Dear Investors, This report depicts the achievements and financial performance generated by Synthos S.A. in 2015. Despite the highly demanding market environment and the extraordinarily difficult conditions it faced for nearly half a year on account of the lack of supplies from the cracker plant in Litvinov, Synthos managed to generate financial performance at a level fundamentally no different from previous years. Synthos S.A.’s sales revenues from 1 January to 31 December 2015 were PLN 112 million. Operating profit was PLN 357 million and EBITDA was PLN 368 million. In this reporting period, Synthos S.A. earned a net profit of PLN 341 million. The global petrochemical industry enjoyed robust market conditions in 2015; this did not, however, apply to the synthetic rubber sector. 2015 was another year of record-low natural rubber prices, and this contributed to synthetic rubber prices following in their tracks. This factor adversely affected the margins generated by the Synthos S.A. Group. The demand for EPS from the construction industry was a positive factor affecting the group’s full-year results in 2015 and the high spread on the production of styrene was a positive factor for several months in 2015. Synthos S.A. endeavored to adapt skillfully to changing market conditions and ultimately generated positive business results. In 2015 Synthos S.A. consistently pursued its long-term strategy of strengthening its group’s market position and creating a modern product portfolio attracting a high level of profitability. Launching the SSBR factory in Oświęcim was a key event. During the process of installation start-up, the first test cube of SSBR rubber was produced on 4 August 2015. Since that time, production tests have been performed for a range of rubbers covered by the license and client certification. In the styrene plastics segment 2015 was another year during a persisting trend of enhancing the results generated by the styrene plastics segment. In 2017 Synthos S.A. will finally join the group of producers who have grey EPS with superior thermal insulation properties in their portfolio. Synthos S.A.’s long-term strategy also calls for steadily building the market value of the dispersions and adhesives business. The dispersions and adhesives segment is the third area of business currently being developed. As a result of an acquisition in 2014 the Synthos S.A. Group expanded to include a vinyl dispersions i adhesives production plant in Sochaczew. This acquisition was another step in building its position as a leading supplier of chemical products and a market leader offering high quality solutions in the dispersions and adhesives segment, taken mainly with buyers and end users in mind. In 2015 the Synthos Group optimized its product portfolio and maximized sales considerably, thereby growing its market share in Poland in vinyl dispersions, adhesives for wood and adhesives for the paper industry. In conclusion, I would like to thank our shareholders and Supervisory Board cordially for the support extended to the Management Board and to our commercial partners, employees and associates for their contribution to the success of the Company and the Synthos S.A. Group. Tomasz Kalwat CEO of Synthos S.A. SEPARATE FININCIAL STATEMENTS FOR THE 12 MONTHS ENDED 31 DECEMBER 2015 SYNTHOS S.A. Oświęcim, ul. Chemików 1 Separate financial statements For the 12 months ended 31 December 2015 prepared in accordance with the International Financial Reporting Standards as adopted by the European Union Oświęcim, 7 March 2016 Synthos S.A. Separate financial statements for the 12 months ended 31 December 2015 (in PLN millions unless stated otherwise) MANAGEMENT REPRESENTATIONS 4 STATEMENT OF COMPREHENSIVE INCOME FOR THE 12-MONTHS ENDED 31 DECEMBER 2015 5 STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2015 6 STATEMENT OF CHANGES IN EQUITY FOR THE 12 MONTHS ENDED 31 DECEMBER 2015 7 CASH FLOW STATEMENT FOR THE 12-MONTH PERIOD ENDED 31 DECEMBER 2015 8 Note 1. Accounting policies ...................................................................................................................... 11 Note 2. Sales revenue ................................................................................................................................ 23 Note 3. Costs by type ................................................................................................................................ 24 Note 4. Dividends ...................................................................................................................................... 24 Note 5. Employee benefit expense ........................................................................................................... 24 Note 6. Net finance income/costs ............................................................................................................. 24 Note 7. Income tax .................................................................................................................................... 25 Note 8. Property, plant and equipment .................................................................................................. 26 Note 9. Intangible assets ........................................................................................................................... 29 Note 10. Shares in subsidiaries .................................................................................................................. 30 Note 11. Borrowings granted ..................................................................................................................... 31 Note 12. Financial assets ............................................................................................................................ 32 Note 13. Deferred tax ................................................................................................................................. 33 Note 14. Trade and other receivables ....................................................................................................... 34 Note 15. Cash and cash equivalents .......................................................................................................... 34 Note 16. Share capital................................................................................................................................. 34 Note 17. Earnings per share ...................................................................................................................... 35 Note 18. Liabilities in respect of loans, borrowings and other debt instruments .................................. 36 Note 19. Trade and other payables ........................................................................................................... 36 Note 20. Reasons for the differences between the changes in certain items in the statement of financial position and the corresponding changes in the cash flow statement ....................................... 37 2 Synthos S.A. Separate financial statements for the 12 months ended 31 December 2015 (in PLN millions unless stated otherwise) Note 21. Financial instruments .................................................................................................................. 37 Note 22. Operating leases ........................................................................................................................... 43 Note 23. Investment commitments ............................................................................................................ 43 Note 24. Contingent liabilities, guaranties and warranties ..................................................................... 43 Note 25. Events after the date of the statement of financial position ..................................................... 44 Note 26. Significant accounting estimates and judgments ...................................................................... 44 Note 27. Related party transactions .......................................................................................................... 44 Note 28. Approval of the financial statements ......................................................................................... 47 3 Synthos S.A. Separate financial statements for the 12 months ended 31 December 2015 (in PLN millions unless stated otherwise) MANAGEMENT REPRESENTATIONS The Management Board of Synthos S.A. hereby presents the separate financial statements for the 12 months ended 31.12.2015, which comprise: • the statement of comprehensive income for the period from 1.01.2015 to 31.12.2015; • the statement of financial position as at 31.12.2015; • the statement of changes in equity for the period 1.01.-31.12.2015; • the statement of cash flows for the period from 1.01.2015 to 31.12.2015; • the explanatory notes to the financial statements. The annual separate financial statements and the comparatives have been prepared in accordance with the requirements of the International Financial Reporting Standards, as adopted by the European Union, hereinafter called “IFRS EU”, and the Decree of the Minister of Finance dated 19 February 2009 on current and period information to be provided by issuers of securities (Journal of Laws of 2009 No. 33, item 259) and present the Company’s financial and economic position and its results of operation truly, fairly and clearly. The Directors’ Report of Synthos S.A. presents a true view of the Company’s development, achievements and situation, including a description of risks and threats.