Conclusion of a contract of sale of Kolb Sp. z o.o. shares

In reference to the current report no. 24/2017 dated 12 December 2017, the Management Board of STALPROFIL S.A. informs that on 2 January 2 2018 an agreement was concluded between STALPROFIL S.A. and Izostal S.A., the subject of which is sale of Kolb Sp. z o.o. shares.
Pursuant to the agreement STALPROFIL S.A. sold to its subsidiary IZOSTAL S.A. shares of KOLB sp. z o.o. in the amount of 1 549 units (100% of the share capital) with a nominal value of each share 2000 PLN, at the total price of 14 453 719 PLN. The sale price of the shares of KOLB sp. z o.o. was 14 453 719 PLN, ie. at their fair value evaluation, which was carried out by PWC sp. z o.o., based on financial forecast of KOLB sp. z o.o. for the period 2017-2021.
The transaction is a continuation of activities regarding restructuring transformation of the STALPROFIL S.A. Capital Group, which aim to improve the efficiency of asset management, the optimization of the financing structure of the Group's entities and maximizing synergies within the Group.
The date of transfer of ownership of shares to Izostal S.A. is the date of the Agreement, ie. 2 January 2018. The parties agreed that the payment of the agreed price will take place by 31 January 2018 and all costs associated with conclusion of the Agreement shall be borne by Izostal S.A.
Conditions of the Agreement do not differ from those commonly used for this type of agreements.
In connection with the entry into force on 1 January 2018 of IFRS 9, the effects of the transaction will not be included in the net income of the Company (as stated in the current report no. 24/2017 of 12 December 2017, on the basis of IAS 39), but "other comprehensive income", which, due to the determination of the selling price of the shares at their fair value recognized in the Company's books, ie. 14 453 719 PLN, revenue from transaction is equal to its cost (in accordance with IFRS 9), so the result on the transaction for this position will be neutral.
At the same time, accumulated so far in the "Capital reserve from revaluation of assets" revaluation results of 100% of the shares KOLB sp. z o.o., equal to 3 666 thousand PLN, will be entirely transferred to retained earnings, ie. to "Profit/(loss) from previous years and the current year".