ULJANIK Group. Yearly Report for 2013

Transcription

1 d.d. HR PULA, Flaciusova 1, HRVATSKA, p.p web: Tel.: +385 (0) (0) (0) Fax.: +385 (0) ULJANIK Group Yearly Report for Pula, April 2014

2 Management Report for ULJANIK d.d. is a joint stock company with its head office in Pula, at the address Flaciusova 1. According to the Notice regarding classification of business subjects as per national classification of activities of the State Institute for Statistics, Zagreb, the Company has the numerical class mark 7010 management activities, business subject identification number , and VAT No The company ULJANIK d.d is the parent Company within the ULJANIK Group. The subsidiary Companies are: - ULJANIK Brodogradilište d.d MAJ BRODOGRADILIŠTE d.d. - ULJANIK Strojogradnja d.d. - ULJANIK Proizvodnja opreme d.d. - ULJANIK Poslovno informacijski sustavi d.o.o. - ULJANIK Brodograđevni projekti d.o.o. - ULJANIK Financije d.o.o. - ULJANIK Standard d.o.o. All the stated companies are 100% in the ownership of ULJANIK Group, apart from the company 3. MAJ BRODOGRADILIŠTE d.d. On ULJANIK d.d. has signed the Contract for the sale and transfer of shares of BI 3. MAJ d.d. for the acquisition of 1,051,118 shares having nominal value of 100,00 kuna which represents % of the equity capital of BI 3. MAJ for which ULJANIK is obliged to pay the purchase price of 1.00 kn (one kuna). After expiry of the deadline for takeover, ULJANIK d.d. gained 235 shares of the company 3. MAJ BRODOGRADILIŠTE d.d. and holds in total 1,051,352 shares which represents % of the overall number of Company shares. BUSINESS ACTIVITIES The gaining of shares of the Company 3. MAJ and the integration of same in the ULJANIK Group, had, as a consequence, the significant increase of assets and other items in the consolidated Financial Reports of ULJANIK d.d. compared to the previous year. In the period ULJANIK d.d. achieved a positive financial result before tax to the amount of 48,628 thousand kuna. Overall income amounts to 1,954,138 thousand kuna, while the overall expenditure amounts to 1,905,510 thousand kuna. The liability of corporate tax is expressed for the parent company ULJANIK d.d. and amounts to 1,975 thousand kuna. In net profit in the amount of 46,654 thousand kuna has been achieved, while loss of 12,466 thousand kuna has been attributed to the minority interest. On the overall assets of ULJANIK Group amounted to 2,598,291 thousand kuna which is 920,692 thousand kuna higher than the previous year. The world crisis in the shipbuilding industry has directly affected the income achieved from sales of ULJANIK Group which in amounted to 1,053,723 thousand kuna. On the Group had 3,956 employees, while in the previous period the number of employees was 2,631 workers.

3 in 000 HRK I-XII/ I-XII/ Income from sales Earnings from business activities (earnings before interest and taxes) (20.298) ( ) Profit after tax (loss) periods (72.779) in 000 HRK Liquid assets and short term financial assets Total assets Principal amount In extensive work has been done on development and improvement of the organization in order to increase the efficiency of all management processes as well as optimization of complex shipbuilding processes and integration with shipyard 3. MAJ, and same will be continued in the next period. In August ULJANIK has signed with the company SOFIDRA S.A. a Contract for the construction of a sophisticated multipurpose Vessel for various special maritime operations. With the signing and construction of the stated vessel ULJANIK has confirmed the trust of the Company JAN DE NUL, one of the leading companies in the area of dredging and complex marine underwater and off shore works. Ownership structure Equity capital of the Company amounts to 302,062, kuna and is divided among 3,356,250 ordinary shares having mark ULJN-R-A, of individual nominal value of HRK. Shareholders of ULJANIK d.d. are: STATUS on No. Shareholder Ticker Number of shares Percent stake in the share capital 1 CROATIA OSIGURANJE D.D. (1/1) ULJN-R-A , CERP (0/1) / HZMO - HRVATSKI ZAVOD ZA MIROVINSKO OSIGURANJE (1/1) ULJN-R-A , HRVATSKA POŠTANSKA BANKA D.D. (0/1) / KAPITALNI FOND D.D. (1/1) ULJN-R-A , HRVATSKA POŠTANSKA BANKA D.D. (0/1) / FOND ZA FINANCIRANJE RAZGRADNJE NEK (1/1) HYPO ALPE - ADRIA - BANK D.D. (0/1) / PBZ CROATIA OSIGURANJE OBVEZNI MIROVINSKI FOND (1/1) ULJN-R-A ,9658 ULJN-R-A , HZZO - HRVATSKI ZAVOD ZA ZDRAVSTVENO OSIGURANJE (1/1) ULJN-R-A , SOCIETE GENERALE - SPLITSKA BANKA D.D. (0/1) / ERSTE PLAVI OBVEZNI MIROVINSKI FOND (1/1) ULJN-R-A , ULJANIK D.D. (1/1) ULJN-R-A , ADRIS GRUPA D.D. (1/1) ULJN-R-A , CERP (0/1) / DRŽAVNA AGENCIJA ZA OSIGURANJE ŠTEDNIH ULOGA I SANACIJU BANAKA (1/1) ULJN-R-A , DOMAĆA FIZIČKA OSOBA (7.186) ULJN-R-A , STRANA OSOBA ( 13) ULJN-R-A , OSTALI DIONIČARI *** ( 43) ULJN-R-A ,3227 TOTAL ,0000

4 Own shares: ULJANIK d.d. has gained 104,375 own shares which represents % of the Company s equity capital. The shares were gained at a price of kuna per share. After this acquisition the overall number of treasury shares amounts to 104,375 which represent % of the Company s equity capital. The acquisition of shares has been carried out on Risk Management The Company and Group are subject to risk primarily due to changes in exchange rate, credit risk, cash flow risk as well interest rate risk. Currency exchange rate risk is the risk represented by the fact that the financial instruments value would change amid changes of the exchange rate. The Group is mainly exposed to changes in the value of the American dollar and EUR since a significant part of the financial assets, obligations and foreign income are expressed in these currencies. In order for this risk to be decreased greater currency conformity between inflow and outflow is in the process of being achieved. Credit risk represents the risk of one party not fulfilling its obligations in the financial instrument and that by not doing so will cause a financial loss to the other side. The Company minimizes that risk by continuous monitoring of Buyer s demands, while suspicious demands are reserved and regularly appraised, and are changed if necessary. Liquidity risk, which is deemed financing risk, represents the risk that the Group will encounter difficulties in gathering funds for settling obligations related to financial instruments. The Group pays careful attention to cash flow by monitoring real daily changes. Interest risk represents the risk that the value of financial instruments will change amid changes of market interest rates. Interest risk of the Company and the Group results from received long-term and short-term credits and loans. Significant events after the date of the Assets and Liability Statement All significant events are regularly notified through the pages of the Zagreb Stock Exchange, the Official Register of Regulated Information and the internet pages of the Company. Implementation of code of corporate management The Company voluntarily applies the Code of Corporate Management drawn up jointly by the Croatian Financial Services Supervisory Agency (HANFA) and Zagreb Stock Exchange (Zagrebačka burza d.d. Zagreb) (hereinafter: Codex). In the previous year, besides the Codex, the Company had also issued the Yearly Report on corporate management, which in one place brings together all data and information showing the levels of corporate culture, and whose issuance is foreseen during The Company plans to continue to make its business and business results transparent and publically available. Surveillance over the conduct of Company business is carried out by the Supervisory Board in accordance with the provisions of the Companies Act. The Supervisory Board acts also through their sub-committee: Audit Committee which offers support to the Supervisory Board and Company s Management Board in the realization of obligations of corporate management, financial reporting and control of business activities of the Company. The Company has an independent internal Auditor whose main function is to ensure that Financial Reports accurately and objectively show the Company s financial as well as business status.

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6 ULJANIK d.d. Annual Consolidated Financial Statements and Independent Auditor's Report For the year ended 31

7 CONTENTS Page Responsibility for the Consolidated Financial Statements 1 Independent Auditor s Report 2-4 Consolidated Statement of Comprehensive income 5-6 Consolidated Balance Sheet / Consolidated Statement of Financial position 7-8 Consolidated Statement of Changes in Equity 9 Consolidated Cash Flows Statement 10 Notes to the Consolidated Financial Statements 11-48

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9 AUDIT REVJZlJS)(E \:SLUGE. ZAGREB MOORE STEPHENS AUDIT ZAGREB Audit d.c.c. za revizijske usluge Baslijancva 52A Zagreb HRVATSKA Tel:+385 (0) I ,]85 (0) I ~ 385 (0) I Fax+385 (0) I audil-revizija@audit.hr INDEPENDENT AUDITOR'S REPORT To the shareholders of the company We have audited the accompanying annual consolidated financial statements of the company ULJ'ANIK d.d., Pula, Flaciusova 1 ("the Company") for the year ended 31, which comprise the consolidated Balance Sheet I consolidated Statement of Financial Position as of that date; the consolidated Statement of Comprehensive Income; the consolidated Statement of Changes in Equity and the consolidated Cash Flows Statement for the year then ended; and the accompanying Notes to the consolidated Financial Statements which concisely set out the principal accounting policies and other explanations. Responsibility of the Company's Management 2 The Company's Management is responsible for the preparation and fair presentation of the enclosed consolidated financial statements according to the International Financial Reporting Standards effective in the European Union and also those internal controls which are determined by the Company's Management as necessary to enable the preparation of the consolidated financial statements free of material misstatements whether due to fraud or error. Responsibility of the Auditor 3 Our responsibility is to express an opinion on the enclosed consolidated financial statements based on the audit performed. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance that the consolidated financial statements are free of material misstatements. An audit includes performing of procedures to obtain audit evidence supporting the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatements in the consolidated financial statements, whether due to fraud or error. In making these risk assessments, the auditor considers internal controls relevant to the Company's preparation and fair presentation of the consolidated financial statements in order to conduct audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Company's Management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that auditing proof and evidence collected by us are sufficient and suitable as the basis for expressing our opinion. 2

10 AUDIT REV1ZIJSKE USLUGE. lag~eb MOORE STEPHENS AUDIT ZAGREB Opinion 4 In our OpiniOn, the enclosed consolidated financial statements, in all significant terms of reference, truthfully and fairly present the consolidated financial position of the Company as at 31, and its consolidated financial performance and the consolidated cash flows of the Company for, according to the Accountancy Act and the International Financial Reporting Standards effective in the European Union. Emphasize of matter 5. Without making condition upon our opinion set out in paragraph 4 above, we draw your attention that the company 3.Maj Brodogradiliste d.d., Rijeka in has recorded revenues from donations, subventions and state subsidies in the amount of HRK 139,923,216. These revenues relate to the recording of a proportional part of the refund of costs for restructuring on the basis of Contract on sale and transfer of shares of Brodogradevna industrija 3. Maj d.d., Rijeka (hereinafter:"the Contract"), and also the Restructuring program of Brodogradevna industrija 3. Maj d.d., Rijeka (hereinafter: "the Restructuring program"). On the basis of fulfilment of conditions from Contract for the receipt of subvention in, as well as in accordance with the anticipated utilization of subventions according to Restructuring program and the dynamics of investments, and consequently to the established liability of the Republic of Croatia stated through the Contract and the Restructuring program, the Company in has recorded the stated amount of revenue which relates to contribution of the Republic of Croatia in the restructuring of the Company. 6. Without making condition upon our opinion set out in paragraph 4 above, we draw your opinion that the company Uljanik Brodogradiliste d.d., Pula in the Balance sheet / Statement of financial condition as at 31 has stated loss over the level of capital in the amount of HRK 271,054,336. Beside that, as at 31, total short-term liabilities of Uljanik Brodogradiliste d.d., Pula are bigger than short-term assets for the amount of HRK 437,769,744. Also, the company Uljanik Strojogradnja d.d., Pula in the Balance sheet/statement of financial position as at 31 has stated loss over the level of capital in the amount of HRK 12,366,826. Beside that, as at 31 total short-term liabilities of Uljanik Strojogradnja d.d., Pula are bigger than short-term assets for the amount of HRK 47,708,164. This suggests the necessity of undertaking the activities on restructuring and consolidation of business operations of the stated companies. As is stated in Note 59 to the consolidated financial statements in 2014 are signed new contracts for the construction of ships. 7. Audit of the annual consolidated financial statements for was performed by auditing firm Reconsult d.o.o., Zagreb which in its Independent auditor's report dated 12 April has stated opinion with reserve due to insufficient provisions for losses upon the constructions in accordance with las 11. 3

11 AUDIT RtVIZJJSKE USLUGE, ZAGREB MOORE STEPHENS AUDIT ZAGREB Opinion on the adjustment to other legal and regulatory requirements 8. The Company's Management is responsible for the preparation of the annual consolidated financial statements of the Company for the year ended 31 in prescribed form on the basis of the Regulation on the structure and content of annual financial statements (Official gazette No 38/08,12/09,130/10) and in accordance with the other provisions which regulate the operations of the Company ("Standard Annual Consolidated Financial Statements"). The financial information set out in the standard annual consolidated financial statements of the Company are in accordance with the information stated in the annual consolidated financial statements of the Company shown on pages 5 to 48 which are the subject of our opinion, as set out in the section Opinion, above. Opinion on adjustment to Annual statement 9 The Company's Management is responsible for the preparation of the Annual statement of the Company. As a result of the provisions of article 17 of the Accountancy Act, we are obliged to express an opinion on adjustment of the Annual statement of the Company with the annual consolidated financial statements of the Company. In our opinion, on the basis of the performed audit of the annual consolidated financial statements of the Company and the comparison with the Annual statement of the Company for the year which ended 31, the financial information set out in the Annual statement of the Company, approved for their issuance by the Company's Management on 18 April 2014, are in accordance with the financial information set out in the annual consolidated financial statements of the Company set out on pages 5 to 48 which were the object of our opinion, a t out in section Opinion, above. Marijana Pranjic, member of the Manageme I :0AiUI2lI_~ Zagreb, 25 April 2014 ~-1 G R ",,<0 ~ Il\ ':0-..0., ag 2d0'"\ j Au ~nko Balen, certified auditor \ d.d.a. / 4

12 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the year ended 31 Note Sales revenue 3 1,053,722,528 1,391,378,761 Other operating revenues 4 315,142,572 71,587,739 Operating revenues 1,368,865,100 1,462,966,500 Changes in value of work in progress and finished goods 5 19,987,304 (2,254,791) Raw material and material costs 6 (768,192,632) (851,553,784) Costs of goods sold 7 (1,727,498) (5,213,953) Other external costs 8 (149,977,357) (178,775,671) Material costs (919,897,487) (1,035,543,408) Net salaries and wages (297,385,827) (186,341,430) Costs for taxes and contributions from salaries (119,727,595) (78,483,009) Contributions on gross salaries (71,592,849) (47,265,782) Staff costs 9 (488,706,271) (312,090,221) Depreciation 10 (50,869,259) (33,492,607) Other costs 11 (164,406,970) (70,151,705) Value adjustment of long-term assets (17,738,380) - Value adjustment of short-term assets (17,282,538) (980,132) Value adjustment 12 (35,020,918) (980,132) Provisions 13 (77,417,063) (20,204,737) Other operating expenses 14 (21,154,367) (8,547,390) Operating expenses (1,737,485,031) (1,483,264,991) Interest income, foreign exchange gains, dividends and similar income from related parties 557,363,957 - Interest income, foreign exchange gains, dividends and similar income from non-related parties and other entities 83,734,752 78,071,423 Financial income ,098,709 78,071,423 Interest expenses, foreign exchange losses and similar expenses from non-related parties and other entities (160,951,972) (125,106,606) Other financial expenses (3,955,555) - Financial expenses 16 (164,907,527) (125,106,606) Income from investment-share in profit 17 of associated entrepreneurs 145,836 - Loss from investment-share in loss 18 of associated entrepreneurs ( 3,132,368) (4,224,291) TOTAL INCOME 2,010,109,645 1,541,037,923 TOTAL EXPENSES (1,905,524,926) (1,612,595,888) PROFIT/(LOSS) BEFORE TAXATION 104,584,719 (71,557,965) Profit tax 19 (1,974,533) (1,221,292) PROFIT/(LOSS) FOR THE PERIOD ,610,186 (72,779,257) Profit/(loss) subscribed to the parent capital holders 105,758,648 (72,779,257) Profit/(loss) subscribed to minority interest 43 (3,148,462) - 5

13 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME STATEMENT OF OTHER COMPREHENSIVE INCOME Note PROFIT / (LOSS) FOR THE PERIOD 102,610,186 (72,779,257) Exchange differences on translation of foreign operations (692,467) - OTHER COMPREHENSIVE INCOME/(LOSS) BEFORE TAXATION (692,467) - Tax on other comprehensive income for the period 138,493 - NET OTHER COMPREHENSIVE INCOME/(LOSS) FOR THE PERIOD 21 (553,974) - COMPREHENSIVE INCOME/(LOSS) FOR THE PERIOD 102,056,212 (72,779,257) Comprehensive income/(loss) attributed to equity holders of parent company 105,204,674 (72,779,257) Comprehensive income/(loss) attributed to minority interest (3,148,462) - The accompanying Notes from 1 to 60 set out below form an inseparable part of these consolidated financial statements. 6

14 CONSOLIDATED BALANCE SHEET / CONSOLIDATED STATEMENT OF FINANCIAL POSITION As of 31 ASSETS Note Development costs - 5,163 Concessions, patents, licence fees, merchandise and service brands, software and other rights 181,757, ,201,147 Intangible assets in preparation 955,556 19,000 Intangible property ,712, ,225,310 Land 15,377,808 15,377,808 Buildings 59,225,225 63,331,324 Plant and equipment 173,958, ,556,112 Instruments, facility inventories and transportation assets 174,533,954 21,781,295 Tangible assets in preparation 35,296,832 34,848,886 Other tangible assets 782,205 69,758 Investments into real estate 91,553,708 72,039,165 Tangible assets ,728, ,004,348 Shares (stocks) in related parties 84,591,493 54,377,459 Participating interests (portions) 248, ,700 Investment in securities 352, ,490 Loans, deposits and similar 116,131,841 18,888 Other long-term financial assets 20,000 20,000 Investments accounted by equity method 147,760, ,581,686 Financial assets ,104, ,497,223 Amounts due on the basis of sale on credit 20,755,296 8,979,788 Other receivables 305,778,946 10,000,000 Receivables ,534,242 18,979,788 Deferred tax property - - LONG-TERM ASSETS 1,409,080, ,706,669 Raw material and supplies 221,931, ,352,563 Work in progress 38,655,266 17,881,895 Finished goods Merchandise 43,449 56,315 Prepayments for stocks 13,079,306 - Long-term assets held for sale 643,097 - Inventories ,353, ,291,598 Accounts receivable 27 21,952,051 14,074,486 Receivables from participating entrepreneurs 28 26,318 37,862 Receivables from employees and shareholders , ,890 Receivables from government and other institutions ,144, ,220,641 Other receivables 31 38,290,983 92,786,119 Receivables 279,637, ,260,998 Loans, deposits and similar assets 110,916,206 3,693,397 Financial assets ,916,206 3,693,397 Cash at bank and in cashier ,715,748 47,006,119 SHORT-TERM ASSETS 916,623, ,252,112 Prepaid expenses of the future period and accrued income ,558, ,640,222 TOTAL ASSETS 2,654,261,863 1,677,599,003 OFF BALANCE RECORDS ,059, ,671,116 7

15 CONSOLIDATED BALANCE SHEET / CONSOLIDATED STATEMENT OF FINANCIAL POSITION As of 31 - continued LIABILITIES AND CAPITAL Note Basic (subscribed) capital ,062, ,062,500 Capital reserves 36 15,191,367 15,191,367 Reserves for own shares 37 3,200,000 - Own shares and portions (deducted item) 38 (4,696,875) - Other reserves 39 4,963 - Reserves from net income (1,491,912) - Revaluation reserves 40 (692,467) Retained earnings /(Accumulated loss) 41 (64,638,108) (901,992) Profit/(Loss) for the current year ,758,648 (72,779,257) Minority interest ,206,777 CAPITAL AND RESERVES 464,396, ,572,618 Provisions for pensions, severance pays and similar liabilities 3,861,516 - Other reserves 109,775, ,000 Provisions ,636, ,000 Liabiliteis to banks and other financial institutions 475,612, ,102,050 Liabilities upon securities 155,866,629 - Long-term liabilities ,479, ,102,050 Liabilities to banks and other financial institutions ,945, ,545,080 Liabilities for received prepayments ,395,669 20,827,273 Accounts payable ,596, ,744,774 Liabilities to entrepreneurs in whom the entity holds participating interests 49 4,051,449 3,445,612 Liabilities to employees 50 69,694,357 16,896,621 Liabilities for taxes, contributions and similar fees 51 23,412,468 11,958,864 Other short-term liabilities 52 78,389,101 14,074,277 Short-term liabilities 1,362,485, ,492,501 Deferred settlement of charges and income deferred to future period 53 82,263,146 58,782,834 TOTAL CAPITAL AND LIABILITIES 2,654,261,863 1,677,599,003 OFF BALANCE RECORDS ,059, ,671,116 CAPITAL AND RESERVES Subscribed to parent capital holders 356,190, ,572,618 Subscribed to minority interests ,206,777 - The accompanying Notes from 1 to 60 set out below form an inseparable part of these consolidated financial statements. 8

16 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 31 Basic (subscribed) capital Capital reserves Transferred loss Profit/(Loss) for the current year Total 2011 Increase Decrease Transfer from/to Loss for the current year 670,875, ,799,730 (469,613,130) ,062, ,191, ,191,367 (457,022,983) - 454,421,763 1,699,228 - (901,992) 1,699, (1,699,228) (72,779,257) (72,779,257) 215,552, ,799, (72,779,257) 243,572,618 Note Increase/ (decrease) Other Transfer from/to Profit for the current year Basic (subscribed) capital ,062, ,062,500 Capital reserves 36 15,191, ,191,367 Reserves for own shares ,200,000-3,200,000 Own shares and portions 38 - (4,696,875) (4,696,875) Other reserves ,963-4,963 Revaluation reserves (692,467) - - (692,467) Transferred loss 41 (901,992) - 12,248,104 (75,984,220) - (64,638,108) Profit/(Loss) for the current year 42 (72,779,257) ,779, ,758, ,758,648 Minority interest ,206, ,206,777 Total 243,572, ,509,902 11,555, ,758, ,396,805 The accompanying Notes from 1 to 60 set out below form an inseparable part of these consolidated financial statements. 9

17 CONSOLIDATED CASH FLOWS STATEMENT For the year ended 31 I II III Note CASH FLOW FROM OPERATING ACTIVITIES Profit before tax 104,584,719 (71,557,965) Depreciation 50,869,259 33,492,607 Increase in short-term liabilities 333,577,722 - Decrease in short-term receivables 111,772, ,103,444 Decrease in inventories - 70,654,091 Other cash flow increases 339,626,167 56,517,318 Total increase in cash flow from operating activities 940,429, ,209,495 Decrease in short-term liabilities - (248,745,520) Increase in inventories (61,061,869) - Other cash flow decreases (867,847,902) (90,519,792) Total decrease in cash flow from operating activities (928,909,771) (339,265,312) NET CASH FLOW FROM OPERATING ACTIVITIES 11,520,196 (145,055,817) CASH FLOW FROM INVESTING ACTIVITIES Cash inflows from sale of long-term intangible and tangible assets 4,492,817 1,354,816 Cash inflows from sale of equity and debt financial instruments 1 - Interest received 6,433,843 2,540,331 Dividends received 179, ,815 Other cash inflows from investing activities 19,095,433 3,305,378 Total cash inflows from investing activities 30,201,729 7,904,340 Cash outflows for purchase of long-term intangible and tangible assets (4,196,466) (15,258,731) Cash outflows for purchase of equity and debt financial instruments (53,492,900) (51,240,426) Other outflows from investing activities (60,403,922) (2,333,397) Total money expenses from investing activities (118,093,288) (68,832,554) TOTAL CASH FLOW FROM INVESTING ACTIVITIES ( ) (60,928,214) CASH FLOW FROM FINANCING ACTIVITIES Cash inflows from the issue of equity and debt financial instruments - 100,799,730 Cash inflows from loans, debentures, credits and other borrowings 973,242, ,876,223 Total cash inflows from financing activities 973,242, ,675,953 Cash outflows for the repayment of loan principal and bonds (687,335,691) (793,388,600) Cash outflows for the financial lease (128,537) (292,714) Cash expenses for the purchase of own shares (4,696,875) - Total money expenses from financial activities (692,161,103) (793,681,314) TOTAL CASH FLOW FROM FINANCING ACTIVITIES ,994,639 TOTAL NET CASH FLOW 204,709,629 (62,989,392) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 33 47,006, ,995,511 CASH AND CASH EQUIVALENTS AT END OF PERIOD ,715,748 47,006,119 INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 204,709,629 (62,989,392) The accompanying Notes from 1 to 60 set out below form an inseparable part of these consolidated financial statements. 10

18 For the year ended GENERAL 1.1. Activity ULJANIK d.d., Flaciusova 1, Pula (''the Company'') is a Parent company of the Group Uljanik and is engaged in managing companies, activities of sale and the design, financial operations as well as rendering of other services for the companies of the Group. The Group consists of the Company and the subsidiary companies, as follows: Company s portion of ownership and voting rights (%) Uljanik Brodogradilište d.d., Pula Maj Brodogradilište d.d., Rijeka Uljanik Strojogradnja d.d., Pula Uljanik Proizvodnja opreme d.d., Pula Uljanik Poslovno informacijski sustavi d.o.o., Pula Uljanik Brodograđevni projekti d.o.o., Pula Uljanik Financije d.o.o., Pula Uljanik Standard d.o.o., Pula Maritime Transport Pula Three Inc., Liberia Brodo Opus d.o.o., Pula AKS d.o.o., Pula Uscs d.o.o., Pula Uljanik Marina d.o.o., Pula Maritime Transport Pula One Inc., Liberia Maritime Transport Pula Two Inc., Liberia United Shipping Services Sixteen Inc., Liberia Associated companies Adriadiesel d.d., Karlovac Brodogradilište Viktor Lenac d.d., Rijeka United Shipping Services Twelve Inc, Liberia United Shipping Services Thirteen Inc., Liberia

19 1.2. Number of staff The number of staff employed by the Company at 31 was 3,956 employees ( was 2,631 employees). The structure of the staff by qualification level is, as follows: Doctor s degree 1 - Master s degree 7 6 University degree Two-year post secondary school diploma Secondary school certificate 1, High-skilled workers Skilled workers 1, Semi-skilled workers Low-skilled workers 5 4 Unskilled workers Total 3,956 2, Supervisory and Management Board of the Company The members of the Supervisory Board of the Company are: from to Renata Kašnjar-Putar, president from 27 April Đino Šverko, vice president from 27 April Andrija Hren, member from 27 April Rajko Kutlača, member from 27 April Vladimir Žmak, member from 27 April Zoja Crnečki, member to 26 April Vladimir Žmak, president to 26 April Erik Ružić, vice president to 26 April Anica Sekušak, member to 26 April The Management of the Company: from to Gianni Rossanda, president from 27 April Veljko Grbac, member from 27 April Marinko Brgić, member from 27 April Anton Brajković, president to 26 April The amount of remuneration to members of the Management and the Supervisory Board of the Company is specified in Notes 9 and 11 to the consolidated Financial Statements. 12

20 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Set out below are the principal accounting policies Statement of adjustment and basis of presentation The consolidated financial statements of the Company for are prepared in accordance with the Accounting Act (Official gazette 109/07, 54/13) and the International Financial Reporting Standards ( IFRS ) effective in the European Union, and in accordance with the Regulation on the structure and content of annual financial statements (Official gazette No 38/08, 12/09, 130/10). The International Financial Reporting Standards ("IFRS") issued by the Committee for Financial Reporting Standards nominated by the Government of the Republic of Croatia (Official gazette No 136/09, 8/10, 18/10, 27/10, 65/10, 120/10, 58/11, 140/11, 15/12, 118/12, 45/13, 69/13), which were effective till the date of entrance of Croatia into the European Union, are in accordance with International Financial Reporting Standards ("IFRS") which have been established by the European commission and promulgated in official gazette of European Union. The consolidated financial statements are prepared with the application of the basic accounting assumption of the occurrence of a business event upon which the effects of operations are recognized when arisen and are shown in the consolidated financial statements for the period to which they relate and with the application of the basic accounting assumption of the going concern concept Basis of consolidation The consolidated financial statements incorporate the financial statements of the Company and the financial statements of enterprises controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an investee enterprise so as to obtain benefits from its activities. All significant intercompany transactions and balances between Group s enterprises are eliminated on consolidation Key estimates and uncertainty of estimates Certain estimates are used during the preparation of the consolidated financial statements which have inflow to the statement of property and liabilities of the Company and subsidiary companies, income and expenses of the Company and subsidiary companies and the disclosure of potential liabilities of the Company and subsidiary companies. Future events and their inflows cannot be predicted with certainty, thus the real results may differ from those estimated. The estimates utilized during the preparation of the consolidated financial statements are subject to changes by the occurrence of new events, by gathering additional experience, obtaining additional information and comprehensions and by a change of environment in which the Company and subsidiary companies operate. Key estimates used by the application of accounting policies during the preparation of the consolidated financial statements relate to the depreciation count of long-term intangible and tangible property, value decrease of property, value provision of inventories, value provision of receivables and provisions and the disclosure of potential liabilities. 13

21 2.4. Reporting currency The consolidated financial statements of the Company are prepared in the Croatian kuna as a measuring and reporting currency of the Company Revenue recognition Revenue from the sale of goods and services is recognized in the moment when goods are delivered and services are rendered, and the title has passed. Interest from revenue is accrued on a time basis, by reference to the principal outstanding and at the applicable effective interest rate. Dividend income, or income from the share in the profit, is recognized when the right to receive payment has been recognized. Income from construction contracts, subsequently to the estimate of the results of contract, is recognized according to a degree of finalization of the works contracted, and on the basis of portion of contract's costs, recognized until the end of the consolidated Balance Sheet / consolidated Statement of Financial Position date in relation to the totally estimated contract's costs. If it is likely that totally estimated contract s costs will exceed total contract's income, the expected loss is recognized as expense of the period State subsidies State subsidies are recognized as income on a systematic and rational basis through the accounting periods as to be brought face to face with related costs to which they are intended to refund them and in accordance with conditions according to which the subsidies are granted Borrowing costs Borrowing costs are charged to the consolidated Statement of Comprehensive Income in the period in which they were incurred Foreign currency transactions Transactions in currencies other than the Croatian kuna are initially recorded at the rates of exchange prevailing on the dates of the transactions. Monetary assets, receivables and liabilities denominated in such currencies are calculated at the rates prevailing on the date of the consolidated Balance Sheet / consolidated Statement of Financial Position. Gains and losses arising on conversion are included in the consolidated Statement of Comprehensive Income for the current year. the official rate of the Croatian kuna was 7.64 HRK for 1 EUR ( it was 7.55 HRK) and 5.55 HRK for 1 USD ( it was 5.73 HRK). 14

22 The results of operations and the financial position of the Group members which functional currency differs from the reporting currency is translated in the reporting currency as follows: i. assets and liabilities for each item of the Balance Sheet / Statement on Financial position are calculated at the closing currency rate at each Balance Sheet / Statement of Financial Position date; ii. income and expenses for each Statement of Comprehensive Income are calculated at the average currency rates Income tax The tax currently payable is based on the result for the year, adjusted by non-taxable and tax nondeductible items (70% of business entertainment expenses, 30% of costs for the use of personal cars, etc.). Income tax is calculated using tax rates that were valid on the date of the consolidated Balance Sheet / consolidated Statement of Financial Position. Deferred tax property and deferred tax liability arise from temporary differences between value of property and liabilities stated in the financial statements and the values stated for the purposes of determining net income tax basis. Deferred tax property is recognized for the non-utilized transferred tax losses if the possibility exists that in the future net taxable income would be realized as the basis for the utilization of deferred tax property. Deferred tax property and deferred tax liability is accounted by the application of net income tax rates applicable to future period when such property or liability has to be realized Long-term intangible and tangible assets Long-term intangible and tangible assets initially are carried at historical acquisition cost which comprises purchase price, import duties and non-refundable sales taxes, after the deduction of commercial discounts and rebates, as well as all other costs directly attributable to bringing the asset to its working condition for its intended use. Long-term intangible and tangible assets are recognized if it is likely that future benefits attributable to the property will inflow to the Company, and if the cost of the acquisition of an asset can be reliably measured, and if a single purchase value of property exceeds HRK 3,500. After the first recognition, the property is carried at historical acquisition cost minus the accumulated depreciation and any accumulated impairment losses. Maintenance and repairs, replacements and improvements of minor importance are expensed as incurred. Where it is obvious that the expenses incurred resulted in an increase of expected future economic benefits to be derived from the use of an item of long-term intangible or tangible property in excess of the originally assessed standard performance of the asset, they are added to the carrying amount of the asset. Gains or losses on the retirement or disposal of long-term intangible and tangible asset are included in the consolidated Statement of Comprehensive Income in the period in which they occur. 15

23 Investments into real estate (land, buildings) which are the property of the Company or subsidiary company or in a financial lease are held to enable the Company or subsidiary company to realize rental income or / and the increase of a market value of property, and are stated at fair value. Depreciation commences when an asset is put into use, i.e. when it is at the location and in the condition necessary for utilization. The depreciation count of property ceases when the property is classified as property held for sale. Depreciation is charged so as to write-off the cost or valuation of each asset, other than land and long-term intangible and tangible property under construction, over their estimated useful lives, using the straight-line method, on the following basis: Depreciation rate (from to %) Development costs % Concessions, patents, licenses, software, etc % Other intangible assets 2 20 % Buildings 2 10 % Facilities and equipment % Instruments, facility inventories and transportation assets % Other material assets % Financial assets Financial property represents the cash, the investments in cash, objects and the cession of rights with an intention of securing income and is classified on the date of the consolidated Balance Sheet / consolidated Statement of Financial Position, as follows: investments held to the maturity date; loans and receivables Shares (stocks) in related parties Associated companies are the companies where the Company has a control over bringing and implementing of financial and business policies. Investments into associated companies are stated at cost method. 16

24 2.13. Inventories Inventories are stated at the lower of cost and net realizable value. Cost of inventories comprises all purchase costs, cost of conversion and other costs that have been incurred in bringing the inventories to their present location and condition. Net realizable value represents the estimated selling price during a normal course of operations less all estimated costs of completion and necessary costs to be incurred in selling. If the value of inventories is higher than the estimated net selling price, an allowance is created and charged to consolidated Income Statement / consolidated Statement of Comprehensive Income for the current year. Small inventories, packing materials and car tires are written-off by 100% at the moment when they are put into use. Work in progress is assessed on the basis of a percentage of finalization method, measured by value of work finalized in relation to calculated value. Building contracts Costs of contract are recognized when occur. When the outcome of building contract is not possible to estimate reliably, the income from contract is recognized only in the amount of arisen costs from the contract which is expected to be able to be realized. When an outcome of contract is impossible to be reliably measured and when it is probable that by the contract would be realized the income, the income from building contract is recognized as income while the duration of the contract. When the possibility exists that total costs of contract will exceed total income of the contract, the expected loss is recognized immediately as cost. For all the contracts in course by which the arisen costs and the recognized gains (decreased for recognized losses) are bigger than the payments of buyers upon phases of realization, the amount of receivables from ship-owners is stated as refundable amount upon contracts in the figure of the paid costs of the future period and undue collection of income. When the payments of the ship-owners upon phases of realization are bigger than arisen costs increased for recognized gains (decreased for recognized losses), the amount of liability is shown as liabilities toward buyers upon contract, in the figure of liabilities for received advance payments Long term assets held for sale Assets held for sale represent long-term intangible and tangible assets which are expected, due to ceasing of utilization or suspension of operations, to be sold within a one year period from the date of classification. Assets held for sale are stated at the lower of a net book value and fair value less selling costs. 17

25 2.15. Receivables Receivables are initially measured at fair value. At each consolidated Balance Sheet / consolidated Statement of Financial Position date, receivables, which collection is expected in a period longer than a year, are stated at depreciated cost by the application of effective interest rate method less impairment value. Short-term receivables are stated at initially recognized nominal amount less corresponding amount of value provision for estimated uncollectable amounts and the value decreases. The value of receivables is decreased and the impairment losses arise only and exclusively if an objective evidence exists in respect of a value decrease resulted from a certain or more events arisen after the initial recognition of property, when such event has the impact to the estimated future cash flows from receivables which can be reliably determined. At each consolidated Balance Sheet / consolidated Statement of Financial Position date, it is estimated whether an objective evidence in respect of a value decrease of a single receivable exists. If an objective evidence exists in respect of a value decrease of receivables, the amount of loss is measured as a difference between a net book value and the estimated future cash flows. Net book value of receivables will be decreased directly or by using a separate account of value provision. The amount of a loss is recognized by charging the consolidated Statement of Comprehensive Income for the current year Cash at bank and in cashier Cash consists of balances with banks and cash in hand, demand deposits and securities payable at call or with maturities of up to three months Impairment On the date of each consolidated Balance Sheet / consolidated Statement of Financial position, the Company reviews the carrying amounts of its assets to determine whether there is any indication that these assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. Loss from the decrease in value of property is recognized as expense in the consolidated Statement of Comprehensive Income Financial instruments Financial instruments are classified as assets, liabilities or equity instruments in accordance with applicable contracts. Interest, gains and losses on financial instruments classified as financial assets or liabilities are recognized as income or expense when they arise. Financial assets and financial liabilities are recognized on the Company's consolidated Balance Sheet / consolidated Statement of Financial Position when the Company or subsidiary company becomes a party to the contractual provisions of the instrument. 18

26 Receivables are stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable amounts. Liabilities are stated at their nominal amounts. Investments are recognized on a trade-date basis of accounting and initially are measured at cost, which includes transaction costs. Interest-bearing bank borrowings and overdrafts are recorded in the proceeds received and to the extent of approved overdraft facility. The Management Board of the Company believes that the fair values of all assets and liabilities stated in the consolidated Balance Sheet / consolidated Statement of Financial Position are not materially different from their carrying amounts Leases Leases are classified as financial leases if all the risks and economic benefits connected with ownership are transferred from the lessor to the lessee. A financial lease is recognized in the consolidated Balance sheet / consolidated Statement of Financial Position of the lessee as property and liability for the financial lease. Leases are classified as business/operating leases if all the risks and economic benefits connected with ownership are not transferred from the lessor to the lessee. A business/operative lease is recognized as an expense in the consolidated Statement of Comprehensive Income of the lessee on the uniform basis during the period of lease Provisions A provision is recognized only when the Company or subsidiary company has a present obligation as a result of a past event and if it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and if a reliable estimate can be made of the amount of the obligation. Provisions are reviewed at each consolidated Balance Sheet / consolidated Statement of Financial Position date and adjusted to reflect the current best estimate. Provisions are determined for possible repair costs in a guarantee period, anticipated construction losses upon contract, costs of legal proceedings, costs of severance pays, costs of jubilee awards to employees and retirement costs (regular jubilee awards and severance pays) and also for the costs of stimulative severance pays based on a staff restructuring plan of the Company or subsidiary company. Provision of costs of jubilee awards to employees and retirement costs (regular jubilee awards and severance pays) is determined as a net book value of the future pay-offs using a discount rate equal to the interest rate on government bonds. 19

27 Provisions of costs of awards to employees for a long-age employment and retirement (regular jubilee awards and severance pays) of employees of the subsidiary company 3. Maj Brodogradilište d.d., Rijeka is not determined in the financial statements of subsidiary company 3. Maj Brodogradilište d.d., Rijeka concerning that the mentioned company was not able to measure reliably the amount of the stated provisions due to the following reasons: the company since 2011 is in the restructuring process on the basis of which the number of employees has fluctuated significantly, and in this period was decreased from 1,955 in 2011 to 1,307 at the end of.having into regard the requirements from the Restructuring program, in the following period is expected further decrease of the number of employees, but in the very moment of the issuance of these consolidated financial statements the Management of the Company does not have reliable information of the number and the names of employees who will leave the Company. momentary effective Collective agreement of the company 3. Maj Brodogradilište d.d. is not in the fundamental elements which determine the amounts and the criteria for the payment of severance pays and jubilee awards identical to the Collective contract which is in the application for the other companies of the Uljanik Group. Due to the stated, it is expected the adjustment of these collective contracts but in the moment of the issuance of these financial statements is not known when and by which mode will be adjusted the stated collective contracts. Due to the stated question marks for the subsidiary company 3. Maj Brodogradilište d.d., Rijeka was not possible to apply the reliable criteria which are the basis for measurement of the amount of provision for regular severance pays and jubilee awards in the consolidated financial statements for Contingent liabilities and assets Contingent liabilities are not recognized in the consolidated financial statements but disclosed in notes to the consolidated financial statements. A contingent asset is not recognized in the consolidated financial statements but disclosed in the moment when an inflow of economic benefits is probable Subsequent events Events which occur after the date of the consolidated consolidated Balance Sheet / consolidated Statement of Financial Position that provide additional information about the Company s or subsidiary company s position on the date of the consolidated Balance Sheet / consolidated Statement of Financial Position (adjusting events) are reflected in the consolidated financial statements. Post-year-end events that are not adjusting events are disclosed in the notes to the consolidated financial statements when material. 20