POLIMEX-MOSTOSTAL S.A. FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015 Warsaw, 18 March 2016 Polimex-Mostostal S.A. Financial statements for the year ended 31 December 2015 (PLN’000) TABLE OF CONTENTS Income statement .......................................................................................................................... 5 Statement of comprehensive income ............................................................................................ 6 Balance Sheet ............................................................................................................................... 7 Balance Sheet ............................................................................................................................... 8 Cash flow statement ...................................................................................................................... 9 Statement of changes in equity ................................................................................................... 11 NOTES TO THE FINANCIAL STATEMENTS DRAWN UP AS AT 31 DECEMBER 2015 .................................. 12 1. General information ............................................................................................................... 12 1.1. Composition of the Management Board and the Supervisory Board ......................... 12 2. Approval of the financial statements ..................................................................................... 14 3. Application of International Financial Reporting Standards .................................................. 14 3.1. Statement of compliance............................................................................................. 14 3.2. Status of IFRS endorsement by the EU ...................................................................... 14 3.3. First-time adoption ...................................................................................................... 15 3.4. Early adoption of standards and interpretations ......................................................... 15 3.5. Standards and interpretations already published and approved by the EU, but not yet effective ....................................................................................................................... 15 3.6. Voluntary change in accounting principles.................................................................. 16 4. Summary of significant accounting policies .......................................................................... 18 4.1. Going concern ............................................................................................................. 18 4.2. Basis for preparation of the financial statements ........................................................ 18 4.3. Translation of foreign currency items .......................................................................... 18 4.4. Property, plant and equipment .................................................................................... 19 4.5. Investment property .................................................................................................... 19 4.6. Intangible assets ......................................................................................................... 20 4.7. Lease........................................................................................................................... 21 4.8. Impairment of non-financial non-current assets .......................................................... 21 4.9. Borrowing costs ........................................................................................................... 22 4.10. Financial assets .......................................................................................................... 22 4.11. Impairment of financial assets .................................................................................... 23 4.12. Embedded derivative instruments ............................................................................... 24 4.13. Derivative financial instruments and hedges .............................................................. 24 4.14. Inventory ..................................................................................................................... 26 4.15. Trade and other receivables; performance bonds related to construction contracts .. 26 4.16. Cash and cash equivalents ......................................................................................... 26 4.17. Credit facilities, loans and debt securities (bonds) ..................................................... 26 4.18. Non-current assets (or disposal groups) held for sale ................................................ 27 4.19. Other assets ................................................................................................................ 27 4.20. Trade and other liabilities; performance bonds related to construction contracts ...... 27 4.21. Liabilities due to employee benefits ............................................................................ 28 4.22. Provisions .................................................................................................................... 28 4.23. Retirement and jubilee benefits .................................................................................. 28 4.24. Share-based payments ............................................................................................... 29 The accounting principles (policy) and notes to the financial statements on pages 12 to 121 constitute an integral part hereof. 2 Polimex-Mostostal S.A. Financial statements for the year ended 31 December 2015 (PLN’000) 4.25. Allocation of profit to employee benefits and special funds ........................................ 30 4.26. Revenue ...................................................................................................................... 30 4.27. Taxes........................................................................................................................... 31 4.28. Net earnings per share................................................................................................ 32 5. Material values based on professional judgment and estimates .......................................... 32 5.1. Professional judgment................................................................................................. 32 5.2. Uncertainty of estimates.............................................................................................. 33 6. Operating segments .............................................................................................................. 34 6.1. Geographic information ............................................................................................... 38 7. Revenue and expenses ......................................................................................................... 39 7.1. Sales revenue ............................................................................................................. 39 7.2. Other operating revenue ............................................................................................. 41 7.3. Other operating expenses ........................................................................................... 42 7.4. Financial revenue ........................................................................................................ 42 7.5. Financial revenue from conversion of debt into shares .............................................. 42 7.6. Financial expenses ..................................................................................................... 43 7.7. Expenses by type ........................................................................................................ 44 7.8. Amortization/depreciation expense charged to profit or loss ...................................... 45 7.9. Cost of employee benefits .......................................................................................... 45 8. Income taxes ......................................................................................................................... 46 8.1. Income taxes ............................................................................................................... 46 8.2. Deferred income tax .................................................................................................... 48 9. Earnings per share ................................................................................................................ 51 10. Dividends paid and proposed ................................................................................................ 52 11. Property, plant and equipment .............................................................................................. 53 11.1. Fair value of land and buildings .................................................................................. 55 11.2. Investment property ...................................................................................................... 60 11.3. Liabilities under finance and buy-back lease agreements .............................................. 63 12. Intangible assets ................................................................................................................... 63 13. Financial assets ..................................................................................................................... 64 13.1. Non-current