SEPARATE FINANCIAL STATEMENTS in accordance with the International Financial Reporting Standards for the fiscal year commenced October 1, 2015 and ended September 30, 2016
9 grudnia 2013
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
Warsaw, December 16, 2016
Jan Maciejewicz
Roman Durka
Jakub Leśniewski
President of the Management Board
Vice-President of the Management Board
Vice-President of the Management Board for Finance
……………………………
……………………………
……………………………
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
Table of contents
Separate statement of comprehensive income .................................................................................................................. 5
Separate balance sheet ................................................................................................................................................... 6
Separate statement of changes in equity .......................................................................................................................... 7
Separate statement of cash flows .................................................................................................................................... 8
Supplemental information ............................................................................................................................................... 9
1. General information ........................................................................................................................................... 9
1.1 Sygnity S.A. ........................................................................................................................................... 9
1.2 Supervisory Board .................................................................................................................................. 9
1.3 Management Board .............................................................................................................................. 10
1.4 Auditor ................................................................................................................................................ 10
2. Basis for preparation of the financial statements ................................................................................................ 11
3. Basic accounting principles ............................................................................................................................... 13
3.1 Application of the new standards, changes to standards and interpretation ............................................. 13
3.2 Changes to accounting principles and to data presentation ..................................................................... 14
3.3 Relevant accounting principles .............................................................................................................. 14
4. Financial risk management ............................................................................................................................... 26
4.1 Financial risk factors............................................................................................................................. 26
4.1.1 Market risk .................................................................................................................................... 26
4.1.2 Credit risk ...................................................................................................................................... 26
4.1.3 Liquidity risk .................................................................................................................................. 27
4.2 Capital risk management ...................................................................................................................... 28
5. Important estimates and accounting assessments ............................................................................................. 29
6. Information on operating segments .................................................................................................................. 30
7. Approval of financial statements for the fiscal year 2014/2015 ........................................................................... 30
8. Sales revenues ................................................................................................................................................ 31
9. Costs by type and cost of goods and services sold ............................................................................................. 31
10. Other operating revenues ................................................................................................................................. 32
11. Other operating expenses ................................................................................................................................ 32
12. Financial revenues ........................................................................................................................................... 33
13. Financial expenses ........................................................................................................................................... 33
14. Income tax ...................................................................................................................................................... 33
14.1 Tax burden .......................................................................................................................................... 33
14.2 Effective tax rate reconciliation ............................................................................................................. 34
14.3 Deferred income tax............................................................................................................................. 35
14.4 Tax loss to be deducted in future periods .............................................................................................. 35
14.5 Tax settlements ................................................................................................................................... 36
15. Loss per share ................................................................................................................................................. 36
16. Tangible fixed assets ....................................................................................................................................... 37
17. Intangible assets ............................................................................................................................................. 39
18. Goodwill impairment test .................................................................................................................................. 41
19. Investments in codependent entities ................................................................................................................. 42
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements
4
20. Shares and interests in subsidiaries................................................................................................................... 43
21. Financial assets ............................................................................................................................................... 45
22. Inventory ........................................................................................................................................................ 45
23. Trade receivables and other receivables ............................................................................................................ 46
24. Long-term contracts......................................................................................................................................... 48
25. Cash and cash equivalents ............................................................................................................................... 49
26. Equity ............................................................................................................................................................. 49
26.1 Share capital ......................................................................................................................................... 49
Shareholder structure ...................................................................................................................................... 49
Treasury shares ............................................................................................................................................... 49
26.2 Shares of Sygnity S.A. held by Members of Management Board and Members of Supervisory Board ........... 50
26.3 Other capital items ................................................................................................................................ 51
27. Employee share schemes ................................................................................................................................. 51
2011 Program ................................................................................................................................................. 51
2013 Program ................................................................................................................................................. 51
28. Interest-bearing bank credits and loans ............................................................................................................ 52
29. Bond liabilities and other financial liabilities ....................................................................................................... 53
30. Provisions........................................................................................................................................................ 55
31. Trade liabilities and other liabilities ................................................................................................................... 56
32. Deferred income .............................................................................................................................................. 57
33. Associates and transactions with associates....................................................................................................... 57
34. Compensation of the top management.............................................................................................................. 58
35. Structure of employment .................................................................................................................................. 59
36. Contingent liabilities ......................................................................................................................................... 59
37. Seasonal or periodical nature of operations ....................................................................................................... 60
38. Claims and disputes ......................................................................................................................................... 60
39. Events after the reporting period ...................................................................................................................... 60
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements
5
Separate statement of comprehensive income
Period:
Period:
from Oct. 1, 2015
from Oct. 1, 2014
Note to Sep. 30, 2016
to Sep. 30, 2015
Audited
Audited
Adjusted*
Net revenue from sales
Revenue from sales of products and services 8 337 605
368 612
Revenue from sales of goods and materials 8 59 862
39 910
397 467
408 522
Cost of products, goods and materials sold
Cost of producing the products and services sold 9 (288 830)
(308 686)
Value of goods and materials sold 9 (52 826)
(35 126)
(341 656)
(343 812)
Gross profit on sales
55 811
64 710
Cost of sales 9 (20 472)
(19 273)
Overhead costs 9 (36 810)
(43 707)
Other operating income 10 1 817
3 768
Other operating expenses 11 (303)
(1 618)
Operating profit
43
3 880
Financial income 12 585
373
Financial expenses 13 (4 030)
(4 543)
Result on financial operations
(3 445)
(4 170)
Write-down of joint-venture 19 (344)
-
Loss before tax
(3 746)
(290)
Income tax 14 (6 755)
(3 700)
Net loss
(10 501)
(3 990)
Other comprehensive income
-
-
Revaluation of provision for pension benefits
2
-
Total loss
(10 499)
(3 990)
Basic and diluted loss per share (in PLN) 15 (0.92)
(0.35)
* - adjusted data. For details see note 3.2
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements
6
Separate balance sheet
As of:
As of:
Note Sep. 30, 2016
Sep. 30, 2015
Audited
Audited
ASSETS
Fixed assets
Tangible fixed assets 16 8 762
5 892
Intangible assets 17 32 856
39 308
Goodwill 18 156 528
156 528
Investments in joint-ventures 19 2 564
2 908
Shares and interests in subsidiaries 20 50 775
50 775
Long-term receivables 23 3 166
3 403
Deferred income tax assets 14 -
1 208
254 651
260 022
Current assets
Inventory 22 19 120
5 827
Trade receivables and other receivables 23 187 242
178 357
Short-term loans 21 2 404
904
Cash and short-term deposits 25 61 668
1 476
270 434
186 564
TOTAL ASSETS
525 085
446 586
LIABILITIES
Equity
Share capital 26.1 15 082
15 082
Treasury shares 26.1 (7 234)
(5 929)
Share premium 26.3 211 902
211 902
Spare capital 26.3 22 327
22 327
Reserve capital 26.3 6 238
6 238
Losses carried forward 26.3 (12 535)
(2 036)
235 780
247 584
Long-term liabilities
Long-term bond liabilities 29 39 885
39 793
Financial lease liabilities
-
98
Provisions 30 4 903
8 063
Trade liabilities and other liabilities 31 9 742
-
Deferred income tax provision
5 635
-
60 165
47 954
Short-term liabilities
Credits and loans 28 19 885
30 800
Trade liabilities and other liabilities 31 148 114
108 006
Income tax liabilities
-
46
Bond liabilities 29 486
499
Financial lease liabilities 29 95
1 271
Provisions 30 4 750
4 895
Deferred income 32 55 810
5 531
229 140
151 048
Total liabilities
289 305
199 002
TOTAL LIABILITIES
525 085
446 586
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements
7
Separate statement of changes in equity
Share capital
Treasury shares
Share premium
Spare capital
Reserve capital
Retained earnings /
(losses carried
forward)
TOTAL EQUITY
As of October 1, 2014
15 082
(5 560)
211 902
16 090
-
14 429
251 943
Total comprehensive income:
- net loss
-
-
-
-
-
(3 990)
(3 990)
Allocation of part of net profit of previous year for the spare capital and reserve capital
-
-
-
6 237
6 238
(12 475)
-
Share buyback
-
(369)
-
-
-
-
(369)
As of September 30, 2015
15 082
(5 929)
211 902
22 327
6 238
(2 036)
247 584
As of October 1, 2015
15 082
(5 929)
211 902
22 327
6 238
(2 036)
247 584
Total comprehensive income:
- net loss
-
-
-
-
-
(10 501)
(10 501)
- revaluation of provision for retirement benefits
-
-
-
-
-
2
2
Share buyback
-
(1 305)
-
-
-
-
(1 305)
As of September 30, 2016
15 082
(7 234)
211 902
22 327
6 238
(12 535)
235 780
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 8
Separate statement of cash flows
Period:
Period:
from Oct. 1, 2015
from Oct. 1, 2014
Note to Sep. 30, 2016
to Sep. 30, 2015
Audited
Audited
Cash flows from operating activities
Loss before tax
(3 746)
(290)
Adjustments for:
97 148
(12 733)
Depreciation 9 16 126
14 382
Interest income and expenses
3 416
4 236
Profits on investing operations
(252)
(2 392)
Other adjustments
-
(98)
Change in working capital *
77 858
(28 861)
Net cash generated from operating activities
93 402
(13 023)
Income tax paid
(3 256)
(2 846)
90 146
(15 869)
Cash flows from investing activities
Inflow from sales of tangible fixed assets and intangible assets
-
100 Purchase of tangible fixed assets and intangible assets
(6 942)
(3 426)
R&D expenses
(5 824)
(8 852)
Expenses for purchase of shares and interests
-
(1 085)
Loans granted
(1 500)
(330)
Loans repaid
-
7
(14 266)
(13 586)
Cash flows from financing activities
Expenses for purchase of shares and interests
(1 305)
(369)
Inflows from issue of debt securities 29 -
40 000
Expenses for redemption of debt securities 29 -
(40 000)
(Repayments) / inflows from credits and loans taken on
(10 915)
26 775
Repayment of financial lease liabilities
(456)
(1 810)
Interest paid
(3 012)
(3 231)
(15 688)
21 365
Total net cash flows
60 192
(8 090)
Cash at the beginning of the period
1 476
9 566
Cash at the end of the period
61 668
1 476
*Change in working capital
Change in provisions
(5)
(2 434)
Change in inventory
(13 293)
5 542
Change in receivables
(8 648)
(3 670)
Change in liabilities
49 433
(31 852)
Change in prepayments and accruals
50 371
3 553
Total
77 858
(28 861)
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 9
Supplemental information
1. General information
1.1 Sygnity S.A.
Sygnity S.A. (the “Parent company”, “Entity”, “Sygnity”, “Issuer” or “Company”) is a joint stock company incorporated in Poland, with its registered seat in Warsaw, ul. Franciszka Klimczaka 1, entered into the register of entrepreneurs of the National Court Register kept by the Regional Court, 13th Economic Division of the National Court Register, under KRS number KRS 0000008162. The Company has been assigned the REGON statistical number 190407926. The Company has been established for an indefinite term. Company’s fiscal year commences October 1, and ends September 30. The core business of the Company is software, and IT consultancy and related business. The Company’s offering includes the following IT services:
Software development and implementation,
IT projects consultancy,
Integration of IT systems,
Outsourcing services,
Hardware delivery and installation,
Construction of local and wide area computer networks (LAN and WAN),
Software, network and hardware maintenance services,
Training services.
The Company has been established for an indefinite term. The Company's shares have been listed at the Warsaw Stock Exchange since 1995.
1.2 Supervisory Board
As of September 30, 2016 the Supervisory Board consisted of the following members:
Mr Tomasz Sielicki - Chairman of the Supervisory Board
Mr Kristof Zorde - Vice-Chairman of the Supervisory Board
Mr Piotr Rymaszewski - Member of the Supervisory Board
Mr Piotr Skrzyński - Member of the Supervisory Board
Mr Ryszard Wojnowski - Member of the Supervisory Board
On November 16, 2016 the Extraordinary General Meeting of Shareholders appointed the Supervisory Board for a new three year-long term in office, consisting of the following members who were not replaced as on the day of preparation of these financial statements:
Mr Raimondo Eggink - Chairman of the Supervisory Board
Ms Beata Gessel - Kalinowska vel Kalisz - Member of the Supervisory Board
Mr Tomasz Sielicki - Vice-Chairman of the Supervisory Board
Mr Piotr Skrzyński - Member of the Supervisory Board
Mr Mariusz Bogdan Tokarski - Member of the Supervisory Board
Mr Paweł Zdunek - Member of the Supervisory Board
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 10
1.3 Management Board
As of the day of publication of these financial statements the Management Board of the Company was composed of:
Mr Jan Maciejewicz - President of the Management Board
Mr Roman Durka - Vice-President of the Management Board
Mr Jakub Leśniewski - Vice-President of the Management Board for Finance
During the fiscal year ended September 30, 2016 following changes to the composition of the Management Board occurred:
Between October 1, 2015 and February 12, 2016 the Company's Management Board was as follows:
Mr Janusz R. Guy - President of the Management Board
Mr Jakub Leśniewski - Vice-President of the Management Board for Finance
Ms Magdalena Bargieł - Vice-President of the Management Board for HR
Mr Roman Durka - Vice-President of the Management Board
Mr Bogdan Zborowski - Vice-President of the Management Board for Sales
On February 12, 2016 the Company's Supervisory Board adopted the resolution to appoint Mr Jan Maciejewicz as the Vice-President of the Management Board for the current term and adopted resolutions appointing the following persons as members of the Management Board of the Company:
Mr Janusz R. Guy as President of the Management Board;
Ms Magdalena Bargieł as Vice-President of the Management Board for HR;
Mr Roman Durka as Vice-President of the Management Board;
Mr Jakub Leśniewski as Vice-President of the Management Board for Finance;
Mr Jan Maciejewicz as Vice-President of the Management Board;
for the new common three year term of office that commenced on the day of the General Meeting of Shareholders approving the financial statements for the fiscal year ended September 30, 2015, i.e. on March 24, 2016. On March 24, 2016, on the day the General Meeting of Shareholders that approved the financial statements for the fiscal year ended September 30, 2015 was held the term in office of Mr Bogdan Zborowski as Member of the Management Board has expired. On May 30, 2016 the Supervisory Board of the Company has made a decision to recall Mr Janusz R. Guy – President of the Management Board and Ms Magdalena Bargieł – Vice-President of the Management Board for HR from their positions in the Management Board. At the same time the Supervisory Board of the Company has on May 30, 2016 decided to appoint Mr Jan Maciejewicz, then the Vice-President of the Management Board, as the President of the Management Board of Sygnity. The above listed changes to the Management Board of the Company have no influence on the duration of the present common term of office of the Management Board of Sygnity.
1.4 Auditor
PricewaterhouseCoopers Sp. z o. o.
Al. Armii Ludowej 14
00-638 Warszawa
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 11
2. Basis for preparation of the financial statements
These separate annual financial statements were drawn up in compliance with the International Financial Reporting Standards ("IFRS") approved by the EU. The IFRS include standards and interpretations approved by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC).
The separate financial statements were drawn up in accordance with the historical cost principle, except for derivative financial instruments and financial assets held for sale which are measured at fair value.
Preparation of separate financial statements compliant with IFRS requires application of relevant accounting estimates. Furthermore, it requires the Management Board to use its own judgment while applying the adopted accounting principles. Issues which require a more thorough judgment, more complex issues, as well as assumptions and estimates relevant for the separate financial statements have been presented in Note 5. These separate financial statements should be read in combination with the consolidated financial statements for the fiscal year ended on September 30, 2016.
These annual separate financial statements were drawn up on going concern assumption. The Management Board of the Company has drawn-up the Company’s cash flow plan for the next fiscal year commencing on October 1, 2016 and ending on September 30, 2017, that takes into account the access to sources of financing allowing funding, implementation and maintenance of large scale IT projects, timely settlement of liabilities and continuing growth of the Entity. Management Board expects the Company to be capable of settling all its liabilities: repayment of interests, credit, loan and bond installments, as well as accounts due to the suppliers when due. As of the date of these interim condensed consolidated financial statements, the Company has met the terms and conditions for continuation of credit agreements in regard to covenants and other liabilities resulting out of the credit agreements and bonds issued.
Pursuant to the resolution of the Extraordinary General Meeting of Shareholders of the Company of November 28, 2014 Management Board of Sygnity S.A obtained consent for execution of the short- and medium-term bond issue program, which will be carried out in a period not extending beyond December 31, 2017. Maximum Program value is 100 000. In addition, the Management Board of the Company intends to refinance the debt or extend the existing lines of credit with the banks for subsequent term.
Due to formal requirements, including those concerning the use of prudent valuation principle and going concern principle, the Management Board points to the following issues. The Company is a party to external financing agreements for a total amount of 52 851 (of which 39 885 are long-term bond liabilities due on December 19, 2017 and 13 685 is the debt in renewable credits maturing on March 31, 2017) as of the balance sheet date (see notes 28 and 29), subject to covenants concerning, among others, its financial results.
Changes in valuations of long-term contracts (see notes 23 and 24) may influence (both positively and negatively) the financial result and profitability of the Company. In the negative case they may result in breach of covenants of credit agreements and bond issue agreements, which in turn may result in increased costs of financing, necessity to renegotiate financing terms and conditions or the liabilities being called in for immediate repayment, thus may constitute significant uncertainty as to continuation of business by the Company in foreseeable future. The valuations of long-term contracts and their performance in subsequent reporting periods depends on many factors, including external factors, beyond the Parent company’s control.
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 12
With respect to one of such contracts being performed by the Company the Ordering Party (a public sector client) declared that it will not be continuing the already commenced work in the initially agreed scope. As a result, the Company is currently in the process of negotiating the way of contract termination as well as potential participation in execution of the renewed project in a new formula, the final result of which cannot be clearly determined as of the date of drawing up these financial statements. Considering the valuation of the contract on the balance sheet date (not yet invoiced receivables for work items resulting from long-term contracts in amount of 16 715) the Management Board of the Company – to its best knowledge of the status of the negotiations in progress and based on review of rights and obligations of the parties resulting out of their agreement – adopted various scenarios taking into account the probabilities of occurrence of results of contract settlement. Due to the ongoing negotiations, the real final valuation of the contract may differ from the one disclosed in these financial statements.
Concerning another key contract, there are also negotiations in progress with respect to changes to the method of its execution, thus the future valuation of this contract may differ from the one disclosed in these statements. Moreover, during performance of this contract the Management Board of the Company decided to formulate and put forward claims against a subcontractor for a maximum amount of 37 000. Based on negotiations being conducted with the supplier and contract analysis the Management Board assesses that the amount likely to be recovered through settlement or litigation is approximately 18 000. The cost budget of this project takes into account the adjustment for this amount.
In the opinion of the Management Board the described events that potentially may form grounds for establishment of a valuation write-down of estimated receivables require an ongoing analysis from the point of view of their impact on Company’s financial standing, however as of the day of drawing up these statements in the opinion of the Management Board of the Company no premises occurred that would substantiate the need to perform write-downs for the abovementioned long-term contracts. Regardless of the above the Company, taking into account the results of such analysis and the market situation as well as standpoints of the contracting parties shall consider commencing measures to assure undisturbed functioning of the Company. Unless the circumstances described above as significant uncertainty occur, in the opinion of the Management Board all covenants and obligations resulting from under the credit agreements and bonds issues will continue to be met in the foreseeable future. These statements do not account for any adjustments related to lack of possibility to continue business operations, as in the opinion of the Management Board the statements should be drawn-up on going concern principle. In the opinion of the Management Board the working capital of the Company and possibilities to renegotiate current agreements or obtaining alternative sources of financing allow for assuring continuation of its business and maintaining liquidity for at least 12 months following the date of preparation of these financial statements. These separate financial statements of Sygnity S.A. cover data for the period of 12 months ended September 30, 2016 and as of September 30, 2016, contain comparable data for the period of 12 months ended September 30, 2015 and as of September 30, 2015. Financial data contained in these financial statements are stated in Polish zlotys (“PLN"), and all values are in PLN thousands, unless otherwise specified. These financial statements were approved for publication by the Management Board on December 16, 2016.
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 13
3. Basic accounting principles
3.1 Application of the new standards, changes to standards and interpretation
In these financial statements the Company has for the first time applied the new and amended standards and interpretations applicable to financial statements for fiscal years commencing January 1, 2015 and beyond:
a) Improvements to IFRS 2011-2013
b) Defined benefits plans: Employee contributions - Amendments to IAS 19
c) Improvements to IFRS 2010-2012
In these financial statements the Company did not decide on early adoption of the following new and amended standards and interpretation, which entered into force for financial statements for the fiscal years commenced on January 1, 2016:
a) Annual amendments to IFRS 2012-2014
b) Amendments to IFRS 11 concerning acquisition of interest in joint operations
c) Amendments to IAS 16 and IAS 38 on depreciation
d) Amendments to IFRS 10, IFRS 12 and IAS 28 on "Investment entities: Applying the Consolidation
Exception"
e) Amendments to IAS 27 on equity method in separate financial statements
f) Amendments to IAS 1
In these financial statements the Company did not decide on early adoption of the following published standards, interpretations or amendments to existing standards before their entry into force: a) IFRS 9 "Financial instruments: Classification and measurement and hedge accounting"
b) IFRS 15 - "Revenue from Contracts with Customers"
c) Amendments to IFRS 10 and IAS 28 “Sales or contribution of assets between the investor and its
associate or joint venture”
d) IFRS 16 ”Leases”
e) Amendments to IAS 12 “Recognition of deferred tax assets for unrealised losses”
f) Amendments to IAS 7 “Disclosure initiative”
g) Amendments to IFRS 2 “Classification and valuation of share-based payment transactions”
Assessment of influence of the above amendments on the financial statements:
In the opinion of the Management Board application by the Company of the new or amended standards and
interpretations did not have significant influence on the financial statements of the Company.
The Management Board of the Company is analyzing the expected influence of adoption of the standards not used so far, however at the present stage it does not seem that adoption of these standards, except for IFRS 15 – “Revenue from Contracts with Customers”, would have a significant influence on Company’s financial statements.
In the opinion of the Management Board of the Company the IFRS 15 will have a significant influence on the financial statements as the model of recognizing the revenue from contracts with clients changes. As on the date of preparation of these financial statements the Company has not completed its analysis of influence of the new standard.
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 14
3.2 Changes to accounting principles and to data presentation
In the fiscal year ended September 30, 2016 the Company has not made any changes to the accounting
principles and to data presentation except for a change of classification of part of overhead expenses and cost of
producing the products and services sold to cost of sales to better reflect the amounts of costs of the Company as
per where they occur.
As the result of change of classification of part of overhead expenses and cost of producing the products and
services sold to cost of sales, the overhead expenses in the fiscal year ended September 30, 2015 decreased by
1 034, cost of producing the products and services sold decreased by 385 and the cost of sales plus the sum of
the above two amounts, namely 1 419.
There were no other changes of accounting principles, presentation of items in the separate balance sheet and the separate statement of comprehensive income with respect to the status as on September 30, 2015.
3.3 Relevant accounting principles
The key accounting principles applied when drawing up these separate financial statements are presented below. These principles were applied in all presented periods on continuous basis, unless specified otherwise.
3.3.1 Functional and reporting currency
The functional and reporting currency of these annual separate financial statements is the Polish zloty (PLN).
Exchange rates used for the
purposes of balance sheet valuation Average arithmetic exchange rates for
individual fiscal years were
Currency Sep. 30, 2016 Sep. 30, 2015
fiscal year commenced Oct. 1,
2015 and ended Sep. 30, 2016
fiscal year commenced Oct. 1,
2014 and ended Sep. 30, 2015
EUR 4.3120 4.2386 4.3348 4.1707
USD 3.8558 3.7754 3.9268 3.6419
3.3.2 Measurement of foreign currency denominated items
Foreign currency denominated transactions are converted into the functional currency at the rate prevailing on the transaction date. Foreign exchange gains and losses under settlement of those transactions and resulting from balance sheet valuation of foreign currency denominated assets and liabilities are recognized accordingly in the profit and loss account.
Foreign exchange gains and losses relating to financing activities are recognized in the profit and loss account in the "Financial revenues" or "Financial expenses" items. All other foreign exchange profits or losses are recognized in the profit and loss account in the “Other operations” item.
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 15
3.3.3 Investments in subsidiaries, associates and jointly controlled entities
Subsidiary entities are all entities (including special purpose vehicles) in relation to which the Company has the right to manage their financial and operating policies, which is usually accompanied by possession of the number of shares / interest granting over half of the total number of voting rights, unless such ownership does not provide the control. While assessing whether the Company controls a given entity the existence and effect of potential voting rights which can be exercised at a given time or changed for shares/interest are taken into account. Investments in subsidiary entities are recognized at their purchase price less possible impairment write-offs.
Associated entities are those entities on which the Company can exert significant influence but has no control over. Typically this is equivalent to having between 20% and 50% of voting rights at the General Meeting of the Company. The investments in the associates are recognized in the balance sheet at their purchase price less possible impairment write-offs.
Jointly controlled entities are joint ventures requiring appointment of a legal person, partnership or any other entity wherein every partner to the joint venture holds interest. The interest of the Company in such joint-venture is recognized in the balance sheet at value of contribution.
3.3.4 Fixed assets, current assets and offsetting
Assets the realization of which is expected within 12 months following the balance sheet date are recognized as current assets. The other assets are recognized as fixed assets. Neither assets, liabilities, revenue or expenses are offset unless this is allowed by a standard or an interpretation.
3.3.5 Tangible fixed assets
Buildings, machinery and equipment, means of transportation and other fixed assets are recognized at their purchase price/cost of producing less any subsequent depreciation and all impairment write-downs and plus any improvements made. Land is recognized at its purchase price and not subsequently depreciated.
Expenditures for improvements are recognized in the balance sheet value of the fixed asset or as a separate fixed asset (where appropriate) only when it is likely that this will result in economic benefit to the Company, while the costs of the asset can be reliably measured. The balance sheet value of replaced parts is removed from the balance sheet. All other expenditures incurred for repairs and maintenance are posted to the profit and loss account in the financial period in which they were incurred.
Depreciation is applied to the purchase price or the cost of producing the asset concerned, less the residual value of that asset and plus the amount of improvements made to the asset concerned. The depreciation rates used reflect the useful lifetime of the tangible fixed assets. Depreciation is calculated using the straight-line method. The depreciation rates for particular groups of tangible fixed assets are:
- computer sets and servers: 20% - 30%
- facsimiles, copiers and similar office equipment: 10% - 20%
- other technical equipment: 10%
- telephone exchanges: 10%
- means of transportation: 14% - 33%
- buildings and structures: 10% - 20%
The residual value, useful lifetime and method of depreciation of assets are reviewed on annual basis and, if required – adjusted, effective at the beginning of the next fiscal year.
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 16
A given tangible fixed asset may be removed from the balance sheet following its disposal or in the event when no economic benefits resulting from further use of that asset are expected. All profits or losses resulting from removal of a given tangible fixed asset from the balance sheet are recognized in the profit and loss account in the period when it was written-off.
In the event the balance sheet value of a fixed asset exceeds its estimated recoverable value, its balance sheet value is immediately reduced to the recoverable value ("Impairment of non-financial assets"). Impairment write-downs on non-financial assets are recognized in other operating costs, while reversal of write-downs is recognized in other operating income.
3.3.6 Impairment of non-financial assets
Assets with unspecified useful lifetime, such as goodwill, are not subject to depreciation, but are tested on an annual basis for possible impairment. Assets subject to depreciation are tested for impairment whenever any events or changed circumstances indicate a possibility of failure to realize their balance sheet value. A loss due to impairment is recognized in the amount by which the balance sheet value of a given asset exceeds its recoverable value. The recoverable value is the higher of: the assets’ fair value less cost to sell, or the usable value. For the purposes of impairment tests assets are grouped at the lowest level with reference to which separate cash flows (cash generating units) may be identified. Non-financial assets, other than goodwill, in relation to which impairment has been determined earlier on, are assessed as of each balance sheet date for premises indicating the possibility of reversal of a given write-down.
3.3.7 Goodwill
The goodwill resulting out of acquisition of a business entity is initially recognized at the price of acquisition being the surplus cost of acquisition of business entities over the share of the acquiring entity in the net fair value of identifiable assets, liabilities and contingent liabilities. Following initial recognition, the goodwill is recognized at purchase price less any accumulated impairment write-downs. Goodwill is tested for possible impairment on an annual basis or more frequently - in case circumstances or changes occur that indicate possible impairment. Goodwill impairment write-downs are irreversible. Profits and losses from sale of the operations belonging to cash generating units to which goodwill has been allocated account for relevant part of the company’s balance sheet value, concerning the sold operations.
In order to carry out a the impairment tests, the goodwill is allocated to cash generating units (CGUs). Allocations are performed for such cash generating units or groups of cash generating units that are expected to benefit from the combination that resulted in the goodwill being generated.
3.3.8 Other intangible assets
Intangible assets acquired within a separate transaction are initially recognized at purchase price. Intangible assets acquired by takeover of an economic entity are initially recognized at fair value as of the takeover date. Following initial recognition the other intangible assets are measured at the cost less amortization write-downs and impairment. The useful life of intangible assets is assessed at the time of initial recognition, and it is deemed definite or indefinite.
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 17
Intangible assets with a specific useful life are amortized using the straight-line method throughout their useful life which is reflected in the amortization rates for particular groups of other intangible assets presented below:
cost of completed research and development work: 20% - 50%
concessions, patents, licenses, software and similar values: 5% - 50%
other intangible assets: 10% - 20%
relations with clients: 20%
order book: 50%
product brands: 10%
trademarks: 10% - 20%
Expenditures for research and development are capitalized provided the criteria specified in section "Costs of research and development works" are met.
Useful lifetimes are subject to annual reviews and, if required, adjusted beginning with the next fiscal year.
3.3.9 Research and development expenses
Costs of research and development work are posted to the profit and loss account at the time they are incurred. The costs which may be allocated directly, but are capitalized as part of a product in the form of software, include payroll costs related to research and development work on software and a relevant part of indirect applicable costs. Expenditures made on research and development work performed within a given project are capitalized provided it is possible to determine that:
from the technical point of view it is possible to complete an intangible asset so that it becomes fit for use,
the entity's management intends to complete an intangible asset for use or for sale,
it is possible for a given intangible asset to be used or sold,
it is possible to demonstrate how the intangible asset concerned will be generating likely future economic benefits,
there are appropriate technical, financial and other resources available that are necessary for a given intangible asset to be completed so that it will be fit for use or sale,
it is possible to reliably determine the amount of expenditures incurred in the course of research and development work that may be allocated to that intangible asset.
Following initial recognition of expenditures incurred for research and development work, the cost model requiring assets to be recognized at the purchase price/manufacturing cost less the accumulated amortization and accumulated impairment write-downs is applied. Capitalized costs of research and development work are amortized throughout the foreseeable period of generating revenues from sale of a given project.
The costs of research and development work are assessed for possible impairment of value on an annual basis - if an asset has not been rendered for use yet, or more often - if in the course of the reporting period there is a premise of impairment of value indicating that their balance sheet value may be impossible to recover.
3.3.10 Borrowing costs
In case of incurring borrowing costs concerning qualified assets the Company capitalizes the borrowing costs related directly to purchase, construction or manufacture of a qualified asset component within the cost of production of such an asset component.
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 18
3.3.13 Financial instruments
The Company divides its financial assets into the following categories: recognized at fair value in the financial result, loans and receivables, as well as financial assets held for sale. The classification is based on the criterion of the aim of financial asset acquisition. The Management Board specifies the classification of its financial assets at their initial recognition.
Financial assets and liabilities are recognized in the Company’s balance sheet when the Company becomes party to a binding agreement. Financial assets are written-off the books when the rights to obtain cash flow due to them have expired or have been transferred, and the Company has transferred the total risk and all benefits resulting from the ownership title to them. A financial liability is written-off the books when it has been settled, annulled or when it has expired.
Loans and receivables
Loans and receivables are financial assets not included in derivatives, of determined or determinable payments, which are not quoted on any active market. They are included in current assets provided that their maturity date is not longer than 12 months following the balance sheet date, or when it is not longer than the regular operation cycle related to long-term contracts exceeding 12 months. The principles of valuating loans and receivables are presented in the section “Trade receivables and other receivables”.
Financial assets recognized at fair value in the financial result
The Company includes derivative instruments in instruments held for sale. Assets included in that category are current assets if they are sold within 12 months; if they are held for a longer period then they are recognized as fixed assets.
Financial assets held for sale
Financial assets held for sale are financial instruments which are not derivative instruments and are to be included in this category or ones which are not included in any other category. They are considered fixed assets unless the Management Board does not intend to dispose of them within 12 months from the balance sheet date.
Derivative instruments and hedge accounting
Due to its operations, the Company bears financial risks related to changes in currency exchange rates and interest rates. In order to hedge against these risks, the Company applies currency forward contracts. The Company does not apply hedge accounting.
Rules applicable while using derivatives are included in the Company’s risk management policy approved by the Management Board.
Derivatives are included in the category of “marketable” which are initially recognized at fair value and then they are measured at their fair value in the profit and loss account.
Investments in securities
Where a market convention assumes the provision of a security after a precisely defined period of time following the transaction date, investments in securities are recognized in account books and are written-off the books on the date of concluding a purchase or sale transaction. Investments in securities are initially valued at their fair value (plus transaction costs in case of financial assets held for sale).
Investments in securities are classified as valued at their fair value through the financial result or as held for sale and they are measured as of the balance sheet date at their fair value. When securities have been classified as valued at their fair value by the financial result, profits and losses resulting from the change of the fair value will be recognized in the profit and loss account for a given period. In case of assets held for sale, profits and losses resulting from the change of their fair value are recognized directly in capitals until the asset component is sold or the impairment is recognized. Accumulated profits and losses previously recognized in capitals are then transferred to the profit and loss account for a given period.
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 19
3.3.14 Impairment of financial assets The Company assesses as of each balance sheet date whether there is objective evidence that the financial assets component or a group of financial assets is impaired.
The policy concerning impairment of receivables and loans is presented in section “Trade receivables and other receivables”. When determining whether securities included in the held for sale category have been impaired, a significant or continuing loss of the fair value of a given security below its cost is taken into consideration. If such evidence exists (in the case of financial assets held for sale), total losses incurred to date – determined as the difference between the purchase price and current fair value, less possible losses due to impairment already recognized in the profit and loss account – are excluded from the equity and recognized in the profit and loss account. The impairment losses already recognized in the profit and loss account and the losses due to capital instruments are not subject to reversal by the financial result.
3.3.15 Inventory Inventory is disclosed at its purchase price or at its production costs not higher than the net sales price. The production costs are made up of direct material costs and, as required, of the direct payroll costs and a justifiable part of indirect costs. Outgoing inventory of materials and goods is valued at actual prices. The net sales price corresponds to the estimated sales price less all costs necessary to complete the production and costs of rendering the inventory saleable or finding a purchaser (i.e. sales and marketing costs, etc.).
3.3.16 Trade receivables and other receivables Trade receivables and other receivables are initially recognized at fair value, and then, once they have been decreased by impairment write-downs they are recognized at adjusted acquisition price (amortized cost) with application of the effective interest rate. Impairment write-downs are made when there is objective evidence that the Company will not be able to receive all its receivables in accordance with the original settlement terms and conditions. In order to measure receivables at amortized cost, the debtor's major financial problems, probability of its insolvency or financial reorganization, as well as its failure to settle or delayed settlement of liabilities are taken into account, and these are recognized as indicators of trade receivable impairment. The amount of the write-downs is equal to the difference between the balance sheet value of a given asset and its value measured at amortized cost. The write-down amount is recognized in the profit and loss account. The balance sheet value of a given asset is decreased by revaluation write-downs, and the loss amount is posted to the profit and loss account (sales expenses). In case of bad trade receivable it is written off the account of provisions for trade receivables. Amounts recovered later after being written off are credited to the cost of sales item in profit and loss account.
Contract receivables The Company recognizes among assets within trade receivables, in the "Uninvoiced receivables from clients resulting from agreements" item the amounts due from clients for contract deliverables, with respect to all contracts in progress, in case of which the costs incurred – plus the recognized profits (less the recognized losses) – exceed the invoiced amounts.
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 20
3.3.17 Deferred income Deferred income is accounted for while observing the prudence principle and accrual principle. In particular the deferred income includes the equivalent of amounts received or due from the trading partners for deliverables that shall be provided in future reporting periods.
The Company recognizes among deferred income within the "Deferred income" item an amount due to clients for
contract deliverables, with respect to all contracts in progress, in case of which the amounts invoiced exceed the
costs recognized.
3.3.18 Cash and cash equivalents Cash and short-term deposits recognized in the balance sheet include cash at the banks and on hand, as well as short-term deposits with the original maturity date of maximum three months. Balance of cash and cash equivalents recognized in the statement of cash flow consists of cash and cash equivalents specified above. Balances of un-repaid overdraft facilities are recognized in the balance sheet in the credits and loans item.
3.3.19 Assets held for sale Fixed assets or groups of assets classified as assets held for sale are measured at their balance sheet value or fair value less sales expenses, whichever is lower.
3.3.20 Equity
Equity of the Company is recognized at nominal value in accordance with the principles stipulated in legal regulations and the provisions set forth in the Articles of Association.
Share capital of the Company is recognized in the amount specified in the Articles of Association and entered in a court register.
Marginal costs related directly to issue of new shares or options are recognized in equity as a decrease of proceeds from the issue.
3.3.21 Share-based payments
Some employees of the Company may receive additional compensation in the form of share options, due to which employees provide services in exchange for shares or rights to shares ("transactions settled with equity instruments").
The cost of transactions settled with employees through equity instruments is measured by reference to the fair value as of the date the rights were granted. The fair value is determined by an independent valuer. No conditions concerning performance/results, besides those related to the price of shares of the Company ("market conditions") are taken into account at measurement of transactions settled with equity instruments.
The cost of transactions settled with equity instruments is recognized in the profit and loss account including a corresponding increase in equity within the period in which the conditions concerning performance/results, ending on the date the employees acquire full rights to benefits ("date of acquisition of rights"), are met. A cumulated cost recognized due to transactions settled with equity instruments as of each balance sheet date until the date of acquisition of the rights reflects the passage of time of acquisition of the rights and the number of options to which the rights will eventually be acquired – according to the opinion of the Management Board of the Company. No costs are recognized due to options the rights to which have not been finally acquired except for options the acquisition of which depends on market conditions, which are treated as acquired regardless of meeting market conditions provided all other conditions concerning performance are met.
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 21
In case of a change to the conditions of allocation of options settled with equity instruments, as a minimum such costs are recognized as if these conditions had not changed. Furthermore, costs due to each increase in value of a transaction as a result of such a change, measured as of the date the change was implemented, are recognized.
The dilutive effect of issued shares is taken into account in determination of profit per share as additional dilution of shares.
3.3.22 Employee benefits
Pursuant to the company compensation schemes, the employees of the Company have right to a retirement severance pay. Retirement severance pay is a one-time payment made upon retirement. The amount of the retirement severance pay depends on the employment tenure and average compensation of the employee concerned. The Company creates a provision for future liabilities due to retirement severance pay in order to allocate the costs to the period which they refer to. Pursuant to IAS 19, retirement severance pays are programs of defined benefits after the period of employment. The current value of these liabilities as of each balance sheet date is calculated by an independent actuary. Liabilities accrued are equal to the discounted payments which will be made in the future, considering staff churn, and they refer to the period before the balance sheet date. Demographic information as well as information on staff churn is based on historical data. Profits and losses due to actuarial calculations are recognized in the profit and loss account and in other comprehensive income.
The Company pays contributions to national retirement schemes under defined contribution plans. Contributions to defined contribution plans are recognized as costs in the profit and loss account in the period they concern.
3.3.23 Provisions Provisions are established when the Company has an effective liability (legal or commonly expected) resulting from past events, and when it is likely that fulfilling this liability will lead to the need to spend the resources related to economic benefits and when it is possible to estimate the amount of this liability in a reliable manner.
When the influence of value of money over time is significant, the amount of the provision is determined by discounting the expected future cash flows to the present value, with the application of a gross discount rate reflecting present market valuations of value of money and possible risk related to a given liability. If the method consisting of discounting has been applied, the increase of provisions in time is recognized as borrowing costs.
3.3.24 Leases Company as a lessee
Financial lease agreements which generally transfer to the Company all risk and benefits resulting from possessing the leased object, are recognized in the balance sheet as of the date of commencement of lease as the lower of the two following values: the fair value of the tangible asset constituting a lease object or the present value of minimum lease charges. Lease charges are divided into financial costs and reduction of balance of liabilities due to lease, in a manner allowing for determining a fixed interest rate on the remaining liability to be paid. Financial expenses are recognized directly in the profit and loss account.
Fixed assets used pursuant to financial lease agreements are depreciated over either: estimated economic useful lifetime of the fixed asset or the term of lease, whichever is shorter.
Lease agreements, pursuant to which the lessor generally retains all the risk and benefits resulting from possessing the lease object, are considered as operating lease agreements. Lease charges due to operating lease agreements and further lease installments are recognized as costs in the profit and loss account by a straight-line method throughout the term of lease.
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 22
Company as a lessor
Lease agreements, pursuant to which the Company generally retains all the risk and benefits resulting from possessing the lease object, are considered as operating lease agreements. Conditional lease charges are recognized as income in the period when they become due.
3.3.25 Financial liabilities and equity instruments Financial liabilities and equity instruments are classified on the basis of their economic contents resulting from the concluded agreements. An equity instrument is an agreement giving the right to participate in the Company’s assets less all liabilities.
3.3.26 Equity instruments Equity instruments issued by the Company are recognized in the value of the revenues less direct issuance costs.
3.3.27 Bank credits and loans
At the moment of the initial recognition, all bank credits and loans are recognized at fair value, less the costs of obtaining a credit or loan. After the initial recognition, interest-bearing credits and loans are further valued in accordance with a depreciated cost (adjusted purchase price), using the effective interest rate method. When determining a depreciated cost (adjusted purchase price), costs of obtaining a borrowing or credit, as well as discounts or bonuses gained while settling liabilities are taken into consideration.
3.3.28 Trade liabilities
Trade liabilities are the obligations to pay for goods and services acquired from suppliers in the course of the enterprise's regular business activities. Trade liabilities are classified as short-term liabilities if the payment date falls within one year (or in the course of regular business activity cycle of an enterprise, if longer). Otherwise, liabilities are recognized as long-term.
Trade liabilities in the initial recognition are disclosed at fair value, whereas subsequently they are disclosed at depreciated cost, using the effective interest rate method.
Trade liabilities include accrued expenses in the amount of likely liabilities due in the current reporting period
when the liability amount may be reliably estimated. Accrued expenses have a lower probability of turning into
expense than liabilities. Accrual adjustments are performed with observance of prudence principle and on accrual
basis.
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 23
3.3.29 Revenues Revenues are recognized in the amount in which it is likely that the Company will gain economic benefits related to a given transaction, and when the amount of income may be valued in a reliable way. Revenues are shown after deduction of value added tax, refunds, rebates and discounts.
Multi-element contracts
Sales of products and services are based mainly on contacts concluded on standard terms and conditions; however, the Company also enters into multi-element contracts which require the Management Board to perform a detailed analysis and interpretation in order to ensure appropriate recognition in the financial statements. Appropriate recognition of revenues resulting from multi-element contracts consists of assessment whether the delivered products and services should be accounted for as individual elements for which revenue is recognized independently or the contract should be recognized as an inseparable whole. In case of separation of independent elements within the sales contract, the contract price is allocated to its particular elements, based on their relative fair value. Changes in price allocations between contract elements may have influence on the date of revenue recognition, but not on the total amount of revenue recognized in the contract.
Consortium agreements
The Company recognizes the total revenue due to a consortium agreement, also with regard to other consortium members, if its participation in the consortium was significant in terms of the risks incurred and benefits obtained.
Long-term contracts
The aim of valuation of a long-term IT implementation contract is to determine the value of revenues to be
recognized with regard to progress of work. The Company performs valuation applying the degree of progress
method. Application of this method results in recognition of revenues proportionally to the incurred costs, which as
a result allows for maintaining a constant aggregate margin on the contract, provided that the contract is not a
loss generating contract.
Progress of contract is recognized as ratio between costs incurred until the balance sheet date and total contract
costs (total contract costs cover costs incurred until the balance sheet date and currently expected costs to
complete the contract). Revenues corresponding to contract progress as of the balance sheet date are
recognized by multiplying the progress ratio by the total planned revenues from the contract.
If the incurred costs less estimated losses and plus profits recognized in the profit and loss account exceed by
their percentage progress the percentage progress of invoiced sales, the resulting difference of amount of non-
invoiced sales is presented in the assets of the balance sheet in the other receivables under the “Uninvoiced long-
term contracts receivables” as part of trade receivables.
Loss generating contracts
A loss generating contract is a contract in which total contract revenue is lower than total costs.
When it is highly likely that total costs of contract performance would exceed total revenues from the agreement,
the estimated loss is recognized as a cost for the period in which it was discovered by establishing a provision for
contract losses. The amount of provision and/or relevance of its presence is reviewed as of each subsequent
balance sheet date, until completion of the contract.
The value of provisions established for losses is recognized in the “long-term IT contracts valuation” category of
liabilities”.
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 24
Methods of contract completion progress measurement
To determine degree of contract completion, the Company applies such methods that allow for determination of
progress of work in reliable manner. Depending on the nature of contract, these methods may include:
determination of proportion of contract costs incurred for work performed until the balance sheet date
compared to the estimated total contract costs,
measurement of the work performed, or
comparison of physically performed work against the contract deliverables.
When the degree of contract completion is determined on basis of incurred contract costs, such costs include only
these contract costs that reflect the work completed so far. Examples of costs, which should not be included, are
as follows:
costs of future activities related to the agreement, e.g. costs of materials purchased to complete the
project, which as of the valuation date, have been not installed or utilized in any other way yet;
advance payments to subcontractors for work to be performed under the contract.
If the degree of progress of service, expected total costs of its performance or the result cannot be reliably
determined as of the balance sheet date, then:
revenues are recognized only up to the amount of contract costs incurred in the given reporting period,
however not exceeding the costs that are likely to be covered in the future by the client,
contract costs shall be recognized as costs of the period in which they were incurred.
The percentage progress method is applied cumulatively in each accounting period with respect to the then
current estimates of revenues and contract costs. The effects of changes to estimates of contract revenues or
costs are recognized in the current accounting period.
Sales of goods
Revenue from sales of goods primarily consists of revenues from sales of computer hardware. Revenues are recognized if a significant risk and benefits resulting from the ownership title to products have been transferred to the purchaser and when the revenue amount may be valued in a reliable way.
Sale of licenses and software
Revenues are recognized if a significant risk and benefits resulting from the ownership title to products have been transferred to the purchaser and when the amount of revenue may be valued in a reliable way. Revenues from sales of third party licenses (from the Company's business partners) and own licenses are recognized when all the rights and obligations related to the product have been transferred to the client, and the client has accepted and confirmed receipt of the license or software.
Implementation services
Revenues are recognized in accordance with the degree of progress of a given service; most often this is the revenue resulting from long-term contracts settled in time. Detailed information on the revenue recognition has been provided in the paragraph "Long-term contracts”.
Maintenance services
Revenues from maintenance services consist of revenues from fixed remuneration contracts for provision of maintenance services for hardware and software. These revenues are usually recognized in the period in which relevant services were provided.
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 25
Revenues from lease
Revenues from lease of investment real-estates are recognized using the straight-line method for the entire term
of lease for open agreements.
3.3.30 Dividends
Dividends are recognized when shareholders obtain the rights to acquire them. Dividend payouts to shareholders of the Company recognized as liability in the financial statements of the Company during the period then they were approved by the shareholders of the Company.
3.3.31 Interest income
Interest income is recognized proportionally to the period of time by an effective interest rate.
3.3.32 Income tax
Income tax for a reporting period includes current and deferred income tax. Tax is recognized in the profit and loss account, except for the scope in which it relates directly to items included in the comprehensive statement of income or in equity.
In such a case tax is also recognized in the other comprehensive income or in equity respectively. Current tax charges are calculated pursuant to tax provisions in force or those actually introduced as of the balance sheet date. The Management Board carries out a periodic review of calculations of tax liabilities in relation to situations in which relevant tax regulations are subject to interpretation, establishing potential provisions for the amounts payable to tax authorities.
A deferred income tax liability or asset resulting from temporary differences between the tax value of assets and liabilities and their balance sheet value in the financial statements is recognized in accordance with the balance sheet method. If, however, deferred income tax resulted from initial recognition of an asset or liability within a transaction other than business combination which has no impact on the financial result or the taxable income (tax loss), it is not recognized. Deferred income tax is determined in accordance with the tax rates (and regulations) legally or actually binding as of the balance sheet date which are expected to be binding at the time of realization of the concerned assets under deferred income tax or at the time of settlement of the resulting liability.
Deferred income tax assets are recognized only when it is likely that future taxable income will be generated, which will enable utilization of temporary differences. A deferred income tax liability and asset resulting from temporary differences, occurring due to an investment in subsidiary and associated companies is recognized, unless distribution in time of reversal of temporary differences is controlled by the Company and it is likely that those differences will not be reversed in foreseeable future. Deferred income tax assets and liabilities are compensated when there is an enforceable legal title to compensate the current income tax assets with current income tax liabilities and when deferred income tax assets and liabilities concern income taxes calculated by the same tax authorities to be collected from an entity subject to taxation.
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 26
4. Financial risk management
4.1 Financial risk factors
The business activities conducted by the Company expose it to various financial risks: market risk (including: foreign exchange risk, risk of change to fair value or risk of cash flows as a result of interest rate changes and price variation risk), credit risk and liquidity risk. The framework risk management program is focused on unpredictability of financial markets and aims at minimizing the potentially negative influences on the financial results. The Entity is using derivatives to hedge against certain risks. Risk is managed by the Financial Office of the Company that follows the policy approved by the Management Board. The Financial Office identifies and evaluates the financial risks and hedges the Company against risks in close collaboration with the operating units.
4.1.1 Market risk
Foreign exchange risk
The foreign exchange risk is deemed to mean the likeliness of adverse influence of foreign exchange rates
changes on the financial result. Assets and liabilities denominated in foreign currencies are exclusively the trade
receivables and trade liabilities denominated in EUR, USD or other currencies. The Entity does not draw credits in
foreign currencies. Due to the fact that the Entity’s exposure to foreign exchange risk is not significant, the Entity
is not attempting to hedge all its foreign currency transactions. The main objective of foreign exchange risk
hedging efforts is hedging against the foreign exchange rates fluctuations accompanying the foreign currency
payments for deliveries or payments from clients. To protect against this risk the Company is using the currency
forward contracts. The Company does not maintain hedge accounting.
Interest rate risk
The interest rate risk is deemed to mean the likeliness of adverse influence of interest rate changes on the financial result. The Entity is exposed to the interest rate risk resulting out of credit debt, financial lease agreements concluded and cash deposits in banks, which bear interest dependent on the WIBOR and EURIBOR. Change of interest rates shall have influence on the amount of interest paid on financial liabilities. The Company is not using derivative instruments to hedge against interest rate risk. 4.1.2 Credit risk
Credit risk is deemed to mean the likeliness of a trading party’s default on or untimely payment. The Company
follows the principle of entering into transactions concerning financial instruments with entities with high credit
ratings. Credit risk arises primarily in case of unsettled accounts with clients for contracts delivered by the
Company. Company’s clients mainly include public authorities, central and local government administration
agencies as well as corporate clients with unquestionable credit ratings. The credit risk exposure on granted loans
results mainly from the loans granted to employees of the Company and to subsidiaries. Such loans are granted
only if the requesting employees meet several conditions and establish collaterals. The Company is managing its
credit risk on ongoing basis by monitoring the lifecycle stages, receivables and through proactive collection
efforts, thus influencing the minimization of the risk level. The Company is not expecting to incur significant losses
arising out of credit risk in excess of write-downs recognized in these financial statements.
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 27
4.1.3 Liquidity risk
Day to day operations of the Company depend on available cash and credit lines in the banks. The Company
maintains such debt level, including available credit lines, as to ensure financing without hindering current
operations. The Management Board monitors the projected cash flows of the Entity. The liquidity level is
controlled through preparation of a cash flows forecast. Execution of the planned cash flows is regularly reviewed
and it includes, among others, analysis of unrealized cash flows, their causes and consequences. Such
projections of financial results take into account the Company’s plans as regards the need for borrowing and the
necessity to observe the covenants related to incurred liabilities.
The Company forecasts that the basic future needs as regards financial resources will concern financing of working capital, capital expenditures, credit and bond debt servicing and repayment of current liabilities. According to the Company the current cash, easily marketable financial assets held for sale as well as proceeds from operating activities will be sufficient to finance those needs. Nevertheless, if the market conditions or clients’ financial problems should have a negative influence on cash generated from the operations, the Company will revise its financial needs in order to assure that its existing liabilities shall be met in the foreseeable future. As of September 30, 2016 the Entity’s total cash resources amounted to 61 668 (as of September 30, 2015 – 1 476). The table below presents an age analysis of the Company’s financial liabilities by the period remaining until the repayment date as of the balance sheet date, broken down into short-term and long-term. The amounts presented in the table constitute contractual undiscounted cash flow plus due interest. The balances of non-interest bearing liabilities due within 12 months have been presented in values of balance sheet items.
As of:
As of:
Sep. 30, 2016
Sep. 30, 2015
Audited
Audited
Long-term liabilities
Issued bonds liabilities 39 885
39 793
Financial lease liabilities -
98
Trade liabilities 9 742
-
49 627
39 891
Short-term liabilities
Credits and loans 19 885
30 800
Issued bonds liabilities 486
499
Financial lease liabilities 95
1 271
Trade liabilities 102 690
52 895
Other liabilities 45 424
55 111
168 580
140 576
* Due on December 19 2017 ** Due on December 15, 2018 Information about liquidity risk are also presented in note 2. Information about ageing of short-term trade liabilities in part for deliveries and services are resented in note 31.
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 28
4.2 Capital risk management
The main objective of Company’s capital management is to maintain its good credit rating and safe capital
indicators which would facilitate the operations and would increase its shareholder value.
The Company manages its capital structure and it alters it as a result of changes in economic conditions. In order
to maintain or adjust its capital structure, the Entity may change payment of a dividend for shareholders, return
capital to shareholders and issue new shares. The Entity monitors its capitals using a financial debt indicator. It is
calculated as the ratio of net financial debt to total capital. Net financial debt is calculated as the sum of liabilities
for interest-bearing credits and loans as well as bonds and financial lease minus cash and cash equivalents. The
total capital is calculated as equity recognized in the balance sheet plus the net financial debt.
As of: As of:
Sep. 30, 2016 Sep. 30, 2015
Financial debt
Gross financial debt
Bond liabilities 40 371
40 292
Interest-bearing credits and loans 19 885
30 800
Financial lease liabilities 95
1 369
60 351
72 461
Net financial debt
Less cash and cash equivalents (61 668)
(1 476)
-
70 985
Total equity 235 780
247 584
Total capital 235 780
318 569
Net financial debt ratio 0.0%
22.3%
During the fiscal year ended September 30, 2016, as during the previous fiscal year, the Company mainly used
equity financing; short-term variations in working capital requirements were financed with short-term overdraft
facilities and long-term bonds.
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 29
5. Important estimates and accounting assessments
These result from the experience gained to date and from other factors, including forecasts concerning future events which seem relevant in a given situation. Accounting estimates and assessments are subject to regular reviews.
Important estimates and assumptions The Entity makes estimates and assumptions concerning the future. Resulting accounting estimates in principle will rarely match actual results. Estimates and assumptions which involve significant risk of necessity to introduce a major adjustment into the balance sheet value of assets and liabilities within the next business year are discussed below. Deferred tax assets
The Entity recognizes a deferred tax asset based on the assumption that a taxable profit allowing for its utilization
will be generated in the future. Deterioration of taxable results achieved in the future could result in the
assumption being unfounded. As of September 30, 2016 the Company has recognized a net deferred tax
provision amounting to 5 608. (The deferred income tax asset in amount of 30 352 as of September 30, 2016 was
less the provision for deferred income tax in amount of 35 960). For details see note 14.
In the fiscal year ended September 30, 2016 the Company has achieved a taxable income resulting in part of the
tax losses from previous years having been consumed. In the opinion of the Management Board of the Company
the recoverability of tax losses on which the Company has recognized a deferred income asset is likely. Ability to
deduct the tax losses in the future depends on multiple factors, including the ability of the Company to realize the
assumed forecasts. In the event the Company would not achieve sufficient taxable income over the following five
tax years from the date of these financial statements, i.e. 2017 – 2021, this could result in the necessity to write-
off the deferred income tax asset in amount of 936.
Estimates of significant provisions and contracts
While accounting for revenues from contracts with defined prices for provision of design services, the Company uses the method of percentage degree of progress of work. Use of this method requires ongoing estimation of ratio of costs incurred up to date to the total budgeted costs.
Budgets of individual contracts are being updated with current information on every balance sheet date and are reviewed by the Management Board. If between the official budget reviews events occur that significantly influence the contract result, the value of total contract revenues or costs may be updated earlier. On every balance sheet date there is a significant portion of work that was performed, but not yet accepted and not invoiced for by subcontractors, which the Entity recognizes as contract costs – in conformance with accrual basis. The amount of subcontractor costs due to completed but not invoiced work items is estimated by a technical team on basis of actual progress of work and may differ from the value determined in the formal acceptance process which is compliant with a mutually agreed time schedule. See also note 2.
Depreciation/amortization rates
The value of depreciation/amortization rates is determined on basis of the expected economic lifetime of tangible
and intangible assets. Every year the Company reviews the economic lifetime periods used on basis of the then
current estimates.
Estimated goodwill impairment
Every year and every time in case of occurrence of relevant circumstances the Company tests the goodwill for impairment, according to the accounting principle described in note 3.
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 30
Assessment of usable value consists of determination of future cash flows generated by the cash generating unit and requires determination of the discount rate to be applied for calculation of the present value of those cash flows.
The details of the test conducted are described in note 18 to these separate financial statements.
Estimated impairment of investments in subsidiaries and joint ventures
Every time relevant circumstances occur, the Entity tests its shares and interests in subsidiaries and joint-ventures held on the balance sheet date for impairment. Estimation of their recoverable value consists of determination of future cash flows generated from shares or interests held in subsidiaries and joint ventures (including their residual value estimated assuming the increase of earned margin after the forecast period) and requires determination of discount rate to be applied to calculation of the present value of these cash flows. The details of the test conducted are described in note 19 to these separate financial statements. Changes of value of results achieved in future with respect to the forecasts used in the impairment test may in future result in the need to perform write-downs updating the goodwill or investments in subsidiaries.
6. Information on operating segments
Pursuant to paragraph 4 of IFRS 8 the Management Board of the Company has disclosed the information about
the operating segments in the consolidated financial statements of the Sygnity Group for the period of 12 months
ended September 30, 2016.
7. Approval of financial statements for the fiscal year 2014/2015
The separate financial statements for the fiscal year ended on September 30, 2015 were approved on March 24, 2016 by the General Meeting of Sygnity S.A. On April 1, 2016 they were submitted to the National Court Register pursuant to the legislation in force.
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 31
8. Sales revenues
Period:
Period:
from Oct. 1, 2015
from Oct. 1, 2014
to Sep. 30, 2016
to Sep. 30, 2015
Audited
Audited
Revenue from sales of products and services
Licenses and software 76 872
71 860
Implementation services 186 762
219 445
Maintenance services 72 280
75 661
Other 1 691
1 646
337 605
368 612
Revenue from sales of products and materials
Computer hardware 59 862
39 910
59 862
39 910
Revenues are primarily generated on the territory of Poland. Around 1.7% of sales revenues in the year ended September 30, 2016 (around 1.3% for the year ended September 30, 2015) came from clients with no registered seat on the territory of Poland. Majority of these revenues came from sales of implementation services and computer hardware.
9. Costs by type and cost of goods and services sold
Period:
Period:
from Oct. 1, 2015
from Oct. 1, 2014
to Sep. 30, 2016
to Sep. 30, 2015
Audited
Audited
Costs by type in total
Materials and energy consumed (62 630)
(64 778)
Third party services (137 658)
(144 741)
Remuneration (97 574)
(116 278)
Employee benefits (18 685)
(22 189)
Depreciation (16 126)
(14 382)
Taxes and levies (2 516)
(2 674)
Other (10 923)
(6 624)
(346 112)
(371 666)
Cost of products and services sold
Cost of sales (20 472)
(19 273)
Overhead cost (36 810)
(43 707)
(288 830)
(308 686)
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 32
10. Other operating revenues
Period:
Period:
from Oct. 1, 2015
from Oct. 1, 2014
to Sep. 30, 2016
to Sep. 30, 2015
Audited
Audited
Other operating revenues
Positive foreign exchange differences 68 107
Adjustment to employee benefits 215 -
Profit from sale of nonfinancial fixed assets - 17
Settlement of completed lease contracts 818 2 371
Corrections to VAT returns for previous years 891
Other titles 716 382
1 817
3 768
11. Other operating expenses
Period:
Period:
from Oct. 1, 2015
from Oct. 1, 2014
to Sep. 30, 2016
to Sep. 30, 2015
Audited
Audited
Other operating expenses
Inventory update write-down -
(1 475)
Late payment interest (250)
(56)
Donations (18)
(18)
Other titles (35)
(69)
(303)
(1 618)
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 33
12. Financial revenues
Period:
Period:
from Oct. 1, 2015
from Oct. 1,
2014
to Sep. 30, 2016
to Sep. 30, 2015
Audited
Audited
Financial revenues
Financial revenue on interest including:
- on bank deposits 70
224
- on loans granted 52
-
- other -
80
Positive foreign exchange differences - 69
Settlement discount 324 -
Other financial revenues 139 -
585
373
13. Financial expenses
Period:
Period:
from Oct. 1, 2015
from Oct. 1, 2014
to Sep. 30, 2016
to Sep. 30, 2015
Audited
Audited
Financial expenses
Financial expenses on interest:
- on credits and loans (1 273)
(562)
- on bonds and other debt securities (1 747)
(2 484)
- on financial lease (49)
(693)
- other types of interest (417)
(500)
Settlements and bonds discount -
(304)
Negative foreign exchange differences (544)
-
(4 030)
(4 543)
14. Income tax
14.1 Tax burden
Period:
Period:
from Oct. 1,
2015 from Oct. 1,
2014
to Sep. 30, 2016
to Sep. 30, 2015
Audited
Audited
Income tax as presented on the statement of comprehensive income
Deferred income tax (6 843)
(1 861)
Tax correction for previous years 88
1 461
Provision for tax liabilities concerning previous years -
(3 300)
(6 755)
(3 700)
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 34
14.2 Effective tax rate reconciliation
The reconciliation of the income tax on the gross financial result before tax at the statutory tax rate with the income tax calculated at the effective tax rate of the Company for the fiscal year commenced on October 1, 2015 and ended September 30, 2016 is as follows:
Period:
Period:
from Oct. 1, 2015
from Oct. 1, 2014
to Sep. 30, 2016
to Sep. 30, 2015
Audited
Audited
Loss before tax (3 746)
(290)
Statutory tax rate 19%
19%
Tax at statutory rate 712
55
Change to assessment of calculation of last year’s tax (203)
533
Write-off of unutilized tax losses asset (3 635)
(2 846)
Establishment of write-down updating the value of asset recognized on tax losses (1 311)
-
Write-down updating the assets on inventory value updating write-downs (811)
-
Adjustments disclosed in the current year with respect to taxes for previous years 88
(1 839)
Other adjustments - 784
Effect of permanent differences on tax:
Non-taxable revenues:
- settlements with tax office -
74
- release of provisions for liquidated damages -
55
- other revenues -
285
Non deductible expenses:
- advertising and representation expenses (34)
(47)
- establishment of provision for penalties (1 238)
(382)
- write-off of receivables and financial assets -
(189)
- costs due to awarded court rulings (122)
-
- taxes and contributions (94)
(211)
- share in tax loss of codependent entity 60
69
- other expenses (167)
(41)
Income tax (6 755)
(3 700)
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 35
14.3 Deferred income tax
Deferred income tax is calculated using the balance-sheet method from temporary differences between the tax value of assets and liabilities and their balance sheet value at 19% rate. Deferred income tax assets are recognized when it is likely that the company will generate future taxable income which will enable utilization of temporary differences and tax losses.
As of
As of
Sep. 30, 2016
Sep. 30, 2015
Audited
Audited
Deferred income tax asset including:
Discount of deposit 18
31
Provision for unutilized holidays 327
356
Provisions for remuneration, bonuses, extra pay and others 376
738
Other prepayments and accruals 13 341
6 724
Receivables and inventory revaluation write-down 2 237
2 787
Provision for warranty services 1 339
1 407
Invoice corrections 1 408
2 590
Negative foreign exchange differences resulting out of revaluation - 8
Direct costs concerning non-taxable revenues 9 416
5 815
Other differences 960
1 741
Tax losses 936
6 268
30 358
28 465
Deferred income tax provision including:
Recognition of revenues from long-term contracts 25 383
19 936
Prepaid expenses recognized as tax deductible expenses in the current year 4 565
-
Surplus of balance sheet value over tax value of fixed assets and intangible assets
5 956
7 282
Other differences 89
39
35 993
27 257
Net deferred income tax asset (provision) (5 635)
1 208
14.4 Tax loss to be deducted in future periods
Tax loss to be deducted in future periods by year of occurrence Incurred in 2012 2015
Loss amount 6 900 4 924
Tax loss to be deducted in future periods by year of expiry
Incurred in 2012 2015 2015
Loss amount 6 900 2 462 2 462 Date of expiry Sep. 30, 2017 Sep. 30, 2019 Sep. 30, 2020
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 36
As of the balance sheet date, the Company recognized an asset on part of losses pending settlement as of September 30, 2016 in amount of 936. The value of tax losses written off in the year ended September 30, 2016 was 19 130 (influence on net financial result in amount of 3 635) . Based on achieved results and projections of future taxable profits, in particular related to schedules of long-term contract invoicing, the Management Board of the Company considers consuming of yet unsettled tax losses of past years on which a deferred tax loss asset was recognized as highly likely.
14.5 Tax settlements
Tax settlements and other regulated areas of activity (e.g. customs or foreign exchange issues) may be audited by administrative authorities authorized to impose high fines and sanctions. Lack of reference to the well-established legal regulations in Poland results in lack of clarity and incoherence of the Polish legislation in force. Frequent differences of opinions as to legal interpretation of tax provisions, both by government authorities and in contacts between the government authorities and businesses result in existence of areas of uncertainty and in disputes. Such issues cause the fiscal risk in Poland to significantly exceed the risks encountered in countries with more mature fiscal systems.
Tax settlements may be audited by authorities during the five years following the end of year in which the taxes were paid. Such audits may result in existing tax settlements of the Company being increased with additional tax burdens.
15. Loss per share
The basic loss per share is calculated by dividing the net loss of the Shareholders of the Entity for the reporting period by the weighted average number of issued ordinary shares outstanding within the reporting period.
The diluted loss per share is calculated by dividing the net loss of the Shareholders of the Entity for the reporting period by the adjusted (by influence of the potential diluted shares) weighted average number of issued ordinary shares outstanding within the reporting period.
Data on loss and shares used to calculate both basic and diluted loss per share are presented below:
Period:
Period:
from Oct. 1, 2015
from Oct. 1, 2014
to Sep. 30, 2016
to Sep. 30, 2015
Audited
Audited
Net basic and diluted loss attributable to the shareholders of the company (10 501) (3 990)
Weighted average number (in thousands) of ordinary shares used for calculation of loss per share
11 363
11 520
Basic and diluted loss per share (0.92) (0.35)
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 37
16. Tangible fixed assets
Land (including perpetual usufruct
right)
Buildings, premises and civil
and water engineering
facilities
Plant and machinery
Means of transportation
Other tangible
fixed assets
Tangible fixed assets
under construction
Total
Tangible fixed assets
Purchase price as of Oct. 1, 2015
21
4 493
36 059
1 739
4 517
127
46 956
Increases of value due to:
-
3 004
1 887
-
2 019
5 433
12 343
Acquisition
-
1 294
-
56
-
1 350
Capitalization of costs in the period
-
-
-
-
5 433
5 433
Completed investments
3 004
593
-
1 963
-
5 560
Decreases of value due to: - (3 235) (13 070) (1 620) (343) (5 560) (23
828)
Sale
-
(7)
-
-
-
(7)
Liquidation
(3 235)
(13 063)
(1 620)
(343)
-
(18 261)
Completed investments
-
-
-
-
(5 560)
(5 560)
Purchase price as of Sep. 30, 2016
21
4 262
24 876
119
6 193
-
35 471
Depreciation as of Oct. 1, 2015 (21) (4 198) (31 320) (1 440) (4 085) - (41
064)
Depreciation increase:
(432)
(2 743)
(148)
(368)
-
(3 691)
Depreciation write-off for the reporting period
(432)
(2 262)
-
(368)
-
(3 062)
Leases
-
(481)
(148)
-
-
(629)
Depreciation decrease due to:
3 226
13 008
1 469
343
-
18 046
Sale
-
5
-
-
-
5
Liquidation
3 226
13 003
1 469
343
-
18 041
Depreciation as of Sep. 30, 2016 (21) (1 404) (21 055) (119) (4 110) - (26
709)
Net balance sheet value as of Oct. 1, 2015
0
295
4 739
299
432
127
5 892
Net balance sheet value as of Sep. 30, 2016
-
2 858
3 821
0
2 083
-
8 762
As of the balance sheet date the Company held fixed assets used under financial lease agreements of net value of 71. Besides the leased fixed assets, there are no other limitations as to disposition of the fixed assets in possession of the Company. The depreciation recognized in the cost of production was 1 810, in cost of sales was 96 and in overhead costs was 1 785.
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 38
Tangible fixed assets
Land (including perpetual usufruct
right)
Buildings, premises and civil and water
engineering facilities
Plant and machinery
Means of transportation
Other tangible fixed assets
Tangible fixed assets under construction Total
Purchase price as of Oct. 1, 2014 21 4 389 35 706 7 740 4 089 - 51 945
Increases of value due to: - 104 2 294 - 428 127 2 953
Acquisition - 104 2 294 - 428 - 2 826
Capitalized of costs in the period - - - - - 127 127
Decreases of value due to: - - (1 941) (6 001) - - (7 942)
Sale - - (216) (15) - - (231)
Liquidation - - (1 725)
- - (1 725)
Leases - - (5 986) - - (5 986)
Purchase price as of Sep. 30, 2015 21 4 493 36 059 1 739 4 517 127 46 956
Depreciation as of Oct. 1, 2014 (21) (4 131) (29 594) (5 262) (4 035) - (43 043)
Depreciation increase: - (67) (3 583) (1 447) (50) - (5 147)
Depreciation write-off for the reporting period - (67) (2 420) - (50) - (2 537)
Leases - - (1 163) (1 447) - - (2 610)
Depreciation decrease due to: - - 1 857 5 269 - - 7 126
Sale - - 147 15 - - 162
Liquidation - - 1 710 - - - 1 710
Leases - - 5 254 - - 5 254
Depreciation as of Sep. 30, 2015 (21) (4 198) (31 320) (1 440) (4 085) - (41 064)
Net balance sheet value as of Oct. 1, 2014 - 258 6 112 2 478 54 - 8 902
Net balance sheet value as of Sep. 30, 2015 - 295 4 739 299 432 127 5 892
As of the balance sheet date the Company held fixed assets used under financial lease agreements of net value of 824. Besides the leased fixed assets, there are no other limitations as to disposition of the fixed assets in possession of the Company. The depreciation recognized in the cost of production was 2 623, in cost of sales was 279 and in overhead costs was 2 245.
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 39
17. Intangible assets
Third party
licenses
Own licenses
Trademarks
Goodwill
Intangible assets
established by
acquisition
Advances for intangible
assets Total
Intangible assets
Purchase price as of Oct. 1, 2015
61 501
35 267
554
158 861
27 417
10 460
294 060
Increases of value due to:
159
11 692
-
-
-
5 824
17 675
Acquisition
159
-
-
-
-
-
159
Capitalized costs during the period
-
-
-
-
-
5 824
5 824
Completed investments
-
11 692
-
-
-
-
11 692
Decreases of value due to:
-
-
(14)
-
-
(11 692)
(11 706)
Liquidation
-
-
(14)
-
-
-
(14)
Completed investments
-
-
-
-
-
(11 692)
(11 692)
Purchase price as of Sep. 30, 2016
61 660
46 959
540
158 861
27 417
4 592
300 029
Amortization as on Oct. 1, 2015
(58 502)
(17 805)
(304)
(2 333)
(19 280)
-
(98 224)
Increase of amortization due to:
(737)
(9 606)
(56)
-
(2 036)
-
(12 435)
Amortization write-off for the reporting period
(737)
(9 606)
(56)
-
(2 036)
-
(12 435)
Decrease of amortization due to:
-
-
14
-
-
-
14
Liquidation
-
-
14
-
-
-
14
Amortization as of Sep. 30, 2016
(59 239)
(27 411)
(346)
(2 333)
(21 316)
-
(110 645)
Net balance sheet value as of Oct. 1, 2015
2 999
17 462
250
156 528
8 137
10 460
195 836
Net balance sheet value as of Sep. 30, 2016
2 421
19 548
194
156 528
6 101
4 592
189 384
The depreciation recognized in the cost of production was 9 582, in cost of sales was 2 and in overhead costs was 2 851.
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 40
Third party
licenses Own licenses
Trademarks
Goodwill
Intangible assets
established by
acquisition
Advances for intangible
assets Total
Intangible assets
Purchase price as of Oct. 1, 2014 60 915
23 628
539
158 861
27 417
13 374
284 734
Increase of value due to: 586 11 639 15 - - 8 725 20 965
Acquisition 586 - 15 - - - 601
Capitalized costs during the period - - - - - 8 725 8 725
Completed investments - 11 639 - - - - 11 639
Decreases of value due to: - - - - - (11 639) (11 639)
Liquidation - - - - - - -
Completed investments - - - - - (11 639) (11 639)
Purchase price as of Sep. 30, 2015 61 501 35 267 554 158 861 27 417 10 460 294 060
Amortization as of Oct. 1, 2014 (56 925)
(12 237)
(250)
(2 333)
(17 243)
-
(88 988)
Increase of amortization due to: (1 577) (5 568) (54) - (2 037) - (9 236)
Amortization write-off for the reporting period (1 577) (5 568) (54) - (2 037) - (9 236)
Decrease of amortization due to: - - - - - - -
Liquidation - - - - - - -
Amortization as of Sep. 30, 2015 (58 502) (17 805) (304) (2 333) (19 280) - (98 224)
Net balance sheet value as of Oct. 1, 2014
3 990
11 391
289
156 528
10 174
13 374
195 746
Net balance sheet value as of Sep. 30, 2015
2 999
17 462
250
156 528
8 137
10 460
195 836
The depreciation recognized in the cost of production was 6 218, in cost of sales was 3 and in overhead costs was 3 015.
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 41
18. Goodwill impairment test
The Company applied the fair value less costs to sell method in the test carried out as of September 30, 2016
concerning determination of the recoverable value of cash generating units.
Cash flows
The cash flows used in the usable value model are based on the approved financial plan for 2017, the announced
strategy and assumptions on growth of the IT market in Poland in the coming years. The usable value accounts
for the residual value estimated with the assumption of an increased margin generated after the period of financial
projections. Cash flows do not include cash inflows and outflows that may be expected to be generated by the
business entity due to future restructuring or improvement of assets. However, the calculation of the usable value
has accounted for capital expenditures which have to be incurred in order to ensure current level of the expected
economic benefits.
Discount rate
To calculate discounted cash flows the Company has used the discount rate built based on the weighted average
cost of capital (WACC). To determine the correct value of the discount rate, the Management Board of the
Company has used publically available financial valuations and analyses of a group of companies with
comparable business profiles, published by independent financial institutions. Individual items of that rate were
estimated based on market data concerning risk free rate (Treasury bonds yield), beta quotient value which has
been releveraged based on the debt/equity market structure and the expected market rate of return.
Allocation of goodwill to CGUs
Based on the analyses performed, it was decided it was reasonable to distinguish two CGUs in the Sygnity
Group: the IT Segment and the Other Operations Segment. Goodwill in Sygnity S.A. is related only to the IT
Segment and thus the goodwill impairment test was performed only for the IT Segment.
Sygnity S.A.
Net operating assets (balance sheet value)
Recoverable
value
Surplus of recoverable value
over balance sheet value
Impairment identified?
IT Segment
226 098
287 933
61 835 No
Balance sheet value of the CGUs
The balance sheet value of each CGU includes the total net operating assets allocated to a given Segment, i.e.:
fixed tangible assets, intangible assets including goodwill, inventory and trade receivables and liabilities.
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 42
Key assumptions of the goodwill impairment test and the sensitivity analysis
The key assumptions in calculation of the useful value of each cash generating unit, as well as the sensitivity analysis relating to the goodwill impairment test performed are as follows:
Discount rate 7.99%
Growth rate for calculation of residual value 2.0%
Operating profit margin in 2017-2018 from 3.4% to 4.3%
Operating profit margin in 2019-2021 from 4.8% to 5.9%
The recoverable value of the cash generating centers is presented in the note below:
Recoverable value 287 933
Surplus of recoverable value over the balance sheet value 61 835
Change in the discount rate resulting in the recoverable value being equal to the book value
1.4 pp.
Change in the growth rate value for calculation of the residual value resulting in the recoverable value being equal to the book value
(2.1 pp.)
Change in levels of the operating profit margins assumed for individual years of projection (2017-2021), resulting in recoverable value being equal to book value
(21.48%)
Result of the impairment test
The recoverable value of a CGU determined based on calculation of the usable value exceeds its balance sheet
value, hence no goodwill impairment write-down was recognized. Due to the fact that the valuation is based to a
large extent on forecasted operating and financial results, which are additionally dependent on forecasts
concerning the market development, the Management Board points to inherent uncertainty related to realization
of those forecasts.
19. Investments in codependent entities
Balance sheet value of interests as of
Balance sheet value of interests as of
% equity share
As of Sep. 30, 2016 As of Sep. 30, 2015 Sep. 30, 2016 Sep. 30, 2015
Budimex S.A. Sygnity S.A. Sp. j. 2 564 2 908 33% 33%
2 564 2 908
Budimex S.A. Sygnity S.A. Sp. j.
Sep. 30, 2016 Sep. 30, 2015
Operating assets, 8 624 9 534
Including cash 7 397 8 273
Total assets 8 624 9 534
Equity
Total assets
7 769 8 361
Short-term liabilities 854 686
Revenue - -
Operating expenses (844) (1 677)
Net loss (762) (1 590)
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 43
Due to determination of goodwill impairment in Budimex S.A. Sygnity S.A. Sp. j. the Company has as of the
balance sheet date effected joint venture investment value write down in amount of 344, i.e. to the level of share
of net assets held.
20. Shares and interests in subsidiaries
Sep. 30, 2016 Sep. 30, 2015
Sygnity Business Solutions S.A. 40 833 40 833
Sygnity International Sp. z o.o. 2 000 2 000
Geomar S.A. 7 882 7 882
Enhandel Sp. z o.o. 60 60
50 775 50 775
Sygnity Business Solutions S.A.
Due to appearance of indications of possible goodwill impairment, as of September 30, 2016 the Company performed the test for impairment of shares of Sygnity Business Solutions S.A. using the fair value less costs to sell method. Cash flows used in the tests were based on the company’s strategy, approved financial plans for the subsequent fiscal years and the assumptions on market developments in the future periods. The recoverable value of investments includes the residual value estimated on assumption of increase of the generated margin after the forecasting period.
To calculate discounted cash flows the Company used the discount rate built based on the weighted average cost of capital (WACC). To determine the correct value of the discount rate, the Management Board of the Company has used publically available financial valuations and analyses of a group of companies with comparable business profiles, published by independent financial institutions. Individual items of that rate were estimated based on market data concerning risk free rate (Treasury bonds yield), beta quotient value which has been releveraged based on the debt/equity market structure and the expected market rate of return.
Key assumptions of the goodwill impairment test and the sensitivity analysis
The key assumptions in calculation of the recoverable value of the investment held as well as the sensitivity analysis relating to the goodwill impairment test performed are as follows:
Discount rate 7.99%
Growth rate for calculation of residual value 2.5%
Accumulated operating profit margin growth in 2017- 2021 20.0%
Change in the discount rate resulting in the recoverable value being equal to the book value
3.3 pp.
Change in the growth rate value for calculation of the residual value resulting in the recoverable value being equal to the book value
(5.6 pp.)
Change in levels of the operating profit margins assumed for individual years of projection (2017-2021), resulting in recoverable value being equal to book value
(55.8%)
Result of the impairment test
The recoverable value of shares held by the Company in Sygnity Business Solutions S.A. determined based on
calculation of the usable value exceeds its balance sheet value (i.e. 40 833), hence no goodwill impairment write
down was recognized for the investment held. Due to the fact that the valuation is based to a large extent on
forecasted operating and financial results, which are additionally dependent on forecasts concerning the market
developments, the Management Board points to inherent uncertainty related to realization of those forecasts.
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 44
Sygnity International Sp. z o.o.
Due to appearance of indications of possible goodwill impairment, as of September 30, 2016 the Company performed the test for impairment of interests in Sygnity International Sp. z o.o. using the fair value less costs to sell method. Cash flows used in the tests were based on the company’s strategy, approved financial plans for the subsequent fiscal years and the assumptions on market developments in the future periods. The recoverable value of investments includes the residual value estimated on assumption of increase of the generated margin after the forecasting period.
To calculate discounted cash flows the Company used the discount rate built based on the weighted average cost of capital (WACC). To determine the correct value of the discount rate, the Management Board of the Company has used publically available financial valuations and analyses of a group of companies with comparable business profiles, published by independent financial institutions. Individual items of that rate were estimated based on market data concerning risk free rate (Treasury bonds yield), beta quotient value which has been releveraged based on the debt/equity market structure and the expected market rate of return.
Key assumptions of the goodwill impairment test and the sensitivity analysis
The key assumptions in calculation of the recoverable value of the investment held as well as the sensitivity analysis relating to the goodwill impairment test performed are as follows:
Discount rate 7.99%
Growth rate for calculation of residual value 2.5%
Accumulated operating profit margin growth in 2017- 2021 0.5%
Change in the discount rate resulting in the recoverable value being equal to the book value
246.8 pp
Change in the growth rate value for calculation of the residual value resulting in the recoverable value being equal to the book value
>(100 pp.)
Change in levels of the operating profit margins assumed for individual years of projection (2017-2021), resulting in recoverable value being equal to book value
(95.7%)
Result of the impairment test
The recoverable value of shares held by the Company in Sygnity International Sp. z o.o. determined based on
calculation of the usable value exceeds its balance sheet value (i.e. 2 000), hence no goodwill impairment write
down was recognized for the investment held. Due to the fact that the valuation is based to a large extent on
forecasted operating and financial results, which are additionally dependent on forecasts concerning the market
developments, the Management Board points to inherent uncertainty related to realization of those forecasts.
The Company has not identified any indications of possible goodwill impairment in case of other investments in
subsidiaries.
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 45
21. Financial assets
Period:
Period:
from Oct. 1, 2015
from Oct. 1, 2014
to Sep. 30, 2016
to Sep. 30, 2015
Audited
Audited
Financial assets valuated at fair value:
Loans granted:
Long-term -
-
Short-term 2 404
904
2 404
904
The Company has a short-term receivables due to a loans from its subsidiaries UAB Baltijos Kompiuteriu Centras and Geomar S.A.
Fair value of financial assets held by the Company does not differ significantly from their balance sheet value.
22. Inventory
As of: As of:
Sep. 30, 2016 Sep. 30, 2015
Audited Audited
Inventory
Semi-products and products in progress 16 647
3 103
Goods 2 473
2 724
19 120
5 827
The balance of semi-products and products in progress consists mainly of costs of purchase of third party licenses and maintenance services settled for in time.
Changes to inventory write-down balance in the fiscal year ended September 30, 2016 and in the preceding year are presented below:
As of:
As of:
Sep. 30, 2016
Sep. 30, 2015
Audited
Audited
Inventory write-down
Beginning of the period 7 922 6 402
Establishment - 1 520
Release (392) -
End of the period 7 530
7 922
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 46
23. Trade receivables and other receivables
As of:
As of:
Sep. 30, 2016
Sep. 30, 2015
Audited
Audited
Net long-term receivables
Deposits paid 3 166 3 403
3 166
3 403
Trade receivables and other receivables
- for deliveries and services 49 977
51 907
a) from associates 164
165
b) from other entities 49 813
51 742
- un-invoiced receivables due from clients for work resulting from long-term contracts 133 592
122 850
- due to other taxes 156
156
- due to deposits 1 831
1 745
- other 123
491
185 679
177 149
Advance payments
- maintenance, renovations and rents for office premises 95
158
- insurances 551
327
- other 917
723
1 563
1 208
187 242
178 357
Receivables write-downs (positive value) 8 437
8 766
Gross total receivables 198 845
190 526
The receivables for delivery of goods and services are interest-free. Their fair value does not significantly differ from their balance sheet value.
Aging of trade receivables not covered with write-off as of the balance sheet date is presented below:
As of:
As of:
Sep. 30, 2016
Sep. 30, 2015
Audited
Audited
Short-term trade receivables
Not overdue, due within:
Up to 1 month 31 715 32 106
From 1 to 6 months 6 057 5 197
Over 6 months - -
37 772
37 303
Overdue in arrears for:
Up to 1 month 2 995 4 365
From 1 to 6 months 1 162 691
Over 6 months 8 048 9 548
12 205
14 604
49 977
51 907
With respect to overdue receivables in arrears over 6 months in amount of 8 048, despite being in dispute with the buyers, the Company, based on legal analyses, considers these amounts as likely recoverable in significant part.
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 47
Trade and other receivables of the Company are denominated in the following currencies:
As of:
As of:
Sep. 30, 2016
Sep. 30, 2015
Audited
Audited
PLN 189 277
180 244
EUR 1 123
1 506
USD 8
10
190 408
181 760
In the opinion of the Company there is no excessive concentration of credit risk, due to the numerous client base and the nature of clients. Clients for Company’s goods and services include public sector and banking and finance sector organizations. The public sector and enterprises with majority stake by public sector entities include primarily the government offices, central and local government agencies, with credit rating raising no concerns. The banking and finance sector includes mainly the banks with which the Entity is collaborating, securities market supervisory institutions, investment funds and insurance companies.
With respect to receivables uninvoiced to clients for work items resulting from long-term contracts, 87% concerns the public sector, including 76% with one client.
The other trading partners are primarily IT sector companies (of various sizes), with which the Company collaborates in performance of contracts where the end clients are mostly the public sector entities. Based on collaboration track record, receivables from this group of buyers are not treated as lower credit quality receivables.
The Company recognizes the costs of creating and the revenues on releasing of receivables write-downs depending on the method of write-down allocation to relevant contracts.
Changes of receivable write-downs during the fiscal year commenced October 1 2015 and ended September 30, 2016 are presented below:
Period:
Period:
from Oct. 1, 2015
from Oct. 1, 2014
to Sep. 30, 2016
to Sep. 30, 2015
Audited
Audited
Receivables write-down
At the beginning of period 8 766 5 932
Establishment 4 765
4 651
Release (59)
(814)
Utilization (5 035)
(1 003)
At the end of period 8 437
8 766
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 48
24. Long-term contracts
The Company accounts for long-term contracts on a degree of progress of work principle.
Period:
Period:
from Oct. 1, 2015
from Oct. 1, 2014
to Sep. 30, 2016
to Sep. 30, 2015
Audited
Audited
Disclosures concerning long-term contracts in progress (during the period)
Revenues from delivery of IT contracts 111 104
103 691
Accrued expenses due to delivery of IT contracts (96 652)
(91 199)
Profits from delivery of IT contracts 14 452
12 492
Cumulatively
as of: Cumulatively
as of:
Sep. 30, 2016
Sep. 30, 2015
Disclosures concerning long-term contracts in progress (cumulative data)
Revenues from delivery of IT contracts 297 156
240 480
Accrued expenses due to delivery of IT contracts (252 936)
(203 203)
Profits / (losses) on delivery of IT contracts 44 220
37 277
Invoiced amounts total 166 335
119 020
As of:
As of:
Sep. 30, 2016
Sep. 30, 2015
Recognized in the financial statements as accounts receivable (in accordance with the balance sheet):
- from clients for work due under long-term contracts 133 592
122 850
- to clients for long-term contracts 2 771
1 390
Due to the nature of long-term contracts where the dates of commencement and of completion of work items fall in different periods, their delivery is subject to liquidity risk arising out of timeliness of cash inflows. Accrued revenues reflect the percentage progress of specific work items in conformance with the method of valuation in function of degree of their progress.
As of the balance sheet date and as of the day of drawing up these financial statements the Company is a party to two major long-term contracts being delivered to public sector institutions. In the fiscal year ended September 30, 2016 the Company has recognized in total out of both long-term contracts 57 729 in sales revenues while receivables for work items resulting from these contracts that were uninvoiced as of the balance sheet date constituted in total 62% of trade receivables and other short-term receivables as of September 30, 2016 (see also note 23). After the balance sheet date up to the date of drawing up these statements no invoices were issued for these projects. The contracts in progress are profitable.
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 49
25. Cash and cash equivalents
As of:
As of:
Sep. 30, 2016
Sep. 30, 2015
Audited
Audited
Cash and short-term deposits
Cash on hand and in banks 61 668
1 476
61 668
1 476
Cash in banks and bank deposits are variable interest deposits, the rate of which depends on the interest rate on the Polish inter-banking market. Bank deposits are established for different terms - from several days to one month - depending on the demand of the Company for cash.
26. Equity
26.1 Share capital
As of September 30, 2016 the Parent company’s share capital amounted to 15 082 and covered 11 886 242 (not in thousands) fully paid up ordinary bearer shares with a face value of PLN 1 each and 3 196 due to hyperinflationary revaluation of equity. Shares of all series are equally privileged with respect to dividend, voting rights, and return on capital.
Shareholder structure
According to the knowledge of the Management Board of the Parent Company resulting from information from the shareholders obtained on power of article 69 sections 1 and 2 of the Public Offering Act, the structure of shareholders holding directly or indirectly through subsidiary companies a minimum of 5% of the total number of votes at the General Meeting of the Company was as follows:
Shareholder
As of December 16, 2016 As of September 30, 2016 As of September 30, 2015
Number of shares
% of votes Number of
shares % of votes
Number of shares
% of votes
Legg Mason Towarzystwo Funduszy Inwestycyjnych S.A.
1 444 412 12.15 1 444 412 12.15 1 444 412 12.15
Cron sp. z o. o. 1 433 840 12.06 1 193 000 10.04 - -
Quercus Towarzystwo Funduszy Inwestycyjnych S.A.
1 185 190 9.97 1 185 190 9.97 1 185 190 9.97
Nationale-Nederlanden Otwarty Fundusz Emerytalny
613 097 5.16 613 097 5.16 613 097 5.16
Others * 7 209 703 60.66 7 450 543 62.68 8 643 543 72.72
Total 11 886 242 100.00 11 886 242 100.00 11 886 242 100.00
* Including 523 313 treasury shares repurchased by the Company.
Treasury shares
On March 31, 2016 the Company has completed its share buyback program.
The share buyback was completed due to the expiry of the deadline defined in the resolution no. 7 of the Ordinary General Meeting of March 31, 2015 on share buyback and the authorization granted to the company's Management Board ("OGM Resolution"), adopted on power of article 362 § 1 item 8 the Commercial Companies Code.
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 50
Share buyback pursuant to the authorization granted in the OGM Resolution commenced on June 1, 2015 on power of the resolution of Company’s Management Board of June 1, 2015 on commencement of the share buyback program. Company’s shares were purchased in transactions made via the brokerage house of ING Securities S.A. with its seat in Warsaw at the Warsaw Stock Exchange S.A.
The total number of shares acquired by the Company under the completed share buyback program is 193 313 (not in thousands), corresponding to 193 313 (not in thousands) votes at the General Meeting of the Company and 1.6% of the total number of votes at the General Meeting of the Company (however the Company is not exercising its voting rights from treasury shares);
The average price per share acquired under the completed share buyback program was PLN 8.64 (not in thousands;
In the fiscal year ended September 30, 2016 the Company has acquired a total of 156 945 (not in thousands) shares for a total price of 1 305. The average price per share acquired was PLN 8.32 (not in thousands).
The completed share buyback program was implemented for the purpose of:
redemption;
financing the company's investment transactions, in particular for further resale in the takeover and acquisition processes performed for the benefit of shareholders/partners in the entities taken over in return for interests/shares in these entities;
implementing future incentive schemes.
The ultimate goal of the use of the company's treasury shares repurchased under the Share Buyback Program pursuant to the authorization granted in the OGM Resolution shall be defined by the Management Board of the Company in a separate executive resolution.
The total number of treasury shares held by Sygnity is 523 313 and constitutes a 4.4% share in the share capital of the Company and the total number of votes at the General Meeting of the Company, however the Company does not exercise its voting rights from treasury shares.
26.2 Shares of Sygnity S.A. held by Members of Management Board and Members of Supervisory Board
Number of shares as of
Dec. 16, 2016
Number of shares as of
Sep. 30, 2016
Number of shares as of
Sep. 30, 2015
Mr Ryszard Wojnowski n/a 364 305 364 305
Mr Tomasz Sielicki 209 374 209 374 229 374
Mr Jakub Leśniewski 21 249 21 249 -
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 51
26.3 Other capital items
Share premium
The share premium capital is a surplus capital representing the amount raised on the issue of shares of individual series in excess of their nominal value less the cost of issuing them.
Spare capital
Spare capital is created in the Company in accordance with the Articles of Association of Sygnity S.A. It is subject to distribution up to the amount specified in the Commercial Companies Code. As of September 30, 2016 it amounted to 22 327.
27. Employee share schemes
2011 Program
On June 30, 2011 the Ordinary General Meeting of Shareholders of the company adopted a resolution on establishment of rules of execution of the Incentive Program in 2011-2013 by the Company. The basic principles of the program referred to in the abovementioned resolution (regulatory filing 47/2011) are presented in Note 27 to the consolidated financial statements for the fiscal year ended September 30, 2013. Pursuant to the decision of the Management Board of December 11, 2012 (regulatory filing 46/2012), execution of the last part of the incentive program scheduled for 2013 was abandoned. As of September 30, 2016 the number of options granted to former Members of the Management Board that have not been exercised was 210 000 (not in thousands). In the fiscal year ended September 30, 2016 no options were granted or exercised.
In case the options are not exercised the resulting rights shall expire on December 31, 2016.
2013 Program
On January 10, 2013 the Ordinary General Meeting of Shareholders of the company adopted a resolution on establishment of rules of execution of the Incentive Program for fiscal year 2012/2013 by the company. The basic principles of the program referred to in the abovementioned resolution (regulatory filing 3/2013) are:
a. The persons entitled to participate in the Options Program are the members of the Management Board of the Company;
b. The maximum number of shares in the program may not exceed 150 000 (not in thousands) shares of the Company;
c. The entitled persons shall have the right to exercise the Options on condition that the Company shall disclose in its consolidated financial statements of the Company's Capital Group approved by the General Meeting, made for the fiscal year, a net profit of at least 15 000;
d. The net income shall be calculated without considering the financial effects of events unrelated to the normal operation of the Company;
e. The share price under the options program will be equal to PLN 15 (not in thousands);
f. The Supervisory Board shall supervise the implementation of this program and shall be directly responsible for granting the rights;
g. The condition of execution of the Program in its full scope is the acquisition by the Company of up to 150 000 (not in thousands) of its own shares under the terms defined in the Resolution no. 24 of the Ordinary General Meeting of January 10, 2013;
h. In case of failure to exercise an option, the resulting right expires on September 30, 2016.
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 52
On May 19, 2014 the Supervisory Board of Sygnity S.A. granted the former Members of the Management Board of Sygnity the options for shares under this Program. According to the Supervisory Board, the General Premise for granting the Options under the Program was met. As of September 30, 2016 the number of options granted to former Members of the Management Board that have not been exercised was 120 000 (not in thousands). In the fiscal year ended September 30, 2016 no options were granted or exercised. As the options mentioned above have not been exercised, the rights resulting from there under have expired on September 30, 2016.
28. Interest-bearing bank credits and loans
Interest rate
Repayment deadline
As of:
As of:
Sep. 30, 2016 Sep. 30, 2015
Audited
Audited
Short-term
Overdraft facilities
ING Bank Śląski SA
WIBOR 1M+ margin
Mar. 31, 2017
-
6 047
Deutsche Bank Polska SA
WIBOR 1M+ margin
Mar. 31, 2017
12 385
15 329
Loan
De Lage Landen Leasing Polska S.A.
7% effective
May 25, 2016
-
424
Sygnity Business Solutions S.A.
WIBOR 1M+ margin
Mar. 31, 2017
7 500
9 000
19 885
30 800
As of September 30, 2016 the Company had a loan of 7 500 granted by its subsidiary.
As of September 30, 2016 the Company had multi-purpose lines of credit at 2 banks (Deutsche Bank Polska S.A. and ING Bank Śląski S.A.) for a total amount of 80 000 As of September 30, 2016 the Company has utilized 21 783 in guarantee lines. Additionally, as of September 30, 2016 the Company had a bank guarantee for a total of 11 605 issued by Bank Pekao S.A. As of September 30, 2016, the multi-purpose lines of credit granted were secured by the assignments of proceeds under contracts and the granted powers of attorney to bank accounts as well as representation on submission to enforcement under article 777 paragraph 1 item 5 of the Polish Civil Procedure code. Under the financing agreements concluded with the ING Bank Śląski S.A. the Company has undertaken to observe the following covenants calculated based on consolidated data, among others: - maintaining the value of its equity at not less than 200 000, - maintaining positive EBITDA in at least one of two consecutive calendar quarters, - for each calendar quarter meeting the condition of: net debt /EBITDA not exceeding 3.5.
Pursuant to the agreement, the ING Bank Śląski S.A. may refuse further financing or may terminate the agreement upon occurrence of circumstances that in justified opinion of the bank shall adversely impact Customer’s ability to perform his obligations under the agreement. Breach of terms and conditions of the Bond Issue Program or terms and conditions of a credit agreement with another bank meets the criteria of the above definition.
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 53
Under the financing agreements concluded with the Deutsche Bank Polska S.A. the Company has undertaken to observe the following covenants calculated based on consolidated data, among others: - maintaining the value of its equity at not less than 200 000, - maintaining positive EBITDA in every quarter of the calendar year, - for each calendar quarter meeting the condition of: net financial debt /EBITDA below 3.5.
Pursuant to the agreement, the Deutsche Bank Polska S.A. may refuse further financing or may terminate the agreement upon occurrence of circumstances that in justified opinion of the bank shall adversely impact credit Customer’s ability to perform his obligations under the agreement. Breach of terms and conditions of the Bond Issue Program or terms and conditions of a credit agreement with another bank meets the criteria of the above definition. The lines of credit have been granted on market terms and conditions that do not differ from those prevailing in case of such agreements.
29. Bond liabilities and other financial liabilities
As of:
As of:
Sep. 30, 2016
Sep. 30, 2015
Audited
Audited
Long-term liabilities
Bond liabilities 39 885
39 793
Financial lease liabilities -
98
39 885
39 891
Short-term liabilities
Bond liabilities 486
499
Financial lease liabilities 95
1 271
581
1 770
Bond and financial lease liabilities are valued as of their initial recognition at fair value less transaction costs. As of the balance sheet date valuation was made using depreciated cost with the effective interest rate method (in adjusted purchase price) and divided as per maturity dates of generated flows into short-term and long-term parts.
Bond liabilities
The Bond Issue Program was approved on November 28, 2014 by the Extraordinary General Meeting of the Parent company. The maximum value of the Program is 100 000. Under the Bond Issue Program, on December 19, 2014 the Company issued four thousand bonds in the 1/2014 series with face value of 10, 40 000 in total. Redemption date of the new issue is December 19, 2017. The bonds are bearing interest at a floating WIBOR rate for 6-month deposits in PLN plus margin of 2.6%. Bond issue was executed by mBank S.A. under the binding bond issue program agreement. Based on the resolution by BondSpot S.A. the company bonds of series 1/2014 issued on December 19, 2014 for the amount of 40 000 have been introduced to trading in the alternative trading system on Catalyst on February 23, 2015.
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 54
Under the Bond Issue Program the Company has undertaken to observe the following covenants calculated based on consolidated data, among others: - maintaining the value of its equity at not less than 200 000, - for each calendar quarter meeting the condition of: net financial debt /EBITDA not exceeding 3.5.
The terms and conditions of the Bond Issue Program define Covenant Breaches occurrence of which shall result in the possibility of Bond Holder notifying the Issuer that the Bond is subject to immediate redemption. In particular the Covenant Breaches are:
- Breach of the Financial Indicators described above, - Breach of terms and conditions of Financial Debt agreements (whereas Financial Debt consists in particular of bank credits and loans).
As of September 30, 2016 the fair value of the Bonds based on Catalyst market listing as of the day of the report is 100% of the face value.
Financial lease liabilities:
Minimum lease
payments
Future financial expenses under financial lease
payments
Present value of lease
payments
As of:
Sep. 30, 2016
Within 1 year
100
(5)
95
Within 1 to 5 years
-
-
-
100
(5)
95
As of:
Sep. 30, 2015
Within 1 year
1 381
(110)
1 271
Within 1 to 5 years
100
(2)
98
1 481
(112)
1 369
Under the financial lease agreements, the Company uses computer hardware, software and means of transportation. The Company concludes lease agreements for terms of 3 to 5 years. Such agreements are secured with blank promissory notes and, in certain cases, with pledges on fixed assets. Lease installments are affected not only by foreign exchange rates, but also by change to the applicable interest rate constituting an element used in calculation of lease installments. Financial lease agreements have no special restrictions and additional terms and conditions. Upon lease period, the Company may purchase the leased items for the amounts specified in the agreements.
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 55
30. Provisions
As of: As of:
Sep. 30, 2016 Sep. 30, 2015
Audited Audited
Long-term
Provisions for potential claims in litigations in progress 1 000
4 300
Provisions for warranty repairs 3 702 3 620
Provisions for retirement and similar benefits 201 143
4 903
8 063
Short-term
Provisions for potential claims in litigations in progress 720
175
Provisions for warranty repairs 3 345 3 786
Provisions for retirement and similar benefits 177 237
Provisions for penalties 508 697
4 750
4 895
Oct. 1, 2015 - Sep. 30, 2016 As of
Oct. 1, 2015 Established Used up Released As of
Sep. 30, 2016
Provisions for potential claims in litigations in progress 4 475 616 (3 300) (71) 1 720
Provision for warranty repairs 7 406 11 076 (5 939) (5 496) 7 047
Provision for retirement and similar benefits 380 - - (2) 378
Provision for penalties 697 298 - (487) 508
Total 12 958 11 990 (9 239) (6 056) 9 653
of which short-term 4 895
4 750
of which long-term 8 063
4 903
Oct. 1, 2014 - Sep. 30, 2015 As of 01.10.2014 Established Used up Released
As of Sep. 30, 2015
Provisions for potential claims in litigations in progress 7 627 3 404 (1 047) (5 509) 4 475
Provision for warranty repairs 6 512 8 140 (4 205) (3 041) 7 406
Provision for retirement and similar benefits 380 - - - 380
Provision for penalties 1 881 1 330 (100) (2 414) 697
Total 16 400 12 874 (5 352) (10 964) 12 958
of which short-term 5 351 - - - 4 895
of which long-term 11 049 - - - 8 063
Provision for warranty services
The Company establishes provisions for the expected warranty service expenses and costs of warranty repairs. The assumptions for the estimates for warranty services and repairs were determined based on current levels of sales and up to date information about the costs of warranties incurred in the past periods taking into account the client segments and their specifics.
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 56
31. Trade liabilities and other liabilities
As of:
As of:
Sep. 30, 2016
Sep. 30, 2015
Audited
Audited
Long-term
Trade liabilities and other liabilities:
- Trade liabilities 9 742
-
9 742
-
Short-term
Trade liabilities and other liabilities:
- Trade liabilities 102 690
52 895
a) from associates 12 149 1 480
b) from other entities 90 541 51 415
Liabilities for taxes, duties, social security and other contributions 19 581
9 325
Remuneration liabilities 7 360
8 471
Other liabilities 275
313
129 906
71 004
Accrued liabilities for:
- costs of completed contracts 12 335
29 071
- reviews and audits of financial statements 105
105
- bonuses, awards and commissions 1 909
2 281
- accrued rents 1 883
1 791
- unutilized holidays and overtime 1 719
1 873
- severance pay, non-compete compensation 72
1 603
- other current expenses 185
278
18 208
37 002
148 114
108 006
157 856
108 006
As of:
As of:
Sep. 30, 2016
Sep. 30, 2015
Audited
Audited
Short-term trade liabilities
Not overdue, due within:
Up to 1 month 28 976 25 566
From 1 to 6 months 25 912 3 935
Over 6 months 1 230 320
56 117
29 821
Overdue in arrears for:
Up to 1 month 14 155 9 471
From 1 to 6 months 24 190 2 218
Over 6 months 8 228 11 385
46 573
23 074
102 690
52 895
The fair value of trade and other liabilities does not differ significantly from their balance sheet value. Overdue trade liabilities are in particular made of a liability towards a supplier subject to claims described in note 38 in an amount of 12 844 and liabilities towards subsidiaries in amount of 7 700.
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 57
32. Deferred income
As of:
As of:
Sep. 30, 2016
Sep. 30, 2015
-
Short-term
- unrealized sales 53 039
4 141
- revenues from work items resulting out of long-term contracts 2 771
1 390
55 810
5 531
33. Associates and transactions with associates
The equity relations as of September 30, 2016:
#. Company name Registered seat
Nature of business Share of equity
Sep. 30, 2016
Share of equity Sep.
30, 2015
1 Geomar S.A. 1) Szczecin, Poland
Spatial information, geodesy and cartography. 86.43 86.43
2 ICD Comp Consulting
Sp. z o.o. 2)
Warsaw, Poland
Software and services for the banking sector. - 100.00
3 Sygnity Business Solutions S.A. 3)
Zielona Góra, Poland
Software and IT services. 98.33 98.33
4 UAB Baltijos Kompiuteriu Centras
Vilnius, Lithuania
Computerization services to the industrial, trade and public administration sectors.
100.00 100.00
5 Sygnity International Sp. z o.o.
Warsaw, Poland
Software and hardware sales on international markets. 100.00 100.00
6 Enhandel Sp. z o.o. Warsaw, Poland
Electricity trading. 100.00 100.00
7 Budimex S.A. Sygnity S.A. Sp. j.
Warsaw, Poland
Special purpose vehicle for investment project. 33.00 33.00
8 Emtal Sp. z o.o. Gdańsk, Poland Supplier and integrator of systems for public transport. 50.00 50.00
1) After the balance sheet date the Company has increased its share of equity in Geomar S.A. to 100% (see also note 39).
2) On February 26, 2013 the General Meeting of Partners adopted a resolution on dissolution and liquidation of the company, setting the liquidation process commencement date as February 26, 2013. The Company decided not to consolidate the company due to the fact that its financial data is insignificant from the perspective of the consolidated financial statements. On August 17, 2016 the Company was stricken off the National Court Register.
3) On November 5, 2015 a change of company name from Max Elektronik S.A. to Sygnity Business Solutions S.A. was registered
In the fiscal year ended September 30, 2016 the Company did not enter into any atypical transactions with its associates on terms and conditions differing from those commonly used for similar types of agreements.
Total amounts of transactions between the company and the associates entered into in the fiscal year commended October 1, 2015 and ended September 30, 2016 are presented below.
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 58
Associate
Sales of goods
and services
Purchases of goods
and services
Trade and
other receivables
Loans
granted
Trade and
other liabilities
Financial
liabilities
ICD CompConsulting Sp. z o.o.
2015/16
- -
- - - -
2014/15
19
-
-
-
-
-
Sygnity Business Solutions S.A.
2015/16
923
15 300 21 -
12 185 7 500
2014/15
589
3 343
27
-
1 319
9 000
UAB Baltijos Kompiuteriu Centras
2015/16
81
39
69
904 - -
2014/15
327
-
74
904
-
-
Geomar S.A. 2015/16
18
85
20
1 500 -
-
2014/15
17
-
16
-
137
-
Sygnity International Sp. z o.o.
2015/16
782
172
55 -
19 -
2014/15
532
220
48
-
24
-
Total 2015/16
1 804
15 596
165
2 404
12 204
7 500
2014/15
1 484
3 563
165
904
1 480
9 000
34. Compensation of the top management
Period:
Period:
from Oct. 1, 2015
from Oct. 1, 2014
to Sep. 30, 2016
to Sep. 30, 2015
Audited
Audited
Management Board of Sygnity S.A. 5 141
4 770
Short-term employee benefits
5 141
4 770
Supervisory Board of Sygnity S.A. 278
278
Short-term employee benefits 278
278
The above table does not include the payments of annual bonuses for which provisions have been established in the fiscal year 2016 in the amount of 306 (in fiscal year 2015 no such provision has been established).
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 59
35. Structure of employment
The average employment at the Company in the fiscal year commenced October 1, Oct. 1, 2015 and ended September 30, 2016 as well as in previous year was as follows:
Top management 4
4
Administration 113
136
Sales department 77
63
Production 677
901
Total 871
1 104
36. Contingent liabilities
Guarantees, bills of exchange, sureties
As of:
As of:
Sep. 30, 2016
Sep. 30, 2015
Audited
Audited
Contingent liabilities
Liabilities out of issued guarantees including: 52 671
52 807
- performance bonds and retention bonds 49 598
43 635
- tender bonds 1 663
4 245
- payment guarantees 1 410
4 927
Sureties 410
616
53 081
53 423
As of September 30, 2016 contingent liabilities of the Company resulted for the most from bank and insurance guarantees issued by the Company, majority of which (94%) concerned agreement (contract) performance bonds and retention bonds. The purpose of a performance bond is to secure the claims arising out of non-performance of improper performance of contract.
Tax office proceedings
On November 25, 2015 the Company received the decision by the Director of the Tax Audits Office of November 20, 2015 concerning the tax liability under Corporate Income Tax for 2008. On November 27, 2015 the Company settled the liability resulting out of this decision including the accrued interest up to the date of payment in total amount of 3 211. As of September 30, 2015 the Company has established the relevant provision in amount of 3 300. At present the proceedings at the WSA (District Administrative Court) in this case are suspended.
Disputes
The Company establishes provisions for potentially negative outcomes of litigations, provided that outflow of funds to which economic benefits are related is likely.
As of September 30, 2016 disputes in litigation mainly concerned the claims arising out of trade contracts with trading partners and employee claims. As of September 30, 2016 the likeliness of outflow of funds resulting from litigations in progress, for which no provisions are established, was insignificant in the opinion of the Management Board.
Sygnity S.A. Separate financial statements for the fiscal year commenced on October 1, 2015 and ended on September 30, 2016
[all data in PLN thousands unless specified otherwise]
Supplemental information constitutes an integral part of these separate financial statements 60
37. Seasonal or periodical nature of operations
As a significant share of revenues comes from clients in the public sector and from enterprises realizing their IT budgets in the second half of the calendar year, there is a significant concentration of revenues and realization of positive financial results of the Company in Q4 of the calendar year.
38. Claims and disputes
In the reporting period presented there were no proceedings in progress before the court, competent arbitration authority or public administration body relating to the liabilities or receivables of the issuer or its subsidiary the value of which would be equivalent to at least 10% of Issuer’s equity. The total value of proceedings that Companies of the Sygnity Capital Group are a party to does not exceed 10% of Issuer’s equity both in case of liabilities as well as receivables. At the same time the Company wishes to inform that after the balance sheet date the Company received a claim in form of writ of payment in proceedings commenced by one of the suppliers who in Company’s opinion is unrightfully demanding the payment of 16 856 for delivery of licenses, maintenance of licenses and for services rendered. Upon request of this same supplier another payment order was issued for amount of 7 564 that in the opinion of the Company also does not merit recognition. In case of both receivables the Company has appealed both writs in their entirety. In principle the disagreement between the parties in assessment of the claims raised concerns the interpretation of the agreement binding the parties. The Company stands by its opinion that the receivables are not yet due and in addition, in case of one of them, raises objections as to the locus standi of the claimant. The value of the first claim in amount of 5 663 and of the second one in total are recognized in the costs of the fiscal year. The value of the first dispute in amount of 11 194 is not included in the costs of the fiscal year as it concerns maintenance of a product that is not completed.
39. Events after the reporting period
There were no events occurring after the reporting period that would have significant influence on these financial statements. However, some information that merits attention, include:
After the balance sheet date the Company, as a result of transactions settled by November 7, 2016 has increased its share of equity of its Geomar S.A. subsidiary from 86.43% held on the balance sheet date to 100% for the amount of 647.
On December 15, 2016 the Company has received a request from the Tax Audits Office to provide clarifications and submit documents concerning transactions made in the fiscal year 2013. As of December 16, 2016 the Company is in the process of assembling the required documents.