LIBET GROUP. Consolidated Financial Statements for the period of 12 months ended on 31 December 2014

Transcription

1 LIBET GROUP Consolidated Financial Statements compliant with the International Financial Reporting Standards as approved by the European Union Wrocław, dated 19 March 2015

2 CONSOLIDATED PROFIT AND LOSS STATEMENT AND COMPREHENSIVE INCOME STATEMENT... 4 CONSOLIDATED STATEMENT OF FINANCIAL POSITION... 5 AS AT 31 DECEMBER CONSOLIDATED CASH FLOW STATEMENT... 6 CONSOLIDATED STATEMENT ON CHANGES IN EQUITY... 7 EXPLANATORY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT 31 DECEMBER General Information LIBET Group's description The composition of the Management Bard and Supervisory Bard Approval of the financial statements Basis of preparation of Statement on compliance New standards and interpretations Functional currency and currency of financial statements Segment information Significant accounting policies applied Continuing of activity Basis of drawing up the financial statement Significant values based on a professional assessment and estimates Professional assessment Estimates uncertainty Change in estimates Adjustment of previous periods' errors Revenue and costs Discontinued operations Sales revenue Information on leading customers Financial revenue Financial costs Other operating revenue Other operating expenses Cost by nature Employee benefit costs Income tax relating to continued operations Income recognised in profits/losses of the period Effective tax rate Income tax taken directly to the equity Income tax taken to other comprehensive income - none Current assets and tax liabilities Deferred tax balance Not recognised deferred tax assets Change in deferred tax assets and provisions Property, plant and equipment Assets put under a lien as collateral Fixed assets classified as held for sale Intangible assets Inventories Trade and service receivables Cash and cash equivalents Other assets Other current non-financial assets Loans and own receivables Other liabilities Other current liabilities

3 21.2. Deferred income Employee benefits Defined benefits plans Share capital and other capitals Share capital Reserve capital General reserve capital Retained earnings and limitations in dividend distribution Earnings per share ordinary and diluted Dividends paid and proposed to pay Provisions State as at 31 December State as at 31 December Investment liabilities Contingent liabilities and assets Tax settlements Information on related entities The Group's parent company Co-controlled entities Joint ventures in which the Company is a partner Loans granted to members of the Management Boards Other transactions with the participation of members of the Management Board Remuneration of members of the management Terms of transactions with related entities Outstanding balances of liabilities/receivables resulting from transactions with related entities Financial instruments Book value and fair value of financial instrument classes Characteristics of derivatives Items of revenue, costs, profits and losses recognised in the statement of comprehensive income split into categories of financial instruments Description of significant items within particular categories of financial instruments Financial assets carried at amortised cost Loans and borrowings Breach of the loan agreement Liability repayment collateral Financial risk management objectives and purposes Interest rate risk Currency risk Credit risk Trade and service receivables Deposits and cash and cash equivalents Write-downs and ageing profile of trade and service receivables Liquidity risk Market risk - sensitivity analysis Analysis of sensitivity to the exchange rate risk Analysis of sensitivity to the interest rate risk Equity management Employment structure Remuneration for a certified auditor or authorised entity Events after the balance sheet date

4 CONSOLIDATED PROFIT AND LOSS STATEMENT AND COMPREHENSIVE INCOME STATEMENT Note No Continued operations Sales revenue , ,958 Costs of sales , ,454 Profit on sales before tax 55,246 50,504 Selling costs -25,929-24,149 Cost of general management -11,490-11,121 Profit (loss) on other operating activity 12.6, Operating profit 17,872 15,596 Profit (loss) on financial activities 12.4,12.5-7,036-7,258 Profit before tax 10,836 8,338 Income tax ,959-2,205 Discontinued operations Net profit (loss) from discontinued operations 0 0 Net profit from continued operations 8,877 6,133 Net profit for the financial year 8,877 6,133 Other comprehensive income Items that may be taken to result Items that will not be taken to result Items that may be taken to total result Total other net comprehensive income 0 0 Total comprehensive income for the financial year 8,877 6,133 Net profit for the financial year 8,877 6,133 Attributed to parent company's shareholders 8,877 6,133 Comprehensive income for financial year 8,877 6,133 Attributed to parent company's shareholders 8,877 6,133 Weighted average number of shares* 50,000 50,000 Profit per share (in PLN) Basic from profit of the financial year attributed to shareholders of the parent company Basic from continued operations attributed to shareholders of the parent company Diluted from profit of the financial year attributed to shareholders of the parent company Diluted from continued operations attributed to shareholders of the parent company

5 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2014 ASSETS Note No State as at State as at ASSETS Non-current assets Property, plant and equipment , ,290 Intangible assets 16 55,971 67,464 Other assets ,536 2,150 Deferred tax assets 13 9,600 9,622 Total non-current assets 276, ,527 Current assets Inventories 17 79,649 69,112 Trade and service receivables 30 36,528 48,726 Current tax assets 0 0 Other assets ,837 6,839 Cash and cash equivalents Total current assets 134, ,898 TOTAL ASSETS 411, ,425 LIABILITIES Note No State as at State as at LIABILITIES Equity Issued share capital Share premium Reserve capital ,511 84,883 Retained earnings , ,932 Total equity 221, ,315 Equity attributed to shareholders of the parent company 221, ,315 Equity attributed to non-controlling shareholdings 0 0 Non-current liabilities Long-term loans and bank credits 30 82,669 69,900 Other liabilities ,121 0 Pension and other benefit liabilities Deferred tax provision 13 11,017 10,655 Non-current provisions Deferred income Total non-current liabilities 96,767 81,233 Current liabilities Trade and service liabilities 56,633 50,780 Short-term loans and bank credits 30 31,792 25,739 Current tax liabilities ,072 Deferred income Other liabilities ,980 8,916 Total current liabilities 93,634 86,876 TOTAL LIABILITIES 411, ,425 5

6 CONSOLIDATED CASH FLOW STATEMENT Cash flows from operating activities Profit for the financial year before tax 10,836 8,338 Adjustments: 8,958 5,265 Amortisation/depreciation 24,639 22,988 (Positive) /negative net exchange rate differences 0 0 Financial costs recognised in profit and loss statement 4,993 6, Profit/(loss) on sale or disposal of tangible fixed assets Changes in working capital: 0 (Increase) / decrease in inventories (10,537) (24,897) (Increase) / decrease in trade and other receivables (1,766) (8,095) (6) 9,049 (Increase) / decrease in trade and other liabilities (Increase) / decrease in provisions (656) 50 (Increase) / decrease in deferred income (158) 19 Tax paid (2,072) (711) Other adjustments (5,872) 0 Cash flows generated on operating activities 19,794 13,603 Cash flows from investing activities Payments for property, plant and equipment and intangibles (35,053) (8,588) Inflows from sale of property, plant and equipment and intangibles Cash flows generated on investing activities (34,505) (8,475) Cash flows from financing activities Inflows from loans 101,509 4,261 Loan repayment (81,398) (12,121) Interest paid (4,736) 0 Cash flows generated on financing activities 15,375 (7,860) Net increase (decrease) in cash and cash equivalents Impact of exchange rate variations on the balance of cash denominated in foreign currencies Opening balance of cash and cash equivalents Closing balance of cash and cash equivalents 665 (2,732) ,

7 CONSOLIDATED STATEMENT ON CHANGES IN EQUITY Share capital Other reserve capital Retained earnings Total equity State as at 01 January , , ,315 Share premium Share issue Costs of share issue Transfer of generated profit to supplementary capital 0 15,628-15,628 0 Distribution of dividend Total other comprehensive income Profit of current year 0 0 8,877 8,877 State as at 31 December , , ,192 for the period of 12 months ended on 31 December 2013 Share capital Other reserve capital Retained earnings Total equity State as at 01 January , , ,182 Share premium Share issue Transfer of generated profit to reserve capital 0 10,067-10,067 0 Distribution of dividend Profit of current year 0 0 6,133 6,133 Redemption of capital Coverage of losses from previous years State as at 31 December , , ,315 7

8 EXPLANATORY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT 31 DECEMBER General Information A predecessor entity of the Parent company of Libet Group (further on referred to as the "Company", "Parent Company"), Cydia Sp. z o.o. company (from 1 October 2010 Libet Sp. z o.o., from 14 December 2010 Libet S.A.) was established pursuant to the Notarial Deed No Rep. A 2705/2008 dated 18 March 2008 in the office of the Notary Public - Danuta Kosim-Kruszewska, Magdalena Witkowska, Spółka Cywilna. The registered office of Cydia Sp. z o.o. was Warsaw, pl. Piłsudskiego 1, Poland. During the period from the establishment to 29 March 2010 (date of Libet Group acquisition) Cydia Sp. z o.o. did not pursue any business activity, was not a parent to any group, and did not have any equity holdings in other entities. On 29 March 2010 Cydia Sp. z o.o. purchased 100% shares in Libet S.A., seated in Wrocław, ul. Powstańców Śląskich 5, incorporated under the notarial deed of 16 November 1996 before Hanna Olszewska in Rawicz (Repertory No A 4234/1996). As at the acquisition date Libet S.A. held 100% of shares in Libet 2000 Sp. z o.o. On 01 October 2010 Cydia Sp. z o.o. merged with Libet S.A. under the conditions of Article of the Commercial Companies Code via the takeover of the assets and liabilities of the acquired company (Libet S.A.) by the acquirer (Cydia Sp. z o.o.). The acquiring entity (predecessor entity of the Issuer) changed its name to Libet Sp. z o.o. on the same date, and on 14 December 2010 it was transformed into a joint-stock company (spółka akcyjna) operating under the name of Libet S.A. (further on also the "Issuer"). Currently, the parent company is registered with the National Court Register in the District Court for Wrocław-Fabryczna, 6th Commercial Division under the number of KRS The duration of the parent company and entities composing the Group is indefinite. The basic subject of Libet S.A.'s activities is production of concrete construction products. The of the Group comprise the period of 12 months ended on 31 December 2014 and include the comparative data for the period of 12 months ended on 31 December LIBET Group's description LIBET Group ("Group", "Capital Group", "Libet Group") comprises Libet S.A. ("Parent Company", "Company") and its two subsidiaries: Libet 2000 Sp. z o.o. and Baumabrick Sp. z o.o. (from 02 October 2013 the Company operated as Libet Libiąż Sp. z o.o.), in which Libet S.A. holds 100% of shares. The subject of operations and addresses of particular entities are presented below: No Name of subsidiary Core operations Place of registration and operations % share in votes Consolidation method 1 Libet 2000 Sp. Z o.o. cobblestone manufacturing Poland, Żory, ul. Strażacka % full 2 BaumaBrick Sp. Z o.o. sales of cobblestone Poland, Wrocław, ul. Powstańców Śląskich 5 100% full The Group's structure did not change in the period from 01 January 2014 to 31 December The composition of the Management Bard and Supervisory Bard The Management Board's composition as at 31 December 2014 was as follows: Thomas Lehmann - President of the Board Ireneusz Gronostaj - Member of the Board In the period from 31 December 2014 until the date of publication of these annual financial statements the composition of the Management Board did not change. As at 31 December 2014, the composition of the Supervisory Board was as follows: Jerzy Gabrielczyk Andrzej Bartos - Chairman of the Supervisory Board from 12 December 2014 (previously Member of the Supervisory Board), - Member of the Supervisory Board (until 12 December 2014 the Chairman of the Supervisory Board), 8

9 Sławomir Bogdan Najnigier Heinz Geenen Tomasz Marek Krysztofiak - Member of the Supervisory Board, - Member of the Supervisory Board, - Member of the Supervisory Board. LIBET GROUP In the period ended on 31 December 2014 there were the following changes in the composition of the Supervisory Board: - Mrs Magdalena Magnuszewska resigned from the position of a Member of the Supervisory Board on 03 September 2014 with effect as of 04 September In the period from 31 December 2014 until the date of publication of these annual financial statements the composition of the Supervisory Board did not change. 4. Approval of the financial statements These were approved for issue by the Management Board on 19 March Basis of preparation of 5.1. Statement on compliance These audited of the Group ("Consolidated Financial Statements") were prepared in accordance with the International Financial Reporting Standards ("IFRS") and related interpretations published as the European Commission's regulations New standards and interpretations Standards and interpretations applied for the first time The following changes to the standards published by the International Accounting Standards Board and approved by the EU enter into force in 2014: IFRS 10 "Consolidated Financial Statements", approved in the EU on 11 December 2012 (applying to annual periods commencing on or after 01 January 2014), IFRS 11 "Joint Arrangements", approved in the EU on 11 December 2012 (applying to annual periods commencing on or after 01 January 2014), IFRS 12 "Disclosure of Interests in Other Entities", approved in the EU on 11 December 2012 (applying to annual periods commencing on or after 01 January 2014), IAS 27 (amended in 2011) "Separate Financial Statements", approved in the EU on 11 December 2012 (applying to annual periods commencing on or after 01 January 2014), IAS 28 (amended in 2011) "Investments in Associates and Joint Ventures", approved in the EU on 11 December 2012 (applying to annual periods commencing on or after 01 January 2014), Amendments to IFRS 10 "Consolidated Financial Statements", IFRS 11 "Joint Arrangements" and IFRS 12 "Disclosure of Interests in Other Entities" - explanations regarding interim provisions, approved in the EU on 04 April 2013 (applying to annual periods commencing on or after 01 January 2014), Amendments to IFRS 10 "Consolidated Financial Statements", IFRS 12 "Disclosure of Interests in Other Entities" and IAS 27 "Separate Financial Statements" - investment units, approved in the EU on 20 November 2013 (applying to annual periods commencing on or after 01 January 2014), Amendments to IAS 32 "Financial Instruments: Presentation" setting off financial assets and financial liabilities, approved in the EU on 13 December 2012 (applying to annual periods commencing on or after 01 January 2014), Amendments to IAS 36 "Impairment of Assets" - Recoverable amount disclosures for non-financial assets, approved in the EU on 19 December 2013 (applying to annual periods commencing on or after 01 January 2014), Amendments to IAS 39 "Financial instruments: Recognition and Measurement" Novation of derivatives and continuation of hedge accounting, approved in the EU on 19 December 2013 (applying to annual periods commencing on or after 01 January 2014), The above mentioned standards, interpretations to standards had no significant impact on the accounting policy applied by the Group so far. Standards and interpretations which were already published and approved by the EU but have not entered into force yet Approving these financial statements the Group did not apply the following standards, amendments to standards and interpretations which were published and approved for application in the EU but have not entered into force yet: Amendments to various standards "Improvements to IFRS ( cycle)" - performed amendments within the procedure of introducing annual improvements to IFRS (IFRS 2, IFRS 3, IFRS 8, IFRS 13, IAS 16, IAS 24 and IAS 38) directed mainly at solving irregularities and refinement of vocabulary - approved by the EU on 17 December 2014 (applying to annual periods commencing on or after 01 February 2015), Amendments to various standards "Improvements to IFRS ( cycle)" - performed amendments within the procedure of introducing annual improvements to IFRS (IFRS 1, IFRS 3, IFRS 13 and IAS 40) directed mainly at solving irregularities and refinement of vocabulary - approved by the EU on 18 December 2014 (applying to annual periods commencing on or after 01 January 2015), 9

10 Amendments to IAS 19 "Employee Benefits" - Defined benefit plans: employee contributions - approved in the EU on 17 December 2014 (applying to annual periods commencing on or after 01 February 2015), Interpretation of IFRIC "Levies" - approved in the EU on 13 June 2014 (applying to annual periods commencing on or after 17 June 2014), Standards and interpretations adopted by IASB, not yet approved for application IFRS as approved by the EU do not significantly differ from the regulations adopted by the International Accounting Standards Board (IASB), except for the following standards, amendments to standards and interpretations, which as at 19 March 2014 were not approved for application in the EU: IFRS 9 "Financial Instruments" (applying to annual periods commencing on or after 01 January 2018), IFRS 14 "Regulatory Deferral Accounts" (applying to annual periods commencing on or after 01 January 2016), IFRS 15 "Revenue from Contracts with Customers" (applying to annual periods commencing on or after 01 January 2017), Amendments to IFRS 10 "Consolidated Financial statements" and IAS 28 "Investments in Associates and Joint Ventures" - Sale or contribution of assets between an investor and its associates or joint venture (applying to annual periods commencing on or after 01 January 2016), Amendments to IFRS 10 "Consolidated Financial Statements", IFRS 12 "Disclosure of Interests in Other Entities" and IAS 28 "Investments in Associates and Joint Ventures" - Investment units: application of an exemption from consolidation (applying to annual periods commencing on or after 01 January 2016), Amendments to IFRS 11 "Joint Arrangements" - Accounting for acquisitions of interests in joint operations (applying to annual periods commencing on or after 01 January 2016), Amendments to IAS 1 "Presentation of Financial Statements" - Initiative relating to disclosures (applying to annual periods commencing on or after 01 January 2016), Amendments to IAS 16 "Property, Plant and Equipment " and IAS 38 "Intangible Assets" - Clarification of acceptable methods of depreciation and amortisation (applying to annual periods commencing on or after 01 January 2016), Amendments to IAS 16 "Property, Plant and Equipment " and IAS 41 "Agriculture" - Agriculture: plants (applying to annual periods commencing on or after 01 January 2016), Amendments to IAS 27 "Separate Financial Statements" - Equity Method in Separate Financial Statements (applying to annual periods commencing on or after 01 January 2016), Amendments to various standards "Improvements to IFRS ( cycle)" - performed amendments within the procedure of introducing annual improvements to IFRS (IFRS 5, IFRS 7, IAS 19 and IAS 34) directed mainly at solving irregularities and refinement of vocabulary (applying to annual periods commencing on or after 01 January 2016), According to the estimates of the entity, the above standards, interpretations and amendments to the standards would not have any significant impact on the financial statements, if they were applied by the Group as at 31 December At the same time, the financial assets and liabilities portfolio hedging accounting is still beyond the regulations adopted by the EU the application rules of which were not approved for application in the EU. Pursuant to the estimates of the entity, application of the financial assets and liabilities portfolio hedging accounting according to IAS 39 "Financial instruments: Recognition and Measurement" would have no significant impact on the financial statements, if they were adopted for application as at the balance sheet date. 6. Functional currency and currency of financial statements The functional currency of the parent company and other companies included in these and the reporting currency of these is a thousand of Polish zloty (PLN '000), unless stated otherwise by selected information. 7. Segment information The Group's operations in Poland demonstrate no significant regional differentiation. In relation to the above the Group demonstrates no financial data relating to the segments of operations. Also due to the fact that the operations of the Group, as regards the type of sold products and goods is homogeneous, the financial statements do not demonstrate financial data relating to the segments of operations as regards the type of sold products and goods. 8. Significant accounting policies applied 8.1. Continuing of activity These of the Group were prepared with an assumption of continuing business operations by the Group in the foreseeable future. As at the date of preparation of these there were no circumstances indicating any threat to the continuation of business operations by the Group. 10

11 8.2. Basis of drawing up the financial statement LIBET GROUP These were prepared in accordance with the concept of historical cost, except for some financial instruments, which are valued at fair value at the end of each reporting period pursuant to the accounting policy specified below. As a rule, the historical cost is determined based on the fair value of the payment made for goods or services. The fair value is the price which may be attained on sale of assets or paid in order to transfer the liability under a regular transaction on the main (or the most advantageous) market as at the valuation date and under current market conditions, notwithstanding the fact whether the price is directly observable or estimated using a different valuation technique. When evaluating assets or liabilities to the fair value, the Group takes into account the nature of given assets or liabilities, if market participants take these features into account when evaluating assets or liabilities as at the valuation date. The fair value for the valuation purposes and/or disclosing information in the of the Group is determined as above, except for the payment transactions in the form of shares which are subject to IFRS 2, lease transactions, which are subject to IAS 17, and valuations which are similar to fair value but are not fair values, such as net selling price compliant with IAS 2 or usable value complaint with IAS 36. Additionally, for the proposes of financial reporting, valuations at fair value are categorised according to three levels depending on the scope in which input data for measuring fair values is observable and on the importance of input data for the fair value valuation as a whole. The levels are as follows: Level 1: input data is quoted price (unadjusted) from active markets for equivalent assets or liabilities to which the entity has an access as at the valuation day. Level 2: input data is data other than quoted prices under Level 1, which is observable for the assets or liabilities, directly or indirectly. Level 3: input data is not observable data for the valuation of assets or liabilities. Consolidated profit and loss statement, as an element of consolidated statement of comprehensive income, was prepared in the costs-by-function format. Libet S.A., as the parent company, prepares consolidated statements for the whole Group. They are kept in the seat of the parent company and are subject to publication on the website Statements of a subsidiary subject to consolidation, are prepared for the same reporting period as the statements of the parent company. The Group Companies keep their own accounts pursuant to the principles (policy) of accounting specified by the act of 29 September 1994 on accounting ("Act") as amended, and secondary legislation ("Polish accounting standards"). Consolidated financial statements include adjustments not included in accounts of the Group entities introduced in order to make the financial statements of these entities compliant with IFRS. The information held by the Company and Group does not indicate that any shareholder of the Company exists who would be obliged to prepare consolidated statements including Libet Group. The key accounting standards applied by the Group are presented below. Rules of consolidation These include the financial data of Libet S.A. and its subsidiaries prepared by each entity for the year ended on 31 December 2014 and for the comparative period ended on 31 December Financial statements of subsidiaries, after adjustments making them complaint with IFRS, are prepared for the same reporting period as the statements of the parent company, based on uniform principles of accounting applied to transactions and economic events of a similar nature. All the significant balances and transactions between the Group entities, including unrealised profits resulting from the intergroup transactions, were fully eliminated. Unrealised losses are eliminated, unless they prove any impairment. Subsidiaries are subject to consolidation in the period from taking them under the control by the Group and cease to be consolidated with the end of the control. Control by the parent company occurs when, due to its engagement it is exposed to versatile financial results, or when it has rights to versatile financial results and has a possibility of affecting the level of these results controlling the subsidiary. Investments in subsidiaries Subsidiaries mean entities controlled by the parent company (including special purpose entities). It is deemed that the control occurs when the parent company has a possibility of affecting the financial and operating policy of its subsidiary in order to gain benefits from its operations. Financial results of subsidiaries acquired or sold during the year are recognised in the from/until they are effectively acquired or sold. In relevant cases, adjustments are made in the financial statements of subsidiaries in order to standardise the accounting principles applied by the given entity with the principles applied by the other Group entities. Any transactions, balances, revenue and expenditures occurring between the related entities subject to consolidation are fully excluded form consolidation. Non-controlling interests are presented separately from the Group's equity. Non-controlling interests may be preliminary valued either at fair value or in proportion to the share in the fair value of acquired net assets. Selection of one of the above methods is available for each merger of business units. In the next periods the value 11

12 of non-controlling interests includes the recognition value preliminary adjusted with changes in the entity's equity in proportion to the volume of shares held. The total income is allocated to non-controlling interests even when it results in a negative value of such shares. Changes in the share in the subsidiary not resulting in a loss of control are recognised as equity transactions. The Group's share book values and non-controlling interests are relevantly modified in order to reflect changes in the shareholdings. The difference between the value by which the minority shares are modified and the fair value of the payment received or incurred is recognised directly in the Group's equity. In a situation of a loss of control over a subsidiary, profit or loss on sale is determined as the difference between: (i) The total fair value of the payment received and the fair value of the shares of the entity remaining in the Group and (ii) the book value of assets (including the goodwill), liabilities and non-controlling interests. Amounts recognised in relation to the sold entity in other elements of the comprehensive income, are subject to reclassification to the profit and loss statement. The fair value of shares in entities of the Group left after the sale, is deemed to be the initial fair value for the purpose of their further recognition compliant with IAS 39, or initial cost of shares in associates or joint ventures. Conversion of items presented in foreign currencies Transactions denominated in foreign currencies are converted as at the moment of initial recognition into Polish zloty applying the exchange rate in force as at the transaction date. As at the balance sheet date: cash items are converted using the closing rate (the closing rate is the average exchange rate for a given currency determined by the National Bank of Poland as at that date), non-cash items valued at historical cost in a foreign currency are converted using the exchange rate from the date of the initial transaction (exchange rate of the bank servicing the entity), non-cash items valued at fair value in a foreign currency are converted using the exchange rate from the date of fair value determination. The exchange rate differences occurring as a result of such a conversion are recognised respectively under the item of financial revenue (expenditures) or, in cases specified in the accounting standards (policy), capitalised in the value of assets. Non-cash assets and liabilities recognised at historical cost denominated in a foreign currency are presented at historical rate from the transaction date. Exchange rate differences occurring on non-cash items, or items such as equity instruments valued at fair value through profit or loss, are recognised as an element of fair value change. The following exchange rates were adopted for the balance sheet valuation: Currency 31 December December December 2012 EUR CZK Segments of operations The Group conducts its own operations mostly in Poland. Revenue from sale of products in export trading presented in note 12.2 constitutes around 0.3% of the total net revenue from sale of products. Operations of the Group companies in Poland do not demonstrate any significant regional differentiation within risk and level of return on capital expenditures made. In relation to the above the Group demonstrates no financial data relating to the segments of operations. Also due to the fact that the operations of the Group, as regards the type of sold products and goods is homogeneous, the financial statements do not demonstrate financial data relating to the segments of operations as regards the type of sold products and goods. Recognition of revenue Sales revenue is recognised at fair value of the payment received or due, minus foreseen rebates, returns form customers and similar decreases, including tax from goods and services (VAT), and other sales related taxes. Revenue includes amounts due for sold finished products, goods, materials and other services relating to core operations determined based on net price, adjusted with given rebates and discounts and excise tax. The criteria presented below are applicable on recognition of revenue. Sales of products and goods for resale Revenue from sale of products and goods for resale is recognised after satisfaction of all the below mentioned conditions: transfer of the significant risk and benefits following from the title to products and goods from the Group to the purchaser, The Group ceases to be permanently engaged in the management of sold goods in the scope in which such the function is realised towards the goods to which a title is held, and does not perform an active control over them, possibilities of making a credible valuation of revenue amount, likelihood that the entity will gain economic benefits related to the transaction, possibilities of a credible assessment of costs incurred or foreseen in relation to the transaction. 12

13 Rent revenue LIBET GROUP Rent revenue is recognised applying the straight-line method for the period of tenancy in relation to concluded agreements. Cost recognition Costs of sales Costs of sales include: cost of product generation incurred in a given reporting period, adjusted with the change in the balance of products (finished products, semi-products and production in progress) and adjusted with a cost of product generation for own purposes, value of goods and materials sold at acquisition prices. establishment of write-downs of tangible fixed assets and intangible assets, total costs of sales and costs of general management incurred in the reporting period (demonstrated as profit or loss). costs of generation which may be directly classified under revenue generated by entities, affect the financial result of entities for the reporting period in which they arose. Costs of generation, which may be only indirectly classified under revenue or other benefits gained by entities, affect the financial result of entities in the scope in which they relate to the reporting period, ensuring their commensuracy with revenue or other economic benefits, including the principles of valuation of fixed assets and inventories. Other operating revenue and costs Other operating revenue and costs include in particular items related to: sale of tangible fixed assets, intangible assets, establishment and release of provisions, excluding provisions related to financial operations or applied to operating costs, transfer or nil-paid acquisition, also as a donation, of assets, and cash, establishment and release of impairment of receivables, damages, penalties and fines and other costs not related to ordinary operations. Financial revenue and costs Financial revenue and costs include in particular revenue and costs relating to: sale of financial assets, revaluation of financial instruments, excluding financial assets available for sale, whose revaluation effects are applied to revaluation capital, revenue from shares in profits of other entities, interest, changes in the amount of provisions resulting from the proximity of the cost incurring (unwinding of discount), exchange rate differences being the result of operations performed in the reporting period and assets and liabilities book valuations at the end of the reporting period, excluding exchange rate differences included in the initial value of fixed assets, in the scope they are recognised as interest cost adjustment, other items related to the financial operations. Entities set off revenue and costs of exchange rate differences if they result from similar transactions. If exchange rate differences are significant, and do not result from similar transactions, the entity analyses whether to present them separately. Interest revenue and costs are recognised successively as they accumulate, including the effective interest method in relation to the net book value of the given financial instrument, applying the materiality principle. Dividends are recognised on the determination of shareholders' rights to receive them. Costs of external funding Costs of external financing directly related to the acquisition or generation of assets requiring a longer time in order to bring them to use, are recognised as costs of generation of such assets until the assets are substantially ready for a purported use or sale. Revenue from investment gained as a result of a short-term investing of obtained external funds designated directly for financing the acquisition or generation of the assets, decease the value of costs of external financing subject to capitalisation. 13

14 Any other external financing costs are applied directly to the profit and loss statement in the period in which they were incurred. Employee benefit costs Benefits after the employment period as defined benefit plans (gratuities) and other long-term benefits (disability pensions, etc.) are determined using the projected unit credit method, with an actuarial valuation performed on each balance sheet day. Profits and losses are fully recognised in other comprehensive income. Costs of previous employment are recognised immediately and are applied to profit/loss of the period. Employee benefits are recognised as costs, unless they are costs of assets generation. Benefits for dissolution of the employment relationship are recognised as liability and cost, when the Group decided, in a way that may be proved: to dissolve the employment relationship with an employee or group of employees before they reach retirement age, guarantee benefits for dissolving the employment relationship as a result of a proposal made by oneself encouraging to voluntarily dissolve the employment relationship. Taxation Income tax of the entity is current tax due and deferred tax. Current tax Current tax charges are valued based on the tax result (basis of taxation) of a given financial year. Tax profit (loss) differs from the net book profit (loss) in relation to the exclusion of revenue not subject to taxation and costs not being income costs and items of costs and revenue which will never be subject to taxation. Tax charges are valued based on tax rates in force in a given financial year. Differed income tax Deferred tax is calculated with the balance method as tax subject to payment or refund in the future based on differences between the book and tax values of assets and liabilities used for calculation of the taxation basis. Deferred tax provision is established from all the positive temporary differences subject to taxation, and the deferred tax assets are recognised from the value in which it is likely that future tax profits may be decreased with recognised negative temporary differenced and tax losses or tax credits which the Group may use. The item of deferred tax assets of provisions is not created if the temporary difference occurs from the initial recognition of the goodwill or from the initial recognition of other assets or liabilities in the transaction which has no impact on the tax or book result. The value of deferred tax assets is subject to review as at each balance sheet date, and if anticipated future tax profits are not sufficient for the realisation of assets or a part of them, they are written-down. Deferred tax is calculated using tax rates which are in force when the item of assets is realised or liability is due. In the statement of financial position income tax is presented after set-off in the scope in which it follows from the liability which is payable to the same tax office. Current and deferred tax for the current financial period Current and deferred tax is presented in costs or revenue in profit/loss of the period, except for the situation when it relates to items credited or charged directly to the equity, since then the tax is applied directly to the equity (other comprehensive income in the statement of comprehensive income), or when it results from the initial accounting for the merger of business units. If there is a merger of business units, tax consequences are recognised on the calculation of goodwill or determination of the value of share of the acquiring entity at net fair value of identifiable assets, liabilities and contingent liabilities of the acquired entity which exceed the takeover cost. Property, plant and equipment The item of Property, Plant and Equipment includes fixed assets and expenditures on fixed assets under construction, which the entity plans to use in its operations and for the administrative needs in the period not longer than 1 year, and which will result in the inflow of economic benefits to the entity in the future. Expenditures on tangible fixed assets include the investments incurred and also expenditures made on future deliveries of machines, equipment and services relating to the generation of fixed assets (transfer of advance payments). Fixed assets include significant specialist spare parts which are an element of fixed assets. Fixed assets and assets under construction are initially recognised at acquisition prices or cost of generation. Significant components are also recognised as separate items of fixed assets. Lands are recognised by the Group as an element of fixed assets. 14

15 Assets under construction established for production or administration purposes are presented in the statement of financial position at generation cost decreased with recognised impairment write-downs. Cost of generation includes fees and, for relevant assets, costs of external financing capitalised in accordance with the Group's accounting policies. Fixed assets are depreciated when they are used for the first time, in accordance with the Group's principles relating to fixed assets. Depreciation of fixed assets, including their components, is performed at rates reflecting their predicted period of use. Useful life estimates are revised on an annual basis. For the purposes of fixed assets depreciation a straight-line method is used. Useful lives for particular fixed assets are as follows: Buildings Machines and equipment Vehicles Other tangible fixed assets from 22 to 40 years from 3 to 33 years from 5 to10 years from 5 to 20 years Depreciation method, depreciation rate and residual value of tangible fixed assets are subject to review at least at the end of each financial year. Any amendments resulting from the verification are recognised as change of estimates. Depreciation write-downs are recognised in profit or loss and are charged to the costs category which corresponds to the function of given fixed assets. A given item of tangible fixed assets may be removed from the statement of financial position after it is sold or when no economic benefits are expected to flow from the further use of such assets. Tangible fixed assets and assets under construction are verified for impairment if there are grounds indicating any impairment, however, for the assets under construction in the period of their realisation any potential impairment is determined as at each balance sheet day. Results of any impairment of assets under construction are taken to costs of core operations. Assets kept based on the financial lease agreement are depreciated for the period of their useful economic life under the same conditions as own assets, not longer however than for the term of the lease. Tangible fixed assets and assets under construction satisfying the criteria of being qualified as held for sale, or included in the group for sale, are valued in accordance with the principles included in Tangible fixed assets for sale. Profits or losses resulting from sale / liquidation or discontinuance of use of the item of tangible fixed assets are determined as the difference between sale revenue and the book value of these items and are recognised in the profit and loss statement. Leasing Leasing is classified as financial lease when within the concluded agreement substantially the whole benefits and risk following from holding the subject of the lease are transferred to the lessee. Any other types of lease are treated as operating lease. The Group as Lessee Assets used based on the financial lease agreement are treated as the Group's assets and valued at fair value when they are acquired, not higher however than the current value of minimum lease charges. The resulting liability towards the lessor is presented in the statement of financial position under the item of other liabilities. Lease payments are divided into interest and decrease in the lease liability. The part being the cost of financing is attributed to particular periods during term of the lease agreement using an effective interest method. Financial costs are directly applied to the financial result, unless they may be directly classified under relevant assets - then they are capitalised in accordance with the Group's accounting principles relating to debt service costs, presented under the item of costs of external financing. Contingent lease-related payments are recognised in costs during the period of their incurring. Payments for operating lease are applied to the financial result using the straight-line method for the term of the lease, except for the cases when another, regular basis for settlement is more representative for the time pattern governing the consumption of economic benefits resulting from the lease of given element of assets. Contingent payments related to the operating lease are recognised in costs during the period of their incurring. Intangible assets Under intangible assets the Group includes identifiable non-cash assets, which are dematerialised, such as: proprietary interests acquired by the entity, included in the fixed assets, from which future economic benefits are expected to flow to the entity, of a predictable period of economic usability longer than a year, designated for use by the entity, in particular: copyright or derivative property rights, licences (including those relating to computer programmes), rights to inventions, patents, trademarks, utility models and decorative designs, computer programmes, know-how, i.e. value constituting the equivalence of obtained information related to the know-how in the area of industry, trade, science or organisation, development costs, goodwill, excluding the goodwill generated by the entity on its own, 15

16 other intangible assets recognised on acquisition within the merger of business units. LIBET GROUP Intangible assets include also: external intangible assets adopted for use for a fee based on the tenancy, lease or other agreements of a similar nature, if the agreement is qualified as the financial lease according to IAS 17 Leases, proprietary interests given to other units for use based on the tenancy, lease or other agreements of a similar nature, if the agreement is qualified as the operating lease according to IAS 17 Leases. As at the date of the initial recognition intangible assets are valued at acquisition prices or cost of generation in the case of development works. After the initial recognition, intangible assets are presented at acquisition prices or cost of generation less amortisation and impairment write-offs. The expenditures incurred on intangible assets generated by the entity on its own, except for activated expenditures incurred for development works, are not activated and are recognised in the costs of the period in which they were incurred. The Group assesses whether the usable life of intangible assets is specified or indefinite and if it is definite, the Group estimates its length or volume of production or other measurement being the basis for determination of the useful life. Intangible assets with a limited useful life are amortised during the projected period of use and subject to impairment verification when grounds exist indicating their impairment. Period and method of amortisation of intangible assets of a limited useful life are verified at least at the end of each balance sheet year. Changes in the excepted useful life or expected method of consuming economic benefits flowing from given assets are recognised through the change of, respectively, a relevant period or method of amortisation, and are treated as changes of estimate values. Amortisation write-offs of intangibles with a limited useful life are recognised in the profit or loss and are charged to this category which corresponds to the function of given intangible assets. Intangible assets with an indefinite useful life and those which are not used, are verified each year for impairment. Expenditures incurred on development works performed within a given undertaking are carried forward to the next period, if it may be deemed that they will be recovered in the future. Except for development costs any intangible assets generated by the Group are not activated and are recognised in profit or loss of the period in which the related costs were incurred. Intangible assets arising as a result of development works are recognised if and only if it may be proved that: a possibility, from a technical point of view, of completion of intangible assets so that they are fit for use or sale, intention to complete intangible assets and their use or sale, ability to use or sell intangible assets, method in which intangible assets generate projected future economic benefits, availability of relevant technical, financial and other tools which are to serve completion of development works and use or sale of intangible assets, possibility of a credible determination of expenditures incurred during development works which may be classified under these intangible assets. Intangible assets include also expenditures incurred on the acquisition of perpetual usufruct of the land. Perpetual usufruct of land is treated as the operating lease, in relation to which it is not recognised as Group's assets. However, expenditures on the acquisition of such rights on the secondary market (from other entities) and expenditures related to conferring such rights by relevant state institutions, are recognised as intangible assets and amortised during the contractual term in which the Group may exercise these rights. On the restatement of the perpetual usufruct to land into the ownership right the Company performs reclassification of the priorly recognised right as intangible assets into land and the fee for restatement is recognised as a decrease in the value of the held right. Amortisation of intangible assets is performed at rates reflecting their projected period of their use. Useful life estimates are revised on an annual basis. The Group does not hold any intangible assets with an indefinite useful life. For the amortisation purposes of intangible assets with an indefinite useful life a straight-line amortisation method is applied. Useful lives for particular intangible assets are as follows: Software licence Trademarks 3 years 5 20 years. Intangible assets are verified for impairment if there are grounds indicating any impairment, however for intangible assets under construction in the period of their realisation any potential impairment is determined as at each balance sheet day. Consequences of impairment and amortisation of intangible assets are taken to the costs of core operations. Intangible assets kept based on the financial lease agreement are depreciated for the period of their useful economic life under the same conditions as own assets, not longer however than the term of the lease. Intelligible assets satisfying the criteria of being qualified as held for sale, or included in the group for sale, are valued in accordance with the principles included in Tangible fixed assets for sale. 16