JASTRZĘBSKA SPÓŁKA WĘGLOWA S.A. CAPITAL GROUP JASTRZĘBIE-ZDRÓJ, AL. JANA PAWŁA II 4 CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR 2014 WITH THE AUDITOR S OPINION AND AUDIT REPORT
CONTENTS OPINION OF THE INDEPENDENT AUDITOR REPORT ON THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS OF THE JASTRZĘBSKA SPÓŁKA WĘGLOWA S.A. CAPITAL GROUP FOR THE FINANCIAL YEAR 2014 I. GENERAL INFORMATION 1. Data identifying the audited Parent Company 2. Structure of the Capital Group 3. Information on the consolidated financial statements for the previous financial year 4. Data identifying the authorized entity and the key certified auditor conducting the audit on its behalf 5. Availability of data and the Parent Company Management Board s representations II. ECONOMIC AND FINANCIAL POSITION OF THE CAPITAL GROUP III. DETAILED INFORMATION 1. Information on the audited consolidated financial statements 2. Consolidation documentation 3. Completeness and correctness of drawing up additional notes and explanations and the report on the activity of the Capital Group IV. FINAL REMARKS CONSOLIDATED FINANCIAL STATEMENTS OF THE CAPITAL GROUP OF FOR THE FINANCIAL YEAR 2014 1. Consolidated statement of financial position 2. Consolidated statement of profit or loss and other comprehensive income 3. Consolidated statement of changes in equity 4. Consolidated cash flow statement 5. Notes containing information on the accepted accounting policy and other explanatory information REPORT ON THE ACTIVITY OF THE CAPITAL GROUP FOR THE FINANCIAL YEAR 2014
Deloitte. Deloitte Polska Spółka z ograniczoną odpowiedzialnością Sp. k. with registered offices in Warsaw Al. Jana Pawła II 19 00-854 Warsaw Poland Phone: +48 22 511 08 11, 511 08 12 Fax: +48 22 511 08 13 www.deloitte.com/pl OPINION OF THE INDEPENDENT AUDITOR To the Shareholders and the Supervisory Board of Jastrzębska Spółka Węglowa S.A. We have audited the attached consolidated financial statements of the Jastrzębska Spółka Węglowa S.A. Capital Group (hereinafter referred to as the Capital Group ), the parent company of which is Jastrzębska Spółka Węglowa S.A. (hereinafter referred to as the Parent Company ) with its registered office in at Al. Jana Pawła II 4. The statements consist of the consolidated statement of financial position as at 31 December 2013, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity, the consolidated cash flow statement for the financial year from 1 January 2014 to and the notes containing information on the adopted accounting policy and other explanatory information. Preparation of the consolidated financial statements and the report on the Capital Group s activity compliant with the applicable regulations is the responsibility of the Parent Company s Management Board. The Parent Company s Management Board and its Supervisory Board members are required to ensure that the consolidated financial statements and the report on the Capital Group s activity satisfy the requirements provided for in the Accounting Act of 29 September 1994 (Journal of Laws of 2013 Item 330, as amended), hereinafter referred to as the Accounting Act. Our responsibility was to audit the consolidated financial statements and express an on their compliance with the accounting principles (policy) adopted by the Capital Group and whether the financial statements give, in all material aspects, a true and fair view of the financial and economic position as well as the financial performance of the Capital Group. We have planned and conducted our audit of the financial statements in accordance with the following provisions: - chapter 7 of the Accounting Act, - national auditing standards issued by the National Council of Statutory Auditors in Poland. We have planned and performed our audit of the consolidated financial statements in such a way as to
obtain reasonable assurance to express an on the financial statements. Our audit included, in particular, verification of the correctness of the accounting principles (policy) applied by the Parent Company and the subsidiaries, verification largely on a test basis of the basis for the amounts and disclosures in the consolidated financial statements, as well as overall evaluation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our. In our, the audited consolidated financial statements, in all material aspects: - give a true and fair view of the information material to evaluation of the economic and financial position of the Capital Group as of as well as its financial performance in the financial year from 1 January 2014 to, - have been prepared in accordance with International Accounting Standards, International Financial Reporting Standards and related interpretations issued in the form of regulations of the European Commission or, to the extent not governed by these standards, in accordance with the requirements of the Accounting Act and and secondary legislation to the Act, - comply with the provisions of law affecting the contents of the consolidated financial statements and applicable to the Capital Group and to the entities comprising the Capital Group. The Report on the activity of the Capital Group for the 2014 financial year is complete within the meaning of Article 49 Section 2 of the Accounting Act and and the Ordinance of the Minister of Finance of 19 February 2009 on the current and periodic information published by issuers of securities and the rules of equal treatment of the information required by the laws of non-members states (Journal of Laws of 2014 Item 133) and consistent with underlying information disclosed in the audited consolidated financial statements. /-/ Artur Maziarka Key certified auditor conducting the audit file no. 90108 On behalf of odpowiedzialnością Sp. k., an entity authorized to audit financial statements, entered under number 73 on the list of kept by the National Council of Statutory Auditors: /-/ Artur Maziarka - Vice-President of the Management Board of Deloitte Polska Sp. z o.o - a general partner in odpowiedzialnością Sp. k. Warsaw, 18 March 2015
REPORT ON THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS OF THE JASTRZĘBSKA SPÓŁKA WĘGLOWA S.A. CAPITAL GROUP FOR THE FINANCIAL YEAR 2014 I. GENERAL INFORMATION 1. Data identifying the audited Parent Company The Parent Company operates under the business name of Jastrzębska Spółka Węglowa S.A. (hereinafter Parent Company ). Its registered office is located in at Al. Jana Pawła II 4. The Parent Company conducts its business as a joint stock company. The Parent Company is registered in the Commercial Register kept by the District Court, 10th Business Registry Division, in Katowice, under file no. KRS 0000072093. The Parent Company operates on the basis of the provisions of the Commercial Company Code. As of the Parent Company s share capital was PLN 587 million and was divided into 117,411,596 ordinary shares with a face value of PLN 5 each. As at the date of this the Parent Company s Management Board was composed of: - Jerzy Borecki Acting President of the Management Board, - Grzegorz Czornik Vice-President of the Management Board, - Robert Kozłowski, Vice-President of the Management Board, - Artur Wojtków Vice-President of the Management Board. In the audited period and up to the date of this the following changes were made to the Parent Company s Management Board composition: - on 16 February 2015 Mr. Jarosław Zagórowski resigned from the function of the Company's President of the Management Board and his mandate expired on 17 February 2015. On the same day the Supervisory Board adopted a resolution to appoint Mr. Jerzy Borecki, Vice-President of the Management Board for Technical Matters to act as the President of the Company s Management Board from 18 February 2015 until the new Management Board is appointed. 2. Structure of the Capital Group As at the following companies were included in the consolidated financial statements: a) Parent Company - Jastrzębska Spółka Węglowa S.A. We audited the Parent Company s financial statements for the period from 1 January to 31 December 2014. Following our audit, on 18 March 2015 we issued an unqualified.
b) Companies subject to full consolidation: Name and registered office of the company Jastrzębska Spółka Kolejowa Sp. z o.o., JSU Sp. z o.o., Jastrzębskie Zakłady Remontowe Sp. z o.o., JSW Szkolenie i Górnictwo Sp. z o.o., Przedsiębiorstwo Gospodarki Wodnej i Rekultywacji S.A., Spółka Energetyczna Jastrzębie S.A., Zakład Odsalania Dębieńsko Sp. z o.o., Czerwionka-Leszczyny Zakład Przewozów i Spedycji Spedkoks Sp. z o.o., Dąbrowa Górnicza SEJ Serwis Sp. z o.o., Przedsiębiorstwo Energetyki Cieplnej S.A., JSW Finance AB (publ), Stockholm, Sweden Polski Koks S.A., Katowice Polski Koks Forwarding&Shipping Agency Sp. z o.o., Gdynia Zakład Remontów Mechanicznych Sp. z o.o., Dąbrowa Górnicza Share in equity (%) Entity auditing the financial statements and type of issued Balance sheet date of the consolidated entity Company not subject to audit 99.79% 99.54% 98.61% Deloitte AB - unqualified 98.61% 98.61% 97.57% Biuro Usług Księgowych Finans-Buk Sp. z o.o. - unqualified
Baza Transportu Samochodowego Sp. z o.o., Dąbrowa Górnicza CARBOTRANS Sp. z o.o., Zabrze 95.71% 95.71% JSW Koks S.A., Zabrze 95.71% P.P.H.U. REM-BUD Sp. z o.o., Zabrze Centralne Laboratorium Pomiarowo-Badawcze Sp. z o.o., Jastrzębie- Zdrój Wałbrzyskie Zakłady Koksownicze Victoria S.A., Wałbrzych Zakład Usług Energetycznych epekoks Sp. z o.o., Wałbrzych JZR Dźwigi Sp. z o.o., Jastrzębie- Zdrój ADVICOM Sp. zo.o., 95.71% 89.21% 85.03% 85.03% 84.97% 75.06% odpowiedzialnością sp, k. - unqualified ATAC Audytorzy i Partnerzy Sp. z o.o. - unqualified c) Companies subject to equity method consolidation Name and registered office of the company Jastrzębska Strefa Aktywności Gospodarczej Sp. z o.o., Jastrzębie- Zdrój Share in equity (%) Entity auditing the financial statements and type of issued Balance sheet date of the consolidated entity 50% Company not subject to audit Remkoks Sp. z o.o., Dąbrowa Górnicza 46.90% ZBR Faber Sp. z o.o. - unqualified Grafit Sp. z o.o., Pawłowice 35% Company not subject to audit OPA-ROW Sp. zo.o., Rybnik 24.82% BUFIKS Biuro Usług Finansowo- Księgowych Sp. z o.o. - unqualified In the audited financial year, the Parent Company included the following entities in consolidation: Zakład Odsalania Dębieńsko Sp. z o.o., JSW Szkolenie i Górnictwo Sp. z o.o., Polski Koks Forwarding&Shipping Agency Sp. z o.o. and JSW Finance AB.
3. Information about the consolidated financial statements for the prior financial year The Capital Group s activity in 2013 generated a net profit of PLN 82.2 million. The Capital Group s consolidated financial statements for the financial year 2013 were audited by a certified auditor. The audit was carried out by an authorized entity, Deloitte Polska Spółka z ograniczoną odpowiedzialnością Sp. k. On 12 March 2014 the auditor issued an unqualified on those financial statements. The Shareholder Meeting approving the consolidated financial statements for the financial year 2013 was held on 22 May 2014. The consolidated financial statements for the financial year 2013 were filed with the National Court Register on 10 June 2014. 4. Data identifying the authorized entity and the key auditor conducting the audit on its behalf The authorized entity has been selected by the Supervisory Board. The audit of the consolidated financial statements was carried out pursuant to the agreement of 23 July 2013, concluded by and between the Parent Company and odpowiedzialnością Sp. k. with its registered office in Warsaw, al. Jana Pawła II 19, entered in the list of entities authorized to audit financial statements kept by the National Council of Statutory Auditors under number 73. On behalf of the authorized entity, the audit of the consolidated financial statements was carried out under the supervision of the key certified auditor Artur Maziarka (registration no. 90108) in the registered office of the Parent Company from 23 February to 27 February 2015 and outside the Parent Company s registered office to the date of issue of this. odpowiedzialnością Sp. k. and the key certified auditor conducting the audit confirm that they are authorized to audit financial statements and that they satisfy the conditions laid down in Article 56 of the Act on statutory auditors and their self-governing body, auditing firms and on public oversight (Journal of Laws of 2009 No. 77, Item 649, as amended) to express an unbiased and independent on the consolidated financial statements of the Capital Group. 5. Availability of data and management s representations The scope of our audit was not limited. During the audit, all necessary documents and data as well as detailed information and explanations, were provided to the authorized entity and the key certified auditor, as confirmed e.g. in the written representation of the Management Board of the Parent Company of 18 March 2015.
II. ECONOMIC AND FINANCIAL POSITION OF THE CAPITAL GROUP Presented below are the main items from the consolidated statement of profit or loss and other comprehensive income as well as financial ratios describing the financial performance of the Capital Group and its economic and financial position compared to the prior year. Key figures from the consolidated statement of profit or loss and other comprehensive income (in PLN million) 2014 2013 Sales revenues 6,814.9 7,632.2 Operating expenses (7,792.8) (7,476.2) Operating result (774.8) 201.9 Net profit (loss) (657.1) 82.2 Key figures from the consolidated statement of financial standing (in PLN million) Inventories 538.2 540.9 Trade receivables 683.5 535.9 Current assets 2,283.4 3,562.0 Total assets 15,369.3 13,862.0 Equity 7,267.5 8,351.6 Short-term liabilities (including short-term 4,114.5 2,487.8 provisions and accruals) Trade liabilities 917.7 678.5 Sum of liabilities and provisions for liabilities 8,101.8 5,510.4 Profitability and efficiency ratios 2014 2013 gross profit margin -11% 3% net return on equity -8% 1% assets turnover ratio 0.44 0.55 receivable turnover in days 32 29 liability turnover in days 37 31 inventory turnover in days 25 32 Liquidity/Net working capital debt ratio 53% 40% equity to assets ratio 47% 60% net working capital (in PLN million) (1,831.1) 1,074.2 current ratio 0.55 1.43 quick ratio 0.42 1.21
Analysis of the above figures and ratios shows that the following trends were present in 2014: decrease of the gross profit margin and net return on equity, decrease of the assets turnover ratio, increase of the receivable and liability turnover, decrease of the inventory turnover, increase of the debt ratio, decrease of the equity to assets ratio, decrease of net working capital, decrease of liquidity ratios. As at the Capital Group reported negative working capital and declining liquidity ratios. The Management Board of the Parent Company described, in items 3.1, 3.4 and 3.10 of the Parent Company s Management Board Report on the activity of the Capital Group the main reasons, which led to the deterioration of the Capital Group s liquidity and described the measures undertaken to remedy this situation. III. DETAILED INFORMATION 1. Information on the audited consolidated financial statements The audited consolidated financial statements have been drawn up as at and include: consolidated statement of financial position drawn up as at showing total assets and liabilities of PLN 15,369.3 million, consolidated statement of profit or loss and other comprehensive income for the period from 1 January 2014 to showing a net loss of PLN 657.1 million and negative total comprehensive income of PLN 1.079,2 million, consolidated statement of changes in equity for the period from 1 January 2014 to 31 December 2014 showing a decrease in equity of PLN 1,084.1 million, consolidated cash flow statement for the period from 1 January 2014 to 31 December 2014 showing an decrease of cash by PLN 1,318.7 million, notes comprising information about the adopted accounting policy and other explanatory information. The audit covered the period from 1 January 2014 to and focused mainly on: verification of the correctness and fairness of the consolidated financial statements prepared by the Management Board of the Parent Company, verification of the consolidation documentation, evaluation of the correctness of the consolidation methods and procedures applied during consolidation, review of s and reports on audits of financial statements of consolidated subsidiaries and associated companies, prepared by other certified auditors.
2. Consolidation documentation The Parent Company presented the consolidation documentation comprising: financial statements of entities included in the consolidated financial statements, financial statements of controlled entities, adjusted to the accounting principles (policy) applied during consolidation, financial statements of entities included in the consolidated financial statements, converted to Polish currency, all consolidation adjustments and eliminations necessary for preparation of the consolidated financial statements, calculation of the bargain purchases gain, calculation of non-controlling interests. The financial statements of the Capital Group, were consolidated by the full method by adding up the entire amounts of all relevant items of financial statements of the Parent Company and consolidated entities. The equity method has been applied to associates. The value of the Parent Company s share in an associated company was adjusted for the increase or decrease of the equity of the associated company attributable to the Parent Company, which took place over the consolidation period and decreased by the dividends due from such entities. The Parent Company drawing up the consolidated financial statements has not made any significant simplifications and departures from the accepted principles of consolidation in respect to its controlled entities. 3. Completeness and correctness of drawing up notes and explanations and the report on the activities of the Capital Group The Parent Company confirmed that it was justified to draw up the consolidated financial statements under the going concern assumption. The asset and liability valuation methods, the measurement of the financial result and the method of drawing up the consolidated financial statements have been all correctly and completely described in the notes and explanations to the consolidated financial statements. The Parent Company has drawn up notes and explanations in the form of tabular notes to individual items of the consolidated statement of financial position and statement of profit or loss and other comprehensive income as well as descriptions in accordance with the rules set out in IFRS. The Parent Company s Management Board has drawn up and attached to the consolidated financial statements a report on the activities of the Capital Group for the 2014 financial year. The report includes the information required by Article 49 Section 2 of the Accountancy Act and the Ordinance of the Finance Minister of 19 February 2009 on the current and periodic information published by issuers of securities and the rules of equal treatment of the information required by the laws of non-member states (Journal of Laws of 2014, Item 133).
We have audited the report with respect to the disclosed information derived directly from the audited consolidated financial statements. IV. FINAL REMARKS Management Board's representations odpowiedzialnością Sp. k. and the key auditor received a written representation from the Parent Company s Management Board, stating that the Capital Group complied with the laws in force. /-/ Artur Maziarka Key certified auditor conducting the audit file no. 90108 On behalf of odpowiedzialnością Sp. k., an entity authorized to audit financial statements, entered under number 73 on the list of kept by the National Council of Statutory Auditors: /-/ Artur Maziarka - Vice-President of the Management Board of Deloitte Polska Sp. z o.o - a general partner in odpowiedzialnością Sp. k. Warsaw, 18 March 2015