statement of the financial standing drawn up as of 31st December 2010, which on the assets and liabilities side shows an amount of 362,231,000 PLN;

Transcription

1 Report by the statutory auditor for the Shareholders Meeting, Supervisory Board and Management of ŚNIEŻKA Spółka Akcyjna Paint and Varnish Factory for the financial period from 1 January to 31 December This report, supplementing the opinion, was produced in connection with the examination of the financial statement of Śnieżka Paint and Varnish Factory Spółka Akcyjna based in Lubzin 34 a. The examination covered the financial statement including: introduction to the financial report; statement of the financial standing drawn up as of 31st December, which on the assets and liabilities side shows an amount of 362,231,000 PLN; statement of total income for the period from 1 January to 31 December showing total income and net profit of the same amount of 35,963,000 złotys; cash flow statement for the period from 1 January to 31 December indicating an increase in cash resources of 8,566,000 złotys; statement of changes in equity capital for the period from 1 January to 31 December indicating an increase in equity capital of 13,546,000 złotys; additional information and clarification. The financial statement was signed by the Company Management Board and the person responsible for keeping the ledgers on This report should be read along with the opinion of the statutory auditor for the Company's Shareholders of concerning the financial statement described above. This report contains 13 successively numbered pages and consists of the following parts: 3

2 Page I. General Characteristics of the Company 3 II. General Information on the Investigation Conducted 5 III. Summary of the Results of the Investigation 6 IV. Description of the Items in the Financial Statement 7 V. Detailed part of the report 11 On behalf of Elżbieta Pudło The Group's Chartered Auditor Key chartered auditor Entered on the Register of Chartered Auditors as number 9950 The company is entered on the list of entities authorised to audit financial statements under the number 3510, Rzeszów, 19 April

3 I. General Characteristics of the Company 9.Śnieżka Paint and Varnish Factory Spółka Akcyjna, henceforth referred to as the Company, conducts its business on the basis of: the Commercial Companies Code; the Freedom of Business Act; the Company Statute The Company has its headquarters at Lubzin 34 a. 10.The company was founded after being established by physical persons on The deed of foundation was drawn up in the form of notary act Rep. A nr 121/98 of The notary act was prepared at the Notary Office in Dębica by the Notary Piotr Sumara. Rzeszów Regional Court, 5th Commercial Division, issued a decision to enter the Company on the Commercial Register as no. RHB The company is included on the company register as KRS The Company has the following numbers: tax ID number NIP and company statistical ID REGON ) The Company's financial statement for the financial period from to was approved by a resolution of the Shareholders Meeting on The Shareholders Meeting decided by Resolution no. 5 to allocate the profit achieved: for remuneration for the Founding Shareholders, owners of foundation certificates 735, zł; for supplementary capital, 14,371, zł; for dividend payout 21,685, zł. The approved financial statement for the previous year was announced in the Official Journal of the Republic of Poland B No item of 3 December. 5

4 4) The Company's financial statement for the previous year was examined by Moore Stephens J.Król Sp. z o.o. from Rzeszów who expressed no reservations. 5) During the period examined the Company's core business was: production of chemical products; production of paints, varnishes, adhesives and solvents; other activity indicated in section 3 of the National Court Register. 6) The Company's authorities are: The Shareholders Meeting, Supervisory Board and Management Board. 7) During the period investigated, the Management Board had the following members: Piotr Mikrut President of the Management Board Witold Waśko Vice President of the Management Board Joanna Wróbel Lipa Member of the Management Board Walentyna Ochab Member of the Management Board 8) During the period investigated, the Supervisory Board consisted of the following: Stanisław Cymbor Chairman Jerzy Pater Jakub Bentke Stanisław Mikrut Zbigniew Łapiński Anna Pater from 21 June 9) Authorised agents were established in the Company: Bożena Tabian independent procuration Halina Flis independent procuration Stanisław Panek independent procuration Zdzisław Czerwiec independent procuration 6

5 10) The Company's share capital as of stood at 13,550,676 zł consisting of 13,550,676 shares with a nominal value of 1.00 zł each. 11) The Company investigated owns shares in affiliated and associated entities. 12) Average employment in the Company in was persons. 13) The present financial period covers the period from to The previous financial period covered the 12 successive months of II. General Information on the Investigation Conducted 1) was chosen as auditor by Supervisory Board resolution Nr II/25/ of 14 May. 2) The investigation was conducted on the basis of contract 01/10 signed on between the Company as the Orderer and Moore Stephens Józef Król Sp. z o.o. based in Rzeszów ul. Bp. J. Pelczara 6c/8, as the Contractor, during the periods: July - August, November February - April ) The following inventories were taken by the Company during the period covered by the investigation: by obtaining statements of the states of accounts from banks and business partners: cash in bank accounts state as of receivables state as of by a physical inventory: - cash in hand state as of inventory state as of

6 by comparing record data with the documentation: - other assets and liabilities state as of ) A declaration dated was received from the Company concerning the completeness, reliability and propriety of the financial statement presented for review, and the inclusion with the additional information of all contingent liabilities and the existence or otherwise by the day the investigation ended of events significantly influencing the amounts of the data presented in the financial statement for the year investigated. III. Summary of the Results of the Investigation During the period under review, the balance sheet sum increased by 25%, while the asset structure changed. The share of fixed assets in the assets decreased from 52% to 45%. The value of tangible fixed assets increased. Equity capital still dominates liabilities, but its share decreased compared to the previous year. On balance date it stood at 54%. Financial fluidity ratios, activity ratios and financing ratios remained at a similar level as the previous year. The golden balance sheet rule defining the degree of coverage of fixed assets by equity capital is maintained with a surplus. Equity capital covers fixed assets by over 100%. Working capital shows a positive value. The profit achieved is 6% lower than the previous year, which had no major influence on profitability ratios. These remained at a similar level as the previous year. The Company uses bank (working) credit in Polish and foreign currencies to finance its business. Credit is serviced without delays. The results of the review of the financial statement, an analysis of the financial indicators and proposals for 2011 contained in the Management report do not indicate 8

7 any threat to continuation of the Company's business during the 12 months from balance date. 9

8 IV Description of the Items in the Financial Statement A End of the present period in 000 zł B End of the previous period in 000 zł A-B Structure A Structure B Assets A. Fixed assets , , ,00 44,96 51,62 Intangible assets 1 828, ,00 627,00 0,50 0,41 Property, plant and equipment , , ,00 30,02 33,17 Long-term investment property , ,00-530,00 4,54 5,86 Long-term receivables 23,00 41,00-18,00 0,01 0,01 Other long-term financial assets , ,00-55,00 9,44 11,81 Assets from deferred taxes 1 626, ,00 603,00 0,45 0,35 B. Current assets , , ,00 55,04 48,36 Inventory , , ,00 14,47 16,67 Short-term receivables from supplies and services , , ,00 25,62 25,89 Receivables from current income tax 2 461,00 0, ,00 0,68 0,00 Other short-term receivables , , ,00 9,64 1,17 Other short-term financial assets 4 596, , ,00 1,27 3,39 Cash and equivalents , , ,00 3,36 1,24 C. Assets intended for sale 0,00 73,00-73,00 0,00 0,03 Total assets , , ,00 100,00 100,00 10

9 A End of the present period in zł B End of the previous period in zł A-B Structure A Structure B Liabilities A. Equity capital , , ,00 54,06 62,85 Stated capital , ,00-3,00 3,74 4,67 Own shares 0,00-89,00 89,00 0,00-0,03 Supplementary capital , , ,00 40,38 45,52 Revaluation reserve capital 0,00 0,00 0,00 0,00 0,00 Reserve capital 0,00 0,00 0,00 0,00 0,00 Non-distributed financial result , ,00-824,00 9,93 12,41 B. Liabilities and reserves for liabilities , , ,00 45,94 37,15 Long term liabilities 5 230, ,00 381,00 1,44 1,67 Short-term liabilities , , ,00 44,50 35,47 Total liabilities , , ,00 100,00 100,00 11

10 Statement of total revenue (calculated version) for the financial period 1 January to 31 December A End of the present period in zł B End of the previous period in zł Revenue from sales , , ,00 Own cost of sales , , ,00 Gross profit / (loss) on sales , , ,00 Cost of sales , ,00-743,00 General administrative expenses , , ,00 Other operating revenue 4 785, , ,00 Other operating costs 3 807, ,00 103,00 Profit / (loss) on operating activities , , ,00 Financial revenue 6 892, ,00-344,00 Financial costs 7 869, , ,00 Profit / (loss) before tax , , ,00 Income tax 5 772, , ,00 Net profit (loss) , ,00-830,00 A-B 12

11 IV. Description of the items on the financial statement (cont.) Presentation of the asset and financial situation, financial result and profitability of the Company The investigated company's economic activity, financial result for the financial year and material and financial situation compared to the previous period are characterised by the following ratios: Unit Present Period Previous Period Activity indexes total asset productivity Sales revenue average state of assets productivity of fixed Sales revenue assets average fixed assets 1,27 1,38 2,64 2,83 equity capital productivity Sales revenue average equity capital 2,18 2,35 receivables turnover average receivables x 365 days ratio Sales revenue days inventory turnover ratio average state of inventory x 365 days cost of operating activities days Profitability ratios net profit margin net profit / loss Sales revenue % 8,71 8,93 profit / loss on sales gross profit margin Sales revenue % 10,10 10,13 total asset profitability net profit / loss total assets % 9,93 12,69 return on equity net profit / loss equity capital % 18,37 20,19 13

12 Financing ratios debt margin total long- and short-term liabilities total liabilities 0,44 0,35 liability turnover rate average state of short-term liabilities x 365 days cost of operating activities days equity to fixed assets equity capital + reserves ratio fixed assets sustainability of equity capital + reserves + long-term liabilities financing ratio total liabilities 1,24 1,25 0,56 0,65 Liquidity ratios current ratio total current assets short-term liabilities 1,24 1,37 Quick ratio total current assets - inventory short-term liabilities 0,91 0,90 cash ratio stocks and shares intended for trading + cash short-term liabilities 0,10 0,13 V. Statements by Statutory Auditor 1) During the investigation the Company presented the requested information, reliable explanations and declarations within sufficient scope and reasonable time, and submitted a declaration of the complete inclusion of data in the account books and display of all conditional liabilities, and of the announcement of all significant events between the balance date and the date the declaration was submitted. 2) The Company keeps account books based on the adopted accountancy principles which meet the requirements of the Accountancy Act and are in accordance with 14

13 International Accounting Standards (IAS), International Financial Reporting Standards (IFRS) and the associated interpretations announced in the form of ordinances of the European Commission. The economic operations investigated by us were documented fully and transparently and were properly qualified in the account books. The accounts entries investigated by us were made properly and completely on the basis of accounting evidence. The financial statement results from properly kept accounts. The account books were properly stored. 3) The Company's internal control system was investigated to a degree sufficient to express an opinion. It was possible, on the basis of the investigation of the Company's internal control system and checks of the reliability of individual items in the financial statement, to express a general, complete opinion on the propriety and reliability of this statement. 4) The closing balance at the end of the previous financial period was properly entered in the account books as the opening balance of the present period. The assets and liabilities of the balance were presented properly and reliably in all significant aspects. 5) The stated capital was covered in accordance with the letter of the law and actually exists. 6) The results of inventories taken were included in the account books. 7) The items forming the gross financial result on the Company's business in all essential aspects were included completely and properly. 8) In all essential aspects, the gross financial result was properly transformed into the net financial result. 9) The statement of changes in equity capital was prepared properly. 15

14 10) The cash flow account was properly drawn up in connection with the balance sheet, profit and loss account and account books. 11) The additional information presents all the essential information stipulated by the Accountancy Act completely and reliably. 12) There were no changes to the accountancy principles applied. Continuity of the applied principles was maintained with regard to the previous period. 13) The Board of Management of the Company prepared its report into the Company's activities which is complete in the understanding of art. 49 para. 2 of the Accountancy Act and takes into consideration the Ordinance of the Minister of Finance of 19th February 2009 regarding current and periodic information to be submitted by issuers of securities and the conditions for recognition as equivalent of the information whose disclosure is required under the laws of a state which is not an EU member state (Journal of Laws 2009, no. 33, item 259) and the information contained therein arising from the examined financial report conform with it. The information included in the report on activities is consistent with the information included in the Company's financial statement examined for. 14) The numerical information presented in the additional information for the annual financial statement and supplemented by information in part 4 of the report meet, in all essential aspects, the national financial reviewing standards issued by the National Council of Statutory Auditors in Poland. 15) It is confirmed that both the entity entitled and the statutory auditor are independent of the entity being investigated. 16