Consolidated financial statement

Transcription

1 Consolidated financial statement RS-2017 Consolidated annual financial statement 1 Entity name Apator Group Page 1

2 Consolidated annual financial statement 2 Table of contents 1. General information Information about the Group Information about the parent entity Line of parent entity and of the Group operations Group composition Management Board and Supervisory Board composition Information about a basis for drawing up the financial statement, the reporting currency, and the level of rounding up used Basis for drawing up the financial statement Principles of International Financial Reporting Standards applied Reporting currency and a rounding-up level applied Indication of the life of the Group Approval of the financial statement Consolidated financial statement of the Apator Group Consolidated financial status report The consolidated profit and loss account and other total revenues Consolidated statement on changes in the equity Consolidated cash flow statement Accounting principles applied Basis for drawing up the statement (general principles) Consolidation Consolidation principles Investments in entities held under joint control Goodwill Detailed principles of assets and liabilities valuation used in the Group Intangible assets Tangible fixed assets Leasing Investment real estate Fixed assets and groups of net assets classified as available for sale Inventories Costs of external financing Government subventions Financial instruments Provisions Employee benefits Revenues Transactions in foreign currencies Taxes Zone allowance related to conducting operations in the Special Economic Zone Equities Reporting of operating sectors Basic estimations and grounds for estimating the uncertainty Information on seasonal operations Explanatory notes to the consolidated financial statement Entity name Apator Group Page 2

3 Consolidated annual financial statement Operating segments Geographic information Intangible assets Goodwill Tangible fixed assets Fixed assets available for sale Investment real estate Investments in entities held under joint control Other financial assets Inventories Trade receivables and other receivables Loans granted Cash and cash equivalents Prepayments and accruals Share capital Other capitals Non-controlling shares Credits and loans Provisions for liabilities and employee benefits liabilities Long-term Income tax Costs by type Other operating income and costs; Financial income and costs Discontinued operations Explanation to consolidated cash flow statement Long-term contracts Financial leasing Future payments under operating leasing agreements not recognised in the consolidated financial status report Financial instruments Financial derivatives, hedge accounting Aims and objectives of the financial risk management Purchase of subsidiaries Information on affiliates Contingent items and other items not recognised in the financial status report Employment structure Remuneration of an entity authorised to audit the financial statement Adjustment of comparative data Events occurring after the end of the reporting period Signatures Entity name Apator Group Page 3

4 Consolidated annual financial statement 4 1. General information 1.1. Information about the Group The Apator Group consists of the parent entity Apator S.A. and its subsidiaries Information about the parent entity The parent entity Apator Joint Stock Company with its registered office in Toruń (at Gdańska 4a ap. C4) was founded by employees of the liquidated state enterprise operating under the name Pomorskie Zakłady Aparatury Elektrycznej Apator w Toruniu. The Company was registered in the District Court in Torun, 5th Commercial Division on January 14, 1993, under the RHB number On October 24, 2001, the Company was registered in a register of entrepreneurs at the District Court in Torun, 7th Commercial Division of the National Court Register (KRS) with a KRS number The parent entity operates within the territory of Poland under provisions of the Commercial Companies Code Line of parent entity and of the Group operations In accordance with the parent entity statutes, the main line of its business are production and services concerning switch and control equipment for electric power and sales of measuring apparatus and systems. The APATOR S.A. shares are listed in the primary market, in the electrical energy sector according to the Warsaw Stock Exchange classification. The entities belonging to the Group are, in general, focused on operations associated with production and sales of measuring instruments and equipment, monitoring and measuring devices, switchgear ad control gear, IT systems of SCADA class together with telemechanical devices working with them, securing devices and other network equipment for distributed systems, providing an option for remote control and monitoring of energy and power supply grids at the full voltage range, and devices for data readout and transmission Group composition In 2017, the Apator Group consisted of Apator S.A. and the following subsidiaries: Apator Control Sp. z o.o. (Toruń) subsidiary of Apator S.A. Apator Mining Sp. z o.o. (Katowice) subsidiary of Apator S.A. FAP Pafal S.A. (Świdnica) subsidiary of Apator S.A. Apator Metrix S.A. (Tczew) subsidiary of Apator S.A. Apator GmbH (Berlin, Germany) subsidiary of Apator S.A. Apator Rector Sp. z o.o. (Zielona Góra) subsidiary of Apator S.A. Apator Powogaz S.A. (Poznań) subsidiary of Apator S.A. Apator Elkomtech S.A. (Łódź) subsidiary of Apator S.A. Apator Telemetria Sp. z o.o. (Słupsk) - subsidiary of Apator Powogaz S.A. Apator Metroteks TOV (Kiev, Ukraine) - subsidiary of Apator Powogaz S.A. Apator Metra s.r.o. (Supmerk, Czech Republic) subsidiary of Apator Powogaz S.A. Apator Miitors ApS. (Aarhus, Denmark) subsidiary of Apator Powogaz S.A. George Wilson Industries Ltd. (Coventry, United Kingdom) subsidiary of Apator Metrix S.A. Entity name Apator Group Page 4

5 Consolidated annual financial statement 5 The Apator Group held a share in the following entities under a joint control: ZAO Teplovodomer (Mytishi, Russia) - an entity under a joint control of Apator Powogaz S.A. Inda d.o.o. (Slovenia) an entity under a joint control of George Wilson Industries Ltd. Changes in the Group in 2017 With an effect as of August 2, 2017, a merger of Apator Telemetria Sp. z o.o. and imeters Sp.z o.o. was registered in the National Court Register (KRS). As of that day, the company imeters formally ceased to exist as a separate entity, and all its assets automatically became assets of Apator Telemetria Sp. z o.o. Entity name Apator Group Page 5

6 Consolidated annual financial statement 6 Group entities included in the consolidation Company Registered office Main line of business Competent court/ body maintaining the register Share in the capital Consolidation method Notes APATOR MINING Sp. z o.o. (Limited Liability Company) Katowice Production of switch and control equipment, electric power, electrical equipment, lifting equipment, pumps and compressors, together with related services. District Court in Katowice, 8th Commercial Division of the National Court Register; KRS % Complete Subsidiary APATOR CONTROL Sp. z o.o. (Limited Liability Company) Toruń Production of switch and control equipment, and electrical equipment, together with related services, as well as research and development works in a field of engineering sciences District Court in Toruń, 7th Commercial Division of the National Court Register; KRS % Complete Subsidiary APATOR METRIX S.A. Tczew Production of tools and instruments for measurements, monitoring and navigation, and for other uses. District Court in Gdańsk, 9th Commercial Division of the National Court Register; KRS % Complete Subsidiary FAP PAFAL S.A. Świdnica Production of monitoring and measuring, electrical and digital equipment, trade, maintenance services District Court for Wrocław-Fabryczna in Wrocław, 9th Commercial Division of the National Court Register, KRS % Complete Subsidiary APATOR RECTOR Sp. z o.o. Zielona Góra IT, publishing activities, printing and reproduction of recorded media District Court in Zielona Góra, 8th Commercial Division of the National Court Register; KRS % Complete Subsidiary APATOR POWOGAZ S.A. Poznań Production of tools and instruments for measurements, monitoring and navigation, production of other machines of general application. District Court Poznań Nowe Miasto i Wilda in Poznań, 8th Commercial Division of the National Court Register; KRS % Complete Subsidiary Apator Elkomtech S.A. Łódź Production of IT systems of SCADA class together with telemechanical devices working with them, securing devices and other network equipment for distributed systems District Court for Łódź-Śródmieście in Łódź, 20 th Commercial Division of the National Court Register; KRS % Complete Subsidiary Entity name Apator Group Page 6

7 Consolidated annual financial statement 7 Company Registered office Main line of business Competent court/ body maintaining the register Share in the capital Consolidation method Notes APATOR GmbH Berlin Sale of prepayment electricity meter systems and gas meters HRB B Charlottenburg % Complete Subsidiary APATOR TELEMETRIA Sp. z o.o. Słupsk Production of equipment for data readout and transmission, production of systemic IT applications. District Court Gdańsk Północ in Gdańsk, 8th Commercial Division of the National Court Register; KRS % Complete Indirect subsidiary Indirect share APATOR METROTEKS TOV Kiev Ukraine Distribution of water and heat meters 61.00% Complete Indirect subsidiary Indirect share APATOR METRA S.R.O. Sumperk Czech Republic Production of cost allocator systems, thermometers and thermostats % Complete Indirect subsidiary Indirect share GEORGE WILSON INDUSTRIES Ltd. Coventry Great Britain Production and sales of household and industrial gas meters; gas smart metering % Complete Indirect subsidiary Indirect share Apator Miitors ApS. Aarhus Denmark Design and development of ultrasound technologies for measurements of water and heat consumption % Complete Indirect subsidiary Indirect share Entity name Apator Group Page 7

8 Consolidated annual financial statement 8 Entities under joint control included in the consolidation: Company Registered office Main line of business Competent court/ body maintaining the register Share in the capital Consolidation method Notes ZAO Teplovodomer Mytishi Russia Production and sales of water and heat meters, and their verification and maintenance 50.00% Valuation by the equity method Indirect joint control Indirect share Inda d.o.o. Slovenia Development works on digital counters and communication technologies used in smart metering 35.00% Valuation by the equity method Indirect joint control Indirect share Entity name Apator Group Page 8

9 Consolidated annual financial statement Management Board and Supervisory Board composition Management Board Mirosław Klepacki President of the Management Board (from November 16, 2017) Andrzej Szostak President of the Management Board (from January 1 to November 15, 2017) Piotr Nowak Member of the Management Board (to January 3, 2018) Piotr Dobrowolski Member of the Management Board (from January 1, 2017 to February 27, 2017) Agnieszka Nosal Member of the Management Board (from January 1 to November 30, 2017) Arkadiusz Chmielewski Member of the Management Board (from June 12, 2017 to November 30, 2017) Supervisory Board Janusz Niedźwiecki Chairman of the Supervisory Board Mariusz Lewicki Deputy Chairman of the Supervisory Board Janusz Marzygliński Member of the Supervisory Board Danuta Guzowska Member of the Supervisory Board Marcin Murawski Member of the Supervisory Board Kazimierz Piotrowski Member of the Supervisory Board Entity name Apator Group Page 9

10 Consolidated annual financial statement Information about a basis for drawing up the financial statement, the reporting currency, and the level of rounding up used 2.1. Basis for drawing up the financial statement The presented annual consolidated financial statement of the Apator Group, as of and for the year ending on December 31, 2017, was drawn up in accordance with the International Accounting Standards, International Financial Reporting Standards, and related interpretations published as the European Commission regulations. The annual consolidated financial statement of the Apator Group covers 2017 and contains comparative data for Principles of International Financial Reporting Standards applied When drawing up the consolidated financial statement for a period from January 1, 2017 to December 31, 2017, the same accountancy rules (policy) and calculation methods were used as in the last consolidated financial statement for the year ending on December 31, 2016, excluding changes described in note 8.38 of additional information. POSITION ON NEW STANDARDS AND INTERPRETATIONS OF THE INTERNATIONAL FINANCIAL REPORTING STANDARDS The following new Standards, amendments to the Standards and interpretations were not adopted by EU or are not yet applicable to annual periods ending on December 31, 2017, and were not used in the consolidated financial statement: IFRS 15 Revenue from contracts with customers - for periods starting on January 1, 2018; Amendments to IFRS 15 Revenue from contracts with customers - for periods starting on January 1, 2018; IFRS 9 Financial instruments - for periods starting on January 1, 2018; Amendments to IFRS 9 Financial instruments - for periods starting on January 1, 2019; IFRS 16 Leasing - for periods starting on January 1, 2019; MSSF 14 Regulatory Deferral Accounts - for periods starting on January 1, The European Commission decided not to approve this interim Standard while waiting for the final version of the Standard; Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS 10 Consolidated Financial Statements and to IAS 28 Investments in Associates) - for periods starting on January 1, The European Commission decided to defer approval of these amendments for an indefinite period of time; Amendments to IFRS 2 Share-based Payment - for periods starting on January 1, 2018; Amendments to the International Financial Reporting Standards in for periods starting after January 1, 2018 (excluding amendments to IFRS 12 coming into force for annual periods starting on January 1, 2017 or later); IFRIC 22 Foreign Currency Transactions and Advance Consideration - for periods starting after January 1, 2018; Amendments to IAS 40 Investment Property - for periods starting on January 1, 2018; IFRIC 23 Uncertainty over Income Tax Treatments - for periods starting after January 1, 2019; Amendments to IAS 28 Investments in Associates and Joint Ventures - for periods starting on January 1, 2019; Amendments to International Financial Reporting Standards in for periods starting on January 1, Entity name Apator Group Page 10

11 Consolidated annual financial statement 11 The Group intends to apply them to periods in which they be applicable for the first time. INFLUENCE OF NEW STANDARDS, AMENDMENTS TO STANDARDS AND INTERPRETATIONS ON THE CONSOLIDATED FINANCIAL STATEMENT IFRS 9 Financial Instruments came into force on January 1, The published standard introduces new ways for classification and valuation of financial assets and financial liabilities, establishing revaluation write-offs for financial assets impairment, and hedge accounting. In relation to IFRS 9 coming into force and resultant new classification of financial assets, the Group will not make any changes in disclosure of financial assets and liabilities in its consolidated report on the financial status. The Group does not hold financial assets available for sale. The conducted analysis concerning a need to apply IFRS 9 shows that as of January 1, 2018 no additional write-offs should be recognised. IFRS 15 Revenue from Contracts with Customers came into force on January 1, In accordance with the new Standard, the Group will use a five-step model to determine a moment of revenue recognition and its amount. The conducted analysis concerning a need to apply IFRS 15 shows that as of January 1, 2018 the Group s equity will increase by PLN 387 thousand. On a basis of the conducted analysis of the IFRS 15 influence on the consolidated financial statement of the Apator Group, area were identified, where new requirements have a significant effect. Changes in disclosure of income on sales include: changes of a moment at which sales of services are recognised, previously recognised in accordance with the International Accounting Standard 11 Construction Contracts ( IAS 11 ) allocation of contractual remuneration to identified obligations to provide services related to free of charge maintenance service provision moment of recognising income on sales of licences IFRS 16 Leasing comes into force on January 1, Concerning lessees, the new Standard eliminates a currently applicable classification into financial and operating leasing. With the operating leasing disclosed in the consolidated financial statement financial status report, a new asset - a right to use a subject matter of a leasing agreement - and a new liability - an obligation to pay the amounts due under a leasing agreement will be recognised. Rights to use leased assets will be depreciated, while interests will be calculated for the liability. This will result in higher costs at the initial stage of the leasing, even when its parties agreed on fixed annual fees. Recognition of leasing agreements at a lessor will remain the same in most cases, with a differentiation into operating and financial leasing agreements maintained. Currently, the Group analyses the Standard to establish the amount of adjustments. The Group expects that at the initial recognition the Standard may affect its financial statement. The new standard will contribute to an increase in the balance sheet total, change allocation of costs in the profit and loss account, as well as presentation of cash flows. In the profit and loss account, expenditures on leasing and rent, recognised as leasing under the new regulation, will be replaced with costs of depreciation and costs of interests (similarly to current recognition of a financial leasing under IAS 17). In consequence, at an initial stage of a term of an agreement, a cost of leasing will appear resulting in a reduction in revenues and an equity value immediately following initial recognition of leasing currently recognised as operating leasing. The new requirements eliminate the term operating leasing, and therefore, the off-balance sheet recognition of assets used under it. All assets used with corresponding liabilities to pay rents will be disclosed in the financial status report. This will also result in a change of a basis for calculation of generally used financial ratios, such as debt ratios or EBITDA. This will increase data comparability between companies, but also can influence covenants in loan agreements, credit ratings, financial costs, and Group s perception by its stakeholders. Entity name Apator Group Page 11

12 Consolidated annual financial statement Reporting currency and a rounding-up level applied The reporting currency of this consolidated financial statement is Polish zloty, and all amounts are expressed as PLN thousand (unless stated otherwise). The Polish zloty is also a functional currency of the parent entity Indication of the life of the Group The parent entity Apator S.A. together with entities included in consolidation will exist for an indefinite period of time. This consolidated financial statement was prepared with an assumption that the operations would be continued in a foreseeable future, that is, for a period of at least 12 months counting from the end of the reporting period Approval of the financial statement This consolidated financial statement was approved for publication by the Management Board of the entity on April 27, Entity name Apator Group Page 12

13 Consolidated annual financial statement Consolidated financial statement of the Apator Group 3.1. Consolidated financial status report as of NOTE 31/12/ /12/2016* 01/01/2016* Fixed assets 460, , ,329 Intangible assets are ,370 85,846 76,085 Equity of subsidiaries , , ,685 Tangible fixed assets , , ,187 Investment real estate 8.7 1,354 1,491 1,633 Investments in entities under joint control consolidated by the equity method 8.8 2,517 2,776 2,569 Other long-term financial assets in other entities Long-term receivables ,663 6,623 7,387 - from other entities 7,663 6,623 7,387 Long-term prepayments Deferred income tax assets ,288 44,846 35,719 Current assets 378, , ,529 Inventories , , ,216 Trade receivables , , ,023 - from affiliated entities 829 4,754 1,448 - from other entities 171, , ,575 Corporate income tax receivables ,621 3,095 1,942 Other tax, customs duties and social insurance receivables ,334 10,538 8,363 Other short-term receivables ,202 17,305 30,487 - from other entities 13,202 17,305 30,487 Other short-term financial assets 8.9 8,520 2,026 1,124 - in other entities 8,520 2,026 1,124 Cash and cash equivalents ,602 22,009 42,384 Short-term prepayments ,580 3,142 2,990 Fixed assets classified as available for sale TOTAL ASSETS 839, , ,858 * - transformed in accordance with note 8.38 Entity name Apator Group Page 13

14 Consolidated annual financial statement 14 as of NOTE 31/12/ /12/2016* 01/01/2016* Equity 455, , ,549 Equity assigned to parent entity shareholders 450, , ,556 Share capital ,311 3,311 3,311 Other capitals , , ,398 Result of revaluation of a defined benefit plan (58) Result of valuation of hedging transactions and exchange rate differences from consolidation (3,661) (4,971) (2,986) Retained earnings 24,245 83,330 96,891 - result carried over (7,997) 36,847 46,367 - result of the current period 42,569 56,810 59,376 - write-offs from the result of the current year (10,327) (10,327) (8,852) Non-controlling shares ,505 3,881 3,993 Long-term 383, , ,309 Long-term payables and provisions 65,529 96, ,510 Long-term credits and loans ,310 54,824 82,581 - from other entities 32,310 54,824 82,581 Long-term accounts payable ,616 24,381 29,199 - to other entities 9,616 24,381 29,199 Provision for deferred income tax assets ,499 8,215 7,996 Provisions for long-term employee benefits ,736 8,215 8,343 Other long-term provisions , Short-term payables and provisions 318, , ,799 Short-term credits and loans , , ,007 - from other entities 135, , ,007 Trade obligations ,958 93,458 66,148 - to affiliated entities to other entities 88,339 93,458 66,144 Corporate income tax payables ,279 2,818 2,799 Other tax, customs duties and social insurance payables ,217 13,003 14,492 Other short-term payables ,972 28,781 34,283 - to affiliated entities to other entities ,972 28,781 34,195 Short-term provisions for employee benefits ,287 13,312 10,733 Other short-term provisions ,089 11,174 4,337 TOTAL LIABILITIES 839, , ,858 Entity name Apator Group Page 14

15 Consolidated annual financial statement 15 * - transformed in accordance with note The consolidated profit and loss account and other total revenues for the period Continued operations NOTE from 01/01/2017 from 01/01/2016 to 31/12/2017 to 31/12/2016* Income on sales , ,161 Income on sales of products and services 844, ,703 - for affiliated entities 20,612 21,022 - to other entities 823, ,681 Revenues on sales of goods and materials 38,866 37,458 - for affiliated entities to other entities 38,780 37,269 Costs of sales 8.1 (649,620) (628,961) Costs of products and services sold (621,311) (600,529) - for affiliated entities (13,158) (12,813) - to other entities (608,153) (587,716) Costs of goods and materials sold (28,309) (28,432) - for affiliated entities (83) (145) - to other entities (28,226) (28,287) Gross profit on sales 233, ,200 Costs of sales 8.1 (44,748) (38,125) General management costs 8.1 (118,578) (103,650) Profit on sales 70,250 70,425 Other operating income (costs) including: 8.23 (8,669) (4,589) Revenues 7,036 4,010 Costs (15,705) (8,599) Participation in profits of entities consolidated by the equity method 8.8 1,149 1,512 Profit on operations 62,730 67,348 Financial costs, including: 8.24 (4,513) (5,488) Revenues 6,344 1,932 Costs (10,857) (7,420) Profit before tax 58,217 61,860 Current income tax (15,209) (16,318) Deferred income tax (512) 10,518 Net profit on continued operations 42,496 56,060 Discontinued operations Net profit on discontinued operations ,412 2,080 Entity name Apator Group Page 15

16 Consolidated annual financial statement 16 for the period Continued and discontinued operations NOTE from 01/01/2017 from 01/01/2016 to 31/12/2017 to 31/12/2016* Net profit 43,908 58,140 Other total income Other net total incomes 1,546 (1,907) Items that can be reclassified into the financial result in the future: Exchange rate differences from revaluation of entities abroad (4,987) (1,282) Result on the hedge accounting including tax impact 6,269 (692) Items that will not be reclassified into the financial result in the future: Revaluation of a provision for a defined benefit plan including tax impact Combined total revenue 45,454 56,233 Net profit, including allocated to: 43,908 58,140 parent entity shareholders 42,569 56,810 minority shareholders 1,339 1,330 Combined total revenue, including allocated to: 45,454 56,233 parent entity shareholders 44,143 54,892 minority shareholders 1,311 1,341 Net profit per one ordinary share: - basic diluted Net profit on continued operations per one ordinary share: - basic diluted Average weighted number of shares 29,507,028 29,507,028 * - transformed in accordance with note 8.38 for the period NOTE from 01/01/2017 from 01/01/2016 to 31/12/2017 to 31/12/2016* Profit on operations 62,730 67,348 Depreciation 39,284 34,778 EBITDA 102, ,126 * - transformed in accordance with note 8.38 The above information is not required by IFRS. This is not a standard measure included in IFRS, therefore, it may not be comparable to similar measures reported by other entities. Entity name Apator Group Page 16

17 Consolidated annual financial statement Consolidated statement on changes in the equity EQUITY ASSIGNED TO PARENT ENTITY SHAREHOLDERS Share capital Other capitals Result of revaluation of a defined benefit plan Result of valuation of hedging transactions and exchange rate differences from consolidation Retained earnings Total Non-controlling shares TOTAL EQUITY Balance as of 01/01/2016 3, ,398 (58) (2,986) 97, ,282 4, ,958 Adjustments of the opening balance (note 8.38) (726) (726) (683) (1,409) Changes in accounting principles Balance after changes 3, ,398 (58) (2,986) 96, ,556 3, ,549 Changes in equity from 01/01/2016 to 31/12/2016 Total revenue: Net profit for a period from 01/01/2016 to 31/12/ ,810 56,810 1,330 58,140 Result allocation to a reserve capital - 46, (46,105) Loss covered from the supplementary capital - (6,783) - 6, Other total incomes: Items that can be reclassified into the financial result in the future Result on the hedge accounting including tax impact (692) - (692) - (692) Items that will not be reclassified into the financial result in the future: Revaluation of a provision for a defined benefit plan including tax impact Exchange rate differences from recalculation of the financial statement to the reporting currency (1,293) - (1,293) 11 (1,282) Other net total revenues (1,985) - (1,918) 11 (1,907) Entity name Apator Group Page 17

18 Consolidated annual financial statement 18 EQUITY ASSIGNED TO PARENT ENTITY SHAREHOLDERS Share capital Other capitals Result of revaluation of a defined benefit plan Result of valuation of hedging transactions and exchange rate differences from consolidation Retained earnings Total Non-controlling shares TOTAL EQUITY Total revenue recognised in a period from 01/01/2016 to 31/12/ , (1,985) 17,488 54,892 1,341 56,233 Transactions with owners recognised directly in the equity Dividends (29,574) (29,574) (1,453) (31,027) Settlement of advanced dividend for the previous year ,852 8,852-8,852 Advance dividend payments (10,327) (10,327) - (10,327) Balance as of 31/12/2016 3, ,720 9 (4,971) 83, ,399 3, ,280 Entity name Apator Group Page 18

19 Consolidated annual financial statement 19 EQUITY ASSIGNED TO PARENT ENTITY SHAREHOLDERS Share capital Other capitals Result of revaluation of a defined benefit plan Result of valuation of hedging transactions and exchange rate differences from consolidation Retained earnings Total Non-controlling shares TOTAL EQUITY Balance as of 01/01/2017 3, ,720 9 (4,971) 86, ,637 5, ,317 Adjustments of the opening balance (note 8.38) (3,238) (3,238) (1,799) (5,037) Balance after changes 3, ,720 9 (4,971) 83, ,399 3, ,280 Changes in equity from 01/01/2017 to 31/12/2017 Total revenue: Net profit for a period from 01/01/2017 to 31/12/ ,569 42,569 1,339 43,908 Result allocation to a reserve capital - 70, (70,779) Loss covered from the supplementary capital - (1,674) - - 1, Other total incomes: Items that can be reclassified into the financial result in the future Result on the hedge accounting including tax impact 6,269-6,269-6,269 Exchange rate differences from recalculation of the financial statement to the reporting currency (4,959) - (4,959) (28) (4,987) Items that will not be reclassified into the financial result in the future: Revaluation of a provision for a defined benefit plan including tax impact Other net total revenues ,310-1,574 (28) 1,546 Total revenue recognised in a period from 01/01/2017 to 31/12/ , ,310 (26,536) 44,143 1,311 45,454 Transactions with owners recognised directly in the equity Dividends (32,549) (32,549) (687) (33,236) Balance as of 31/12/2017 3, , (3,661) 24, ,993 4, ,498 Entity name Apator Group Page 19

20 Consolidated annual financial statement Consolidated cash flow statement for the period NOTE from 01/01/2017 from 01/01/2016 to 31/12/2017 to 31/12/2016 Cash flow from operations Gross profit on continued operations before tax 58,217 61,860 Gross profit on discontinued operations before tax 1,879 2,328 Adjustments: 42,387 38,987 Depreciation of intangible assets 10,667 8,906 Depreciation of tangible fixed assets 28,617 25,872 Fixed assets available for sale 1,966 - Profit on disposal of tangible fixed assets and intangible assets (1,615) (957) Profit on investment real estate revaluation to fair value Profit on a fair value adjustment for derivatives (1,123) 1,321 Costs of interests 4,657 5,154 Shares in profits of entities held under joint control (1,149) (1,512) Interest revenues (289) (73) Other adjustments Cash on operations before changes in working capital 102, ,175 Change in inventories 21,421 (22,564) Change in receivables ,348 (20,776) Change in payables ,119 20,095 Change in provisions ,753 9,645 Change in prepayments and accruals 8.26 (446) (3,672) Other adjustments 8.26 (314) (431) Cash from operations 165,364 85,472 Income tax paid (14,574) (20,463) Net cash from operations 150,790 65,009 Cash flow from investments Expenditures on purchase of intangible assets 8.26 (17,837) (16,002) Expenditures on purchase of tangible fixed assets 8.26 (35,901) (26,590) Income on sale of tangible fixed assets ,342 4,340 Income on sale of financial assets available for sale Investments in subsidiaries 8.26 (13,899) (7,179) Interests received Dividends received 1,371 1,785 Other income (expenditures) (1,086) (423) Entity name Apator Group Page 20

21 Consolidated annual financial statement 21 for the period NOTE from 01/01/2017 from 01/01/2016 to 31/12/2017 to 31/12/2016 Net cash used from investments (63,457) (43,758) Cash flow from financial operations Proceeds from loans and credits taken 57,677 62,146 Payments of loans and credits (82,894) (61,163) Interests paid (4,460) (5,032) Dividends paid (33,036) (32,421) Payment of financial lease payables (4,875) (4,764) Other expenditures (152) (392) Net cash from financial operations (67,740) (41,626) Net increase (decrease) in cash and cash equivalents 19,593 (20,375) Cash and cash equivalents at the beginning of the period 22,009 42,384 Cash and cash equivalents at the end of the period 41,602 22,009 Entity name Apator Group Page 21

22 Consolidated annual financial statement Accounting principles applied 4.1. Basis for drawing up the statement (general principles) The consolidated financial statement has been drawn up in accordance with the historical cost principle, excluding valuation of certain fixed assets (investment real estate) and financial instruments (derivatives) all of which are valued at their fair value. The most important accounting principles applied by the Group are presented in to Accounting principles and policy presented below were used to all periods presented in the Group consolidated financial statement. In this consolidated financial statement the Apator Group changed the comparable data. Details are provided in note Consolidation Consolidation principles The consolidated financial statement covers the financial statements of the parent entity APATOR S.A. and of its subsidiaries. As of the day of purchasing the subsidiary (taking the control), assets and liabilities of the purchased entity are valued at their fair value. The excess in the purchase price over the fair value for possible to identify net assets of the entity is recognised in assets in the financial status report as goodwill. When the purchase price is below the fair value of possible to identify net assets of the entity, the difference is recognised in a result of the period in which the purchase occurred. Minority shares are recognised at a fair value of net assets allocated to them. When minority shares are purchased, i.e., additional shares/stocks purchased when already having control, the new fair value is not established for purchased assets and liabilities. This operation is recognised as a transfer in capitals between minority shares and a parent entity share in a value established on the basis of fair value of net assets as of a day of taking the control. Subsidiaries over which the parent entity lost control during the year, are consolidated for a period from the beginning of the financial year to the day that control was lost. Financial results of entities purchased during the year are included in the consolidated financial statement from the moment of taking the control. Whenever necessary, adjustments are made in financial statements of subsidiaries or entities under joint control, to harmonise accounting principles used by that entity with principles used by the parent entity. All transactions, balances, incomes and costs between affiliates included in the consolidation were excluded from the consolidated financial statement. Entity name Apator Group Page 22

23 Consolidated annual financial statement Investments in entities held under joint control An entity under a joint control is a joint project being a joint contractual covenant, in which parties holding a joint control over a given project (partners in a joint project) have rights to net assets resulting from contractual arrangements. The contractual arrangements establish joint control over the joint project. This requirement prevents an individual partner from controlling the project s operations alone. It is assumed that a partner holds a joint control when strategic financial and operating decisions require unanimous consent of parties exercising a joint control. The Group reconciles its shares in the joint project by the equity method, according to which the investment is initially recognised at its purchase price, and then, after its purchase its value is adjusted accordingly by a change in the investor s share in net assets of the entity in which the investment was made. The investor s profit or loss covers its share in a profit or loss of the entity in which the investment was made, and other total income of the investor cover its share in other total income of the entity in which the investment was made Goodwill Goodwill is an asset representing future economic benefits arising from assets purchased during merger of entities that cannot be identified or recognised separately. Goodwill is recognised as an asset and tested for impairment at least once a year. Results of impairment are recognised in the result and are not reversed in future periods Detailed principles of assets and liabilities valuation used in the Group Intangible assets Research and development Expenditures borne at the research works stage aiming to gain new scientific or technical knowledge are recognised as a profit or a loss for a current period at the moment they are incurred. Expenditures on research works the effect of which are used for development or creation of a new or significantly improved product are capitalised when creation of a new product (process) is technically feasible and economically justified, and when the Group has technical, financial and other necessary resources to complete development works. Capitalised costs include: costs of materials, remuneration of employees directly involved in research works, justified part of costs indirectly related to generation of an intangible asset, and capitalised costs of external financing. Other costs of development works are recognised as a profit or a loss for a current period at the moment they are incurred. Costs of development works are recognised as intangible assets on a basis of their purchase price decreased by aggregated write-offs and impairment write-offs. Other intangible assets Other intangible assets purchased by the Group of specified economic life are recognised on a basis of their purchase price decreased by depreciation write-offs and impairment write-offs. Entity name Apator Group Page 23

24 Consolidated annual financial statement 24 Expenditures incurred at a later period Later expenses on existing intangible assets are capitalised only when they increase future economic benefits associated with a given asset. Other expenditures, including expenditures on trademarks and brand generated by the Company are recognised as a profit or a loss for a current period at the moment they are incurred. Depreciation Depreciation is written off in relation to an asset purchase price or its equivalent, reduced by its residual value. The depreciation cost is recognised as a profit or a loss for a current period using the linear method in relation to life of a given intangible asset other than company goodwill, as estimated by the Group, from a moment of determining its usefulness, reflecting in the best possible way execution of future economic benefits related to use of the given asset. The Group assumes the following periods of use for the individual categories of intangible assets: Patents and licences Development works from 2 to 5 years from 3 to 5 years Tangible fixed assets Tangible fixed assets are tangible assets held by the Group to be used in production, delivery of goods or services, renting out to third persons or for administration purposes, when it is foreseen they will be used for a period exceeding 12 months. They are valued at their purchase price or costs of production reduced by depreciation or amortisation write-offs and asset impairment write-offs. In accordance with the asset-based approach, the Group assumes different depreciation rates for important items of a tangible fixed asset. The depreciation starts at a moment of commissioning. When annual depreciation rates are established, the period of economic life of a given tangible fixed asset is taken into account. The correct use of depreciation periods and rates by the Group is periodically verified by production department managers. For the purpose of depreciation of tangible fixed assets, the linear depreciation method is used. Periods of economic life for individual assets are as follows: Buildings and facilities from 10 to 40 years Machines and equipment from 2 to 25 years Vehicles from 4 to 10 years Other tangible fixed assets from 3 to 10 years When any circumstances occur indicating that the reporting value of tangible fixed assets can be impossible to recover, the said assets are reviewed for their impairment. When there are any indications that their value may be impaired, and the reporting value exceeds the estimated value possible to recover, then the value of the said assets, or of cashgenerating centres to which the said assets belong, is decreased to the level of the value possible to recover. The value possible to recover corresponds to a higher of two values: the fair value reduced by costs of sale, or the usable value. When the usable value is determined, the estimated future cash flows are discounted to their present value using the gross discount rate reflecting current market estimations of value of money over time and a risk associated with a given asset. For the asset not generating financial revenues in a significantly independent way, the value possible to recover is estimated for a cash-generating centre to which a given asset belongs. Profits or losses resulting from sales/liquidation or discontinued use of the said tangible fixed assets are determined as a difference between income on sales and a net value of the said assets, and are recognised in a profit of a period in which they were sold. Entity name Apator Group Page 24

25 Consolidated annual financial statement 25 The tangible fixed assets under construction concern assets being under construction or assembling, and are recognised at purchase prices or costs of their production. The tangible fixed assets under construction are not depreciated until their construction is completed and they are commissioned. The Group holds tangible fixed assets used in its social activities, which it administers. These assets, together with a right of perpetual usufruct were valued at their fair value by an independent valuer, as of a date of transition to IFRS. As there are no plans to sell these assets, while costs of maintenance of these assets are reimbursed from the Company Social Benefits Fund as agreed with Trade Unions, the Group presents these assets in the financial statement together with the right of perpetual usufruct recognised off-balance sheet Leasing Financial leasing agreements are agreements under which, in general, all risks and all possible benefits resulting from a title to a given asset are transferred onto the Group. All other types of leasing are treated as operating leasing. Assets used under financial leasing agreements are treated in the same way as the Group assets and valued at the moment when a leasing agreement comes into force, at a lower of the two values: a fair value of a leased asset or a current value of minimum leasing fees. Leasing fees are divided into interests and a principal, so the interest rate for the outstanding obligation remains a fixed value. Leasing fees related to operating leasing are recognised in a result for the period using a linear method, throughout the term of leasing Investment real estate The investment real estate is understood as real estate treated as a source of income from rents and/or are held due to an expected increase in their value. The investment real estate is valued at a fair value as of the reporting date. Profits and losses resulting from changes in a fair value of the investment real estate are recognised in a financial result for a period in which they were generate.d Fixed assets and groups of net assets classified as available for sale Fixed assets classified as available for sale, as well as groups of net assets available for sale are valued at a lower of two values: reporting value or fair value decreased by costs associated with sale. Fixed assets and groups of net assets are classified as available for sale when their reporting value will rather be recoverable in the sales transaction than due to their further use. This condition is understood as met only when an asset (or a group of net assets available for sale) is available in its current condition for immediate sale, and occurrence of sales transaction is highly probable during the year from a moment of reclassification Inventories Materials and goods are valued at their purchase price (a sales price increased with costs of transport, border fees, custom duties, costs of unloading and loading). Issuing of materials and goods is valued as a weighted average. Entity name Apator Group Page 25

26 Consolidated annual financial statement 26 Products are valued at a regular basis at a cost of their production, and stocks of products and goods are valued at costs of their production not exceeding their net sales prices possible to obtain if sales occurred on a reporting day. The production costs consist of total direct costs (materials, payroll) and a relevant part of indirect costs associated with production of a product, including indirect production costs and a part of fixed overheads corresponding to the level of these costs during a normal use of production capacities. Inventories are verified at the end of each reporting period. 100% revaluation write-off is performed for inventories unsuitable for economic purposes. Furthermore, to ensure reliable value of inventories, the inventories age structure is analysed, with a decisive factor being the date of their reception into and issuing from a warehouse Costs of external financing The Group capitalises costs of external financing (interests and other costs borne by the Group in relation to mobilised financing) which can be directly allocated to a purchase or construction of tangible fixed assets. The rules for capitalisation are not applied to investment real estate and inventories manufactured in a repeatable way, with a short production circle. To the extent to which the Group borrows special funds to finance purchasing of an asset, the amount of costs of external financing that can be capitalised represents a difference between actual costs of external financing in a given period, and entities income on temporary investment of these borrowed funds. When the Group borrows financial resources for general application, and then uses them to obtain an asset, then a capitalisation rate is applied to expenditures borne in a given period (a weighted average of the costs of external financing, covering total credits and loans remaining to be paid in a given period) Government subventions Government subventions, including subventions in kind recognised at their fair value, are disclosed only when there is sufficient certainty that the Group will meet conditions related to a given subvention and that a given subvention will actually be received. When a subvention concerns a given cost item, then it is recognised as a reduction in costs which a given subvention is intended to compensate. However, when a subvention concerns an asset, then its fair value reduces the value of that asset Financial instruments The Group classifies as a financial instrument each agreement that results at the same time in creation of a financial asset at one of its parties and a financial liability or a capital instrument at the other party; provided that the contract concluded between two or more parties clearly results in economic consequences. The Group classifies financial instruments as: Financial assets or financial liabilities valued at a fair value in the financial result - assets and liabilities obtained or incurred mainly to sell or repurchase in a short time, or being a part of a portfolio of specific financial instruments managed together, and for which a current actual formula for generation of short-term profits is confirmed; the Group includes in this category derivatives hedging the exchange rate risk; Entity name Apator Group Page 26