SIGIT POLAND SP. Z O.O. FINANCIAL REPORT

Transcription

1 SIGIT POLAND SP. Z O.O. FINANCIAL REPORT For fiscal year January 01 December 31, 2016 Page 1 of 7

2 1. Company Registration SIGIT POLAND Spółka z ograniczoną odpowiedzialnością (a limited liability company) was established by virtue of a Notarial Deed dated December 13, 2006 drawn up in the Notary Public Office of Ryszard Ruśkowski in Bielsko-Biała (Register A No 5039/2006) and entered in the Register of Entrepreneurs by the District Court in Bielsko-Biała, 8 th Commercial Department of the National Court Register under the number KRS on December 21, The Company maintains its registered office in Skoczów. Main office address: Skoczów, 63 Górecka St. Duration of the Company is for an indefinite period of time; the Company operates its business in Poland and abroad. 2. Share Capital The Company s authorized share capital amounts to PLN 4,050, as at the Balance Sheet date of Dec. 31, 2016 and S.I.G.I.T S.p.A. with a registered seat in Italy is the sole shareholder who holds 1,000 shares of a nominal value of PLN 4,050 each, with a combined value of PLN 4,050, Reserve Capital of PLN 3,600, as at Dec. 31, 2016; Other Reserve Capital of PLN 0.00 as at Dec. 31, 2016; As at Dec. 31, 2016, the Company did not have any Revaluation Capital. 3. Company Management and Changes during FY 2016 In FY 2016, the Company s Management Board consisted of several members and there were no changes of its membership during the reporting period. As at Dec. 31, 2016, the Management Board included the following members: Emanuele Buscaglione - President of the Management Board, Gennaro Fabbrocino - Member of the Management Board. 4. Main Line of Business In FY 2016, the Company s main line of business did not change: it continues production conforming to the Polish Statistical Classification of Economic Activity (PKD 2007): Z - Manufacture of other rubber products, Z - Manufacture of other plastic products, and Z - Manufacture of electric household appliances. 5. FY2016 Revenue from Sales of Products, Services, and Goods Sales Revenue, net: PLN 55,981, Page 2 of 7

3 6. FY 2016 Employment In FY 2016, the Company s staff included 218 individuals: 195 direct and 23 indirect employees plus 3 trainees. As at Dec. 31, 2016, the total headcount numbered 235 personnel, while the average annual employment stood at FY 2016 Investment Projects The Company launched the following investment projects in FY 2016: - Construction of a new 1,800 sq m warehouse, - A new cooling system for machinery and production equipment, - A central pellet feeder system. 8. Balance Sheet As at Dec. 31, 2016, the Balance Sheet amount stood at PLN 49,081, The Company posted the following revenue in FY 2016: - Sales Revenue, net PLN 55,981, Other Operating Income PLN 832, Financial Income PLN 137, In FY 2016, the Company incurred the following costs and expenses: - Operating Costs PLN 47,389, including: Materials and Energy PLN 26,837, Purchased Services PLN 8,233, Taxes and Fees PLN 418, Wages and Salaries PLN 6,839, Social Insurance and Other Benefits PLN 1,550, Other Operating Expenses PLN 334, Financial Expenses PLN 2,334, In FY 2016, the Company posted Net Profit of PLN 5,567, The result was rendered possible thanks to considerable operating cost savings combined with higher revenues. 9. Current and Anticipated Financial Condition of the Company The Company s finances in FY 2016 consisted of the following: Liabilities: - Long-term Payables PLN 2,334, Short-term Payables PLN 18,147,599.72, including: - Intercompany Payables PLN 4,466, Page 3 of 7

4 Receivables: - Other Payables PLN 13,680, Short-term Receivables PLN 20,562,561.44, including: - Intercompany Trade A/R PLN 4,891, Other Receivables PLN 15,670, Long-term Receivables - None 10. Growth Forecast In the future, the Company anticipates retaining its existing customers as well as winning new accounts; furthermore, the Company intends to further strengthen its market position by selling more products and services by following the approved path of growth. The Company plans to reach the objectives thanks to among others construction of a new 1,800 sq m warehouse. Orders from customers, such as INDESIT / WHIRLPOOL and VW continue coming and the Company anticipates sustained dynamics in this respect. This growth will be accompanied by new, bigger orders from the Fiat Group companies who are planning a new car launch. 11. Major Contracts In FY 2016, the Company continued working on orders for components earmarked for VW model Craft, Turan, and Tiguan, as well as Draxlmaier components for BMW vehicles, the production of which had already been partially launched in FY 2016 also saw the launch of new projects for Draxlmaier components for BMW which required consolidating and raising the production output (invoicing) for the VW Group. Moreover, the Company started making some new components for another company / group in the automotive sector. 12. Transactions with Related Entities Transactions with Related Entities in FY 2016: Revenue from Transactions with Related Entities: Sales Revenue Other Revenue Sigit Spa Sigit Doo SOAG GROUP Costs of Transactions with Related Entities in FY 2016: Page 4 of 7

5 Purchase of Materials and Goods Purchased Services Interest Sigit Spa Sigit Doo SOAG GROUP Credits, Loans, Guarantees, and Pledges In FY 2017 (until the date this Management Report on Operations for FY 2016 was drawn up), the Company has obtained the following investment credit lines: A. BANK BGŻ BNP PARIBAS S.A. a revolving line of credit in the amount of EUR 800,000.00, expiration in 2022; B. DEUTSCHE BANK POLSKA S.A. INVESTMENT CREDIT OF EUR 1,350,000.00, expiration in Factors and Events Affecting the Financial Results Just like in prior years, the risks and threats for the Company s operations stemmed mainly from the specific character of the industrial sector the Company operates in, of which the most significant ones include the following: the risk of a lower volume of orders since the customers do not guarantee the amounts; the risk of order cancellations due to customers deteriorating financial condition or capacity reduction; the risk of financial liquidity caused by irregular / delayed payments or excessive A/R aging. The Company faces various risks and exposures in its business activities arising from, among others: - Risk of a changing economic outlook in Poland The Company manufactures plastic products and its financial results are closely tied to the conditions prevailing in the Polish market as well as the general financial performance of other market players; which in turn depends on the macroeconomic outlook both in this country and abroad. A number of factors determine our performance, including, among others, the rate of economic growth, business investment outlays, inflation, and unemployment. A deteriorating economy may negatively affect demand for some products which include components we make, forcing the Company to downsize our production capacity accordingly. - Risk related to the economic policy in Poland Our strategic targets are also subject to certain macroeconomic factors which remain beyond the Company s control. They include: the official government policy plus decisions of the National Bank of Poland and the Monetary Policy Council. Adverse changes in the macroeconomic environment may result in a significant negative impact on the operations and financial condition of the Company. In order to mitigate any such effect, the Company s Management closely follows any new developments in this area in order to take appropriate action and adjust our strategy to the changing conditions. - Risk related to changing laws and their interpretation Page 5 of 7

6 Keeping in mind the complicated and specific character of the Polish legal system, prone to sudden modifications, and the frequently low quality of legislation, changes introduced to the existing laws or a novel interpretation thereof represent a major risk for the Company s further growth and operations, especially with respect to any changes of the commercial law, tax law, or the financial and banking laws. - Risk of adverse changes to the tax law Instability and insufficient clarity of the Polish tax system, the result of numerous changes and inconsistent interpretations, combined with relatively new and highly formalized tax regulation process, as well as strict sanctions for any non-compliance may all contribute to a level of uncertainty as to the final tax consequences of any business decisions taken by the Company. Moreover, the Company must account for the risk of changing tax regulations which might lead to higher fiscal burdens and thus contribute to weaker financial performance. - Risk of Force Majeure acts Force Majeure acts, such as war, terrorist attack or natural disasters, may negatively affect the condition of the entire national economy, leading to undesirable consequences for the Company s operations. - Risk related to competition Considering the type of our production, i.e. products for the automotive and household appliances sectors, the Company faces stiff competition in the market. - Risk related to impaired receivables Our financial condition is exposed to the risk related to a limited number of customers and our dependence on one strategic customer; thus, any payment bottlenecks caused by the strategic customer are likely to pose a major problem for the Company s liquidity. - Risk related to occupational accidents The Company s business is liable to considerable risk posed by occupational accidents. In order to mitigate the chances of occupational accidents the Company sponsors special training courses in occupational health and safety and fire prevention. The courses are run by an outside training organization on the Company s premises; they end with an examination to verify the employees newly acquired knowledge or skills. - Risk related to major customers Our major customers are buyers who supply our products to major automotive and household appliances companies. - Risk related to excessive debts A company dependent on one strategic customer may face the risk of limited liquidity since it may be forced to obtain credits and loans to finance its current operations. The ratio of any such credits and loans to the Company s own equity may potentially result in the organization becoming excessively dependent on its creditors. 15. Major Achievements Related to Technical Research and Development The Company does not conduct any R&D operations. Page 6 of 7

7 16. Changes in the Company s Management System In FY 2016, the Company did not introduce any changes to its management system. 17. Changes in the Company s Authorities In FY 2016, there were no changes in the Company s Management Board membership. 18. Compensation and Bonus of the Management and Supervisory Board Members In FY 2016, no compensation was paid to the members of the Company s authorities. President of the Management Board Emanuele Buscaglione Member of the Management Board Gennaro Fabbrocino Skoczów, March 31, 2017 Page 7 of 7

8 SIGIT POLAND SP. Z O.O. FINANCIAL REPORT For fiscal year January 01 December 31, 2016

9 Contents MANAGEMENT LETTER... 3 INTRODUCTION TO FINANCIAL REPORT... 4 BALANCE SHEET AS AT DECEMBER 31, INCOME STATEMENT CHANGES TO CAPITAL STATEMENT OF CASH LOWS ADDITIONAL NOTES AND INFORMATION Page 2 of 38

10 MANAGEMENT LETTER In line with the provisions of Art of the Accounting Act of September 29, 1994 (Journal of Laws [Dz.U.] No 1047/2016 as amended) Management of Sigit Poland Sp. z o.o. (Company) submits this Financial Report which includes the following: 1) Introduction to Financial Report; 2) Balance Sheet as at December 31, 2016 showing Total Assets and Liabilities of PLN 49,081,322.33; 3) Income Statement for the period January 1 December 31, 2016, showing Net Profit of PLN 5,567,650.23; 4) Changes to Capital for the period January 1 December 31, 2016, showing net increase of PLN 5,567,650.23; 5) Statement of Cash Flows for the period January 1 December 31, 2016, showing a decrease in Cash and Cash Equivalents of PLN 2,340,445.63; 6) Additional Notes and Information Emanuele Buscaglione President of the Management Board Gennaro Fabbrocino Management Board Member Responsible Accountant [Position] [Place, date} Page 3 of 38

11 INTRODUCTION TO FINANCIAL REPORT Sigit Poland Sp. z o.o. (PLN) 1. Company 1. 1 Company Name Sigit Poland Sp. z o.o., hereinafter Company 1. 2 Registered office Górecka Skoczów 1. 3 National Court Register number Court of registration: District Court in Bielsko-Biała, 8th Department of the National Court Register Date: Register No: KRS Basic business and duration of Company As per its Articles of Incorporation, Company operates, among others the following lines of business activities: Z - Manufacture of other plastic products Z - Manufacture of other rubber products Duration of the Company is for an indefinite period of time Reporting Period This Financial Report covers the period from January 1, 2016 r. to December 31, 2016, with comparative data was provided for the period from January 1, 2015 to December 31, Going Concern In their statement regarding the Financial Report, the Company s Management declared that the Report had been prepared assuming the Company would continue as a going concern and that there are no facts indicating a potential threat that may cast doubt upon the Company s ability to continue as a going concern. 2. Major Accounting Principles The Financial Report was prepared based on the following accounting principles: The Financial Report was prepared based on accounting books and records for the fiscal year ending December 31, Legal Requirements The Company keeps its accounting records and prepares financial statements in compliance with the accounting regulations in force in the Republic of Poland laid down in the Accounting Act of September 29, 1994 (Official Journal [Dz.U.] 2016 section 1047, as amended) and applicable regulations. Page 4 of 38

12 The Company applies the accounting principles (with the exception of the presentation changes) in a consistent and continuous manner, in line with those used in the prior fiscal year Revenue and Costs Revenue and Costs are consistent with the accrual methods, i.e. regardless of the date of receiving or making a payment, in the applicable fiscal year. Company prepares a Comparative Income Statement]. Sales Revenue Revenues from sales of products, goods, and materials are posted to the Income Statement once Company has transferred to the buyer significant benefits resulting from property rights to such assets and has ceased being regularly involved in managing the transferred assets, and no longer retains effective control of same Interest Earned Interest Earned is calculated using the actual interest rate Statement of Cash Flows Statement of Cash Flows Direct Method Intangible Assets Intangible Assets are recognized at their carrying amounts equal to their purchase price, or manufacturing cost, after deducting any accumulated depreciation and amortization as well as write-offs due to a permanent loss of value Intangible Assets are subject to straight-line depreciation using the following tax deductible rates: Software 50 % Company periodically verifies the depreciation and amortization periods and rates applied to Intangible Assets, and adjusted, if necessary, in the following fiscal years Fixed Assets Fixed Assets are recognized at their carrying amounts equal to their purchase price, or manufacturing cost (initial value), including any adjustments, depreciation, or after deducting any write-offs resulting from a permanent loss of value.. The purchase price and manufacturing cost of Fixed Assets and Fixed Assets under Construction include all the costs incurred by Company over the construction period, assembly, adaptation and improvement beginning with the day they were accepted for use, including any debt servicing costs if Company obtained credits to finance such purchases plus any related foreign exchange rate gain/loss after deducting any related income. The initial value of Fixed Assets is increased by the amount of any improvements, including overhaul, expansion, modernization or reconstruction, which raises the useful value of the asset in question, once the improvement has been completed, over and above the one used at the time the asset was first committed. Page 5 of 38

13 Company uses a straight-line depreciation method for its Fixed Assets. Depreciation starts in the month following the one in which the asset was first committed for regular use. Examples of depreciations rates: Buildings and Structures 2.5 % Civil Engineering Objects 4.5 % Machinery and Equipment 20 % Vehicles (forklift truck) 14 % Company periodically verifies the depreciation and amortization periods and rates applied to Fixed Assets, and makes any adjustments, if necessary, in the following fiscal years 2. 8 Investments Investments include assets acquired with a view to obtain economic benefits derived from an increase in their value, generated revenue, such as interest earned, dividends (profit distribution) or other benefits, including profits from business transactions, especially financial assets, real estate, and intangible assets which Company does not use but holds with a view to derive such benefits Permanent Loss of Asset Value Company analyzes if there are objective assumptions pointing to permanent loss of value of one or a group of assets, for every Balance Sheet day. Should such assumptions arise, Company estimates the recoverable value of any such asset, and makes an adjusting entry equal to the difference between any recoverable value and the asset book value. Any loss resulting from permanent loss of value is posted to the Income Statement. Any such posted loss reduces the amount of previous revaluation gain while the remaining portion of the loss is posted to the Income Statement Financial Leasing Leased Assets are posted to the Balance Sheet whenever Company is a party to leasing agreements and uses third-party fixed or intangible assets, assuming basically the entire risks and benefits deriving from ownership of such leased assets. Initially, leased assets are recognized at the lower of the fair value or the current value of minimum lease payments. Company classifies its lease agreements according to tax regulations [only when the entity s annual financial report is not subject to mandatory audit and publication] Inventory Inventory is recognized at their carrying amounts equal to the purchase price or manufacturing cost not higher than their net sales price as at the Balance Sheet day "Inventory value is calculated based on:" Materials - purchase price, sale - FIFO "Goods purchase price, sale - FIFO" Finished Goods manufacturing cost, including any costs relating directly to the product and any reasonable portion of costs indirectly related to its manufacture. The reasonable, proportionate part of indirect costs includes variable indirect manufacturing cost and a Page 6 of 38

14 part of fixed indirect manufacturing cost incurred under normal capacity. The term normal capacity shall mean average, anticipated production capacity under standard conditions, for a specific number of periods or seasons, including any planned maintenance. Products in progress - [direct manufacturing costs]. Inventories are recognized in the Balance Sheet at their net value, i.e. minus any writeoffs which are posted to Other Operating Costs and Expenses Receivables, Claims and Liabilities other than those classified as Assets and Financial Liabilities Receivables are recognized at their net carrying price, in line with the prudence principle. Receivables are adjusted according to probability of receiving payment by means of adjusting entries which are classified either as Other Operating Costs and Expenses or Financial Expenses, depending on the type of Receivable thus affected. Liabilities are recognized at the amount due. A/R and A/P denominated in foreign currencies are recognized at their initial price calculated using the average exchange rate published by the National Bank of Poland on the preceding day. A/R and A/P denominated in foreign currencies are recognized at their carrying value calculated using the average exchange rate published by the National Bank of Poland on that day Advances and Prepaids Company posts Advances and Prepaids which relate to future accounting periods. Accruals are equal to the likely amounts due in the current reporting period. [Advances Provisions Company sets up Provisions for likely future liabilities with unknown due dates, such as unused vacation. In line with the Capital Group policy, such Provisions are expensed as Operating Costs and Expenses, whereas in the Balance Sheet said Provisions are included in Other Liabilities. To this end, our presentation has been adjusted accordingly, i.e. for FY Corporate Income Tax The Corporate Income Tax shown in the Income Statement includes both the current and deferred portions. The current CIT tax amount is calculated in line with applicable tax regulations. The deferred portion disclosed in the Income Statement represents the difference between the deferred income tax provisions and assets at the end and beginning of the reporting period. Deferred income tax provisions and assets involving Equity are posted to Equity. Deferred Income Tax Assets correspond to amounts to be deducted from the CIT taxes in the future due to negative temporary differences and deductible taxable losses, always assuming the prudence principle. Page 7 of 38

15 Deferred income tax provisions are equal to the amount of future income tax due, owing to positive temporary difference, or difference giving rise to a higher taxable base in the future. The amounts of deferred income tax reserves and assets take into account the CIT rates applicable to the fiscal year in which the tax arises, taking into account any current tax regulations in force as at the Balance Sheet date. Deferred Income Tax Provisions and Assets are not offset for presentation purposes in the Financial Report Foreign Exchange Rate Gain/Loss Foreign Exchange Gain/Loss resulting from valuation of assets and liabilities expressed in foreign currencies as at the Balance Sheet date, except for long-term investments or related to payment of receivables and payables denominated in foreign currencies or when selling foreign currencies, are classified to Financial Income or Financial Costs, respectively; and in justified cases to the manufacturing costs of products or the purchase price of goods, as well as the purchase price or manufacturing cost of Fixed Assets, Fixed Assets under Construction or Intangible Assets. The following FX exchange rates (in PLN) have been used to calculate the Balance Sheet items, Income Statement items, and losses expressed in foreign currency: Balance Sheet EUR Loans Granted and Receivables Loans Granted and Receivables include, regardless of their due dates, Financial Assets arising from paying the other party in cash. Loans Granted and Receivables also include bonds and other debt instruments acquired in return for direct cash payments to the other party if the contract unequivocally provides that the seller does not abdicate control over the delivered financial instruments (repurchase transactions). Loans Granted and Receivables do not include loans, receivables or payments made by Company for purchase of newly issued capital instruments, also when the acquisition takes place in the first public offering or in primary market; in the case of subscription for shares also in secondary market. Loans Granted and Receivables are recognized at a corrected purchase price calculated using the effective interest rate method Financial Liabilities Financial Liabilities Held for Trade, including derivatives not intended as hedging instruments, are recognized at their fair value, whereas profits and losses from their valuation are posted directly to the Income Statement. Financial Liabilities Held for Trade also includes commitments to supply borrowed securities and other financial instruments should Company conclude any short sale contracts. Page 8 of 38

16 BALANCE SHEET AS AT DECEMBER 31, 2016 No Description As at As at A. ASSETS 21,765, ,898, I. I Intangible Assets , Capitalized Completed R&D Costs Goodwill Other Intangible Assets , Advances for Intangible Assets II. II Property, Plant, and Equipment 21,298, ,243, Fixed Assets 20,916, ,854, a) Land (including Leasehold) 1,388, ,388, b) Buildings, Structures, Civil Engineering Objects 15,175, ,819, c) Machinery and Equipment 4,250, ,901, d) Vehicles 2, , e) Other Fixed Assets 98, , Construction-in-Progress 49, ,271, Advances for Construction-in-Progress 333, , III. Long-term Receivables Related Entities Other Receivables from companies in which Entity holds a stake Other Receivables IV. Long-term Investments 43, , Real Estate Assets Intangible Assets Long-term Financial Assets 43, , a) Related Entities 43, , Shares and Bonds Other Securities Loans Granted 43, , Other Long-term Financial Assets b) Other Companies in which Entity holds a stake Shares and Bonds Other Securities Loans Granted Other Long-term Financial Assets c) Unrelated Entities Shares and Bonds Other Securities Loans Granted Other Long-term Financial Assets Other Long-term Investments V. Long-term Prepaids 423, , Deferred Income Tax Assets 423, , Other Prepaids and Advances , B. CURRENT ASSETS 21,804, ,182, I. Inventory 2,818, ,474, Page 9 of 38

17 No Description As at As at Materials 1,682, ,191, Semi-finished Goods and Work-in-Progress 311, , Finished Goods 733, , Goods for Resale Supplier Advances 91, II. Short-term Receivables 16,092, ,562, Intercompany Trade Receivables 4,251, ,891, a) Due within: 4,251, ,891, months or less 4,251, ,891, more than 12 months b) Other Other Trade Receivables from companies in which Entity holds a stake a) Due within: months or less more than 12 months b) Other Other Receivables 11,840, ,670, a) Due within: 11,265, ,102, months or less 11,265, ,102, more than 12 months b) Taxes, Grants, Duties, Payroll Taxes, Other 560, , c) Other 15, , d) Receivables in Litigation III. Short-term Financial Assets 2,874, , Short-term Financial Assets 2,874, , a) Related Entities Shares and Bonds Other Securities Loans Granted Other Short-term Financial Assets b) Unrelated Entities Shares and Bonds Other Securities Loans Granted Other Short-term Financial Assets c) Cash and Cash Equivalents 2,874, , Cash on Hand and in the Bank 2,874, , Other Cash Equivalents , Other Cash Assets Other Short-term Investments IV. Short-term Prepaids 18, , C. CALLED-UP SHARE (FUND) CAPITAL D. TREASURY STOCK (SHARES) TOTAL ASSETS 43,569, ,081, Page 10 of 38

18 No Description As at As at No. Description As at As at A. RETAINED EARNINGS AND SHAREHOLDERS' EQUITY 7,650, ,218, I. Share Capital 4,050, ,050, II. Reserve Capital, including: 1,434, ,600, Share premium III. Revaluation Reserve, including: Fair Value Adjustment IV. Other Reserve Capital, including Statutory Reserves Own Shares V. RETAINED EARNINGS -1,125, VI. Net Profit/Loss 3,291, ,567, VII. Current Year Profit Distributions (-) B. TOTAL PAYABLES AND RESERVES 35,918, ,862, I. Reserves 538, , Deferred Income Tax Reserve 30, , Retirement and Similar Reserves Long-term Short-term Other Reserves 507, Long-term Short-term 507, II. Long-term Trade Payables 21,638, ,694, Intercompany Payables 10,547, ,299, Other Companies in which Entity holds a stake Other Liabilities 11,091, ,395, a) Credits and Loans 11,073, ,087, b) Debt Instruments Issued c) Other Financial Liabilities 18, , d) Bill-of-Exchange Liabilities e) Other III. Short-term Trade Payable 13,741, ,147, Intercompany Payables 4,973, ,466, a) Due within: 1,407, , months or less 1,407, , more than 12 months b) Other 3,566, ,702, Other Companies in which Entity holds a stake a) Due within: months or less more than 12 months b) Other Other Payables 8,768, ,680, a) Credits and Loans 1,355, ,590, Page 11 of 38

19 No Description As at As at b) Debt Instruments Issued c) Other Financial Liabilities 8, , d) Due within: 6,137, ,557, months or less 6,137, ,557, more than 12 months e) Trade Advances f) Bills of Exchange g) Taxes, Duties, Payroll Taxes, Other Benefits 684, ,515, h) Wages and Salaries 369, , i) Other 212, , Special Funds IV. Accruals Negative Goodwill Other Accruals Long-term Short-term TOTAL LIABILITIES 43,569, ,081, Page 12 of 38

20 INCOME STATEMENT Sigit Poland Sp. z o.o. No Description A. Sales Revenue, by type: 45,832, ,981, Related Entities 4,960, ,294, I. Net Sales - Products 45,348, ,832, II. Change in Product Inventory (increase - positive, decrease - negative) 395, , III. Cost of Goods Manufactured for Own Use IV. Net Sales - Goods and Materials 88, , B. Operating Expenses 39,563, ,389, I. Depreciation and Amortization 3,718, ,071, II. Materials and Energy 21,476, ,837, III. Purchased Services 6,840, ,233, IV. Taxes and Fees, including: 214, , Excise Tax V. Wages and Salaries 5,749, ,839, VI. Social Insurance and Other Benefits, including 1,282, ,550, Pensions and Retirement Benefits 549, , VII. Other Costs and Expenses by Type 281, , VIII. Goods and Materials Sold C. Profit / Loss on Sales (A B) 6,269, ,592, D. Other Operating Income 796, , I. Profit on Sales of Non-Financial Fixed Assets 282, , II. Grants and Subsidies III. Non-Financial Asset Revaluation IV. Other Operating Income 513, , E. Other Operating Expenses 1,163, , I. Loss on Sales of Non-Financial Fixed Assets , II. Non-Financial Asset Revaluation 510, , III. Other Operating Expenses 652, , F. Operating Profit / Loss (C+D E) 5,901, ,089, G. Financial Income 464, , I. Dividends and Profit Distributions, including: a) Related Entities Companies in which Entity holds a stake b) Other, including Companies in which Entity holds a stake II. Interest Earned, including 464, , Related Entities 440, III. Profit from Sales of Financial Assets, including Related Entities IV. Financial Assets Revaluation V. Other , H. Financial Expenses 2,553, ,334, I. Interest Paid, including: 1,793, ,562, Related Entities 1,412, , Page 13 of 38

21 No Description II. Loss on Sales of Financial Assets, including Related Entities III. Financial Assets Revaluation IV. Other 760, , I. Operating Profit / Loss (F+G H) 3,812, ,893, J. Income Tax 520, ,325, K. Minority Interest (Increase of Loss) L. Net Profit / Loss (I-J K) 3,291, ,567, Page 14 of 38

22 CHANGES TO CAPITAL Sigit Poland Sp. z o.o. (PLN) Share Capital Reserve Capital Revaluation Reserve Other Reserve Capital Retained Earning Net Profit / Loss Current Yr. Profit Distribution Total Shareholders Capital Share Capital as at ,050, ,658, ,728, ,504, ,484, Error Corrections Change of Accounting Policy Share Capital as at following Corrections 4,050, ,658, ,728, ,504, ,484, Share / Stock Issue Share Capital Increase following transfer from Spare Capital Debt to Equity Swap Nominal Share Value Decrease / Increase Redemption of Shares Share Purchases Profit Distribution (statutory) Profit Distribution (over and above statutory minimum amount) Loss Covering ,224, Prior Year Profit Distribution ,224, ,504, ,504, Net Profit / Loss ,504, ,291, ,796, Dividends Sales of Fixed Assets Financial Instruments Revaluation Adjustment Other ,125, ,125, Page 15 of 38

23 Share Capital Reserve Capital Revaluation Reserve Other Reserve Capital Retained Earning Net Profit / Loss Current Yr. Profit Distribution Total Shareholders Capital Other Other Share Capital as at ,050, ,434, ,125, ,291, ,650, Share Capital as at , following proposed profit distribution / loss covering 7,650, Share Capital Reserve Capital Revaluation Reserve Other Reserve Capital Retained Earning Net Profit / Loss Current Yr. Profit Distribution Total Shareholders Capital Share Capital as at ,050, ,434, ,166, ,650, Error Corrections Change of Accounting Policy Share Capital as at following Corrections 4,050, ,434, ,166, ,650, Share / Stock Issue Share Capital Increase following transfer from Spare Capital Debt to Equity Swap Nominal Share Value Decrease / Increase Redemption of Shares Share Purchases Profit Distribution (statutory) ,166, Profit Distribution (over and above statutory minimum amount) - 2,166, Loss Covering Prior Year Profit Distribution Page 16 of 38

24 Share Capital Reserve Capital Revaluation Reserve Other Reserve Capital Retained Earning Net Profit / Loss Current Yr. Profit Distribution Total Shareholders Capital Net Profit / Loss ,567, ,567, Dividends Sales of Fixed Assets Financial Instruments Revaluation Adjustment Other Other Other Share Capital as at ,050, ,600, ,166, ,401, ,218, Share Capital as at , following proposed profit distribution / loss covering 13,218, Page 17 of 38

25 Changes to Equity Sigit Poland Sp. z o.o Equity at Beginning of Period 4,359, ,484, Corrections Policy Changes Equity at Beginning of Period, with Corrections 4,359, ,484, Equity at Beginning of Period 4,050, ,050, Changes to Share Capital Increase by: Issue of Shares Decrease by: 'Redemption of Shares / Bonds Share Capital at End of Period 4,050, ,050, Reserve Capital at Beginning of Period 1,434, ,658, Changes to Reserve Capital Increase by: 2,166, Share premium Profit Distribution (statutory) 2,166, Profit Distribution (over and above statutory minimum amount) Decrease by: ,224, Covering of Losses ,224, Reserve Capital at End of Period 3,600, ,434, Revaluation Adjustment Fund at Beginning of Period Changes in Revaluation Adjustment Fund Increase by: Decrease by: Sale of Fixed Assets Revaluation Adjustment Fund at End of Period Other Reserve Funds at Beginning of Period Changes in Other Reserve Funds Increase by: Decrease by: Page 18 of 38

26 Other Reserve Funds at End of Period Retained Earnings, Beginning of Period ,504, Retained Earnings, beginning of period ,504, Basic Error Corrections Accounting Policy Changes Prior Profit, beginning of period, with Corrections ,504, Increase by: Decrease by: ,504, ,504, Retained Earnings, end of period Prior Profit/Loss, beginning of period ,728, Basic Error Correction ,125, Policy Change Prior Loss, beginning of period, with Corrections ,853, Increase by: Decrease by: ,728, ,728, Prior Loss, end of period ,125, Retained Earnings, end of period ,125, Net Profit/ Loss Net Profit 5,567, ,291, Net Loss Minority Interest Equity at end of period 13,218, ,650, Equity after Proposed Profit Distribution / Covering of Losses Page 19 of 38

27 STATEMENT OF CASH LOWS Sigit Poland Sp. z o.o. No Description A. Cash Flows from Operating Activities I. Net Profit (Loss) 3,291, ,567, II. Total Corrections 2,928, ,977, Depreciation and Amortization 3,718, ,071, Exchange Rate Gain (Loss) 455, , Interest and Dividends 1,321, ,547, Profit / Loss from Investing Activities -282, , Changes in Provisions -113, , Changes in Inventories -244, , Changes in Receivables -3,734, ,470, Changes in Short-term Liabilities, except Credits and Loans 1,389, ,852, Changes in Accruals and Deferrals 417, , Other Adjustments III Net Cash Flows from Operating Activities (I+/ II) 6,220, ,545, B. Cash Flows from Investing Activities I. Inflows 1,088, , Sale of Intangible Assets and Fixed Assets 1,088, , Sale of Investment Property and Intangible Assets 3. Sale of Financial Assets, including: a) Related Entities b) Other Entities Sale of Financial Assets - Dividends and Minority Interest - Repayment of Long-term Loans - Interest Earned - Other Inflows from Financial Assets 4. Other Inflows from Sale of Investment Assets II. Outflows 17,194, ,450, Acquisition of Intangible Assets and Fixed Assets 16,861, ,450, Purchase of Property and Intangible Assets 333, Purchase of Financial Assets, including: a) Related Entities b) Other Entities Purchase of Financial Assets Page 20 of 38

28 - Long-term Loans Extended 4. Other Investment Expenditure III Net Cash Flows from Investing Activities (I II) -16,106, ,446, C. Cash Flows from Financing Activities I. Inflows 14,739, Net Cash Flows from issue of Stock and Other Capital Instruments plus Additional Payments to Equity 2.. Credits and Loans 14,739, Issue of Debt Securities 4. Other Financing Inflows II. Outflows 7,773, ,478, Redemption of Shares 2. Dividends and Other Payments to Shareholders 3. Profit Distributions Other than Payments to Shareholders 4. Repayment of Credits and Loans 6,031, ,824, Repurchase of Debt Securities 6. Other Financial Liabilities 7. Financial Lease Payment 7, , Interest Paid 1,735, ,482, Other Financial Expenditure III Net Cash Flows from Financing Activities (I-II) 6,966, ,478, D. Total Net Cash Flows -2,919, ,379, E. Change in Cash and Cash Equivalents, including: 3,194, ,340, Change in Cash and Cash Equivalents due to Foreign Exchange Rate Fluctuations 275, , F. Cash at Beginning of Period 6,030, ,110, G. Cash at End of Period (F+D), including 3,110, , Cash of Limited Availability for Use Page 21 of 38

29 ADDITIONAL NOTES AND INFORMATION Sigit Poland Sp. z o.o. Additional Notes and Information (PLN) 1. Intangible Assets Changes to Intangible Assets Completed R&D Costs Goodwill Other Intangible Assets Advances for Intangible Assets Total Gross Value , , Increase , , Internal Transfer Decrease , , Depreciation and Amortization , , Increase Internal Transfer Decrease , , Adjustments Increase Internal Transfer Decrease Net Value , , Page 22 of 38

30 Sigit Poland Sp. z o.o. Additional Notes and Information (PLN) 2. Tangible Fixed Assets 2. 1 Changes to Tangible Assets Land, including Leasehold Buildings, Structures, Civil Engineering Objects Machinery and Equipment Vehicles Other Fixed Assets Total Gross Value ,388, ,430, ,252, , , ,806, Increase , ,244, , , ,082, Internal Transfer Decrease , , , , ,388, ,480, ,229, , ,343, ,587, Depreciation and Amortization , ,002, , , ,890, Increase , ,521, , , ,070, Internal Transfer Decrease , , , , , ,328, , , ,732, Write-offs Increase Internal Transfer Decrease Net Value ,388, ,175, ,250, , , ,916, ,388, ,819, ,901, , , ,854, Page 23 of 38

31 2. 2 Leasehold Value The leasehold value determined by the local authorities for purposes of setting the leasehold fee is PLN 51K ( PLN 51K) 2. 4 Fixed Assets under construction The cost of fixed assets under construction was PLN ,85 K (2015 -: PLN K) 3. Long-term Receivables 3. 1 Long-term Receivables Aging 3. 2 Long-term Receivables Adjustments Page 24 of 38

32 4. Long-term Investments 4. 1 Changes to Long-term Investments 4. 2 Long-term Financial Assets in Related Entities Shares and Bonds Other Securities Loans extended Other long-term Financial Assets , , , , Long-term Financial Assets in entities i which Company holds a stake 4. 4 Long-term Financial Assets in other entities 4. 5 Long-term Financial Asset Revaluation 4. 6 Affiliated Companies and Subsidiaries 5. Securities and Other Rights 6. Other Prepaids / Accruals Prepaid Expenses to Suppliers 132, , Page 25 of 38

33 Sigit Poland Sp. z o.o. Additional Notes and Information (PLN) 8. Short-term Receivables 8. 1 Trade A/R Aging - Related Entities Due within 12 months or less More than 12 months A/R - Gross A/R Revaluation Adjustment A/R - net ,891, ,251, ,891, ,251, ,891, ,251, ,891, ,251, Short-term Trade A/R from other entities in which Entity holds a stake 8. 3 Short-term Trade A/R - other Due within 12 months or leass More than 12 months Gross A/R A/R write-offs Net A/R ,00 11,265, , ,00 11,265, ,00 11,775, ,88-510, ,12 11,265, Short-term Trade A/R write-offs Related Entities Other in which Entity holds a stake Other Entitie , Increase , Decrease , Reversal , , Other Short-term A/R Adjustments (including A/R in Litigation) Page 26 of 38

34 9. Short-term Investments 9. 1 Short-term Financial Assets - Related Entities 9. 2 Short-term Financial Assets - Other 9. 3 Cash and Cash Equivalents Cash on Hand and in the Bank Other Cash Equivalents Other Cash Assets 314, ,874, , , ,874, Short-term Prepaids Insurance Prepaid Software License (for 1 yr. In advance) Internat Domains Prepaid Expenses to Suppliers Prepaid Expenses to Customers Other 13, , , , , , , , , , , Page 27 of 38

35 Sigit Poland Sp. z o.o. Additional Notes and Information (PLN) 11. Equity Shareholding Shareholder No of Shares Share Nominal Value % Share SIGIT SPA 1, ,050, , ,050, Proposed Net Profit Distribution (Covering of Loss) Company Management proposes to apply the FY 2016 Net Profit to increase the Reserve Capital Change to Spare and Reserve Capital Reserve Spare Capital Capital , Increase 3,291, Decrease ,600, Reserves Reserves for pensions, retirement benefits and other Other Long-term Resrves Impaired A/R Reserve Other Total , , Increase Decrease Reversal -507, , Other Short-term Reserves Page 28 of 38

36 13. Long-term Liabilities Long-term A/P Aging - Related Entities Due within: 1-3 years 3-5 years More than 5 years Due within: Less than 1 year (recognized as short-term) ,299, ,299, Long-term A/P Aging - Minority Interest Long-term A/P Aging - Other Entities Due within: 1-3 years 3-5 years More than 5 years Credits and Loans Issue of Debt Securities Other Financial Liabilities Bill-of- Exchange Liabilities Other Total 10,087, , ,395, ,087, , ,395, Due within: 1 year or less 1,590, , ,781, Disloced and Short-term Liabilities 14. Short-term Liabilities Short-term trade liabilities owed to Related Entities of PLN 764 K payable within 12 months of the Balance Sheet date. Short-term trade liabilities owed to Related Entities of PLN K spayable within 12 months of the Balance Sheet date. Page 29 of 38

37 15. Other Prepaids and Accruals Long-term Liabilities Short-term Liabilities N'A 16. Sales Revenues by: Area: Sales of Products Domestic Export Sales of Goods and Materials Domestic Export Sales, by type Sales of Products Basic business activities Z Sales of Goods and Materials Basic business activities Z ,651, ,180, ,180, ,168, ,832, ,348, , , , , ,832, ,348, ,832, ,348, , , , , Page 30 of 38

38 17. Interest Earned (including from debt securities, loans granted and own receivables) FY January 1 - December 31, 201 Debt Securities Loans Granted and own Receivables Other Assets Realized Interest Unrealized Interest due within: More than 12 Up to 3 months 3 12 months months Total , , , , FY January 1 - December 31, 2015 Debt Securities Loans Granted and own Receivables Other Assets Realized Interest Unrealized Interest due within: More than 12 Up to 3 months 3 12 months months Total , , , , Interest Expense (including Financial Liabilities) FY January 1 - December 31, 201 Financial Liabilities Held for Trade Other Short-term Financial Liabilities Long-term Financial Liabilities Other Liabilities Realized Interest Up to 3 months Unrealized Interest due within: 3 12 months More than 12 months Total ,562, ,562, ,562, ,562, FY January 1 - December 31, 2015 Financial Liabilities Held for Trade Other Short-term Financial Liabilities Long-term Financial Liabilities Other Liabilities Realized Interest Up to 3 months Unrealized Interest due within: 3 12 months More than 12 months Total ,793, ,793, Page 31 of ,793, ,793,389.47

39 Other Short-term Financial Liabilities Long-term Financial Liabilities Other Liabilities 1,793, ,793, ,793, ,793, Corporate Income Tax CIT Income Tax, broken down by: Current CIT tax Prior Year Additional Tax Liabilities Deferred Income Tax Change 1,386, , , , ,325, , CIT Tax Calculation Gross Profit / Loss Amounts Increasing Taxable Base Statutory Interest on Loan Agreements FX Difference from Valuation Costs, by nature - various Depreciation and Amortization, Leasing A/R Write-downs Interest (DB) - paid in January Unpaid ZUS Taxes Travel and Entertainment Fees and Charges Miscellaneous Costs and Expenses - T&E Provisions PFRON Disability Fund Contributions Other [<10% of total value] Taxable Expenses 2015 Costs of Sales disclosed in 2016 (instead of when first incurred) ELTEK Provision Reversal ZUS Taxes paid in 2016 Invoices deducted from Costs Subcontractor's contract paid Lease Payments Initial Lease Payments... SGIT SPA Invoice Statutory Interest Reversal of Provisions... Other [<10% of total value] 6,893, ,812, , , , , , , , , , , , , , , , , , , , , , , , , , ,810, ,852, , , , , , ,062, , , , , , , ,199, , , ,405, ,377, Page 32 of 38

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