QUARTERLY CONDENSED FINANCIAL
          STATEMENTS


         of Zakłady Tłuszczowe
      “KRUSZWICA” Spółka Akcyjna

for ...
Zakłady Tłuszczowe „Kruszwica” S.A.
Quarterly Condensed Financial Statements

TABLE OF CONTENTS:

SELECTED FINANCIAL DATA ...
Zakłady Tłuszczowe „Kruszwica” S.A.
Quarterly Condensed Financial Statements

SELECTED FINANCIAL DATA
(all figures in thou...
Zakłady Tłuszczowe „Kruszwica” S.A.
Quarterly Condensed Financial Statements

Euro exchange rates applied for restatement ...
Zakłady Tłuszczowe „Kruszwica” S.A.
Quarterly Condensed Financial Statements

STATEMENT OF COMPREHENSIVE INCOME
(all figur...
Zakłady Tłuszczowe „Kruszwica” S.A.
Quarterly Condensed Financial Statements

STATEMENT OF FINANCIAL POSITION

           ...
Zakłady Tłuszczowe „Kruszwica” S.A.
Quarterly Condensed Financial Statements


    STATEMENT OF CHANGES IN EQUITY

       ...
Zakłady Tłuszczowe „Kruszwica” S.A.
Quarterly Condensed Financial Statements

STATEMENT OF CASH FLOWS

                   ...
Zakłady Tłuszczowe „Kruszwica” S.A.
Quarterly Condensed Financial Statements

ADDITIONAL INFORMATION TO THE QUARTERLY COND...
Zakłady Tłuszczowe „Kruszwica” S.A.
Quarterly Condensed Financial Statements

IFRS PLATFORM AND ACCOUNTING PRINCIPLES APPL...
Zakłady Tłuszczowe „Kruszwica” S.A.
Quarterly Condensed Financial Statements

•      IFRIC 13 “Customer Loyalty Programmes...
Zakłady Tłuszczowe „Kruszwica” S.A.
Quarterly Condensed Financial Statements

•   IFRS (2009) Amendments to IFRS resulting...
Zakłady Tłuszczowe „Kruszwica” S.A.
Quarterly Condensed Financial Statements

Earlier adoption of standards and interpreta...
Zakłady Tłuszczowe „Kruszwica” S.A.
Quarterly Condensed Financial Statements

STATEMENT OF COMPREHENSIVE INCOME
For the 9-...
Zakłady Tłuszczowe „Kruszwica” S.A.
Quarterly Condensed Financial Statements


STATEMENT OF COMPREHENSIVE INCOME
For the 3...
Zakłady Tłuszczowe „Kruszwica” S.A.
Quarterly Condensed Financial Statements

INFORMATION ON MATERIAL CHANGES OF ESTIMATED...
Zakłady Tłuszczowe „Kruszwica” S.A.
Quarterly Condensed Financial Statements

Revaluation write-downs on inventories.
As a...
Zakłady Tłuszczowe „Kruszwica” S.A.
Quarterly Condensed Financial Statements

The structure of sales in terms of revenue a...
Zakłady Tłuszczowe „Kruszwica” S.A.
Quarterly Condensed Financial Statements

Financial liabilities dropped from PLN 78,48...
Zakłady Tłuszczowe „Kruszwica” S.A.
Quarterly Condensed Financial Statements

OPERATING SEGMENTS
Operating segments identi...
Zakłady Tłuszczowe „Kruszwica” S.A.
Quarterly Condensed Financial Statements

Exchange differences:
Differences arising fr...
Zakłady Tłuszczowe „Kruszwica” S.A.
Quarterly Condensed Financial Statements


Segment assets and liabilities
            ...
Zakłady Tłuszczowe „Kruszwica” S.A.
Quarterly Condensed Financial Statements


Revenue and profit/loss per segment and oth...
Zakłady Tłuszczowe „Kruszwica” S.A.
Quarterly Condensed Financial Statements

Revenue from sales of key products and servi...
Zakłady Tłuszczowe „Kruszwica” S.A.
Quarterly Condensed Financial Statements

Information regarding geographical regions
 ...
QUARTERLY CONDENSED FINANCIAL STATEMENTS
QUARTERLY CONDENSED FINANCIAL STATEMENTS
QUARTERLY CONDENSED FINANCIAL STATEMENTS
QUARTERLY CONDENSED FINANCIAL STATEMENTS
QUARTERLY CONDENSED FINANCIAL STATEMENTS
QUARTERLY CONDENSED FINANCIAL STATEMENTS
QUARTERLY CONDENSED FINANCIAL STATEMENTS
QUARTERLY CONDENSED FINANCIAL STATEMENTS
QUARTERLY CONDENSED FINANCIAL STATEMENTS
QUARTERLY CONDENSED FINANCIAL STATEMENTS
QUARTERLY CONDENSED FINANCIAL STATEMENTS
QUARTERLY CONDENSED FINANCIAL STATEMENTS
QUARTERLY CONDENSED FINANCIAL STATEMENTS
QUARTERLY CONDENSED FINANCIAL STATEMENTS
QUARTERLY CONDENSED FINANCIAL STATEMENTS
QUARTERLY CONDENSED FINANCIAL STATEMENTS
QUARTERLY CONDENSED FINANCIAL STATEMENTS
QUARTERLY CONDENSED FINANCIAL STATEMENTS
QUARTERLY CONDENSED FINANCIAL STATEMENTS
QUARTERLY CONDENSED FINANCIAL STATEMENTS
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QUARTERLY CONDENSED FINANCIAL STATEMENTS

  1. 1. QUARTERLY CONDENSED FINANCIAL STATEMENTS of Zakłady Tłuszczowe “KRUSZWICA” Spółka Akcyjna for the 9-month period ended 30 September 2009 Kruszwica, 16 November 2009
  2. 2. Zakłady Tłuszczowe „Kruszwica” S.A. Quarterly Condensed Financial Statements TABLE OF CONTENTS: SELECTED FINANCIAL DATA .....................................................................................................................3 STATEMENT OF COMPREHENSIVE INCOME...........................................................................................5 STATEMENT OF FINANCIAL POSITION.....................................................................................................6 STATEMENT OF CHANGES IN EQUITY.....................................................................................................7 STATEMENT OF CASH FLOWS..................................................................................................................8 ADDITIONAL INFORMATION TO THE QUARTERLY CONDENSED FINANCIAL STATEMENTS............9 GENERAL INFORMATION ...........................................................................................................................9 IFRS PLATFORM AND ACCOUNTING PRINCIPLES APPLIED ...............................................................10 INFORMATION ON MATERIAL CHANGES OF ESTIMATED VALUES. ...................................................16 SIGNIFICANT SUCCESSES AND FAILURES OF THE ISSUER during the reporting period...................17 DESCRIPTION OF ITEMS AFFECTING ASSETS, LIABILITIES, EQUITY, NET PROFIT AND CASH FLOWS THAT ARE EXTRAORDINARY DUE TO THEIR TYPE, SIZE OR EXERTED INFLUENCE........17 SEASONAL AND CYCLICAL NATURE OF BUSINESS.............................................................................19 OPERATING SEGMENTS ..........................................................................................................................20 RELATED PARTY TRANSACTIONS..........................................................................................................25 DERIVATIVES.............................................................................................................................................30 SENSITIVITY ANALYSIS OF FINANCIAL ASSETS AND LIABILITIES .....................................................38 CHANGES IN THE STRUCTURE OF THE ENTITY ..................................................................................38 Issuance, redemption and repayment of non-equity and equity securities .................................................40 DIVIDEND PAID (OR DECLARED) ............................................................................................................41 CHANGES IN CONTINGENT LIABILITIES OR CONTINGENT ASSETS..................................................41 POST BALANCE SHEET EVENTS ............................................................................................................41 DESCRIPTION OF THE ISsuer's CAPITAL GROUP ORGANIZATION.....................................................41 POSITION OF THE MANAGEMENT BOARD CONCERNING THE PREVIOUSLY PUBLISHED FORECASTS FOR THE FINANCIAL YEAR ...............................................................................................42 SHAREHOLDERS WHO, EITHER DIRECTLY OR INDIRECTLY (THROUGH THEIR SUBSIDIARIES), HOLD AT LEAST 5% VOTES AT THE issuer'S GENERAL SHAREHOLDERS’ MEETING......................42 THE ISSUER’S SHARES AND SUBSCRIPTION RIGHTS ASSIGNED TO MEMBERS OF THE ISSUER’S MANAGEMENT AND SUPERVISORY BODIES.......................................................................42 PROCEEDINGS PENDING BEFORE ANY COURT, ARBITRATION AUTHORITY OR PUBLIC ADMINISTRATION AUTHORITY, INCLUDING INFORMATION ON: ........................................................43 INFORMATION ON ONE OR MORE TRANSACTIONS WITH RELATED parties WHICH ARE, SEPARATELY OR JOINTLY, regarded as SIGNIFICANT AND WERE NOT CARRIED OUT ON AN ARM'S LENGTH BASIS ..............................................................................................................................43 INFORMATION ON CREDIT/LOAN SURETIES OR GUARANTEES EXTENDED BY THE COMPANY TO ONE OF ITS SUBSIDIARIES IF THEIR AGGREGATE VALUE CORRESPONDS TO AT LEAST 10% OF THE ISSUER’S EQUITY .............................................................................................................................43 OTHER INFORMATION ESSENTIAL FOR ASSESSING THE issuer'S HUMAN RESOURCES, ASSETS, FINANCIAL POSITION AND RESULTS AND their CHANGES AS WELL AS THE COMPANY'S ABILITY TO meet ITS LIABILITIES ...........................................................................................................................43 FACTORS WHICH, IN THE ISSUER'S OPINION, WILL AFFECT THE COMPANY’S PERFORMANCE AT LEAST DURING THE NEXT QUARTER...............................................................................................44 Page 2 of 45
  3. 3. Zakłady Tłuszczowe „Kruszwica” S.A. Quarterly Condensed Financial Statements SELECTED FINANCIAL DATA (all figures in thousands, except numbers of shares and earnings per share) For For For For 3 months 3 months 3 months 3 months ended 30/09/2009 ended 30/09/2008 ended 30/09/2009 ended 30/09/2008 PLN’000 EUR’000 I. Revenue from sales of products 524,008 557,907 125,933 168,095 and goods II. Operating profit 48,432 54,401 11,640 16,391 III. Profit before tax 44,587 46,293 10,715 13,948 IV. Net profit 35,750 37,725 8,592 11,366 V. Number of shares 22,986,949 22,338,949 22,986,949 22,338,949 VI. Earnings per ordinary share (in 1.56 1.69 0.37 0.51 PLN/EUR) For For For For 9 months ended 9 months ended 9 months ended 9 months ended 30/09/2009 30/09/2008 30/09/2009 30/09/2008 PLN’000 EUR’000 I. Revenue from sales of products 1,516,454 1,571,173 344,703 458,750 and goods II. Operating profit 152,213 168,250 34,599 49,126 III. Profit before tax 135,793 145,252 30,867 42,411 IV. Net profit 110,032 117,556 25,011 34,324 V. Number of shares 22,986,949 22,338,949 22,986,949 22,338,949 VI. Earnings per ordinary share (in 1.54 4.79 5.26 1.09 PLN/EUR) VII. Net cash provided by (used in) 127,008 44,261 28,870 12,924 operating activities VIII. Net cash provided by (used in) (3,079) (14,816) (700) (4,326) investing activities IX. Net cash provided by (used in) financing activities (117,677) (27,209) (26,749) (7,945) X. Total net cash flows 6,252 2,236 1,421 653 End of period End of period End of period End of period 30/09/2009 31/12/2008 30/09/2009 31/12/2008 PLN’000 EUR’000 XI. Non-current assets 518,749 567,709 122,851 136,063 XII. Current assets 780,443 741,740 184,825 177,773 XIII. Total assets 1,299,192 1,309,449 307,676 313,836 XIV. Non-current liabilities 48,298 47,615 11,438 11,412 XV. Current liabilities 619,350 692,635 146,675 166,004 XVI. Equity 631,544 569,149 149,563 136,408 XVII. Share capital 185,076 180,229 43,830 43,196 Page 3 of 45
  4. 4. Zakłady Tłuszczowe „Kruszwica” S.A. Quarterly Condensed Financial Statements Euro exchange rates applied for restatement of the “selected financial data”: Individual assets and liabilities of the Company’s statement of financial position as at 30 September 2009 and as at 31 December 2008 were translated at the average exchange rate of the National Bank of Poland valid for Euro as at that dates. . Other items disclosed in the statement of comprehensive income, statement of changes in equity as well as in the statement of cash flows were translated at the arithmetic average of average exchange rates of the National Bank of Poland valid on the last day of each month of the presented period. The foreign currency exchange rates applied for restatement of the “selected financial data” are presented below: End of period End of period 30/09/2009 31/12/2008 Statement of financial position 4.2226 4.1724 For For For For 3 months 3 months 9 months 9 months ended ended ended ended 30/09/2008 30/09/2009 30/09/2008 30/09/2009 Statement of comprehensive income Statement of changes in equity 4.1610 3.3190 4.3993 3.4249 Statement of cash flows Page 4 of 45
  5. 5. Zakłady Tłuszczowe „Kruszwica” S.A. Quarterly Condensed Financial Statements STATEMENT OF COMPREHENSIVE INCOME (all figures in PLN thousands, except for numbers of shares and earnings per share) For For For For 3 months 3 months 9 months 9 months ended ended ended ended 30/09/2009 30/09/2008 30/09/2009 30/09/2008 PLN’000 PLN’000 PLN’000 PLN’000 Revenue Revenue from sales of products 515,564 530,243 1,496,817 1,518,991 Revenue from sales of goods 8,444 27,664 19,637 52,182 Other operating revenue 1,993 3,012 21,529 9,997 Total revenue 526,001 560,919 1,537,983 1,581,170 Expenses Cost of products sold (423,647) (416,183) (1,200,691) (1,180,753) Cost of goods sold (7,890) (24,393) (12,151) (49,405) Selling expenses (17,433) (14,760) (53,046) (47,739) General and administrative costs (26,255) (37,574) (85,221) (110,084) Exchange gains/losses and gains/losses on (647) (9,962) (21,387) (18,537) measurement of derivatives Profit/loss on sale of fixed assets and other (160) (1,591) (177) (1,191) expenses related to fixed assets Other operating expenses (1,537) (2,055) (13,097) (5,211) Total expenses (477,569) (506,518) (1,385,770) (1,412,920) Operating profit 48,432 54,401 152,213 168,250 Financial expenses and revenue (3,845) (8,108) (16,420) (22,998) Pre-tax profit from continuing operations 44,587 46,293 135,793 145,252 Income tax (8,837) (8,568) (25,761) (27,696) current portion (12,614) (14,650) (18,253) (34,120) deferred portion 3,777 6,082 (7,508) 6,424 35,750 37,725 110,032 117,556 Net profit Other comprehensive income Hedge accounting 6,220 2,529 28,046 (12,824) Income tax related to other items of (1,293) (481) (6,622) 2,437 comprehensive income Other net comprehensive income 4,927 2,048 21,424 (10,387) Total comprehensive income 40,677 39,773 131,456 107,169 Earnings per share (in PLN) 1.56 1.69 4.79 5.26 Weighted average number of shares 22,986,949 22,338,949 22,986,949 22,338,949 In this report, the comparative data for the prior year were subject to restatement in connection with reclassification of certain types of revenue and expenses as disclosed in the statement of comprehensive income (these changes have been described in detail in section "Changes in accounting principles applied – Changes in presentation of financial statements". Page 5 of 45
  6. 6. Zakłady Tłuszczowe „Kruszwica” S.A. Quarterly Condensed Financial Statements STATEMENT OF FINANCIAL POSITION End of period 30/09/2009 End of period 31/12/2008 PLN’000 PLN’000 Non-current assets Property, plant and equipment 380,059 412,976 Investment property 1,822 1,907 Goodwill 83,793 83,793 Intangible assets 32,075 34,454 Long-term financial assets 124 194 Deferred tax assets 20,876 34,385 518,749 567,709 Current assets Inventories 592,026 547,062 Trade receivables 133,854 160,101 Other receivables 21,686 15,590 Short-term financial assets 20,120 15,497 Cash and bank balances 8,799 2,546 Prepayments 3,958 944 780,443 741,740 Total assets 1,299,192 1,309,449 End of period 30/09/2009 End of period 31/12/2008 PLN’000 PLN’000 Equity Share capital 185,076 180,229 Share premium 245,403 206,160 Reserve capital 66,722 (7,460) Retained earnings 134,343 190,220 Total equity 631,544 569,149 Non-current liabilities Provision for income tax 34,411 33,782 Other provisions 4,942 4,888 Liabilities due to employee benefits 8,945 8,945 48,298 47,615 Current liabilities Short-term loans and borrowings 355,411 452,113 Financial liabilities 14,397 78,486 Liabilities due to employee benefits 13,210 17,305 Trade liabilities 153,818 107,328 Current income tax liabilities 12,269 33,615 Net dividend payable 65,903 - Income tax payable on dividends 3,058 - Other current liabilities 1,284 3,788 619,350 692,635 Accruals 50 Total equity and liabilities 1,299,192 1,309,449 Page 6 of 45
  7. 7. Zakłady Tłuszczowe „Kruszwica” S.A. Quarterly Condensed Financial Statements STATEMENT OF CHANGES IN EQUITY Reserve capital Revaluation reserve of Retained Minority Share capital Share premium appropriated for Total equity hedging instruments earnings interest dividend payment PLN’000 PLN’000 PLN’000 PLN’000 PLN’000 PLN’000 PLN’000 Equity as at 1 January 2008 180,229 206,213 3,268 4,926 47,569 42,992 485,197 Impact of changes in presentation of equity due to acquisition of minority interests in a subsidiary 42,992 (42,992) - Equity as at 1 January 2008 after restatement 180,229 206,213 3,268 4,926 90,561 - 485,197 Total net comprehensive income for the period (10,387) 117,556 - 107,169 Dividend declared 16,268 (16,268) Dividend paid (16,308) (16,308) Equity as at 30 September 2008 180,229 206,213 19,536 (5,461) 175,541 - 576,058 Equity as at 1 January 2009 180,229 206,160 19,536 (26,996) 190,220 - 569,149 Total net comprehensive income for the period 21,424 110,032 - 135,390 Declared dividend 52,758 (121,719) (68,961) Issue of shares 4,847 39,243 44,090 Acquisition of subsidiaries (44,190) - (44,190) Equity as at 30 September 2009 185,076 245,403 72,294 (5,572) 134.343 - 635,478 Comparative data as at 1 January 2008 (originally disclosed in the consolidated financial statements) were restated in such a way as if the transaction of acquisition of minority interests in a subsidiary was conducted not in February this year, but at the beginning of the prior financial year. Detailed description of the settlement for the above-mentioned transaction is presented in “Changes in the structure of the entity”. Strona 7 z 45
  8. 8. Zakłady Tłuszczowe „Kruszwica” S.A. Quarterly Condensed Financial Statements STATEMENT OF CASH FLOWS For For 9 months ended 9 months ended 30/09/2009 30/09/2008 PLN’000 PLN’000 Cash flows from operating activities Net profit (loss) 110,032 117,556 Total adjustments 16,976 (73,295) Amortization/Depreciation 36,900 37,565 Exchange gains (losses) (40,671) 4,637 Interest 20,980 24,262 (Gain) loss on sale or liquidation of property, plant and equipment and 155 1,191 intangible assets Change in provisions (29) 627 Change in inventories (49,821) (159,887) Change in receivables 20,178 (23,805) Change in short-term liabilities, except for loans and borrowings 109,044 28,846 Change in prepayments and accruals (3,014) (1,103) Income tax charged 25,761 27,696 Income tax paid (33,411) (13,281) Other adjustments (69,096) (43) Net cash provided by operating activities 127,008 44,261 Cash flows from investing activities Proceeds from disposal of property, plant and equipment and intangible 700 1,379 assets Other proceeds from financial assets 660 217 Acquisition of intangible assets and property, plant and equipment (4,458) (15,735) Originated long-term borrowings 19 28 Change in originated advance payments for acquisition of fixed assets - (705) Net cash used in investing activities (3,079) (14,816) Cash flows from financing activities Dividend and other profit-sharing payments - (16,080) Repayment of loans and borrowings (96,702) (514,442) Interest paid (20,980) (24,309) Proceeds from contracted loans/borrowings - 527,699 Other proceeds and payments due to investing activities - (77) Net cash used in financing activities (117,677) (27,209) Total net cash flows 6,252 2,236 Balance sheet change in cash and cash equivalents 6,252 2,236 Cash and cash equivalents at the beginning of the financial period 2,546 646 Cash and cash equivalents at the end of the financial year 8,799 2,882 The financial statements signed by: Member of the Management Board, Financial Director………………………………………….. Proxy………………………………………………………………….. Kruszwica, 16 November 2009 Page 8 of 45
  9. 9. Zakłady Tłuszczowe „Kruszwica” S.A. Quarterly Condensed Financial Statements ADDITIONAL INFORMATION TO THE QUARTERLY CONDENSED FINANCIAL STATEMENTS GENERAL INFORMATION Zakłady Tłuszczowe Kruszwica SA (“the Company” or “ZT Kruszwica SA”) carries out business operations in the territory of Poland and is entered in the Commercial Register, Section B, under the number 3698, by decision of the District Court in Bydgoszcz - VIII Business Division of 21 December 1995. On 12 June 2001, the Company was entered in the National Court Register maintained by the District Court in Bydgoszcz, XIII Division of the National Court Register, under the number KRS 0000019414.. The core business of the Company is processing of oilseeds, production of bottled oils, production of margarines and edible fats. The Company is a part of the Bunge Group, a worldwide leader in processing of oilseeds and production of bottled vegetable oils. 22,986,949 of the Company's shares are subject to public trading and are listed on the primary market of the Warsaw Stock Exchange (Giełda Papierów Wartościowych w Warszawie S.A.). On 27 February 2009 (i.e. the business combination date) the Company acquired all the minority interests in its subsidiary Zakłady Przemysłu Tłuszczowego w Warszawie S.A. (ZPT w Warszawie S.A.). As of the business combination date, the Zakłady Tłuszczowe „Kruszwica” S. A. Capital Group, incorporating ZT “Kruszwica” S.A. and ZPT w Warszawie S.A. being subject to consolidation, has been liquidated. As a consequence, the Company has abandoned preparation of consolidated financial statements since the business combination date. The last consolidated financial statements of the Zakłady Tłuszczowe “Kruszwica” S.A. Capital Group were drawn up for the year 2008. These individual financial statements of ZT “Kruszwica” S.A. are the only financial statements published by the Company; whereas, the comparative data presented herein have been derived from the consolidated financial statements of ZT “Kruszwica” S.A. for the corresponding prior periods. More information on the business combination and the related issuance of shares can be found in "Changes in the structure of the entity" and in "Issuance, redemption and repayment of non-equity and equity securities”. As at the date of preparation of these financial statements, the compositions of the Company's management and supervisory bodies were as follows: Management Board of the Company: 1. Tommy Jensen –President of the Management Board 2. Roman Rybacki –Vice-President of the Management Board 3. Mariusz Szeliga –Member of the Management Board 4. Wojciech Jachimczyk –Member of the Management Board 5. Wojciech Bauman –Member of the Management Board 6. Tomasz Wika –Member of the Management Board 7. Piotr Piotrowski –Member of the Management Board 8. Marcin Brodowski –Member of the Management Board Supervisory Board: 1. Jean-Louis Gourbin - Chairman of the Supervisory Board 2. Frans Mol - Vice-Chairman of the Supervisory Board 3. Laurent Bogaert - Member of the Supervisory Board 4. Dirk Hellings - Member of the Supervisory Board 5. Lane Silverman - Member of the Supervisory Board 6. Jacek Glinka - Member of the Supervisory Board 7. Roman Górny - Member of the Supervisory Board 8. Sławomir Ludwikowski - Member of the Supervisory Board 9. Jerzy Rajski - Member of the Supervisory Board 10. Stefan Latawiec - Member of the Supervisory Board Page 9 of 45
  10. 10. Zakłady Tłuszczowe „Kruszwica” S.A. Quarterly Condensed Financial Statements IFRS PLATFORM AND ACCOUNTING PRINCIPLES APPLIED Statement of compliance The accompanying Quarterly Condensed Financial Statements were prepared according to International Accounting Standard (IAS) 34 Interim Financial Reporting and in compliance with the International Financial Reporting Standards (IFRS) applicable for interim financial reporting, as approved by the International Accounting Standards Board (IASB) or the Standing Interpretation Committee (SIC), as adopted by the European Union and in effect as at 30 September 2009. The IFRS shall include the below mentioned regulations accepted by the International Accounting Standards Board (IASB): - International Financial Reporting Standards (IFRS); - International Accounting Standards (IAS); - Interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC) or by its predecessor – the Standing Interpretation Committee (SIC), which were accepted by the ISAB. These quarterly condensed financial statements contain data for the following periods: - statement of financial position – data as at the end of the interim period reported, and comparative financial statements as at the end of the preceding financial year; - statement of comprehensive income – data for the interim period reported and cumulative year-to-date data, and comparative statement of comprehensive income for the corresponding interim periods of the preceding financial year; - statement of changes in equity – cumulative year-to-date data for the current financial year, and comparative statement of changes in equity year-to-date for the corresponding period of the preceding financial year; - statement of cash flows – cumulative year-to-date data for the current financial year, and comparative cumulative data for the corresponding period of the preceding financial year. All the comparative data presented in these financial statements have been derived from the Company's consolidated financial statements for the respective corresponding prior periods as mentioned above. Standards and interpretations applied for the first time in 2009. The following amendments to the existing standards issued by the International Accounting Standards Board and interpretations issued by the International Financial Reporting Interpretations Committee are effective as of 2009: • IFRS 8 “Operating Segments” (effective for annual periods beginning on or after 1 January 2009); • Amendments to IFRS 7 “Financial Instruments: Disclosures” - Improving disclosures about financial instruments (effective for annual periods beginning on or after 1 January 2009); • Amendments to IFRS 1 “First-time Adoption of IFRS” and IAS 27 “Consolidated and Separate Financial Statements” – Cost of investment in a subsidiary, jointly-controlled entity or associate (effective for annual periods beginning on or after 1 January 2009); • IFRS (2008) “Amendments of International Financial Reporting Standards” - amendments under the procedure of introducing annual improvements to IFRS published on 22 May 2008 (IAS 1, IFRS 5, IAS 8, IAS 10, IAS 16, IAS 19, IAS 20, IAS 23, IAS 27, IAS 28, IAS 29, IAS 31, IAS 34, IAS 36, IAS 38, IAS 39, IAS 40, IAS 41) primarily with a view to removing inconsistencies and clarifying wording (most amendments are to be applied for annual periods beginning on or after 1 January 2009); • Amendments to IAS 32 “Financial Instruments: Presentation” and IAS 1 “Presentation of Financial Statements” – Puttable financial instruments and obligations arising on liquidation (effective for annual periods beginning on or after 1 January 2009); • IAS 1 (revised) “Presentation of Financial Statements” – A revised presentation (effective for annual periods beginning on or after 1 January 2009); • IAS 23 (revised) “Borrowing Costs” (effective for annual periods beginning on or after 1 January 2009); • Amendments to IFRS 2 “Share-based Payment” – Vesting conditions and cancellations (effective for annual periods beginning on or after 1 January 2009); • Amendments to IFRIC 9 “Reassessment of Embedded Derivatives” and IAS 39 “Financial Instruments: Recognition and Measurement” - Embedded derivatives (effective for annual periods ending on or after 30 June 2009); Page 10 of 45
  11. 11. Zakłady Tłuszczowe „Kruszwica” S.A. Quarterly Condensed Financial Statements • IFRIC 13 “Customer Loyalty Programmes” (effective for annual periods beginning on or after 1 July 2008); • IFRIC 15 “Agreements for the Construction of Real Estate” (effective for annual periods beginning on or after 1 January 2009); • IFRIC 16 “Hedges of a Net Investment in a Foreign Operation” (effective for annual periods beginning on or after 1 October 2008); With the exception of IFRS 8 and revised IAS 1, IFRS 3 and IFRS 27 (see description below and earlier adoption of standards and interpretations), the above-mentioned standards, amendments and interpretations would have had no substantial impact on the Company's accounting policy, if they had been applied by the Company at the balance sheet date. Application of the revised IAS 1 In these financial statements the Company applied the revised IAS 1 “Presentation of Financial Statements” and introduced the required changes retrospectively. As a result of adopting this revised standard, the names of the main components of the financial report have been changed as follows:: Prior name Current name Balance sheet Statement of financial position Profit and loss account + Statement of comprehensive income Statement of comprehensive income Statement of changes in equity Statement of changes in equity Cash flow statement Statement of cash flows Furthermore, as a result of adopting the revised IAS 1 the statement of changes in equity included in these financial statements discloses transactions with owners only. The remaining, non-owner changes in equity are presented separately in the Statement of comprehensive income. The revisions of this standard have no impact on the previously published financial results or equity; they only affect the presentation and names used in financial statements. Application of IFRS 8 IFRS 8 “Operating Segments” has replaced IAS 14 “Segment Reporting”. IFRS 8 requires disclosure of information on each operating segment based on internal reports submitted to the chief operating decision maker for the purposes of allocating resources to that segment and assessing its performance. Whereas, IAS 14 required disclosure of information on business segments and geographical segments. More information on identification of segments of the Company's operations and on application of IFRS 8 is presented in the note "Operating Segments”. Standards and interpretations already published, but not yet effective As at the date of preparing these financial statements, the following standards, revised standards and interpretations have been published but have not become effective: • IFRS 3 (revised) “Business combinations” (effective for annual periods beginning on or after 1 July 2009); • IFRS 1 (revised) “First-time Adoption of International Financial Reporting Standards” (effective for annual periods beginning on or after 1 July 2009); • Amendments to IFRS 1 “First-time Adoption of IFRS”- Additional Exemptions for First-time Adopters (effective for annual periods beginning on or after 1 January 2010); • Amendments to IFRS 2 “Share-based Payment” - Group cash-settled share-based payment transactions (effective for annual periods beginning on or after 1 January 2010); • Amendments to IAS 24 “Related Party Disclosures” - Simplifying the disclosure requirements for government- related entities and clarifying the definition of a related party (effective for annual periods beginning on or after 1 January 2011); • Amendments to IAS 27 “Consolidated and Separate Financial Statements” (effective for annual periods beginning on or after 1 July 2009); • Amendments to IAS 32 “Financial Instruments: Presentation” – Accounting for rights issues (effective for annual periods beginning on or after 1 February 2010); • Amendments to IAS 39 “Financial Instruments: Recognition and Measurement” - Eligible hedged items (effective for annual periods beginning on or after 1 July 2009); Page 11 of 45
  12. 12. Zakłady Tłuszczowe „Kruszwica” S.A. Quarterly Condensed Financial Statements • IFRS (2009) Amendments to IFRS resulting from the Annual quality improvement project of IFRS published on 16 April 2009 (IFRS 2, IFRS 5, IFRS 8, IAS 1, IAS 7, IAS 17, IAS 18, IAS 36, IAS 38, IAS 39, IFRIC 9, IFRIC 16) primarily with a view to removing inconsistencies and clarifying wording, (most amendments are to be applied for annual periods beginning on or after 1 January 2010); • Interpretation IFRIC 17 “Distributions of Non-cash Assets to Owners” (effective for annual periods beginning on or after 1 July 2009); • IFRIC Interpretation 18 “Transfer of Assets from Customers "- (applicable to the transactions taking place on or after 30 June 2009). The Company decided not to exercise the possibility of earlier application of the above standards, amendments to standards and interpretations. According to the Company’s estimates, the abovementioned standards, interpretations and amendments to standards would not have had a significant effect on the financial statements, if they had been adopted by the Company as at the balance sheet date. Standards and interpretations adopted by IASB, but not approved by the EU At present, IFRS in the form adopted by the EU do not differ significantly from regulations adopted by the International Accounting Standards Board (IASB), except for the following standards as well as amendments to standards and interpretations which as at the date of publication of the financial statements had not been yet adopted for use: • IFRS 1 (revised) “First-time Adoption of International Financial Reporting Standards” (effective for annual periods beginning on or after 1 July 2009); • IFRS (2009) Amendments to IFRS resulting from the Annual quality improvement project of IFRS published on 16 April 2009 (IFRS 2, IFRS 5, IFRS 8, IAS 1, IAS 7, IAS 17, IAS 18, IAS 36, IAS 38, IAS 39, IFRIC 9, IFRIC 16) primarily with a view to removing inconsistencies and clarifying wording, (most amendments are to be applied for annual periods beginning on or after 1 January 2010); • Amendments to IAS 24 “Related Party Disclosures” - Simplifying the disclosure requirements for government- related entities and clarifying the definition of a related party (effective for annual periods beginning on or after 1 January 2011); • Amendments to IAS 32 “Financial Instruments: Presentation” – Accounting for rights issues (effective for annual periods beginning on or after 1 February 2010); • Amendments to IFRS 1 “First-time Adoption of IFRS”- Additional Exemptions for First-time Adopters (effective for annual periods beginning on or after 1 January 2010); • Amendments to IFRS 2 “Share-based Payment” - Group cash-settled share-based payment transactions (effective for annual periods beginning on or after 1 January 2010); • Amendments to IFRS 7 “Financial Instruments - Disclosures” - improved quality of disclosed information on financial instruments (effective for annual periods beginning on or after 1 January 2009); • Amendments to IFRIC 9 “Reassessment of Embedded Derivatives” and IAS 39 “Financial Instruments: Recognition and Measurement” - Embedded derivatives (effective for annual periods ending on or after 30 June 2009); • Interpretation IFRIC 17 “Distributions of Non-cash Assets to Owners” (effective for annual periods beginning on or after 1 July 2009); • IFRIC Interpretation 18 “Transfer of Assets from Customers "- (effective for the transactions taking place on or after 30 June 2009). According to the Company’s estimates, the abovementioned standards, interpretations and amendments to standards would not have had a significant effect on the financial statements, if they had been adopted by the Company as at the balance sheet date. In addition, hedge accounting principles applicable to the portfolios of financial assets or liabilities continue to remain outside the scope of regulations adopted by the EU, as they have not been approved for use in the EU. According to the Company’s estimates, application of hedge accounting principles with respect to the portfolio of financial assets or liabilities in line with IAS 39 “Financial Instruments: Recognition and Measurement” would not have had a material impact on the financial statements if they had been adopted for use as at the balance sheet date. Page 12 of 45
  13. 13. Zakłady Tłuszczowe „Kruszwica” S.A. Quarterly Condensed Financial Statements Earlier adoption of standards and interpretations The Company decided to use the possibility of early adoption of the below mentioned standards applicable to accounting for the business combination transaction conducted by the Company in the first half of 2009 (further information on the business combination is presented in “Changes in the structure of the entity”): • Revision of IFRS 3 "Business Combinations” – endorsed in the EU on 3 June 2009 (effective for annual periods beginning on or after 1 July 2009); • Amendments to IAS 27 “Consolidated and Separate Financial Statements” – endorsed in the EU on 3 June 2009 (effective for annual periods beginning on or after 1 July 2009). Apart from the aforementioned standards, the Company did not decide about early adoption of any other standards, amendments to standards and interpretations. Basis for the preparation of the financial statements These financial statements have been prepared in accordance with the historical cost principle, except for the measurement of financial instruments that were disclosed at their fair value. The financial statements were prepared assuming that the Company would continue business activities for at least 12 months after the balance sheet date. The Company’s Management Board believes that there are no circumstances indicating that business continuity in that period may be threatened. The financial statements were prepared in Polish zlotys (PLN). The Company's functional currency is Polish zloty and its business operations are denominated in this currency. All the figures are presented in thousands of PLN (PLN’000), following the principle that amounts lower than PLN 500 are skipped, whereas amounts of PLN 500 and more are increased to full thousands of PLN. Appropriate information is provided in case any data are presented in other units of value. Change in the accounting principles applied Changes in presentation of financial statements As far as presentation of financial statements is concerned, the Company modified its statement of changes in equity following adoption of the revised IAS 1 as described in item Application of the revised IAS 1, starting from 1 January 2009 and changed the manner of presentation of certain items disclosed in the statement of comprehensive income. Such changes resulted from other qualification of certain revenue and expenses to specific items of that statement, including primarily other operating revenue, other operating expenses, as well as general administrative expenses and cost of products sold. These changes have no impact on the net financial profit/loss. The differences resulting from the restatement of comparative data for 9 months of the previous year and the third quarter of 2008, as disclosed in the statement of comprehensive income are presented in the tables below: Page 13 of 45
  14. 14. Zakłady Tłuszczowe „Kruszwica” S.A. Quarterly Condensed Financial Statements STATEMENT OF COMPREHENSIVE INCOME For the 9-month period ended 30 September 2008 Data disclosed in the published consolidated Restated data Difference financial statements PLN’000 PLN’000 PLN’000 Revenue Revenue from sales of products 1,518,991 1,518,991 - Revenue from sales of goods 52,182 52,182 - Other operating revenue 9,831 9,997 166 Total revenue 1,581,004 1,581,170 166 Expenses Cost of products sold (1,193,044) (1,180,753) 12,291 Cost of goods sold (49,405) (49,405) - Selling expenses (47,743) (47,739) 4 General and administrative costs (106,643) (110,084) (3,441) Exchange gains/losses (8,754) (18,537) (9,783) Profit/loss on sale of fixed assets and other (1,191) (1,191) - expenses related to fixed assets Other operating expenses (5,974) (5,211) 763 Total expenses (1,412,754) (1,412,920) (166) Operating profit 168,250 168,250 - Financial expenses and revenue (22,998) (22,998) - Pre-tax profit from continuing operations 145,252 145,252 - Income tax (27,696) (27,696) - current portion (34,120) (34,120) - deferred portion 6,424 6,424 - Net profit 117,556 117,556 - Page 14 of 45
  15. 15. Zakłady Tłuszczowe „Kruszwica” S.A. Quarterly Condensed Financial Statements STATEMENT OF COMPREHENSIVE INCOME For the 3-month period ended 30 September 2008 Data disclosed in the published consolidated Restated data Difference financial statements PLN’000 PLN’000 PLN’000 Revenue Revenue from sales of products 530,243 530,243 - Revenue from sales of goods 27,664 27,664 - Other operating revenue 1,765 3,012 1,247 Total revenue 559,672 560,919 1,247 Expenses Cost of products sold (416,670) (416,183) 487 Cost of goods sold (24,393) (24,393) - Selling expenses (14,760) (14,760) - General and administrative costs (39,517) (37,574) 1,943 Exchange gains/losses (7,842) (9,962) (2,120) Profit/loss on sale of fixed assets and other (1,591) (1,591) - expenses related to fixed assets Other operating expenses (498) (2,055) (1,557) Total expenses (505,271) 506,518 (1,247) Operating profit 54,401 54,401 - Financial expenses and revenue (8,108) (8,108) - Pre-tax profit from continuing operations 46,293 46,293 - Income tax (8,568) (8,568) - current portion (14,650) (14,650) - deferred portion 6,082 6,082 - Net profit 37,725 37,725 - Changes in recognition of foreign exchange differences The Company changed its accounting policy in the scope of foreign exchange rates it applies to: • measurement of cash inflows and outflows in foreign currencies. The buy and sell currency rates of the leading bank, which used to be applied for recalculation of collections of receivables and payments of liabilities, respectively, were replaced with one exchange rate – the average exchange rate of the National Bank of Poland (NBP) in effect on the date of foreign currency inflows or outflows. The effective NBP average exchange rate is the average exchange rate announced by the National Bank of Poland on the prior business day. The average NBP exchange rate is the mid exchange rate published by the National Bank of Poland on the prior business day. • valuation of foreign currency assets and liabilities as at the balance sheet date. The buy and sell currency rates of the leading bank, which the Company used to apply for measurement of receivables and liabilities, respectively, were replaced with one exchange rate – the average exchange rate of the European Central Bank (ECB) in effect on the balance sheet date. The rationale behind such change was to apply uniform exchange rates for measurement of cash receivables and liabilities at the balance sheet date, as well as for valuation of currency derivatives at fair value at the balance sheet date, in both cases based on the applicable ECB exchange rates. For valuation of currency derivatives the Company uses the model applied in the Bunge Group. Under this model currency derivatives are valued on the basis of the current ECB exchange rates. The Company did not determine the impact of the above described change in the accounting policy on the current financial result, nor did it restate the comparative data for the prior year's corresponding period, because the effort and cost of making such estimation would be disproportionately high in relation to the expected benefits for the financial statements. Apart from the aforementioned changes in the accounting principles, the Company applied the same accounting policies and calculation methods as described in detail in the 2008 annual financial statements. Page 15 of 45
  16. 16. Zakłady Tłuszczowe „Kruszwica” S.A. Quarterly Condensed Financial Statements INFORMATION ON MATERIAL CHANGES OF ESTIMATED VALUES. Deferred tax assets and liabilities As at 30 September 2009, deferred tax asset amounted to PLN 20,876 thousand and in the third quarter it increased by PLN 5,325 thousand (vs. PLN 15,551 thousand as at 30 June 2009). Such change resulted from the following adjustments: Decrease: - release of write-downs on inventories 29 - decrease in write-downs on irrecoverable receivables 38 - decrease in estimated provision for incentives and annual bonuses for employees 256 - decrease in estimated provision for unused paid vacations 186 - decrease in cost accruals and other provisions 42 Increase: - increase in estimated unrealized losses on derivatives 1.591 - increase in realized gains on derivatives 83 - increase in accrued deferred discounts 267 - increase in accrued unpaid interest on loans 453 - increase in deviations from the standard prices of rapeseed 3,442 - increase in provision for jubilee bonuses and retirement benefits 40 As at 30 September 2009, deferred tax liability amounted to PLN 34,411 thousand and increased by PLN 2,840 thousand as compared to PLN 31,571 thousand reported as at 30 June 2009. Such change resulted from the following adjustments: Decrease: - lower difference between the balance sheet value and tax value of fixed assets and 478 intangible assets - other items 70 Increase: - increase in estimated unrealized gains on derivatives 3.194 - increase in realized losses on derivatives 194 Provisions for future liabilities. In the third quarter of 2009 the Company changed the value of provisions for future liabilities due to employment benefits (retirement and pension benefits, jubilee bonuses, remunerations and related social insurance, unused paid vacations and annual bonuses). As a result of changing the estimates of these provisions as well as due to their application in the third quarter of 2009, the amount of the provisions grew by PLN 140 thousand up to PLN 22,155 thousand as at 30 September 2009 (vs. PLN 22,015 thousand as at 30 June 2009). Revaluation write-downs on receivables. In the third quarter of 2009 the Company reduced its revaluation write-downs on receivables under composition, conciliatory or bankruptcy proceedings (that have been previously guaranteed or otherwise secured), on receivables in dispute as well as on past due receivables, by the total amount of PLN 381 thousand which comprised the following items: - increase in revaluation write-downs 210 - decrease due to cancellation 5 - decrease due to collection 586 As at 30 June 2009 the Company's write-downs on receivables amounted to PLN 11,242 thousand, as compared to PLN 10,861 thousand as at 30 September 2009. Page 16 of 45
  17. 17. Zakłady Tłuszczowe „Kruszwica” S.A. Quarterly Condensed Financial Statements Revaluation write-downs on inventories. As at 30 June 2009 the Company's write-downs on inventories equaled PLN 559 thousand. During the third quarter of 2009 the following changes took place: - write-down created 269 - write-down reduced 56 The write-down was related to pallets, as the Company was unable to collect them from clients. As at 30 September 2009 revaluation write-downs on inventories amounted to PLN 772 thousand. Impairment write-downs on property, plant and equipment and intangible assets As at 30 September 2009, impairment write-downs on property, plant and equipment and intangible assets amounted to PLN 1,095 thousand and they remained unchanged over the third quarter of 2009 and as at 30 September 2009 they equaled PLN 1,095 thousand. SIGNIFICANT SUCCESSES AND FAILURES OF THE ISSUER DURING THE REPORTING PERIOD On 27 February 2009, the District Court in Bydgoszcz registered the combination of the Company’s business with its subsidiary, Zaklady Przemysłu Tłuszczowego w Warszawie S.A. (ZPT w Warszawie S.A.). The combination of ZT Kruszwica S.A. (the Acquirer) with ZPT w Warszawie S.A. (the Acquiree) was based on Article 492 clause 1 point 1 of the Code of Commercial Companies, i.e. by transfer of all Acquiree’s assets to the Acquirer in exchange for shares from the business combination issued by the Acquirer (more information regarding the business combination is presented in the note “Changes in the structure of the entity” and “Issuance, redemption and repayment of non-equity and equity securities”). Following the combination, the process of integrating operational structures of both companies commenced. The integration included unification of logistic operations, combination of sales and marketing departments and other general functions. In relation to the integration, during the discussed nine month-period, the Company incurred restructuring costs in the amount of PLN 4,866 thousand, recognized in the statement of comprehensive income. These costs included mainly severance pays of laid-off employees. Unification of trade agreements was another important project commenced in Q1 2009. The Company unified client service standards and created the Trade Marketing Department. In Q3 2009, integration of the logistic structure resulted in significant improvement of logistics efficiency in the combined companies. Logistic warehouses (Trade Divisions) were liquidated, and terms of trade agreements adjusted to the new logistic structure. Additionally, the Company successfully developed a more efficient price and promotion management model. In Q3 2009, an agreement was reached in relation to trade terms with Biedronka retail network regarding the sale of Olej Kujawski. The sale of the product had been suspended in Q1 2009 due to lack of agreement regarding future trade terms between the parties. The fact had not influenced the sales of private brand oil to the Biedronka network. Following the agreement reached in July 2009, the Company resumed supply of Olej Kujawski to the retailer. In May 2009, a serious breakdown of a toaster machine in Kruszwica oil department took place. As a result, production of crude oil from seeds was stopped in this department. The downtime lasted almost a month. Following the breakdown the Company incurred additional costs of repair and rapeseed transport to another plant in the total amount of PLN 1,200 thousand approximately. The Company’s insurer was notified about the resulting damages in order to provide a compensation. At the financial statements date, the liquidation of damages is pending. DESCRIPTION OF ITEMS AFFECTING ASSETS, LIABILITIES, EQUITY, NET PROFIT AND CASH FLOWS THAT ARE EXTRAORDINARY DUE TO THEIR TYPE, SIZE OR EXERTED INFLUENCE In the first three quarters of 2009, the Company generated net profit of PLN 110,032 thousand, i.e. by PLN 7,524 thousand (-6.8%) lower than in the corresponding period of 2008. The profit decrease was accompanied with a drop in product sales value by PLN 22,174 thousand (-1.5%). The level of sales revenues was certainly affected by the toaster machine failure that occurred in May-June at the oil extraction plant in Kruszwica, which was consequently forced to interrupt the production of crude oil for one month. This production downtime resulted in reducing the volume of bulk oil sales by approximately 15 thousand tons. Page 17 of 45
  18. 18. Zakłady Tłuszczowe „Kruszwica” S.A. Quarterly Condensed Financial Statements The structure of sales in terms of revenue and volume is as follows: Change in comparison Three quarters of 2009 YTD to three quarters of 2008 PLN’000 Ton’000 Share(*) PLN’000 Ton’000 Bottled oils 392 135 84 11.8% -20 755 -5 Consumer margarines 209 440 49 6.8% -11 501 -5 Industrial margarines 96 434 28 4.0% 3 251 -1 Industrial fat 67 503 20 2.8% -17 053 -4 Refined and crude oils in bulk 511 434 178 25.0% 33 816 36 Rapeseed meal 206 729 352 49.5% 4 892 11 Other 13 142 - - -14 825 - Total sales of products 1 496 817 711 - -22 174 33 Bottled oils 3 680 1 15.3% 593 0 Refined and crude oils in bulk 3 227 1 20.3% -20 658 -12 Rapeseed meal 2 291 3 64.4% 1 545 2 Other 10 439 - - -14 025 - Sales of goods for resale 19 637 5 - -32 545 -10 (*) – share in the volume of sales of the product group Other operating revenue and other operating expense changed significantly compared to the corresponding period. The value of these items increased by PLN 11,532 thousand (+115,4 %) and PLN 7,886 thousand (+151.3%) respectively. Revenue and expense related to the sale to production of fats for Koelln, Germany in the amount of PLN 8,642 thousand being recognized in other revenue and PLN 8,002 thousand recognized in other operating expense were the key reason of the increase. Detailed information regarding the issue is presented in the note “Related party transactions”. General administrative expenses were significantly reduced by PLN 24,863 thousand (-22.6%). The decrease resulted both from the combination of ZT Kruszwica S.A. with ZPT Warszawa S.A. and from reduced advertisement and promotion costs incurred in the period, related to consolidation of sales and marketing activities of the combined companies (business combination of 27 February 2009, note "Significant successes and failures..." and "Changes in the structure of the entity"). In the first three quarters of 2009, financial expenses amounted to PLN 16,420 thousand, and were PLN 6,578 thousand lower than in the corresponding period of the previous year (-28.6%). They key reason of the financial expenses drop was the reduced share of external funds in the Company’s working capital, resulting mainly from 2008 net profit remaining undistributed as at balance sheet date, i.e. 30 September 2009. Income tax structure changed significantly compared to the previous year. The changes resulted chiefly from recognizing as tax-deductible expenses in 2009 of (i) the losses on derivative instruments concluded in 2008, and (ii) the last year's gaps between the price of rapeseed purchased in 2008 and the cost of purchase as understood by the tax regulations. Compared to the 2008 closing balance, the following items changed significantly in the statement of financial position: As at 30 September 2009, the value of non-current assets decreased by PLN 32,917 thousand (-8.0%) from PLN 412,976 thousand as at 30 September 2008 to PLN 380,059 thousand as at 31 December 2008. The drop in the value of assets results mainly from depreciation write-offs that reduce value of tangible and intangible assets and from low level of expenditure for replacement and acquisition of non-current assets in the last three quarters. The value of inventory grew significantly by PLN 44,964 thousand. The increase resulted mainly from the growth of rapeseed inventory level resulting from the standard operational cycle of the Company. A decrease in the value of trade receivables from PLN 160,101 thousand as at 31 December 2008 to PLN 133,854 thousand as at 30 September 2009 has resulted mainly from seasonality of the Company’s business expressed as an increase in sales of bottled oils and margarines in Q1 and Q4 compared to Q2 and Q3 of the calendar year. Deferred tax assets drop resulted from losses on derivatives being reclassified from non-tax deductible in 2008 to tax deductible in 2009. The Company equity structure changed as a result of combination of ZT Kruszwica S.A. as the parent and ZPT w Warszawie S.A. as the subsidiary on 27 February 2009. The issuance of a new series of shares resulted in an increase of the share capital and in the share premium. Additionally, in June 2009, Extraordinary General Shareholders Meeting decided to pay dividend in the amount of PLN 68,961 thousand. Decrease in the debt level by PLN 96,702 thousand (-21.4%) from the level of PLN 452,113 thousand to PLN 355,411 thousand results from accumulation of additional cash from profit generated in 2009 and the use of cash from 2008 profit undistributed as at the balance sheet date. Page 18 of 45
  19. 19. Zakłady Tłuszczowe „Kruszwica” S.A. Quarterly Condensed Financial Statements Financial liabilities dropped from PLN 78,486 thousand to PLN 14,397 thousand (-81.7%). The decrease in the amount of financial liabilities by PLN 64,089 thousand resulted mainly from the stabilized exchange rate of PLN in the first quarter of 2009. The high level of liabilities as at the end of 2008 had resulted from depreciation of PLN that generated losses on unsettled currency forward contracts hedging foreign exchange risk and concluded in 2008. The discussed contracts are described in note 9. Trade liabilities increased by PLN 46,490 thousand (+43.3%). The increase has no extraordinary reasons and results from agreed terms of payment related to supplies of goods. The Company pays all its liabilities within the due deadline. Adjustment of operating cash flows changed significantly compared to the previous year (increase by PLN 77,198 thousand) due to a change in value of short-term liabilities. The change resulted from dividend liabilities in the amount of PLN 68,961 thousand being recognized in the statement of financial position for the nine months of 2009. The relevant adjustment of the non-cash item was introduced in operating cash flows, in “Other adjustments”. Both in the nine months of 2009 and in the entire 2008 there were no instances of the Company's failure to pay loans or interest, or to perform under the provisions the escrow account for settlement of liabilities, or under the terms of repayment of such loan liabilities. Furthermore, the Company did not breach the terms of any loan agreement nor did it renegotiate the terms of payment of loan commitments before the date of approving these financial statements. SEASONAL AND CYCLICAL NATURE OF BUSINESS The Company's business operations are affected by seasonality of certain important factors determining the achieved financial results, which include: - cost of raw materials – rapeseed; - sales volume; - raw materials inventory. Most of the Company's purchases of rapeseed are made during the harvest (July, August) and then the seed is processed until the next harvest time. Rapeseed is the main raw material used in manufacturing of finished products by the Company, and it accounts for approx. 70% of the total cost of products sold. The purchase price of rapeseed is determined by its current quotations on the European commodity exchanges at the time of purchase. Hence, during a financial year (which in the Company's case corresponds to the calendar year) the unit cost of rapeseed consumption changes at the beginning of the second half-year when consumption of the newly-supplied rapeseed crops is commenced; this may have a substantial impact on the Company's financial performance in comparison with the first six months of a year. Also the volume of rapeseed inventory is subject to sizeable changes during a year. The lowest inventory level is observed at the end of June to be subsequently recovered during the coming purchasing campaign, which results in increased borrowings being the main source of financing of rapeseed purchases. Fluctuations in the level of debt are a consequence of seasonality in the acquisition of rapeseed. During the purchasing process, the need for external financing increases substantially and in the following months it is gradually reduced as the loan installments are paid back. However, in recent years there is a tendency to buy more rapeseed outside the harvest time, which helps mitigate the discussed seasonality effects to some extent. Some seasonality is also observed in the purchases of oil by the biofuel industry. The third quarter is the period when the biofuel companies increase their purchases of rapeseed oil forced by the need to achieve the target share of biofuel in traditional fuel, thus triggering additional demand for the Company product. Additionally, in winter refineries purchase less rapeseed oil than in summer, which results in seasonal changes of oil sales to that sector. The sales value of bottled oils and margarines also demonstrate seasonal changes, with increased sales level in Q1 and Q4. Page 19 of 45
  20. 20. Zakłady Tłuszczowe „Kruszwica” S.A. Quarterly Condensed Financial Statements OPERATING SEGMENTS Operating segments identified The identified and disclosed operating segments result from the divisions made for the Company's internal management purposes as well as for the purpose of consolidation with the Bunge Group. The Company has identified two key operating segments: - Agricultural Commodities Segment (Agri), - Food Products Segment (Food). Agricultural Commodities Segment (Agri) includes: - rapeseed processing – purchases of rapeseed, sales of raw/degummed rapeseed oil, rapeseed meal, or resale of rapeseed to external customers or to the Food segment; - trading in other oils – purchases of other crude or refined oils (including rapeseed oil) from third parties intended for resale to external customers or to the Food segment. The Food Products Segment (Food) involves activities from the purchase of crude and refined oils from our Agri segment (originally bought from third parties), through the sale of refined oils, bottled oils, consumer and industrial margarines, and confectionery fat. The Food segment does not sell any goods to the Agri segment. Reconciliation of sales volume, revenues and costs in inter-segment transactions Due to the adopted identification of operating segments, the Company conducts inter-segment transactions which involve sales (from the Agri segment to the Food segment) of crude rapeseed oil and other vegetable, crude or refined, oils purchased elsewhere, which are subsequently used for production of finished products. The volume of intersegment transactions at every balance sheet date is measured as the equivalent of production sold, this is as the amount of oils needed to produce the quantity of finished products sold by the Food segment in a given period. The raw material oil prices as applied in the inter-segment sales (the transfer prices) correspond to the market prices quoted on commodity exchanges, and they are effective over various periods depending on the assortment of finished products of the Food segment. In the case of refined rapeseed oil being sold to external customers, the transfer prices from the Agri segment to Food segment are determined by deducting a fixed refining premium applicable for the given period on the basis of the market refining premiums (the difference between the market prices of refined oil and crude oil) from the actual prices achieved in external sales by the Food segment. The cost of goods/materials sold in intersegment transactions is measured as follows: - for sales of self-produced crude rapeseed oils – the current standard price of rapeseed, adjusted by the actual production gains and the selling price of rapeseed meal (main by-product obtained during production of crude oil); - for sales of other raw materials – at historical cost of purchase. Allocation of other operating components in the income statement Cost of production – direct production costs (incurred by production departments) are allocated to individual reportable segments in line with the allocation of types of products manufactured; indirect production costs (incurred by support departments and administration of production departments) are allocated to individual segments using fixed allocation coefficients determined for the given financial year on the basis of the planned involvement of individual departments in particular product manufacturing. Selling expenses are allocated on the basis of revenues generated by individual reportable segments. All expenses incurred in transactions of selling the products and goods for resale attributable to the Agri segment are allocated to this segment. Likewise, all the expenses incurred in transactions of selling the products and goods for resale attributable to the Food segment are allocated to that segment. General administrative expenses are allocated according to attribution of particular operating departments to reportable segments. Such attribution is based on the type of activities performed by each department. The costs of central administration departments that manage both areas of operations are split equally between the operating segments. Page 20 of 45
  21. 21. Zakłady Tłuszczowe „Kruszwica” S.A. Quarterly Condensed Financial Statements Exchange differences: Differences arising from financial instruments are allocated to the Agri segment in the following scope: - all unrealized gains/losses on currency derivatives; - realized gains/losses on the execution of currency derivatives in the portion relating to the realized hedges in Agri segment and subject to hedge accounting; - all realized gains/losses on currency derivatives excluded from hedge accounting. A portion of realized gains/losses on the execution of hedging transactions, subject to hedge accounting, which are used to hedge the value of sales of refined bulk oil is allocated to the Food segment. The remaining foreign exchange differences resulting from measurement of the balance sheet items or from making/receiving payments in foreign currencies are allocated to the Agri segment. Items of the statement of comprehensive income are allocated to individual segments only up to the level of operating profit. Allocation of balance sheet items Inventories The criteria for allocation of inventories are coherent with the rules followed in recognition of the segment revenues, which enables detailed identification of inventories allocated to either operating segment. Settlements with suppliers and customers Both the Company's suppliers and customers have been attributed to each segment according to the type of product/material purchased or the type of product/merchandise sold, respectively. This allows identification of all liabilities/receivables pertaining to each segment. Correctness of the allocations is reviewed once a year. Fixed assets Fixed assets are allocated to individual segments in accordance with the allocation of costs, i.e. by assigning of particular operating departments to reportable segments. Fixed assets under construction Increases in the value of fixed assets in the Agri segment are recognized exclusively at the moment of fixed asset commissioning. Total outlays for fixed assets under construction are recognized in the Food segment. Intangible assets Intangible assets are allocated to individual segments based on their detailed identification with the segment’s assets. Goodwill Goodwill is not allocated to any segment. Debt Debt is allocated to reportable segments proportionally to the structure of net assets. Other balance sheet items Any balance sheet items which are not included in the primary allocation are discretely allocated to the Food segment. The allocation is based on the assumption that any settlements with third parties which do not result from sale or purchase transactions are recognized in that segment. Key measures and criteria for assessing the performance of business segments The Company uses two basic measures to assess its business segment performance: - EBIT - RONA Return on net assets (RONA) is based only on working assets, having eliminated fixed assets under construction from non-current assets. This assumption is important, since it eliminates outlays increasing the value of non-current assets in the Agri segment from the Food segment. Below please find key financial data regarding the operating segments. Page 21 of 45
  22. 22. Zakłady Tłuszczowe „Kruszwica” S.A. Quarterly Condensed Financial Statements Segment assets and liabilities (1 AGRI FOOD Unallocated items TOTAL End of period End of period End of period End of period End of period End of period End of period End of period 30/09/2009 30/09/2008 30/09/2009 30/09/2008 30/09/2009 30/09/2008 30/09/2009 30/09/2008 PLN’000 PLN’000 PLN’000 PLN’000 PLN’000 PLN’000 PLN’000 PLN’000 Assets Non-current assets 136,052 150,102 298,904 319,296 83,793 83,793 518,749 553,191 including investments in progress - - 7,628 12,895 - - 7,628 12,895 Current assets 589,115 532,222 191,328 362,059 - - 780,443 894,281 Total assets 725,167 682,324 490,232 681,355 83,793 83,793 1,299,192 1,447,472 Liabilities Non-current liabilities 1,137 1,311 47,161 44,436 - - 48,298 45,747 Current liabilities 146,745 190,800 158,080 185,076 304,825 375,876 Total liabilities 147,882 192,111 205,241 229,512 - - 353,123 421,623 Net assets 577,285 490,213 284,991 451,843 83,793 83,793 946,069 1,025,849 Debt 27,434 86,118 13,452 79,378 - - 40,886 165,496 Debt adjusted net assets 604,719 576,331 298,443 531,221 83,793 83,793 986,955 1,191,345 1) Goodwill Page 22 of 45
  23. 23. Zakłady Tłuszczowe „Kruszwica” S.A. Quarterly Condensed Financial Statements Revenue and profit/loss per segment and other information AGRI FOOD TOTAL EXCLUSIONS 9-month period 9-month period 9-month period 9-month period 9-month period 9-month period 9-month period 9-month period ended ended ended ended30/09/200 ended ended30/09/200 ended ended30/09/200 30/09/2009 30/09/2008 30/09/2009 8 30/09/2009 8 30/09/2009 8 PLN’000 PLN’000 PLN’000 PLN’000 PLN’000 PLN’000 PLN’000 PLN’000 Revenue Sales to third parties 581,527 508,184 956456 1,072,986 - - 1,537,983 1,581,170 Inter-segment sales 545,815 401,805 - - (545,815) (401,805) - - Total revenue 1,127,342 909,989 956,456 1,072,986 (545,815) (401,805) 1,537,983 1,581,170 EBIT 93,390 91,096 58,823 77,154 - - 152,213 168,250 Other information Capital expenditure 607 - 1,687 4,430 - - 2,294 4,430 Depreciation of fixed assets 12,481 10,832 22,149 24,455 - - 34,630 35,287 Amortization of intangible assets - - 2,119 37 - - 2,119 37 Impairment losses on tangible and intangible - - (5) (1,343) - - (5) (1,343) assets Page 23 of 45
  24. 24. Zakłady Tłuszczowe „Kruszwica” S.A. Quarterly Condensed Financial Statements Revenue from sales of key products and services AGRI FOOD TOTAL 9-month period 9-month period 9-month period 9-month period 9-month period 9-month period ended ended30/09/20 ended ended30/09/20 ended ended30/09/20 30/09/2009 08 30/09/2009 08 30/09/2009 08 PLN’000 PLN’000 PLN’000 PLN’000 PLN’000 PLN’000 Revenue from sales of products Bulk oil 356 641 266 524 154 793 211 095 511 434 477 619 Rapeseed meal 206 729 201 837 - - 206 729 201 837 Bottled oils - - 392 135 412 890 392 135 412 890 Table margarines - - 209 440 220 941 209 440 220 941 Industrial margarines - - 96 434 93 183 96 434 93 183 Confectionery fat - - 67 503 84 556 67 503 84 556 Other 1 515 1 776 11 627 26 189 13 142 27 965 Sale of products 564 885 470 137 931 932 1 048 854 1 496 817 1 518 991 Revenue from sales of goods Bulk oil 3 227 13 314 - 10 571 3 227 23 885 Rapeseed meal 2 291 746 - - 2 291 746 Bottled oils - - 3 680 3 087 3 680 3 087 Sunflower meal 3 761 - - - 3 761 - Rapeseed 724 16 125 - - 724 16 125 Other 5 934 7 784 20 555 5 954 8 339 Sale of goods 15 937 37 969 3 700 14 213 19 637 52 182 Total sales 580 822 508 106 935 632 1 063 067 1 516 454 1 571 173 RONA AGRI FOOD TOTAL End of period End of period End of period End of period End of period End of period 30/09/2009 30/09/2008 30/09/2009 30/09/2008 30/09/2009 30/09/2008 PLN’000 PLN’000 PLN’000 PLN’000 PLN’000 PLN’000 Average assets 693,473 632,631 595,013 723,393 1,288,486 1,356,024 Average liabilities 263,605 277,920 283,082 341,446 546,687 619,366 Fixed assets under construction - - 7,628 12,895 7,628 12,895 Average net operating assets 429,868 354,711 304,304 369,052 734,172 723,763 Operating profit 93,390 91,096 58,823 77,154 152,213 168,250 Income tax (on operating profit) 17,744 17,308 11,176 14,660 28,920 31,968 Operating profit after tax 75,646 73,788 47,647 62,494 123,293 136,282 RONA 23.5 % 27.7% 20.9% 22.6% 22.4 % 25.1% Page 24 of 45
  25. 25. Zakłady Tłuszczowe „Kruszwica” S.A. Quarterly Condensed Financial Statements Information regarding geographical regions AGRI FOOD TOTAL 9-month period 9-month period 9-month period 9-month period 9-month period 9-month period ended ended30/09/200 ended ended30/09/200 ended ended30/09/200 30/09/2009 8 30/09/2009 8 30/09/2009 8 PLN’000 PLN’000 PLN’000 PLN’000 PLN’000 PLN’000 Revenue from external clients POLAND 369,161 353,111 869,423 1,027,507 1,238,584 1,380,618 GERMANY 78,245 84,783 46,486 10,588 124,731 95,371 OTHER COUNTRIES 134,122 70,290 40,546 34,891 174,668 105,181 581,528 508,184 956,455 1,072,986 1,537,983 1,581,170 Key account data The Company's sales to external customers are not subject to concentration where a single client would generate 10 or more percent of the Company's total sales revenues in the reporting period. RELATED PARTY TRANSACTIONS Vast majority of the Company's transactions with related entities were conducted with the Bunge Group companies. It is the Bunge Group policy to execute its intercompany contracts at the transfer prices on the arms-length terms. By providing a description of such transactions, the Company attempts to ensure access to information necessary to draw readers’ attention to the probability of its financial standing being impacted by the existence of related parties and presented transactions, not reconciled balances of receivables or liabilities among such parties. The following tables present total amounts of transactions concluded with the Bunge Group entities and with other related parties. Jointly controlled entities listed in the following tables are those controlled by Koninklijke Bunge BV. Akpol Spedycja Międzynarodowa Sp. z o.o. is related to the Company through the wife of a Management Board member being a majority shareholder of Akpol Sp. z o.o. Page 25 of 45

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