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1
RAWLPLUG GROUP
MANAGEMENT REPORT ON THE OPERATIONS OF
RAWLPLUG GROUP AND RAWLPLUG S.A.
FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2018
WROCŁAW, 21 MARCH 2019
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Contents
Letter from the CEO .................................................................................................................................................. 5
1. BASIS FOR PREPARATION OF FINANCIAL STATEMENTS AND PERIOD COVERED.
ACCOUNTING PRINCIPLES ADOPTED IN PREPARING THE FINANCIAL STATEMENTS ................ 7
2. DESCRIPTION OF GROUP OPERATIONS ................................................................................................... 7
2.1. DESCRIPTION OF THE GROUP ............................................................................................................... 7
2.1.1. Group parent ........................................................................................................................................ 7
2.1.2. Composition of the Group .................................................................................................................... 8
2.1.3. Changes in Group structure .................................................................................................................. 8
2.2. CHANGES IN THE MAIN PRINCIPLES OF GROUP AND COMPANY MANAGEMENT .................. 9
2.3. GROWTH DIRECTIONS ............................................................................................................................ 9
2.4. PARENT'S AUTHORITIES ....................................................................................................................... 10
2.4.1. Management Board ............................................................................................................................ 10
2.4.2. Supervisory Board .............................................................................................................................. 10
2.4.3. Shares held by the parent's management board or supervisory board members ................................ 10
2.4.4. Remuneration and pay bonuses paid or due to be paid to the Parent's management board and
supervisory board members ............................................................................................................... 11
2.5. SHAREHOLDING STRUCTURE ............................................................................................................. 11
2.6. OWN SHARES .......................................................................................................................................... 12
2.7. SHARE ISSUES ......................................................................................................................................... 13
2.8. INCENTIVE PROGRAMME .................................................................................................................... 13
3. FACTORS SIGNIFICANT TO GROUP DEVELOPMENT, INCLUDING THREATS AND RISKS,
AND GROWTH PERSPECTIVES ................................................................................................................. 14
3.1. External factors ........................................................................................................................................... 14
3.1.1. Macroeconomic situation and conditions in the industry ................................................................... 14
3.1.1.1. Construction and fixings industry ............................................................................................. 14
3.1.1.2. Industrials sector ....................................................................................................................... 16
3.1.2. Employment conditions; prices of products and intermediates imported from the Far East .............. 17
3.1.3. Exchange rates ................................................................................................................................... 17
3.1.4. Interest rates ....................................................................................................................................... 17
3.2. Internal factors ............................................................................................................................................ 17
3.3. Growth perspectives ................................................................................................................................... 18
3.4. Growth strategy .......................................................................................................................................... 18
4. STATEMENT ON NON-FINANCIAL DATA ............................................................................................................ 18
4.1. Business model and key performance indicators ........................................................................................ 18
4.2. Business strategy, key financial and non-financial ratios ........................................................................... 20
4.3. Important topics related to sustainable development and responsible business .......................................... 21
4.4. Risk management ........................................................................................................................................ 23
4.5. Management, procedures and results in the employee area ........................................................................ 23
4.6. Management, procedures and results in the area of ethics and combating corruption and bribery and
the area of combating human rights abuses ................................................................................................ 25
4.7. Management, procedures and results in the environmental area................................................................. 26
4.8. Management, procedures and results in the social area .............................................................................. 26
4.9. Management, procedures and results in the product/client/supply chain area ............................................ 27
5. SEASONALITY OF SALES .......................................................................................................................... 29
6. INVESTMENTS AND R&D .......................................................................................................................... 30
6.1. INVESTMENTS ......................................................................................................................................... 30
6.2. INVESTMENTS ......................................................................................................................................... 30
6.3. R&D............................................................................................................................................................ 30
6.4. PLANS FOR 2019 ...................................................................................................................................... 33
7. HUMAN RESOURCES ................................................................................................................................. 33
7.1. Employment ................................................................................................................................................ 33
7.2. REMUNERATION POLICY ..................................................................................................................... 34
8. RELATED-PARTY TRANSACTIONS ......................................................................................................... 35
8.1. RELATED-PARTY TRANSACTIONS..................................................................................................... 35
8.2. RELATED-PARTY TRANSACTIONS AT RAWLPLUG S.A. ............................................................... 37
9. OFF-BALANCE SHEET ITEMS ................................................................................................................... 40
3
9.1. CREDIT OR LOAN SURETIES GRANTED OR RECEIVED AND GUARANTEES GRANTED
AND RECEIVED AT RAWLPLUG GROUP AND RAWLPLUG S.A.................................................... 40
9.2. OTHER OFF-BALANCE SHEET ITEMS ................................................................................................ 42
10. INFORMATION ON SURETIES AND GUARANTEES RECEIVED BY RAWLPLUG S.A. .................... 42
11. INFORMATION ON LOANS, SURETIES AND GUARANTEES GRANTED BY RAWLPLUG S.A.
AND CREDIT FACILITIES RECEIVED ...................................................................................................... 42
12. SIGNIFICANT PROCEEDINGS IN PROGRESS BEFORE A COURT, ARBITRATION BODY OR
PUBLIC ADMINISTRATION AUTHORITY ............................................................................................... 43
13. SIGNIFICANT INFORMATION FOR ASSESSMENT OF THE COMPANY AND GROUP ..................... 43
13.1. DIVIDEND ............................................................................................................................................ 43
13.2. EVENTS AFTER THE END OF THE REPORTING PERIOD ............................................................ 44
14. SIGNIFICANT AGREEMENTS .................................................................................................................... 45
15. GROUP FINANCIAL RESULTS................................................................................................................... 45
15.1. ASSET AND LIABILITY STRUCTURE IN THE CONSOLIDATED STATEMENT
OF FINANCIAL POSITION ................................................................................................................. 46
15.2. REVENUE FROM SALES .................................................................................................................... 46
15.2.1. Domestic sales.................................................................................................................................... 47
15.2.2. Foreign sales ...................................................................................................................................... 47
15.2.3. Product structure ................................................................................................................................ 47
15.2.4. Supply sources ................................................................................................................................... 47
15.3. Selling costs and administrative expenses .............................................................................................. 48
15.4. FINANCING ACTIVITIES ................................................................................................................... 48
15.5. PROFITABILITY RATIOS ................................................................................................................... 49
15.6. LIQUIDITY RATIOS ............................................................................................................................ 50
15.7. DEBT RATIOS ...................................................................................................................................... 50
15.8. PROGRESS VERSUS PREVIOUSLY PUBLISHED GUIDANCE ..................................................... 50
15.9. FACTORS AND EXTRAORDINARY EVENTS HAVING AN IMPACT ON FINANCIAL
RESULTS ............................................................................................................................................... 50
15.10. FINANCIAL MANAGEMENT ........................................................................................................ 50
15.11. FINANCIAL RISK MANAGEMENT .............................................................................................. 51
16. RAWLPLUG S.A. FINANCIAL RESULTS .................................................................................................. 51
16.1. ASSET AND LIABILITY STRUCTURE ............................................................................................. 52
16.2. REVENUE FROM SALES .................................................................................................................... 52
16.2.1. DOMESTIC SALES .............................................................................................................................. 52
16.2.2. SALES IN FOREIGN MARKETS .......................................................................................................... 53
16.2.3. PRODUCT STRUCTURE ..................................................................................................................... 53
16.3. OPERATING EXPENSES .............................................................................................................................. 53
16.4. FINANCING ACTIVITIES ............................................................................................................................ 54
16.5. PROFITABILITY RATIOS ............................................................................................................................ 55
16.6. LIQUIDITY RATIOS .................................................................................................................................... 55
16.7. DEBT RATIOS ............................................................................................................................................. 55
16.8. PROGRESS VERSUS PREVIOUSLY PUBLISHED GUIDANCE ..................................................................... 56
16.9. FACTORS AND EXTRAORDINARY EVENTS HAVING AN IMPACT ON FINANCIAL RESULTS ................. 56
16.10. FINANCIAL MANAGEMENT .................................................................................................................. 56
16.11. FINANCIAL RISK MANAGEMENT ......................................................................................................... 56
17. ENTITY AUTHORISED TO AUDIT THE FINANCIAL STATEMENTS ................................................... 56
18. STATEMENT ON APPLICATION OF CORPORATE GOVERNANCE STANDARDS IN 2018............... 57
18.1. Indication of the corporate governance standards to which the Issuer is subject, together with
the location where the text concerning such principles is publicly available ......................................... 57
18.2. Information on the extent to which the Issuer diverged from the set of corporate governance
standards, indication of those standards and reasons for their omission ................................................ 57
18.3. Description of the key features of the Issuer's internal control system and risk management system,
as these relate to the process of preparing separate and consolidated financial statements .................... 59
18.4. Indication of shareholders directly or indirectly holding significant stakes, together with indication
of the number of shares held by such entities, their share in capital, the number of votes carried by such
shares and their share in the total number of votes at the general meeting ............................................. 59
18.5. Holders of securities with special control entitlements, together with description thereof .................... 60
18.6. Indication of all limitations relating to exercise of voting rights, such as a limitation concerning
exercise of voting rights by holders of a specified stake or number of votes, time limitations
concerning exercise of voting rights - pursuant to which, and with the company's support,
the entitlements attached to securities are separated from ownership of such securities ........................ 60
18.7. Indication of any limitations concerning transfer of securities ownership ............................................. 60
4
18.8. Description of principles concerning the appointment and dismissal of management personnel
and their entitlements, in particular the right to make decisions on the issue or buyback of shares ....... 60
18.9. Description of the principles for amending the Company's articles of association ................................ 61
18.10. Modus operandi of the general meeting, along with its main authorisations; description
of shareholder rights and the means of their exercise, in particular those resulting from
the general meeting rules, if these were adopted, unless such information is not provided for by
the provisions of law .......................................................................................................................... 61
18.11. Composition of the Issuer's Management Board, Supervisory Board, administrative authorities
and their committees, along with changes over the past financial year.............................................. 63
18.12. Diversity policy concerning the Company's authorities and key managers ....................................... 68
19. MANAGEMENT BOARD STATEMENT AND INFORMATION .............................................................. 69
19.1. MANAGEMENT BOARD STATEMENT ............................................................................................ 69
19.1. MANAGEMENT BOARD INFORMATION PREPARED PURSUANT TO SUPERVISORY
BOARD STATEMENT ON SELECTION OF AUDIT FIRM .............................................................. 69
5
Management report on the operations of
RAWLPLUG GROUP AND RAWLPLUG S.A.
for the period from 1 January to 31 December 2018 (data in PLN 000s)
Letter from the CEO
Dear Partners, Shareholders and Employees of RAWLPLUG Group,
2018 was an important year for two key reasons. The first one was the further comprehensive development of our
offering, based on three pillars: products, services and training, which involved great efforts in many areas of
RAWLPLUG Group's business. Intensive preparations for 2019 - a year of international celebrations for the 100th
anniversary of the RAWLPLUG brand, were the second reason. This is an event of exceptional significance to our
employees, clients and all stakeholders. We are proud of having worked well in 2018, gaining new experiences and
competences, motivating ourselves for further action and getting ready to take on new challenges that will let us
steadfastly implement our strategy.
Last year we developed our product offering, which contains plenty of evidence that for RAWLPLUG Group
motivation is what we need, functionality is our strength and efficiency is our priority. We introduced ten completely
new products that are already acclaimed by the market. Each of them is available in several or several dozen variants,
depending on the type of surface, application or assembly methods. Each is equipped with specialised accessories
that together make up a complete fixings system. Uncompromising technical parameters and safety guarantee for
each application. Advanced technologies for high loads and simplicity of use. Durability, versatility, ease of assembly
on any surface, with any element. System solutions ensuring efficient assembly and long-term operation. Professional
tools designed to save time and provide solid connections.
In 2018, Rawlplug Technical Helpdesk was added to RAWLPLUG Group's portfolio of specialised free-of-charge
services, intended as an international service for engineers, architects and builders as regards versatile technical and
design solutions. We have already handled over 1500 queries and we are constantly increasing our potential and
capabilities in this area. Just as with applications for designing fixings - BIM Rawlplug now featuring a bonded
anchor offering, EasyFix with a completely new and even more intuitive interface, and Rawlplug ID - functionality
that provides easier access to all of our online services.
Last year, we were also preparing to introduce Rawlplug Academy®, an educational and development programme
dedicated to employees and clients, based on an e-learning platform, training centre, traditional workshops and a
knowledge base, designed in a way that takes users from basic to expert level in products and services.
The project will eventually include ten product categories, 82 e-learning workshops, 24 practical workshops and 250
training hours, focusing on expanding knowledge and developing skills.
This intense development of the three pillars of RAWLPLUG Group's offering was possible thanks to integrated
activities in many areas as well as continued demand for our products, especially in European and Asian markets.
Examples? A new company in our Group – Rawl India Services Private Limited, responsible for technical and
marketing support for our activities in the region. Participation in prestigious industry events as advisers and experts.
Fifth International ETICS Conference by the Association for Thermal Insulation Systems, International Industry
Ministry Conference in Islamabad, Institution of Engineers Seminar in Singapore are just some of them.
Completing the deployment of SAP B1 at our companies in the UAE and the U.K., along with commencement of
deployment in Ireland, letting us securely store data and use efficient sales reporting tools. Further investments related
to our plan to automate the production facilities in Wrocław and Łańcut, from machine park modernisation and
expansion, through infrastructural changes to better use land and facilities, to providing our employees with a higher-
quality workplace. Transfer and development of laboratory dedicated to mechanical anchor assortment to the
production facility in Łańcut. Formation of a new joint venture in Thailand - RAWLPLUG-TMAX Corporation
Limited, which from December 2018 produces light construction fixings and chemicals for bonded anchors for Asian
markets - this is our first production facility outside of Europe. Merger of Koelner Łańcucka Fabryka Śrub Sp. z o.o.
with Koelner Rawlplug IP Sp. z o.o. as well as RAWLPLUG S.A. with Koelner Tworzywa Sztuczne Sp. z o.o.,
which significantly improved the optimisation and synergy of operational and cost processes. Our challenges and
6
Management report on the operations of RAWLPLUG GROUP AND RAWLPLUG S.A.
for the period from 1 January to 31 December 2018 (data in PLN 000s)
achievements of course include efforts to implement our sustainable development strategy, the social aspect of which
was acknowledged in Poland, where we received the Eagle Award from the weekly WPROST, and in the United
Kingdom, where we were invited by BBC1 to work on The DIY SOS Show project.
Our increasing presence and operational scale, continuous improvements in the quality and efficiency of our
processes and the competitiveness of our offering led us to deliver very good financial results for 2018 and once
again grow RAWLPLUG Group's market share. This is also why we are entering 2019, the 100th year of the
RAWLPLUG brand, with a strong conviction that we can set even more ambitious goals for ourselves and that we
can reach for more. We believe that John Joseph Rawlings, inventor of the first wallplug in the world and founder of
the RAWLPLUG brand, would be proud of us in 2019: of our persistence and determination, of our attention to detail
and of our focus on the highest quality. Of the fact that this is not enough for us. And also of the fact that in our
every-day work with employees, clients and other stakeholders we do everything we can to ensure that you are
satisfied with pursuing your goals with us.
Sincerely,
Radosław Koelner
President of the Management Board of RAWLPLUG S.A.
7
Management report on the operations of
RAWLPLUG GROUP AND RAWLPLUG S.A.
for the period from 1 January to 31 December 2018 (data in PLN 000s)
1. BASIS FOR PREPARATION OF FINANCIAL STATEMENTS AND PERIOD
COVERED. ACCOUNTING PRINCIPLES ADOPTED IN PREPARING THE
FINANCIAL STATEMENTS
These annual consolidated financial statements of RAWLPLUG Group cover the 12 months ended 31 December 2018 (the
comparative period is the 12 months ended 31 December 2017) and are prepared in order to present the financial situation, results
and cash flows in accordance with International Accounting Standards (IAS), International Financial Reporting Standards (IFRS)
and the associated interpretations published in the form of Commission Regulations as well as in accordance with the Ordinance
of the Minister of Finance of 29 March 2018 (Polish Journal of Laws of 2018, item 757) on current and periodic information
disclosed by issuers of securities (...).
From 1 January 2005, RAWLPLUG Group, in accordance with the Act on Accounting of 29 September 1994
(Polish Journal of Laws of 2016, item 1047), prepares consolidated financial statements in accordance with International
Accounting Standards (IAS), International Financial Reporting Standards (IFRS) and the associated interpretations published in
the form of Commission Regulations.
The presentation and functional currency for these consolidated financial statements is PLN, and all amounts are expressed in
PLN 000s (unless stated otherwise). Financial statements of the entities comprising the Group were translated into the
presentation currency based on the principles specified in IAS 21.
These annual consolidated financial statements are prepared in accordance with the accounting principles presented in
RAWLPLUG Group's consolidated financial statements for the period 1 January - 31 December 2018.
The annual separate financial statements of RAWLPLUG S.A. cover the 12-month period ended 31 December 2018, as well as
comparative data, are prepared in order to present the Company's financial situation, results and cash flows in accordance with
the Company's adopted accounting principles, which are based on regulations resulting from the Accounting Act of 29 September
1994 (Polish Journal of Laws of 2019, item 351, as amended).
The presentation currency for the separate financial statements is PLN, and all amounts are expressed in PLN 000s (unless stated
otherwise).
The annual separate financial statements are prepared in accordance with the accounting principles presented in RAWLPLUG
S.A.'s separated financial statements for the period 1 January - 31 December 2018.
2. DESCRIPTION OF GROUP OPERATIONS
2.1. DESCRIPTION OF THE GROUP
2.1.1. GROUP PARENT
RAWLPLUG S.A., formerly: KOELNER S.A. (Company or RAWLPLUG), was registered on 20 December 1999 in division B
of the commercial register under no. 9101. Currently, the Company is registered under KRS number 33537. The Company was
founded by: Krystyna Koelner, Przemysław Koelner and Radosław Koelner. The Company's main economic activities of are:
design, manufacture and sale, mostly through wholesale distribution channels, of products from the following assortment groups:
✓ construction fixings,
✓ hand tools and power tools,
✓ screws and related accessories.
8
Management report on the operations of RAWLPLUG GROUP AND RAWLPLUG S.A.
for the period from 1 January to 31 December 2018 (data in PLN 000s)
2.1.2. COMPOSITION OF THE GROUP
Entities in RAWLPLUG S.A. Group (RAWLPLUG Group, Group) as at 31 December 2018:
* companies not subject to consolidation as of 31 December 2019 (in accordance with IAS 1 point 31)
** This is a joint venture, which for the purposes of these consolidated financial statements is measured using the equity method.
1 - the company has a branch in Łańcut.
2.1.3. CHANGES IN GROUP STRUCTURE
On 26 February 2018, Rawl India Services Private Limited, based in Bangalore, India ("Company"), was registered by the Indian
Ministry for Corporate Affairs, with the entire founding capital being taken up by RAWLPLUG S.A. Rawl India Services Private
Limited currently conducts service activity only, consisting of providing technical support for the distributor of RAWLPLUG
products, with which Rawlplug Group currently cooperates.
On 20 August 2018, RAWLPLUG-TMAX Corporation Limited, a production joint venture of RAWLPLUG S.A. and TMAX
Corporation Co. Ltd, was registered by Thailand's Ministry of Trade. Ltd. This company will produce light construction fixings
and chemical components for bonded anchors for Asian markets. The company is head-quartered in Bangkok (Thailand). The
company's share capital amounts to THB 34 560 000 (which is the equivalent of approx. USD 1 080 000.00), with RAWLPLUG
S.A. owning 51% and TMAX Corporation Co. Ltd. 49%. The formation of this new company is in line with the key elements of
RAWLPLUG Group's strategy as regards reinforcing the position of its foreign companies and entering new markets, focusing
also on non-European markets. RAWLPLUG Group is currently developing its activities in Europe, the Middle East, Australia,
Asia and Africa.
On 31 October 2018, the District Court for Wroclaw-Fabryczna in Wroclaw, 6th Commercial Division of the National Court
Register, registered the merger of RAWLPLUG S.A. with subsidiary Koelner - Tworzywa Sztuczne Sp. z o.o., based in Wrocław.
On the date the merger was registered in the register of companies at the National Court Register, RAWLPLUG S.A. succeeded
to all of the rights and obligations of Koelner - Tworzywa Sztuczne Sp. z o.o. As a result of the merger, Koelner - Tworzywa
RAWLPLUG S.A.
-> Koelner Polska Sp. z o. o. - 100%
-> Koelner Rawlplug IP Sp. z o.o.1 - 100%--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ------------------
-> Rawlplug Ltd - 100%
-> Koelner Hungária Kft - 51%
-> Koelner CZ s.r.o. - 100%
-> Koelner Deutschland GmbH - 100% -------------> Stahl GmbH - 100%
-> Rawlplug Middle East FZE - 100% -------------> Rawlplug Building and Construction Material Trading LLC - 100%
-> Rawlplug Ireland Ltd - 100% -------------> Rawlplug Ireland (Export) Ltd* - 100%
-> Koelner Vilnius UAB - 100%
-> Rawl France SAS - 100%
-> Koelner Centrum Sp. z o.o. - 51%
-> Rawl Scandinavia AB - 100%
-> Koelner Slovakia s.r.o. - 100%
-> Koelner Ltd - 100%
-> Koelner-Ukraine LLC * - 60%
-> Koelner Trading KLD LLC* - 100%
-> Koelner - Inwestycje Budowlane Sp. z o.o.* - 100%
-> Rawlplug Inc.* - 100%
-> Rawlplug Singapore PTE. LTD* - 100%
-> Rawlplug Shanghai Trading Co., Ltd.* - 100%
-> Rawl India Services Private Limited* - 100%
-> Koelner Kazakhstan Ltd* - 70%
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------> Rawlplug Portugal LDA *-100%
-> Rawl Africa (Pty) Ltd* - 100%
-> RAWLPLUG-TMAX Corporation Limited** - 51%
99%
1%
9
Management report on the operations of
RAWLPLUG GROUP AND RAWLPLUG S.A.
for the period from 1 January to 31 December 2018 (data in PLN 000s)
Sztuczne Sp. z o.o. was removed from the register of companies. Information on the merger procedures was published in current
reports (15, 16, 19 and 21/2018). The merger is an element of RAWLPLUG Group's strategy, which sees consolidation of Group
companies and is intended to simplify organisational structure and eliminate unnecessary processes. This process results in
greater transparency of the Group for investors and a streamlined structure in manufacturing activities, allowing for greater
efficiency. The merger had no impact on RAWLPLUG Group's consolidated results in 2018.
On 31 December 2018, the District Court for Wroclaw-Fabryczna in Wroclaw, 6th Commercial Division of the National Court
Register, registered a merger of RAWLPLUG S.A.'s subsidiaries, i.e. Koelner Rawlplug IP Sp. z o.o. as the Acquiring Company
with Koelner Łańcucka Fabryka Śrub Sp. z o.o. as the Acquired Company under art. 492 § 1 point 1 of the Polish Commercial
Companies Code, in accordance with rules specified in the Merger Plan of 31 August 2018 (information published in current
report 20/2018). As a result of the merger, Łańcucka Fabryka Śrub Sp. z o.o. was removed from the register and Koelner
Rawlplug IP Sp. z o.o.'s capital was increased. As a result of the merger, the Acquiring Company's share capital was increased
by PLN 104 527 250.00, i.e. to PLN 391 245 250.00, by issued 2 090 545 shares of Koelner Rawlplug IP Sp. z o.o. with nominal
value of PLN 50 each to RAWLPLUG S.A., as results from the exchange ratio calculation, specified in the Merger Plan. The
aim of the merger was to simplify RAWLPLUG Group's structure as regards economic activities in Poland, which will unlock
operational and cost synergies. It is expected that the merger will bring a number of operational and financial savings benefits,
including: stronger market and financial position through the formation of a strong economic entity, ensuring the consolidation
of assets of the merged companies and streamlining of the Group's operational structure and processes and thus increasing its
operational efficiency, simplifying flows, reducing the quantity of documents and eliminating mutual settlements between the
merged companies. There will also be financial savings in the administrative and organisational areas. The merger had no impact
on RAWLPLUG Group's consolidated results in 2018.
2.2. CHANGES IN THE MAIN PRINCIPLES OF GROUP AND COMPANY MANAGEMENT
No changes in management rules at RAWLPLUG S.A. and RAWLPLUG Group took place in 2018, except for the process
described in point 2.3.
2.3. GROWTH DIRECTIONS
2018 saw no significant changes in the directions of the Group's development. A sustainable development strategy was continued
in all operating areas. Particular emphasis was placed on the systematising of the sales offering and further development of the
strategic RAWLPLUG brand, particularly on export markets. The strategy is reflected in the further development of sales
companies in Singapore and China as well as the formation of a production company in Thailand and a sales company in India.
The management is focusing on optimising all processes within the Group in order to fully utilise all of its resources, reduce
costs and achieve optimal synergy effects. This is why a decision was made to implement SAP at RAWLPLUG Group. The
main objective of replacing the existing ERP systems is to substantially improve management information and introduce Master
Data Management. This process has already begun and four implementations have been successfully completed: SAP B1 is
deployed at the Dubai-based companies (Rawlplug Middle East FZE and Rawlplug Building&Construction Material Trading
LLC), at the U.K. company (Rawlplug Ltd) and in Ireland (Rawlplug Ireland Ltd). SAP S/4HANA was implemented at Koelner
Rawlplug IP Sp. z o.o. SAP B1 will be deployed at the companies in Thailand and Sweden in 2019.
In addition, in order to improve Group management, a decision was made to simplify the Group's structures as regards economic
activities in Poland, which will unlock operational and cost synergies. The re-organisation of the Group involves a reduction in
the number of its constituent companies. These changes bring considerable cost savings related to certain redundant functions
and jobs as well as cost savings related to direct services for these companies. Moreover, given the smaller number of entities in
the Group, the number of transactions between the companies is decreasing, which has a positive impact on the transparency of
intra-Group operations.
10
Management report on the operations of RAWLPLUG GROUP AND RAWLPLUG S.A.
for the period from 1 January to 31 December 2018 (data in PLN 000s)
In connection with the above, the Management Board of RAWLPLUG S.A. decided to implement the following merger
processes:
✓ Merger of Koelner - Tworzywa Sztuczne Sp. z o.o. (acquired company) and RAWLPLUG S.A. (acquiring
company). As a result of the merger, the entire assets of Koelner - Tworzywa Sztuczne Sp. z o.o. and its functions
were transferred to RAWLPLUG S.A., and Koelner - Tworzywa Sztuczne Sp. z o.o. was removed from the register
of companies at the National Court Register. The merger took place on 31 October 2018. Information on this merger
is presented in point 2.1.3.
✓ Merger of Koelner Łańcucka Fabryka Śrub Sp. z o.o. (acquired company) with Koelner Rawlplug IP Sp. z o.o.
(acquiring company). As a result of this merger, the entire assets of Koelner Łańcucka Fabryka Śrub Sp. z o.o. and
its functions were transferred to Koelner Rawlplug IP Sp. z o.o., and Koelner Łańcucka Fabryka Śrub Sp. z o.o.
was removed from the register of companies at the National Court Register. The merger took place on 31 December
2018. Information on this merger is presented in point 2.1.3.
✓ The merger of Koelner Centrum Sp. z o.o. (acquired company) and RAWLPLUG S.A. (acquiring company) will
be carried out in two stages. The first stage involves RAWLPLUG S.A. purchasing the remaining 49% stake in
Koelner Centrum Sp. z o.o., followed by the merger of these companies in accordance with the Polish Commercial
Companies Code. Information on this plan is presented in point 11.2 Events after the reporting period.
The above operations had no impact on RAWLPLUG Group's consolidated results in 2018.
2.4. PARENT'S AUTHORITIES
2.4.1. MANAGEMENT BOARD
Composition of RAWLPLUG S.A.'s Management Board as at 31 December 2018:
Radosław Koelner - President
Piotr Kopydłowski - Member, responsible for finance
2.4.2. SUPERVISORY BOARD
Composition of RAWLPLUG S.A.'s Supervisory Board as at 31 December 2018:
Krystyna Koelner - Chairperson
Tomasz Mogilski - Deputy Chairperson
Włodzimierz Frankowicz - Member
Janusz Pajka - Member
Zbigniew Pamuła - Member
Zbigniew Stabiszewski - Member
2.4.3. SHARES HELD BY THE PARENT'S MANAGEMENT BOARD OR SUPERVISORY BOARD MEMBERS
As per the Company's knowledge, members of RAWLPLUG S.A.'s Management Board and Supervisory Board held shares as
follows:
Management Board As at 31 December 2018
Radosław Koelner - President 2 935 915
Piotr Kopydłowski - Member, responsible for finance 29 344
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Management report on the operations of
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for the period from 1 January to 31 December 2018 (data in PLN 000s)
Supervisory Board As at 31 December
2018 Krystyna Koelner - Chairperson -
Tomasz Mogilski - Deputy Chairperson 100 000
Włodzimierz Frankowicz - Member -
Janusz Pajka - Member -
Zbigniew Pamuła - Member -
Zbigniew Stabiszewski - Member -
The nominal amount of one share in RAWLPLUG S.A. is PLN 1.
As at 31 December 2018, none of the management or supervisory personnel held any shares in RAWLPLUG S.A.'s related
parties.
2.4.4. REMUNERATION AND PAY BONUSES PAID OR DUE TO BE PAID TO THE PARENT'S MANAGEMENT BOARD AND SUPERVISORY
BOARD MEMBERS
Remuneration paid or due to be paid to Management Board members (in PLN 000s):
Management Board 1.01.2018 - 31.12.2018
Radosław Koelner - President 805
including roles at subsidiaries, associates and jointly controlled
entities
265
Piotr Kopydłowski - Member, responsible for finance 578
including roles at subsidiaries, associates and jointly controlled
entities
158
Remuneration paid or due to be paid to Supervisory Board members (in PLN 000s):
Supervisory Board 1.01.2018 - 31.12.2018
Krystyna Koelner - Chairperson 29
Tomasz Mogilski - Deputy Chairperson 14
Włodzimierz Frankowicz - Member 26
Janusz Pajka - Member 26
Zbigniew Pamuła - Member 14
Zbigniew Stabiszewski - Member 50
As at 31 December 2018, there were no agreements entered into between RAWLPLUG and management board members
providing for compensation in the event of resignation or dismissal without valid cause or in the event of dismissal or redundancy
as a result of the Company's merger.
As at 31 December 2018, there were no liabilities resulting from pensions and similar considerations for former management or
supervisory personnel or former members of administrative bodies and liabilities incurred in connection with such pensions.
2.5. SHAREHOLDING STRUCTURE
As per the Company's knowledge, at 31 December 2018 RAWLPLUG S.A.'s shareholding structure was as follows:
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Management report on the operations of RAWLPLUG GROUP AND RAWLPLUG S.A.
for the period from 1 January to 31 December 2018 (data in PLN 000s)
Shareholder Number of
shares
% in share capital
Number of votes
at the general
meeting
% of votes at the
general meeting
Amicus Poliniae Sp. z o.o. 16 902 750 51.91 16 902 750 51.91
Radosław Koelner 2 935 915 9.02 2 935 915 9.02
PKO BP Bankowy PTE S.A. 2 933 639 9.01 2 933 639 9.01
Nationale Nederlanden PTE S.A. 2 842 138 8.73 2 842 138 8.73
Quercus TFI S.A.
(including Quercus Parasolowy SFIO)
1 705 831
(1 645 263)
5.24
(5.053)
1 705 831
(1 645 263)
5.24
(5.053)
Other 5 239 727 16.09 5 239 727 16.09
TOTAL 32 560 000 100.00 32 560 000 100.00
During the period from the date on which the most recent periodic report was published, i.e. 11 November 2018 to 31 December
2018, no changes in significant shareholdings took place.
There are no limitations on the exercise of RAWLPLUG S.A.'s voting rights.
The Company is not aware of any agreements pursuant to which there may be a change in the proportions of shares held by the
current shareholders.
2.6. OWN SHARES
On 10 September 2018, an Extraordinary General Meeting of RAWLPLUG S.A. was held, during which a resolution was passed
pursuant to 362 § 1 point 8 in connection with 362 §2 of the Polish Commercial Companies Code, which authorises RAWLPLUG
S.A.'s Management Board to purchase shares in the Company that are listed on the regulated market managed by the Warsaw
Stock Exchange in order to cancel or re-sell them. The Company will be able to purchase own shares, fully paid-in, on the
following terms:
✓ the total number of purchased shares may not exceed 2 727 272, with a nominal value of PLN 1.00 each,
✓ the minimum price for the purchased shares may not be lower than PLN 1.00 per share, and the maximum value of
the purchased shares may not exceed PLN 30 000 000, i.e. PLN 11.00 per share,
✓ the Management Board's authorisation to purchase own shares covers the period from the date on which this
resolution is adopted to 31 December 2022, or until the funds intended for the buyback programme are used up,
✓ shares may be purchased on the regulated market: during trading sessions and in off-session transactions,
✓ shares may be purchased via block trades,
✓ shares may be purchased via a public tender offer,
✓ the purchase of own shares, if so decided by the management board, may be financed from the allocated amount,
pursuant to art. 348 of the Polish Commercial Companies Code, with the stipulation that the Company's
Management Board is authorised to decide on using other sources of financing,
Acting in the best interest of the Company and after consulting with the Supervisory Board, the Management Board may:
✓ finish the buyback programme before 31 December 2022 or before the funds intended for the buyback programme
are used up,
✓ withdraw from buying back shares, in part or in full.
Pursuant to the draft resolution, the Company's Management Board has been obligated and authorised to take all factual and
legal actions to purchase the Company's own shares in order to cancel or re-sell them, in accordance with the content of the
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Management report on the operations of
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for the period from 1 January to 31 December 2018 (data in PLN 000s)
resolution, including to execute an agreement with a selected brokerage firm to buy back shares in exchange and OTC
transactions.
The Company's Management Board has been authorised to specify any other rules for the buy-back that are not addressed in this
resolution. After completion of the buyback programme, the Company's Management Board will call a General Meeting
immediately, but not later than four months from that date, in order to adopt resolutions on redemption of own shares and decrease
of the Company's share capital and amendment of its Articles of Association. If the purchased shares will be intended for further
re-sale, once the buy-back is complete, the Management Board will decide whether to proceed with further re-sale.
The resolution calls for an increase, pursuant to art. 362, § 2, point 3 of the Polish Commercial Companies Code, art. 348, § 1,
in connection with art. 396, § 4 and 5 of the Polish Commercial Companies Code, of the Company's reserve capital, created for
the Company to purchase own shares in order to cancel or re-sell them, from PLN 21 600 000 to PLN 30 000 000. The resolution
also covers an increase of reserve capital to PLN 30 000 000 through the transfer of PLN 8 400 000 from supplementary capital,
which was established using the Company's profit from previous years.
2.7. SHARE ISSUES
Not applicable.
2.8. INCENTIVE PROGRAMME
RAWLPLUG Group does not have any share-based incentive programmes.
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Management report on the operations of RAWLPLUG GROUP AND RAWLPLUG S.A.
for the period from 1 January to 31 December 2018 (data in PLN 000s)
3. FACTORS SIGNIFICANT TO GROUP DEVELOPMENT, INCLUDING
THREATS AND RISKS, AND GROWTH PERSPECTIVES
3.1. EXTERNAL FACTORS
3.1.1. MACROECONOMIC SITUATION AND CONDITIONS IN THE INDUSTRY
3.1.1.1. CONSTRUCTION AND FIXINGS INDUSTRY
In 2018, the Group recorded 9.4% growth in sales in comparison with 2017, which also exceeded sales plans. The key factors in
generating good sales results were the continuing good economic situation, continuous improvements in the widely understood
sales offering (products, services, Rawlplug Academy), good product availability and sales through new distribution channels as
well as continuous drive to expand the customer base and markets where RAWLPLUG Group is present.
In recent years, RAWLPLUG Group has been focusing on optimising its sales offering and on investing in its machine park,
including the factories in Wrocław and Łańcut. Product novelties, an increasingly attractive and cutting-edge technical,
marketing and training support system, as well as new technical documentation ensuring even better product parameters all
started to bear fruit in the first half of 2018, and this growth trend continued throughout the rest of the year. RAWLPLUG Group's
offering became very competitive in comparison with the largest players in the industry, allowing it to secure new sales contracts
and retain the existing customer base.
A training programme and marketing support for subsidiaries and official distributors translated into higher sales of high-margin
products produced at our manufacturing facilities. Additional services made available at www.rawlplug.com such as "RTH -
Rawlplug Technical Helpdesk," "BIM Rawlplug" (Building Information Modelling Rawlplug) and new EasyFix calculation
modules are increasing the appeal of RAWLPLUG Group's offering and the loyalty of the largest clients.
The first sales through the e-commerce channel were launched in Poland. Dedicated B2C offerings are prepared for 2019 in
countries such as Poland, Germany, France and Singapore, and the team handling this channel was expanded. A B2B service is
expected to be launched in the second half of 2019.
The two key new products in 2018 accounted for 12% of the RAWLPLUG brand's turnover and almost 24% of consolidated
margin, proving that investments in high-tech product novelties are the right direction for RAWLPLUG Group.
Constraints on the implementation of new third-party products and brands were introduced, and decisions regarding new products
are now much higher up the chain. Thanks to this, low-margin contracts and products without interesting growth perspectives
were not introduced. Moreover, tens of smaller third-party brands were withdrawn from production. Some of them have been
replaced with RAWLPLUG or KOELNER brand sales.
Sales growth strategy changes took place at certain subsidiaries. Greater emphasis was placed on sales through the investment
channel (construction), which translated into higher sales of highly-processed products, including new high-margin products.
This also made it possible to obtain strong credentials from counterparties, which - especially in new markets - constitutes the
basis for securing new contracts.
Contact was made with the largest DIY chains in the world. RAWLPLUG Group is participating in several tenders in Europe,
and the offers made should translate into higher sales in the coming months. For example, first orders were delivered to OBI
Polska and Toolstation UK, and cooperation began with several other chains in Europe and Africa.
Demand on the domestic construction and fixings market remained high throughout 2018. Sales grew by 6.3%, largely thanks
to the development of the RAWLPLUG brand, which grew by 28% in this time. Sales growth was achieved despite work
continuing on re-building the sales offering by gradually reducing third-party brand sales, private label production and stopping
lowest-margin assortment lines. Certain off-line services in the CRM system are planned to be implemented in 2019, which
should result in a full system deployment for all transactions, regardless of mobile signal strength. An Investment module is also
expected to be deployed in the CRM system in the first quarter of 2019, while the Salesforce Visits and Routes functionality will
be deployed in the second quarter of 2019. Thanks to these functions, Koelner Polska Sp. z o.o. will have complete information
15
Management report on the operations of
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for the period from 1 January to 31 December 2018 (data in PLN 000s)
on salesforce performance at client sites and will begin analysing the effectiveness and structure of sales offerings, with an option
to examine the causes of lost sales.
Good conditions prevailed on European markets in 2018. The Group recorded significant sales growth, largely under the
RAWLPLUG brand, which considerably contributed to margin building. In most of the countries, sales growth dynamics
outpaced the market, showing that the RAWLPLUG brand is growing its market share.
Another very good year at the Hungarian company Koelner Hungaria Kft should be noted. Very good service and client relations,
with strong purchasing competence and market know-how, resulted in turnover reaching PLN 76 million (up by 15.8% from the
previous year), causing Koelner Hungaria Kft to end 2018 as RAWLPLUG Group's strongest foreign-based company.
In Great Britain, due to low growth in the construction sector and due to changes in Rawlplug Ltd's organisational structure and
product offering, the company ended 2018 on the same level as the year prior. Starting from H2 2018, changes began to bear
fruit, resulting in growth of 8.4% in Q3 and 13.4% in Q4 2018, which in combination with a successful deployment of new
products at the end of the year and the signing of another very large British chain as client gives grounds for optimism. Despite
concerns about Brexit, the company plans an ambitious 15% growth in 2019, as compared to 2018.
The company in Ireland - Rawlplug Ireland Ltd - closed another year with sales growth, at 10.18%. It benefited from very good
conditions, resulting from the uncertain political situation of its biggest neighbour. In 2019, the company plans to focus on
developing technical sales, which should translate into significant growth in business in the sector, which had little contribution
to the company's overall sales in 2018.
The company in France - Rawl France SAS - increased turnover by 12.1%, compared to 2017. However, the growth potential in
France is much higher, with 19% turnover growth planned for 2019. This good result is due to changes in the company's
organisational structure, among other things. New product groups that have been implemented at several other Group companies
will also be launched in France. Commercial talks with three global chains, which have the largest number of stores in France,
are also on-going. Each of these projects would generate approx. 5-9% of additional revenue for the Company. The B2C Modeco
France service was launched in Q1 2019.
The Sweden-based subsidiary - Rawl Scandinavia AB - which handles the Nordic markets, closed the year with more than 24.1%
growth thanks to its five-year strategy being implemented. The company plans another 20% in growth in 2019. Preparations are
under-way to launch a B2B service on the Swedish market for professional clients.
Conditions in the insulation sector in the Czech Republic and Slovakia (two Group companies operate in this area: Koelner CZ
s.r.o. and Koelner Slovakia s.r.o.) resulted in very good sales growth, at 24.6% and 29.5%, respectively. At the same time, the
company is intensifying efforts to develop other RAWLPLUG-branded products groups. An online store for the Czech and
Slovak markets is expected to be launched in Q3 2019, with sales growth estimated by these companies at 15%.
Koelner Deutschland GmbH and Stahl GmbH operate in the Germany, Austria, Switzerland and Netherlands region. Their sales
grew by more than 8% in 2018 y/y. The weak growth resulted from delays on the part of product certification institutions, which
delayed the launch of new products for OEM clients. Growth of no less than 18% is planned for 2019, thanks to the
commencement of sales planned for 2018 and performance of contracts negotiated over the past three years as well as an
expansion of the product offering at the existing clients. 2019 also marked the beginning of sales on the German e-commerce
market.
Sales in Russia went up by 11.5% y/y in 2018, with the RAWLPLUG brand having a 52% share in the sales structure. The
Russian company Koelner Trading KLD LLC is involved on a greater scale in technical projects such as the construction of
subways, bridges and agricultural infrastructure. Appropriate sales structures with high engineering competences are being built
in connection with this. In addition, marketing support activities for the RAWLPLUG brand in Russia are highly advanced,
including a website in Russian, Rawlplug Academy's training materials in Russian, adaptation of the EasyFix programme to
Russian standards, e-learning materials. Sales in the construction segments, in which the company has not had have a large share
so far, are expected to be intensified in 2019.
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Management report on the operations of RAWLPLUG GROUP AND RAWLPLUG S.A.
for the period from 1 January to 31 December 2018 (data in PLN 000s)
A process of reorienting structures at Koelner-Ukraine LLC was also initiated in order to focus on RAWLPLUG-branded
technical sales. A group of dedicated salespeople and engineers tasked with building a partner network was selected. Cooperation
was established with road and bridge designers, the first Rawlplug Academy seminar was organised in Wrocław, cooperation
with the Lviv University of Technology was established and full market support was prepared. All of these activities should
translate into significant growth of the RAWLPLUG brand in the coming quarters. The company ended 2018 at a level similar
to 2017 despite an unfavourable geopolitical situation. The final quarter of 2018 saw 6.7% sales growth y/y.
In the Middle East, sales grew by 9% in comparison to 2017 and by 18% in comparison to 2016, despite weak conditions in
Saudi Arabia and the UAE and an unstable situation in Qatar. The sales growth resulted from sales development in other countries
in the Middle East, Africa and India, which is gradually becoming a more promising market for the Group. Further growth in
new sales markets, especially by introducing new RAWLPLUG, KOELNER and MODECO product groups, is planned for 2019.
The company in Singapore - Rawlplug Singapore PTE. LTD - finished building its sales team and began sales in mid-2018. The
Singaporean market places the largest emphasis on local testimonials, i.e. the RAWLPLUG brand's participation in construction
projects. Tens of projects were added to the testimonials list thanks to the local team, which led to strong sales dynamic in the
fourth quarter of 2018 and fulfilment of sales plans in that quarter. Plans for 2019 include technical service for the existing
contracts and intensification of sales efforts in order to expand the customer base and list of Singapore-based design offices
cooperating with the team. A trainer from Poland is expected to spend half a year there in order to increase the sales team's
activities and performance. An e-commerce platform (B2B and B2C) is planned to be implemented in Q1 2019, which will
constitute another package of add-on services for RAWLPLUG Group's offering in the Asia and Pacific region. Sales growth
was also recorded in the region's other countries, mainly thanks to having won numerous prestigious construction projects based
on the deep epoxy resin anchoring technology R-KEX-II. Manufacturing of chemical anchors is planned to be launched in the
factory in Thailand, which should positively affect sales in the region (shorter time-to-market, lower logistics costs and better
technical parameters in the European Technical Assessment).
3.1.1.2. INDUSTRIALS SECTOR
In the industrial sector, foreign markets also drove sales, although the disproportion in favour of exports was even higher here.
In line with its strategy, the Łańcut-based production facility - Koelner Łańcucka Fabryka Śrub Sp. z o.o. (Koelner Łańcucka
Fabryka Śrub Sp. z o.o. until 31 December 2018, i.e. merger date) recorded further sales declines in its home country (down by
14% in 2018 from a year earlier), which was entirely offset by export sales (up by more than 21% y/y). Currently, exports account
for 86.5% of the company's sales. Total sales generated by the Łańcut-based plant in 2018 went up by close to 17% y/y.
The sales decline on the domestic market is still driven by the repeal of anti-dumping duties imposed on the import of certain
iron or steel fasteners originating in the People's Republic of China, as well as changes in product portfolio from standard to
specialist products that are more technologically advanced. Currently, just as in the previous years, all efforts of our domestic
salesforce are directed at acquiring clients from the special product segment - retaining the level of sales from before the removal
of duty will be largely dependent on the development of new market segments.
Growth in foreign sales is largely the effect of a strong euro and an increasingly large share of high-margin goods sales, with
various margins, as well as sales volume growth.
The decline in sales on the domestic market in 2018 was offset by growth in export sales to EU countries.
In 2019, Koelner Rawlplug IP Sp. z o.o.'s Łańcut-based branch intends to continue with its existing development strategy based
on growing the share of special products for the automotive segment and less focusing on standard products. The above strategy
lets the company invest in new machinery and modern solutions that make it possible to expand assortment and production
volumes and thus growth market share in screw products on the European market.
Retaining the level of sales and securing planned margins in 2019 will depend on economic conditions on the domestic and
European markets. Moreover, at the end of 2018 the Management Board already noted an up-trend in the prices of key
commodities used in the production of screw products, i.e. steel, and growth in electricity and gas prices - factors that have a
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Management report on the operations of
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for the period from 1 January to 31 December 2018 (data in PLN 000s)
direct impact on production costs, which will indirectly force price hikes on the factory's products and might translate into lower
sales margins.
3.1.2. EMPLOYMENT CONDITIONS; PRICES OF PRODUCTS AND INTERMEDIATES IMPORTED FROM THE FAR EAST
In 2018, commodity markets remained rather stable but the expanding global trade war and the associated market uncertainty
resulted in a visible growth in steel prices in recent months.
3.1.3. EXCHANGE RATES
In terms of global cash flows, the Group is exposed to EURUSD. Given the specific nature and territorial scope of its operations,
the Group has an excess of EUR (sales mostly in EUR) and shortage of USD (imports from the Far East). The current volume
of conversion for EUR to USD is relatively small (about EUR 600 thousand a month).
In 2018, RAWLPLUG S.A. executed three forward contracts (with Bank BGŻ BNP Paribas S.A.) fur EURUSD 450 thousand.
Following the settlement of these transactions, the Company incurred a PLN 12 thousand loss, which was recognised in finance
costs in the statement of profit and loss.
On 18 December 2018, RAWLPLUG S.A. executed a forward contract with Bank BGŻ BNP Paribas S.A. for GBPPLN 1 000
thousand with a delivery date of 21 June 2019. As of 31 December 2018, it was valued at PLN 35 thousand and was recorded as
finance costs.
In measuring balance sheet items, the Management Board aims to balance out foreign-currency items through natural hedging
in as far as practicable.
3.1.4. INTEREST RATES
Given the substantial share of bank borrowing in RAWLPLUG Group's financing structure, interest rates have a direct impact
on financial performance. The most recent interest rate change in Poland took place on 5 March 2015, and no further moves are
expected in the coming months.
3.2. INTERNAL FACTORS
The organisation, including both RAWLPLUG S.A. and RAWLPLUG Group, is properly prepared for fully efficient operations.
Proper assortment and pricing policy analysis, focus on those product groups that enable maximum competitive advantages,
alongside deployment of management solutions for sales and marketing (merchandising, POS system for RAWLPLUG) as well
as the introduction of the latest SAP solutions - these are the main tasks which were commenced in 2018 and will be continued
in the coming years.
On 31 December 2018, Koelner Łańcucka Fabryka Śrub Sp. z o.o. and Koelner Rawlplug IP Sp. z o.o. were formally merged
and operate as Koelner Rawlplug IP Sp. z o.o. since. The main objective was to simplify RAWLPLUG Group's structure, which
will have a positive impact on the optimisation and synergies of operational and cost processes. Moreover, the merger will
simplify and harmonise numerous management tasks at both of the companies, which will certainly be of importance when it
comes to knowledge and information sharing and thus business awareness. In addition, harmonised terminology that takes into
account the RAWLPLUG name will have a positive impact on the effectiveness of efforts in the area of brand awareness and
image.
The changes carried out in recent years aimed at better organising sales, production and marketing allow us to achieve optimal
effectiveness and maximally use the Group's potential. Substantial capex on machinery, particularly as regards the production
facility at Rawlplug S.A. as well as at Koelner Łańcucka Fabryka Śrub Sp. z o.o. (from 31 December 2018 Koelner Rawlplug
IP Sp. z o.o., branch in Łańcut) have increased productivity, which translated into better product availability and higher pricing
competitiveness, alongside an upgraded product offering.
The streamlining of the sales portfolio is an important efficiency driver. Withdrawing low-margin assortment and a substantial
part of third-party brands will make it possible to further improve service for own brands (RAWLPLUG, KOELNER,
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Management report on the operations of RAWLPLUG GROUP AND RAWLPLUG S.A.
for the period from 1 January to 31 December 2018 (data in PLN 000s)
MODECO), which in turn will enhance RAWLPLUG Group's positive image as a supplier of high-quality products for the
building industry. This is a subsequent step towards our strategic objective of becoming a first-choice supplier.
3.3. GROWTH PERSPECTIVES
Key directions of the changes being continued in 2019 as regards logistics and sales solutions are as follows: optimisation of the
product offering, improvement in the quality of distribution, along with effective sales support, especially through the
opportunities offered by the 100th anniversary of the RAWLPLUG brand.
3.4. GROWTH STRATEGY
The main strategic objective is reinforcement of RAWLPLUG S.A.'s and RAWLPLUG Group's position in markets where we
are already present. This strategy consists of further activities aimed at strengthening the market position of RAWLPLUG
Group's foreign companies through restructuring, introducing new high-margin products and developing business via new
distribution channels, such as DIY and OEM. At the same time, the Group is working on entering new markets, with a focus
mainly on those outside Europe.
This strategy included the formation of a company providing sales support to the distributor in India and the formation of a
production joint venture in Thailand. These activities are in line with the main assumptions of RAWLPLUG Group's expansion
outside of Europe.
RAWLPLUG Group's main strategic objective is a focus on technologically advanced products groups, where the Group has
high production competences, and distribution through all available sales channels, which will be operated by either
RAWLPLUG S.A. or its subsidiaries, depending on local requirements. The Group invariably considers European markets as
key, but is also expanding in the Middle East, Australia, North and South America, Central and Eastern Asia and Africa.
4. STATEMENT ON NON-FINANCIAL DATA
4.1. BUSINESS MODEL AND KEY PERFORMANCE INDICATORS
Manufacturer of fixings, screws and tools
Rawlplug has been producing fixings, screws and tools for one hundred years. John Joseph Rawlings was not merely the founder
of the Rawlplug brand and an entrepreneur, but also a visionary and an inventor. The first wallplug in the world, which he had
patented, revolutionised the construction industry, becoming part of its history. This discovery was also the beginning of a new
history for the Rawlplug brand, which has been part of RAWLPLUG Group since 2005 and currently counts more than 30 000
products in its portfolio across 10 categories, with application in the widely-defined building industry. RAWLPLUG Group's
products are a guarantee of safety and reliability wherever they are used - from household finishing works to such impressive
facilities as the Burj Khalifa in Dubai, the Olympic Park in Sochi, Yas Marina Formula 1 race track in Abu Dhabi, Wembley
Stadium in London and the Curiosity Mars rover.
RAWLPLUG Group is a manufacturer of fixings, screws and tools, meaning that the Group designs, produces and sells
assortment groups such as construction fixings, handtools, power tools and screw products. The products manufactured by
RAWLPLUG Group guarantee safety and fixing reliability and are used in the construction, energy, automotive, machinery,
power machinery, mining, ship-building, road-building and forestry industries.
The Group's offering consists of three complementary parts: innovative products that meet the highest global safety standards,
specialised services at no charge, designed so as to improve the efficiency of work of designers, builders and contractors, as well
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Management report on the operations of
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for the period from 1 January to 31 December 2018 (data in PLN 000s)
as modern training within the Rawlplug Academy development programme, which is based on four pillars: e-learning, traditional
training, hands-on training at Rawlplug Training Centre and a unique knowledge base. All of this creates a set of benefits thanks
to which RAWLPLUG Group's clients receive products that they can trust, support that they need and unique know-how to
increase their expert capabilities.
Brands
RAWLPLUG Group offers several brands. Given that the Group's clients have various profiles, specialisations and operational
scales, they have four brands to choose from: Rawlplug, Koelner, LF and Modeco. This is why we are able to offer truly
comprehensive solutions to clients, with optimal parameters, which impact their business decisions.
RAWLPLUG®. A global brand with a market presence since 1919. Part of RAWLPLUG Group since 2005. The Rawlplug
portfolio consists of products of the highest global class, meeting rigorous safety requirements. Mechanical anchors, bonded
anchors, lightweight fixings, facade insulation fixings, roofing fixings, passive fire protection systems, foams and sealants,
screws, direct and hand-held fixings systems as well as accessories for power tools constitute a comprehensive portfolio for
professionals.
KOELNER®. A strong Polish brand acclaimed by clients, who value an attractive quality to price profile the most.
Koelner's products include construction fixings and fasteners, from facade and roofing insulation fixings through self-drilling
screws to fixings systems for lightweight industrial structures. These are proven and appreciated products, both at the
construction site and at home.
LF®. A brand of high-grade fasteners. Its product portfolio includes - a variety of cold-rolled screw products, both standard and
custom. LF means top-quality products made in a variety of sizes and delivered in a variety of protective coating systems (zinc
flake, galvanic layers, hot dip galvanised coat, pre-applied coats). The brand's products are tailored to individual client needs and
are used in all industries where reliability and high quality are the top priority.
MODECO®. The Modeco brand has been specialising in reasonably priced high-quality handtools and power tools for 25 years.
Whether the brand's products are used at the construction site, at home or in the garden, experts value them for durability,
resistance to mechanical damage and nice design. Modeco includes three brands: Modeco Expert, i.e. tools and power tools for
small industrial shops and demanding handymen, Modeco Home, which includes handtools for home use, and Modeco Garden,
which offers handtools and accessories for garden and green area care.
Companies
RAWLPLUG Group sells its products throughout the world thanks to an extensive network consisting of own companies as well
as distributors. Its presence spans 72 countries, and the key destinations for the Group's products are Western as well as Central
and Eastern European countries, although interest in its products has been increasing in new markets every year, and
RAWLPLUG Group is constantly expanding its distribution network.
Research and development Production Logistics Disposal
Technical and Research Centre
in Łańcut and Wrocław
Manufacturing facility in Wrocław (RAWLPLUG
S.A.)
Screw factory in Łańcut (Koelner Łańcucka Fabryka
Śrub Sp. z o.o., as at 31 December 2018 Koelner
Rawlplug IP Sp. z o.o., branch in Łańcut)
Manufacturing facility in Kaliningrad (Koelner
Trading KLD LLC - this facility is not included in
the consolidated financial statements)
Factory in Bangkok (RAWLPLUG-TMAX
Corporation Limited, not included in the
consolidated financial statements)
Warehousing
Transport (rail and
road)
Comprehensive
customs services
The Company's own
distribution
companies and
partners on four
continents: Europe,
Asia, Africa and
Australia
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Management report on the operations of RAWLPLUG GROUP AND RAWLPLUG S.A.
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Production
RAWLPLUG Group has full control over every manufacturing process. This is possible due to successive roll-out of production
areas in its factories, which in technological terms are some of the most modern and automated factories in the world. At
RAWLPLUG Group, production is not just physical manufacturing. This is a complex, orderly and systematic sequence of many
specialised tasks, which together form a comprehensive, fully controlled process. RAWLPLUG Group monitors, examines and
continuously improves every stage of the process, from design by a team of engineers and constructors, prototyping and testing
in the research and development division, through to production in the world-renowned Polish factories in Wrocław and Łańcut.
RAWLPLUG S.A. The production company located in Wrocław was formed in 1999 and thanks to major investments in the
machinery park it developed quickly and systematically expanded its product assortment. It began producing wallplugs in 2003.
RAWLPLUG S.A. currently employs approx. 500 people, mainly in the production area. The production divisions works closely
with the research and development division, which is equipped in a modern lab and major technological infrastructure.
RAWLPLUG S.A. produces a wide array of wallplugs from plastics and bonded anchors, and all of these products are sold
globally. Another intensive modernisation took place at the factory in 2018, thanks to which it was possible to raise its efficiency,
work comfort and quality as well as the precision of production processes. The modernisation included machine replacements
and more modern technologies, as RAWLPLUG S.A. placed an even greater emphasis on innovativeness.
Koelner Łańcucka Fabryka Śrub Sp. z o.o. (as at 31 December 2018 Koelner Rawlplug IP Sp. z o.o., branch in Łańcut).
This is the largest producer of fasteners in Central Europe. LF products are a synonym for reliability and are renowned around
the world. Since the beginning in 1957, the top priority has been to produce goods of the highest quality. Thanks to such priorities,
the factory developed dynamically for decades, outpacing the competitors and becoming one of the finest production facilities
in the global fixings industry. The factory is also a member of the prestigious European Industrial Fasteners Institute, the largest
European association for the producers of fasteners. It has been a part of RAWLPLUG Group since 2006 and one of its key
production facilities. The Łańcut facility produces screws and nuts in accordance with the standards PN, DIN, ISO, BS and
ANSI, a full range of mechanical anchors (clamp, sleeve, for heavy loads) and fastening screws (sizes M4 to M24), nuts (sizes
M4 to M20), as well as complex fasteners and speciality products. This is one of the most modern factories in Europe and caters
to clients from all segments of the fixings market thanks to advanced technical infrastructure for thermal processing and coating,
which allows producing a very wide range of products.
4.2. BUSINESS STRATEGY, KEY FINANCIAL AND NON-FINANCIAL RATIOS
Mission and vision
Our mission is the reason RAWLPLUG Group exists. The mission expresses the Group's operating philosophy, defining its role
in business, society and the world. RAWLPLUG Group's mission is to deliver the most cutting-edge solutions that can be trusted.
This means that it gains trust by providing innovative solutions. RAWLPLUG Group focuses on innovations throughout every
stage of work on improving what has been done so far and on developing what it is planning to create. The modernity and
technological advancement offered by RAWLPLUG Group bring safety, reliability and simplicity of use. It is important to the
Group for every client to realise this when selecting its products and services. This is why every day - at 29 companies on 4
continents a team of over 1800 employees pursue RAWLPLUG Group's mission: to deliver the latest solutions that you can trust.
RAWLPLUG Group's vision defines what we strive for. The vision clarifies the main goal and is a key pillar of our strategy,
mobilising and motivating the Group to act. RAWLPLUG Group's vision is to be a global brand of first choice. This means that
the Group has ambitions and aspirations for its products to be desired all over the world. This is why it focuses on expanding
into new markets globally, and its offering does not include just reliable and innovative products but also complementary services
and professional training. This comprehensiveness helps the Group in strengthening its position as the expert of the fixings
industry, appreciated for over 100 years by even the most demanding clients.
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Values
RAWLPLUG Group would not be able to pursue its mission and vision without our values: engagement, cooperation,
professionalism, effectiveness and a client-centric attitude. They are at the foundation of our activities. RAWLPLUG Group
counts on professionalism, i.e. the highest quality of work and expert know-how of all its employees, therefore the Group is
investing heavily in development and continues to strengthen its position as expert in the fixings industry. It is also heavily
focused on the effects of its work, i.e. effectiveness, and in relations with clients it counts on long-term relations and meeting
their needs. RAWLPLUG Group's clients feel taken care of at every stage of cooperation thanks to the involvement of the entire
team, which provides them with strong support in terms of sales advisory, technical advisory and the transfer of expert know-
how.
Business strategy
RAWLPLUG Group operates in a highly competitive and dynamically changing surrounding therefore in order to remain the
expert in fixings it has set out three key objectives, which are at the foundation of RAWLPLUG Group's business strategy. These
are:
1. Retain innovation dynamics.
By implementing this objective, RAWLPLUG Group focuses on both retaining the level of product innovations in order to
improve and develop goods for customers as well as on retaining the level of design innovations, which improves efficiency
and the quality of work in numerous areas, allowing the Group to achieve more.
2. Expand sales.
RAWLPLUG Group is successively expanding its presence on new markets throughout the world, at the same time
strengthening its position on existing markets. This is made possible by RAWLPLUG Group's complementary offering of
products, specialised services and innovative training.
3. Increase internal performance.
RAWLPLUG Group optimises and improves everything it does. The efficiency of the Group's internal processes directly
translates into quality and work effectiveness and in consequence the offering that is delivered to clients.
These three objectives are the pillars of RAWLPLUG Group's strategy, allowing it to focus on what's most important and
confidently look to the future.
RAWLPLUG Group's turnover reached PLN 775 501 thousand in 2018.
4.3. IMPORTANT TOPICS RELATED TO SUSTAINABLE DEVELOPMENT AND RESPONSIBLE BUSINESS
Sustainable development at RAWLPLUG Group results directly from its vision, i.e. being the brand of first choice throughout
the world. This is an ambitious goal and a great commitment. To social sensitivity. To generosity. To attentiveness. To
engagement. Because a global brand of first choice is a responsible brand. RAWLPLUG Group does not want to do business
without focusing on what is the most important for us, what gives us potential and perspectives. Employees and clients. Local
community. Natural environment. These are RAWLPLUG Group's strengths.
RAWLPLUG Group's sustainable development is based on three pillars: value-based management, care for the environment and
social engagement. They accompany everything the Group does, creating foundations for its responsibility.
These pillars were chosen following an analysis of areas important to stakeholders and of importance from the industry's
perspective.
Value-based management. RAWLPLUG Group manages people, projects, processes, relations with clients, the supply chain.
This is a major challenge and in order to do it better and more effectively, it focuses on the most important values: respect,
honesty, lawfulness, loyalty, because they have the greatest impact on efficiency, standards and discipline, which are the main
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Management report on the operations of RAWLPLUG GROUP AND RAWLPLUG S.A.
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impulses for creating new opportunities and possibilities. This is a common denominator for all activities the aim of which is
RAWLPLUG Group's global expansion.
As part of value-based management, RAWLPLUG Group:
✓ ensures product reliability, showing that it is trustworthy,
✓ cares about its clients' expert know-how because it wants them to be proud of working with RAWLPLUG Group,
✓ focus on innovativeness in creating products and services because its clients' comfort and safety are the highest
priorities,
✓ acts based on an incontestable ethics code because it wants its actions to be transparent,
✓ cares about the development of its employees, about their involvement, because it wants them to be satisfied and
loyal,
✓ guarantees workplace safety and comfort because it wants employees to feel secure and comfortable,
✓ respects and appreciates social and cultural diversity because thanks to this it is working more creatively for the
entire world.
Care for the environment. This also stems from RAWLPLUG Group's vision and is of great importance. The Group constantly
takes action that proves this. It builds awareness of the importance of the environment in our lives.
It creates and promotes best practices in respecting our planet. It places emphasis on ecological awareness at every stage of
operations.
As part of environmental care, RAWLPLUG Group:
✓ conducts operations in compliance with an environmental management system and thus is careful and reliable in
meeting all norms and standards,
✓ complies with legal regulations concerning environmental protection by meeting all environmental requirements,
✓ focuses on both quality and quantity efficiency and on the quality of its solutions across all actions undertaken for
the environment,
✓ monitors environmental indicators on an on-going basis and continuously works on improving activities intended
to minimise any potential impact on the environment,
✓ participants in environmental protection campaigns, both local and global, increasing social awareness amongst its
employees, business partners and local communities.
Social engagement. RAWLPLUG Group employs more than 1800 people globally, and every one of these people has a family,
friends and relatives. Together, they create a community that is important to RAWLPLUG Group. RAWLPLUG Group wishes
to actively participate in the life of this community and exert positive influence. Be supportive. RAWLPLUG Group is much
more than simply business or workplace. It is a partnership approach, building the trust of local communities through investments
in their development, supporting them in their daily challenges, becoming involved in education and relation building.
As part of its social engagement, RAWLPLUG Group:
✓ supports charitably activities for the local community because it cares about its quality of life, safety and wellness,
✓ finances local sporting and cultural events because it wants the local community to pay attention to how important
sports and leisure are to every-day life.
✓ encourages employees and partners to actively participate in charity campaigns because it knows how important
charity is and wants to raise awareness about philanthropic activities.
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RAWLPLUG Group has deliberately decided to pursue a sustainable development strategy. This is one of the foundations of
trust building. This is an investment for the future. The future, which combines 100 years of know-how and experience with
a constant drive towards innovations.
RAWLPLUG Group's complete report on sustainable development in 2018 is prepared in line with the international standard
Global Reporting Initiative (GRI). Once finished, it will be published at www.rawlplug.com. The report will contain an extended
description of the way in which we are pursuing our strategic directions in sustainable development, alongside good practices
and results indicators (GRI).
4.4. RISK MANAGEMENT
RAWLPLUG Group analyses risks related to its business, which raises its efficiency. These surveys include both financial risks
and risks associated with employees, the environment and corporate governance, whilst in the production facilities in Wrocław
and Łańcut risks are analysed in every possible area of operations. Risk analysis at RAWLPLUG Group's production facilities
is carried out once a year and its results are presented to RAWLPLUG's Supervisory Board.
This risk assessment involves the likelihood of risk, its overall impact on the Group's activities and the level of control that
should be ensured. Next, a detailed plan of action is developed for each risk so as to have remedies ready.
Examples of risk divided into categories:
✓ corporate governance: financial penalties; lack of compliance with the law, reputation damage, lack of payment of
receivables,
✓ human rights: lack of compliance with the law, failure to observe the ethics code,
✓ environment: lack of compliance with the law, loss of permits, changes in law,
✓ business ethics: loss of trust of suppliers, anti-dumping practices, delivery delays,
✓ consumer issues: inspections and penalties, loss of customer trust, delayed deliveries to clients,
✓ society development: lack of trust.
4.5. MANAGEMENT, PROCEDURES AND RESULTS IN THE EMPLOYEE AREA
RAWLPLUG Group is fully aware of its strong suites. However, it knows very well that the market is changing and that in order
to keep up with these changes it must constantly monitor and improve its operations in every area of the business. Areas which
directly or indirectly have an impact on the qualifications, competences and comfort of its employees are especially important
to RAWLPLUG Group.
At the end of 2018, RAWLPLUG Group had 1 894 employees in 29 companies on four continents. This team plays important
roles in over a dozen areas, which are of key importance to the Group's activities. Each function and every employee at
RAWLPLUG Group are equally important and needed. All roles and tasks intertwine and complement one another, creating a
complementary structure thanks to which the work of the entire team lets us build and strengthen a leading position on the
international market. Regardless of whether it is the head of production facility, R&D director, marketing specialist, quality
controller, junior engineering consultant, warehouse, packaging or production worker - their work is appreciated and respected.
Everyone at RAWLPLUG Group has the same goals and the same drive to achieve them.
RAWLPLUG Group has a high work dynamic, focus on creative development and global expansion. Good is not enough for the
Group. It has great ambitions to retain and strengthen its position of international expert in the fixings industry. Therefore, every
member of the RAWLPLUG team is expected to be well prepared for work, have excellent time management and quick reaction
skills. Clear and understandable communication is also really important, especially in an international team. But this is not all.
Having wide-ranging specialist knowledge about the Group's products and services is also of key importance. To verify this
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Management report on the operations of RAWLPLUG GROUP AND RAWLPLUG S.A.
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knowledge, RAWLPLUG Group conducts cyclical employee competence evaluations, which offer an opportunity to analyse
each employee's individual characteristics and skills that have an impact on individual success and good teamwork. Solutions
supporting the development of knowledge, competences and skills are created on the basis of employee evaluation results. An
example of such a solution is Rawlplug Academy, an innovative training and development system at RAWLPLUG Group that
provides access to an integrated package of training and tools useful in every-day work in a single place, available online.
RAWLPLUG Group is an international company, with operations in numerous areas. It employs people all over the world,
thanks to which it deals with great diversity as regards both its employees' tasks and specialisations and cultures and nationalities.
RAWLPLUG Group believes that such diversity is its great strength but it requires the right approach. This is why RAWLPLUG
Group does not have one HR strategy to manage people, rather each company has personnel and departments responsible for
observing the local legal requirements concerning labour as well as workplace health and safety regulations.
Management foundations: Master Plan
Master Plan is one of the most important and largest strategic projects being implemented by RAWLPLUG Group. It is strictly
tied to the Group's sustainable development strategy. Master Plan involves the modernisation of the Wrocław-based production
facility, consisting of the introduction of modern technologies and replacement of machines and equipment as well as
centralisation of production and production-related divisions around the innovation area, which is composed of R&D and quality
teams.
This reorganisation entails structural changes, improvements in the area of technological innovations, modifications of
production processes, optimisation of internal logistics and inventory management concerning raw materials and intermediates.
As a result of the Master Plan, the production facility will be divided into four key areas:
✓ warehousing of raw materials and intermediates,
✓ technological and quality support,
✓ technical support,
✓ production.
As part of the Master Plan, RAWLPLUG S.A. has purchased new injection moulding machines and new production machines
for the chemical production division. There is a process under-way to purchase additional machines, including for mass
production. But this is not all. The Group has completed numerous construction and architectural works aimed at better
development of land and facilities in its production venues. Additional construction works are in progress. All of this is intended
to raise the efficiency, quality and comfort of work.
The Master Plan's key objective is to centralise competences, optimise logistics processes, automate production processes,
improve workplace health and safety, retain workplace ergonomics and raise efficiency.
Management by objectives (MBO)
Management by objective is a useful tool that mobilises the entire RAWLPLUG team for creative work and active attitudes in
implementing joint strategic goals, which translates into higher operational performance. As part of MBO, at both Wrocław- and
Łańcut-based companies, regular employee evaluations are carried out. On this basis, employees receive monthly, quarterly or
annual objectives and their performance based on defined criteria is tied to bonuses. Moreover, RAWLPLUG Group believes
that financial bonuses are not the only thing that counts. The Group realises that its team's enthusiasm and right attitudes are also
driven by other, non-financial factors, therefore it provides numerous benefits to employees, such as healthcare, accident
insurance, sporting discounts, vouchers for meals, as well as support for initiatives and creativity, including the Employee Ideas
programme. RAWLPLUG Group also keeps in mind the personal ambitions of its team and strives to appreciate every-day work
by delegating new development tasks and increasing scopes of responsibility so that employees feel that they have unlimited
opportunities for self-fulfilment at RAWLPLUG Group.
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Management report on the operations of
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Project management office (PMO)
RAWLPLUG Group operates in a dynamic industry, dealing every day with very demanding clients who have ever higher and
highly specialised needs. This is why it decided to deploy a project-based business management model, which is overseen by
RAWLPLUG's Project Management Office (PMO). Project-based management on the one hand lets the Group optimise its
processes while on the other allows it to quickly and flexibly respond to changes, both internal and external. Project management
means that even the most difficult changes can be carried out in a short period of time, translating into improvements in processes,
products and services. This approach ensures constant development at RAWLPLUG Group and, more importantly, supports its
mission of delivering the most cutting-edge solutions that can be trusted.
The PMO's key function is to support employees involved in implementing specific projects at RAWLPLUG Group. As part of
this support, employees receive training, tools for project management, as well as best practices and specific operational methods,
developed in accordance with global project management standards. In effect, RAWLPLUG Group is constantly sharing
knowledge, improving project management skills, monitoring project progress, measuring work results and increasing efficiency.
A methodical approach to project management allows RAWLPLUG Group to better focus on quality and efficiency, encourages
experience sharing and teamwork.
Safety
Safety is a key issue for RAWLPLUG Group. Due to the specific nature of its industry and its approach to quality and comfort
of its entire team. Although RAWLPLUG Group has procedures concerning safety, detailed analyses are conducted for previous
hazardous situations and prevention plans are developed on this basis, while management communication heavily emphasises
safety in every-day operational work, RAWLPLUG Group is unable to eliminate accidents. It is constantly working on
minimising the occurrence of factors that may result in an accident. It is systematically increasing its employees' awareness of
workplace safety rules and behaviours. It operates in compliance with the OHSAS 18001 system, implemented in Wrocław and
Łańcut, as well as it monitors workplace health and safety rules and regulations and, if necessary, immediately updates or amends
procedures that ensure the safety of all employees at RAWLPLUG Group.
It is thanks to these standards that in 2018 there were just 19 light accidents at both of the production facilities - in Wrocław and
Łańcut - and no fatal accidents.
4.6. MANAGEMENT, PROCEDURES AND RESULTS IN THE AREA OF ETHICS AND COMBATING CORRUPTION AND
BRIBERY AND THE AREA OF COMBATING HUMAN RIGHTS ABUSES
At RAWLPLUG Group, ethical business and profitable business are not mutually exclusive - this can be achieved by integrity
in action. RAWLPLUG Group wants to be thought of us as partner who can be trusted because its team values integrity. People
who are aware that trust must be earned every day. People who understand that RAWLPLUG Group is responsible for how it
operates, and that how strong it is will have an impact on its strength in the future. People who consistently pursue RAWLPLUG
Group's sustainable development strategy, which includes the Business Code of Ethics. The code defines the way in which we
act, based on rules that are understood by everyone around the world as fair and transparent.
RAWLPLUG Group's Business Code of Ethics clearly and transparently addresses the most important aspects of fair activities:
confidentiality and protection of sensitive data, accepting gifts and favours, respecting rules concerning human rights and mutual
respect, respect for workplace health and safety, as well as unfair trade and competition law.
The code of ethics is known to every RAWLPLUG Group employee but our clients and suppliers also get to learn about it. On
the one hand, RAWLPLUG Group wants everyone to see that it does fair business, on the other - it wants to work with partners
who share these values and whose activities are based on integrity. Guided by shared values and operational rules, RAWLPLUG
Group is able to provide a consistent, complementary, attractive offering to its customers and at the same time show that ethical
behaviour, transparency and fairness are as important as profit is.
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The HR director is responsible for monitoring the observance of the Business Code of Ethics at RAWLPLUG Group.
The HR director works closely with the Group's key stakeholders, performs cyclical reviews of the Code to ensure that it is up
to date and consistent with the organisation's culture and the work methodology adopted at RAWLPLUG Group. Potential reports
concerning Code violations can be emailed to [email protected] or submitted via a dedicated telephone
number. All submissions concerning Code violations are anonymous and are analysed and - if necessary - dealt with by the HR
Director and Sustainability Officer.
In 2018, no confirmed violations of RAWLPLUG Group's Business Code of Ethics were submitted.
4.7. MANAGEMENT, PROCEDURES AND RESULTS IN THE ENVIRONMENTAL AREA
Operating in heavy industry, RAWLPLUG Group is fully aware of its environmental footprint. For this reasons, care about
ecology is one of the pillars in our sustainable development strategy. RAWLPLUG Group's actions for ecology are based on
world-class standards, going above and beyond what is prescribed by law.
The Group operates in compliance with ISO 14001, which it has deployed at its factories in Wrocław and Łańcut. As part of
these activities, it heavily focuses on minimising the impact of its products on the environment, raising awareness of human life
and health quality, monitoring and preventing pollutions, as well as continuously raising its employees' competences as regards
ecological technologies and the rational management of natural resources.
Energy consumption and CO2 emissions
✓ Starting in 2007, the Group has reduced its CO2 emissions by 30% at the entire Group's level.
✓ Its production facilities use 23.3 GWh of electricity.
Reducing demand for raw materials
As producer, RAWLPLUG Group rationalises the use of raw materials. This means that at every stage of the production process
and in all areas related to production, RAWLPLUG Group carefully and diligently analyses all available options and always
takes into account its impact on the natural environment. This is aided by the fact that the Group has full control over all stages
of production. Thanks to this, it is reducing the use of natural resources and harmful substances to a minimum.
In connection with the fact that reducing demand for raw materials is a complicated task, which requires constant involvement,
RAWLPLUG Group continues to analyse its production processes and is constantly searching for new ways to minimise the use
of resources and generation of waste. It raises productivity while reducing post-production waste. It applies a quality,
environment and workplace health and safety policy. It sets out objectives in these areas and achieves them. All this is intended
to minimise its impact on the natural environment and the health of its employees and local communities.
4.8. MANAGEMENT, PROCEDURES AND RESULTS IN THE SOCIAL AREA
Social engagement is important to RAWLPLUG Group. This is one of the pillars of our sustainable development strategy, of
key importance from the perspective of a responsible international market leader. The Group supports people and communities
because it believes that they will develop only in safe and comfortable conditions. We know that investing in people creates
energy and hope for the future, and that motivation, wellness and satisfaction are important to every human being, regardless of
whether it is an employee, business partner or member of the local community.
RAWLPLUG Group operates throughout the world therefore it does not have one consistent policy addressing its impact on the
social surroundings. This gives the Group greater openness and sensitivity to the present needs and expectations of its employees
and local communities wherever it is present. It focuses on understanding what is truly important to them, on dialogue thanks to
which it learns of their needs, finds out what impacts their sense of security, happiness, what motivates them to act. RAWLPLUG
Group actively participates in the life of its close communities, helping and supporting various initiatives that contribute to good
well-being and development.
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Children and youth
RAWLPLUG Group believes that kids and youth should have equal opportunities for development. This is why it gets involved,
with enthusiasm and energy, in making these opportunities equal and improving the general well-being of kids and youth.
Helping young people in local communities is a permanent element of the Group's activities. It supports orphanages, children's
hospitals and foundations that fight for equal rights and privileges for all children. The Group also supports life-saving medical
care and gets involved in smaller, humorous initiatives such as Santa Claus visits during Christmas festivities for RAWLPLUG
Group employees and their children.
The Group's cooperation with the FUNKOMITYWA foundation is an example of efforts in this area, intended to support
children-patients at the University Clinical Hospital in Wrocław. On 24 July 2018, FUNKOMITYWA organised an educational
play for them entitled "Eat healthy," combined with games and animations. The campaign was intended to psychologically
support the small patients by providing them with entertainment and by educating them on healthy lifestyle and combating
obesity. Approx. 50 children and their caretakers and medical personnel participated in the event.
Another noteworthy example of RAWLPLUG Group's involvement in creating equal development opportunities for children
and youth is help in organising a trip to the USA for a group of creative kids from State School no. 64 in Wrocław for Global
Creativity Olympics 2018. The Crazy Kids team, consisting of nine children and two trainers, won the national qualifications
stage and qualified for the global final, which took place in May 2018 in Knoxville, Tennessee. More than 18 000 people from
all over the world participated in the event, competing over seven days in solving creative tasks. The Wrocław-based team placed
36th out of 86, which is an excellent result. RAWLPLUG Group was one of the sponsors for the trip. A company for which an
innovative approach is equally important as knowledge and experience believes that creativity and thinking outside the box are
rare and highly valuable characteristics. RAWLPLUG Group supports local talents, taking responsibility for their future.
Sports
RAWLPLUG Group believes that one of the key values is cooperation, which results in certain attitudes such as focus on a
shared goal, discipline, integrity, mutual support, risk taking and involvement. All of this is reflected in sports, which is why the
Group eagerly supports sporting initiatives. But this is not the only reason. Another reasons is to emphasise RAWLPLUG Group's
care about its employees' health. About them leading a healthy, harmonious lifestyle, feeling well and being happy and relaxed.
The Group strives to raise awareness about how physical activity positively affects mood, improves well-being, increases
creativity, gives strength to pursue goals, ambitions and dreams, including professional ones. This is why it supports many
sporting initiatives, from amateur races to professional football games. The Group's employees, their families and friends take
part in it, and every success is RAWLPLUG Group's success.
One of the many examples is RAWLPLUG Group's participation in a Santa Claus charity race which took place on 2 December
2018 at the Wrocław-based Physical Fitness Academy. The task involved running five laps with total distance of 10.75km, and
every kilometre run meant one zloty donated for kids with cancer.
RAWLPLUG Group has for many years been supporting the Modeco Football Team, currently in Extraklasa, which last year
won the 1st place Cup, Smaller Cup for best defence as well as awards for best goalkeeper and MVP.
These are just some example of the Group's social engagement. In 2018 in Wrocław the Group invested PLN 209 thousand in
social engagement activities.
4.9. MANAGEMENT, PROCEDURES AND RESULTS IN THE PRODUCT/CLIENT/SUPPLY CHAIN AREA
RAWLPLUG Group operates based on ISO 9001, including ISO/TS 16949, implemented at the production facility in Łańcut.
The Group is heavily focusing on the needs, expectations and requirements of its clients as well as the team's involvement in
design and delivery of the highest-quality products, preventing errors and continuous improvement in all areas of its operations.
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Product design and development
RAWLPLUG Group has been an expert in the fixings industry for a hundred years. It knows how important continuous
improvement is, which is why it is focused on innovations throughout every stage of product work. On the one hand, it offers
advanced technological solutions, modern products, on the other it provides safety, simplicity of use and reliability, which are
so important in the fixings industry. This is why RAWLPLUG Group is constantly investing in facilities that meet international
standards and carry out wide-ranging research in compliance with ISO and VDA standards. The research and development
division plays an important role in this process, creating the foundations for product and service development.
Representatives of R&D, design and construction and sales teams from around the world meet with industry specialists and
actual users of RAWLPLUG Group's products and services. This way they are able to observe how users work with the Group's
solutions on a daily basis, note down any suggestions, comments and experiences as well as discuss problems and develop
innovative solutions.
This approach to product development at RAWLPLUG Group and multiannual close cooperation with users have given the
Group the ability to develop competences and tools that help it to shape the market reality so that the client knows that it can
always be counted on for support. This is made possible by:
✓ Specialised laboratories: mechanics, metallographic, measurement and chemical.
✓ Specialist NPD (new product development) design procedure.
✓ Own resources and thus full control over each process in the creation of new products.
✓ Latest laboratory equipment.
✓ Fast-tracked prototyping process.
✓ Precise verification of product behaviours in specific applications and comprehensive mechanical research.
✓ Flexibility and rapid response to the present needs of existing and potential clients.
RAWLPLUG Group's product and service offering is constantly expanding. Each new product or service is preceded by in-depth
analysis and credible verification of the needs of clients, who receive tailored solutions from the Group. RAWLPLUG Group's
objective is to achieve 20% growth in average sales results for innovative products.
Production
Production and all related activities is the largest process area at RAWLPLUG Group. It is in the production area that the Group
strives to achieve the highest level of sustainability, while improving production efficiency indicators. This is no easy task as
numerous factors must be taken into account, including the RAWLPLUG Group team's working conditions, the expectations
and needs of local communities, impact of the Group's actions on the natural environment. Only this approach allows production
objectives to be achieved in a harmonious and sustainable manner, and the following list of rules that RAWLPLUG Group
applies in the area of production processes is a helpful tool for that:
✓ care for natural resources, including reductions in water and energy consumption, search for alternative and
renewable energy sources,
✓ reductions in losses in the production process across all product development stages,
✓ support for innovativeness, especially in areas that require improvements in the efficiency of production processes,
✓ implementation of new and more efficient technologies,
✓ recycling used in as wide a scope as possible in order to optimally and appropriately use natural resources,
✓ implementation of an environmental management system in compliance with ISO standards in Wrocław and
Łańcut,
✓ rationalisation of the use of raw materials and eco-friendly waste management.
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Management report on the operations of
RAWLPLUG GROUP AND RAWLPLUG S.A.
for the period from 1 January to 31 December 2018 (data in PLN 000s)
RAWLPLUG Group is aware of the key role played by technology and infrastructure in its sustainable development strategy and
environmental protection efforts. This is why it strives to ensure that its production facilities reduce the use of resources, limit
processes done by hand and become more energy efficient. In other words, operations based on best industry practices. Moreover,
the Group applies very rigorous control over all of its production processes thanks to which it can continue developing its supply
chain in a competitive and eco-friendly manner.
Product safety
RAWLPLUG Group is a manufacturer of fixings, fasteners and tools. This means that it designs and manufactures very complex
products, with complex applications. This is why it makes every effort to ensure that its products can be safely used, precisely
marked, safely packaged and transported globally.
User safety
RAWLPLUG Group places great emphasis on user safety. This is its mission, a commitment that it treats very seriously. It
documents the compliance of its products and packaging with existing regulations on an on-going basis. RAWLPLUG Group
features a team of experts responsible for preparing product data sheets, and they do it with utmost precision. Thanks to this, the
Group's products are in compliance with the REACH regulation (Registration, Evaluation and Authorisation of Chemicals) as
well as GHS regulations (Globally Harmonized System of Classification and Labelling of Chemicals) and CLP regulations
(Classification, Labelling and Packaging). RAWLPLUG Group also has domestic and European technical assessments,
certificates and declarations of performance. All of this is intended to make sure that users receive innovative, eco-friendly
products guaranteeing the safety of use and application.
In 2018, RAWLPLUG Group did not receive any significant penalties for lack of compliance with the law and regulations related
to product supply and use.
Transport safety
RAWLPLUG Group transports its products into many countries around the world. This requires the use of many forms of
transport: by land, sea and air. The Group's key priority is to transport its products in a fully safe manner. The Group complies
with requirements imposed through existing regulations, placing emphasis on the transport of hazardous goods. It trains its
employees on all regulations related to the transport and safety of goods so as to make sure that deliveries are safe for the
environment.
Responsible supply chain
RAWLPLUG Group observes management system requirements as regards annual supplier assessments, which are conducted
by its production facilities in Wrocław and Łańcut. Subject to assessment are many aspects of cooperation, including the quality
of goods, timeliness of deliveries, social and environmental responsibility. In 2018, RAWLPLUG Group conducted nine such
audits.
5. SEASONALITY OF SALES
Given the fact that the main customer group for RAWLPLUG Group's products and goods is the construction sector, sales are
subject to seasonality. The Group generates the largest portion of its revenue from sales in the third quarter and the smallest in
the fourth quarter. Considering that sales of hand tools and power tools - which are subject to lesser seasonality than construction
fixings - are increasing their share in the Group's overall sales structure, the seasonality effect is decreasing. Seasonality of sales
is characteristic for both Poland as well as RAWLPLUG Group's foreign sales markets.
30
Management report on the operations of RAWLPLUG GROUP AND RAWLPLUG S.A.
for the period from 1 January to 31 December 2018 (data in PLN 000s)
6. INVESTMENTS AND R&D
6.1. INVESTMENTS
RAWLPLUG Group's expenditures on tangible and intangible assets in 2018 reached PLN 50 937 thousand. This concerned in
particular expanding production capacities, especially for the automotive sector, at Koelner Łańcucka Fabryka Śrub Sp. z o.o.
(as at 31 December 2018, a Łańcut-based branch of Koelner Rawlplug IP Sp. z o.o.) and at RAWLPLUG S.A. Additional
investment expenditures concerned research and development, purchase of software and means of transport.
At 31 December 2018, RAWLPLUG Group's bank deposits amounted to PLN 700 thousand.
6.2. INVESTMENTS
2018
Non-current non-financial assets, including: 36 267
Machinery and equipment 26 631
Software 3 312
Buildings and structures 2 263
Means of transport 3 234
Other tangible assets 763
Research and development 64
Non-current financial assets, including: 14 068
Loans granted 12 036
Assets and shares 2 032
TOTAL 50 335
Capital expenditure on non-current non-financial assets in 2018 amounted to PLN 36 267 thousand and mainly concerned
expansion and upgrade of machinery and the modernisation of buildings and structures as well as SAP S/4HANA
implementation.
Investments in the Company's financial non-current assets, amounting to PLN 14 068 thousand, included loans (PLN 12 036
thousand) and purchase of shares (PLN 2 032 thousand) (in PLN 000s):
✓ long-term loan to Koelner Polska Sp. z o.o. 7 066
✓ long-term loan to Koelner Trading KLD LLC 2 790
✓ long-term loan to Amicus Poliniae Sp. z o.o. 2 180
✓ purchase of shares in RAWLPLUG-TMAX Corporation Limited 2 027
✓ purchase of shares in Rawl India Services Private Limited 5
In 2018, the Company did not record any significant expenditures on environmental protection.
6.3. R&D
R&D activities in 2018 were mainly conducted at Koelner Rawlplug IP Sp. z o.o. (work commissioned by RAWLPLUG S.A.)
and Koelner Łańcucka Fabryka Śrub Sp. z o.o. (as at 31 December 2018, a Łańcut-based branch of Koelner Rawlplug IP
Sp. z o.o.).
31
Management report on the operations of
RAWLPLUG GROUP AND RAWLPLUG S.A.
for the period from 1 January to 31 December 2018 (data in PLN 000s)
Koelner Rawlplug IP Sp. z o.o. conducted R&D work on construction fixings. In the areas of bonded anchors, mechanical
anchors and plastic fixings: facade insulation, frame fixings and others. In addition, research and development activities focused
on approval processes and process optimisation in manufacturing divisions.
The key achievements in 2018 include:
✓ completion of implementation phase for a new facade fixing R-TFIX-8M, together with launch of automatic
assembly system,
✓ completion of prototype phase for a new OSL2 plastic packaging,
✓ completion of prototype phase for a new OSL3 plastic packaging,
✓ completion of design phase in BIM for bonded anchors,
✓ completion of research phase in process to create European Technical Assessment for use in category C2 seismic
zones for R-LX,
✓ completion of prototype phase for a new bonded anchor R-KEX,
✓ completion of research phase in process to create European Technical Assessment for R-KEX,
In 2018, at Koelner Łańcucka Fabryka Śrub Sp. z o.o. (as at 31 December 2018, a Łańcut-based branch of Koelner Rawlplug IP
Sp. z o.o.) the following research and development works were conducted:
In rolling processes
The product portfolio was extended by 263 new product groups, of which approx. 80% were for the automotive industry. Being
able to maintain high quality made it possible to prepare full documentation for the approval of 271 products in accordance with
automotive standards (VDA 2, AIAG PPAP). The approved products also include the highest quality and control safety products.
This shows a growing trust on the part of OEM clients, who approve such products individually.
In 2018, the factory in Łańcut introduced a new product segment intended for coating with plastic. Two assortments of this type
of product went to the automotive industry. Furthermore, during the year a forging process was optimised, reducing production
costs by improving the lifecycle of key tools forming the foundations for these goods.
Production technology was optimised as regards products with a very large diameter head, reducing the costs to produce these
items. Changeover time reduction, tool lifecycle extension as a result of modifications confirmed by MES research and
simulations translated into higher production efficiency and lower rejections after selection, which is required by the end client.
All of these activities showed the need to improve the parametrisation of material used for production. This process was begun
as part of a PhD project by one of our employees, who in cooperation with smelters and support from the technical university is
developing parametrisation processes for material for screw products.
Research and analysis began on optimising the production of flange screws. The first effects are visible in improved quality by
the stabilisation of dimension parameters and reduction of unit costs. This process is in its initial stage and work for all flange
product groups will continue for over a dozen months. Works on the optimisation of material use by optimising technology led
to a decrease in the use of material, which reduced production costs.
Another group of products for the automotive industry was put into production, this time used in the assembly of crankshaft
systems. These are very difficult to forge, with large perforation through the head and deep socket. This several months-long
process and the work of several engineers, lab employees, assemblers and operators as well as the management team brought
measurable effects in the form of prototype approvals and the start of mass production of these goods.
Cooperation on the local market was established with aviation and automotive firms, which resulted in new projects to produce
fasteners that will be used in advanced gear box designs and other sub-sets of the drive system.
In 2018, the factory in Łańcut also began to optimise its thread rolling process by improving changeovers (SMED analysis) and
improving tool management by introducing a system for complete and clear documentation.
32
Management report on the operations of RAWLPLUG GROUP AND RAWLPLUG S.A.
for the period from 1 January to 31 December 2018 (data in PLN 000s)
Work is continuing on improving tool lifecycles by searching for innovative solutions, which is why specialist training for
engineers at the AGH University of Science and Technology was commenced. Thanks to this, competences in compressional
stress fields concerning the various elements of tools are growing. In the future, this will generate savings and improve production
efficiency.
The works continued in 2018 on the optimisation of resin parameters for the construction sector are entering the prototyping
phase. The first results should confirm that this product segment should be able to meet market demand while retaining
competitive prices. The first prototypes were created and tested at the end of 2018, which will make it possible to begin the
European Technical Assessment process next year.
In thermal processing
In R&D on screws for concrete, non-standard thermal and chemical processing was applied. In effect, the desired product
functionalities were achieved at a competitive price.
R&D work on a class of screws (100) consisted of selecting materials and thermal processing technologies. This made it possible
to achieve the desired parameters according to specifications from the largest distributor of such products in the world and reduce
costs by changing the chemical content of the material.
Research is under-way in cooperation with universities on innovative thermal processing processes in order to obtain the
mechanical properties for special products class 16.8 and 18.8.
Works began on a special process to prepare material to obtain nano-bainite structures. The segment of these materials will have
potential application in building products, exceeding their mechanical properties without costly thermal and chemical processing.
In surface treatment
In order to optimise the process of producing fixings, work is continuing on optimising thread fit prior to coating so that the
products are fully functional and easily assembled.
In cooperation with Anachrome Group, hybrid coating solutions are being implemented in order to increase corrosive resistance
and friction factor stability. This type of innovative solution makes it possible to create, in cooperation with clients, new
specifications and to be a market pioneer.
Wide-ranging research on surface friction coefficient was conducted as part of student internships, using a variety of coatings,
which expanded knowledge in this area. This research is used to create interesting engineering and master's theses and constitute
a base for creating publications in renowned journals.
In general processes
A process approach was implemented for all aspects of the factory's operations and oversight, resulting in successful audit in Q4
2018 and receipt of a certificate in accordance with automotive standard IATF 16949 ver. 1 2016.
In Q1 2018, the factory received, following an audit, approval for its quality system for the production of products with extended
mechanical properties in classes 10.9 and 12.9 for Volkswagen.
Becoming a supplier for Volkswagen is not only a prestigious confirmation of the high quality of processes but it also brings the
factory into the elite group of producers of fixings and a standard for other clients.
A set of screws for compressed fastening used in advanced building structures was implemented in 2018. It should be noted that
the process and the employees' involvement resulted in the necessary certificates being obtained on the first try.
33
Management report on the operations of
RAWLPLUG GROUP AND RAWLPLUG S.A.
for the period from 1 January to 31 December 2018 (data in PLN 000s)
6.4. PLANS FOR 2019
In 2019, RAWLPLUG Group plans about PLN 66 million in capital expenditure.
The key investment projects are continuing:
✓ Reorganisation and replacement of machine park at Wrocław-based production facility - 3-year programme worth
approx. PLN 30 million (PLN 10 million per year), covering: replacement of the existing line of injectors with
modern hybrid machines (using hydraulic and electric technology), expansion of production line for glue-in anchors
(chemical production) as well as expansion and upgrade of the research and development department;
✓ Continued expansion of the machine park at the Łańcut factory towards further development of production for
specialised screw products for export markets, approx. PLN 13 million per year;
✓ Deployment of SAP in additional Group companies.
✓ E-commerce system implementation at Rawlplug Ltd.
RAWLPLUG Group's investments are financed using own funds and leasing.
In 2019, RAWLPLUG S.A. plans about PLN 33 852 thousand in capital expenditure. These will be mostly expenditures on:
✓ equipment and machines 19 635
✓ construction, expansion and modernisation of buildings and structures 8 633
✓ IT expansion 3 068
✓ R&D, including planned expenditures on obtaining technical approvals 2 277
✓ intangible assets 239
RAWLPLUG S.A.'s investments are financed using own funds and leasing. The Company is not planning any significant
expenditures on environmental protection in 2019.
7. HUMAN RESOURCES
7.1. EMPLOYMENT
At 31 December 2018, RAWLPLUG Group employed 1 894 people.
RAWLPLUG Group employment
31.12.2018
Polish companies 1 418
Foreign companies 466
TOTAL 1 894
As at 31 December 2018, RAWLPLUG S.A. employed 543 people.
34
Management report on the operations of RAWLPLUG GROUP AND RAWLPLUG S.A.
for the period from 1 January to 31 December 2018 (data in PLN 000s)
The following table presents average employment at RAWLPLUG S.A. for 2018, by work group:
in full-time positions
Employment 2018
Direct production workers 192
Indirect production workers 135
Logistics employees 107
Sales force 47
Other 44
Total 525
The Company's HR policy is based on promoting professional development and fostering a safe working environment. The
Company aims to hire employees who have technical high school or university education. As employer, RAWLPLUG S.A. does
not discriminate and ensures equal treatment and employment conditions.
The majority of the Company's staff have high school education.
7.2. REMUNERATION POLICY
Rawlplug S.A.'s remuneration policy is based on the Company Fund Remuneration Regulations and is an element of
management.
The existing remuneration policy results from the Company's strategy and thus supports the pursuit of short-, mid- and long-
term growth plans.
The key objectives of the remuneration policy are as follows:
✓ motivating employees to constantly improving their work efficiency and growing their involvement,
✓ ensuring the adequacy of the remuneration system to the type of work being performed, value of the job position
for the Company, competences, skills required and the market level of remuneration.
The Company has a time- and bonus-based remuneration system, which consists of base salary, specified on a monthly basis,
and optionally: an MBO task-based bonus (monthly, quarterly, yearly) for achievement of objectives, results-related bonus,
regulations-related bonus and commissions. Provisions in employment contracts address remuneration and the type of bonus.
Using an incentive scheme to pass onto the management team and employees objectives that are strictly aligned with the
Company's short-, mid- and long-term growth plans ensures that the Company's business strategy is efficiently implemented.
This is especially reflected in the MBO bonus.
The Company has a remuneration system for the management board and key manages, tied to the Company's financial ratios and
thus to the long-term growth in value for shareholders. The incentive system is based on KPIs, which include project goals and
a goal associated with the accuracy of rolling forecasts. The goals are achieved in accordance with RAWLPLUG Group's
strategy.
Rawlplug S.A. provides non-wage benefits to its employees, such as: co-financing of private healthcare services, sports cards.
As part of the Company Social Security Fund, employees may use: co-financing for holidays or summer camps for children
("Wczasy pod gruszą"), holiday vouchers, etc.
The Company's incentive policy links pay with performance.
35
Management report on the operations of
RAWLPLUG GROUP AND RAWLPLUG S.A.
for the period from 1 January to 31 December 2018 (data in PLN 000s)
8. RELATED-PARTY TRANSACTIONS
8.1. RELATED-PARTY TRANSACTIONS
All transactions between related parties were executed on market terms.
The following table presents transactions executed by companies within RAWLPLUG Group with related parties:
✓ receivables and prepayments, excluding loan receivables, at 31 December 2018,
✓ liabilities and deferred revenues, excluding loan liabilities, at 31 December 2018,
✓ loan and borrowing receivables and liabilities at 31 December 2018,
✓ revenue for the period 1 January – 31 December 2018, covering revenue from sale of products, services, goods and
materials, result on sale of property, plant and equipment and financial assets, other operating revenues, finance
income from dividends received and loans and borrowings granted, together with income from guarantees and
sureties granted,
✓ purchases for the period 1 January – 31 December 2018, covering goods, materials, services, tangible assets and
intangible assets,
✓ result on sale of tangible assets and other operating expenses during the period 1 January - 31 December 2018,
✓ finance costs constituting interest on loans received and costs of guarantees and sureties received during the period
1 January - 31 December 2018.
Total related
parties Eliminations
Total related
parties, after
eliminations
Net revenue from sale of products, goods, materials and services 395 861 ( 384 384) 11 477
Purchases included in the cost of manufacture and value of goods,
materials and services sold
351 945 ( 345 339) 6 606
Purchases included in selling costs and administrative expenses 41 672 ( 39 486) 2 186
Purchase or contribution of property, plant and equipment and intangible
assets 8 388 ( 2 594) 5 794
Other operating revenues 6 733 ( 5 733) 1 000
Other operating expenses 2 080 ( 2 080) -
Dividend income 29 077 ( 29 077) -
Other finance income 5 892 ( 4 545) 1 347
Finance costs 5 052 ( 4 545) 507
Receivables and prepayments, excluding loan receivables 67 475 ( 62 523) 4 952
Loan and borrowing receivables 130 277 ( 84 121) 46 156
Liabilities and deferred revenues, excluding loan and borrowing liabilities
71 340 ( 65 629) 5 711
Loan and borrowing liabilities 84 709 ( 84 103) 606
36
Management report on the operations of RAWLPLUG GROUP AND RAWLPLUG S.A.
for the period from 1 January to 31 December 2018 (data in PLN 000s)
At 31 December 2018, RAWLPLUG Group had the following loan agreements with unconsolidated related parties:
Lender Borrower Year of
execution
Contractual loan value Value to be repaid* Terms
of interest
Repayment
date
PLN 000s Foreign currency 000s PLN 000s Foreign currency 000s
RAWLPLUG S.A. Koelner Trading KLD
LLC 2011 1 623 EUR 378 1 623 EUR 378
EURIBOR 3M
+ margin 01.2021
RAWLPLUG S.A. Koelner Trading KLD
LLC 2016 14 800 - 13 990 -
WIBOR 1M
+ margin 07.2022
RAWLPLUG S.A. Rawlplug Ireland
(Export) Ltd 2014 800 EUR 186 609 EUR 142
EURIBOR 1M
+ margin 08.2019
RAWLPLUG S.A. Amicus Poliniae
Sp. z o.o. 2012 30 000 - 24 093 -
WIBOR 12M
+ margin 01.2019
RAWLPLUG S.A.
Rawlplug Portugal
LDA **
Gross value
Impairment
Net value
2016 645 EUR 150
417
( 417)
-
EUR 97 EURIBOR 1M
+ margin 12.2021
RAWLPLUG S.A.
Rawl Africa (Pty) Ltd
Gross value
Impairment
Net value
2015 752 USD 200
447
( 447)
-
USD 119 LIBOR 1M +
margin 9.2019
RAWLPLUG S.A.
Rawl Africa (Pty) Ltd
Gross value
Impairment
Net value
2015 188 USD 50
195
( 195)
-
USD 52 LIBOR 1M +
margin 6.2019
RAWLPLUG S.A. Rawlplug Inc. 2017 38 USD 10 41 USD 11 LIBOR 1M
+ margin 10.2019
Rawlplug Ireland
(Export) Ltd Rawlplug Ireland Ltd 2016 985 EUR 229 606 EUR 141 fixed interest no deadline
RAWLPLUG S.A. Koelner-Inwestycje
Budowlane Sp. z o.o. 2018 2 200 - 2 243 -
WIBOR 1M
+ margin 05.2019
RAWLPLUG S.A. Rawlplug Singapore
PTE. LTD 2018 2 706 USD 720 2 757 USD 733
LIBOR 1M
+ margin 06.2019
RAWLPLUG S.A. Rawlplug Singapore
PTE. LTD 2018 2 706
USD 720 limit
602 USD 160 fixed interest 06.2019
* amounts to be repaid include interest accrued but not yet paid as at the end of the reporting period.
** the company ceased economic activities on 22 September 2016.
As at 31 December 2018, RAWLPLUG Group had the following loan agreements with consolidated related parties:
Lender Borrower Year of
execution
Contractual loan value Value to be repaid* Terms
of interest
Repayment
date PLN 000s Foreign currency 000s PLN 000s Foreign currency 000s
Koelner Hungária Kft.
Koelner Rawlplug IP
Sp. z o.o. (branch in
Łańcut)
2014 13 817 EUR 3 213 17 324 EUR 4 029 fixed interest 10.2020
Koelner Hungária Kft.
Koelner Rawlplug IP
Sp. z o.o. (branch in
Łańcut)
2015 5 160 EUR 1 200 5 387 EUR 1 253 fixed interest 11.2020
Koelner Hungária Kft.
Koelner Rawlplug IP
Sp. z o.o. (branch in
Łańcut)
2017 6 112 EUR 1 421 3 877 EUR 902 fixed interest 05.2020
RAWLPLUG S.A. Rawlplug Middle East
FZE 2017 13 422 USD 3 570 11 279 USD 3 000 fixed interest 11.2020
RAWLPLUG S.A. Rawlplug Ireland Ltd 2016 11 180
EUR 2 600
8 835
EUR 2 055
EURIBOR 1M +
margin 12.2021
Koelner Rawlplug IP
Sp. z o.o. Rawlplug Ireland Ltd 2014 226 - 195 -
EURIBOR 1M +
margin 08.2019
Koelner Rawlplug IP
Sp. z o.o. RAWLPLUG S.A. 2013
Limit
19 500 - 14 948 -
WIBOR 1M
+ margin 11.2021
Stahl GmbH Koelner Deutschland
GmbH 2010 9 993 EUR 2 324 5 108 EUR 1 188 fixed interest 12.2022
37
Management report on the operations of
RAWLPLUG GROUP AND RAWLPLUG S.A.
for the period from 1 January to 31 December 2018 (data in PLN 000s)
Lender Borrower Year of
execution
Contractual loan value Value to be repaid* Terms
of interest
Repayment
date PLN 000s Foreign currency 000s PLN 000s Foreign currency 000s
Stahl GmbH RAWLPLUG S.A. 2011 2 150 EUR 500 2 152 EUR 501 EURIBOR 1M
+ margin 09.2019
Stahl GmbH RAWLPLUG S.A. 2012 860 EUR 200 860 EUR 200 EURIBOR 1M
+ margin 09.2019
Stahl GmbH RAWLPLUG S.A. 2012 1 943 EUR 452 1 915 EUR 445 EURIBOR 1M
+ margin 09.2019
Stahl GmbH RAWLPLUG S.A. 2012 860 EUR 200 860 EUR 200 EURIBOR 1M
+ margin 09.2019
Stahl GmbH RAWLPLUG S.A. 2012 430 EUR 100 430 EUR 100 EURIBOR 1M
+ margin 09.2019
Stahl GmbH RAWLPLUG S.A. 2012 658 EUR 153 285 EUR 66 EURIBOR 1M
+ margin 09.2019
Koelner Deutschland
GmbH RAWLPLUG S.A. 2018 1 935 EUR 450 1 935 EUR 450
EURIBOR 1M
+ margin 01.2019
Koelner Hungária Kft. Koelner Rawlplug IP
Sp. z o.o. 2018 8 706 HUF 650 000 8 731 HUF 651 603
EURIBOR 1M
+ margin 11.2019
* amounts to be repaid include interest accrued but not yet paid as at the end of the reporting period.
8.2. RELATED-PARTY TRANSACTIONS AT RAWLPLUG S.A.
All related-party transactions were executed on market terms, and their nature and terms result from the on-going operating
activities of the Company or its subsidiaries.
The table below presented transactions with related parties, including:
✓ net receivables, excluding loan receivables, as at 31 December 2018,
✓ liabilities, excluding loan liabilities, as at 31 December 2018,
✓ revenue for the period 1 January - 31 December 2018, covering revenue from sale of products, services, goods and
materials, result on sale of property, plant and equipment, other operating revenues, dividend and interest income,
together with income from guarantees and sureties granted,
✓ purchases for the period 1 January - 31 December 2018, covering procurement of goods, materials, services and
property, plant and equipment, plus initial rent recorded in prepayments. The item also includes finance costs
constituting interest on loans received and the cost of guarantees and sureties received.
All transactions between related parties were executed on market terms.
38
Management report on the operations of RAWLPLUG GROUP AND RAWLPLUG S.A.
for the period from 1 January to 31 December 2018 (data in PLN 000s)
Revenues Purchases Receivables Liabilities
Koelner Centrum Sp. z o.o. 181 109 - -
Koelner CZ s.r.o. 12 373 4 741 -
Koelner Hungária Kft 13 223 21 1 391 -
Koelner Deutschland GmbH 3 975 136 636 -
Koelner Vilnius UAB 5 986 533 128 -
Rawlplug Middle East FZE 10 853 10 4 045 -
Rawl Scandinavia AB 4 942 - 451 -
Rawlplug Ireland Ltd 4 589 20 1 190 -
Rawl France SAS 27 472 1 528 6 633 -
Rawlplug Ltd 37 536 130 7 918 -
Stahl GmbH 865 86 92 -
Amicus Poliniae Sp. z o.o. 772 480 - 121
Rawlplug Ireland (Export) Ltd 7 - - -
Koelner Trading KLD LLC 5 480 50 1 854 -
Koelner Ltd - 146 - 204
Koelner Rawlplug IP Sp. z o.o. 32 340 65 161 - 14 350
Rawlplug Singapore PTE. 1 051 78 603 -
Koelner - Inwestycje Budowlane Sp. z o.o. 79 7 053 2 1 862
Koelner-Ukraine LLC 3 899 - 803 -
Koelner Polska Sp. z o.o. 168 766 805 16 022 -
Rawlplug Shanghai Trading Ltd. - 6 055 765 1 866
Rawl Africa (PTY) Ltd 27 - - -
Rawlplug Portugal LDA 5 - - -
Rawlplug Inc. 17 - 17 -
Koelner Slovakia s.r.o. 3 - - -
Amicus Sp. z o.o. 5 - 1 -
Rawlplug-TMAX Limited Corporation 761 - 89 1 364
TOTAL 335 207 82 405 43 381 19 767
As at 31 December 2018, gross receivables concerning loans amounted to PLN 67 131 thousand, including:
✓ PLN 24 093 thousand from Amicus Poliniae Sp. z o.o.,
✓ PLN 15 613 thousand from Koelner Trading KLD LLC,
✓ PLN 11 279 thousand from Rawlplug Middle East FZE,
✓ PLN 8 835 thousand from Rawlplug Ireland Ltd,
✓ PLN 3 359 thousand from Rawlplug Singapore Pte. Ltd.,
✓ PLN 2 243 thousand from Koelner - Inwestycje Budowlane Sp. z o.o.,
✓ PLN 642 thousand from Rawl Africa (Pty) Ltd,
✓ PLN 609 thousand from Rawlplug Ireland (Export) Ltd,
✓ PLN 417 thousand from Rawlplug Portugal LDA,
✓ PLN 41 thousand from Rawlplug Inc.
39
Management report on the operations of
RAWLPLUG GROUP AND RAWLPLUG S.A.
for the period from 1 January to 31 December 2018 (data in PLN 000s)
In 2018, an impairment loss was recognised on a PLN 23 thousand loan issued to Rawl Africa (Pty) Ltd and on a PLN 4 thousand
loan to Rawlplug Portugal LDA, and an impairment loss was reversed with regard to a PLN 45 thousand loan issued to Rawl
Africa (Pty) Ltd.
Finance income on loan interest received during the period 1 January - 31 December 2018 was PLN 1 749 thousand, including:
✓ PLN 772 thousand from Amicus Poliniae Sp. z o.o.,
✓ PLN 436 thousand from Koelner Trading KLD LLC,
✓ PLN 300 thousand from Rawlplug Middle East FZE,
✓ PLN 98 thousand from Rawlplug Ireland Ltd,
✓ PLN 53 thousand from Rawlplug Singapore Pte. Ltd.,
✓ PLN 43 thousand from Koelner - Inwestycje Budowlane Sp. z o.o.,
✓ PLN 23 thousand from Rawl Africa (Pty) Ltd,
✓ PLN 9 thousand from Koelner Polska Sp. z o.o.,
✓ PLN 7 thousand from Rawlplug Ireland (Export) Ltd,
✓ PLN 5 thousand from Rawlplug Portugal LDA,
✓ PLN 2 thousand from Rawl France SAS,
✓ PLN 1 thousand from Rawlplug Inc.
As at 31 December 2018, loan and borrowing liabilities amounted to PLN 23 385 thousand, including:
✓ PLN 14 948 thousand towards Koelner Rawlplug IP Sp. z o.o.,
✓ PLN 6 502 thousand towards Stahl GmbH,
✓ PLN 1 935 towards Koelner Deutschland GmbH.
Finance costs on loan interest paid during the period 1 January - 31 December 2018 was PLN 712 thousand, including:
✓ PLN 587 thousand to Koelner Rawlplug IP Sp. z o.o.,
✓ PLN 73 thousand to Stahl GmbH,
✓ PLN 25 thousand towards Koelner Deutschland GmbH.
✓ PLN 21 thousand towards Koelner Hungária Kft,
✓ PLN 6 thousand to Koelner Polska Sp. z o.o.,
As at 31 December 2018, RAWLPLUG S.A. held contingent liabilities on sureties and guarantees granted to related parties in
total amounting to PLN 55 024 thousand. A detailed list is presented in the table below.
Entity receiving the surety Beneficiary
Liabilities
connected with
sureties /
guarantees issued
Object of collateral Term of surety /
guarantee
Koelner Rawlplug IP Sp. z o.o. Bank Handlowy w Warszawie S.A. 16 850 Credit agreement 29.02.2020
Koelner Rawlplug IP Sp. z o.o. CMC Poland Sp. z o.o. 16 000 supplies / services 31.12.2019
Rawl France SAS Bank Handlowy w Warszawie S.A. 8 884 Credit agreement 31.07.2019
Koelner Rawlplug IP Sp. z o.o. ING Lease Polska Sp. z o.o. 7 828 Leasing
payable in the
period from
01.2020
to 06.2021
40
Management report on the operations of RAWLPLUG GROUP AND RAWLPLUG S.A.
for the period from 1 January to 31 December 2018 (data in PLN 000s)
Entity receiving the surety Beneficiary
Liabilities
connected with
sureties /
guarantees issued
Object of collateral Term of surety /
guarantee
Koelner Polska Sp. z o.o. Alphabet Polska Fleet Management
Sp. z o.o. 1 868 Leasing 31.12.2021
Koelner Polska Sp. z o.o. LeasePlan Fleet Management
(Polska) Sp. z o.o. 1 543 Leasing
payable in the
period from
05.2019
to 04.2022
Rawlplug LTD Bank Handlowy w Warszawie S.A. 1 217 Credit agreement 28.02.2020
Koelner Rawlplug IP Sp. z o.o. PKO Leasing S.A. 820 Leasing
payable in the
period from
from 08.2019
to 12.2020
Koelner Rawlplug IP Sp. z o.o. Suppliers 14 supplies / services 02.04.2019
The following table presents liabilities on the sureties received by RAWLPLUG S.A. as of 31 December 2018:
Entity issuing the surety Beneficiary
Level of credit liabilities
guaranteed by other
entities
Term for which
the surety was
issued
Koelner Rawlplug IP Sp. z o.o., Koelner
Polska Sp. z o.o. Bank Handlowy w Warszawie S.A. 1 210 29.02.2020
Koelner Rawlplug IP Sp. z o.o. ING Lease Polska Sp. z o.o. 21 636
payable in the
period from
from 09.2021
to 07.2023
9. OFF-BALANCE-SHEET ITEMS
9.1. LOAN AND BORROWING SURETIES GRANTED OR RECEIVED AND GUARANTEES GRANTED
AND RECEIVED AT RAWLPLUG GROUP AND RAWLPLUG S.A.
CREDIT OR LOAN SURETIES GRANTED OR RECEIVED AND GUARANTEES GRANTED AND RECEIVED AT
RAWLPLUG GROUP
RAWLPLUG Group companies issue mutual sureties for both credit facilities and lease contracts as well as in the course of
regular commercial activities. These are intra-group transactions (guaranteed liabilities are recorded in the consolidated balance
sheet), therefore the associated liabilities are not recognised in the consolidated financial statements.
SURETIES GRANTED FOR LOANS AND BORROWINGS, GUARANTEES GRANTED BY RAWLPLUG S.A.
In 2018, subsidiary Koelner Polska Sp. z o.o. terminated a credit agreement with Bank Handlowy w Warszawie S.A., in
connection with which a surety granted to Koelner Polska Sp. z o.o. by RAWLPLUG S.A. expired. A surety granted to Koelner
Rawlplug IP Sp. z o.o. expired in 2018 (prior to the merger with Koelner Łańcucka Fabryka Śrub Sp. z o.o.) concerning liabilities
towards PGE OBRÓT S.A., along with a surety granted to Koelner Polska Sp. z o.o. for liabilities towards PKO Leasing S.A.
and Toyota Leasing Polska Sp. z o.o.
In 2018, RAWLPLUG S.A. granted a surety to Koelner Rawlplug IP Sp. z o.o. for the repayment of liabilities concerning lease
contracts executed with ING Lease Polska Sp. z o.o., Alphabet Polska Fleet Management Sp. z o.o. and LeasePlan Fleet
Management (Polska) Sp. z o.o. Annexes to contracts executed in previous years, extending the repayment deadlines, were also
executed in 2018.
41
Management report on the operations of
RAWLPLUG GROUP AND RAWLPLUG S.A.
for the period from 1 January to 31 December 2018 (data in PLN 000s)
As at 31 December 2018, RAWLPLUG S.A. held contingent liabilities on sureties and guarantees granted to subsidiaries in total
amounting to PLN 55 024 thousand. A detailed list is presented in the table below.
Entity to which RAWLPLUG
S.A. granted the
surety/guarantee
Entity receiving the
surety/guarantee
Total amount
of credit that is
fully or
partially
secured
Term for which
the surety was
issued
Financial terms upon
which the surety was
issued
Type of connection
between the entity
issuing the surety and
the entity receiving it
Koelner Rawlplug IP Sp. z o.o. Bank Handlowy
w Warszawie S.A. 16 850 29.02.2020
Fees based on a fixed
rate of interest subsidiary
Koelner Rawlplug IP Sp. z o.o. CMC Poland Sp. z o.o. 16 000 31.12.2019 Fees based on a fixed
rate of interest subsidiary
Rawl France SAS Bank Handlowy
w Warszawie S.A. 8 884 31.07.2019
Fees based on a fixed
rate of interest subsidiary
Koelner Rawlplug IP Sp. z o.o. ING Lease Polska
Sp. z o.o. 7 828
from 01.2020
to 06.2021
Fees based on a fixed
rate of interest subsidiary
Koelner Polska Sp. z o.o. Alphabet Polska Fleet
Management Sp. z o.o. 1 868 31.12.2021
Fees based on a fixed
rate of interest subsidiary
Koelner Polska Sp. z o.o. LeasePlan Fleet
Management (Polska)
Sp. z o.o.
1 543 05.2019
to 04.2022
Fees based on a fixed
rate of interest subsidiary
Rawlplug LTD Bank Handlowy
w Warszawie S.A. 1 217 28.02.2020
Fees based on a fixed rate of interest
subsidiary
Koelner Rawlplug IP Sp. z o.o. PKO Leasing S.A. 820 from 08.2019
to 12.2020
Fees based on a fixed rate of interest
subsidiary
Koelner Rawlplug IP Sp. z o.o. Suppliers 14 02.04.2019 Fees based on a fixed
rate of interest subsidiary
SURETIES GRANTED AND RECEIVED FOR LOANS AND BORROWINGS, GUARANTEES RECEIVED BY
RAWLPLUG S.A.
Annexes to RAWLPLUG S.A.'s existing surety and guarantee agreements, executed in previous years, were executed in 2018,
as well as new guarantees were received and some expired. A guarantee issued to RAWLPLUG S.A. by Bank BGŻ BNP Paribas
Spółka Akcyjna (formerly Raiffeisen Bank Polska SA) as collateral for the repayment of liabilities towards PGE Obrót SA
expired in 2018. In 2018, RAWLPLUG S.A. received a guarantee from Bank BGŻ BNP Paribas Spółka Akcyjna as general
collateral for customs operations up to PLN 500 thousand. In 2018, Koelner Polska Sp. z o.o. (subsidiary) ceased being a
guarantor for the repayment of liabilities by RAWLPLUG S.A. concerning a credit agreement executed with Bank BGŻ BNP
Paribas Spółka Akcyjna (formerly Raiffeisen Bank Polska SA). Koelner Rawlplug IP Sp. z o.o. (formerly Koelner Łańcucka
Fabryka Śrub Sp. z o.o.) (subsidiary), which guarantees RAWLPLUG S.A.'s repayment of liabilities concerning lease contracts
executed with ING Lease Polska Sp. z o.o., granted new sureties in 2018 for lease contracts, while some contracts executed in
previous years expired. Moreover, Koelner Rawlplug IP Sp. z o.o. granted a surety to RAWLPLUG S.A. for the repayment of a
current account credit facility granted to RAWLPLUG S.A. by Bank Handlowy w Warszawie S.A. This surety also expired in
2018.
The following table presents data concerning liabilities on the sureties and guarantees received by RAWLPLUG S.A. as at 31
December 2018:
Entity issuing the surety Year in which
guarantee/surety
was originated
Beneficiary Level of credit and other
liabilities guaranteed by
other entities, and amount
of customers guarantee
Term for which
the surety was
issued
Koelner Rawlplug IP Sp. z o.o.,
Koelner Polska Sp. z o.o. (subsidiary) 2014
Bank Handlowy
w Warszawie S.A. 1 210 29.02.2020
Koelner Rawlplug IP Sp. z o.o. (formerly
Koelner Łańcucka Fabryka Śrub
Sp. z o.o.) (subsidiary)
2017/2018 ING Lease Polska
Sp. z o.o. 21 636
payable in the
period from
from 09.2021
to 07.2023 BGŻ BNP Paribas S.A. 2018 customers guarantee 500 no deadline
42
Management report on the operations of RAWLPLUG GROUP AND RAWLPLUG S.A.
for the period from 1 January to 31 December 2018 (data in PLN 000s)
9.2. OTHER OFF-BALANCE SHEET ITEMS
As at 31 December 2018, RAWLPLUG Group did not have any material off-balance-sheet items.
10.INFORMATION ON SURETIES AND GUARANTEES RECEIVED BY
RAWLPLUG S.A.
Information on sureties and guarantees received by RAWLPLUG S.A. is presented in detail in point 9.1. "Off-balance-sheet
items."
11.INFORMATION ON LOANS, SURETIES AND GUARANTEES GRANTED
BY RAWLPLUG S.A. AND CREDIT FACILITIES RECEIVED
Annexes to loan agreements executed in previous years as well as new agreements were executed in 2018.
In 2018, as part of an existing limit, loans were made to Amicus Poliniae Sp. z o.o. (PLN 4 629 thousand), Rawl France SAS
(EUR 138 thousand), Rawlplug Inc. (USD 7 thousand) and Koelner Trading KLD LLC (PLN 2 790 thousand). New loan
agreements were also executed with: Koelner Inwestycje Budowlane Sp. z o.o. (PLN 2 200 thousand), Rawlplug Singapore PTE.
LTD (USD 720 thousand), Rawlplug Singapore PTE. LTD (USD 720 thousand limit) and Koelner Polska Sp. z o.o. (limit up to
PLN 10 000 thousand). PLN 15 707 thousand in loans was repaid in 2018.
As at 31 December 2018, RAWLPLUG S.A. held receivables due to loans amounting to a total of PLN 66 270 thousand. A
detailed list is presented in the table below.
Lender Borrower Year of
execution
Contractual loan value Value to be repaid* Terms
of interest
Repayment
date PLN 000s Foreign currency 000s PLN 000s Foreign currency 000s
RAWLPLUG S.A. Rawlplug Middle
East FZE 2017 13 422 USD 3 570 11 279 USD 3 000
fixed
interest 11.2020
RAWLPLUG S.A. Rawlplug Ireland Ltd 2016 11 180
EUR 2 600
8 835
EUR 2 055
EURIBOR 1M +
margin
12.2021
RAWLPLUG S.A. Koelner Trading
KLD LLC 2011 1 623 EUR 378 1 623 EUR 378
EURIBOR
3M +
margin
01.2021
RAWLPLUG S.A. Koelner Trading
KLD LLC 2016 14 800 - 13 990 -
WIBOR
1M
+ margin
07.2022
RAWLPLUG S.A. Rawlplug Ireland (Export) Ltd
2014 800 EUR 186 609 EUR 142 EURIBOR
1M + margin
08.2019
RAWLPLUG S.A. Amicus Poliniae Sp. z o.o.
2012 30 000 - 24 093 - WIBOR
12M + margin
01.2019
RAWLPLUG S.A.
Rawlplug Portugal LDA **
Gross value
Impairment Net value
2016 645 EUR 150
417
( 417) -
EUR 97 EURIBOR
1M +
margin
12.2021
RAWLPLUG S.A.
Rawl Africa (Pty) Ltd Gross value
Impairment
Net value
2015 752 USD 200
447
( 447)
-
USD 119
LIBOR
1M + margin
09.2019
RAWLPLUG S.A.
Rawl Africa (Pty) Ltd
Gross value
Impairment Net value
2015 188 USD 50
195
( 195) -
USD 52 LIBOR 1M +
margin
06.2019
43
Management report on the operations of
RAWLPLUG GROUP AND RAWLPLUG S.A.
for the period from 1 January to 31 December 2018 (data in PLN 000s)
Lender Borrower Year of
execution
Contractual loan value Value to be repaid* Terms
of interest
Repayment
date PLN 000s Foreign currency 000s PLN 000s Foreign currency 000s
RAWLPLUG S.A. Rawlplug Inc. 2017 38 USD 10 41 USD 11 LIBOR
1M
+ margin
10.2019
RAWLPLUG S.A. Koelner-Inwestycje
Budowlane Sp. z o.o. 2018 2 200 - 2 243 -
WIBOR
1M
+ margin
05.2019
RAWLPLUG S.A. Rawlplug Singapore
PTE. LTD 2018 2 706 USD 720 2 757 USD 733
LIBOR
1M
+ margin
06.2019
RAWLPLUG S.A. Rawlplug Singapore PTE. LTD
2018 2 706 USD 720 limit
602 USD 160
fixed interest
06.2019
RAWLPLUG S.A. WKK Obiekty Sp. z o.o
2015 190 - 198 - WIBOR
12M + margin
12.2021
* amounts to be repaid include interest accrued but not yet paid as at the end of the reporting period.
** the company ceased economic activities on 22 September 2016.
Information on sureties and guarantees granted by RAWLPLUG S.A. is presented in detail in point 9.1. "Off-balance-sheet
items."
Annexes to credit agreements executed in previous years were executed in 2018. In 2018, a new credit agreement was executed
with Bank Handlowy w Warszawie Spółka Akcyjna, pursuant to which RAWLPLUG SA became one of the borrowers of a
current-account credit facility with a total limit for all borrowers of up to PLN 60 000 thousand.
In 2018, PLN 5 000 thousand was repaid on a credit facility granted to RAWLPLUG S.A. by PKO Bank Polski S.A.
Detailed information about credit facilities received is presented in notes 16d and 17c of RAWLPLUG S.A.'s 2018 financial
statements.
12. SIGNIFICANT PROCEEDINGS IN PROGRESS BEFORE A COURT,
ARBITRATION BODY OR PUBLIC ADMINISTRATION AUTHORITY
At 31 December 2018, there were no proceedings on-going before a court or other authority, the object of which was a material
payable or liability of RAWLPLUG S.A. or RAWLPLUG Group.
13. SIGNIFICANT INFORMATION FOR ASSESSMENT OF THE COMPANY
AND GROUP
13.1.DIVIDEND
On 22 June 2018, the Company's Ordinary General Meeting adopted a resolution on the payment of a dividend.
In accordance with this resolution, the Ordinary General Meeting set the amount of dividend at PLN 10 744 800.00, i.e.
PLN 0.33 per share. The dividend will be paid from the net profit generated in financial year 2017.
The dividend applied to all 32 560 000 shares of RAWLPLUG S.A.
The Company's Ordinary General Meeting also decided as follows:
✓ ex-dividend date - 8 August 2018
✓ dividend payment date - 24 August 2018
44
Management report on the operations of RAWLPLUG GROUP AND RAWLPLUG S.A.
for the period from 1 January to 31 December 2018 (data in PLN 000s)
The Management Board is proposing to use RAWLPLUG S.A.'s net profit for 2018, amounting to PLN 17 888 thousand, as
follows:
✓ to pay a dividend in the amount of PLN 10 745 thousand,
✓ increase supplementary capital by PLN 7 143 thousand.
13.2.EVENTS AFTER THE END OF THE REPORTING PERIOD
On 18 February 2018, an agreement was executed between RAWLPLUG S.A. and an existing shareholder of subsidiary Koelner
Centrum Sp. z o.o. in Pabianice, pursuant to which RAWLPLUG S.A. purchased a 49% stake in Koelner Centrum Sp. z o.o.,
which constitutes 245 shares with nominal value of PLN 1 thousand each and total nominal value of PLN 245 thousand. The
purchase price was PLN 1 555.9 thousand. As a result of the transaction, RAWLPLUG S.A. became the owner of 100% of shares
in Koelner Centrum Sp. z o.o. The next stage will involve the merger of these two companies, therefore on 27 February 2019 a
merger plan was agreed and signed by the merging entities' management boards. The merger will take place pursuant to art. 492
§ 1 point 1 of the Polish Commercial Companies Code, i.e. through the transfer of all of the assets of Koelner Centrum Sp. z
o.o., as the acquired company, to RAWLPLUG S.A., as the acquiring company. Due to the fact that RAWLPLUG S.A. is the
sole shareholder of the acquired company, i.e. Koelner Centrum Sp. z o.o., the merger will be carried out in a simplified procedure
pursuant to art. 516 § 6 of the Polish Commercial Companies Code, i.e. without:
✓ drafting by the management boards of the companies being merged of the reports referred to in art. 501 § 1 of the
Polish Commercial Companies Code,
✓ disclosure of the information referred to in art. 501 § 2 of the Polish Commercial Companies Code and
✓ audit of the merger plan by a statutory auditor and drafting of an audit opinion.
On the date on which the merger will be entered into the National Court Register, Koelner Centrum Sp. z o.o. will be removed
from the register of companies without liquidation. The merger plan is to be publicly disclosed on the website of RAWLPLUG
S.A. www.rawlplug.pl and on the website of the acquired company: www.koelnercentrum.pl. The planned merger is the next
stage in a process to simplify RAWLPLUG Group's organisational structure, which should translate into higher efficiency of
commercial activities in Poland.
On 22 February 2019, RAWLPLUG S.A. signed an annex to a Multi-Product Agreement of 3 March 2014 with ING Bank Śląski
S.A., as referred to in current reports 3/2014 of 4 March 2014, 3/2015 of 7 April 2015 and 23/2015 of 23 December 2015. The
annex increased RAWLPLUG S.A.'s limit to PLN 70 million and extended the repayment deadline to 27 February 2022.
On 18 March 2019, RAWLPLUG S.A.'s Management Board convened the Company's Ordinary General Meeting for 23 April
2019. The General Meeting is expected to adopt a resolution on the Company's merger with Koelner Centrum Sp. z o.o. On the
same day, the Management Board of RAWLPLUG S.A., through current report 6/2019, published the first notice to shareholders
on its intent to merge the Company with subsidiary Koelner Centrum Sp. z o.o.
On 20 March 2019, the Management Board of Rawlplug S.A. adopted a resolution concerning a proposal on allocation of the
Company’s 2018 net profit. The Company’s Management Board decided to submit a recommendation to the Ordinary General
Meeting regarding payment of dividend for 2018 in the amount of PLN 10 745 thousand, i.e. PLN 0.33 per share. The Company’s
Supervisory Board will issue an opinion on this recommendation. The final decision on allocation of the 2018 profit will be made
by the Company’s General Meeting.
45
Management report on the operations of
RAWLPLUG GROUP AND RAWLPLUG S.A.
for the period from 1 January to 31 December 2018 (data in PLN 000s)
14.SIGNIFICANT AGREEMENTS
Presented in the table below are RAWLPLUG Group's significant agreements.
CREDIT AGREEMENTS
Borrower Bank Contractual value Type of credit facility
RAWLPLUG S.A.,
Koelner Polska Sp. z o.o.,
Koelner Rawlplug IP Sp. z o.o.
ING Bank Śląski S.A. 66 000 Overdraft
RAWLPLUG S.A. Bank BGŻ BNP Paribas S.A. 40 000 Overdraft
RAWLPLUG S.A.,
Koelner Polska Sp. z o.o.
Bank BGŻ BNP Paribas S.A.
(formerly Raiffeisen Bank Polska S.A.) 84 000
Framework revolving credit
facility
RAWLPLUG S.A.,
Koelner Polska Sp. z o.o.,
Koelner Rawlplug IP Sp. z o.o.
Bank Handlowy w Warszawie S.A. 60 000 Trade credit
Detailed information on all credits and borrowings is presented in note 22 to RAWLPLUG Group's consolidated annual report
for the period from 1 January to 31 December 2018.
15. GROUP FINANCIAL RESULTS
RAWLPLUG Group
01-12.2018 01-12.2017 % change
Continuing operations
Revenue from sales 775 501 708 556 9.4
Cost of sales ( 511 303) ( 469 200) 9.0
Gross profit on sales 264 198 239 356 10.4
Selling costs ( 148 847) ( 136 726) 8.9
Administrative expenses ( 50 643) ( 45 241) 11.9
Profit on sales 64 708 57 389 12.8
Other operating revenues 11 026 15 976 ( 31.0)
Other operating expenses ( 14 483) ( 16 047) ( 9.7)
Operating profit 61 251 57 318 6.9
Finance income 1 475 4 997 ( 70.5)
Finance costs ( 12 470) ( 17 201) ( 27.5)
Gross profit 50 256 45 114 11.4
Income tax ( 9 087) ( 11 788) ( 22.9)
Net profit on continuing operations 41 169 33 326 23.5
Depreciation 27 379 24 563 11.5
EBITDA 88 630 81 881 8.2
Discontinued operations
Net profit (loss) on discontinued operations - 1 181 ( 100.0)
Net profit (loss) 41 169 34 507 19.3
Consolidated revenue from sales in 2018 was PLN 775 501 thousand, up 9.4% on the previous year. Operating profit was PLN
64 708 thousand (up 12.8% compared with 2017), while EBITDA reached PLN 88 630 thousand, i.e. 8.2% higher than in 2017.
In 2018, RAWLPLUG Group generated PLN 41 169 thousand in net profit on continuing operations, compared with PLN 33
326 thousand in 2017, a 23.5% increase. The Group's overall net profit in 2018 came to PLN 41 169 thousand, compared to PLN
34 507 thousand in 2017 (up by 19.3%).
46
Management report on the operations of RAWLPLUG GROUP AND RAWLPLUG S.A.
for the period from 1 January to 31 December 2018 (data in PLN 000s)
15.1. ASSET AND LIABILITY STRUCTURE IN THE CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
Selected items from RAWLPLUG Group's consolidated statement of financial position
RAWLPLUG Group
Selected balance sheet items 31.12.2018 31.12.2017 Change
TOTAL ASSETS 976 331 868 846 107 485
Non-current assets, including: 478 236 463 835 14 401
Intangible assets 80 113 74 852 5 261
Property, plant and equipment 295 851 267 304 28 547
Investment properties 3 401 3 401 -
Investments in associates 2 027 - 2 027
Non-current financial assets 36 766 56 940 ( 20 174)
Non-current receivables and prepayments 5 115 3 423 1 692
Deferred income tax assets 54 963 57 915 ( 2 952)
Current assets, including: 498 095 405 011 93 084
Inventories 263 633 223 665 39 968
Receivables and prepayments 149 945 141 846 8 099
Current financial assets 30 393 1 779 28 614
Cash and cash equivalents 48 890 37 387 11 503
TOTAL EQUITY AND LIABILITIES 976 331 868 846 107 485
Equity 462 362 429 993 32 369
Liabilities 513 969 438 853 75 116
Non-current liabilities, including: 152 941 188 441 ( 35 500)
Loans and borrowings 119 287 165 192 ( 45 905)
Current liabilities, including: 361 028 250 412 110 616
Loans and borrowings 148 767 60 455 88 312
Trade and other payables 170 873 151 374 19 499
Share of non-current assets 49.0% 53.4%
Share of current assets 51.0% 46.6%
Share of inventories in current assets 52.9% 55.2%
Share of receivables in current assets 30.1% 35.0%
The balance sheet total at 31 December 2018 was PLN 976 331 thousand, up by PLN 107 485 thousand y/y.
Growth in non-current assets in the past 12 months was PLN 14 401 thousand, and the largest share, amounting to PLN 28 547
thousand, was related to property plant and equipment concerning on-going investment projects. At the same time, non-current
financial assets declined by PLN 20 174 thousand. This resulted from reclassification of loans from non-current to current.
Current assets increased by PLN 93 084 thousand, resulting mainly from an increase in inventories and current financial assets
(reclassification of loans from non-current to current).
On the equity and liabilities side, equity went up by PLN 32 369 thousand, while loan and borrowing liabilities (both current and
non-current) grew by PLN 42 407 thousand and trade and other payables increased by PLN 19 499 thousand.
15.2. REVENUE FROM SALES
31.12.2018 31.12.2017 % change
Revenue from sales 775 501 708 556 9.4
Cost of sales ( 511 303) ( 469 200) 9.0
Gross profit on sales 264 198 239 356 10.4
Margin I 34.1% 33.8%
47
Management report on the operations of
RAWLPLUG GROUP AND RAWLPLUG S.A.
for the period from 1 January to 31 December 2018 (data in PLN 000s)
Q4 2018 Q3 2018 Q2 2018 Q1 2018 Q4 2017 Q3 2017 Q2 2017 Q1 2017
Revenue from sales 184 581 206 049 206 647 178 224 165 213 189 366 186 650 167 327
Cost of sales ( 123 008) ( 135
329)
( 133
411)
( 119
555)
( 108
951)
( 124
007)
( 124
965)
( 111
277) Gross profit on sales 61 573 70 720 73 236 58 669 56 262 65 359 61 685 56 050
Margin I 33.4% 34.3% 35.4% 32.9% 34.1% 34.5% 33.0% 33.5%
Consolidated revenue from sales in 2018 was PLN 775 501 thousand, up 9.4% on the previous year. This resulted from higher
export sales (development of the RAWLPLUG brand and sales of specialist screws for the electric machinery and automotive
industries) as well as intensified marketing and sales activities on the domestic market (Koelner Polska Sp. z o.o.).
In 2018, gross margin was 34.1%, compared with 33.8% in 2017. Gross margin was maintained despite commodity price pressure
and a stronger Polish zloty. This was mainly driven by: a change in sales portfolio towards developing the sales of RAWLPLUG
brand, gradual phase out of external brand sales and development of export sales for specialist screw products.
RAWLPLUG Group sales
01-12.2018 01-12.2017 Change
Sales location PLN 000s % share PLN 000s % share PLN 000s %
Domestic 248 718 32.1% 254 805 36.0% ( 6 087) ( 2.4)%
Export 526 783 67.9% 453 751 64.0% 73 032 16.1%
Total 775 501 100.0% 708 556 100.0% 66 945 9.4%
None of the customers exceeded 10% of total sales.
15.2.1. DOMESTIC SALES
In 2018, domestic sales came to PLN 248 718 thousand, a level 2.4% lower than that achieved in the preceding year. A decline
in domestic-market sales was noted at Koelner Łańcucka Fabryka Śrub Sp. z o.o. (as at 31 December 2018, a Łańcut-based
branch of Koelner Rawlplug IP Sp. z o.o.). This was caused by the removal of anti-dumping duties on screw products as well as
a change in the product portfolio, shifting from standard products to specialist products, which are more technologically
advanced. On the other hand, sales growth was recorded on the domestic construction and fixings market.
15.2.2. FOREIGN SALES
RAWLPLUG Group's foreign sales in 2018 amounted to PLN 526 783 thousand, up 16.1% from 2017. The Group recorded
growth in foreign sales largely due to new high-margin RAWLPLUG-branded products as well as a substantial increase in screw
product sales on Western European markets. The sales growth in foreign markets largely took place in Eastern European markets
(Czech Republic, Slovakia, Hungary) and Western European markets (Ireland, France). RAWLPLUG Group's export sales are
growing. In 2018, they accounted for 67.9% of total sales, compared to 64.0% in the preceding year.
15.2.3. PRODUCT STRUCTURE
Assortment 01-12.2018 01-12.2017 Change
PLN 000s % share PLN 000s % share PLN 000s %
Products 468 428 60.4% 418 618 59.1% 49 810 11.9%
Goods and materials 307 073 39.6% 289 938 40.9% 17 135 5.9%
Total 775 501 100.0% 708 556 100.0% 66 945 9.4%
In 2018, we continued our strategy of changing the product portfolio, which consisted of dropping low-margin products (third-
party brands) and focusing on higher-margin ones. As a result, these products accounted for 60.4% of total sales.
15.2.4. SUPPLY SOURCES
Goods for resale as well as materials and goods for further processing that RAWLPLUG Group purchases are either low-
processed (e.g. plastics, steel), medium-processed (e.g. bolts, screws, simple tools) or highly-processed (power tools). They are
48
Management report on the operations of RAWLPLUG GROUP AND RAWLPLUG S.A.
for the period from 1 January to 31 December 2018 (data in PLN 000s)
procured on an on-going basis from domestic, European and Asian (Taiwan, Malaysia, China) suppliers. RAWLPLUG Group
does not have any suppliers that would have exclusive rights to any assortment. There is an alternative supplier for each product
and material, resulting from the Group's long-term strategy, No supplier exceeded 10% in the purchasing structure, however
RAWLPLUG Group strives to maximise purchasing volumes, which go through its own purchasing company in China, Rawlplug
Shanghai Trading Ltd.
15.3. SELLING COSTS AND ADMINISTRATIVE EXPENSES
31.12.2018 31.12.2017 % change
Selling costs 148 847 136 726 8.9
Administrative expenses 50 643 45 241 11.9
Operating expenses 199 490 181 967 9.6
Share of costs in sales 25.7% 25.7%
Q4 2018 Q3 2018 Q2 2018 Q1 2018 Q4 2017 Q3 2017 Q2 2017 Q1 2017
Selling costs 41 542 37 218 36 582 33 505 35 282 34 958 34 493 31 993
Administrative expenses 14 314 12 279 12 655 11 395 11 812 10 583 11 421 11 425
Operating expenses 55 856 49 497 49 237 44 900 47 094 45 541 45 914 43 418
Share of costs in sales 30.3% 24.0% 23.8% 25.2% 28.5% 24.0% 24.6% 25.9%
In the 12 months of 2018, RAWLPLUG Group recorded 9.6% growth in selling costs and administrative expenses (comparing
with the same period last year), although their share in sales remained at 25.7%. This means that the expenditures incurred,
especially on the development of export sales in Far-East markets and in Africa, are starting to generate first results.
In the upcoming reporting periods, administrative expenses will remain at a similar level, while selling costs will slightly increase
due to planned sales growth and increased marketing activities, however the overall cost efficiency improvement trends should
remain intact.
The Management Board continues to work on reducing costs. The aim is to closely match costs to the level of revenue so as to
avoid losses when sales stall.
15.4. FINANCING ACTIVITIES
31.12.2018 31.12.2017 % change
Finance income 1 475 4 997 ( 70.5)
Finance costs ( 12 470) ( 17 201) ( 27.5)
Result on financing activities ( 10 995) ( 12 204) ( 9.9)
Q4 2018 Q3 2018 Q2 2018 Q1 2018 Q4 2017 Q3 2017 Q2 2017 Q1 2017
Finance income 327 261 571 316 1 904 526 897 1 670
Finance costs ( 4 111) ( 2 767) ( 3 056) ( 2 536) ( 8 602) ( 2 651) ( 3 355) ( 2 593)
Result on financing activities ( 3 784) ( 2 506) ( 2 485) ( 2 220) ( 6 698) ( 2 125) ( 2 458) ( 923)
In 2018, RAWLPLUG Group generated PLN 1 475 thousand in finance income and incurred PLN 12 470 thousand in finance
costs.
49
Management report on the operations of
RAWLPLUG GROUP AND RAWLPLUG S.A.
for the period from 1 January to 31 December 2018 (data in PLN 000s)
Finance income comprised (in PLN 000s):
01-12.2018 01-12.2017
Interest on loans and borrowings granted 1 351 1 225
Other interest 61 3 566
Gains on exchange differences - 97
Other 63 109
1 475 4 997
Finance costs comprised (in PLN 000s):
01-12.2018 01-12.2017
Interest on loans and borrowings 7 396 6 858
Commissions 1 702 1 511
Losses on exchange differences 1 247 -
Other interest 504 621
Sureties and guarantees 495 489
Measurement of derivatives 47 38
Impairment of financial assets 27 826
Loss on sale of financial assets - 5 997
Other 1 052 861
12 470 17 201
In 2018, the Group executed three forward contracts (with Bank BGŻ BNP Paribas S.A.) fur EURUSD 450 thousand. Following
the settlement of these transactions, the Group incurred a PLN 12 thousand loss, which was recognised in finance costs in the
statement of profit and loss.
On 18 December 2018, RAWLPLUG S.A. executed a forward contract with Bank BGŻ BNP Paribas S.A. for GBPPLN 1 000
thousand.
with a delivery date of 21 June 2019. As of 31 December 2018, it was valued at PLN 35 thousand and was recorded as finance
costs.
The Management Board continues to prioritise cost optimisation in both operating and financing activities. This will result in
more streamlined processes within the Group and use of natural hedging for foreign currency-denominated balance sheet items
in as far as practicable.
15.5. PROFITABILITY RATIOS
Group profitability ratios 31.12.2018 31.12.2017
Gross sales margin 34.1% 33.8%
Operating margin 7.9% 8.1%
Net margin 5.3% 4.7%
Return on assets 4.2% 3.8%
Return on equity 8.9% 7.8%
EBITDA margin 11.4% 11.6%
Ratio methodology:
✓ Gross sales margin = gross profit on sales / revenue from sales
✓ Operating margin = operating profit / revenue from sales
✓ Net margin = net profit / revenue from sales
✓ Return on assets = net profit / total assets
50
Management report on the operations of RAWLPLUG GROUP AND RAWLPLUG S.A.
for the period from 1 January to 31 December 2018 (data in PLN 000s)
✓ Return on equity = net profit / equity
✓ EBITDA margin = EBITDA / revenue from sales
All profitability ratios improved or remained steady in 2018, comparing with the same period last year.
15.6. LIQUIDITY RATIOS
Group's liquidity ratios 31.12.2018 31.12.2017
Current ratio 1.38 1.62
Liquidity ratio 0.65 0.72
Ratio methodology:
✓ Current ratio = current assets / current liabilities
✓ Quick ratio = (current assets - inventories) / current liabilities
Liquidity ratios at the end of 2018 decreased but remain at safe levels.
15.7. DEBT RATIOS
Group's debt ratios 31.12.2018 31.12.2017
Debt ratio 52.6% 50.5%
Financial leverage 111.2% 102.1%
Equity to non-current assets 96.7% 92.7%
Long-term debt ratio 15.7% 21.7%
Non-current liabilities to liabilities 29.8% 42.9%
Ratio methodology:
✓ Debt ratio = current and non-current liabilities / total assets
✓ Financial leverage = current and non-current liabilities / equity
✓ Equity to assets = equity / total assets
✓ Long-term debt ratio = non-current liabilities / total assets
✓ Non-current liabilities to liabilities = non-current liabilities to liabilities
The debt ratio increased from 50.5% to 52.6%, while debt to equity increased from 102.1% to 111.2%.
15.8. PROGRESS VERSUS PREVIOUSLY PUBLISHED GUIDANCE
The Management Board did not publish a financial forecast for 2018.
15.9. FACTORS AND EXTRAORDINARY EVENTS HAVING AN IMPACT ON FINANCIAL RESULTS
In 2018, there were no extraordinary events that would have an impact on financial results.
15.10. FINANCIAL MANAGEMENT
No significant factors were noted in 2018 such as could have impact on a change in the management of financial resources.
51
Management report on the operations of
RAWLPLUG GROUP AND RAWLPLUG S.A.
for the period from 1 January to 31 December 2018 (data in PLN 000s)
The procedures for managing currency risk, interest rate risk, credit risk and liquidity risk are described in Notes 42-45 of
additional information to the consolidated annual financial statements for the period 1 January - 31 December 2018.
15.11. FINANCIAL RISK MANAGEMENT
Because RAWLPLUG Group is both an importer and exporter, it applies a significant degree of natural hedging. However, given
its continued expansion in Western Europe, there is a growing imbalance in EURUSD, with an excess of EUR and shortage of
USD.
In 2018, the Group executed three forward contracts (with Bank BGŻ BNP Paribas S.A.) fur EURUSD 450 thousand. Following
the settlement of these transactions, the Group incurred a PLN 12 thousand loss, which was recognised in finance costs in the
statement of profit and loss.
On 18 December 2018, RAWLPLUG S.A. executed a forward contract with Bank BGŻ BNP Paribas S.A. for GBPPLN 1 000
thousand with a delivery date of 21 June 2019. As of 31 December 2018, it was valued at PLN 35 thousand and was recorded as
finance costs.
The Group does not apply hedge accounting.
In measuring balance sheet items, the Management Board aims to offset foreign-currency items through natural hedging, in as
far as this is practicable.
16.RAWLPLUG S.A. FINANCIAL RESULTS RAWLPLUG S.A. PLN 000s 31.12.2018 31.12.2017 % change
Revenue from sales 334 214 312 317 7.0
Cost of sales ( 270 349) ( 261 781) 3.3
Gross profit on sales 63 865 50 536 26.4
Selling costs ( 50 072) ( 47 783) 4.8
Administrative expenses ( 17 684) ( 14 655) 20.7
Profit on sales ( 3 891) ( 11 902) ( 67.3)
Other operating revenues 7 045 9 577 ( 26.4)
Other operating expenses ( 6 592) ( 7 842) ( 15.9)
Operating profit (loss) ( 3 438) ( 10 167) ( 66.2)
Finance income 32 408 58 143 ( 44.3)
Finance costs ( 10 394) ( 10 774) ( 3.5)
Gross profit 18 576 37 202 ( 50.1)
Income tax ( 407) ( 315) 29.2
Net profit 18 169 36 887 ( 50.7)
Depreciation 8 235 6 987 17.9
EBITDA 4 797 ( 3 180) 250.8
Entities under joint control were merged in 2018. Given the negligible effect of recognising the merger as if it had taken place
in 2017 on the 2017 financial statements and the disparity between expenses and the expected information effects as well as an
actual assessment of the impact of this merger on the financial results and balance sheet for 2017, no changes were introduced
in the comparative period 2017 in the financial statements for 2018.
RAWLPLUG S.A.'s net revenue from sales in 2018 was PLN 334 214 thousand, up 7% from the previous year. The Company
reported an EBIT loss of PLN 3 438 thousand, i.e. 66.2% smaller than last year. The Company posted an EBITDA profit of PLN
4 797 thousand (loss of PLN 3 180 thousand in 2017). In 2018, RAWLPLUG S.A. generated PLN 18 169 thousand in net profit,
compared with PLN 36 887 thousand in 2017. The main reason for this decline was lower amount of dividend received from
subsidiaries.
52
Management report on the operations of RAWLPLUG GROUP AND RAWLPLUG S.A.
for the period from 1 January to 31 December 2018 (data in PLN 000s)
16.1. ASSET AND LIABILITY STRUCTURE
RAWLPLUG S.A.
Selected balance sheet items (PLN 000s) 31.12.2018 31.12.2017 Change
TOTAL ASSETS 690 483 634 507 55 976
Non-current assets 455 305 436 147 19 158
Current assets 235 178 198 360 36 818
Inventories 129 052 113 478 15 574
Receivables and prepayments 68 973 69 930 (957)
Current financial assets 30 345 10 622 19 723
Cash and cash equivalents 6 807 4 330 2 477
TOTAL EQUITY AND LIABILITIES 690 483 634 507 55 976
Equity 331 795 301 217 30 578
Liabilities and liability provisions 358 688 333 290 25 398
Non-current liabilities, including: 115 654 204 424 ( 88 770)
Loans and borrowings 100 913 201 109 ( 100 196)
Current liabilities, including: 234 458 124 796 109 662
Loans and borrowings 129 389 44 560 86 895
Trade payables 75 986 58 123 17 863
Share of non-current assets 65.9% 68.7%
Share of current assets 34,1% 31.3%
Share of inventories in current assets 54.9% 57.2%
Share of receivables and prepayments in current assets 29.3% 35.3%
The balance sheet total as at the end of 2018 was PLN 690 483 thousand, up by PLN 55 976 thousand from the previous year.
On the asset side, non-current assets increased by PLN 19 158 thousands and current assets by PLN 36 818 thousand. The growth
in current assets was mainly driven by growth in inventories and current financial assets (increase due to reclassification of a
loan from non-current to current).
On the equity and liabilities side, equity grew by PLN 30 578 thousand, which was mainly driven by the acquisition of Koelner
- Tworzywa Sztuczne Sp. z o.o.' supplementary capital as part of merger. Comparing to 2017, non-current and current liabilities
with provisions grew by PLN 25 398 thousand.
16.2. REVENUE FROM SALES
RAWLPLUG S.A.'s sales
Sales location 01-12.2018 01-12.2017 Change
PLN 000s % share PLN 000s % share PLN 000s %
Domestic 171 173 51.2 162 129 51.9 9 044 5.6
Export 163 041 48.8 150 188 48.1 12 853 8.6
Total 334 214 100.0 312 317 100.0 21 897 14.1
16.2.1. DOMESTIC SALES
2018 brought a 5.6% increase in domestic sales in comparison with last year.
In 2018, sales to Koelner Polska Sp. z o.o. exceeded 10% of total revenue and reached 46%. Sales to other domestic
counterparties did not exceed the 10% threshold in the sales structure.
53
Management report on the operations of
RAWLPLUG GROUP AND RAWLPLUG S.A.
for the period from 1 January to 31 December 2018 (data in PLN 000s)
16.2.2. SALES IN FOREIGN MARKETS
RAWLPLUG S.A.'s foreign sales in 2018 amounted to PLN 163 014 thousand, up 8.6% from 2017. The Company reported
growth in foreign sales largely due to new, high-margin products sold under the RAWLPLUG brand, but also thanks to new
client acquisition in markets where RAWLPLUG S.A. previously did not do business. Sales growth in foreign markets mainly
occurred in Great Britain, France, Hungary, Czech Republic, Ireland, Lithuania, Belgium, UAE and RSA, Singapore, Thailand
and Vietnam.
In 2018, sales to subsidiary Rawlplug Ltd exceeded 10% of total revenue and reached 11%. Sales to other domestic counterparties
did not exceed the 10% threshold in the sales structure.
The following table presents RAWLPLUG S.A.'s sales divided into European Union and other countries.
RAWLPLUG S.A.
Sales location in PLN 000s % share
European Union 126 307 77%
Other countries 36 734 23%
TOTAL 163 041 100
16.2.3. PRODUCT STRUCTURE
Assortment 01-12.2018 01-12.2017 Change
PLN 000s % share PLN 000s % share PLN 000s %
Products and services 230 728 69.0 207 120 66.3 23 608 11.4
Goods and materials 103 486 31.0 105 197 33.7 ( 1 711) ( 1.6)
Total 334 214 100.0 312 317 100.0 21 897 9.8
Revenue from sales in 2018 was 9.8% higher than last year. The share of products in the overall sales structure increased in
2018, reaching 69.0%.
16.3. OPERATING EXPENSES
PLN 000s 31.12.2018 31.12.2017 % change
Selling costs 50 072 47 783 4.8
Administrative expenses 17 684 14 655 20.7
Operating expenses 67 756 62 438 8.5
Share of costs in sales 20.3% 20.0% 1.4
PLN 000s Q4 2018 Q3 2018 Q2 2018 Q1 2018 Q4 2017
Selling costs 13 370 12 890 12 131 11 681 12 035
Administrative expenses 5 566 4 272 3 876 3 970 3 714
Operating expenses 18 936 17 162 16 007 15 651 15 749
Share of costs in sales 23.3% 18.8% 18.4% 21.0% 22.0%
In 2018, RAWLPLUG S.A. recorded an 8.5% increase in operating costs compared with the previous year. At the same time,
the share of costs in sales remained almost unchanged (20.3% compared to 20.0% last year). This means that the expenditures
incurred, especially on the development of export sales in Far-East markets and in Africa, are starting to generate first results.
The Management Board continues to work on reducing costs and adapting them as closely as possible to sales, so as to ensure
that decreases in sales will not result in losses.
54
Management report on the operations of RAWLPLUG GROUP AND RAWLPLUG S.A.
for the period from 1 January to 31 December 2018 (data in PLN 000s)
16.4. FINANCING ACTIVITIES
PLN 000s 31.12.2018 31.12.2017 % change
Finance income 32 408 58 143 ( 44.3)
Finance costs ( 10 394) ( 10 774) ( 3.5)
Result on financing activities 22 014 47 369 ( 53.5)
PLN 000s Q4 2018 Q3 2018 Q2 2018 Q1 2018 Q4 2017
Finance income 2 578 453 4 219 25 158 45 323
Finance costs ( 1 968) ( 2 719) ( 3 045) ( 2 662) ( 2 675)
Result on financing activities 610 ( 2 266) 1 174 22 496 42 648
In 2018, RAWLPLUG S.A. generated PLN 32 408 thousand in finance income and incurred PLN 10 394 thousand in finance
costs.
Finance income comprised (in PLN 000s):
✓ dividend from subsidiaries 29 077
✓ interest received 1 756
✓ income on guarantees and sureties granted 1 012
✓ positive exchange differences 518
✓ reversal of impairment on financial receivables 45
Finance costs comprised (in PLN 000s):
✓ Interest on credit, loans and leasing: 6 541
✓ cost of guarantees and sureties received: 1 933
✓ bank commissions and fees 215
✓ other interest 578
✓ revaluation of investments 74
✓ other 53
In 2018, RAWLPLUG S.A. executed three forward contracts (with Bank BGŻ BNP Paribas S.A.) for EURUSD 450 thousand.
Following the settlement of these transactions, the Company incurred a PLN 12 thousand loss, which was recognised in finance
costs in the statement of profit and loss.
On 18 December 2018, RAWLPLUG S.A. executed a forward contract with Bank BGŻ BNP Paribas S.A. for GBPPLN 1 000
thousand with a delivery date of 21 June 2019. As of 31 December 2018, it was valued at PLN 35 thousand and was recorded as
finance costs.
The Company's Management Board continues to prioritise cost optimisation in both operating and financing activities. This will
be effected through more streamlined corporate processes, restructuring of employment, reduction in bank margins and use of
natural currency hedging in as much as practicable.
At the balance sheet date, no financial covenants in credit agreements were breached.
55
Management report on the operations of
RAWLPLUG GROUP AND RAWLPLUG S.A.
for the period from 1 January to 31 December 2018 (data in PLN 000s)
16.5. PROFITABILITY RATIOS
Profitability ratios 31.12.2018 31.12.2017
Gross sales margin 19.1% 16.2%
Operating margin ( 1.0)% ( 3.3)%
Net margin 5.4% 11.8%
Return on assets 2.6% 5.8%
Return on equity 5.5% 12.2%
Ratio methodology:
✓ Gross sales margin = gross profit on sales / revenue from sales
✓ Operating margin = operating profit / revenue from sales
✓ Net margin = net profit / revenue from sales
✓ Return on assets = net profit / total assets
✓ Return on equity = net profit / equity
Gross sales margin reached 19.1% in 2018, increasing from the preceding year. Operating margin also improved. The decline in
profitability ratios results from intensive development of export sales into Asia and Africa as well as lower dividends received
from subsidiaries than last year.
16.6. LIQUIDITY RATIOS
Liquidity ratios 31.12.2018 31.12.2017
Current ratio 1.00 1.59
Liquidity ratio 0.45 0.68
Ratio methodology:
✓ Current ratio = current assets / current liabilities
✓ Quick ratio = (current assets - inventories) / current liabilities
Liquidity ratios at the end of 2018 decreased but remain at safe levels.
16.7. DEBT RATIOS
Debt ratios 31.12.2018 31.12.2017
Debt ratio 51.9% 52.5%
Financial leverage 108.1% 110.6%
Equity to assets 72.9% 69.1%
Long-term debt ratio 16.7% 32.2%
Non-current liabilities to liabilities 32.2% 61.3%
Ratio methodology:
✓ Debt ratio = current and non-current liabilities / total assets
✓ Financial leverage = current and non-current liabilities / equity
✓ Equity to assets = equity / total assets
✓ Long-term debt ratio = non-current liabilities / total assets
✓ Non-current liabilities to liabilities = non-current liabilities to liabilities
56
Management report on the operations of RAWLPLUG GROUP AND RAWLPLUG S.A.
for the period from 1 January to 31 December 2018 (data in PLN 000s)
The debt ratio deceased from 52.5% to 51.9%, while debt to equity declined from 110.6% to 108.1%.
16.8. PROGRESS VERSUS PREVIOUSLY PUBLISHED GUIDANCE
The Management Board did not publish a financial forecast for 2018.
16.9. FACTORS AND EXTRAORDINARY EVENTS HAVING AN IMPACT ON FINANCIAL RESULTS
Not applicable.
16.10. FINANCIAL MANAGEMENT
No significant factors were noted in 2018 such as could have impact on a change in the management of financial resources.
In 2018, base interest rates, which are the basis for measuring the cost of bank loans, remained at stable low levels, which resulted
in bank interest costs being at a level similar to that of last year. Furthermore, the Company has unused credit limits, which has
a positive contribution to improving product availability and, therefore, on revenue and earnings.
16.11. FINANCIAL RISK MANAGEMENT
Because RAWLPLUG S.A. is both an importer and exporter, it applies a significant degree of natural hedging. However, given
its continued expansion in Western Europe, there is a growing imbalance in EURUSD, with an excess of EUR and shortage of
USD. The Management Board decided to use derivatives to hedge currency items in 2018 (exchanging EUR for USD).
In 2018, RAWLPLUG S.A. executed three forward contracts (with Bank BGŻ BNP Paribas S.A.) fur EURUSD 450 thousand.
Following the settlement of these transactions, the Company incurred a PLN 12 thousand loss, which was recognised in finance
costs in the statement of profit and loss.
On 18 December 2018, RAWLPLUG S.A. executed a forward contract with Bank BGŻ BNP Paribas S.A. for GBPPLN 1 000
thousand with a delivery date of 21 June 2019. As of 31 December 2018, it was valued at PLN 35 thousand and was recorded as
finance costs.
The Group does not apply hedge accounting.
In measuring balance sheet items, the Management Board aims to offset foreign-currency items through natural hedging, in as
far as this is practicable.
17.ENTITY AUTHORISED TO AUDIT THE FINANCIAL STATEMENTS
Pursuant to a decision of the Supervisory Board of RAWLPLUG S.A. dated 18 May 2018, selected as the entity authorised to
audit RAWLPLUG S.A.'s separate financial statements and RAWLPLUG Group's consolidated financial statements for 2018
was Grant Thornton Polska sp. z o.o. s.k., based in Poznań, ul. Abpa Antoniego Baraniaka 88 E, entered into the list of entities
authorised to audit financial statements held by the National Statutory Auditors Chamber in Poland under number 4055. Pursuant
to an annex to the agreement signed on 14 June 2017, the selected auditor carried out:
1. review of RAWLPLUG S.A.'s separate financial statements for H1 2018;
2. review of RAWLPLUG Group's consolidated financial statements for H1 2018;
3. audit RAWLPLUG S.A.'s separate financial statements for 2018;
4. audit of RAWLPLUG Group's consolidated financial statements for 2018.
57
Management report on the operations of
RAWLPLUG GROUP AND RAWLPLUG S.A.
for the period from 1 January to 31 December 2018 (data in PLN 000s)
Total amount of fees paid or due to be paid pursuant to the agreement concerning audit and review of financial statements,
together with fees paid or due to be paid for tax advisory services:
2018 2017
Audit fees, including:
- audit of separate financial statements
86
53
76
41
Audit
- review of separate financial statements
37
20
35
19
Tax and legal advisory fees - -
RAWLPLUG S.A. used services provided by Grant Thornton Polska sp. z o.o. s.k. consisting of the review and audit of separate
and consolidated financial statements for 2016 and 2017. Given the fact that Grant Thornton Polska Sp. z o.o. sp.k. and Grant
Thornton Frąckowiak sp. z o.o. sp.k. are members of Grant Thornton International Ltd, the Company announces that it previously
retained Grant Thornton Frąckowiak sp. z o.o. s.k. and Grant Thornton Frąckowiak sp. z o.o., i.e. the auditor's general partner,
for tax advisory services and review and audit of the separate and consolidated financial statements for 2004-2008 and 2010-
2014.
18.STATEMENT ON APPLICATION OF CORPORATE GOVERNANCE
STANDARDS IN 2018
18.1. INDICATION OF THE CORPORATE GOVERNANCE STANDARDS TO WHICH THE ISSUER IS SUBJECT, TOGETHER
WITH THE LOCATION WHERE THE TEXT CONCERNING SUCH PRINCIPLES IS PUBLICLY AVAILABLE
In 2018, RAWLPLUG S.A. observed regulations contained in the document "Best practices for WSE-listed companies 2016,"
adopted through Resolution 26/1413/2015 of the Exchange Council on 13 October 2015 (in effect from 1 January 2016). The set
of corporate governance standards is available online at https://www.gpw.pl/dobre_praktyki_spolek_regulacje, the WSE's
website dedicated to corporate governance. The statement on application of corporate governance standards is available in the
IR section of the Company's website (www.rawlplug.pl).
18.2. INFORMATION ON THE EXTENT TO WHICH THE ISSUER DIVERGED FROM THE SET OF CORPORATE
GOVERNANCE STANDARDS, INDICATION OF THOSE STANDARDS AND REASONS FOR THEIR OMISSION
In 2018, RAWLPLUG S.A. decided to not apply the following corporate governance standards:
I. Information policy and communication with investors
I.Z.1. The Company maintains a corporate website, which contains, aside from legally-required information, in a clearly
readable and separate place, the following:
I.Z.1.16. Information regarding planned broadcast of general meeting - no later than 7 days prior to the general meeting date.
The Company does not apply this rule, and does not intend to apply it in the future, due to the low interest shown by the
Company's shareholders in conducting General Meetings in this form.
I.Z.1.20. Audio or video recording of general meetings.
Presently, the Company does not employ audio or video recording of general meetings. According to the Company, the existing
methodology of documenting General Meetings by publishing adopted resolutions on its website in the form of current reports
fully ensures the transparency of General Meetings and provides investors and analysts with full access to the matters being
examined. The Company is contemplating introducing this practice at a later time.
IV. General meetings and relations with shareholders
58
Management report on the operations of RAWLPLUG GROUP AND RAWLPLUG S.A.
for the period from 1 January to 31 December 2018 (data in PLN 000s)
IV.R.2. If justified given the shareholding structure or shareholder expectations indicated to the company and if the company is
able to provide the technical infrastructure necessary to effectively conduct the general meeting using electronic means of
communication, the company should make it possible for shareholders to participate in the general meeting using such means,
in particular through:
1) real-time broadcast of the general meeting,
2) two-way communication in real time, using which shareholders may make verbal statements in the course of the general
meeting while being physically at another location,
3) exercise, either in person or through an attorney, of voting rights in the course of the general meeting.
The Company does not apply this rule, and does not intend to apply it in the future, due to the low interest shown by the
Company's shareholders in conducting General Meetings in this form.
IV.Z.2. If justified given the company's shareholding structure, the company ensures a commonly accessible broadcast of the
general meeting in real time.
The Company does not apply this rule, and does not intend to apply it in the future, due to the low interest shown by the
Company's shareholders in conducting General Meetings in this form. According to the Company, the existing methodology of
documenting General Meetings by publishing adopted resolutions on its website in the form of current reports fully ensures the
transparency of General Meetings and provides investors and analysts with full access to the matters being examined.
V. Conflicts of interest and related party transactions
V.Z.6. The company uses internal regulations to specify the criteria and circumstances in which a conflict of interest might arise
as well as rules for proceeding with an actual or potential conflict of interest. The company's internal regulations take into
consideration, among other things, ways of preventing, identifying and resolving conflicts of interest as well as rules for
excluding a member of the management board or supervisory board from participating in examining cases involving an actual
or potential conflict of interest.
The Company currently does not have internal regulations referred to in this rule. Elements relating to preventing conflicts of
interest are described in the Company's Code of Ethics. The Company is contemplating introducing the internal regulations
described in this rule at a later time.
VI. Salaries and wages
VI.Z.4. In its report on operations, the company presents a report on its remuneration policy, which contains at least the
following:
1) overall information regarding the company's remuneration system,
2) information on the terms and level of remuneration for each member of the management board, broken down by fixed and
variable components of remuneration, with indication of the key parameters for establishing the variable components as well as
rules for the payment of severance pay and other payments related to terminating employment, commission or other legal relation
of a similar nature - separately for the company and each entity in its group,
3) information on non-financial components of remuneration for Management Board members and key managers,
4) indication of significant changes in the remuneration policy being introduced in the past financial year or information on a
lack thereof,
5) assessment of the remuneration policy's performance from the viewpoint of achieving its objectives, in particular long-term
growth in value for shareholders and the enterprise's operational stability.
In its report on operations, the Company presents a report concerning its remuneration policy in the scope indicated above, except
for the following:
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Management report on the operations of
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for the period from 1 January to 31 December 2018 (data in PLN 000s)
- Information on the remuneration terms for each member of the Management Board - the Company considers its existing
remuneration system for Management Board members as a business secret. At the same time, in reference to publishing
information on remuneration of Management Board and Supervisory Board members, the Company applies the relevant existing
rules of law.
18.3. DESCRIPTION OF THE KEY FEATURES OF THE ISSUER'S INTERNAL CONTROL SYSTEM AND RISK MANAGEMENT
SYSTEM, AS THESE RELATE TO THE PROCESS OF PREPARING SEPARATE AND CONSOLIDATED FINANCIAL
STATEMENTS
The Company prepares financial reports and periodic reports based on existing laws and internal procedures.
The Management Board is responsible for the Company's internal control system and its functioning in the process of preparing
financial statements.
Technical supervision over the process of preparing financial statements and periodic reports is performed by the Company's
finance director.
The accounting and financial reporting department, together with the management accounting department, are responsible for
organising work on preparing annual and interim financial statements.
Financial data constituting the basis for financial statements and periodic reports is taken from the Company's accounting and
financial system, where all transactions are recorded in accordance with the Company's adopted accounting principles.
Once approved by the head of accounting and financial reporting, financial statements are provided to the management board
member and finance director for preliminary evaluation and subsequently to the Management Board, in full composition, for
final evaluation.
Annual and semi-annual financial statements are subject to independent audit and review by a statutory auditor. Results of the
review and audit are presented to the head of accounting and financial reporting and management board member, finance director
at a meeting.
The Supervisory Board performs an annual review of the Company's financial statements for the preceding year and issues
recommendations to the general meeting concerning their approval.
18.4. INDICATION OF SHAREHOLDERS DIRECTLY OR INDIRECTLY HOLDING SIGNIFICANT STAKES, TOGETHER WITH
INDICATION OF THE NUMBER OF SHARES HELD BY SUCH ENTITIES, THEIR SHARE IN CAPITAL, THE NUMBER OF
VOTES CARRIED BY SUCH SHARES AND THEIR SHARE IN THE TOTAL NUMBER OF VOTES AT THE GENERAL
MEETING
List of shareholders directly or indirectly holding significant stakes in the Company as at 31 December 2018 (unchanged until
the date on which these financial statements were prepared):
Shareholder Number of
shares
% in share capital
Number of votes at
the general
meeting
% of votes at the
general meeting
Amicus Poliniae Sp. z o.o. 16 902 750 51.91 16 902 750 51.91
PKO BP Bankowy PTE S.A. 2 933 639 9.01 2 933 639 9.01
Nationale Nederlanden PTE S.A. 2 842 138 8.73 2 842 138 8.73
Radosław Koelner 2 744 750 8.43 2 744 750 8.43
Quercus TFI S.A. (including Quercus
Parasolowy SFIO)
1 705 831
(1 645 263)
5.24
(5.053)
1 705 831
(1 645 263)
5.24
(5.053)
Other 5 430 892 16.68 5 430 892 16.68
TOTAL 32 560 000 100.00 32 560 000 100.00
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Management report on the operations of RAWLPLUG GROUP AND RAWLPLUG S.A.
for the period from 1 January to 31 December 2018 (data in PLN 000s)
18.5. HOLDERS OF SECURITIES WITH SPECIAL CONTROL ENTITLEMENTS, TOGETHER WITH DESCRIPTION THEREOF
Not applicable.
18.6. INDICATION OF ALL LIMITATIONS RELATING TO EXERCISE OF VOTING RIGHTS, SUCH AS A LIMITATION
CONCERNING EXERCISE OF VOTING RIGHTS BY HOLDERS OF A SPECIFIED STAKE OR NUMBER OF VOTES, TIME
LIMITATIONS CONCERNING EXERCISE OF VOTING RIGHTS - PURSUANT TO WHICH, AND WITH THE COMPANY'S
SUPPORT, THE ENTITLEMENTS ATTACHED TO SECURITIES ARE SEPARATED FROM OWNERSHIP OF SUCH
SECURITIES
Not applicable.
18.7. INDICATION OF ANY LIMITATIONS CONCERNING TRANSFER OF SECURITIES OWNERSHIP
Not applicable.
18.8. DESCRIPTION OF PRINCIPLES CONCERNING THE APPOINTMENT AND DISMISSAL OF MANAGEMENT
PERSONNEL AND THEIR ENTITLEMENTS, IN PARTICULAR THE RIGHT TO MAKE DECISIONS ON THE ISSUE OR
BUYBACK OF SHARES
Pursuant to § 27 sec. 1 of the Articles of Association, the Management Board comprises one or more members, including the
President and Vice-Presidents, elected and dismissed by the Supervisory Board. The Company may be represented by each
Management Board member individually. The Company may also be represented by attorneys appointed by the Management
Board pursuant to, and within the scope of, the relevant power of attorney. The Management Board term is three years and
commences on the election date.
Management Board meetings are held as and when needed, however at least once every quarter. Minutes are kept at Management
Board meetings.
The Management Board manages the Company's business, its movables and immovables and its rights, as well as adopts
resolutions and makes decisions in all matters which are not reserved for the general meeting or Supervisory Board.
Management Board resolutions may be adopted if all persons entitled to participate in Management Board meetings had been
properly invited, and at least two Management Board members are present.
Management Board resolutions are adopted by an absolute majority of votes cast, unless the articles of association state
otherwise.
The following activities require Management Board resolutions:
1) incurrence of debt other than a regular trade credit;
2) issue of shares, bonds, warrants or promissory notes;
3) provision of collateral for any debt of another entity, including subsidiaries;
4) establishment of a mortgage or any other encumbrance of the Company's assets;
5) execution of an agreement resulting in the Company's obligation - or a risk of such an obligation arising - to provide, within
a single financial year, items, services or cash in an amount exceeding PLN 2 000 000.00, unless the execution of such an
agreement is included in the Company's annual financial plan (budget) adopted by the Management Board and approved by
the Supervisory Board;
6) calling a general meeting or Supervisory Board meeting;
7) submission of a court request to declare as invalid or to waive general meeting resolutions;
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Management report on the operations of
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for the period from 1 January to 31 December 2018 (data in PLN 000s)
8) submission of a court request to declare the Company's bankruptcy.
The Company's Articles of Association do not grant any special authorisation to the Management Board as regards decisions on
issue or buyback of shares. In accordance with the articles of association, however, prior to a decision on issue of shares the
Management Board is required to adopt a relevant resolution.
18.9. DESCRIPTION OF THE PRINCIPLES FOR AMENDING THE COMPANY'S ARTICLES OF ASSOCIATION
Pursuant to §16 sec. 2 point 2 of RAWLPLUG S.A.'s articles of association, all changes thereto are reserved exclusively for the
general meeting. All matters concerning amendment of articles of association are exclusively regulated by the absolutely binding
provisions of the Polish Commercial Companies Code, and the Company's articles of association do not contain any special
provisions in this regard.
18.10. MODUS OPERANDI OF THE GENERAL MEETING, ALONG WITH ITS MAIN AUTHORISATIONS; DESCRIPTION OF
SHAREHOLDER RIGHTS AND THE MEANS OF THEIR EXERCISE, IN PARTICULAR THOSE RESULTING FROM THE
GENERAL MEETING RULES, IF THESE WERE ADOPTED, UNLESS SUCH INFORMATION IS NOT PROVIDED FOR BY
THE PROVISIONS OF LAW
The general meeting operates pursuant to the provisions of the Polish Commercial Companies Code and the Company's articles
of association.
The means of organising and conducting general meetings are described in the general meeting regulations adopted by the general
meeting and available at www.rawlplug.pl.
As per the articles of association in effect in 2018, the general meeting may be held at the Company's registered office.
General meetings are called by the Company's Management Board.
An ordinary general meeting should take place no later than six months from the end of the financial year.
The Supervisory Board has the right to call an ordinary general meeting if the Management Board does not do so within the
above time period as well as an extraordinary general meeting if it deems doing so appropriate. Each independent member of the
Supervisory Board may request that a general meeting be called and request the introduction of specific matters to the general
meeting agenda.
Shareholders representing at least half of share capital or half of voting rights may call an Extraordinary General Meeting. A
shareholder or shareholders representing at least one-twentieth of share capital may, prior to the General Meeting date, submit
to the Company, in writing or in electronic form, draft resolutions concerning items on the General Meeting agenda or those
which are yet to be included in the agenda.
A General Meeting is called by publishing a notification on the Company's website at least 26 days prior to the General Meeting
date and in the manner specified for provision of current information in accordance with regulations on public offerings and the
terms and conditions for admitting financial instruments to an organized trading system, and on public companies.
Draft resolutions for the general meeting are presented to shareholders within the time limits specific by laws on trade in financial
instruments, the Polish Commercial Companies Code and other relevant regulations.
The right to participate in a General Meeting of a publicly-listed company belongs only to persons who are shareholders in the
Company 16 days before the General Meeting. Shareholders have the right to participate in a general meeting either personally
or through attorneys. A power of attorney should be granted in writing or in electronic form, and be attached to the General
Meeting minutes.
The main rights and obligations of shareholders authorised to participate in a general meeting are as follows:
1) exercising voting rights,
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Management report on the operations of RAWLPLUG GROUP AND RAWLPLUG S.A.
for the period from 1 January to 31 December 2018 (data in PLN 000s)
2) submitting requests,
3) requesting secret ballots,
4) submitting appeals and requiring that they be entered into minutes,
5) submitting questions and requesting explanations from members of the Company's authorities present at the meeting as
regards items on the meeting's agenda,
6) observing the meeting's agenda, legal regulations, provisions of the Company's Articles of Association and good
practices.
Each shareholder participating in the general meeting has the right to propose candidates for all positions being filled.
Rules for appointing the Supervisory Board by the general meeting are specified in the Company's articles of association.
The general meeting is valid regardless of the number of shares represented.
General Meeting resolutions are adopted with an absolute majority of votes cast, unless an absolutely binding provision of law
or the Articles of Association state otherwise.
Voting may be done with or without the use of an electronic voting and vote counting system.
In matters not included on the meeting's agenda, resolutions may not be adopted, unless the entire share capital is represented at
that general meeting and no one appeals adoption of such a resolution.
According to the articles of association in effect in 2018, other than the matter specified in the Polish Commercial Companies
Code, general meeting resolutions should concern the following:
1) examining and approving the Company's financial statements and management report, together with the Supervisory
Board report, for the previous financial year,
2) adopting resolutions on the distribution of profit or coverage of loss from prior years,
3) adopting resolutions concerning votes of approval for members of the Company's authorities,
4) electing the Company's new authorities, if these are elected by the general meeting and the mandates of their members
expire on the general meeting date.
In addition, the following competences lie exclusively with the general meeting:
5) appointment and dismissal of Supervisory Board members, subject to § 18 of the Company's articles of association,
6) amendment to the Company’s articles of association,
7) decision on issue or buy-back of shares,
8) issue of convertible bonds or bonds with pre-emptive rights to the Company's shares,
9) issue of warrants,
10) establishment of salary regulations and amounts for members of the Supervisory Board,
11) merger or dissolution of the Company and selection of liquidators,
12) sale, lease or encumbrance of the Company's business,
13) examination of claims against members of the Company's authorities or the Company's founders concerning damages
resulting from illegal actions.
General meeting resolutions are placed on the agenda, prepared by a notary.
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Management report on the operations of
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for the period from 1 January to 31 December 2018 (data in PLN 000s)
18.11. COMPOSITION OF THE ISSUER'S MANAGEMENT BOARD, SUPERVISORY BOARD, ADMINISTRATIVE
AUTHORITIES AND THEIR COMMITTEES, ALONG WITH CHANGES OVER THE PAST FINANCIAL YEAR
Management Board
The composition of the Company's Management Board did not change in 2018.
Composition of the Company's Management Board as at 31 December 2018 (unchanged until the date on which these financial
statements were prepared):
− Radosław Koelner - President
− Piotr Kopydłowski - Member, responsible for finance
The Company's Management Board operates pursuant to the provisions of the Polish Commercial Companies Code and the
Company's articles of association. The organisation and modus operandi of the Management Board are specified in the
Management Board regulations approved by the Supervisory Board, which are available online at www.rawlplug.pl.
The Company may be represented by each Management Board member individually. The Company may also be represented by
attorneys appointed by the Management Board pursuant to, and within the scope of, the relevant power of attorney. The
Management Board term is three years and commences on the election date. A Management Board member's mandate expires
on the date of the Ordinary General Meeting approving the financial statements for the last year of such a member's term.
Management Board meetings are held as and when needed, however at least once every quarter. Minutes are kept at Management
Board meetings.
The Management Board manages the Company's business, its movables and immovables and its rights, as well as adopts
resolutions and makes decisions in all matters which are not reserved for the general meeting or Supervisory Board.
Management Board resolutions may be adopted if all persons entitled to participate in Management Board meetings had been
properly invited, and at least two Management Board members are present.
Management Board resolutions are adopted by an absolute majority of votes cast, unless the articles of association state
otherwise.
The following activities require Management Board resolutions:
1) incurrence of debt other than a regular trade credit;
2) issue of shares, bonds, warrants or promissory notes;
3) provision of collateral for any debt of another entity, including subsidiaries;
4) establishment of a mortgage or any other encumbrance of the Company's assets;
5) execution of an agreement resulting in the Company's obligation - or a risk of such an obligation arising - to provide, within
a single financial year, items, services or cash in an amount exceeding PLN 2 000 000.00, unless the execution of such an
agreement is included in the Company's annual financial plan (budget) adopted by the Management Board and approved
by the Supervisory Board;
6) calling a general meeting or Supervisory Board meeting;
7) submission of a court request to declare as invalid or to waive general meeting resolutions;
8) submission of a court request to declare the Company's bankruptcy.
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Management report on the operations of RAWLPLUG GROUP AND RAWLPLUG S.A.
for the period from 1 January to 31 December 2018 (data in PLN 000s)
Supervisory Board
The composition of the Company's Supervisory Board did not change in 2018.
Composition of the Company's Supervisory Board as at 31 December 2018:
− Krystyna Koelner - Chairperson
− Tomasz Mogilski - Deputy Chairperson
− Włodzimierz Frankowicz - Member
− Janusz Pajka - Member
− Zbigniew Pamuła - Member
− Zbigniew Stabiszewski - Member
The Company's Supervisory Board operates pursuant to the provisions of the Polish Commercial Companies Code and the
Company's articles of association. The organisation and modus operandi of the Supervisory Board, as well as the means of
adopting resolutions, are detailed in Supervisory Board regulations, as approved by the Supervisory Board. The regulations are
available online at www.rawlplug.pl.
The number of Supervisory Board members is specified by the general meeting prior to their election. The Supervisory Board is
elected for a three-year term.
Supervisory board members may not be employees of the Company nor members of the authorities or employees of the
Company's subsidiaries. They may not engage in activities competing with the Company's interest.
At least two supervisory board members should fulfil the independence criteria specified in the Company's articles of association.
An independent Supervisory Board member should fulfil the following criteria:
1) must not be a related party or a spouse, partner, shareholder, employee, advisor or member of the corporate authorities of
the Company or its related parties;
2) must not be a relative up to the second degree of affinity or consanguinity in relation to an employee of the Company or a
related party;
3) must not be directly or indirectly engaged in any business dealings with the Company or its related parties;
4) must not be an employee, advisor, member of the corporate authorities, owner, partner or shareholder of a company or
cooperative or any other enterprise engaged in competing activities, or a person close to such other person.
Furthermore, an independent Supervisory Board member should fulfil the criteria specified in art. 129 sec. 3 of the Act on
statutory auditors, audit firms and public oversight of 11 May 2017 (Polish Journal of Laws of 2017, item 1089, hereinafter "Act
on Statutory Auditors") and the rationale resulting from Best Practices for WSE-Listed Companies 2016, including those
pertaining to restrictions indicated in Annex II of COMMISSION RECOMMENDATION of 15 February 2005 on the role of
non-executive or supervisory directors of listed companies and on the committees of the (supervisory) board (2005/162/EC) (EU
Journal of 25 February 2005, L 52, page 51, as amended).
The General Meeting appoints the Supervisory Board chairperson from amongst Supervisory Board members, who are appointed
by the General Meeting. The Supervisory Board appoints its Deputy Chairperson through a secret ballot.
Supervisory Board resolutions may be adopted if all members have been properly invited to the meeting.
Supervisory Board resolutions are adopted by an absolute majority of votes cast, unless the articles of association state otherwise.
In the case of an even number of votes, the Supervisory Board Chairperson holds the deciding vote. Minutes are kept at
Supervisory Board meetings.
Supervisory Board members may perform their functions only in person.
The Supervisory Board may delegate its members to perform certain supervisory functions on an individual basis.
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for the period from 1 January to 31 December 2018 (data in PLN 000s)
Management Board members may participate in Supervisory Board meetings with an advisory vote.
Supervisory Board members receive remuneration for the functions they perform in the amounts specified by the general
meeting.
Supervisory Board meetings are called at least once every quarter by the Supervisory Board chairperson or - in his/her absence
- by the Supervisory Board deputy chairperson, on his/her own initiative, at the request of the Management Board or at the
request of a Supervisory Board member.
An invitation to a Supervisory Board meeting is deemed effective if it is sent at least 10 days before the meeting date. Supervisory
Board meetings may be conducted using long-distance communications, provided that all participants of such a meeting will be
able to hear the other participants as well as be able to speak, and that all participants will be provided the same documents
concerning items on the agenda.
The adoption of a resolution in writing by circulation is permissible.
The responsibilities of the Supervisory Board include:
1) reviewing and examining the Management Board's report on the operations of the Company and Rawlplug Group in terms
of compliance with documents, accounts and the facts,
2) reviewing and examining the separate and consolidated financial statements for the previous financial year in terms of
compliance with documents, accounts and the factual state,
3) reviewing and examining Management Board requests regarding the allocation of profit or coverage of loss,
4) preparing a report on the Supervisory Board's activities,
5) assessing the Company's situation, taking into consideration an assessment of internal control, risk management and
compliance systems as well as the internal audit function,
6) assessing the way in which the Company fulfils its information obligations resulting from corporate governance rules,
7) assessing the rationality of the Company's sponsorship, charity or other similar policy if the Company is involved in such
activities.
The Supervisory Board provides continuous oversight of the Company’s operations along with exercise of the entitlements and
obligations specified by law, and in particular the following:
1) establishing the remuneration of Management Board members and the principles for their employment;
2) consenting to the Management Board members' engagement in competing activities, either personally or as participants in
partnerships, members of the corporate authorities of companies or cooperatives, as well as shareholders of companies or
cooperatives, if their share of the capital of such companies or cooperatives exceeds 5% or if they are entitled to appoint,
pursuant to the articles of association or founding agreement, at least one member of the Management Board or supervisor
board;
3) approving the formation of a new company or entry into an existing company by Rawlplug S.A.;
4) approving the purchase or sale of fixed assets with net accounting value exceeding 20% of equity, as indicated in the
Company's most recent financial statements;
5) approving the Company's loans and borrowings exceeding 20% of equity, as indicated in the Company's most recent
financial statements;
6) approving loans or guarantees by the Company for natural or legal persons, subject to sec. 2 points 7 and 8), with value
exceeding 20% of equity, as indicated in the Company's most recent financial statements;
7) approving loans or guarantees by the Company for Rawlplug Group entities, with value exceeding 20% of equity, as
indicated in the Company's most recent financial statements;
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Management report on the operations of RAWLPLUG GROUP AND RAWLPLUG S.A.
for the period from 1 January to 31 December 2018 (data in PLN 000s)
8) approving agreements being executed by the Company in excess of PLN 2 000 000.00 with a shareholder holding at least
5% of the total votes in the Company or Related Party;
9) consenting to the sale, acquisition or encumbrance of property or shares in property;
10) approving the Management Board regulations;
11) appointing a statutory auditor to carry out the audit or review of financial statements;
12) delegating supervisory board members to the management board in the event that management board members are
suspended.
The Supervisory Board represents the Company in agreements and disputes with members of the Management Board, with the
Supervisory Board Chairperson or another Supervisory Board member designated through a Supervisory Board resolution
signing on behalf of the Supervisory Board pursuant to a one-time authorisation granted through a resolution.
The Supervisory Board examines and issues opinions on matters that are to be the subject of General Meeting resolutions.
The detailed means of calling and operation of the Supervisory Board are presented in the Supervisory Board Regulations
adopted by the General Meeting at the request of the Supervisory Board Chairperson.
According to its regulations, the Supervisory Board may appoint and in cases where it is legally required does appoint permanent
committees from amongst Supervisory Board members. In particular, the Supervisory Board appoints an audit committee.
Through a resolution of 28 November 2005, the Supervisory Board appointed an Audit Committee.
In accordance with the Audit Committee Regulations adopted by the Supervisory Board, the Audit Committee's tasks include
supporting the Supervisory Board as a statutory body of the Company in performing its supervisory responsibilities as well as
other activities specified in Polish and EU law, including especially:
1) monitoring:
a) the financial reporting process,
b) internal control and risk management systems, within a scope that applies to financial reporting,
c) the performance of financial review functions, including in particular audits being carried out by audit firms, taking
into account all conclusions and findings by the Audit Supervision Commission resulting from inspections carried out
at the audit firms;
2) controlling and monitoring the statutory auditor’s and audit firm's independence, especially if non-audit services are being
performed for the Company by the audit firm (the monitoring of the independence of the statutory auditor and audit firm
includes reviewing whether the audit firm is in compliance with the existing guidelines concerning the rotation of statutory
auditors, the level of remuneration paid by the Company to the audit firm and the regulatory requirements in this scope);
3) informing the Supervisory Board of audit results and explaining how the audit contributed to the reliability of the Company's
financial reporting and what the Audit Committee's role in the audit process was;
4) examining the statutory auditor's independence and expressing consent for provision of non-audit services by such statutory
auditor for the Company (control of the character and scope of permissible non-audit services, including especially based
on disclosures by the audit firm or statutory auditor of all fees paid by the Company to the audit firm and its network, with
a view to preventing any conflicts of interest in this aspect);
5) drafting and reviewing the audit firm selection policy;
6) drafting and reviewing the policy concerning provision of non-audit services by the audit firm conducting the audit, by its
related parties or a member of the audit firm's network;
7) defining and reviewing the procedure to select the Company's audit firm;
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Management report on the operations of
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for the period from 1 January to 31 December 2018 (data in PLN 000s)
8) evaluating the process of selecting the audit firm and presenting to the Supervisory Board the recommendations referred to
in art. 16 sec. 2 of Regulation 537/2014 regarding the appointment of statutory auditors or audit firms, in accordance with
the policies referred to in points 5 and 6 above;
9) reviewing the effectiveness of the external audit process, and the responsiveness of management to the recommendations
made by statutory auditors;
10) investigating the issues giving rise to any resignation of the external auditor, and make recommendations as to any required
action;
11) making recommendations intended to ensure the reliability of the Company's financial reporting process;
12) review at least annually the internal control and risk management systems, with a view to ensuring that the main risks
(including those related to compliance with existing legislation and regulations) are properly identified, managed and
disclosed,
13) supervising the organisational unit responsible for the Company's internal audit;
14) if the Company has a separate internal audit function - ensuring the effectiveness of the internal audit function, especially
through appointing, re-appointing and dismissing the head of internal audit and the related budget as well as monitoring
the responsiveness of management to its conclusions and recommendations.
The composition of the Audit Committee did not change in 2018. As at 31 December 2018 and at the date on which these
financial statements were prepared, the Audit Committee's composition was as follows: Zbigniew Stabiszewski, Janusz Pajka
and Włodzimierz Frankowicz. The Audit Committee held seven meetings in 2018.
Zbigniew Stabiszewski and Włodzimierz Frankowicz meet the independence criteria for independent supervisory board member
in the meaning of Commission Recommendation of 15 February 2005 on the role of non-executive or supervisory directors of
listed companies and on the committees of the (supervisory) board, taking into account the requirements specified in Good
Practices for WSE-Listed Companies, as well as for independent Audit Committee members in the meaning of the Act of 11
May 2017 on statutory auditors, audit firms and public oversight (Polish Journal of Laws of 2017, item 1089).
Audit Committee members' competences in accounting and the industry:
Zbigniew Stabiszewski has:
▪ knowledge of accounting, resulting from the fact that he has been operating since 2006 in the economic advisory sector,
mainly for businesses and local government units. He is authorised as supervisory board member for State Treasury
companies. He has many years of experience working at supervisory boards, including audit committees, for entities related
to the banking sector, investment funds, trade of financial instruments and businesses.
▪ knowledge of the industry, gained as member of the Company's Supervisory Board in 2011-2018 and resulting from the
fact that he has been operating since 2006 in the economic advisory sector, mainly for businesses and local government
units.
Włodzimierz Frankowicz has:
▪ knowledge of accounting, resulting from the fact that in 1990-2016 he was the owner and manager of Biuro Księgowo-
Rachunkowe "STORNO" sp. z o.o. and has the following professional authorisations:
− Qualification Certificate 2000/97 issued by the Minister of Finance for people providing bookkeeping services - 1997
− Tax adviser no. 3055, entered onto the list of tax advisers by the Minister of Finance - 1997
▪ knowledge of the industry, resulting from the fact that in 1988-1990 he served as director general at Zakład Wytwarzania
Urządzeń Elektronicznych ARMATRONIC, where he personally oversaw the operation of a plastics processing facility,
production and repair of injection forms and the work of a team of designers.
The Supervisory Board selects the statutory auditor to audit the Company's separate and consolidated financial statements.
Statutory auditor authorised to audit the Company's financial statements is understood as the entity specified in the Act of 11
May 2017 on statutory auditors, audit firms and public oversight (Polish Journal of Laws of 2017, item 1089),
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Management report on the operations of RAWLPLUG GROUP AND RAWLPLUG S.A.
for the period from 1 January to 31 December 2018 (data in PLN 000s)
Pursuant to § 23 sec. 13 point 8 of the Company's Articles of Association, the Audit Committee evaluates the process to select
the statutory auditor and provides a recommendation to the Supervisory Board on audit firm selection. The entity authorised to
audit RAWLPLUG S.A.'s separate financial statements and RAWLPLUG Group's consolidated financial statements for 2018 is
Grant Thornton Polska Sp. z o.o. sp.k. The audit firm was selected by the Company's Supervisory Board on 18 May 2018. The
Audit Committee's recommendation regarding extension of cooperation with the existing audit firm was drafted following an
organised procedure in compliance with the existing laws.
The Company has the following documents in place:
− "Policy for selecting audit firm to audit by public-interest entity - RAWLPLUG S.A., based in Wrocław,"
− "Policy for selecting audit firm by public-interest entity - RAWLPLUG S.A., based in Wrocław,"
− "Policy for the provision of permitted non-audit services by the audit firm conducting the audit, by its related parties or a
member of the audit firm's network, for a public-interest entity - RAWLPLUG S.A., based in Wrocław,"
the provisions of which are in compliance with the requirements of the Act on statutory auditors, audit firms and public oversight
of 11 May 2017 (Polish Journal of Laws of 2017, item 1089).
In the course of selecting the audit firm to audit the Company's financial statements, the Company's bodies and the Audit
Committee (as a body created within the Supervisory Board, which is not a body of the Company in the legal and formal sense)
apply due care to follow Polish and EU legal regulations as well as guidelines and clarifications from authorities carried out
oversight of public-interest entities, intended to:
1) ensure the appropriate quality of audit by increasing audit reporting standards;
2) eliminating the risk of violating the independence and the professional scepticism rule by the selected audit firm;
3) ensuring the independence and objectivity of the selected audit firm and statutory auditor.
4) increasing the Audit Committee's competences as body playing an important role in ensuring the high quality of statutory
audits.
The Company observes the prohibition on provision of non-audit services by the audit firm conducting the audit, by its related
parties or a member of the audit firm's network. Grant Thornton Polska Sp. z o.o. sp.k., as auditor of the Company's separate
financial statements and Rawlplug Group's consolidated financial statements for financial year 2018, did not provide non-audit
services to the Company.
18.12. DIVERSITY POLICY CONCERNING THE COMPANY'S AUTHORITIES AND KEY MANAGERS
RAWLPLUG S.A.'s diversity policy is an extension of the Group's Code of Ethics and is an integral part thereof.
The policy aims to build awareness and organisational culture open to diversity, which leads to more efficient work, development
of trust and counteracts discrimination.
The Company's diversity policy intends to fully use the employees' potential, their diverse skills, experiences and talents in an
atmosphere of respect and support.
RAWLPLUG S.A. is implementing diversity management rules and an equal treatment policy, taking into account respect for a
diverse, multi-cultural society and placing special emphasis on equal treatment in terms of gender, age, disability, health, race,
nationality, ethnic origin, religion, faith, lack of religious beliefs, political beliefs, trade union participation, sexual orientation,
gender identity, marital status, lifestyle, employment for, scope and basis as well as other considerations that provide exposure
to discrimination.
Creating appropriate working conditions is an important element of the diversity policy, intended to ensure that employees feel
respected and appreciated and that they feel they can develop and maximise their professional potential. The Company is
promoting a culture based on dialogue, openness, tolerance and team work, alongside an approach that minimises risk related to
the loss of valuable employees.
69
Management report on the operations of
RAWLPLUG GROUP AND RAWLPLUG S.A.
for the period from 1 January to 31 December 2018 (data in PLN 000s)
In selecting executives and key managers for the Group's companies, the Company strives to ensure versatility and diversity,
especially as regards gender, education, age and professional experience. Strong qualifications and technical readiness for the
given job are the deciding aspects.
19.MANAGEMENT BOARD STATEMENT AND INFORMATION
19.1.MANAGEMENT BOARD STATEMENT
According to the Management Board's best knowledge, RAWLPLUG Group's consolidated financial statements for 2018 and
RAWLPLUG S.A.'s separate financial statements for 2018, along with comparative data, are prepared in accordance with the
binding accounting principles and they reflect the asset position and financial situation of RAWLPLUG Group and RAWLPLUG
S.A. in a correct, reliable and clear manner, and the report on RAWLPLUG Group's and RAWLPLUG S.A.'s operations contains
a true depiction of RAWLPLUG Group's and RAWLPLUG S.A.'s development, achievements and present situation, including
a description of major threats and risks.
19.1.MANAGEMENT BOARD INFORMATION PREPARED PURSUANT TO SUPERVISORY
BOARD STATEMENT ON SELECTION OF AUDIT FIRM
Pursuant to a statement by the Supervisory Board of RAWLPLUG S.A. on selection of audit firm to audit annual financial
statements in accordance with the laws, including laws concerning audit firm selection and selection procedure, the Management
Board of RAWLPLUG S.A. notes as follows:
✓ the audit firm and members of the team performing the audit met the conditions to issue impartial and independent
reports on audit of annual financial statements (separate and consolidated) in accordance with the existing laws,
professional standards and professional ethics rules,
✓ the existing regulations concerning audit firm and lead statutory auditor rotation and mandatory grace periods are
being observed,
✓ RAWLPLUG S.A. has a policy for selecting audit firms and a policy for provision by audit firm, its related parties
or members of its network of non-audit services, including services that are conditionally exempted from the
prohibition.
Radosław Koelner - President of the Management Board
Piotr Kopydłowski - Member of the Management Board responsible for finance
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RAWLPLUG S.A. ul. Kwidzyńska 6 51-416 Wrocław
tel. +48 71 32 60 100
fax +48 71 37 26 111
e-mail: [email protected]
www.rawlplug.pl