Audit Report / Information • Apr 24, 2019
Audit Report / Information
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Deloitte Audyt Spółka z ograniczoną odpowiedzialnością Sp. k. al. Jana Pawła II 22 00-133 Warszawa Polska
Tel.: +48 22 511 08 11 Fax: +48 22 511 08 13 www.deloitte.com/pl
We have audited the annual financial statements of Pfleiderer Group S.A. (the "Company"), which comprise the statement of financial position as at December 31, 2018, and the statement of profit and loss and other comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information (the "financial statements").
In our opinion, the accompanying financial statements:
Our opinion is consistent with the Additional Report to the Audit Committee, which we issued on April 9, 2019.
We conducted our audit in accordance with International Standards on Auditing ("ISAs") in a version adopted by the National Council of Statutory Auditors as the Polish Standards on Auditing ("PSAs") and in compliance with the Act on Statutory Auditors, Audit Firms and Public Oversight of 11 May 2017 (the "Act on Statutory Auditors", Journal of Laws of 2017, item 1089, as amended) as well as Regulation (EU) No 537/2014 of the European Parliament and of the Council of 16 April 2014 on specific requirements regarding statutory audit of public-interest entities ("EU Regulation", Official Journal of the European Union L158). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report.
We are independent of the Company in accordance with the International Federation of Accountants' Code of Ethics for Professional Accountants ("IFAC Code"), adopted by resolution of the National Council of Statutory Auditors, together with the ethical requirements that are relevant to the audit of the financial statements in Poland, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IFAC Code. Throughout the audit, both the key
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statutory auditor and the audit firm remained independent of the Company in accordance with the independence requirements set out in the Act on Statutory Auditors and in the EU Regulation.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. They encompass the most significant assessed risks of material misstatement, including assessed risks of material misstatement due to fraud. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon. We summarized our response to those risks and, where appropriate, we presented the key findings related to those risks. We do not provide a separate opinion on these matters.
| Key audit matter | How we addressed the matter |
|---|---|
| Analysis of impairment of investments | |
| Investments in shares recognized in the stand-alone balance sheet of PGSA as at 31 December 2018 amounted to PLN 2,110 m. This item accounts for 93% of the total assets of the entity. The key audit risk is the judgement concerning future cash flows and the calculation of the discount rate assumed in the discounted cash flow model, which are the basis for the analysis of indications of impairment on segments: Core East and Core West. |
The audit of the stand-alone financial statements of the entity included the following procedures: identification and understanding of internal controls applied to test of impairment; evaluation of the methodology and mathematical correctness of the model; comparison of the assumptions about future cash flows with approved budgets; verification of the correctness of data used for the cash flow forecasts by comparing the data from the calculation to actual results, retrospective analysis; critical review of the key cash flow assumptions made by the Management; evaluation of the long-term growth rate applied after the forecast period, discount rate and independent estimation of the discount rate; evaluation of the sensitivity analysis of the key assumptions to determine the changes which individually or jointly affect the conclusions from the tests carried out by the Management; assessment of the correctness and completeness of disclosures made in the entity's |
| financial statements. |
The Company's Management Board is responsible for the preparation – based on properly kept accounting records – of financial statements which give a true and fair view of the economic and financial position of the Company and of its financial performance in accordance with the applicable International Financial Reporting Standards, as endorsed by the European Union, the adopted accounting policies as well as the applicable laws and articles of association, and for such internal control as the Management Board determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Management Board is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Management Board either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
The Management Board and members of the Supervisory Board of the Company are obliged to ensure that the financial statements meet the requirements of the Accounting Act. Members of the Supervisory Board are responsible for overseeing the Company's financial reporting process.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with PSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
The scope of an audit does not include an assurance about the future profitability of the Company or the effectiveness or efficiency of the Management Board in managing the Company's affairs at present or in the future.
As part of an audit in accordance with PSAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern;
evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with the Company's Supervisory Board regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the Company's Supervisory Board with a statement that we have complied with relevant ethical requirements regarding independence, and that we will communicate with it all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Supervisory Board, we determined those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Other information includes a report on the Company's activities in the financial year ended December 31, 2018 (the "Report on the Activities"), together with a statement of compliance with corporate governance principles, which constitute separate part of the report (together: the "Other Information").
Report on the Company's activities of Pfleiderer Group S.A. and the Group of Pfleiderer Group for 2018, was prepared in accordance with Article 55.2 of the Accounting Act as combined.
The Company's Management Board is responsible for the preparation of the Other Information in accordance with the applicable laws.
The Management Board and members of the Supervisory Board of the Company are obliged to ensure that the Report on the Activities, along with the separate parts, meet the requirements of the Accounting Act.
Our opinion on the financial statements does not cover the Other Information. In connection with our audit of the financial statements, our responsibility is to read the Other Information and, in doing so, consider whether the Other Information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this Other Information, we are required to report that fact in our auditor's report. Additionally, under the Act on Statutory Auditors we are obliged to express an opinion on whether the Report on the Activities has been prepared in accordance with the applicable laws and whether it is consistent with the information contained in the financial statements. Furthermore, we are obliged to state whether a non-financial information statement has been prepared by the Company and to express an opinion on whether the Company has included the necessary information in the statement of compliance with corporate governance principles.
Based on our work performed during the audit, we are of the opinion that the Report on the Activities:
Furthermore, in the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified any material misstatements of the Report on the Activities.
In our opinion, the statement of compliance with corporate governance principles contains all the information referred to in par. 70.6.5 of the Current Information Regulation. We are also of the opinion that the information referred to in par. 70.6.5(c)-(f), (h) and (i) of the Regulation, as contained in the statement of compliance with corporate governance principles, is in accordance with the applicable laws and consistent with the information included in the financial statements.
In accordance with the requirements of the Act on Statutory Auditors, we would like to inform you that the Company does not prepare a non-financial information statement, relying on the exemption under Article 49b.9 of the Accounting Act. In the Report on the Activities, the Company included information concerning the preparation of a separate non-financial report. By the date of this report, the Company had prepared a separate non-financial report.
We have not performed any assurance services relating to the separate non-financial report and we do not express any form of assurance conclusion thereon.
To the best of our knowledge and belief, we represent that non-audit services which we have provided to the Company and to its subsidiaries are in accordance with the laws and regulations applicable in Poland and that we have not provided any non-audit services which are prohibited under Article 5.1 of the EU Regulation and Article 136 of the Act on Statutory Auditors. The non-audit services which we provided to the Company and to its subsidiaries in the audited period have been listed in Point 31 in the Report on the Activities.
We were appointed as the auditor of the Company's financial statements by resolution no. 8 of Shareholders' Meeting adopted on 21 June 2017. Our total uninterrupted period of engagement to audit the Company's financial statements is 2 consecutive financial years, i.e. starting from the financial year ended December 31, 2017.
The key statutory auditor on the audit resulting in this independent auditor's report is Piotr Świętochowski.
Acting on behalf of Deloitte Audyt Spółka z ograniczoną odpowiedzialnością Sp. k. with its registered seat in Warsaw, entered under number 73 on the list of audit firms, in the name of which the financial statements have been audited by the key statutory auditor:
Piotr Świętochowski Register no. 90039
Warsaw, 24 April 2019
This Report is an English version of the original Polish version. In case of any discrepancies between the Polish and English version, the Polish version shall prevail.
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