Radpol Spółka Akcyjna REPORT ON THE AUDIT OF THE NON-CONSOLIDATED FINANCIAL STATEMENT AS AT

Transcription

1 ECA Auxilium Radpol Spółka Akcyjna REPORT ON THE AUDIT OF THE NON-CONSOLIDATED FINANCIAL STATEMENT AS AT Contents 1. GENERAL PART Page 1.1 Company's identification data Company's bodies and resolutions Tax controls Employment Financial statement for the previous year Subject of the review Data identifying the entity authorised to performed the audit of the consolidated financial statement Data availability and declarations of the Company 6 2. FINANCIAL ANALYSIS 2.1 General analysis of the financial statement Selected financial indicators Interpretation of selected financial indicators DETAILED PART 3.1 Books of account and system of internal control Information on selected items of the statement of financial position Information on selected items of profit and loss account The other elements of the financial statement and report on the operations of the entity Events after the balance sheet date Conclusions of the performed audit 17 1

2 GENERAL PART 1.1 Company's identification data Company's name, legal form, National Court Register The Company is registered under the name of Radpol Spółka Akcyjna in the Business Register of the National Court Register kept by the District Court for Gdańsk-Północ, 8th Commercial Division of the National Court Register, under the number of KRS The registration was made on We were presented an extract from the register of with the last entry made on Pursuant to the information of the Board there were no other events requiring any entry Company's seat The Company is seated in Człuchów, ul. Batorego Status The basis of operations of the Company is Articles of Association of signed before a notary public, Anna Ewa Dańko-Roesler in a notary's office in Warsaw, ul. Ordynacka 9, under the Repertory A No /2012, as amended. The term of the Company is perpetual Statistical registration number (REGON) Statistical Office in Gdańsk, issued the following statistical registration number to the Company: Tax identification number (NIP) Tax Office in Gdańsk, issued the following tax identification number to the Company: Subject of activity of the Company The principal activities of the Company are: - manufacture of tubes, pipes, hollow profiles and related fittings of steel, - manufacture of insulated wiring and cables and installation equipment, - manufacture of plastic products and other products form rubber, - manufacture of ceramic insulators and insulating fittings, The actual subject of activity corresponds to the registered subject of activity

3 1.1.7 Financial year The Company s financial year is the calendar year Share capital The share capital of the Company did not change in the reporting period and amounts to PLN 771, and consists of 25,719,752 shares of the nominal value of PLN 0.03 each. The shareholding structure of RADPOL S.A. as at number value % preparation of the report share issue nominal THC Fund Management Ltd (formerly GJB Assets 3,061,390 91, % Management Ltd) Marcin Wysocki 3,031,572 90, % ING OFE 1, , % BZ WBK Asset Management S.A. 2,439,068 73, % Aviva Otwarty Fundusz Emerytalny Aviva BZ WBK 2,432,763 72, % Aviva lnvestors Poland S.A. 2,284,765 68, % PKO Towarzystwo Funduszy Inwestycyjnych S.A. Warsaw 1,937,293 58, % Allianz Polska Otwarty Fundusz Emerytalny 1,682,665 50, % Andrzej Sielski 446,997 13, % Andrzej Pożarowszczyk 869,739 26, % Tomasz Firczyk % RADPOL S.A. (the buy-back pursuant to the Resolution No ,574 8, % of the Extraordinary General Meeting of Shareholders of ) TRIGON Dom Maklerski S.A. (the buy-back pursuant to the Resolution No. 4 of the Extraordinary General Meeting of 15, % Shareholders of ) Other shareholders 5,434, , % 25,719, , % After the balance sheet date until the date of the report there were no changes in the shareholding structure of the Company List of related units - Przedsiebiorstwo Produkcji Strunobetonowych Zerdzi Wirowanych "WIRBET" S.A. - a subsidiary. - till Rurgaz Sp. z o.o. On the merger was registered in the National Court Register of: RADPOL S.A. (Merging Company) with RURGAZ Sp. z o.o. (Merged Company). Since RURGAZ Sp. z o.o. was a subsidiary of RADPOL S.A. the merger was treated as a merger of entities under a common control and provisions of IFRS 3 did not apply. Consolidation of financial data of the financial statement was made by summing particular items of relevant assets and liabilities and revenues and expenditures of merged companies, valuated with uniform methods as ate the date of the merger ( ). In the consolidated financial statement mutual liabilities and payables of the merged companies and other transactions of a similar nature were excluded. Report on the audit of the financial statement

4 Comparative data as at and and for the period of were presented using the above methodology retrospectively as if the legal and formal merger was made a year before. 1.2 Company's bodies and resolutions The Management Board and representation The Management Board in the reporting period was composed of: Mr. Andrzej Piotr Sielski - President of the Board Mr. Adam Waldemar Dombrowski - Vice-President of the Board Mr. Andrzej Pożarowszczyk - Vice-President of the Board Mr. Marcin Piotr Rusiecki - Vice-President of the Board from Two Management Board members acting jointly or one Management Board member and a proxy acting jointly are authorised to make declarations of will on behalf of the Company. After the balance sheet date until the date of the report there were no changes in the Company's Board Supervisory Board During the reporting period the composition of the Supervisory Board was as follows: Mr. Grzegorz Jan Bielowicki - Chairman of the Supervisory Board Mr. Zbigniew Piotr Janas - Vice-Chairman of the Supervisory Board Mr. Tomasz Krzysztof Firczyk - Secretary of the Supervisory Board Mr. Leszek Grzegorz Iwaniec - Member of the Supervisory Board Mr. Krzysztof Stanisław Kurowski - Member of the Supervisory Board Mr. Jacek Jakub Tomasik - Member of the Supervisory Board Mr. Jerzy Markiewicz - Member of the Supervisory Board from Proxy In the reporting period the proxy was granted to: Ms. Dorota Anna Kania - joint commercial representation

5 1.2.4 General Meeting of Shareholders The shareholders adopted e.g. the following resolutions: on regarding approval of the Report of the Supervisory Board of RADPOL S.A. - regarding approval of the Report of the Management Board on the operations of the Company for the period from to , - regarding approval of the Report of the Management Board on the operations of the Company's Capital Group for the period from to , - regarding approval of the financial statement of the Company for the period from to , - regarding approval of the consolidated financial statement of the capital group - regarding profit distribution for the financial year of on regarding the merger of RADPOL S A. seated in Człuchów and RURGAZ Sp. z o.o. seated in Kolonia Prawiedniki and the amendment of the Statute of RADPOL S.A., - regarding changes in the composition of the Supervisory Board of the Company, - regarding determination of the number of members of the Supervisory Board of the Company, 1.3 Tax controls In 2012 there were no tax controls performed in the Company. 1.4 Employment The Company in 2012 employed an average of 356 employees (in the previous year 426 employees). 1.5 Financial statement for the previous year The financial statement for 2011 was audited by ECA Seredyński i Partnerzy Sp. z o.o. The opinion issued in the audited explanation was issued with the explanation: "With no reservations as to the correctness and reliability of the audited financial statement we wish to emphasize that in 2008 the Company was granted a technology credit for the purchase of fixed assets, which after the fulfilment of the conditions specified in the Agreement was redeemed. The terms of credit redemption were presented in explanatory notes to the financial statement in Note No. 43 "Other operating revenues". The redeemed credit instalments, based on the provisions of IRS 20 "Accounting for government grants and disclosure of government assistance" were classified by the Board as a grant for revenues and were recognized in the profit and loss account at the moment of reception of a decision on the redemption. The financial statement was approved by a resolution of the General Meeting of Shareholders of Verified financial statement was filed in the Tax Office on and in the District Court on

6 The financial statement was published in the Polish Monitor B No. 1627/2012 of Subject of the review The subject of the review was financial statements for the period of to , consisting of: - statement of financial position as at , which on the side of assets and liabilities totals to 175,405, - statement of comprehensive income for the financial year from to demonstrating total comprehensive income in the amount of 12,014, - statement of changes in equity for the financial year from to demonstrating a drop in the equity by 2,220, - cash flow statement for the financial year from to , demonstrating a drop in the cash and cash equivalents by 5,139, - explanatory notes to the financial statement prepared as at , 1.7 Data identifying the entity authorised to performed the audit of the financial statement The audit was performed by ECA Seredyński i Wspólnicy Sp.k. z seated in Cracow, ul. Moniuszki 50, entered into the list of entities authorized to audit financial statements under the number of The basis of the review is the agreement signed on with RADPOL S.A. The certified auditor was elected as the auditor of the Company by the Supervisory Board's resolution of The certified auditor, representing the authorized entity and directing the audit is Piotr Woźniak, registration number We declare that both the authorized entity, ECA Seredyński i Partnerzy Sp. z o.o and the certified auditor comply with the conditions required to express an unbiased and independent opinion on that statement. The fact of impartiality was confirmed in writing. The review was performed in November 2012 and February and March 2013 and was completed on Data availability and declarations of the Company There were no restrictions as to the scope of the review. The auditors received all the required information and explanations. On the Board of the Company confirmed the completeness of the prepared financial statement in writing and listing of all the contingent liabilities and informed about no important events that occurred after the balance sheet date till the date of the declaration.

7 FINANCIAL ANALYSIS 2. FINANCIAL ANALYSIS 2.1 General analysis of the financial statement % % % Assets Tangible fixed assets 82, , , Intangible assets 1, , , Company goodwill Shares and stock 30, Assets due to deferred income tax , dochodowego Other fixed assets Fixed assets 114, , , Inventories 22, , , Trade 29, , , receivables Current tax receivables dochodowego Other receivables 2, , , Other financial , , assets Cash and cash equivalents Accruals and prepayments 5, , , Current assets 60, , , Assets 175, , , Liabilities % % % Share capital Treasury shares -2, Supplementary capital from share 52, , , issue Retained earnings 18, , , Other reserve capitals 17, , , Other comprehensive income 3, , , Equity 89, , , Non-current liabilities and reserves Provisions for deferred income tax tax 4, , , Provisions for gratuities and similar 1, including: non-current Other reserves Interest-bearing loans and 40, , , borrowings Other financial liabilities i,

8 Liabilities and provisions for liabilities 46, , , Current liabilities Loans and borrowings 8, , , Other financial liabilities Trade and service liabilities 17, , , Current income tax liabilities Other liabilities 3, , , Deferred income 8, , , Current liabilities 39, , , Liabilities 175, , , Percentage changes in the statement of comprehensive income in current prices /2011 Net revenues from the sale of goods and materials 131, ,370 Cost of products, goods and materials sold 98, ,587 Gross result on sales 32, ,783 Costs of sales Costs of general management Costs of acquisition % , ,591 11, , Result on sales 15, ,677 Other operating revenue 1, ,657 Other operating expenses 2, ,603 Result on operating activity 13, ,731 Financial revenues 3, Financial expenses 3, ,137 Gross result 14, ,143 Income tax Net result Other comprehensive income Comprehensive total income 2, ,909 12, , , , Selected financial indicators Balance sh eet total 175, ,959 Net financial resu lt 12,014 14,235 PROFITAB ILITY RATIOS ROA Net financial result Sum of assets (average) Net sales profitability Report on the audit of the financial statement %

9 Net financial result Sales revenues Gross sales p rofitability Result on sales Sales revenues ROE Net financial result Equity (average) % % % LIQUIDITY RATIOS I grade liquidity Current assets Current liabilities II grade liqu idity Current assets - Inventories Current liabilities III grade liquid ity Cash and cash equivalents Current liabilities ACTIVITY RATIOS Receivables tu rnover (ratio) Trade and other receivables Sales revenues days Inventory turn over (ratio) Inventories (average) Prime costs of sales days DEBT RATIOS Total debts Liabilities and provisions for liabilities Total assets LIABILITIES TURNOVER (RATIO) Trade liabilities (average) Prime costs of sales Sustainab ility of finan cing (ratio) Equity + Non-current liabilities and provisions Total assets % days % OTHER RATIOS EFFECTIVE RATE OF INCOME TAX Income tax % Gross result EBIT (Earnin gs Before d edu ctin g Interest and Taxes) 13,972 21,731 EBITDA (Earnin gs b efore Interest, Taxes, Depreciation, and 21,101 28,394 Amortization ) EPS (profit/loss per share) PLN Report on the audit of the financial statement '3

10 2.3 Interpretation of selected financial indicators The analysis was performed at current prices taking into account the data of the two subsequent financial years. On the merger of RADPOL S.A. and RURGAZ Sp. z o.o. was registered. Since RURGAZ Sp. z o.o. was a subsidiary of RADPOL S.A. the merger was treated as a merger of entities under a common control and provisions of IFRS 3 did not apply. Consolidation of financial data of the financial statement was made by summing particular items of relevant assets and liabilities and revenues and expenditures of merged companies, valuated with uniform methods as ate the date of the merger, making relevant adjustments. In 2012 the key item of the assets of the Company are tangible fixed assets, shares and stock and trade and service receivables, the share of which in the balance sheet sum amounts to respectively 47.0%, 17.1%, and 17.0%. In comparison with the previous year the share of tangible fixed assets dropped by 0.6 p.p., and the share of trade receivables dropped by 1.3 p.p. The greatest growth was reported in the item of shares and stock - it amounted to 17.1 p.p. The considerable growth stems from the purchase of Wirbet's shares. The key source of financing of the Company's operations is still the equity, the share of which in the total liabilities as at amounts to 51.2%. In comparison with the previous years we may notice a gradual drop in the share of the equity in the total capital (a drop from 57.5% at the end of 2010). The share of external capitals in the structure of liabilities amounted to 48.8% - in comparison with 2010 there was a gradual growth from 32.5%. The most important item of the equity is the supplementary capital from the issue of shares totalling to 52,323, constituting 29.8% of the total liabilities. In the reporting year, in relation to a drop in net sales revenues (a drop by 1.0% in connection with the previous year) and a growth in costs of operating activities (a growth by 4.9%) there was a 15% drop in the gross result in sales. At the end of the period it totalled to 32,862 and was by 5,921 lower than in the previous year. In 2012 the Company generated net profit amounting to 12,014, which means a drop yoy by 15.6%. The achieved results on particular areas of activities demonstrated in the profit and loss account for the reviewed period: result on operating activity 15,114 result on the other operating activity -1,142 result on financial activity 676 income tax - current 2,365 income tax - deferred 269 impacted the net financial result in the amount of 12,014 10

11 Because of the drop in sales result and net financial result asset, sales profitability and return on equity deteriorated. ROA dropped from 9.20% in 2011 to 7.04% in Net sales profitability ratio dropped from 10.75% in 2011 to 9.17% in Return on equity also decreased by 16.31% in 2011 to 13.22% in the reporting year, which means a lower ability of the equity to generate profit. I, II and III grade profitability ratios at the end of the reporting year amounted to respectively 1.55, 0.97 and 0.15 and were similar to the values of these ratios from the previous year. The analysis of activity ratios indicated extension of the period of inflow of trade and service receivables. In 2012 the receivables turnover ratio amounted to 84 days and was prolonged by 4 days in comparison with The average cycle of settling liabilities was shortened by 6 days and at the end of 2012 amounted to 69 days. The inventory rotation period in 2012 amounted to 86 days and was by 8 days longer than in comparison with The total level of debts of the Company increased from 44.56% in 2011 to 44.81% in Earnings per ordinary share for 2012 amounted to PLN 0.47 and was by PLN 0.11 lower than in the previous year.

12 DETAILED PART OF THE REPORT 3. DETAILED PART OF THE REPORT 3.1 Books of account and system of internal control The Company has developed accounting policies approved by the Board, introduced with effect from Accounting policies take into account the nature of the business and is used in a continuous manner. Accounting policy was updated on Entries in the books are made in a sustainable manner. The way the records of economic events in the books allows for the identification of the date of the business transaction, the source document and the amount and signification of bookkeeping accounts, on which the operation was recognized. Accounting records are complete, correct and appropriately related with relevant invoices or other source documents. The accounts are kept in a fair, accurate, and verifiable way, using a computerized financial and accounting system, Symfonia Finance and Accounting. Methods used by the Company of securing the access to data and their processing system are sufficient. Stocktaking of assets and liabilities was carried out in accordance with the Accounting Act, and the results of the stocktaking were properly accounted for in the books. Statutory frequency of inventory taking was maintained. Books are kept and stored in the seat of the Company subject to the provisions of Chapter 8 of the Act. It was found that internal control ensures the identification and recording of business transactions, their unambiguous classification, proper documentation, correct presentation of data in the financial statements and inclusion of operations in the relevant periods. The review of the internal control system was conducted to the extent to which it relates to the financial statement and regarded the internal control within: - purchase and its accounting and related invoices, - sale and settlements and related invoices, - revenues and expenditures of cash and cash equivalents, - calculation and remuneration system in relation to work. It was not to disclose all possible irregularities of the system. The review did not reveal any significant irregularities within the operation of the internal control system. 12

13 3.2 Information on selected items of the statement of financial position Tangible fixed assets Last stocktaking of fixed assets held on Statutory frequency of inventory taking was maintained. Listing: Item Gross value as at % of use Increase in the reporting period Decrease in the reporting period lands (including the right of perpetual 3, % usufruct) buildings, premises and land & water 35, % 2, engineering machinery and equipment 81, % 3,685 2,637 means of transport 4, % other fixed assets 6, % The main expenditures for fixed assets incurred in the period relate to the extension of the plant (Kolonia Prawiedniki) and modernisation outlays for the hall (Człuchów) and roof (Ciechów). The right of the Company to dispose of the tangible fixed assets was limited. The hedging of credits and loans is e.g. a contractual joint mortgage on the real property of RADPOL S.A. and the registered pledge agreement on the fixed pool of assets and rights being part of the undertaking of RADPOL S.A Intangible fixed assets The tangible fixed assets include the warehouse software, licence for the manufacture of polymer insulators and costs of development works connected with the activity conducted by the Company Stock and shares On 5 April 2012 RADPOL S.A. purchased 549,000 shares of WIRBET S.A. for a total amount of PLN 29,997, (PLN 54,64 per share). As a result of the purchase of the said shares RADPOL S.A. became a shareholder of WIRBET holding 100% shares in the share capital of WIRBET and 100% votes on the General Meeting of WIRBET S.A. (a total of 1,647,000 votes on the General Meeting) RADPOL S.A. became a parent company for WIRBET S.A. RADPOL S.A. treats the said block of 100% shares of WIRBET S.A. as a long-term investment and classifies as financial assets available for sale. The source of financing of the purchase of shares of WIRBET S.A. was the credit granted in the amount of PLN 25 mln and the remaining sum of PLN 4,997, was settled from the cash of the Company. In relation to the loans drawn the registered pledge and financial lien agreements were established on shares of WIRBET S.A.

14 3.2.4 Inventories The item is composed of the following elements: Materials 6,051 Semi-finished goods and work in progress 4,563 Finished goods 10,676 Merchandise 1,267 Advances for deliveries 46 22,603 including: write-downs 1,818 The quantity status was confirmed by the physical stocktaking as at the balance sheet date. Representative of the auditing entity participated in the observation of inventory taking. No objections were made as to the method of inventory taking accuracy. Valuation of materials and goods made at cost. Finished goods were valued based on the manufacture cost calculation. The right of the Company to dispose of the inventory is unlimited. The balance sheet value of the inventory constituting a collateral for the liabilities as at the end of 2011 amounted to 7, Cash and cash equivalents Listing: Cash at bank 5,730 Cash in hand 33 5,763 Cash and cash equivalents in hand are confirmed with the protocol from the physical stocktaking made on the balance sheet date. Cash and cash equivalents at bank are confirmed with the confirmations of balances as at the balance sheet date The equity Detailed information on the share capital is included in the general part of the report in section On the merger was registered in the National Court Register of RADPOL S.A. (Merging Company) with RURGAZ Sp. z o.o. (Merged Company). 14

15 The equity as at the end of the year amounted to 89,791. In comparison with the previous year, in relation to the distributed dividend ( 12,065) and a drop in the treasury shares ( 2,093), it decreased by 2,220. The largest item is the supplementary capital for share issue in the amount of 52,323 (29.8%). The net profit as at the end of the year amounted to 12, Provisions for liabilities Listing: deferred income tax provisions 4,769 provisions for pensions and similar 1,184 other provisions 109 6,062 At our discretion and in accordance with the explanations given to us by the Board the provisions created in a given period fully protect the Company from the risk with sources during the reporting period Non-current liabilities Listing: bank loans 40,396 The loans are documented as at the balance sheet date with balance conformations. Due interests and fees were recorded in relevant periods Current loans and borrowings Listing: bank loans 8,882 The loans are documented as at the balance sheet date with balance conformations. Due interests and fees were recorded in relevant periods Other liabilities Listing: tax, duty and social insurance liabilities 1, remuneration liabilities Company Social Benefits Fund and special funds 735.,00 other liabilities 1, ,670.00

16 Deferred income Listing: PLN Grants to loans 8, commercial bonuses other settlements , The Company adjusted, in the current period, in accordance with IAS 8 "Policies, Changes in accounting estimates and errors", the method of presentation of the technology credit redemption. In previous periods the redemption of the technology credit was presented as a subsidy to revenues and not as a subsidy to assets. The redeemed credit instalments were during previous years recognised in the profit and loss account when the decision on their redemption was achieved. After the change, the credit redemption is presented commensurately to the amortization and depreciation of fixed assets financed with the credit. 3.3 Information on selected items of profit and loss account Revenues and expenses are recognized in full and result from properly maintained accounting records. Eligibility of costs to respective items of the calculation is correct. The main item of the other operating revenues is revenues from the reversal of revaluation write-downs in the amount of 631, while of the other operating expenses - write-downs of receivables in the amount of inventory shortages 1,927. The financial revenues relate primarily to the net foreign exchange gains in the amount of 1,125 and dividends received in the amount of 2,276, and financial costs relate to interest on bank loans in the amount of 2,952. Both the calculation of income tax from legal persons as well as reserve and deferred income tax assets are to be found in the additional information and explanations. 3.4 The other elements of the financial statement and report on the operations of the entity Explanatory notes Explanatory notes to the accounting rules (policies) and other explanatory information are an integral part of the financial statements and were prepared in accordance with International Accounting Standards, International Financial Reporting Standards and related interpretations published in the form of regulations of the European Commission, in the absence of these standards pursuant to the requirements of the Accounting Act and subordinate legislation issued on its basis (hereinafter referred to as International Accounting Standards).

17 Statement of comprehensive income Statement of comprehensive income was prepared properly in accordance with International Accounting Standards. Its relation to the statement of financial position, non-consolidated profit and loss account and books of account was stated. Statement on changes in the equity Statement of changes in equity was prepared properly in accordance with International Accounting Standards. Its relation to the other elements of the financial statement and books of account was stated. Cash flow statement Cash flow statement was prepared properly in accordance with International Accounting Standards. Its relation to the other elements of the financial statement and books of account was stated. Other elements Statement of financial position as at the beginning of the earliest comparative period in which the unit applied the rules (policy) of accounting retrospectively or made a retrospective restatement of the items in the financial statement, or re-classified the items in its financial statement, was prepared properly in accordance with International Accounting Standards. Report of the Management Board on the operations of the unit The report on operations in the financial year contains the data compliant with the data in the financial statement and covers the information in accordance with the requirements of Article 49 of the Act on accounting and provisions of the Regulation of the Minister of Finance of 19 February 2009 on current and periodic information published by issuers of securities and conditions of deeming the information required by legal regulations of a state not being a member state as equivalent (Dz. U. No. 33, item 259); 3.5 Events after the balance sheet date There were no events after the balance sheet which had a considerable impact on the balance sheet sum or the level of financial result for a year under the review. 3.6 Conclusions of the performed audit Based on the performed audit of the books of account of Radpol Spółka Akcyjna seated in Człuchów, it is stated that: 1. the financial statement for the financial year of 2012 was prepared correctly, the data contained in the financial statement is compliant with relevant balances and turnovers in the books of account, 2. consistency was maintained, 3. financial statement was signed by authorised persons, 4. there were no events or phenomena indicating any breach of the law being in force. 17

18 The result of the audit of the financial statement of Radpol Spółka Akcyjna for the financial year of 2012 was presented by the certified auditor in his opinion. The opinion was issued without reservations. The report contains of 26 pages signed by the certified auditor. Poznań, Piotr Woźniak Key statutory auditor License No auditing on behalf of ECA Seredyński i Wspólnicy Sp.k. No ECA Seredyński i Wspólnicy Sp.k. Piotr Woźniak Managing Partner Statutory Auditor License No