FABRYKA FARB I LAKIERÓW ŚNIEŻKA SA. REPORT ON THE FINANCIAL STATEMENT FOR THE YEAR ENDED AS AT 31 December 2014

Transcription

1 REPORT ON THE FINANCIAL STATEMENT FOR THE YEAR ENDED AS AT 31 December 2014

2 I. GENERAL PROVISIONS 1. General information Fabryka Farb i Lakierów Śnieżka S.A. (Company) was established by virtue of Notarial Deed as of 16 January The registered office of the Company is Lubzina 34a. On 12 November 2001 the company was entered into a register of entrepreneurs of The National Court Register under number KRS The company holds tax identification number (NIP): , which was obtained on 5 March 1998 as well as national Business Registry Number (REGON): , obtained on 24 February The Company is a parent company in FFiL Śnieżka SA Capital Group. Information on transactions with related entities as well as a list of companies, where the Company holds at least 20% of shares in the capital or general number of votes in company s management, has been presented in note 35 of accounting principles (policy) and additional explanatory notes ( additional information ) to the audited financial statement for the year ended as at 31 December The core scope of the Company s activity is manufacture of paints, varnishes, adhesives and solvents (PKD 2030Z). On 31 December 2014 the share capital of the company amounted to PLN The equity of the Company as at the aforementioned date amounted to In accordance with information included in note 29, regarding additional information to the attached financial statement, the structure of the Company s share capital was as follows: Number of shares Number of votes Nominal value of the share Share in the share capital Jerzy Pater 2,541,667 3,208,335 2,541,667 20,14% Stanisław Cymbor 2,541,667 3,208,335 2,541,667 20,14% Piotr Mikrut 1,254,166 1,787,498 1,254,166 9,94% Piotr Mikrut 1,254,167 1,254,167 1,254,167 9,94% AMPLICO OFE 1,250,000 1,250,000 1,250,000 9,91% Aviva OFE Aviva BZ WBK 781, , ,669 6,19% Other 2,994,442 3,127,774 2,994,442 23,74% Total 12,617,778 14,617,778 12,617, ,00% ======== ======== ======== ======= 2/ 12

3 In the reporting period as well as from the balance sheet date through to the opinion s date, no changes in the composition of the Management Board of the company occurred. The composition of the Management Board of the company as at 20 April 2015 was as follows: Piotr Mikrut - President of the Management Board Witold Waśko - Vice-President of the Management Board, Joanna Wróbel-Lipa - Vice-President of the Management Board, In the reporting period as well as from the balance sheet date through to the opinion s date, no changes in the composition of the Management Board of the company occurred. 3/ 12

4 2. Financial statement On 21 June 2005, the General Meeting of Shareholders Meeting adopted a resolution on preparing the financial statement of the Company in accordance with International Financial Reporting Standards, approved by the EU. 2.1 Independent statutory auditor's report on the financial statement On 17 June 2014, the Parent Company concluded an agreement with Ernst & Young Audit Polska Limited Liability Company, with its registered seat in Warsaw, Rondo ONZ 1, is an entitled entity to carry out the report on financial statement, entered in the register under the following number: 130. On 2 June 2014 Ernst & Young Audyt Polska spółka z ograniczoną odpowiedzialnością sp. k. was chosen by the Supervisory Board to to carry out the report on the financial statement of the company. Ernst &Young Audyt Polska spółka z ograniczoną odpowiedzialnością sp. k. as well as the Key Certified Auditor, meet, pursuant to art. 56 paragraph 3 and 4 of the Act as of 7 May 2009 on Statutory Auditors, their self-government organization, entities authorized to audit financial statements and on public oversight (Journal of Laws 2099, no. 77, item 649 as amended), conditions to express independent and impartial opinion on a financial statement. By virtue of the agreement concluded on 17 June 2014 with the Management Board of the parent company, we audited the financial statement for the year ended as at 31 December Our responsibility was to express an opinion about the financial statement on the basis of the performed audit. The procedures, carried out during the audit of the financial statement, were conducted in such a manner, so as to allow to express an opinion on the financial statement as a whole. Our procedures did not cover supplementary information, which do not influence the financial statement as a whole. On the basis of the audit, as of 20 April 2015, we have issued an unqualified opinion: For the General Meeting and the Supervisory Board of Fabryka Farb i Lakierów "Śnieżka" S.A 1. We have reviewed the financial statements of the Fabryka Farb i Lakierów Śnieżka S.A ( Company ), with its registered office in Lubzina 34a, for the statement of comprehensive income for the period from 1 January 2014 to 31 December 2014, the statement of financial position prepared as at 31 December 2014, the cash flow statement and the statement of changes in equity for the period from 1 January 2014 to 31 December 2014, accounting principles (policy), as well as the notes to the financial statements ( attached financial statements ). 4/ 12

5 2. The Company's Management Board is responsible for ensuring the reliability and accuracy of the financial statements, their compliance with the applicable accounting principles (policy), as well as the correctness of the respective documents. The Company's Management Board and the members of its Supervisory Board are further responsible for ensuring compliance of the attached financial statements and the report on the Company's activities with the requirements provided for in the Accounting Act of 29 September 1994 (Journal of Laws , as amended), hereinafter referred to as "the accounting act." Our task was to audit the attached financial statements and, based on the audit, express our opinion on whether they comply in all material aspects with the applicable accounting principles (policy) and whether they fairly and accurately present the Company's assets and financial position, as well as its financial result in all material aspects. 3. We have audited the attached financial statements pursuant to the provisions of: Chapter 7 of the accounting act; the National Standards on Auditing, issued by the Polish Council of Statutory Auditors; in such a way as to ensure, with reasonable certainty, that the audited statements do not contain material irregularities. In particular, the audit included verification performed largely at random - of the documents constituting the source of figures and information included in the financial statement. The audit further included an assessment of correctness of the accounting principles adopted by the Company s Management Board and of the estimates made by the Company's Management Board, as well as the general presentation of the attached financial statements. We believe that in the course of the audit we obtained sufficient information to express an opinion about the attached financial statements as a whole. 4. In our opinion, the attached financial statements in all material respects: give fair and reliable information material to the evaluation of the Company's financial result for the period from 1 January 2014 to 31 December 2014, as well as its assets and financial position as at 31 December 2014; were prepared in accordance with the International Financial Reporting Standards approved by the EU; and based on correctly kept accounting books; comply in form and content with the provisions of law regulating the preparation of financial statements and the provisions of the Articles of Association. 5/ 12

6 5. We have reviewed the Company's Management Board's Report on the Company's activities in the period from 1 January 2014 to 31 December 2014 and the principles of preparation of annual financial statements ("report on activities") and concluded that the information contained therein is true and fair. General information contained in the report on the Company's activities complies with the provisions of art. 49 of the accounting act and the Regulation of the Minister of Finance of 19 February 2009 on the current and periodic information to be submitted by issuers of securities and conditions for considering as equivalent information required under the law of a non-member state (Journal of Laws , as amended) - ("regulation on current and periodic information"). The audit of the Company s financial statement was carried out between the periods from 28 July 2014 to 20 April 2015, including the premises of the company from 28 July 2014 to 7 August 2014, from 24 November 2014 to 28 November 2014, from 16 March 2015 to 26 March Representations provided and data availability The Company's Management Board confirmed its responsibility for ensuring the reliability and accuracy of the financial statements, their compliance with the applicable accounting principles (policy), as well as stated that it provided us with all financial data, accounting documents and other required documents as well as all necessary explanations. We also obtained a written representation dated 20 April 2015, from the Management Board of the company confirming that: the information included in the book of accounts was complete; all contingent liabilities had been disclosed in the financial statements, and all material events from the balance sheet date to the date of the representation letter had been disclosed in the financial statements. And confirmed that the information provided to us was true and fair to the best of the parent company Management Board s knowledge and belief, and included all events that could have had an effect on the financial statements. At the same time we declare that during the audit of the financial statements, there were no limitations of scope. 6/ 12

7 2.3 Consolidated financial statements of the Company for prior financial year The financial statements of the Company for the year ended 31 December 2013 were audited by Leszek Lerch, a key certified auditor no. 9886, acting on behalf of Ernst & Young Audyt Polska spółka z ograniczoną odpowiedzialnością sp. k. with its seat in Warsaw. The key certified auditor issued an unqualified opinion with an emphasis of matter on the financial statements for the year ended 31 December The financial statement of the Company for the year ended as at 31 December 2013 was approved at the General Meeting of Shareholders which was held on 2 June 2014, where the shareholders adopted a resolution on net profit for 2013, i.e. PLN 21,426,000. The financial statement of the Company for the year ended as of 31 December 2013 along with the opinion of the key certified auditor, a copy of resolution approving the financial statement, resolution of profit distribution, and the report on the Company s activates, were filed with the National Court Register on 10 June The approved closing balance sheet as at 31 December 2013 was properly recorded in the books of accounts as the opening balance sheet as at 1 January / 12

8 3. Analytical Review 3.1 Basic data and financial ratios Presented below are selected financial ratios indicating the economic or financial performance of the Company for the years The ratios were calculated on the basis of financial information included in the financial statements for years ended 31 December 2013 and 31 December Balance sheet total 309, , ,888 equity 130, , ,281 net profit 24,639 21,864 21,928 Return on assets (%) 7,96% 7,01% 7,15% net profit x 100 total assets Return on equity (%) 17,81% 14,74% 12,71% net profit x 100 equity at the beginning of the period Net profit margin (%) 5,07% 4,67% 4,63% net profit x 100 revenues from sales of products, goods and materials liquidity I total current assets short-term liabilities liquidity III cash short-term liabilities Debtors days 48 days 41 days 39 days trade and other receivables x 365 days revenues from sales of products, goods and materials Creditors days 40 days 35 days 42 days trade and other liabilities x 365 days Cost of sales 8/ 12

9 Inventory days 67 days 75 days 68 days inventory x 365 days Cost of sales Stability of financing (%) 64,20% 62,08% 63,82% (Equity + long-term provisions and liabilities) x 100 Total liabilities Debt ratio (%) 57,75% 55,63% 51,68% (total assets - equity) x 100 total assets Rate of inflation: yearly average 0,00% 0,90% 3,70% December to December -1,00% 0,70% 2,40% 3.2 Comments Based on the analysis of the above data and financial ratios, the following trends may be observed: Return on assets ratio which amounted to 7,96% in 2014 and increased compared to 2013 by 0,95 pp and to 2012 which was 7,15%, Return on equity ratio increased which amounted to 17,81% in 2014 compared to 2013 by 3,07 pp and to 2012 which was 12,71%, Net profit margin which amounted to 5,07% in 2014 and increased compared to 2013 by 0,4 pp and to 2012 which was 4,63%, Liquidity I ratio which amounted to 1,28% as at 31 December 2014 and increased compared to 2013 by 0,06 pp and to 2012 which was 1,25%, Liquidity III ratio which amounted to 0,12% as at 31 December 2014 and decreased compared to 2013 by 0,05 pp and changed compared to 2012, Debtors days ratio which amounted to 48 days in 2014 increased compared to 2013 by 7 days and to 8 days in 2012 (39 days), Creditors days ratio which amounted to 40 days in 2014 increased compared to 2013 by 5 days and decreased by 2 days compared to 2012 (42 days), Inventory days ratio which amounted to 67 days in 2014 decreased compared to 2013 by 8 days and to 1 day in 2012 (68 days), Stability of financing ratio which amounted to 64,20% as at 31 December 2014 and increased compared to 2013 by 2,12 pp and to 2012 which was 63,82%, 9/ 12

10 Debt ratio which amounted to 57,75% as at 31 December 2014 and increased compared to 2013 by 2,12 pp and to 2012 which was 51,68%, 3.3 Going concern Nothing came to our attention during the audit that caused us to believe that the company is unable to continue as a going concern for at least twelve months subsequent to 31 December 2014 as a result of an intended or compulsory withdrawal from a substantial limitation in its current operations. The Management Board of thecompany has stated in note 7 of notes to the audited financial statement as at 31 December 2014 that the financial statement was prepared on the assumption that the Company will continue as a going concern for a period of at least twelve months subsequent to 31 December 2014 and that there are no circumstances that would indicate a threat to its continued activity. 10/ 12

11 II. DETAILED REPORT 1. Correctness of the accounting system Accounting of the Company is conducted by taking advantage of IAS computer system in the Company s headquarters. The Company holds an accurate documentation, as referred to in art. 10 of the Act as of 29 September 1994 on accounting (Journal of Laws as amended Accounting Act ), including Corporate Chart of Accounts approved by the Company s Management Board. During the audit we did not notice any inconsistencies in the accounting documentation, which might have influenced the audited financial statement, that wasn t corrected, including the following: legitimacy and continuity of applied accounting principles (policy), reliability of accounts, correctness of accounts as well as relations between book entries, recorded economic operations, correctness of opening accounts based on balances of the approved balance sheet, relations between book entries and accounting records and the financial statement, requirements which ought to be met in order to protect accounting documentation as well as storage of accounts and financial statements. 2. Assets, liabilities as well as share capitals and items affecting the bottom line of Company s operations. The structure of assets and liabilities of the Company, as well as share capitals and items affecting the bottom line of Company s operations, have been presented in the audited financial statement. Inventory of assets and liabilities has been conducted in accordance with the Accounting Act. Inventory differences were measured and recognized in books of accounts of Additional notes The additional notes for the year ended 31 December 2014 were prepared, in all material respects, in accordance with International Financial Reporting Standards as adopted by the EU. 11/ 12

12 4. The Management Board s Report We have reviewed the Company's Management Board's Report on the Company's activities in the period from 1 January 2014 to 31 December 2014 and the principles of preparation of annual financial statements ("report on activities") and concluded that the information contained therein is true and fair. General information contained in the report on the Company's activities complies with the provisions of art. 49 item 2 of the accounting act and the regulation of the Minister of Finance of 19 February 2009 on the current and periodic information to be submitted by issuers of securities and conditions for considering as equivalent information required under the law of a nonmember state (Journal of Laws , as amended) 5. Conformity with Law and Regulations We have obtained a letter of representations from the Management Board of the company confirming that no laws, regulations or provisions of the Company s Articles of Association were breached during the preparation of the financial statement. On behalf of: Ernst & Young Audyt Polska spółka z ograniczoną odpowiedzialnością sp. k Rondo ONZ Warszawa file ref. no. 130 Key Statutory Auditor Leszek Lerch Statutory Auditor's no Warsaw, 20 April / 12