The world's key markets closed out the year 2012 on a bullish note. London's S&P100, New York's NASDAQ Composite and France's CAC40 indices all posted gains of more than a dozen per cent, and the Warsaw Stock Exchange also saw an uptrend. The annual increase on the WIG (all-caps index of the main market) was 26.2%, while the WIG-20 rose by slightly over 20%. WIG-PALIWA (the index of fuel companies) advanced by 39.0%. Against the background of the economic deceleration in Europe, debt crisis in the eurozone and economic problems in the US, investor sentiment was improved by the decisions of bodies responsible for monetary policy (the Monetary Policy Council, European Central Bank and the US Federal Reserve).

Two major trends were observed in Grupa LOTOS stock price dynamics in 2012. In the first half of the year, there was a horizontal movement in the stock price, amid increased trading volumes. The strong price rebound in early June provided the catalyst for a strong uptrend: over the year, the price of Grupa LOTOS stock went up by 76.8%. This price reached a low on January 11st 2012 (PLN 21.33 per share) and peaked on December 11th 2012 (PLN 43.00 per share).

In 2012, the uptrend in Grupa LOTOS share price was stronger than in the WIG, WIG20 and WIG-PALIWA (fuel sector index) exchange indices; the price growth had significantly overtaken the market. Over 2012, the RESPECT index of socially responsible companies grew by 29.2%.

In the period under review, the number of the Company’s shares which changed hands in an average trading session was 282,163, down by 25% relative to the previous period. The total value of trading on the Company’s shares was PLN 2,013m, representing 1.07% of the total trading value on the WSE.

Grupa LOTOS’ market capitalisation as at the end of 2012 was PLN 5,351bn.

At the end of 2012, the closing price was PLN 41.20 per Company’s share. The rate of return for the year was 76.82%.

All-year low and high closing prices of Grupa LOTOS shares and closing prices on the WSE

End of year, December 31
	Low (PLN)	High (PLN)	Closing price (PLN)
2009	7.21	32.80	31.80
2010	25.05	37.85	36.35
2011	22.26	49.50	23.30
2012	21.30	43.78	41.20

Months, 2012
Month	Low (PLN)	High (PLN)	Closing price (PLN)
January	21.30	26.37	26.10
February	25.72	28.98	28.00
March	24.36	28.19	27.23
April	27.33	31.90	28.35
May	23.30	28.92	23.30
June	22.66	29.57	27.90
July	24.02	29.49	26.19
August	25.55	27.65	26.48
September	26.60	32.00	31.40
October	29.50	33.98	33.65
November	32.27	38.55	37.75
December	37.81	43.78	41.20

End of year, December 31st
Year	Rate of return at end of period (%)	Rate of return from beginning of year (%)
2009	166.11	166.11
2010	14.31	14.31
2011	-35.90	-35.90
2012	76.82	76.82

Months, 2012
Month	Rate of return at end of period (%)	Rate of return from beginning of year (%)
January	12.02	12.02
February	10.28	20.17
March	-2.02	16.87
April	4.11	21.67
May	-17.81	0.00
June	17.67	19.74
July	-6.13	12.40
August	5.00	13.65
September	18.58	34.76
October	7.17	44.42
November	12.18	62.02
December	9.14	76.82

Volume

According to data furnished by the WSE, the total value of trading on Company’s shares - that is, the aggregate value of all transactions on Grupa LOTOS securities concluded in 2012 - was PLN 2,013.15m. 54.10% of Company’s shares were traded in 2012. The average daily trading volume was 282,000 shares per session.

As at the end of the year
Year	Trading value (PLN m)	Share in trade on the WSE (%)	Turnover rate (%) *	Average trading volume per session
2009	3,642.56	1.11	173.00	381,938
2010	3,684.33	0.88	53.40	234,464
2011	3,299.07	1.31	73.10	377,048
2012	2,013.15	1.07	54.10	282,163

Months, 2012
Month	Trading value (PLN m)	Share in trade (%)	Turnover rate (%)	Average trading volume per session
January	189.46	1.06	6.10	379,430
February	225.38	1.25	6.40	397,127
March	214.68	1.11	6.20	368,315
April	187.20	1.48	5.00	338,203
May	150.55	1.05	4.60	281,384
June	170.11	1.10	5.00	321,139
July	116.84	0.74	3.40	201,949
August	82.41	0.57	2.40	140,576
September	148.96	0.99	3.90	252,139
October	116.61	0.73	2.80	158,500
November	193.81	1.29	4.30	266,366
December	217.14	1.50	4.10	310,169

End of year, December 31st
Year	Number of shares	Capitalisation at year end (PLN m)	Book value (PLN m)	Earnings per share (PLN)	P/E **	P/BV **
2009	129.87	4,130	6,489.76	7.44	4.60	0.61
2010	129.87	4,721	7,266.09	5.23	7.00	0.63
2011	129.87	3,026	7,829.99	5.03	4.63	0.38
2012	129.87	5,351

Dividend Policy

Distributions of dividend for the years covered by the current strategy, i.e. for 2011–2015, are subject to the optimisation of LOTOS Group financing. Grupa LOTOS' financial strategy provides for distribution of up to 30% of net profit as dividend.

The Company’s Board recommended that no part of the 2011 net profit be distributed among the Company’s shareholders.

On June 28th 2012, acting upon the Board's recommendation, the General Meeting resolved to distribute the 2011 profit as follows:

• PLN 306,169,935.90 was transferred to statutory reserve funds,
• PLN 1,500,000.00 was transferred to the Special Account designated for financing corporate social responsibility (CSR) projects.

Dividend and dividend yield

Financial year	Dividend per share (PLN)	Dividend per share (PLN)	Share price at the year end (PLN)	Dividend yield* (%)
2005	0.00	0.00	44.20
2006	40,932,000.00	0.36	49.30	0.73
2007	0.00	0.00	44.50
2008	0.00	0.00	11.95
2009	0.00	0.00	31.80
2010	0.00	0.00	36.35
2011	0.00	0.00	23.30

Historical dividend per share

Financial year	Dividend per share (PLN)	% of net profit	Dividend record date*	Dividend payment date**
2005	0.00	0.00
2006	0.36	10.06	June 11 2007	not later than July 31 2007
2007	0.00	0.00
2008	0.00	0.00
2009	0.00	0.00
2010	0.00	0.00
2011	0.00	0.00

Brokers' recommendations

According to the Company’s knowledge, in 2012 brokers issued 24 recommendations (including also updates to recommendations), as follows:

• 1 recommendation “Buy”,
• 3 recommendations “Accumulate”,
• 6 recommendations “Hold”,
• 1 recommendation “Reduce”,
• 13 recommendations “Sell”.

According to the brokers, the target price of Grupa LOTOS shares fluctuated from PLN 19.40 to PLN 38.90. The average price of Grupa LOTOS shares was PLN 26.58 in 2012.

The market value of Grupa LOTOS shares fluctuated from PLN 21.30 to PLN 43.78. At the end of 2012, the price stood at PLN 41.20.