THE CONSOLIDATED QUARTERLY STATEMENTS of …...PGM Group sp. z o.o. 51%Grodzisk Mazowiecki ......
Transcript of THE CONSOLIDATED QUARTERLY STATEMENTS of …...PGM Group sp. z o.o. 51%Grodzisk Mazowiecki ......
THE CONSOLIDATED QUARTERLY STATEMENTS
of Elemental Holding SA CAPITAL GROUP
as of 31 March 2019
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Table of contents
A. DECLARATION OF THE MANAGEMENT BOARD B. SELECTED FINANCIAL DATA OF THE ELEMENTAL HOLDING SA CAPITAL GROUP C. QUARTERLY CONSOLIDATED FINANCIAL STATEMENT OF THE ELEMENTAL HOLDING SA CAPITAL GROUP D. SELECTED FINANCIAL DATA OF ELEMENTAL HOLDING SA E. QUARTERLY CONDENSED FINANCIAL STATEMENTS OF ELEMENTAL HOLDING SA
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A. DECLARATION OF THE MANAGEMENT BOARD
Pursuant to the Regulation of the Minister of Finance of 29 March 2018 r on current and periodic information provided by issuers of securities and conditions for recognizing as equivalent information required by the laws of a non-Member State (Journal of Laws: Dz.U.2018.757), hereinafter referred to as “the Regulation”, the parent company’s Management Board declares that, to the best of its knowledge, this consolidated financial statements and comparable data as well as the Issuer’s separate statements and comparable data were prepared in accordance with the principles of accounting binding for the Group as well as that they reflect the Capital Group’s material status, financial standing and financial results in a true, reliable and clear manner. These consolidated financial statements were prepared in accordance with the principles of accounting, in accordance with the International Financial Reporting Standards (IFRS) approved by the European Union and in the scope required by the Regulation. These statements cover the period from 01 January to 31 March 2019 and a comparable period from 01 January to 31 March 2018.
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
B. SELECTED FINANCIAL DATA OF THE ELEMENTAL HOLDING CAPITAL GROUP
GENERAL INFORMATION I. Data of the parent company from a legal point of view:
Name: Elemental Holding SA
Legal form: spółka akcyjna [Polish joint-stock company]
Registered office: ul. Traugutta 42A, 05-825 Grodzisk Mazowiecki
Country of registration: Poland
Core object of business activities:
The core business of the Parent Company includes activities of head
offices and holdings, accounting and bookkeeping activity, tax
consulting
Core object of business activities of the Capital Group
The core business of the Capital Group companies includes waste
collection, treatment and disposal activities; recovery of raw
materials; wholesale of waste and scrap; reclamation activities and
other waste management service activities
Registration authority:
District Court for the Capital City of Warsaw, 14th Commercial Division of the National Court Register (KRS) under KRS number 0000375737.
REGON statistical number: 141534442
NIP tax identification number: 5291756419
The Parent Company was established under a notarial deed of 14 August 2008 as Synergis Metalrecycling spółka z ograniczoną odpowiedzialnością. Synergis Metalrecycling sp. z o.o. was transformed into Elemental Holding SA pursuant to the Resolution No. 1 of the Extraordinary Meeting of Shareholders of Synergis Metalrecycling sp. z o.o. dated 14 December 2010. II. Duration of the capital group: The Parent Company Elemental Holding SA and the other entities of the Capital Group were established for an unspecified time. III. Periods presented Historical consolidated financial information includes data concerning the period from 01 January 2019 to 31 March 2019. Comparable data are presented as of 31 March 2018 for the consolidated financial standing statement, for the period from 01 January 2018 to 31 March 2018 for the consolidated profit and loss account, the consolidated statement of total income, the consolidated cash flow statement, and the statement of changes in consolidated equity.
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
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IV. Composition of authorities of the parent company as of 31.03.2019: The Management Board: As of 31.03.2019
Name Function
Paweł Jarski President of the Management Board
Michał Zygmunt Vice-President of the Management Board
Anna Kostro Member of the Management Board
Krzysztof Spyra Member of the Management Board
Changes in the composition of the Management Board
In the period concerned, there were no changes in the composition of the Management Board.
The Supervisory Board: As of 31.03.2019
Name Function
Tomasz Malinowski Chairman of the Supervisory Board
Marek Piosik Member of the Supervisory Board
Jarosław Michalik Member of the Supervisory Board
Edyta Jusiel Member of the Supervisory Board
Karol Kuch Member of the Supervisory Board
Changes in the composition of the Supervisory Board
On 23 January 2019, the Extraordinary General Meeting of Elemental Holding S.A. was held, at which group voting was conducted to select a new composition of the Supervisory Board. Mandates of all previous members of the Supervisory Board composed of: Jarosław Michalik, Marek Piosik, Tomasz Malinowski, Krzysztof Szymański and Wojciech Napiórkowski expired prematurely. The following persons were appointed to the Supervisory Board for the new term of office: Mr. Jarosław Michalik, Ms. Edyta Jusiel, Mr. Karol Kuch, Mr. Tomasz Malinowski, Mr. Marek Piosik
V. Significant shareholders of the parent company: As of 31 March 2019, the Issuer’s significant shareholders were as follows:
Shareholder Number of shares
% of equity capital
Number of votes
% of votes
EFF B.V. (along with Reventon sp. z o.o.)
52 500 000 30.80% 52 500 000 30.80%
Nationale-Nederlanden PTE SA 21 827 597 12.80% 21 827 597 12.80%
JJR INVEST sp. z o.o. 15 500 968 9.09% 15 500 968 9.09%
MetLife OFE 12 829 712 7.53% 12 829 712 7.53%
Aegon OFE 10 138 587 5.95% 10 138 587 5.95%
Others 57 669 201 33.83% 57 669 201 33.83%
Total 170 466 065 100.00% 170 466 065 100.00%
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
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VI. Subsidiaries: As of 31.03.2019
Name of subsidiary Registered office
% of owned capital and votes carried at the General
Meeting of Shareholders (GMS):
Tesla Recycling spółka z ograniczoną odpowiedzialnością sp.k.
Grodzisk Mazowiecki 100%
Syntom Metal Recycling sp. z o.o. Warsaw 100%
Terra Recycling spółka z ograniczoną odpowiedzialnością sp.k.
Grodzisk Mazowiecki 100%
Elemental Group Consulting sp. z o.o. Grodzisk Mazowiecki 100%
Collect Points spółka z ograniczoną odpowiedzialnością sp.k.
Grodzisk Mazowiecki 100%
PGM Group spółka z ograniczoną odpowiedzialnością sp.k.
Grodzisk Mazowiecki 51%
Metal Holding s.r.o. Čapajevova, Slovakia 94.65%
UAB "EMP recycling" Galinės vil., Lithuania 51%
Evciler & Elemental Recycling B.V. Amsterdam, the Netherlands 100%
Evciler & Elemental Recycling Middle East DMCC Dubai, United Arab Emirates 51%
Evciler Kimya Madencilik ve Değerli Metaller San. Tic. A.Ş.
Ankara, Turkey 51%
Kat-Metal Oy Tervajoki, Finland 51%
Kat-Metal Estonia Oü Tallinn, Estonia Kat Metal Oy holds 80% in Kat Metal Estonia company
Elemental Resource Management Ltd. Leeds, Great Britain 51%
FINEX SICAV SIF S.A. - Private Equity VII Luxemburg, 100%
Elemental Capital SARL Luxemburg, 100%
Syntom sp. z o.o. Grodzisk Mazowiecki 100%
Syntom Holdco sp. z o.o. Warsaw 100%
Tesla Recycling sp. z o.o. Grodzisk Mazowiecki 100%
Tesla Holdco sp. z o.o. Warsaw 100%
Terra Recycling sp. z o.o. Grodzisk Mazowiecki 100%
Terra Holdco sp. z o.o. Warsaw 100%
Elemental Group sp. z o.o. Grodzisk Mazowiecki 100%
Platinium M.M. sp. z o.o. Wysogotowo 51%
Platinium M.M. spółka z ograniczoną odpowiedzialnością sp.k.
Wysogotowo 75%
Elemental Asset Management sp. z o.o. Grodzisk Mazowiecki 100%
Collect Points sp. z o.o. Grodzisk Mazowiecki 100%
PGM Group sp. z o.o. Grodzisk Mazowiecki 51%
Elemental Catalyst Recycling sp. z o.o. Grodzisk Mazowiecki 100%
Syntom spółka z ograniczoną odpowiedzialnością sp. j.
Grodzisk Mazowiecki 100%
PCB Tech sp. z o.o. Bydgoszcz 100%
RECAT GmbH Sulzfeld, Germany 85%
Other units 51% of shares of DAG Recycling GmbH company with its registered office in Solingen, Germany, is owned by a subsidiary Evciler Kimya Madencilik ve Değerli Metaller San. Tic. A.Ş. with its registered office in Ankara, Turkey.
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
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VII. Affiliated companies. There are no affiliated companies. VIII. Graphic presentation of the Capital Group: Status as of 31 March 2019
IX. Approval of the financial statements
This consolidated financial information was approved for publication by the Management Board of the Parent Company on 23 May 2019.
X. Selected financial data converted to EUR
These financial statements were prepared based on the historical cost principle. The financial statements are presented
in Polish zlotys (“PLN”) and, unless indicated otherwise, all sums are stated in thousand PLN, in accordance with Art. 45
paragraph 5 of the Accounting Act of 29 September 1999 (Journal of Laws Dz.U.2018.395), hereinafter referred to as
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
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the “Accounting Act”, in thousand PLN. Differences, if any, between sums shown in individual items of tables may differ
from their totals due to the algorithm of rounding them to the nearest thousand PLN.
Average exchange rates of Polish zloty in relation to Euro in the periods covered by the financial statements are
determined by the National Bank of Poland. The average exchange rates of Polish zloty in relation to Euro determined
by the National Bank of Poland in the periods covered by the historical financial data were as follows:
Reporting period average exchange rate in the period*
exchange rate on the last day of the period
31.03.2019 4.2978 4.3013
31.12.2018 4.3000
31.03.2018 4.1784 4.2085
*) an average of the exchange rates applicable on the last day of each month in a given period
Individual items of assets and liabilities of the balance sheet were converted according to the exchange rates
announced by the National Bank of Poland for EUR and applicable on the last day of a given period.
Individual items of the profit and loss account and of the cash flow statement were converted according to the
exchange rates constituting an arithmetic mean of the average exchange rates announced by the National Bank of
Poland for EUR and applicable on the last day of each month in a given reporting period.
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
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Basic items of the balance sheet, the profit and loss account and the cash flow statement from the presented financial
statements and the comparable data, converted to EUR
Description for 01.01.-31.03.2019 for 01.01.-31.03.2018
PLN EUR PLN EUR
Net revenues from sales of products, goods and materials
500 339 116 417 372 620 89 178
Cost of goods sold 445 361 103 625 332 231 79 512
Profit (loss) from operating activities 13 089 3 046 12 365 2 959
Gross profit (loss) 11 456 2 666 9 603 2 298
Net profit (loss) 10 084 2 346 7 831 1 874
Net profit (loss) of the parent company 6 137 1 428 5 298 1 268
Weighted average number of shares 170 466 065 170 466 065 170 466 065 170 466 065
Net profit (loss) per ordinary share (PLN/EUR) 0.04 0.01 0.03 0.00
as of 31.03.2019 as of 31.12.2018
Fixed assets 454 929 105 765 436 140 101 428
Current assets 397 884 92 503 371 930 86 495
Equity 525 814 122 245 515 851 119 965
Equity of the parent company’s shareholders 492 360 114 468 486 266 113 085
Long-term liabilities 91 477 21 267 76 213 17 724
Short-term obligations 235 522 54 756 216 006 50 234
Book value per share (PLN/EUR) 2.89 0.67 2.85 0.66
for 01.01.-31.03.2019 for 01.01.-31.03.2018
Net cash flows from operating activities -8 384 -1 951 7 944 1 901
Net cash flows from investment activities -4 068 -947 -2 022 -484
Net cash flows from financial activities 5 671 1 320 -19 718 -4 719
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
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CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS OF THE ELEMENTAL HOLDING SA GROUP Consolidated profit and loss account
Description Note 31.03.2019 31.03.2018
Sales revenues and equivalents 1 500 339 372 620
Net revenues from sales of services and products 10 779 19 289
Change in the balance of products: increases (+); decreases (-)
3 576 -2 046
Cost of manufacturing products for the entity’s own needs
0 0
Net revenues from sales of goods and materials 485 985 355 377
I. Operating costs 488 482 360 424
I. Depreciation and amortization 4 092 2 314
II. Consumption of materials and energy 10 624 6 437
III. External services 9 753 6 784
IV. Taxes and charges 665 569
V. Salaries and wages 12 698 8 367
VI. Social insurance and other benefits 1 920 1 909
VII. Other costs by type 3 369 1 813
VIII. Value of goods and materials sold 445 361 332 231
IX. including excise duty 0 0
X. including pensions 0 0
Profit (loss) from sales 11 857 12 196
Other operating revenues 4 1 488 469
Other operating costs 4 256 300
Profit (loss) from operating activities 13 089 12 365
Financial revenues 5 1 721 382
Financial costs 5 3 354 3 144
Profit (loss) from ordinary activities 11 456 9 603
Participation in net profits (losses) of entities settled using the equity method
0 0
Profit (loss) before taxation 11 456 9 603
Income tax 1 372 1 772
Net profit (loss) from continuing activities 10 084 7 831
Net profit (loss) from discontinued activities 0 0
Net profit (loss) 10 084 7 831
Profit (loss) attributable to non-controlling shareholders
3 947 2 533
Net profit (loss) attributable to the parent company 6 137 5 298
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
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Consolidated statement of total income
Description 31.03.2019 31.03.2018
Net profit (loss) 10 084 7 831
Changes in revaluation surplus 0 0
Profits (losses) from the revaluation of financial asset components available for sales
0 0
Effective part of profits and losses connected with cash flow hedging instruments
0 0
Actuarial profits (losses) from programs of specified pension benefits 0 0
Exchange differences from pricing of entities operating abroad 1 886 - 1 052
Income tax connected with components of other total incomes 0 0
Sum of total incomes 11 970 6 779
Sum of total incomes attributable to non-controlling shareholders 3 947 2 533
Sum of total incomes falling to the parent company 8 023 4 246
Consolidated statement of financial standing
Description Note 31.03.2019 31.12.2018 31.03.2018
Fixed assets 454 929 436 140 396 483
Tangible fixed assets 11 132 810 113 621 103 795
Investment real estate 2 372 2 372 2 372
Intangible assets 11 661 574 274
Goodwill 12 316 445 316 445 278 937
Financial assets available for sales 0 0 0
Investments in subordinate entities 0 390 1 175
Other investments 0 3 0
Other financial assets 15 60 30 42
Other receivables 0 0 9 427
Deferred tax assets 2 572 2 700 416
Other fixed assets 9 7 45
Current assets 397 884 371 930 324 737
Inventories 16 192 835 161 938 136 028
Trade receivables 17 166 518 164 457 131 739
Current income tax receivables 5 159 679
Other receivables – short term 18 15 412 16 649 27 075
Other financial assets – short term 15 1 851 887 1 263
Other assets 1 314 1 113 4 588
Cash and cash equivalents 19 19 948 26 727 23 365
Assets classified as held for sales 0 0 0
TOTAL ASSETS 852 813 808 070 721 220
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
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Description Nota 31.03.2019 31.12.2018 31.03.2018
Equity 525 814 515 851 492 974
Equities of the parent company’s shareholders 492 360 486 266 470 786
Share capital 170 466 170 466 170 466
Supplementary capital from taking up shares above par value
121 734 121 734 121 708
Supplementary capital 195 657 171 506 178 185
Interim dividends paid 0 0 -1 565
Capital from exchange differences -1 634 -3 520 -3 306
Financial result of the current period 6 137 26 080 5 298
Retained earnings 0 0 0
Capital of non-controlling shareholders 33 454 29 585 22 188
Long-term liabilities 91 477 76 213 92 001
Credits and loans 19 080 17 104 14 187
Other financial liabilities 21 59 068 45 347 68 300
Other long-term liabilities 300 0 0
Deferred income tax provisions 4 384 4 574 399
Accruals 27 8 449 8 562 8 902
Provision for pension benefits and similar benefits 25 196 627 213
Other provisions 0 0 0
Short-term liabilities 235 522 216 006 136 245
Credits and loans 88 766 81 190 67 367
Other financial liabilities – short term 21 43 328 36 642 8 578
Trade liabilities 22 86 485 81 556 48 890
Income tax liabilities 1 743 1 732 3 015
Other liabilities 23 7 323 8 452 4 583
Accruals - short term 27 2 077 1 529 713
Provision for pension benefits and similar benefits 25 1 750 1 912 1 387
Other provisions 26 4 050 2 994 1 712
TOTAL LIABILITIES 852 813 808 070 721 220
Book value per share 2.89 2.85 2.76
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
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Statement of changes in consolidated equity As of 31.03.2019
Share capital
Supplementary capital from taking
up shares above par value
Other supplementary
capitals and retained earnings
Exchange differences
from translation
Financial result of the current
period
Equity of the parent company’s shareholders
Capital of non-controlling
shareholders
Opening balance of equity
170 466 121 734 171 506 -3 520
26 080 486 266 29 584
Changes in accounting principles
0 0 0 0 0
0 0
Adjustment of errors from previous years
0 0 0 0 0
0 0
Equity after adjustments
170 466 121 734 171 506 -3 520
26 080 486 266 29 584
Share issue 0 0 0 0 0 0 0
Share issue costs 0 0 0 0 0 0 0
Settlement of purchase/sale of shares
0 0 0 0 0
0 0
Net profit distribution 0 0 26 080 0 -26 080 0 0
Option pricing 0 0 0 0 0 0 0
FX settlement 0 0 -1 865 0 0 -1 865 0
Payment of interim dividends
0 0 0 0 0 0 0
Sum of total incomes 0 0 0 1 886 6 137 8 023 3 947
Payment of dividends 0 0 -64 0 0 -64 -77
Closing balance of equity
170 466 121 734 195 657 -1 634 6 137 492 360 33 454
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
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As of 31.12.2018
2018 Share capital
Supplementary capital from
taking up shares above
par value
Other capitals (supplementary
capital and retained earnings)
Exchange differences
from translation
Interim dividends
paid
Financial result of the
current period
Equity of the parent
company’s shareholders
Capital of non-controlling
shareholders
Equity as of 01 January 2018 170 466 121 708 153 376 -2 254 -1 465 24 769 466 600 19 004
Adjustment of errors from previous years -5 140 - 5 140
Equity as of 01 January 2018 after adjustments 170 466 121 708 148 236 -2 254 -1 465 24 769 461 460 19 004
Share issue
Other 36 36 -36
Settlement of purchase/sale of shares 3 477
Net profit distribution 27 24 741 -24 769
FX settlement -86 -86 1 201
Goodwill adjustment -529 - 529
Payment of interim dividends -892 1 465 573 -3 726
Sum of total incomes -1 266 26 080 24 814 9 664
Equity as of 31 December 2018 170 466 121 734 171 506 -3 520 0 26 080 486 266 29 584
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
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As of 31.03.2018
Share capital
Supplementary capital from
taking up shares above par value
Other supplementary
capitals and retained earnings
Financial result of the current period
Foreign exchange differences
Interim dividends paid
Equity of the parent company’s
shareholders
Capital of non-controlling shareholders
Opening balance of equity
170 466 121 708 153 376 24 769 -2 254 -1 465 466 600 19 004
Changes in accounting principles
0 0 40 0 0 0 40 0
Adjustment of errors from previous years
170 466 121 708 153 416 24 769 - 2 254 -1 465 466 640 19 004
Equity after adjustments
0 0 0 0 0 0 0 0
Share issue 0 0 0 0 0 0 0 0
Share issue costs 0 0 0 0 0 0 0 0
Settlement of purchase/sale of shares
0 0 0 0 0 0 0 651
Net profit distribution 0 0 24 769 -24 769 0 0 0 0
Option pricing 0 0 0 0 0 0 0 0
FIZ settlement adjustment
0 0 0 0 0 0 0 0
Payment of interim dividends
0 0 0 0 0 -100 -100 0
Sum of total incomes 0 0 0 5 298 -1 052 0 4 246 2 533
Payment of dividends 0 0 0 0 0 0 0 0
Closing balance of equity
170 466 121 708 178 185 5 298 -3 306 -1 565 470 786 22 188
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
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Consolidated cash flow statement
31.03.2019 31.03.2018
OPERATING ACTIVITIES Profit (loss) before taxation 11 456 9 603 Total adjustments -19 840 - 1 659
Amortization and depreciation 4 092 2 314 Profits (losses) from exchange differences 102 488
Interest and participation in profits (dividends) 1 662 947
Profit (loss) from investment activities 390 78 Change in the balance of provisions 1 814 - 3 971 Change in the balance of inventories -30 882 5 930 Change in the balance of receivables -824 5 915 Change in the balance of liabilities, excluding loans and credits 3 800 -11 433 Change in the balance of other assets -220 -191 Other operating activities adjustments 1 640 122 Income tax (paid)/refunded -1 413 - 1858
A. Net cash flows from operating activities - 8 384 7 944
INVESTMENT ACTIVITIES Receipts 91 953
Disposal of intangible assets and tangible fixed assets 87 484
Disposal of financial assets 4 0
Cash taken over (acquisition settlement) 0
Repayment of loans granted 0
Other investment receipts 0 469
Expenses 4 159 2 975
Purchase of intangible assets and tangible fixed assets 2 977 1 975
Purchase of investments in real estate 0
Financial asset expenses 1 182 1 000
Other investment expenses 0
B. Net cash flows from investment activities -4 068 -2 022
FINANCIAL ACTIVITIES
Receipts 18 811 13 005
Net receipt from issuing the shares (share emission) and other capital instruments as well as additional capital contributions
12 875
Credits and loans 16 512 0
Issue of debt securities 0
Dividends received 0
Other financial receipts 2 299 130
Expenses 13 140 32 723
Purchase of shares (stocks), certificates 10 100
Dividends and other payments to owners 1 867 101
Profit distribution expenses other than payments to owners 0
Repayment of credits and loans 5 766 13 669
Redemption of debt securities 0
On other financial liabilities
Payments of financial lease agreement liabilities 2 065 689
Interest 965 891
Other financial expenses 2 476 7 273
C. Net cash flows from financial activities 5 671 -19 718
D. Total net cash flows (A+B+C) - 6 779 -13 796
E. Change in the balance of cash - 6 779 -13 796
F. Opening balance of cash 26 727 37 161
G. Closing balance of shares (F+D) 19 948 23 365
SKONSOLIDOWANE SPRAWOZDANIE FINANSOWE GRUPY KAPITAŁOWEJ Elemental Holding SA za okres 01.01.– 31.03.2018r. oraz okres porównywalny za 01.01.-31.03.2017 r. (wszystkie kwoty podane są w tys. złotych o ile nie podano inaczej)
17
The attached notes form an integral part of these financial statements
ADDITIONAL NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
I. Compliance with the International Financial Reporting Standards.
BASIS FOR THE PREPARATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
These consolidated financial statements were prepared based on the historical cost principle, with an exception for investment real estate, derivative financial instruments and financial assets available for sale, which are measured at fair value. These consolidated financial statements are presented in Polish zlotys (“PLN”) and all sums are stated in thousand PLN unless indicated otherwise. These consolidated financial statements were prepared with an assumption of continuation of business activity of the Group in a foreseeable future. As on the date of approval of these financial statements, no circumstances posing threat to the continuation of the activity by the Group companies were established.
STATEMENT OF COMPLIANCE
These consolidated financial statements were prepared in accordance with the International Financial Reporting Standards (“IFRS”) approved by the EU (“EU IFRS”). As at the date of approval of these statements for publication, taking into account the ongoing process of introducing IFRS in the EU, the IFRS applicable to these financial statements do not differ from the EU IFRS. EU IFRS include standards and interpretations accepted by the International Accounting Standards Board (“IASB”). Some entities of the Group keep their accounting books in accordance with the accounting policy (principles) set out in the Accounting Act and secondary legislation issued on the basis thereof (“Polish accounting standards”) or foreign companies that keep their books in accordance with the accounting rules applicable in a given country. The consolidated financial statements contain adjustments not included in the accounting books of the Group entities introduced in order to bring the financial statements of these entities to compliance with the IFRS.
FUNCTIONAL CURRENCY AND CURRENCY OF THE FINANCIAL STATEMENTS
The consolidated financial statements of the Group were presented in PLN, which is also the functional currency of the parent company. Functional currency is determined for each of the subsidiaries and assets and liabilities of a respective subsidiary are measured in that functional currency. The Group uses the direct consolidation method and chose the method of settling profits or losses from conversion, which is consistent with this method.
II. Assumption of continuation of business activity and comparability of financial statements These consolidated financial statements were prepared with an assumption of continuation of business activity by the
Group for the period of 12 months after the last balance day, i.e. 31.12.2018. The Management Board of the parent
company has not identified any facts or circumstances which would indicate threats to the possibility of continuing the
business activity throughout the period of 12 months after the balance day as a result of a deliberate or forced omission
or a significant limitation of current activity.
Until the date of preparation of the consolidated financial statements for the first quarter of 2019, there were no events
that were not and should have been included in the accounting books of the reporting period. At the same time, there
are no material events related to previous years in these financial statements.
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
The attached notes form an integral part of these financial statements 18
III. KEY ACCOUNTING PRINCIPLES
Consolidation principles These consolidated financial statements include the financial statements of Elemental Holding SA and the financial statements of its controlled entities (subsidiaries) prepared each time for the period ended 31 March 2019. Financial statements of subsidiaries, taking into account adjustments leading to compliance with IFRS, are prepared for the same reporting period as the parent company's report, using consistent accounting principles based on uniform accounting principles applied to transactions and economic events of a similar nature. All significant balances and transactions between the Group's entities, including unrealized profits resulting from transactions within the Group, were completely eliminated. Unrealized losses are eliminated unless they prove impairment. Subsidiaries are subject to consolidation in the period from the day when the Group takes control over them, and cease to be consolidated from the day the control ceases. The parent company exercises control when:
✓ it has power over a given entity, ✓ it is exposed to variable returns or has rights to variable returns due to its involvement in a given entity, ✓ it has the ability to use power to shape the level of returns generated. The Group verifies the fact of exercising control over other entities if there is a situation indicating a change of one or several of the above-mentioned control conditions. In a situation where the Group has less than the majority of voting rights in a given entity, but the voting rights held are sufficient to unilaterally manage essential activities of that entity, it means that it exercises power over it. When assessing whether the voting rights in a given entity are sufficient to ensure power, the Group analyzes all material circumstances, including:
✓ the size of the voting rights held in relation to the size of the shares and the degree of distribution of voting rights held by other shareholders;
✓ potential voting rights held by the Group, other shareholders or other parties; ✓ rights resulting from other contractual arrangements; and ✓ additional circumstances that may prove that the Group has or does not have the possibility to manage
essential activities at the time of decision making, including the voting patterns observed at previous shareholders' meetings.
Changes in the ownership interest of the parent company that do not result in the loss of control over a subsidiary are recognized as equity transactions. In such cases, in order to reflect changes in relative shares in a subsidiary, the Group adjusts the carrying amount of controlling shares and non-controlling interests. Any differences between the amount of the adjustment of non-controlling shares and the fair value of the amount paid or received are recognized in equity and attributed to owners of the parent company. Non-controlling shares are shown in a separate item of equity and represent that part of the total revenues and net assets of subsidiaries that fall on entities other than the Group companies. The Group allocates comprehensive income of subsidiaries between the shareholders of the Parent Company and non-controlling entities based on their share in ownership.
Valuation to fair value The Group measures financial instruments such as instruments available for sale and derivative instruments as well as non-financial assets such as investment properties at fair value as at each balance sheet date. Fair value is understood as the price that would have been received from the sale of an asset or paid in order to transfer a liability in a transaction carried out on the ordinary terms of asset disposal between market participants on the valuation date under current market conditions. The fair value measurement is based on the assumption that the transaction of the sale of an asset or the transfer of a liability takes place either:
✓ on the main market for a given asset or liability, ✓ in the absence of the main market, on the most favorable market for a given asset or liability. Both the main and the most favorable market must be available to the Group. The fair value of an asset or liability is measured assuming that market participants when determining the price of an asset or liability act in their best economic interest.
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
The attached notes form an integral part of these financial statements 19
The fair value measurement of a non-financial asset takes into account the market participant's ability to generate economic benefits through the largest possible and best use of an asset or its disposal to another market participant that ensures the largest possible and best use of the asset. The Group applies valuation techniques that are appropriate to the circumstances and for which sufficient data is available to measure fair value, with the maximum use of relevant observable input data and the minimum use of unobservable input data. All assets and liabilities that are measured at fair value or when their fair value is disclosed in the financial statements, they are classified in the fair value hierarchy as described below based on the lowest input data level that is significant for the fair value measurement taken as a whole:
✓ Level 1 - Quoted (unadjusted) market prices in an active market for identical assets or liabilities, ✓ Level 2 - Valuation techniques for which the lowest level of input data, which is significant for the fair value
measurement as a whole, is directly or indirectly observable, ✓ Level 3 - Valuation techniques for which the lowest level of input data, which is significant for the fair value
measurement as a whole, is unobservable. As at each balance sheet date, in the case of assets and liabilities occurring at particular balance sheet dates, the Group assesses in the financial statements whether there were transfers between levels of the hierarchy by reassessing the classification to individual levels, guided by the relevance of input data from the lowest level that is significant for the valuation to fair value treated as a whole.
Conversion of items expressed in a foreign currency Transactions denominated in foreign currencies are translated into the functional currency at the rate prevailing at the date of the transaction. However, if the sale or purchase transaction is preceded by the receipt or payment, respectively, of an advance in a foreign currency, such advance payment as at the payment date is recognized at the exchange rate as at that day. Then, when recognizing in the profit and loss account of the revenue or cost, or asset acquired in the currency, these transactions are recognized at the exchange rate effective at the date of recognition of the advance, and not at the exchange rate of the date on which the revenue or cost or asset was recognized. As at the balance sheet date, cash assets and liabilities expressed in currencies other than PLN are converted into Polish zlotys using the average exchange rate announced for a given currency by the National Bank of Poland at the end of the reporting period. Foreign exchange differences resulting from the translation are recognized respectively in the financial revenues (costs) or, in cases specified in the accounting principles (policy), capitalized in the value of assets. Non-cash assets and liabilities recognized at historical cost expressed in a foreign currency are disclosed at the historical exchange rate as at the transaction date. Non-cash assets and liabilities recognized at fair value expressed in a foreign currency are translated at the exchange rate effective at fair value. Gains or losses resulting from translation of non-cash assets and liabilities recognized at fair value are recognized in accordance with the recognition of profit or loss due to changes in fair value (i.e. respectively in other comprehensive income or in profit or loss depending on where the change in fair value is recognized). Exchange differences on the valuation of derivative instruments denominated in a foreign currency are recognized in profit or loss as long as they do not constitute cash flow hedges. The following rates were adopted for the needs of balance sheet valuation:
31.03.2019
USD 3.8365
EUR 4.3013
TRY 0.6802
GBP 4.9960
The functional currency of foreign subsidiaries is the euro and the US dollar. As at the balance sheet date, the assets and liabilities of these foreign subsidiaries are translated into the Group presentation currency at the exchange rate prevailing at the balance sheet date, and their statements of comprehensive income are translated at the weighted average exchange rate for the given financial period. Exchange differences arising as a result of such conversion are recognized in other comprehensive income and accumulated in a separate item of equity. At the time of disposal of a foreign entity, exchange differences accumulated in equity relating to a given foreign entity are recognized in profit or loss. The weighted average exchange rates for particular periods were as follows:
01.01-31.03.2019
USD 3.7830
EUR 4.2978
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
The attached notes form an integral part of these financial statements 20
TRY 0.7015
GBP 4.9733
Tangible fixed assets Tangible fixed assets are shown at the purchase price/production cost less depreciation and impairment losses. The initial value of fixed assets includes their purchase price increased by all costs directly related to the purchase and adaptation of the asset to a condition suitable for use. The cost also includes the cost of replacing components of machines and devices when incurred, if the recognition criteria are met. Costs incurred after the date of putting the fixed asset into use, such as maintenance and repair costs, are charged to profit or loss when incurred.
The purchase price of tangible fixed assets transferred to customers is determined at their fair value as at the date of taking control. Fixed assets at the time of their acquisition are divided into components that are items of significant value, for which a separate period of economic usability can be assigned. The component parts also include the costs of major repairs. Depreciation is calculated using the straight-line method over the estimated useful life of the given asset, lasting:
Type Depreciation rate Period
Buildings and structures 5% to 6.5% 15 - 20
Machines and technical equipment 5% to 50% 2 - 20
Means of transport 10% to 30% 10 – 3.3
Other tangible assets 5% to 50% 2 - 20
The residual value, useful life and depreciation method of assets are verified on an annual basis. A given item of tangible fixed assets may be removed from the balance sheet after its disposal or in the event that no economic benefits are expected from the continued use of such an asset. Any gains or losses resulting from the removal of a given asset from the balance sheet (calculated as the difference between any net sales proceeds and the carrying amount of a given item) are recognized in profit or loss in the period in which such removal was made. Investments in progress relate to fixed assets under construction or assembly and are recognized at acquisition or production cost less any impairment losses. Fixed assets under construction are not subject to depreciation until the completion of construction and transfer of a fixed asset for use.
Fixed assets held for sale
Fixed assets and their groups for sale are considered to be held for sale when their carrying amount will be recovered as a result of the sale transaction rather than as a result of their further use. This condition can only be met when the occurrence of the sale transaction is highly probable and the asset is available for immediate sale in its present condition. Classification of an asset as held for sale assumes the intention of the Group's management to make a sale transaction within one year from the date of classification. Fixed assets classified as held for sale are measured at the lower of two values: carrying amount or fair value less costs of sale. If the Group wants to make a sale transaction, as a result of which it would lose control over its subsidiary, all assets and liabilities of this subsidiary are classified as held for sale irrespective of whether the Group retains non-controlling interests after this transaction. If the Group is required to implement the sales plan consisting in the sale of investments in a joint venture or an associate or a part of such investment, the investment or its part intended for sale is classified as held for sale after meeting the above criteria and the Group ceases to apply the ownership rights method for accounting for a part of an investment classified as held for sale. The remaining part of the investment in an associate or joint venture, not classified as held for sale, is still accounted for using the equity method. The Group ceases to apply the equity method at the time of disposal if the sale transaction results in the loss of significant influence on the associate or joint venture. After the sale transaction, the Group settles the retained shares in accordance with IAS 39, unless the shares enable further classification of this entity as an associate or joint venture; in this case, the Group continues to apply the equity method.
Investment properties Initial recognition of investment property is made at the purchase price including transaction costs. The carrying amount of investment properties includes the cost of replacing the investment property component at the time it is incurred, provided that the recognition criteria are met, and does not include the cost of the current maintenance of these properties.
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
The attached notes form an integral part of these financial statements 21
After initial recognition, investment properties are carried at fair value. Gains or losses resulting from changes in the fair value of investment property are recognized in profit or loss in the period in which they arose, including the related impact on deferred tax. Investment properties are removed from the balance sheet if they are sold or if a respective investment property is permanently withdrawn from use, when no future benefits are expected from its sale. Any profits or losses resulting from the removal of an investment property from the balance sheet are recognized in profit or loss in the period in which such removal was made. The transfer of assets to investment property is made only when there is a change in the manner of their use confirmed by the end of use of the asset by the owner or the conclusion of an operating lease agreement. If the asset used by the owner - the Group – it becomes an investment property, the Group applies the principles described in the section Tangible fixed assets until the date of change in the manner of use of the property.
Intangible assets Intangible assets acquired in a separate transaction or generated (if they meet the recognition criteria for development costs) are measured at the initial recognition, respectively at the purchase price or production cost. The purchase price of intangible assets acquired in a merger transaction is equal to their fair value as at the merger date. After the initial recognition, intangible assets are disclosed at the purchase price or production cost less depreciation and impairment losses. Expenditures incurred on intangible assets generated internally, with the exception of activated expenditures incurred for development works, are not capitalized and are recognized in the costs of the period in which they were incurred. The Group determines whether the useful life of intangible assets is definite or indefinite. Intangible assets with a definite useful life are depreciated over their useful lives and tested for impairment each time there are indications that their value is impaired. The period and method of depreciation of intangible assets with a definite useful life are verified at least at the end of each financial year. Changes in the expected period of use or the expected method of consuming economic benefits derived from a given asset are recognized by changing the amortization period or method, respectively, and treated as changes in estimated values. The amortization write-down of intangible assets with a definite useful life is recognized in profit or loss in the category that corresponds to the function of a given intangible asset. Intangible assets with an indefinite useful life and those that are not used are tested annually for impairment, with reference to particular assets or at the level of the cash generating center. Useful lives are subject to annual verification.
Goodwill
Goodwill resulting from the acquisition of an entity is initially disclosed at the purchase price being the surplus of
• the sum of: ◦ the payment made, ◦ the amount of any non-controlling interests in the acquired entity and ◦ in the case of a merger of entities carried out at fair value as at the date of acquisition of the share in the capital of
the acquired entity, previously owned by the acquirer. • over the net fair value determined as at the date of acquisition of the value of identifiable assets acquired and
liabilities assumed. After initial recognition, goodwill is disclosed at cost less any accumulated impairment losses. The impairment test is carried out once a year or more often if there are indications to do so. Goodwill is not subject to depreciation. As at the acquisition date, the goodwill acquired is allocated to each of the cash-generating centers that can benefit from the synergy of the combination. Each center or group of centers to which the goodwill was assigned:
• corresponds to the lowest level in the Group, on which goodwill is monitored for internal management needs and • is no larger than one operating segment determined in accordance with IFRS 8 Operating Segments. An impairment loss is determined by estimating the recoverable amount of the cash-generating center to which the goodwill was allocated. If the recoverable amount of the cash-generating center is lower than the carrying amount, an impairment loss is recognized. If goodwill is part of a cash-generating center and part of the operations within this center is sold, the goodwill associated with the sold business is included in its carrying amount when determining profits or losses from the sale of such activity. In such circumstances, goodwill is sold based on the relative value of the operations sold and the value of the part of the cash-generating center retained.
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
The attached notes form an integral part of these financial statements 22
Lease The Group as a lessee
Financial lease agreements that substantially transfer all the risks and benefits of ownership of the leased asset to the Group are recognized in the statements of financial standing as of the lease commencement date at the lower of the following two values: fair value of the asset being the subject of the lease or current value of the minimum lease payments. Lease payments are divided between financial costs and reduction of the lease liability balance in a way that allows obtaining a fixed interest rate on the liability remaining to be repaid. Financial costs are recognized in profit or loss unless the capitalization requirements are met.
The principles of depreciation of fixed assets used under finance lease should be consistent with the principles applied to depreciate the Group's own assets subject to depreciation. If there is no sufficient certainty that the lessee will obtain the title of ownership before the end of the leasing period, fixed assets used under finance lease agreements are depreciated over the shorter of the two periods: estimated useful life or leasing period. Lease agreements, according to which the lessor retains substantially all the risk and all benefits resulting from possessing the subject of leasing, are classified as operating lease agreements. Lease payments under operating leases and subsequent lease installments are recognized as operating costs in profit or loss on a straight-line basis over the lease term.
Contingent lease payments are recognized as an expense in the period in which they become due.
Impairment of non-financial fixed assets At each balance sheet date, the Group assesses whether there are any indications that any of the non-financial fixed assets may have been impaired. If any such indication exists, or if it is necessary to perform an annual impairment test, the Group estimates the recoverable amount of the asset or cash-generating center to which the asset belongs. The recoverable amount of an asset or a cash-generating center is equal to the fair value less costs to sell the asset or, respectively, the cash-generating center or its value in use, depending on which one is higher. The recoverable amount is determined for individual assets, unless the asset does not generate cash inflows that are largely independent of those generated by other assets or groups of assets. If the carrying amount of an asset is higher than its recoverable amount, impairment occurs and a write-off is made up to the determined recoverable amount. When estimating the value in use, the projected cash flows are discounted to their present value using the discount rate before taking into account the effects of taxation reflecting the current market estimation of the time value of money and the risk typical for a given asset. Write-downs for impairment of assets used in continuing operations are recognized in those cost categories that correspond to the function of the asset in the case of which impairment was recognized. At each balance sheet date, the Group assesses whether there are any indications that an impairment loss recognized in previous periods with respect to a given asset is unnecessary or should be reduced. If such premises exist, the Group estimates the recoverable amount of the asset. A previously recognized impairment loss is reversed only if there has been a change in the estimates used to determine the recoverable amount of the asset since the last impairment loss was recognized. In this case, the carrying amount of the asset is increased to its recoverable amount. The increased amount may not exceed the carrying amount of the asset that would be determined (after redemption), if in the previous years no impairment loss was recognized for that asset. A reversal of an impairment loss for an asset is immediately recognized as revenue. After reversing the write-down, in subsequent periods the amortization write-down for a given component is adjusted in a way that allows the systematic write-down of its verified carrying value, less the residual value, over the remaining useful life of the asset.
Borrowing costs Borrowing costs are capitalized as part of the production cost of tangible fixed assets, investment property, intangible assets and finished goods. The borrowing costs are composed of interest calculated using the effective interest rate method, financial charges under finance lease agreements and exchange differences arising in connection with external financing up to the amount corresponding to the adjustment of the interest cost.
Financial assets As at the acquisition date, the Group measures financial assets at their fair value, i.e. most often at the fair value of the price paid. Transaction costs are included by the Group in the initial value of all financial assets, except for the category of assets measured at fair value through profit or loss. Trade receivables are an exception to this rule, which are measured by the Group at their transaction price in accordance with IFRS 15, however, this does not apply to these
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
The attached notes form an integral part of these financial statements 23
items of trade receivables whose payment period is longer than one year and which contain an important financing component as defined in IFRS 15. For the purpose of valuation after initial recognition, financial assets other than hedging derivatives are classified by the Group into:
▪ financial assets measured at amortized cost, ▪ financial assets measured at fair value through other comprehensive income, ▪ financial assets measured at fair value through profit or loss, and ▪ equity instruments measured at fair value through other comprehensive income.
These categories define the valuation principles as at the balance sheet date and the recognition of revaluation gains or losses in profit or loss or other comprehensive income. The Group classifies financial assets into categories based on the business model functioning in the Group in the scope of financial asset management and the cash flows characteristic for a financial asset resulting from the contract. A financial asset is measured at amortized cost if both of the following conditions are met (and were not designated at the time of initial recognition for measurement at fair value through profit or loss):
▪ a financial asset is maintained in accordance with the business model whose purpose is to maintain financial assets to obtain cash flows arising from a contract,
▪ terms of the contract relating to the financial asset cause cash flows to be made at specified times, which are exclusively repayment of the principal and interest on the outstanding nominal value.
In the category of financial assets measured at amortized cost, the Group includes: ▪ loans, ▪ trade receivables and other receivables (excluding those for which IFRS 9 is not applicable), ▪ debt securities,
The aforementioned classes of financial assets are presented in the consolidated statement of financial position, broken down into long-term and short-term assets in items “Other financial assets”, “Trade receivables”. Valuation of short-term receivables is carried out in the amount required for payment due to insignificant discount effects. Losses due to impairment of financial assets measured at amortized cost less revaluation losses are recognized in the income statement in item “Losses due to expected credit losses”. Gains and losses arising in connection with the exclusion of assets belonging to this category from the statement of financial position are recognized by the Group as a result in the item “Profit (loss) on cessation of the recognition of financial assets at amortized cost”. Other gains and losses from financial assets recognized in the result, including exchange differences, are presented as financial revenues or costs. A financial asset is measured at fair value through other comprehensive income if both of the following conditions are met:
▪ a financial asset is maintained in accordance with the business model, which is aimed both at receiving cash flows resulting from a contract and the sale of financial assets,
▪ terms of the contract relating to the financial asset cause cash flows to be made at specified times, which are exclusively repayment of the principal and interest on the outstanding nominal value.
Interest revenues, profits and losses due to impairment and exchange differences related to these assets are calculated and recognized in profit or loss in the same way as in the case of financial assets valued at amortized cost. Other changes in the fair value of these assets are recognized in other comprehensive income. Upon cessation of the recognition of a financial asset at fair value through other comprehensive income, accumulated profits or losses previously recognized in other comprehensive income are reclassified from capital to profit or loss. In the reporting period, the Group did not have financial assets qualifying for this valuation category. A financial asset is measured at fair value through profit or loss if it does not meet the criteria for measurement at amortized cost or at fair value through other comprehensive income and is not an equity instrument designated at the moment of initial recognition for measurement at fair value through other comprehensive income. In addition to this category, the Group classifies financial assets designated at the initial recognition for measurement at fair value through profit due to meeting the criteria set out in IFRS 9. This category includes:
▪ all derivatives,
▪ other assets that do not meet conditions for inclusion in other categories.
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
The attached notes form an integral part of these financial statements 24
Instruments belonging to this category are measured at fair value and the effects of valuation are recognized in the item “Financial revenues” or “Financial expenses”, respectively. Gains and losses on the measurement of financial assets are determined by a change in fair value determined based on current prices as at the balance sheet date from an active market or based on valuation techniques, if an active market does not exist. Financial assets classified into the categories measured at amortized cost and measured at fair value through other comprehensive income due to the business model and the nature of cash flows related to them are subject to assessment at each balance sheet date in order to recognize expected credit losses, regardless of whether there is any indication of a loss of value. The method of making this assessment and estimating the write-offs on expected credit losses differs for individual classes of financial assets:
▪ In the case of trade receivables, the Group applies a simplified approach assuming the calculation of write-offs on expected credit losses for the entire life of the instrument. Estimates of the write-offs are made on a collective basis and receivables are grouped according to the period by which they are overdue. The write-off estimate is based primarily on the historically developing overdue dates and the connection between arrears and the actual repayment of the last 3 years, taking into account available information about the future.
▪ In the case of the other classes of assets, for instruments for which the increase in credit risk since the first recognition was not significant or the risk is low, the Group assumes primarily the loss from failure to perform an obligation for the period of the next 12 months. If the increase in credit risk since the initial recognition was significant, losses corresponding to the entire life of the instrument are recognized.
Financial liabilities Financial liabilities other than hedging derivatives are recognized in the following items of the statement of financial position:
▪ Credits and loans, ▪ Other financial liabilities, ▪ trade liabilities.
As at the acquisition date, the Group measures financial liabilities at fair value, i.e. most frequently at the fair value of the amount received. Transaction costs are included by the Group in the initial value of all financial liabilities, except for the category of liabilities measured at fair value through profit or loss. After initial recognition, financial liabilities are measured at amortized cost using the effective interest method, except for financial liabilities held for trading or designated as measured at fair value through profit or loss. The Group classifies derivative instruments other than hedging instruments to the category of financial liabilities measured at fair value through profit or loss. Short-term liabilities for deliveries and services are measured at the value of the payment due, considering insignificant discount effects. Gains and losses on the measurement of financial liabilities are recognized in profit or loss in financing activities.
Embedded derivatives Embedded derivatives are separated from contracts and treated as derivatives, if the following conditions are met:
• the economic nature and the risk of an embedded instrument are not strictly related to the economic nature and risk of the contract in which the instrument is embedded;
• an independent instrument with identical implementation terms as an embedded derivative would meet the definition of a derivative;
• a hybrid (compound) instrument is not recognized at fair value, and changes in its fair value are not recognized in profit or loss.
Embedded derivatives are recognized in a similar manner as independent derivative instruments that are not recognized as hedging instruments. The extent to which, in accordance with IAS 39, the economic characteristics and risks specific to the embedded derivative in a foreign currency are closely related to the economic characteristics and risks specific to the host contract (the main contract) also include situations where the currency of the host contract is the currency of the purchase contracts or the sale of non-financial items on the market for a given transaction. The Group assesses whether an embedded derivative is separable at the moment of its initial recognition. In the case of embedded instruments acquired in a merger transaction, the Group does not re-assess the embedded derivatives as at the merger date (they are assessed as of the date of initial recognition in the acquired entity).
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
The attached notes form an integral part of these financial statements 25
Derivative financial instruments and collaterals Derivative instruments used by the Group to hedge against the risks associated with changes in interest rates and foreign exchange rates are mainly forward contracts and interest rate swaps. Such derivative financial instruments are measured at fair value. Derivative instruments are shown as assets when their value is positive and as liabilities - when their value is negative. Gains and losses arising from changes in the fair value of derivatives that do not meet the hedge accounting principles are directly recognized in net profit or loss for the financial year. The fair value of forward currency contracts is determined by reference to the current forward rates for contracts with similar maturities. The fair value of interest rate swap contracts is determined on the basis of a valuation model that takes into account observable market data, including in particular current forward interest rates. In hedge accounting, collateral is classified as:
✓ fair value hedge, hedging against the risk of changes in the fair value of the recognized asset or liability, or ✓ cash flow hedge to hedge against changes in cash flows that can be assigned to a specific type of risk related
to the recognized asset, liability or forecast transaction, or ✓ hedging of shares in net assets in a foreign entity.
Hedging of the currency risk of a probable future liability is accounted for as a cash flow hedge. At the moment when the collateral is established, the Group formally designates and documents the hedge relationship, as well as the purpose of risk management and the strategy for establishing the collateral. The documentation includes identification of the hedging instrument, the hedged item or transaction, the nature of the hedged risk as well as the method of assessing the effectiveness of the hedging instrument in offsetting the risk of changes in the fair value of the hedged item or cash flows related to the hedged risk. It is expected that the collateral will be highly effective in offsetting changes in fair value or cash flows resulting from the risk being hedged. The collateral effectiveness is assessed on an ongoing basis to check whether it is highly effective in all reporting periods for which it was established.
Fair value hedge
Fair value hedge is a hedge against changes in the fair value of the recognized asset or liability or an unrecognized future liability, or a separated portion of such asset, liability or probable future liability that can be attributed to a specific risk and which could affect profit or loss. In the case of fair value hedge, the carrying amount of the hedged item is adjusted for profit and / or loss due to changes in fair value resulting from the hedged risk, the hedging instrument is measured at fair value, and the gain and loss on the hedging instrument and the hedged item are recognized in profit or loss. If the unrecognized future liability is designated as a hedged item, subsequent overall changes in the fair value of the probable future liability resulting from the hedged risk are recognized as an asset or liability, and the resulting profits or losses are recognized in profit or loss. Changes in the fair value of the hedging instrument are also recognized in profit or loss. The Group ceases to apply hedge accounting principles if the hedging instrument expires, is sold, terminated or exercised, if the hedge no longer meets the hedge accounting criteria or if the Group revokes the hedging relationship. Any adjustment to the carrying amount of the hedged financial instrument to which the depreciated cost method is applied is depreciated and write-downs recognized are recognized in profit or loss. Amortization may start as soon as the adjustment is made, however not later than when the hedged item ceases to be adjusted for changes in fair value resulting from the risk being hedged.
Cash flow hedge
Cash flow hedge is a hedge against the threat of cash flow volatility, which can be attributed to a specific risk associated with a recognized asset or liability or a highly probable planned transaction, and which could affect profit or loss. Part of the profits or losses related to the hedging instrument, which is an effective hedge, is recognized in other comprehensive income, and the ineffective part is recognized in profit or loss. If the hedged planned transaction subsequently results in the recognition of a financial asset or financial liability, related gains and losses that were recognized in other comprehensive income and accumulated in equity are transferred to the profit and loss account in the same period or periods in which the acquired asset or liability has an impact on profit or loss. If the collateral for a planned transaction subsequently results in the recognition of a non-financial asset or non-financial liability, either the planned transaction related to a non-financial asset or non-financial liability becomes a probable future liability to which fair value hedge will apply, profits or losses that were recognized in other comprehensive income are excluded from equity and included in the cost of acquisition or other carrying amount of an asset or liability.
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
The attached notes form an integral part of these financial statements 26
Gains or losses resulting from changes in the fair value of derivatives that do not meet the conditions that allow the application of hedge accounting principles are recognized directly in the net financial result for the current period. The Group ceases to apply the hedge accounting principles when the hedging instrument expires or has been sold, its use has come to an end or has been implemented, or when the hedge no longer meets the conditions enabling the application of hedge accounting principles to it. In this case, the total gain or loss on the hedging instrument that was recognized in other comprehensive income and accumulated in equity is still recognized in equity until the forecast transaction occurs. If the Group ceases to expect that the forecast transaction will occur, the total net profit or loss accumulated in equity is recognized in net profit or loss for the current period.
Hedges of shares in net assets in a foreign entity
Hedge of shares in net assets in a foreign entity, including a hedge of a monetary item treated as part of a net share in a net asset, is accounted for similarly to cash flow hedges. Gains or losses related to the hedging instrument related to the effective part of the hedge are recognized in other comprehensive income, whereas gains or losses related to the ineffective portion of the hedge are recognized in profit or loss. At the time of disposal of a foreign entity, the amount of profits or losses recognized earlier in other comprehensive income is reclassified from equity to profit or loss as an adjustment resulting from reclassification.
Inventories Inventories are valued at the lower of the two values: purchase price / production cost and net realizable sale price. The purchase price or production cost of each inventory component includes all purchase costs, processing costs and other costs incurred while bringing the inventories to their current location and condition - both in relation to the current and previous year - and are determined as follows:
Materials - at the purchase price determined using the "first in-first out" method
Finished products and products in progress
- the cost of direct materials and labor and an appropriate mark-up of indirect production costs determined assuming the normal use of production capacity, excluding the costs of external financing
Goods - at the purchase price determined using the "first in-first out" method.
Net realizable value is the estimated selling price in the ordinary course of business, less finishing costs and estimated costs necessary to make the sale.
Receivables due to deliveries and services and other receivables Receivables due to deliveries and services are classified as assets measured at amortized cost and valued according to the principles described above. Other receivables include in particular advances transferred for future purchases of tangible fixed assets, intangible assets and inventories. Advance payments are presented in accordance with the nature of the assets to which they relate - as fixed or current assets, respectively. As non-cash assets, advances are not discounted. Budget receivables are presented as other non-financial assets, with the exception of corporate income tax receivables, which constitute a separate item in the balance sheet.
Cash and cash equivalents Cash and cash equivalents include cash at bank and on hand, deposits payable on demands, as well as short-term investments with high liquidity (up to 3 months), easily convertible into cash, for which the risk of change in value is insignificant.
Liabilities due to deliveries and services and other liabilities Short-term liabilities for deliveries and services are recognized as liabilities measured at amortized cost. Other non-financial liabilities include, in particular, liabilities to the tax office for goods and services tax and payroll liabilities. Other non-financial liabilities are recognized in the amount due.
Provisions Provisions are created when the Group has an existing obligation (legal or customarily expected) resulting from past events and when it is probable that fulfillment of this obligation will cause the outflow of economic benefits and a
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
The attached notes form an integral part of these financial statements 27
reliable estimate of the amount of such liability can be made. If the Group expects that the costs covered by the provision will be returned, for example under an insurance contract, then this return is recognized as a separate asset, but only when it is virtually certain that the return will actually take place. The costs related to a given provision are disclosed in the profit and loss account after deduction of all returns. If the effect of the time value of money is material, the amount of the provision is determined by discounting the projected future cash flows to the current value, using a discount rate reflecting current market assessments of the time value of money and the potential risk associated with the given liability. If the discounting method has been applied, the increase in the provision due to the passage of time is recognized as financial costs.
Employee benefits In accordance with the company remuneration systems, employees of the Group have the right to retirement benefits. Retirement benefits are paid once at the time of retirement. The amount of retirement benefits depends on the length of service and the average remuneration of the employee. The Group creates a provision for future liabilities related to retirement benefits in order to allocate costs to the periods to which they relate. According to IAS 19, retirement benefits are programs of specified post-employment benefits. The current value of these liabilities at each balance sheet date is calculated by an independent actuary. The accrued liabilities are equal to discounted payments that will be made in the future, taking into account the employment turnover and they refer to the period until the balance sheet date. Demographic information and information about employment turnover is based on historical data.
Re-measurement of liabilities due to employee benefits related to defined benefit plans including actuarial gains and losses is recognized in other comprehensive income and is not subject to subsequent reclassification to profit or loss.
Accruals and prepayments The Group shows in assets in the item “Prepayments” pre-paid costs relating to future reporting periods.
In the item “Accruals” included in the liabilities, deferred income is presented, including cash received for financing fixed assets, which are accounted for in accordance with IAS 20 “Government subsidies and disclosure of information on government assistance”.
Subsidies are recognized only when there is sufficient certainty that the Group will meet the conditions related to a given subsidy and that the subsidy will actually be received.
A subsidy relating to a given cost item is recognized as revenue in a manner commensurate with the costs that the subsidy is intended to compensate.
A subsidy financing an asset is gradually recognized in the result as revenue over the periods in proportion to depreciation charges made on that asset. For the purposes of presentation in the consolidated statement of financial position, the Capital Group does not subtract subsidies from the carrying amount of assets, but shows subsidies as deferred income in the item “Accruals”.
Sales revenues Sales revenues are only revenues from contracts with clients falling within the scope of IFRS 15. The method of recognizing sales revenues in the consolidated financial statements, including both the value and the moment of recognizing revenues, is determined by a five-stage model including the following steps:
• identification of the contract with the client,
• identification of performance obligations,
• determining the transaction price,
• assigning the transaction price to the performance obligations,
• revenue recognition when completing or after completing performance obligations. Identification of the contract with the client The Group recognizes the contract with the client only if all of the following criteria are met:
▪ parties to the contract have entered into a contract (in writing, or in accordance with other usual commercial practices) and are required to perform their obligations;
▪ the Company is able to identify rights of each party regarding the goods or services to be transferred; ▪ the Company is able to identify terms of payment for goods or services to be transferred;
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
The attached notes form an integral part of these financial statements 28
▪ the contract has economic content (i.e. it can be expected that as a result of the contract, a risk, time schedule or an amount of future cash flows of the Company will change); and
▪ it is probable that the Company will receive a remuneration which it will be entitled to in exchange for goods or services that will be transferred to the client.
Identification of performance obligations At the conclusion of the contract, the Group reviews the goods or services promised in the contract with the client and identifies as a performance obligation each promise to transfer to the customer a good or service (or a set of goods or services) that can be separated, or groups of separate goods or services that are basically the same and in the same way transferred to the client. In principle, there is one obligation in the contracts concluded by the Group to perform a service consisting in the sale of certain products and goods, which are sold by companies from the Group. The moment in which the Group usually meets its performance obligations depends on the terms of the concluded contract and may occur at the time of delivery of goods or products to the carrier or at the time of delivery to the customer. Payment terms vary depending on the recipient and on average last between 7 days and 21 days. In the case of domestic sales, usual payment terms are up to 30 days and the moment of performance of the obligation takes place when goods/products are released from the warehouse of the Group company. In the case of sale to some recipients in the Asian market, the Group applies the principle that 80% of the sales invoice, which is issued at the time of sending the goods/products from the Group's warehouse, is paid by the recipient in the short term, and the remaining 20% is settled after the quality verification received good/product. Under contracts concluded by the Group, as a rule, there are no returns or complaints about quality. The Group also does not identify obligations other than the sale of goods/products in the contracts signed. Determining the transaction price In order to determine the transaction price, the Group takes into account terms of the contract and its usual commercial practices. The transaction price is the amount of remuneration which, as expected, will be payable in exchange for the transfer of promised goods or services to the client, excluding amounts collected on behalf of third parties. Contracts are generally for fixed amounts of remuneration, however, in the case of foreign sales, including to Asian markets, there are sales corrections as a result of verification of the quality of goods delivered to the recipient. If the remuneration specified in the contract includes a variable amount, the Group estimates the amount of remuneration to which it will be entitled in exchange for the transfer of the promised goods or services to the client. The Group estimates the amount of variable remuneration based on the experience of its employees who, on the basis of business contacts with clients, are able to reliably estimate the amount of variable remuneration as at the balance sheet date. The Group includes part or all of the variable remuneration to the transaction price only to the extent that there is a high probability that a significant portion of the amount of previously recognized cumulated revenues will not be written down as the uncertainty about variable remuneration gradually decreases. Assigning the transaction price The Group assigns a transaction price to each performance obligation (or to a separate good or separate service) in an amount that reflects the amount of remuneration which, as expected by the Company, is due in exchange for the transfer of promised goods or services to the client. Revenue recognition The Group recognizes revenues at the time of fulfilling the obligation by transferring the promised good or service to the customer at a specific point in time. As a standard, the Group applies the INCOTERMS conditions, which are defined in contracts with customers, which define the moment of transfer of risk and benefits to the recipient. The INCOTERMS conditions applied by the Group vary depending on the company and the contractor for whom the sale is made. In the Group's opinion, due to the nature of the contracts concluded, the implementation of IFRS 15 did not significantly affect the manner of recognizing sales revenues in the consolidated financial statements.
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
The attached notes form an integral part of these financial statements 29
Taxes
Current tax
Current tax liabilities and receivables for the current and previous periods are measured at the amount of expected payment to the tax authorities (subject to reimbursement from tax authorities) using tax rates and tax regulations that were legally or actually already in force at the balance sheet date.
Deferred tax
For the purposes of financial reporting, deferred tax is calculated using the method of balance sheet liabilities in relation to temporary differences existing as at the balance sheet date between the tax value of assets and liabilities and their carrying amount disclosed in the financial statements. A provision for deferred tax is recognized in relation to all positive temporary differences:
✓ except when the provision for deferred tax arises as a result of the initial recognition of goodwill or initial recognition of an asset or liability when the transaction is not a merger and when it is concluded, it has no effect on gross profit or loss or taxable income or tax loss and
✓ in the case of positive temporary differences arising from investments in subsidiaries or associates and interests in joint ventures, except when the dates of reversal of temporary differences are subject to investor control and when it is probable that the temporary differences will not be reversed in the foreseeable future.
Deferred tax assets are recognized for all deductible temporary differences as well as unused tax credits and unused tax losses carried forward to the following years, in the amount in which it is probable that taxable income will be achieved, which will allow to use the abovementioned differences, assets and losses:
✓ except when deferred tax assets related to deductible temporary differences arise as a result of the initial recognition of an asset or liability when a transaction is not a merger and it has no effect on gross profit or loss or taxable income on conclusion tax loss and
✓ in the case of negative temporary differences due to investments in subsidiaries or associates and shares in joint ventures, the deferred tax asset is recognized in the balance sheet only in the amount in which it is probable that in the foreseeable future the above-mentioned temporary differences will be reversed and taxable income will be generated that will allow deduction of negative temporary differences.
The carrying amount of the deferred tax asset is verified as at each balance sheet date and is subject to a corresponding reduction in so far as it has ceased to be probable that taxable income will be sufficient to partially or fully realize the deferred tax asset. Unrecognized deferred tax asset is subject to reassessment at each balance sheet date and is recognized to the amount reflecting the probability of future taxable income that will allow the asset to be recovered. Deferred income tax assets and deferred tax provisions are valued using tax rates that are expected to apply in the period when the asset is realized or the provision is released, based on tax rates (and tax regulations) in effect at the balance sheet date or those whose validity is certain in the future as at the balance sheet date. Income tax relating to items recognized outside profit or loss is recognized outside profit or loss: in other comprehensive income, for items recognized in other comprehensive income or directly in equity for items recognized directly in equity. The Group offsets deferred tax assets and deferred tax liabilities against each other if and only if it has a legally enforceable right to set off the receivables against current tax liabilities and the deferred income tax is related to the same taxpayer and the same tax authority.
Tax on goods and services
Revenues, costs, assets and liabilities are recognized after deducting the value of the tax on goods and services, except:
• when the tax on goods and services paid when purchasing assets or services is not recoverable from the tax authorities; then it is recognized as a part of the purchase price of the asset or as part of the cost position, and
• for receivables and liabilities, which are reported taking into account the amount of tax on goods and services. The net amount of tax on goods and services recoverable from or payable to tax authorities is recognized in the balance sheet as part of receivables or liabilities.
Evaluation of uncertainty regarding tax settlements
If in the Group's opinion it is probable that the Group's approach to tax or tax issues will be accepted by the tax authority, the Group determines taxable income (tax loss), tax base, unused tax losses, unused tax credits and tax rates based on the approach to taxation planned or used in its tax return.
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
The attached notes form an integral part of these financial statements 30
If the Group finds that it is unlikely that the tax authority will accept the Group's approach to a tax or group of tax issues, the Group reflects the impact of uncertainty in determining taxable income (tax loss), unused tax losses, unused tax credits or tax rates.
Net profit per share Net profit per share for each period is calculated by dividing the net profit for a given period by the weighted average number of shares in a given reporting period.
CHANGES IN APPLIED ACCOUNTING PRINCIPLES
The accounting principles (policy) used to prepare these consolidated financial statements are consistent with those used in the preparation of the Group's consolidated financial statements for the year ended 31 December 2017, except for the ones presented below.
▪ New IFRS 15 „Revenues from contracts with clients” The new standard replaced the existing IAS 11 and IAS 18 and related interpretations and applies to all contracts with clients, except for contracts excluded from the scope of IFRS 15, including contracts governed by the provisions of other standards. The new IFRS 15 provides one consistent 5-step revenue recognition model that includes the following steps:
o identification of the contract with the client, o identification of performance obligations under the contract, o determining the price, o assigning the price to the performance obligations, o recognition of revenues after fulfilling or when fulfilling the performance obligations.
In the Group's opinion, due to the nature of the concluded contracts, the implementation of IFRS 15 did not significantly affect the manner of recognizing sales revenues in the consolidated financial statements.
▪ Amendment to IFRS 2 "Payments based on shares”
The IAS Supervisory Board settled three issues: o the method of recognizing in the valuation of the cash-adjusted program terms other than vesting
conditions, o classification of payments in equities when the entity is required to collect a tax, o modification of the program, which results in a change from a program settled in cash into a program
settled in equity instruments. The Group did not start share-based payment programs; therefore, the described changes did not affect the consolidated financial statements of the Group.
▪ Amendment of IFRS 4 “Insurance Contracts”
In connection with the entry into force in 2018 of the new standard on financial instruments (IFRS 9), the IASB Council introduced transitional (until the entry into force of the new IFRS 17) rules for the application of new accounting principles in the financial statements of insurers. Otherwise, their results would be exposed to considerable volatility. Two alternative approaches have been proposed:
o adjusting the volatility caused by IFRS 9 for some assets through a separate item in the income statement and other comprehensive income,
o exemption from the application of IFRS 9 until the entry into force of the new insurance standard (or 2021).
The change in the standard will not affect the Group's financial statements due to the fact that it does not conduct insurance activities. The amendments are effective at the time of applying IFRS 9.
▪ Amendment to 28 „Investments in Associates and Joint Ventures”
Changes resulting from the “Annual Amendments Project: 2014-2016 cycle”, which clarified that in situations where IAS 28 allows the valuation of investments either using the equity method or at fair value (by risk capital management organizations, mutual funds, etc., or shares in investment units), this choice can be made separately for each such investment. The Group does not have any investments in affiliates; therefore, the described change did not affect the consolidated financial statements of the Group.
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
The attached notes form an integral part of these financial statements 31
▪ Amendment to IAS 40 “Investment Property”
The amendment clarifies the rules according to which a real property is reclassified to or from the investment property category from or to fixed assets or inventories. First of all, the change of classification takes place when the way of use changes and this change has to be proved. The standard says that changing the intention of the board is not enough in itself. The amendment to the standard should be applied to all changes in use, which will occur after the amendment to the standard comes into force and to all investment properties owned as of the effective date of the amendment to the standard. Effects of the entry in force of this new standard did not affect the financial statements.
▪ New IFRIC 22 “Foreign Currency Transactions and Advances”
The interpretation defines which exchange rate should be used in the case of sale or purchase in a foreign currency, which is preceded by receiving or making an advance payment in that currency. According to the new interpretation, the advance payment as of the date of payment should be recognized in the exchange rate for that day. Then, when recognized in the income statement, income or cost or asset acquired in a currency should be recognized at the exchange rate effective on the day when the advance was recognized, not at the exchange rate when the income or cost or asset was recognized. The Group estimates that the entry in force of this new standard did not affect its financial statements in a material way.
▪ New IFRS 9 “Financial Instruments” The new standard replaced the existing IAS 39. The changes introduced by the standard in the accounting of financial instruments include mainly:
o other categories of financial assets on which the asset valuation method depends: ▪ measured at amortized cost, ▪ measured at fair value through other comprehensive income, ▪ measured at fair value through profit or loss (with the option of recognizing the effects of
valuation in other comprehensive income for equity instruments); the allocation of assets to the category is made depending on the business model relating to a given asset and the nature of cash flows resulting from it,
o new hedge accounting principles that reflect risk management to a greater extent, increasing the possibility of designating instruments as hedging positions and eliminating rigid rules for determining efficiency in the range of 80-125%,
o a new model of impairment of financial assets based on anticipated losses and necessitating faster recognition of costs in the financial result; recognition of impairment losses in accordance with the existing principles took place only when there was objective evidence of impairment, such as significant financial difficulties of the debtor or failure to meet terms of a contract, e.g. delay in repayment; the new model assumes that from the moment the financial asset is recognized, the entity estimates the expected credit losses using a 3-step model based on changes in credit risk; the standard provides for simplifications for trade receivables and assets under the contract.
The Management Board of the Parent Company decided that the application of IFRS 9 in terms of classification and valuation will be done retrospectively, without adjusting the comparative data. Effects of the changes are described below: Until now, the Group had assets classified as “loans and receivables”, “investments held to maturity” and “financial assets measured at fair value through profit or loss – designated at initial recognition for fair value measurement”. Under the new standard, “loans and receivables” and “investments held to maturity were classified as measured at amortized cost because the analysis carried out by the Group as at the date of the first application of the standard showed that they are maintained in order to obtain cash flows resulting from the contract and these flows constitute only repayment of the nominal value and interest. The change of category did not affect the value of the Group's assets and its financial result. “Financial assets at fair value through profit or loss – designated at initial recognition for measurement at fair value” were classified under the new IFRS 9 to the category of assets measured at fair value through profit or loss. The categories of financial liabilities have not changed.
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
The attached notes form an integral part of these financial statements 32
In the case of all classes of financial assets and liabilities, the change in the valuation category in connection with the first application of IFRS 9 on 1 January 2018 took place without any change in the carrying amount. Also in the Group's assessment, the effects of the new model of estimating expected credit losses did not significantly affect the carrying amount. For assets categorized as “receivables and loans”, which in accordance with IFRS 9 are measured at amortized cost, the Group built a model for estimating expected losses from the receivables portfolio. For receivables due to deliveries and services, a simplified version of the model assuming a loss calculation for the entire life of the instrument was applied. The model for other assets assumes, for instruments for which the increase in credit risk from the first recognition was not significant or the risk is low, recognition in the first place of losses from non-performance for the next 12 months. The Group assumed that the risk considerably grows, inter alia, when the overdue payment exceeds 180 days. If the increase in credit risk was significant, losses corresponding to the entire life of the instrument are recognized. The Group assumes that there is non-performance when the overdue period is 365 days or there are other circumstances indicating this.
The Group has not decided to apply earlier any other standard, interpretation or amendment that have been published but has not yet entered into force in the light of European Union regulations.
NEW STANDARDS AND INTERPRETATIONS THAT HAVE BEEN PUBLISHED, BUT HAVE NOT
YET COME INTO FORCE
When approving these financial statements, the Group did not apply the following standards, amendments to standards and interpretations that have not yet been approved for use in the EU:
▪ Amendment to IFRS 9 “Financial instruments” The amendment consists in admitting the classification into the category of assets measured at the amortized cost of such instruments, which in the case of early repayment cause that an entity will receive an amount less than the sum of capital and accrued interest (the so-called negative remuneration). The Group estimates that the amendment to the standard will not affect its financial statements due to the fact that there were no transactions subject to changes. The changes are effective for annual periods beginning on 1 January 2019 or later.
▪ New IFRIC 23 “Uncertainty over Income Tax Treatments”
The interpretation to IAS 12 “Income tax” determines the approach to the situation when the interpretation of income tax regulations is not unambiguous and it cannot be definitively decided which solution will be accepted by tax authorities, including courts. The management should first assess whether its interpretation is likely to be accepted by tax authorities. If so, the interpretation should be used to prepare the financial statements. If not, the uncertainty of amounts related to income tax should be taken into account with the most probable value or expected value method. The company should assess any changes in facts and circumstances affecting the determined value. If the value is subject to adjustment, it is treated as a change in the estimate in accordance with IAS 8. The Group estimates that the new interpretation will not have a material impact on its financial statements as it does not carry out the transactions the changes concern. The interpretation applies to annual periods beginning on 1 January 2019 or later.
▪ Amendment to IAS 28 “Investments in Associates and Joint Ventures”
The change in the standard specifies that IFRS 9 should be applied to financial instruments other than those accounted for using the equity method in affiliates and joint ventures, even if these instruments constitute an element of net investment in such an entity.
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
The attached notes form an integral part of these financial statements 33
The Group estimates that the new interpretation will not have a material impact on its financial statements as it does not hold such financial instruments. The changes apply to annual periods beginning on 1 January 2019 or later.
▪ Amendments to IAS 12 “Income tax”, IAS 23 “Borrowing costs”, IFRS 3 “Business combinations” and IFRS 11
“Joint arrangements” Smaller corrections to standards, introduced as part of annual changes to standards (cycle 2015 – 2017):
o the IAS Council has clarified the manner of recognizing income tax resulting from dividends. The tax is recognized when the liability to dividend payment is recognized as a burden on the result or other comprehensive income or equity, depending on where the past transactions that generated the result were recognized.
o IAS 23: It was clarified that the debt originally earmarked for financing an asset that has already been completed is included in general debt, the cost of which can later be capitalized in the value of other assets.
o IFRS 3: the IASB Council clarified that the rules regarding the settlement of the combination of projects implemented in stages, including the need to measure shares, also apply to previously held shares in joint operations.
o IFRS 11: the Council clarified that a partner in joint operations, not exercising a joint control, in a situation where it gained joint control over joint venture activity, should not re-evaluate shares in this joint operation.
The Group estimates that the new standard will not significantly affect its financial statements because:
o the Group is not a party to transactions subject to change in IAS 12, o all adjustments to the asset of material value are financed by the Group from external funds
specifically for this purpose, o the Group does not conduct joint operations in the meaning of IFRS 11.
The changes apply to annual periods beginning on 1 January 2019 or later.
▪ New IFRS 17 “Insurance Contracts”
A new standard regulating the recognition, valuation, presentation and disclosures regarding insurance and reinsurance contracts. The standard replaces the previous IFRS 4. The Group estimates that the new standard will not affect its financial statements because it does not conduct insurance activities. The standard applies to annual periods beginning on 1 January 2021 or later.
▪ Amendment to IAS 19 “Employee benefits”
According to the introduced amendment, if a net asset component or liability under a defined benefit plan is re-measured as a result of changes, limitations or settlements, an entity should:
o determine the costs of current employment and net interest for the period following the re-valuation using the assumptions used in the re-measurement and
o determine net interest for the remaining period based on the discounted net assets or liabilities. The Group estimates that the new standard will not affect its financial statements because it does not offer programs of specific benefits to employees after the employment period. The standard applies to annual periods beginning on 1 January 2019 or later.
▪ Amendment to IAS 1 “Presentation of financial statements” and IAS 8 “Accounting principles (policy), changes
in estimates and correction of errors” The amendment consists in introducing a new definition of the term “material” (with regard to omission or distortion in the financial statements). The current definition contained in IAS 1 and IAS 8 differs from that contained in the Financial Reporting Concepts, which could have caused difficulties in making judgments by entities preparing financial statements. The amendment will unify definitions in all applicable IAS and IFRS.
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
The attached notes form an integral part of these financial statements 34
The Group estimates that the new standard will not affect its financial statements, because the materiality judgments made so far were in line with those that would have been made using the new definition. The changes apply to annual periods beginning on 1 January 2020 or later.
▪ Amendment to IFRS 3 “Business combinations”
The amendment concerns the definition of a business and mainly includes the following issues: o it specifies that the acquired set of assets and activities, in order to be treated as a business venture,
must also include the contribution and relevant processes that will have a joint and significant share in generating return,
o it narrows the definition of return, and thus also the business, focusing on goods and services provided to recipients, removing the reference to a return in the form of a reduction of costs from the definition,
o it adds guidelines and illustrative examples to facilitate the assessment of whether an important process has been taken over as part of the merger,
o it disregards the assessment of whether it is possible to replace the missing contribution or process and to continue to operate the business to obtain a return, and
o it adds an optional opportunity to perform a simplified assessment to exclude that the adopted set of activities and assets is a business venture.
The change applies to business combinations for which the acquisition date falls within the first annual reporting period beginning on or after 1 January 2020, and for acquisitions of assets that occurred in the reporting period or thereafter. As a result, the change will not affect the Group's financial statements.
Implementation of IFRS 16
In January 2016, the International Accounting Standards Board issued the International Financial Reporting Standard 16 Leases (“IFRS 16”), which replaced IAS 17 Leases, IFRIC 4 Determining whether the contract includes lease, SIC 15 Operating Leases - Incentives and SIC 27 Evaluating the Substance of Transactions in the Legal Form of a Lease. IFRS 16 sets out the accounting principles for lease in terms of valuation, presentation and disclosure. IFRS 16 introduces a single model of the lessee's accounting and requires the lessee to recognize assets and liabilities resulting from each lease with a period exceeding 12 months, unless the underlying asset is of low value. On the date of the commencement, the lessee recognizes an asset component in view of the right of use of the underlying asset and a lease liability that reflects his obligation to make lease payments. The lessee separately recognizes depreciation of the asset component under the right of use and interest on the lease liability. The lessee updates the valuation of the lease liability after the occurrence of certain events (e.g. changes in the lease period, changes in future lease payments resulting from a change in the index or the rate used to determine such charges). As a rule, the lessee recognizes the revaluation of the lease liability as an adjustment to the asset's value under the right of use. Lessor accounting in accordance with IFRS 16 remains substantially unchanged from current accounting in accordance with IAS 17. A lessor will continue to recognize all lease agreements using the same classification principles as in IAS 17, distinguishing between operating leases and finance leases. IFRS 16 requires broader disclosures from both the lessee and the lessor than in the case of IAS 17. The lessee has the right to choose a full or modified retrospective approach, and the transitional provisions provide for some practical solutions. IFRS 16 is effective for annual periods beginning on 1 January 2019 and later. The Group made a valuation and disclosed identified financial assets and liabilities in the books.
Implementation of other standards and interpretations
As at the date of approval of these consolidated financial statements for publication, the Management Board does not expect the introduction of other standards and interpretations to have a material effect on the accounting principles (policy) applied by the Group.
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
The attached notes form an integral part of these financial statements 35
ADDITIONAL NOTES AND EXPLANATIONS TO THE CONSOLIDATED FINANCIAL STATEMENTS Note 1. SALES REVENUES Under IAS 18, revenues from the sale of goods and services, net of value added tax, discounts and rebates are recognized
when significant risks and rewards of ownership have been transferred to the buyer.
The Group’s sales revenues and total revenues are as follows:
Description 01.01.-31.03.2019 01.01.-31.03.2018
Continuing operations
Sale of goods/materials 485 985 355 377
Sale of services and products 10 779 19 289
Change in the balance of products 3 576 -2 046
TOTAL sales revenues 500 339 372 620
Other operating revenues 1 488 469
Financial revenues 1 721 382
TOTAL revenues from continuing operations 503 548 373 471
Revenues from discontinued operations
TOTAL revenues 503 548 373 471
Revenues from discontinued operations did not occur. Note 2. OPERATIONAL SEGMENTS The Group assumed the basic reporting arrangement in the form of geographical segments, i.e. segments connected with conducting operations in various geographical areas defined according to the market location criterion. Two segments were distinguished:
• domestic market (Poland),
• Europe,
• Asia. No division into sectors was made since Elemental Holding S.A. Group is a group of horizontally integrated enterprises and the Management Board believes that they should be assessed as a whole in terms of financial effects of their activity. Only consolidated financial data and information presented accordingly provide objective conclusions after the analysis, so Elemental Holding Group does not distinguish activity segments. According to the Management Board, only an overall view allows for the most objective assessment of types and effects of the business activities in which the Group is involved. The Group’s unique nature, complexity of processes and variety of activity areas, in which the Group operates, makes the presentation of consolidated results the only method that does not distort the objective image of financial effects of the activity. Distinguishing operating segments does not provide the readers of the financial statements with significant information and could lead to wrong conclusions.
Description 01.01.-31.03.2019 01.01.-31.03.2018
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
The attached notes form an integral part of these financial statements 36
Poland 143 690 129 619
Europe (except Poland) 200 467 94 484
Asia 156 182 148 517
Total sales revenues 500 339 372 620
Note 3. OPERATING COSTS The data concerning operating costs are presented in “Consolidated profit and loss account”.
Note 4. OTHER OPERATING REVENUES AND EXPENSES
Description 01.01.-31.03.2019 01.01.-31.03.2018
Profit from disposal of non-financial fixed assets 25 83
Release of provisions 872 0
Obtained penalties, fines and damages 247 40
Inventory surpluses 0 0
Remuneration subsiding 162 174
Company Fund for Rehabilitation of Disabled Persons (ZFRON) 0 14
Revenues from cost reinvoicing 22 112
Subsidies 113 0
Other 0 46
Clearance of erroneous settlements 47 0
Adjustment of previous years’ errors within the limits of materiality
1 0
Other operating expenses 1 488 469
Loss on disposal of non-financial fixed assets 7 78
Creation of provisions 0 100
Penalties and damages 25 0
Theft 0 3
Re-invoicing of costs 0 70
Other 224 49
Other operating expenses 256 300
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
The attached notes form an integral part of these financial statements 37
Note 5. FINANCIAL REVENUES AND EXPENSES
Description 01.01.-31.03.2019 01.01.-31.03.2018
Financial revenues on interest 150 342
Profit on disposal of investments 0 0
Revaluation of investments 0 0
FX differences 1 309 40
Release of provision for interest on court case 0 0
Other financial revenues 167 0
Dividends 0 0
Valuation of financial instruments 94 0
Financial revenues 1 721 382
Financial costs from interest 1 757 2 217
FX differences 216 658
Bank commissions 55 0
Revaluation of financial assets 41 0
Revaluation of investments 386 0
Write-off on bonds 0 0
Factoring services 230 0
Other financial costs 143 0
Costs of obtaining capital 24 0
Valuation of financial instruments 502 269
Financial costs 3 354 3 144
Note 6. INCOME TAX AND DEFERRED INCOME TAX Main components of the tax burden for the periods concerned are as follows:
Description 01.01.-31.03.2019 01.01.-31.12.2018 01.01.-31.03.2018
Current income tax 1 648 8 558 2 081
For the financial year 1 648 8 543 2 081
Adjustments for previous years 0 15
Deferred income tax -276 1 604 -309
Related to occurrence and reversal of temporary differences -276 1 604 -309
Related to lowering of income tax rates 0 0 0
Tax burden disclosed in the consolidated profit and loss account 1 372 10 162 1 772
The current portion of corporate income tax of entities constituting the Capital Group was set at a rate of 15%, 19% and
22% for the tax base of income tax. Tax on foreign jurisdictions does not occur.
NEGATIVE TRANSITIONAL DIFFERENCES BEING THE BASIS FOR CREATION OF
DEFERRED TAX ASSETS
Opening balance
Increases Decreases Closing balance
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
The attached notes form an integral part of these financial statements 38
1) Unrealized foreign exchange differences 2 997 493 2 504
2) Lease liabilities 7 010 29 6 981
3) Provisions 2 564 134 2 430
4) Suspended costs related to revenues 1 021 1 021
5) Write-offs on receivables 728 728
6) Tax losses 0 0
7) Unpaid salaries 295 36 259
8) Unpaid Social Security (ZUS) contributions
318 39 279
9) Other 21 60 81
Total negative temporary differences 14 954 60 731 14 283
Deferred tax assets 2 700 11 139 2 572
Deferred tax assets/net provision
31.03.2019 31.12.2018 31.03.2018
Deferred tax asset 2 572 2 700 416
Provision for deferred tax - continued operations 4 384 4 574 399
Deferred tax assets/net provision -1 812 -1 874 17
Note 7. DISCONTINUED OPERATIONS Discontinued operations did not occur. Note 8. PROFIT PER SHARE OF THE PARENT COMPANY
Description 01.01.-31.03.2019 01.01.-31.03.2018
Weighted average number of shares disclosed for the purpose of calculating the value of basic profit per share in pcs.
170 466 065 170 466 065
Net profit (loss) attributed to the parent entity 6 137 5 298
Profit per one share 0.04 0.03
POSITIVE TRANSITIONAL DIFFERENCES BEING THE BASIS FOR CREATION OF
DEFERRED TAX PROVISION
Opening balance
Increases Decreases Closing balance
1) Interest 1 903 824 1 079
2) Net value of leased fixed assets 18 758 27 18 731
3) Accrued revenues 3 345 75 3 270
4) FX differences 59 11 70
5) Other temporary differences 470 66 536
Total positive temporary differences 24 535 77 926 23 686
Provision for deferred tax at the end of the period
4 574 15 205 4 384
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
The attached notes form an integral part of these financial statements 39
Basic profit per share is calculated by dividing the net profit for the period attributable to the Group's shareholders by the weighted average number of shares occurring during the period. Diluted profit per share is calculated by dividing the net profit for the period attributable to the shareholders by the weighted average number of shares outstanding during the period. For the purposes of calculating the weighted average number of ordinary shares (the denominator of the profit per share formula) existing throughout the period when a reverse acquisition took place: a) the number of ordinary shares occurring between the beginning of the period and the acquisition day is the
number of ordinary shares calculated based on the weighted average number of ordinary shares of an entity considered an acquired one from the legal point of view (an acquiring entity from the accounting point of view) occurring throughout the period and multiplied by the exchange index specified in the consolidation agreement and
b) the number of ordinary shares occurring between the acquisition day and the end of that period is the actual number of ordinary shares of an entity considered an acquiring one from the legal point of view (an acquired entity from the accounting point of view) occurring throughout the period.
The basic profit per share for each comparable period preceding the acquisition day and presented in the consolidated financial statement prepared after the reverse acquisition is calculated by dividing: a) the profit or loss of an entity considered an acquired one from the legal point of view which can be attributed to
ordinary shareholders in each of those periods by b) the historical weighted average number of ordinary shares of an entity considered an acquired one from the legal
point of view multiplied by the exchange index specified in the acquisition agreement. Profit per share calculation was based on the following information:
Description 01.01.-31.03.2019 01.01.-31.03.2018
Net profit on continued activities for the parent company 6 137 5 298
Loss on discontinued activities 0 0
Profit disclosed for the purpose of calculating the value of basic profit attributable to one share
6 137 5 298
Dilution effect 0 0
Profit disclosed for the purpose of calculating the value of diluted profit per one share
6 137 5 298
Number of shares
Description 01.01.-31.03.2019 01.01.-31.03.2018
Weighted average number of shares shown for the purposes of calculating the value of basic profit per share in pieces 170 466 065 170 466 065
Dilution effect 0 0
Weighted average number of shares shown for the purposes of calculating the value of diluted profit per share in pieces 170 466 065 170 466 065
Note 9. DIVIDENDS PROPOSED, PAID OR RESOLVED BY THE DATE OF APPROVAL OF THE FINANCIAL STATEMENTS
In 2019, the Issuer did not pay interim dividends. Interim dividends paid in the total amount of PLN 101 thousand were disclosed in equity. The interim dividends were paid in subsidiaries to non-controlling shareholders. Note 10. DISCLOSURE OF COMPONENTS OF OTHER TOTAL INCOME AND TAX EFFECT OF OTHER TOTAL INCOME
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
The attached notes form an integral part of these financial statements 40
In the periods covered by the consolidated statement, there were transactions that would be classified as "other
comprehensive income" in accordance with IAS 1, therefore the values of the item net income and total income are
different. They were classified as total income from foreign exchange differences from the valuation of entities
operating abroad amounting to PLN 1 886 thousand.
Nota 11. TANGIBLE FIXED ASSETS AND INTANGIBLE ASSETS Fixed assets
Purchase and sales
During the three months ended 31 March 2019, the Group acquired fixed assets with a value of PLN 4,252 thousand (during the three months ended 31 March 2018: PLN 2,612 thousand).
In connection with the implementation of IFRS 16, the value was disclosed in the books as the value of disclosed assets in the amount of PLN 18,916 thousand.
During the three months ended 31 March 2019, the Group sold fixed assets with a value of PLN 634 thousand (during the three months ended 31 March 2018: PLN 1 434 thousand).
The following collaterals are established on fixed assets to secure loan repayments:
• registered pledge on the recycling line owned by Terra Recycling spółka z ograniczoną odpowiedzialnością sp. k.,
• registered pledge on the processing line for the recycling of refrigeration equipment owned by Terra Recycling spółka z ograniczoną odpowiedzialnością sp. k.,
• registered pledge on the processing line for the recycling of printed circuit boards owned by PCB Tech sp. z o.o.,
• registered pledge on the line owned by Syntom spółka z ograniczoną odpowiedzialnością sp. k.,
• mortgage up to the amount of PLN 3 million on real property located in Grodzisk Mazowiecki at ul. Słowackiego 22A owned by PGM Group spółka z ograniczoną odpowiedzialnością sp. k.
In addition, the following joint contractual mortgages were established as collaterals for the repayment of loans:
• Mortgage on real property located in Bielsko-Biała at ul. Piekarska 74, owned by Syntom spółka z ograniczoną odpowiedzialnością sp. k.,
• Mortgage on real property located in Konstantynów Łódzki at ul. Kościelna 13, owned by Syntom spółka z ograniczoną odpowiedzialnością sp. k.,
• Mortgage on real property located in Słupsk at ul. Grunwaldzka 2, owned by Syntom spółka z ograniczoną odpowiedzialnością sp. k.,
• Mortgage on real property located in Gdańsk at ul. Litewska 1, owned by Syntom spółka z ograniczoną odpowiedzialnością sp. k.,
• Mortgage on real property located in Szczecin at ul. Narzędziowa 15, owned by Syntom spółka z ograniczoną odpowiedzialnością sp. k.,
• Mortgage on real property located in Tomaszów Mazowiecki, at ul. Wysoka 61/65, owned by Syntom spółka z ograniczoną odpowiedzialnością sp. k.
Impairment write-offs
In the period ended 31 March 2018, the Group did not create or release impairment write-offs on tangible fixed assets. INTANGIBLE ASSETS
Purchase and sales
During the three months ended 31 March 2019, the Group acquired intangible assets with a value of PLN 95 thousand (in the 3-month period ended 31 March 2018: PLN 45 thousand).
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
The attached notes form an integral part of these financial statements 41
During the three months ended 31 March 2019, the Group did not sale intangible assets. Also in the period ended 31 March 2018 no intangible assets were sold. Note 12. GOODWILL
31.03.2019 31.12.2018
31.03.2018
Goodwill: settlement of purchase of Syntom spółka z ograniczoną odpowiedzialnością sp.k.
59 851 59 851 59 851
Goodwill: purchase of an organized part of “TOMPOL”
2 491 2 491 2 491
Goodwill: purchase of GK Terra Recycling spółka z ograniczoną odpowiedzialnością sp.k.
44 647 44 647 44 647
Goodwill of UAB ”EMP recycling” 11 566 11 566 11 566
Goodwill of Metal Holding s.r.o. 12 846 12 846 12 846
Goodwill of PGM Group spółka z ograniczoną odpowiedzialnością S.K.A.
30 661 30 661 30 661
Evciler & Elemental Recycling Middle East DMCC 41 497 41 497 41 497
Goodwill of Syntom spółka z ograniczoną odpowiedzialnością sp.j
9 421 9 421 9 950
Goodwill of Elemental Resourse Management Ltd. 18 129 18 129 18 129
Goodwill of Platinium M.M. sp. z o.o. 66 66 66
Goodwill of Kat-Metal Oy 15 630 15 630 15 630
Goodwill of Platinium M.M. spółka z ograniczoną odpowiedzialnością sp.k.
23 725 23 725 22 725
Goodwill of PCB Tech sp. z o.o. 8 878 8 878 8 878
Goodwill of Recat Gmbh 36 002 36 002
Goodwill of Evciler Kimya Madencilik ve Değerli Metaller Sanayi Ticaret Anonim Şirketi
1 036 1 036
316 445 316 445 278 937
Note 13. OTHER FIXED ASSETS Other fixed assets in the presented period amounted to PLN 9 thousand. Note 14. FINANCIAL ASSETS AVAILABLE FOR SALE Financial assets available for sale did not occur in the presented periods. Note 15. OTHER FINANCIAL ASSETS AND ASSETS PRICED THROUGH PROFIT AND LOSS
Description 31.03.2019 31.12.2018 31.03.2018
Loans 1 772 590 1 263
Bonds 0 0 0
Other, including valuation of derivative instruments 139 327 42
Total 1 911 917 1 305
Other financial assets – short-term 1 851 887 1 263
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
The attached notes form an integral part of these financial statements 42
Description 31.03.2019 31.12.2018 31.03.2018
Other financial assets – long-term 60 30 42
Note 16. INVENTORIES Inventories are valued at cost or net realizable value not higher than their net selling price obtainable at the balance sheet date. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the costs necessary to accomplish the sale.
Description 31.03.2019 31.12.2018 31.03.2018
Materials for production and other materials 15 409 55 400 8 742
Semi-finished products and work in progress 1 802 1 578 702
Finished products 24 246 8 085 4 480
Goods 151 378 96 875 122 104
Gross inventories 192 835 161 938 136 028
Inventory write-off 0 0 0
Inventories 192 835 161 938 136 028
Note 17. TRADE RECEIVABLES
Description 31.03.2019 31.12.2018 31.03.2018
Trade receivables 166 518 164 457 131 739
- from associated entities 0
- from other entities 166 518 164 457 131 739
Impairment write-offs 1 860 1 860 1 455
- from associated entities 0 0
- from other entities 1 860 1 860 1 455
Gross trade receivables 168 378 166 317 133 194
Note 18. OTHER RECEIVABLES
Description 31.03.2019 31.12.2018 31.03.2018
Other receivables, including: 15 412 16 649 36 502
- deposits 614 480 250
- advance payment settlements 931 1 821 905
- tax receivables 7 085 7 879 4 801
- receivables from disposal of assets 3 982 3 981 27 797
- other 2 800 2 488 2 749
- dividend receivables 0 0 0
Other receivables – short-term 15 412 16 649 27 075
Other receivables – long-term 0 0 9 427
Note 19. CASH AND CASH EQUIVALENTS
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
The attached notes form an integral part of these financial statements 43
Description 31.03.2019 31.12.2018 31.03.2018
Cash in hand and on bank accounts: 19 302 26 625 21 677
Cash in hand 3 124 1 893 1 454
Bank accounts 16 178 24 732 20 223
Other cash: 646 102 1 688
Deposits/depositories 213 0 1 550
Cash in transit 433 102 138
Cash and cash equivalents 19 948 26 727 23 365
Note 20. SHARE CAPITAL Share capital - structure as on 31.03.2019
As of the date of drawing up these financial statements, the share capital of Elemental Holding SA is fully paid up and divided into 170 466 065 ordinary bearer shares with a nominal value of PLN 1.00 (one zloty) each.
Shareholding structure as of 31 March 2019 is presented in the table below
Shareholder Number of shares
% of share capital
Number of votes
% of votes
EFF B.V. (along with Reventon sp. z o.o.)
52 500 000 30.80% 52 500 000 30.80%
Nationale-Nederlanden PTE SA 21 827 597 12.80% 21 827 597 12.80%
JJR INVEST sp. z o.o. 15 500 968 9.09% 15 500 968 9.09%
MetLife OFE 12 829 712 7.53% 12 829 712 7.53%
Aegon OFE 10 138 587 5.95% 10 138 587 5.95%
Others 57 669 201 33.83% 57 669 201 33.83%
Total 170 466 065 100.00% 170 466 065 100.00%
Determination of the total number and nominal value of all Issuer’s shares
Series / issue / type of shares
Type of share preference
Type of limitation of
rights for shares
Number of shares
Unit value
Series/issue value
according to face value
Way of covering capital
A/bearer ordinary shares none 100,000 PLN 1.00 100,000 in-cash
B/bearer ordinary shares none 40,000,000 PLN 1.00 40,000,000 in-kind
C/bearer ordinary shares none 23,270,833 PLN 1.00 23,270,833 in-kind
D/bearer ordinary shares none 25,126,984 PLN 1.00 25,126,984 in-kind
E/bearer ordinary shares none 1,000,000 PLN 1.00 1,000,000 in-cash
F/bearer ordinary shares none 6,883,329 PLN 1.00 6,883,329 in-cash
G/bearer ordinary shares none 3,287,000 PLN 1.00 3,287,000 in-cash
H/bearer ordinary shares none 1,837,581 PLN 1.00 1,837,581 in-cash
I/bearer ordinary shares none 1,658,000 PLN 1.00 1,658,000 in-cash
J/bearer ordinary shares none 512,040 PLN 1.00 512,040 in-cash
K/bearer ordinary shares none 1,626,500 PLN 1.00 1,626,500 in-cash
L/bearer ordinary shares none 11,688,800 PLN 1.00 11,688,800 in-cash
M/bearer ordinary shares none 24,500,000 PLN 1.00 24,500,000 in-cash
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
The attached notes form an integral part of these financial statements 44
N/bearer ordinary shares none 13,333,334 PLN 1.00 13,333,334 in-cash
O/bearer ordinary shares none 3,641,664 PLN 1.00 3,641,664 in-cash
P/bearer ordinary shares none 12,000,000 PLN 1.00 12,000,000 in-cash
TOTAL 170,466,065 170,466,065
Note 21. OTHER FINANCIAL LIABILITIES
Description 31.03.2019 31.12.2018 31.03.2018
Lease liabilities 26 057 8 754 5 564
Liabilities from issue of D- and E-series bonds 65 351 64 557 64 638
Factoring liabilities 10 605 8 389 5 712
Due to taking up investment certificates for the purchase of shares in PCB TECH sp. z o.o.
0
0
Option liability 0 0 0
Derivatives 383 289 0
Other liabilities 0 0 964
Total financial liabilities 102 396 81 989 76 878
Other financial liabilities - short-term 43 328 36 642 68 300
Other financial liabilities - long-term 59 068 45 347 8 578
In connection with the implementation of IFRS 16, financial liabilities in the amount of PLN 18,916 thousand were entered in the books in the presented period. Note 22. TRADE LIABILITIES
Trade liabilities
Description 31.03.2019 31.12.2018 31.03.2018
Trade liabilities 86 485 81 556 48 890
To associated entities
To other entities 86 485 81 556 48 890
Trade liabilities – aging structure As of 31.03.2019
Description To associated
entities To other entities Total
Not past due 61 507 61 507
Past due but recoverable 24 978 24 978
- up to 60 days 22 434 22 434
- over 60 days to 90 days 1 996 1 996
- over 90 days to 180 days 481 481
- over 180 days to 360 days 16 16
- over 360 days 51 51
Total 86 485 86 485
As of 31.12.2018
Description To associated
entities To other entities Total
Not past due 55 457 55 457
Past due but recoverable
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
The attached notes form an integral part of these financial statements 45
- up to 60 days 22 024 22 024
- over 60 days to 90 days 2 499 2 499
- over 90 days to 180 days 260 260
- over 180 days to 360 days 57 57
- over 360 days 1 259 1 259
Total 81 556 81 556
As of 31.3.2018
Description To associated
entities To other entities Total
Not past due 36 638 36 638
Past due but recoverable
- up to 60 days 8 247 8 247
- over 60 days to 90 days 1 272 1 272
- over 90 days to 180 days 332 332
- over 180 days to 360 days 355 355
- over 360 days 2 046 2 046
Total 48 890 48 890
Note 23. OTHER LIABILITIES Other short-term liabilities
Description 31.03.2019 31.12.2018 31.03.2018
Payroll settlements 2 057 2 051 1 507
Social Insurance contributions (ZUS) 1 743 1 808 1 383
Remuneration tax 837 593 419
State/Company Fund for Rehabilitation of Disabled Persons (PFRON/ ZFRON)
13 11
89
Tax on civil law transactions 12 4 31
Bailiff 14 18 17
Other 1 317 402 148
Advances 101 0 496
VAT 1 229 914 73
Liabilities due to purchase of assets 0 0 420
Other 0 2 651 0
Other liabilities 7 323 8 452 4 583
Note 24. SOCIAL ASSETS AND COMPANY’S SOCIAL BENEFITS FUND (ZFŚS) LIABILITIES The Act of 4 March 1994 on the Company's Social Benefits Fund, as amended, states that the Company Social Benefits
Fund is created by employers employing more than 20 full-time employees. Based on Article 3 paragraph 3b of the Act
of 4 March 1994 on the Company's Social Benefits Fund, the Group did not create the Company's Social Benefits Fund
during the period covered by the statements, nor paid holiday benefits.
Note 25. PROVISION FOR PENSION AND SIMILAR BENEFITS
Description 01.01.-31.03.2019 01.01.-31.12.2018 01.01.-31.03.2018
Provisions for severance pays 276 709 227
Provisions for jubilee awards 0 0 0
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
The attached notes form an integral part of these financial statements 46
Provisions for costs of unused holiday leaves 1 455 1 370 1 096
Provisions for other benefits 215 460 277
Total, including: 1 946 2 539 1 600
Provision for retirement and similar benefits - short-term 1 750 1 912 213
Provision for retirement and similar benefits - long-term 196 627 1 387
Provisions for costs of unused holiday leaves were estimated for individual companies on the basis of available personnel and financial accounting information. Provisions are calculated at the end of the financial year on the basis of the actual number of days of unused leaves in the current period and increased by the number of days of unused leaves from previous periods. The amount of days received for each employee is multiplied by the average daily rate based on the average remuneration used to determine the holiday leave remuneration. Provisions for retirement severance pays are created using actuarial methods. The method used for calculations complies with International Accounting Standards (IAS 19). This is the so-called method of forecasted unit benefits, also called the method of benefits accrued on the basis of seniority. The essence of the method is to perceive increasing work seniority as a cause for the increase in the company's liabilities to pay other than remuneration benefits in the future. In accordance with IAS 19, the interest rate used to discount future liabilities should be determined on the basis of the market rate of return on corporate bonds (as of the balance sheet date) and the maturity of the bonds should be consistent with the estimated maturity date. In the absence of a developed corporate bond market, market rates of return on Treasury bonds should be used. Provisions for holiday leaves are calculated on a case-by-case basis for each employee on the basis of average remuneration and the number of days of overdue leave.
Note 26. OTHER PROVISIONS
Description 01.01.-
31.03.2019 01.01.-
31.12.2018 01.01.-
31.03.2018
Costs of the year documented in the next year 4 050 2 994 1 712
Provision for the audit of the financial statements 0 0 0
Other provisions 0 0 0
Total, including: 4 050 2 994 1 712
Other provisions – short-term 4 050 2 994 1 712
Other provisions – long-term 0 0 0
Note 27. ACCRUALS AND PREPAYMENTS Accruals
Description 31.03.2019 31.12.2018 31.03.2018
Funds received to finance acquisition of fixed assets and other
8 899 9 012 9 462
Revenues of future periods 1 473 1 076 0
Other 154 2 0
Total, including: 10 526 10 090 8 902
Accruals – short-term 2 077 1 529 713
Accruals – long-term 8 449 8 562 8 902
Subsidies are settled in parallel to the depreciation of fixed assets financed or co-financed by subsidies. According to the Group, there are no indications of uncertainty (possibility of return) related to the received amounts of subsidies.
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
The attached notes form an integral part of these financial statements 47
Note 28. AVERAGE EMPLOYMENT
Description 31.03.2019 31.12.2018 31.03.2018
White-collar workers 228 226 186
Blue-collar workers 507 502 392
TOTAL 735 728 578
Note 29. PURPOSES AND RULES OF FINANCIAL RISK MANAGEMENT
Main financial instruments used by the companies forming the Capital Group are loans, bonds, credit agreements, finance lease agreements, factoring, cash and short-term deposits, and liabilities related to the purchase of shares. The main purpose of these financial instruments is to raise funds for the Group's activities. The Group also has other financial instruments, such as trade receivables and payables arising directly from its business. Companies of the Capital Group also deal with derivative transactions. The policy applied by the Group at present and throughout the reporting period is to enter into secure forward transactions, such as FX forward, to secure interest rate risk on a part of its core business. Main risks arising from the Group's financial instruments include interest rate risk, liquidity risk, currency risk and credit risk. The Management Board verifies and agrees the rules of managing each financial liability. The Capital Group’s companies use interest-bearing liabilities with a fixed (in the case of some loans, bonds and the overdraft facility in Bank Pekao S.A.) and variable interest rate (in the case of some loans, credit, factoring agreements and lease agreements). Therefore, the Group is exposed to the interest rate risk, however, due to low and stable interest rates in PLN, it is considered by the Group as relatively moderate.
Interest rate risk - sensitivity to change
The Capital Group’s companies use interest-bearing liabilities with a fixed (in the case of some loans, bonds and the
overdraft facility in Bank Pekao S.A.) and variable interest rate (in the case of some loans, credit, factoring agreements
and lease agreements). Therefore, the Group is exposed to the interest rate risk, however, it is insignificant from the
point of view of the Group.
Currency risk The Group is exposed to the currency risk arising from transactions concluded. Such risk arises from sales or purchases in currencies other than the currency of valuation. Foreign currency transactions are mainly related to the sale and purchase of goods by Syntom spółka z ograniczoną odpowiedzialnością sp.k., Tesla Recycling spółka z ograniczoną odpowiedzialnością sp.k., Platinium MM spółka z ograniczoną odpowiedzialnością sp.k., PGM Group spółka z ograniczoną odpowiedzialnością sp.k., Elemental Catalyst Recycling Sp. z o.o., as well as sales effected by companies situated in Slovakia, Lithuania, England, Finland, and Estonia. Both sales and purchases abroad represent a significant percentage of the Group's turnover. The Group performed a sensitivity analysis for currency risk by examining the impact on the net financial result of changes in the USD and EUR exchange rate by PLN 0.10. The following results were obtained:
currency risk / impact on the net financial result EUR USD
exchange rate changes by PLN 0.10 +/- PLN 660 thousand +/- PLN 557 thousand
Another area of currency risk arises as a result of intra-group financing in foreign currencies due to the fact that foreign companies keep their books in foreign currency. Valuation of loans granted in other currency is made at the level of Polish companies and the unrealized financial revenues or costs arising during the valuation have a significant impact on the financial result of the Capital Group.
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
The attached notes form an integral part of these financial statements 48
The Group performed an estimated analysis of sensitivity to currency risk by examining the impact on the financial result of the change in the basket of USD and EUR foreign exchange rates by 1%. The following approximate results were obtained:
currency risk / impact on the net financial result EUR USD
exchange rate changes by 1% +/- PLN 392 thousand +/- PLN 203 thousand
Credit risk The companies belonging to the Elemental Holding SA Capital Group use, inter alia, financing from bank credits, loans and bonds. It cannot be ruled out that in the future various unpredictable events will cause difficulties in meeting obligations towards crediting institutions. In addition, due to the variability in interest rates of the indicated short- and long-term liabilities, the companies are exposed to interest rate risk. In order to minimize such risk, long-term planning is pursued, and each investment is preceded by in-depth financial analysis. The Group deals exclusively with reputable companies enjoying good creditworthiness. All customers wishing to use merchant loans are subject to pre-verification procedures. In addition, due to ongoing monitoring of receivables, the exposure of the Company to the risk of bad debts is insignificant. In respect of other financial assets of the Company, such as cash and cash equivalents, the Group's credit risk arises from the inability of the other party to pay and the maximum exposure to that risk is equal to the carrying amount of the assets. In the opinion of the Management Board, there are no significant concentrations of credit risk related to receivables in the Group. The Group collaborates with a large number of clients.
Cooperation with suppliers to date indicates a low risk of non-payment. Past due trade receivables
Description 31.03.2019
Not past due 87 411
Past due but recoverable: 79 107
- up to 30 days 27 829
- over 30 days to 60 days 16 797
- over 60 days to 90 days 7 159
- over 90 days to 120 days 15 792
- over 120 days 11 530
Total 166 518
Liquidity risk The Group monitors the risk of lack of funds by means of a periodic liquidity planning tool. This tool takes into account
the maturity/payment due dates of both investments and financial assets (e.g. receivables accounts) and forecast cash
flows from operating activities. The Group's goal is to maintain a balance between continuity and flexibility of funding
through the use of various sources of funding such as overdrafts, finance lease agreements, merchant loan, bonds or
loans.
Note 30. CAPITAL MANAGEMENT
The main goal of the Group's capital management is to maintain a good credit rating and secure capital ratios that will
support the Group's operating activities and increase its value for its owners. The Group manages its capital structure
and modifies it as a result of changes in economic conditions. In order to maintain or correct its capital structure, the
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
The attached notes form an integral part of these financial statements 49
Group may change the payment of dividends, return capital to the shareholders or raise capital by issuing new shares
or incurring credit, loan, or bond liabilities.
The Group monitors its capital using the leverage ratio, which is calculated as the ratio of net debt to total equity plus net debt. The Group's net debt includes interest-bearing liabilities (credits, loans, bonds, factoring), trade payables and other liabilities, less cash and cash equivalents. Capital includes equity attributable to equity holders of the parent company. In the year ended 31 March 2019, no changes were made to the objectives, principles and processes applicable in this
area.
Description 31.03.2019 31.12.2018 31.03.2018
Interest-bearing credits and liabilities 210 242 180 283 158 432
Trade and other liabilities 94 108 90 008 53 473
Minus cash and cash equivalents 19 948 26 727 23 365
Net debt 284 402 243 564 188 540
Total capital 492 360 486 266 470 786
Equity 492 360 486 266 470 786
Reserve capitals from unrealized net profits 0 0 0
Capital and net debt 776 762 729 830 659 326
Leverage ratio 36.61% 33.37% 28.60%
Note 31. LITIGATION The Group has no litigation in excess of 10% of the capital of the Issuer.
Note 32. OTHER INFORMATION WHICH ACCORDING TO THE ISSUER IS IMPORTANT FOR ASSESSMENT OF THE HR, PROPERTY, FINANCIAL SITUATION, AND FINANCIAL RESULTS WITH THEIR CHANGES AND THE INFORMATION THAT IS IMPORTANT FOR ASSESSMENT OF POSSIBILITY OF THE IMPLEMENTATION OF THE ISSUER'S LIABILITIES.
In the opinion of the Management Board of Elemental Holding SA, the financial statements and the explanatory notes fully present the financial, material and HR situation that may be necessary to evaluate the performance of liabilities by Elemental Holding SA. Elemental Holding S.A. and its subsidiaries financed their activity and development from their own funds and interest-bearing debt. The companies were well financially able to meet all their liabilities on time.
Note 33. FACTORS WHICH ACCORDING TO THE ISSUER WILL HAVE EFFECT ON THE ACHIEVED RESULTS IN PERSPECTIVE AT LEAST THE NEXT QUARTER. In the first quarter of 2019, Elemental Holding SA and its subsidiaries financed their activity and development from own funds and interest-bearing debt.
Note 34. DESCRIPTION OF SEASONALITY IN THE OPERATIONS OF ELEMENTAL HOLDING GROUP
The Group's operations in the market of recycling of waste electrical and electronic equipment, scrap and metal and
non-ferrous metal processing and international trade in metals and scrap are not subject to seasonality.
Note 35. FACTORS AND EVENTS OF AN USUAL NATURE THAT COULD AFFECT THE RESULTS ACHIEVED
In the presented period there were no events of an unusual nature that could affect the results achieved.
Note 36. DESCRIPTION OF EVENTS WHICH HAPPENED AFTER THE DATE OF PREPARATION OF THE STATEMENTS
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
The attached notes form an integral part of these financial statements 50
On 9 April 2019, the Company received information from the subsidiary FINEX SICAV SIF S.A. - Private Equity VII
(hereinafter referred to as: “"the Fund”), on the liquidation and removal from the Dutch commercial register of its
subsidiary Evciler & Elemental Recycling B.V.
Note 37. DESCRIPTION OF CHANGES IN THE STRUCTURE OF THE ELEMENTAL HOLDING SA CAPITAL GROUP
Changes in the structure of the Elemental Holding group did not have any material effects.
Note 38. POSITION OF THE MANAGEMENT BOARD REGARDING THE IMPLEMENTATION OF THE FORECAST RESULTS FOR 2019.
The Management Board of Elemental Holding SA did not publish forecasts for results for 2019.
Note 39. INFORMATION ON CHANGES IN CONDITIONAL LIABILITIES OR CONDITIONAL ASSETS THAT OCCURRED AFTER
THE TIME OF COMPLETION OF THE LAST FINANCIAL YEAR.
There have been no changes in contingent liabilities since the balance sheet date, i.e. 31 December 2018.
Note 40. INFORMATION ON CHANGES IN SHAREHOLDERS HOLDING MORE THAN 5% OF THE TOTAL NUMBER OF
VOTES AT THE ISSUER’S GENERAL MEETING OF SHAREHOLDERS ON THE DATE OF SUBMISSION OF THE CONSOLIDATED
QUARTERLY STATEMENT.
There were no changes in shareholders holding more than 5% of the total number of votes at the Issuer's General
Meeting as at the date of submitting the consolidated quarterly statements.
Note 41. INFORMATION ON GRANTING BY THE ISSUER OR A SUBSIDIARITY OF CREDIT, LOAN OR GUARANTEE
COLLATERALS - JOINTLY TO ONE RELATED ENTITY, IF THE TOTAL VALUE OF THE EXISTING COLLATERALS OR
GUARANTEES REPRESENTS LEAST 10% OF THE ISSUER'S OWN SHARE CAPITAL.
In the period presented, neither the Issuer nor its subsidiaries granted loan or credit collaterals representing at least
10% of the Issuer's equity.
Note 42. STATEMENT OF ISSUER’S SHARES HELD BY PERSONS MANAGING OR SUPERVISING THE ISSUER
As at the publication date, Mr. Paweł Jarski - the President of the Issuer's Management Board - indirectly owns
52,500,000 shares of the Company through its related entity EFF B.V. None of the other persons managing or supervising
the Issuer holds the Company's shares.
Note 43. INFORMATION ABOUT SIGNIFICANT EVENTS WITH RELATED ENTITIES.
During the reporting period, there were no significant events with both related parties and key officers.
Note 44. OTHER INFORMATION WHICH ACCORDING TO THE ISSUER IS IMPORTANT FOR ASSESSMENT OF THE HR,
PROPERTY, FINANCIAL SITUATION, AND FINANCIAL RESULTS WITH THEIR CHANGES AND THE INFORMATION THAT IS
IMPORTANT FOR ASSESSMENT OF POSSIBILITY OF THE IMPLEMENTATION OF THE ISSUER'S LIABILITIES.
On 23 January 2019, the Extraordinary General Meeting of Elemental Holding S.A. was held, at which group voting was conducted to select a new composition of the Supervisory Board.
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
The attached notes form an integral part of these financial statements 51
The following persons were appointed to the Supervisory Board for the new term of office: Mr. Jarosław Michalik, Ms.
Edyta Jusiel, Mr. Karol Kuch, Mr. Tomasz Malinowski, Mr. Marek Piosik.
In connection with the occurrence of premises regarding the invalidity of resolutions adopted at the Extraordinary
General Meeting of Elemental Holding S.A. on 23 January 2019, the Management Board of Elemental Holding S.A. on
15 February 2019, brought an action to the court for annulment of Resolutions 5 and 6 of the Group of Shareholders
entitled to elect a member of the Supervisory Board by voting in groups at the Company's Extraordinary General
Meeting.
On 1 February 2019, the court disclosed in the register the transformation and change of the name of the subsidiary
Syntom sp. z o.o. spółka komandytowa into Syntom Metal Recycling sp. z o.o.
On 14 February 2019, the Company received information from its subsidiary Evciler Kimya Madencilik ve Değerli
Metaller Sanayi Ticaret Anonim Şirketi regarding its subsidiary DAG Recycling GmbH, against which the court initiated
bankruptcy proceedings at its request. DAG Recycling GmbH did not have significant assets and did not perform
significant operational functions.
On 22 March 2019, the subsidiary Elemental Asset Management sp. z o.o. sold 100% of shares in its subsidiary Elemental
EMEA Global Trade Center DMCC.
Other information relevant to the assessment of the Issuer and subsidiaries and their ability to meet obligations are
included in the supplementary notes to the financial statements for the first quarter of 2019.
Grodzisk Mazowiecki, 23 May 2019.
Paweł Jarski - President of the Management Board Michał Zygmunt – Vice-President of the Management Board Anna Kostro - Member of the Management Board Krzysztof Spyra - Member of the Management Board
The statements were drawn up by:
Katarzyna Stachowiak – Chief Accountant
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
The attached notes form an integral part of these financial statements 52
D. SELECTED FINANCIAL DATA OF ELEMENTAL HOLDING SA
Description for 01.01.-31.03.2019 for 01.01.-31.03.2018
PLN EUR PLN EUR
Net revenues from sales of products, goods and materials
259 60 127 30
Cost of goods sold 2 820 656 1 860 445
Profit (loss) from operating activities -2 561 -596 -1 732 -415
Gross profit (loss) -2 664 -620 -2 179 -521
Net profit (loss) -2 602 -605 -2 495 -597
Weighted average number of shares 170 466 065 170 466 065 170 466 065 170 466 065
Net profit (loss) per ordinary share (PLN/EUR) -0.02 0.00 -0.01 0.00
as of 31.03.2019 as of 31.12.2018
Fixed assets 317 360 73 782 313 514 72 910
Current assets 82 921 19 278 84 679 19 693
Equity 300 282 69 812 302 884 70 438
Equity of the parent company’s shareholders 60 163 13 988 56 631 13 170
Long-term liabilities 39 836 9 261 38 678 8 995
Short-term obligations 1,76 0,41 1,78 0,41
as of 01.01.-31.03.2019 as of 01.01.-31.03.2018
Net cash flows from operating activities -2 003 -466 -2 184 -523
Net cash flows from investment activities 5 392 1 255 1 722 412
Net cash flows from financial activities -173 -40 -10 143 -2 427
The NBP average exchange rate as at the balance sheet date was used to convert the balance sheet data. For the conversion of items in the profit and loss account and the cash flow statement, the exchange rate being the arithmetic mean of the NBP exchange rates as at the last day of each month of a given period was used.
Reporting period average exchange
rate in the period * exchange rate on the last day of the period
31.03.2019 4.2978 4.3013
31.12.2018 4.3000
31.03.2018 4.1784 4.2085
E. QUARTERLY CONDENSED FINANCIAL STATEMENTS OF ELEMENTAL HOLDING SA. Separate profit and loss account
Description 01.01.-31.03.2019 01.01.-31.03.2018
Sales revenues and equivalents 259 127
Net revenues from sales of services and products 259 127
Change in the balance of products: increases (+); decreases (-)
0 0
Cost of manufacturing products for the entity’s own needs 0 0
Net revenues from sales of goods and materials 0 0
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
The attached notes form an integral part of these financial statements 53
- from related entities 0 126
Operating costs 2 820 1 860
Depreciation and amortization 307 92
Consumption of materials and energy 76 18
External services 933 836
Taxes and charges 150 73
Salaries and wages 619 406
Social insurance and other benefits 150 91
Other costs by type 587 344
Value of goods and materials sold 0 0
Profit (loss) from sales -2 561 -1 733
Other operating revenues 210 54
Other operating costs 210 53
Profit (loss) from operating activities -2 561 - 1732
Financial revenues 1 193 602
Financial costs 1 296 1 049
Profit (loss) before taxation -2 664 -2 179
Income tax -62 316
Net profit (loss) -2 602 -2 495
Statement of total income
Description 01.01.-31.03.2019 01.01.-31.03.2018
Net profit (loss) -2 602 -2 495
Changes in revaluation surplus 0 0
Profits (losses) from the revaluation of financial asset components available for sales
0 0
Effective part of profits and losses connected with cash flow hedging instruments
0 0
Actuarial profits (losses) from programs of specified pension benefits 0 0
Exchange differences from pricing of entities operating abroad 0 0
Income tax connected with components of other total incomes 0 0
Sum of total incomes -2 602 -2 495
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
The attached notes form an integral part of these financial statements 54
Separate statement of financial standing
Description 31.03.2019 31.12.2018 31.03.2018
Fixed assets 317 360 313 514 304 585
Tangible fixed assets 4 728 1 334 1 494
Investment real estate 0 0 0
Intangible assets 50 51 5
Goodwill
Financial assets available for sales
Investments in subordinate entities 296 252 296 252 291 232
Other investments
Other financial assets 670 527 1 986
Other receivables 6 7 0
Deferred tax assets 15 654 15 344 441
Other fixed assets 0 0 9 427
Current assets 82 921 84 679 100 717
Current income tax receivables
Other receivables – short term 5 216 5 308 19 672
Other financial assets – short term 71 829 76 675 77 999
Other assets 175 153 686
Assets classified as held for sales
Inventories
Trade receivables 436 494 84
Cash and cash equivalents 5 265 2 048 2 276
TOTAL ASSETS 400 281 398 192 405 302
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
The attached notes form an integral part of these financial statements 55
Description 31.03.2019 31.12.2018 31.03.2018
Equity 300 282 302 884 314 266
Share capital 170 466 170 466 170 466
Capital from taking up shares above par value 152 655 152 655 152 655
Supplementary capital 956 956 204
Interim dividends paid
Retained earnings -21 193 -12 514 -6 563
Financial result of the current period -2 602 -8 679 -2 495
Long-term liabilities 60 163 56 631 85 148
Credits and loans 15 437 15 305 17 697
Other long-term liabilities
Deferred income tax provisions 1 415 1 334 2 275
Other financial liabilities 43 306 39 988 65 173
Accruals
Provision for pension benefits and similar benefits 5 5 3
Other provisions
Short-term liabilities 39 836 38 678 5 888
Credits and loans 13 057 12 954 5 222
Other financial liabilities – short term 25 938 24 752 64
Income tax liabilities
Accruals - short term
Provision for pension benefits and similar benefits 50 50 75
Other provisions – short-term 210 344 20
Trade liabilities 238 310 313
Other liabilities 342 269 194
TOTAL LIABILITIES 400 281 398 192 405 302
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
The attached notes form an integral part of these financial statements 56
Separate statement of changes in consolidated equity For three months ended 31.03.2019
Share capital
Supplementary capital from
taking up shares above
par value
Other supplementary
capitals
Retained earnings
Exchange differences
from translation
Interim dividends paid
Financial result of the current
period Total
Opening balance of equity 170 466 152 655 956 -21 193 0 0 0 302 884
Changes in accounting principles 0 0 0 0 0 0 0 0
Adjustment of errors from previous years
0 0 0 0 0 0 0 0
Equity after adjustments 170 466 152 655 956 -21 193 0 0 0 302 884
Share issue 0 0 0 0 0 0 0 0
Share issue costs 0 0 0 0 0 0 0 0
Settlement of purchase/sale of shares 0 0 0 0 0 0 0 0
Net profit distribution 0 0 0 0 0 0 0 0
Option pricing 0 0 0 0 0 0 0 0
FIZ settlement adjustment 0 0 0 0 0 0 0 0
Payment of interim dividends 0 0 0 0 0 0 0 0
Payment of dividends 0 0 0 0 0 0 0 0
Sum of total incomes 0 0 0 0 0 0 -2 602 -2 602
Closing balance of equity 170 466 152 655 956 -21 193 0 0 -2 602 300 282
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
The attached notes form an integral part of these financial statements 57
For twelve months ended 31.12.2018
Share capital
Supplementary capital from
taking up shares above
par value
Other supplementary
capitals
Retained earnings
Exchange differences
from translation
Interim dividends paid
Financial result of the current
period Total
Opening balance of equity 170 466 152 655 204 -6 622 0 0 0 316 703
Changes in accounting principles 0 0 0 0 0 0 0 0
Adjustment of errors from previous years 0 0 0 -5 140 0 0 0 -5 140
Equity after adjustments 170 466 152 655 204 -11 762 0 0 0 311 563
Share issue 0 0 0 0 0 0 0 0
Share issue costs 0 0 0 0 0 0 0 0
Settlement of purchase/sale of shares 0 0 0 0 0 0 0 0
Net profit distribution 0 0 752 -752 0 0 0 0
Option pricing 0 0 0 0 0 0 0 0
FIZ settlement adjustment 0 0 0 0 0 0 0 0
Payment of interim dividends 0 0 0 0 0 0 0 0
Payment of dividends 0 0 0 0 0 0 0 0
Sum of total incomes 0 0 0 0 0 0 -8 679 -8 679
Closing balance of equity 170 466 152 655 956 -12 514 0 0 -8 679 302 884
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
The attached notes form an integral part of these financial statements 58
For three months ended 31.03.2018
Share capital
Supplementary capital from
taking up shares above
par value
Other supplementary
capitals
Retained earnings
Exchange differences
from translation
Interim dividends paid
Financial result of the current
period Total
Opening balance of equity 170 466 152 655 204 -7 374 0 0 752 316 703
Changes in accounting principles 0 0 0 0 0 0 0 0
Adjustment of errors from previous years 0 0 0 59 0 0 0 590
Equity after adjustments 0 0 0 0 0 0 0 0
Share issue 0 0 0 0 0 0 0 0
Share issue costs 0 0 0 0 0 0 0 0
Settlement of purchase/sale of shares 0 0 0 0 0 0 0 0
Net profit distribution 0 0 0 752 0 0 -752 0
Option pricing 0 0 0 0 0 0 0 0
FIZ settlement adjustment 0 0 0 0 0 0 0 0
Payment of interim dividends 0 0 0 0 0 0 0 0
Payment of dividends 0 0 0 0 0 0 0 0
Sum of total incomes 0 0 0 0 0 0 -2 495 -2 495
Closing balance of equity 170 466 152 655 204 -6 563 0 0 -2 495 314 266
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
The attached notes form an integral part of these financial statements 59
Separate cash flow statement
01.01.-
31.03.2019
01.01.-31.12.2018
01.01.-31.03.2018
Profit (loss) before taxation -2 664 -7 851 -2 179
Total adjustments 661 -668 -5
Amortization and depreciation 307 367 92
Profits (losses) from exchange differences -430 -3 251 118
Interest and participation in profits (dividends) 279 1 341 421
Profit (loss) from investment activities 0 0 0
Change in the balance of provisions -133 287 -14
Change in the balance of inventories 0 0 0
Change in the balance of receivables 151 -715 -465
Change in the balance of liabilities, excluding loans and credits 274 171 -148
Change in the balance of other assets -21 356 -52
Other operating activities adjustments 235 775 43
Income tax (paid)/refunded 0 0 0
A. Net cash flows from operating activities -2 003 -8 519 -2 184
Receipts 9 194 43 013 3 443
Disposal of intangible assets and tangible fixed assets 0 0 0
Disposal of financial assets 0 18 847 0
Cash taken over (acquisition settlement) 0 0 0
Repayment of loans granted 8 759 22 618 3 423
Other investment receipts 435 1 549 20
Expenses 3 802 46 954 1 721
Purchase of intangible assets and tangible fixed assets 13 153 50
Purchase of investments in real estate 0 0 0
Financial asset expenses 3 789 15 152 1 671
Other investment expenses 0 31 649 0
B. Net cash flows from investment activities 5 392 -3 940 1 722
Receipts 79 21 246 0
Net receipt from issuing the shares (share emission) and other capital instruments as well as additional capital contributions
0 0
0
Credits and loans 0 21 246 0
Issue of debt securities 0 0 0
Dividends received 0 0 0
Other financial receipts 79 0 0
Expenses 252 19 620 10 143
Purchase of shares (stocks) 0 0 10 100
Dividends and other payments to owners 0 0 0
Profit distribution expenses other than payments to owners 0 0 0
Repayment of credits and loans 0 15 980 0
Redemption of debt securities 0 0 0
On other financial liabilities 0 0 0
Payments of financial lease agreement liabilities 250 158 40
Interest 2 3 482 3
Other financial expenses 0 0 0
C. Net cash flows from financial activities -173 1 626 -10 143
D. Total net cash flows (A+B+C) 3 216 -10 833 -10 606
E. Change in the balance of cash 3 216 -10 833 -10 606
F. Opening balance of cash 2 048 12 882 12 882
G. Closing balance of shares (F+D) 5 265 2 048 2 276
Grodzisk Mazowiecki, 23 May 2019
CONSOLIDATED QUARTERLY STATEMENTS OF Elemental Holding SA CAPITAL GROUP for the period of 01 January – 31 March 2019 and for the comparable period of 01 January – 31 March 2018 (all sums are provided in thousand PLN unless specified otherwise)
The attached notes form an integral part of these financial statements 60
Paweł Jarski - President of the Management Board Michał Zygmunt – Vice-President of the Management Board Anna Kostro - Member of the Management Board Krzysztof Spyra - Member of the Management Board
The statements were drawn up by:
Dorota Godlewska-Dudek - Chief Accountant