Condensed financial statements for the 3rd quarter of 2017 prepared pursuant to the International Financial Reporting Standards endorsed by EU

Transcription

1 Wawel S.A. 1 Condensed financial statements for the 3rd quarter of 2017 prepared pursuant to the International Financial Reporting Standards endorsed by EU

2 Wawel S.A. 2 I. FINANCIAL STATEMENT state as of state as of state as of state as of Condensed financial statement for 1 st three months of 2016 Assets Not audited Not audited Aidited Not audited Fixed assets Fixed tangible assets Goodwill Intangible assets Long-term receivables Shares in affiliates valued by equity Financial assets classified to sell Long-term accruals, including deffered tax assets other accruals Current assets Inventory Short-term receivables Receivables due to deliveries and services 2.2. Receivables due to income tax (CIT) Short-term accruals Short-term financial assets Total assets Liabilities Equity Share capital Capital from issue of the shares above their nominal value Other components of equity Supplementary capital Revaluation capital Retained profits/uncovered losses Total liabilities Long-term liabilities liabilities Provisions for liabilities Provision due to the deferred income tax 1.2. Provision for retirement and similar benefits 2. Long-term liabilities Short-term liabilities liabilities Provisions for liabilities Provision for retirement and similar benefits 1.2. Other provisions Short-term liabilities Liabilities due to deliveries and services and other liabilities Liabilities due to CIT tax Accruals and deferred income Total liabilities

3 Wawel S.A. 3 TOTAL INCOME STATEMENT (PLN k) I. Net income from the sale of products, goods and materials, including: 3rd quarter of quarters of rd quarter of quarters of 2016 Not audited Not audited Not audited Not audited Net income from sales of products Net income from sales of goods and materials II Costs of products, goods and materials sold, including: (84 277) ( ) (92 738) ( ) 1. Manufacturing cost of products sold (82 010) ( ) (86 587) ( ) 2. Value of the goods and materials sold (2 267) (9 571) (6 151) (21 226) III. Gross profit (loss) from sales Sales costs (24 508) (71 904) (23 386) (68 200) Management Board costs (11 852) (31 524) (9 451) (33 198) IV. Profit (loss) from sales Other operating income Other operating costs (301) (822) (906) (1 051) V. Profit (loss) from operating activity Financial incomes Financial costs Share in profit of affiliates (293) (386) - (1) (8) VI. Gross profit (loss) Income tax (5 193) (13 432) VII. Profit (loss) for the period VIII. Other total incomes - (2 903) Figures, which are not connected to the profit: - (2 903) Profits and losses connected to financial assets possible to sell - (2 903) IX. The sum of the total incomes Number of ordinary shares Profit (loss) per one ordinary share (in PLN) Diluted earnings per one share (in PLN)

4 Wawel S.A. 4

5 Wawel S.A. 5 CASH-FLOW STATEMENT (in k PLN) 3rd quarter of quarters of rd quarter of quarters of 2016 Not audited Not audited Not audited Not audited A. Net cash-flow from operating activities I. Gross profits (loss) II. Total adjustments: Amortization Profit/loss due to the exchange differences Paid income tax Interests and dividends Profit/loss from investment activity Reserve change Stocks change Receivables change Short-term liabilities change (except for loans and credits) Change in prepayments and accrued income III. Net cash-flow from operating activities B. Net cash-flow from the investment activity 1. Sales of intangible and tangible fixed assets Purchase of intangible and tangible fixed assets Assets financial inflows including interest in related parties Expenses for financial assets IV. Net cash-flow from the investment activity C. Net cash-flow from financial activities 1. Dividends and other payments to shareholders Payments of liabilities due to leasing agreements Interest V. Net cash-flow from financial activities D. Total net cash flows E. Balance change of pecuniary assets including change in pecuniary assets due exchange differences F. Opening balance of pecuniary assets G. Closing balance of pecuniary assets (F+/-D)

6 Wawel S.A. 6 II. ADDITIONAL INFORMATION 1. GENERAL INFORMATION 1.1 Legal status and basic subject of activity as per the Polish Classification of Activities (PKD) Wawel Spółka Akcyjna seated in Kraków. The Company is registered in the National Court Register kept by the District Court for Kraków - Śródmieście, 11th Commercial Department in Kraków under the number According to the sections of the Polish Classification of Activities the basic subject of the company s activity is production of cocoa, chocolate and confectionary products denoted with the symbol (PKD 2007) 1082Z. The Company s shares are traded in the official market of the WSE. According to the classification adopted by the WSE, the Company is acting in the food industry sector. 1.2 The Company s duration is indefinite. 1.3 The periods for which the financial statement and comparable data are presented. The financial data presented cover the period from 1st January to 30 th Sep The comparable data cover the period from 1st January to 30 th Sep 2016 and in financial statement cover the period from 1st January to 31st December Information concerning the composition of the Management Board and the Supervisory Board MANAGEMENT BOARD President of the Management Board - Member of the Management Board - Dariusz Orłowski Wojciech Winkel SUPERVISORY BOARD Chairman of the Supervisory Board Vice Chairman of the Supervisory Board Secretary of the Supervisory Board Member of the Supervisory Board Member of the Supervisory Board Member of the Supervisory Board Member of the Supervisory Board Hermann Opferkuch Eugeniusz Małek Paweł Bałaga Nicole Opferkuch Christoph Köhnlein Paweł Tomasz Brukszo Laura Weiss 1.5 As at 30 th September 2017, the following shareholders possessed more than 5 % of votes at the General Shareholders' Meeting: Name of shareholders Number of shares % share capital Number of votes % votes at the GSM Hosta International AG seated 781, , in Münchenstain (Switzerland) MetLife OFE seated in Warsaw 147, , Nationale-Nederlanden OFE 76, , Others shareholders 494, , Total 1,499, ,499, The Issuer is not a dominant entity in relation to other entities and it does not draw up a consolidated statement.

7 Wawel S.A CHARACTERISTICS OF FINANCIAL RESULTS GENERATED IN THE REPORTING PERIOD 2.1. Results generated in Q The revenues from sales in 3rd quarter of 2017 amounted million zlotys, that constitutes 97% of sales in comparison to the same period in The events described by us in our current reports No. 1/2017 and No. 2/2017 had significant impact on the level of sales in the 3rd quarter of To compare these two analyzed periods the margin rates EBIDTA, EBIT, gross cash flow and net cash flow was applied. The EBIDTA rate- calculated as the operational profit plus amortization. EBIDTA rate: 3rd quarter 3rd quarter Dynam. of 2017 of / 2016 EBIDTA rate ( in k PLN) Operational profit+amortization 33,150 31, % EBIDTA margin (% share in revenues) 22.0% 20.7% The EBIT rate- calculated as the operational profit. EBIT rate: 3rd quarter of rd quarter of 2016 Dynam / 2016 EBIT rate ( in k PLN) Operational profit 25,200 25,393 99% EBIT margin (% share in revenues) 17.3% 16.8% Gross cash flow rate- calculated as the gross profit plus amortization. Gross cash flow rate: 3rd quarter 3rd quarter Dynam. of 2017 of / 2016 Gross cash flow rate (in k PLN) Gross profit+amortization 32,386 33,207 98% Gross cash flow margin (% share in revenues) 22.2% 22.0% Net cash flow rate- calculated as the net profit plus amortization. Net cash flow rate: 3rd quarter 3rd quarter Dynam. of 2017 of / 2016 Net cash flow rate (in k PLN) Net profit+amortization 54,723 28, % Net cash flow margin (% share in revenues) 37.5% 18.5% 2.2 Important events within the period The important events which occurred in Q were presented in the published current reports. 2.3 Important events after balance date:

8 Wawel S.A Factors and events of a non-typical nature significantly influencing the financial results. In connection with starting of the activity in the special economic zone called Krakow Technology Park (SEZ), Issuer recognized the deferred income tax asset in 3rd quarter 2017, what it was previously reported by the Issuer in the current report no. 13/2017 on On the basis of financial expenditure (classified costs) paid to 30th Septemebr 2017 and financial forecasts for the use of state aid until 2026, i.e. until the end of the period of the functioning of the SEZ, the Company recognized the initial asset of PLN 27,674 thousand. However, the calculated using of state aid for 9montf of 2017 amounted to PLN 486 thousand. As a result, the value of deferred tax assets related to the activity in SEZ as at 30 September 2017 amounts to PLN 27,188, which positively influenced on the level of net profit for Q Description of the basic threats and risks related to the other months of the fiscal year. The following should be mentioned among the main threats and risk factors: - a possible decreasing of sales y / y in the coming quarters, what it was announced by the Company in the current reports No 1/2017 and 2/2017. At the moment, it is difficult to indicate in details the scale of decreasing of sales in The cooperation with a key business partner is being continued in the limited scope. - prices fluctuations of the essential production raw materials, - occurrence of unfavourable for the Company changes of the exchange rates (mostly EUR, USD, GBP) which may consequently result in the increase in the purchase cost of the imported raw materials. The Company does not possess any periodical foreign currency agreements and does not plan the important operations related to the opening the transactions with the currency risk due to its limited influence on the Company's result. The inflows due to the export in the material part (ca. 20%) protect the expenses due to the raw materials import used to manufacturing the finished products. Other open currency exposition due to the import purchase is calculated at the price of finished product. But the Issuer allows for possibility of entering into the currency term transactions related to the currency purchase to the extent necessary to cover the current raw materials purchases. Furthermore, in connection with the still unstable political and economic situation in Ukraine, there is a risk associated with the business activity of the Lasoszczi Company (an affiliate in which Wawel S.A. holds 48.5% share). Therefore, the Management Board does not exclude the possibility of making - in the next reporting periods - the write-offs for impairment of held shares and loans granted to the Lasoszczi Company whose total book value as at 30th September 2017 equalled PLN 4,405 thousand (of which shares of PLN 3,292 thousand and loans together with interest of PLN 1,113 thousand). 3. ADOPTION OF THE INTERNATIONAL FINANCIAL REPORTING STANDARDS 3.1 Declaration of compliance: These interim condensed financial statements were prepared in compliance with the International Accounting Standard No. 34 Interim financial reporting endorsed by EU ( IAS 34 ). The interim condensed financial statements do not include all information and disclosures required for the annual financial statements and should be read along with the financial statements of the Company for the year ended on 31 st December 2016 and approved to be published on The interim financial results may not fully reflect the achievable financial result for the fiscal year. The interim condensed consolidated financial statements were prepared on the assumption that the Company would continue as a going concern in the foreseeable future. As for the date of approval of this consolidated financial statement there are not any circumstances indicating any threat for the going concern principle. 3.2 First time adopted standards The accounting principles (policy) applied to prepare the interim condensed financial statements are consistent with these applied to prepare the annual financial statement of the Company for the year ended on

9 Wawel S.A st December 2016, except for the following new or amended standards and interpretations applicable for the annual periods starting on or after 1 st January Amendments to IAS 12 Recognition of deferred tax assets arising from unused tax losses (published on 19th January 2016) Amendments to IAS 7 Initiative on the disclosure of information (published on 29 January 2016). Application of the above amendments to standards and interpretations did not have any impact on the financial situation, financial results of the Company or the scope of information presented in the condensed financial statements of the Company. 3.3 Standards and interpretations issued not yet effective. IFRS 9 Financial Instruments (published on 24 July 2014) effective for annual periods beginning on 1 January 2018 or later, IFRS 14 Regulative Accruals (published on 30 January 2014) - pursuant to the decision of the European Commission, the process of standard approval in a preliminary version shall be initiated before publishing the standard in its final version - until the date of approving these shortened financial statements not approved by the EU - effective for annual periods beginning on 01 January 2016 or later, IFRS 15 Revenue from Contracts with Customers (published on 28 May 2014), including amendments to IFRS 15 Effective date of IFRS 15 (published on 11 September 2015) - effective for annual periods beginning on 1 January 2018 or later, Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (published on 11 September 2014) -work leading to the approval of these changes was postponed for an indefinite period - the date of coming into force was deferred by the IASB for an indefinite period, IFRS 16 Leasing (published on 24 July 2014) - until the date of approving these shortened financial statements not approved by the EU - effective for annual periods beginning on 1 January 2019 or later, Amendments to IFRS 4 Application of IFRS 9 Financial Instruments including IFRS 4 Insurance Contracts (published on 12 September 2016) - until the date of approving these shortened financial statements not approved by the EU - effective for annual periods beginning on 1 January 2018 or later, Explanations to IFRS 15 Revenue from Contracts with Customers (published on 12 April 2016) - until the date of approving these shortened financial statements not approved by the EU - effective for annual periods beginning on 01 January 2018 or later, Amendments to IFRS 2 Classification and Valuation of Payment Transactions based on Shares (published on 20 June 2016) - until the date of approving these shortened financial statements not approved by the EU - effective for annual periods beginning on 01 January 2018 or later, Amendments resulting from the Review of IFRS (published on 08 December 2016) - until the date of approving these shortened financial statements not approved by the EU - Amendments to IFRS are effective for annual periods beginning on 1 January 2017 or later, whereas Amendments to IFRS 1 and IAS 28 are effective for annual periods beginning on 1January 2017 or later, Interpretation of IFRIC 22 Transactions in Foreign Currency and Pre-payments (published on 8 December 2016) - until the date of approving these shortened financial statements not approved by the EU - effective for annual periods beginning on 01 January 2018 or later, Amendments do IAS 40: Transfer of the Investment Real Estate (published on 8 December 2016) - until the date of approving these shortened financial statements not approved by the EU - effective for annual periods beginning on 01 January 2018 or later, IFRS 17 Insurance Contracts (published on 18 May 2017) - until the date of approving these shortened financial statements not approved by the EU - effective for annual periods beginning on 01 January 2021 or later, IFRIC 23 Unreliability related to Income Tax Presentation(published on 7 June 2017) - until the date of approving these shortened financial statements not approved by the EU - effective for annual periods beginning on 1 January 2019 or later. The effective dates are dates resulting from the content of standards announced by the International Accounting Standards Board. The effective dates of standards in the European Union may vary from the effective dates resulting from the content of standards and are announced upon the EU approval for application. The Company did not decide to make an early application of any standard, interpretation or amendment that was issued but is not yet effective in light of the provisions of law of the European Union.

10 Wawel S.A. 10 The Management Board analyses potential influence of amendments to the standards on the Company s financial statements. In particular, with regard to IFRS 15, the analysis shall focus on variable price elements (bonuses, discounts). 3.4 Voluntarily changes in accounting principles. The Company has not changed any Accounting Principles in comparison to the previous financial statements. 3.5 Comparability of financial data for the preceding year and the data from the financial statements for the reporting period. In the presented financial statements for the 3rd quarter 2017 and 2016 it has preserved the principle of comparability of data. 4. IMPORTANT VALUES BASING ON PROFESSIONAL JUDGMENT AND ESTIMATIONS 4.1 Professional judgment. At preparation of the condensed interim financial statements, the Entity s management is required to make certain estimates, judgments and assumptions that affect the presented revenues, costs, assets and liabilities and related notes and disclosures of contingent liabilities. The uncertainty of these assumptions and estimates may cause the material adjustments of the carrying amount of assets and liabilities in the future. 4.2 Uncertainty of estimations and assumptions The basic assumptions referred to the future and other key sources of uncertainty as of the end of the period, with which the significant risk of the significant adjustment of the assets and liabilities accruing amount in the next fiscal year is connected, are described below. The Company adopted the assumptions and estimations about the future based on the knowledge as of the date of these financial statements. The assumptions and estimations may change as a result of the future events being a consequence of the market changes or changed beyond the Company s control. Such changes are reflected in the estimations and assumptions, when occurred. Impairment of non-current assets and goodwill The Company did not identify any assumptions of impairment and did not carry out any test for impairment. Impairment of interest in associate The Company did not identify any assumptions of impairment and did not carry out any test for impairment. Measurement of provisions for employee benefits The provisions due to the employee benefits were estimated by actuarial methods. Deferred tax assets The Company recognizes the deferred tax assets basing on the assumption that the tax profit allowing to use them will be achieved in future. The deterioration of the achieved tax results in the future might cause that this assumption would be unjustified.

11 Wawel S.A. 11 Depreciation rates The amount of depreciation rates is set basing on the expected period of useful life of the assets of the property, plant and equipment as well as the intangible assets. Annually, the Company carries out the verification of adopted useful life periods basing on the current estimations. 5. OTHER EXPLANATORY NOTES TO THE FINANCIAL STATEMENT 5.1 Functional and reporting currency. This financial statement was drawn up in polish zlotys. The reporting and functional currency is polish zloty. The financial data in the financial statement were presented in thousands zlotys. 5.2 Chosen financial data contained in this statement have been converted into EURO according to the following rules: Financial data for 2017: - the particular items of the assets and liabilities for the balance sheet according to the average exchange rate announced for by the National Bank of Poland: 1 EUR = 4,3091 PLN - the particular items of the profit and loss account and the cash flow account for the period from to according to the exchange rate constituting the arithmetic mean of the average exchange rates determined by the National Bank of Poland as of the last day of each month of 9 months of EUR = 4,2566 PLN Financial data for 2016: - the particular items of the assets and liabilities for the balance sheet according to the average exchange rate announced for by the National Bank of Poland: 1 EUR = 4,4240 PLN - the particular items of the profit and loss account and the cash flow account for the period from to according to the exchange rate constituting the arithmetic mean of the average exchange rates determined by the National Bank of Poland as of the last day of each month of 9 months of EUR = 4,3688 PLN 5.3 Important events after the interim period completion, which were not reflected in the financial statement for the relevant interim period. Did not occur 5.4 Paid dividends with division into registered shares and other shares. On 11 th May 2017 the Ordinary General Meeting of Shareholders of Wawel S.A. adopted the resolution No. 6 on distribution of the profit for 2016 in the amount of PLN that constitutes PLN per share, as a dividend for shareholders. The record date was 25 th May 2017 but the dividend was paid on 9 th June Information on changes in contingent liabilities or contingent assets, which occurred from the end of the last fiscal year. Liabilities and assets do not occur. 5.6 Information on issue, buy-out and repayment of debt securities and capital securities

12 Wawel S.A Change in the entity s structure in the interim period Did not occur. 5.8 Goals and policy of the financial risk management In the period of first 9 months of 2017 any goals or policy of the financial risk management did not change in comparison to Financial instruments In the Company s opinion, the fair value of cash, short-term deposits, trade receivables, granted loans, listed equity instruments, trade liabilities and other liabilities does not differ from the carrying amount, mainly as a result of the short maturity date Discontinuing operations 5.11 Seasonality of issuer s business activity The business activity of the Issuer is characterized by the seasonality, which results from the structure of manufactured and sold products. Due to the fact that 75% - 80% of the sale constitute the products from the group of filled chocolate, full chocolate and chocolate candies, their sale is lower during the summer months, but the lowest level is in II quarter. The biggest revenues and profits are generated in I and IV quarter of the calendar year. The diagram below presents the amounts in sale revenues in the last four quarters of Company s activity in comparison to the same quarters of the previous year Information on operating sectors Pursuant to the requirements of IFRS 8, the operating sectors need to be identified basing on internal reports on these elements of the Company, which are verified on a regular basis by the persons deciding on allocation to the relevant sector and assessing the financial results. The Company runs homogenous business activity consisting of manufacture and sale of confectionery. However for the management needs the internal system of financial reporting allows identifying the financial results pursuant to the markets.

13 Wawel S.A. 13 The results in the market segments are as follows: 3 quarters of 2017 PLN k Item: Country Export Total Income from sales of products, goods and materials Cost of products, goods and materials sold Gross profit (loss) from sales quarters of 2016 PLN k Income from sales of products, goods and materials Cost of products, goods and materials sold Gross profit (loss) from sales The capital expenditures are not alocated according to the markets, because all of the fixed assets used are situated in Poland. Information on major clients: In the first 9 months of 2017, the Company and one external entity performed the sales transaction exceeding 10% of the total revenues from sales of the Company. The sales transactions referred to the segment Domestic sales Information on allowances revaluating the inventories amount to the achievable net amount and reversal of allowances: In Q the revaluation allowances for inventories of materials amounting to PLN 30 k and inventories of finished goods amounting to PLN 80 k were dissolved Information on revaluation allowances for impairment of financial assets, impairment of noncurrent assets, impairment of intangible assets or other assets and any reversal of such allowances: - In Q the write-downs for debts for principal amount and interest were increased by the amount of PLN 336 k Information on establishment, increase, use and release of provisions: In Q the provision was not changed in comparison to 30th June Information on provisions and assets due to deferred income tax realized in Q1 2017: - The balance of the provision for deferred income tax was increased by the amount of PLN 344 k - The balance of the assets due to deferred income tax was increased by the amount of PLN k, including the amount of PLN k connected with the activity in SEZ Information on significant purchase and sale transactions of fixed tangible assets: Did not occur Information on significant liability due to the purchase of fixed tangible assets:

14 Wawel S.A Information on significant settlement due to court procedures: 5.20 Indication of adjustments of the previous periods: 5.21 Information on changes in the economic situation and business activity conditions, which affect significantly the fair value of financial assets and liabilities of the entity: 5.22 Information on failure to pay any credit or loan or on breaching of the credit or loan agreement: 5.23 Significant transactions with the related entities under other conditions than market. Did not occur Information on change in the classification of financial assets as a result of change of target or use of such assets. Did not occur Opinion of the Management Board concerning the possibility of published forecasts of results for 2017: The Company did not published the forecast of the financial results for Wawel S.A. shareholders possessing directly or indirectly by the related entities at least 5% of votes at the GMS of the Issuer: Name of shareholder Number of shares Number of votes % share in the share capital % votes at GMS Shareholding as for the date of semi-annual report for 2016: Hosta International AG seated in Münchenstein (Switzerland) 781, , MetLife OFE 147, , Nationale-Nederlanden OFE 76,322 76,322 5,09 5,09 Change in shareholding from the date of forwarding the annual report for 2016 to the date of forwarding the report for 3rd quarter of 2017: There were no changes Shareholding as for the date of report for 3rd quarter of 2017: Hosta International AG seated in Münchenstein 781, , (Switzerland) MetLife OFE Nationale-Nederlanden OFE 76,322 76,322 5,09 5,09

15 Wawel S.A Specification of the changes in Issuer s shareholding by the managing and supervising person: Number of Number of Managing person Type of held shares shares votes Shareholding as for the date of semi-annual report for 2016: Wojciech Winkel - the Member of the 1 1 Ordinary bearer s shares Management Board Change in shareholding from the date of forwarding the annual report for 2016 to the date of forwarding the report for 3rd quarter of 2017: There were no changes Shareholding as for the date of report for 3rd quarter of 2017: Wojciech Winkel - the Member of the 1 1 Ordinary bearer s shares Management Board Supervising person Number of Number of shares votes Type of held shares Shareholding as for the date of semi-annual report for 2016: Eugeniusz Małek 2 2 Ordinary bearer s shares Paweł Bałaga 1,640 1,640 Ordinary bearer s shares Change in shareholding from the date of forwarding the annual report for 2016 to the date of forwarding the report for 3rd quarter of 2017: There were no changes. Shareholding as for the date of report for 3rd quarter of 2017: Eugeniusz Małek 2 2 Ordinary bearer s shares Paweł Bałaga 1,640 1,640 Ordinary bearer s shares 5.28 Proceedings in progress before the court, entity competent for the arbitrage proceeding or public administration entity. There are not any disputes. On 23rd August 2017 the Issuer received a decision of the President of Energy Regulatory Office (hereinafter President of ERO ) dated on 21st August 2017 regarding imposing a fine in the amount of PLN due to breach by the Issuer of the duty to follow electric energy delivery and offtake constraints resulting from art. 11 i art. 11d par. 3 of the Act on Power Law, which is subject to a fine pursuant to Art. 56, par. 1, item 3a, of the Act on Power Law. The decision is invalid and the Issuer appealed to the District Court in Warsaw Information on granting the guaranty for the credit or loan or awarding the warranty by the issuer. The guarantees and warranties awarded by Wawel S.A. constituting at least 10% of the own equity of the Issuer do not occur Other information significantly affecting the assessment of the financial standing and financial result of the issuer. Did not occur.