyre marking systems (Japan, USA, South Korea). Polybutadiene rubbers, currently 2 varieties, are sold under the reserved brand name SYNTECA. At present, the Group is working on extending its market offer for this specific synthetic rubber type. Two types of synthetic latexes are manufactured: bonded styrene-butadiene latex (LBS) and styrene- butadiene-carboxylic latex (LBSK). Synthetic latexes are used, among others, in the production of gelled and non-gelled foam goods, in the production of carpets and floor covering, the finishing of fabrics, impregnation of non-woven materials. One of the applications is also the production of asphalt-latex emulsions for sealing, used in the construction industry.

Styrene plastics The production of styrene plastics comprises three main types of products obtained in the process of styrene polymerization, which have different applications. The first group comprises expandable polystyrenes EPS. Expandable polystyrene (EPS) is manufactured by polymerization in suspension and in the extrusion process using GPPS as the raw material. The main area of application of expandable polystyrenes is the manufacture of styrofoam, the basic thermo insulation material used in Central Europe. Another significant application of EPS is the production of transport packaging e.g. for household appliances, TVs, computers. EPS is also used in the production of finishing and decorative elements in the construction industry and small goods such as long floats and bicycle helmets. The second group are general purpose polystyrene (GPPS) and high impact polystyrene (HIPS). The main market for both GPPS and HIPS is the foodstuff packaging industry in the broad sense. Polystyrenes are used in manufacturing disposable tableware, all kinds of mugs and containers for dairy products, trays, cutlery, as well as shower booths, jewellery boxes etc.—all products that require stiffness and transparency at the same time. HIPS is used in the manufacture of other products, requiring greater mechanical resistance. To achieve the required mechanical parameters, it is modified by the addition of polybutadiene rubber. Potential applications include, apart from packaging, e.g. cases for radio and TV equipment, elements of household appliances, toys and furniture elements.

F-20 The Synthos S.A. Group Explanatory notes to the condensed interim consolidated financial statements for the 6 months ended 30 June 2014 (Continued) (in PLN ‘000 unless otherwise indicated)

Note 3. Segment reporting (Continued) GPPS is also sold to the construction market. The third group are XPS boards manufactured on the new production line for extruded polystyrene. Extruded polystyrene is manufactured on the basis of own raw materials—GPPS polystyrene. XPS boards are a homogeneous building material with a smooth or pressed surface and honeycomb structure. It has various unique qualities, such as water resistance, thermal insulation, strength both crosswise and lengthwise, the possibility of full recycling, and it is a self-extinguishing product. It is mainly used in the construction industry as a thermo insulation material for the insulation of buildings, insulation of reverse roofs, insulation of floors, thermal bridges and layered walls. Its mechanical strength and resistance to freezing with minimal water absorbability means that it can be used in the thermal insulation of roads, bridges, rail tracks and airfields.

Power sector This segment is engaged in the generation and distribution of heat and in the generation, trading and distribution of electricity in combined heat and power plants. The basic power products, i.e. heat, electricity and transmission services (relating to both electricity and heat) are sold on the local power market.

Dispersions and adhesives The Group’s offer includes acrylic dispersions and styrene-acrylic dispersions, as well as vinylacetate dispersions. The main application of acrylic, styrene-acrylic and vinyl-acrylic dispersions is the production of high quality paints, acrylic plasters, priming preparations, sealers and many other construction chemical goods. Dispersions in the group of vinyl polyacetate dispersions are mainly used in the production of wood adhesives and in the paper industry, for finishing textiles and in the construction industry—for the modification of concrete and the production of emulsion paints. The Group has two installations for the production of dispersions with a combined production capacity of ca. 40 tonnes a year. Currently, dispersions are represented on the market by 18 products that are sold under the registered brand names WINACET and OSAKRYL. Dispersion adhesives are offered under two brand names: WOODMAX—intended mainly for the wood industry and for making manufactured boards with various levels of water resistance (D1, D2, D3 and D4) and PAPERMAX—adhesives for the paper industry. The present portfolio of adhesives sold contains 16 products. Operating segments generate revenues mainly from the sales of various groups of finished goods. Other revenues (other operating income, profit/loss on disposal of property, plant and equipment, profit from sale of shares) and finance income and costs have not been included in segment reporting, because they are not covered by the reports submitted to the Management Board. The results of these operations are presented in ‘‘Unallocated income, costs’’. The revenues from transactions with unrelated entities reported to the Management Board by operating segment are calculated in the same manner as applied in the preparation of the statement of comprehensive income. The amounts of total assets by operating segment presented to the Management Board are measured in the same manner as applied in the financial statements. Such assets are allocated based on the segment operations and the physical location of a given asset (this applies to trade receivables, inventories, fixed assets). Other assets, i.e. cash, shares, other receivables, have been accounted for as unallocated assets.

F-21 2,313 6,194 (8,437) (16,020) 12,987 11,304 (22,315) (10,075) (63,307) (29,876) 945,515 1,338,831 Business segments The Synthos S.A. Group Styrene derivatives dispersions Vinyl Other (in PLN ‘000 unless otherwise indicated) for the 6 months ended 30 June 2014 (Continued) 30.06.2013 30.06.2013 30.06.2013 — — — — — — — — — — 252,216 257,722 — — — — — — — — — — 232,214 253,841 — — — — — — — — — — 168,907 223,965 85,64617,613 61,565 18,710 9,419 30,413 18,400 33,767 43,780 12,734 15,437 11,366 2,976 526 2,671 1,306 14,040 4,952 13,063 21,517 77,776 144,323 118,225 79,577 Rubbers and latexesRubbers segment Power Total 151,363 220,503 69,257 7,191 14,253 25,754 (57) 1,106 12,850 7,884 247,666 262,438 Explanatory notes to the condensed interim consolidated financial statements 30.06.2014 restated 30.06.2014 30.06.2013 30.06.2014 restated 30.06.2014 30.06.2013 30.06.2014 30.06.2013 30.06.2014 restated 1,194,928 1,480,747 973,775 919,5591,194,928 93,533 1,480,747 973,775 120,1551,043,565 1,260,244 64,166 919,559 904,518 55,714 93,533 912,368 120,155 10,584 79,280 64,166 94,401 4,635 55,714 64,223 2,336,986 2,580,810 23,575 54,608 17,320 10,725 2,349,977 2,593,495 9,436 2,102,311 2,331,057 1,232,167 1,571,504 983,608 1,121,4031,232,167 426,053 1,571,504 983,608 302,108 1,121,403 55,043 426,053 302,108 55,946 55,043 229,398 241,051 55,946 2,926,269 3,292,012 229,398 241,051 3,871,784 4,630,843 ...... — — — — — — — — ...... — — — — — — — — — — ...... — — — — — — — — — — ...... — — — — — — — — — — ...... — — — — — — — — — — ...... — — — — — — — — — — ...... goods (external customers) Sales of services (external customers) . income (external customers)Rental . . . income Total — costs Total —Segment’s profit (loss) Unallocated income —Unallocated costs —Operating profit —Finance income Finance costs — — — — — — — — — — — 12,367 11,656 624 12,367 1,029 11,656 624 1,029 Revenues Sales of goods for resale / finished Profit before tax Income tax Net profit Segment assets Unallocated assets assets Total Capital expenditure Amortization and depreciation Note 3. Segment reporting (Continued)

F-22 The Synthos S.A. Group Explanatory notes to the condensed interim consolidated financial statements for the 6 months ended 30 June 2014 (Continued) (in PLN ‘000 unless otherwise indicated)

Note 3. Segment reporting (Continued) Information about major customers The sales: • of ‘‘rubbers and latexes’’ amounting to PLN 1,194,928 thousand (1st six months of 2013: PLN 1,480,747 thousand) include the sales to the 10 largest customers of PLN 770,583 thousand (1st six months of 2013: PLN 953,950 thousand), • of ‘‘styrene plastics’’ amounting to PLN 973,775 thousand (1st six months of 2013: PLN 919,559 thousand) include the sales to the 10 largest customers of PLN 361,711 thousand (1st six months of 2013: PLN 330,049 thousand), • of ‘‘vinyl dispersions’’ amounting to PLN 64,166 thousand (1st six months of 2013: PLN 55,714 thousand) include the sales to the 10 largest customers of PLN 30,803 thousand (1st six months of 2013: PLN 30,574 thousand).

Note 4. Explanations concerning the seasonal or cyclical nature of the operations The Synthos S.A. Group in the first six months of 2014. Supplies of strategic raw materials are not seasonal or cyclical. All supplies of strategic raw materials are based on long-term or annual contracts and the volumes are sufficient to maintain continuity of production.

Rubbers and latexes The sales of rubbers and latexes are not seasonal. Their cyclical nature results from the general economic environment, in particular trends in the automotive industry and fluctuations associated with the availability of butadiene—the key monomer.

Styrene plastics Seasonality in the sales of polystyrene occurs in the areas associated with the construction industry. It concerns mainly expandable polystyrene and extruded polystyrene in the form of XPS insulation panels.

Dispersions The construction sector, which is the main market for dispersions, is characterized by noticeable seasonality, which directly depends on the weather conditions.

Power sector The operations in the power sector are subject to cyclical changes relating to the seasonality of sales. The biggest sales of heat and electricity are generated in the winter season (i.e. in the first and the fourth quarter of the year), when demand for heat is the biggest, both for technological uses and for the municipal heating system.

Note 5. Financial risk management There were no changes in financial risk management in the six months covered by these financial statements compared with the previous financial year. Despite contracted loans presented in Note 16 and repayments disclosed in consolidated statement of cash flows, there were no changes in the structure of future not discounted cash flows affecting the liquidity risk analysed by the Management Board.

F-23 The Synthos S.A. Group Explanatory notes to the condensed interim consolidated financial statements for the 6 months ended 30 June 2014 (Continued) (in PLN ‘000 unless otherwise indicated)

Note 6. Other operating expenses

1st half of the year 1st half of the year 2014 2013 Remeasurement of provisions ...... 56 60 Cost of unused production capacity ...... 898 483 Current assets written off ...... 696 964 Costs of debt collection and court proceedings ...... 206 488 Costs of decommissioning of unused facilities ...... 1,203 1,415 Receivables written off ...... 2,011 537 Receivables write-downs ...... 1,855 8,417 Other ...... 1,512 3,656 8,437 16,020

Note 7. Net finance income / costs

1st half of the year 1st half of the year 2014 2013 Income generated on borrowings and receivables ...... 2,277 5,236 Net foreign exchange gains/ losses ...... — 489 Income on realization and measurement of derivatives ...... 36 469 Total finance income ...... 2,313 6,194 Costs of interest on loans ...... (9,769) (8,970) Costs in respect of measurement of derivatives ...... (877) — Net foreign exchange gains/ losses ...... (10,429) — Other ...... (1,240) (1,105) Total finance costs ...... (22,315) (10,075) Net finance income / costs ...... (20,002) (3,881)

Note 8. Income tax Income tax recognized in the statement of comprehensive income Income tax was charged to profit before tax at the best possible estimate of the expected annual effective tax rate. The estimated effective tax rate as at 30 June 2014 was 27% (30 June 2013: 12%*). In 2013, the Group changed the legal form of some of its subsidiaries, as well as the group structure, as a result of which the company Synthos Dwory 7 społka´ z ograniczon˛a odpowiedzialno´sci˛a Społka´ jawna (formerly Synthos Dwory 7 społka´ z ograniczon˛a odpowiedzialno´sci˛a S.K.A.) remained an entity which is not a corporate income tax payer, thus reducing the Group’s effective income tax rate. In previous years, the Group recognized a deferred tax asset on an investment relief at the subsidiary Synthos PBR s.r.o. in the full amount. The tax relief may be utilized till the end of 2015. As at 30 June 2014, The Group remeasured its estimateregarding recoverability of the deferred tax assets recognized on tax relief in Synthos PBR s.r.o. Considering current market condition, the Management Board estimates that the assessed amount to be utilized until the end of 2015 amounted to

* rate after profit adjustment in accordance with Note 25.

F-24 The Synthos S.A. Group Explanatory notes to the condensed interim consolidated financial statements for the 6 months ended 30 June 2014 (Continued) (in PLN ‘000 unless otherwise indicated)

Note 8. Income tax (Continued) PLN 42,938 thousand. Due to remeasured assumptions, deferred tax asset write-off in the amount of PLN 36,600 thousand was recognized in the profit for current period.

1st half of the year 1st half of the year 2014r. 2013r. Income tax ...... 12 674 21 131 Income tax for the period ...... 12673 21131 Deferred tax Recognition / Utilization / Release of deferred tax ...... 14034 8745 Derecognition of deferred tax asset on tax relief ...... 36600 — Deferred tax for the period ...... 50 634 8 745 Income tax recognized in the statement of comprehensive income .. 63 307 29 876

Note 9. Property, plant and equipment

Fixed assets Buildings and Plant and under Land structures machinery Vehicles Other construction Total Gross book value as at 1 January 2013 ...... 33,222 859,811 1,524,127 44,377 55,056 148,772 2,665,365 Purchase of fixed assets under construction ...... — — — — — 82,469 82,469 Transfer to fixed assets ...... — 17,115 53,883 4,590 5,719 (81,307) — Disposal / scrapping ...... — (2,429) (1,003) (1,319) (481) — (5,232) Foreign exchange differences on translation ...... 781 9,893 22,122 467 227 1,180 34,670 Gross book value as at 30 June 2013 ...... 34,003 884,390 1,599,129 48,115 60,521 151,114 2,777,272 Gross book value as at 1 January 2014 ...... 30,879 846,689 1,533,645 47,748 60,353 273,368 2,792,682 Purchase of fixed assets under construction ...... — — — — — 130,955 130,955 Transfer to fixed assets ...... — 21,959 37,693 868 4,206 (64,726) — Purchase of an entity ...... 14 388 430 75 120 90 1,117 Disposal / scrapping ...... — (2,427) (3,289) (9,169) (251) (127) (15,263) Foreign exchange differences on translation ...... 40 473 1,092 26 14 103 1,748 Gross book value as at 30 June 2014 ...... 30,933 867,082 1,569,571 39,548 64,442 339,663 2,911,239

F-25 The Synthos S.A. Group Explanatory notes to the condensed interim consolidated financial statements for the 6 months ended 30 June 2014 (Continued) (in PLN ‘000 unless otherwise indicated)

Note 9. Property, plant and equipment (Continued)

Fixed assets Buildings and Plant and under Land structures machinery Vehicles Other construction Total Depreciation and impairment Depreciation and impairment as at 1 January 2013 ...... — 264,097 671,832 21,587 34,937 49,716 1,042,169 Depreciation charge for the period . — 14,701 57,290 2,247 2,052 — 76,290 Disposal / scrapping ...... — (2,321) (896) (1,107) (387) — (4,711) Foreign exchange differences on translation ...... — 1,406 9,078 206 233 — 10,923 Depreciation and impairment as at 30 June 2013 ...... — 277,883 737,304 22,933 36,835 49,716 1,109,625 Depreciation and impairment as at 1 January 2014 ...... — 283,236 753,407 22,857 37,169 49,714 1,146,383 Depreciation charge for the period . — 14,407 53,716 2,209 2,310 — 72,642 Disposal / scrapping ...... — (1,567) (3,323) (5,522) (307) (127) (10,846) Foreign exchange differences on translation ...... — 52 363 9 11 — 435 Depreciation and impairment as at 30 June 2014 ...... — 296,128 804,163 19,553 39,183 49,587 1,208,614 Net book value As at 1 January 2013 ...... 33,222 595,714 852,295 22,790 20,119 99,056 1,623,196 As at 30 June 2013 ...... 34,003 606,507 861,825 25,182 23,686 101,398 1,652,601 As at 1 January 2014 ...... 30,879 563,453 780,238 24,891 23,184 223,654 1,646,299 As at 30 June 2014 ...... 30,933 570,954 765,408 19,995 25,259 290,076 1,702,625 The costs of depreciation of property, plant and equipment are presented in the statement of comprehensive income under cost of sales in the amount of PLN 58,525 thousand (2013: PLN 62,011 thousand).

Impairment write-downs and their utilization The Group did not record any write-downs of fixed assets in the reporting period. Under the project financing agreements signed previously, in the first six months of 2014 the Group received a subsidy for the installation for the manufacture of SSBR rubber in the amount of PLN 12,368 thousand, for the launch of new EPS types in the amount of PLN 8,620 thousand, and for the research and development centre in the amount of PLN 2,960 thousand.

F-26 The Synthos S.A. Group Explanatory notes to the condensed interim consolidated financial statements for the 6 months ended 30 June 2014 (Continued) (in PLN ‘000 unless otherwise indicated)

Note 10. Intangible assets

Concessions, licences, Total Development computer software Other intangible intangible costs and other assets assets Gross book value as at 1 January 2013 .... 9,694 159,688 100,539 269,921 Purchase ...... — 4,583 — 4,583 Foreign exchange differences on translation — 878 2,235 3,113 Gross book value as at 30 June 2013 ..... 9,694 165,149 102,774 277,617 Gross book value as at 1 January 2014 .... 29,380 162,986 93,853 286,219 Purchase of an entity ...... — 48 — 48 Purchase ...... 6,263 9,182 1,655 18,472 Sale/ scrapping ...... — (1,914) — (1,914) Foreign exchange differences on translation — 50 116 166 Gross book value as at 30 June 2014 ..... 35,643 170,352 95,624 301,619

Concessions, licences, Total Development computer software Other intangible intangible costs and other assets assets Accumulated amortization and impairment write-downs as at 1 January 2013 ...... 639 34,971 100,368 135,978 Depreciation charge for the period ...... 3 3,054 143 3,200 Foreign exchange differences on translation — 364 2,235 2,599 Accumulated amortization and impairment write-downs as at 30 June 2013 ...... 642 38,389 102,746 141,777 Accumulated amortization and impairment write-downs as at 1 January 2014 ...... 646 40,327 93,853 134,826 Depreciation charge for the period ...... 3 4,210 894 5,107 Foreign exchange differences on translation — 16 116 132 Accumulated amortization and impairment write-downs as at 30 June 2014 ...... 649 44,553 94,863 140,065 Net book value As at 1 January 2013 ...... 9,055 124,717 171 133,943 As at 30 June 2013 ...... 9,052 126,760 28 135,840 As at 1 January 2014 ...... 28,734 122,659 — 151,393 As at 30 June 2014 ...... 34,994 125,799 761 161,554

Note 11. Long-term investments

30 June 2014 31 December 2013 Available-for-sale financial assets ...... 210,520 258,715 Other borrowings ...... 1,067 726 Shares in non-consolidated subsidiaries ...... 2,295 2,106 Total ...... 213,882 261,547

F-27 The Synthos S.A. Group Explanatory notes to the condensed interim consolidated financial statements for the 6 months ended 30 June 2014 (Continued) (in PLN ‘000 unless otherwise indicated)

Note 11. Long-term investments (Continued) Available-for-sale financial assets

Number of shares Amount in PLN’000 List of shares held as at 30 June 2014 —Echo Investment S.A...... 17,884,050 81,444 —Rovese S.A...... 63,281,250 119,465 —Global BioEnergies ...... 59,625 9,611 Total ...... 210,520

Number of shares Amount in PLN’000 List of shares held as at 31 December 2013 —Echo Investment S.A...... 17,884,050 119,823 —Rovese S.A...... 63,281,250 132,069 —Global BioEnergies ...... 59,625 6,823 Total ...... 258,715

Note 12. Trade receivables and other receivables

30 June 2014 31 December 2013 Trade receivables from related entities ...... 1,212 2,127 Trade receivables from other entities ...... 913,870 782,848 Receivables in respect of other taxes ...... 71,517 94,021 Receivables in respect of financial instruments ...... ,— 1,375 Other receivables ...... 5,355 1,007 Advance payments for the purchase of fixed assets ...... 12,790 2,064 Cash pool receivables ...... 48,895 26,400 Prepayments ...... 8,701 3,366 1,062,340 913,208

Note 13. Trade payables and other payables

30 June 2014 31 December 2013 Trade payables from other entities ...... 459,976 432,741 Trade payables from related entities ...... 650 750 Liabilities in respect of taxation and insurance, excluding income tax . . . 1,972 4,839 Wages and salaries payable ...... 7,731 5,462 Accruals ...... 52,516 53,202 Special funds ...... 647 342 Investment liabilities ...... 64,660 51,441 Other liabilities ...... 5,792 6,177 593,944 554,954

F-28 The Synthos S.A. Group Explanatory notes to the condensed interim consolidated financial statements for the 6 months ended 30 June 2014 (Continued) (in PLN ‘000 unless otherwise indicated)

Note 14. Share capital

30 June 2014 31 December 2013 Number of shares at the beginning of the period ...... 1,323,250,000 1,323,250,000 Number of shares at the end of the period ...... 1,323,250,000 1,323,250,000 Par value of 1 share (PLN) ...... 0.03 0.03

Note 15. Earnings per share Basic earnings per share The calculation of basic earnings per share was based on the net profit of the Parent Company’s shareholders and the weighted average number of shares as at the date of preparation of the financial statements. These values have been determined in the following manner:

30 June 2014 30 June 2013 Net profit for the period in PLN’000 ...... 168,756 223,722 Weighted average number of shares at the end of the period ...... 1,323,250,000 1,323,250,000 Earnings per share Basic (PLN) ...... 0.13 0.17 Diluted (PLN) ...... 0.13 0.17

Diluted earnings per share There are no factors that would cause dilution of earnings per share.

Note 16. Liabilities in respect of loans, borrowings, finance lease and other debt instruments The note presents the data on the Group’s liabilities in respect of loans, borrowings and other debt instruments.

30 June 2014 31 December 2013 Long-term liabilities Bank loans ...... 587,267 428,873 587,267 428,873 Short-term liabilities Short-term portion of bank loans ...... 128,248 131,644 128,248 131,644

Schedule of loan repayment

from 1 year to from after more Total up to 1 year 2 years 2 to 5 years than 5 years currency and interest rate PLN/WIBOR + margin ...... 18,470 10,543 6,465 1,462 — CZK/PRIBOR + margin ...... 10,647 3,549 7,098 EUR/EURIBOR + margin ...... 686,398 114,156 244,946 327,296 — 715,515 128,248 258,509 328,758 —

The Synthos Group signed an agreement with BNP PARIBAS Bank for a multi-purpose credit facility of PLN 250 million on 5 March 2014. The interest on this facility amounts to WIBOR + margin, EURIBOR + margin, and the repayment deadline is 30 March 2016.

F-29 The Synthos S.A. Group Explanatory notes to the condensed interim consolidated financial statements for the 6 months ended 30 June 2014 (Continued) (in PLN ‘000 unless otherwise indicated)

Note 16. Liabilities in respect of loans, borrowings, finance lease and other debt instruments (Continued) As at 30.06.2014, the amount of EUR 27 million had been utilized. Additionally, during 2014, The Group received subsequent tranches from contracts concluded in previous years.

Note 17. Overdrafts drawn

Creditor Debt currency Amount of debt in PLN Date of final repayment BANK POLSKA KASA OPIEKI S.A...... EUR 217,569 31 December 2015 BANK ZACHODNI WBK S.A...... EUR 74,975 24 May 2015 PKO BP S.A...... EUR 62,763 30 September 2016 BNP Paribas Bank Polska S.A...... EUR 15,764 30 March 2016 371,071

Note 18. Dividends paid On 17 April 2014, the GSM passed a resolution on payment of dividend in the amount of PLN 410,208 thousand (2013: PLN 1,005,670 thousand). The dividend was paid on 5 May 2014.

Dividend paid per share

1st half of 2014 2013 Dividend paid per share ...... 0.31 0.76

Note 19. Other liabilities This note presents the information on the Group’s liabilities in respect of finance lease of land.

30 June 2014 31 December 2013 Long-term liabilities Finance lease liability ...... 28,400 28,363 28,400 28,363

Note 20. Investment liabilities As at 30 June 2014, the Group incurred investment liabilities of PLN 134,818 thousand (31 December 2013: PLN 221,312 thousand).

Note 21. Contingent liabilities, guaranties and warranties As at 30 June 2014, the Group did not grant any contingent liabilities to unrelated entities.

Note 22. Fair value of financial instruments Details concerning the fair values of financial instruments which can be estimated are presented below: • Financial instruments measured at fair value as at 30 June 2014

Level 1 Level 2 Level 3 Assets available for sale ...... 210,520 — — Derivative instruments ...... — 3,390 —

F-30 The Synthos S.A. Group Explanatory notes to the condensed interim consolidated financial statements for the 6 months ended 30 June 2014 (Continued) (in PLN ‘000 unless otherwise indicated)

Note 22. Fair value of financial instruments (Continued) • Financial instruments measured at fair value as at 31 December 2013

Level 1 Level 2 Level 3 Assets available for sale ...... 258,715 — — Derivative instruments ...... — (3,351) — Level 1 Shares of listed companies. The fair value was determined on the basis of stock market quotations. Level 2 SWAP contracts hedging the interest rate on loans. The fair value was determined on the basis of the valuation by the bank which issued the contract. Level 3 There were none.

Note 23. Transactions with related entities Transactions with other related entities

30.06.2014 31.12.2013 Receivables Other ...... 1,212 2,127 Total ...... 1,212 2,127 Liabilities Other ...... 650 750 Total ...... 650 750

1st half of 2014 1st half of 2013 Revenues Other ...... 1,861 2,898 Total ...... 1,861 2,898 Costs Cersanit Sports Club (an entity related through the main shareholder) . . 960 1500 Other ...... 5,844 5,232 Total ...... 6,804 6,732

Note 24. Post balance sheet events On 7 August 2014, the Group signed an agreement for the purchase of intellectual property rights, including industrial property rights, copyrights, products formulas and chemical industry trademarks from a company operating on the Polish market. The transaction value was ca. PLN 43 million. On 12 August 2014 the Group finalized the acquisition of a chemical sector entity on the Polish market (100% of shares were purchased). The transaction value was ca. PLN 40 million. Settlement of the transaction has not been made until the date of approval of the financial statements, hence no information on the fair value of assets and liabilities of the acquired entity was disclosed and no other disclosures required by IFRS 3 were included in financial statement.

F-31 The Synthos S.A. Group Explanatory notes to the condensed interim consolidated financial statements for the 6 months ended 30 June 2014 (Continued) (in PLN ‘000 unless otherwise indicated)

Note 25. Change in the accounting policies resulting from the application of IFRS 11 In accordance with IFRS 11, joint arrangements are classified as joint ventures or joint operations. The Group analysed a joint arrangement (Butadien Kralupy a.s.) existing as at 1 January 2013 in the light of IFRS 11 and concluded that it satisfied the conditions for being classified as a joint operation on the basis of the assessment of other facts and circumstances in accordance with IFRS 11, paragraph B29-B33. Butadien Kralupy a.s. is a separate legal entity, however, due to the agreement in place between the shareholders, the parties are obliged to purchase products manufactured by the joint operation. Therefore, in practice the parties are the sole source of cash flows for continuation of the joint operation and the parties have rights to substantially all of the benefits from assets of this joint operation and are required to meet its liabilities. Pursuant to IFRS 11, a new accounting policy was applied to recognize interest in a joint operation. The Group removed the shares in Butadien Kralupy a.s. (recognized under the equity method) from the balance sheet and recognized the percentage interest in the assets and liabilities of a joint arrangement instead. The Group determines the part of assets and liabilities, as well as non-operating income and costs relating to joint operations, which is attributable to the Group, on the basis of its rights and obligations in the proportion resulting from the contract, amounting to 49% (i.e. the percentage of share in capital held in Butadien Kralupy a.s.). The Group determines the part of operating income and costs relating to joint operations, which is attributable to the Group, based on its percentage share in the sales of the joint operation. The transactions and balances from joint operations were eliminated. In The Group liabilities / assets there is liabilitiy to / receivable from the other operator of joint operation recognized respectively to compensate the Group’s share to the level of 49% share of the net profit from joint operation and share of the net assets of Butadiene Kralupy a.s. The Group restated the comparative figures as at 31 December 2012, as at 31 December 2013, for the 6 month period ended 30 June 2013 and for the 12 month period ended 31 December 2013 to comply with IFRS 11.

Restated consolidated statement of financial position as at 31 December 2013

31.12.2013 31.12.2013 Note Published Adjustment restated Assets Non-current assets Property, plant and equipment ...... 1,577,434 68,865 1,646,299 Intangible assets ...... 142,339 9,054 151,393 Investment property ...... 483 483 Shares in subsidiaries ...... 2,106 2,106 Shares in entities accounted for under the equity method . . 84,118 (84,118) — Loans granted ...... 18,100 (17,374) 726 Available-for-sale financial assets ...... 258,715 258,715 Deferred tax assets ...... 81,894 81,894 Total non-current assets ...... 2,165,189 (23,573) 2,141,616 Current assets Loans granted ...... 6,950 (6,950) — Inventories ...... 450,694 4,237 454,931 Income tax receivables ...... 66,296 66,296 Trade receivables and other receivables ...... 931,050 (17,842) 913,208 Cash and cash equivalents ...... 447,041 14 447,055 Total current assets ...... 1,902,031 (20,541) 1,881,490 Total assets ...... 4,067,220 (44,114) 4,023,106

F-32 The Synthos S.A. Group Explanatory notes to the condensed interim consolidated financial statements for the 6 months ended 30 June 2014 (Continued) (in PLN ‘000 unless otherwise indicated)

Note 25. Change in the accounting policies resulting from the application of IFRS 11 (Continued) Restated consolidated statement of financial position as at 31 December 2013 (Continued)

31.12.2013 31.12.2013 Published Adjustment restated Equity and liabilities Equity Share capital ...... 39,698 39,698 Revaluation reserve ...... 75,237 75,237 Foreign exchange gains and losses on translation of subordinated entities ...... (8,636) (8,636) Other reserves ...... — — Retained earnings, including: ...... 2,171,139 2,171,139 net profit for the current period ...... 416,891 416,891 Equity attributable to the parent company’s shareholders ...... 2,277,438 2,277,438 Non-controlling interests ...... 13,823 13,823 Total equity ...... 2,291,261 2,291,261 Liabilities Liabilities in respect of loans, borrowings and other debt instruments ...... 420,012 8,861 428,873 Liabilities in respect of employee benefits ...... 3,816 3,816 Deferred income in respect of government subsidies ...... 42,761 42,761 Provisions ...... 30,260 30,260 Deferred income tax liabilities ...... 41,638 509 42,147 Other long-term liabilities ...... 28,363 28,363 Total long-term liabilities ...... 566,850 9,370 576,220 Overdrafts ...... 456,231 456,231 Liabilities in respect of loans, borrowings and other debt instruments ...... 128,100 3,544 131,644 Liabilities in respect of employee benefits ...... 150 150 Income tax liabilities ...... 3,225 744 3,969 Trade payables and other payables ...... 612,726 (57,772) 554,954 Provisions ...... 3,951 3,951 Derivative instruments ...... 4,726 4,726 Total short-term liabilities ...... 1,209,109 (53,484) 1,155,625 Total liabilities ...... 1,775,959 (44,114) 1,731,845 Total equity and liabilities ...... 4,067,220 (44,114) 4,023,106

F-33 The Synthos S.A. Group Explanatory notes to the condensed interim consolidated financial statements for the 6 months ended 30 June 2014 (Continued) (in PLN ‘000 unless otherwise indicated)

Note 25. Change in the accounting policies resulting from the application of IFRS 11 (Continued) Restated consolidated statement of financial position as at 31 December 2012

31.12.2012 31.12.2012 Published Adjustment restated Assets Non-current assets Property, plant and equipment ...... 1,543,996 79,200 1,623,196 Intangible assets ...... 123,719 10,224 133,943 Investment property ...... 3,432 3,432 Shares in subsidiaries ...... 2,115 2,115 Shares in entities accounted for under the equity method ...... 73,547 (73,547) — Loans granted ...... 52,921 (52,409) 512 Available-for-sale financial assets ...... 187,280 187,280 Deferred tax assets ...... 97,930 191 98,121 Total non-current assets ...... 2,084,940 (36,341) 2,048,599 Current assets Loans granted ...... 7,487 (7,487) — Inventories ...... 617,902 5,197 623,099 Income tax receivables ...... 22,229 22,229 Trade receivables and other receivables ...... 1,078,269 (7,346) 1,070,923 Cash and cash equivalents ...... 746,587 14 746,601 Total current assets ...... 2,472,474 (9,622) 2,462,852 Total assets ...... 4,557,414 (45,963) 4,511,451 Equity and liabilities Equity Share capital ...... 39,698 39,698 Revaluation reserve ...... 3,832 3,832 Foreign exchange gains and losses on translation of subordinated entities ...... 110,044 110,044 Other reserves ...... 252,875 252,875 Retained earnings, including: ...... 2,507,043 2,507,043 net profit for the current period ...... 586,345 586,345 Equity attributable to the parent company’s shareholders ...... 2,913,492 — 2,913,492 Non-controlling interests ...... 14,617 — 14,617 Total equity ...... 2,928,109 — 2,928,109 Liabilities Liabilities in respect of loans, borrowings and other debt instruments ...... 474,655 26,728 501,383 Liabilities in respect of employee benefits ...... 4,288 4,288 Deferred income in respect of government subsidies ...... 17,781 17,781 Provisions ...... 30,260 30,260 Deferred income tax liabilities ...... 43,001 43,001 Other long-term liabilities ...... 30,556 30,556 Total long-term liabilities ...... 600,541 26,728 627,269 Overdrafts ...... 48,901 48,901 Liabilities in respect of loans, borrowings and other debt instruments ...... 171,641 3,818 175,459 Liabilities in respect of employee benefits ...... 218 218 Income tax liabilities ...... 11,477 4,507 15,984 Trade payables and other payables ...... 782,436 (81,016) 701,420 Provisions ...... 4,164 4,164 Derivative instruments ...... 9,927 9,927 Total short-term liabilities ...... 1,028,764 (72,691) 956,073 Total liabilities ...... 1,629,305 (45,963) 1,583,342 Total equity and liabilities ...... 4,557,414 (45,963) 4,511,451

F-34 The Synthos S.A. Group Explanatory notes to the condensed interim consolidated financial statements for the 6 months ended 30 June 2014 (Continued) (in PLN ‘000 unless otherwise indicated)

Note 25. Change in the accounting policies resulting from the application of IFRS 11 (Continued) Restated consolidated statement of comprehensive income for the 6 months ended 30 June 2013

01.01.2013 - 01.01.2013 - 30.06.2013 30.06.2013 Published restated Sales ...... 2,785,779 (192,284) 2,593,495 Cost of sales ...... (2,386,588) 203,537 (2,183,051) Gross profit from sales ...... 399,191 11,253 410,444 Other operating income ...... 11,304 11,304 Selling costs ...... (70,165) (70,165) Administrative expenses ...... (77,841) (77,841) Other operating expenses ...... (16,020) (16,020) Operating profit ...... 246,469 11,253 257,722 Finance income ...... 6,194 6,194 Finance costs ...... (10,075) (10,075) Net finance income / costs ...... (3,881) (3,881) Write-down in respect of financial assets available for sale ...... — — Interest in profit of entities accounted for under the equity method ...... 9,113 (9,113) — Profit before tax ...... 251,701 2,140 253,841 Income tax ...... (27,736) (2,140) (29,876) Net profit ...... 223,965 — 223,965 Other comprehensive income that may be recognized in profit or loss Foreign exchange gains and losses on translation of subordinated entities ...... 24,118 24,118 Measurement of available-for-sale financial assets ...... 41,595 41,595 Other comprehensive income (net) ...... 65,713 65,713 Total comprehensive income ...... 289,678 289,678 Profit attributable to: Shareholders of the parent company ...... 223,722 223,722 Non-controlling interests ...... 243 243 Net profit for the period ...... 223,965 — 223,965 Comprehensive income attributable to: Shareholders of the parent company ...... 289,435 289,435 Non-controlling interests ...... 243 243 Comprehensive income for the period ...... 289,678 289,678 Profit per share attributable to the Company’s shareholders during the period (in PLN per share): Basic (PLN) ...... 0.17 0.17 Diluted (PLN) ...... 0.17 — 0.17

F-35 The Synthos S.A. Group Explanatory notes to the condensed interim consolidated financial statements for the 6 months ended 30 June 2014 (Continued) (in PLN ‘000 unless otherwise indicated)

Note 25. Change in the accounting policies resulting from the application of IFRS 11 (Continued) Restated consolidated cash flow statement for the 6 months ended 30 June 2013

01.01.2013 - 01.01.2013 - 30.06.2013 30.06.2013 Published restated Profit before tax ...... 251,701 2,140 253,841 Adjustments Amortization and depreciation ...... 76,529 3,048 79,577 Reversal of impairment write-down in respect of property, plant and equipment ...... — — Losses on financial investments ...... — — Foreign exchange (gains)/ losses ...... 6,071 306 6,377 Losses on investing activities ...... 2,997 2,997 (Gains)/ losses on disposal of fixed assets ...... 39 39 Interest in profit of entities accounted for under the equity method ...... (9,113) 9,113 — Interest ...... 4,384 4,384 Operating profit before changes in working capital ...... 332,608 14,607 347,215 Change in receivables ...... (110,516) 9,238 (101,278) Change in inventories ...... 10,490 (3,794) 6,696 Change in trade payables, other payables and government subsidies ...... (992) 11,903 10,911 Change in provisions ...... 38 121 159 Net cash generated in operating activities ...... 231,628 32,075 263,703 Tax paid ...... (47,969) (149) (48,118) Net cash from operating activities ...... 183,659 31,926 215,585 Cash flows from investing activities Disposal of intangible assets and property, plant and equipment ...... 395 395 Repayment of loans ...... 3,877 (3,877) — Interest received ...... 4,984 4,984 Purchase of intangible assets and property, plant and equipment ...... (117,472) (753) (118,225) Cash pool received/(granted) ...... — (27,116) (27,116) Net cash from investing activities ...... (108,216) (31,746) (139,962) Cash flows from financing activities Loans and borrowings received ...... — — Overdrafts received ...... 567,430 567,430 Dividends and other payments to shareholders ...... (661,587) (661,587) Other cash inflows from financing activities ...... — — Outflows in respect of swap transactions ...... (2,997) (2,997) Outflows on repayment of loans and borrowings ...... (87,301) (87,301) Interest paid ...... (8,932) (177) (9,109) Net cash from financing activities ...... (193,387) (177) (193,564) Net increase/(decrease) in cash and cash equivalents ...... (117,944) 3 (117,941) Change in cash and cash equivalents in the balance sheet, including: ...... (113,543) 3 (113,540) Cash and cash equivalents at the beginning of the period ...... 746,587 14 746,601 Effect of changes resulting from foreign exchange differences on cash and cash equivalents ...... 4,401 4,401 Cash and cash equivalents at the end of the period ...... 633,044 17 633,061

F-36 The Synthos S.A. Group Explanatory notes to the condensed interim consolidated financial statements for the 6 months ended 30 June 2014 (Continued) (in PLN ‘000 unless otherwise indicated)

Note 25. Change in the accounting policies resulting from the application of IFRS 11 (Continued) Restated consolidated statement of comprehensive income for the 12 months ended 31 December 2013

01.01.2013 - 01.01.2013 - 31.12.2013 31.12.2013 Published restated Sales ...... 5359315 (370 346) 4 988 969 Cost of sales ...... (4619577) 391575 (4228002) Gross profit from sales ...... 739 738 21 229 760 967 Other operating income ...... 31508 31508 Selling costs ...... (141 540) (141 540) Administrative expenses ...... (148 767) (148 767) Other operating expenses ...... (31943) (31943) Profit on fixed assets disposal ...... 3973 3973 Operating profit ...... 452 969 21 229 474 198 Finance income ...... 23 727 23 727 Finance costs ...... (26 748) (26 748) Net finance income / costs ...... (3021) (3021) Interest in profit of entities accounted for under the equity method 17 192 (17 192) — Profit before tax ...... 467 140 4 037 471 177 Income tax ...... (49861) (4037) (53898) Net profit ...... 417 279 — 417 279 Other comprehensive income that may be recognized in profit or loss Foreign exchange gains and losses on translation of subordinated entities ...... (118 680) (118 680) Measurement of available-for-sale financial assets ...... 71405 71405 Other comprehensive income (net) ...... (47 275) (47 275) Total comprehensive income ...... 370 004 370 004 Profit attributable to: Shareholders of the parent company ...... 416891 416891 Non-controlling interests ...... 388 388 Net profit for the period ...... 417 279 — 417 279 Comprehensive income attributable to: Shareholders of the parent company ...... 369616 369616 Non-controlling interests ...... 388 388 Comprehensive income for the period ...... 370 004 370 004 Profit per share attributable to the Company’s shareholders during the period (in PLN per share): Basic (PLN) ...... 0,32 0,32 Diluted (PLN) ...... 0,32 — 0,32

F-37 The Synthos S.A. Group Explanatory notes to the condensed interim consolidated financial statements for the 6 months ended 30 June 2014 (Continued) (in PLN ‘000 unless otherwise indicated)

Note 25. Change in the accounting policies resulting from the application of IFRS 11 (Continued) Restated consolidated cash flow statement for the 12 months ended 31 December 2013

01.01.2013 - 01.01.2013 - 31.12.2013 31.12.2013 Published restated Profit before tax ...... 467 140 4 037 471 177 Adjustments Amortization and depreciation ...... 152327 6149 158476 Foreign exchange (gains)/ losses ...... (2688) 591 (2097) Losses on investing activities ...... 3285 164 3449 (Gains)/ losses on disposal of fixed assets ...... (4129) (4129) Interest in profit of entities accounted for under the equity method . . . . (17 192) 17 192 — Interest ...... 15126 15126 Other ...... (7519) (7519) Operating profit before changes in working capital ...... 606 350 28 133 634 483 Change in receivables ...... 57884 14798 72682 Change in inventories ...... 149124 (2532) 146592 Change in trade payables, other payables and government subsidies . . . . (68 284) 2 494 (65 790) Change in provisions ...... 64 64 Change in liabilities in respect of employee benefits ...... (534) (534) Net cash generated in operating activities ...... 744 604 42 893 787 797 Tax paid ...... (95441) (7022) (102 463) Net cash from operating activities ...... 649 163 35 871 685 034 Cash flows from investing activities Disposal of intangible assets and property, plant and equipment ...... 9370 9370 Repayment of loans granted ...... 31817 (31817) — Proceeds from forward transactions realized ...... 3342 3342 Interest received ...... 6349 6349 Subsiedies received ...... 26443 26443 Purchase of intangible assets and property, plant and equipment ...... (300 268) (1 387) (301 655) Loans granted ...... (218) (218) Cash pool received/(granted) ...... — 187 187 Net cash from investing activities ...... (223 165) (33 017) (256 182) Cash flows from financing activities Loans and borrowings received ...... 524361 524361 Overdrafts received ...... 407331 407331 Dividends and other payments to shareholders ...... (1 006 892) (1 006 892) Outflows in respect of swap transactions ...... (6628) (153) (6 781) Outflows on repayment of loans and borrowings ...... (631 021) (564) (631 585) Interest paid ...... (21071) (2137) (23208) Net cash from financing activities ...... (733 920) (2 854) (736 774) Net increase/(decrease) in cash and cash equivalents ...... (307 922) 0 (307 922) Change in cash and cash equivalents in the balance sheet, including: .... (299 546) (299 546) Cash and cash equivalents at the beginning of the period ...... 746 587 14 746 601 Effect of changes resulting from foreign exchange differences on cash and cash equivalents ...... 8 376 8 376 Cash and cash equivalents at the end of the period ...... 447 041 14 447 055

F-38 The Synthos S.A. Group Explanatory notes to the condensed interim consolidated financial statements for the 6 months ended 30 June 2014 (Continued) (in PLN ‘000 unless otherwise indicated)

Note 26. Accounting estimates, assumptions and judgements The main accounting estimates, assumptions and judgements are presented in the respective explanatory notes to the financial statements: • judgement concerning determination of the type of joint venture under IFRS 11—more information is presented in Note 25. • estimates concerning deferred tax assets recognized are presented in Note 6. No significant changes in the amount of estimates or in the methodologies and assumptions applied that could have a significant effect on the present or future periods occurred in the first 6 months of 2014.

Note 27. Approval of the financial statements The Management Board of the Synthos S.A. Group hereby represents that it approved the condensed interim consolidated financial statements of the Group for the period from 1 January to 30 June 2014 on 25 August 2014.

F-39 CAPITAL GROUP SYNTHOS S.A. O´swi˛ecim, ul. Chemikow´ 1 Consolidated financial statements for the period of 12 months ended 31 December 2013 prepared in accordance with the International Financial Reporting Standards as adopted by the European Union

O´swi˛ecim, 4 March 2014

F-40 10SEP201400263121

Independent Registered Auditor’s Opinion To the General Shareholders’ Meeting and the Supervisory Board of Synthos S.A. We have audited the accompanying consolidated financial statements of the Synthos S.A. Group (hereinafter referred to as ‘‘the Group’’), in which Synthos S.A., O´swi˛ecim, ul. Chemikow´ 1, is the parent company (hereinafter referred to as ‘‘the Parent Company’’), comprising the consolidated statement of financial position prepared as at 31 December 2013, showing total assets and total equity and liabilities of PLN 4.067.220, the consolidated statement of comprehensive income for the period from 1 January to 31 December 2013, showing a total comprehensive income of PLN 370.004; the consolidated statement of changes in equity, the consolidated statement of cash flows for the financial year and additional information on adopted accounting policies and other explanatory notes. The Parent Company’s Management Board is responsible for preparing the consolidated financial statements and a Group Directors’ Report in accordance with the applicable regulations, and for the correctness of the accounting records. The Management Board and members of the Supervisory Board of the Parent Company are obliged to ensure that the consolidated financial statements and the Group Director’s Report comply with the requirements of the Accounting Act of 29 September 1994 (‘‘the Accounting Act’’—Journal of Laws of 2013, item 330). Our responsibility was to perform an audit of the accompanying consolidated financial statements and to express an opinion on whether the consolidated financial statements comply, in all material respects, with the applicable accounting policies and whether they present, in all material respects, a true and clear view of the Group’s financial position and results. We conducted our audit in accordance with: a. the provisions of Chapter 7 of the Accounting Act; b. national standards of auditing issued by the National Council of Registered Auditors. Our audit was planned and performed to obtain reasonable assurance whether the consolidated financial statements are free from material misstatements and omissions. The audit included examining, on a test basis, accounting documents and entries supporting the amounts and disclosures in the consolidated financial statements. The audit also included assessing the Group’s accounting policies and significant estimates made during the preparation of the consolidated financial statements, as well as evaluating the overall presentation thereof. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the accompanying consolidated financial statements, in all material respects: a. give a fair and clear view of the Group’s financial position as at 31 December 2013 and of the results of its operations for the year then ended, in accordance with the International Financial Reporting Standards (IFRS) as adopted by the European Union; b. comply in terms of form and content with the applicable laws; c. have been prepared on the basis of properly maintained consolidation documentation.

F-41 The information contained in the Group Directors’ Report for the financial year ended 31 December 2013 has been presented in accordance with the provisions of the Decree of the Minister of Finance dated 19 February 2009 concerning the publication of current and periodic information by issuers of securities and the conditions of acceptance as equal information required by the law of other state, which is not a member state (‘‘the Decree’’—Journal of Laws of 2009, No. 33, item 259, with further amendments) and is consistent with the information presented in the audited consolidated financial statements. Person conducting the audit on behalf of PricewaterhouseCoopers Sp. z o.o., Registered Audit Company No. 144:

Tomasz Reinfuss Key Registered Auditor No. 90038 Katowice, 4th March 2014

F-42 Synthos S.A. Capital Group Consolidated financial statements for the period of 12 months ended 31 December 2013 (in PLN ‘000 unless stated otherwise)

MANAGEMENT REPRESENTATION CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD OF 12 MONTHS ENDED 31 DECEMBER 2013 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2013 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2013 (CONTINUED) CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD OF 12 MONTHS ENDED 31 DECEMBER 2013 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE PERIOD OF 12 MONTHS ENDED 31 DECEMBER 2013 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE PERIOD OF 12 MONTHS ENDED 31 DECEMBER 2013 (CONTINUED) Note 1. Accounting policies Note 2. Segment reporting Note 3. Revenues from sales Note 4. Costs by type Note 5. Other operating income Note 6. Other operating expenses Note 7. Employee benefits expense Note 8. Net financial income/costs Note 9. Foreign exchange gains/losses Note 10. Income tax Note 11. Property, plant and equipment Note 12. Intangible assets Note 13. Investment properties Note 14. Long-term investments Note 15. Investments in unconsolidated subsidiaries Note 16. Shares in companies recognised under the equity method Note 17. Deferred tax Note 18. Short-term loans granted Note 19. Inventories Note 20. Trade and other receivables Note 21. Cash and cash equivalents Note 22. Share capital Note 23. Earnings per share Note 24. Liabilities under loans, borrowings and other debt instruments

F-43 Synthos S.A. Capital Group Consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 25. Employee benefits Note 26. Provisions Note 27. Trade and other payables Note 28. Reasons for differences between balance sheet changes of certain items and changes resulting from the consolidated statement of cash flows Note 29. Financial instruments Note 30. Operating lease Note 31. Investment liabilities Note 32. Changes of accounting principles Note 33. Contingent liabilities and guarantees Note 34. Related party transactions Note 35. Events after the balance sheet date Note 36. Accounting estimates and assumptions Note 37. Approval of the financial statements

F-44 Synthos S.A. Capital Group Consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

MANAGEMENT REPRESENTATION The Management Board of Synthos S.A. presents consolidated financial statements for the period of 12 months ended 31 DECEMBER 2013, comprising: • Consolidated statement of comprehensive income for the period from 1 January till 31 December 2013, • Consolidated statement of financial position prepared as of 31 December 2013, • Consolidated statement of changes in equity for the period from 1 January till 31 December 2013, • Consolidated statement of cash flows for the period from 1 January till 31 December 2013, • Notes to the financial statements. The consolidated financial statements were prepared in accordance with the requirements of the International Financial Reporting Standards as adopted by the European Union, hereinafter referred to as ‘‘EU IFRS’’ and in accordance with the requirements laid down in the regulation of the Council of Ministers of 19 February 2009 on current and periodic reporting by issuers of securities (Journal of Laws of 2009, No 33, item 259) and they give a true and fair view of the assets and financial position of the Capital Group. The report on the business operations of the Capital Group contains a true view of the development, achievements and positions of the Group, including a description of main risks and threats. The entity licensed to audit the consolidated financial statements, performing the audit of the consolidated financial statements, was appointed in accordance with the law. The above entity and registered auditors who performed the audit met the conditions for expressing an unbiased and independent audit opinion, in accordance with the law and professional standards.

Signatures of the Members of the Management Board

Tomasz Kalwat Michał Watoła President of the Board Person responsible for the preparation of the consolidated financial statements

Zbigniew Warmuz O´swi˛ecim, 4 March 2014 Vice-President of the Board

Zbigniew Lange Member of the Board

Tomasz Piec Member of the Board

Jarosław Rogo˙za Member of the Board

F-45 Synthos S.A. Capital Group Consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD OF 12 MONTHS ENDED 31 DECEMBER 2013

from 01.01.2013 from 01.01.2012 Note to 31.12.2013 to 31.12.2012 Revenues from sales ...... 3 5,359,315 6,206,544 Cost of sales ...... 4 (4,619,577) (5,166,294) Gross profit on sales ...... 739,738 1,040,250 Other operating income ...... 5 31,508 79,043 Selling costs ...... 4 (141,540) (149,637) General and administrative expenses ...... 4 (148,767) (157,916) Other operating expenses ...... 6 (31,943) (37,171) Profit/(Loss) on sale of property, plant and equipment ...... 3,973 1,536 Operating profit ...... 452,969 776,105 Financial income ...... 8 23,727 15,445 Financial costs ...... 8 (26,748) (44,108) Net financial costs ...... 8 (3,021) (28,663) Impairment loss for financial assets available for sale ...... 29 — (154,640) Share in profits of companies recognised under the equity method 17,192 24,501 Profit before tax ...... 467,140 617,303 Income tax ...... 10 (49,861) (32,089) Net profit ...... 417,279 585,214 Other comprehensive income that may be later reclassified to profit or loss Foreign exchange differences on subordinated entities ...... (118,680) (81,737) Valuation of financial assets available for sale ...... 71,405 147,697 Other (net) comprehensive income ...... (47,275) 65,960 Total comprehensive income ...... 370,004 651,174 Profit attributable to: Equity holders of the parent ...... 416,891 586,345 Non-controlling interests ...... 388 (1,131) Net profit for the year ...... 417,279 585,214 Comprehensive income attributable to: Equity holders of the parent ...... 369,616 652,305 Non-controlling interests ...... 388 (1,131) Comprehensive income for the period ...... 370,004 651,174 Earnings per share attributable to shareholders of the Company during the year (PLN per share): Basic (PLN) ...... 23 0.32 0.44 Diluted (PLN) ...... 23 0.32 0.44

The consolidated statement of financial position should be read in conjunction with the notes which constitute an integral part of the consolidated financial statements

F-46 Synthos S.A. Capital Group Consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2013

Note 31.12.2013 31.12.2012 Assets Non-current assets Property, plant and equipment ...... 11 1,577,434 1,543,996 Intangible assets ...... 12 142,339 123,719 Investment properties ...... 13 483 3,432 Shares in subsidiaries ...... 14 2,106 2,115 Shares in companies recognised under the equity method ...... 16 84,118 73,547 Loans granted ...... 14 18,100 52,921 Financial assets available for sale ...... 14 258,715 187,280 Deferred tax assets ...... 17 81,894 97,930 Total non-current assets ...... 2,165,189 2,084,940 Current assets Loans granted ...... 18 6,950 7,487 Inventories ...... 19 450,694 617,902 Income tax receivables ...... 66,296 22,229 Trade and other receivables ...... 20 931,050 1,078,269 Cash and cash equivalents ...... 21 447,041 746,587 Total current assets ...... 1,902,031 2,472,474 Total assets ...... 4,067,220 4,557,414

The consolidated statement of financial position should be read in conjunction with the notes which constitute an integral part of the consolidated financial statements

F-47 Synthos S.A. Capital Group Consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Consolidated statement of financial position as at 31 December 2013 (Continued)

Note 31.12.2013 31.12.2012 Equity and liabilities Equity Share capital ...... 22 39,698 39,698 Revaluation reserve ...... 75,237 3,832 Foreign exchange differences on subordinated entities ...... 22 (8,636) 110,044 Other capital reserves ...... — 252,875 Retained earnings including: ...... 2,171,139 2,507,043 net profit of the current period ...... 416,891 586,345 Equity attributable to equity holders of the parent ...... 22 2,277,438 2,913,492 Non-controlling interests ...... 13,823 14,617 Total equity ...... 2,291,261 2,928,109 Liabilities Liabilities under loans, borrowings and other debt instruments ...... 24 420,012 474,655 Employee benefit liabilities ...... 25 3,816 4,288 Deferred income from government grants ...... 11 42,761 17,781 Provisions ...... 26 30,260 30,260 Deferred tax liability ...... 17 41,638 43,001 Other non-current liabilities ...... 11 28,363 30,556 Total non-current liabilities ...... 566,850 600,541 Overdraft facilities ...... 29 456,231 48,901 Liabilities under loans, borrowings and other debt instruments ...... 24 128,100 171,641 Employee benefit liabilities ...... 25 150 218 Income tax payable ...... 3,225 11,477 Trade and other payables ...... 27 612,726 782,436 Provisions ...... 26 3,951 4,164 Derivatives ...... 29 4,726 9,927 Total current liabilities ...... 1,209,109 1,028,764 Total liabilities ...... 1,775,959 1,629,305 Total equity and liabilities ...... 4,067,220 4,557,414

The consolidated statement of financial position should be read in conjunction with the notes which constitute an integral part of the consolidated financial statements

F-48 (1,182) (1,182) interests interests Attributable to Attributable non-controlling of the Attributable to Attributable non-controlling (81,737) 147,506 — 65,769 (118,680) 71,435 — (47,245) 586,345 (81,737) 147,697 (1,131) 651,174 586,345 — — (1,131) 585,214 416,891 —416,891 (118,680) — 71,405 388 388 417,279 370,004 (661,625) — — — (661,625) (1,005,670) — — — (1,005,670) Other Exchange (511,625) 511,625 — — — — Other Exchange (252,875) 252,875 — — — — Share capital Retained differences Revaluation Non-controlling Total 39,698 764,500 2,070,698 191,781 (143,865)39,698 15,748 252,875 2,507,043 2,938,560 110,044 3,832 14,617 2,928,109 capital reserves earnings on translation reserve interests Equity Share capital Retained differences Revaluation Non-controlling Total 39,698 252,875 2,507,043 110,044 3,832 14,617 2,928,109 39,698 — 2,171,139 (8,636) 75,237 13,823 2,291,261 capital reserves earnings on translation reserve interests Equity Synthos S.A. Capital Group consolidated financial statements (in PLN ‘000 unless stated otherwise) Attributable to equity holders of the Company Attributable to equity holders of the Company Attributable CONSOLIDATED STATEMENT OF CHANGES IN EQUITY STATEMENT CONSOLIDATED FOR THE PERIOD OF 12 MONTHS ENDED 31 DECEMBER 2013 ...... — — — — 191 — 191 ...... — — — — (30) — (30) Consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) ...... — — ...... — — ...... — — — — — ...... — — ...... — — ...... The consolidated statement of changes in equity should be read conjunction with the notes which constitute an integral part ...... — ...... — ...... — — — ...... — — — ...... — — ...... — — payment in respect of a decrease the share capital subsidiary * 31 December 2012 1 January 2012 Deferred tax on other comprehensive income net comprehensive income Total Dividend distribution Reclassification Net profit Other income Reclassification 1 January 2013 Dividend distribution Net profit Deferred tax on other comprehensive income Other net comprehensive income Other payments to shareholders* 31 December 2013 Other income

F-49 Synthos S.A. Capital Group Consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE PERIOD OF 12 MONTHS ENDED 31 DECEMBER 2013

Note 2013 2012 Profit before tax ...... 467,140 617,303 Adjustments Amortisation and depreciation ...... 4 152,327 155,976 Reversal of impairment of property, plant and equipment ...... — (34,359) Impairment loss for financial assets available for sale ...... — 154,640 Foreign exchange gains/(losses) ...... (2,688) 2,273 Losses on investing activities ...... 3,285 4,115 Gains on sale of property, plant and equipment and investment properties ...... (4,129) (1,527) Share in profits of companies recognised under the equity method ...... (17,192) (24,470) Result on sale of shares ...... — — Interest ...... 15,126 (7) Other ...... (7,519) — Profit from operating activities before changes in working capital ...... 606,350 873,944 Movement in receivables ...... 28 57,884 (33,975) Movement in inventories ...... 149,124 (159,866) Movement in trade and other payables ...... 28 (68,284) 181,865 Movement in provisions ...... 64 (20,549) Movement in employee benefit liabilities ...... (534) 784 Cash flows generated from operating activities ...... 744,604 842,203 Income tax paid ...... (95,441) (139,352) Net cash flows from operating activities ...... 649,163 702,851

The consolidated statement of cash flows should be read in conjunction with the notes which constitute an integral part of the consolidated financial statements

F-50 Synthos S.A. Capital Group Consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE PERIOD OF 12 MONTHS ENDED 31 DECEMBER 2013 (Continued)

Note 2013 2012 Cash flows from investing activities Sale of intangible assets and property, plant and equipment ...... 9,370 7,259 Repayments of loans granted ...... 31,817 47,505 Proceeds from executed forwards ...... 3,342 — Interest received ...... 6,349 13,857 Grants received ...... 26,443 — Purchase of intangible assets and property, plant and equipment . . . (300,268) (205,183) Purchase of shares in subsidiaries and joint ventures ...... — 20 Purchase of financial assets ...... — (45,500) Loans granted ...... (218) (20,179) Net cash flows used in investing activities ...... (223,165) (202,221) Cash flows from financing activities Loans and borrowings taken out ...... 524,361 8,969 Change in overdraft facilities ...... 407,331 48,901 Dividends and other payments to shareholders ...... (1,006,892) (661,625) Expenditures relating to executed IRS ...... (6,628) (4,115) Expenditures on repayment of loans and borrowings ...... (631,021) (140,431) Interest paid ...... (21,071) (19,492) Payment of finance lease liabilities ...... — 27 Net cash flows from/(used in) financing activities ...... (733,920) (767,766) Total net cash flows ...... (307,922) (267,136) Balance sheet change in cash and cash equivalents, including: ...... (299,546) (313,837) Cash and cash equivalents at the beginning of the period ...... 746,587 1,060,424 Effect of changes in foreign exchange differences on cash and cash equivalents ...... 8,376 (46,701) Cash and cash equivalents at the end of the period* ...... 21 447,041 746,587

* changes in accounting principles affecting the consolidated statement of cash flows are described in note 32.

The consolidated statement of cash flows should be read in conjunction with the notes which constitute an integral part of the consolidated financial statements

F-51 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (in PLN ‘000 unless stated otherwise)

Information on the Capital Group’s business operations Synthos S.A. Capital Group (formerly Firma Chemiczna ‘‘Dwory’’ S.A. Capital Group, hereinafter referred to as the ‘‘Group’’ or ‘‘Capital Group’’) consists of the parent company and subsidiaries. The parent company of the Group is Synthos S.A. (hereinafter referred to as the ‘‘Company’’ or the ‘‘Parent Company’’) which is a joint-stock company registered in Poland. The Parent Company is listed on the Warsaw Stock Exchange. The registered office of the Parent Company is located in O´swi˛ecim, at ul. Chemikow´ 1. Basic data on the Parent Company: Telephone: Telephone information (33) 844 18 21 do 25 Fax: (33) 842 42 18 Electronic mail: [email protected] Website: www.synthosgroup.com The Company was entered into the National Court Register in the Register of Entrepreneurs on 27 August 2001 under number KRS 0000038981. Tax Identification Number (NIP): 549-00-02-108 Statistical Identification Number (REGON): 070472049 The object of the Group’s business is in particular: • business and management consultancy activities, • accounting and book-keeping activities, • manufacture of plastics PKD 24.16.z, • manufacture of synthetic rubber PKD 24.17.z, • manufacture of other inorganic basic chemicals PKD 24.13.z, • manufacture of other organic basic chemicals PKD 24.14.z, • manufacture of other chemical products, not elsewhere classified PKD 24.66.z, • production and distribution of electricity covered in 40.11.Z, 40.13.Z of PKD, • production and distribution of heat (steam and hot water) covered in 40.30.A, 40.30.B of PKD, • sewage treatment services, • storage and treatment of waste. Duration of Group Companies is indefinite in accordance with the articles of association.

Management Board of the Company: Tomasz Kalwat — President of the Board Zbigniew Warmuz — Vice-President of the Board from 13.01.2014 Zbigniew Lange — Member of the Board Tomasz Piec — Member of the Board Jarosław Rogo˙za — Member of the Board from 13.01.2014

Supervisory Board: Jarosław Grodzki — Chairman Mariusz Waniołka — Vice-Chairman Krzysztof Kwapisz — Vice-Chairman Grzegorz Mironski´ — Secretary Robert Oskard — Member of the Supervisory Board

F-52 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

The basic information on consolidated subsidiaries and joint ventures is presented below:

Percentage of share capital Registered and voting Name of the entity and its legal form office Principal business rights Subsidiaries Miejsko-Przemysłowa Oczyszczalnia Sciek´ ow´ Sp. z o.o...... O´swi˛ecim collection, treatment and disposal of 76.79% sewage, waste treatment, sanitation services and related services Synthos Dwory 7 społka´ z ograniczon˛a odpowiedzialno´sci˛a społka´ jawna ...... O´swi˛ecim manufacture of chemicals and 100% chemical products Synthos Dwory 4 Sp. z o.o...... O´swi˛ecim production of electricity 100% Synthos Dwory 5 Sp. z o.o...... O´swi˛ecim production of electricity 100% Synthos Dwory 7 Sp. z o.o...... O´swi˛ecim manufacture of chemicals and 100% chemical products Synthos Dwory 7 Społka´ z ograniczon˛a odpowiedzialno´sci˛a Holding S.K.A...... O´swi˛ecim investing and capital activities 100% Synthos Dwory 8 Sp. z o.o...... O´swi˛ecim production of electricity 100% Synthos Kralupy a.s...... Kralupy nad manufacture of chemicals and 100% Vltavou—Czech chemical products Republic Tamero Invest s.r.o...... Kralupy nad Production and distribution of 100% Vltavou—Czech electricity Republic Synthos PBR ...... Kralupy nad manufacture of chemicals and 100% Vltavou—Czech chemical products Republic Red Chilli Ltd...... Nicosia investing and capital activities 100% Calgeron Investment LTD ...... Cyprus investing and capital activities 99.87% Jointly Controlled Entity Butadien Kralupy a.s.* ...... Kralupy nad manufacture of chemicals and 49% Vltavou—Czech chemical products Republic

* company accounted for using the equity method (see Note 16)—joint control pursuant to the provisions of the articles of association With the exception of Synthos Dwory 7 społka´ z ograniczon˛a odpowiedzialno´sci˛a Holding Społka´ Komandytowo-Akcyjna (a company established by the Group in 2013) the actual number of shares in other companies remained unchanged since 31 December 2012.

F-53 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 1. Accounting policies 1. Basis of preparation of the consolidated financial statements The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards approved by the European Union, hereinafter referred to as ‘‘EU IFRS’’. The data in the consolidated financial statements are stated in PLN which is the Group’s presentation currency, after being rounded to the nearest thousand. Items included in the financial statements of each Group entity are measured using the currency of the primary economic environment in which the entity operates (‘‘functional currency’’). The consolidated financial statements have been prepared on a historical cost basis, except for assets and liabilities measured at fair value: financial assets available for sale and financial instruments measured at fair value through profit or loss (including derivative instruments). Preparation of financial statements in accordance with EU IFRS requires the Management Board to make judgements, estimates and assumptions which affect the adopted principles and presented values of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and other factors which are considered reasonable in the circumstances, and their results provide the basis for making judgements as to the carrying value of assets and liabilities which does not result from other sources. The actual value may differ from the estimated value. The estimates and associated assumptions are subject to ongoing review. A change in accounting estimates is recognised in the period in which the estimate is revised or in the current and future period if the change in the estimate applies to both the current period and the future period. Judgments made by the Management Board using EU IFRS that have a significant impact on the consolidated financial statements, as well as the estimates, involving a significant risk of changes in future years are presented in Note 35. The accounting policies set out below were applied continuously (except for the changes described in note 32) with respect to all periods presented in the consolidated financial statements. The accounting policies presented were applied by all entities within the Group.

2. Going concern assumption The consolidated financial statements of the Group were prepared under the assumption that the Group will continue as a going concern for the foreseeable future. There are no circumstances indicating a threat to the Group’s ability to continue as a going concern.

3. New and revised accounting standards and interpretations New and revised standards and interpretations, effective from 1 January 2013 and applied by the Capital Group The following new and revised standards and interpretations which became effective on 1 January 2013 were applied for the first time in these consolidated financial statements: a) IFRS 13 ‘‘Fair Value Measurement’’ IFRS 13 was published by the International Accounting Standards Board in May 2011 and applies to annual periods beginning on or after 1 January 2013. The new standard aims to improve the consistency and reduce the complexity by providing a precise definition of fair value and focusing on a single standard of requirements regarding fair value measurement and disclosure of relevant information.

F-54 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 1. Accounting policies (Continued) The Group has applied IFRS 13 as from 1 January 2013. The application of the new standard has no significant impact on the disclosures in the consolidated financial statements. b) Presentation of items of other comprehensive income—Amendments to IAS 1 Amendments to IAS 1, ‘‘Presentation of financial statements’’ concerning the presentation of items of other comprehensive income were published by the International Accounting Standards Board in June 2011 and they apply to annual periods beginning on or after 01 July 2012. The amendments require entities to classify items presented in other comprehensive income into two groups based on whether such items will be able to be included in the financial result in the future. In addition, the title of the statement of comprehensive income was changed into the ‘‘statement of profit or loss and other comprehensive income’’. The Group has applied the amendments to IAS 1 as from 1 January 2013. The Group adjusted the presentation of other comprehensive income to the requirements of the revised standard. The amendments to the standard have no significant impact on the disclosures in the consolidated financial statements. c) Amendments to IAS 19 ‘‘Employee Benefits’’ Amendments to IAS 19, ‘‘Employee benefits’’ were published by the International Accounting Standards Board in June 2011 and they apply to annual periods beginning on or after 1 January 2013. The amendments introduce new requirements for the recognition and measurement of defined benefit plans and termination of employment benefits and the also change required disclosures concerning all employee benefits. The Group has applied the amendments to IAS 19 as from 1 January 2013. The amendments to the standard have no significant impact on the consolidated financial statements. Other changes which came into force on 1 January 2013 did not have a material impact on the consolidated financial statements.

Published standards and interpretations which are not yet effective and have not been adopted early by the Group In these consolidated financial statements the Group decided not to apply the following published standards, interpretations and amendments to existing standards before their date of entry into force: a) IFRS 9 ‘‘Financial instruments Part 1: Classification and Measurement’’ IFRS 9 published by the International Accounting Standards Board on 12 November 2009 replaces those parts of IAS 39 which relate to the classification and measurement of financial assets. In October 2010 IFRS 9 was supplemented with the issues related to the classification and measurement of financial liabilities. Pursuant to the amendments introduced in December 2011, the new standard is effective for annual periods beginning on or after 1 January 2015. The standard introduces one model providing for only two classification categories for financial assets: measured at fair value and measured at amortised cost. The classification is made at the time of initial recognition and depends on the model adopted by the entity for the management of financial instruments and on characteristics of contractual cash flows from these instruments.

F-55 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 1. Accounting policies (Continued) Most of the IAS 39 requirements relating to the classification and measurement of financial liabilities were transferred to IFRS 9 unchanged. The key change is the requirement imposed on entities to present in other comprehensive income effects of changes in their own credit risk in respect of financial liabilities designated for measurement at fair value through profit or loss. The Group shall use MSSF 9 from 1 January 2015. The Group has not yet completed its analysis of the impact of the standard on the financial statements. As at the date of these consolidated financial statements, IFRS 9 has not yet been approved by the European Union. b) IFRS 10 ‘‘Consolidated Financial Statements’’ IFRS 10 was published by the International Accounting Standards Board in May 2011 and applies to annual periods beginning on or after 1 January 2013 (obligatory application in the European Union: from 1 January 2014). The new standard replaces the guidance on control and consolidation contained in IAS 27 ‘‘Consolidated and separate Financial Statements’’ and SIC-12 ‘‘Consolidation—Special Purpose Entities’’. IFRS 10 changes the definition of control so that the same criteria for determining control apply to all entities. The amended definition is accompanied by extensive guidance on the application. The Group will apply IFRS 10 as from 1 January 2014. The Group does not expect the standard to have any impact on the consolidated financial statements. c) IFRS 11 ‘‘Joint Arrangements’’ IFRS 11 was published by the International Accounting Standards Board in May 2011 and applies to annual periods beginning on or after 1 January 2013 (obligatory application in the European Union: from 1 January 2014). The new standard replaces IAS 31 ‘‘Interests in Joint Ventures’’ and SIC-13 ‘‘Jointly Controlled Entities— Non-Monetary Contributions by Venturers’’. Changes in definitions limited the number of types of joint arrangements to two: joint operations and joint ventures. At the same time the existing choice of proportionate consolidation for joint ventures was eliminated. All participants in joint ventures are now required to recognise them under the equity method. The Group will apply IFRS 11 as from 1 January 2014. The Group does not expect the standard to have any impact on the consolidated financial statements. d) IFRS 12 ‘‘Disclosure of Interests in Other Entities’’ IFRS 12 was published by the International Accounting Standards Board in May 2011 and applies to annual periods beginning on or after 1 January 2013 (obligatory application in the European Union: from 1 January 2014). The new standard applies to entities that have an interest in a subsidiary, joint venture, an associate or an unconsolidated structured entity. The standard replaces disclosure requirements contained currently in ‘‘IAS 27 Consolidated and Separate Financial Statements, IAS 28 ‘‘Investments in Associates’’ or IAS 31 ‘‘Interests in Joint Ventures’’. IFRS 12 requires entities to disclose information that will help users of financial statements to evaluate the nature, risks and financial impact of investments in subsidiaries, associates, joint ventures and unconsolidated structured entities. To this end, the new standard requires disclosure of information concerning a number of areas, including significant judgments and assumptions made in determining whether an entity controls, jointly controls or has significant influence over another

F-56 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 1. Accounting policies (Continued) entity; detailed information concerning the non-controlling interest in the operations and cash flows of the group; summary financial information of subsidiaries with significant non-controlling interests, as well as detailed information concerning interests in unconsolidated structured entities. The Group will apply IFRS 12 as from 1 January 2014. The Group does not expect the standard to have any impact on the consolidated financial statements. e) Amended IAS 27 ‘‘Separate Financial Statements’’ Amended IAS 27 ‘‘Separate Financial Statements’’ was published by the International Accounting Standards Board in May 2011 and applies to annual periods beginning on or after 1 January 2013 (obligatory application in the European Union: from 1 January 2014). IAS 27 was amended in connection with the publication of IFRS 10 ‘‘Consolidated Financial Statements’’. The amended IAS 27 is to define the requirements for recognition and presentation of investments in subsidiaries, joint ventures and associates when an entity prepares separate financial statements. The guidance on control and consolidated financial statements has been replaced by IFRS 10. The Group will apply the amended IAS 27 as from 1 January 2014. The Group believes that the changes in the standard will have no impact on the consolidated financial statements. f) Amended IAS 28 ‘‘Investments in Associates and Joint Ventures’’ Amended IAS 28 ‘‘Investments in Associates and Joint Ventures’’ was published by the International Accounting Standards Board in May 2011 and applies to annual periods beginning on or after 1 January 2013 (obligatory application in the European Union: from 1 January 2014). Amendments to IAS 28 resulted from the IASB’s project on joint ventures. The Board decided to include the principles for recognising joint ventures using the equity method in IAS 28 because this method is applicable to both joint ventures and associates. Apart from this exception, other guidelines have not changed. The Group will apply the amended IAS 28 as from 1 January 2014. The Group does not expect the amendments to have any impact on the consolidated financial statements. g) Offsetting Financial Assets and Financial Liabilities—Amendments to IAS 32 Amendments to IAS 32, ‘‘Financial Instruments: Presentation’’ relating to offsetting of financial assets and financial liabilities were published by the International Accounting Standards Board in December 2011 and they apply to annual periods beginning on or after 01 January 2014. The amendments introduce additional explanations of the application into IAS 32 to clarify inconsistencies encountered in the application of certain criteria for offsetting. They include, among other things, a clarification of what is meant by ‘‘has a legally enforceable right to set off’’ and that some gross settlement systems may be regarded as settled net if certain conditions are met. The Group will apply the amendments to IAS 32 as from 1 January 2014. The Group does not expect the amendments to have any impact on the consolidated financial statements. h) Changes in the transitional provisions to IFRS 10, IFRS 11, IFRS 12 The International Accounting Standards Board published in June 2012 changes in the transitional provisions to IFRS 10, IFRS 11 and IFRS 12. The amendments will be effective for annual periods

F-57 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 1. Accounting policies (Continued) beginning on 1 January 2013 or earlier—if the standards that are their basis (IFRS 10, 11 or 12) have been used at an earlier date. The amendments clarify the transitional provisions for IFRS 10 ‘‘Consolidated Financial Statements’’. Entities adopting IFRS 10 should assess whether they have the control on the first day of the annual period for which IFRS 10 was applied for the first time and if the conclusions from such an assessment differ from the conclusions from IAS 27 and SIC 12, the comparative information should be restated unless it would be impractical. The amendments also introduce additional transitional measures in the application of IFRS 10, IFRS 11 and IFRS 12, by limiting the obligation to present adjusted comparative data only to data for the immediately preceding reporting period. In addition, these changes abolish the requirement to present comparative information for the disclosures relating to unconsolidated structured entities for periods prior to the period of application of IFRS 12 for the first time. The Group will apply the above amendments as from 1 January 2014. The Group has not yet completed its analysis of the impact of the standard on the consolidated financial statements. i) Investment Entities—amendments to IFRS 10, IFRS 12 and IAS 27 Amendments to IFRS 10, IFRS 12 and IAS 27 ‘‘Investment Entities’’ were published by the International Accounting Standards Board in October 2012 and they apply to annual periods beginning on or after 1 January 2014. The amendments introduce the definition of an investment entity in IFRS 10. Such entities will be required to report their subsidiaries at fair value through profit or loss and consolidate only those subsidiaries that provide to them services related to the investing activities of the company. IFRS 12 was also amended due to the introduction of new disclosures on investment entities. The Group will apply the above amendments as from 1 January 2014. The Group does not expect the amendments to have a material impact on the consolidated financial statements. j) IFRIC 21 ‘‘Levies’’ IFRIC 21 was published by the International Accounting Standards Board in May 2013 and applies to annual periods beginning on or after 1 January 2014. The interpretation clarifies the accounting recognition of obligations to levies that are not income taxes. Obligating event is an event defined in the law that triggers the payment of the levy. The mere fact that an entity will continue to operate in the next period, or draws up a report in accordance with the going concern principle, do not create an obligation to recognise a liability. The same principles for liability recognition apply to annual and interim reports. The application of the interpretation to liabilities arising from emission rights is optional. The Group will apply IFRIC 21 as from 1 January 2014. The Group does not expect the interpretation to have any impact on the consolidated financial statements. As at the date of these consolidated financial statements, IFRIC 21 has not yet been approved by the European Union.

F-58 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 1. Accounting policies (Continued) k) Disclosures of the recoverable amount for non-financial assets—Amendments to IAS 36 Amendments to IAS 36 ‘‘Impairment of Non-Financial Assets’’ concerning disclosures of the recoverable amount were published by the International Accounting Standards Board in May 2013 and they apply to annual periods beginning on or after 1 January 2014. The amendments eliminate the requirement to disclose the recoverable amount where the cash-generating unit contains goodwill or intangible assets with indefinite useful life and there was no impairment. The Group will apply the amendments to IAS 36 as from 1 January 2014. The Group does not expect the amendments to have any impact on the consolidated financial statements. l) Novation of Derivatives and Continuation of Hedge Accounting—Amendments to IAS 39 Amendments to IAS 39, ‘‘Financial Instruments’’ were published by the International Accounting Standards Board in June 2013 and they apply to annual periods beginning on or after 1 January 2014. The amendments allow for the continuation of hedge accounting when the derivative which was designated as a hedging instrument, is novated (i.e. the parties agreed to replace the original counterparty by a new counterparty) as a result of the settlement of the instrument with a central clearing house as a consequence of the law if strictly defined conditions are satisfied. The Group will apply the amendments to IAS 39 as from 1 January 2014. The Group does not expect the amendments to have any impact on the consolidated financial statements. Other amendments to IFRS issued up to the date of approval of these financial statements for publication will have no impact on the financial statements.

4. Principles of consolidation a) Subsidiaries Subsidiaries are entities controlled by the Parent Company. Control exists when the Parent Company has the power to manage directly or indirectly the financial and operating policies of an entity in order to obtain benefits from its activities. In assessing the degree of control the existing and potential voting rights are taken into account that may be exercised or converted as of the balance sheet date. Subsidiaries are fully consolidated in the period from taking control over them by the parent company until such control cases. Control is understood as the power to manage financial and operating policies of the entity by the parent company in order to achieve economic benefits. Assets, liabilities and identifiable contingent liabilities of a subsidiary as at the date of acquisition of control and its inclusion in the consolidated financial statements are stated at fair value. A positive difference between the acquisition price, the value of non-controlling interest and the fair value of previously held shares and the fair value of acquired assets, liabilities and contingent liabilities gives rise to goodwill, which, if formed, is recognised as a separate item in the consolidated statement of financial position. A negative difference between the acquisition price, the value of non-controlling interest and the fair value of previously held shares and the fair value of assets, liabilities and contingent liabilities is recognised directly in profit or loss. b) Joint ventures Joint ventures are entities over whose activities are jointly controlled by the Group together with other entities. These investments are valued using the equity method. The consolidated financial statements include the Group’s share in the accumulated profits or losses of joint ventures under the equity method until the cessation of joint control or reclassification to assets held for sale. When the Group’s share in

F-59 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 1. Accounting policies (Continued) losses of the joint venture exceeds the carrying amount of the investment, the recognition of further share in losses of joint ventures is discontinued and further losses are recognised by the Group up to the amount of any liabilities incurred. Gains and losses resulting from ‘‘upstream’’ and ‘‘downstream’’ transactions between the Group and a joint venture are recognised in the Group’s financial statements only to the extent of unrelated investors’ interests in the joint venture. Unrealised losses are also eliminated unless the transaction provides evidence of impairment of the asset transferred. c) Consolidation adjustments regarding subsidiaries Internal balances between Group companies, transactions concluded within the Group and any resulting unrealised gains or losses (except where unrealised losses indicate impairment) as well as income and expenses of the Group are eliminated in the consolidated financial statements.

5. Presentation currency and functional currencies Two functional currencies apply in the Group due to the place of business: • in Czech companies, the functional currency is the Czech crown • in Polish companies, the functional currency is the Polish zloty The presentation currency in accordance with which these financial statements are prepared in Polish zloty. Assets and liabilities and income and expenses measured in functional currencies other than the presentation currency were translated into the presentation currency as follows: • assets and liabilities valued in the functional currencies were translated into the presentation currency at the average exchange rate of the National Bank of Poland as of the balance sheet date, • income and expenses were translated at the average exchange rate of the National Bank of Poland as of the transaction date or the average exchange rate of the period, if there were no significant fluctuations in the period, • foreign exchange differences resulting from this translation were recognised in other comprehensive income. Transactions denominated in foreign currencies are recognised on the transaction date in the functional currency using the average exchange rate of National Bank of Poland and in Czech companies—using the exchange rate of CNB (Czech National Bank) as of the transaction date. Monetary items of assets and liabilities denominated in foreign currencies are translated as of the balance sheet date at the average exchange rate of the functional currency for a particular currency applicable as of that date. Exchange differences arising from the settlement of transactions in foreign currencies and the balance sheet valuation of monetary assets and liabilities denominated in foreign currencies are recognised in the profit and loss. Non-monetary assets and liabilities measured at historical cost in a foreign currency are translated using the average exchange rate of the functional currency prevailing on the transaction date. For the valuation of items in the statement of financial position denominated in foreign currencies, the following PLN exchange rates were used:

31.12.2013 31.12.2012 EUR...... 4.1472 4.0882 USD...... 3.0120 3.0996 GBP...... 4.9828 5.0119

F-60 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 1. Accounting policies (Continued) For the valuation of items in the statement of financial position of Czech companies denominated in foreign currencies, the following CZK exchange rates were used:

31.12.2013 31.12.2012 EUR...... 27.425 25.140 USD...... 19.894 19.055 GBP...... 32.911 30.812

6. Derivative financial instruments The Group uses derivative financial instruments to hedge interest rate risk and foreign exchange risk arising from operating, financing or investing activities. According to the adopted policy of monetary operations, the Group does not hold or issue derivative financial instruments held for trading. The Group does not apply hedge accounting. The Group holds derivative instruments such as foreign exchange forwards and IRS contracts hedging the Interest rate risk. Derivative financial instruments are measured as at the date of the balance sheet fair value. Gains and losses arising from the measurement are recognised in profit or loss in other operating activities (forward contracts) and in financial activities (IRS). In the statement of cash flows a result achieved on forwards is presented in cash flows from investing activities and on IRS—in cash flows from financing activities.

7. Property, plant and equipment a) Property, plant and equipment Property, plant and equipment are fixed assets: • which are kept by the entity for use in the production, supply of goods or services and for administrative purposes, • which are expected to be used for more than one year, • in respect of which it is probable that the entity will achieve future economic benefits associated with an asset, and • whose value can be determined reliably. On initial recognition, property, plant and equipment is valued at the purchase price/production cost. The purchase price/production cost is increased by borrowing costs incurred on the acquisition or construction of a qualifying asset. The principles of capitalising the borrowing costs are described in item (f). Upon initial recognition, the purchase price/production cost of fixed assets includes anticipated costs of their disassembly, removal and reinstatement of the place where the asset is located in respect of which the obligation to incur costs arises at the time of the installation of the asset or its use for purposes other than the production of inventories. At the end of the reporting period, property, plant and equipment is valued at the purchase price or production cost less accumulated depreciation and accumulated impairment losses. The principles of recording impairment are presented in item (e).

F-61 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 1. Accounting policies (Continued) b) Items of property, plant and equipment used under lease contracts Finance lease contracts which transfer to the entity substantially all the risks and virtually all the benefits of ownership of the leased item are capitalised at the inception of the lease at the lower of the fair value of the leased asset or the present value of the minimum lease payments. Lease payments are apportioned between financial costs and principal repayments at a fixed interest rate in respect of the obligation. Finance expenses are recognised directly in profit or loss. Fixed assets used under finance leases are depreciated in accordance with the principles applied to own assets. If there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, the assets are depreciated over the shorter of the lease term and the useful life of the asset. Lease contracts under which substantially all the risks and virtually all the benefits of ownership of the leased item are retained by the lessor are classified as operating leases. Operating lease payments are recognised on a straight-line basis over the lease term. c) Right to perpetual usufruct of land The right to perpetual usufruct of land acquired by the Group free of charge on the basis of an administrative decision is a form of operating lease. This right is excluded from the assets of the Group and recorded off-balance sheet. Fees for the right to perpetual usufruct of land are recognised as an expense in profit or loss. d) Expenditures incurred at a later date Subsequent expenditures incurred on an item of property, plant and equipment and are recognised in the carrying amount of the asset only when it is probable that the asset will generate economic benefits for the entity and the cost of the item can be measured reliably. All other expenses on repairs and maintenance are charged to profit or loss in the period in which they were incurred. e) Amortisation and depreciation Items of property, plant and equipment, or their major and separate components are depreciated on a straight-line basis over the expected useful life, taking into account the net selling price of the remainder of the asset expected at the decommissioning (residual value). In the individual groups of fixed assets useful lives were adopted in the following ranges:

• Buildings up to 60 years • Structures, including • Tanks from 10 - to 30 years • Silos from 10 - to 20 years • Collectors, pipelines, sewerage, tracks, bridges, from 10 - to 40 years flyovers • Streets, roads, yards up to 35 • Boilers and power machines up to 25 years • Machinery and equipment 3 - 25 years • Vehicles 4 - 8 years • Tools, instruments, furniture and equipment 4 - 20 years

F-62 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 1. Accounting policies (Continued) Construction in progress is not depreciated. Upon purchase, items property, plant and equipment are divided into components if their purchase price or production cost is significant in comparison with the purchase price or production cost of the entire asset and depreciated over a separate useful life. The adequacy of useful lives used, depreciation methods and the residual value of fixed assets (if not negligible) is reassessed by the Group annually. f) Borrowing costs Borrowing costs that are directly attributable to the purchase, construction or production of an asset which requires a substantial period of time to prepare it for its intended use or sale are capitalised. Capitalised borrowing costs increase the purchase price or the production cost of that asset.

8. Intangible assets Intangible assets include: scientific or technical knowledge, licences, intellectual property, trademarks, patents, relationships with customers and suppliers, computer software that were acquired or assumed in a business combination. An intangible asset is recognised if it is probable that the entity will achieve future economic benefits that are attributable to the asset and if its value can be measured reliably. Intangible assets are recognised in the books of account at their purchase price or production cost less accumulated amortisation and impairment losses. a) Research and development Expenditures incurred during research with the intention of gaining new scientific or technical knowledge are recognised in profit or loss when incurred. Expenditures incurred on research and development whose results are used in the development or production of a new or significantly improved product are capitalised if the manufacture of a new product (or process) is technically feasible and economically justified, and the Group has the technical, financial and other necessary resources to complete the development works. The costs to be capitalised include: the cost of materials, remuneration of employees directly engaged in research and development, and a reasonable proportion of indirect costs directly related to the construction of the intangible asset. Development costs are recognised as intangible assets and are subject to amortisation and impairment charges. Other development costs are recognised in profit or loss when incurred. b) Emission rights Emission rights granted are recognised at purchase price less accumulated amortisation and impairment losses. The purchase price of emission rights if they are acquired at business combinations is their fair value. Liabilities resulting from the emission of air pollutants are measured at the amount equal to the value of emission rights held by the Group if the Group has the number of emission allowances sufficient to cover its obligations. If the number of emission rights held is lower than the number of emission rights expected to be used, a provision is recorded in the amount of the fair value of missing emission rights. c) Renewable energy certificates Rights to renewable energy certificates and energy from cogeneration are recognised at purchase price less accumulated amortisation and impairment losses. Liabilities resulting from the requirement to submit

F-63 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 1. Accounting policies (Continued) rights for redemption are measured at the amount equal to the value of rights to certificates held by the Group if the Group has the number of those rights sufficient to cover its obligations. If the number of rights to certificates held is lower than the number of rights to certificates required to be used, a provision is recorded in the amount of the fair value of missing rights to certificates. d) Other intangible assets Other intangible assets acquired by the Group are stated at cost, less accumulated amortisation and impairment losses. e) Expenditures incurred at a later date Subsequent expenditure on existing intangible assets are capitalised only when they increase future economic benefits associated with the asset. Other expenses are recognised in profit or loss as expenses of the period in which they were incurred. f) Amortisation and depreciation Intangible assets are amortised on a straight-line basis over their useful life, unless it is not specified. Intangible assets with indefinite useful lives are tested for impairment at each balance sheet date. The estimated useful life of amortised intangible assets is as follows:

• Acquired relations with customers 5 years, • Know-how 5 - 10 years, • Licences, software 2 years, • Licences for installations for the production of new types of rubbers - 20 years.

9. Investment properties Investment properties are held in order to earn revenues from rental, from the increase in their value or for both of these reasons. Investment properties are measured in accordance with the principles set out in the valuation of property, plant and equipment, i.e. at the purchase price or production cost less accumulated depreciation and impairment losses.

10. Financial assets available for sale Shares held by the Group that are traded in an active market are classified as assets available for sale and are stated at fair value. Gains and losses arising from changes in fair value are recognised directly in other comprehensive income, except for impairment losses. If the investment is sold or determined to be impaired, the cumulative gain or loss previously recognised in other comprehensive income is recognised in profit or loss for the period. Dividends from equity instruments available for sale are recognised in profit or loss when the Group obtains the right to receive them. Impairment losses recognised in the consolidated statement of profit or loss on equity instruments are not reversed through the consolidated statement of profit or loss.

11. Non-current receivables, current receivables. Non-current receivables and current receivables are recognised initially at fair value and are measured in subsequent periods at amortised cost using the effective interest rate and reduced by impairment losses. Impairment losses are recorded for receivables when there is objective evidence that the Group will not be able to recover entire amounts owed to it. If there is objective evidence that receivables carried at amortised cost are impaired, the amount of the impairment loss is determined as the difference between

F-64 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 1. Accounting policies (Continued) the carrying value of the asset and the present value of future cash flows discounted at the effective interest rate. Impairment losses on receivables, both those recorded and reversed, are recognised in cost of sales.

12. Inventories Inventories are assets held for sale in the ordinary course of business, assets in the production process for sale or materials and supplies that are consumed in production or during the provision of services. Items of inventories are valued at the lower of the acquisition or production cost and the net realisable value as at the balance sheet date. The acquisition price is the purchase price of assets, including the amount due to the seller without deductible tax on goods and services and excise duty, and in the case of imports—increased by public charges and costs directly related to the purchase and adaptation of the asset to a condition for use or placing on the market, including costs of transportation, loading, unloading, reduced by rebates, discounts and other reductions and recoveries. Net realisable value is the difference between the estimated selling price in the ordinary course of business, less rebates and discounts and estimated costs of completion and costs necessary to make the sale. Inventories are recognised at their net value (less impairment losses). Impairment losses for inventories are recorded in connection with their impairment in order to bring the value of inventories to net recoverable value. Impairment losses are recognised in profit or loss under the ‘‘cost of sales’’ item. A reversal of an inventory impairment loss is recognised as a reduction of cost of sales. The value of the impairment loss reduces the carrying amount of inventories affected by the allowance. Materials and goods are received and issued at the weighted average price. Finished products, semi-finished products and work in progress are valued at the actual technical manufacturing cost including a reasonable portion of indirect fixed production costs, calculated under the assumption of normal utilisation of production capacity. Finished products are issued at the weighted average price.

13. Cash and cash equivalents Cash and cash equivalents include cash in hand and demand bank deposits. The balance of cash and cash equivalents reported in the consolidated statement of cash flows consists of the above specified cash and cash equivalents.

14. Impairment losses for assets a) Recognition of impairment Impairment of financial assets At the end of each reporting period an assessment is made whether there is objective evidence that a financial asset or group of financial assets is impaired. The significant objective indication (evidence) includes mainly: serious financial difficulties of the debtor, brining an action to the court against the debtor, occurrence of a material adverse change in the economic, legal or market environment of the issuer of the financial instrument, sustained significant or prolonged decline in the fair value of the equity instrument below the level of cost. If such evidence exists for financial assets available for sale, the cumulative loss recognised in other comprehensive income—measured as the difference between the acquisition cost and the current fair value, less any impairment losses on that financial asset previously recognised in profit or loss—is removed from other comprehensive income and reclassified to profit or loss as a reclassification adjustment.

F-65 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 1. Accounting policies (Continued) Impairment losses recognised in profit or loss and concerning equity instruments are reversed in correspondence to other comprehensive income. The reversal of an impairment of debt financial instruments is recognised in profit or loss if in subsequent periods, after the impairment was recognised, the fair value of these financial instruments increased as a result of events occurring after the impairment recognition. If there is evidence of the potential for impairment of loans and receivables carried at amortised cost, the impairment loss is determined as the difference between the carrying value of assets and the present value of estimated future cash flows discounted at the original effective interest rate for these assets (i.e. the effective interest rate computed at initial recognition of assets based on a fixed interest rate and the effective interest rate determined at the time of the last revaluation of assets based on a variable interest rate). An impairment loss is recognised in profit or loss. The carrying amount of such financial assets is determined taking into account impairment (resulting from credit losses) recorded in a separate account. Impairment loss is reversed if in subsequent periods the impairment loss decreases and the decrease can be attributed to events occurring after the recognition. Reversal of impairment loss is recognised in profit or loss.

Impairment of non-financial assets Goodwill and intangible assets that are not yet available for use are not subject to amortisation but are tested annually for potential impairment. Non-financial assets subject to amortisation are tested for impairment whenever any events or changes in circumstances indicate the possibility that their carrying value will not be realised. An impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest level at which they generate cash flows independently of other assets (cash generating units). For the purposes of testing for impairment, the cash generating unit is determined in each case. An impairment loss is recognised in profit or loss. Non-financial assets, other than goodwill, for which in earlier periods an impairment loss was recorded, are tested at the end of each reporting period to determine whether there is evidence indicating a possibility of reversing a previously recorded impairment loss. b) Reversal of impairment losses Impairment losses are reversed only if there was a change in the estimates used at the stage of the calculation of recoverable amount since the recognition of the last impairment loss. Impairment losses recorded on goodwill are not reversed. An impairment loss is reversed only to the carrying amount of the asset (net of amortisation) that would have been determined if the impairment loss had not been recognised.

15. Equity Equity is recognised in the books of account by type and in accordance with the rules laid down by the law and the provisions of the articles of association of the parent company. Group’s share capital is recognised in the amount specified in the nominal value of issued shares, calculated in accordance with the articles of association of the parent company. Costs of share issue

F-66 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 1. Accounting policies (Continued) incurred at the establishment of the joint-stock company or an increase of the share capital decrease the company’s supplementary capital to the value of the share premium. Amounts resulting from the distribution of profits, retained earnings/accumulated loss from previous years and the result of the current year are presented in the financial statements as retained earnings.

16. Employee benefits Employee benefits include all forms of consideration of the Group in exchange for work performed by employees. They comprise both benefits paid in the course of employment and benefits paid after the period of employment. The Group recognises a provision for future liabilities for retirement and death benefits in order to allocate costs to the periods to which they relate. a) Defined contribution plan When employing workers, the Group is required, under applicable laws, to collect and pay contributions for employee retirement benefits. These benefits constitute, in accordance with IAS 19, a state plan and have the features of the defined contribution plan. Accordingly, the Group’s liability for each period is estimated on the basis of the contributions payable for the year. b) Defined benefit plan—retirement and death benefits The Group is required, under applicable laws, to pay retirement and death benefits calculated in accordance with the provisions of the Labour Code. In addition, based on the Collective Labour Agreement, a retirement severance pay for Company’s employees is increased to the amount that depends on the employee’s length of service acquired in the course of employment with the Company. The minimum value of retirement benefits results from the provisions of the Labour Code applicable on the date of the payment of the retirement benefit. The obligation of the Group arising from retirement benefits is calculated by estimating the amount of future salary of the employee in the period in which the employee reaches retirement age and by estimating the amount of a future retirement benefit. These benefits are discounted to the present value. The discount rate is obtained on the basis of the market rate of return on Treasury bonds as at the balance sheet date. A liability under retirement benefits is recognised in proportion to the expected period of service by the employee. Actuarial gains and losses from the valuation of liabilities arising from defined benefits after the period of employment are recognised in other comprehensive income. The calculation is performed by a qualified actuary using the projected unit credit method. The employee turnover is estimated on the basis of historical data and the projected headcount in the future. The above principle of measurement and recognition also applies accordingly to death benefits. c) Benefit in the form of compensatory benefits Pursuant to the provisions of the Civil Code the Group is required to pay compensations in the form of compensatory benefits to former employees in respect of occupational diseases. The liability is calculated by a qualified actuary. A provision for compensatory benefits is used at the time of payment of benefits to former employees.

F-67 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 1. Accounting policies (Continued) 17. Provisions Provisions are recognised if the following conditions are met: • the entity has a present obligation (legal or constructive) as a result of a past event, • it is probable that an outflow of economic benefits will be required to settle the obligation, • a reliable estimate can be made of the amount of the obligation. The amount for which a provision is recorded is the best estimate of the expenditure required to settle the obligation as at the balance sheet date. The basis of estimation of the value of provisions is a judgment of the management, supported by experiences with similar events, and if necessary—opinions of independent experts. If the effect of time value of money is material, provisions are estimated by discounting the expected future cash flows based on a pre-tax rate that reflects current market assessments of changes in the time value of money and, where appropriate, the risks associated with the liability. The amount of provisions is reviewed at each balance sheet date and adjusted to reflect the current best estimate. A provision is used only for those costs for which it was originally created. a) Restructuring A provision for restructuring costs is recognised when the Group accepted a detailed and formal restructuring plan, and this process was commenced or announced publicly. Provisions do not include future operating losses. b) Reclamation costs Pursuant to the Group’s environmental policy and applicable legal requirements, a provision for reclamation costs relating to polluted land or other assets is recognised when the land or other asset was polluted. c) Onerous contracts Provision for onerous contracts is recognised when the economic benefits expected by the Group from the contract are lower than the unavoidable costs of meeting the contractual obligations.

18. Non-current and current liabilities Liabilities are the obligations resulting from past events to provide services of a reliably determined value, which cause the utilisation of assets already possessed or future assets of the entity. Current liabilities are all trade payables and all or part of other liabilities that become payable within 12 months from the balance sheet date. If the maturity exceeds one year from the balance sheet date, the balances of these liabilities are recognised as non-current liabilities. Liabilities other than financial liabilities measured at fair value through profit or loss are recognised initially at fair value adjusted for transaction costs, and are measured as at the balance sheet at amortised cost using the effective interest rate. In the case of current liabilities this measurement corresponds to the amount due. On initial recognition, bank loans and borrowings are recognised at fair value, less costs associated with obtaining the loan or borrowing. In subsequent periods liabilities from bank loans, with the exception of liabilities held for trading, are measured at amortised cost using the effective interest rate method.

F-68 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 1. Accounting policies (Continued) 19. Financial instruments Financial instruments at initial recognition are recognised as one of the following categories: • financial instruments at fair value through profit or loss, • financial assets held to maturity, • loans and receivables, • financial assets available for sale, • other financial liabilities. A purchase or sale of financial assets is recognised as at the trade date. At the time of initial recognition the financial asset or financial liability is measured at fair value plus/less, in the case of a financial asset or financial liability not classified as measured at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of financial asset or financial liability. a) Financial instruments at fair value through profit or loss Financial instruments measured at fair value through profit or loss include financial assets and liabilities acquired to generate profit by short-term fluctuations in the value and derivatives. Financial instruments at fair value through profit or loss are measured at fair value without deducting transaction costs and taking into account their market value as of the balance sheet date. Changes in fair value of financial assets measured at fair value are recognised in profit or loss in other operating activities or financing activities. The presentation described in detail in clause 6 of the introduction and notes to the financial statements. Financial assets at fair value whose change is recorded in profit or loss are recognised as current assets if the Management Board intends to realise them within 12 months from the balance sheet date. b) Financial assets held to maturity Financial assets held to maturity are investments with fixed or determinable payments and fixed maturities that the Group has the intention and ability to hold to maturity. Financial assets held to maturity are measured at the amortised costs using the effective interest rate. Financial assets held to maturity are recognised as non-current assets if their maturity is greater than 12 months after the balance sheet date. c) Loans granted and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables are recognised as current assets if their maturities do not exceed 12 months from the balance sheet date. Loans with maturities over 12 months from the balance sheet date are reported in fixed assets. Loans and receivables are recognised in the balance sheet item of trade receivables and other receivables. Loans granted and receivables are measured at amortised cost. d) Financial assets available for sale All other financial assets are financial assets available for sale. Financial assets available for sale are recognised at the fair value, without deducting transaction costs and taking into account their market value as at the balance sheet date. If no stock exchange quotations on the active market are available and it is impossible to reliably determine their fair value with alternative methods, financial assets available for sale are valued at the purchase price adjusted by an impairment loss if they were measured at historical cost. A positive and negative difference between the fair value and the purchase price of assets available for sale

F-69 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 1. Accounting policies (Continued) (if there is a market price determined on the active regulated market or whose fair value can be determined in other reliable manner) is posted to other comprehensive income.

20. Revenues Revenues are gross inflows of economic benefits of the period arising in the Group’s (ordinary) course of business, resulting in increases in equity, other than increases in equity resulting from contributions of equity holders. Revenues include only received or receivable gross inflows of economic benefits into own account, and amounts collected on behalf of third parties such as VAT and discounts are not economic benefits and are excluded from revenues. a) Sale of finished products, goods and provision of services Revenues from sales of goods and finished products are recognised in profit or loss if significant risks and rewards of ownership were transferred to the buyer. Revenues from the provision of services are recognised in profit and loss based on the unit price and the volume of processing. No revenue is recognised if there is significant uncertainty as to the possibility of obtaining future economic benefits, determining the amount of costs incurred or the possibility of returning finished products/goods. b) Rental income Income from the lease of investment properties is recognised in profit or loss on a straight-line basis over the lease term. c) Deferred income from government grants Budgetary grants are recognised in the balance sheet as deferred income if there is reasonable certainty of receipt and the Group satisfies the conditions associated with them. Grants received as reimbursement of costs already incurred by the Group are systematically recognised as revenue in profit or loss in the periods in which related costs are incurred. Grants received as reimbursement of costs of assets recognised by the Group are reported as other operating income in the statement of comprehensive income over the life of the asset. d) Other income Other operating income is indirectly related to the activities of the entity. It comprises: • income associated with the sale of fixed assets, • other income not included in revenues from sales or financial income. e) Financial income Financial income is recognised over the year unless it is probable that the entity will achieve economic benefits associated with the executed transaction and the amount of income can be measured reliably. Rules of recognition of financial income: • interest at amortised cost using the effective interest rate, • surplus of foreign exchange gains over losses on cash, loans taken out, receivables and liabilities.

F-70 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 1. Accounting policies (Continued) 21. Expenses a) Cost of sales Costs of sales are all costs related to the principal business of the Group, except for selling costs, general and administrative expenses, other expenses and financial costs. Cost of production includes costs which are directly related to a particular product and a justified portion of fixed costs directly related to the production of that product. b) Selling costs Selling costs are recorded costs associated with the sale. These costs include, among other things: • costs of transportation, loading, unloading, • customs duties and trade commissions (applicable to export sales), • and other costs, insurance for products during transport and other. Impairment losses are recognised in other operating expenses and income. c) General and administrative expenses General and administrative expenses include: • general administrative costs associated with the maintenance of certain units of the Management Board, • general production costs (associated with the production which does not apply to individual departments) related to the maintenance and operation of general purpose units, e.g. laboratories. d) Other expenses Other expenses are indirectly related to the Group’s operations and in particular they include: • other expenses not included in operating expenses, selling expenses, administrative expenses and financial costs. e) Operating lease payments Payments in respect of the Group’s operating leases are recognised in profit or loss on a straight line basis over the term of the lease. Special promotional offers received are recognised in profit or loss together with the costs of the lease. f) Finance lease payments Lease payments are apportioned between the finance charge and the reduction of the lease liability. The finance charge is allocated to each period during the lease term using the effective interest rate method. g) Financial costs Financial costs relate mainly to: • accrued and paid interest on liabilities determined on the basis of the effective interest rate, • surplus of foreign exchange losses over gains on cash, loans taken out, receivables and liabilities.

F-71 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 1. Accounting policies (Continued) 22. Income tax Income tax recognised in profit or loss comprises current and deferred tax. Income tax is recognised in profit or loss, except for amounts relating to items recognised through other comprehensive income. In such a case it is recognised in other comprehensive income. Current tax is the tax payable on the taxable income for the year, using tax rates enacted at the balance sheet date and adjustments to tax payable in respect of previous years. Deferred income tax is calculated using the balance sheet liability method, based on temporary differences between the value of assets and liabilities estimated for accounting purposes and their value estimated for taxation purposes. Assets and liabilities are not created for the following temporary differences: goodwill for which amortisation and depreciation for the period is not considered to be a tax deductible expense for tax purposes, initial recognition of assets or liabilities that affect neither the accounting profit nor taxable income, differences associated with investments in subsidiaries and jointly controlled entities to the extent that it is not probable that they will be utilised in the foreseeable future. The amount of recognised deferred tax is based on the expected manner of utilisation of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date. Deferred income tax assets are recognised only when it is probable that future taxable income will be available against which the asset can be utilised. Deferred tax assets are reduced if it is not probable that tax benefits represented by them can be utilised. Deferred tax in each consolidated company is recognised as deferred tax assets and deferred tax liabilities on a netted basis.

23. Operating segment reporting Segment reporting is prepared on the basis of internal reports on the Group’s components that are regularly reviewed by members of the management responsible for making operating decisions (Management Board) in order to allocate resources to individual segments and to assess their performance.

24. Discontinued operations and assets held for sale The Group classifies non-current assets as assets held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. The condition for including assets in this group is to actively seek a buyer by the management and a high probability of selling these assets within one year from the date of their classification as well as the availability of these assets for immediate sale. These assets are measured at the lower of carrying amount and fair value less costs to sell.

Note 2. Segment reporting Pursuant to IFRS 8, the Management determined the operating segments which are used in making strategic decisions. Information compiled for persons in the Group making decisions on the allocation of resources and assessing segment performance focuses on industry groups of manufactured products. Group’s reportable segments under IFRS 8 are therefore as follows: .

Rubbers and Latexes Production and sale of synthetic rubber is one of the core business areas of the Group. The Group produces synthetic rubber in accordance with the emulsion technology (ESBR) by polymerisation of

F-72 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 2. Segment reporting (Continued) butadiene and other chemicals (styrene, acrylonitrile or the appropriate organic acid). The Group manufactures two main brands of rubber (15xx and 17xx). Synthetic rubbers, currently in 14 brands, are sold under the proprietary brand name of KER and the name of KRALEX. Most synthetic rubbers are sold to manufacturers of automobile tyres, such as: Michelin, Continental, Bridgestone, Goodyear or Pirelli. In addition, rubbers are the raw material for the production of rubber floor coverings, conveyor belts, technical rubber products (especially for the automotive industry) and footwear components. The tyre industry is a key driver of demand for ESBR and has an approximately 80% share in sales of elastomers by the Group. The remaining part of ESBR sales turnover comes from markets other than the tyre market, such as the production of technical rubber, shoe soles, flexible conductors and conveyor belts. The Group also produces a new type of rubber—PBR Nd (neodymium polybutadiene rubber). The most important application of PBR are tyres, mainly the tyre tread and sidewalls, which account for 70 percent of global consumption of PBR. Other PBR applications include technical products (hoses, belts, footwear soles, golf balls, modification of styrene plastics). Regulations favouring the so-called ‘‘green’’ tyres with lower rolling resistance and higher efficiency contributing to a lower fuel consumption primarily in the Western Europe led to a significant increase in demand for PBR in particular in the neodymium technology which is used by, among others, Synthos. This change will continue in the future, in European Union and in addition also in other regions outside Europe which introduce tyre labelling systems (Japan, USA, South Korea). Polybutadiene rubbers, currently in the 2 brands, are sold under the registered brand name of SYNTECA. Currently works are underway on expanding the market offer in this particular type of synthetic rubber. Synthetic latexes are produced in two types: concentrated LBS butadiene and styrene latexes and LBSK carboxylated butadiene and styrene latexes. Synthetic latexes are used among other things for the production of foam products: mattresses, thin film foams and in the production of carpets and floor coverings, for impregnating non-woven materials. One of the applications also includes the production of bitumen emulsions used as insulating coatings in the construction industry.

Styrene derivatives Production of polystyrene plastics covers three main types of products obtained the styrene polymerisation process which differ in the areas of the application. The first group consists of EPS expanded polystyrenes. Expanded polystyrene (EPS) is produced in the suspension polymerisation process (in suspended matter) and in the extrusion process where the raw material is GPPS. The main applications of expanded polystyrene include the production of heat insulation panels for building insulation, the basic heat-insulating material used in the Central Europe. Another important application of EPS is the production of transport packaging such as for household appliances, television sets, computers. EPS is also used for the manufacture of finishing and decorative elements in the construction industry and for the production of small objects, such as for example bricklayer’s long floats and safety helmets for cyclists. The second group consists of polystyrenes which include general purpose GPPS polystyrenes and HIPS high impact polystyrenes. The main market for polystyrene, both GPPS and HIPS is a widely understood food packaging industry. Polystyrene is used in the production of disposable dishes, all kinds of cups and containers for dairy products, trays, cutlery and used as a raw material in the manufacture of shower cubicles, jewellery packaging, everywhere where rigidity and transparency of the finished product is required etc.

F-73 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 2. Segment reporting (Continued) HIPS is used in other products requiring a high mechanical resistance. In order to obtain the required mechanical properties, HIPS is modified with the polybutadiene rubber. In addition to packaging, this polystyrene is used for the production of radio and TV casings, components of domestic appliances, toys or furniture components. GPPS is also used in the construction market. The third group comprises XPS boards produced on a new extruded polystyrene production line. Extruded polystyrene is produced on the basis of own raw materials—general purpose polystyrene (GPPS). XPS board is a homogeneous insulating material with a smooth or embossed surface and a structure consisting of small closed cells. It has a number of unique properties such as water resistance, thermal insulation, transverse and longitudinal strength, is fully recyclable, and is a self-extinguishing product. It is used primarily in the construction industry as thermal insulating material for the building perimeter insulation, insulation of roofs with inverted layers, floor insulation, thermal bridges and multiple-wythe masonry walls. Owing to mechanical strength and resistance to freezing and thawing with minimal water absorption is used in thermal insulation of roads, bridges, railroads and airports.

Power industry This segment is engaged in the production of thermal energy and the distribution of that energy. It is also engaged in combined heat electricity generation and electricity trading and distribution. The market for the primary energy products such as heat, transmission services for both electricity and thermal energy is local energy market.

Dispersions and Adhesives The Group’s offer includes acrylic dispersions, styrene and acrylic dispersions as well as dispersions of vinyl acetate polymers. The main application of acrylic dispersions, styrene and acrylic and vinyl and acrylic dispersions is the production of high quality paints, acrylic plasters, primers, sealers and many other construction chemicals. Polyvinyl acetate dispersions are used mainly in the manufacture of adhesives for wood and for the paper industry, to impregnate textile fabrics in the textile industry and in the construction industry for the modification of concrete and for the production of paints. The Group has two installations for the production of dispersion with a total production capacity of approximately 40 thousand tonnes per year. The current portfolio of dispersions offered on the market includes 18 products, sold under the registered trade names of WINACET and OSAKRYL. Dispersion adhesives are offered under two brand names: WOODMAX—designed primarily for the wood industry and wood-based materials in various classes of water resistance (D1, D2, D3 and D4) and PAPERMAX—adhesives for the paper industry. Currently, sales are realised for the portfolio of adhesives containing 16 products. Reportable business segments derive their revenues primarily from the sale of individual groups of finished products. Other revenues (other operating income, gain/loss on sale of property, plant and equipment, gain on sale of shares) and expenses as well as financial income and costs are not included in the reportable operating segments as they are not covered by the reports submitted to the Management Board. The results of this activity are included in the ‘‘Unallocated income, costs’’ item. Revenues from transactions with third parties, presented to the Management Board by business segments are measured in a manner consistent with the method used in the statement of comprehensive income. The amounts presented to the Management Board with regard to total assets by business segments are measured in a manner consistent with the method used in the financial statements. These assets are allocated on the basis of the operations of the segment and the physical location of the asset (this applies to trade receivables, inventories, fixed assets). Other assets, i.e. cash, shares, other receivables are included as unallocated assets.

F-74 — (154,640) 17,192 24,501 49,861 (32,089) 23,727 15,445 35,481 80,579 (26,748) (44,108) (31,943) (37,171) 417,279 585,214 467,140 617,303 452,969 776,105 1,225,469 1,434,207 2,014 1,988 2,014 1,988 33,605 38,338 33,605 38,338 ——————— ——————— ——————— ——————— ——————— ————— 1,962,082 1,883,910 267,063 234,908 107,591 101,735 46,295 42,536 5,359,315 6,206,544 Business segments Synthos S.A. Capital Group 3,943,455 — — — ——————— — — — ——————— — — —— ——————— — — ——————— — — — ————— Latexes Styrene derivatives Energy dispersions Other Total (in PLN ‘000 unless stated otherwise) Rubbers andRubbers Vinyl 30,943 32,543 66,186 66,565 23,034 21,047 5,600 5,129 26,564 30,692 152,327 155,976 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 126,410 81,712 23,168 36,516 70,482 44,530 3,788 7,175 76,420 35,250 300,268 205,183 280,624 631,110 94,028 45,478 52,087 52,437 1,979 1,345 20,713 2,327 449,431 732,697 Notes to the consolidated financial statements 1,358,540 1,526,450 890,391 1,071,817 409,159 330,856 40,666 39,452 142,995 154,632 4,067,220 4,557,414 1,358,540 1,526,450 890,391 1,071,817 409,159 330,856 40,666 39,452 142,995 154,632 2,841,751 3,123,207 2,695,660 3,312,345 1,868,054 1,838,432 214,976 182,471 105,612 100,390 25,582 40,209 4,909,884 5,473,847 2,976,284 2,976,284 3,943,455 1,962,082 1,883,910 267,063 234,908 107,591 101,735 10,676 2,210 5,323,696 6,166,218 .——— .——— .——— .——— .——— .——— ...... for the period of 12 months ended 31 December 2013 (Continued) ...... method Total assets Total Capital expenditures Amortisation and depreciation Segment assets Unallocated assets Impairment loss for assets available sale Profit before tax Income tax Net profit Share in losses of companies recognised under the equity Operating profit Financial income Financial costs Total costs Total Segment result Unallocated costs Unallocated revenues Total revenues Total Note 2. Segment reporting (Continued) Sales of services income Rental Revenues Sales of goods/finished products (external customers)

F-75 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 2. Segment reporting (Continued) Geographical information The Group distinguishes the following two geographical areas: • Country—domestic sales cover all types of sales (production, trade, services) of the Capital Group in Poland, the Czech Republic, Slovakia, • Other countries—covers all types of sales of the Capital Group in all countries of the world except for Poland, the Czech Republic and Slovakia. All the Group’s assets are located in the Poland and the Czech Republic.

Geographical information

Country Other countries Total 2013 2012 2013 2012 2013 2012 Revenue (sales to external customers) ...... 2,613,697 2,781,476 2,745,618 3,425,068 5,359,315 6,206,544 Assets ...... 4,067,220 4,557,414 — — 4,067,220 4,557,414 Capital expenditures ...... 300,268 205,183 — — 300,268 205,183

Information on major customers Revenues from sales of: • ‘‘rubbers and latexes’’ in the amount of PLN 2,976,284 thousand (in 2012: PLN 3,943,455 thousand) include revenues in the amount of PLN 1,660,809 thousand (in 2012: PLN 1,989,043 thousand) from the sale to 10 largest customers, • ‘‘styrene derivatives’’ in the amount of PLN 1,962,082 thousand (in 2012: PLN 1,883,910 thousand) includes revenues in the amount of PLN 752,127 thousand (in 2012: PLN 685,059 thousand) from the sale to 10 largest customers, • ‘‘vinyl dispersions’’ in the amount of PLN 107,591 thousand (in 2012: PLN 101,735 thousand) include revenues in the amount of PLN 56,731 thousand (in 2012: PLN 57,180 thousand) from the sale to 10 largest customers. Out of the major customers of the Group neither customer accounts for more than 10 percent of sales revenues.

Note 3. Revenues from sales

2013 2012 Revenues from sales of products ...... 4,771,221 5,299,057 Revenues from sales of services ...... 33,605 38,338 Revenues from sales of materials and goods ...... 552,475 867,161 Income from rental of investment properties ...... 2,014 1,988 5,359,315 6,206,544

F-76 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 4. Costs by type

2013 2012 a) amortisation and depreciation ...... 152,327 155,976 b) consumption of materials and energy ...... 3,570,338 3,969,957 c) external services ...... 275,642 280,168 d) taxes and charges ...... 25,172 23,515 e) salaries (note 7) ...... 123,941 127,904 f) social insurance and other benefits (note 7) ...... 38,043 37,502 g) other costs by type ...... 22,841 21,682 Total costs by type ...... 4,208,304 4,616,704 Changes in inventories, products ...... 128,857 (155,980) Changes in settled costs ...... 2,763 3,111 Selling costs (negative value) ...... (141,540) (149,637) General and administrative expenses (negative value) ...... (148,767) (157,916) Cost of products sold ...... 4,049,617 4,156,282 Cost of goods and materials sold ...... (569,960) (1,010,012) Cost of sales ...... 4,619,577 5,166,294

Note 5. Other operating income

2013 2012 Reversal of provisions for electrolysis ...... — 20,435 Reversal of impairment losses for receivables ...... 5,394 3,810 Reversal of impairment losses for property, plant and equipment* ...... — 41,102 Reversal of other provisions ...... 20 570 Compensations received from insurance companies ...... 3,220 5,401 Contractual penalties received ...... 13,052 — Other ...... 9,822 7,725 31,508 79,043

* described in detail in note 11

Note 6. Other operating expenses

2013 2012 Revaluation of provisions ...... 113 115 Establishment of impairment losses for receivables ...... 14,730 5,752 Cost of unused production capacity ...... 1,649 3,664 Establishment of impairment losses for property, plants and equipment ...... — 7199 Current assets written off ...... — 3,230 Receivables written off ...... 3,638 6,941 Utilisation of CO2 emission allowances ...... 1,596 3,681 Costs of decommissioning of inactive facilities ...... 2,488 — Other ...... 7,729 6 589 31,943 37,171

F-77 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 7. Employee benefits expense

2013 2012 Salaries ...... 123,941 127,904 Social insurance ...... 30,263 31,284 Company Social Benefits Fund ...... 1,529 1,604 Other employee benefits ...... 6,251 4,614 161,984 165,406

Note 8. Net financial income/costs

2013 2012 Income generated from loans and receivables ...... 6,622 15,445 Income from valuation of financial derivative instruments ...... 3,519 — Net foreign exchange gains/losses (note 9) ...... 13,586 — Total financial income ...... 23,727 15,445 Loan interest charges ...... (21,076) (19,235) Costs in respect of valuation of financial derivative instruments ...... (580) (4,911) Net foreign exchange gains/losses (note 9) ...... — (18,526) Other ...... (5,092) (1,436) Total financial costs ...... (26,748) (44,108) Net financial income/costs ...... (3,021) (28,663)

Note 9. Foreign exchange gains/losses In the period ended 31 December 2013, the total amount of foreign exchange differences recognised in profit or loss was on a net basis PLN 13,586 thousand (positive) (in 2012: on a net basis— PLN 18,526 thousand) (negative), of which PLN 34,072 thousand (in 2012: PLN 6,824 thousand) was represented by foreign exchange gains and PLN 20,486 thousand (in 2012: PLN 25,350 thousand)—by foreign exchange losses.

Note 10. Income tax Income tax recognised in profit or loss

2013 2012 Income tax Income tax expense for the current period ...... 37,105 74,643 Adjustment of tax for previous years ...... 1,160 (13,946) 38,265 60,697 Deferred tax Creation/reversal of temporary differences ...... 11,596 (28,608) Total deferred tax ...... 11,596 (28,608) Income tax reported in the statement of comprehensive income ...... 49,861 32,089

F-78 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 10. Income tax (Continued) Effective tax rate

2013 2012 %% Profit before tax ...... 467,140 617,303 Tax based on the applicable tax rate ...... 19% 88,757 19% 117,288 Non-tax deductible expenses (permanent differences) ...... 597 809 Non-taxable income (permanent differences) ...... (3,188) (3,001) Utilisation of tax losses not included in the calculation of deferred tax in prior years ...... — (1,670) Gross result of Synthos Dwory 7 społka´ z ograniczon˛a odpowiedzialno´sci˛a społka´ jawna* ...... (43,699) (28,054) Adjustment of tax for previous years ...... 1,160 (13,946) Tax loss for 2013 for which no deferred tax asset was created ...... 3,795 — Investment relief ...... — (38,266) Other ...... 2,439 (1,071) 11% 49,861 11% 32,089

* As a result of the transformation of the legal form of Synthos Dwory Sp. z o.o. into Synthos Dwory 7 społka´ z ograniczon˛a odpowiedzialno´sci˛a S.K.A. as from 1 November 2011 the company ceased to be liable to corporate income tax. In 2013 the Group performed further transformations of the legal forms in subsidiaries and of the capital group structure as a result of which Społka´ Synthos Dwory 7 społka´ z ograniczon˛a odpowiedzialno´sci˛a Społka´ jawna (formerly: Synthos Dwory 7 społka´ z ograniczon˛a odpowiedzialno´sci˛a S.K.A.) is still an entity that is not liable to corporate income tax. Income tax expense in the amount of PLN 3,225 thousand (31 December 2012: PLN 11,477 thousand) is the amount of liabilities to the tax office for the difference between the payments made for the current and previous fiscal year and the amount of tax due. The Group recognised only partially deferred tax assets on the tax loss generated in 2011 and 2013, in the amount recoverable in the future.

List of tax losses

No deferred loss Possible Recognised asset was created date of loss Fiscal year Tax loss loss asset as of 31.12.2013 recovery 2011 ...... 54,757 3,800 6,604 2016 2013 ...... 19.975 — 3,796 2018 The Group did not recognise an asset on a tax loss generated in 2013. The deadline allowing to recover this loss will expire in 2018. The Group recognised in full the deferred tax asset in respect of investment relief in the subsidiary, Synthos PBR s.r.o. The deadline allowing to recover this tax credit will expire in 2015. In the opinion of the Management Board there is no significant risk of non-utilisation of the created asset by 2015.

F-79 — — — 7,199 12,207 41,102 31,136 (11,117) (34,670) (27,967) (62,465) (13,894) (25,598) (17,575) 145,852 134,928 249,638 149,903 (102,241) 7,199 12,207 134,928 249,638 (5,570)(4,409) (1,979) (28,943) (2,645) (651) (923) (665) — (2) (6,024) (17,331) (2,657) (1,919) — (6,068) (3,724) (3,006) (1,057)(4,530)(2,090) (39) (16,956) (14,622) (2,302) (1,810) (378) (485) — — 28,132 109,353 4,547 3,820 — 65,994 121,289 3,479 5,705 (197,393) 22,731 80,303 7,859 7,187 (118,080) 21,155 19,915 17 15 — 31,320 110,269 4,379 3,935 — Buildings and Plant and Construction — 279,398 741,284 22,783 37,169 49,714 1,130,348 — 261,245 662,853 21,532 34,937 49,716 1,030,283 — 261,245 662,853 21,532 34,937 49,716 1,030,283 — 236,545 584,162 19,833 33,297 42,517 916,354 (673) (17,033) (41,418) (933) (551) (1,857) 1,869 523,490 802,452 24,294 18,509 158,370 1,528,984 1,869 760,035 1,386,614 44,127 51,806 200,887 2,445,338 Land structures equipment Vehicles Other in progress Total (2,343) (27,216) (63,466) (1,460) (833) (6,923) 33,222 562,882 806,216 22,501 20,119 99,056 1,543,996 33,22233,222 824,127 824,127 1,469,069 1,469,069 44,033 44,033 55,056 55,056 148,772 148,772 2,574,279 2,574,279 31,136 — — — — — 33,222 562,882 806,216 22,501 20,119 99,056 1,543,996 30,879 813,574 1,482,182 47,426 60,353 273,368 2,707,782 30,879 534,176 740,898 24,643 23,184 223,654 1,577,434 oss in the gross value of property, plant and equipment Synthos S.A. Capital Group (in PLN ‘000 unless stated otherwise) Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) ...... — ...... — — — — — ...... — — — — — ...... — ...... — ...... — — — — — ...... — ...... — ...... 926 ...... — ...... — ...... (36) ...... — ...... — ...... — — — — — — ...... — — — — Net value As at 1 January 2012 Sale/decommissioning Exchange differences on translation Depreciation and impairment losses as at 31 December 2013 As at 31 December 2012 Impairment loss Amortisation and depreciation for the period Gross value as at 1 January 2012 Purchase of construction in progress to fixed assets Transfer Note 11. Property, plant and equipment Note 11. Property, *** Change of the classification leased land from operating lease to finance . of impairment loss adjusts the gross value property, plant and equipment due to prior recognition l Reversal As at 1 January 2013 Transfer to fixed assets Transfer Depreciation and impairment losses as at 1 January 2013 Sale/decommissioning Exchange differences on translation Gross value as at 31 December 2012 Gross value as at 1 January 2013 Purchase of construction in progress Transfer from assets held for sale Transfer Reclassification* of impairment loss** Reversal Sale/decommissioning Exchange differences on translation Sale/decommissioning Exchange differences on translation Depreciation and impairment losses as at 31 December 2012 As at 31 December 2013 Amortisation for the period Impairment loss Gross value as at 31 December 2013 Depreciation and impairment losses Depreciation and impairment losses as at 1 January 2012

F-80 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 11. Property, plant and equipment (Continued) Costs of depreciation of property, plant and equipment are recognised in profit or loss under the costs of sales item in the amount of PLN 124,305 thousand (in 2012: PLN 129,036 thousand).

Impairment losses and their utilisation In the reporting period the Group did not record any impairment losses on property, plant and equipment, while in 2012 it recorded impairment losses in the amount of PLN 7,199 thousand for the installation for waste incineration. The impairment loss covered property, plant and equipment which will not be utilised due to the planned change of technology. In 2012 the Capital Group reversed the impairment loss for the XPS production line in Synthos Kralupy a.s. and Synthos Dwory 7 społka´ z ograniczon˛a odpowiedzialno´sci˛a społka´ jawna. As at 31 December 2012 the total value of the reversed impairment on the above mentioned assets was PLN 31,272 thousand in Synthos Kralupy a.s. and PLN 9,830 thousand in Synthos Dwory 7 społka´ z ograniczon˛a odpowiedzialno´sci˛a społka´ jawna, respectively. Taking into account the results achieved in both locations, the prospects for the continuation of the current trend as well as product development capabilities supported by new implementations, it can be concluded that the maintenance of impairment losses recorded in 2009 was not justified.

Fixed assets used under lease contracts As at the end of the reporting period, the Synthos S.A. Capital Group did not have any fixed assets used under finance lease other than the land under finance lease contracts described above (carrying amount of PLN 28,363 thousand). Synthos Kralupy a.s. in Kralupy upon Vltava and in Litvinow—Czech Republic uses the land under a lease contract with the land owner. The lease contract is concluded for an indefinite period and any changes in the contract must be approved by both parties to the contract. The Group presents this land in the consolidated financial statements in property, plant and equipment. The value of the land under lease contracts results from the value of the liability, estimated as the present value of future payments under the lease contract. The value of the lease liability was calculated as the perpetuity of annual rent payments of CZK 16,872,000 (PLN 2,552,734) using a discount rate of 9%. Liabilities arising from finance lease are recorded in ‘‘Other non-current liabilities’’ item.

Collaterals As at 31 December 2013 the net carrying value of buildings and structures, machinery and equipment constituting the collateral for bank loans amounted to PLN 422,004 thousand (31 December 2012: PLN 610,777 thousand) (note 24).

Construction in progress As at the end of 2013, the Group had construction in progress with the value of PLN 223,654 thousand (as at the end of 2012 their value amounted to PLN 99,056 thousand). This amount consisted of several dozens of commenced investment projects, of which the most important are: a construction of cogeneration units—expenditures of PLN 85,622 thousand, upgrade of battery I and II—amount of expenditures incurred: PLN 15,162 thousand, establishment of a laboratory—amount of expenditures incurred: PLN 19,694 thousand, construction of the gas turbine: PLN 64,529 thousand.

Grants In the 2012 reporting period the Group signed two significant agreements for the funding of investments.

F-81 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 11. Property, plant and equipment (Continued) a) Research and development centre On 23 November 2012 an agreement was signed with the Ministry of Economy for the funding of the Research and Development Centre for New Technologies which will be built in O´swi˛ecim. Eligible investment costs amount to more than PLN 86.5 million. The Group will receive 50% support from the Innovative Economy Operational Programme, i.e. almost PLN 43.3 million. The project will be carried out in Synthos S.A. The implementation of the project includes the construction of laboratories to conduct syntheses (laboratory and pilot plant scale), analytical and application tests. Almost 90% of project costs will be allocated to a purchase of the latest research equipment. The project involves a creation of a Research and Development Centre equipped with the latest equipment whose main objective will be to develop and implement for production new, innovative products, including mainly new types of synthetic rubber. They will allow tyre manufacturers to develop products with a much lower rolling resistance and improved adhesion to the surface, which will translate into a significant reduction in fuel consumption and improved safety. As part of the Project a new, innovative technology will be developed for manufacturing the main raw material for the synthesis of the above mentioned rubbers, i.e. butadiene. In contrast to the currently used technologies, this technology will be based on renewable raw materials, which will allow to become independent of oil prices. The construction is now at the stage of closing the so-called ‘‘shell’’ phase. The opening of the centre is expected in September 2014. The project will be completed in June 2014. In 2013 the Group spent for this purpose PLN 19,694 thousand (in 2012: PLN 4,394 thousand). b) Installation for the production of SSBR rubbers In December 2012 Synthos S.A. signed an agreement with the Ministry of Economy for the funding of the ‘‘Implementation of an innovative technology for manufacturing SSBR X3 rubbers in Synthos Dwory 7’’ project. The aim of the investment is to diversify the company’s production by marketing a new innovative product, i.e. functionalised styrene and butadiene rubber obtained by the solvent method (S-SBR). Product innovation will be achieved through the implementation of the advanced production technology for rubbers with unique characteristics and properties purchased by Synthos S.A. from The Goodyear Tire & Rubber Company. The amount of eligible expenditures is more than PLN 489 million, of which the amount of the funding is nearly PLN 147 million. As a result of the project at least 160 new jobs will be created. In 2013 works were started on the implementation of the project consisting in the construction of the installation for the production of modern SSBR rubbers. The completion of the investment is planned for June 2015. Up till now earthworks, reinforcement, concrete and insulation works have been completed. The above ground portion of the reinforced concrete structure of +8m height was also completed. The Group spent for this purpose PLN 54,558 thousand. As at 31 December 2013, there is no evidence of impairment of unfinished investment works.

F-82 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 12. Intangible assets

Concessions, Research and licences, computer Other Total development software and intangible intangible expenses other assets assets Gross value as at 1 January 2012 ...... 666 63,926 105,242 169,834 Purchase ...... 9,028 92,446 3,961 105,435 Sale/decommissioning ...... — (6,686) (4,021) (10,707) Exchange differences on translation ...... — (1,253) (4,643) (5,896) Gross value as at 31 December 2012 ...... 9,694 148,433 100,539 258,666 Gross value as at 1 January 2013 ...... 9,694 148,433 100,539 258,666 Purchase ...... 19,686 10,547 19 25,762 Sale/decommissioning ...... — — — — Exchange differences on translation ...... — (1,951) (6,706) (8,657) Gross value as at 31 December 2013 ...... 29,380 157,029 93,852 275,771

Concessions, Research and licences, computer Other Total development software and intangible intangible expenses other assets assets Accumulated depreciation and impairment losses as at 1 January 2012 ...... 632 35,546 104,764 140,942 Amortisation and depreciation for the period ..... 7 5,643 248 5,898 Sale/decommissioning ...... — (6,686) — (6,686) Exchange differences on translation ...... — (563) (4,644) (5,207) Accumulated depreciation and impairment losses as at 31 December 2012 ...... 639 33,940 100,368 134,947 Accumulated depreciation and impairment losses as at 1 January 2013 ...... 639 33,940 100,368 134,947 Amortisation and depreciation for the period ..... 7 6,007 284 6,298 Sale/decommissioning ...... — — — — Exchange differences on translation ...... — (1,013) (6,800) (7,813) Accumulated depreciation and impairment losses as at 31 December 2013 ...... 646 38,934 93,852 133,432 Net value As at 1 January 2012 ...... 34 28,380 478 28,892 As at 31 December 2012 ...... 9,055 114,493 171 123,719 As at 1 January 2013 ...... 9,055 114,493 171 123,719 As at 31 December 2013 ...... 28,734 113,605 — 142,339 As at the balance sheet date intangible assets comprise mainly: purchased licences for the manufacture of products, computer software. Licences mainly include a licence for the production of polybutadiene rubber in the amount of PLN 33,115 thousand (on the basis of this licence the Group started in 2011 the production of PBR rubber in Synthos PBR s.r.o.) and a licence for the production of SSBR rubber in the amount of PLN 57,613 thousand (on the basis of this licence the Group started in 2013 the construction of the installation for the production of SSBR rubbers). As at 31 December 2013 an impairment test for the above licence was performed. The test showed no impairment.

F-83 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 12. Intangible assets (Continued) The ‘‘research and development expenses’’ item includes expenditures related to works on the development of new products and commercialisation of processes of obtaining the main raw materials for the production from alternative sources which in the future will translate into lower costs of the main raw materials for the production in the Group. The Group performed an impairment test on the costs of unfinished development works. As at 31 December 2013, the test showed no impairment.

Note 13. Investment properties

31 December 31 December 2013 2012 Gross value at the beginning of the period ...... 6,790 6,588 Adjustment ...... — — Upgrade ...... — 202 Sale/decommissioning ...... (3,872) — Gross value at the end of the period ...... 2,918 6,790 Accumulated depreciation and impairment losses at the beginning of the period ...... 3,358 3,183 Amortisation and depreciation for the period ...... 177 175 Sale/decommissioning ...... (1,100) — Accumulated depreciation and impairment losses at the end of the period ... 2,435 3,358 Net value at the beginning of the period ...... 3,432 3,405 Net value at the end of the period ...... 483 3,432

Investment properties are buildings and structures located in O´swi˛ecim, on the land belonging to a subsidiary, Synthos Dwory 7 społka´ z ograniczon˛a odpowiedzialno´sci˛a społka´ jawna, that are rented by the Group to unrelated entities. In the reporting period the Group sold a part of investment properties. The result achieved on the sale amounted to PLN 4,268 thousand and it was presented in the statement of comprehensive income under the ‘‘profit on sale of property, plant and equipment’’ item. In the reporting period ended 31 December 2013 revenues achieved from the rental of buildings and structures amounted to PLN 2,014 thousand (12 months of 2012: PLN 1,988 thousand). They are presented in the statement of comprehensive income under the ‘‘revenues from sales’’ item. The fair value estimated on the basis of discounted cash flows from the lease of these assets as at 31 December 2013 amounts to approximately PLN 2 million (using the discount rate before tax of 12%).

Note 14. Long-term investments

31 December 31 December 2013 2012 Financial assets available for sale (Note 29) ...... 258,715 187,280 Loan granted to Butadien Kralupy ...... 17,380 52,409 Other loans ...... 720 512 Interests in unconsolidated subsidiaries ...... 2,106 2,115 Total ...... 278,921 242,316

F-84 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 14. Long-term investments (Continued) Loans granted

31 December 31 December 2013 2012 Long-term loans Loan granted to Butadien Kralupy ...... 17,380 52,409 Other ...... 720 512 18,100 52,921 Short-term loans Loan granted to Butadien Kralupy ...... 6,950 7,487 6,950 7,487

Loan repayment schedule

up to from Total 1 year 1 to 5 years currency and interest rate PRIBOR + margin ...... 24,330 6,950 17,380 WIBOR + margin ...... 720 — 720 25,050 6,950 18,100

Changes in respect of loans

Loan receivables as at 01.01.2013 ...... 60,408 Loans granted ...... 220 Repayment of loans* ...... (31,274) Foreign exchange gains/losses ...... (4,304) Loan receivables as at 31.12.2013 ...... 25,050

* Butadien Kralupy repaid in 2013 the amount of CZK 160,764 in addition to the schedule (PLN 24,324 thousand)

Note 15. Investments in unconsolidated subsidiaries

Result for the Assets Liabilities Equity period 31 December 2013 Synthos Dwory 2 sp. z o.o...... 1,413 — 1,413 38 Synthos Dwory 6 sp. z o.o...... 5 23 (18) (6) Synthos XEPS s.r.o ...... 33 — 33 — 1,451 23 1,428 32 31 December 2012 Synthos Dwory 2 sp. z o.o...... 1,375 — 1,375 59 Synthos Dwory 3 sp. z o.o. in liquidation ...... 8 20 (12) (7) Synthos Dwory 6 sp. z o.o...... 33 — 33 — Synthos XEPS s.r.o ...... 1,416 20 1,396 52 1,375 — 1,375 59

F-85 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 15. Investments in unconsolidated subsidiaries (Continued) Investments in unconsolidated subsidiaries comprise: • Synthos Dwory 2 Sp. z o.o. (former name: Sport Olimp Sp. z o.o.)—the object of business is the manufacture of chemicals, • Synthos Dwory 6 Sp. z o.o.—the object of business is generation of electricity, • Synthos XEPS with its registered office in Kralupy upon Vltava, Czech Republic—the object of business of the company is the manufacture of chemicals.

Note 16. Shares in companies recognised under the equity method The Group has the following investments in joint ventures:

Share in share capital % Country 31.12.2013 31.12.2012 Butadien Kralupy a.s...... Czech Republic 49.0% 49.0% The Group has a 49.0% stake in Butadien Kralupy a.s. with its registered office in Kralupy upon Vltava, Czech Republic, as a joint venture of Synthos Kralupy a.s. and Unipetrol a.s. The joint venture was established in order to build a new plant for the production of butadiene which is supplied to the companies of the Group, and the raffinate which is supplied to Unipetrol a.s.

Assets Liabilities Profit/loss non- long- short- for the current current term term Revenues Expenses period 31 December 2013 Butadien Kralupy a.s...... 159,019 170,414 36,495 121,153 946,336 911,250 35,086 31 December 2012 Butadien Kralupy a.s...... 182,888 208,821 106,957 134,533 1,070,735 1,020,733 50,002

31 December 31 December 2013 2012 Balance at the beginning of the period ...... 73,547 51,942 Acquisition of shares ...... — — Profit sharing ...... 17,192 24,501 Foreign exchange gains/losses ...... (6,621) (2,896) Balance at the end of the period ...... 84,118 73,547

The Group’s share in profits of joint ventures accounted for using the equity method amounted in the period ended 31 December 2013 to PLN 17,192 thousand (profit in 2012: PLN 24,501 thousand).

F-86 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 17. Deferred tax Deferred tax assets and deferred tax liabilities were recognised in respect of the following assets and liabilities:

Deferred tax assets and deferred tax liabilities

Assets Liabilities Net value 31.12.2013 31.12.2012 31.12.2013 31.12.2012 31.12.2013 31.12.2012 Property, plant and equipment and investment properties ...... (1,429) (1,443) 64,291 61,376 62,862 59,933 Other investments ...... (858) (858) 223 191 (635) (667) Inventories ...... (408) (148) 439 107 31 (41) Trade and other receivables ...... (577) (870) 4 — (573) (870) Employee benefits ...... (100) (124) — — (100) (124) Provisions ...... (717) (715) — — (717) (715) Liabilities ...... (2,048) (4,540) — — (2,048) (4,540) Investment relief ...... (85,786) (92,421) — — (85,786) (92,421) Tax losses ...... (13,290) (15,484) — — (13,290) (15,484) Deferred tax assets/liabilities ...... (105,213) (116,603) 64,957 61,674 (40,256) (54,929) Offset ...... 23,319 18,673 (23,319) (18,673) — — Deferred tax assets/liabilities recognised in the balance sheet ... (81,894) (97,930) 41,638 43,001 (40,256) (54,929) Deferred tax assets/liabilities to be utilised within 12 months ...... (28,594) (12,634) 1,443 — (27,151) (12,634) Deferred tax assets/liabilities to be utilised after 12 months ...... (53,300) (83,378) 40,195 — (13,105) (83,378)

Unrecognised deferred tax assets The Group recognised only partially an asset for the tax loss generated in 2011, in the amount recoverable in the future. The deadline allowing to recover this loss will expire in 2016. In the previous reporting period the Group revalued assets in respect of the investment relief which it received for the construction of a new polybutadiene rubber installation by creating an asset for the full amount of the relief granted. As at the balance sheet date all conditions for obtaining the investment relief were satisfied.

F-87 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 17. Deferred tax (Continued) Change in temporary differences in the period

Change in temporary differences recognised in Capital from foreign Revaluation exchange reserve difference (other (other As at comprehensive comprehensive As at 01.01.2013 Profit or loss income) income) 31.12.2013 Property, plant and equipment ...... 59,933 7,485 — (4,556) 62,862 Other investments ...... (666) 1 30 — (635) Inventories ...... (42) 41 — 32 31 Trade and other receivables ...... (870) 254 — 43 (573) Employee benefits ...... (124) 23 — 1 (100) Provisions ...... (715) (51) — 49 (717) Investment relief ...... (92,421) — — 6,635 (85,786) Tax losses ...... (15,484) 1,404 — 787 (13,290) Liabilities ...... (4,540) 2,439 — 53 (2,048) (54,929) 11,596 30 3,044 (40,256)

Change in temporary differences recognised in Capital from foreign As at Revaluation exchange As at 01.01.2012 Profit or loss reserve differences 31.12.2012 Property, plant and equipment ...... 50,893 11,714 — (2,674) 59,933 Other investments ...... (769) (88) 191 — (666) Inventories ...... — (69) — 27 (42) Trade and other receivables ...... (1,089) 207 — 12 (870) Employee benefits ...... (184) 59 — 1 (124) Provisions ...... (771) 22 — 34 (715) Investment relief ...... (58,208) (38,268) — 4,055 (92,421) Tax losses ...... (17,268) 1,161 — 623 (15,484) Liabilities ...... (1,207) (3,346) — 13 (4,540) (28,603) (28,608) 191 2,091 (54,929)

Note 18. Short-term loans granted

31 December 2013 31 December 2012 Loan granted to Butadien Kralupy (joint venture) ...... 6,950 7,487 Total ...... 6,950 7,487

F-88 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 19. Inventories

31 December 2013 31 December 2012 Materials ...... 133,417 154,458 Work in progress ...... 63,828 72,814 Finished products ...... 250,393 381,474 Goods ...... 3,056 9,156 450,694 617,902

Inventories are presented in net amounts, net of impairment losses in the amount of PLN 4,159 thousand (31 December 2012: PLN 4,159 thousand). Changes in the value of impairment losses result from the sale, use or decommissioning of the relevant product items and they are recognised in the statement of comprehensive income under the cost of sales item. The value of impairment losses on inventories, recognised in profit or loss, amounted in 2013 to PLN 0 thousand (in 2012: PLN 781 thousand).

Note 20. Trade and other receivables

31 December 2013 31 December 2012 Trade receivables from related parties ...... 136,651 119,466 Trade receivables from other parties ...... 695,229 835,943 Receivables in respect of other taxes ...... 91,520 104,865 Receivables in respect of financial instruments ...... 1,375 — Other receivables ...... 1,007 34 Advances on a purchase of fixed assets ...... 2,064 15,464 Prepayments ...... 3,204 2,497 931,050 1,078,269

Trade receivables are presented in net amounts, net of impairment losses in the amount of PLN 17,037 thousand (31 December 2012: PLN 8,198 thousand). Impairment losses on receivables were recorded in connection with a confirmed fact of their uncollectability. The value of impairment losses on receivables recognised in profit or loss amounted in 2013 to PLN 14,730 thousand (in 2012: PLN 5,704 thousand). In addition, impairment losses of PLN 5,394 thousand (in 2012: PLN 4,759 thousand) were reversed because receivables were repaid. As at 31 December 2013, the value of receivables constituting collateral for Group’s liabilities under loans amounted to PLN 470,000 thousand (31 December 2012: PLN 652,360 thousand). The adopted loan repayment period associated with the normal course of sales is 30-120 days, depending on the business segment.

Note 21. Cash and cash equivalents

31 December 2013 31 December 2012 Cash in hand ...... 156 154 Cash at bank ...... 274,194 469,880 Short-term deposits ...... 172,089 275,951 Other cash and cash equivalents ...... 602 602 Cash and cash equivalents, value reported in the balance sheet .... 447,041 746,587 Cash and cash equivalents, value reported in the cash flow statement ...... 447,041 746,587

F-89 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 21. Cash and cash equivalents (Continued) Pursuant to the Polish law, companies registered in Poland manage the Company Social Benefits Fund (‘‘CSBF’’) on behalf of their employees. Contributions paid to the CSBF are deposited in separate bank accounts of Companies and they cannot be used in operating activities. As at 31 December 2013 the value of cash related to cash in CSBF accounts amounted to PLN 387 thousand (31 December 2012: PLN 349 thousand). Except for the above amounts relating to the CSBF, as at 31 December 2013 and 31 December 2012 the Group had no restricted cash. The Group changed the accounting policy as described in note 32.

Note 22. Share capital

2013 2012 Number of shares at the beginning of the period ...... 1,323,250,000 1,323,250,000 Number of shares at the end of the period ...... 1,323,250,000 1,323,250,000 Face value of 1 share (PLN) ...... 0.03 0.03 Holders of ordinary shares are entitled to receive adopted dividends and are entitled to one vote per share at the Annual General Meeting of Company’s Shareholders. All shares entitle equally to the assets of the Company if the assets are to be divided. As at 31 December 2013, shareholders holding over 5% of votes in the Company included: 1. Mr Michał Sołowow—holds indirectly—through subsidiaries—826,559,009 shares of Synthos S.A., which represents 62.46% of the share capital and entitles to 826,559,009 votes at the AGM representing 62.46% in the total number of votes at the AGM of Synthos S.A. Among the shares held as at the date of the publication of this report indirectly by: • FTF Galleon S.A. with its registered office in Luxembourg. This company holds 772,559,009 shares of SYNTHOS S.A., which constitutes 58.38% of the share capital and the total number of votes at the AGM of SYNTHOS S.A., • Barcocapital Investment Ltd. This company holds 54,000,000 shares of Synthos S.A., which constitutes 4.08% of the share capital and the total number of votes at the AGM of SYNTHOS S.A. 2. ING Otwarty Fundusz Emerytalny—holds 96,688,882 shares of the Company, representing 7.31% of the share capital. These shares entitle to 96,688,882 votes at the general meeting of shareholders of the Company, representing 7.31% of the total number of votes. The information on the holding of Issuer’s shares by the shareholders indicated above is provided by the Issuer to the best of its knowledge, among other things, on the basis of the list of shareholders participating in the Annual General Meeting of SYNTHOS S.A. on 3 April 2013 and a list of shareholders entitled to receive the dividend. The changes in the holding of large blocks of shares in the reporting period, i.e. from 1 January 2013 to 31 December 2013 were notified by the Issuer in the current report no. 26/2013 and 27/2013. These changes were taken into account in the above list. There were no changes in the structure of the ownership of large blocks of Issuer’s shares after the reporting period—in the period from 31 December 2013 until the date of the publication of this report.

F-90 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 22. Share capital (Continued) Dividend paid per share

2013 2012 Dividend paid per share ...... 0.76 0.50

Note 23. Earnings per share Basic earnings per share The calculation of basic earnings per share was performed on the basis of net profit attributable to the shareholders of the Parent Company and the weighted average number of shares as at the date of the financial statements. These figures were determined in the following manner:

2013 2012 Net profit for the year in PLN ‘000 ...... 416,891 586,345 Weighted average number of shares at the end of the period ...... 1,323,250,000 1,323,250,000 Earnings per share Basic (PLN) ...... 0.32 0.44 Diluted (PLN) ...... 0.32 0.44

Diluted earnings per share There are no factors causing a dilution of earnings per share.

Note 24. Liabilities under loans, borrowings and other debt instruments The note presents the information on Group’s liabilities under loans, borrowings and other debt instruments.

31 December 2013 31 December 2012 Non-current liabilities Bank loans ...... 420,012 474,655 420,012 474,655 Current liabilities Current portion of bank loans ...... 128,100 171,641 128,100 171,641

Loan repayment schedule

up to from 1 to from 2 to Above Total 1 year 5 years 5 years 5 years currency and interest rate PLN/WIBOR + margin ...... 25,901 14,614 8,753 2,534 — EUR/EURIBOR + margin ...... 522,211 113,486 107,055 275,313 26,357 548,112 128,100 115,808 277,847 26,357

F-91 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 24. Liabilities under loans, borrowings and other debt instruments (Continued) The value of accrued interest on loans taken out payable on 31 December 2013 amounted to PLN 0 thousand. Bank loans are secured by mortgages on buildings and structures and pledges on machinery and equipment of the Group in the total amount of PLN 422,004 thousand (31 December 2012: PLN 610,777 thousand) and assignments of receivables totalling PLN 470,000 thousand (31 December 2012: PLN 652,360 thousand). In 2013 the Group refinanced loans reported in liabilities under loans as at 31 December 2012 (a loan to finance the production installation in Synthos PBR and a loan for the purchase of a subsidiary—Synthos Kralupy). The loans were refinanced in different banks than the previous loans. Simultaneously, in 2013 the Synthos Group entered into the following new loan agreements: • agreement of 24 May 2013 concluded with BZ WBK on a multi-purpose working capital loan of PLN 250 million, interest rate of the loan agreement: WIBOR + margin, maturity: 24 May 2015. Loan balance as at 31 December 2013 amounts to EUR 36,5 milion. • agreement of 31 December concluded with PKO BP on a multi-purpose working capital loan of PLN 300 million, interest rate of the loan agreement: WIBOR + margin, maturity: 30 September 2016. • annexe of 19 December to the agreement concluded in December 2012 with PEKAO S.A. on a multipurpose working capital loan of PLN 500 million, extending the maturity date of the agreement to 31 December 2015, interest rate of the loan agreement: WIBOR + margin, EURIBOR + margin. Loan balance as at 31 December 2013 amounts to EUR 73,5 milion. • loan agreement of 20 November 2013 concluded with PKO BP S.A. on a repayment of the loan for the acquisition of Synthos Kralupy and on refinancing of capital expenditures incurred, in the amount of EUR 95 million, interest rate of the loan: EURIBOR + margin, maturity: 30 September 2018 year. Loan balance as at 31 December 2013 amounts to EUR 74,5 milion. • agreement of 18 December concluded with PEKAO S.A. on refinancing of expenditures incurred on the repayment of the loan for the PBR line in the amount of EUR 51,352 million, interest rate of the loan agreement: EURIBOR + margin, maturity: 30 June 2019.

Note 25. Employee benefits

31 December 2013 31 December 2012 Non-current employee benefit liabilities Retirement benefit liabilities ...... 1,341 1,462 Death benefit liabilities ...... 1,574 1,925 Compensatory benefit liabilities ...... 901 901 Total employee benefit liabilities ...... 3,816 4,288

31 December 2013 31 December 2012 Current employee benefit liabilities Retirement benefit liabilities ...... 50 104 Death benefit liabilities ...... 85 99 Compensatory benefit liabilities ...... 15 15 Total employee benefit liabilities ...... 150 218

F-92 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 25. Employee benefits (Continued)

31 December 2013 31 December 2012 Changes in employee benefit liabilities Employee benefit liabilities at the beginning of the period ...... 4,506 3,760 Payment of retirement benefits and long-term service awards ...... (185) (220) Payment of death benefits ...... (23) (16) Reversal/provisions ...... (327) 1,019 Exchange differences on translation ...... (5) (37) 3,966 4,506

31 December 2013 31 December 2012 Basic actuarial estimates as at the balance sheet date Discount rate ...... 4.0% 4.0% Future salary increase ...... 4.0% 4.0%

Note 26. Provisions

Decommissioning Other of assets Reclamation provisions Total Value as at 1 January 2013 ...... 30,260 2,967 1,197 34,424 Increases ...... — — 243 243 Reversed ...... — (133) (44) (177) Exchange differences on translation ...... — (63) (216) (279) Value as at 31 December 2013 ...... 30,260 2,771 1,180 34,211 Non-current portion ...... 30,260 — — 30,260 Current portion ...... — 2,771 1,180 3,951 30,260 2,771 1,180 34,211 Value as at 1 January 2012 ...... 50,695 3,259 1,204 55,158 Increases ...... — 3 244 247 Used ...... — (139) (30) (169) Reversed ...... (20,435) (193) (20,628) Exchange differences on translation ...... — (156) (28) (184) Value as at 31 December 2012 ...... 30,260 2,967 1,197 34,424 Non-current portion ...... 30,260 — — 30,260 Current portion ...... — 2,967 1,197 4,164 30,260 2,967 1,197 34,424

Provision for costs of asset decommissioning Closedown of the electrolysis department In December 2005 the Management Board of Firma Chemiczna Dwory S.A made a decision to close down the electrolysis department. The level of pollution of the buildings of the electrolysis department identified on the basis of the test measurements conducted and previous experience of the Group indicates the necessity to demolish them completely and incur disposal costs in order to meet environmental requirements set out by the law and in the integrated permit for the electrolysis department.

F-93 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 26. Provisions (Continued) In 2012 the estimated amount of the provision for costs associated with the closedown of the department was revalued, a provision in the amount of PLN 20,435 thousand was reversed and simultaneously an assumption was made that demolition works will be completed by the end of 2030 (the expected life of the buildings).

Provision for hydrological protection of underground water The provision relates to the environmental protection risk. This risk is associated with the hydrogeological protection of underground water where an increased presence of free oil hydrocarbons in present in the soil. The updated risk analysis for the subsoil shows some pollution with free aromatic hydrocarbons in the place where the storage facilities of liquid gas, styrene and polystyrenes are located. As at 31 December 2013 the Group recognises a provision in the amount of PLN 2,771 thousand for expected costs of land reclamation. At the same time the Group conducts research and protective works to prevent the penetration of contaminants through the hydrogeological protection barriers.

Other provisions Other provisions relate mainly to the provisions for employee compensations for accidents at work.

Note 27. Trade and other payables

31 December 2013 31 December 2012 Trade payables from other entities ...... 386,647 523,132 Trade payables from related parties ...... 104,801 98,573 Liabilities in respect of taxes, insurance excluding income tax ...... 4,798 2,197 Payroll liabilities ...... 5,319 8,140 Accruals ...... 53,202 57,845 Special funds ...... 342 334 Investment liabilities ...... 51,440 92,215 Other liabilities ...... 6,177 — 612,726 782,436

F-94 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 28. Reasons for differences between balance sheet changes of certain items and changes resulting from the consolidated statement of cash flows

from 01.01.2013 to from 01.01.2012 to 31.12.2013 31.12.2012 Receivables: Balance sheet change in trade and other receivables ...... 142,219 11,355 Change in advances for fixed assets and receivables in respect of investing activities ...... (13,400) 15,464 Exchange differences on translation ...... (70,935) (60,794) Change in receivables in the consolidated statement of cash flows .. 57,884 (33,975) Liabilities: Balance sheet change in trade payables, other payables and government grants ...... (169,710) 171,117 Change in investment liabilities ...... 40,775 (47,756) Change in respect of financial instruments Exchange differences on translation ...... 60,651 58,504 Change in liabilities in the consolidated statement of cash flows ... (68,284) 181,865 Inventories Balance sheet change in inventories ...... 167,208 (141,370) Exchange differences on translation ...... (18,084) (18,496) Change in inventories in the consolidated statement of cash flows .. 149,124 (159,866)

Note 29. Financial instruments Classification of financial instruments

31.12.2013 Long-term Short-term Total Financial assets available for sale ...... 258,715 — 258,715 Loans, trade and other receivables ...... 18,100 839,837 857,937 Cash and cash equivalents ...... — 447,041 447,041 Asset arising from the measurement of financial instruments ..... — 1,375 1,375 Financial liabilities measured at amortised cost ...... (420,012) (1,180,421) (1,600,433) Financial assets at fair value through profit or loss (derivatives) . . . — (4,726) (4,726) Finance lease liability ...... (28,363) — (28,363) (171,560) 103,106 (68,454)

31.12.2012 Long-term Short-term Total Financial assets available for sale ...... 187,280 — 187,280 Loans, trade and other receivables ...... 52,921 962,930 1,015,851 Cash and cash equivalents ...... — 746,587 746,587 Financial liabilities measured at amortised cost ...... (474,655) (1,001,307) (1,475,962) Financial assets at fair value through profit or loss (derivatives) . . . — (9,927) (9,927) (234,454) 698,283 463,829

F-95 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 29. Financial instruments (Continued) Effective interest rates and repricing dates The following tables present the effective interest rate for assets and liabilities on which interest is charged and their repricing dates.

Above Effective interest rate* Total <1 year 1 - 5 years 5 years Borrowings ...... PRIBOR+ margin 24,330 6,950 17,380 — WIBOR+ margin 720 720 — Total ...... 25,050 6,950 18,100 Cash and cash equivalents ...... WIBOR +/ margin 99,377 99,377 — PRIBOR+ margin 76,535 76,535 — EURIBOR + margin 218,959 218,959 — USDLIBOR+ margin 52,170 52,170 — Total ...... 447,041 447,041 Bank loans ...... EURIBOR + margin 978,442 569,716 408,726 — WIBOR + margin 25,901 14,615 11,286 — Total ...... 1,004,343 584,331 420,012

* does not differ significantly from the nominal rate

Financial risk management Credit risk, liquidity risk and market risk (which includes primarily interest rate risk and foreign currency risk) arise in the normal course of Group’s business. The objective of financial risk management in the Group is to minimise the impact of market factors such as foreign exchange rates and interest rates on the basic financial parameters approved in the Group’s budget for a particular year (profit and loss, level of cash flows) with the use of natural hedging and derivatives.

Credit risk Credit risk is the risk of the Group incurring financial losses due to a failure by the customer or counterparty to a financial instrument to meet its contractual obligations. Credit risk is mainly related to the Group’s receivables from customers and to financial investments. The following table presents the Group’s maximum exposure to credit risk:

31.12.2013 31.12.2012 Loans granted ...... 25,050 60,408 Trade and other receivables ...... 832,887 955,443 Cash and cash equivalents ...... 447,041 746,587 1,304,978 1,762,438

Trade receivables and other receivables

F-96 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 29. Financial instruments (Continued) The structure of the credit risk of trade receivables by product groups:

31.12.2013 31.12.2012 Dispersions and adhesives ...... 14,373 11,735 Rubbers and latexes ...... 438,730 511,138 Styrene plastics ...... 294,421 354,629 Other ...... 85,363 77,941 832,887 955,443

Credit risk is the risk of the Group incurring financial losses due to a failure by the customer or counterparty to a financial instrument to meet its contractual obligations. Credit risk is mainly related to the Group’s receivables from customers and to financial investments. Credit risk in the Group relates mainly to trade receivables. Due to the procedures applicable in the Group and a large customer base it is estimated that the concentration of credit risk is not significant. The Group performs ongoing evaluations of the creditworthiness of customers and in justified cases it requires appropriate collaterals. In addition, approximately 48% of Group’s receivables is covered by a receivables insurance policy. Counterparties for whom the Group does not have a history of cooperation or sale occurs occasionally, make purchases in the form of a prepayment. In contrast, trade credit is granted to customers for whom a positive history of cooperation exists and whose creditworthiness was assessed on the basis of both internal and external sources. Exposure to credit risk is defined as total outstanding receivables that are monitored individually for each customer. Group sales are concentrated in three main segments associated with the business profile. The largest group are receivables from customers purchasing rubber products—approximately 53% of receivables. The structure of the legal form of customers in this segment is fairly homogeneous because a vast majority of them are subsidiaries of international corporations. In this group 21% of the receivables balance is insured; in addition 18% is secured by a letter of credit or collection. The second important segment are receivables from customers purchasing styrene plastics—35% of receivables. Customers belonging to this segment constitute a heterogeneous group in terms of the legal form because they are both commercial companies and sole traders. The Group has collateral in the form of receivables insurance for 87% of the balance of this group of customers. The third major segment associated with the basic business profile are receivables from customers purchasing dispersions, adhesives and latex—2% of receivables. This group is similar to the second segment in terms of the legal form of customers. Simultaneously, 88% of receivables are covered by insurance. In the opinion of the Management Board the credit risk with respect to receivables is assessed as negligible.

F-97 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 29. Financial instruments (Continued) Impairment The following table presents the ageing structure of trade receivables

31.12.2013 31.12.2012 Gross31.12.2013 Gross 31.12.2012 value Impairment value Impairment Non-overdue ...... 770,379 — 866,360 — Overdue ...... 79,545 17,037 97,281 8,198 1 - 30 days ...... 44,854 — 49,694 — 30 - 180 days ...... 8,022 — 32,646 — 181 - 365 days ...... 18,369 8,737 9,951 3,208 above 1 year ...... 8,300 8,300 4,990 4,990 849,924 17,037 963,641 8,198

Increases and decreases of impairment losses were as follows:

2013 2012 As at 1 January ...... 8,198 7,495 Recorded ...... 14,730 5,704 Reversed ...... (5,394) (4,759) Exchange differences on translation ...... (497) (242) As at 31 December ...... 17,037 8,198

Cash and deposits Cash and cash equivalents are deposited with financial institutions with high credit ratings, in the following banks: Citibank Handlowy, Deutsche Bank, Fortis Bank, Bank ING, Pekao S.A., ABN Amro Bank N.V., BAWAG Bank CZ, Komercji Banka.

Loans granted Group’s credit risk arising from loans granted relates to receivables from related parties. At the moment there is no evidence of the inability of related parties to repay loans taken out.

Liquidity risk Liquidity risk is the risk of inability of the Group to fulfil its financial obligations when they fall due. Measures aimed at mitigating this risk include appropriate liquidity management, implemented by a correct assessment of the level of cash resources on the basis of plans of cash flows in various time horizons. As at 31 December 2013 The Group has a PLN 1,050,000 thousand of overdraft limit available. As at 31 December 2013 the Group used PLN 456,231 thousand of the credit limit granted.

F-98 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 29. Financial instruments (Continued) 31 December 2013

Contracted Present value of above value cash flows up to 1 year 1 - 5 years 5 years Financial liabilities Bank loan liabilities ...... (548,112) (548,112) (128,100) (393,654) (26,358) Ovedraft ...... (456,231) (456,231) (456,231) — — Trade payables and other liabilities* ...... (596,091) (596,091) (596,091) — — Interest rate swap ...... (4,726) (4,726) (4,726) — — (1,605,160) (1,605,160) (1,185,148) (393,654) (26,358)

* applies to trade payables, investment commitments and accruals

31 December 2012

Contracted Present value of above value cash flows up to 1 year 1 - 5 years 5 years Financial liabilities Bank loan liabilities ...... (695,197) (695,197) (220,542) (474,655) — Trade payables and other liabilities ...... (771,765) (771,765) (771,765) — — Interest rate swap ...... (9,927) (9,927) — — — (1,476,889) (1,476,889) (992,307) (474,655) —

Market risk Interest rate risk The Group’s exposure to changes in interest rates relates primarily to cash, cash equivalents and investments as well as loans granted and received bank loans with a variable interest rate based on EURIBOR + margin or WIBOR + margin. In 2013 the Group had swap contracts to hedge against the exposure to changes in interest rates by swapping floating interest rate for a fixed interest rate (the Group did not apply hedge accounting). As at the balance sheet date the Group has the following open Interest Rate Swaps:

Contract Settlement Current PLN Contract type currency Transaction amount date valuation IRS...... EUR 35,000 thousand 2015-12-15 2,384 thousand IRS...... EUR 20,000 thousand 2015-12-15 2,342 thousand IRS...... EUR 16,431 thousand 2017-06-30 239 thousand

F-99 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 29. Financial instruments (Continued) The following table presents the sensitivity profile (maximum exposure) of the Group to the interest rate risk by presenting financial instruments broken down by variable and fixed interest rates:

31 December 2013

Base interest rate WIBOR PRIBOR EURIBOR USDLIBOR Instruments with a variable interest rate Loans granted ...... 720 24,330 — — Cash and cash equivalents ...... 99,377 76,535 218,959 52,170 Loan liabilities ...... (25,901) — (978,442) — 74,196 100,865 (759,483) 52,170

31 December 2012

Base interest rate WIBOR PRIBOR EURIBOR USDLIBOR Instruments with a variable interest rate Borrowings ...... 512 59,896 — — Cash and cash equivalents ...... 299,280 295,004 100,369 51,934 Loan liabilities ...... (90,549) — (604,648) — 209,242 354,900 (504,279) 51,934

The Group has no financial instruments with a fixed rate measured at fair value through profit or loss. Therefore, a change in interest rates at the balance sheet will not affect the valuation of these instruments and consequently the statement of comprehensive income. The Group performed an analysis of the sensitivity of financial instruments with variable interest rate to a change in market interest rates. The following table presents the impact of an increase and decrease in the interest rate by 100 bp on the profit or loss and equity. The analysis was performed under the assumption that all other variables, such as foreign exchange rates remain unchanged.

Profit or loss Equity increases decreases increases decreases 100bp 100bp 100bp 100bp WIBOR 31 December 2013 ...... 742 (742) 742 (742) 31 December 2012 ...... 2,092 (2,092) 2,092 (2,092) PRIBOR 31 December 2013 ...... 1,009 (1,009) 1,009 (1,009) 31 December 2012 ...... 3,549 (3,549) 3,549 (3,549) EURIBOR 31 December 2013 ...... (7,595) 7,595 (7,595) 7,595 31 December 2012 ...... (5,043) 5,043 (5,043) 5,043 USDLIBOR 31 December 2013 ...... 522 (522) 522 (522) 31 December 2012 ...... 519 (519) 519 (519)

F-100 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 29. Financial instruments (Continued) Exchange risk Approximately 70% of revenues and 90% of costs of the Group is related to transactions settled in foreign currencies. Exchange rate fluctuations affect the level of revenues from sales and costs of purchasing raw materials. The strengthening of the domestic currency has a negative impact on the profitability of export and domestic sales, although changes in revenues from export and from domestic sales valued on the basis of quotations caused by exchange rate fluctuations are offset by changes in costs of raw material import (or valued on the basis of currency quotations), thus largely mitigating the Group’s exposure to foreign currency risk. The foreign currency risk management consists of the following processes: risk identification and measurement, monitoring of the situation on the financial markets, matching—where possible—the amount of liabilities and receivables in various currencies. As at the balance sheet the Group had forward contracts for the sale of EUR currency in the amount of EUR 18 million, the period of realisation of those instruments is in 2014. The valuation of contracts as at the balance sheet is: profit of PLN 1,135 thousand. The following table presents the profile of the sensitivity (of the balance sheet exposure as at 31 December 2013) of the Group to the risk of changes in exchange rates by presenting financial instruments broken down by currencies in which they are denominated (data in PLN ‘000):

31 December 2013

Foreign currency items Functional currency items EUR USD GBP CZK PLN Trade and other receivables ...... 498,846 138,525 99,879 120,687 Cash and cash equivalents ...... 218,959 52,170 — 76,535 99,377 Trade and other payables ...... (290,051) (84,574) (104,446) (117,020) Loan liabilities ...... (978,442) — — (25,901) Balance sheet exposure to foreign currency risk ...... (550,688) 106,121 — not applicable not applicable

31 December 2012

Foreign currency items Functional currency items EUR USD GBP CZK PLN Trade and other receivables ...... 524,357 134,802 2,746 158,205 135,333 Cash and cash equivalents ...... 100,369 51,934 — 295,004 299,280 Trade and other payables ...... (314,992) (67,887) (208,645) (180,241) Loan liabilities ...... (604,648) — — — (90,549) Balance sheet exposure to foreign currency risk ...... (294,914) 118,849 2,746 not applicable not applicable

F-101 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 29. Financial instruments (Continued) The Group carried out a sensitivity analysis of financial instruments denominated in foreign currencies to changes in exchange rates of those currencies. The table below presents the impact that strengthening or weakening of the functional currencies as at the balance sheet by 10% in relation to all currencies would have on the financial result. The analysis was performed under the assumption that all other variables, such as interest rates remain unchanged.

Profit or loss 10% 10% increase in decrease in foreign foreign exchange exchange rates rates 31 December 2013 ...... (44,457) 44,457 31 December 2012 ...... (17,332) 17,332

Price risk The Group’s exposure to changes in market prices concerns mainly holdings of shares listed on the Warsaw Stock Exchange and on the NYSE EURONEXT. Financial assets available for sale

2013 2012 As at 1 January ...... 187,280 148,609 Increase as a result of the acquisition of shares ...... — 45,614 Valuation recognised in revaluation reserve ...... 71,435 (6,943) As at 31.12.2012 ...... 258,715 187,280

In 2012 the amount of PLN 154,640 thousand was recognised in the financial result as impairment of financial assets available for sale (the loss relates to shares of Rovese S.A. held). In the current period as well as in previous periods the result on this investment was fully recognised in the revaluation reserve (in other comprehensive income).

Number of Value in List of shares held in 2013 shares PLN ‘000 —Echo Investment S.A...... 17,884,050 119,823 —Rovese S.A...... 63,281,250 132,069 —Global BioEnergies ...... 59,625 6,823 Total ...... 258,715

Number of Value in List of shares held in 2012 shares PLN ‘000 —Echo Investment S.A...... 17,884,050 90,315 —Rovese S.A...... 63,281,250 90,302 —Global BioEnergies ...... 59,625 6,663 Total ...... 187,280

F-102 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 29. Financial instruments (Continued) The Group performed an analysis of the sensitivity of shares held to a change of stock prices of these assets. The following table presents the impact that an increase or decrease in the share price by +/ 10% would have on the value of these assets.

Other comprehensive income 10% price 10% price increase decrease 31 December 2013 ...... 25,872 (25,872) 31 December 2012 ...... 18,728 (18,728) Risk of changes in commodity prices, products, services, resulting in a decrease of the margin achieved by the Group. The Group is exposed to the risk of changes in market prices of used raw materials and own products. That risk is minimised through the relevant provisions in sales agreements relating the prices of products sold by the Group to market prices of raw materials of which they are made. As the price formula included in the sales contracts is directly related with the manufacturing cost, the embedded derivative does not meet the ‘‘not closely related’’ criteria and separate recognition in the financial statements.

Fair value of financial instruments Details of fair values of financial instruments for which they can be estimated are presented below: • Financial instruments measured at fair value as at 31 December 2013

Level 1 Level 2 Level 3 Assets available for sale ...... 258,715 — — Derivatives ...... — (3,351) — • Financial instruments measured at fair value as at 31 December 2012

Level 1 Level 2 Level 3 Assets available for sale ...... 141,780 — — Derivatives ...... — 9,927 —

Level 1 Shares of companies listed on stock exchanges The fair value was determined on the basis of the quotation on the stock market.

Level 2 SWAP contracts hedging the loan interest rate. The fair value was determined on the basis of the valuation of banks issuing these contracts.

Level 3 None.

Other instruments: • Cash and cash equivalents, short-term bank deposits. The carrying amount of the above mentioned instruments is similar to their fair value due to the short maturity of these instruments;

F-103 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 29. Financial instruments (Continued) • Trade receivables, other receivables, trade payables. The carrying amount of the above mentioned instruments is similar to their fair value due to their short-term nature; • Long-term borrowings and bank loans. The carrying amount of the above mentioned instruments is similar to their fair value due to the changing nature of their interest rate; • In relation to receivables and liabilities measured at amortised cost, the fair value for the purposes of disclosure was estimated on the basis of discounted cash flows using a discount rate based on current market interest rates (level 2 in the fair value hierarchy).

Capital management The basic guideline of the Group’s capital management policy is to maintain a strong capital base which will underpin the confidence of investors, lenders and the market and will guarantee a future development of the Group. The Group monitors changes in the shareholding structure, profitability ratios and the equity to liabilities ratios. The Group’s objective is to achieve a return on equity ratio at the level satisfying to shareholders.

2013 2012 change Return on equity (ROE) ...... 18.21% 19.99% 1,78 p.p. Return on assets (ROA) ...... 10.26% 12.84% 2.58 p.p. EBITDA / equity ...... 26.42% 31.83% 5.41 p.p. Debt to equity ratio ...... 78% 56% 22 p.p. In 2013, in comparison with the previous year, the Group recorded a 48% decrease in working capital, which had a direct impact on liquidity ratios. Current ratio decreased by 0.83 p.p. and the quick ratio fell by 0.6. However, these ratios still remain at a satisfactory level. When assessing the structure of assets and liabilities it should be concluded that the Group has a stable financial situation which does not threaten the Group’s functioning in the future. During the financial year there were no changes in the Group’s capital management policy.

Note 30. Operating lease Operating lease contract where the Group is the lessor The Group rented out investment properties under operating leases. Future minimum payments under non-cancellable lease contracts are as shown below:

31 December 31 December 2013 2012 up to one year ...... 623 623 From 1 to 5 years ...... 323 323 above 5 years ...... — — 946 946

Operating lease contract where the Group is the lessee The Group used the land as well as machinery and equipment under operating leases.

F-104 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 30. Operating lease (Continued) Future minimum payments under non-cancellable lease contracts are as shown below:

31 December 31 December 2013 2012 up to one year ...... 4,503 4,503 From 1 to 5 years ...... 11,474 11,474 Above 5 years ...... 21,818 21,818 In 2013 the Group incurred expenses under operating leases in the amount of PLN 3,089 thousand (in 2012: PLN 4,489 thousand).

Note 31. Investment liabilities As at the balance sheet date of 31 December 2013 the Group incurred investment liabilities of PLN 221,312 thousand (in 2012: PLN 78,816 thousand).

Note 32. Changes of accounting principles In the current year the Group changed its accounting principles concerning the presentation of the balance of cash and cash equivalents reported in the consolidated statement of cash flows. In previous years, the balance of cash and cash equivalents reported in the consolidated statement of cash flows consisted of cash and cash equivalents, less outstanding bank overdrafts. From this financial year a change occurred and the balance of cash and cash equivalents reported in the consolidated statement of cash flows consists of cash and cash equivalents. In connection with the change, the data for the comparative period (2012) were restated in the consolidated statement of cash flows. The following items changed in the consolidated statement of cash flows for 2012: • overdrafts incurred—impact in the amount of PLN 48,901 thousand, • cash at the end of the period—an increase of PLN 48,901 thousand to the amount of PLN 746,587 thousand

Note 33. Contingent liabilities and guarantees As at the balance sheet date of 31 December 2013 the Group had no contingent liabilities.

Tax liabilities of the Group The tax authorities may inspect the accounting and tax records within 5 years after the end of the year in which the company filed its tax returns and they may assess additional tax liability for the Group’s Companies plus related interest and fines. In the opinion of the Management Board there are no circumstances that indicate a possibility of incurring significant liabilities in this respect.

F-105 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 34. Related party transactions Transactions with key management personnel

2013 2012 Remuneration of members of the Management Board Remuneration of the Management Board of Synthos S.A.* Kalwat Tomasz** ...... 1,542 1288 Lange Zbigniew ...... 667 701 Piec Tomasz ...... 981 925 Warmuz Zbigniew ...... 740 793 Remuneration of the Management Board of Synthos Kralupy a.s. Lange Zbigniew ...... 59 63 Warmuz Zbigniew ...... 64 68 Remuneration of the Management Board of Synthos Dwory 7 społka´ z ograniczon˛a odpowiedzialno´sci˛a społka´ jawna Warmuz Zbigniew ...... — — Lange Zbigniew ...... — — Ro´sciszewski Marek (from 27.05.2013) ...... 224 — Remuneration of the Management Board of Miejsko—Przemysłowa Oczyszczalnia Sciek´ ow´ Sp. z o.o. Majcherczyk Antoni ...... 288 266 4,565 4,104

* key management of the Group ** other income of PLN 434 thousand

2013 2012 Remuneration of the Supervisory Board Grodzki Jarosław ...... 84 84 Kwapisz Krzysztof ...... 60 60 Mironski´ Grzegorz ...... 48 48 Oskard Robert ...... 48 48 Waniołka Mariusz ...... 60 60 Remuneration of the Supervisory Board of Synthos Kralupy a.s. Ziembla Wiesław ...... 8 23 Oskard Robert ...... 28 30 Kowalczyk Bartosz ...... 14 — Havlu˚ Vaclav´ ...... 22 —

Other contracts with managers In the reporting period, the Group used advisory services of members of the Supervisory Board for the total net amount of PLN 386 thousand.

F-106 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 34. Related party transactions (Continued) Transactions with other related parties

31.12.2013 31.12.2012 Receivables Jointly Controlled Entity Butadien Kralupy a.s...... 71,229 116,158 Other related entities AVE Kralupy Innovation ...... 958 985 Other ...... 235 2,323 Total ...... 72,422 119,466 Liabilities Jointly Controlled Entity Butadien Kralupy a.s...... 102,426 98,359 Other related entities AVE Kralupy Innovation ...... 345 205 Other ...... 2,030 9 Total ...... 104,801 98,573

2013 2012 Revenues Jointly Controlled Entity Butadien Kralupy a.s...... 370,346 509,628 Other related entities AVE Kralupy Innovation ...... 5,154 5,699 Other ...... 172 236 Total ...... 375,672 515,563 Expenses Jointly Controlled Entity Butadien Kralupy a.s...... 625,055 749,089 Other related entities AVE Kralupy Innovation ...... 4,684 5,695 Klub Sportowy Cersanit ...... 3,000 3,102 Columbus Prime ...... — 3,672 Other ...... 4,831 871 Total ...... 637,570 762,429

Note 35. Events after the balance sheet date No significant events occurred after the balance sheet date.

Note 36. Accounting estimates and assumptions Key accounting estimates and assumptions are presented in the respective notes to the financial statements: • estimates for impairment losses for inventories are presented in Note 19, • estimates and assumptions for impairment losses for receivables are presented in Note 20 and 29,

F-107 Synthos S.A. Capital Group Notes to the consolidated financial statements for the period of 12 months ended 31 December 2013 (Continued) (in PLN ‘000 unless stated otherwise)

Note 36. Accounting estimates and assumptions (Continued) • estimates for provisions recorded for liabilities are presented in Note 26, • estimates for impairment loss on assets available for sale are presented in Note 29, • estimates for deferred tax asset created and its recoverability are presented in Note 17, • estimates of expenditures on research and development are presented in Note 11, • estimates for useful lives of property, plant and equipment and intangible assets (including licences for production) are presented in the introduction of accounting principles clause 7e, 8f.

Note 37. Approval of the financial statements The Management Board of the Parent Company of the Synthos S.A. Capital Group declares that as of 4 March 2014 it approves the consolidated financial statements of the Group for the period from 1 January to 31 December 2013.

F-108 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (in thousands of zlotys, unless specified otherwise)

SYNTHOS GROUP O´swi˛ecim, ul. Chemikow´ 1 Consolidated Financial Statements for the 12 months ending on 31 December 2012 prepared in accordance with International Financial Reporting Standards, approved by the EU

O´swi˛ecim, 4 March 2013

F-109 10SEP201400263121

Independent Registered Auditor’s Opinion To the General Shareholders’ Meeting and the Supervisory Board of Synthos S.A. We have audited the accompanying consolidated financial statements of the Synthos S.A. Group (hereinafter referred to as ‘‘the Group’’), in which Synthos S.A., O´swi˛ecim, ul. Chemikow´ 1, is the parent company (hereinafter referred to as ‘‘the Parent Company’’), comprising the consolidated statement of financial position prepared as at 31 December 2012, showing total assets and total equity and liabilities of PLN 4.557.414, the consolidated statement of comprehensive income for the period from 1 January to 31 December 2012, showing a total comprehensive income of PLN 651.174; the consolidated statement of changes in equity, the consolidated statement of cash flows for the financial year and additional information on adopted accounting policies and other explanatory notes. The Parent Company’s Management Board is responsible for preparing the consolidated financial statements and a Group Directors’ Report in accordance with the applicable regulations, and for the correctness of the accounting records. The Management Board and members of the Supervisory Board of the Parent Company are obliged to ensure that the consolidated financial statements and the Group Director’s Report comply with the requirements of the Accounting Act of 29 September 1994 (‘‘the Accounting Act’’—Journal of Laws of 2013, item 330). Our responsibility was to perform an audit of the accompanying consolidated financial statements and to express an opinion on whether the consolidated financial statements comply, in all material respects, with the applicable accounting policies and whether they present, in all material respects, a true and clear view of the Group’s financial position and results. We conducted our audit in accordance with: a. the provisions of Chapter 7 of the Accounting Act; b. national standards of auditing issued by the National Council of Registered Auditors. Our audit was planned and performed to obtain reasonable assurance whether the consolidated financial statements are free from material misstatements and omissions. The audit included examining, on a test basis, accounting documents and entries supporting the amounts and disclosures in the consolidated financial statements. The audit also included assessing the Group’s accounting policies and significant estimates made during the preparation of the consolidated financial statements, as well as evaluating the overall presentation thereof. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the accompanying consolidated financial statements, in all material respects: a. give a fair and clear view of the Group’s financial position as at 31 December 2012 and of the results of its operations for the year then ended, in accordance with the International Financial Reporting Standards (IFRS) as adopted by the European Union; b. comply in terms of form and content with the applicable laws; c. have been prepared on the basis of properly maintained consolidation documentation.

F-110 The information contained in the Group Directors’ Report for the financial year ended 31 December 2012 has been presented in accordance with the provisions of the Decree of the Minister of Finance dated 19 February 2009 concerning the publication of current and periodic information by issuers of securities and the conditions of acceptance as equal information required by the law of other state, which is not a member state (‘‘the Decree’’—Journal of Laws of 2009, No. 33, item 259, with further amendments) and is consistent with the information presented in the audited consolidated financial statements. Person conducting the audit on behalf of PricewaterhouseCoopers Sp. z o.o., Registered Audit Company No. 144:

Tomasz Reinfuss Key Registered Auditor No. 90038 Katowice, 4th March 2013

F-111 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (in thousands of zlotys, unless specified otherwise)

STATEMENT FROM THE MANAGEMENT The Board of Synthos S.A. presents the Consolidated Financial Statements for the 12-month period ending on 31.12.2012, which consist of: • Consolidated Statement of Comprehensive Income for the period from 01.01.2012 to 31.12.2012, • Consolidated Statement of Financial Position as at 31.12.2012, Consolidated • Consolidated Statement of Changes in Equity for the period from 01.01.2012 to 31.12.2012, • Consolidated Statement of Cash Flows for the period from 01.01.2012 to 31.12.2012,

Notes to the Financial Statements. The Consolidated Financial Statements were prepared in accordance with the requirements of International Financial Reporting Standards, approved by the European Union, hereinafter ‘‘IFRS-EU’’, and in accordance with the Regulation of the Council of Ministers of 19 February 2009 on current and periodic information published by issuers of securities (Journal of Laws of 2009, No. 33, Item 259) and in a true, fair and clear way present the material and financial situation of the Group. The Synthos Group Business Report contains a true view of the development and achievements of the Group, including a description of the essential risks and threats. The entity auditing the annual financial statements, certified to examine financial statements, was selected in accordance with the law. This entity and chartered auditor performing the audit fulfil the requirements necessary to issue an impartial and independent opinion regarding the audit, according to applicable laws and standards.

F-112 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

Board members’ signatures

/s/ TOMASZ KALWAT Tomasz Kalwat Chairman of the Board

/s/ ZBIGNIEW LANGE Zbigniew Lange Member of the Board

/s/ TOMASZ PIEC Tomasz Piec Member of the Board

/s/ ZBIGNIEW WARMUZ Zbigniew Warmuz Member of the Board

/s/ MICHAŁ WATOŁA Michał Watoła Responsible for bookkeeping

O´swi˛ecim, 4 March 2013

F-113 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (in thousands of zlotys, unless specified otherwise)

Table of Contents

STATEMENT FROM THE MANAGEMENT CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE 12 MONTHS ENDING ON 31 DECEMBER 2012 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2012 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE 12 MONTHS ENDING ON 31 DECEMBER 2012 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE 12 MONTHS ENDING ON 31 DECEMBER 2012 Note 1. Accounting policies Note 2. Operating segment reporting Note 3. Cash revenue on sales Note 4. Expenses by type Note 5. Other operating income Note 6. Other operating costs Note 7. Costs of employee benefits Note 8. Net financial costs/income Note 9. Currency exchange rate differences Note 10. Income tax Note 11. Property, plant and equipment Note 12. Intangible assets Note 13. Investment real estate Note 14. Long-term investments Note 15. Share in subsidiaries not included in the consolidation Note 16. Share in entities recognised using the equity method Note 17. Deferred tax Note 18. Short-term loans granted Note 19. Stocks Note 20. Trade and other receivables Note 21. Cash and cash equivalents Note 22. Share capital Note 23. Earnings per share Note 24. Credits, loans and other debt instruments Note 25. Employee benefits Note 26. Reserves Note 27. Trade and other liabilities

F-114 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

Note 28. Causes of differences between balance sheet changes of certain items and changes resulting from the statement of cash flows Note 29. Financial instruments Note 30. Operating lease Note 31. Investment commitments Note 32. Contingent commitments, sureties and guarantees Note 33. Transactions with related parties Note 34. Events after the balance sheet date Note 35. Accounting estimates and assumptions Note 36. Approval of the financial statements

F-115 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE 12 MONTHS ENDING ON 31 DECEMBER 2012

from 01.01.2012 from 01.01.2011 Note to 31.12.2012 to 31.12.2011 Revenue ...... 3 6,206,544 5,440,709 Costs of sales ...... 4 (5,166,294) (4,182,749) Gross sales profit ...... 1,040,250 1,257,960 Other operating income ...... 5 79,043 49,068 Selling expenses ...... 4 (149,637) (112,094) Administrative expenses ...... 4 (157,916) (152,308) Other operating costs ...... 6 (37,171) (15,668) Profit / (Loss) on the sale of property, plant and equipment ..... 1,536 2,028 Profit from the sale of shares ...... — 3,317 Operating profit ...... 776,105 1,032,303 Financial income ...... 8 15,445 52,442 Financial costs ...... 8 (44,108) (26,398) Net financial costs/income ...... 8 (28,663) 26,044 Charge to financial assets available for sale ...... 29 (154,640) — Share in profits of entities recognised using the equity method . . . 24,501 21,055 Profit before tax ...... 617,303 1,079,402 Income tax ...... 10 (32,089) (118,585) Net earnings ...... 585,214 960,817 Other comprehensive income Foreign exchange differences on translation of subordinated entities ...... (81,737) 79,055 Remeasurement of available-for-sale financial assets ...... 147,697 (140,197) Other comprehensive income (net) ...... 65,960 (61,142) Total comprehensive income ...... 651,174 899,675 Profit for: Parent company shareholders ...... 586,345 960,277 Minority shareholders ...... (1,131) 540 Net income for the financial year ...... 585,214 960,817 Comprehensive income for: Parent company shareholders ...... 652,305 899,135 Minority shareholders ...... (1,131) 540 Comprehensive income for the period ...... 651,174 899,675 Earnings per share for company’s shareholders during the year (in PLN per share): Basic (PLN) ...... 23 0.44 0.73 Diluted (PLN) ...... 23 0.44 0.73

Consolidated statement of comprehensive income should be analysed in conjunction with the notes which are an integral part of the consolidated financial statements.

F-116 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2012

Note 31.12.2012 31.12.2011 Assets Fixed assets property, plant and equipment ...... 11 1,543,996 1,528,984 Intangible assets ...... 12 123,719 28,892 Investment real estate ...... 13 3,432 3,405 Share in subsidiaries ...... 14 2,115 2,095 Share in entities recognised using the equity method ...... 16 73,547 51,942 Loans granted ...... 14 52,921 83,046 Available-for-sale financial assets ...... 14 187,280 148,609 Deferred tax assets ...... 17 97,930 66,798 Total fixed assets ...... 2,084,940 1,913,771 Current assets Loans granted ...... 18 7,487 7,859 Inventories ...... 19 617,902 476,532 Income tax receivable ...... 22,229 1,581 Trade and other receivables ...... 20 1,078,269 1,089,624 Cash and cash equivalents ...... 21 746,587 1,060,424 Total current assets ...... 2,472,474 2,636,020 Assets held for sale ...... — 12,207 Total assets ...... 4,557,414 4,561,998

Consolidated statement of financial position should be analysed in conjunction with the notes which are an integral part of the consolidated financial statements.

F-117 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2012 (Continued)

Note 31.12.2012 31.12.2011 Equity and liabilities Equity Share capital ...... 22 39,698 39,698 Revaluation reserve ...... 3,832 (143,865) Currency translation differences from subsidiary entity conversion .... 22 110,044 191,781 Other reserves ...... 252,875 764,500 Retained earnings including: ...... 2,507,043 2,070,698 current period net earnings ...... 586,345 960,277 Parent company shareholders’ equity ...... 22 2 913,492 2,922,812 Non-controlling interest ...... 14,617 15,748 Total equity ...... 2,928,109 2,938,560 Liabilities Credits, loans and other debt instruments ...... 24 474,655 689,942 Employee benefit liabilities ...... 25 4,288 3,345 Deferred revenue and revenue from government subsidies ...... 17,781 131 Provisions ...... 26 30,260 54,307 Deferred tax liabilities ...... 17 43,001 38,195 Other long-term liabilities ...... 11 30,556 — Total long-term liabilities ...... 600,541 785,920 Overdraft ...... 29 48,901 — Credits, loans and other debt instruments ...... 24 171,641 141,771 Employee benefit liabilities ...... 25 218 415 Income tax liabilities ...... 11,477 73,300 Trade and other liabilities ...... 27 782,436 611,319 Provisions ...... 26 4,164 851 Derivatives ...... 29 9,927 9,862 Total current liabilities ...... 1,028,764 837,518 Total liabilities ...... 1,629,305 1,623,438 Total equity and liabilities ...... 4,557,414 4,561,998

Consolidated statement of financial position should be analysed in conjunction with the notes which are an integral part of the consolidated financial statements.

F-118 For the company’s shareholders For For the company’s shareholders For 79,055 (140,197) — (61,142) differences the non- For Exchange rate (81,737) 147,506 — 61,269 Foreign exchangeForeign to Attributable (92,628) — — — (92,628) 960,277 79,055 (140,197) 540 899,675 960,277 — — 540 960,817 586,345586,345 (81,737) 147,697 (1,131) (1,131) 651,174 585,214 (661,625) — — — (661,625) Other reserve Retained from Revaluation controlling (511,625) 511,625 — — — — Other reserve Retained gains/(losses) Revaluation non-controlling 39,698 764,500 2,070,698 191,781 (143,865) 15,748 2,938,560 39,698 764,500 1,203,049 112,726 (3,668) 15,208 2,131,513 Share capital capitals earnings conversions reserve interest equity Total 39,698 764,500 2,070,698 191,781 (143,865) 15,748 2,938,560 39,698 252,875 2,507,043 110,044 3,832 14,617 2,928,109 SYNTHOS GROUP Share capital capitals earnings on translation reserve interest equity Total (in thousands of zlotys, unless specified otherwise) FOR THE 12 MONTHS ENDING ON 31 DECEMBER 2012 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY STATEMENT CONSOLIDATED which are an integral part of the consolidated financial statements...... — — — — 191 — 191 Consolidated Financial Statements for the 12 months ending on 31 December 2012 Consolidated statement of changes in equity should be analysed conjunction with the notes ...... — — ...... — — ...... — — ...... — ...... — — — ...... — — — ...... — — ...... — — ...... — — ...... Total revenue Total 31.12.2011 Net earnings Other revenue Dividend payment Reclassification Net earnings Deferred tax on other comprehensive income comprehensive income, net Total Dividend payment 1 January 2012 1 January 2011 Other revenue 31 December 2012

F-119 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (in thousands of zlotys, unless specified otherwise)

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE 12 MONTHS ENDING ON 31 DECEMBER 2012

Note 2012 2011 Profit before tax ...... 617,303 1,079,402 Adjustments Depreciation and amortisation ...... 4 155,976 149,970 Reversal of a write-down of fixed assets ...... (34,359) — Charge to available-for-sale financial assets ...... 154,640 — Profits from exchange rate differences ...... 2,273 (2,226) Losses from investment operations ...... 4,115 4,274 Loss on sale of property, plant and equipment ...... (1,527) (2,344) Share in profits of entities recognised using the equity method ...... (24,470) (21,055) Profit on sale of shares ...... — (3,317) Interest ...... (7) (406) Profits on operating activities prior to changes in the working capital ..... 873,944 1,204,298 Change in receivables ...... 28 (33,975) (283,332) Change in inventories ...... (159,866) (163,805) Change in trade and other payables, subsidies ...... 28 181,865 139,125 Movements in provisions ...... (20,549) 263 Change in employee benefit liabilities ...... 784 (723) Cash generated from operating activities ...... 842,203 895,826 Income tax paid ...... (139,352) (147,242) Net cash from operating activities ...... 702,851 748,584

Consolidated statement of cash flows should be analysed in conjunction with the notes which are an integral part of the consolidated financial statements.

F-120 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE 12 MONTHS ENDING ON 31 DECEMBER 2012

Note 2012 2011 Cash flow from investing activities Intangible assets and property plant and equipment sales ...... 7,259 4,586 Loan repayment ...... 47,505 55,666 Proceeds from redemption of bonds ...... — 60,000 Sale of shares in subsidiaries ...... — 5,547 Interest received ...... 13,857 18,693 Purchase of intangible assets and property, plant and equipment ..... (205,183) (302,691) Purchase of shares in subsidiaries and joint ventures ...... 20 (50) Purchase of financial assets ...... (45,500) (21,056) Loans granted ...... (20,179) (71,508) Purchase of bonds ...... — (60,000) Net cash flow from / (used in) investing activities ...... (202,221) (310,813) Cash flows from financing activities Loans and borrowings received ...... 8,969 133,166 Dividends and other payments to owners ...... (661,625) (92,628) Other financial income ...... 27 750 Expenditures on forward contracts ...... (4,115) (4,274) Credit and loan expenditures ...... (140,431) (120,150) Interest paid ...... (19,492) (16,436) Capital lease payments ...... — (12) Net cash generated from / (used in) financing activities ...... (816,667) (99,584) Net increase / (decrease) in cash and cash equivalents ...... (316,037) 338,187 Change in cash and cash equivalents on balance sheet, including: ...... (362,738) 396,517 Cash and cash equivalents at beginning of period ...... 1,060,424 663,907 Effect of exchange rate differences regarding cash assets and equivalents . (46,701) 58,330 Cash and cash equivalents at the end of the period* ...... 21 697,686 1,060,424

* cash assets at the end of the period were offset by a credit in the current account

Consolidated statement of cash flows should be analysed in conjunction with the notes which are an integral part of the consolidated financial statements.

F-121 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (in thousands of zlotys, unless specified otherwise)

Information on activities of the SYNTHOS GROUP Synthos Group (previously Firma Chemiczna „Dwory’’ S.A. Corporate Group, hereinafter known as the „Group’’ or the ‘‘Synthos Group’’) consists of a parent company and subsidiaries. The parent company in the Group is Synthos S.A. (hereinafter known as the „Company’’ or the „Parent Company’’), which is a joint stock company registered in Poland. The parent company is quoted on the Warsaw Stock Exchange. The parent company’s headquarters is in O´swi˛ecim at ul. Chemikow´ 1.

Basic information about the Parent Company: Phone: Information (33) 844 18 21 to 25 Fax: (33) 842 42 18 Email: [email protected] Website: www.synthosgroup.com The Company has been entered into the National Court Register in the Commercial Register on 27 August 2001, under number KRS 0000038981. VAT No. 549-00-02-108 Statistical No. 070472049

Main business activity of the Group includes: • consultancy regarding business activity and management, • accounting, • production of synthetic materials PKD 24.16.z, • production of synthetic rubber PKD 24.17.z, • production of other basic non-organic chemicals PKD 24.13.z, • production of other basic organic chemicals PKD 24.14.z, • production of other chemical products, otherwise not classified PKD 24.66.z. • generation and distribution of electric energy PKD 40.11.Z, 40.13.Z, • manufacture and distribution of heat (water stream and hot water) PKD 40.30.A, 40.30.B, • sewage treatment, • waste disposal and utilization. Duration of the Group’s Company, according to the Articles of Association, is unlimited.

Company’s Board: Tomasz Kalwat — President of the Board Zbigniew Lange — Member of the Board Tomasz Piec — Member of the Board Zbigniew Warmuz — Member of the Board

Supervisory Board: Jarosław Grodzki — Chairman Mariusz Waniołka — Vice Chairman Krzysztof Kwapisz — Vice Chairman Grzegorz Mironski´ — Secretary Robert Oskard — Board Member

F-122 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

Basic information about consolidated subsidiary entities and joint ventures is presented below:

Percentage of share capital Name of the entity with an indication of its and voting legal form Seat Main activities rights held Miejsko-Przemysłowa Oczyszczalnia Sciek´ ow´ Sp. z o.o...... O´swi˛ecim collection, treatment and disposal of 76.79% sewage, waste neutralization, sanitary and related services Synthos Dwory 7 społka´ z ograniczon˛a odpowiedzialno´sci˛a S.K.A...... O´swi˛ecim Manufacture of chemical products 100% Synthos Dwory 4 Sp. z o.o...... O´swi˛ecim Generation of electric energy 100% Synthos Dwory 5 Sp. z o.o...... O´swi˛ecim Generation of electric energy 100% Synthos Dwory 7 Sp. z o.o...... O´swi˛ecim Manufacture of chemical products 100% Synthos Dwory 8 Sp. z o.o...... O´swi˛ecim Generation of electric energy 100% Synthos Kralupy a.s...... Kralupy nad Manufacture of chemical products 100% Vltavou—Czech Republic Tamero Invest s.r.o...... Kralupy nad Generation and distribution of 100% Vltavou—Czech electric energy Republic Synthos PBR ...... Kralupy nad Manufacture of chemical products 100% Vltavou—Czech Republic Red Chilli Ltd...... Nicosia Investment and capital activities 100% Calgeron Investment LTD ...... Cyprus Investment and capital activities 99.87% Butadien Kralupy a.s.* ...... Kralupy nad Manufacture of chemical products 49% Vltavou—Czech Republic

* Company recognised using the equity method (in accordance with Note 16)—in accordance with the articles of association With the exception of Synthos Dwory 8 Sp. z o.o. (company founded by the Group in 2012) the actual state of shares in other companies remained unchanged since 31 December 2011.

F-123 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (in thousands of zlotys, unless specified otherwise)

Note 1. Accounting policies 1. Basis of preparing the Consolidated Financial Statements Information contained in these Consolidated Financial Statements is presented in Polish zlotys, which is a reporting and functional currency of the Group, rounded off to the nearest thousand. Items included in the Financial Statements of Group’s individual entities are valued in the currency of the economic environment in which the given entity is operating (‘‘functional currency’’). The Consolidated Financial Statements are prepared on the basis of the historical cost principle, except for assets and liabilities valued at fair value: derivatives, available-for-sale financial assets, and financial instruments valued at fair value through P/L. Fixed assets held for sale and groups for sale are valued at balance sheet value but no higher than fair value less costs of sale. Preparation of the financial statements in accordance with IFRS EU requires assessments, estimations and assumptions from the Management, which have an impact on adopted principles and presented values of the assets, liabilities, revenue and costs. Estimations and related with them assumptions are based on historical experience and other factors which are considered rational in the given circumstances, and their results provide a basis for an assessment of the balance sheet value of assets and liabilities, which does not result directly from other sources. The effective value may differ from the estimated value. Estimations and assumptions related with them are subject to ongoing verifications. A change of the accounting estimations is recognised in the period during which the changes in the estimation has been applied or in current and future periods, if the change regards the current period as well as future periods. The Board’s assessments in the use of IFRS EU, which have a significant impact on the consolidated financial statements and on estimations with a significant risk of changing in the upcoming years, are presented in Note 35. Accounting policies presented below were used continuously in regard to all periods presented in the consolidated financial statements. The presented accounting policies were used by all entities belonging to the Group.

2. Continuation of business activities The Group’s Consolidated Financial Statements were prepared with the assumption of a continuation of business activities by the Group in the predictable future. No circumstances exist which might indicate a risk to the continuance of business activities by the Group.

3. New and amended accounting standards and interpretations New and amended standards and interpretations, which came into force on 1 January 2012 and are applied by the Group a. ‘‘Amendments to IFRS 7, ‘‘Transfer of Financial Assets’’ Amendments to IFRS 7 ‘‘Transfer of financial assets’’ have been issued by the International Accounting Standards Board in October 2010, and are effective for annual periods beginning on or after 1 January 2011. The amendments require the disclosure of additional information about the risks arising from the transfer of financial assets. They include a requirement to disclose, by class of assets, the nature, amount and description of risks and benefits of financial assets transferred to another entity, but still remaining in the balance sheet. It is also required to disclosure information allowing the user to know the amount of any

F-124 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

Note 1. Accounting policies (Continued) related liabilities and the relationship between a financial asset and the related liabilities. Where financial assets have been removed from the balance sheet, but the entity is still exposed to some risk, and may get some benefits from the transferred asset, additional disclosure of information is required for understanding the effects of such risks. The Group applied the amendments to IFRS 7 from 1 January 2012. Changes to this standard did not have a significant impact on the disclosures in the consolidated financial statements. Other changes, which came into force on 1 January 2012, had no significant influence on the consolidated financial statements.

Standards and Interpretations, published but not yet effective, not used by the Group in the past. In these Financial Statements, the Group hasn’t decided about an earlier use of the following published standards and interpretations, prior to date of their coming into life: a. IFRS 9 ‘‘Financial Instruments Part 1: Classification and Measurement’’ IFRS 9, published by the International Accounting Standards Board on 12 November 2009, replaces those parts of IAS 39, which relate to the classification and valuation of financial assets. In October 2010 IFRS 9 has been supplemented by the issues of classification and valuation of financial liabilities. According to the changes made in December 2011, the new standard is effective for annual periods beginning on 1 January 2015 or after that date. The standard introduces a single model which provides for only two categories for the classification of financial assets: measured at fair value and measured at amortised cost. Classification is performed at the time of initial recognition and depends on the model of management of financial instruments adopted by the entity and the characteristics of the contractual cash flows of these instruments. Most of the requirements of IAS 39 relating to the classification and valuation of financial liabilities were transferred to IFRS 9 unchanged. The key change is the requirement imposed on entities to present in other comprehensive income effects of changes in its credit risk on the financial liabilities designated as fair value through profit or loss. The Group shall implement IFRS 9 starting on 1 January 2015. The Group hasn’t yet finished the analysis of the impact of the standard on the financial statements. On the day of preparing these Consolidated Financial Statements, the revised IFRS 9 hasn’t yet been approved by the European Union. b. IFRS 10 ‘‘Consolidated Financial Statements’’ IFRS 10 have been issued by the International Accounting Standards Board in May 2011, and is effective for annual periods beginning on or after 1 January 2013. The new standard replaces the guidelines on control and consolidation contained in IAS 27 ‘‘Consolidated and Separate Financial Statements’’ and SIC-12 ‘‘Consolidation—Special Purpose Entities’’. IFRS 10 amends the definition of control in such a way that all entities are subject to the same criteria for determining control. The revised definition is accompanied by extensive guidelines on its application. The Group shall implement IFRS 10 starting on 1 January 2015. The Group does not expect that the interpretation will have a significant impact on the financial statements.

F-125 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

Note 1. Accounting policies (Continued) c. IFRS 11 ‘‘Joint Ventures’’ IFRS 11 have been issued by the International Accounting Standards Board in May 2011, and is effective for annual periods beginning on or after 1 January 2013. The new standard replaces IAS 31 ‘‘Interests in Joint Ventures’’ and SIC-13 ‘‘Jointly Controlled Entities— Non-Monetary Contributions by Venturers’’. Changes in definitions reduced the number of types of joint ventures to two: joint operations and joint ventures. At the same time, the existing choice of proportionate consolidation of entities under common control was eliminated. All participants in a joint venture are now obligated to recognise it using the equity method. The Group shall implement IFRS 11 starting on 1 January 2014. The Group does not expect that the interpretation will have a significant impact on the financial statements. d. IFRS 12 ‘‘Disclosure of Interests in Other Entities’’ IFRS 12 have been issued by the International Accounting Standards Board in May 2011, and is effective for annual periods beginning on or after 1 January 2013. The new standard applies to entities with shares in a subsidiary, joint venture, an associate or an unconsolidated structure managed by an agreement. The standard replaces the requirements for the disclosure of information presently contained in IAS 27 ‘‘Consolidated and Separate Financial Statements’’, IAS 28 ‘‘Investments in Associates’’ and IAS 31 ‘‘Interest in Joint Ventures’’. IFRS 12 requires that entities disclose information that will help users of financial statements to assess the nature, risk and financial impact of individual investments in subsidiaries, associates, joint ventures and unconsolidated structures managed by an agreement. To this end, the new standard requires disclosure of information concerning a number of areas, including significant judgements and assumptions adopted in determining whether an entity controls, co-controls or holds significant impact on its shares in other entities; comprehensive information about the importance of non-controlling interests in business and cash flow group; summary financial information of subsidiaries with significant non-controlling interests, as well as detailed information about the shares in the unconsolidated structures managed by an agreement. The Group shall implement IFRS 12 starting on 1 January 2014. The Group does not expect that the interpretation will have a significant impact on the financial statements. e. ‘‘IFRS 13 ‘‘Fair Value Measurement’’ IFRS 13 have been issued by the International Accounting Standards Board in May 2011, and is effective for annual periods beginning on or after 1 January 2013. The new standard aims to improve consistency and reduce complexity by formulating a precise definition of fair value and collect the requirements for fair value measurement and disclosure of relevant information in one standard. The Group shall implement IFRS 13 starting on 1 January 2013. The Company hasn’t yet finished the analysis of the impact of the standard on the financial statements. f. Presentation of items in other comprehensive income—amendments to IAS 1 Amendments to IAS 1 ‘‘Presentation of Financial Assets’’ on the presentation of items in other comprehensive income have been issued by the International Accounting Standards Board in June 2011, and are effective for annual periods beginning on or after 1 January 2012.

F-126 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

Note 1. Accounting policies (Continued) The changes require that entities divide items presented in other comprehensive income into two groups based on whether or not in the future they will be able to be included in profit or loss. Additionally, the title of the statement of comprehensive income was changed to the ‘‘statement of profit or loss and other comprehensive income’’. The Group shall implement the revised IAS 1 starting on 1 January 2013. The Group does not expect that the interpretation will have a significant impact on the financial statements. g. ‘‘Amendments to IAS 19 ‘‘Employee Benefits’’ Amendments to IAS 19 ‘‘Employee Benefits’’ have been issued by the International Accounting Standards Board in June 2011 and are effective for annual periods beginning on or after 1 January 2013. The amendments introduce new requirements for the recognition and measurement of the cost of defined benefit plans and employment termination benefits, and also change the required disclosure for all employee benefits. The Group shall implement the revised IAS 19 starting on 1 January 2013. The Group hasn’t yet finished the analysis of the impact of the standard on the consolidated financial statements. h. Disclosures—Offsetting Financial Assets and Financial Liabilities—Amendments to IFRS 7 Amendments to IFRS 7 on Disclosures—Offsetting Financial Assets and Financial Liabilities have been issued by the International Accounting Standards Board in June 2011 and are effective for annual periods beginning on or after 1 January 2013. The amendments introduce the obligation of new disclosures that enable users of financial statements to evaluate the effects or potential effects of agreements allowing net settlement, including the rights to set off. The Group shall implement the amendments to IFRS 7 starting on 1 January 2013. The Group does not expect that the interpretation will have a significant impact on the financial statements. i. Amendments to IFRS 2009-2011 In May 2012, the International Accounting Standards Board has published ‘‘Amendments to IFRS 2009-2011’’, which contain amendments for 5 standards. These amendments include changes in the presentation, recognition and valuation, as well as terminology and editorial changes. The amendments will apply for annual periods beginning on 1 January 2013. The Group shall implement the Amendments to IFRS 2009-2011 starting on 1 January 2013. The Group hasn’t yet finished the analysis of the impact of the standard on the financial statements. On the day of preparing these financial statements the amendments to IFRS 2009-2011 were not yet approved by the European Union. j. Amendments in transitional provisions for IFRS 10, IFRS 11, IFRS 12 In June 2012, the International Accounting Standards Board published amendments to transitional provisions for IFRS 10, IFRS 11 and IFRS 12. The amendments are effective for annual periods beginning

F-127 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

Note 1. Accounting policies (Continued) on or after 1 January 2013 or earlier—if the standards that are their basis (IFRS 10, 11 and 12) have been used at an earlier date. The amendments clarify the transitional provisions for IFRS 10 ‘‘Consolidated Financial Statements’’. Entities adopting IFRS 10 should assess whether they have the control on the first day of the annual period for which IFRS 10 was first applied, and if the conclusions of this assessment differ from the conclusions from IAS 27 and SK112, comparative figures should be restated, unless it would be impractical. The amendments also introduce additional transitional facilitation in the application of IFRS 10, IFRS 11 and IFRS 12, by limiting the obligation of presenting adjusted comparative data only to data for the immediately preceding reporting period. In addition, these amendments abolish the requirement to present comparative data for the disclosures about unconsolidated entities managed by contract for the periods prior to the period of application of IFRS 12 for the first time. The Group shall implement the above changes starting on 1 January 2014. The Group hasn’t yet finished the analysis of the impact of the standard on the financial statements. On the day of preparing these financial statements, the amendments to transitional provisions for IFRS 10, IFRS 11 and IFRS 12 were not yet approved by the European Union. Other new or revised standards and interpretations do not apply to the Group.

4. Principles of consolidation a. Subsidiaries Subsidiaries are controlled by the Parent Company. Control exists when the Parent Company has the ability to directly or indirectly control the financial and operating policy of the given entity, in order to obtain benefits from its activities. When assessing the degree of control, the existing and potential voting rights, which can be executed or converted at the end of the reporting period, are taken into consideration. Subsidiaries are fully consolidated from the moment of acquiring control over them by the parent company until the moment this control ceases. Control is understood as the parent company’s ability to direct operating and financial policies of the entity in order to gain economic benefits. Assets, liabilities and contingent liabilities of a subsidiary company on the day of acquiring control and including it in the consolidated financial statements are recognised at fair value. The positive difference between the acquisition price, the value of minority interest and the fair value of the previously held shares and the fair value of acquired assets, liabilities and contingent liabilities gives rise to the goodwill that, if it rises, is recognised as a separate item in the consolidated statement of financial position. The negative difference between the acquisition price, the value of minority interest and the fair value of the shares previously held and the fair value of the assets, liabilities and contingent liabilities is recognised immediately in profit or loss. b. Joint ventures Joint ventures are entities, whose activities are under shared control of the Group and other entities. The consolidated financial statements include the Group’s share in accumulated profits or losses of joint ventures according to the equity method, from the moment of obtaining a significant influence to the moment of reclassification to assets held for sale. If the Group’s share in the joint ventures’ losses exceeds the balance sheet value of the investment, it is assumed that the share in the accumulated profits or losses of joint enterprises amounts to zero, and remaining losses are recognised by the Group to the amount of its potential liabilities.

F-128 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

Note 1. Accounting policies (Continued) c. Consolidation adjustments Balances of internal settlements between entities within the Group, transactions concluded within the Group and all resulting from them unrealized gains or losses, as well as income or costs of the Group are eliminated during preparation of the consolidated financial statements.

5. Presentation currency and functional currencies There are two functional currencies in the Group due to the place of business: • in Czech companies, the functional currency is the Czech crown, • in Polish entities, the functional currency is the Polish zloty. The presentation currency using which these financial statements are prepared is the Polish zloty. Assets and liabilities as well as revenues and expenses valued in functional currencies other than the presentation currency are translated into the presentation currency as follows: • assets and liabilities valued by functional currencies are translated to the presentation currency at the average exchange rate of the National Bank of Poland on the reporting date, • revenues and expenses were translated at the average NBP exchange rate on the transaction date or average in the given period, if there were no significant fluctuations in that period, • exchange rate differences resulting from this translation were recognised in other comprehensive income. Transactions denominated in foreign currencies at the date of the transaction are recorded in the functional currency using the average exchange rate of the NBP, and in the branch of CNB (Czech National Bank), on the day of the transaction. Monetary asset and liability items expressed in a foreign currency are calculated for the reporting date according to the average NBP exchange rate for the given currency on that day. Exchange rate differences resulting from settling a transaction in a foreign currency and balance sheet valuations of assets and liabilities expressed in foreign currency are recognised in the financial result. Nonmonetary asset and liability items valued according to the historical cost in a foreign currency are converted according to the average NBP exchange rate effective on the day of the transaction. The following exchange rates were used for pricing items in the statement of financial condition expressed in foreign currency:

31.12.2012 31.12.2011 EUR ...... 4.0882 4.4168 USD ...... 3.0996 3.4174 GBP ...... 5.0119 5.2691

6. Derivatives The Group has employed derivatives to hedge the interest rate risk resulting from operating, financial or investment activities. According to the adopted policy for monetary transaction, the Group neither possesses nor issues derivatives held for trading. The Group does not apply hedge accounting. On initial recognition, derivatives are recognised at fair value. After initial recognition, derivatives are valued at fair value. Gains and losses arising from changes in the fair value are recognised directly in the profit or loss.

F-129 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

Note 1. Accounting policies (Continued) 7. Property, plant and equipment a. Property, plant and equipment Property, plant and equipment include assets: • which are held by the entity in order to use them in the production process, in the supply of goods or services or for administrative purposes, • which are expected to be used for more than one year, • in respect of which there is a probability that the entity will receive future economic benefits associated with the asset, and • whose value can be measured reliably. As at the date of initial recognition, property, plant and equipment are measured at purchase price/cost of manufacturing. The purchase price/cost of manufacturing are increases by borrowing costs incurred on the acquisition or production of a qualifying item of property, plant and equipment. Policies on borrowing costs are described in Section (f). Upon initial recognition, the purchase price/cost of manufacturing of property, plant and equipment includes the estimated costs of dismantling, removal and restoring the place where the asset is located, whose obligation of incurring arises at the moment of installation of the asset component or its use for any purpose other than to produce inventories. At the end of the reporting period, property, plant and equipment are valued at acquisition or production cost less accumulated amortisation allowances and accumulated impairment charges, Policies for making impairment charges are presented in detail in Section (e). b. Components of property, plant and equipment in use based on lease contracts Capital lease contracts, which transfer all risk and generally all advantages resulting from owning the lease subject onto the entity, are activated on the first day of the lease according to the two following values: fair value of the asset which is the lease subject or the value of current minimal rental payments on lease. Rental payments on lease are split between financial costs and the repayment of principle instalments, taking in to consideration the fixed interest rate for the liability. Finance costs are recognised directly in profit or loss. Fixed assets in use based on capital lease contracts are subject to depreciation according to the rules used for own components of property. If there is no reliable assurance that after the lease contract ends the Group will receive ownership rights, assets are depreciated in a shorter period than the period of the lease and the period of economic usefulness. Lease contracts, according to which the lessor retains fundamentally all of the risk and practically all advantages coming from the lease subject, are classified as operating lease contracts. Operating lease fees are recognised using the straight-line method during the lease period. c. The right of perpetual usufruct of the land The right of perpetual usufruct of the land received by the Group free of charge on a basis of an administrative decision is a form of operating lease. This right is excluded from the Group’s assets and recorded on off-balance accounts. Fees for perpetual usufruct of land are recognised as an expense in profit or loss.

F-130 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

Note 1. Accounting policies (Continued) d. Future expenses Subsequent expenditures borne on an item of property, plant and equipment are included in the carrying value of the given item of property, plant and equipment only if it is likely that the item will bring economic benefits to the company and the cost of the given item can be measured reliably. All other expenditures on repairs and maintenance are charged to profit or loss in the period in which they were incurred. e. Depreciation Items of property, plant and equipment, eventually their significant and separate parts, are depreciated using the straight-line method during the time of their economic usefulness, taking into consideration the net sale price expected during the liquidation of the fixed asset’s remains (residual value). The following periods of economic usefulness are effective for different groups of fixed assets: • Buildings—up to 60 years • Structures, including • Tanks—from 10 to 30 years • Silos—from 10 to 20 years • Collectors, pipelines, sewage systems, railroad tracks, bridges, trestles—from 10 to 40 years • Streets, roads, yards—up to 35 years • Boilers and power machines—up to 25 years • Machinery and equipment—3-25 years • Vehicles—4-8 years • Tools, equipment, tangibles and equipment—4-20 years Capital work in progress is not depreciated. Fixed assets are split into component parts at the moment of acquisition, unless their acquisition price or manufacture cost are significant in comparison to the acquisition price of manufacture cost of the whole fixed asset and are depreciated in a separate period of economic usefulness. Appropriateness of usefulness periods, depreciation methods and residual values for fixed assets (if not insignificant) used is verified by the Group annually. f. Borrowing costs Borrowing costs, which can be directly assigned to purchases, construction or generating an asset component which take a substantial period of time to get ready for use or sale, are capitalised. Capitalised borrowing costs increase the acquisition price or the costs of generating this asset component.

8. Intangible assets Intangible assets include: scientific or technical knowledge, licenses, intellectual property, trade marks, patents, relationships with customers and suppliers, computer programs that have been purchased or acquired in a merger. Components of intangible assets are recognised when there is a probability that the entity will achieve future economic benefits which may be assigned to a given asset component and can be reliably determined. Intangible assets are recognised in the books at purchase price or production cost less amortisation allowances and impairment charges.

F-131 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

Note 1. Accounting policies (Continued) a. Research and development Expenses incurred at the stage of research work aiming to gain new scientific or technical know-how are recognised in profit or loss at the moment of being incurred. Expenditures incurred on development work, effects of which are used in preparation or generation of a new or significantly improved product are capitalised if generating the new product (or process) is technically possible and economically justified and the Group possesses technical, financial and other necessary means to finish the development work. Costs subject to capitalisation include the costs of materials, salaries of employees directly involved in development work and justified portion of indirect costs directly involved with generating the component of intangible assets. Costs of development work are recognized as intangible assets subject to amortisation allowances and impairment charges. Other costs of development works are recognised in the profit or loss at the moment of being incurred. b. Emission rights Emission rights granted are recognised at acquisition price less amortisation allowances and impairment charges. The acquisition price of emission rights in case of purchasing them when merging with economic entities is their fair value. Liabilities resulting from the emission of pollution into the air are valued in the amount equal to the value of emission rights owned by the Group in case the Group owns a sufficient number of emission rights to cover its liabilities. If the number of emission rights owned in less than the number of emission rights expected to be used, a reserve is recognized in the amount of the fair value of missing emission rights. c. Renewable energy certificates Rights to renewable energy and cogeneration certificates are recognised at cost less amortisation allowances and impairment charges. Liabilities resulting from the necessity to redeem rights are valued in the amount equal to the value of rights to certificates owned by the Group in case the Group owns a sufficient number of these rights to cover its liabilities. If the amount of rights owned in lower than the amount required to redeem the number of rights to certificates, a reserve in the amount of the fair value of the missing rights to certificates is recognised. d. Other intangible assets Other intangible assets acquired by the Group are declared based on their acquisition price, less amortisation allowances and impairment charges. e. Future expenses Subsequent expenditures on components of existing intangible assets are capitalized only when they increase future economic benefits related with the given component. Other expenses are recognised in the profit or loss as costs for the period in which they are incurred. f. Amortisation Intangible assets are amortised using the straight-line method, taking into consideration their usefulness period, unless it is unknown. Intangible assets with an unknown usefulness period are subject to impairment tests for the end of each reporting period. Estimated usefulness periods of amortised intangible assets: • Acquired customer relationships—5 years, • Know-how—5 - 10 years,

F-132 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

Note 1. Accounting policies (Continued) • Licenses, software—2 years, • Capitalised development costs—3 years,

9. Investment real estate Investment real estate is held in order to gain profit from lease, raise in value, or both. Investment real estate is measured using methods specified for measuring fixed assets, i.e. according to acquisition price or cost of generating less amortisation allowances and impairment charges.

10. Available-for-sale financial assets Shares owned by the Group which are in the active market are classified as available-for-sale financial assets and recognised at fair value. Profits and losses from changes in fair value are recognised directly in other compreensive income, except for impairment charges, interest calculated using an effective interest rate as well as negative and positive exchange rate differences relating to financial assets, which are recognised directly in profit or loss. In the case of disposal of a project or determination of its impairment, the cumulative profit or loss previously recognised in other comprehensive income is recognised in profit or loss for the period. Dividends from equity instruments available for sale are recognised in profit or loss at the moment of the Group’s right to receive them.

11. Long-term receivables, short-term receivables Long-term receivables and short-term receivables are recognised on the day they occur at fair value, and their valuation takes place in subsequent periods according to amortised costs determined using an effective interest rate and reduced by valuation allowances. Valuation allowances for receivables are established if there is objective proof that the Group will be able to recover all amounts due. If there is objective proof that impairment of receivables declared according to amortised costs took place, the amount lost due to impairment is determined as a difference between the balance sheet value of the asset and current value of future cash flows discounted on the basis of an effective interest rate. Valuation allowances for receivables, establishment as well as release, are recognised in prime costs.

12. Inventories Inventories are assets held for sale in the course of normal operations, which are in production designated for sale, or consumables and raw materials used in the production process or in services. Components of inventories are measured at actual acquisition price, purchase price or cost of generating, however, no higher than their potential net value at the end of the reporting period. Acquisition price is the price of purchasing the asset component which includes the amount due to the seller without the deductible goods and services tax and excise tax, and in case of import, increased by regulatory liabilities and costs directly related with purchasing and adapting the asset component to a condition of being disposable for use, along with transportation, loading, unloading costs less rebates, discounts and similar reductions. The potential net sale price is the difference between the estimated sale price in a normal course of operations, less rebates and discounts, and estimated finishing costs and costs necessary to finalise the sale. Inventories and declared in net value (less valuation allowances). Valuation allowances are established on inventories in order to bring the value of inventories to the level of potential net value. Valuation allowances are recognised in the profit or loss in the ‘‘Prime costs’’ item. A

F-133 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

Note 1. Accounting policies (Continued) reversal of a valuation allowance on inventories is recognised as a decrease of prime cost. The valuation allowance value decreases the carrying value of inventories included in the valuation allowance. Inflow and outflow of materials and goods is carried out according to the weighted average price. Finished products, semi-finished products and production in progress are measured according the actual technical cost of generating which includes a justified portion of indirect fixed costs of production, calculated assuming a normal utilisation of production capabilities. Sale of finished products takes place on the weighted average basis.

13. Cash and cash equivalents Cash and cash equivalents include cash in hand and demand deposits. The balance of cash and cash equivalents declared in the consolidated statement of cash flows consists of cash and cash equivalents described above, additionally reduced by outstanding credits in current accounts, which are an integral part of the Group’s cash management system.

14. Impairment charges on assets a. Recognition of impairment Impairment of financial assets An assessment is made at the end of each reporting period whether there is objective proof that a financial asset or group of financial assets is impaired. The significant objective evidence (proof) includes, in particular: a serious financial difficulties of the debtor, litigation against the debtor, the occurrence of significant non-beneficial changes in the economic, legal or market environment of the issuer of the financial instrument, sustained substantial or extended decrease in the fair value of the equity instrument below cost. If such evidence exists for available-for-sale financial assets, the cumulative loss recognised in other comprehensive income—measured as the difference between the acquisition cost and the current fair value, less the impairment loss previously recognised in profit or loss—is removed from other comprehensive income and transferred to profit or loss as a reclassification adjustment. Impairment losses recognised in profit or loss are relating to equity instruments are reversed in relation to other comprehensive income. Reversal of impairment losses of debt financial instruments is recognised in profit or loss in subsequent periods if, after the impairment was recognised, the fair value of these instruments increased as a result of events occurring after recognition of the impairment loss. If there is evidence of the potential for impairment of loans and receivables measured at amortised cost, the amount of the impairment charge is determined as the difference between the carrying value of assets and the present value of estimated future cash flows discounted at the original effective interest rate for these assets (i.e. the effective interest rate computed at initial recognition for assets based on a fixed interest rate and the effective interest rate determined at the time of the last revaluation of assets based on a variable interest rate). Impairment charges are recognised in profit or loss. The carrying value of such financial assets is determined taking into account the impairment loss (arising from credit losses) posted to a separate account. Reversal of impairment loss is recognised if in subsequent periods, the impairment decreases and the decrease can be attributed to events occurring after recognition of the impairment loss. Reversal of impairment loss is recognised in profit or loss.

F-134 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

Note 1. Accounting policies (Continued) Impairment of non-financial assets Goodwill and intangible assets that are not yet available for use are not subject to amortisation and are tested annually for potential impairment. Non-financial assets subject to amortisation are tested for impairment whenever events or changes in circumstances indicate the possibility of failure to capitalise their carrying value. An impairment loss is recognised in the amount by which the carrying value of the asset exceeds its recovery value. The recovery value is the higher of the two amounts: an asset’s fair value less costs to bring about the sale and use value. For the purposes of assessing impairment, assets are grouped at the lowest level, at which they generate cash flows independently of other assets (cash generating units). For the purposes of testing for impairment, the cash generating unit is determined in each case.

Impairment charges are recognised in profit or loss. Non-financial assets, other than goodwill, for which an impairment charge has been made in earlier periods, are tested for impairment at the end of each reporting period for the occurrence of indications of possible reversal of the previous impairment charge. b. Reversal of valuation allowances Impairment charges are reversed only in case of a change in the range of estimations used at the stage of calculating recovery value from the time of recognising the last impairment charge. Impairment charges recognised in regard to goodwill are not reversed. An impairment charge is reversed only to the amount of balance sheet value of the asset component (reduced by depreciation), which would be indicated if the impairment charge was not recognised.

15. Equity capital Equity capital is recognised in accounting books divided into types and in accordance with principles determined by provisions of the law and parent company’s Articles of Association. The Group’s share capital is declared in the initial value of shares issued, in the amount agreeable with the parent company’s Articles of Association. Share issue costs incurred at the moment of creating the joint stock company or increasing share capital reduce the entity’s supplementary capital to the amount of the issue value surplus over the initial value of shares, their remaining portion is assigned to financial costs. Amounts arising from allocation of profit, undivided result from the previous years and the current year result are presented in the financial statements as retained earnings.

16. Employee benefits Employee benefits include all forms of the Group’s benefits in exchange for work performed by the employees. These include benefits paid out during the employment period as well as benefits paid out after the employment period. The Group creates a reserve for retirement benefit obligations and service anniversary awards in order to assign costs to periods which they regard. a. Defined contribution plan The Group, when hiring employees, is obligated to collect and make employee retirement contributions, under current regulations. These contributions, according to IAS 19, constitute a national plan and have a character of a defined contribution plan. For that reason, the Group’s obligation for each period is evaluated on the basis of the amount of contributions to be made for the given year.

F-135 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

Note 1. Accounting policies (Continued) b. Defined benefit plan—retirement pay and death benefit The Group is obligated under current regulations to pay out retirement pay and death benefits in the amount defined by the provisions of the Labour Code. Additionally, on the basis of the Collective Labour Agreement, retirement pay for Company employees is increased to the amount which depends on the length of the employment period at the Company. Minimal retirement pay amount results from the provisions of Labour Code effective on the day of making the retirement pay. The Group’s obligation regarding retirement pay is calculated by estimating the amount of the employee’s future pay, in the period in which this employee will reach the retirement age, and by estimating the amount of future retirement pay. These pays are discounted to current value. The discount rate is obtained from the rate of return of government bonds on the market at the end of the reporting period. Retirement pay obligations are recognized proportionally to the expected period of employment of the given employee. Calculation is made by an authorized actuary using the projected unit credit method. Employee turnover is estimated on the basis of historical data and estimations of future employee levels. c. Benefits in the form of compensation pension The Group, under the provisions of the Civil Code, is obligated to pay out compensation in the form of compensation pension for ex-employees on account of occupational diseases or accidents at work. Calculation of the obligation is performed by an authorised actuary. The reserve for compensation pensions is utilised at the moment of paying out benefits to ex-employees.

17. Reserves Reserves are recognized when the following conditions are met: • the entity has a obligation (legal or customary) resulting from past events, • a probability exists that fulfilling the obligation will result in a outflow of economic benefits, • a reliable assessment of the obligation amount is possible. The amount for which the reserve is created in the most appropriate estimation of expenditures necessary to fulfil the obligation at the end of the reporting period. A basis of the reserve estimation is the management’s judgement, supported by experience resulting from similar events, and in need, opinions of independent experts. If the effect of time value of money has a significance, reserves are estimated through discounting expected future cash flows based on a rate prior to taxation, which reflects current market estimations of changes in the time value of money and, if it is appropriate, risk relating to the given obligation component. The amount of reserves is reviewed at each reporting date and adjusted to reflect the current, most accurate estimate. The reserve is used only for the costs for which it was initially established. a. Restructuring The reserve for the costs of restructuring is recognized if the Group has accepted a specific and official restructuring plan, which has been initiated and published. Future operating losses are not included in the reserve.

F-136 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

Note 1. Accounting policies (Continued) b. Rehabilitation costs In accordance with environmental protection policy adopted by the Group and appropriate legal requirements, the reserve for rehabilitation costs, which regards pollution of land or other fixed assets, is recognised if the land or other fixed asset become polluted. c. Onerous contracts Reserve for onerous contracts is recognised if the economic benefits expected by the Group from the contract are lower than the unavoidable costs of fulfilling contractual obligations.

18. Long-term and short-term liabilities Liabilities constitute an obligation to deliver benefits with a reliably determined value resulting from past events, which will require the use of already owned or future assets of the entity. Short-term liabilities include all trade payables and all or portion of other liabilities, which are due within 12 months from the end of the reporting period. If the due date exceeds one year from the end of the reporting period, the balance of these liabilities is declared as a long-term liability. Liabilities other than financial liabilities measured at fair value through the profit or loss are recognised on the day of their occurrence at fair value corrected by the transaction costs, and are measured at the reporting date according to amortised cost determined using an effective interest rate. In case of short-term liabilities, this valuation corresponds to the due amount. At the moment of initial recognition, bank credits and loans are recognised at fair value, less the costs related with obtaining the credit or loan. In subsequent periods, credits commitments are measured according to the amortised cost using the method of effective interest rate, except for liabilities designated for turnover.

19. Financial instruments Financial instruments, at the moment of initial recognition, are included to one of the following categories: • financial instruments at fair value through profit or loss, • financial assets held to maturity, • loans and liabilities, • available-for-sale financial assets, • other financial liabilities. Acquisition or sale of financial assets is recognised on the day of the transaction. At the moment of initial recognition, a component of financial assets or liabilities is valued at fair value, increased, in case of a component of assets or financial liabilities not qualifying as valued at fair value by the financial result, by the transaction costs, which may be directly assigned to the acquisition or emission of the component of financial assets or liabilities. a. Financial instruments at fair value through profit or loss Financial assets and liabilities acquired in order to generate profit by way of short-term value fluctuations are assigned to the category of financial instruments at fair value through profit or loss. Financial assets at fair value through profit or loss are valued at fair value, without deducting transaction costs, taking into consideration their market value at the end of the reporting period. Changes in fair value of financial

F-137 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

Note 1. Accounting policies (Continued) assets measured at fair value, whose changes are recognised in profit or loss, are included in financial income or costs. Financial instruments measured at fair value, the change in which is recognised in profit or loss, are classified as current assets if the Board plans to capitalise them within 12 months from the end of the reporting period. b. Financial assets held to maturity Financial assets held to maturity are investments with a defined or possible to define payments and a set maturity date, which the Group plans to and is able to hold in possession until that time. Financial assets held to maturity are valued according to amortised cost using an effective interest rate. Financial assets held to maturity are included in long-term assets, if their incidence exceeds 12 months from the end of the reporting period. c. Loans granted and receivables Loans and receivables are financial assets with defined or possible to define payments which are not derivatives nor are they quoted in an active market. Loans and receivables are included in current assets if their deadline does not exceed 12 months from the end of the reporting period. Loans and receivables with a deadline exceeding 12 months from the end of the reporting period are included in fixed assets. Loans and receivables are recognised in the balance sheet item ‘‘trade and other receivables’’. Loans granted and receivables are valued according to amortised cost. d. Available-for-sale financial assets All other financial assets are included in available-for-sale financial assets. Available-for-sale financial assets are recognised at fair value, without deductions for transaction costs, taking into consideration their market value at the end of the reporting period. If no quotations from the active market are available and there is no possibility to reliably determine their fair value using alternative methods, available-for-sale financial assets are measured at acquisition price adjusted by the impairment charge, if measured at historical value. Positive and negative difference between fair value and acquisition price, less deferred tax, of available-for-sale assets are charged to other comprehensive income, if a market price in the active regulated market exists or fair value may be determined in a different reliable way. Decrease in value of available-for-sale assets caused by impairment is recognised as financial cost in profit or loss.

20. Income Income is an inflow of gross economic benefits for the given period, taking place as a result of (regular) economic activity of the Group, resulting in increasing equity capital, other than an increase of capital as a result of payments from shareholders. Income includes only received or outstanding gross economic benefits to own account, whereas amounts collected on behalf of third parties such as VAT or rebates are not economic benefits and excluded from income. a. Sale of finished products, goods and services Income from the sale of goods and services is recognised in the statement of comprehensive income, if significant risk and benefits resulting from their ownership has been transferred onto the buyer. Income from services is recognised in the statement of comprehensive income on a straight-line basis over the lease term. Income is not recognised if there is a significant uncertainly as to a possibility of obtaining future economic benefits, determining the size of the incurred costs or possibility of the return of finished products/goods.

F-138 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

Note 1. Accounting policies (Continued) b. Income from lease Income from lease of real estate is recognised in the statement of comprehensive income using the straight-line method for the duration of the contract. c. Future income from government subsidies Government subsidies are recognized in the statement of financial position as future income, if there is sufficient certainty that the Group will fulfil the conditions related with obtaining this income. Subsidies received as a return of already incurred costs by the Group are systematically recognized as income in the statement of comprehensive income in periods in which costs relating with them are incurred. Subsidies received as a recovery of asset costs recognised by the Group are systematically recognised as other operating income in the statement of comprehensive income for the period during which the asset is in use. d. Other income Other operating income is related directly with the entity’s activity. It includes: • income related with acquiring fixed assets, • other income not included in income from sales or financial income. e. Financial income Financial income is recognised during the year if there is a probability that the entity will gain economic benefits related with the concluded transaction, and the income amount can be measured in a reliable way. Principles regarding recognising financial income: • interest using the amortised cost method using the effective interest rate, • surplus of positive exchange rate differences over the negative exchange rate differences from cash assets, loans taken, receivables and liabilities.

21. Costs a. Prime costs Prime costs include all costs related with the basic activity of the Group, except for the cost of sale, general administration expenses, other costs and financial costs. The costs of manufacturing a product include costs directly related with the given product and justified part of fixed costs indirectly related with the manufacture of the product. b. Cost of sales Costs of sales are the recorded costs related with sales. These costs include, among other things: • transportation, loading, unloading costs, • duty fees and trade fees (in case of export sales), • and other costs, cargo insurance and others. Valuation allowances are recognised in other costs and operating income.

F-139 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

Note 1. Accounting policies (Continued) c. General administration costs General administration costs include: • general administration costs related with maintaining certain Management sections. • general production costs (related with production which does not regard any particular departments) related with maintaining and functioning of multi-purpose sections, for example laboratories d. Other costs Other costs are directly related to the Group’s activities, in particular: other costs not included in the operating activity costs, costs of sales, administrative expenses or financial costs. e. Operating lease payments Operating lease payments under contracts concluded by the Company are recognised in the profit or loss linearly during the lease period. Special promotional offers received are recognised linearly in the profit or loss together with leasing costs. f. Capital lease payments Lease payments are divided into the portion constituting the financing cost and the portion reducing the liability. The portion constituting the financing cost is assigned to specific periods in the duration of the lease contract using the effective interest method. g. Financial costs Financial costs mainly regard: • due and paid interest determined on the basis of the effective interest, • surplus of negative exchange rate differences over the positive exchange rate differences from cash assets, loans taken, receivables and liabilities

22. Income tax Income tax recognised in the profit or loss includes a current and a deferred part. Income tax is recognised in profit or loss, with the exception of amounts relating to items recognised through other comprehensive income. Then, it is recognised in other comprehensive income. Current tax is a tax obligation from taxed income for the given year, determined using tax rates effective at the end of the reporting period and a correction of tax from previous years. Deferred income tax is calculated using the balance sheet liability method, based on temporary differences between the value of assets and liabilities estimated for accounting purposes and their value estimated for tax purposes. Reserves are not established for the following temporary differences: goodwill, the amortisation of which is not recognised as a cost of obtaining an income for tax purposes, initial recognition of assets or liabilities, which have no impact either on the accounting profit or on taxable income, differences related to investments in subsidiary entities in scope, in which it is not probable that they will be realised in the predictable future. The recognised deferred tax amount is based on expectations of the method of realizing the balance sheet value of assets and liabilities, using tax rate effective or established on the reporting date.

F-140 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

Note 1. Accounting policies (Continued) Deferred tax assets are recognised only when it is probable that future taxable incomes will be available, in regard to which it will be able to realize the given component of the assets. Deferred tax assets are deductible, if it can be determined that it is probable that benefits represented by these assets will be capitalised. Deferred tax in any consolidated company is recognised under deferred tax assets and reserves.

23. Operating segment reporting Reporting according to operating segments is prepared on the basis of internal reports regarding Group’s components subject to periodic reviews performed by a member of the management responsible for operational decisions, in order to allocate resources to specific segments and evaluate their performance.

24. Discontinued operations and assets held for sale The Group classifies components of fixed assets to assets held for sale if their balance sheet value is recovered by way of sale transaction, not though their further utilization. A condition of including assets in this group is an active search of a buyer by the entity’s management and a high probability of selling these assets within one year from the date of their liquidation, and also availability of these assets for immediate sale. These assets are valued at a lower amount from their balance sheet value and fair value reduced by the costs of sale.

Note 2. Operating segment reporting In accordance with IFRS 8, the Management has determined operating segments, which are used when making strategic decisions. Information prepared for the Group’s personnel deciding about the allocation of resources and evaluating the segment’s financial results are concentrated on industry groups related with the manufactured products. The Group’s segments, included in its reports in accordance with IFRS 8, are therefore as follows: • Rubbers and latexes, • Styrene derivatives, • Power engineering, • Vinyl dispersions. Operating segments draw their revenue most of all from the sale of various groups of finished products. Other income and costs (other operating income, profit/loss on disposal of fixed assets, profit on sale of shares), as well as financial gains and losses are not included in operating segments because they are not included in reports submitted to the Board. Results of these activities are included in the items ‘‘Unassigned income/Imputed costs’’. Income from transactions with unaffiliated entities, presented to the Board in division into operating segments, is evaluated in a way which is consistent with the method used in the statement of comprehensive income. Amounts presented to the Board in regard to total assets divided into operating segments are evaluated in a way which is consistent with the method used in the Financial Statements. These assets are allocated on the basis of segment operations and physical location of the given property component (this regards trade receivables, reserves, fixed assets). Other assets, i.e. cash, shares, other receivables are included as unassigned assets.

F-141 80,579 54,413 15,445 52,442 24,501 21,055 (37,171) (15,668) (44,108) (26,398) (32,089) (118,585) 776,105 1,032,302 617,303 1,079,402 585,214 960,817 (154,640) — 1,434,207 1,515,429 6 6,166,218 5,406,271 1,988 1,985 1,988 1,985 38,338 32,453 38,338 32,453 Business segments SYNTHOS GROUP Consolidated Financial Statements — — — ——————— — —— — — ————— — ————— — — — ——————— — — —— ——————— — — ——————— — — — ——————— — — — ——————— — — — ——————— — — — ——————— — — — ——————— (in thousands of zlotys, unless specified otherwise) 81,71232,543 150,916 22,517 36,516 66,565 47,585 7,175 77,996 41,648 5,129 44,530 14,880 22,967 21,047 35,250 2,394 39,575 30,692 205,183 32,183 302,691 155,976 149,970 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 Rubber and LatexRubber Styrene derivatives engineering Power dispersions Vinyl Other Total 631,110 880,931 45,478 29,080 52,437 26,110 1,345 2,168 2,327 55,268 732,697 993,557 3,943,455 3,301,230 1,883,9103,312,345 1,719,693 2,420,299 234,908 1,838,432 227,363 1,690,613 101,735 182,471 106,869 201,253 100,390 42,536 104,701 85,554 40,209 6,206,544 5,440,709 30,286 5,473,847 4,447,152 1,526,450 1,442,314 1,071,817 871,3401,526,450 39,452 1,442,314 288,289 1,071,817 330,856 871,340 46,480 154,632 39,452 398,145 288,289 3,123,207 330,856 3,046,569 46,480 154,632 398,145 4,557,414 4,561,998 for the 12 months ending on 31 December 2012 (Continued) ...... method Sale of services Lease income income Total Imputed costs Income Sale of goods/finished products (external customers) . 3,943,455 3,301,230 1,883,910 1,719,693 234,908 227,363 101,735 costs 106,869Total 2,210Segment result 51,11 Note 2. Operating segment reporting (Continued) Unassigned income Operating profit Financial income Financial costs Share in losses of entities recognized using the equity Charge to available-for-sale assets Profit before tax Income tax Net earnings Depreciation Segment assets assets Total Unassigned assets Investment spending

F-142 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

Note 2. Operating segment reporting (Continued) Geographic information The Group distinguishes two geographic segments: • Country—domestic sales includes sales of all types (manufacturing, trade, services) by the Group in Poland, the Czech Republic, Slovakia, • Other countries—covers all types of sales by the Group in all countries of the world with the exception of Poland, Czech Republic, Slovakia. All of the Group’s assets are located in Poland and Czech Republic.

Geographic information

Other Country countries Total 2012 2011 2012 2011 2012 2011 Income (sales to external customers) ...... 2,781,476 2,691,750 3,425,068 2,748,959 6,206,544 5,440,709 Assets ...... 4,557,414 4,561,998 — — 4,557,414 4,561,998 Investment spending ...... 205,183 302,691 — — 205,183 302,691

Information on major customers Income obtained from the sale of: • ‘‘Rubber and latex’’ in the amount of PLN 3,943,455,000 includes the income of PLN 1,989,043,000 from the sales to 10 major customers, • ‘‘Styrene derivatives’’ in the amount of PLN 1,883,910,000 includes the income of PLN 685,059,000 from the sales to 10 major customers, • ‘‘Vinyl dispersions’’ in the amount of PLN 101,735,000 includes the income of PLN 57,180,000 from the sales to 10 major customers Among the major customers of the Group, none is responsible for more than 10 percent of sales revenue.

Note 3. Cash revenue on sales

2012 2011 Revenue from product sales ...... 5,299,057 4,906,546 Revenues from sales of services ...... 38,338 32,453 Revenues from the sale of materials and goods ...... 867,161 499,725 Revenue from the rental of investment properties ...... 1,988 1,985 6,206,544 5,440,709

F-143 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

Note 4. Costs by type

2012 2011 a)Amortisation and depreciation ...... 155,976 149,970 b)Material and energy consumption ...... 3,969,957 3,337,190 c)Outside services ...... 280,168 241,597 d)Taxes and fees ...... 23,515 23,464 e)Remuneration (Note 7) ...... 127,904 128,032 f)Social insurance and other benefits (Note 7) ...... 37,502 38,200 g)Other costs by type ...... 21,682 18,550 Expenses by type, total ...... 4,616,704 3,937,003 Change in inventories, products, Changes ...... (155,980) (77,657) in the cost accounted for ...... 3,111 (7,626) Cost of sales (negative value) ...... (149,637) (112,094) General administrative costs (negative value) ...... (157,916) (152,308) Cost of manufacture of products sold ...... 4,156,282 3,587,318 Cost of goods and materials sold ...... (1,010,012) (595,431) Costs of sales ...... 5,166,294 4,182,749

Note 5. Other operating income

2012 2011 Release of provision for ...... 20,435 — electrolysis ...... — 40,996 Return of penalties paid ...... 3,810 — Release of valuation allowances for receivables ...... 41,102 — Release of valuation allowances for fixed assets ...... 570 — Release of other reserves ...... 5,401 2,477 Compensation received from insurance companies ...... — — Profit from shares in affiliates ...... 7,725 5,595 Other ...... 79,043 49,068

Note 6. Other operating costs

2012 2011 Inventory revaluation ...... 115 310 Establishment of valuation allowances for receivables ...... 5,752 — Cost of unused production capacity ...... 3,664 3,777 Current assets written off ...... 3,230 2,633 Receivables written off ...... 6,941 1,666 Consumption of CO2 emission rights ...... 3,681 — Establishment of impairment losses for property, plants and equipment ...... 7,199 — Other ...... 6,589 7,282 37,171 15,668

F-144 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

Note 7. Costs of employee benefits

2012 2011 Remuneration ...... 127,904 128,032 Social insurance ...... 31,284 31,430 Employee Benefit Fund ...... 1,604 2,522 Other employee benefits ...... 4,614 4,248 165,406 166,232

Note 8. Net financial costs/income

2012 2011 Income from loans and receivables ...... 15,445 20,968 Net exchange rate differences (Note 9) ...... — 31,474 Financial income, total ...... 15,445 52,442 Interest expense on loans ...... (19,235) (19,408) Cost of valuation of derivatives ...... (4,911) (6,558) Net exchange rate differences (Note 9) ...... (18,526) Other ...... (1,436) (432) Financial costs, total ...... (44,108) (26,398) Net financial costs/income ...... (28,663) 26,044

Note 9. Currency exchange rate differences In the period ended 31 December 2012, the total amount of exchange rate differences recognised in the statement of comprehensive income amounted to per account balance PLN 18,526,000 (negative) (in 2011 per account balance PLN 31,474,000) (positive), of which PLN 6,824,000 (in 2011, PLN 156,192,000) were the positive exchange rate differences and the amount of PLN 25,350,000 (in 2011, PLN 124,718,000) were the negative exchange rate differences.

Note 10. Income tax Income tax indicated in the statement of comprehensive income

2012 2011 Income tax Current income tax ...... 74,643 133,042 Correction of tax from previous years ...... (13,946) — 60,697 133,042 Deferred tax Establishment / reversal of temporary differences ...... (28,608) (14,457) Deferred tax, total ...... (28,608) (14,457) Income tax recognised in the statement of comprehensive income ...... 32,089 118,585

F-145 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

Note 10. Income tax (Continued) Effective interest rate

% 2012 % 2011 Profit before tax ...... 617,303 1,079,402 Tax based on the current tax rate ...... 19%117,288 19% 205,086 Costs other than costs of revenues (permanent differences) ...... 809 1,079 Tax exempt costs (permanent differences)* ...... (3,001) (83,923) Tax loss not included in deferred tax ...... — 6,573 The use of tax losses not included in the calculation of deferred tax in prior years ...... (1,670) — Gross profit of Synthos Dwory 7 społka´ z ograniczon˛a odpowiedzialno´sci˛a S.K.A. adjusted by the difference in the amount of impairment loss on available-for-sale financial assets ...... (28,054) — Correction of tax from previous years ...... (13,946) — Deferred tax assets written-off* ...... — 46,984 Investment allowance ...... (38,266) (57,221) Other ...... (1,071) 7 5% 32,089 11% 118,585

* As a result of the transformation of the legal form of Synthos Dwory 7 społka´ z ograniczon˛a odpowiedzialno´sci˛a S.K.A., the company ceased to be liable to corporate income tax from 1 November 2011. Income tax receivable in the amount of PLN 22,229,000 (PLN 1,581,000 on 31.12.2011) constitutes an amount due from the tax office for payments made for the current and previous business year which exceeded the tax amount due. Income tax liability in the amount PLN 11,477,000 (PLN 73,300,000 on 31.12.2011) constitutes an amount due to the tax office for the difference between payments made for the current and previous business year and the tax amount due. The Group recognised the deferred tax assets generated in 2011 only partially, in the amount possible to settle in the future. The deadline to settle this loss passes in 2016. The deadline to settle the loss on which deferred tax assets have not been created also passed in 2016. The Group recognised the full amount of the deferred tax asset in respect of investment allowance in the subsidiary Synthos PBR s.r.o. The deadline to settle this allowance passes in 2015.

F-146 31,136 41,102 12,207 (27,967) (62,465) 419,366 (284,438) 12,207 (12,207) (12,207) (483,146) (483,146) (284,438) (6,024) (17,331) (2,657) (1,919) — (3,430) (10,125) (2,546) (293) (534) (16,928) 21,155 19,915 17 15 — 20,623 48,07265,994 1,147 251 121,289 3,479 18,993 5,705 89,227 221,973 109,684 356,519 10,019 13,666 303,762 Buildings and Machines and Means of Construction in (673) (17,033) (41,418) (933) (551) (1,857) 1,728 633,158 992,148 35,507 38,182 374,0191,869 2,074,742 760,0351,869 760,035 1,386,614 44,127 1,386,614 51,806 44,127 51,806 200,887 2,445,338 200,887 2,445,338 Land structures equipment transport Other progress Total 33,222 824,127 1,469,069 44,033 55,056 148,772 2,574,279 31,136 — — — — — SYNTHOS GROUP Consolidated Financial Statements ...... — ...... 926 (in thousands of zlotys, unless specified otherwise) for the 12 months ending on 31 December 2012 (Continued) ...... —...... — 141 —...... — — — — — — — ...... — — — — — ...... — ...... — — — — — ...... (36) ...... — Exchange rate differences from conversions Gross value as at 31 December 2012 Reclassification of a valuation allowance** Reversal from available-for-sale assets Transfer Sale/liquidation Acquisition and transfer from capital work in progress Acquisition to fixed assets and intangible Transfer to available-for-sale assets Transfer Sale/liquidation Exchange rate differences from conversions Gross value as at 31 December 2011 Gross value as at 1 January 2012 and transfer from capital work in progress Acquisition to fixed assets and intangible Transfer Gross value as at 1 January 2011 Note 11. Property, plant and equipment Note 11. Property,

F-147 7,199 29,635 (14,044) (25,598) (17,575) 144,984 149,903 7,199 n in the gross value of property, plant and equipment 2,310 16,960 501 9,862 2 (3,126) (9,219) (1,461) (238)(4,530) — (2,090) (16,956) (14,622) (2,302) (1,810) (378) (485) — — 27,677 109,848 4,452 3,00731,320 110,269 — 4,379 3,935 — Buildings and Machines and Means of Construction in — 209,684 466,573 16,341— 20,666 236,545— 42,515 236,545 584,162 755,779 19,833 584,162 33,297 19,833 33,297— 42,517 261,245 42,517 916,354 662,853 916,354 21,532 34,937 49,716 1,030,283 1,7281,869 423,474 523,4901,869 525,575 523,490 802,452 19,166 17,516 24,294 802,452 18,509 331,504 24,294 158,371 18,509 1,318,963 1,528,984 158,371 1,528,984 Land structures equipment transport Other progress Total 33,222 562,882 806,216 22,501 20,119 99,056 1,543,996 SYNTHOS GROUP ...... Consolidated Financial Statements (in thousands of zlotys, unless specified otherwise) for the 12 months ending on 31 December 2012 (Continued) ...... — ...... — ...... — ...... — ...... — ...... — ...... — — — — — Depreciation for the period Exchange rate differences from conversions Accumulated depreciation and impairment as at 31 December 2011 depreciation and impairment as at 1 January 2012 Accumulated Depreciation for the period Exchange rate differences from conversions Accumulated depreciation and impairment as at 31 December 2012 Net book value As at 1 January 2011 As at 31 December 2011 As at 1 January 2012 As at 31 December 2012 Accumulated depreciation and impairment depreciation and impairment as at 1 January 2011 Accumulated * of land leased from operating leases to finance leases. Reclassification ** of a write-down adjusts the gross value property, plant and equipment due to prior recognition write-dow Reversal Note 11. Property, plant and equipment (Continued) Note 11. Property, Sale/liquidation Impairment Sale/liquidation

F-148 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

Note 11. Property, plant and equipment (Continued) The costs of depreciation of property, plant and equipment were recognised in profit or loss in the cost of sales item in the amount of PLN 129,036,000 (in 2011—PLN 111,708,000).

Impairment charges and their use In the reporting period the Group made valuation allowances on property, plant and equipment in the amount of PLN 7,199,000 for the waste incineration plant. The allowance covers property, plant and equipment which, because of the planned changing of technology will not be used. During the reporting period, the Group has made a reversal of a write-down on the value of the XPS production line in Synthos Kralupy a.s. and Synthos Dwory 7 społka´ z ograniczon˛a odpowiedzialno´sci˛a S.K.A. (formerly ‘‘Synthos Dwory’’ Sp. o.o.). The total value of the reversed write-down on the above items of property amounted to as at 31 December 2012, respectively PLN 31,272,000 in Synthos Kralupy a.s. and PLN 9,830,000 in Synthos Dwory 7 społka´ z ograniczon˛a odpowiedzialno´sci˛a S.K.A. (formerly ‘‘Synthos Dwory’’ Sp. o.o.). Taking into account the results achieved in both locations, the perspective of continuation of the current trend, as well as product development capabilities supported by new implementations, it can be concluded that maintaining the valuation allowance carried out in 2009 is not justified.

Fixed assets in lease At the end of the reporting period the Synthos Group, other than land under a financial lease described below, did not have any other assets used under finance leases.

Collaterals As at 31 December 2012, the net carrying value of the buildings and structures, machinery and equipment which constitute collateral for bank loans amounted to PLN 610,777,000 (31 December 2011— PLN 521,700,000) (Note 24).

Capital work in progress At the end of 2012, the Group owned capital work in progress valued at PLN 148,772,000 (at the end of 2011 its value was PLN 200,887,000). This amount consisted of several initiated investment projects, of which the most important are: construction of cogeneration units—the amount of expenses is PLN 29,033,000, upgrading the batteries I and II—the amount of expenses is PLN 12,991,000, creation of a laboratory—the amount of expenses is PLN 4,394,000.

Borrowing costs In 2012 the Group has not capitalised borrowing costs to the value of property, plant and equipment.

Subsidies During the reporting period the Group signed two major contracts for financing of projects. a. R&D Centre On 23 November 2012, the Group signed an agreement with the Ministry of Economy for financing the R&D Centre for New Technologies, which will be built in O´swi˛ecim. Eligible investment costs amount to more than 86.5 million zlotys. The Group will receive 50% of support from the Innovative Economy Operational Programme, i.e. almost 43.3 million zlotys. The project will be carried out at Synthos S.A.

F-149 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

Note 11. Property, plant and equipment (Continued) Implementation of the project includes the construction of laboratories to carry out synthesis (laboratory and pilot plant scale), analytical and application research. Almost 90% of the cost of the project will go towards the acquisition of the latest test equipment. The project involves building the R&D Centre, equipped with latest equipment, whose main objective will be the development and putting into production of innovative new products, including in particular the new types of synthetic rubbers. They will allow tyre manufacturers to develop products with a much lower rolling resistance and improved adhesion to the surface, which will result in a significant reduction of fuel consumption and improve safety. The project will also include the development of new, innovative manufacturing technology for butadiene, the main input material for rubber production. This technology in contrast to the currently used technologies will be based on renewable input materials, which will allow for becoming independent from oil prices. Construction is currently in the stage of closing the so-called ‘‘building shell’’. Opening of the Centre is planned for September 2014. Completion of the project will take place in June 2014. In 2012, the Group spent PLN 4,394,000 for this purpose. b. Plant for the production of SSBR rubbers In December 2012, Synthos SA signed an agreement with the Ministry of Economy on funding for the project ‘‘Implementation of innovative manufacturing technology of SSBR X3 rubbers at Synthos Dwory 7’’. The objective of the project is to diversify the company’s production by the launch of a new innovative product, i.e. functionalised styrene-butadiene rubber obtained using the solvent method (S-SBR). Product innovation will be achieved through the implementation of advanced production technology of rubber with unique characteristics and properties purchased by Synthos S.A. from the Goodyear Tire & Rubber Company. The amount of eligible expenditures is more than 489 million zlotys, of which the amount of funding is almost 147 million zlotys. The project will create at least 160 new jobs.

Land acquired under finance leases Synthos Kralupy a.s. in Kralupy nad Vltavou and in Litvinov—Czech Republic uses the land on the basis of a lease agreement with the owner of the land. The lease agreement is concluded for an indefinite period of time and any changes in the agreement must be approved by both parties. The Group presents this land in the consolidated financial statements under property, plant and equipment. The value of land leased is a derivative of the value of the liability, estimated as the present value of future payments under the lease agreement. Value of the liability under the lease was calculated as the perpetuity of annual rent payments CZK 16,872,000 using a discount rate of 9%.

F-150 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

Note 12. Intangible assets

Concessions, licences, computer Other Development software and intangible Intangible costs other assets assets, total Gross value as at 1 January 2011 ...... 666 56,458 97,316 154,440 Transfer from property, plant and equipment .... — 5,479 417 5,896 Acquisition ...... — — — — Sale/liquidation ...... — — — — Exchange rate differences from conversions ..... — 1,989 7,509 9,498 Gross value as at 31 December 2011 ...... 666 63,926 105,242 169,834 Gross value as at 1 January 2012 ...... 666 63,926 105,242 169,834 Transfer from property, plant and equipment .... — 34,970 3,961 38,931 Acquisition ...... 9,028 57,476 — 66,504 Sale/liquidation ...... — (6,686) (4,021) (10,707) Exchange rate differences from conversions ..... — (1,253) (4,643) (5,896) Gross value as at 31 December 2012 ...... 9,694 148,433 100,539 258,666 Accumulated depreciation and impairment charges as at 1 January 2011 ...... 625 30,117 97,071 127,813 Depreciation for the period ...... 7 4,682 184 4,873 Exchange rate differences from conversions ..... — 747 7,509 8,217 Accumulated depreciation and impairment charges as at 31 December 2011 ...... 632 35,546 104,764 140,942 Accumulated depreciation and impairment charges as at 1 January 2012 ...... 632 35,546 104,764 140,942 Depreciation for the period ...... 7 5,643 248 5,898 Sale/liquidation ...... — (6,686) — (6,686) Exchange rate differences from conversions ..... — (563) (4,644) (5,207) Accumulated depreciation and impairment charges as at 31 December 2012 ...... 639 33,940 100,368 134,947 Net value As at 1 January 2011 ...... 41 26,341 245 26,627 As at 31 December 2011 ...... 34 28,380 478 28,892 As at 1 January 2012 ...... 34 28,380 478 28,892 As at 31 December 2012 ...... 9,055 114,493 171 123,719

Intangible assets as at the reporting date mainly include purchased licenses for the manufacture of products, computer software. Licenses mainly include the license to manufacture polybutadiene rubber in the amount of PLN 33,115,000 (based on this license, in 2011 the Group started the production of PBR rubber at Synthos PBR s.r.o.) and a license to manufacture SSBR rubber in the amount of PLN 57,613,000 (on the basis of this license, in 2013 the Group will begin the construction of a plant for the manufacture of SSBR rubbers). The ‘‘Development costs’’ item recognises expenses related to the work on the development of new products and the search for alternative sources of key input materials.

F-151 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

Note 13. Investment real estate

31 December 31 December 2012 2011 Gross value at the beginning of the period ...... 6,588 6,489 Correction ...... — — Modernisation ...... 202 99 Sale/liquidation ...... — — Gross value at the end of the period ...... 6,790 6,588 Accumulated depreciation and impairment charges ...... 3,183 3,012 Depreciation for the period ...... 175 171 Sale/liquidation ...... — — Accumulated depreciation and impairment charges at the end of the period . 3,358 3,183 Net book value at the beginning of the period ...... 3,405 3,476 Net book value at the end of the period ...... 3,432 3,405

Investment properties are buildings and structures located in O´swi˛ecim, on land belonging to a subsidiary Synthos Dwory 7 społka´ z ograniczon˛a odpowiedzialno´sci˛a S.K.A. (formerly Synthos Dwory Sp. z o.o.) and which are rented by the Group to unaffiliated entities. In the reporting period ending on 31 December 2012, income from the lease of buildings and structures in the amount of PLN 1,988,000 (12 months of 2011: PLN 1,985,000) was achieved, which was presented in the statement of comprehensive income in the ‘‘Income from sales’’ item. Fair value estimated based on discounted cash flows from the lease of this property as at 31 December 2012, amounts to about PLN 10 million (using a discount rate before taxation in the amount of 12%).

Note 14. Long-term investments

31 December 2012 31 December 2011 Available-for-sale financial assets ...... 187,280 148,609 Loan granted to Butadien Kralupy ...... 52,409 62,873 Other loans ...... 512 20,173 Share in subsidiaries not included in the consolidation ...... 2,115 2,095 Total ...... 242,316 233,750

Note 15. Share in subsidiaries not included in the consolidation

Result for the Assets Liabilities Equity period 31 December 2012 Synthos Dwory 2 sp. z o.o...... 1,375 — 1,375 59 Synthos Dwory 6 sp. z o.o...... 8 20 (12) (7) Synthos XEPS s.r.o ...... 33 — 33 — 1,416 20 1,396 52 31 December 2011 Synthos Dwory 2 sp. z o.o...... 1,322 — 1,322 42 Synthos Dwory 3 sp. z o.o. in liquidation ...... 25 — 25 (6) Synthos Dwory 6 sp. z o.o...... 17 21 (4) (6) Synthos XEPS s.r.o ...... 33 — 33 — 1,397 21 1,376 30

F-152 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

Note 15. Share in subsidiaries not included in the consolidation (Continued) Investments in subsidiaries not included in the consolidation consist of: • Synthos Dwory 2 Sp. z o.o. (old name Sport Olimp Sp. z o.o.)—business activity: manufacture of chemical products, • Synthos Dwory 6 Sp. z o.o.—business activity: production of electricity, • Synthos XEPS based in Kralupy nad Vltavou, Czech Republic—business activity of the company is manufacture of chemical products.

Note 16. Share in entities recognised using the equity method The Group has invested in the following joint ventures:

Equity interest in % Country 31.12.2012 31.12.2011 Butadien Kralupy a.s...... Czech Republic 49.0% 49.0% The Group owns 49.0% share in Butadien Kralupy a.s. based in Kralupy nad Vltavou, Czech Republic, a joint venture of Synthos Kralupy a.s. and Unipetrol a.s. The joint venture has been established in order to build a new butadiene production system, which supplies butadiene for the Group’s companies.

Profit/Loss Assets Liabilities for the fixed current long-term short-term Income Costs period 31 December 2012 Butadien Kralupy a.s...... 182,888 208,821 106,957 134,533 1,070,735 1,020,733 50,002 31 December 2011 Butadien Kralupy a.s...... 202,462 154,930 129,037 122,349 822,033 779,064 42,969

31 December 31 December 2012 2011 At the beginning of the period ...... 51,942 28,187 Purchase of shares ...... — — Share of profit ...... 24,501 21,055 Currency exchange rate differences ...... (2,896) 2,700 At the end of the period ...... 73,547 51,942

The Group’s share of profit of joint ventures accounted for using the equity method, amounted in the period ended 31 December 2012 to PLN 24,501,000 (profit in 2011—PLN 21,055,000).

F-153 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

Note 17. Deferred tax Deferred income tax assets and deferred income tax liabilities are recognised in relation to the following asset and liability items:

Deferred income tax assets and deferred income tax liabilities

Assets Liabilities Net value 31.12.2012 31.12.2011 31.12.2012 31.12.2011 31.12.2012 31.12.2011 Property, plant and equipment and investment real estate ...... (1,443) — 61,376 50,893 59,933 50,893 Other investments ...... (858) (769) 191 — (667) (769) Inventories ...... (148) — 107 — (41) — Trade and other receivables ...... (870) (1,089) — — (870) (1,089) Employee benefits ...... (124) (184) — — (124) (184) Reserves ...... (715) (771) — — (715) (771) Liabilities ...... (4,540) (1,207) — — (4,540) (1,207) Investment allowance ...... (92,421) (58,208) — — (92,421) (58,208) Tax losses ...... (15,484) (17,268) — — (15,484) (17,268) Deferred income tax liabilities / assets ...... (116,603) (79,496) 61,674 50,893 (54,929) (28,603) Compensation ...... 18,673 12,698 (18,673) (12,698) — — Deferred income tax liabilities / assets declared in the statement of financial position ...... (97,930) (66,798) 43,001 38,195 (54,929) (28,603) Deferred income tax assets/liabilities for realization within 12 months ...... (14,552) (14,552) — — (14,552) (14,552) Deferred income tax assets/liabilities for realization after 12 months ...... (83,378) (52,246) — — (40,377) (14,051)

Unrecognised deferred income tax assets During the reporting period the Group has updated the value of assets due to investment allowance which it received for the construction of a new polybutadiene rubber plant, creating an asset for the full amount of allowance granted. At the reporting date, all conditions associated with obtaining investment allowances have been met.

F-154 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

Note 17. Deferred tax (Continued) Change in temporary differences in the period

Change in temporary differences recognized Capital from exchange rate Revaluation differences reserve (other (other As at Profit or comprehensive comprehensive As at 01.01.2012 loss income) income) 31.12.2012 Property, plant and equipment ...... 50,893 11,714 — (2,674) 59,933 Other investments ...... (769) (88) 191 — (666) Inventories ...... — (69) — 27 (42) Trade and other receivables ...... (1,089) 207 — 12 (870) Employee benefits ...... (184) 59 — 1 (124) Reserves ...... (771) 22 — 34 (715) Investment allowance ...... (58,208) (38,268) — 4,055 (92,421) Tax losses ...... (17,268) 1,161 — 623 (15,484) Liabilities ...... (1,207) (3,346) — 13 (4,540) (28,603) (28,608) 191 2,091 (54,929)

Change in temporary differences recognised in the in the capital statement of in the from As at comprehensive inventory exchange rate As of 01.01.2012 income revaluation differences 31.12.2011 Property, plant and equipment ...... 344 47,056 3,493 50,893 Other investments ...... (296) (1,367) 860 34 (769) Inventories ...... 20 74 (94) — Trade and other receivables ...... (1,639) 550 — — (1,089) Employee benefits ...... (1,174) 990 — — (184) Reserves ...... (10,288) 9,517 (771) Investment allowance ...... — (57,221) — (987) (58,208) Tax losses ...... — (17,040) — (228) (17,268) Liabilities ...... (4,099) 2,983 — (91) (1,207) (17,132) (16,432) 860 2,127 (28,603)

Note 18. Short-term loans granted

31 December 31 December 2012 2011 Loan granted to Butadien Kralupy ...... 7,487 7,859 Total ...... 7,487 7,859

F-155 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

Note 19. Inventories

31 December 31 December 2012 2011 Materials ...... 154,458 129,146 Products in progress ...... 72,814 68,467 Finished products ...... 381,474 241,886 Goods ...... 9,156 37,033 617,902 476,532

Inventories are presented in net amounts less valuation allowances in the amount of PLN 4,159,000 (31 December 2011: PLN 3,378,000). Changes in valuation allowances result from the sale, use or liquidation of corresponding product assortment items and are recognised in the statement of comprehensive income in the ‘‘Prime costs’’ item. Valuation allowances on inventories, recognised in statement of comprehensive income, amount to PLN 781,000 in 2012 (PLN 962,000 in 2011).

Note 20. Trade and other receivables

31.12.2012 31.12.2011 Trade receivables from affiliated entities ...... 119,466 52,899 Trade receivables from other entities ...... 835,943 935,170 Other tax receivables ...... 104,865 95,542 Other receivables ...... 34 3,541 Advances for purchase of fixed assets ...... 15,464 — Advance payments ...... 2,497 2,472 1,078,269 1,089,624

Trade receivables are presented in net amounts less valuation allowances in the amount of PLN 8,198,000 (31 December 2011: PLN 7,495,000). Valuation allowances for receivables were established in regard of their potential lack of recoverability. Valuation allowances for receivables, recognised in statement of comprehensive income, amount to PLN 5,704,000 in 2012 (5,451,000 PLN in 2011). Additionally, valuation allowances in the amount of PLN 4,759,000 (PLN 8,296,000 in 2011) were released because of the repayment of these due amounts. As at 31 December 2012, the value of the receivables pledged as security for the Group’s obligations from loans amounted to PLN 652,360,000 (as at 31 December 2011: PLN 791,996,000). Adopted payment period for amounts due in a normal course of sale is 30-120 days, depending on the operating segment.

Note 21. Cash and cash equivalents

31.12.2012 31.12.2011 Cash in hand ...... 154 185 Cash in bank accounts ...... 469,880 602,490 Short-term investments ...... 275,951 450,596 Other cash and cash equivalents ...... 602 7,152 Overdraft ...... (48,901) — Cash and cash equivalents value declared in the balance sheet ...... 697,686 1,060,424 Cash and cash equivalents, value declared in the statement of cash flows ...... 697,686 1,060,424

According to Polish law, companies registered in Poland manage an Employee Benefit Fund (‘‘EBF’’) on behalf of their employees. EBF fees are deposited to a separate bank account belonging to the Company

F-156 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

Note 21. Cash and cash equivalents (Continued) and cannot be used in operating activity. As at 31 December 2012, the value of cash assets on the EBF account amounted to PLN 349,000 (31 December 2011—PLN 674,000). Besides the EBF-related amount described above from 31 December 2012, as at 31 December 2011, the Group had no cash assets which were subject to limitations in disposal.

Note 22. Share capital

31.12.2012 31.12.2011 Number of shares at the beginning of the period ...... 1,323,250,000 1,323,250,000 Number of shares at the end of the period ...... 1,323,250,000 1,323,250,000 Nominal value of 1 share (PLN) ...... 0.03 0.03

Shareholders are entitled to receive dividends due and have a right to one vote per share during the General Meeting of Shareholders. All shares give an equal right to the Company’s property in case of a division of property. As at 31 December 2012, Company’s shareholders owning more than 5% of the total number of votes are: Mr. Michał Sołowow owns indirectly—through subsidiaries—826,559,009 shares in Synthos S.A., 62.46% of the total number of shares, amounting to 826,559,009 voting shares at AGM, 62.46% of the total number of voting shares at Synthos S.A. AGM. Among the shares held at the date of this report, Mr. Michał Sołowow directly holds—6,552,000 shares of SYNTHOS S.A. which represents 0.50% of the share capital and the total number of votes at the General Meeting of SYNTHOS S.A. and indirectly, by: • FTF Galleon S.A., based in Luxembourg. The company holds 643,224,380 shares in Synthos S.A. which represents 48.61% of the share capital and the total number of votes at the GM of Synthos S.A. • Barcocapital Investment Ltd. The company holds 176,782,629 shares in Synthos S.A. which represents 13.36% of the share capital and the total number of votes at the GM of Synthos S.A. ING Otwarty Fundusz Emerytalny—holds 108,287,035 shares of the Company, representing 8.18% of the share capital. These shares entitle to 108,287,035 votes at the Company’s General Meeting of Shareholders, representing 8.18% of the total number of votes. Information regarding the holding of shares by the shareholders indicated above is shared by the Issuer according to the best of its knowledge, based on the list of shareholders participating in the General Meeting of SYNTHOS S.A. on 28 March 2012, and the list of shareholders entitled to receive the dividend. About changes in ownership of large blocks of shares in the reporting period i.e. from 1 January 2012 to 31 December 2012, the Issuer reported in Current Report No. 13/2012 of 27 March 2012. These changes were included in the above statement. No changes in the ownership of significant share blocks of the Issuer took place after the end of the reporting period, i.e. since 31 December 2012, until the publication of this report.

F-157 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

Note 23. Earnings per share Basic earnings per share Calculation of basic earnings per share was done based on net earnings of the Parent Company’s shareholders and average weighted number of shares on the day of preparing the financial statements. These amounts have been determined as presented below:

31 December 31 December 2012 2011 Net profit for the year in thousands PLN ...... 585,214 960,817 Average weighted number of shares at the end of the period ...... 1,323,250,000 1,323,250,000 Earnings per share Basic (PLN) ...... 0.44 0.73 Diluted (PLN) ...... 0.44 0.73

Diluted earnings per share No factors diluting the earnings per share exist.

Note 24. Credits, loans and other debt instruments This note presents data regarding the Group’s credits, loans and other debt instruments

31 December 31.12.2012 2011 Long-term liabilities Bank loans ...... 474,655 689,942 474,655 689,942 Short-term liabilities Short-term portion of bank loans ...... 171,641 141,771 171,641 141,771

Credit repayment schedule

up to from from More than Total 1 year 1 to 2 years 2 to 5 years 5 years currency and interest rate PLN/WIBOR + margin ...... 90,549 63,7687 13,757 13,024 — EUR/EURIBOR + margin ...... 604,648 156,779 156,661 291,208 — 695,197 220,547 170,418 304,232 —

The value of accrued interest on loans, as at 31 December 2012, amounted to PLN 117,700. Bank loans are secured by mortgages on buildings and structures, and pledges on machinery and equipment of the Group in the total amount of PLN 610,777,000 (31 December 2012: PLN 521,700,000) and cessions of receivables totalling PLN 652,360,000 (31 December 2011: PLN 521,700,000).

F-158 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

Note 25. Employee benefits

31 December 31 December 2012 2011 Long-term provisions for employee benefits Retirement pay obligations ...... 1,462 1,561 Death benefit obligations ...... 1,925 1,002 Compensation pension obligations ...... 901 782 Total provisions for employee benefits ...... 4,288 3,345

31 December 31 December 2012 2011 Short-term provisions for employee benefits Retirement pay obligations ...... 104 174 Death benefit obligations ...... 99 107 Compensation pension obligations ...... 15 134 Total provisions for employee benefits ...... 218 415

31 December 31 December Changes in provisions for benefits obligations 2012 2011 Provisions for employee benefits at the beginning of the period ...... 3,760 4,405 Retirement pay and service anniversary award payments ...... (220) (154) Payment of death benefits ...... (16) (35) Establishment/ of reserves ...... 1,019 458 Exchange rate differences from conversions ...... (37) 2 4,506 3,760

31 December 31 December Basic actuarial estimations at the end of the reporting period 2012 2010 Discount rate ...... 4.0% 6.25% Increase of future remuneration ...... 4.0% 2.5%

F-159 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

Note 26. Provisions

Other Restructuring Rehabilitation reserves Total Value as at 1 January 2012 ...... 50,695 3,259 1,204 55,158 Increases ...... — 3 244 247 Use...... — (139) (30) (169) Released ...... (20,435) (193) (20,628) Exchange rate differences from conversions ...... — (156) (28) (184) Value as at 31 December 2012 ...... 30,260 2,967 1,197 34,424

Long-term portion ...... 30,260 — — 30,260 Short-term portion ...... — 2,967 1,197 4,164 30,260 2,967 1,197 34,424 Value as at 1 January 2011 ...... 50,705 2,758 1,149 54,612 Increases ...... — 491 — 491 Use...... (10) (187) (31) (228) Exchange rate differences from conversions ...... — 197 86 283 Value as at 31 December 2011 ...... 50,695 3,259 1,204 55,158 Long-term portion ...... 50,695 2,408 1,204 54,307 Short-term portion ...... — 141 710 851 50,695 2,549 1,914 55,158

Restructuring Liquidation of the electrolysis department In December 2005, the Board of Firma Chemiczna Dwory S.A. decided to close the electrolysis department. Identified on the basis of measurements taken and the Group’s previous experience, pollution level in the electrolysis department buildings indicates a need for their complete demolition and utilization in order to satisfy environmental requirements of the law and the electrolysis department’s integrated permit. In 2012, the estimate of the amount of the provision for costs associated with closing the department was updated, the provision in the amount of PLN 20,435,000 was released, and it was assumed that the demolition will be complete by the end of 2030 (the expected lifetime of buildings).

Reserve for a hydrologic protection of groundwater This reserve regards environmental risks. The risk is related with hydrologic protection of groundwater, with an increased presence of free hydrocarbons in the ground. Updated analysis of risk to the subsoil indicates some pollution with free aromatic hydrocarbons where liquid gas, styrene and polystyrene storage is located. As at 31 December 2012, the Group declared a reserve in the amount PLN 2,967,000 for the costs of rehabilitation. Simultaneously, the Group is carrying out tests and securing works aimed to prevent pollution from penetrating through hydrologic protection barriers.

Other reserves Other reserves are in the most part related with the provisions for employee compensation for accidents at work and for tax procedures.

F-160 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

Note 27. Trade and other liabilities

31 December 31.12.2012 2011 Trade payables from other entities ...... 523,132 413,187 Trade payables due to affiliated entities ...... 98,573 76,985 Tax and insurance payables, except income tax payable ...... 2,197 3,580 Amounts due to remuneration ...... 8,140 6,387 Deferred costs ...... 57,845 47,548 Special funds ...... 334 326 Investment commitments ...... 92,215 44,459 Other liabilities ...... — 18,847 782,436 611,319

Note 28. Reasons behind the differences between balance sheet changes of certain items and changes resulting from the consolidated statement of cash flows

from 01.01.2012 from 01.01.2011 to 31.12.2012 to 31.12.2011 Receivables: Balance sheet change of trade and other receivables ...... 11,355 (333,686) Change of advance payments for fixed assets and receivables from investment activity ...... 15,464 (6,885) Exchange rate differences from conversions ...... (60,794) 57,239 Change in receivables in the consolidated statement of cash flows ..... (33,975) (283,332) Liabilities: Balance sheet changes in trade and other payables, subsidies ...... 171,117 140,251 Change in investment commitments ...... (47,756) 18,714 Change of financial instruments ...... 13,094 Exchange rate differences from conversions ...... 58,504 (32,633) Change in liabilities in the consolidated statement of cash flows ...... 181,865 139,125

Note 29. Financial instruments Classification of financial instruments

31.12.2012 long-term short-term Total Available-for-sale financial assets ...... 187,280 — 187,280 Loans, trade and other receivables ...... 52,921 962,930 1,015,851 Cash and cash equivalents ...... — 746,587 746,587 Financial liabilities measured at amortised cost ...... (474,655) (1,001,307) (1,475,962) Financial liabilities measured at fair value through profit or loss (derivatives) ...... — (9,927) (9,927) (234,454) 698,283 463,829

F-161 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

Note 29. Financial instruments (Continued)

31 December 2011 long-term short-term Total Available-for-sale financial assets ...... 148,609 — 148,609 Loans, trade and other receivables ...... 83,046 999,469 1,082,515 Cash and cash equivalents ...... — 1,060,424 1,060,424 Financial liabilities measured at amortised cost ...... (689,942) (723,950) (1,413,892) Financial liabilities measured at fair value through profit or loss (derivatives) ...... — (9,862) (9,862) (458,287) 1,414,999 956,712

Effective interest rate and revaluation periods The following charts present the effective interest rate regarding assets and liabilities, to which interest is calculated and their revaluation periods.

over Effective interest rate* Total <1 year 1 - 5 years 5 years Loans ...... PRIBOR+margin 59,896 7,487 52,409 WIBOR + margin 512 512 Cash and cash equivalents ...... WIBOR +/- margin 299,280 299,280 PRIBOR+margin 295,004 295,004 EURIBOR + margin 100,369 100,369 USDLIBOR + margin 51,934 51,934 Bank loans ...... EURIBOR + margin 604,648 156,779 447,869 — WIBOR + margin 90,549 63,763 26,786

* does not differ significantly from the nominal rate

Financial risk management Credit, liquidity and market risks (mostly consisting of interest rate risk and currency exchange rate risk) arise in normal course of Group’s business activity. The goal of financial risk managements in the Group is to minimise the impact of market factors, such as currency exchange rates and interest rates, on key financial parameters approved in the Group’s budget for the given year (financial result, size of cash flow) using natural hedges and derivatives.

Credit risk Credit risk is a risk that the Group will suffer financial losses due to a failure on part of a customer or contractor who is a party to a financial instrument to fulfil their contractual obligations. Credit risk is mainly linked with the Group’s receivables from customers and financial investments. The chart below presents maximum exposure of the Group to credit risk:

31.12.2012 31.12.2011 Loans granted ...... 60,408 90,905 Trade and other receivables ...... 955,443 991,610 Cash and cash equivalents ...... 746,587 1,060,424 1,762,438 2,142,939

F-162 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

Note 29. Financial instruments (Continued) Trade and other receivables The structure of credit risk for trade receivables according to product group:

31.12.2012 31.12.2011 Dispersions and glue ...... 11,735 15,464 Rubber and latex ...... 511,138 616,812 Styrene plastics ...... 354,629 275,551 Other ...... 77,941 83,783 955,443 991,610

Credit risk is a risk that the Group will suffer financial losses due to a failure on part of a customer or contractor who is a party to a financial instrument to fulfil their contractual obligations. Credit risk is mainly linked with the Group’s receivables from customers and financial investments. Credit risk in the Group is mostly related with trade receivables. Thanks to the procedures currently in effect at the Group and a numerous customer base, the concentration of credit risk is assessed as insignificant. The Group carries out ongoing assessments of its customers’ credit capacity and in justified cases demands appropriate security. Moreover, about 47% of the Group’s receivables are covered by trade credit insurance. Contractors with no history of cooperation with the Group or to whom sales are sporadic are required to make advance payments on purchases. Trade credit is granted to buyers with a positive cooperation history and credit capacity assessed in the basis of external and internal sources. Exposure to credit risk is defined as total unpaid receivables, monitored individually on an ongoing basis in regard to each client. Group turnover concentrates in three main segments, associated with the business profile. The largest group consists of receivables from rubber plastics buyers—about 53% of receivables. The structure of the legal form of customers in this segment is fairly homogeneous, because the vast majority of these are companies which area a part of international corporations. In this group, 22% of the outstanding balance is insured; in addition, 26% is secured by letters of credit or collection. Another important segment are receivables from customers for styrene plastics—37% of receivables. Customers from this segment are not a uniform group in the sense of legal structure, because they include corporations as well as independent contractors. 83% of balance from this group of customers is covered by trade credit insurance. The third major segment associated with the basic business profile are receivables from buyers of dispersions, adhesives and latexes—1% of receivables. This group is similar to the second segment in regard to legal structure. At the same time 92% of receivables are covered by insurance.

Impairment The following chart presents the age structure of trade receivables:

31.12.2012 31.12.2012 31.12.2011 31.12.2011 Gross value Impairment Gross value Impairment Not overdue ...... 866,360 — 921,499 — Overdue ...... 97,281 8,198 77,606 7,495 1 - 30 days ...... 49,694 — 54,337 — 30 - 180 days ...... 32,646 — 16,346 572 181 - 365 days ...... 9,951 3,208 799 799 over 1 year ...... 4,990 4,990 6,124 6,124 963,641 8,198 999,105 7,495

F-163 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

Note 29. Financial instruments (Continued) Increases and decreases of valuation allowances are as follows:

2012 2011 As at 1 January ...... 7,495 8,441 Correction from BO ...... — 1,246 Establishment ...... 5,704 5,451 Release ...... (4,759) (8,296) Exchange rate differences from conversions ...... (242) 653 As at 31 December ...... 8,198 7,495

Cash and investments Cash and cash equivalents are invested in financial institutions of high financial reliability, in the following banks: Citibank Handlowy, Deutsche Bank, Fortis Bank, Bank ING, Pekao S.A., ABN Amro Bank N.V., BAWAG Bank CZ, Komercji Banka.

Loans granted Group’s credit risk from loans granted relates to receivables from related entities. At the moment, there is no evidence of a lack of ability of the repayment of loans taken by the affiliates.

Liquidity risk Liquidity risk is a risk of losing the ability to repay the Group’s financial obligations when due. Actions aiming to limit this risk include appropriate management over liquidity, fulfilled through a correct assessment of the level of cash assets based on plans of cash flows in various time horizons. Currently, the Group has significant financial surplus, which virtually eliminates the possibility of liquidity risk of the Group. As of 31 December 2012, the Group has 500 million zlotys of credit limit available in current accounts. As of 31 December 2012, 48,901,000 zlotys of the credit limit has been used

31 December 2012

Current Contracted More than value cash flows up to 1 year 1 - 5 years 5 years Financial liabilities Credit obligations ...... (695,197) (695,197) (220,542) (474,655) Trade and other payables ...... (771,765) (771,765) (771,765) — Interest rate swaps ...... (9,927) (9,927) (9,927) (1,476,889) (1,476,889) (1,002,234) (474,655)

31 December 2011

Current Contracted More than value cash flows up to 1 year 1 - 5 years 5 years Financial liabilities Credit obligations ...... (831,713) (831,713) (141,771) (599,306) (90,636) Trade and other payables ...... (582,179) (582,179) (582,179) — — Interest rate swaps ...... (9,862) (9,862) (2,466) (7,396) — (1,423,754) (1,423,754) (726,416) (606,702) (90,636)

F-164 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

Note 29. Financial instruments (Continued) Market risk Interest rate risk Group’s exposure to interest rate changes in the most part regards cash, cash equivalents, investments as well as loans and credits with a variable interest rate based on EURIBOR + margin or on WIBOR + margin. In 2012, the Group had swap contracts to hedge against exposure to changes in interest rates by converting the variable interest rate to a fixed interest rate. As at the reporting date, the Group owns the following interest rate swap contracts • contract to hedge the EUR interest rate—A35 million contract to hedge • the EUR interest rate—A35 million Market value of open contracts on the reporting date amounts to a loss of PLN 9,927,000. The following chart shows a susceptibility profile (maximum expose) of the Group to the risk of interest rate changes by presenting financial instruments divided according the variable and fixed interest rates:

31 December 2012

Basic interest rate WIBOR PRIBOR EURIBOR USDLIBOR Instruments with a variable interest rate Financial assets ...... 299,791 354,900 100,369 51,934 Financial liabilities ...... (90,549) — (604,648) — 209,242 354,900 (504,279) 51,934

31 December 2011

Basic interest rate WIBOR PRIBOR EURIBOR USDLIBOR Instruments with a variable interest rate Financial assets ...... 444,607 180,392 435,341 90,200 Financial liabilities ...... (47,527) — (784,186) — 397,080 180,392 (348,845) 90,200

Group has no financial instruments with a fixed interest rate valued at fair value through profit or loss. Because of this, a change of the interest rate on the balance day will not have an impact on the assessment of these instruments and on the statement of comprehensive income. Group also has no instruments with a fixed interest rated carried over directly to capital; therefore a change of the interest rate will not have an impact on the size of equity. The Group has carried out an analysis of susceptibility of financial instruments with a variable interest rate to the change of interest rates in the market. The following chart presents the impact which the increase and decrease of the interest rate by 100 bp would have on the financial result and equity capital. The

F-165 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

Note 29. Financial instruments (Continued) analysis has been performed with the assumption that all other variables, such as currency exchange rates, remain unchanged.

Statement of comprehensive income Equity increase of decrease of increase of decrease of 100bp 100bp 100bp 100bp WIBOR 31 December 2012 ...... 2,092 (2,092) 2,092 (2,092) 31 December 2011 ...... 3,970 (3,970) 3,970 (3,970) PRIBOR 31 December 2012 ...... 3,549 (3,549) 3,549 (3,549) 31 December 2011 ...... 1,803 (1,803) 1,803 (1,803) EURIBOR 31 December 2012 ...... (5,043) 5,043 (5,043) 5,043 31 December 2011 ...... (3,488) 3,488 (3,488) 3,488

Currency exchange rate risk About 70% of the Group’s income and cost is related with foreign currency transactions. Exchange rate fluctuations have an impact on the size of income from sales and costs of material purchase. Strengthening of the domestic currency has a negative impact on the profitability of export and domestic sales, but changes in income from export and domestic sales valued on the basis of quotations caused by exchange rate fluctuations are balanced out by changes of the costs of import of raw material (or valued based on currency quotations), significantly decreasing the Group’s currency exchange rate risk. Exchange rate risk management includes identification and measurement of the risk, monitoring of the situation on financial markets, adjustment—wherever possible—of the size of obligations and receivables in specific currencies. The following chart shows a susceptibility profile (balance sheet exposure as at 31 December 2012) of the Group to the exchange rate risk by presenting financial instruments divided into currencies in which they are denominated (in thousands PLN):

31 December 2012

Items in foreign currency Items in functional currency EUR USD GBP CZK PLN Trade and other receivables ...... 524,357 134,802 2,746 158,205 135,333 Cash ...... 100,369 51,934 — 295,004 299,280 Trade and other liabilities ...... (314,992) (67,887) (208,645) (180,241) Credit obligations ...... (604,648) — — — (90,549) Balance sheet exposure to exchange rate risks ...... (294,914) 118,849 2,746 Not applicable Not applicable

F-166 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

Note 29. Financial instruments (Continued) 31 December 2011

Items in foreign currency Items in functional currency EUR USD GBP CZK PLN Trade and other receivables ...... 564,418 143,068 2,321 186,314 186,394 Cash ...... 435,341 90,200 731 109,660 424,492 Trade and other liabilities ...... (187,708) (30,434) — (183,852) (180,185) Credit obligations ...... (784,186) — — — (47,527) Balance sheet exposure to exchange rate risks ...... 27,865 202,834 3,052 Not applicable Not applicable

The Group has performed an analysis of the susceptibility of financial instruments denominated in foreign currencies to exchange rate changes of these currencies. The following table shows the impact the strengthening or weakening of functional currencies by 10% at the reporting date in relation to all currencies would have on profit or loss. The analysis has been performed with the assumption that all other variables, such as interest rates, remain unchanged.

Financial result: decrease of increase of foreign foreign currency currency exchange rate exchange rate by 10% by 10% 31 December 2012 ...... (17,332) 17,332 31 December 2011 ...... 23,375 (23,375)

Price risk The Group’s exposure to changes in market prices mainly relates to shares listed on the Warsaw Stock Exchange and the NYSE EURONEXT.

Available-for-sale financial assets

2012 2011 As at 1 January ...... 148,609 267,250 Increase as a result of a purchase of shares ...... 45,614 21,556 Measurement recognised in the revaluation reserve ...... (6,943) (140,197) As at 31 December 2012 ...... 187,280 148,609

In the reporting period, the amount of PLN 154,640,000 has been recognised in the financial result as a loss of value of available-for-sale financial assets (loss relates to the Rovese S.A. shares held). In previous periods, the loss on this investment was fully recognised in the revaluation reserve (through other comprehensive income).

Value Number of in thousands shares PLN List of shares owned 2012 —Echo Investment S.A...... 17,884,050 90,315 —Rovese S.A...... 63,281,250 90,302 —Global BioEnergies ...... 59,625 6,663 Total ...... 187,280

F-167 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

Note 29. Financial instruments (Continued)

Value Number of in thousands shares PLN List of shares owned 2011 —Echo Investment S.A...... 17,884,050 58,838 —Rovese S.A...... 21,093,750 83,953 —Global BioEnergies ...... 59,625 5,818 Total ...... 148,609

The Group has conducted an analysis of the susceptibility of the shares owned to exchange price changes of these assets. The following chart presents the impact which the increase or decrease of the price of stock by +/10% would have on the value of these assets.

other comprehensive income price price increase 10% decrease 10% 31 December 2012 ...... 18,728 (18,728) 31 December 2011 ...... 14,861 (14,861) Risk of changes in prices of raw material, goods, services, causing a decrease of the margin obtained by the Group. In order to limit this type of risk, actions are taken aiming to include ‘‘symmetrical’’ entries in sales contracts to those included in supply contracts (for example entries referring to ICIS-LOR pricing data).

Fair value of financial instruments Details regarding fair value of financial instruments which can be assessed are presented below: • Financial instruments measured at fair value as at 31 December 2012

Level 1 Level 2 Level 3 Available-for-sale assets ...... 141,780 — — Derivatives ...... — 9,927 — • Financial instruments measured at fair value as at 31 December 2011

Level 1 Level 2 Level 3 Available-for-sale assets ...... 148,609 — — Derivatives ...... — 9,862 —

Level 1 Shares listed on stock exchanges. Fair value was determined on the basis of quotations on the stock market.

Level 2 Swap contracts hedging the interest rate of loans. Fair value was determined based on the valuation of banks issuing these contracts.

Level 3 There were none

F-168 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

Note 29. Financial instruments (Continued) Other instruments: • Cash and cash equivalents, short-term bank deposits. Balance sheet value of instruments mentioned above is close to their fair value due to short maturity of these instruments; • Trade receivables, other receivables, trade liabilities. Balance sheet value of instruments mentioned above is close to their fair value because of their short-term nature; • Long-term loans and bank credits. Balance sheet value of instruments mentioned above is close to their fair value because of the variable nature of their interest rate;

Capital management The basic premise of Group’s capital management policy is to maintain a strong capital base which will be a basis of trust to investors, lenders and the market, and which will secure future growth of the Group. The Group monitors changes in share ownership, the profitability index and the ratio of equity capital to liabilities. The Group’s goal is to achieve a profitability index on a level which is satisfying to the shareholders.

2012 2011 change Return on equity (ROE) ...... 19.99% 32.70% 12.71 p.p. Return on assets ratio (ROA) ...... 12.84% 21.12% 8.28 p.p. EBITDA / equity ...... 31.83% 40.23% 8.4 p.p. Debt-equity ratio ...... 56% 55% 1 p.p. In 2012, the Group recorded a decline in return on equity of 12.71 percentage points, but in spite of this decline it should be noted that this ratio remains at a high level of 20.14%. The debt-equity ratio indicates a 56% debt of equity and compared to the previous year remains at a constant level, which indicates a stable financing structure. There were no changes to the Group’s capital management policy during the business year.

Note 30. Operating lease Operating lease contracts in which the Group is the lessor. The Group has rented investment real estate by way of operating lease. Future minimal payments for irrevocable leasing contract are presented below:

31 December 2012 31 December 2011 Up to 1 year ...... 623 623 From 1 to 5 years ...... 323 323 Over 5 year ...... — — 946 946

F-169 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

Note 30. Operating lease (Continued) Operating lease contract in which the Group is the lessee. The Group made use of land, machines and equipment by way of operating lease. Future minimal payments for irrevocable leasing contract are presented below:

31 December 2012 31 December 2011 Up to 1 year ...... 4,503 4,503 From 1 to 5 years ...... 11,474 11,474 More than 5 years ...... 21,818 21,818 In 2012, the Group under operating leases incurred expenses in the amount of PLN 4,489,000 (in 2011— PLN 4,489,000)

Note 31. Investment commitments As at the reporting date of 31 December 2012, the Group has investment commitments in the amount of PLN 78,816,000.

Note 32. Contingent commitments, sureties and guarantees List of bank guarantees and letters of credit which constitute a security of trade liabilities:

Guarantees granted

SYNTHOS Kralupy Bank/Security Issuer name entity amount currency guarantee subject issue date expiration date The Royal Bank of Scotland ...... Customs 1,000,000 CZK Security for excise tax 2008-04-30 2014-10-03 Office Prague The Royal Bank of Scotland ...... Customs 32,000,000 CZK Security for excise tax 2008-04-30 2013-10-31 Office Melnik The Royal Bank of Scotland ...... Customs 10,500,000 CZK Security for excise tax 2008-04-30 2013-10-31 Office Melnik The Royal Bank of Scotland ...... Customs 1,500,000 CZK Security for excise tax 2008-04-30 2013-10-31 Office Melnik LBBW Bank CZ a.s. . . . Customs 3,000,000 CZK Security for excise tax 2009-01-20 2013-04-30 Office Melnik LBBW Bank CZ a.s. . . . Most Customs 94,000,000 CZK Security for excise tax 2011-08-22 2013-08-21 Office The Royal Bank of Scotland ...... Most Customs 4,188,236 CZK Security for excise tax 2011-09-01 2013-10-31 Office

F-170 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

Note 32. Contingent commitments, sureties and guarantees (Continued)

SYNTHOS Dwory Bank/Security Issuer name entity amount currency guarantee subject issue date expiration date Zabezpieczenie Wekslowe Synthos Dwory ...... Customs 11,000,000 PLN Security for excise tax 2007-11-03 without time Office in limit Nowy Targ BNP PARIBAS ...... Customs 500,000 PLN Security for customs 2012-06-02 2013-06-01 Chamber of duties Katowice Zabezpieczenie Wekslowe Synthos Dwory ...... Polski 25,000,000 PLN security for trade Koncern payables Naftowy Zabezpieczenie Wekslowe ...... Kompania 1,500,000 PLN security of trade 2010-01-01 2012-12-31 W˛eglowa S.A. payables

The Group’s tax liabilities: Tax authorities may be carrying out an inspection of accounting books and tax returns for the last 5 years from the end of the year in which tax declarations were filed, and may charge the Group’s Companies with a additional tax assessment along with fines and interest. In the Board’s opinion, there are no circumstances indicating a possibility of significant obligations arising due to this matter.

F-171 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

Note 33. Transactions with related parties Transactions with key management

2012 2011 Remuneration for the members of the Board Remuneration for the Board of Synthos S.A.* Kalwat Tomasz ...... 1288 352 Krawczyk Dariusz ...... — 2,535 Lange Zbigniew ...... 701 1,650 Piec Tomasz ...... 925 695 Warmuz Zbigniew ...... 793 90 Remuneration for Board of Synthos Kralupy a.s. Krawczyk Dariusz ...... — 28 Lange Zbigniew ...... 63 65 Warmuz Zbigniew ...... 68 68 Remuneration for the Board of Synthos Dwory 7 społka´ z ograniczon˛a odpowiedzialno´sci˛a S.K.A. (formerly Synthos Dwory Sp. z o.o.) Warmuz Zbigniew ...... — 588 Remuneration for the Board of Miejsko—Przemysłowa Oczyszczalnia Sciek´ ow´ Sp. z o.o. Majcherczyk Antoni ...... 266 108 Odrobina Janusz ...... — 153 Prill Jarosław ...... — 19 4,104 6,351

* key management of the Group

2012 2011 Supervisory Board remuneration Ciesielski Wojciech ...... — 21 Grodzki Jarosław ...... 84 47 Kalwat Tomasz ...... — 37 Kwapisz Krzysztof ...... 60 27 Mironski´ Grzegorz ...... 48 48 Oskard Robert ...... 48 48 Waniołka Mariusz ...... 60 60 Remuneration for the Supervisory Board of Synthos Kralupy a.s. Ziembla Wiesław ...... 23 24 Oskard Robert ...... 30 31 Evzen Listik ...... — 18

Other contracts with the management In accordance with the contract concluded on 1.08.201, the Company has granted a loan to Tomasz Kalwat in the amount of PLN 800,000. Loan interest has been set at the level of an annual WIBOR + margin. In the reporting period, the Company used the consulting services of members of the Supervisory Board for a total net amount of PLN 1,966,000.

F-172 SYNTHOS GROUP Consolidated Financial Statements for the 12 months ending on 31 December 2012 (Continued) (in thousands of zlotys, unless specified otherwise)

Note 33. Transactions with related parties (Continued) Transactions with other related entities

31.12.2012 31 December 2011 Receivables Butadien Kralupy a.s...... 116,158 123,606 AVE Kralupy Innovation ...... 985 984 Other ...... 2,323 111 Total ...... 119,466 124,701 Liabilities Butadien Kralupy a.s...... 98,359 75,664 AVE Kralupy Innovation ...... 205 495 Columbus Prime ...... — 783 Other ...... 9 43 Total ...... 98,573 76,985

2012 2011 Income Butadien Kralupy a.s...... 509,628 391,525 AVE Kralupy Innovation ...... 5,699 5,569 Other ...... 236 423 Total ...... 515,563 397,517 Costs Klub Sportowy Cersanit ...... 3,102 2,160 Butadien Kralupy a.s...... 749,089 590,009 AVE Kralupy Innovation ...... 5,695 6,439 Columbus Prime ...... 3,672 5,908 Other ...... 871 877 Total ...... 762,429 605,393

Note 34. Events after the balance sheet date There were no significant events after the reporting date.

Note 35. Accounting estimates and assumptions Main accounting estimates and adopted assumptions were presented in appropriate notes to the financial statements: • estimations regarding valuation allowances for inventories are presented in Note 19, • estimations and assumptions regarding valuation allowances for receivables are presented in Note 20, i 29. • estimates of employee benefits are presented in Note 25, • estimates of established reserves for liabilities are presented in Note 26. • estimates of impairment loss on available-for-sale assets are shown in Note 29, • estimates of asset established for deferred tax liabilities are presented w in Note 17.

Note 36. Approval of the financial statements The Board of the Parent Company of the Synthos Group declares that on 4 March 2013 it approves these Financial Statements of the Group for the period from 1 January 2012 to 31 December 2012.

F-173 THE SYNTHOS S.A. GROUP O´swi˛ecim, ul. Chemikow´ 1 Consolidated financial statements for the 12 months ended 31 December 2011 prepared in accordance with International Financial Reporting Standards as approved by the European Union

O´swi˛ecim, 2 March 2012

F-174 10SEP201400263121

TRANSLATORS’ EXPLANATORY NOTE The following document is a free translation of the registered auditor’s opinion and report of the below- mentioned Polish Company. In Poland statutory accounts must be prepared and presented in accordance with Polish legislation and in accordance with the accounting principles and practices generally used in Poland. The accompanying translated report has not been reclassified or adjusted in any way to conform to accounting principles generally accepted in countries other than Poland, but certain terminology current in Anglo-Saxon countries has been adopted to the extent practicable. In the event of any discrepancy in interpreting the terminology, the Polish language version is binding.

Independent Registered Auditor’s Opinion To the General Shareholders’ Meeting and the Supervisory Board of Synthos S.A. We have audited the accompanying consolidated financial statements of the Synthos S.A. Group (hereinafter referred to as ‘‘the Group’’), in which Synthos S.A. is the parent company (hereinafter referred to as ‘‘the Parent Company’’), O´swi˛ecim, ul. Chemikow´ 1, comprising the consolidated statement of financial position prepared as at 31 December 2011, showing total assets and total liabilities & equity of PLN 4,561,998 thousand, the consolidated statement of comprehensive income for the period from 1 January to 31 December 2011, showing comprehensive income in the amount of PLN 899,675 thousand, the consolidated statement of changes in equity, the consolidated cash flow statement for that financial year, and additional information about the adopted accounting policies and other explanatory notes. The Parent Company’s Management Board is responsible for preparing consolidated financial statements and a Group Directors’ Report which comply with the applicable regulations. The Management Board and the Members of the Supervisory Board of the Parent Company are required to ensure that the consolidated financial statements and the Group Directors’ Report meet the requirements set out in the Accounting Act of 29 September 1994 (Journal of Laws of 2009, No. 152, item 1223, as amended, hereinafter referred to as ‘‘the Accounting Act’’). Our responsibility was to perform an audit of the accompanying consolidated financial statements and to express an opinion on whether these financial statements complied, in all material respects, with the applicable accounting policies and whether they presented a fair and clear view of the Group’s financial position and results of operations. We conducted our audit in accordance with the following: (a) the provisions of Chapter 7 of the Accounting Act; (b) national standards of auditing issued by the National Council of Registered Auditors. Our audit was planned and performed to obtain reasonable assurance that the consolidated financial statements were free of material misstatements and omissions. The audit included examining, on a test basis, accounting documents and entries supporting the amounts and disclosures in the consolidated financial statements. The audit also included an assessment of the accounting policies applied by the Group and significant estimates made in the preparation of the consolidated financial statements, as well as an evaluation of the overall presentation thereof. We believe that our audit provided a reasonable basis for our opinion. In our opinion, and in all material respects, the accompanying consolidated financial statements: (a) give a fair and clear view of the Group’s financial position as at 31 December 2011 and of its results of operations for the financial year from 1 January to 31 December 2011 in accordance with the International Financial Reporting Standards as adopted by the European Union; (b) comply in terms of form and content with the applicable regulations;

F-175 (c) have been prepared on the basis of properly maintained consolidation documentation. The information in the Group Directors’ Report for the financial year from 1 January to 31 December 2011 takes account of the provisions of the Decree of the Minister of Finance dated 19 February 2009 on current and periodical reporting by issuers of securities and the terms of recognizing the information required under the legal regulations of a state which is not a member state as being equivalent (Journal of Laws No. 33, item 259, as amended, hereinafter referred to as ‘‘the Decree’’), and is consistent with the information in the audited consolidated financial statements. Person conducting the audit on behalf of PricewaterhouseCoopers Sp. z o.o., registered audit company no. 144:

Tomasz Reinfuss Registered Auditor to the Group, Key Registered Auditor No. 90038 Katowice, 2 March 2012

F-176 The Synthos S.A. Group Consolidated financial statements for 12 months ended 31 December 2011 (in PLN ‘000, unless otherwise stated)

MANAGEMENT’S STATEMENT CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE 12 MONTH PERIOD ENDED 31 DECEMBER 2011 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2010 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2011 (CONT.) CONSOLIDATED STATEMENT OF CHANGES IN EQUITY OR THE PERIOD OF 12 MONTHS ENDED 31 DECEMBER 2011 CONSOLIDATED CASH FLOW STATEMENT FOR THE PERIOD OF 12 MONTHS ENDED 31 DECEMBER 2011 CONSOLIDATED CASH FLOW STATEMENT FOR THE PERIOD OF 12 MONTHS ENDED 31 DECEMBER 2011 Note 1. Accounting policies Note 2. Segment reporting Note 3. Revenue Note 4. Costs by type Note 5. Other operating income Note 6. Other operating expenses Note 7. Employee benefit costs Note 8. Net financial income/costs Note 9. Foreign exchange gains and losses Note 10. Income tax expense Note 11. Property, plant and equipment Note 12. Intangible assets Note 13. Investment property Note 14. Non-current investments Note 15. Investments in non-consolidated subsidiaries Note 16. Shares in equity-accounted entities Note 17. Deferred income tax Note 18. Short-term loans granted Note 19. Inventories Note 20. Trade and other receivables Note 21. Cash and cash equivalents Note 22. Share capital Note 23. Earnings per share Note 24. Liabilities in respect of loans, borrowings and other debt instruments

F-177 The Synthos S.A. Group Consolidated financial statements for 12 months ended 31 December 2011 (Continued) (in PLN ‘000, unless otherwise stated)

Note 25. Employee benefits Note 26. Provisions Note 27. Trade and other payables Note 28. Reasons behind differences between balance sheet changes in certain items and the changes resulting from consolidated cash flow statement Note 29. Financial instruments Note 30. Operating leases Note 31. Capital expenditure commitments Note 32. Contingent liabilities, guarantees and warranties Note 33. Related party transactions Note 34. Post-balance sheet date events Note 35. Accounting estimated and assumptions Note 36. Approval of the financial statements

F-178 The Synthos S.A. Group Consolidated financial statements for 12 months ended 31 December 2011 (in PLN ‘000, unless otherwise stated)

MANAGEMENT’S STATEMENT The Management Board of Synthos S.A. presents consolidated financial statements for the 12 months ended 31.12.2011 which comprise: • Consolidated statement of comprehensive income for the period from 1.01 to 31.12 2011 • Consolidated statement of financial position as at 31.12.2011 • Consolidated statement of changes in equity for the period from 1.01 to 31.12.2011 • Consolidated cash flow statement for the period from 1.01 to 31.12 2011 • Notes to the financial statements The consolidated financial statements have been prepared in accordance with the requirements of the International Financial Reporting Standards as approved by the European Union (‘‘MSSF EU’’) and in accordance with the requirements set out in the Decree of the Council of Minister of 19 February 2009 on current and periodical information submitted by issuers of securities (Journal of Laws of 2009, no. 33, item 259) and present the Group’s financial position in a true, fair and clear manner. The Group’s Directors’ Report includes a true description of the Group’s development and achievements and the Group’s position, including a description of the key risks and threats. The registered audit company which audited the consolidated financial statements was selected in accordance with the law. The registered audit company and the auditors who conducted the audit met the conditions enabling them to issue an unbiased and independent audit opinion, in accordance with the law and professional standards. Signatures of the Management Board members:

Tomasz Kalwat Michał Watoła Chairman of the Board Person responsible for maintaining accounting records

Zbigniew Lange Board Member

Tomasz Piec Board Member

Zbigniew Warmuz Board Member

O´swi˛ecim, 2 March 2012

F-179 The Synthos S.A. Group Consolidated financial statements for 12 months ended 31 December 2011 (in PLN ‘000, unless otherwise stated)

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD OF 12 MONTHS ENDED 31 DECEMBER 2011

from 01.01.2011 from 01.01.2010 Note to 31.12.2011 to 31.12.2010 Revenue ...... 3 5,440,709 3,860,697 Cost of sales ...... 4 (4,182,749) (3,067,810) Gross profit ...... 1,257,960 792,887 Other operating income ...... 5 49,068 16,622 Selling expenses ...... 4 (112,094) (104,727) Administrative expenses ...... 4 (152,308) (137,145) Other operating expenses ...... 6 (15,668) (13,370) Gain/(loss) on disposal of property, plant and equipment ...... 2,028 (1,165) Profit on disposal of shares ...... 3,317 12,554 Operating profit ...... 1,032,303 565,656 Financial income ...... 8 52,442 39,737 Financial costs ...... 8 (26,398) (18,829) Net financial income/costs ...... 8 26,044 20,908 Share in profit of entities recognized under the equity accounting method ...... 21,055 — Profit before tax ...... 1,079,402 586,564 Income tax expense ...... 10 (118,585) (109,708) Net profit for the year ...... 960,817 476,856 Other comprehensive income Foreign exchange differences on translation of subordinated entities ...... 79,055 5,249 Remeasurement of available-for-sale financial assets ...... (140,197) (3,404) Other comprehensive income (net) ...... (61,142) 1,845 Total comprehensive income ...... 899,675 478,701 Earnings attributable to: Shareholders of the parent entity ...... 960,277 476,161 Non-controlling interests ...... 540 695 Net profit for the year ...... 960,817 476,856 Total comprehensive income attributable to: Shareholders of the parent entity ...... 899,135 478,006 Non-controlling interests ...... 540 695 Comprehensive income for the period ...... 899,675 478,701 Earnings attributable to shareholders of the Company during the year (in PLN per share) Basic (PLN) ...... 23 0.73 0.36 Diluted (PLN) ...... 23 0.73 0.36

Consolidated statement of financial position should be analysed in conjunction with explanatory notes which comprise an integral part of consolidated financial statements

F-180 The Synthos S.A. Group Consolidated financial statements for 12 months ended 31 December 2011 (in PLN ‘000, unless otherwise stated)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2010

Note 31.12.2011 31.12.2010 Assets Non-current assets Property, plant and equipment ...... 11 1 528 984 1 318 963 Intangible assets ...... 12 28 892 26 627 Investment properties ...... 13 3 405 3 476 Shares in subsidiaries ...... 14 2 095 12 984 Shares in entities recognized under the equity accounting method .... 16 51 942 28 187 Loans granted ...... 14 83 046 65 365 Available for sale financial assets ...... 14 148 609 267 250 Deferred tax asset ...... 17 66 798 57 521 Total non-current assets ...... 1 913 771 1 780 373 Current assets Loans granted ...... 18 7 859 7 257 Inventories ...... 19 476 532 307 404 Income tax receivable ...... 1581 353 Trade and other receivables ...... 20 1 089 624 755 938 Cash and cash equivalents ...... 21 1 060 424 663 907 Total current assets ...... 2 636 020 1 734 859 Assets held for sale ...... 12 207 2 205 Total assets ...... 4 561 998 3 517 437

Consolidated statement of financial position should be analysed in conjunction with explanatory notes which comprise an integral part of consolidated financial statements

F-181 The Synthos S.A. Group Consolidated financial statements for 12 months ended 31 December 2011 (Continued) (in PLN ‘000, unless otherwise stated)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2011 (Continued)

Note 31.12.2011 31.12.2010 Equity and liabilities Equity Share capital ...... 22 39,698 39,698 Revaluation reserve ...... (143,865) (3,668) Foreign exchange differences on translation of subordinated entities . . . 22 191,781 112,726 Other reserves ...... 764,500 764,500 Retained earnings, including: ...... 2,070,698 1,203,049 net profit for the current period ...... 960,277 476,161 Equity of the shareholders of the parent entity ...... 22 2,922,812 2,116,305 Non-controlling interests ...... 15,748 15,208 Total shareholders’ equity ...... 2,938,560 2,131,513 Liabilities Liabilities in respect of loans, borrowings and other debt instruments . . 24 689,942 602,332 Employee benefit liabilities ...... 25 3,345 3,741 Deferred income and state subsidies ...... 131 31 Provisions ...... 26 54,307 53,797 Deferred tax payable ...... 17 38,195 40,389 Total non-current liabilities ...... 785,920 700,290 Liabilities in respect of loans, borrowings and other debt instruments . . 24 141,771 123,953 Employee benefit liabilities ...... 25 415 664 Income tax liabilities ...... 73,300 82,175 Trade and other payables ...... 27 611,319 471,068 Provisions ...... 26 851 815 Derivative instruments ...... 26 9,862 6,959 Total non-current liabilities ...... 837,518 685,634 Total liabilities ...... 1,623,438 1,385,924 Total equity and liabilities ...... 4,561,998 3,517,437

Consolidated statement of financial position should be analysed in conjunction with explanatory notes which comprise an integral part of consolidated financial statements

F-182 5,249 (3,404) — 1,845 79,055 (140,197) — (61,142) Foreign Foreign exchange to Attributable exchange to Attributable Attributable to the Company’s shareholders Attributable to the Company’s shareholders Attributable (92,628) — — — (92,628) 476,161 5,249 (3,404) 695 478,701 476,161 — — 695 476,856 960,277960,277 — 79,055 (140,197) — 540 540 899,675 960,817 Share Other Retained gains/(losses) Revaluation non-controlling Total Share Other Retained gains/(losses) Revaluation non-controlling Total capital reserves earnings on translation reserve interests Equity capital reserves earnings on translation reserve interests Equity 39,698 764,500 1,203,049 112,726 (3,668) 15,208 2,131,513 39,698 764,500 1,203,049 112,726 (3,668) 15,208 2,131,513 39,698 764,500 726,888 107,477 (264) 14,513 1,652,812 39,698 764,500 2,070,698 191,781 (143,865) 15,748 2,938,560 The Synthos S.A. Group Consolidated financial statements (in PLN ‘000, unless otherwise stated) for 12 months ended 31 December 2011 12 MONTHS ENDED 31 DECEMBER 2011 which comprise an integral part of consolidated financial statements CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD STATEMENT CONSOLIDATED Consolidated statement of changes in equity should be analysed conjunction with explanatory notes ...... — — ...... — — ...... — — ...... — — ...... — — ...... — — — ...... — — — 31 December 2010 Comprehensive income 1 January 2011 1 January 2010 Payment of dividend Payment Net profit for the year Other income Net profit for the year Other income 31 December 2011 Comprehensive income

F-183 The Synthos S.A. Group Consolidated financial statements for 12 months ended 31 December 2011 (in PLN ‘000, unless otherwise stated)

CONSOLIDATED CASH FLOW STATEMENT FOR THE PERIOD OF 12 MONTHS ENDED 31 DECEMBER 2011

Note 2011 2010 Profit before tax ...... 1,079,402 586,564 Adjustments Amortization and depreciation ...... 4 149,970 136,963 Foreign exchange gains ...... (2,226) (38,465) Losses on investing activities ...... 4,274 97 Losses on sale of property plant and equipment ...... (2,344) 1,065 Share in profit of entities recognized under the equity accounting method ...... (21,055) (6,097) Profit/(Loss) on disposal of shares ...... (3,317) (12,590) Interest ...... (406) (719) Profit on operating activities before changes in working capital ...... 1,204,298 666,818 (Increase)/Decrease in receivables ...... 28 (283,332) (248,015) (Increase)/Decrease in inventories ...... (163,805) (43,775) Change in trade and other payables and state subsidies ...... 28 139,125 115,871 (Increase)/Decrease in provisions ...... 263 (5,686) Change in employee benefit liabilities ...... (723) (824) Cash generated in operating activities ...... 895,826 484,388 Income tax paid ...... (147,242) (35,074) Net cash from operating activities ...... 748,584 449,315

Consolidated cash flow statement should be analysed in conjunction with explanatory notes which comprise an integral part of consolidated financial statements

F-184 The Synthos S.A. Group Consolidated financial statements for 12 months ended 31 December 2011 (Continued) (in PLN ‘000, unless otherwise stated)

CONSOLIDATED CASH FLOW STATEMENT FOR THE PERIOD OF 12 MONTHS ENDED 31 DECEMBER 2011 (Continued)

Note 2011 2010 Cash flows from investing activities Sale of intangible assets and property, plant and equipment ...... 4,586 7,160 Repayment of loans and borrowings ...... 55,666 — Redemption of bonds ...... 60,000 — Sale of shares in subsidiaries ...... 5,547 21,397 Interest received ...... 18,693 9,692 Acquisition of intangible assets and property, plant and equipment .... (302,691) (250,345) Acquisition of shares in subsidiaries and joint ventures ...... (50) (23,331) Acquisition of financial assets ...... (21,056) (11,813) Loans granted ...... (71,508) (6,246) Acquisition of bonds ...... (60,000) — Net cash from investing activities ...... (310,813) (253,486) Cash flows from financing activities Loans and borrowings received ...... 133,166 98,391 Dividends and other payments to shareholders ...... (92,628) — Other cash inflows ...... 750 — Outflows relating to forward contracts realized ...... (4,274) — Outflows on repayment of loans and borrowings ...... (120,150) (182,492) Interest paid ...... (16,436) (11,405) Repayment of finance lease liabilities ...... (12) (28) Net cash generated from financing activities ...... (99,584) (95,534) Net increase/(decrease) in cash and cash equivalents ...... 338,187 100,295 Change in cash and cash equivalents in the balance sheet, including: .... 396,517 104,786 Cash and cash equivalents at the start of the period ...... 663,907 559,121 Effect of exchange differences relating to cash and cash equivalents ..... 58,330 (4,491) Cash and cash equivalents at the end of the period ...... 21 1,060,424 663,907

Consolidated cash flow statement should be analysed in conjunction with explanatory notes which comprise an integral part of consolidated financial statements

F-185 The Synthos S.A. Group Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (in PLN ‘000, unless otherwise stated)

Information on the Group’s operations The Synthos S.A. Group (formerly: the Grupa Chemiczna ‘‘Dwory’’ S.A. Group, hereinafter referred to as ‘‘the Group’’) consists of the parent entity and subsidiaries. Synthos S.A. (hereinafter referred to as ‘‘the Company’’ or ‘‘the Parent Entity’’) is the Group’s parent entity and is registered in Poland. The Parent Entity is listed on the Warsaw Stock Exchange. The Parent Entity’s registered office is in O´swi˛ecim, ul. Chemikow´ 1. Key contact details of the Parent entity Telephone: General Inquiries +48 (33) 844 18 21 to 25 Telefax: +48 (33) 842 42 18 E-mail: [email protected] Website: www.synthosgroup.com On 27 August 2001, the Company was registered in the Register of Businesses of the National Court Register with the reference number KRS 0000038981. Tax identification number NIP: 549-00-02-108 Statistical identification number REGON: 070472049 The Group’s operations comprise, in particular: • business and management advisory; • accounting and bookkeeping; • production of plastics, Polish Classification of Activities no. PKD 24.16.z • production of synthetic rubber, Polish Classification of Activities no. PKD 24.17.z; • production of other basic inorganic chemicals, Polish Classification of Activities no. PKD 24.13.z; • production of other basic organic chemicals, Polish Classification of Activities no. PKD 24.14.z; • production of other chemical products, not classified elsewhere, Polish Classification of Activities no. PKD 24.66.z; • production and distribution of electricity, classified in the Polish Classification of Activities PKD in Sections 40.11.Z, 40.13.Z; • production and distribution of heating (steam and hot water), classified in the Polish Classification of Activities in Sections 40.30.A, 40.30.B; • waste water treatment services; • waste storage and treatment services. In accordance with their Memorandums of Association, the duration of Group Companies in unlimited.

The Company’s Management Board: Tomasz Kalwat — Chairman of the Board Zbigniew Lange — Board Member Tomasz Piec — Board Member Zbigniew Warmuz — Board Member

F-186 The Synthos S.A. Group Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (Continued) (in PLN ‘000, unless otherwise stated)

Supervisory Board: Jarosław Grodzki — Chairman Mariusz Waniołka — Deputy Chairman Krzysztof Kwapisz — Deputy Chairman Grzegorz Mironski´ — Secretary Robert Oskard — Board Member

Key information on consolidated subsidiaries and joint ventures are presented below:

% of share capital and Registered Principal voting rights Entity name, including legal form office activity held Miejsko-Przemysłowa Oczyszczalnia Sciek´ ow´ Sp. z o.o...... O´swi˛ecim collection, treatment and disposal 76.79% of waste water, waste management and providing sanitary and related services Synthos Dwory 7 społka´ z ograniczon˛a odpowiedzialno´sci˛a S.K.A. (formerly: Synthos Dwory Sp. z o.o.) ...... O´swi˛ecim production of chemicals 100% Synthos Dwory 4 Sp. z o.o...... O´swi˛ecim production of electricity 100% Synthos Dwory 5 Sp. z o.o...... O´swi˛ecim production of electricity 100% Synthos Dwory 7 Sp. z o.o...... O´swi˛ecim production of chemicals 100% Synthos Kralupy a.s...... Kralupy nad Vltavou— production of chemicals 100% the Czech Republic Tamero Invest s.r.o...... Kralupy nad Vltavou— production and distribution of 100% the Czech Republic electricity Synthos PBR ...... Kralupy nad Vltavou— production of chemicals 100% the Czech Republic Red Chilli Ltd...... Nikosia investing and equity holding 100% activities Calgeron Investment LTD ...... Cyprus investing and equity holding 99.87% activities Butadien Kralupy a.s.* ...... Kralupy nad Vltavou— production of chemicals 49% the Czech Republic

* a company accounted for under the equity method (in accordance with Note 16)

F-187 The Synthos S.A. Group Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (in PLN ‘000, unless otherwise stated)

Note 1. Accounting policies 1. Basis for preparation of consolidated financial statements The data in the consolidated financial statements are presented in Polish zloty (PLN) which is the Group’s presentation currency, rounded to full thousands. The individual financial statements of each Group company are presented in the currency of the primary economic environment in which it operates (‘‘functional currency’’). The consolidated financial statements have been prepared on a historical cost basis, with the exception of assets and liabilities measured at fair value: derivative instruments, available-for-sale financial assets and financial instruments at fair value through profit or loss. Non-current assets held for trading and disposal groups are measured at the lower of their carrying value and fair value less cost to sell. Preparation of the financial statements under IFRS EU requires the Management Board to use judgment, estimates and assumptions which affect the application of accounting policies and the values of assets, liabilities, revenues and costs presented. Accounting estimates and the related assumptions are based on past experience and other factors deemed reasonable in specific circumstances, and their results form the basis for judgments as to the carrying values of assets and liabilities which do not result directly from other sources. The actual values may differ from estimates. The accounting estimates and the related assumptions are reviewed continuously. Changes to accounting estimates are recognized in the period in which the estimates changed or in the current and future periods, if the change made relates to both current and future periods. Judgments made by the management Board when applying IFRS EU which materially affect the consolidated financial statements, as well as estimates carrying a significant risk of changes in future years are presented in Note 35. The accounting policies presented below have been applied consistently in all periods presented in the consolidated financial statements. The accounting policies presented have been applied by all Group entities.

2. Going concern assumption The consolidated financial statements have been prepared on the assumption that the Group will continue its operations as a going concern in the foreseeable future. There are no circumstances indicating any threats to the Group’s ability to continue as a going concern.

3. New and revised accounting standards and interpretations New and revised accounting standards and interpretations effective from 1 January 2011 and applied by the Group (a) Changes to IAS 24, Related Party Disclosures The changes simplified the requirements relating to disclosures made by state-controlled entities and made the definition of a related party more precise. The Company applied amendments to IAS 24 as of 1 January 2011. The amendments have no significant impact on the presentation and disclosure of information on related parties. Other amendments which entered into force as of 1 January 2011 have no material impact on the Group’s financial statements.

F-188 The Synthos S.A. Group Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (Continued) (in PLN ‘000, unless otherwise stated)

Note 1. Accounting policies (Continued) Published standards and interpretations which are not yet in force and have not been adopted early by the Group In these financial statements, the Group decided not to apply the following published standards, interpretations or amendments to the existing standards early, before their effective dates: a) IFRS 9, Financial Instruments Part 1: Classification and Measurement IFRS 9, published by the International Accounting Standards Board on 12 November 2009, replaces those parts of IAS 39 which relate to the classification and measurement of financial assets. IFRS 9 was further amended in October 2010 to address the classification and measurement of financial liabilities. In accordance with the changes implemented in December 2011, the new standard will apply to annual periods beginning on or after 1 January 2015. The standard introduces a single model with only two classification categories for financial assets: those to be measured at fair value, and those to be measured at amortized cost. The classification is performed at initial recognition and depends on the entity’s business model for managing its financial instruments and the contractual cash flow characteristics of these instruments. Most of the requirements in IAS 39 for classification and measurement of financial liabilities were carried forward unchanged to IFRS 9. The key change is that an entity is be required to present the effects of changes in own credit risk of financial liabilities designated as at fair value through profit or loss in other comprehensive income. The Group shall apply IFRS 9 from 1 January 2015. The Group has not yet finished assessing the impact of the standard on the presentation of information in the financial statements. As at the date of preparing these consolidated financial statements, the amended IFRS 9 had not yet been approved by the European Union. b) IFRS 10, Consolidated Financial Statements The amended IFRS 10 was issued by the International Accounting Standards Board in May 2011 and applies to annual periods beginning on or after 1 January 2013. The new standard replaces guidance on control and consolidation included in IAS 27, ‘‘Consolidated and separate financial statements’’, and in SIC-12, ‘‘Consolidation—special purpose entities’’ (SPEs). IFRS 10 changes the definition of control so that the same criteria are applied to all entities to determine control. The amended definition is accompanied by extensive application guidance. The Group shall apply IFRS 10 from 1 January 2013. The Group does not expect the standard to have any impact on the financial statements. As at the date of preparing these consolidated financial statements, the amended IFRS 10 had not yet been approved by the European Union. c) IFRS 11, Joint Arrangements IFRS 11 was issued by the International Accounting Standards Board in May 2011 and applies to annual periods beginning on or after 1 January 2013. The new standard replaces IAS 31, Interest in Joint Ventures and SIC-13, Jointly Controlled Entities— Non-Monetary Contributions from Ventures. Changes in the definitions have reduced the number of ‘‘types’’ of joint arrangements to two: joint operations and joint ventures. At the same time, the existing

F-189 The Synthos S.A. Group Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (Continued) (in PLN ‘000, unless otherwise stated)

Note 1. Accounting policies (Continued) policy choice of proportionate consolidation for jointly controlled entities has been eliminated. Equity accounting is currently mandatory for all participants in joint ventures. The Group shall apply IFRS 11 from 1 January 2013. The Group has not yet finished assessing the impact of the standard on the presentation of information in the financial statements. As at the date of preparing these consolidated financial statements, the amended IFRS 11 had not yet been approved by the European Union. d) IFRS 12, Disclosure of Interests in Other Entities IFRS 12 was issued by the International Accounting Standards Board in May 2011 and applies to annual periods beginning on or after 1 January 2013. The new standard applies to entities that have interests in a subsidiary, a joint arrangement, an associate or an unconsolidated structured entity. The standard replaces the disclosure requirements of IAS 28, Investments in Associates. IFRS 12 requires entities to disclose information that helps financial statement users to evaluate the nature, risks and financial effects associated with the entity’s interests in subsidiaries, associates, joint arrangements and unconsolidated structured entities. To meet these objectives, the new standard requires disclosures in a number of areas, including significant judgments and assumptions made in determining whether an entity controls, jointly controls or significantly influences its interests in other entities, extended disclosures on the importance of non-controlling interests in group activities and cash flows, summarized financial information of subsidiaries with material non-controlling interests, and detailed disclosures of interests in unconsolidated structured entities. The Group shall apply IFRS 12 from 1 January 2013. The Group has not yet finished assessing the impact of the standard on the presentation of information in the financial statements. As at the date of preparing these consolidated financial statements, the amended IFRS 12 had not yet been approved by the European Union. e) IFRS 13, Fair Value Measurement IFRS 13 was issued by the International Accounting Standards Board in May 2011 and applies to annual periods beginning on or after 1 January 2013. The new standard aims to improve consistency and reduce complexity by providing a precise definition of fair value, and a single source of fair value measurement and disclosure requirements. The Group shall apply IFRS 13 from 1 January 2013. The Group has not yet finished assessing the impact of the standard on the presentation of information in the financial statements. As at the date of preparing these consolidated financial statements, the amended IFRS 13 had not yet been approved by the European Union. f) Amended IAS 27, Separate Financial Statements The amended IAS 27, Separate Financial Statements, was issued by the International Accounting Standards Board in May 2011 and applies to annual periods beginning on or after 1 January 2013. IAS 27 was amended in connection with the publication of IFRS 10, Consolidated Financial Statements. The amended IAS 27 aims to provide the disclosure and presentation requirements for investments in

F-190 The Synthos S.A. Group Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (Continued) (in PLN ‘000, unless otherwise stated)

Note 1. Accounting policies (Continued) subsidiaries, joint arrangements and associates when the entity prepares separate financial statements. Guidance on control and consolidated financial statements have been replaced by IFRS 10. The Group shall apply the amended IAS 27 from 1 January 2013. The Group has not yet finished assessing the impact of the standard on the presentation of information in the financial statements. As at the date of preparing these consolidated financial statements, IAS 27 had not yet been approved by the European Union. g) Amended IAS 28, Investments in Associates and Joint Ventures The amended IAS 28, Investments in Associates and Joint Ventures, was issued by the International Accounting Standards Board in May 2011 and applies to annual periods beginning on or after 1 January 2013. Amendments to IAS 28 were due to the IASB project on joint arrangements. The Board decided to include the disclosure requirements relating to equity-accounting of joint arrangements in IAS 28 as this method applies to both joint arrangements and associates. With this exception, the remaining guidance remained unchanged. The Group shall apply the amended IAS 28 from 1 January 2013. The Group does not expect the standard to have any impact on the financial statements. As at the date of preparing these consolidated financial statements, IAS 28 had not yet been approved by the European Union. h) Recovery of Underlying Assets—Amendments to IAS 12 The amended IAS 12, Investments in Associates and Joint Ventures, on the recovery of underlying assets, was issued by the International Accounting Standards Board in December 2010 and applies to annual periods beginning on or after 1 January 2012. The amendments relate to the measurement of deferred tax provision and asset on investment properties measured at fair value in accordance with IAS 40, Investment Property’’ and introduces a refutable assumption that the value of an investment property will be fully recovered by way of its sale. The assumption may be rebutted when investment property is held within a business model whose objective is to consume substantially all of the economic benefits embodied in the investment property over time, rather than through sale. SIC-21, Income taxes—Recovery of Revalued Non-Depreciable Assets, covering similar issues in the case of non-depreciable assets measured in accordance with the revaluation model presented in IAS 16, Property, Plant and Equipment, was incorporated in IAS 12, excluding guidance on investment property measured at fair value. The Group shall apply amendments to IAS 12 as of 1 January 2012. The Group does not expect the standard to have any impact on the financial statements. As at the date of preparing these consolidated financial statements, amended IAS 12 had not yet been approved by the European Union. i) Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters—Amendments to IFRS 1 The amendment to IFRS 1, First-Time Adoption of IFRS, relating to severe hyperinflation and removal of fixed dates for first-time adopters was issued by the International Accounting Standards Board in December 2010 and apply to annual periods beginning on or after 1 July 2011.

F-191 The Synthos S.A. Group Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (Continued) (in PLN ‘000, unless otherwise stated)

Note 1. Accounting policies (Continued) The severe hyperinflation amendment provides an additional exemption for entities which suffered from severe hyperinflation when resuming the preparation of financial statements in accordance with IFRS or adopting the standard for the first time. This exemption allows an entity that has been subject to severe hyperinflation to measure assets and liabilities at fair value and use that fair value as the deemed cost of those assets and liabilities in the opening IFRS statement of financial position. In addition, IASB amended IFRS 1 to remove reference to fixed dates for one exception and one exemption relating to financial assets and financial liabilities. The first amendment requires first-time adopters of IFRS to prospectively apply the IFRS derecognition requirements from the IFRS adoption date rather than from 1 January 2004. The second amendment relates to financial assets and financial liabilities presented at fair value on initial recognition when the fair value is determined using valuation techniques due to the absence of an active market, and allows prospective application of the guidance from the date of IFRS adoption rather than from 25 October 2002 or 1 January 2004. This means that first-time adopters of IFRS will not have to determine the fair values of financial assets and financial liabilities before the adoption of IFRS. IFRS 9 was amended accordingly. The Group shall apply amendments to IFRS 1 after 1 July 2011. The Group does not expect the standard to have any impact on the financial statements. As at the date of preparing these consolidated financial statements, amended IFRS 1 had not yet been approved by the European Union. j) Presentation of items of other comprehensive income—amendments to IAS 1 The amended IAS 1, Presentation of Financial Statements, relating to the presentation of other comprehensive income components was issued by the International Accounting Standards Board in June 2011 and applies to annual periods beginning on or after 1 July 2012. The amendment requires entities to classify items presented in other comprehensive income to two categories, depending on whether an item can be recognized in the profit or loss in future. In addition, the title of the statement of comprehensive income was changed to ‘‘Statement of Profit or Loss and Other Comprehensive Income’’. The Group shall apply amendments to IAS 1 after 1 July 2012. The Group has not yet finished assessing the impact of the standard on the presentation of information in the financial statements. As at the date of preparing these consolidated financial statements, amended IAS 1 had not yet been approved by the European Union. k) Amendments to IAS 19, Employee Benefits The amended IAS 19, Employee Benefits, was issued by the International Accounting Standards Board in June 2011 and applies to annual periods beginning on or after 1 January 2013. The amendment introduces new requirements for the recognition and measurement of defined benefit pension expense and termination benefits, and to the disclosures for all employee benefits. The Group shall apply amendments to IAS 19 as of 1 January 2013. The Group has not yet finished assessing the impact of the standard on the presentation of information in the financial statements. As at the date of preparing these consolidated financial statements, amended IAS 19 had not yet been approved by the European Union.

F-192 The Synthos S.A. Group Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (Continued) (in PLN ‘000, unless otherwise stated)

Note 1. Accounting policies (Continued) l) Offsetting Financial Assets and Financial Liabilities—amendments to IAS 32 Amendment to IAS 32, Financial Instruments: Presentation, relating to the offsetting of financial assets and financial liabilities, was issued by the International Accounting Standards Board in June 2011 and applies to annual periods beginning on or after 1 January 2014. The amendment adds application guidance to IAS 32 to clarify inconsistencies found when applying some of the offsetting criteria. They include, inter alia, a clarification of the expression ‘‘has a legally enforceable right to offset’’ and that certain gross settlement solution may be treated as net settlements provided that certain conditions have been met. The Group shall apply amendments to IAS 32 as of 1 January 2014. The Group does not expect the standard to have any impact on the financial statements. As at the date of preparing these consolidated financial statements, amended IAS 32 had not yet been approved by the European Union. m) Disclosures—Offsetting Financial Assets and Financial Liabilities—amendments to IFRS 7 The amendment to IFRS 7 on disclosures—offsetting of financial assets and financial liabilities, was issued by the International Accounting Standards Board in June 2011 and applies to annual periods beginning on or after 1 January 2013. The amendment introduces new disclosures to enable users of the financial statements to evaluate the effects, or potential effects, of net settlement arrangements, including rights to offsetting. The Group shall apply amendments to IFRS 7 as of 1 January 2013. The Group does not expect the standard to have any impact on the financial statements. As at the date of preparing these consolidated financial statements, amended IAS 32 had not yet been approved by the European Union. n) IFRIC 20, Stripping Costs in the Production Phase of a Surface Mine IFRIC 20 was issued by the International Accounting Standards Board in October 2011 and applies to annual periods beginning on or after 1 January 2013. The interpretation explains that stripping costs are recognized as current production costs in accordance with IAS 2, Inventories, provided that the benefit from the stripping activity is realized in the form of inventory produced. On the other hand, if stripping provides a benefit in the form of improved access to ore, the entity should recognize these costs as a ‘‘stripping activity asset’’ in non-current assets, provided that specific conditions set out in the Interpretation have been met. The Group shall apply IFRIC 20 from 1 January 2013. The Group does not expect the standard to have any impact on the financial statements. As at the date of preparing these consolidated financial statements, the amended IFRS 20 had not yet been approved by the European Union.

4. Consolidation policies a) Subsidiaries Subsidiaries are entities controlled by the Parent Entity. Control exists when the Parent Entity has the power to govern, directly or indirectly, the financial and operating policies of a given entity so as to obtain

F-193 The Synthos S.A. Group Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (Continued) (in PLN ‘000, unless otherwise stated)

Note 1. Accounting policies (Continued) benefits from its activities. When assessing whether control exists, the existing and potential voting rights which can be executed or converted as at the balance sheet date are taken into account. Subsidiaries are fully consolidated for the period from the date of the Parent Entity assuming control over them until such control ceases to exist. Control is understood as the power to govern the financial and operating policies of a given entity so as to obtain benefits from its activities. Assets, liabilities and identifiable contingent liabilities of a subsidiary as at the date of assuming control and the inclusion of a subsidiary in consolidated financial statements are recognized at fair value. A positive difference between the acquisition price and the fair value of such assets, liabilities and contingent liabilities gives rise to goodwill which is disclosed separately in the consolidated statement of financial position. A negative difference between the acquisition price and the fair value of such assets, liabilities and contingent liabilities is recognized directly in the profit or loss. b) Joint arrangements Joint arrangements are entities jointly controlled by the Group and other entities. Consolidated financial statements take into account the Group’s share in accumulated profits or losses of joint arrangements in accordance with the equity method, from obtaining significant influence until ceasing to exert it or until reclassification to assets held for sale. When the Group’s share in the losses of a joint arrangement exceeds the carrying value of the investment, it is assumed that the share in accumulated profits or losses of joint arrangements is nil, and the remaining losses are recognized by the Group up to the amount of any liabilities incurred. c) Consolidation adjustments Intra-group mutual balances of receivables and payables, intra-group transactions and any resulting unrealized gains or losses, and intra-group revenue and expenses are eliminated when preparing consolidated financial statements.

5. Presentation currency and functional currency Given the location of its business operations, the Group has two functional currencies: • the Czech koruna is the functional currency in Czech companies; • the Polish złoty is the functional currency in Polish companies. Polish złoty is the presentation currency of these financial statements. Assets and liabilities carried in functional currencies were translated into presentation currency at the average exchange rate of the National Bank of Poland (NBP) as at the balance sheet date. Transactions in foreign currencies are recorded in functional currencies on the transaction date using the average exchange rate of the NBP or of the CNB (the Czech National Bank) in the case of the branch. Monetary assets and liabilities in foreign currencies are translated as at the balance sheet date at the average exchange rate of the functional currency applicable on that date. Foreign exchange differences on the settlement of transactions in foreign currencies and on the valuation of monetary assets and liabilities in foreign currencies as at the balance sheet date are recognized in the profit or loss. Non-monetary assets and liabilities in foreign currencies, carried at historical cost, are translated at the average exchange rate of the functional currency applicable on the transaction date.

F-194 The Synthos S.A. Group Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (Continued) (in PLN ‘000, unless otherwise stated)

Note 1. Accounting policies (Continued) The following exchange rates were adopted for the valuation of items in the statement of financial position:

31.12.2011 31.12.2010 EUR...... 4.4168 3.9603 USD...... 3.4174 2.9641 GBP...... 5.2691 4.5938

6. Derivative financial instruments The Company uses derivative financial instruments to hedge against interest rate risk and foreign exchange risk resulting from operating, financing or investing activities. In accordance with the adopted treasury policy, the Group does not have nor issue derivative financial instruments held for trading. The Group does not apply hedge accounting. On initial recognition, derivative financial instruments are recognized at fair value. Subsequently, derivative financial instruments are measured at fair value. Gains and losses resulting from changes in the fair value are recognized directly in profit or loss.

7. Property, plant and equipment a) Property, plant and equipment Property, plant and equipment includes assets: • held by the entity with a view to using them in production processes, when delivering goods and providing services or for administrative purposes; • expected to be used for a period longer than one year; • which are likely to enable the entity to derive future economic benefits from a given assets, and • whose value can be reliably measured. On initial recognition, property, plant and equipment is measured at cost. Borrowing costs incurred to purchase or manufacture a given asset are capitalized and increase its cost. The policies used for capitalizing borrowing costs are discussed in item (f). On initial recognition, the cost of an asset includes anticipated costs of its disassembly, removal and rehabilitation of the site where the asset is located, when an obligation to incur such costs arises on installation of the asset or its use for purposes other than the production of inventories. As at the end of a reporting period, property plant and equipment is measured at cost, less accumulated depreciation and impairment. The policies used for the recognition of impairment are discussed in detail in item (e). b) Property, plant and equipment used under lease agreements Finance lease contracts which transfer to the Company substantially all risks and benefits associated with the leased asset, are capitalized as at the lease commencement date at the lower of the fair value of the leased asset and the present value of the minimum lease payments. Lease payments are divided into financial costs and the repayment of principal, using a fixed interest rate in respect of the liability. Financial costs are charged directly to the profit or loss. Property, plant and equipment used under finance lease agreements are depreciated in accordance with the same policies as own assets. When there is no reasonable certainty that the Group will obtain the

F-195 The Synthos S.A. Group Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (Continued) (in PLN ‘000, unless otherwise stated)

Note 1. Accounting policies (Continued) ownership right after the expiry of the lease agreement, assets are depreciated for the shorter of the lease period and useful economic life. Leases in which the lessor retains substantially all the risks and rewards of ownership are classified as operating leases. Lease payments made under operating leases are recognized on a straight-line basis over the period of the lease. c) Rights to perpetual usufruct of land The right to perpetual usufruct of land obtained by the Group free of charge on the basis of an administrative decision represents a type of operating lease. It is not recognized as the Group’s asset and is recorded off-balance sheet. Fees for perpetual usufruct of land are recognized as costs in the profit or loss. d) Expenditure incurred subsequently Subsequent expenditure on a property, plant and equipment item (e.g. in order to increase its usefulness, replace a part or renovate it) are capitalized in the carrying value of a given asset only when it is likely that economic benefits will flow to the entity in connection with this asset, and its cost can be reliable measured. All other repairs and maintenance expenditure are charged to the profit or loss during the period in which they are incurred. e) Depreciation Property, plant and equipment items, or their material and separate components are depreciated on a straight line basis, taking into account their expected residual values. The following useful lives were adopted for particular categories of property, plant and equipment:

• Buildings up to 60 years • Structures, including • Reservoirs 10 to 30 years • Silos 10 to 20 years • Collectors, pipes, sewage systems, railway 10 to 40 years subgrades,bridges, flyovers • Streets, roads, yards up to 35 years • Boilers and power engineering machines up to 25 years • Plant and machinery 3 - 25 years • Vehicles 4 - 8 years • Tools, instruments, movables, fixtures and 4 - 20 years fittings Assets under construction are not depreciated. At the moment of purchase, property, plant and equipment items are split into components, if the cost of a component is material in relation to the cost of the entire asset, and they are depreciated over separate economic useful lives. The correctness of useful economic lives, depreciation methods and residual values of property, plant and equipment (if not immaterial) are reviewed by the Group annually.

F-196 The Synthos S.A. Group Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (Continued) (in PLN ‘000, unless otherwise stated)

Note 1. Accounting policies (Continued) f) Borrowing costs Borrowing costs which may be directly attributed to the acquisition, construction or manufacture of assets which require significant time to be prepared for their intended use or sale are capitalized. Capitalized borrowing costs increase the cost of an asset.

8. Intangible assets Intangible assets include, inter alia: technical or scientific knowledge, licenses, intellectual property, trademarks, patents, relations with customers and suppliers, computer software purchased or taken over in a business combination. An intangible asset is recognized if it is likely that the entity will derive future economic benefits which can be attributed to this asset, and the value of the asset can be reliably measured. Intangible assets are recognized at cost, less accumulated amortization and impairment. a) Research and development Expenditure incurred on research work conducted with a view to obtaining new scientific or technical knowledge are recognized in the statement of comprehensive income when incurred. Expenditure on development work resulting in the development of a new or significantly improved product are capitalized when completing the new product (or process) is technically feasible and economically justified, and the Group has adequate technical, financial and other resources to complete development work. The following costs are capitalized: material costs, salaries and wages of employees directly involved in the development work and the justified portion of indirect costs directly attributable to the development of an intangible asset. Costs of development work are recognized as intangible assets and are amortized and tested for impairment. Other costs of development work are recognized in the profit or loss when incurred. b) Emission rights Emission rights obtained are recognized at cost less accumulated amortization and impairment. The cost of emission rights acquired in a business combination is equal to their fair value. Liabilities resulting from emission of pollutants to air are measured at the amount equal to the value of emission rights held by the Group when the Group has sufficient emission rights to cover its liabilities. When the emission rights are lower than the anticipated utilization of emission rights, a provision is recognized at the fair value of the missing emission rights. c) Renewable energy certificates Rights to renewable energy certificates and co-generation are recognized at cost less accumulated amortization and impairment. Liabilities resulting from the need to redeem the rights measured at the amount equal to the value of rights held by the Group when the Group has sufficient rights to cover its liabilities. When the quantity of rights is lower than the anticipated number of rights to be redeemed, a provision is recognized at the fair value of the missing rights. Amortization of rights to certificates is charged in accordance with the activity based method. d) Other intangible assets Other intangible assets acquired by the Group are carried at cost less accumulated amortization and impairment.

F-197 The Synthos S.A. Group Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (Continued) (in PLN ‘000, unless otherwise stated)

Note 1. Accounting policies (Continued) e) Expenditure incurred subsequently Subsequent expenditure on the existing intangible assets are capitalized solely when they increase future economic benefits associated with a given asset. Other expenditure is recognized in the statement of comprehensive income as costs of the period in which they were incurred. f) Amortization Intangible assets are amortized on a straight-line basis, taking into account their useful economic lives, unless indefinite. Intangible assets with indefinite useful lives are tested for impairment at each balance sheet date. Estimated useful economic lives of amortized intangible assets are as follows:

• Acquired customer relations 5 years; • Know-how 5 - 10 years; • Licences and software 2 years; • Capitalized development costs 3 years;

9. Investment property Investment property is held to earn rentals or for capital appreciation or both. Investment property is measured in accordance with the measurement rules for property, plant and equipment, i.e. at cost less accumulated depreciation and impairment.

10. Available for sale financial assets Assets held by the Group and traded in an active market are classified as available for sale and recognized at fair value. Gains and losses resulting from fair value remeasurement are recognized directly in other comprehensive income, with the exception of impairment losses, interest calculated using the effective interest rate and foreign exchange gains and losses on monetary assets which are recognized directly in the profit or loss. When an investment is sold or impaired, the accumulated gains or losses previously recognized in other comprehensive income are transferred to the profit or loss for a given period. Dividend on available for sale equity instruments is recognized in the profit or loss when the Group’s right to dividend arises.

11. Non-current receivables, current receivables Non-current and current receivables are recognized on the date when they arise at fair values, and subsequently measured at amortized cost determined using the effective interest rate, less impairment losses. Impairment losses are recognized when there is objective evidence that the Group will be unable to recover the full amounts due. If there is objective evidence of impairment of receivables carried at amortized cost, an impairment loss is determined as the difference between the carrying value of an asset and the present value of future cash flows discounted using the effective interest rate. Impairment losses, both recognized and released, are charged to selling expenses.

12. Inventories Inventories are assets held for sale in the ordinary course of business, in the process of production for such sale or materials and supplies to be consumed in the production process or in rendering services.

F-198 The Synthos S.A. Group Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (Continued) (in PLN ‘000, unless otherwise stated)

Note 1. Accounting policies (Continued) Inventories are measured at the lower of cost and net realizable value. The costs of purchase is the purchase price, comprising the amount due to the seller net of VAT and excise duty, and in the case of imports including import duties and other taxes, and costs directly attributable to the acquisition or adaptation of the asset for use or trading, including costs of transportation, loading and unloading, less any rebates, discounts and similar deductions and recoveries. Net realizable value is the difference between the estimated selling prices achieved in the course of ordinary business activities, net of any rebates and discounts, and the estimated costs necessary to effect the sale. Inventories are carried net of any impairment losses. Impairment losses are recognized in order to bring the value of inventories to their net realizable value. Impairment losses are recognized in the profit or loss under ‘‘cost of sales’’. Reversal of impairment losses are recognized as a decrease of costs of sales. Impairment losses decrease the carrying value of impaired inventories. Receipts and issues of materials and goods for resale are recorded at actual purchase prices. Finished goods, semi-finished goods and work in progress is measured at actual technical manufacturing cost which includes a reasonable portion of fixed indirect manufacturing costs calculated assuming the ordinary utilization of production capacity. Issues of finished goods are recorded under the weighted average method.

13. Cash and cash equivalents Cash and cash equivalents comprise cash in hand and demand deposits with banks. Cash and cash equivalents shown in the consolidated cash flow statement comprise the above-mentioned cash and cash equivalents, less outstanding bank overdrafts which are an integral part of the Group’s cash management system.

14. Impairment a) Recognition of impairment Impairment of financial assets As at the end of each reporting period, The Group performs an assessment of any objective evidence that a financial asset or a group of financial assets may be impaired. Material objective evidence of impairment includes primarily: significant financial difficulties of the debtor, court cases instituted against the debtor, adverse changes in the economic, legal or market environment of the issuer of a financial instrument, a significant or prolonged decline in the fair value of an equity instrument below its cost. When such evidence exists for available for sale financial assets, accumulated losses recognized in other comprehensive income (determined as the difference between cost and the current fair value, less any impairment losses previously recognized in the profit or loss) are removed from other comprehensive income and transferred to the profit or loss as a reclassification adjustment. Impairment losses recognized in the profit or loss and relating to equity instruments are reversed in correspondence with other comprehensive income. The reversal of impairment losses of debt financial instruments is recognized in the profit or loss if in the subsequent periods after the recognition of impairment losses the fair value of such financial instruments increased as a result of events which occurred after the impairment loss was recognized. If there exists objective evidence of the potential impairment of loans and receivables measured at amortized cost, the impairment loss is determined as the difference between the carrying value of these assets and the present value of estimated future cash flows discounted using the original effective interest rate on these assets (i.e. the effective interest rate calculated at initial recognition of fixed interest assets and the effective interest rate determined as at the last repricing of variable interest assets). Impairment

F-199 The Synthos S.A. Group Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (Continued) (in PLN ‘000, unless otherwise stated)

Note 1. Accounting policies (Continued) losses are recognized in the profit or loss. The carrying value of such financial instruments is determined taking into account impairment (resulting from credit losses) recorded on a separate account. Impairment losses are reversed if impairment is reduced in subsequent periods and the reduction may be attributed to events occurring after the recognition of the impairment loss. Reversals of impairment losses are recognized in the profit or loss.

Impairment of non-financial assets Goodwill and intangible assets which are not yet available for use are not amortized, but tested annually for impairment. Non-financial depreciable assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying value exceeds its recoverable value. The recoverable value is the higher of fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). The relevant cash-generating unit is determined individually for purposes of impairment tests. Impairment losses are recognized in the profit or loss. Non-financial current assets other than goodwill in respect of which impairment losses were recognized in previous periods are tested as at the end of each reporting period for indications of the possible reversal of the impairment loss previously recognized. b) Reversal of impairment losses Impairment losses are reversed only when there was a change in accounting estimates used when calculating the recoverable value after the recognition of the impairment loss. Impairment losses recognized in respect of goodwill are not reversed. Impairment losses are reversed only to the carrying value of an assets (less depreciation/amortization) which would have been recorded had the impairment loss never been recognized.

15. Equity Equity is recorded in books of account in accordance with equity components and the binding regulations and the Parent Entity’s Memorandum of Association. The Group’s share capital is disclosed at the nominal values of the shares issued, in accordance with the Parent Entity’s Memorandum of Association. Costs of share issue incurred on the set-up or an increase in the capital of a joint stock company reduce supplementary capital up to the level of the share premium, and any resulting excess is charged to financial costs. Amounts resulting from profit distribution, retained earnings or accumulated losses and the net profit for the current year are disclosed in the financial statements as retained earnings.

16. Employee benefits Employee benefits include all forms of benefits provided by the Group in exchange for the work provided by employees. They include both benefits paid during the employment and post-employment benefits. The Group recognized a provision for future liabilities in respect of retirement bonuses in order to allocate costs to the periods to which they relate.

F-200 The Synthos S.A. Group Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (Continued) (in PLN ‘000, unless otherwise stated)

Note 1. Accounting policies (Continued) a) Defined contribution plan Based on the applicable legislation, the Group is obliged to collect and remit contributions to the employee retirement plan. This plan, which is a state plan, in accordance with IAS 19 is classified as a defined contribution plan. Consequently, the Group’s liability for each period is estimated based on the amount of contributions to be made for a given year. b) Defined benefit plan—retirement and death benefits Based on applicable legislation, the Group is obliged to pay retirement bonuses and death benefits at amounts resulting from the provisions of the Polish Labour Code. In addition, based on a Collective Labour Agreement, retirement bonuses of the Company’s employees are increased to amounts which depend on the years of service for the Company of a given employee. The minimum level of retirement bonuses is based on the provisions of the Polish Labour Code in force as at the date of their payment. The Group’s retirement bonus liability is calculated by estimating the amount of the future remuneration of an employee in the period when the employee reaches retirement age and by estimating the level of the future retirement bonus. These bonuses are discounted to their present value. The discounting rate is arrived at based on the market rate of return on Polish Treasury bonds as at the balance sheet date. Retirement bonus liability is recognized in line with the expected period of service of a given employee. Calculation is performed by a qualified actuary using the projected unit credit method. Employee turnover is estimated on the basis of historical data and the expected future level of employment. c) Benefits in the form of disability compensation Based on the provisions of the Polish Civil Code, the Group is obliged to pay benefits in the form of disability compensation for former employees in respect of professional diseases and accidents at work. The liability was calculated by a qualified actuary. A provision for disability compensation is used at the moment of payment of the benefit to former employees.

17. Provisions Provisions are recognized when the following conditions are met: • the entity has a legal or constructive obligation resulting from past events; • it is probable that settling the obligation will result in an outflow of resources embodying economic benefits; • the amount of the obligation may be reliably estimated. The amount of provision represents the best estimate of expenditure necessary to settle the obligation as at the balance sheet date. The Management uses judgment to estimate the amount of provision, taking into account experience of similar events and, if necessary, independent expert opinions. If the impact of the time value of money is significant, provisions are estimated by discounting expected future cash flows to the present value, using a pre-tax rate which reflects current market assessments of the time value of money and the risks specific to the obligation, if any. The balance of provisions is verified at each balance sheet date and adjusted to reflect the current best estimate. The provision is utilized solely for those costs in respect of which it had originally been recognized.

F-201 The Synthos S.A. Group Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (Continued) (in PLN ‘000, unless otherwise stated)

Note 1. Accounting policies (Continued) a) Restructuring provision The restructuring provision is recognized when the Group has a detailed formal plan for the restructuring and the restructuring process has been initiated or publicly announced. Future operating losses are not covered by the restructuring provision b) Rehabilitation costs In accordance with the environmental protection policy adopted by the Group and the relevant legal requirements, the provision for rehabilitation costs relating to polluted land or other non-current assets is recognized if the land or another non-current asset has been polluted. c) Onerous contracts A provision for onerous contracts is recognized when economic benefits from a contract expected by the Company are lower than the unavoidable costs of meeting contractual obligations.

18. Non-current and current liabilities Liabilities are performance obligations resulting from past events whose value can be reliably determined and which involve the use of an entity’s current or future assets. Current liabilities are all trade payables and all or part of liabilities which will become due within 12 months of the balance sheet date. Liabilities whose maturity exceeds one year of the balance sheet date are disclosed as non-current liabilities. Liabilities other than financial liabilities at fair value through profit or loss are recognized on the date when they arise at fair value adjusted for transaction costs. They are measured as at the balance sheet date at amortized cost determined using the effective interest rate. For current liabilities, such measurement corresponds to the amount due. On initial recognition, bank loans and borrowings are recorded at the fair value, less the costs of obtaining a loan/borrowing. In subsequent periods, liabilities in respect of bank loans, with the exception of liabilities held for trading, are measured at amortized cost using the effective interest rate.

19. Financial instruments On initial recognition, financial instruments are classified to one of the following categories: • financial instruments at fair value through profit or loss • financial assets held to maturity; • loans and receivables; • available-for-sale financial assets; • other financial liabilities. Purchase or sale of financial assets is recognized at the transaction date. Financial assets and financial liabilities are initially recognized at fair value plus transaction costs directly attributable to the purchase or issue of a given financial asset or financial liability for all financial assets and financial liabilities not carried at fair value through profit or loss.

F-202 The Synthos S.A. Group Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (Continued) (in PLN ‘000, unless otherwise stated)

Note 1. Accounting policies (Continued) a) Financial instruments at fair value through profit or loss Financial instruments at fair value through profit or loss include financial assets and financial liabilities acquired to generate profits on short-term price fluctuations. Financial assets at fair value through profit or loss are measured at fair value without deducting transaction costs and taking into account their market value as at the balance sheet date. Fair value changes of financial assets measured at fair value, disclosed in the statement of comprehensive income, are credited to financial income or charged to financial costs. Financial assets measured at fair value with fair value changes disclosed in the statement of comprehensive income are classified as current assets if the Management intends to realize them within 12 months of the balance sheet date b) Financial assets held to maturity Financial assets held to maturity are investments with fixed or determinable payments and fixed maturity which the Group has the positive intention and ability to hold to maturity. Financial assets held to maturity are stated at amortized cost using the effective interest rate. Financial assets held to maturity are classified as non-current assets, if their maturity exceeds 12 months from the balance sheet date. c) Loans granted and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Group spends cash and cash equivalents, provides goods or services directly to the debtor without the intention to classify these receivables as financial assets at fair value through profit or loss. Loans and receivables are classified as current assets, unless their maturity exceed 12 months of the balance sheet date. Loans and receivables with maturities exceeding 12 months from the balance sheet date are classified as non-current assets. Loans and receivables are presented on the balance sheet under trade and other receivables. Loans granted and receivables are measured at amortized cost. d) Available-for-sale financial assets All the remaining financial assets are classified as available-for-sale financial assets. Available-for-sale financial assets are stated at fair value, gross of transaction costs and taking into account their market value at the balance sheet date. If there are no market quotations on an active market and there is no possibility of determining their fair values using alternative methods, available-for-sale financial assets are stated at purchase price, less impairment, provided that they were measured at historical amounts. Positive and negative differences between the fair value of available-for-sale assets and their purchase price, less deferred income tax, of available-for-sale assets (if there is a market price determined on an active regulated market or whose fair value may be otherwise reliably determined), are recognized in other comprehensive income. Impairment losses on available-for-sale financial assets are charged to financial costs.

20. Revenue Revenue is inflow of gross economic benefits for a given period, arising in the (ordinary) course of activities of the Group, resulting in increases in equity, other than those relating to contributions from shareholders. Revenue comprises only gross inflows of economic benefits received or receivables on own account, while amounts collected on behalf of third parties such as VAT or rebates are not economic benefits and are excluded from revenue.

F-203 The Synthos S.A. Group Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (Continued) (in PLN ‘000, unless otherwise stated)

Note 1. Accounting policies (Continued) a) Sales of finished goods, goods for resale and the provision of services Revenue from sales of finished goods and goods for resale are recognized in the statement of comprehensive income when significant risks and rewards of ownership were transferred to a buyer. Revenue from the provision of services are recognized in the statement of comprehensive income on a straight-line basis for the duration of a contract. Revenue is not recognized when there is uncertainty as to the recovery of future economic benefits, determination of the amount of costs incurred or the possibility of returning finished goods/goods for resale. b) Lease revenue Revenue from investment property lease are recognized in the statement of comprehensive income on a straight-line basis for the duration of a contract. c) Deferred income in respect of state subsidies State subsidies are presented on the balance sheet as deferred income if there is a reasonable certainty of their receipt and the Group has complied with the conditions attached to them. Subsidies received as a reimbursement of costs already incurred by the Group are recognized systematically as revenue in the statement of comprehensive income for periods when the related costs were incurred. Subsidies received as a reimbursement of costs of assets recognized by the Group are credited systematically to other operating income in the statement of comprehensive income for the useful life of the asset. d) Other revenue Other operating income is indirectly related to the entity’s operations. They include: • income relating to disposals of non-current assets; • other income not included in revenue or financial income. e) Financial income Financial income is recognized during the year if it is likely that an entity will receive economic benefits associated with a transaction and the amount of such income can be reliably measured. Financial income recognition policies are as follows: • interest—at amortized costs using the effective interest rate; • dividend—when the owner’s right to receive them is established; • the surplus of foreign exchange gains over losses on cash and cash equivalents, loans obtained, receivables and liabilities.

21. Expenses a) Cost of sales Cost of sales includes all costs relating to the Group’s core operations, with the exception of selling expenses, administrative expenses, other costs and financial costs. Manufacturing cost of finished goods comprises costs directly attributable to a given product and the justified portion of fixed costs indirectly attributable to the manufacturing of the product. b) Selling expenses Selling expenses are recorded costs relating to sales.

F-204 The Synthos S.A. Group Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (Continued) (in PLN ‘000, unless otherwise stated)

Note 1. Accounting policies (Continued) They include, inter alia: • costs of transportation, loading and unloading; • customs duties and trade commission (on export sales); • and other expenses, insurance of finished goods during their transport, etc. Write-downs of receivables, both recognized and reversed, are charged or credited to selling expenses c) Administrative expenses Administrative expenses comprise: • general administrative expenses relating to the maintenance of specific Management Board units; • general production expenses (associated with production but not related to particular departments) relating to the maintenance and operations of general purpose units, e.g. laboratories. d) Other expenses Other expenses are indirectly associated with the Groups operations, in particular with: • cash and cash equivalents donated free of charge; • other expenses not included in operating expenses, selling expenses, administrative expenses or financial costs. e) Operating lease payments Payments in respect of operating lease agreement concluded by the Group are recognized in the statement of comprehensive income on a straight-line basis for the duration of the lease. Incentives received are recognized in the statement of comprehensive income together with lease expenses. f) Operating lease payments Lease payments are divided in two components: finance costs and a reduction of the liability. The finance cost component is allocated to specific periods over the lease term using the effective interest rate method. g) Financial costs Financial costs comprise mainly: • interest accrued and paid on liabilities, determined based on the effective interest rate; • the surplus of foreign exchange losses over gains on cash and cash equivalents, loans obtained, receivables and liabilities.

22. Income tax expense Income tax expense presented in the statement of comprehensive income comprises current tax and deferred tax. Income tax expense is recognized in the statement of comprehensive income, with the exception of amounts relating to items recognized through other comprehensive income, In such case, income tax is recognized in other comprehensive income. Current tax represents a tax liability in respect of taxable income for a given year, determined at the tax rate applicable as at the balance sheet date, and adjustment of prior year taxes. Deferred income tax is calculated using the balance sheet liability method in respect of temporary timing differences between the values of assets and liabilities for accounting purposes and their values for tax

F-205 The Synthos S.A. Group Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (Continued) (in PLN ‘000, unless otherwise stated)

Note 1. Accounting policies (Continued) purposes. Deferred tax provision is not recognized for temporary differences arising on: goodwill (amortization of goodwill is not tax deductible), initial recognition of assets or liabilities which have no effect either on tax profit or on accounting profit, differences relating to investments in subsidiaries, to the extent it is unlikely that they would be realized in the foreseeable future. The deferred tax recognized is based on assumptions of how the carrying values of assets and liabilities will be realized, using the tax rates applicable or enacted as at the balance sheet date. Deferred tax asset is recognized only when it is probable that taxable income will be available in future to enable realization of the asset. A deferred tax asset is reduced if it is concluded that it is no longer probable that the tax benefit will be realized. The deferred tax for each of the consolidated companies is presented on a net basis.

23. Segment reporting Segment reporting was prepared on the basis of internal reporting on the Group’s components which are periodically reviewed by the chief operating decision-maker in order to allocate resources to particular segments and to assess their performance.

24. Discontinued operations and assets held for sale The Group classifies current assets as held for sale if their carrying value is to be recovered through a sale rather than their continued use. Conditions to be met for inclusion of an asset to this category are that management is actively searching for a buyer, it is highly probable that the assets will be sold within one year of their classification date and that the assets are available for immediate sale. Such assets are measured at the lower of their carrying value and fair value less costs to sell.

Note 2. Segment reporting In accordance with IFRS 8, the Management Board determined segments which are used for making strategic decisions. Information prepared for the Group’s chief operating decision-makers to decide on the allocation of resources and assess their performance are focused on product groups. Therefore, the Group’s reporting segments under IFRS 8 are as follows: • rubbers and latexes; • styrene derivatives; • power engineering; • vinyl dispersions. Reporting segments earn their revenue mainly on the sale of particular categories of finished goods. Other income and costs and financial income and costs have not been included in reporting segments as they are not included in the reports submitted to the Management Board. Net result on such operations is presented in the lines ‘‘Unallocated revenue’’ or ‘‘Unallocated costs’’ Revenue on transactions with external parties presented to the Management Board by operating segments are measured consistently with the rules applied in the statement of comprehensive income. Amounts presented to the Management Board on total assets by operating segments are measured consistently with the rules applied in the statement of comprehensive income. These assets are allocated based on the segment operation and physical location of a given asset (this applies to trade receivables, inventories, non-current assets). Other assets, namely cash, shares, other receivables, are presented as unallocated assets. A new reporting segment, Power engineering, was separated in the reporting year. Consequently, comparative data for 2010 were restated.

F-206 54,413 29,175 52,442 39,737 21,055 — (15,668) (14,534) (26,398) (18,829) 960,817 476,856 (118,585) (109,708) 1,032,302 565,656 1,079,402 586,564 1,515,429 1,035,244 1,985 1,015 1,985 1,015 32,453 15,642 32,453 15,642 ————— ————— ——————— ——————— ——————— ——————— ——————— ——————— Operating segments The Synthos S.A. Group (in PLN ‘000, unless otherwise stated) Notes to the consolidated financial statements — — — ——————— — — — ——————— — — — ——————— for the 12 months ended 31 December 2011. (Continued) 22,517 18,993 77,996 73,515 14,880 5,585 2,394 ,2,099 32,183 36,771 149,970 136,963 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010 880,931 401,821 29,080 67,626 26,110 42,670 2,168 (2,807) 55,268 41,705 993,557 551,015 150,916 173,691 47,585 15,148 41,648 17,561 22,967 8,046 39,575 35,899 302,691 250,345 Rubbers and latexesRubbers Styrene derivatives engineering Power dispersions Vinyl Other Total 3,301,230 2,027,936 1,719,693 1,445,869 227,363 198,173 106,8693,301,230 80,330 2,027,936 1,719,693 51,1162,420,299 1,445,869 1,626,115 227,363 91,732 1,690,613 198,173 5,406,271 1,378,243 106,869 3,844,040 201,253 80,330 155,503 104,701 85,554 83,137 108,389 5,440,709 30,286 3,860,697 66,684 4,447,152 3,309,682 1,442,314 914,948 871,3401,442,314 886,178 914,948 288,289 214,786 871,340 46,480 886,178 47,358 288,289 398,145 214,786 418,923 3,046,569 46,480 2,482,193 47,358 398,145 418,923 4,503,98 3,517,437 .——— .——— .——— .——— .——— .——— .——— .——— ...... (external clients) Sales of services Lease revenue revenue Total expenses Total Segment result Unallocated revenue Unallocated costs Operating profit Financial income Financial costs Share in losses of equity-accounted entities . . . Profit before tax Income tax expense Net profit for the year Segment assets Unallocated assets assets Total Capital expenditure Depreciation/Amortization Revenue Sales of goods for resale / finished Note 2. Segment reporting (Continued)

F-207 The Synthos S.A. Group Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (Continued) (in PLN ‘000, unless otherwise stated)

Note 2. Segment reporting (Continued) Geographical information The Group distinguishes two geographical areas: • Domestic—domestic sales cover all sales categories (production, trade, services) of the Group in Poland, the Czech Republic and Slovakia; • Other countries—cover all sales categories of the Group to all countries except Poland, the Czech Republic and Slovakia. All of the Group’s assets are located in Poland or the Czech Republic.

Geographical information

Domestic Other countries Total 2011 2010 2011 2010 2011 2010 Revenue (sales to external clients) ...... 2,691,750 1,192,662 2,748,959 2,668,035 5,440,709 3,860,697 Assets ...... 4,561,998 3,517,437 — — 4,561,998 3,517,437 Capital expenditure ...... 302,691 250,345 — — 302,691 250,345

Information on key clients Revenue on sales of • ‘‘rubbers and latexes’’ of PLN 3,301,230 thousand includes revenue of PLN 648,190 thousand on sales to the 10 largest clients; • ‘‘styren derivatives’’ of PLN 1,719,693 thousand includes revenue of PLN 503,742 thousand on sales to the 10 largest clients; • ‘‘vinyl dispersions’’ of PLN 106,869 thousand includes revenue of PLN 51,611 thousand on sales to the 10 largest clients;

Note 3. Revenue

2011 2010 Sales of finished goods ...... 4,760,315 3,544,344 Sales of services ...... 32,453 31,050 Sales of goods for resale ...... 200,582 103,754 Sales of materials ...... 445,374 179,517 Revenue from investment property lease ...... 1,985 2,032 5,440,709 3,860,697

F-208 The Synthos S.A. Group Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (Continued) (in PLN ‘000, unless otherwise stated)

Note 4. Costs by type

2011 2010 a) amortization and depreciation ...... 149,970 136,963 b) materials and energy used ...... 3,404,426 2,601,174 c) external services ...... 241,597 190,575 d) taxes and fees ...... 23,464 24,086 e) salaries and wages (Note 7) ...... 128,032 114,597 f) social security and other benefits (Note 7) ...... 38,200 34,702 g) other costs by type ...... 18,550 15,853 Total costs by type ...... 4,004,239 3,117,950 Change in inventories, finished goods, prepayments and accruals ...... (77,657) (40,668) Change in costs expensed ...... (7,626) 3,245 Selling expenses (negative amount) ...... (112,094) (104,727) Administrative expenses (negative amount) ...... (152,308) (137,145) Cost of finished goods sold ...... 3,654,554 2,838,655 Cost of goods for resale and materials sold ...... (528,195) (229,155) Cost of sales ...... 4,182,749 3,067,810

Note 5. Other operating income

2011 2010 Reimbursement of penalties paid ...... 40,996 — Release of other provisions ...... — 3,959 Compensation received from insurance companies ...... 2,477 4,439 Profit from shares in associates ...... — 6,097 Other ...... 5,595 2,127 49,068 16,622

Note 6. Other operating expenses

2011 2010 Remeasurement of provisions ...... 310 165 Cost of unutilized capacity ...... 3,777 — Current assets written off ...... 2,633 — Receivables written off ...... 1,666 2,062 Other ...... 7,282 11,143 15,668 13,370

Note 7. Employee benefit costs

2011 2010 Salaries and wages ...... 128,032 114,597 Social insurance ...... 31,430 27,967 Social Fund ...... 2,522 2,048 Other employee benefits ...... 4,248 4,957 166,232 149,569

F-209 The Synthos S.A. Group Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (Continued) (in PLN ‘000, unless otherwise stated)

Note 8. Net financial income/costs

2011 2010 Income received on loans and receivables ...... 20,968 12,301 Net foreign exchange gains (Note 9) ...... 31,474 27,417 Other ...... — 19 Total financial income ...... 52,442 39,737 Cost of interest on loans ...... (19,408) (11,351) Cost of remeasurement of derivative financial instruments ...... (6,558) (6,981) Other ...... (432) (497) Total financial costs ...... (26,398) (18,829) Net financial income/costs ...... 26,044 20,908

Note 9. Foreign exchange gains and losses In the reporting period ended 31 December 2011, the total net amount of foreign exchange differences recognized in the statement of comprehensive income amounted to PLN 31,474 thousand (net gains) (in 2010: PLN 27,417 thousand (net gains)), of which PLN 156,192 thousand (in 2010: PLN 112,035 thousand) were foreign exchange gains, and PLN 124,718 (in 2010: PLN 84,618 thousand) were foreign exchange losses.

Note 10. Income tax expense Income tax expense disclosed in the statement of comprehensive income

2011 2010 Income tax expense Income tax for the current period ...... 133,042 106,647 Adjustment of income taxes for prior years ...... — (44) 133,042 106,603 Deferred income tax Temporary differences arising / reversed ...... (14,457) 3,105 Total deferred income tax ...... (14,457) 3,105 Income tax expense disclosed in the statement of comprehensive income ...... 118,585 109,708

F-210 The Synthos S.A. Group Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (Continued) (in PLN ‘000, unless otherwise stated)

Note 10. Income tax expense (Continued) Effective tax rate

% 2011 % 2010 Profit before tax ...... 1,079,402 586,564 Tax at the applicable tax rate ...... 19% 205,086 19% 111,447 Non-deductible costs (permanent differences) ...... 1,079 210 Non-taxable income (permanent differences)* ...... (83,923) (233) Tax losses not included in the calculation of deferred tax ...... 6,573 169 Adjustment of income taxes for prior years ...... — (44) Deferred tax asset written off ...... 46,984 — Investment relief ...... (57,221) — Other ...... 7 (1,841) 11% 118,585 19% 109,708

* As a result of transformation of the legal form of Synthos Dwory Sp. z o.o.to Synthos Dwory 7 społka´ z ograniczon˛a odpowiedzialno´sci˛a S.K.A. (a limited partnership), the company ceased to be a payer of corporate income tax as of 1 November 2011. The income tax receivable of PLN 1,581 thousand (PLN 353 thousand as at 31.12.2010) represents an amount due from the tax office in respect of payments made for the current and prior financial years in excess of the tax due. The income tax liability of PLN 73,300 thousand (PLN 82,175 thousand as at 31.12.2010) represents the difference between amounts due to the tax office in respect of the difference in payments made for the current and prior financial years and the amount of tax due. In addition, the Group recognized a deferred tax asset in respect of tax loss carryforwards which can be used until 2016. The Group also recognized a deferred tax asset in respect of investment relief which can be used until 2015.

F-211 89,227 12,601 (16,928) (12,207) (22,290) (79,707) (17,266) 793,650 368,570 (483,146) (12,207) (79,707) (483,146) (765) (10,335) (1,590) (1,223) (3,353) 3,433 8,280 205 14 643 (3,430) (10,125) (2,546) (293) (534) 20,623 48,072 1,147 251 18,993 19,026 40,853 10,111 3,409 295,081 (22,290) — — — — 109,684 356,519 10,019 13,666 303,762 Buildings and Plant and Assets under 1,869 760,035 1,386,614 44,127 51,806 200,887 2,445,338 1,7281,728 633,158 633,158 992,148 35,507 992,148 38,182 35,507 374,019 38,182 2,074,742 374,019 2,074,742 1,612 633,754 953,350 26,781 35,982 161,355 1,812,834 Freehold landFreehold structures machinery Vehicles Other construction Total ...... — — — — — ...... — — — — — The Synthos S.A. Group ...... — ...... 90 (in PLN ‘000, unless otherwise stated) Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (Continued) ...... 141 ...... 26 ...... — — — — — ...... — ...... — ...... — Gross book value at 31 December 2011 Foreign exchange differences on translation Foreign Gross book value at 31 December 2010 Gross book value at 1 January 2011 and reclassification from assets under construction Acquisitions to property, plant and equipment intangible assets Reclassification to assets held for sale Reclassification Disposal / scrapping Reclassification to intangible assets Reclassification and reclassification from assets under construction Acquisitions to property, plant and equipment intangible assets Reclassification Disposal / scrapping exchange differences on translation Foreign Gross book value at 1 January 2010 Note 11. Property, plant and equipment Note 11. Property,

F-212 2,004 (5,014) 29,635 (12,608) (14,044) 132,713 144,984 d in the statement of 1,687 74 2 — (560) (9,694) (1,220) (1,134) — 2,310 16,960 501 9,862 2 (3,126) (9,219) (1,461) (238) — (5,014) — — — — 26,575 99,451 3,982 2,70527,677 109,848 — 4,452 3,007 — Buildings and Plant and Assets under —— 209,684 209,684 466,573— 16,341 466,573 20,666 16,341 20,666 236,545 42,515 42,515 584,162 755,779 19,833 755,779 33,297 42,517 916,354 — 188,442 375,129 13,505 19,093 42,515 638,684 1,6121,7281,728 445,3121,869 423,474 578,221 423,474 525,575 13,276 523,490 19,166 16,889 525,575 17,516 802,452 19,166 118,840 24,294 17,516 331,504 1,174,150 18,509 331,504 1,318,963 158,371 1,318,963 1,528,984 Freehold landFreehold structures machinery Vehicles Other construction Total The Synthos S.A. Group ...... (in PLN ‘000, unless otherwise stated) Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (Continued) ...... —...... 241 — ...... — ...... — — ...... — ...... — Disposal / scrapping exchange differences on translation Foreign Accumulated depreciation and impairment as at 31 December 2010 depreciation and impairment as at 1 January 2011 Accumulated Depreciation charge for the period Disposal / scrapping exchange differences on translation Foreign Accumulated depreciation and impairment as at 31 December 2011 Net book value As at 1 January 2010 As at 31 December 2010 As at 1 January 2011 As at 31 December 2011 The costs of depreciation property, plant and equipment PLN 111,708 thousand (PLN 110,819 in 2010) were presente comprehensive income under cost of sales. Reclassification to intangible assets Reclassification Depreciation charge for the period Accumulated depreciation and impairment depreciation and impairment as at 1 January 2010 Accumulated Note 11. Property, plant and equipment (Continued) Note 11. Property,

F-213 The Synthos S.A. Group Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (Continued) (in PLN ‘000, unless otherwise stated)

Note 11. Property, plant and equipment (Continued) Impairment losses and their utilization In the reporting period, the Group did not recognize any impairment losses in respect of property, plant and equipment.

Assets used under lease agreements As at the end of the reporting period, the Synthos S.A. Group had no property, plant and equipment used under lease agreements.

Collateral As at 31 December 2011, the net carrying value of buildings and structures and plant and machinery pledged as collateral for bank loans amounted to PLN 521,700 thousand (PLN 384,985 thousand as at 31 December 2010) Note 24)

Assets under construction As at the end of 2011, the Group had assets under construction of PLN 158,371 thousand (PLN 331,504 thousand as at the end of 2010). They included a large number of capital expenditure projects in progress, of which the most important include: the modernization of boiler no. 9—expenditure incurred of PLN 31,631 thousand, the construction of the XEPS production line—expenditure incurred of PLN 29,478 thousand, the modernization of the EPS production line—expenditure incurred of PLN 17,701 thousand.

F-214 The Synthos S.A. Group Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (Continued) (in PLN ‘000, unless otherwise stated)

Note 12. Intangible assets

Concessions, Other Total Development licenses, software intangible intangible costs and other assets assets Gross book value as at 1 January 2010 ...... 666 27,823 100,747 129,236 Reclassification from property, plant and equipment . — 22,290 — 22,290 Acquisition ...... — 6,347 231 6,577 Disposal / scrapping ...... — (389) (5,152) (5,541) Foreign exchange differences on translation ...... — 388 1,490 1,878 Gross book value as at 31 December 2010 ...... 666 56,458 97,316 154,440 Gross book value as at 1 January 2011 ...... 666 56,458 97,316 154,440 Reclassification from property, plant and equipment . — 5,479 417 5,896 Acquisition ...... — — — — Disposal / scrapping ...... — — — — Foreign exchange differences on translation ...... — 1,989 7,509 9,498 Gross book value as at 31 December 2011 ...... 666 63,926 105,242 169,834

Concessions, Other Total Development licenses, software intangible intangible costs and other assets assets Accumulated amortization and impairment as at 1 January 2010 ...... 618 21,402 95,455 117,475 Reclassification from property, plant and equipment . — 5,014 — 5,014 Amortization charge for the period ...... 7 3,949 126 4,082 Disposal / scrapping ...... — (250) — (250) Foreign exchange differences on translation ...... — 2 1,490 1,492 Accumulated amortization and impairment as at 31 December 2010 ...... 625 30,117 97,071 127,813 Accumulated amortization and impairment as at 1 January 2011 ...... 625 30,117 97,071 127,813 Amortization charge for the period ...... 7 4,682 184 4,873 Foreign exchange differences on translation ...... — 747 7,509 8,217 Accumulated amortization and impairment as at 31 December 2011 ...... 632 35,546 104,764 140,942 Net book value As at 1 January 2010 ...... 48 6,421 5,292 11,761 As at 31 December 2010 ...... 41 26,341 245 26,627 As at 1 January 2011 ...... 41 26,341 245 26,627 As at 31 December 2011 ...... 34 28,380 478 28,892

As at the balance sheet date, intangible assets included mainly: product licenses, software.

F-215 The Synthos S.A. Group Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (Continued) (in PLN ‘000, unless otherwise stated)

Note 13. Investment property

31 December 2011 31 December 2010 Gross book value as at the beginning of the period ...... 6489 5722 Adjustment ...... — 473 Modernization ...... 99 325 Disposal/scrapping ...... — (31) Gross book value as at the end of the period ...... 6,588 6,489 Accumulated depreciation and impairment as at the beginning of the period ...... 3,012 2,870 Depreciation charge for the period ...... 171 168 Disposal/scrapping ...... — (26) Accumulated depreciation and impairment as at the end of the period ...... 3,183 3,012 Net book value as at the beginning of the period ...... 3,476 3,682 Net book value as at the end of the period ...... 3,405 3,476

Investment property comprises buildings and structures located in O´swi˛ecim, on land owned by the subsidiary Synthos Dwory 7 społka´ z ograniczon˛a odpowiedzialno´sci˛a S.K.A. (formerly: Synthos Dwory Sp. z o.o.) which are leased by the Group to unrelated entities. In the reporting period ended 31 December 2011, revenue earned on the lease of building and structures amounted to PLN 1,985 thousand (PLN 2,031 thousand for 2010) and was presented in the statement of comprehensive income under ‘‘Revenue’’. The fair value estimated on the basis of discounted cash flows from the lease of this property as at 31 December 2011 was ca. PLN 10 million (using a pre-tax discount rate of 12%).

Note 14. Non-current investments

31 December 2011 31 December 2010 Available-for-sale financial assets ...... 148,609 267,250 Loan granted to Butadien Kralupy ...... 62,873 65,365 Other loans granted ...... 20,173 — Shares in unconsolidated subsidiaries ...... 2,095 12,984 Total ...... 233,750 345,599

F-216 The Synthos S.A. Group Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (Continued) (in PLN ‘000, unless otherwise stated)

Note 15. Investments in non-consolidated subsidiaries

Net profit/(loss) Assets Liabilities Equity for the period 31 December 2011 Synthos Dwory 2 sp. z o.o...... 1,322 — 1,322 42 Synthos Dwory 3 sp. z o.o. w likwidacji ...... 25 — 25 (6) Synthos Dwory 6 sp. z o.o...... 17 21 (4) (6) Synthos XEPS s.r.o ...... 33 — 33 — 1,397 21 1,376 30 31 December 2010 Synthos Dwory 2 sp. z o.o...... 1,280 — 1,280 37 Synthos Dwory 3 sp. z o.o. w likwidacji ...... 33 2 31 (19) Synthos Dwory 4 sp. z o.o...... 10,243 2,618 7,625 (26) Synthos Dwory 5 sp. z o.o...... 5,016 1,186 3,830 (20) Synthos Dwory 6 sp. z o.o...... 10 6 4 (2) Red Chili Limited ...... 14 — 14 — Tamero Invest s.r.o...... 32 — 32 — Synthos XEPS s.r.o ...... 31 — 31 — 16,659 3,812 12,847 (30)

Investments in non-consolidated subsidiaries include: • Synthos Dwory 2 Sp. z o.o. (formerly: Olimp Sp. z o.o.)—engaged in the production of chemical products; • Synthos Dwory 3 Sp. z o.o. w likwidacji (a company in liquidation)—engaged in electrical power engineering; • Synthos Dwory 6 Sp. z o.o.—engaged in electrical power engineering; • Synthos XEPS z siedzib˛a w Kralupach nad Vltavou, the Czech Republic—engaged in the production of chemical products. Synthos Dwory 4 Sp. z o.o. and Synthos Dwory 5 Sp. z o.o. have been consolidated since 2011. The companies did not conduct any operating activities before that date.

Note 16. Shares in equity-accounted entities The Group has the following investments in joint ventures:

Interest in share capital % Country 31.12.2011 31.12.2010 Butadien Kralupy a.s...... The Czech Republic 49.0% 49.0%

F-217 The Synthos S.A. Group Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (Continued) (in PLN ‘000, unless otherwise stated)

Note 16. Shares in equity-accounted entities (Continued) The Group has a 49.0% interest in Butadien Kralupy a.s in Kralupy nad Vltavou, the Czech Republic, being a joint venture of Synthos Kralupy a.s. and Unipetrol a.s. The joint venture was established in order to construct a new installation for the production of butadiene which is delivered to Group companies.

Profit / Assets Liabilities Loss for non-current current non-current current Revenue Expenses the period 31 December 2011 Butadien Kralupy a.s...... 202,462 154,930 129,037 122,349 822,033 779,064 42,969 31 December 2010 Butadien Kralupy a.s...... 197,732 79,818 146,797 73,228 316,918 304,475 12,443

31 December 31 December 2011 2010 As at the beginning of the period ...... 28,187 10,323 Acquisition of shares ...... — 11,613 Share in profits/ (losses) ...... 21,055 6,097 Exchange differences ...... 2,700 154 As at the end of the period ...... 51,942 28,187

The Group’s share in the profits of equity-accounted joint ventures amounted to PLN 21,055 thousand in the reporting period ended 31 December 2011 (the profit for 2010: PLN 6,097 thousand).

Note 17. Deferred income tax Deferred income tax assets and liabilities were recognized in respect of the following items of assets and liabilities:

Deferred income tax assets and liabilities

Net deferred tax asset/ Assets Liabilities liability 31.12.2011 31.12.2010 31.12.2011 31.12.2010 31.12.2011 31.12.2010 Property, plant and equipment and investment property ...... — (44,114) 50,893 44,458 50,893 344 Other investments ...... (769) (1,718) — 1,422 (769) (296) Inventories ...... — (125) — 145 — 20 Trade and other receivables ...... (1,089) (1,639) — — (1,089) (1,639) Employee benefits ...... (184) (1,174) — — (184) (1,174) Provisions ...... (771) (10,288) — — (771) (10,288) Liabilities ...... (1,207) (4,099) — — (1,207) (4,099) Investment relief ...... (58,208) — — — (58,208) — Tax loss carryforwards ...... (17,268) — — — (17,268) — Deferred income tax asset/liability ... (79,496) (63,157) 50,893 46,025 (28,603) (17,132) Offsetting ...... 50,893 5,636 (50,893) (5,636) — — Deferred income tax asset / liability on the balance sheet ...... (28,603) (57,521) — 40,389 (28,603) (17,132) Deferred income tax asset/liability to be realized within 12 months ..... (14,552) (10,159) — 5,614 (14,552) (4,545) Deferred income tax asset/liability to be realized after 12 months ...... (14,051) (47,362) — 34,775 (14,051) (12,587)

F-218 The Synthos S.A. Group Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (Continued) (in PLN ‘000, unless otherwise stated)

Note 17. Deferred income tax (Continued) Deferred tax asset not recognized The Group recognized a deferred tax asset in respect of the tax loss for 2011 and a tax relief only partially, to the extent the Group will be able to realize it in future. The deadline for utilization of the tax loss expires in 2016.

Change in temporary timing differences during the period

Change in temporary timing differences recognized in Foreign Statement of exchange As at comprehensive Revaluation translation As at 01.01.2011 income reserve reserve 31.12.2011 Property, plant and equipment ...... 344 47,056 3,493 50,893 Other investments ...... (296) (1,367) 860 34 (769) Inventories ...... 20 74 (94) — Trade and other receivables ...... (1,639) 550 — — (1,089) Employee benefits ...... (1,174) 990 — — (184) Provisions ...... (10,288) 9,517 (771) Investment relief ...... — (57,221) — (987) (58,208) Tax loss carryforwards ...... — (17,040) — (228) (17,268) Liabilities ...... (4,099) 2,983 — (91) (1,207) (17,132) (16,432) 860 2,127 (28,603)

Change in temporary timing differences recognized in Foreign Statement of exchange Profit/(Loss) As at comprehensive Revaluation translation on disposal of As at 01.01.2010 income reserve reserve shares 31.12.2010 Property, plant and equipment ...... (2,046) 3,745 738 (2,093) 344 Other investments ...... (132) 636 (798) (2) — (296) Inventories ...... (411) 434 — (2) — 20 Trade and other receivables . (1,192) (433) (15) — (1,639) Loans granted and received . — 1 — — — — Employee benefits ...... (945) (228) — (2) — (1,174) Provisions ...... (11,409) 1,142 — (21) — (10,288) Other ...... — — — — — — Liabilities ...... (1,907) (2,193) — — — (4,099) (18,042) 3,105 (798) (696) (2,093) (17,132)

Note 18. Short-term loans granted

31 December 2011 31 December 2010 Loan granted to Butadien Kralupy ...... 7,859 7,257 Total ...... 7,859 7,257

F-219 The Synthos S.A. Group Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (Continued) (in PLN ‘000, unless otherwise stated)

Note 19. Inventories

31 December 2011 31 December 2010 Materials ...... 129,146 88,086 Work in progress ...... 68,467 65,144 Finished goods ...... 241,886 153,848 Goods for resale ...... 37,033 326 476,532 307,404

Inventories are presented net of impairment losses of PLN 3,378 thousand (PLN 4,725 thousand as at 31 December 2010). Changes in impairment losses result from the sale, utilization or scrapping of the respective inventory items and are recognized in the statement of comprehensive income under cost of sales. In 2011, impairment losses recognized in respect of inventories in the statement of comprehensive income amounted to PLN 962 thousand (PLN 11 thousand in 2010).

Note 20. Trade and other receivables

31 December 2011 31 December 2010 Trade receivables from related entities ...... 52,899 30,866 Trade receivables from other entities ...... 935,170 658,384 Other taxes receivable ...... 95,542 54,629 Other receivables ...... 3,541 10,310 Payments in advance ...... 2,472 1,749 1,089,624 755,938

Trade and other receivables are presented net of impairment losses of PLN 7,495 thousand (PLN 8,441 thousand as at 31 December 2010). Impairment losses on receivables were recognized due to the high probability of the respective receivables becoming irrecoverable. Changes in impairment losses on trade receivables were presented in the statement of comprehensive income under cost of sales. In 2011, impairment losses recognized in respect of receivables in the statement of comprehensive income amounted to PLN 5,451 thousand (PLN 1,008 thousand in 2010). In addition, impairment losses of PLN 8,296 thousand (PLN 565 thousand in 2010) were reversed due to the repayment of the receivables. As at 31 December 2011, receivables pledged as collateral for the Group’s liabilities in respect of loans amounted to PLN 791,996 thousand (PLN 502,694 thousand as at 31 December 2011). The adopted receivables payment period in the course of ordinary sales is 30-120 days, depending on the operating segment.

Note 21. Cash and cash equivalents

31 December 2011 31 December 2010 Cash in hand ...... 185 143 Cash at bank ...... 602,490 357,104 Short-term deposits ...... 450,596 305,469 Cash equivalents ...... 7,152 1,191 Cash and cash equivalents disclosed on the balance sheet ...... 1,060,424 663,907 Cash and cash equivalents in the cash flow statements ...... 1,060,424 663,907

In accordance with the Polish law, companies registered in Poland manage a Social Fund on behalf of their employees. Contributions to the Social Fund are deposited on separate bank accounts of the respective

F-220 The Synthos S.A. Group Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (Continued) (in PLN ‘000, unless otherwise stated)

Note 21. Cash and cash equivalents (Continued) companies and cannot be used in operating activities. As at 31 December 2011, cash and cash equivalents on the Social Fund accounts amounted to PLN 674 thousand (PLN 478 thousand as at 31 December 2010). Except for the said amounts of the Social Fund, as at 31 December 2011 and 31 December 2010 the Group had no other cash and cash equivalents with restricted ability to dispose of them.

Note 22. Share capital

31 December 2011 31 December 2010 Number of shares at the beginning of the period ...... 1323250000 1323250000 Number of shares at the end of the period ...... 1 323 250 000 1 323 250 000 Nominal value of 1 share (PLN) ...... 0,03 0,03

Holders of ordinary shares are entitled to receive dividend and have a right to one vote per share at the General Shareholders’ Meeting. All shares give the same right to participate in the Company’s assets in the case of their division. As at 31 December 2011, the following Company’s shareholders held more than 5% of total voting rights: Mr Michał Sołowow held indirectly—through subsidiaries—826,559,009 shares in Synthos S.A. representing a 62.46% interest in the share capital and 826,559,009 votes at the GSM, representing 62.46% of total voting rights. Among the shares held indirectly by Mr Michał Sołowow as at the date of publication of this report are, inter alia, shares in Synthos S.A. held by FTF Galleon S.A. with its registered office in Luxembourg. The company holds 617,001,504 shares in Synthos S.A. representing 46.62% of the share capital and total voting rights at the GSM of Synthos S.A. Barcocapital Investment Ltd. The company holds 192,774,629 shares in Synthos S.A. representing 14.57% of the share capital and total voting rights at the GSM of Synthos S.A. Columbus Prime Sp. z o.o. with its registered office in Kielce, which holds 16,782,876 shares in Synthos S.A. representing 1.27% of the share capital and total voting rights at the GSM of Synthos S.A. ING Otwarty Fundusz Emerytalny holds 66,498,055 shares in the Company representing 5.03% of the share capital. These shares give rights to 66,498,055 votes at the General Shareholders’ Meeting of the Company representing 5.03% of total voting rights. Information on the holdings of the Issuer’s shares by the said shareholders is disclosed in accordance with declarations submitted by these shareholders to the Issuer in accordance with Article 69 of the Act of 29 July 2005 on the public offering and the conditions for introducing financial instruments to organized trading systems and on public companies (consolidated text, Journal of Laws of 2009, No. 185, item 1439). Any changes in the holding of significant blocks of shares during the reporting period, i.e. from 1 January 2011 to 31 December 2011, were reported by the Issuer in current reports No. 19/2011 of 14 June 2011, No. 20/2011 of 14 June 2011 and No. 39/2011 of 9 December 2011. There were no changes in the ownership structure of significant blocks of the Issuer’s shares after the reporting period, i.e. from 1 January 2012 to the date of submission of this report.

F-221 The Synthos S.A. Group Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (Continued) (in PLN ‘000, unless otherwise stated)

Note 23. Earnings per share Basic earnings per share Basic earnings per share were calculated based on the net profit of the shareholders of the Parent entity and the weighted average number of shares as at the date of preparation of the financial statements. They were determined as follows:

31 December 2011 31 December 2010 Net profit for the year in PLN ‘000 ...... 960,817 476,856 Weighted average number of shares as at the end of the period .... 1,323,250,000 1,323,250,000 Earnings per share Basic (PLN) ...... 0.73 0.36 Diluted (PLN) ...... 0.73 0.36

Diluted earnings per share There are no factors resulting in the dilution of earnings per share.

Note 24. Liabilities in respect of loans, borrowings and other debt instruments The Note presents the Group’s liabilities in respect of loans, borrowings and other debt instruments.

31 December 2011 31 December 2010 Non-current liabilities Bank loans ...... 689,942 602,332 689,942 602,332 Current liabilities Current portion of bank loans ...... 141,771 123,953 141,771 123,953

Loan repayment schedule

up to from 1 year from 2 to after Total 1 year to 2 years 5 years 5 years currency and interest rate PLN/WIBOR + margin ...... 47,527 11,842 14,312 21,373 — EUR/EURIBOR + margin ...... 784,186 129,929 168,799 394,822 90,636 831,713 141,771 183,111 416,195 90,636

Interest accrued on loans as at 31 December 2011 amounted to PLN 2,419 thousand. Bank loans are secured with mortgages on buildings and structures and pledges on the Group’s plant and machinery totalling PLN 521,700 thousand (PLN 384,985 thousand as at 31 December 2010) and with assignments of receivables totalling PLN 791,996 thousand (PLN 502,694 thousand as at 31 December 2010).

F-222 The Synthos S.A. Group Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (Continued) (in PLN ‘000, unless otherwise stated)

Note 25. Employee benefits

31 December 2011 31 December 2010 Non current employee benefit liabilities Retirement bonuses ...... 1,561 1,606 Death benefits ...... 1,002 1,267 Disability compensation ...... 782 868 Total employee benefit liabilities ...... 3,345 3,741

31 December 2011 31 December 2010 Current employee benefit liabilities Retirement bonuses ...... 174 157 Long-service bonuses ...... — 186 Death benefits ...... 107 123 Disability compensation ...... 134 134 Health insurance ...... — 64 Total employee benefit liabilities ...... 415 664

31 December 2011 31 December 2010 Changes in employee benefit liabilities Employee benefit liabilities at the beginning of the period ...... 4,405 5,210 Payment of retirement bonuses and long-service bonuses ...... (154) (442) Payment of death benefits ...... (35) — Additional provisions recognized ...... 458 (384) Foreign exchange differences on translation ...... 2 21 3,760 4,405

31 December 2011 31 December 2010 Key actuarial assumptions as at the balance sheet date Discount rate ...... 5.95% 6.25% Future salary growth ...... 2.8% 2.5%

F-223 The Synthos S.A. Group Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (Continued) (in PLN ‘000, unless otherwise stated)

Note 26. Provisions

Restructuring Rehabilitation Other provision provision provisions Total As at 1 January 2011 ...... 50,705 2,758 1,149 54,612 Increase ...... — 491 — 491 Utilization ...... (10) (187) (31) (228) Foreign exchange differences on translation ...... — 197 86 283 As at 31 December 2011 ...... 50,695 3,259 1,204 55,158

Non-current portion ...... 50,695 2,408 1,204 54,307 Current portion ...... — 141 710 851 50,695 2,549 1,914 55,158 As at 1 January 2010 ...... 52,717 2,853 4,673 60,243 Increase ...... — 228 74 302 Utilization ...... (130) — (296) (426) Release ...... — (371) (3,368) (3,739) Revaluation due to exchange rate changes ...... (1,882) — — (1,882) Foreign exchange differences on translation ...... — 48 66 114 As at 31 December 2010 ...... 50,705 2,758 1,149 54,612 Non-current portion ...... 50,705 2,617 475 53,797 Current portion ...... — 141 674 815 50,705 2,758 1,149 54,612

Restructuring Liquidation of the Electrolysis Division In December 2005, the Management Board of Firma Chemiczna Dwory S.A decided to close the Electrolysis Division. The level of contamination of the Electrolysis Division buildings, identified on the basis of test measurements and past experience of the Group indicates that the buildings will need to be completely demolished and that the Group will need to incur treatment costs in order to meet the environmental requirements set out in the law and in the Integrated Permit for the Electrolysis Division. In 2010, when reviewing the calculation of the provision for costs of closing the Division, it was assumed that demolition work will be completed by the end of 2030 (the estimated useful life of the buildings).

Provision for hydrological protection of underground water The provision relates to environmental risk. The risk is associated with hydro-geological protection of underground water where there is an increased presence of free oily carbohydrates in the ground. An updated analysis of the risk relating to undersoil shows as certain contamination with free aromatic carbohydrates in the location of warehouses for liquid gases, styrene and polystyrenes. As at 31 December the Group recognized a provision of PLN 2,549 thousand for anticipated costs of land rehabilitation. At the same time, the Group conducts research and protective works in order to prevent the penetration of pollutants through the hydro-geological protection barrier.

Other provisions Other provisions include mainly provisions for employee compensation for accidents at work and for tax proceedings.

F-224 The Synthos S.A. Group Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (Continued) (in PLN ‘000, unless otherwise stated)

Note 27. Trade and other payables

31 December 31 December 2011 2010 Trade payables to other entities ...... 413,187 308,677 Trade payables to related entities ...... 76,985 42,339 Tax and insurance payables, except income tax payable ...... 3,580 6,318 Salaries and wages payable ...... 6,387 5,321 Accruals ...... 47,548 42,025 Special funds ...... 326 393 Capital expenditure commitments ...... 44,459 61,581 Other liabilities ...... 18,847 4,414 611,319 471,068

Note 28. Reasons behind the differences between balance sheet changes in certain items and the changes resulting from consolidated cash flow statement

from 01.01.2010 from 01.01.2010 to 31.12.2011 to 31.12.2010 Receivables: Balance sheet change in trade and other receivables ...... (333,686) (240,422) Change in prepayments for non-current assets and receivables from investing activities ...... (6,885) (442) Foreign exchange differences on translation ...... 57,239 (7,151) Change in receivables in the consolidated cash flow statement ...... (283,332) (248,015) Liabilities: Balance sheet change in trade and other payables and state subsidies . . . 140,251 138,483 Change in capital expenditure commitments ...... 18,714 (19,519) Change in financial instruments ...... 13,094 Foreign exchange differences on translation ...... (32,633) (3,093) Change in liabilities in the consolidated cash flow statement ...... 139,125 115,871

Note 29. Financial instruments Classification of financial instruments

31.12.2011 Non-current Current Total Available for sale financial assets ...... 148,609 — 148,609 Loans and trade and other receivables ...... 83,046 999,469 1,082,515 Cash and cash equivalents ...... — 1,060,424 1,060,424 Financial liabilities measured at amortized cost ...... (689,942) (723,950) (1,413,892) Financial liabilities at fair value through profit or loss (derivative instruments) ...... — (9,862) (9,862) (458,287) 1,414,999 956,712

F-225 The Synthos S.A. Group Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (Continued) (in PLN ‘000, unless otherwise stated)

Note 29. Financial instruments (Continued)

31.12.2010 Non-current Current Total Available-for-sale financial assets ...... 267,250 — 267,250 Loans and trade and other receivables ...... 65,365 706,817 772,182 Cash and cash equivalents ...... — 663,907 663,907 Financial liabilities measured at amortized cost ...... (602,332) (578,575) (1,180,907) Financial liabilities at fair value through profit or loss (derivative instruments) ...... (6,959) (6,959) (6,959) (269,717) 908,352 638,635

Effective interest rates and repricing dates The tables below present effective interest rate on interest-bearing assets and liabilities and their repricing dates.

Over Effective interest rate* Total < 1 year 1 - 5 years 5 years Loans ...... PRIBOR+ margin 70,732 7,859 62,873 WIBOR+ margin 20,173 20,173 Cash and cash equivalents ...... WIBOR +/- margin 424,434 424,435 PRIBOR+ margin 109,660 109,660 EURIBOR + margin 435,341 435,341 USDLIBOR+ margin 90,200 90,201 Bank loans ...... EURIBOR + margin 784,186 129,929 563,621 90,636 WIBOR + margin 47,527 11,842 35,685

* does not differ significantly from the nominal rate

Financial risk management Credit risk, liquidity risk and market risk (which includes mainly interest rate risk and foreign exchange risk) arise in the ordinary course of the Group’s activities. The objective of the Group’s financial risk management is to minimize the impact of market-related factors, such as foreign exchange rates and interest rates, on key financial parameters budgeted by the Group (profit or loss, cash flows) using natural hedging and derivative financial instruments.

Credit risk Credit risk is the risk of financial losses incurred by the Group as a result of a default by a client or counterparty of a financial instrument. Credit risk relates mainly to the Group’s receivables from clients and financial investments. Analysis of the Group’s maximum credit risk exposure is presented in the table below:

31.12.2011 31.12.2010 Loans granted ...... 90,905 72,622 Trade and other receivables ...... 991,610 699,560 Cash and cash equivalents ...... 1,060,424 663,907 2,142,939 1,436,089

F-226 The Synthos S.A. Group Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (Continued) (in PLN ‘000, unless otherwise stated)

Note 29. Financial instruments (Continued) Trade and other receivables The structure of credit risk on trade receivables by product category:

31.12.2011 31.12.2010 Dispersions and adhesives ...... 15,464 12,334 Rubbers and latexes ...... 616,812 377,201 Styrene ...... 275,551 230,664 Other ...... 83,783 79,361 991,610 699,560

Credit risk is the risk of financial losses incurred by the Group as a result of a default by a client or counterparty of a financial instrument. Credit risk relates mainly to the Group’s receivables from clients and financial investments. Credit risk within the Group relates mainly to trade receivables. Given the procedures adopted by the Group and a broad client base it is estimated that concentration of the credit risk is not significant. The Group monitors, on an on-going basis, creditworthiness of its clients and in justified cases requires collateral. In addition, ca. 45% of the Group’s receivables are covered by an insurance policy. Counterparties with no past record of cooperation with the Group or who buy sporadically have to pay in advance. Trade credit is granted to clients with a positive record of past cooperation and whose creditworthiness was assessed based on both internal and external sources. Exposure to credit risk is defined as the total of outstanding receivables which are monitored individually on an on-going basis. The Group’s turnover is focused in three segments relating to the profile of its operations. The largest group includes receivables from the recipients of rubbers—ca. 62% of total receivables. The structure of the legal forms of such clients is rather homogeneous, as the majority of clients are members of international concerns. In this group, 29% of the balance of receivables is insured; in addition, 19% is secured with a letter of credit or documentary collection. Recipients of styrene form another important group—28% of the receivables. Clients in this segment form a heterogeneous group in terms of their legal form, as they include both commercial companies and sole entrepreneurs. 78% of receivables in this group are insured. The third main segment in the Group’s core operations includes the recipients of dispersions, adhesives and latexes—2% of total receivables. In terms of legal forms, this client group is similar to the second segment. At the same time, 90% of receivables are insured.

Impairment The table below presents the ageing analysis of trade receivables:

31.12.2011 31.12.2011 31.12.2010 31.12.2010 Gross Impairment Gross Impairment value loss value loss Not overdue ...... 921,499 — 655,209 — Overdue ...... — — 1 - 30 days ...... 54,337 — 39,641 — 30 - 180 days ...... 16,346 572 4,879 2,095 181 - 365 days ...... 799 799 904 904 Over 1 year ...... 6,124 6,124 7,368 5,442 999,105 7,495 708,001 8,441

F-227 The Synthos S.A. Group Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (Continued) (in PLN ‘000, unless otherwise stated)

Note 29. Financial instruments (Continued) Increases and decreases in impairment losses were as follows:

2011 2010 As at 1 January ...... 8,441 11,554 OB adjustment ...... 1,246 — Recognized ...... 5,451 1,008 Utilized ...... — (3,685) Released ...... (8,296) (565) Foreign exchange differences on translation ...... 653 129 As at 31 December ...... 7,495 8,441

Cash and cash equivalents and deposits Cash and cash equivalents are deposited with reputable financial institutions, namely the following banks: Citibank Handlowy, Deutsche Bank, Fortis Bank, Bank ING, Pekao S.A., ABN Amro Bank N.V., BAWAG Bank CZ, Komercji Banka.

Loans granted The Group’s credit risk resulting from loans granted relates to receivables from related entities. At present, there are no indications of the possible default by the related entities on loans obtained.

Liquidity risk Liquidity risk is the risk of the Group’s inability to settle its financial liabilities as they become due. Measures intended to reduce liquidity risk include proper management of liquidity, executed by accurately evaluating the levels of cash and cash equivalents based on cash flow plans for various time horizons. At present, the Group has significant surplus of cash which practically eliminates any liquidity risk. As at 31 December 2011, the Group has no overdrafts available.

December 2011

Present Contractual up to over value cash flows 1 year 1 - 5 years 5 years Financial liabilities Bank loan ...... (831,713) (831,713) (141,771) (599,306) (90,636) Trade and other payables ...... (582,179) (582,179) (582,179) — — Interest rate swap ...... (9,862) (9,862) (2,466) (7,396) — (1,423,754) (1,423,754) (726,416) (606,702) (90,636)

December 2010

Present Contractual up to over value cash flows 1 year 1 - 5 years 5 years Financial liabilities Bank loan ...... (726,285) (726,285) (123,953) (598,563) (3,769) Trade and other payables ...... (454,622) (454,622) (454,622) — — Interest rate swap ...... (6,959) (6,959) — (6,959) — (1,187,866) (1,187,866) (578,575) (605,522) (3,769)

F-228 The Synthos S.A. Group Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (Continued) (in PLN ‘000, unless otherwise stated)

Note 29. Financial instruments (Continued) Market risk Interest rate risk The group’s exposure to changes in interest rates relates mainly to cash and cash equivalents, investments and variable interest rate loans and borrowings based on EURIBOR + margin or WIBOR + margin interest rates. In 2011, the Group had swap contracts to hedge against interest rate risk. As at the balance sheet date, the Group had the following interest rate swaps: • a swap hedging EUR interest rateEUR 40,000; • a swap hedging EUR interest rateEUR 40,000; Remeasurement as at the balance sheet date of these open contracts resulted in a loss of PLN 9,862 thousand. The table below presents the Group’s sensitivity profile (maximum exposure) with regard to interest rate risk by presenting financial instruments divided into variable- and fixed-interest instruments:

December 2011

Base interest rate WIBOR PRIBOR EURIBOR Variable interest rate instruments Financial assets* ...... 444,607 180,392 435,341 Financial liabilities ...... (47,527) — (784,186) 397,080 180,392 (348,845)

December 2010

Base interest rate WIBOR PRIBOR EURIBOR Variable interest rate instruments Financial assets* ...... 309,454 245,271 146,162 Financial liabilities ...... (30,853) — (695,432) 278,601 245,271 (549,270)

* financial assets exclude cash deposits in GBP and USD The Group holds no fixed interest financial instruments at fair value through profit or loss. Consequently, any potential changes in interest rates as at the balance sheet will not affect these instruments or the statement of comprehensive income. Nor does the Group holds any fixed interest instruments recognized directly in equity and, therefore, any potential changes in interest rates will not affect the equity.

F-229 The Synthos S.A. Group Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (Continued) (in PLN ‘000, unless otherwise stated)

Note 29. Financial instruments (Continued) The group performed a sensitivity analysis of variable-interest financial instruments to changes in market interest rates. The table below presents the potential impact of an increase and a decrease in interest rates of 11 basis points on the profit or loss and equity. The analysis was performed based on an assumption that all other variables, such as e.g. foreign exchange rates, remain unchanged.

Statement of comprehensive income Equity increase of decrease of increase of decrease of 100bp 100bp 100bp 100bp WIBOR 31 December 2011 ...... 3,970 (3,970) 3,970 (3,970) 31 December 2010 ...... 2,786 (2,786) 2,786 (2,786) PRIBOR 31 December 2011 ...... 1,803 (1,803) 1,803 (1,803) 31 December 2010 ...... 2,452 (2,452) 2,452 (2,452) EURIBOR 31 December 2011 ...... (3,488) 3,488 (3,488) 3,488 31 December 2010 ...... (5,492) 5,492 (5,492) 5,492

Foreign exchange risk Approximately 70% of the group’s revenue and costs relates to transactions settled in foreign currencies. Exchange rate fluctuations affect the revenue on sales and costs of purchase or raw materials. The appreciation of domestic currency adversely affects the profitability of export sales and domestic sales, even if changes in revenue on the export sales resulting from exchange rate fluctuations and revenue on domestic sales measured on the basis of foreign exchange rates are compensated by changes in the costs of imported raw materials (or measured on the basis of foreign exchange rates, thus to a large extent, mitigating the Group’s exposure to foreign exchange risk. Foreign exchange risk management comprises the following processes: risk identification and measurement, monitoring the situation on the financial markets, and adjusting, where possible, the levels of liabilities and receivables in specific currencies. The table below presents the Group’s sensitivity profile (maximum exposure) with regard to changes in foreign exchange rates by presenting financial instruments classified by currency in which they are denominated (in PLN thousand).

31 December 2011

Items in foreign currency Items in functional currency EUR USD GBP CZK PLN Trade and other receivables ...... 564,418 143,068 2,321 186,314 186,394 Cash and cash equivalents ...... 435,341 90,200 731 109,660 424,492 Trade and other payables ...... (187,708) (30,434) — (173,052) (146,526) Liabilities in respect of loans ...... (784,186) — — — (47,527) Exposure to foreign exchange risk in the balance sheet ...... 27,865 202,834 3,052 not applicable not applicable

F-230 The Synthos S.A. Group Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (Continued) (in PLN ‘000, unless otherwise stated)

Note 29. Financial instruments (Continued) 31 December 2010

Items in foreign currency Items in functional currency EUR USD GBP CZK PLN Trade and other receivables ...... 398,657 60,087 411 123,381 117,024 Cash and cash equivalents ...... 146,162 32,421 789 172,649 311,886 Trade and other payables ...... (133,453) (32,532) (18) (116,519) (110,519) Liabilities in respect of loans ...... (695,432) — — — (30,853) Exposure to foreign exchange risk in the balance sheet ...... (284,066) 59,976 1,182 not applicable not applicable

The Group performed a sensitivity analysis of financial instruments denominated in foreign currencies to changes in exchange rates of these currencies. The table below presents the effect on the profit or loss of appreciation and depreciation of the functional currencies as at the balance sheet date by 10% in relation to all currencies. The analysis was performed based on an assumption that all other variables, such as e.g. interest rates, remain unchanged.

Net profit or loss 10% increase 10% decrease foreign foreign currency currency exchange exchange rates rates 31 December 2011 ...... 23,375 (23,375) 31 December 2010 ...... (22,290) 22,290

Price risk The Group’s exposure to price risk relates mainly to its holdings of shares listed on the Warsaw Stock Exchange and NYSE EURONEXT. Available-for-sale financial assets

2011 2010 As at 1 January ...... 267,250 259,638 Increase due to acquisition of shares ...... 21,556 11,813 Sale ...... — — Re-measurement recognized in equity ...... (140,197) (4,201) As at 31 December ...... 148,609 267,250

In the reporting period, the Group recognized in equity a loss on remeasurement of available-for-sale shares in 2011 of PLN 4,201 thousand (PLN 327 thousand in 2010)

Shares held (number) 2011 2010 —Echo Investment S.A...... 17,884,050 17,884,050 —Cersanit S.A...... 21,093,750 16,875,000 —Global BioEnergies ...... 59,625 —

F-231 The Synthos S.A. Group Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (Continued) (in PLN ‘000, unless otherwise stated)

Note 29. Financial instruments (Continued) The Group performed a sensitivity analysis of the shares held with regard to changes in the quotation of these assets. The table below presents the effect of an increase or decrease in the quoted prices of these shares by +/- 10% on the value of these assets.

Other comprehensive income 10% 10% increase in decrease in quoted quoted prices prices 31 December 2011 ...... 14,861 (14,861) 31 December 2010 ...... 26,725 (26,725) The risk of changes in prices of raw materials, finished goods, services resulting in a decrease in margins realized by the Group. In order to mitigate the respective risk, steps are taken to include in the sales contracts the provisions ‘‘symmetrical’’ to those contained in procurement contracts (e.g. provisions referring to ICIS-LOR quotations).

Fair value of financial instruments Detailed information on the fair value of financial instruments where estimation is possible: • Financial instruments remeasured to fair value as at 31 December 2011

Level 1 Level 2 Level 3 Available-for-sale assets ...... 148,609 — — Derivative instruments ...... — 9,862 — • Financial instruments remeasured to fair value as at 31 December 2010

Level 1 Level 2 Level 3 Available-for-sale assets ...... 267,250 — — Derivative instruments ...... — 6,959 —

Level 1 Shares in companies listed on stock exchanges. The fair value was determined based on exchange quotations.

Level 2 Swap contracts hedging interest rates on loans. The fair value was determined on the basis of valuations performed by banks which issued the said contracts.

Level 3 None.

Other instruments: • Cash and cash equivalents, current bank deposits. The carrying value of these instruments is close to their fair value due to the short maturities of these instruments.

F-232 The Synthos S.A. Group Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (Continued) (in PLN ‘000, unless otherwise stated)

Note 29. Financial instruments (Continued) • Trade receivables, other receivables, trade payables. The carrying value of these instruments is close to their fair value due to their current nature. • Non-current loans and borrowings. The carrying value of these instruments is close to their fair value due to the variable interest they bear.

Management of capital The main objective of the Group’s capital management policy is to maintain a strong capital base to ensure confidence on the part of investors, lenders and the market and to ensure the Group’s future development. The Group monitors changes in the ownership structure, return-on-equity indicators and debt-to-equity ratios. The Group aims to achieve a return on equity at a level satisfactory to its shareholders.

2011 2010 change Return on equity ...... 32.70% 22.34% 10.36 p.p. Debt-to-equity ratio ...... 55% 65% 10,00 p.p. In 2011, the Group recorded an increase in the return on equity of 10.36 percentage points. Such significant increase was due to the increased demand for chemical products following the crisis of 2008-2009. The debt-to-equity ratio is 55% and improved by 10 percentage points compared with the prior year, reflecting a stable structure of financing. During the year, there were no changes in the Group’s capital management policy.

Note 30. Operating leases Operating leases where the Group is the lessor The Group leased investment property under operating lease agreements. Future minimum payments under non-cancellable operating leases are as follows:

31 December 31 December 2011 2010 up to 1 year ...... 623 534 Between 1 and 5 years ...... 323 — Over 5 years ...... — — 946 534

Operating leases where the Group is the lessee The Group used land and plant and machinery under operating leases. Future minimum payments under non-cancellable operating leases are as follows:

31 December 31 December 2011 2010 up to 1 year ...... 4,503 3,155 Between 1 and 5 years ...... 11,474 12,620 Over 5 years ...... 21,818 —

F-233 The Synthos S.A. Group Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (Continued) (in PLN ‘000, unless otherwise stated)

Note 30. Operating leases (Continued) In 2011, the Group incurred operating lease expenses of PLN 4,489 thousand (PLN 3,155 thousand in 2010).

Note 31. Capital expenditure commitments As at the balance sheet date, the Group had capital expenditure commitments of PLN 41,390 thousand.

Note 32. Contingent liabilities, guarantees and warranties List of bank guarantees and letters of credit securing trade payables:

Guarantees issued

Date of Bank/Issuer of the security Entity Amount Currency Subject of guarantee issue Expiry date SYNTHOS Kralupy Subject of the Date of Bank/Issuer of the security Entity Amount Currency guarantee issue Expiry date The Royal Bank of Scotland . . . Customs Office, Prague 1,000,000 CZK excise duty guarantee 2008-04-30 2012-09-11 The Royal Bank of Scotland . . . Customs Office Melnˇ ´ık 20,000,000 CZK excise duty guarantee 2008-04-30 2012-10-31 The Royal Bank of Scotland . . . Customs Office Melnˇ ´ık 10,200,000 CZK excise duty guarantee 2008-04-30 2012-10-31 The Royal Bank of Scotland . . . Customs Office Melnˇ ´ık 1,500,000 CZK excise duty guarantee 2008-04-30 2012-10-31 LBBW Bank CZ a.s...... Customs Office Melnˇ ´ık 3,000,000 CZK excise duty guarantee 2009-01-20 2012-10-31 LBBW Bank CZ a.s...... Customs Office Most 69,000,000 CZK excise duty guarantee 2011-08-22 2012-08-21 The Royal Bank of Scotland . . . Customs Office Most 29,188,236 CZK excise duty guarantee 2011-09-01 2013-02-28

Butadien Kralupy—using SYNTHOS Kralupy bank credit Subject of the Date of Bank/Issuer of the security Entity Amount Currency guarantee issue Expiry date Fortis Bank ...... Customs Office Melnˇ ´ık 17,059,000 CZK excise duty guarantee 2011-10-17 Fortis Bank Synthos SA Guarantee granted ...... Styron Europe GmbH 4,200,000 EUR security for the 2010-11-03 2011-12-31 liabilities of Synthos Kralupy a.s. SYNTHOS Dwory Bill of exchange of Synthos Dwory ...... Customs Office in 11,000,000 PLN excise duty guarantee 2007-11-03 unspecified Nowy Targ Fortis Bank ...... 275,000 PLN zabezpieczenie 2012-04-27 akcyzowe Bill of exchange of Synthos Dwory ...... Polski Koncern 25,000,000 PLN trade payables Naftowy guarantee Bill of exchange ...... Kompania 1,500,000 PLN trade payables 2010-01-01 2011-12-31 W˛eglowa S.A. guarantee

The Group’s tax liabilities The tax authorities may examine the accounting and tax records within 5 years of the end of the year in which the tax returns were filed and assess additional tax liabilities of the Group Companies plus related penalties and interest. The Management Board believes that there are no circumstances that would indicate any possible material liability arising in this respect.

F-234 The Synthos S.A. Group Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (Continued) (in PLN ‘000, unless otherwise stated)

Note 33. Related party transactions Transactions with the Management

2011 2010 Remuneration of the Management Board Members Remuneration of the Management Board of Synthos S.A. Kalwat Tomasz ...... 352 — Krawczyk Dariusz ...... 2,535 1,585 Lange Zbigniew ...... 1,650 908 Piec Tomasz ...... 695 — Warmuz Zbigniew ...... 90 — Remuneration of the Management Board of Synthos Kralupy a.s. Kalwat Tomasz ...... — — Krawczyk Dariusz ...... 28 33 Lange Zbigniew ...... 65 31 Warmuz Zbigniew ...... 68 31 Remuneration of the Management Board of Synthos Dwory 7 społka´ z ograniczon˛a odpowiedzialno´sci˛a S.K.A. (formerly:Synthos Dwory Sp. z o.o.) Warmuz Zbigniew ...... 588 446 Remuneration of the Director of PBR Roubik Jiˇri...... 368 — Remuneration of the Director of Tamero Invest s.r.o Brandys Bogusław ...... 52 — Listik Evˇzen...... 403 — Remuneration of the Management Board of Miejsko—Przemysłowa Oczyszczalnia Sciek´ ow´ Sp. z o.o. Majcherczyk Antoni ...... 108 — Odrobina Janusz ...... 153 144 Prill Jarosław ...... 19 — 7,174 3,178

2011 2010 Remuneration of the Supervisory Board Ciesielski Wojciech ...... 21 48 Grodzki Jarosław ...... 47 — Bogusławski Rafał ...... — 1 Kalwat Tomasz ...... 37 84 Kwapisz Krzysztof ...... 27 — Mironski´ Grzegorz ...... 48 48 Oskard Robert ...... 48 39 Waniołka Mariusz ...... 60 60 Remuneration of the Supervisory Board of Synthos Kralupy a.s. Ziembla Wiesław ...... 24 11 Oskard Robert ...... 31 15 Evzen Listik ...... 18 13 361 319

F-235 The Synthos S.A. Group Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (Continued) (in PLN ‘000, unless otherwise stated)

Note 33. Related party transactions (Continued) Other agreements with Management In accordance with an agreement of 1.08.2011, the Company granted a loan of PLN 800 thousand to Tomasz Kalwat. The annual interest rate on the loan was determined at annual WIBOR+ margin.

Other related party transactions

31.12.2011 31.12.2010 Receivables Butadien Kralupy a.s...... 123,606 28,763 AVE Kralupy Innovation ...... 984 931 Other ...... 111 42 Total ...... 124,701 29,736 Liabilities Butadien Kralupy a.s...... 75,664 39,115 AVE Kralupy Innovation ...... 495 376 Columbus Prime ...... 783 11 Other ...... 43 2 Total ...... 76,985 39,504

2011 2010 Revenue Butadien Kralupy a.s...... 391,525 118,137 AVE Kralupy Innovation ...... 5,569 4,446 Other ...... 423 283 Total ...... 397,517 122,749 Expenses Klub Sportowy Cersanit ...... 2,160 2,160 Magellan Pro Equity fund I SA ...... — 1471 Butadien Kralupy a.s...... 590,009 220,371 AVE Kralupy Innovation ...... 6,439 6,131 Columbus Prime ...... 5,908 10,519 Other ...... 877 130 Total ...... 605,393 240,782

Note 34. Post-balance sheet date events There were no significant post balance sheet date events.

Note 35. Accounting estimated and assumptions The main accounting estimates and assumptions are presented in the relevant notes to the financial statements: • estimates relating to the impairment of inventories are presented in Note 19; • estimates and assumptions relating to the impairment of receivables are presented in Notes 20 and 29; • estimates relating to employee benefits are presented in Note 25; • estimates relating to provisions for liabilities are presented in Note 26;

F-236 The Synthos S.A. Group Notes to the consolidated financial statements for the 12 months ended 31 December 2011. (Continued) (in PLN ‘000, unless otherwise stated)

Note 35. Accounting estimated and assumptions (Continued) • estimates relating to the deferred tax asset recognized are presented in Note 17.

Note 36. Approval of the financial statements The Management Board of the Parent Entity of the Synthos S.A. Group declares that these consolidated financial statements of the Group for the period from 1 January to 31 December 2011 were approved as of 2 March 2012.

F-237 THE ISSUER Synthos Finance AB (publ) Stureplan 4C, 4tr. 114 35 Stockholm Sweden

REGISTERED OFFICE OF THE COMPANY Synthos S.A. Chemikow´ 1 32-600 O´swi˛ecim Poland

LEGAL ADVISORS TO THE COMPANY as to U.S. Law as to Polish Law as to Czech Law as to Swedish Law White & Case LLP White & Case P. Pietkiewicz, White & Case White & Case 5 Old Broad Street M. Studniarek i (Europe) LLP Advokat AB London EC2N 1DW Wspolnicy—´ Na Pˇr´ıkop 14 Biblioteksgatan 12 United Kingdom Kancelaria Prawna sp.k. 110 00 Prague 1 Box 5573 Marszałkowska 142 Czech Republic SE-114 85 00-061 Warsaw Stockholm, Sweden Poland

LEGAL ADVISORS TO THE INITIAL PURCHASERS as to U.S. Law as to Polish Law as to Czech Law as to Swedish Law Clifford Chance LLP Clifford Chance, Janicka, Clifford Chance Advokatfirman 10 Upper Bank Street Kruzewski, Namiotkiewicz i Prague LLP, Vinge KB London E14 5JJ Wspolnicy´ sp. k. organizaˇın´ı sloˇzka Smalandsgatan˚ 20, United Kingdom Norway House, ul. Lwowska 19 Jungmannova 745/24 Box 1703 00-060 Warsaw 110 00 Prague 1 SE-11187 Poland Czech Republic Stockholm Sweden

INDEPENDENT AUDITORS TO THE COMPANY PricewaterhouseCoopers Sp. z o.o. Al. Armii Ludowej 14 00-638 Warsaw Poland

TRUSTEE, PAYING AGENT AND TRANSFER AGENT Citibank, N.A., London Branch Citigroup Centre Canada Square, Canary Wharf London E14 5LB United Kingdom

REGISTRAR LISTING AGENT Citigroup Global Markets Deutschland AG Arthur Cox Listing Services Limited Reuterweg 16 Earlsfort Center 60323 Frankfurt Earlsfort Terrace Germany Dublin 2 Ireland

LEGAL ADVISOR TO THE TRUSTEE Reed Smith LLP Broadgate Tower 20 Primrose Street London EC2A 2RS United Kingdom Synthos Finance AB (publ)

E350,000,000 4.000% Senior Notes due 2021

9SEP201411041283

September 30, 2014