FABRYKA FARB I LAKIERÓW ŚNIEŻKA S.A. REPORT ON REVIEW OF FINANCIAL STATEMENTS FOR YEAR ENDED 31 DECEMBER 2011

Transcription

1 FABRYKA FARB I LAKIERÓW ŚNIEŻKA S.A. REPORT ON REVIEW OF FINANCIAL STATEMENTS FOR YEAR ENDED 31 DECEMBER 2011

2 I. GENERAL PART 1. General information Fabryka Farb i Lakierów Śnieżka S.A. Fabryka Farb i Lakierów Śnieżka S.A. (the "Company") was formed by a notarial deed of 16 January The Company is based in Lubzina 34a. On 12 November 2001 the Company was entered into the Register of Entrepreneurs of the National Court Register under KRS no. KRS The Company was granted a tax identification number NIP on 5 March 1998 and statistical number REGON: on 24 February The Company is a parent company of Fabryka Farb i Lakierów "Śnieżka" S.A. Capital Group. Information on transactions with affiliates was presented in note 34 of the accounting principles (policy) and additional notes ("additional information") to the audited financial statements for the year ended 31 December The object of the Company is production of paints, varnishes, adhesives and solvents (PKD 2030Z). On 31 December 2011, the initial capital of the Company amounted to PLN 13,551 thousand. As at this date, the Company's equity was PLN 173,862 thousand. According to data presented in note 29 of additional information in the attached financial statements, the ownership structure of the Company was as follows: Number of shares Number of votes Par value of shares Percentage in share capital Jerzy Pater 2,541,667 3,208,335 2,541, % Stanisław Cymbor 2,541,667 3,208,335 2,541, % Piotr Mikrut 1,254,166 1,787,498 1,254, % Rafał Mikrut 1,254,167 1,254,167 1,254, % Amplico OFE 1,710,696 1,710,696 1,710, % Others 4,248,313 4,381,645 4,248, % Total 13,550,676 15,550, % According to the data received from the Company, in the financial year, there were the following changes made in the ownership structure of the Company: The share of AMPLICO Otwarty Fundusz Emerytalny in the Company's share capital increased from 5.88% in 2010 to 12.62% in In the reporting period and from the balance sheet date to the opinion date, the initial capital of the Company did not change. As at 23 April 2012, the members of the Management Board of the Company were: Piotr Mikrut President of the Management Board Witold Waśko Member of the Management Board Joanna Wróbel-Lipa Member of the Management Board In the reporting period and from the balance sheet date to the opinion date, there were the following changes made in the Management Board of the Company: Mrs Walentyna Ochab resigned from being a Member of the Management Board on 5 May Mrs Joanna Wróbel-Lipa was appointed a Member of the Management Board on 6 May 2011.

3 2. Financial statements Fabryka Farb i Lakierów Śnieżka S.A. On 21 June 2005 the General Meeting of Shareholders decided to prepare the Company's financial statements pursuant to the International Financial Reporting Standards, approved by the EU. 2.1 Auditor's opinion and audit of financial statements Ernst & Young Audit sp. z o.o. with the registered office in Warsaw, at Rondo ONZ 1 is an entity authorised to audit financial statements, entered into the list under number 130. On 3 June 2011 Ernst & Young Audit sp. z o.o. was selected by the Supervisory Board to audit financial statements of the Company. Ernst & Young Audit sp. z o.o. and the key auditor meet the conditions provided for in art. 56 (3) and (4) of the Act on Statutory Auditors and their Governing Council, Entities Authorised to Audit Financial Statements and Public Supervision of 7 May 2009 (Journal of Laws of 2009, No. 77, item 649 as amended) to provide an unbiased and impartial opinion on the financial statements. Pursuant to the agreement entered into on 22 July 2011, we audited the financial statements for the year ended 31 December 2011 together with the Management Board of the Company. Our task was to give an opinion on the financial statements based on the conducted audit. The procedures implemented in the course of auditing of the financial statements were designed in such a way as to allow for giving an opinion on the financial statements as a whole. Our procedures did not include additional information not affecting the financial statements as a whole. On the basis of our audit, on 23 April 2012 we expressed the following auditor's opinion without any objections: "For the General Meeting of Shareholders and the Supervisory Board of Fabryka Farb i Lakierów "Śnieżka" S.A." 1. We have audited the attached financial statements for the year ended 31 December 2011 of Fabryka Farb i Lakierów "Śnieżka" S.A. ("Company") with the registered office in Lubzina 34a, including the statement of comprehensive income for the period from 1 January 2011 to 31 December 2011, the statement of financial position as at 31 December 2011, the cash flow statement and the statement of changes in equity for the period from 1 January 2011 to 31 December 2011, the accounting principles (policies) and additional explanatory notes (the "attached financial statements"). 2. The Management Board of the Company is responsible for the reliability and clarity of the attached financial statements and their preparation in accordance with the applicable accounting principles (policy) as well as for the correctness of books of account. Moreover, the Management Board of the Company and members of the Supervisory Board are obliged to ensure compliance of the financial statements and the management report with the requirements provided for in the Accounting Act of 29 September 1994 (Journal of Laws no. 152 of 2009, item 1223, as amended the "Accounting Act"). Our task was to review the attached financial statements and express an opinion based on the audit whether they comply with the applicable accounting principles (policy) in all material aspects and whether they present the Company's material and financial standing plus the financial performance in a reliable and clear way in all material aspects, as well as whether the books of account on which they are based are properly kept in all material aspects. 3. We have audited the attached financial statements in accordance with the following laws and standards: chapter 7 of the Accounting Act,

4 Fabryka Farb i Lakierów Śnieżka S.A. national standards of financial revision as issued by the Polish National Chamber of Statutory Auditors, in such a way as to obtain reasonable certainty that these statements are free of material irregularities. In particular, the audit included a verification, mainly randomly, of documents relevant to the amounts and information contained in the attached financial statements. It also involved assessment of correctness of the accounting principles applied by the Management Board and material estimates done by the Management Board, as well as an overall evaluation of the presentation of the financial statements. In our opinion, this audit provided us with sufficient basis for expressing an opinion on the attached financial statements considered as a whole. 4. The financial statements for the previous financial year ended 31 December 2010 was audited by a key auditor acting on behalf of another authorised authority, who expressed his opinion about these financial statements without any objections on 19 April In our opinion, the attached financial statements in all material aspects: provide an accurate and clear presentation of all the information essential to give an opinion on the financial result for the period from 1 January 2011 to 31 December 2011, as well as the economic and financial standing of the Company audited as at 31 December 2011; have been prepared in compliance with the International Financial Reporting Standards as adopted by the EU and pursuant to all books of account kept in a correct manner; comply with the legal regulations governing the preparation of financial statements and the provisions of the Company s Articles of Association that affect the form and contents of the financial statements. 6. We have reviewed the report of the Management Board on Company's operations for the period from 1 January 2011 to 31 December 2011 and the principles governing the preparation of annual financial statements (the "Management Report"), and we have found the information in the attached financial statements compliant with this report. The information presented in the Management Report takes into account appropriate provisions of the Regulation of the Minister of Finance of 19 February 2009 on current and periodic information to be submitted by issuers of securities and conditions for considering as equivalent information required under the law of a non-member state (Journal of Laws, No. 33, item 259, as amended the "Regulation on current and periodic information"). We audited the financial statements of the Company in the period from 25 July 2011 to 23 April 2012, including at the seat of the Company from 25 July 2011 to 5 August 2011, from 12 December 2011 to 14 December 2011 and from 5 March 2012 to 15 March Statements received and data availability The Management Board confirmed its responsibility for the reliability and clarity of the financial statements and their preparation in accordance with the applicable accounting principles (policy) as well as represented that it made available to us all the financial data, books of account and any other required documents, and provided necessary explanations. We also received a written statement dated 23 April 2012 from the Management Board of the Company about: complete disclosure of data recognised in the books of account, recognition of all contingent liabilities in the financial statements, and disclosing in the financial statements of any significant events which took place after the balance sheet date until the statement date.

5 Fabryka Farb i Lakierów Śnieżka S.A. The statement confirmed that the information submitted to us was accurate and true to the best knowledge of the Management Board of the Company, and that it covered all the events that could influence the financial statements. 2.3 Information on financial statement of Company for the previous business year The financial statements of the Company for the year ended 31 December 2010 was audited by Elżbieta Pudło, key auditor no. 9950, acting on behalf of ReVision Rzeszów Józef Król sp. z o.o. with the registered office in Rzeszów, entered into the list under number The key auditor acting on behalf of the authorised entity expressed an opinion about this financial statements for the year ended 31 December 2010 without any objections. The financial statements of the Company for the year ended 31 December 2010 were approved by the General Meeting of Shareholders on 17 June 2011, whereby the shareholders adopted a resolution pursuant to which the net profit for 2010 and the undistributed profit brought forward would be distributed in the following way: dividend for shareholders 23,036 supplementary capital 12,217 remuneration for founding shareholders ,972 The financial statements for the financial year ended 31 December 2010 including an auditor's opinion, a copy of the resolution on approval of the financial statements, a copy of the resolution on distribution of profit and the management's report were submitted to the National Court Register on 27 June The balance sheet as at 31 December 2010, the profit and loss account, the statement of changes and the cash flow statement for the year ended 31 December 2010 including an auditor's opinion and a copy of the resolution on approval of the financial statements and a copy of the resolution on distribution of profit were published on 26 January 2012 in the Official Gazette of the Government of the Republic of Poland B (Monitor Polski B) number 364. The approved closing balance as at 31 December 2010 was correctly entered into books of account as an opening balance as at 1 January Financial situation 3.1 Basic information and financial ratios Presented below are the selected ratios characterising the Company s financial situation in the years , calculated pursuant to financial data contained in the financial statements for the year ended 31 December Due to the change in presentation of particular items of the financial statements, referred to in note 8 of the accounting principles (policy) and additional notes, no ratios were shown for the year ended 31 December balance sheet total 318, ,605 Equity 173, ,806 net profit/loss 1,812 35,963 return on assets (%) 0.57% 9.97% net profit/loss x 100 total assets

6 Fabryka Farb i Lakierów Śnieżka S.A. return on equity (%) 0.93% 19.73% net profit/loss x 100 equity at the beginning of the period net return on sales (%) 0.43% 8.68% net profit/loss x 100 revenue on sales of products, goods and materials liquidity liquidity ratio I total current assets short-term liabilities liquidity liquidity ratio III Cash short-term liabilities receivables turnover rate 61 days 82 days trade receivables x 365 days revenue on sales of products, goods and materials repayment period 52 days 52 days trade liabilities x 365 days value of goods and materials sold + manufacturing cost of products sold inventory turnover rate 83 days 68 days inventory x 365 days value of goods and materials sold + manufacturing cost of products sold sustainability of financing structure (%) 55.47% 55.37% (equity + provisions and long-term liabilities) x 100 total equity and liabilities debt-to-assets ratio (%) 45.38% 45.70% (total liabilities-equity) x 100 total assets inflation rate: average per year 4.30% 2.60% December to December 4.60% 3.10%

7 3.2 Comment Fabryka Farb i Lakierów Śnieżka S.A. The presented ratios indicate the following trends: In 2011 the assets profitability ratio was 0.57% and decreased from 9.97% as compared to In 2011 the equity profitability ratio was 0.93% and decreased from 19.73% as compared to In 2011 the net return on sales ratio was 0.43% and decreased from 8.68% as compared to As at 31 December 2011 the liquidity ratio I was 1.12 and decreased from 1.24 as compared to the 31 December As at 31 December 2011 the liquidity ratio III was 0.02 and decreased from 0.08 as compared to the 31 December The receivables turnover rate for 2011 was 61 days and was lower as compared to 82 days in In 2011 the repayment period was 52 days and did not change as compared to The inventory turnover rate for 2011 was 83 days and was higher as compared to 68 days in As at 31 December 2011 the sustainability of financing structure ratio was 55.47% and was higher as compared to 55.37% as at 31 December As at 31 December 2011 the debt-to-assets ratio was 45.38% and was lower as compared to 45.70% as at 31 December Continuity of operations During our audit nothing attracted our attention which could make us believe that the Company was not able to continue its operations for at least 12 months as from 31 December 2011 due to intentional or obligatory discontinuation or material limitation of its activities. In note 7 of additional information to the audited financial statements of the Company for the year ended 31 December 2011, the Management Board indicated that the financial statements were drawn up on the assumption that the Company would continue as a going concern for the period not shorter than 12 months from 31 December 2011 and that there were no circumstances indicating the risk to the Company's continuation as a going concern.

8 II. DETAILED REPORT 1. Correctness of applied accounting system Fabryka Farb i Lakierów Śnieżka S.A. The Company's accounting is kept using the IFS computer system at the Company's seat. The Company has up-to-date documentation referred to in art. 10 of the Accounting Act of 29 September 1994 (Journal of Laws No. 152 of 2009, item 1223 as amended the "Accounting Act"), including a corporate chart of accounts approved by the Management Board of the Company. During the audit, we did not notice any material irregularities in the books of account, which could affect the audited financial statements and could not be remedied, including: grounds for and continuity of applied accounting principles (policy), accuracy, correctness and correspondence of entries in the books of account, documentation of business transactions, correct opening of the books of account based on the balances of the approved balance sheet for the previous period, correspondence of entries with accounting documents and the financial statements, meeting the conditions applicable to protection of accounting documents and keeping books of account and financial statements. 2. Assets, liabilities and equity and items shaping results of Company s activity The structure of assets and liabilities of the Company's balance sheet, equity and items shaping the result of its activity were presented in the audited financial statements for the year ended 31 December The inventory of assets and liabilities was made pursuant to the Accounting Act. The inventory differences were settled and presented in the books of account for Additional information The notes to the financial statements for the year ended on 31 December 2011 were prepared in all material aspects in line with the International Financial Reporting Standards as approved by the EU. 4. Management Report We have reviewed the report of the Management Board on Company's operations for the period from 1 January 2011 to 31 December 2011 and the principles governing the preparation of annual financial statements (the "Management Report"), and we have found the information in the attached financial statements compliant with this report. The information presented in the Management Report takes into account appropriate provisions of the Regulation of the Minister of Finance of 19 February 2009 on current and periodic information to be submitted by issuers of securities and conditions for considering as equivalent information required under the law of a non-member state (Journal of Laws, No. 33, item 259, as amended). 5. Compliance with law We have obtained a written confirmation from the Management Board that in the reporting year there were no infringements of any provisions of law and articles of association, which could affect the financial statements. on behalf of: Ernst & Young Audit sp. z o.o. Rondo ONZ Warsaw

9 Fabryka Farb i Lakierów Śnieżka S.A. Registration No. 130 Key Auditor Leszek Lerch Auditor no Warsaw, 23 April 2012