Hansen Sicherheitstechnik AGVelbertBefreiender Konzernabschluss zum Geschäftsjahr vom 01.01.2021 bis zum 31.12.2021Famur S.A.Katowice/PolenKonzernabschluss und Konzernlagebericht
der Famur S.A.
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PLN 1,050,0m in revenue for 2021, down 8% year on year, mainly due to lower revenue from the supply of new machinery and equipment, partly offset by higher recurring and other revenue. |
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PLN 294m in revenue for the three months ended December 31st 2021 alone, down 8% year on year. |
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EBITDA for 2021 at PLN 314m, with EBITDA margin at 30% of revenue. |
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EBITDA for the fourth quarter of 2021 at PLN 73m, with EBITDA margin at 25% of revenue. |
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PLN 25m in net profit for 2021, including a net loss of PLN 74m for the fourth quarter of 2021 as a result of recognition of a PLN 95m impairment loss on goodwill allocated to the Mining Machinery segment (one-off non-cash item). |
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Operating cash flow of PLN 209m in 2021. |
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PLN 423m surplus of cash over gross debt at December 31st 2021. |
| Key financial ratios | 12 months
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Change
[%] |
3 months
to |
Change
[%] |
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| Dec 31 2021 | Dec 31 2020 | Dec 31 2021 | Dec 31 2020 | |||
| (PLNm) | ||||||
| Revenue | 1,050 | 1,139 | -8% | 294 | 318 | -8% |
| EBITDA | 314 | 416 | -25% | 73 | 75 | 3% |
| Net profit | 25 | 190 | -87% | -74 | 35 | N/A |
| Cash flows from operating activities | 209 | 640 | -67% | 103 | 136 | -24% |
| as % of revenue | ||||||
| EBITDA | 30% | 37% | -7pp | 25% | 24% | +1pp |
| Net profit * | 11% | 15% | -4pp | 7% | 11% | -4pp |
* adjusted for material non-recurring items affecting comparability, as described in section Description and assessment of factors and non-recurring events with a bearing on the result of operations for the financial year.
| as at | ||
| Dec 31 2021 | Dec 31 2020 | |
| Net debt (PLNm) | -423 | -420 |
| Net debt/EBITDA | -1.3x | -1.0x |
Key developments in 2021
Strategic initiatives
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Taking new strategic directions with a view to transforming the FAMUR Group into a holding that invests in green transition projects and opportunities in other promising industries |
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Launch of utility-scale solar project development and EPC services on the B2B market |
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Issue of Series C bearer notes ("Green Bonds") with a total par value of PLN 400m to raise additional funds to finance new strategic transformation projects. |
Development of the FAMUR Group's PV segment
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Investment agreement with TDJ concerning the PV segment |
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Securing financing for SPVs established to deliver PV projects |
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Execution of framework contract for supply of PV modules |
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Securing offtake of renewable electricity by accepting ENERGA-OBRÓT S.A.'s binding offer for the purchase of electricity until the end of 2024 |
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Consistent scaling up of the portfolio of new PV projects and winning auctions held by the Energy Regulatory Authority for a total of 161 MW. |
Mining Machinery Segment
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PLN 950m worth of orders for the supply of machinery and equipment and provision of aftermarket services secured in 2021 (including PLN 367m in Q4 2021 alone) |
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PLN 523m worth of significant contracts for the supply of equipment |
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Approximately PLN 799m in the FAMUR Group's total backlog (supplies of machinery and equipment and leases in accordance with the contracts terms) as at year-end 2021 |
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Decision taken in February to close down FAMUR S.A. Longwall Hydraulic Systems Branch in Zabrze in view of the persistent decline in demand for new mining equipment, including hydraulic actuators, and the expected gradual closure of thermal coal mines in Poland. |
Financing activities and corporate developments
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Execution of amendment agreements to credit facilities: in January with Haitong Bank S.A. Branch in Poland and PKO BP S.A., and in February with Credit Agricole Bank Polska and Bank Gospodarstwa Krajowego |
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TDJ's share in FAMUR S.A.'s share capital increased to 48.05% as at December 31st 2021 and to 48.48% as at the date of issue of this report |
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Execution of a share buyback programme |
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Retaining the entire 2020 net profit and transferring it to the Company's share capital. |
LETTER FROM THE PRESIDENT OF THE MANAGEMENT BOARD
Dear Shareholders,
2021 was a turning point of the FAMUR Group's growth, opening new development paths towards green technologies. The competencies built by the FAMUR Group in the industry and energy sector, the scale of its projects, unique resource base and strong financial position will allow the Group to adjust its business profile to the economic environment evolving in line with the New Green Deal.
In line with the updated strategic directions unveiled in May 2021, we intend to consistently strengthen the FAMUR Group's position in the renewables sector and other promising industries supporting the green transition. In addition to the solar PV business, we plan to focus on sectors with the highest growth potential, which we believe can effectively benefit from the accelerating energy transition. Among them, we have identified eight priority sectors, that is those of most interest in terms of potential mergers and acquisitions: solar PV, offshore and onshore wind power generation, energy storage facilities, HVAC, combined heat and power generation, energy transmission and distribution, energy metering (smart metering), smart grids, and electromobility. In addition to its compounded diversification efforts, the FAMUR Group is seeking to consolidate its strong position as a global supplier of mining machinery and equipment, with a particular focus on state-of-the-art technologies dedicated to extracting strategic minerals, such as coking coal and potash.
Development of the FAMUR Group's Solar PV Segment
The first step towards transforming the FAMUR Group into a holding company that invests in green transition was its entry into the PV sector using the combined resources and capabilities of Projekt Solartechnik (PST), TDJ, and the FAMUR Group. Our strategic objective in this area is to become a leader in turnkey delivery of utility-scale solar photovoltaic farm projects (solar power plants) and medium-sized PV systems (for corporate customers/businesses) on an EPC basis. In 2021, we focused on structuring the Segment, integrating PST Group companies, and setting up an investment fund to manage the PV project portfolio. Our operating activities included primarily acquisitions of solar projects at various stages of development, development of own projects and construction of solar farms with a total capacity of more than 130 MW. It is noteworthy that we have already secured offtake of electricity to be generated by the solar farms that are currently under construction until 2024. In March 2022, we contracted our largest project finance credit facility to date, with a credit limit of PLN 428m, to optimise the financing of solar farms being constructed under project finance arrangements. We are currently looking for a potential buyer for their portfolio. In June and December 2021, we submitted successful bids for projects with a total capacity of 161 MW in renewable energy auctions held by the Energy Regulatory Authority. As at December 31st 2021, our portfolio comprised 1.6 GW worth of projects at various stages of development, including close to 300 MW attributable to projects that won renewable energy auctions in 2019, 2020 and 2021.
Mining Machinery Segment's 2021 operating performance
From early 2021 onwards, the Group's core business segments saw a strong recovery in global coal prices. This translated into an increase in the number of requests for proposal received by the Group on foreign markets (including Russia, China, US, Turkey, Mexico and Indonesia), allowing us to secure new contracts for the supply of equipment not only in geographies where we have had a long-standing presence, but also in such markers as the US. We are also proud to have signed another contract for the supply of Mikrus equipment to a customer in China and another contract for the supply of machinery to a customer in Indonesia. On the Polish market, which remained under strong pressure in connection with the negotiation of terms and conditions for a governmental programme to phase out thermal coal mines in the country, we mainly entered into machinery lease contracts and provided aftermarket services. In 2021, our commercial efforts allowed the segment to secure approximately PLN 950m worth of new orders from Poland and abroad. As a result, the total value of our backlog (understood as the supplies of machinery and equipment and leases in accordance with the contract terms) as at year-end 2021 was approximately PLN 799m.
Financial performance in 2021
In 2021, the FAMUR Group posted PLN 1,050m in revenue, down 8% year on year, with revenue generated in foreign markets representing 34% of total revenue. This translated into EBITDA of PLN 314m. Cash flows from operating activities reached PLN 209m despite increased expenditure on procurement of solar farm components. At year-end 2021, the FAMUR Group carried PLN 423m in cash surplus over debt. In the second half of 2021, we issued PLN 400m worth of Green Bonds. Accordingly, we have sufficient funds available to finance delivery of our strategy.
As part of the preparations for further transformation of the FAMUR Group into a holding investing in green transition projects, as well as in the light of the shift occurring worldwide in the approach to using thermal coal for power generation, in the fourth quarter of 2021 we recognised a PLN 95m impairment loss on goodwill allocated to the Mining Machinery segment, which reduced the net profit to PLN 25m. The impairment loss was a one-off non-cash item.
Sustainable development and social responsibility of the FAMUR Group
The FAMUR Group has been and will always be a socially responsible corporate citizen. We aim to grow our business sustainably, with due regard paid to the interests of all stakeholders, in particular our shareholders, employees and local communities. In conducting our activities, we are guided by the sense of responsibility for our external stakeholders, and we attach great importance to safety and environmental protection.
The outbreak of war in Ukraine in late February 2022 led to significant disruptions in the commodity markets and deterioration of the global economic outlook and, above all, caused a humanitarian crisis in the region. The FAMUR Group and its employees have been actively engaged in helping war refugees from Ukraine as well as supporting non-governmental organisations providing relief to those who have stayed in the country. We have also offered special support to our Ukrainian employees, their families and friends.
We also take regular measures to raise environmental awareness of our employees through a best practice programme implemented across our organisation. Emphasis is placed on saving space, time and resources, and - consequently - on energy efficiency and waste sorting, already at the work planning stage. We have also launched projects to optimise energy consumption, including through deployment of own renewable energy sources. Through education, we increase our organisation's awareness of the need to take further steps towards effective delivery of the sustainable development strategy.
We consider non-financial reporting to be an extremely important communication channel, allowing us to update you on the progress in the delivery of projects and development directions we have designed for the Environmental, Social and Governance (ESG) area.
2021 saw our continued efforts to mitigate the impact of the COVID-19 pandemic on our business and our employees. The Group took consistent measures to ensure employee safety, including introducing dedicated workplace protocols and adequate remote work arrangements, launching a voluntary vaccination campaign, and providing personal protective equipment and free access to COVID-19 tests.
Challenges in 2022
In 2022, we will continue to pursue the new strategic directions with a view to transforming the FAMUR Group into a holding that invests in green transition projects and opportunities in other promising industries. We will both strive to identify attractive acquisition targets to diversify revenue from new business areas and, with regard to our traditional business activities, i.e. the Mining Machinery Segment, we will search for new markets and secure new orders, and we will consistently optimise our operational resources in line with anticipated market developments. In response to a rapid growth in the prices of commodities, energy and components and to rising labour costs, we will continue to focus on maintaining appropriate cost discipline and exploring opportunities for continuous improvement of operational efficiency in each area of our business.
Of course, the economic and social impacts of the war in Ukraine will continue to pose a particular challenge to the FAMUR Group's business throughout the remainder of 2022. We have decided to discontinue offering any new mining machinery and equipment in the Russian Federation until further notice and are fully committed to operating in strict compliance with the sanctions regime imposed by the Polish government and the European Union. At the same time, we have been thoroughly reviewing all economic, operational and legal aspects of performing our existing contracts with customers in Russia and of our future operations in that country. Apart from having tragic humanitarian and social consequences, which are of the highest concern, the war has exacerbated disruptions in global supply chains and accelerated the already significant rise in the prices of many cost items, including energy, raw materials and components. All of this has been impeding our operating performance. We have launched intensive search for alternative sources of supply to minimise the impact of the current geopolitical conditions on our operations. However, given the pace at which the situation is evolving, we are unable to estimate the extent to which it will affect the Group's business in the future.
FAMUR GROUP
Strategy and development directions
General information
The FAMUR Group is a global manufacturer of longwall machinery and systems for underground mining. The Group's product range encompasses longwall systems, road headers, conveyors with accessories, power supply and switchgear equipment for mining machinery, and development and supply of IT systems for end-to-end management of coal mining processes (from the face to the surface). Through its subsidiary, the Group also provides specialist borehole drilling services for various applications and offers drilling technology implementation services for engineering and geotechnical projects.
In May 2021, the FAMUR Group modified its strategic directions with a view to transforming the Group from an enterprise almost exclusively manufacturing mining machinery and equipment into a holding investing in green transition projects and opportunities in other promising industries. Apart from the Mining Machinery Segment, the FAMUR Group, in collaboration with TDJ S.A. and Project Solartechnik S.A. (PST), is currently developing a new segment whose core activities comprise development and turnkey delivery of utility-scale solar projects and medium-sized PV systems on an EPC basis to business customers.
FAMUR Group's further investment in integrated provision of advanced and environmentally friendly energy solutions may include co-generation, energy storage, Smart Grid and HVAC projects, with the Group simultaneously working to identify new, promising areas.
Growth strategy
The current megatrends and the globally accelerating transition towards low-carbon economies induce significant changes in Poland's Energy Policy, with the pace of the changes considerably increasing since the beginning of 2020. The planned phasing out of the coal mining industry in Poland by 2049 and 'Poland's Energy Policy until 2040' adopted by the Council of Ministers in February 2021 envisage, among other things, that the share of coal in Poland's energy mix will be reduced from 69% in 2020 to approximately 11% in 2040 under the high CO 2 price scenario. As a large portion of the FAMUR Group's revenue is generated from sales of products and services to the Polish thermal coal mining industry (approximately 52% in 2021 and 64% in 2021), the Management Board of FAMUR decided to modify the Group's strategic directions and dividend policy (see Current Report No. 51/2018 of September 26th 2021).
The new strategic directions are aimed at tapping the potential of Poland's energy transition and taking advantage of related opportunities and will in particular involve:
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Generating cash from the mining assets by concentrating on the most profitable and stable product lines and continuously adapting the structure of operating assets to the directions of Poland's energy transition, while retaining the competence and know-how to be able to participate in selected mining projects in Poland and export markets on an opportunistic basis. |
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Repurposing selected production plants, e.g. under the strategic partnership model (JV, license agreements, etc.) in the industrial sectors that are oriented particularly towards manufacturers of machinery and equipment for RES, transport, logistics and infrastructure. |
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Evolving into a holding that invests in green transition projects, in the first place by launching utility-scale solar project development and EPC services on the B2B market |
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Consistently searching for attractive investment opportunities in RES and other promising industries. |
The competencies built by the FAMUR Group in the industry and energy sector, the scale of its projects, unique resource base and strong financial position will allow the Group to adjust its business profile to the economic environment evolving in line with the New Green Deal.
The FAMUR Group's entry into the new sectors and rapid achievement of an operating scale will be supported by cooperation with the TDJ Group, a stable and long-term investor in FAMUR S.A.
The modification of strategic directions and their adaptation to changes in the external environment are aimed at transforming the FAMUR Group into a holding that invests in green transition projects and other promising industries. Thanks to these measures, the estimated share of revenues related to the thermal coal sector should fall below 30% by 2024.
The development in new areas will be financed from profits, available EU funds and other financial instruments supporting green energy.
The first stage of the FAMUR Group's expansion into new directions will require profit reinvestment, which necessitates a change of the dividend policy. The dividend, if any, will depend on profits earned in a given year, the investment attractiveness of new projects and growth prospects, as well as the financial and liquidity situation of the FAMUR Group.
The pursuit of the modified strategic directions, and thus the likelihood of achieving the expected benefits, may be affected by the following factors: a significant deterioration of the macroeconomic environment, major change in the announced energy transition of Poland, considerable acceleration of the programme to phase out thermal coal mines in Poland, other extraordinary one-off events with a bearing on the FAMUR Group's business, significant changes in laws and regulations currently in force, and, above all, major geopolitical crises in the regions and countries where the Group operates. The Management Board of FAMUR S.A. monitors the current market situation on an ongoing basis, adjusting the operating activities accordingly and analysing their impact on the development directions taken.
Following the announcement of new strategic directions of the FAMUR Group, which entail a change of the dividend policy, the FAMUR Management Board recommended that the General Meeting allocate PLN 70m to the buyback of Company shares by way of a tender offer with a price of PLN 2.50 per share, assuming that the total number of tendered shares will not exceed 5% of the share capital.
Few shareholders decided to participate in the programme (the tender offer was announced for 28 million shares, and only approximately 82.5 thousand shares were tendered, to be subsequently bought back for PLN 2.50 per share), which the Company considers its shareholders' stamp of approval for the new, updated strategic directions adopted by the FAMUR Group. On September 27th 2021, the Management Board of FAMUR S.A. passed a resolution to end the Company's share buyback programme as of that date. (For details of the programme, see Share Buyback Programme).
The business of the FAMUR Group's segments is presented below. The impact of the political and economic situation in Ukraine on the Group's operations is presented later in this report.
Mining Machinery Segment
Manufacturer of underground longwall mining systems and machinery with a global reach
The FAMUR Group's Mining Machinery Segment supplies longwall systems, roadheaders, belt conveyors with accessories, and power supply and switchgear solutions for underground soft rock mining machinery. The Group's offering includes also design and delivery of IT systems for back-to-back management of coal mining processes (from the face to the surface). The FAMUR Group is a global manufacturer of longwall machinery and systems for underground mining. The FAMUR Group is continually growing and consistently expanding its international footprint. Group companies and service centres based in Russia, Kazakhstan, China and Germany guarantee ongoing customer service and fast response in line with customer expectations. The FAMUR Group is constantly raising the bar on service quality and extend its outreach to new locations where reliable mining and industrial systems are needed.
Through Dalbis, a subsidiary and member of the Primetech Group, the FAMUR Group also provides specialist borehole drilling services for various applications and offers drilling technology implementation services for engineering and geotechnical projects.
Market situation in 2021
To a large extent, the number of orders for mining equipment offered by the FAMUR Group reflects the currently prevailing and expected global trends, mainly in the prices of coal and other energy commodities. In 2021, the prices of both thermal and coking coal trended upward, reaching levels not seen in years. While in the first half of 2021 the tightening decarbonisation policy and the ongoing pandemic caused mining companies to either reduce or postpone for months their planned capital projects and to focus on orders from the broadly-defined aftermarket, the second half of the year witnessed a significant rebound and improvement in the investment sentiment, especially abroad, which translated into an increase in requests for proposals from foreign markets where the FAMUR Group operates (Russia, China, the United States, Turkey, and Mexico).
In Poland, however, changes in global prices of coal and higher demand for this commodity continued to have little impact on mining companies' investments. This was largely due to the prolonged process of securing the European Commission's approval of state aid scheme for the hard coal mining industry under the plan to phase out thermal coal mines in the region of Silesia by the end of 2049. In the long term, investments in the Polish mining market will be driven In 2021, coal production in Poland grew by approximately 1% relative to 2020. With growing demand for thermal coal, coal stocks in Poland as at the end of December 2021 fell by about 65% year on year.
Mining machinery market drivers
Growth in the mining machinery sector is mainly driven by:
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The political and economic situation in Ukraine - for information on its impact on the operations of the FAMUR Group and, in particular, on the Mining Machinery Segment see 'Overview of key factors affecting the performance, financial position and outlook of FAMUR S.A. and its Group'. |
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The tightening decarbonisation policy and the transition of economies towards low-carbon energy carriers will contribute to a structural decline in demand for thermal coal and thus in demand for new mining machinery. According to 'Poland's Energy Policy until 2040' as adopted on February 2nd 2021, the share of coal in the country's energy mix is expected to fall to 11% in 2040 (from 69% in 2020) if the prices of CO 2 emission allowances remain high. The last Silesian thermal coal mine is planned to be closed down by the end of 2049. Unlike thermal coal, the impact of decarbonisation policy on metallurgical coal is limited. The European Commission confirmed the status of coking coal as a critical raw material included in the list of 27 raw materials for which the risk of a supply shortage and its impact on the economy is higher than for other raw materials. |
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Current business cycle phase: Demand for metallurgical coal is correlated with steel production, which in turn depends on global economic prospects, including with respect to industrial and construction output. Changes in economic activity also result in changes in demand for energy, which in turn translates into temporary fluctuation in demand for coal. |
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Changes in the global coal prices affect the condition of the global mining industry and thus its capital expenditure, including on new equipment and maintenance services. While an increase in capex spend on new equipment largely depends on current and expected global coal price trends, the level of orders for aftermarket services is more stable as it is closely linked to current production levels at mines and to the quantity of equipment installed. As mining machinery operates in difficult underground conditions, it requires regular maintenance and replacement of parts and consumables to ensure uninterrupted operation and avoid costly downtimes. |
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The ability to meet the expectations of end users in terms of the reliability, efficiency, quality, safety and pricing of FAMUR solutions: Innovative, safe, end-to-end solutions sold at competitive prices, combined with high technical standard of products and high quality of services help the Group to maintain a strong position on the underground mining products and services market. The equipment and services provided by the FAMUR Group represent a small portion of total operating costs for mining companies, but they are key to customers' production operations. Customers now expect mining equipment to be highly productive to offset the persistently growing cost of labour. Such equipment is expected to be even more reliable, leading to reduced downtimes, which should be supported by expedient and readily available maintenance service. In addition, suppliers of mining machinery are expected to additionally deliver IT solutions to monitor its operation on an ongoing basis and communicate in advance any future maintenance needs. More technologically advanced and autonomous mining systems are expected to promote safer working environments. Customers often expect suppliers to provide competitive financing arrangements for machinery purchases. Some developing markets are prone to be particularly sensitive to low prices. |
Competitive environment
In the underground mining segment, the Group competes with several specialised companies, such as Komatsu Mining Corp (formerly JOY Mining Machinery), the Caterpillar Group, EICKHOFF GmbH, SANDVIK AB, as well as Czech, Ukrainian and Chinese manufacturers.
Strategy for the Mining Machinery Segment
The accelerating energy transition in Poland and globally is worsening the outlook of the mining machinery sector. The FAMUR Group's strategic response to this trend is to focus on generating cash from its existing mining assets through:
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focus on the most profitable and stable product areas, |
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maintaining the lease model designed to stabilise revenue and continued provision of aftermarket services, |
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disposal or phase-out of less profitable assets in keeping with Poland's energy transition, |
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maintaining capabilities and know-how for opportunistic involvement in selected mining projects in Poland and on export markets. |
The FAMUR Group offers a complete portfolio of advanced solutions for the underground soft rock mining industry
Examples of machinery and equipment offered by the FAMUR Group and where they are used:
Roof supports and shearer loaders
This product category comprises shearer loaders, powered roof supports and scraper conveyors. These products can be purchased independently or in combination with other equipment to form longwall systems for mining coal from seams up to 6 m thick. Thin coal seams, varying in thickness from 1.1 m to 1.7 m, can be mined using the specialist longwall system Mikrus. The Group's offering also includes hydraulic actuators and controls, in particular hydraulic supports, pilot controls, and power hydraulics.
Roadheaders
Roadheaders form part of a gallery system and are used primarily to excavate galleries and drill tunnels. At the end of 2015 and beginning of 2016, the FAMUR Group expanded its product portfolio to include drilling rigs, drills, dinting loaders and loaders used in underground mines.
Underground transport and bulk materials handling systems
The FAMUR Group manufactures equipment for transport and handling of bulk materials used in underground mines and other operations. The product mix for the hard coal mining industry includes underground belt conveyors, surface belt conveyors, as well as various underground means of transport for logistics purposes.
Explosion-proof and electronic equipment
These products and services include design and manufacture of power supply and switchgear equipment for mining machinery, electronic components, development and deployment of IT solutions, implementation of industrial automation systems, development of technical systems and devices, and integration of power and automation systems.
A description of the complete product range, including the capacity and technical parameters of each product, is available on the Company's website at www.famur.com/oferta.
Mining Machinery Segment's commercial activities in 2021
In 2021, the FAMUR Group secured orders for the supply of machinery and equipment and provision of aftermarket services totalling more than PLN 950m (including PLN 367m in the fourth quarter of 2021 alone). Below are specified significant contracts for the lease and supply of mining machinery concluded by the FAMUR Group in 2021.
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March - a number of individual roadheader lease contracts were signed with the TAURON Group, for a total amount of approximately PLN 26m (VAT exclusive) (see Current Report No. 11/2021 of March 24th 2021), |
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May - the Company (as the leader of a consortium with Hydrotech S.A.) and LW Bogdanka S.A. signed a contract for the upgrade and delivery of longwall system equipment for a price of PLN 62m (see Current Reports No. 17/2021 and 18/2021 of May 6th and May 7th 2021), |
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August - on August 11th 2021, Century Mining LLC of Volga, WV, USA, communicated binding acceptance of FAMUR S.A.'s proposal (which is equivalent to signing a contract) for the supply of a powered roof support system with a total value of approximately USD 28m, or PLN 111m, with the performance completion date in the first quarter of 2023 (see Current Report No. 39/2021 of August 11th 2021). On August 19th 2021, the Company and AO SUEK-Kuzbass signed a contract for the supply of powered roof support sections, with a price of approximately EUR 20m (PLN 92m), To be completed in the first quarter of 2022 (see Current Report No. 43/2021 of August 19th 2021), |
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September - execution of a contract for the supply of machinery to a customer from Indonesia. The total value of the contract is approximately EUR 10m (PLN 46m). The equipment should be delivered within nine months of the effective date of the Contract (see Current Report No. 49/2021 of September 30th 2021) |
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November - the Company and a customer from China signed a contract for the supply of Mikrus low-seam underground hard coal mining equipment. The value of the contract is approximately EUR 15m (PLN 68m). The Contract provides that the equipment must be delivered in the fourth quarter of 2022 (see Current Report No. 56/2021 of November 5th 2021). |
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December - the Company and Polskie Maszyny Group Sp. z o.o. of Katowice signed a series of contracts for the supply of a roof support system with an output handling system to be used in the Russian Federation and for the oversight of their installation, with a total value of PLN 144m (see Current Report No. 63/2021 of December 17th 2021). Performance of two of the four contracts have been suspended following submission of a force majeure notice by a supplier of components used in the manufacturing process (see Current Report No. 10/2022 of March 4th 2022). |
As at the end of December 2021, the total value of the FAMUR Group's backlog (supplies of machinery and equipment and leases in accordance with contract duration) was approximately PLN 799m (including approximately PLN 189m attributable to machinery and equipment to be used in Russia).
Distribution model and key customers
The Mining Machinery Segment sells its products and services directly to companies specialised in the mining of soft rocks, such as coal (thermal and coking) and potash.
In the Company's opinion, there is no material risk of its dependence on any single customer. However, the Company's sales are concentrated in a single sector of the economy. Domestic customers accounting for over 10% of the Group's revenue for 2021 were: Polska Grupa Górnicza S.A. (19% of the Group's sales and 20% of FAMUR S.A.'s sales) and Jastrzębska Spółka Węglowa S.A. (19% of the Group's sales and 20% of FAMUR S.A.'s sales). There are no formal equity links between the above entities and the Company.
Supply chain
The FAMUR Group's Mining Machinery Segment has access to diversified sources of raw materials and is not dependent on one or more suppliers. Expansion of the Group's operations over the previous years helped improve the efficiency of procurement processes, mainly by leveraging the economies of scale and the effective management and logistics system. The suppliers of materials and component parts are selected with due diligence: the supplier is checked in terms of its financial situation and whether it meets the criteria to eliminate the risk of carousel fraud or transfer of funds to entities not included in the 'white list', as well as in terms of its status and size to ensure compliance with the Act on Preventing Excessive Delays in Commercial Transactions. All suppliers are required to confirm that they have read and understood, and undertake to comply with, the requirements set out in the Code of Ethics and Anti-Corruption Policy of FAMUR S.A. The FAMUR Group does not purchase materials from bargain suppliers offering prices that significantly differ from market levels. The machinery and equipment manufactured by the Group are directly delivered to the end customers, with large machines and process lines delivered in parts (batches). The Group outsources such deliveries as well as intra-Group deliveries to reliable third-party carriers. Some of whom have signed regular cooperation agreements with the Group. In March 2020, the FAMUR Group implemented and compiled into a single document the rules of conduct and CSR criteria adopted by the Company and its Group, thus formalising its existing supplier assessment standards in the Supplier Code of Conduct. Compliance with the Code is an obligatory criterion in vetting prospective trade partners. The 'Supplier Code of Conduct' is a standard binding across the FAMUR Group, promoting responsibility among external stakeholders and encouraging good practices among suppliers. The full text of the Code, as formally adopted by the Company's Management Board, is available for download on the Company's hope page at www.famur.com.
Key risks and threats in the Mining Machinery segment
For a detailed description of the risks to which the FAMUR Group is exposed, see: Description of main risks and threats This section contains only an overview of the identified key risks and threats to the Mining Machinery Segment's business:
| • |
increasing pandemic-related and geopolitical risks, which may lead to disruptions in the segment's operating activities, |
| • |
risk of unexpected violent political changes in the countries where the FAMUR Group's mining machinery subsidiaries operate. Such changes may result in business constraints, incurring unexpected liabilities, deterioration of the affected subsidiary's liquidity position, or limitation or even loss of control of the subsidiary; |
| • |
risk of a significant deterioration in the condition of the mining sector, leading to a material reduction in order volumes and customers' failure to timely pay liabilities or otherwise perform under existing contracts, or even to their losing liquidity; |
| • |
risk of a significant acceleration of the energy transition, leading to a material reduction in order volumes; |
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risk of major supply chain disruptions, preventing the Group from timely performing its contracts; |
| • |
risk of a considerable increase in cost items, including labour, materials and components, to an extent that cannot be offset with a corresponding increase in the price of the final product or service, which may depress the Segment's margins. |
Solar PV Segment
At the top of the organisational structure of the FAMUR Group's Solar PV Segment is the subsidiary FAMUR SOLAR Sp. z o.o. It controls the PST Group, whose entities carry out the Segment's operating activities, and the Investment Fund which manages the Segment's PV project portfolio.
Projekt Solartechnik (PST) Group entities offer development and turnkey delivery of solar PV projects on an EPC basis, i.e. from development, design and engineering of a project to procurement of necessary components, to construction and maintenance of all project facilities. The PST Group has a professional project development team, design and engineering studio, and other own project construction and execution resources, dedicated to PV projects. Apart from developing own projects, the Group looks for properties it can secure for potential future projects. It also acquires projects at various stages of development, offering competitive prices. The Group offers its customers proprietary solutions, including self-manufactured assembly systems, constructs own solar power systems, and sells PV components.
The Segment's portfolio of solar farms, comprising both completed projects and ones that are under construction, is managed through the investment fund Projekt Solartechnik Fund FUNDUSZ INWESTYCYJNY ZAMKNIĘTY (the "Fund"), a subsidiary of FAMUR SOLAR Sp. z o.o.
Market situation in 2021
In 2021, Poland's installed PV capacity was among the lowest in the EU. However, with an 82% year-on-year increase in installed PV capacity, the country was one of the fastest growing PV markets in the region. According to data published on the website of the International Renewable Energy Agency (IRENA), Poland's installed PV capacity was approximately 7.1 GW in 2021 (vs. 3.9 GW in 2020). To compare, installed PV capacity in Germany, which is the regional leader in solar power, and Italy was approximately 59.9 GW and 22 GW, respectively 1 . The increase in installed PV capacity in 2021 in the fastest growing markets in the EU, i.e. Germany, Spain, the Netherlands, Poland and France, was 5.3 GW, 3.8 GW, 3.3 GW, 3.2 GW and 2.5 GW, respectively.
According to data published by Agencja Rynku Energii S.A., Poland's installed PV capacity as at the end of January 2022 exceeded 8.1 GW, relative to approximately 4 GW at the end of 2020. In its 'Poland's photovoltaic market in 2020' report of November 2021, the Institute for Renewable Energy (IEO) predicts an increase in installed PV capacity in Poland to 9-10 GW in 2022 and to as much as 27 GW by 2030. The share of solar farms in Poland's energy mix has been increasing at an accelerating pace, with their installed capacity likely to match that of distributed PV power systems in late 2023 or early 2024 2 .
The growth in Poland's renewable energy capacity has also been driven by a dedicated auction system introduced under the RES Act, which primarily supports wind and solar electricity producers. In 2021, President of the Energy Regulatory Authority held two RES auction rounds, one in June and one in December.
The results of the June auctions may translate into deployment of PV systems with a total capacity of close to 2.2 GW, including:
| • |
approximately 1 GW worth of systems with a capacity of up to 1 MW each, for which the minimum electricity selling price in the auctioned basket is PLN 207/MWh, |
| • |
approximately 1.2 GW worth of systems with a capacity of more than 1 MW each, for which the minimum electricity selling price in the auctioned basket is PLN 209/MWh 3 . |
The results of the December auctions may translate into deployment of PV systems with a total capacity of close to 870 MW, including:
| • |
approximately 300 MW worth of systems with a capacity of up to 1 MW each, for which the minimum electricity selling price in the auctioned basket is PLN 219/MWh, |
| • |
approximately 570 MW worth of systems with a capacity of more than 1 MW each, for which the minimum electricity selling price in the auctioned basket is PLN 207.85/MWh 4 . |
The RES Act was amended in October 2021. The amended Act extends, among others, the existing public aid schemes for renewable energy producers. It guarantees that RES auctions dedicated to supporting renewable energy production will continue to be held until December 31st 2027 and that public aid will continue to be offered until June 30th 2047. The amended Act also relaxes licensing requirements for business undertakings with respect to small RES systems as well as otherwise facilitating their deployment, including by waiving the requirement to include RES system with a capacity of up to 0,5 MW in core land development strategies or local development plans and exempting all rooftop solar power systems, regardless of their capacity, from that requirement. This has removed major barriers to the development of B2B solar PV projects.
2021, especially its second half, saw solar farm construction companies experience supply chain disruptions resulting from temporary shortages of electronic and electrical components and PV modules. This also drove prices up and extended solar farm completion times.
Following an increase in energy prices under contracts for 2022, demand for the construction of distributed renewable power generation systems from business customers is expected to rise. Businesses have two main incentives to invest in such solutions: first, an RES system owner can consume electricity the system produces, which offsets the system's cost. Second, businesses have been under growing pressure to commit to environmental protection and reducing their carbon footprint towards achieving carbon neutrality.
PV market growth drivers and inhibitors
The main growth drivers of the PV sector in Poland include:
| • |
accelerating energy transition driven by increasingly ambitious climate objectives, |
| • |
expected rapid increase in demand for utility- and medium-scale solar farms from power producers, infrastructure developers and businesses, |
| • |
development of PPA and CPPA projects in the prosumer segment in line with trends seen in countries with highly advanced PV solutions, |
| • |
prices of EUA CO 2 emission allowances, which are significantly above forecasts and push out conventional energy sources, |
| • |
rapidly increasing energy prices, enhancing the attractiveness of investing in RES projects, |
| • |
EU funding for businesses investing in renewable energy technologies, |
| • |
shift among financial institutions towards financing low- and net-zero emissions sources instead of conventional energy sources, |
| • |
energy transition pressures and expectations of the economic and social environment to seek and apply solutions that will contribute to businesses achieving carbon neutrality within a given time horizon. |
The most serious growth inhibitors of the PV sector include:
| • |
insufficient adaptation of distribution networks to the rapid growth in RES capacity and longer waiting periods for newly-built projects to be connected to the operators' networks, |
| • |
disruptions in the key component supply chains and in transport logistics. |
Competitive environment
The PV market is highly competitive, in particular in the non-utility (up to 1 MW) segment, a situation which is largely attributable to low entry barriers. The PV industry is also highly fragmented, with most contractors being active only in a single area of the value chain of turnkey delivery of utility-scale and medium-sized PV projects. At the same time, the expected fast growth in demand for PV project development and EPC services in Poland is attracting new domestic and foreign players, mainly from Germany and China. The FAMUR Group's key competitors in the Solar PV Segment include RPower and Pro Vento Energia.
Growth strategy
In order to tap the opportunities arising from the expected rapid growth of the PV sector, the FAMUR Group, TDJ S.A. (TDJ) and Projekt Solartechnik S.A. (PST) decided to pursue a solar PV joint venture. To that end, on May 25th 2021 FAMUR S.A. (FAMUR) and TDJ signed an investment agreement ("Investment Agreement") on a solar PV joint venture project (see Current Report No. 24/2021 of May 25th 2021).
The Group's strategic objective is to become a leader in turnkey delivery of utility-scale solar farm projects (solar power plants) and medium-sized PV systems (for corporate customers/businesses) on an EPC basis thanks to the combination of complementary resources, capabilities and sources of competitive advantage of the FAMUR Group, TDJ and PST.
Adopting the EPC model of turnkey utility-scale PV project delivery should allow the Group to achieve higher margins, mainly through planned integration of most elements of the B2B PV value chain (from development of a project to its design, engineering and construction, to its maintenance). The Group's long-term strategic objective is to position itself as a major B2B provider of EPC solutions for PV projects on the European market.
Development of the FAMUR Group's Solar PV Segment
In 2021, the FAMUR Group took a number od measures to develop its Solar PV Segment in line with the terms of the Investment Agreement on a Solar PV Joint Venture signed with TDJ on May 25th 2021 (see Current Report No. 24/2021 of May 25th 2021).
FAMUR SOLAR Sp. z o.o. ("FAMUR SOLAR") was established and entered in the National Court Register under entry No. 906516 on June 15th 2021. The Projekt Solartechnik Fund FUNDUSZ INWESTYCYJNY ZAMKNIĘTY closed-end investment fund (the "Fund") was established to manage the Group's PV project portfolio. The investment certificates of the FUND are held by FAMUR SOLAR (51%) and Maciej Marcjanik (49%). On June 24th 2021, the Management Board of the Central Securities Depository of Poland (CSDP) passed resolution No. 844/2021 to grant the Fund the CSDP participation status of issuer. The Fund is controlled by FAMUR (51%). Pursuant to the Investment Agreement, on July 13th 2021 the share capital of FAMUR SOLAR was increased through cash contributions of PLN 69m (with FAMUR S.A. contributing PLN 35m, or 51% of the total, and TDJ contributing PLN 34m, or 49% of the total). The cash contributions to FAMUR SOLAR totalled PLN 70m (with 51% contributed by FAMUR and 49% by TDJ). Pursuant to the Investment Agreement and the Articles of Association of FAMUR SOLAR, the Company has full corporate power and authority over FAMUR SOLAR, and it fully consolidates the results of the company and its subsidiaries.
In order to secure sufficient funding to support a rapid growth of the Solar PV Segment being built within the FAMUR Group, on July 16th 2021 an annex to the Investment Agreement was signed between TDJ's subsidiary and Maciej Marcjanik (the "Parties") in consultation with the Company. Pursuant to the annex, the rights and obligations of TDJ's subsidiary under the amended Investment Agreement were transferred to FAMUR SOLAR. FAMUR SOLAR agreed to provide funding (directly or through a related party) in the form of loans or other type of financial assistance to support the development of the Solar PV Segment (to be repaid by December 31st 2023 at the latest) up to a maximum amount of PLN 400m. On March 10th 2022, the Parties amended the Investment Agreement, whereby the financing cap was increased to PLN 500m. The cap will be gradually reduced to PLN 50m in 2023 (see Current Report No. 11/2022 of March 10th 2022). The amount comprises total funding that may be provided by FAMUR SOLAR (directly or through a related party) to companies of the FAMUR Group operating in the Solar PV Segment. The rate of interest on the funds provided to companies operating in the Solar PV Segment has been set on an arm's length basis as 3M WIBOR plus margin. Within the above limit, FAMUR SOLAR also agreed to provide a loan (directly or through a related party), to be disbursed in one or more tranches, to Maciej Marcjanik as the Borrower (the "Loan") to fund the acquisition of investment certificates of the FUND allocated to the Borrower (the "Certificates"), with its key terms listed below: the maximum Loan amount is PLN 150m, the Loan bears interest at a fixed rate determined on an arm's length basis, the final repayment date of the Loan is July 31st 2022 (for the first tranche of the Loan) and the first anniversary of each subsequent tranche (for the other tranches of the Loan), with an early repayment option. The repayment of each tranche of the Loan will be secured by a registered pledge over the Certificates subscribed for with funds provided under a given tranche of the Loan (see Current Report No. 34/2021 of July 16th 2021). On July 20th 2021, the Company advanced a PLN 69m loan to FAMUR SOLAR to support the delivery of the objectives set out in its Articles of Association, particularly to fund the acquisition of investment certificates issued by the FUND. On July 20th 2021, the Company and Maciej Marcjanik signed a loan agreement to finance the acquisition of investment certificates issued by the FUND. The first tranche of PLN 69m was disbursed under the loan on July 21st 2021. On July 21st 2021, FAMUR SOLAR acquired Series B investment certificates issued by the FUND for a total amount of PLN 89m, representing 51% of all certificates. The remaining portion of the certificates was acquired by Maciej Marcjanik for PLN 86m. On July 26th 2021, in accordance with the main terms of the Investment Agreement between FAMUR and TDJ, shares in companies holding PV projects were sold by FAMUR, TDJ and PST to the FUND. For a list of companies transferred to the Fund, see Organisational structure of the FAMUR Group and changes therein later in this Report. The companies sold to the Fund held in their portfolios PV projects with a total capacity of approximately 100 MW (with auctions won in 2019 and 2020) in the case of TDJ, and approximately 164 MW (including approximately 104 MW with auctions won in 2020 and 2021) in the case of FAMUR.
On July 20th 2021 and September 17th 2021, FAMUR SOLAR and Maciej Marcjanik signed agreements to sell to FAMUR SOLAR some of the Series A and Series B shares in PST's share capital. On November 3rd 2021, a transfer of Series B shares acquired by FAMUR SOLAR was entered in the register of shareholders of PST, following which the aggregate share of Series A and Series B shares acquired by FAMUR SOLAR in the share capital of PST reached 22%. Furthermore, on September 16th 2021 FAMUR SOLAR and PST signed an agreement on FAMUR SOLAR's subscription for new Series C shares in PST's share capital. On November 10th 2021, an increase in the share capital of PST following the issue of Series C shares was registered and as of that day FAMUR SOLAR's equity interest in PST is 51%. Following the execution of the above agreements, the aggregate amount allocated by FAMUR SOLAR to purchase some of the Series A and Series B shares and take up Series C shares in PST's share capital reached approximately PLN 48m.
The FAMUR Group offers development and turnkey delivery of PV projects on an EPC basis for the B2B segment
Trough its PST operating subsidiaries, the FAMUR Group offers development and turnkey delivery of utility-scale solar farms on an EPC basis, from development of a project to its design, engineering and construction, to its maintenance. The offering includes in particular the following products and services:
| • |
for utility-scale projects, i.e. solar farms (free-standing solar power stations) with a capacity of 1 MW or higher - project development, design, engineering and construction, its connection to the grid, and its maintenance to ensure it remains fully operational; |
| • |
medium-sized PV systems for business customers, i.e. systems dedicated to various businesses, including industrial companies, and public institutions seeking to improve their energy efficiency, meet environmental standards and reduce electricity costs, i.e. to enhance their competitiveness; |
| • |
project development services provided by our Project Development Department, including preparation and compilation of complete project documentation comprising documents confirming the title to the property (project site), environmental permits, zoning permit, grid connection permit, planning permission application, amended planning permission documents (if required), detailed design, and comprehensive as-built documentation. The Group also conducts energy audits of buildings and provides supervision services at any stage of PV project development and delivery; |
| • |
sale or acquisition of completed projects or projects at various stages of development in order to find an appropriate solution for the customer; |
| • |
sale of electricity from the portfolio of completed solar farms. |
Solar PV Segment's operating and commercial activities in 2021
In 2021, the FAMUR Group's operating activities aimed at the development of its Solar PV Segment included mainly acquisition of PV projects at various stages of development, development of own projects, including participation in RES auctions, construction of solar farms and securing offtake of electricity to be produced by them, optimisation of the financing of solar farm projects being constructed under project finance arrangements, and seeking an investor for the portfolio of completed solar farms. These measures resulted in the following achievements:
| • |
In June and December 2021, FAMUR Group companies submitted successful bids for projects with a total capacity of 161 MW in RES auctions held by the Energy Regulatory Authority. |
| • |
Over 130 MW of total solar PV capacity is currently under construction. However, completion deadlines for some projects had to be extended due to limited availability of certain electronic components, insufficient adaptation of distribution networks to the swift growth in renewable energy capacity, longer waiting periods for the projects to be connected to the operators' networks, etc. The completion deadline extensions were also partly necessitated by delayed deliveries of solar modules by a trading partner of the FAMUR Group (see Current Report No. 53/2021 of October 29th 2021). An agreement was negotiated whereby the supplier committed to perform the outstanding deliveries in the fourth quarter of 2021 and in the first half of 2022 (see Current Report No. 58/2021 of November 19th 2021). |
| • |
On August 2nd 2021, FAMUR was notified that the SPVs operating in the PV segment and controlled by the Fund accepted a binding offer made by ENERGA-OBRÓT S.A. of Gdańsk to purchase electricity generated by the offerees from renewable sources and fed into the DSO's distribution network on the terms and conditions specified in the offer, together with a balancing service, for a definite term until December 31st 2024. Accepting the offer was equivalent to signing a contract for the sale of electricity and a balancing service in accordance with the offer and the draft contracts attached thereto, which were signed on a later date only to confirm the terms binding on the parties. In accordance with the binding terms of the offer, the remuneration of the sellers under the contracts signed as a result of accepting the offer is estimated at approximately PLN 143m over their respective terms. It was calculated as per the formula set out in the draft contracts attached to the offer for the relevant settlement periods (see Current Report No. 38/2021 of August 2nd 2021). |
The total capacity of the Solar PV Segment's portfolio, which comprises projects at various stages of development, is currently estimated at more than 1.6 GW, including over 300 MW with auctions won in 2019, 2020 and 2021. As a result of the acquisition of projects, loans granted to the SPVs and costs incurred on the construction of solar farms, as at December 31st 2021 FAMUR's spending on the development of the Solar PV Segment was approximately PLN 380m. On March 10th 2022, the Investment Agreement was amended, whereby the maximum amount of financing to be provided by FAMUR has been increased to PLN 500m and will be gradually reduced to PLN 50m in 2023 (see Current Report No. 11/2022 of March 10th 2022). On March 11th 2022, a credit facility agreement was concluded between 32 companies owned by Projekt Solartechnik Fund FUNDUSZ INWESTYCYJNY ZAMKNIĘTY (the Borrowers) and a syndicate of ING Bank Śląski S.A., Bank Polska Kasa Opieki S.A. and BNP Paribas Bank Polska S.A. (the Financing Parties). Under the agreement, the Financing Parties granted to the Borrowers a project finance credit facility to finance and refinance the costs of construction of solar farms with a total capacity of approximately 134 MW (with the option to convert the credit facility into an investment loan later on) and to cover the debt service reserve. The total credit facility limits under the Agreement are PLN 428m (see Current Report No. 12/2022 of March 11th 2022).
Distribution model and key customers
The Solar PV Segment sells its products and services directly to end customers, which mainly include large Polish power producers, foreign infrastructure sector funds building RES project portfolios, and business undertakings at large.
Supply chain
With a large number of manufacturers, the competition on the PV component parts market is strong. The Group can decide to switch over to new suppliers of PV modules, inverters or other components at any time. Accordingly, in the Company's opinion, the Group does not depend on any component supplier to a greater extent than other entities operating in the same industry.
By selecting the main supplier of PV modules for its projects, the FAMUR Group seeks to secure a stable business relationship with a trusted manufacturer which is ranked by Bloomberg among the world's five largest PV module producers. The Group's current main PV supplier is Trina Solar Schweiz AG, which imports modules directly from China. The FAMUR Group mitigates the vendor concentration and supply chain disruption risks through access to alternative module manufacturers which can help meet any shortfall in components if necessary.
The FAMUR Group procures inverters from a number of reputable manufacturers depending on the specification of a given PV project. The FAMUR Group has also entered into a master agreement with ZPUE for the supply of transformer substations for solar farms with a total capacity of more than 130 MW which are currently under construction. Steel for mounting structures is ordered directly from a European producer. The Group also allocates its operating resources to ensure delivery of supplies.
Given the volume of its purchase orders, the Group is able to source most PV components and other supplies directly from manufacturers. The continuity of supplies is secured, inter alia, by placing orders well in advance and/or concluding master agreements for the supply of strategic components (including PV modules, transformer substations, inverters, etc.).
Key risks and threats in the Solar PV Segment
For a detailed description of the risks to which the FAMUR Group is exposed, see: Description of main risks and threats This section contains only an overview of the identified key risks and threats to the Solar PV Segment's business:
| • |
risk of adverse changes in the legal and regulatory environment - amendments to RES legislation reducing the amount of funds available under the public aid scheme to support renewable energy producers or impeding or preventing deployment of new RES systems may materially affect the expected profitability of the Group's existing PV project portfolio or related business model; |
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risk of increased competition - the expected rapid growth in the solar farm construction industry may attract new players. This may lead to the adoption of an aggressive pricing and product policy by the Group's existing and future competitors, resulting in reduced profitability of the Group's projects and scaling down of its business below the threshold assumed in its strategy. If the FAMUR Group fails to align its pricing with price levels offered by competitors, its market position may deteriorate; |
| • |
risk of a significant increase in the prices/costs of key PV components - PV modules, which are mainly made in China, account for more than half of the costs of constructing a solar farm. What is also important, the number of manufacturers whose modules meet the required specifications and quality standards is limited. This gives those suppliers a certain competitive advantage, which may be used if demand for modules or their cost increases significantly. Manufacturers may then try to pass on the increased costs to customers by raising prices or delay or even reduce deliveries. This may, in turn, translate into higher total costs of a solar farm or delay its delivery; |
| • |
risk of failure to upgrade distribution networks in step with the rapid growth in RES capacity - Poland is currently facing the increasingly serious problem of outdated or rapidly aging distribution infrastructure, affecting the technical condition of power lines and substations, especially overhead MV and HV lines. The increase in RES power generation capacity requires investments primarily in upgrading Poland's MV and HV power grids. The FAMUR Group cannot rule out that the insufficient development of Poland's electricity transmission infrastructure, mainly MV and HV power lines, may hinder the process of securing grid connection conditions for future solar farm projects, with a negative effect on the number of new projects. |
The FAMUR Group continuously monitors the above risks and threats so as to be able to promptly respond to any materialised risk and take adequate mitigating measures.
In its business activities, the FAMUR Group takes into account the existing and future environmental impacts of the processes applied at each of its manufacturing plants. The Company has implemented a certified ISO 14001 Environmental Management System to minimise any significant environmental impacts. The environmental goals set and implemented by the Company in this area follow from the Environmental Policy adopted by the FAMUR S.A. Management Board. They include better waste management, use of environmentally friendly technologies, raising the environmental awareness of staff, and rational use of energy resources. Moreover, by effectively monitoring all the environmental aspects we are able to control our environmental footprint and take, if required, immediate steps to reduce the risk of adverse environmental impacts.
Famur Group companies operate in compliance with the applicable environmental protection requirements and based on valid sectoral permits (including permits for waste generation, permits for gas and dust emissions, and water permits), fulfilling their reporting obligations stipulated in the environmental laws in a timely manner.
The table below presents selected historical data on assets and financial performance achieved over the last five years. This data should be read in conjunction with the consolidated financial statements of the FAMUR Group and the separate financial statements of FAMUR S.A.
| (PLNm) | 12 months to December 31st | ||||
| 2021 | 2020 | 2019 | 2018 | 2017 | |
| Selected data from the statement of profit or loss | |||||
| Revenue | 1,050 | 1,139 | 2,165 | 2,217 | 1,460 |
| Operating profit | 134 | 239 | 289 | 300 | 133 |
| Net profit | 25 | 190 | 249 | 220 | 57 |
| (PLNm) | As at December 31st | ||||
| 2021 | 2020 | 2019 | 2018 | 2017 | |
| Selected items of the statement of financial position | |||||
| Current assets | 2,621 | 1,718 | 2,039 | 1,800 | 2,039 |
| Non-current assets | 599 | 774 | 936 | 1,158 | 1,099 |
| Total assets | 3,220 | 2,492 | 2,975 | 2,958 | 2,138 |
| Current liabilities | 669 | 342 | 938 | 572 | 857 |
| Non-current liabilities | 670 | 468 | 526 | 520 | 524 |
| Equity | 1,881 | 1,682 | 1,511 | 1,587 | 1,550 |
Share price
In August 2006, FAMUR SPÓŁKA AKCYJNA (then FABRYKA MASZYN FAMUR SPÓŁKA AKCYJNA) became a listed company. As at December 31st 2021, 574.8m FAMUR shares were traded on the Warsaw Stock Exchange (abbreviated name: FAMUR; ticker code: FMF). At the end of 2021, FAMUR shares were included in the following stock exchange indices: mWIG40 (comprising 40 mid-caps listed on the Main Market of the WSE), WIG, WIG-Poland, WIG-ESG, mWIG40TR, and InvestorMS.
The chart below shows FAMUR stock price change vs mWIG40 over the last five years.
The table below shows the cumulative rate of return on investment in FAMUR shares (excluding dividends) (from the end of 2016 to the end of 2021) relative to the rate of return on mWIG40 index.
| Base value at the end of 2016=100 | rate of return at year end | |||||
| 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | |
| FAMUR | 100 | 146 | 127 | 70 | 53 | 79 |
| mWIG40 | 100 | 115 | 93 | 93 | 94 | 126 |
The table below presents FAMUR stock price movements in each quarter of 2021.
| Price per share (PLN) | 2021 | |||
| Q1 | Q2 | Q3 | Q4 | |
| Low | 2.30 | 2.26 | 2.21 | 2.61 |
| High | 3.00 | 2.55 | 2.88 | 3.59 |
Dividend policy
The pursuit by the FAMUR Group of its new strategic directions as adopted in May 2021 will require that any profits be reinvested, in particular at the initial stages. The dividend, if any, will depend on profits earned in a given year, the investment attractiveness of new projects and growth prospects, as well as the financial and liquidity situation of the FAMUR Group. The table below presents cash dividend paid by FAMUR S.A. for 2017-2021.
| PLN per share | 2017 | 2018 | 2019 | 2020 | 2021 |
| Cash dividend per share | - | 0.44 | 0.53 | - | - |
Investor relations at the FAMUR Group
In its investor relations activities FAMUR S.A. places focus on ensuring transparent and active communication with capital market participants, working in close liaison with investors and analysts, and ensuring compliance with disclosure requirements set out in applicable laws. The Investor Relations team, along with Company representatives, regularly hold meetings with investors and analysts, both at home and abroad, and participate in most regional and industry investor conferences. The activities undertaken by the Investor Relations department in its contacts with investors aim to facilitate reliable assessment of the Group's financial standing and market position in the context of changes occurring in the sector of machinery and equipment suppliers as well as of the effectiveness of the new strategic directions intended to transform the FAMUR Group from a soft rock mining machinery manufacturer into a holding investing in green transition projects and opportunities in other related promising industries.
The Company holds quarterly conferences for investors and analysts (face-to-face or online conference calls) to present the financial and operating results of the FAMUR Group. Four quarterly earnings presentation conferences and approximately 40 investor and analyst meetings were held in 2021.
In order to provide easy, quick and fair access to information on the FAMUR Group, the Company runs a corporate website at www.famur.com/relacje-inwestorskie, where it regularly posts current reports, periodic reports, presentations and other information relevant to understanding the FAMUR Group's activities, available in Polish and English.
The FAMUR Group has identified the following key factors affecting its performance, financial position and outlook.
External factors:
| • |
Political and economic situation in Ukraine |
| • |
COVID-19 pandemic |
| • |
Expected structural decline in production of thermal coal in Poland and globally |
| • |
Global business cycles affecting the mining industry's capital expenditure levels |
| • |
Financial condition of the Group's key customers |
| • |
Expected increase in demand for renewable energy solutions |
| • |
Supply chain disruptions reflecting increasing PV components and energy prices and rising pay expectations. |
Internal factors:
| • |
Effective and efficient delivery of the adopted strategy to achieve diversification of revenue streams |
| • |
Ability to meet the growing expectations of trading partners by continuously seeking to improve the quality and efficiency of the Group's products and services and of the technologies implemented in them |
| • |
Maintaining a flexible operating model and tight cost control. |
In the Management Board's opinion, the above factors were the key drivers of the FAMUR Group's performance and had a material impact on its financial position in the reporting period. Unless indicated otherwise, the Management Board expects that these factors will continue to materially affect the performance and financial position of the FAMUR Group and of its Parent. For information on uncertain events that may have a material effect on the FAMUR Group's growth prospects, see 'Description of main risks and threats'. A detailed description of the above listed external and internal factors is presented below.
External factors with a material bearing on the FAMUR Group's business and growth
Political and economic situation in Ukraine
The current political and economic situation in Ukraine has significantly increased the degree of exposure of the FAMUR Group to the following types of risks:
| • |
Interruption in the chain of supply of components necessary for the operations of the FAMUR Group as manufacturers and distributors of, inter alia, sheet metal and steel stopped offering products due to the high uncertainty in the market; |
| • |
A spike in the volatility of commodity prices due to Ukraine's and Russia's significant shares in the production of metallurgical products and related components (e.g. castings, forgings) and Russia's significant share in the extraction of key commodities, including oil, gas, nickel, aluminium. This has led to a significant increase in the prices of components (mainly sheet metal and steel), as the FAMUR Group's suppliers largely imported components from Ukraine. In addition, the sanctions imposed on Russia ban the import into the European Union of iron and steel products originating from that country; |
| • |
Delayed delivery of products due to limited and falling availability of transport services, |
| • |
Risk of the interruption of business activities by the FAMUR Group's subsidiary in the Russian Federation (OOO FAMUR Russia). |
The FAMUR Group monitors these risks on an ongoing basis and has taken the following measures to limit their impact on the Group's business:
| • |
It has suspended the offering of new mining machinery and equipment in the Russian Federation until further notice, |
| • |
It has commenced a review of the directions of further operational activities in the Russian Federation, |
| • |
It monitors and adjusts its activities to any administrative decisions of the Polish government and to restrictive measures imposed by European Union bodies, |
| • |
It analyses options for sourcing raw materials and components for current and future orders from alternative sources. |
With regard to orders for the supply of machinery placed by end customers from Russia before the outbreak of the armed conflict, the FAMUR Group is taking the following steps:
| • |
It is thoroughly analysing all economic, operational and legal issues related to the open supply contracts with Russian trading partners, |
| • |
It monitors on an ongoing basis any restrictions on the activities of the subsidiary in the Russian Federation, |
| • |
It is in constant contact with its business partners in the CIS countries to work out solutions to complete the contracts an to collect consideration due for the deliveries, |
| • |
It is in constant contact with banks and financial institutions to minimise payment delays by its trading partners from the CIS countries. |
As at December 31st 2021, the total amount of backlog of equipment intended for use in Russia was PLN 189 million. On March 4th 2022, the Management Board of FAMUR S.A. decided to notify Polskie Maszyny Group Sp. z o.o. of Katowice, its customer, of the occurrence of a force majeure event with respect to two of a series of executed contracts for the supply of equipment to be used in the Russian Federation The Company made the decision after it was notified by a supplier of sheet metal, a material necessary for the performance of the contracts by FAMUR, of an event of force majeure at present preventing the supplier from fulfilling the order. Citing the current geopolitical situation in Ukraine, the supplier notified the Company that it is unable to obtain a substitute offer for the material necessary to perform the Agreements from any other manufacturers or distributors as all of them have stopped submitting offers due to the highly uncertain conditions prevailing on the market (see Current Report No. 10/2022 of March 4th 2022). On April 1st 2022, an agreement was concluded with the customer to abandon the performance of three contracts with a total contract price of approximately PLN 130 million for the supply of equipment and the provision of assembly supervision services, purchased for operation in the Russian Federation. Each Party agreed to cover its costs incurred in connection with execution and performance of the contracts. The amount of costs to be covered by the Issuer is not material (see Current Report No. 16/2022 dated April 1st 2022). Adjusted for the price of the three terminated contracts, the total amount of backlog for equipment to be operated in Russia as of the end of February 2022 (i.e., the last closed accounting period before the date of issue of this report) was approximately PLN 40 million.
In 2021, the FAMUR Group recognised PLN 205 million in revenue from contracts for the delivery of machinery for operation in the Russian Federation. As at the end of December 2021 and the end of February 2022 (i.e., the last closed accounting period), the on-balance-sheet exposure related to the performance of contracts for the supply of machinery and services to customers in the Russian Federation was as follows:
| On-balance-sheet exposure (PLN million) | Dec 31 2021 | Feb 28 2022 |
| Prepayments received | 85 | 99 |
| Contract assets | 54 | 14 |
| Net liability on measurement of derivative instrument | 1 | < 1 |
The FAMUR Group has a service centre located in Russia, operated by OOO FAMUR. The entity is primarily responsible for the performance of obligations under contract warranties provided by the Group in the past. The carrying amount of net assets of OOO FAMUR at the date of this report is PLN 46 million. Considering the current dynamic situation, the Issuer assesses the entity's ability to conduct business activities on an ongoing basis; currently the Issuer sees no indication that the entity would not be able to continue as a going concern for a period of 12 months from the reporting date. As at December 31st 2021 and February 28th 2022, trade receivables from OOO FAMUR amounted to PLN 10 million and PLN 7 million, respectively. The Company does not hold any assets or FAMUR Group companies in Ukraine or Belarus.
Impact of the COVID-19 pandemic on the FAMUR Group's business
In 2021, Poland and other countries were still struggling with the impact of the COVID-19 pandemic on business activity and the persistently high risk of business interruption. Due to the smooth and prompt implementation of the FAMUR Group's plan to mitigate this risk, the impact of the COVID-19 pandemic on the FAMUR Group's business was significantly lower in 2021 than in the previous year.
In 2021, some countries where the FAMUR Group's trading partners operate continued to apply the restrictions imposed in 2020 (e.g., China), which hindered the performance of contracts in those markets. In order to send maintenance teams and delegations to China two coronavirus tests (molecular and serological) and to be performed (before departure and after arrival), a 14-day quarantine was obligatory, and a special entry visa (consent) had to be obtained, also preceded by coronavirus testing. Vaccinated persons are not exempted from the obligation to undergo the tests as required. All this had a significant impact on the amount and length of work performed by maintenance teams, and every business trip had to be planned well ahead and took much more time. As at the date of this Report, cross-border traffic restrictions were being eased. However, the emergence of new variants of the SARS-CoV-2 virus may lead to their retightening, which will affect the FAMUR Group's operations.
In order to minimise the risk of a significant reduction in operating activities, as well as to ensure the safety of employees, their families and contractors, the Company carried out a voluntary vaccination campaign in June 2021, with a total of some 350 employees receiving two doses of the vaccine. Committed to containing spread of the virus to the maximum extent possible, the Company also provides its employees with free access to SARS-CoV-2 tests.
In addition, in order to maintain the continuity of maintenance teams' operations and to support them during the pandemic, the FAMUR Group used Service In Grid, a concept whereby customer service is provided using modern technologies which facilitate quicker and more effective support of trading partners regardless of the geographical distance. The FAMUR Group is one of the first mining machinery and equipment manufacturers using smart-grid tools in relations with its trading partners. The modern technology also creates various opportunities and solutions to be used deep underground in the mines, which was unthinkable in the past due to extremely complex mining and geological conditions. FAMUR aims to facilitate the use of state-of-the-art technologies in the mining sector. With Service In Grid solutions, it is possible to hold safe multimedia training and meetings with trading partners worldwide, including with the use of VR equipment. This is just a step from online service using smartglasses, which would enable FAMUR employees visiting customers in the most distant locations to securely and directly connect with the Service Centre in Poland. FAMUR has already carried out underground tests of such service in China and Indonesia.
The Management Board is monitoring the threats posed by the SARS-CoV-2 virus and its variants on an ongoing basis and is taking appropriate steps to ensure that the employees are safe, operations are not disrupted, liabilities are met, financial liquidity is maintained, and the negative impact of the situation on the FAMUR Group's profitability is mitigated.
Expected structural decline in production of thermal coal in Poland and globally
Renewable energy transition, embraced by a growing number of countries, will affect the long-term investment rates in the thermal coal mining industry. EU member states have already agreed to raise their CO 2 reduction target from the current 40% to no less than 55% by 2030 (relative to the 1990 levels), known as the 'Fit for 55' package. In February 2021, the Polish authorities officially adopted 'Poland's Energy Policy until 2040', which envisages, among other things, a reduction of the share of coal in Poland's energy mix down to 11% in 2040 (from 69% in 2020) if the prices of CO 2 emission allowances remain high. In late April 2021, representatives of the Polish government and industry trade unions initialled an agreement providing for a gradual phase-out of thermal coal mines by the end of 2049. The agreement also provides for a mechanism to finance hard coal mining companies and a redundancy package for employees of the mines to be closed down. The entry into force of the agreed solutions is subject to approval by the European Commission.
The expected fall in the number of coal production projects due to the decarbonisation policy may result in more intense competition, both in Poland and abroad, which may erode margins and drive down profitability. Moreover, there has been growing pressure from financial institutions to curtail financing for companies associated with the broad sector of conventional coal-fired power generation.
Global business cycles affecting the mining industry's capital expenditure levels
Despite the implementation of projects to diversify the FAMUR Group's revenue streams, its sales in the coming quarters will continue to be strongly correlated with soft rock (e.g. hard coal or potash) mining companies' capital expenditure on new equipment. The level of investment in thermal coal production will depend on the pace of green energy transition in different regions of the world. Unlike thermal coal, the impact of decarbonisation policy on metallurgical coal is limited. The European Commission confirmed the status of coking coal as a critical raw material included in the list of 27 raw materials for which the risk of a supply shortage and its impact on the economy is higher than for other raw materials. Demand for metallurgical coal is correlated with steel production, which in turn depends on global economic prospects, including with respect to industrial and construction output.
Financial condition of the Group's key customers
The protracted process to have a plan for the phase-out of coal mines in Poland and reorganisation of coal-fired power assets formulated and approved is affecting the Polish hard coal mining industry, particularly Polska Grupa Górnicza (PGG), which accounted for 19% of the FAMUR Group's revenue for 2021. As at December 31st 2021, the FAMUR Group's total invoiced receivables from PGG stood at approximately PLN 77m, including past due receivables of approximately PLN 4m, attributable to the payment policy in place at PGG. The total exposure, including invoiced revenue, recourse rights relating to receivables sold, and other payments under the contracts in progress (including, but not limited to, the outstanding payments for the lease of shearer loaders and roadheaders), is approximately PLN 257m. There are currently no material delays in payment of liabilities by the Polish mining industry.
Expected increase in demand for renewable energy solutions
The FAMUR Group offers project development and EPC solutions for utility-scale solar farms for power producers, infrastructure sector funds and businesses. For detailed information on the Group's activities in the RES sector, see 'Solar PV Segment'. Demand for renewable energy products and services is mainly driven by: 1) demand for renewable electricity 2) electricity prices increasing in step with the rising prices of CO 2 emission allowances 3) availability of financing and state aid for RES projects 4) energy sector regulations 5) pace of the green energy transition in Poland and the European Union.
Supply chain disruptions reflecting increasing PV component and energy prices and rising pay expectations
2021 emergence of the following adverse trends, which may lead to an increase in operating expenses and affect lead times in the quarters to come:
| • |
growing prices of energy and raw materials, in particular steel and semi-finished steel products (such as forgings and castings) |
| • |
a surge in maritime container freight rates |
| • |
limited availability of electronic and electrical components |
| • |
growing prices and limited availability of PV modules and other components |
| • |
higher employee pay expectations. |
Increase in steel and energy prices
Prices of steel grades purchased by the Company have been growing significantly since the end of 2020. The average prices of selected steel grades used by the FAMUR Group rose, on average, by approximately 40% compared with January 2021, with prices of certain grades up by even 60%. In the first quarter of 2022, steel prices continued to rise at a rate of 80% to more than 100%, depending on the grade. The increase was mainly attributable to the discontinuation of production in Ukraine and the sanctions imposed on the Russian Federation. The rising steel prices affect the prices of machinery and equipment offered by the FAMUR Group, powered roof supports and scraper conveyors in particular. This may cause customers to reduce or halt investment and may increase operating expenses incurred by the FAMUR Group. Higher steel prices also increase the cost of structural profiles used to construct solar farms.
The increase in electricity and gas prices has a relatively limited impact on the FAMUR Group's profitability as this cost currently represents less than 2% of the FAMUR Group's total product costs. Electricity and gas prices were fixed under contracts until the end of 2021. Since early 2022, however, there has been a marked increase in the costs of energy (including electricity and gas) and other utilities.
Growing freight rates
2021 saw an approximately three-fold surge in maritime container freight rates. Rates charged on imports from China rose the fastest, with those on deliveries from European countries growing at a slower pace. The increase in freight rates has had a limited impact on the FAMUR Group's Mining Machinery Segment as most of the components used to build shearers/roadheaders and powered roof supports (e.g. steel) are sourced from European manufacturers. Freight rates represent only a minor fraction of the cost of complete mining machinery delivered to end customers. By contrast, higher freight rates may affect the overall construction costs of solar farms as their major cost items are PV modules and inverters, which are mostly imported from China.
Limited availability of electronic and electrical components
The market has been witnessing limited availability and longer delivery times of certain electrical and electronic components. In addition, the increase in the prices of commodities (mainly metals) has pushed up the prices of cables and transformers. Problems with timely delivery of components give rise to risks associated with longer lead times and postponed deliveries of certain products to customers. The FAMUR Group's production process is largely based on cooperation with external partners. Any disruptions in production at such partners or suppliers of raw materials and feedstocks, or lower access to raw materials or merchandise required to perform orders for the FAMUR Group's customers, may adversely affect the Group's ability to meet its obligations towards customers. The limited availability of certain electronic components (semiconductors) also affects the implementation of solar farm projects. Although these components account for a relatively small share of the overall costs, any shortages cause the completion time of a solar farm to lengthen.
Growing prices and limited availability of PV modules and other components
2021 saw limited availability of PV modules, which are mainly produced in China. Driven by the growing prices of semiconductors in China and their insufficient supply, the prices of PV modules are also rising. The insufficient supply of modules on the market may extend the completion times for solar farms. The average price increase per PV module was around 30% in 2021. Given that PV modules account for a material share in the overall solar farm construction costs, a significant growth in their prices may increase the amount of capital expenditure required to deploy a PV system. Prices of other components used to construct solar farms, including transformer substations, cables, inverters and mounting systems, may also be expected to rise.
Wage pressures and planned amendments to tax regulations under the Polish Deal
Pay expectations are rising in Poland today. The current trend resulting from accelerating inflation and the introduction of new regulations under the "Polish Deal" may translate into wage pressures and, consequently, increase operating expenses both in the segment of mining machinery and equipment production and in the PV segment being developed at the FAMUR Group.
Internal factors with a material bearing on the FAMUR Group's business and growth
Effective and efficient delivery of the adopted strategy to achieve diversification of revenue streams
In 2021, about 52% of the FAMUR Group's revenue was derived from sales of machinery and equipment and maintenance services to customers in the thermal coal mining industry. The growing importance of the decarbonisation policy in Poland and globally, coupled with the increasing pressure from financial institutions to curtail financing for companies associated with the conventional coal-fired power generation sector, will lead to a long-term decline in the number of thermal coal mining projects. Therefore, further development of the FAMUR Group requires making significant efforts to diversify its revenue streams beyond the thermal coal mining industry. In 2021, the FAMUR Group updated its strategic directions with a view to transforming it into a holding investing in green transition projects and opportunities in other promising industries, including photovoltaics, cogeneration, energy storage, smart grid, HVAC, and electromobility, which is expected to help decrease the share of revenue related to the thermal coal mining sector in the Group's total revenue to below 30% by 2024. The pace of revenue diversification will depend on the Group's ability to identify suitable investment targets as well as on efficient integration of new entities within the Group.
Ability to meet the growing expectations of trading partners by continuously seeking to improve the quality and efficiency the Group's products and service and of the technologies implemented in them
The FAMUR Group seeks to continuously enhance the quality and innovativeness of its competitively priced solutions. The Group invests in technology development, introduces new products and services, and improves the existing ones, thus expanding its product portfolio to include more and more comprehensive solutions. For detailed information on the FAMUR Group's investing and R&D activities in 2021, see 'Research and development'. At the same time, by continuously improving production efficiency, the Group is able to maintain both the technological sophistication and the attractive pricing of its offering. These efforts allow the Group to retain its distinct competitive advantage in the Mining Machinery and Solar PV Segments alike.
Maintaining a flexible operating model and tight cost control
The fundamental principle underlying the FAMUR Group's operations is to maintain a flexible operating model enabling quick and effective adaptation of the cost and production base to current and expected demand shaped by the business cycle and structural shifts in the markets in which the Group operates. In 2021, in order to adjust its operational resources and cost base structure to current and expected market demand reflecting the global economic slowdown, developments on the coal market and the COVID-19 crisis, the Group took the following optimisation measures:
| • |
close-down of the FAMUR S.A. Longwall Hydraulic Systems Branch in Zabrze (see Current Report No. 8/2021 of February 15th 2021), |
| • |
implementation of a collective redundancy process and launch of a voluntary redundancy programme at the FAMUR S.A. Longwall Systems Branch in Katowice, |
| • |
conclusion of individual working time and pay reduction agreements between the Glinik branch and its employees in May 2021. |
These measures help the FAMUR Group to adjust its operational resources to the current and expected market situation, while maintaining production, technical and technological competence and product know-how, so that the production is continued to fulfil any secured orders.
The FAMUR Group's manufacturing plants constantly strive to increase productivity and efficiency under the Lean Manufacturing programme. Lean Enterprise Institute Polska Sp. z o.o., Poland's most experienced organisation promoting Lean Management and a member of Lean Global Network, named FAMUR S.A. a reference Lean manufacturer. Also, we use the services of subcontractors to assemble and make equipment requiring no specialist technical or technological knowledge, which allows us to flexibly and quickly adapt to changing backlog levels.
DESCRIPTION OF MAIN RISKS AND THREATS
General definition and classification of key risks at the FAMUR Group
The FAMUR Group defines risk as an uncertainty which is inherent in its business and which may result in both opportunities and threats to the achievement of its strategic objectives and have an adverse impact on its financial performance, assets, operating or commercial activities, or outlook. The Management Board of FAMUR S.A. has, to the best of its knowledge and belief, identified the key risks to the FAMUR Group and classified them into the following categories:
| • |
external risks, i.e. risks associated with the Group's business environment, |
| • |
operational risks, i.e. risks arising from the Group's business activities, |
| • |
financial risks, i.e. risks associated with price, interest rate or foreign exchange rate movements, the Group's liquidity position, or failure by the Group's trading partners to fulfil their obligations under contracts with the Group. |
Risk management process at the FAMUR Group
The identified risks are assessed in the context of strategic and operational objectives pursued by FAMUR. The criteria for risk assessment include both financial and reputational impacts on the organisation, as well as consequences for the environment, employees and members of the community affected by the Group's operations. For each of the identified risks, risk handling procedures and mitigating measures are determined. Periodically, the risks are reviewed for relevance and adequacy in the context of changes in the Group's operating environment. A review of the identified risks is discussed in the Directors' Reports on the operations of the Company and the Group.
In assessing the materiality or change of a specific risk in terms of the expected magnitude of its negative impact on the FAMUR Group's business, financial condition, results of operations or prospects, and in terms of the probability of its occurrence, the Group considered a number of factors, including any past occurrence of that risk and its impact, as well as the availability and effectiveness of remedial measures that could mitigate the impact of its occurrence. Such assessment was based on the best knowledge of the Management Board, relying on facts and circumstances known to the Management Board as at the date of this Report.
The current geopolitical situation, related to the war in Ukraine, has led to instability in the production and availability of key raw materials and components and, consequently, to high volatility of their prices. This has deteriorated the outlook for the global economy, as the economic and social consequences of the war will be long-lasting. In such circumstances, the assessment of all relevant risks and the scale of their impact on the FAMUR Group's business is extremely difficult and may be subject to revision on an ongoing basis.
The order in which the risks are presented below is not in any way indicative of their materiality, the likelihood of their materialisation, or their potential impact on the FAMUR Group's business.
Key external risks
| Type of risk | Risk exposure | Change in 2021 |
| Changes in macroeconomic trends | High | Increase |
| Geopolitical risk | High | Increase |
| Material changes in the industries in which the Group operates | High | Increase |
| Major regulatory changes | High | No change |
| Environmental and climate risks | High | No change |
| Technological shifts | Medium | No change |
Key operational risks
| Type of risk | Risk exposure | Change in 2021 |
| M&A transactions and acquiree integration | Medium | No change |
| Failure to meet customer expectations | Medium | No change |
| Failure to retain or attract key personnel | Medium | Increase |
| Supply chain disruption | High | No change |
| Disruptions in manufacturing processes and provision of maintenance services | Low | No change |
| IT and cybersecurity threats | High | Increase |
| Failure to comply with legal or regulatory requirements | Medium | No change |
Key financial risks
| Type of risk | Risk exposure | Change in 2021 |
| Credit risk: failure by a trading partner to meet its contractual obligations | Medium | No change |
| Liquidity risk: loss or limitation of the FAMUR Group's ability to meet its obligations | Low | No change |
| Market risk: currency risk, interest rate risk, and price risk | Medium | Increase |
Description of key risks and corresponding risk mitigation measures
Below is presented a description of the key external and operational risks, including information on the possible consequences of their materialisation for the FAMUR Group and on the corresponding risk mitigation measures. For information on the financial risks to which the FAMUR Group is exposed, see Note 48 'Objectives and principles of financial risk management' to the Consolidated Financial Statements of the FAMUR Group for 2021.
| Type of risk | Risk description | Consequences of materialisation | Risk mitigating measures |
| Changes in macroeconomic trends | Failure to keep pace with changes in macroeconomic trends: a slowdown in the global economy can result in lower order volumes, increased competition and consequent margin erosion; on the other hand, rapid economic growth may lead to increased wage pressures and rising prices of services, energy and materials, and often to reduced availability of certain components (supply chain disruptions) | Reduced order volumes, increase in operating expenses, decreased margins | Continuous optimisation of manufacturing processes and tight cost control. |
| Flexible organisational structure, adaptable to changes in the environment. | |||
| Monitoring of project margins and cash flows. | |||
| Maintaining a low leverage ratio. | |||
| Geopolitical risk | Political changes in countries where FAMUR Group companies operate may result in business constraints, unexpected liabilities or charges, supply chain disruptions, or restrictions on cash transfers; | Reduced order volumes, increase in operating expenses | Monitoring of political changes in countries where FAMUR Group companies operate or offer their products or which the Group is considering entering into |
| Material changes in the industries in which the Group operates | Change in the competitive environment: an increase in the number of new players on the market may cause a downward pressure on prices, structural decline in demand for certain products or services offered by the Group, and limited availability of key components for the Group's products. Consolidation of suppliers or customers may increase the costs of components or pressure on prices of the FAMUR Group's products, as appropriate. | Reduced demand for certain products or services offered by the Group, lower order volumes, declining revenue, depressed margins | Pursuing strategy to diversify revenue streams and searching for entities offering product synergies. |
| Continuous improvement of the product offering, provision of comprehensive solutions, expansion of the product portfolio | |||
| Major regulatory changes | Major amendments to RES, tax or public procurement laws or regulations, imposing unexpected significant burdens on businesses | Benefits from entering into renewable energy market partly or entirely offset. | Ongoing monitoring of changes in and comprehensive analysis of statutory interpretations and recent judicial decisions and taking prompt action to ensure compliance with new legislation. |
| Increased costs due to unforeseen taxes and other public charges. | |||
| Cancelling auctions or restricting participation therein may result in a revenue drop. | |||
| Environmental and climate risks | Potential acceleration of global trends to phase out carbon emitting energy generation sources. Changes in regulations, administrative fees, charges for using natural resources such as water, energy or raw materials, or emission fees. | Faster than expected decline in revenue in the Mining Machinery segment | Adoption of a strategy for entry into the renewable energy sector, deployment of PV systems at selected production facilities |
| Technological shifts | Development or emergence of new technologies, offering an economically viable alternative to the existing solutions on the market | Inventory write-downs, decrease in revenue, costs of implementing new technologies | Development and improvement of existing products, investment in R&D, monitoring of technology developments and customer needs and expectations |
| M&A transactions and acquiree integration | Difficulties in closing an acquisition, integrating the acquiree, or obtaining the expected synergies | Reduced ability to achieve strategic objectives, unexpected costs or potential impairment losses on acquired assets | Ongoing review of acquisition plans, development of an acquiree integration plan at the due diligence stage, ensuring adequate and properly qualified personnel, engagement of reputable external advisers |
| Failure to meet customer expectations | Failure to obtain the required certificates, failure to pass a customer's product quality tests, failure to fulfil orders on schedule, failure to market new products or solutions, failure to respond to a technological shift or meet customer demand for new products | Incurring damages or penalties, reputational damage, decline in revenue | Investments in R&& D, expansion of the product portfolio, offering tailor-made solutions based on customer input, provision of after-sales services |
| Failure to retain or attract key personnel | Failure or inability to retain or attract qualified personnel | Increase in labour costs, possible disruptions in operating activities, deteriorated growth prospects following loss of key personnel | Continuous mapping of employee competences and requirements, monitoring of the labour market in terms of remuneration and qualifications. Providing development opportunities to employees within the Group. |
| A pandemic adversely affecting employees' health and fitness for work | |||
| Supply chain disruption | The FAMUR Group relies heavily on suppliers of components for its products. | Increase in operating expenses | Evaluation and selection of business partners based on objective criteria such as quality, pricing and supply reliability |
| Risk of disruptions or unexpected major delays in component deliveries or of a sharp rise in component prices. | Delays in contract performance | Prior to commencing deliveries for the FAMUR Group, each new trading partner is required to commit to complying with the "Code of Conduct for FAMUR Group Suppliers". | |
| Risk of failure by FAMUR Group suppliers to comply with the "Code of Conduct for FAMUR Group Suppliers" | Reduced ability to accept new orders as a result of limited availability or increased costs of components | ||
| Disruptions in manufacturing processes and provision of maintenance services | Unforeseen major disruptions in manufacturing processes or provision of services as a result of extreme weather conditions, fires, pandemics, civil unrest, etc. | Failure to deliver products and services on schedule may result in a decrease in revenue or an increase in costs due to contractual penalties. | Adequate crisis management procedures and business continuity plans have been developed and are reviewed on an ongoing basis and updated as required. |
| IT and cybersecurity threats | Failure of or unauthorised access to the FAMUR Group's IT infrastructure and/or systems, leakage of confidential information, theft of the FAMUR Group's intellectual property, loss of the operational continuity of key IT systems and services | Crisis resulting from unauthorised access to confidential information, risk of reputational damage to the FAMUR Group, risk of penalties | The FAMUR Group takes regular measures to ensure the security of its IT infrastructure and systems, including by implementing various procedural, organisational and technical safeguards. |
| Failure to comply with legal or regulatory requirements | Risks related to breaches of the security or integrity of personal data (GDPR), trade secrets or other confidential information, including in particular destruction, loss, modification, or unauthorised disclosure, publication or transfer of protected data. | Failure to comply with the GDPR may result in the imposition of a penalty of up to 4% of the breaching party's annual global turnover. Any breach of the security of personal data or trade secrets may adversely affect the perception of the Group's brands, its competitive position, or its future financial performance. | The FAMUR Group takes regular measures to ensure adequate protection of its trade secrets and personal data that is controls or processes, including by implementing various procedural, organisational and IT security solutions. |
OVERVIEW OF THE FAMUR GROUP'S BUSINESS IN 2021
For a description of the FAMUR Group's organisational structure and any changes therein, including the reasons for their introduction, see Notes 9 and 10, as appropriate, to the Consolidated Financial Statements of the FAMUR Group for the year ended December 31st 2021.
This discussion of financial results for the 12 and three months ended December 31st 2021 should be read in conjunction with the audited Consolidated Financial Statements of the FAMUR Group and the audited Separate Financial Statements of FAMUR S.A. for the year ended December 31st 2021, prepared in accordance with the International Financial Reporting Standards (IFRS). The following discussion of the results achieved in the period is intended to provide the readers with information enabling them to understand changes in the selected key items of the financial statements and to present significant factors behind those changes. In its evaluation and discussion of the reported financial performance, financial position and cash flows, the FAMUR Group makes references to performance metrics other than those expressly defined or outlined in the applied financial reporting framework compliant with IFRS requirements, such as 'EBITDA', 'net debt', and 'working capital'. However, these metrics are calculated on the basis of information sourced from the financial statements prepared in accordance with IFRSs, with their definitions and calculations presented in this section.
Discussion of key components of financial results and assessment of factors significantly affecting financial results
Revenue development
| (PLNm) | 12 months to | 3 months to | ||
| Dec 31 2021 | Dec 31 2020 | Dec 31 2021 | Dec 31 2020 | |
| Supply of machinery and equipment | 370 | 593 | 133 | 184 |
| Revenue from aftermarket services and leases | 592 | 539 | 149 | 131 |
| Other | 88 | 7 | 12 | 3 |
| Total revenue | 1,050 | 1,139 | 294 | 318 |
In 2021, revenue fell PLN 89m (-8%) year on year, to PLN 1,050m. Revenue from the supply of machinery and equipment for the period was PLN 370m, a drop of PLN 223m (-38%) on year on year, with recurring revenue (aftermarket services and leases) up PLN 53m (+10%), to PLN 592m. The increase in other revenue was mainly attributable to transactions involving key components for solar farm construction projects entered into with related SPVs and operating companies implementing the projects. In line with the strategy to develop the FAMUR Group's Solar PV Segment, the SPVs and operating companies were fully consolidated following formal acquisition of control. From then on, the transactions became intra-group transactions subject to elimination in the consolidated financial statements of the FAMUR Group and do not distort the economic analysis of changes in revenue or profitability. In the third quarter of 2021, the SPVs became controlled entities, while the operating companies were formally acquired following registration of changes in the National Court Register in the fourth quarter of 2021 (for details, see Notes 9 and 10 to the FAMUR Group's Consolidated Financial Statements for the year ended December 31st 2021).
In the fourth quarter of 2021 alone, revenue amounted to PLN 294m, down PLN 24m (-8%) year on year. The decrease was mainly attributable to a PLN 51m decline in revenue from the supply of machinery and equipment, partly offset by a PLN 18m increase in revenue from aftermarket services and leases and a PLN 9m increase in other revenue.
Sales by key geographies
In 2021, the FAMUR Group's export sales accounted for approximately 34% of total revenue, up 1pp year on year. Sales to foreign markets were mainly to Russia and CIS countries (over 25% of total revenue), with Asian, American and African countries combined representing about 6% of total revenue, and EU members states - about 3% of total revenue.
Key profitability ratios of the FAMUR Group
| (PLNm) | 12 months | 3 months to | ||
| Dec 31 2021 | Dec 31 2020 | Dec 31 2021 | Dec 31 2020 | |
| Gross profit | 330 | 387 | 99 | 88 |
| Operating profit | 134 | 239 | 24 | 31 |
| EBITDA | 314 | 416 | 73 | 75 |
| Net profit | 25 | 190 | -74 | 35 |
Gross profit
In 2021, gross profit was PLN 330m, down PLN 57m year on year, with gross profit for the fourth quarter at PLN 99m, up PLN 11m year on year.
Gross profit margin as a percentage of revenue declined 3pp year on year, to 31%, in 2021. The analysis of profitability was distorted by transactions involving key components for solar farm construction projects, entered into with related SPVs and operating companies implementing the projects. Excluding the effect of those transactions, gross profit margin for 2022 would have been approximately 34%, i.e. largely unchanged year on year.
Operating profit
Operating profit for 2021 amounted to PLN 134m, down PLN 105m on the previous year, mainly on account of lower gross profit. In addition, operating expenses were relatively lower in the comparative period due to the following factors: (i) wage subsidies received under the Anti-Crisis Shield Act, a 20% working time and pay reduction effective from May to July 2020, suspension of bonus schemes in the application of measures provided for in the Act Amending the Act on Special Measures Related to Preventing, Counteracting and Combating COVID-19 (the 'Anti-Crisis Shield Act'), and (ii) reversal, in the third quarter of 2020, of the provision for tax risk following the receipt of a favourable tax decision to discontinue a CIT investigation.
In the fourth quarter of 2021 alone, operating profit reached PLN 24m, having decreased PLN 7m year on year.
EBITDA
EBITDA is the main operating profit metric used by the Management Board, representing operating profit before depreciation/amortisation and impairment of non-current assets. The method of calculating EBITDA is not defined in IFRSs, and the methodology adopted by the Group is presented below.
| (PLNm) | 12 months | 3 months to | ||
| Dec 31 2021 | Dec 31 2020 | Dec 31 2021 | Dec 31 2020 | |
| Operating profit | 134 | 239 | 24 | 31 |
| Depreciation and amortisation | 180 | 177 | 49 | 44 |
| EBITDA | 314 | 416 | 73 | 75 |
EBITDA for 2021 came in at PLN 314m, down PLN 102m on the previous year. The decrease in EBITDA was mainly attributable to lower operating profit caused by the comparative period events discussed earlier: wage subsidies received under the Anti-Crisis Shield Act, a 20% working time and pay reduction effective from May to July 2020, suspension of bonus schemes in the application of measures provided for in the Act Amending the Act on Special Measures Related to Preventing, Counteracting and Combating COVID-19 (the 'Anti-Crisis Shield Act'), and reversal, in the third quarter of 2020, of the provision for tax risk following the receipt of a favourable tax decision to discontinue a CIT investigation. In the fourth quarter of 2021 alone, EBITDA came in at PLN 73m, down by approximately 3% year on year.
EBITDA margin, calculated as a percentage of revenue, for 2021 fell by 7pp, to 30% as an effect of a lower cost base in the comparative period, as described above. The analysis of profitability in the 12 and three months ended December 31st 2021 alone is also distorted by transactions involving key components for solar farm construction projects, entered into with related SPVs and operating companies implementing the projects. These companies are fully consolidated as of the date of assuming formal control. From that moment, the transactions become intra-group transactions subject to elimination in the consolidated financial statements of the FAMUR Group and do not distort the economic analysis of changes in revenue and profitability. Adjusted for the transactions with the SPVs, the EBITDA margin for the 12 and three months to December 31st 2021 would have been around 33% and 26%, respectively.
Net finance income/costs
| (PLNm) | 12 months to | 3 months to | ||
| Dec 31 2021 | Dec 31 2020 | Dec 31 2021 | Dec 31 2020 | |
| Finance income | 38 | 38 | 18 | 17 |
| Finance costs | -23 | -34 | -8 | 10 |
| Net finance costs | 15 | 4 | 10 | 27 |
| Gains (losses) on expected credit loss allowances | 2 | 4 | -1 | 1 |
| Gain/(loss) on disposal or partial disposal of shares in subordinates | - | 14 | - | 2 |
| Share in net profit/(loss) of equity-accounted subordinates | 4 | -9 | -2 | 0 |
| Net finance income/costs | 21 | 13 | 7 | 30 |
In 2021, net finance income was PLN 21m, up PLN 8m year on year, largely on the back of lower finance costs.
Gain on disposal of subordinated entities in 2020 was a non-cash item recognised on deconsolidation of the FAMAK Group following loss of control of the FAMAK Group in February 2020.
Share of net profit of equity-accounted subordinated entities of PLN 4m reported for 2021 reflected the FAMUR Group's 32% share of the FAMAK Group's profit earned thanks to implementation of the restructuring process of the FAMAK Group commenced in 2020. In the comparative period, the FAMAK Group reported a loss, with the share of the loss allocated to the FAMUR Group pro rata to its interest amounting to PLN -9m.
Net finance income for the fourth quarter of 2021 alone was PLN 7m.
Net profit
Net profit for 2021 was PLN 25m, down PLN 165m from PLN 190m a year earlier, mainly as a result of lower operating profit and a close to PLN 95m impairment loss on goodwill allocated to the Mining Machinery Segment, partly offset by net finance income. In the fourth quarter of 2021 alone, the Company reported a net loss of PLN 74m, which was mainly attributable to the aforementioned goodwill impairment loss.
Description and assessment of factors and non-recurring events with a bearing on the result of operations for the financial year
In 2021, a non-recurring material (i.e. representing more than 10% of net profit) event which reduced net profit for the period was a close to PLN 95m impairment loss on goodwill allocated to the Mining Machinery Segment. The loss, which is a non-cash item with no effect on EBITDA or cash, reflects lower projected cash flows in the Mining Machinery Segment based on reassessment of its expected future results in the light of conditions currently prevailing in the Polish sector of hard coal mining machinery manufacturing. Specifically, the updated projection reflects the following external factors:
| • |
the sharp growth in the prices of CO 2 emission allowances in 2021, which increases the probability of a faster reduction of the share of coal in the Polish electricity generation mix in accordance with the high CO 2 price scenario assumed in 'Poland's Energy Policy until 2040'; |
| • |
the prolonged process of consulting with the European Commission the terms of an agreement to be concluded between the Polish government and trade unions regarding gradual closure of thermal coal mines in Poland until 2049 prompting the FAMUR Group's domestic customers to put their investment plans on hold; |
| • |
pressure from financial institutions to restrict financing for the coal industry. |
In 2020, a non-recurring event with a bearing on the results in 2020 was the PLN 22m positive effect on net profit in the third quarter of 2020 following receipt of the favourable tax decision to discontinue CIT investigation.
Consolidated net profit was further driven by certain events concerning the FAMAK Group, which lifted the FAMUR Group's consolidated net profit by approximately PLN 5m as a combined effect of:
| • |
PLN 7m loss of the FAMAK Group for January and February 2020 (before loss of control), |
| • |
PLN 12m gain on loss of control of the FAMAK Group, |
| • |
PLN 8m loss of the FAMAK Group for March to December 2020, allocated to the FAMUR Group pro rata to its ownership interest (32%), |
| • |
PLN 8m positive effect on the consolidated financial statements of the reversal of impairment loss on FAMAK shares. |
Excluding material non-recurring events, net profit margin for 2021 would have been at 11% of revenue (7% of revenue in the fourth quarter of 2021 alone), down from 15% in the comparative period (11% in the fourth quarter of 2020 alone).
Discontinued operations
The Group withdrew from the Serbian and Indonesian markets. Revenue and profit/(loss) from discontinued operations in 2021 were immaterial. In 2020, revenue from discontinued operations was PLN 10m, which translated into a net profit of PLN 2m.
Assets and financial resources management
Analysis of consolidated assets, equity and liabilities, including from the perspective of the Group's liquidity position
| (PLNm) | As at | |
| Dec 31 2021 | Dec 31 2020 | |
| Non-current assets | 599 | 774 |
| Current assets | 2,621 | 1,718 |
| Total assets | 3,220 | 2,492 |
| Equity | 1,881 | 1,682 |
| Non-current liabilities | 670 | 468 |
| Current liabilities | 669 | 342 |
Assets
In the 12 months ended December 31st 2021, assets rose by PLN 728m, with current assets up PLN 903m and non-current assets down PLN 175m. The increase in current assets was mainly attributable to an increase in inventories, other current financial assets and cash. The decrease in non-current assets was mainly attributable to a good impairment loss and decrease in property, plant and equipment, primarily due to depreciation.
Working capital
Working capital is the metric used by the Management Board to assess the amount of capital needed to perform contracts. Working capital as a percentage of revenue shows the efficiency of managing the operating cash conversion cycle. The method of calculating working capital is not defined in IFRSs, and the methodology applied by the FAMUR Group is presented below.
| (PLNm) | As at | |
| Dec 31 2021 | Dec 31 2020 | |
| Inventories | 583 | 229 |
| Short-term trade receivables | 419 | 481 |
| Subtotal | 1,002 | 710 |
| Less short-term trade payables | -160 | -97 |
| Less prepayments received | -139 | -80 |
| Working capital | 703 | 533 |
| Working capital as % of revenue | 67% | 47% |
The PLN 170m increase in working capital in 2021, to PLN 703m, was mainly attributable to an increase in inventories. The working capital to revenue ratio for 2021 was 67%. Higher working capital requirements were mainly related to expenditure on development of the Solar PV Segment, partly financed by FAMUR.
Analysis of major equity investments of the FAMUR Group in 2021
In 2021, following the adoption of new strategic directions with a view to transforming the FAMUR Group into a holding investing in green transition, the FAMUR Group invested into projects related to its launching utility-scale solar project development and EPC services on the B2B market (for details, see Development of the FAMUR Group's Solar PV Segment).
For a description of non-current and current financial assets, see Notes 25, 26 and 30 to the Consolidated Financial Statements of the FAMUR Group for 2021.
Financial resources and liquidity position
The main sources of financing and liquidity for the FAMUR Group in the reporting period was cash at banks, cash from operating activities (above operating capital requirements), proceeds from the sale of non-operating assets, lines of credit available under agreements with banks, and proceeds from issue of notes, including 'green bonds'.
Cash flows
| (PLNm) | 12 months
to |
|
| Dec 31 2021 | Dec 31 2020 | |
| Cash flows from operating activities | 209 | 640 |
| Cash flows from investing activities | -138 | -105 |
| Cash flows from financing activities | 362 | -236 |
In the 12 months ended December 31st 2021, cash flows from operating activities amounted to PLN 209m, reflecting mainly two opposing factors: PLN 314m in EBITDA and a PLN 100m increase in operating capital requirements (a PLN 129m increase in expenditure on inventory and a PLN 80m negative change in receivables, partially offset by a PLN 109m positive change in liabilities). Income tax paid was PLN 37m. Other adjustments reconciling EBITDA to operating cash flow amounted to PLN +32m.
Cash used in investing activities totalled PLN 138m, reflecting the following inflows and outflows: expenditure on property, plant and equipment and intangible assets of PLN 112m, partially offset by PLN 28m in proceeds from sale of non-core assets (result of the ongoing non-core asset optimisation programme); PLN 81m of loans advanced to finance the operations of special purpose vehicles active in the PV business, a loan advanced to Maciej Marcjanik under the Investment Agreement concerning development of the Solar PV Segment, and loans advanced to TDJ Equity I Sp. z o.o. under an agreement signed in 2021 (see Current Reports No. 15/2021 and No. 34/2021); dividends and interest received as well as other cash flows from investing activities totalling PLN 27m.
Cash flows from financing activities amounted to PLN 362m and were mainly attributable to PLN 400m in proceeds from the issue of green bonds (for details, see Use of issue proceeds by the FAMUR Group up to the date of this Directors' Report). Other cash flows from financing activities comprised proceeds from accounts receivable factoring, borrowings, and non-controlling shareholders' contributions towards share capital increase at the Solar PV Segment companies, as well as outflows on payment of borrowings, interest and lease liabilities.
Net debt
Net debt is a debt metric used by the Management Board. The method of calculating net debt is not defined in IFRSs, and the methodology applied by the FAMUR Group is presented below.
| (PLNm) | As at | |
| Dec 31 2021 | Dec 31 2020 | |
| Non-current financial liabilities | 648 | 437 |
| bank borrowings | 4 | 2 |
| other debt instruments | 599 | 401 |
| leases | 32 | 26 |
| factoring | 13 | 8 |
| Current financial liabilities | 262 | 42 |
| bank borrowings | 28 | 2 |
| other debt instruments | 206 | - |
| leases | 11 | 5 |
| factoring | 17 | 35 |
| Gross debt | 910 | 479 |
| less cash and cash equivalents | -1,333 | -899 |
| Net debt | -423 | -420 |
| Net debt/EBITDA | -1.3x | -1.0x |
As at December 31st 2021, net cash exceeded borrowings, other debt instruments, debt purchases and lease liabilities by PLN 423m. In the 12 months to December 31st 2021, total non-current financial liabilities increased by PLN 211m, to PLN 648m, with current financial liabilities up PLN 220m, to PLN 262m.
Credit facilities taken out or loans advanced in the financial year, including at least the credit facility or loan amount, type and level of interest rate, currency and maturity date
In 2021, the FAMUR Group executed the following material amendment agreements to the existing credit facilities:
| • |
with Haitong Bank Spółka Akcyjna, Poland Branch - an amendment agreement to a multi-purpose credit facility, comprising a bank guarantee facility and a revolving credit facility for a total amount of up to PLN 100m (see Current Report No. 1/2021 of January 12th 2021), with the PLN 50m guarantee facility initially available until November 30th 2021 (subsequently extended until February 28th 2022) and the PLN 50m revolving credit facility available until November 30th 2022; |
| • |
with Powszechna Kasa Oszczędności Bank Polski S.A. - an amendment agreement to a credit facility of up to PLN 60m for the Company and up to PLN 20m for Elgór+Hansen, a subsidiary of the Company, available until December 3rd 2022 (see Current Report No. 5/2021 of January 28th 2021); |
| • |
with Credit Agricole Bank Polska S.A. - an amendment agreement to an up to PLN 71.3m credit facility available until February 28th 2024 (see Current Report No. 7/2021 of February 9th 2021); |
| • |
with Bank Gospodarstwa Krajowego - amendment agreements to a PLN 40m Credit Facility, PLN 42m Bank Guarantee Facility and PLN 100m Factoring Facility, each available until November 30th 2022 (see Current Report No. 9/2021 of February 19th 2021); |
| • |
with Santander Bank Polska - an amendment agreement to a Multi-Facility to extend the availability of the facility until October 30th 2022 and increase its amount to PLN 50m (see Current Report No. 52/2021 of October 28th 2021). |
Use of issue proceeds by the FAMUR Group up to the date of this Directors' Report
In December 2015, FAMUR S.A. decided to set up and launch a Notes Programme, whose terms and conditions were amended in August 2021(see Current Report No. 44/2021 of August 30th 2021). The key terms and conditions of the Programme, as amended, are as follows:
| • |
The limit on the aggregate nominal value of Notes under the Programme is PLN 1bn, having been raised from PLN 500m, and is revolving, i.e. it applies to the aggregate nominal value of Notes issued and outstanding. Accordingly, any issue or redemption of Notes will, respectively, decrease or increase the available limit by the nominal value of the Notes. |
| • |
The nominal value of Notes under the Programme is PLN 1 per Note. |
| • |
The Management Board has changed the term of the Programme to indefinite, subject to the limit on the aggregate nominal value of Notes under the Programme. |
| • |
Under the Programme, the Company may issue a single or multiple series of Notes. |
| • |
Notes will be issued in book-entry form and will be: (i) registered with the Central Securities Depository of Poland ("CSDP") or (ii) entered in the register maintained by the issue agent in accordance with the Polish Act on Trading in Financial Instruments of July 29th 2005 (as amended) (the "Issue Agent") and subsequently registered with the CSDP by the Issue Agent. |
| • |
Notes will be bearer notes and will be issued as secured or unsecured notes within the meaning of the Act on Bonds of January 15th 2015 (as amended). |
| • |
The terms of any series of Notes may stipulate that the Notes will be admitted to trading and listed in an Alternative Trading System operated by the Warsaw Stock Exchange. |
| • |
Notes may (but need not) be issued as green bonds as defined in the June 2021 edition of the Green Bond Principles (as amended) published by the International Capital Market Association (ICMA) or any other green bond guidelines deemed to set standard terms of such bonds. The Management Board has the discretion to decide on whether to effect such issue for each series of Notes individually. |
The detailed parameters of each series of Notes will be determined separately by relevant resolutions of the Management Board.
Under the Programme, the Company issued the following notes:
| • |
Series A notes with a total nominal value of PLN 108m, which were redeemed at maturity in January 2020; |
| • |
Series B notes with a total nominal value of PLN 200m, maturing on June 27th 2024. The Series B notes bear interest at a floating rate based on 6M WIBOR (Warsaw Interbank Offered Rate) plus a margin of 260 basis points per annum for each interest period, with interest paid every six months. Noteholders have the right to demand early redemption of Series B Notes. The events triggering the Noteholders' right to demand early redemption of Series B Notes and the early redemption procedure for Series B Notes are specified in the Terms and Conditions of Series B Notes. Starting from (and including) the third interest period and every six months at the end of each interest period, the Company has the right to send an early redemption notice for all or part of Series B Notes, enabling it to redeem the Notes on the terms set out in the Terms and Conditions of Notes. (see Current Report No. 34/2019 of June 12th 2019). Series B Notes have been admitted to trading in the Catalyst alternative trading system operated by the Warsaw Stock Exchange and BondSpot S.A. (see Current Report No. 52/2019 of September 20th 2019); |
| • |
Series C notes with a total nominal value of PLN 400m, maturing on November 3rd 2026. Series C Notes bear interest at a floating rate based on 6M WIBOR (Warsaw Interbank Offered Rate) rate plus a margin of 290 basis points per annum for each interest period. Noteholders have the right to demand early redemption of Series C Notes. The events triggering the Noteholders' right to demand early redemption of Series C Notes and the early redemption procedure for Series C Notes are specified in the Terms and Conditions of Series C Notes. Starting from (and including) the third interest period and every six months at the end of each interest period, the Company will have the right to send an early redemption notice for all or part of Series C Notes, enabling it to redeemed the Notes on the terms set out in the Terms and Conditions of Series C Notes (see Current Report No. 50/2021 of October 12th 2021). Series C Notes have been admitted to trading in the Catalyst alternative trading system operated by the Warsaw Stock Exchange (see Current Report No. 51/2021 of October 26th 2021). |
Material loans advanced in the financial year, including to the Company's related parties, including at least the loan amount, type and level of interest rate, currency and maturity date
| • |
In May 2021, the FAMUR Group and TDJ Equity I Sp. z o.o. ("TDJ"), as the Borrower, entered into an agreement for a loan of up to PLN 50m, available until April 30th 2022. The loan bears interest at a floating rate of 3M WIBOR + margin (see Current Report No. 15/2021 of May 5th 2021 and Current Report No. 34/2021 of July 16th 2021). The agreement was concluded in view of the amount of free cash exceeding debt at that time, the risk of incurring fees for holding cash in bank accounts, and the limited offer of safe options for short-term investing of free cash on favourable terms. |
| • |
For information on loans advanced under the Investment Agreement, see 'Solar PV Segment'. |
Sureties and guarantees provided and received in the financial year, including sureties and guarantees provided to the Company's related parties
In the 12 months ended December 31st 2021, Neither the Company nor any of its subsidiaries provided any sureties or guarantees equivalent to 10% or more of FAMUR S.A.'s equity to the Company's related parties or entities.
Reasoned assessment of financial resources management, including the ability to meet obligations, and potential threats and measures taken or to be taken by the Company to address those threats
Financial stability and diversified financing sources are the FAMUR Group's top priority. The FAMUR S.A. Management Board believes that the Group's financial resources are managed in a sound manner. Trade payables, public charges, and employee benefits are timely paid by the Group. The same applies to the servicing of debt under credit facilities and settlement of liabilities under notes.
As at December 31st 2021, the Group had a surplus of cash over liabilities under borrowings and leases in the amount of PLN 423m and access to undrawn lines of credit totalling PLN 541m.
Agreements signed with banks require the FAMUR Group to maintain selected ratios within a specified range. As at December 31st 2021, the ratios remained at safe levels, with the Group not in breach of any of the corresponding covenants.
To the best of the FAMUR S.A. Management Board's knowledge and belief, there are no reasons to expect any material recourse claims against FAMUR from financial institutions under any factoring agreements, as debtors, i.e. mainly Polish coal mining companies, have so far been settling their financial liabilities subject to such agreements in a timely manner.
A consistent and conservative financial policy coupled with a flexible business model and, more importantly, effective cost management, allow the FAMUR Group to maintain a satisfactory liquidity position.
Derivatives
The FAMUR Group hedges the portion of foreign currency exposure not covered by the natural hedging mechanism with currency forwards. Interest rate risk is hedged using interest rate swaps ("IRS"). The financial derivatives held by the FAMUR Group are listed in Note 47 to the Consolidated Financial Statements of the FAMUR Group for 2021.
Contingent liabilities
The contingent liabilities of the FAMUR Group are listed in Note 45 to the Consolidated Financial Statements of the FAMUR Group for 2021. Guarantees, mainly performance bonds, continued to be the largest item of liabilities.
Feasibility of investment plans
Capital expenditure is adjusted by the Group on an ongoing basis to the economic conditions in Poland and globally, as well as to current needs to ensure proper growth rates for the Group companies. In the opinion of the Company's Management Board, there are no threats to the Group companies' ability to implement their investment plans over at least the next year.
The FAMUR Management Board did not publish any 2021 profit forecast for the Company or the Group.
The FAMUR Group's manufacturing branches conduct independent research and development activities.
In the reporting period, a lot of the Group's electronics research and development resources were committed to managing problems arising from disruptions in the global supply of electronic components, which affected most industries relying on advanced technologies, including the FAMUR Group, which was forced to introduce certain modifications in manufactured equipment so as to ensure its compatibility with available substitute components. One such modification involved devising a universal platform to enable the use of various types of microprocessors within a single device without the need to change the embedded software or make changes in parts of printed circuit boards subject to third-party certification. The platform allows the Group to swiftly adapt its manufacturing process to a situation where key components for an electronic device have become unavailable.
The Group also continued the project started a year earlier to develop standardised software capable of controlling most FAMUR shearer loader and roadheader models.
R&D projects completed in 2021 included development and implementation of a driller control system with a new type of a remote control.
2021 also saw increased application of 3D printing technologies in the manufacture of equipment, including in particular electronic equipment cases and small mechanical components.
The related-party transactions in 2021 were executed on an arm's length basis and, in the opinion of the FAMUR S.A. Management Board, were standard transactions. For detailed information on related-party transactions, see Note 49 to the Consolidated Financial Statements of the FAMUR Group for 2021 and Note 47 to the separate financial statements of FAMUR S.A. for 2021.
In 2021, the FAMUR Group had an average headcount of 2,426, compared with 2,969 in 2020, The decrease was mainly attributable to measures taken by the FAMUR Group to adjust its cost base structure to expected market conditions
In 2021 and as at the issue date of this Report, there were no court, arbitration or administrative proceedings pending that would be material from the perspective of the Company or its Group.
For a description of events occurring after the reporting date, see Note 53 to the full-year consolidated financial statements of the FAMUR Group for 2021.
PARENT OF THE FAMUR GROUP
FAMUR S.A. of Katowice ("FAMUR" or the "Company") is the parent of the FAMUR Group (the "Group" or the "FAMUR Group"). In August 2006, FAMUR (then FABRYKA MASZYN FAMUR Spółka Akcyjna) became a listed company, as its shares were floated on the Warsaw Stock Exchange (the "WSE") under the abbreviated name FAMUR and ticker symbol FMF. The registered address of FAMUR is ul. Armii Krajowej 51, Katowice, Poland.
Changes in the organisational structure of the Management Board of FAMUR S.A.
| • |
On June 14th 2021, Adam Toborek resigned from the Management Board of the Company with effect from June 21st 2021. The resignation resulted from Mr Toborek having been assigned a new role within the TDJ Group. |
| • |
On June 22nd 2021, the Company's Annual General Meeting appointed Adam Toborek and other candidates to the Company's Supervisory (see Current Report No. 30/2021 of June 22nd 2021). |
| • |
On July 16th 2021, the Supervisory Board resolved to change the Management Board position held by Dawid Gruszczyk from Vice President of the Management Board, Underground Sales, to Vice President of the Management Board, Sales. |
Changes in the organisational structure of FAMUR S.A.
In 2021, the FAMUR S.A. Longwall Hydraulic Systems Branch in Zabrze was closed down (see Current Report No. 8/2021 of February 15th 2021) to better adjust the Group's operating resources and cost structure to current and expected market needs.
The implementation of the strategy to transform the FAMUR Group from an enterprise almost exclusively manufacturing mining machinery and equipment into a holding investing in green transition projects required introducing changes in the Company's organisational structure. In January 2022, a decision was made to change the Group's organisational structure and product mix in order to ensure continued efficient management of its existing business lines as well as effective integration of any new Group entities in line with its new strategic directions. The Group's resources were grouped into two areas: the operating Mining Machinery segment and the corporate management Holding Segment. The Mining Machinery segment will comprise the core business activities carried out by the Group to date. The Holding Segment will manage the other segments, i.e. the Mining Machinery Segment, Solar PV Segment and other new segments if and when such are created.
Changes in the organisational structures of FAMUR S.A.'s subsidiaries
There were no material changes in the organisational structure of the Company's subsidiaries in 2021.
Organisational and equity links, including major investments in securities, financial instruments, intangible assets and real property
TDJ Equity I Sp. z o.o. is the parent of FAMUR S.A. TDJ S.A. is the ultimate parent.
Following the adoption of new strategic directions with a view to transforming the FAMUR Group into a holding investing in green transition, FAMUR S.A. financed projects related to its launching utility-scale solar project development and EPC services on the B2B market (for details, see 'Development of the FAMUR Group's Solar PV Segment in 2021').
FAMUR S.A.'s shareholdings in subsidiaries, associates and other entities which are not intended for sale in the near term are presented in Note 25 to the separate financial statements of FAMUR S.A. Intangible assets and real property are presented in Notes 22 and 24 to the separate financial statements of FAMUR S.A.
Financial highlights of FAMUR S.A.
| (PLNm) | 12 months
to |
3 months
to |
||
| Dec 31 2021 | Dec 31 2020 | Dec 31 2021 | Dec 31 2020 | |
| Revenue | 916 | 965 | 268 | 224 |
| Operating profit/(loss) | 124 | 221 | 33 | 24 |
| Net profit/(loss) | 35 | 169 | -59 | -1 |
Revenue for 2021 amounted to PLN 916m, compared with PLN 965m in 2020. Revenue from export sales, mainly to customers in Russia and CIS, accounted for 27% of total revenue. In the three months ended December 31st 2021 alone, revenue was PLN 268m, up PLN 44m year on year.
Operating profit for 2021 fell PLN 97m, to PLN 124m, mainly as a result of lower revenue and other income. Net profit for 2021 fell dropped by PLN 134m, to PLN 35m, mainly due to lower operating profit and recognition of a PLN 95m good impairment loss. In the fourth quarter of 2021, operating profit increased by PLN 9m year on year chiefly as a result of higher revenue. In the three months to December 31st 2021, the Company posted net loss of PLN 59m, which was mainly attributable to the goodwill impairment loss.
Material non-recurring events
A material (over 10% of net profit) non-recurring event with a bearing on FAMUR S.A.'s operating results for 2021 was the recognition of a PLN 95m good impairment loss (see Note 21.2 to the separate financial statements of FAMUR S.A. for 2021). In addition, an impairment loss of PLN 9m was recognised on shares in Primetech S.A. (see Note 19.3 the separate financial statements of FAMUR S.A. for 2021).
A material non-recurring event with a bearing on FAMUR S.A.'s operating results for 2020 was the PLN 22m positive effect on net profit of the favourable tax decision to discontinue CIT investigation (see Notes 15 and 17 to the separate financial statements of FAMUR S.A. for 2021). At the same time, profit for 2020 was reduced by a total amount of PLN 46m of impairment losses on deferred tax assets (see Note 19.3 to the separate financial statements of FAMUR S.A. for 2021).
Workforce and remuneration
In 2021, FAMUR S.A. has the average headcount of 1,623 FTEs (1,979 FTEs in 2020), with employment costs at PLN 167m (PLN 197m in 2020).
Analysis of assets, equity and liabilities
| (PLNm) | As at | |
| Dec 31 2021 | Dec 31 2020 | |
| Non-current assets | 753 | 863 |
| Current assets | 1,846 | 1,261 |
| Total assets | 2,599 | 2,124 |
| Equity | 1,376 | 1,338 |
| Non-current liabilities | 645 | 461 |
| Current liabilities | 578 | 325 |
In 2021, assets increased by PLN 475m, to PLN 2,599m at the end of December 2021. Current assets rose by PLN 585m, to PLN 1,846m, with non-current assets down PLN 110m, to PLN 753m as at December 31st 2021. Non-current liabilities increased by PLN 184m, to PLN 645m, with current liabilities up by PLN 253m, to PLN 578m.
Assessment of financial resources management
| (PLNm) | As at | |
| Dec 31 2021 | Dec 31 2020 | |
| non-current financial liabilities | 627 | 434 |
| Bank borrowings | 3 | 2 |
| Other debt instruments | 599 | 402 |
| factoring | 13 | 8 |
| Leases | 12 | 22 |
| current financial liabilities | 236 | 56 |
| Other debt instruments | 206 | - |
| factoring | 17 | 35 |
| Leases | 13 | 21 |
| Gross debt | 863 | 490 |
| Less cash and cash equivalents | -953 | -557 |
| Net debt | -90 | -67 |
As at December 31st 2021, net cash exceeded borrowings, other debt instruments and lease liabilities by PLN 90m. In 2021, total non-current and current financial liabilities increased by PLN 373m, to PLN 863m, with cash having increased PLN 396m, to PLN 953m. These changes are mainly attributable to the issue of Series C notes with a total nominal value of PLN 400m.
Contingent liabilities
For information on the contingent liabilities of FAMUR S.A., see Note 44 to the financial statements of FAMUR S.A. for 2021. Most of these liabilities were guarantees, mainly performance bonds.
Dividend
On June 22nd 2021, the Company's entire net profit earned in 2020, of PLN 169.5m, was, by a decision of the General Meeting, allocated to the Company's statutory reserve funds.
Share Buyback Programme
In 2021, the adoption of new strategic directions for the FAMUR Group necessitated a change in its dividend policy. Accordingly, in 2021 the FAMUR S.A. Management Board recommended that the General Meeting allocate PLN 70m to the buyback of Company shares for cancellation, by way of a tender offer with a price of PLN 2.50 per share. The main purpose of the programme was to enable the sale of Company shares (divestment) by those shareholders who had purchased them with a view to benefiting from the dividend policy adopted in the previous strategy (see Current Report No. 23/2021 of May 25th 2021).
On August 17th 2021, the Extraordinary General Meeting ("EGM") passed a resolution to approve the buyback of Company shares for cancellation and create a capital reserve of PLN 70m for that purpose. The Company's Management Board was also authorised to purchase Company shares representing not more than 5% of the Company's share capital, i.e., 28,700,000 shares of all series with a par value of PLN 0.01 per share, at a price not lower than PLN 2.50 per share. The deadline of the programme was set for October 31st 2021 (or until the funds allocated to the buyback are spent) (see Current Report No. 41/2021 of August 17th 2021).
In the exercise of the authorisation granted by the EGM, on September 1st 2021 the Management Board invited the Shareholders to submit, in the period September 6th to September 17th 2021, offers to sell FAMUR S.A. shares. The tender offer was made for up to 27,934,000 ordinary book-entry shares (ISIN PLFAMUR00012), representing up to 4.86% of the Company's share capital. The offered buyback price of PLN 2.50 reflected the price assumptions adopted in Resolution 3 of the EGM (see Current Report No. 45/2021 of September 1st 2021).
The buyback took place between September 6th and September 17th 2021. A total of 82,539 (eighty-two thousand five hundred and thirty-nine) Company shares were tendered for sale. As the total number of Company shares tendered by the Shareholders for sale under the Invitation did not exceed the total number of shares the Company intended to buy back under the Invitation, the Company accepted all submitted tenders and bought back all those shares for PLN 2.50 per share and a total price of PLN 206,347.50. The shares will be cancelled by way of reducing the Company's share capital, pursuant to Art. 359 of the Commercial Companies Code (see Current Report No. 47/2021 of September 20th 2021).
On September 27th 2021, the Management Board of FAMUR S.A. passed a resolution to end the Company's share buyback programme as of that date. In the Company's opinion, the low participation in the buyback should be viewed as acceptance of the new strategic directions. Accordingly, the Management Board saw no reason to continue the buyback under the authorisation granted by the EGM. Pursuant to Section 2.2 of Resolution 3 of the EGM, funds from the capital reserve set up to finance the buyback of Company shares and not used for the buyback were automatically transferred to the Company's statutory reserve funds on the buyback end date, and the capital reserve was released on that date, without the General Meeting having to pass any separate resolution (see Current Report No. 48/2021 of September 27th 2021).
CORPORATE GOVERNANCE AT FAMUR S.A.
Shareholders holding directly or indirectly (through subsidiaries) at least 5% of total voting rights at the General Meeting of FAMUR S.A. as at the issue date of this interim report and changes in the shareholding structure occurring after the issue of the previous quarterly report
The table presents data as at the date of the Company's last Extraordinary General Meeting held on December 14th 2021, updated in accordance with notifications received from TDJ Equity I Sp. z o.o. on December 15th 2021, December 20th 2021 and December 22nd 2021 (see Current Reports No. 59/2021, 62/2021, 64/2021, and 65/2021).
| Shareholder | Number of shares held | Number of voting rights at GM | Equity interest |
| TDJ Equity I Sp. z o.o. | 276,172,470 | 276,172,470 | 48.05% |
| Nationale-Nederlanden OFE I DFE * | 61,769,000 | 61,769,000 | 10.75% |
| AVIVA OFE AVIVA SANTANDER | 55,513,000 | 55,513,000 | 9.66% |
| FAMUR S.A. ** | 86,655 | 86,655 | 0.02% |
| Other shareholders *** | 181,222,087 | 181,222,087 | 31.52% |
| Total | 574,763,212 | 574,763,212 | 100.00% |
*Funds managed by Nationale‐Nederlanden Powszechne Towarzystwo Emerytalne S.A., i.e.: Nationale‐Nederlanden Otwarty Fundusz Emerytalny ("OFE") and Nationale‐Nederlanden Dobrowolny Fundusz Emerytalny ("DFE") **Famur S.A. and indirectly the subsidiary company FAMUR Finanse Sp. z o.o. (4,116) and 82,539 ordinary bearer shares acquired by FAMUR as part of the tender offer for shares of FAMUR S.A. (announced in Current Report No. 45/2021 of September 1st 2021)
*** Total other shareholders holding less than 5% of total voting rights.
The parent of TDJ Equity I Sp. z o.o. is TDJ S.A. TDJ S.A. is directly controlled by Tomasz Domogała, Chairman of the Supervisory Board, who thus indirectly controls the majority interest in FAMUR S.A.
Shares held by the Company's management and supervisory personnel
According to the Company's knowledge, no FAMUR S.A. shares were held by the Company's management or supervisory personnel as at December 31st 2021 and as at the date of issue of this Report; with the proviso that during the reporting period and as at the date of issue of this report a majority interest in the Company was held by Tomasz Domogała, who owned the interest indirectly through TDJ S.A.'s subsidiary TDJ Equity I Sp. z o.o., remaining a major shareholder in the Company.
Composition of the Management Board as at December 31st 2021 and the date of issue of this report
| Full name | Position |
| Mirosław Bendzera | President of the Management Board |
| Beata Zawiszowska | Vice President, Chief Financial Officer |
| Dawid Gruszczyk | Vice President of the Management Board, Sales |
| Tomasz Jakubowski | Vice President, Chief Operating Officer, Underground segment |
| Ireneusz Kazimierski | Vice President of the Management Board, Business Development |
Mirosław Bendzera, President of the Management Board of FAMUR S.A., is responsible for the FAMUR Group's strategy and development. He holds a master's degree in Management and Marketing from the Kraków University of Economics. He served on the governing bodies of Ponar Wadowice S.A. and Ponar Silesia S.A. and held a managerial position at Toyota Motor Poland Co. Ltd. Since 2009, he has served on the management boards of companies affiliated with the TDJ Group. He was President of the Management Board of Odlewnia Żeliwa Śrem S.A., Pioma-Odlewnia Sp. z o.o. and Polska Grupa Odlewnicza S.A. In October 2014, he assumed the position of President of FAMUR S.A. From January to July 2016, he was also a member of the Management Board of Elgór+Zamet Sp. z o.o.
Beata Zawiszowska, Vice President of the Management Board, is responsible for coordination of finance and accounting activities of the FAMUR Group. Since 1998, she has served on the management boards of companies affiliated with the TDJ Group. She has been a member of the Management Board of FAMUR S.A. since its inception in 2002.
Tomasz Jakubowski is Vice President of the Management Board, Chief Operating Officer, Underground Segment At the FAMUR Group he is responsible for operational management of the Underground business. He is a graduate of the Faculty of Transport of the Silesian University of Technology in Katowice. He also completed a post-graduate management studies based on the MBA programme organised by SGH Warsaw School of Economics in cooperation with the University of Minnesota (USA). During his professional career Mr Jakubowski has held managerial positions and served as member of management boards at many TDJ Group companies, including Zakłady Mechaniczne Zamet S.A. i FMG Pioma S.A. In 2003-2010, he was President and Vice President of the Management Board of FAMUR S.A. He also served as President of the Management Board of Fabryka Zmechanizowanych Obudów Ścianowych FAZOS S.A. From July 2012, he was a member of the Supervisory Board of Kompania Węglowa S.A., and from May 2014 to January 2015 he served as Vice President, Restructuring and Development at the company. From May 2015, he served as President of the Management Board of Zamet S.A. At the Zamet Group, he also served as Chairman of the Supervisory Board of Zamet - Budowa Maszyn S.A. (from August 2017) and President of the Management Board of Zamet Industry Sp. z o.o. (from January 2018).
Mr Gruszczyk currently serves as Vice President of the Management Board, Sales, a position established by the Supervisory Board on July 16th 2021 in place of the position of Vice President of the Management Board, Underground Sales. He is in charge of the FAMUR Group's Underground segment domestic and export sales. He graduated from the Katowice University of Economics, completed a postgraduate programme at the Warsaw School of Economics and the General Ziętek Silesian University of Management in Katowice. In 2003-2008, he worked at the Office of Management Board Advisors at ELGÓR + HANSEN Sp. z o.o. From 2004, he held managerial positions in ELGÓR + ZAMET Sp. z o.o. He has been a member of the Management Board of FAMUR S.A. since January 2016.
Ireneusz Kazimierski is Vice President of the Management Board, Business Development At the Group, he is responsible for providing support to the Management Board, sales and R&D, liaising with existing and prospective customers, driving growth in new and existing markets, supporting product development, and developing a strategic outlook. He also exercises supervision of associated companies operating in the Surface segment. He holds a degree in Chemical Technology from the Faculty of Chemistry of the Łódź University of Technology. He holds a certificate of completion of the ICAN Institute Harvard Business management programme. He began his professional career in 1999 at Ceramika Paradyż. Later, he progressed along the management career path working for Ultra Pack, the Rovese Group (Cersanit and Opoczno), and other companies. As the CEO of Rovese he was responsible for implementing the growth strategy, and he engaged in the process of transforming the company into a global organisation. From November 2017 to March 2019, he served as President of the Management Board of Narzędzia i Urządzenia Wiertnicze GLINIK Sp. z o.o. of Gorlice, and from November 2017 to November 2019 he was Vice President, Chief Operating Officer at PGO S.A. He has served on the Management Board of FAMUR S.A. since November 2019.
For a full description of positions held and functions performed by Members of the Management Board, see Current Reports No. 35/2019 of June 13th 2019 and No. 57/2019 of November 12th 2019.
Changes in the composition of the Management Board in 2021
On June 14th 2021, Adam Toborek tendered his resignation as Vice President of the Management Board, Underground Export Sales, with effect from June 21st 2021 (see Current Report No. 25/2021 of June 14th 2021). The resignation resulted from Mr Toborek having been assigned a new role within the TDJ Group.
On July 16th 2021, the Supervisory Board resolved to change the Management Board position held by Dawid Gruszczyk from Vice President of the Management Board, Underground Sales, to Vice President of the Management Board, Sales.
Composition of the Supervisory Board as at December 31st 2021 and as at the date of this Report
| Full name | Position |
| Tomasz Domogała | Chairman of the Supervisory Board |
| Czesław Kisiel | Deputy Chairman of the Supervisory Board |
| Jacek Leonkiewicz | Member of the Supervisory Board |
| Adam Toborek | Member of the Supervisory Board |
| Dorota Wyjadłowska * | Member of the Supervisory Board |
| Tomasz Kruk * | Member of the Supervisory Board |
* Supervisory Board member meeting statutory independence criteria.
The committees operating within the Supervisory Board of FAMUR S.A. since 2018 are the Nomination and Remuneration Committee, Strategy and Investment Committee, and Audit Committee. The composition of each committee is presented below.
Strategy and Investment Committee
| • |
Czesław Kisiel |
| • |
Adam Toborek |
| • |
Jacek Leonkiewicz |
Nomination and Remuneration Committee
| • |
Czesław Kisiel |
| • |
Adam Toborek |
| • |
Jacek Leonkiewicz |
Audit Committee
| • |
Tomasz Kruk, Chairman of the Audit Committee |
| • |
Dorota Wyjadłowska |
| • |
Jacek Leonkiewicz |
Independent Supervisory Board Members:
| • |
Tomasz Kruk |
| • |
Dorota Wyjadłowska |
Tomasz Domogała has a university degree. He is a graduate of the AGH University of Science and Technology of Kraków (M.Sc.Eng. from the Faculty of Mechanical Engineering and Robotics) and the University of Loughborough, UK (Faculty of Mechanical and Manufacturing Engineering). Tomasz Domogała holds an MBA from the Stanford Graduate School of Business, US. Mr Domogała holds indirectly a controlling interest in FAMUR S.A. In January to October 2017, he was Chairman of the Supervisory Board of PRIMETECH S.A. (formerly KOPEX S.A.). Between 2010 and 2019, he served as a Member of the Supervisory Board of PME S.A. Since 2017, he has served on the Supervisory Board of Narzędzia i Urządzenia Wiertnicze GLINIK Sp. z o.o. and since 2018 - on the Supervisory Board of FAMUR FAMAK S.A. He has served on the Supervisory Board of FPM S.A. of Mikołów since 2015 and on the Supervisory Board of PGO S.A. of Katowice (POLSKA GRUPA ODLEWNICZA S.A.) since 2011. In 2011-2015, he was a Member of the Supervisory Board of Fabryka Maszyn GLINIK S.A. of Gorlice. Since 2010, he has served on the Supervisory Boards of Zamet S.A. of Piotrków Trybunalski and TDJ S.A. of Katowice. He has been a Member of the Company's Supervisory Board since 2004.
Czesław Kisiel holds a university degree. He is a graduate of the Kraków University of Economics, with a diploma in Planning after completing the 'Planning and Financing of National Economy' programme at the Faculty of Production Economics. He completed the MBA-based Postgraduate Managerial Programme at the Warsaw School of Economics. He also completed a course for receivers and liquidators, as well as a course for members of the supervisory boards of state-stock companies and state-owned companies, organised by the Ministry of Industry and Trade and the Business Consulting Service. He has sat on the Company's Supervisory Board since 2009. From October 2016 to October 2017, he was Deputy Chairman of the Supervisory Board of PRIMETECH S.A. (formerly KOPEX S.A.). Since 2016, he has served as President of the Management Boards of TDJ Equity V Sp. z o.o. of Katowice, TDJ Equity IV S.A. of Katowice and TDJ EQUITY III Sp. z o.o. of Katowice. Since 2013, he has been President of the Management Boards of TDJ EQUITY I Sp. z o.o. of Katowice, TDJ EQUITY II Sp. z o.o. of Katowice and TDJ Finance Sp. z o.o. of Katowice, and since 2010 - TDJ S.A. of Katowice. Between 2009 and 2012, he served as President of the Management Board of TDJ Estate Sp. z o.o. of Katowice and from 2009 as Vice President of the Management Board of Zamet-Budowa Maszyn S.A. of Tarnowskie Góry. From 2004 to 2005, Mr Kisiel was President of the Management Boards of the following companies: Lodus Sp. z o.o. of Będzin and Przedsiębiorstwo Handlu Chemikaliami Chemia-Wrocław S.A. of Wrocław.
Jacek Leonkiewicz is a graduate of the Warsaw School of Economics and holds a CEMS Master in International Management. He also studied at Universidad Carlos III of Madrid and Copenhagen Business School. He began his professional career at J.P. Morgan (an investment bank) in London, UK, where he worked in the Equity Capital Markets, Debt Capital Markets and Equity Private Placements teams. He was also a member of the Debt Capital Partners team at Merrill Lynch in London. Mr Leonkiewicz then worked for PKO TFI, where his role was equity market research, with particular focus on construction, industrial, property development and transport companies. In 2013-2015, Mr Leonkiewicz served as Managing Director for Corporate Supervision and Privatisation at PKP S.A., where he was responsible for the monitoring of privatisation processes at the PKP Group. He was in particular responsible for the stock exchange debut and accelerated bookbuild of PKP Cargo. From January 2015 to March 2016 he was CEO of PKP Intercity S.A. Since April 2016, she has been a managing partner at TDJ S.A., in charge of corporate supervision and investment strategy in the equity area. He served on the Supervisory Boards of Spedkoks, PKP Energetyka, TK Telekom and PKP Cargo, and in 2017 also of PRIMETECH S.A. (formerly KOPEX S.A.). Currently, he serves on the Supervisory Boards of Sports Resorts Solutions Sp. z o.o., Polska Grupa Odlewnicza S.A., Odlewnia Żeliwa ŚREM S.A., Pioma-Odlewnia Sp. z o.o., Pemug S.A., FPM S.A., Zamet-Budowa Maszyn S.A., Zamet Industry S.A. and FAMAK S.A.
Dorota Wyjadłowska graduated from the Cracow University of Economics majoring in Finance and completed postgraduate studies in financial and tax law at Warsaw School of Economics as well as in economic law at the Cracow University of Economics. She also passed the state exam for a tax advisor and was entered in the list of tax advisors. She worked for the Kraków Tax Chamber. She was a member of the Management Board of Equus S.A. and President of the Management Board of Spółka Doradztwa Podatkowe KDT Sp. z o.o. Since 2001, she has been the owner of a tax advisory firm under the name of Kancelaria Doradztwa Skarbowego Dorota Wyjadłowska, and in 2015 was appointed Vice President of the Management Board of Longline Sp. z o.o., responsible for finance and taxes. Dorota Wyjadłowska meets the statutory independence criteria for a member of the Supervisory Board of FAMUR S.A.
Tomasz Kruk has a university degree. He graduated from the Faculty of Economics and Management of the Lazarski University in Warsaw, with an MA degree in economics (specialisation: strategic management). He studied risk management at the Warsaw School of Economics (Postgraduate Studies in Risk Management at Financial Institutions). In 2006 he became a member of the Institute of Internal Auditors, FL, USA, and in 2008 was designated as a Certified Internal Auditor (CIA). He is qualified in project management (having passed Prince2 Foundation Examination). A member of the International Compliance Association, Mr Kruk received an ICA International Diploma in Governance, Risk & Compliance. He has over 10 years of experience in compliance audits, internal audits, special audits, advisory audits, litigation advice, risk management, as well as fraud and abuse risk management projects. His project experience spans various sectors, including finance, logistics, transport, real estate management, land surveying and cartography, infrastructure project management, IT and telecommunications, HORECA/holiday resort management, property development and light industry. Mr Kruk has a long track record of work in management and supervisory positions, including as a member of investment committees. For more than a decade, he has worked directly with the management and supervisory boards of both private and public sector companies. Tomasz Kruk meets the statutory independence criteria for a member of the Supervisory Board of FAMUR S.A.
Adam Toborek holds a university degree. He completed the Master of Business Administration programme at the Kozminski University in Warsaw. He also completed a number of managerial courses in Poland and abroad: Project Portfolio Management - OMEC (2014), Conscious Leadership - MPS (2013), Leadership Training Corporate Management Platform - Ramirent PLC (2010), Young Business Talents - Smithfield (2000), and Cooperative Management - VOCA (1998). Since 2017, he has been Vice President of FAMUR S.A.'s Longwall Systems Segment, responsible for sales, and since January 2018 - Vice President of the FAMUR S.A. Management Board; from January 1st 2019 to June 21st 2021, he served as Vice President of the Management Board, Underground Segment Export Sales. He started his professional career in BRADO companies, where he held various positions, including President of the Management Board of Z.M. BRADO 2 S.A. He also held the position of President of the Management Board of RODO SRL of Romania and of Lodus Sp. z o.o. He was Head of the Distribution Centre at Animex S.A. (Smithfield Foods Incorporated), and in 2000-2015 he worked for the RAMIRENT Group of Finland, where he served as Director of the South Region, Vice President of the Management Board of RAMIRENT Scaffolding Sp. z o.o., and Member of the Management Board of RAMIRENT S.A. With NiUW Glinik in 2015-2017, initially as Vice President (in 2015) and then President of that company's Management Board (from 2016). Since 2017, he has been a member of the Supervisory Board of NiUW Glinik Sp. z o.o. and PRIMETECH S.A. (formerly KOPEX S.A.).
For a full description of positions held and functions performed by Members of the Supervisory Board, see Current Report No. 26/2021 of June 15th 2021 on nomination of candidates for Supervisory Board members and Current Report No. 30/2021 of June 22nd 2021 on reappointment of Management Board members for a new term. Current reports are available on the Company's corporate website at www.famur.com/raporty
The appointed Supervisory Board Members are not engaged in any activities competing with the Company's business and are not partners in any competing partnership under civil law or another type of partnership, or members of the governing bodies of other companies. None of the persons specified above is entered in the Register of Insolvent Debtors maintained under the National Court Register Act. Dorota Wyjadłowska and Tomasz Kruk meet the statutory independence criteria for a member of the Company's Supervisory Board.
The remuneration policy for members of the Management Board and Supervisory Board of FAMUR S.A. was approved by the Annual General Meeting of the Company in Resolution No. 23 of June 29th 2020. The policy sets out the framework for awarding remuneration to members of the Management Board and Supervisory Board of FAMUR S.A., forms part of the Company's governance and corporate culture consisting of a transparent organisational structure, ethical values, personnel competencies and skills, powers and responsibilities, information channels, controls, and a risk management system. The full text of the remuneration policy is available on the Company's website at: www.famur.com/walne-zgromadzenie#2020
All remuneration paid to Management Board and Supervisory Board members is subject to compliance with the Company's remuneration policy.
For details on remuneration of members of the Management Board and Supervisory Board, see Note 50 to the consolidated financial statements of the FAMUR Group for 2021.
Members of the Company's Management Board are not employed under contracts of employment. They receive remuneration whose amount is determined by way of a Supervisory Board resolution. In 2021, the Company did not enter into any non-competition agreements with Management Board members. Pursuant to the remuneration policy for Management and Supervisory Board members in place at the Company, if a Management Board member is removed during their term of office, or if they resign or are not re-appointed for another term of office, such Management Board member will have the right to receive a severance pay in the following amounts: - in the case of the President of the Management Board: from three to six times their fixed gross monthly remuneration, depending on the Supervisory Board's decision; - in the case of other Management Board members: from one to three times their fixed gross monthly remuneration, depending on the Supervisory Board's decision. The Company does not operate any employee stock option scheme.
On August 17th 2021, the Extraordinary General Meeting of FAMUR S.A. (EGM) passed Resolution No. 4 to approve the Report on Remuneration of the Supervisory Board and the Management Board of FAMUR S.A. for 2020. The EGM resolutions, including any appendices thereto, are available on the Company's corporate website at www.famur.com/walne-zgromadzenie#2021
Obligations arising under retirement and similar benefits
FAMUR S.A. does not operate any additional old age and disability pension schemes or early retirement programmes for members of the Management or Supervisory Boards. No remuneration in the form of financial instruments shall be granted to members of the Management or Supervisory Boards of FAMUR S.A.
The table below presents the information on remuneration of members of the Parent's Management Board for the financial year 2021 in accordance with Par. 70.7.17 of the Regulation on current and periodic information
| A | PLN '000 net | ||||
| B | C | D | E | F | |
| Member of the Management Board | Total remuneration, awards or benefits paid by FAMUR S.A. in 2021 (remuneration + bonuses) | Separate amounts of bonuses for 2020 paid by FAMUR S.A. in the financial year 2021 (bonus *) | Separate amounts of bonuses for 2021 paid by FAMUR S.A. in the financial year 2021 (bonus *) | Total amount of remuneration and awards received for service on governing bodies of subsidiaries *** | Total amount of remuneration, awards or benefits paid by FAMUR S.A. and subordinated entities in 2021 ** |
| Mirosław Bendzera | 1,591 | 522 | 400 | 27 | 1,618 |
| Beata Zawiszowska | 1,237 | 428 | 329 | 48 | 1,285 |
| Dawid Gruszczyk | 1,079 | 371 | 280 | 23 | 1,102 |
| Tomasz Jakubowski | 1,054 | 371 | 263 | 19 | 1,073 |
| Adam Toborek | 875 | 377 | 247 | 19 | 894 |
| Ireneusz Kazimierski | 766 | 409 | 259 | 1,025 | |
| Total | 6,601 | 2,069 | 1,929 | 396 | 6,997 |
* The amounts of bonuses shown in columns C and D are a component of the amounts presented in column B (remuneration + bonus).
** The amounts shown in column F are a sum of the amounts shown in columns B and E.
*** Subordinated entities mean subsidiaries, jointly‐controlled entities and associates
Members of the Company's Supervisory Board receive remuneration on the terms and in the amounts set forth in a General Meeting resolution. Pursuant to Resolution No. 19 of the Extraordinary General Meeting of FAMUR S.A. of October 18th 2017 to determine the terms of remuneration for members of the Supervisory Board of FAMUR S.A., members of the FAMUR S.A. Supervisory Board receive gross monthly remuneration of PLN 500. Members of FAMUR S.A. Audit Committee shall receive additional gross monthly remuneration of PLN 500.
The table below presents the information on remuneration of members of the Parent's Supervisory Board for the financial year 2021 in accordance with Par. 70.7.17 of the Regulation on current and periodic information
| A | PLN '000 net | ||||
| B | C | D | E | F | |
| Member of the Management Board | Total remuneration, awards or benefits paid by FAMUR S.A. in 2021 (remuneration + bonuses) | Separate amounts of bonuses for 2020 paid by FAMUR S.A. in the financial year 2021 (bonus *) | Separate amounts of bonuses for 2021 paid by FAMUR S.A. in the financial year 2021 (bonus *) | Total amount of remuneration and awards received for service on governing bodies of subsidiaries *** | Total amount of remuneration, awards or benefits paid by FAMUR S.A. and subordinated entities in 2021 ** |
| Tomasz Domogała | 6 | - | - | - | 6 |
| Czesław Kisiel | 6 | - | - | - | 6 |
| Jacek Leonkiewicz | 10 | - | - | - | 10 |
| Dorota Wyjadłowska | 18 | - | - | - | 18 |
| Magdalena Zajączkowska-Ejsymont | 3 | - | - | - | 3 |
| Tomasz Kruk | 20 | - | - | - | 20 |
| Adam Toborek | 3 | - | - | - | 3 |
| Total | 66 | - | - | - | 66 |
* The amounts of bonuses shown in columns C and D are a component of the amounts presented in column B (remuneration + bonus).
** The amounts shown in column F are a sum of the amounts shown in columns B and E.
*** Subordinated entities mean subsidiaries, jointly‐controlled entities and associates.
Code of corporate governance standards applicable to the Company; the place where the code is available to the public
The Company issues current and periodic reports, which are published on its corporate website. The website also includes key corporate events, financials and news.
In July 2021, the Company updated its Statement of Compliance with the principles of the Best Practice for GPW Listed Companies following the coming into effect of the new Best Practice for GPW Listed Companies 2021 ("Best Practice 2021") on July 1st 2021. The amended text of the rules is available on the Warsaw Stock Exchange's official website, in the section devoted to corporate governance, www.gpw.pl/dobre-praktyki2021 and on the Company's website at www.famur.com/relacje-inwestorskie/lad-korporacyjny/
Extent of non-compliance
Based on the current status of compliance with Best Practices, the Company does not apply the following 12 principles: 1.2., 1.3.1., 1.4., 1.4.1., 1.4.2., 2.1., 2.2., 2.7., 2.11.6., 4.3., 4.8., 6.3.
Under the WSE Rules, information on the corporate governance rules which the Company does not comply with, including the extent of and reasons for such non-compliance, was provided on July 29th 2021 in EBI Current Report No. 1/2021, available on the Company's website at www.famur.com/relacje-inwestorskie/lad-korporacyjny/.
Diversity policy
The FAMUR Group has in place a diversity policy requiring the Group companies to:
| • |
Prevent any discrimination based on gender, racial, national or ethnic origin, religion or religious denomination, philosophy of life, degree or type of disability, health, age, psychosexual orientation or gender identity, family status, lifestyle or any other possible discriminatory grounds (policy of equal treatment); |
| • |
Manage diversity by developing strategies, policies and programmes that help create a work environment in which each employee can feel appreciated, contributing to the success of the entire FAMUR Group. |
Furthermore, the diversity policy assumes that in electing members to the Group companies' governing bodies and their key managers, the FAMUR Group seeks to ensure diversity, especially in terms of gender, educational background, age, and professional experience. High qualifications and professional preparation to perform a given function are the key factors in determining whether a person may take up a particular position.
Description of the internal control system
Key features of the internal control and risk management systems used in the process of preparing financial statements are as follows:
| • |
Transactions are carried out on the basis of general or specific authorisations by management (depending on the importance of a document); |
| • |
Documents are checked, accepted and described by persons responsible both for the subject matter they relate to and for the accounting aspects; |
| • |
Each material transaction is duly reviewed by the legal department to ensure that it is properly accounted for in accordance with the accounting and tax laws; |
| • |
Appropriate control procedures put in place by the management are used, including: |
| • |
checking the correctness of accounting entries by responsible persons, |
| • |
control of computer programs and the IT environment by assigning care of the programs and the IT environment to IT specialists and firms, |
| • |
maintaining and reviewing subsidiary ledger accounts and statements of ledger transactions and account balances, |
| • |
approval and control of documents, |
| • |
comparing actual performance against targets and analysis of the results, |
| • |
All transactions and other events are promptly recorded in correct amounts, in appropriate accounts and in proper accounting periods so as to enable the preparation of financial statements in accordance with the adopted financial reporting policy; |
| • |
Access to assets and records is only possible with the management's authorisation; |
| • |
Assets revealed in accounting records are compared against physical assets based on the provisions of the accounting laws; relevant measures are taken whenever any discrepancies are found; |
| • |
A uniform accounting policy has been developed for all the Group companies; |
| • |
The accounting policy is updated as needed so that it is always in line with the current accounting laws; |
At the beginning of January 2019, an Internal Audit Department was established at the Company. In 2021 the Company did not establish any additional internal audit units, and all internal control, risk management and compliance functions were performed within the internal audit, corporate controlling and legal departments.
Audit Committee
The Audit Committee is an advisory and opinion giving body, acting collectively within the Supervisory Board and supporting the Supervisory Board, particularly with its recommendations, proposals, opinions and reports. Its responsibilities include monitoring of the effectiveness of the internal control and risk management systems as well as of the internal audit function, also with respect to financial reporting. Two Audit Committee members meet the independence criteria specified in Art. 129.3 of the Act on Statutory Auditors, Audit Firms and Public Oversight of May 11th 2017 (Dz.U. of 2017, item 1089, as amended). At least one member of the Audit Committee has knowledge of and skills in accounting or financial statements auditing and at least one member of the Audit Committee has knowledge and skills relevant for the industry in which the Company operates, or the individual members of the Audit Committee have knowledge and skills relevant for different aspects of that industry.
In 2021, the Audit Committee was composed of:
| • |
Tomasz Kruk, Chairman of the Audit Committee, meeting the statutory independence criteria |
| • |
Dorota Wyjadłowska, Audit Committee member meeting the statutory independence criteria |
| • |
Jacek Leonkiewicz. |
Members of the Supervisory Board and members of Supervisory Board Committees act on the basis of The Commercial Companies Code, the Company's Articles of Association and the Rules of Procedure for the Supervisory Board published on the Company's website at www.famur.com/relacje-inwestorskie/lad-korporacyjny/ and are required to comply with the corporate governance principles stipulated in the Code of Best Practice for WSE Listed Companies, except where the Company has submitted a statement of non-compliance (in accordance with the FAMUR S.A.'s Statement of compliance with corporate governance standards) On July 29th 2021, the Company updated its Statement of compliance with corporate governance standards. The full text of the statement is available on the Company's website at www.famur.com/relacje-inwestorskie/lad-korporacyjny/.
For details regarding education and professional experience of the appointees, see section 'The Supervisory Board of FAMUR S.A. and its committees'.
Having analysed the practices and procedures set out in Art. 130.1.5-7 of the Act on Statutory Auditors, Auditing Firms, and Public Oversight, the Audit Committee adopted:
| ― |
a policy for selection of an auditing firm to perform audits, |
| ― |
the auditing firm selection procedure, |
| ― |
a policy for the provision of non-audit services by the auditing firm, its affiliates and members of its network. |
At the beginning of January 2019, an Internal Audit Department was established at the Company.
In 2021 the Company did not establish any additional internal audit units, and all internal control, risk management and compliance functions were performed within the internal audit, corporate controlling and legal departments.
Additional information on the Audit Committee
| • |
No permitted non-audit services were provided to the Company by the audit firm auditing its financial statements, save for the review of its interim financial statements. |
| • |
Key assumptions of the Company's policy for the selection of the audit firm to perform statutory audit of the Company's financial statements and a policy for the provision of permitted non-audit services by the audit firm, its affiliates and members of its network. |
| • |
The internal regulations governing selection and rotation of the audit firm and the lead auditor have been introduced pursuant to the Act on Statutory Auditors and Their Self-Government, Entities Qualified to Audit Financial Statements and Public Oversight of May 11th 2017 (Dz.U. of 2020, item 1415, as amended). |
| • |
The audit firm is selected in keeping with the principle of audit firm and lead auditor rotation so that the maximum duration of uninterrupted statutory audit engagements with an audit firm, any of its affiliates or members of its network operating in the territory of the European Union does not exceed five years, and that a lead auditor does not carry out statutory audits of the Company's financial statements for a period longer than five years (in which case the lead auditor may again carry out statutory audits of the Company's financial statements after at least three years from the end of the most recent statutory audit). |
| • |
The audit firm is selected by the Company's Supervisory Board after having considered the Audit Committee's recommendation. |
| • |
The audit firm is selected sufficiently in advance to enable it to take part in inventory taking of significant assets and a review of interim reports. |
| • |
When selecting the audit firm, the Audit Committee and the Supervisory Board must pay particular attention to ensuring independence of the audit firm and the auditor. |
| • |
The independence of the statutory auditor and the audit firm is verified and monitored at each stage of the selection procedure. |
| • |
The Supervisory Board, during the selection process, and the Audit Committee, when preparing its recommendation, apply in particular the following criteria: the auditor's confirmed impartiality and independence, price offered by the auditor, the audit firm's reputation and experience, its human resources and qualifications and experience of its personnel directly involved in the audit process, the ability to perform an audit within the time frame specified by the Company, and completeness of the service range. |
| • |
The provision of permitted non-audit services is allowed to the extent provided for in Art. 136.2 of the Act on Statutory Auditors, Audit Firms and Public Oversight. |
| • |
The provision of permitted non-audit services is only allowed to the extent they do not relate to the Company's tax policy, after a risk assessment has been performed and independence referred to in Art. 69-73 of the Act on Statutory Auditors, Audit Firms and Public Oversight has been ensured by the Audit Committee. |
| • |
An agreement for the provision of permitted non-audit services is signed on the initiative of the Company's Management Board, subject to the Audit Committee's approval. |
| • |
When entering into an agreement for the provision of permitted non-audit services, the Company's Management Board must pay particular attention to ensuring the auditor's and audit firm's independence. |
| • |
Permitted non-audit services are performed in compliance with the independence requirements laid down in relevant professional ethics policies and standards of performance of non-audit services. |
| • |
The Audit Committee's recommendation on the selection of the audit firm to audit the Company's and the Group's financial statements met relevant requirements stipulated in the Polish Accounting Act of September 29th 1994 (Dz.U. of 2021, item 217, as amended), Regulation (EU) No. 537/2014 of the European Parliament and of the Council of April 16th 2014 on specific requirements regarding statutory audit of public-interest entities and repealing Commission Decision 2005/909/EC, and complied with the adopted policy on selecting the audit firm to perform statutory audits of the Company's financial statements. The recommendation was prepared following an audit firm selection procedure carried out by the Company. |
The number of audit committee meetings or supervisory board meetings or meetings held by any other supervisory or governing body, devoted to performance of duties of the audit committee
In 2021, the Audit Committee meetings were held as conference calls, and its resolutions were voted on in writing. In 2021, the Audit Committee held three votes and its members took part in two conference calls.
Major holdings of shares
For details of the shareholding structure as at December 31st 2021 and as at the date of the most recent Extraordinary General Meeting of the Company, see section 'Shareholding structure'. There are no securities conferring any special control rights in the Company. Also, the Management Board is not aware of any restrictions on the transferability of Company shares or of any agreements that could lead to future changes in the shareholding structure.
Composition of the Supervisory and Management Boards
The composition of the Management and Supervisory Boards and changes in their composition in the reporting period are discussed in sections 'The Management Board of FAMUR S.A.' and 'The Supervisory Board of FAMUR S.A. and its committees'. An Audit Committee operates within the Company's Supervisory Board. Its responsibilities are described in the section on the internal control system.
Rules governing appointment, removal and replacement of the Company's Management Board members and amendment of the Company's Articles of Association; powers of Management Board Members (including in particular the authority to resolve to issue or buy back shares)
Members of the Management Board are appointed and removed by the Supervisory Board. The Management Board consists of one or more members. When appointing members of the Management Board, the Supervisory Board determines their number and defines the function to be performed by a given person on the Management Board. Members of the Management Board are appointed for a joint term of office. The term of office of the Management Board is three years. A member of the Management Board may at any time resign from his or her position. A resignation should be submitted to the Company in writing.
The Management Board manages the Company's affairs and represents the Company before third parties. Resolutions of the Management Board are passed by an absolute majority of votes. In the case of a voting tie, the President of the Management Board has the casting vote. The President of the Management Board directs the Management Board's work; in particular, the President coordinates, supervises and organises the Management Board members' work and convenes and chairs meetings of the Management Board. In the event of the President's absence, their duties are performed by a Vice President of the Management Board or another Management Board member designated for that purpose by the President.
In accordance with the Company's Articles of Association, the Management Board is authorised to increase the Company's share capital by up to PLN 2,523,491, through the issue of new shares with an aggregate par value of up to PLN 2,523,491, by way of one or more share capital increases within the limit specified above (the authorised share capital). As part of the authorisation to increase the share capital within the authorised capital limit, the Management Board is authorised to issue subscription warrants referred to in Art. 453.2 of the Commercial Companies Code, exercisable by the date of expiry of the authorisation. The Management Board is authorised to increase the share capital within the period of three years from the date of registration by the competent court of the amendment to the Articles of Association authorising the Management Board to increase the share capital within the authorised capital limit of up to PLN 2,523,491. In exercising the authorisation referred to in the preceding sentences, the Management Board decides independently - except where the provisions of the Commercial Companies Code provide otherwise - on all matters related to the share capital increase; in particular the Management Board is entitled to:
| a) |
Carry out the share capital increase within the authorised capital limit through one or more issues and to assign consecutive series designations to those issues; |
| b) |
Determine the issue price, subject to the Supervisory Board's approval; |
| c) |
With the Supervisory Board's approval, disapply in whole or in part the existing shareholders' pre-emptive rights with respect to shares issued within the authorised share capital limit; |
| d) |
Decide to deliver the shares of a given issue in exchange for a cash contribution, a non-cash contribution or any combination of a cash and non-cash contribution; the delivery of shares in exchange for a non-cash contribution may also be carried out under Art. 447 1 of the Commercial Companies Code, but will in each case require the Supervisory Board's approval; |
| e) |
Take steps with a view to registering shares issued within the authorised capital limit with the Central Securities Depository of Poland as well as any other steps necessary to have the shares admitted and introduced to trading on the regulated market operated by the Warsaw Stock Exchange. |
The General Meeting authorised the Company's Management Board to take any steps necessary to list shares issued by the Company within the authorised capital limit on the Warsaw Stock Exchange; this authorisation covers in particular:
| a) |
Signing an agreement with the Central Securities Depository of Poland on conversion of shares issued by the Company within the authorised capital limit into book-entry form and their registration in the relevant register; |
| b) |
Filing of applications or notifications with the competent authorities and institutions in relation to the introduction and admission of shares issued by the Company within the authorised capital limit to trading on the regulated market operated by the Warsaw Stock Exchange. |
The Management Board is not authorised to make a decision regarding buy-back of shares. The detailed scope of rights and duties of the Management Board and its operating procedures are defined in the Rules of Procedure for the Management Board. The Rules of Procedure for the Management Board are adopted by the Management Board and approved by the Supervisory Board.
With the Supervisory Board's consent of March 12th 2020, on March 12th 2020 the Company's Management Board resolved to amend the existing Rules of Procedure for the Management Board of FAMUR S.A. by updating its provisions e.g. to further specify the number of Management Board members, to systematise the rules and form of making decisions during or outside of the Company's Management Board meetings (i.e. voting by written ballot or by means of remote communication) and to formalise the acceptable methods and means of communication between Management Board members.
The main purpose of these amendments is to facilitate the remote decision-making process. The consolidated text of the Rules of Procedure for the Management Board is available on the Company's website at www.famur.com/lad-korporacyjny.
Amendments to the Articles of Association
Any amendment to the Company's Articles of Association requires a resolution by the General Meeting and must be entered in the National Court Register. An amendment to the Articles of Association must be submitted by the Management Board to the registry court within three months from the date on which the General Meeting passed the resolution introducing the amendment. The General Meeting may authorise the Supervisory Board to prepare a consolidated text of the amended Articles of Association or to make other editorial changes to the Articles of Association as specified in the General Meeting's resolution.
On March 17th 2022, the District Court for Katowice-Wschód in Katowice, 8th Commercial Division of the National Court Register, registered the amendments to the Company's Articles of Association made pursuant to Resolutions Nos. 3 and 4 of the Extraordinary General Meeting of the Company held on December 14th 2021. The Company's share capital has been reduced from PLN 5,747,632.12 to PLN 5,746,806.73, i.e. by PLN 825.39, which corresponds to the total par value of the cancelled treasury shares. Art. 6.1 of the Company's Articles of Association was amended. The consolidated text of the Articles of Association is available on the Company's corporate website at www.famur.com/lad-korporacyjny.
Operation and key powers of the General Meeting; shareholder rights and how they are exercised
The General Meeting of FAMUR S.A. operates in accordance with the Rules of Procedure for the General Meeting, the Company's Articles of Association, and the Commercial Companies Code. Apart from other matters provided for in relevant laws, key powers of the General Meeting include:
| a) |
Appointment and removal from office of Supervisory Board members; |
| b) |
Determination of the rules of remuneration of Supervisory Board members; |
| c) |
Determination of the amounts of remuneration for the Supervisory Board members delegated to individually perform certain supervisory functions on a permanent basis. |
The General Meeting of a public company is convened by publishing a relevant notice on the company's website and in the manner required for the publication of current information pursuant to the Act on Public Offering, Conditions Governing the Introduction of Financial Instruments to Organised Trading, and Public Companies. Such notice should be published at least twenty-six days prior to the date of the General Meeting. A notice of a public company's General Meeting should include as a minimum:
| 1. |
The date, time and place of the Meeting and a detailed agenda for the Meeting; |
||||||||||||||
| 2. |
Precise description of procedures for
participating in the General Meeting and exercising
voting rights, including in particular information
on:
|
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| 3. |
the record date for participation in the General Meeting referred to in Art. 406 1 of the Commercial Companies Code, |
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| 4. |
information that only persons being the Company's shareholders as at the date of registration of attendance for the General Meeting may attend the Meeting, |
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| 5. |
information on where and how a person entitled to attend the General Meeting may access a complete set of documents to be presented to the Meeting, as well as draft resolutions or, if no resolutions are to be passed, comments from the Management Board or the Supervisory Board on matters which have been placed on the agenda or are to be placed on the agenda before the date of the Meeting, |
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| 6. |
address of the website on which information on the Meeting will be made available. |
Only persons who are Company shareholders sixteen days prior to the date of the General Meeting (the record date for participation in the General Meeting) have the right to attend the Meeting. The record date for participation in the General Meeting is the same for holders of rights attached to bearer shares and registered shares.
The Chairperson's role is to open and chair the General Meeting, and to ensure that the Meeting proceeds smoothly and that the rights and interests of all the shareholders are respected. After presentation of each item on the agenda by a rapporteur, the Chairperson of the General Meeting opens the discussion. More than one agenda item may be discussed at the same time. Participants take the floor in the order in which they requested to speak. With respect to each agenda item and procedural matter, a shareholder is only entitled to speak and reply once. The General Meeting may only pass resolutions concerning matters on its agenda.
One share carries the right to one vote at the General Meeting. A shareholder may vote each of their shares in a different manner. A shareholder has the right to vote on each proposal once.
Resolutions of the General Meeting are passed with an absolute majority of votes, unless the Company's Articles of Association or the Commercial Companies Code provide otherwise. Resolutions are voted on in an open ballot. A secret ballot is ordered in the case of voting on appointment or removal from office of members of the Company's governing bodies or its liquidators, on bringing somebody to account and on personnel matters.
The Chairperson of the General Meeting announces the results of a vote, which are then recorded in the minutes of the meeting. The minutes of a General Meeting are drawn up by a notary public. Shareholders and members of the Company's governing bodies have the right to review the minutes of General Meetings and to request to be issued their copies certified as true by the Management Board.
NON‐FINANCIAL STATEMENT
Introduction
The Non-Financial Statement of the FAMUR Group and FAMUR S.A. for 2021, covering the activities of the FAMUR Group (the "FAMUR Group" or the "Group"), comprising the Parent FAMUR S.A. ("FAMUR" or the "Company") and its subsidiaries ELGÓR+HANSEN S.A. and DALIBIS Sp. z o.o., which are important from the perspective of non-financial aspects of the Group's activities, has been prepared in accordance with Art. 49b.9 of the Accounting Act and with reference to the Global Reporting Initiative (GRI) Standards. However, this Statement should not be considered prepared in accordance with, but only with reference to, the GRI Standards. The Company prepares a separate comprehensive Integrated Report compliant with the Core option of the GRI Standards.
This Statement presents non-financial data identified through dialogue with stakeholders and incorporated into the FAMUR Group Strategy and other documents, based on the materiality criterion.
The criterion for the selection of content was the relevance of a particular matter to the Group and its stakeholders.
This Statement is a continuation of previously released statements and reports.
The Group and its business model
For a description of the FAMUR Group and its business model, see 'Strategy and development directions of the FAMUR Group'.
Stakeholders
The purpose of non-financial reporting includes providing the organisation's key stakeholders with more complete information on the scale and nature of the positive and negative impacts of the organisation's activities on sustainable development. The organisation collects and discloses non-financial information that may have an ongoing impact on its policies, strategies and operations with respect to social, HR, environmental, human rights and anti-corruption matters.
The FAMUR Group's CSR policy assumes that good corporate management which takes into account public interest in the broad sense, respect for the stakeholders, and the principles of ethics, requires sound corporate governance and fair market practices. The quality of communication with the stakeholders is one of the determinants of a responsible approach to business.
In 2021, the Company continued to hold consultations with its stakeholders to update their expectations with respect to disclosure of non-financial information on the Company's activities. Based on the analytical material obtained, the Company's Management Board decided to retain the adopted scope of non-financial reporting, while verifying the management risks related to climate change, the Company's and its Group's impacts on climate and climate's impact on the operations of FAMUR S.A. and the FAMUR Group, as well as the identification of material social risks which materialised prominently in the face of the global COVID-19 pandemic.
The Company intends to gradually expand the scope of its non-financial reporting with a view to presenting, as fully as possible, the context of its decisions and key outcomes of implementing the CSR policy by individual FAMUR Group companies.
Mission, vision and values
OUR VALUES
Faith
| • |
We believe our shared vision can be accomplished |
| • |
We are true to our system of values |
| • |
We focus on the future |
| • |
We believe that investing in education and development is the most valuable contribution to society |
Responsibility
| • |
We make bold, well thought-out decisions |
| • |
We take responsibility for our and our team's decisions and actions |
| • |
We take the initiative |
| • |
We always act in the best interests of our company |
Cooperation
| • |
We are a close-knit team of people who trust one another |
| • |
We listen to and learn from others, making sure all voices are heard in a discussion |
| • |
Once a decision is made, we work together towards the goal |
| • |
We are happy about achievements of our people, promoting them within the organisation |
Openness
| • |
We are loyal to one another and we communicate openly and honestly |
| • |
We respect diversity of views and opinions |
| • |
We are open to change and innovation |
| • |
We talk about and learn from our mistakes |
Reliability
| • |
We always deliver on our promises |
| • |
We are reliable and honest |
| • |
We play fair |
| • |
We fulfil our obligations |
Sustainable development
The FAMUR Group's CSR policy defines objectives for activities in the four key areas: employees, local communities, natural environment and management of the organisation.
Employees
The FAMUR Group is aware that its success depends mainly on its employees. The Group's objective is to provide them with safe and fair working conditions that comply with national and international labour laws, and adequately take into account the employees' skills on one hand and their company's business standing on the other.
LOCAL COMMUNITIES
The FAMUR Group is not only one of the largest employers in Poland, but also a corporate neighbour and partner in local initiatives. It would like its success to be confirmed by the development of local communities, particularly in the immediate environment of its production plants. The Group also wishes to build cross-sectoral partnerships based on mutual respect and benefits.
Natural environment
The FAMUR Group's objective is to deliver an excellent product which is manufactured in a process that minimises adverse environmental impacts. The Group meets the legal requirements applicable in the European Union and conducts its operations in accordance with the ISO 14001 standard, which promotes environmental protection and prevention of pollution while accommodating social and economic needs.
MANAGEMENT OF THE ORGANISATION
Good corporate management which takes into account public interest in the broad sense, respect for stakeholders and principles of ethics, requires good corporate governance and fair market practices. Being aware of the processes occurring in modern economy, the FAMUR Group wants its suppliers and trading partners to follow the same rules.
The UN Sustainable Development Goals were formulated as global challenges, with the belief that the complex world of today requires that any measures towards preventing the destruction of the natural environment and climate change and supporting creation of decent living conditions need to be undertaken globally in a synchronised manner to be effective, and that the business sector plays a key role in the process.
The FAMUR Group's CSR strategy provides for activities supporting in the long term the achievement of the following nine UN Goals:
| 1. |
Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work. |
| 2. |
Ensure inclusive and quality education, and promote lifelong learning. |
| 3. |
Achieve gender equality and empower all women and girls. |
| 4. |
Ensure healthy lives and promote well-being for all at all ages. |
| 5. |
Ensure access to affordable, reliable, sustainable and modern energy. |
| 6. |
Ensure availability and sustainable management of water and sanitation. |
| 7. |
Build resilient infrastructure, promote sustainable industrialisation. |
| 8. |
Ensure sustainable consumption and production patterns. |
| 9. |
Promote peaceful and inclusive societies, provide access to justice and build effective, accountable and inclusive institutions. |
Ethics
The FAMUR Group and TDJ jointly developed a new system of values that the they want to follow in their daily work in order to consistently deliver their objectives. Further work is now required to improve the corporate culture and to implement the adopted values across the complex organisational structure. Improved communication, including the ability to openly and honestly discuss difficulties and to draw constructive conclusions, will be an essential part of these efforts.
In addition to the adopted new system of values, in 2020 the organisation developed a Code of Ethics to be followed by all employees and implemented an ethical education system which facilitates promoting the accepted standards of conduct. Also, a code of ethics for suppliers was adopted in April 2020. The full text of the Code of Ethics is available on the Company's website.
Management approach
In the FAMUR Group, risks are identified in all areas of activity and are of a diverse nature.Many risks are interlinked; therefore, their interaction is examined while seeking ways to mitigate them.
Management systems
To ensure the required quality of their products and services, individual companies of the FAMUR Group have implemented Integrated Management Systems (IMS), whose scope is consistent with their business profiles. The Management Systems are process-based. Processes identified in connection with the adopted business strategy have been organised into a uniform system defining their sequence and interaction. Continuous improvement of the Integrated Management Systems boosts competitiveness while mitigating environmental impacts and fostering occupational health and safety.
In the fulfilment of the requirements of the PN-EN ISO 9001:2015, PN-EN ISO 14001:2015, and PN-EN 45001:2018 standards and industry standards for quality, health, safety and environment (QHSE) management, IMS documentation has been developed, comprising IMS Policies, IMS Objectives, as well as procedures and instructions.
The systems undergo annual surveillance audits and re-certification audits, carried out every three years by accredited certification bodies.
In all key non-financial areas, i.e. relating to environmental, social, and labour matters, diversity, human rights, anti-corruption and anti-bribery, FAMUR has implemented policies that are also applicable to the Group's subsidiaries.
Employment matters
The HR policy in place at the FAMUR Group sets out four main strategic goals.
| • |
Ensure safe working conditions. |
| • |
Develop employee skills. |
| • |
Maintain a stable team of qualified staff. |
| • |
Ensure that the FAMUR Group and its companies are perceived as good employers. |
In accordance with the adopted policy, the criteria to be taken into account when hiring a new employee are their appropriate skills and experience and the candidate's readiness to respect the rules applicable at the Group.
The FAMUR Group also aims to provide its employees with safe working standards and fair terms of employment, reflecting the employee's qualifications and the company's business standing. Moreover, the Group adheres to the principle that employees should be fairly and adequately remunerated considering the work they actually perform, irrespective of their position.
At FAMUR Group companies, part-time employees are entitled to the same benefits as full-time staff. Employees are eligible for benefits provided for in the labour law, as well as additional benefits, e.g. granted from the Company Social Benefits Fund or in accordance with the collective bargaining agreement in force at a given Group company, regardless of what part of an FTE their contract provides for. Depending on the company, employee category, and the terms and conditions set out in individual collective bargaining agreements, additional benefits include, for instance, group life insurance, partial funding of commuting expenses, additional disability and old-age retirement severance payments, length-of-service awards or Miner's Day benefits. At FAMUR, employees have the option to use private medical care on a co-funded basis, with a part of the cost covered by the employer.
Collective bargaining agreements
FAMUR is a multi-branch organisation, in which each of the branches is a separate employer. Each employer applies its own collective bargaining agreement or remuneration rules. In accordance with Art. 23 1 of the Labour Code, in the event of a business combination the new employer takes over employees together with their collective bargaining agreement.
| COMPANY | Percentage of employees covered by collective bargaining agreements | |
| 2021 | 2020 | |
| FAMUR S.A. | 97.1% | 97.2% |
The FAMUR Group cares for all staff, and requires its service providers to ensure appropriate working conditions for their employees. Harassment and discrimination, in any form, are unacceptable. Managers are required to build and maintain a sense of mutual trust and atmosphere of dialogue within their teams and in the business environment.
Most of the Group companies have in place documented internal policies governing training and facilitating effective management of human resources. These documents also define training requirements and set growth priorities.
The FAMUR Group does not in any way restrict the employees' freedom of association or their right to form unions and associations under the local law. It is also engaged in dialogue with the trade unions operating within the Group companies. Regular meetings are held with trade union representatives, who also sit on the Company Social Benefits Fund committees.
Each employee may join a company trade union organisation, and no activities restricting this freedom were reported in 2021.
The FAMUR Group seeks to create a stable team of qualified employees by such means as building relationships with potential candidates, cooperating with technical and vocational schools and universities, and offering apprenticeships and work placements for secondary school and university students at the Group's companies and branches. Representatives of the Group take part in educational fairs and scientific industry conferences, presenting work at the FAMUR Group to potential candidates.
Human rights policy
In accordance with the requirements of the Human Rights Policy adopted at the Group, compliance with its terms is monitored by FAMUR S.A. In 2021, there were no confirmed cases of human rights violation at the Group companies covered by non-financial reporting, including no cases of child labour or practices involving the risk of forced or compulsory labour. There were no identified violations of personal data protection which would require notification to the President of the Office for Personal Data Protection and to persons to whom data affected by the violation relates.
Key indicators on employment, diversity, working conditions, and occupational health and safety
FAMUR Group headcount
| as at | |||||
| Dec 31 2021 | Dec 31 2020 | ||||
| COMPANY | Type of employment | women | men | women | men |
| FAMUR S.A. | employment contract of which open-ended employment contracts | 185 | 1,447 | 233 | 1,769 |
| 174 | 1337 | 217 | 1,575 | ||
| ELGÓR + HANSEN S.A. | employment contract of which open-ended employment contracts | 43 | 174 | 39 | 187 |
| 36 | 157 | 31 | 141 | ||
| ŚTW DALBIS Sp. z o.o. | employment contract of which open-ended employment contracts | 4 | 68 | 4 | 72 |
| 4 | 63 | 4 | 59 | ||
FAMUR Group total headcount *
| COMPANY | as at | |
| Dec 31 2021 | Dec 31 2020 | |
| FAMUR S.A. | 1,632 | 2,002 |
| ELGÓR + HANSEN S.A. | 217 | 226 |
| ŚTW DALBIS Sp. z o.o. | 72 | 76 |
| Total | 1,921 | 2,304 |
New hires and employee turnover at the FAMUR Group
| COMPANY | Diversity criteria | number of new hires
in |
|
| 2021 | 2020 | ||
| FAMUR S.A. | age < 30 | 30 | 40 |
| age 30-50 | 50 | 43 | |
| age > 50 | 30 | 9 | |
| Women | 9 | 5 | |
| Men | 101 | 87 | |
| Silesia region | 69 | 62 | |
| Łódź region | 5 | 4 | |
| Lesser Poland region | 36 | 26 | |
| employee turnover | 29.17% | 34.3% | |
| ELGÓR + HANSEN S.A. | age < 30 | 1 | 3 |
| age 30-50 | 8 | 3 | |
| age > 50 | 2 | 2 | |
| Women | 5 | 2 | |
| Men | 6 | 6 | |
| employee turnover | 9% | 17% | |
| ŚTW DALBIS Sp. z o.o. | age < 30 | 1 | 1 |
| age 30-50 | 1 | 3 | |
| age > 50 | 2 | - | |
| women | 1 | - | |
| men | 3 | 4 | |
| employee turnover | 10% | 50% | |
Percentage of FAMUR Group employees by employee category
| Percentage of employees in the category | |||||
| 2021 | 2020 | ||||
| COMPANY | Gender | White-collar workers | Blue-collar workers | White-collar workers | Blue-collar workers |
| FAMUR S.A. | women | 21% | 4% | 22% | 4% |
| men | 79% | 96% | 78% | 96% | |
| ŚTW DALBIS Sp. z o.o. | women | 25% | 13% | 14% | 2% |
| men | 75% | 87% | 86% | 98% | |
| ELGÓR + HANSEN S.A. | women | 12% | 2% | 22% | 11% |
| men | 88% | 98% | 78% | 89% | |
Percentage of FAMUR Group employees by age
| Percentage of employees in the age group | |||||
| 2021 | 2020 | ||||
| COMPANY | age | White-collar workers | Blue-collar workers | White-collar workers | Blue-collar workers |
| FAMUR S.A. | < 30 | 13% | 8% | 11% | 8% |
| 30-50 | 56% | 39% | 60% | 41% | |
| > 50 | 31% | 53% | 29% | 51% | |
| ŚTW DALBIS Sp. z o.o. | < 30 | 12% | 17% | 9% | 16% |
| 30-50 | 42% | 33% | 50% | 54% | |
| > 50 | 46% | 50% | 41% | 30% | |
| ELGÓR + HANSEN S.A. | < 30 | 9% | 9% | 10% | 12% |
| 30-50 | 74% | 60% | 74% | 61% | |
| > 50 | 17% | 31% | 16% | 27% | |
Composition of FAMUR S.A. Management Board by diversity criteria
| at year end | |||||
| 2021 | 2020 | ||||
| COMPANY | criteria | % of persons meeting the criterion | Number of persons | % of persons meeting the criterion | Number of persons |
| FAMUR S.A. Management Board | women | 20% | 1 | 17% | 1 |
| men | 80% | 4 | 83% | 5 | |
| age 30-50 | 60% | 3 | 50% | 3 | |
| age > 50 | 40% | 2 | 50% | 3 | |
Average hours of training received by FAMUR Group employees by gender and employee category
| COMPANY | Diversity criteria | average number of hours | |
| 2021 | 2020 | ||
| FAMUR S.A. | women | 7.40 | 1.46 |
| men | 6.17 | 4.68 | |
| blue-collar workers | 3.71 | 3.74 | |
| specialists | 9.81 | 4.58 | |
| managers | 10.24 | 6.77 | |
| ELGÓR + HANSEN S.A. | women | 8.88 | 7.18 |
| men | 11.02 | 7.93 | |
| white-collar workers | 16.65 | 8.69 | |
| blue-collar workers | 5.98 | 6.65 | |
| ŚTW DALBIS Sp. z o.o. | women | 8.00 | - |
| men | 2.47 | - | |
| white-collar workers | 1.92 | - | |
| blue-collar workers | 66.21 | - | |
Severity and frequency rates of accidents, injuries, occupational diseases, days lost, and total number of work-related fatalities at the FAMUR Group
| 12 months of | ||||
| COMPANY | 2021 | 2020 | ||
| FAMUR S.A. | number of | occupational diseases in former employees | 4 | 5 |
| work-related fatalities | - | - | ||
| accidents at work | 21 | 32 | ||
| indicator | Frequency | 12 | 13 | |
| Severity | 82 | 42 | ||
| ELGÓR + HANSEN S.A. | number of | occupational diseases in former employees | - | - |
| work-related fatalities | - | - | ||
| accidents at work | 3 | 2 | ||
| indicator | Frequency | 14 | 8 | |
| Severity | 75 | 74 | ||
| ŚTW DALBIS Sp. z o.o. | number of | occupational diseases in former employees | - | - |
| work-related fatalities | - | - | ||
| accidents at work | 1 | 1 | ||
| indicator | Frequency | 14 | 13 | |
| Severity | 78 | 180 | ||
Reference to material risks related to human resources management
| Risk description | Risk mitigating measures | Risk exposure |
| 1. Risk of occupational accidents | Due diligence procedures have been put in place across the FAMUR Group to support the 'zero accident' policy. | medium |
| 2. Risk of workforce shortage | The FAMUR Group organises wide-ranging and effective multichannel recruitment processes, which include communicating its job offers on various platform. The Group also has in place employee substitution procedures to ensure undisrupted information flow within and across organisational units; Group employees are also divided into task teams and deployed in different locations, as well as being provided with an option to work remotely (home office). | medium |
Social matters
The Extraordinary General Meeting of the Company, held on January 18th 2021, adopted the FAMUR S.A. Charitable Giving Policy. The corporate image of FAMUR is built based on sound financial performance but also on our openness to the needs of local communities and strong, trusting stakeholder relationships. Our charitable giving policy and corporate social responsibility play a central role in our decision making and corporate culture. Our sponsorship activities target mainly local community initiatives and needs in our immediate environment. Our sponsorship activities also include initiatives aimed at promoting FAMUR and its business at conferences, trade fairs and other events held under our patronage. The purpose of our sponsorship efforts is to implement our strategy by showcasing our operational and corporate strength. The full text of the Charitable Giving Policy in place at the FAMUR Group is available in the home section of the Company's website at www.famur.com and in section Investor Relations: Corporate governance: www.famur.com/lad-korporation (materials to download).
As a socially responsible corporate citizen, in 2021 the FAMUR Group donated more than PLN 4m in cash to the Guardian Angels House and TDJ's Foundation for the Promotion of Education and Development to support their projects and activities as well as to the Municipality of Bytom for the construction of an access road to a production hall (to eliminate nuisance caused by heavy goods vehicle traffic going through a nearby residential area). The table below presents the amounts of FAMUR S.A.'s and the FAMUR Group's charitable donations.
| Charitable donations (PLNm) | 12 months to | |
| Dec 31 2021 | Dec 31 2020 | |
| FAMUR S.A. | 4 | 6 |
| The FAMUR Group: | 4 | 6 |
Employee engagement in corporate social initiatives
Ranking among the largest employers in Poland, we are a partner to our local communities, particularly those living near our manufacturing plants. We want our success to drive development of our external environment.
Corporate social initiatives
The best example of the FAMUR Group's community involvement is its participation in various campaigns and projects, including the Mining for Engagement, Social and Civic Competence Building Studio, Paint the World for Children and Kilometres of Good programmes, Christmas collections for aid organisations, and refugee support initiatives.
Collaboration with schools and universities
We are a company with a long history, which has employed successive generations of workers. Therefore, we strive to foster strong relationships with technical and vocational schools and universities providing education to our potential future workforce. We try to help them grow by offering professional development opportunities in the form of internship and work placement programmes run at the FAMUR Group. We take part in educational fairs and scientific trade conferences to showcase our achievements, and we support classes organised under our patronage.
TDJ Foundation
The mission of the TDJ Foundation is to provide support to children of people employed at FAMUR S.A.'s related company TDJ S.A. The TDJ Foundation invests in education to create optimal development opportunities for future generations.
| Project name | Beneficiary | Number of employees involved |
| Run for Angels | 'Guardian Angels House' Youth Assistance Association | 11 |
| Poland Business Run | Poland Business Run Foundation | 10 |
| Ekomocni | Regional Childcare and Therapeutic Centre No. 1 and 2 in Gliwice | 12 |
| #SadziMy | Employees of FAMUR and its branches | 20 |
| Business League | Employees of FAMUR and its branches | 10 |
| 'Books for Heroes' book collection | ARKA Foundation | +100 |
| 'Easter dECOorations' competition to design an eco-friendly Easter wreath | Children of employees of FAMUR and its branches | 28 |
| 'Christmas like no other' competition do design a Christmas card | Children of employees of FAMUR and its branches | 11 |
| 'Christmas Youth Empowering Aid' initiative | 'Guardian Angels House' Youth Assistance Association | +100 |
| League of Patrons of the Guardian Angels House | 'Guardian Angels House' Youth Assistance Association | +100 |
Matters related to respecting human rights
As part of its efforts to put its human rights policy into action, FAMUR regularly educates its employees, raising their human rights awareness. In line with the principles of sustainable development upheld by the Company, a short series of training sessions and workshops on protecting human rights, counteracting workplace bullying and corruption and on environmental issues was launched in 2020 and continued during the reporting year. Over the several months of the programme, employees were provided with information and training materials in various forms (such as online presentations, brochures, articles in the Fama magazine, etc.) devoted to particular topics, along with information on how the organisation is dealing with that aspect of its activities, what actions it has taken or intends to take and why. FAMUR focuses on building the awareness among its employees that they can contribute to strengthening the fundamental human rights both within and outside of the organisation.
In 2021, there were no confirmed incidents of discrimination at FAMUR Group companies covered by non-financial reporting. The FAMUR Group's Human Rights Policy has been formulated on the basis of the Universal Declaration of Human Rights (1948), International Bill of Rights, United Nations Guidelines on Business and Human Rights, and the United Nations Global Compact initiative.
The Policy defines the rules of activities and conduct relating to human rights at the FAMUR Group, including in the supply chain and in relations with stakeholders. The Group understands respecting human rights as refraining from violating the rights of others, active prevention of any such violations, and taking remedial measures should any of the Group companies directly or indirectly contribute to any such violation. The FAMUR Group pledges to respect the human rights of its employees and to continuously raise their awareness of the human rights they have. The Group respects and promotes human rights in relations with its trading partners. It seeks to respect human rights and to understand the needs, customs and values of the local communities where it directly or indirectly conducts its operations.
Matters covered by the FAMUR Group's Human Rights Policy include:
| • |
Occupational health and safety, |
| • |
Ensuring freedom of expression, |
| • |
Prevention of child labour, |
| • |
Elimination of exploitation, |
| • |
Observance of terms and conditions of employment, |
| • |
Prevention of discrimination, and |
| • |
Protection of personal data. |
Protection of personal data
With regard to personal data protection, since 2018 the Group companies have been required under law to take measures to ensure that the provisions of the General Data Protection Regulation (GDPR 5 ) are complied with in their relations with current and former employees, their families, as well as job applicants and external partners. These matters are treated not only as a legal requirement, but also as part of a broader commitment to respecting privacy, which is a human right.
In 2018, the FAMUR Group implemented its Personal Data Protection Policy, along with the necessary physical and ICT security procedures and instructions as well as relevant compliance and organisational solutions, All of which are updated on an ongoing basis. The method of securing personal data and the tools used for this purpose have been chosen following a relevant risk analysis. Moreover, in order to raise the employees' awareness of personal data issues, regular training on personal data protection is provided and supported by interestingly presented information disseminated via internal communication channels.
A Personal Data Protection Officer (PDPO) has been appointed at FAMUR and notified to the President of the Office for Personal Data Protection. The PDPO is responsible for monitoring the Company's compliance with the GDPR and the due diligence procedures adopted by the Company in this respect. In 2021, two personal data breaches were recorded at the FAMUR Group, which were reported to the President of the Office for Personal Data Protection. The inquiries prompted by reports were closed in 2021, with no penalties imposed on the Company. The PDPO's recommendations on data breach prevention and mitigation of related risks are currently being implemented.
Matters related to counteracting corruption
The risk of corruption relates to all FAMUR Group companies and branches, especially those that directly cooperate with customers or suppliers, as well as the technical departments which search for solutions and suppliers on their own. To counteract this, the FAMUR Group companies are obliged to observe the comprehensive Anti-Corruption Rights Policy in their operations. Compliance with the Policy is monitored. In addition, those matters are regulated by due diligence procedures adopted by FAMUR, such as the Supplier Selection Procedure and the Rules of Cooperation with Suppliers and Trading Partners. The full text of the Anti-Corruption Policy in place at the FAMUR Group is available in the home section of the Company's website at www.famur.com and in section Investor Relations: Corporate governance: www.famur.com/lad-korporation (materials to download). In 2021, there were no confirmed incidents of corruption at FAMUR Group companies covered by non-financial reporting.
Environmental matters
In 2018, the FAMUR Group developed and implemented an Environmental Policy. In order to properly manage environmental matters, some of the FAMUR Group subsidiaries have implemented Integrated Management Systems, which include Integrated Management System Policies (specific to the individual companies) as their integral parts. All the FAMUR Group companies have in place internal regulations designed to ensure top quality and safety of their products and services. They also seek to minimise, wherever possible, the environmental impact of their operations.
The management boards of individual Group companies, their managers and employees are committed to developing environmental protection initiatives so that quality improvements of products and services are inextricably connected with efforts towards reducing their environmental impact, including by preventing contamination, taking into account the social and economic needs of the local community.
We monitor our major environmental impacts by:
| • |
Promoting eco-friendly attitudes and environmental awareness: we engage in initiatives to increase environmental awareness and promote eco-friendly attitudes among our employees, business partners as well as children and youth from local institutions of education. |
| • |
We are determined to reduce paper consumption through electronic workflow. |
| • |
Minimising waste: focus on proper waste management, waste reduction measures and recycling |
| • |
Enhancing rational use of raw materials in the supply chain: we implement procurement plans through efficient and well thought-out resource management. |
With regard to climate change issues and the new European Commission Guidelines on non-financial reporting of climate-related information (2019/C 209/01), the FAMUR Group focuses on the analysis of non-binding guidelines which began in late 2019 and early 2020 and which is expected to enter the planning phase in subsequent reporting years so that the Company can present progress in their implementation in its future non-financial reports.
The FAMUR Group is aware of the impact of its operations on rapidly changing climate and of the impact of climate on its own operations observed in the following areas:
| • |
fuel and energy consumption and related greenhouse gas emissions from operating activities, |
| • |
greenhouse gas emissions from manufacturing activities, |
| • |
waste management (supply chain). |
In order to mitigate environmental risks, the FAMUR Group companies are obliged to observe the Comprehensive Environmental Policy in their operations. Compliance with the Policy is monitored, and the Policy itself undergoes periodic reviews. The effectiveness of those measures is confirmed by the fact that in 2021 no sanctions for non-compliance with environmental laws and regulations were imposed on the FAMUR Group companies covered by non-financial reporting on environmental protection.
Mitigation of environmental impacts
In its Environmental Policy, the FAMUR Group has declared that it continuously mitigates the impact of its operations on the environment through:
| • |
Rational waste management, including waste reclamation and recycling. |
| • |
Introducing changes to the applied environmentally friendly technologies. |
| • |
Rational management of energy and water. |
| • |
Efficient management of hazardous substances and reduction of emissions of substances harmful to the environment. |
In order to achieve its objectives, the FAMUR Group carries out the following activities:
| • |
Rational use of utilities |
| • |
Improving waste management |
| • |
Rational management of packaging. |
| • |
Use of recyclable materials. |
| • |
Optimising the use of raw materials. |
| • |
Implementation of innovative solutions in the manufactured equipment. |
| • |
Analysing, on a case-by-case basis, whether the applicable environmental protection standards and requirements are met whenever new machinery and equipment are purchased and solutions are selected for use, as well as during the operation of the existing units and facilities. |
| • |
Building lean culture aimed at raising employees' awareness of the need to reduce the environmental impact of operations, implementing tools and methods to improve the efficiency of production processes and making the necessary improvements. |
By effectively monitoring all the environmental aspects, the Group companies are able to control their environmental footprint and take, if required, immediate steps to reduce the risk of adverse events. The Group companies operate in compliance with the applicable environmental protection requirements and based on valid sectoral permits (including permits for waste generation, permits for gas and dust emissions, and water permits), fulfilling its reporting obligations stipulated in the environmental laws in a timely manner.
An important aspect of the organisation's approach to ensuring appropriate environmental standards in the Group's value chain is the inclusion of environmental criteria in supplier evaluation procedures. Each supplier of goods and services that represent at least 0.1% of the value of total annual supplies is subject to periodic evaluation and qualification. This applies in particular to suppliers of raw materials, utilities and other materials, parts for resale, transport services and production services. The evaluation takes into account environmental criteria such as:
| • |
Having a certified Environmental Management System in place; |
| • |
Use of environmentally friendly solutions, e.g. green energy sources, biofuels in means of transport, eco-labelled products; |
| • |
Application of internal environmental policies and instructions. |
Key environmental performance indicators
Consumption of utilities, volumes of emissions and waste generated at FAMUR S.A.
| INDICATOR | UNIT OF MEASURE | Total for 12 months | |
| 2021 | 2020 | ||
| Electricity | [MWh] | 12,710 | 18,409 |
| Heat | [GJ] | 34,464 | - |
| Water withdrawal | [m3] | 27,581 | 46,667 |
| Gasoline | [Mg] | 34 | 37 |
| Diesel oil | [Mg] | 141 | 124 |
| Industrial post-installation waste | [Mg] | 8,518 | 7,870 |
| Municipal waste | [Mg] | 179 | 415 |
| Reclaimed waste | [Mg] | 93 | 111 |
| Packaging waste - recycled | [kg] | 237,994 | 86,290 |
Consumption of utilities, volumes of emissions and waste generated at the FAMUR Group *
| INDICATOR | UNIT OF MEASURE | Total for 12 months | |
| 2021 | 2020 | ||
| Electricity | [MWh] | 13,419 | 19,089 |
| Heat | [GJ] | 37,486 | 297 |
| Water withdrawal | [m3] | 29,337 | 49,666 |
| Gasoline | [Mg] | 58 | 37 |
| Diesel oil | [Mg] | 413 | 243 |
| Industrial post-installation waste | [Mg] | 8,522 | 7,913 |
| Municipal waste | [Mg] | 215 | 446 |
| Reclaimed waste | [Mg] | 102 | 117 |
| Packaging waste - recycled | [kg] | 238,438 | 86,623 |
* The table presents non-financial consolidated data for FAMUR S.A. and those of its subsidiaries whose activities are relevant to the non-financial aspects of the Group's business, i.e. ELGÓR+HANSEN S.A. and DALIBIS Sp. z o.o.
Consumption of utilities, volumes of emissions and waste generated at ELGÓR + HANSEN S.A.
| INDICATOR | UNIT OF MEASURE | Total for 12 months | |
| 2021 | 2020 | ||
| Electricity | [MWh] | 619 | 564 |
| Heat | [GJ] | 2627 | - |
| Water withdrawal | [m3] | 1269 | 1799 |
| Gasoline | [Mg] | 24 | - |
| Diesel oil | [Mg] | 7 | - |
| Industrial post-installation waste | [Mg] | 3 | 43 |
| Municipal waste | [Mg] | 24 | 24 |
| Reclaimed waste | [Mg] | 9 | 6 |
| Packaging waste - recycled | [kg] | 444 | 333 |
Consumption of utilities, volumes of emissions and waste generated at ŚTW DALBIS Sp. z o.o..
| INDICATOR | UNIT OF MEASURE | Total for 12 months | |
| 2021 | 2020 | ||
| Electricity | [MWh] | 90 | 116 |
| Heat | [GJ] | 395 | 297 |
| Water withdrawal | [m3] | 487 | 1200 |
| Gasoline | [Mg] | - | - |
| Diesel oil | [Mg] | 264 | 119 |
| Industrial post-installation waste | [Mg] | - | - |
| Municipal waste | [Mg] | 12 | 7 |
| Reclaimed waste | [Mg] | - | - |
| Packaging waste - recycled | [kg] | - | - |
Greenhouse gas emissions by FAMUR S.A.
| INDICATOR | UNIT OF MEASURE | Total for 12 months | |
| 2021 | 2020 | ||
| SCOPE 1 - process emissions | |||
| CO 2 | [kg] | 491,435 | 438,589 |
| CH4 | [kg] | - | - |
| N2O | [kg] | - | - |
| HFC | [kg] | - | - |
| PFC | [kg] | - | - |
| SF6 | [kg] | - | - |
| SCOPE 1 - mobile combustion | |||
| CO 2 | [kg] | 571,808 | - |
| CH4 | [kg] | - | - |
| N2O | [kg] | - | - |
| HFC | [kg] | - | - |
| PFC | [kg] | - | - |
| SF6 | [kg] | - | - |
| SCOPE 2 | |||
| Emissions from purchased electricity | [MgCO 2] | 9,517 | 13,785 |
| Emissions from purchased heat | [MgCO 2] | 3,629 | - |
Greenhouse gas emissions by the FAMUR Group *
| INDICATOR | UNIT OF MEASURE | Total for 12 months | |
| 2021 | 2020 | ||
| SCOPE 1 - process emissions | |||
| CO 2 | [kg] | 531,714 | 471,117 |
| CH4 | [kg] | - | - |
| N2O | [kg] | - | - |
| HFC | [kg] | - | - |
| PFC | [kg] | - | - |
| SF6 | [kg] | - | - |
| SCOPE 1 - mobile combustion | |||
| CO 2 | [kg] | 920,284 | - |
| CH4 | [kg] | - | - |
| N2O | [kg] | - | - |
| HFC | [kg] | - | - |
| PFC | [kg] | - | - |
| SF6 | [kg] | - | - |
| SCOPE 2 | |||
| Emissions from purchased electricity | [MgCO 2] | 10,016 | 13,785 |
| Emissions from purchased heat | [MgCO 2] | 4,220 | - |
* The table presents non-financial consolidated data for FAMUR S.A. and those of its subsidiaries whose activities are relevant to the non-financial aspects of the Group's business, i.e. ELGÓR+HANSEN S.A. and DALIBIS Sp. z o.o.
Greenhouse gas emissions by ELGÓR + HANSEN S.A.
| INDICATOR | UNIT OF MEASURE | Total for 12 months | |
| 2021 | 2020 | ||
| SCOPE 1 - process emissions | |||
| CO 2 | [kg] | 40,248 | 32,479 |
| CH4 | [kg] | - | - |
| N2O | [kg] | - | - |
| HFC | [kg] | - | - |
| PFC | [kg] | - | - |
| SF6 | [kg] | - | - |
| SCOPE 1 - mobile combustion | |||
| CO 2 | [kg] | 84,106 | - |
| CH4 | [kg] | - | - |
| N2O | [kg] | - | - |
| HFC | [kg] | - | - |
| PFC | [kg] | - | - |
| SF6 | [kg] | - | - |
| SCOPE 2 | |||
| Emissions from purchased electricity | [MgCO 2] | 431 | - |
| Emissions from purchased heat | [MgCO 2] | 549 | - |
Greenhouse gas emissions by ŚTW DALBIS Sp. z o.o.
| INDICATOR | UNIT OF MEASURE | Total for 12 months | |
| 2021 | 2020 | ||
| SCOPE 1 - process emissions | |||
| CO 2 | [kg] | 30 | 49 |
| CH4 | [kg] | - | - |
| N2O | [kg] | - | - |
| HFC | [kg] | - | - |
| PFC | [kg] | - | - |
| SF6 | [kg] | - | - |
| SCOPE 1 - mobile combustion | |||
| CO 2 | [kg] | 264,370 | - |
| CH4 | [kg] | - | - |
| N2O | [kg] | - | - |
| HFC | [kg] | - | - |
| PFC | [kg] | - | - |
| SF6 | [kg] | - | - |
| SCOPE 2 | |||
| Emissions from purchased electricity | [MgCO 2] | 67 | - |
| Emissions from purchased heat | [MgCO 2] | 42 | - |
Material environmental risks
With regard to environmental management, the FAMUR Group has identified the following risks (significant direct aspects with a negative impact according to the Register of Environmental Aspects 6 ):
| Risk description | Risk mitigating measures | Risk exposure |
| 1. Risk associated with generation of hazardous office waste | The FAMUR Group has introduced internal instructions for waste management. In addition, the Group meets all the conditions required to obtain a waste generation permit, and its employees receive training in proper waste management. | medium |
| 2. Risk associated with generation of production waste (including hazardous waste) | The FAMUR Group has developed instructions for waste management and obtained a permit for waste generation. | medium |
| 3. Risk associated with air emissions of dust and oxides from production processes | The FAMUR Group has obtained a permit to release gases and dusts into the air. | medium |
| 4. Risk associated with generation of hazardous waste during continuous plant operation processes | The FAMUR Group has developed instructions for waste management and obtained a permit for waste generation. | medium |
| 5. Risk resulting from the need to adapt the Company's operations to the rapidly changing climate policy: Pursuant to the objectives of the Paris Agreement, the European Union intends to achieve climate neutrality by 2050. | The FAMUR Group keeps track of any changes in the EU climate policy and the related legal requirements. | medium |
TAXONOMY
In compliance with Article 8 of Regulation (EU) 2020/852 of the European Parliament and of the Council of June 18th 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 (OJ L 2020.198.13) and with Commission Delegated Regulation (EU) 2021/2139 of June 4th 2021 supplementing Regulation (EU) 2020/852 of the European Parliament and of the Council by establishing the technical screening criteria for determining the conditions under which an economic activity qualifies as contributing substantially to climate change mitigation or climate change adaptation and for determining whether that economic activity causes no significant harm to any of the other environmental objectives (Technical Screening Criteria), as well as with the other Commission delegated acts supplementing Regulation 2020/852 by clarifying the content of the required presentation of information on environmentally sustainable economic activities, FAMUR S.A. hereby presents the proportions of its Taxonomy-eligible and Taxonomy non-eligible economic activities as defined in the said regulations (hereinafter jointly referred to as the "Taxonomy") in its total turnover, capital expenditure and operating expenditure, as well as the required qualitative information.
Under the Taxonomy, in 2022 FAMUR S.A. is required to report key indicators for its economic activities in 2021 which contributed to two of the six environmental objectives, i.e. climate change mitigation and climate change adaptation. Economic activities contributing to the other environmental objectives will be reported in subsequent periods, following addition of those objectives to the Taxonomy.
The core economic activities of FAMUR S.A., i.e. the manufacture of mining machinery, are not included in either Annex I or Annex II to the Commission Delegated Regulation 2021/2139 defining the Technical Screening Criteria. The FAMUR Group is currently continuing to pursue its new strategic directions as announced in May 2021; for details, see 'Strategy and Development Directions' earlier in this Report. These activities may contribute positively to climate change mitigation and adaptation change by helping to reduce carbon footprint in subsequent reporting periods.
FAMUR S.A. applied the Technical Screening Criteria as defined in Annexes I and II to the Commission Delegated Regulation 2021/2139 to determinate the Taxonomy-eligible portion of its turnover, capital expenditure and operating expenditure. The reported indicators do not take into account the Company's economic activities which meet the Technical Screening Criteria but which in 2021 were negligible in terms of the amount of revenue, capital expenditure or operating expenditure associated therewith.
In order to ensure consistency with the remainder of the Non-Financial Statement, this Report presents the proportions of Taxonomy-eligible and Taxonomy non-eligible activities both on a consolidated basis, i.e. for the entire FAMUR Group, and on a separate basis, i.e. for FAMUR S.A. alone.
FAMUR S.A.
Review of activities in relation to the first two environmental objectives
| Environmental objective | Activities as defined in the Taxonomy | Activities as defined by FAMUR |
| Climate change mitigation | 7.6 Construction and real estate activities | Revenue from sale of components for the construction of solar farms |
| Installation, maintenance and repair of renewable energy technologies |
| Proportion of revenue, capital expenditure and operating expenditure associated with environmentally sustainable activities |
12 months
to |
| Dec 31 2021 | |
| Revenue from Taxonomy-eligible economic activities (PLNm) | 150.5 |
| Separate revenue (PLNm) | 916.4 |
| Proportion of revenue associated with Taxonomy-eligible economic activities | 16.42% |
| Proportion of revenue associated with Taxonomy non-eligible economic activities | 83.58% |
| Capital expenditure associated with Taxonomy-eligible economic activities (PLNm) | 0.0 |
| Total capital expenditure (PLNm) | 121.0 |
| Proportion of capital expenditure associated with Taxonomy-eligible economic activities | 0% |
| Proportion of capital expenditure associated with Taxonomy non-eligible economic activities | 100% |
| Operating expenditure associated with Taxonomy-eligible economic activities (PLNm) | 0.0 |
| Total operating expenditure (PLNm) | 6.5 |
| Proportion of operating expenditure associated with Taxonomy-eligible economic activities | 0% |
| Proportion of operating expenditure associated with Taxonomy non-eligible economic activities | 100% |
The proportion of Taxonomy-eligible economic activities in FAMUR S.A.'s total turnover was calculated in accordance with Commission Delegated Regulation 2021/2139 as a quotient of the Company's revenue from Taxonomy-eligible economic activities and its total revenue. In 2021, the proportion of FAMUR S.A.'s revenue associated with Taxonomy-eligible economic activities was 16.42%, reflecting the portion of the Company's revenue attributable to sales to the FAMUR SOLAR Group of components for the construction of solar farms for the purposes of developing the FAMUR Group's Solar PV Segment.
The proportion of Taxonomy-eligible economic activities in FAMUR S.A.'s capital expenditure was calculated as a quotient of the Company's capital expenditure meeting the Technical Screening Criteria under Annex I to Commission Delegated Regulation 2021/2178 and the Company's total capital expenditure.
The proportion of Taxonomy-eligible economic activities in FAMUR S.A.'s operating expenditure was calculated as a quotient of the Company's operating expenditure associated with Taxonomy-eligible economic activities and the Company's total operating expenditure.
FAMUR Group
Review of activities in relation to the first two environmental objectives
| Environmental objective | Activities as defined in the Taxonomy | Activities as defined by FAMUR |
| Climate change mitigation | 7.6 Construction and real estate activities | Revenue from professional PV-related services. |
| Installation, maintenance and repair of renewable energy technologies | ||
| Capital expenditure classified as non-current assets upon merger with the FAMUR SOLAR Group. |
| Proportion of revenue, capital expenditure and operating expenditure associated with environmentally sustainable activities |
12 months
to |
| Dec 31 2021 | |
| Revenue from Taxonomy-eligible economic activities (PLNm) | 9.0 |
| Consolidated revenue (PLNm) | 1050.4 |
| Proportion of revenue associated with Taxonomy-eligible economic activities | 0.86% |
| Proportion of revenue associated with Taxonomy non-eligible economic activities | 99.14% |
| Capital expenditure associated with Taxonomy-eligible economic activities (PLNm) | 14.5 |
| Total capital expenditure (PLNm) | 141.0 |
| Proportion of capital expenditure associated with Taxonomy-eligible economic activities | 10.26% |
| Proportion of capital expenditure associated with Taxonomy non-eligible economic activities | 89.74% |
| Operating expenditure associated with Taxonomy-eligible economic activities (PLNm) | 0.2 |
| Total operating expenditure (PLNm) | 7.5 |
| Proportion of operating expenditure associated with Taxonomy-eligible economic activities | 3% |
| Proportion of operating expenditure associated with Taxonomy non-eligible economic activities | 97.00% |
The proportion of Taxonomy-eligible economic activities in the Group's total turnover was calculated in accordance with Commission Delegated Regulation 2021/2139 as a quotient of the Group's revenue from Taxonomy-eligible economic activities and its total revenue. In 2021, the proportion of the Group's revenue associated with Taxonomy-eligible economic activities was 0.86%, reflecting the portion of the Group's revenue attributable to the FAMUR SOLAR Group's services consisting in delivery and installation of PV systems.
The proportion of Taxonomy-eligible economic activities in the Group's capital expenditure was calculated as a quotient of the Group's capital expenditure meeting the Technical Screening Criteria under Annex I to Commission Delegated Regulation 2021/2178 and the Group's total capital expenditure. Capital expenditure associated with Taxonomy-eligible activities, which were classified as an increase in non-current assets upon merger with the FAMUR SOLAR Group.
The proportion of Taxonomy-eligible economic activities in the Group's operating expenditure was calculated as a quotient of the Group's operating expenditure associated with Taxonomy-eligible economic activities and the Group's total operating expenditure. In 2021, operating expenditure associated with Taxonomy-eligible activities comprised the FAMUR SOLAR Group's direct expenses related to the use of items of property, plant and equipment and to their maintenance to ensure the continuity and reliability of their operation.
OTHER STATEMENTS FROM THE MANAGEMENT BOARD
The auditor
The Company's auditor is BDO Spółka z ograniczoną odpowiedzialnością Sp.k. with its registered office at ul. Postępu 12, Warsaw, registered by the District Court for the Capital City of Warsaw, 12th Commercial Division of the National Court Register, under No. KRS 0000729684, entered in the list of qualified auditors of financial statements maintained by the Polish Agency for Audit Oversight (Polska Agencja Nadzoru Audytowego) under No. 3355. On February 4th 2020, the Company and BDO Spółka z ograniczoną odpowiedzialnością Sp.k. entered into an agreement for:
| • |
review of FAMUR S.A.'s interim separate financial statements and the FAMUR Group's interim consolidated financial statements, |
| • |
audit: of FAMUR S.A.'s separate financial statements and the FAMUR Group's consolidated financial statements |
| • |
assurance engagement with to the report on executive compensation for the General Meeting and the Supervisory Board of FAMUR S.A. |
For information on the auditor's fees, see Note 49 to the separate financial statements of FAMUR S.A. for 2021 and Note 51 to the consolidated financial statements of the FAMUR Group for 2021.
Statement of compliance with applicable accounting policies
The Management Board of FAMUR S.A. comprising:
| Full name | Position |
| Mirosław Bendzera | President of the Management Board |
| Beata Zawiszowska | Vice President, Chief Financial Officer |
| Dawid Gruszczyk | Vice President of the Management Board, Underground Segment Domestic Sales |
| Tomasz Jakubowski | Vice President, Chief Operating Officer, Underground segment |
| Ireneusz Kazimierski | Vice President of the Management Board, Business Development |
certifies that, to the best of its knowledge, the FAMUR Group's full-year financial statements, FAMUR S.A.'s separate full-year financial statements and the comparative data have been prepared in compliance with the applicable accounting standards, and give a true, fair and clear view of FAMUR S.A.'s the Group's assets, their financial condition and results of operations. This Directors' Report gives a fair view of the development, achievements and position of the FAMUR Group, and describe the key risks and threats.
FAMUR S.A.'s financial statements and consolidated financial statements for 2021 were prepared in accordance with the International Financial Reporting Standards/International Accounting Standards (IFRS/IAS), as endorsed by the European Union. The financial statements were prepared by applying uniform accounting policies for like transactions and other events in similar circumstances. The Company's and the FAMUR Group's financial statements were prepared in accordance with the same accounting policies and computation methods as those applied to prepare the most recent full-year financial statements. Unless stated otherwise, all amounts are presented in PLN million (PLNm).
Signatures of members of the Management Board of FAMUR S.A.
Mirosław Bendzera
Beata Zawiszowska
Dawid Gruszczyk
Tomasz Jakubowski
Ireneusz Kazimierski
CONSOLIDATED FINANCIAL STATEMENTS OF THE FAMUR GROUP FOR 2021
I. CONSOLIDATED FINANCIAL STATEMENTS OF THE FAMUR GROUP
1. Consolidated statement of profit or loss of the FAMUR Group
| PLN million, except for earnings per share | 12 months to Dec 31 2021 | 12 months to Dec 31 2020 |
| Revenue | 1,050 | 1,139 |
| Cost of sales | 720 | 752 |
| Gross profit | 330 | 387 |
| Distribution costs | 38 | 22 |
| Administrative expenses | 117 | 107 |
| Other income | 29 | 79 |
| Other expenses | 70 | 98 |
| Operating profit | 134 | 239 |
| Gains (losses) on expected credit loss allowances | 2 | 4 |
| Finance income | 38 | 38 |
| Finance costs | 23 | 34 |
| Gains (losses) recognised when control of subsidiary is lost | 0 | 14 |
| Share in net profit (loss) of equity | 4 | -9 |
| goodwill impairment loss | 95 | 0 |
| Profit before tax | 60 | 252 |
| Income taxes | 35 | 64 |
| Net profit from continuing operations | 25 | 188 |
| Discontinued operations | 0 | 2 |
| Net profit, attributable to: | 25 | 190 |
| owners of the parent | 34 | 185 |
| non-controlling interests | -9 | 5 |
| Earnings per share | ||
| Earnings per ordinary share (PLN) | 0.04 | 0.33 |
| Diluted earnings per ordinary share (PLN) | 0.04 | 0.33 |
2. Consolidated statement of comprehensive income of the FAMUR Group
| (PLN million) | 12 months to Dec 31 2021 | 12 months to Dec 31 2020 |
| Net profit | 25 | 190 |
| Other comprehensive income that may be reclassified to profit or loss in subsequent reporting periods: | 3 | -19 |
| Cash flow hedges | -1 | -3 |
| Exchange differences | 4 | -16 |
| Other comprehensive income that will not be reclassified to profit or loss in subsequent reporting periods: | 1 | 2 |
| Actuarial gains (losses) | 1 | 2 |
| Total other comprehensive income, net of tax | 4 | -17 |
| Total comprehensive income | 29 | 173 |
| including income attributable to owners of the parent | 38 | 168 |
| including income attributable to non-controlling interests | -9 | 5 |
3. Consolidated statement of financial position of the FAMUR Group
| (PLN million) | Dec 31 2021 | Dec 31 2020 |
| Non-current assets | 599 | 774 |
| Goodwill | 67 | 162 |
| Other intangible assets | 17 | 23 |
| Property, plant and equipment | 374 | 441 |
| Long-term receivables | 1 | 2 |
| Investment property | 56 | 62 |
| Investments in subsidiaries and associates | 38 | 37 |
| Other non-current financial assets | 8 | 8 |
| Deferred tax assets | 38 | 39 |
| Current assets | 2,621 | 1,718 |
| Current assets other than assets classified as held for sale | 2,556 | 1,655 |
| Inventories | 583 | 229 |
| Short-term trade and other receivables | 519 | 520 |
| Current tax assets | 35 | 5 |
| Other current financial assets | 86 | 2 |
| Cash and cash equivalents | 1,333 | 899 |
| Non-current assets classified as held for sale | 65 | 63 |
| Total assets | 3,220 | 2,492 |
| (PLN million) | Dec 31 2021 | Dec 31 2020 |
| Equity | 1,881 | 1,682 |
| Share capital | 6 | 6 |
| Other components of equity | 1,091 | 910 |
| Retained earnings | 624 | 794 |
| Equity attributable to owners of the parent | 1,721 | 1,710 |
| Equity attributable to non-controlling interests | 160 | -28 |
| Liabilities | 1,339 | 810 |
| Non-current liabilities | 670 | 468 |
| Long-term provisions | 20 | 30 |
| Deferred tax liabilities | 2 | 1 |
| Other non-current financial liabilities | 648 | 437 |
| Long-term trade and other payables | 0 | 0 |
| Current liabilities | 669 | 342 |
| Current liabilities other than liabilities included in disposal groups classified as held for sale | 657 | 330 |
| Short-term provisions | 23 | 21 |
| Short-term trade and other payables | 371 | 266 |
| Current tax liabilities | 1 | 1 |
| Other current financial liabilities | 262 | 42 |
| Liabilities included in disposal groups classified as held for sale | 12 | 12 |
| Equity and liabilities | 3,220 | 2,492 |
4. Consolidated statement of changes in equity of the FAMUR Group
| Share capital | Other capital reserves | Retained earnings | Equity attributable to owners of the parent | Equity attributable to non-controlling interests | Total equity | |
| Jan 1 2021 | 6 | 910 | 794 | 1,710 | -28 | 1,682 |
| Net profit | 0 | 0 | 34 | 34 | -9 | 25 |
| other comprehensive income | 0 | 3 | 1 | 4 | 0 | 4 |
| total comprehensive income | 0 | 3 | 35 | 38 | -9 | 29 |
| transfer of profit to statutory reserve funds and other reserves | 0 | 178 | -178 | 0 | 0 | 0 |
| Increase (decrease) due to changes in ownership interests in subsidiaries that do not result in loss of control, equity | 0 | 0 | -27 | -27 | 197 | 170 |
| changes in equity in the period | 0 | 181 | -170 | 11 | 188 | 199 |
| Dec 31 2021 | 6 | 1091 | 624 | 1,721 | 160 | 1,881 |
| Share capital | Other capital reserves | Retained earnings | Equity attributable to owners of the parent | Equity attributable to non-controlling interests | Total equity | |
| Jan 1 2020 | 6 | 756 | 795 | 1,557 | -46 | 1,511 |
| Net profit | 0 | 0 | 185 | 185 | 5 | 190 |
| other comprehensive income | 0 | -19 | 2 | -17 | 0 | -17 |
| total comprehensive income | 0 | -19 | 187 | 168 | 5 | 173 |
| transfer of profit to statutory reserve funds and other reserves | 0 | 173 | -173 | 0 | 0 | 0 |
| Increase (decrease) due to changes in ownership interests in subsidiaries that do not result in loss of control, equity | 0 | 0 | -15 | -15 | 13 | -2 |
| changes in equity in the period | 0 | 154 | -1 | 153 | 18 | 171 |
| Dec 31 2020 | 6 | 910 | 794 | 1,710 | -28 | 1,682 |
5. Consolidated statement of cash flows of the FAMUR Group
| (PLN million) | 12 months to Dec 31 2021 | 12 months to Dec 31 2020 |
| Cash flows from operating activities - indirect method | ||
| Profit before tax | 60 | 252 |
| Total adjustments, including | 186 | 470 |
| inventories | -129 | 46 |
| trade receivables | 62 | 485 |
| other operating receivables | -142 | -51 |
| trade payables | 64 | -144 |
| other operating payables | 45 | -15 |
| depreciation and amortisation | 180 | 177 |
| impairment loss (reversal of impairment loss) recognised in profit or loss | 0 | 7 |
| provisions | 20 | -28 |
| exchange differences | 7 | -9 |
| undistributed profits of associates | -4 | 9 |
| (gain) loss on disposal of non-current assets | 62 | -25 |
| Other adjustments producing cash effects in the form of investing or financing cash flow | 19 | 19 |
| other adjustments to reconcile profit (loss) | 2 | -1 |
| total gross profit and adjustments | 246 | 722 |
| Income tax paid (refunded) | 37 | 82 |
| Net cash from operating activities | 209 | 640 |
| Cash flows from investing activities | ||
| Cash flows from losing control of subsidiaries | 0 | -19 |
| Proceeds from sale of property, plant and equipment | 28 | 35 |
| Purchase of property, plant and equipment | 111 | 157 |
| Purchase of intangible assets | 1 | 5 |
| Cash advances and loans to third parties | 125 | 0 |
| Cash receipts from repayment of advances and loans to third parties | 44 | 32 |
| Dividends received | 2 | 3 |
| Interest received | 1 | 0 |
| Other inflows (outflows) of cash | 24 | 6 |
| Net cash from investing activities | -138 | -105 |
| Cash flows from financing activities | ||
| Proceeds from changes in ownership interests in subsidiaries that do not result in loss of control | 34 | 0 |
| Proceeds from borrowings | 400 | 23 |
| Repayment of borrowings | 54 | 244 |
| Payment of lease liabilities | 9 | 5 |
| Interest paid | 9 | 10 |
| Net cash from financing activities | 362 | -236 |
| Increase (decrease) in cash and cash equivalents before effect of exchange rate changes | 433 | 299 |
| Effect of exchange rate changes on cash and cash equivalents | 1 | -2 |
| Increase (decrease) in cash and cash equivalents | 434 | 297 |
| Cash and cash equivalents at beginning of period | 899 | 602 |
| Cash and cash equivalents at end of period | 1,333 | 899 |
II. ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS
1. General information
Name: Grupa FAMUR Spółka Akcyjna
Country of incorporation: Poland
Registered office: Katowice 40-698, ul. Armii Krajowej 51. Poland
Registered address: Katowice 40-698, ul. Armii Krajowej 51
Principal business: manufacture of machinery for mining, quarrying and construction (PKD 28.92 A)
Principal place of business: Poland
Registry court: District Court of Katowice, Commercial Division of the National Court Register; the Company is registered under No. KRS 0000048716
Duration of the entity: unlimited
Reporting period: January 1st - December 31st 2021
TDJ Equity I Sp. z o.o. is the parent of FAMUR S.A. TDJ S.A. is the ultimate parent.
Explanation of change in name of reporting entity or other means of identification from end of preceding reporting period: none.
Name of ultimate parent of group: TDJ S.A..
2. Composition of the Management Board
As at December 31st 2021, the composition of the Management Board was as follows:
Mirosław Bendzera President of the Management Board
Beata Zawiszowska Vice President of the Management Board, Chief Financial Officer
Dawid Gruszczyk Vice President of the Management Board, Sales
Tomasz Jakubowski Vice President of the Management Board, Chief Operating Officer, Underground Segment
Ireneusz Kazimierski Vice President of the Management Board, Business Development
As at December 31st 2020, the composition of the Management Board was as follows:
Mirosław Bendzera President of the Management Board
Beata Zawiszowska Vice President of the Management Board, Chief Financial Officer
Dawid Gruszczyk Vice President of the Management Board, Underground Segment Domestic Sales
Tomasz Jakubowski Vice President of the Management Board, Chief Operating Officer, Underground Segment
Ireneusz Kazimierski Vice President of the Management Board, Business Development
Adam Toborek * Vice President of the Management Board, Underground Segment Export Sales
* until June 14th 2021.
3. Authorisation of consolidated financial statements
The Management Board authorised these consolidated financial statements for issue on April 11th 2022.
4. Estimates and subjective judgement
4.1. Estimates
The preparation of financial statements requires that the Group's Management Board makes estimates. The Management Board reviews such estimates taking into account changes in the underlying factors, new information or past experience.
4.2. Subjective judgement
Where a given transaction does not fall within the scope of any standard or interpretation, the Management Board relies on its subjective judgement in the choice and application of accounting policies to ensure that the financial statements contain reliable information that gives a true, clear and fair view of the Group's assets, financial position, results of operations and cash flows. A subjective judgement is made to ensure that the financial statements reflect the economic substance of transactions, are objective, prepared in accordance with the principle of prudent valuation, and complete in all material respects.
4.3. Uncertainty related to tax settlements
The regulations on value added tax, corporate income tax, and social security contributions are subject to frequent changes and amendments, with a resulting lack of appropriate points of reference, conflicting interpretations, and scarcity of established precedents to follow. Furthermore, the applicable tax laws lack clarity, which leads to differing opinions and diverse interpretations, both between various public authorities and between public authorities and businesses.
Tax settlements and other regulated areas of activity (e.g. customs or foreign exchange control) are subject to inspection by administrative bodies, which are authorised to impose penalties and fines, and any additional tax liabilities arising from such inspections must be paid with interest. Consequently, the tax risk in Poland is higher than in countries with more mature tax systems.
The amounts presented and disclosed in these financial statements may therefore change in the future as a result of a final decision by a tax inspection authority.
5. Basis of accounting
These financial statements have been prepared in accordance with the historical cost principle, except with respect to investment property and derivative financial instruments, which are measured at fair value.
These financial statements have been prepared based on the assumption that the Group will continue as a going concern in the foreseeable future. As at the date of authorisation of these financial statements for issue, circumstances related to the coronavirus crisis were identified, which could affect the Group's ability to continue as a going concern. The Management Board has analysed the situation in the context of the COVID-19 pandemic and, based on the considered scenarios, as regards liquidity, financing and continuity of operations, it has not identified any risk for the Group continuing as a going concern in the foreseeable future, also taking into account the events described in the note 'Events after the reporting date'.
Material accounting policies are presented in the individual notes to these financial statements. The Group applied the accounting policies consistently to all reporting periods presented.
5.1. Statement of compliance
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as endorsed by the European Union (EU IFRSs). As at the date of authorisation of these financial statements for issue, taking into account the ongoing process of adopting IFRSs in the EU, there were no material differences between the IFRSs applied in these financial statements and the EU IFRSs.
The EU IFRSs comprise standards and interpretations approved by the International Accounting Standards Board ("IASB").
5.2. Functional and reporting currency
The Group's consolidated financial statements are presented in the Polish złoty (PLN), which is the parent's functional currency. For each subsidiary, the functional currency is determined separately, and assets and liabilities of the subsidiary are measured in that functional currency. The Group's presentation currency in these consolidated financial statements is the Polish zloty.
The data presented in these consolidated financial statements is expressed in millions of złoty, unless stated otherwise.
6. Basis of consolidation
These consolidated financial statements include the separate financial statements of the parent and the financial statements of its subsidiaries. These consolidated financial statements of the FAMUR Group have been prepared using the full consolidation method.
In preparing consolidated financial statements, the financial statements of the parent and its subsidiaries are combined on a line-by-line basis by adding together like items of assets, liabilities, equity, income and expenses.
All transactions, balances, income and expenses resulting from dealings between consolidated related entities are eliminated on consolidation.
The following steps are taken so that the consolidated financial statements present financial information about the Group as a single economic entity:
| • |
The carrying amount of the parent's investment in each subsidiary and the parent's portion of equity of each subsidiary are eliminated; |
| • |
Non-controlling interests in the net profit or loss of consolidated subsidiaries for the reporting period are identified; |
| • |
Non-controlling interests in the net assets of consolidated subsidiaries are identified and presented separately from the parent's ownership interest in such net assets. |
A non-controlling interest in net assets includes:
The amount of non-controlling interests on the original business combination date, calculated in accordance with IFRS 3, and changes in equity attributable to non-controlling interests from the business combination date.
7. Material accounting policies
7.1. Application of new and revised standards
The accounting policies applied in the preparation of these financial statements are consistent with the policies applied in the preparation of the Group's financial statements for the year ended December 31st 2020, except for the application of new or revised standards and interpretations effective for annual periods beginning on or after January 1st 2021.
On January 1st 2021, the following amendments to standards came into force:
| ― |
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16: Interest Rate Benchmark Reform - Phase 2 (issued on August 27th 2020), |
| ― |
Amendments to IFRS 4, moving the date of the end of the temporary exemption period from the application of IFRS 9 from January 1st 2021 to January 1st 2023. |
The amendments listed above had no material effect on these financial statements.
8. New standards and interpretations which have been issued but are not yet effective
The following standards and interpretations have been issued by the International Accounting Standards Board, but are not yet effective:
| ― |
IFRS 14 Regulatory Deferral Accounts (issued on January 30th 2014) − pursuant to the European Commission's decision, the process leading to the approval of a preliminary version of the standard will not be initiated until its final version is published; not endorsed by the EU by the date of authorisation of these financial statements for issue; effective for annual periods beginning on or after January 1st 2016; |
| ― |
Amendments to IFRS 10 and IAS 28: Sale or contribution of assets between an investor and its associate or joint venture (issued on September 11th 2014) − work leading to approval of the amendments was postponed by the EU for an indefinite period; the effective date was deferred by the IASB for an indefinite period; |
| ― |
IFRS 17 Insurance Contracts (issued on May 18th 2017) including Amendments to IFRS 17 (issued on June 25th 2020) − not endorsed by the EU by the date of authorisation of these financial statements for issue; effective for annual periods beginning on or after January 1st 2023; |
| ― |
Amendments to IAS 1: Presentation of Financial Statements - Classification of Liabilities as Current or Non-Current - Deferral of Effective Date (issued on January 23rd 2020 and July 15th 2020, respectively) − not endorsed by the EU by the date of authorisation of these financial statements for issue − effective for annual periods beginning on or after January 1st 2023; |
| ― |
Amendments to IFRS 3 Reference to the Conceptual Framework (issued on May 14th 2020) − effective for annual periods beginning on or after January 1st 2022; |
| ― |
Amendments to IAS 16 Property, Plant and Equipment: Proceeds before Intended Use (issued on May 14th 2020) - effective for annual periods beginning on or after January 1st 2022; |
| ― |
Amendments to IAS 37 Onerous contracts - Cost of Fulfilling a Contract (issued on May 14th 2020) − effective for annual periods beginning on or after January 1st 2022; |
| ― |
Annual Improvements to IFRS Standards 2018-2020 (issued on May 14th 2020) - effective for annual periods beginning on or after January 1st 2022; |
| ― |
Amendments to IAS 1 - Disclosure of Accounting Policies, and IAS 8 - Definition of Accounting Estimates. The amendments were issued on February 12th 2021 and are effective for annual periods beginning on or after January 1st 2023. The purpose of the amendments is to highlight the importance of disclosing material accounting policies and to clarify the distinction between a change in an accounting policy and a change in an accounting estimate. Not endorsed by the EU by the date of authorisation of these financial statements. |
| ― |
Amendments to IAS 8: Definition of Accounting Estimates (issued on February 12th 2021) - effective for annual periods beginning on or after January 1st 2023; not endorsed by the EU by the date of authorisation of these financial statements for issue. |
| ― |
Amendments to IAS 12: Deferred Tax related to Assets and Liabilities arising from a Single Transaction (issued on May 7th 2021) - not yet endorsed by EU as at the date of authorisation of these financial statements - effective for annual periods beginning on or after January 1st 2023. |
| ― |
Amendments to IFRS 17 Insurance Contracts: Initial Application of IFRS 17 and IFRS 9 - Comparative Information (issued on December 9th 2021) - not endorsed by the EU as at the date of authorisation of these financial statements for issue - effective for annual periods beginning on or after January 1st 2023. |
Effective dates are the dates given by the International Accounting Standards Board in the standards. The effective dates of the standards in the European Union may differ from those specified in the text of the standards and are announced on endorsement of a standard by the European Union.
In these financial statements, the Group did not elect to early apply the standards or interpretations issued prior to their effective date and does not apply the standards published by the International Accounting Standards Board or the International Financial Reporting Interpretations Committee and not endorsed by the European Union.
At the date of authorisation of these financial statements for issue, the Management Board had not completed its assessment of the effect of other standards and interpretations on the accounting policies applied by the Group with respect to its operations or financial results. However, the Management Board believes that the aforementioned amendments will have no material effect on the Group's financial statements.
9. Organisational structure of the Famur Group as at December 31st 2021
| Company |
FAMUR S.A.'s interest (held indirectly and directly)
(%) |
Interest of entity exercising direct control
(%) |
Name of entity exercising direct control | Registered office, country |
| Subsidiaries | ||||
| Famur Institute Sp. z o.o. | 100.0 | Katowice, Poland | ||
| Famur Finance Sp. z o.o. | 100.0 | Katowice, Poland | ||
| Famur INVEST Sp. z o.o. | 100.0 | 100.0 | Famur Finance Sp. z o.o. | Katowice, Poland |
| Famur Finance & Restructuring Sp. z o.o. | 100.0 | Katowice, Poland | ||
| Elgór+Hansen S.A. | 100.0 | 83.6 | Hansen Sicherheitstechnik AG | Chorzów, Poland |
| De Estate Sp. z o.o. | 100.0 | Katowice, Poland | ||
| Ex-Coal Sp. z o.o. | 100.0 | Katowice, Poland | ||
| Polskie Maszyny Górnicze S.A. | 100.0 | Katowice, Poland | ||
| EXPO Katowice S.A. (formely: Polska Technika Górnicza S.A.) | 33.3 | Katowice, Poland | ||
| EXC FMF Sp. z o.o. | 100.0 | Katowice, Poland | ||
| Invest PV 1 Sp. z o.o. | 100.0 | Katowice, Poland | ||
| INVEST PV 56 Sp. z o.o. | 100.0 | Warsaw, Poland | ||
| INVEST PV 57 Sp. z o.o. | 100.0 | Warsaw, Poland | ||
| INVEST PV 58 Sp. z o.o. | 100.0 | Warsaw, Poland | ||
| INVEST PV 46 Sp. z o.o. | 100.0 | Kraków, Poland | ||
| INVEST PV 47 Sp. z o.o. | 100.0 | Kraków, Poland | ||
| INVEST PV 48 Sp. z o.o. | 100.0 | Kraków, Poland | ||
| Famur Solar Sp. z o.o. (composition of the FAMUR SOLAR Group is presented in the tables below) | 51.0 | Katowice, Poland | ||
| Stadmar Sp. z o.o. | 50.0 | Radziszów, Poland | ||
| Primetech S.A. | 81.2 | Katowice, Poland | ||
| Śląskie Towarzystwo Wiertnicze Dalbis Sp. z o.o. | 81.2 | 100.0 | Primetech S.A. | Tarnowskie Góry, Poland |
| OOO Famur Rosja | 100.0 | Novokuznetsk, Russia | ||
| TOO Famur Kazachstan | 100.0 | Karaganda, Kazakhstan | ||
| Kopex-Min A.D. | 100.0 | Niš, Serbia | ||
| Dams GMBH | 100.0 | Velbert, Germany | ||
| Hansen Sicherheitstechnik AG | 100.0 | Munich, Germany | ||
| PT. Kopex Mining Contractors | 100.0 | Jakarta, Indonesia | ||
| Kopex Africa Pty Ltd. | 100.0 | 100.0 | Hansen Sicherheitstechnik AG | Benoni, South Africa |
| Hansen And Genwest Pty Ltd. | 74.9 | 74.9 | Kopex Africa Pty Ltd. | Benoni, South Africa |
| Air Reliant Pty Ltd. | 74.9 | 100.0 | Hansen And Genwest Pty Ltd. | Benoni, South Africa |
| Shandong Tagao Mining Equipment Manufacturing Co. Ltd. | 50.0 | Tai'an, China | ||
| Taian Famur Coal Mining Machinery Co., Ltd. | 100.0 | Tai'an, China | ||
| Associates | ||||
| Famak S.A. | 31.9 | Kluczbork, Poland | ||
| Fmk Engineering Sp. z o.o. | 31.9 | 100.0 | Famak S.A. | Kluczbork, Poland |
| Mining Equipment Finance Sp. z o.o. | 51.0 | Katowice, Poland | ||
| Famak India Private Limited | 2.9 | 10.0 | Famak S.A. | New Delhi, India |
Composition of the Famur Solar Group as at December 31st 2021 (direct interest of Famur Solar in the PST Group was 51%)
| Company |
FAMUR S.A.'s interest (held indirectly and directly)
(%) |
KRS NO. | Registered office, country |
| Projekt-Solartechnik S.A. | 26 | 834759 | Tomaszów Mazowiecki, Poland |
| PST Service Sp. z o.o. | 26 | 912684 | Tomaszów Mazowiecki, Poland |
| Sun Deal Sp. z o.o. | 26 | 824863 | Tomaszów Mazowiecki, Poland |
| Projekt-Solartechnik Group Sp. z o.o. | 26 | 468833 | Tomaszów Mazowiecki, Poland |
| PST MOUNTING SYSTEMS Sp. z o.o. | 26 | 846378 | Tomaszów Mazowiecki, Poland |
| Projekt-Solartechnik Dystrybucja Sp. z o.o. | 26 | 850401 | Tomaszów Mazowiecki, Poland |
| Projekt-Solartechnik Development Sp. z o.o. | 18 | 819926 | Tomaszów Mazowiecki, Poland |
| P+S Energooszczędni Sp. z o.o. | 17 | 701159 | Czerniewice, Poland |
| PV PROJEKT HUB Sp. z o.o. | 26 | 905061 | Tomaszów Mazowiecki, Poland |
| PV PROJEKT STARA RUDNA Sp. z o.o. | 18 | 885615 | Wrocław, Poland |
| PV DASZYNA Sp. z o.o. | 18 | 896299 | Łódź, Poland |
| Solar Energia 4 Sp. z o.o. | 18 | 580709 | Nadarzyn, Poland |
| MM Solartechnik Sp. z o.o. | 26 | 842926 | Warsaw, Poland |
| PV OLEŚNICA Sp. z o.o. | 26 | 896238 | Tomaszów Mazowiecki, Poland |
| PST Projekt Solartechnik GmbH | 26 | Germany |
Projekt Solartechnik Fund Fundusz Inwestycyjny Zamknięty ("FUND"), in which Famur Solar holds 371 investment certificates (51%) - as at Dec 31 2021
| Company |
FAMUR S.A.'s interest (held indirectly and directly)
(%) |
KRS NO. | Registered office |
| Invest PV 2 Sp. z o.o. | 26.0 | 879450 | Katowice, Poland |
| Invest PV 3 Sp. z o.o. | 26.0 | 879476 | Katowice, Poland |
| Invest PV 4 Sp. z o.o. | 26.0 | 879446 | Katowice, Poland |
| Invest PV 5 Sp. z o.o. | 26.0 | 879527 | Katowice, Poland |
| Invest PV 6 Sp. z o.o. | 26.0 | 879522 | Katowice, Poland |
| Invest PV 7 Sp. z o.o. | 26.0 | 879452 | Katowice, Poland |
| Invest PV 8 Sp. z o.o. | 26.0 | 879457 | Katowice, Poland |
| Invest PV 9 Sp. z o.o. | 26.0 | 879416 | Katowice, Poland |
| Invest PV 10 Sp. z o.o. | 26.0 | 879455 | Katowice, Poland |
| Invest PV 11 Sp. z o.o. | 26.0 | 840444 | Katowice, Poland |
| Invest PV 12 Sp. z o.o. | 26.0 | 829093 | Katowice, Poland |
| Invest PV 13 Sp. z o.o. | 26.0 | 507743 | Katowice, Poland |
| Polska Energia Słoneczna Sp. z o.o. | 26.0 | 839412 | Poznań, Poland |
| PV Koryta Sp. z o.o. | 26.0 | 854946 | Łódź, Poland |
| PV Ostrowąsy Sp. z o.o. | 13.5 | 852418 | Łódź, Poland |
| PV Projekty Piotrowice sp. o.o. | 26.0 | 859386 | Wrocław, Poland |
| PV Projekt Strupina Sp. z o.o. | 26.0 | 858773 | Wrocław, Poland |
| PV Skrzypaczowice Dziemiony Sp. z o.o. | 26.0 | 833844 | Kokoszczyn, Poland |
| Invest PV 16 Sp. z o.o. | 26.0 | 772495 | Rzeszów, Poland |
| Invest PV 15 Sp. z o.o. | 26.0 | 773957 | Katowice, Poland |
| Invest PV 14 Sp. z o.o. | 26.0 | 824366 | Katowice, Poland |
| Invest PV 17 Sp. z o.o. | 26.0 | 850482 | Katowice, Poland |
| Invest PV 18 Sp. z o.o. | 26.0 | 446948 | Katowice, Poland |
| Invest PV 19 Sp. z o.o. | 26.0 | 730449 | Katowice, Poland |
| Invest PV 20 Sp. z o.o. | 26.0 | 522095 | Katowice, Poland |
| Invest PV 21 Sp. z o.o. | 26.0 | 387119 | Katowice, Poland |
| Invest PV 22 Sp. z o.o. | 26.0 | 443003 | Katowice, Poland |
| Invest PV 23 Sp. z o.o. | 26.0 | 461180 | Katowice, Poland |
| Invest PV 25 Sp. z o.o. | 26.0 | 435841 | Katowice, Poland |
| Invest PV 26 Sp. z o.o. | 26.0 | 842906 | Katowice, Poland |
| Invest PV 27 Sp. z o.o. | 26.0 | 728459 | Katowice, Poland |
| Invest PV 28 Sp. z o.o. | 26.0 | 852249 | Katowice, Poland |
| Invest PV 29 Sp. z o.o. | 26.0 | 714293 | Katowice, Poland |
| Invest PV 30 Sp. z o.o. | 26.0 | 777797 | Katowice, Poland |
| Invest PV 31 Sp. z o.o. | 26.0 | 445980 | Katowice, Poland |
| Resnet 1 Sp. z o.o. | 26.0 | 873926 | Wrocław, Poland |
| Elektrownia PV Grylewo Sp. z o.o. | 26.0 | 675195 | Wrocław, Poland |
| Invest PV 32 Sp. z o.o. | 26.0 | 796747 | Katowice, Poland |
| Invest PV 33 Sp. z o.o. | 26.0 | 796684 | Katowice, Poland |
| Invest PV 34 Sp. z o.o. | 26.0 | 440454 | Katowice, Poland |
| Invest PV 35 Sp. z o.o. | 26.0 | 425274 | Katowice, Poland |
| Invest PV 36 Sp. z o.o. | 26.0 | 440047 | Katowice, Poland |
| Invest PV 37 Sp. z o.o. | 26.0 | 734704 | Katowice, Poland |
| Invest PV 38 Sp. z o.o. | 26.0 | 569871 | Katowice, Poland |
| Invest PV 39 Sp. z o.o. | 26.0 | 844431 | Katowice, Poland |
| Invest PV 24 Sp. z o.o. | 26.0 | 460404 | Katowice, Poland |
| P+S SPV 2 Sp. z o.o. | 26.0 | 864853 | Tomaszów Mazowiecki, Poland |
| P+S SPV 3 Sp. z o.o. | 26.0 | 864856 | Tomaszów Mazowiecki, Poland |
| P+S SPV 4 Sp. z o.o. | 26.0 | 864838 | Tomaszów Mazowiecki, Poland |
| P+S SPV 5 Sp. z o.o. | 26.0 | 873181 | Tomaszów Mazowiecki, Poland |
| P+S SPV 6 Sp. z o.o. | 26.0 | 873127 | Tomaszów Mazowiecki, Poland |
| Invest PV 49 Sp. z o.o. | 26.0 | 917556 | Katowice, Poland |
| Invest PV 50 Sp. z o.o. | 26.0 | 918131 | Katowice, Poland |
| Invest PV 51 Sp. z o.o. | 26.0 | 918031 | Katowice, Poland |
| Invest PV 52 Sp. z o.o. | 26.0 | 918084 | Katowice, Poland |
| Invest PV 53 Sp. z o.o. | 26.0 | 918067 | Katowice, Poland |
| Invest PV 54 Sp. z o.o. | 26.0 | 918068 | Katowice, Poland |
| Invest PV 55 Sp. z o.o. | 26.0 | 918111 | Katowice, Poland |
Changes in the composition of the Group in the reporting period:
| • |
Kopex MIN Fitip (register number: 07583168) was dissolved and deleted from the National Court Register on January 12th 2021, following a resolution to that effect passed by the company's Extraordinary General Meeting on November 6th 2020. |
| • |
WAMAG Sp. z o.o. w likwidacji w upadłości (in liquidation bankruptcy) (National Court Register No.: 0000060368) was deleted from the National Court Register on January 5th 2021, after the decision of the District Court in Wałbrzych, 6th Commercial Division, case No. VI GUp 84/16, dated June 9th 2020, to close the company's bankruptcy proceedings had been carried into effect. |
| • |
On May 19th 2021, the District Court for Katowice-Wschód in Katowice entered EXC FMF Sp. z o.o. (wholly-owned by FAMUR S.A.) in the National Court Register. |
| • |
On June 15th 2021, the District Court for Katowice-Wschód in Katowice entered Famur Solar Sp. z o.o. (51% owned by Famur S.A. and 49% owned by TDJ S.A.) in the National Court Register. |
| • |
On June 24th 2021, the Management Board of the Central Securities Depository of Poland (CSDP) passed resolution No. 844/2021 to grant Projekt Solartechnik Fund Fundusz Inwestycyjny Zamknięty (the "Fund") the CSDP participation status of issuer. The Fund is controlled indirectly by Famur S.A. (51%) through its subsidiary Famur Solar Sp. z o.o. A complete list of companies contributed to the Fund as at December 31st 2021 is presented in the table on page 13 and a description of the PV segment in the FAMUR Group is presented on page 17 of the Directors' Report on the operations of the FAMUR Group and FAMUR S.A. in 2021 on page 17. |
| • |
On July 8th 2021 FAMUR S.A. acquired 100% of the shares in SH32 Sp. z o.o., SH22 Sp. z o.o. and SH16 Sp. z o.o. |
| • |
Following acquisition by FAMUR of a 50% interest in PV Koryta Sp. z o.o. on July 12th 2021, the Company's interest in that company reached 100%. On July 26th 2021, FAMUR S.A. sold 50% of shares in PV Koryta Sp. z o.o. to Projekt Solartechnik Fund Fundusz Inwestycyjny Zamknięty and as at the date of issue of this report holds 50% of shares in PV Koryta Sp. z o.o. |
| • |
On July 20th 2021 and September 17th 2021, FAMUR SOLAR Sp. z o.o. and Maciej Marcjanik concluded agreements for the sale to FAMUR SOLAR Sp. z o.o. of some of series A and B shares of Projekt-Solartechnik S.A. ("PST"). Furthermore, on September 16th 2021 FAMUR SOLAR Sp. z o.o and PST signed an agreement on subscription by FAMUR SOLAR Sp. z o.o of new Series C shares in PST. On November 10th 2021, an increase in the share capital of PST following the issue of Series C shares was registered and as of that day FAMUR SOLAR's equity interest in PST is 51%. |
| • |
On August 6th and August 9th 2021, FAMUR S.A. acquired 100% of the shares in SPP Wytwarzanie 3 Sp. z o.o. and SPP Wytwarzanie 35 Sp. z o.o. |
| • |
on 16 and September 17th 2021 FAMUR S.A. acquired 100% of shares in SPP Wytwarzanie 38 Sp. z o.o. |
| • |
On September 22nd 2021, FAMUR sold 14% of shares in Anhui Long Po Electrical Co., Ltd., following which its equity interest in the company fell to 6%.Subsequently, the sale of the remaining 6% interest was registered on October 18th 2021, followed by the formal removal of the existing shareholder from the register on October 22nd 2021. As at the reporting date, Anhui Long Po Electrical Co., Ltd. was not part of the Issuer's Group. |
| • |
On October 22nd 2021, the FUND purchased from TDJ Legal Morawiec sp.k. seven companies, i.e., Invest PV 49 - 55 Sp. z o.o. |
| • |
On December 9th 2021, FAMAK S.A. sold 100% of shares in Pemug Sp. z o.o. in restructuring ("Pemug") to a buyer outside the FAMUR Group. As a result, Biprocemwam S.A. and BPiRI Separator Sp. z o.o., both directly controlled by Pemug, were also removed from the Group. |
| • |
Pursuant to a decision of the District Court for Katowice-Wschód of Katowice, 8th Commercial Division of the National Court Register, dated December 16th 2021, Polska Technika Górnicza S.A. changed its name to EXPO Katowice S.A. (KRS No. 0000008533) |
| • |
On December 22nd 2021, FAMAK S.A. sold 90% of shares in Famak India Private Limited to a buyer outside the FAMUR Group, thus reducing its interest in the company to 10%. |
Changes in the composition of the Group after the reporting date:
| • |
On January 3rd 2022, the Extraordinary General Meeting of Mining Equipment Finance Sp. z o.o. held in Warsaw passed a resolution to dissolve the company and open its liquidation. As of January 3rd 2022, the company's name includes the words 'in liquidation' and trades as Mining Equipment Finance Sp. z o.o. w likwidacji (in liquidation). |
| • |
On February 8th 2022, the Extraordinary General Meeting of Polskie Maszyny Górnicza S.A. passed a resolution to dissolve the company and open its liquidation. |
| • |
On March 28th 2022, following reduction in the share capital of Hansen Sicherheitstechnik AG, a subsidiary of the Company, in exchange for compensation in kind in the form of shares in Kopex Africa (Pty) Ltd, 100% of shares in Kopex Africa Pty Ltd. were transferred to FAMUR S.A. |
10. Consolidated entities as at December 31st 2021
| Company | ||
| Famur S.A. | Projekt-Solartechnik Development Sp. z o.o. | Invest PV 21 Sp. z o.o. |
| Famur Finance Sp. z o.o. | P+S Energooszczędni Sp. z o.o. | Invest PV 22 Sp. z o.o. |
| Famur INVEST Sp. z o.o. | PV PROJEKT HUB Sp. z o.o. | Invest PV 23 Sp. z o.o. |
| Famur Finance & Restructuring Sp. z o.o. | PV PROJEKT STARA RUDNA Sp. z o.o. | Invest PV 25 Sp. z o.o. |
| Elgór+Hansen S.A. | PV DASZYNA Sp. z o.o. | Invest PV 26 Sp. z o.o. |
| De Estate Sp. z o.o. | Solar Energia 4 Sp. z o.o. | Invest PV 27 Sp. z o.o. |
| Ex-Coal Sp. z o.o. | MM Solartechnik Sp. z o.o. | Invest PV 28 Sp. z o.o. |
| Polskie Maszyny Górnicze S.A. | PV OLEŚNICA Sp. z o.o. | Invest PV 29 Sp. z o.o. |
| EXC FMF Sp. z o.o. | PST Projekt Solartechnik GmbH | Invest PV 30 Sp. z o.o. |
| Invest PV 1 Sp. z o.o. | Invest PV 2 Sp. z o.o. | Invest PV 31 Sp. z o.o. |
| INVEST PV 56 Sp. z o.o. | Invest PV 3 Sp. z o.o. | Resnet 1 Sp. z o.o. |
| INVEST PV 57 Sp. z o.o. | Invest PV 4 Sp. z o.o. | Elektrownia PV Grylewo Sp. z o.o. |
| INVEST PV 58 Sp. z o.o. | Invest PV 5 Sp. z o.o. | Invest PV 32 Sp. z o.o. |
| INVEST PV 46 Sp. z o.o. | Invest PV 6 Sp. z o.o. | Invest PV 33 Sp. z o.o. |
| INVEST PV 47 Sp. z o.o. | Invest PV 7 Sp. z o.o. | Invest PV 34 Sp. z o.o. |
| INVEST PV 48 Sp. z o.o. | Invest PV 8 Sp. z o.o. | Invest PV 35 Sp. z o.o. |
| Famur Solar Sp. z o.o. | Invest PV 9 Sp. z o.o. | Invest PV 36 Sp. z o.o. |
| Primetech S.A. | Invest PV 10 Sp. z o.o. | Invest PV 37 Sp. z o.o. |
| Śląskie Towarzystwo Wiertnicze Dalbis Sp. z o.o. | Invest PV 11 Sp. z o.o. | Invest PV 38 Sp. z o.o. |
| OOO Famur Rosja | Invest PV 12 Sp. z o.o. | Invest PV 39 Sp. z o.o. |
| TOO Famur Kazachstan | Invest PV 13 Sp. z o.o. | Invest PV 24 Sp. z o.o. |
| Kopex-Min A.D. | Polska Energia Słoneczna Sp. z o.o. | P+S SPV 2 Sp. z o.o. |
| Hansen Sicherheitstechnik AG | PV Koryta Sp. z o.o. | P+S SPV 3 Sp. z o.o. |
| PT. Kopex Mining Contractors | PV Ostrowąsy Sp. z o.o. | P+S SPV 4 Sp. z o.o. |
| Kopex Africa Pty Ltd. | PV Projekty Piotrowice sp. o.o. | P+S SPV 5 Sp. z o.o. |
| Hansen And Genwest Pty Ltd. | PV Projekt Strupina Sp. z o.o. | P+S SPV 6 Sp. z o.o. |
| Air Reliant Pty Ltd. | PV Skrzypaczowice Dziemiony Sp. z o.o. | Invest PV 49 Sp. z o.o. |
| Taian Famur Coal Mining Machinery Co., Ltd. | Invest PV 16 Sp. z o.o. | Invest PV 50 Sp. z o.o. |
| Projekt-Solartechnik S.A. | Invest PV 15 Sp. z o.o. | Invest PV 51 Sp. z o.o. |
| PST Service Sp. z o.o. | Invest PV 14 Sp. z o.o. | Invest PV 52 Sp. z o.o. |
| Sun Deal Sp. z o.o. | Invest PV 17 Sp. z o.o. | Invest PV 53 Sp. z o.o. |
| Projekt-Solartechnik Group Sp. z o.o. | Invest PV 18 Sp. z o.o. | Invest PV 54 Sp. z o.o. |
| PST MOUNTING SYSTEMS Sp. z o.o. | Invest PV 19 Sp. z o.o. | Invest PV 55 Sp. z o.o. |
| Projekt-Solartechnik Dystrybucja Sp. z o.o. | Invest PV 20 Sp. z o.o. |
11. Accounting for business combinations
11.1. Acquisition of special purpose vehicles conducting photovoltaic projects
On June 24th 2021, the Management Board of the Central Securities Depository of Poland (CSDP) passed resolution No. 844/2021 to grant Projekt Solartechnik Fund Fundusz Inwestycyjny Zamknięty (the "Fund") the CSDP participation status of issuer. The Fund is controlled indirectly by Famur S.A. (51%) through its subsidiary Famur Solar Sp. z o.o. A complete list of companies contributed to the Fund as at December 31st 2021 is presented in the table on page 15 and a description of the PV segment in the FAMUR Group is presented on page 17 of the Directors' Report on the operations of the FAMUR Group and FAMUR S.A. in 2021 on page 17. On July 28th 2021, the Fund acquired most of the special purpose vehicles, and on that date the Group assumed control of the SPVs.
When acquiring special purpose vehicles, the Fund becomes the holders of 100% of shares and voting rights in the companies.
The Group acquires special purpose vehicles through the Solartechnik Fundusz Inwestycyjny Zamknięty (closed-end investment fund). The acquired companies do not constitute a business within the meaning of IFRS 3. The Group tested the concentration of PV companies; based on the test results it was concluded that the fair value of the acquired gross assets is concentrated in a group of photovoltaic farm projects. The Group identifies acquired assets and related liabilities and allocates the purchase price to them in proportion to their fair values as at the acquisition date. As the most valuable assets of the acquired SPVs are photovoltaic farm projects that are developed and built by the Group at subsequent stages, the Group allocates the price to the value of these farms, which for the Group represent work in progress and are presented under inventories in the statement of financial position.
The Group took control of the fund's assets (special purpose vehicles) and, accordingly to its equity and voting interests, has the power over those entities, accepts exposures to variable returns from its involvement with the SPVs and has the ability affect those returns through its power over the companies.
SPEs are not a business at the time of acquisition and do not generate revenue either until the time of acquisition or at the reporting date, and their financial results are insignificant from the Group's perspective.
As of the date control was obtained over the assets of the investment fund, the following assets and liabilities were recognised:
| Category of assets and liabilities | |
| Assets | 244 |
| Non-current assets | 1 |
| Inventories (projects and expenditures on construction of photovoltaic farms) | 188 |
| Receivables | 34 |
| Cash and cash equivalents | 21 |
| Liabilities and provisions for liabilities | 165 |
| non-current liabilities | 20 |
| current liabilities | 145 |
| Recognised net assets | 79 |
The fair value of the SPVs acquired by the Fund was PLN 81 million.
11.2. Acquisition of the PST Group
On July 20th 2021 and September 17th 2021, FAMUR SOLAR Sp. z o.o. and Maciej Marcjanik concluded agreements for the sale to FAMUR SOLAR Sp. z o.o. of some of series A and B shares of Projekt-Solartechnik S.A. ("PST"). Furthermore, on September 16th 2021 FAMUR SOLAR Sp. z o.o and PST signed an agreement on subscription by FAMUR SOLAR Sp. z o.o of new Series C shares in PST. On November 10th 2021, an increase in the share capital of PST following the issue of Series C shares was registered and as of that day FAMUR SOLAR's equity interest in PST is 51%.
The Group took control of the PST group and, accordingly to its equity and voting interests, has the power over those entities, accepts exposures to variable returns from its involvement with the PST group has the ability affect those returns through its power over the companies.
As a result of the events described above, the Group obtained control over the PST Group. In accordance with IFRS 3 Business Combinations, the Group accounted for the acquisition as a result of which it recognised the following assets and liabilities at fair value:
| Category of assets and liabilities | |
| Assets | 184 |
| Non-current assets | 18 |
| Inventories (projects and expenditures on construction of photovoltaic farms) | 76 |
| Receivables | 66 |
| Cash and cash equivalents | 9 |
| Other assets | 15 |
| Liabilities and provisions for liabilities | 90 |
| provisions for liabilities | 1 |
| non-current liabilities | 9 |
| current liabilities | 80 |
| Recognised net assets | 94 |
Famur Solar, which holds 51% of the shares, has direct control over the PST Group. The purchase price determined to account for the acquisition was PLN 48 million. As a result of accounting for the acquisition, the Group recognised a gain on a bargain purchase of PLN 0.3 million, which was disclosed under Other inocme in the profit and loss account.The amount of equity attributable to non-controlling interests as at the date of acounting for the merger was PLN 70 million (including PLN 46 million attributable to non-controlling interests holding direct equity interests in the PST Group).
In 2021 until the Famur Group took control, the PST Group generated PLN 63 million in revenue with zero profit. In the period from the date the Famur Group took control to the reporting date (December 31st 2021), the PST Group generated PLN 9 million in revenue, with a loss of PLN 13 million.
12. Non-controlling interests
As a result of the acquisition, described in the note 'Accounting for business combinations', the Famur Solar Group was incorporated into the Famur Group. Famur S.A. indirectly holds 26% of the equity and voting rights in significant components of the Famur Solar Group. As at December 31st 2022, the amount of equity attributable to non-controlling interests of the Famur Solar Group was PLN 159 million, and the loss attributable to non-controlling interests and generated as part of the Famur Group in the reporting period was PLN 9 million.
13. Business segments and discontinued operations
13.1. Business segments
Until the end of 2019, the Group reported the following four business segments:
| • |
Underground - manufacture of longwall system components, roadheaders, underground means of transport, belt conveyors and supporting equipment, and provision of related services |
| • |
Surface - manufacture of loading and hoisting equipment and provision of related services, provision of design, construction and engineering services for the general mining industry |
| • |
Electrical Equipment - design and manufacture of power supply and switchgear equipment for mining machinery, electronic components, development and deployment of IT solutions, implementation of industrial automation systems, development of technical systems and devices, and integration of power and automation systems. |
| • |
Mining Services - mining design and construction services and drilling services, including surface drilling and underground drilling. |
Following the sale of Przedsiębiorstwo Budowy Szybów S.A. ("PBSz") to a buyer outside the FAMUR Group in May 2019 and the loss of control of FAMUR FAMAK S.A. (formerly Famur Famak S.A.) and its subsidiaries (the "FAMAK Group") in February 2020, these segments ceased to be considered material by the FAMUR Group. Following the sale of PBSz, the Mining Services segment's share of total revenue fell below 2% in the second half of 2019, compared with 12% in the first half of 2019 and 13% in FY2018. The loss of control of the FAMAK Group, which comprised the Surface segment, resulted in no revenue and operating expenses of the FAMAK Group recognised in the FAMUR Group's operating results since March 2020. Electrical Equipment's share of consolidated revenue in 2019 was 7%. A large portion of the segment's revenue was generated under contracts concluded by the Underground segment with its own trading partners. These changes in the ownership structure and the strong correlation of the segment's revenue with Underground operations drove a significant change in decision making concerning resource allocation, shifting reliance to consolidated operating performance. Accordingly, the Group reports one operating segment for 2020.
As a result of activities and transactions carried out in 2021, described in more detail in the Directors' Report on the operations of the Famur Group, the Group has built the PV Segment. In 2021, the PV Segment's revenue and financial results were immaterial from the Group's perspective. As the segment's profit or loss data was not analysed by the chief decision maker, the Group does not present the data for 2021. Considering that carrying amounts of the PV Segment's items of the statement of financial position were significant at year-end 2021 and that the chief decision maker analyses the relevant data, the main items of the segments' statements of financial position are presented below.
| Category of assets and liabilities | PV Segment | Mining segment | total |
| Assets | 512 | 2,708 | 3,220 |
| Non-current assets | 21 | 578 | 599 |
| Inventories (projects and expenditures on construction of photovoltaic farms) | 350 | 233 | 583 |
| Receivables | 95 | 424 | 519 |
| Cash and cash equivalents | 33 | 1,300 | 1333 |
| Other assets | 13 | 173 | 186 |
| Liabilities and provisions for liabilities | 42 | 1,297 | 1339 |
| provisions for liabilities | 2 | 20 | 22 |
| non-current liabilities | 4 | 646 | 650 |
| current liabilities | 36 | 631 | 667 |
| net assets | 470 | 1,411 | 1881 |
The Group's operations are not subject to seasonality.
13.2. Geographical segments
The Company operates in Poland, Russia, the European Union and other countries.
The table below presents the Group's markets, irrespective of the country of origin of its products and services.
| Revenue | 12 months to Dec 31 2021 | 12 months to Dec 31 2020 |
| Poland | 697 | 758 |
| Russia and CIS | 266 | 261 |
| European Union | 23 | 39 |
| Other Europe | 0 | 3 |
| Other (America, Asia, Africa, Australia) | 64 | 78 |
| Total | 1050 | 1139 |
| Total exports | 353 | 381 |
| Poland | 697 | 758 |
13.3. Major customers
In 2021, revenue from sales to two customers exceeded individually 10% of the Group's revenue. The customers are not associated with the Group. Revenue from these customers was as follows:
|
PGG S.A.: PLN 200 million |
|
|
JSW S.A.: PLN 197 million |
In 2020, revenue from sales to three customers exceeded individually 10% of the Group's revenue. The customers are not associated with the Group. Revenue from these customers was as follows:
|
PGG S.A.: PLN 342 million |
|
|
JSW S.A.: PLN 195 million |
13.4. Discontinued operations
The Famur Group identified discontinued operations. The Group discontinued operations through subsidiaries on the Serbian and Indonesian markets.
Statement of profit or loss
| Discontinued operations | 12 months to Dec 31 2021 | 12 months to Dec 31 2020 |
| Revenue | 0 | 10 |
| Cost of sales | 0 | 9 |
| Gross profit (loss) | 0 | 1 |
| Distribution costs | 0 | 0 |
| Administrative expenses | 0 | 4 |
| Profit (loss) on sales | 0 | -3 |
| Other income | 0 | 6 |
| Other expenses | 0 | 0 |
| Operating profit (loss) | 0 | 3 |
| Finance income | 0 | 0 |
| Finance costs | 0 | 1 |
| Profit (loss) before tax | 0 | 2 |
| Income taxes | 0 | 0 |
| Net profit | 0 | 2 |
Statement of cash flows
| Discontinued operations | 12 months to Dec 31 2021 | 12 months to Dec 31 2020 |
| Cash flows from operating activities | 0 | -2 |
| Cash flows from investing activities | 0 | 2 |
| Cash flows from financing activities | 0 | 0 |
| Total cash flows from discontinued operations | 0 | 0 |
14. Revenue from contracts with customers
14.1. Selected accounting policies
In accordance with IFRS 15, revenue is recognised in an amount that reflects the consideration to which the entity expects to be entitled in exchange for promised goods or services to customers.
The Group's business involves manufacturing and selling machinery.
Sales of goods
If a contract provides for only one performance obligation, i.e., the obligation to sell goods, the revenue is recognised at a specific point in time, i.e., when the customer obtains control of the goods (as a rule, upon delivery).
- Variable consideration
Some contracts with customers contain elements of variable consideration arising as a result of discounts, rebates or penalties. In accordance with IFRS 15, where a contract contains elements of variable consideration, the entity estimates the amount of variable consideration to which it will be entitled in exchange for transferring promised goods or services to a customer and includes in the transaction price the variable consideration in whole or in part only to the extent that it is highly probable that its inclusion will not result in a reversal of a significant part of previously recognised accumulated revenue when the uncertainty relating to variable consideration has been resolved.
- Warranties
The Group provides warranties for the goods it sells. Typically, warranties are issued to assure the customer that the product complies with the specification defined by the parties and are not an additional service. Consequently, most of the existing warranties are recognised in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets. Nevertheless, some non-standard contracts with customers contain extended guarantees. Under IFRS 15, an extended warranty is a separate service and is recognised as a performance obligation to which part of the transaction price is assigned.
Sale of bundles of goods or services delivered or rendered in different periods
In accordance with IFRS 15, the transaction price is allocated to each performance obligation by reference to their relative standalone selling prices.
Contracts concluded by the Group with customers are structured taking into account that the services or goods to be provided under the contract are tailored to the customer's particular needs and that the contract is irrevocable. Consequently, the Group passes control and thus satisfies the performance obligation over time. Therefore, in accordance with IFRS 15, the Group recognises revenue from the sale of services over time measuring progress towards complete satisfaction of the performance obligation using the stage of completion method. The stage of contract completion is determined based on contract costs incurred by the reporting date as proportion of estimated total contract costs.
The Group recognises revenue in correspondence with trade receivables. In accordance with IFRS 15, where a customer has paid an amount of consideration prior to the entity performing by transferring the related good or service to the customer, the entity presents the contract as a contract asset, excluding any amounts presented as receivables.
Advance payments from customers
The Group presents advance payments from customers under other current liabilities.
In accordance with IFRS 15, the Group assesses whether a contract includes a significant financing component. The Group elected to use a practical expedient, namely it does not adjust the promised amount of consideration for the effect of a significant financing component if it expects at the time of contract execution that the interval between transfer of the promised goods or services and payment by the customer will be less than 12 months. Therefore, with respect to short-term advance payments, the Group does not recognise a significant financing component.
In the case of contracts with customers for which the interval between transfer of the promised goods or services and payment by the customer is expected to be more than 12 months, the Group assumes that the contracts include a significant financing component. In the period covered by these financial statements, no such events occurred at the Group.
14.2. Presentation and disclosure requirements
The Group presents recognised revenue from contracts with customers by categories reflecting the manner in which economic factors affect the nature, amount, payment date and uncertainty of revenue and cash flows. The Group also discloses information that will enable users of its financial statements to understand the relationship between the disclosure of revenue broken down into categories and the revenue information that the Group discloses for each reportable segment.
The table below presents the distribution of revenue by the accounting standards applied by the Group.
| Revenue | 12 months to Dec 31 2021 | 12 months to Dec 31 2020 |
| Revenue from contracts with customers(IFRS 15) | 763 | 862 |
| Lease income (IFRS 16) | 287 | 277 |
| Total | 1,050 | 1,139 |
Contracts with customers for the delivery of mining machinery and equipment differ with respect to payment terms and delivery periods. As a rule, the delivery period is up to 12 months.
The table below presents revenue from contracts with customers by categories reflecting the manner in which economic factors affect the nature, amount, payment date and uncertainty of revenue and cash flows.
| Revenue from contracts with customers(IFRS 15) | 12 months to Dec 31 2021 | 12 months to Dec 31 2020 |
| Poland | 410 | 481 |
| Russia and CIS | 266 | 261 |
| European Union | 23 | 39 |
| Other Europe | 0 | 3 |
| Other (America, Asia, Africa, Australia) | 64 | 78 |
| Total | 763 | 862 |
| Revenue recognised in accordance with the percentage of completion method | 353 | 481 |
| Other revenue | 410 | 381 |
The table below presents assets and liabilities related to contract revenue
| Dec 31 2021 | Dec 31 2020 | |
| Amounts due under contracts | 66 | 107 |
| Advance payments received | 121 | 33 |
Amounts due under contracts include amounts due for the work performed as at the reporting date, calculated using the percentage of completion method.
Under outstanding contracts with customers, as at December 31st 2021 the Group had performance obligations to deliver machinery and equipment for a total amount of PLN 351 million (December 31st 2020: PLN 101 million). These deliveries will be made in:
|
the first half of 2022 - PLN 52 m, |
|
|
the second half of 2022 - PLN 191 million, |
|
|
the first quarter of 2023 - PLN 108 million. |
The contracts do not contain a significant financing component. The consideration agreed with the customers is not variable.
The amount of revenue recognised in the reporting period that was included in the opening balance of performance obligations was PLN 101 million.
Revenue recognised in 2021 and included in the balance of contract liabilities at the beginning of the period amounted to PLN 98 million.
15. Lease income
Lease income is generated under lease contracts executed with mining sector companies, relating mainly to shearer loader and roadheader leases. Lease contracts provide for daily lease rates which are not index-linked and contain no variable components. The contracts are concluded for a definite period. The lessor (Group companies) retains ownership of the leased items, and the lessee is required to return the machinery and equipment to the lessor once the lease term expires. The leased items are insured against damage. For information on the value of leased shearer loaders and roadheaders, see the note on property, plant and equipment.
The following table presents the maturity dates of the undiscounted lease payments:
| (PLN million) | As at Dec 31 2021 | As at Dec 31 2020 |
| Up to 1 year | 261 | 302 |
| 1-2 years | 89 | 138 |
| 2-3 years | 19 | 20 |
| 4-5 years | - | 1 |
| carrying amount at end of period | 369 | 461 |
16. Costs by nature of expense
| costs by nature of expense | 12 months to Dec 31 2021 | 12 months to Dec 31 2020 |
| depreciation | 180 | 177 |
| raw materials and consumables used | 320 | 358 |
| services | 131 | 130 |
| taxes and charges | 11 | 10 |
| salaries and wages | 178 | 209 |
| social security contributions and other benefits | 43 | 56 |
| other costs by nature of expense | 16 | 21 |
| total costs by nature of expenses | 879 | 961 |
| change in inventories, products, accruals and deferrals | 17 | 18 |
| work performed by entity and capitalised (negative value) | -161 | -154 |
| distribution costs (negative value) | -38 | -21 |
| administrative expenses (negative value) | -117 | -107 |
| cost of products sold | 580 | 697 |
17. Workforce and cost of salaries and wages
The table below presents the average number of employees as well as the cost of salaries and wages at the Group (the data includes the Management Board):
| Employment | 12 months to Dec 31 2021 | 12 months to Dec 31 2020 |
| White-collar workers | 1,193 | 1,210 |
| Blue-collar workers | 1,225 | 1,752 |
| Employees on parental leaves | 8 | 7 |
| Total | 2,426 | 2,969 |
| cost of salaries and wages | 12 months to Dec 31 2021 | 12 months to Dec 31 2020 |
| Salaries and wages | 178 | 209 |
| Other employee benefits | 43 | 56 |
| Total | 221 | 265 |
18. Other income and expenses
Other income and expenses cover all income and expenses which are not directly attributable to ordinary operating activities and which affect the net profit or loss (mainly compensation, complaints, warranty repairs).
18.1. Other income
| other income | 12 months to Dec 31 2021 | 12 months to Dec 31 2020 |
| gain on disposal of non-financial non-current assets | 10 | 6 |
| grants ** | 0 | 15 |
| reversal of provision for penalties and fines | 0 | 10 |
| other provisions reversed | 2 | 3 |
| reversal of impairment losses on non-current assets | 2 | 0 |
| tax decisions - refunds * | 0 | 16 |
| scrapping | 6 | 8 |
| compensation, damages | 5 | 9 |
| other | 4 | 12 |
| other income | 29 | 79 |
* Following discontinuation of the tax proceedings, the revenue office refunded Famur a tax of PLN 11.6 million paid in 2019, with interest. The company also reversed an additional provision of PLN 4.7 million.
** In April 2020, the Group signed agreements with the Social Partners on the application of the measures provided for in the Act Amending the Act on Special Measures Related to Preventing, Counteracting and Combating COVID-19, i.e., reduction of working time by 20% and the resultant reduction of salaries and wages by 20% in the period May 1st−July 31st 2020. As a result of applying for support under the governmental anti-crisis shield, in 2020 the Group Companies received grants of PLN 15 million partly financing the salaries and wages for May, June and July.
18.2. Other expenses
| other expenses | 12 months to Dec 31 2021 | 12 months to Dec 31 2020 |
| recognised impairment losses on property, plant and equipment | 0 | 7 |
| recognised inventory write-downs | 8 | 13 |
| recognised provisions for penalties and fines | 0 | 1 |
| other provisions recognised | 0 | 3 |
| cost of repairs | 38 | 38 |
| costs of dismantling, retirement of property, plant and equipment | 7 | 12 |
| donations | 4 | 6 |
| penalties, fines and damages/compensation | 1 | 5 |
| other | 12 | 13 |
| other expenses | 70 | 98 |
19. Finance income and costs
19.1. Finance income
| finance income | 12 months to Dec 31 2021 | 12 months to Dec 31 2020 |
| dividends and other profit distributions received | 2 | 2 |
| interest | 10 | 27 |
| gain on disposal of investments | 1 | 3 |
| revaluation of investments | 2 | 2 |
| settlement of forward contracts * | 16 | 0 |
| other | 7 | 4 |
| total finance income | 38 | 38 |
* The finance income from measurement of derivative financial instruments represents measurement of an interest rate swap (IRS).
19.2. Finance costs
| finance costs | 12 months to Dec 31 2021 | 12 months to Dec 31 2020 |
| interest | 13 | 18 |
| exchange differences | 0 | 2 |
| commission fees | 4 | 2 |
| settlement of forward contracts * | 0 | 11 |
| bank guarantees and sureties | 2 | 1 |
| other | 4 | 0 |
| total finance costs | 23 | 34 |
* The finance cost from measurement of derivative financial instruments represents measurement of an interest rate swap (IRS).
20. Income taxes
20.1. Selected accounting policies
Tax expense comprises current tax expense and deferred tax expense. Current and deferred tax is recognised in profit or loss, except to the extent that the tax arises from a transaction recognised in other comprehensive income or in equity.
The current portion of income tax is calculated based on net profit (loss) (taxable income) for a given financial year. Current tax for the current and previous periods is recognised as a liability at the amount outstanding.
Deferred tax is calculated as income tax to be paid or received in subsequent periods, using the liability method; it arises on temporary differences between the tax base and the carrying amounts of assets and liabilities. Deferred tax is calculated based on the tax rates and regulations effective at the time when deferred tax assets are realised and deferred tax liabilities are paid.
Deferred tax assets are amounts expected to be deducted from income tax in future periods due to deductible temporary differences or carry forward of unused tax losses and unused tax credits. Deferred tax assets are recognised to the extent it is probable that taxable income will be available in the foreseeable future against which the assets can be utilised.
Deferred tax liabilities are the amounts of income tax payable in future periods in connection with taxable temporary differences.
Temporary differences are differences between the tax base and the carrying amount of an asset or liability.
20.2. Income tax disclosed in the statement of profit or loss
| income tax in the statement of profit or loss | 12 months to Dec 31 2021 | 12 months to Dec 31 2020 |
| income tax for reporting period | 34 | 35 |
| deferred income tax | 1 | 29 |
| income tax | 35 | 64 |
20.3. Reconciliation of effective tax rate
| reconciliation of effective tax rate | 12 months to Dec 31 2021 | 12 months to Dec 31 2020 |
| profit before tax | 60 | 252 |
| income tax | 35 | 64 |
| Effective tax rate | 58% | 25% |
| Non-taxable income and non-tax-deductible costs (permanent differences) | 110 | -8 |
| Effect of foreign tax rates | 1 | 2 |
| Recognition / reversal of impairment loss on deferred tax assets (base value) | 9 | 91 |
| Result adjusted for differences that reconcile the nominal tax rate | 180 | 337 |
| nominal income tax rate | 19% | 19% |
In 2020, a PLN 17 million impairment loss on deferred tax asset was recognised in connection with reorganisation of Hansen AG and its subsidiaries and due to the inability to use a portion of the deferred tax asset.
21. Deferred tax assets and liabilities
21.1. Deferred tax assets
| Dec 31 2021 | Dec 31 2020 | |
| Total deferred tax asset at end of period | 43 | 47 |
| recognised in profit or loss | 43 | 47 |
| employee benefits | 5 | 4 |
| losses carried forward | 2 | 2 |
| interest payable | 2 | 2 |
| unrealised foreign exchange differences | 0 | 1 |
| impairment losses on non-financial assets | 5 | 8 |
| impairment losses on financial assets | 14 | 14 |
| provision for warranty repairs | 2 | 3 |
| un-invoiced selling expenses | 1 | 0 |
| provision for coal and coal allowance for retired employees | 2 | 3 |
| provisions for other costs | 9 | 7 |
| deferred tax asset on taxable difference between carrying amounts of property, plant and equipment and their tax base | 1 | 3 |
| recognised in comprehensive income | 0 | 0 |
21.2. Deferred tax liabilities
| Dec 31 2021 | Dec 31 2020 | |
| Total deferred tax liabilities at end of period | 7 | 9 |
| recognised in profit or loss | 6 | 8 |
| accounting for lease contracts | 0 | 1 |
| penalties and damages/compensation | 1 | 0 |
| foreign exchange gains | 3 | 0 |
| profit (loss) on long-term contracts | 0 | 7 |
| other | 2 | 0 |
| recognised in equity | 1 | 1 |
| actuarial valuation | 1 | 1 |
22. Earnings per share
22.1. Selected accounting policies
In its financial statements, the Group presents in the statement of profit or loss its basic and diluted earnings per share for all types of ordinary shares, with equal visibility and for all periods presented. Dilution is a reduction of earnings per share assuming conversion of any convertible instruments, exercise of options or warrants, or issuance of ordinary shares following the fulfilment of certain conditions.
Calculation of basic earnings per share:
Calculation of diluted earnings per share:
Basic earnings per share are calculated by dividing the profit or loss attributable to the holders of ordinary shares of the parent (numerator) by the weighted average number of ordinary shares outstanding during the period (denominator).
For the purposes of calculating basic earnings per share, the amounts attributable to the holders of ordinary shares of the parent as:
| ― |
Profit or loss from continuing operations attributable to the parent, and |
| ― |
Profit or loss attributable to the parent, |
are the respective amounts adjusted for preferred dividends after tax, differences on accounting for preference shares and other similar effects of preference shares classified as equity instruments.
22.2. Calculation of earnings per share
For the purposes of calculating earnings per ordinary share, the number of shares was assumed as the weighted average number of ordinary shares outstanding during the period.
| earnings per share | 12 months to Dec 31 2021 | 12 months to Dec 31 2020 |
| Net profit from continuing operations used to calculate earnings per share | 25 | 188 |
| Net profit used to calculate earnings per share | 25 | 190 |
| weighted average number of shares | 574,763,212 | 574,763,212 |
| Earnings from continuing operations per ordinary share (PLN) | 0.04 | 0.33 |
| Earnings per ordinary share (PLN) | 0.04 | 0.33 |
| Diluted earnings from continuing operations per ordinary share (PLN) | 0.04 | 0.33 |
| Diluted earnings per ordinary share (PLN) | 0.04 | 0.33 |
23. Goodwill
23.1. Selected accounting policies
Goodwill acquired through business combinations is equal to the consideration paid by the acquirer, which represents the future economic benefits arising from a business combination that are not individually identified and separately recognised.
Goodwill on consolidation is the excess of the acquisition cost over the fair value of net identifiable assets and liabilities of a subsidiary, associate or joint venture as at the acquisition date.
If acquisition cost is lower than net fair value of the acquired identifiable net assets, the difference is disclosed as gain in the statement of profit or loss for the period in which the acquisition took place, in accordance with IFRS 3.
23.2. Annual impairment test
Goodwill acquired through business combinations is not amortised. Goodwill is reviewed at least once a year for impairment. Impairment of goodwill is recognised immediately in the statement of profit or loss and cannot be reversed in subsequent reporting periods.
Goodwill is tested for impairment as at December 31st in each reporting year.
Goodwill is concentrated in the Underground segment (products and services for underground mining).
During the financial year, impairment was tested by comparing the carrying amount to the recoverable amount of the cash-generating unit to which goodwill was allocated (the Underground segment). The recoverable amount was determined based on the value in use calculated on the basis of a cash flow forecast based on five-year financial budgets approved by senior management. The discount rate was assumed at 8.22% (8.04% in 2020). The five-year forecast assumes safe revenue projections for the Underground segment. The assumptions were based on the current conditions in the Polish sector of producers of machinery for hard coal mining. Specifically, the updated cash-flow projection reflects the following external factors:
| ― |
the sharp growth in the prices of CO 2 emission allowances in 2021, which increases the probability of a faster pace of reduction of the share of coal in the Polish electricity generation mix in accordance with the high CO 2 price scenario provided for in 'Poland's Energy Policy until 2040'; |
| ― |
the prolonged process of consulting with the European Commission the terms of an agreement to be concluded between the Polish government and trade unions regarding gradual closure of thermal coal mines in Poland until 2049 prompting the Company's domestic customers to put their investment plans on hold; |
| ― |
pressures from financial institutions to restrict financing for the coal industry. |
The forecast assumes the average year-on-year revenue decline of 14% and the average annual operating margin of 13%. It was assumed that the Group companies would continue as going concerns after the forecast period. The perpetuity formula was used to determine the residual value, with growth of sales assumed at 0%.
Goodwill was found to be impaired and therefore a goodwill impairment charge of PLN 95 million was recognised.
The table below presents a sensitivity analysis of probable changes in the discount rate, revenue and EBIT.
| Assumptions | Change in underlying assumptions | Impairment charge (PLN million) |
| Increase in discount rate | by 1 pp, to 9.22% | 132 |
| Decrease in EBIT | by 10% | 143 |
| Decrease in revenue | by 10% | 134 |
| Decrease in the discount rate | by 1 pp, to 7.22% | 51 |
| Increase in EBIT | by 10% | 47 |
| Increase in revenue | by 10% | 56 |
No goodwill impairment losses were recognised as at December 31st 2020.
24. Other intangible assets
24.1. Selected accounting policies
An intangible asset is recognised only if it is probable that the future economic benefits attributable to the asset will flow to the organisation and its cost can be measured reliably.
Initially, intangible assets are measured at cost. Intangible assets are amortised at amortisation rates reflecting the assets' useful lives. Intangible assets are amortised on a straight-line basis. The Group applies the following amortisation periods:
| capitalised development expenses | 1-5 years |
| trademarks | 1-5 years |
| software | 1-2 years |
Assets with an initial value of up to PLN 10 thousand are not included in intangible assets and are not amortised. The cost of their acquisition is recognised under expenses in the month in which they are placed in service. All intangible assets have definite useful lives. As at the reporting date, the Group did not identify any evidence of impairment.
24.2. Movements in intangible assets
| capitalised development expenses | acquired licences, patents and similar assets | other | expenditure | total | |
| As at Jan 1 2021 | |||||
| gross amount | 58 | 29 | 50 | 6 | 143 |
| accumulated amortisation * | 52 | 27 | 37 | 4 | 120 |
| net carrying amount | 6 | 2 | 13 | 2 | 23 |
| increases | 1 | 1 | 0 | 4 | 6 |
| decreases | 0 | 0 | 3 | 1 | 1 |
| exchange differences | 0 | 0 | 0 | 0 | 0 |
| amortisation | 2 | 0 | 9 | 0 | 11 |
| impairment losses - increases | 0 | 0 | 0 | 0 | 0 |
| impairment losses - decreases | 0 | 0 | 0 | 0 | 0 |
| As at Dec 31 2021 | |||||
| net carrying amount | 6 | 2 | 4 | 5 | 17 |
| gross amount | 59 | 29 | 50 | 8 | 146 |
| accumulated amortisation * | 53 | 27 | 46 | 3 | 129 |
| capitalised development expenses | acquired licences, patents and similar assets | other | expenditure | Total | |
| As at Jan 1 2020 | |||||
| gross amount | 56 | 29 | 52 | 14 | 151 |
| accumulated amortisation * | 54 | 27 | 27 | 7 | 115 |
| net carrying amount | 2 | 2 | 25 | 7 | 36 |
| increases | 7 | 1 | 0 | 10 | 18 |
| decreases | 1 | 0 | 3 | 15 | 19 |
| exchange differences | 0 | 0 | 0 | 0 | 0 |
| amortisation | 2 | 1 | 9 | 0 | 12 |
| impairment losses - increases | 0 | 0 | 0 | 0 | 0 |
| impairment losses - decreases | 0 | 0 | 0 | 0 | 0 |
| As at Dec 31 2020 | |||||
| net carrying amount | 6 | 2 | 13 | 2 | 23 |
| gross amount | 58 | 29 | 50 | 6 | 143 |
| accumulated amortisation * | 52 | 27 | 37 | 4 | 120 |
25. Property, plant and equipment
25.1. Selected accounting policies
Property, plant and equipment are items that are held for use in the production or supply of goods or services or for rental to others, and are expected to be used for more than one year.
For each new item of property, plant and equipment placed in use, the technical personnel is obliged to identify, where possible, any significant components and define the depreciation method.
The Company does not increase the carrying amounts of property, plant and equipment to account for day-to-day maintenance costs of the assets. Such costs are recognised in profit or loss when incurred. The costs of day-to-day maintenance include the cost of labour and materials used and may also include the cost of small spare parts.
The initial carrying amount of items of property, plant and equipment is increased by the amount of expenditure on their modernisation and upgrades where the expenditure is a separate component.
Property, plant and equipment are measured at the reporting date at cost less accumulated depreciation and impairment losses. Property, plant and equipment are initially recognised at cost plus any costs directly attributable to the purchase, production and bringing the asset to the location and condition necessary for it to be capable of operating in the intended manner.
Property, plant and equipment include perpetual usufruct of land. As there were no indications that the rights of perpetual usufruct of land (relating mainly to plots of land located within the Company's premises) may be revoked or may be impossible to renew, a decision was made to classify the rights as an item of non-depreciable property, plant and equipment, as is the case with land.
Property, plant and equipment are depreciated on a straight-line basis using the following rates:
| Annual depreciation rate | |
| land and perpetual usufruct rights | - |
| buildings and premises | 2 - 10% |
| civil engineering structures | 4 - 10% |
| steam generators and power units | 7% |
| general plant and equipment | 3 -30% |
| special plant and equipment | 10 - 50% |
| machinery | 10 - 26% |
| vehicles | 16 - 52% |
| tools, devices and fixtures | 16 - 30% |
When determining the value of a depreciable asset, the entity does not take into account its residual value. In the opinion of the technical personnel, the residual value of plant and equipment used in production is insignificant and therefore not material to the calculation of the depreciable value.
Assets with an initial value of up to PLN 10 thousand are not included in property plant and equipment and are not depreciated. The cost of their acquisition is recognised under expenses in the month in which they are placed in service.
Property, plant and equipment under construction, to be used in production, for rental or for administrative purposes, are presented in the statement of financial position at cost less impairment losses, if any. The cost is increased by the amount of fees and borrowing costs.
Leased assets are depreciated over their useful economic lives, if not restricted by lease term, like owned assets.
Any gains or losses arising from the sale, retirement or withdrawal from use are calculated as the difference between proceeds from the sale and the carrying amount of the item of property, plant and equipment, and are recognised in profit or loss.
When significant components of property, plant and equipment can be identified, each such component is depreciated separately.
The useful life of an item of property, plant and equipment is determined by the Company's technical personnel based on their experience and available market information.
Material items of property, plant and equipment include shearer loaders and roadheaders used in the mining industry, leased to customers under contracts classified as operating leases. Because shearer loaders and roadheaders are operated in extreme conditions, their useful lives and depreciation periods are assumed to be the same as their respective lease terms. Taking into account working conditions at the mines, the residual value of shearer loaders and roadheaders is difficult to determine.
Shearer loaders and roadheaders returned to the Company after the lease term are subject to valuation performed by technical personnel, who use their knowledge of the particular machine, such as conditions in the mine where it operated, how it was operated, the lease term, and whether it can be leased again.
Shearer loaders and roadheaders returned after the lease term which are still economically useful and have undergone repairs and maintenance for further lease, continue to be depreciated unless any of the following circumstances set forth in IAS 16.55 has occurred:
| ― |
the asset has been classified as held for sale in accordance with IFRS 5; |
| ― |
the asset has been retired; |
| ― |
the asset has been fully depreciated. |
25.2. Property, plant and equipment by type
| Dec 31 2021 | Dec 31 2020 | |
| land (including perpetual usufruct rights) | 26 | 24 |
| buildings, premises and civil engineering structures | 129 | 143 |
| plant and equipment | 170 | 208 |
| vehicles | 13 | 5 |
| other property, plant and equipment | 4 | 5 |
| total property, plant and equipment | 342 | 385 |
| right-of-use assets | 20 | 19 |
| property, plant and equipment under construction | 12 | 37 |
| Total property, plant and equipment | 374 | 441 |
25.3. Movements in property, plant and equipment
| land (including perpetual usufruct rights) | buildings, premises and civil engineering structures | plant and equipment used by the Group | plant and equipment used by lessees | |
| Jan 1 2021 | ||||
| gross amount | 26 | 202 | 301 | 447 |
| accumulated depreciation | 1 | 55 | 241 | 300 |
| net carrying amount | 25 | 143 | 60 | 147 |
| increases | 0 | 10 | 16 | 99 |
| decreases | 0 | 15 | 3 | 5 |
| reclassification | 0 | 0 | 0 | 0 |
| exchange differences | 0 | 1 | 0 | 0 |
| depreciation | 0 | 10 | 20 | 127 |
| impairment losses - increases | 0 | 0 | 0 | 0 |
| impairment losses - decreases | 0 | 0 | 1 | 3 |
| Dec 31 2021 | ||||
| net carrying amount | 25 | 129 | 53 | 117 |
| gross amount | 26 | 195 | 291 | 477 |
| accumulated depreciation | 1 | 66 | 238 | 360 |
| vehicles | other property, plant and equipment | Total property, plant and equipment | |
| Jan 1 2021 | |||
| gross amount | 16 | 24 | 1,016 |
| accumulated depreciation | 11 | 19 | 631 |
| net carrying amount | 5 | 5 | 385 |
| increases | 10 | 0 | 135 |
| decreases | 0 | 0 | 23 |
| reclassification | 0 | 0 | 0 |
| exchange differences | 0 | 0 | 1 |
| depreciation | 2 | 0 | 159 |
| impairment losses - increases | 0 | 0 | 0 |
| impairment losses - decreases | 0 | 0 | 4 |
| Dec 31 2021 | |||
| net carrying amount | 13 | 5 | 342 |
| gross amount | 25 | 25 | 1,039 |
| accumulated depreciation | 12 | 19 | 697 |
| land (including perpetual usufruct rights) | buildings, premises and civil engineering structures | plant and equipment used by the Group | plant and equipment used by lessees | |
| Jan 1 2020 | ||||
| gross amount | 51 | 297 | 428 | 423 |
| accumulated depreciation | 0 | 97 | 339 | 243 |
| net carrying amount | 51 | 200 | 89 | 180 |
| increases | 0 | 13 | 20 | 95 |
| decreases | 25 | 42 | 20 | 4 |
| reclassification | -1 | -14 | -7 | 0 |
| exchange differences | 0 | -5 | 0 | 0 |
| depreciation | 0 | 11 | 24 | 121 |
| impairment losses - increases | 0 | 0 | 0 | 3 |
| impairment losses - decreases | 0 | 0 | 0 | 0 |
| Dec 31 2020 | ||||
| net carrying amount | 25 | 143 | 60 | 147 |
| gross amount | 26 | 202 | 301 | 447 |
| accumulated depreciation | 1 | 59 | 242 | 300 |
| vehicles | other property, plant and equipment | Total property, plant and equipment | |
| Jan 1 2020 | |||
| gross amount | 25 | 29 | 1,253 |
| accumulated depreciation | 20 | 25 | 724 |
| net carrying amount | 5 | 4 | 529 |
| increases | 3 | 2 | 133 |
| decreases | 1 | -2 | 90 |
| reclassification | 0 | -1 | -23 |
| exchange differences | 0 | 0 | -5 |
| depreciation | 2 | 2 | 160 |
| impairment losses - increases | 0 | 0 | 3 |
| impairment losses - decreases | 0 | 0 | 0 |
| Dec 31 2020 | |||
| net carrying amount | 5 | 5 | 385 |
| gross amount | 16 | 24 | 1,016 |
| accumulated depreciation | 11 | 19 | 631 |
The increase in property, plant and equipment was mainly attributable to expenditure on shearers leased to mines.
As at December 31st 2020 and December 31st 2019, The Group had no commitments to acquire property, plant and equipment.
26. Investment property
26.1. Selected accounting policies
The Group applies the fair value model to measure investment property (Level 3 of the valuation hierarchy) due to the use of property, plant and equipment − investment property is not used in the production, supply or administration activities, and is treated as a source of rental income and held for value appreciation. Fair value of investment property is estimated based on the property value determined by an independent expert appraiser. Investment property was measured using a comparative approach and the average price adjustment method.
26.2. Investment property
| Investment property | Dec 31 2021 | Dec 31 2020 |
| land, including land usufruct rights | 13 | 25 |
| buildings, premises and civil engineering structures | 36 | 28 |
| total land, buildings and structures | 49 | 53 |
| right-of-use assets | 7 | 9 |
| Total investment property | 56 | 62 |
26.3. Movements in investment property
| 12 months to Dec 31 2021 | 12 months to Dec 31 2020 | |
| net carrying amount at beginning of period | 53 | 27 |
| increases | 0 | 47 |
| decreases | 4 | 21 |
| carrying amount at end of period | 49 | 53 |
For more information on right-of-use assets, see the note on lease liabilities.
The decreases recognised in 2020 resulted from the reclassification of investment property to non-current assets held for sale and from divestment of redundant assets in line with the adopted strategy to sell properties not related to the Company's core business.
26.4. Income and expenses related to investment property
| 12 months to Dec 31 2021 | 12 months to Dec 31 2020 | |
| rental income | 2 | 2 |
| direct operating expenses | 1 | 1 |
27. Investments in subsidiaries and associates
27.1. Selected accounting policies
Non-current financial assets include shares in subsidiaries, associates and shares in other entities, which are not intended by the Group for sale in the near term.
Investments in non-consolidated subsidiaries and associates are recognised at cost less impairment losses.
27.2. Non-current financial assets
| Investments in subsidiaries, joint ventures and associates | Dec 31 2021 | Dec 31 2020 |
| Shares in non-consolidated subsidiaries | 3 | 3 |
| Shares in equity-accounted associates * | 32 | 34 |
| Long-term loans | 3 | - |
| Total | 38 | 37 |
For a list of related entities, see the introduction to these financial statements.
Non-consolidated shares include shares in the following companies: Dams GmbH, Famur Institute Sp. z o.o., Mining Equipment Finance Sp. z o.o., Famak S.A. (formerly Famur Famak S.A.), and other.
*Shares in equity-accounted companies are shares in Mining Equipment Finance Sp. z o.o. and Famak S.A. (formerly Famur Famak S.A.).
As at the reporting date, the Group had no financial assets held for trading or sale.
28. Other non-current financial assets
28.1. Selected accounting policies
Non-current financial assets include shares in entities other than subsidiaries or associates, which are not intended for sale in the near term, measured at fair value through profit or loss. If no reliable valuation is possible, assets are recognised at cost.
Non-current financial assets also include the long-term portion of loans. Loans are initially recognised at fair value, and subsequently at amortised cost using the effective interest rate method, less allowance for expected credit losses, if any.
Loans in foreign currencies are measured as at the reporting date at the mid rate quoted for a given currency by the National Bank of Poland for that date. Foreign exchange gains and losses arising on translation are posted to finance income or finance costs, as appropriate.
28.2. Non-current financial assets
| Non-current financial assets | Dec 31 2021 | Dec 31 2020 |
| Shares | 8 | 8 |
Other non-current financial assets include mainly the shares held in Shan Dong Tagao Mining Equipment Manufacturing Co. Ltd, an entity which is neither controlled nor jointly controlled by the Group.
29. Inventories
29.1. Selected accounting policies
The Group recognises inventories at the lower of cost and net realisable value.
Costs of inventories comprise all costs of purchase, costs of conversion and other costs incurred to bring the inventories to their present location and condition.
Costs of inventories include costs directly attributable to the unit of production and systematically allocated fixed and variable production overheads incurred to convert materials into finished goods. The allocation of fixed production overheads to the costs of conversion of inventories is based on normal capacity of production facilities, as established for production expected to be achieved on average over a number of periods under normal circumstances, taking into account the loss of capacity resulting from planned maintenance.
Costs of materials and merchandise are assigned using the 'first in, first out' cost formula. Movements in inventories of finished goods and semi-finished products are accounted for using the specific identification method for their costs.
The Group recognises inventory write-downs in the case of damage, complete or partial loss of usability, or decline in the selling prices of inventory items. As at the reporting date, slow-moving inventories are checked for impairment. Inventory write-downs are recognised and reversed in expenses for the period in which the write-down or reversal occurred.
29.2. Inventories and inventory write-downs
| Dec 31 2021 | Dec 31 2020 | |
| materials | 99 | 100 |
| semi-finished products and work in progress | 427 | 64 |
| finished goods | 15 | 26 |
| merchandise | 42 | 39 |
| total | 583 | 229 |
| Movements in inventory write-downs | 12 months to Dec 31 2021 | 12 months to Dec 31 2020 |
| At beginning of period | 56 | 53 |
| increases | 15 | 23 |
| decreases | 27 | 20 |
| Inventory write-downs at end of period | 44 | 56 |
30. Trade and other receivables
30.1. Selected accounting policies
Receivables are initially recognised at fair value, and subsequently at amortised cost using the effective interest rate method, less impairment losses. In accordance with IFRS 9, the entity measures allowance for expected credit losses at an amount equal to the 12-month expected credit losses or lifetime expected credit losses. In the case of trade receivables, the Group opted for the simplified approach and measures expected credit loss allowances at an amount equal to lifetime expected credit losses. The Group analysed the credit risk using the simplified model. Impairment losses are charged to profit or loss. The difference between the recognised and reversed impairment losses is recognised as other income or other expense, as appropriate. Financial receivables denominated in foreign currencies are measured as at the reporting date at the mid rate quoted for a given currency by the National Bank of Poland for that date. Foreign exchange gains and losses arising on translation are posted to finance income or finance costs, as appropriate.
Short-term prepayments and accrued income include operating expenses incurred but relating to periods following the reporting period.
30.2. Short-term receivables and impairment losses
| Dec 31 2021 | Dec 31 2020 | |
| trade receivables | 419 | 481 |
| other receivables | 92 | 39 |
| total net short-term receivables | 519 | 520 |
| impairment losses | 106 | 116 |
| total gross short-term receivables | 625 | 636 |
30.3. Movements in impairment losses on short-term receivables
| 12 months to Dec 31 2021 | |
| At beginning of period | 116 |
| increase in impairment losses (recognition) | 9 |
| decrease in impairment losses (reversal) | 19 |
| Impairment losses on receivables at end of period | 106 |
31. Other current financial assets
31.1. Selected accounting policies
Other current financial assets include the short-term portion of loans made, i.e., loans maturing within 12 months.
Loans are initially recognised at fair value, and subsequently at amortised cost using the effective interest rate method, less allowance for expected credit losses, if any.
Loans in foreign currencies are measured as at the reporting date at the mid rate quoted for a given currency by the National Bank of Poland for that date. Foreign exchange gains and losses arising on translation are posted to finance income or finance costs, as appropriate.
31.2. Loans
| Dec 31 2021 | Dec 31 2020 | |
| Famago Sp. z o.o. w upadłości | 1 | 2 |
| Maciej Marcjanik | 71 | - |
| Other entities | 14 | - |
| total loans | 86 | 2 |
32. Other current non-financial assets
32.1. Selected accounting policies
Under other current non-financial assets, the Group presents prepayments and accrued income, which include operating expenses incurred but relating to periods following the reporting period.
32.2. Short-term prepayments and accrued income
| Dec 31 2021 | Dec 31 2020 | |
| interest, fees and commissions on bank credit and non-bank borrowings | 1 | 1 |
| insurance | 5 | 5 |
| costs of contracts amortised | 2 | 2 |
| other charges amortised | 0 | 1 |
| Total short-term prepayments and accrued income | 8 | 9 |
33. Cash and cash equivalents
32.1. Selected accounting policies
Cash is disclosed at nominal amounts and comprises cash in hand, cash in bank accounts and bank deposits maturing in up to three months.
Cash denominated in foreign currencies is measured as at reporting date at the mid rate quoted for a given currency by the National Bank of Poland for that date. Exchange differences are charged to finance income or finance costs, as appropriate.
34. Non-current assets held for sale and related liabilities
34.1. Selected accounting policies
Non-current assets whose sale is highly probable, for which there is an active programme to find a buyer and the sale plan is expected to be completed within one year are classified as non-current assets held for sale, and their depreciation is discontinued.
The Company measures a non-current asset classified as held for sale at the lower of its carrying amount and fair value less costs to sell.
| Dec 31 2021 | Dec 31 2020 | |
| Assets of subsidiaries held for sale | 12 | 12 |
| Property | 53 | 51 |
| Total non-current assets held for sale | 65 | 63 |
| Liabilities of subsidiaries held for sale | 12 | 12 |
Companies whose assets have been classified as assets held for sale:
KOPEX MIN (Serbia)
PT Kopex Mining Contractors (Indonesia)
In 2020, the Group sold assets and related liabilities of Kopex MIN LIV (Serbia) and K-Construction, which were presented as assets held for sale as at December 31st 2019.
The decrease in other non-current assets classified as held for sale was mainly attributable to reclassification of certain assets to investment property following decision to change their intended use and to conclude the sale transactions.
35. Shareholders of Famur S.A.
List of shareholders representing 5% or more of total voting rights:
| Shareholder | Number of shares | Number of voting rights | % share |
| TDJ Equity I Sp. z o.o. | 276,172,470 | 276,172,470 | 48.05% |
| Nationale-Nederlanden OFE * | 61,769,000 | 61,769,000 | 10.75% |
| AVIVA OFE AVIVA SANTANDER | 55,513,000 | 55,513,000 | 9.66% |
| FAMUR S.A. ** | 86,655 | 86,655 | 0.02% |
| Other *** | 181,222,087 | 181,222,087 | 31.52% |
| Total | 574,763,212 | 574,763,212 | 100% |
The table presents data as per the most recent EGM of FAMUR S.A. (i.e., as at August 17th 2021 and as at December 14th 2021) as well as data based on notices submitted to the Issuer by TDJ Equity I Sp. z o.o. of December 10th 2021, December 15th 2021, December 20th 2021 and December 22nd 2021 (Current Reports Nos. 59/2021, 62/2021, 64/2021, 65/2021) *Funds managed by Nationale-Nederlanden Powszechne Towarzystwo Emerytalne S.A., i.e.,: Nationale-Nederlanden Otwarty Fundusz Emerytalny ("OFE") i Nationale-Nederlanden Dobrowolny Fundusz Emerytalny ("DFE")
**Famur S.A. and indirectly the subsidiary company Famur Finanse Sp. z o.o. (4,116) and 82,539 ordinary bearer shares acquired by FAMUR as part of the tender offer for shares of FAMUR S.A. (announced in Current Report No. 45/2021 of September 1st 2021)
***Total other shareholders holding less than 5% of total voting rights.
36. Share capital
Share capital is recognised at par value of shares issued in accordance with the Articles of Association and registered with the National Court Register (KRS). The most important principle applicable to making any changes in the share capital provides that no activity resulting in the determination of or an increase or decrease in the share capital should be performed without first obtaining a copy of an entry in the court register to confirm the registration of changes and the current amount of the share capital. Share capital may be increased through amendment of the Articles of Association, new share issue, or increase of the par value of existing shares, or it can be reduced through amendment of the Articles of Association, reduction of the par value of existing shares, reverse share split, or cancellation of a part of shares. The Group's share capital is the Parent's share capital. As at December 31st 2021 and December 31st 2020, the share capital was paid up in full.
As at December 31st 2021
| Series / issue | Type of shares | Number of shares |
| A | ordinary bearer / non-preferred | 432,460,830 |
| B | ordinary bearer / non-preferred | 49,039,170 |
| C | ordinary bearer / non-preferred | 4,970,000 |
| D | ordinary bearer / non-preferred | 43,677,000 |
| E | ordinary bearer / non-preferred | 29,293,500 |
| F | ordinary bearer / non-preferred | 15,322,712 |
| Total number of shares | 574,763,212 | |
| Total share capital | 5,747,632.12 | |
| Par value per share | 0.01 |
| Dec 31 2021 | Dec 31 2020 | |
| Number of shares | 574,763,212 | 574,763,212 |
37. Statutory reserve funds and capital reserves
37.1. Share premium
As at December 31st 2021 and December 31st 2020, share premium on Series B, C, D and E shares was PLN 546,803 thousand.
37.2. Other capital reserves
The allocation of the other capital reserves was not defined as at the reporting date, i.e., December 31st 2021.
38. Retained earnings
As at December 31st 2021, retained earnings attributable to owners of the parent were PLN 624 million, including:
| ― |
the Group's profit for the year attributable to owners of the parent of PLN 33 million; |
| ― |
retained earnings from previous years attributable to owners of the parent of PLN 591 million. |
39. Dividend
On June 22nd 2021, the Annual General Meeting of Famur S.A. passed a resolution to allocate the entire net profit for 2020 to statutory reserve funds.
On June 29th 2020, the Annual General Meeting of Famur S.A. passed a resolution to allocate the entire net profit for 2019 to statutory reserve funds.
40. Provisions
40.1. Selected accounting policies
Provisions represent liabilities whose maturity date or amount are uncertain. The Group recognises provisions when all of the following conditions are met:
| • |
the Group has an obligation (legal or constructive) arising from past events, |
| • |
it is probable that the obligation will cause an outflow of resources embodying economic benefits; |
| • |
the amount of the obligation can be reliably estimated. |
Provisions for employee benefit obligations are broken down by jubilee benefits, retirement severance payments, and other employee benefits, including mainly coal allowances and employee bonuses and awards.
Employee benefit obligations are estimated by an independent actuary using actuarial methods. A provision is reversed when it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation. A provision is used when the obligation covered with the provision arises.
Provisions for warranty repairs are recognised upon sale of products, at amounts equal to best estimates of expenses that the Company will have to incur during the warranty period.
The Group also recognises provisions for other risks, including for tax risk and risk of contractual penalties.
40.2. Provisions
| Dec 31 2020 | Dec 31 2021 | |
| Long-term provisions, including: | 20 | 30 |
| provisions for long-term employee benefits | 13 | 22 |
| provisions for long-term warranty repairs | 7 | 8 |
| Short-term provisions, including: | 23 | 21 |
| provisions for employee benefits | 7 | 5 |
| provisions for warranty repairs | 6 | 7 |
| provisions for penalties | 3 | 3 |
| provisions for other costs | 3 | 3 |
| other provisions | 4 | 3 |
| Total short-term provisions | 43 | 51 |
40.3. Provisions for employee benefits
Actuarial assumptions
| Dec 31 2021 | Dec 31 2020 | |
| expected pay growth rate | 3.6% | 1.8 - 2.5% |
| return on investment | 3.7% | 1.2% |
Movements in long-term provision for employee benefits:
| long-term provisions for employee benefits | 12 months to Dec 31 2021 |
| at beginning of period | 22 |
| provision for jubilee benefits | 5 |
| provision for old-age and disability retirement benefits | 5 |
| provision for other employee benefits | 12 |
| change | -9 |
| - reversed | 9 |
| at end of period | 13 |
| provision for jubilee benefits | 5 |
| provision for old-age and disability retirement benefits | 2 |
| provision for other employee benefits | 6 |
Movements in short-term provision for employee benefits:
| short-terms provision for employee benefits | 12 months to Dec 31 2021 |
| at beginning of period | 5 |
| provision for jubilee benefits | 1 |
| provision for other employee benefits | 4 |
| change | 2 |
| - recognised | 2 |
| at end of period | 7 |
| provision for jubilee benefits | 1 |
| provision for other employee benefits | 6 |
The table below presents a reconciliation of the balance of defined benefit obligations, i.e., provisions for old-age and disability retirement benefits and jubilee benefits.
| 12 months to Dec 31 2021 | 12 months to Dec 31 2020 | |
| Employee benefit obligation at beginning of period | 11 | 14 |
| Current service cost | 1 | - |
| Actuarial gains/losses from revaluation and change in assumptions | -1 | -1 |
| Benefits paid | -3 | -1 |
| Loss of control | - | -1 |
| Employee benefit obligations at end of period | 8 | 11 |
| Sensitivity analysis for changes in key assumptions: | Dec 31 2021 | Dec 31 2020 |
| +1pp increase in return on investment | 8 | 11 |
| -1pp decrease in return on investment | 8 | 12 |
| +1pp increase in pay and coal price growth rates | 8 | 12 |
| -1pp decrease in pay and coal price growth rates | 8 | 11 |
40.4. Other provisions
| movements in other long-term provisions | 12 months to Dec 31 2021 |
| at beginning of period | 8 |
| provision for warranties and warranty claims | 8 |
| change | -1 |
| - reversed | 1 |
| at end of period | 7 |
| provision for warranties and warranty claims | 7 |
| movements in other short-term provisions | 12 months to Dec 31 2021 |
| at beginning of period | 21 |
| provision for warranties and warranty claims | 7 |
| provision for penalties | 3 |
| provision for other costs | 11 |
| change | -5 |
| - recognised | 6 |
| - reversed | 11 |
| at end of period | 16 |
| provision for warranties and warranty claims | 6 |
| provision for penalties | 3 |
| provision for other costs | 7 |
41. Financial liabilities
41.1. Selected accounting policies
Bank credit and non-bank borrowings are initially recognised at fair value, and subsequently at amortised cost using the effective interest rate method, except for current liabilities, which are measured at amounts payable.
The short-term portion of a liability comprises the part of principal and interest repayable in the next 12 months. Overdraft facilities are classified as current liabilities irrespective of the final repayment date and the agreement term.
41.2. Borrowings
| Financial liabilities | Dec 31 2021 | Dec 31 2020 |
| non-current financial liabilities | 648 | 437 |
| bank credit and non-bank borrowings | 4 | 2 |
| notes | 599 | 401 |
| lease | 32 | 26 |
| factoring | 13 | 8 |
| current financial liabilities | 262 | 42 |
| bank credit and non-bank borrowings | 28 | 2 |
| notes | 206 | 0 |
| lease | 11 | 5 |
| factoring | 17 | 35 |
| Total financial liabilities | 910 | 479 |
41.3. Bank credit and non-bank borrowings
| Dec 31 2021 | Dec 31 2020 | |
| undrawn credit facilities | 541 | 492 |
All undrawn credit facilities are secured.
Interest rates on borrowings are variable.
41.4. Series B notes
In June 2019, Famur S.A. issued Tranche B notes of PLN 200 million under the unsecured notes programme. In each six-month settlement period, the notes bear interest at a floating rate based on 6M WIBOR plus margin.
The notes registered with the depository were assigned ISIN code PLFAMUR00053. The issue date for Series B notes is June 27th 2019, and the redemption date is June 27th 2024.
The Company hedges its interest rate risk using an interest rate swap (IRS). Information on the measurement of the IRS is presented in the note on financial instruments.
41.5. Series C notes
In October 2021, Famur S.A. issued Tranche C notes of PLN 400 million under the notes programme. In each six-month settlement period, the notes bear interest at a floating rate based on 6M WIBOR plus margin.
The notes registered with the depository were assigned ISIN code PLFAMUR00061. The issue date of Series C notes is November 3rd 2021. The maturity date of Series C notes November 3rd 2026.
The Company hedges its interest rate risk using an interest rate swap (IRS). For information on the measurement of the instrument see Notes to these financial statements.
41.6. Financial ratios for series B notes
Consolidated data used to calculate financial ratios
| 1 Long-term borrowings and factoring liabilities | 616 |
| 2 Short-term borrowings and factoring liabilities | 251 |
| 3 Cash and cash equivalents | 1,333 |
| 4 Equity | 1,881 |
| 5 Long-term provisions | 20 |
| 6 Short-term provisions | 23 |
| 7 Total assets | 3,220 |
| 8 EBITDA | 314 |
Financial ratios computed as December 31st 2021
| Name | Value | Formula |
| Capitalisation ratio | 59.8% | (4+5+6) /7 * 100% |
| Debt ratio | -1.48 | (1+2-3) /8 |
41.7. Security for borrowings
| borrowings | Dec 31 2021 | Dec 31 2020 |
| secured | 0 | 0 |
| not secured | 837 | 405 |
| total borrowings | 837 | 405 |
The table above shows borrowings which are the Group's liabilities as at the reporting date.
41.8. Factoring liabilities
The Group is party to agreements under which it sold its receivables to financial institutions. The institutions have recourse to the Group if a debtor fails to pay. In the Management's opinion, the Group retains substantially all the risks and rewards incidental to the receivables and therefore does not derecognise the receivables, and recognises factoring transactions as financing agreements; as a result, the Group recognises a financial liability for the consideration received from the factor. The Management believes that the risk of an event triggering the exercise the right of recourse is low, as is also evidenced by the history of repayment of the receivables sold.
42. Lease liabilities
42.1. Selected accounting policies
At the lease commencement date, the Group measures lease liabilities at the present value of lease payments then outstanding. Lease payments include fixed payments (including in-substance fixed lease payments) less any lease incentives due, variable payments that depend on an index or rate, and amounts expected to be payable under residual value guarantees. Lease payments also include the exercise price of a purchase option if the Group is reasonably certain to exercise that option, and payment of financial penalties for terminating the lease if the lease terms grant a termination option to the Company. Variable lease payments that do not depend on an index or rate are recognised as an expense in the period in which the event or condition triggering the payment occurs.
When calculating the present value of lease payments, the Group uses the lessee's incremental borrowing rate on the lease commencement date, if the interest rate implicit in the lease cannot be readily determined. After the commencement date, the amount of lease liabilities is increased to reflect the interest and reduced by lease payments made. Furthermore, the carrying amount of lease liabilities is remeasured if the lease term, in-substance fixed lease payments or judgement as to purchase of the underlying assets change.
Short-term leases and leases of low-value assets
The Group applies the short-term exemption to its short-term lease contracts (i.e., contracts with lease terms of 12 months or less from the inception date, containing no purchase options). The Group also applies the low-value exemption with respect to its leases of low-value assets. Lease payments under short-term leases and leases of low-value assets are recognised as an expense on a straight-line basis over the lease term.
Material judgements and estimates in determining the lease term of contracts with extension options
The Group determines the lease term as a non-cancellable period of a lease, together with periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option, and periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option.
Right-of-use assets
The Group recognises right-of-use assets at the lease commencement date (i.e., the date when the underlying asset is made available for use).
| ― |
Right-of-use assets are measured at cost less accumulated depreciation and impairment losses, adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, the initial direct costs incurred and any lease payments made at or before the commencement date, less any lease incentives received. Unless the Group believes there is reasonable certainty it will acquire ownership of the leased assets after a relevant lease expires, the recognised right-of-use assets are depreciated using the straight-line method over the shorter of the estimated useful life and lease term. Right-of-use assets are subject to impairment. |
| ― |
Right-of-use assets that relate to investment property are measured at fair value. |
The Group holds lease contracts for machinery and vehicles, as well as perpetual usufruct of land.
42.2. Right-of-use assets and lease liabilities
| Property, plant and equipment | Property, plant and equipment | Total property, plant and equipment | Investment property | Inventories | Lease liabilities | |
| perpetual usufruct right | machinery and equipment and vehicles | perpetual usufruct right | perpetual usufruct right | perpetual usufruct right | ||
| as at Jan 1 2021 | 15 | 4 | 19 | 9 | 0 | 31 |
| Increases | 0 | 4 | 4 | 7 | 19 | |
| Decreases | 0 | 0 | 0 | 2 | 0 | 2 |
| Depreciation | 0 | 3 | 3 | |||
| interest expense | 1 | |||||
| lease payments | 6 | |||||
| as at Dec 31 2021 | 15 | 5 | 20 | 7 | 7 | 43 |
| Property, plant and equipment | Property, plant and equipment | Total property, plant and equipment | Investment property | Assets held for sale | Lease liabilities | |
| perpetual usufruct right | machinery and equipment and vehicles | perpetual usufruct right | perpetual usufruct right | perpetual usufruct right | ||
| as at Jan 1 2020 | 32 | 3 | 35 | 16 | 10 | 68 |
| increases | 0 | 2 | 2 | 0 | 0 | 0 |
| decreases | 16 | 0 | 16 | 7 | 10 | 32 |
| depreciation | 1 | 1 | 2 | |||
| interest expense | 1 | |||||
| lease payments | 6 | |||||
| as at Dec 31 2020 | 15 | 4 | 19 | 9 | 0 | 31 |
42.3. Amounts recognised in profit or loss under lease contracts
| 12 months to Dec 31 2021 | 12 months to Dec 31 2020 | |
| Depreciation of right-of-use assets | 3 | 3 |
| Interest expense on lease liabilities | 1 | 1 |
| Total amount recognised in profit and loss | 4 | 4 |
The costs related to leases of low-value assets and the costs of short-term leases incurred in 2020 and in the comparative period were immaterial.
43. Trade and other payables
43.1. Selected accounting policies
Trade and other payables are initially recognised at fair value, and subsequently at amortised cost using the effective interest rate method, except for current financial liabilities, which are measured at amounts payable.
43.2. Trade and other payables
| Dec 31 2021 | Dec 31 2020 | |
| trade payables | 160 | 97 |
| salaries and wages | 11 | 13 |
| public charges | 33 | 35 |
| other short-term payables | 10 | 22 |
| Total trade and other payables | 214 | 167 |
44. Non-financial liabilities
44.1. Selected accounting policies
Under non-financial liabilities, the Group recognises advance payments received, accruals and deferred income.
Advance payments received are carried at historical cost. As non-monetary items, advance payments denominated in a foreign currency are translated at the exchange rate effective at the date of the transaction.
Accrued expenses are expenses which have not been incurred yet but which are attributable to the given financial period in accordance with the matching principle.
Deferred income includes in particular the equivalent of funds (such as grants and sureties) received from trading partners, to be settled in future periods.
Grants are amounts received by the Company in 2010−2012 as EU co-financing under the Innovative Economy Operational Programme for a project to expand and modernise its existing business.
The grants were received to finance depreciable/amortisable assets and are settled through adjustment to the reduction in the depreciation/amortisation costs of the non-current assets financed with the grants.
44.2. Non-financial liabilities
| Dec 31 2021 | Dec 31 2020 | |
| advance payments received | 139 | 80 |
| accrued expenses, including: | 10 | 10 |
| provision for paid absences | 5 | 5 |
| estimated contract costs | 4 | 4 |
| Other | 1 | 1 |
| deferred income, including: | 8 | 9 |
| grants | 8 | 9 |
| other | - | - |
| Total non-financial liabilities | 157 | 99 |
45. Assets pledged as security
Carrying amount of assets pledged as security
| Type of assets pledged as security | Dec 31 2021 | Dec 31 2020 |
| Property | 87 | 84 |
| Inventories | 0 | 0 |
| Plant and equipment | 2 | 3 |
| Total | 89 | 87 |
46. Contingent liabilities
| Dec 31 2021 | Dec 31 2020 | |
| Contingent liabilities | 80 | 164 |
| guarantees issued, including: | 80 | 163 |
| bid bonds | 1 | 10 |
| performance bonds | 44 | 85 |
| other | 35 | 68 |
| other | 0 | 1 |
47. Capital risk management
The Group's capital management policy is to ensure that the Group entities continue as going concerns and to maximise return for the shareholders through optimisation of the capital structure. The Group's overall strategy remains unchanged.
The purpose of capital risk management is to protect the Company's ability to continue its activities in the form and to the extent necessary to ensure return on investment for the shareholders and benefits for other stakeholders, as well as to maintain optimum capital structure to reduce cost of capital. To maintain or adjust its capital structure, the Group may adjust the amount of dividends paid to shareholders, issue new shares, increase debt, or sell assets to reduce debt.
The Group monitors its capital using the debt ratio, calculated as net debt to total capital. Net debt is calculated as total liabilities (bank credit, non-bank borrowings, trade payables and other) less cash and cash equivalents. Total capital is calculated as the sum of equity as disclosed in the statement of financial position and net debt.
The capital structure of the Group consists of debt comprising bank credit, non-bank borrowings and notes, as well as cash and cash equivalents and equity attributable to owners of the parent, including issued shares and retained earnings.
As at the date of issue of the financial statements as well as at the reporting dates of December 31st 2021 and December 31st 2020, to the best of management's knowledge, the Group complied with covenants under the financing agreements.
48. Financial instruments
48.1. Selected accounting policies
Fair value of financial instruments
Below is presented detailed information on the fair value of financial instruments whose fair values can be estimated:
| • |
Cash and cash equivalents, short-term bank deposits and short-term bank credit: the carrying amounts of such instruments approximate their fair values due to their short maturities; |
| • |
Trade receivables, other receivables, trade payables the carrying amounts of such instruments approximate their fair values due to their short-term nature; |
| • |
Bank credit and non-bank borrowings. The carrying amounts of such instruments approximate their fair values as they bear interest at variable rates determined by reference to market rates. |
Interest rate swaps (IRS) are initially recognised at fair value net of transaction costs and subsequently, as at each reporting date, are measured at fair value, with the effect of measurement recognised in profit or loss.
The fair values of financial derivatives such as forwards, which are used to lock in exchange rates, are estimated for a financial asset using input data other than quoted prices, observable for the asset (level 2). Future cash flows are measured at the end of each reporting period based on the contracted forward rate. Financial instruments have fixed (contractual) maturities and therefore they are measured as at each reporting date. The parent applies hedge accounting. It is applied to forward contracts which are deemed effective in accordance with applicable policies.
Hierarchy of financial instruments measured at fair value
Financial instruments measured at fair value may be classified into the following measurement models:
| • |
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities; |
| • |
Level 2: inputs other than quoted prices used at Level 1, observable for the assets or liabilities either directly (e.g. as prices) or indirectly (e.g. derive from provisions); |
| • |
Level 3: inputs not based on observable market prices (unobservable inputs). |
In the period covered by these consolidated financial statements, there were no transfers between the levels of the fair value hierarchy.
48.2. Financial instruments measured at fair value by class
Fair value hierarchy as at December 31st 2021 and December 31st 2020
| Classes of financial instruments | Level 1 | Level 2 | Level 3 |
| Derivatives (measurement), including: | - | 7 | - |
| assets | - | 7 | - |
| liabilities | - | - | - |
| Classes of financial instruments | Level 1 | Level 2 | Level 3 |
| Derivatives (measurement), including: | - | -11 | - |
| assets | - | - | - |
| liabilities | - | -11 | - |
48.3. List of derivatives
| Derivatives (groups of instruments) | Planned settlement date | Future cash flows at forward rate | Market value of hedging transactions (corresponding to their fair value) | Hedged risk |
| as at Dec 31 2021 | ||||
| Forward − sale of EUR | Q1 2022 | 109 | 110 | currency risk |
| Forward − sale of EUR | Q2 2022 | 54 | 53 | currency risk |
| Forward − sale of EUR | Q3 2022 | 43 | 43 | currency risk |
| Forward − sale of EUR | Q4 2022 | 64 | 64 | currency risk |
| Forward − sale of EUR | Q3 2023 | 7 | 7 | currency risk |
| Forward - sale of USD | Q1 2022 | 14 | 14 | currency risk |
| Forward - sale of USD | Q2 2022 | 21 | 22 | currency risk |
| Forward - sale of USD | Q3 2022 | 21 | 22 | currency risk |
| Forward - sale of USD | Q4 2022 | 10 | 11 | currency risk |
| Forward - sale of USD | Q1 2023 | 10 | 11 | currency risk |
| Forward - sale of USD | Q2 2023 | 10 | 11 | currency risk |
| IRS | Q2 2024 | 200 | 191 | interest rate risk |
| IRS | Q4 2026 | 400 | 395 | interest rate risk |
| as at Dec 31 2020 | ||||
| Forward − sale of EUR | Q1 2021 | 36 | 37 | currency risk |
| Forward − sale of EUR | Q2 2021 | 22 | 23 | currency risk |
| Forward - sale of USD | Q3 2021 | 3 | 3 | currency risk |
| Forward − sale of RUB | Q1 2021 | 32 | 28 | currency risk |
| IRS | Q2 2024 | 200 | 210 | interest rate risk |
The fair values of financial derivatives such as forwards, which are used to lock in exchange rates, are estimated for a financial asset using input data other than quoted prices, observable for the asset (level 2). Future cash flows are measured at the end of each reporting period based on the contracted forward rate. Financial instruments have fixed (contractual) maturities and therefore they are measured as at each reporting date. The Group uses hedge accounting. It is applied to forward contracts which are deemed effective in accordance with applicable policies.
48.4. Financial instruments by category
| Dec 31 2021 | Dec 31 2020 | |
| trade and other receivables | 519 | 520 |
| loans | 86 | 2 |
| cash and cash equivalents | 1,333 | 899 |
| Total financial assets | 1,938 | 1,421 |
| trade and other payables | 214 | 167 |
| other financial liabilities | 910 | 479 |
| Total financial liabilities | 1,124 | 646 |
In the opinion of the Group, the fair values of cash, short-term deposits, trade receivables, trade payables, overdraft facilities and other current liabilities do not differ from their carrying amounts, chiefly due to their short maturities.
49. Objectives and principles of financial risk management
Financial risk management is designed to mitigate or eliminate the adverse effect on the Group's financial condition of risks inherent in its operations, including in particular:
| • |
credit risk - the risk of a trading partner's failure to perform contractual obligations; |
| • |
liquidity risk - the risk that the Group may not be able to meet its financial liabilities when due; |
| • |
market risk - currency risk, interest rate risk, and price risk. |
The Group is primarily exposed to financial risk related to its trade receivables (currency risk, credit risk) and liabilities under borrowings (interest rate risk).
The Group seeks to mitigate the impact of various risks through natural hedging mechanisms.
49.1. Credit risk
The Group's credit risk exposure is related to its principal business. IFRS 7 requires that entities analyse individual assets exposed to credit risk, i.e., trade receivables, lease receivables, loans, and cash. Credit risk results from outstanding contracts and is related to the risk of such credit events as a trading partner's insolvency, partial payment of receivables, and material delays in payment of receivables or loans.
On the domestic market, the Group enters into transactions mainly with customers from the mining sector, and therefore receivables, including lease receivables, from that sector are the source of the largest risk concentration.
Additionally, the creditworthiness of trading partners is checked, and security (in the form of letters of credit or bank guarantees) is used to minimise the risk of non-payment.
49.2. Liquidity risk
The Group is exposed to liquidity risk when cash flows related to payment of receivables are delayed. The Group protects itself against payment difficulties in relation its liabilities by managing the payment and collection periods, as well as the system of advance payments. At the same time, the credit facility limits available to the Group are sufficient to prevent any negative consequences of payment delays.
| Maturity of liabilities in the period | Dec 31 2021 | up to 1 year | 1-3 years | Over 3 years |
| trade and other payables | 214 | 214 | - | - |
| bank credit and non-bank borrowings | 32 | 28 | 4 | - |
| notes | 805 | 206 | 200 | 399 |
| factoring | 30 | 17 | 13 | - |
| lease liabilities | 33 | 12 | 4 | 17 |
| Total | 1,114 | 477 | 221 | 416 |
| Maturity of liabilities in the period | Dec 31 2020 | up to 1 year | 1-3 years | Over 3 years |
| trade and other payables | 167 | 167 | - | - |
| bank credit and non-bank borrowings | 4 | 2 | 2 | - |
| notes | 420 | - | 200 | 220 |
| factoring | 43 | 35 | 8 | - |
| lease liabilities | 59 | 5 | 4 | 50 |
| Total | 693 | 209 | 214 | 270 |
49.3. Market risk
| • |
Currency risk - related to exchange rate movements, causing uncertainty as to the level of future cash flows. The Group takes steps to minimise this risk by entering into FX forwards and agreements containing clauses which provide for the possibility of price adjustment in the event of changes in raw material prices caused by foreign exchange movements; |
| • |
Interest rate risk - the Group is exposed to this risk as it finances its operations with bank loans bearing interest at WIBOR-based variable rates. As the majority of the Group's loans are denominated in the złoty, the Group monitors the decisions of the Polish Monetary Policy Council and negotiates lending terms with the financing banks; |
| • |
Price risk - the risk of price increases arises in connection with prices of materials essential for the Group's operations, mainly steel products. The Group mitigates this risk by ensuring that its contracts with suppliers (steelworks; suppliers of hydraulic elements, screw elements) provide for the right to negotiate prices and by placing framework purchase orders where prices and volumes are guaranteed but individual batches are received gradually, when and as needed. The Group's sources of materials for production and provision of services are diversified insofar as possible. |
49.4. Sensitivity analysis for currency risk
| Dec 31 2021 | Value at risk | EUR/PLN | EUR/PLN | Other currency/PLN | Other currency/PLN | |
| Change | 10% | -10% | 10% | -10% | ||
| Cash and cash equivalents | 1,333 | 31 | 1.0 | -1.0 | 2.1 | -2.1 |
| Trade and other receivables | 516 | 110 | 10.8 | -10.8 | 0.2 | -0.2 |
| Financial liabilities other than borrowings | 73 | - | - | - | - | - |
| Trade and other payables | 214 | 15 | -1.5 | 1.5 | - | - |
| Borrowings | 837 | 11 | -1.1 | 1.1 | - | - |
| Cash and cash equivalents | 899 | 20 | 1.7 | -1.7 | 0.3 | -0.3 |
| Trade and other receivables | 511 | 98 | 9.2 | -9.2 | 0.6 | -0.6 |
| Financial liabilities other than borrowings | 74 | - | - | - | - | - |
| Trade and other payables | 167 | 15 | -1.5 | 1.5 | - | - |
| Borrowings | 405 | 4 | -0.2 | 0.2 | -0.2 | 0.2 |
49.5. Sensitivity analysis for interest rate risk
| Dec 31 2021 | effect on profit or loss | effect on profit or loss | |
| Interest rate change | 1% | -1% | |
| Cash and cash equivalents | 1333 | 13.3 | -13.3 |
| Loans | 86 | 0.9 | -0.9 |
| Financial liabilities other than borrowings | 73 | -0.7 | 0.7 |
| Borrowings | 837 | -8.4 | 8.4 |
| Dec 31 2020 | effect on profit or loss | effect on profit or loss | |
| Interest rate change | 1% | -1% | |
| Cash and cash equivalents | 899 | 9.0 | -9.0 |
| Loans | 2 | 0.2 | -0.2 |
| Financial liabilities other than borrowings | 74 | -7.4 | 7.4 |
| Borrowings | 403 | -4.0 | 4.0 |
50. Related-party transactions
The statement of profit or loss data relates to the period January 1st-December 31st 2021 and the statement of financial position includes data as at December 31st 2021.
| Revenue and other income | Finance income | Sale of property, plant and equipment (gain on sale) | Purchase of materials, services and other | Finance costs | |
| subsidiaries | 0 | 0 | 0 | 1 | 0 |
| associates | 4 | 1 | 0 | 1 | 0 |
| other related entities | 2 | 1 | 0 | 108 | 0 |
| parent TDJ Equity I | 0 | 0 | 0 | 0 | 0 |
| Purchase of property, plant and equipment | Liabilities | Bank credit and non-bank borrowings | Receivables | loans | |
| subsidiaries | 0 | 0 | 0 | 0 | 0 |
| associates | 0 | 0 | 0 | 0 | 0 |
| other related entities | 0 | 10 | 18 | 2 | 0 |
| parent TDJ Equity I | 0 | 0 | 0 | 0 | 0 |
The statement of profit or loss data relates to the period January 1st-December 31st 2020 and the statement of financial position includes data as at December 31st 2020.
| Revenue and other income | Finance income | Sale of property, plant and equipment (gain on sale) | Purchase of materials, services and other | Finance costs | |
| subsidiaries | 0 | 0 | 0 | 0 | 0 |
| associates | 7 | 1 | 0 | 7 | 0 |
| other related entities | 2 | 4 | 0 | 42 | 0 |
| parent TDJ Equity I | 0 | 0 | 0 | 0 | 0 |
| Purchase of property, plant and equipment | Liabilities | Bank credit and non-bank borrowings | Receivables | loans | |
| subsidiaries | 2 | 0 | 0 | 0 | 0 |
| associates | 0 | 2 | 0 | 3 | 0 |
| other related entities | 0 | 9 | 29 | 2 | 0 |
| parent TDJ Equity I | 0 | 0 | 0 | 0 | 0 |
52. Remuneration of members of the management board and the supervisory board
The tables below present net remuneration of members of the Management Board and the Supervisory Board of the parent for 2021. (PLN thousand)
| Management Board, Jan 1-Dec 31 2021 | 12 months to Dec 31 2021 |
| Mirosław Bendzera | 1,618 |
| Beata Zawiszowska | 1,285 |
| Dawid Gruszczyk | 1,102 |
| Tomasz Jakubowski | 1,073 |
| Adam Toborek | 894 |
| Ireneusz Kazimierski | 1,025 |
| Total | 6,997 |
| Supervisory Board, Jan 1-Dec 31 2021 | 12 months to Dec 31 2021 |
| Tomasz Domogała | 6 |
| Czesław Kisiel | 6 |
| Jacek Leonkiewicz | 10 |
| Dorota Wyjadłowska | 18 |
| Magdalena Zajączkowska-Ejsymont | 3 |
| Tomasz Kruk | 20 |
| Adam Toborek | 3 |
| Total | 66 |
52. Auditor's fees
On February 4th 2020, FAMUR S.A. entered into a contract for the audit and review of financial statements with BDO spółka z ograniczoną odpowiedzialnością sp.k., with its registered office at ul. Postępu 12, Warsaw, registered by the District Court for the Capital City of Warsaw, 12th Commercial Division of the National Court Register, under No. KRS 0000729684, entered in the list of qualified auditors of financial statements maintained by the Polish Agency for Audit Oversight (PANA) under No. 3355. The total remuneration of the auditor for the provision of contracted services in 2021 was PLN 259,750, VAT exclusive, including:
| ― |
PLN 59,000.00 (VAT exclusive) for the review of condensed interim separate financial statements of FAMUR S.A. and for the review of the consolidated financial statements of the FAMUR Group, |
| ― |
PLN 179,000.00 (VAT exclusive) for the audit of the full-year separate financial statements of FAMUR S.A. and for the audit of the full-year consolidated financial statements of the FAMUR Group, |
| ― |
PLN 21,750.00 (VAT exclusive) - report on evaluation of the report on executive compensation for the General Meeting and the Supervisory Board of FAMUR S.A. |
53. Analysis of the impact of the COVID-19 pandemic on the Group's assets and liabilities
In 2021, Poland and other countries were still struggling with the impact of the COVID-19 pandemic on business activity and the persistently high risk of business interruption. Due to the smooth and prompt implementation of the Group's plan to mitigate this risk, the impact of the COVID-19 pandemic on the Group's business was significantly lower in 2021 than in the previous year.
The Management Board is monitoring the threats posed by the SARS-CoV-2 virus and its variants on an ongoing basis and is taking appropriate steps to ensure that the employees are safe, operations are not disrupted, liabilities are met, financial liquidity is maintained, and the negative impact of the situation on the Group's profitability is mitigated.
The Group reviews its budgets and forecasts on an ongoing basis to reflect the current economic conditions created by the COVID-19 epidemic. The Group tested goodwill for impairment (see notes to these financial statements).
The Group carried out an analysis of expected credit losses based on a review of the financial position of its largest customers and the age structure of receivables. Following the analysis, it was concluded that the expected credit loss rate did not change materially relative to December 31st 2020. The Company did not experience any extraordinary debt collection problems. The Group monitors information on its main trading partners, as well as the overall market situation and collection of receivables, on an ongoing basis. In the event of any additional developments or indications of deterioration, the Group will update its estimates and calculate expected future credit losses.
As at the date of these financial statements, the Group's financial position was sound. The Group has not identified any liquidity problems or the risk of default under credit facility agreements or other financing agreements. The Group does not see any risk to the financing of its day-to-day operations or investment projects. For information on available financing and credit facilities, see the relevant note.
54. Events after the reporting date
On February 24th 2022, the Russian Federation launched an invasion of Ukraine. The current political and economic situation in Ukraine has significantly increased the degree of exposure of the FAMUR Group to the following types of risks:
| • |
Interruption in the chain of supply of components necessary for the operations of the FAMUR Group as manufacturers and distributors of, inter alia, sheet metal and steel stopped offering products due to the high uncertainty in the market, |
| • |
A spike in the volatility of commodity prices due to Ukraine's and Russia's significant shares in the production of metallurgical products and related components (castings, forgings) and Russia's significant share in the extraction of key commodities, including oil, gas, nickel, aluminium. This has led to a significant increase in the prices of components (mainly sheet metal and steel), as the FAMUR Group's suppliers largely imported components from Ukraine. In addition, the sanctions imposed on Russia ban the import into the European Union of iron and steel products originating from that country, |
| • |
Delayed delivery of products due to limited and falling availability of transport services, |
| • |
Risk of the interruption of business activities by the FAMUR Group's subsidiary in the Russian Federation (OOO FAMUR Russia). |
The FAMUR Group monitors these risks on an ongoing basis and has taken the following measures to limit their impact on the Group's business:
| • |
It has suspended the offering of new mining machinery and equipment in the Russian Federation until further notice, |
| • |
It has commenced a review of the directions of further operational activities in the Russian Federation |
| • |
It monitors and adjusts its activities to any administrative decisions of the Polish government and to restrictive measures imposed by European Union bodies, |
| • |
It analyses options for sourcing raw materials and components for current and future orders from alternative sources. |
With regard to orders for the supply of machinery placed by end customers from Russia before the outbreak of the armed conflict, the FAMUR Group is taking the following steps:
| • |
It is thoroughly analysing all economic, operational and legal issues related to the open supply contracts with Russian trading partners, |
| • |
It monitors on an ongoing basis any restrictions on the activities of the subsidiary in the Russian Federation, |
| • |
It is in constant contact with its business partners in the CIS countries to work out solutions to complete the contracts an to collect consideration due for the deliveries, |
| • |
It is in constant contact with banks and financial institutions to minimise payment delays by its trading partners from the CIS countries. |
As at December 31st 2021, the total amount of backlog of equipment intended for use in Russia was PLN 189 million.
On March 4th 2022, the Management Board of FAMUR S.A. decided to notify Polskie Maszyny Group Sp. z o.o. of Katowice, its customer, of the occurrence of a force majeure event with respect to two of a series of executed contracts for the supply of equipment to be used in the Russian Federation. The Company made the decision after it was notified by a supplier of sheet metal, a material necessary for the performance of the contracts by FAMUR, of an event of force majeure at present preventing the supplier from fulfilling the order. Citing the current geopolitical situation in Ukraine, the supplier notified the Company that it is unable to obtain a substitute offer for the material necessary to perform the Agreements from any other manufacturers or distributors as all of them have stopped submiting offers due to the highly uncertain conditions prevailing on the market (Current Report No. 10/2022 of March 4th 2022). On April 1st 2022, an agreement was concluded with the customer to abandon the performance of three contracts with a total contract price of approximately PLN 130 million for the supply of equipment and the provision of assembly supervision services, purchased for operation in the Russian Federation. Each Party agreed to cover its costs incurred in connection with execution and performance of the contracts. The amount of costs to be covered by the Issuer is not material (Current Report No. 16/2022 dated April 1st 2022). Adjusted for the price of the three terminated contracts, the total amount of backlog for equipment to be operated in Russia as of the end of February 2022 (i.e., the last closed accounting period before the date of issue of this report) was approximately PLN 40 million.
In 2021, the FAMUR Group recognised PLN 205 million in revenue from contracts for the delivery of machinery for operation in the Russian Federation. As at the end of December 2021 and the end of February 2022 (i.e., the last closed accounting period), the on-balance-sheet exposure related to the performance of contracts for the supply of machinery and services to customers in the Russian Federation was as follows:
| On‐balance‐sheet exposure (PLN million) | Dec 31 2021 | Feb 28 2022 |
| Advance payments received | 85 | 99 |
| Contract assets | 54 | 14 |
| Net liability on measurement of derivative instrument | 1 | <1 |
The FAMUR Group has a service centre located in Russia, operated by OOO FAMUR. The entity is primarily responsible for the performance of obligations under contract warranties provided by the Group in the past. The carrying amount of net assets of OOO FAMUR at the date of this report is PLN 46 million. Considering the current dynamic situation, the Issuer assesses the entity's ability to conduct business activities on an ongoing basis; currently the Issuer sees no indication that the entity woud not be able to continue as a going concern for a period of 12 months from the reporting date. As at December 31st 2021 and February 28th 2022, trade receivables from OOO FAMUR amounted to PLN 10 million and PLN 7 million, respectively. The Company does not hold any assets or FAMUR Group companies in Ukraine or Belarus.
Katowice, April 11th 2022
Signature of the person responsible for preparation of the financial statements
Marcin Pietrzak
Signatures of members of the Management Board of FAMUR S.A.
Mirosław Bendzera
Beata Zawiszowska
Dawid Gruszczyk
Tomasz Jakubowski
Ireneusz Kazimierski
Digitally signed
Responsibility of the auditor
Our objective was to express an opinion, on the basis of the reasonable assurance service we performed, whether the consolidated financial statements in the ESEF format have been marked up in accordance with the requirements of the ESEF Regulation.
We have performed our engagement in accordance with National Standard on Assurance Engagements Other than Audits and Reviews 3001PL - "Audit of financial statements prepared in a single electronic reporting format" adopted by the National Council of Statutory Auditors by Resolution No. 1975/32a/2021 of December 17th 2021 ("NSAE 3001PL") and, where appropriate, in accordance with National Standard on Assurance Engagements Other than Audits and Reviews 3000 (Z) as defined in International Standard on Assurance Engagements 3000 (Revised) - "Assurance Engagements Other than Audits or Reviews of Historical Financial Information", adopted by the National Council of Statutory Auditors by Resolution No. 3436/52e/2019 of April 8th 2019, as amended ("NSAE 3000 (Z)").
The Standard requires that we plan and perform our procedures so as to obtain reasonable assurance that the consolidated financial statements in the ESEF format have been prepared in accordance with the specified criteria.
Reasonable assurance is a high level of assurance but is not a guarantee that a service performed in accordance with NSAE 3001PL and, where appropriate, NSAE 3000 (Z) will always detect a material misstatement.
The procedures selected depend on the auditor's judgement, including assessment of the risk of a material misstatement, whether due to fraud or error. When assessing this risk, the auditor takes into account the internal controls related to the preparation of the consolidated financial statements in the ESEF format in order to plan appropriate procedures to provide the auditor with sufficient appropriate evidence. We have not assessed the functioning of the internal control system to issue an opinion on its effectiveness.
Summary of the work performed
The procedures we planned and performed included:
| ― |
obtaining an understanding of the process of preparing the consolidated financial statements in the ESEF format, including the process of selecting and applying XBRL tags by the Group and ensuring compliance with the ESEF Regulation, including an understanding of the internal control system mechanisms related to this process; |
| ― |
reconciling the marked up information contained in the consolidated financial statements in the ESEF format with the audited consolidated financial statements; |
| ― |
assessment, with the use of a specialist IT tool, of compliance with the technical standards on the specification of a single electronic reporting format, assessment of completeness of marking up the information contained in the consolidated financial statements in the ESEF format with XBRL tags; |
| ― |
assessment of whether the applied XBRL tags from the taxonomy specified in the ESEF Regulation were applied properly and whether taxonomy extensions were used in situations where no appropriate elements were identified in the core taxonomy specified in the ESEF Regulation; |
| ― |
assessment of the correctness of anchoring the applied taxonomy extensions in the core taxonomy specified in the ESEF Regulation. |
We believe that the evidence we obtained is sufficient and appropriate to express our opinion on the compliance of the mark-up with the requirements of the ESEF Regulation.
Ethical requirements, including independence
In performing the engagement, the auditor and the audit firm complied with the independence requirements and other ethical requirements laid down in the IESBA Code. The IESBA Code is based on the fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional conduct. We also complied with other independence and ethical requirements applicable to this assurance engagement in Poland.
Quality control requirements
The audit firm applies national standards on quality control as defined in International Standard on Quality Control 1 - Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements, adopted by National Council of Statutory Auditors' Resolution No. 2040/37a/2018 on the national standards on quality control, dated March 3rd 2018, as amended (the "NSQC").
In accordance with the requirements of the NSQC, the audit firm maintains a comprehensive quality control system including documented policies and procedures for compliance with ethical requirements, professional standards and the applicable laws and regulations.
Opinion on compliance with requirements of ESEF Regulation
The auditor's opinion is based on the matters described above and therefore the opinion should be read taking into account those matters.
In our opinion, the consolidated financial statements in the ESEF format have been marked up in all material respects in accordance with the requirements of the ESEF Regulation.
Statement on provision of non-audit services
To the best of our knowledge and belief, the non-audit services we have provided to the Group are compliant with applicable laws and regulations in force in Poland, and we have not provided any non-audit services that are prohibited under Article 5(1) of the EU Regulation or Art. 136 of the Statutory Auditors Act.
The non-audit services we provided to the Parent and its subsidiaries in the audited period are specified in Note 52 to the consolidated financial statements.
Appointment of the audit firm
We were appointed to audit the consolidated financial statements of the Group by resolution of the Parent's Supervisory Board of December 20th 2019. We audit the Group's consolidated financial statements as of the financial year ended December 31st 2020.
The lead auditor responsible for the audit based on which this auditor's report has been prepared is Marcin Krupa.
BDO spółka z ograniczoną odpowiedzialnością sp.k. of Warsaw
entered in the list of audit firms under Reg. No. 3355
on behalf of which the lead auditor has audited the consolidated financial statements
Katowice, April 11th 2022
Signed with qualified electronic signature
Marcin Krupa Auditor Reg. No. 11142
Signed with qualified electronic signature
André Helin, PhD President of the General Partner's Management Board Auditor Reg. No. 90004
1
www.irena.org/Statistics/View-Data-by-Topic/Capacity-and-Generation/Country-Rankings
2
www.ieo.pl/pl/aktualnosci/1566-ieo-podnosi-prognoze-nowych-mocy-dla-fotowoltaiki
3
www.ure.gov.pl/pl/urzad/informacje-ogolne/aktualnosci/9587,Aukcje-OZE-Prezes-URE-podsumowuje-wyniki-aukcji-na-sprzedaz-energii-elektrycznej.html
4
www.ure.gov.pl/pl/urzad/informacje-ogolne/aktualnosci/9981,Aukcje-OZE-2021-Prezes-URE-podsumowuje-wyniki-grudniowych-aukcji-na-sprzedaz-ene.html
5 Regulation (EU) 2016/679 of the European
Parliament and of the Council of 27 April 2016 on the
protection of natural persons with regard to the processing
of personal data and on the free movement of such data, and
repealing Directive 95/46/EC.
6 FAMUR S.A.'s Register of Environmental Aspects
as well as the Environmental Monitoring Plan and
Environmental Aspects Assessment were updated in April
2018.