Consolidated Quarterly Report QSr 1 / 2012 quarter / year

Transcription

1 GRAJEWO QSr 1/2012 POLISH FINANCIAL SUPERVISION AUTHORITY Consolidated Quarterly Report QSr 1 / 2012 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 1st quarter of the financial year 2012, covering the period from January 1st to March 31st 2012, 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: May 14th 2012 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 FINANCIAL HIGHLIGHTS 1 quarter cumulative / 2012 Jan 1-Mar PLN 000 EUR quarter cumulative / 2011 Jan 1-Mar Condensed consolidated financial statements data 1 quarter cumulative / 2012 Jan 1-Mar quarter cumulative / 2011 Jan 1-Mar 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)* 0,88-0,03 0,21-0,01 XX. Diluted earnings per ordinary share (PLN/EUR)* 0,88-0,03 0,21-0,01 XXI. Book value per share (PLN/EUR) 11,70 11,42 2,81 2,58 XXII. Diluted book value per share (PLN/EUR) 11,70 11,42 2,81 2,58 XXIII. Declared or paid dividend per share (PLN/EUR) 0,00 0,00 0,00 0,00 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)* 0,64 0,21 0,15 0,05 XLII. Diluted earnings per ordinary share (PLN/EUR)* 0,64 0,21 0,15 0,05 XLIII. Book value per share (PLN/EUR) 10,45 10,58 2,51 2,40 XLIV. Diluted book value per share (PLN/EUR) 10,45 10,58 2,51 2,40 XLV. Declared or paid dividend per share (PLN/EUR) 0,00 0,00 0,00 0,00 * Based on annualised profit data in lines : X-XV, XXXII-XXXVII are presented accordingly: column.1 - for column.2 - for column.3 - for column.4 - for

3 Consolidated Quarterly Report QSr 1/2012 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

4 PRESIDENT'S INTRODUCTION TO THE Q CONSOLIDATED REPORT We are pleased to present our Q report. In the first three months of 2012, we recorded a year-onyear growth in sales. Sales revenue in Q went up 12% compared with the same period a year ago, with sales margins staying at roughly the same level. The Group s performance was driven primarily by the positive effects of its marketing and operational efforts, further supported by depreciation of the Polish currency. Relative to Q1 2011, there was an upturn in both prices and sales volumes. Financial performance improved on the back of favourable market conditions prevailing both at home and in Russia. In Poland, which is one of the world's leading furniture producers, there was a stronger growth in the number of products sold (year on year), despite the fact that western manufacturers' surplus capacities were a source of considerable pricing pressure. The continuity of production processes was maintained. Sales on the Russian market account for more than 20% of the Group's total sales. Both in 2011 and in Q1 2012, the Russian economy showed signs of a vigorous recovery. This was reflected in a double-digit sales growth in the period January-March The capacities of the main production lines were utilised at nearly 90%, which ensured good distribution of fixed costs. Q ushered in a moderate year-on-year rise in the prices of key raw materials, including paper and energy. There was also an increase in the prices of wood, even though the prices of round timber remained stable. The trend is attributable to the energy sector's demand for wood processing waste, putting strong upward pressure on the prices. The Group s profitability on operational level improved, driven also by the continued implementation of cost optimisation measures. Despite the adverse influence of seasonality effect, growing prices of strategic raw materials and significant financing costs, the Group recorded PLN 12.7m in consolidated net profit attributable to owners of the parent comparing to PLN2.1m in the same period a year ago. Capital expenditure budgeted for 2012 is over PLN 40m. CAPEX projects, limited largely to modernisation and replacement investment, are progressing as planned. As at March 31st 2012, the Group was in compliance with the financial covenants under its credit facility agreements. The Management Board of Pfleiderer Grajewo S.A. aims to consistently pursue its deleveraging policy. Despite its active hedging policy, the Group remains exposed to currency risk, largely of non-cash nature, related to potential fluctuations in the PLN/EUR and RUB/EUR exchange rates, which may affect its future performance. The market environment in 2012 will be largely determined by the pace of economic growth in response to the Europe-wide sovereign debt crisis. Yours faithfully, Wojciech Gątkiewicz President of the Management Board Page 2

5 II. GENERAL INFORMATION PFLEIDERER GRAJEWO GROUP 1. General Information on Pfleiderer Grajewo S.A. (Parent) Pfleiderer Grajewo S.A. is the Parent of the Pfleiderer Grajewo Group. The Parent, 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 Section B of the Commercial Register 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 Parent s registered office is located at ul. Wiórowa 1, Grajewo, Poland. On September 18th 2002, the Parent's Management Board received a decision of the District Court of Białystok to enter the Parent's new name in the National Court Register. Accordingly, on September 18th 2002, the Parent s name was changed from Zakłady Płyt Wiórowych S.A. to Pfleiderer Grajewo S.A. In accordance with the Polish Classification of Business Activities, the Parent s business is registered under No Z. 2. Composition of the Management Board and the Supervisory Board of the Parent and changes in the reporting period As at the end of the reporting period, the composition of the Parent's Management Board was as follows: 1. Wojciech Gątkiewicz President 2. Rafał Karcz Member 3. Dariusz Tomaszewski Member 4. Radosław Wierzbicki Member Composition of the Supervisory Board as at March 31st 2012: 1. Michael Wolff Chairman of the Supervisory Board 2. Hans H. Overdiek Member 3. Hans-Kurt von Werder Member 4. Jan Woźniak Member 5. Hans-Joachim Ziems Member On March 7th 2012, Mr Hans-Joachim resigned from the position of a member of the Parent's Supervisory Board with effect from April 10th In accordance with a resolution of the Extraordinary General Shareholders Meeting, on April 10th 2012, Mr Jochen Schapka was appointed as Member of the Supervisory Board of Pfleiderer Grajewo S.A.. Page 3

6 3. Periods covered by the consolidated financial statements and comparative data The financial statements of Pfleiderer Grajewo S.A. (Parent), 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. (subsidiaries) were consolidated using the full method. Financial information for the comparative period of Q comprises separate financial statements of Pfleiderer Grajewo S.A. prepared in accordance with the IFRS, and separate 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 Parent 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 prepared on the assumption that the Parent would continue as a going concern in the foreseeable future. As at the date of publication of the financial statements, no facts or circumstances were identified that would indicate any threat to the Group continuing as a going concern. The Group's financial statements for Q and comparative data were prepared in accordance with the accounting policies presented in the most recent annual financial statements of the Group and give a true, fair and clear view of the Group s assets, financial standing and financial performance. (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; their data was 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; their data was also restated for the purpose of consolidation. The consolidated financial statements, prepared on the basis of the accounting records of the Group companies, reflect adjustments made to present 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. The consolidated financial statements of the Group and the separate financial statements of the Parent prepared as at March 31st 2012 have not been audited. The separate financial statements of the Parent as at March 31st 2012 were prepared in accordance with the requirements of the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Committee (IASC), as well as with the interpretations issued by the IASC Standing Interpretations Committee. Page 4

7 IV. FINANCIAL HIGHLIGHTS 1. Group s consolidated revenue and changes thereof The table below presents a comparison of the Q and Q data. Statement of comprehensive income Q Jan 1- Mar Q Jan 1- Mar (PLN 000) % (PLN 000) % /A/ /B/ /C/ /D/ Revenue 449, % 402, % Cost of sales (370,483) (82.4%) (331,139) (82.2%) Gross profit 79, % 71, % Other income 4, % 1, % Distribution costs (27,877) (6.2%) (25,881) (6.4%) General and administrative expenses (22,598) (5.0%) (20,584) (5.1%) Other expenses (4,807) (1.1%) (5,138) (1.3%) Operating profit 27, % 21, % Finance income 12, % 4, % Finance expenses (23,905) (5.3%) (23,835) (5.9%) Net finance income/(expenses) (11,599) (2.6%) (18,859) (4.7%) Profit before tax 16, % 3, % Corporate income tax (2,616) (0.6%) (2,768) (0.7%) Net profit 13, % % Net profit/loss attributable to noncontrolling interests % (1,816) (0.5%) Net profit attributable to owners of the parent 12, % 2, % EBITDA 47, % 41, % Comments on the comprehensive income statement Revenue posted by the Group in Q rose by 11.6% year on year. This significant increase is attributable to the Group's intensified operational and marketing activities, recovery of the wood-based board market and the furniture sector, as well as to the depreciation of the Polish currency against the euro. In Q1 2012, the sales margin was 17.6% and stayed relatively flat year on year. Operating profit expanded by 27%, demonstrating stronger growth than revenue. This can be attributed to consistently pursued sales efforts and the cost discipline. The significant increase in finance income in Q resulted from positive exchange differences of PLN 12.1m. There were no significant changes in the Group's finance expenses in Q The net finance expense is attributable primarily to interest on bank borrowings and other debt instruments. In Q1 2012, the Group's net profit was positive, and rose by PLN 13.4m year on year. This positive result is attributable to higher prices of the Group's products and a lower loss on financing activities. Page 5

8 2. Net cash position In Q1 2012, the Group s net debt under bank borrowings, finance leases and other debt instruments fell by PLN 3,001 thousand, mainly on positive operating cash flows. As at March 31st 2012, the Group s net debt under bank borrowings and other debt instruments was PLN 996,269 thousand, of which PLN 815,840 thousand was net debt under bank borrowings. 3. Equity As at the end of Q1 2012, the Group s equity was PLN 580,819 thousand, up by PLN 14,338 thousand quarter on quarter. The increase was attributable mainly to the Group's net profit earned in the period, as well as positive exchange differences on translating Russian subsidiaries and net investments, which followed from the increase of RUB/PLN exchange rate. 4. Sale of shares or assets In Q1 2012, the Pfleiderer Grajewo Group reported a gain on disposal of non-current assets of PLN 20 thousand. 5. Factors and events that may affect future results of the Group Similar factors as those described above can influence the level of performance in subsequent quarters. Page 6

9 V. THE GROUP S SALES 1. Domestic and export sales The long-term sales strategy of the Pfleiderer Grajewo Group is based on the three key distribution channels: direct sales to the furniture industry, sales to Pfleiderer Partner (the PP Network) wholesalers, export sales. The Group s sales data comprises the sales of Pfleiderer Grajewo S.A., Pfleiderer Prospan S.A., and Pfleiderer MDF Sp. z o.o. Sales structure in Q and Q (PLN 000) Exports Other Furniture industry PP network Figure: Structure of sales in Q and Q (PLN 000). In the Polish market, direct sales to large and medium-sized furniture manufacturers and the Pfleiderer Partner network continued to represent the most important distribution channels. Year on year, in Q direct sales to large and medium-sized furniture manufacturers rose by 7% in value terms, while sales to the Pfleiderer Partner wholesalers network fell by 11%. Export sales increased by 7% in the reporting period. Sales through other distribution channels fell by 6%. Page 7

10 In Q1 2012, the shares of individual distribution channels in total revenue were as follows: Share of distribution channels in total sales in Q PP network 27.4% Exports 24.9% Other 4.5% Furniture industry 43.2% Figure: Distribution channels in Q (%) There were no significant changes in the shares of individual distribution channels in the structure of sales in Q1 2012, relative to Q The share of export sales went up from 24.8 to 24.9%, and the share of sales to the Pfleiderer Partner wholesale network rose from 27.0 to 27.4%. The share of direct sales to large and medium-sized furniture manufacturers declined from 43.4 to 43.2%, and the share of sales through other distribution channels fell from 4.8 to 4.5%. 2. Seasonality of operations Chipboard sales are subject to seasonal changes, in particular related to the seasonal nature of the construction cycle. Sales peak in the second half of a calendar year. Page 8

11 VI. Q RESULTS 1. Composition of the Pfleiderer Grajewo Group a. Structure of the Pfleiderer Grajewo Group Pfleiderer Grajewo S.A. is the Parent 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. Blitz GmbH of Neumarkt is jointly-controlled by Pfleiderer Grajewo S.A. Pfleiderer Grajewo Group as at March 31st 2012: Unifloor Sp. z o.o. Subsidiary (in liquidation) Pfleiderer MDF OOO of Novgorod (Russia) Subsidiary 100% 50% Pfleiderer Prospan S.A. Subsidiary Jura Polska Sp. z o.o. Subsidiary 100% Pfleiderer Grajewo S.A. 100% Parent 50% 84.19%* Pfleiderer MDF Sp. z o.o. Subsidiary 100% 50% Pfleiderer OOO of Novogrod (Russia) Subsidiary Pfleiderer Services Sp. z o.o. Subsidiary 50%** Blitz GmbH Jointly-controlled entity Silekol Sp. z o.o. Subsidiary *Pfleiderer Grajewo S.A. holds a call option which allows it to early repurchase the shares in Pfleiderer OOO held by the EBRD. The EBRD holds a put option which allows it to sell early the shares held in Pfleiderer OOO to the Parent in the event of default under the financing agreements. Accordingly, the Parent (Pfleiderer Grajewo S.A.) treats Pfleiderer OOO as its wholly-owned subsidiary. In the Group s consolidated financial statements, 100% of Pfleiderer OOO s profit is consolidated. ** The interest in the company, which is jointly-controlled by the Parent, is accounted for in the consolidated financial statements with the equity method. b. Changes in the Pfleiderer Grajewo Group s structure in the reporting period In Q1 2012, there were no changes in the Group's structure. Page 9

12 c. Group s business The Pfleiderer Grajewo Group is an arm of the international Pfleiderer Group and its Business Centre for Eastern Europe, which builds upon extensive experience on the market for wood-based products. The Group, boasting strong positions on the markets of Central and Eastern Europe, is growing rapidly, entering new markets, targeting new segments and refining and adding new products to its portfolio. The mission of the Pfleiderer Grajewo Group is to establish long-term relations with direct customers and end users of its products. In business terms, the Group strives to win and retain customers' full confidence by developing a fully professional approach at all levels of cooperation. The Group operates manufacturing plants with diverse profiles. The Parent's business consists in: manufacture and veneering of wood and wood-based products, paper finishing, trade at home and abroad. Business profiles of other companies of the Pfleiderer Grajewo Group: Pfleiderer Prospan S.A. manufacture of melamine-faced, raw chipboards, construction boards and other wood and wood-based products, paper finishing, trade at home and abroad, generation and distribution of heat. Pfleiderer OOO manufacture of raw and melamine-faced chipboards, other materials and wood processing products, production of materials from wood waste, wholesale of own and third-party products. Pfleiderer MDF OOO The entity has been established to execute the investment project consisting in the construction of an MDF/HDF production plant in Novgorod, in Russia. Silekol Sp. z o.o. Silekol Sp. z o.o. is a subsidiary which ensures uninterrupted supplies of high-quality adhesives used in the production of chipboards to the Parent and the other subsidiaries. manufacture of dyes and pigments, manufacture of other organic and inorganic chemicals, manufacture of paints and varnishes, manufacture of glues and gelatines. Pfleiderer MDF Sp. z o.o. manufacture of MDF boards and other wooden and wood-based products, trade at home and abroad, generation and distribution of heat. Page 10

13 Jura Polska Sp. z o.o. transport, road transport of goods with specialised vehicles, road transport of goods with universal vehicles, lease of trucks, wholesale of building materials and sanitary fixtures and fittings. Unifloor Sp. z o.o. (in liquidation) Unifloor Sp. z o.o. is currently in liquidation Pfleiderer Services Sp. z o.o. The company has suspended its operations. Blitz GmbH exports, in particular to Russia and Eastern Europe, provision of investment-related services, provision of services related to exports of manufacturing equipment. d. Non-consolidated entities 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 have not been consolidated. The interest in the jointly-controlled Blitz GmbH is accounted for with the equity method. e. Subsidiaries comprising the Pfleiderer Grajewo Group Pfleiderer Prospan S.A. a joint-stock company entered into the Polish commercial register maintained by the District Court of Kalisz under No. RHB 1754, on September 23rd 1997, under the name of Zakłady Płyt Wiórowych Prospan S.A.; subsequently, on September 17th 2001, registered by the District Court of Łódź-Śródmieście, XX Division of the National Court Register, under No. KRS Industry Identification Number (REGON): Tax Identification Number (NIP): Registered office: ul. Bolesławiecka 10, Wieruszów, Poland Pfleiderer OOO a limited liability company incorporated under the laws of the Russian Federation, registered on January 15th 2003 by the Interregional Inspection No. 3 of the Novgorod District of the Ministry of Duties and Taxes of the Russian Federation. Uniform Registration Number: Tax Identification Number (NIP): Registered office: 106 Tsentralnaya St, Novgorod Region , Russia Pfleiderer MDF OOO a limited liability company incorporated under the laws of the Russian Federation, registered on September 11th 2007 by the Interregional Inspection No. 3 of the Novgorod District of the Ministry of Duties and Taxes of the Russian Federation. Uniform Registration Number: Tax Identification Number (NIP): Registered office: 106 Tsentralnaya St, Novgorod Region , Russia Page 11

14 Silekol Sp. z o.o. a company entered into the National Court Register by the District Court of Opole, VIII Commercial Division of the National Court Register of Opole, 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): Registered office: ul. Wiórowa 1, Grajewo, Poland Unifloor Sp. z o.o. entered in the National Court Register by the District Court of Białystok, 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 Blitz GmbH a jointly-controlled entity based in Neumarkt, Germany, entered in the Commercial Register by the Court of Nürnberg under No. HRB HRB: Tax Identification Number (NIP): 201/116/21366 Registered office: Ingolstädter Strasse 51, Neumarkt, Germany Page 12

15 2. Consolidated financial results Consolidated statement of financial position as at March 31st 2012 (PLN 000) Total Total Total Mar Dec Mar Assets Property, plant and equipment 1,140,801 1,153,850 1,115,611 Intangible assets 3,400 2,539 4,716 Goodwill 107, , ,829 Investments in related entities Other non-current financial assets Investment property 4,300 4,300 4,300 Deferred tax assets 11,669 13,447 13,658 Non-current receivables prepayments for tangible assets 203, , ,191 Government assistance receivable 26,640 27,165 14,572 Non-current assets 1,498,736 1,516,954 1,480,939 Inventories 243, , ,621 Income tax receivable Trade and other receivables 1 157, , ,956 Cash and cash equivalents 29,686 19,586 30,550 Currency forwards Current assets 429, , ,074 Total assets 1,928,626 1,935,970 1,909,013 Equity and liabilities Equity Share capital 16,376 16,376 16,376 Share premium 289, , ,806 Statutory reserve funds 155, , ,711 Revaluation reserve Cash flow hedges (169) Exchange differences on translating foreign operations (4,463) (4,839) (12,232) Exchange differences on net investments in subsidiaries 4,618 4,182 (9,936) Retained earnings/(deficit) 46,553 33,892 4,065 Equity (attributable to owners of the parent) 508, , ,806 Non-controlling interests 72,474 71,440 79,879 Total equity 580, , ,685 Liabilities Borrowings and other debt instruments 877, , ,135 Finance lease liabilities Employee benefits payable 6,584 6,584 6,013 Provisions Deferred tax liabilities 12,343 12,827 5,783 Deferred income under government assistance 40,278 40,484 25,645 Non-current liabilities 937, , ,279 Borrowings and other debt instruments 148, , ,665 Finance lease liabilities Income tax payable Trade and other payables 2 240, , ,200 Employee benefits payable 19,515 21,118 17,696 Deferred income under government assistance 1,876 1,876 1,188 Current liabilities 410, , ,049 Total liabilities 1,347,807 1,369,489 1,386,328 Total equity and liabilities 1,928,626 1,935,970 1,909,013 Page 13

16 OFF-BALANCE-SHEET ITEMS PFLEIDERER GRAJEWO GROUP Mar end of Q (PLN 000) Dec , end of Q (PLN '000) Mar end of Q (PLN 000) Contingent liabilities 0 0 4,844 To other entities, including: 0 0 4,844 - guarantees and sureties issued 0 0 4,844 Total off-balance-sheet items 0 0 4,844 Comments on changes in key items of the statement of financial position A decrease in property, plant and equipment is primarily a result of capital expenditure offset by amortisation cost in the period and negative valuation on translating assets of the Russian subsidiaries. An increase in intangible assets in Q resulted from purchase of a computer software licence. As at the end of Q1 2012, goodwill did not change. Receivables under prepayments for tangible assets fell by PLN 3.7m on Q4 2011, chiefly due to translation of prepayments of the Russian subsidiaries. Compared with the end of Q4 2011, there were no significant changes in the amount of government grants receivables, resulting from the revaluation of the total estimated value of the assistance calculated on the basis of budgeted financial data relating to future years. As at the end of Q1 2012, inventories were PLN 243m, i.e. they remained relatively flat on the end of As at March 31st 2012, there were no significant quarter-on-quarter changes in trade and other receivables. As at the end of March 2012, cash was PLN 29.7m, primarily attributable to positive operating cash flows. As at March 31st 2012, the Group s total equity was PLN 580.8m, having grown by PLN 14.3m over Q The increase was driven mainly by the Group's net profit of PLN 13,7m, positive valuation of net investments in subsidiaries, and positive exchange differences on translating foreign operations. As at the end of Q1 2012, liabilities fell PLN 21.2m relative to the end of Q The decline essentially results from a PLN 26.7m decrease in trade and other payables. This change is attributable to an improvement in the average collection period and a PLN 1.6m decrease in employee benefits payable. In Q1 2012, the Group s net debt under borrowings and other debt instruments increased by PLN 7.1m. This change was accompanied by a PLN 10.1m quarter-on-quarter increase in cash and cash equivalents. Page 14

17 Consolidated statement of comprehensive income for the period January 1st March 31st 2012 (PLN '000) Total Total Jan 1 Jan 1 Mar Mar Note Continuing operations Continuing operations Revenue 449, ,917 Cost of sales (370,483) (331,139) Gross profit 79,133 71,778 Other income 4,018 1,723 Distribution costs (27,877) (25,881) General and administrative expenses (22,598) (20,584) Other expenses (4,807) (5,138) Operating profit 27,869 21,898 Finance income 12,306 4,976 Finance expenses (23,905) (23,835) Net finance expenses 3 (11,599) (18,859) Profit before tax 16,270 3,039 Corporate income tax (2,616) (2,768) Net profit 13, Attributable to non-controlling interests 933 (1,816) Attributable to owners of the parent 12,661 2,087 EBITDA 47,658 41,184 Other income/expenses Exchange differences on translating foreign operations 417 3,381 Exchange differences on net investments in subsidiaries 436 5,413 Effective portion of loss on fair-value measurement of hedging instruments, including corporate income tax (169) (192) Other income 684 8,602 Total income for the period 14,338 8,873 Total income/expenses for the period attributable to: Owners of the parent 13,304 9,905 Non-controlling interests 1,034 (1,032) Total income for the period 14,338 8,873 Basic earnings per share (PLN) 0.26 (0.04) Diluted earnings per share (PLN) 0.26 (0.04) Page 15

18 Statement of changes in consolidated equity for the period January 1st March 31st 2012 (PLN 000) Share capital Share premium Statutory reserve funds Revaluation reserve Exchange differences on translating foreign operations Exchange differences on net investments in subsidiaries Cash flow hedges Retained earnings/(d eficit) Total Noncontrolling interests Total As at Jan , , , (4,839) 4,182 (0) 33, ,041 71, ,481 Comprehensive income for the period Net profit ,661 12, ,654 Other comprehensive income Exchange differences on translating foreign operations Exchange differences on net investments in subsidiaries Exchange differences on valuation of forward contracts (169) 0 (169) 0 (169) Total other comprehensive income (169) Total comprehensive income for the period (169) 12,661 13,304 1,034 14,338 Transactions with owners recognised in equity As at Mar , , , (4,463) 4,618 (169) 46, ,345 72, ,819 Page 16

19 Share capital Share premium Statutory reserve funds Revaluation reserve Exchange differences on translating foreign operations Exchange differences on net investments in subsidiaries Valuation of forward contracts Retained earnings/(deficit) Total Noncontrolling interests As at Jan , , , (14,829) (15,349) 589 1, ,901 63, ,174 Total Comprehensive income for the period Net profit/loss ,208 33,208 (11,473) 21,735 Other comprehensive income Exchange differences on translating foreign operations , ,990 2,001 11,991 Exchange differences on net investments in subsidiaries , , ,531 Exchange differences on valuation of forward contracts (589) 0 (589) 0 (589) Total other comprehensive income ,990 19,531 (589) 0 28,932 2,001 30,933 Total comprehensive income for the period ,990 19,531 (589) 33,208 62,140 (9,472) 52,668 Transactions with owners Share capital increase at Pfleiderer MDF Sp. z o.o ,639 17,639 Transfer of 2010 net profit to statutory reserve funds 0 0 1, (1,294) Transactions with owners recognised in equity 0 0 1, (1,294) 0 17,639 17,639 As at Dec , , , (4,839) 4, , ,041 71, ,481 Page 17

20 Share capital Share premium Statutory reserve funds Revaluation reserve Exchange differences on translating foreign operations Exchange differences on net investments in subsidiaries Cash flow hedges Retained earnings/(deficit) Total Non-controlling interests Total As at Jan , , , (14,829) (15,349) 589 1, ,901 63, ,174 Comprehensive income for the period Net profit/loss ,087 2,087 (1,816) 271 Other comprehensive income Exchange differences on translating foreign operations , , ,380 Exchange differences on net investments in subsidiaries , , ,413 Effective portion of loss on fairvalue measurement of hedging instruments, including corporate income tax (192) 0 (192) 0 (192) Total other comprehensive income ,597 5,413 (192) 0 7, ,601 Total comprehensive income for the period ,597 5,413 (192) 2,087 9,905 (1,033) 8,872 Transactions with owners recognised in equity Share capital increase at Pfleiderer MDF Sp. z o.o ,639 17,639 Transactions with owners recognised in equity ,639 17,639 As at Mar , , , (12,232) (9,936) 397 4, ,806 79, ,685 Page 18

21 Consolidated statement of cash flows for the period January 1st March 31st 2012 (PLN 000) Jan 1 Jan 1 Mar Mar Cash flows from operating activities Net profit/loss 14, Adjustments 9,305 (10,224) Depreciation and amortisation 19,789 19,286 Foreign exchange gains (11,982) (4,408) Interest for the period 22,584 22,298 Gain/loss on disposal of intangible assets and property, plant and equipment (20) 0 Income tax expense 2,616 2,768 Deferred income tax charged to equity Change in trade and other receivables 419 (42,899) Change in inventories (1,224) (9,134) Change in trade and other payables (20,564) 6,236 Change in employee benefits payable (1,603) 675 Change resulting from government grants 319 (229) Change in currency translation differences on consolidation (1,131) (6,468) Profit from forward transactions Cash flows from operating activities 22,959 (9,953) Interest received/paid Income tax paid (1,206) (1,364) Net cash provided by/(used in) operating activities 21,773 (11,209) Cash flows from investing activities Disposal of non-current assets Other cash provided by financial assets 0 25 Acquisition of intangible assets and property, plant and equipment (8 490) (1,287) Net cash provided by/(used in) investing activities (8 359) (1,262) Cash flows from financing activities Repayment of borrowings and other debt instruments (19,753) (10,500) Increase in borrowings and other debt instruments 35,439 53,401 Interest paid (19,000) (19,748) Net cash provided by/(used in) financing activities (3,314) 23,153 Change in cash 10,100 10,682 Cash at beginning of period 19,586 19,868 Cash at end of period 29,686 30,550 Page 19

22 VII. CAPITAL EXPENDITURE In Q1 2012, the Pfleiderer Grajewo Group incurred capital expenditure of PLN 2.4 million. VIII. SUPPLEMENTARY INFORMATION 1. Material agreements On March 15th 2012 an annex was signed to the Credit Facility Agreement of March 16th 2010 executed by Pfleiderer Grajewo S.A. as the Borrower, Pfleiderer Prospan S.A. and Silekol Sp. z o.o. as other obligors under the agreement and a syndicate of financing banks comprising: Bank Polska Kasa Opieki S.A., Bank Zachodni WBK S.A., BRE Bank S.A., Bank Gospodarki śywnościowej S.A. and BNP Paribas Bank Polska S.A. (formerly Fortis Bank Polska S.A.). Under the annex, the repayment date for Tranche B, previously scheduled for March 16th 2012, was extended. Consequently, the full amount of Tranche B (PLN 170m) falls due on March 16th There were no other changes in the terms of the Credit Facility Agreement. 2. Provisions As at the end of Q1 2012, the Group maintained a provision for employee benefits of PLN 26.0m. The value of the provision fell by PLN 1.6m relative to the end of Q The provision for employee benefits is the only provision recognised by the Group under IAS. Currently, Pfleiderer Grajewo S.A. recognises no other provisions under IAS. In Q1 2012, deferred tax assets fell by PLN 1.8m quarter on quarter, while deferred tax liabilities fell by PLN 0.5m. In the reporting period, no major changes with a potentially material bearing on the Group's financial performance took place regarding impairment losses. 3. Guarantees and sureties As at March 31st 2012, Pfleiderer Grajewo S.A. had two outstanding sureties for an aggregate amount of up to PLN 36,651 thousand, including a surety of up to EUR 7,692 thousand issued for an unspecified period for the benefit of the European Bank for Reconstruction and Development to secure the liabilities of Pfleiderer OOO under a bank loan. As at March 31st 2012, the amount of underlying debt secured with the sureties was PLN 36,651 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 a period of five years starting from the bank's acquisition of shares. After that, the shares will be sold to Pfleiderer Grajewo S.A. The annual finance 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 to repurchase the shares held by the Bank at any time. The EBRD holds a put option enabling it to sell the shares before December 28th 2010 if the financing agreements concluded by the Parent and Pfleiderer OOO with the Page 20

23 EBRD are breached and if there arises the risk that the shares may not be purchased by the agreed deadline. Furthermore, Pfleiderer Prospan S.A. and Silekol Sp. z o.o. had contingent liabilities towards banks under facilities contracted by: - Pfleiderer Grajewo S.A. - liabilities to a syndicate of Polish banks in an amount of PLN 700,000 thousand (the currently outstanding debt is PLN 660,000 thousand); - - Pfleiderer OOO and Pfleiderer Grajewo S.A. - liabilities to the EBRD under a bank borrowing and put option in the total amount of EUR 16,935 thousand. The other Group companies did not issue any guarantees or sureties. 4. Changes in contingent assets and liabilities In Q1 2012, contingent liabilities of Pfleiderer Grajewo S.A. decreased slightly following repayment of bank borrowings secured with the Parent's sureties. 5. Contracted and repaid borrowings; issue of debt and equity instruments In Q1 2012, Pfleiderer Grajewo S.A. carried out 14 issues of commercial paper in the form of short-term notes with a view to optimising the Group's management of financial liquidity. The notes were issued pursuant to the commercial paper programme agreement executed with Bank PEKAO S.A. on July 22nd 2003 and in accordance with the Polish Bonds Act of June 29th 1995 as złoty-denominated, unsecured, zero-coupon bearer securities in book-entry form. The notes are redeemed at their par value. The notes were acquired by Pfleiderer Prospan S.A., a subsidiary. 6. Dividend paid In Q1 2012, no decisions were made concerning dividend payment. 7. Performance forecast Given the fast-changing market environment, Pfleiderer Grajewo S.A. did not publish any financial forecasts for Material events subsequent to March 31st 2012 After March 31st 2012, Pfleiderer Grajewo S.A. carried out 8 issues of commercial paper in the form of short-term notes with a view to optimising the Group's financial liquidity management. The notes were issued pursuant to the commercial paper programme agreement executed with Bank PEKAO S.A. on July 22nd 2003 and in accordance with the Polish Bonds Act of June 29th 1995 as złoty-denominated, unsecured, zero-coupon bearer securities in book-entry form. The notes are redeemed at their par value. The notes were acquired by Pfleiderer Prospan S.A., a subsidiary. On April 2nd 2012, Pfleiderer Grajewo S.A. (the parent) and Pfleiderer Prospan S.A. (a subsidiary) received a decision of the President of the Office of Competition and Consumer Protection, dated March 30th 2012, concerning the instigation of anti-trust proceedings on suspicion that Kronospan Szczecinek Sp. z o.o., Kronospan Mielec Sp. z o.o., Kronopol Sp. z o.o., Pfleiderer Grajewo S.A. and Pfleiderer Prospan S.A. had made an arrangement restricting competition on the domestic chipboard and fibreboard markets. Page 21

24 In accordance with a resolution of the Extraordinary General Meeting, on April 10th 2012, Mr Jochen Schapka was appointed as Member of the Supervisory Board of Pfleiderer Grajewo S.A. Mr Schapka does not conduct any activity competitive with respect to the Parent, nor is he a partner in a competing civil-law partnership or a member of a governing body of a competing corporation or another legal entity. Mr Jochen Schapka is not entered in the Register of Insolvent Debtors maintained under the National Court Register Act. On April 10th 2012, the Extraordinary General Meeting resolved to extend the term of the commercial paper programme until June 30th On April 10th 2012, the Extraordinary General Meeting adopted a resolution concerning the amount of remuneration of Members of the Pfleiderer Grajewo Supervisory Board. 9. Changes in the Group's structure In Q1 2012, there were no changes in the Group's structure. 10. Transactions with owners and related parties In Q1 2012, Pfleiderer Grajewo S.A. carried out 14 issues of short-term notes, all of which were acquired by Pfleiderer Prospan S.A. 11. Change in the number of shares or options held by the management and supervisory staff As at the publication date of this report, the number of Pfleiderer Grajewo shares held by the Management Board members was as follows: - Wojciech Gątkiewicz, President of the Management Board, held 5,400 shares in Pfleiderer Grajewo S.A.; - Rafał Karcz, member of the Management Board, held 3,472 shares in Pfleiderer Grajewo S.A.; - Dariusz Tomaszewski, member of the Management Board, held 4,108 shares in Pfleiderer Grajewo S.A.; - Radosław Wierzbicki, Member of the Management Board of Pfleiderer Grajewo S.A., held 2,000 shares. On January 31st 2012, Pfleiderer Grajewo S.A. received a notification dated January 27th 2012 from Wojciech Gątkiewicz, President of the Management Board. In the notification, Mr Gątkiewicz, acting pursuant to Art. 160 of the Act on Trading in Financial Instruments of July 29th 2005, notified the Parent that in 2011 he acquired Company shares for a total value of no more than EUR 5,000. 2,400 ordinary bearer shares were acquired at prices from PLN 8.10 to PLN 8.78 per share in ordinary session transactions concluded on the Warsaw Stock Exchange on August 29th and September 6th As at the publication date of this Report, the number of Pfleiderer Grajewo shares held by the Supervisory Board members was as follows: - Jan Woźniak, Member of the Supervisory Board, held 10,000 shares in Pfleiderer Grajewo S.A. The other members of Pfleiderer Grajewo S.A. s Supervisory Board did not hold any shares in the Parent. Page 22

25 12. Shareholder structure as at the report release date Shareholder structure as at May 14th 2012 Number of shares % of share capital Number of votes at GM % of votes 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 Company shares held by Aviva OFE (former Commercial Union Otwarty Fundusz Emerytalny BPH CU WBK) is sourced from the most recent notification of shareholding change, received by the Parent on July 9th The information on the number of Company shares held by ING OFE is sourced from the most recent notification of shareholding change, received by the Parent on June 5th The number of shares held by the main shareholder, Pfleiderer Service GmbH, did not change in Q Court proceedings There are no court, arbitration or administrative proceedings pending with respect to any liabilities or claims of the Group companies, whose value would represent 10% or more of the Parent s equity. On April 2nd 2012, Pfleiderer Grajewo S.A. (the parent) and Pfleiderer Prospan S.A. (a subsidiary) received a decision of the President of the Office of Competition and Consumer Protection, dated March 30th 2012, concerning the instigation of anti-trust proceedings on suspicion that Kronospan Szczecinek Sp. z o.o., Kronospan Mielec Sp. z o.o., Kronopol Sp. z o.o., Pfleiderer Grajewo S.A. and Pfleiderer Prospan S.A. had made an arrangement restricting competition on the domestic chipboard and fibreboard markets. On the basis of information obtained by the companies, it has been established that the case files are being prepared based on evidence collected during explanatory proceedings. Pfleiderer Grajewo S.A. and subsidiary Pfleiderer Prospan S.A. are currently awaiting access to the case files. At present, the Management Boards of Pfleiderer Grajewo S.A. and Pfleiderer Prospan S.A. are not able to assess the risk based on the information available to them. 14. Other material information On March 28th 2012, Pfleiderer AG of Neumarkt filed a bankruptcy petition. According to the information released by Pfleiderer AG, the Management Board of Pfleiderer AG filed a petition to initiate insolvency proceedings and be allowed to operate as a debtor in possession. The Management Board of Pfleiderer AG, under the supervision of a court-appointed trustee, will continue to manage the company and carry out the restructuring process. On April 17th 2012 the court opened insolvency proceedings for Pfleiderer AG, appointed the custodian and ordered personal management as debtor in possession. Pfleiderer AG is the parent of the Pfleiderer Group. It is a holding company, which does not conduct production activities. Pfleiderer AG employs 10 staff. The insolvency petition was filed exclusively with respect to Pfleiderer AG and does not involve the other companies of the Pfleiderer AG Group, which operate as usual. The Pfleiderer Grajewo Group companies have not issued any sureties for Pfleiderer AG s liabilities. The Company s direct shareholder is Pfleiderer Service GmbH of Neumarkt, however, the bankruptcy petition filed by Pfleiderer AG does not cover Pfleiderer Service GmbH. Page 23