Consolidated financial quarterly report of FFiL Śnieżka S.A. for Q3 2016

Transcription

1 Consolidated financial quarterly report of FFiL Śnieżka S.A. for Q The Śnieżka Capital Group ("Group") comprises Fabryka Farb i Lakierów Śnieżka SA ("parent company", "Company") and its subsidiaries. The interim condensed consolidated financial statements of the Group cover the 3-month period ended 30 September 2016 and include comparative data for the 3-month period ended 30 September The statement of comprehensive income includes data for 3-month period ended 30 September 2016 it was not subject to the auditor's review or audit. The parent company is entered in the register of entrepreneurs of the National Court Register maintained by the District Court in Rzeszów, 12th Commercial Division of the National Court Register, under KRS no The parent company was assigned statistical number (REGON) The duration of the parent entity and the Group entities is unspecified. The Group's business focus consists of: manufacture of paints, varnishes, adhesives, solvents, etc. wholesale and retail. The Group s direct parent is Fabryka Farb i Lakierów Śnieżka SA. These interim condensed financial statements of the Group for the 3-month period ended 30 September 2016 were approved for publication by the Management Board on 2 November These interim condensed consolidated financial statements have been drawn up in conformity with the International Financial Reporting Standards ("IFRS") approved by the EU. As at the day when these statements were approved for publication, in consideration of the IFRS implementation process taking place in the EU and the Group's business, and with regard to the accounting principles applied by the Group, the International Financial Reporting Standards differ from the International Financial Reporting Standards approved by the EU. The IFRS approved by the UE include standards and interpretations approved by the International Accounting Standards Board (IASB) and the Committee for International Financial Reporting Interpretations ("IFRIC"). These interim condensed consolidated financial statements are presented in the Polish zloty ( PLN ), and all figures are in thousand PLN, unless specified otherwise. These interim condensed consolidated financial statements have been prepared on the assumption that the Group will continue as a going concern in the foreseeable future. The condensed consolidated financial statements do not include all information and disclosures required in the annual consolidated financial statements and should be read in conjunction with the Group s consolidated financial statements for the year ended on 31 December 2015, which was published on 21 April p. 1

2 EUR exchange rates used for translations in the statements: Individual items of the income statement have been translated according to the average EUR exchange rate applicable in the period, and the rate was: over 9 months of 2016: 4,3688 over 9 months of 2015: 4,1585 The individual items of the balance sheet have been converted according to the EUR exchange rate at the end of the period: as at 30 September 2016: 4,3120 as at 30 September 2015: 4,2386 Selected financial data of the Śnieżka Capital Group 9-month period ended on 30 September 2016 (not audited) in thousand PLN 9-month period ended on 30 September 2015 (not audited) 9-month period ended on 30 September 2016 (not audited) in thousand EUR 9-month period ended on 30 September 2015 (not audited) I. Net revenue from sales of products, goods and materials II. Profit (loss) on operating activities III. Gross profit/(loss) IV. Net profit (loss) Net profit (loss) attributable to shareholders of the parent company Net profit (loss) attributable to non-controlling shares V. Comprehensive income for the period Comprehensive income for the period, attributable to shareholders of the parent company Comprehensive income for the period, attributable to non-controlling shares 559 (564) 128 (136) VI. Net cash flows from operating activities VII. Net cash flows from investing activities (17 550) (11 542) (4 017) (2 776) VIII. Net cash flow from financial activities (12 965) (28 871) (2 968) (6 943) IX. Total net cash flows X. Total assets XI. Liabilities and provisions for liabilities XII. Non-current liabilities XIII. Current liabilities XIV. Equity Equity attributable to shareholders of the parent company Equity attributable to non-controlling shares XV. Share capital XVI. Number of shares XVII. Earnings (loss) per ordinary share (in PLN / EUR) 3,89 3,56 0,89 0,86 - Earnings (loss) per ordinary share, attributable to shareholders of the parent company 3,82 3,51 0,87 0,84 XVIII. Diluted earnings (loss) per ordinary share (in PLN / EUR) 3,89 3,56 0,89 0,86 - Diluted earnings (loss) per ordinary share, attributable to shareholders of the parent company 3,82 3,51 0,87 0,84 XIX. Book value per share (in PLN / EUR) 16,94 16,20 3,93 3,82 XX. Diluted book value per share (in PLN / EUR) 16,94 16,20 3,93 3,82 XXI. Declared or paid dividend per share (in PLN / EUR) 3,15 3,10 0,73 0,73 p. 2

3 INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION as of 30 September September 2016 (unaudited) 31 December 2015 Non-current assets Property, plant and equipment Investment property Goodwill - - Intangible assets Investments in associates measured with equity method Financial assets held for sale - - Other (long-term) financial assets Long-term receivables Deferred income tax assets Current assets Inventories Trade and other receivables Income tax receivables Derivative financial instruments - - Other financial assets - - Other non-financial assets Cash and cash equivalents Non-current assets classified as held for sale - - TOTAL ASSETS EQUITY & LIABILITIES Equity (attributable to shareholders of the parent company) Share capital Share premium - - Equity shares - - Foreign exchange differences on translation of a foreign undertaking (37 862) (35 874) Other reserve capitals Supplementary capital Revaluation reserve Retained earnings / Uncovered losses Equity of non-controlling shareholders Total equity Non-current liabilities Interest-bearing loans and borrowings Provisions Other liabilities - - Deferred income tax provisions Current liabilities Trade and other liabilities Current portion of interest-bearing loans and borrowings Other financial liabilities - - Income tax liabilities Accruals Provisions Liabilities related to non-current assets classified as held for sale - - Total liabilities TOTAL EQUITY & LIABILITIES p. 3

4 INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the period ended on 30 September 2016 Continuing operations 3-month period ended on 30 September 2016 (not audited) 9-month period ended on 30 September 2016 (not audited) 3-month period ended on 30 September 2015 (not audited) 9-month period ended on 30 September 2015 (not audited) Revenue from sales of products Revenue from sales of goods Revenue from sales of materials Sales revenue Cost of goods sold Gross profit/(loss) on sales Other operating revenue Selling costs General administrative expenses Other operating costs Profit/(loss) on operating activities Financial revenue Financial costs Share in profit of the associate Loss on hyperinflation Gross profit/(loss) Income tax Net profit/(loss) on continuing operations Discontinued operations Profit/(loss) on discontinued operations Net profit/(loss) for the period Other comprehensive income Items subject to reclassification to profit/(loss) in the following reporting periods: Foreign exchange gains/losses on translation of foreign undertakings (2 157) (2 314) (1 156) (8 488) Items not subject to reclassification to profit/loss in the following reporting periods: Actuarial gains/losses Other net comprehensive income (2 157) (2 246) (1 156) (8 218) COMPREHENSIVE INCOME FOR THE PERIOD Profit/(loss) attributable to: Shareholders of the parent company Non-controlling shareholders Comprehensive income attributable to: Shareholders of the parent company Non-controlling shareholders (564) Profit (loss) per share: - basic, from profit for the period attributable to the shareholders of the parent company - basic, from profit on continued operations for the period attributable to the shareholders of the parent company - diluted, from profit for the period attributable to the shareholders of the parent company - diluted, from profit on continued operations for the period attributable to the shareholders of the parent company 1,69 3,82 1,70 3,51 1,69 3,82 1,70 3,51 1,69 3,82 1,70 3,51 1,69 3,82 1,70 3,51 p. 4

5 INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS for the period ended on 30 September 2016 Cash flows from operating activities 9-month period ended on 30 September 2016 (not audited) 9-month period ended on 30 September 2015 (not audited) Profit before tax Adjustments: Depreciation of property, plant and equipment and amortisation of intangible assets (Profit) loss on investment activities (278) (57) (Profit) loss related to financing activities and foreign exchange differences Share in (profit) loss of associates (393) (240) Net interest and dividends Cash from operating activities before changes in working capital Change in inventories (222) Change in receivables (67 966) (60 478) Change in liabilities Change in provisions Change in prepayments and accruals Cash generated by operating activities Income tax paid (7 104) (6 832) Net cash from operating activities Cash flow from investing activities Outflows on acquisition of intangible assets - (18) Expenses related to acquisition of property, plant and equipment (17 912) (11 959) Inflows from sales of property, plant and equipment Net cash used in investing activities (17 550) (11 542) Cash flows from financing activities Inflows from loans and borrowings taken out Repayment of loans and borrowings (56 095) (50 463) Repayment of liabilities under finance lease - (123) Other inflows Interest (1 964) (2 622) Dividends and founders certificates paid (41 005) (39 608) Net cash from financing activities (12 965) (28 871) Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the period Foreign exchange gains/losses on translation of foreign undertakings (369) (556) Cash and cash equivalents at the end of the period p. 5

6 INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the period ended on 30 September 2016 Share capital Foreign exchange differences on translation of a foreign undertaking Attributable to shareholders of the parent company Revaluation reserve Supplementary capital Other reserve capitals Retained earnings / Uncovered losses Total Equity of noncontrolling shareholders As of 1 January (35 874) Net profit/(loss) for the period Other net comprehensive income for the period - (1 988) (1 920) (326) (2 246) Change in supplementary capital due to distribution of profit (13 317) Founders' certificates paid (1 164) (1 164) - (1 164) Payment of dividend (39 746) (39 746) (197) (39 943) As of 30 September 2016 (not audited) (37 862) As of 1 January (26 486) Net profit/(loss) for the period Other net comprehensive income for the period - (7 285) (7 015) (1 203) (8 218) Change in supplementary capital due to distribution of profit (8 995) Founders' certificates paid (493) (493) - (493) Payment of dividend (14 969) - (24 146) (39 115) - (39 115) As of 30 September 2015 (not audited) (33 771) Total equity p. 6

7 Selected separate financial data of FFiL Śnieżka S.A. 9-month period ended on 30 September 2016 in thousand PLN 9-month period ended on 30 September month period ended on 30 September 2016 in thousand EUR 9-month period ended on 30 September 2015 not audited not audited not audited not audited I. Net revenue from sales of products, goods and materials II. Profit (loss) on operating activities III. Gross profit/(loss) IV. Net profit (loss) V. Comprehensive income for the period VI. Net cash flows from operating activities VII. Net cash flows from investing activities (15 039) (10 999) (3 442) (2 471) VIII. Net cash flow from financial activities (21 787) 733 (7 168) IX. Total net cash flows (2 828) (1 205) X. Total assets XI. Liabilities and provisions for liabilities XII. Non-current liabilities XIII. Current liabilities XIV. Equity XV. Share capital XVI. Number of shares XVII. Earnings (loss) per ordinary share (in PLN / EUR) 2,46 2,20 0,56 0,53 XVIII. Diluted earnings (loss) per ordinary share (in PLN / EUR) 2,46 2,20 0,56 0,53 XIX. Book value per share (in PLN / EUR) 11,09 9,44 2,57 2,26 XX. Diluted book value per share (in PLN / EUR) 11,09 9,44 2,57 2,26 XXI. Declared or paid dividend per share (in PLN / EUR) 3,15 3,10 0,72 0,74 p. 7

8 INTERIM CONDENSED STATEMENT OF FINANCIAL POSITION as of 30 September September 2016 (unaudited) 31 December 2015 ASSETS Non-current assets Property, plant and equipment Investment property Intangible assets Financial assets held for sale Interests, shares and other long-term assets Long-term receivables Deferred income tax assets Current assets Inventories Trade and other receivables Income tax receivables - - Derivative financial instruments - - Other financial assets Other non-financial assets Cash and cash equivalents Non-current assets classified as held for sale - - TOTAL ASSETS EQUITY & LIABILITIES Equity (attributable to shareholders of the parent company) Share capital Share premium - - Equity shares - - Other reserve capitals - - Revaluation reserve - - Supplementary capital Retained earnings / Uncovered losses Non-current liabilities Interest-bearing loans and borrowings Provisions Other liabilities - - Deferred income tax provisions Accruals - - Current liabilities Trade and other liabilities Current portion of interest-bearing loans and borrowings Derivative financial instruments - - Income tax liabilities Accruals Provisions Liabilities directly related to non-current assets classified as held for sale - - Total liabilities TOTAL EQUITY & LIABILITIES p. 8

9 INTERIM CONDENSED STATEMENT OF COMPREHENSIVE INCOME for the period ended on 30 September 2016 Continuing operations 3-month period ended on 30 September 2016 (not audited) 9-month period ended on 30 September 2016 (not audited) 3-month period ended on 30 September 2015 (not audited) 9-month period ended on 30 June 2015 (not audited) Revenue from sales of products Revenue from sales of goods Revenue from sales of materials Sales revenue Cost of goods sold Gross profit/(loss) on sales Other operating revenue Selling costs General administrative expenses Other operating costs Profit/(loss) on operating activities Financial revenue Financial costs Gross profit/(loss) Income tax Net profit/(loss) on continuing operations Discontinued operations Profit/(loss) on discontinued operations Net profit/(loss) for the period Other comprehensive income Items subject to reclassification to profit /(loss) in subsequent reporting periods: Foreign exchange gains/losses on translation of foreign undertakings Items not subject to reclassification to profit /(loss) in subsequent reporting periods: Actuarial gains/losses Other net comprehensive income _ 58 _ 258 COMPREHENSIVE INCOME FOR THE PERIOD Profit (loss) per share: - basic from profit for the reporting period 1,18 2,46 1,20 2,20 - basic from profit on continuing operations for the reporting period 1,18 2,46 1,20 2,20 - diluted from profit for the reporting period 1,18 2,46 1,20 2,20 - diluted, from profit on continued operations for the reporting period 1,18 2,46 1,20 2,20 p. 9

10 INTERIM CONDENSED STATEMENT OF CASH FLOWS for the period ended on 30 September month period ended on 30 September month period ended on 30 September 2015 Cash flows from operating activities (not audited) (not audited) Profit before tax Adjustments: Depreciation/amortisation of fixed and intangible assets (Profit) loss on investment activities (323) (45) Foreign exchange gains/losses Net interest and dividends Cash from operating activities before changes in working capital Change in inventories Change in receivables (76 364) (62 286) Change in liabilities Change in provisions Change in prepayments and accruals Cash generated by operating activities Income tax paid (6 133) (6 078) Net cash from operating activities Cash flow from investing activities Outflows on acquisition of property, plant and equipment and intangible assets (16 752) (11 424) Inflows from sales of property, plant and equipment Received repayments of borrowings granted Interest received 8 24 Dividends received Net cash used in investing activities (15 039) (10 999) Cash flows from financing activities Inflows from loans and borrowings taken out Repayment of loans and borrowings (46 684) (47 272) Repayment of liabilities under finance lease - (123) Interest (2 555) (3 043) Other outflows / inflows - 34 Dividends and founders certificates paid (40 910) (39 608) Net cash from financing activities (21 787) Net increase (decrease) in cash and cash equivalents (2 828) Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period p. 10

11 INTERIM CONDENSED STATEMENT OF CHANGES IN EQUITY for the period ended on 30 September 2016 Share capital Supplementary capital Retained earnings / uncovered losses Total equity As of 1 January Net profit/(loss) for the period Reclassification for supplementary capital from distribution of profit (8 824) - Other net comprehensive income for the period Founders' certificates paid - - (1 165) (1 165) Payment of dividend - - (39 746) (39 746) As of 30 September 2016 (not audited) As of 1 January Net profit/(loss) for the period Other net comprehensive income for the period Founders' certificates paid - - (493) (493) Payment of dividend - (14 969) (24 146) (39 115) As of 30 September 2015 (not audited) p. 11

12 Notes to the consolidated quarterly report for Q Organisation of the Capital Group of the Issuer and its consolidated entities Graphic presentation of the organisational structure of the Issuer s group of related parties and information on the types of relations in the group, as of 30 September 2016: Fabryka Farb i Lakierów Śnieżka SA Śnieżka-Ukraina Sp. z o.o. in Yavoriv 82.52% of shares Śnieżka BelPol Wspólna Sp. z o.o. in Zhodino near Minska 99.00% shares Sniezka EastTrade Sp. z o.o. in Moscow 100% of shares TM Investment Sp. z o.o. in Brzeźnica 100% of shares Plastbud Sp. z o.o. in Pustków 10.07% of shares p. 12

13 List of Group members that are consolidated or accounted for using the equity method NAME REGISTERED OFFICE BUSINESS FOCUS Śnieżka-Ukraine Sp. z o.o. Yavoriv, Privokzalna 1A Ukraine manufacture of paints, varnishes, solvents, adhesives, fillers, etc.; wholesale and retail sale of construction materials Śnieżka BelPol Wspólna Sp. z o.o. Zhodino, Dorozhnaya 3/1 Belarus manufacture of fillers and impregnating agents TM Investment Sp. z o.o. Brzeźnica ul. Dębicka 44 trademark management Plastbud Sp. z o.o. Pustków 164 b manufacture and sale of paints and varnishes APPLIED CONSOLIDATION AND MEASUREMENT METHODS: Śnieżka-Ukraine Sp. z o.o. Śnieżka-BelPol Wspólna Sp. z o.o. TM Investment Sp. z o.o. Plastbud Sp. z o.o. Full consolidation method Full consolidation method Full consolidation method Equity method Śnieżka EastTrade Sp. z o.o. with its registered office in Moscow the company is involved in the promotion of Śnieżka products, and in advertising and marketing activities. As of 30 September 2016, the company is not consolidated as the scale of its activities is insignificant. 1. Effects of changes in the business unit s structure, including resulting from business combinations, acquisitions or sales of entities in the Issuer s Capital Group, long-term investments, de-mergers, restructuring and discontinuation. In the third quarter of 2016, there were no changes in the structure of the business entity caused by amalgamation, acquisition or sale of entities in the issuer s capital group. There were also no changes due to long-term investments, demergers, restructuring or discontinuation of activity. 2. Position of the Management Board concerning the possibility of meeting previously published profit/loss forecasts for a given year, in the light of the results presented in the quarterly report compared to the forecasted profit/loss. The Management Board of FFiL Śnieżka S.A. did not prepare any profit/loss forecast for Shareholders holding, directly or indirectly, through their subsidiaries, at least 5% of the total votes at the Issuer s general meeting as at the quarterly report submission date, including the number of shares held by such entities, their percentage share in the share capital, the number of resulting votes and their percentage share in the total votes at the general meeting and specification of changes in the ownership structure of substantial stakes of the Issuer s shares in the period following the publication of the previous quarterly report. Parties (shareholders) holding, directly and indirectly, at least 5% of the Company s share capital and at least 5% of the overall number of votes at the Company's General Meeting, with the total number of shares of 12, 617, 778 and the total number of votes of 14,617,778 as at the issue date of this report: p. 13

14 Shareholder Number of shares held Jerzy Pater* of which directly Stanisław Cymbor** of which directly directly Piotr Mikrut Rafał Mikrut Share in the share capital (%) 20,14 1,32 20,14 1,32 Number of votes Share in the total number votes at the General Meeting of Shareholders (%) 21,95 5,70 21,95 5, , ,23 directly , ,58 AMPLICO OFE , ,55 Aviva OFE Aviva BZ WBK , ,35 * Jerzy Pater holds the Issuer s shares indirectly via PPHU Elżbieta i Jerzy Pater Sp. z o.o. (PPHU Elżbieta i Jerzy Pater Sp. z o.o. holds 2,375,000 shares of the Issuer, giving the holder 18.82% share in the share capital and 16.25% share in the total votes at the General Meeting of Shareholders). ** Stanisław Cymbor holds the Issuer s shares indirectly via PPHU Iwona i Stanisław Cymbor Sp. z o.o. (PPHU Iwona i Stanisław Cymbor Sp. z o.o. holds 2,375,000 shares of the Issuer, giving the holder 18.82% share in the share capital and 16.25% share in the total votes at the General Meeting of Shareholders). In Q and until the date of submission of this report, no changes took place in the structure of shareholders holding at least 5% of the total votes at the General Meeting of Shareholders. 4. The Issuer's shares or rights thereto held by the Issuer s managers and supervisors as of the quarterly report submission date plus changes in their ownership, in the period following the publication of the previous quarterly report, for each person separately; Managers Piotr Mikrut 1,254,166 - no changes Witold Waśko Supervisors Stanisław Cymbor Stanisław Mikrut Jerzy Pater 198 no changes 2,541,667 no changes 33,333 no changes 2,541,667 no changes In the third quarter of 2016 and until the date of publication of this report, no changes took place in the structure of issuer shares held by managers and supervisors. 5. Identification of the proceedings pending before court, competent arbitration authority or public administration authority, including the information on: a) proceedings regarding liabilities or claims of the issuer or its subsidiary whose value is at least 10% of the issuer s equity, with the specification of: subject of proceedings, value of the subject of dispute, date of institution of proceedings, parties to the proceedings initiated and the issuer s position, b) two or more proceedings concerning liabilities and claims whose total amount equals at least 10% of the Issuer s equity respectively, with identification of the total value of the proceedings, separately for the liabilities and claims, and the Issuer's position concerning the case, and for major proceedings concerning liabilities and claims with identification of the p. 14

15 subject of the proceedings, value in litigation, commencement date of the proceedings and parties to the proceedings. There are no proceedings whose value would equal at least 10% of the Issuer s equity. 6. Information on the conclusion by the Issuer or its subsidiary of one or more transactions with related parties, if they are material (individually or jointly) and if they are not arm's-length transactions, plus the specification of their amount; information on individual transactions may be grouped by type, except when separate information on individual transactions is necessary to understand their impact on the Issuer's assets, financial position and profit/loss, including the following: a) information on the entity with which the transaction was concluded, b) information on relations of the issuer or its subsidiary with a party to the transaction, c) information on the object of the transaction, d) any material terms and conditions of the transaction, with a particular emphasis on the financial terms and indication of specific terms agreed by the parties, which are characteristic for this agreement, in particular terms differing from those that are generally applied to such agreements, e) any other information on these transactions if they are required for understanding the issuer's property, financial position and financial performance, f) any changes in the transactions with related parties that were described in the last annual statements, if such changes could have a significant impact on the Issuer's assets, financial position and profit/loss - but: if relevant information was presented in the quarterly condensed financial statements, the obligation will be deemed fulfilled if it is indicated where such information is available In the third quarter of 2016, the issuer or its subsidiaries did not enter into any transactions with related entities, which would be material and were not arm's length transactions. Transactions between related parties are arm s-length transactions, i.e. their terms do not differ from transactions concluded on market terms. 7. Information on the Issuer s or its subsidiaries credit or loan guarantees or warranties granted jointly to a single entity or its subsidiary, if the total value of the existing guarantees or warranties is equivalent to at least 10% of the Issuer s equity capital, with the indication of: a) name of (company) entity to which sureties or guarantees were issued, b) total amount of loans or borrowings, which was guaranteed in whole or in a specific part, c) period of time for which sureties or guarantees were issued, d) financial conditions under which sureties or guarantees were issued with the indication of the remuneration of the issuer or its subsidiary for issuing of such sureties or guarantees, e) nature of links between the Issuer and the entity that took out loans or borrowings. As of 30 September 2016, no sureties or guarantees were issued by the parent company to one entity, exceeding 10% of the Issuer's equity. On 20 February 2015, the Issuer's subsidiary, i.e. TM Investment Sp. z o.o., granted to the Issuer, i.e. FFiL Śnieżka S.A., a surety for a loan raised with Bank Handlowy w Warszawie S.A. in the total amount of PLN 30 million. The surety was granted until 31 August The remuneration for TM Investment Sp. z o.o. for the surety granted in 2016 will amount to PLN 150 thousand. 8. Any other information that, in the Issuer's opinion, is significant in order to evaluate its human resources, assets, financial position and profit/loss and changes thereof, as well as any information considered significant in order to evaluate the Issuer s capacity to meet its obligations. In the third quarter of 2016, there were no changes in the issuer s structure that could influence its capacity to meet its obligations. p. 15

16 9. Factors which, in the Issuer's opinion, will influence its financial performance for at least one quarter. In the Issuer s opinion, the major factors that will influence its financial performance in the coming quarter are prices of raw materials used in the manufacturing process, currency exchange rate variations and the sales dynamics of the Issuer s Capital Group companies. The consolidated profit/loss in the coming quarter will be most influenced by the results of the parent, FFiL Śnieżka SA, and its subsidiaries: Śnieżka Ukraina Sp. z o.o., with its registered office in Yavoriv, Śnieżka BelPol Wspólna Sp. z o.o. and TM Investment Sp. z o.o. The factors with a big impact on the results of the Śnieżka Capital Group in the coming quarters will be the devaluation of the Ukrainian hryvnia and the Belarusian ruble. Other information for the report for Q Brief description of the issuer s significant achievements or failures in the period included in the report, plus a list of the most important related events Sales revenues of the Śnieżka Capital Group in Q3, 2016 amounted to PLN million (growth rate of 5,7% compared with the corresponding period of the previous year), consolidated operating profit amounted to PLN 26,8 million (decrease by 1,9% y-o-y) and consolidated net profit to PLN 21,8 million (decrease by 0,4% y-o-y). Within three quarters of 2016 the Group achieved the best results on the Russian market (growth of sales by 21.9% y-o-y), Ukrainian market (growth of sales by 11.5% y-o-y) and Polish market, where the growth of sales within the three quarters of 2016 amounted to 5.9% as compared to the corresponding period in The biggest slump in sales, by 24.1% after conversion to the Polish zloty, was observed on the Belarusian market as a result of an economic crisis in that territory. 2. Description of factors and events, in particular of untypical nature, having a significant impact on the financial results achieved. The main factor affecting the financial performance of the Capital Group during the three quarters of 2016 consisted in increased sales in the Ukrainian and Polish market and considerably lower sales in the Belarusian market compared to Q1-Q The realised net profit was affected by stable prices of raw materials and significantly lower financial costs compared to the corresponding period in Lower operating profit was caused by higher selling costs and higher general administrative expenses within the three quarters of Notes on the seasonality or cyclicality of the Issuer s business in the presented period. The business of the Śnieżka Capital Group experiences seasonality, which consists in the considerable growth of demand, and consequently, of product sales in Q2 and Q3 of each financial year. In wintertime, however, the sales may drop by as much as 70% compared to summer months. Every year, Q3 is usually the best-in-year in terms of sales volume and profit. 4. Information on write-downs on inventories to net value to be received and reversal of these write-downs In Q the amount of revaluation write-downs on inventories (in comparison with the end of the first half of 2016) increased by PLN 30 thousand and as of 30 September 2016 these write-downs amount to PLN 609 thousand. 5. Information on impairment losses on financial assets, property plant and equipment, intangible assets or any other assets and on reversal of such impairment losses. In comparison to 30 June 2016, as of 30 September 2016, there was an increase by PLN 42 thousand of the amount of write-downs on receivables (currently they amount to PLN 4,010 thousand). 6. Information on creation, increase, use and release of provisions. p. 16

17 Provisions created in the Śnieżka Capital Group relate to future employee benefits and, as of 30 September 2016, they amount to PLN 3,325 thousand in total (of which long-term provisions of PLN 1,356 thousand and short-term provisions of PLN 1,969 thousand). In Q3 2016, the amount of these provisions was reduced by a total of PLN 47 thousand, of which by PLN 4 thousand in the long-term part and by PLN 43 thousand in the short-term part. Other provisions were not created by the Group. 7. Information on deferred income tax provisions and assets. In the statement of financial position, the deferred income tax provision is compensated against the deferred income tax assets in each Group company. In Q3, 2016 deferred income tax assets increased by PLN 1,510 thousand compared to 30 June 2016 and currently amounts to PLN 7,423 thousand. Deferred income tax provisions remained unchanged and as of 30 September 2016 amounted to PLN 236 thousand. 8. Information on material purchase and sale transactions of property, plant and equipment. No material separate purchase and sale transactions of property, plant and equipment took place. Over three quarters of 2016 the Śnieżka Group purchased property, plant and equipment for the total amount of PLN 17,912 thousand, comprising investments in buildings and structures, purchase of machines and equipment, means of transport and other fixed assets. 9. Information on material liabilities due to purchase of property, plant and equipment. There are no material liabilities due to purchase of property, plant and equipment. 10. Information on material settlements due to court proceedings. There are no material settlements related to court proceedings. 11. Adjustments of errors from previous periods. None. 12. Information on changes in economic situation and conditions for pursuing business activity, which have a material impact on fair value of financial assets and liabilities of the company, notwithstanding the fact if these assets and liabilities are disclosed at their fair value or in adjusted purchase price (amortised cost). In the third quarter of 2016 the economic situation in Ukraine was still unsure in connection with a possible devaluation of the hryvnia and a political and economic crisis. The economic situation in Belarus was also difficult due to a decrease in the purchasing power of consumers and necessary increases in prices due to the devaluation of the Belarusian ruble over the past years. 13. Information on failure to repay a loan or a credit or infringement of material terms and conditions of a loan or credit agreement, in relation to which no correction measures were taken until the end of the reporting period. In the third quarter of 2016 there were no failures to repay a loan or a borrowing or infringements of material terms and conditions of a loan or borrowing agreement in relation to a parent company and subsidiaries of the Śnieżka Capital Group. 14. Information on the conclusion by the Issuer or its subsidiary of one or more transactions with related parties, if they are material (individually or jointly) and if they are not arm's-length transactions, plus the specification of their amount; information on individual transactions may be grouped by type, except when separate information on individual transactions is necessary to understand their impact on the Issuer's assets, financial position and profit/loss, including the following: p. 17

18 a) information on the entity with which the transaction was concluded, b) information on relations of the issuer or its subsidiary with a party to the transaction, c) information on the object of the transaction, d) any material terms and conditions of the transaction, with a particular emphasis on the financial terms and indication of specific terms agreed by the parties, which are characteristic for this agreement, in particular terms differing from those that are generally applied to such agreements, e) any other information on these transactions if they are required for understanding the issuer's property, financial position and financial performance, f) any changes in the transactions with related parties that were described in the last annual statements, if such changes could have a significant impact on the Issuer's assets, financial position and profit/loss; In the third quarter of 2016, the issuer or its subsidiaries did not enter into any transactions with related entities, which would be material and were not arm's length transactions. Transactions between related parties are arm s-length transactions, i.e. their terms do not differ from transactions concluded on market terms. 15. In case of financial instruments measured at fair value information on change of the way (method) of its determination. There were no changes in the way the value of financial instruments measured at fair value is determined. 16. Information on change in classification of financial assets due to change of objectives or use of these assets. There were no changes in the classification of financial assets due to change of objectives or use of these assets. 17. Information on issue, purchase and repayment of non-equity and capital securities. In the third quarter of 2016 no issue, redemption or repayment of non-equity and equity securities took place. 18. Information on paid (or declared) dividend, total and per share, divided into ordinary shares and preference shares. The dividend from the profit for the year 2015 in the amount of PLN 3.15 per share, i.e. a total amount of PLN 39,746 thousand, was paid on 1 July In the company the same amount of dividend per share is allocated for preference and ordinary shares. 19. Identification of events occurring after the date of the quarterly condensed financial statements, not included in these statements, and likely to significantly affect the future financial performance of the issuer. After the date for which the financial data for the third quarter of 2016 was compiled, no events occurred that could have a negative considerable impact on the issuer s future consolidated results. 20. Information on changes in contingent liabilities or contingent assets that have occurred since the end of the last financial year. p. 18

19 As of 30 September 2016, the Śnieżka Capital Group did not have any contingent liabilities or contingent assets. As compared to 31 December 2015, the balance of contingent liabilities and assets did not change. 21. Any other information which may significantly affect property, financial position and financial performance of the issuer. None. 22. Segment reporting. In order to give a more complete view of its performance over three quarters of 2016, the issuer presents the business operations of the Group broken down by geographical segments and segments according to criteria of products and services: Segment performance in 3 quarters of 2016: 9-month period ended on 30 September 2016 (not audited) Continuing operations Discontinued operations Exclusions Total activity Poland Ukraine Belarus Moldova Russia Other Total Segment revenue after exclusions The Group did Sales to external customers not discontinue its operations Sales between segments (exclusions) (36 565) - in the Total segment revenue without exclusions presented Segment costs after exclusions period Results after exclusions Non-assigned costs Other operating revenue 809 Other operating costs Net loss on discontinued operations - Profit (loss) on operating activities Financial revenue 542 Financial costs Share in net profit (loss) of subordinates measured with the equity method 393 Profit (loss) before tax income tax Net profit (loss), of which for: shareholders of the parent company non-controlling shareholders 884 Sales structure in Śnieżka Group according to criteria of products and services in thousand PLN: Details 9 months of 2016 Decorative products Construction chemistry products Industrial products Goods Other revenues Materials Total sales p. 19

20 Total assets of the operating segments did not change much compared to the segment assets disclosed in the statements for Segment performance in 3 quarters of month period ended on 30 September 2015 (not audited) Continuing operations Discontinued operations Poland Ukrain e Belarus Moldova Russia Other Total Exclusion s Total activity Segment revenue after exclusions The Group did Sales to external customers not Sales between segments (exclusions) discontinue its operations in (34 038) - Total segment revenue without exclusions the presented period Segment expenses after exclusions Results after exclusions Non-assigned costs Other operating revenue Other operating costs Net loss on discontinued operations - Profit (loss) on operating activities Financial revenue 375 Segment revenue after exclusions Share in net profit (loss) of subordinates measured with the equity method 240 Loss on hyperinflation - Profit (loss) before tax Income tax Net profit (loss), of which for: shareholders of the parent company non-controlling shareholders 639 Sales structure in Śnieżka Group according to criteria of products and services in thousand PLN: Details 9 months of 2015 Decorative products Construction chemistry products Industrial products Goods Other revenues Materials Total sales The above financials have been calculated and presented in line with International Financial Reporting Standard 8, i.e. income and costs have been allocated to geographical segments, excluding income relative to interest or dividends received from other segments, including associated companies as appropriate. The gross result of the segment is the difference between segment income and segment costs before adjustments for minority interest. p. 20