CONSOLIDATED QUARTERLY STATEMENT FOR 3 RD QUARTER 2011

Transcription

1 CONSOLIDATED QUARTERLY STATEMENT FOR 3 RD QUARTER NOVEMBER 2011

2 Contents I.... Statement of Management Board on integrity of preparation of abbreviated consolidated quarterly statement... 3 II. Abbreviated consolidated interim financial statement drawn up in line with International Financial Reporting Standards for from 1 January 2011 to 30 September Consolidated total income statement... 5 Consolidated financial standing report... 7 Summary of changes in consolidated equity... 8 Consolidated cash flow statement... 9 Explanatory notes on the abbreviated consolidated interim financial statement Overview Principles applied while preparing this statement Important estimates and judgments Operating segments Revenue and costs Corporate income tax Write-offs and provisions Loans and credits and other liabilities Hedge accounting Contingent assets and liabilities Events after the balance date III. Other quarterly financial information IV. Statement of the Management Board on integrity of preparation of this abbreviated interim statement V. Abbreviated consolidated interim financial statement of ACTION S.A. for from 1 January 2011 to 30 September Total income statement Report on financial standing Changes in Equity Cash flow statement Additional information Page 2

3 I. Statement of Management Board on integrity of preparation of abbreviated consolidated quarterly statement This abbreviated consolidated interim statement with comparative data has been drawn up to present the financial standing, business results and cash flows as required by the International Financial Reporting Standards ( IFRS ) approved by EU published and in force as of the balance date, and with respect to matters not regulated by the IFRS, in compliance with the Polish Accounting Act of 29 September This abbreviated consolidated interim financial statement of the ACTION S.A. Group for the ended on the 30 September 2011 includes: a consolidated total income statement, consolidated report on the financial standing, summary of changes in consolidated equity, consolidated cash flow statement and additional information, such as a description of the key accounting principles applied and selected explanations. As required by the Ordinance of the Ministry of Finance of 19 February 2009 on current and ic information published by issuers of securities and on terms of recognition of equivalence of information required by the legislation of a country which is not a Member State, the Management Board of ACTION S.A. hereby announces that: - to their best knowledge, this abbreviated consolidated interim financial statement and the comparative data used have been drawn up in compliance with the applicable accounting principles and provide a true, honest and transparent picture of the condition of the Group s assets, its financial standing and its financial result. In the accounting covered in this statement, the companies of the Group, excluding ACTION S.A., ran their books in compliance with the accounting principles (accounting policy) laid down by the Accounting Act of 29 September 1994 and the regulations issued thereunder. The Consolidated Financial Statement comprises adjustments not posted into the books of the members of the Group entered in order to bring the financial statements of such members in line with IFRS. Since 1 January 2010, ACTION S.A. has been running its books in line with the requirements of the International Financial Reporting Standards ("IFRS") approved by the EU, published and in force as of the balance date, and with respect to matters not regulated by the IFRS, in compliance with the Polish Accounting Act of 29 September Piotr Bieliński President Sławomir Harazin Vice President Edward Wojtysiak Vice President Warsaw, 7 November 2011 Page 3

4 II. Abbreviated consolidated interim financial statement drawn up in line with International Financial Reporting Standards for from 1 January 2011 to 30 September 2011 Selected consolidated financial information in PLN M in EUR M SELECTED CONSOLIDATED FINANCIAL INFORMATION Q3 accrued from 1/1/2011 to 9/30/2011 Q3 accrued from 1/1/2010 to 9/30/2010 Q3 accrued from 1/1/2011 to 9/30/2011 Q3 accrued from 1/1/2010 to 9/30/2010 I. Net sales revenue (on sales of finished goods, goods and materials) 1,781,464 1,471, , ,599 II. Gross sales profit 130, ,295 32,298 28,306 III. Operating profit 36,417 19,767 9,011 4,939 IV. Net profit due to company Shareholders 27,411 15,344 6,783 3,834 V. Net cash flows from operating activities -4,547-29,645-1,125-7,407 VI. Net cash flows from investing activities -3,786-3, VII. Net cash flows from financial activities 9,853 32,988 2,438 8,242 VIII. Net increase (decrease) of cash 1, IX. Earnings per share of common stock *(in PLN/EUR) As of 9/30/2011 As of 12/31/2010 As of 9/30/2011 As of 12/31/2010 X. Assets, total 710, , , ,723 XI. Liabilities 505, , , ,081 XII. Long-term liabilities 18,088 21,688 4,100 5,476 XIII. Short-term liabilities 487, , ,497 94,604 XIV. Equity due to shareholders of the Company 205, ,772 46,495 47,666 XV. Share capital 1,641 1, XVI. Number of shares ** ) 16,410,000 16,410,000 16,410,000 16,410,000 XVII. Book value of one share ***) (in PLN/EUR) PLN/EUR exchange rates Period Average exchange rate in Minimum exchange rate in Maximum exchange rate in Exchange rate on the last day of 01/01/ /30/ /01/ /31/ /01/ /30/ *) Profit per ordinary share is the quotient of net profit and the number of shares. **) The number of shares allows for the change in nominal value of series A shares from 1 PLN to 0.10 PLN occasioned by the division of each 1 PLN share into 10 shares of a nominal value of 0.10 PLN each. The change was made on the 04/11/2006 by resolution of the Extraordinary General Meeting of Shareholders. ***) Book value per share is the quotient of the equity due to Company s shareholders to the Number of shares. The selected financial data presented in the consolidated financial statements has been converted into EUR as follows: - positions of the total income statement and the cash flow statement were calculated using the exchange rate obtained as the arithmetic mean of the average exchange rates announced by the National Bank of Poland (NBP) as of the last day of each month. For three quarters of 2011, that exchange rate was equal to EUR 1.00 = PLN , and for 3 quarters of 2010 EUR 1.00 = PLN ; - positions of the consolidated financial statement were calculated according to the average exchange rate announced by the National Bank Poland for the balance day; the rate was PLN per EUR as of 30 September 2011, PLN per EUR as of 31 December 2010 and PLN per EUR as of 30 September Page 4

5 Consolidated total income statement All revenue and costs stated apply to the continued activities. Note Quarter 3 accrued from 1/1/2011 to 9/30/2011 Quarter 3 from 7/1/2011 to 9/30/2011 Quarter 3 accrued from 1/1/2010 to 9/30/2010 Quarter 3 from 7/1/2010 to 9/30/2010 Sales revenue (5.2) 1,781, ,308 1,471, ,645 Cost of sales of products, goods and materials (5.3) -1,650, ,097-1,358, ,717 Gross profit on sales 130,526 53, ,295 31,928 Cost of sales and marketing (5.3, 5.4) -78,830-26,357-74,224-23,822 General administrative costs (5.3, 5.4) -15,887-5,572-16,481-5,722 Other revenue and operating profits (5.5) 7, ,314 6,671 Other costs and losses (5.6) -7,161-8,336-6,137-1,093 Operating profit 36,417 13,740 19,767 7,962 Financial costs (5.7) -3,843-1,361-3,025-1,103 Profit before tax 32,574 12,379 16,742 6,859 Corporate income tax (6) -5,293-2,236-1, Share in associate's net result Net profit for trading 27,411 10,126 14,934 7,114 Other total income components Net change on cash flow hedging (9) -4,970-4, Corporate income tax (6) Other components Other total net income components -4,026-4, Total income for 23,385 6,100 14, Net profit/loss due to: Company shareholders 27,411 10,126 15,344 7,267 non-controlling interest Total income due to: Company shareholders 23,385 6,100 15,332 7,261 non-controlling interest Profit/loss due to Company shareholders per ordinary share (in PLN per one share) basic diluted Number of shares 16,410,000 16,410,000 16,410,000 16,410,000 Diluted number of shares 17,230,500 17,230,500 17,230,500 17,230,500 Page 5

6 The basic number of shares includes 11,910,000 series A shares and 4,500,000 of series B shares. The diluted number of shares includes an additional planned issue of 820,500 series C shares. The basic profit per share is calculated by dividing the profit due to shareholders of the Company by the weighted average number of ordinary shares throughout the. The diluted profit per share is calculated by dividing the profit due to shareholders of the Company and the weighed average number of ordinary shares, including the planned issue of 820,500 shares of series C as part of a conditional increase in share capital pursuant to a resolution passed by the Extraordinary General Meeting of Shareholders of the Company of 15 November 2006 and a resolution passed by the Extraordinary General Meeting of Shareholders of 5 December The weighted average number of ordinary shares includes the changed nominal value of series A shares, which was reduced from 1 PLN to 0.10 PLN. The change of the nominal value of shares of series A was made by resolution of the Extraordinary General Meeting of Shareholders of 04/11/2006. In addition, the weighed average number of ordinary shares was increased by the planned issue of 820,500 series C shares. Page 6

7 Consolidated financial standing report Note 09/30/ /30/ /31/ /30/2010 ASSETS Non-current assets Tangible fixed assets 120, , , ,487 Goodwill 13,994 13,994 13,994 14,283 Other non-tangible values 3,526 4,094 5,366 5,677 Investment real estate 3,536 3,536 3,526 2,821 Financial assets 3,285 3, Deferred tax assets (6) 1,120 1,140 1, Trade receivables and other receivables , , , ,910 Current assets Inventory 276, , , ,572 Trade receivables and other receivables 278, , , ,912 Current income tax receivables ,842 Derivative financial instruments Other financial assets Cash and cash equivalents 9,692 11,347 7,774 7, , , , ,780 Total assets 710, , , ,690 EQUITY Equity due to shareholders of the Company Share capital 1,641 1,641 1,641 1,641 Surplus from the sale of shares above nominal value 55,744 55,744 55,744 55,744 Other reserve capital 30, Retained profit 121, , , ,466 Other equity components -4, , , , ,851 Non-controlling interest Total equity 205, , , ,851 LIABILITIES Long-term liabilities Loans and credits and other liabilities (8) 13,102 13,424 16,476 18,174 Trade liabilities and other Provisions for deferred income tax (6) 4,986 5,127 5,212 3,956 18,088 18,551 21,688 22,130 Short-term liabilities Trade liabilities and other 387, , , ,306 Loans and credits and other liabilities (8) 95, ,810 64,680 84,210 Current income tax liabilities Employee benefit liabilities ,297 Derivative financial instruments Reserves for other liabilities and other charges (7.2) 3,647 4,117 5,125 4, , , , ,709 Total liabilities 505, , , ,839 Total liabilities and equity 710, , , ,690 Page 7

8 Summary of changes in consolidated equity Due to shareholders of the Company Due to noncontrolling interest Total equity Share capital Surplus from the sale of shares above nominal value Retained profit Other reserve capital Cash flow hedge valuation capital As of 1 January ,641 55, , ,678 Net profit/loss in financial year 27,411 27,411 Dividends paid -7,057-7,057 Other total income 0-4,026-4,026 Other -30,000 30, As of 30 September ,641 55, ,741 30,000-4, ,100 As of 1 January ,641 55, , ,993 Net profit/loss in financial year 26, ,783 Dividends paid -13,948-13,948 Result on sale of own shares 0 Other, ,-150 As of 31 December ,641 55, , ,678 As of 1 January ,641 55, , ,993 Net profit/loss in financial year 15, ,934 Dividends paid -13,948-13,948 Result on sale of own shares 0 Other ,-128 As of 30 September ,641 55, , ,,,,0 177,851 Page 8

9 Consolidated cash flow statement Q3 accrued from 1/1/2011 to 9/30/2011 Q3 accrued from 1/1/2010 to 9/30/2010 Cash flow from operating activity Net Profit/Loss 27,411 15,344 Adjustments: -31,958-44,989 Corporate income tax 5,293 2,087 Income taxes paid -4,364-2,169 Depreciation of fixed assets and amortisation of intangibles 8,517 8,751 Profit/loss on investment activities -1, Revenue on interest 0-4 Costs on interest 3,847 3,001 Share in associate's net result Other -1,356-1,469 Changes in trading capital position: Inventory -85,577-53,838 Trade receivables and other receivables -41,013-23,512 Trade liabilities and other 84,709 21,861 Net cash flow from operating activity -4,547-29,645 Cash flow from investment activity Acquisition of tangible and intangible assets -2,181-3,092 Inflows on sale of tangible fixed assets and intangible assets 2, Other inflows/expenses -4, Net cash flows from investing activities -3,786-3,140 Cash flow from financial activity Inflows from share issue 0 0 Share buy-back 0 0 Loans and borrowed money received 22,777 52,422 Payment of loans and borrowed money 0 0 Dividends paid -7,057-13,948 Interest paid -3,847-3,001 Repayment of finance lease liabilities -2,020-2,485 Other inflows/financial expenses 0 0 Net cash flows from financial activities 9,853 32,988 Net increase (decrease) of cash 1, Cash balance at the beginning of the 7,774 6,907 Profit/loss on cash valuation due to foreign currency exchange rates Financial position at the end of the 9,692 7,452 Piotr Bieliński President Sławomir Harazin Vice President Edward Wojtysiak Vice President Warsaw, 7 November 2011 Page 9

10 Explanatory notes on the abbreviated consolidated interim financial statement 1.Overview Entity name: ACTION Spółka Akcyjna Legal form: Stock company Incorporated in: Poland Registered head office: Warsaw Address: ul. Jana Kazimierza 46/54, Warsaw National Court Register: KRS Telephone: (+48 22) Fax: (+48 22) Website: REGON: NIP (VAT ID): Scope of business ACTION S.A. (Issuer/Company) and its subsidiaries sell computer equipment, consumer electronics and home appliances through wholesalers, its own retail outlets and third party shops. The Group conducts its sales operations principally in Poland. Primary field of business: wholesale trade in computer accessories (PKD Z). The dominant entity is ACTION S.A. with registered office in Warsaw at ul. Jana Kazimierza 46/54. ACTION Spółka Akcyjna was registered on 2 August 2004 in the Commercial Register of the National Court Register with the number KRS The company was registered pursuant to a decision of the District Court of the Capital City of Warsaw, 19th Commercial Division of the National Court Register. The legal predecessor of ACTION had previously been registered with the Commercial Register as a limited liability company (full name: ACTION spółka z ograniczoną odpowiedzialnością ) under number KRS The company was incorporated pursuant to a decision of the District Court of the Capital City of Warsaw, Commercial Division of the National Court Register 28 November Capital Group members Structure of ACTION S.A. Capital Group 1 2 GRAM.PL Sp. z o.o. 100% ACTION S.A. ACTION ENERGY Sp. z o.o. 24% ACTINA Sp. z o.o. 100% SFERIS Sp. z o.o % SELECTRO Sp. z o.o % SFK Sp. z o.o. 100% Page 10

11 As of 30 September 2011 the Capital Group included the following companies: - dominant entity: ACTION S.A. - subsidiaries: SFK Sp. z o.o. with registered office in Krakow subsidiary (100%) ACTINA Sp. z o.o. with registered office in Warsaw subsidiary (100%) SFERIS Sp. z o.o. (former name: PTR Sp. z o.o.) with registered office in Warsaw indirect subsidiary (99.89%) 1) GRAM.PL Sp. z o.o. with registered office in Warsaw subsidiary (100%) 2) ACTION ENERGY Sp. z o.o. with registered office in Krakow associate (24 %) 3) A.PL Sp. z o.o. with registered office in Warsaw subsidiary (100%) 4) ACTION IT Service GmbH with registered office in Berlin subsidiary (78%) 5) SELECTRO Sp. z o.o. with registered office in Warsaw indirect subsidiary (99.89%) 7) The following companies were also consolidated in the compared: PROLOGIC Sp. z o.o. under liquidation 6) Third party shares in subsidiaries: SFERIS Sp. z o.o %, including: Piotr Bieliński %, Anna Bielińska % 1) SFERIS Sp. z o.o. with registered office in Warsaw was included in the consolidation process on 5 January ) GRAM.PL Sp. z o.o., whose registered office is in Warsaw, was included in the consolidation process on 28 May 2009 and the share was increased to 80% on 18 December On 24 May 2010 the share was increased further to 100 % by means of a share purchase contract. 3) ACTION ENERGY Sp. z o.o., whose registered office is in Krakow, was incorporated on 3 September New shares were issued (the increased share capital was registered on 4 April 2011) and were subsequently acquired by a third party, as a result of which ACTION S.A.'s share in this company decreased to 24 %.ACTION S.A. ceased controlling it at the end of Since 1 January 2011 ACTION S.A. has remained a company with significant impact on that entity. Considering the above, ACTION ENERGY Sp. z o.o. has been valued based on the equity method since 1 January ) A.PL Sp. z o.o. with registered office in Warsaw was established on 12 October The company was deleted from the National Court Registry as a result of a merger, which was registered on 27 May The merger had no effect on the consolidated financial statement 5) ACTION IT Service GmbH was not included in the consolidation process due to the bankruptcy proceeding in progress. 6) PROLOGIC Sp. z o.o. was put under liquidation on 1 October 2009and was effectively liquidated on 5 November ) SELECTRO Sp. z o.o. was incorporated on 8 September ACTINA Sp. z o.o. is a computer products wholesaler. The primary field of business of ACTION ENERGY Sp. z o.o. is renewable energy market. The company's objective is to create a technological sales centre for installers of equipment used with renewable energy sources. The primary field of business of SFERIS Sp. z o.o. is retail trade in computer products. GRAM.PL Sp. z o.o. focuses on retail trade in computer games and operates through its own ecommerce websites and mail order outlets. SFK Sp. z o.o. is an advertising company. The core field of operations of SELECTRO Sp. z o.o. is retail trade in computer hardware through its own ecommerce websites and mail order outlets. Page 11

12 Consolidated entities as of 09/30/2011 entity (company) name and an indication of its legal form registered office subject of operations nature of relationship (subsidiary, joint venture, associate, incl. a list of direct and direct relationships) court or other relevant registrar applied consolidation method / equity-based valuation, or an indication that the entity is not subject to one date of gaining control / shared control / substantial influence percentage of equity capital owned share in the total number of votes at the general meeting SFK Sp. z o. o. Krakow advertising subsidiary ACTINA Sp. z o. o. SFERIS Sp. z o.o. Warsaw Warsaw wholesale trade in computer hardware retail trade in computer hardware subsidiary indirect subsidiary SELECTRO Sp. z o.o. Warsaw retail indirect subsidiary GRAM.PL Sp. z o.o. Warsaw retail subsidiary ACTION ENERGY Sp. z o. o. *) Krakow wholesale trade in metal products associated Regional Court for Krakow-Środmieście, 11th KRS Economic Division full 05/09/ % 100% Regional Court for Capital City of Warsaw,12th KRS Economic Division full 6/3/ % 100% Regional Court for Capital City of Warsaw,13th KRS Economic Division full 9/5/ ,89% 99,89% Regional Court for Capital City of Warsaw,14th Economic Division of National Court Registry (KRS) full 9/8/ ,89% 99,89% Regional Court for Capital City of Warsaw,13th KRS Economic Division full 5/28/ % 100% Regional Court for Krakow-Środmieście, 11th KRS Economic Division equity-based valuation 9/3/ % 24 % *) ACTION S.A. ceased controlling the company at the end of Since 1 January 2011 ACTION S.A. has remained a company with significant impact on that entity. Consequently, on 1 January 2011 ACTION ENERGY Sp. z o.o. changed its method of consolidation method from full to the equity-based one. Page 12

13 2.Principles applied while preparing this statement This abbreviated consolidated interim financial statement of the ACTION S.A. Capital Group for three quarters of 2011 was drawn up in line with IAS 34 Interim Financial Reporting. This abbreviated consolidated interim financial statement covers the from 1 January 2011 to 30 September 2011 and includes reference financial information for from 1 January 2010 to 30 September The key accounting principles used to prepare this abbreviated consolidated interim financial statement have been presented below. The principles were applied continuously over all the s presented, unless stated otherwise. 2.1.General principles of preparation This consolidated financial statement was based on the historical cost principle, except for marketable financial assets (derivative instruments), which were valued by their fair value. This abbreviated consolidated interim financial statement was drawn up with the application of going concern principle to the foreseeable future of the Group. As of the date of approving this abbreviated consolidated interim financial statement no circumstances representing a threat to the continuation of Group's business activities were detected. This abbreviated consolidated interim financial statement does not include some information and disclosures that are normally required in the annual consolidated financial statement and should therefore be read together with the IFRSbased consolidated financial statement of the Group for the financial year ended on 31 December 2010, which was published on 21 March Compliance statement This abbreviated consolidated interim financial statement for the from 1 January 2011 to 30 September 2011 was drawn up in line with the International Financial Reporting Standards (IFRS) approved by the European Union, and particularly in line with the International Accounting Standard 34 Interim Financial Reporting, which is specifically applicable to interim reporting. As of the date of approval of this statement for publishing, no difference exists between the binding IFRS applied by the Group in its accounting and the standards and interpretations approved by the European Union. IFRS comprise standards and interpretations published by the International Accounting Standards Board ( IASB ) and the Interpretations Committee of the International Financial Reporting Standards. 2.3.Significant principles of accounting The accounting policy used to draw up this abbreviated consolidated financial statement for the third quarter of 2011 are consistent with the ones applied to issue the consolidated financial statement for the financial year 2010, with the exception of the changes specified below. A detailed description of the principles of accounting adopted by ACTION S.A. Capital Group has been included in the consolidated annual statement for FY 2010, which was published on 21 March On 1 September the Group implemented accounting procedures for the cash flow hedge accounting model. For the basic parameters of foreign cash positions used as hedging instruments, their fair value and recognition of the change of fair value of the hedging instruments in the Company's capital please refer to Note 9. This financial statement does not include the Company's decision to apply the standards published or their interpretation prior to their effective date. The following standards and interpretations have already been published by the International Accounting Standards Board (IASB) and the Financial Reporting Interpretations Committee (IFRIC) but has not become effective by the balance date: Page 13

14 IFRS 9 Financial Instruments This new standard was published on 12 November 2009 and is IASB's first step towards replacing IAS 39 Financial Instruments: Recognition and Measurement. The new standard shall become effective on 1 January The Group shall be applying it since 1 January As of the date of issue of this financial statement it is not possible to assess the impact of that new standard in a reliable way. Amendments to IFRS 7 Disclosures Transfers of Financial Assets The amendments to IFRS 7 were published on 7 October 2010 and are applicable to annual s that start on or after 1 July The changes in that standard are supposed to allow the users of financial statements to understand the financial asset transfer transactions (e.g. securitisation) better, including the potential consequences of the risks that remain on the part of the entity which transferred the assets. These changes also enforce additional disclosures for assets of substantial value transferred at the end of the reporting. The Group shall be applying the revised IFRS 7 since 1 January As of the date of issue of this financial statement it is not possible to assess the impact of that new standard in a reliable way. Amendments to IFRS 1 Severe Hyperinflation and Removal of Fixed Dates The amendments to IFRS 1 were published on 20 December 2010 and are applicable to annual s that start on or after 1 July The amendments apply to the fixed date of 1 January 2004 as the date of first application of IFRS and replace that date with the wording "the day of first application of IFRS" in order to eliminate the need to convert the transactions performed prior to the date of adoption of IFRS. Moreover, the standard is expanded with guidelines on re-application IFRS for s that follow s of severe hyperinflation which prevented full compliance with IFRS. The Group shall be applying the revised IFRS 1 since 1 January The amended IFRS 1 shall not affect the financial statement of the Group. Amendment to IAS 12 Deferred Tax: Recovery of Underlying Assets The amendment to IAS 12 was published on 20 December 2010 and is applicable to annual s that start on or after 1 January Among other things, the amendment specifies the details of valuation of deferred tax provisions and assets for investment real property valuated based on the fair value model set forth in IAS 40 Investment real estate. Coming of that amended standard into force shall also result in withdrawal of SIC interpretation 21 Income Taxes Recovery of Revalued Non-Depreciable Assets. The Group shall be applying the revised IAS 12 since 1 January As of the date of issue of this financial statement it is not possible to assess the impact of that new standard in a reliable way. IFRS 10 Consolidated Financial Statements The new standard was published on 12 May 2011 as a replacement for interpretation SIC 12 Consolidation Special Purpose Entities and for some provisions of IAS 27 Consolidated and Separate Financial Statements. The standard defines the concept of control as a factor that determines whether the entity should be included in the consolidated financial statement and provides guidelines that help observing whether the entity exercises control or not. The Group shall be applying it since 1 January As of the date of issue of this financial statement it is not possible to assess the impact of that new standard in a reliable way. IFRS 11 Joint Arrangements The new standard was published on 12 May 2011 and is supposed to replace interpretation SIC 13 Jointly Controlled Entities - Non-Monetary Contributions by Venturers and IAS 31 Interests in Joint Ventures. The standard focuses on the rights and obligations that arise of a joint agreement, regardless of its legal form, and eliminates the reporting inconsistencies by defining a method for share calculation in the jointly controlled entities. The Group shall be applying it since 1 January As of the date of issue of this financial statement it is not possible to assess the impact of that new standard in a reliable way. IFRS 12 Disclosure of Interests in Other Entities The new standard was published on 12 May 2011 and includes requirements for disclosure of information on ties between entities. The Group shall be applying it since 1 January Page 14

15 As of the date of issue of this financial statement it is not possible to assess the impact of that new standard in a reliable way. IFRS 13 Fair Value Measurement The new standard was published on 12 May 2011 and it is expected to facilitate using the fair value measurement by reducing the complexity of solutions and increasing the consistency of use of fair value measurement policies. The standard clearly specifies the purpose of such value measurement and defines the fair value in detail. The Group shall be applying it since 1 January As of the date of issue of this financial statement it is not possible to assess the impact of that new standard in a reliable way. IAS 27 Separate Financial Statements The new standard was published on 12 May 2011 and is mainly the result of moving certain provisions hitherto included in IAS 27 to the new standards IFRS 10 and 11. The standard includes requirements on presentation and disclosures of investments in associates, subsidiaries or joint ventures in separate financial statements. The standard shall replace IAS 27 Consolidated and Separate Financial Statements, which has been used so far. The Group shall be applying it since 1 January As of the date of issue of this financial statement it is not possible to assess the impact of that new standard in a reliable way. IAS 28 Investments in Associates and Joint Ventures The new standard was published on 12 May 2011 and deals with settlements related to investments in associate entities. It also sets forth the requirements for application of equity-based valuation to investments in associates and joint ventures. It shall replace standard IAS 28 Investments in Associates, which has been used so far. The Group shall be applying it since 1 January As of the date of issue of this financial statement it is not possible to assess the impact of that new standard in a reliable way. Amendments to IAS 19 Employee Benefits The amendments to IAS 19 were published on 16 June 2011 and are applicable to annual s that start on or after 1 January They eliminate the possibility of delaying recognition of profits and losses, which has been known as the "corridor method". In addition, they improve the presentation of changes to the balance sheet related to employee benefit schemes, as well as the presentation of the necessary estimates presented in other comprehensive incomes. The revisions also expand the scope of the applicable disclosures. The Group shall be applying the revised IAS since 1 January As of the date of issue of this financial statement it is not possible to assess the impact of that amended standard in a reliable way. Amendments to IAS 1 Presentation of Items of Other Comprehensive Income The amendments to IAS 1 were published on 16 June 2011 and are applicable to annual s that start on or after 1 July They deal with grouping of other items of comprehensive income that can be moved to the profit and loss account. The revisions also confirm that it is allowed to present items of other comprehensive income and of the profit and loss account as one or two separate statements. The Group shall be applying the revised IAS since 1 January As of the date of issue of this financial statement it is not possible to assess the impact of that amended standard in a reliable way. At present, the scope of IFRS approved by the EU does not materially differ from the regulations adopted by the International Accounting Standards Board (IASB), except for the standards, interpretations and their amendments listed below, which have not been adopted by the EU for use as of the date of approving of this financial statement: IFRS 9 Financial Instruments, published on 12 November 2009 (as amended), Amendments to IFRS 7 Disclosures Transfers of Financial Assets, published on 7 October 2010, Amendments to IFRS 1 Severe Hyperinflation and Removal of Fixed Dates, published on 20 December 2010, Amendment to IAS 12 Deferred Tax: Recovery of Underlying Assets, published on 20 December 2010, IFRS 10 Consolidated Financial Statements, published on 12 May 2011, IFRS 11 Joint Arrangements, published on 12 May 2011, IFRS 12 Disclosure of Interests in Other Entities, published on 12 May 2011, Page 15

16 IFRS 13 Fair Value Measurement, published on 12 May 2011, IAS 27 Separate Financial Statements, published on 12 May 2011, IAS 28 Investments in Associates and Joint Ventures, published on 12 May 2011, Amendments to IAS 19 Employee Benefits, published on 16 June 2011, Amendments to IAS 1 Presentation of Items of Other Comprehensive Income, published on 16 June Changes introduced by the Group by its own initiative The Group changed the presentation of the comparative (reference) information, i.e. the financial data for 3 quarters of The costs of transport services at the amount of PLN 6,082 M, which had so far been presented under Costs of sales and marketing, have been moved to Costs of sales of goods, finished goods and materials. That change did not affect the operating result of the net result of the reported. 2.4.Presentation currency, foreign currency transactions and valuation of items expressed in foreign currencies Functional currency and presentation currency The functional currency of the dominant entity as well as the presentation currency of this abbreviated consolidated interim financial statement is the Polish zloty (PLN). This abbreviated consolidated interim financial statement was drawn up in zloty ('PLN' or 'zł') and all amounts, unless stated otherwise, are given in thousands of zloty (PLN M). 3.Important estimates and judgments Drawing up a consolidated financial report requires that the Company s Management Board use certain approximations, as a lot of information included in the report cannot be valuated precisely. The Board verifies the estimates adopted based on the changes of the factors taken into consideration for their purposes, new information or past experiences. Therefore any estimates made as of 30 September 2011 are subject to change in the future. The areas for which estimates or assumptions made as of the date of this statement pose a risk of a necessity to make material corrections to the balance values of assets or liabilities during the current or the next financial years have been presented below. 3.1.Useful life of tangible and intangible assets The companies of the Group estimated useful life of tangible and intangible assets as of 30 September The analysis did not indicate any necessity of corrections in that respect. 3.2.Impairment of goodwill and other intangibles in subsidiaries The Companies of the Group checked for existence of any premises indicating a loss of value of any investments in the subsidiaries (goodwill and other intangibles) as of 30 September Having analyzed external and internal sources of information, the Board did not identify any premises that would indicate a need to recognize any additional impairment write-off. 3.3.Taxes Considering the complexity of the Polish tax law and the inconsistency of tax interpretations, the Group has taken the effort to evaluate the resulting risks. An analysis performed in that area did not suggest any needs to create provisions for future tax liabilities. Deferred tax assets and provisions are presented in relation to the items which shall be Page 16

17 realized in terms of tax in the short term, provided taxable revenue is generated at a level that allows these amounts to be settled. 3.4.Employee benefits The current value of pension and disability benefits is determined using the actuarial method. Actuarial valuation requires certain assumptions to be made concerning discount rates, predicted salary increases and the projected pension increase. Due to the complexity of such valuation, the assumptions made and the long-term nature, liabilities on account of pension and disability benefits are sensitive to changes of their underlying assumptions. All assumptions are verified as of each balance date. 3.5.Presentation of cost of sales of products, goods and materials As of each balance date the Group calculates the value of the post-transactional rebates that are due from suppliers and have not been settled by that date. Those estimates are based on the terms of rebates agreed with the suppliers as evidenced with contracts or otherwise at amounts confirmed by suppliers. 3.6.Write-offs to receivables The member companies of the Group update the value of their receivables on an ongoing basis with respect to the probability of payment by means of appropriate write-offs. The probability assessment is based on the management's judgment of collectability of overdue receivables and the evaluation of the risk of their uncollectibility. 4.Operating segments Since 1 January 2010 the ACTION S.A. Capital Group has been obliged to present its results in a layout defined in IFRS 8 Operating Segments. The standard defines a segment as a component of an entity: - which is involved in business activities that allow it to make revenue and incur costs; - whose operating results are under a regular review by a central body which is responsible for making decisions with regard to the entity's operations and which relies on those results while making decisions on allocating resources with the segment; - for which separate financial information is available. Based on the definitions included in IFRS 8, operations of the Group with respect to distribution of IT products, consumables and consumer electronics were presented in this statement under a single operating segment on the following premises: - Total revenue on sales and the profits realized on those operations exceed 75% of the value generated by the Capital Group. - No separate financial information is drawn up for the individual sales channels, which is a result of the industryspecific pattern of co-operation with suppliers, whose products are distributed through all the sales channels used. - Due to the lack of isolated segments, i.e. no availability of separate financial information for the individual product groups, operating decisions are made based on numerous detailed analyses of financial results achieved on sales of all products in all channels of distribution. - Due to the specific nature of the distribution operations in each sales channel, the Management Board of ACTION S.A., which is the central body responsible for making decisions with regard to the entity's operations, allocates resources based on the achieved and projected results of the Capital Group as a whole as well as on the basis of the planned returns on the allocated resources and outcomes of analyses of the business environment. Page 17

18 5.Revenue and costs 5.1.Seasonality of sales No significant seasonality nor regular repeatability of the sales revenue trend was noticed in the ended on 30 September 2011 or in the ended on 30 September The Group records sales peaks in the fourth quarter of the financial year, i.e. between October and December. In the remaining s, the sales metrics maintain a similar level. 5.2.Sales revenue The entire sales revenue is generated on the sale of computer hardware. For 01/01/ /30/2011 For 01/01/ /30/2010 Revenues from the sale of products (services) 64,300 39,289 Revenues from sales of goods and materials 1,717,164 1,432,027 1,781,464 1,471,316 For 01/01/ /30/2011 For 01/01/ /30/2010 Revenues on sales of goods domestic market 1,357,619 1,262,776 Revenues on sales of goods foreign market 359, ,251 1,717,164 1,432,027 Page 18

19 5.3.Costs by type For 01/01/ /30/2011 For 01/01/ /30/2010 Depreciation of fixed assets and amortisation of intangibles 8,517 8,751 Employee benefit costs 34,706 39,737 Consumption of materials and energy 5,105 5,909 External services 32,873 28,438 Taxes and fees 1,101 1,040 Advertising costs 11,156 5,737 Property and personal insurance Other prime costs Cost of sales of goods, finished goods and materials, including: 1,650,938 1,358,021 - write-down of provisions value Total costs of products, goods and materials sold, sales and marketing and general and administrative costs 1,745,655 1,448, Employee benefit costs For 01/01/ /30/2011 For 01/01/ /30/2010 Payroll 29,381 33,810 Social security and other benefits 5,325 5,927 34,706 39, Other revenue and operating profits For 01/01/ /30/2011 For 01/01/ /30/2010 Surplus of foreign exchange profits 38 0 Revenue on valuation of financial instruments Revenue on interest Revenue on expiry of liabilities Revenue on damages received Revenue on released reserves Revenue on donations received 1,899 1,398 Other revenue Profit on disposal of non-financial fixed assets 2, ,769 3,314 Page 19

20 5.6.Other costs and losses For For 01/01/ /30/ /01/ /30/2010 Surplus of foreign exchange losses 5,111 2,173 Costs of compensation paid Costs of write-downs of receivables Costs on valuation of financial instruments Costs of write-downs of receivables Other costs 747 2,780 7,161 6, Financial costs For For 01/01/ /30/ /01/ /30/2010 Interest on credits and loans 3,271 2,323 Interest on leases ,843 3,025 6.Corporate income tax For 01/01/ /30/2011 For 01/01/ /30/2010 Current tax 4, Deferred tax 878 1,327 Deferred tax The deferred income tax values subject to compensation are as follows: Deferred tax assets: 5,293 1,808 09/30/ /31/2010 deferred tax assets to be recovered within 12 months 3,738 1,915 Provisions for deferred income tax: 3,738 1,915 deferred tax provisions due and payable within 12 months 7,604 5,847 7,604 5,847 Deferred tax assets 1,120 1,280 Provisions for deferred income tax -4,986-5,212 Deferred income tax assets/provisions (on the whole): -3,866-3,932 Changes of the status of the deferred income tax (compensated assets and provisions) are as follows: Page 20

21 09/30/ /31/2010 As of the beginning of the (BOP) -3,932-2,605 Debit/credit of the financial result,-878-1,327 Increase/decrease of equity As of the end of the (EOP) -3,866-3,932 7.Write-offs and provisions 7.1.Write-offs to trade receivables and other receivables 09/30/ /31/ /30/2010 Write-offs to receivables at beginning of -9,092-14,436-14,436 Creation -1,166-1,919-1,249 Use 519 4,551 4,326 Terminated 335 2,712 2,629 Excluding the company from full consolidation Write-offs to receivables at end of -9,381-9,092-8, Reserves for other liabilities and other charges Reserves for liabilities Other Total including: longterm including: short-term As of 1 January , , ,125 Creation 2, , ,002 Use -2, , ,577 Termination As of 30 September , , ,647 As of 1 January , , ,175 Creation 1, , ,101 Use -1, , ,101 Termination As of 31 December , , ,125 As of 1 January , , ,175 Creation 1, , ,960 Page 21

22 Use -2, , ,463 Termination As of 30 September , , ,622 8.Loans and credits and other liabilities Long-term 09/30/ /31/ /30/2010 Investment credit 3,433 5,600 6,400 Lease liabilities 9,669 10,876 11,774 13,102 16,476 18,174 Short-term Overdraft facility and investment loan 91,307 61,455 80,989 Lease liabilities 3,790 3,225 3,221 95,097 64,680 84,210 Total 108,199 81, , Aging of credit liabilities Aging liabilities falling due 09/30/ /31/ /30/2010 Over 1 year 91,307 61,455 80,989 Over a from 1 to 5 years 3,433 5,600 6,400 Over a exc. 5 years Total 94,740 67,055 87, Lease liabilities 09/30/ /31/ /30/2010 Nominal value of minimum leasing instalments Over 1 year 4,434 4,232 3,951 Over a from 1 to 5 years 9,830 11,313 12,675 Over a exc. 5 years Finance lease liabilities in total - minimum leasing instalments in total 14,264 15,545 16,626 Financial costs on finance lease contracts 805 1,444 1,631 Current value of minimum leasing instalments Over 1 year 3,790 3,225 3,221 Over a from 1 to 5 years 9,669 10,876 11,774 Page 22

23 Over a exc. 5 years Current value of minimum leasing instalments in total 13,459 14,101 14,995 9.Hedge accounting The Company hedges against currency exchange risk related to its sales operations indexed based on the EUR and USD exchange rates and denominated in those currencies using currency cash positions, i.e. trade liabilities reduced by trade receivables and cash and increased/reduced by the nominal value of FX Forward and FX Swap currency selling/buying contracts. The Company allocates the designated FX cash positions as hedging instruments for cash flow hedging purposes and presents them in line with the hedge accounting principles. The following charts present the key parameters of the FX cash positions designated for use as hedging instruments, such as the s in which the hedging cash flows shall be taking place, the s in which they shall affect the financial result, as well as their fair value in thousand Polish zloty as of 30 September Hedging instruments: EUR Instrument type Total par value Fair value* 30 September September September September 2010 Trade liabilities -78,561, ,561,489 - Trade receivables 21,234,459-21,234,459 - Cash and cash equivalents 188, ,592 - FX Forward EUR Credit / Loans -15,211, ,211,326 - Financial leasing -12,798, ,798,625 - Expected hedged position settlement 30 September 2011 October / November 2011 October / November 2011 October / November 2011 October / November 2011 October / November 2011 October / November September 2010 N/A N/A N/A N/A N/A N/A Total cash positions -85,148, ,148,389 Hedging instruments: USD Instrument type Total par value Fair value* 30 September September September September 2010 Trade liabilities -53,659, ,659,238 - Trade receivables 10,752,303-10,752,303 - Cash and cash equivalents 1,974,162-1,974,162 - FX Forward USD 8,143, Expected hedged position settlement 30 September 2011 October / November 2011 October / November 2011 October / November 2011 October / November September 2010 N/A N/A N/A N/A Page 23

24 Credit / Loans -1,785, ,785,200 - Financial leasing Total cash positions -34,574, ,717,811 October / November 2011 October / November 2011 N/A N/A *) Balance value given for positions other than FX Forward transactions. In the opinion of the Company, the balance value does not significantly differ from the fair value. Change of fair value of cash flow hedges reflected in equity 9 months to 30 September months to 30 September 2010 Opening balance Effective part of profit/loss on hedging instrument Amounts reflected in profit and loss account, including: ,726, ,756, adjustment to other losses and costs - 4,756, adjustment on account of hedge ineffectiveness - - Closing balance - 4,969, Contingent assets and liabilities As of 30 September 2011 the Group had liabilities on repayment of liabilities at an amount of PLN 2,350 M. As of 30 September 2011, the value of security liabilities which arise of contracts signed as of the reporting date and not reflected in the Group's consolidated financial statement was equal to PLN 21,277 M, as compared to their value of PLN 22,034 M as of 31 December /30/ /31/ /30/ Contingent receivables 2,350 4,502 4, From other entities (source) 2,350 4,502 4,075 - on guarantees and sureties 2,350 4,502 4, Contingent liabilities 21,277 20,355 22, To other entities (source ) 21,277 20,355 22,034 - on guarantees and sureties issued 6,560 4,935 5,741 - letters of credit 14,717 15,420 16, Other (source) Off-balance sheet items total 23,627 24,857 26,109 Page 24

25 11.Events after the balance date Pursuant to a contract executed with Hewlett-Packard Europe BV based in Geneva, Switzerland (its signed copy was received by the Company on 5 October 2011)ACTION S.A. became Hewlett-Packard's Authorised Reseller on the territory of the European Union and Switzerland. The contract covers the sales of Hewlett-Packard PCs, monitors, servers, portable terminals and accessories. The contract was executed for an unspecified term. The Group expects it to facilitate its further development of sales of HP products to its customers and shall present it with new business opportunities which had remained beyond its reach under the model of co-operation followed earlier. III.Other quarterly financial information 1.Description of the Issuer s relevant successes and failures in the covered by the report, together with a list of the most significant events Q Q Net sales 669, ,645 Gross profit on sales 53,211 31,928 Gross margin 7.95% 6.38% EBIT 13,740 7,962 EBIT margin 2.05% 1.59% Net profit 10,126 7,114 net margin 1.51% 1.42% The ACTION S.A. Capital Group recorded the third quarter of 2011 as one of the best s in terms of sales revenue in its entire history. That fact is even more significant if one considers the economic environment of that, which saw substantial confusion of the global economy and particularly the European one, caused by the financial recession of the high-debt countries of the euro area. However, this seems not to have discouraged enterprises and consumers from buying IT products, neither in Poland not abroad. The in question was also a of strong depreciation of the Polish currency compared to USD and EUR, a significant rise of fuel prices on the domestic market and consequently an increase of maintenance and operating costs and tough competition. In spite of all those factors, the companies of the ACTION S.A. Capital Group successfully managed to attain excellent financial results. The revenue on sales recorded in Q exceeded those of Q by 33.69% (PLN 669,308 M compared to PLN 500,645 M respectively), which among other things was a result of winning new markets and broadening the product range offered at attractive prices. The noticeable increase of gross margin from 6.38% in Q to 7.95% in Q3 2011(i.e. by 1.57 PP) is related to adjustments of sales prices in response to the depreciation of the zloty in the in question. The gross margin achieved by the Group does not include any FX losses, which have been included in item Other costs and losses. If Page 25