Volatility of PLN and other foreign currencies with respect to the EUR and USD

The Group’s main products are usually priced in PLN, EUR, USD and CZK, while its operating expenses, including employee benefits, the consumption of materials, energy and external services are predominantly incurred in PLN. Other costs and expenditures for investment purchases are incurred in PLN, EUR and USD. Having regard for the structure of the Group’s sales revenues and expenses, the strengthening of the PLN against the EUR or USD may cause the Group’s revenues to fall and as a result may lead to a lower operating result. According to data published by the National Bank of Poland (NBP), the PLN appreciated against the EUR at the end of 2012 compared to the beginning of the year by about 8.4%, and against the USD by 10.0%. As a result, PLN volatility against the EUR or USD may affect the Group’s operations, its financial position and operating results.

The Group is exposed to a significant foreign exchange risk associated with the sales of products to domestic and international markets. To eliminate FX risk, in 2012 the Group entered into FX forwards. The Group also buys materials, services and investment goods in foreign currencies. This curtails the FX volatility risk resulting from selling products in a natural way.

The prospective impact exerted by EUR/PLN exchange rate growth and decline has been depicted in Note 3.1 to the consolidated financial statements of the Jastrzębska Spółka Węglowa S.A. Capital Group for the financial year ended 31 December 2012. Changes in exchange rates of currencies other than EUR do not have a material impact on the Group’s net profit.