AUDITOR'S REPORT. on the financial statements of ENEFI Energiahatékonysági Nyrt. as at

Transcription

1 AUDITOR'S REPORT on the financial statements of ENEFI Energiahatékonysági Nyrt. as at

2 Tel: , Fax: BDO Magyarország Könyvvizsgáló Kft Budapest, Kőér utca 2/a. Laurus Irodaházak C épület 1476 Budapest, Pf.138. Independent Auditor's Report to the Shareholders of ENEFI Energiahatékonysági Nyrt. Audit Report on annual financial statements We have audited the accompanying 2013 annual financial statements of ENEFI Energiahatékonysági Nyrt., which comprises the balance sheet as at 31 December showing a balance sheet total of HUF thousands and a loss for the year of HUF ( ) thousands -, the related profit and loss account for the year then ended and the summary of significant accounting policies, and other explanatory notes. Management's Responsibility for the financial statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with the Hungarian Accounting Law and for maintaining internal controls which are considered necessary by the management to prepare the financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on the audit. We conducted our audit in accordance with Hungarian National Auditing Standards and with the applicable laws and regulations in force in Hungary. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made by management, as well as the evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion the annual financial statements give a true and fair view of the equity and financial position of ENEFI Energiahatékonysági Nyrt. as at 31 December 2013 and of the result of its operation for the year then ended in accordance with the Hungarian Accounting Law. BDO Magyarország Könyvvizsgáló Kft. egy magyar korlátolt felelősségű társaság, az egyesült királyságbeli BDO International Limited garancia alapú korlátolt felelősségű társaság tagja és a független cégekből álló nemzetközi BDO hálózat része. BDO Hungary Audit Ltd., a Hungarian limited liability company, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent firms. Fővárosi Bíróság Cégbírósága, Cégjegyzékszám: Cg Csoportazonosító (Group-ID-Nr): Group VAT Nr.: HU

3 Tel: , Fax: BDO Magyarország Könyvvizsgáló Kft Budapest, Kőér utca 2/a. Laurus Irodaházak C épület 1476 Budapest, Pf.138. Other issues The Company s annual financial statements for 2012 were audited by Deloitte Auditing and Consulting Ltd. who issued a qualified audit opinion in the auditor s report dated on 22 August Other reporting requirements: Reporting on the business report We have examined the accompanying business report of ENEFI Energiahatékonysági Nyrt. for the financial year of The management is responsible for the preparation and fair presentation of the business report in accordance with the Hungarian Accounting Law. Our responsibility is to assess whether or not the accounting information disclosed in the business report is consistent with the financial statements. Our work in respect of the business report was limited to assessing whether the business report is consistent with the financial statements and does not include reviewing other information originated from non audited financial records. In our opinion the 2013 business report of ENEFI Energiahatékonysági Nyrt. is consistent with the disclosures in the financial statements as of 31 December Budapest, BDO Hungary Audit Ltd Budapest, Kőér utca 2/A Registration number: Zsuzsanna Nagy Managing Director Ferenc Baumgartner Certified Auditor Chamber registration No.: This is the translation of the original Hungarian statutory report. In case of any discrepancies, the original Hungarian version prevails. BDO Magyarország Könyvvizsgáló Kft. egy magyar korlátolt felelősségű társaság, az egyesült királyságbeli BDO International Limited garancia alapú korlátolt felelősségű társaság tagja és a független cégekből álló nemzetközi BDO hálózat része. BDO Hungary Audit Ltd., a Hungarian limited liability company, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent firms. Fővárosi Bíróság Cégbírósága, Cégjegyzékszám: Cg Csoportazonosító (Group-ID-Nr): Group VAT Nr.: HU

4 ENEFI Energyefficiency Plc. Statistical code: Co. reg. no.: ENEFI Energyeffeciency Public Limited Company 1134 Budapest, Klapka u.11. Annual financial statements 31 December 2013 Date: Budapest, 20 March 2014 manager (representative) of the company BDO Magyarország Könyvvizsgáló Kft. egy magyar korlátolt felelősségű társaság, az egyesült királyságbeli BDO International Limited garancia alapú korlátolt felelősségű társaság tagja és a független cégekből álló nemzetközi BDO hálózat része. BDO Hungary Audit Ltd., a Hungarian limited liability company, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent firms. Fővárosi Bíróság Cégbírósága, Cégjegyzékszám: Cg Csoportazonosító (Group-ID-Nr): Group VAT Nr.: HU

5 ENEFI Energyefficiency Plc Statistical code Co. reg. no. "A" BALANCE sheet Assets 31 December 2013 (data in HUF thousand) Serial no. Item Changes in the previous year(s) a b e d e 1 A. Fixed assets I. INTANGIBLE ASSETS Capitalised value of foundation and restructuring Capitalised value of experimental development Property rights Intellectual property Goodwill Advances given for intangible assets Value adjustment of intangible assets II. FIXED ASSETS Real estate and related property rights Technical equipment, machines, vehicles Other equipment, accessories, vehicles Livestock Capital projects, renovations Advances given for capital projects Value adjustment of tangible assets III. FINANCIAL INVESTMENTS Permanent interests in associated companies Long-term loans to associated companies Other permanent interests Long-term loans to companies in which other types of interests are held Other long-term loans Long-term debt securities Value adjustment of financial investments Valuation difference of financial investments - - Date: Budapest, 20 March 2014 manager (representative) of the company BDO Magyarország Könyvvizsgáló Kft. egy magyar korlátolt felelősségű társaság, az egyesült királyságbeli BDO International Limited garancia alapú korlátolt felelősségű társaság tagja és a független cégekből álló nemzetközi BDO hálózat része. BDO Hungary Audit Ltd., a Hungarian limited liability company, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent firms. Fővárosi Bíróság Cégbírósága, Cégjegyzékszám: Cg Csoportazonosító (Group-ID-Nr): Group VAT Nr.: HU

6 ENEFI Energyefficiency Plc Statistical code Co. reg. no. "A" BALANCE sheet Assets 31 December 2013 (data in HUF thousand) Serial no. Item Changes in the previous year(s) a b e d e 27 B. Current assets I. INVENTORIES Materials Unfinished production and semi-finished products Animals for breeding and fattening and other livestock Finished products Goods Advances given for inventory II. RECEIVABLES Receivables from the transportation of goods and from services (accounts receivable) Receivables from associated companies Receivables from minority interest companies Bill of exchange receivables Other receivables Valuation difference of receivables Positive valuation difference of derivative transactions III. SECURITIES Interests in associated companies Other interests Own shares, own shareholdings Debt securities for trading purposes Valuation difference of securities IV. FINANCIAL ASSETS Cash desk, checks Bank deposits C. Accruals Accrued revenues Accrued costs and expenses Deferred expenditure Total assets Date: Budapest, 20 March 2014 manager (representative) of the company BDO Magyarország Könyvvizsgáló Kft. egy magyar korlátolt felelősségű társaság, az egyesült királyságbeli BDO International Limited garancia alapú korlátolt felelősségű társaság tagja és a független cégekből álló nemzetközi BDO hálózat része. BDO Hungary Audit Ltd., a Hungarian limited liability company, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent firms. Fővárosi Bíróság Cégbírósága, Cégjegyzékszám: Cg Csoportazonosító (Group-ID-Nr): Group VAT Nr.: HU

7 ENEFI Energyefficiency Plc Statistical code Co. reg. no. "A" Balances Sheet: Liabilities 31 December 2013 (data in HUF thousand) Serial no. Item Changes in the previous year(s) a b e d e 57 D. Total equity I. SUBSCRIBED CAPITAL of which: repurchased ownership stake at nominal value II. REGISTERED BUT NOT YET PAID CAPITAL (-) III. CAPITAL RESERVES IV. PROFIT RESERVE V. COMMITTED RESERVES VI. VALUATION RESERVES Valuation reserves for adjustments Fair value reserve VII. B/S PROFIT/LOSS E. Provisions Provisions for expected commitments Provisions for future costs Other provisions F. Liabilities I. SUBORDINATED LIABILITIES - 74 Subordinated liabilities to associated companies Subordinated liabilities to minority interest companies Subordinated liabilities to other businesses II. LONG TERM LIABILITIES Long-term loans received Convertible bonds Debts related to bond issuance Investment and development loans Other long term loans Long-term liabilities to associated companies Long-term liabilities to minority interest companies Other long term liabilities - - Date: Budapest, 20 March 2014 manager (representative) of the company BDO Magyarország Könyvvizsgáló Kft. egy magyar korlátolt felelősségű társaság, az egyesült királyságbeli BDO International Limited garancia alapú korlátolt felelősségű társaság tagja és a független cégekből álló nemzetközi BDO hálózat része. BDO Hungary Audit Ltd., a Hungarian limited liability company, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent firms. Fővárosi Bíróság Cégbírósága, Cégjegyzékszám: Cg Csoportazonosító (Group-ID-Nr): Group VAT Nr.: HU

8 ENEFI Energyefficiency Plc Statistical code Co. reg. no. "A" Balances Sheet: Liabilities 31 December 2013 (data in HUF thousand) Serial no. Item Changes in the previous year(s) a b e d e 86 III. SHORT TERM LIABILITIES Short-term loans of which: convertible bonds Short-term loans Deposits received from customers Liabilities from the transportation of goods and from services (accounts payable) Debts related to bills of exchange Long-term liabilities to associated companies Short-term liabilities to minority interest companies Other short term liabilities Valuation difference of liabilities Negative valuation difference of derivative transactions G. Accruals Accruals and deferred income Deferred expenses Deferred revenues Total liabilities and shareholders equity Date: Budapest, 20 March 2014 manager (representative) of the company BDO Magyarország Könyvvizsgáló Kft. egy magyar korlátolt felelősségű társaság, az egyesült királyságbeli BDO International Limited garancia alapú korlátolt felelősségű társaság tagja és a független cégekből álló nemzetközi BDO hálózat része. BDO Hungary Audit Ltd., a Hungarian limited liability company, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent firms. Fővárosi Bíróság Cégbírósága, Cégjegyzékszám: Cg Csoportazonosító (Group-ID-Nr): Group VAT Nr.: HU

9 ENEFI Energyefficiency Plc Statistical code Co. reg. no. "A" INCOME STATEMENT (total cost method) 31 December 2013 (data in HUF thousand) Se ria l no. Item 2012 Changes in the previous year(s) a b c d e 1 1 Net revenue from domestic sales Net revenue from export sales I. Net revenue from sales (01+02) Change in self-manufactured inventories ± Capitalised value of self-manufactured equipment II. Value of capitalised own performance (±03+04) - 7 III. Other revenues of which: reversed impairment Material costs Cost of services used Value of other services Cost of goods sold Cost of services sold (intermediated) IV. Material costs ( ) Wages Other expenses of personnel Wage contributions V. Personnel expenses ( ) VI. Depreciation VII. Other expenses of which: impairment A. OPERATING PROFIT/LOSS (I±II+III-IV-V-VI-VII) Date: Budapest, 20 March 2014 manager (representative) of the company BDO Magyarország Könyvvizsgáló Kft. egy magyar korlátolt felelősségű társaság, az egyesült királyságbeli BDO International Limited garancia alapú korlátolt felelősségű társaság tagja és a független cégekből álló nemzetközi BDO hálózat része. BDO Hungary Audit Ltd., a Hungarian limited liability company, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent firms. Fővárosi Bíróság Cégbírósága, Cégjegyzékszám: Cg Csoportazonosító (Group-ID-Nr): Group VAT Nr.: HU

10 ENEFI Energyefficiency Plc Statistical code Co. reg. no. "A" INCOME STATEMENT (total cost method) 31 December 2013 (data in HUF thousand) Se ria l no. Item 2012 Changes in the previous year(s) a b c d e Dividends and interest received (due) of which: from associated companies Exchange rate gain on the sale of equity holdings of which: from associated companies Interest and exchange rate gain on financial investments of which: from associated companies Other interest and interest-type revenue received (due) of which: from associated companies Other income from financial transactions of which: valuation difference VIII. Income from financial operations ( ) Exchange rate loss on financial investments of which: to associated companies Interest payable and interest-type expenditures of which: to associated companies Impairment on interests, securities, bank deposits Other expenses of financial transactions of which: valuation difference IX. Expenses of financial transactions (18+19±20+21) B. PROFIT/LOSS OF FINANCIAL TRANSACTIONS C. PROFIT/LOSS OF ORDINARY ACTIVITIES (±A±B) X. Extraordinary revenues XI. Extraordinary expenditures D. EXTRAORDINARY PROFIT/LOSS (X-XI) E. PROFIT/LOSS BEFORE TAX (±C±D) XII. Tax liabilities F. PROFIT/LOSS AFTER TAX (±E-XII) Profit reserve used for dividends, interests Approved dividends and interests G. B/S PROFIT/LOSS (±F+22-23) Date: Budapest, 20 March 2014 manager (representative) of the company BDO Magyarország Könyvvizsgáló Kft. egy magyar korlátolt felelősségű társaság, az egyesült királyságbeli BDO International Limited garancia alapú korlátolt felelősségű társaság tagja és a független cégekből álló nemzetközi BDO hálózat része. BDO Hungary Audit Ltd., a Hungarian limited liability company, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent firms. Fővárosi Bíróság Cégbírósága, Cégjegyzékszám: Cg Csoportazonosító (Group-ID-Nr): Group VAT Nr.: HU

11 ENEFI Energyefficiency Public Limited Company Notes to the Financial Statements for the year ending 31 December 2013 BDO Magyarország Könyvvizsgáló Kft. egy magyar korlátolt felelősségű társaság, az egyesült királyságbeli BDO International Limited garancia alapú korlátolt felelősségű társaság tagja és a független cégekből álló nemzetközi BDO hálózat része. BDO Hungary Audit Ltd., a Hungarian limited liability company, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent firms. Fővárosi Bíróság Cégbírósága, Cégjegyzékszám: Cg Csoportazonosító (Group-ID-Nr): Group VAT Nr.: HU

12 General notes Company profile Company name: ENEFI Energyefficiency Plc. (name change on: 09 December 2013; registered on: 17 December 2013, former name: E-Star Alternative Energy Service Plc., name change on: 17 February 2011; registered on: 04 March 2011, former name: RFV Plc.) Company s registered capital: HUF 525,314,450 represented by 52,531,445 pieces of ordinary shares with a nominal value of HUF 10 each. 49,891,445 pieces of ordinaries with a nominal value of HUF 10 each were issued in closed circle in 2013 in accordance with the settlement with the creditors of the bankruptcy proceedings. The Company s registered office on the balance sheet date: 1134 Budapest, Klapka utca 11. Branch offices: 8413 Eplény, Veszprémi u. 66/A Romania Mures Tg. Mures Str. Revolutiei Nr. 1 AP. 110 The Company s representatives authorised to sign the financial statements: Csaba Soós 1038 Budapest, Hanga köz 1/E. Norbert Szivek 8057 Zürich, Schaffhauserstrasse 74. Switzerland Tamás Vágány 1021 Budapest, Budakeszi út 71/A 1ép. 2a. Date of establishment as a private joint stock company: 01 March Registered: 12 June 2006 Date of establishment as a public joint stock company: 12 March 2007 registered on: 10 May 2007 Tax number: Co. reg. no.:

13 The company was under bankruptcy proceeding from 13 December 2012 until 30 August This bankruptcy proceeding was terminated with a settlement with the creditors in accordance with the details in a separate paragraph. Core activity: Steam and air conditioning Description of the Company: The Company (its legal predecessor) was established on 29 June 2000 with the aim of implementing for future its clients primarily energy-related investments, and by operating these projects in the long term, efficiently supplying energy to its clients. The Company provides its services in the context of an ESCO (Energy Services Company) structure, which is a form of PPP (public-private partnership) arrangement specific to the energy sector. It implements energysector projects in proprietary investments the cost of which is typically recouped from the resulting energy savings which it subsequently maintains and operates in the long term following completion of the initial investment. In this manner the Company uses the assets created in the investment (heat supply, public lighting, electrical energy saving services, etc.) to provide energy services, typically under an 8-15-year contract, depending on the rate of return. The Company has until now generally financed its projects from bank loans. It issued shares and bonds in addition to taking out loans for financing the projects of its subsidiaries and the EETEK Limited transaction. The main services (business lines) of Enefi Energyefficiency Plc. include the following: Cost-effective electrical energy supply, Public lighting, lighting power regulation, Heat supply combined with the modernisation of heating systems, Electricity supply combined with the modernisation of interior lighting, Energy systems reconstruction and long-term heat supply for buildings constructed using prefabricated technologies. 12

14 Permanent interests in associated companies as at 31 December 2013: 1 Company name Country Share capital ENEFI Energyefficiency Plc. Share in equity (%) Hungary 525,314,450 HUF - - Voting right (%) 2 E-STAR ESCO Kft. Hungary 3,000,000 HUF 100% 100% 3 E-STAR Geotherm Kft. Hungary 3,000,000 HUF 100% 100% 4 E-STAR Management Zrt. Hungary 5,000,000 HUF 100% 100% E-STAR Távhőfejlesztési Kft. Veszprém Megyei Fűtés- és Melegvíz-szolgáltató Non- Profit Kft. RFV Józsefváros Szolgáltató Kft. Fejér Megyei Energiaszolgáltató Nonprofit Kft. Hungary 1,000,000 HUF 100% 100% Hungary 510,000 HUF 49% 50% Hungary 3,000,000 HUF 49% 70% Hungary 510,000 HUF 49% 51% 9 RFV Slovak s.r.o. Slovakia 200,000 SKK 100% 100% 10 E-STAR Polska Spółka Z o. o. Poland 31,965,600 PLN 100% 100% 11 E-STAR Management Polska Spółka z o. o. Poland 5,250,500 PLN 100% 100% E-STAR Elektrocieplownia Mielec Spółka z o. o. EC-Energetyka Spółka Z o. o. Poland 9,994,000 PLN 85.37% 85.37% Poland 300,000 PLN 51.66% 51.66% 14 Termoenergy SRL Romania 6,960 RON 99.50% 99.50% E-STAR Centrul de Dezvoltare Regionala SRL E-STAR ZA Distriterm SRL E-STAR Energy Generation SA Romania 525,410 RON 100% 100% Romania 40,000 RON 51% 51% Romania 90,000 RON 99.99% 99.99% 18 E-STAR Mures Energy SA Romania 90,000 RON 99.99% 99.99% E-STAR Alternative Energy SA E-STAR Heat Energy SA from January 2013: SC Faapritek SA Romania 90,000 RON 99.99% 99.99% Romania 90,000 RON 99.99% 99.99% 13

15 21 22 E-STAR CL Distriterm SRL E-STAR Investment Management SRL from January 2013 under liquidation Romania 200 RON 100% 100% Romania 15,000 RON 99.93% 99.93% 23 EETEK Limited Cyprus 1,000,000 EUR 100% 100% E-STAR Kockázati Tőkealap-kezelő Zrt. E-Star Reorganizáció-01 Kft. Hungary 5,000,000 HUF 100% 100% Hungary 500,000 HUF 100% 100% 26 E-Star Transzfer-02 Kft. Hungary 500,000 HUF 100% 100% 27 E-Star Debt-Equity-03 Kft. Hungary 500,000 HUF 100% 100% 28 E-Star Capital-Share-04 Kft. Hungary 500,000 HUF 100% 100% * Euro Energetyka was out of scope of consolidation in E-Star Elektrocieplownia Gorlice Spółka z o. o. was sold in The final settlement of E-Star AR Energy SA and E-Star OR District Heating SA was completed in E-Star Mures Energy SA declared bankruptcy. E-Star ZA Distriterm SRL and E-Star Investment Management SRL are under liqiudation. E-Star CL Distriterm SRL is under final settlement. Detailed core information relating to the subsidiaries as at 31 December 2013: Detailed information relating to E-Star ESCO Kft. s subsidiaries: 1 2 Company name Country Share capital Veszprém Megyei Non-profit Kft. Fejér Megyei Nonprofit Kft. Share in equity (%) Voting right (%) Hungary 510,000 HUF 49% 50% Hungary 510,000 HUF 49% 51% 14

16 Detailed information on E-Star Alternative Energy S.A. s subsidiaries: 1 2 Company name Country Share capital E-Star CL Distriterm SRL E-Star Investment Management SRL Share in equity (%) Voting right (%) Romania 200 RON 100% 100% Romania 15,000 RON 99.93% 99.93% Detailed information on E-Star Geotherm Kft. s subsidiaries: Company name Country Share capital E-Star Reorganizáció-01 Kft. E-Star Transzfer-02 Kft. E-Star Debt-Equity- 03 Kft. E-Star Capital- Share-04 Kft. Share in equity (%) Voting right (%) Hungary 500,000 HUF 100% 100% Hungary 500,000 HUF 100% 100% Hungary 500,000 HUF 100% 100% Hungary 500,000 HUF 100% 100% 4 companies (hereinafter project company) owned by E-Star Geotherm Kft. were established for conducting bankruptcy proceedings. Detailed information on the companies owned by E-Star Polska Spółka z o. o.: 1 2 Company name Country Share capital E-Star Elektrociepłownia Mielec Spółka z o. o. E-Star Management Polska Spółka z o. o. Share in equity (%) Voting right (%) Poland 9,994,000 PLN 85.37% 85.37% Poland 5,250,500 PLN 100% 100% 15

17 Information on the EC Mielec companies/subsidiaries: 1 Company name Country Share capital EC-Energetyka Spółka z o. o. Share in equity (%) Voting right (%) Poland 300,000 PLN 51.66%* 51.66* Main features of the accounting policy: The Company keeps its books and accounting records in compliance with the accounting principles set forth in Act C of 2000 on Accounting (hereinafter Act on Accounting ), as amended. In its accounting policy, the Company sets out its valuation methods and procedures. The annual financial statements include: - Balances Sheet A - type A income statement prepared using the total cost method - notes to the financial statements. Auditing services provided by: BDO Magyarország Könyvvizsgáló Kft. Auditing services provided by: Ferenc Baumgartner (Registration no: ) Accounting services provided by: Róbert Heim 2027 Dömös Kőrössy u. 10. (Registration No: ) Balance sheet date: 31 December 2013 Date of balance sheet preparation: 20 January 2014 Applied valuation procedures and the means of accounting for depreciation: Assets Fixed assets - Within the group of intangible assets, property rights and intellectual products are written off over a period of three years. - Tangible assets: In compliance with the Act on Accounting, the Company values tangible assets on a case-by-case basis. - In case of purchases, the acquisition cost is the gross value. 16

18 - Accounting for depreciation: ENEFI Energyefficiency Public Limited Company Tangible assets with an acquisition cost of less than HUF 100,000 are written down to zero in one sum when taken into use for their intended purpose. In the case of tangible assets costing more than HUF 100,000 the straight-line method is applied. Amortisation and write-off rates used: Description Applicable rate Intangible assets 20-33% Real estate and related property rights 6% Technical equipment, machines, vehicles 6-33% Other equipment, accessories, vehicles 20-33% Depreciation is recognised monthly, on a pro rata basis. No depreciation is recognised on land and artworks. - The Company does not do value adjustment. - Assets that do not serve the Company s activities over long term are reclassified as current assets. - Extraordinary depreciation must be recognised on intangible and tangible assets if the carrying value of the intangible or tangible asset (excluding capital projects) is permanently and significantly higher than the market value of the same asset. - If the carrying value of such assets is lower than the original acquisition cost of the assets, and the reasons for their valuation at a lower value no longer apply, or only part, the write-downs must be ceased in order to ensure a true and fair picture of their value, and the asset must be revalued at its market value (reversal). Financial investments: - In the case of investments embodying an ownership share, impairment must be recognised if the difference, entailing a loss, between the carrying value and the market value of the investment appears to be permanent, and is significant. Current assets Inventories: - Among inventories the Company recognises subcontractors performances related to the maintenance of any secondary systems, which it invoices on at the appropriate time. In addition to this the services connected to the projects in Romania are also stated here, which then are recharged upon the realisation of the projects. - If items on inventory are not invoiced, impairment is recognized by the Company. Receivables: Receivables included in the records on the balance sheet date of 31 December 2013 are rated on a case-by-case basis as follows: - full-value - overdue 17

19 - doubtful - unrecoverable receivables. ENEFI Energyefficiency Public Limited Company Based on an aging list, receivables are valued individually taking into account financial performance following the balance sheet date, and impairment is recognised in the extent required. Liabilities Shareholders equity: - Subscribed capital: the nominal value recorded in the Company s articles of association and registered by the Company Court in compliance with the provisions of the Act on Accounting. - Capital reserve: reserve placed at the disposal of the Company; if shares are issued, the capital surplus. - Profit reserve: as per the accounting records. - Committed reserves: items set out in the Act on Accounting as items to be carried over from the profit reserve. - Development reserve: reserve occasionally set aside by the Company in compliance with the Act on Corporate Taxation, and reversed when new capital projects are capitalised. The amounts appropriated from the profit reserve due to the repurchase of own shares are stated here. - Balance sheet profit: contribution made to the equity, equal to the amount stated in the income statement. Provisions: Funds set aside to the charge of the pre-tax profit for expected liabilities and future costs. Sales revenue: The Company accounts for purchased and self-manufactured inventory sold and services performed in the period concerned under sales revenue. (Energy fee, public lighting, service fee, other revenue). Costs: The following is accounted for under costs: materials purchased, the costs of services used, the costs of other services, wages and taxes on wages, other personnel expenses and depreciation in the period under review. Material error An error is considered material if, in the year in which it is discovered, the total amount of errors (regardless whether it is positive or negative) or the impact of errors that increase or decrease the profit or loss and the shareholders equity found in the context of various audits in respect of a given year exceeds the material error limit defined in accounting policy. An error is always considered material if, in the year in which it is discovered, the total amount of errors (regardless whether it is positive or negative) or the impact of errors that increase or decrease the profit or loss and the shareholders equity found in the context of various audits in respect of a given year exceeds 2 percent of the balance sheet total of the business year audited or, if 2 percent of the balance sheet amount not exceeds HUF 1 million, it exceeds HUF 1 million. 18

20 Not material error ENEFI Energyefficiency Public Limited Company An error is not considered material if, in the year in which it is discovered, the total amount of errors (regardless whether it is positive or negative) or the impact of errors that increase or decrease the profit or loss and the shareholders equity found in the context of various audits in respect of a given year (separately by specific years) does not exceed the material error limit. Errors and the impacts of errors that are considered material are presented in a separate column in the balance sheet and the income statement of the given year, in accordance with the Act on Accounting. Errors and the impacts of errors that are considered material on the basis of the above must be recorded, after they are discovered, on a separate general ledger under the given category of accounts and indicated the year of the error. Presentation of the key factors impacting the operation and the business of the Company in the reporting period: Bankruptcy proceedings Two main events determined operation of the Company group in 2013: the bankruptcy proceedings initiated by the parent company and the implementation of the settlement with the creditors. Detailed description of the bankruptcy proceedings will be presented in the next chapter. Changes at the group level Hungary: Hungarian operation of the company group was accumulated a HUF 600 million tax deficit in the beginning of The debt of E-Star ESCO Kft. was HUF 460 million, tax deficit of E-Star Management Zrt. was HUF 160 million. For both companies instalment payment request has been submitted to the National Tax and Customs Administration of Hungary (NTCA). E-Star ESCO Kft. and NTCA entered into a 15-month instalment payment agreement in May 2013 to pay the tax deficit. Instalment payment request of E-Star Management Zrt. was rejected. In June 2013 E- Star Polska Sp. z o.o. sold its 72% share in EC Gorlice Sp. z o.o. The purchase price was PLN 7.4 million. The price of transfer of the loan given by EETEK Ltd. to EC Gorlice Sp. z o.o. - and which loan was assigned to EC Mielec Sp. z o.o. in 2012 for improving liquidity of the group - was included in this purchase price. So from the above purchase price appropriate amount of HUF 200 million was entitled to EC Mielec Sp. z o.o., while the remaining approximately HUF 320 million was used for reducing outstanding tax debt of the group to the NTCA. E-Star Management Zrt. paid its tax debt to the NTCA in the summer of 2013 so the risk of initiate liquidation by NTCA because of outstanding tax debt was eliminated. E-Star ESCO Kft. complied with the obligation of paying 6 monthly instalments until year-end because all were prepaid. As the Company has previously indicated, E-Star ESCO Kft. will be able to pay additional eight (8) monthly instalments due in 2014 (in previous financial statements included the wrong year 2013). NTCA impounded certain asset items of E-Star ESCO Kft. as for collateral of the instalments. 19