Consolidated Quarterly Report QSr 3 / 2009 quarter / year

Transcription

1 GRAJEWO QSr 3/2009 POLISH FINANCIAL SUPERVISION AUTHORITY Consolidated Quarterly Report QSr 3 / 2009 quarter / year (prepared in accordance with Par and Par of the Regulation of the Minister of Finance dated February 19th Dz.U. No. 33, item 259) for issuers conducting manufacturing, construction, trade or services business for the 3rd quarter of the financial year 2009, covering the period from July 1st to September 30th 2009, including condensed consolidated financial statements prepared in accordance with the IFRS currency: PLN and condensed non-consolidated financial statements prepared in accordance with the IFRS currency: PLN Date of filing: November 12th 2009 Pfleiderer Grajewo Spółka Akcyjna (full name) GRAJEWO (abbreviated name) (postal code) Wiórowa (street) (telephone number) grajewo@pfleiderer.pl ( ) (NIP Tax Identification Number) wood products (sector according to the Warsaw Stock Exchange s classification) Grajewo (registered office) 1 (number) (fax number) (web site) (REGON Industry Registration Number)

2 PLN 000 EUR 000 FINANCIAL HIGHLIGHTS 3 quarter cumulative / 2009 Jan 1-Sep quarter cumulative / 2008 Jan 1-Sep Condensed consolidated financial statements data 3 quarter cumulative / 2009 Jan 1-Sep quarter cumulative / 2008 Jan 1-Sep I. Sales revenue II. Operating profit/(loss) III. Profit/(loss) before tax IV. Net profit V. Net profit attributable to equity holders of the parent VI. Net cash provided by (used in) operating activities VII. Net cash provided by (used in) investing activities VIII. Net cash provided by (used in) financing activities IX. Total net cash flow X. Total assets XI. Liabilities XII. Non-current liabilities XIII. Current liabilities XIV. Equity XV. Share capital XVI. Weighted average number of shares XVII. Weighted average diluted number of shares XVIII. Annualised net profit attributable to equity holders of the parent XIX. Earnings per ordinary share (PLN/EUR) -1,38 1,33-0,31 0,39 XX. Diluted earnings per ordinary share (PLN/EUR) -1,38 1,33-0,31 0,39 XXI. Book value per share (PLN/EUR) 10,82 12,94 2,56 3,80 XXII. Diluted book value per share (PLN/EUR) 10,82 12,94 2,56 3,80 XXIII. Declared or paid dividend per share (PLN/EUR) 0,00 2,86 0,00 0,84 Condensed financial statements data XXIV. Sales revenue XXV. Operating profit/(loss) XXVI. Profit/(loss) before tax XXVII. Net profit/(loss) XXVIII. Net cash provided by (used in) operating activities XXIX. Net cash provided by (used in) investing activities XXX. Net cash provided by (used in) financing activities XXXI. Total net cash flow XXXII. Total assets XXXIII. Liabilities XXXIV. Non-current liabilities XXXV. Current liabilities XXXVI. Equity XXXVII. Share capital XXXVIII. Weighted average number of shares XXXIX. Weighted average diluted number of shares XL. Annualised net profit XLI. Earnings per ordinary share (PLN/EUR) -0,03 1,91-0,01 0,56 XLII. Diluted earnings per ordinary share (PLN/EUR) -0,03 1,91-0,01 0,56 XLIII. Book value per share (PLN/EUR) 9,80 9,82 2,32 2,88 XLIV. Diluted book value per share (PLN/EUR) 9,80 9,82 2,32 2,88 * Based on annualised profit

3 Extended Consolidated Report for Q Consolidated Quarterly Report for QSr 3/2009 Pursuant to the Regulation of the Polish Council of Ministers on current and periodic information to be published by issuers of securities and conditions for recognition as equivalent of information whose disclosure is required under the laws of a non-member state, dated February 19th 2009 (Dz. U. No. 33, item 259), the Management Board of Pfleiderer Grajewo S.A. of Grajewo hereby releases the quarterly report for Q Page 1 of 30

4 Extended Consolidated Report for Q COMPANY PRESIDENT S INTRODUCTION TO THE Q CONSOLIDATED REPORT In the third quarter of 2009, the Pfleiderer Grajewo Group generated sales revenue which was approximately 20% higher than in the previous quarter. The increase is the effect of a seasonal rise in demand. Nonetheless, what gives rise to optimism is a significant increase in the number of orders received over the last two months, which enabled the Group to use its production capacities in more than 90%. Until the end of the year, sales should remain high, which will have a positive effect on the Group s profitability. The observed trends may indicate a growing probability of reversal of the downward trends prevailing on the market. On the other hand, the imbalance between supply and demand makes any marked improvement in profitability less feasible. According to prior declaration, the strategic objective of the Group is to maintain its market share in the key segments. It is worth noticing that despite the worsening macroeconomic and market conditions there was an increase in the sales volume of thin MDF board produced by the plant which started operations towards the end of The increase is to a large degree driven by the expansion of our customer portfolio in the Western Europe and in the Scandinavian countries. The prices of key raw and other materials remained low in the third quarter. The prices of the three strategic raw materials (wood, glue and paper) were also lower than in the previous quarter. The falling prices of materials and the cost-cutting programme only partly offset the negative market effects of lower demand for furniture in the first nine months of An assessment of the situation in the Polish and Russian furniture sectors in a longer term depends to a large extent on whether the economies of the European Union and Russia recover. Given an increase in debt and the poorer financial performance reflecting the current market situation, as well as the necessity to finance a strategic investment project in Russia, the Group has embarked on negotiations with banks to secure stable sources of financing in the years to come. The Management Board does not envisage a further increase in debt in Further optimisation of the production cost, combined with a continuation of positive market trends, should help the Group to boost its sales and financial performance both in the fourth quarter of 2009 and in the whole Yours faithfully, Wojciech Gątkiewicz President of the Management Board Page 2 of 30

5 Extended Consolidated Report for Q II. GENERAL INFORMATION 1. General Information on Pfleiderer Grajewo S.A. (Parent Undertaking) Pfleiderer Grajewo S.A. is the Parent Undertaking of the Pfleiderer Grajewo Group. The Parent Undertaking, under its former name of Zakłady Płyt Wiórowych S.A. of Grajewo, was originally registered on July 1st 1994 by the District Court, Commercial Court of ŁomŜa, in the Commercial Register in Section B under entry No On May 9th 2001, it was registered by the District Court of Białystok, XII Commercial Division of the National Court Register, under entry No. KRS The Company s registered office is situated at ul. Wiórowa 1, Grajewo, Poland. On September 18th 2002, the Management Board of the Parent Undertaking received the decision of the District Court of Białystok on entering its new name in the National Court Register. Accordingly, on September 18th 2002, the Parent Undertaking s former name Zakłady Płyt Wiórowych S.A. was changed into Pfleiderer Grajewo S.A. In accordance with the Polish Classification of Business Activities, the Company is registered under No Z. 2. Composition of the Management Board and the Supervisory Board of the Parent Undertaking and Changes in the Reporting Period As at the end of the reporting period, the Management Board of Pfleiderer Grajewo S.A. of Grajewo was composed of: 1. Wojciech Gątkiewicz President 2. Rafał Karcz Member 3. Dariusz Tomaszewski Member On September 28th 2009, the Company s Supervisory Board adopted a resolution on the appointment of Mr Radosław Wierzbicki as Member of the Company s Management Board Chief Operating Officer of Pfleiderer Grajewo S.A., with effect from November 1st Also with effect from November 1st 2009, Mr Radosław Wierzbicki was appointed as Member of the Company s Management Board Chief Operating Officer of Pfleiderer Prospan S.A. On November 21st 2008, the Company s Supervisory Board adopted a resolution on the appointment of Mr Wojciech Gątkiewicz as President of the Company s Management Board with effect from January 1st As of January 1st 2009, Mr Wojciech Gątkiewicz was also appointed President of the Management Board of Pfleiderer Prospan S.A. of Wieruszów, a subsidiary of Pfleiderer Grajewo S.A. As at September 30th 2009, the Supervisory Board of Pfleiderer Grajewo S.A. was composed of: 1. Paweł Wyrzykowski - Chairman 2. Rafał Bogusławski - Member 3. Robert Hopperdietzel - Member 4. Hans H. Overdiek - Member 5. Michael Wolff - Member On January 5th 2009, Mr Michael Ernst resigned from his position as Member of the Supervisory Board of Pfleiderer Grajewo S.A., with effect from January 5th On January 12th 2009, the Extraordinary General Shareholders Meeting appointed Mr Paweł Wyrzykowski previously the President of the Management Board of Pfleiderer Grajewo S.A. as Member of the Supervisory Board. Page 3 of 30

6 Extended Consolidated Report for Q On February 20th 2009, Mr Paweł Wyrzykowski was appointed as Chairman of the Supervisory Board of Pfleiderer Grajewo S.A. and Chairman of the Supervisory Board of Pfleiderer Prospan S.A. of Wieruszów, a subsidiary of Pfleiderer Grajewo S.A. 3. Periods Covered by the Consolidated Financial Statements and the Comparable Data The financial statements of Pfleiderer Grajewo S.A. (Parent Undertaking), Pfleiderer Prospan S.A., Pfleiderer OOO, Pfleiderer MDF OOO, Silekol Sp. z o.o., Pfleiderer MDF Sp. z o.o., Jura Polska Sp. z o.o., and Unifloor Sp. z o.o. (subsidiary undertakings) were consolidated using the full method. The financial data for the comparable period of Q comprise the non-consolidated financial statements of Pfleiderer Grajewo S.A. prepared in accordance with the IFRS, and the non-consolidated financial statements of Pfleiderer Prospan S.A., Pfleiderer OOO, Pfleiderer MDF OOO, Silekol Sp. z o.o. and Pfleiderer MDF Sp. z o.o., Jura Polska Sp. z o.o. and Unifloor Sp. z o.o. III. CHANGES IN ACCOUNTING POLICIES 1. Accounting Policies (a) Compliance Statement The financial statements of the Company were prepared in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Committee (IASC) and in compliance with the interpretations issued by the IASC Standing Interpretations Committee. The financial statements were drawn up in accordance with the same accounting policies as those applied in the most recent annual financial statements. (b) Basis for Preparation of the Financial Statements The companies comprising the Group, namely Pfleiderer Grajewo S.A., Pfleiderer Prospan S.A., Pfleiderer MDF Sp. z o.o., and Silekol Sp. z o.o. maintain their accounting records in compliance with the International Financial Reporting Standards (IFRS), whereas Pfleiderer OOO and Pfleiderer MDF OOO apply accounting policies based on the Russian standards, which were restated for the purpose of consolidation to meet the requirements imposed under the International Financial Reporting Standards. As concerns Jura Polska Sp. z o.o. and Unifloor Sp. z o.o., their accounting records are kept in accordance with the policies and common practice applied by Polish companies; its figures were also restated for the purpose of consolidation. These consolidated financial statements drawn up on the basis of the accounting records of the Group companies reflect adjustments made to show the consolidated financial standing, results and cash flows of the Group in accordance with the International Financial Reporting Standards, which include standards and interpretations approved by the International Accounting Standards Board and the Standing Interpretations Committee. These consolidated financial statements of the Group and the non-consolidated financial statements of the Parent Undertaking prepared as at September 30th 2009 have not been audited. The non-consolidated financial statements of the Parent Undertaking as at September 30th 2009 were prepared in accordance with the requirements of the International Financial Reporting Standards issued by the International Accounting Standards Committee (IASC), as well as with the interpretations issued by the IASC Standing Interpretations Committee. Page 4 of 30

7 Extended Consolidated Report for Q IV. KEY INFORMATION 1. Consolidated Sales Revenue and Sales Revenue Dynamics Below is presented a comparison of the Q and Q data. Income Statement Q Jul 1 Sep Q Jul 1 Sep (PLN 000) % (PLN 000) % /A/ /B/ /C/ /D/ Sales revenue 316, % 375, % Cost of sales (262,975) -83.0% (302,491) -80.6% Profit on sales 53, % 72, % Other income 3, % % Selling costs (20,661) -6.5% (19,460) -5.2% General and administrative expenses (29,898) -9.4% (28,347) -7.6% Other expenses (6,015) -1.9% (3,040) -0.8% Operating profit/loss 1, % 22, % Financial income 34,315 10,8% 16,546 4,4% Financial expenses (53,748) -17,0% (31,457) -8,4% Net financial income/(expenses) (19,433) -6,1% (14,911) -4,0% Profit/loss before tax (18,411) -5.8% 7, % Income tax % (7,407) -2.0% Net profit/loss (17,518) -5.5% % Net profit attributable to minority interests (9,490) -3.0% (3,818) -1.0% Net profit/loss attributable to majority interests (8,028) -2.5% 4, % EBITDA 30, % 50, % Comments on the income statement Sales revenue posted by the Group in Q fell by approximately 15.6% year on year. The drop is attributable to the overall financial crisis, which has an adverse effect on demand for furniture in Europe and this in turn affects the demand for furniture board. In Q3 2009, the sales margin was 17%, having decreased by 2.4 percentage points from the Q level. The lower sales margin is a result of price pressures observed on the market, which follow from oversupply of board in the region. An increase in financial income relative to the corresponding period of 2008 is attributable to FX gains. The financial expenses rose strongly on the back of higher interest connected with an increase in the Group s debt and recognition of costs arising from the settlement of financial instruments (forward contracts). Page 5 of 30

8 2. Net Cash Position Pfleiderer Grajewo Group Extended Consolidated Report for Q The Group s net debt under loans and borrowings increased in Q by PLN 85,000 thousand, mainly due to the capital expenditure related to the MDF project in Russia, and change in working capital. As at September 30th 2009, the Group s net debt under bank loans and borrowings stood at PLN 931,169 thousand. 3. Equity As at the end of Q3 2009, the Group s equity was PLN 537,140 thousand, down by PLN 34,533 thousand quarter on quarter. The decrease is attributable mainly to the negative net result posted by the Group in Q and to revaluation of the equity interests in the Russian companies. 4. Sale of Shares and Assets In Q3 2009, the Pfleiderer Grajewo Group reported a gain on sale of non-current assets amounting to PLN 1,178 thousand. V. THE GROUP S SALES 1. Domestic and Export Sales Pfleiderer Grajewo Group s long-term sales strategy relies on three key distribution channels: - direct sale to the furniture industry, - sale to Pfleiderer Partner (the PP Network) wholesalers, - export sale. The sales analysis covers sales of Pfleiderer Grajewo S.A., Pfleiderer Prospan S.A., and Pfleiderer MDF Sp. z o.o. Sales analysis for Q and Q (PLN 000) Exports Other Industry PP Network Chart: Sales analysis for Q and Q (PLN 000). In the Polish market, direct sales to large and medium-sized furniture producers and the Pfleiderer Partner wholesalers network continued to represent the most important distribution channels. Q3 saw a year-on-year decrease in the value of sales in each domestic distribution channel and in the value of export sales, which resulted chiefly from the downturn experienced by the Polish and global furniture market relative to Page 6 of 30

9 Extended Consolidated Report for Q In Q3 2009, the shares of the above distribution channels were as follows: Q sales by distribution channel Other ( 3.36 % ) Export ( % ) Industry ( % ) Chart: Distribution channels in Q (%). PP Network ( % ) Relative to the corresponding period of the previous year, sales through the individual distribution channels as percentages of total sales changed. The share of export sales decreased from 28% to 27% and the share of sales to the Pfleiderer Partner wholesalers network fell from 32% to 31%. On the other hand, the share of direct sales to large and medium-sized furniture producers increased from 37% to 39%. The market of furniture production materials is characterised by strong price, product and logistics competition from domestic and foreign manufacturers, which try to gain a competitive advantage in those aspects of cooperation which are important to the customers. Thanks to its sales and marketing efforts, the Group continues to increase its sales and, most importantly, consolidate its position in the market of furniture production materials. VI. Q RESULTS 1. Composition of the Pfleiderer Grajewo Group a. Structure of the Pfleiderer Grajewo Group Pfleiderer Grajewo S.A. is the Parent Undertaking of Pfleiderer Prospan S.A. of Wieruszów (Poland), Pfleiderer OOO of Novgorod (Russia), Pfleiderer MDF OOO of Novgorod (Russia), Silekol Sp. z o.o. of Kędzierzyn-Koźle (Poland), Pfleiderer MDF Sp. z o.o. of Grajewo, Jura Polska Sp. z o.o. of Grajewo, UniFloor Sp. z o.o. of Wieruszów and Pfleiderer Services Sp. z o.o. of Grajewo. Page 7 of 30

10 Extended Consolidated Report for Q Structure of the Pfleiderer Grajewo Group as at September 30th 2009: Unifloor Sp. z o.o. Subsidiary Undertaking Pfleiderer MDF OOO of Novgorod (Russia) Subsidiary Undertaking 100% 50% Pfleiderer Prospan S.A. Subsidiary Undertaking Jura Polska Sp. z o.o. Subsidiary Undertaking 100% 100% Pfleiderer Grajewo S.A. Parent Undertaking 50% 84.19%* Pfleiderer MDF Sp. z o.o. Subsidiary Undertaking 100% 50% Pfleiderer OOO of Novgorod (Russia) Subsidiary Undertaking Pfleiderer Services Sp. z o.o. Subsidiary Undertaking Silekol Sp. z o.o. Subsidiary Undertaking *Pfleiderer Grajewo S.A. holds a Call option entitling the Company to early repurchase the shares in Pfleiderer OOO held by the EBRD. The EBRD holds a put option entitling it to sell early the shares held in Pfleiderer OOO to the Company in the event of a breach of the provisions of financing agreements. Accordingly, from the point of view of the Parent Undertaking (Pfleiderer Grajewo S.A.), Pfleiderer OOO is treated as a subsidiary undertaking in which Pfleiderer Grajewo S.A. holds 100% of shares. Moreover, in the consolidated financial statements of the Pfleiderer Grajewo Group, 100% of Pfleiderer OOO s profit is subject to consolidation. The consolidated financial statements of the Group comprise the financial data of Pfleiderer Grajewo S.A., Pfleiderer Prospan S.A., Pfleiderer OOO, Pfleiderer MDF OOO, Silekol Sp. z o.o., Pfleiderer MDF Sp. z o.o., Jura Polska Sp. z o.o. and Unifloor Sp. z o.o. b. Changes in the Pfleiderer Grajewo Group s Structure in the Reporting Period There were no changes in the structure of the Group in Q c. Business Profile The scope of business of Pfleiderer Grajewo S.A., the Parent Undertaking, includes: manufacture and veneering of wood and wood-based products impregnation of paper trade at home and abroad. Business profiles of other Companies of the Pfleiderer Grajewo Group: Page 8 of 30

11 Extended Consolidated Report for Q Pfleiderer Prospan S.A. manufacture of melamine-faced and raw chipboards and other wood and wood-based products impregnation of paper trade at home and abroad production and distribution of heat. Pfleiderer OOO manufacture of raw and melamine-faced chipboard, other materials and wood products production of materials from wood waste wholesale of own and third-party products. Pfleiderer MDF OOO The undertaking has been established to execute the investment project consisting in the construction of an MDF/HDF production plant in Novgorod (Russia). Silekol Sp. z o.o. Silekol Sp. z o.o. is a subsidiary undertaking which ensures steady supplies of high-quality adhesives used in the production of chipboards to the Parent Undertaking and the other subsidiary undertakings. manufacture of dyes and pigments manufacture of organic and other inorganic chemicals manufacture of paints and varnishes manufacture of glues and gelatines. Pfleiderer MDF Sp. z o.o. manufacture of MDF board and other wooden and wood-based boards trade at home and abroad production and distribution of heat. Jura Polska Sp. z o.o. transport road transport of goods with special vehicles road transport of goods with universal vehicles lease of trucks wholesale of building materials and sanitary fittings. Unifloor Sp. z o.o. Current business profile of Unifloor Sp. z o.o. comprises: wholesale of wood, building materials and sanitary fittings. Pfleiderer Services Sp. z o.o. The company has suspended its operations. d. Non-Consolidated Undertakings Page 9 of 30

12 Extended Consolidated Report for Q Since Pfleiderer Services Sp. z o.o. has suspended its operations and its financial data is immaterial for a clear and fair view of the Group s financial standing, the financial statements of the company were not consolidated. e. Subsidiary Undertakings Comprising the Pfleiderer Grajewo Group Pfleiderer Prospan S.A. - a joint-stock company entered in the Polish commercial register maintained by the District Court of Kalisz under No. RHB 1754 on September 23rd 1997 as Zakłady Płyt Wiórowych Prospan S.A. On September 17th 2001, the company was registered with the District Court of Łódź-Śródmieście in Łódź, XX Division of the National Court Register under entry No. KRS: Industry Identification Number (REGON): Tax Identification Number (NIP): Registered office: ul. Bolesławiecka 10, Wieruszów, Poland Pfleiderer OOO - a limited liability company organised under the laws of the Russian Federation, registered on January 15th 2003 by the Interregional Inspection No. 3 of the Novgorod Region under the Ministry of Customs and Taxes of the Russian Federation. Uniform registration number: Tax Identification Number: Registered office: 106 Tsentralnaya St, Novgorod Region , Russia. Pfleiderer MDF OOO a limited liability company organised under the laws of the Russian Federation, registered on September 11th 2007 by the Interregional Inspection No. 3 of the Novgorod Region under the Ministry of Customs and Taxes of the Russian Federation. Uniform registration number: Tax Identification Number: Registered office: 106 Tsentralnaya St, Novgorod Region , Russia Silekol Sp. z o.o. - entered in the National Court Register by the District Court of Opole, VIII Commercial Division of the National Court Register under entry No. KRS on January 6th Industry Identification Number (REGON): Tax Identification Number (NIP): Registered office: ul. Mostowa 30 K, Kędzierzyn-Koźle, Poland Pfleiderer MDF Sp. z o.o. - entered in the National Court Register by the District Court of Białystok, XII Commercial Division of the National Court Register in Białystok, under entry No. KRS , on October 9th Industry Identification Number (REGON): Tax Identification Number (NIP): Registered office: ul. Wiórowa 1, Grajewo, Poland Jura Polska Sp. z o.o. - entered in the National Court Register by the District Court of Katowice, Commercial Division of the National Court Register, under entry No. KRS , on November 24th Industry Identification Number (REGON): Tax Identification Number (NIP): Page 10 of 30

13 Registered office: Pfleiderer Grajewo Group Extended Consolidated Report for Q ul. Wiórowa 1, Grajewo, Poland Unifloor Sp. z o.o. - entered in the National Court Register by the District Court of Białystok, XII Commercial Division of the National Court Register, under entry No. KRS , on June 29th Industry Identification Number (REGON): Tax Identification Number (NIP): Registered office: ul. Bolesławiecka 10, Wieruszów, Poland Pfleiderer Services Sp. z o.o. of Grajewo - entered in the National Court Register by the District Court of Białystok, XII Commercial Division of the National Court Register in Białystok, under entry No. KRS , on December 20th Industry Identification Number (REGON): Tax Identification Number (NIP): Registered office: ul. Wiórowa 1, Grajewo, Poland Page 11 of 30

14 Extended Consolidated Report for Q Consolidated Financial Results Consolidated Balance Sheet as at September 30th 2009 (PLN 000) Total Total Total Total Assets Note Sep Jun Dec Sep Property, plant and equipment 1,162,354 1,214,314 1,238,556 1,166,731 Intangible assets 6,379 7,940 8,948 10,795 Goodwill 107, , , ,829 Investments in related undertakings Other non-current financial assets Deferred tax asset 6,337 5, ,376 Non-current receivables prepayments for tangible assets 198, ,155 73,257 96,488 Government assistance receivable 32,553 32,553 32,553 32,229 Non-current assets 1,514,263 1,507,018 1,462,082 1,415,535 Inventories 160, , , ,635 Income tax receivable 1 1,152 16,069 15,306 9,339 Trade and other receivables 152, , , ,328 Other current financial assets Cash and cash equivalents 31,931 3,083 16,133 16,763 Current assets 345, , , ,622 Total assets 1,859,804 1,820,083 1,840,594 1,795,157 Equity Share capital 16,376 16,376 16,376 16,376 Share premium account 289, , , ,806 Statutory reserve funds 133, ,518 89,174 89,156 Valuation of forward contracts 269 (5,244) 0 0 Currency translation differences on subordinated undertakings (14,997) (6,128) (8,434) (20,913) Currency translation differences on net investment in subsidiary undertakings (16,202) (5,556) 636 (3,321) Retained earnings 41,481 49, , ,416 Equity attributable to equity holders of the parent 450, , , ,520 Minority interests 86,889 99, , ,437 Total equity 537, , , ,957 Liabilities Non-current portion of interest-bearing bank loans and borrowings 826, , , ,561 Employee benefits 5,737 5,737 5,309 6,983 Provisions 2,482 2,482 2,409 2,372 Deferred tax liability 7,112 9,069 10,683 17,003 Deferred income under government assistance 44,668 45,044 46,665 48,435 Non-current liabilities 886, , , ,354 Loans and borrowings 136,708 83, , ,068 Income tax payable ,591 1,599 Trade payables and other liabilities 2 278, , , ,496 Employee benefits 17,130 17,676 22,042 21,261 Deferred income under government assistance 3,698 3,698 3,924 3,422 Current liabilities 436, , , ,846 Total liabilities 1,322,664 1,248,410 1,221,618 1,153,200 Total equity and liabilities 1,859,804 1,820,083 1,840,594 1,795,157 Page 12 of 30

15 Extended Consolidated Report for Q Sep end of Q (PLN 000) Jun end of Q (PLN 000) Dec end of Q (PLN 000) Sep end of Q (PLN 000) OFF-BALANCE-SHEET ITEMS Contingent liabilities 31,529 24, ,333 To other undertakings, including: 31,529 24, ,333 - guarantees and sureties issued 31,529 24, ,333 Total off-balance-sheet items 31,529 24, ,333 Comments on changes in the key balance-sheet items: The PLN 52m decrease in property, plant and equipment was attributable mainly to the depreciation charges and revaluation of equity interests in the Russian companies made in Q3. Additionally, prepayments for tangible assets increased in Q by nearly PLN 60m, on account of the investment in the MDF/HDF board production plant in Russia (payment for the production line). At the end of the third quarter, there was no change in goodwill and government assistance receivables also remained at the same level. The decrease in intangible assets was due to their periodic amortisation. As at the end of Q3 2009, inventories stood at PLN 160m, having decreased by PLN 7.5m relative to the figure as at the end of H This decrease was an effect of further optimisation of the working capital level. As at September 30th 2009, trade and other receivables rose by PLN 26,1m relative to the figure posted as at the end of June The increase was due to the higher sales in the last month of Q3. As at September 30th 2009, cash amounted to almost PLN 32m, having increased by near PLN 29m. The rise can be explained by the fact of securing an optimum level of cash at all companies of the Group. As at the end of Q3 2009, the Group s total equity was over PLN 537m, having fallen by almost PLN 34.5m relative to the previous period. The decline was caused mainly by a net loss of over PLN 17m, increase in negative currency translation differences on subordinated undertakings by almost PLN 9m, and a PLN 11m increase in negative valuation of net investments in subsidiary undertakings, accompanied by a more than PLN 5m decrease in negative valuation of financial instruments following from the application of hedge accounting. As at the end of the reporting period, liabilities rose by PLN 77m relative to the end of Q There was a change in the structure of liabilities current liabilities rose by PLN 16.2m, while non-current liabilities went up by PLN 58.8m. The higher amount of liabilities is chiefly an outcome of an increase in the Group s debt, combined with a drop in trade payables. Page 13 of 30

16 Extended Consolidated Report for Q Consolidated Income Statement for the period January 1st September 30th 2009 (PLN 000) Note Jan 1 - Sep Jan 1 - Sep Jul 1 - Sep Jul 1 - Sep Continued operations Continued operations Continued operations Continued operations Sales revenue 875,364 1,092, , ,192 Cost of sales (731,464) (883,812) (262,975) (302,491) Profit on sales 143, ,227 53,699 72,701 Other income 26,787 7,120 3, Selling costs (53,860) (55,619) (20,661) (19,460) General and administrative expenses (91,342) (89,122) (29,898) (28,347) Other expenses (14,959) (8,924) (6,015) (3,040) Operating profit/loss 10,526 61,682 1, Financial income 96,107 61,792 45,866 29,320 Financial expenses (163,500) (109,752) (92,957) (61,500) Net financial income/(expenses) 4 (67,393) (47,091) (19,433) (14,911) Gain on dilution of shares 0 1, Profit/loss before tax (56,867) 16,292 (18,411) 7,621 Income tax 525 (12,711) 893 (7,407) Net profit/loss (56,342) 3,581 (17,518) 214 Net profit/loss attributable to: Equity holders of the parent (36,109) 18,023 (8,028) 4,032 Minority interests (20,233) (14,442) (9,490) (3,818) EBITDA 98, ,598 30,350 50,533 Page 14 of 30

17 Extended Consolidated Report for Q Statement of Changes in Consolidated Equity for the Period January 1st 2008 September 30th 2009 (PLN 000) Share capital Share premium account Statutory reserve funds Currency translation differences on subordinated undertakings Retained earnings (deficit) Total Minority interests Total Balance as at Jan , ,806 88,743 (14,624) 278, ,032 45, ,595 Currency translation differences (6,289) 0 (6,289) 0 (6,289) Net investment in subordinated undertakings (3,321) 0 (3,321) 0 (3,321) Net income and expenses recognised in equity (9,610) 0 (9,610) 0 (9,610) Net profit ,023 18,023 (14,442) 3,581 Total income and expenses for period (9,610) 18,023 8,413 (14,442) (6,029) Issue of shares in Silekol Sp. z o.o ,700 22,700 Share premium from issue of shares in Silekol Sp. z o.o., attributable to minority interests ,908 4,908 Issue of shares in Pfleiderer MDF OOO ,708 57,708 Transfer of part of 2007 net profit to statutory reserve funds (413) Allocation of profit to dividend (141,925) (141,925) 0 (141,925) Balance as at Sep , ,806 89,156 (24,234) 154, , , ,957 Page 15 of 30

18 Extended Consolidated Report for Q Share premium account Statutory reserve funds Currency translation differences on subordinated undertakings Currency translation differences on net investment in subordinated undertakings Retained earnings (deficit) Share capital Total Minority interests Total Balance as at Jan , ,806 88,743 (14,624) 0 278, ,032 45, ,595 Currency translation differences , ,190 4,462 10,652 Net investment in subsidiary undertakings Net income and expenses recognised in equity , ,826 4,462 11,288 Net profit (14,441) (14,441) (25,857) (40,298) Total income and expenses for period , (14,441) (7,615) (21,395) (29,010) Issue of shares in Silekol Sp. z o.o ,700 22,700 Share premium from issue of shares in Silekol Sp. z o.o., attributable to minority interests ,908 4,908 Issue of shares in Pfleiderer MDF OOO ,708 57,708 Transfer of part of 2007 net profit to statutory reserve funds (431) Allocation of profit to dividend (141,925) (141,925) 0 (141,925) Balance as at Dec , ,806 89,174 (8,434) , , , ,976 Page 16 of 30

19 Extended Consolidated Report for Q Share premium account Statutory reserve funds Currency translation differences on subordinated undertakings Currency translation differences on net investment in subordinated undertakings Valuation of forward contracts Retained earnings (deficit) Share capital Total Minority interests Total Balance as at Jan , ,806 89,174 (8,434) , , , ,976 Currency translation differences (6,563) (6,563) (2,362) (8,925) Currency translation differences on net investment in subsidiary undertakings (16,838) 0 0 (16,838) 0 (16,838) Currency translation differences on valuation of forward contracts Net income and expenses recognised in equity (6,563) (16,838) (23,132) (2,362) (25,494) Net profit (36,109) (36,109) (20,233) (56,342) Total income and expenses for period (6,563) (16,838) 269 (36,109) (59,241) (22,595) (81,836) Issue of shares in Silekol Sp. z o.o Share premium from issue of shares in Silekol Sp. z o.o., attributable to minority interests Issue of shares in Pfleiderer MDF OOO Transfer of part of 2007 net profit to statutory reserve funds , (44,344) Allocation of profit to dividend Balance as at Sep , , ,518 (14,997) (16,202) , ,251 86, ,140 Page 17 of 30

20 Extended Consolidated Report for Q Consolidated Cash-Flow Statement for the Period January 1st September 30th 2009 (PLN 000) Jan 1- Sep Jan 1- Sep Cash flows from operating activities Net profit/loss (56,342) 3,581 Adjustments: 93, ,400 Depreciation and amortisation 88,142 82,916 Foreign exchange gains/losses 21,267 (481) Interest for period 45,308 43,401 Gain/loss on disposal of intangible assets and property, plant and equipment 243 (58) Income tax expense (525) 12,711 Change in receivables 15,912 (23,511) Change in inventories 18,702 13,550 Change in liabilities (52,912) 72,740 Change in employee benefits payable (4,484) (2,673) Change in provisions 73 (104) Amortisation of government assistance (2,223) (2,435) Change resulting from valuation of forward contracts (2,149) (30,974) Change in currency differences on consolidation (4,667) 7,194 Gain on dilution of shares 0 (1,701) Cash provided by/(used in) operating activities 37, ,981 Interest received/(paid) Income tax paid 3,503 (31,273) Net cash provided by/(used in) operating activities 41, ,825 Cash flows from investing activities Sale of non-current assets 1,178 2,223 Sale of non-current assets held for sale 0 13,510 Other cash provided by financial assets 13 1,940 Acquisition of a subsidiary undertaking 0 (108) Acquisition of intangible assets and property, plant and equipment (180,834) (217,894) Change resulting from valuation of forward contracts (14,026) 8,568 Net cash used in investing activities (193,669) (191,761) Cash flows from financing activities Proceeds from issue of shares 0 87,017 Repayment of bank loans and borrowings (162,202) (66,169) Increase in bank loans and borrowings 298, ,605 Dividends paid 0 (141,925) Interest paid (44,166) (42,527) Net cash provided by financing activities 92,531 17,001 Change in cash (59,906) (2,935) Cash at beginning of period 13,939 6,593 Cash at end of period (45,967) 3,658 Page 18 of 30

21 Extended Consolidated Report for Q VII. CAPITAL EXPENDITURE In Q3 2009, the Pfleiderer Grajewo Group incurred capital expenditure of PLN 78,770 thousand. VIII. SUPPLEMENTARY INFORMATION 1. Material Agreements On July 2nd 2009, Pfleiderer Grajewo S.A. entered into a agreement with Pfleiderer AG of Neumarkt concerning financial collateral for the contract of November 19th 2007 for the supply of an MDF/HDF board production line ( the Supply Contract ), concluded between Dieffenbacher GmbH & Co. KG and Pfleiderer MDF OOO of Russia, a subsidiary of the Company. Under the agreement, the Company will be obliged to participate in the financial collateral provided by Pfleiderer AG for the benefit of Dieffenbacher and pay Pfleiderer AG an amount of up to EUR 19,172, This amount constitutes a half of the total amounts payable by Pfleiderer AG to Dieffenbacher on account of the financial collateral for the Supply Contract. The need to provide financial collateral for the benefit of Dieffenbacher results from the delay in construction of the MDF/HDF plant in Russia caused by termination of the contract with the general contractor. Once the Supply Contract is performed and Pfleiderer MDF OOO makes the payments specified therein, Dieffenbacher will return the financial collateral. Until the amounts paid to Dieffenbacher are repaid, the Company will acquire (to secure the repayment) a 50% interest in the ownership title to the equipment to be supplied under the Supply Contract. 2. Provisions As at the end of Q3 2009, the Group maintained a provision for employee benefits of PLN 17,130 thousand. Relative to Q2 2009, the value of the provision remained almost unchanged. The provision for employee benefits is the only provision created by the Group under IAS. Currently, Pfleiderer Grajewo S.A. maintains no other provisions under IAS. In Q3 2009, relative to Q2 2009, the deferred tax asset rose by PLN 1,176 thousand. The deferred tax liability fell by PLN thousand. In the reporting period, there were no material changes in impairment charges which would have a material bearing on the Pfleiderer Grajewo Group s net profit/loss. 3. Guarantees and Sureties As at September 30th 2009, Pfleiderer Grajewo S.A. had issued four sureties for an aggregate amount of up to PLN 153,092 thousand, including a surety of up to EUR 21,752 thousand, valid for an indefinite period, provided for the benefit of the European Bank for Reconstruction and Development to secure the liabilities of Pfleiderer OOO under a bank loan. As at September 30th 2009, the amount of underlying debt secured with the sureties stood at EUR 139,272 thousand. Additionally, Pfleiderer Grajewo S.A. has a contingent liability towards the European Bank for Reconstruction and Development, under the Put/Call Option Agreement of December 28th In performance of the Agreement, in Q2 2007, Pfleiderer OOO issued, and the EBRD acquired, new shares worth EUR 7m. The Agreement provides for the Bank s equity involvement for five years. Thereafter, Page 19 of 30

22 Extended Consolidated Report for Q the shares will be sold to Pfleiderer Grajewo S.A. The annual financial expenses relating to the transaction, resulting from the difference between the purchase price and the selling price of the shares, will be equal to the interest expense on the loan advanced by the Bank to Pfleiderer OOO. Pfleiderer Grajewo S.A. has a call option enabling it to repurchase the shares held by the Bank at any time before the lapse of the five-year period. The Bank has a put option over the shares, whereby it may sell the shares to the Company if the financial agreements executed between the Company, Pfleiderer OOO and the Bank are breached, or if there is a risk that the shares might not be repurchased at the expected date. The other companies of the Group did not issue any guarantees or sureties. 4. Changes in Contingent Liabilities and Assets In Q3 2009, Pfleiderer Grajewo S.A. s contingent liabilities fell by PLN 7,165 thousand, primarily on account of a partial repayment of a bank loan with respect to which Pfleiderer Grajewo S.A. issued a surety. 5. Contracted and Repaid Loans and Borrowings; Debt and Equity Issues On September 23rd 2009, Pfleiderer Grajewo S.A. issued commercial paper in the form of short-term notes with a par value of PLN 65,000,000. The notes rate of return is equal to 12M WIBOR. The notes will be redeemed by December 22nd The notes were acquired by Pfleiderer Prospan S.A. and Silekol Sp. z o.o., subsidiary undertakings of Pfleiderer Grajewo S.A. 6. Dividend Paid In Q3 2009, no decisions concerning dividend payment were made. 7. Performance Forecast In connection with the highly volatile market environment, Pfleiderer Grajewo S.A. has not published any forecasts of its financial performance in Material Events Subsequent to September 30th 2009 There were no material events subsequent to September 30th Changes in the Capital Structure of the Group In Q3 2009, there were no changes in the capital structure of the Group. 10. Transactions with Shareholders and Related Parties In Q3 2009, Pfleiderer Grajewo S.A. carried out 5 issues of short-term notes, all of which were acquired by Pfleiderer Prospan S.A. and Silekol Sp. z o.o. Page 20 of 30

23 Extended Consolidated Report for Q Change in the Number of Shares or Options Held by the Management and Supervisory Staff Since August 31st 2009, when the previous quarterly report was released, the number of shares in Pfleiderer Grajewo S.A. held by members of its Management Board has not changed: - Mr Wojciech Gątkiewicz, President of the Management Board, holds 2,500 shares in Pfleiderer Grajewo S.A., - Mr Rafał Karcz, Member of the Management Board, holds 3,472 shares in Pfleiderer Grajewo S.A., - Mr Dariusz Tomaszewski, Member of the Management Board, holds 4,108 shares in Pfleiderer Grajewo S.A. Mr Radosław Wierzbicki, Member of the Management Board since November 1st 2009, holds 2,000 shares in Pfleiderer Grajewo S.A. Mr Paweł Wyrzykowski, Chairman of the Supervisory Board, holds 4,080 shares in Pfleiderer Grajewo S.A. The other members of the Supervisory Board of Pfleiderer Grajewo S.A. do not hold any shares in the Company. 12. Shareholder Structure of the Company as at the Report Release Date Shareholder structure as at November 12th 2009 Number of shares % of share capital held Number of votes at GM % of total vote at GM Pfleiderer Service GmbH 32,308, % 32,308, % Aviva OFE Aviva BZ WBK 4,928, % 4,928, % ING OFE 2,639, % 2,639, % Other shareholders 9,747, % 9,747, % TOTAL 49,624, % 49,624, % The information on the number of shares in Pfleiderer Grajewo S.A. held by Aviva OFE ( former Commercial Union Otwarty Fundusz Emerytalny BPH CU WBK) is based on the most recent notification received by the Company on July 9th Information on the holding of Pfleiderer Grajewo S.A. shares by ING OFE is based on the most recent notification, received by the Company on June 5th The number of shares held by the principal shareholder, Pfleiderer Service GmbH, did not change in the last quarter. 13. Court proceedings There are no court, arbitration or administrative proceedings pending with respect to the Group companies liabilities or claims whose value would represent 10% or more of the Issuer s equity.. Page 21 of 30

24 14. Other Material Information Pfleiderer Grajewo Group Extended Consolidated Report for Q On September 28th 2009, the Company s Supervisory Board adopted a resolution on the appointment of Mr Radosław Wierzbicki as Member of the Company s Management Board Chief Operating Officer of Pfleiderer Grajewo S.A., with effect from November 1st Also with effect from November 1st 2009, Mr Radosław Wierzbicki was appointed as Member of the Company s Management Board Chief Operating Officer of Pfleiderer Prospan S.A. Mr Radosław Wierzbicki (born 1964) graduated from the Białystok Technical University and completed post-graduate management studies at the Warsaw School of Economics (SGH).From 1993, he worked for the ABB companies of the T&D segment in Poland, first as Head of the Regional Sales Office in Warsaw and then as Development Director for the CEE Markets. Since 2000, Mr Radosław Wierzbicki has been employed by Pfleiderer Grajewo S.A. He started as Director of Exports, then moved up to the position of Commercial Director- Management Board Member of Pfleiderer OOO of Novgorod, Russia a subsidiary of Pfleiderer Grajewo S.A. Since 2007, he has served as Chief Executive Officer of Pfleiderer OOO. 15. Financial Instruments The Group conducts its production and trading activities in a number of different countries, therefore it is exposed to currency risk. In Poland, key sources of the risk related to the EUR/PLN exchange rate are euro-denominated sales (euro-denominated export and domestic sales). For approximately 10 years now, the Group has hedged its currency risk using only FX forwards. The Group has never employed FX options or option strategies. All of the concluded transactions are hedging transactions; the Group has never entered into speculative transactions. As at September 30th 2009, Pfleiderer Grajewo S.A. was party to the following derivative transactions: - EUR/PLN forward contract for sale of EUR 12,000 thousand, to be settled from October to December 2009 (hedging the Group s sales denominated in foreign currencies) As at September 30th 2009, the other Group companies were not party to any derivative transactions. In Russia, key sources of the risk related to the EUR/RUB exchange rate include: - euro-denominated loan contracted by Pfleiderer OOO with the EBRD - euro-denominated loans contracted by Pfleiderer MDF with Pfleiderer AG As at September 30th 2009, the FX risk exposure in Russia was unhedged. In 2009, the Group did not hedge its interest rate risk or the risk associated with fluctuations of prices of raw materials. Since January 1st 2009, the Group has applied hedge accounting, presenting any changes in the valuation of transactions hedging its export sales in equity. Gain or loss on forward contracts is taken to the income statement in the month in which a given derivative transaction is settled. The value of forward contracts is measured at the end of each month, and any changes are recognised in equity or in the income statement. In the case of forward transactions used to hedge loans, changes in the value of the hedges are compensated by the foreign exchange differences resulting from the revaluation of loans, which are also measured as at the end of each month. Page 22 of 30

25 Extended Consolidated Report for Q In Q3 2009, the total negative impact of forward transactions on the income statement was PLN 323 thousand. 16. Business segments A business segment is a distinct area of the Group s business activities, comprising production and distribution of specific products or provision of services (industry segment), or covering certain economic environment (geographical segment), that is subject to risks and returns that are different from those of other business segments. In Q3 2007, the Pfleiderer Grajewo Group commenced the sale of thin MDF/HDF board at the newly launched MDF plant. The Group s export sales (chiefly to Russia, Lithuania, Latvia and Ukraine) accounted in Q for 26.99% of total sales of the Group. 17. Notes to the Consolidated Balance Sheet Note 1 Trade and Other Receivables (PLN 000) Sep Jun Dec Sep Trade receivables and prepayments 111,376 78,164 69,571 92,741 Trade receivables and prepayments related undertakings ,117 18,789 Current prepayments and accrued income 8,059 9,179 2,713 13,914 Current VAT receivables 23,207 28,668 33,506 28,156 Other receivables 9,245 9,677 14,032 4,728 Total 152, , , ,328 Note 2 Trade and Other Payables (PLN 000) Sep Jun Dec Sep Trade payables 144, , , ,005 Trade payables to related undertakings 7,318 12,817 12,110 13,801 VAT liabilities 1,665 3,109 1,139 3,103 Liabilities under factoring agreements 40,941 29,676 42,153 28,247 Liabilities under investment supplies 1,383 2,385 9,032 17,127 Prepaid deliveries from related undertakings 60,202 77, ,261 7,325 Prepaid deliveries 2,111 1,276 1,684 1,282 Interest expense payable ,152 Liabilities under forward contracts 7,666 22,988 38,260 2,237 Other liabilities 11,485 9,796 6,551 8,217 Total 278, , , , Notes to the Consolidated Cash-Flow Statement (PLN 000) Note 3 Page 23 of 30