LIBET S.A. REPORT OF THE MANAGEMENT BOARD ON THE OPERATIONS OF LIBET S.A. FOR THE PERIOD FROM 1 JANUARY TO 30 JUNE 2015

Transcription

1 LIBET S.A. REPORT OF THE MANAGEMENT BOARD ON THE OPERATIONS OF LIBET S.A. FOR THE PERIOD FROM 1 JANUARY TO 30 JUNE 2015 Wrocław, 27 August 2015

2 1. SUPPLEMENTARY INFORMATION TO THE SEMI-ANNUAL REPORT Selected financial data Significant events in the reporting period Factors and events affecting the financial result Profit and Loss Statement Financial and asset position Cash flows Seasonality and cyclicality Forecast realisation Issue, redemption and repayment of non-equity and equity instruments Allocation and distribution of profit for the previous year Shareholders of Libet S.A Shares held by managing and supervising persons Litigation Transactions with related entities Guarantees and suretyships granted Events after the balance sheet day Factors affecting the financial results in the next quarter Other significant information

3 1. SUPPLEMENTARY INFORMATION TO THE SEMI-ANNUAL REPORT 1.1 Selected financial data months ended on 30/06/2015 months ended on 30/06/2014 PLN 000 PLN 000 Net sales revenue 136, ,665 Profit (loss) from operations 5,183 11,107 Profit (loss) before tax 7,065 7,801 Net profit (loss) 7,355 6,214 Net cash flows from operating activities Net cash flows from investing activities Net cash flows from financing activities 12,133 3,348-7,660-1,227-1,002-2,812 As at 30/06/2015 As at 31/12/2014 As at 30/06/2014 PLN 000 PLN 000 PLN 000 Total assets 425, , ,841 Non-current liabilities 85,609 85,884 68,100 Current liabilities 121,973 96, ,937 Equity 112, , ,031 Share capital Significant events in the reporting period In H there were not any significant events affecting Libet S.A.'s financial situation. In H Libet was consistently developing the range of Premium products. The Company's portfolio was supplemented with new products, and their sale grows dynamically. A dynamic growth in sales of the Group demonstrates that innovations within industrial design are recognised by end users of the Company's products, and a consistent implementation of Libet's strategy within the development of the Premium offer brings indicative business results. In H the Company continued selling ceramic 3

4 products supplementing the Premium product line. In H1 2015, the Company focused on the sales network development and further development of distribution through Platinum customers network. 1.3 Factors and events affecting the financial result Profit and Loss Statement Selected items of the non-consolidated profit and loss account for H and H are presented in the table below. months ended on 30/06/2015 months ended on 30/06/2014 Change PLN 000 PLN 000 PLN 000 Net sales revenue and equivalent revenue, including: 136, ,665 10,232 from related units 7,402 8,747-1,345 Net revenue from sales of products 113, ,666-4,191 Change in stock position (increase - positive value, decrease - negative value) 12,305 7,611 4,694 Manufacturing cost of products for internal purposes Net revenue from sales of goods and materials 10, ,990 Costs of operations 132, ,389 12,328 Amortisation/depreciation 12,162 11,118 1,044 Consumption of materials and energy 61,803 63,519-1,716 External services 25,736 24,008 1,728 Taxes and charges, including: 3,179 3, excise tax Salaries 12,325 11, Social security and other benefits 3,020 2, Other costs by type 4,482 3, Value of products and materials sold 10, ,641 Profit (loss) from sales 4,180 6,277-2,096 Profit (loss) from operations 5,183 11,107-5,924 Result on financing activities 1,882-3,306 5,187 Profit (loss) before tax 7,065 7, Net profit (loss) 7,355 6,214 1,142 4

5 Sales revenue In H the value of sales of Libet S.A. amounted to PLN 136,897 thou. which is a growth by 8% in relation to the same period of the previous year. The growth in revenue stemmed mainly from higher revenue from sales of products which pursuant to the company's policy are complimentary high-margin products, and a change in the presentation of income from pallet sale introduced in H In the previous period Libet further made the cooperation with the largest recipients with whom it signed new distribution agreements closer. Due to the cooperation, the Company is able to guarantee the highest product availability to customers, and it additionally offers its Partners support within the sales service, marketing, logistics or consulting. A consistent policy of strengthening the cooperation with authorised sales points is very significant in the light of building Libet's position in the Premium segment being the core one for the Company. Costs of operations The item amounted to PLN 132,717 thou. and increased by PLN 12,328 thou. in comparison with the same period of the previous year. The growth results mainly from an earlier commencement of the production season in relation to the previous year. The growth in costs was affected by the development of sales network and extension of the customer localisation programme. Production costs grew due to the recognition of the plant in Toruń which was taken over at the end of 2014 as an expense. Profit from sales Libet S.A. in H generated profit from sa les before tax in the amount of PLN 4,1 80 thou. comparing to the profit of PLN 6,227 thou. reported in the same period of Other operating revenue and costs In Q1 and Q the balance of other operating revenue and expenses was positive and amounted to PLN 1,002 thou. The presented balance was affected the most by the negative goodwill depreciation. Operating profit (EBIT) In H Libet S.A. reported an operating profit in the amount of PLN 5,183 thou. compared to PLN 11,107 thou. in the same period of Net profit Net result for H amounted to PLN 7,355 thou. relating to the profit in the amount of PLN 6,214 thou. reported in H In H the operating profit was increased with t he positive result on the fin ancial activity in the amount of PLN 1,882 thou. The balance of financial revenue and expenditures was affected the most by the dividend from Libet 2000 and interest on bank loans described in detail in note 20 of the semiannual non-consolidated financial statements. 5

6 1.3.2 Financial and asset position Selected items of the statement of financial position as at 30 June 2015 and 30 June 2014 are presented in the table below: months ended on 30/06/2015 months ended on 30/06/2014 change PLN '000 PLN '000 PLN '000 % Fixed assets 260, ,441 27, % Property, plant and equipment 196, ,532 26, % Other non-current assets 63,854 62, % Current assets 164, ,400 14, % Inventories 91,482 74,287 17, % Trade receivables 57,672 71,433-13, % Current financial assets 1, , % Other current assets 6,240 4,552 1, % Equity 112, ,031 10, % Liabilities 312, ,811 30, % Non-current liabilities 85,609 68,100 17, % Current liabilities 121, ,937 16, % Provision for liabilities 11,557 11, % Accruals 93,082 96,464-3, % The asset position of the Company did not significantly change in relation to In comparison with 2014 assets are demonstrated relating to the transaction of the acquisition of the plant in Toruń. Lower level of trade receivables stems from a better recoverability. Higher debt is mainly the impact of the loan on the acquisition of assets from the plant in Toruń. Higher current liabilities depend on the volume of production higher by the additional plant. months ended on 30/06/2015 months ending on 30/06/2014 Current liquidity ratio Quick liquidity ratio Debt ratio 73% 73% Current ratio: current assets / current liabilities Quick ratio: current assets decreased by inventory / current liabilities Debt ratio: liabilities/total assets 6

7 Net debt as at 30 June 2015 is presented in the table below: months ended on 30/06/2015 months ended on 30/06/2014 PLN '000 PLN '000 Interest-bearing loans and borrowings 112,504 96,087 Other financial liabilities 0 0 Minus cash and cash equivalents -1, Net debt 111,354 95,958 Equity 112, ,031 Net Debt to Assets ratio Cash flows Selected items of the cash flow s tatement fo r H an d H are presented in the table below: months ended on 30/06/2015 months ended on 30/06/2014 PLN '000 PLN '000 PLN '000 Net cash from operating activities 12,133 3,348 8,786 Net cash from investing activities -7,660-1,227-6,433 Net cash from financing activities -1,002-2,812 1,811 Change in the balance of cash 3, ,163 Net cash flows in H amounted to PLN 3,471 thou. Net cash flows fro m oper ating activities amounted t o PLN 12,133 thou. Within inve sting activit ies there was a surplus of outflo ws over i nflo ws in relat ion to t he implementation of the investment and acquisition of tangible fixed assets and intangible assets. Cash flows from these activities amounted to PLN -7,660 thou. Net cash flows from financing activities amounted to PLN -1,002 thou. 7

8 1.4 Seasonality and cyclicality Due to the nature of the sector in which the Company operates, its operations are considerably affected by the seasonality factor. Traditionally, the best sales period is Q2 and Q3 of each year. Libet's operations are strongly dependant on the weather conditions, taking particularly into account minus temperatures, and long-term rainfalls obstructing the production. The winter time is devoted for necessary renovations, preparation of the best possible offer for the next season or implementation of new investments. Due to that, also additional costs occur which are compensated during the other months of the year. In Q1 the Company may report negative financial results. 1.5 Forecast realisation The Company did not publish any projections of results. 1.6 Issue, redemption and repayment of non-equity and equity instruments During the period covered with this report Libet S.A. did not conclude any transactions within the issue, redemption or payment of non-equity and equity securities. 1.7 Allocation and distribution of profit for the previous year On 25 June 2015 the Ordinary General Shareholders Meeting of Libet S.A. decided to allocate the whole profit for 2014 to raising the Company's supplementary capital. 1.8 Shareholders of Libet S.A. As at the publication date of this statement the share of significant shareholders in the share capital and in votes is presented in the table below: Shareholder % in share capital Share in the votes at GM Glaspin Consultants Limited I Lybet Limited 30.06% 30.06% LEGG MASON funds 15.42% 15.42% OFE ING 12.33% 12.33% OFE PKO BP Bankowy 7.72% 7.72% Others 34.47% 34.47% Total 100% 100% 1.9 Shares held by managing and supervising persons Members of the Management Board of Libet S.A. directly hold 5,000 (five thousand) shares of the Company, and members of the Supervisory Board of Libet S.A. do not directly hold any shares on the Company. Members of the Board, Thomas Lehmann and Ireneusz Gronostaj and Member of the 8

9 Supervisory Board Jerzy Józef Gabrielczyk indirectly control, via an entity controlled jointly by them, 15,028,619 shares of the Company, which constitutes 30.06% of the share capital of the Company. Until the date of publication of the report the above mentioned situation did not change Litigation As at 30 June 2015 and as the date of publication of this report the Company was not a party to any significant arbitration or court proceedings Transactions with related entities In the period covered with this report Libet S.A. did not conclude any significant transactions with its related entities under other than market terms. Significant transactions within the group were described in the non-consolidated financial statements Guarantees and suretyships granted Libet S.A. did not grant any guarantees or suretyships Events after the balance sheet day In the Company's assessment there is no significant information other than that presented in these condensed financial statements which would be significant for the assessment of the staff, asset, financial positions, financial result and their changes, and information which is significant for the possibility of settling liabilities Factors affecting the financial results in the next quarter The factors which may significantly influence the Company's results in the next quarter include: - Macroeconomic forecasts: According to the forecasts of the European Commission the GDP in Poland will grow by 3.5% (compared to a growth of 3.3% in the previous year) in Current average forecasts of inflation for 2015 total to 0.1%. - Situation in the construction sector: In 2015 further improvements will be observable in the construction sector resulting mainly from the proneness of investors to undertake new investments, mainly in the developer construction sector. The new budget perspective of the EU from 2015 will also have a positive impact here, however in the current year we will have to, to a larger extent, deal with replacement investments, and a higher inflow of the EU funds should occur just in New products, trends and development of sales network: taking into account the forecasts of the cobblestone market dynamics, verified as to current economic prognoses, a real growth is on the level of ca. 3%. At the same time, the greatest drops in 2015 should be expected in the public sector, hence lower sales volumes will relate in particular to industrial products and Premium products included in investments. - Prices of raw materials and selling prices: in relation to the interviews with cobblestone producers in 2015 stabilisations are projected in sales and prices in the group of industrial 9

10 and standard products. In the Premium product category long-term growth perspectives are anticipated within volumes and prices. - In the period ended on 30 June 2015 the Company commenced the application of the hedging accounting in order to hedge the future cash flows relating to the volatility of interest rates applied in long-term bank loans. Certain derivative instruments used by the Company are classified as cash flow hedging. In the period of 6 months ended on 30 June 2015 the Company commenced the application of the hedging accounting pursuant to IAS 39 and regulation on the valuation and presentation of financial instruments. Hedging of cash flows allows for the elimination of volatility in future cash flows resulting from the interest rate risk which could affect the profit and loss statement. In the period of 6 months ended on 30 June 2015 the Company concluded a forward transaction in order to hedge against the interest rate risk for the long-term investment loan - hedged item. Derivative products used by the Group is interest swap - hedging item Other significant information The informa tion sig nifi cant f or the as sessment o f the staff, asset, fina ncial po sitions and financial result and possibilities of settling the liabilities are presented in this report on operations and in the financial statements. Thomas Lehmann President of the Board Ireneusz Gronostaj Member of the Board 10