CAPITAL GROUP APATOR SA
OPINION AND REPORT OF THE STATUTORY AUDITOR
Year ending December 31, 2014
Opinion contains 3 pages
Supplementing report includes 13 pages
Opinion of the independent statutory auditor
and supplementing report from the audit of
the consolidated financial statements
for the year ending
December 31, 2014
OPINION OF THE INDEPENDENT STATUTORY AUDITOR
For the General Meeting of Apator S.A.
Opinion on the consolidated financial statements
We have audited the consolidated financial statements of the Capital Group, where the parent entity is Apator S.A. with the registered office in Toruń, ul. Gdańska 4A, roomC4 (“the Capital Group”), composed of the consolidated statement of financial position prepared as ofDecember 31, 2014, consolidated statement of comprehensive income, consolidated statement of changes in equity and the consolidated statement of cash flows for the fiscal year ended on this day and additional notes to the financial statement concerning the applied accounting principles and other explanatory notes.
Responsibility of the Executive and the Supervisory Board
The Management Board of the Parent Entity is responsible for the preparation and fair presentation of these consolidated financial statements pursuant to the International Financial Reporting Standards as adopted by the European Union and other applicable regulations and for preparation the Management Report. The Management Board of the Parent Entity is also responsible for an internal control as management deems it necessary to enable the preparation of the financial statements that are free of material misstatements, whether due to fraud or error.
According to the Accounting Act of September 29, 1994 (Dz. U.of 2009 No. 152, item1223 as amended) (“Accounting Act”) the Management Board of the Parent Entity and the members of the Supervisory Board are required to ensure that the consolidated financial statements and the management report are in compliance with the requirements set forth in the Accounting Act.
Responsibility of the Statutory Auditor
Our responsibility was to express the opinion about these financial statements based on our audit.We conducted our audit pursuant to provisions of the chapter 7 of the Accounting Act, National Financial Reporting Standards issued by the National Board of Statutory Auditors in Poland and International Financial Reporting Standards.Those standards require that we comply with ethical requirements and to plan and perform the audit to obtain the reasonable assurance about whether that the financial statements are free of material misstatements.
The audit involves performing procedures to obtain audit evidence about amounts and disclosures in the consolidated financial statements.The procedures selected depend on our judgment, including the assessment of the risk of material misstatement of the consolidated financial statement whether due to fraud or error. In making those risk assessment, we consider the internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control.An audit also includes evaluating appropriateness of accounting principles used and the reasonableness of accounting estimates made by management, as well as evaluating the overall consolidated financial statement presentation.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Opinion
In our opinion the attached consolidated financial statements of the Capital Group of Apator S.A. have been prepared and present fairly, in all material respects, the financial position of the Company as of December 31, 2014, the results of its operations and its cash flows for the fiscal year ending this day in conformity with the International Financial Reporting Standards as adopted by the European Union, are compliant with all regulations that apply to the consolidated financial statement.
Special explanations on other law requirements and regulations
Management Report of the Capital Group
As required under the Accounting Act, we also report that the Management Report of the Capital Group includes the information required by Art.49 of the Accounting Act and of the Ordinance of the Minister of Finances dated February 19, 2009 on the current and periodic information provided by the issuers of securities and conditions of considering as equal the information required by the legal provisions of the non-member country (Dz.U. 2009 No. 33, item259 as amended) and information is consistent with the consolidated financial statement.
On behalf of KPMG
Audyt Spółka z ograniczoną odpowiedzialnością sp.k.
Registration No. 3546
Chłodna 51
00-867 Warszawa
Rafał Wiza
Key Statutory Auditor
Registration No. 11995
Limited Partner, Proxy
Poznań, April 23, 2015
Capital Group Apator S.A.
Report supplementing the opinion
on the audit of the consolidated financial statements
for the year ending December 31, 2013
,
Report supplementing contains 13 pages
Report supplementing the opinion on the audit of the consolidated financial statement for the year ending December 31, 2013
Table of contents
1.General3
1.1.Identification of the Capital Group3
1.1.1.Name of the Capital Group3
1.1.2.Registered office3
1.1.3.Registration of the parent entity in the National Court Register3
1.1.4.Management of the Parent Entity3
1.2.Information about companies comprising the Capital Group3
1.2.1.Entities included in the consolidated financial statements3
1.2.2.Entities not included in the consolidated financial statements3
1.3.Information about the statutory auditor and entity authorized to audit financial statements4
1.3.1.Information about the statutory auditor4
1.3.2.Information about the authorized entity4
1.4.Information about the consolidated financial statements for the previous fiscal year5
1.5.Audit scope and responsibilities5
1.6.Information on audited entities included in the scope of consolidation6
1.6.1.Parent entity6
1.6.2.Other consolidation entities7
2.Financial analysis of the Capital Group8
2.1.Summary analysis of the consolidated financial statements8
2.1.1. Consolidated statement of financial condition 8
2.1.2. Consolidated statement of comprehensive income10
2.2.Selected financial ratios11
3.Detailed report12
3.1.Accounting principles12
3.2.Basis of preparation of the consolidated financial statements12
3.3.Method of consolidation12
3.4.Goodwill arising from consolidation12
3.5.Consolidation of capitals and determining of NCI12
3.6.Consolidation eliminations13
3.7.Additional notes to the consolidated financial statements13
3.8.Management Report of the Capital Group13
Apator S.A.,
Report supplementing the opinion on the audit of the financial statement
ending December 31, 2012
1.General
1.1.Identification of the Capital Group
1.1.1.Name of the Capital Group
Capital Group Apator SA.
1.1.2.Registered office of the Parent Entity
ul.Gdańska 4A, roomC4 87-100 Toruń
1.1.3.Registration of the parent entity in the National Court Register
Registering Court:District Court in Toruń, 7th Commercial Division of the National Court Register
Date:October 24, 2001
Registration No.:KRS 0000056456
Share capital
as of the end of the period:PLN 3 310 702.80
1.1.4.Management of the Parent Entity
The position of the manager of the Parent Entity is held by the Management Board.
The Management Board of the Parent Entity as of December 31, 2012 consisted of:
•Mr Andrzej Szostak - President of the Management Board
•Mr Tomasz Habryka- Member of the Management Board
•Mr Jerzy Kuś- Member of the Management Board
•Mr Piotr Nowak- Member of the Management Board
Under the resolution of the Supervisory Board adopted on May16, 2014Mr Piotr Nowak was appointed as the member of the Management Boardas of July 1, 2014.
On March 30, 2015 Mr Tomasz Habryka resigned from the function of the Member of the Management Board of Apator SA as of March 31, 2015.
1.2.Information about companies comprising the Capital Group
1.2.1.Entities included in the consolidated financial statements
As of December 31, 2014 the following entities belonging to the Capital Group were included in the scope of consolidation:
Parent entity:
• Apator S.A.
Subsidiaries included to the full method of consolidation:
•Apator Control Sp. z o.o.,
•Apator Mining Sp. z o.o.,
•FAP Pafal S.A.,
•Apator Metrix S.A.,
•Apator GmbH (Germany),
•Apator Rector Sp. z o.o.,
•Apator Powogaz S.A.,
•Apator Telemetria Sp. z o.o.,
•Apator Metra s. r. o. (Czech),
•Apator Metroteks TOV (Ukraine),
Joint-controlled entities consolidated by equity method:
•OOO Apator Elektro (Russia),
•ZAO Teplovodomer (Russia),
•George Wilson Industries Ltd. (Great Britain).
The following subsidiaries have been included in the scope of consolidation for the first time in the fiscal year ending on December 31, 2014 due to taking up the control by the Parent Entity:
•Apator Elkomtech S.A.- an entity consolidated for the period from April 1, 2013 to December 31, 2014
1.2.2.Entities not included in the consolidated financial statements
As at December 31, 2014 all entities belonging to the Capital Group were consolidated.
1.3.Information about the statutory auditor and entity authorized to audit financial statements
1.3.1.Information about the statutory auditor
Name and surname:Rafał Wiza
Register No.:11995
1.3.2.Information about the authorized entity
Company:KPMG Spółka z ograniczoną odpowiedzialnością
Sp.k.
Registered office:ul.Chłodna 51, 00-867 Warszawa
Registration No.:KRS 0000339379
Registry Court: District Court for the capital city of Warsaw in Warsaw
12th Commercial Division of the National Court Register, NIP [Tax Identification Number: 527-26-15-362
KPMG Audyt Spółka z ograniczoną odpowiedzialnością sp.k. is entered into the list of the entities authorized to audit the financial statements kept by the National Chamber of Statutory Auditors with the number 3546.
1.4.Information about the consolidated financial statements for the previous fiscal year
The consolidated financial statement of the parent entity for the fiscal year ending December 31, 2013 was audited by KPMG Audyt Spółka z ograniczoną odpowiedzialnością sp.k. the entity authorized to audit financial statements and obtained the opinion without any reservations.
The consolidated financial statementswere approved at the General Meeting on June 16, 2014.
The consolidated financial statement were submitted to the Registry Court on July 2, 2014.
1.5.Audit scope and responsibilities
This report was prepared for the General Meeting of Apator S.A., seated in Toruń, ul. Gdańska 4A, roomC4 and relates to consolidated financial statements composed of the consolidated statement of financial position prepared as at December 31, 2014, consolidated statement of comprehensive income, consolidated statement of changes in equity and the consolidated statement of cash flows for the fiscal year ended on this day and additional notes to the financial statement concerning the applied accounting principles and other explanatory notes.
The parent entity prepares the consolidated financial statement pursuant to the International Financial Reporting Standards, which were approved by the European Union based on resolution of the Extraordinary General Meeting of Shareholders of December 20, 2004.
We conducted the audit of the consolidated financial statementsin accordance with the agreement datedJanuary 7, 2014 concluded under the Resolution of the Supervisory Board of December 12, 2013 referring to the selection of the entity authorized to audit the financial statements.
We conducted the audit of the consolidated financial statements pursuant the provisions of the chapter 7 of the Accounting Act of September 29, 1994 (Dz. U.of 2009 No. 152, item1223 as amended) (“Accounting Act”), National Financial Reporting Standards issued by the National Chamber of Statutory Auditors and International Financial Reporting Standards.
We audited the consolidated financial statementsat the Group entities in the period from February 2, 2015 to March 13, 2015.
The Management Board of the Parent Entity is responsible for accuracy of the accounting books, for preparation and fair presentation of the consolidated financial statements pursuant to the International Financial Reporting Standards as adopted by the European Union and to other applicable regulations and preparation of the Management Report.
Our responsibility was to express an opinion and to prepare the supplementary report on the audit of the consolidated financial statements.
TheManagement Board of the Parent Entity submitted a statement, dated as the same date as this report,as to the true and fair presentation of the accompanyingconsolidated financial statements, which confirmed that there were no undisclosed matters, which could have a significant influence oninformation presented in the consolidated financial statements.
All required statements, explanations and information were provided by Management Board of the Parent Entity and all our requests for additional documents and information necessary for expressing our opinion and preparing the report have been fulfilled. The scope of work planned and performed has not been limited in any way. The method and scope of our audit is detailed in the working papers prepared by us and retained in the registered office of the authorized entity.
The Key Statutory Auditor and the entity authorized fulfil the independence requirementas described in Art.56 sec.3 and 4 of the Act of May 7, 2009 on the on Statutory Auditors, Their Self-Governing Organisation, and Entities Authorised to Audit Financial Statements and on Public Oversight (Dz. U. of 2009, No. 77 item649 as amended).
1.6.Information on audited entities included to the scope of consolidation
1.6.1.Parent entity
The separate financial statement of the parent entity for the fiscal year ending December 31, 2014 was audited by KPMG Audyt Spółka z ograniczoną odpowiedzialnością sp.k. the entity authorized to audit financial statements and received unmodified opinion.
Apator S.A.,
Report supplementing the opinion on the audit of the financial statement
ending December 31, 2012
1.6.2.Other consolidated entities
Entity's name / Authorized auditor / Reporting date / Status of the opinion of the statutory auditorApator Control Sp. z 0.0. / KPMG Audyt Spółka z ograniczoną odpowiedzialnością sp.k. / December, 31, 2014 / Unmodified.
Apator Mining Sp. z 0.0. / KPMG Audyt Spółka z ograniczoną odpowiedzialnością sp.k. / December, 31, 2014 / Unmodified.
FAP Pafal S.A. / KPMG Audyt Spółka z ograniczoną odpowiedzialnością sp.k. / December, 31, 2014 / Unmodified.
Apator Metrix S.A, / KPMG Audyt Spółka z ograniczoną odpowiedzialnością sp.k. / December, 31, 2014 / Unmodified.
Apator GmbH / It does not require audit. / December, 31, 2014 / Not applicable.
Apator Rector Sp. z 0.0. / KPMG Audyt Spółka z ograniczoną odpowiedzialnością sp.k. / December, 31, 2014 / Unmodified.
Apator Elkomtech Sp. z o.o. / KPMG Audyt Spółka z ograniczoną odpowiedzialnością sp.k. / December, 31, 2014 / Unmodified.
Apator Powogaz S.A. / KPMG Audyt Spółka z ograniczoną odpowiedzialnością sp.k. / December, 31, 2014 / Unmodified.
Apator Telemetria Sp. z 0.0. / Gdańska Grupa Audytorów Sp. z 0.0. / December, 31, 2014 / Unmodified.
Apator Metra s.r.o. / KPMG Ćeska republika, s.r.o. / December, 31, 2014 / Unmodified.
Apator Metroteks TOV / It does not require audit. / December, 31, 2014 / Not applicable.
OOO Apator Elektro / It does not require audit / December, 31, 2014 / Not applicable.
ZAO Teplovodomer / Biznesaudit OOO / December, 31, 2014 / Unmodified.
George Wilson Industries Ltd. / Grant Thomton UK LLP / November 30, 2014 / Unmodified.
Apator S.A.,
Report supplementing the opinion on the audit of the financial statement
ending December 31, 2012
2.Financial analysis of the Capital Group
2.1.General analysis of the consolidated financial statements
2.1.1.Consolidated statement of financial condition
ASSETS / 31.12.2014 / % / 31.12.2013* / %PLN’000 / assets / PLN ‘000 / assets
Non-current assets
Intangible assets / 36 283 / 1.3 / 6 955 / 5.2
Goodwill of subsidiaries / 93 050 / 13.4 / 63 706 / 12.2
Property, plant and equipment / 169 601 / 12.4 / 146 233 / 27.9
Investment property / 1 643 / 0.2 / 1 721 / 0.3
Investments in affiliates and joint subsidiaries / 17 719 / 2.5 / 5 279 / 1.0
measured by equity method
Other long-term financial assets / - / - / 284 / 0.1
Granted long-term loans / 9 016 / 1.3 / 8 994 / 1.7
Long- term receivables / 7 507 / 1.1 / 5 719 / 1.1
Long-term accrued and deferred assets / 2 / 0.0 / 9 / 0.0
Deferred tax assets / 21 866 / 3.1 / 23 527 / 4.5
Total non-current assets / 356 687 / 51.3 / 262 427 / 50.2
Current assets
Inventories / 101 630 / 14.6 / 995 359 / 18.2
Trade receivables / 136 866 / 19.7 / 116 106 / 22.2
Receivables due to corporate income tax / 145 / 0.0 / 1 314 / 0.3
Receivables due to other taxes, subsidies, customs and social insurances
8 947 / 1.3 / 5 465 / 1.0
Other current receivables / 24 212 / 3.5 / 18 161 / 3.5
Other short-term financial assets / 2 455 / 0.4 / 4 522 / 0.9
Cash and cash equivalents / 62 102 / 8.9 / 18 239 / 3.5
Short-term accrued and deferred assets / 2 047 / 0.3 / 1 636 / 0.3
Non-current assets held for re-sale / - / - / 256 / 0.0
Total current assets / 338 404 / 48.7 / 261 058 / 49.9
TOTAL ASSETS / 695 091 / 100.0 / 523 485 / 100.0
* The statement transformed pursuant to the Note 8.38to the consolidated financial statements
LIABILITIES / 31.12.2014 / % / 31.12.2013* / %PLN’000 / liabilities / PLN ‘000 / liabilities
Equity
Share capital / 3 311 / 0.5 / 3 311 / 0.6
Other capitals
Revaluation capital from defined benefit plans / 272 199 / 39.2 / 222 837 / 42.6
Capital from measurement of hedging transactions and exchange differences from consolidation / 85
(2824) / 0.0
0.4 / 355
623 / 0.1
0.1
Undivided financial result / 112 747 / 16.2 / 97 505 / 18.6
Equity of the shareholders of the parent entity / 385 518 / 55.5 / 323 829 / 62.0
NCI / 2 033 / 0.3 / 1 582 / 0.3
Total equity / 387 551 / 55.8 / 325 411 / 62.3
Liabilities
Long-term borrowings / 71 608 / 10.3 / 8 665 / 1.6
Long-term liabilities / 22 118 / 3.2 / 11 904 / 2.3
Provision for deferred income tax / 1 015 / 0.1 / 1 462 / 0.3
Provisions and liabilities due to employee benefits / 8 016 / 1.1 / 6951 / 1.3
Other long-term provisions / 391 / 0.1 / - / -
Total long-term liabilities / 103 148 / 14.8 / 28 982 / 5.5
Short-term borrowings / 94 008 / 13.5 / 48 629 / 9.3
Trade liabilities / 52 843 / 7.6 / 52 474 / 10.0
Liabilities due to corporate income tax / 7 864 / 1.1 / 6 134 / 1.2
Liabilities due taxes, customs and social insurances / 14 651 / 2.2 / 9 606 / 1.9
Other short-term liabilities / 15 633 / 2.2 / 33 521 / 6.4
Short-term provisions for liabilities due to employee benefits / 11 955 / 1.7 / 11 678 / 2.2
Other short-term provisions / 7 348 / 1.1 / 6 248 / 1.2
Total short-term liabilities / 204 392 / 29.4 / 168 290 / 32.2
Total liabilities / 307 540 / 44.2 / 197 272 / 37.7
TOTAL LIABILITIES AND EQUITY / 695 091 / 100.0 / 523 485 / 100.0
* The statement transformed pursuant to the Note 8.38 to the consolidated financial statements
2.1.2.Consolidated statement of comprehensive income
1.01.2013 - / % / 1.01.2012 - / %31.12.2013 / Revenues from sale / 31.12.2012* / Revenues from sale
PLN’000 / PLN‘000
Revenues / 724 994 / 100.0 / 683 990 / 100.0
Cost of sales / (507 805) / 70.0 / (482 007) / 70.6
Gross profit from sales / 217 189 / 30.0 / 201 983 / 29.4
Distribution expenses / (34 124) / 4.7 / (35 725) / 5.2
Administration expenses / (81 202) / 11.2 / (77 523) / 11.3
Other operating revenues / 354 / 0.0 / (3 244) / 0.6
Share in profits of entities included in the scope of consolidation by equity method / 4 043 / 0.6 / 1 288 / 0.2
Costs of restructuring / 140 / 0.0 / (277) / 0.0
Profit from operating activities / 106 400 / 14.8 / 85 512 / 12.7
Finance income / 5 675 / 1.3 / 5 278 / 0.8
Finance cost / (6725) / 12.7 / (8 577) / 1.3
Profit before tax / 105 350 / 14.5 / 83 203 / 12.2
Current income tax / (18 930) / 2.5 / (16 088) / 2.3
Deferred income tax / (1732) / 0.2 / 1 872 / 2.4
Net profit for the fiscal year / 84 688 / 0.2 / 67997 / 10.1
OTHER COMPREHENSIVE INCOME
Items to be reclassified to the profit of the year
Exchange differences from translation the foreign units / (1323) / 0.2 / (1218) / 0,2
Profit on hedge accounting / (2153) / 0.3 / 875 / 0.1
Items to be reclassified to the profit of the year
Revaluation of provisions due to defined benefit plan with tax effect / (270) / 0.0 / (45) / 0.0
Net other comprehensive income for the fiscal year / (3746) / 0.5 / (388) / 0.1
Total comprehensive income for the fiscal year / 80 942 / 11.2 / 67 609 / 9.9
Net profit (loss), attributable to:
Shareholders of the company / 83 802 / 67 339
Shareholders of NCI / 886 / 658
Net profit for the year
Total comprehensive income, attributable to: / 84 688 / 67 997
Shareholders of the company / 80 085 / 66 956
Shareholders of NCI / 857 / 653
Total comprehensive income for the fiscal year / 80 942 / 67 609
Net profit per one ordinary share:
- basic / 2.84 / 2.28
- diluted / 2.84 / 2.28
* The statement transformed pursuant to the Note 8.38 to the consolidated financial statements
2.2.Selected financial ratios
2014 / 2013 / 20121. Return on sales
Net profit x 100%
net revenues / 11.7% / 10.1% / 14.3%
2. Return on equity
Profit for the year x100%
equity-profit for the year / 28.0% / 26.7% / 46.7%
3. Debtor’s days
Average trade receivables x 365 days
net revenues / 66 days / 62 days / 63 days
4. Debt ratio
Liabilities x 100%
equity and liabilities / 44.2% / 37.7% / 40.6%
5. Current ratio
current assets
current liabilities / 1.7 / 1.5 / 1.6
- Revenue include of revenue from sales of products, goods and materials.
- Average trade receivables represent the arithmetic average of trade receivables at the beginning and at the end of the reporting period, with no deduction made for allowances.
3.Detailed report
3.1.Accounting principles
The Parent Entity maintains current documentation describing the applied accounting principles adopted by the Capital Group and adopted by the Management Board of the Parent Entity.
The adopted accounting principles are described in the notes to the consolidated financial statements to the extent required by the International Financial Reporting Standards as adopted by the European Union.
The entities belonging to the Capital Group apply common accounting principles compliant with the principles applied by the Parent Entity.
The financial statements of the entities included in the consolidated financial statements were prepared at the end of the same reporting period as the financial statements of the Parent Entity.
3.2.Basis of preparation of the consolidated financial statements
The Capital Group Apator S.A. prepared the consolidated financial statements pursuant to the International Standards of Financial Reporting as recommended by the European Union and with other applicable regulations.