Radpol S.A. Capital Group

Transcription

1 Radpol S.A. Capital Group REPORT ON THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENT AS OF

2 Table of contents Page 1. GENERAL PART 1.1 Capital Group's identification data The legal basis Information about the units forming the Capital Group Information about the consolidated financial statement for the previous year Data identifying the entity authorized to perform the audit of the consolidated financial statement Data availability and declarations of the Company FINANCIAL ANALYSIS 2.1 General analysis of the consolidated financial statement Selected financial ratios Interpretation of selected financial ratios DETAILED PART 3.1 Accounting policies The basis for preparation of the consolidated financial statement The methodology of consolidation The consolidation eliminations Consolidation of equity Other elements of the consolidated financial statement and report on the activities of the Group Events after the balance sheet date Conclusions from the carried out audit 24

3 GENERAL PART

4 1.1 Capital Group's identification data Capital Group's name Grupa Kapitałowa Radpol S.A. (Radpol S.A Capital Group) Registration of the parent company in the National Court Register The parent company is registered under the business name: Radpol S.A. (Polish joint-stock company) in the Register of Entrepreneurs of the National Court Register kept by the District Court for Gdańsk-Północ, 8 th 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 Seat of the parent company The Company is seated in Człuchów, , ul. Batorego Statistical registration number (REGON) of the parent company Statistical Office in Gdańsk, issued the following statistical registration number to the parent company:

5 1.1.5 Tax Identification Number (NIP) of the parent company Tax Office in Gdańsk, issued the following tax identification number to the parent company: Bodies of the parent company The Management Board in the reporting period was composed of: Mr. Andrzej Piotr Sielski President of the Board till Mr. Krzysztof Zbigniew Pióro President of the Board since Mr. Andrzej Piotr Sielski Vice-President of the Board since Mr. Adam Dombrowski Vice-President of the Board till Mr. Andrzej Pożarowszczyk Vice-President of the Board Mr. Marcin Maciej Rusiecki Vice-President of the Board Two Management Board members acting jointly or one Management Board member and a proxy acting jointly are authorized 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. During the reporting period the composition of the Supervisory Board was as follows:

6 Mr. Grzegorz Jan Bielowicki Chairman of the Supervisory Board Mr. Zbigniew Piotr Janas Vice-Chairman of the Supervisory Board till Mr. Tomasz Krzysztof Firczyk Member of the Supervisory Board Mr. Krzysztof Stanisław Kurowski Member of the Supervisory Board Mr. Leszek Grzegorz Iwaniec Member of the Supervisory Board Mr. Jacek Jakub Tomasik Member of the Supervisory Board Mr. Jerzy Paweł Markiewicz Member of the Supervisory Board After the balance sheet date until the date of the report, i.e a person appointed a member of the Supervisory Board was: Mr. Marcin Maciej Wysocki Member of the Supervisory Board Commercial power of attorney In the reporting period the commercial power of attorney was granted to: Ms. Dorota Anna Kania - joint commercial power of attorney

7 1.2 The legal basis The articles of association of the parent company The activity of the company is based on the articles of association of the Company of 4 September 2007, signed before a notary Anna Ewa Dańko-Roesler in a notary's office in Warsaw, ul. Ordynacka 9, reference number Repertory A 12800/2012, as amended Subject of activity of the parent company The main subject of the parent company's activity is: - manufacture of tubes, pipes, hollow profiles and fittings of steel - manufacture of insulated wires and cable and wiring devices - manufacture of plastics and other rubber products - manufacture of ceramic insulators and insulating fittings 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 owners of shares in the Company number shares Nominal value of shares % THC Fund Management Ltd (formerly GJB 3,061,390 91, Assets Management Ltd) Marcin Wysocki 3,031,572 90, Aviva Otwarty Fundusz Emerytalny Aviva 2,432,763 72, BZ WBK Aviva lnvestors Poland S.A. 2,132,668 63, BZ WBK Asset Management S.A. 2,226,215 66,

8 PKO Towarzystwo Funduszy Inwestycyjnych 2,017,873 60, S.A. ING OFE 1,788,013 53, Allianz Polska Otwarty Fundusz Emerytalny 1,682,665 50, Andrzej Pożarowszczyk 869,739 26, Andrzej Sielski 446,977 13, Tomasz Firczyk RADPOL S.A. (the buy-back pursuant to the 284,610 8, resolution No. 4 of Extraordinary Meeting of Shareholders dated ) TRIGON Dom Maklerski S.A. (the buy-back of own shares pursuant to the resolution No. 4 of Extraordinary Meeting of Shareholders dated ) Other shareholders 5,743, , ,719, , % After the balance sheet date until the date of the report there were no changes in the shareholding structure of the Company. 1.3 Information about the units forming the Capital Group The units included in the consolidated financial statement: a) the parent company: Radpol S.A. b) the units included in the capital group - Wirbet S.A., - Finpol Rohr Sp. z o.o.

9 On 27 June 2013 RADPOL S.A. acquired 4,571 shares of FINPOL ROHR Sp. z o.o., which is 100% of share capital of FINPOL ROHR Sp. z o.o. RADPOL S.A. purchased the aforementioned 100% of shares for the total price of PLN 10,000,000.00, i.e. for PLN 2, per each share (and PLN 100, pcc). 1.4 Information about the consolidated financial statement for the previous year. The consolidated financial statement for 2012 was audited by ECA Seredyński i Partnerzy Sp. z o.o. The issued opinion included no reservations. The consolidated financial statement was approved by a resolution of the General Meeting of Shareholders of Verified consolidated financial statement was filed in the District Court on Data identifying the entity authorized to perform the audit of the consolidated financial statement The audit was performed by ECA Seredyński i Wspólnicy Sp.k. seated in Cracow, ul. Moniuszki 50, entered into the list of entities authorized to audit financial statements under the number The basis of the review is the agreement signed on with the Management Board of Radpol S.A. The certified auditor was elected as the auditor of Radpol S.A. 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 Wspólnicy Sp.k. and the certified auditor comply with the conditions required for issuing an unbiased and independent opinion on that statement. The fact of impartiality was confirmed in writing. The audit was performed in November 2013, and February and March 2014 and was completed on

10 1.6 Data availability and declarations of the Company There were no restrictions as to the scope of the audit. The auditors received all the required information and explanations. On the Board of the parent company confirmed the completeness of the prepared financial statement in writing and listing of all the contingent liabilities and informed about important events that occurred after till the date of the declaration.

11 FINANCIAL ANALYSIS

12 2. FINANCIAL ANALYSIS 2.1 General analysis of the consolidated financial statement Consolidated statement on the financial standing % % % PLN PLN PLN ASSETS THOUSAND THOUSAND THOUSAND Fixed assets Tangible fixed assets 117, , , Intangible assets 1, , , Company goodwill 12, , Shares and stock Long-term receivables Deferred income income tax assets 1, Other non-current assets Fixed assets 132, , , Inventories 29, , , Trade and service receivables 39, , , Current income tax receivables Other receivables 1, , , Other financial assets , Cash and cash equivalents 21, , , Prepayments and accruals Current assets 93, , , Fixed assets classified as held for sale 1, Assets 227, , ,

13 LIABILITIES % % % PLN PLN PLN THOUSAND THOUSAND THOUSAND Share capital Treasury shares -2, , Supplementary capital from share issue 52, , , Retained earnings 29, , , Other capitals 17, , , Other comprehensive income 3, , , Non-controlling interest Equity 99, , , Deferred income tax reserve 7, , , Provisions for pensions and similar 1, , including: non-current Other reserves Interest-bearing loans and borrowings 54, , , Other financial liabilities Liabilities and provisions for liabilities 63, , , Loans and borrowings 19, , , Other financial liabilities Trade and service liabilities 30, , , Current income tax liabilities Other liabilities 5, , , Deferred income 8, , , Current liabilities 63, , , Liabilities 227, , ,

14 Consolidated statement of results of the activity Percentage changes in the statement of comprehensive income in current prices 2013 PLN thousand 2012/20 13 % 2012 PLN thousand 2012/2011 % 2011 PLN thousand Revenues from sales 178, , ,370 Prime costs of sales 165, , ,587 Gross result on sales 43, , ,783 Costs of sales 10, , ,591 Overhead costs 15, , ,515 Costs of acquisition Result on sales 17, , ,677 Other operating revenue 6, , ,657 Other operating expenses 2, , ,603 Result on operating activity 20, , ,731 Financial revenues , Financial expenses 2, , ,137 Gross result 18, ,143 Income tax , ,909 Net profit 15, , ,234 Profit to shareholders of the parent company 15, , ,234 Other comprehensive income Comprehensive income in total 15, , ,234 including for the non-controlling interest including for the shareholders of the parent company , , ,234

15 2.2 Selected financial ratios Balance sheet total Net financial result PLN thousand PLN thousand 227, , ,958 15,310 12,494 14,234 PROFITABILITY RATIOS ROA Net financial result Sum of assets (average) % Net sales profitability Net financial result Sales revenues % ROE Net financial result Equity (average) % LIQUIDITY RATIOS 1 st grade liquidity Current assets Current liabilities nd grade liquidity Current assets - inventories Current liabilities

16 3 rd grade liquidity Cash and cash equivalents Current liabilities ACTIVITY RATIOS Receivables turnover (ratio) Trade and other receivables (average) Sales revenues days Liabilities turnover (ratio) Trade and other liabilities (average) Prime costs of sales days Inventories turnover (ratio) Inventories (average) Prime costs of sales days DEBT RATIOS Total debts Liabilities and provisions for liabilities Total assets % Sustainability of financing (ratio) Equity + Non-current liabilities and provisions Total assets %

17 OTHER RATIOS EPS (profit per share) Profit/loss in the period Weighted average number of ordinary shares within the period PLN

18 2.3 Interpretation of selected financial ratios Financial data characterizing the Group for the three previous financial years was analyzed. Comparability of data for the analyzed periods has not been maintained due to changes in the structure of the Capital Group. The share of fixed assets in the sum of Group s assets in total amounts to 58.2 % in comparison to 61.5% in the previous year. The major part of the total assets of the Group are tangible fixed assets, the balance sheet sum of which was 51.6% in comparison to 53.7% last year. The second place in the structure of total assets are trade receivables the balance sheet sum of which in 2013 was 17.3% in comparison to 20.0% in the previous year. The share of inventories in the structure of total assets dropped slightly from 13.3% in 2012 to 13.2% in the audited period. At the same time, there was a significant increase in the share of cash and cash equivalents in the structure of total assets from 3.8% in 2012 to 9.6% in the audited period. The increase is a result of activating subsequent tranches of the loans contracted by the Cap[ital Group. The share of equity in the structure of liabilities decreased from 48.8 in the last year to 43.9% in the audited financial year. The drop in the share of equity in comparison to 2012 is a result of increase of external financing (loans). The share of long-term loans and credits in the sum of liabilities in total increased by 0.6% in comparison to the previous year, i.e. by PLN 11,232 thousand and the share of short-term loans and credits in the sum of Group s liabilities in total amounted to 8.5% in comparison to 4.9% in the last year (increase by PLN 10,287 thousand). Moreover, the share of trade receivables in the structure of liabilities of the Group increased by 1.6% (increase from 11.8% in 2012 to 13.4% in the audited period, i.e. by PLN 8,498 thousand). There was a year to year increase in the sales revenues by 14.7%, while the prime costs of sales increased by 17.6 in comparison to Therefore, the gross result on sales in 2013 amounted to PLN 43,246 thousand and increased by 6.5% year to year. The increase of costs of sales by 21.1%, (i.e. by PLN 1,901 thousand) and overhead costs by 18.6% (i.e. by PLN 2,390 thousand) with a slight drop of cost of acquisition had an impact on result on sales of the Group by 8.0% in comparison to The increase in other operating revenue by 367.8% and increase of other operating expenses by 16.5% had an impact on the increase in the result on operating activity by 19.7% year to year. The decrease of financial revenues by 77.7% and financial expenses by 9.9% had an impact on the increase in the gross result by 16.3% in comparison to the previous year the increase in the Group s net result by 22.5% year to year. The achieved results on particular areas of activities demonstrated in the profit and loss account for the reviewed period: PLN thousand result on operating activity result on the other operating activity result on financial activity income tax impacted the net financial result in the amount of 17,054 3,932-2,539-3,137 15,310

19 The profitability ratios in the audited period were positive and all of them increased in comparison to the previous year. The main factor resulting in the increase of the profitability ratios was higher net profit than in the previous year, which is a consequence of, among others, taking over the subsidiary Finpol Rohr Sp. z o.o as of by the parent company. The increase in current liabilities of the Group in the audited period had a slight impact on decrease of the 1 st and 2 nd grade financial liquidity ratios: 1 st grade ratio by 0.16% and the 2 nd grade ratio by 0.07%. At the same time, the significant increase in cash and cash equivalents resulted in the improvement of the 3 rd grade liquidity ration that amounted to 0.34% in comparison to 0.16% in the previous year. The receivables turnover ratio of the Group was shortened by 1 day, and in the audited period amounted to 78 days. The inventory rotation period was shortened by 3 days in comparison to the previous year and amounted to 74 days in the audited period. The cycle of settling liabilities of the Group was extended from 66 to 71 days in The total level of debts increased amounted to 56.06% in the audited in comparison to 51.30% in the previous year as a result of the increase of loans and credits as well as trade and other liabilities. The sustainability of financing ratio in the audited period amounted to 71.64% in comparison to 75.81% in Earnings per share achieved by the Group in 2013 was higher by PLN 0.11 than in the previous year, and amounted to PLN What had a significant impact on the value of the ratio was taking control over the subsidiary Finpol Rohr Sp. z o.o described above.

20 DETAILED PART OF THE REPORT

21 3. DETAILED PART OF THE REPORT 3.1. Accounting policies A parent company has the current documentation describing the use of the Capital Group's accounting policies adopted by the Board of the parent company. Subsidiaries forming part of the Capital Group comply with the accounting principles used by the parent company. The financial statements of the subsidiaries covered by the consolidated financial statement have been prepared on the same reporting date as the financial statement of the parent company The basis for preparation of the consolidated financial statement The consolidated financial statement of the Capital Group was prepared in accordance with the International Financial Reporting Standards, and in matters not covered by these standards, as required by the Act of 29 September 1994 on accounting as amended and issued on the basis of implementing provisions, as well as requirements applicable to issuers of securities admitted or sought to be admitted to trading on an official stock exchange listing. The basis of preparation of the consolidated financial statement was the consolidation documentation including, in particular: - financial statements of related entities, - adjustments and exclusions made during consolidation, necessary to prepare the consolidated financial statement, - calculating the fair value of net assets of the subsidiary, - calculating the company value and the excess of share of the overtaking unit in the net fair value of the assets that can be identified, liabilities and contingent liabilities of the taken over unit over the purchase price. Consolidation documentation is complete and meets the requirements of the Regulation of the Minister of Finance of 25 September 2009 on detailed rules of preparation of financial statements of related entities by entities other than banks and insurance agencies.

22 3.3. The methodology of consolidation The parent company prepared the consolidated financial statement using the full consolidation method covering the financial statements of the following units: a) the parent company: Radpol S.A. b) subsidiaries: - Wirbet S.A., - Finpol Rohr Sp. z o.o The consolidation eliminations During the consolidation of intercompany settlements there were exemptions for sales between capital group entities, other intercompany operational revenues and expenses and the financial expenses and revenues. Exemptions results have also been implemented by the entities subject to consolidation, contained in the value of assets. The data, which provided the basis for the exemption was obtained from the books of Radpol S.A. and agreed with the information received from the subsidiaries Consolidation of equity Capital Group's share capital is the capital of the parent company. The calculation of the other components of equity of the capital group was made by adding to particular components of equity of the parent company appropriate components of equity of the subsidiary included in the consolidated financial statement in proportion to the share of the parent company in the equity of the subsidiary as of the balance sheet date. Only those parts of the respective components of equity of a subsidiary that were created since the date of taking the control over the subsidiary by the parent company were included in the equity of the Capital Group.

23 3.6. Other elements of the consolidated financial statement and report on the activities of the Group Consolidated statement of changes in equity Consolidated statement of changes in equity has been prepared properly in accordance with the International Financial Reporting Standards as adopted by the European Union. Consolidated statement of cash flows Consolidated cash flow statement has been prepared properly in accordance with the International Financial Reporting Standards. Its relationship with other elements of the financial statement and the books was confirmed. Explanatory notes to the consolidated financial statement Explanatory notes to the consolidated financial statement forming an integral part of the consolidated financial statement have been prepared in accordance with the International Financial Reporting Standards as adopted by the European Union. Report of the Management Board on the activity of the Capital Group The report on the activity of the Capital Group is complete within the meaning of the Article 49 par. 2 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 (Polish Journal of Laws Dz. U. of , item 133), and the information contained therein coming from the audited financial statement is in line with it Events after the balance sheet date There were no events after the balance sheet date which had a considerable impact on the balance sheet sum or the level of financial result for the audited year.

24 3.8. Conclusions from the carried out audit Based on the carried out audit of the consolidated financial statement of Radpol S.A. Capital Group, the parent company of which is Radpol S.A. seated in Człuchów, it is stated that: 1. the consolidated financial statement for the year 2013 has been prepared correctly, and the data contained in the financial statement is in line with the relevant balance sheets and the turnover in the accounts, 2. the balance sheet consistency was maintained, 3. the consolidated financial statement was signed by the authorized persons, 4. there were no events indicating any breach of the binding law. The result of the audit of the consolidated financial statement of Radpol S.A. Capital Group for the financial year 2013 was presented by the certified auditor in his opinion. The opinion was issued without reservations. The report contains of 21 pages signed by the certified auditor. ECA Seredyński i Wspólnicy Sp.k. [Illegible signature] Piotr Woźniak Key statutory auditor License No auditing on behalf of ECA Seredyński i Wspólnicy Sp.k. No Poznań, [On the right there is an oval stamp reading: Subject authorized to audit financial statements, Number 3115, ECA, ul. Moniuszki 50, Kraków.]

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