Purposes of Issue

Emission of K series shares is aimed at acquiring funds by POL-MOT Warfama assigned for realisation of the investment programme, repayment of debts due to contracted credits and acquisition of competitive companies and those producing complementary products.

Acquired means will be used by POL-MOT Warfama for purposes presented below according to the order of priorities:

Investment, including:

- planned purchase of machines, production equipment and means of transport, in the amount of app. 10,0 million zloty,

- financing current investment, that is providing the plant, where the seat of the Issuer is located, with laser contour band saw and numerically controlled bending brake, in the amount of 5,6 million zloty,

- renovation and modernisation of the existing building facilities, in the amount of 2,4 million zloty,

- investment related to informatisation of POL-MOT WARFAMA Group, in the amount of 0,32 million zloty,

- research and development, in the amount of 1,0 million zloty.

Total repayment of debts due to contracted credits.

Means acquired from issue of K series shares will be also allocated for takeovers of competitive companies and those producing complementary products. Presently, the Company conducts works connected with market research and selection of potential investment. The basic criterion, which the Issuer will follow while choosing the subject of acquisition, will be a possibility to broaden assortment of product offer and/or development of sales network of POL-MOT WARFAMA Group and economic profitability of the planned investment.

If means acquired from issue of K series shares will prove to be lower than expected, the Company will adequately decrease the value of means assigned for acquisitions. In the event that the Management Board of the Company assumes binding obligation with regards to takeovers and means from issue prove to be not sufficient to realise described purposes, the remaining sum will be covered by the Company from its own means or bank credits. During the period from acquiring means from the issue of K series shares to their investing in accordance with the described purposes, a part of means not used will be allocated for temporary transfer of means to the working capital or to safe financial instruments, i.e. securities issued by the State Treasury or deposits.

Sale of part of shares by the main shareholder results from willingness to realise part of a profit from investment made on the Issuer’s shares taken up and acquired since 1997 and to increase attractivity of the Offer through an increase in a number of shares offered by the Issuer.

Structure of the Offer

Within the public offering of shares the total number of shares that may be taken up amounts to:

7.500.000 new K series shares offered by the Company and 1.600.000 of J series shares in sale by POL-MOT Holding S.A.

The public offer is directed both to individual and institutional investors.

Within the framework of the Retail Tranche, 2.000.000 K series shares are offered. Within the framework of Large Investors Tranche – 5.500.000 of K series shares and 1.600.000 of Shares in Sale.