0. Preparation of special financial statements For the purposes of this Offering Circular and in accordance with the requirements of Commission Regulation (EC) No. 809/2004 of 29 April 2004 of the European Parliament and of the Council we have prepared these special financial statements (hereafter: consolidated financial statements ). The consolidated financial statements cover the consolidated financial statements of 2013 and 2014 (with the comparative data of 2012), approved by the Annual General Meeting, and the additional notes, which became necessary because of the regulations applicable to listed companies. 1. Reporting entity Waberer s International Zrt. (hereafter: Company ) is an enterprise based in Hungary. Registered office: 1239 Budapest Nagykőrösi út 351. The consolidated financial statements comprise the Company and its subsidiaries (hereinafter collectively referred to as: the Group, and separately as Group entities ) as well as the Group s interests in associates and jointly controlled entities. The Group's core activity is transportation, forwarding and logistics services. 2. Basis of preparation (a) Statement of compliance The Group's consolidated financial statements were prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. The IFRS comprise accounting standards issued by the IASB and its predecessor, as well as interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC) and its predecessor. The consolidated financial statements were approved by the Board of Directors on 21 September 2015. (b) Basis of measurement With the exception of derivative financial instruments, which were measured at fair value, the consolidated primary financial statements were prepared on a historic cost basis. The methods used for fair value measurement are detailed in Note 30. (c) Functional and presentation currency On 31 December 2012, management decided to change the Company s presentation currency. The Group s sales revenues are generated and its costs incur predominantly in EUR and changes in the local Hungarian economy have very little effect on EUR rates. 95% of the Company s business is done within the European Union. The Group is financed in EUR and, owing to the special and EU-wide nature of the Company s business, the CDS rates for Hungary are barely considered by the Group s funders and creditors when establishing their interest premiums. Accordingly, the consolidated financial statements are prepared in EUR which has been the Company s presentation currency since 1 January 2013. The change in the presentation currency according to IAS 8 qualifies as a change in the accounting policy. Therefore items shown in the notes for prior periods are presented as if the currently used currency has always been in place. Comparative figures were presented for the 1 January 2012 at 31 December 2011 exchange rates (311.13 HUF/EUR), 2012 income statement figures were presented at the average annual National Bank rate, figures as at 31 December 1
2012 were converted from HUF to EUR at the official HUF/EUR rate of the National Bank of Hungary prevailing at 31 December 2012 (291.29 HUF/EUR). (d) Use of estimates and judgments The preparation of financial statements in accordance with the following accounting policies requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. Information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements are described in the notes below: measurement of recoverable amount of cash-generating unit containing goodwill (see Note 6. a) provisions and contingent items (see Notes 18 and 32) measurement of financial instruments (Note 31. d) rating of leases (Note 3. g). recording of gain on fleet sales (Note 3.h) 3. Significant accounting policies The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements and have been applied consistently by Group entities. (a) Basis of consolidation (i) Subsidiaries Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries were amended if this was necessary to ensure consistency with the policies applied by the Group. (ii) Associates and jointly-controlled entities (equity accounted investees) Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies. Significant influence is presumed to exist when the Group holds between 20% and 50% of the voting power of another entity. Jointly-controlled entities are those entities over whose activities the Group has joint control, established by contractual agreement and where unanimous consent is required for strategic financial and operating decisions. Associates and jointly-controlled entities are accounted for using the equity method (equity accounted investees), and are initially recognised at cost. The Group s investments include goodwill identified on acquisition, net of any accumulated impairment losses. The consolidated financial statements include the Group s share of the income and expenses and equity movements of equity-accounted investees, after adjustments to align the accounting policies with those of the Group, from the date that significant influence or joint control commences until the date that significant influence or joint control ceases. When the Group s share of losses exceeds its interest in an equity accounted investee, the carrying amount of that interest (including any long-term investments) is reduced to nil and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee. 2
(iii) Transactions eliminated on consolidation Intra-group balances, and any unrealised income and expenses arising from intra-group transactions are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Group s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. (b) Foreign currency (i) Foreign currency transactions Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between amortised cost in the functional currency at the beginning of the period, adjusted for effective interest and payments during the period, and the amortised cost in foreign currency translated at the exchange rate at the end of the period. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Gains and losses arising on remeasurement are included in the consolidated profit or loss for the period, with the exception of gains and losses on the remeasurement of available-for-sale equity instruments. (ii) Foreign operations The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to Hungarian forints at exchange rates at the reporting date. The income and expenses of foreign operations are translated to forints at exchange rates at the dates of the transactions. Foreign currency differences are recognised directly in equity, in the foreign currency translation reserve (translation reserve). When a foreign operation is disposed of, in part or in full, the relevant amount in the translation reserve is transferred to profit or loss. Foreign exchange gains and losses arising from a monetary item receivable from or payables to a foreign operation, the settlement of which is neither planned nor likely in the foreseeable future, are considered to form part of a net investment in a foreign operation and are recognised directly in equity in the foreign currency translation reserve. (c) Financial instruments (i) Non-derivative financial instruments Non-derivative financial instruments comprise investments in equity and debt securities, trade and other receivables, cash and cash equivalents, loans and borrowings, and trade and other payables. Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit or loss, at fair value adjusted for any directly attributable transaction costs. Subsequent to initial recognition non-derivative financial instruments are measured as described below. Cash and cash equivalents comprise cash balances and call deposits. Available-for-sale financial assets The Group s investments in equity securities and certain debt securities are classified as available-for-sale financial assets. Subsequent to initial recognition they are measured at fair value, and changes therein, other than impairment losses, and foreign exchange gains and losses on available-for-sale monetary items, are recognised directly in equity. When an investment is derecognised, the cumulative gain or loss in equity is transferred to profit or loss. 3
Other Other non-derivative financial instruments are measured at amortised cost using the effective interest method, less any impairment losses. (ii) Borrowing costs Borrowing costs that are directly attributable to the acquisition or construction of a qualifying asset are capitalised as part of the cost of the given asset. Other borrowing costs are expensed when incurred. (iii) Derivative financial instruments The Group holds derivative financial instruments to hedge its foreign currency risk exposures. A cash-flow hedge is a hedge of exposure to the variability of cash flow that is attributable to a particular risk associated with the recognized asset or liability. Such as all or some future interest payments on variable rate debt or a highly probable forecast transaction and could affect profit or loss. Derivatives are recognised initially at fair value; attributable transaction costs are recognised in profit or loss when incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are recognised through profit and loss. Derivatives are recognised initially at fair value; attributable transaction costs are recognised in profit or loss when incurred. Subsequent to initial recognition, derivatives are measured at fair value at year-end; the effective part of the fair value is recognised directly in other comprehensive income while the ineffective part is recognised through profit or loss. In the case of hedging transactions closed in the reporting period and in accordance with the company's accounting policies, any realised profit or loss is recognised in the same way as for the hedged product, i.e. under direct costs: raising the incomes in the case of a gain and lowering the income in the case of a loss. (iv) Share capital Ordinary shares Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares are recognised as a deduction from equity, net of any tax effects. Repurchase of share capital (treasury shares) When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly attributable costs, is recognised as a deduction from equity net of any tax effects. Repurchased shares are classified as treasury shares and are presented as a deduction from total equity. When treasury shares are sold or subsequently reissued, the amount received is recognised as an increase in equity, and the resulting surplus or deficit on the transaction is transferred to/from retained earnings. (d) Property, plant and equipment (i) Recognition and measurement Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses. The cost values of individual assets in the categories of property, plant and equipment were determined on 1 January 2007, when the Group switched to IFRS reporting, based on their fair values as of 1 January 2006. Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to a working condition for its intended use, and the costs of dismantling and removing the assets and restoring the site on which they are located. Borrowing costs related to the acquisition, construction or production of qualifying assets are capitalised to the cost of the asset. When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. Gains and losses on the disposal of an item of property, plant and equipment are determined by comparing the 4
proceeds from the disposal with the carrying amount of the item and are recognised net in profit or loss among other income. (ii) Subsequent costs The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The carrying value of the replaced part is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred. (iii) Depreciation Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment and based on the amount of the depreciable asset value. The depreciable amount of an asset is its cost less any residual value. Leased assets are depreciated over the shorter of the lease term and their useful lives, unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. Land is not depreciated. The estimated useful lives for the current and comparative period are as follows: buildings 30 years plant and equipment 7 years vehicles 4 years other fixtures and fittings 7 years The average useful life of the Company s leased trucks is four years during which their acquisition cost is written off on a straight line basis to a 48% residual value, in case of trailers, the useful life is five years. If the lease term is prolonged for two more years, the residual value changes accordingly so that straight line depreciation applies for two more years to the new residual value. Depreciation methods, useful lives and residual values are reassessed at each reporting date. (e) Intangible assets (i) Goodwill Goodwill (negative goodwill) arises on the acquisition of subsidiaries, associates and jointly-controlled entities. Cost of goodwill On 1 January 2007 the Company decided to apply IFRS 3 Business Combinations retrospectively for business combinations created on or after 1 January 2006. The carrying value on 1 January 2006 of the goodwill from business combinations pre-dating 1 January 2006 is the carrying value as at 1 January 2006 determined on the basis of Hungarian accounting standards. For subsequent business combinations the Company determines the goodwill as the difference between the consideration paid and the fair value of the net assets acquired. Acquisition of minority interests Acquisitions of minority interests in subsidiaries are treated as transactions between equity holders and as such the results are recorded directly in equity upon the acquisition. 5
Subsequent measurement Goodwill is measured at cost less accumulated impairment losses. In respect of equity accounted investees, the carrying amount of goodwill is included in the carrying amount of the investment. (ii) Other intangible assets Other intangible assets acquired by the Group which have definite useful lives are recognised at cost less accumulated amortisation and accumulated impairment losses. (iii) Subsequent expenditure Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognised in profit or loss when incurred. (iv) Amortisation Amortisation is recognised in profit or loss on a straight-line basis, with the exception of goodwill, over the estimated useful lives of intangible assets, from the date that they are available for use. The estimated useful lives for the current and comparative period are as follows: software 3 years rights and concessions 6 years (f) Investment property Investment property is held to earn rentals or for capital appreciation or both, and is therefore not held for sale in the ordinary course of business, or for use for the production or supply of goods or services, or for administrative purposes. Investment property is measured at cost less accumulated depreciation. (g) Leased assets Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. When lease transactions are classified the risk derived from the change in the residual value of the leased assets is taken into account. Upon initial recognition the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Other leases are operating leases and are not recognised on the Group s statement of financial position. (h) Gain on fleet sales The net result of the sale of the fixed assets held for sale (mainly vehicles purchased from the financial lease contract) is recognized in other income or other expense. (i) Inventories Inventories are measured at the lower of cost and net realisable value. The cost of spare part inventories is determined at average price and the cost of tank inventories is based on the FIFO principle, and includes expenditure incurred in acquiring the inventories, their production or transformation costs, and other costs incurred in bringing them to their existing location and condition. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. (j) Impairment loss (i) Financial assets A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have 6
had a negative effect on the estimated future cash flows of that asset. An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the original effective interest rate. Impairment losses for available-for-sale financial assets are calculated at fair value. Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. All impairment losses are recognised in profit or loss. If impairment must be recognised, any cumulative loss that had been recognised directly in equity in relation to available-for-sale financial assets is recognised in the statement of comprehensive income. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost and available-for-sale financial assets that are debt securities, the reversal is recognised in profit or loss. For available-for-sale financial assets that are equity securities, the reversal is recognised directly in equity. (ii) Non-financial assets The carrying amounts of the Group s non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the asset s recoverable amount is estimated. For goodwill and intangible assets that have indefinite useful lives or that are not yet available for use, the recoverable amount is estimated at each reporting date. The Group examines on an annual basis whether there are any indications of impairment, and reviews whether the recording of impairment may be justified for goodwill. Accordingly, the recoverable amount of the cash-generating unit to which the goodwill is related must be estimated. To determine the recoverable amount the Group assesses the future cash flows of the cash-generating unit, and selects an appropriate discount rate to calculate the present value of the cash flows. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets ( cashgenerating unit ). The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to cash-generating units that are expected to benefit from the synergies of the combination. An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. All impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cashgenerating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis. An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. (k) Non-current assets held for sale Non-current assets (or disposal groups comprising assets and liabilities) whose carrying amount will be recovered principally through a sale transaction rather than through continuing use are considered to be non-current assets classified as held for sale. Immediately prior to the classification as held for sale the assets (or components of the disposal group) are re-measured in accordance with the Group's accounting policies. Thereafter, the assets (or disposal 7
group) are measured at the lower of the carrying value and the fair value less cost to sell. Impairment losses related to a disposal group are allocated initially to goodwill and then proportionally to the other assets, apart from inventories, financial assets, deferred tax assets, employee-benefit related assets and investment properties, to which losses are not allocated, and which are still measured in accordance with the Group's accounting policies. Impairment losses related to the initial classification as held for sale and any subsequent gains or losses following re-measurement are recognised in profit or loss. Gains are recognised up to the amount of any cumulative impairment loss. When classifying the assets back the Group compares the carrying value less impairment of the assets held for sale with the value that would have prevailed if the assets had been depreciated when carried as held for sale, before proceeding to use the lower figure, if this was not higher than the recoverable amount of the asset. The net result of sales of non-current assets held for sale, typically tow trucks and trailers bought from leasing contracts, are shown among other incomes or other expenses depending on the outcome of the transaction. (l) Employee benefits (i) Defined contribution plans Defined contribution plans are post-employment benefit plans under which an enterprise pays fixed contributions into a separate entity but has no legal or constructive obligation to pay further contributions. Payments to defined contribution pension-benefit plans are recognised in profit and loss as employee benefit related expense when incurred. (ii) Termination benefits Termination benefits are recognised as expense when the Group is demonstrably committed to a detailed formal plan to terminate employment before the normal retirement date or to provide termination benefits as a result of an offer made in order to encourage voluntary redundancy, without a realistic possibility of withdrawal. Termination benefits for voluntary redundancies are recognised as expense if the Group has made an offer encouraging voluntary redundancy, it is probable that the offer will be accepted and the number of acceptances can be estimated reliably. (iii) Short-term employee benefits Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. (m) Provisions A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. (n) Net revenues Net revenues include amounts billed to customers for products or services delivered during the financial year. Net sales revenues are recognised when the amount of revenues becomes evident or when it is probable that the Group will be able to realise the billed amount. Sales revenues include the billed amounts less VAT and any applicable discounts. (i) Services Revenues from services rendered are recognised in profit and loss in accordance with the percentage of completion of the transaction on the reporting date. The percentage of completion is determined by assessing the work performed. (ii) Rental revenue Revenue from renting investment property is recognised evenly in profit and loss over the term of the rental. Rental incentives provided are recognised as an integral part of the total rental revenue over the term of the rental. 8
(o) Leasing fees Lease payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease. Minimum lease payments made under finance leases are apportioned between finance expense and the reduction of the outstanding liability. The finance charge shall be allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. (p) Finance income and expense Finance income comprises the following: interest income on investments (including available-for-sale financial assets), dividend income, gains from the sale of available-for-sale financial assets and changes in the fair value of financial assets at fair value through profit or loss. Interest income is recognised as it accrues, using the effective interest method. Dividend income is recognised on the date that the Group s right to receive payment is established, which in the case of quoted securities is the ex-dividend date. Finance expenses comprise the following: interest expense on borrowings, unwinding of the discount on provisions, changes in the fair value of financial assets at fair value through profit or loss, and impairment losses recognised on financial assets. Exchange gains and losses are recognised net. (q) Income tax Income tax expense comprises current and deferred income taxes. Income tax expense is recognised in profit or loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Hungarian municipal business tax payable is also presented as an income tax. Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that they probably will not reverse in the foreseeable future. In addition, deferred tax may not be recognised for temporary taxable differences related to the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and deferred tax liabilities should be offset on the statement of financial position only if the entity has the legal right to offset current tax assets with current tax liabilities, and they are related to income taxes levied by the same taxing authority on the same taxable entity, or on different entities that intend to realise their current tax assets and settle their current tax liabilities either on a net basis or at the same time. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised. 9
(r) IFRS and IFRIC interpretations adopted in current year The Group has adopted the following new and amended IFRS and IFRIC interpretations during the year. Adoption of these standards and interpretations did not have any significant effect on the financial statements of the Group. - Amendments to IFRS 10, IFRS 12 and IAS 27 relating to Investment Entities - IAS 32 Offsetting Financial Assets and Financial Liabilities Amendments to IAS 32 - IFRIC 21 Levies - Amendments to IAS 36 Impairment of Assets Recoverable Amount Disclosures for Non-Financial Assets - IAS 39 Novation of Derivatives and Continuation of Hedge Accounting - Amendments to IAS 19 Defined Benefit Plans: Employee Contributions - Annual improvements 2010-2012 Cycle - Annual improvements 2011-2013 Cycle The principal effects of these changes are as follows: Amendments to IFRS 10, IFRS 12 and IAS 27 relating to Investment Entities These amendments are effective for annual periods beginning on or after 1 January 2014 provide an exception to consolidation requirement for entities that meet the definition of an investment entity under IFRS 10. The exception to consolidation requires investment entities to account for subsidiaries at fair value through profit or loss. IAS 32 Offsetting Financial Assets and Financial Liabilities Amendments to IAS 32 These amendments clarify the meaning of currently has a legally enforceable right to set-off and the criteria for non-simultaneous settlement mechanisms of clearing houses to qualify for offsetting. These are effective for annual periods beginning on or after 1 January 2014. These amendments are not expected to be relevant to the Group. IFRIC 21 Levies IFRIC 21 provides guidance on when to recognise a liability for a levy imposed by a government, both for levies that are accounted for in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets and those where the timing and amount of the levy is certain. This interpretation is effective for annual periods beginning on or after 1 January 2014. Amendments to IAS 36 Impairment of Assets Recoverable Amount Disclosures for Non-Financial Assets These amendments remove the requirement to disclose recoverable amount of those CGUs to which goodwill or other intangibles with indefinite useful lives had been allocated when there was no impairment or reversal of impairment recognised on the related CGU. These amendments are effective retrospectively for annual periods beginning on or after 1 January 2014. Amendments to IAS 19 Defined Benefit Plans: Employee Contributions IAS 19 requires an entity to consider contributions from employees or third parties when accounting for defined benefit plans. Where the contributions are linked to service, they should be attributed to periods of service as a negative benefit. These amendments clarify that, if the amount of the contributions is independent of the number of years of service, an entity is permitted to recognise such contributions as a reduction in the service cost in the period in which the service is rendered, instead of allocating the contributions to the periods of service. This amendment is effective for annual periods beginning on or after 1 July 2014. 10
IAS 39 Novation of Derivatives and Continuation of Hedge Accounting These amendments provide relief from discontinuing hedge accounting when novation of a derivative designated as a hedging instrument meets certain criteria. These amendments are effective for annual periods beginning on or after 1 January 2014. Annual improvements 2010-2012 Cycle These improvements are effective from 1 July 2014. They include: IFRS 2 Share-based Payment This improvement is applied prospectively and clarifies various issues relating to the definitions of performance and service conditions which are vesting conditions, including: - A performance condition must contain a service condition - A performance target must be met while the counterparty is rendering service - A performance target may relate to the operations or activities of an entity, or to those of another entity in the same group - A performance condition may be a market or non-market condition If the counterparty, regardless of the reason, ceases to provide service during the vesting period, the service condition is not satisfied IFRS 3 Business Combinations The amendment is applied prospectively and clarifies that all contingent consideration arrangements classified as liabilities (or assets) arising from a business combination should be subsequently measured at fair value through profit or loss whether or not they fall within the scope of IFRS 9 (or IAS 39, as applicable). IFRS 8 Operating Segments The amendments are applied retrospectively and clarifies that: An entity must disclose the judgements made by management in applying the aggregation criteria in paragraph 12 of IFRS 8, including a brief description of operating segments that have been aggregated and the economic characteristics (e.g., sales and gross margins) used to assess whether the segments are similar The reconciliation of segment assets to total assets is only required to be disclosed if the reconciliation is reported to the chief operating decision maker, similar to the required disclosure for segment liabilities. IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets The amendment is applied retrospectively and clarifies in IAS 16 and IAS 38 that the asset may be revalued by reference to observable data on either the gross or the net carrying amount. In addition, the accumulated depreciation or amortisation is the difference between the gross and carrying amounts of the asset. IAS 24 Related Party Disclosures The amendment is applied retrospectively and clarifies that a management entity (an entity that provides key management personnel services) is a related party subject to the related party disclosures. In addition, an entity that uses a management entity is required to disclose the expenses incurred for management services. Annual improvements 2011-2013 Cycle These improvements are effective from 1 July 2014. They include: 11
IFRS 3 Business Combinations The amendment is applied prospectively and clarifies for the scope exceptions within IFRS 3 that: - Joint arrangements, not just joint ventures, are outside the scope of IFRS 3 - This scope exception applies only to the accounting in the financial statements of the joint arrangement itself. IFRS 13 Fair Value Measurement The amendment is applied prospectively and clarifies that the portfolio exception in IFRS 13 can be applied not only to financial assets and financial liabilities, but also to other contracts within the scope of IFRS 9 (or IAS 39, as applicable). IAS 40 Investment Property The description of ancillary services in IAS 40 differentiates between investment property and owner-occupied property (i.e., property, plant and equipment). The amendment is applied prospectively and clarifies that IFRS 3, and not the description of ancillary services in IAS 40, is used to determine if the transaction is the purchase of an asset or business combination. The amendments did not have any impact on the Group. 4. Earnings per share The share capital of Waberer s International Zrt is EUR 5,128,910 comprising 14,654,028 registered dematerialised ordinary shares each with a nominal value of EUR 0.35 that provide equal rights to shareholders. Therefore the share capital of Waberer s International Zrt was EUR 5,128,910 both at 31 December 2013 and 31 December 2014. The issued capital at 31 December 2012 was EUR 5,030,736, the number of shares was similarly Basic EPS amounts are calculated by dividing the profit for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year. In all three years the diluted earnings per share equals with the basic earnings per share as there is no dilutive effect on the earnings. Earnings per share 2012 2013 2014 Profit for the year attributable to ordinary equity holders of the parent - EUR Weighted average ordinary shares outstanding basic Earnings per ordinary share in EUR Diluted earnings per ordinary share in EUR 19,274,789 12,673,603 9,929,833 14,654,028 14,654,028 14,654,028 1.32 0.86 0.68 1.32 0.86 0.68 5. Segment Information With a view to ensuring transparent operations, IFRS 8 Operating Segments requires listed companies to provide enhanced disclosures about their operating segments. The Group has identified two operating segments (International and Domestic) as set out below and the Group s overall operations are directed by Group management as aligned to these segments. The two operating segments include the following activities: International: international FTL transport and shipping, and international forwarding Domestic: international FTL and LTL transport and shipping, warehousing, and vehicle repairs for third parties Financial information about the Group s segments is presented below. 12
Sales revenues and key comprehensive income statement items: 2012 Item International Domestic Inter-segment transfers Total Sales to third parties 345,991,282 31,365,369 377,356,651 Inter-segment sales 895,096 655,186 (1,550,282) - Sales revenues 346,886,378 32,020,555 (1,550,282) 377,356,651 EBITDA 50,424,262 1,926,830 52,351,092 impairment 26,703,304 1,028,266 27,731,570 EBIT 23,720,958 898,564-24,619,522 2013 Item International Domestic Inter-segment transfers Total Sales to third parties 383,193,383 60,346,907 443,540,290 Inter-segment sales 4,141,125 2,541,526 (6,682,651) - Sales revenues 387,334,508 62,888,433 (6,682,651) 443,540,290 EBITDA 54,022,434 8,046,040 62,068,474 impairment 30,898,207 3,636,176 34,534,383 EBIT 23,124,227 4,409,864-27,534,091 2014 Item International Domestic Inter-segment transfers Total Sales to third parties 418,621,273 77,578,667 496,199,940 Inter-segment sales 6,349,936 1,445,921 (7,795,857) - Sales revenues 424,971,209 79,024,588 (7 795 857) 496,199,940 EBITDA 59,302,199 7,912,954 67,215,153 impairment 37,293,746 4,598,138 41,891,884 EBIT 22,008,454 3,314,815-25,323,269 Interest received/paid: 2012 2013 2014 Item International Domestic International Domestic International Domestic Interest received 485,950 20,095 503,543 12,540 96,921 1,365 Interest paid 6,522,293 119,853 6,378,732 474,586 6,236,391 982,459 Actual income taxes: 2012 2013 2014 Item International Domestic International Domestic International Domestic actual income taxes 7,976,480 393,501 4,240,927 723,214 4,198,192 1,028,236 - income taxes paid 3,921,695 408,659 2,773,144 734,676 4,846,862 864,449 - deferred tax 4,054,785 (15,158) 1,467,783 (11,462) (648,670) 163,787 13
Non-current assets: 2012 2013 2014 Megnevezés International Domestic International Domestic International Domestic Properties 13,244,087 462,913 13,891,034 3,736,835 14,172,269 1,799,992 Capital expenditures 879,166 224,854 703,155 243,232 2,219,651 460,954 Vehicles 134,784,551 3,144,060 160,981,486 14,595,434 208,802,435 18,199,131 Other equipment 3,431,291 945,289 2,602,654 1,454,053 2,859,991 2,348,634 Intangible assets 934,660 61,955 947,753 595,102 559,711 460,905 Goodwill 15,925,168-15,925,168 2,336,841 15,925,168 2,336,841 Other long-term financial assets 562,934-520,659 285,216 415,664 268,930 Deferred tax assets 741,591 55,632 24,827 48,839 209,856 - Events without significant cash movements: Item 2012 2013 2014 International Domestic International Domestic International Domestic Unrealised foreign exchange gain or loss on leases 1,286,761 (64 152) 1,286,761 (64 152) - (280,524) Unrealised foreign exchange gain or loss on other foreign exchange assets and liabilities 3,677 (126 703) 3,677 (126 703) (320,746) (182,508) Impairment loss 432,688 98,343 432,688 98,343 3,241,404 1,762,968 Difference between provisions made and released (817,772) 1,520 (817 772) 1,520 677,932 348,405 6. Intangible assets Opening at 01.01.2012 Intangible assets Goodwill Total Gross value 8,527,978 14,909,658 23,437,636 Cumulative amortisation and impairment 7,614,026-7,614,026 Net value 913,952 14 909,658 15,823,610 Changes in 2012 Additions and capitalisations 506,282-506,282 Amortisation (479,528) - (479,528) Disposals (6,209) - (6,209) Effect of exchange rate difference 62,118 1,015,510 1,077,628 Net closing value 996,615 15,925,168 16,921,783 14
Closing at 31 December 2012 Intangible assets Goodwill Total Gross value 9,144,370 15,925,168 25,069,538 Cumulative amortisation and impairment 8,174,755-8,147,755 Net value 996,615 15,925,168 16,921,783 Changes in 2013 Additions and capitalisations 1,439,547 2,336,841 3,776,388 Addition related to business combination 226,443 226,443 Amortisation (1,119,750) (1,119,750) Disposals - Effect of exchange rate difference - Net closing value 1,542,855 18,262,009 19,804,864 Closing at 31 December 2013 Gross value 11,602,926 18,262,009 29,864,935 Cumulative amortisation and impairment 10,060,071-10,060,071 Net value 1,542,855 18,262,009 19,804,864 Changes in 2014 Additions and capitalisations 750,565-750,565 Amortisation (1,272,804) - (1,272,804) Disposals - - - Net closing value 1,020,616 18,262,009 19,282,625 Closing at 31 December 2014 Gross value 12,333,449 18,262,009 30,595,458 Cumulative amortisation and impairment 11,312,833-11,312,833 Net value 1,020,616 18,262,009 19,282,625 (a) Goodwill Goodwill generated by means of business combinations is allocated at the time of the acquisition to cash-generating units that are likely to benefit from the impacts of the business combination. Most of the carrying value of goodwill is allocated to the international transportation and forwarding cash-generating unit in its entirety and totalled EUR 15,925,168 at the end of 2014. On 26 April 2013, Waberer s Logisztika Kft. acquired 60%, and therefore controlling influence, in Szemerey Transport Zrt. in a share swap transaction. In line with the Group s accounting policies goodwill of EUR 2,336,841 is presented in the consolidated balance sheet. The amount of goodwill related to the acquisition of Szemerey Transport Zrt. is not attributable to the assets as it reflects a fair value difference at the time of the acquisition and was recognised against minority interest. The basis for the recoverable amount calculation is the five-year plans approved by management, on which basis the cash flows are projected for the purpose of determining the value in use. The annual plans for 2014-2018 are expressed in EUR and if the items arising in HUF, it can be converted to HUF at a 315 HUF/EUR rate if necessary. The basis year is 2014 s it reflects actual figures at the time of the planning. Compared to 2014, the fleet is expected to increase by 7.7% in 2015 and then by 200 vehicles on average in each year afterwards. The target is a fleet of 3,650 vehicles by the end of 2018 in international shipping and a fleet of 525 for 15
domestic shipping. Fuel costs were adjusted to reflect by 5.7% lower fuel prices in 2015 and it is expected to remain unchanged in the ensuing years. The effect of the Hungarian road toll system is reflected in increased transit costs in 2015 and remains unchanged in the years after. Driver costs are planned to increase by 4.1% but maintenance costs are expected to drop after 2014 as a result of an increasingly younger fleet to an average vehicle age of less than two years. A drastic increase is forecast in insurance costs as a result of increased mandatory vehicle insurance premiums and a large number of damage incidents. All the other costs have been planned to increase by 0.5% and 1.5% respectively, while payroll costs are expected increase at inflation+1%. The plans predict a considerable increase in the number of kilometres driven (200 km/trailer per month each year), and cargo capacity levels are also expected to increase by 0.2% over the year. The plans were based on the existing company structure with the only difference that the percentage of franchise fleet will increase along with the importance of having agency offices abroad in the international shipping line. The plans were compiled in a KPI-driven model in which the three main factors influencing cash flows were the fuel price, the number of kilometres driven and the fee level. Changes in main factors at EBIT level: an increase in fuel prices by 1 euro cent would cause a cash increase of EUR 1.3 million. an increase in the number of kilometres driven by 1 million kilometres would raise the cash generating ability by EUR 0.25 million one euro cent increase in fees would improve the cash generating ability by EUR 4.5 million Main changes expected at Group level in comparison to 2014 used for the 2015 planning: 7.7% growth in fleet 1.7% increase in the number of kilometres driven 0.1% reduction in fees 5.7% reduction in fuel prices (in EUR) 6.7% increase in driving cost 0.2% increase in truck load (b) Intangible assets with indefinite useful lives Other than goodwill, the Group has no assets with indefinite useful lives recorded under intangible assets. 16
7. Tangible assets Opening at 1 January 2012 Properties Construction in progress Vehicles Other equipment Total Gross value 16,679,440 484,058 168,437,807 12,901,157 198,502,462 Cumulative depreciation and impairment loss 3,151,856-51,810,815 8,190,229 63,152,900 Net value 13,527,584 484,058 116,626,992 4,710,928 135,349,562 Changes in 2012 Additions and capitalisations 440,454 62,368,665 60,477,051 860,376 124,146,546 FX effect of assets carried in FX (229,452) - (1,351,887) - (1,581,339) Reclassification from non-current assets held for sale - - - - - Depreciation (949,347) - (25,032,613) (1,410,507) (27,392,467) Derecognitions (8,407) (61,777,880) (8,985,064) (109,315) (70,880,666) Reclassification to non-current assets held for sale - - (11,663,119) - (11,663,119) Effect of exchange rate difference 926,168 29,177 7,857,251 325,098 9,137,694 Closing net value 13,707,000 1,104,020 137,928,611 4,376,580 157,116,211 Closing at 31 Dec 2012 Properties Construction in progress Vehicles Other equipment Total Gross value 17,991,074 1,104,020 192,756,460 13,954,753 225,806,306 Cumulative depreciation and impairment loss 4,284,074-54,827,849 9,578,173 68,690,096 Net value 13,707,000 1,104,020 137,928,611 4,376,580 157,116,211 17
Changes in 2013 Properties Construction in progress Vehicles Other equipment Total Additions and commissioning 1,551,545 79,622,473 77,300,180 928,381 159,402,579 Movements in FX assets due to FX rate fluctuations (33,357) - 6,202 (265) (27,420) Acquisition 3,282,414-7,863,761 404,031 11,550,206 Depreciation (879,733) - (30,981,196) (1,553,673) (33,414,602) Derecognition - (79,780,106) (7,435,079) (98,347) (87,313,532) Reclassified to held for sales - - (9,105,559) - (9,105,559) Closing net value 17,627,869 946,387 175,576,920 4,056,707 198,207,883 Closing at 31 Dec 2013 Gross value 22,791,676 946,387 252,180,121 15,188,553 291,106,737 Cumulative depreciation and impairment loss 5,163,807-76,603,201 11,131,846 92,898,854 Net value 17,627,869 946,387 175,576,920 4.056,707 198,207,883 Changes in 2014 Properties Construction in progress Vehicles Other equipment Total Additions and commissioning 2,194,218 136,483,516 128,455,747 3,324,074 270,457,555 Movements in FX assets due to FX rate fluctuations (213,079) (13,888) (655,579) (51,675) (934,221) Depreciation (904,307) - (37,882,628) (1,832,145) (40,619,080) Impairment (2,731,551) (761,371) (66,426) - (3,559,348) Derecognition (889) - (1,945,860) (288,336) (2,235,085) Reclassified to held for sale - (133,974,039) (36,480,608) - (170,454,647) Closing net value 15,972,261 2,680,605 227,001,566 5,208,625 250,863,057 Closing at 31 Dec 2014 Gross value 24,771,668 2,680,605 299,032,717 16,482,370 342,967,360 Cumulative depreciation and impairment loss 8,799,407-72,031,151 11,273,745 92,104,303 Net value 15,972,261 2,680,605 227,001,566 5,208,625 250,863,057 18
(a) Movements in tangible assets The Group's most important property is located in Nagykőrösi út and had a carrying value of HUF 2,080 million as at 31 December 2014 (31 December 2013: HUF 2,125 million); based on an appraisal by Eston Kft. its fair value is HUF 2,600 million (31 December 2013: HUF 2,640 million based on an appraisal by Eston Kft.). In 2008, Waberer s Romania carried out a major property investment and acquired a new business site and constructed an office building plus service buildings. The investment was capitalised in 2009; the carrying value of the property in Csíkszereda as at 31 December 2013 was EUR 2,948 thousand. As a result of a fair valuation by property values, an impairment loss totalling EUR 1,040 has been recognised on the site in Romania in 2014. In 2013 the group purchased a property from VN-Udvar Kft, which is located in Mosonmagyaróvár and it was previously rented by international transport division, in a value of EUR 1 million. Properties worth EUR 3.3 million acquired in 2013 as the result of the acquisition of Szemerey Zrt. were revalued at the end of 2014 and a total impairment loss of EUR 1,692 thousand was recognised as a result. (b) Mortgaged assets A mortgage was registered on the Group's properties at 1239 Budapest, Nagykőrösi út 351., at 1051 Budapest, Kossuth tér 18. and at 7632 Pécs, Nagyárpádi út 42. on 31 May 2013 to secure the loans of the Group. The Group repaid all its loans in 2014 and therefore the above listed properties became unencumbered. None of the Group s properties presented in the balance sheet as at 31 December 2014 are mortgaged. (c) Leased assets Tangible assets contain assets acquired by the Group as a result of finance leases. The gross value of assets leased as at 31 December 2013 totalled EUR 243,314 thousand, with a cumulative depreciation of EUR 71,134 thousand and a carrying value of EUR 172,180 thousand. At 31 December 2014, the gross value of leased assets totalled EUR 273,977 thousand, cumulative depreciation EUR 65,260 thousand and carrying value EUR 208,717 thousand. As in 2013 the Group continued its pre-crisis (per-2008) vehicle acquisition practice also in 2014 and replaced fouryear old vehicles with ones equipped with EURO 6 engines under a financial lease and an export enhancing development loan totalling EUR 128 million. (d) Commitments as of reporting date to purchase assets The Group has general agreements for asset purchases for three years, which relate only to recommended quantities but do not imply any future obligations. (e) Tentative construction cost of properties as at 1 January 2007 The initial cost of property, plant and equipment was determined on 1 January 2007, when the Group switched to IFRS reporting, and are based on their fair values as at 1 January 2006. The Group continues to depreciate properties based on the useful lives determined on 1 January 2006. 19
8. Investments in subsidiaries and joint ventures Company Country Scope of activities Ownership ratio 2012 Ownership ratio 2013 Ownership ratio 2014 international transportation and Waberer's Logisztika Kft. Hungary forwarding, logistics 100,00% 60,00% 60,00% Delta Rent Kft. Hungary vehicle trade 100,00% 100,00% 100,00% Merged into Waberer s Logisztika Kft Merged into Waberer s Logisztika Kft Szemerey Transport Zrt. Hungary domestic transportation, forwarding, logistics 0,00% international transportation and Waberer's Románia SA Romania forwarding 100,00% 100,00% 100,00% Waberer's Espana Spain international transportation 100,00% 100,00% 100,00% international transportation and forwarding 95,00% 95,00% 95,00% Royalsped Románia Romania Waberer's Polska Poland international forwarding 100,00% 100,00% 100,00% Waberer's Slovakia Slovakia logistics 100,00% 100,00% 100,00% Waberer s France France trading agent - - 100,00% Interszervíz Hargita Kft. Romania vehicle repairs 100,00% 100,00% 100,00% Cseri Intertrans Kft. Hungary international transportation 51,00% 100,00% 100,00% Simon Intertrans Kft. Hungary international transportation 51,00% 51,00% 51,00% Molnár S Intertrans Kft. Hungary international transportation 51,00% 100,00% 100,00% Kovács Á Intertrans Kft. Hungary international transportation 51,00% 51,00% 51,00% Molnár N Intersped Kft. Hungary international transportation 51,00% 51,00% 51,00% Réthi Intertrans Kft. Hungary international transportation 51,00% 51,00% 51,00% Vágenhoffer Intertrans Kft. Hungary international transportation 100,00% 51,00% 51,00% VT Intertrans Kft. Hungary international transportation 100,00% 51,00% 51,00% Pálinkás Intertrans Kft. Hungary international transportation 51,00% 51,00% 51,00% Székely Intertrans Kft. Hungary international transportation 51,00% 51,00% 51,00% Szabó Intertrans Kft. Hungary international transportation 51,00% 51,00% 51,00% Kerekes Intertrans Kft. Hungary international transportation 51,00% 51,00% 51,00% Veres Intertrans Kft. Hungary international transportation 51,00% 51,00% 51,00% Zsemlye Intertrans Kft. Hungary international transportation 51,00% 51,00% 51,00% Bódi Intertrans Kft. Hungary international transportation 51,00% 51,00% 51,00% S Tóth Intertrans Kft. Hungary international transportation 51,00% 51,00% 51,00% Vándor Intertrans Kft. Hungary international transportation 51,00% 51,00% 51,00% Transpont Hungária Kft. Hungary international transportation 51,00% 51,00% 51,00% Kanczler Intertrans Kft. Hungary international transportation - 51,00% 51,00% TT Intertrans Kft. Hungary international transportation - 51,00% 51,00% Euro-Unió Trans Kft. Hungary international transportation - 100,00% 100,00% Rapid Teherautószerviz Hungary vehicle repairs 51,00% 51,00% 51,00% Waberer s Network Kft. Hungary international groupage forwarding 99,00% 99,00% 99,00% In 2010 the Group's Management decided to establish a franchise company involving nine international hauliers, a service franchise company and a separate groupage freight company operating as part of Waberer s International Zrt. The Group continued the establishment of franchise companies in 2011 and another eight new companies were founded as a result. In 2012 one new franchise was estabilished and a former external subcontractors were involved in the acquisition of ownership of a franchise system. In 2013, the Group s management decided to establish three more franchise companies and more franchise companies are planned for 2015. Franchise companies fulfil international transport tasks as subcontractors of Waberer s International in an unified framework. On 26 April 2013, Waberer s Logisztika Kft. acquired 60%, and therefore controlling influence, in Szemerey Transport Zrt. in a share swap transaction while the former private person owner of Szemerey Transport Zrt. acquired 20