Report on audit of Rawlplug Group's consolidated financial statements for 2016

Transcription

1 + Report on audit of Rawlplug Group's consolidated financial statements for 2016 RAWLPLUG Group Audit Tax Outsourcing Advisory Member of Grant Thornton International Ltd Grant Thornton Polska Spółka z ograniczoną odpowiedzialnością sp. k. Entity authorised to audit financial statements no General partner: Grant Thornton Polska Sp. z o.o. General partner's management board: Cecylia Pol president, Tomasz Wróblewski vice-president. Registered office: Poznań, ul. Abpa Antoniego Baraniaka 88 E. NIP: , REGON: Bank account: District Court for Poznań - Nowe Miasto i Wilda in Poznań, 8th Commercial Division, KRS no

2 RAWLPLUG Group 2 1 Information about the Parent The Group's Parent is RAWLPLUG Spółka Akcyjna. The Parent was formed on 6 December The Parent is established for an indefinite period of time. The Parent's registered office is in Wrocław, ul. Kwidzyńska 6. The Parent's main economic activities are as follows: manufacture of builders ware of plastic, wholesale of construction materials manufacture of connections, screws, chains and springs, wholesale of metal hardware, plumbing and heating equipment and supplies, The economic activities of subsidiaries are related to the Parent's activities. The Parent was entered into the register of companies at the National Court Register maintained by the District Court for Wrocław-Fabryczna in Wrocław, 6th Commercial Department of the National Court Register, under KRS number , on 27 August The Parent has NIP number and REGON number As at the day ending the financial year, i.e. 31 December 2016, the Parent's share capital amounted to PLN thousand. The Group's equity as at that day amounted to PLN thousand. According to note 14 of additional information to the financial statements, the ownership structure of the Parent's share capital as at 31 December 2016 was as follows: Shareholder Number shares Number of votes Nominal value Stake in share capital Amicus Poliniae Sp. z o.o PKO BP BANKOWY PTE NATIONALE NEDERLANDEN PTE Radosław Koelner Quercus TFI S.A Other TOTAL As of 21 March 2017 (date on which the consolidated financial statements were signed), the Parent's Management Board was composed as follows: Radosław Koelner - President of the Management Board Piotr Kopydłowski Member of the Management Board, responsible for finance During the period from 1 January 2016 to 21 March 2017 (publication date for this report), the composition of the Parent's Management Board did not change.

3 RAWLPLUG Group 3 2 Composition of the Group On 31 December 2016, the following subsidiaries were part of RAWLPLUG Group (directly and indirectly): Company name Koelner - Tworzywa Sztuczne Sp. z o.o. Koelner Polska Sp. z o.o. Fabryka Pił i Narzędzi Wapienica Sp. z o.o. Koelner Rawlplug IP Sp. z o.o. Consolidation method full full Type of opinion on financial statements unqualified unqualified Name of entity auditing financial statements Balance sheet date of financial statements Grant Thornton Frąckowiak sp. z o.o. sp. k. Grant Thornton Frąckowiak sp. z o.o. sp. k. full unqualified Kancelaria Audytorska Dudek i Partnerzy full unqualified Grant Thornton Frąckowiak sp. z o.o. sp. k. full unqualified Grant Thornton Koelner Łańcucka Fabryka Śrub Sp. Frąckowiak sp. z o.o. z o.o. sp. k. Farmlord Trading Ltd full Meadowfolk Holdings Ltd full Rawlplug Ltd full unqualified TB Dunn & Co. Koelner Hungária Kft full unqualified Ecoaudit 89 Kft Koelner CZ s.r.o. full unqualified MORAVSKOSLEZSKÝ AUDIT s.r.o. Koelner Deutschland GmbH full Stahl GmbH full Rawlplug Middle East FZE Rawlplug Building & Construction Material Trading LLC full full unqualified Morison Menon Chartered Accountants unqualified Morison Menon Chartered Accountants Rawlplug Ireland Ltd full unqualified Niall Carberry F.C.P.A. Rawlplug Ireland (Export) Ltd Koelner Vilnius UAB full unqualified Atskaitomybe ir auditas Rawl France SAS full unqualified Cabinet Sabatier Koelner Centrum Sp. z o.o. full Rawl Scandinavia AB full unqualified Deloitte AB Koelner Slovakia s.r.o. full Koelner Ltd full Koelner-Ukraine LLC Koelner Trading KLD LLC Koelner - Inwestycje Budowlane Sp. z o.o. Koelner Kazakhstan Ltd Rawlplug Portugal LDA Rawl Africa (PTY) Ltd Koelner Romania SRL (under liquidation)

4 RAWLPLUG Group 4 Changes in consolidated companies in comparison with the previous year and the effects of these changes on the consolidated financial statements are presented in point of additional information to the Group's consolidated financial statements for the financial year ended 31 December Consolidated financial statements for the previous year The Group's consolidated financial statements for the financial year ended 31 December 2015 (previous financial year) were audited by BDO Sp. z o.o., with statutory auditor Beata Wójcik- Dziechciarz, register number 10948, acting on its behalf. The auditor issued an unqualified opinion on the audited financial statements. The Group's consolidated financial statements for the financial year ended 31 December 2015 were approved by the Parent's General Meeting on 24 June The Group's consolidated financial statements for the financial year ended 31 December 2015 (previous financial year), together with the statutory auditor's opinion, a resolution by the General Meeting on the approval of the Group's consolidated financial statements and report on operations, were filed with the National Court Register on 4 July Information on the entity authorised for audit and the statutory auditor Grant Thornton Polska Spółka z ograniczoną odpowiedzialnością sp. k., based in Poznań, ul. Abpa Antoniego Baraniaka 88 E, is an entity authorised to audit financial statements, entered into the list of entities authorised to audit financial statements held by the National Statutory Auditors Chamber in Poland under number The audit of the Group's consolidated financial statements was managed on behalf of Grant Thornton Polska Spółka z ograniczoną odpowiedzialnością sp. k. by statutory auditor Jan Letkiewicz, register number Grant Thornton Polska Spółka z ograniczoną odpowiedzialnością sp. k. was selected by the Supervisory Board on 20 May 2016 to audit the Group's consolidated financial statements for the financial year ended 31 December We carried out the audit of these consolidated financial statements pursuant to an agreement signed on 10 June 2016 with the Parent's Management Board. 5 Scope and schedule of the audit The objective of our audit was to express an opinion in writing, together with a report, on whether the consolidated financial statements for the financial year ended 31 December 2016 accurately and clearly depict the Group's asset and financial position and financial result in accordance with International Accounting Standards, International Financial Reporting Standards and related interpretations published in the form of European Commission regulations, and the adopted accounting principles (policy). The audit consisted of procedures aimed at obtaining proof for the amounts and disclosures contained in the consolidated financial statements. The selection of audit procedures is up to the

5 RAWLPLUG Group 5 statutory auditor and depends on an assessment of the risk of significant distortions in the consolidated financial statements resulting from fraud or error. In assessing this risk, the statutory auditor considers the performance of internal control as regards preparing and reliably presenting by the entity of its consolidated financial statements in order to design appropriate audit procedures and not to express an opinion on the performance of the entity's internal control. The audit also covers an assessment of the appropriateness of the adopted accounting principles (policy), rationality of estimated values set by the Parent's Management Board and evaluation of the overall presentation of the consolidated financial statements. In auditing specific items from the consolidated financial statements and documentation, we applied tests and samples appropriate for financial review. Based on the results of these tests and samples, we concluded whether the items being audited were correct. An audit limited to select samples was also applied to tax settlements and debits, which is why there might be differences between our conclusions and the results of any potential inspections by authorised tax authorities. Determining and explaining events that could have - if they occurred - constituted basis for instigating a penal proceeding by relevant authorities were beyond the scope of our audit. Other issues that could have occurred outside the Group's accounting system but without impact on the consolidated financial statements audited by us were also beyond the scope of our audit. The audit of the Group's consolidated financial statements for the year ended 31 December 2016 was carried out between 20 February 2017 and 21 March Declaration of independence Grant Thornton Polska Spółka z ograniczoną odpowiedzialnością sp. k., members of the general partner's management board, the network in which the entity authorised for audit belongs, the statutory auditor managing the audit and other persons participating in the audit meet the conditions to express an impartial and independent opinion on the Group's consolidated financial statements being audited, as specified in art. 56 of the Act of 7 May 2009 on statutory auditors and their self-regulation, entities authorised to audit financial statements and on public supervision (consolidated text: Polish Journal of Laws of 2016, item 1000, as amended). 7 Availability of data and declarations received The Parent's Management Board submitted a written declaration dated 21 March 2017 on the completeness, reliability and accuracy of the audited consolidated financial statements and stating that between the balance sheet date and the date at which the audit ended no events took place such as could have materially affected the Group's financial and asset situation and that would have required recognition in the audited consolidated financial statements. The Parent's Management Board confirmed its responsibility for the signed consolidated financial statements and declared that it provided us in the course of the audit with the financial statements of all companies covered by, documentation, information and other required documents and that it provided us with explanations necessary for us to issue an opinion on the audited consolidated financial statements.

6 RAWLPLUG Group 6 We consider the evidence received to constitute sufficient basis for expressing an opinion on the consolidated financial statements and that therefore the scope of our audit was not limited. 8 Consolidated statement of financial position ASSETS (in PLN 000s) NON-CURRENT ASSETS Intangible assets Property, plant and equipment Investment properties Non-current financial assets Non-current receivables and prepayments Deferred income tax assets CURRENT ASSETS Inventories Current receivables and prepayments Current income tax receivables Current financial assets Cash and cash equivalents TOTAL ASSETS: EQUITY AND LIABILITIES (in PLN 000s) EQUITY Equity attributable to owners of the parent Non-controlling interests LIABILITIES NON-CURRENT LIABILITIES Loans and borrowings Other financial liabilities Other liabilities Deferred income tax provision Employee benefit provisions Liability provisions Deferred revenues and accruals CURRENT LIABILITIES Loans and borrowings Other financial liabilities Trade and other payables Current income tax liabilities Deferred revenues and accruals Employee benefit provisions Liability provisions TOTAL EQUITY AND LIABILITIES: The Group's consolidated financial statements for 2015 were not audited by Grant Thornton Polska.

7 RAWLPLUG Group 7 9 Consolidated statement of profit and loss (in PLN 000s) Net revenue from sale of products, goods and materials Cost of products, goods and materials sold ( ) ( ) ( ) Gross profit (loss) on sales Selling costs ( ) ( ) ( ) Administrative expenses (44 716) (45 011) (35 453) Other operating revenues Other operating expenses (19 608) (16 693) (20 777) Operating profit (loss) Finance income Finance costs (13 129) (12 079) (13 377) Gross profit (loss) Income tax (4 923) (3 851) Net profit (loss) Net profit (loss) attributable to: owners of the parent non-controlling interests Net profit (loss) per ordinary share: - Basic 0,98 0,64 0,43 - Diluted 0,98 0,64 0,43 The Group's consolidated financial statements for 2015 were not audited by Grant Thornton Polska. 10 Consolidated statement of comprehensive income (in PLN 000s) Net profit (loss) for the period Items not transferable to profit or loss Items transferable to profit or loss Exchange differences on translation of foreign operations (144) Exchange differences on goodwill measurement Revaluation of property, plant and equipment - (320) - Total other comprehensive income Comprehensive income for the period Comprehensive income for the period, attributable to: owners of the parent non-controlling interests The Group's consolidated financial statements for 2015 were not audited by Grant Thornton Polska.

8 RAWLPLUG Group 8 11 Basic data and financial ratios Presented below are selected data and financial ratios for 2014, 2015 and 2016, depicting the Group's financial situation during this period. We calculated these financial ratios based on data contained in the Group's consolidated financial statements for the years ended 31 December 2016 and 31 December Ratio Calculation formula Ratio value **** 2014 Revenue from sales (PLN 000s) Net financial result *** (PLN 000s) Equity ** (PLN 000s) Total assets (PLN 000s) return on assets (%) net financial result / total assets at the end of period 4.4% 3.2% 2.3% return on equity (%) net financial result / equity at the beginning of period 9.5% 6.7% 5.0% sales margin (%) net profit on sales / revenue from sales 8.5% 6.2% 4.7% liquidity ratio I total current assets / current liabilities liquidity ratio III cash / current liabilities receivables turnover (in days) payables turnover (in days) inventory turnover (in days) financing structure trade receivables* x 365 days / revenue from sales trade payables x 365 days / own cost of sales inventories x 365 days / own cost of sales (equity + non-current liabilities) / total equity and liabilities 66.4% 67.6% 65.4% debt to assets (%) Inflation indicators: (total equity and liabilities - equity) / total equity and liabilities 50.6% 50.4% 52.1% yearly average (%) from December to December (%) * before reduction by impairment ** equity covers equity attributable to shareholders of the Parent and non-controlling interests; *** net financial result covers result attributable to shareholders of the Parent and non-controlling interests **** ratios for 2015 calculated based on financial data from consolidated financial statements audited by another auditor

9 RAWLPLUG Group 9 12 Going concern In point 2.1. of additional information to the Group's audited consolidated financial statements for the year ended 31 December 2016, the Parent's Management Board announced that the Group's consolidated financial statements is prepared on a going concern basis for a period not shorter than 12 months from 31 December 2016 and that there are no circumstances indicating a threat to the Group's going concern. During our audit we did not record any circumstances that would warrant our belief that the Group may not be able to continue as a going concern for at least 12 months from the balance sheet date, i.e. 31 December 2016, as a result of an intended or forced discontinuation or significant reduction in its activities. 13 Financial year The financial statements of all companies in the Group that are the basis for preparing the consolidated financial statements were prepared as at 31 December 2016 and cover financial data for the reporting period from 1 January 2016 to 31 December Accounting principles (policy) and methods of presenting financial data In point 2.2. of additional information to the consolidated financial statements for the year ended 31 December 2016, the Parent's Management Board presented the Group's accounting principles (policy) and methods for presenting financial data. Amendments to the Group's accounting principles (policy) / methods for presenting financial data and their impact are presented in note 50 in additional information to the Group's consolidated financial statements for the year ended 31 December Goodwill arising on and gain from bargain purchase Rules for determining goodwill arising on and for recognising goodwill impairment as well as information facilitating assessment of changes in the balance sheet value of goodwill during the period from 1 January 2016 to 31 December 2016 are disclosed in point of additional information to the consolidated financial statements and in notes 2 and 52.

10 RAWLPLUG Group Equity Equity indicated in the consolidated statement of financial position as at 31 December 2016 is in compliance with documentation. Non-controlling interests as at 31 December 2016 amounted to PLN thousand. Financial data related to equity is presented in notes from 14 to 16 of additional information to the consolidated financial statements. 17 Consolidation exclusions Exclusions concerning companies subject to : mutual settlements (receivables and payables), intra-group trade (revenues and costs), results not realised by companies covered by, contained in the value of their assets, dividends are in compliance with documentation. 18 Sale of shares in a subordinated company During the financial year ended 31 December 2016, the Group did not sell any shares in subordinated companies. 19 Completeness and accuracy of documentation As a result of our audit, we concluded that documentation is complete and correct and that it fulfils the significant conditions that documentation should meet. This particularly applies to exclusions related to adjustments. 20 Asset and liability structure in the consolidated statement of financial position The Group's asset and liability structure is presented in the consolidated financial statements for the year ended 31 December Data presented in the Group's consolidated financial statements is in compliance with documentation.

11 RAWLPLUG Group Items having impact on the Group's financial results A description of items having impact on the Group's financial result is presented in the audited consolidated financial statements for the year ended 31 December Data presented in the consolidated financial statements is in compliance with documentation. 22 Exemptions from rules and application of the equity method In preparing the consolidated financial statements, the Parent's Management Board made the following exemptions from rules and application of the equity method: Consolidation as at 31 December 2016 did not cover the data of seven subsidiaries, as listed in note of additional information to the consolidated financial statements for 2016 given their negligible impact on the consolidated financial statements. 23 Additional information on the adopted accounting principles and other explanatory information Additional information on the adopted accounting principles and other explanatory information to the consolidated financial statements for the financial year ended 31 December 2016 are prepared, in all significant respects, in accordance with International Accounting Standards, International Financial Reporting Standards and related interpretations published in the form of European Commission regulations. 24 Management report on group operations We reviewed the report by the Parent's Management Board on the Group's operations for the financial year ended 31 December In our opinion, the information contained in the report on the Group's operations takes into consideration art. 49 sec. 2 of the Accounting Act of 29 September 1994 (consolidated text: Polish Journal of Laws of 2016, item 1047, as amended) and the Ordinance of the Minister of Finance of 19 February 2009 on current and periodic information disclosed by issuers of securities and the terms for recognising information required by the provisions of law of a non-member state as equivalent (consolidated text: Polish Journal of Laws of 2014, item 133) and is in compliance with information contained in the attached consolidated financial statements. Moreover, in light of the knowledge about the Group and its surroundings obtained in the course of auditing the consolidated financial statements, we did not identify any distortions in the report on the Group's operations.

12 RAWLPLUG Group 12 In our opinion, the Parent's declaration on application of corporate governance rules, constituting a separate part of the report on the Group's operations, included information that is required within the scope specified in secondary regulations issued on the basis of art. 60 sec. 2 of the Act of 29 July 2005 on Public Offerings and the Terms for Introducing Financial Instruments to an Organised Trading System and on Public Companies (consolidated text: Polish Journal of Laws of 2016, item 1639). This information is in compliance with the applicable regulations and information contained in the consolidated financial statements. This report contains 12 pages. Jan Letkiewicz Statutory auditor no Lead statutory auditor conducting the audit on behalf of Grant Thornton Polska Spółka z ograniczoną odpowiedzialnością sp. k., based in Poznań, ul. Abpa Antoniego Baraniaka 88 E, an entity authorised to audit financial statements, entry number Poznań, 21 March 2017