TOYA S.A. Capital Group Consolidated interim report For period from 1 January to 31 March 2016
SELECTED FINANCIAL DATA Selected financial data relating to the interim consolidated financial statement of Toya Group in Wrocław PLN thousands EUR thousands 1 quarter / period from 1.01.2016 to 31.03.2016 1 quarter / period from 1.01.2015 to 31.03.2015 1 quarter / period from 1.01.2016 to 31.03.2016 1 quarter / period from 1.01.2015 to 31.03.2015 I. Revenue 71 193 70 574 16 344 17 010 II. Operating profit 8 770 6 980 2 013 1 682 III. Profit before income tax 8 723 6 648 2 003 1 602 IV. Net profit 6 944 5 140 1 594 1 239 V. Total comprehensive income 6 446 6 488 1 480 1 564 VI. Weighted average number of shares 78 331 78 147 78 331 78 147 VII. Earnings per share (PLN/EUR) 0,09 0,07 0,02 0,02 VIII. Net cash from operating activities 7 670 (13 793) 1 761 (3 324) IX. Net cash from investing activities (688) (748) (158) (180) X. Net cash from financing activities (4 252) 14 782 (976) 3 563 XI. Total net cash 2 730 241 627 58 As at As at As at As at 31 March 31 December 31 March 31 December 2016 2015 2016 2015 XII. Non-current assets 28 722 26 404 6 729 6 196 XIII. Current assets 176 230 170 024 41 287 39 897 XV. Total assets 204 952 196 428 48 016 46 094 XVI. Non-current liabilities 695 740 163 174 XVII. Current liabilities 34 726 32 603 8 135 7 651 XVIII. Equity attributable to shareholders of the parent company 169 531 163 085 39 718 38 269 The following currency rates were applied in the calculation of selected financial data in EUR: - - for the calculation of comprehensive income and cash flow for the period from 1 January 2016 to 31 March 2016 the rate of 4,3559 PLN / EUR (*) - for the calculation of comprehensive income and cash flow for the period from 1 January 2015 to 31 March 2015 the rate of 4,1489 PLN / EUR (*) - for the calculation of assets, liabilities and equity at 31 March 2016 the rate of 4,2684 PLN / EUR - for the calculation of assets, liabilities and equity at 31 December 2015 the rate of 4,2615 PLN / EUR (*) the rates represent the arithmetic mean of current average Exchange rates announced by the NBP on the last day of each month during the periods from January to March respectively of 2016 and 2015 2
CONTENT PART A CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENT OF TOYA GROUP zdefiniowano zakładki. PART B - OTHER INFORMATION TO CONSOLIDATED QUATER REPORT... zdefiniowano zakładki. PART C - CONDENSED INTERIM STAND ALONE FINANCIAL STATEMENTS OF TOYA S.A. zdefiniowano zakładki. 3
PART A CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENT OF TOYA GROUP Consolidated statements of financial position ASETS Non-current assets Property, plant and equipment Note 31 March 2016 31 December 2015 odwołania. 21 037 21 271 Intangible assets 2 678 2 640 Goodwill odwołania. 760 786 Other receivables odwołania. 2 353 341 Deferred tax assets odwołania. 1 894 1 366 Current assets Inventory Trade and other receivables 28 722 26 404 odwołania., odwołania. 110 817 112 460 odwołania., 15 59 341 54 068 Income tac receivables 67 65 Cash and cash equivalents 10 6 005 3 431 176 230 170 024 Total assets 204 952 196 428 EQUITY AND LIABILITIES Equity attributable to owners of the parent Share capital 4 odwołania. 7 833 7 833 Share premium 35 677 35 677 Other comprehensive income 1 646 2 143 Result on transactions with non-controlling shareholders (6 270) (6 270) Retained earnings 130 645 123 702
odwołania. Total equity 169 531 163 085 Non-current liabilities Finance lease liabilities 455 500 Employee benefit obligations odwołania. 240 240 Current liabilities Trade and other payables Employee benefit obligations Loans 695 740 odwołania. 27 388 22 793 odwołania. 2 950 2 105 odwołania. 2 508 6 662 Finance lease liabilities 177 176 Current income tax liabilities 1 360 533 Provisions odwołania. 343 334 34 726 32 603 Total liabilities 35 421 33 343 Total equity and liabilities 204 952 196 428 Consolidated statement of profit or loss and other comprehensive income Note 3 months ended 31 March 2016 2015 Revenue from sales of goods and materials Cost of goods and materials sold odwołania., odwołania. 71 193 70 574 odwołania., (46 716) (46 034) 5
odwołania. Gross profit 24 477 24 540 Distribution costs odwołania. (11 775) (12 585) Administrative expenses 17 (4 049) (3 596) Other operating income 229 119 Other operating expenses (111) (1 498) - Operating profit 8 770 6 980 Financial income 12 50 Financial costs (59) (382) Profit before income tax 8 723 6 648 - Income tax expense (1 780) (1 508) Net profit 6 943 5 140 Other comprehensive income Positions that may be included in the financial result: Currency translation differences (497) 1 348 Other comprehensive income, net of tax (497) 1 348 Total comprehensive income for the reporting period 6 446 6 488 Net profit attributable to: Owners of the parent 6 943 5 140 Non-controlling interests - - Other comprehensive income attributable to: Owners of the parent (497) 1 348 Non-controlling interests - - Total comprehensive income attributable to: Owners of the parent 6 446 6 488 Non-controlling interests - - Basic/diluted earnings per share from continuing operations (PLN) odwołania. 0,09 0,07 6
Consolidated statements of changes in equity Attributable to shareholders of the parent Share capital Share premium Share capital during registration Other comprehensive income Other reserve capital Result on transactions with non-controlling shareholders Retained earnings Total equity As at 1 January 2016 7 833 35 677-2 143 - (6 270) 123 702 163 085 Net profit - - - - - - 6 943 6 943 Other comprehensive income Currency translation differences - - - (497) - - - (497) Actuarial gains/losses - - - - - - - - Deferred tax relating to other comprehensive income - - - - - - - - Total other comprehensive income - - - (497) - - - (497) Total comprehensive income - - - (497) - - 6 943 6 446 Transactions with owners - - - - - - - - As at 31 March 2016 7 833 35 677-1 646 - (6 270) 130 645 169 531 As at 1 January 2015 7 815 35 351-1 039 294 (6 270) 98 307 136 536 Net profit - - - - - - 5 140 5 140 Currency translation differences - - - 1 348 - - - 1 348 Total comprehensive income - - - 1 348 - - 5 140 6 488 Transactions with owners - Shares options - - - - 25 - - 25 Total transactions with owners - - - - 25 - - 25 As at 31 March 2015 7 815 35 351-2 387 319 (6 270) 103 447 143 049 7
Consolidated statements of cash flow Note 3 months ended 31 March 2016 2015 Cash flows from operating activities Profit before income tax 8 723 6 648 Adjustments for: Amortisation and depreciation 828 714 Interest 43 331 Gains on investing activities (17) (25) Foreign exchange gains/losses 1 34 Valuation of shares options - 26 Changes in balance sheet items: Change in trade and other receivables (7 630) (13 192) Change in inventory 1 122 2 977 Change in provisions 10 32 Change in trade and other payables 5 243 (9 389) Change in employee benefit obligations 848 321 Income tax paid (1 488) (2 270) Net cash from operating activities 7 681 (13 793) Cash flows from investing activities Proceeds from sale of property, plant and equipment, and intangible assets 25 25 Purchases of property, plant and equipment, and intangible assets (724) (774) Interest received - 1 Net cash from investing activities (699) (748) Cash flows from financing activities Proceeds from loans and borrowings - 15 187 Repayments of loans and borrowings (4 150) 1 Payments related to finance lease (43) (41) Interest paid on loans and borrowings (53) (357) Interests paid on leasing (6) (8) Net cash from financing activities (4 252) 14 782 Change in cash and cash equivalents 2 730 241 Cash and cash equivalents at beginning of year 10 3 431 7 776 Exchange gains / (losses) on cash and cash equivalents (156) 482 Cash and cash equivalents at end of year 10 6 005 8 499 8
Accounting policy and other explanatory information to interim condensed consolidated financial statements 1. General information TOYA S.A. (the Company or the Parent Company ) is a joint stock company established under the Commercial Companies Code. The Company's registered address is Sołtysowicka 13/15, Wrocław, Poland. The core business activities of TOYA S.A. include import and distribution of industrial goods, including primarily hand and power tools for professional and DIY use. In the period from 1 January to 31 March 2016, the Management Board of the Parent Company comprised: Grzegorz Pinkosz President of the Management Board Dariusz Hajek Vice-president of the Management Board Maciej Lubnauer Vice-president of the Management Board In the period from 1 January to 31 March 2016, the Supervisory Board of the Parent Company comprised: Piotr Mondalski President of the Supervisory Board Jan Szmidt Vice-president of the Supervisory Board Tomasz Koprowski Member of the Supervisory Board Dariusz Górka Member of the Supervisory Board Grzegorz Maciąg Member of the Supervisory Board 2. Group Structure As at 31 March 2016 the Group comprised the following entities: Name of a unit Registered seat Business profile Type of equity link % of shares and votes held Date of assuming control Method of consolidation as at end of reporting period Toya S.A. Wrocław, Poland Distribution of hand and power tools Parent Company Not applicable Not applicable Full consolidation method Toya Romania S.A. Bucharest, Romania Distribution of hand and power tools Subsidiary 99,99 November 2003 r. Full consolidation method Yato Tools (Shanghai) Co., Ltd * Shanghai, China, Distribution of hand and power tools Subsidiary * 100,00 January 2013 r. Full consolidation method * In June 2008, the Company and Saame Tools (Shanghai) Import & Export Co., Ltd China established a joint venture under the name Yato China Trading Co., Ltd. The Company acquired 51% of the shares in the share capital, the remaining 49% was acquired by Saame Tools (Shanghai) Import & Export Co., Ltd China. On 2 January 2013, TOYA S.A. has obtained control over Yato China as a result of share capital increase and changed to Articles of Association. In April 2013 the name of the company has been changed to Yato Tools (Shanghai) Co., Ltd. On 16 July 2014 TOYA SA acquired additional share capital, obtaining a total of 100% equity interest in the entity. 9
3. Summary of significant accounting policies The accounting policies are consistent with policies applied in the consolidated financial statements for the period ended 31 December 2015. 3.1 Basis of preparation The interim condensed consolidated financial statement has been prepared In accordance with IAS 34 Interim Financial Reporting. It should be read jointly with the consolidated financial statements for the year ended 31 December 2015 prepared in accordance with International Financial Reporting Standards (called IFRS ) and interpretations issues by International Accounting Standards Board approved by European Union (called EU ). 3.2 The influence of new or amended standards and interpretations on the consolidated financial statements of the Group These interim condensed consolidated financial statements have been prepared on the basis of IFRS approved by EU and effective for the annual periods ended 31 March 2016. a) New standards, interpretations and amendments to existing standards effective in 2016 Defined benefit plans: Employee contributions amendments to IAS 19 Amendments to IAS 19 Employee benefits were published by the International Accounting Standards Board in November 2013 and are effective for annual periods starting on or after 1 July 2014. The amendments allow entities to recognise employee contributions as a reduction in the employment costs in the period in which the related employee service is rendered, instead of attributing the contributions to the periods of service, if the amount of the employee contributions is independent of the number of years of service. Those amendments had no impact on the consolidated financial statements. Improvements to IFRSs 2010 2012 In December 2013, the International Accounting Standards Board issued Improvements to IFRSs 2010 2012 which consist of improvements to 7 standards. Improvements contain changes in the presentation, recognition and valuation, as well as terminological and editing changes Those amendments will had no material impact on the consolidated financial statements. IFRS 14 Regulatory deferral accounts IFRS 14 is effective for annual periods starting on or after 1 January 2016. The standard permits first-time adopters of IFRS to continue to recognise amounts related to rate regulation in accordance with their previously binding accounting policies. To enhance comparability with entities that already apply IFRS and do not recognise such amounts, IFRS 14 requires that the effect of rate regulation must be presented separately from other items both in the statements of financial position as well as in the income statements and statements of other comprehensive income. Application of the standard had no impact on the consolidated financial statements. 10
Amendments to IFRS 11 regarding acquisitions of interests in joint operations This amendment to IFRS 11 regulates that the acquirer of an interest in a joint operation in which the activity constitutes a business, as defined in IFRS 3, is required to apply all of the principles on business combinations accounting in IFRS 3 and other IFRSs with the exception of those principles that conflict with the guidance in IFRS 11. Application of the standard had no impact on the consolidated financial statements. Amendments to IAS 16 and IAS 38 regarding depreciation and amortisation The amendment clarifies that a depreciation method that is based on revenue is not appropriate because the revenue generated in the business which uses the asset also reflects factors other than the consumption of the economic benefits of the asset. The amendment had no impact on the consolidated financial statements. Amendments to IAS 16 and IAS 41 concerning crops The amendments require the recognition of certain bearer plants, such as vines, rubber trees or oil palms (i.e. that produce crops for many years and are not intended for sale in the form of planting or harvesting at harvest time) in accordance with IAS 16 Property, plant and equipment because their cultivation is analogous to the production. As a result of these amendments, such plants are within the scope of IAS 16 and not IAS 41. Crops from these plants remain in the scope of IAS 41. These amendments do not apply to the Group s activities. Amendments to IAS 27 concerning equity method in separate financial statements The amendments of IAS 27 establish the possibility of equity method application for investments in subsidiaries, joint ventures and associates in separate financial statements. These amendments do not apply to the consolidated financial statements. Improvements to IFRSs 2012 2014 In September 2014, the International Accounting Standards Board issued Annual improvements to IFRS 2012-2014, which consist of improvements to 4 standards: IFRS 5, IFRS 7, IAS 19 and IAS 34. The amendment had no material impact on the consolidated financial statements. Amendments to IAS 1 In December 2014, as part of works related to the so-called disclosure initiative, the International Accounting Standards Board issued an amendment to IAS 1. The purpose of the amendment is to clarify the concept of materiality and explain that when an entity decides that given information is immaterial, it should not disclose such information even if such disclosure is, in principle, required by other IFRS. The amended IAS 1 clarifies that items presented in the statement of financial position, income statement and statement of other comprehensive income can be aggregated or disaggregated, depending on their materiality. The amendment also provides additional guidelines concerning the presentation of subtotals in these statements. The changes are effective in the European Union for annual periods starting on 1 January 2016. The amendment had no material impact on the consolidated financial statements. b) New standards, interpretations and amendments, which are not yet effective and have not previously been applied by the Group In 2016 after the date of publishing the annual consolidated financial statements that is after 17 March 2016 no new standards nor interpretations were published. In these interim condensed consolidated financial statement neither standard nor interpretations was early adopted or adopted before EU approval. 11
4. Seasonality The Group's offer is aimed at the consumer market, which is sensitive to the seasons and weather conditions. However, seasonality that was slightly felt by the Group a few years ago, practically does now exists now. This is the result of a consistent policy of continuous expanding range of product, which is attractive in all seasons and continuous improvement of logistics processes which enables a good of the offer to the changing environment. For the gradual disappearance of seasonality not without significance it is the fact that the Group is present in both the European and Asian market and it uses a variable demand on the market for cultural reasons and climatic conditions observed at the same time 5. Property, plant and equipment 31 March 2016 31 December 2015 Lands 2 907 2 907 Buildings and structures 9 523 9 677 Plant and equipment 2 260 2 388 Vehicles 1 653 1 673 Other 4 003 4 090 Total 20 346 20 735 Property, plant and equipment not accepted for use 691 536 Total property, plant and equipment 21 037 21 271 In the period from 1 January to 31 March 2016 the gross value of property, plant and equipment increased by PLN 52 thousands. It was the result increase in the Parent Entity by the amount of PLN 287 thousands (purchase of computer equipment and exposition shelves) form the one hand, but from the other hand decrease as a result of recording foreign exchange differences from translation of foreign entities. 6. Goodwill Goodwill in the amount of PLN 760 thousands relates only to the goodwill from acquisition of Yato Tools in 2013. Changes in the value of goodwill during 2016 are presented in the table below: Yato Tools (Shanghai) Co. Ltd. As at 1 January 2016 786 Foreign exchange differences (16) As at 31 March 2016 760 12
7. Long term trade and other receivables 31 March 2016 31 December 2015 Trade receivables from third parties 4 4 Other receivables from related parties 2 011 - Other receivables from third parties 114 113 Prepayments (perpetual usufruct) 224 224 Total long term receivables 2 353 341 On 23 December 2015 the Parent Company has made a conditional transfer of receivables from TOYA Development Sp. o.o. S. K. in liquidation in the amount of PLN 4 119 thousand. As a result of the fulfilment of the condition of non-payment by the original debtor until 31 December 2015, the debt was transferred to a related person, a member of the key management of the Company, par value claims, effective on 1 January 2016. The amount of PLN 2 119 thousand was repaid on 15 January 2016 while the deadline for the repayment of the remaining part of the debt in the amount of PLN 2 000 thousand with interest falls on 30 June 2017. 8. Inventory 31 March 2016 31 December 2015 Goods for resale in stock and in transit 113 609 115 214 Inventory write-down (2 792) (2 754) Inventory total 110 817 112 460 Changes of the inventory write-down were presented below: 2016 2015 As at 1 January 2 754 2 097 Increase 183 697 Released/ used (117) - Foreign exchange differences (28) (40) As at 31 March / 31 December 2 792 2 754 9. Short term trade and other receivable 13
31 March 2016 31 December 2015 Trade receivables from related parties 3 1 893 Trade receivables from third parties 58 726 48 698 Total trade receivables 58 729 50 591 Taxes, customs duties and social security receivable 912 2 156 Other receivables from related parties - 2 250 Other receivables from third parties 979 529 Prepayments 1 060 908 Total gross receivables 61 680 56 434 Impairment write-downs of doubtful trade receivables (2 339) (2 366) Total net receivables 59 341 54 068 Changes of the receivables write-down were presented below: 2016 2015 As at 1 January 2 366 1 499 Increase 37 1 650 Release (57) (513) Used - (270) Foreign exchange differences (7) - As at 31 March / 31 December 2 339 2 366 Recognition and reversal of impairment write-downs of receivables was recorded in: Selling costs. 10. Cash and cash equivalents 31 March 2016 31 December 2015 Cash in hand and at banks 6 005 3 431 Total cash and cash equivalents 6 005 3 431 14
Reconciliation of changes in balance sheet items as shown in the consolidated statement of financial position and in the consolidated statement of cash flows: 3 months ended 31 March 2016 Adjustments Balance sheet change Interest on receivables not paid Translation of cash in foreign currencies Translation of foreign entities Change in statement of cash flows Change in trade and other receivables (7 285) 11 - (356) (7 630) Change in inventories 1 643 - - (521) 1 122 Change in provisions 9 - - 1 10 Change in trade and other payables 4 595 - - 646 5 241 Change in employee benefit liabilities 845 - - 3 848 Change in cash 2 574-156 - 2 730 3 months ended 31 March 2015 Adjustments Balance sheet change Discount of longterm receivables Translation of cash in foreign currencies Translation of foreign entities Change in statement of cash flows Change in trade and other receivables (14 132) 49-891 (13 192) Change in inventories 2 653 - - 324 2 977 Change in provisions 34 - - (2) 32 Change in trade and other payables (8 131) - - (1 258) (9 389) Change in employee benefit liabilities 369 - - (48) 321 Change in cash 723 - (482) - 241 15
11. Share capital As at 31 March 2016 the share capital amounted to PLN 7 833 084,10 and comprised 78 330 841 shares with a par value of PLN 0,1 each. During 1st quarter of 2016 there were no changes in the share capital. 12. Earnings per share 3 months ended 31 March 2016 2015 Net profit for the period attributable to the owners of the parent 6 944 5 140 Weighted average number of ordinary shares ('000) 78 331 78 147 Basic earnings per share (PLN) 0,09 0,07 Diluted net profit for the period attributable to the owners of the parent 6 944 5 140 Weighted average number of ordinary shares used to calculate basic earnings per share ('000) 78 331 78 147 Influence of dilution: Shares options - 122 Adjusted weighted average number of ordinary shares used for calculating diluted earnings per share ( 000) 78 331 78 269 Diluted earnings per share (PLN) 0,09 0,07 Basic earnings per share were calculated by dividing the net profit attributable to shareholders of the Group by the weighted average number of ordinary shares during the period. The Group in 2015 had one potential dilutive instrument: shares options granted to Supervisory Board members, Management Board members and key employees. During 1 st quarter of 2015 shares options did not have material impact on the diluted earnings per share. In 2016 the Group does not have dilutive instruments. 16
13. Bank loans 31 March 2016 31 December 2015 Bank loans, including 2 508 6 662 - non-current - - - current 2 508 6 662 Defaults under the loans As at 31 March 2016 the Group did not default on its debt repayment obligations or on any other of its obligations under loan agreements in a manner which would result in an acceleration of debt repayment. The working capital credit facility agreements require the borrower to maintain its financial debt ratios at an agreed level throughout the lending period. If these requirements are not met, the bank has the right to terminate the agreement. The Group has good relationships with banks and in the up to date activity had no problems with renewal of bank loans. On this basis the Board believes that the risk resulting from short term debt is not significant. 17
Description of loan agreements: Object and value of agreement Bank / person acquiring the bonds / granting the borrowing Loan amount as per agreement as at 31 March 2016 Amount outstanding as at 31 March 2015 Amount outstanding as at 31 December 2015 Current interest rate Date of expiry 1. Debt limit facility agreement No. CRD/L/11381/02 of 2 October 2002 (available in PLN, USD and EUR) Raiffeisen Bank Polska S.A. seated in Warsaw 5 000 583 1 358 WIBOR 1 M +bank margin EURIBOR/LIBOR 1 M+ bank margin 7 March 2017 2. Overdraft facility agreement No. BDK/KR- RB/000054601/0641/10 of 22 December 2010 Bank Handlowy w Warszawie S.A. 25 000 1 456 3 847 WIBOR 1 M + bank margin 16 December 2016 3. Multipurpose debt limit facility agreement no WAR/4060/12/102/CB of 6 September 2012 BNP Paribas Bank Polska S.A. seated in Warsaw 30 000 469 1 457 WIBOR 3 M + bank margin 19 September 2016 Total liabilities, including: 60 000 2 508 6 662 - current portion 60 000 2 508 6 662 - non-current portion - - - 18
14. Trade and other payables 31 March 2016 31 December 2015 Trade payables to related parties 228 305 Trade payables to third parties 24 549 20 943 Total trade payables 24 777 21 248 Taxes payable 2 303 368 Accruals 214 274 Other payables to third parties 236 888 Deferred income 8 15 Total other current payables 2 761 1 545 Total 27 538 22 793 15. Changes in estimates 15.1 Inventory write-down In 1 st quarter of 2016 the Group has increased the inventory write-down by the amount of PLN 38 thousands. In 1 st quarter of 2015 the Group has increased the inventory write-down by the amount of PLN 298 thousands. 15.2 Trade receivables write-down In 1st quarter of 2016 the Group has decreased the trade receivables write-down by the amount of PLN 27 thousands In 1st quarter of 2015 the Group has increased the trade receivables write-down by the amount of PLN 1 155 thousands mainly as a result of placing of a write-down of receivables from the company NOMI SA in connection with the adoption by the court decision on liquidation in March 2015. Recognition and reversal of impairment write-downs of receivables was recorded in: Selling costs. 15.3 Provisions for guarantees In 1st quarter of 2016 the Group has increased the warranty provision by the amount of PLN 9 thousands. In 1st quarter of 2015 the Group has increased the warranty provision by the amount of PLN 34 thousands. 15.4 Employee benefits obligations In 1st quarter of 2016 the Group has increased the unused holidays provision by the amount of PLN 57 thousands. In 1st quarter of 2015 the Group has increased the unused holidays provision by the amount of PLN 92 thousands. The pension provision has not been changed as compared to 31 December 2015. 19
15.5 Deferred tax Deferred tax assets have been increased in the 1st quarter of 2016 by PLN 528 thousands, mainly due to recognition of employee benefits obligation and sales rebates that are not tax deductible in the current period. Deferred tax assets have been increased in the 1 st quarter of 2015 by PLN 345 thousands, mainly due to increase of receivables and inventory write-downs. According to the Management Board, there is no risk that the deferred tax asset could not be realized. 16. Revenue from sales 3 months ended 31 March 2016 2015 Revenue from sales Sales of services 172 182 Sales of goods for resale 71 021 70 392 Total sales revenues 71 193 70 574 17. Costs by type and cost of goods sold 3 months ended 31 March 2016 2015 Depreciation and amortisation 828 714 Materials and energy used 832 739 Contracted services 3 325 3 430 Taxes and charges 267 312 Cost of employee benefits, including: 7 780 7 255 Salaries and wages 6 457 6 043 Costs of shares options 0 26 Cost of social insurance 1 284 1 092 Cost of other employee benefits 39 94 Other costs by type 2 792 3 731 Value of goods and materials sold 46 716 46 034 Total costs by type and value of goods and materials sold 62 540 62 215 Distribution costs 11 775 12 585 Administrative expenses 4 049 3 596 Value of goods sold 46 716 46 034 Total 62 540 62 215 20
18. Financial guarantees issued, conditional assets and liabilities On 29 November 2012, the Parent Company and TOYA Development Sp. z o.o. Spółka Komandytowo- Akcyjna concluded an agreement concerning a legal defect of the real property which was contributed in kind on 6 April 2011 pursuant to Resolution No 1 of the Extraordinary General Meeting of TOYA Development SKA by TOYA S.A., which at that time was the company s general partner. The real property in question comprises land with the expenditure incurred thereon. The contributed real property had a legal defect, i.e. on 6 April 2011, TOYA S.A. was not its owner since, pursuant to a decision of the Head of Wisznia Mała Municipality of 7 May 2007, this plot of land became the property of Trzebnicki Poviat on 8 June 2007. TOYA S.A. is entitled to pursue claims against Trzebnicki Poviat due to expropriation of the above-mentioned real property and the expenditure incurred thereon. Had the legal defect of the in-kind contribution not existed and had the transfer of ownership of the real property been effective, TOYA Development Sp. z o.o. SKA. would be entitled to the claims of Toya S.A. Thus, by way of compensation for the damage resulting from the property s legal defect, TOYA S.A. has undertaken to pay TOYA Development SKA compensation equal to the compensation obtained from the Trzebnicki Poviat. The right to compensation will arise provided that Toya S.A. receives compensation from the Trzebnicki Poviat and in the amount obtained from the Trzebnicki Poviat. As at 31 March 2016, the contingent liability includes compensation due to the incurred expenditure, whose value is estimated at PLN 2,5 million. At the same time, as at 31 March 2015, the Parent Company has a contingent asset due to compensation for the incurred expenditure from the Trzebnicki Poviat in the same amount, i.e. approx. PLN 2,5 million, net. On 24 January 2014, TOYA S.A. filed a lawsuit in the Regional Court in Wrocław against the Trzebnicki Poviat for the repayment of the disputed amount. In July 2015 the lawsuit was dismissed by the Court and in September 2015 the Parent Company appealed against that judgment. Appeal hearing was held on 26 February 2016. The court of second instance did not deliver a substantive decision on the matter, while directing the matter to the next meeting to be held on 31 May 2016. 19. Transactions with related parties In 1st quarter of 2016 and 2015 the Group effected transactions with the following related parties: Toya Development Sp. z o.o. S.K. in liquidation entity jointly controlled by the shareholders jointly controlling TOYA S.A., Golf Telecom Sp. z o.o. SKA entity jointly controlled by the shareholders jointly controlling TOYA S.A., Grzegorz Pinkosz President of the Management Board of the Parent Company member of key management personnel, Dariusz Hajek Vice-president of the Management Board of the Parent Company member of key management personnel, Maciej Lubnauer Vice-president of the Management Board of the Parent Company member of key management personnel, Piotr Mondalski President of the Supervisory Board - member of key management personnel, Jan Szmidt Vice - President of the Supervisory Board - member of key management personnel, Tomasz Koprowski - member of the Supervisory Board - member of key management personnel, Grzegorz Maciąg member of the Supervisory Board - member of key management personnel Dariusz Górka member of the Supervisory Board - member of key management personnel. 21
Transactions and balances with related parties: Trade and other receivables Trade and other payables Revenues from sales of goods Purchase of goods and services Remuneration for work Financial income - interest 31.03.2016 1.01.2016-31.03.2016 Entities jointly controlled by controlling shareholders 3-4 162 - - Key management personnel 2 011 - - - 274 11 Total 2 014-4 162 274 11 31.12.2015 1.01.2015-31.03.2015 Entities jointly controlled by controlling shareholders 4 120 302 4 113-49 Key management personnel - - - - 218 - Total 4 120 302 4 113 263 49 Related party transactions are entered into on arm's length terms in the course of the Group's day-to-day operations. 22
20. Operating segments The Management Board of the Parent Company makes decisions related to the group's operations from the perspective of distribution channels and geographical coverage. The Group specifies 4 operating and reporting segments for its activities: - trading area domestic sales (Poland, Romania and China) to retail networks, - trading area domestic sales ((Poland, Romania and China) wholesale, - trading area exports, - trading area other sale. As part of the retail networks segment, the Group cooperates with the large retail networks throughout Poland and Romania. Wholesale on the all markets where Group holds its entities is conducted through a network of wholesalers, authorized retail stores and sales representatives. Foreign markets are supported using sales department of the Parent entity and Yato Tools (Shanghai) Co., Ltd. subsidiary. Other sale includes mainly sales made through stationary and online store. As at 31 March 2016 this segment did not meet separate reporting criteria and was as a result presented as other trading activity. Data analysed by the Management Board of the parent company for segment description is consistent with the data disclosed in the statement of comprehensive income. The Group did not record revenue from sale to a single external customer exceeding 10% of total sales revenue. As at 31 March 2016 total asset of the Group amounted to PLN 204 952 thousands and total liabilities amounted to PLN 35 421 thousands and were allocated to trading activity. The Management Board of the Parent Company does not allocate assets to separate operating segments. The Parent Company has no non-current assets located abroad, although such assets are held by the subsidiaries. The value of property, plant and equipment located in Romania as at 31 March 2016 amounts to PLN 1 628 thousands and located in China is PLN 2 971 thousands. The most important geographic export directions in terms of the country of the destination of goods are: Sales revenue 3 months ended 3 months ended 31 March 2016 31 March 2015 Share in export sales Sales revenue Share in export sales Baltic countries 3 080 16,8% 3 763 9,1% Ukraine 1 995 10,9% 296 0,7% Germany 1 904 10,4% 1 914 4,6% Czech Republic 1 790 9,8% 2 017 4,9% Hungary 1 527 8,3% 1 532 3,7% Russia 1 461 8,0% 1 019 2,5% Sales on local market in Poland amounted to PLN 43 502 thousands, in Romania - PLN 7 786 thousands and in China PLN 1 585 thousands (in the same period of previous year: PLN 44 367 thousands, PLN 6 309 thousands and PLN 2 135 thousands respectively). 23
3 months ended 31 March 2016 Trading - EXPORTS Trading - WHOLESALE MARKET Trading - RETAIL NETWORKS Trading- OTHER Total Revenue from sales Sales to external customers 18 320 36 918 14 805 1 150 71 193 Total segment revenue 18 320 36 918 14 805 1 150 71 193 Cost of sales Sales to external customers (11 210) (24 253) (10 693) (560) (46 716) Total cost of sales (11 210) (24 253) (10 693) (560) (46 716) Gross profit 7 110 12 665 4 112 590 24 477 Gross margin 39% 34% 28% 51% 34% Gross profit all operating segments 24 477 Distribution costs (11 775) Administrative expenses (4 049) Other operating income 229 Other operating expenses (111) Operating profit 8 770 Financial income 12 Financial costs (59) Profit before income tax 8 723 Income tax (1 779) Net profit 6 944 24
3 months ended 31 March 2015 r. Trading - EXPORTS Trading - WHOLESALE MARKET Trading - RETAIL NETWORKS Trading- OTHER Total Revenue from sales Sales to external customers 17 763 35 338 16 808 665 70 574 Total segment revenue 17 763 35 338 16 808 665 70 574 Cost of sales Sales to external customers (10 936) (22 497) (12 277) (324) (46 034) Total cost of sales (10 936) (22 497) (12 277) (324) (46 034) Gross profit 6 827 12 841 4 531 341 24 540 Gross margin 38% 36% 27% 51% 35% Gross profit all operating segments 24 540 Distribution costs (12 585) Administrative expenses (3 596) Other operating income 119 Other operating expenses (1 498) Operating profit 6 980 Financial income 50 Financial costs (382) Profit before income tax 6 648 Income tax (1 508) Net profit 5 140 25
21. Significant events subsequent to the end of reporting period After 31 March 2016 there were no significant events. 26
PART B OTHER INFORMATION TO CONSOLIDATED QUATER REPORT 1. Significant events in 1st quarter of 2016 1.1 Disputes On 26 February 2016. the hearing on the payment of the claim of TOYA S.A. against the county was held before the Court of Appeals in Wroclaw, as a result of an appeal filed against the judgment of the District Court in Wrocław, which is described in paragraph 18. The court of second instance did not deliver a substantive decision on the matter, while directing the matter to the next meeting to be held on 31 May 2016. 2. Description of circumstances and events, particularly not typical that have significant impact on the financial results; Sales revenues of Toya Group for the first quarter of 2016 amounted to PLN 71 193 that is by 1% more than in the same period of 2015. Net profit of the Group for the first quarter of 2016 amounted to PLN 6 944 thousands as compared to PLN 5 140 thousands for 1st quarters of 2015. Sales revenues in the first quarter of 2016 were very similar to revenues in the same period last year. The signs of stabilization of sales on Ukrainian and Russian markets, which so far had a significant share in exports of the Group, which was influenced by the relative political stability and economic in these countries, especially deserve attention. The Group has noted positive financial results as compared to the previous year due to avoiding recognition of significant allowance for impairment of receivables that took place in 1 st quarter of 2015, which were caused by the adoption by the court decision on bankruptcy liquidation of the Company NOMI SA in March 2015. An additional positive effect on net income in the current period as compared to the previous year had a negative exchange rate differences effect in the Parent Company which amounted to PLN 30 thousands, compared to PLN 1 185 thousand in the first quarter of 2015. Trade receivables as at 31 March 2016 increased by 10% as compared to 31 December 2015. Main reason of this change was higher level of sales in 1st quarter of 2016 as compared to 4th quarter of 2015. Trade payables as at 31 March 2016 decreased by 20% mainly due to higher level of liabilities arising from the purchase of imported goods as compared to 31 December 2015. 3. Statement of the Management Board regarding the possibility to realize previously published forecasts of current year results. The Management Board of Toya S.A. has not published forecasts of the results of the Company or the Group for 2016. Other information to the consolidated quarter report 27
4. Factors and events which may influence future results. For a long time, the Group has been performing development activities aimed at strengthening the market position and searching for new attractive possibilities in the wider industrial goods industry. The most important of the actions currently performed are: Developing the export channel The Group recognises a large growth potential in the export channel. Recognizing the signs of normalization in the eastern markets, the Group will closely monitor the political and economic situation and in a favourable situation will work towards rebuilding its position in these markets. All the time it will also be running activities aimed at developing and strengthening its position on other markets. These actions will be supported by a new common pricing policy for export customers, pursued by the Parent Company and the subsidiary, Yato Tools. These actions will be focused on acquiring new customers and expanding the product range. Expanding the product offer For several years, the Group has been pursuing the policy of constantly expanding the product range, which is one of the most important elements of strengthening the market position and distinguishes the Group s offer from the competitors offers. This process, requiring a broad knowledge of the product, customs and expectations of customers, as well as of developments in sales trends, is carried out by the team of the Parent Company s Product Managers, owing to which the offer is tailored to the changing needs of the customers. This will have a positive impact on the financial performance in the next quarters of the year. Developing the capital group Yato Tools, a dynamically growing subsidiary, proves that the policy adopted by the Parent Company to support the development of this company brings very good results. The optimization of the existing infrastructure, introduced in 2015, will enable, in the coming months, the delivery of any product included in the Group s offer both from the Parent Company, and from Yato Tools. For the subsidiary, this will be a significant impulse for the sales growth, in particular in the export market. Yato Tools plays also a very important role for the Group in the entire supply chain, as it completes deliveries from local Asian producers. Therefore one of the priorities will be further enhancement of cooperation with suppliers what will translate into timely deliveries, reduced costs of complaints and increase satisfaction of the customer. These actions are significant elements in the implementation of the strategy for transforming Yato Tools into a major export and logistics centre for the entire Group. Due to a complex macroeconomic and political situation in different regions of the world and the increasing importance of the Chinese economy in global trade, it is another factor that contributes to the Group s competitive advantage. Capital investments The Company is still monitoring the market in search for an attractive acquisition target and in the case a project which gives the Company added value appears, the Company will pursue it. Supporting IT systems Customer service is one of the most important components of the competitive advantage. The Company has completed the implementation of SAP CRM which is currently one of the most modern solutions in the market and provides the entire sales chain with the ability to manage the relationships with customers in a modern and very flexible manner. Another important element increasing the customer s satisfaction with the Company s offer is the constant enhancement of post-sale services. The Parent Company has completed the implementation of the SAP Complaints module and integration of the transport settlement module with relevant IT modules of transport companies, and expects that these actions will result in an increased interest in the Company s offer and increase the number of customers. The Company is intensively expanding the on-line store, Toya24.pl. Owing to the IT support in the process of accounting and logistics settlements, the management of the store is easier and enables the preparation of a better offer. The B2B platform was expanded in order to enhance sales in other distribution channels. Other information to the consolidated quarter report 28
Subsidiary Yato Tools is considering the installation of the SAP system. Its implementation will enable the full integration of information systems of the Group and will provide the same standard of customer service throughout the Group. Currently, design work and Study on this project. In the coming months, a common purchasing platform for the Group companies will be prepared. 5. Shareholders holding directly or indirectly via related parties at least 5% of total votes at the Parent s General Shareholders Meeting and changes in the ownership of qualified holdings of Toya S.A. shares in the period from last quarter report until the date of filling this report. Shareholders holding at least 5% of total voting rights According to the information possessed by the Company, shareholders holding at least 5% of voting rights are: Number of shares Number of voting rights Share (%) Jan Szmidt (*) 28 170 647 28 170 647 35,96% Tomasz Koprowski (*) 14 771 208 14 771 208 18,86% Romuald Szałagan (*) 11 033 875 11 033 875 14,09% Piotr Wojciechowski (*) 5 033 055 5 033 055 6,43% Generali OFE (**) 5 001 147 5 001 147 6,38% (*)status according to information held by TOYA S.A. in accordance with the notification to the Ordinary General Shareholders Meeting on 28 May 2015 (**) according to the information held by the Company as at the dividend date for 2013 which was 11 July 2014 6. Shares and shares options held by the management Board and Supervisory Board members as at the date of filling the report, including changes since the date of filing last quarter report. Shares held by Management Board members Number of shares and voting rights held by members of Management Board as at the date of filling this report and changes thereof since the date of filling last report (annual report for 2015 published on 17 March 2016) according to information received by the Company is disclosed in the below table: Number of shares as at 17 March 2016 Increase / decrease Number of shares as at 5 May 2016 Grzegorz Pinkosz 158 222-158 222 Dariusz Hajek 150 562-150 562 Maciej Lubnauer 66 644-66 644 TOTAL 375 428-375 428 Other information to the consolidated quarter report 29
Shares held by Management Board members Number of shares and voting rights held by members of Management Board as at the date of filling this report and changes thereof since the date of filling last report (annual report for 2015 published on 17 March 2016) according to information received by the Company is disclosed in the below table: Number of shares as at 17 March 2016 Increase / decrease Number of shares as at 5 May 2016 Jan Szmidt 28 170 647-28 170 647 Tomasz Koprowski 14 771 208-14 771 208 Grzegorz Maciąg 5 275-5 275 RAZEM 42 947 130-42 947 130 7. Information concerning significant proceedings in front of court, body appropriate for arbitration proceedings or in front of public administration bodies. As at 31 March 2016 the total value of proceedings in front of court, body appropriate for arbitration proceedings or in front of public administration bodies relating to Company s liabilities and receivables did not exceed the value of 10% of Company s equity. 8. Information on material transactions concluded by Toya S.A. or its subsidiary with related parties on other than market terms. Related party transactions are entered into on arm's length terms in the course of the Group's day-to-day operations The related parties transactions are disclosed in note odwołania. of condensed consolidated financial statement and note odwołania. of condensed stand-alone financial statement. 9. Information on loan sureties and guarantees of at least 10% of Company s equity granted by the Parent Company or its subsidiaries to one entity or its subsidiaries. Parent Company and its subsidiaries have not granted loan sureties or guaranties of at least 10% of Company s equity to one entity or its subsidiary. 10. Other information which in the opinion of Toya S.A. is significant for the assessment of personnel situation, assets, finance and the financial result and any changes thereto, and information which is significant for assessing the ability to perform obligations. In the 1 st quarter of 2016 there were no other significant events which could have a significant impact on the assessment of personnel situation, assets, finance and the financial result and any changes thereto, apart from factors discussed above in the commentary to financial result. As at the date of filling this report there are no events that could have impact on the ability to perform obligations by the Company. Other information to the consolidated quarter report 30
PART C - CONDENSED INTERIM STAND ALONE FINANCIAL STATEMENTS OF TOYA S.A. Statement of financial position 31 March 2016 31 December 2015 ASSETS Nota Non-current assets Tangible fixed assets 1 16 415 16 392 Intangible assets 2 545 2 498 Investments in subsidiaries 22 631 22 631 odwołania. Other long-term receivables odwołania. 2 239 228 Deferred income tax assets odwołania. 1 184 691 Current assets Inventory Trade receivables and other receivables Cash and cash equivalents 45 014 42 440 5, odwołania. 91 449 93 232 odwołania., odwołania. 48 691 41 117 odwołania. 888 299 141 028 134 648 Total assets 186 042 177 088 EQUITY AND LIABILITIES Equity Share capital Notes constitute integral part of these interim condensed financial statements 31 odwołania. 7 833 7 833 Share premium 35 677 35 677 Other comprehensive income (16) (16) Retained earnings odwołania. 121 643 114 619
Long-term liabilities 165 137 158 113 Financial lease liabilities 455 500 Liabilities arising from employee benefits odwołania. 240 240 Short-term liabilities Trade payables and other payables Liabilities arising from employee benefits Liabilities arising from loans and borrowings 695 740 odwołania. 13 477 9 359 odwołania. 2 501 1 207 odwołania. 2 508 6 662 Financial lease liabilities 177 176 Current income tax liabilities 1 222 532 Provisions 325 299 20 210 18 235 Total liabilities 20 905 18 975 Total equity and liabilities 186 042 177 088. Notes constitute integral part of these interim condensed financial statements 32
Statement of profit or loss and other comprehensive income Note 3 months ended 31 March 2016 2015 Revenues from sales Cost of goods sold odwołania. 64 206 62 827 odwołania. (44 458) (43 685) Gross profit 19 748 19 142 Selling costs Administrative expenses odwołania. (7 859) (8 468) odwołania. (3 127) (2 772) Other operating income 112 44 Other operating costs (122) (1 266) Operating profit 8 752 6 680 Financial revenue 11 49 Financial costs (54) (381) Profit before income tax 8 709 6 348 Income tax expense (1 685) (1 231) Net profit 7 024 5 117 Other net comprehensive income - - Net comprehensive income for the period 7 024 5 117 Net profit for the period attributable to shareholders of the parent company 7 024 5 117 Total comprehensive income for the period attributable to shareholders of the parent company, net 7 024 5 117 Basic/diluted earnings per share (PLN) odwołania. 0,09 0,07 Notes constitute integral part of these interim condensed financial statements 33