TEASER ZORKA NON-FERROUS METALLURGY In restructuring ...

BEOCONEXBELGRADETEASERZORKA NON-FERROUS METALLURGYIn restructuringŠabacBelgrade, April 2013

Table of contents:INTRODUCTION1. INFORMATION ON PRIVATIZATION SUBJECT1.1. Basic data on privatization subject1.2. Organizational chart1.3. Quality standards2. COMPANY ACTIVITY3. BASIC DATA ON PRIVATIZATION SUBJECT’S PROPERTY3.1. Main buildings of the Company3.2. Land3.3. The most significant equipment4. MARKET POSITION AND SWOT4.1. Market position4.2. SWОТ analysis5. EMPLOYEES STRUCTURE6. ANNUAL FINANCIAL REPORTS2

INTRODUCTIONRestructuring procedure for privatization subject Zorka Non-Ferrous Metallurgy Joint Stock Companyfor zinc production and processing Šabac, 1, Narodnih heroja Street, (hereinafter Company), which now hasaddition to its name „in restructuring“ in accord with the Law on Privatization, Article 19, Paragraph 2, startedby the Privatization Agency Decree number R-002/02-OD on July 10, 2002.The Company Restructuring Program with all subsequent amendments provided restructuringthrough property unit Sales Package I sale, in order to settle secured creditors, with the Buyers’ obligation tooffer employment all the workers who are employed on the day of sales contract signing and to continueCompany activity. Besides, the joint sale of the property owned by the companies Zorka Mineral Fertilizersand Zorka Non-Ferrous Metallurgy is provided, therefore the Sales Package Contact II, comprising buildings,plant and equipment owned by Zorka Mineral Fertilizers is attached to the Sales Package I.3

1. INFORMATION ON PRIVATIZATION SUBJECT1.1. General informationFull nameZorka Non-Ferrous Metallurgy JSC for zinc production and processingin restructuring ŠabacShort nameZorka Non-Ferrous MetallurgySeatŠabacAddress Narodnih heroja 1Serbian Business RegistersAgency numberBD 55852/2005Organizational formOpen joint stock companyCapital141.950.826,76RSD or 69,8% socially owned capital61.413.987,01RSD or 30,2% share capitalFounding year 1962.Identification number 07160321VAT number 100083089Main activity code2443 – lead, zinc and tin productionAccounts 1205-2109-66 Komercijalna banaka AD Beograd205-165160-84160-7092-43 „Banca Intesa“ AD BeogradNumber of employees 113Acting ManagerNevenka TrifunovićPhone 015 350 744, 018 352 726Fax 015 350 744E-mailzorkaobojena@gromnet.netCapital structure:Type of capital Share % Registered capital1. Socially ownedcapital2. Share capital69,80%30,20%Capital inscribed and paid on December 31, 2005:141.950.826,76RSD61.413.987,01RSDTotal: 203.364.813,77RSDThe Company capital, according to the Central Securities Depository and Clearing data, has thefollowing ownership structure:No ShareholderNumber ofsharesValue RSD Share in total capital1. Legal entity, Zorka Holding 406.729 61.009.350 30,00271%2. Physical persons 2.573 385.950 0,18980%2.1.Common shares,389 shareholders2.411 361.6502.2.Preferred shares,27 shareholders162 24.3003.Socially owned capital – notshown in shares- - 69,80749%Total (1+2+3) 100,0000%1 Accoutn numbers and names are from National Bank of Serbia web site on April 20, 2012. As of day when this report was draftedaccounts are blocked based on debt enforcement. Accoridng to the National Bank of Serbia data the Company has unpaid liabilities inthe amount of 8.197.639,77 RSD and the accounts are blocked since June 6, 2011.4

1.2. Organizational chart1.3. Quality standardsZorka Non-Ferrous Metallurgy JSC in restructuring does not operate in accord with internationalquality standards.2. COMPANY ACTIVITYThe main Company activities are: electrolytic zinc and electrolytic cadmium production, zincprocessing, other non-ferrous metals production, other non-ferrous metals casting, inorganic chemicalsproduction (zinc, aluminum, magnesium, potassium sulfates), while the auxiliary activities that Company canperform are: machinery, devices and plants maintenance and servicing, electrical machines and devicesmaintenance and servicing, metal goods and chemical products wholesale and other trading.The Company has no own production for a long time, i.e. since 2007, when the Contract on leaseand management with Indo Zinc Smelters and Crowberry B.V. was terminated. Since then the Companyperforms services to the buyers with their own raw material in volume that is far lower than installed capacity.3. BASIC DATA ON COMPANY PROPERTY3.1. The main Company buildingsAccording to the Restructuring Program Amendment, which is in preparation, the sales package willcomprise real estate within Cadastre Municipality Šabac with corresponding land rights, burdened bymortgages, beneficiaries are: the first priority mortgage creditor Mittal Steel Holdings A.G. Zug, Switzerland,with whom the liability condition was coordinated on December 31, 2008; the second priority mortgagecreditors Indo Zinc Smelters LLC Belgrade and Crowberry B.V. Hague, Holland, with whom the liabilitycondition was coordinated on December 31, 2006; and sub-mortgage creditor Icici Bank UK Ltd. Londonwhich acquired sub-mortgage by transferring secured claims from second priority mortgage creditors; as wellas movables, mostly pledged to beneficiaries: the first priority pledge creditors Indo Zinc Smelters LLCBelgrade and Crowberry B.V. Hague, Holland; the second priority pledge creditor Mineco AG, Zug,Switzerland based on court pledge right; and the third priority pledge creditor Mittal Steel Holdings A.G. Zug,SwitzerlandBesides this, tools in use and tools not in use, but could be used in metal production and processing,are added to the Sales Package, along with 3600 tons EMCO sludge, pledged to the first priority pledgecreditor Mineco AG, Zug, Switzerland based on court pledge right.Sales Package I and Sales Package Contact II will be realized under condition that mutual relationsconsidering liabilities to all secured creditors who have mortgages or pledges on movables in Property UnitsI and II would be fully resolved and the property will be sold without burdens.The Sales Package I owned by Zorka Non-Ferrous Metallurgy JSC in restructuringcomprise:5

The real estate with primary and secondary land equipment, tools in use, tools not in use that can beused in production process and 3600 tons of EMCO sludge, to be sold as is, will be shown in details inRestructuring Program Amendments and Sales Documentation.When this teaser was being drafted, the Company made inscription of ownership right on buildings,and usage right on land situated within Cadastre Municipality Šabac into new Immovable Cadstre.All the buildings are registered into new Immovable Cadstre based on insight to Immovable PropertyList number 13429 Cadastre Municipality Šabac transcript no 952-1/2012-2261 on May 22, 2012 with all thedata on burdens and restrictions shown on G list – Data on burdens and restrictions; Immovable PropertyList number 13434 Cadastre Municipality Šabac transcript no 953-1/2012 – 502 on April 20, 2012;Immovable Property List number 13428 Cadastre Municipality Šabac transcript no 953-1/2012-502 on April20. 2012; Immovable Property List number 14894 Cadastre Municipality Šabac transcript no 953-1/2012-502; Immovable Property List number 15304 Cadastre Municipality Šabac transcript no 953-1/2012-502 andaccompanying plan copies.Units to be sold are marked on satellite photo:6

Location 1 - PlantThe most of the buildings, also technologically most significant, are built on Cadastre Lot no. 6915/70CM Šabac, area 45.467 m 2 , recorded in Property List no. 13429 CM Šabac. At the same time this the oldestpart of the plant, which started development in 1953, while the last significant buildings were built duringeighties.The location has full infrastructural equipment (power, gas, water, sewer, telephone) with direct trafficaccess, over internal road further connected to regional roads. There is industrial railroad in the complex.Location is connected to other industrial buildings in the vicinity by overhead fluid and energytransport lines. Earlier that comprised technologically integrated whole. Pipeline, posts, power lines areassessed jointly through low rise buildings and infrastructure.Photo: Zinc roaster – equipment storage construction and raw material transportLocation 1 – Plant comprise following building groups:Production halls and buildings: Electrolyte cells hall, cadmium building, leaching building (withannex that was built last) are along internal road, all connected with heat and power lines.Along the same side of the lot there are two identical and connected halls: zinc powder buildingsPhase 1 and 2. Zinc sulfate building is built separately, besides compressor station.Within these buildings there are small office space, personnel lodging, storage room etc.Buildings are in relatively bad condition: due to the aggressive environment and processes, decaysigns are very visible, while the roof construction is in bad condition due to insufficient maintenanceespecially on older halls. Bearing construction is stable.Extensive investment is necessary to repair these buildings and into new internal installations thatwould be up to the standards for production spaces.7

Photo: Production halls, leaching annex in frontPhoto: Electrolyte cells hall with melting house, on the right zinc powder hallConstructions and stands for various equipment, to mention multi story steel construction, furnacestand and auxiliary equipment for zinc roaster, connected to storage block.Other stands, mostly reinforced concrete, are for reservoirs and cooling equipment; they are locatedin the middle of the lot, besides production halls.These buildings are also in bad condition, they are usable, but with highly visible signs of decay andcorrosion, and some constructions, like the old roaster building and one tank for waste electrolyte areunusable.Storages are grouped: two buildings (new and old part) zinc concentrate storage are single navespaces with massive constructions, usable, besides is the hall zinc concentrate thawing hall, old building inbad condition.Separate unit are three reinforced concrete silos behind leaching building.8

Photo: jarosite thickener tank stands, on the right reinforced concrete silosWithin the section there are other auxiliary buildings for maintenance and storage: Maintenanceworkshop, transport workshop with garage and few smaller worse quality buildings for civil engineeringservice, pump storage etc.Power is supplied by main power station with transformer building, two smaller power stations withinzinc powder building, and one besides zinc concentrate roaster. Capacity is planned according to productionneeds. Power lines are subterranean, with adequate cross section.Separate building is made for compressor station, with reservoir stands on the back side.Photo: Zinc sulfate buildings (in the middle), on the left compressor station, on the right power station, transport bridge tothe roaster in the backgroundArea around buildings is concrete paved for access, as well as areas intended for open storages, butthey are cracked, and almost complete replacement is necessary. The section has no fence nor did separatecontrol entrance.The roads around the section are in relatively good condition, sufficient for two way heavy vehiclestraffic. Industrial railway, entering the section and branching to storage halls, is in usable condition where onconcrete base, while the part with wooden ties is in worse condition.9

Location 2 – Management and plantMain buildings are built on Cadastre Lot 6915/1 CM Šabac, area 12.296 m 2 , while the entrance boothbelonging to this unit, located on Cadastre Lot 6915/91, area 120 m 2 .The old foundry was built in 1967 while the other two halls were built from 1977 until 1985.Management building and two newer halls - Metal processing and Anode foundry, have reinforcedconcrete construction, built for their purpose, equipped with all internal installations, well maintained,constructively stable.Photo: Anode foundry, Metal processing behindManagement building has spaces for the Company administration on the floor, while the ground flooris for employees’ needs (locker rooms, bathrooms), and for one power station.Metal processing building is two-nave hall with two story annex, Anode foundry is one nave hall, andone more nave is planned but not built. It is still possible to build it because the space planned for itremained free.The old foundry is one nave hall with reinforced concrete construction, with visible signs of decay.Currently not in function.Photo: Management building, on the right, Metal processing hall interiorThis location has good traffic access with platforms in front of the halls.Areas around buildings are concrete paved as necessary.Location has infrastructural equipment with sufficient capacity for planned technological processes.10

Location 3 - WarehousesThis location comprises two buildings built on Cadastre Lot 6915/72 CM Šabac, area 2.680 m 2 , oneof them – raw materials and products storage – built in 1988, with reinforced concrete construction, in goodcondition, while the other is older (1955), and in worse quality, with visible signs of decay. Both buildings areconnected to the complex infrastructure and have adequate traffic access.Photo: Raw materials and products storage (red brick), on the right, the older building (former laboratory)Location 4 - LaboratoryOn Cadastre Lot 6915/89 CM Šabac, area 10.942 m 2 , was built the building with two purposes: partlydug in ground floor in massive reinforced concrete is standard bomb shelter, while the first floor is plannedfor laboratory used in production process.The first floor is adequately equipped, with all necessary installations.Separate storage for hazardous materials and technical gas is built on the outside of this building.Building is constructively stable, with visible decay signs due to insufficient maintenance investments.Photo: Laboratory building with shelter, on the right building interior11

Location 5 and 6Location 5 is the land on Cadastre Lot 6915/76, area 1.631 m 2 , used as open storage, while thelocation 6 is a tailing pond, area 6,03 ha, on a part of Cadastre Lot 6915/107 CM Šabac.Photo: Location 5, on the right tailing pond (Location 6)The most important Company buildings:Chemical industry building – Metal processing, building no. 1, gross area 2.030 m 2 , sociallyowned, share 1/1Chemical industry building – Anodes foundry, building no. 2, gross area 1.061 m 2 , sociallyowned, share 1/1Chemical industry building – Cells hall with management building, building no. 1, building no.2, gross area 3.336 m 2 , socially owned, share 1/1Chemical industry building - leaching 2, building 2, gross area 1.807 m 2 , socially owned,share 1/1 Railroad, building no. 1, gross area 4.857m 2 , socially owned, share 1/13.2. LandBased on documentation delivered to Consultant it was established that the most important buildingsare located on Cadastre Lot 6915/70 CM Šabac, area 45.467 m 2 , Cadastre Lot 6915/1 CM Šabac, area12.296 m 2 , Cadastre Lot 6915/72 CM Šabac, area 2.680 m 2 , Cadastre Lot 6915/89 CM Šabac, area 10.942m 2 and Cadastre Lot 6915/103 CM Šabac, area 158 m 2 ; all state owned urban construction land.Having examined the Republic Geodetic Authority, Real Estate Cadastre Record of exposure byCommission in charge for immovable property and rights data for Cadastre Municipality Šabac 17 no. 951-3443/2009 on March 5, 2010 it was established that the usage right beneficiary on Cadastre Lot 6915/79inscribed in temporary Property List 14936 is Zorka Non Ferrous Metallurgy in restructuring, share3035/15149 based on Contract no. 1/96 on July 18, 2006, Annex no. Ov.no.15815/2009 on August 11, 2009and that Zorka Non Ferrous Metallurgy in restructuring ownership is inscribed on page V1 for buildingnumber 1 on Cadastre Lot 69415/79, share 3035/15416, based on usage permit number 02-2456 on June25, 1970 by Secretariat for Administrative and Legal Affairs Municipality Šabac.Having examined the Republic Geodetic Authority, Real Estate Cadastre Record of exposure byCommission in charge for immovable property and rights data for Cadastre Municipality Šabac 17 no. 951-248/2010 on March 10, 2010 it was established that the usage right beneficiary on Cadastre Lot 6915/91inscribed in temporary Property List 13429 is Zorka Non Ferrous Metallurgy in restructuring, based onContract no. 1/96 on July 18, 2006, Annex II Ov.no.3142/2010 on March 5, 2010, and that Zorka NonFerrous Metallurgy in restructuring ownership is inscribed on page V1 for building number 1 on Cadastre Lot6915/91 based on usage permit Decree no. 354-147/75-08 on January 29, 1975 by Secretariat forCommunal, Administrative and Legal Affairs Municipality ŠabacHaving examined the Republic Geodetic Authority, Real Estate Cadastre Record of exposure byCommission in charge for immovable property and rights data for Cadastre Municipality Šabac 17 no. 951-12

3420/2009 on April 16, 2010 it was established that the usage right beneficiary on Cadastre Lots 6915/1,6915/70, 6915/71, 6915/72, 6915/76, 6915/89, 6915/91 and 6915/103 inscribed in temporary Property List13429 Zorka Non Ferrous Metallurgy in restructuring, based on inscription into Land Registry Entry no. 3829,and that Zorka Non Ferrous Metallurgy in restructuring ownership is inscribed on page V1 for buildingsnumber 1, 2, 3 and 4 on Cadastre Lot 6915/1 also based on inscription into Land Registry Entry no. 3829;Zorka Non Ferrous Metallurgy in restructuring ownership is inscribed for buildings from number 1 to number53 on Cadastre Lot 6915/70, based on inscription into Land Registry Entry no. 3829; Zorka Non FerrousMetallurgy in restructuring ownership is inscribed for building number 1 on Cadastre Lot 6915/71, buildings 1and 2 on Cadastre Lot 6915/72, building 1 on Cadastre Lot 6915/89, building 1 on Cadastre Lot 6915/91 andbuilding 1 on Cadastre Lot 6915/103, all based on inscription into Land Registry Entry no. 3829. It is alsonoted that burdens – mortgages are inscribed to page G also from on inscription into Land Registry Entry no.3829.3.3. The most important equipmentThe most important equipment with purchase values:Purchase valueEMCO Filter no. 1 1977 2.139.632.53EMCO Filter no. 2 1977 2.139.632.53Thickener FI 15M TIL-3.01 1988 1.874.143.24Thickener no. 1 1977 1.815.276.05Thickener no. 2 1977 1.815.276.05Pressure casting machine 1977 1.537.825.87Main low voltage power switch 1956 1.361.645.53Power transformer group I/2 1977 1.133.796.40Power transformer group II/2 1977 1.133.796.40Air blower Neu 1981 1.087.235.36Furnace 'Lurgi' with 3 torches 1981 15.062.128,44Cauldron with pipeline 1981 13.453.835,10Electrical furnace 1975 8.903.750,95Rotational cooler 1981 2.638.249,27Vacuum filter Doroliver KL3-7.C 1988 2.536.002,42Vacuum filter Doroliver KL3-7 1988 2.536.002,42One way copper rail for distribution 1956 2.172.422,37EMCO Filter no. 5 1977 2.139.632,53Thickener 1977 2.012.012,40Filter housing with equipment 1981 1.990.678,68Power transformer group I 1977 1.814.074,23Power transformer group II 1977 1.814.074,23Reactor 1981 1.810.351,98Electrical motor furnace for tin anodes 1985 1.763.633,22Electrical furnace 'CER' 1985 1.763.633,22Thickener FI 15M JI-3.01 1988 1.756.109,94Steel balls mill 1956 1.674.088,92Thickener no. 1 1977 1.668.245,34Thickener no. 1 1977 1.668.245,34Thickener before neutralization 1977 1.668.245,34Electrical bridge lift 5 tons 1956 1.601.819,94Pressure casting machine 1977 1.537.825,87Mill for concentrate 1956 1.431.381,05Pressure casting machine 1971 1.357.000,91Pressure casting machine 1971 1.357.000,24Pressure casting machine 1971 1.146.945,69Power transformer group I/1 1977 1.133.796,40Power transformer group II/ 1977 1.133.796,40Electrical furnace for alloys 1965 1.072.848,3713

4. MARKET POSITION AND SWOT4.1. Market positionIn previous years the Company had production program comprising: zinc in electrolyte, zinc insolution, electrolytic cadmium, zinc anodes for galvanization, zinc balls, zinc powder (standard, super fineand ultra-fine), zinc alloys, zinc alloy pressure casts, zinc sulfate mono hydrate, tin anodes, lead blocks andalloys.In current production are: zinc anodes for galvanization, zinc balls, zinc anodes for cathodeprotection, cadmium balls, protectors – anodes for ship protection, zinc granules, lead anodes, tin anodes,ZAM-12 and ZAM-27 alloy casts, brass etc.Production capacities are not used in available capacity for a long time, therefore significant part ofthe equipment is neglected and it is necessary to perform general cleaning, technical revision of completeproduction equipment, make needed repairs, service, even buy new equipment.The Company uses following equipment:For hydrometallurgical zinc production: „Lurgi”, “Norzink”, “Sigmaster& Breyer”, “Sice”,For zinc powder production: “Imperial Smelting”,For unprocessed casts and lead anodes: domestic equipment,For tin anodes; „Wellman“/„Incandescent Smethwich“, aFor zinc sulfate: HI „Zorka“ and „Niro atomizer“.Production capacity survey:Capacity (tons per year)PlannedTechnicalElectrolytic zinc 30.000 29.813Electrolytic cadmium 100 106,6Zinc alloys 5.000 4.666Zinc powder 7.200 7.425Unprocessed casts 750 741Zinc anodes 2.000 2.000Tin anodes 1.500 838,4Zinc sulfate 5.000 3.458Since 2007 the Company has only the production in foundry, which is clearly visible based onachieved production and services volume during last five years:Product unit 31.12.2008. 31.12.2009. 31.12.2010 31.12.2011 31.12.2012Sludge kg - - - - -Electrolytic cadmium kg - - - - -Unprocessed casts kg 24.693,513 13.484,664 12.306,385 15.052,275 9.513,500Lead blocks kg - - - - -Alloy „S“ kg 310 257 460 830 836Alloy „V“ kg 1.810 670 1.140 960 525Zinc block „B“ kg - - - - -Zinc waste kg - - - - -Zinc sulfate granules kg - - - - -Sales volume on domestic market per product types:Product unit 31.12.2008. 31.12.2009. 31.12.2010. 31.12.2011. 31.12.2012.Unprocessed casts kg 26.233,618 13.571,927 12.042,123 14.371,8 9.978,25Lead anodes II kg 235.655 15.940* - - -Copper bars coveredin leadkg 52.034 2.750* - - -Waste lead kg - - - - -Waste aluminum kg 5.832 9.480 850 - -14

Old aluminumsupport barskg 2.532 573 620 - -Electrolytic zinc kg 2.336 - - - -Zinc waste kg 1.284 - - - -Electrolytic cadmium kg - - - - -Remark: sale of 15.940 kg lead anodes and 2.750 kg copper bars is realized by former leaseholder„Indo Zinc Smelters“MEHI.The most important domestic buyers are currently PPT Break Technics, RS Partners PES, INSA andIn previous period the Company purchased locally necessary raw and auxiliary materials. TheCompany mostly agreed that buyer acquires necessary alloy for ordered casts.The Company did not acquire raw and auxiliary materials for electrolytic zinc and cadmium, which isthe zinc factory main activity, due to the lack of current assets and other accumulated business problems.When the Company produced zinc, 50% of raw material – zinc concentrate was purchased on domesticmarket.Annual quantities of basic and auxiliary material used in existing activity:Product unit 31.12.2008. 31.12.2009. 31.12.2010. 31.12.2011. 31.12.2012.Alloy „V“ kg 23.495,3 13.829 11.310 13.792 8.679Cardboard boxes kg 208 290 228 173 135Alloy V kg 2.430 810 857 1.039 532Alloy „S“ kg 110 557 402 888 761ZAMAC waste andremelted castskg 1.337,913 202,803 793 1.128,062 1.245,237Alloy V , Alloy „S“, ZAMAC waste and remelted casts are Foundry I and Foundry II products andbyproducts – therefore own rather than bought raw materials.4.2. SWOT analysisStrengths► High volume production capacity► Skilled and experienced employees► Favorable location along Sava river for rawmaterials and products transportOpportunities► Unused technical and spatial capacities forproduction and servicesWeaknesses► Low capacity usage► High fixed costs compared to productionvolume► Lack of financesThreats► Accumulated liabilities both in cash andproducts (zinc)► Foreign strategic partners interest for plantand real estate purchase►Enforcements for unpaid salaries15

5. EMPLOYEES STRUCTUREIn previous period the number of employees is significantly decreased, as shown in table; when therestructuring program was initiated there were around 1.200 employees.Qualification 31.12.2007. 31.12.2008. 31.12.2009. 31.12.2010. 31.12.2011.CD 29 28 15 15 15TCE 18 18 3 3 3HSD 149 148 43 43 41AST 3 2 0 0 0Q 99 99 44 43 42SQ 39 39 0 0 0NQ 2 2 16 16 16Total 339 336 121 120 117CD – college degree, TCE – two-year college education, HSD – high school degree, AST – advancedspecialist training, Q – qualified, SQ – semi qualified, NQ – non-qualifiedThe number of employees is decreased, nevertheless it should be mentioned that the Company hasno production for a long time, since 2007 (when the Contract on lease and management with „Indo ZincSmelters“ and „Crowberry B.V.“ was terminated). The services are provided only to buyers with own rawmaterials in volume many times smaller than installed capacity. Due to the impossibility to start zincproduction and processing (main Company activity), the employees on property protection duties, whileadministrative workers come to work 2 or 3 days weekly, as scheduled.On December 31, 2012 there were 113 employees with following qualification structure:NQ SQ Q AST HSD TCE CD Total17 - 39 1 39 3 14 113Share % 15,04% - 34,51% 0,88% 34,51% 2,65% 12,39% 100,00 %16

6. ANNUAL FINANCIAL REPORTSBALANCE SHEET ( 000 RSD) 31.12.2010. 31.12.2011. 31.12.2012.ASSETS 7.204.957 7.579.663A. Fixed Assets 221.254 178.581 137.762I. Unpaid capital subscribedII. GoodwillIII. Non-material investmentsIV. Fixed assets, buildings, equipment andbiological assets221.254 178.581 137.7621. Fixed assets, buildings, equipment 220.384 177.711 136.8922. Tools and inventory3. Biological assetsV. Long term financial investments 870 870 8701. Investments in capital2. Other long term financial investmentsB. Current Assets 654.810 616.728 254.684I. Inventories 487.926 451.562 90.394II. Short term receivables and placementsIII. Short term receivables and cash 166.884 165.166 164.2901. Receivables 164.731 163.084 161.9252. Receivables for overpaid profit tax3. Short term financial placements4. Cash equivalents and cash 2.153 2.082 2.3655. VAT and prepayments and accruedincomeC. Deferred tax receivablesD. Operating Assets 876.064 795.309 392.446E. Loss Above Capital Value 6.324.557 6.780.042 7.967.259F. Total Assets 7.200.621 7.575.351 8.359.705G. Off Balance Sheet Assets 4.336 4.312 5.573LIABILITIES 7.204.957 7.579.663A. Capital 0 0 0I. Initial capital 205.449 205.449 205.449II. Subscribed capital unpaidIII. ReservesIV. Revaluation reserves 201.292 201.292 201.292V. Unrealized profit from securitiesVI. Unrealized loss from securitiesVII. Retained earningsVIII. Loss 406.741 406.741 406.741IX. Own shares boughtB. Long-Term Provisions And Liabilities 7.200.621 7.575.351 8.359.705I. Long term provisionsII. Long term liabilities 1.215 1.2151. Long term loans 1.215 1.2152. Other long term liabilitiesIII. Short term liabilities 7.199.406 7.574.136 8.359.7051. Short term financial liabilities 686.269 792.647 743.8462. Prepayments received3. Operating liabilities 5.098.496 5.201.238 5.632.5584. Other short term liabilities 1.398.423 1.561.360 1.963.6495. VAT and public income liabilitiesaccruals and deferred income16.218 18.891 19.6526. Liabilities for profit taxC. Deferred tax liabilitiesD. Total liabilities 7.200.621 7.575.351 8.359.705E. Off balance sheet liabilities 4.336 4.312 5.57317

INCOME STATEMENT (u 000 RSD) 2010. 2011. 2012.A. Revenue and Expenses from operationsI. Business revenue 59.339 0 29.5451. Sales of merchandise 5.455 6.665 11.3442. Revenue from value effects3. Inventories - value increase 17.9414. Inventories - value decrease 36.038 6.708 6825. Other operating revenues 89.922 43 942II. Expenses 218.346 264.420 243.1091. Purchase value of sold goods2. Costs of material 5.758 7.181 6.5973. Cost of salaries and other personal expenses 165.279 212.326 194.8954. Depreciation costs 43.544 42.637 36.5945. Other operating expenses 3.765 2.240 5.023III.ProfitIV. Loss 159.007 264.420 213.564V. Financial revenues 12 2773 11VI. Financial expenses 832.298 221.383 514.765VII. Other revenues 13.580 2.388 4.969VIII. Other expenses 458.099 1.425 3.600IX. Operating profit before taxesX. Operating loss before taxes 1.435.812 482.067 726.949XI. Revaluated revenueXII. Revaluated expensesB. Profit before taxesC. Loss before taxes 1.435.812 482.067 726.949D. Profit tax1. Tax expenses2. Deferred tax expenses3. Deferred tax revenueE. Paid salaries to employerF. Net profitG. Net loss 1.435.812 482.067 726.949H. Net profit belonging to minority investorsI. Net profit belonging to ownersJ. Profit per share1. Basic profit per share2. Decreased profit per share18

Contacts:Privatization AgencyBEOCONEX LLCPrivatization CenterDragana PuzićMiodrag TatarevićTerazije 23/VII, Beograd, SrbijaZahumska 71, Beograd, Srbijaphone +381 11 3025 795 phone + 381 11 3088 103fax +381 11 3020 816 fax +381 11 3088 105email: dpuzic@priv.rsemail: office@beoconex.comRemark: This presentation was prepared by Beoconex as Privatization Agency Advisor, in cooperation withZorka Non-Ferrous Metallurgy JSC in restructuring expert team. Presentation is based on the Companysources and data. Beoconex trusts that the sources and data are highly reliable and adequately presented.Investors are invited to independently verify the data and the information.19