statement of Apator Group for four Consolidated quarterly financial quarters 2014

Transcription

1 quarterly financial statement of for four quarters quarterly financial statement of for four quarters in 2014 that includes 1

2 Contents quarterly financial statement of for four quarters in 2014 that includes 1. Selected financial data with essential items of condensed financial statement (also converted to Eur) presenting cumulative data for all quarters current and previous financial year Organization of Capital Group Business activity of Makeup of and associated and jointly controlled entities as at 31 st December Entities subject to consolidation as at 31 st December The effects of changes in the structure of the entity in I-IV quarters finanial statement of financial statement of financial position Information on changes in contingent liabilities or contingent assets that occurred since the end of the recent financial year (balance off sheet items) of financial statement of comprehensive income financial statement of changes in equity financial statement of cash flow financial statement pursuant to operational segments Geographical information Information on credit guarantee or borrowing or guarrantee granted by the issuer or its subsidiary Loans and borrowings of Information on borrowings granted Information on principles adopted during preparation of the financial statement, particularly information on changes of principles applied in accounting policy Accounting principles Consolidation principles Additional financial information Weighted average number of shares Weighted average number of shares for consolidated financial statement Weighted average number of shares for separate financial statement Exchange rates used to convert selected financial data Information on adjustments due to provisions, provision and assets due to deferred income tax mentioned in accounting act, write downs of the value of elements of assets financial statement Purchase of Apator Elkomtech SA Changes in accounting principles, adjustment of error Factors and events that have the influence on financial results of in The forecast of financial results Analysis of financial results achieved by Macroeconomic situation in Poland in Sectors where Apator operates Sales revenues and explanations concerning its seasonal nature Income statement and other comprehensive income Analysis of financial position Condensed description of significant achievements and failures Proceeding before the court, arbitration court or public authority Information on conclusion by the issuer or its subsidiary significant transactions with related entities Information concerning the issue,buyout and repayment of non equity securities and capital securities Shares and shareholders Share capital Shareholding and changes in the ownership structure of important shareholders Shareholding and changes in the ownership structure of persons in management and supervision Dividend Dividend from the profit for The payment of dividend from the profit in 2014 and interim dividend towards dividend for Other significant information for the assessment of personnel, property and financial situation, financial result and their changes and significant information for the assessment of possibilities of the issuer to perform its obligations Factors that in opinion of Management Board will have the impact on results to be achieved at least in one quarter Forecast of financial results for Risks and threats Enclosure: Separate financial statement of Apator SA Statement of financial position of parent entity - Apator SA Information concerning the contingent changes or contingent assets that occurred since the end of the recent financial year (off-balance sheet items) of parent entity Apator SA Comprehensive income statement of parent entity - Apator SA

3 quarterly financial statement of for four quarters in 2014 that includes Financial statement of changes in equity of parent entity - Apator SA Financial statement of cash flow of parent enity - Apator SA Information on adjustments due to provisions, provision and assets due to deferred income tax mentioned in accounting act and write downs the value of the elements of assets made

4 quarterly financial statement of for four quarters in 2014 that includes 1. Selected financial data with essential items of condensed financial statement (also converted to Eur) presenting cumulative data for all quarters current and previous financial year 4 in thousands of PLN current period previous period in thousands of EUR current period previous period financial statement IV Qs 2014 IV Qs 2013 IV Qs 2014 IV Qs 2013 Sales revenues of products, goods and materials Profit (loss) from operating activity EBITDA Gross profit (loss) Net profit (loss) Net profit (loss) for shareholders of parent entity in Net profit (loss) for non-controlling interest Weighted average number of shares Net profit (loss) per ordinary share [PLN/ share]: 2,87 2,28 0,68 0,54 Cash flows from operating activity Cash flows from investing activity ( ) (21 965) (30 979) (5 296) Cash flows from financing activity (44 913) (10 830) Total cash flows (25 480) (6 144) financial statement Total assets Fixed assets Current assets Equity with non-controlling interest Non-controlling interest Share capital Long-term liabilities and provisions Short-term liabilities and provisions Weighted average number of shares Book value per ordinary share [PLN/ share]: 13,15 11,03 3,09 2,66

5 quarterly financial statement of for four quarters in 2014 that includes 2. Organization of Capital Group Business activity of Entities of focuse its activities on electric machines industry with the following business segments: metering - business lines: water and heat, electricity meters, gas, ICT, grid automation - business lines: switchgear and control and supervision systems, non-core - business lines: control and mining equipment Makeup of and associated and jointly controlled entities as at 31 st December 2014 Parent entity of the group is Apator SA. Apator Metrix Apator Elkomtech Pafal Apator Powogaz Apator Rector Apator Control Apator Mining 100% 100% 100% 100% 100% 100% 100% Apator GmbH Apator Elektro 100% 50% GWi Apator Metra 50% 100% Apator Telemetria 61,6% Apator Metroteks 61% Teplovodomer 50% Inda 35% Since 1 st April 2014 was extended by Elkomtech SA, business line supervisory control systems Entities subject to consolidation as at 31 st December 2014 parent entity: Apator SA, subsidiaries (directly and indirectly ) consolidated by full method: Company Headquarters Share in capital Relationships with Apator SA Apator Mining Sp. z o. o. Katowice 100,00% Subsidiary of Apator SA Apator Control Sp. z o. o. Toruń 100,00% Subsidiary of Apator SA Apator Metrix SA Tczew 100,00% Subsidiary of Apator SA Apator Elkomtech SA Łódź 100,00% Subsidiary of Apator SA FAP Pafal SA Świdnica 100,00% Subsidiary of Apator SA Apator Rector Sp. z o. o. Zielona Góra 100,00% Subsidiary of Apator SA Apator Powogaz SA Poznań 100,00% Subsidiary of Apator SA Apator GmbH Berlin (Germany) 100,00% Subsidiary of Apator SA Apator Metra s. r. o. TOV Apator Metroteks Sumperk (Czech Republic) Kiev (Ukraine) 100,00% 100,00% Indirect subsidiary of Apator SA through Apator Powogaz SA Indirect share through Apator Powogaz SA 61,00% Indirect subsidiary of Apator SA through Apator

6 quarterly financial statement of for four quarters in 2014 that includes Company Headquarters Share in capital ApatorTelemetria Sp.z o. o. Słupsk Relationships with Apator SA 61,00% Powogaz SA Indirect share through Apator Powogaz SA 61,60% 61,60% Indirect subsidiary of Apator SA through Apator Powogaz SA Indirect share through Apator Powogaz SA 6 entities jointly controlled evaluated by equity method: Company Headquarters Share in capital OOO Apator Elektro Moscow (Russia) 50,00% 50,00% ZAO Teplovodomer Mytishchi (Russia) 50,00% Relationships with Apator SA Jointly controlled through Apator SA Indirect jointly controlled by Apator SA through Apator Powogaz SA Indirect share through Apator Powogaz SA GWi Ltd. Coventry (United Kingdom) 50,00% 50,00% Jointly controlled by Apator SA indirect by Apator Metrix SA Indirect share through Apator Metrix SA 3. The effects of changes in the structure of the entity in I-IV quarters 2014 The effects of changes in the structure of the entity in I-IV quarters 2014, including merger of entities, take over or sale of entities of capital group of the issuer, long term investments, division, restructuring and discontinuance of the activity: Apator SA: Apator SA has not introduced any changes in organization structure. The Company has been operating based on four divisions; operating, financial, switchgear, metering equipment and systems. Changes have occurred in the make-up of Management Board of Apator SA. On 6 th May 2014 Supervisory Board of Apator SA made the decision on the appointment since 1 st July 2014 Piotr Nowak to the Member of Management Board Chief Financial Officer. The extension of the makeup of Management Board is related to performance of the strategy of for The Member of Management Board is responsible for the integration of financial areas in, growth of effectiveness of financial management and searching the sources of growth of the goodwill of capital group. Since 1 st July 2014 Management Board of Apator SA has been operating in the following make-up: Andrzej Szostak President of Management Board, Tomasz Habryka Member of Management Board, Jerzy Kuś Member of Management Board, Piotr Nowak Member of Management Board.

7 quarterly financial statement of for four quarters in 2014 that includes 7 After reporting period i.e. on 1 st February 2015 Tomasz Habryka took over the post of CEO in Apator Elkomtech SA. Further to the above, after its duties are submitted to the Management Board of Apator SA it will offer its resignation of the Member of Management Board of Apator SA. Long term investment - Apator Elkomtech SA: On 1 st April 2014 Apator SA acquired 100% of shares of Elkomtech SA with headquarters in Łódź that is leading Polish supplier of IT systems of SCADA class and control engineering equipment, protection equipment and other power grid equipment for dissipation systems cooperating with the systems, providing the possibility of remote control and supervision of power grid for the entire voltage range. The purchase price was in total PLN 98, 4 m while Apator SA took over the cash of PLN 7, 8 m with Elkomtech SA. The acquisition of shares of Apator Elkomtech has been financed by long term credit. The purchase of the company results out of performance of the strategy of the development of that for the automation of power grid assumes: comprehensive consumer service of power engineering sector based on smart equipment and systems, offering comprehensive tool for the automation of the operation of entire power grid for all voltage values, provision the possibility of current diagnostics of power grid and flexible its management. On 26 th January 2015 the amended name of the company to Apator Elkomtech SA was registered. Changes in long term investments - Apator Rector sp. z o.o.: On 30 th June 2014 Apator SA acquired 30% of shares of its subsidiary- Apator Rector sp. z o. o. for the amount of PLN 17, 9 m. The assignment of property rights was performed on 1 st July Currently, Apator SA is in possession 100% of shares of Apator Rector sp. z o. o. The acquisition of the above shares was performed in conditions defined in investment contract dated 30 th December 2010 concluded between Apator SA and two non-corporate persons. Changes in long investments - FAP Pafal SA: On 12 th February 2014 Apator SA sold FAP Pafal SA its shares for PLN The purchase cost of these shares was PLN The shares together with outstanding ones purchase by the Company in 2013 have been redeemed in the fourth quarter The process of restructuring of FAP Pafal SA is being continued while the manufacturing of electronic electricity meters has been transferring to Apator SA, located in the area of Pomeranian Special Economic Zone. The activity of FAP Pafal SA since the second quarter 2015 will be focused on manufacturing of inductive electricity meters and rendering services related to electricity meters. Changes in long investments - Apator GmbH: On 31 st January 2014 the share capital was increased in subsidiary - Apator GmbH (Germany) from Eur to Eur Besides the above changes in no more mergers neither other takeover of entities, restructuring, division or discontinuance of activity have occurred. 4. financial statement of and separated financial statements for four quarters in 2014 have been prepared in accordance with International Accounting Standards (IAS / IFRS) and related to them interpretations announced in form of Regulations of European Commission and Regulation of Ministry of Finance dated 19 th February 2009 on current and regular information being transferred by the issuers of securities (Journal of Laws of the Republic of Poland No 33, item 259) with later amendments.

8 quarterly financial statement of for four quarters in 2014 that includes 8 Interim financial statements (consolidated and separated ones of parent entity) for the period of twelve months completed on 31 st December 2014 have been constructed according to IAS 34 (interim financial reporting). Interim financial statements do not include all the information and disclosures that are required in annual financial statement and they should be read together with annual financial statement of Apator Capital Group as at 31 st December financial statement of financial position Day Fixed assets Intangible assets Goodwill of related entities Property, plant and equipment Investment properties Investments in associated entities consolidated by equity method Other long-term financial assets in other entities Long-term borrowings granted to related entities Long -term receivables from other entities Long-term prepayments 2 9 Deferred tax assets Current assets Inventories Trade receivables from related entities from other entities Current tax assets Receivables due to other taxes (excluding income tax) and other similar charges Other short-term receivables from other entities Other short-term financial assets in other entities Cash and cash equivalents Short-term prepayments Fixed assets classified as held for sale TOTAL ASSETS Equity Equity for shareholders of parent entity

9 quarterly financial statement of for four quarters in 2014 that includes Day Share capital Other capitals Reserve of remeasurements of defined benefit plans (136) 355 Evaluation capital of hedging transactions and exchange differences from consolidation (2 821) 623 Undistributed financial result undistributed result from previous years result of current period write-offs from net profit in the financial year (negative value) (8 852) (8 852) Non-controlling interest Liabilities Long-term and liabilities and provisions Long-term loans and borrowings from other entities Long-term liabilities towards other entities Deferred income tax liabilities Long-term provisions for employee benefit liabilities Other long-term provisions Short-term liabilities and provisions Short-term loans and borrowings from other entities Trade liabilities towards related entities towards other entities Current tax liabilities Liabilities due to other taxes (excluding income tax) and other similar charges Other short-term liabilities towards other entities Short-term provisions for employee benefit liabilities Other short-term provisions TOTAL LIABILITIES

10 quarterly financial statement of for four quarters in 2014 that includes Information on changes in contingent liabilities or contingent assets that occurred since the end of the recent financial year (balance off sheet items) of Day Contingent receivables Contingent receivables due from other entities Contingent liabilities Contingent liabilities connected with related entities due to guarranties and warranties granted to related entities Contingent liabilities due to other entities due to guarranties and warranties granted Other off-balance-sheet items Fixed assets leased Ordinary mortgage Bail mortgage Hedging on property Assignment of receivables Deposits placed - 36 Blank bills of exchnage Other - compulsory mortgage Total off-balance-sheet items Additionally, the Group has established the following hedging for the repayment of liabilities to banks: hedging of repayment of the limit of liabilities by silent assignment 30% minimum of all the turnover of Apator S.A., assignment of rights from insurance policy to properties of Apator S.A. located in Ostaszewo as the hedging of revolving line for the bank guarantee to be granted, bail deposit in foreign currency and in amount issued by Raiffeisen Bank Polska SA guarantee in case of failure of other hedging, hedging of repayment of the loan on current account of Apator SA by assignment of receivables, assignment of rights from insurance policy to properties of Apator Mining Sp.z o.o. located in Pszów, assignment of rights from insurance policy to properties of Apator Powogaz S.A. located in Poznań assignment of rights from insurance policy to properties of FAP Pafal S.A. located in Świdnica, assignment of rights from insurance insurance policy to properties Apator Metra located in Czech Republic, assignment of rights from insurance policy to current assets of Apator Mining Sp.z o.o, assignment of rights from insurance policy to current assets of Apator Control sp. z o.o., assignment of rights from insurance policy to current assets of FAP Pafal S.A. hedging of inventories in manufacturing in progress and material inventories power of attorney to the cash on bank account in Raiffeisen Bank Polska SA leaded for Apator SA, registered pledge on securities of Apator SA being in possession of Apator Mining Sp. z o.o. to maximum hedging amount of PLN 60 m, registered pledge on tangible fixed assets of Apator SA to maximum hedging amount of PLN m with the assignment of rights from insurance policy registered pledge on inventories of the manufacturing in progress and materials of FAP PAFAL SA, surety under civil law of Apator Powogaz SA concerning the repayment of the loan by Apator SA to the amount of PLN 100 m, power of attorney to manage the cash collected on bank account of FAP PAFAL SA power of attorney to manage the cash collected on bank account of APATOR SA hedging of repayment of the long-term loan with registered pledge for shares of Elkomtech SA to maximum hedging amount of PLN 98,4 m,

11 quarterly financial statement of for four quarters in 2014 that includes hedging of bank guarantee of Apator SA 5 pieces of promissory note ( to the amount of PLN 9,76 each however not higher than PLN 9,76 in total) and hedging of insurance guarantee five pieces of in blanco promissory note hedging of the loan on current account of FAP PAFAL SA by in blanco promissory note, hedging of bank guarantee of proper performance of the contract in FAP PAFAL SA by in blanco promissory note 11 Under the above described hedging of the performance of bank contracts at the end of December 2014 the entities of made declarations of the voluntary submission of enforcement to the total amount PLN 370,6m. The declarations concern loan contracts and contracts of bank guarantee granted. The declarations submitted correspond to maximum liability of entities increased by bank costs financial statement of comprehensive income Period Sales revenues Sales revenues of products and services to related entities to other entities Sales revenues of goods and materials to related entities to other entities Cost of goods sold ( ) ( ) ( ) ( ) Cost of products and services sold ( ) ( ) ( ) ( ) - to related entities (7 865) (6 422) (33 901) (31 725) - to other entities ( ) ( ) ( ) ( ) Cost of goods and materials sold (11 551) (12 479) (44 238) (47 422) - to related entities (789) (436) (2 500) (2 717) - to other entities (10 762) (12 043) (41 738) (44 705) Gross profit (loss) on sales Selling costs (11 593) (11 722) (39 885) (35 725) Overheads (23 232) (21 921) (78 441) (77 523) Zysk (strata) ze sprzedaży/ Profit (loss) on sales Other operating revenues (costs), including: (2 385) (1 923) 560 (3 244) Result on sales and liquidation of property plant and equipment and intangibles Result on revaluation of non financial fixed assets Result on valuation of property (84) 20 (84) 160 Result on revaluation of non financial current assets 49 (1 938) 78 (1 468) Result on reserves for retirement bonuses and jubilee awards

12 quarterly financial statement of for four quarters in 2014 that includes Period Result on other operating activity (2 480) (928) (2 380) (3 284) Share in profits of entities consolidated by equity method (5) (176) Restructuring revenues (costs) 140 (277) 140 (277) Profit (loss) on operating activity Financial revenues (costs), including: (1 280) (1 038) (3 299) Interest on loans and borrowings (1 130) (455) (4 005) (1 908) Result on other interest Result on shares 26 (26) 26 (1 313) Result on bills of exchange 7 (3) (1) (4) Result on exchange differences (1 402) (358) (2 963) Result on currency transactions Result on revaluation of finnacial current assets (97) (757) (739) (1 038) Other financial revenues (costs) (140) 79 (899) (435) Profit (loss) before tax Current income tax (5 726) (4 941) (18 860) (16 088) Deferred income tax (512) (1 877) Net profit (loss) Other comprehensive income Other net comprehensive income (3 214) (3 963) (388) Items that can be reclassified in the future: Trade differences of foreign entities (858) (963) (1 324) (1 218) Net result on hedging accounting including tax effect (1 866) (2 149) 875 Items that will not be be reclassified in the future: 12 Net actuarial gains/(losses) on defined benefit plans including tax effect (491) 223 (491) (45) Comprehensive income in total Net profit (loss), including: shareholders of parent company non-controlling interest Comprehensive income in total, including: shareholders of parent company non-controlling interest

13 quarterly financial statement of for four quarters in 2014 that includes Period Profit (loss) on operating activity Amortization and depreciation EBIDTA

14 quarterly financial statement of for four quarters in 2014 that includes financial statement of changes in equity CAPITAL FOR THE SHAREHOLDERS OF PARENT ENTITY Share capital Other capitals Reserve of remeasurements of defined benefit plans Capital on valuation of hedging transactions and exchange differences from consolidation Undistribute d financial result TOTAL Noncontrolling interest TOTAL EQUITY Balance as at Adjustments to the opening balance (802) (802) - (802) Balance after changes made Changes in equity since till Comprehensive income: Net profit since till Distribution of result for supplementary capital (51 672) Reimbursement of loss from supplementary capital - (2 310) Other comprehensive income: Items that can be reclassified in the future: - - Net result on hedging accounting including tax effect - (2 149) (2 149) (2 149) Net exchange differences translated from financial statement to the currency of presentation Items that can t be reclassified in the future: (1 295) - (1 295) (29) (1 324) Profit (loss) due to revaluation (491) (491) - (491) Comprehensive income since till (491) (3 444)

15 quarterly financial statement of for four quarters in 2014 that includes 15 CAPITAL FOR THE SHAREHOLDERS OF PARENT ENTITY Share capital Other capitals Reserve of remeasurements of defined benefit plans Capital on valuation of hedging transactions and exchange differences from consolidation Undistribute d financial result TOTAL Noncontrolling interest TOTAL EQUITY Transactions with shareholders recognized directly in equity Dividends (18 396) (18 396) (406) (18 802) Settlement of interim dividend towards dividend from previous year Interim dividend paid (8 852) (8 852) - (8 852) Redemption of own shares - (5 080) (5 080) - (5 080) Redemption of own shares Total transactions with shareholders since till (18 396) (18 396) (406) (18 802) Balance as at (136) (2 821)

16 quarterly financial statement of for four quarters in 2014 that includes 16 CAPITAL FOR THE SHAREHOLDERS OF PARENT ENTITY Share capital Other capitals Reserve of remeasurements of defined benefit plans Capital on valuation of hedging transactions and exchange differences from consolidation Undistributed financial result TOTAL Noncontrolling interest TOTAL EQUITY Balance as at Changes in equity since till Comprehensive income: Net profit since till Distribution of result for supplementary capital (35 866) Other comprehensive income: Items that can be reclassified in the future: - - Net result on hedging accounting including tax effect Net exchange differences translated from financial statement to the currency of presentation Items that can t be reclassified in the future: - - (1 213) - (1 213) (5) (1 218) Profit (loss) due to revaluation (55) (55) - (55) Comprehensive income since till (45) (338)

17 quarterly financial statement of for four quarters in 2014 that includes 17 Transactions with shareholders recognized directly in equity Dividends (44 510) Settlement of interim dividend towards dividend from previous year Interim dividend paid (8 852) Total transactions with shareholders since till (41 559) Balance as at (44 510) (8 852) (41 559) (231 ) (231 ) (44 741) (8 852) (41 790)

18 quarterly financial statement of for four quarters in 2014 that includes financial statement of cash flow 18 Period Cash flow from operating activity Profit before tax (continued operation) Adjustments: Amortization of intangible assets Depreciation of property, plant and equipment Write downs due to depreciation of property,plant and equipment (10) (134) (Profit) loss on sales of tangible fixed assets and intangibles (2 676) (740) (Profit) loss on sales of financial assets available for sales (Profit) loss from evaluation of investment properties at fair value 84 (160) (Profits) losses from the change of fair value of derivatives 456 (1 048) Cost of interest Share in (profits) losses of associated entities (3 948) (1 288) Interest received (465) (378) Other adjustments (1 433) (1 518) Cash from operating activity before taking into consideration changes in current assets Change in inventories (1 641) Change in receivables (26 481) (44 657) Change in liabilities Change in provisions Change in accruals and prepayments (219) 296 Other adjustments (588) (1 707) Cash generated by operating activity Income tax paid (14 677) (18 714) Net cash from operating activity Cash flow from investing activity Outflows for the purchase of intangibles (5 418) (4 022) Inflows from the sales of intangibles - Outflows for the purchase of tangible fixed assets (24 724) Inflows from the sales of tangible fixed assets Inflows from sales of financial assets held for trading Investments in subsidiaries ( ) - (18 878)

19 quarterly financial statement of for four quarters in 2014 that includes Period Inflows from sales of subsidiaries - (278) Borrowings granted - (982) Inflows from repayment of borrowings granted Interest received Dividends received Other inflows (outflows) (380) (1 948) Net cash from investing activity ( ) (21 965) 19 Cash flow from financing activity Inflows from loans and borrowings taken Repayment of loans and borrowings (32 103) (40 326) Interest (4 456) (2 183) Dividends paid (18 555) (41 701) Repayment of liabilities under finance lease contracts (2 909) (2 329) Other inflows (outflows) (428) (254) Net cash from financing activity (44 913) Increase (decrease) of net cash and cash equivalents (25 480) Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period financial statement pursuant to operational segments The activity of is focused on two essential segments: metering automation of power grid The activity apart to defined segments in strategy of the Group has been presented as the other one. Current classification of operating segments is in accordance with updated strategy of the Group for Change of identification of segments has been followed by the transformations of comparative period. Metering Power Grid Automation Other Unallocated items Total Financial results of operating segments since till Total revenues Sales outside Sales to related entities Total costs ( ) (70 421) (59 433) - ( ) Costs borne outside ( ) (64 785) (59 433) - ( )

20 quarterly financial statement of for four quarters in 2014 that includes 20 Metering Power Grid Automation Other Unallocated items Total Costs borne to related entities (30 765) (5 636) - - (36 401) Result of segment Overheads and unallocated costs (37 563) (7 004) (5 562) (27 611) (77 740) Share in profits of entities consolidated by equity method Profit (loss) on operating activity (27 609) Financial revenues interest Financial costs (2 540) (50) (170) (3 947) (6 707) - interest (1 274) (1) (42) (3 355) (4 672) Profit (loss) before tax (31 045) Income tax (13 274) (4 148) (912) (2 403) (20 737) Non-controlling interest (889) (889) Net profit (loss) (33 448) Other information on segments as at Total assets, including: Property, plant and equipment Intangibles Goodwill of subordinated entities Inventories Trade receivables Other assets, unallocated assets Trade liabilities Metering Power Grid Automation Other Unallocated items Total Financial results of operating segments since till Total revenues Sales outside Sales to related entities Total costs ( ) (55 534) (97 482) - ( ) Costs borne outside ( ) (51 129) (97 482) - ( ) Costs borne to related entities (30 037) (4 405) - - (34 442) Result of segment Overheads and unallocated costs (43 551) - (7 111) (30 382) (81 044)

21 quarterly financial statement of for four quarters in 2014 that includes 21 Metering Power Grid Automation Other Unallocated items Total Share in profits of entities consolidated by equity method Profit (loss) on operating activity (30 368) Financial revenues interest Financial costs (6 518) - (344) (1 705) (8 567) - interest (990) - (76) (1 441) (2 507) Profit (loss) before tax (30 998) Income tax (10 540) - (1 764) (1 912) (14 216) Non-controlling interest (658) (658) Net profit (loss) (32 910) Other information on segments as at Total assets, including: Property, plant and equipment Intangibles Goodwill of subordinated entities Inventories Trade receivables Other assets, unallocated assets Trade liabilities Geographical information has determined three following areas of activity: Home sales at home, European Union sales to European Union states, Export sales to other countries. Home Export EU Total Sales revenues in geographical segments since till Total revenues Sales outside Sales to related entities Sales revenues in geographical segments since till Total revenues Sales outside

22 quarterly financial statement of for four quarters in 2014 that includes Home Export EU Total 22 Sales to related entities Information on credit guarantee or borrowing or guarantee granted by the issuer or its subsidiary 1) On 20 th March 2014 subsidiary - Apator Powogaz SA granted: Surety under the civil law for Apator SA to the amount of PLN 100 m. The surety is the hedging for the repayment of long term loan for the acquisition of the shares of Elkomtech SA and it was granted on 30 th June The commission due to Apator Powogaz SA in respect of surety is 0, 8% annually. Surety can be borne when the Debit/EBITDA indicator (calculated by dedicated formula) for Apator SA will be below 3, 5 for the next two calendar quarters. Finally, on 31 st December 2014 the indicator was 5, 2. Surety for two bills of exchange hedging the insurance guarantee of proper performance of the contract by subsidiary - Apator Telemetria Sp. z o.o. for the total amount of PLN for Zarząd Gospodarki Komunalnej in Jerzyce Sp. z o.o. Validity of surety: the first bill of exchange for the amount of PLN expired on 2 nd December 2014 surety expired the second bill of exchange for the amount of PLN will expire on 17 th December ) Subsidiary - Apator Metrix SA granted the guarantee to joint controlled entity - George Wilson Industries Ltd (GWi) to maximum amount of GBP 6,7 m i.e. PLN 35,4 m for the period of 3 years with the option to be prolonged for the next 4 years. The surety is the hedging of the cooperation between GWi and National Grid Gas Plc in respect of repairs, overhauls and supplies of gas meters and regulators. Total, estimated value of the supplies is GBP 7,7 m, i.e. PLN 40,7 m and it was defined in 5 contracts concluded by GWi in the second half Loans and borrowings of Description Day Long term loans and borrowings Short term loans and borrowings Loans and borrowings in total, including: from other entities On 19 th March 2014 Apator SA concluded the contract of long term loan with Bank Handlowy w Warszawie. Under the contract concluded and annex signed on 9 th April 2014, bank granted Apator SA, the loan for the amount of PLN , allocated to finance the acquisition of 100% shares of Przedsiębiorstwo Wdrożeń Postępu Technicznego Elkomtech SA. The loan has been granted for the period of 5 years and it will be repaid since the 31 st December 2014 in nine six month capital instalments: the first instalment to be paid on 31 st December 2014 in amount of PLN , the instalments from second to eight to be paid at the end of June and December in amount of PLN the ninth instalment to be paid on 31 st December 2018 in amount of PLN Calculation of interest and their payment will be made in quarterly periods. Under the contract of long-term loan the following hedging has been established: registered pledge to the highest insurance amount of PLN 60 m for 1,8 m of own shares of Apator SA being in possession of subsidiary - Apator Mining sp. z o.o., registered pledge for 100% shares of Elkomtech, registered pledge for fixed assets with the assignment of rights from insurance contract,

23 quarterly financial statement of for four quarters in 2014 that includes mortgage to the amount of PLN 40 m for the property of Apator SA located in Ostaszewo with the assignment of rights from insurance contract, surety under civil law of subsidiary Apator Powogaz SA to the amount of PLN 100 m. Apator SA has made the statement of subject to enforcement in respect of it obligations resulting of the contract to the highest amount of PLN The opening of the loan in amount of PLN was on 31 st March In the reporting period the entities of Apator Capital Group fulfilled their obligations resulting of the loan contracts concluded Information on borrowings granted On 28 th July 2014 Apator SA granted subsidiary - Apator Rector sp. z o. o. in amount to PLN 2 m. The borrowing was granted for the period since 1 st August 2014 to 31 st July 2015 and it is allocated to finance current activity of Apator Rector sp. z o. o. The amounts of the borrowing were granted in tranches. On the value of the borrowing granted was PLN 2 m. The interest is charged from the amount of borrowing according to variable interest rate defined as the sum of WIBOR rate for one month deposits quoted on the first working day of the calendar month when borrowing was used for the first time and next quoted on the first working day every following month of the calendar and the margin in amount of 0, 90% annually. The interest is calculated in single month periods. Apator Metrix SA has got the receivables due to borrowings granted to its jointly controlled entity - GWi Ltd.: 23 Reason the borrowing was granted Borrowing granted for current activity of the company Borrowing granted for current activity of the company Borrowing granted for current activity of the company Borrowing granted for current activity of the company Borrowing granted for current activity of the company Total Borrowing amount Date borrowing was granted Status as at Currency Due date GBP GBP GBP GBP GBP GBP Interest rate 3 p.p above base rate of Barclays Bank PLC 3 p.p above base rate of Barclays Bank PLC 3 p.p above base rate of Barclays Bank PLC 3 p.p above base rate of Barclays Bank PLC 3 p.p above base rate of Barclays Bank PLC On 31 st December 2014 the amount of GBP of the borrowing was repaid pursuant to the schedule of repayment with all interest calculated for 2013 and 2014 on the above borrowing. Therefore, on 31 st December 2014 the borrowing granted GWI was in total GBP (i.e. PLN according to the purchase rate of parent bank on 31 st December 2014 that is 1 GBP = 5, 3039 PLN). 6. Information on principles adopted during preparation of the financial statement, particularly information on changes of principles applied in accounting policy 6.1. Accounting principles The consolidated financial statements of Apator Capital Group are compiled according to International Financial Reporting Standards since the year 2005 according to the requirement imposed by the amendment of the accounting act. Apator SA also used the possibilities granted by the new Act on accounting and it decided at its general meetings that:

24 quarterly financial statement of for four quarters in 2014 that includes - separated statements of Apator SA shall be compiled according to IFRS/IAS, - statements of entities included in Apator Capital Group shall be compiled according to IFRS/IAS (both separated and consolidated statements). Financial statements (separated and consolidated) at 31 st December 2014 were prepared according to International Financial Reporting Standards (IFRS/IAS) and interpretations related to them announced in the form of Regulations of the European Commission, in Polish zloty, due to the fact that Polish zloty is the main currency in which economic operations are performed in Capital Group of Apator. Financial statements of foreign entities included in Apator Capital Group were calculated into the reporting currency according to rules resulting from International Accounting Standard No. 21. Financial statements were prepared assuming that the business activities of the entities of the Group will be continued in the foreseeable future. As of the day of report preparation there are no circumstances indicating the threat to continued business activity of the entities of Group. Financial statements were prepared according to historical cost accounting convention except the valuation of some fixed assets (investment properties) and financial instruments (derivatives) that are valuated at fair value. Detailed accounting principles used by Apator Capital Group were presented in RS 2013 consolidated financial statement Consolidation principles financial statement of the capital group includes the data of APATOR SA - parent company and its subsidiaries. Related entities use uniform accounting principles binding in the parent company and they use homogenous form and scope of separate and consolidated financial statements that are the bases for consolidation in a capital group. financial statement of a capital group is prepared for balance day and for the financial period, specified for separated financial statement of the parent company. For the day of purchase, the assets and liabilities of the company being purchased are valuated at their fair market value. The excess of the purchase price above the fair market value of possible to identify the net assets of the company acquired is recognized as company value. If the purchase price of the company is lower than the fair market value of the identifiable taken over net assets of the company, the difference is presented as a profit in the income statement for the period in which the purchase took place. The share of non-controlling interest is presented in an appropriate proportion of fair market value of assets, assets and capitals. Financial results of companies purchased or sold during the year are presented in the consolidated statement in accordance with the date of their purchase or sale. The method of consolidation was used while preparing the consolidated financial statement by adding individual positions of reports, exclusions and other adjustments. Exclusions include: - value of shares of subsidiaries held by the parent company quoted in purchase price; - mutual receivables and liabilities and other similar accounts of consolidated companies; - profit and costs resulted from economic operations between consolidated companies; - profit and costs resulted from economic operations between consolidated companies included in the value of consolidated assets; - dividends calculated or paid by consolidated companies to other consolidated companies 7. Additional financial information 7.1. Weighted average number of shares Book value per share was calculated by division the equities by weighted average number of shares, but profit per share was calculated by division of net profit from activity continued by weigthed average number of shares.

25 quarterly financial statement of for four quarters in 2014 that includes Weighted average number of shares for consolidated financial statement Weighted average number of shares on 31 st December 2014 and 31 st December 2013 is The shares of Apator SA being in possession of subsidiary Apator Mining are in consolidation of and they are treated as own shares and they are not taken into account when the average weighted value is calculated Weighted average number of shares for separate financial statement Weighted average number of shares on 31 st December 2014 and 31 st December 2013 is and it is equal number of shares Exchange rates used to convert selected financial data Items of assets and liabilities and items of cash flow account according to average Eur exchange rate binding on the day of preparation of the financial statement. Items of income statement according to average Eur exchange rate is the arithmetic mean of average of exchange rates announced by the National Bank of Poland binding on the last day of the month. 25 IV Qs IV Qs 2013 Eur / PLN Eur / PLN Eur / PLN Comprehensive income statement 4,1893 X 4,2110 Cash flow statement 4,2623 X 4,1472 Financial position statement 4,2623 4,1472 X 7.3. Information on adjustments due to provisions, provision and assets due to deferred income tax mentioned in accounting act, write downs of the value of elements of assets financial statement Deferred income tax assets and income tax reserve Status at the beginning of the period Change due to take over/ exclusion of entity Net exchange differences translated from financial statement to currency presented Charging the result due to the change in temporary differences and tax loss Increase (decrease) of equity due to the change of temporary differences Status at the end of the period Deferred income tax since till Deferred tax assets (3) (1 394) Provisions for employee benefits (88) Provisions for bonuses (441) Provisions for margins of revenues Provisions for warranty repairs Provisions for future costs (77) Salaries and wages, insurance fees

26 quarterly financial statement of for four quarters in 2014 that includes 26 Status at the beginning of the period Change due to take over/ exclusion of entity Net exchange differences translated from financial statement to currency presented Charging the result due to the change in temporary differences and tax loss Increase (decrease) of equity due to the change of temporary differences Status at the end of the period unpaid Write downs of property, plant and equipment and intangibles (2) Inventory write downs (3) (268) Receivables write downs Valuation at fair value - derivatives Valuation at fair value-other financial assets Tax loss - - (1) Tax relief due to operation in Pomeranian Special Economic Zone (2 137) Balance amortization apart to tax one Internal transactions (49) Differences due to finance lease contracts Temporary differences due to longterm contracts (construction contracts) (485) Other costs not taxed in the period (741) Deferred income tax liabilities (280) Valuation at fair value - property (16) - 24 Valuation at fair value - derivatives (73) (280) 329 Balance amortization apart to tax one (175) Excess of nominal value over book value of apportionment Differences due to finance lease contracts Liquidated damages received (157) - - Temporary differences due to longterm contracts (construction contracts) Other revenues not taxed in the period Total X X (24) (1 878) 558 X Deferred tax assets X X X Deferred income tax liabilities X X X 1 066

27 Effective tax rate quarterly financial statement of for four quarters in 2014 that includes 27 Period Profit (loss) before tax: Income tax calculated according to binding tax rate: Adjustments 554 (1 377) Possible tax on tax free revenues (permanent differences) (432) (859) Tax on cost not being costs of revenues (permanent differences) Tax on internal transactions in the group (permanent differences) (938) (310) Tax on items not included in financial result of the period Asset to be taxed due to operation in Pomeranian Special Economic Zone - (2 846) Adjustment to tax loss from past years (6) 164 Other deductions (43) (32) Income tax specified in comprehensive income statement Effective tax rate 19,52% 17,29% Write-downs of non-current & current assets Status at the beginning of the period Change due to take over/ exclusion of entity Change in the period (increase "+", decrease "-") Net exchange diffferences translated from financial statement to the currency presented Status at the end of the period Goodwill of subordinated entities Property, plant and equipment (10) Other financial assets (27) Invetories (788) Receivables Total (491)

28 quarterly financial statement of for four quarters in 2014 that includes 28

29 quarterly financial statement of for four quarters in 2014 that includes Provisions for liabilities BENEFITS FOR EMPLOYEES 29 OTHER PROVISIONS Severance payments, jubilee awards (actuary) Restructuring provision (benefits) Bonuses Leaves Warranties Provisions in respect of uncompleted implementation services contracts (penalties, compensation) Others Provision for unrealized margin on sales to associated entity TOTAL Value of provisions at the beginning of the period Change from the sale of shares Provisions raised during the period Provisions reversed during the period Provisions used during the period (254) (140) Remeasurement of provision presented in other comprehensive income (5 439) (281) (2 092) (388) (50) - (8 644) Net exchange differences arising on the conversion of the financial statements to presentation currency Value of provisions at the end of the period, including: long term provisions short term provisions

30 quarterly financial statement of for four quarters in 2014 that includes 7.4. Purchase of Apator Elkomtech SA On 1 st April 2014 the final purchase contract was signed to purchase registered shares of Elkomtech SA. The purchase price was PLN , 70, i.e. PLN 7.026,92 per share. The total nominal value of shares is PLN ,00 and it is 100% shares in share capital of the entity being purchased and 100% of total number of votes at its general shareholders meeting. Pursuant to IFRS 3, further to the control taken over Apator Elkomtech SA, Management Board of Apator SA made the analysis of intangibles for the purpose of allocation of the purchase price. In the process, the intangibles have been identified as relations with customers complying with the criterion of intangibles indicated by IAS 38. Fair value of those relations was estimated by use of profit approach method (excess profit method) for the total amount of PLN 26, 8. The period of economic usefulness of relations with customers was assumed as not exceeding 10 years (annual amortization of that asset will be PLN 2, 7 m). The initial settlement of the value of assets acquired and obligations accepted have been presented below. It is foreseen that the final settlement will be recognized in annual report for Pursuant to IFRS 3, Apator SA should make the final settlement of acquisition of shares of Apator Elkomtech SA within 12 months since the takeover. 30 Fixed assets Intangible assets 871 Property, plant and equipment Current assets Inventories Receivables Prepayments 183 Cash and cash equivalents TOTAL ASSETS Long-term and liabilities and provisions 650 Deferred income tax reserve 257 Other reserves 393 Short-term liabilities and reserves Liabilities Provisions 588 Liabilities and provisions in total Net assets Net assets purchased in total Identified intangible assets relationships with customers Godwill on the day of purchase Purchase price Cash inflow due to take over is presented below.

31 quarterly financial statement of for four quarters in 2014 that includes 31 Net cash taken over with the subsidiary Cash paid (98 412) Net cash expenditure (90 636) The impact of take over to the result of Apator Capital Group is shown below. Total revenues in the year of purchase (in entire period) Net profit in the year of purchase (in entire period) Total revenues in the year of purchase (in the period of control) Net profit in the year of purchase (in the period of control) Share in net profit (in the period of control) Interest of shares being in possession 100,00% 7.5. Changes in accounting principles, adjustment of error has made some changes in financial statement prepared as at the day and the period ending on 31 st December 2013, in result of the adjustment of estimated costs of the project being settled pursuant to IAS 11. In result of the adjustment made the equity of Apator Capital Group has been decreased by PLN Factors and events that have the influence on financial results of in 2014 The significant influence on the results of had the acquisition of Elkomtech SA and consolidation of its financial results since the second quarter in Other positive factors: economic boom on the Polish market growth on the market, practically in all business lines, change of business model extension by control and supervision of power grid line, improvement of profitability in lines of metering of water and heat, switchgear and also gas (including GWI UK), growth of sales in metering of electricity line, Negative factors: conflict Russia Ukraine and its influence on economy environment in Russia devaluation of Russian rouble; decrease of the competitiveness of import evident first of all in switchgear line, failure to perform the financial plan by ICT line due to the delays in performance of important contracts, failure to perform the financial plan by non-core entities (crisis in mining, disruptions in contracting after termination the performance of the big project for ArcelorMittal Poland), price erosion and pressure on margins in metering of electricity and gas lines. Other important events: adoption of new strategy for , operationalisation of strategy adoption of initiatives for 2014 in all business lines, commencement of business integration process between ICT, supervisory control and switchgear lines extension of Management Board of Apator SA by CFO and adoption of the development plan of financial division in Apator Capital Group, development of smart systems and solutions:

32 2014 quarterly financial statement of for four quarters in 2014 that includes metering of electricity - development of PRIME open technologies (by its own) and Open Smart Grid Protocol (in cooperation with Echelon/NES). Participation in consortium performing the project - Smart City Wrocław for Tauron Dystrybucja (including the option of supply about smart meters in the system where 40% is to be performed by ), metering of gas: further development of smart gas meters destined to British market making offer for pilot projects, making development plan for German market The forecast of financial results The forecast of financial results for 2014 assumes to achieve consolidated sales revenues in the range PLN m and consolidated net profit in the range PLN m. During preparation of the forecast the following were taken into account: - take over of 100% shares of Elkomtech SA and consolidation of results of this entity since the second quarter 2014, - financing the transaction of acquisition of shares in Elkomtech SA from bank loan in amount to PLN 100 m, - buyout of 30% shares of Apator Rector sp. z o.o. for the amount of PLN 17,9 m, - maintenance of large share of export in sales revenues in total, - Euro exchange rate adopted at medium level in amount of PLN 4, 10, - use of investment tax relief due to activity of Apator SA in Pomeranian Special Economic Zone. The performance of the forecast of consolidated financial results in 2014 is presented below. Description Forecast for 2014 revenues on sales of products, goods and materials Performance of I-IVQ 2014 Progress (%) ,4% - 95,5% net profit ,0% - 109,6% Sales revenues were a little bit lower than bottom limit of the forecast due to lower sales than planned to Russia in lines: ICT, switchgear (Russia), mining equipment. Net profit was considerably over the top limit of the forecast that the reasons were very good results in lines: control and supervision systems, water, heat and gas. 10. Analysis of financial results achieved by Macroeconomic situation in Poland in 2014 In 2014, when a little bit improvement of the economic trend was in European economy, the rate of economic growth was moderate but higher than in two previous years in Poland. The maim growth factor was both consumption and investment demand at home. Pursuant to the initial estimation, GDP in 2014 increased in real by 3, 3% per annum in relation to the growth by 1, 7% in Sold production of industry in total in 2014 was higher than in the last year by 3, 2% (in 2013 growth was by 1, 8%). In 2014 in relation to 2013 it was the increase of production of investment goods by 7, 4%, durable consumption goods by 5, 7%. It was the decrease of sales of goods related to energy by 3, 2%. Construction and mounting production being performed by the enterprises dealing with construction of buildings in 2014 was 4% lower than in the last year ( 1,3% in 2013).The prices decreased mainly in sections: mining and extraction ( by 4,7%) and industrial processing (by 1,6%) Sectors where Apator operates Metering segment - metering of electricity line:

33 quarterly financial statement of for four quarters in 2014 that includes The sold manufacturing of electricity meters in 2014 increased about 16% (Central Statistical Office). participated in high degree in the growth. The growth regarded first of all the market of residential electricity meters without remote communication and it is the result of slowness of development of smart metering (there is still lack of technical specification for Poland). The invitations to small tenders are being continued for smart meters and AMI infrastructure. They were announced or selected of their winning at the beginning of 2014: in Energa -Gdańsk (III stage of implementation), in Tauron Dystrybucja (Smart City Wrocław project), in PGE Dystrybucja (supplies of smart meters and concentrators in branch office in Łódź Miasto and in branch office in Białystok) and in w Enea, where technical consultations were continued. Due to joint" tender for balance electricity meters the risks related to obtain orders increased slightly.(one ordering party). There is still lack of official announcement about technical specification prepared for smart meters. In Poland there is also lack of officially approved schedule of implementations of AMI systems and smart meters and therefore it ruins the priorities of R&D and causes additional doubt among potential suppliers. The risk is being increased for suppliers related to consolidation planned in power engineering sector (PGE - Energa, Tauron and Enea). Moreover, new competitors in cheap" residential electricity meters segment appeared in Poland in In 2014 evident revival of smart meters occurred on the markets in high developed European states. Large implementation tenders have been noticed in such countries like the Netherlands, Denmark, Norway, the United Kingdom, Greece, and Belgium. In the United Kingdom first tenders have been noticed by the largest sellers of energy for smart meters that comply with SMETS2 domestic technical specification. The number of implementations planned reaches million units annually and the date of completion of the implementation project have to be postponed again. Large implementation of smart meters is also being prepared in Germany. The European market of smart meters forecast are very good, however considerable increase of number of orders are expected about Estimated growth of European market for smart meters in the period may reach even several dozen percent annually however it will occur first of all in high developed states being members of the European Union. Some European producers of meters open their manufacturing companies in France and the United Kingdom. participates in consultations concerning many projects related to the performance the idea of smart grids and smart metering in Poland and abroad. The example of organization aiming at acceleration of works concerning the implementation of Smart Grids in Poland is: Consortium Smart Power Grids Polska and Section Power Grids at Polish Chamber of Commerce for Electronics and Telecommunication. The Ministry of Economy adopted the document "List of Strategic Projects for Power Engineering Infrastructure in Operation Program for Infrastructure and Environment , being the Project pipeline for power engineering sector within Operation Programme for Infrastructure and Environment In the programme implementation projects of smart meters and investments in smart power engineering were included. At the beginning 2014 the project of technical specification for the Polish smart metering (jointly with TOR) was submitted to institutions concerned in order to get their opinions. Project was elaborated during power engineering workshops conducted under protectorate of Energy Regulatory Office. The organizations participated in the workshops such like: Polish Chamber of Commerce for Electronics and Telecommunications and Polish Power Transmission and Distribution Association. Expected approval of the specification in 2004 by the environment was not obtained. At the beginning 2004 Apator joined international organization ESMIG - European Smart Metering Industry Group with the headquarters in Brussel that has significant influence on European standards of smart metering and smart grids. Lack of standardization is the main obstacle to the development of European markets for smart metering and smart grids. In 2014 Apator became the member of OSGP Alliance and obtained the consent to be the member of G3-PLC Alliance. Taking into consideration that fact that Apator was earlier the member of PRIME Alliance Apator has become the member of three from four dominant organization where the latest open communication standards are created making use of the power grid as transmission medium (PLC). Apator is going to develop the products pursuant with the standards and promote them both at home and abroad. The first meters that comply with open OSGP standard will be supplied by Apator already in the first quarter 2015 (Smart City Wrocław). Accession of Apator to OSGP Alliance and G3-PLC Alliance are further steps to perform strategic intentions and to build position of as the supplier of smart systems and equipment. Metering segment gas line: 33

34 quarterly financial statement of for four quarters in 2014 that includes The Polish market is important sales market for gas line of foreseeable and steady quantity potential. has stabilized leader position or it is the second company on the market depending on year in Poland. has strong product brand and trade relations with customers. Sold manufacturing of gas meters in 2014 slightly increased by about 3%. In November 2014 the first central PGNIG tender was held after distribution entities were consolidated for Instead of 6 large tenders only one tender was held that covered the number of gas meter that took part in previous tenders in total. Only former Pomorska Spółka Gazownictwa in Gdańsk has been excluded from the tender (earlier contract covered also the supplies to the end of 2015). In result of such tender conducted, considerable decrease of prices occurred. Apator Metrix gave the best offer for the most of the tasks, offering among other things the cheapest G4 type gas meter and won about of 70% of supplies. The next central PGNiG tender will be held in the second half of the year and it will cover the supplies for On Eastern markets the installation of gas meters commenced relatively soon (since the 80-ties), and in some countries the binding regulations requiring to mount the gas meters at every user appeared in recent years. On those markets due to among other things increasing prices of gas make both enhancement of awareness and desire to meter gas consumption. It is related to the noticed huge and growing demand for gas meters particularly gas meters with temperature compensation (Georgia, Kazakhstan, Moldova, Ukraine, others). The threat on Eastern markets is first of all, unsteady political situation. Moreover, particularly in Ukraine and Russia the problem is getting weaker the exchange rate of hryvnia and rouble particularly to dollar and Eur. In European countries one can notice growing interest in smart gas meters. They are products of highest quality, innovative and technologically advanced. In some countries the process of the replacement of traditional gas meters by smart meters has already commenced (the Netherlands, the United Kingdom, France, soon also Italy) and it should be expected that the process in the future will generate the most important demand for gas meters. Moreover, in the recent period the first large joint tenders both for gas meters and smart meters occurred (e.g. Liander and Stedin in the Netherlands, E.ON UK, RWE, and Scottish Power in the United Kingdom). It means that in the nearest future the demand for smart meters in Europe will be growing in double digit rate. Apator develops its products for selected markets that comply with requirements of that new developing market. Although, it is not seem to be possible in foreseeable period to replace traditional, cheapest, the most reliable and proven in practice bellows gas meters, Apator attempts to complete the offer with quite new equipment that can be based on statistical-pure electronic technologies of measurement. The industrial gas meters market is steady. Metering segment water and heat line: In water meters sectors in 2014 about 10% of growth occurred in respect of the volume of metering equipment for water flow. In Poland about ¼ new water meters has communication module for remote data read out and they can be classified to category of smart ones. Further growth of saturation with equipment completed with tele transmission is expected. In result of marketing actions leading to diversification of the offer and to increase the occurrence of dedicated brands both for cheap and requiring better quality segments of the market, it was succeeded significantly increase the share of Apator Powogaz in domestic market. On Russian market strong price pressure has been noticed, in high degree it was related to unfavourable changes of exchange rate of rouble. In spite of it, it is worth to notice that Apator Powogaz was in the group of 5 enterprises from the list of 2000 largest firms in ranking of Rzeczposopita daily newspaper that have been awarded the title Eagle of Export. Also, Gazeta Prawna daily newspaper awarded Apator Powogaz of Wings of business destined for the best firms in the region in the segment so called medium sized enterprises. 34 Actions foreseen for 2015 leading to increase the competitiveness it is worth to be mentioned among other things pricing, increase of competitiveness of radio systems by the improvement of the functionality of the system and implementation the system of remote education of customers by e-learning. The most attractive European markets remain Russia and Germany; however in case of Russia the important meaning will have the development of geopolitical situation having the influence also on financing (among other things, rouble exchange rate, and inflation). Besides Europe increased demand is expected in African countries that have larger and

35 quarterly financial statement of for four quarters in 2014 that includes larger access to assistance programmes among other things from European Union and the World Bank destined to increase the access to drink water. Heating sector both in Poland and Europe demonstrates low dynamics of growth by 0-2% annually (in some years negative one) and it is mainly based on replacement of attested equipment. Larger cities in Poland like Warszawa, Łódź or Katowice have commenced the investment in smart heat distribution networks (e.g. Warszawa has completed the replacement of heat centres), that generates extra demand for smart technologies including heat meters with communication devices. One can notice that electricity distribution companies commenced to take over heating enterprises and making diversification of distribution activity to other utility services. Metering segment - ICT line: The revenues of IT sector for power engineering are growing very fast. The Polish power engineering companies have to invest not only in the areas related to traditional applications like Billing or ERP but necessary are IT investments in turn over areas, distribution and management of power grid assets and also in areas related to customer but not only in CRM but also in applications such like HES or Meter Data Management. Currently the majority of multibillion investments in power engineering concerning power grid infrastructure but in the nearest future quick growth of investments in information systems is expected particularly in systems that have direct influence on technical efficiency of operation of power grid, better service of a customer (e.g. new services) and integration of IT technical systems and business systems. One can expect that in coming years the share of IT investment will increase very quickly from current about 1% to at least several percent exceeding annually the value of PLN 1-2 bn. Double digit annual growth is expected in the subsector. Electricity distribution companies will be ordering the services relating to passportings of the power grid (such projects are being performed by Energa-Operator SA and Tauron Group with ). Important task is to centralize the systems of control and supervision that currently are dispersed in the distribution regions.in such project participate; Apator Elkomtech. SCADA Systems being serviced by distribution companies that will be replaced in the near future by systems being serviced from the central points. Integration of dispersed IT technical resources in the region will be great challenge that will require cooperation with the companies having the appropriate experience in both electrical and information field. In 2015 implementations of MDM class systems (Meter Data Management aggregating and processing systems of metering data) at distributors (OSD) other than Energa-Operator SA and further implementations of MDM at other operators of distribution system (OSD) are expected. Integration of huge number of data coming from smart metering systems with the information about power grid and a customer are great potential for the development of analytical systems in power engineering. The construction of interfaces between SCADA, MDM, grid asset management system and other OSD business systems (integration of technical systems with business ones IT/OT) it creates great impulse for the development in this line. Moreover, it is expected to establish the operator for smart metering aggregating data from OSD in power engineering. Segment of power grid automation line of supervisory control: Automation world sector of power grids was getting increased in 2014 at the rate about of 19% reaching the value of USD 7 bn (source Navigant Research). In the nearest five years the expenses for power engineering infrastructure of the largest operators of distribution power grids and PSE can exceed the value of PLN 42 bn. Ministry of Economy has adopted the document Project pipeline for the infrastructure in power engineering that takes into account financial support to these projects from European Union (Infrastructure and Environment). Centralization of supervision and control that currently are dispersed in the regions of distribution is one of the most important tasks for electricity distribution companies ant it creates perspectives for the development of that line. At the end of 2014 the draft of the act on renewable energy sources was accepted by Sejm and addressed to Senate. The acceleration of legislative works allows assuming that the act on (OZE) renewable energy sources will be adopted and will come into life in If it comes true then significant increase of interest of private investors in installations of renewable energy sources on buildings is expected (e.g. photovoltaics) since the expected financial support to energy generated from installations up to 10 kw will have material impact, what will make the period of return of investment shorter to several years. Expected dynamic growth of OZE (prosumer) segment will cause not only the growth of demand for metering equipment but also force the investment in automation of power grid operation. Supervisory control systems of SCADA class and smart electronic equipment cooperating with them will become necessary in order to control growing number of unsteady operated renewable energy sources. Moreover, complete control of energy flow will 35

36 quarterly financial statement of for four quarters in 2014 that includes 36 have to be obtained not only for the highest and high voltage but also in places where new unsteady operated (OZE) renewable energy sources will be connected that means at medium and low voltage. The (IED) smart electronic equipment and digital protection cooperating with remote supervisory control of power grid systems (SCADA) that are manufactured among other things by Apator Elkomtech SA will become necessary standard technical tool enabling unsteady operation of power grid. Strong impulse of development of the market in 2015 and in several following years will give also the change in the model of justified investment of power grid assumed to be introduced by Energy Regulatory Office already in New method of the settlement of power grid enterprises will be based on direct evaluation of quality indicators of electricity being supplied to the end consumers. These indicators have not been monitored in detail till now. The need occurred to install appropriate technical equipment (electricity meters in power stations, registers of the quality of energy and systems of HES/MDM and SCADA class in order to obtain and make analysis of metering data). First tenders for such type of equipment already occurred at the end of 2014 and the following ones are expected in 2015 and The offer of, among other things due to integration with Apator Elkomtech is currently well suited to meet the requirements of new being established market of equipment and systems for smart power grids. Projects carried out in automation of power grid operation in 2014 covered first of all: preparation to implement the requirements concerning the security of information and communication technologies for the objects of power engineering stations (pursuant to customer s requirements), implementation of the system covering emergency management central module, pilot project connecting module of emergency management, pilot project connecting functionality of power grid asset management and SCADA supervisory control extended even to low voltage (pilot project of Smart Grid), development and implementation the latest version of WindEx (CIM) supervisory control and Apator Elkomtech, construction of synergy and technical interfaces between systems of power grid asset management (Apator Rector) and remote supervisory control system (SCADA), new implementations of applications of automated emergency management and digital applications facilitating the work of repair teams in the field and dispatchers (impact on shortening of power supply interruptions). Plans of for 2015 include the development of systems, applications and appropriate equipment to the needs of the Polish distributors of electricity including among other things: applications for the forecast, scheduling, balancing of energy allowing to forecast the demand of energy, utilizing planning of generating of energy by large producers and then the prosumers, control of performance energy supply and also development of technology of automatic energy supply restoration after the supply failure (in some possible for the performance range). The application of open interfaces and protocols to the systems of other producers. development of mobile applications for service teams of power engineering utilizing and accelerating to repair a failure. (including the making use of GPS navigation to localize of power grid assets, the access to maps of power grids through Google Maps, the use of tablets by field teams taking into account the protection of data). design and preparation of SCADA system of the following generation cooperating with DMS class systems. Power grid automation segment switchgear line: Domestic sales in switchgear segment are correlated with the number of building permission issued. The demand for disconnectors and switches being used in electrical connections, substations and distribution substations in high degree is generated by number of buildings and flats have given for use. Number of building permissions increased in 2014 about by 13% y/y), announcing gradual growth of the market. It is worth to mention that Polish Government accepted the project of amended Construction Law in August 2014 that simplifies and makes the investment process shorten which can have positive influence on the market. Some influence on revenues in switchgear segment has also the condition of industry. The sold manufacturing in industry was by 3, 2% higher than in previous year (Central Statistical Office)

37 quarterly financial statement of for four quarters in 2014 that includes In respect of switchgear Apator in 2014 first of all was the supplier of equipment to complicated systems of safe distribution of electricity and first of all it cooperates with business customers (B2B). The largest group of customers of switchgear is electrical engineering services providers and electrical installation companies (integrators). The greatest impact on result of the sector have infrastructural investments such like; new and modernized objects, public buildings, stadiums, housing estates, (GPZ) main points of power supply, new and modernized power grids, office buildings, fair objects, hotels and etc. The companies carry out integrating activity in the scope of building power grids and complex power equipment such like substations and distribution substations. The size of the segment of the market can be estimated as about PLN 2 bn annually (based on Elektrosystemy monthly magazine - May 2014). The largest share in the market of integrators (electrical engineering services providers and construction and installation services providers) have WSE listed large companies has been cooperating with for many years (e.g. ZPUE, Elektrobudowa, Ekektromontaże and others). Significant group of customers of switchgear line are large electrical warehouses. In 2014 the liabilities of those entities were growing and fierce price war took place that caused serious problems with the liquidity. However, in comparison with 2013 which was the year of decline to the distribution sector (-4%), 2014 brought significant revival in goods and electrical articles sector. Initial evaluation of sales on the wholesale trade market indicates the increase about 10% in the sector in 2014 in comparison with the same period of the previous year. New player on wholesales market is the Elektro- Omega wholesales trade power grid which include 30 members (separate warehouses not associated yet).the sales dynamically has been developing the through internet. Many wholesales trade power grids implement ERP systems improving their operational efficiency. More and more popularity gains the universal classification system of electrical engineering products ETIM (shareholders of ETIM Polska offering the solution are 12 distributors of electrical engineering branch representing ¾ of the market Non-core segment mining line: Data of Central Statistical Office for 2014 indicate about 4% decrease of revenues in Poland in 2014 (the following year in a row).the biggest problem of the Polish coal mining struggled with; it was growing import of cheap coal from the East and decreasing efficiency of coal extraction and growing costs in state entities of the sector. The decrease of revenues reflected in bad financial result of the branch and lack of liquidity in coal mines that had the impact on decreasing number of orders for mining equipment. Worse and worse financial results of the coal mines (growing losses) reflected the announcement of a strike at the end of the year. Crisis was averted at the beginning of 2015 by signing the agreement with the government concerning the restructuring of coal mines that envisages among other things, consolidation of coal mines and electricity distribution sector in the future and the growth of market force of power engineering sector in relation to providers of technology and equipment for mining. Non-core segment control line: There are two main sectors of the line; industrial automatics including drives and applications, and distribution equipment for industry. Pursuant to initial data of Central Statistical Office, industrial production sold in 2014 was higher by 3, 2% in relation to the previous year. Subsector of drives showed the increase about 1, 5% (Poland) much lower than in previous year and lower than it has been expected by the sector. For industrial automatics subsector the increase in 2014 was a bit lower than expected 12%. The separate revenues of electrical installation companies in 2014 were by 11% higher in 2014 than in 2013 exceeding the value of PLN 2 bn. The perspectives of development of the industry in Poland are good but they depend in large degree on the development of geopolitical situation Sales revenues and explanations concerning its seasonal nature When financial results of 2014 are being analysed in relation to 2013 the activity of Newind sp. z o.o. in should be taken into account till the day of its selling that is 31 st May For comparison purposes the results of Newind sp. z o.o. in 2013 are shown as reported and adjusted ones. The revenues on sales of were in four quarters 2014 at value PLN in relation to: revenues adjusted in 2013 are higher by PLN (10,0%) growth of revenues was achieved mainly by higher domestic sales revenues reported in 2013 are higher by PLN (6, 2%). 37

38 quarterly financial statement of for four quarters in 2014 that includes 38 Further to the manufacturing of investment goods by when the revenues are being analysed the seasonal nature of the sales is shown. In the past years achieved higher revenues in the third and fourth quarter. Since 2012 slow disappearance of seasonal nature of sales is noticed. However, due to the joint of Apator Elkomtech SA the in 2014 (high seasonal nature significant the fourth quarter), in the following years the revenues of Apator Capital Group can be again higher in fourth quarter permanently. Reported revenues in years I quarter II quarter III quarter IV quarter ,9% 22,4% 27,0% 30,7% ,4% 22,0% 28,2% 25,4% ,5% 25,4% 23,8% 26,3% ,2% 25,1% 25,0% 28,7% In the sales structure of, metering segment has the most magnitude unchanged that share was 74, 4% in four quarters in However, equalization of structure of segments by extending the automation of power grid by Apator Elkomtech SA has occurred. Sales structure of pursuant to segments is shown below (continued activity): Description Performance of Performance of

39 quarterly financial statement of for four quarters in 2014 that includes I-IV quarters 2014 I-IV quarters 2013 Change y/y Progress (PLN 000) (PLN 000) (PLN 000) (%) Metering segment ,07% Home ,49% Export ,93% share of export of metering equipment in revenues in total 40,76% 40,12% Automation of power grid segment ,79% Home ,08% Export ,97% share of export of power grid automation in revenues in total 3,86% 5,19% Non-core segment (excluding Newind in 2013 ) ,82% Home ,44% Export ,42% share of export of other sales in revenues in total 0,17% 0,18% Revenues on sales in total ,01% Home ,82% Export ,62% Share of export in total in revenues in total 44,79% 47,10% 39 Revenues in particular segments were as follows: metering segment increase achieved mainly in electricity meters line (increased sales of post-paid electricity meters due to large tender won in PGE Dystrybucja SA) and in water and heat line (mainly at home but also in export in spite of crisis in Russia and lower sales to Ethiopia), power grid automation segment increase of acquisition in result of Apator Elkomtech SA take over and consolidation its financial results since the second quarter 2014, non-core segment decrease of revenues both in case of control equipment (termination of the contract with Arcelor Mittal Poland) and mining equipment (crisis of branch). From geographical point of view, has achieved higher reported sales on domestic market by PLN (7, 6%) and adjusted sales by PLN (14, 8%). The influence on it mainly had the consolidation of Apator Elkomtech SA (the entity performs only domestic sales) and higher sales in line of electricity meters and in water and heat line. Sales on foreign markets in spite of crisis in Russia and in Ukraine increase by PLN (4, 6%), including: increase of sales to non-european Union countries by PLN (by 14,2%) y/y in gas line to India (with destination to the British market ), in electricity meters line to Morocco, the sales to Russia was maintained almost at the level of 2013, decrease to European Union countries by PLN (by 5%) y/y, what was the result of termination of the contract with Denmark with destination to Dutch market; in other European Union countries, achieved some increases or maintained the sales level. In result of growing domestic sales, the share of export in revenues decreased in adjusted form from 47, 1% to 44, 8% y/y. The bar chart below shows the main countries to which exported its products.

40 quarterly financial statement of for four quarters in 2014 that includes 40 Changes (y/y) in the main directions of export relating to the following countries: Denmark decreased by PLN termination of the contract of gas meters supply with the destination to Dutch market, India/Great Britain increase of sales of gas meters by PLN with destination to the British market, Czech Republic increase of sales by PLN increase sales in water and heat line (legal obligation to install heat cost allocators till the end of 2014 ) and gas, Turkey decrease by PLN reduced contracting of heat cost allocators and switchgear, Morocco increase by PLN performance in 2014 of the tender won for supply of inductive electricity meters, Austria increase by PLN performance of orders of inductive electricity meters supply in 2014, Ethiopia decrease by PLN tenders invited fewer water meters than in 2013, Russia decrease only by PLN deceleration of growth dynamics due to political crisis, lack of financial means in the system and offering of some products by Russian competition at lower prices (due to rouble devaluation). Decrease of sales of switchgear Income statement and other comprehensive income The following factors had the influence on financial results achieved by Apator G in four quarters in 2014 in relation to four quarters in 2013: Commencement of consolidation of Apator Elkomtech SA since the second quarter 2014, increase of profitability in water and heat, gas,switchgear, price erosion of residential meters (electricity meters line) and gas meters (gas line), decrease of profitability in CT line, decrease of profitability in non-core segment, increase of share in profit of consolidated entities by equity method by PLN , increase of the result on other operating activity by PLN (sales of property by Pafal SA). Reported results are presented in the table below (including Newind in 2013) Reported results I-IV quarter I-IV quarter Change Progress

41 quarterly financial statement of for four quarters in 2014 that includes Sales revenues ,23% 41 Cost of products sold ,68% Gross profit on sales ,93% Selling costs ,64% Overheads ,18% Profit on sales ,96% Result on other operating activity ,26% Share in profits of entities consolidated by equity method ,52% Revenues (costs) on restructuring ,54% Profit on operating activity ,45% EBITDA ,89% Result on financial activity ,54% Profit before tax ,22% Current income tax ,23% Deferred income tax ,27% Net profit ,74% Profitability ratios: Gross profit margin on sales 30,5% 29,4% Profit margin on sales 14,1% 12,8% EBITDA margin 18,1% 15,6% Net profit margin 11,8% 10,0% during four quarters 2014 in relation to the results for four quarters 2013 achieved better financial results at all the levels and higher profitability. The table below presents adjusted results by the impact of Newind in Adjusted results ( I-IV quarters in 2013) I-IVquarters 2014 I-IV quarters 2013 Change Progress Revenues on sales in total ,0% Gross profit on sales ,7% Profit on sales ,6% Profit on operating activity ,0% EBITDA ,0% Net profit ,4% Gross profit margin on sales 30,5% 30,3% Profit margin on sales 14,1% 13,5% EBITDA margin 18,1% 16,2% Net profit margin 11,8% 10,7% Analysis of financial position in the period since January till December 2014 achieved the cash from operating activity prior the changes made in working capital in amount of PLN The investment in working capital caused the decrease the above cash to the amount of PLN The reduction by PLN was caused mainly by the increase of liabilities by PLN The cash from investing activity shown negative value PLN and they have been related mainly to expenses incurred for the acquisition of Apator Elkomtech and shares of Apator Rector sp. z o.o.

42 quarterly financial statement of for four quarters in 2014 that includes In I-III quarters in 2014 cash from investing activity showed negative value PLN and it was mainly related to the expenses for the purchase of 100% shares of Elkomtech SA (PLN 98,4 m) and shares in Apator Rector Sp. z o.o. (PLN 17,9 m) Negative cash flows from investing activity have been covered in large degree by cash from financial activity PLN due to loans taken (mainly for financing of the expenses to purchase Elkomtech SA). The cash in at 31 st December 2014 is high and it is PLN The value increased by PLN in relation to the end of The growth has been generated mainly from operating activity achieved by higher operating result achieved and the decrease of engagement of Apator group in working capital Jan.-14 Oper. Inv. Fin. Sep Safe financial situation of allows to perform current investments and to share with the profit with shareholders in form of dividend. I-IV quarters I-IV quarters Ratios Formula Current liquidity ratio 1,7 1,5 Quick liquidity ratio 1,2 1,0 Net debt (PLN 000) Net debt/ltm EBITDA 0,7 0,3 Capex (PLN 000) Working capital (PLN 000) Current assets/liabilities and short-term provisions (Current assets - Inventories)/Liabilities and short-term provisions Loans and borrowings cash and equivalents borrowings granted (Loans and borrowings cash and equivalents borrowings granted)/ltm EBITDA Tangible and intangible investment expenses (Current assets cash) (Liabilities and short-term provisions short-term loans and borrowings)

43 quarterly financial statement of for four quarters in 2014 that includes Condensed description of significant achievements and failures Very good financial results 43 In 2014 achieved very good financial results and performed the forecast of financial results. The main reason of growth of sales by was consolidation of results of Apator Elkomtech SA since the second quarter 2014 and the growth in electricity, water and heat and gas lines. Terminated large contract of gas meters supply to Denmark/The Netherlands has been in high degree replaced by the sales to Secure (to India with destination to Great Britain). Difficult situation on Russian market had no influence on the results of. Positive influence on growth of net result had significant improvement of jointly controlled GWi (repairs of gas meters in Great Britain). has got high cash: PLN: (growth by 240% y/y) at the end of In spite of long term loan taken is in good financial condition, allowing repaying liabilities on time, to hold the investment and to suggest higher dividend to the shareholders. Preparation of development strategy for Strategic objectives Performance in 2014 Change in business model Target value of revenues over PLN 1,5 bn (average annual growth 15,1%) Average annual growth rate of EBITDA in the range 10% 15% Division into metering segment and power grid automation segment Extension of the power grid automation segment by supervisory control system - take over of Elkomtech Balancing of business model Revenues: PLN 726 m increase by 10% EBITDA: PLN 132 m, increase by 23%