LIBET : Financial statements for the period of 12 months ended on 31 December 2015

Wprowadzenie do sprawozdania finansowego LIBET S.A. Financial statements for the period of 12 months ended on 31 December 2015 prepared complaint with the Act on Accounting including:

1. Introduction
2. Balance sheet
3. Profit and Loss Statement
4. Statement on changes in the equity
5. Cash flow statement
6. Additional information and explanations March 2016

   LIBET S.A.

   financial statements for the period of 12 months ended on 31 December 2015

7. INTRODUCTION TO THE FINANCIAL STATEMENTS
9. General Information

   The financial statements of Libet S.A. comprise the period of 12 months ended on 31 December 2015 and include the comparative data for the period of 12 months ended on 31 December 2014 and as at 31 December 2014.

   Libet S.A. ("Joint Stock Company") was established with the Notarial Deed dated 18.03.2008. The Company is entered into the National Court Register kept by the District Court for Wrocław-Fabryczna, 6th Commercial and Registry Division in Wrocław, under the KRS number of 0000373276.

   The Company's seat is located in Wrocław, at 5, Powstańców Śląskich street. The term of the Company is perpetual.

   The basic subject of Libet S.A.'s activities is production of concrete products.

   The Company is listed on the Warsaw Stock Exchange on the main market in continuous trading.

10. Basis of preparation of the financial statements

    These financial statements were prepared in accordance with the following regulations:

    • Act from 29 September on accounting (uniform text Journal of Laws of 2013 item 330 - further on "AoA")

    • Regulation of the Minister of Finance of 19 February 2009 on current and periodic information published by issuers of securities (Journal of No 2014, item 133 - "regulation on current and periodic information", as amended).

    • Regulation of the Minister of Finance of 18 October 2005 on the scope of information published in financial statements and consolidated financial statements, required in the issue prospectus for issuers seated in the Republic of Poland subject to Polish accounting standards (Journal of Laws No 209, item 1743).

    • Regulation of the Minister of Finance of 12 December 2001 regarding detailed rules of recognition, appraisal methods, scope of disclosures and methods of presenting financial instruments ("regulation on financial instruments").

    This financial statements are presented in Polish zloty and grosz, unless stated otherwise.

    The financial statements were prepared with an assumption of continuing business operations by the Company in the foreseeable future. There were no grounds for discontinuation of operations.

    Libet S.A. is the parent company of Libet Group and prepares consolidated financial statements in accordance with the International Financial Reporting Standards, as approved by the European Union, for the period of 12 months ended on 31 December 2015. They are kept in the seat of the Company and are subject to publication on the website www.libet.pl. The Company comprises internal entities which prepare their balance sheets individually.

    During the reporting period for which these statements were prepares, the Company did not merge with any business units.

11. Comparability of financial data

    Financial statements for the current and previous financial year were prepared applying the same rules (policy) of accounting except for the rule of accounting for fixed costs relating to the months in which there is no production due to the seasonality of the sector in which the Company operates.

    LIBET S.A.

    financial statements for the period of 12 months ended on 31 December 2015

    The Company changed the method of fixed costs calculation in months in which there is no production due to the seasonality of the sector in which the Company operates. In previous periods, the Company activated fixed costs relating to months in which there was no production as costs to be recognised in the following year. As a result of the reverification of the adopted accounting method, the Company's Management Board amended the rule that fixed costs relating to non-productive months may be activated but exclusively within the given financial year. They cannot however be shifted among particular years.

    In note 37 the impact of the change to the accounting policy on the comparative information for the period ended on 31 December 2014.

12. Differences in the value of published data and significant differences relating to the adopted principles (policies) of accounting between the financial statements prepared in accordance with the Polish accounting principles and the financial statements which would be prepared according to IAS

    Pursuant to par. 7 par. 1 of the Regulation of the Minister of Finance dated 18 October 2005 regarding the scope of information presented in financial statements and consolidated financial statements, required in the issue prospectus for issuers seated on the territory of the Republic of Poland, to which the Polish accounting principles apply, the Company is obliged to indicate and explain differences in the value of disclosed data, relating to at least the equity (net assets) and net financial result and significant differences regarding adopted principles (policies) of accounting, between the financial statements and comparative data, prepared in accordance with the Polish Accounting Principles (PAP) and financial statements and comparative data which would be prepared pursuant to the International Financial Reporting Standards ("IFRS").

    The Company is the parent company of the Capital Group which is obliged to prepare consolidated financial statements according to the IFRS adopted by the EU. The Capital Group to which the Company is the parent.

    Due to the changes introduced to the International Financial Reporting Standards, principles of IFRS accounting adopted and applied by the Board on preparation of this note may differ from the principles which will be used in the first IFRS financial statement which may be prepared by the Company in the future.

    As a result of the conducted analysis of the financial statements prepared according to PAP and the statements prepared according to IFRS for the period from 01 January 2015 to 31 December 2015 and for the comparative period, the Company's Board stated that the differences are immaterial on non-consolidated and consolidated basis, therefore the Company resigned from their presentation. On the preparation of this financial statements the Board made assumptions as regards the selection of standards and interpretation, which would probably be applied on the preparation of the first financial statements according to IFRS.

    Additionally, the presentation of some items of the financial statements according to the Polish accounting principles and IFRS may differ. The differences in the presentation will have no impact on the equity and net result of the Company. The Company could, among others, for the needs of IFRS, present the profit and loss statement differently.

    Pursuant to the accounting policy, in the balance sheet prepared according to PAP, the balance of the Company Social Benefits Fund (CSBF) and CSBF assets were presented separately, and according to IFRS assets and liabilities within CSBF are excluded in the balance sheet.

13. Selected financial data converted into EUR

    Selected financial data from the financial statements and comparative data converted into EUR were included in the annual report SA-R 2015.

    LIBET S.A.

    financial statements for the period of 12 months ended on 31 December 2015

14. Applied principles of accounting and adopted methods of assets and liabilities valuation, measuring the financial result and method of preparation of financial statements within the scope in which the act leaves a choice to the entity.

15. Intangible assets

    Intangible assets are recognised if it is likely that future economic benefits will flow to the Company and which may be directly related to assets. The initial recognition of intangible assets occurs at the acquisition prices or cost of generation. After the initial recognition, intangible assets are valued at acquisition prices or cost of generation less accumulated amortisation and impairment write-offs. Intangible assets are amortised using the straight-line method in the period corresponding to the estimated period of their useful economic right.

    Commencement of the amortisation and depreciation occurs not earlier than after accepting the intangible fixed assets for use.

16. Tangible fixed assets

17. Tangible fixed assets are valued at acquisition prices, cost of generation or revalued amount, less depreciation or accumulated amortisation write-offs or less impairment write-offs. Costs borne after the tangible fixed assets are first used, such as costs of repairs, overhauls, exploitation charges, affect the financial result of the reporting period in which they were incurred. The initial value of tangible fixed assets, being the acquisition price or cost of the tangible fixed assets generation, is subject to an increase with the expenditures incurred on their improvement, such as reconstruction, extension, modernisation or restructuring and resulting in the usable value of such assets after the improvement completion exceeds the usable value on the first use of the assets, valued with the period of use, generating capacity, quality of products obtained using the improved tangible fixed assets costs of exploitation and other measures.

    Tangible fixed assets are depreciated using the straight-line method in the period corresponding to the estimated period of their useful economic right.

    The depreciation commences not earlier than after the tangible fixed assets are first used.

    Pursuant to Article 32 par. 3 of the Act on Accounting, a verification is performed at the end of a year of the correctness of applied rates and period of tangible fixed assets depreciation. As a result of such a verification it is verified if the periods and depreciation rates are determined correctly, considering the requirements of article 32 par. 2 of the Act on Accounting, i.e. if they correspond to the useful economic life of particular tangible fixed assets duly reflecting the actual mode of drawing economic benefits from given tangible fixed assets.

    Adopted periods of useful economic lives of fixed assets:

    - group 1 to 2 - 2.5% to 4.5%

    - group 3 to 6 - 2.5% to 20 %

    • group 4 - 30 % of computer sets

      - group 7 - 10% to 20%

    • group 8 - 5% to 20%

    Tangible fixed assets used based on lease, hire, leasing or other similar nature agreements, recognised as the entity's assets, are depreciated during the term of the agreements or during the useful economic life of the assets - depending on which of them is shorter.

    If any causes occur which result in an impairment of tangible fixed assets relevant write-downs decrease the book value of fixed assets.