CREDIT REPORT Test d.d. Date of preparation 9/11/2013 Creditworthiness: CRITICAL BASIC COMPANY INFORMATION Company name: Registered address: Fax: Electronic mail: Web page: Id no.: 1234567891 Tax no.: Director/President of the management board: President of supervisory board: Group: Legal form: Court register entry date: on 15.09.1995 Registration no.: Test d.d. Test d.d. za proizvodnju i prodaju Adresa 10, 10000 Grad, Croatia Telephone: +385 1 12 34 567 +385 1 12 34 568 test@test.hr www.test.hr 1234567 Mr. Ivo Ivic Mr. Marko Maric Company belongs to the Test group of companies Joint stock company 012356478 SHORT SUMMARY: (DECEMBER 2012) Total assets (in EUR) Equity capital (in EUR) Financial debt (in EUR) Net sales revenues (in EUR) EBITDA (in EUR) Net profit/loss for financial year (in EUR) 116.812.699 28.799.799 38.841.558 30.242.181-6.103.312-14.653.466 Trend - credit score (max. 100 points): Creditworthiness: Recommended credit limit: 0 EUR Page 1 of 12
GENERAL COMPANY DATA History: Company was established in 1995. From the very beginning, the company started to expand to the foreign markets. Both export and sales increased significantly in first couple of years. By the end of 1999 company was already a leader in its segment of production, production of baby furniture. Size of the company: Equity capital (in EUR) Today the company has 73% market share on domestic market and a very good position on surrounding markets as well. Size (EU): Large 2011 2012 Equity capital 44.085.340 28.799.799 Share capital 12.754.363 12.771.323 Ownership: 1. KUNA D.D. 9,56% 2. KARLOVAČKA BANKA D.D. KARLOVAC 9,19% 3. RAIFFEISENBANK AUSTRIA D.D. 8,95% 4. MIRO D.O.O. 8,22% 5. FRANJO STJEPAN 7,03% 6. ERSTE & STEIERMARKISCHE BANK D.D. 5,73% 7. SOCIETE GENERALE-SPLITSKA BANKA D.D. 4,47% 8. MIRO NENAD 3,08% 9. STIPE PERIC 2,55% 10. PERO PERIC 2,05% TOTAL: 60,83% Registered activity: Premises: C 31.09 Manufacture of other furniture - company sells equipment for babies: baby room, bedding, feeders, carriers, beds, cabinets, carts, car seats, walkers, feeding equipment and toys - company has offices and production facilities at heading address - company has stores in Zagreb, Split and Pula Business activity (in EUR) 2011 2012 Net sales 39.958.372 30.242.181 revenues Major buyers: Major suppliers: Market position: - small companies - large buyers - private persons - MIRO Spain - HANS Germany - ADIO Italy - company has 73% market share on domestic market Export (% of sales): 2011 2012 0,00 0,00 Import: Germany, Italy, Austria, UK, Spain, Finland Page 2 of 12
Subsidiary/affiliated companies - company has 100% ownership in next companies: TEST Proizvodnja d.o.o. TEST OPS d.o.o. TEST metali d.o.o. TEST Opskrba d.o.o. TEST Trgovina d.o.o. TEST turizam d.o.o. TEST Plin d.o.o. TRG d.o.o. TEST ESCO d.o.o. TEST Nastavno obrazovni centar - subsidiaries abroad: TEST GmbH Germany Börnestr. 7 40211 Düsseldorf TEST d.o.o. Slovenia Efenkova cesta 61 Velenje TEST sro Czech Republic Malo prosenska 148 75121 Prosenice Average number of employees: 2011 2012 1.272 694 Management: Supervisory board: Official entries: / Commercial banks: Mr. Ivo Ivic, president of management board Mr. Petar Miric, member of the board Mrs. Ivana Ivanic, member of the board Mr. Marko Maric, president Mrs. Ana Anic, member Mr. Dudo Dudic, member Mrs. Iva Peric, member Mr. Ivan Ivanis, member OTP BANKA HRVATSKA d.d. Zadar Account No.: 2407000-1123546546 CENTAR BANKA d.d. Zagreb Account No.: 2382001-1659849846 ZAGREBAČKA BANKA d.d. Zagreb Account No.: 2360000-1659585155 HYPO ALPE-ADRIA-BANK d.d. Zagreb Account No.: 2500009-1156598745 SOCIETE GENERALE SPLITSKA BANKA d.d. Split Account No.: 2330003-1105645468 Payment delays: Recorded debt collection: Number of blocked bank accounts: 0 No payment delays were recorded The company has been registered as a debtor in Pro Kolekt Group. Claim registered on: 07.02.2012 Amount of the claim: 5.485,00 EUR Claim status: Closed negative, claim disputed. Subject paid until today: 0 EUR Claim registered on: 01.05.2013. Amount of the claim: 13.548,00 EUR Claim status: Closed positive Subject paid until today: 13.548,00 EUR Page 3 of 12
BALANCE SHEET 12/31/2011 (in EUR) 12/31/2012 (in EUR) ASSETS 126.209.193 116.812.699 LONG-TERM ASSETS 106.876.410 103.271.899 Intangible long-term assets 871.318 746.234 Tangible long-term assets 102.322.389 99.744.629 Investment properties 0 0 Long-term financial investments 3.203.525 2.364.324 Long-term operating receivables 479.178 416.712 Other long-term assets 0 0 SHORT-TERM ASSETS 19.282.802 13.473.330 Inventories 10.911.861 5.652.596 Short-term financial investment 1.149.635 368.697 Short-term operating receivables 7.076.012 7.248.520 Short-term operating receivables due by customers 2.814.801 2.026.732 Cash 145.293 203.516 ST DEFERRED COSTS AND ACCRUED REVENUES 49.982 67.469 Off-balance sheet assets 6.267.881 2.048.971 LIABILITIES 126.209.193 116.812.699 EQUITY CAPITAL 44.085.340 28.799.799 Share capital 12.754.363 12.771.323 PROVISIONS AND LONG-TERM ACCRUED COSTS AND DEFERRED REVENUES 31.843 11.519 Provisions 31.843 11.519 Long-term accrued costs and deferred revenues 0 0 LONG-TERM LIABILITIES 27.134.715 23.296.258 Long-term financial liabilities 17.896.489 14.207.567 Long-term operating liabilities 0 10.173 Deferred tax liabilities 9.238.226 9.078.518 SHORT-TERM LIABILITIES 54.894.073 63.930.163 Short-term financial liabilities 21.683.748 24.633.991 Short-term operating liabilities 33.210.325 39.296.172 Short-term operating liabilities to suppliers 12.400.153 11.519.006 ST ACCRUED COSTS AND DEFERRED REVENUES AND OTHER ST LIABILITIES 63.223 774.960 Off-balance sheet liabilities 6.267.881 2.048.971 Page 4 of 12
PROFIT & LOSS ACCOUNT 1/2011-12/2011 (in EUR) 1/2012-12/2012 (in EUR) NET SALES REVENUES 39.958.372 30.242.181 Net sales revenues on domestic market 0 0 Net sales revenues on EU market 0 0 INCREASE OF INVENTORIES OF PRODUCTS AND WORK -IN-PROGRESS DECREASE OF INVENTORIES OF PRODUCTS AND WORK-IN-PROGRESS 0 0 1.035.218 683.675 OTHER OPERATING REVENUES 4.069.149 4.211.284 GROSS OPERATING PROFIT 42.992.304 33.769.790 OPERATING EXPENSES 46.463.328 42.036.302 Cost of goods, materials and services 29.550.899 26.370.252 Labour costs 9.547.069 5.953.002 Depreciation 2.064.726 2.163.200 Revaluatory oper. expen. from intangible and tang. fixed assets 885.753 4.097.041 Revaluatory operating expenses from working capital 0 0 Other operating expenses 4.414.882 3.452.806 OPERATING PROFIT 0 0 OPERATING LOSS 3.471.025 8.266.512 FINANCIAL REVENUES 359.038 441.763 FINANCIAL EXPENSES 5.007.535 6.828.717 Interest expenses 5.007.535 6.556.926 FINANCING PROFIT 0 0 FINANCING LOSS 4.648.497 6.386.954 OTHER REVENUES 0 0 OTHER EXPENSES 0 0 TOTAL PROFIT 0 0 TOTAL LOSS 8.119.521 14.653.466 TAX ON PROFIT 0 0 DEFERRED TAXES 0 0 NET PROFIT FOR FINANCIAL YEAR 0 0 NET LOSS FOR FINANCIAL YEAR 8.119.521 14.653.466 AVERAGE NUMBER OF EMPLOYEES BASED ON WORKING HOURS WITHIN THE FINANCIAL PERIOD 1.272 694 NUMBER OF OPERATING MONTHS 12 12 Page 5 of 12
ID CASH FLOW STATEMENT 12/31/2011 (in EUR) 12/31/2012 (in EUR) A Cash flows from (used in) operating activities 1 Pretax profit (loss) -8.119.521-14.653.466 2 Depreciation 2.064.726 2.163.200 3 Income and other taxes 0 0 4 Other exclusion of non-cash transactions 885.753 4.097.041 5 Gross cash-flow from operating activities (1+2-3+4) -5.169.042-8.393.225 6 Decrease (- increase) in operating receivables n.a. -110.042 7 Decrease (- increase) in deferred costs and accrued revenues n.a. -17.487 8 Decrease (- increase) in inventories n.a. 5.259.265 9 Decrease (- increase) in deferred tax receivables n.a. 0 10 Increase (- decrease) in deferred tax liabilities n.a. -159.708 11 Increase (- decrease) in operating liabilities n.a. 6.096.020 12 Revaluatory operating expenses from working capital n.a. 0 13 Increase (- decrease) in accrued costs and deferred revenues n.a. 711.737 14 Cash flow from operations (5+6+7+8+9+10+11+12+13) n.a. 3.386.560 B Cash flows from (used in) investing activities Receipts (- Expenditure) from investing activities 15 Offset decrease (- increase) in intangible long-term assets n.a. 125.084 16 Offset decrease (- increase) in tangible long-term assets n.a. -3.682.481 17 Offset decrease (- increase) in investment properties n.a. 0 18 19 Offset decrease (- increase) in long-term financial investments Offset decrease (- increase) in short-term financial investments n.a. 839.201 n.a. 780.938 20 Cash flow from investments (15+16+17+18+19) n.a. -1.937.258 C Cash flows from (used in) financing activities Receipts (- Expenditure) from financing 21 Increase (- decrease) in equity capital (less net profit) n.a. -632.075 22 Offset increase (- decrease) in provisions n.a. -20.324 23 Offset increase (- decrease) in long-term financial liabilities n.a. -3.688.922 24 Offset increase (- decrease) in short-term financial liabilities n.a. 2.950.243 25 Cash flow from financing (21+22+23+24) n.a. -1.391.078 26 Cash and cash equivalents, end of year 145.293 203.516 27 Net increase in cash and cash equivalents (14+20+25 n.a. 58.224 28 Cash and cash equivalents, beginning of year n.a. 145.293 Page 6 of 12
RATIOS 12/31/2011 12/31/2012 Monthly sales revenues (in EUR) 3.329.864 2.520.182 Investment in intang., tangible long-term assets and inventories (in EUR) 114.105.568 106.143.459 Financial liabilities (in EUR) 39.580.237 38.841.558 Net worth (in EUR) 44.117.182 28.811.318 EBITDA (in EUR) -1.406.299-6.103.312 Free cash flow - estimation (in EUR) n.a. 1.449.299 Cash-flow estimation Cash-flow from operating activities (in EUR) n.a. 3.386.558 Cash-flow from investing activities (in EUR) n.a. -1.937.259 Cash-flow from financing activities (in EUR) n.a. -1.391.077 Balance at the beginning of the year (in EUR) 145.293 203.516 Changes in cash and cash equivalents (in EUR) n.a. 58.223 Balance at the end of the period (in EUR) n.a. 145.293 Financial intermediary position Net debt (in EUR) 69.988.386 77.332.141 Net short-term debt (in EUR) 46.536.374 56.816.920 Net long-term debt (in EUR) 23.452.012 20.515.222 Net claim (in EUR) / / Net short-term claim (in EUR) / / Net long-term claim (in EUR) / / Net working capital analysis Net working capital - NWC (in EUR) -35.624.512-51.164.324 Recommended net working capital (in EUR) -15.257.060-20.884.066 Surplus / deficit of NWC (in EUR) -20.367.452-30.280.258 Share of NWC in sales revenues (%) -89,15-169,18 Share of deficit of NWC in sales revenues (%) 50,97 100,13 Share of deficit of NWC which can be replaced with net profit in one year (%) Financial strength / / Capital ratio (%) 34,93 24,65 Debt to net worth 1,86 3,05 Financing of tangible and intangible long-term assets by capital (%) Financing of long-term assets and inventories by capital (%) 42,72 28,66 37,43 26,44 Long-term sources to long-term assets (%) 66,67 50,46 Financial stability (%) 60,49 47,84 Net claim to net worth (%) / / Net short-term claim to monthly sales income (in months) Financial balance / / Current ratio 0,35 0,21 Quick acid ratio 0,15 0,12 Quick ratio 0,02 0,01 Quality of net working capital / / Long-term financing of short-term assets (%) / / Long-term financing of inventories (%) / / Short-term financing of long-term assets (%) 33,33 49,54 Page 7 of 12
Profitability and efficiency Sales revenues increase/decrease (%) n.a. -24,32 Net profit margin on sales (%) -20,32-48,45 Operating margin (%) -8,69-27,33 EBITDA in sales revenues (%) -3,52-20,18 Cash flow from operating activities in sales revenues (%) n.a. 11,20 Free cash flow in sales revenues (%) n.a. 4,79 Return on equity - ROAE (%) -18,42-40,21 Return on assets - ROAA (%) -6,43-12,06 Rate of accumulation (%) -15,15-41,37 Sales revenues per employee (in EUR) 31.414 43.577 Labour costs in value added 1,06 1,51 Value added per employee (in EUR) 7.096 5.687 Net profit/loss per employee (in EUR) -6.383-21.115 Net profit to operating cash-flow (%) n.a. / Share of cash-flow from operating activities in total assets (%) n.a. 2,90 Share of loss in depreciation (%) -393,25-677,40 Share of loss in share capital (%) -63,66-114,74 Assets management Inventory days 90 83 Receivables collection period (days) 64 85 Payables deferral period (days) 275 365 Cash converting cycle (days) -121-197 Assets turnover 0,32 0,25 Capital turnover 0,91 0,83 Indebtedness Level of indebtedness-fin. of material investments by foreign funds (%) 61,34 72,86 Financial debt to total capital 0,90 1,35 Net financial debt to EBITDA / / Ratio of short-term debt to monthly sales revenues (in months) Ratio of net short-term debt to monthly sales income (in months) Factor of indebtedness (total debt compared to accumulation in years) 16,50 25,67 13,98 22,54 / / Share of free cash flow in fin. and oper. Liabilites (%) n.a. 1,65 Share of EBITDA in fin. and oper. Liabilites (%) / / EBIT financial expenses cover ratio / / EBITDA financial expenses cover ratio / / Share of financial costs in sales revenues (%) 12,53 21,68 Trade receivables to trade payables 0,21 0,18 Share of intangible and tangible long-term assets in depreciation (%) n.a. / Page 8 of 12
CONCLUSION/EVALUATION Notes: Resume: Creditworthiness: Description of creditworthiness: - Mr. Ivo Ivic is also the director of the company PROGRAM d.o.o., Rijeka, Croatia - Mr. Marko Maric is also a member of the management board of ZVIJEZDA d.o.o., Split, Croatia - company performed with both operating and net loss in years under discussion - sales revenues decreased by 24% compared to 2011 and were recorded at 2.520.182 EUR per month in 2012 - company is net debtor, 72% of company's material investments in 2012 were financed by foreign funds -share of capital in total liabilities was recorded at acceptable level, still financial strength was poor, only 47% of company's long term assets and inventories in 2012 were financed by long term sources of financing - the debts, both net short term debt compared to monthly sales income and the total debts compared to retained earnings, were recorded at high level in years under discussion D- Critical financial condition. No capacity for payment of the commitments. Recommended credit limit: (EUR) 0 EUR Based on available financial data and due to high overall indebtedness, especially net short term indebtedness that can make problems with current liquidity, credit limit for the company is 0! Some of the data are supplied from sources not controlled by Pro kolekt d.o.o. Pro kolekt d.o.o. does not guarantee for the correctness or the effective delivery of the information and will not be held responsible for any errors therein or omissions there from.credit report is made solely for clients needs. Credit report is intended only for clients decision making and is not intended for further distribution. Pro kolekt d.o.o. does not take any responsibility for business decisions made upon credit report. Exchange rate (balance sheet): 1 EUR 2011 2012 End of period 7,53000 HRK 7,52000 HRK Average 7,43000 HRK 7,51000 HRK Page 9 of 12
GRAPHS (COMPANY) Net sales revenues, EBITDA, net profit/loss (last three business periods) Revenue structure (latest period) Cost structure in sales revenues (last three business periods) Page 10 of 12
Accumulation in sales revenues (latest period) Return on equity - ROAE (last three business periods) Assets and liabilities structure (latest period) Page 11 of 12
Comparison of financial debt to equity capital Cash-flow estimation Page 12 of 12