Radpol S.A. Capital Group REPORT ON AUDIT OF CONSOLIDATED FINANCIAL STATEMENTS AS AT 31 DEC 2014

Transcription

1 Radpol S.A. Capital Group REPORT ON AUDIT OF CONSOLIDATED FINANCIAL STATEMENTS AS AT 31 DEC

2 Table of contents Page 1. GENERAL PART 1.1 Capital Group Identification Details Legal bases Information on entities included in the Capital Group Information on the consolidated financial statements for the previous financial year Data identifying the entity authorized to audit the financial statements Information on conducted audits of the financial statements 8 2. FINANCIAL ANALYSIS 2.1 General analysis of the financial statements Selected financial ratios Interpretation of selected financial ratios DETAILED PART 3.1 Accounting principles The basis of drafting consolidated financial statements Consolidation methodology Transactions excluded from consolidation Equity consolidation Other elements of the consolidated financial statements and report on the activities of the Capital Group Events after the balance sheet date Audit conclusions 19 2

3 GENERAL PART 3

4 1.1 Capital Group Identification Details 1.1.1Capital Group name Radpol S.A Registration of the Parent Company in the National Court Register The Parent Company is registered under the company name: Radpol S.A. in the Register of Entrepreneurs of the National Court Register held by the District Court of Gdańsk- Północ in Gdańsk, 8 th Economic Division of the National Court Register with KRS number The registration was made on 26 Oct We were submitted an extract from the register on 2 Mar 2015 with the last entry of 2 Mar According to the information of the Management Board, there were no subsequent events requiring entry Parent Company registered office The Parent Company registered seated in Człuchów, , at ul. Batory Statistical number (REGON) The Statistical Office in Gdańsk granted the Parent Company statistical identification number: Tax identification number (NIP) The Tax Office in Gdansk granted the Parent Company tax identification number:

5 1.1.6 Parent Company authorities and resolutions During the reporting term the Management Board of the Parent Company included: Mr Krzysztof Zbigniew Pióro - President of the Management Board until 17 Dec 2014 Mr Andrzej Piotr Sielski - Vice President of the Management Board Mr Marcin Piotr Rusiecki - Vice President of the Management Board In order to make declarations on behalf of the Company joint action of two members of the Management Board or a joint action of a Management Board member with a proxy. On 17 December 2014, Mr. Krzysztof Pióro resigned from his position on the Management Board of the Company, while on 7 January 2015 the Supervisory Board decided to include Mr. Daniel Dajewski in the Management Board appointing him the President of the Management Board effective as of 1 March Composition of the Supervisory Board of the Parent Company during the reporting term: Grzegorz Jan Bielowicki - Chairman of the Supervisory Board Marcin Maciej Wysocki - Deputy Chairman of the Supervisory Board Tomasz Krzysztof Firczyk - Secretary of the Supervisory Board Krzysztof Stanisław Kurowski - Member of the Supervisory Board Jacek Jakub Tomasik - Member of the Supervisory Board Leszek Grzegorz Iwaniec - Member of the Supervisory Board Jerzy Paweł Markiewicz - Member of the Supervisory Board During the reporting term: Ms Dorota Anna Kania was appointed joint commercial proxy. After the balance sheet date until the date of the opinion there were no changes in terms of people granted power of attorney. 5

6 1.2 Legal bases Articles of Association The activities of the Parent Company are based on the Articles of Association of the Company dated 4 Sep 2007, signed before a notary Anna Ewa Dańko-Roesler in a notary's office in Warsaw, ul. Ordynacka 9, with the file number Repertory A 12800/2012, as amended Subject of the business activities of the entity The principal business activities of the entity include: - Manufacturing tubes, pipes, cables, hollow profiles and steel connectors, - Manufacturing insulated wiring and cables and wiring devices, - Manufacturing plastic goods and other rubber products, - Manufacturing ceramic insulators and insulating shells Share capital The Parent Company's share capital did not change during the term and amounts to PLN 771, It consists of 25,719,752 shares with the nominal value of PLN 0.03 each. Company shares held by: No. of Share nominal shares value % Marcin Wysocki % Aviva Otwarty Fundusz Emerytalny Aviva BZ WBK % PKO Towarzystwo Funduszy Inwestycyjnych S.A. Warszawa % FULCRUM Fundusz Inwestycyjny Zamknięty Aktywów Niepublicznych % BZ WBK Asset Management S.A % ING OFE % Allianz Polska Otwarty Fundusz Emerytalny % Aviva Investors Poland S.A % Grzegorz Bielowicki % Andrzej Sielski % RADPOL S.A % Tomasz Firczyk % TRIGON Dom Maklerski S.A % Other shareholders % % After the balance sheet date until the date of issuing the opinion there were no changes in the structure of shareholders of the Company. 6

7 1.3 Information on entities included in the Capital Group Companies included in the consolidated financial statements: a) the Parent Company: - Radpol S.A. b) subsidiaries: - Finpol Rohr Sp. z o.o 1.4. Information about the consolidated financial statements for the previous financial year The consolidated financial statements for 2013 were audited by ECA Seredyński i Wspólnicy Sp. k. The audited report was granted an unqualified opinion. The consolidated financial statements were approved by virtue of a resolution of the Shareholders' General Meeting of 6 May The approved consolidated financial statements were filed with the District Court on 12 May Data identifying the entity authorized to audit financial statements The audit was conducted by ECA Seredyński i Wspólnicy Spółka z ograniczoną odpowiedzialnością Sp.k. with registeredoffice in Kraków, at ul. Moniuszki 50, entered on the list of entities authorized to audit financial statements with number The Audit was conducted pursuant to the agreement concluded on 12 July 2013 with the Management Board of Radpol Spółka Akcyjna. The auditor was selected as the auditor of the Radpol Spółka Akcyjna by virtue of the Supervisory Board s resolution dated 9 Jul The Chartered Accountant, representing the authorized entity and in charge of the audit, is Piotr Woźniak, registration number We declare that both the authorized entity ECA Seredyński i Wspólnicy Spółka z ograniczoną odpowiedzialnością Sp.k. as well as the chartered accountant are qualified to express an impartial and independent opinion on these financial statements. The impartiality is confirmed in writing. The audit was conducted in December 2014 and February and March 2015 and was completed on 18 March There were no limitations as to the scope of the audit. The auditors obtained all the information and explanations. On 18 Mar 2015 the Management Board confirmed in writing the completeness of the prepared financial statements and indication of any contingent liabilities and informed of significant events that occurred after 31 Dec 2014 to the date of submitting the statements. 7

8 1.6 Information on conducted audits of the financial statements Entity name Entity authorized to conduct the audit Balance sheet date Opinion type Radpol S.A. FinpolRohr Sp. z o.o. ECA Seredyński i Wspólnicy Spółka z ograniczoną odpowiedzialnością Sp.k. ECA Seredyński i Wspólnicy Spółka z ograniczoną odpowiedzialnością Sp.k. 31 Dec 2014 Unqualified opinion 31 Dec 2014 Unqualified opinion with an explanatory note* *the explanation refers to the planned merger of the entity with the Parent Company Radpol S.A. 8

9 FINANCIAL ANALYSIS 9

10 2. CAPITAL GROUP FINANCIAL ANALYSIS 2.1 General analysis of the consolidated financial statements 31 Dec 2014 PLNk % 31 Dec 2013 PLNk % 31 Dec 2012 PLNk Assets Tangible assets Tangible fixed assets Intangible assets Goodwill Stocks and shares Long-term receivables Deferred income tax assets Other fixed assets Total fixed assets Current assets Inventories Trade and service receivables Current income tax receivable Other receivables Other financial assets Cash and cash equivalents Accruals Current assets Assets classified as held for sale Assets classified as held for sale Assets classified as held for sale in total Assets % 10

11 31 Dec 2014 PLNk % 31 Dec 2013 PLNk % 31 Dec 2012 PLNk Liabilities Equity Share capital Treasury shares Share premium reserve Retained earnings Other reserve capitals Other comprehensive income Equity in total attributable to the shareholders of the Parent Company % Long-term liabilities and provisions Deferred income tax reserve Provision for pensions and similar obligations Incl.: long term provisions Other provisions Interest-bearing facilities and loans Other financial liabilities Long-term liabilities and provisions in total Short-term liabilities Facilities and loans Other financial liabilities Trade and service receivables liabilities Current income tax liabilities Other liabilities Deferred income Short-term liabilities in total Liabilities

12 Percentage changes in the separate profit and loss account 2014 PLN k 2013/2014 % 2013 PLN k 2012/2013 % 2012 PLN k Sales revenues Own sales costs Gross profit (loss) from sales Sales costs General and administrative costs Acquisition costs Profit (loss) from sales Other operating revenue Other operating costs Gross profit (loss) from operating activities Financial revenue Financial costs Profit (loss) before tax Income tax Net result

13 2.2 Selected financial results Balance sheet total PLNk Net financial result PLNk PROFITABILITY RESULTS Return on assets ROA Net financial result Total assets (average balance) % net profit margin Net financial result Sales revenue % Return on Equity ROE Net financial result Equity (average balance) % LIQUIDITY RATIOS 1 st grade liquidity Current assets Short-term liabilities % nd grade liquidity Current assets Inventories Short-term liabilities % Receivables turnover (ratio) Trade and service receivables Sales revenue days Liabilities turnover (ratio) Trade and service liabilities Own sales costs days Inventory turnover (ratio) Inventories Own sales costs days

14 2.3 Interpretation of selected financial ratios The analysis of the balance sheet covered financial data characterizing the company for the last three financial years. On 31 Dec 2014 Radpol S.A. merged with a subsidiary WIRBET S.A. Comparability of data for the analyzed terms and 2013 was retained, 2012 takes into account only the financial data of the Radpol S.A. With regard to the structural analysis it can be stated that the fixed assets represent 64.31% of the Group's assets, while current assets 35.69%. The main item of fixed assets are tangible fixed assets, which represent 55.45% of the balance sheet total. The current assets are dominated by trade and service receivables whose share in the balance sheet total amounts to 18.9%. The value of trade and service receivables is higher by 1.6 p.p. compared to last year. The share of equity in total liabilities increased by 2.7 p.p. and amounted to 46.6% in the audited year. The share of short-term liabilities also increased in the analyzed term to 29.1% from 28% last year. Sales revenues in the Capital Group increased by 15.1% year to year, while the sales cost increased by 15.3% compared to Thus, the gross profit from sales in 2014 amounted to PLN 49,513k and increased by 14.5 % compared to the previous year. The increase in cost of sales by 26.2% (i.e. by about PLN 2,858k) and general and administrative expenses by 25.7% (i.e. by PLN 3,903k) with an overall decrease in acquisition costs contributed to the decline in net profit from sales in the Capital Group by 2.5% compared to The decrease in other operating revenue by 70.3% and an increase in other operating expenses by 7.4% contributed to the decline in operating profit by 25.8% compared to The decrease in financial revenues by 31.0% and an increase in financial costs by 22.7% led to the decrease in gross profit by 33.5% compared to the previous year and a decrease in group net profit by 37.5%. The results of the different activities shown in the consolidated profit and loss account for the audited term: PLN k Operating result Other operating result Financial result Income tax Affected the net financial result at the amount of The profitability ratios in the audited year were positive but all recorded a decline compared to the previous year. The main factor behind the decline in profitability ratios was recognizing higher net profit compared to the previous year, which is, among others, the result of the increase in the cost of basic and other activities, and financial activities. The decrease in current assets of the Group in the term contributed to a slight decrease in liquidity ratios of the first and second grade: the 1 st grade by about 0.23 degree; the 2 nd grade by about The receivables turnover ratio of the Group decreased by seven days and was 74 days in the audited year. Also, inventory turnover shortened by 14 days compared to the previous year and amounted in the audited year to 67 days. The liability payment cycle deteriorated and decreased from 82 to 62 days in

15 DETAILED PART 15

16 3. DETAILED PART 3.1 Accounting principles The Parent Company maintains current documentation describing the accounting principles applied by the Capital Group and adopted by the Management Board of the Parent Company. Subsidiaries of the Capital Group apply accounting principles consistent with the accounting policies applied by the Parent Company. The financial statements of the entities included in the consolidated financial statements were prepared as at the same balance sheet date as the financial statements of the Parent Company. 3.2 The basis of drafting consolidated financial statements The consolidated financial statements of the Capital Group were prepared in accordance with the International Financial Reporting Standards, and with regard to matters not regulated by the above standards, in accordance with the requirements of the Accounting Act of 29 September 1994, as amended and executive regulations issued on the basis thereof, as well as requirements for issuers of securities admitted or intended to be admitted to trading on a regulated stock market. The consolidated financial statements was based on the consolidation documentation, including in particular: - the financial statements of related parties, - adjustments and transactions excluded made during consolidation, necessary to prepare the consolidated financial statements; - calculation of the fair value of the net assets of the subsidiary, - calculation of goodwill and surplus of the share of the merging entity in the net fair value of the identifiable assets, liabilities and contingent liabilities of the merged entity over the purchase cost, - calculation of minority interest. The consolidation documentation is complete and meets the requirements of the Regulation of the Minister of Finance dated 25 Sep 2009 on detailed rules for drafting financial statements of related parties by entities other than banks and insurance companies. 3.3 Consolidation methodology The Parent Company prepared consolidated financial statements applying the full method including the financial statements of the following entities. a) the Parent Company: - Radpol S.A. b) subsidiaries: - Finpol Rohr Sp. z o.o 16

17 3.4 Transactions excluded from consolidation During the consolidation intercompany sales transactions, intercompany operating revenues and expenses and financial expenses were excluded. Unrealized results of the consolidated companies included in the value of assets were also excluded. Details forming the basis for exemptions were obtained from the accounting records of Radpol S.A. and reconciled with information received from the subsidiaries. 3.5 Equity consolidation The Share Capital of the Capital Group is the share capital of the Parent Company. The other components of group equity were was calculated by adding individual components of relevant components of the equity of the subsidiary included in the consolidated financial statements to the particular components of the equity of the parent company, corresponding to the percentage share of the parent company in the equity of the subsidiary as at the balance sheet date. The equity of the Capital Group includes only those parts of the relevant components of equity of the subsidiary, which were generated from the date of merging it by the parent company. 17

18 3.6Other elements of the consolidated financial statements and report on the Capital Group s operations Consolidated statement of changes in equity Consolidated statement of changes in equity was prepared correctly, in accordance with the International Accounting Standards. It was found to be linked with other elements of the financial statements and accounting records. Consolidated statement of comprehensive income Consolidated statement of Comprehensive Income was prepared properly in accordance with the provisions of International Accounting Standards. It was found to be linked with the statement of financial position, the separate profit and loss accounts and accounting records. Consolidated statement of Cash Flows The consolidated statementcash flow statement has been prepared correctly, in accordance with the International Accounting Standards. It was found to be linked with other elements of the financial statements and accounting records. Additional notes The additional notes being an integral component of the consolidated financial statements were prepared in accordance with International Financial Reporting Standards adopted by the European Union. Parent Company Management Board s Report on the Operations of the Capital Group The report on the operations in the financial year includes figuresin accordance with the figures of the financial statements and includes information that complies with the requirements of Article 49 of the Accounting Act and the Regulation of the Minister of Finance dated 19 February 2009 on current and periodic information published by issuers of securities. 3.7 Events after the balance sheet date No events after the balance sheet date that have a significant impact on the balance sheet total or the financial result for the audit year were found. 18

19 3.8 Audit conclusions Based on our audit of the consolidated financial statements of Radpol S.A. Capital Group with the registered seat in Człuchów it can be stated that: 1. The consolidated financial statements for 2014 financial year were prepared correctly, the figures contained in the financial statements are in accordance with the relevant balances and turnover in the books, 2. The financial statements were signed by authorized persons, 3. There were no developments and events indicating violation of applicable law. The result of the audit of the consolidated financial statements of Radpol S.A. Capital Group for 2014 fiscal year was presented by the auditor in his opinion. An unqualified opinion was issued. The report contains 19 pages signed by the auditor. [Woźniak, legible signature] [oval stamp: An entity authorized to audit financial statements No ECA ul. Moniuszki 50, Kraków] Piotr Woźniak Key chartered accountant Registered no Conducting an audit on behalf of ECA Seredyński I Wspólnicy Spółka z ograniczoną odpowiedzialnością Sp. k No Poznań 18 Mar