CONSOLIDATED FINANCIAL STATEMENTS for the period between 1 January and 31 December 2012

Transcription

1 CONSOLIDATED FINANCIAL STATEMENTS for the period between 1 January and 31 December March 2013

2 Table of Contents... 1 I. Statement of the Management Board concerning the accuracy of the Consolidated Financial Statements... 4 II. Statement of the Management Board on the entity entitled to audit the Financial Statements... 5 III. Annual Consolidated Financial Statements prepared in accordance with the International Financial Reporting Standards for the period between 1 January 2012 and 31 December Consolidated Statement of Comprehensive Income... 8 Consolidated Statement of Financial Condition... 9 Statement of Changes in Consolidated Equity Consolidated Cash Flow Statement Notes to the Consolidated Financial Statements General information Principles of preparing the Consolidated Financial Statements Property, plant and equipment Intangible assets Borrowing costs Investment property Impairment of non-financial assets Financial instruments Derivatives Inventory Cash and cash equivalents Share capital Lease Employee benefits Provisions Sales revenues Operating expenses Other operating income and expenses Financial expenses Income tax Net profit per share Professional assessment of the Management Board, estimates and assumptions Business mergers Information about operating segments... 34

3 6. Revenues and expenses Income tax Social assets and the Employee Benefits Fund Profit per share Dividend per share Property, plant and equipment Goodwill Intangible assets Investment property Financial assets Inventory Trade and other receivables Derivative financial instruments Other financial assets Cash and cash equivalents Share capital and other capitals Provisions for other liabilities and other encumbrances Employee benefit liabilities Loans and borrowings and other financial liabilities Trade and other liabilities Hedge accounting Contingent assets and liabilities Transactions with related parties Objectives and principles of financial risk management Capital management Financial instruments Net cash inflows from operating activity Other investment inflows/outflows Causes of differences between balance sheet changes of certain items and changes following from the Cash Flow Statement Employment structure Remuneration for managers and supervisors Remuneration for senior management staff Remuneration for the certified auditor or the entity authorised to audit financial statements Transactions with managers Events after the balance sheet date Page 3

4 I. Statement of the Management Board concerning the accuracy of the Consolidated Financial Statements These Consolidated Financial Statements and the comparative data have been prepared in order to present the financial standing, activity results and cash flows in accordance with the International Financial Reporting Standards ("IFRS") approved by the EU, issued and binding as of the balance sheet date, while for matters not regulated by these Standards in accordance with the Accounting Act dated 29 September The Annual Consolidated Financial Statements of the ACTION S.A. Group for the period ending 31 December 2012 comprise: Consolidated Statement of Comprehensive Income, Consolidated Statement of Financial Position, Statement of Changes in Consolidated Equity, Consolidated Cash Flow Statement and Notes containing a description of key accounting principles and selected explanatory notes. Pursuant to the requirements of the Ordinance of the Minister of Finance of 19 February 2009 on current and periodic information published by issuers of securities and the conditions thereof regarding information required by the law of a non-member state as equivalent as well as the Ordinance of the Minister of Finance of 3 April 2012 amending the Ordinance on current and periodic information published by issuers of securities and the conditions thereof regarding information required by the law of a non-member state as equivalent (Dziennik Ustaw [Journal of Laws] of 13 April 2012), the Management Board of ACTION S.A. hereby represents that: - to the best of their knowledge the Annual Consolidated Financial Statements and comparative data were prepared in compliance with the accounting principles in force and that they present a true, accurate and fair view of the Group's economic and financial standing as well as its financial result and that the Directors' Report on Operations presents a true overview of the development and achievements of the Group and its situation, including basic risks and exposures. During the period covered by the Consolidated Financial Statements, the companies from the Group, excluding ACTION S.A., kept their account books in line with the accounting policy (principles) determined by the Accounting Act dated 29 September 1994 and regulations issued on its basis. The Consolidated Financial Statements comprise adjustments not included in the books of the Group's units, entered in order to bring the financial statements of such units in line with the IFRS. Since 1 January 2010 ACTION S.A. has been keeping its account books in accordance with the International Financial Reporting Standards ("IFRS") approved by the EU, issued and binding as of the balance sheet date while for matters not regulated by these Standards in accordance with the Accounting Act dated 29 September Piotr Bieliński President of the Management Board Sławomir Harazin Vice-President of the Management Board Edward Wojtysiak Vice-President of the Management Board Warsaw, 19 March 2013 Page 4

5 II. Statement of the Management Board on the entity entitled to audit the Financial Statements The Management Board declares that the entity entitled to audit the Financial Statements, i.e. BDO Sp. z o.o. based in Warsaw and conducting the audit of the Annual Consolidated Financial Statements of ACTION S.A. Capital Group, was selected in compliance with the law and that the entity and auditors conducting this said audit meet the conditions to issue an impartial and independent opinion on the audit of the Group's Annual Consolidated Financial Statements in compliance with the relevant regulations and professional standards. Piotr Bieliński President of the Management Board Sławomir Harazin Vice-President of the Management Board Edward Wojtysiak Vice-President of the Management Board Warsaw, 19 March 2013 Page 5

6 III. Annual Consolidated Financial Statements prepared in accordance with the International Financial Reporting Standards for the period between 1 January 2012 and 31 December 2012 Selected consolidated financial data of the ACTION S.A. Capital Group SELECTED CONSOLIDATED FINANCIAL DATA in thousand PLN cumulative period from 1 January 2012 to 31 December 2012 cumulative period from 1 January 2011 to 31 December 2011 in thousand EUR cumulative period from 1 January 2012 to 31 December 2012 cumulative period from 1 January 2011 to 31 December 2011 I. Revenues from net sales of products, goods and materials 3,515,189 2,804, , ,464 II. Gross profit/loss on sales 226, ,502 54,343 46,014 III. Profit/loss from operating activity 68,264 57,326 16,356 13,847 IV. Net profit/loss attributed to the Company's Shareholders 48,319 42,409 11,577 10,243 V. Net cash flows from operating activity 14,741 5,059 3,532 1,222 VII. Net cash flows from investments -5,947-5,926-1,425-1,431 VII. Net financial cash flows -9,313 1,308-2, VIII. Net increases (decreases) of cash IX. Profit per ordinary share * (in PLN/EUR) As of 31 December 2012 As of 31 December 2011 As of 31 December 2012 As of 31 December 2011 X. Total assets 901, , , ,940 XI. Liabilities 641, , , ,583 XII. Long-term liabilities 5,024 12,537 1,229 2,838 XIII. Short-term liabilities 636, , , ,745 XIV. Equity attributed to the Company's Shareholders 259, ,417 63,496 50,357 XV. Share capital 1,641 1, XVI. Number of shares ** (quantity) 16,410,000 16,410,000 16,410,000 16,410,000 XVII. Book value per share *** (in PLN/EUR) * Profit per ordinary share was calculated as the quotient of net profit and the number of shares. ** The number of shares takes into account the change in the nominal value of series A shares from 1 PLN to 0.10 PLN at the same time dividing 1 share of 1 PLN into 10 shares of a nominal value of 0.10 PLN. The change was made on 11 April 2006 by virtue of a resolution of the Extraordinary General Meeting of Shareholders. *** The book value per share was calculated as the quotient of share capital attributed to the Company's Shareholders and the number of shares. The selected financial data presented in the Consolidated Financial Statements was converted into EUR in the following manner: - items concerning the Consolidated Statement of Comprehensive Income and the Cash Flow Statement were converted at the exchange rate being the arithmetic mean of the average exchange rates published by the National Bank of Poland, in force on the last day of each month; for 2012 this exchange rate stood at: EUR 1 = PLN , for 2011: EUR 1 = PLN ; - items concerning the Consolidated Statement of Financial Position were converted at the exchange rate published by the National Bank of Poland, in force on the balance sheet date; as of 31 December 2012 this exchange rate stood at: EUR 1 = PLN , as of 31 December 2011: EUR 1 = PLN ; Page 6

7 PLN/EUR exchange rates Period 1 January December January December 2011 Average exchange rate in the period Minimum exchange rate in the period Maximum exchange rate in the period Exchange rate as of the last day of the period Exchange rates for PLN with respect to other currencies Exchange rates for PLN with respect to USD Period 1 January December January December 2011 Average exchange rate in the period Minimum exchange rate in the period Maximum exchange rate in the period Exchange rate as of the last day of the period Exchange rates for PLN with respect to GBP Period 1 January December January December 2011 Average exchange rate in the period Minimum exchange rate in the period Maximum exchange rate in the period Exchange rate as of the last day of the period Page 7

8 Consolidated Statement of Comprehensive Income All revenues and costs relate to continuing activities. Note period period from 1 from 1 January January to 31 to 31 December December Sales revenues (6.2) 3,515,189 2,804,768 Costs of products, goods and materials sold (6.3) -3,288,383-2,614,266 Gross profit from sales 226, ,502 Selling and marketing costs (6.3,6.4) -134, ,104 General and administrative expenses (6.3,6.4) -23,701-21,964 Other revenues and operating profits (6.5) 3,987 8,247 Other costs and losses (6.6) -4,009-4,355 Profit/loss from operating activity 68,264 57,326 Financial expenses (6.7) -7,343-5,133 Profit/loss before tax 60,921 52,193 Income tax (7) -12,699-9,920 Share in the net result of the associate Net profit/loss for the financial period 48,319 42,409 Other components of comprehensive income Net change due to cash flow hedging 3,252-2,107 Income tax Other components 0 0 Other components of net comprehensive income 2,634-1,707 Total income for the period 50,953 40,702 Profit/loss net attributed to: the Company's Shareholders 48,319 42,409 minority interest 0 0 Comprehensive income attributed to: the Company's Shareholders 50,953 40,702 non-controlling interests 0 0 Profit/loss attributed to the Company's Shareholders per ordinary share (in PLN per share) Basic (9) Diluted Number of shares 16,410,000 16,410,000 Diluted number of shares 17,230,500 17,230,500 Piotr Bieliński President of the Management Board Sławomir Harazin Vice-President of the Management Board Edward Wojtysiak Vice-President of the Management Board Warsaw, 19 March 2013 Page 8

9 The basic number of shares is comprised of 11,910,00 A series shares and 4,500,00 B series shares. The diluted number of shares is comprised of the additionally planned issue of 820,500 C series shares. The basic profit per share is computed as the quotient of the profit attributed to the Company's Shareholders and the weighted average number of ordinary shares during the period. The diluted profit per share is computed as the quotient of the profit attributed to the Company's Shareholders and the weighted average of ordinary shares taking into consideration the planned issue of 820,500 C series shares within conditional increase of the share capital in accordance with the Resolution of the Extraordinary General Meeting of the Company Shareholders dated 15 November 2006 and the Resolution of the Ordinary General Meeting of Shareholders dated 5 December The weighted average number of ordinary shares takes into account the change in the nominal value of series A shares from 1 PLN to 0.10 PLN. The change of the nominal value of A series shares was performed by way of Resolution of the Extraordinary General Meeting of Shareholders dated 11 April Moreover, the weighted average number of ordinary shares was increased by the planned issue of 820,500 C series shares. Consolidated Statement of Financial Condition Note 31 December December 2011 ASSETS Non-current assets Property, plant and equipment (11) 112, ,525 Goodwill (12) 13,994 13,994 Other intangible assets (13) 2,019 3,069 Investment property (14) 3,545 3,537 Financial assets (15) 2,930 3,226 Share in associates measured under the equity method (15) 2, Deferred income tax assets (7.1) Trade and other receivables (17) , ,496 Current assets Inventory (16) 315, ,541 Trade and other receivables (17) 439, ,700 Current income tax receivables Derivative financial instruments (18) 95 0 Other financial assets (19) Cash and cash equivalents (20) 7,674 8, , ,596 Total assets 901, ,092 EQUITY Equity attributed to the Company's Shareholders Share capital (21.1) 1,641 1,641 Share premium surplus (21.2) 55,744 55,744 Other reserve capital (21.2) 30,000 30,000 Retained earnings (21.2) 171, ,739 Other components of equity 927-1, , ,417 Non-controlling interests (21.3) 0 0 Total equity 259, ,417 LIABILITIES Long-term liabilities Loans and borrowings and other financing liabilities (24) ,125 Trade and other liabilities 0 0 Deferred income tax provisions (7.1) 4,882 1,412 Page 9

10 5,024 12,537 Short-term liabilities Trade and other liabilities (25) 522, ,103 Loans and borrowings, and other financing liabilities (24) 106,504 83,577 Current income tax liabilities (25) 6,435 0 Employee benefit liabilities (23) Derivative financial instruments (18) 0 43 Provisions for other liabilities and other encumbrances (22) , ,138 Total liabilities 641, ,675 Total equity and liabilities 901, ,092 Statement of Changes in Consolidated Equity Equity attributed to the Shareholders of the parent Equity attributed to noncontrolling interests Total equity Share capital Share premium surplus Retained earnings Other reserve capital Capital from cash flow hedge valuation As of 1 January ,641 55, ,739 30,000-1, ,417 Total comprehensive income 48,319 2,634 50,953 Dividends paid -13,784-13,784 Other 0 As of 31 December ,641 55, ,274 30, ,586 As of 1 January ,641 55, , ,678 Total comprehensive income 42,409-1,707 40,702 Dividends paid -7,057-7,057 Other -30,000 30, As of 31 December ,641 55, ,739 30,000-1, ,417 Piotr Bieliński President of the Management Board Sławomir Harazin Vice-President of the Management Board Edward Wojtysiak Vice-President of the Management Board Warsaw, 19th March 2013 Page 10

11 Consolidated Cash Flow Statement Note period period from 1 January from 1 January to 31 December to 31 December Cash flows from operating activity Net profit/loss for the financial period 48,319 42,409 Adjustments: -33,578-37,350 Income tax 12,699 9,920 Income tax paid -2,860-13,416 Depreciation of fixed and intangible assets 11,361 11,468 Profit (loss) from investment activity 752-1,347 Interest revenues 0 0 Interest expenses 7,343 5,133 Other (32) 3,232-2,538 Changes in working capital: (32) Inventory -18, ,774 Trade and other receivables -112,982-89,164 Trade and other liabilities 65, ,368 Net cash flows from operating activity 14,741 5,059 Cash flows from investment activity Purchase of property, plant and equipment and intangible assets Revenues from the sale of property, plant and equipment and intangible assets -2,831-4, ,563 Other investment inflows/outflows (33) -3,178-4,307 Net cash flows from investments -5,947-5,926 Cash flows from financial activity Receipts from issue of shares 0 0 Purchase of own shares 0 0 Loans and borrowings received 15,811 15,814 Repayment of loans and borrowings 0 0 Dividends paid -13,784-7,057 Interest paid -7,343-5,133 Payments of liabilities under finance lease agreements -3,997-2,316 Other financial inflows/outflows 0 0 Net financial cash flows -9,313 1,308 Net increases/decreases of cash Opening balance of cash FX gains (losses) on valuation of cash 8,194 7, Closing balance of cash 7,674 8,194 Piotr Bieliński President of the Management Board Sławomir Harazin Vice-President of the Management Board Edward Wojtysiak Vice-President of the Management Board Warsaw, 19th March 2013 Page 11

12 Notes to the Consolidated Financial Statements 1. General information Company name: ACTION Spółka Akcyjna Legal status: Joint stock company under Polish law Incorporated in: Poland Registered office: Warsaw Address: ul. Jana Kazimierza 46/54, Warsaw National Court Register (KRS) KRS No.: Tel. No.: (+48 22) Fax No.: (+48 22) Website: Statistical Number (REGON): Tax Identification Number (NIP): 1.1.BUSINESS FOCUS ACTION S.A. (Issuer/Company) and its subsidiaries sell computer equipment, consumer electronics and home appliances through wholesalers, their own retail outlets and third party shops. The Group conducts its sales operations principally in Poland. Primary field of the Company's business: wholesale trade in computer accessories (Polish Classification of Activities Z). ACTION S.A. is the parent with its registered office in Warsaw, ul. Jana Kazimierza 46/54. On 2 August 2004, ACTION Spółka Akcyjna was entered into the Register of Entrepreneurs of the National Court Register under KRS number on the basis of the decision of the District Court in Warsaw, 19th Commercial Division of the National Court Register. The legal predecessor of the Issuer ACTION spółka z ograniczoną odpowiedzialnością (limited liability company), had been registered in the Register of Businesses under KRS no on the basis of the decision of the District Court in Warsaw, Commercial Division of the National Court Register, of 28 November Composition of the Group Structure of ACTION S.A. Capital Group Page 12

13 1 GRAM.PL Sp. z o.o. 100% ACTION S.A. ACTION ENERGY Sp. z o.o. 24% ACTINA Sp. z o.o. 100% ACTION INVESTMENTS Sp. z o.o. 100% ACTIVEBRAND Sp. z o.o. 100% SFK Sp. z o.o. 100% ACTION CENTRUM EDUKACYJNE Sp. z o. o % SFERIS Sp. z o.o % SELECTRO Sp. z o.o. 100% SYSTEMS Sp. z o. o. 100% Composition of the Group: parent: ACTION S.A.with its registered office in Warsaw subsidiaries and associates SFK Sp. z o.o. with its registered office in Cracow subsidiary (100%). ACTINA Sp. z o.o. with its registered office in Warsaw subsidiary (100%) SFERIS Sp. z o.o. with its registered office in Warsaw indirect subsidiary (99.89%) 1 GRAM.PL Sp. z o.o. with its registered office in Warsaw subsidiary (100%) 2 ACTION ENERGY Sp. z o.o. with its registered office in Cracow an associate (24%) 3 SELECTRO Sp. z o. o. with its registered office in Zamienie - indirect subsidiary (99.89%) 4 ACTION INVESTMENTS Sp. z o.o. with its registered office in Zamienie - subsidiary (100%) 5 ACTION CENTRUM EDUKACYJNE Sp. z o. o. with its registered office in Warsaw - an associate (25.94%) 6 SYSTEMS Sp. z o. o. with its registered office in Warsaw indirect associate (25.94%) 7 ACTIVEBRAND Sp. z o.o. with its registered office in Zamienie - subsidiary (100%) 8 Changes in the Group s composition during the reporting period: Changes occurred in the composition of the Group during the period covered by the statements. On 12 September 2012 ACTION S.A. acquired shares in the company ACTION CENTRUM EDUKACYJNE Sp. z o. o. and indirectly in the company SYSTEMS Sp. z o. o., which is wholly-owned by the company ACTION CENTRUM EDUKACYJNE Sp. z o. o. Third party shares in subsidiaries: SFERIS Sp. z o.o %, including Piotr Bieliński 0.055%, Anna Bielińska 0.055% 1 SFERIS Sp. z o.o. with its registered office in Warsaw was consolidated on 5 January GRAM.PL Sp. z o.o. with its registered office in Warsaw was consolidated on 28 May 2009 and on 18 December 2009 the interest was raised to 80%. On 24 May 2010 the interest was raised to 100% by way of a share purchase agreement. 3 ACTION ENERGY Sp. z o.o. with its registered office in Cracow was founded on 3 September Page 13

14 4 SELECTRO Sp. z o. o. with its registered office in Zamienie was founded on 8 September ACTION INVESTMENTS Sp. z o.o. with its registered office in Zamienie was founded on 12 December ACTION CENTRUM EDUKACYJNE Sp. z o.o. with its registered office in Warsaw was consolidated on 1 October SYSTEMS Sp. z o. o. with its registered office in Warsaw was consolidated on 1 October ACTIVEBRAND Sp. z o.o. with its registered office in Zamienie was founded on 3 September ACTINA Sp. z o.o. deals in wholesale of computer hardware. ACTION ENERGY Sp. z o.o., founded in 2009, focuses its activity on the renewable energy market. The aim of the company is to create a technological sales centre addressed at installers of devices using renewable energy sources. The primary business focus of SFERIS Sp. z o.o. is retail of computer hardware. The activities of GRAM.PL Sp. z o.o. (computer games) focus on online retail sales. SFK Sp. z o.o. provides advertising services. The main scope of activities of SELECTRO Sp. z o.o. is the online sales of goods offered by the Group. ACTION INVESTMENTS Sp. z o.o. has begun activities in the financial services sector. The primary business focus of ACTION CENTRUM EDUKACYJNE Sp. z o.o. and SYSTEMS Sp. z o.o. is on training and IT services as well as rental of IT hardware. ACTIVEBRAND Sp. z o.o. began activities in the marketing services sector. Page 14

15 Subsidiaries consolidated as of 31 December 2012 Name (business name) of the entity Registered office Business focus Type of relationship with legal status of the enterprise (subsidiary, co-subsidiary, associate, including details of direct and indirect relationships) Competent court or other authority maintaining the register Applied consolidation method / equity method or statement: "nonconsolidated/equity method not applied" Date of control/jointcontrol/significant influence acquisition Percentage of the share capital held Share in the total number of votes at the General Meeting SFK Sp. z o.o. Cracow advertising activity direct subsidiary ACTINA Sp. z o.o. Warsaw wholesale trade in computer hardware direct subsidiary GRAM.PL Sp. z o.o. Warsaw retail direct subsidiary ACTION ENERGY Sp. z o. o. * Cracow SFERIS Sp. z o.o. Warsaw wholesale in metal products retail in computer hardware associate indirect subsidiary SELECTRO Sp. z o.o. Warsaw retail indirect subsidiary ACTION INVESTMENTS Sp. z o.o. Warsaw financial services direct subsidiary ACTION CENTRUM EDUKACYJNE Sp. z o. o. Warsaw training and IT services as well as rental of IT hardware. associate District Court for Kraków- Śródmieście, 11th Commercial Division of the National Court Register full 9 May % 100% District Court for the capital city of Warsaw, 12th Commercial Division of the National Court Register full 3 June % 100% District Court for the capital city of Warsaw, 13th Commercial Division of the National Court Register full 28 May % 100% District Court for Kraków- Śródmieście, 11th Commercial Division of the National Court Register measured under the equity method 3 September % 24% District Court for the capital city of Warsaw, 13th Commercial Division of the National Court Register full 5 January % 99.89% District Court for the capital city of Warsaw, 14th Commercial Division of the National Court Register District Court for the capital city of Warsaw, 14th Commercial Division of the National Court Register District Court for the capital city of Warsaw, 13th Commercial Division of the National Court Register full full measured under the equity method 8 September % 99.89% 14 December % 100% 12 September % 25.94% Page 15

16 Name (business name) of the entity Registered office Business focus Type of relationship with legal status of the enterprise (subsidiary, co-subsidiary, associate, including details of direct and indirect relationships) SYSTEMS Sp. z o. o. Warsaw ACTIVEBRAND Sp. z o.o. Zamienie training and IT services as well as rental of IT hardware. advisory services in the scope of carrying out an economic activity indirect associate subsidiary Competent court or other authority maintaining the register District Court for the capital city of Warsaw, 13th Commercial Division of the National Court Register District Court for the capital city of Warsaw, 14th Commercial Division of the National Court Register Applied consolidation method / equity method or statement: "nonconsolidated/equity method not applied" measured under the equity method full Date of control/jointcontrol/significant influence acquisition Percentage of the share capital held Share in the total number of votes at the General Meeting 12 September % 25.94% 3 September % 100% * Control by ACTION S.A. over this company ceased at the end of Since 1 January 2011, ACTION S.A. has had a significant influence on this entity. With regard to the above, on 1 January 2011, the consolidation method of the company ACTION ENERGY Sp. z o.o. was changed from full to equity-based. Page 16

17 1.3.Composition of the Company's bodies As of the balance sheet date, the composition of the Company's authorities was as follows: Management Board President of the Management Board - Piotr Bieliński Vice President of the Management Board - Sławomir Harazin * Vice President of the Management Board - Edward Wojtysiak * Sławomir Harazin was appointed Vice-President of the Management Board by way of a Resolution of the Supervisory Board of ACTION S.A. on 9 August Until 8 August 2011 the function of the Vice-President of the Management Board was performed by Kazimierz Lasecki. Supervisory Board Piotr Kosmala Marek Jakubowski Iwona Bożena Bocianowska Rafał Piotr Antczak Łukasz Krzysztof Pawłowski As of the day of the approval of these Statements for publication, this composition did not change. 1.4.Shareholding structure: List of the Company's Shareholders, the number of shares held by them and their percentage share in the share capital and the total number of votes as of 31 December 2012: Shareholding structure above 5% as of 31 December 2012 Natural or legal person Number of shares held Percentage share in the capital of ACTION S.A. Share of votes Piotr Bieliński 3,853, % 23.48% Olgierd Matyka* 3,500, % 21.33% GENERALI OFE** 2,109, % 12.85% Wojciech Wietrzykowski* 1,400, % 8.53% * As of 11 April 2012 ** As of 31 December 2012 Shareholding structure above 5% as of the day of preparing these Statements: Natural or legal person Number of shares held Percentage share in the capital of ACTION S.A. Share of votes Piotr Bieliński 3,853, % 23.48% Olgierd Matyka* 3,500, % 21.33% GENERALI OFE** 2,109, % 12.85% Wojciech Wietrzykowski* 1,400, % 8.53% AVIVA OFE AVIVA BZ WBK *** 890, % 5.42% * As of 11 April 2012 ** As of 31 December 2012 *** As of 25 January 2013 Page 17

18 1.5.Approval of the Financial Statements These Consolidated Financial Statements were approved by the Company's Management Board on 19 March Business duration The parent was established on 2 August 2004 for an indefinite period of time according to the Articles of Association. The duration of the entities comprising the Capital Group is unlimited. 2. Principles of preparing the Consolidated Financial Statements Key accounting principles applied in the preparation of these Consolidated Financial Statements are presented below. These principles were applied continuously throughout the analysed periods unless stated otherwise. 2.1.General principles of preparation These Consolidated Separate Financial Statements were prepared in accordance with the historical cost principle, except for marketable financial assets held for trading (derivatives) measured at fair value thereof. The Consolidated Separate Financial Statements were drawn up with the application of the going concern principle to the foreseeable future. As of the day of approval of these financial statements, no circumstances implying threats to the business continuity of the Group had been confirmed. 2.2.Statement of compliance The Consolidated Annual Financial Statements for the financial year between 1 January 2012 and 31 December 2012 were drawn up by the parent in line with the EU-approved IFRS effective as of the date of preparing these Financial Statements. The IFRS comprise standards and interpretations approved by the International Accounting Standards Board ("IASB") and the International Financial Reporting Interpretations Committee ("IFRIC"). 2.3.Functional currency and reporting currency These Consolidated Financial Statements were prepared in the Polish zloty (PLN). The Polish zloty is the functional and reporting currency of the Capital Group. The data in the Financial Statements are disclosed in thousand PLN though in certain situations they may have been declared with greater precision. 2.4.The effect of applying new accounting standards and amendments to the accounting policy The accounting principles (policy) applied to prepare these Consolidated Financial Statements for the financial year ended 31 December 2012 are consistent with those applied to prepare the Consolidated Financial Statements for the financial year ended 31 December 2011, except for amendments specified Page 18

19 hereinbelow. The same principles were applied for the current and comparative period unless the standard or the interpretation provided for prospective application exclusively. Changes resulting from amendments to the IFRS The following new or amended standards and interpretations issued by the International Accounting Standards Board or the International Financial Reporting Interpretations Committee have been applicable since 1 January 2012: Amendment to IFRS 1 Severe Hyperinflation and Removal of Fixed Dates Amendment to IAS 12 Deferred Tax: Recovery of Underlying Assets Amendments to IFRS 7 Disclosures Transfer of Financial Assets Application thereof did not have any impact on the activity results or the financial situation of the Group and it only resulted in amending the accounting principles applied, broadening the scope of obligatory disclosures or altering the terminology used. Major consequences of applying new regulations. Amendment to IFRS 1 Severe Hyperinflation and Removal of Fixed Dates Amendments to IFRS 1 were published on 20 December 2010 and they apply to annual periods beginning on 1 July 2011 or thereafter. The amendments concern reference to the fixed date of "1 January 2004" as the date of adopting the IFRS for the first time and change it to the date of "first-time adoption of the IFRS" so that it is not required to transform transactions conducted prior to the first-time adoption of the IFRS by the relevant entity. Moreover, the standard comprises guidelines concerning re-application of the IFRS during periods falling after the periods of severe hyperinflation preventing full compliance with the IFRS. The Group will apply the amended IFRS 1 as of the effective date determined by the European Commission, i.e. as of 1 January The amended IFRS 1 does not have any impact on the Group's Financial Statements. Amendment to IAS 12 Deferred Tax: Recovery of Underlying Assets The amendment to IAS 12 was published on 20 December 2010 and it applies to annual periods beginning on 1 January 2012 or thereafter. The amendment specifies the method of measuring deferred tax assets and provisions in the case of investment property measured according to the fair value model defined in IAS 40 Investment Property. The implementation of the amended standard will also result in the withdrawal of interpretation SIC 21 Income Tax Recovery of Revalued Non-depreciable assets. The Group will apply the amended IAS 12 as of the effective date determined by the European Commission, i.e. as of 1 January The amended IAS 12 does not have any impact on the Group's Financial Statements. Amendments to IFRS 7 Disclosures Transfer of Financial Assets Amendments to IFRS 7 were published on 7 October 2010 and they apply to annual periods beginning on 1 July 2011 or thereafter. The chief objective of the said amendments is to enable users of financial statements to understand better transactions involving transfer of financial assets (e.g. securitisation), including understanding of potential effects of risks remaining in the entity which transferred the relevant assets. The amendments also enforce additional disclosures in the case of transferring assets of a significant value near the end of the reporting period. The amended IFRS 7 does not have any impact on the Group's Financial Statements. Amendments implemented independently by the Company The Group adjusted the presentation of the comparative data of the Consolidated Statement of Comprehensive Income. The changes introduced are described in detail below. The data for 2011 was adjusted as follows: period Adjustmen from 1 January 2011 t to 31 December 2011 after adjustment period from 1 January 2011 to 31 December 2011 Page 19

20 before adjustment Sales revenues 2,804,768 2,804,768 Costs of products, goods and materials sold -2,614,266-9,694-2,604,572 Gross profit from sales 190,502 9, ,196 Selling and marketing costs -115, ,104 General and administrative expenses -21,964-21,964 Other revenues and operating profits 8, ,284 Other costs and losses -4,355 9,731-14,086 Profit/loss from operating activity 57, ,326 Financial expenses -5,133-5,133 Profit/loss before tax 52, ,193 Income tax -9,920-9,920 Share in the net result of the associate Net profit/loss for the financial period 42, ,409 Other components of comprehensive income Net change due to cash flow hedging -2,107-2,107 Income tax Other components 0 0 Other components of net comprehensive income -1,707-1,707 Total income for the period 40, ,702 Net profit/loss attributed to: Company's Shareholders 42, ,409 non-controlling interests 0 0 Comprehensive income attributed to: Company's Shareholders 40, ,702 non-controlling interests 0 0 The description of the adjustment - positive and negative foreign exchange differences from the settlement and valuation of currency settlements, excluding foreign exchange differences from the settlement and valuation of lease liabilities as well as excluding foreign exchange differences from the settlement and valuation of investment currency loans, were transferred from other operating activity to core operating activity and they are recognised in the Cost of sold products, goods and materials. The Group reclassified amounts disclosed in the item Provisions for other liabilities and charges and transferred them to the item Trade creditors and other liabilities. Adjustments are as follows: Page 20

21 As of 31 December 2011 Short-term liabilities After Before Adjustment adjustment adjustment Trade and other liabilities 457,103 4, ,540 Loans and borrowings, and other financing liabilities 83,577 83,577 Current income tax liabilities 0 0 Employee benefit liabilities Derivative financial instruments Provisions for other liabilities and other encumbrances 655-4,563 5, , ,138 The result of changes introduced to the Cash Flow Statement. Cash flows from operating activity Period from 1 January 2011 to 31 December 2011 after adjustment Adjustment Period from 1 January 2011 to 31 December 2011 before adjustment Net profit/loss for the financial period 42,409 42,409 Adjustments: -37,350-37,350 Income tax 9,920 9,920 Income tax paid -13,416-13,416 Depreciation of fixed and intangible assets 11,468 11,468 Profit/loss from investment activity -1,347-1,347 Interest revenues 0 0 Interest expenses 5,133 5,133 Other -2, ,445 Changes in working capital: Inventory -106, ,774 Trade and other receivables -89,164-89,164 Trade and other liabilities 149, ,275 Net cash flows from operating activity 5, ,059 Non-applicable standards (new standards and interpretations) In these Financial Statements the Group decided not to apply the following published standards or their interpretations prior to the effective date thereof. The following standards and interpretations had been issued by the International Accounting Standards Committee or the International Financial Reporting Interpretations Committee though they were not effective as of the balance-sheet day: IFRS 9 Financial Instruments The new standard was published on 12 November 2009 and it was the first step of the IASB to replace IAS 39 Financial Instruments: Recognition and Measurement. After the publication, the new standard underwent further work and was partially amended. The new standard will come into effect on 1 January The Group will apply the new standard as of 1 January As of the date of preparing these Financial Statements, it is not possible to assess reasonably the impact of applying the new standard. IFRS 10 Consolidated Financial Statements The new standard was published on 12 May 2011 and it is to replace the interpretation SIC 12 Consolidation - Special Purpose Entities and certain provisions of IAS 27 Consolidated and Separate Financial Statements. The standard defines the term of control as the factor determining whether the entity should be consolidated Page 21

22 in the financial statements and it contains guidelines helping one to determine whether the entity exercises control or not The Group will apply the new standard as 1 January 2014, i.e. as of the effective date determined by the European Commission. As of the date of preparing these Financial Statements, it is not possible to assess reasonably the impact of applying the new standard. IFRS 11 Joint Arrangements The new standard was published on 12 May 2011 and it is to replace the interpretation SIC 13 Jointly Controlled Entities - Non-Monetary Contributions by Venturers. The standard focused on the rights and obligations resulting from a joint agreement regardless of its legal status and it eliminates any inconsistencies in reporting by specifying the method of settling shares in jointly controlled entities. The Group will apply the new standard as 1 January 2014, i.e. as of the effective date determined by the European Commission. As of the date of preparing these Financial Statements, it is not possible to assess reasonably the impact of applying the new standard. IFRS 12 Disclosure of Interest in Other Entities The new standard was published on 12 May 2011 and it contains a list of disclosure requirements concerning ties between entities. The Group will apply the new standard as 1 January 2014, i.e. as of the effective date determined by the European Commission. As of the date of preparing these Financial Statements, it is not possible to assess reasonably the impact of applying the new standard. IFRS 13 Fair Value Measurement The new standard was published on 12 May 2011 and its general objective is to facilitate fair value measurement by simplifying solutions and improving the consistency in applying fair value measurement principles. The standard clearly specifies the objective of such measurement and the definition of fair value. The Group will apply the new standard as of 1 January As of the date of preparing these Financial Statements, it is not possible to assess reasonably the impact of applying the new standard. IAS 27 Separate Financial Statements The new standard was published on 12 May 2011 and it primarily results from the transfer of certain provisions of the current IAS 27 to the new IFRS 10 and IFRS 11. The standard defines requirements concerning presentation and disclosures in separate financial statements on investments in associates, subsidiaries and joint ventures. The standard will replace the current IAS 27 Consolidated and Separate Financial Statements. The Group will apply the new standard as 1 January 2014, i.e. as of the effective date determined by the European Commission. As of the date of preparing these Financial Statements, it is not possible to assess reasonably the impact of applying the new standard. IAS 28 Investments in Associates and Joint Ventures The new standard was published on 12 May 2011 and it refers to settling investments in associates. Moreover, it defines requirements of applying the equity method in investments in associates and joint ventures. The standard will replace the current IAS 28 Investments in Associates. The Group will apply the new standard as 1 January 2014, i.e. as of the effective date determined by the European Commission. As of the date of preparing these Financial Statements, it is not possible to assess reasonably the impact of applying the new standard. Amendments to IAS 19 Employee Benefits Amendments to IAS 19 were published on 16 June 2011 and they apply to annual periods beginning on 1 January 2013 or thereafter. The amendments eliminate potential delay in recognising profits and losses known as the "corridor method". Moreover, they improve presentation of changes in the balance sheet following from employee benefit schemes and of mandatory estimates presented in the statement of other comprehensive income as well as broaden the scope of required disclosures related thereto. The Group will apply the amended IAS 12 as of 1 January Page 22

23 As of the date of preparing these Financial Statements, it is not possible to assess reasonably the impact of applying the amended standard. Amendments to IAS 1 Presentation of Statement of Other Comprehensive Income Amendments to IAS 1 were published on 16 June 2011 and they apply to annual periods beginning on 1 July 2012 or thereafter. The amendments concern grouping of items of the statement of other comprehensive income that may be transferred to the profit and loss statement. Moreover, the amendments confirm the possibility to present items of the statement of other comprehensive income and items of the profit and loss statement as one statement or two separate statements. The Group will apply the amended IAS 12 as of 1 January As of the date of preparing these Financial Statements, it is not possible to assess reasonably the impact of applying the amended standard. Amendments to IFRS 7 Disclosures - Offsetting Financial Assets and Financial Liabilities Amendments to IFRS 7 were published on 16 December 2011 and they apply to annual periods beginning on 1 January 2013 or thereafter. Without changing the general principles regarding the offsetting of financial assets and liabilities, the amendment extended the scope of disclosures relating to the offset amounts. It also introduced the requirement of broader (more transparent) disclosures with respect to the management of credit risk using received or transferred collaterals (pledges). The Group will apply the amended IFRS 1 as of 1 January As of the date of preparing these Financial Statements, it is not possible to assess reasonably the impact of applying the amended standard. Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities Amendments to IAS 32 were published on 16 December 2011 and they apply to annual periods beginning on 1 January 2014 or thereafter. These amendments were introduced in response to existing incoherence regarding the application of offsetting criteria in IAS 32. The Group will apply the amended IAS 12 as of 1 January As of the date of preparing these Financial Statements, it is not possible to assess reasonably the impact of applying the amended standard. Interpretation IFRIC 20 - Stripping Costs in the Production Phase of a Surface Mine Interpretation IFRIC 20 was issued on 19 October 2011 and it applies to annual periods beginning on 1 January 2013 or thereafter. The interpretation provides guidelines regarding the recognition of costs relating to the removal of surface layers of ground in order to access mined resources in surface mines. The Group will apply the new interpretation as of 1 January As of the date of preparing these Financial Statements, it is not possible to assess reasonably the impact of applying the new interpretation. Amendments to IFRS 1 Amendments to IFRS 1 were published on 13 March 2012 and they apply to annual periods beginning on 1 January 2013 or thereafter. The purpose of these amendments is to release entities adopting the IFRS for the first time from full retrospective application of all the IFRS in the case where such entities use government loans bearing interest below market rates. The Group will apply the amended IFRS 1 as of 1 January The amended IFRS 1 will not have any impact on the Group's Financial Statements. Amendments to various standards resulting from the annual review of the International Financial Reporting Standards (Annual Improvements ) On 17 May 2012 further amendments were published to seven standards resulting from draft amendments proposed to the International Financial Reporting Standards published in June They apply predominantly to annual periods beginning on 1 January 2013 or thereafter (depending on the standard). The Group will apply the amended standards since 1 January 2013, unless another date for their coming into force has been specified. The application of the amended standards will not have any material impact on the Group's Financial Statements. Recommendations concerning transitory provisions (Amendments to IFRS 10, IFRS 11 and IFRS 12) Page 23

24 The recommendations were published on 28 June 2012 and they contain additional information regarding the application of IFRS 10, IFRS 11 and IFRS 12, including the presentation of comparative data in the case of first-time adoption of these standards. The Group will apply the amendments as of the adoption thereof by the European Union. As of the date of preparing these Financial Statements, it is not possible to assess reasonably the impact of applying the amendments introduced. Investment entities (Amendments to IFRS 10, IFRS 12 and IAS 27) Recommendations were published on 31 October 2011 and they contain other principles regarding the application of IFRS 10 and IFRS 12 in the case of entities meeting the definition of investment funds. The Group will apply the amendments as of the adoption thereof by the European Union. As of the date of preparing these Financial Statements, it is not possible to assess reasonably the impact of applying the amendments introduced. The IFRS, as approved by the EU, do not differ significantly from the regulations adopted by the International Accounting Standards Board (IASB), except for the following standards, interpretations and amendments thereto which had not been approved by the EU as of the date of approving these Financial Statements. IFRS 9 Financial Instruments published on 12 November 2009 (as amended), Amendments to IFRS 1 published on 13 March 2012; Amendments to various standards resulting from the annual review of the International Financial Reporting Standards (Annual Improvements ) published on 17 May Recommendations concerning transitory provisions (Amendments to IFRS 10, IFRS 11 and IFRS 12) published on 28 June 2012; Investment entities (Amendments to IFRS 10, IFRS 12 and IAS 27). The following new or amended standards and interpretations issued by the International Accounting Standards Board or the International Financial Reporting Interpretations Committee have been in force since 1 January 2012, but due to a later effective date thereof determined by the European Commission they were not applied by the Group during the preparation of these Financial Statements: Amendments to IFRS 1 Severe Hyperinflation and Removal of Fixed Dates published on 20 December 2010; Amendment to IAS 12 Deferred Tax: Recovery of Underlying Assets published on 20 December Consolidation principles The Consolidated Financial Statements comprise the Financial Statements of the parent, the Financial Statements of entities controlled by the parent as of the balance sheet date and the measurement of the shares of the associate under the equity method. Control exists whenever the parent is able to influence the financial and operating policy of the relevant subsidiary in order to achieve benefits from its activity. Subsidiaries are fully consolidated as of the day on which the Group takes control over them. They are no longer subject to consolidation as of the day on which control ceases. Financial Statements of subsidiaries and associates are drawn up for the same reporting period as the Financial Statements of the parent applying consistent accounting principles. The takeover of subsidiaries by the Group is settled under the purchase method. As of the purchase day, the assets as well as equity and liabilities of the acquired entity are measured at fair value thereof. The surplus of the purchase price over the fair value of identifiable acquired net assets of the relevant unit (taking into consideration the fair value of contingent liabilities) is disclosed as goodwill. In the event the purchase price is lower than the fair value of identifiable acquired net assets of the relevant unit, the difference is disclosed as profit in the Statement of Comprehensive Income for the period during which the purchase took place. The interest of non-controlling equity holders is disclosed in an appropriate proportion of the fair value of assets and capitals. Page 24