Annual / Quarterly Financial Statement • Apr 30, 2020
Annual / Quarterly Financial Statement
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| STATEMENT OF FINANCIAL POSITION | $3 - 4$ |
|---|---|
| STATEMENT OF REVENUES AND EXPENSES | 5 |
| STATEMENT OF GLOBAL RESULT | 6 |
| STATEMENT OF MODIFICATIONS OF EQUITY CAPITAL | 7 |
| STATEMENT OF TREASURY FLOWS | 8 |
| NOTES TO INDIVIDUAL FINANCIAL STATEMENTS | $9 - 52$ |
| APPENDIX A - DIRECTORS REPORT |
| Note | 31 December 2019 |
31 December 2018 |
|
|---|---|---|---|
| Asset | |||
| Fixed assets | |||
| Tangible assets Intangible assets |
6 $\overline{7}$ |
29.653.422 9.709 |
30.346.332 9.239 |
| Total fixed assets | 29.663.131 | 30.355.571 | |
| Current assets | |||
| Stocks | 11 | 2.640.638 | 4.058.368 |
| Clients and other claims | 10 | 282.329 | 659.424 |
| Cash and cash equivalents | 12 | 335.922 | 458.044 |
| Short-term financial assets | 110.155 | ||
| Total current assets | 3.369.044 | 5.175.836 | |
| Total assets | 33.032.175 | 35.531.407 | |
| Equity and debts | |||
| Registered capital | 13 | 18.110.957 | 18.110.957 |
| Reserves | 21.335.091 | 21.335.091 | |
| Reported result | $-44.288.947$ | $-40.835.609$ | |
| Total equity | $-4.842.899$ | $-1.389.561$ | |
| Long term debts | |||
| Loans | |||
| Debts related to deferred tax | 16 | 2.666.568 | 3.006.772 |
| Suppliers and other debts | |||
| 2.666.568 | 3.006.772 |
The appended notes represent an integral part of the financial statements hereof.
| Note | 31 December 2019 |
31 December 2018 |
|
|---|---|---|---|
| Current debts | |||
| Suppliers and other debts Settlements with shareholders on |
14 | 9.829.821 | 9.597.502 |
| registered capital | 100 | 100 | |
| Loans | 25.230.721 | 24.148.638 | |
| Provisions for risks and expenses 17 | 147.864 | 167.956 | |
| Total current debts | 35,208.507 | 33.914.196 | |
| Total debts | 37.875.074 | 36.920.968 | |
| Total equity and debts | 33.032.175 | 35.531.407 |
The financial statements were signed today
Director,
Akper Saryyev
Drafted by,
expert contabil Fătăcean Gheorghe
canter that has a sea Fataceau Guestale
| Year concluded on Year concluded on | |||
|---|---|---|---|
| 31 December | 31 December | ||
| Note | 2019 | 2018 | |
| Revenues | 7.305.111 | 8.283.671 | |
| Other operating income | 105.325 | 5.987 | |
| Variation of finished products stocks | |||
| and undergoing production | 603.986 | 111.204 | |
| Raw materials and materials | $-4.698.787$ | $-4.591.398$ | |
| Cost of merchandise | $-59.940$ | $-246.769$ | |
| Staff expenditure | 20 | $-2.497.509$ | $-2.582.282$ |
| Utilities expenditure | $-330.642$ | $-385.251$ | |
| Services rendered by third parties | $-380.195$ | $-465.593$ | |
| Amortisation and depreciation of fixed assets | $-776.287$ | $-973.354$ | |
| Net movement in provision for other | |||
| risks and expenditure | 17 | 20.092 | 2.031 |
| Other operational expenditure | 19 | $-585.818$ | $-1.134.631$ |
| Other revenues / (losses), net | 18 | $-1.171.753$ | 621.133 |
| Operational result | $-2.466.417$ | $-1.355.252$ | |
| Financial revenues | 69 | ||
| Financial expenditure | $-1.327.192$ | $-530.108$ | |
| Net financial loss | 21 | $-1.327.123$ | $-530.108$ |
| Loss before taxation | $-3.793.540$ | $-1.885.360$ | |
| Revenue / (Expenditure) with current and deferred | |||
| corporation tax | 22 | 340.204 | $-26.153$ |
| Net loss related to the exercise | $-3.453.336$ | $-1.911.513$ | |
| Number of shares issued | 40.000.000 | 40.000.000 | |
| The result on basic action and diluted one | $-0,0863$ | $-0,0478$ |
The appended notes represent an integral part of the financial statements hereof.
| Year concluded on Year concluded on 31 December |
||
|---|---|---|
| Note | 2019 | 31 December 2018 |
| Loss related to exercise | $-3.453.336$ | $-1.911.513$ |
| Other elements of the global result: | ||
| Profit/(Loss) from the reassessment of buildings Impact of deferred tax on the reassessment |
13.804.980 | |
| reserves | $-2.208.797$ | |
| Other elements of the global result Related to the year, net tax |
11.596.183 | |
| Total global result related to the exercise | $-3.453.336$ | 9.684.670 |
The financial statements were signed today
Director,
Akper Saryyev
Drafted by,
expert contabil Fătăcean Gheorghe
$I$ and Fatacean Gheorithe and or
FOR THE YEAR CONCLUDED AT 31 DECEMBER 2019
(in lei, if not mentioned otherwise) ARMATURA S.A.
STATEMENT OF MODIFICATIONS OF EQUITY
| Registered capital Reserves | reassessment | Other reserves | Reported result | Total | |
|---|---|---|---|---|---|
| Balance at 1 January 2018 | 18.110.957 | 8.787.961 | 950.947 | $-38.924.096$ | $-11.074.231$ |
| Other elements of global result Profit/Loss related to the year Reserves from reassessment |
13.804.980 $-2.208.797$ |
$-1.911.513$ | 13.804.980 $-1.911.513$ $-2.208.797$ |
||
| Total global result | 11.596.183 | $-1.911.513$ | 9.684.670 | ||
| Balance at 31 December 2018 | 18.110.957 | 20.384.144 | 950.947 | 40.835.611 | $-1.389.563$ |
| Other elements of global result Profit/Loss related to the year Reserves from reassessment Balance at 1 January 2019 |
18.110.957 | 20.384.144 | 950.947 | $-3.453.336$ 40.835.611 |
$-3.453.336$ $-1.389.563$ |
| Total global result | $-3.453.336$ | $-3.453.336$ | |||
| The financial statements were signed today Balance at 31 December 2019 |
18.110.957 | 20.384.144 | 950.947 | -44.288.947 | -4.842.899 |
| Akper Saryyev Director, |
Drafted by, Gheorghe expert contabil Fătăcean |
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Continuation
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| (in lei, if not mentioned otherwise) | Year concluded on Year concluded on | |
|---|---|---|
| 31 December | 31 December | |
| Note | 2019 | 2018 |
| Cash flows from the operating activities Cash generated from operations 24 Paid interests |
76.630 | $-32.208$ |
| Net cash generated from operating activities | 76.630 | $-32.208$ |
| Cash flows from investment activities Purchase of tangible assets Net proceeds from the sale of tangible assets Interest proceeds |
$-101.104$ 12.438 69 |
$-75.574$ |
| Net cash used in investment activities | $-88.597$ | $-75.574$ |
| Cash flows from financing activities | ||
| Settlements from shareholders Net cash used in financing activities |
||
| Net modification of cash and cash equivalents Cash and cash equivalents |
$-11.967$ | $-107.781$ |
| at the beginning of the year 12 |
458.044 | 565.825 |
| Increases /- Decreases | $-11.967$ | $-107.781$ |
| Cash and cash equivalents at the end of the year 12 | 446.077 | 458.044 |
The financial statements were signed today
Director,
Akper Saryyev
$4.6$
Drafted by, Expert contabil Fătăcean Gheorghe
atacean Ghi
$74.1$
ARMATURA SA ("The Company") registered at the beginning of the year 1991 at Cluj Trade Registry as a share company, and at the end of the year 1996 concluded the privatization process, currently being a trade company with full private registered capital. The company has the registered office in Cluj-Napoca, 19 Garii street, where it carries out its production activity.
The company has as object of activity "Manufacture of other taps and valves", NACE code and is active in the field of metallic armatures with experience in manufacture of armatures for thermal installations and water and gas supply installations, including today in the product portfolio over 1,500 articles with dimensions according to the type. The company clients are national and international companies.
The Company's shares are registered in the second category of Bucharest Stock Exchange since 1997, and in the year 2019 the main shareholder is HERZ ARMATUREN Ges.m.b.H Austria.
The company has no branches, is not in association and does not own participation titles.
The company has a submitted registered capital in value of Lei 4,000,000 representing 40,000,000 shares with a nominal value of 0.1 lei per share.
The main accounting policies applied when drafting these individual financial statements are presented here. These policies were concertedly applied during all the years presented, if not mentioned otherwise.
The financial individual statements of the Company were drafted pursuant to the provisions of the Order of Public Finance Ministry no. 2.844/2016, for the approval of Accounting regulations pursuant to the International Financial Reporting Standards, applicable to the trade companies whose securities are admitted for trade on a regulated market, with subsequent modifications and clarifications.
These provisions are in compliance to the International Financial Reporting Standards adopted by the European Union, except IAS 21 - The effects of modification of the exchange rate, regarding the functional currency. In order to draft these financial reports pursuant to the legislation requirements from Romania, the functional currency of the Company is considered to be RON ("Romanian leu").
For the year concluded on 31 December 2011 and for all prior financial years, the Company drafted the individual financial statements pursuant to the Romanian accounting regulations (local accounting principles) represented by OMF 3055/2009 for the years 2011 and 2010. On December the 31st 2012 the Company drafted the first set of individual financial statements pursuant to IFRS adopted by the EU.
The drafting of individual financial situations pursuant to IFRS requires the use of critical accounting estimates. Also, it requires to the management to use the reasoning in the application process of the Company's accounting policies. The fields which involve a higher complexity degree and application of these reasonings or those in which the hypothesis and estimates have a significant impact on the individual financial statements are presented in note 4
The current financial statements were drafted on the basis of the principle of continuation of activity, which means that the Company shall carry out its activity also in the predictable future.
The nature of the Company's activity may bring unpredictable variations in which concerns the cash intakes in the future. The management analysed the issue of opportunity of drafting the financial statements having as basis the principle of continuity of activity.
On 31 December 2019, The Company registered total loss in value of RON-3.453.336 (31 December 2018: RON1.911.513), having a reported loss of RON-44.288.947 (31 December 2018 : RON- 40.835.611).
Following the registered losses, the net assets of the Company diminished to less than a half of the value of submitted registered capital. In the year 2011, the Extraordinary General Meeting of Shareholders decided the reduction of registered capital with an amount equal to the losses which could not be covered from reserves, respectively with RON16,000,000 to the historical value and, thus, the losses from the years 2006-2008 were fully and partially covered from the year 2009.
On March 7, 2013 the Extraordinary General Meeting of Shareholders approved the Company's share capital decrease to the value "zero" and its concomitant increase in the amount of RON4,000,000 by contribution in cash by its shareholders. Completion of this operation was not possible because the shareholder Bugica Radu challenged the decision of the Commercial Court Cluj, request which made the object of case file no. 817/1285/2013 and the Decision of the EGMS was annulled by the court by a final decision. From a financial standpoint, the Company was affected only for the fact that they could solve the problem of equity, which on 31.12.2012 worthen less than 50% of the share capital value. The main reason for the cancellation was that the Company did not organize before approving the reduction and capital increase an EGMS in order to discuss the dissolution and liquidation of the Company.
On 29/04/2014 an EGMS took place which rejected the Board of Directors proposal of dissolution and liquidation of the Company.
On 12/02/2015, the Extraordinary General Meeting decided to reduce the Company's share capital from RON 4,000,000 to RON 400,000 by reducing the number of shares from 40,000,000 to 4,000,000 registered shares and simultaneously the capital increase from the value RON 400,000 to RON 4,000,000 value by cash contribution. The answer concerning the recording of the operation to reduce the share capital from ASF has been communicated to the company on 12/02/2016. The Extraordinary General Meeting of Shareholders dated April 2016 rejected the proposal approved by the Extraordinary General Meeting of Shareholders no. 01/12.02.2015. The same EGMS approved for the Board of Directors to be mandated the duty to approve and perform a capital increase of company up to a value of RON10,000,000, within one year from the date of adoption of the EGMS decision, but until de date of the financial statements hereof this procedure was not fulfilled.
During the year 2017, the Company came across an activity reorganization period and closed down the units: Iron Foundry, Mechanical Processing, Mounting Department and also the Presentation Store located at the registered office.
The Company depends on the financial support awarded by the shareholder Herz Armaturen Ges.m.b.H.
In the year 2018, Company's activity was reduced and mainly focused on the tapware items mounting, but also the rest of the support functions involved in the process.
On the date of 15/02/2018 was closed down the Brass Foundry Unit following the EGMS decision no. 02 of 29/04/2014.
On the date of 25/04/2019 an EGMA took place, via which, by the decision no. 3/25.04.2019. the shareholders representing 49.76% of the equity capital did not approve the dissolution of the Company and approved the selling, entirely or partially, simultaneously or successively. to one or several buyers, of any and all real-estate owned by the Company. The amounts collected from the sale of the real-estate will be used to pay the Company's debts.
Also, by the Decision of the Board of Directors of the Company Armatura SA no. 957/10.12.2019, was approved the dissolution from the organigram of 9 job positions, the individual employment agreements of the employees occupying these positions being scheduled to terminate on January 2020.
In January 2020, via the Decision of the Board of Directors of the Company Armatura SA no. 89/23.01.2020, was approved the scrappage of the fixed assets and the inventory items of all units of Armatura SA.
New and altered standards adopted by the Company:
This standard enters into force for periods starting at or after 1 January 2018. IFRS 15 establishes a new 5 steps model that will apply for the acknowledgement of revenues from a contract concluded with a client (with limited exceptions), regardless of the type of transaction or industry. Moreover, the requirements of this standard will apply for the acknowledgement and the appraisal of the revenues and losses from the sale of certain assets of other nature than the operational one and which are not the result of the usual activity of the entity (such as: the sale of tangible and intangible assets). Will be included an extended presentation of information, comprising the detailed explanation of the total income, information about the execution obligations, alterations of the contractual balances of assets and debts accounts between the periods and the reasoning and the key estimates.
The clarifications apply for annual periods starting from or since 1 January 2018 and the early application is allowed. The object of clarifications is to specify the IASB intentions when drafting the IFRS 15 standard requirements, especially the accountancy of performance obligations identification, thus altering the formulation of "distinctly identifiable" assets principle, of the considerations regarding the Agent and the Principle, including the appraisal of the fact that an entity acts as Agent or as Principal as well as the application of the control and licence principle, thus suppling additional guidance regarding intellectual property and royalties accounting. The clarifications provide additional practical solutions for the entities that either apply IFRS 15 completely retrospectively, or they choose to apply the altered retrospective approach.
The objective of these modifications is to clarity the requirements related to the debts regarding the deferred tax related to unachieved loss, in order to approach the existing diversity in practice in which regards the application of IAS 12 Corporate tax. The specific probe of the fact that, in practice, there is diversity in application, refers to the existence of time deductible differences at the deduction of a just value, at the recovery of an asset at a value higher than its accounting value, at future taxable profits and at the assessment comparatively combined with the separate assessment.
This alterations clarifies the fact that the IFRS12 presentation requirements, except those financial abstract information about subsidiaries, participation associations and associated entities, apply to the interests of an entity within a subsidiary, participation association, and
associated entity that are classified as owned in view of sale, owned in view of distribution or interrupted activity according to IFRS 5.
This standard enters into force for annual periods starting at or since 1 January 2018 and the early application is allowed. The complete version of IFRS 9 was published in July 2016. This replaces parts of IAS 39 referring to the classification and assessment of financial instruments. IFRS 9 maintains, but simplifies the mixed assessment model establishing 3 main categories of financial assets assessment: depreciation cost, just value by OCI (other elements of the global result) and the just value by P&L (profit and loss account). The basis of classification depends on the business model of the entity and of the features of the contractual cash flow of financial assets. The investments in equity instruments shall be assessed at the correct value by profit or loss, with the irrevocable option at the beginning to present the modifications in the correct value in OCI which shall not be recycled. There is a new modality of expected loss from credits which replaces the depreciation model of losses used in IAS 39. For the financial debts there were no modifications in classification and assessment, except the modification of the equity risk in other elements of the global result, for debts appointed at the correct value by the situation of profit and loss account. IFRS 9 relaxes the requirements regarding the efficiency of protection. This imposes an economic relation between the article covered and the coverage instrument and, in order for the .coverage index' to be the same as the one effectively used by the management in order to manage risks.
The alterations enter into force for annual periods starting at or since 1 January 2018 in case of IFRS 1, the first time adopting the Financial Reporting International Standards and for IAS 28 Investments in associated entities and in participation associations.
The objective of these modifications is to supply data allowing to the users of the financial situations to assess the modifications occurred regarding the debts resulted in the debts resulted from the financing activity, including modifications occurred in the treasury flow, as well as non-monetary elements. The modifications stipulate the fact that a modality to fulfil the presentation requirements is the one to supply a chart accordance between the initial balances and the final ones in the case of financial position in case of debts resulted from the financing activity, including modifications from the treasury flow related to the financing activity, modifications resulted from obtaining or loss of control on branches or other segments, the effect of modifications of exchange rates, modifications of the correct value and other types of modifications.
The alterations enter into force for annual periods starting at or since 1 January 2018 and the early application is allowed. The alterations provide requirements to account the necessary conditions effects in order to become rightful and to account the revocable conditions effects in order to become rightful in respect to the appraisal of the shares-based payments, as they are paid in cash, along with the shares-based payment transactions with the feature of the source taxable obligations, as well as for the alterations brought to the terms and conditions applicable to a shares-based payment that changes the transaction classification from cash payment transaction into equity instruments issuing payment.
The interpretation enters into force for annual periods starting at or since 1 January 2018 and the early application is allowed. The interpretation clarifies how were accounted for those transactions that include receiving or paying certain sums of money in advance in foreign currency. The interpretation covers foreign currency transactions for which the entity acknowledges a non-monetary asset or a non-monetary debt resulted from the payment or the receiving of an advance payment before the entity acknowledge the afferent asset. expense or income. The interpretation provides that, in order to determine the exchange rate, the transaction date is the date when is initially acknowledged the non-momentary asset paid in advance or the debt from the delayed income. In the event there are several advance payments or receiving, then the entity must determine a transaction date for each advance payment or receiving.
The alterations enter into force for annual periods starting at or since 1 January 2018. The alterations refer to the preoccupations generated by the implementation of the new Standard concerning the financial instruments, IFRS 9, before the implementation of the new standard concerning the insurance agreements that the Council develops in order to replace IFRS 4.
The alterations enter into force for annual periods starting at or since 1 January 2018 and the early application is allowed. The alterations clarify the moment when an entity must transfer real-estate properties, including real-estate properties that are under a construction or development process, in or from the real-estate investments. The alteration provides that a change of use takes place when the real-estate fulfils or no longer fulfils the definition of real-estate investments and there are proofs concerning the use alteration. A simple change of management intention concerning the use of a real-estate does not provide evidence regarding a use alteration.
New standards, amendments and interpretations issued, but inapplicable for the financial exercise starting with 1 January 2018, meaning non-adopted:
The alterations enter into force for annual periods starting at or since 1 January 2019 and the early application is allowed. The alterations require to entities to use updated actuarial hypothesis in order to determine the actual services cost and the net interest for the rest of the reporting period, subsequent to the alterations. The alterations clarify, also, the manner in which the accounting of the alteration, the reduction or the deduction of a plan affect the application of the requirements concerning the assets cap.
Investments in associated entities and participation association: sale of or contribution with assets between an investor and its associated entity (all sums are expressed in Lei if not otherwise specified) 12 from 56 participation association. The alterations refer to an inconsistency identified between the IFRS 10 and IAS 28 requirements, in respect to the sell and the contribution with assets between an investor and its associated entity or the participation association. The main consequence of the alterations is that a revenue or a total loss is acknowledged when the transaction supposes an enterprise (regardless it is or not under the form of a subsidiary). A revenue or a partial loss is acknowledged when a transaction supposes assets that do not represent an enterprise, even if under the form of subsidiaries. In December 2015, IASB delayed for an undetermined period of time the date this alteration shall enter into force.
-IFRS 16 Leasing Agreements: this standard entered into force starting with 1 January 2019. The standard establishes the principles for the acknowledgement. assessment, presentation and description/supply of information regarding the leasing agreements of the two parties of an agreement, thus, the client (Beneficiary) and the supplier (Owner). The new standard provides that the Beneficiaries must acknowledge the majority of the leasing agreements within their financial statements. The beneficiaries shall dispose of a single accountancy pattern for all agreements, with certain exceptions. The accountancy of the Owner significantly remains unchanged.
The alteration enters into force for annual periods starting at or since 1 January 2019 and the early application is allowed. The alteration allows that the financial assets with features of advance payments, which allow or require that a party of an agreement either pay or receive a reasonable compensation for the early termination of the agreement (so that, form the perspective of the asset owner, it is possible to exist a "negative compensation") be appraised at depreciation cost or at the just value via other elements of the global result. The alterations weren't vet adopted by the EU.
The alterations enter into force for annual periods starting at or since 1 January 2019 and the early application is allowed. The alterations refer to the fact that if the appraisal and.
especially, the requirements concerning the depreciation of the short term interests in associations and participation associations that, fundamentally, are part of the "net investment" in the respective association or participation association should be governed by IFRS 9, by IAS 28 or by a combination of these two standards. The alterations clarify the fact that an entity applies IFRS 9 Financial Instruments before applying IAS 28 to those long-term interests to which doesn't apply the equivalence method. In applying IFRS 9, the entity does not take into consideration the accountancy value adjustments of the long-term interests that are generated by the IAS 28 application.
This improvement eliminates the short-term exceptions concerning the information to be supplied regarding the financial instruments, the employees benefits and the investment entities, applicable for the companies that adopt for the first time the Financial Reporting International Standards.
The alteration clarifies the fact that the choice to evaluate at the just value via the profit and loss account an investment in an associated entity or in a participation association that is owned by an entity representing a participation association or another entity that qualifies, is available for each investment in an associated entity or in a participation association for each individual investment, at the initial acknowledgment.
There are no other IFRS or IFRIC interpretation that did not yet enter into force and that might have a significant impact on the individual financial statements of the Company.
A segment is a distinctive component of the Company, which supplies certain products or services (segment of activity) or supplies products and services to a certain geographic environment (geographic segment) and which is subject to risks and benefits different from those of the other segments. From the point of view of segments of activity, the Company does not identify distinctive components from the point of view of risks and benefits.
IFRS 8 Segments of activity must be applied to the Individual Financial Statements of the Company so that its equity instruments shall be listed on a public stock exchange (Bucharest Stock Exchange).
The presentation of data regarding the products and services, as well as the geographic areas where the company is active is compulsory, even for those entities which identify only one reportable segment of activity, taking into account the quantitative limits and the aggregation criteria mentioned by the standard. Taking into account the quantitative limits and the aggregation criteria mentioned by the standard, from the point of view of the segments of activity, the company does not identify the distinctive components from the perspective of associated risks and benefits.
| $P = 1$ | Sales | Percentage in total sales |
|---|---|---|
| Internal Sales of Goods | 431.732 | 5.91 % |
16
| Total | 7.305.111 | 100% | |
|---|---|---|---|
| External Sales of Services | 1.366 | 0.02% | |
| External Sales of Goods | 6.222.018 | 85.17 % | |
| Internal Sales of Services | 649.995 | 8.90% | |
The financial statements are presented in lei (RON), Romania's national currency. The Company keeps accounting records in lei, drafts and presents the financial statements pursuant to the specific legislation in the field and with the Regulations regarding accounting and financial-accounting reports issued by the Ministry of Public Finance.
The transactions in foreign currency are converted in in functional currency by using the exchange rate valid at the date of transactions. The wins and losses resulted from the exchange rate differences following the conclusion of such transactions and from the conversion at the end of the financial year, at the exchange rate from the end of the year of the monetary assets and denominated bonds in foreign currency is reflected in the profit and loss account.
The wins and losses from the exchange rate which refer to loans and cash and cash equivalents are presented in the profit and loss account under "financial revenues or expenses". All the other wins and losses from the exchange rate are presented in the profit and loss account under .. other (losses)/revenues - net".
The monetary assets and liabilities denominated in foreign currency are expressed in lei at the balance sheet date. On 31 December 2019, the exchange rate used at the conversion of balances in foreign currency is 1 EUR = 4.7793 RON. The wins and losses resulted from the conversion of assets and monetary debts are reflected in the profit and loss account during the year.
The Romanian economy went through relatively high inflation period and it was considered hyper inflationist pursuant to IAS 29 "Financial reporting in hyperinflation economies" $(.$ IAS 29").
IAS 29 requires that the financial statements drafted in the currency of a hyperinflation economy shall be treated in the terms of purchase power from the balance date. The amounts expressed in the terms of purchase power at December the 31st 2004 (date of
termination of hyperinflation) are treated as basis for the accounting values of these financial statements.
The company decided to reflect the impact of application of IAS 29 in the financial situations drafted on 31 December 2012. The impact of such adjustments was reflected on the value of the land, registered capital and result reported.
The buildings and lands are presented at their correct value, on the basis of regular assessments, at least once in every three years, performed by independent external reviewers, minus subsequent amortisation and depreciation. Any amortisation cumulated at the date of reassessment is eliminated from the gross accounting value of the asset, and the net value is registered as reassessed value of the asset. All the other fixed assets are registered at the historical cost minus amortisation. The historical cost includes the expenses which might be directly attributed to the purchase of respective elements.
The subsequent expenses are included in the accounting value of the asset or acknowledged as separate active, as applicable, only when the entrance of future economic benefits for the company associated to the element is probable and the cost of the respective element may be assessed in an adequate manner.
The increase of accounting value resulted from the reassessment of buildings is credited at ..reassessment reserves" from equity.
The diminution compensating the related increases to the same asset are registered next to other reserves directly in equity; all the other diminutions are registered in the profit and loss account. The elements registered in the reassessment reserves are transferred to the reported result at the end of the useful lifetime of the asset or when the asset is to be acknowledged.
The reparations and maintenance expenses are recorded in the revenues and expenses statements in the financial period of time when they are executed. The costs to replace the major components of the tangible assets elements and the equipment are capitalized and the replace component are taken off use.
The wins and losses from the eliminations determined by the comparison of encashments with the accounting values are acknowledged in profit or loss.
The lands shall not be amortized. Amortization of other tangible assets elements is calculated on the basis of the linear method in order to allocate the reassessed value of every asset until its residual value during its lifetime, as follows:
Number of years
Type
Buildings
$7 - 45$
| Equipment | $2 - 12$ |
|---|---|
| Vehicles | $3 - 15$ |
The residual value of an asset is the estimated value which might be obtained by the company by the sale of the respective asset minus the estimate costs of the sale, in case the asset already has the age and corresponds to the conditions related to the end of its lifetime. The residual value of an asset is zero in case the Company estimates the use of the asset until the end of its physical life. The residual values of assets and the lifetime are reviewed and adjusted in an adequate manner, at every date of the balance sheet.
The wins and losses from assignation are determined by the comparison of the amounts obtained from assignation to the accounting value, and are acknowledged at "Other (losses)/wins-net" in the situation of revenues and expenses.
At the sale of reassessed assets, the amounts included at other reserves are transferred to the reported result.
The real-estate investments are real-estate properties (buildings) owned by the Company for the purpose of renting it or increasing its value or both, and not for:
-using it in the production or supply of goods and services or for administrative purposes; or
-to be sold during the normal activity.
A real-estate investment is initially appraised at its just value. The accountancy policy of the Company regarding the subsequent appraisal of the real-estate investments is the one fundament on the just value pattern. This policy is uniformly applied to any and all investments owned. The appraisal of the just value of the real-estate investments is performed by evaluators members of the National Association of Romanian Evaluators (ANEVAR). Thus, the depreciation expense is no longer acknowledged, and the real-estate investment is submitted to the re-appraisal with enough regularity in view of acknowledgement at its just value. The revenues or the losses resulted following the alteration of the just value of the real-estate investments are acknowledged in the profit and loss account of the period of time when these occur.
The purchased licenses related to software copyright capitalized on the basis of the costs registered with the purchase and installation of the respective software. These costs are amortised during their estimated lifetime (three years). The costs related to the development or maintenance of software are acknowledged as expenses on the period they are performed.
Other non-tangible assets
Within other non-tangible assets is registered the software created by the entity or purchased from third parties for its own use, as well as other non-tangible assets owned by the Company.
The expenses allowing to the non-tangible assets to generate economic benefits are added to their original cost. These expenses are capitalized as non-tangible assets, if not part of non-tangible assets.
The assets which are subject to amortisation are reviewed for the identification of losses from depreciation every time events or changes in circumstances indicate the fact that the accounting value cannot be recovered. The loss from depreciation is represented by the difference between the accounting value and the recoverable value of the respective asset. The recoverable value is the maximum between the correct value of the asset minus sale costs and value of use.
The loans and claims are non-derivate financial assets with fixed payments or payments which might be determined and which are listed on an active stock exchange. They are included in the current assets, except those which have a maturity period higher than 12 months from the date of the balance sheet. They are classified as fixed assets.
The financial assets purchase and sales are acknowledged from the transaction date at which the Company undertakes to buy or to sell the respective asset. The financial assets cease to be acknowledged at the moment when the right to encash treasury flows from investments expire or is transferred, and the Company transfers all the risks and benefits related to property right. The loans and claims are registered at amortisation cost on the basis of effective interest. The loans and claims of the Company are classified as "cash and cash equivalents", respectively as "clients and other claims" in the balance sheet (notes 2.12 and 2.13).
The financial assets and debts are compensated and the net value is reported in the balance sheet only when there is an applicable legal right to compensate the acknowledged amounts and there is the intention to compensate on a net basis or to valorise the asset and to compensate the debts in the same time.
The stocks are registered at the purchase or production cost. The discharge of stocks is to be executed starting with the year 2019 via the FIFO method.
The finished products and the products under construction are registered at the effective construction cost
Where necessary, slow movement stock provisions shall be done, physically or morally obsolete. The net achievable value is estimated on the basis of the sale price diminished with the finalization costs and with the sale costs.
The claims are registered at the nominal value minus the adjustments for their depreciation.
The trade claims are the amounts due by clients for the products, merchandise sold or services rendered during the regular course of activity.
The provision for depreciation of trade claims is done at the moment when there is objective proof that the Company shall not be able to collect all the amounts due pursuant to the initial conditions of the claims. The significant difficulties encountered by the debtor, probability that the debtor enters a bankruptcy procedure or financial reorganization, failure to pay or failure to observe the payment conditions are considered indicators of depreciation of trade claims.
The accounting value of the asset shall be reduced by using a provision account, and the loss value is acknowledged in the situation of revenues and expenses at "other wins/(losses) - net" in the profit and loss account. When a trade claim cannot be recovered, it is mentioned as expenses, with adequate drawback of the provision for trade claims. The subsequent recovery of amortised amounts is credited in the profit and loss account.
For the situation of cash flow, the cash and its equivalents contain cash, bank accounts, spot bank deposits, other short-term financial investments, overdrafts and short-term restricted bank accounts.
The registered capital composed of common shares is registered at the value set on the basis of the articles of association and of addendums, as applicable, as of the explanatory documents regarding capital deposits.
The own shares redeemed, pursuant to the law, are presented in the statement of assets, debts and equity as a correction of equity.
The profit or loss related to the issue, buy-back, sale, free of charge assignment or cancellation of equity instruments of the entity are directly acknowledged in equity in the
lines of "Profit / or Losses related to equity instruments".
The trade debts are acknowledged at their correct value.
The trade debts are obligations to pay for the goods and services which were purchased during the regular course of the activity from suppliers. The supplier's accounts are classified as current debts if the payment has to be done within a year or less than a year (or later, during the regular course of activity). Otherwise, they shall be presented as longterm debts
The short term and long-term loans are registered initially at the amount received, net for the costs related to obtaining the loans. During the following periods, the loans are registered at amortised cost by using the effective output method, the differences between the amounts received (net from the production costs) and the regular buy-back value, being acknowledged in the profit and loss account during the duration of the loan contract.
The short-term part of long-term loans is classified as "Debts: the amounts which have to be paid for a period of up to a year" and included together with the accumulated interest at the balance sheet date in "Amounts due to credit institutions" within current debts.
The company registers current corporation tax at a rate of 16% from the net fiscal result resulted from the statutory financial situations, by adjustment of expenses which cannot be deducted and of untaxable revenues, pursuant to Romania's Fiscal Code and with related regulations.
The tax expenditure related to the period includes the current tax and deferred tax. The tax is acknowledged in the profit and loss account, except the case in which it refers to the acknowledged elements to other elements of global or direct result in equity. In this case, also the related tax is acknowledged in other elements of the global result or directly in equity.
The current corporation tax expenditure is calculated according to the fiscal regulations in force at the date of balance sheet in Romania. The management regularly assesses the positions from the fiscal statements concerning the cases in which the fiscal regulations applicable may be interpreted. It established provisions, if necessary, on the basis of the amounts estimated as debts to the fiscal authorities.
The corporation tax is acknowledged on the basis of the balance obligation method, for the temporary differences occurred between the fiscal basis of assets and debts and their accounting values from the individual financial statements. However, the deferred corporation tax which results following the initial acknowledged of assets or liabilities from a transaction other than a combination of enterprises and which, at the moment of transaction, does not affect the accounting profit, nor the taxable one and the taxable one is not acknowledged. The deferred corporate tax is determined on the basis of the tax rates
(and of the laws) in effect until the date of balance sheet and which shall be applied on the period when the deferred tax which has to be recovered shall be valorised or the deferred tax to be paid shall be paid.
The deferred tax to be recovered is acknowledged only to the degree in which it is probably to be obtained in the future a taxable profit from which the temporary differences shall be deducted
The claims and debts regarding the deferred tax are compensated when there is the legal applicable right to compensate the current fiscal claims with current fiscal debts, and when the claims and debts regarding the deferred tax imposed by the same fiscal authority either to the taxable entity, or to different taxable entities, if there is the intention to compensate the balances on a net basis
The uncertain fiscal positions of the Company are analysed by the management at the date of each balance. Debts are registered for the fiscal positions for which the management considers it is probably to be applied additional tax if these positions would be verified by the fiscal authorities. The assessment is based in the interpretation of fiscal laws which were adopted at the date of balance sheet. The debts related to penalties, interests and taxes, others than the income tax, are acknowledged on the basis of the best estimate of management necessary for elimination of obligations at the date of the balance sheet.
During the financial exercise the Company makes payments to the Social Insurance budget for its employees, because all of them are included in the public pensions system.
The Company does not contribute to any other pensions or benefits plan after retirement and does not have any other obligations such are those mentioned for its employees.
In the collective labour agreement of the company it is stipulated that the employees of the Company receive on retirement a bonus equivalent to a basic salary on the month prior to retirement. The company made an estimate of the updated value of this promised benefit. in order to establish the necessary provision, but which did not materialize because it was not considered as having a significant impact on the financial statements.
The provisions are acknowledged when the Company has a current obligation (legal or implicit) generated by a prior event, it is probably that a resource exit is necessary in order to settle the obligation, and the debts may be estimated in a credible manner.
The provisions for taxes are set for the amounts to pay due to the state budget, if the respective amounts do not appear as debts to the state.
The provisions are reviewed at the date of financial situations and adjusted in order to reflect the best current estimate of the Management regarding this. In case for the estimate of an obligation it is not probable an exit of resources, the provision has to be cancelled by mentioning it at revenues again.
The revenues are registered when the significant risks and advantages of owning property of assets are transferred to the client. The amounts representing revenues do not include value added tax (VAT), but include trade discounts granted. The financial discounts granted to the clients (discounts) reduce the value of Company's revenues.
The company acknowledges the revenues when their value may be assessed in an adequate manner, when it is probable to produce future economic benefits for the entity, and when the specific criteria for each of the Company's activities were fulfilled as described hereunder. The value of revenues is not considered as adequately subject to assessment until all contingencies related to sales were not settled. The company bases its estimates on historical results, taking into account the type of client, type of transaction and elements specific to each contract.
The revenues from service rendering are acknowledged for the period they were rendered and in correspondence with the execution stage.
The revenues from interests are regularly acknowledged, proportionally, as the respective income is generated, on the basis of accounting of engagements.
The revenues of leases and/or asset use rights are acknowledged on the basis of engagements accounting, pursuant to the contract.
The dividends distributed to the share owners, proposed or declared after the date of financial statements, are acknowledged as revenues from dividends when the shareholder's right to cash them is settled.
The leasing represents a contract, or part of a contract, which allows the Company the right to use an asset (support-asset) for a certain period of time in exchange for a counter-value. At the date the execution of the contract begins, the Company appraises the asset's cost afferent to the right of use.
The asset's cost afferent to the right of use includes:
or to bring the support-asset to the condition imposed in the terms and conditions of the leasing contract, except when these costs are encumbered for stocks production. The beneficiary undertakes an obligation towards these costs either at the date the execution of the contract begins, or subsequently to the use of the support-asset during a certain period of time.
The Company shall choose not to apply the IFRS16 provisions for the short-term leasing contracts (<12 months) and for the leasing contracts where the support-asset has a low value.
The depreciation of the support-asset is determined as follows:
In the year 2019, the Company had zero on-going leasing contracts.
Dividends distribution is acknowledged as debt in the financial statements of the Company on the period in which the dividends are approved by the Company's shareholders.
By nature of activities performed, the Company is exposed for different risks, including: market risk (including monetary risk, interest rate risk regarding the correct value, interest rate risk regarding the cash flow and price risk), credit risk and liquidity risk. The Company's risk management program is focused on unpredictability of financial markets and searches to minimalize the possible adverse effects on Company's financial performance. The Company does not use derivative financial instruments in order to be protected from certain exposure to risk
Risk management is the responsibility of management of ARMATURA SA on the basis of the policies approved by the management board. The management of ARMATURA SA identifies and assesses the financial risks in close cooperation with the operational units of the Company. The management board supplies the basic principles for risk management, as well as recommendations for specific areas, such as currency risk, interest rate risk, credit risk and excessive liquidity investment.
The company works mainly in Romania and is exposed to currency risk resulted from the exposure to various currencies, especially related to Euro. The currency risk results especially from loans, claims and trade debts of the Company.
The Company is not covered against currency rick. Due to the fact that the Company's activities are carried out especially on the internal market, this does not generate revenues in the same currency as the loans. However, the management regularly receives previsions related to the RON / EUR exchange rate evolution and uses the data in the price establishment strategy. The management shall take into account for the future the elaboration of strategies for protection of the Company against currency risk.
The company does not have significant assets which bear interest. The interest rate risk in the case of the Company comes from long term loan. The contracted loan is with variable interest and exposes the Company to the interest rate risk regarding the cash flow, which is partially compensated by the cash owned at variable rates. In 2019 and 2018, the variable rate loan of the Company was denominated in EUR.
The Company dynamically analyses the exposure to interest rate. Various scenarios are simulated, taking into account the financing, renewal of existing positions and alternative functions. Based on these scenarios, the Company calculates the impact on profit and loss of the modification of interest rate. For each simulation, the same percentage of modification
of interest rate is used for all currencies. The scenarios are applied only in case of debts representing major interest-bearing positions.
Credit risk results from cash and cash equivalents, bank deposits and financial institutions. as well as from clients' exposure to credit, including the due claims and undertaken transactions. In the case of banks and financial institutions, only those independently assessed with a minimum rating "BB" are accepted. For clients, there is no independent assessment; the management assesses the client's solvency, taking into account the financial position, past experience and other factors. The individual risk limit is set on the basis of internal and external qualifications, pursuant to the limits set by the management board. The use of credit limits is regularly monitored. Please consult note 9 for additional presentations related to credit risk.
The previsions referring to the treasury flows are performed by operational entities of the Company and aggregated by the Company management. The Company management monitors the previsions regarding the liquidity necessary of the Company, in order to ensure that there is sufficient cash in order to serve the operational requirements. These previsions are made in compliance to the financing plans of the Company's debts, observing the agreements, internal objectives regarding the balance sheet indexes.
The Company management is investing the cash surplus in the current accounts bearing interests and term deposits, selecting the instruments with adequate maturities or sufficient liquidity in order to offer a sufficient margin, as established on the basis of the previsions mentioned before.
In the chart hereunder the financial debts of the Company are analysed on groups of relevant maturity, in relation to the period left at the date of balance sheet until the date of contractual maturity date. The values presented in the chart represent the respective gross values at the date of balance sheet
| On 31 December 2019 | above | |||
|---|---|---|---|---|
| under 1 year |
$1 - 5$ vears |
years | Total | |
| Loans | 23.896.500 | $\overline{a}$ | $\qquad \qquad -$ | 23.896.500 |
| Suppliers and other debts | 9.829.821 | $\overline{\phantom{0}}$ | $\sim$ | 9.586.380 |
ARMATURA S.A.
Total
The Company objectives regarding equity management aiming at the protection of the Company's capacity to continue the activity in the future, in order to bring profit to shareholders and benefits to the other parties involved, as well as maintenance of an optimal structure of capital and reduction of capital expenditure.
32.917.002
31.917.002
In order to maintain or adjust equity structure, the Company may adjust the value of dividends granted to shareholders, may return capital to shareholders, issues new shares or sells assets for the reduction of debt
The company monitors the capitals on the basis of the debt degree coefficient. This coefficient is calculated by dividing the net debt to the total capital. The net debt is calculated by deducting from the total of loans (including "long term loans and short-term loans" from the balance sheet) the cash and cash equivalents. The total capital is calculated by adding to "equity" from the balance sheet the net debt.
| 31 December 2019 |
31 December 2018 |
|
|---|---|---|
| Total loans (note 15) | 23.896.500 | 23.319.500 |
| Less: cash and cash equivalent at the disposal of the | ||
| Company (note 12) | $-445.977$ | $-457.944$ |
| Net debts | 23.450.523 | 22.861.556 |
| Total Company's equity | $-4.842.899$ | $-1.389.561$ |
| 18.607.626 | 21.471.995 |
| $-4.84$ | $-16.45$ |
|---|---|
The company does not own financial instruments appraised in the accounting balance at the just value and, as follows, the data presentation related to the just value does not apply.
The estimates and reasonings are continuously assessed and have as basis historical experience and other factors, including the anticipations regarding the future elements which are considered reasonable under the given conditions.
The Company elaborates estimates and hypothesis on the future. The accounting estimates shall be, by definition, rarely equal to the adequate current results. The estimates and hypothesis involving a high degree of risk and which determine significant adjustments of accounting values of assets and liabilities in the following financial year are presented as follows.
In order to establish the income tax significant assessments are necessary. There are several transactions and calculations for which the determination of final tax is uncertain. The company acknowledges obligations for issues anticipated to result following fiscal verifications on the basis of estimates regarding the payment of additional tax. If the fiscal final result of such operations is different from the amounts initially registered, the differences shall influence the claims and debts regarding the current income tax or deferred tax in the period in which the determination is performed. The acknowledgement of an asset in which concerns the deferred income tax takes into account a detailed analysis in which concerns the possibility of achieving it.
Determination of loss from equipment depreciation requires significant reasonings, as described in note 2.8. When performing this estimate, the Company compares the net accounting value of such equipment with the highest value between the estimate sale price and the updated net value of cash flows which shall be generated by the equipment during the rest of their lifetime
| (in lei, if not mentioned otherwise) | ||||
|---|---|---|---|---|
| ildings Lands and bui |
and equipment Vehicles |
and equipment Furniture, supplies |
Assets to be constituted |
Total |
| 861.661 | 40.262 | 80.706 | 13.804.980 17.521.963 |
|
| 0.836 | 69.870 | $-80.706$ | ||
| 61.802 273.835 |
||||
| $-577.149$ | -461.858 | $-14.210$ | $-1.053.217$ | |
| 93.160 $-19$ |
$-69.870$ | -69.870 $-193160$ |
||
| 29.584.841 | 729.881 | 31.610 | 30.346.332 | |
| 0 29.584.841 |
7.497.772 8.227.653 |
105.735 74.125 |
37.918.229 9.571.897 |
|
| 29.584.841 | 729.881 | 31.610 | 30.346.332 | |
| 16.539.335 13.804.980 |
61.802 268.277 |
5.558 |
Ï i $\tilde{\epsilon}$ NOTES TO INDIVIDUAL FINANCIAL STATEMENTS FOR THE VEAR CONCLUDED
$\bullet$
30
| ) |
||||||
|---|---|---|---|---|---|---|
| buildings Lands and |
and equipment Vehicles |
and equipment Furniture, supplies |
Assets to be constituted |
Real-estate investment |
Total | |
| Financial year concluded on 31 December 2018 |
||||||
| Net initial accounting value | 29.584.841 | 729.881 | 31.610 | 30.346.332 | ||
| ncrease from equity reassessment | ||||||
| Transfers | 6.900 | 52.438 | 1.192 | $-60.530$ | ||
| nputs | 29.232 | 4.950 | 62.505 | 4.742.938 | 4.839.625 | |
| Outputs | -4.742.938 | $-2.179.520$ | $-6.922.458$ | |||
| Amortisation expenditure | $-579.737$ | 1.979.447 | $-9.787$ | 1.389.924 | ||
| ncreases from the reassessment in global | ||||||
| result | I | |||||
| Iransfers | ï | |||||
| Final net accounting value | 24.269.066 | 1.479 চ্ |
27.965 | 1.975 | 4.742.938 | 29.653.423 |
| On 31 December 2019 | ||||||
| Cost or assessment | 24.848.803 | 6.129.804 | 111.876 | 1975 | 4.742.938 | 31.092.458 |
| Cumulated amortisation | 579.737 | 8.325 5.51 |
83.911 | 6.181.974 | ||
| Net accounting value | 24.269.066 | 1.479 51 |
27.965 | 1975 | 4.742.938 | 29.653.423 |
$31$
The Company's buildings were reassessed on 31 December 2018 by an independent assessor. ANEVAR member. The surplus from reassessment was credited in the "Reassessment reserves", except the deferred tax calculated for this surplus, and the value decrease for which there were no differences from covering reassessment were registered in the expenditure on the respective period.
In the year 2014 it was decided the modification of accounting policy in which concerns the company lands, by adoption of the correct value model. Thus, a reassessment of the land value owned by the Company at 31.12.2014 was performed. The surplus from reassessment was credited in the reassessment reserve account within equity. The company land was reassessed on 31.12.2014 by an independent assessor member of ANEVAR. The latest reassessment of the land owned by the Company was performed on 31.12.2018.
The tangible assets lands and buildings, presented under Note 6, represent warranty for the credit undertaken by the Company from the significant shareholder Herz Armaturen Gmbh.
The tangible assets amortisation method, for the 2019 Financial exercise, was linear. For these no residual value was established.
During the 2019 financial exercise, the Company transferred from the category of realestate properties used by the holder in real-estate investments, buildings and afferent land in value of 4,742,938 because these are held in order to obtain income from rent. The transfer was executed at the just value of the buildings, established on 31.12.2018 by an independent evaluator.
The real-estate investments are acknowledged by using the just value model. Starting with the transfer date, these were no longer amortized.
In the Profit and Loss Account were acknowledged incomes from rents afferent to realestate investments in value of 496,695, and the direct exploitation expenses resulted from the real-estate investments were insignificant.
There were zero net gains or losses resulted from the just value adjustments.
| Software | Advances and other non-tangible assets |
Total | |
|---|---|---|---|
| The financial year concluded on 31 December 2017 |
|||
| Initial balance | 445 | 445 | |
| Inputs | 9.605 | 9.605 | |
| Amortisation expenditure | $-811$ | $-811$ | |
| Transfers | |||
| Final balance on | |||
| 31 December 2018 | 9.239 | 9.239 | |
| Cost Cumulated amortisation and |
275.851 | 275.851 | |
| depreciation | 266.612 | 266.612 | |
| Net accounting value | 9.239 | 9.239 |
| Software | Advances and other non-tangible assets |
Total | |
|---|---|---|---|
| The financial year concluded on 31 December 2018 |
|||
| Initial balance | 9.239 | 9.239 | |
| Inputs | 4.417 | 4.417 | |
| Amortisation expenditure Transfers |
$-3.947$ | $-3.947$ | |
| Final balance on | |||
| 31 December 2019 | 9.709 | 9.709 | |
| Cost Cumulated amortisation and |
280.268 | 280.268 | |
| depreciation | 270.559 | 270.559 |
(in lei, if not mentioned otherwise)
| Net accounting value | 9.709 | 9.709 |
|---|---|---|
The non-tangible assets consist in software. These are evaluated at cost, except the cumulated amortisation.
The amortisation method for the year 2019 for the non-tangible assets was linear.
All the Company's financial assets belong to the category of loans and claims. Their accounting value is presented hereunder:
| 31 December 2019 |
31 December 2018 |
|
|---|---|---|
| Clients and other claims (except the advance expenses, advances at suppliers and VAT to be |
||
| encashed) | 207.635 | 644.853 |
| Cash and cash equivalents (Note 12) | 446.077 | 458.044 |
| Total | 653.712 | 1.102.897 |
All the financial debts of the Company are financial debts accounted on the basis of the model of amortised cost. Their accounting value is presented hereunder:
| 31 December 2019 |
31 December 2018 |
|
|---|---|---|
| Loans | ||
| Trade debts and other debts (excluding | 23.896.500 | 23.319.500 |
| statutory obligations and revenues in advance) | 9.775.164 | 9.363.146 |
| Total | 33.671.664 | 32.682.646 |
The credit risk related to financial assets which are not due, nor depreciated, may be assessed in relation to the historical data related to the failure to pay rate for third parties, so that there are no independent external ratings for Company's clients:
Trade claims which are not due, nor depreciated:
| , .v., v. v | ||
|---|---|---|
| Group 1 | 49.419 | 37.115 |
| Of which affiliated parties | ||
| Group 2 | $\overline{\phantom{0}}$ | |
| Of which affiliated parties | $\overline{\phantom{0}}$ | Barbara |
| Group 3 | ||
| Of which affiliated parties | $\overline{\phantom{0}}$ | $\overline{\phantom{0}}$ |
| Group 4 | ||
| 49.419 | 37.115 | |
The description of trade claims in relation to the credit risk was done pursuant to the historical data from the financial year 2019 and, where possible, from the financial year 2018, taking into account the following criteria:
| 31 December 2019 |
31 December 2018 |
|
|---|---|---|
| Trade claims Minus: provision for depreciation of trade claims Trade claims – net |
866.155 $-743.225$ 122.930 |
843.834 $-727.666$ 116.168 |
| -of which in relation to affiliated parties (note 26) VAT to collect |
56.797 | |
| Advance expenditure Advances granted to suppliers |
16.985 913 |
14.217 353 |
| Minus: provision for depreciation of advances | ||
| Various debtors | 7.000 | 7.304 |
| Other claims | 77.704 | 521.382 |
| Current portion of trade claims and other claims |
||
| 282.329 | 659.423 |
The analysis based on oldness of due but non-depreciated trade claims is as follows:
| 31 December 2019 |
31 December 2018 |
|
|---|---|---|
| Between 1 and 3 months | 62.082 | 50.211 |
| Between 3 and 6 months | 7.932 | 26.772 |
| Above 6 months | 3.497 | 2.071 |
| Total | 73.511 | 79.054 |
Company's clients and other claims accountancy value are expressed in the following currencies:
| 31 December 2019 |
31 December 2018 |
|
|---|---|---|
| RON EUR |
122.205 725 |
115.460 708 |
| 122.930 | 116.168 |
Movements of Company provisions for depreciation of clients and other claims are as follows:
| 2019 | 2018 | |
|---|---|---|
| On 1 January | 727.666 | 726.455 |
| Provision for depreciation of claims | 15.559 | 1.211 |
| Amounts retaken in the course of the period | ||
| At the end of the period | 743.225 | 727.666 |
| 31 December 2019 |
31 December 2018 |
|
|---|---|---|
| Raw materials and materials | 1.848.032 | 2.713.596 |
| Provisions for raw materials and materials | $-861.087$ | $-328.283$ |
| Production in progress | 1.404.731 | 1.086.107 |
| Provisions for goods in progress | $-601.980$ | $-428.345$ |
| Merchandise | 160.456 | 162.898 |
| Provisions for merchandise | $-160.456$ | $-161.475$ |
| Finished products | 2.010.124 | 1.725.601 |
| Provisions for finished products | $-1.232.219$ | $-815.105$ |
| Other stocks | 110.549 | 112.044 |
| Provisions for other stocks | $-37.512$ | $-8.670$ |
| Total | 2.640.638 | 4.058.368 |
For the situation of cash flow, cash and cash equivalents include the following:
| 31 December 2019 |
31 December 2018 |
|
|---|---|---|
| Cash in bank | 320.101 | 439.906 |
| - amounts in RON | 290.626 | 312.363 |
| - amounts in other currency | 29.475 | 127.543 |
| Restricted bank accounts | 100 | 100 |
| - short-term | ||
| - RON | 100 | 100 |
| - foreign currency | ||
| Cash deposit | 15.721 | 18.037 |
| - amounts in RON | 15.696 | 15.425 |
| - amounts in other currency | 25 | 2.613 |
| Bank deposits | 110.155 | |
| - amounts in RON | 110.155 | |
| - amounts in other currency | ||
| Total cash and cash equivalent available for | ||
| the Company | 445.977 | 457.944 |
| Restricted bank accounts | ||
| On short-term / RON | 100 | 100 |
| Total | 446.077 | 458.044 |
On 31 December 2018, the shareholders structure is as follows:
| 31 December 2018 |
31 December 2018 31 December | 2018 | |
|---|---|---|---|
| Number of shares |
Value of subscribed and paid-up equity capital (RON) |
Percentage owned (%) |
|
| Hric Beteiligungs Ges.m.b.h |
10.400.000 | 1.040.000 | 26.0000 |
| Tridelta Heal Herz Beteiligungsgesellschaft |
6.703.418 | 670.342 | 16,7585 |
| S.A.I Swiss Capital Asset Management SA Herz Armaturen GesbH |
4.180.618 2.797.352 |
418.062 279.735 |
10.4515 6.9934 |
| Broadhurst Investments Limited |
2.730.881 | 273.088 | 6,8273 |
| FDI Active Dinamic/SAI Swiss Capital |
2.791.735 | 279.174 | 6.9793 |
| Natural Entities | 7.851.339 | 785.134 | 19.6283 |
| Legal Entities | 2.544.657 | 254.466 | 6.3616 |
| Total | 40.000.000 | 4.000.000 | 100.0000 |
Total authorised number of shares is of 40.000.000 shares with a net value of 0.1 RON per share.
Total
On 31 December 2019 the shareholders structure is as follows:
| 31 December 2019 |
31 December 2019 |
31 December 2019 |
|
|---|---|---|---|
| Number of shares |
Value of the subscribed and paid-up equity capital (RON) |
Percentage owned (%) |
|
| Herz Armaturen GesbH Hric Beteiligungs |
13.197.352 10.400.000 |
1.319.735 1.040.000 |
32,9934 26,0000 |
| Ges.m.b.h | |||
| Tridelta Heal Herz Beteiligungsgesellschaft |
6.703.418 | 670.341 | 16,7585 |
| Natural Entities | 5.816.220 | 581.622 | 14,5406 |
| Legal Entities | 3.883.010 | 388.301 | 9,7075 |
40.000.000
| The total number of authorised shares is of 40.000.000 shares having a net value of 0.1 | ||||||||
|---|---|---|---|---|---|---|---|---|
| RON per share. |
4.000.000
100.0000
| 31 December 2019 |
31 December 2018 |
|
|---|---|---|
| Trade debts -of which in relation to affiliated parties (note 26) |
9.586.380 | 9.363.146 |
| 9.280.702 | 8.781.856 | |
| Debts with staff, contributions, social insurance Value added tax |
188.685 | 182.943 |
| Other debts | 54.757 | 51.413 |
| 9.829.821 | 9.597.502 | |
| Minus long term portion: subsidies |
| (in lei, if not otherwise specified) | ||||
|---|---|---|---|---|
| Current portion of trade debts and other | ||
|---|---|---|
| debts | 9.829.821 | 9.597.502 |
| LOANS | ||
| 31 December 2019 |
31 December 2018 |
|
| Short term | ||
| Short term loans | 23.896.500 | 23.319.500 |
| Long term loans | ||
| Long term loans |
During the month of April 2010, a loan was contracted on a period of 5 years from the majority shareholder Herz Armaturen Ges.m.b.H. in value of 5 million Euros, respectively 23,896,500 RON, with a variable interest rate Euribor+2p.p which shall be paid in full at the due date. Following the decision of the Ordinary General Meeting of Shareholders from the year 2015 the due date of the credit was extended with 1 more year, that is until 15.04.2016. This due date was not updated.
The short-term loans are guaranteed as such:
| 31 December 2019 |
31 December 2018 |
|
|---|---|---|
| Tangible assets | 29.012.004 | 29.584.841 |
The accountable values of loans approximate their just values. The Company does not have any loan facilities unused as on 31 December 2019 and 31 December 2018.
15
The analysis of claims and debts regarding the deferred income tax is as follows:
| 31 December 2019 |
31 December 2018 |
|
|---|---|---|
| Claims regarding the deferred income tax: | ||
| - Claims regarding the deferred tax to be recovered in less than 12 months Debts regarding the deferred tax: - Debts regarding the deferred tax |
605.495 | 422.000 |
| to be recovered in more than 12 months to be recovered in less than 12 months |
$-3.272.063$ | $-3.428.772$ |
| $-2.666.568$ | $-3.006.772$ |
The gross modification related to the deferred income tax is as follows:
| 2019 | 2018 | |
|---|---|---|
| On 1 January | $-3.006.772$ | $-771.822$ |
| (Expenditure) / Retake in the profit and loss account | 340.204 | $-26.153$ |
| (Creation) / Retake in the global result situation | $-2.208.797$ | |
| On 31 December: assets / (debt) | $-2.666.568$ | $-3.006.772$ |
NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS
FOR THE YEAR CONCLUDED ON 31 DECEMBER 2019 (in lei, if not otherwise specified) ARMÁTURA SA
The alteration in claims and debts on the deferred income tax during the year, but without taking into account the settlement of related balances for
the same fiscal authority, is the following:
| January 2018 $\frac{1}{2}$ |
profit and OSS account in the Credited (Debited) |
result Credited in the global |
2018 December On 31 |
account and loss Credited in the profit (Debited) |
result Credited in the global |
2019 On 31 December |
|
|---|---|---|---|---|---|---|---|
| Reassessment of tangible assets |
1.286.829 | $-66.854$ | 2.208.797 | 3.428.772 | $-156.709$ | 3.272.063 | |
| Provision for trade claims Debts on deferred tax |
1.286.829 $-116.233$ |
$-66.854$ $-194$ |
2.208.797 | 3.428.772 $-116.427$ |
$-2.489$ $-156.709$ |
$-118.916$ 3.272.063 |
|
| Provision for suppliers benalties, litigates and rovision for stocks material warranties |
$-24.509$ $-374.265$ |
95.565 $-2.364$ |
$-26.873$ $-278.700$ |
24.154 $-184.221$ |
$-2.719$ $-462.921$ |
||
| Provision for untaken leave days, provision for |
$-20.939$ | $-20.939$ | |||||
| Claims regarding the e-structuring deferred tax |
$-515.007$ | $-93.007$ | -422.000 | $-183.495$ | $-605.495$ | ||
| Effect of net deferred tax | 771.822 | 26.153 | 2.208.797 | 3.006.772 | $-340.204$ | 2.666.568 |
43
| Warranties granted to clients |
Litigates | Other provisions | Total | |
|---|---|---|---|---|
| On 1 January 2019 | 11.014 | 156.942 | 167.956 | |
| Registered in the profit and loss account |
16.955 | $-11.014$ | $-26.033$ | $-20.092$ |
| Retaken not used amounts On 31 December 2019 |
16.955 | 130.909 | 147.864 |
At the end of each period, the Company establishes provisions for the value of untaken leaves by its employees.
The Company constituted provisions for possible penalties from suppliers, due to delays in due trade debts payments.
The Company constituted provisions for activity restructuring in value of 107,732 RON, representing compensations dues for 9 employees whose job positions were dissolved and for whom their Individual Labour Agreement shall end on January 2020. The compensations represent the equivalent of 4 gross monthly wages and shall be paid upon termination of their Individual Labour Agreements.
| 2019 | 2018 | |
|---|---|---|
| (Loss)/gain from assignment of tangible assets | $-4.818$ | 25.065 |
| (Expenditure) / Retake of provision for stocks | $-1.151.376$ | 596.068 |
| (Expenditure) / Retake of provision for claims | $-15.559$ | |
| Other net expenditure/gains | ||
| Total | $-1.171.753$ | 621.133 |
| 2019 | 2018 | |
|---|---|---|
| Travel and daily allowance expenses | 10.383 | 3.566 |
| Leases | 100.327 | 189.184 |
| Insurances | 36.986 | 38.323 |
| Repairs and maintenance | 83.055 | 57.163 |
| Transportation | 37.629 | 23.341 |
| Taxes and similar costs | 151.166 | 243.952 |
| Advertising and protocol | 29.536 | 19,809 |
| Commissions and fees | 73.093 | 470.540 |
| Others | 63.641 | 88.753 |
| Total | 585.818 | 1.134.631 |
| 2018 |
|---|
| 2.512.038 70.244 |
| 2.582.282 |
Number of employees
| 2019 | 2018 | |
|---|---|---|
| Number of employees | 42 | 45 |
| Management Personnel | ||
| Executive Personnel | 13 | 14 |
| Production Personnel | 28 | 30 |
| 2019 | 2018 | |
|---|---|---|
| Costs with interests: - Loans contracted from shareholders Exchange rate differences costs Revenues from exchange rate differences |
481.352 1.156.300 $-310.460$ |
471.716 564.925 $-506.533$ |
| Net financial costs | 1.327.192 | 530.108 |
| - Revenues from interests to short term bank deposits |
$-69$ | |
| Financial Revenues | $-69$ | |
| Net financial costs | 1.327.123 | 530.108 |
| 2019 | 2018 | |
|---|---|---|
| Current tax: Current income tax related to the year |
||
| Total current tax | ||
| Deferred tax (note 16): Occurrence and retake of temporary differences |
$-340.204$ | 26.153 |
| Total deferred tax | $-340.204$ | 26.153 |
| Profit Tax Cost | $-340.204$ | 26.153 |
| 2019 | 2018 | |
|---|---|---|
| Net profit Adjustments for: |
$-3.453.336$ | $-1.911.513$ |
| - Depreciation costs (note 6) - (Profit) / loss from the sale of tangible assets |
776.287 | 1.047.391 |
| (note 18) | 4.818 | |
| - Revenues from interests (note 21) | $-69$ | |
| - Interest cost (note 21) | 481.496 | 471.716 |
| $-$ Profit tax (note 22) | $-340.204$ | 26.153 |
| - Provisions for trade stocks and claims | ||
| (note 18) | 1.166.935 | 596.068 |
| $-20.092$ | ||
| - Provisions for risks and expenses (note 17) | $-2.031$ | |
| - Losses from the exchange rate differences Alterations of the circulating capital: |
600.587 | 21.000 |
| - Stocks | 266.354 | $-141.901$ |
| - Clients and other claims | 361.536 | 128.218 |
| - Suppliers and other debts | 232.318 | 924.828 |
| Cash generated by operations | 76.630 | $-32.208$ |
The non-monetary transaction is represented by settlements between the trade debts and claims to different internal and external partners.
| 31 December 2019 |
31 December 2018 |
|
|---|---|---|
| Sales of goods | 6.653.750 | 7.798.681 |
| Sales of services | 651.361 | 484.990 |
| 7.305.111 | 8.283.671 |
| 31 December 2019 |
31 December 2018 |
|
|---|---|---|
| EU interstate exports | 6.223.384 | 7.350.379 |
| National revenues | 1.081.727 | 933.292 |
| 7.305.111 | 8.283.671 |
The Company has litigated with trade partners, resulted out of the normal course of activity deployment, as well as with ex-employees. The Company's Management considers that these legal actions will not have a significant adverse effect on the economic outcome and financial position of the Company.
The majority of disputes refer to claims from companies in insolvency procedure and for which the company already created provisions in the past years.
On the date of 31/12/2019, there is an active trial procedure involving an ex-employee of the Company who claims from Armatura the amount of 500,000 EUR with the title of damages, in order to cover the prejudice suffered from a work injury. In the primary court session, the Company Armatura has obtained a favourable sentence, in the meaning that the Court rejected the claims of the ex-employee. On the date of 12/03/2020 The Court of Appeals from Cluj rejected the appeal declared, sense in which the Company shall pay no amount of money to the ex-employee. The decision of the Court is final.
All the amounts due to the State for taxation purposes were paid or registered at the date of financial statements. The Romanian fiscal system is under consolidation and
harmonization with the European legislation, with the possibility to have different interpretations of authorities in relation to the fiscal legislation, which might result in additional taxes, amounts and penalties. In case the state authorities discover violations of legal provisions applicable in Romania, these may determine, as applicable: forfeiture of respective amounts, additional fiscal obligations, application of fines, application of delay penalties to the effective amounts due to be paid). As such, the fiscal sanctions resulted from violations of the legal provisions may lead to important amounts to be paid to the State. The Company holds that it paid in due time and in full all taxes, charges, penalties and penalty interests, to the degree applicable.
The Romanian fiscal authorities performed controls in relation to calculation of income tax until 31.12.2008.
Pursuant to the relevant fiscal legislation, the fiscal assessment of a transaction concluded with affiliated parties has as basis the concept of market price related to the respective transaction. Pursuant to this concept, the transfer prices shall be adjusted so that they reflect the market prices agreed between the entities in an affiliation relation and which act independently, based on "regular market conditions".
During the month of September 2011, a verification process of trade relations between Armatura SA and affiliated companies of Herz group was initiated, the period subject to analysis being the financial years 2009 - 2010. Because the Company did not have at that time a Transfer price file, it was given the permission to draft the documentation within the deadlines mentioned by the legislation in force.
The Company drafted and submitted the Transfer price file for the period mentioned in due time, that is on February 17th 2013. Until the date of the current financial statements, the Fiscal Inspection Service of ANAF Clui (National Fiscal Administration Agency) did not verify and did not conclude on the observance of the principle of "regular market conditions" and as taxation basis of the contributor is not distorted. The Company management cannot estimate the finality of such verifications.
For the financial years $2012 - 2017$ , the Company drafted the documentation regarding the transfer prices implemented in the trade proceedings with the affiliated parties.
$(b)$ Financial crisis
The current global liquidity crisis which started at the middle of the year 2007 had as result. among others, a low financing level of market capital, low levels of liquidity in the banking and circumstantial sector, higher rates at interbaking loans and a very high volatility of stock exchanges.
Currently, the entire impact of the current financial crisis is impossible to anticipate and to prevent in total.
The management cannot accurately estimate the effects on financial position of the Company, continuous decrease of liquidity of financial markets and increase of volatility of the exchange rate of national currency and of capital markets indexes. The management considers that they took all diligent measures in order to ensure the continuity of the
Company under the current conditions.
The volume of financing from economy was significantly reduced lately. This may affect the Company's capacity to obtain new loans and/or to refinance the existing loans in similar terms and conditions with the prior financing.
The clients and other debtors of the company may be affected by the market conditions, which may affect their capacity to reimburse the amounts due. This may have an impact also on the previsions of the Company management regarding the cash flows and on the assessment of depreciations of financial and non-financial assets of the company. To the degree where there is available data, the management reflected in an adequate manner the reviewed estimates of the future cash flows in the assessment of depreciation.
The Company engaged transactions with the following affiliated parties:
Herz Armaturen Ges.m.b.H - shareholder; Herz d.o.o - entity under joint control.
Sales of goods and services
| 2019 | 2018 | |
|---|---|---|
| Sales of assets | 6.222.018 | 7.342.117 |
| Shareholder | 6.211.740 | 7.341.417 |
| Entities under joint control with the shareholder | 10.278 | 700 |
| Sales of services | 1.366 | |
| Shareholder | 1.366 | |
| Entities under joint control with the shareholder | ||
| 6.223.384 | 7.342.117 |
Purchase of assets and services
| 2019 | 2018 | |
|---|---|---|
| Purchase of assets | 3.476.587 | 4.169.075 |
| Shareholder | 3.476.587 | 4.169.075 |
| Entities under joint control with the shareholder | ||
| Purchase of services | 109.413 | 203.054 |
| Significant shareholder | 109.413 | 302.054 |
| Entities under joint control with the shareholder | ||
| Purchase of tangible assets | - | 9.307 |
| Significant shareholder | 9.307 | |
| Entities under joint control with the shareholder | ||
| 3.586.000 | 4.381.436 |
Interest to be paid at the end of the period
The key management staff includes managers (executive and non-executive) and members of the Board of Directors. The paid compensations in 2019 and 2018 to the key management staff for their services as employees are presented as follows:
| 2019 | 2018 | |
|---|---|---|
| Members of the Board of Directors | $\qquad \qquad \blacksquare$ | |
| Management Staff | 172.599 | 161.992 |
Balances at the end of the year which result from sales/purchases of goods/services
| 2019 | 2018 | |
|---|---|---|
| Trade claims from entities under joint control with the shareholder |
||
| Trade debts to the shareholder | 9.266.729 | 8.781.856 |
| Trade debts to entities under joint control with the shareholder Advances received from the shareholder |
205.087 | 363.318 |
| 9.471.816 | 9.145.174 | |
| 2019 | 2018 | |
| Loans from the shareholder | 23 896 500 | 23.319.500 |
The claims from affiliated parties result mainly from sale transactions and are due between 30 - 90 days from the date of sale, in relation to the negotiated contractual conditions. The claims are not guaranteed and do not bear interest. On 31 December 2019 and on 31 December 2018 no provisions were created for claims from affiliated parties.
1.334.221
829.138
The debts to affiliated parties result mainly from purchase transactions and are due one month from the purchase date. The debts do not bear interest.
There were no events, subsequent to balance sheet date, to be reported.
The Financial Statements were signed today,
Director,
Akper Saryyev
Drafted by,
expert contabil Fătăcean Gheorghe
Fatacem Gheorghe
Registered Office: 400267 Cluj-Napoca. Str. Gării, Nr. 19 Telephone: +40 264 435 367 Fax: +40 264 435 368 Email: [email protected] Website: www.armatura.ro Sole Registration Code: RO 199001 Trade Register Number: J 12/13/1991 Subscribed and paid-up equity capital: 4,000,000 RON The Company has zero branches.
The shareholders consolidated synthetic structure on the date of 31/12/2019, according to the information supplied by the Central Register:
| Owner Name | Percentage % |
|---|---|
| Herz Armaturen | 32.99 |
| Hric Beteiligungs | 26 |
| Tridelta Heal Beteiligungsgesellschaft | 16.76 |
| Natural Entities | 14.54 |
| Legal Entities | 9.71 |
| Total | 100.00 |
The regulated market on which are traded the issued stocks is: Bucharest Stock Exchange.
The main features of the stock issued by the Company:
The Company has shares listed to the Bucharest Stock Exchange. Subsequently, the Company implements any and all legal provisions in force: Law 31/1990 updated, OMFP 2844/2016 for the approval of the Accountancy Regulation according to the International Standards of Financial Reports, the ASF regulation 05 / 2018 regarding the reporting, the law 297/2004 regarding the stock exchange market, the Bucharest Stock Exchange regulations and others. All those documents are public. Until the date this report was drafted, the Company did not adhere to the Corporate Governance Code issued by Bucharest Stock Exchange in the year 2015. The Company implemented an Organisation and Functioning Regulation and an Internal Order Regulation that are meant to ensure the secure functioning of the Company and the fulfilment of Company's goals. The internal control system fulfils the established objectives and no significant deficiencies were noted in the internal system functioning. The implemented principles of the internal control system are decision separation, existence of software incorporated automatic controls, authorisation limits, periodic reporting etc. The Company designated an internal auditor, but not an auditing committee. There is no distinct department of investors relations. The Company signed a contract with an authorised financial auditor, according to the legal requirements, and the auditor verifies the financial statements according to the legal provisions in force. The General Assembly has the attributions provided by Law 31/1990 with the afferent alterations and Company's constitutive act in force at the date the General Meeting is held. The manner to deploy the Shareholders General Assembly and the keyattributes of this assembly comply with the legislation in force and with Company's Statute. The shareholders rights and the manner in which they can be exerted are provided in the applicable legislation.
Main object of activity of SC Armatura SA: "Manufacture of taps and valves".
The Company develops, manufactures and sells the following products:
Company's products are sold both on the national and international markets.
The documents regarding the economic and financial operations afferent to the reporting period were correctly recorded, in strict compliance with the accountancy principles, the accountancy rules and methods provided by the legislation in force.
Were observed the financial statements drafting rules, provided in the Law no. 82/1991 and the Order of Public Finances Minister no. 2844/2016, the data inscribed in the Financial Position Situation correspond with the date recorded in the accounting registers and agree with the real situation of the patrimonial elements.
The situation of the global outcome truly reflects the income, the costs and the financial results of the reporting period.
| Colum | Balance on | ||
|---|---|---|---|
| n No. | Indicator Name | 01.01.2019 | 31.12.2019 |
| FIXED ASSETS | |||
| 1 | Intangible assets | 9.239 | 9.709 |
| 2 | Tangible assets | 30.346.332 | 29.653.422 |
| 3 | Financial immobilisations | 0 | $\Omega$ |
| 4 | FIXED ASSETS - TOTAL (line 01 to 03) | 30.355.571 | 29.663.131 |
| CURRENT ASSETS | |||
| 5 | Stocks | 4.058.368 | 2.640.638 |
| 6 | Debts | 659.424 | 282.329 |
| $\overline{7}$ | Short-term financial assets | 110.155 | |
| 8 | Cash and Bank accounts | 458.044 | 335.922 |
| 9 | CURRENT ASSETS - TOTAL (lines 05 to 08) | 5.175.836 | 3.369.044 |
| 10 | TOTAL ASSETS (line 4 + line 9) | 35.531.407 | 33.032.175 |
| EQUITY CAPITAL AND DEBTS | |||
|---|---|---|---|
| EQUITY CAPITAL | |||
| 11 | Share Capital | 18.110.957 | 18.110.957 |
| 12 | Reserves | 21.335.091 | 21.335.091 |
| 13 | Reported Result | $-40.835.609$ | -44.288.947 |
| 14 | EQUITY CAPITAL - TOTAL(Iines 11 to 13) | $-1.389.561$ | $-4.842.899$ |
| DEBTS | |||
| 15 | LONG-TERM DEBTS | 3.006.772 | 2.666.568 |
| 16 | SHORT-TERM DEBTS AND PROVISIONS | 33.914.196 | 35.208.507 |
| 17 | TOTAL DEBTS (line 15 + line 16) | 36.920.968 | 37.875.074 |
| 18 | TOTAL EQUITY CAPITAL AND DEBTS (line $14 + line 17$ |
35.531.407 | 33.032.175 |
Company's stocks recorded a decrease as compared to the beginning of 2019 in value of 1,417,730 RON.
Stocks structure on 31.12.2019 is as follows:
| % in total stocks | |
|---|---|
| finished products and merchandise | 29.46 % |
| on-going production | 30.40% |
| raw materials and materials | 40.14 % |
Stocks rotation average duration (DMR) calculated as report between the average stock and the turnover presents as follows:
DMRmp = average stock mp / CA * 360 days
2018: DMRmp = [(2.068.322+2.486.030) / 2] / 8.283.671 * 360 days = 99 days 2019: DMRmp = [(2.486.030+1.059.982) / 2] / 7.305.111* 360 days = 87 days
intermediate products (pn) $\omega$ .
DMRpn = average stock pn / CA * 360 days
2018: DMRpn = [(1.233.634+657.762) / 2] / 8.283.671 * 360 days = 41 days
DMRpn = [(657.762+802.751) / 2] / 7.305.111 * 360 days = 36 days $2019:$
DMRpf = average stock pf / $CA * 360$ days
DMRpf = [(18.443 + 914.576) / 2] / 8.283.671 * 360 days = 20 days $2018:$
DMRpf = [(914.576+777.905) / 2] /7.305.111 * 360 days = 42 days $2019:$
Stock rotation speed calculated as report between the turnover and the average stock is as follows:
VRmp = CA / average stock mp
2018: VRmp = 8.283.671 / [(2.068.322 + 2.486.030 / 2] = 4 times 2019: VRmp = 7.305.111 / [(2.486.030 + 1.059.982 / 2] = 4 times
VRpn = CA / average stock pn
2018: VRpn = 8.283.671 / [(1.233.634+657.762) / 2] = 9 times 2019: VRpn = 7.305.111 / [(657.762+802.751) / 2] = 10 times
$VRpf = CA / average stock pf$
VRpf = 8.283.671 / [(18.443 + 914.576) / 2] = 18 times $2018:$ 2019: VRpf = 7.305.111 / [(914.576+777.905) / 2] = 9 times
On the date of 31/12/2019, Company's claims in sum of 282,329 RON had the following structure:
| Value | % in total | |
|---|---|---|
| RON | ||
| Trade claims: | 122,930 | 43.54% |
| Other claims | 159,399 | 56.46% |
Trade claims and other claims balance decreased during the year 2019 with 377,095 RON.
DM ic = [(claims at the beginning of the period + claims at the end of the period) / 2] / CA * 360 days
2018: DM ic = [(753.287 + 645.206) / 2] / 8.283.671* 360 days = 30 days 2019: DM ic = [(645.206 + 265.344) / 2] /7.305.111* 360 days = 22 days
At the end of the year 2019, the Company has provisions constituted from the prior years for the depreciation of trade claims in value of 743,224 RON.
Company's payment obligations on 31/12/2019 have the following structure:
| Category | Balance in RON |
|---|---|
| Suppliers (affiliated parties included) | 9.586.380 |
| Settlements with shareholders regarding the equity | 100 |
| Debts with staff and afferent social security | 188.685 |
| Value Added Tax | |
| Sums due to shareholders (interests included) | 25.230.721 |
| Other debts | 54.757 |
| TOTAL | 35.060.643 |
On the date of 31/12/2019, the Company had a loan contracted from the shareholder Herz Armaturen Ges.m.b.H in value of 5 million EUR for the payment of Company's debts (23,896,500 RON)
Credits were secured by mortgages on Company's patrimony assets.
The global result situation on 31/12/2019 comprises: net turnover, incomes and costs of current exercise, grouped according to their nature, as well as exercises' result.
| Financial Exercise: | |||||
|---|---|---|---|---|---|
| No. | Indicator's Name | 31.12.2019 | 31.12.2018 | ||
| Net turnover | 7.305.111 | 8.283.671 | |||
| $\mathcal{P}$ | Operation Result | Profit | |||
| Loss | 2.466.417 | 1.355.252 | |||
| 3 | Financial Result | Profit |
| Loss | 1.327.123 | 530.108 | ||
|---|---|---|---|---|
| 4 | Gross Result | Profit | $\overline{\phantom{a}}$ | |
| Loss | 3.793.540 | 1.885.360 | ||
| 5 | Deferred Profit Tax | 340.204 | $-26.153$ | |
| 6 | Net result | Profit | $\overline{\phantom{a}}$ | |
| Loss | 3.453.336 | 1.911.513 |
Company's management identifies, analyses and drafts, constantly strategies to fight the risks that the Company faces in deploying its activity.
View that a significant portion of Company's sales represent exports, one risk the Company takes and is carefully monitored is represented by the exchange rate of the foreign currency risk.
Because of the general economic environment, the cash flow risk and the treasury flow risk constituted an increased interest theme for Company's management and they tried to find the best solutions in order to prevent this risk, including, amongst others; analysis of obligations due dates, efforts in recuperating claims, optimal use of bank resources etc.
On the date of 07 March 2013. The Extraordinary General Meeting of the Shareholders approved the reduction of Company's equity capital at the value "zero" and simultaneously the increase of its value at 4,000,000 RON via cash contribution from Company's shareholders. The finalisation of this operation was not possible because the shareholder Bugică Radu contested the decision at Trade Court from Cluj, his request made the object of the file no. 817/1285/2013 and the EGMS was annulled by the Court by definitive decision. From the financial point of view, the Company wasn't affected except for the fact that the issue of equity capital couldn't be solved, and, on the date of 31/12/2015 the equity capital was 50% below the share capital. The main reason of the annulment was that the Company did not organize before the approval of the reduction and the increase of the share capital an EGMS to discuss the dissolution and liquidation of the Company.
On the date of 29/04.2014, an EGMS took place in which was rejected the proposal of the Board of Directors to dissolve and liquidate the Company, and the Company received a one year delay to present a proposal for the shareholders to solve the issue of negative equity capital, until the end of the year 2014.
On the date of 12/02/2015, the Extraordinary General Assembly decided the reduction of the share capital of the Company from 4,000,000 RON to 400,000 RON by reducing the number of shares, from 40,000,000 to 4,000,000 nominative shares and simultaneously the increase of the share capital from the value of 400,000 RON to the value of 4,000,000 RON by cash inflow. The reply communicated by ASF regarding the registration of the operation to reduce the share capital was sent to the Company on the date of 12/02/2016. In the EGAS that took place in April 2016 was rejected the proposal approved by the EGAS Decision
01/12.02.2015. In this EGAS, was approved the assignment of the Board of Directors to approve and execute a share capital increase up to the value of 10,000,000 RON, within one year since the EGAS date, but until the date of these financial statements the respective action was not taken.
On the date of 25/04/2019, took place an EGAS in which, via the decision no. 3/25.04.2019, the shareholders representing 49.76% of the share capital do not approve the dissolution of the Company and approve the selling, entirely or partially, simultaneously or successively, to one or several buyers, of any and all real-estate owned by the Company. The amounts of money thus obtained will be used to pay Company's debts.
Moreover, via the Decision of the Board of Directors of the Company Armatura SA no. 957/10.12.2019, was approved the dissolution from the organigram of 9 job positions, and the individual labour agreements of the employees occupying those positions were scheduled to end on January 2020.
In the month of January 2020, via the Decision of the Board of Directors of the Company Armatura SA no. 89/23.01.2020, was approved the scrapping of the fixed assets and the inventory items from all the departments of Armatura SA.
The due date for the reimbursement of the 5 million EUR credit contracted from the shareholder Herz Armaturen Ges.b.h was not renewed during the year 2019, the due date remaining 15/04/2016.
There were no subsequent events to report.
Cluj-Napoca
Director,
Akper Saryyev
| The provisions of the Code | Respect | Not respect or respect partial |
Reason for nonconformity |
|---|---|---|---|
| A.1 All companies must have an internal Council regulation that includes the terms of reference / responsibilities of the Council and the key management functions of the company and which applies, inter alia, the General Principles of Section А. |
Not | To be adopted by the Board of Directors |
|
| A 2 Provisions for managing conflicts of interest should be included in the Council Regulation. In any members must notify Council case, The Council on any conflicts of interest that have occurred or may occur and refrain from participating in the discussion (including by not presenting, unless the failure to attend would hamper the formation of the quorum) and the vote on the adoption of a decision on the matter gives rise to that conflict of interest. |
Not | There is no regulation yet, it will be adopted after the election of the council |
|
| A 3 The Board of Directors or the Supervisory Board | Yes | ||
| must be composed of at least five members A 4 Most members of the Board of Directors should |
Yes | ||
| not have executive functions. In the case of Standard Category companies, at least one member of the Board of Directors should be independent. |
|||
| A4. Each independent member of the Board of Directors shall make a declaration at the time of his nomination for election or re-election, as well as when any change of his status occurs, indicating the elements on the basis of which he is considered to be independent in character and his / her judgment, and according to the following criteria A4.1-A4.9 |
No t | So far there is no A1 rule | |
| A.5 Other relatively permanent engagements and duties of a member of the Board, including executive and non-executive positions in the Board of Non-Profit Societies and Institutions, must be disclosed to potential shareholders and investors prior to nomination and during their term of office. |
Not | To be implemented | |
| A 6 Any member of the Council must report to the Council on any report with a shareholder who holds |
Not | To be implemented |
| directly or indirectly shares representing more than 5% of all voting rights This obligation refers to any report that may affect the member's position on matters decided by the Council. |
||
|---|---|---|
| A 7 The Society shall designate a Council Secretariat responsible for supporting the work of the Council. |
Not | To be implemented |
| A.8 The Corporate Governance Statement will inform whether a Council assessment has taken place under the chairmanship of the Chair or the nomination committee and, if so, will summarize the key measures and the resulting changes. Society must have a policy / guidance on the Council's assessment of the scope, criteria and frequency of the evaluation process. |
Not | To be implemented |
| A.10 The corporate governance statement should include information on the exact number of independent members of the Board of Directors or the Supervisory Board |
Not | Until this time, there was no information on the number of independent members, but the AGA's decision-making decisions were published on the company's website, through which members were elected |
| B.1 The Board should set up an audit / risk committee in which at least one member should be a non-executive non-executive Most members, including the Chairperson, must have proven that they have appropriate qualifications relevant to the functions and responsibilities of the Committee. At least one member of the audit committee must have appropriate audit or accounting proven and experience |
Not | an audit We do not have committee, the company will implementation the start procedure of the internal audit committee |
| B 2 The Audit / Risk Committee Chairman must be an independent non-executive member. |
Not | audit do not have We an committee |
| B 3 As part of its responsibilities, the audit / risk committee should conduct an annual review of the internal control system. |
Not | do audit We not have an committee |
| B.4 The assessment should take into account the effectiveness and coverage of the internal audit function, the adequacy of the risk management and internal control reports submitted to the Council's audit committee, the promptness and effectiveness with which executive management addresses identified weaknesses or weaknesses following internal control and the submission of relevant reports to the Council's attention |
Not | audit do not have We an committee. |
| B.5 The audit committee should assess the conflicts of interest in relation to the transactions of the company and its subsidiaries with affiliated parties |
Not | audit We do not have an committee |
| the The audit committee assess B.6 must |
Not | have audit We do not an |
| effectiveness of the internal control system and the system management risk |
committee. | ||
|---|---|---|---|
| B 7 The Audit Committee should monitor the application of generally accepted legal standards and auditing standards. The Audit Committee should receive and evaluate internal audit team reports |
Not | We do not have an audit committee. |
|
| B 8 Whenever the Code mentions reports or analyzes initiated by the Audit Committee, they should be followed by periodic reports (at least annually) or ad hoc reports to be submitted to the Council |
Not | audit do not have an We committee |
|
| B.9 No shareholder may be granted preferential treatment over other shareholders in connection with transactions and agreements entered into by the company with shareholders and their affiliates. |
Yes | ||
| B.10 The Council should adopt a policy to ensure that any transaction of the company with any of the companies with which it has close relationships whose value is equal to or greater than 5% of the company's net assets (according to the latest report financial) is approved by the Council following a binding opinion of the Council Audit Committee and properly disclosed to shareholders and potential investors to the extent that such transactions fall within the category of events subject to reporting requirements |
Not | We do not have an audit committee. |
|
| B 11 Internal audits should be performed by a division (internal audit structural separate department) within the company or by hiring an independent third party. |
Not | We do not have an audit committee |
|
| B.12 In order to ensure the main functions of the internal audit department, it must report functionally to the Council through the audit committee. For administrative purposes and within the management's responsibility to monitor and reduce risks, it must report directly to the Director General |
Not | do not audit have We an committee |
|
| C1 The company must publish the remuneration policy on its website and include a statement on the implementation of the remuneration policy in the annual report during the annual period under review. |
Not | No, we are going to implement a Renewal policy to comply with the BVB Code |
|
| D1 The company must organize an Investor Relations Service - indicating to the general public the responsible persons or the organizational unit. In addition to the information required by law, the company must include on its website a section dedicated to Investor Relations, in Romanian and English, with all relevant information of interest to investors, including . |
Not | There are special columns on the company's website that include different investor information, depending on the nature of the information, but there is no heading distinct Investor Relations |
| D.12 Professional CVs of members of the other management body of the company, professional engagements of Council members, including executive and non-executive positions in boards of directors in companies or non-profit |
Not | We are going to take steps to comply with the BVB Code |
|
|---|---|---|---|
| institutions; | |||
| periodic reports D.13 Current reports and (quarterly, semester and annual) - at least those |
Yes | ||
| under D 8 - including current reports with detailed | |||
| information on non-compliance with this Code; | |||
| D 1 4 Information on general shareholders meetings: | Yes | Not | Information on AGA is posted on |
| agenda and informative materials, the procedure for | the site | ||
| the election of the members of the Council, the | |||
| arguments supporting the nomination of candidates | We are going to take steps to | ||
| for election to the Council, together with their | comply with the BVB Code | ||
| professional resumes, shareholders' questions about | |||
| agenda items and company responses, including | |||
| resolutions adopted; | |||
| D.1 6 Name and contact details of a person who will | Not | We are going to take steps to | |
| be able to provide relevant information upon | comply with the BVB Code | ||
| request, | |||
| D 2 The Company will have a policy on the annual | Not | We are going to take steps to | |
| distribution of dividends or other benefits to | comply with the BVB Code | ||
| shareholders proposed by the Director General and | |||
| adopted by the Council in the form of a set of | |||
| guidelines that the company intends to follow | |||
| regarding the distribution of net profit The | |||
| principles of the annual distribution policy to | |||
| shareholders will be published on the company's | |||
| website | |||
| D.3 Society will adopt a policy in relation to | Not | We have not implemented a | |
| forecasts, whether they are made public or not The | forecasting policy so far. We are | ||
| forecasts refer to quantified conclusions of studies | going to take steps to comply | ||
| aimed at determining the overall impact of a number | with the BVB Code | ||
| of factors over a future period (the so-called | |||
| hypotheses) by its nature, this projection has a high | |||
| level of uncertainty, the actual results may differ | |||
| significantly of the forecasts originally presented. | |||
| The forecast policy will determine the frequency, | |||
| timing and content of the forecasts. If published, | |||
| forecasts can only be included in the annual, half- | |||
| yearly or quarterly reports The forecasting policy | |||
| will be published on the company's website | |||
| D 4 The rules of general shareholders' meetings | Yes | ||
| should not limit the participation of shareholders to | |||
| general meetings and the exercise of their rights | |||
| Changes to the rules will take effect at the earliest, | |||
| starting with the next shareholders' meeting. | |||
| D 5 External auditors will be present at the general | Yes | ||
| shareholders' meeting when their reports are | |||
| presented at this meeting. | |||
| D 6 The Board will give a brief assessment to the |
| Annual General Meeting of Shareholders on the internal control and risk management systems as well as opinions on matters subject to the decision of the general meeting. |
|||
|---|---|---|---|
| D.7 Any specialist, consultant, expert or financial analyst may attend the shareholders' meeting on the basis of a prior invitation from the Board. Accredited journalists may also participate in the general meeting of shareholders, unless the President of the Council decides otherwise. |
Not | Will take a decision in this regard. | |
| D.8 Quarterly and half-yearly financial reports will include both Romanian and English information on key factors influencing changes in sales, operating profit, net profit and other relevant financial ratios, both quarter- to another and to one year to another. |
Yes | ||
| D.10 If a society supports different forms of artistic and cultural expression, sporting activities, educational or scientific activities and considers that their impact on innovation and the competitiveness of society is part of its mission and development strategy, it will publish its policy with of its activity in this field |
Not | We do not support |
S.C. ARMĂTURA S.A. 400267 Clui-Napoca, str. Gării nr.19 Tel: +40 264 435 367, Fax: +40 264 435 368 E-mail: [email protected], web: www.armatura.ro
Were drafted the annual financial statements on 31.12.2019 for: SC Armatura SA, county: 12 - Cluj address: Cluj-Napoca, Str. Garii, Nr. 19 Trade Register Number: J12/13/1991 Ownership Form: 34 - Joint Stock Companies Main Activity (NACE code and class name): 2814 – Manufacture of other taps and valves Fiscal Identification Code: RO 199001
We, the undersigned Matthias Haider and Akper Saryyev, as Directors of SC Armatura SA, hereby take full responsibility for the drafting of the annual financial statements on 31.12.2019 and hereby confirm that:
Signatures,
Financial audit report - 2019
| No. 355/18.03.2020 | ||
|---|---|---|
| ARMATURA S.A S.C. ARMATURA |
||
|---|---|---|
| INTRARE | CLUJ-NAPOCA | |
| IFSIRE | ||
on the individual financial statements elaborated on 31.12.2019
$\mathsf{b}$
Towards.
Associates, creditors and management of ARMATURA S.A.
and
the other legal users of the information in the individual financial statements and the present Report
(1.3) Main reference values on 31.12.2019 regarding the individual financial statements up mentioned, are
| • Total assets | 33.032.175 lei |
|---|---|
| • Net turnover | 7.305.111 lei |
| Result of the financial year (loss) | 3.453.336 lei |
(1.4) In our opinion, the individual financial statements of ARMATURA S.A., attached to the present, with the exception of those referred at point 3.1, 3.2, 3.3, 3.4, 3.5, 3.6, 3.7, present faithfully (correctly) under all significant aspects, the financial position and performance, their variations, the global result, cash flows, as well as other information presented in the Annotations (accounting policies and other explanatory information) of the Company for the financial year concluded on 31.12.2019, according to the requirements of the general financial reporting framework as it is defined at point (2.7) below.
(2.8) Our audit has been planned and performed according to ISA, adopted by the Chamber of Financial Auditors of Romania (CAFR), and the other legal requirements and professional regulations applicable in Romania, which also establish our responsibilities $\cdot$ (the Auditor) as they are described below in section VII – Responsibility of the Auditor from the present Report.
(2.9) ISA standards as the other legal incidental regulations require the auditor to observe the Ethic Code of IFAC, and the fundamental principles regarding the independence towards the audited entity, integrity, objectivity, professional competence, both when engaging in a financial audit mission and during its performance.
$\mathfrak{Z}$
(4.1) Beside the contrary opinion presented above, we draw attention to the beneficiaries of information from this present report, that the company must prepare the documentation of transfer prices regarding the most significant transactions made with the affiliated parties, because important transactions (as number and value) were registered. Therefore, is a risk that the ANAF authorities may adjust all these transactions at the market price level, thing that may generate additional taxes to be paid, in case there will not be presented this kind of files for the last 5 years of prescription.
| Key aspects of audit | The auditor perspective regarding the key aspects |
|---|---|
| 1. Company's debts and ways of solve them. |
Documentation and discussion with the lead of the company regarding the debts' situation and the values of the guarantees, as well as their stage. |
| The risk regarding the sale of the company's assets, for which exists a Shareholders Decision from 25.04.2019 (no.3/25.04.2019) |
|
| 2. The loan from an affiliate company worth 5.000.000 euro overdue from 2016. |
Confirmation from the affiliate company and the possibility to extend the contract. Discussions with the board regarding the guarantees granted |
| for the loan received (fixed assets). | |
| 3. The risk related to the going concern assumption. |
Considering the decrease of the net turnover and the losses registered, as well as the decision of the boarding no.957/10.12.2019, through which was approved the abolition of 9 work positions, the labour contracts due to cease in January 2020, leads us to a high risk related to the impossibility to carry on the company's activities. |
future events or conditions can make the audited entity to stop develop its activity based on the continuity assumption.
Registered to the Chamber of Financial Auditor of Romania with no. 740/2007
Registered to the Chamber of Financial Auditor of Romania with no. 2134/2007
Cluj-Napoca March, 18 2020
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