PROSPEKT EMISYJNY AKCJI

Transcription

SHARE ISSUE PROSPECTUS
Magellan S.A.
(a company incorporated in accordance with Polish commercial law with its seat in Łódź, Poland,
entered in the Business Enterprises Register at no KRS 0000263422)
Public Offering of 2,995,455 Ordinary Bearer Shares
(with the possibility of enlarging the public offering by up to 651,408 additional ordinary bearer shares)
This Prospectus has been drawn up in reference to the public offering of 2,995,455 ordinary bearer shares, including 2,555,455 existing A-series
shares (“the A-Series Shares”) and 440,000 newly issued C-series shares (“the C-Series Shares”), with a nominal value of PLN 0.30 each (jointly
referred to as “the Offered Shares”) and in reference to seeking the admission to trading and listing on the Warsaw securities exchange Giełda Papierów Wartościowych w Warszawie S.A. – of 5,812,500 A-Series Shares, 261,588 B-Series Shares, 440,000 C-Series Shares, and
440,000 rights in C-Series Shares (“Rights in C-Series Shares”).
Not later than on the Price Definition Date, the Selling Shareholder may decide to increase the number of Offered Shares by up to 651,408
existing A-series ordinary bearer shares. In the event that the Selling Shareholder decides to increase the number of Offered Shares,
information in this regard shall be communicated to the general public in accordance with art. 54. 3 of the Act.
The A-Series Shares and the C-Series Shares are offered to investors without differentiation among existing shares and newly issued shares at
the subscription stage. As a result, existing A-Series Shares and/or newly issued C-Series Shares may be alloted to investors. The Public Offering
is addressed to institutional Investors and to Retail Investors, although it is anticipated that the number of Offered Shares which will be alloted
to Retail Investors will correspond to 20% of all the Offered Shares (also in the event that the Selling Shareholder increases the number of
Shares Offered, as discussed above). The Issuer and the Selling Shareholder reserve the right to allot to Retail Investors a number of the
Offered Shares greater or smaller than specified above, acting in accordance with recommendations by the Offeror. Information
concerning the share allotments shall be communicated to the general public in accordance with art. 54. 3 of the Act. The detailed terms of
the Public Offering, including the terms governing allotment of the Offered Shares, are described in Chapter 22 of this Prospectus –
“Subscription and Sale of Offered Shares”. The Public Offering shall not be executed through performance of a firm commitment
underwriting contract.
A Maximum Price per Offered Share shall be defined for purposes of accepting subscriptions by Retail Investors. This Maximum Price shall be
announced to the general public by way of an annex to this Prospectus in accordance with the principles laid down in art. 51 of the Act. The
Price of Offered Shares purchased by Institutional Investors may be higher than the Price of Offered Shares purchased by Retail Investors.
Securities of the Issuer are not traded on the regulated market. It is the intent of the Issuer to introduce the A-Series Shares, the B-Series Shares,
the C-Series Shares, and the Rights in C-Series Shares to trading on the Warsaw Securities Exchange simultaneously and as quickly as possible.
The C-Series Shares should be introduced to trading within two months following the conclusion of subscriptions; it is the intent of the Issuer
that, until this occurs, it is possible to trade Rights in C-Series Shares on the Warsaw Securities Exchange.
Investment in the securities covered by this Prospectus is associated with the high degree of risk entailed in equity market instruments of a
share character as well as with risk entailed in the operations of the Issuer and the environment in which the Issuer pursues its operations. A
detailed description of the risk factors is set out in Chapter 2 of this Prospectus – “Risk Factors”.
THIS PUBLIC OFFERING IS CONFINED TO THE TERRITORY OF THE REPUBLIC OF POLAND. THIS PROSPECTUS MAY NOT BE REGARDED AS A PROPOSAL
OR AN OFFER TO PURCHASE ANYWHERE OUTSIDE POLISH TERRITORY. NEITHER THIS PROSPECTUS NOR THE SECURITIES TO WHICH IT REFERS HAVE
BEEN THE OBJECT OF REGISTRATION, OF APPROVAL. OR OF NOTIFICATION IN ANY NATIONAL JURISDICTION OTHER THAN POLAND, IN
PARTICULAR UNDER THE PROSPECTUS DIRECTIVE OR UNDER THE AMERICAN SECURITIES ACT. THE SECURITIES TO WHICH THIS PROSPECTUS REFERS
MAY NOT BE OFFERED OR SOLD OUTSIDE POLAND (AND MAY NOT BE SOLD WITHIN THE EUROPEAN UNION OR IN THE UNITED STATES OF
AMERICA) UNLESS SUCH OFFERING OR SALE COULD BE LEGALLY EFFECTED WITHIN SUCH A NATIONAL JURISDICTION WITHOUT THE NECESSITY OF
FULFILLING ANY ADDITIONAL LEGAL REQUIREMENTS, IN PARTICULAR ON THE BASIS OF THE EXCLUSIONS LAID DOWN IN ART. 4 OF THE
PROSPECTUS DIRECTIVE. ANY INVESTOR RESIDENT OR BASED OUTSIDE POLAND SHOULD PERUSE THE POLISH LAWS AND THE LAWS OF OTHER
NATIONAL JURISDICTIONS WHICH MAY HAVE APPLICATION TO SUCH INVESTOR.
Offeror
UniCredit CA IB Polska S.A.
ul. Emilii Plater 53, 00-113 Warsaw
Prospectus Date: August 28, 2007
Prospectus of Magellan S.A.
DISCLAIMER
This Prospectus has been drawn up in relation to the Public Offering of the Offered Shares within Poland
and to their admission to trading and listing on the regulated market operated by Giełda Papierów
Wartościowych w Warszawie S.A.
This Prospectus has been drawn up in accordance with the Commission Regulation (CE) 809/2004 and
with other laws regulating the equity market in Poland, in particular with the legislative Act regarding the
public offering. This Prospectus has been approved by the Financial Supervision Authority on August 28,
2007.
Apart from the persons named in the Prospectus, i.e. members of the Company’s Executive Board, no
other person is authorised to announce to the general public any information concerning the Public
Offering. Where any such information is released to the general public, permission of the Executive Board
shall be required.
This Prospectus is drawn up to the best knowledge and with due care and skill, and the information set out
herein is accurate as at the Prospectus Date. It is possible that, following release of this Prospectus to the
general public, there may occur changes in the situation of the Issuer; accordingly, unless specific
provisions of the Prospectus indicate otherwise, the information set out herein should be treated as up to
date as at the Prospectus Date.
STATEMENTS CONCERNING FUTURE EVENTS
Information set out in this Prospectus which does not constitute historical facts cinstitutes statements
concerning future events. Such statements concern, in particular, planned investment outlays. Such
statements may be identified with the use of expressions referring to the future, such as “believe”,
“expect”, “may”, “will”, “should”, “it is anticipated”, and “it is presumed” as well as the negatives and
variations of such and similar terms.
The statements set out in this Prospectus concerning matters which are not historical facts should be
regarded exclusively as projections associated with an element of risk and uncertainty. There can be no
guarantee that such projections will be substantiated through actual future events given, especially,
operation of the risk factors described in the issue document.
DOCUMENTS MADE AVAILABLE FOR PERUSAL
This Prospectus shall be made available to the general public along with updating information in
electronic form for the duration of its validity at the Company’s website, www.magellan.pl. Printed copies
of the Prospectus shall be made available at the following locations:
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At the Company’s registered seat at ul. Sienkiewicza 85/87, Łódź;
At the seat of the Offeror at ul. Emilii Plater 53, Warsaw;
At Customer Service Locations accepting subscriptions for the Offered Shares – a list of these
locations is set out in Schedule 4 to the Prospectus;
At the Information Centre of the Securities and Exchange Commission at pl. Powstańców
Warszawy 1, Warsaw;
At the Warsaw Securities Exchange Promotion Centre at ul. Książęca 4, Warsaw.
Furthermore, for the duration of subscription, financial reports for the financial years 2004 and 2005 as well
as financial statements for the periods of January 1, 2006 through September 7, 2006 and September 8,
2006 through December 31, 2006 as well as copies of the relevant audit reports and opinions shall be
made available for perusal at the seat of the Company.
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INFORMATION ABOUT THE MARKET ENVIRONMENT
This Prospectus sets out information concerning the activities of the Issuer and the market environment in
which these activities are conducted. Information concerning the market and its size, the Issuer’s share in
that market, and indicators as well as other information concerning the operations of the Issuer has been
drawn up on the basis of data sourced from third parties, of information about relations between the
Issuer and its customers, and of the Issuer’s own estimates. Additional market information concerning
activities pursued by the Issuer has been obtained from the following sources: the Polish Ministry of Health,
the Ministry of Labour and Social Policy, the Health Care Information Systems Centre, the Central Statistical
Office for Poland - GUS, EUROSTAT, reports by UniCredit CA IB, Internet Securities, the Union of Leasing
Enterprises, and the Polish Factor Union.
Publications about the market environment, projections, and forecasts essentially incorporate information
originating from sources deemed dependable by the Issuer. The Issuer, however, has not subjected that
information to independent verification and does not guarantee their truthfulness or completeness. The
Issuer has nonetheless endeavoured to duly compile and prepare this information. This information has
been accurately repeated with due care and skill so as to avoid any omission of facts which would render
the information repeated herein inaccurate or misleading.
Furthermore, many sections of this Prospectus set out information concerning the market position of the
Issuer which has been drawn up on the basis of the Issuer’s own assessments and estimates. The Issuer is in
no position to guarantee that such information is correct or that it accurately presents the market position
of the Issuer – none of this information has been verified by independent entities.
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SPIS TREŚCI
CHAPTER 1
SUMMARY..................................................................................................................................... 5
CHAPTER 2
RISK FACTORS ............................................................................................................................ 15
CHAPTER 4
OBJECTIVES OF THE PUBLIC OFFERING................................................................................ 25
CHAPTER 5
DILUTION ..................................................................................................................................... 26
CHAPTER 6
EQUITY AND DEBT ..................................................................................................................... 28
CHAPTER 7
DIVIDEND POLICY..................................................................................................................... 30
CHAPTER 8
EXCHANGE RATES .................................................................................................................... 32
CHAPTER 9
SELECTED FINANCIAL AND OPERATING DATA................................................................... 33
CHAPTER 10
PROSPECTS
ANALYSIS OF FINANCIAL STANDING, PERFORMANCE AND DEVELOPMENT
37
CHAPTER 12
DESCRIPTION OF ACTIVITIES............................................................................................... 58
CHAPTER 13
EXECUTIVE AND SUPERVISORY STAFF................................................................................... 91
CHAPTER 14
MAJOR SHAREHOLDERS .................................................................................................... 108
CHAPTER 15
TRANSACTIONS WITH RELATED ENTITIES..........................................................................111
CHAPTER 16
SHARES, SHARE CAPITAL, GENERAL MEETING...............................................................113
CHARTER 17
ISSUER .................................................................................................................................... 125
CHAPTER 18
INFORMATION ABOUT HOLDERS OF SECURITIES BEING SOLD.................................. 128
CHAPTER 19
REGULATIONS CONCERNING THE CAPITAL MARKET.................................................. 129
CHAPTER 20
TAXATION ............................................................................................................................. 139
CHAPTER 21
INFORMATION CONCERNING THE ISSUE ...................................................................... 142
CHARTER 22
SUBSCRIPTION AND SALE OF OFFERED SHARES........................................................... 152
CHAPTER 23
DEFINITIONS ............................................................................................................................ 158
CHAPTER 24 FINANCIAL INFORMATION CONCERNING ISSUER’S ASSETS AND LIABILITIES, ITS
FINANCIAL CONDITION, PROFITS AND LOSS ............................................................................................... 162
CHAPTER 25
SCHEDULES ............................................................................................................................... 227
4
CHAPTER 1
SUMMARY
Disclaimer
This summary should be regarded as an introduction to the Prospectus.
Each and every decision concerning investment in Shares of the Issuer offered on the basis of this Prospectus
ought to be taken on the basis of the entire Prospectus.
Any Investor advancing a claim rooted in the contents of this Prospectus shall bear the costs of any translation
of the Prospectus before initiation of the court proceedings.
The persons drawing up this Prospectus, along with any translation hereof, shall be liable only for damage
occasioned in the event that this summary is found to be misleading, inaccurate, or inconsistent with other
sections of the Prospectus.
1.
Introduction
The company Magellan S.A. is a dynamically growing financial institution which specialises in offering financial
products and services for entities operating in the medical market as well as in other segments of the
economy. It is one of the leaders in this market. The portfolio of the Company’s assets committed to the
medical sector stood at PLN 129.6 million as at late 2006, making for an increase of 68.7% in relation to late
2005. For the years 2003-2006, the average annual increase in the value of the Issuer’s financial assets was 25%.
According to the Executive Board’s own estimates, the value of the portfolio of the Company’s assets
committed to the medical sector as at late 2006 was one of the largest among all financial institutions active
in the Polish market.
The Company has been consistently developing a wide range of services for financing current operations and
investments in the medical services sector. The Company provides financing to its customers by financing their
receivables (i.e. by acquiring receivables of entities supplying hospitals and, thus, taking over the role of
creditor to those hospitals) and refinancing liabilities (payment of specified liabilities of a hospital to its
suppliers, simultaneously taking over the role of creditor to that hospital); it also extends loans for the financing
of current activities, guarantees repayment of liabilities, provides factoring services, and finances long-term
projects, including investments.
Concentration of the Company’s activities in the medical services segment follows from the considerable
need for financial services on the part of all participants in the Polish medical market, especially public health
care entities (mainly hospitals) and their suppliers. The medical services market in Poland, much like in many
other European countries, is accounted for first and foremost by the public health care system financed out of
the social insurance system and out of public funds. This market – again, much like in other European countries
– is characterised by a misalignment of the sector’s financing vis a vis current needs arising from day-to-day
activities and investments by health care providers. In the developed medical services markets in Europe,
hospitals are financed by way of bank finance, commercial lending, and other forms of finance provided by
specialised financial institutions. In Poland, meanwhile, financing of health care is still in the early stages of its
development, with hospitals funded primarily by overdue commercial loans and, as a result, saddled with
considerable amounts of overdue liabilities and facing solvency problems. On the other hand, the unique
credit risk presented by the health care sector and an array of legal restrictions mean that the presence of
banks, leasing institutions, and factoring institutions in the medical market is very limited. These conditions
enable the Company to devise and deliver to its customers financial problems tailored to their specific needs,
attaining high growth of revenues and of profit. The market for financing the medical system in Poland has
large growth potential also for the longer term, this due to relatively low per capita expenditures on health
care in the country, the necessity of considerable investment in modern medical technology by health care
institutions, and the low utilisation of financial products in juxtaposition with other branches of the Polish
economy
The Company achieves very good financial results on its activities. Net revenues for 2006 were PLN 24 million,
operating profit - PLN 13.7 million, and net profit – PLN 10.7 million. These results for 2006 translate into a 33.5%
increase in sales revenues, a 126% increase in operating profit, and a 121% increase in net profit in comparison
with 2004.
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The Company has maintained a consistently high rate of growth for many years, irrespective of shifts in general
economic conditions and of the solvency of health care entities. This has been possible thanks to effective
management of the Company and through offering solutions well matched to the current needs and present
solvency of its customers.
The Company offers:
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Financing of current activities;
Financing of current and future liabilities;
Long-term financing.
The main area of the Company’s activities comprises current financing for health care entities and for their
suppliers, payroll financing, and financing of public law liabilities such as taxes. The Company also offers
services relating to finance of medical equipment deliveries, securing credit risk in the medical market, and
refinancing liabilities, also within the context of debt restructuring programmes.
The Company’s customers include hospitals, companies from the pharmaceutical and medical equipment
sectors, and other companies which cooperate with hospitals. The largest global suppliers of pharmaceuticals
and hospital equipment are active in the Polish market - Glaxo, Roche, Sanofi-Aventis, Novartis, Johnson &
Johnson, Boston Scientific, GE Healthcare, Philips, Stryker, Siemens, Medtronic, and B. Braun. The Company
also works with utilities providers to the medical sector, such as ENEA, ENERGA, Dalkia, or Telekomunikacja
Polska. Another large group of the Company’s customers consists of outsourcing companies active in medical
and auxiliary services; providers of such services to Polish hospitals include Euromedic, Gambro, Impel, Falck,
and ISS Multiserwis.
Over the years of 2004-2006, the Issuer drew up unconsolidated financial reports complying with Polish
accounting standards as an independent entity. For purposes of this Prospectus, the Company’s
unconsolidated financial reports have been converted into unconsolidated financial reports complying with
international financial reporting standards. As of May 2007, the Company has a subsidiary - MedFinance
Magellan, s.r.o. with its registered seat in Prague.
The Issuer commenced operations in 1998 as a limited liability company. In the initial phases of its activities, the
Company provided services to suppliers of public hospitals, buying up their receivables and collecting them in
the Company’s own account. With time, the Company’s operating model morphed into that of a financial
institution specialising in services for entities from the medical services market.
In 2003, the Company gained a strategic investor - Polish Enterprise Fund IV, L.P. represented by Enterprise
Investors Sp. z o.o.
2.
Competitive Advantages
The main competitive advantages of the Company include:
Familiarity with suppliers and buyers in the medical market and their characteristics
The Company has been providing services to the medical services market for more than 9 years. This long
track record testifies to considerable experience with contacts between health care entities and their
suppliers. This puts the Company in a position to react swiftly and effectively to the needs of specific customers
as they arise and to recommend financial solutions most suited to the given conditions. The Company has
furthermore devised its own system for assessing the credit risk of health care entities; the knowledge thus
gained accounts for one of the principal competitive advantages over bank, leasing, or factoring institutions
enjoyed by the Company. By virtue of its familiarity with the market and with the needs and expectations of its
customers, the Company has become one of the leaders in financing for the medical market.
Innovative sales model
The Issuer’s business model relies on constantly seeking out new market niches and on the creation of new
financial services for entities active in the medical services market and in other sectors which rely on public
funding. Thanks to its sales model, designed to address and anticipate the needs of such entities, the
Company cultivates long-term relationships with its clients and is better placed to expediently address their
needs.
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A team of experts in medical sector finance
The Company’s employees comprise a well-trained team disposing of thorough knowledge about the
products presently on offer as well as the trends affecting the medical market. This enables them to act as
competent advisors in selecting the best financial solutions. Familiarity with its clients and with the market
affords much flexibility to the Company, leaving it capable of adapting to new customer needs on short
notice and of modifying products and operating methods in line with new developments in the market
environment.
A wide range of products
The Company’s strong market position results, among other factors, from the comprehensive assortment of
products offered by it. The Company’s product range encompasses diverse financial products addressed to
medical entities as well as to their suppliers, devised to finance day-to-day activities as well as investments. The
principal product categories comprise debt financing, liabilities refinancing, financing medical equipment
deliveries, long-term investment financing, guaranteeing repayment of debts, loans, and factoring.
Access to capital
The Company benefits from access to sources of finance which guarantee coverage of current needs as well
as development of the product portfolio. The Company’s sources of external financing are varied, including
credit facilities from banks, commercial loans, and issues of short-term and medium-term bonds. As it expands
its activities and continues to build up its portfolio of quality financial assets, and also through appreciable
increase in the value of its equity, the Company adds to its good standing with external financing investors. As
a result, the Company is capable of financing transactions which oftentimes exceed the financial capacities
of smaller market participants.
3. Strategy
The Company’s main strategic objectives over the coming three years are as follows:
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Strengthening the Company’s leading position as a supplier of financial solutions for the medical
sector;
Increasing market share;
Entering new markets;
Maintaining returns on equity in excess of the industry average.
The basic goal of the Company lies in strengthening its leading position among non-bank financial institutions
providing financial services for the medical market by:
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Increasing sales (contracting) of financial products and services;
Growth in the value of assets generated by financial products in the medical market;
Expanding the scope and complexity of the financial product offer dedicated to entities operating in
the medical market.
The Company aims to attain its goal of strengthening its leading position as a supplier of financial solutions for
the medical market by:
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Increasing the value of sales (contracting) of financial products and services as well as the value of
assets generated by financial products in the medical market;
the medical market;
Increasing recognition of the Magellan S.A. brand, especially in markets other than the medical
market;
Fortifying the image of the Company as a first-choice non-bank institution for the provision of financial
services.
Increase of the Company’s market share will be achieved by:
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Increasing the number of clients served on the basis of permanent, constantly renewed cooperation;
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Increasing sales to existing clients through cross-selling;
Soliciting new clients in the medical sector;
Increasing sales in selected segments of the medical market, such as outsourcing;
Introducing new products to address specific client needs.
Penetration of new markets will follow from:
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Geographic expansion – the Company is planning continued expansion of its operations in the Czech
Republic and Slovakia;
Sectoral diversification consequent to entry into markets other than the medical sector – an important
element in the Company’s development will be comprised in expanding the number of customers
active in other markets (local self government bodies, municipal services, companies cooperating
with these sectors).
The Company also aims to maximise growth in its operations measured in earnings per share, and also to
maintain – and increase – growth in the value of its shares measured by their stock exchange listings in
juxtaposition with the stock exchange index.
4. Risk factors
A full description of the risk factors is set out in Chapter 2 of this Prospectus.
Risk factors associated with the environment in which the Issuer operates
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Risk of impact of the macroeconomic situation on the Company’s results
Risk of changes in the health care system
Risk associated with competition
Risk associated with legal regulations
Risk associated with tax regulations
Risk associated with interest rates
Risk factors associated with the Company’s operations
Risk associated with loss of the Company’s key employees
Risk associated with possibilities for financing growth
Foreign exchange risk
Risk of loss of asset value
Risk associated with bad PR for the Company
Operating risk
Risk of cost increase
Risk associated with administrative proceedings related to VAT
Risk associated with fulfilling the objectives of the C-Series Shares issue
Risk factors associated with investment in the Shares
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Risk of insufficient market liquidity and of fluctuations in the price of the Shares
Risk associated with abortion of the Public Offering or failure to complete the Public Offering
Risk associated with purchase of rights to shares in secondary trading
Risk associated with refusal to introduce the Offered Shares or the Rights in Shares to public trading or
of delay in such introduction, risk associated with the character of the Rights in Shares
Risk associated with suspension in trading of the Shares or with exclusion of the Shares from trading in
the regulated market
Risk of pausing, interrupting, or prohibiting the Public Offering or the introduction to trading
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5. Summary of operating and financial data
June 30
December 31
Summary of financial data
2004
2005
2006
2006
2007
(PLN 000s)
Sales revenues
18.015
20.608
24.042
10.999
14.967
Profit (loss) on operating activities
6.042
11.683
13.657
6.379
8.065
Profit (loss) before tax
6.068
11.448
13.477
6.405
7.986
Net profit (loss)
4.843
9.066
10.702
5.012
6.350
Net profit (loss) without valuation of the management
option*
5.284
9.575
11.211
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Total assets
76.554
83.294
138.430
97.113
157.788
Liabilities and reserves towards liabilities
36.091
33.295
77.259
41.888
90.079
Long-term liabilities
1.303
1.107
1.074
1.112
40.648
Short-term liabilities
34.788
32.188
76.185
40.776
49.431
Equity (net assets)
40.463
49.999
61.171
55.225
67.709
1.546
1.744
1.744
1.744
1.822
5.037.500
5.725.000
5.812.500
5.812.500
5.838.659
Profit (loss) per ordinary share (in PLN) **
0,96
1,58
1,84
0,86
1,09
Diluted profit (loss) per ordinary share (in PLN)
0,96
1,58
1,84
0,86
1,09
Declared or paid-out dividend***
590
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Share capital
Average weighted number of shares (units) – A series
* The net profit (loss) adjusted to take account of the management options programme valuation is described in more detail in the
Company’s financial report in note no 38.
** With only A-Series Shares taken into account.
***Comprises dividends as well as the cost of the capital increase.
The operating data set out below is included to afford a better understanding of the financial data and of the
specific nature of the Company’s operations.
June 30
December 31
Summary of operating data
2004
2005
2006
2006
2007
(PLN 000s)
Balance sheet contracting of financial assets*
End-of-year value of financial assets portfolio**
End-of-year off-balance sheet value of portfolio ***
Proceeds, commissions and equivalent items****
96.572
121.713
219.557
90.767
122.867
67.875
76.842
129.663
82.781
144.333
13.896
26.164
66.844
58.913
68.790
100.409
119.759
135.945
67.811
86.155
* Contracting realised in a given period reflects sales activity of the Company. Realised balance sheet contracting corresponds to financial
assets included in the Company’s assets on the basis of executed contracts (for loans, debt financing, refinancing of receivables, factoring,
and guarantees) in the course of the given period. Given the operating character of the data on balance sheet contracting realised in any
given period as well as the lack of an appropriate standard for presenting this data in the financial report, this data has not been audited.
** The value of the financial assets portfolio comprises novation agreements (new agreements between a creditor and the Company
converting a mature liability into a non-mature liability) with financial services agreements with a defined repayments schedule, receivables
without a defined repayments schedule, and receivables under extended loans.
*** The off-balance sheet portfolio value is the value of sold guarantee limits to suppliers of goods and services not guaranteed by the
Company for which the framework agreement has not expired yet.
**** Proceeds, commissions and equivalent items comprise turnovers associated with realisation of the portfolio held (other than revenues
from loans, where earnings refer exclusively to commissions and to interest) as well as commission and interest revenue classified with the
basic activities. This item is presented in the interests of a better description of the character and scale of the activities pursued by the
Company.
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June 30
December 31
Indicators of Magellan S.A.
2004
2005
2006
2006
2007
in %)
Operating margin on sales
33.5%
56.7%
56.8%
58.0%
Profit margin before tax
33.7%
55.6%
56.1%
58.2%
53.4%
Net profit margin
26.9%
44.0%
44.5%
45.6%
42.4%
54.9%
46.5%
43.6%
42.0%
46.1%
Net operating margin on proceeds, commissions and
equivalent items
6.0%
9.8%
10.0%
9.4%
9.4%
Net profit margin on proceeds, commissions and
equivalent items
4.8%
7.6%
7.9%
7.4%
7.4%
Return on equity
13.6%
20.0%
19.3%
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Return on assets
6.5%
11.3%
9.7%
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Debt to equity
7.9%
28.8%
73.9%
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Margin of operating costs to sales revenues
53.9%
The figures set out above were calculated on the basis of the financial reports in accordance with international financial reporting
standards.
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6. The Public Offering and the Shares Being Offered
Issuer ...................................................................... Magellan S.A., a company incorporated in accordance with
Polish commercial law with its seat in Łódź, Poland, entered in
the Business Enterprises Register at no KRS 0000263422.
Selling Shareholder.............................................. Polish Enterprise Fund IV, L.P.
The Offering........................................................... An aggregate number of 2,995,455 Offered Shares is offered on
the basis of this Prospectus, including:
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2,555,455 existing A-series ordinary bearer shares offered by
the Selling Shareholder, i.e. by Polish Enterprise Fund IV, L.P.,
and
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440,000 newly issued C-series ordinary bearer shares.
The newly issued C-Series Shares shall be alloted in the first order of
sequence. Only once all the C-Series Shares have been alloted
will the existing A-Series Shares offered for sale by the Selling
Shareholder be alloted.
Not later than on the Price Definition Date, the Selling
Shareholder may decide to increase the number of Offered
Shares by up to 651,408 existing A-series ordinary bearer shares.
The A-Series Shares and the C-Series Shares are offered to
investors without differentiation among existing shares and newly
issued shares at the subscription stage. As a result, existing ASeries Shares and/or newly issued C-Series Shares may be alloted
to investors.
The Public Offering is addressed to institutional Investors and to
Retail Investors, although it is anticipated that the number of
Offered Shares which will be alloted to Retail Investors will
correspond to 20% of all the Offered Shares. Investors may
subscribe for the Offered Shares in a number not greater than
the aggregate number of the Offered Shares on the basis of this
Prospectus, with the reservation that subscription by Retail
Investors must refer to at least 20 Offered Shares.
The Issuer and the Selling Shareholder reserve the right to allot to
Retail Investors a number of the Offered Shares greater or
smaller than specified above, acting in accordance with
recommendations by the Offeror. Information concerning the
share allotments shall be communicated to the general public in
accordance with art. 54. 3 of the Act.
Stabilisation Option ............................................. No stabilisation measures are planned.
Offering Time Frame ............................................ September 10 – 18, 2007 – Book building process for Institutional
Investors
September 11, 2007 – Commencement of the Public Offering
September 11 – 18, 2007– Acceptance of subscriptions by Retail
Investors
September 18, 2007– Price Definition
September 20 – 21, 2007 – Acceptance of subscriptions by
Institutional Investors
September 24, 2007 – Any subscriptions made in performance of
standby underwriting agreement
11
September 25, 2007 – Closing of the Public Offering
Objectives of the Public Offering...................... Proceeds from the new C-Series Share issue will be received by
the Company, which will utilise them in accordance with the
issue objectives described in Chapter 4 below. The Company
estimates net proceeds from the C-Series Share issue (following
deduction of issue costs) will attain approximately PLN 23.1 million;
these proceeds will be used for partial financing of the increase in
value of the financial assets portfolio.
Proceeds from the sale of existing A-Series Shares will be
received by the Selling Shareholder, i.e. by Polish Enterprise Fund
IV, L.P.
Price, Maximum Price ......................................... A Maximum Price per Offered Share shall be defined for
purposes of accepting subscriptions by Retail Investors. The
Maximum Price shall be announced to the general public
before commencement of the Public Offering in the form of an
annex to this Prospectus in accordance with art. 51 of the Act.
The Issuer and the Selling Shareholder shall define the Price taking
into account recommendations by the Offeror and the following
criteria and principles: (i) assessment and price sensitivity of
demand among Institutional Investors participating in the book
building process, (ii) capital needs of the Issuer and the Selling
Shareholder with respect to realising the objectives of the Public
Offering, (iii) current and projected situation on the equity markets
in Poland and abroad and (iv) assessment of the perspectives for
growth and risk factors and of other information relating to the
Issuer’s activities set out in this Prospectus.
The Price of the Offered Shares purchased by Institutional
Investors may be higher than the Price of the Offered Shares
purchased by Retail Investors. In the event that the Price is
defined at a level equal to or lower than Maximum Price, the
Price of the Offered Shares purchased by Retail Investors shall be
equal to the Price of the Offered Shares purchased by
Institutional Investors. The Price shall be announced to the
general public in accordance with art. 54.3 of the Act before
the commencement of acceptance of subscriptions by
Institutional Investors.
Payment for the Shares....................................... Payment towards the Shares must be remitted in the full amount,
in Polish currency, not later than at the making of the
subscription.
Failure to remit payment for the Shares in accordance with the
terms laid down in this Prospectus shall render the subscription for
the Shares made by the given investor void.
Detailed terms of payment for the Offered Shares are set out in
Chapter 22 – “Subscription and Sale of Offered Shares”.
Allotment of Shares ............................................. Allotment of the Offered Shares shall be effected promptly
following conclusion of acceptance of subscriptions from
Institutional Investors. Newly issued C-Series Shares as well as
existing A-Series Shares being sold may be alloted to Investors.
Allotment of the Offered Shares to Individual Investors shall be
effected in accordance with the subscriptions made; in the
event that the number of Offered Shares for which the Retail
Investors make subscriptions exceeds the number of Offered
12
Shares earmarked for purchase by Retail Investors, the Offered
Shares shall be alloted in accordance with the principle of
proportional reduction of subscriptions.
Considering the positive, motivational aspect of share holding
by employees of the Issuer, the Company and the Selling
Shareholder reserve, within the context of alloting Offered Shares
to Retail Investors, the possibility of conducting, at their
discretion, preferential allotment of not more than 15,000
Offered Shares to persons employed by the Company on the
day of Share allotment. In the event that employees subscribe
for more than 15,000 Offered Shares, the Company and the
Selling Shareholder intend to allot Shares to employees in
accordance with the principle of proportional reduction of
subscriptions by this group and not to allot more than 1,000
Shares to any Company employee under the preferential
allotment.
Allotment of Offered Shares to Institutional Investors shall be
effected by the Issuer and by the Selling Shareholder with due
heed for recommendations by the Offeror, at their sole
discretion, taking into account the objectives of the Public
Offering as set out in Chapter 4 of this Prospectus – “Objectives
of the Public Offering”.
Settlement of the Offering .................................. Any return of any amounts remitted shall be effected without
any interest or damages within five (5) business days following
announcement that the Public Offering will not be completed,
announcement that the Public Offering has been aborted, or
the date of allotment of Shares, as appropriate.
In the case of Investors who submit instructions to deposit along
with their subscription for Shares, the C-Series Offered Shares and
rights to shares alloted to them shall be entered on the accounts
specified in such deposit instructions.
Detailed terms of Settlement of the Offering are set out in
Chapter 22 of this Prospectus – “Subscription and Sale of Offered
Shares”.
Planned Listing Market........................................ The Issuer intends to introduce the A-Series Shares, the B-Series
Shares, the C-Series Shares, and the Rights in C-Series Shares to
trading in the regulated market, i.e. on the basic market of
Giełda Papierów Wartościowych w Warszawie S.A., the Warsaw
securities exchange.
Limitations on Dealing in the Shares................. The Company has obligated itself that, over a period of six (6)
months following the closing of the Public Offering, the
Company shall not issue shares (or any other convertible
securities or securities exchangeable for shares or securities
associated with a right to acquire or purchase shares in the
Company) or publicly announce intent to issue shares without
the permission of the Underwriter and of the Offerror.
In accordance with resolution no 2 adopted by the
Extraordinary Shareholders Meeting of the Company on April 6,
2007, B-Series Shares may not be divested or encumbered
between the moment of acquisition of the shares and the
elapse of two (2) years following the first listing of the shares on
Giełda Papierów Wartościowych w Warszawie S.A. In
13
exceptional circumstances, the Supervisory Board may authorise
such divestment of encumbrance. In performance of this
resolution and on the basis of the contract for acquisition of
shares, persons who acquired B-Series Shares have undertaken
not to divest or encumber B-Series Shares until securities
accounts are opened with a brokerage house. As at execution
of a securities account agreement, a freeze shall be instituted
on the securities account, remaining effective until two (2) years
following the first listing of the shares on Giełda Papierów
Wartościowych w Warszawie S.A. have elapsed.
Share Capital........................................................ The share capital of the Company is PLN 1,822,226.40 (one
million eight hundred and twenty-two thousand two hundred
and twenty-six złoty and 40/100) and is divided into 6,074,088
shares with a nominal value of PLN 0.30 each. The Company’s
Extraordinary General Meeting has furthermore adopted a
resolution in accordance with which the share capital shall be
increased by not more than PLN 132,000.00 (one hundred and
thirty-two thousand złoty) by way of issue of 440,000 ordinary Cseries shares (“the C-Series Shares”). Following registration of the
share capital increase and the issue of 440,000 C-Series Shares,
the share capital of the Company shall be not more than PLN
1,954,226.40 (one million nine hundred and fifty-four thousand
two hundred and twenty-six złoty and 40/100)and will be divided
into not more than 6,514,088 A-Series Shares, B-Series Shares, and
C-Series Shares. More information on this subject is set out in
Chapter 16 – “Shares, Share Capital, and the General Meeting”.
Dividend Policy .................................................... In the medium term, the strategy adopted by the Company
provides for re-investment of all profits in building up the financial
assets portfolio so as to ensure that the Company’s value grows
as rapidly as possible. Accordingly, given its plans for further
investment in its portfolio of medical market financial assets, the
Company has not planned any pay-outs of dividends from
profits for the years 2007 or 2008. The Company does not rule out
the possibility, however, that a dividend be paid out of profits for
subsequent years, i.e. beginning with profits for 2009, provided
that this does not translate into a negative impact on the
possibility for securing the financing needed for further
expansion. At the moment, the Company is no position to
estimate the possible dividends after 2009.
Dividend Tax ......................................................... Income accruing in Poland from dividends is subject to a flatrate income tax at 19% of the income; more details on tax issues
are set out in Chapter 20 of this Prospectus – “Taxation”.
Voting Rights ........................................................ In accordance with arts. 411 and 412 of the Polish Commercial
Companies and Partnerships Code, Shareholders are entitled to
participate in the Issuer’s General Shareholders Meeting and to
vote during that General Meeting, with each share entitling its
holder to one vote. A detailed description of the voting rights
associated with the Shares is set out in Chapter 16 of this
Prospectus –“Shares, Share Capital, and the General Meeting”.
14
CHAPTER 2
RISK FACTORS
Each Investor should carefully review and analyse the information set out in this Prospectus. Any
investment in shares attracts the high degree of risk characteristic of capital market instruments,
particularly the risks discussed below. The risk factors described below may exert a negative impact on
operations of the Issuer, on the Issuer’s assets and financial standing, and on the Issuer’s financial results.
The price of the shares may fall due to operation of the risk factors described below as well as due to the
occurrence of other factors or circumstances not described in this Prospectus.
The risk factors described below are not the only ones which may affect the Issuer or the Issuer’s activities.
Investors are advised to bear in mind that, in the future, there may arise new risks which are difficult to
foresee at this time, for instance due to the occurrence of unexpected or extraordinary events remaining
beyond the control of the Issuer at the time of preparation of this Prospectus.
As a result, the investors may lose some or all of the funds invested by them.
1. Risk factors associated with the environment in which the Issuer operates
Risk of impact of the macroeconomic situation on the Company’s results
The macroeconomic environment exerts a significant influence on the situation of the Company. The
emergence of negative trends in the Polish economy or in the country’s public finances may translate into
a negative impact on the medical sector and, consequently, on the condition of the Company and its
financial results. To date, the Company has proved itself able to adapt its product offer and its operating
model to shifts in the macroeconomic situation, sustaining a growth dynamic during periods of economic
expansion as well as during economic downturns. Yet one can not discount a scenario whereunder future
changes in the macroeconomic environment exert a negative impact on the condition of the Company
and on its financial situation. Of such negative macroeconomic tendencies, the following must be
mentioned in the first order of sequence:
−
−
−
A deceleration of economic growth leading to a slowing down of health insurance contribution
accruals, decreasing the capabilities of NFZ, the national health finance authority, as regards
disbursement of public funds among health care entities;
Increase of the national budget deficit, efforts at countering it by an increase of tax rates, by
introduction of new tax burdens, or increase of social insurance contributions;
Increase of interest rates, leading to a spike of the financial costs borne by the Company.
Risk of changes in the health care system
Seeing as the Polish health care system is predominantly a public one and is financed out of public
resources, this risk essentially comprises a scenario where the legislature and, consequently, the national
administration would adopt measures geared at changing the principles according to which public
health care operates and, specifically, the fashion in which it is financed. Such possible changed would
include, in particular:
−
−
−
−
−
−
Debt reduction measures, financial injections to the health care finance system sourced from
public aid;
Introduction of new sources of finance to the system (such as the additional mandatory insurance
mooted by the Ministry of Health, voluntary insurance, financing treatment of traffic accident
victims out of civil liability insurance policies of the motorists causing the accident, etc);
A system-wide restructuring coupled with cost reduction, debt reduction, and increased
efficiency;
Establishment of a network of hospitals to which full coverage of their financial requirements will
be guaranteed;
Ownership changes whereunder it would become legally possible to transform health care
entities into bodies corporate operating under Polish commercial and company law, changes of
the ownership structure of such entities;
A decision to shut down some of the existing health care entities; and
15
−
Introduction of new legal and financial solutions which might lead to changes in the financial
management of the Polish health care sector.
Most likely, introduction of any such changes would, on the one hand, produce a positive effect as
regards overall improvement of the Polish health care sector and the financial condition of its individual
units; on the other hand, these changes would also be likely to actuate new interest in financial products
which deliver financial efficiency and management advantages. At the same time, these changes may,
at least in the short term, adversely affect demand for some of the Company’s products and, thus, also
the Company’s financial results.
Channelling new resources into the health care system, be it in the form of public aid or of new sources of
finance, may lead to improvement of the health care sector’s financial liquidity. Again, this could
occasion lower demand for some of the Company’s products and financial services, especially in the field
of financing day-to-day activities. Such a development would be reflected in the Company’s revenues.
Establishment of a hospitals network benefiting from guaranteed coverage of its financial needs,
meanwhile, could lead to closure of some of the health care entities which do business with the
Company, leaving the Company with smaller possibilities for sale of products for financing day-to-day
activities.
The plans of transforming health care facilities into commercial law entities being considered by the
Ministry of Health could cause an increase of the Company’s credit risk; any such public hospitals, clinics,
etc transformed into commercial law entities would become subject to bankruptcy law and to all the
rules of the market economy.
Risk associated with competition
The risk associated with competition refers, first and foremost, to the possibility that there might emerge on
the market new entities seeking to provide services analogous to those now provided by the Issuer. This
may lead to higher competition and to strains on the financial condition of the Company.
This risk may manifest itself either in market entry by institutions with a similar operating model or by other
financial institutions such as banks, leasing firms, insurance companies, or investment funds.
At present, there are – apart from the Company – several competitors which operate in the market with a
similar business model as well as a group of smaller companies specialising mainly in debt enforcement
and collection services. At present, these do not amount to direct competition for the Company due to
the fact that such a model for cooperation has not gained the acceptance of health care entities. With
the exception of Electus S.A., the scale of these companies’ operations is significantly smaller than that of
the Company, this due to limited financial resources.
To date, the presence in the market of interest to the Company of financial institutions, especially of
banks, has been relatively limited. Such entities face significant hurdles associated with legal and
oversight regulations and with their internal constitution.
That said, the Company is in no position to exclude the possibility that strong competition may emerge in
its market in the future, leaving the Company with smaller revenues and with poorer financial results.
Risk associated with legal regulations
The Company maintains its own legal team, composed of individuals with long experience in all aspects
of the Company’s operations; the Company is also a partner in a law firm which provides it with legal
services. The Company is nonetheless in no position to exclude the possibility that unfavourable changes
in the legislative framework of its operations and/or unfavourable interpretations of applicable laws may
occasion negative consequences for the Company.
16
The Company operates in a market niche in reliance on non-standard products and services which, given
the lack of detailed legal solutions in this respect, are rooted in the general laws (the Polish Civil Code and
other general statutes). Interpretation of certain legal issues and of points of contention arising in their
context usually proceeds by way of rulings arrived at through court proceedings which, following the
exhaustion of all avenues of appeal, become final and binding and the results of which can not be
foreseen with certainty. Also of concern in this regard are the frequently amended and inconsistently
interpreted statutes regulating commercial activity, labour and social insurance law, and securities law.
Risk associated with tax regulations
This risk centres on the potential danger of changes or unfavourable interpretations of the tax laws. The
Company operates in a niche market to which it regularly brings innovative products and services the
taxation of which is not regulated to any significant detail by the tax law or by legal literature on the
subject. This opens the Company to risk associated with amendments to the tax law and with
interpretations unfavourable to the Company.
The Company endeavours to minimise this risk, among other measures, through cooperation with external
tax advisors with respect to constant monitoring changes in the tax laws. As it introduces any new
financial product which may give rise to doubts as to how it should be taxed, the Company applies to the
competent tax authorities for their binding interpretation. Yet, the Company’s best efforts to obviate this
risk notwithstanding, it is impossible to predict the exact direction of future changes of the tax laws or the
scale of the influence exerted by tax laws and their interpretation on the Company’s business and results.
Risk associated with interest rates
The financial results of the Company are, to a large degree, dependent on interest rates. The Company
does not apply any instruments to secure against this risk. Interest rate risk follows primarily from what is
known as the interest rate gap, which results from the difference in the times of re-evaluation of interest on
assets (financial products for the Company’s contracting parties) and on liabilities (bank credit facilities
and debt securities which partly finance the products portfolio). The Company’s assets bear interest at
fixed rates or at rates adjusted in reference to statutory rates which, in turn, are defined by administrative
bodies. Interest on some of the Company’s liabilities, in turn, is pegged to current market rates (e.g.
WIBOR). This leads to a situation where, in the event of an interest rate increase, the Company may not be
able to pass the entirety of the financing costs increase onto its clients (through higher interest on assets),
thus suffering a negative impact on its financial results.
2. Risk factors associated with the Company’s operations
Risk associated with loss of the Company’s key employees
The Company operates in a niche market, in a setting where innovation in creating solutions and financial
services for clients is of tantamount importance. A basic internal resource of the Company is comprised in
its qualified, experienced, and dynamic professional cadres whose knowledge and commitment
contribute to the continued growth of the Company. Any loss of key employees may be difficult to
compensate for given the labour market’s dearth of employees disposing of the requisite skills and
experience. In addition, the Company’s employees may well be attractive for any new entities
contemplating entry to the market in which the Company operates. A loss of key employees could
potentially mean a temporary slowing down of the Company’s development as well as entailing
additional costs associated with recruitment and training of new personnel.
The Company has successfully obviated this risk over the years of 2003-2006 through the implementation
of an incentive programme relying significantly on issue of the B-Series Shares on the basis of the resolution
of April 6, 2007 regarding increase of the Issuer’s share capital by way of a share issue addressed to
members of the Company’s Executive Board and to its key employees. This has enabled the Company to
maintain relatively low churn rates among its key managers. The Company plans to continue applying this
17
mechanism in the future by way of the planned issue of D-Series Shares. Yet the possibility of key
employees leaving the Company – and of attendant slowing down of its activities and its growth remains.
Risk associated with possibilities for financing growth
Access to external financing is one of the main prerequisites for further development of the Company.
Increase of the Company’s financial results depends largely on the parameters and value of its assets
portfolio, and expansion of assets is financed with equity, with commercial loans, and with bank loans and
the issue of debt securities. In the event of problems with securing finance, difficulties with development of
business activity may ensue, leading to deterioration of financial results.
Foreign exchange risk
To date, the Company’s exposure to foreign exchange risk has been slight. As of 2005, the Company has
been developing operations in the Czech and Slovak markets but, between them, these two markets
accounted for 1.7% of the Company’s aggregate sales revenues for 2006. Operations in the Czech and
Slovak markets are pursued in the local currencies with respect to the assets portfolio as well as to the
liabilities financing it. Thus, the individual areas of the Company’s foreign operations have closed foreign
currency positions and do not generate foreign exchange risk. The only item which is exposed to foreign
exchange risk is the value of the Company’s shares in its subsidiary pursuing activities in the Czech
Republic and Slovakia. There arises the possibility, however, that if the Company develops its foreign
activities on any significant scale, its exposure to foreign exchange risk in the future will increase. This
applies, in particular, to the Company’s increased commitment to the Czech market consequent to
registration of its Czech subsidiary, MedFinance Magellan, s.r.o. with its registered seat in Prague.
Risk of loss of asset value
The dominant part of the Company’s financial assets consists of receivables from entities which,
according to the relevant statutes, can not file for bankruptcy – independent health care entities, local
self government bodies, etc. The Company intends to continue concentrating its business activities on this
area. It is forecast that only a small portion of the portfolio will be subject to “normal” credit risk in
accordance with all market principles. Despite the fact that the Company uses its own system for
assessing the creditworthiness of its contracting parties, it is impossible to exclude individual cases of bad
investment decisions and loss of some asset value vis a vis the debtor as a result of deterioration of loss of
the latter’s solvency.
Risk associated with bad PR for the Company
While the Company pursues measures geared at maintaining a positive image in the market, bad PR may
bring significant interference with its activities as well as occasioning additional financial burdens
associated with restoring the Company’s image. These factors could have a negative impact on the
Company’s financial results.
Given that the Company pursues business activity in the area of financing health care, its activities are
relatively vulnerable to changes in the surrounding business climate. For many years, the Company has
been cultivating partner-like relations with its clients as well as actively building its image of a financial
institution serving the health care sector. These efforts notwithstanding, the Company is open to the risk of
bad PR which may affect perceptions of the Company’s dependability and, thus, render potential
business partners less willing to deal with the Company.
Operating risk
This risk relates to the possibility of committing errors due to adoption of incorrect operating procedures or
to failure to abide by procedures caused by human error. Possible results include incorrect assessment of
18
a client’s credit risk or untimely repayment of liabilities to the Company due to incorrect repayments
monitoring. In order to reduce the scale of risk and to ensure repetitiveness of its basic operating
processes, the Company has implemented an appropriate operating procedures system in accordance
with which it provides financial services and monitors all actions relating to risk analysis, documentation,
and transaction closing and monitoring.
Risk of cost increase
This risk concerns the possibility that operating expenses may rise in a fashion incommensurate with
increase in the scale of operating activity. This risk refers, in particular, to the Company’s personnel costs –
the most significant costs factor as well as a carrier of other costs by type.
Despite the active costs control carried on by the Company on a constant basis, it is impossible to
altogether exclude a sudden spike in costs caused primarily by a major employment increase or by the
imposition of additional labour costs, payroll taxes, etc or the necessity of bearing other costs.
Risk associated with administrative proceedings related to VAT
The Company has been a party to administrative proceedings geared at clarifying the discrepancies
between positions adopted by the Company and the tax authorities with respect to classification of one
of the financial intermediation services provided by the Company. These proceedings have been
described in detail in the explanatory note 3.2 constituting an integral part of the financial reports of the
Company set out in this Prospectus. Having received the final ruling, with no possibility of further appeal,
by the Regional Administrative Court, the Company has posted amounts paid as VAT to receivables from
the tax office totalling PLN 3.185 million as VAT paid plus interest on overdue payment. Given the
favourable ruling by the Regional Administrative Court in Łódź, the Company has not established any
reserves or effected any updating write-offs, and it plans to promptly apply for repayment of the amounts
due. On July 13, 2007, the Director of the Treasury Office amended the decision concerning the written
interpretation on the scope and means of applying the tax law and acknowledged the position originally
taken by the Company. This decision terminates the dispute as well as marking the end of the
administrative procedure. The decision confirms the correctness of the presentation of financial data in
the financial reports enclosed with this Prospectus, and it constitutes a basis for repayment to the
Company of the overpaid tax. The Company may not, however, exclude the possibility that, at some time
in the future, the tax authorities may again question positions taken by the Company with respect to
interpretation of tax laws applicable to its activities, although the Executive Board believes that, given the
rules adopted for proceeding in instances where applicable laws are unclear, this risk is immaterial.
Risk associated with fulfilling the objectives of the C-Series Shares issue
As at the Prospectus Date, the Company is in no position to provide detailed information on planned
loans which it intends to extend to public hospitals out of the funds accruing to it from the C-Series Share
issue. Specifically, the Company can not yet specify the hospitals to which these loans will be extended,
the amounts of such loans, or the terms and conditions of these loans. The Company expects that, by the
end of Q1 2008, all proceeds from the C-Series Share issue will have been invested in accordance with the
issue objectives. Possible delays in execution of the issue objectives may slow down growth of the
3. Risk factors associated with investment in the Shares
Risk of insufficient market liquidity and of fluctuations in the price of the Shares
It is uncertain whether all the shares of the Issuer will become the object of public trading on the Warsaw
securities exchange upon the conclusion of the Offering or whether their market price will not drop or be
subject to significant fluctuations. This will depend on a confluence of various factors, including exchange
19
rate fluctuations, periodic changes in the Company’s results, volume and dynamics of exchange trading,
and general conditions prevailing on securities markets around the world. The Polish capital market is
characterised by significant fluctuations in price shares and trading volumes, and investors contemplating
transactions with large blocs of shares should factor in the risk of temporary declines of liquidity and of
significant fluctuations in price. On account of the above, investors purchasing shares of the Issuer should
bear in mind the risk that their investment may suffer a decline of liquidity.
Risk associated with abortion of the Public Offering or failure to complete the Public Offering
At any time prior to commencement of the Public Offering, the Issuer and the Selling Shareholder may
abandon their plans for completing the Public Offering without specifying any cause. Any decision to
abort the Public Offering shall be announced to the general public in accordance with applicable laws.
Following commencement of the Public Offering, the Public Offering may be abandoned only in the
event that there arise, in the view of the Issuer and of the Selling Shareholder, material grounds militating in
favour of such a decision. Such material grounds would include, in particular: (i) sudden, previously
unforeseeable changes in the national or global economic or political situation which might have a
negative impact on the financial markets, on the national economy, or on further activities of the
Company, including on the information set out in this Prospectus, (ii) sudden, unforeseeable changes
exerting a direct impact on operating activities of the Company or (iii) insufficient demand for the Offered
Shares by Institutional Investors during the book building process.
The Public Offering shall not be completed if at least one C-Series Share is not subscribed for and duly
paid up.
The C-Series Share issue shall not be completed under the following circumstances:
−
If at least one C-Series Share is not acquired and duly paid up under the subscriptions for the Offered
Shares;
−
If the Company’s Executive Board does not submit the resolution concerning increase of the share
capital to the register court within six (6) months following approval of the Prospectus; or
−
Once the register court’s decision refusing registration of the share capital increase becomes final
with no possibility of further appeal.
Registration of the share capital increase following from the C-Series Share issue shall also be conditional
upon the making by the Executive Board of a statement defining the value of the share capital increase
on the basis of the number of C-Series Shares validly subscribed for. This statement, to be made in
accordance with art. 310 in reference to art. 431 § 7 of the Polish Commercial Companies and
Partnerships Code, should specify the amount of the share capital following the conclusion of public
subscriptions within the range defined in the resolution concerning the share capital increase by way of
issue of C-Series Shares. Failure of the Executive Board to make such a statement would render registration
of the share capital increase by way of the Share issue impossible and, thus, prevent valid completion of
the C-Series Share issue. If the share capital is not increased, this may cause funds to be frozen for a
certain period of time, leading to loss of potential profits by the investors given that amounts paid in shall
be returned to the subscribers without any interest or damages.
There can be no certainty whether the Issuer and the Selling Shareholder will not take the decision to
abandon the Public Offering, or whether the Public Offering will not be prevented by other
circumstances. In the event that the Public Offering is aborted or does not come to pass due to other
reasons, the Issuer or the Selling Shareholder shall be obligated to return payments towards Shares within
five (5) business days following the decision to abort or to not complete the Public Offering to the bank
accounts or investment accounts specified in the share subscription forms, with the reservation that such
contributions shall be returned without any interest or damages.
Risk associated with purchase of rights to shares in secondary trading
20
Investors should note that, in the event that the register court’s decision refusing registration of the share
capital increase through the Share issue becomes final with no possibility of further appeal, investors shall
only receive a refund corresponding to the product of the number of rights to shares on the investor’s
account multiplied by the issue price of the Offered Shares, which may be lower than the price paid by
such investors for the rights to shares in secondary trading.
Risk associated with refusal to introduce the Offered Shares or the Rights in Shares to public trading or of
delay in such introduction, risk associated with the character of the Rights in Shares
Admission of the Shares and of the Rights in Shares to market trading will be predicated upon fulfilling a
number of requirements laid down in the internal regulations of the Warsaw securities exchange and of
Krajowy Depozyt Papierów Wartościowych S.A. with its registered seat in Warsaw, the national securities
deposit. If the Shares or the Rights in Shares are not admitted to trading on the exchange or if such
admission is delayed, this may have an adverse impact on the liquidity of such securities and,
consequently, on the possibility of selling them at a price commensurate to their market value.
Risk associated with suspension in trading of the Shares or with exclusion of the Shares from trading in the
regulated market
Powers of the Polish Financial Supervision Authority
In circumstances where publicly listed companies do not fulfil certain duties laid down in arts. 157 and 158
of the legislative Act regarding trade in financial instruments, the Polish Financial Supervision Authority may
impose upon the delinquent entity a fine of up to PLN 1 million or issue a decision on debarment of such
entity’s shares in the regulated market. These two penalties may also be imposed jointly.
Furthermore, under art. 20 of the legislative Act regarding trade in financial instruments, where trading in
specific financial instruments is conducted under circumstances indicating that correct operation of the
regulated market and security of dealing on that market may be endangered, or that investor interests
may be compromised, the Warsaw securities exchange – acting at the request of the Polish Financial
Supervision Authority – suspends trading in such securities or instruments for a period of up to one month.
At the request of the Polish Financial Supervision Authority, the Warsaw securities exchange excludes
securities specified by the Polish Financial Supervision Authority from trading in the event that trading in
such securities significantly threatens correct operation of the regulated market and security of dealing on
that market or causes violation of investor interests.
The possibility that such a situation may arise in the future with respect to all shares of the Issuer may not
be excluded.
Powers of the Warsaw securities exchange
Under § 30 of the Warsaw securities exchange rules, the Executive Board of the exchange may suspend
trading in securities for a period of up to three (3) months at the request of the Issuer, and also where it
deems that such suspension is warranted on account of the interests and the security of market
participants or if the Issuer is in breach of Warsaw securities exchange rules. The Executive Board of the
exchange may furthermore debar securities from the exchange under circumstances specified in the
Warsaw securities exchange rules.
Under § 31.1 of the Warsaw securities exchange rules, the Executive Board of the exchange debars
securities from trading on the exchange: (i) if their divesttive properties have become limited, (ii) further to
a request by the Polish Financial Supervision Authority made in accordance with the legislative Act
regarding trade in financial instruments, (iii) if the dematerialisation of the securities is reversed, (iv) if the
securities are excluded from trading on the regulated market by a competent oversight body.
Apart from the circumstances in which debarment / exclusion from trading on the exchange is
mandatory, § 31.2 of the Warsaw securities exchange rules envisages the following situations where the
Executive Board of the exchange may decide to exclude securities from trading on the exchange: (i) if
21
such securities have ceased to fulfil conditions for admission to trading on the exchange other than those
which provide grounds for mandatory exclusion from trading, (ii) if the Issuer persistently violates rules in
force on the Warsaw securities exchange, (iii) at the application of the Issuer, (iv) as a result of
announcement of the Issuer’s bankruptcy, or in the event that the court rejects the Issuer’s application for
announcement of bankruptcy because Issuer’s assets are insufficient to cover the cost of the bankruptcy
proceedings, (v) if the Executive Board of the exchange deems such exclusion warranted by the interests
and security of the market participants, (vi) consequent to a decision to merge the Issuer with another
entity, to divide the Issuer or to transform it, (vii) if the given security was not the object of any transactions
on the exchange over the past three (3) months, (viii) consequent to taking up by the Issuer of activities
proscribed by applicable laws, or (ix) consequent to the commencement of liquidation proceedings for
the Issuer.
The possibility that such a situation may arise in the future with respect to all shares of the Issuer may not
be excluded.
Risk of pausing, interrupting, or prohibiting the Public Offering or the introduction to trading
Under arts. 16 and 17 of the legislative Act regarding the Public Offering, in the event of a breach – or
reasonable suspicion of a breach – of the law in the context of a public offering within Poland or in
relation to seeking admission of securities to trading on the regulated market in Poland by the issuer, by
the selling shareholder, or by other entities participating in the offering on behalf of, or in instructions from,
the issuer or the selling shareholder – and also in the event of reasonable suspicion that such a breach
may occur in the future – the Commission may:
1) Order that commencement of the public offering or admission of the securities to trading on the
regulated market be delayed, or that the public offering be interrupted, for a period of not more than ten
(10) business days; or
2) Proscribe commencement of the public offering or its continuation or proscribe admission of the
securities to trading on the regulated market; or
3) Publish, at the expense of the issuer or of the selling shareholder, information concerning illegal actions
with respect to the public offering or to seeking admission of the securities to trading in the regulated
market.
The Commission may apply the measures discussed in arts. 16 i 17 also in the event that the issue
prospectus submitted to the Commission or announced to the general public indicates that:
1) The public offering of the securities or their admission to trading in the regulated market would
significantly violate the interests of investors;
2) Establishment of the issuer was accompanied by blatant breach of the law, and the effects of that
breach continue;
3) Activities of the issuer were or are accompanied by blatant breach of the law, and the effects of that
breach continue;
4) The legal status of the securities does not comply with applicable laws.
In addition, under art. 20.1 of the legislative Act regarding trade in financial instruments, where required
by security of trading in the regulated market or where investor interests are at risk, the company
operating the regulated market orders, at the request of the Commission, that admission of the securities
to trading on that market or the first listing of securities or other financial instruments indicated by the
Commission be delayed for not more than ten (10) business days.
22
CHAPTER 3
2004
STATEMENT IN ACCORDANCE WITH COMMISSION REGULATION (CE) 809/2004 OF APRIL 29,
Statement by the Issuer
On behalf of Magellan S.A. with its registered seat in Łódź, we hereby declare that, to our best knowledge
and having applied due care and skill in order to ensure such a state, the information set out in this
Prospectus is truthful, complete and accurately reflects the factual state and that this Prospectus does not
omit anything which may influence its import.
……………………………
……………………………
…………………………….
Dariusz Strojewski
Krzysztof Kawalec
Grzegorz Grabowicz
President
of the Executive Board
Vice President
Member
23
Statement by the Selling Shareholder
Acting on behalf of Enterprise Investors Sp. z o.o. with its registered seat in Warsaw, proxy of Polish
Enterprise Fund IV, L.P. of Corporation Trust Centre, 1209 Orange Street, Wilmington, County of New Castle,
Delaware with its head office at 1 Exchange Place, Suite 1000 Jersey City, NJ 07302, USA, we hereby
declare that, to our best knowledge and having applied due care and skill in order to ensure such a state,
the information set out in this Prospectus is truthful, complete and accurately reflects the factual state and
that this Prospectus does not omit anything which may influence its import.
……………………………
…………………………….
Dariusz Prończuk
Tadeusz Gałkowski
Member
Member
24
CHAPTER 4
OBJECTIVES OF THE PUBLIC OFFERING
The objective of the Company’s Public Offering lies in obtaining funds for the Company, in sale of some of
the Shares held by the Selling Shareholder, and in building a stable shareholding structure. Proceeds from
the new C-Series Share issue will be collected by the Company and used in accordance with the
objective described below. Proceeds from the sale of existing A-Series Shares will be collected by the
Selling Shareholder, i.e. by Polish Enterprise Fund IV, L.P. The Company will bear all the expenses
associated with preparation and printing of the issue Prospectus, retaining advisors to the Company,
administrative fees relating to the Public Offering, the cost of promoting the Public Offering, and
commissions on sale of the C-Series Shares. Commissions on sale of the existing A-Series Shares will be
borne by the Selling Shareholder.
Objectives of the C-Series Share Issue
Anticipated proceeds from issue of the C-Series Shares are estimated at PLN 25.5 million. The Company
furthermore estimates that aggregate costs of the Public Offering incumbent upon the Company will total
approximately PLN 2.4 million. The estimated cost of the issue will be approximately PLN 5.37 per new
share. With the costs of the issue taken into account, estimated net proceeds from the C-Series Share issue
will be PLN 23.1 million.
The Company expects to eventually use most of the proceeds from the C-Series Share issue towards loans
extended to public hospitals, including long-term loans used by the borrowing entities to finance
investments and long-term restructuring of their existing debts. Long-term debt restructuring may also be
conducted with the use of proceeds from the C-Series Share issue through transactions for financing
receivables or through factoring of long-term hospital receivables.
As at the Prospectus Date, the Issuer is in no position to provide detailed information as to the specific
hospitals to which these loans will be extended, the amounts of such loans, or the terms and conditions of
these loans. The Company expects that, by the end of Q1 2008, all proceeds from the C-Series Share issue
will have been invested in accordance with the issue objectives described above.
Until proceeds from the issue have been invested in fulfilment of the above objective, the Company may
use these proceeds: (i) for interim financing of contracting financial assets other than those specified
above (e.g. short-term loans or financing receivables) with short maturity dates (up to one year) or (ii) in
the second order of sequence, for reducing external financing (bank loans and bonds).
Should the proceeds from the C-Series Share issue prove lower than expected, the Company shall obtain
the missing funds by way of an increased bond issue. As at June 30, 2007, the Company had two open
bond issue programmes to a combined amount of PLN 100 million, with PLN 61.8 million used. For a
detailed description of the Issuer’s bond issue programmes, please see sub-point 2 of Chapter 12 –
“Description of Activities”.
Detailed information about use of proceeds from the Share issue towards the objectives described above
shall be announced to the general public in the form of a current statement.
25
CHAPTER 5
DILUTION
As at the Prospectus Date, the Company’s shareholding structure was as follows:
Shareholder
No of shares
Polish Enterprise Fund IV, L.P.
5,812,500
Managerial cadre
Total number of shares
No of
General
Meeting
votes
5,812,500
% of
shareholding
structure
95.7%
261,588
261,588
4.3
6,074,088
6,074,088
100.0%
If all the Offered Shares are acquired, the shareholding structure of the Company following the Public
Offering will be as follows:
Shareholder
No of shares
3,257,045
No of
General
Meeting
votes
3,257,045
% of
shareholding
structure
50.0%
Managerial cadre
261,588
261,588
4.0%
New shareholders
2,995,455
2,995,455
46.0%
6,514,088
6,514,088
100.0%
If all the Offered Shares are acquired along with 651,408 additional Shares, the shareholding structure of
the Company following the Public Offering will be as follows:
Shareholder
No of shares
Managerial cadre
No of
General
Meeting
votes
% of
shareholding
structure
2,605,637
2,605,637
40.0%
261,588
261,588
4.0%
New shareholders
3,646,863
3,646,863
56.0%
6,514,088
6,514,088
100.0%
Issue of the C-Series bearer Shares will also occasion a change of the book value per share - from PLN
10.07 PLN before issue of the C-Series Shares to PLN 12.95 PLN following the C-Series Shares issue, as
illustrated by the following table.
Magellan S.A.
Book value (PLN 000s)
No of Shares as at Prospectus Date (units)
Book value per Share (PLN)
Diluted no of Shares***
Diluted book value per Share (PLN)
After CSeries Share
issue*
Before CSeries Share
issue **
84.328
61.171
6,514,088
6,074,088
12.95
10.07
6,514,088
6,074,088
12.95
10.07
* The book value following the issue is the pro forma value designated by increasing the book value as at the end of December 2006 by
projected net proceeds from the C-Series Share issue, given 440,000 new Shares and the Maximum Price.
** As at December 31, 2006.
*** Does not include D-Series Shares issued under the Management Options Programme, as described in detail in sub-point 2 of Chapter
12 – “Description of Activities”.
26
On June 20, 2007, the Issuer’s Extraordinary General Meeting adopted resolution no 4/2007 concerning
definition of the terms of the Management Options Programme to be executed by the Company over the
years 2007-2011, to comprise not more than 390,840 ordinary D-series shares. Details of the Management
Options Programme and the D-series share issue are set out in the chapter entitled “Description of
Activities”. The D-series shares are not included in the shareholding structure of the Company presented in
this Chapter 5.
Intentions of major shareholders and of members of the Issuer’s management, supervisory, or
administrative bodies to take part in the subscription
The intentions of Major Shareholders, Executive Board and Supervisory Board Members, and of members
of other administrative bodies of the Company with respect to participation in subscriptions for C-Series
Shares are as follows.
ENTITY
Intention of subscribing for Shares
covered by the Offering
Yes / No
Intention of acquiring more than 5% of
the Shares offered under subscription
for Shares covered by the Offering
Yes / No
Major Shareholders
No
No
No
No
Executive Board Members
Dariusz Strojewski
Grzegorz Grabowicz
No
No
Krzysztof Kawalec
No
No
No
No
Supervisory Board Members
Dariusz Prończuk
Michał Kornatowski
No
No
Sebastian Król
No
No
Tadeusz Duszyński
No
No
Zdzisław Piekarski
No
No
The information set out in the above table is based on replies to questionnaires by the persons named
above.
The information about exceeding the 5% threshold for A-Series Shares and C-Series Shares is based on the
maximum possible number of offered A-Series Shares and the maximum possible number of issued C-Series
Shares. In the event that the number of A-Series Shares and C-Series Shares is set at a lower level with the
result that the entities named above exceed the 5% threshold for the Offered Shares, the Issuer undertakes
to promptly make an appropriate statement detailing the changes in this respect.
27
CHAPTER 6
1.
EQUITY AND DEBT
Statement re current capital
The Executive Board hereby declares that, as at the Prospectus Date, the Company disposes of appropriate
and sufficient current capital in an amount guaranteeing coverage of current needs over a period of twelve
consecutive months following the Prospectus Date.
2.
Capital resources
As at the Prospectus Date, we dispose of appropriate capital resources which enable us to finance current
operations.
3.
Capitalisation and indebtedness
Unaudited financial data based on the Company’s financial statement as at June 30, 2007 and illustrating its
equity and indebtedness is set out in the following table:
June 30
2007
(PLN 000s)
Total short-term debt
47.772
- Guaranteed
-
- Secured
17.094
Short-term credit
17.094
Liabilities under purchased shares
-
- Not guaranteed / not secured
30.678
Issued short-term bonds
22.320
Commercial liabilities
8.096
Financial leasing
262
Total long-term debt (excluding the current portion of long-term debt)
- Guaranteed
39.933
-
- Secured
-
- Not guaranteed / not secured
39.933
Equity
67.709
Share capital
1.822
Reserve capital
57.654
Profit (loss) from previous years
-
Net profit (loss)
6.350
Contingency capital
1.883
A. Cash
6.869
B. Cash equivalents (specification)
53
C. Securities earmarked for dealing
-
D. Liquidity (A) + (B) +(C)
6.922
E1. Current financial receivables
139.370
From basic activities
136.186
Other receivables
3.185
E2. Long-term financial receivables
8.503
F. Short-term debts with banks
17.094
G. Issued short-term bonds
22.320
H. Other short-term debts
8.915
I. Short-term financial debt (F) + (G) + (H)
48.328
J. Net short-term financial debt (I) - (E) - (D)
(106.467)
28
June 30
2007
(PLN 000s)
K. Long-term bank credit facilities and loans
-
L. Issued bonds
39.933
M. Other long-term bank credit facilities and loans
-
N. Net long-term financial debt (K) + (L) + (M)
39.933
O. Net financial debt (J) + (N)
(66.534)
29
CHAPTER 7
DIVIDEND POLICY
Dividend policy
In the medium-term perspective, the Company’s strategy calls for re-investing all its profits into building up a
financial assets portfolio so as to ensure that the value of the Company increases as quickly as possible.
Accordingly, given that it is planning further investments in its portfolio of financial assets on the medical
market, the Company does not expect to pay out dividends from profits in the years 2007-2008. The
Company does not rule out the possibility, however, that a dividend be paid out of profits for subsequent
years, i.e. beginning with profits for 2009, provided that this does not translate into a negative impact on the
possibility for securing the financing needed for further expansion. At the moment, the Company is no position
to estimate the possible dividends after 2009.
In accordance with art. 347 §1 of the Polish Commercial Companies and Partnerships Code, shareholders are
entitled to partake of the profit specified in the financial report audited by a qualified auditor which has been
earmarked by the general meeting for distribution among the shareholders. The amount to be distributed
among the shareholders may not exceed the profit for the last financial year increased by any undistributed
profits from previous years and by amounts transferred out of any contingency funds and reserve funds
established out of profit which may be used for dividend pay-outs. This amount should be reduced by any
losses not covered, by own shares, and by any amounts which – according to statute or to the company’s
articles – should be earmarked from the profit for the last financial year towards contingency funds and
reserve funds (art. 348 § 1 of the Polish Commercial Companies and Partnerships Code).
Deadline for deciding on dividend pay-outs
Under art. 395 § 2.2 of the Polish Commercial Companies and Partnerships Code, authority to resolve on the
distribution of profits (or the covering of losses) and on a dividend pay-out rests with the general meeting. A
general meeting session should be held within six (6) months following the elapse of each financial year.
Given that the financial year of the Issuer coincides with the calendar year, the General Meeting should be
held by the end of June of each calendar year.
Definition of the means of announcing the dividend pay-out
Information concerning the pay-out of dividends by the Issuer shall be announced in the form of current
statements.
Conditions of dividend pay-outs
The conditions for collection of dividends by shareholders correspond to the usual terms followed by publicly
listed companies. In accordance with art. 348 § 3 of the Polish Commercial Companies and Partnerships
Code, the general meeting of a publicly listed company defines the dividend date and the day of the
dividend’s pay-out. The dividend date may be set for the day of adoption of the relevant resolution or for
another day within the subsequent three (3) months, with due heed for the deadlines defined in the rules
governing operation of Krajowy Depozyt Papierów Wartościowych S.A. with its registered seat in Warsaw, the
national securities deposit.
Entitlement to the dividend for the given financial year extends to shareholders who were entitled to shares
on the dividend date set by the Issuer’s General Meeting as it resolved to pay out a dividend for the given
financial year. The dividend date may be set for the day of such resolution’s adoption or for another day
within the subsequent three (3) months.
The conditions for dividend pay-outs are furthermore defined in accordance the usual terms followed by
publicly listed companies. In accordance with § 91 of the Detailed rules of Operation of Krajowy Depozyt
Papierów Wartościowych S.A. with its registered seat in Warsaw (schedule to the KDPW Executive Board
resolution no 79/98 dated January 29, 1998, as amended), the Issuer must notify Krajowy Depozyt Papierów
Wartościowych S.A. with its registered seat in Warsaw of the dividend per share and of the day on which the
entitled persons (i.e. those with a right to collect the dividend) will be defined – in other words, of the dividend
date and of the dividend pay-out date – promptly, and not later than ten (10) days before the dividend
date, submitting the relevant General Meeting resolution. At least ten (10) days must elapse between
definition of the entitled persons (those with a right to collect the dividend) and the date of the actual
30
dividend pay-out (§ 91.2 of the Detailed rules of Operation of Krajowy Depozyt Papierów Wartościowych S.A.
with its registered seat in Warsaw). The Issuer must consult these dates with Krajowy Depozyt Papierów
Wartościowych S.A. Under § 100a of the Detailed rules of Operation of Krajowy Depozyt Papierów
Wartościowych S.A. with its registered seat in Warsaw, the provisions concerning dividend pay-outs shall apply
mutatis mutandis to payment of advances towards projected dividends although, in this case, the minimum
period which must elapse between the day of the advance towards the projected dividend and the day of
paying out such advance has been set at five (5) days.
In accordance with § 26 of the Rules of Giełda Papierów Wartościowych w Warszawie S.A., as approved in
resolution no 1/1110/2006 of the Giełda Papierów Wartościowych w Warszawie S.A. board on January 4, 2006,
issuers of financial instruments admitted to trading on the exchange must promptly notify the exchange of
their plans concerning issue of financial instruments with respect to which they will be seeking admission to
public trading and of the exercise of rights attaching to financial instruments already listed on the exchange,
and likewise of any decisions made in this respect. Issuers should also consult such decisions with the
exchange insofar as these decisions may impact on the organisation and means of conducting transactions
on the exchange.
Dividend pay-outs out of profits for 2004 - 2006
During the period of December 2003 through October 2004, advance payments towards dividends from
profits for 2004 were made to the shareholder Ms Mariola Błaszkowska in the amount of PLN 150,000 (in 2003,
the advance payment was PLN 40,000). The dividend due for 2004 to the shareholder Polish Enterprise Fund
IV, L.P. in the amount of PLN 159,000 was paid out on January 31, 2005.
Covering of the costs of the capital increase over the years 2004/2005 referred to costs incurred in relation to
increasing the share capital and to soliciting an investor in the amounts of PLN 280,749.29 for 2004, PLN
39,333.85 for 2005, and PLN 39,400.00 for 2006. The costs of increasing the share capital and soliciting an
investor do not refer to the Company’s current activities; rather, they are costs borne by the Owners.
01.01. – 31.12.2006
Net profit for period
01.01. - 31.12.2005
01.01. - 31.12.2004
PLN 11,211,221.41
PLN 9,575,418.38
Covering of capital obtainment and increase costs
PLN 0.00
PLN 39,400.00
PLN 39,333.85
Dividend paid out for the period
PLN 0.00
PLN 0.00
PLN 150,000.00
PLN 159,000.00
PLN 5,284,364.55
Distribution of net profit
Declared dividend
No of shares as at end of period*
Value of dividend per share for the period
PLN 0.00
PLN 0.00
5,812,500
1,395
1,237
PLN 0.00
PLN 28.24
PLN 281.60
*Number of Shares of the Issuer reflecting the change of the nominal value of each Share of the issuer of April 6, 2007.
31
CHAPTER 8
EXCHANGE RATES
To date, practically all the revenues of the Company were realised on the Polish market in PLN. At the same
time, beginning in 2005, the Company began executing contracts in the Czech and Slovak markets. In 2005,
revenues from these two foreign markets accounted for 1.1% of total revenues; for 2006, this figure was 1.7%.
Given that all of the Issuer’s external financing is also denominated in PLN, the Issuer is not exposed to material
foreign exchange risk with respect to its operations.
Exchange rate of the Czech koruna to the Polish złoty
The following table presents the lowest, the highest, and the end-of-period average exchange of the Czech
koruna (CZK) to the Polish złoty. The average exchange rate has been calculated on the basis of the daily
exchange rates announced by the National Bank of Poland.
As at December 31
Average
End of
period
0.1510
0.1420
0.1341
0.1307
0.1403
0.1351
0.1329
0.1308
0.1441
0.1375
0.1393
Low
High
2004
0.1325
2005
2006
(PLN : 1 CZK)
Source: National Bank of Poland
Exchange rate of the Slovak koruna to the Polish złoty
The following table presents the lowest, the highest, and the end-of-period average exchange of the Slovak
koruna (SKK) to the Polish złoty. The average exchange rate has been calculated on the basis of the daily
exchange rates announced by the National Bank of Poland.
As at December 31
Average
End of
period
0,1214
0,1132
0,1053
0,0998
0,1085
0,1043
0,1020
0,1007
0,1118
0,1047
0,1109
Low
High
2004
0,1043
2005
2006
(PLN : 1 SKK)
Source: National Bank of Poland
32
CHAPTER 9
SELECTED FINANCIAL AND OPERATING DATA
The financial and operating data presented below are based on the stand-alone / unconsolidated financial
statements of the Company for the years 2004-2006 and the semi-annual stand-alone financial statements for
the period ended June 30, 2007 prepared according to the International Financial Reporting Standards (IFRS)
as approved by the European Union. The Company does not prepare consolidated financial statements.
Until the end of 2006, the Company prepared its financial statements in accordance with the Polish
accounting policies set forth in the legislative Act regarding accountancy.
The financial statements of the Company to be subsequently published will be prepared in accordance with
the International Financial Reporting Standards.
For purposes of this Prospectus, the financial statements prepared in accordance with the Polish accounting
standards have been restated to comply with the policies consistent with the International Financial Reporting
Standards. In order to correctly prepare the financial statements for the purposes of this Prospectus, in
accordance with IFRS 1, the date of transition to the IFRS has been set for January 1, 2004.
We would like to emphasize that this review should be analyzed in conjunction with unabridged stand-alone
financial statements disclosed in Chapter 24 of this Prospectus.
The financial statements for the years 2004, 2005 and, in connection with the transformation of the limited
liability company Magellan Sp. z o.o. into the joint-stock company Magellan S.A., for the periods from January
1, 2006 to September 7, 2006 and from September 8, 2006 to December 31, 2006, prepared in accordance
with the Polish Accounting Act, as well as the financial statements for the years 2004-2006 restated in
accordance with the International Financial Reporting Standards for the purposes of this Prospectus, have
been audited by Deloitte Audyt Sp. z o.o. with its registered seat at ul. Piękna 18, 00-549 Warsaw.
The stand-alone financial statements for the years 2004-2006 prepared in accordance with the IFRS have
been audited by certified auditors acting for, and on behalf of, Deloitte Audyt Sp. z o.o.: Ms Marzena Libsz,
licensed qualified auditor reg. no. 9869/7350, Ms Maria Rzepnikowska, licensed qualified auditor auditor reg.
no. 3499/1028 as well as Mr Piotr Sokołowski, licensed qualified auditor reg. no. 9752/7281.
The semi-annual stand-alone financial statements of the Issuer for the period of 6 months ended June 30, 2007
have not been audited.
The Issuer has not disclosed any forecasts of its financial performance in the Prospectus, nor made such
forecasts public in any other manner whatsoever.
Selected financial and operating data of Magellan S.A.
June 30
December 31
Summary of operating data
2004
2005
2006
2006
2007
(PLN 000s)
Contracted financial assets reported on the balance
sheet*
Value of financial assets portfolio held at year-end**
Off-balance-sheet portfolio value at year-end***
Receipts, fees and equivalent proceeds****
96,572
121,713
219,557
90,767
122,867
67,875
76,842
129,663
82,781
144,333
13,896
26,164
66,844
58,913
68,790
100,409
119,759
135,945
67,811
86,155
* Contracted financial assets disbursed in a given period reflect the operating activity of the Company in terms of sales. Disbursed
contracted financial assets reported on the balance sheet stand for financial assets that are reported under the Company’s assets during
respective periods as a result of executed contracts (loans, financing of receivables, refinancing of liabilities, factoring, guarantees). Owing
to the operating nature of data concerning contracted financial assets reported on the balance sheet disbursed in a given reporting
period and absence of an adequate standard of presentation of such data in the financial statements, these data have not been audited
by the qualified auditor.
** The value of the financial assets portfolio comprises novation agreements (new agreements between a creditor and the Company
whereunder a mature receivable is rescheduled for repayment at a future date) with a set financial services repayments schedule,
receivables without a set repayments schedule, and receivables under extended loans.
33
*** Off-balance sheet portfolio value – value of sold guarantee limits addressed to suppliers of goods and services for which the Company
has not given any scurity, but in case of which the term of the framework contract has not expired.
**** Receipts, fees and equivalent proceeds comprise turnover on the portfolio held (excluding receipts from loans where revenue is
derived exclusively from fees or interest) as well as revenue from fees and interest classified as falling within core business activity. This item is
presented in order to provide a better description of the nature and scale of the Company’s business.
In
Summary of financial data
Semi-annual period of
2005
2004
2006
2006
2007
(PLN 000s)
Sales revenue
Consumption of raw materials and consumables
18,015
20,608
24,042
10,999
14,967
192
202
180
88
99
Employee benefit expense
3,733
4,531
4,738
2,160
2,497
Depreciation/Amortization
508
642
770
489
198
Costs of advisory services
1,168
963
650
366
115
Other costs
6,372
2,587
4,047
1,517
3,994
Operating profit
6,042
11,683
13,657
6,379
8,065
40
(286)
(150)
18
(86)
244
247
75
50
37
Other operating profits and losses
Finance income
Finance costs
258
196
105
42
30
6,068
11,448
13,477
6,405
7,986
Income tax
1,225
2,382
2,775
1,393
1,636
Net profit (loss)
4,843
9,066
10,702
5,012
6,350
Net profit (loss), excluding valuation of management
share option*
5,284
9,575
11,211
-
-
Earnings (loss) per share (in PLN per one share)**
0,96
1,58
1,84
0,86
1,09
Diluted earnings (loss) per share (in PLN per one share)**
0,96
1,58
1,84
0,86
1,09
* Net profit (loss) adjusted for the valuation of the management share option program is more comprehensively described in Note 38 of the
Company’s Financial Statements
** Including only A-Series Shares
In
2004
2005
2006
(PLN 000s)
Revenue from receivables’ financing services (discount, fees, interest)
Revenue from granted loans (fees, interest)
Revenue adjudicated by court (adjudicated court fees received, interest from the
date of the statement of claim)
Revenue from provision of surety (fees, interest)
14,381
15,281
14,652
-
189
4,854
3,196
3,384
1,738
40
980
1,706
Revenue from payables refinancing services (fees, interest)
-
16
287
Revenue from factoring services(fees, interest)
-
136
252
Revenue from other services (fees, interest)
Total sales revenue
398
622
553
18,015
20,608
24,042
The above table presents revenue as broken down into products with allocated interest income derived from
individual categories of assets that generate revenue for the Company. The statements appended to the
Prospectus present sales revenue as broken down into products, with the exclusion of interest income in a
separate revenue item.
Semi-annual period
In
2004
2005
2006
2006
2007
(PLN 000s)
3,733
4,531
4,738
2,160
2,497
Depreciation
508
642
770
489
198
Outsourced and other services
601
472
733
-
-
1,168
963
650
366
115
534
437
359
-
-
Taxes and charges
34
192
202
180
88
99
Other costs
3,147
2,332
3,047
1,517
3,994
Operating expense before revaluation write-down of
portfolio and provisions
9,883
9,579
10,477
4,620
6,903
Revaluation write-down of portfolio and provisions
2,090
(654)
(92)
-
-
11,973
8,925
10,385
4,620
6,903
Total operating expense
As at June 30
As at December 31
2005
2004
2006
2006
2007
(PLN ‘000)
Fixed assets
5,473
6,669
11,623
14,406
10,688
Property, plant and equipment
1,720
521
468
635
486
513
395
233
301
221
10
20
10
20
38
Other intangible assets
Investments in subsidiaries, affiliates and associated
companies
Deferred tax assets
Other financial assets
Current assets
Trade and other receivables
489
512
1,239
697
1,440
2,741
5,221
9,673
12,753
8,503
71,081
76,625
126,807
82,707
147,100
325
333
653
1,247
501
65,134
71,621
119,990
70,028
135,830
-
-
3,185
-
3,185
83
34
55
46
663
5,539
3,827
2,924
11,386
6,922
-
810
-
-
-
76,554
83,294
138,430
97,113
157,788
Tax receivables
Other assets
Cash and cash equivalents
Fixed assets classified as held for sale
Total assets
As at June 30
As at December 31
2005
2004
2006
2006
2007
(PLN ‘000)
Shareholders’ equity
40,463
49,999
61,171
55,225
1,546
1,744
1,744
1,744
1,822
28,613
38,681
48,217
48,216
57,654
Reserves
5,777
1,265
1,774
1,517
1,883
Profit (loss) carried forward
4,527
8,309
9,436
3,748
6,350
1,303
1,107
1,074
1,112
40,648
Share capital
Supplementary capital
Long-term loans and bank borrowings
67,709
16
-
-
-
-
Other financial liabilities
769
477
367
476
39,779
Deferred tax provision
518
630
707
636
868
35
34, 788
32,188
76,185
40,776
49,431
31,829
17,836
30,082
19,828
8,552
1,958
3,532
15,757
3,000
17,094
465
10,385
29,095
17,060
22,766
Current tax liabilities
70
125
669
332
701
Short-term provisions
-
-
-
169
18
466
310
582
387
300
76,554
83,294
138,430
97,113
157,788
Trade and other payables
Short-term loans and bank borrowings
Other liabilities
Total shareholders’ equity and liabilities
Semi-annual period
In
2004
2005
2006
2006
2007
(PLN ‘000)
Net cash flows from operating activities
Net cash flows from investing activities
(355)
(12,354)
(32,002)
798
(30,513)
307
(177)
694
665
(41)
Investment expenditure
(654)
(228)
(212)
(209)
(65)
Net cash flows from financing activities
2,600
10,818
30,405
6,096
34,551
Net cash flows
2,551
(1,713)
(902)
7,560
3,997
Balance-sheet change in cash and cash equivalents
2,551
(1,713)
(902)
7,560
3,997
Cash and cash equivalents at beginning of period
2,988
5,539
3,827
3,827
2,924
Cash and cash equivalents at end of period
5,539
3,827
2,924
11,386
6,922
36
CHAPTER 10
ANALYSIS OF FINANCIAL STANDING, PERFORMANCE AND DEVELOPMENT PROSPECTS
The financial and operating data presented below are based on the stand-alone financial statements of the
Company for the years 2004-2006 and the semi-annual stand-alone financial statements for the period ended
June 30, 2007 prepared according to the International Financial Reporting Standards (IFRS) as approved by
the European Union.
Until the end of 2006, the Company prepared its financial statements in accordance with the Polish
accounting policies set forth in the legislative Act regarding accountancy. The Company was not obliged to
prepare, and consequently did not prepare, consolidated financial statements.
The financial statements of the Company to be subsequently published will be prepared in accordance with
the International Financial Reporting Standards.
Therefore, for the purposes of this Prospectus, the financial statements prepared in accordance with the
Polish accounting policies have been restated to comply with the policies consistent with the International
Financial Reporting Standards. In order to correctly prepare financial statements for the purposes of this
Prospectus, in accordance with IFRS 1, the date of transition to the IFRS has been set for January 1, 2004.
We wish to emphasize that this review should be analyzed in conjunction with unabridged stand-alone
financial statements disclosed in Chapter 24 of this Prospectus.
The financial statements for the years 2004, 2005 and, in connection with the transformation of the limited
liability company Magellan Sp. z o.o. into the joint stock company Magellan S.A., for the periods from January
1, 2006 to September 7, 2006 as well as from September 8, 2006 to December 31, 2006, have been audited by
Deloitte Audyt Sp. z o.o. with its registered seat at ul. Piękna 18, 00-549 Warsaw.
The semi-annual stand-alone financial statements of the Issuer for the period of 6 months ended June 30, 2007
have not been audited.
1. Summary
When analyzing financial data of the Issuer, it should be pointed out that the Company is a financial
institution and the system it applies for purposes of presenting its financial results complies with IFRS and covers
typical components correctly describing the Company’s business model:
−
Revenue comprises revenue from discount and fees determined at each balance-sheet date
according to the amortized cost method;
−
Interest income on the asset portfolio held is presented under sales revenue within core business
activity and comprises received and accrued interest. Interest accrues by reference to the amount
of outstanding capital, at the effective interest rate, i.e. the rate effectively discounting future cash
receipts estimated to be obtained throughout the expected useful life of an asset component up to
the net carrying amount of that component;
−
Revenue from fees on surety given is generated in the form of starting fee and handling fee. The
starting fee is charged for allocation of a limit available to a supplier; within this limit the supplier is
authorized to request the Company to make a payment to the debtor in consequence of its failure
to settle the outstanding payment. The starting fee for allocating such limit is settled over time, pro
rata to the term of the executed surety agreement. The handling fee is charged in the event of a
claim and disbursement of funds by the Company to the supplier. A claim results in a liability being
reported on the Company’s balance sheet. This fee is reported in the income statement as an
element of valuation using the effective interest rate method;
−
Revenue from fees on loans is reported in the income statement according to the effective interest
rate throughout the term of the agreement;
−
Revenue from adjudicated court fees and interest concerns amounts derived on this account.
37
The objective of the above breakdown is to clearly differentiate revenue relative to core business activity,
ensuing from the nature of the Company’s business, from other sources of revenue generated by the
Company. As a result of the adopted method of presentation, interest on bank borrowings incurred to
finance the Company’s core business activity is not excluded from the operating activities of the cash
flow statement.
In order to better present the volume of executed transactions, the value of sales / turnover are depicted
according to the value of “receipts, fees and equivalent proceeds”, i.e. turnover on the financial assets
portfolio held (excluding receipts from loans with revenue derived exclusively from fees and interest) as
well as fees and interest revenue classified under core business activity.
Furthermore, another crucial parameter that correctly defines the turnover intensity in a given year is the
value of contracted individual products, i.e. the volume of sales of financial instruments reported on the
Company’s balance sheet as well as the value of contracted products reported off-balance sheet in a
given year, reported at cost/nominal value of the instrument.
The cash flow statement with negative flows from operating activities and positive flows from financing
activities depicts a continuous growth in the value of asset portfolio held and a necessity to ensure
appropriate financing. In line with the standards of presentation of individual items adopted by the
Company, interest revenue and expense that form an integral part of the Company’s operating activities
has not been excluded from operating activities.
Sales revenue, EBITDA profit, net profit and value of contracted products reported on the balance sheet,
shareholders’ equity and value of Magellan portfolio in the years 2004-2006 (in PLN 000s)
250,00
250.00
0
30.000
30,000
24.042
24,042
25,000
.000
20.000
20,000
20,60
20.60
8
18,01
18.01
5
10.000
10,000
5,00
5.00
0
200,00
200.00
0
33,5
%
14.427
14,427
15.000
15,000
12.325
12,325
6,55
6.55
4.843
4,843
0
10,70
10.70
2
9.06
6
121,0
121.0
%
219,55
219.55
7
150,00
150.00
0
100,00
100.00
0
50.000
50,000
96.57
2
67.87
67,87
4
5
40.463
40,463
13,89
13.89
6
0
0
2004
Sales
revenue
2005
EBITD
A
200
6
Net profit
127,4
127.4
%
121,71
121.71
3
129,66
129.66
3
76.841
76,842
49.999
49,999
26,16
26.16
4
66.844
66,844
61,17
61.17
1
2004
2005
2006
Kontraktacjaproducts
bilansowa
Wartość portfela
Contracted
reported
Portfolio
on the balance sheet
value
Kapitały własne
Shareholders’
Wartość portfela portfolio
Off-balance-sheet
equity
pozabilansowa
value
Source: the Company
The Company’s financial and operating condition in the years 2004-2006 was affected by the following
factors:
−
Dynamic growth in sales up to PLN 24.042 million in 2006 (increase by 33.5% against 2004)
−
Average annual growth in sales revenue (CAGR) by 15.5% in the years 2004-2006
−
Considerable increase in operating profit EBITDA by 120.3% in 2006 against 2004
−
Substantial growth in net profit up to PLN 10.702 million in 2006, which translates into a 121.0% rise as
compared to 2004
−
Average annual growth in net profit (CAGR) in the years 2004-2006 by 48.7%
−
Significant growth in the value of contracted products reported on the balance sheet up to
PLN 219.557 million in 2006, which translates into the 127.4% growth against 2004
−
Growth in Return on Equity (ROE) in 2006 up to 19.3%, as well as in Return on Assets (ROA) up to 9.7%
38
−
High net profit margin at the level of 44.5% in 2006 (net profit margin on receipts, fees and equivalent
proceeds at the level of 7.9%)
−
Growth in the Company’s external financing connected with high commitment of the Company in
solicitation of new contracts
−
Prevailing share of current assets in the balance sheet total (91.6% in 2006)
Revenue structure
In the years 2004-2006, the Issuer’s sales revenue was on the rise year in year out, and reached PLN 24.042
million in 2006 (increase by 14.4% in 2005 and 16.7% in 2006, respectively). The dynamic increase in the Issuer’s
revenue was a consequence of the fact that the Company skilfully capitalised on changes occurring on the
medical services market which involved an increased need of the medical sector for new forms of financing
and apt expansion of the scope of the Company’s business to cover new market segments (financing of
current and future receivables). Consequently, this has brought about a considerable rise in the value of
contracted products and asset portfolio of the Company, which was mirrored in the Issuer’s sales revenue. It
merits pointing out that the value of contracted products reported on the balance sheet in current business
activities results in an increase in the value of financial assets portfolio which translates subsequently into the
Company’s revenue in the current and subsequent periods.
In
2004
2005
2006
2006
2007
(PLN 000s)
sheet
96,572
121,713
219,557
90,767
122,867
Value of financial assets portfolio at end of period
67,875
76,842
129,663
82,781
144,333
Off-balance sheet portfolio value at end of period
13,896
26,164
66,844
58,913
68,790
100,409
119,759
135,945
67,811
86,155
18,015
20,608
24,042
10,999
14,967
Receipts, fees and equivalent proceeds
Sales revenue
When analyzing the above table, it should be considered that the Company, i.e. a financial institution, is
subject to specific mandatory rules applicable to presentation of financial assets, both in terms of balance
sheet items and generated revenue.
The Company classifies financial assets presented on the balance sheet as bank borrowings and receivables.
Individual items of financial assets are correctly valuated at each balance sheet date, as described in the
notes to the financial statements attached to this Prospectus.
In the semi-annual period of 2007, the value of contracted financial assets amounted to PLN 123 million, and
went up by 35.4% against the semi-annual period of the preceding year. The growth in contracted financial
assets was reflected in an increase in the value of portfolio which stood at PLN 144 million at the end of the
semi-annual period of 2007. In the semi-annual period of 2007, the value of revenue reached PLN 14.9 million
and grew by 36.1% as compared to the corresponding period of the preceding year.
The rise in the Issuer’s revenue resulted from a substantial growth in the value of contracted products reported
on the balance sheet (sale of financial products), which amounted to PLN 219.6 million in 2006 and rose by
80.4% against 2005, and a growth in the turnover ratio of the financial assets portfolio held. In 2005, the value
of the Company’s contracted products reported on the balance sheet totalled PLN 121.7 million, while in
2006 it stood at the level of PLN 96.6 million. The growth in sales was mirrored in the value of the Company’s
portfolio which reached PLN 129.7 million in 2006 and went up by 68.7% against 2005. In 2005, the value of the
Issuer’s portfolio amounted to PLN 76.8 million, while in 2004 it reached PLN 67.8 million.
In
Profitability
2004
2005
2006
2006
2007
(in %)
33.5%
39
56.7%
56.8%
58.0%
53.9%
Operating margin on receipts, fees and equivalent
proceeds
6.0%
9.8%
10.0%
9.4%
9.4%
-
Operating margin on sales – operating profit /sales revenue
-
Operating margin on receipts, fees and equivalent proceeds – operating profit / revenue from receipts, fees and equivalent proceeds
In the semi-annual period of 2007, the Company’s profitability remained at a high level, its operating margin
on sales reached 53.9% while the operating margin on receipts, fees and equivalent proceeds stood at 9.4%.
A negligible decline in the margin in the semi-annual period of 2007 as compared to 2006 resulted from the
fact that the Company entered new market segments and increased the value of contracted products and,
therefore, performs contracts providing for a slightly lower operating margin.
The table with profitability ratios indicates that in the analyzed period (2004-2006) the operating margin on
sales remains at a high level and goes up year after year. In 2006, the operating margin on sales reached
56.8%, in 2005 the margin was at the level of 56.7%, while in 2004 it stood at 33.5%. The low margin in 2004 was
a consequence of higher operating expenses of the Company that totalled PLN 11.973 million as compared
to PLN 8.925 million in 2005. Higher level of operating expenses incurred by the Issuer in 2004 was an outcome
of a revaluation write-down of the portfolio of held financial assets at the level of PLN 2.015 million created by
the Company to account for the effects of the legislative Act regarding restructuring of debt of independent
public health care institutions of April 15, 2005.
In
2004
2005
2006
(PLN 000s)
Revenue from receivables’ financing services (discount, fees, interest)
Revenue from granted loans (fees, interest)
Revenue adjudicated by court (adjudicated court charges received, interest from
the date of the statement of claim)
Revenue from provision of guarantees (fees, interest)
Revenue from payables refinancing services (fees, interest)
Revenue from factoring services (fees, interest)
Revenue from other services (fees, interest)
Total sales revenue
14,381
15,281
14,652
-
189
4,854
3,196
3,384
1,738
40
980
1,706
-
16
287
-
136
252
398
622
553
18,015
20,608
24,042
Receivables’ financing services contributed the largest share to sales revenue generated in 2006. Sales
revenue derived from these services reached PLN 14.652 million, accounting for 60.9% of total sales revenue.
In 2005, the Company generated revenue from receivables financing in the amount of PLN 15.281 million and
reported a growth in this item by 6.3% as compared to the preceding year. Considering that the cycle of
performance of a receivables financing contract lasts for about 12 months, this growth resulted, first and
foremost, from high value of contracted sales of this product in 2004 – 111% against 2003. The increase in the
value of contracted products in 2004 translated into a significant rise in revenue from the sale of the product
concerned in 2005. In 2005, the share of revenue from receivables financing was 74.2%, while in 2004 it stood
at 79.8% of total sales revenue.
Revenue from loans reached PLN 4.854 million in 2006 and went up more than twenty times as compared to
the preceding year. Such a dramatic growth in revenue reported in 2006 was brought about by the
introduction of the “loan” product in Q1 2006 and commencement of regular sales in response to a change
in market liquidity and higher involvement of the Issuer in current financing.
Similarly, the year 2006 witnessed a high growth in revenue from guarantees, which totalled PLN 1.706 million
in 2006 and rose over 1.7 times as compared to the preceding year. Introduced in 2004 and sold regularly
throughout 2005, the “guarantee” product is based on the structure of assurance / guarantee, as regulated
by the Polish Civil Code. The value of contracts for this product gradually rises, and so does revenue from sales
in the form of fees for limit allocation and handling fees for providing surety and aggregation of generated
assets on the Company’s balance sheet. Growth in revenues from guarantees in 2006 resulted from higher
involvement of the Company in financing current and future activities of entities operating on the medical
market. The “guarantee” product attracted wide interest among suppliers to hospitals who thus gained
assurance that their receivables will be collected from hospitals in due time.
40
In 2006, revenue adjudicated by court totalled PLN 1.738 million and declined by 48.6% as compared to the
preceding year, which resulted from a lower number of court litigations initiated by the Company starting
from the last quarter of 2005. In 2004, the number of litigations to which the Issuer was a party totalled 139 and
went down to 15 in 2006. The drop in revenue adjudicated by court was a result of timely payment of
hospitals liabilities towards the Issuer which, therefore, did not require the Company to enforce payment of its
receivables in court. This results from the business model adopted by the Company which is based on partnerlike relations with its contracting parties (hospitals, hospitals’ suppliers). The amount of payments to be
effected by hospitals to discharge of their liabilities is determined in such a manner so that the amount is
individually adjusted to their financial capacity. Consequently, hospitals pay off their liabilities towards the
Issuer according to an agreed time schedule. Revenue adjudicated by the courts comprises received
revenue from adjudicated court costs, refund of court fees as well as interest received as from the date of
filing a statement of claim by the Company.
Revenue from payables refinancing was at the level of PLN 287,000 in 2006 and PLN 16,000 in 2005. Increase in
revenue from payables refinancing resulted from launching regular sales of this product in 2006.
Revenue from factoring reached PLN 252,000 in 2006, i.e. it grew by 85.3% as compared to the preceding
year. The “factoring” product was introduced to regular sales in 2006, which explains more than 85% growth in
revenue from its sales.
Revenue from other services was at the level of PLN 553,000 and comprised revenue from fees on nonstandard products (other financial services), revenue from related companies (space rental and other
services).
Cost structure
In
2004
2005
2006
2006
2007
(PLN 000s)
3,733
4,531
4,738
2,160
2,497
Depreciation
508
642
770
489
198
Outsourced and other services
601
472
733
-
-
1,168
963
650
366
115
Taxes and charges
534
437
359
-
-
192
202
180
88
99
Other costs
3,147
2,332
3,047
1,517
3,994
Operating expense before revaluation write-down of
portfolio and provisions
9,883
9,579
10,477
4,620
6,903
Revaluation write-down of portfolio and provisions
Total operating expense
2,090
(654)
(92)
-
-
11,973
8,925
10,385
4,620
6,903
In the semi-annual period of 2007, operating expense totalled PLN 6.903 million, which translates into an
increase by 49.4% as compared to the corresponding period of the preceding year. The increase was
brought about mainly by a rise in other costs comprising costs of portfolio financing. In the semi-annual period
of 2007, the Company launched a medium-term bond issue program worth PLN 70 million and by June 30,
2007 issued bonds valued PLN 39 million under the said program. Such a considerable growth in external
financing was reflected in costs of portfolio financing. In the semi-annual period of 2007, costs of portfolio
financing totalled PLN 2.2 million and were by PLN 1.7 million, i.e. 305% lower than the corresponding cost in
the semi-annual period of 2006.
In 2004, costs of operating activities were at the level of PLN 9.883 million, and declined slightly to PLN 9.579
million in 2005. In 2006, the Issuer’s operating expenses grew by 9.4%, up to PLN 10.477 million. A detailed
analysis of changes in individual costs items of the Issuer is described in paragraphs to follow.
The growth in the Issuer’s operating expenses in 2006 resulted predominantly from a rise in other costs,
comprising costs of interest and fees relative to the bond issue that totalled PLN 1.428 million and went up by
63.4% as compared to 2005 due to higher contribution of this source in the financing of the Company’s
41
activities. The issue of bonds by the Issuer’s was triggered by the need for capital to finance investments in the
financial assets portfolio.
During the analysed period covering the years 2004-2006, employee benefit expense rose systematically.
In 2006, this expense item reached PLN 4.738 million, which means growth by 26.9% against 2004. The growth
in employee benefit expenses in the analysed period was, first and foremost, a result of higher employment.
Employee benefit expenses accounted for 45.2% of total operating expenses of the Company in 2006.
In 2006, costs of depreciation/amortization were at the level of PLN 770,000 and grew by 19.9% as compared
to the preceding year. In 2005, costs of depreciation/amortization rose by 26.4% against 2004 and reached
PLN 642,000. Systematic growth in these costs reported in the analyzed period resulted from expansion of
transportation fleet.
In 2006, costs of outsourced services were at the level of PLN 733,000, accounting for 7.0% of total operating
expenses. The growth in the costs of outsourced services in 2006 was brought about by recognition of rent for
rented office space in this cost category following a change in the Company’s registered seat in March 2006.
In preceding years, this cost item was non-existent since the Company’s registered address was located in a
real property owned by the Company.
A positive phenomenon has been reported in the Issuer’s structure of costs, i.e. a regular decline in the cost of
advisory services, which totalled PLN 650,000 in 2006 and went down by 44.3% against 2004. Declining cost of
advisory services was an outcome of a diminishing number of lawsuits instituted before courts, reflected in the
costs of legal representation. Court fees went down because hospitals’ liabilities towards the Issuer were
repaid in a timely manner and, consequently, the Company’s receivables did not have to be collected in
court proceedings and, therefore, no additional cost of legal representation was incurred. This results from the
business model adopted by the Company which is based on partner-like relations with its contracting parties
(including hospitals). The amount of payments to be effected by hospitals to discharge of their liabilities is
determined in such a manner so that the amount is individually adjusted to their financial capacity.
Consequently, hospitals pay off their liabilities towards the Issuer according to an agreed time-schedule.
Moreover, costs of taxes and charges are seen to be going down year after year (2004-2006). Lower costs of
taxes and charges in 2006 are attributable to the fact that, following a change of its registered address, the
Company ceased to pay the real property tax.
In 2004 the Company made a revaluation write-down of portfolio of financial assets held at the level of
PLN 2.015 million as a result of implementation and execution of the legislative Act regarding restructuring of
debt of independent public health care institutions of April 15, 2005. The revaluation write-down made
reflected the estimated risk of future loss of some gains on turnover of financial assets reported on the
balance sheet. The estimated risk and adopted amount of the revaluation write-down factored in the level of
knowledge and predictions of the Executive Board concerning the course of restructuring and, therefore,
ultimate financial effects of provisions of the law implemented in May 2005 could not be fully defined. As at
December 31, 2005 the Company revaluated its financial instruments taking into account the credit risk and
reduced the amount of the revaluation write-down on account of the Restructuring Act down to PLN 826,000.
As at December 31, 2006 the revaluation write-down on account of the Restructuring Act was reduced down
to PLN 110,000, which matches the credit risk relative to assets held.
Operating expense before revaluation write-down/sales revenue of Magellan in the years 2004-2006
42
60.0%
54.9%
46.5%
50.0%
43.6%
40.0%
30.0%
20.0%
10.0%
0.0%
2004
2005
2006
Source: the Company
The efficiency ratio expressed as a ratio of operating expense to total sales revenue goes down year after
year, reaching 43.6% in 2006. In 2004, the ratio of the Issuer’s operating efficiency stood at 54.9%, while in 2005
this ratio dropped to 46.5%. The drop in this ratio during the analysed period was an outcome of the
application by the Company of an operating leverage, as a result of which the growth in the value of the
Issuer’s contracted products to a much lesser extent entails a rise in operating expense. During the analysed
period covering the years 2004-2006, the growth in the Company’s operating expense before revaluation
write-down stood at 6.0%, whilst the value of contracted products rose by 127.4%, as described in detail in the
preceding paragraphs.
Profitability analysis
In
2004
2005
2006
2006
2007
(PLN 000s)
sheet
% growth rate
Value of financial assets portfolio held at year end
% growth rate
Off-balance-sheet portfolio value at year end
% growth rate
Receipts, fees and equivalent proceeds
96,572
121,713
219,557
90,767
122,867
12.4%
26.0%
80.4%
54.1%
35.4%
67,875
76,842
129,663
82,781
144,333
2.3%
13.2%
68.7%
8.8%
74.4%
13,896
26,164
66,844
58,913
68,790
-20.4%
88.3%
155.5%
115.9%
16.8%
100,409
119,759
135,945
67,811
86,155
% growth rate
38.4%
19.3%
13.5%
27.0%
27.1%
Sales revenue
18,015
20,608
24,042
10,999
14,967
% growth rate
7.6%
14.4%
16.7%
12.1%
36.1%
Operating expense
11,973
8,925
10,385
4,620
6,903
% growth rate
17.0%
-25.5%
16.4%
10.0%
49.4%
Operating profit (loss)
6,042
11,683
13,657
6,379
8,065
33.5%
56.7%
56.8%
58.0%
53.9%
6.0%
9.8%
10.0%
9.4%
9.4%
Gross profit (loss)
6,068
11,448
13,477
6,405
7,986
Gross profit margin
33.7%
55.6%
56.1%
58.2%
53.4%
Operating margin on receipts, fees and equivalent
proceeds
Net profit (loss)
4,843
9,066
10,702
5,012
6,350
Net profit margin
26.9%
44.0%
44.5%
45.6%
42.4%
4.8%
7.6%
7.9%
7.4%
7.4%
Return on Equity
13.6%
20.0%
19.3%
-
-
Return on Assets
6.5%
11.3%
9.7%
-
-
Net profit margin on receipts, fees and equivalent
proceeds
Profitability was assessed based on the following ratio defined below:
-
Operating margin on sales – operating profit / sales revenue
-
Operating margin on receipts, fees and equivalent proceeds – operating profit / receipts, fees and equivalent proceeds
-
Gross profit margin - gross profit / sales revenue
-
Net profit margin - net profit / sales revenue
43
-
Net profit margin on receipts, fees and equivalent proceeds – net profit / receipts, fees and equivalent proceeds
-
Return on Equity - net profit /average annual value of shareholders’ equity
-
Return on Assets - net profit /average annual value of assets
In the semi-annual period of 2007, operating profit went up to PLN 8.065 million, while the operating margin on
sales stood at 53.9%. Net profit reached PLN 6.350 million and grew by 26.7% as compared to the semi-annual
period of the preceding year. Net profit margin stood at 42.4%, while net profit margin on receipts, fees and
equivalent proceeds at 7.4%.
In 2006, the Issuer generated sales revenue of PLN 24.042 million, which translates into a revenue growth by
16.7% as compared to 2005. Such a growth in sales was brought about predominantly by revenue derived
from loans, generated thanks to the introduction of this product in response to a considerable need that
hospitals demonstrated for current financing products. Operating profit reached PLN 13.657 million and rose
by 16.9% as compared to the preceding year. Margin on operating activity stood at 56.8%. In 2006, the
Issuer’s net profit totalled PLN 10.702 million, while net profit margin grew to 44.5%. Operating margin on
receipts, fees and equivalent proceeds went up to 10,0%, while net profit margin on receipts, fees and
equivalent proceeds up to 7.9% owing to a considerable growth in the Company’s profits (increase in the
operating profit by 56.8%, growth in net profit by 44.5%), accompanied by a rise in receipts, fees and
equivalent proceeds by 13.5%.
In 2005, the Company reported a growth in sales revenue by 14.4% as compared to the preceding year. This
growth was, first and foremost, attributable to revenue derived from guarantees – sales of this product
intensified during the analyzed period. Demand for the offered service resulted from increased demand
among suppliers for hedging instruments to secure timely payment of trade receivables. Operating profit was
at the level of PLN 11.683 million; gross profit totalled PLN 11.448 million, while net profit reached PLN 9.066
million. In 2005, the Company markedly improved its profitability ratios as compared to the preceding year.
Margin on operating activity grew to 56.7%, while net profit margin went up to 44.0%. Operating margin on
receipts, fees and equivalent proceeds went from 6.0% in 2004 up to 9.8% in 2005, and net profit margin on
receipts, fees and equivalent proceeds rose from 4.8% to 7.6% during the corresponding period. Increase in
profitability in 2005 resulted chiefly from a 93.4% growth in operating profit and from a 87.2% rise in net profit as
compared to the preceding year. Growth in operating profit and net profit in 2005 was predominantly an
outcome of growth in sales revenue by 14% against 2004 and a simultaneous decline in costs of operating
activity by 25%. The growth of the Issuer’s margins in 2005 results from a rise in sales revenue by 14.4% and a
decline in operating expense as compared to 2004, which is described in detail in preceding paragraphs. The
decline in operating expense of the Issuer is attributable chiefly to the release of the portfolio revaluation
write-down as well as to lower court fees following from a reduced number of lawsuits before court.
In 2004, operating profit was at the level of PLN 6.042 million, while the Company’s gross profit totalled
PLN 6.068 million. Margin on operating activity stood at 33.5%, while gross profit margin at 33.7%. Net profit
generated by the Company amounted to PLN 4.843 million, and net profit margin reached 26.9%.
Net profit of Magellan SA in the years 2004-2006 (PLN 000s)
12,000
10,702
10,000
9,066
18.0%
8,000
87.2%
6,000
4,843
4,000
2,000
0
2004
2005
44
2006
Source: the Company
In 2004, Return on Equity (ROE) reached 13.6%, while Return on Assets (ROA) stood at 6.5%. The year 2005 saw
a considerable improvement of profitability as compared to the preceding year, which resulted from a
significant growth in net profit by 87.2%. Return on Equity went up to 20.0% while Return on Assets grew to
11.3%. In 2006, equity and assets profitability ratios declined slightly by continue to remain at a high level. ROE
stood at 19.3% and ROA at 9.7%.
Balance sheet total, shareholders’ equity and assets
As at June 30
As at December 31
2004
2005
2006
2006
2007
( PLN 000s)
Fixed assets, including:
5,473
6,669
1,720
489
Deferred tax assets
Current assets, including:
11,623
14,406
521
468
635
486
512
1,239
697
1,440
2,741
5,221
9,673
12,753
8,503
71,081
76,625
126,807
82,707
147,100
325
333
653
1,247
501
65,134
71,621
119,990
70,028
135,830
-
-
3,185
-
3,185
Tax receivables
Total assets
10,688
5,539
3,827
2,924
11,386
6,922
76,554
83,294
138,430
97,113
157,788
In the semi-annual period of 2007, the balance sheet total amounted to PLN 157.788 million and went up by
62.5% as compared to the semi-annual period of 2006 and by 14.0% as compared to the end of 2006. A
considerable growth in the balance sheet total was attributable to an increase in current assets up to
PLN 147.100 million as a result of high value of contracted products in the semi-annual period of 2007 – by 35%
higher than in the corresponding period of 2006.
The Company reported a significant growth in the balance sheet total by 80.8%, from PLN 76.554 million in
2004 to PLN 138.430 million in 2006, following predominantly from expansion of portfolio of fixed and current
financial assets (growth in the financial assets portfolio). The growth in the portfolio value was, first and
foremost, brought about by intensified activity of the Company on the market which contributed to a growth
in the number of contracts signed by the Issuer for provision of financial services to both hospitals and hospital
suppliers. Increase in the number of contracts executed by the Issuer during the analyzed period covering the
years 2004-2006 resulted from a dynamic development of the Company, improving familiarity with the market
as well as establishment and maintenance of partner relations with contracting parties. As the Company
developed, it was able to offer to its contracting parties products that were progressively custom-tailored to
their needs. The Company’s market position strengthened and the Company established long-term relations
with numerous contracting partners, which in turn allowed the Company to increase both the value and
number of executed contracts.
Throughout the years 2004-2006, current assets contributed the largest share to the balance sheet total
(between 91.6% and 92.9%). Current assets comprised chiefly other current financial assets that accounted
for 86.7% of total assets as at the end of 2006.
Fixed assets represented a negligible component of the balance sheet total, accounting for 8.4% as at the
end of 2006 and 8.0% as at the end of 2005, respectively. As at the end of 2006, other long-term fixed assets
(long-term portion of assets on account of provision of rendered financial services and loans) represented the
main component of fixed assets (7% of the balance sheet total), and grew by 85% in 2006 and 90% in 2005,
respectively. A considerable increase in fixed assets during the analyzed period resulted from the financial
portfolio of the Company that expanded to include long-term contracts – sale of financial products with
repayment schedule exceeding 1 year.
45
In 2006, the Company’s asset portfolio comprised, among others, assets on account of receivables financing
amounting to PLN 84.168 million, granted loans for a total amount of PLN 32.999 million, guarantee contracts
of PLN 6.391 million and liabilities refinancing totaling PLN 5.144 million. In 2005, the majority of assets
comprising the Issuer’s portfolio originated from financing of receivables of PLN 67.516 million and accounted
for 87.9% of the total portfolio value, which followed from the fact that in the period concerned financing of
receivables was the core product offered by the Company. Additionally, granted loans represented a
significant item of the portfolio in 2005; the value of loans totalled PLN 5.649 million. In 2004, the Issuer’s
portfolio was in 99.9% composed of assets on account of financing receivables of PLN 65.115 million as during
this period the Company’s business focused exclusively on sales of this product.
2004
2005
2006
139
31
15
Claimed amount in lawsuits brought to court in the year (PLN 000s)
17.737
4.092
2.828
Value of receivables under court proceedings as at December 31
(PLN 000s)
25.934
13.966
5.705
Company’s portfolio as at December 31 at nominal prices*
77.488
83.301
136.615
Share of portfolio of lawsuits tried in court (%)
33.5%
16.8%
4.2%
Number of lawsuits brought to court in the year
*
Owing to a different method of calculation, the amount differs from the amount disclosed in the financial statements, determined on the
basis of management financial statements
The Company reports a systematic improvement of the quality of financial assets portfolio owing to the
implementation of its proprietary system of credit risk assessment and introduction of new products with lower
risk profile. The quality of the portfolio is measured by the share of receivables that require initiation of court
procedure in order for the receivables to be collected in the total financial assets portfolio of the Company.
As a rule, the Company initiates a debt collection procedure before the court within a period of
approximately 6 months after failure of the amicable receivable collection procedure. The table below
demonstrates systematic improvement in the quality of financial assets portfolio.
As at December 31
2004
2005
As at June 30
2006
2006
2007
(PLN ‘000)
Share capital
40,463
49,999
61,171
55,225
67,709
1,546
1,744
1,744
1,744
1,822
28,613
38,681
48,217
48,216
57,654
Reserves
5,777
1,265
1,774
1,517
1,883
Retained earnings
4,527
8,309
9,436
3,748
6,350
Long-term Liabilities
1,303
1,107
1,074
1,112
40,648
16
-
-
-
-
769
477
367
476
39,779
518
630
707
636
868
34,788
32,188
76,185
40,776
49,431
31,829
17,836
30,082
19,828
8,552
1,958
3,532
15,757
3,000
17,094
465
10,385
29,095
17,060
22,766
70
125
669
332
701
Long-term loans and bank borrowings
Short-term loans and bank borrowings
Other liabilities
-
-
-
169
18
466
310
582
387
300
76,554
83,294
138,430
97,113
157,788
A considerable growth in long-term liabilities in the semi-annual period of 2007 resulted from the issue of shortterm bonds for the amount of PLN 39 million. In the semi-annual period of 2007, the Company also reported
an increase in short-term liabilities by 21.2% as compared to the semi-annual period of 2006, which was
brought about by a rise in short-term loans and bank borrowings and other financial liabilities. This was an
46
outcome of effective solicitation and use of external financing to sustain dynamic development of the
Company. Main sources of financing of the Issuer’s activity in the semi-annual period of 2007 comprise
shareholders’ equity (42.9%), long-term bonds (25.2%) as well as short-term loans and bank borrowings (10.8%).
The share of the shareholders’ equity in total shareholders’ equity and liabilities went down from 52.9% as at
the end of 2004 to 44.2% as at the end of 2006 as a result of increase in short-term financing with trade credit,
bank debt and corporate bonds. As at the end of 2006, short-term liabilities amounted to PLN 76.185 million,
which accounted for 55.0% of total shareholders’ equity and liabilities. As a result of a dynamic growth of the
asset portfolio in 2006, short-term liabilities rose by 137% against 2005, which was attributable to increased
sales of financial products of the issuer and development of the Company’s financial assets portfolio.
Chief components of short-term liabilities include trade payables (trade credit), short-term bank borrowings
and other financial liabilities on account of bond issue, which as at the end of 2006 accounted for,
respectively, 21.7%, 11.4% and 20.5% of total shareholders’ equity and liabilities.
In the period of 2004-2006, there was a clear tendency of change in the structure of short-term financial
liabilities entailing a shift from dominant share of trade payables in favour of bank borrowings and corporate
bonds; in 2004, these items accounted for 91.5%, 5.6% and 0.0%, respectively, of total short-term payables,
while in 2006 the corresponding amounts stood at, respectively, 39.5%, 20.7% and 37.3% of total short-term
liabilities. Considerable growth in external financing during 2006 was a result of policy pursued in the area of
balance sheet structure management. The launch of the bond issue program coupled with the Company’s
access to bank borrowings following from improvement in the Issuer’s creditworthiness resulted in apt
adjustment of the structure of assets held and transactions planned versus the capacity to ensure their
financing.
In 2006, the Issuer’s sources of financing included chiefly the shareholders’ equity (44.2%), issue of short-term
bonds (20.5%) as well short-term loans and bank borrowings (21.7%). In 2005, the Issuer’s activity was financed
with the shareholders’ equity (60%), issue of short-term bonds (11.8%) as well as short-term bank borrowings
and loans (4.2%). Major sources of financing in 2004 included the shareholders’ equity (52.8%) and a trade
credit (41.6%).
The bond issue program of the Company is worth up to PLN 100 million. Guided by considerations of secure
pursuit of its business, the Company’s Executive Board takes the opinion that, under current market
conditions, the structure of financing measured as shareholders’ equity/interest debt should be kept within
the range of 0.8 – 1.3.
Detailed information on bank borrowings taken by the Issuer as well as the bond issue is to be found in
Chapter 12 - “Description of Activities”, section on “Major Contracts”. The list provided therein is updated as
at the date of this Prospectus.
The Company is not limited by any restrictions in respect of the use of capital resources, which apply as at or
which could have a direct or indirect significant impact of the Issuer’s operating activity.
Debt analysis
December 31
2004
2005
June 30
2006
2006
2007
(PLN 000s)
Long-term debt
Short-term bank borrowings
785
477
367
1,958
3,532
15,757
3,000
17,094
465
10,385
29,095
17,060
22,766
3,208
14,394
45,219
20,536
79,639
Other short-term liabilities
Total interest-bearing debt
476
39,779
In the semi-annual period of 2007, the Issuer’s debt rose to PLN 79.639 million, which translates into a growth
by 76.1% as compared to the end of 2006. Increase in the Company’s debt resulted, among others, from the
issue of long-term bonds valued at PLN 39 million and from additional bank borrowings up to PLN 17.094
million, which was brought about by considerable growth in sales of financial products and, consequently,
rise in the value of the Issuer’s portfolio.
47
The Issuer increases its debt level through received borrowings and issue of bonds in order to finance new
contracts and expand its product range. Growth in the Company’s debt is attributable to the fact that, in
2004, the Issuer’s portfolio was financed predominantly from shareholders’ equity and trade credits, while in
the years 2005-2006 the Company used external capital to a greater extent. The Company’s debt went up
because the Company took new bank borrowings and launched short-term bond issue program valued at
PLN 30 million in 2005, which is reflected both in the value of contracted products reported on the balance
sheet and in the value of the Issuer’s asset portfolio which goes up from one year to another. Detailed analysis
of the value of contracted products reported on the balance sheet and the Company’s portfolio is
presented in Chapter 12 of this Prospectus.
Total debt of the Company reached PLN 45.219 million in 2006, translating into a 214% growth as compared to
2005 brought about by the use of the short-term bond issue program launched in 2005 and taking a revolving
credit with the value of PLN 9 million by the Company. In 2005, total debt of the Issuer grew by 350% up to
PLN 14.394 million as compared to the preceding year, which was attributable to the launch of a short-term
bond issue program with the value of PLN 30 million and issue of PLN 10 million worth bonds by the end of
2005. In 2004, the level of the Company’s debt stood at PLN 3.208 million.
As at June 30
As at December 31
2004
2005
2006
2006
2007
(in %)
Debt ratio
47.1%
40.0%
55.8%
43.1%
57.1%
7.9%
28.8%
73.9%
37.2%
117.6%
Debt/equity ratio
Debt analysis was made based on the following ratios:
-
Debt ratio – liabilities and provisions for liabilities /total assets,
-
Debt/equity ratio – total debt / shareholders’ equity.
Growth in debt ratios in the semi-annual period of 2007 presented in the above table follows from the growth
in sales of financial products of the Issuer, as described in the preceding paragraphs. In the semi-annual
period of 2007, debt ratio reached 57.1%, while the debt/equity ratio stood at 117.6%.
In 2005, the Company’s debt ratio declined from 47.1% reported in 2004 down to 40.0%. In 2006, the debt ratio
went up as compared to the preceding year to reach 55.8%. In 2006, rise in the Issuer’s debt was a result of a
two-fold growth in short-term liabilities as compared to 2005 following from an increase in the value of the
Company’s asset portfolio.
Higher growth in the Company’s debt accompanied by lower rise in shareholders’ equity translated into an
increase in the Company’s debt ratio from 7.9% in 2004, up to 28,8% in 2005 and 73.9% in 2006.
Within the framework of the business pursued, the Company executes conditional contracts providing for
financing of receivables, which are reported as off-balance sheet assets as long as the contracts remain
conditional. The Issuer’s off-balance sheet assets also include liabilities under sureties resulting from the sale of
the “guarantee” product and liabilities under executed but not performed contracts for disbursement of loan
tranches and refinancing of payables. In 2006, total value of contingent liabilities amounted to PLN 66.252
million, while in 2005 contingent liabilities totalled PLN 25.968 million.
Liquidity analysis
As at June 30
As at December 31
2004
2005
2006
2006
2007
Current ratio (x)
2.0x
2.4x
1.7x
2.0x
Quick ratio (x)
2.0x
2.4x
1.7x
2.0x
3.0x
Cash ratio (x)
0.2x
0.1x
0.04x
0.3x
0.1x
The Issuer’s liquidity was assessed on the basis of the following ratios:
-
Current ratio –current assets /short-term liabilities,
-
Quick ratio - (current assets – inventories) /short-term liabilities
-
Cash ratio –cash and other cash assets / short-term liabilities
48
3.0x
Both the current ratio and quick ratio have equivalent values owing to the fact that during the analysed
period the Company did not keep any inventories. In the semi-annual period of 2007, these ratios reached
3.0x, which resulted from a growth in current assets by 16% as compared to sum reported as at the end of
December 2006. A considerable growth in both current and quick ratios was also attributable to a decline in
short-term liabilities by 35.1% as compared to 2006. It resulted from a change in the structure of financing the
Company’s asset portfolio. In the semi-annual period of 2007, the Issuer considerably increased the level of its
long-term debt and reduced the level of its short-term liabilities, as a result of issue of medium-term bonds with
the value of PLN 39 million. The cash ratio stood at 0.1x in the semi-annual period of 2007.
Both the current and quick ratio grew in 2005 up to 2.4x from 2.0x in the preceding year as a result of a 7.8%
growth in current assets accompanied by a 7.5% decline in short-term liabilities as compared to 2004 which,
on the one hand, was attributable to the Company’s development and growth in the value of its portfolio
with simultaneous allocation of generated profits for further development of the Company and, therefore,
reduction of share of short-term liabilities in the structure of financing. In 2006, the current ratio and the quick
ratio both dropped to 1.7x as compared to 2005, the said decline resulting from the nearly two-fold growth in
short-term liabilities in 2006 due to a more extensive use by the Company of external financing, i.e. trade
credit, bank borrowings and loans, and issue of corporate bonds to finance the Issuer’s asset portfolio. During
the analyzed period, the cash ratio went down from 0.2x in 2004 to 0.04x in 2006. Such a significant drop was
a consequence of a high growth in short-term liabilities coupled with a decline in cash.
In 2004, the Issuer’s product portfolio was financed predominantly from shareholders’ equity and trade
credits, while in the years 2005-2006 the Company more extensively used external sources of financing. This
approach follows from the adopted liquidity and balance sheet management policies pursued by the Issuer
as well as from changes in the structure of the Company’s contracted financial products during the analysed
period covering the years 2004-2006.
Basic sources of cash receipts and expenditure
AS at June 30
As at December 31
2004
2005
2006
2006
2007
( PLN 000s)
Net cash flows from operating activities
(355)
(12,354)
(32,002)
798
307
(177)
694
665
(41)
Net cash flows from financing activities
2,600
10,818
30,405
6,096
34,551
Net cash flows
2,551
(1,713)
(902)
7,560
3,997
Net cash flows from investing activities
(30,513)
Owing to the specific nature of the Company’s business activity, the Issuer’s cash flow analysis reveals
negative flows from operating activities and positive flows from financing activities. This is a consequence of
recognition of receivables acquisition from contracting parties under operating activities as well as
recognition of financing by bank borrowings and issue of corporate bonds under the cash flows from
financing activities. As a result, the higher the growth in the Issuer’s portfolio, the higher negative flows from
operating activities and the higher positive flows from financing activities.
Rise in the value of negative cash flows from operating activities year to year reflects an increased value of
the Company’s contracted products (growth in the Company’s sales). At the same time, it triggers a greater
need of financing, evident from additional cash flows from financing activities.
In the semi-annual period of 2007, the value of net cash flows from the Issuer’s operating activities totalled
PLN -30.513 million owing to high volume of contracted products and increase in the value of financial assets
portfolio of PLN 15 million, coupled with a simultaneous decline in the value of trade and other receivables at
PLN 22 million. During the same period, the value of net cash flows from financing activities equalled
PLN 34.551 million, mainly on account of net cash flows from borrowings and issue of corporate bonds of
PLN 34.741 million.
The year 2005 brought high net cash flows from operating activities, which reached a negative total of
PLN 12.354 million during the year. It has been caused, amongst others, by a substantial increase of financial
assets thanks to intensified sales of (contracted) financial products of the Issuer and decline in the balance of
49
payables. In 2005, the net cash flows from financing activities increased substantially, i.e. by 316.1% as
compared to 2004 and equaled PLN 10.818 million. This was mainly due to receipts from the sale of corporate
bonds equalling PLN 13.808 million, as cash derived from this source financed the growth in the value of the
Issuer’s portfolio. Net cash flows in 2005 reached a negative value of PLN 1.713 million.
The year 2006 marked yet another year of a substantial growth in the financial assets portfolio, which
generated negative net cash flows from operating activities on account of a considerable increase in the
financial assets. The net cash flows from financing activities increased by 181.1% as compared to 2005 due to
receipts from borrowings and income from issue of corporate bonds. Increase in the Company’s debt
resulted from a significant rise in the value of the Issuer’s portfolio. Acquisition of external financing allowed
the Company to retain momentum in its further dynamic development. The Company was able to offer new
product to its business partners, custom-tailored to meet their needs and responding to their expectations as
regards the dates of payment by the Company, which are shorter than in the past years. The net cash flows
from investing activities in 2006 reached PLN 694,000, while net cash flows totalled PLN -902,000.
Throughout 2004-2006, the Company reported a steady decline in the net cash flows from operating
activities, which is the outcome of the growth in the value of the balance sheet total and an increase in the
value of the Issuer’s portfolio of liabilities as well as the value of loans given that increases from one year to
another. During the analyzed period, the net cash flows from financing activities have been increasing
progressively due to financing of the Company from external capital. The Issuer increases its debt by way of
borrowings and issue of corporate bonds to finance new contracts. This is reflected in the value of the Issuer’s
portfolio which is growing year to year.
Factors having a major impact upon Magellan’s financial results
The main one-off event that impacted upon the operating results of the Issuer during the years 2004-2006 was
the coming into force of the legislative Act regarding restructuring of debt of independent public health care
entities in May of 2005.
On the basis of the legislative Act regarding restructuring of debt of independent public health care entities
of April 15, 2005, the Executive Board of the Company estimated the risk of loss of some assets reported in the
financial statements as at December 31, 2004, by making a revaluation write-down of the portfolio of
investments at the level of PLN 2.015 million. The revaluation write-down made reflected the estimated risk of
future loss of some gains on turnover of financial assets reported on the balance sheet. In 2005 the Company
once again evaluated its financial instruments taking into account the credit risk and reduced the amount of
the revaluation write-down on account of the Restructuring Act down to PLN 826,000. In 2006 the revaluation
write-down was further reduced to PLN 110,000.
According to the Company, no material changes in the financial condition or commercial position of the
Company have occurred since the end of the last financial year for which the audited financial report has
been published.
50
CHAPTER 11
1.
ENVIRONMENT OF THE ISSUER
Description of the market environment in which the Issuer pursues its activities
Public health care
Much as in other European countries, entities providing health care in Poland are predominantly part of the
public sector and are financed with mandatory health insurance contributions. Given its public character, the
health care system in Poland is one of general, free-of-charge access. The public sector accounts for 95.5% of
the entire medical market in Poland 1 .
Financing of public health care in Poland
The National Health Fund (Narodowy Fundusz Zdrowia, Polish acronym NFZ) is the public institution charged
with guaranteeing medical services for insured individuals and for their families. The National Health Fund is a
state institution which finances health care and guarantees reimbursement for medication; its funding relies
on contributions paid by participants in the ZUS and KRUS schemes mandatory, respectively, for persons
employed in Poland and for Polish farmers. The National Health Fund has taken over the role of payee /
bursar in the health care financing system from the patient funds (kasy chorych) which, in 2003, were
transformed into a single fund based in Warsaw plus sixteen regional branches. The funds credited to the
National Health Fund are distributed among the regional branches which then transfer them to individual
health care entities pursuant to contracts executed with the National Health Fund.
The table below summarises public health care expenditures in Poland from the National Health Fund. As
indicated in this table, the aggregate value of funds to be distributed among public health care entities by
NFZ in 2007 is expected to reach PLN 39.5 billion, PLN 16.9 billion of which is to be earmarked for hospital
treatment. Analysis of health care spending in Poland over the years 2004 through 2007 shows that these
expenditures are consistently increasing, up from PLN 30.5 billion in 2004 to PLN 36.2 billion in 2006.
Public health care spending in Poland
Year
2004
2005
2006
2007*
(PLN billions)
Hospital treatment
13.083
14.460
15.553
16.957
Refunding of medicine prices
5.938
6.341
6.726
7.044
Basic health care
3.537
3.653
3.971
4.456
Specialised out-patient treatment
2.164
2.362
2.746
3.047
Other
5.791
6.312
7.190
8.032
Total
30.514
33.128
36.186
39.537
(*) Planned
Source: National Health Fund
Despite health care expenditures to the level of PLN 40 billion in 2007, Poland continues to be a country
whose health care spending compared to other European countries is very low. Over 1998 through 2003,
Polish health care spending increased by approximately 3% every year, giving it 23rd place among the 30
OECD countries. According to a Polish Ministry of Health report, per capita health care spending in Poland in
2004 was USD 677, one of the lowest figures among all OECD countries; the typical country with a level of
social and economic development comparable to Poland’s is likely to spend much more on health care. By
comparison, combined per capita spending on health care in Hungary was USD 1,115 USD, and in the Czech
Republic – USD 1,298. Per capita spending on health care in Western European countries was higher yet – USD
3,807 in Norway, USD 3,781 in Switzerland, and USD 2,996 in Germany.
1 Counted in reference to the number of beds at stationary (hospital) treatment facilities – data according to “Basic Health Care Data for
2005”, Central Statistical Office for Poland – GUS, Warsaw 2006.
51
The need for financing on the part of the Polish health care sector has not met with much response among
typical financial institutions such as banks, leasing companies, or factoring firms. This lack of interest on the
part of the traditional financial sector is caused mainly by the chronic financial problems of the health care
sector which, when regarded from the perspective of the relatively rigorous safety mechanisms applied by
such institutions, render the health care sector an unacceptable credit risk. As a result, the financial sector
does very little business with health care entities in Poland, and penetration of the health sector with financial
services remains very low.
Medical
sector
Total
Share
(PLN millions)
Bank credit and loans
(%)
129.559
349
0.3%
Leasing
20.994
209
1.0%
Factoring
17.000
187
1.1%
Source: Company materials based on data from the Central Statistical Office for Poland- GUS, Union of Leasing Enterprises, Polish Factors
Union
The table above presents the share of the medical market in turnovers by financial institutions in the year
2006. This analysis confirms that involvement of the financial sector in financing Polish health care is quite
small.
Cost breakdowns for hospitals
The largest categories in the breakdown of expenses of Polish hospitals are comprised in payrolls, use of
materials and energy and in third-party services. During the first three quarters of 2006, remunerations
accounted for 35.6% of aggregate hospital costs, and social insurance and other benefits - for 7.9%; this left
staff salaries and related cost items accounting for 43.5% of aggregate spending by hospitals for the first three
quarters of 2006. Over the same period, use of energy and materials accounted for 25.1% of all costs, and
third party services - for 20.9%. analysis of the costs structure of Polish hospitals in 2005 indicates that this
structure remains stable.
Structure of hospital costs in 2005 and in Q1-3 2006
Other costs
Depreciation
Depreciation
Other costs
5.0%
5.4%
2.5%
2.5%
Materials and energy
Materials
and energy
Remunerations
Remunerations
24.7%
35.9%
Social insurance, other
Taxes and fees
benefits
25.1%
35.6%
3rd party services
3rd party services
Social insurance,
20.3%
other benefits
Taxes and fees
20.9%
3.0%
3.4%
7.9%
7.8%
Source: Internet Securities
The table below presents the types and values of the liabilities of Polish health care entities as at December
31, 2006.
Type of liability
Value (PLN billions)
Percentage share
Taxes, other public law liabilities
3.622
36%
Medicines and medical materials
1.413
14%
436
4%
Medical equipment and devices
52
Third party services
721
7%
Remunerations
728
7%
Utilities
260
3%
Other
2.988
29%
Total
10.168
100%
Source: Ministry of Health
As at late 2006, total liabilities of Polish health care providers stood at PLN 10.2 billion. Taxes and other public
law liabilities comprised the largest expense category at 36%, followed by liabilities associated with purchase
of pharmaceuticals and medical supplies at PLN 1.4 billion or 14% of the total hospital debt. Liabilities with
respect to purchase of medical equipment as at the end of 2006 were PLN 400 million. The structure of
aggregate liabilities of health care entities indicates that hospitals make regular payments towards
remunerations and towards services by external providers (third party services, utilities). Public law liabilities
and liabilities relating to purchase of medicines and supplies and of equipment are, to a large degree, paid
late, once they have become overdue.
Overdue liabilities of health care entities as at the end of the year
(PLN billions)
7.000
6.000
5.872
5.027
5.000
3.847
4.000
3.000
2.000
1.000
0
2004
2005
2006
Source: Ministry of Health
Given this high amount of overdue debt incumbent on hospitals, the Polish government adopted the
legislative Act regarding restructuring of public health care entities, coming into force on April 15, 2005. The
liabilities of health care entities covered by restructuring totalled PLN 4 billion, most of which was accounted
for by public law liabilities and civil law liabilities. Effective debt reduction applied to approximately PLN 980
million in debt, which was either waived and forgiven or taken over by the founding entities of the health
care providers concerned. The main practical effect of this public aid injection came down to conversion of
overdue debt into future debt. Loans extended by BGK to the amount of approximately PLN 1.7 million are
subject to repayment over the coming years, with the possibility that a part of this debt may be waived. The
remainder of the financing, most particularly the commercial loans and the issued bonds, must be repaid,
mostly in the space of 2005 through 2010.
The above bar chart presents the level of overdue debt of independent public health care entities over the
years 2004-2006. As the chart illustrates, this debt has been consistently shrinking. In 2004, overdue debt of
public health care entities amounted to PLN 5.9 billion; by 2005, this figure was reduced to PLN 5.0 billion, and
by 2006 – to PLN 3.8 billion. This debt reduction has been made possible, in parts, by an infusion of cash, a
waiver of debts, and by conversion of overdue debt into future debt.
Investments in the health care sector
As it is at present, the hospital infrastructure is in need of refurbishment and modernisation, recreation of
assets, and purchases of new medical equipment. The average age of a hospital building used by health
care entities founded by local self government bodies is 42 years; some 43% of Polish hospitals were
constructed prior to 1970. Of all the hospital buildings, 11.5% remain within the jurisdiction of historical heritage
53
conservators and, for 8.5%, completing a round of modernisation work in order to bring the given hospital in
compliance with current laws and Ministry of Health requirements is impossible.
According to the report entitled “Information for the Sejm of the Republic of Poland on the Situation in the
Health Care Sector” (dated May 31, 2006), spending in modernisation and refurbishment of hospital buildings
over the years 2000-2005 was PLN 2.86 billion and, for the years 2006-2010, the basic necessary modernisation
and refurbishment work (as opposed to new investments) will require PLN 6.5 billion.
Apart from buildings, the technical infrastructure of the health care system also comprises technical and
medical equipment. Given the rapid rate of technical and technological progress, medical equipment is
becoming obsolete very quickly, and demand for new, technologically advanced devices to replace the old
ones is pressing. In the medical field, equipment becomes obsolete particularly quickly – certainly sooner than
outliving its useful life in purely technological terms. Good quality (good technical condition) and correct
operation of the technical infrastructure are prerequisites for proper operation of the health care system.
Questionnaire data analysis by the Ministry of Health (from April 2006) indicates that the local self
governments estimate financial needs relating to medical infrastructure modernisation over the coming five
years at approximately PLN 217.5 million, and relating to purchases of new medical equipment – at PLN 3.2
billion.
Macroeconomic conditions affecting the activities pursued
2004
2005
2006
Gross domestic product growth
5.3%
3.5%
5.8%*
Reference interest rate
6.5%
4.5%
4.0%
Mandatory health care contribution
Statutory interest
8.25%
8.50%
8.75%
12.25%
13.50%
11.50%
Source: GUS, UniCredit CA IB research, (*) preliminary results
The macroeconomic parameters set out above are those with the greatest impact on operations of the
Issuer.
The budget of the National Health Fund is one of the most important factors which predetermines spending
on medical services in Poland. The health care contribution, remitted through the ZUS and KRUS social
insurance schemes, determines revenues of the National Health Fund. This contribution has been increasing
by 0.25 percentage points in per year, attaining the expected level of 9% in 2007. No further increase of the
health insurance contribution is expected in the coming years; once the contributions has settled at 9%,
National Health Fund revenues will be indirectly determined by increase of GDP.
The reference interest rate set by the Monetary Policy Council defines the cost of financing purchased
receivables by the Issuer; this is due to the fact that the Company uses financing from external entities (e.g.
bank credit facilities, issue of bonds).
Statutory interest is defined by the Ministry of Justice; the Issuer’s receivables are largely dependent on this
variable. While statutory interest rates are correlated with the reference rate, anticipated change of the
reference rate is not immediately reflected by the statutory interest rate; seeing as each rate is approved by
a different authority, this process requires a certain amount of time.
The hospital market
There are more than 23,797 health care entities registered in Poland, 2,697 of which are public health care
entities. For in-patient treatment, these comprise hospitals, care and treatment facilities, nursing and care
facilities, spas, preventive care facilities, and other facilities for patients requiring round-the-clock care.
Hospitals operate as health care entities in the form of organisationally distinct bodies of persons and assets
established and maintained with the objective of providing health care services and promoting health.
Hospitals account for the main client group of the Company.
Number of hospitals in individual Polish regions (as at December 31, 2006)
54
93
100
90
79
80
70
61
57
60
48
50
40
39
44
34
31
30
22
23
43
36
33
27
23
20
10
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Source: Health Care Information Systems Centre
As at December 31, 2006, there were 693 hospitals operating as independent public health care entities
(general hospitals, multi-speciality hospitals, psychiatric and substance abuse rehabilitation hospitals, 24-hour
psychiatric and substance abuse treatment centres, and single-speciality hospitals).
A public health care entity may be founded by a local self government body, a medical university, or by a
national administration body at the central level. Under art. 60 of the legislative Act regarding health care
entities, the liabilities and receivables of a liquidated independent public health care entity become liabilities
and receivables of the State Treasury or the relevant local self government body or, as appropriate, of the
public medical university, public university pursuing didactic and research activity in the medical sciences, or
the Postgraduate Medical Training Centre. As a result, public health care entities may not announce
bankruptcy within the meaning of Polish commercial law.
The pharmaceuticals and medical materials producer and distributor market
The largest representatives of this sector comprise the Polish branches or subsidiaries of multi-national
pharmaceutical groups as well as leading Polish companies with very good financial standing.
Entities active in the segment of pharmaceuticals and medical materials producers and distributors in Poland
include:
−
−
−
−
−
Pharmaceutical producers (such as Polpharma SA, GlaxoSmithKline Pharmaceuticals SA, Grupa
Sanofi-Aventis, Lek Polska SA, or Roche Polska Sp. z o.o.);
Pharmaceutical distributors (such as PGF SA, Farmacol SA, Prosper SA, ORFE SA, or Torfarm SA);
Producers of medical materials (such as Medtronic Polska Sp. z o.o., Tyco Poland Sp. z o.o., TZMO SA,
Johnson&Johnson Poland Sp. z o.o., or Boston Scientific Sp. z o.o.);
Distributors of medical equipment (such as SHIM-MED Polska Sp. z o.o., or TMS);
Producers of medical equipment (such as SIEMENS Sp. z o.o., Drager Polska Sp. z o.o., Philips Polska
Sp. z o.o., or GE Medical Systems Sp. z o.o.).
Competition in the Polish market for medical materials and equipment is relatively strong. Accordingly,
producers and suppliers alike are forced by the market to accept ever-longer payment periods as regards
settlements with hospitals. What’s more, most of the largest players in the market have set themselves the
goal of increasing turnovers with hospitals, long waits for payment notwithstanding. Crediting the operation of
hospitals – as accepting long payment periods essentially is – is a common phenomenon in this market
segment.
The outsourcing companies market
Companies operating in this market may be divided into two groups. The first comprises large entities offering
a comprehensive package of services to hospitals – security, cleaning, catering - with Impel SA and Falck Sp.
z o.o. among the leading players. These companies are characterised by a strong financial base and by a
nationwide scope of operations. Given that the services provided to hospitals by such companies are
55
oftentimes of strategic significance and that the withholding of such services could well lead to serious
problems, hospitals tend to settle their debts vis a vis such entities with comparatively little delay.
The second group, meanwhile, comprises local companies, many of which are concentrated around – and
dependent upon – a single hospital. Many of these companies were established through separation of what
was hereto a part of the hospital’s organisational structure into an independent entity which assumed
responsibility for certain farmed-out tasks. These entities are in no position to finance liabilities of the hospitals
for any sustained period of time in that many face their own financing shortfalls.
The outsourcing market is one with considerable potential for growth, this due to the fact that many hospitals
are now opting for cooperation with private entities operating in the medical sector. With increasing
frequency, hospitals are contract medical services (tests, laboratory analyses, etc) out to external entities for
considerable periods of time because they lack the requisite equipment and/or the funds to finance the
required investments.
The utilities suppliers market
The utilities market is dominated by entities owned by the State Treasury or by local self government bodies.
These entities enjoy a very strong market position. Refinancing of hospital liabilities vis a vis such entities is
facilitated on account of the importance of their services. This market comprises suppliers of electricity, water,
heat, and gas.
Competition and market share
The Issuer is a financial institution operating in the medical market finance sector. Its most significant
competitors include non-bank institutions offering financial products to the health care sector, banks (current
as well as potential competition), and insurance and factoring institutions.
Electus SA is the most important competitor of the Company among non-bank institutions. This is a financial
institution similar in size to the Issuer operating in the health care market, and its basic operating scheme and
products portfolio also resemble those of the Issuer. The remaining companies in this segment operate on a
relatively small scale and have little need for capital; their services are mostly to suppliers, meaning that their
business models are gradually drifting in the direction of debt collection and enforcement. At the moment,
they do not pose a direct competitive threat for the Issuer.
The operations of banks in their capacity as potential competitors of the Company is concentrated on
pitching their products to founding bodies of health care entities (i.e. to local self government bodies) rather
than directly to health care entities. This is due to the fact that banks are subject to the banking law which
imposes certain procedures that are hard to apply in the case of public health care entities (establishment of
reserves, collateral, creditworthiness analysis).
Insurers and factoring institutions may present competition for the Issuer with respect to products securing
future receivables and to the Issuer’s factoring activity. Yet the present activities of insurance and factoring
companies in the medical market does not bespeak much commitment to this segment; accordingly, these
entities are competitors largely in a potential sense.
Appearance of a new, strong competitor in the market of interest would entail overcoming certain market
barriers. Given the unique characteristics of this market, one hurdle to prospective new entrants is posed in
familiarity with the market. Lack of experience in offering financial products specifically for medical entities
may well be a factor which causes other entities to regard this market with little interest; that said, given the
present absence of strong competitors, the possibility that new entities may be tempted to foray into this
market is a probable one.
The premises adopted herein with respect to the Issuer’s competitive position are based on estimates by the
Company’s Executive Board.
Given the specific characteristics of the Company’s activities, it would be very difficult to estimate its market
share. The Company is not in possession of any independent reports analysing this market, and it is not aware
of the existence of any such elaborations. Based on estimates drawn up by the Executive Board on the basis
of available financial data of the Company’s main competitors, Magellan was the leader among non-bank
56
financial institutions offering financial products in the medical market in terms of financial assets portfolio
value in 2006.
2.
Description of the legal environment
The legal predecessor of the Company was incorporated on the basis of the old Commercial Code;
transformation of the legal predecessor into a joint stock company, meanwhile, was effected in accordance
with the Polish Commercial Partnerships and Companies Code, and it is the latter statute which regulates the
Issuer’s activities. The Issuer is also bound by the laws in force in Poland (including European Union law),
particularly by the provisions of the Polish Civil Code governing obligations.
Considering that the Issuer’s basic operations comprise provision of financial services to the public and
private health care sectors, the legislative Act of August 30, 1991 regarding health care entities has
considerable bearing on the Issuer’s activities, particularly art. 60 of said Act which excludes independent
public health care entities from operation of the bankruptcy and court-appointed restructuring laws. Public
health care entities may not go into bankruptcy in accordance with general commercial laws and, in the
event of their liquidation, their liabilities are assumed by the State Treasury or by the relevant local selfgovernment body.
Art. 60 of the legislative Act regarding health care entities also provides that a negative financial result posted
by an independent public health care entity may not constitute grounds for discontinuing activities where
continued existence of that entity is warranted by the objectives and tasks for which it was established and
such objectives and tasks may not be assumed by another entity so as to ensure uninterrupted provision of
health care to the population. Art. 60.3 of the legislative Act regarding health care entities furthermore
provides that, where a negative financial result may not be covered by the given entity’s own resources, the
body which established that entity shall issue a statutory order or adopt a resolution changing the form of the
entity’s financial management or liquidating it as well as covering the negative result out of public funds; such
establishing body may also define forms for continued financing of the health care entity.
57
CHAPTER 12
DESCRIPTION OF ACTIVITIES
Summary
The company Magellan S.A. is a dynamically growing financial institution which specialises in offering financial
products and services for entities operating in the medical market as well as in other segments of the
economy. It is one of the leaders in this market. The portfolio of the Company’s assets committed to the
medical sector stood at PLN 129.6 million as at late 2006, making for an increase of 68.7% in relation to late
2005. For the years 2003-2006, the average annual increase in the value of the Issuer’s financial assets was
25%. According to the Executive Board’s own estimates, the value of the portfolio of the Company’s assets
committed to the medical sector as at late 2006 was one of the largest among all financial institutions active
in the Polish market.
The Company has been consistently developing a wide range of services for financing current operations
and investments in the medical services sector. The Company provides financing to its customers by financing
their receivables (i.e. by acquiring receivables of entities supplying hospitals and, thus, taking over the role of
creditor to those hospitals) and refinancing liabilities (payment of specified liabilities of a hospital to its
suppliers, simultaneously taking over the role of creditor to that hospital); it also extends loans for the financing
of current activities, guarantees repayment of liabilities, provides factoring services, and finances long-term
projects, including investments.
Concentration of the Company’s activities in the medical services segment follows from the considerable
need for financial services on the part of all participants in the Polish medical market, especially public health
care entities (mainly hospitals) and their suppliers. The medical services market in Poland, much like in many
other European countries, is accounted for first and foremost by the public health care system financed out
of the social insurance system and out of public funds. This market – again, much like in other European
countries – is characterised by a misalignment of the sector’s financing vis a vis current needs arising from
day-to-day activities and investments by health care providers. In the developed medical services markets in
Europe, hospitals are financed by way of bank finance, commercial lending, and other forms of finance
provided by specialised financial institutions. In Poland, meanwhile, financing of health care is still in the early
stages of its development, with hospitals funded primarily by overdue commercial loans and, as a result,
saddled with considerable amounts of overdue liabilities and facing solvency problems. On the other hand,
the unique credit risk presented by the health care sector and an array of legal restrictions mean that the
presence of banks, leasing institutions, and factoring institutions in the medical market is very limited. These
conditions enable the Company to devise and deliver to its customers financial problems tailored to their
specific needs, attaining high growth of revenues and of profit. The market for financing the medical system
in Poland has large growth potential also for the longer term, this due to relatively low per capita expenditures
on health care in the country, the necessity of considerable investment in modern medical technology by
health care institutions, and the low utilisation of financial products in juxtaposition with other branches of the
Polish economy
The Company achieves very good financial results on its activities. Net revenues for 2006 were PLN 24 million,
operating profit - PLN 13.7 million, and net profit – PLN 10.7 million. These results for 2006 translate into a 33.5%
increase in sales revenues, a 126% increase in operating profit, and a 121% increase in net profit in
comparison with 2004.
The Company has maintained a consistently high rate of growth for many years, irrespective of shifts in
general economic conditions and of the solvency of health care entities. This has been possible thanks to
effective management of the Company and through offering solutions well matched to the current needs
and present solvency of its customers.
The Company offers:
−
−
−
Financing of current activities;
Financing of current and future liabilities;
Long-term financing.
The main area of the Company’s activities comprises current financing for health care entities and for their
suppliers, payroll financing, and financing of public law liabilities such as taxes. The Company also offers
58
services relating to finance of medical equipment deliveries, securing credit risk in the medical market, and
refinancing liabilities, also within the context of debt restructuring programmes.
The Company’s customers include hospitals, companies from the pharmaceutical and medical equipment
sectors, and other companies which cooperate with hospitals. The largest global suppliers of pharmaceuticals
and hospital equipment are active in the Polish market - Glaxo, Roche, Sanofi-Aventis, Novartis, Johnson &
Johnson, Boston Scientific, GE Healthcare, Philips, Stryker, Siemens, Medtronic, and B. Braun. The Company
also works with utilities providers to the medical sector, such as ENEA, ENERGA, Dalkia, or Telekomunikacja
Polska. Another large group of the Company’s customers consists of outsourcing companies active in
medical and auxiliary services; providers of such services to Polish hospitals include Euromedic, Gambro,
Impel, Falck, and ISS Multiserwis.
Over the years of 2004-2006, the Issuer drew up unconsolidated financial reports complying with Polish
accounting standards as an independent entity. For purposes of this Prospectus, the Company’s
unconsolidated financial reports have been converted into unconsolidated financial reports complying with
international financial reporting standards. As of May 2007, the Company has a subsidiary - MedFinance
Magellan, s.r.o. with its registered seat in Prague.
The Issuer commenced operations in 1998 as a limited liability company. In the initial phases of its activities,
the Company provided services to suppliers of public hospitals, buying up their receivables and collecting
them in the Company’s own account. With time, the Company’s operating model morphed into that of a
financial institution specialising in services for entities from the medical services market.
In 2003, the Company gained a strategic investor - Polish Enterprise Fund IV, L.P. represented by Enterprise
Investors Sp. z o.o.
Competitive Advantages
The main competitive advantages of the Company include:
Familiarity with suppliers and buyers in the medical market and their characteristics
The Company has been providing services to the medical services market for more than 9 years. This long
track record testifies to considerable experience with contacts between health care entities and their
suppliers. This puts the Company in a position to react swiftly and effectively to the needs of specific
customers as they arise and to recommend financial solutions most suited to the given conditions. The
Company has furthermore devised its own system for assessing the credit risk of health care entities; the
knowledge thus gained accounts for one of the principal competitive advantages over bank, leasing, or
factoring institutions enjoyed by the Company. By virtue of its familiarity with the market and with the needs
and expectations of its customers, the Company has become one of the leaders in financing for the medical
market.
Innovative sales model
The Issuer’s business model relies on constantly seeking out new market niches and on the creation of new
financial services for entities active in the medical services market and in other sectors which rely on public
funding. Thanks to its sales model, designed to address and anticipate the needs of such entities, the
Company cultivates long-term relationships with its clients and is better placed to expediently address their
needs.
A team of experts in medical sector finance
The Company’s employees comprise a well-trained team disposing of thorough knowledge about the
products presently on offer as well as the trends affecting the medical market. This enables them to act as
competent advisors in selecting the best financial solutions. Familiarity with its clients and with the market
affords much flexibility to the Company, leaving it capable of adapting to new customer needs on short
notice and of modifying products and operating methods in line with new developments in the market
environment.
A wide range of products
59
The Company’s strong market position results, among other factors, from the comprehensive assortment of
products offered by it. The Company’s product range encompasses diverse financial products addressed to
medical entities as well as to their suppliers, devised to finance day-to-day activities as well as investments.
The principal product categories comprise debt financing, liabilities refinancing, financing medical
equipment deliveries, long-term investment financing, guaranteeing repayment of debts, loans, and
factoring.
Access to capital
The Company benefits from access to sources of finance which guarantee coverage of current needs as well
as development of the product portfolio. The Company’s sources of external financing are varied, including
credit facilities from banks, commercial loans, and issues of short-term and medium-term bonds. As it expands
its activities and continues to build up its portfolio of quality financial assets, and also through appreciable
increase in the value of its equity, the Company adds to its good standing with external financing investors. As
a result, the Company is capable of financing transactions which oftentimes exceed the financial capacities
of smaller market participants.
Strategy of the Issuer
The Company’s main strategic objectives over the coming three years are as follows:
−
−
−
−
Strengthening the Company’s leading position as a supplier of financial solutions for the medical
sector;
Increasing market share;
Entering new markets;
Maintaining returns on equity in excess of the industry average.
The basic goal of the Company lies in strengthening its leading position among non-bank financial institutions
providing financial services for the medical market by:
−
−
−
Increasing sales (contracting) of financial products and services;
Growth in the value of assets generated by financial products in the medical market;
the medical market.
The Company aims to attain its goal of strengthening its leading position as a supplier of financial solutions for
the medical market by:
−
−
−
−
Increasing the value of sales (contracting) of financial products and services as well as the value of
assets generated by financial products in the medical market;
the medical market;
Increasing recognition of the Magellan S.A. brand, especially in markets other than the medical
market;
Fortifying the image of the Company as a first-choice non-bank institution for the provision of financial
services.
Increase of the Company’s market share will be achieved by:
−
−
−
−
−
Increasing the number of clients served on the basis of permanent, constantly renewed cooperation;
Increasing sales to existing clients through cross-selling;
Soliciting new clients in the medical sector;
Increasing sales in selected segments of the medical market, such as outsourcing;
Introducing new products to address specific client needs.
Penetration of new markets will follow from:
−
Geographic expansion – the Company is planning continued expansion of its operations in the
Czech Republic and Slovakia;
60
−
Sectoral diversification consequent to entry into markets other than the medical sector – an
important element in the Company’s development will be comprised in expanding the number of
customers active in other markets (local self government bodies, municipal services, companies
cooperating with these sectors).
The Company also aims to maximise growth in its operations measured in earnings per share, and also to
maintain – and increase – growth in the value of its shares measured by their stock exchange listings in
juxtaposition with the stock exchange index.
Business Model
Magellan S.A. is a financial institution specialising in the provision of financial services for entities active in the
medical sector. The Company concentrates largely on financing current activities and investments and on
financing current as well as future liabilities arising in the course of commercial intercourse between suppliers
of goods and services on the one hand and their buyers (first and foremost hospitals) on the other.
The model adopted for the Company’s operations relies on bringing to the market individualised financial
products which support commercial intercourse between hospitals and their suppliers as well as the daily
operations of the latter. The Company also finances investment projects. While the Issuer’s primary focus is on
the medical services market, it has been expanding its offer to entities active in other markets, such as local
self government bodies, municipal companies, and small and medium-sized enterprises.
The Company’s business model provides for expanding the spectrum of cooperation and for tapping the
growth potential inherent in all areas of the medical market, estimated by the Company to be worth
between PLN 6 and 7 billion. This enables building up a stable customer base which presently numbers more
than 600 entities as well as constant increase of financial service sales volumes (the Company’s balance
sheet contracting has grown from less than PLN 100 million in 2004 to approximately PLN 220 million in 2006)
while, at the same time, maintaining the set liquidity parameters and complete control over different
categories of risk (including credit risk and liquidity risk).
Given the unique characteristics of the market in which the Company pursues its operations, the Company
creates demand for its own financial products. The Issuer conducts expert analyses of the medical market’s
needs for financial products and creates new products devised to fill niches in that market. As a result, the
Issuer’s products are closely suited to market needs and go a long way in addressing the needs of medical
service providers.
One of the main objectives of the Company lies in continued expansion of the market in which it operates, to
be achieved through constant shaping of the market by way of new products and services. The Company
aims to develop existing as well as new products in the market segments in which it has been operating for
many years, viz financing the activities of medical entities in Poland. The Issuer is in a position to offer several
different products to a single entity. The Issuer is also planning to develop new business lines by intensifying its
activities in the Czech and Slovak markets. In 2007, the Company established a subsidiary in the Czech
Republic in order to expand the scale of its operations in that country. The Issuer also intends to expand its
customer target to include non-public health care entities, self government bodies, municipal companies
and their affiliates, commercial law companies, and other entities providing services to the public sector .
Types of products and services
The Company’s financial service offer comprises the following financial products:
Financing receivables
The essence of this product comprises transfer onto the Company of all rights in a pecuniary receivable,
accomplished pursuant to a contract for assignment. The Company assumes all the risk associated with such
a receivable as well as the obligation to finance it; payment to the supplier is remitted irrespective of the
terms, or indeed the possibility, of recouping the amounts in question. Having acquired a receivable, the
Company executes with the original debtor (the buyer of the goods delivered by the supplier) an agreement
setting out the terms and deadlines for repayment. The Company’s profit is constituted in the operating
margin from the supplier and the interest on the receivable defined in the contract with the buyer.
61
Refinancing of liabilities
The essence of this product lies in payment, on instructions by the buyer, of the buyer’s liabilities vis a vis a
supplier; as it makes such a repayment, the Company assumes the role of the creditor. Following repayment,
the Company “steps into the shoes” of the creditor whose claim for payment it has just satisfied, acquiring all
the rights to the receivable. The Company’s profit is the commission collected for execution of the service as
well as the future interest.
From the commercial perspective, the essential difference between this product and the financing of
receivables, as described above, lies in the fact that this service is provided on instructions by the buyer of the
goods and services, e.g. a hospital.
Loan
Under this product, the Company provides a medical entity with financing subject to agreed conditions and
repayment deadlines pursuant to a loan agreement. The loan offered by the Company presents a flexible
form of financing current operations, an attractive alternative to bank loans. This product is addressed
primarily to public hospitals.
The Company’s profit is constituted in the commission collected for the making available of finance as well as
in current interest.
Guarantee
This product derives from the legal institution of underwriting or assuring a loan. Here, the Company assumes
the obligation to pay invoices issued by the supplier in the event that payment from the buyer is not
forthcoming within the agreed deadline. As it honours the guarantee and pays the supplier, the Company
assumes the rights and obligations of the creditor. This product enables the supplier to regulate and secure its
cash flows while the buyer benefits from what is in effect an additional commercial loan.
The profit of the Company is presented in the commission paid by the supplier (the party benefiting from the
guarantee) as well as in financial revenues from the buyer.
This product is addressed to the suppliers of goods and services.
Factoring
Under the factoring service, receivables which have not matured yet are transferred onto Magellan S.A.
pursuant to a contract for assignment. The Company usually offers the factoring service without reverse
claims, meaning that it accepts the risk of default with respect to the receivables in question. The Company
assumes the obligation to finance the receivable and the credit risk as well as handling all the administrative
and collection functions. Under this service, the Company provides customers with the possibility of extending
their commercial loan beyond the due date of the invoice. The profit of the Company is presented in the
commission or the discount on buying up of the receivable and, alternately, in the interest accruing on the
receivable.
The Company also applies the factoring structure in the financing of investment projects. Under this solution,
the receivable (replete with a set repayment schedule) is transferred onto Magellan S.A. in what is essentially
financing of instalment sales. This structure is most typically used to finance deliveries of medical equipment.
The factoring product is addressed to the suppliers of goods and services.
Long-term finance products
Long-term financing refers to unique transactions involving long-term commitments of resources to projects
centring, first and foremost, on the financing of investments and medical equipment at medical entities an on
long-term financing of supplier receivables.
Most of the financing products are tailored to the requirements of the specific client. Long-term financing is
offered by way of:
−
−
Tailor-made projects for financing medical equipment and investments;
Non-standard projects for liability restructuring;
62
−
Long-term loans for health care entities.
Depending on the specific nature of the selected solution, the product may be addressed to suppliers (nonstandard projects for long-term finance of receivables, financing receivables under commercial contracts
payable in instalments, etc) or to buyers (long-term loans to health care entities, financial leasing, etc).
Financing of medical equipment purchases may be effected by way of:
−
−
−
Factoring receivables under sales contracts payable in instalments;
Long-term loans;
Financial leasing.
The nature of the business activity pursued by the Company means that the Company’s business model does
not constitute a closed catalogue of services. The Company is constantly monitoring the needs of its clients
and devising financial solutions in line with their expectations. Every client receives individual treatment, and
efficient decision making with respect to investments is guaranteed. This approach follows from constant
perfecting of the scope and quality of services, and also from the fact that the economic and legal
environment in which the Company operates is an exceptionally fluid one.
In its introduction of new products, the Company follows the principle whereunder its products and services
should be complementary – rather than competitive – vis a vis those offered by banks and by other financial
institutions.
Risk management systems
Correct functioning of the business model is facilitated by unique risk management systems devised and
implemented by the Company, comprising accurate identification, assessment, and monitoring of the risk
borne by the Company.
The key components of the Company’s risk management system comprise:
−
−
−
The solvency management system;
The credit risk management system;
The operating risk management system.
Solvency management
The system in place for financing public health care entities in Poland is characterised by a systemic
misalignment of these entities’ revenues and their expenditures; this leaves them prone to difficulties with dayto-day liquidity and with discharging their financial liabilities on a timely basis. Accordingly, solvency
management is a critical element of risk management at the Company.
Experience gained by the Company in this regard during the period when solvency of Polish hospitals was
particularly low (2003-2005) has enabled the Company to devise a unique solvency management system
based on:
−
−
−
−
−
−
Close monitoring of revenues and a policy of actively enforcing late payments, all handled by a
specialised team;
Constant forecasting and day-to-day updating of revenue projections in the short, medium, and long
terms;
Managing the structure of the liabilities side of the balance sheet through appropriate selection of
financing sources, taking into account the structure of the assets side of the balance sheet and the
specific nature of individual products, in particular the stability and predictability of financial revenues
from these products;
Limiting debt indicators (e.g. the equity-to-debt ratio, the debt-to-EBIT ratio, etc) to a conservative
level which guarantees development of business activities but, at the same time, ensures a safe
degree of liquidity for the Company on the basis of past experiences;
Maintaining reserve sources of finance for current payments;
Obtaining purpose-specific external financing with a profile suited to the assets cash flow profile.
63
Credit risk management
Working on the basis of its long years of experience, the Company has devised a unique risk analysis and
assessment system aligned to the market risk profile, the risk attaching to the entities with which the Company
does business, and to the risk associated with the offered products. Scoring is conducted on the basis of
econometric models designed for internal purposes of the Company. As part of its scoring system, the
Company systematically analyses approximately 870 health care entities, and the aggregate credit limits
total approximately PLN 1.7 billion. The scoring system enables definition of the optimum commitment level
with respect to each contracting party. The scores and the optimum commitment limits are updated on a
quarterly basis.
The scoring system applied by the Company to public health care entities has proved its worth in practice. It
is also broadly used to classify individual entities as potential clients of the Company in reference to its specific
product lines.
Operating risk management
For purposes of operating risk management, the Company has implemented and follows over a dozen
operating procedures which regulate the basic operating processes. The goal of these procedures is to
ensure repetitiveness of the processes, to increase working efficiency of specialised departments in selected
aspects of the business process, to introduce control elements at key points throughout the process, and – first
and foremost – to avoid losses stemming from any errors or mistakes in the discharge of duties.
Integrated IT system
Management of the Company is assisted by an extensive information technology system which supports its
operating activities. The TETA 2000 Integrated IT System was gradually expanded and perfected in line with
the Issuer’s growth to facilitate management functions. The implemented package comprises the following
functionalities: TETA Finance, TETA Personnel, TETA Fixed Assets, TETA Controlling, and TETA CRM – the
receivables service module. Each module may operate independently and/or in conjunction with other parts
of the system.
The receivables service module has been designed to reflect as closely as possible the business processes
occurring at the Company, spanning negotiations with suppliers, execution of contracts with suppliers, the
various types of contracts and agreements made with the health care entities, and monitoring repayments
and final settlement with the medical entity. The Company is now finalising implementation of this module.
Main factors characterising the basic areas of activity an revenue sources (principal markets and market
segments)
The basic area of the Company’s activities comprises financial services to the medical sector. Most of the
Issuer’s activities are concentrated on covering the current financial needs of health care providers and of
their cooperating entities and on financing supply of goods and services for the medical sector. The
Company also lends to medical entities to help them meet their day-to-day financial obligations.
The Company’s offer presently includes:
−
−
−
Financing day-to-day activities;
Financing current and future receivables;
Long-term finance for investment and restructuring projects.
Sales levels achieved by the Issuer depend on the inflow of financial resources to Narodowy Fundusz Zdrowia
– the National Health Fund (Polish abbreviation NFZ) financed out of mandatory social insurance contributions
paid into the ZUS and KRUS schemes (for the general working public and for agricultural workers, respectively)
and, to a small degree, from the Polish national budget. Funds paid to the National Health Fund are then
passed on to public health care entities, determining the income level of these entities and – at least as
importantly – their expenditures. The regular shortfalls in funds placed at the disposal of health care entities
under this system generates demands for products of the Issuer, which are designed specifically to finance
the current and future operations of the public health care entities.
Structure of the Issuer’s revenues broken down by main product groups
64
Year
2004
2005
2006
(PLN 000s)
From receivable financing services (discounting, commissions, interest)
14.381
15.281
14.652
-
189
4.854
40
980
1.706
-
136
252
From loans extended (commissions, interest)
From guarantees (commissions, interest)
From factoring services (commissions, interest)
From debt refinancing services (commissions, interest)
From other services (commissions, interest)
Litigation (coverage of court costs, interest on claim)
Total sales revenues
-
16
287
398
622
553
3.196
3.384
1.738
18.015
20.608
24.042
Source: the Company
For 2006, the greatest share in the Issuer’s revenues was accounted for by financing of receivables, which
amounted to PLN 14.6 million and accounted for 60.9% of aggregate sales revenues. Revenues from loans
and from guarantees also accounted for large parts of aggregate revenues in 2006, at 20.2% and 7.1%,
respectively. For 2005, revenues from finance of receivables accounted for 74.2%, and guarantees - for 4.8%
of total revenues. In 2004, the Company achieved revenues of PLN 18.0 million, 79.8% of which was from
financing receivables.
Structure of the Issuer’s revenues in 2006
7,1%
7,2%
20,2%
1,0%2,3%
1,2%
60,9%
Financing of receivables
Loans
Court revenues
Guarantees
Refinancing of receivables
Factoring
Other services
Source: the Company
The year 2006 witnessed a significant increase of revenues from loans extended by the Company - from PLN
189,000 in 2005 to PLN 4.854 million in 2006 – and likewise from guarantees, from PLN 980,000 to PLN 1.706
million.
As indicated by the pie chart above, the Company has diversified its revenue stream over the past three
years, increasing its product offer to include new elements.
Geographic breakdown of sales
Domestic Sales
The Company’s products and services are offered throughout Poland. For 2006, the largest share of the
Issuer’s sales (balance sheet contracting) was accounted for by the northern region, comprising Pomerania
proper, Kujawy and Pomerania, Warmia and Mazury, and Podlasie - 32% of aggregate sales. The Issuer also
achieved considerable sales in the south-central part of Poland, comprising Lower Silesia, the region around
Łódź, and the Warsaw metropolitan area - 28%.
Exports
The quality of Magellan S.A.’s services and its good relations with key clients in the Polish market have brought
the Company international acclaim, with the result that, in 2005, it embarked on operations in the Czech
republic and in Slovakia. Exports accounted for 1.1% of the Issuer’s aggregate sales in 2005 and for 1.7% in
2006.
Sales policies
65
The Issuer has been operating in the financial market catering to the medical sector for over 9 years. Sales of
its products rely on well-established and cultivated relationships with key entities in the industry – hospitals as
well as major suppliers to the medical sector. The Company’s sales teams concentrate on maintaining
continuous, direct contacts with entities operating in this market. The Issuer’s current activities also comprise
monitoring the market for information about potential contracts and about future trends.
The Company’s sales personnel report to management on an ongoing basis on the current status of
commercial operations and on development of the client portfolio. Apart from teams which generate new
contracts, the Issuer maintains a sales support team which is charged with optimisation of all back office
activities and with ensuring quality of documentation and abidance by procedures.
The character of the Company’s activities means that most of its contracts are executed by way of direct
sales; only a small proportion of sales proceed through telemarketing and through mass offers.
Seasonality
Value of contracts executed (contracting) by the Issuer (PLN 000s)
90.000
80.215
80.000
70.000
60.000
50.000
44.226
48.509
48.561
42.271
40.000
29.858
30.000
28.884
27.804
20.000
18.131
30.067
20.778
18.535
10.000
0
Q1
Q2
Q3
Q4
Q1
Q2
2004
Q3
2005
Q4
Q1
Q2
Q3
Q4
2006
Source: the Company
Contracting achieved in any one period reflects the level of the Company’s activity on the sales side.
realised balance sheet contracting corresponds to the balance sheet value of financial assets posted to the
Company’s assets during the individual periods pursuant to executed contracts (loans, financing of
receivables, refinancing of liabilities, factoring, and guarantees).
As indicated by the above graph, contracting for Q4 2005 as well as for Q4 2006 demonstrates a
considerable increase in comparison with previous quarters.
There have been no changes in the tendencies observed over 2004-2006 following the end of the last full
financial year.
The Company does not have any information concerning additional tendencies, uncertain elements,
demands, obligations or events which would in any way be likely to have a material impact upon the
perspectives of the Issuer at least until the end of the current financial year.
Main contracting parties
In light of the specific characteristics of the Issuer’s activities, its main contracting parties and business partners
may be divided into:
−
−
The medical entities segment;
The segment of suppliers to medical entities.
66
The medical entities segment
In this segment, the Company specialises in financial services for health care providers. The most important
entities in this segment are independent health care entities, most particularly hospitals. The basic activities of
the Issuer are complemented by activities in other areas of the publicly financed market, including local self
government bodies and their affiliates, municipal companies, and commercial law companies (outside the
medical sector) cooperating with the medical sector.
The presence of medical entities in the Issuer’s portfolio over the years 2004-2006 indicates that the Company
is not dependent on any one contracting party. For the year 2004, the largest share of a single entity in this
portfolio stood at 13.3% - and, in 2005, at 14.7% - of the Issuer’s balance sheet contracting. In 2006, the largest
share of an individual health care entity in the Issuer’s contracting was reduced to 6.5%. As regards the
revenues structure, the largest share of a single entity in 2004 stood at 6.0%, in 2005 - at 8.9%, and in 2006 - at
10.3%. In 2005 as well as in 2006, the share of other entities in the revenues of the Company did not exceed
3%. The breakdown of contracting parties from the medical entities segment is a highly diversified one; thus,
the Issuer is not dependent on any one contracting party.
The segment of suppliers to medical entities
This segment encompasses the broad spectrum of entities pursuing commercial and service activities in the
medical sector, especially as regards supplying health care entities with pharmaceuticals, medical
equipment, utilities, outsourcing services, and other goods and services. The Company’s main clients among
such suppliers include pharmaceutical companies, producers and distributors of medical equipment, and
outsourcing companies. As of 2002, the Company has signed contracts with more than 100 major entities
active in the medical segment.
Producers and distributors of pharmaceuticals and of medical equipment comprise the basic group of the
Company’s contracting parties, and they account for the deals with the greatest value. Yet the structure of
the Company’s portfolio over the past few years indicates that the Company is not dependent on any one of
these entities. In 2004, the greatest share of a single producer / supplier of pharmaceuticals / medical
equipment in the Issuer’s balance sheet contracting was 15.9%, and in 2005 – 15.1%. In 2006, the greatest
share of a single contracting party from this group in the Issuer’s contracting was 4.7%. These statistics confirm
that the Company benefits from a diversified contracting parties base among producers / suppliers of
pharmaceuticals / medical equipment.
Description of investments
The low level of investments in fixed assets and in intangible and legal assets follows from the specific
character of the Company’s activities. The Company’s investments over the years of 2004 through 2006 were
centred mostly on expansion of the information technology infrastructure necessary for servicing its basic
operations in light of the growing product range as well as of increasing sales volumes (in terms of value as
well as number of contracts).
The other area of the Company’s investments comprises vehicles, as needed for pursuit of the sales strategy
and for maintaining face-to-face contact with what is an increasing number of contracting parties. The
character of the services provided by the Issuer and the means of their delivery throughout the country
necessitates a fleet of vehicles and appropriate IT infrastructure.
The following table summarises investment outlays by the Company over the years 2004 – 2006.
2004
Fixed assets
2005
2006
747
153
599
Land
0
0
0
Buildings and facilities
0
0
14
Technical equipment and machines
0
0
0
Vehicles
473
105
421
Other fixed assets
274
48
164
67
Intangible and legal assets
Computer equipment and software
Other intangible and legal assets
Total
653
141
30
653
128
26
0
13
4
1.400
294
629
Source: the Company
Investment outlays over the years 2004-2006 were mostly on vehicles. Investment spending on vehicles
totalled PLN 473,000 in 2004, PLN 105,000 in 2005, and PLN 421,000 in 2006.
The Company’s investments in intangible and legal assets in 2004 were PLN 653,000; they were associated
mostly with purchase by the Company of software (FK, Personnel, Controlling) for the aggregate amount of
PLN 495,000 as well as of computer hardware (servers) for PLN 83,000. In 2005, investments in intangible and
legal assets comprised purchase of computer equipment for PLN 98,000. In 2006, investments in intangible
and legal assets stood at PLN 30,000.
At present, the Company is not engaged in any major investments, and there is no knowledge of any future
investments with respect to which the Executive Board may have assumed any binding obligations.
Sources of finance for investments
The following table presents the sources for financing investments of the Issuer.
2004
2005
2006
Fixed assets
747
153
599
Leasing
636
86
419
Own funds
106
67
180
5
0
0
653
141
30
Other
Intangible and legal assets
Rental, lease or leasing contracts
300
30
0
Own funds
348
111
30
5
0
0
1.400
294
629
Other
Total
Source: the Company
Most of the Company’s investment outlays over the years 2004-2006 - i.e. investments in computer equipment,
software, and vehicles – were financed through leasing. Individual investments with a low value were
financed out of the Company’s own funds.
Employees (human resources)
1.
Number of employees
As at December 31, 2006, the employment headcount at the Company was 49 persons, as at December 31,
2005 - 41 persons, and as at December 31, 2004 - 37 persons. Employees are retained on the basis of
employment contracts executed for an indefinite term, a fixed term, or a trial period.
Table: Employment structure at the Issuer and its subsidiaries by employment type
Date
Employment Contract
Fixed term
Contract for completion of
specific task, commission
contract, other
Indefinite term
68
Total
Prospectus Date
3
46
6
55
August 20, 2007
3
46
6
55
December 31, 2006
7
42
6
55
December 31, 2005
2
39
7
48
December 31, 2004
2
35
6
43
Source: Issuer
Table: Number of employees retained on the basis of an employment contract (including the Executive
Board, excluding management contracts) by the Issuer and its subsidiaries, subdivided by position
Date
Operating
Dept
Risk Dept
Legal Dept
Finance and
Accounting
Dept
Administration
Board
Office
Board
Total
Prospectus Date
26
2
2
14
1
2
2
49
August 20, 2007
26
2
2
14
1
2
2
49
December 31, 2006
25
2
3
13
1
3
2
49
December 31, 2005
18
2
4
9
3
3
2
41
December 31, 2004
16
1
4
7
3
4
2
37
Source: Issuer
2.
Employee participation in the Issuer’s share capital
Incentive Programme pursued on the basis of the B-Series Share issue.
Under the incentive programme pursued on the basis of resolution no 2 adopted by the Extraordinary
General Meeting of the Issuer on April 6, 2007, members of the Executive Board as well as key employees of
the Issuer (“the Entitled Persons”) were accorded the right to purchase shares of the Issuer.
The incentive programme was executed on pursuant to § 9 of the shareholders agreement executed on
March 14, 2003 by and between Polish Enterprise Fund IV, L.P., Mariola Błaszkowska, Marek Błaszkowski and
Magellan Sp. z o.o.
Resolution no 2 adopted of the Extraordinary General Meeting of the Issuer dated April 6, 2007 was adopted
in reference to the management options programme in operation at the legal predecessor of the Company
as of 2003. Under that programme, Executive Board members and key employees received the right to
purchase shares in a number not to exceed 5% of the share capital of Magellan Sp. z o.o. as at March 14,
2003. This right was to be exercised by way of acquisition by the Entitled Person of shares from the new issue at
the nominal price, provided that the Company is floated on the securities exchange by the end of 2007. The
Company has valuated these options at their nominal value of PLN 1,250 (i.e. PLN 0.30 per share following
division of the shares). The priority rights may be exercised at any time following the elapse of two (2) years
after the Company’s listing on the securities exchange. Acquisition of the right to these shares is predicated,
among other conditions, on the execution of a public share issue in 2007.
The total number of Entitled Persons covered by the incentive programme was five. Entitled Persons
participating in the programme could purchase the Company bearer shares from the new issue (“the
Shares”) by way of a private subscription addressed to the Entitled Persons as part of the Company’s share
capital increase.
The issue price of the Shares within the incentive programme will be PLN 0.30 (thirty grosz) per share.
In accordance with the provisions of the incentive programme, the Entitled Persons shall execute with the
Company and with the Brokerage House contracts pursuant to which the Entitled Persons shall be prevented
from selling or encumbering the Shares between their acquisition and the elapse of two (2) years following
69
the first listing of the Company’s Shares on Giełda Papierów Wartościowych w Warszawie S.A., although the
Supervisory Board may authorise such sale or encumbrance under exceptional circumstances.
Entitled Persons who have taken up Shares are obligated to deposit the Share documents at the seat of the
Company. Following the entry of those Shares to a securities account maintained by the Brokerage House,
these persons shall institute an irrevocable freeze on that account. At the same time, the Entitled Persons
have undertaken that, until such a time as the B-Series Shares are entered on the securities account, they
shall not collect the Shares from the deposit maintained by the Company and shall not divest the Shares,
institute a limited right in res upon the Shares, or encumber the Shares.
Detailed terms of the incentive programme have been laid down in the rules approved by the Issuer’s
Supervisory Board.
The incentive programme has been executed on the basis of resolution no 3 adopted by the Extraordinary
General Meeting of the Issuer on April 6, 2007 which provided for increase of the Company’s share capital
from PLN 1,743,750.00 (one million seven hundred and forty-three thousand seven hundred and fifty złoty) by
an amount not to exceed PLN 78,476.40 (seventy-eight thousand four hundred and seventy-six złoty and
40/100) by way of an issue of not more than 261,588 (two hundred sixty-one thousand five hundred and
eighty-eight) ordinary B-Series bearer Shares with a nominal value of PLN 0.30 each.
The B-Series Shares have been paid up in cash and may be counted for purposes of the dividend as of
January 1, 2007.
Resolution no 3 of the Extraordinary General Meeting of the Issuer dated April 6, 2007 has been adopted
subject to the condition that the register court registers the amendments to the Issuer’s Articles of Association
effected pursuant to resolution no 1 adopted by the Extraordinary General Meeting of the Issuer on April 6,
2007. Resolution no 3 came into force as of registration of these amendments.
The following table lists the Entitled Persons who may acquire Shares under the incentive programme being
pursued on the basis of resolutions nos 2 and 3/2007 of the Extraordinary General Meeting from April 6, 2007.
Entitled Person
D. Strojewski
No of Shares
Issue price per Share in PLN (nominal)
117,880
0.30
Issue price in PLN
35,364.00
K. Kawalec
56,457
0.30
16,937.10
G. Grabowicz
35,927
0.30
10,778.10
R. Karnowski
25,662
0.30
7,698.60
T. Maj
25,662
0.30
7,698.60
Total
261,588
0.30
78,476.40
On May 10, 2007, the Issuer executed with the Entitled Persons contracts for acquisition of B-Series Shares. On
May 25, 2007, the Issuer lodged an application with the National Court Register. On June 12, 2007, the register
court entered the increase of the Issuer’s share capital effected through issue of B-Series Shares in the register.
Incentive programme pursued by way of issue of subscription warrants.
On June 20, 2007, the Extraordinary General Meeting of the Issuer adopted resolution no 4/2007 concerning
definition of the terms of execution of a management options programme by the Company, resolution no
5/2007 concerning issue of subscription warrants and a conditional share capital increase by way of a Dseries share issue geared at enabling participants in the incentive programme to acquire shares, and
resolution no 6/2007 concerning amendment of the Company’s Articles of Association so as to take account
of the share capital increase.
In accordance with resolution no 4/2007, participation in the management options programme executed
by way of issue of subscription warrants is open to the Executive Board and to the Directors of Magellan S.A.
as well as to the Executive Boards and Directors of companies comprised in the Magellan S.A. Group (“the
Entitled Persons”).
70
The number of entitled persons was set at 15. The options programme will be executed over the years of 2007
through 2011. The detailed list of Entitled Persons and the number of shares extending to them in each year of
the programme’s operation shall be defined in the options programme rules to be drawn up and approved
by the Company’s Supervisory Board.
The Supervisory Board may amend the appendix to the options programme rules and to extend the options
programme to include new persons becoming Executive Board members or Directors of Magellan S.A. or of
companies comprising the Magellan S.A. Group subsequent to approval of the programme.
In association with execution of the management options programme, the share capital of the Company
shall be conditionally increased by PLN 117,252.00 (one hundred and seventeen thousand two hundred and
fifty-two złoty) through issue of 390,840 (three hundred and ninety thousand eight hundred and forty) ordinary
D-Series registered Shares with a nominal value of PLN 0.30 (thirty grosz) each.
In association with execution of the management options programme, the Company shall issue 390,840
(three hundred and ninety thousand eight hundred and forty) registered subscription warrants entitling their
holders to acquire shares in the Company with the exclusion of drawing rights. The subscription warrants shall
be acquired by a custodian which will then sell them to the Entitled Persons in the numbers defined in the
options programme rules. In every consecutive year of the management options programme, i.e. over 2007
through 2011, the Entitled Persons may receive not more than:
a)
b)
c)
d)
e)
2007: 32,570 (thirty-two thousand five hundred and seventy) subscription warrants;
2008: 97,710 (ninety-seven thousand seven hundred and ten) subscription warrants;
2011: 65,140 (sixty-five thousand one hundred and forty) subscription warrants.
In the options programme rules, the Supervisory Board may reserve up to 25% of the aggregate subscription
warrants pool for the given year for new Entitled Persons. The Supervisory Board may also allot subscription
warrants to other Entitled Persons in the given year or move subscription warrants back for distribution among
new Entitled Persons or existing Entitled Persons in the consecutive year.
In the event that an Entitled Person loses her/his right to participation in the options programme (due to
termination of employment, expiration of her/his period in office, resignation, etc), the Supervisory Board may
allot the subscription warrants originally earmarked for that Entitled Person to another Entitled Person or to a
new Entitled Person, move these subscription warrants back for distribution in the next financial year, or add
these subscription warrants to the reserve pool.
The subscription warrants may be acquired by Entitled Persons in the course of the options programme
provided that the given Entitled Person remains in employment with the Company (or its subsidiary)or remains
bound to the Company (or to its subsidiary) by a similar legal relationship over a period of at least six (6)
months in the financial year preceding the date of assignment of the options for acquisition of the
subscription warrants and on the day of assignment of the options for acquisition of the subscription warrants
for the given year of the options programme.
The subscription warrants shall be issued in five series, with a separate series for each year of the option
programme’s duration. The size of each subscription warrant series shall be defined by a Supervisory Board
resolution.
Issue of the subscription warrants for the given year of the options programme should be completed by the
end of Q3 of the next calendar year following the year for which these subscription warrants are being
assigned – not sooner, however, than following approval of the financial report for the given year by the
Company’s General Meeting.
The holder of subscription warrants from a given series may subscribe for shares at any moment of her/his
choosing during the year of issue of the subscription warrants from that series or during the two (2) following
years.
71
The options programme rules proscribe dealing in subscription warrants other than:
a) Sale of the subscription warrants to the Company for purposes of their redemption;
b) Sale of the subscription warrants due to attainment or exceeding by an entity other than Polish
Enterprise Fund IV, L.P. of 33% of the votes at the Company’s General Meeting;
c) Sale of the subscription warrants due to announcement of a call to sell not less than 33% of the
shares in the Company via the procedure provided for in the legislative Act regarding the public
offering;
d) Sale of the subscription warrants under exceptional circumstances, subject to approval by the
Supervisory Board of the Company.
Dealing in shares acquired under the options programme in situations other than attainment or exceeding by
an entity other than Polish Enterprise Fund IV, L.P. of 33% of the votes at the Company’s General Meeting or
announcement of a call to sell not less than 33% of the shares in the Company via the procedure provided for
in the legislative Act regarding the public offering shall be possible only upon the elapse of twelve (12)
months following acquisition of such shares.
The Issuer has no plans to file resolution no 5/2007 or resolution no 6/2007 from June 20, 2007 with the National
Court Register prior to the approval of this Prospectus.
Organisational structure of the Issuer’s capital group
1.1
Description of the capital group to which the Issuer belongs and the place of the Issuer within that
group
Polish Enterprise Fund IV, L.P. with capital in the amount of USD 217 million is the shareholder which holds
95.69% of the shares in the Issuer’s share capital. Contributors of funds to Polish Enterprise Fund IV, L.P. included
leading international insurers, pension funds, and other financial institutions. Polish Enterprise Fund IV, L.P. is a
closed-end private equity fund established as a limited partnership under the laws of the State of Delaware.
Polish Enterprise Fund IV, L.P. is a closed-end private equity fund established in 2000 s a limited partnership
under the laws of the State of Delaware. Its participants comprise leading international insurers, pension funds,
and other financial institutions. The only general partner empowered to represent PEF IV is Polish Enterprise
Investors II, LLC. PEF IV was established by the general partner on the basis of the Delaware Revised Uniform
Limited Partnership Act (6 Del. C. §17-101 et post). Polish Enterprise Fund IV, L.P. does not remain under the
direct or indirect control of any entity; in particular, it is not controlled by its general partner, Polish Enterprise
Investors II, LLC.
The core activities of Polish Enterprise Fund IV, L.P. consist in investing in equity and in equity securities, relying
on the wide investment possibilities with respect to companies with large potential for growth. Polish Enterprise
Fund IV, L.P. conducts its investments by financing growth, buying up shares, and restructuring. Polish
Enterprise Fund IV, L.P. invests in Poland and in other countries around Central Europe.
The capital group of the Issuer assembles business enterprises which provide consulting services with respect
to administrative management as well as organisational and business services, including advice on business
management, finance, business organisation and economics as well as legal services.
The financial group of the Issuer comprises:
MedFinance Magellan, s.r.o. with its registered seat in Prague, a limited liability company incorporated
in accordance with Czech law. The object of this company’s business activities lies in administrative
management services and organisational and advisory services, consulting activity with respect to
business management, finance, business organisation and economics as well as advertising and
marketing.
1.2
List of major subsidiaries of the Issuer, specifying their name, the country of their incorporation or seat,
the percentage share of the Issuer in their share capital, and the percentage share in the vote (if
different from the share in the capital)
List of major subsidiaries of the Issuer
72
Subsidiary
MedFinance Magellan, s.r.o.
with its seat in Prague, Czech
Republic
1.
1.3
Share of the Issuer in
the share capital
100%
the aggregate vote
100%
Information about shares in other enterprises
The Issuer does not have direct or indirect shares in companies whose book value would account for at least
10% of the Issuer’s capital and reserves or which would generate at least 10% of the Issuer’s net profit (or loss).
The Issuer holds shares in the following enterprises
Subsidiary
1.
the share capital
MedFinance Magellan, s.r.o.
with its seat in Prague, Czech
Republic
100%
the aggregate vote
100%
Sponsoring
The Issuer pursues extensive charitable operations, most particularly with respect to hospitals and to health
care establishments.
In 2004, the legal predecessor of the Issuer executed, in the capacity of donor, six (6) agreements for
bequests to an aggregate value of at least PLN 34,500.
In 2005, the legal predecessor of the Issuer executed, in the capacity of donor, seventeen (17) agreements
for bequests to an aggregate value of at least PLN 200,983.71.
In 2006, the legal predecessor of the Issuer as well as the Issuer itself executed, in the capacity of donors, six
(6) agreements for bequests to an aggregate value of at least PLN 35,587.04.
Patents, licences and trademarks
The Issuer does not own any patents or any material licences.
Ensuring that the Issuer and its offer is recognised and distinguished among the considerable number of
entities pursuing competitive activities is a critical element of the Issuer’s operations.
On August 12, 2005, the Issuer filed the verbal and visual device “iii magellan TWORZYMY ROZWIĄZANIA”
(filing no Z 298856):
Licences and permits
Operations of the Issuer are not dependent on any licences or permits.
Research and development, implementation work
Given the profile of its operations, the Issuer does not pursue R&D work or implementation work.
73
Credit facilities, assurances, and guarantees
Credit facilities
The Issuer assesses its needs for external finance on an ongoing basis. The degree of the Issuer’s resort to
external financing is dictated by liquidity management policies and balance sheet management policies of
the Issuer and by sales and repayment projections with respect to individual financial products offered by the
Issuer.
The Issuer is financed mainly by short-term and medium-term bonds. As at December 31, 2006 the limit for
these bonds was PLN 30 million; as at today, the limit is PLN 100 million (with the additional PLN 70 million
accounted for by medium-term bonds).
The Issuer does not pursue any material investments which would require financing with bank credit.
Assurances
As part of its basic activities, the Issuer sells a product which comprises an assurance / guarantee whereunder
the Issuer pays the liability of a debtor in response to a separate call for payment issued by the original
creditor. A framework agreement is executed with the original creditor, setting the limit of such guarantee
and the deadline within which the Issuer may be called upon to cover the liability of the debtor.
Unused limits under these framework guarantee agreements account for off-balance sheet obligations of the
Issuer which may potentially morph into balance sheet liabilities in future accounting periods. It warrants
emphasising that, working on the basis of analysis of past performance of such agreements, the Issuer
estimates that off-balance sheet liabilities relating to guarantees will become balance sheet liabilities in
between 30% and 40%, and also that such transformation will be spread evenly across the periods in which
these agreements remain binding.
As at December 31, 2006, the Issuer had off-balance sheet liabilities under framework guarantee agreements
in the amount of PLN 55,237,183.21, including:
−
−
−
PLN 2,501,116.47 guaranteed and called for payment;
PLN 11,757,196.10 guaranteed but not yet called for payment;
PLN 40,978,870.64 unused limits under executed guarantee agreements.
Material agreements
1.
Agreements executed in the usual course of business
Activities of the Issuer rely largely on the execution of agreements and contracts which are standard for the
given type of legal act or product. According to the statement by the Issuer, in light of the form and the scale
of the Issuer’s business activities – and, in particular, given the number of contracts executed by the Issuer
every year, the Issuer is not dependent on any one type of industrial, commercial, or financial contract which
would be especially significant from the perspective of Issuer’s activities or profitability.
The table below lists the Issuer’s ten largest clients among hospitals over the years 2003-2006 in terms of
contract value as at the signature date (all figures are in PLN).
1
2
3
4
5
6
7
Party
Akademickie Centrum Kliniczne Szpital Akademii
Medycznej w Gdańsku
Specjalistyczny Szpital św. Jana w Starogardzie
Gdańskim
Wojewódzki Szpital Specjalistyczny im. M. Kopernika
w Łodzi
Samodzielny Publiczny Zakład Opieki Zdrowotnej
Wojewódzki Szpital im. dr Jana Biziela w Bydgoszczy
Wojewódzki Szpital Specjalistyczny im. Stefana
Kardynała Wyszyńskiego Samodzielny
Publiczny Zakład Opieki Zdrowotnej w Lublinie
Wojewódzki Szpital Bródnowski Samodzielny
Publiczny Zakład Opieki Zdrowotnej w Warszawie
Niepubliczny Zakład Opieki Zdrowotnej Swissmed Centrum
Zdrowia S.A. w Gdańsku
74
2004
2005
2006 Total
12 841 159.12 17 903 927.21 14 254 116.19 44 999 202.51
1 243 805.36
1 380 136.92 13 290 433.70 15 914 375.98
1 940 856.15
3 107 348.90
5 828 532.51 10 876 737.56
2 635 025.89
2 265 291.57
5 193 825.30 10 094 142.75
1 986 958.15
3 167 118.59
4 912 789.78 10 066 866.52
766 030.71
687 488.69
8 244 570.91
9 698 090.31
0.00
3 592 487.43
5 918 831.39
9 511 318.82
Samodzielny Publiczny Zakład Opieki Zdrowotnej
8 Szpital Uniwersytecki w Krakowie
Szpital Wojewódzki Samodzielny Publiczny Zakład Opieki
9 Zdrowotnej im. Karola Marcinkowskiego w Zielonej Górze
10 Szpital Specjalistyczny im. Floriana Ceynowy w Wejherowie
0.00
761 897.47
8 068 905.03
8 830 802.50
746 477.75
2 596 591.33
3 671 682.75
1 956 643.10
3 929 747.94
2 143 343.45
8 347 908.45
6 696 577.88
Over the period of January 1, 2007 through May 31, 2007, the following – listed according to the PLN value of
their contracts as at signing – were the largest clients of the Issuer among hospitals:
Party
2007 (by 31.05.2007)
1 Specjalistyczny Szpital św. Jana w Starogardzie Gdańskim
Wojewódzki Szpital Bródnowski Samodzielny Publiczny Zakład Opieki
2 Zdrowotnej w Warszawie
3 Samodzielny Publiczny Zakład Opieki Zdrowotnej w Słubicach
4 Centrum Dializa Sp. z o.o. z siedzibą w Sosnowcu
5 Szpital Miejski Specjalistyczny im. G. Narutowicza w Krakowie
6 Centrum Medyczne Enel-Med. S.A. z siedzibą w Warszawie
Samodzielny Publiczny Szpital Kliniczny im. Dr. A. Jurasza Akademii Medycznej
7 w Bydgoszczy
11 484 950.38
4 435 573.35
4 300 000.00
3 000 000.00
2 400 000.00
2 358 476.02
2 348 577.96
8 Wojewódzki Szpital Specjalistyczny im. M. Kopernika w Łodzi
2 303 682.02
9 Zespół Publicznych Zakładów Opieki Zdrowotnej w Otwocku
10 Zespół Opieki Zdrowotnej - Świętochłowice
2 159 739.26
1 810 440.98
The next table names the largest clients of the Issuer among suppliers for 2003 through 2006, listed according
to the PLN value of their contracts as at signing.
1
2
3
4
5
6
7
8
9
10
Party
Zakłady Farmaceutyczne
Polpharma S.A.
Starogard Gdański
Boston Scientific Polska
Sp. z o.o. Warszawa
Medtronic Poland Sp. z o.o.
Warszawa
GlaxoSmithKline
Pharmaceuticals S.A. Poznań
GE Medical Systems Polska
Sp. z o.o. Warszawa
Profarm Sp. z o.o. Warszawa
Polska Grupa Farmaceutyczna
S.A. Łódź
Linde Gaz Polska Sp. z o.o.
Kraków
Gdańskie Przedsiębiorstwo Energetyki
Cieplnej Sp. z o.o. Gdańsk
Aesculap Chifa Sp. z o.o. Nowy Tomyśl
2006 Suma
2004
2005
15 346 004.02
18 397 458.04
7 788 339.99
41 531 802.05
1 879 230.38
7 302 691.25
10 406 365.81
19 588 287.44
7 470 743.65
3 858 718.29
6 798 323.63
18 127 785.57
5 015 955.54
5 006 696.01
3 127 807.24
13 150 458.79
810 336.99
0.00
5 401 705.44
8 510 502.74
5 952 838.04
2 592 037.03
12 164 880.48
11 102 539.77
6 610 013.22
2 429 949.70
551 636.72
9 591 599.64
4 299 026.80
2 555 077.85
1 905 026.72
8 759 131.37
0.00
938 573.15
2 697 638.18
3 602 371.19
5 657 284.66
4 219 551.83
8 354 922.84
8 760 496.17
Over the period of January 1, 2007 through May 31, 2007, the following – listed according to the PLN value of
their contracts as at signing – were the largest clients of the Issuer among suppliers:
Contracting party
2007 (by 31.05.2007)
1 Boston Scientific Polska Sp. z o.o. Warszawa
2 GE Medical Systems Polska Sp. z o.o. Warszawa
Hurtownia Środków Farmaceutycznych i Artykułów Sanitarnych "Hurtofarm"
3 Sosnowiec
4 Linde Gaz Polska Sp. z o.o. Kraków
5 HELIMED DIAGNOSTIC IMAGING Sp. z o.o. Sp. komandytowa Katowice
6 TMS Diagnostyka Sp. z o.o. Warszawa
7 Med-Prom Sp. z o.o. Warszawa
2 667 340,52
2 176 802,14
1 943 903,00
1 715 703,89
1 628 972,58
8 Stryker Polska Sp. z o.o. Warszawa
1 571 901,09
75
3 617 652,33
2 826 663,76
9 Gdańskie Przedsiębiorstwo Energetyki Cieplnej Sp. z o.o. Gdańsk
10 Medtronic Poland Sp. z o.o. Warszawa
1 277 888,46
1 237 189,43
Set out below is a description of the contracts executed by the Issuer in the usual course of its business, broken
down by individual types and by categories, as well as a quantification of all the contracts of a given type
executed by the Issuer in the course of the period covered by the historical data.
A. FINANCING OF RECEIVABLES (based on the legal construct of the receivables assignment contract)
The divesting party states in the text of the contract that it holds undisputable, payable receivables not falling
under the statute of limitations as well as specifying the aggregate value of these receivables and breaking
the amounts down into principal and accrued interest.
The divesting party transfers, conveys, and assigns onto the Issuer all these receivables along with all the rights
attaching thereto, in particular the right to claim interest in accordance with statutory rates on overdue
payments (from the day on which the invoice falls due to the day of actual payment) other than guarantee
and warranty obligations incumbent upon the divesting party. The Issuer accepts this transfer.
The divesting party states that it is transferring the receivables constituting the object of the contract onto the
Issuer in consideration for a price constituting a certain percentage of the receivables covered by the
contract.
In consideration for the financial service rendered pursuant to the contract, the Issuer charges a commission
to the divesting party. In the event that any instalment is not paid on time at any point during the term of the
assignment contract, the divesting party may call on the Issuer to make the payment on pain of rescission of
the contract with respect to the delinquent performance upon elapse of the set deadline.
In the event that the Issuer pays for the receivables in accordance with the price defined in the contract in
part only, the divesting party may rescind the contract with respect to the delinquent performance. Where
the divesting party has rescinded the contract, the Issuer effects return assignment of the receivable in the
amount outstanding as at the date of rescission. The Issuer notifies the debtor of the fact that the divesting
party has rescinded the contract as well as returning to the divesting party any documents received in
performance of the contract.
The Issuer is obligated pursuant to the assignment contract to notify the divesting party of any changes to its
ownership status, of any changes of the Issuer’s dominant / parent entity, and of any legal or factual events
unfavourable from the perspective of the divesting party within one (1) month of the occurrence of such
change or event. In the event of failure to discharge this obligation, the divesting party may rescind the
contract with immediate effect upon written notice within a specified deadline after becoming aware of
such change or event.
Contracts are executed by the Issuer subject to a condition precedent with respect to receivables covered
by a proscription on assignment to third parties; this condition precedent comprises written permission by the
debtor with respect to such receivable for the transfer / assignment. Where such permission is not forthcoming
within the stipulated deadline, the contract does not become binding and is regarded by the parties as
never having been executed.
B. FINANCING OF RECEIVABLES (based on the legal construct of the (not matured) receivables assignment
contract)
The divesting party transfers, conveys, and assigns onto the Issuer all the receivables not payable yet along
with all the rights attaching thereto, in particular the right to claim interest in accordance with statutory rates
on overdue payments (from the day on which the receivable falls due to the day of actual payment) other
than guarantee and warranty obligations incumbent upon the divesting party. The Issuer, in turn, undertakes
to pay the price specified in the contract.
76
The Issuer acquires the receivables thus assigned as at the date of the contract’s execution.
In the event that the receivable is tainted by a legal defect, the Issuer may rescind the contract with respect
to all or some of the receivables within one (1) month following discovery of the legal defect. If the Issuer
rescinds the contract, the divesting party shall – within a set deadline following receipt of the Issuer’s notice of
rescission – return to the Issuer, by way of the price of purchase of the given receivable, its nominal value as
at execution of the contract plus statutory interest, and the Issuer shall transfer onto the divesting party the
relevant receivables, return all the attendant documents, and notify the debtor of return transfer of the
receivable.
The divesting party shall notify all the debtors (by registered post, with confirmation of receipt) of the
execution of the assignment contract, failing which the Issuer may rescind the contract.
In the event that any instalment set in the contract is not paid on time, the divesting party – having first called
upon the Issuer, in a form of its choosing, to make the overdue payment within the absolute deadline of one
week – may rescind the contract if the overdue instalment remains unpaid.
The divesting party must provide the Issuer with evidence that the receivables in question exist and are
indisputable, a summary of receivables as at the contract date, and data about the debtor. The divesting
party shall also notify the Issuer of any payment made by the debtor.
If the divesting party fails to discharge its contractual obligations concerning notification of the Issuer of
payments by the debtor and the means of settlement with the Issuer, the divesting party shall pay liquidated
damages.
Liquidated damages must also be paid for any breach of the obligation to maintain confidentiality.
C. LOAN (based on the legal construct of the loan agreement)
Pursuant to the loan agreement, the lender makes available to the borrower an agreed amount of money
and the borrower undertakes to repay this amount in accordance with the repayments schedule.
In the agreement, the borrower authorises its own debtor to credit borrower’s receivables directly to the Issuer
until the receivable has been repaid in full.
The debtor repays the amount of the loan on the basis of a transfer arrangement; this, however, remains
without prejudice to the borrower’s liability for repayment. In the event that repayment is not forthcoming
from the debtor, the obligation to repay rests on the borrower.
The parties agree that borrower shall send the signed notification of transfer to the debtor and present the
Issuer with proof that this transfer has been accepted before crediting any funds under the loan.
Amounts not repaid on time shall be regarded as overdue receivables on which the Issuer may claim interest
in accordance with the statutory rates (between the day on which the given amount becomes overdue and
the day of payment).
The transfer arrangement involving the debtor is a prerequisite for release of any funds under the loan.
D.
Contract for provision of factoring services
The contract for provision of factoring services is executed by and between the Issuer, which acts as a factor,
and a party interested in selling all its receivables before they have become due and payable. On the day of
such a contract’s executions, the entities (debtors) whose receivables will be sold, and acquired by the
factor, are not known.
The divesting party states that, in order to sell the given receivable, it shall submit to the Issuer / factor a
written application specifying:
− The entity with respect to which it holds a receivable not due yet;
− The legal relationship providing the basis for that receivable;
− The amount of the receivable.
77
Within a specified deadline, the factor must reply to this application, indicating whether it is interested in
purchasing the receivable of the given entity and, if yes, specifying the terms at which it would contemplate
such purchase and the value of the monthly limit for the entity in question.
The parties agree that, where the Issuer does not give its reply within a set deadline, this shall be tantamount
to negative appraisal of the entity proposed by the divesting party and that, accordingly, the Issuer shall be
under no obligation to purchase the receivable in question.
In consideration for the Issuer’s readiness to purchase the receivables presented to it, the divesting party shall
remit to the Issuer a commission calculated in reference to the limit of the receivables.
Only invoices issued by the divesting party, signed by a person empowered to represent the debtor, shall be
recognised as proof of the existence of receivables.
The Issuer acquires the receivables under the given invoice as at receipt from the divesting party of a signed
statement on transfer of the receivables. Any and all correction invoices referring to invoices already paid
shall be settled between the debtor and the divesting party.
By the same token, the Issuer shall not be liable for any guarantee or warranty for defects of goods and
services delivered or performed in a fashion giving rise to claims with respect to physical or legal defects. Any
settlements in this respect shall be conducted directly between the divesting party and the debtor.
In consideration for the purchased receivables, the Issuer shall remit a price corresponding to 100% of the
gross amount of the invoice. On the other hand, the Issuer is entitled to a commission for purchase of the
receivables under the invoice, as defined in the contract.
The parties may terminate the contract subject to a one-month period of notice.
E.
REFINANCING OF LIABILITIES (based on the legal construct of the contract for restructuring of liabilities and
taking over of the debt)
In the contract for restructuring of liabilities and taking over of the debt, the Issuer undertakes to restructure
the debts of the contracting hospital by assuming the obligation to repay its debts and subsequently settling
with the hospital’s debtors.
The Issuer repays the hospital’s debts by way of wire transfer. As at the day on which this transfer is effected,
the Issuer acquires the receivable which it has thus paid off along with the right to claim statutory interest on
the amount of the repayment. In this way, the Issuer becomes a creditor of the hospital.
In the event that some of the hospital’s debt is waived or forgiven, the Issuer acquires the rights of the debtor
thus satisfied up to the amount of the repayment made along with the right to claim interest on the amount
repaid and to a commission on the restructured debt. The commission is paid on the basis of a VAT invoice
issued by the Issuer. Where the Issuer repays the hospital’s debts in instalments, the commission is due on the
appropriate amount of the part repaid by the Issuer.
Upon repayment of the hospital’s debt by the Issuer, the hospital undertakes to repay the amount of that
debt to the Issuer along with the commission and interest.
In the event of delays or shortfalls in payment of any instalment, the Issuer reserves the right to claim interest
(at the agreed rates) for the period of delay or to seek legal recourse.
By way of security for repayment of the loan, the hospital draws up and presents to the Issuer an own, in
blanco promissory note and undertakes to pay against that promissory note in the promissory note
declaration constituting a schedule to the contract.
F.
GUARANTEE (based on the legal construct of the contract for cooperation with respect to receivables
and extension of guarantees)
In the contract for cooperation with respect to receivables and extension of guarantees, the Issuer
undertakes to guarantee the liabilities of the entity under separate contracts executed with the supplier.
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Guarantee by the Issuer of the entity’s liabilities vis a vis the supplier is conditional upon observance by the
supplier of the deadlines laid down in the contract. Where the Issuer guarantees the liabilities of the entity, the
Issuer notifies the entity in due course that a contract to that effect has been executed.
On the basis of the guarantee contract, in consideration for the Issuer’s readiness to guarantee the liabilities
of the entity the supplier undertakes to pay to the Issuer a commission defined as a percentage of the cap on
guaranteed liabilities set in the contract.
The guarantee extended by the Issuer is effective subject to the following conditions precedent:
−
−
Payment by the supplier of the commission defined in the contract;
Timely discharge by the supplier of the obligations laid down in the contract.
Where the Issuer has guaranteed a liability of the entity and the entity fails to repay such liability, the supplier
notifies the Issuer accordingly in accordance with the deadline set in the contract.
The Issuer, in its capacity as guarantor, then repays the liability along with the statutory interest accrued
between the date on which the liabilities of the entity fell due and the day of repayment following the notice.
The Issuer becomes a creditor of the entity with respect to the liability thus repaid; the Issuer is entitled to claim
interest in accordance with the statutory rates for any delays as of the day on which the entity is called upon
to repay the liability vis a vis the Issuer.
If the entity repays all or some of the guaranteed liability before this repayment is made by the Issuer, the
supplier shall notify the Issuer accordingly, indicating the specific liabilities towards which such repayment by
the entity was credited.
If the entity repays all or some of the guaranteed liability after this repayment is made by the Issuer, the
supplier shall return to the Issuer the amounts covered by the guarantee and repaid for the entity.
The Issuer and the supplier shall maintain confidentiality with respect to all information incorporated in the
contract, in particular as regards the value of that contract, the terms subject to which the Issuer guarantees
liabilities of the entity, and information obtained in relation to performance of the guarantee contract. The
party in breach shall pay liquidated damages or every instance of breach of the obligation to maintain
confidentiality of such information.
Novation agreements
This is a special type of contract executed with hospitals vis a vis which the Issuer holds matured receivables.
On the basis of a novation agreement, the existing liability of the health care entity (which expires as at
execution of this agreement) is supplanted by a new liability payable in the future. By executing such a
contract, the Issuer may offer to the health care entity new, favourable terms for honouring the liability which
do not affect current operation of the entity.
Pursuant to the novation agreement, the Issuer’s contracting party undertakes to repay the principal along
with interest in accordance with the agreed repayments schedule. The Issuer, provided that the repayment
deadlines are abided by, undertakes to waive the interest accruing after execution of the contract for
financing liabilities.
In accordance with the contract, the day of an instalment’s payment is recognised as that on which the
funds are credited to the account of the Issuer. Funds thus credited are posted, in the first order of sequence,
towards repayment of the interest due in reference to the instalment and then towards repayment of the
principal.
Interest is always calculated in reference to the rate per annum, and interest instalments are payable on a
monthly basis along with the principal instalments. In the event of delay or shortfall in payment of any given
instalment, the creditor may demand immediate repayment of the entire outstanding debt by serving notice
to that effect.
Any receivables not repaid in accordance with the contractual deadline, and likewise receivables due in the
even of delays or shortfalls in payment of instalments, are regarded as overdue liabilities.
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The Issuer may claim statutory interest on the principal amount of the overdue debt; such interest shall accrue
between the day on which such debt becomes overdue and the day on which it is repaid.
In the event of delayed instalment payments, an overdue debt arises as of the day following that on which
the given instalment was due. In the case of mature receivables, meanwhile, if any instalment is late or is not
paid in full, an overdue debt arises as of the day specified in the notice that the debt has become due and
payable served by the creditor on the debtor.
In 2005, the Issuer executed:
1.
313 contracts for financing receivables to the aggregate value of PLN 96,392,639.46;
2.
24 factoring contracts to the aggregate value of PLN 1,711,771.81;
3.
155 guarantee contracts to the aggregate value of PLN 12,145,130.54;
4.
31 loan agreements to the aggregate value of PLN 10,083,816.64;
5.
6 contracts for the refinancing of liabilities to the aggregate value of PLN 1,379,670.55.
In 2006, the Issuer executed:
2.
1.
317 contracts for financing receivables to the aggregate value of PLN 98,453,433.44;
2.
17 factoring contracts to the aggregate value of PLN 7,034,174.23;
3.
406 guarantee contracts to the aggregate value of PLN 23,392,910.37;
4.
149 loan agreements to the aggregate value of 83,356,181.57;
5.
74 contracts for the refinancing of liabilities to the aggregate value of PLN 6,872,770.19.
Material agreements executed beyond the ordinary course of business
Over the years of 2004, 2005, 2006 and 2007, the Issuer did not execute material agreements outside the usual
scope of its business activity other than those specified below:
A. CONTRACTS ASSOCIATED WITH THE BONDS ISSUE PROGRAMME
On March 25, 2005, Magellan Sp. z o.o. executed with Raiffeisen Bank Polska S.A. (RBP S.A.) a contract for
servicing of the short-term bond issue programme with a cap of PLN 10 million. Execution of this contract was
preceded by a resolution of the Shareholders Meeting dated March 23, 2005 concerning launch of a PLN 10
million bond programme; pursuant to applicable contracts, soliciting of investors for these bonds was
entrusted to Magellan Sp. z o.o.
On April 18, 2005, Magellan Sp. z o.o. issued its own bonds to the value of PLN 400,000, addressing them to
private investors. These bonds were purchased for a one-year period, assumed material form and where
deposited in a safe deposit box at a bank until the day of their redemption.
On October 14, 2005, Magellan Sp. z o.o. signed an agency and dealership agreement with RBP S.A.
concerning launch of a short-term bond issue programme with a cap of PLN 20 million. Execution of this
contract was preceded by resolution no 4 of the Extraordinary General Meeting dated October 5, 2005
concerning launch of a PLN 20 million bond programme. The resolution adopted by the Extraordinary General
Meeting on October 20, 2006 increased the value of the programme to PLN 30 million; this increase was duly
reflected in the annex to the contract with RBP S.A. dated October 26, 2006.
For purposes of this programme, RBP S.A. served as the dealer and the issue agent.
The bond issue programme is used for financing basic operations associated with the financing and
restructuring of public health care entities. The Issuer issues bonds with maturity periods of between one and
twelve months, depending on its current financial needs and on the maturity dates of the assets financed by
the given issue.
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In aggregate, the value of bonds issued over the years 2004-2006 was PLN 56.870 million. These bonds bore
interest at between 6.75% and 14% per annum. The highest interest rates coincided with the rolling out of the
programme. A significant influence on the interest rate is also exerted by the period for which funds were
invested. Interest remained fixed for the duration of the given liability. Bonds issued under the PLN 30 million
programme are discounted bonds; the previous programmes involved issue of coupon bonds.
B.
Agency agreement with BRE Bank S.A. dated January 17, 2007
On January 17, 2007, the Issuer executed (in Warsaw) an agency agreement with BRE Bank S.A. with its
registered seat in Warsaw pursuant to which the Bank assumed the obligation to perform, subject to this
agreement, obligations relating to issue of bonds and transfer of rights in bonds in secondary dealing in the
capacity of issue agent, payment agent, and depositary. The agreement envisages multiple bond issues - to
be made by the Issuer through instructions for a tranche issue – over a period of five (5) years following the
agreement execution date, i.e. by January 12, 2012, with the reservation that the Issuer is entitled to issue
bonds with an issue date which shall not entail transgression of the issue programme duration. The minimum
period for exercise of rights in bonds from a given issue is 1.5 years, and the maximum period – 3 years.
The maximum value of the programme has been set at PLN 70 million.
The Issuer has appointed BRE Bank S.A. to serve as its issue agent, payment agent, and depositary with
respect to the issue programme and instructed the Bank to perform these duties, as provided for in the
agreement. The Bank may terminate the agreement in the event that:
1.
The Issuer fails to pay any amount due under the bonds on the interest payment date or on the
redemption date or fails to discharge any other financial obligation incumbent upon the Issuer under
the agreement or under the dealership contract;
2.
The Issuer fails to repay on a timely basis its debts in an aggregate or one-time amount in excess of
PLN 1,000,000;
3.
Any asset or assets of the Issuer become the object of any attachment, court-imposed security, or
enforcement in an aggregate amount (over 12 consecutive months) or a one-time amount
exceeding PLN 1,000,000;
4.
The Issuer institutes, or there is instituted, security on any present or future assets of the Issuer in an
aggregate amount (over 12 consecutive months) or a one-time amount exceeding PLN 1,000,000.
This shall not apply to the institution of security to a value not exceeding half the assets held by the
Issuer (counted as at their book value specified in the last audited annual financial report of the
Issuer) associated with execution by the Issuer of a loan agreement, a bank guarantee agreement,
or a credit facility agreement with a bank institution. For these purposes, “security” denotes
mortgages, pledges or liens, register pledges, financial pledges, transfer as security, guarantee, right
to retain or other encumbrances or attachments applied to the assets or the revenues of the Issuer as
security;
5.
Debts of the Issuer in an aggregate amount (over 12 consecutive months) or a one-time amount in
excess of PLN 1,000,000 becomes due and payable before their original maturity, or there arise
circumstances as a result of which the Issuer’s credit may render such liabilities of the Issuer due and
payable before their original maturity;
6.
Any express or implicit representation, warranty, or undertaking made by the Issuer in the agreement,
in the dealership contract, or in the bond documentation proves to be untruthful in whole or in part
as at the time of its making;
7.
There occurs a factual or legal event as a result of which it is possible to place the Issuer in
bankruptcy with the possibility of arranging with its creditors or in bankruptcy combined with asset
liquidation;
8.
One or more final (without possibility of further appeal) judgements or decisions are handed down
enjoining the Issuer to pay an aggregate amount (over 12 consecutive months) or a one-time
amount exceeding PLN 1,000,000 or any other judgment or decision, not necessarily referring to
pecuniary payments, binding on the Issuer which, in the view of the Bank, shall or may cause a
81
material adverse change in the business activities, assets, or financial situation of the Issuer or which
shall, or may, have a negative effect on legality, validity, or possibility of performance of the
obligations under the bonds;
9.
The Issuer discontinues business activity in such a way that, in the view of the Bank, it becomes
impossible for the Issuer to repay its liabilities under the bonds;
10. Polish laws applicable to the Bank or to the Issuer, or decisions of administrative bodies, provide
reasonable grounds for believing that the share issue, the amount to be paid under the bonds,
and/or performance by the Issuer of its obligations under the agreement and the dealership contract
will be illegal;
11. Any permits, permissions, or other licences required for validity of the agreement or of the dealership
contract or for performance of the Issuer’s obligations under the agreement are revoked or expire;
12. The Issuer does not perform or abide by any condition, warranty, representation, or obligation set out
in the agreement, in the dealership contract, in the rules, or in the information documents, with the
reservation that the Bank may apply the measures discussed above after calling upon the Issuer in
writing to desist in the breach and upon ineffectual elapse of the deadline set for rectifying the
breach, which shall be not shorter than five (5) business days;
13. There occurs an event or a series of events which, in the reasonable assessment of the Bank, may
have a material adverse effect on the Issuer’s financial situation or on its ability to discharge its
obligations with respect to the bonds.
If the circumstances described above arise, the Bank may:
1.
Suspend with immediate effect – for a defined period of time – its activities as issue agent, payment
agent and depositary with respect to any subsequent planned bond issues, including issues with
respect to which the issue agent has received issue instructions after the grounds for termination of
the agreement arose; or
2.
Terminate the agreement in writing subject to a 30-day period of notice, with the reservation that,
subsequent to the date of termination, the Bank will continue to perform its obligations in the
capacity of issue agent, payment agent and depositary vis a vis bond holders, investors, and the
Issuer, but solely with respect to bonds issued before the agreement’s termination; or
3.
Terminate the agreement with immediate effect, with the reservation that, subsequent to the date of
termination, the Bank will continue to perform its obligations in the capacity of issue agent, payment
agent and depositary vis a vis bond holders, investors, and the Issuer, but solely with respect to bonds
issued before the agreement’s termination.
In the event of the agreement’s termination in accordance with items 2 or 3 above, the agreement shall
continue in force with respect to any bonds issued prior to such termination; in respect to such bonds, the
agreement shall be terminated on the day of the redemption of the final tranche of bonds issued before
termination.
The Issuer or the issue agent may furthermore terminate the agreement without specifying any reason, subject
to a 30-day period of notice.
C. Dealership contract with BRE Bank S.A. of January 17, 2007
On January 17, 2007, the Issuer executed (in Warsaw) a dealership contract with BRE Bank S.A. with its
registered seat in Warsaw pursuant to which the Bank assumed the obligation to perform, subject to this
contract, obligations relating to issue of bonds and transfer of rights in bonds in secondary dealing in the
capacity of dealer. The agreement envisages multiple bond issues - to be made by the Issuer through
instructions for a tranche issue – over a period of five (5) years following the contract execution date, i.e. by
January 12, 2012, with the reservation that the Issuer is entitled to issue bonds with an issue date which shall
not entail transgression of the issue programme duration. The minimum period for exercise of rights in bonds
from a given issue is 1.5 years, and the maximum period – 3 years.
The maximum value of the programme has been set at PLN 70 million.
82
The Issuer has appointed the Bank as its dealer with respect to the issue programme and commissioned the
Bank to perform its duties in accordance with the terms of the contract and the rules. It was furthermore
agreed that the Bank may, subject to a separate contract with the Issuer, define the conditions for
guaranteeing that issue of the tranche, or tranches, will be effected.
As qualified by the contract, the Issuer shall agree with the dealer, in the form of instructions for issue, issue of
a bond tranche. Further to this agreement, the dealer shall be obligated to seek out investors on a best effort
basis, or the dealer shall be entitled to acquire such bonds in its own account.
Insofar as the dealer and the Issuer do not agree otherwise, the dealer shall not be obligated to acquire or
purchase the bonds from the Issuer, and the Issuer shall not be obligated to issue or sell the bonds to the
dealer or to subcontractors of the dealer.
Insofar as the dealer and the Issuer do not agree otherwise, the nominal value of each individual tranche of
bonds shall not be less than PLN 3,000,000 and the time intervening between consecutive tranche issues
(irrespective of their maturity dates) shall not be less than 5 business days.
Bonds issued under the issue programme shall not assume the form of a document; in other words, each
bond shall be registered with the Deposit and the rights attaching to each bond shall arise as at their entry in
the Deposit and, in particular, their entry on the deposit account of the bondholder.
The Issuer has authorised the dealer to organise secondary trading in the bonds, to comprise in particular
further sale to investors of bonds purchased previously or purchase of bonds from their holders. The Issuer has
furthermore authorised the dealer to draw up and sign on its behalf proposals for purchase of bonds, and it
has undertaken to provide the Issuer with the information required under the legislative Act regarding bonds
with a view to correct drawing up of such proposals.
Over a period of eighteen (18) months following execution of the bond issue programme contracts as well as
at any time within nine (9) months following the giving of instructions for issue of a bond tranche, the Issuer
shall not, without the permission of the dealer, give instructions for the introduction – or introduce – to
domestic equity markets any new debt instruments with maturity dates in excess of one (1) year which would
be directly or indirectly addressed to the following domestic investor groups: open pensions funds, insurers,
investment funds, entities providing services in the area of asset management, investment fund associations,
general pension societies, cooperative savings and loans societies, employee pension funds, and reinsurance
societies. At the same time, in the event of intended introduction, or commissioning introduction, of new debt
instruments with maturity dates of more than one year to be floated pursuant to contracts other than the
agency agreement and the dealership contract executed with the dealer, the Issuer shall notify the dealer
one month in advance.
The parties have instituted limitations on sale of the bonds, deciding that the bonds shall be offered only
within Poland and that they may not be offered as part of a public offering within the meaning of art 3 of the
legislative Act regarding public offering, conditions governing the introduction of financial instruments to
organised trading, and public companies (“Public Offering”).
The dealer warranted that it would not offer or sell the bonds in Poland as part of a public offering in the
secondary market and, accordingly, obligated itself that it shall not offer bonds from any given tranche to
potential investors in a number exceeding 99 persons.
The bonds may not be directly offered, sold, or issued in the United States or in its territories or dependencies;
by the same token, the bonds may not be directly offered, sold, or issued in any one of the fifty states, in the
District of Columbia, or to American entities – “U.S. Persons” within the meaning of the American Securities
Act, unless the bonds have been registered in accordance with the American Securities Act or an exemption
from registration applies.
The parties have furthermore agreed that grounds for termination of the agency agreement shall also
constitute grounds for termination of the dealership contract and that – subject to the reservation discussed
below – they shall apply in an analogous scope with respect to the contract and shall be regarded as if they
were defined in the contract.
If the circumstances described above arise, the Bank may:
83
1.
Suspend with immediate effect – for a defined period of time – its activities as dealer with respect to
any subsequent planned bond issues after the grounds for termination of the agreement arose and
shall not accept new instructions for bond issue as well as suspending activities falling under the
current instructions for issue received prior to suspension of the contract; or
2.
Terminate the contract in writing subject to a 30-day period of notice, with the reservation that,
subsequent to the date of termination, the Bank will continue to perform its obligations in the
capacity of dealer vis a vis the Issuer with respect to bonds issued before the contract’s termination
and shall not accept new instructions for bond issue as well as suspending activities falling under the
current instructions for issue received prior to termination of the contract; or
3.
Terminate the contract with immediate effect, with the reservation that, subsequent to the date of
termination, the Bank will continue to perform its obligations in the capacity of dealer vis a vis the
Issuer with respect to bonds issued before the contract’s termination.
In the event of the contract’s termination in accordance with items 2 or 3 above, the contract shall continue
in force with respect to any bonds issued prior to such termination; in respect to such bonds, the agreement
shall be terminated on the day of the redemption of the final tranche of bonds issued before termination.
The Issuer or the issue agent may furthermore terminate the agreement without specifying any reason, subject
to a 30-day period of notice. Termination shall become effective upon elapse of the period of notice, as
qualified by items 2 and 3 above.
Unless terminated at an earlier date, the contract shall remain in force for the duration of the agency
agreement of January 17, 2007, i.e. until redemption of all the bonds issued under the bond issue programme.
On May 22, 2007, the Supervisory Board of the Issuer adopted a resolution extending permission for a bond
issue with the aggregate value of PLN 5 million. Acting on authority of this resolution, the Issuer issued bonds
with an aggregate value of PLN 5 million on May 24, 2007.
D.
CONTRACT FOR LEASE OF FACILITIES TO SERVE AS THE COMPANY’S SEAT
On September 16, 2005, the legal predecessor of the Issuer executed (in Łódź) a contract with Echo Centrum
Bankowości i Finansów Łódź Sp. z o.o. with its registered seat in Kielce for lease of 571.61 m² of office space on
the ninth storey of the building at ul. Sienkiewicza 85/87 in Łódź as well of a further 25.18 m² on the first storey
of that building along with 12 parking spaces.
Pursuant to the annex of June 4, 2007 executed with the legal successor of Echo Centrum Bankowości i
Finansów Łódź Sp. z o.o. with its registered seat in Kielce, viz Projekt Echo – 53 Sp. z o.o. with its registered seat
in Kielce (following transfer of the former’s business enterprise), the leased office space was increased by an
additional 210.7 m2 on the tenth storey of the building.
The contract was executed for a fixed term of five (5) years, counted as of the day of release of the object of
the lease. The contract is subject to extension for a subsequent five (5) years subject to signature by the
parties of an annex to that effect not later than three (3) months before elapse of the original contract term.
E.
CONTRACTS FOR SALE OF REAL ESTATE
On March 27, 2006, the legal predecessor sold to private individuals the following properties for an aggregate
price of PLN 809,940:
a) Property in Łódź-Polesie at ul. Wólczańska 73 with a usable area of 65.72 m² for which the District
Court for Łódź-Śródmieście, Division XVI – Land and Mortgage Register maintains the land and
mortgage register no LD1M/00106484/3;
b) Property in Łódź-Polesie at ul. Wólczańska 73 with a usable area of 56.97 m² for which the District
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c) Property in Łódź-Polesie at ul. Wólczańska 73 with a usable area of 194.32 m² for which the District
d) Property in Łódź-Polesie at ul. Wólczańska 73 with a usable area of 194.62 m² for which the District
mortgage register no LD1M/00150472/9.
These contracts were drawn up in the form of a notarial deed before Piotr Czarnecki, notary in Łódź with his
notarial office at ul. Piotrkowska 122 (Repertorium A no 1261/2006).
Credit facility agreements
Lender
Date of agreement
Credit amount
Deadline
1.
Raiffeisen Bank
Polska
Spółka Akcyjna
10.08.2006
PLN 9,000,000
30.11.2007
2.
Powszechna Kasa
Oszczędności Bank
Polski Spółka
Akcyjna
19.10.2006
PLN 2,000,000.00
13.03.2008
Bank Inicjatyw
Społeczno Ekonomicznych
Spółka Akcyjna
03.10.2005
3.
Type of credit facility, material
provisions
Financing of the Issuer’s current
operations.
Repayment of the credit facility is
secured by:
1. A statement on submission to
enforcement pursuant to a bank
enforcement title up to the amount
of PLN 13,500,000.00;
2. Powers of attorney over the
current account and other
accounts of the Issuer at Bank
Raiffeisen Bank Polska S.A.;
3. Assignment of existing
receivables to at least twice the
amount of the contractual limit.
Multi-purpose credit facility.
secured by:
1. A clause re deduction of funds
held on the Issuer’s current
account at PKO BP SA;
2. Own in blanco promissory note;
3. Statement on submission to
enforcement.
PLN 6,000,000.00
31.03.2008
Short-term renewable overdraft.
secured by:
1. Own in blanco promissory note
with statement;
2. Conditional assignment of
receivables from health care
entities to the minimum amount of
PLN 12,000,000.00;
current account at BISE S.A.;
enforcement title up to the
amount of PLN 12,000,000.00.
85
4.
Dominet Bank
Spółka
Akcyjna
10.02.2005
PLN 1,000,000.00
28.09.2007
Current credit facility
Legal security for repayment of
the credit facility is comprised in:
Issuer’s current account;
2. Own in blanco promissory note
by the Issuer with statement;
3. Conditional assignment of
Issuer’s receivables;
enforcement title up to the
amount of PLN 2,500,000.00.
Fixed assets
Real property of the Issuer of material significance to the Issuer’s activities is described in the table below. As
at the date of approval of this Prospectus, apart from the properties, vehicles and computer equipment
described below, the Issuer does not have any other assets which would be of significance from the
perspective of its activities.
Real property of the Issuer
Location and designation
1.
Łódź, ul. Sienkiewicza
85/87
Use
Seat of the Issuer
Area
m2
782.31
on the
ninth storey,
25.18 m2 on the first
storey, 12 parking
spaces
2.
Warsaw, ul. Emilii Plater 53
Office space
16 m2 on the tenth
storey of
Warszawskie
Centrum Finansowe
Legal title
Material provisions
Lease contract
of September
16, 2005
executed with
Projekt Echo 53
Sp. z o.o. with its
registered seat
in Kielce
The contract was executed for
a fixed term of five (5) years,
counted as of the day of
release of the object of the
lease. The contract is subject to
extension for a subsequent five
(5) years subject to signature by
the parties of an annex to that
effect not later than three (3)
months before elapse of the
original contract term.
Lease contract
of January 17,
2007 executed
with REGUS
Bussiness Centre
Sp. z o.o.
The contract was executed for
a fixed term of two (2) years.
Source: Issuer
The aggregate value of fixed assets owned by the Issuer as at December 31, 2006 is PLN 468,000. According
to the Issuer’s own statement, the fixed assets owned by the Issuer are not encumbered by any third party
rights. The Issuer does not own any land (including perpetual usufruct title). As at December 31, 2006, the
aggregate value of the Issuer’s buildings, facilities and land and water engineering structures amounted to
PLN 13,000.
The Issuer owns and uses in its current activities fixed assets comprising vehicles. As at December 31, 2006, the
value of these vehicles was PLN 418,000, and the value of other fixed assets – PLN 50,000.
The Issuer purchases fixed assets on the basis of contracts for sale, or it utilises fixed assets on the basis of
contracts for lease, rental, leasing, or similar contracts.
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As at the date of approval of this Prospectus, the Issuer had executed 11 leasing contracts with respect to
cars. The contracting parties were Carcade S.A. and BRE Leasing Sp. z o.o. In each case, the period of the
lease was set at 36 months; the leasing contracts were secured by own in blanco promissory notes.
The most significant leasing contract is that executed with ECS International Polska Sp. z o.o. on December 1,
2003, for reverse lease of software and computer equipment to the value of PLN 820,000. Pursuant to the
annex dated July 22, 2005, the value of the lease was set at PLN 920,000. Interest on the agreement was set at
WIBOR 3M plus the margin of the financial institution; the contract remains in force for a period of 36 months
following the date of the most recent annex (i.e. until July 2008).
For the year 2007, the Issuer expects to make expenditures towards fixed assets in the amount of PLN 500,000;
most of these expenditures will refer to replacement of vehicles. For consecutive years, the Issuer expects to
increase spending on fixed assets by between PLN 0.5 million and PLN 1.2 million.
The Issuer also expects that, as employment increases, 2007 or early 2008 will bring the need of increasing
office space at the Issuer’s disposal by leasing additional space.
According to the Issuer’s own statement, no binding obligations have been assumed in the above respect.
Environmental Protection
The activities of the Issue do not entail a duty to obtain any specific permits with respect to use of
environmental resources or discharges and emissions. The Issuer draws up information concerning its use of
environmental resources on a timely basis, and there has been no need to remit any payments in this respect.
For the individual years of 2004 through 2006, the Company has filled out environmental reports only with
respect to exhaust emissions from the cars used by it for business purposes.
Court and arbitration proceedings
1.
Over the past twelve (12) months, the Issuer has not been, and is not, party to any arbitration
proceedings, reprivatisation proceedings, or proceedings before government bodies.
2.
Over the past twelve (12) months, there were – and are – no bankruptcy, debt arrangement, debt
settlement, debt enforcement, or liquidation proceedings pending vis a vis the Issuer which might
have a material impact on the Issuer’s activities.
3.
Over the past twelve (12) months, the Issuer has not been involved in any collective labour disputes.
4.
Bankruptcy proceedings involving the Issuer as a creditor
Case brought at the application of Magellan S.A. with the participation of Mieczysław Dziadkiewicz, trading
under the business name “Firma Dziadkiewicz”. Proceedings underway before the District Court in Piotrków
Trybunalski (case ref V GUp 1/06); bankruptcy with liquidation of the bankrupt entity’s assets has been
announced.
These proceedings do not have a material impact on the Issuer’s activities.
5.
Labour law proceedings involving the Issuer as a party
Case brought by Marcin Ciszewski for reinstatement in his job, underway before the District Court for ŁódźŚródmieście; the court has scheduled a hearing for May 14, 2007.
These proceedings do not have a material impact on the Issuer’s activities.
6.
Court proceedings involving the Issuer as a plaintiff
The nature of the Issuer’s business activities means that, in certain cases, the Issuer has been a plaintiff in court
proceedings, and also that it will continue bringing suits in the future. At present, the Issuer is a plaintiff in 103
civil suits at various stages of the judicial process. None of the defendants may be said to have a dominant
87
role; for the most party, they are independent public health care entities (Polish abbreviation SP ZOZ). The
Company employs a three-way division of court cases in which it is involved as a plaintiff:
1.
2.
3.
Ordinary proceedings;
Proceedings against founding bodies;
Proceedings geared at confirming the legality of the Issuer’s products.
The first category comprises proceedings underway before the general courts, mostly involving independent
public health care entities. These cases are at various stages of the judicial process, although judgements or
orders for payment have already been handed down in most of them with no possibilities of further appeal
and, accordingly, the cases have been referred for debt collection.
The second category refers to liabilities of independent public health care entities which have found
themselves de facto insolvent. Seeing as standard methods for debt enforcement do not yield results vis a vis
these entities, steps have been taken to recoup the Issuer’s receivables vis a vis these entities directly from the
founding bodies of the independent public health care entities concerned. These proceedings are geared
at:
-
Obtaining damages from the founding bodies of the independent public health care entities (cases
against the self government of the Lower Silesian administrative region pending before the District
Court in Wrocław), with Szpital Matki i Dziecka of Wałbrzych as debtor, and against Gryfin County,
with the Hospital in Gryfin as debtor;
-
Preventing the founding bodies of the independent public health care entities from protracting the
liquidation of the entities which are the Issuer’s primary debtors. As at the completion of such
liquidation, liabilities of the hospitals pass onto their founding bodies by statute.
The above data indicates that, as part of its activities, the Issuer has taken efforts geared at developing
effective methods of collecting its receivables fro de facto insolvent health care entities. In the process, the
Issuer has devised basic procedures for court cases and legal avenues which best serve this purpose. This has
enabled the Issuer to take legal steps against the founding entities of delinquent health care entities when
the grounds for such legal action arise, and to lodge appropriate applications in the course of debt
enforcement proceedings already underway. Where required in light of the measures taken by the founding
bodies of the health care entities, the Issuer also brings complaints referring to the Polish constitution to block
illegal measures by the local self government bodies.
These concepts of the Issuer have been affirmed by the Polish Supreme Court, which concurred with the
reasoning put forward by the Issuer in a number of Civil Chamber decisions (case refs II CK 600/2004, V CK
160/2003). These decisions amount to a species of confirmation that the legal strategies devised by the Issuer
are duly founded in applicable laws and that they present a legitimate means of enforcing the rights
guaranteed for the Issuer in pertinent legislation.
Given the characteristics of the actions taken as part of the debt enforcement proceedings, this category
should also be taken to include cases for granting execution clauses against founding bodies following
liquidation of independent public health care entities initiated within the context of debt enforcement
proceedings already underway.
The third category, finally, comprises cases in which the legality of the Issuer’s financial products is verified
before the courts. Most of these cases refer to guarantees and assurances. Examples include the cases
against Marciniak Hospital in Wrocław and Banach Hospital in Warsaw. The products offered by the Issuer
have been analysed and endorsed by the courts on many occasions; despite the variety of interpretations,
no general court has ever questioned the legality of the Issuer’s products, testifying to their thorough
formulation and their legality.
7.
Interpretation concerning VAT on financial intermediation services with respect to debt restructuring
employing assignment of receivables
88
On January 4, 2005, the Issuer applied to the Head of the Łódź Treasury Office for a written interpretation
concerning the scope and means of applying the tax law with respect to VAT on services provided by the
Issuer. The Treasury Office’s reply of April 5, 2005 did not set out an unequivocal position, which led the Issuer
to lodge a complaint before the Director of the Łódź Treasury Office on April 11, 2005.
On February 15, 2006, the Director of the Łódź Treasury Office issued a decision repealing in part the decision
of the Head of the Łódź Treasury Office and indicating that, within the meaning of the legislative Act
regarding VAT, the service of restructuring receivables by way of acquiring receivables through assignment,
as provided by the Issuer, constitute a debt collection service which is subject to the basic VAT rate. On
March 1, 2006, the Issuer appealed the decision of the Director of the Łódź Treasury Office, citing legal
defects. The Issuer argued that one point militating in favour of the VAT rate applied by it is the interpretation
by the Classifications Standard Interpretation Centre of the Statistical Office in Łódź.
On May 5, 2004, the Issuer had applied to the Classifications Standard Interpretation Centre of the Statistical
Office in Łódź with a request for interpretation with respect to the service cited above. On May 10, 2004, the
Issuer received a reply indicating that, under the PKWiU (Polish Classification of Goods and Services) rules, the
described service for dealing in receivables in one’s own account, purchasing receivables with the
involvement of one’s own funds and with assuming the risk of the debtor’s solvency falls within the group:
PKWiU 65.23.10-00.00 – “Other financial intermediation services not classified elsewhere, excluding insurance
and pension and disability funds”.
At the same time, the Centre stated that, in reference to § 2 of the statutory order promulgated by the
Council of Ministers on April 6, 2004 (Journal of Laws No 89, item 844), the PKWiU implemented by the statutory
order of March 18, 1997 (Journal of Laws No 42, item 264 with subsequent amendments) still applies for tax
purposes and that the service described above falls within the group:
PKWiU 65.23.10-00.00 – “Financial intermediation services not classified elsewhere”.
According to the classification presented above and to schedule no 4 to the new VAT Act incorporating the
list of tax-exempt services, the service provided by the Issuer has been classified as an object service
exempted from VAT. The Statistical Office has not classified the service as factoring or as a debt collection
service which might be subject to taxation at 22%. The Polish Classification of Goods and Services places
factoring services (65.22.10-00.10) and services provided by collection agencies (74.87.12) in categories
separate from financial intermediation services. The fact that such a distinction is made for statistical purposes
indicates that the legal relationships entailed in dealing in receivables as a financial intermediation service
and in factoring and debt collection services are, in fact, different.
As at the day of drawing up its financial report for 2005, the Issuer had not received a reply to its appeal of
the decision of the Director of the Łódź Treasury Office.
The Issuer estimated the potential liability in this respect and its impact upon the financial report, setting this
information out in a note enclosed with that report. The potential liability was assessed in accordance with
Executive Board estimates of the additional liabilities which would be entailed by an interpretation
unfavourable to the Issuer. Seeing as the Executive Board was confident that the outcome of the case would
be in the Issuer’s favour, the financial report as at December 31, 2005 does not include the estimate, and
mention of this event is confined to the additional explanatory notes.
On May 15, 2006 – following approval of the financial report for 2005 – the Issuer received a decision by the
Director of the Łódź Treasury Office upholding the original tax interpretations challenged by the Issuer.
The Issuer once again assessed the tax liability, literally following the decisions in question. Accordingly, it
became necessary to effect appropriate adjustments to the financial reports of the Issuer. Thus, the liability vis
a vis the tax office was defined at PLN 2.890 million (including penalty interest), PLN 2.086 million of which
referred to the period of 2004-2005, and PLN 417,000 - to 2006. Penalty interest on delayed payment of a tax
liability amounted to PLN 387. On July 3, 2006, the Issuer paid the VAT while, at the same time, adjusting its
income tax to reflect the reduction of the tax base through reduction of VAT discounts calculated by the
“hundred” method. The amount of PLN 295,000 refers to VAT paid for the period of June through December
2006.
89
On June 14, 2006, the Issuer challenged the decision of the Director of the Łódź Treasury Office before the
Regional Administrative Court. At the same time, the Issuer adapted its contracts to the interpretation, and
new transactions were taxed in accordance with this decision.
On February 27, 2007, the Regional Administrative Court – having considered the case at a session held on
February 13, 2007 – handed down a decision (ref I SA/Łd 1240/06 and I SA/Łd 1239/06) in which it repealed
the inveighed decisions as well as the original decision of the Director of the Łódź Treasury Office and
awarded reimbursement of the court costs to the Company. This decision confirmed that the Director of the
Łódź Treasury Office has erred in classifying the financial intermediation services provided by the Company as
debt collection services subject to the basic VAT rate.
Consequent to the favourable ruling by the Regional Administrative Court, the Company has posted amounts
paid as VAT to receivables from the tax office totalling PLN 3.185 million as VAT paid plus interest on overdue
payment. The Regional Administrative Court declared this decision to be final, with no possibility of further
appeal, as of April 28, 2007. Given the final ruling overturning the inveighed decision as well as the original
decision of the Director of the Łódź Treasury Office of February 15, the Company has not established any
reserves or effected any updating write-offs. On July 13, 2007, the Director of the Treasury Office in Łódź
amended (by way of the administrative decision no 3/4407int92/VAT/07/LEO) the decision concerning the
written interpretation on the scope and means of applying the tax law of April 5, 2005 (ŁUS-III-2-443/2/05/AJ)
and acknowledged the position originally taken by the Company. This decision terminates the dispute as well
as marking the end of the administrative procedure.
To the knowledge of the Issuer, apart from the proceedings described above, which are closely associated
with the character of the Issuer’s activities, no other proceedings are expected in the future. While the Issuer
may, from time to time, apply for interpretations of the pertinent laws by the tax authorities, these are
proceedings which do not have a material impact on operations of the Issuer and do not entail any
significant risk.
90
CHAPTER 13
EXECUTIVE AND SUPERVISORY STAFF
Administrative, executive and supervisory bodies, senior executive staff
Issuer’s Executive Board
Dariusz Strojewski – Executive Board President
Dariusz Strojewski performs the function of Issuer’s Executive Board President, Chief Executive Officer since
August 1 2004. Dariusz Strojewski does not conduct any activity being competitive to that of Issuer’s or any
other activity than Issuer’s business which could materially affect the Issuer. There are no family connections
between Dariusz Strojewski and other members of Issuer’s Executive Board, members of Issuer’s Supervisory
Board or members of Issuer’s senior executive staff.
Dariusz Strojewski is 47. He has academic qualifications. In 1984, he completed studies at the Faculty of
Technical Physics and Applied Mathematics at Warsaw University of Technology in Warsaw, with the
professional title of Master’s of Sciences Engineer in Fundamental Technical Issues, majoring in Applied
Mathematics. In 1989, Dariusz Strojewski obtained Doctor’s of Physical Sciences degree at the Institute of
Physics, Warsaw University of Technology.
In the years 1986 – 1987, Dariusz Strojewski worked as Assistant at the Vacuum Electronics Research and
Development Centre in Warsaw. In the years 1987-1992, he worked as Assistant Trainee, Senior Assistant, and
Reader at the Main School of Planning and Statistics of Warsaw School of Economics in Warsaw. In the years
1990 – 1991, Dariusz Strojewski worked as Main Specialist at the Ministry of Finance in Warsaw. In the years 1991
– 1992, Dariusz Strojewski performed the function of Main Specialist, Head of Section at the National Bank of
Poland in Warsaw. In the years 1992 – 1994, Dariusz Strojewski occupied the post of Head of Projects at
Creditanstalt Financial Advisers S.A. in Warsaw. In the years 1995 – 2000, Dariusz Strojewski was employed as
Senior Officer, Deputy Director of Department, Director Capital Markets and Structured Finance and Co–
Head of Department at ING Bank N.V., Warsaw Division. In the years 2000 – 2004, Dariusz Strojewski performed
the function of Senior Banker at the European Bank for Reconstruction and Development Representation
Office in Warsaw. Since April 25, 2007, Dariusz Strojewski performs the function of member of the Executive
Board of MedFinance Magellan, s.r.o., the Issuer’s subsidiary.
In accordance with his statement, during the past five years, Dariusz Strojewski has not performed any
functions in administrative, executive or supervisory bodies of any company or partnership apart that of the
Issuer.
During the past five years :
(i) No judgment has been pronounced against Dariusz Strojewski as regards the offence of fraud,
(ii) Dariusz Strojewski has not been member of administrative, executive or supervisory bodies or member of
senior executive staff at any entities that have, during the past five years, been declared bankrupt, found
themselves under receivership in bankruptcy or in liquidation,
(iii) No official public charge has been filed against Dariusz Strojewski (including indictment, or motion for
conditional discontinuance of proceedings); Dariusz Strojewski has not been charged with any sanction on
the part of statutory or regulatory bodies (including professional organizations),
(iv) No court order has been issued in respect of Dariusz Strojewski regarding ban on his activity as member of
administrative, executive or supervisory bodies of any issuer, or ban on his participation in the management or
conduct of any issuer’s affairs.
Krzysztof Kawalec – Executive Board Vice President
Krzysztof Kawalec performs the function of Issuer’s Executive Board Vice President, Operational Director since
August 5, 2003. Krzysztof Kawalec does not conduct any activity being competitive to that of Issuer’s or any
other activity than Issuer’s business which could materially affect the Issuer. There are no family connections
between Krzysztof Kawalec and other members of Issuer’s Executive Board, members of Issuer’s Supervisory
Board or members of Issuer’s senior executive staff.
91
Krzysztof Kawalec is 33. He has academic qualifications. In 1999, he completed studies at the Faculty of
Organization and Management of Łódź Technical University in Łódź, with the professional title of Master’s in
Sciences Engineer in Business Management. In the year 2002, Krzysztof Kawalec completed the Post-graduate
Studies in Business Quality Management at Warsaw School of Economics in Warsaw. In the year 2003, Krzysztof
Kawalec completed the Post-graduate Studies in Management Accounting and Controlling at Warsaw
School of Economics in Warsaw. In the year 2006, Krzysztof Kawalec completed the MBA program at the PAM
Center Uniwersytet Łódzki, University of Maryland.
In the years 1998 – 2001, Krzysztof Kawalec occupied the post of Manager at IFFP Sp. z o.o. of Wrocław
(International Fast Ford Polska Sp. z o.o. with its registered seat in Wrocław). In the years 2001 – 2002, Krzysztof
Kawalec performed the function of Head of Issuer’s Contracting Division. In the years 2002 – 2003, Krzysztof
Kawalec performed the function of Issuer’s Executive Board Member, Financial Director.
In accordance with his statement, during the past five years, Krzysztof Kawalec has not performed any
functions in administrative, executive or supervisory bodies of any company or partnership other than with the
Issuer’s.
(i) No judgment has been pronounced against Krzysztof Kawalec as regards the offence of fraud,
(ii) Krzysztof Kawalec has not been member of administrative, executive or supervisory bodies or member of
(iii) No official public charge has been filed against Krzysztof Kawalec (including indictment, or motion for
conditional discontinuance of proceedings); Krzysztof Kawalec has not been charged with any sanction on
(iv) No court order has been issued in respect of Krzysztof Kawalec regarding ban on his activity as member of
Grzegorz Grabowicz – Executive Board Member
Grzegorz Grabowicz performs the function of Issuer’s Executive Board Member, Financial Director since
February 1, 2004. Grzegorz Grabowicz does not conduct any activity being competitive to that of Issuer’s or
any other activity than Issuer’s business which could materially affect the Issuer. There are no family
connections between Grzegorz Grabowicz and other members of Issuer’s Executive Board, members of
Issuer’s Supervisory Board, or members of Issuer’s senior executive staff.
Grzegorz Grabowicz is 33. He has academic qualifications. In 1998, he completed Management and
Marketing at the Faculty of Accounting at Łódź University in Łódź with the professional title of Master’s in
Management. Grzegorz Grabowicz is a qualified auditor officially listed as such under number 10045.
In the years 1998 – 2003, Grzegorz Grabowicz worked at Audit Division of Deloitte & Touche occupying the
posts from consultant to senior experienced consultant. He acquired the title of qualified auditor. In the years
2003 – 2004, he performed the function of Issuer’s Financial Controller.
In accordance with his statement, during the past five years, Grzegorz Grabowicz has not performed any
functions in administrative, executive or supervisory bodies of any company or partnership apart from that of
the Issuer.
(i) No judgment has been pronounced against Grzegorz Grabowicz as regards the offence of fraud,
(ii) Grzegorz Grabowicz has not been member of administrative, executive or supervisory bodies or member
of senior executive staff at any entities that have, during the past five years, been declared bankrupt, found
(iii) No official public charge has been filed against Grzegorz Grabowicz (including indictment, or motion for
92
conditional discontinuance of proceedings); Grzegorz Grabowicz has not been charged with any sanction
on the part of statutory or regulatory bodies (including professional organizations),
(iv) No court order has been issued in respect of Grzegorz Grabowicz regarding ban on his activity as
member of administrative, executive or supervisory bodies of any issuer, or ban on his participation in the
management or conduct of any issuer’s affairs.
Issuer’s Supervisory Board
Dariusz Prończuk – Supervisory Board Chairman
Dariusz Prończuk performs the function of Supervisory Board Chairman since April 17, 2003. Dariusz Prończuk
does not conduct any activity being competitive to that of Issuer’s, or any other activity than Issuer’s business,
which could materially affect the Issuer. There are no family connections between Dariusz Prończuk and other
members of Issuer’s Supervisory Board, members of Executive Board, or members of Issuer’s senior executive
staff.
Dariusz Prończuk is 46. He has academic qualifications. In 1987, he completed studies at the Main School of
Planning and Statistics in Warsaw at the Faculty of Foreign Trade with the professional title of Master’s in
Economy.
In the years 1988 -1991, Dariusz Prończuk was employed as consultant and, next, as head of department at
PGO Partner Sp. z o.o. with its registered seat in Warsaw. In the year 1992, he worked at Hejka Michna Inc.
with its registered seat in Warsaw occupying the post of Vice President.
Since 1993, Dariusz Prończuk has been working at the Enterprise Investors Sp. z o.o. with its registered seat in
Warsaw, first as Vice President (1993-1999), since 1997 as member of Executive Board, Partner (1999-2006),
and managing Partner (2006 until the present moment).
In the years 2000-2001, he performed the function of President at Lukas S.A with its registered seat in Wrocław.
During the past five years Dariusz Prończuk has performed the functions of:
-
Chairman of Supervisory Board at Comp Rzeszów S.A. with its registered seat in Rzeszów
-
Chairman of Supervisory Board at Comp S.A. with its registered seat in Warsaw
-
Member of Supervisory Board at Bauma S.A. with its registered seat in Warsaw
-
Chairman of Supervisory Board at Mobiltek S.A. with its registered seat in Cracow
-
Chairman of Supervisory Board at the Global Hotels Development Group Poland S.A. with its
registered seat in Warsaw
-
Member of Supervisory Board at Messenger Service Stolica S.A. with its registered seat in Warsaw
Additionally, during the past five years until the present moment, Dariusz Prończuk has been performing the
functions of:
-
Chairman of Supervisory Board at the at Kruk S.A. with its registered seat in Wrocław
-
Chairman of Supervisory Board at Skarbiec Asset Management Holding S.A. with its registered seat in
Warsaw
-
President of Board of Directors at the Romanian company S.C. MACON S.A. with its registered seat in
Deva, Romania
-
Member of Board of Directors at the Romanian company SIVECO ROMANIA SA with its registered
seat in Bucharest, Romania
-
Member of Supervisory Board at the Dutch company Grisoft International, B.V. with its registered seat
in Amstelveen, the Netherlands
93
-
Member of Board of Directors at the Cypriot company DBMM Investment Holdings Limited with its
registered seat in Nicosia, Cyprus
-
Member of Board of Directors at the U.S. Enterprise Investors Corporation with its registered seat in
Wilmington, Delaware, USA
-
Member of Board of Directors of the Polish Enterprise Investors VI GP, Ltd with its registered seat in
George Town, Caymans
During the past five years Dariusz Prończuk has been a shareholder in Centrum Technologii Mobilnych
Mobiltek Sp. z o.o. with its registered seat in Cracow.
(i) No judgment has been pronounced against Dariusz Prończuk as regards the offence of fraud,
(ii) Dariusz Prończuk has been Chairman of Supervisory Board of the Global Hotels Development Group
Poland S.A. with its registered seat in Warsaw which, on April 14, 2003, was declared bankrupt by the District
Court for the Capital City of Warsaw (case ref XVII U 188/03) and for which the said Court appointed SSR
Urszula Wilk as the Judge Commissioner in bankruptcy proceedings, and Andrzej Wrzesiński as the Receiver.
Upon the Decision of February 9, 2006 (ref 63/06) the list of claims was complemented. On February 2, 2007,
the District Court for the Capital City of Warsaw, the 10th Commercial, Division for Bankruptcy and
Reorganization issues made the decision to close the bankruptcy proceedings. On March 28, 2007, the District
Court for the Capital City of Warsaw, the 12th Commercial, Division struck the company’s entry from the
register of business enterprises of the National Court Register. Apart from performance of the function in the
above described company, Dariusz Prończuk has not been member of administrative, executive or
supervisory bodies or member of senior executive staff at any entities that have, during the past five years,
been declared bankrupt, found themselves under receivership or in liquidation,
(iii) Over the period of January 2004 through November 2005, Dariusz Prończuk was a shareholder in Logis
Partners Sp. z o.o. in liquidation with its registered seat in Warsaw. On January 22, 2006, the District Court for
the capital city of Warsaw took the decision to annotate this company’s National Court Register entry to the
effect that it has been placed in liquidation; on March 26, 2007, the conclusion of liquidation was notified to
the Court.
(iv) No official public charge has been filed against Dariusz Prończuk (including indictment, or motion for
conditional discontinuance of proceedings); Dariusz Prończuk has not been charged with any sanction on
(v) No court order has been issued in respect of Dariusz Prończuk regarding ban on his activity as member of
Michał Kornatowski – Supervisory Board Vice Chairman
Michał Kornatowski performs the function of Supervisory Board Vice Chairman since April 17, 2003. Michał
Kornatowski does not conduct any activity being competitive to that of Issuer’s or any other activity than
Issuer’s business, which could materially affect the Issuer. There are no family connections between Michał
Kornatowski and other members of Issuer’s Supervisory Board, members of Executive Board, or members of
Issuer’s senior executive staff.
Michał Kornatowski is 60. He has academic qualifications. In 1983, he completed studies at the Medical
Academy in Warsaw, First Faculty of Medicine, with the professional title of Physician. Additionally, in 1987,
Michał Kornatowski obtained specialization Io in Internal Diseases, and in 1990, specialization IIo cum laudae
in Geriatrics at the Post-Graduate Centre for Medical Education in Warsaw. In 1992, Michał Kornatowski
completed Post-Graduate Studies in National Economy Operations at Warsaw University, Faculty of Economic
Sciences, majoring in health economics. In 1992, he completed post-graduate studies in hospital
administration at Toho University, Public Health School. Additionally, in 1996, Michał Kornatowski completed
post-graduate studies in management of health protection at Utrecht University, Public Health School. In 1998,
Michał Aleksander Kornatowski completed post-graduate studies in management in the Health Protection
94
Education Centre, Project HOPE (USA).
In the years 1983-1990, Michał Kornatowski worked at Wojewódzki Szpital Zespolony w Ciechanowie as a
physician, and in the years 1991-1995, as Director. In the years 1995-1996, he worked as executive board
advisor at Bank Inicjatyw Społeczno-Ekonomicznych SA in Warsaw. In the years 1996-1997, he occupied the
post of advisor to the Minister of Labour as the Government Plenipotentiary for Social Security Reform in
Warsaw. In the years 1997-1998, he performed the function of State Secretary at the Ministry of Health and
Social Welfare in Warsaw. Additionally, in the years 1998-2000, Michał Kornatowski performed the function of
director at Centrala Farmaceutyczna CEFARM in Warsaw. In the years 2002-2005, he performed the function
of plenipotentiary of the Director of the Centrum Zdrowia Dziecka – Memorial Institute in Warsaw.
According to his statement, during the past five years, Michał Kornatowski performed the following functions
in the governing bodies of the following entities: (i) President of Management Board at OXYGEN Sp. z o.o. with
its registered seat in Warsaw, until the present moment; (ii) member of the executive board at Centrum
Medyczne Damiana Sp. z o.o. with its registered seat in Warsaw, until the present moment; (iii) member of the
executive board at Towarzystwo Ubezpieczeń Wzajemnych TUW with its registered seat in Warsaw, in the
years 2000-2001; (iv) President of executive board at Instytut Badań i Informacji Szpitalnych Sp. z o.o. with its
registered seat in Warsaw. Additionally, Michał Kornatowski performed the function of member of Supervisory
Board at MERYDIAN Brokerski Dom Ubezpieczeniowy S.A. with its registered seat in Łódź.
During the past five years, Michał Kornatowski performed the function of the Management Board President at
Instytut Badań i Informacji Szpitalnych Sp.z o.o. with its registered seat in Warsaw. The Shareholders Meeting,
by resolution no. 13/2003 dated July 9, 2003, decided to dissolve and liquidate the company, appointing
Małgorzata Graniecka its Liquidator. On August 12, 2003, the company Liquidator declared the company
dissolved and liquidated inviting the creditors to notify claims. On February 5, 2007, the company’s National
Court Register entry was deleted.
Additionally, Michał Kornatowski is a shareholder in OXYGEN Sp. z o.o. with its registered seat in Warsaw.
According to his statement, during the past five years, Michał Kornatowski has not performed any functions in
administrative, executive or supervisory bodies of any company or partnership apart from that of Issuer’s
except those specified above.
(i) No judgment has been pronounced against Michał Kornatowski as regards the offence of fraud,
(ii) Apart from his function in Instytut Badań i Informacji Szpitalnych Sp. z o. o. with its registered seat in
Warsaw, referred to above, Michał Kornatowski has not been member of administrative, executive or
supervisory bodies or member of senior executive staff at any entities that have, during the past five years,
been declared bankrupt, found themselves under receivership in bankruptcy or in liquidation,
(iii) No official public charge has been filed against Michał Kornatowski (including indictment, or motion for
conditional discontinuance of proceedings); Michał Kornatowski has not been charged with any sanction on
(iv) No court order has been issued in respect of Michał Kornatowski regarding ban on his activity as member
of administrative, executive or supervisory bodies of any issuer or ban on his participation in the management
or conduct of any issuer’s affairs.
Sebastian Król – Supervisory Board Member
Sebastian Król performs the function of Issuer’s Supervisory Board Member since April 17, 2003. Sebastian Król
does not conduct any activity being competitive to that of Issuer’s or any other activity than Issuer’s business,
which could materially affect the Issuer. There are no family connections between Sebastian Król and other
members of Issuer’s Supervisory Board, members of Issuer’s Executive Board, or members of Issuer’s senior
executive staff.
Sebastian Król is 35. He has academic qualifications. In 1996, he completed studies at the Faculty of Economy
and Sociology at Łódź University with the professional title of Master’s in Economy.
In the years 1996-2000, Sebastian Król was employed at Arthur Andersen in Warsaw occupying various posts
95
beginning from that of consultant. In the years 2000-2001, he worked at Hachette Distribution Services in
Warsaw as Business Development Manager. Since 2001 until the present moment, Sebastian Król has been
working for Enterprise Investors Sp. z o.o. in Warsaw.
In accordance with his statement, during the period of the past five years, Sebastian Król has performed the
function of Supervisory Board member in the following companies:
(i) Polska Grupa Gospodarki Odpadami S.A. in Łódź;
(ii) Polish Energy Partners S.A. in Warsaw;
(iii) MS Stolica S.A. in Warsaw;
(iv)Harpers Hygienics Sp. z o.o. in Warsaw;
(v) Skarbiec Asset Management Holding S.A. in Warsaw;
(vi)Instytut Badań i Informacji Szpitalnych w likwidacji Sp. z o.o. in Warsaw.
During the period of the past five years, Sebastian Król performed the function of the Management Board
member of the Logis Partners Sp. z o.o. in Warsaw (from February 5, 2006 through August 22, 2006).
Sebastian Król conducts professional activity at the Enterprise Investors Sp. z o.o. in Warsaw and individual
business activity under business name: Doradztwo Gospodarcze Sebastian Król. Neither of these activities are
competitive to that of the Issuer’s.
In accordance with his statement, during the past five years, Sebastian Król has not performed any functions
in administrative, executive or supervisory bodies of any company or partnership apart from that of Issuer’s
except those specified above.
During the period of the past five years:
(i) Between February 5, 2006 and August 22, 2006, Sebastian Król was member of the executive board of Logis
Partners sp. z o.o. in liquidation with its registered seat in Warsaw. On August 22, 2006, the District Court for the
Capital City of Warsaw took the decision to make in the National Court Register a record that the company
was put under the liquidation proceedings, and on March 26, 2007, the Court was provided with the
notification that the liquidation proceedings were closed,
(ii) Between September 2, 2004 and February 5, 2007, Sebastian Król was member of the Supervisory Bard of
Instytut Badań i Informacji Szpitalnych in liquidation with its registered seat in Warsaw. The company’s
Shareholders Meeting, by Resolution no. 13/2003 dated July 9, 2003, decided to dissolve and liquidate the
company, appointing Małgorzata Graniecka its Liquidator. On August 12, 2003, the company Liquidator
announced the company’s dissolution and liquidation, inviting the creditors to notify claims. On February 5,
2007, the company’s National Court register entry was deleted,
(iii) Apart from the companies referred to above, Sebastian Król has not been member of administrative,
executive or supervisory bodies or member of senior executive staff at any entities that have, during the past
five years, been declared bankrupt, found themselves under receivership in bankruptcy or in liquidation,
(iv) No judgment has been pronounced against Sebastian Król as regards any offence,
(v) No official public charge has been filed against Sebastian Król (including indictment, or motion for
conditional discontinuance of proceedings); Sebastian Król has not been charged with any sanction on the
part of statutory or regulatory bodies (including professional organizations),
(vi) No court order has been issued in respect of Sebastian Król regarding ban on conducting own business
activity or performing the function of member of supervisory board, representative or plenipotentiary in a
commercial company, state enterprise, cooperative, foundation or association, or ban on his activity as
member of administrative, executive or supervisory bodies of any issuer, or on his participation in the
96
Tadeusz Duszyński – Supervisory Board Member
Tadeusz Duszyński performs the function of Issuer’s Supervisory Board Member since May 23, 2003. Tadeusz
Duszyński does not conduct any activity being competitive to that of Issuer’s or any other activity than Issuer’s
business, which could materially affect the Issuer. There are no family connections between Tadeusz Duszyński
and other members of Issuer’s Supervisory Board, members of Issuer’s Executive Board, or members of Issuer’s
senior executive staff.
Tadeusz Duszyński is 46. He has academic qualifications. In 1986, Tadeusz Duszyński completed studies at
Katolicki Uniwersytet Lubelski. In 1992, Tadeusz Duszyński completed Post-graduate Studies in Health
Economics at WNE, Warsaw University. In 1996, Tadeusz Duszyński completed studies at Collegium Medicum,
Public Health Management at the Jagiellonian University.
In the years 1986 – 1990, Tadeusz Duszyński performed the function of the Head of Investment Department of
Katolicki Uniwersytet Lubelski. In the years 1990 – 1993, Tadeusz Duszyński worked as Hospital Director in Lublin.
In the years 1995 – 1998, Tadeusz Duszyński performed the function of the Chief Executive Officer at PZ
Cormay – Diagnostyka. In 1998, Tadeusz Duszyński performed the function of the Chief Executive Officer at
Lubelskie Zakłady Farmaceutyczne Polfa. From 1999 to June 2007, Tadeusz Duszyński performed the function
of Management Board President of Polfa Lublin S.A.
In accordance with his statement, during the past five years, Tadeusz Duszyński has not performed any
functions in administrative, executive or supervisory bodies of any companies or partnerships apart that of
Issuer’s except those specified above.
During the period of the past five years :
(i) No judgment has been pronounced against Tadeusz Duszyński as regards the offence of fraud,
(ii) Tadeusz Duszyński has not been member of administrative, executive or supervisory bodies or member of
(iii) No official public charge has been filed against Tadeusz Duszyński (including indictment, or motion for
conditional discontinuance of proceedings); Tadeusz Duszyński has not been charged with any sanction on
(iv) No court order has been issued in respect of Tadeusz Duszyński regarding ban on his activity as member of
conduct of affairs of any issuer’s.
Zdzisław Piekarski – Supervisory Board Member
Zdzisław Piekarski performs the function of Issuer’s Supervisory Member since April 17, 2003. Zdzisław Piekarski
does not conduct any activity being competitive to that of Issuer’s or any other activity than Issuer’s business,
which could materially affect the Issuer. There are no family connections between Zdzisław Piekarski and
other members of Issuer’s Supervisory Board, members of Issuer’s Executive Board, or members of Issuer’s
senior executive staff.
Zdzisław Piekarski is 52. He has academic qualifications. In 1981, he completed studies at Medical Academy
in Białystok with the professional title of Physician with specialization in General Surgery. In the years 1990 –
1997, Zdzisław Piekarski trained in organization of health care institutions, health insurance, personnel
management and negotiations. In 1999, he obtained a diploma for candidates for Members of Supervisory
Boards at State Treasury Companies. In 2001, he completed the Post-Graduate Studies in General
Management in European Market Conditions organized by Częstochowa Technical University, Management
Faculty. In 2001, he completed the Post-Graduate Studies in Management of Health Protection Organizations
organized by Warsaw School of Economics.
In the years 1981-1986, Zdzisław Piekarski worked at Zakład Opieki Zdrowotnej in Węgorzewo as assistant. In
the years 1986-1990, he worked as assistant in Wojewódzki Szpital Zespolony in Ostrołęka. In the years 19941997, he occupied the post of Manager at Niepubliczny Zakład Opieki Zdrowotnej CHIR-MED in Białystok.
From 1997 to 1999, he occupied the post of director at Centralny Zarząd Służby Zdrowia MSWiA in Warsaw. In
the years 2000-2001, Zdzisław Piekarski occupied the post of Chairman of the Council of the District Kasa
97
Chorych in Białystok.
Since 2001 until the present moment, he conducts business activity under his own name, Zdzisław Jan
Piekarski. Since 2001, Zdzisław Piekarski is a partner in the EKO-CHEM Polkowski i inni Sp.j. registered
partnership.
According to his statement, during the past five years, Zdzisław Piekarski has not performed any functions in
administrative, executive or supervisory bodies of any companies or partnerships apart from that of Issuer’s.
During the period of the past five years, Zdzisław Piekarski was a partner in EKO-CHEM Polkowski i inni Sp.j.
Currently, Zdzisław Piekarski is not a shareholder of the Issuer.
(i) No judgment has been pronounced against Zdzisław Piekarski as regards the offence of fraud,
(ii) Zdzisław Piekarski has not been member of administrative, executive or supervisory bodies or member of
(iii) No official public charge has been filed against Zdzisław Piekarski (including indictment, or motion for
conditional discontinuance of proceedings); Zdzisław Piekarski has not been charged with any sanction on
(iv) No court order has been issued in respect of Zdzisław Piekarski regarding ban on his activity as member of
Bogusław Grabowski – Supervisory Board Member
Bogusław Grabowski performs the function of Issuer’s Supervisory Board Member since November 24, 2006.
Bogusław Grabowski does not conduct any activity being competitive to that of Issuer’s or any other activity
than Issuer’s business, which could materially affect the Issuer. There are no family connections between
Bogusław Grabowski and other members of Issuer’s Supervisory Board, members of Issuer’s Executive Board,
or members of Issuer’s senior executive staff.
Bogusław Grabowski is 47. He has academic qualifications. He graduated from Łódź University (1984). He
completed studies in econometrics and statistics. In 1991, he also completed economic studies at Windsor
University in Ontario, Canada. In 1993, he obtained the title of Doctor of Economic Sciences from Łódź
University. Since 1985, he has been working at the Chair of Economy of Łódź University, currently as a Reader.
In the years 1988-1989, he obtained scientific and research traineeships at the Economic Analyses and
Forecast Department of NBP and at the University of Sussex, Great Britain. He participated in many research
projects. He is the author of works in monetary politics, banking system, and balance of payments, published
in Poland and abroad. In his scientific work, he specialized in macroeconomic theory, monetary politics and
balance of payments.
In the years 1989-1990, he worked at Powszechny Bank Gospodarczy as main specialist at Economic
Department. Next – until 1992 – he was advisor to the President of LG Petro Bank S.A. In 1993, he performed
the function of Łódzki Vice Voivode, responsible for economic issues. He was member of Inter-industry Team
for Restructuring of the Region of Łódź, and the author of the Program of Restructuring of the Region of Łódź.
In the years 1993-1997, he performed the function of management board president of the Petrobank S.A. In
the years 1998 – 2004, he was member of the Monetary Policy Council at the National Bank of Poland.
Since 2004, he has been linked with Skarbiec holding. From March 2004 to February 2006, he performed the
duties of the President of the executive board of PTE Skarbiec-Emerytura. Since March 2006, he has been
President of the executive board of Skarbiec Asset Management Holding S.A., President of the executive
board of Skarbiec Towarzystwo Funduszy Inwestycyjnych and Chairman of the Supervisory Board of
ProService Agent Transferowy Sp. z o.o.
According to his statement, during the period of the past five years, Bogusław Grabowski performed the
following functions in the bodies of the following entities: (i) President of executive board in PTE SkarbiecEmerytura with its registered seat in Warsaw in the years 2004-2006; (ii) President of executive board in
Skarbiec TFI S.A. with its registered seat in Warsaw, until the present moment; (iii) President of executive board
98
in Skarbiec Asset Management Holding S.A. with its registered seat in Warsaw; (iv) President of executive
board in Skarbiec TFI S.A. with its registered seat in Warsaw, since 2006 until the present moment.
Additionally, during the period of the past five years, Bogusław Grabowski performed the following functions
in the bodies of the following entities: (i) Chairman of Supervisory Board in Skarbiec Investment Management
S.A. with its registered seat in Warsaw, in the years 2006-2007; (ii) Chairman of Supervisory Board in ProService
Agent Transferowy Sp. z o.o. with its registered seat in Warsaw, since 2006 until the present moment; (iii)
Chairman of Supervisory Board in Teuton S.A. with its registered seat in Zgierz, since 2007 until the present
moment; (iv) Member of Supervisory Board in the Nowy Przewoźnik Sp. z o.o. (Centralwings), in the years 2004
– 2006.
In accordance with his statement, during the past five years, Bogusław Grabowski has not been a
shareholder in companies or partner in any partnerships apart from that of Issuer’s, save a shareholder in
Skarbiec Asset Management Holding S.A. with its registered seat in Warsaw.
(i) No judgment has been pronounced against Bogusław Grabowski as regards the offence of fraud,
(ii) Bogusław Grabowski has not been member of administrative, executive or supervisory bodies or member
of senior executive staff at any entities that have, during the past five years, been declared bankrupt, found
(iii) No official public charge has been filed against Bogusław Grabowski (including indictment, or motion for
conditional discontinuance of proceedings); Bogusław Grabowski has not been charged with any sanction
on the part of statutory or regulatory bodies (including professional organizations),
(iv) No court order has been issued in respect of Bogusław Grabowski regarding ban on his activity as
member of administrative, executive or supervisory bodies of any issuer, or ban on his participation in the
Remuneration and benefits
The amount of remuneration of the Company’s Executive Board members
Table: Amounts of remuneration for Issuer’s Executive Board members in 2006.
Name and surname
Total amount of remuneration
(PLN gross)
Function
Extras (PLN gross)
Dariusz Stryjewski
Executive Board President
613,200.00
100,000.00
Krzysztof Kawalec
Executive Board Vice President
217,200.00
95,000.00
Grzegorz Grabowicz
Executive Board Member
Total remuneration
180,988.93
66,500.00
1,011,388.93
261,500.00
Source: Issuer
The amount of remuneration of the Company’s Supervisory Board members
Table: Amounts of remuneration for Issuer’s Supervisory Board members in 2006.
Name and surname
Function
Dariusz Prończuk
Supervisory Board Chairman
Michał Kornatowski
Supervisory Board Vice Chairman
Total amount of remuneration (PLN
gross)
0.00
29,728.56
Sebastian Król
Supervisory Board Member
0.00
Tadeusz Duszyński
29,728.56
Zdzisław Piekarski
29,728.56
Bogusław Grabowski
0.00
Total remuneration
89,185.68
Source: Issuer
99
The remuneration and benefits in kind for Executive Board members, Supervisory Board members, and other
higher rank executives paid by Issuer’s subsidiaries.
Executive Board members and Supervisory Board members and other members of Issuer’s executive staff
have not been paid remuneration (including conditional or deferred benefits) or benefits in kind for services
provided to entities being Issuer’s subsidiaries.
General amount allocated by Issuer or its subsidiaries for pension, retirement pension or similar benefits
Apart from the contributions constituting Issuer’s obligatory payments under social security or health insurance
schemes, Issuer does not pay any amounts towards retirement pensions, pensions or similar benefits for
members of Executive Board, Supervisory Board or other members of executive staff (Issuer’s commercial
proxies).
List of all reserves for employees benefits as of the date of approval of Prospectus:
No.
Type of benefit
Amount
1.
Retirement pension severance pay
PLN 0
2.
Pension severance pay
PLN 0
3.
Anniversary awards
PLN 0
4.
Leave benefits
PLN 0
Total:
Source: Issuer
PLN 0
Remuneration and benefits in kind for members of Executive Board, Supervisory Board or other members of
senior executive staff paid by Issuer’s subsidiaries
Executive Board members, Supervisory Board members or other members of Issuer’s executive staff have not
received remuneration (including conditional or deferred benefits) or benefits in kind for services provided to
entities being Issuer’s subsidiaries.
Administrative, executive or supervisory bodies practice
Term of office. Date of conclusion
Executive Board
Pursuant to Paragraph 10 of Issuer’s Articles of Association, the Executive Board is composed of three to four
members appointed for a joint term of office. The term of office of the first Executive Board is 2 years, and the
term of office of each following Executive Board is 4 years. The Supervisory Board elects its Chairman by
resolution from amongst its members and signs with the Chairman a contract of employment or another
contract.
Two Executive Board Members acting jointly or one Executive Board Member acting together with the
commercial proxy are authorised to make declarations relating to Issuer’s property rights and obligations and
to sign documents in Issuer’s name.
Pursuant to Article 369 § 4 of the Polish Commercial Partnerships and Companies Code, the term of office of
a member of Executive Board expires at the latest at the date of the General Meeting approving the
financial statement for the past full business year during which the Executive Board member performed
his/her function. The term of office of Executive Board member also expires upon his death, resignation or
upon his being recalled from Executive Board (Article 369 § 5 of the Polish Commercial Partnerships and
Companies Code).
Table: Terms of Office of current members of Issuer’s Executive Board
Beginning of term of office
End of term of office
Dariusz Strojewski
Name and surname
Executive Board President
Function
11.05.2006
11.05.2009
Krzysztof Kawalec
Executive Board Vice President
11.05.2006
11.05.2009
100
Grzegorz Grabowicz
Executive Board Member
11.05.2006
11.05.2009
Source: Issuer
Supervisory Board
The Supervisory Board is appointed and recalled by the General Meeting with the reservation of the provisions
of Paragraph 14 sections 3 and 4 of the Articles of Association, under which, as long as the Polish Enterprise
Fund IV, L.P. is a holder of Company’s shares entitling it to more than 50% votes at the General Meeting of
shareholders, it is entitled to appoint and recall:
−
−
Three members of the five-member Supervisory Board, including the Chairman,
Four members in the six-member and the seven-member Supervisory Board, including the
Chairman.
As long as the Polish Enterprise Fund IV, L.P. is a holder of Company’s shares entitling it to more than 20% votes
at the General Meeting of shareholders, it is entitled to appoint and recall:
−
−
Two members of the five-member Supervisory Board, including the Chairman,
Three members in the six-member and the seven-member Supervisory Board, including the
Chairman.
At least half of the members of the Supervisory Board should be independent. A member of the Supervisory
Board is deemed to be independent if he/she:
−
−
−
−
−
Is not the Issuer’s employee;
Does not hold more than 5% of Issuer’s shares;
Is not an employee of the corporation who performs the audit of the financial statement;
Is not a relative and is not related by affinity up to the second degree of the persons being
Issuer’s employees or shareholders holding more than 5% of Issuer’s shares;
Is not an employee, member of bodies, owner, or shareholder in the enterprise conducting
business being competitive to that of Issuer’s.
The above requirements should be satisfied by a member of Issuer’s Supervisory Board also as regards Issuer’s
dominant or subsidiary companies.
Dates of appointment of members of current Supervisory Board:
Name and surname
Function
Beginning of term of office
End of term of office
Dariusz Prończuk
22.05.2006
22.05.2009
Michał Kornatowski
22.05.2006
22.05.2009
Sebastian Król
22.05.2006
22.05.2009
Tadeusz Duszyński
22.05.2006
22.05.2009
Zdzisław Piekarski
22.05.2006
22.05.2009
Bogusław Grabowski
24.11.2006
24.11.2009
Pursuant to art. 386.2 in conjunction with art. 369.4 of the Polish Commercial Partnerships and Companies
Code, the term of office of Supervisory Board member expires at the latest at the date of the General
Meeting approving the financial statement for the past full business year during which the Supervisory Board
member performed his/her function. Therefore, the terms of office of all current members of the Supervisory
Board will expire following Issuer’s General Meeting summarizing the business year 2009.
Contracts for service between members of executive and supervisory bodies and Issuer or its subsidiaries
For the performance of the function of President of Issuer’s Executive Board, Dariusz Strojewski is entitled to be
paid the basic monthly remuneration being gross PLN 51,000.00.
Dariusz Strojewski performs the function of Executive Board member on the basis of management contract
dated July 31, 2004 annexed on August 1, 2004. The management contract was signed for the period from
August 1, 2004 to the date of the Issuer’s General Meeting approving the Company’s financial statement for
the business year 2007, with the reservation that the contract will expire upon Dariusz Strojewski’s being
101
recalled from the function of Issuer’s Executive Board President or upon his submission of resignation from that
function.
Dariusz Strojewski is obligated not to disclose or use the information constituting Issuer’s secret for purposes
being in conflict with the management contract, during the term of the contract and five (5) years following
its termination or expiration; specifically, the obligation to protect Issuer’s secrets concerns the trade,
technical, technological, organizational, know–how, and any information concerning the relationships
between Issuer’s partners and between Issuer and its employees, contractors or clients.
During the term of the contract and six (6) months following its expiration or termination, Dariusz Strojewski is
obligated not to undertake, directly or indirectly, any activity being competitive to that of Issuer’s. This ban
also concerns inducing Issuer’s employees, co-operators or contractors to change or terminate contracts with
Issuer.
Due to the above limitations, Issuer is obligated to pay Dariusz Strojewski for each month of such limitation a
compensation constituting 60% of Dariusz Strojewski’s remuneration. If the contract expires at the date of the
Issuer’s General Meeting for the business year 2007, Dariusz Strojewski will be entitled to the compensation
being 100% of the remuneration.
Should Dariusz Strojewski violate the above limitations, he shall pay Issuer the penalty in the amount being six
times the amount of the remuneration, for each violation of the above specified limitations, within the period
of 14 days following the service of a relevant call for payment. The payment of the penalty does not exclude
Issuer’s claims for damages exceeding the amount of the penalty.
The management contract may be terminated by either of the parties upon six (6) month’s notice. Dariusz
Strojewski may terminate the contract without notice in the event he is unable to perform his duties for a
period being longer than 30 days for reasons caused by Issuer and in the event of gross violation of the
management contract on the part of Issuer.
Disputes arising from performance of the management contract are to be resolved in an amicable way by
negotiations. Should the dispute not be resolved in an amicable way, it is to be referred for resolution to a
common court having jurisdiction over Issuer’s seat.
Krzysztof Kawalec – Executive Board Vice President
For the performance of the function of Vice President of Issuer’s Executive Board, Krzysztof Kawalec is entitled
to be paid the basic monthly remuneration being gross PLN 21,000.00.
Krzysztof Kawalec performs the function of Executive Board Vice President on the basis of the contract of
employment dated August 5, 2004 annexed on March 3, 2005 and May 11, 2006. The contract of
employment was signed for a non-fixed period.
Save the circumstances provided for by law, during the term of the contract of employment, Krzysztof
Kawalec is obligated to keep Issuer’s secrets and to keep confidential any information concerning Issuer’s
activity the disclosure of which might expose Issuer to risk of damage.
During the term of the contract and during the twelve-month period following its expiration, Krzysztof Kawalec
is obligated:
−
Not to perform any activity being competitive to that of Issuer’s,
−
Not to provide services being of similar nature as those specified in the contract to the extent of
management, to corporations conducting activity being competitive to that of Issuer’s.
Due to the above limitations, Issuer is obligated to pay Krzysztof Kawalec compensation constituting 50% of
twelve (12) times Krzysztof Kawalec’s remuneration, in the last month of the term of the contract. Should
Krzysztof Kawalec violate the above limitations, he shall pay Issuer damages constituting 100% of the
damages for the waiting period.
The contract of employment may be terminated by either of the parties upon six (6) month’s notice. The
termination of the contract must be made in the written form, otherwise being null and void. Either of the
parties may terminate the contract without notice if the other party has committed a gross violation of a
material provision of the contract.
102
Disputes arising from performance of the service contract are to be resolved in an amicable way. Should the
dispute not be resolved in an amicable way, it is to be referred for resolution to a common court having
jurisdiction over Issuer’s seat.
Grzegorz Grabowicz – Executive Board Member
For performance of the function of Issuer’s Executive Board Member, Grzegorz Grabowicz is entitled to be
paid the basic monthly remuneration being gross PLN 19,100.
Grzegorz Grabowicz performs the function of Executive Board Member on the basis of the contract of
employment dated January 31, 2004 annexed March 3, 2005. The contract of employment was signed for a
non-fixed period.
Grzegorz Grabowicz is obligated not to pass, not to disclose, and not to use the information constituting
Issuer’s secret, specifically the trade, technical, technological, organizational, know–how information or any
information concerning the relationships between Issuer’s partners and between Issuer and its employees,
contractors or clients, as well as any information provided to him in connection with or on the occasion of
undertaking or performing of the duties under the contract. The above ban is not limited in time.
During the term of the contract and during the period of 12 months following its expiration or termination,
Grzegorz Grabowicz is obligated not to conduct, directly or indirectly, any activity being competitive to that
of Issuer’s. This ban also concerns scientific, training, educational, journalist or another activity, unless Issuer
has granted consent for conducting thereof, having decided that its nature or extent does not prejudice
Grzegorz Grabowicz’s proper performance of his duties during the term of the contract and does not give rise
to a conflict of interest following the expiration or termination of the management contract. Additionally,
Grzegorz Grabowicz is obligated not to:
−
Induce the persons providing work to Issuer under employment relationship or another legal
relationship, not to perform their duties to Issuer or to unduly perform their duties to Issuer, or to
terminate their contracts;
−
Perform actions aimed at inducing Issuer’s contractors to terminate contracts with Issuer or not to
perform or unduly perform their contracts;
−
Disseminate information that could in any manner be harmful to issuer’s image or to that of any of
Issuer’s contractors or clients.
Due to the above limitations, Issuer is obligated to pay Grzegorz Grabowicz compensation constituting 50% of
twelve (12) times Grzegorz Grabowicz ’s remuneration in the last month of the term of the contract. The
compensation is paid monthly in equal instalments, on the last business day of the given calendar month
throughout the period of limitation.
Should Grzegorz Grabowicz violate the above limitations, he shall pay Issuer damages constituting 100% of
the damages for the waiting period.
The contract of employment may be terminated by either of the parties upon a 6-month notice.
Issuer may terminate the contract without notice in the event of:
−
Breach of the contract;
−
Grzegorz Grabowicz’s failure to fulfil Issuer’s bodies’ resolutions;
−
Acting to Issuer’s detriment;
−
Unexcused failure to perform the function or the contract for a period being longer than 10 business
days;
−
Grzegorz Grabowicz’s criminal or civil liability.
The termination of the contract without notice may also be effectuated during Grzegorz Grabowicz’s sick
leave or period of his paid non-performance of the contract.
Disputes arising from a controversy concerning the interpretation of the provisions of the contract of
employment or performance of obligations thereunder are to be resolved in an amicable way, by
negotiation. Should the dispute not be resolved in an amicable way, it is to be referred for resolution to a
common court having jurisdiction over Issuer’s seat.
103
Supervisory Board
Pursuant to Paragraph 16 section 5 of Issuer’s Articles of Association, Supervisory Board members receive
remuneration for performance of their duties, unless the body authorized to appoint Supervisory Board
Members decides otherwise. The amount of the remuneration is fixed by General Meeting’s resolution.
The Polish Enterprise Fund IV, L.P. has decided that Issuer’s Supervisory Board members designated by the
Polish Enterprise Fund IV, L.P. would not receive remuneration for performance of the function of Issuer’s
Supervisory Board members.
Under Resolution no. 9 of the General Meeting of Magellan Sp. z o.o. dated June 29, 2001, the amount of the
monthly remuneration of the Company’s Supervisory Board member will be:
−
1.2 – as regards Supervisory Board Chairman, and
−
1.1 – as regards Supervisory Board member
of the average Polish remuneration applicable in the five basic sectors of economy, fixed on the basis of the
past announcement made by the President of the Central Statistical Office for Poland - GUS.
The remuneration is paid in advance, by the 10th day of the month for which it is due.
Members of Supervisory Board are also entitled to receive full reimbursement of the costs borne in connection
with the performance of their function, specifically the reimbursement of travel and accommodation costs.
Information concerning the Issuer’s Audit Committee and Committee for Remuneration
Pursuant to Paragraph 13 of the Supervisory Board By-laws, the Supervisory Board appoints an Audit
Committee and a Committee for Remuneration. The Audit Committee is composed of three members,
including one independent member. The Committee for Remuneration is composed of three Supervisory
Board members.
The Audit Committee is to perform the following tasks:
1)
2)
3)
4)
To ensure due preparation of financial statements, including independent audit,
To review Company’s financial statements and submit to the Supervisory Board its opinion thereon,
To review transactions performed with related entities,
To recommend the Supervisory Board the selection of the entity to fulfil the role of the qualified
auditor with the grounds for it.
The Audit Committee is authorized to be provided with assistance of the experts while preparing an
appropriate evaluation of financial statement.
The Committee for Remuneration is to perform specifically the following tasks:
1)
2)
To plan the members of the Executive Board remuneration policy;
To adjust the remuneration of the Executive Board members to Company’s long term interests and
The Audit and the Remuneration Committees provide the Supervisory Board with annual reports on their
activities. The Company makes those reports available to shareholders at the Company’s offices.
Statement on observance of corporate order
On May 9, 2007, Issuer’s Extraordinary General Meeting passed the resolution adopting the principles of
corporate order specified in Good Practices of Public Companies 2005.
Pursuant to Paragraph 1 of the above said resolution, Issuer’s Extraordinary Meeting adopted the principles of
corporate order specified in “Good Practices in Public Companies 2005” save Principle 14, Principle 20, and
Principle 28, and put all Issuer’s bodies under the obligation to ensure their observance.
104
Issuer did not adopt Principle 14, since neither the Polish Commercial Partnerships and Companies Code nor
the Company’s Articles of Association provide for the necessity of taking a vote on cancelling from the
agenda or quitting a matter put on the agenda upon request of the shareholders holding at least 10% of the
share capital, by a qualified majority of votes.
Pursuant to Principle 20, on May 9, 2007, the General Meeting passed Resolution no. 2 approving the
Supervisory Board By-laws. The Supervisory Board By-laws, in its Paragraph 13 section 1, provides for that the
Supervisory Board appoints the Audit Committee and the Committee for Remuneration.
The Audit Committee is composed of three members, including one being an independent member.
Pursuant to Resolution no. 2 dated May 9, 2007, Issuer’s Supervisory Board, acting on the basis of Paragraph 13
section 1 of Supervisory Board By-laws, appointed the following Audit Committee:
—Sebastian Król – Chairman of the Committee,
—Dariusz Prończuk – Member of the Committee,
—Michał Kornatowski - Member of the Committee.
The Committee for Remuneration is composed of three members of the Supervisory Board. Pursuant to
Resolution no. 3 dated May 9, 2007, Issuer’s Supervisory Board, acting on the basis of Paragraph 13 section 1
of Supervisory By-laws, appointed the following Committee for Remuneration:
—Dariusz Prończuk - Chairman of the Committee,
— Sebastian Król - Member of the Committee,
—Michał Kornatowski — Member of the Committee.
In accordance with Principle 20 of the principles of corporate order specified in “Good Practices in Public
Companies 2005”, half of the members of Issuer’s Supervisory Board are independent members. Currently, the
function of independent members of Supervisory Board is performed by:
—Michał Kornatowski,
—Tadeusz Duszyński,
—Zdzisław Piekarski,
—Bogusław Grabowski.
The only item of Principle 20 that is departed from is the absence of the specification, in Paragraph 13 section
1 of Supervisory Board By-laws, that at least one member of the Audit Committee is to be member of
Supervisory Board having qualifications and experience in the fields of accounting and finance.
The item of Principle 28 that is stepped aside from is the provision of Paragraph 13 section 1 of Supervisory
Board By-laws, under which at least one member of the Audit Committee is to be independent, and the
absence of the specification that at least one Audit Committee member should be Supervisory Board
member having qualifications and experience in the fields of accounting and finance.
In Issuer’s opinion, the Supervisory Board members have appropriate knowledge and experience for the
performance of their functions.
Conflict of interests in administrative, executive and supervisory bodies and as regards members of senior
executive staff
Potential conflicts of interest between obligations towards Issuer and other obligations and private interests of
members of the Executive Board, the Supervisory Board and other members of senior executive staff
None of the members of Issuer’s Executive Bard, none of the members of issuer’s Supervisory Board, and none
of Issuer’s independent commercial proxies is currently or potentially involved in a conflict of interest between
obligations towards Issuer and private interests of the above said persons or their other obligations.
Contracts and other arrangements made with significant shareholders, clients, suppliers or other persons,
constituting the grounds for the selection of Issuer’s Executive Board members, members of Issuer’s
Supervisory Board or other members of senior executive staff
Apart from the provisions of Issuer’s Articles of Association indicated below, there are no contracts or other
arrangements with significant shareholders, clients, suppliers or other persons, constituting grounds for the
105
selection of Issuer’s Executive Board members, members of Issuer’s Supervisory Board and other members of
its senior executive staff.
Members of Executive Board have been appointed by resolutions of Issuer’s Supervisory Board in secret voting
after having taken into account their qualifications and guarantee of proper performance of tasks of
Executive Board members.
Independent members of Supervisory Board have been appointed by resolutions of Issuer’s General Meeting
in secret voting after having taken into account their qualifications and guarantee of proper performance of
supervision of Issuer’s activities.
Pursuant to Paragraph 14 section 2 of Issuer’s Articles of Association, members of Issuer’s Supervisory Board are
appointed and recalled by the General Meeting, subject to the provisions of Paragraph 14 sections 3 and 4
of the Articles of Association .
Pursuant to Paragraph 14 section 3 of Issuer’s Articles of Association, as long as the Polish Enterprise Fund IV,
L.P. holds Company’s shares entitling it to more than 50% of votes at the General Meeting of shareholders, it is
entitled to appoint and recall:
a.
b.
Four members of the six-member or the seven-member Supervisory Board, including the
Chairman.
L.P. holds Company’s shares entitling it to 20% or more but less then 50% of votes at the General Meeting of
a.
b.
Three members of the six-member or the seven-member Supervisory Board, including the
Chairman.
Shares held and share options
Executive Board Members
Dariusz Strojewski holds 117,880 Issuer’s B-Series Shares entitling him to 117,880 votes at Issuer’s General
Meeting, constituting 1.9% of Issuer’s share capital. In accordance with the motivation program performed
under Resolutions nos. 4/2007 and 5/2007 of Issuer’s Extraordinary General Meeting of June 20, 2007, Dariusz
Strojewski, as President of Issuer’s Executive Board, is entitled to acquire subscription warrants issued by Issuer
in the years 2007-2011. The detailed information concerning the performance of the incentive programme is
contained in section “Provisions concerning employees participation in Issuer’s share capital”.
Krzysztof Kawalec - Executive Board Vice President
Krzysztof Kawalec holds 56,457 Issuer’s B-Series Shares entitling him to 56,457 votes at Issuer’s General Meeting,
constituting 0.09% of Issuer’s share capital. In accordance with the motivation program performed under
Resolutions nos. 4/2007 and 5/2007 of Issuer’s Extraordinary General Meeting of June 20, 2007, Krzysztof
Kawalec, as member of Issuer’s Executive Board, is entitled to acquire subscription warrants issued by Issuer in
the years 2007-2011. The detailed information concerning the performance of the incentive programme is
contained in section “Provisions concerning employees participation in Issuer’s share capital”.
Grzegorz Grabowicz - Executive Board Member
Grzegorz Grabowicz holds 35,927 Issuer’s B-Series Shares entitling him to 35,927 votes at Issuer’s General
Meeting, constituting 0.05 % of Issuer’s share capital. In accordance with the incentive programme
performed under Resolutions nos. 4/2007 and 5/2007 of Issuer’s Extraordinary General Meeting of June 20,
2007, Grzegorz Grabowicz is entitled to acquire subscription warrants issued by Issuer in the years 2007-2011.
106
The detailed information concerning the performance of the incentive programme is contained in section
“Provisions concerning employees participation in Issuer’s share capital”.
Supervisory Board Members
Dariusz Prończuk – Supervisory Board Member
Dariusz Prończuk does not hold Issuer’s shares or Issuer’s share options.
Michał Kornatowski – Supervisory Board Member
Michał Kornatowski does not hold Issuer’s shares or Issuer’s share options.
Sebastian Król- Supervisory Board Member
Sebastian Król does not hold Issuer’s shares or Issuer’s share options.
Tadeusz Duszyński- Supervisory Board Member
Tadeusz Duszyński does not hold Issuer’s shares or Issuer’s share options.
Zdzisław Piekarski - Supervisory Board Member
Zdzisław Piekarski does not hold Issuer’s shares or Issuer’s share options.
Bogusław Grabowski – Supervisory Board Member
Bogusław Grabowski does not hold Issuer’s shares or Issuer’s share options.
Commercial proxies
Issuer’s Executive Board has not appointed commercial proxies.
107
Chapter 14
MAJOR SHAREHOLDERS
Information about persons other than members of executive or supervisory bodies directly or indirectly
holding shares in Issuer’s share capital or voting rights required to be notified under Issuer’s national law
No.
Name and surname
Number of shares held
Share in capital
Share in total number of votes
1
5,812,500
95.69%
95.69%
The Polish Enterprise Fund IV, L.P., Corporation Trust Centre, 1209 Orange Street, Wilmington, County of New
Castle, Delaware, having its principal office at 1 Exchange Place, Suite 1000 Jersey City, NJ 07302, U.S.A. is
represented by the Enterprise Investors Sp. z o.o. with its registered seat Warsaw, entered in the register of
Business Enterprises by the National Court Register maintained by the District Court for the Capital City of
Warsaw, the 19th Commercial, Division of the National Court Register at number KRS 0000007178.
Information about other voting rights pertaining to Issuer
Apart from the rights in directly held Issuer’s shares, the Polish Enterprise Fund IV, L.P. does not hold other
voting rights at Issuer’s General Meeting.
Issuer’s shares held by the Polish Enterprise Fund IV, L.P. are not preference shares.
Issuer’s Articles of Association grant the Polish Enterprise Fund IV, L.P. in respect of Issuer the personal right in
the form of the right to appoint and recall members of Issuer’s Supervisory Board.
In accordance with Paragraph 14 section 2 of Issuer’s Articles of Association, members of Issuer’s Supervisory
Board are appointed and recalled by the General Meeting subject to provisions of Paragraph 14 sections 3
and 4 of the Articles of Association.
In accordance with Paragraph 14 section 3 of Issuer’s Articles of Association, as long as the Polish Enterprise
Fund IV, L.P. holds Company’s shares entitling it to more than 50% of votes at the General Meeting of
a.
b.
Four members of the six-member or the seven-member Supervisory Board, including the
Chairman.
L.P. holds Company’s shares entitling it to 20% or more but less then 50% of votes at the General Meeting of
a.
b.
Three members of the six-member or the seven-member Supervisory Board, including the
Chairman.
Entity exercising control over Issuer. Nature of such control. Mechanisms preventing its abuse
Issuer is an entity controlled directly by the Company’s principal shareholder, i.e. Polish Enterprise Fund IV, L.P,
holding 95.69% votes at Issuer’s General Meeting of Shareholders and possessing the personal right to appoint
a specified number of members of the Supervisory Board.
Issuer’s shares held by the Polish Enterprise Fund IV, L.P are ordinary bearer shares. They have been created as
a result of transformation of a limited liability company ( sp. z o. o. ) into a joint stock company.
The Supervisory Board is appointed and recalled by the General Meeting, subject to provisions of Paragraph
14 sections 3 and 4 of the Articles of Association, in accordance with which, as long as the Polish Enterprise
Fund IV, L.P. holds Company’s shares entitling it to more than 50% of votes at the General Meeting of
108
-
-
Four members of the six-member or the seven-member Supervisory Board, including
the Chairman.
As long as the Polish Enterprise Fund IV, L.P. holds Company’s shares entitling it to more 20% or more, less,
however, than 50% of votes at the General Meeting of shareholders, it is entitled to appoint and recall:
-
Three members of the six-member or the seven-member Supervisory Board,
including the Chairman.
The provisions concerning the scope of activities entrusted to the Supervisory Board have been presented in
Chapter 16 of this Prospectus - “Shares, Share Capital, and General Meeting”.
In accordance with Paragraph 16 section 1 of the Articles of Association, Supervisory Board resolutions are
adopted by an absolute majority of votes cast by the Board members present at its meeting. In the event of
equal numbers of votes for and against, the Chairman has the casting vote.
The mechanism preventing abuse of Polish Enterprise Fund IV, L.P.’s control over Issuer is comprised in Issuer’s
minority shareholders’ right to appeal Issuer’s General Meeting resolutions in the course provided for in arts.
422-427 of the Polish Commercial Partnerships and Companies Code as well as in the regulations contained in
the legislative Act regarding public offering concerning functioning of public companies, such as:
−
The right of public company shareholders holding at least 5% of share capital to request
appointment of an auditor for special issues,
−
The obligations concerning a disclosure of possession of public company shares,
−
The obligations concerning the circumstances in which the given entity’s share exceeds
specified share in the total number of votes held in the public company which, in principle,
may occur only upon announcement of invitation to subscribe for sale or exchange of public
company shares.
In accordance with the regulations of the legislative Act regarding public offering, the minority shareholders
are also entitled to request buying up of public company shares held by them by another shareholder in the
public company, if his/her share in the total number of votes reaches or exceeds 90%.
The implementation of the system of independent members of Supervisory Board serves as a mechanism of
prevention of abuse of the dominant position on the part of the Polish Enterprise Fund IV, L.P. In accordance
with Paragraph 15 section 6 of Issuer’s Articles of Association, at least half of members of Supervisory Board
should be independent. A Supervisory Board member is deemed to be independent if he/she:
a.
b.
c.
d.
e.
Is not the Company’s employee;
Does not hold more than 5 % of Company’s shares;
Is not an employee of the firm performing the audit of the financial report;
Is not a relative and is not related by affinity up to the second degree of the persons who are
Company’s employees or shareholders holding more than 5% of Issuer’s shares;
Is not an employee, member of bodies, owner, or shareholder in the enterprise conducting
business being competitive to that of Company’s.
The above requirements should be satisfied also as regards Company’s dominant or subsidiary companies.
An additional mechanism preventing abuse of control over Issuer is provided for in art. 387 of the Polish
Commercial Partnerships and Companies Code, under which an executive board member, commercial
proxy, liquidator, or head of branch or establishment and likewise the chief accountant who is the company’s
employee, legal advisor or attorney may not be members of supervisory board. This regulation also applies to
other persons who are directly subordinated to a member of the executive board or a liquidator, and applies
accordingly to the members of the executive board or liquidators of a dependent company or cooperative.
109
Any arrangements being known to Issuer the implementation of which may change the manner of Issuer’s
control
In accordance with its statement, Issuer does not have any information about any arrangements the
implementation of which at a later date might change the manner of Issuer’s control.
110
CHAPTER 15
TRANSACTIONS WITH RELATED ENTITIES
During the period dealt with in the historical financial information (business years 2004-2006) and during the
period between January 1, 2007 and the date of approval hereof, Issuer was a party to transactions with
related entities.
In accordance with MSR 24 concerning a disclosure of information about related entities, adopted as
prescribed in the Regulation (EC) no. 1606/2002 of the European Parliament and Council dated July 19, 2002
concerning application of international standards of accountancy, the following should be deemed to be
Issuer’s related entities:
1) Issuer’s associated entities:
- The law firm Kancelaria Prawnicza Piotr Pszczółkowski i Wspólnik Spółka Komandytowa;
- The law firm Kancelaria Aleksander Sękowski i Wspólnik Spółka Komandytowa.
Issuer is a limited partner both in Kancelaria Prawnicza Piotr Pszczółkowski i Wspólnik Spółka Komandytowa
and in Kancelaria Aleksander Sękowski i Wspólnik Spółka Komandytowa.
It should be pointed out that, on April 12, 2006, the partners of Spółka Komandytowa A. Sękowski i Wspólnik
Kancelaria Prawnicza adopted the resolution dissolving the Partnership. On April 21, 2006, A. Sękowski i
Wspólnik Kancelaria Prawnicza Spółka Komandytowa filed for having the Partnership’s entry struck from the
National Court Register (file reference number: LD. XX Ns-REJ. KRS 6538/06/120). Thus, beginning from 2006, the
Company has no material influence on the law firm’s activity.
In specified years, the Company’s related entities performed the following transactions (PLN 000s):
Issuer’s sale transactions
Issuer’s purchase transactions
Year
ended
Year
ended
Year
ended
Year
ended
Year
ended
Year
ended
31/12/06
31/12/05
31/12/04
31/12/06
31/12/05
31/12/04
Receivables from related
parties
31/12/06
31/12/05
31/12/04
Payables to related parties
31/12/06
31/12/05
31/12/04
Kancelaria A.
Sękowski i
Wspólnik Spółka
Komandytowa
-
19
96
-
370
454
-
133
256
-
-
-
Kancelaria P.
Pszczółkowski i
Wspólnik Spółka
Komandytowa
60
50
-
441
502
-
14
79
-
18
-
-
Issuer generated income from related companies by lease of offices, use of the IT network and data bases.
Purchases were made under existing legal service agreements, debt collection agreements and agreements
for representation in court proceedings, at market prices, taking into account the specific statutory regulation
of court fees.
The amounts not paid are not secured and will be settled in cash. No guarantees were given or obtained. In
2005, the cost of the up-date write-offs were reflected as PLN 93,000, constituting the conditionally redeemed
receivables from the Partner by reason of the dissolution of Kancelaria A. Sękowski i Wspólnik. In 2006, the
whole receivable amount from Kancelaria A. Sękowski i Wspólnik was written off.
During the period dealt with in the historical financial information and as of the date of approval hereof, Issuer
did not make any transactions with its related company - MedFinance Magellan, s.r.o. with its registered seat
in Prague, Czech Republic.
The cooperation agreement made between Issuer and Kancelaria Prawnicza Piotr Pszczółkowski Spółka
Komandytowa.
111
On March 10, 2005, Issuer signed a cooperation agreement with Kancelaria Prawnicza Piotr Pszczółkowski
Spółka Komandytowa. Under the agreement, Kancelaria Prawnicza Piotr Pszczółkowski Spółka
Komandytowa was obligated to provide Issuer with legal services. By virtue of the agreement, Issuer is to pay
Kancelaria Prawnicza Piotr Pszczółkowski Spółka Komandytowa the flat rate monthly remuneration being net
PLN 30,000 plus VAT. The remuneration includes payment for provision by Kancelaria Prawnicza Piotr
Pszczółkowski Spółka Komandytowa of a full range of legal service other than representation in proceedings
at law. The remuneration for representation in proceedings at law is calculated separately for each case, as
commissioned by the Issuer.
Additionally, by virtue of the above agreement, Issuer gives Kancelaria Prawnicza Piotr Pszczółkowski Spółka
Komandytowa payable access to offices on its premises being appropriate for performance of the subject of
the said agreement. Issuer also undertook to lease to Kancelaria Prawnicza Piotr Pszczółkowski Spółka
Komandytowa the computer network and office equipment for which Kancelaria Prawnicza Piotr
Pszczółkowski Spółka Komandytowa undertook to pay Issuer the monthly rent of PLN 5,000.
In 2005, the value of sale and purchase transactions between Issuer and Kancelaria Prawnicza Piotr
Pszczółkowski Spółka Komandytowa was PLN 552,000.
In 2006, the value of transactions between Issuer and Kancelaria Prawnicza Piotr Pszczółkowski Spółka
Komandytowa was PLN 501,000.
In 2007, the value of transactions between Issuer and Kancelaria Prawnicza Piotr Pszczółkowski Spółka
Komandytowa was PLN 158,400.
112
CHAPTER 16
SHARES, SHARE CAPITAL, GENERAL MEETING
Issued share capital for each share capital category
Number of shares in target capital
On December 31, 2006, Issuer’s Articles of Association did not provide for a target share capital increase. No
target share capital shares are there among Issuers’ shares.
Number of shares in conditional share capital increase
Issuer’s share capital has not been conditionally increased.
Number of shares issued and fully paid, and number of shares issued but not fully paid
Issuer’s share capital comprises 6,074,088 (six million seventy four thousand and eighty eight) ordinary bearer
shares, including:
- 5,812,500 (five million eight hundred twelve thousand and five hundred) A-Series Shares, the nominal value
of each share being PLN 0.30 (thirty grosz),
- 261,588 (two hundred sixty one thousand five hundred and eighty-eight) B-Series Shares, the nominal value
of each share being PLN 0.30 (thirty grosz).
Nominal value of shares
The nominal value of each Issuer’s share is PLN 0.30(thirty grosz).
Number of shares being in trading at the beginning and end of year
On January 1, 2006, the share capital of Issuer’s legal predecessor, Magellan Sp. z o.o., comprised 1,395 (one
thousand three hundred and ninety-five) shares, the nominal value of each share being PLN 1,250.00. On
December 31, 2006, Issuer’s share capital comprised 1,395 (one thousand three hundred and ninety-five)
ordinary registered shares, the nominal value of each share being PLN 1,250.00 (one thousand three hundred
and ninety-five złoty).
During the period dealt with in historical financial information, Issuer’s share capital was not paid for in any
other assets than cash.
In business year 2006, Issuer did not make any share capital increase or decrease.
As of the date of approval of the registration Prospectus, Issuer’s share capital comprises:
a) 5,812,500 (five million eight hundred twelve thousand and five hundred) A-Series Shares, the nominal value
of each share being PLN 0.30 (thirty grosz), not yet introduced into any organized system of trading, which will
be subject to dematerialization due to filing for admitting them to trading on GPW under this Prospectus,
b) 261,588 (two hundred sixty one thousand five hundred and eighty-eight) B-Series Shares, the nominal value
of each share being PLN 0.30 (thirty grosz), issued under Resolution no. 3 of Issuer’s Extraordinary General
Meeting of April 6, 2007, as implementation of the motivation programme addressed to Company’s
employees, not yet introduced into any organized system of trading, which will be subject to
dematerialization due to filing for admitting them to trading on GPW under this Prospectus,
c) No more than 440,000 (four hundred and forty thousand) ordinary bearer C-Series Shares, the nominal
value of each share being PLN 0.30 (thirty grosz), not yet introduced into any organized system of trading,
which will be subject to dematerialization due to filing for admitting them to trading on GPW under this
Prospectus.
Shares not representing share capital
Issuer has not issued any other shares than those making up its share capital.
Issuer’s shares held by Issuer, by other persons in its name or by Issuer’s subsidiaries
113
Issuer does not hold any self-issued shares. No persons, other than Issuer hold any shares Issued by Issuer, in its
name.
No Issuer’s subsidiary holds any Issuer’s shares.
Number of exchangeable securities, convertible securities or securities with warrants; the principles and
procedures governing their exchange, conversion or subscription
Issuer has not issued any exchangeable securities, convertible securities or securities with warrants.
Specifically, Issuer has not issued any bonds exchangeable to Issuer’s shares, bonds with priority warrant, or
subscription warrants.
Information about all acquisition rights or obligations pertaining to target capital or capital authorized but not
issued, or obligations to increase share capital
Issuer’s Articles of Association do not provide for the right to make a target share capital increase. There are
no acquisition rights or obligations pertaining to target capital.
Issuer’s Articles of Association do not provide for a conditional share capital increase. There are no acquisition
rights or obligations pertaining to capital conditionally increased.
There are no obligations pertaining to Issuer’s share capital increase.
On June 20, 2007, Issuer’s Extraordinary General Meeting adopted Resolution no. 5/2007 concerning issue of
subscription warrants and conditional share capital increase by issue of D-Series Shares in order to enable
acquisition of shares by persons participating in the motivation programme, and Resolution no. 66/2007
amending the Company’s Articles of Association by including the provision on conditional share capital
increase.
The resolutions were adopted as a result of the earlier adoption of Resolution no. 4/ 2007 specifying the
principles of Company’s Management Share Option Programme, described in the chapter “Employees’
participation in Issuer’s share capital” hereof.
In connection with the implementation of the management share option programme, the Company’s share
capital will be conditionally increased by PLN 117,252.00 (one hundred seventeen thousand two hundred
and fifty-two złoty) by issue of 390,840 (three hundred ninety thousand eight hundred and forty) Company’s
ordinary registered D-Series Shares, the nominal value of each share being PLN 0.30 (thirty grosz).
In connection with the implementation of the share option programme, the Company will issue 390,840 (three
hundred ninety thousand eight hundred and forty) registered subscription warrants entitling their holders to
acquisition of Company’s shares without a pre-emptive right. Subscription warrants will be taken up by a
custodian who will then transfer subscription warrants to Entitled Persons in the number as prescribed in the
share option programme by-laws. in each consecutive years of the share option programme, i.e. in the years
2007 – 2011, the following maximum numbers of subscription warrants may be allocated to relevant Entitled
Persons:
a)
b)
c)
d)
e)
Year 2007: 32,570 (thirty two thousand five hundred and fifty);
Year 2008: 97,710 (ninety seven thousand seven hundred and ten);
Year 2009: 97.710 (ninety seven thousand seven hundred and ten);
Year 2010: 97.710 (ninety seven thousand seven hundred and ten);
Year 2011: 65.140 (sixty five thousand one hundred and forty);
The Supervisory Board, as prescribed in the share option programme by-laws, is entitled to reserve up to 25%
of the total number of subscription warrants allocated for the given year, for new Entitled Persons. The
Supervisory Board is also entitled to distribute subscription warrants to other Entitled Persons in the given year
or forward them for distribution in a subsequent year to respectively: new Entitled Persons or existing Entitled
Persons.
In accordance with the premises of the share option programme, the holder of subscription warrants of the
given series will be entitled to subscribe for shares at any time during the year of issue of the given series of
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subscription warrants or during 2 years subsequent to that in which the given series subscription warrants were
issued.
Subscription warrants will be issued in 5 series – separately for each of the years of the share option
programme. The size of each subscription warrants series is to be specified by Supervisory Board resolution.
The issue price of all shares under the share option programme will be equal to the final issue price/sale price
of the shares offered on Company’s initial public offering. Subscription warrants will be issued free of charge.
Each subscription warrant will entitle its holder to acquire one Company share. The distribution of subscription
warrants will be the task of the Supervisory Board.
Subscription warrants will be offered for acquisition by a brokerage house or bank to be selected by the
Executive Board.
D-Series Shares will be acquired by subscription warrant holders by way of making a statement as prescribed
in art. 451 of the Polish Commercial Partnerships and Companies Code.
D-Series Shares will participate in dividend to be paid for the business year of their issue, if registered on the
securities account of the person who has exercised the right to acquire D-Series Shares not later than on the
day preceding the date of the General Meeting which is to pass the resolution distributing profit and fixing the
dividend date.
Issuer does not intend to notify the National Court Register of Resolution no. 5/2007 and Resolution no. 6/2007
dated June 20, 2007 before the date of Prospectus Approval.
Information about the capital of any member of the Capital Group being an object of share option or in
respect of which a conditional or unconditional decision has been made that it is going to become an object
thereof
No share option is contemplated in respect of Issuer’s share capital or the share capital of any member of
Issuer’s Capital Group. No conditional or unconditional decision has been made in respect of Issuer’s share
capital or in respect of the share capital of any of the members of Issuer’s Capital Group being an object of a
share option.
Share capital historical data
1. CHANGES IN SHARE CAPITAL OF ISSUER’S LEGAL PREDECESSOR BEFORE 2005.
Issuer’s legal predecessor, Magellan Sp. z o.o., was formed on January 5, 1998 by a notarial deed executed in
Łódź by Notary Public Zbigniew Jacek Lipke (Repertorium A No 9/98). Magellan Sp. z o.o. was registered on
January 1, 1998, at the date of Issuer’s registration in the Commercial Register section B at number RHB 6800
by the District Court for Łódź-Śródmieście in Łódź, the 14th Commercial Registration Division.
Magellan Sp. z o.o. shares, in the number of 40, the nominal value of each share being PLN 100, in aggregate
PLN 4,000.00, have been acquired by the sole shareholder – Ms Mariola Błaszkowska.
In accordance with the General Meeting Resolution of January 8, 2000, the share capital was increased from
PLN 4,000.00 to PLN 50,000.00 by increasing the share nominal value from PLN 100.00 to PLN 1,250.00. On
January 8, 2000, the Company filed with the District Court in Łódź a request for registration of the changes
made in the contents of the commercial register entry resulting from the share capital increase.
In accordance with the Extraordinary General Meeting Resolution of December 14, 2000 (Notarial Deed
executed at Notary’s Office of Janusz Kozłowski, Notary Public in Łódź (Repertorium A No 5835/2000), the
share capital of Issuer’s legal predecessor was increased from PLN 50,000.00 to PLN 750,000.00 by issue of 560
new shares, the nominal value of each share being PLN 1,250.00.
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All shares in Issuer’s increased share capital have been acquired by the existing shareholder, Mariola
Błaszkowska, who paid for all of them by making a contribution in kind.
On January 22, 2001, by the District Court decision, Issuer’s share capital was increased to PLN 750,000.00
(reference file number XIV Ns rej. H 1482/00/2).
On March 19, 2003, the Extraordinary General Meeting adopted Resolution no 1 increasing the share capital
and changing the Company Articles of Association. Under the said resolution, Issuer’s legal predecessor’s
share capital was increased from PLN 750,000.00 (seven hundred and fifty thousand złoty) by PLN 590,000.00
(five hundred and ninety thousand złoty)– to PLN 1,340,000.00 (one million three hundred and forty thousand
złoty), by creating 472 (four hundred and seventy-two) new shares, the nominal value of each share being
PLN 1,250.00 (one thousand two hundred and fifty złoty), all of which are to be acquired by the Polish
Enterprise Fund IV L.P. The share capital was increased by Polish Enterprise Fund IV L.P. cash contribution of
PLN 15,000,000.00 (fifteen million złoty). In connection with the above, Paragraph 8 of the Company Deed
was amended to read as follows: ”the Company share capital is PLN 1,340,000 (one million three hundred
and forty thousand złoty) divided into 1,072 (one thousand and seventy two) equal and indivisible shares, the
value of each share being PLN 1,250 (one thousand two hundred and fifty złoty)”.
The above change was registered at the National Court Register by the May 6, 2003 Decision of the District
Court for Łódź– Śródmieście in Łódź, the 20th National Court Register Division.
On August 6, 2003, the Extraordinary General Meeting adopted Resolution no 2 increasing Issuer’s legal
predecessor’s share capital from PLN 1,340,000 (one million three hundred and forty thousand złoty) to PLN
1,546,250 (one million five hundred forty six thousand two hundred and fifty złoty), i.e. by PLN 206,250 (two
hundred six thousand two hundred and fifty złoty), by creating 165 (one hundred sixty five) new shares, the
nominal value of each share being PLN 1,250 (one thousand two hundred and fifty złoty). The issue price of
new shares was fixed as PLN 31,779.61 (thirty one thousand seven hundred and seventy nine złoty and 61/100)
per one share. The aggregate issue price of new shares was PLN 5,243,635.65 (five million two hundred forty
three thousand six hundred thirty-five złoty and 65/100). All shares were offered for acquisition. All shares were
acquired by the Polish Enterprise Fund IV L.P.
The above change was registered at the National Court Register by the March 4, 2004 Decision of the District
Court for Łódź– Śródmieście in Łódź, 20th National Court Register Division.
During the period dealt with in this Registration Document in historical financial information (years 2004-2006)
the following changes were made as regards Issuer’s share capital:
2. SHARE CAPITAL INCREASE OF OCTOBER 29, 2004
On October 29, 2004, the Extraordinary General Meeting of Magellan Sp. z o.o. adopted Resolution no.
5/2004 increasing the Company’s share capital and changing the Company Deed, by virtue of which the
Company’s share capital was increased from PLN 1,546,250 (one million five hundred forty six thousand two
hundred and fifty złoty) to PLN 1,743,750.00 (one million seven hundred forty three thousand seven hundred
and fifty złoty) i.e. by PLN 197,500.00 (one hundred ninety seven thousand and five hundred złoty), by
creating 158 (one hundred and fifty eight) new, equal, indivisible shares, the nominal value of each share
being PLN 1,250.00 (one thousand two hundred and fifty złoty), of aggregate value of PLN 197,500.00 (one
hundred ninety seven thousand and five hundred złoty). At the same time, the Shareholders’ Resolution
excluded the existing Company’s shareholders’ pre-emptive right to acquire new shares in the increased
share capital pro rata to their existing shareholdings, allocating 158 newly created shares for acquisition by
existing shareholder – the Polish Enterprise Fund IV, L.P., who paid for all newly issued shares allocated to it in
cash, in aggregate the amount of PLN 5,021,178.30 (five million twenty one thousand one hundred and
seventy eight złoty and 30/100), i.e. for the price being PLN 31,779.61 (thirty one thousand seven hundred and
seventy nine złoty and 61/100) per each share. The surplus over the nominal value of the shares, being PLN
4,823,678.30 (four million eight hundred twenty three thousand six hundred and seventy eight złoty and
30/100) was transferred to Company’s reserve fund in compliance with art. 154 § 3 of the Polish Commercial
Partnerships and Companies Code. By virtue of the same Resolution § 4 of Company Deed was changed to
read as follows:
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“§ 4.1 The shares in the Company’s share capital were acquired as follows:
1)
2)
Mariola Błaszkowska acquired 600 (six hundred) shares, the nominal value of each share being PLN
1,250.00 (one thousand two hundred and fifty złoty), their aggregate nominal value being PLN
750,000.00 (seven hundred and fifty thousand złoty), out of which 40 (forty) shares were paid for in
cash and 560 (five hundred and sixty) shares were acquired in return for a contribution in kind,
described in details in the Notarial Deed executed by Janusz Kozłowski, Notary Public in Łódź, having
his Notary’s Office in Łódź at Aleja Kościuszki 39, Repertorium A 5835/2000,
The Polish Enterprise Fund IV, L.P., Corporation Trust Centre, 1209 Orange Street, Wilmington, County
of New Castle, Delaware, having its principal office at 1 Exchange Place, Suite 1000 Jersey City, NJ
07302, the United States (the “Fund”) acquired 795 (seven hundred and ninety five) shares, the
nominal value of each share being PLN 1,250.00 (one thousand two hundred and fifty złoty), their
aggregate nominal value being PLN 796,250.00 (seven hundred ninety six thousand two hundred and
fifty złoty), paying for all of them in cash”.
The above changes were registered at the National Court Register by the February 18, 2005 Decision of the
District Court for Łódź – Śródmieście in Łódź, the 20th National Court Register Division, reference file number
LD.XX NS-REJ.KRS/20877/4/888 (Company’s Capital) and the December 28, 2005 Decision, reference file
number LD.XX NS-REJ.KRS/20379/5/188 (Information about Shareholders).
3. TRANSFORMATION OF LIMITED LIABILITY COMPANY INTO JOINT STOCK COMPANY
By virtue of Resolution no 2 dated May 22, 2006, the Extraordinary General Meeting transformed the
Company under the business name: Magellan spółka z ograniczoną odpowiedzialnością with its registered
seat in Łódź into a joint stock company. The share capital of the transformed company is PLN 1,743,750.00
(one million seven hundred forty three thousand seven hundred and fifty złoty) and is divided into 1,395 (one
thousand three hundred and ninety five) A-Series Shares, the nominal value of each share being PLN 1,250.00
(one thousand two hundred and fifty złoty). The shares have been acquired by the existing sole shareholder –
the Polish Enterprise Fund IV, L.P., and paid for with part of the Company’s assets worth PLN 1,743,750 (one
million seven hundred forty three thousand seven hundred and fifty złoty). The assets of the transformed
Magellan spółka z ograniczoną odpowiedzialnością with its registered seat in Łódź, the balance sheet value
of which was PLN 47,568,308.09 (forty seven million five hundred sixty eight thousand three hundred and eight
złoty and 9/100) was allocated for the transformed Company’s reserve fund.
The above transformation was registered by the September 8, 2006 Decision of the District Court for Łódź –
Śródmieście in Łodź, the 20th National Court Register Division (reference file number L.D.XX.NS-REJ.
KRS/012354/06/679).
4. CHANGE OF ISSUER’S ARTICLES OF ASSOCIATION
On April 6, 2007, Issuer’s Extraordinary General Meeting, acting in compliance with art. 430 § 1 of the Polish
Commercial Partnerships and Companies Code of September 15, 2000 and with § 24 section 6 of the
Company’s Articles of Association, adopted Resolution no 1 amending the Company’s Articles of Association.
Pursuant to the newly adopted Articles of Association, the Company’s share capital is PLN 1,743,750 (one
million seven hundred forty three thousand seven hundred and fifty złoty) and is divided into 5,812,500 (five
million eight hundred twelve thousand and five hundred) ordinary bearer A-Series Shares, the nominal value
of each share being PLN 0.30 (thirty grosz).
The above amendment of the Articles of Association was registered by the April 27, 2007 Decision of the
District Court for Łódź – Śródmieście in Łodź, the 20th National Court Register Division (reference file number
L.D.XX.NS-REJ. KRS/006562/07/680).
5. SHARE CAPITAL INCREASE OF APRIL 6, 2007
On April 6, 2007, Issuer’s Extraordinary General Meeting, acting in compliance with arts. 431, 432, 433 § 2, and
440 § 3 of the Polish Commercial Partnerships and Companies Code and with §24 section 5 of the Company’s
Articles of Association, adopted Resolution no 3, increasing the Company’s share capital from PLN 1,743,750
(one million seven hundred forty three thousand seven hundred and fifty złoty) by the amount not exceeding
PLN 78,476.40 (seventy eight thousand four hundred and seventy-six złoty and 40/100), by issue of shares in
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the number not exceeding 261,588 (two hundred sixty one thousand five hundred and eighty-eight), the said
shares being ordinary bearer B-Series Shares, the nominal value of each share being PLN 0.30 (thirty grosz).
The Resolution was adopted in connection with the implementation of the incentive programme adopted by
Resolution no 2 of the Issuer’s Extraordinary General Meeting of April 6, 2007.
B-Series Shares have been paid for in cash.
Issuer’s Extraordinary General Meeting Resolution no 3 of April 6, 2007 was adopted on the condition that the
Court Register registers the amendments introduced to the Issuer’s Articles of Association by Extraordinary
General Meeting Resolution no 1 dated April 6, 2007, and became effective at the date of registration of
these amendments.
On May 10, 2007, Issuer signed with Entitled Persons agreements on acquisition of B-Series Shares and, on May
25, 2007, filed a relevant request with the National Court Register. On June 12, 2007, the Court Register
registered the increase of Issuer’s share capital by issue of 261,588 B-Series Shares.
Object of Issuer’s activity
Pursuant to § 3 of Issuer’s Articles of Association, the object of the Company’s operations comprises:
1.
Pecuniary intermediation, not classified elsewhere;
2.
Financial leasing;
3.
Other forms of extending credit facilities;
4.
Financial intermediation, not classified elsewhere;
5.
Auxiliary financial activities, not classified elsewhere;
6.
Commercial activities, not classified elsewhere;
7.
Service activities, not classified elsewhere;
8.
Market and public opinion polling;
9.
Advisory services with respect to pursuit of business activity and management;
10. Management and administration with respect to pursuit of business activity;
11. Technical testing and analyses.
Issuer is a non-banking financial institution, specialized in providing financial services and products to entities
operating in medical market, i.e. entities providing medical services and being suppliers of goods and
services thereto.
In accordance with its business model, the Company provides clients with customized financial products,
supporting medical entities’ trade exchange with suppliers, and their current operations, as well as financing
of long-term investment projects.
The principal financial products offered by the Company to its clients are: debt financing, refinancing of
obligations, loans, guarantees, factoring, long-term financing of investment projects.
The Company’s activity is focused specifically on the medical market. However, the company extends the
range of its offer also to other market entities (local self-government units, municipal partnerships).
Summary of provisions of the Articles of Association or By-laws relating to members of executive or
supervisory bodies
Executive Board
The Company’s Executive Board is composed of between three (3) and four (4) members appointed for a
joint term in office. The term of office of the first Executive Board is two (2) years, and the term of office of
every consecutive Executive Board – four (4) years. Members of the Executive Board are appointed by the
Supervisory Board by resolution.
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From amongst the Executive Board members, the Supervisory Board appoints – by resolution – a President,
with whom an employment contract or another contract is executed. The Supervisory Board signs this
contract and represents the Company in dealings with the Executive Board; this provision applies mutatis
mutandis to other members of the Executive Board.
The mandates of the Executive Board members expire as at the day of the General Meeting approving the
financial statement for the last full financial year of the Executive Board member’s service. Executive Board
members may be recalled at any time by the Supervisory Board or by the General Meeting; such recalling
remains without prejudice to claims extending to the Executive Board members under their employment
contracts.
The Executive Board is empowered to take any and all decisions not reserved for other governing bodies of
the Company. The Executive Board is obligated to manage the assets and the affairs of the Company with
due care and skill of a standard appropriate for business activity, to abide the law, by the provisions of these
Articles of Association, and by the resolutions adopted by the General Meeting and the Supervisory Board
within the scope of their competences.
The Executive Board pursues its activities on authority of these Articles of Association and of the Executive
Board By-Laws approved by the Supervisory Board.
Authority to make binding declarations with respect to proprietary rights and obligations of the Company and
to sign on behalf of the Company extends to two Executive Board members acting jointly or to one Executive
Board member acting jointly with a commercial proxy.
Appointment of a commercial proxy requires permission of all the Executive Board members; proxy powers
may be revoked by a decision of any Executive Board member.
Supervisory Board
The Supervisory Board is the Company’s supervisory body, composed of 5 to 7 members, including Supervisory
Board Chairman and Vice Chairman.
The Supervisory Board is appointed and recalled by the General Meeting, subject to provisions of § 14
sections 3 and 4 of the Articles of Association, under which as long as the Polish Enterprise Fund IV, L.P. holds
Company’s shares entitling it to more than 50% votes at the General Meeting of shareholders, it enjoys the
right to appoint and recall:
− Three members of the five-member Supervisory Board, including the Chairman,
− Four members in the six-member and the seven-member Supervisory Board, including the
Chairman.
As long as the Polish Enterprise Fund IV, L.P. is the holder of Company’s shares entitling it to more than 20%
votes at the General Meeting of shareholders, it enjoys the right to appoint and recall:
−
−
Chairman.
Pursuant to § 15 section 6 of Issuer’s Articles of Association, at least half of the members of the Supervisory
Board should be independent. A member of the Supervisory Board is deemed to be independent if he/she:
a. Is not an Issuer’s employee;
b. Does not hold more than 5 % of Issuer’s shares;
c. Is not an employee of the corporation who performs the audit of the financial statement;
d. Is not a relative or related by affinity up to the second degree of the persons being Issuer’s
employees or shareholders holding more than 5% of Issuer’s shares;
e. Is not an employee, member of bodies, owner, or shareholder in the enterprise conducting
business being competitive to that of Issuer’s.
Supervisory Board resolutions are adopted by an absolute majority of the votes cast by the Supervisory Board
members in attendance at the session. In the event of a tied vote, the Chairman has the casting vote.
In order for a Supervisory Board resolution to be valid, all the Supervisory Board members must have been
invited to the session and at least half the Supervisory Board members must be in attendance.
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As qualified by pertinent provisions of the Polish Commercial Partnerships and Companies Code, Supervisory
Board members may participate in the adoption of Supervisory Board resolutions by casting their vote in
writing through the intermediation of another Supervisory Board member. Such written voting may not refer to
issues added to the agenda while the given Supervisory Board session was already underway.
As qualified by pertinent provisions of the Polish Commercial Partnerships and Companies Code, the
Supervisory Board may adopt resolutions by way of a written procedure or by using means of direct longdistance communication (by telephone or by other means guaranteeing that all the Supervisory Board
Members may communicate with one another). A resolution adopted in accordance with the above is valid
only if all the Supervisory Board members have been presented with that resolution’s draft. In the event of a
written ballot, the Supervisory Board Chairman casts her/his vote first and then forwards the text of the
resolution to the remaining Supervisory Board members. The resolution becomes legally binding once signed
by an absolute majority of the Supervisory Board members. The adoption of a resolution by using means of
direct long-distance communication is to be endorsed by the Supervisory Board Chairman, who collects the
votes of the remaining Supervisory Board members, with such endorsement assuming the form of an
annotation on the resolution about the procedure of its adoption and of the votes cast by the individual
Supervisory Board Members. Under both the procedures described above, in the event of a tied vote, the
Chairman has the casting vote.
Supervisory Board members receive remuneration for performance of their duties, unless the body authorized
to appoint Supervisory Board Members decides otherwise. The amount of the remuneration is fixed by
resolution of the General Meeting.
The Supervisory Board operates on the basis of the Articles of Association and of the By-laws defining its
organisation and the manner of performance of its duties, as adopted by the General Meeting. The
Supervisory Board maintains ongoing supervision of the Company’s activities.
Pursuant to § 17 of Issuer’s Articles of Association, the Supervisory Board’s scope of responsibilities includes, in
particular:
a) Approval of the Company’s annual financial plans (the budget) and strategic business plans; the budget
should include, at the very least, the Company’s operating plan, the plan of revenues and expenses for
the given financial year, a projection of the balance sheet as at the end of the financial year, a cash flow
plan for the financial year, and a plan of Company expenditures departing beyond the scope of its
ordinary course of business;
b) Expressing permission for incurring by the Company of loans and credit facilities not provided for in the
annual budget as well as for extending guarantees and for instituting any encumbrances upon the assets
of the Company and for incurring by the Company of liabilities with respect to guarantees and other offbalance sheet liabilities other than such liabilities as have been provided for in the budget;
c) Expressing permission for incurring by the Company of liabilities – with respect to a single transaction or to a
series of interrelated transactions – of an aggregate value in excess of EUR 150,000 (one hundred and fifty
thousand euro), or the equivalent thereof in another currency, within a single financial year where such
liabilities are not provided for in the budget approved in accordance with the Company’s Articles of
Association and do not follow from the Company’s ordinary operations;
d) Expressing permission for institution of a pledge or lien or of a mortgage upon assets of the Company or for
transfer of the Company’s assets for security and for other encumbrances of the Company’s assets not
provided for in the budget approved in accordance with the Company’s Articles of Association;
e) Expressing permission for purchase or acquisition by the Company of shares in other commercial
companies and for the Company’s accession to other business entities as well as for establishment of
branches of the Company;
f) Expressing permission for divestment of assets of the Company to a value exceeding 10% (ten percent) of
the Company’s net book value established on the basis of the most recent audited financial report;
g) Expressing permission for divestment or transfer of copyrights or other intellectual property, in particular
rights in patents and technologies and trademarks, departing beyond the scope of ordinary management
and not provided for in the budget;
h) Expressing permission for retaining by the Company, or by the Company’s subsidiaries, of advisors and
other parties external vis a vis the Company or the Company’s subsidiaries in the capacity of consultant,
legal counsel. or agent where the aggregate annual cost of retaining such persons to be borne by the
Company not provided for in the budget were to exceed EUR 40,000.00 (forty thousand euro) or the
equivalent thereof in another currency;
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i) Approval of management options by-laws;
j) Selection of the qualified auditor for examination of the Company’s annual financial reports, as discussed in
art. 395 of the Polish Commercial Partnerships and Companies Code, in keeping with Polish and
international accounting principles;
k) Appointment and removal of members of the Company’s Executive Board, suspension of individual
Executive Board members or of the entire Executive Board, and defining the principles for remuneration of
the members of the Company’s Executive Board as well as the remuneration policies for the Company;
l) Expressing permission for the execution of contracts between the Company, or subsidiaries of the
Company, on the one hand and members of the Company’s Executive Board, members of the
Supervisory Board, or affiliates of any member of the Company’s Executive Board or member of the
Supervisory Board on the other, defining limits for the value of such contracts and the conditions the
fulfilment of which exempts the given contract from the necessity of securing Supervisory Board authority;
m) Expressing permission for the manner of voting by the Company in its capacity as significant shareholder
on the governing bodies of other companies with respect to, per analogam, the matters specified in §
17.a – 17.p of these Articles of Association;
n) Expressing permission for effecting by the Company, or by subsidiaries of the Company, of any free-ofcharge disposals, or for the incurring of any free-of-charge obligations or liabilities, within the scope of the
Company’s business activities in a value exceeding PLN 1,000,000.00 (one million złoty);
o) Expressing permission for effecting by the Company, or by subsidiaries of the Company, of any free-ofcharge disposals, or for the incurring of any free-of-charge obligations, departing beyond the scope of the
Company’s business activities in a value exceeding PLN 80,000.00 (eighty thousand złoty);
p) Disposal of rights or incurring of liabilities in excess of PLN 10,000,000.00 (ten million złoty);
q) Other matters, as specified in these Articles of Association and in the Polish Commercial Partnerships and
Companies Code.
Description of rights pertaining to securities, including all their limitation, and procedures of exercising thereof
The Polish Commercial Partnerships and Companies Code
The rights enjoyed by the shareholders are divided into proprietary and corporate ones. Their proprietary
rights are as follows: the right to dividend (art. 347 of the Commercial Partnerships and Companies Code),
the pre-emptive right to acquire new shares (art. 433 of the Commercial Partnerships and Companies Code),
and the right to participate in distribution of Issuer’s assets in the event of liquidation (art. 474 of the
Commercial Partnerships and Companies Code). The shareholders’ corporate (organizational) rights are as
follows: the right to review the share register and to demand being provided with its official copy (art. 341 of
the Commercial Partnerships and Companies Code), the right be provided with an official copy of Executive
Board’s report on Issuer’s activities and of financial statement together with an official copy of Supervisory
Board’s report and of the qualified auditor’s opinion (art. 395 of the Commercial Partnerships and Companies
Code), the right to request having General Meeting convened and having specified items put on the
agenda of the nearest General Meeting on the part of the shareholders holding at least 1/10 part of the
share capital (art. 400 of the Commercial Partnerships and Companies Code), the right to file with Issuer’s
court register for authorisation to convene General Meeting in the event the Executive Board has failed to
convene the General Meeting within two (2) weeks following the filing of the request referred to in art. 400 of
the Commercial Partnerships and Companies Code (art. 401 of the Commercial Partnerships and Companies
Code), the right to participate in the General Meeting of Shareholders (art. 406 of the Commercial
Partnerships and Companies Code), the right to review the list of shareholders at the Company’s offices, the
right to request drawing up of a list of the shareholders entitled to participate in the General Meeting of
Shareholders, the right to request issuing of official copies of motions made in the matters covered by the
Agenda of the General Meeting of Shareholders (art. 407 of the Commercial Partnerships and Companies
Code), the right to verify, upon request of shareholders holding 1/10 part of the share capital represented at
the General Meeting, the list of attendance of the General Meeting by a committee appointed to this end,
composed of at least three members, one of whom being selected buy the requesting shareholders (art. 410
of the Commercial Partnerships and Companies Code), the right to vote at the General Meeting of
Shareholders (art. 411 of the Commercial Partnerships and Companies Code), the right to review the register
of the minutes of the General Meeting, and the right to be provided with official copies of resolutions certified
by the Executive Board (art. 421 of the Commercial Partnerships and Companies Code), the right to appeal
against a resolution of the General Meeting not being compliant with the Articles of Association or with the
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good practice and being prejudicial to Issuer’s interests or aimed against a shareholder by bringing against
Issuer a court action for reversing a resolution (art. 422 of the Commercial Partnerships and Companies
Code), the right to bring against the Company a court action for declaration of invalidity of a resolution of
the General Meeting not being in compliance with law (art. 425 of the Commercial Partnerships and
Companies Code), the right to request the Executive Board to provide the General Meeting with information
concerning Issuer, where justifiably required or the assessment of a matter covered by the Agenda (art. 428 §
1 of the Commercial Partnerships and Companies Code), the right to file to the court register for putting the
Executive Board under the obligation to provide the information referred to in art. 428 § 1 of the Commercial
Partnerships and Companies Code (art. 429 § 1 of the Commercial Partnerships and Companies Code) or to
put Issuer under the obligation to publish the information provided to another shareholder outside the
General Meeting pursuant to Article 428 § 4 of the Commercial Partnerships and Companies Code (art. 429 §
2 of the Commercial Partnerships and Companies Code), the right to bring a court action against members
of Issuer’s bodies or against other persons who have harmed Issuer (arts. 486 and 487 of the Commercial
Partnerships and Companies Code), the right to review the documents relating to a merger, division or
transformation of Issuer (arts. 505, 540 and 561 of the Commercial Partnerships and Companies Code), and
the right to request election of the Supervisory Board by taking a vote in separate groups (art. 385 § 3 of the
Commercial Partnerships and Companies Code).
Pursuant to art. 6 § 4 and § 5 of the Commercial Partnerships and Companies Code, Issuer’s shareholder also
enjoys the right to request that a commercial company being Issuer’s shareholder provide written information
if it is in the relationship of dominance or dependence in the meaning of art. 4 § 1.4 of the Commercial
Partnerships and Companies Code vis a vis a particular commercial company or cooperative being Issuer’s
shareholder. Issuer’s shareholder is entitled to lodge the request referred to above and also to request
disclosure of the number of Issuer’s shares or number of votes at the General Meeting of Issuer’s Shareholders,
held by a commercial company, including also those held as a pledgee, a perpetual leaseholder or under
agreements made with other persons.
Legislative Act regarding public offering, legislative Act regarding trade in financial instruments
Pursuant to the legislative Act regarding trade in financial instruments, the document confirming holding rights
in dematerialized bearer shares is a registered deposit certificate, which may be issued by an entity operating
the securities account as prescribed in that Act. Pursuant to art. 328 § 6 of the Polish Commercial Partnerships
and Companies Code, the shareholders holding dematerialized Issuer’s shares are entitled to obtain
registered deposit certificates issued by the entity operating the securities account. The shareholders holding
dematerialized Issuer’s shares are not entitled to demand issue of the Share documents. The right to demand
issue of the share document is, however, retained by the shareholders holding the Issuer’s Shares that have
not been dematerialized. Art. 84 of the legislative Act regarding public offering vests in the shareholder or
shareholders holding at least 5% of the total number of votes at the General Meeting the right to request
adoption of a resolution concerning a qualified auditor’s examination of the given issue related to the
Company formation or conduct of its affairs (auditor for special issues). In the event the General Meeting fails
to adopt a resolution in compliance with submitted request for appointment of an auditor for special issues,
the requesting shareholders may request the register court’s appointment of a specified entity as the auditor
within fourteen (14) days following the date of resolution (art. 85 of the legislative Act regarding public
offering). Minority shareholders enjoy a protective right in the form of an institution provided for in art. 83 of the
legislative Act regarding public offering. Pursuant to that provision, a public company shareholder may file a
written request for buying up his/her shares by another shareholder who has reached or exceeded 90% of the
total number of votes in that company.
Description of actions necessary for changing shareholders rights
Issuer’s Articles of Association do not provide for a limitation as regards exchange of shares.
Description of principles of convening general meetings of shareholders
General Meetings are convened by the Executive Board by way of announcement published in Monitor
Sądowy i Gospodarczy at least twenty-one (21) days before the designated time. The announcement should
specify the date, hours and the venue of the Ordinary Meeting of Shareholders, as well as the detailed
Agenda. The General Meetings of Shareholders may only be held at the Company’s registered seat in
Warsaw.
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Unless the law provides for otherwise, the General Meeting of Shareholders may adopt binding resolutions
irrespective of the number of shares represented at it.
The shareholders participate in the General Meetings and cast votes in person or by proxy. The powers of
attorney must be granted in the written form, otherwise being null and void. General Meeting resolutions are
adopted by an absolute majority of the votes unless pertinent provisions of the Polish Commercial Partnerships
and Companies Code or the Articles of Association institute stricter requirements in this respect. Validity of
General Meeting resolutions concerning material change of the object of the Company’s activities does not
require buying up the shares of any shareholders who do not agree to such change provided that these
resolutions have been adopted by a majority of two-thirds of the votes in the presence of persons
representing at least half the share capital.
Issuer’s Ordinary General Meetings
Pursuant to the Commercial Partnerships and Companies Code and Issuer’s Articles of Association, an
ordinary General Meeting should be held within six (6) months following the end of every financial year. An
ordinary General Meeting is convened by Issuer’s Executive Board. An ordinary General Meeting is convened
by the Supervisory Board if the Executive Bard has not convened it within two weeks following the date of
submission of Supervisory Board’s relevant request to this end.
Issuer’s Extraordinary General Meetings
Issuer’s extraordinary General Meeting is convened by Issuer’s Executive Board:

Upon own initiative;
Upon request of Issuer’s Supervisory Board;
Upon request of a shareholder or shareholders representing at least one tenth part of issuer’s share
capital, to be submitted at the latest one month before the proposed date of Extraordinary General
Meeting.
Issuer’s Extraordinary General Meeting may be convened by Issuer’s Supervisory Board, if the Supervisory
Board finds it necessary to be convened and the Executive Board has not convened the Extraordinary
General Meeting within two weeks following the date of submission of a relevant request to this end by the
Supervisory Board.
The register court, following summoning the Executive Board to make a relevant statement, authorises the
shareholders requesting the convening of the Extraordinary General Meeting to convene it in the situation in
which the Extraordinary General Meeting has not been convened within two weeks following the submission
of such request to the Executive Board.
Description of provisions of Issuer’s Company Deed, Articles or By-laws that could cause a delay in or
adjournment of change of control over Issuer or could render it impossible
Issuer’s Articles of Association provide for personal rights of the Polish Enterprise Fund IV, L.P. in the form of the
right to appoint:
−
−
Three members of the five-member Supervisory Board, including the Chairman;
Four members in the six-member and the seven-member Supervisory Board, including the
Chairman;
as long as the Polish Enterprise Fund IV, L.P. is the holder of Company’s shares entitling it to 50% or more votes
at the General Meeting of Shareholders, and
−
−
Two members of the five-member Supervisory Board, including the Chairman;
Chairman;
as long as the Polish Enterprise Fund IV, L.P. is the holder of Company’s shares entitling it to 20% or more, not
less, however, than 50%, votes at the General Meeting of Shareholders.
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Issuer’s Articles of Association do not contain any other provisions which could cause a delay in, or
adjournment of, change of control or render the change of control over Issuer impossible. At the same time,
Issuer’s Articles of Association do not contain any provisions limiting the right of vote on the part of Issuer’s
shareholders holding more than one-fifth part of the total number of votes in the Company, as referred to in
art. 411 §3 of the Polish Commercial Partnerships and Companies Code.
Indication of provisions of Issuer’s Company Deed, Articles or By-laws regulating the limit of the number of
shares over which it is required from the shareholder to disclose the size of its shareholding
Issuer’s Articles of Association do not provide for any shareholder’s obligation of inform about exceeding of
specified limits as regards the number of Issuer’s shares held.
Description of principles and conditions imposed by Company Deed, Articles or By-laws to be observed while
making capital changes in the event such principles are stricter than those provided for by law
Issuer’s share capital increase or decrease is made in accordance with the principles specified in the Polish
Commercial Partnerships and Companies Code. Issuer’s Articles of Association do not contain stricter
requirements in this respect than those of the Commercial Partnerships and Companies Code.
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CHARTER 17
ISSUER
Issuer’s legal (statutory) and business name
Issuer’s legal and statutory name is: Magellan Spółka Akcyjna.
In accordance with art. 305 §2 of the Polish Commercial Partnerships and Companies Code and with §1
second sentence of Issuer’s Articles of Association, Issuer may use the abbreviated form of its business name:
Magellan S.A. as its trade name.
In commercial trading, Issuer may use both its business name and its abbreviated form.
Issuer’s registered seat is in the city of Łódź. Issuer operates in the territory of the Republic of Poland and
outside that territory.
Place of Issuer’s registration and its registration number
Issuer is registered at the register of business enterprises at the National Court Register maintained by the
District Court for Łódź-Śródmieście, the 20th Division of the National Court Register with number KRS
0000263422. Issuer was entered in the register of entrepreneurs at the National Court Register on September 8,
2006. The registration was made by the District Court for Łódź-Śródmieście, the 20th Division of the National
Court Register on the basis of the Decision dated September 8, 2006 (reference file number: LD.XX NSREJ.KRS/12354/06/679).
Issuer’s legal predecessor, Magellan Spółka z ograniczoną odpowiedzialnością, was entered in the
commercial register maintained by the District Court for Łódź-Śródmieście, Commercial Court 15th
Commercial-Registry Division in Łódź, in Section B, with number 6800. The company was registered in the
commercial register on June 1, 1998.
On September 3, 2001, Issuer’s legal predecessor, Magellan Spółka z ograniczoną odpowiedzialnością, was
entered in the register of business enterprises at the National Court Register maintained by the District Court
for Łódź-Śródmieście in Łódź, the 20th Division of the National Court Register with number 000038232. Magellan
Sp. z o.o. was entered in the register of business enterprises on the basis of the Decision of September 3, 2001
(reference file number: CLD.XX NS-REJ.KRS/4772/1/43).
Issuer was also provided with its identification numbers:
- Tax identification number, NIP:
9471800271
- Statistical identification number, REGON:
471987671
Date of Issuer’s formation and term for which it is formed, unless indefinite
Issuer was formed as a result of the transformation of Magellan Spółka z ograniczoną odpowiedzialnością in
Łódź into Magellan Spółka Akcyjna, by virtue of the Extraordinary General Meeting Resolution of May 22, 2006
(Notarial Deed executed at the Notary’s Office in Warsaw, Nowolipki 27B, office 3, by Notary Public Maria
Alicja Janowska, Repertorium A – 4727/ 2006, amended by the Extraordinary General Meeting Resolution of
August 16, 2006, recorded by Olga Bogusz, assistant judge to Maria Alicja Janowska Notary Public in Warsaw,
Repertorium A – 7939/2006), adopted under art. 562 of the Polish Commercial Partnerships and Companies
Code. On September 8, 2006, the District Court for Łódź –Śródmieście in Łódź, the 20th Division of the National
Court Register entered the Issuer, Magellan Spółka Akcyjna, in the register of business enterprises in the
National Court Register, with number 0000263422.
Issuer was formed for an indefinite term.
Issuer’s registered seat and legal form; regulations on the basis of and in compliance with which Issuer
conducts its operations, country, address and telephone number of its registered seat (or its principal place of
business, if different from registered seat)
Issuer is a joint stock company with its registered seat in Łódź. The country of location of its registered seat is
the Republic of Poland.
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Issuer was formed and operates under Polish law. Issuer was incorporated on the basis of the Polish
Commercial Partnerships and Companies Code and operates in accordance with that Code.
The principal place of Issuer’s business is its registered seat.
Issuer’s registered seat address and contact telephone numbers are as follows:
Registered seat address:
ul. Sienkiewicza 85/87, 90-057 Łódź (until 21.03.2006 ul. Wólczańska 73
2a/2b, 90-515 Łódź)
Principal telephone number:
(+48 42) 637 17 90
Fax number:
(+48 42) 637 08 00
E-mail address:
[email protected]
www:
www.magellan.pl
Events of significance in the development of Issuer’s business
1998
Formation of Issuer’s legal predecessor, Magellan Sp. z o.o., and beginning of business operations
2000
Increasing Issuer’s legal predecessor’s, Magellan Sp. z o.o., share capital from PLN 4,000.00 to PLN 50,000.00, by
increasing the share nominal value from PLN 100.00 to PLN 1,250,00
2000
Increasing Issuer’s legal predecessor’s, Magellan Sp. z o.o., share capital from PLN 50,000.00 to PLN 750,000.00, by
creating 560 new shares, the nominal value of each new share being PLN 1,250.00.
Signing by Mariola Błaszkowska, Magellan Sp. z o.o. , and the Polish Enterprise Fund IV, L.P. of agreement,
shareholders agreement, under which the Company offered the Polish Enterprise Fund IV, L.P. the acquisition of all
shares in the increased share capital.
2003
On March 19, 2003, the Magellan Sp. z o.o. share capital was increased from PLN 750,000.00 by PLN 590,000.00 to PLN
1,340,000.00 by creating 472 new shares, the nominal value of each new share being PLN 1,250.00, that were
acquired by the Polish Enterprise Fund IV, L.P. who paid for all of them in cash, the price being PLN 15,000,000.00.
On November 26, 2003, Mariola Błaszkowska signed with the Polish Enterprise Fund IV, L.P. the agreement for use of
shares, under which the Polish Enterprise Fund IV, L.P. acquired the right of perpetual leaseholding of all shares in
Magellan Sp. z o.o., with the limitation concerning profits from their use
2004
Increasing Issuer’s legal predecessor’s, Magellan Sp. z o.o., share capital to PLN 1,546,250.00. The number of shares
held by the Polish Enterprise Fund IV, L.P. increased to 637 shares , the nominal value of each of those shares being
PLN 1,250.00, their aggregate nominal value being PLN 796,250.00.
Increasing Magellan Sp. z o.o. share capital to PLN 1,743,750.00,
The number of shares held by the Polish Enterprise Fund IV, L.P. increased to 795, the aggregate nominal value of
those shares being 993,750.
2005
On November 24, 2005, Mariola Błaszkowska signed with the Polish Enterprise Fund IV, L.P. a share transfer
agreement. By virtue of that agreement, on December 13, 2005, Mariola Błaszkowska transferred 600 shares in
Magellan Sp. z o.o. to the Polish Enterprise Fund IV, L.P. On December 28, 2005, the district Court for Łódź Śródmieście, the 20th Division of the National Court Register, by the Decision of December 28, 2005, entered the Polish
Enterprise Fund IV, L.P. as the sole shareholder of Magellan Sp. z o.o., holding 1,395 shares, the aggregate value of
those shares being PLN 1,743,750.00.
On November 24, 2005, the Polish Enterprise Fund IV, L.P. and Mariola Błaszkowska signed the agreement re final
settlement of accounts between former shareholders of Magellan Sp. z o.o. in connection with the Polish Enterprise
Fund IV, L.P. investment in that company. By virtue of that agreement, the Polish Enterprise Fund IV, L.P. undertook to
make another settling of accounts with Mariola Błaszkowska in the event of transfer of shares in Magellan Sp. z o. o.
by the Polish Enterprise Fund IV, L.P.
Beginning of business activity in other Central and Eastern European countries; signing of first contracts in the Czech
market.
2006
Transformation of Magellan Sp. z o.o. into Magellan S.A. by virtue of the Extraordinary Meeting of Shareholder
Resolution of May 22, 2006, adopted in the course of art. 562 of the Polish Commercial Partnerships and Companies
Code (the National Court Register entry number 0000263422 on September 8, 2006.)
Change of Issuer’s Articles of Association; decreasing of the nominal value of Issuer’s shares to PLN 0.30 without
decreasing the share capital.
2007
Increasing Issuer’s share capital by issue of Issuer’s B-Series Shares within the framework of its motivation program.
Adoption of resolution increasing Issuer’s share capital by issue of Issuer’s C-Series Shares in public offering,
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dematerializing Issuer’s Shares and requesting admission of Issuer’s shares to public trading in the regulated market
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CHAPTER 18
INFORMATION ABOUT HOLDERS OF SECURITIES BEING SOLD
Name and surname or name and address of employer or seat of the entity offering securities for sale; nature
of position, function or other material links of the selling parties with Issuer of securities or its predecessors or
related persons during the past three years
Issuer’s A-Series Shares will be offered for sale by the current Company shareholder, i.e..:
Polish Enterprise Fund IV, L.P., Corporation Trust Centre, 1209 Orange Street, Wilmington, County of New
Castle, Delaware, having its principal office at 1 Exchange Place, Suite 1000 Jersey City, NJ 07302, USA.
The holder of the securities to be offered for sale under this Prospectus holds personal the right to appoint
Issuer’s Supervisory Board members in accordance with the information contained in Chapter “Executive and
Supervisory Staff” of this Prospectus.
The holder of the securities to be offered for sale under this Prospectus is interested in a successful public offer
of Issuer’s shares and their admission to trading in the regulated market.
Number and kind of securities offered by individual selling shareholders
The existing Issuer’s shareholder, Polish Enterprise Fund IV, L.P., offers 2,555,455 ordinary bearer A-Series Shares;
Not later than at the Price Definition Date, the Selling Shareholder may decide to increase the number of
Offered Shares by up to 651,408 additional existing ordinary bearer A-Series Shares.
Agreements putting ban on sale of shares of the “lock-up” type. Parties to such agreements. Contents of
agreement and exceptions. Period of ban on sale.
The Polish Enterprise Fund IV, L.P. is not a party to any agreement putting a ban on sale of shares of the ”lockup” type in respect of Issuer’s A-Series Shares.
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CHAPTER 19
REGULATIONS CONCERNING THE CAPITAL MARKET
Acts Governing the Capital Market
−
Legislative Act of July 29, 2005 regarding trade in financial instruments (2005 Journal of Laws No 183,
item 1538);
−
Legislative Act of July 29, 2005 regarding public offering, conditions governing the introduction of
financial instruments to organised trading, and public companies (2005 Journal of Laws No 184, item
1539);
−
Legislative Act regarding supervision of capital market (2005 Journal of Laws No 183, item 1537).
Dematerialization of securities admitted to public trading
In accordance with art. 5 of the legislative Act regarding trade in financial instruments, securities which
constitute the subject of public offering, subject to admission to trade on regulated market, do not have
documentary form since their registration pursuant to the agreement with the National Securities Deposit, i.e.
their dematerialization. The rights attaching to dematerialized securities are created when they are registered
for the first time on the securities account, and they rest with the holder of such account.
Under art. 9 of the legislative Act regarding trade in financial instruments, the entity which keeps the securities
account issues a registered depository certificate at the request of its holder, separately for each type of
security. A depository certificate confirms the entitlement to exercise rights attaching to the securities
specified in the certificate which are not, or may not, be exercised only on the basis of the entries on the
securities account.
After the certificate has been issued, the securities in the number specified in the certificate can not be the
subject of trade until the certificate loses its validity or is returned to the issuer before the end of its validity
term. The issuer blocks the relevant number of such securities on the account for such term.
Duties related to the purchase and sale of significant blocs of shares
Under art. 69 § 1 of the legislative Act regarding public offering, an entity which obtained or exceeded 5%,
10%, 20%, 25%, 33%, 50%, or 75% of the total number of shares in the Issuer or held at least 5%, 10%, 20%, 25%,
33%, 50% or 75% of the total number of votes in the Issuer, and as a result of the reduction of that share
obtained 5%, 10%, 20%, 25%, 33%, 50% or 75% or less of the total number of votes, as appropriate, shall notify
the Polish Financial Supervision Authority (KNF) and the Issuer thereof, within 4 days from the date of the
change of the share in total number of votes or from the date on which it became aware of such change or
could have become aware of it using due diligence.
The obligation to serve a notification referred to in art. 69 § 1 of the legislative Act regarding public offering
arises also in the case of:
1.
Change of the existing share of over 10% of the total number of votes by at least:
−
2.
2% of the total number of votes – in an issuer whose shares are admitted to trade in the
official securities listing market;
Change of the existing share of over 33% of the total number of votes by at least 1% of the total
number of shares.
The Issuer shall:
1.
Immediately provide information, to the extent specified in art. 69, simultaneously to the Polish
Financial Supervision Authority, to the information agency, and to the company which operates the
regulated market on which the Issuer’s Shares are listed;
2.
Deliver to the Polish Financial Supervision Authority, not later than until the date preceding the
designated date of the General Meeting, the list of shareholders who are entitled to participate in
that General Meeting, together with the number of Shares and votes attaching to the Shares which
each such shareholder holds;
3.
Simultaneously deliver to the Polish Financial Supervision Authority, the information agency, and to
the company which operates the regulated market on which the Issuer’s Shares are listed, within 7
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days from the date of holding the General Meeting, the list of shareholders who hold at least 5% of
the number of votes at such General Meeting, specifying the number of votes that each such
shareholder holds with respect to their Shares and specifying their percentage share in the number of
votes at that General Meeting and in the total number of votes.
Squeeze-out of the Issuer’s Shares
In accordance with art. 82.1 of the legislative Act regarding public offering, the Issuer’s shareholder which
individually or jointly with its subsidiaries, its controlling entities or entities which are the parties to the
agreement made with it, as referred to in art. 87.1.5 of the legislative Act regarding public offering, obtained
or exceeded 90% of the total number of votes at the General Meeting of the Issuer, shall have the right to
request the remaining shareholders of the Issuer to sell all of the Issuer’s shares held by them (squeeze-out).
The squeeze-out may be announced after the establishment of security having the value of not less than
100% of the value of shares which are to be the subject of the squeeze-out. The squeeze-out is announced
and carried out through an entity which conducts brokerage activities within the territory of Poland. The
squeeze-out may not be discontinued after its announcement.
Acquisition of shares in the result of squeeze-out shall take place without the consent of the shareholder
whose shares are subject to squeeze-out, at a price specified in compliance with art. 79.1 – 3 of the legislative
Act regarding public offering.
Sell-out of the Issuer’s Shares
Under art. 83.1 of the legislative Act regarding public offering, the Issuer’s shareholder shall be entitled to
request, in writing, the buy-out of its shares in the Issuer by another shareholder of the Issuer (together with its
subsidiaries, its controlling entities and entities which are parties to the agreement made with it, referred to in
art. 87.1.5 of the legislative Act regarding public offering) where that other shareholder obtained or
exceeded 90% of the total number of votes at the General Meeting of the Issuer.
The shareholders who have obligation to buy out shares of the Issuer shall be jointly and severally liable.
1. Filing duties
Obligations arising from the legislative Act on trade in financial instruments
Under art. 159 of the legislative Act on trade in financial instruments, members of the Executive Board,
Supervisory Board, holders of commercial powers of attorney (prokurent) or attorneys in fact of the Issuer or
issuer, employees of the Issuer, auditors or other persons who are in a relationship of mandate or other legal
relationship of similar nature with the Issuer or the issuer may not, during the closed period, buy or sell, on their
own account or on account of a third party, Shares of the Issuer, derivative rights regarding the Issuer’s Shares
or other financial instruments related with them or engage in other legal transactions, on their own account or
on the account of a third party, which result or might result in disposing of such financial instruments. The
closed period shall be:
(1) The period from becoming aware of confidential information regarding the Issuer, Issuer’s Shares or
financial instruments related with the Issuer’s Shares, meeting conditions referred to in art. 156.4 of the
legislative Act on trade in financial instruments, until that information is disclosed to the general public;
(2) In the case of an annual report – two months prior to the disclosure of the report to the general public or
the period between the end of financial year and the disclosure of such report to the public, if such period is
shorter than the former – unless the given natural person did not have access to financial information on the
basis of which the given report is prepared;
(3) In the case of a semi-annual statement – a month prior to the disclosure of the statement to the general
public or the period between end date of a given six-month period and the disclosure of such statement to
the public if such period is shorter than the former - unless the given natural person did not have access to the
financial information on the basis of which the given statement is prepared;
(4) In the case of a quarterly statement – two weeks prior to the disclosure of the statement to the general
public or the period between the end date of a given quarter and the disclosure of such statement to the
public if such period is shorter than the former - unless the given natural person did not have access to
financial information on the basis of which the given statement is prepared.
In accordance with art. 160 of the legislative Act on trade in financial instruments, persons who are members
of the Issuer’s management or supervisory bodies or who are holders of its commercial powers of attorney
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(prokurent) or other persons who perform management functions in the Issuer’s organizational structure and
who have permanent access to confidential information directly or indirectly regarding the Issuer and who
have competencies to make decisions which have impact on its development and business perspectives
shall be under the obligation to provide information to the Polish Financial Supervision Authority and the Issuer
about transactions made by such persons and persons closely related to them, on own account, concerning
purchase or sale of the Issuer’s Shares, derivative rights regarding the Issuer’s Shares and other financial
instruments related with such securities admitted to trading on the regulated market or constituting the
subject of the application for admission to trade on such market.
Additionally, under art. 19 of the legislative Act on trade in financial instruments, unless the Act provides
otherwise:
(1) Securities covered by the approved issue prospectus may be the subject of trade on the regulated
market only after they have been admitted to such trade;
(2) Public offering in Poland or trade in securities or other financial instruments on the regulated market shall
require intermediation of an investment company.
Obligations Arising from the legislative Act on public offering
In compliance with art. 69 of the legislative Act on public offering, an entity which:
(1) Obtained or exceeded 5%, 10%, 20%, 25%, 33%, 50% or 75% of the total number of votes at the Issuer’s
General Meeting; or
(2) Held at least 5%, 10%, 20%, 25%, 33%, 50% or 75% of the total number of votes at the Issuer’s General
Meeting and in the result of the reduction of such share, obtained 5%, 10%, 20%, 25%, 33%, 50% or 75% or less
of the total number of votes at the Issuer’s General Meeting, as appropriate, shall notify the Polish Financial
Supervision Authority (KNF) and the Issuer thereof, within 4 days from the date of the change of the share in
total number of votes or from the date on which it became aware of such change or could have become
aware of it using due diligence.
The obligation to provide notification referred to above shall also arise in the event of:
(1) Change of the existing share of over 10% of the total number of votes by at least 2% of the total number of
votes – with a view to the fact that the Issuer’s Shares have been admitted to trading on the official securities
listing market;
(2) Change of the existing share of over 33% of the total number of votes by at least 1% of the total number of
votes.
Duty to make announcement or call
Duty to make call in connection with the take-over of control over the Issuer
The obligations of making the call referred to in this section rests both individually with the entity which directly
exceeds the share in the total number of votes at the General Meeting of the Issuer, as specified in the
legislative Act on public offering, as well as with entities which indirectly exceed the share in the total number
of votes at the General Meeting of the Issuer, as specified in the legislative Act on public offering, in the
situations referred to in art. 87 of the legislative Act on public offering, among others with the following entities:

An entity which obtained the status of controlling entity of the entity which holds the Issuer’s
shares or an entity which is a controlling entity of the entity which holds the Issuer’s shares;

An entity which is the controlling entity of the entity which purchases the Issuer’s shares;

Jointly with all the entities which are parties to the agreement referred to in art. 87.1.5 of the
legislative Act on public offering regarding the acquisition by such entities of the Issuer’s shares or
concerted voting at the Issuer’s General Meeting on matters material for the Issuer.
Exceeding 33% of the total number of votes at the Issuer’s General Meeting
In accordance with art. 73 of the as specified in the legislative Act on public offering, exceeding of the
threshold of 33% of the total number of votes at the Issuer’s General Meeting may take place only as a result
of making a call to purchase or convert Issuer’s shares in a number which shall ensure the achievement of
131
66% of the total number of votes at the Issuer’s General Meeting or as a result of making a call to purchase or
convert all the remaining shares of the Issuer, except for the situations referred to in the next sentence.
Exceeding the threshold of 33% of the total number of votes at the Issuer’s General Meeting may also take
place as a result of the purchase of the Issuer’s shares in a public offering, as a result of the contribution of the
Issuer’s shares into the company as an in-kind contribution, as a result of the merger of the Issuer with another
entity or division of the Issuer, as a result of amendment of the Issuer’s Articles of Association or expiration of
the preferences of the Issuer’s shares, in the consequence of a legal event other than a legal transaction, or
in consequence of inheritance.
In instances provided for in the preceding sentence, in compliance with art. 73.2 of the legislative Act
regarding public offering, the Issuer’s shareholder, within three months from the date on which it exceeded
the threshold of 33% of the total number of votes at the Issuer’s General Meeting otherwise than in
consequence of inheritance, shall (i) make a call to purchase or convert the Issuer’s shares in a number
resulting in the achievement of 66% of the total number of votes at the Issuer’s General Meeting (or a call
concerning all the remaining shares of the Issuer – at the discretion of the entity which has the obligation to
make tender offer) or (ii) sell the Issuer’s shares in a number resulting in the achievement of not more than 33%
of the total number of votes at the Issuer’s General Meeting. The duty referred to in the previous sentence
shall not apply in a situation where the share of the Issuer’s shareholder in the total number of votes at the
Issuer’s General Meeting goes down to not more than 33% of the total number of votes at the Issuer’s General
Meeting, as appropriate in the result of the increase of the Issuer’s share capital, amendment of the Issuer’s
Articles of Association or expiration of the preferences of the Issuer’s shares.
The Issuer’s shareholder who exceeded the threshold of 33% of the total number of votes at the Issuer’s
General Meeting as a result of inheritance shall fulfil the duty referred to in art. 73.2 of the legislative Act on
public offering within three (3) months from the date on which further increase of that shareholder’s share in
the total number of votes at the Issuer’s General Meeting took place.
The price of the Issuer’s shares in the call referred to in art. 73 of the legislative Act on public offering is
determined subject to the provisions of art. 79.1 - 79.4 of the legislative Act on public offering.
Exceeding 66% of the total number of votes at the Issuer’s General Meeting
Under art. 74 of the legislative Act on public offering, exceeding of the threshold of 66% of the total number of
votes at the Issuer’s General Meeting may take place only as a result of making a call to purchase or convert
all the remaining Issuer’s shares, except for the situations referred to in the next sentence.
Exceeding the threshold of 66% of the total number of votes at the Issuer’s General Meeting may also take
place as a result of the purchase of the Issuer’s shares in public offering, as a result of the contribution of the
Issuer’s shares to the company as an in-kind contribution, as a result of the merger of the Issuer with another
entity or division of the Issuer, as a result of amendment of the Issuer’s Articles of Association or expiration of
the preferences of the Issuer’s shares, in consequence of a legal event other than a legal transaction or in
consequence of inheritance.
In the instances provided for in the preceding sentence, in compliance with art. 74.2 of the legislative Act on
public offering, the Issuer’s shareholder, within three (3) months from the date on which it exceeded the
threshold of 66% of the total number of votes at the Issuer’s General Meeting otherwise than in consequence
of inheritance, shall (i) make a call to purchase or convert all of the remaining Issuer’s shares or (ii) sell the
Issuer’s shares in a number resulting in the achievement of not more than 66% of the total number of votes at
the Issuer’s General Meeting. The duty referred to in the previous sentence shall not apply in a situation where
the share of the Issuer’s shareholder in the total number of votes at the Issuer’s General Meeting decreases to
not more than 66% of the total number of votes at the Issuer’s General Meeting, as appropriate as a result of
the increase of the Issuer’s share capital, amendment of the Issuer’s Articles of Association or expiration of the
preferences of the Issuer’s shares.
The Issuer’s shareholder which exceeded the threshold of 66% of the total number of votes at the Issuer’s
General Meeting as a result of inheritance shall fulfil the duty discussed in art. 74.2 of the legislative Act on
public offering within three (3) months from the date on which further increase of that shareholder’s share in
the total number of votes at the Issuer’s General Meeting took place.
The price of the Issuer’s shares in the call referred to in art. 73 of the legislative Act on public offering is
determined subject to the provisions of art. 79.1 – 79.44 of the legislative Act regarding public offering.
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Duty to make a call in connection with cancellation of dematerialization of the Issuer’s Shares
The procedure of reinstating documentary form of the shares of a publicly listed company (cancellation of
dematerialization of shares) is governed by art. 91 of the legislative Act on public offering. In accordance with
its provisions, in order to cancel dematerialization of the Issuer’s shares, the Issuer’s General Meeting should
adopt, by a majority of 4/5 of the votes cast in the presence of shareholders representing at least half of the
share capital, a resolution concerning cancellation of dematerialization of the Issuer’s shares, and thereafter
the Polish Financial Supervision Authority, at the Issuer’s request, should grant the relevant permission. The
adoption of a resolution concerning cancellation of dematerialization of the Issuer’s shares may be placed
on the agenda only upon the request of shareholder(s) representing at least 10% of the Issuer’s share capital.
In accordance with art. 91.7 of the legislative Act on public offering, the shareholder(s) requesting the
inclusion of adoption of resolution concerning cancellation of dematerialization of the Issuer’s shares on the
agenda, before submitting such a request, shall issue a call to subscribe for the Issuer’s shares to all the
remaining shareholders. The duty to make the above call shall not arise if the request to place the matter
regarding adoption of a resolution concerning cancellation of dematerialization of the Issuer’s shares on the
agenda was made by all the shareholders of the Issuer.
The price of the Issuer’s shares in the tender offer referred to in art. 91.7 of the legislative Act on public offering
is determined subject to the provisions of art. 79.1 – 79.4 of the legislative Act on public offering.
Request to appoint auditor for special matters
The legislative Act on public offering allows for the possibility of appointing auditor for special matters in
publicly listed companies, at the same time referring to two grounds for such appointment:
a) Resolution of the General Meeting of the company (art. 84 of the legislative Act on public offering);
b) Decision of the register court of relevant jurisdiction for the company (art. 85 of the legislative Act on
public offering).
Appointment of the auditor for special matters by the registry court is an exceptional situation and depends
on actions aimed at the appointment of the auditor by way of the resolution of the General Meeting of the
company. If the resolution in compliance with the shareholders’ request is not adopted or if a resolution is
adopted contrary to art. 84.4 of the legislative Act on public offering, the shareholders who submitted the
request for the appointment of the auditor for special matters may apply to the registry court with a request
to that effect.
The application for appointment of an auditor for special matters may be submitted by shareholder(s) of a
public company holding at least 5% of the total number of votes at the General Meeting of that company.
Under art. 400 § 2 of the Polish Commercial Companies and Partnerships Code, the articles of association
may provide that also shareholders who hold lower number of votes are entitled to apply with a request to
appoint an auditor for special matters. The Issuer’s Articles of Association do not provide for rights to submit
such a request for the shareholders who hold less than 5% of the total number of votes at the General
Meeting of the Company.
The shareholders, in order to exercise the right to submit an application for the appointment of the auditor for
special matters, may request:
a) That an Extraordinary General Meetings be convened; or
b) That the matter of the adoption of the relevant resolution be placed on the agenda of the next
General Meeting.
Under arts. 400 and 401 of the Polish Commercial Companies and Partnerships Code, the shareholders submit
a request to the Executive Board of a public company to call the General Meeting at the latest one month
prior to the planned date of the General Meeting. The request should be made in writing and specify the
necessity to adopt a resolution concerning the appointment of the auditor for special matters.
Before the resolution is adopted by the General Meeting, the Executive Board of a publicly listed company
shall submit to the General Meeting a written opinion concerning the request made.
The resolution of the General Meeting adopted in compliance with art. 84.1 of the legislative Act on public
offering should, in particular, specify:
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1) The identity of the auditor for special matters agreed upon in writing by the applicant;
2) The subject and scope of the audit, consistent with the request unless the applicant agreed in writing to
amend that request;
3) The types of documents that the company should make available to the auditor;
4) The date of audit commencement, not longer than three (3) months from the resolution date.
The General Meeting resolution should be adopted during the General Meeting whose agenda includes
examination of the request concerning such a resolution.
In compliance with art. 414 of the Polish Commercial Companies and Partnerships Code, an absolute majority
of votes cast is required for adoption of the resolution unless the articles of association provide otherwise.
A resolution on appointment of the auditor has to specify the entity identified by the applicant as the auditor.
Another entity may be appointed only in the event that the applicant agrees in writing. This means that the
General Meeting shall be entitled to appoint the specific auditor in compliance with the shareholders’
request unless the shareholders applies for the appointment of the auditor without specifying the auditor in its
request. The entity which provides, during the term covered by the audit, services to the company whose
matters are the subject of the audit and to:
−
The entity which is a controlling entity or subsidiary of the audited public company (within the
meaning of the legislative Act on public offering); or
− The entity which is a controlling entity of such public company (within the meaning of the legislative
Act regarding accountancy); or
− The entity which is a significant investor in that public company (within the meaning of the legislative
Act regarding accountancy);
may not be the auditor for special matters.
If the company’s General Meeting:
−
−
Does not adopt a resolution in compliance with the wording of the shareholders’ application; or
Adopts such a resolution, however, it fails to meet the requirements of art. 84.4 of the legislative Act
on public offering, i.e. the resolution does not contain identification of the auditor (either requested
by the applicants or another auditor agreed upon in writing), the subject and scope of audit (in
compliance with the wording of the application), type of documents which the company should
make available to the auditor, or the date of the audit commencement (not longer than three
months from the date of the resolution);
then the shareholders submitting the request may file an application with the register court of relevant
jurisdiction for the registered office of the public company for the appointment of a specified entity as the
auditor for special matters within fourteen (14) days from the date of the adoption of the resolution.
The register court shall appoint the auditor for special matters by way of decision which should specify, as
appropriate, all the elements specified in art. 84.4 of the legislative Act on public offering. In its decision on
appointment of the auditor for special matters, the register court may appoint only a party which was
specified by the applicant in the application.
Before the decision on the appointment of the auditor for special matters is issued, the registry court calls
upon the Executive Board and Supervisory Board of the company to present their positions on the matter
within seven (7) days from the date of the receipt of the request. Failure to provide a reply within such time
shall not stop the issuance of the decision.
If the court decides to refuse appointment of the auditor for special matters (or on forfeiture of security), the
applicant shall be entitled to a complaint. In accordance with art. 394 §2 of the Polish Civil Procedure Code,
the time for filing a complaint shall be one week and run from the date of the decision’s delivery.
The complaint shall be filed with the district court of relevant jurisdiction for the registered office of the
company through the district court which issued the decision which is appealed against.
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The register court shall specify the remuneration for work of the auditor and shall approve the invoice for the
auditor’s expenses. Should the company fail to pay the amounts due, the registration court shall collect
outstanding amounts following the procedure provided for enforcement of court fees.
Both the Executive Board as well as the Supervisory Board of the company shall make the documents
specified in the resolution of the General Meeting or in the court decision about appointment of the auditor
for special matters available to the auditor for special matters as well as providing clarifications necessary for
conducting the audit. In principle, the report of the auditor for special matters may not disclose information
which constitute technical, commercial or organisational secrets of the company unless such disclosure is
necessary to justify the position contained in the report.
After the completion of the audit, the auditor for special matters shall present a written report on the audit
results to the Executive Board and Supervisory Board and submit the report to the registration court (where the
auditor is appointed by a court decision). The Executive Board shall also deliver the report to the Authority, to
the company which operates the regulated market on which the company shares are listed, and release the
report to the general public in accordance with art. 56 1 of the legislative Act on public offering (i.e. following
the procedure specified for the fulfilment of reporting duties of issuers, in this case with respect to confidential
information). The auditor shall also submit the report concerning the manner in which audit results are to be
taken into consideration at the next General Meeting.
The legislative Act on public offering grants substantial rights of a supervisory nature to the Polish Financial
Supervision Authority with respect to the auditor within the scope of the audit carried out by it. In accordance
with art. 86.4 of the legislative Act on public offering, at the request of the Financial Supervision Authority or its
authorized representative, the auditor for special matters shall immediately make and deliver (at its own
expense) copies of documents and other information carriers and provide written or verbal clarifications with
respect to actions taken in connection with the audit carried out by the auditor for special matters.
In accordance with art. 84.1 and art. 85.6 of the legislative Act on public offering, both in the case of
appointment of the auditor on the basis of a resolution of the General Meeting as well as on the basis of court
decision, costs of the auditor’s audit shall be borne by the Company.
In the event of proceedings before the registry court, in accordance with art. 85.2 of the legislative Act on
public offering, the register court may, at the request of the Executive Board of a public company, make the
issuance of the decision about appointment of the auditor for special matters dependent on the submission
of relevant security by the applicants. If the audit discloses no violations of applicable laws, the Executive
Board may submit an application to the register court for forfeiture of the security.
An appeal may be filed against the court decision on forfeiture of the security.
Administrative liability
Administrative liability on the basis of the legislative Act regarding trade in financial instruments.
In accordance with art. 176.1, in the event that the Issuer or the selling shareholder fails to perform, or unduly
performs, the duties laid down in art. 157 and art. 158 or duties arising from the regulations issued on authority
of art. 160.5, the Authority may:
−
−
−
Issue a decision excluding the securities from trade in the regulated market;
Impose a fine up to the amount of PLN 1,000,000.00;
Issue a decision about excluding, for a specified or unspecified time, securities from trading in
the regulated market, at the same time imposing the fine referred to under item 2.
Administrative liability on the basis of the legislative Act on public offering.
Where the Issuer fails to perform, or unduly performs, duties imposed on it by the legislative Act on public
offering, the Authority may:
−
−
Issue a decision about excluding, for a specified or unspecified time, the securities from the
regulated market;
Impose, considering - in particular - the financial standing of the entity on which the penalty
is imposed, a fine in the amount up to PLN 1,000,000.00;
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−
Apply both the above penalties jointly.
Legislative Act regarding competition and consumer protection
In accordance with art. 13 of the legislative Act regarding competition and consumer protection, the
intention of the concentration with the Issuer’s participation shall be subject to filing with the President of the
Office for Competition and Consumer Protection if aggregate international sales of enterprises participating
in the concentration during the financial year preceding the year in which notification is made exceed the
equivalent of EUR 1,000,000,000 or aggregate sales in Poland of enterprises which participate in the
concentration during the financial year preceding the year of notification exceed the equivalent of EUR
50,000,000.
The filing duty referred to above pertains to the intention of:
1.
Merger between two or more individual enterprises;
2.
Take-over – by purchase or acquisition of shares, other securities or in any other way – of direct or
indirect control over one or more enterprises by one or more enterprises;
3.
Establishment of a joint enterprise by enterprises;
4.
Acquisition of a part of the assets of a different enterprise (all or part of the enterprise) by an
enterprise, where sales generated by such assets in Poland in any of the two financial years
preceding the notification exceeded the equivalent of EUR 10,000,000.
Regulation (Council Regulation (EC) 139/2004) on the control of concentrations between enterprises
On the basis of the provisions of the Council Regulation (EC) 139/2004 dated January 20, 2004 on the control
of concentrations between enterprises, a concentration occurs if the change of control arises from:
1.
Merger of two or more enterprises, or parts of enterprises, which were previously independent; or
2.
Taking over direct or indirect control by one or more persons which already control at least one
enterprise or by one or more enterprises over the entirety or part of one or more other enterprises,
either by the purchase of securities or assets or on the basis of agreement or otherwise .
Rights, agreements or any other measures which either individually or jointly, and considering the factual and
legal circumstances, enable a decisive impact on the enterprise constitute the basis of control, in particular:
1.
Ownership title or the right of usufruct of the enterprise’s assets in whole or in part;
2.
Rights or agreements which grant decisive influence on the composition, voting or decisions of the
governing bodies of the enterprise.
Control is taken over by persons or enterprises which:
1.
Are holders of rights or are entitled to rights on the basis of relevant agreements; or
2.
Not being the holders of such rights or not entitled to such rights on the basis of relevant agreements,
have the entitlement to exercise rights arising therefrom.
A concentration does not occur where:
1.
Credit institutions or other financial institutions or insurance companies whose ordinary operations
involve transactions and trade in securities carried out on own account or account of others
temporarily hold securities acquired in the enterprise for the purpose of their resale, provided that
they do not exercise voting rights with respect to such securities in order to identify competitive
behaviour of the enterprise or provided that they exercise such rights only in order to prepare sale of
that enterprise or its assets, in whole or in part, or sell such securities and provided that any such sale
occurs within one year from the date of acquisition; that period may be extended by the Commission
acting upon request in the event that such institutions of companies prove that the sale has not been
generally possible during that time;
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2.
Control is taken over by a person authorized by public authorities in compliance with the law of the
given Member State regarding liquidation, bankruptcy, lack of liquidity, cancellation of debt,
arrangement proceedings or similar proceedings;
3.
Actions carried out by financial holdings described in art. 5 clause 3 of the Fourth Council Directive
78/660/EEC of July 25, 1978 based on Article 54 (3) (g) of the Treaty on the annual accounts of certain
type of companies – provided, however, that the voting rights with respect to the holding are
exercised, in particular with respect to the appointment of the members of the management or
supervisory bodies of enterprises in which they hold shares exclusively in order to maintain the full
value of such investments and not setting, directly or indirectly, competitive behaviour of such
enterprises.
The provisions of the Regulation apply only in the case of all concentrations having a Communities dimension.
A concentration has a Communities dimension if:
1.
Aggregate international sales of all the enterprises concerned are more than EUR 5 billion; and
2.
Aggregate sales in the Communities of each of at least two enterprises concerned are more than
EUR 250 million;
unless each enterprise concerned generates more than two-thirds of its aggregate sales for the Communities
in one and the same Member State.
Also, concentrations which do not achieve the above thresholds may have a Communities dimension where:
1.
Aggregate international sales of all the enterprises concerned are more than EUR 2.5 billion;
2.
In each of at least three Member States, aggregate sales of all the enterprises concerned amount to
more than EUR 100 million;
3.
In each of at least three Member States covered for the purposes of b) above, aggregate sales of at
least two enterprises concerned amount to more than EUR 25 million; and
4.
Aggregate sales for the Communities of each of at least two enterprises concerned amount to more
than EUR 100 million;
unless each of the enterprises concerned obtains more than two-thirds of its aggregate in the Communities in
one and the same Member State.
When evaluating the concentration, the Commission takes into account:
1.
The need to maintain and develop effective competition in the Common Market, among others,
from the perspective of the structure of all given markets and actual or potential competition on the
part of enterprises located in the Community or outside of it;
2.
The market position of the enterprises concerned and their economic and financial strength,
opportunities available to suppliers and users, their access to the market supply, all legal or other
barriers to market entry, supply and demand trends with respect to appropriate goods and services,
interests of indirect and end consumers and development of technical and economic progress
provided, that it proceeds to the benefit of the consumers and does not constitute a barrier to
competition.
A concentration having a Communities dimension is notified to the Commission prior to its implementation
and after the agreement is entered into, after announcement of public offering concerning take-over, and or
after acquisition of a controlling bloc of shares.
The Commission reviews the notification immediately after its receipt:
1.
In the event it finds that the notified concentration does not fall within the scope of this Regulation,
such fact is noted in the form of the decision;
2.
In the event it finds that, even though the notified concentration falls within the scope of this
Regulation, it does not raise significant doubt as to its compliance with the Common Market
137
principles, it makes a decision about no objections and states that it complies with the Common
Market principles;
3.
In the event it finds that the notified concentration falls within the scope of this Regulation and raises
serious doubts as to its compliance with Common Market principles, the Commission makes a
decision on institution of proceedings;
4.
In the event the Commission finds that, after changes are made by the enterprises concerned, the
notified concentration raises no further serious doubts, it deems the concentration as being in
compliance with Common Market principles.
In the event that the Commission finds that the concentration has already been made and it has been
considered as contrary to the Common Market, or that it was made in violation of conditions enclosed with
the decision, the European Commission may:
1.
Request that the enterprises concerned rescind the concentration, in particular by the dissolution of
merger or transfer of all shares or collected assets, in order to restore the situation as it was prior to the
concentration; in the event that it is not possible to restore the situation as it was prior to the
concentration by the rescission of the concentration, the Commission may use any other measures
necessary in order to restore such condition to the extent possible;
2.
Order that any other relevant measures be taken in order to ensure that the enterprises concerned
rescind it or take other measures in order to restore previous conditions in compliance with its
decision.
The Commission may also take indirect measures necessary in order to recreate or maintain conditions of
effective competition.
The Commission shall immediately notify the enterprises concerned and the relevant authorities of the
Member States of its decision.
The Commission may, by way of its decision, impose a fine on the enterprises concerned which shall not
exceed 10% of aggregate sales of the enterprise concerned, in the event that they either intentionally or
unintentionally:
1.
Fail to make notification concerning the concentration prior to its implementation, unless they are
authorized to do it;
2.
Proceed with a concentration in violation of Article 7;
3.
Proceed with a concentration contrary to the Common Market principles or fail to apply other
measures ordered by the decision;
4.
Fail to fulfil a requirement or obligation imposed by the decision.
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CHAPTER 20
TAXATION
The following information is general. With respect to taxation matters, it is recommended to use the services of
attorneys, legal advisors or licensed tax advisors.
Income Tax on income from the dividend and other revenues in connection with the share in the joint stock
company profit
Taxation of corporate income
Principles of taxation of revenue/income obtained by legal entities (corporations) in connection with the
share in the Issuer’s profit are governed by the legislative Act regarding corporate income tax. In accordance
with art. 10 of the said Act, income from the participation in profit of corporations is income actually obtained
from shares (dividend), including: income from share redemption, income obtained from transfer of shares to
the company in return for compensation – for the purpose of redemption of such shares, value of assets
received in connection with the liquidation of the corporation, income allocated to the increase of the share
capital and income being the equivalent of the amounts transferred to such capital from other funds of a
corporation. It has to be noted that in accordance with art. 12.4.3 of the legislative Act regarding corporate
income tax, the amounts of the cancelled or redeemed shares in connection with the company liquidation,
in a part which constitutes costs of acquisition or subscription, as appropriate, shall not be included in
revenues from cancellation of the shares in a company, including amounts received from transfer of shares to
the company in return for compensation for the purpose of cancellation of such shares and the value of
assets received in connection with the liquidation of the corporation.
In accordance with art. 22.1 of the legislative Act regarding corporate income tax, the dividend and other
revenues in connection with the share in profit of corporations obtained by corporations are subject to flat
rate income tax at 19%.
In accordance with art. 26.1 of the legislative Act regarding corporate income tax, the Issuer which makes
the payment of the dividend and other revenues in connection with the participation in profit of corporations,
as the remitter / payee, has to charge, on the payment date, flat rate income tax on such payments. The
amounts of the charged tax are remitted by the Issuer until the 7th day of the month following the month in
which tax was charged to the account of the relevant tax authority.
On the basis of art. 22.4 of the legislative Act regarding corporate income tax, income from dividends and
other revenues in connection with the share in the Issuer’s profit obtained by entities which jointly meet the
following conditions is exempt from income tax:
1)
An entity which receives income (revenues) is a company which is subject to income tax on its
entire income, notwithstanding the place in which it is generated, in Poland or in a European
Union Member State other than Poland, or in another country of the European Economic Area;
2)
A company which receives income (revenues) holds directly not less than 15% shares in the
Issuer’s capital;
3)
A recipient of income (revenues) from dividend and other revenues in connection with the share
in the profit of corporations is:
a)
b)
A company referred to in item 1 above; or
A foreign factory/facility of the company referred to in item 1 above.
The above exemption shall apply when the company which obtains income in connection with the share in
profit of a corporation has held shares in the company which pays such amounts uninterruptedly for two
years.
This exemption also applies when the period of two years of uninterrupted holding of shares amounting to 15%
by the company which obtains income in connection with the share in the profit of a corporation ends after
the date of receiving such income. In the event the condition of the holding of shares of such percentage
without interruption for two years is not met, the Issuer shall pay tax (together with interest for delay) in the
amount of 19% of the revenues by the 20th day of the month following the month in which the company lost
the right to the exemption. Interest shall accrue since the following day after the day on which the company
benefited from the exemption for the first time.
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Until December 31, 2008 the above exemption shall apply if the share of the company which obtains income
in connection with dividends and other revenues arising from the share in the Issuer’s profit is not less than
15%; after December 31, 2008, a 10% share in the Issuer’s capital shall be sufficient for the exemption to apply.
Taxation of income of individuals
Principles of taxation of revenues/income accruing to natural persons in connection with the share in the
Issuer’s profit are governed by the provisions of the legislative Act regarding personal income tax. In
accordance with art. 30a.1.4 of the legislative Act regarding personal income tax, the dividend and other
revenues arising from participation in profit of corporations generated by individuals are subject to flat rate
income tax at 19%. Income accruing to natural persons in connection with the participation in profit of
corporations is not combined with income taxed subject to other principles set forth in art. 27 of the legislative
Act regarding personal income tax.
In accordance with art. 24.5 of the legislative Act regarding personal income tax, income from the
participation in profit of corporations is income actually obtained from shares, also including: income from the
redemption of shares, income obtained from transfer of shares to the company in return for compensation –
for the purpose of redeeming such shares, the value of assets received in connection with liquidation of a
corporation, income allocated to the increase of the share capital and income being equivalent of the
amounts allocated to that capital from other funds of the corporation. In accordance with art. 24.5d of the
legislative Act regarding personal income tax, income from redemption of shares is the surplus of revenues
obtained in connection with redemption over tax deductible costs calculated in accordance with art. 22.1f
or art. 23.1.38 of the legislative Act regarding personal income tax; if the acquisition took place by way of
inheritance or bequest, costs are determined up to the value as at the date of the acquisition of such
inheritance or bequest.
In accordance with art. 41.4 of the legislative Act regarding personal income tax, the remitter / payee of flat
rate income tax on dividends and other revenues in connection with the share in profit of corporations shall
be the entity which makes the payment or which makes the monies or funds in connection therewith
available to the taxpayer. Tax charged is transferred by the remitter to the account of the relevant tax
authority until the 20th day of the month following the month in which the tax was charged. In compliance
with the position of the Minister of Finance formulated in letter dated February 5, 2002 addressed to the
National Securities Deposit (KDPW), the remitter of tax on dividends shall be the brokerage house which keeps
the securities account of the individual to whom the dividend is paid.
Taxation of income (revenues) of foreign entities
The above taxation principles concerning dividends and other revenues in connection with the participation
in profit of corporations apply, in principle, to foreign investors who are subject to limited tax liability in Poland,
notably to:

Corporations, if they do not have a registered seat or their management in the territory of Poland (art.
3.2 of the legislative Act regarding corporate income tax); and

Natural persons, if they do not have their place of residence in the territory of Poland (art. 3.2a of the
legislative Act regarding personal income tax).
However, the taxation principles and rates of income tax on dividends and other types of share in the Issuer’s
profit accruing to foreign investors may be changed by double taxation treaties signed between Poland and
the country in which the corporation or its management has its registered seat or in which an individual
resides. In the event that an applicable double taxation treaty modifies principles of taxation of income
accruing to such persons in connection with the share in profit of corporations, the provisions of such treaty
are binding and they exclude the application of the provisions of the above-mentioned Polish taxation laws.
In accordance with art. 26.1 of the legislative Act regarding corporate income tax, application of the tax rate
arising from a relevant double taxation treaty or non-collection of tax pursuant to such treaty is possible
provided that the registered seat of the taxpayer for tax purposes is proved on the basis of a certificate
obtained by it (residence certificate), issued by a relevant tax administration body.
140
In the case of natural persons, in accordance with Article 30a.2 of the legislative Act regarding personal
income tax, application of a tax rate arising from a relevant double taxation treaty or non-collection of tax is
possible provided that taxpayer presents her/his residency certificate.
In the case of foreign corporations, the Issuer is the remitter. However, in the case of foreign natural persons,
the remitter, according to the above-mentioned letter of the Minister of Finance dated February 5, 2002, is
the brokerage house which keeps the securities account of the natural person to whom the dividend is paid.
In accordance with art. 26.1c. of the legislative Act regarding corporate income tax, the Issuer, when paying
out the dividend and other revenues arising from the share in profit of corporations to entities which benefit
from exemption from income tax on the basis of the above-mentioned Article 22.4 of the legislative Act
regarding corporate income tax, shall apply exemptions arising from such regulations only if the following is
proved on the basis of appropriate documents:
1)
2)
Location of registered seat of the company for tax purposes, on the basis of a residence certificate
received from such company; or
Existence of foreign factory/facility, on the basis of a certificate issued by a relevant tax
administration body of the country in which the registered seat of the company or its management is
located or by relevant tax authorities of the country in which such foreign factory/facility is located.
Liability of the remitter
In compliance with the above-mentioned provisions of the legislative Act regarding corporate income tax
and legislative Act regarding personal income tax, the entity which makes the payment or makes the money
or funds in connection therewith available to the taxpayer shall be the remitter of flat rate income tax and
shall be under the obligation to calculate and collect income tax from investors in connection with dividend
and other revenues arising from the share in profit of corporations received by them, and to remit such tax to
the relevant authorities within the set deadlines.
In accordance with art. 30 § 1 of the Polish Tax Ordinance, a remitter which failed to perform its obligations
shall be liable for the tax which has not been collected or tax which has been collected but not paid in to the
full value of all its assets. The above principles of liability shall not apply if separate regulations provide
otherwise, or if the tax has not been collected due to the taxpayer’s fault.
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CHAPTER 21
INFORMATION CONCERNING THE ISSUE
Type, form, currency and category of Company’s shares admitted to trading which are the subject of this
offering and the grounds for their issue
The Public Offering applies to 2,555,455 existing ordinary bearer A-Series Shares and up to 440,000 ordinary CSeries Shares bearer having a nominal value of PLN 0.30 (thirty grosz) each.
Application for admittance to trading on the regulated market shall cover:

5,812,500 A-Series Shares,

261,588 B-Series Shares,

Up to 440,000 C-Series Shares,

Up to 440,000 Rights in C-Series Shares.
On the Price Definition Date at the latest, the Selling Shareholder may make a decision concerning increase
in the quantity of Offered Shares by up to an additional 651,408 over and above the existing quantity of
ordinary bearer shares A-Series Shares.
Relevant codes shall be allocated to A-Series Shares and B-Series Shares at the time of their dematerialization,
which shall take place upon their registration in the securities deposit kept by the National Securities Deposit
(KDPW). Registration of A-Series Shares and B-Series Shares shall be effected on the basis of a contract
executed by the Issuer with the National Deposit before the launch of the public offering of the A-Series
Shares and B-Series Shares pursuant to this Prospectus.
Relevant codes shall be allocated to Rights in C-Series Shares and the Rights in C-Series Shares shall be
registered by the National Deposit upon delivery of documents confirming the allotment of C-Series Shares
and the actual issue of C-Series Shares by the Issuer to the National Deposit. Registration of C-Series Shares
shall be effected on the basis of a contract executed by the Issuer with the National Deposit before the
launch of the public offering of the C-Series Shares pursuant to this Prospectus.
A-Series Shares and B-Series Shares are ordinary bearer shares having a nominal value of PLN 0.30 (thirty grosz)
each. A-Series Shares and B-Series Shares are not preferred, with no particular preference as to voting rights;
therefore, each A-Series Share and B-Series Share carries one vote at the General Meeting of the Issuer.
The decision concerning admittance of A-Series Shares and B-Series Shares to trading on the regulated
market, and the consequent dematerialization of A-Series Shares and B-Series Shares as well as authorizing
the Issuer’s Executive Board to execute the contract with the National Deposit was made by way of adopting
Resolution No 2 of the Extraordinary General Meeting of the Issuer dated April 26, 2007 (Notary’s Deed dated
April 26, 2007, executed by Artur Strzępek, notary’s file No Repertorium A 4123/2007).
The decision concerning public offering of C-Series Shares and application for admittance of C-Series Shares
and Rights in C-Series Shares to trading on the regulated market, and the consequent dematerialization of CSeries Shares as well as authorizing the Issuer’s Executive Board to execute the contract with the National
Deposit was made by way of adopting Resolution No 1 of the Extraordinary General Meeting of the Issuer
dated April 26, 2007 (Notary’s Deed dated April 26, 2007, executed by Artur Strzępek, notary’s file No
Repertorium A 4123/2007).
Indication whether the securities are registered or made to the bearer and whether they have been
dematerialized
A-Series Shares
A-Series Shares are ordinary bearer shares. A-Series Shares are issued is document form.
A-Series Shares will be dematerialized upon their registration in the securities deposit kept by the National
Securities Deposit (KDPW). The contract between the Issuer and the National Deposit concerning registration
of A-Series Shares shall be executed before the launch of the public offering of the A-Series Shares
conducted on the basis of this Prospectus and pursuant to art. 5.4 of the legislative Act regarding trading in
financial instruments.
B-Series Shares
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B-Series Shares are ordinary bearer shares. B-Series Shares are issued iin document form.
B-Series Shares will be dematerialized upon their registration in the securities deposit kept by the National
Securities Deposit (KDPW). The contract between the Issuer and the National Deposit concerning registration
of B-Series Shares shall be executed before the launch of the public offering of the B-Series Shares conducted
on the basis of this Prospectus and pursuant to art. 5.4 of the legislative Act regarding trading in financial
instruments.
C-Series Shares
C-Series Shares are ordinary bearer shares.
C-Series Shares will not be issued in document form. C-Series Shares will be dematerialized following
registration by the District Court of increase of the Issuer’s share capital by way of issue of C-Series Shares,
upon registration of the C-Series Shares in the securities deposit kept by the National Deposit for Securities
(KDPW). The contract between the Issuer and the National Deposit concerning registration of C-Series Shares
shall be executed before the launch of the public offering of the C-Series Shares conducted on the basis of
this Prospectus and pursuant to art. 5.3 of the legislative Act regarding trading in financial instruments.
Rights in C-Series Shares
Rights in C-Series Shares will not be issued in document form.
The Company keeping the Issuer’s Share Register
Upon registration of shares in the in the securities deposit kept by the National Deposit for Securities (KDPW),
the said company shall keep the register of A-Series Shares, B-Series Shares, C-Series Shares and Rights in CSeries Shares.
Currency of issued securities
The nominal value of the Issuer’s Shares is denominated in Polish złoty.
The nominal value of one share of the Issuer is PLN 0.30 (thirty grosz).
Legal regulations by virtue of which the securities have been issued
A-Series Shares
A-Series Shares have been created in the course of transformation of the limited liability company Magellan
Sp. z o.o. into the joint stock company Magellan S.A. as A-Series Shares by virtue of the Polish Commercial
Companies and Partnerships Code as ordinary registered shares having a nominal value of PLN 1,250.00.
According to the Resolution No 1 dated April 6, 2007 concerning adopting the consolidated text of the
Company’s Articles of Association, the said shares have been converted into ordinary bearer A-Series Shares,
whereupon the A-Series Shares have been split.
B-Series Shares
B-Series Shares have been issued on the basis of Resolution No 3 of the Extraordinary General Meeting of the
Issuer dated April 6, 2007 concerning increase of the Issuer’s share capital by way of issuing not more than
261,588 B-Series Shares, with the exclusion of drawing rights of the existing shareholders.
C-Series Shares
C-Series Shares are being issued on the basis of Resolution No 2 of the Extraordinary General Meeting of the
Issuer dated June 20, 2007 concerning increase of the Issuer’s share capital by way of issuing not more than
440,000 C-Series Shares with the exclusion of drawing rights of the existing shareholders, and amendment of
the Issuer’s Articles of Association in connection with the issue of C-Series Shares.
Rights in C-Series Shares
Rights in C-Series Shares shall be created upon allotment of the C-Series Shares by the Issuer’s Executive Board
and shall expire upon registration of the C-Series Shares in the securities deposit kept by the National Securities
Deposit (KDPW) pursuant to art. 3.29 of the legislative Act regarding trading in financial instruments.
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Rights and restrictions thereof carried by A-Series Shares, B-Series Shares, C-Series Shares and Rights in CSeries Shares as well as rights exercise procedures
Polish Commercial Companies and Partnerships Code
The rights to which shareholders are entitled can be broken down into proprietary and corporate rights. The
proprietary rights encompass:
−
The right to dividend (art. 347 of the Polish Commercial Companies and Partnerships Code),
−
Subscription right - right of pre-emptive purchase of new securities (art. 433 of the Polish Commercial
Companies and Partnerships Code), and
−
Right to participate in the distribution of the Issuer’s assets in the case of its liquidation (art. 474 of the
Polish Commercial Companies and Partnerships Code).
Corporate (procedural) powers of the shareholders include:
−
The right to review the share register which the Executive Board is obligated to maintain and request
a copy thereof. The entries in the share register include the shareholder’s surname and forename or
business name, the shareholder’s corporate seat and registered address or address for service,
amount of payments made and, upon request of an entitled person, a note on the share having
been transferred to another person and the date of such entry. If the authorized shareholder requests
a copy of the share register, the shareholder is under the duty to cover the cost of issue of the said
copy (art. 341 of the Polish Commercial Companies and Partnerships Code),
−
The right to receive copies of the Executive Board report on the Issuer’s activities and the financial
statements together with the copy of the Supervisory Board report and the opinion of the qualified
auditor; however, such copies must be requested not later than fifteen (15) days prior to the date of
the General Meeting. The date of the General Meeting is not taken into account for the purpose of
calculating the above-mentioned time limit (art. 395 of the Polish Commercial Companies and
Partnerships Code),
−
The right of shareholders representing at least one-tenth of the share capital to demand that a
General Meeting be convened or, likewise, that certain issues be placed on the agenda of the next
General Meeting. A request to this effect shall be submitted in writing to the Executive Board not later
than one month before the proposed date of the General Meeting. The request must contain
evidence that the requesting shareholder or shareholders hold the required share in the share capital
(art. 400 of the Polish Commercial Companies and Partnerships Code),
−
The right to apply to the Issuer’s registration court for authorization to convene the General Meeting in
the case of failure to convene the General Meeting by the Executive Board within two (2) weeks from
the date of the request, referred to in art. 400 of the Polish Commercial Companies and Partnerships
Code. The court shall appoint the chairman to preside at the General Meeting. The General Meeting
should adopt a conclusive resolution on whether the Issuer shall or shall not bear the costs of
convening and holding the General Meeting (art. 401 of the Polish Commercial Companies and
Partnerships Code),
−
the right to participate in the General Meeting. This right may be exercised by those shareholders
who have been entered in the register of shares not later than one week before the General Meeting
is held. Bearer shares shall entitle a shareholder to participate in the General Meeting provided the
share title deeds have been deposited with the Issuer not later than one week before the date of the
General Meeting and are not withdrawn before the closing thereof. In case of withdrawal of share
title deeds during the session of the General Meeting, it is presumed that the shareholder was entitled
to participate in the General Meeting and to exercise the rights to which he is entitled until the
moment of withdrawal of the share title deeds (art. 406 of the Polish Commercial Companies and
Partnerships Code),
144
−
The right to review the list of shareholders in the company’s premises, the right to request a copy of
the list of shareholders entitled to participate in the General Meeting against refund of costs thereof,
the right to request a copy of motions on matters included on the agenda of the General Meeting.
The list of shareholders is signed by the Executive Board and specifies the forenames and surnames or
business names of the entitled persons, their place of residence or corporate seat, number, kind and
identification numbers of shares and the number of votes carried by the shares. The said list should be
made available for review in the office of the Executive Board three (3) business days prior to the
date of the General Meeting (art. 407 of the Polish Commercial Companies and Partnerships Code),
−
The right to have the list of attendance at the General Meeting verified, upon request of shareholders
representing at least one-tenth of the share capital represented at the General Meeting, by a
committee elected for this purpose, composed of at least three members, one of which is elected by
the shareholders who filed such a request (art. 410 of the Polish Commercial Companies and
Partnerships Code),
−
The right to vote at the General Meeting, whereas one share shall carry one vote, while right to vote
may be exercised as from the day on which the shares has been fully paid up (art. 411 of the Polish
Commercial Companies and Partnerships Code),
−
The right to review the register of minutes from the General Meeting and the right to receive copies of
resolutions authenticated by the Executive Board. This right may also be exercised by those
shareholders who have not been present during the General Meeting or even those shareholders
who were not authorized to participate in the said General Meeting as they had not yet been
shareholders at that time. The Issuer may request a refund of the costs of making a cop[y in writing,
however, the Issuer may not refuse such shareholder’s request (art. 421 of the Polish Commercial
Companies and Partnerships Code),
−
The right to appeal against a resolution of the General Meeting which is contrary to the Articles of
Association and good practices and prejudicial to interests of the Issuer or intended to occasion
harm to a shareholder by way of an action for revoking the said resolution brought against the Issuer.
This right may be exercised by the shareholder who voted against the resolution and, upon the
resolution being adopted, demanded that his objection be put on record, by the shareholder who
was groundlessly prevented from participating in the General Meeting and by the shareholder who
was absent from the General Meeting, exclusively in the event when the said General Meeting had
been improperly convened or the resolution was adopted on a matter not included in its agenda.
Such action shall be instituted within a month from obtaining information on the resolution, but not
later than three months from the date of adopting the resolution (art. 422 and art. 424 of the Polish
Commercial Companies and Partnerships Code),
−
The right to bring an action against the Company seeking to have an unlawful resolution of a
General Meeting pronounced invalid. This right may be exercised by the same persons who are
empowered to bring an action appealing against a resolution. This right expires upon the lapse of
thirty (30) days from the day on which the resolution was published, however, not more than within a
year from the date on which it was adopted (art. 425 of the Polish Commercial Companies and
Partnerships Code),
−
The right to request information concerning the Issuer from the Executive Board during the session of
the General Meeting, if it is reasonable in view of assessment of a matter included on the agenda of
the General Meeting, whereupon the Executive Board may refuse to provide information if it could
damage the Issuer or a company related to the Issuer, or its subsidiary, particularly as a result of
disclosure of technical, commercial or organizational secrets of an enterprise or in the case when an
Executive Board member might be exposed to criminal, civil or administrative liability as a result of
disclosing such information (art. 428 § 1 of the Polish Commercial Companies and Partnerships Code),
−
The right to apply to the registration court to impose upon the Executive Board the obligation to
provide information referred to in art. 428 § 1 of the Polish Commercial Companies and Partnerships
Code (art. 429 § 1 of the Polish Commercial Companies and Partnerships Code) or to impose upon
the Issuer the obligation to publish information furnished to another shareholder outside the General
Meeting by virtue of art. 428 § 4 of the Polish Commercial Companies and Partnerships Code (art. 429
145
§ 2 of the Polish Commercial Companies and Partnerships Code). This right may be exercised by a
shareholder who had been refused the requested information during the General Meeting and who
made objection for the record and filed the application with the court within one week from the
closing of the General Meeting. The shareholder also may file an action against members of the
Issuer’s governing bodies or other persons who occasioned damage to the Issuer, if the Issuer fails to
bring such action within one year from the disclosure of the injurious act (art. 486 and art. 487 of the
Polish Commercial Companies and Partnerships Code),
−
The right to review documents related to merger, division or transformation of the Issuer, particularly
the merger plans, financial statements and reports of the Executive Board on the activities of the
merging Companies for the last three financial years along with the opinion of the qualified auditor, if
the opinion or the report have been prepared, reports of the Executive Board prepared for the
purpose of merger (art. 505, art. 540 and art. 561 of the Polish Commercial Companies and
Partnerships Code), the right to request that the Supervisory Board be elected by voting in separate
groups, if such a request was made by shareholders representing at least one-fifth of the share
capital (art. 385 § 3 of the Polish Commercial Companies and Partnerships Code).
Pursuant to art. 6 § 4 and § 5 of the Polish Commercial Companies and Partnerships Code, Issuer’s
shareholder may also request that a commercial company which is a shareholder of the Issuer furnish written
information whether it is a controlling company or a controlled company as defined in art. 4 § 1.4) of the
Polish Commercial Companies and Partnerships Code versus a certain commercial company or cooperative
which is a shareholder of the Issuer. The Issuer’s shareholder who is entitled to request the information
specified above may also demand the disclosure of the number of the Issuer’s shares or votes at the General
Meeting of the Issuer, which the given commercial company holds, also as a pledgee, usufructuary or
beneficiary owner.
The legislative Act regarding public offering and the legislative Act regarding trading in financial instruments
According to the legislative Act regarding trading in financial instruments, a deposit certificate written in the
name of its holder, which may be issued by the company keeping the securities account pursuant to the
legislative Act regarding trading in financial instruments, is the document that confirms the holder’s
entitlement to exercise rights carried by the dematerialized bearer share. Pursuant to art. 328 § 6 of the Polish
Commercial Companies and Partnerships Code, a shareholder of dematerialized Shares of the Issuer is
entitled to receive a registered deposit certificate issued by a company keeping securities account.
However, shareholders of dematerialized Shares in the Issuer are not entitled to claim the Share document.
On the other hand, shareholders of those Shares in the Issuer which have not yet been dematerialized are
entitled to request the release of a share document.
According to art. 84 of the legislative Act regarding public offering, shareholder or shareholders holding at
least 5% of the total votes at the General Meeting may request adoption of a resolution concerning a review
by a licensed expert of a specific issue related to the Company’s incorporation or the conduct of its business
(special purpose auditor). If the General Meeting fails to adopt a resolution in accordance with the request
for appointment of a special purpose auditor, the requesting shareholders may, within fourteen (14) days from
the date of the resolution, apply to the registration court for appointment of a company nominated by them
as the special purpose auditor (art. 85 of the legislative Act regarding public offering). The mechanism
providing protection to minority shareholders is set forth in art. 83 of the legislative Act regarding public
offering. Accordingly, a shareholder in a public company may make a written demand that his shares be
acquired by another shareholder who reaches or exceeds 90% of the total number of votes in the said public
company.
Issuer’s Articles of Association
The Articles confer upon the shareholders of A-Series Shares, B-Series Shares or C-Series Shares no powers other
than those stipulated in the Polish Commercial Companies and Partnerships Code, the legislative Act
regarding trading in financial instruments and the legislative Act regarding public offering. The Articles
contain no clauses imposing a restraint upon the above-mentioned powers.
Right to Dividend
146
A-Series Shares participate in the distribution of dividend beginning from January 1, 2006, i.e. for the financial
year started on January 1, 2006 and ended on December 31, 2006.
B-Series Shares participate in the distribution of dividend beginning from January 1, 2007, i.e. for the financial
C-Series Shares participate in the distribution of dividend beginning from January 1, 2007, i.e. for the financial
A-Series Shares, B-Series Shares and C-Series Shares are not preferred as regards the right to dividend,
therefore, the value of dividend per share is calculated by dividing the amount allocated by the General
Meeting of the Issuer for distribution amongst the shareholders by the quantity of all the Issuer’s shares.
The right to dividend is conferred every year as long as the General Meeting of the Issuer adopts a resolution
concerning distribution by way of dividend of a part of or the entire profit of the Issuer for the last financial
year (plus potential undistributed past year’s profits that have been brought forward and profits transferred to
reserves and reserve capitals, which may be allocated for payment of the dividend).
Holders of the Issuer’s Shares as at the date of dividend are entitled to receive it. Dividend is due on the date
of dividend payment. The right to receive a dividend is a proprietary right and therefore does not expire;
however, it may be barred by the statute of limitations.
The right to dividend on the Issuer’ Shares does not expire and may not be excluded.
Upon admittance of Shares to trading at the stock exchange, pursuant to § 26 of the Rules of the Warsaw
securities exchange, securities issuers are under the duty to inform the Warsaw securities exchange about
their intention to distribute the dividend and to agree with the exchange the decision concerning payment
to the extent it might affect the organization and the manner of conducting stock exchange transactions.
Moreover, § 91 of the Detailed Rules of Operation of the National Deposit imposes upon securities issuers the
duty to immediately deliver to the National Deposit the content of the resolution adopted by the General
Meeting concerning dividend, i.e. the information concerning the value of the dividend, date of dividend
allotment and date of payment. The date of dividend allotment and the date of dividend payment must also
be notified beforehand to the National Deposit. The resolution concerning this matter must be delivered to
the National Deposit not later than ten (10) days prior to the date of dividend allotment. According to § 91
item 2 of the Detailed Rules of Operation of the National Deposit, at least nine (9) days must pass between
the date of dividend allotment and the date of its payment. Moreover, pursuant to § 5 item 1 of the National
Deposit Rules, the above-mentioned time limit must be calculated with exclusion of non-business days
defined in separate legal regulations and Saturdays.
Pursuant to § 97 of the Detailed Rules of Operation of the National Deposit, payment of dividend to holders of
dematerialized shares in a public company takes place by way of transfer of funds for exercise of the right to
dividend by the Issuer to the National Deposit to a cash or bank account specified by the National Deposit
and then by distribution by the National Deposit of funds transferred by the Issuer into accounts of National
Deposit members, who shall then transfer these funds to individual accounts held by shareholders.
The Articles of the Issuer contain no clauses as regards the conditions for collection of dividend, regulating the
issue of dividend collection in a manner other than as provided for in the Polish Commercial Companies and
Partnerships Code and the National Deposit rules.
The terms and conditions of collection and payment of dividend shall be communicated in a current report
submitted to the Polish Financial Supervision Authority (KNF), the Warsaw securities exchange (GPW), and the
Polish Press Agency (PAP).
The date of dividend will be fixed in such a manner so as to enable a correct settlement of income tax on
gains derived from a legal person.
The Issuer’s Articles do not envisage making advance payments against dividend.
Voting rights
A-Series Shares, B-Series Shares and C-Series Shares are not preferred as regards the voting rights, hence each
Share caries one vote at the General Meeting of the Issuer.
147
Right to subscribe for shares of a new issue
Pursuant to Art. 433 § 1 of the Polish Commercial Companies and Partnerships Code, the Issuer’s shareholders
have the pre-emptive right to subscribe for shares of a new issue pro rata to the number of shares held by
them (share subscription rights).
In the interests of the Issuer, the share subscription rights of shareholders may be suspended by virtue of a
resolution of a General Meeting of the Issuer adopted by a majority of at least 4/5 of votes, if the suspension
of the share subscription rights was communicated in the agenda of the General Meeting and the Executive
Board of the Issuer has submitted to the General Meeting a written opinion providing grounds for such share
subscription rights suspension and specifying the proposed share issue price and the method of its fixing.
A-Series Shares, B-Series Shares and C-Series Shares are not preferred as regards the share subscription rights.
Right to participate in the Issuer’s profits
Issuer’s shareholders have the right to participate in the Issuer’s profits reported in the financial statements,
audited by a qualified auditor, allocated for distribution amongst the shareholders by the Annual General
Meeting. The profit is distributed in proportion to the number of Issuer’s Shares. A-Series Shares, B-Series Shares
and C-Series Shares are not preferred as regards participation in the Issuer’s profits.
Right to participate in the estate remaining in the case of liquidation
In the case of the Issuer’s liquidation, the assets of the Issuer remaining after the creditors have been either
satisfied or their claims secured is distributed amongst the shareholders of the Issuer in proportion to the
number of Issuer’s Shares held. A-Series Shares, B-Series Shares and C-Series Shares are not preferred as
regards participation in the division of the Issuer’s assets remaining after liquidation.
Share redemption
The Issuer’s shares may be redeemed under the voluntary redemption procedure.
Share conversion
A-Series Shares, B-Series Shares and C-Series Shares are ordinary bearer shares which, upon their registration in
the securities deposit kept by the National Deposit for Securities, will have no paper form.
Pursuant to art. 334 § 2 of the Polish Commercial Companies and Partnerships Code, A-Series Shares, B-Series
Shares and C-Series Shares may be converted into registered shares by the Issuer’s Executive Board upon
request of a shareholder. In case of conversion of A-Series Shares, B-Series Shares or C-Series Shares into
registered shares after these shares have been admitted to trading on the Warsaw securities exchange, the
Board of the Warsaw exchange shall withdraw these shares from trading at the stock exchange pursuant to §
31 of the Stock exchange rules.
Rights carried by Rights in C-Series Shares
Pursuant to art. 3 item 28 of the legislative Act regarding trading in financial instruments, share allotment
certificates / rights in shares are securities conferring the right to receive paperless new issue shares in a public
company, which are created upon the allotment of such shares and expire after the shares are registered in
the securities deposit or after a decision of the registration court refusing the entry of a share capital increase
in the register of business enterprises becomes final.
Public take-over offers relating to the Issuer’s capital
During the financial year 2006 and during the present financial year 2007, no public take-over offers (including
calls for subscription for sale or exchange of shares) have been made with respect to the Issuer’s Shares.
Information concerning new share issue
On June 20, 2007, the Extraordinary General Meeting of the Issuer adopted Resolution No. 2 concerning increase of the
Company’s share capital by way of public issue of not more than 440,000 C-Series Shares, with the exclusion
of drawing rights of the existing shareholders, and amendment of the Issuer’s Articles in connection with the
issue of C-Series Shares. The wording of this Resolution is as follows:
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“Acting on the basis of art. 431 and art. 432 as well as art. 433 § 2 of the Polish Commercial Companies and Partnerships
Code and in accordance with § 22 item 5 of the Articles of Association, the Extraordinary General Meeting of Magellan S.A.
( “the Company”) hereby resolves as follows:
§ 1.
1.
The share capital of the Company is hereby increased from PLN 1,822,226.40 (one million eight hundred twenty
two thousand two hundred twenty-six Polish złoty and 40/100) by not more than PLN 132,000.00 (one hundred thirty-two
thousand Polish złoty) up to the amount not exceeding PLN 1,954,226.40 (one million nine hundred fifty four thousand two
hundred twenty-six Polish złoty and 40/100) by way of issuing not more than 440,000 (four hundred forty thousand) ordinary
bearer C-Series Shares having a nominal value of PLN 0.30 each.
2.
C-Series Shares shall be fully paid-up in cash.
3.
The issue will be effected if at least one Share is acquired.
4.
C-Series Shares shall participate in the dividend from profits allocated for distribution beginning from the financial
year 2007, i.e. starting from January 1, 2007.
5.
The Executive Board of the Company is hereby authorized to:
(a)
Define the issue price for C-Series Shares,
(b)
Determine the subscription opening and closing dates,
(c)
Make a potential division of the C-Series Shares issue into tranches and set forth the terms and conditions of share
reallocation between tranches,
(d)
Define the dates and set forth the terms and conditions for subscription, including indication of persons entitled to
subscribe for C-Series Shares,
(e)
Determine the principles of allocating the C-Series Shares ,
(f)
Execute a stand-by underwriting contract or firm commitment underwriting contract, if required in the opinion of
the Executive Board,
(g)
Set other terms and conditions of C-Series Shares issue, if not regulated herein,
(h)
Abort the public offering upon consent of the Supervisory Board,
(i)
File a notarized statement concerning the value of the share capital acquired in the frame of public subscription.
§2
1.
C-Series Shares shall be offered by way of public offering as defined in the legislative Act of July 29, 2005, on
public offering, conditions governing the introduction of financial instruments to organized trading, and public companies
(Journal of Laws No 183, item 1539).
2.
Application shall be filed for admittance of the C-Series Shares to trading on an official regulated stock exchange
market operated by Giełda Papierów Wartościowych w Warszawie S.A. Accordingly, the Executive Board is hereby
authorized and requested to take all actions leading towards introduction of the Company’s shares into trading on the
exchange.
3.
In connection with the public offering of the C-Series Shares and application for admittance of the C-Series Shares
to trading on the regulated market, C-Series Shares shall be dematerialized. Accordingly, the Executive Board of the
Company is hereby authorized and obligated to execute an agreement with the National Securities Deposit (Krajowy
Depozyt Papierów Wartościowych S.A.) whereunder the C-Series Shares and Rights in C-Series Shares will be registered in
the register kept by the National Securities Deposit and will be dematerialized and to apply for admittance of the C-Series
Shares and Rights in C-Series Shares to trading on the regulated market.
149
§3
1.
The General Meeting hereby suspends the subscription rights of the existing shareholders to C-Series Shares in their
entirety.
2.
Sharing the position of the Executive Board as regards this resolution, the General Meeting decided to approve
the text of the submitted written opinion of the Executive Board concerning suspension of the share subscription rights of
the existing shareholders to C-Series Shares and the proposed method of fixing the C-Series Shares issue price in the wording
as follows:
‘C-Series Shares shall be offered for acquisition by external investors within a public offering. Funds obtained from external
investors by way of issuing the C-Series Shares will permit further expansion of the scale of business conducted by the
Company, including financing the growth in the value of portfolio of financial products offered by the Company, thus
aiding the increase of the Company’s capital and growth of revenues and profits generated by the Company.
Moreover, thanks to issue of C-Series Shares with the drawing rights of the existing shareholders being suspended, the
Company will gain new shareholders.
Therefore, suspension of the drawing rights of the existing shareholders is in the interest of the Company and is not contrary
to the interests of the Company’s shareholders.
The value of the C-Series Shares issue price shall be defined by the Company’s Executive Board at a later date. Authorizing
the Company’s Executive Board to define the C-Series Shares issue price is justified as effective execution of the C-Series
Shares issue requires matching the share issue price with the demand for shares offered. As the demand is correlated with a
number of factors which are independent of the Company, the Company’s Executive Board should be free to determine
the issue price for the C-Series Shares in order to obtain as many funds as possible for the Company.’
The above-mentioned reasons meet the requirements set forth in art. 433 § 2 of the Polish Commercial Companies and
Partnerships Code.
§4
1.
In connection with the increase of the share capital referred to in this Resolution, the Extraordinary General
Meeting of the Company hereby amends the Company’s Articles, whereupon § 6 item 1 of the statutes shall now have the
following wording:
‘The share capital of the Company amounts to from PLN 1,822,226.70 (one million eight hundred twenty two thousand two
hundred twenty-six złoty and 70/100) up to PLN 1,954,226.40 (one million nine hundred fifty four thousand two hundred
twenty-six Polish złoty and 40/100) and is divided into:
(a) 5,812,500 (five million eight hundred twelve thousand five hundred) ordinary bearer A-Series Shares having a nominal
value of PLN 0.30 ach;
(b) 261,588 (two hundred sixty one thousand five hundred eighty-eight) ordinary bearer B-Series Shares having a nominal
value of PLN 0.30 each;
(c) from 1 (one) up to 440,000 (four hundred forty thousand) ordinary bearer C-Series Shares having a nominal value of PLN
0.30 each.
2.
The Extraordinary General Meeting of the Company authorizes the Supervisory Board to draft a consolidated text
of the Company’s Articles incorporating the increase of the share capital, referred to in this resolution.
§5
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This Resolution comes into force on the date of its adoption.”
Information concerning advisors to the public offering of the Issuer’s shares [if no statements are published or
signed by them]
The following advisors are engaged in this offering:
1) UniCredit CA IB Polska S.A. with its registered seat in Warsaw — organizer and coordinator of the offering,
and at the same time an offering agent of the Shares and the Offering, engaged by Issuer to act an
intermediary in offering the acquisition of the C-Series Shares by the Issuer or in the sale of C-Series Shares, also
participates as an intermediary in offering, by Polish Enterprise Fund IV, L.P., of the acquisition of A-Series
Shares or their sale. In particular, the tasks of UniCredit CA IB Polska S.A. with its registered address in Warsaw
include preparation of the financial model and valuation, assistance in the best possible structuring of capital
increase and floating of Shares by the present Shareholder. The fees of UniCredit CA IB Polska S.A. with its
registered address in Warsaw are partially based on a success fee model.
2) Deloitte Audyt Spółka z ograniczoną odpowiedzialnością with its registered seat in Warsaw — a company
licensed to audit the financial statements, Issuer’s auditor, whose fees are not based on the success fee
model.
3) GESSEL. Beata Gessel-Kalinowska vel. Kalisz i Wspólnicy Spółka Komandytowa with its registered seat in
Warsaw - legal advisor of the Company, in charge of providing legal service and advice as regards the new
public issue of shares and admittance of the Company’s shares to stock exchange trading, including
preparation of the drafts of resolutions for the purpose of the Company’s issue prospectus and share issue.
4) NBS Public Relations Sp. z o .o. with its registered address in Warsaw – public relations advisor, whose fees
are not based on the success fee model.
The companies listed above participated in the work on the preparation of the Issue Prospectus.
The companies mentioned above and natural persons representing them do not hold any securities of the
Issuer. There is no conflict of interests between the entities mentioned above and the Issuer.
Amongst the entities mentioned above, only the fee of UniCredit CA IB Polska SA is partially based on a
success fee model. In the opinion of the Issuer, this factor is of material importance in view of the public
offering.
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Charter 22
1.
SUBSCRIPTION AND SALE OF OFFERED SHARES
Public Offering
The total number of Shares offered under this Prospectus is 2,995,455, including:
−
2,555,455 existing ordinary bearer A-Series Shares offered by the Selling Shareholder i.e. by the Polish
Enterprise Fund IV, L.P., and
−
440,000 newly issued ordinary bearer C-Series Shares.
No later than at the Price Definition Date, i.e. no later than on September 18, 2007, the Selling Shareholder
may decide to increase the number of Offered Shares by additional up to 651,408 existing ordinary bearer ASeries Shares. The decision to increase the number of Offered Shares will be made by the Selling Shareholder
in the event the Institutional Investors notify satisfactory demand for Offered Shares in the course of the book
building process. If the Selling Shareholder makes the decision to increase the number of Offered Shares, the
relevant information in this respect will be made available to the general public in the course of art. 54.3 of
the Act.
This Prospectus also deals with the process of requesting admission of 440,000 Rights to C-Series Shares to
trading on the Giełda Papierów Wartościowych S.A., the Warsaw securities exchange. At the stage of
subscription, A-Series Shares and C-Series Shares are offered to investors without differentiation between
existing and the newly issued shares. As a result, investors may receive both A-Series Shares and C-Series
Shares.
The Public Offering is addressed to Institutional Investors and Retail Investors, and it is estimated that the
number of Offered Shares that will be allocated to Retail Investors will constitute 20% of all Offered Shares
(also in the event the Selling Shareholder increases the number of Offered Shares, as referred to above). Issuer
and Selling Shareholder reserve the right to allocate, upon Selling Shareholder’s recommendation, a bigger or
a smaller number of Offered Shares to Individual Investors than the one specified above. The decision in this
respect will be made at the latest on the Price Definition Date, i.e. September 18, 2007, on the basis of the
evaluation of the amount and quality of the demand for Offered Shares notified by Individual Investors and
Institutional Investors; information in this respect will be made available to the public in the course of art. 51 of
the Act. Issuer and Selling Shareholder will not resign from the allocation of Offered Shares to Individual
Investors as a result of performance of possible change in the number of the Offered Shares to be allocated
to those investors.
Pursuant to art. 54.1.2 of the legislative Act regarding public offering, the person who has placed a
subscription order before the information about the final number of offered securities or the Price of Offered
Shares was made available to the public enjoys the right to avoid the legal consequences of placing
subscription order by lodging a written statement to this effect at the venue of placing subscription orders,
within two (2) business days following the date of release of that information to the public.
Investors are entitled to rescind placed subscription orders in the event a supplement to the Prospectus is
released, in the course of and following the principles as specified in art. 51 of the Act, within two (2) business
days following the date of supplement release.
With the reservation of the information contained in item 2 below, on the basis of the agreement signed with
Issuer and Selling Shareholder, while placing the offer of the Shares, the Offeror, i.e. UniCredit CA IB Polska S.A.
with its registered seat in Warsaw at ul. Emilii Plater 53, undertook to act with due diligence required at
transactions on capital markets.
2.
Underwriting Agreement
No later than at the Price Definition Date, i.e. no later than on 18, 2007, Issuer, Selling Shareholder, Offeror and
Bank Austria Creditanstalt AG with its registered seat in Vienna (address: Vordere Zollamtsstrasse 13, A-1030
Vienna, Austria) (“Underwriter”) will sign the agreement for investment underwriting. In accordance with the
agreement, the Underwriter will be obligated to place a subscription order for Offered Shares in respect of
which no orders have been placed by Institutional Investors, recommended by the Offeror and Underwriter to
the Company and Selling Shareholders, and together with placing the subscription order, to pay for them (or
152
to cause placing subscription order for Offered Shares and paying for them by other parsons) in the amount
equal to the product of the Price fixed for Offered Shares and the number of Offered Shares, not subscribed
for by recommended investors.
The performance of the obligation of underwriting will be conditional upon the satisfaction of, among others,
the following requirements: (i) definition of the Price, (ii) lack of any material changes or events resulting in any
unfavourable material change of legal, financial or other situation, profits, trade affairs or economic
forecasts of the Company or the Capital Group as compared to the situation described in the Prospectus, (iii)
Company’s fulfilment of obligations provided for in the agreement, (iv) providing by Issuer the legal opinions
with the contents as specified in the Agreement. Underwriter and Offeror are also entitled to terminate the
agreement, specifically in the event any of Issuer’s representations or warranties appears to be incompliant to
existing facts or legal situation.
For the assuming of the underwriting obligation, Underwriter will be entitled to be paid the commission on all
Offered Shares that will be acquired under Public Offering. The signing of the underwriting agreement will not
increase the cost of share issue specified in Chapter 4 of the Prospectus.
The Company will undertake that without Underwriter’s and Selling Shareholder’s consent, during six (6)
months following the dale of closing of Public Offering, it will not issue any shares (or any other securities
exchangeable or convertible to shares or which involve rights to acquire or purchase Company shares),
neither will it notify the public of any intention to issue shares.
The agreement will contain an indemnification clause under which the Company and the Selling
Shareholder, on the terms and conditions specified in the agreement, will: (i) reimburse Underwriter and
Offeror, and entities related therewith, to be indicated in the agreement, all costs related with any
proceedings instituted in connection with the agreement; (ii) indemnify Underwriter, Offeror and entities
related therewith, to be indicated in the agreement, to the broadest possible extent permitted by law,
against any liability resulting from any loss, claims, damages, obligations and expenses incurred under the
agreement.
3.
Stabilization
In connection with the Public Offer no actions are intended to be performed with the view to stabilize the
share rate at GPW.
4.
Public Offer Dates
September 10 – 18, 2007
Book building process for Institutional Investors
September 11, 2007
Commencement of the Public Offering
September 11 – 18, 2007
Acceptance of subscriptions by Retail Investors
September 18, 2007
Price Definition
September 20 – 21, 2007
Acceptance of subscriptions by Institutional Investors
September 24, 2007
Any subscriptions made in performance of standby underwriting
agreement
September 25, 2007
Closing of the Public Offering
Issuer and Selling Shareholder reserve the right to change the dates of Public Offering, including the dates of
taking subscription orders in the form of Prospectus supplement, on the terms and conditions as prescribed in art.
51 of the Act.
5.
Maximum Price
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A Maximum Price per Offered Share shall be defined for purposes of accepting subscriptions by Retail
Investors. The Maximum Price shall be announced to the general public before commencement of the Public
Offering in the form of an annex to this Prospectus in accordance with art. 51 of the Act.
The Price of Offered Shares to be acquired by Institutional Investors may be higher than the Price of Offered
Shares to be acquired by Retail Investors.
6.
Price Definition
The Issuer and the Selling Shareholder shall define the Price taking into account recommendations by the Offeror
and the following criteria and principles: (i) assessment and price sensitivity of demand among Institutional
Investors participating in the book building process, (ii) capital needs of the Issuer and the Selling Shareholder
with respect to realising the objectives of the Public Offering, (iii) current and projected situation on the equity
markets in Poland and abroad and (iv) assessment of the perspectives for growth and risk factors and of other
information relating to the Issuer’s activities set out in this Prospectus.
The Price of the Offered Shares purchased by Institutional Investors may be higher than the Price of the
Offered Shares purchased by Retail Investors. In the event that the Price is defined at a level equal to or lower
than Maximum Price, the Price of the Offered Shares purchased by Retail Investors shall be equal to the Price
of the Offered Shares purchased by Institutional Investors. The Price shall be announced to the general public
in accordance with art. 54.3 of the Act before the commencement of acceptance of subscriptions by
Institutional Investors.
On May 10, 2007, the Company’s five key managers acquired in aggregate 261,588 B-Series Shares at the
issue price being equal to the nominal value, i.e. PLN 0.30. The price of acquisition of B-Series Shares is
substantially different from that of Offered Shares. However, it should be taken into account that the issue of
B-Series Shares was made in performance of the obligations to Company’s key managers in connection with
the incentive programme performed in the years 2003-2006. B-Series Shares may not be traded on GPW for 2
years following the date of the first listing of Company Shares on GPW without consent of Issuer’s Supervisory
Board.
7.
Principles of placing subscription and depositing orders
Subscription orders for Offered Shares will be taken at the dates specified in item 4 of this Chapter.
Subscription Orders placed by Retail Investors will be taken at the Customer Service Locations of the Bank BPH
S.A. brokerage house and at Customer Service Locations of Centralny Dom Maklerski Pekao S.A., the list of
which is provided in Schedule 5 to the Prospectus. The Subscription orders placed by Institutional Investors will
be taken at the offices of UniCredit CA IB Polska S.A. in Warsaw, ul. Emilii Plater 53.
The Investors entitled to place subscription orders for Offered Shares are: (i) individuals being residents of
Poland and organizational units other than Institutional Investors having legal personality and organizational
units not having legal personality with their seats in Poland (“Retail Investors”, “Individual Investors”) and (ii)
investors qualified in the meaning of Article 8 of the legislative Act regarding public offering other than
individuals (“Institutional Investor”).
Investors may place subscription orders for Offered Shares in the number not exceeding the aggregate
number of Offered Shares allocated to the given Group of Investors by virtue of this Prospectus, with the
reservation that the subscription order placed by Individual Investors must deal with minimum 20 Offered
Shares. The subscription order or orders for the number of Offered Shares being, in aggregate, higher than the
number of Offered Shares is treated as the subscription order or orders for maximum number of Offered
Shares that may be subscribed by investors. The investor placing subscription order for Offered Shares may at
the same time place irrevocable order for depositing.
The subscription order form, containing the order for depositing, constitutes Schedule 4 to the Prospectus and
is available at the Customer Service Locations of the brokerage houses taking subscription orders for Offered
Shares. Each investor is obligated to place a subscription order for Offered Shares in 4 copies. All
consequences of improper fulfillment of the form of subscription order or order for depositing, including the
invalidity of the order, by reasons caused by the investor placing order for Offered Shares are incurred by the
investor.
154
It is admitted that subscription orders for Offered Shares may be placed by statutory representatives, as well
as that subscription orders may be placed by telephone, fax or internet where such possibility is provided for
by the brokerage house with which such a subscription order is placed and on the terms and conditions as
specified by the brokerage house under consideration. For the information concerning the detailed principles
of placing subscription orders and orders for depositing, specifically concerning: (i) the documents required
for placing a subscription order by a statutory representative, an attorney or another person acting on behalf
on investor, and (ii) the possibility to place subscription orders and orders for depositing in another than written
form, the investors should consult the brokerage house, the Customer Service Locations of which they are
going to use for placing the subscription order.
Pursuant to art. 54 of the Act, the Individual Investor who has placed a subscription order before the
information about the final number of Offered Shares was made available to the public, enjoys the right to
avoid the legal consequences of placed subscription order by lodging with the Offeror a written statement to
this effect, within two business days following the date of release of that information to the public.
Investors are entitled to rescind placed subscription orders in the event a supplement to the Prospectus is
released, in the course of and following the principles as specified in art. 51 of the Act.
8.
Term during which subscription order for Offered Shares are binding
Investor is bound by the subscription order for Offered Shares from the date of its until the date of allocation of
Offered Shares, no longer, however, than for a period of three (3) months following the date of opening of
the Public Offering. Investor ceases to be bound by the subscription order in the event the performance of
Public Offering has been given up.
9.
Principles of payment for Offered Shares
Individual Investors must make payments for Offered Shares covered by subscription orders in such a manner
that the entire payment is credited on the account of the brokerage house whose Customer Service Location
was used for placing the subscription order, no later than at the time of placing the orders. The failure to
make the entire payment for Shares as prescribed in the principles specified in the Prospectus will render the
Individual Investor’s subscription order for Shares invalid.
Institutional Investors should pay for subscription orders at the latest until the end of the period of placing their
orders. In the event the payment is not complete, i.e. the amount paid is lower than the product of Offered
Shares allocated to the Investor and the Issue Price, the order is valid for the number of shares equivalent to
the payment made for Offered Shares, i.e. for the number being the product of the amount paid and the
Issue Price.
The information about the number of the account to which the payment should be made will be available at
the Customer Service Location which takes the subscription order for Offered Shares. The payment for
Offered Shares must be made in PLN in cash or by bank transfer to the account as said above.
10. Allocation of Offered Shares
The allocation of Offered Shares will be made promptly after the end of taking subscription orders from
Institutional Investors, in compliance with valid placed subscription orders. To be valid, a subscription order for
Offered Shares must be placed and paid in accordance with the principles and at the dates as prescribed in
this Chapter.
In the event the number of Offered Shares subscribed by Individual Investors is higher than the number of
Offered Shares allocated for acquisition by Individual Investors, Offered Shares will be allocated to them in
accordance with the principles of pro rata reduction of each of placed subscription orders. In accordance
with that principle, fractional parts of Offered Shares will be rounded down to the nearest integer number,
while the remaining Offered Shares will be allocated, by 1 Offered Share, to consecutive Individual Investors
who have placed subscription orders for the biggest numbers of Offered Shares, and in the event that the
subscription orders provide for the same number of shares, and the part of Offered Shares remaining for
allocation thereto is not sufficient, the allocation will be determined by drawing lots. For the purpose of
allocation of Offered Shares, multiple orders placed by the same investors will not be summed up for the
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establishing of the biggest number of subscribed shares. Individual Investors have no guarantee of any
minimum number of allocated shares.
Within the framework of allocation of Offered Shares, having in mind the positive, motivational nature of
holding shares by Issuer’s employees, as regards Individual Investors, the Company and the Selling
Shareholder reserve the option to make, at their discretion, a preference allocation of no more than 15,000
Offered Shares to persons being Company employees, at the date of allocation of the shares. In the event
the employees have placed subscription orders for bigger number of shares than 15,000 Offered Shares it is
the Company’s and Selling Shareholder’s intention to allocate the shares to employees in accordance with
the principle of pro rata reduction of the subscription orders placed by that group and not to allocate to one
Company employee more than 1,000 shares within the framework preference allocation of shares.
The allocation of Offered Shares to Institutional Investors will be made by Issuer and Selling Shareholder taking into
account the Offeror’s recommendation at their sole discretion, while keeping in mind the objectives of the issue
and sale specified in Chapter 4 of this Prospectus - “Objectives of the Public Offering”.
The first to be allocated will be the newly issued C-Series Shares. After all C-Series Shares are allocated, ASeries Shares offered for sale by Selling Shareholder will be made subject to allocation.
At the stage of placing subscription orders, A-Series Shares and C-Series Shares are offered to investors without
being differentiated as existing or newly issued shares. As a result, investors may acquire existing A-Series
Shares or newly issued C-Series Shares. In the event the investors are provided with both newly issued C-Series
Shares and existing A-Series Shares, the allocation to the given investor, broken up into newly issued shares
and existing shares, will be made pro rata, with possible rounding-ups. The securities accounts of the investors
who are allocated C-Series Shares will be credited with the Rights to C-Series Shares.
The information concerning the allocation will be made available to the public by way of a current
statement, and Retail Investors will be able to obtain detailed information about Offered Shares allocated to
them at the Customer Service Locations at which they have placed their subscription orders. The information
about the allocation of shares will be made available before the beginning of the Company Share and Right
to Share listing on GPW.
11. Public Offering and C-Series Share Issue failure
The Public Offering shall not take effect in the event the subscription orders do not cover and do not
generate due payment for at least one C-Series Share.
The C-Series Share issue shall not take effect in the following circumstances:
−
The subscription orders placed for Offered Shares do not cover and do not generate due payment for at
least one C-Series Share, or
−
The Company’s Executive Board does not notify the register court of the resolution increasing the share
capital within six months following the date of approval of Prospectus, or
−
The court register decision to refuse registration of the share capital increase becomes final and
enforceable.
Should there occur the circumstances that will render the Public Offering or the C-Series Share issue
impossible, the information about this fact will be made available to the public by way of a current
statement.
The information about effective C-Series Share issue will be made available to the public by way of a current
statement promptly after the registration of the Company share capital increase.
12. Return of payments
Relevant amounts paid on placing of subscription orders for Offered Shares will be returned in following
circumstances: (i) the Public Offering has not taken effect, (ii) the performance of the Public Offering has
been given up, (iii) the investor has been allocated a lower number of Offered Shares than the number for
which the investor placed subscription order or has not been allocated Offered Shares at all, or (iv) the Price
has been defined at a lower than Maximum Price. The payments will be returned to the bank account or
156
investment account indicated by the investor in the subscription order form. The payments will be returned
without any interest or damages, within five (5) business days following respectively the date of information
about the Public Offering not taking effect, or the date of allocation of Shares.
In the event the C-Series Share issue does not take effect following admitting of the Rights to Shares to trading
at the stock exchange, promptly after the occurrence of the circumstances causing that the issue has not
taken effect, Issuer will file for termination of listing of the Rights to Shares on GPW. The payments will then be
returned to the investors whose accounts have been credited with the Rights to Shares at the date of
settlement of accounts concerning the transactions made during the last day of listing of the Rights to Shares.
The amount to be returned will be the product of the number of the Rights to Shares on the investor’s account
and the issue price of C-Series Shares.
13. Rescission of Public Offering
Issuer and Selling Shareholder may rescind the Public Offer at any time before its beginning in whole or in part
without giving reasons. The information about the decision to rescind the Public Offering will be made
available to the public in the form of Prospectus supplement, in accordance with the principles specified in
art. 51 of the Act.
After the Public Offering has begun, the rescission of its performance is possible exclusively in the event Issuer
and Selling Shareholder decide that that there are serious reasons for it. Serious reasons are in particular: (i)
sudden unexpected changes in the economic and political situation of the country or the world that may
have negative effect on financial markets, national economy or on further activity of the Company, including
the information contained in the Prospectus; (ii) sudden unexpected changes having direct effect on
Company’s operations, (iii) notification of unsatisfactory demand for Offered Shares on the part of Institutional
Investors in the course of building of the register of demand.
14. Listing of Offered Shares and Rights to C-Series Shares
Issuer intends to file for admission of all Offered Shares and the Rights to Series C Shares to trading on the
regulated market, i.e. on the GPW basic market. As of the date of the Prospectus, no Issuer’s securities of the
same category have been admitted to trading on another regulated or equivalent market.
Issuer intends to introduce into trading on GPW simultaneously all A-Series Shares, B-Series Shares, C-Series
Shares, and the Rights to C-Series Shares promptly after the allocation of Offered Shares while the admission
to trading on GPW of C-Series Shares should take place immediately after the registration of the Company
share capital increase by issue of C-Series Shares, which should take place no later than two (2) months
following the date of closing of Public Offering.
Before the opening of the Public Offering, the Company will take actions aimed at the registration with the
KDWP of all Series A-Series Shares, B-Series Shares, C-Series Shares, and the Rights to C-Series Shares. Promptly
after KDPW adopts the resolution to register A-Series Shares, B-Series Shares, C-Series Shares, and the Rights to
C-Series Shares, the Company will file for admitting A-Series Shares, B-Series Shares, C-Series Shares, and the
Rights to C-Series Shares to trading on the basic GPW market. After allocation of Offered Shares, the
Company will request GPW to fix the date of beginning of listing of A-Series Shares, B-Series Shares, and the
Rights to C-Series Shares s.
After the registration of the share capital increase by issue of C-Series Shares, the Company will take actions
aimed at the introduction of C-Series Shares to GPW trading. After the registration of C-Series Shares by the
register court, they will be recorded at KDPW accounts of the investors who will, at that date, be entitled to
the Rights to Shares. In return for each Right to Shares, one C-Series Share will be recorded on investor’s
account or at the sponsors of issue register. As a result, the Rights to Shares will expire. The day of expiration of
the Rights to Shares will be the last day of their trading on GPW. Beginning from the following day of trading
on GPW, C-Series Shares will be subject to listing.
157
CHAPTER 23
DEFINITIONS
Definitions and explanation of abbreviations
Shares
Issuer’s A-Series Shares and B-Series Shares together
Offered Shares
In aggregate 2,995,455 shares, including: up to 2,555,455 existing ASeries Shares offered by the Selling Shareholder and no more than
440,000 newly issued C-Series Shares.
No later than at the Price Definition Date, i.e. on September 18, 2007,
the Selling Shareholder may make the decision to increase the number
of Offered Shares by additional up to 651,408 existing ordinary bearer
series A shares. The decision to increase the number of offered shares
will be made by the Selling Shareholder in the event the Institutional
Investors notify satisfying demand for Offered Shares in the process of
building of demand register.
A-Series Shares
5,812,500 ordinary bearer series A shares, the nominal value of each
share being PLN 0.30 (thirty grosz), constituting founding shares
B-Series Shares
261,588 ordinary bearer series B shares, the nominal value of each
share being PLN 0.30 (thirty grosz)
C-Series Shares
440,000 ordinary bearer series C shares, the nominal value of each
share being PLN 0.30 (thirty grosz), offered in Public Offer
D-Series Shares
No more than 390,840 ordinary bearer series D shares, the nominal
value of each share being PLN 0.30 (thirty grosz), issued in the course of
conditional capital increase in connection with the implementation of
the Motivation Program
Qualified Auditor
Deloitte Audyt Sp. z o.o. with its registered seat in Warsaw
Price, Share Price
Price of Offered Shares acquired by Individual Investors or Price of
Offered Shares acquired by Institutional Investors
Price of Offered Shares acquired by Final price fixed for Offered Shares for Retail Investors, i.e. issue price of
Retail Investors
Series C Shares and sale price of Series A Shares
Price of Offered Shares acquired by Final price fixed for Offered Shares for Institutional Investors, i.e. issue
price of Series C Shares and sale price of Series A Shares
Maximum Price
Price at which subscription orders of Institutional Investors are to be
taken and paid
Existing Shareholder
Financial Advisor
UniCredit CA IB Polska S.A. with its registered seat in Warsaw
Legal Advisor
GESSEL. Beata Gessel – Kalinowska vel. Kalisz i Wspólnicy Spółka
Komandytowa with its registered seat in Warsaw
EBITDA
Operational profit increased by amortization
Issuer, the Company, Magellan S.A., Magellan Spółka Akcyjna with its registered seat in Łódź – issuer of
Magellan
shares being introduced into public trading under this Prospectus
EURO, EUR
The European Union monetary unit
Exchange, Warsaw securities
Giełda Papierów Wartościowych w Warszawie Spółka Akcyjna
158
exchange, GPW
gr
grosz – 1/100 of 1 złoty – the monetary unit of the Republic of Poland
Group of Investors
Retail Investors or Institutional Investors
Retail Investors, Individual Investors
Individuals being residents of Poland and other than Institutional
Investors organizational units having legal personality and
organizational units not having legal personality with their seats in
Poland
Investor qualified in the meaning of Article 8 of the Public Offering Act,
other than an individual
KDPW, Deposit, National Securities
Deposit
Krajowy Depozyt Papierów Wartościowych Spółka Akcyjna with its
registered seat in Warsaw
Polish Civil Code
The Civil Code Act of April 23, 1964 (Journal of Laws No 16, item. 93 as
amended.)
Polish Commercial Code
Regulation by the President of the Republic of Poland of June 27,
1934, Commercial Code (Journal of Laws No 57, item 502 as
amended)
Polish Criminal Code
The Criminal Code Act of June 6, 1997 (Journal of Laws No 88, item 553
as amended)
Polish Commercial Partnerships and
Companies Code
The Commercial Partnerships and Companies Code Act of September
15, 2000 (2000Journal of Laws No 94, item 1037 as amended)
Commission, KNF, Financial
Supervision Authority
Komisja Nadzoru Finansowego with its seat in Warsaw
KRS, National Court Register
Krajowy Rejestr Sądowy (National Court Register)
Offeror, UniCredit CA IB, CA IB
UniCredit CA IB Polska S.A. with its registered seat in Warsaw
Extraordinary General Meeting,
Issuer’s Extraordinary General
Meeting, Company’s Extraordinary
General Meeting
The Extraordinary General Meeting of Shareholders of Magellan S.A.
Tax Law
The Tax Ordination Act dated August 29, 1997 (unified text:
Journal of Laws No 8, item 60 as amended)
GDP
Gross Domestic Product
PLN, zł, złoty
Złoty – monetary unit of the Republic of Poland
Polish Enterprise Fund IV, L.P.,
Polish Enterprise Fund IV, L.P., Corporation Trust Centre, 1209 Orange
Street, Wilmington, County of New Castle, Delaware, with principal
office at 1 Exchange Place, Suite 1000 Jersey City, NJ 07302, the United
States of America.
PEF
2005
Company shareholder holding 100% share in Issuer’s share capital and
the same share in the total number of votes at the General Meeting of
Shareholders
Customer Service Location
Customer Service Location or Order Taking Point of a brokerage house
Rights to Shares, Rights to C-Series
Shares
440,000 rights to Series C Shares
Banking Law
The Banking Law Act of August 29, 1997, (unified text – 2002 Journal of
159
Laws No 72, item 665 as amended)
Foreign Currency Law
The Foreign Currency Law of July 27, 2002 (Journal of Laws No 141, item
1178 as amended)
Motivation Programme, Incentive
Programme
Mechanism motivating members of Company Executive Board, key
employees and co-operators to take actions ensuring both long-term
increase in Company value and stable increase in operational profit,
based on issue of Series B Shares
Prospectus, Issue Prospectus
This issue prospectus, being the only legally binding document
containing information about the Issuer, the shares being introduced
into public trading and the shares being offered in public trading,
prepared as prescribed in the Prospectus Regulation
Supervisory Board, Issuer’s
Supervisory Board, Company’s
Supervisory Board
The Supervisory Board of Magellan S.A.
Securities exchange By-laws
By-laws of Giełda Papierów Wartościowych w Warszawie S.A. adopted
by resolution of the Board of Giełda Papierów Wartościowych w
Warszawie S.A. nr 1/1110/2006 dated January 4, 2006
Current statement
The form in which public companies perform their duty to provide
information, as specified in art. 56 of the Public Offering Act
The Prospectus Regulation, The
Regulation
The Commission Regulation (EC) no. 809/2004 dated April 29, 2004
implementing Directive 2003/71/CE of the European Parliament and
Council concerning the information to be provided in issue
prospectuses and the form, inclusion by reference, publication of
such issue prospectuses, and dissemination of advertisements (Official
Journal L 149/1 dated April 30, 2004)
Regulation concerning current and
periodical Information
The Regulation of the Minister of Finance dated October 19, 2005
concerning current and periodical information provided by issuers of
securities (Journal of Laws No 209, item 1744)
Controlling Regulation
The Regulation of the Council (CE) No. 139/2004 dated January 20,
2004 concerning controlling of business concentration (Official Journal
L24/1 dated January 29, 2004)
Regulation 2273/2003
The Regulation of the Commission (CE) No. 2273/2003 dated December
22, 2003 implementing Directive 2003/6/CE of European Parliament and
Council as regards buy up and stabilization of financial instruments
programs exemptions (Official Journal L 336/33 of December 23, 2003)
Court Register
The District Court for Łódź-Śródmieście in Łódź, the 20th Division of the
National Court Register
Articles of Association, Issuer’s
Articles of Association, Company’s
Articles of Association, Articles
The Articles of Association of Magellan S.A.
EU, European Union
The European Union, union of states being members of European
Communities formed on the basis of the Treaty establishing the
European Union (signed in Maastricht in 1992, came into force on
November 1, 1993); currently 27 states (Belgium, Denmark, France,
Greece, Spain, the Netherlands, Ireland, Luxembourg, Germany,
Portugal, Italy, The United Kingdom, since 1995 – Austria, Finland, and
Sweden, since 2004 – Cyprus, Czech Republic, Estonia, Poland,
Lithuania, Latvia, Malta, Slovakia, Slovenia and Hungary, since 2007 –
160
Romania and Bulgaria)
UE15
EU Members before enlargement in 2004 (Austria, Belgium, Denmark,
Finland, France, Greece, Spain, the Netherlands, Ireland, Luxembourg,
Germany, Portugal, Sweden, Italy and United Kingdom)
USD
American dollar, US legaltender used in the territory of the United
States of North America
National Court Register Act
The National Court Register Act of August 20, 1997 (unified text: 2001
Journal of Laws No 17, item 209 as amended)
Legislative Act regarding supervision The Supervision of Capital Market Act of July 29, 2005 (Journal of Laws
of capital markets
No 183, item 1537)
Legislative Act regarding trading in
financial instruments
The Trading in Financial Instruments Act of July 29, 2005 (Journal of
Laws No 183, item 1538)
Legislative Act regarding Competition The Protection of Competition and Consumers Act of February 16, 2007
(2007 Journal of Laws No 50, item 331)
and consumer protection
Legislative Act regarding public
offering, the Act
The Public Offering and Defining Conditions for Introducing Financial
Instruments into Organized Trading and Public Companies Act of July
29, 2005 (Journal of Laws No 184, item 1539)
Legislative Act regarding personal
income tax
The Personal Income Tax Act of July 26, 1991 (unified text –2000 Journal
of Laws No 14, item 176 as amended)
Legislative Act regarding corporate
income tax
The Corporate Income Tax Act of February 15, 1992 (unified text: 2000
Journal of Laws No no. 54, item 654 as amended)
Legislative Act regarding civil law
transactions
The Civil Law Transactions Act of September 9, 2000 (unified text: 2005
Journal of Laws No no. 41, item 399 as amended)
Legislative Act regarding accounting The Act on Accounting of September 29, 1994 (unified text
– 2002 Journal of Laws No 76, item 694 as amended
Legislative Act regarding health care The Health Care Institutions of August 30, 1991(unified text– 2007
entities
Journal of Laws No 14 item 89)
General Meeting, Issuer’s General
Meeting, Company’s General
Meeting
The General meeting of Shareholders of Magellan S.A.
Executive Board, Issuer’s Executive
Board, Company’s Executive Board
The Executive Board of Magellan S.A.
161
CHAPTER 24
FINANCIAL INFORMATION CONCERNING ISSUER’S ASSETS AND LIABILITIES, ITS
FINANCIAL CONDITION, PROFITS AND LOSS
OPINION OF INDEPENDENT QUALIFIED AUDITOR ON HISTORICAL FINANCIAL INFORMATION IN COMPLIANCE
WITH ISFA FOR MAGELLAN S.A. FOR THE YEARS ENDING DECEMBER 31, 2004, DECEMBER 31, 2005, and
DECEMBER 31, 2006
To the Shareholder and Supervisory Board of Magellan S.A.
For the purposes of this Issue Prospectus and in compliance with the requirements of the Regulation of the
Commission (EC) no. 809/2004 dated April 29, 2004, implementing Directive 2003/71/CE of the European
Parliament and Council concerning the information to be provided in issue prospectuses and the form,
inclusion by reference and publication of such issue prospectuses and dissemination of advertisements (O.J.
UE L 149,
30.04.2004), we performed an audit of the unconsolidated historical financial information of
Magellan S.A. (until September 7, 2006 Magellan Sp. z o.o. ) presented therein, for the years ending
respectively on December 31, 2004, December 31, 2005, and December 31, 2006, hereinafter referred to as
historical financial information.
The responsibility for the historical financial information as presented herein, as well as for its correct
establishing rests with the Executive Board of Magellan S.A., hereinafter referred to as Issuer.
Our task was to express an opinion if the historical financial information presented in his registration document
is provided accurately and clearly.
Our audit of historical financial information was made in compliance with applicable regulations and
professional standards as prescribed in:
–
Chapter 7 of the legislative Act regarding accounting of September 29, 1994 (2002 Journal of Laws No
76, item 694, as amended), hereinafter referred to as the Act on Accounting, and
–
Qualified auditors’ professional standards and guidelines issued by the National Council of Qualified
Auditors,
in a manner giving us reasonable grounds for formulating the opinion whether the historical financial
information does not contain material errors. The audit included, in particular, the examination – to a great
extent made with the use of at random examination method – of the evidence and accounting records
reflecting the amounts and information contained in historical financial information, as well as the evaluation
of applied accounting policy, significant estimations prepared by Issuer’s Executive Board and general
evaluation of the presentation of historical financial information.
We are positive that our audit gave us sufficient grounds for expression of this opinion.
We find that historical financial information was prepared in all material aspects in compliance with
International Standards of Financial Accounting, in the form as approved by the European Union, and that it
presents issues of material importance for the evaluation of Issuer’s proprietary and financial condition in the
periods covered by this issue prospectus, fairly and clearly.
Not making objections to the correctness and accuracy of audited historical financial information, we would
like to point out explanatory note no. 3.2, in which the Executive Board explained the course of proceedings
concerning the difference of opinions between the revenue authority and the Company over the
qualification of the financial intermediation services performed by the company as far as financing of
suppliers debt was concerned. The VAT amount, PLN 3.185 million, paid in respect of the period from May 1,
2004 to December 31, 2006 - resulting from interpretational dispute, was settled by the Company and
reflected as tax receivables.
On April 28, 2007, the Company obtained the enforceable judgment of the Regional Administrative Court
reversing the Decision of the Director of the Treasury Office. Therefore, the Company has not created reserves
or up-date write-offs for payment of possible consequences of the above described matter. The Company
intends to file for reimbursement of the amounts it paid, however, due to the absence of uniform tax
qualification of services provided by the Company, we cannot entirely exclude the risk of questioning of its
grounds.
162
Qualified Auditor:
Maria Rzepnikowska
Piotr Sokołowski
Marzena Libsz
President of Executive Board
Member of Executive Board
Reg no. 9869/7350
Qualified Auditor,
Qualified Auditor
Reg. no. 3499/1028
Reg. no. 9752/7281
Persons representing entity
Deloitte Audyt Sp. z o.o.
ulica Piękna 18, 00-549 Warsaw
Entity qualified to audit financial statements entered
in the list of commissioned entities with no. 73
maintained by KRBR
Warsaw, April 30, 2007
163
Historic Financial Information in Accordance with IFRS
Magellan S.A.
for the years ended December 31, 2004, December 31, 2005
and December 31, 2006
164
Table of contents
HISTORIC FINANCIAL INFORMATION FOR THE YEARS 2004 - 2006
INCOME STATEMENT
BALANCE SHEET
STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
CASH FLOW STATEMENT
NOTES TO THE FINANCIAL STATEMENTS
165
NOTES TO THE FINANCIAL STATEMENTS
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
Page
Background
Summary of significant accounting policies
Critical accounting judgments and key sources of estimation of uncertainty
Revenue
Other expenses
Other operating gains and losses
Finance income
Finance costs
Income tax
Earnings per share
Subsidiaries, affiliates and associated companies
Other entities
Taxes receivable
Other assets
Assets pledged as security
Held-for-sale fixed assets
Retained earnings and dividends
Borrowings received
Other financial liabilities – obligations under finance leases
Other liabilities
Dividends paid and declared
Financial instruments
Share-based payments
Related party transactions
Non-cash transactions and sources of financing
Contingencies
Events after the balance sheet date
Differences in respect of previously published financial statements
Approval of the financial statements
167
9
9
19
22
22
23
23
24
24
24
27
27
30
32
32
33
33
34
34
35
35
35
36
37
37
42
42
43
44
44
44
47
48
50
51
51
52
53
54
Financial statements of the Issuer – stand-alone financial statements in PLN ‘000
INCOME STATEMENT
NOTE
Period ended
Dec. 31, 2006
Period ended
Dec. 31, 2005
Period ended
Dec. 31, 2004
PLN ‘000
PLN ‘000
PLN ‘000
Continuing operations
Sales revenue
Depreciation/amortization
Cost of advisory services
Other expenses
Operating profit
4
5
6
24 042
180
4 738
770
650
4 047
13 657
20 608
202
4 531
642
963
2 587
11 683
18 015
192
3 733
508
1 168
6 372
6 042
7
(150)
(286)
40
Finance income
Finance costs
8
9
75
105
247
196
244
258
13 477
11 448
6 068
2 775
2 382
1 225
10 702
9 066
4 843
-
-
-
10 702
9 066
4 843
7 672
6 599
4 006
from continuing and discontinued operations:
Basic
Diluted
7 672
7 672
6 599
6 599
4 006
4 006
from continuing operations:
Basic
Diluted
7 672
7 672
6 599
6 599
4 006
4 006
Income tax
10
Net profit (loss) from continuing operations
Discontinued operations
Net profit (loss) from discontinued operations
Net profit (loss)
Earnings (loss) per share
(in PLN/gr per share)
11
168
NOTES TO HISTORIC FINANCIAL INFORMATION FOR THE YEARS 2004 – 2006 – cont.
BALANCE SHEET
NOTE
Period ended
Dec. 31, 2006
Period ended
Dec. 31, 2005
Period ended
Dec. 31, 2004
PLN ‘000
PLN ‘000
PLN ‘000
ASSETS
Fixed assets
Investments in subsidiaries, affiliates and associated
companies
Deferred tax assets
12
13
14
468
233
10
521
395
20
1 720
513
10
10
16
1239
9 673
512
5 221
489
2 741
11 623
6 669
5 473
Total fixed assets
Current assets
Taxes receivable
Other assets
19
16
17
18
21
653
119 990
3 185
55
2 924
333
71 621
34
3 827
325
65 134
83
5 539
Fixed assets classified as held for sale
22
-
810
-
Total current assets
126 807
76 625
71 081
Total assets
138 430
83 294
76 554
169
BALANCE SHEET
NOTE
Period ended
Dec. 31, 2006
Period ended
Dec. 31, 2005
Period ended
Dec. 31, 2004
PLN ‘000
PLN ‘000
PLN ‘000
SHAREHOLDERS’ EQUITY AND LIABILITIES
Share capital issued
Reserves
Retained earnings
23
24
Total shareholders’ equity
Long-term bank borrowings
25
26,27
10
1 744
48 217
1 774
9 436
1 744
38 681
1 265
8 309
1546
28 613
5 777
4 527
61 171
49 999
40 463
367
707
477
630
16
769
518
1 074
1 107
1 303
30 082
15 757
29 095
669
582
17 836
3 532
10 385
125
310
31 829
1 958
465
70
466
Total short-term liabilities
76 185
32 188
34 788
Total liabilities
77 259
33 295
36 091
138 430
83 294
76 554
Total long-term liabilities
Obligations under bonds and other financial liabilities
Other liabilities
29
25
26,27
28
170
Statement of changes in shareholders’ equity
Share
Supplementary
capital
capital
PLN ‘000
PLN ‘000
As at January 1, 2004
Capital contributions
Profit (loss) for the period
Management share options
Registration of capital
Dividend
Cost of capital issue
Distribution of profit
As at December 31, 2004
Dividend
Retained earnings
PLN ‘000
1 340
19 641
5 559
206
-
5 038
-
5 021
4 208
4 843
441
(5 244)
1 546
3 934
28 613
198
-
4 823
-
5 777
-
(309)
(281)
(3 934)
4 527
5 245
38 681
1 744
1 265
1 744
171
1 774
30 748
5 244
5 021
4 843
441
(5 244)
(309)
(281)
40 463
5 021
9 066
509
(5 021)
(39)
(5 245)
8 309
(39)
50 001
10 702
10 702
509
(39)
(9 536)
9 436
(39)
509
9 536
48 217
Total
PLN ‘000
9 066
509
(5 021)
Dividend
Reserves
PLN ‘000
61 171
Cash flow statement
Note Period ended
Dec. 31, 2006
PLN ‘000
Cash flows from operating activities
Profit for the financial year
Income tax paid
(Profit)/loss from investing activities
Interest paid
Share of profits of associated companies
Dividends unpaid
Depreciation of fixed assets
Impairment of fixed assets recognised in profit or loss
Net foreign exchange (gains)/losses
(Increase)/decrease in balance of trade and other receivables
(Increase)/decrease in other financial assets
(Increase)/decrease in other assets
Increase/(decrease) in balance of trade and other payables
Increase/(decrease) in provisions
Increase/(decrease) in other liabilities
Valuation of management share option
Valuation of bank borrowings and bonds
Cash generated from operating activities
Cash flows from investing activities
Dividend received from associated companies
Proceeds from sale of property, plant and equipment
Expenditure on acquisition of property, plant and equipment
Net cash (expended)/generated in connection with investing
activities
Cash flows from financing activities
Proceeds from issue of equity shares
Proceeds from borrowings
Repayment of borrowings
Proceeds from bonds issue
Redemption of bonds
Repayment of obligations under finance leases
Interest paid
Dividends paid
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial
year
Cash and cash equivalents at the end of the financial year
172
Period ended
Dec. 31, 2004
PLN ‘000
PLN ‘000
13 477
(2 936)
(30)
90
0
11 448
(2 306)
81
123
0
770
642
0
(3 163)
(53 143)
(7)
(338)
(8 622)
12 300
77
251
509
(204)
(32 002)
(13 923)
112
(71)
509
(8)
311
(1 518)
(4 888)
(11)
687
441
(12 354)
(355)
906
(212)
51
(228)
198
763
(654)
694
(177)
307
14 826
(2 546)
40 634
(21 904)
(516)
(90)
4 851
(3 286)
13 808
(4 000)
(433)
(123)
-
5 021
3 000
(5 013)
(258)
(150)
30 405
10 818
2 600
(902)
(1 713)
2 551
3 827
5 539
2 988
2 924
3 827
5 539
30
Net cash used in financing activities
Period ended
Dec. 31, 2005
6 068
(1 617)
30
(198)
(159)
508
NOTES TO HISTORIC FINANCIAL INFORMATION FOR THE YEARS 2004 – 2006
1. Background
The Company Magellan S.A. was founded by virtue of the Notary’s Deed of January 5, 1998 drawn before the Notary
Public Zbigniew Jacek Lipke in Łódź (Rep. No. A 9/98). The Company’s registered address is in the city of Łódź, at
85/87 Sienkiewicza street. The Company’s registration authority is the Registration Court for Łódź-Śródmieście,
Commercial Court XIV Commercial Registry Division in Łódź, section B under number 6800. The Company is entered in
the Register of Business Operators kept by the District Court, XX Division of the National Court Register in Łódź under
number KRS 0000263422.
Until September 7, 2006, the Company operated as a limited liability company. By virtue of Resolution of Shareholders’
of May 22, 2006, a decision was taken to transform the Company into a Joint-Stock Company. The Registration Court
registered the Joint-Stock Company on September 8, 2006.
As at December 31, 2006, the Company’s sole shareholder is Polish Enterprise Fund IV, L.P. The limited liability
company Enterprise Investors Sp. z o.o. with its registered address in Warsaw, entered in the Register of Business
Operators of the National Court Register kept by the District Court for the Capital City of Warsaw, XIX Commercial
Division of the National Court Register under number KRS 0000007178 acts on behalf of Polish Enterprise Fund IV L.P.
in the capacity of its representative.
According to the Articles of Incorporation, the Company’s business covers:
•
Other monetary intermediation, not elsewhere classified
•
Financial leasing
•
Other credit granting
•
Other financial intermediation, not elsewhere classified
•
Auxiliary financial activities, not elsewhere classified
•
Other commercial activities, not elsewhere classified
•
Other service activities, not elsewhere classified
•
Market research and public opinion polling
•
Business and management consultancy activities
•
Business management
•
Technical testing and analysis
2. Summary of significant accounting policies
Basis of preparation of historic financial information
The financial statements embrace solely the stand-alone financial statements; the Company does not form any capital
group. Till the end of 2006, the Company prepared financial statements in accordance with Polish accounting policies
ensuing from the Polish Accounting Act. The financial statements have been restated to comply with the policies
consistent with the International Financial Reporting Standards for the purposes of this registration document.
The presented financial statements have been prepared as at December 31, 2004, 2005 and 2006. The financial year in
the Company corresponds to a calendar year.
The financial statements have been prepared on the assumption that the business entity will continue as a going
concern in the foreseeable future. As at the date of the financial statements, there exist no circumstances that would
indicate a threat to the Company’s ability to continue as a going concern.
Financial data incorporated in the financial statements are shown in PLN thousand, unless quoted in a more detailed
manner in specific situations. Polish Zloty (PLN) is the Company’s functional and presentation currency.
Statement of compliance with IFRS
The financial statements of the Company Magellan S.A. covering annual periods ended December 31, 2004, December
31, 2005 and December 31, 2006 have been prepared in accordance with the International Accounting Standards,
International Financial Reporting Standards and related Interpretations promulgated in the form of implementing
regulations of the European Commission.
In order to ensure that the financial statements are correctly prepared in accordance with IFRS no. 1, the date of
transition to IFRS was fixed for January 1, 2004. Restatements made to adjust the financial statements to the
requirements of the International Financial Reporting Standards in accordance with IFRS 1 are set out in Note 38.
Presently, IFRS as approved by the EU do not differ significantly from the regulations adopted by the International
Accounting Standards Board (IASB), save for the following Interpretations that had not been adopted for application as
at December 31, 2006:
173
IFRIC 10 Interim Financial Reporting and Impairment"
IFRIC 10 is effective for annual periods beginning on November 1, 2006. This Interpretation gives guidance concerning
ambiguity surrounding application of requirements of IAS 34 Interim Financial Reporting and provisions of other
standards concerning recognition and reversal of impairment losses on goodwill and other financial assets in the
financial statements.
IFRIC 11 Group and Treasury Share Transactions
IFRIC 11 is effective for annual periods beginning on March 1, 2007. This Interpretation contains guidelines concerning
recognition of transactions in which an entity settles payments in financial instruments of the entity or its parent
company.
IFRS 8 Operating Segments
IFRS 8 was issued on November 30, 2006 and replaces IAS 14 Segment Reporting. IFRS 8 is effective for annual
periods beginning after January 1, 2009. This Standard specifies how the entity should disclose information on
operating segments and requires that presented information should be based on reports used internally. Moreover, this
Standard introduces requirements concerning disclosure of information on products, services, geographical areas as
well as key clients.
IFRIC 12 Service Concession Arrangements
IFRIC 12 is effective for annual periods beginning on or after January 1, 2008. This Interpretation contains guidelines for
operators under service concession arrangements between the public and private sector concerning recognition of
these arrangements in accounting books. IFRIC 12 concerns arrangements whereby the grantor controls or regulates
the services to be provided by the operator with the use of specific infrastructure as well as controls the outstanding
share in infrastructure at the end of the term of arrangement.
According to the estimates of the Executive Board, the above Standards and Interpretations would not have any
significant effect on the financial statements, if they had been applied by the Company as at the balance sheet date and
for comparable periods.
However, beside regulations adopted by the EU, there are also policies relating to hedge accounting for a portfolio of
financial assets or liabilities, which have not been approved for application in the EU.
According to the Executive Board’s estimates, application of hedge accounting for a portfolio of financial assets or
liabilities according to IAS 39 Financial Instruments: Recognition and Measurement would not have any significant
impact on the financial statements, if they had been adopted for application by the EU as at the balance sheet date.
Furthermore, when preparing these financial statements, the Company did not apply the following Standards,
Amendments to Standards and Interpretations which had been published and approved for application in the EU but
have not been effective to date:
Amendments to IAS 1 Presentation of Financial Statements – Capital Disclosures
This Amendment should be applied for annual periods beginning on or after January 1, 2007. It supplements IFRS 7 –
Financial Instruments: Disclosures and introduces requirements concerning the disclosure by all the entities of:
− the entity's objectives, policies and processes for managing capital;
− quantitative data about what the entity regards as capital;
− whether the entity has complied with any capital requirements; and
− if it has not complied, the consequences of such non-compliance.
IFRS 7 Financial Instruments: Disclosures
IFRS 7 was issued on August 18, 2005 along with an additional Amendment to IAS 1 Presentation of Financial
Statements – Capital Disclosures. IFRS 7 is effective for annual periods beginning on or after January 1, 2007.
It introduces new requirements concerning disclosure of information on financial instruments and replaces IAS 32
Financial Instruments: Disclosure and Presentation which was effective as at the date of these financial statements.
Moreover, IFRS 7 expands the scope of disclosures concerning financial instruments. IFRS 7 requires disclosure of
quantitative and qualitative information related to management of risk ensuing from financial instruments, e.g. credit,
liquidity and market risk. Earlier application of this Standard is permitted.
IFRIC 7 Applying the Restatement Approach under IAS 29 – Financial Reporting in Hyperinflationary Economies
IFRIC 7 contains guidelines concerning application of requirements of IAS 29 in the reporting period during which an
entity identifies existence of hyperinflation in the country of its functional currency, in the setting where the economy was
not hyperinflationary in the preceding period, and therefore the entity is obligated to adjust its financial statements in
accordance with IAS 29.
IFRIC 8 Scope of IFRS 2
IFRIC 8 was issued on January 12, 2006 in order to clarify that IFRS 2 Share-Based Payments applies to arrangements
where an entity makes share-based payments for apparently nil or inadequate consideration.
IFRIC 9 Reassessment of Embedded Derivatives
IFRIC 9 is effective for annual periods beginning on June 1, 2006. This Interpretation offers guidelines concerning
whether an entity should reassess whether an embedded derivative should be recognised separately from the host
contract.
174
As estimated by the Executive Board, the above Standards and Interpretations would not exert any significant impact on
the financial statements, if they had been applied by the Company as at the balance sheet date and in respect of
comparable periods. The Executive Board does not intend to apply these Standards and Interpretations before their
effective dates.
Application of IFRS 7 would result in the presentation of a wider scope of disclosures on financial instruments and the
Company will apply this IFRS to financial statements to be prepared after January 1, 2007.
Recognition of sales revenue
Sales revenue is recognised at the fair value of consideration received or receivable, less anticipated rebates, customer
returns and similar allowances.
The Company recognizes economic benefits with a reliably defined amount probable to occur in the reporting period in
the form of increase in the value of assets or decrease in the value of liabilities which will lead to the growth in equity or
decrease in the shortage thereof, otherwise than by making contributions by shareholders or owners, as the Company’s
revenue and profits.
Revenue from the sale of services
Revenue embraces revenue from discount and fees which are determined at each balance sheet date according to the
amortised cost method.
Interest revenue on the held assets portfolio comprises interest received and accrued. Interest is accrued by reference
to the principal outstanding and at the effective interest rate applicable, which is the rate that effectively discounts
estimated future cash receipts over the expected life of an asset to that asset’s net carrying amount.
Revenue from fees on surety given is generated in the form of starting fee and handling fee. The starting fee is charged
for allocation of a limit available to a supplier; within this limit the supplier is authorized to request the Company to make
a payment in lieu of the debtor in consequence of its failure to settle the outstanding payment. The starting fee for
allocating such limit is settled over time, pro rata to the term of the executed surety agreement. The handling fee is
charged in the event of a claim and disbursement of funds by the Company to the supplier. A claim results in a
receivable being reported on the Company’s balance sheet. This fee is reported in the income statement as an element
of valuation using the effective interest rate method.
Revenue from fees on loans is reported in the income statement according to the effective interest rate over the term of
the agreement.
Revenue from adjudicated court fees concern amounts derived on this account.
The objective of the above breakdown is to clearly differentiate revenue relative to core business activity, ensuing from
the nature of the Company’s business, from other sources of revenue generated by the Company. As a result of the
adopted method of presentation, interest on borrowings incurred to finance the Company’s core business activity is not
excluded from the operating activities of the cash flow statement
Finance income
Dividend revenue is recognised when the shareholder’s right to receive payment has been established
Interest revenue on bank deposits is recognised at the effective interest rate, i.e. the rate which discounts estimated
future cash receipts over the expected life of an asset to this asset’s net carrying amount.
Rental income
Income from sub-rental of office space is recognised on a straight line basis over the term of rental contract.
Leases
Leases are classified as finance leases where terms and conditions of an agreement transfer substantially all the risks
and rewards of ownership of an asset to the lessee. All other types of leases are treated as operating leases.
Assets used under a finance lease agreement are treated as assets of the Company and measured at their fair value at
the date of their acquisition, not higher however than the present value of minimum lease payments. The corresponding
liability to the lessor is presented under the “Other financial liabilities” item of the balance sheet.
Lease payments are apportioned between the interest element and reduction in the lease obligation so as to achieve a
constant rate of interest on the remaining balance of the liability. Finance costs are charged directly to profit or loss,
unless they are directly attributable to qualifying assets – in which case they are capitalized in accordance with the
Company’s accounting policy on borrowing costs, presented below.
Foreign currency transactions
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Economic transactions denominated in foreign currencies are recognised as at the transaction date according to the
following exchange rates:
•
Foreign currency purchase or sales rate applicable by the bank rendering services to the Company – in case of
sale or purchase of foreign currencies and payment of receivables and payables,
•
Average exchange rate determined for a given currency by the National Bank of Poland for that day, unless
other foreign exchange rate was determined in a customs declaration or another document binding the
company – in case of other transactions.
As at the balance sheet date, components of assets and liabilities denominated in foreign currencies were valued
according to the average exchange rate determined for a given foreign currency by the National Bank of Poland for that
date.
Exchange differences relative to assets and liabilities denominated in foreign currencies, other than long-term
investments, created as at the date of valuation and at the time of payment of receivables and payables in foreign
currencies, are classified as finance income or finance costs, accordingly, of other operating activities. Where
appropriate, exchange differences are included in the cost of property, plant and equipment, assets under construction
or intangible assets.
Borrowing costs
Borrowing costs directly attributable to the acquisition or production of assets components, which are assets that
necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those
assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on
the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the
borrowing costs eligible for capitalisation.
All other borrowing costs are recognised directly in profit or loss in the period in which they are incurred. Finance costs
related to the financing of the receivables and loans portfolio held are recognised under basic operating activities and
reduce the discount and fees generated from the sale of financial services.
Retirement benefit costs
Contributions to defined contribution retirement plans are charged to profit or loss when employees have already
worked a specific number of years entitling them to the contribution.
For defined benefit retirement plans, the cost of benefits is determined using the Projected Unit Credit Method, with
actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses that exceed 10% of the
greater of the present value of the Group’s defined retirement benefit obligations and the fair value of the plan assets
are amortised over the expected remaining working lives of the participating employees.
Past-service cost is recognised immediately to the extent that the benefits are already vested; and otherwise is
amortised ion a straight-line basis over the average period until the benefits are vested.
The Company assessed provisions for future retirement benefits and, in view of negligible amount of such provisions,
did not recognize these liabilities in the financial statements.
The management share option program for the employees and others providing similar services, settled in the form of
transferred shares (the share option is exercised by way of acquiring shares), is measured at the fair value of equity
instruments at the grant date. Fair value is measured using Black Scholes’s model. The expected life used in the model
has been adjusted, based on the Company management’s best estimate, for the effects of restrictions of rights to
transfer and exercise rights in options. Further details on how the fair value of equity-settled share-based transactions
has been determined can be found in Note 32.
The fair value determined at the grant date of the management share option program settled by share transfer is
expensed on a straight-line basis over the vesting period, based on the Company’s estimate of the number of shares to
be eventually acquired.
Income tax
Income tax payable by the entity embraces current tax to be paid and deferred tax.
Current tax
The tax currently payable is calculated on the basis of taxable profit (loss) (tax base) for the financial year. Taxable profit
differs from the net book profit because it excludes items of taxable income and deductible expenses in subsequent
years as well as items of income and expenses that will never be taxable. The Company’s liability for current tax is
calculated using tax rates effective in a given financial year.
Deferred tax
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The deferred tax is calculated using the balance sheet liability method as tax to be paid or refunded in future, by
reference to differences between carrying amounts of assets and liabilities and the corresponding tax values used in
computation of the tax base.
The deferred tax provision is recognised on all taxable positive temporary differences, while the deferred tax asset is
recognised up to the amount of probable decrease in future tax profits by the recognised negative temporary
differences. The deferred tax asset or liability does not arise if the temporary difference arises on goodwill or from the
initial recognition (with the exception of recognition following business combination) of other asset or liability in a
transaction that affects neither the taxable profit nor the accounting profit.
The deferred tax provision is recognised on temporary tax differences associated with investments in subsidiaries,
associated companies and interests in joint ventures, except where the Company is able to control the moment of
reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable
future. Deferred tax assets arising from temporary differences in deductions associated with such investments and
interests are only recognised to the extent of probable taxable profits against which to utilize the benefits of temporary
differences and they are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and in case future probable taxable
profits will not be sufficient to allow all or part of the asset to be recovered, this value should be reduced accordingly.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the
asset is realized or a liability becomes payable, in accordance with tax regulations (rates) that have been enacted or
substantively enacted by the balance sheet date. The measurement of deferred tax liabilities and assets reflects the tax
consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or
settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a right to set off current tax assets against current tax
liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle
its current tax assets and liabilities on a net basis.
Current and deferred tax for the period
Current tax and deferred tax are recognised as an expense or income in profit or loss, except when they relate to items
credited or debited directly to equity, in which case the tax is also recognised directly in equity, or where they arise from
the initial accounting for a business combination. In the case of a business combination, the tax effect is taken into
account in calculating goodwill or in determining the excess of the acquirer’s interest in the net fair value of the
acquiree’s identifiable assets, liabilities and contingent liabilities over cost.
Property, plant and equipment comprise tangible assets and expenditure on assets under construction which the entity
intends to use in its business and for administrative purposes for a period longer than 1 year, that will in future lead to an
inflow of economic benefits to the entity. Expenditure on property, plant and equipment comprise incurred capital
expenditure as well as expenditure on future supply of machines, appliances and services associated with the
production of property, plant and equipment (advance payments made).
Property, plant and equipment and assets under construction are initially recognised at cost.
Property, plant and equipment are depreciated at rates reflecting their estimated useful lives. The straight-line method is
applied for the purpose of depreciation of property, plant and equipment. Useful lives of individual property, plant and
equipment components are as follows:
•
•
•
•
Buildings and structures – 40 years
Plant and machinery – from 2.5 to 10 years
Vehicles – from 3 to 5 years
Other property, plant and equipment – up to 5 years
Property, plant and equipment and assets under construction are tested for impairment if there occur indications that
they may be impaired, with the reservation that impairment of assets under construction is determined as at each
balance sheet date. The effects of impairment of property, plant and equipment and assets under construction as well
as costs of depreciation of property, plant and equipment are charged to the expenses of core business activity.
As at the balance sheet date, property, plant and equipment and assets under construction are measured at cost less
depreciation charges and impairment loss, if any.
Property, plant and equipment with a unit value of up to PLN 3,500 are depreciated on a one-off basis.
Depreciation commences after a property, plant and equipment component is accepted for use.
Property, plant and equipment used on the basis of a contract of rental, tenancy, lease or a contract of a similar nature,
classified as the entity’s assets, are depreciated over the shorter of the term of the contract or useful life of the asset.
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Intangible assets
Intangible assets comprise the Company’s assets that have no physical substance, are identifiable and may be reliably
measured and will in future lead to an inflow of economic benefits to the entity.
Intangible assets are initially carried at cost.
Intangible assets are amortised at rates reflecting their expected useful lives. The Company does not have any
intangible assets without a definite useful life. The straight-line method is applied to for purposes of amortization of
intangible assets with a definite useful life. Useful lives of individual intangible assets are as follows:
•
Software licenses – 2-4 years
Intangible assets are tested for impairment if there are indications that they may be impaired, with the reservation that
impairment of intangible assets under construction is determined at each balance sheet. The effects of impairment of
intangible assets and costs of amortization are charged to expenses of core business activity.
As at the balance sheet date, intangible assets are valued at cost, less any write-downs and possible impairment losses
made.
Intangible assets with a unit value of up to PLN 3,500 are amortised on a one-off basis.
Amortization commences only after intangible assets are accepted for use.
Intangible assets used on the basis of a contract of rental, tenancy, lease or a contract of a similar nature, classified as
the entity’s assets, are amortised over the shorter of the term of the contract or useful life of the rights.
Impairment of property, plant and equipment and intangible assets excluding goodwill
At each balance sheet date, the Company reviews the carrying amounts of its property, plant and equipment and
intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any
such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the
impairment loss (if any). Where an assets component does not generate any cash flows that are substantially
independent from cash flows generated by other assets, the analysis is performed for the group of assets that generate
cash flows to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified,
components of the Company’s property, plant and equipment are allocated to individual cash-generating units, or
otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent
allocation basis can be identified.
Intangible assets with indefinite useful lives are tested for impairment annually, and also whenever there is an indication
that the asset may be impaired.
Recoverable amount is determined as the higher of fair value less costs to sell and value in use. The value in use
equals the present value of estimated future cash flows discounted using a gross discount rate that reflects current
market assessments of the time value of money and the risks specific to the given asset.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the
carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is
recognised immediately as an expense of the period in which impairment occurred, unless the relevant asset is carried
at a revalued amount (in which case the impairment loss is treated as a revaluation decrease).
Where an impairment loss subsequently reverses, the net value of the asset (cash-generating unit) is increased to the
revised estimate of its recoverable amount, not higher however than the carrying amount that would have been
determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an
impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in
which case the reversal of the impairment loss is treated as a revaluation increase.
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Investments in associates
An associate is an entity over which the parent company has significant influence and that is neither a subsidiary nor an
interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions
of the associate but is not control or joint control over those policies.
.
As at December 31, 2006 and December 31, 2005 the Company was the Limited Partner in the Law Office Kancelaria
P. Pszczółkowski i Wspólnik, and till the end of 2005 was the Limited Partner in the Law Office Kancelaria Sękowski i
Wspólnik Spółka Komandytowa. The Partners executed an agreement on priority in providing legal services to the
Company Magellan. During these periods, the Company Magellan was a significant business partner of the Law Offices
that significantly impacted the financial and operating policies of the entities.
The Company’s investments in associates are valued at cost. Owing to the fact that the Law Offices are partnerships
and do not have legal personality, the Company Magellan S.A.’s share in the profit (loss) of the Law Offices in individual
years is recognised under the “Finance income” line of the income statement, which is consistent with the equity
method. Figures contained in the financial statements of the Law Offices are not significant.
Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event,
it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the
amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation
at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation. Where a provision
is measured using the cash flows estimated to settle the present obligation, its carrying amount corresponds to the
present value of those cash flows.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party,
the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of
the receivable can be measured reliably.
The Company grants surety for repayment of liabilities to hotels’ suppliers recognised as off-balance sheet liabilities that
constitute unused limits of potential involvement arising from active agreements within the framework of the „guarantee”
product. In case the surety is realized and a liability settled in for the supplier, the Company recognizes amounts paid
under financial assets. Analysis of impairment of portfolio derived from performance of surety agreements is described
in the „Impairment of financial assets” item.
Onerous contracts
Present obligations arising under onerous contracts are recognised and measured as a provision. An onerous contract
is considered to exist where the Company has a contract under which the unavoidable costs of meeting the obligations
under the contract exceed the economic benefits expected to be received under it.
Financial assets
General rules
Investments considered to be financial instruments are recognised on the date of their acquisition at the initial value
equal to the fair value plus transaction costs, save for the assets that are classified as financial assets at fair value
through profit or loss.
Financial assets are classified into the following categories: financial assets at fair value through profit or loss, held-tomaturity investments, available-for-sale financial assets as well as loans and receivables. The classification depends on
the nature and purpose of the financial assets and assets are classified at the time of initial recognition. In the periods
covered by the presented financial statements, the Company held financial assets classified as loans and receivables
1.
The Company classifies financial assets held for trading as financial assets at fair value through profit or loss.
Financial assets held for trading are assets that have been acquired or created in order to derive benefits as a
result of short-term (up to three months) price fluctuations as well as financial assets which, irrespective of reason
for which they have been acquired, represent a group of assets that have been recently used to derive benefits
from price fluctuations.
2.
The Company classifies financial assets with fixed or determinable payments and fixed maturity dates that the
Company has the positive intent and ability to hold to maturity, save for amounts due classified as loans and
receivables, as held-to-maturity investments. Held-to-maturity investments are recorded at amortised cost less
impairment, with revenue recognised using the effective interest method.
3.
The Company classifies all financial assets not classified as loans and receivables, held-to-maturity investments or
financial assets at fair value through profit or loss as available-for sale financial assets. Available-for-sale financial
assets include predominantly investments in entities other than subsidiaries, affiliates and associated companies,
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that the Company did not designate for sale over a short period of time. These assets are measured at fair value,
gains and losses arising directly from changes in the fair value are recognised directly in equity as a revaluation
reserve, with the exception of impairment losses, interest calculated using the effective interest method and foreign
exchange gains and losses on monetary assets, which are recognised directly in profit or loss.
4.
Granted loans and other receivables that the Company did not classify as at fair value through profit or loss, are
classified as loans and receivables. In particular, this item includes amounts due acquired within the framework of
financing of receivables, factoring contracts and liabilities refinancing contracts as well as granted loans and
receivables arisen on account of sureties granted by the Company. They are measured at amortised cost using the
effective interest method less any impairment. Revenue from interest and fees is recognised by applying the
effective interest rate. The Company measures receivables with short maturity (trade receivables) for which the
discount effect is not material, according to the amount payable.
A financial asset is derecognized if and only in case of expiry of the right to cash flows arising from this asset or the
Company transfers the asset to another entity that qualify to be derecognized from the balance sheet.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest
revenue over the relevant period. The effective interest rate is the rate that discounts estimated future cash flows until
the anticipated maturity of a given asset or, where appropriates, through a shorter period, to the net book amount of the
asset.
Income from debt instruments other than financial assets classified as at fair value through profit or loss is recognised
on an effective interest basis
Balance sheet measurement of acquired receivables before after execution of a novation agreement
Within the framework of agreements for financing of receivables through assignment and factoring agreements
executed with initial debtors, the Company acquires principal and interest receivables at a discount or charges an
additional fee from the debtor.
Acquired receivables are classified as loans and receivables and registered initially at cost. In case of normal payment
dates, adopted in the market practice for similar transactions, the fair value is deemed to be the nominal value of the
obligation to pay the price of the receivable (including a possible fee).
As at the balance sheet date, the Company measures receivables at nominal value, less unsettled initial discount/fee. In
case of receivables that do not come under the novation agreement, profit from discount/fee is recognised pro rata to
the paid amount of the receivable, owing to the fact that no new expected schedule of payments has been determined.
Furthermore, at the balance sheet date the Company makes write-downs for receivables not covered by an agreement,
the collection of which – according to the principle of prudence - is threatened. Effects of such write-downs are charged
to the “Other operating expenses” item of the income statement for the financial year. Statutory interest that the
Company charges is treated as income not certain to occur, hence such interest is not recognised in revenue until a
novation agreement is signed.
Having signed the agreement and knowing the dates of payments following from the schedule attached to the novation
agreement, the Company computes the effective interest rate for the restructured receivable. From this moment on, the
Company recognizes revenue using the effective interest rate, including interest that accrues at the contractual rate,
settlement of discount/fee over time and contractual interest charged by the Company starting from the date of
acquisition of the receivable until the date of the agreement.
The same method of valuation with the use of the effective interest rate was applied for purposes of measurement of
receivables that arose as a result of sureties granted by the Company.
Granted loans and receivables acquired within the framework of payables refinancing.
Within the frame of loan agreements and receivables acquired under payables refinancing agreements (using the
structure stipulated in the Polish Civil Code, i.e. “payment in lieu of the debtor”), the Company determines a schedule of
payments individually with the debtor and, additionally, charges a fee. Resulting amounts due, classified also as loans
and receivables are valued using the effective interest rate, according to the same method as in case of valuation of
novation agreements. In such a case, revenue is recognised by the Company using the effective interest rate and
includes interest that accrues at a contractual rate as well as a fee charged according to the determined schedule.
Trade receivables
Trade receivables are initially recognised at fair value, i.e. the nominal value arisen on the date of revenue recognition.
At the balance sheet date, trade receivables are measured according to the principle of prudence. Receivables are
revalued, with due regard to the degree of probability that they will be paid, by way of making a write-down on a given
category of receivables.
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Receivables denominated in foreign currencies are recognised and valued as at the balance sheet date according to the
rules set out in „Foreign currency transactions”.
Impairment of financial assets
Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at each
balance sheet date. Financial assets are impaired where there is objective evidence that events that occurred after the
initial recognition of the asset adversely impacted the related future cash flows. For financial assets carried at amortised
cost, the amount of the impairment is the difference between the asset’s carrying amount and the present value of
estimated future cash flows, discounted at the original effective interest rate.
The carrying amount of the financial asset is directly reduced by the impairment loss or write-downs to a special
account. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related
objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is
reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is
reversed does not exceed what the amortised cost would have been had the impairment not been recognised. This
applies to all assets with the exception of available-for-sale equity instruments. In this case, increase in fair value
subsequent to an impairment loss is recognised directly in equity.
Assets held by the Company include predominantly loans and receivables from public health care institutions, i.e.
entities with legal personality that independently manage funds obtained chiefly from the National Health Care Fund
pursuant to contracts for provision of health care services. The most important information from the point of view of the
Company’s business activity is the fact that the founding authority is always liable for the liabilities of hospitals after their
liquidation (as stipulated in provisions of the law). This significantly reduces economic risk related to operations on the
public health service financing market. Such a reduction of credit risk, coupled with existence of long-term demand for
financial services rendered by the Company, has become a basis for the Company to concentrate its business on
provision of financial services on the medical market. The sector in which the Company pursues its core business
activity is safe from the point of view of the risk related to the loss of acquired financial assets. Pursuant to the Act of
August 30, 1991 on Health Care Institutions (Official Journal „Dz.U.” of October 14, 1991), public health care institutions
are not subject to the provisions of the composition and bankruptcy law, and in case they are liquidated the founding
authority, i.e. the State Treasury or Local Government Units, is liable for their payables. In view of the present legal
circumstances and the system created to monitor and select business partners, the Company is not exposed to the risk
of impairment of assets. In principle, loans that are treated as financial assets are secured with promissory notes, while
in justified cases of increased risk of impairment, such assets are secured with assignments or transfers under contracts
with the National Health Fund. In case it is justifiably anticipated that it will be necessary to redeem a part of assets held
or in case of uncertainty surrounding recovery of assets, the Company makes write-downs charging expenses of core
business activity.
In the years 2004-2005, the Company’s operations focused on financing of receivables through restructuring of debt of
selected hospitals under a novation agreement. In the analyzed period, the Company was actively involved in the
financing of public health care institutions and contributed to improvement of financial liquidity in the sector. In 2006, the
Company predominantly provided services consisting in direct financing of hospitals through granted loans and
financing of receivables.
Other assets
Other short-term assets comprise prepayments. This category includes incurred expenditures that form expenses of
future periods. Prepayments are originally recognised at amounts of expenditures incurred, and valued adhering to the
principle of prudence as at the balance sheet date. Prepayments are written down according to the lapse of time or
amount of benefits depending on their nature.
Cash include cash in hand and kept on bank accounts, including bank deposits. Cash equivalents comprise highly liquid
investments that are easily convertible into specific cash amounts and exposed to a negligible risk of change in value,
including due interest on bank deposits. Cash and cash equivalents are measured at nominal value. Cash and cash
equivalents denominated in foreign currencies are recognised and valued as at the balance sheet date according to the
rules set out in “Foreign currency transactions”. For the purposes of the cash flow statement, cash and cash equivalents
are defined in the same manner as for the purposes of their recognition in the balance sheet.
Fixed assets held for sale
Fixed assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally
through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is
highly probable and the asset (or disposal group) is available for immediate sale in its present condition. Management
must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year
from the date of classification.
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Fixed assets (and disposal groups) classified as held for sale are measured at the lower of their original carrying amount
and fair value less costs to sell. On March 27, 2006 a tenement house located at 73 Wólczańska street, formerly the
Company’s corporate seat, was sold. In connection with reclassification of the building to assets held for sale, as at
December 31, 2005 a write-down was made to equalize the value of the building with the selling price less costs to sell
– write-down on PLN 70 005.04 was recognised in profit or loss in 2005.
Financial liabilities and equity instruments issued by the Company
Classification as debt or equity
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of
the contractual agreement.
Equity instruments
An equity instrument is any contract that evidences an interest in the assets of an entity after deducting all of its
liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs.
Surety agreement liabilities
In accordance with IAS 39, such liabilities are initially measured at fair value and, subsequently, at the higher of:
•
the amount of the obligation under the agreement, as determined in accordance with IAS 37 Provisions,
Contingent Liabilities and Contingent Assets; and
•
the amount initially recognised less, where appropriate, cumulative amortization recognised in accordance with
the revenue recognition policies set out above.
Financial liabilities
Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities
measured at the amortised cost using the effective interest method.
The effective interest method is a method of calculating the amortised cost of a liability and of allocating interest
expense over the relevant period. The effective interest rate is the rate that exactly discounts future cash payments until
the expected maturity of the liability, or, where appropriate, a shorter period, to the book amount of a given liability.
Bank borrowings
Bank borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently
stated at amortised cost using the effective interest method.
Finance costs, including fees payable at the time of repayment or redemption and direct costs of incurring borrowings,
are recognised in profit or loss using the effective interest method, and increase the book value of the instrument,
including amounts repaid in the current period.
Obligations under bonds
Obligations under bonds are valued initially at fair value, less transactions costs. They are subsequently measured at
amortised cost using the effective interest method.
Finance costs, including fees payable at the time of repayment or redemption and direct costs of incurring obligations
under bonds, are recognised in profit or loss using the effective interest method, and increase the book value of the
instrument, including amounts repaid in the current period.
An obligation, following from future event, to provide benefits with a reliably defined amount, that will result in the
utilization of already held or future assets of the Company, is regarded as a liability.
Liabilities are recognised initially at fair value. In case of normal payment dates, recognised in the market practice for
similar transactions, the fair value is deemed to be the nominal value of the obligation arisen on the date on which the
liability is recognised. As at the balance sheet date, liabilities are valued at amortised cost, with due regard to the rules
described above.
Other payables comprise accruals, i.e. amounts to be paid for provided or received services, which have not been paid
for, invoiced or formally agreed with a supplier, including amounts due to employees, e.g. on account of overdue
bonuses. Although in such specific circumstances it is necessary to estimate the amount or the date of payment of such
liabilities, the degree of uncertainty is generally considerably lower than in case of provisions, hence these liabilities are
classified as current liabilities.
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Payables denominated in foreign currencies are recognised and valued as at the balance sheet date in accordance with
rules described in point „Foreign currency transactions”.
3. Critical accounting judgments and key sources of estimation of uncertainty
In the application of the Company’s accounting policies, management is required to make judgments, estimates and
assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical experience and other factors that are considered to be
relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the
revision and future periods if the revision affects both current and future periods.
Below presented are critical judgments made by the management in the process of applying the entity’s accounting
policies, that have the most significant effect on the amounts recognised in the financial statements.
3.1. Act on Restructuring of Debt of Independent Public Health Care Institutions
In order to comply with the provisions of Articles 10 - 13 of the Act of April 15, 2005 on Restructuring of Debt of
Independent Public Health Care Institutions, which entered into force on May 21, 2005, the Company’s Executive Board
assessed the risk of loss of part of assets disclosed in the financial statements prepared as at December 31, 2004.
A comprehensive analysis indicated that, adhering to the principle of prudence, there is an actual need to make a writedown of PLN 2 015 thousand on the held investments portfolio to be charged to the financial profit (loss) for 2004.
Based on current analyses, the Company’s Executive Board made an estimation of the process of restructuring of
Independent Public Health Care Institutions and forecasts prepared by experts. Moreover, the Executive Board’s
assessment of the uncollectibility risk was based on current information concerning the rules of executing composition
agreements with hospitals within the framework of debt restructuring process and consultations with suppliers.
The write-down made reflected the estimated identified risk of future loss of proceeds from realization of financial assets
disclosed on the balance sheet. The estimated risk and the adopted amount of the write-down factored in the Executive
Board’s knowledge of and predictions concerning the course of the restructuring process and, therefore, ultimate
financial consequences of legal regulations enacted in May 2005 could not be defined.
As at December 31, 2005, the Company revalued held financial instruments, with due regard to the credit risk, and
reduced the amount of the write-down on account of the Restructuring Act down to PLN 826 thousand.
As at December 31, 2006, the write-down on account of the Restructuring Act was reduced down to PLN 110 thousand,
which matches the credit risk relative to assets held.
3.2 Interpretation concerning VAT tax on financial intermediation services in the area of restructuring of receivables with
the use of receivables assignment instrument
On January 1, 2005, the Company filed an application with the Head of Łódź Revenue Office for a written interpretation
concerning the scope and manner of application of provisions of tax law concerning VAT on the provided service. In
reply dated April 5, 2005, the Office did not provide any clear position and, consequently, on April 11, 2005 the
Company filed a complaint with the Director of the Revenue Chamber in Łódź. After nearly one year, on February 15,
2006, Director of the Revenue Chamber issued a decision that partially revoked the position of the Head of Łódź
Revenue Office and, at the same time, indicated that the services provided by the Company. i.e. restructuring of
receivables by way of acquisition of receivables through assignment, represent, within the meaning of the VAT Act, a
debt collection service taxed with basic VAT rate. On March 1, 2006, the Company appealed against the decision of the
Director of the Revenue Chamber and indicated legal faults of the decision. One of the arguments supporting that the
applied VAT rate is correct was in the interpretation of the Centre for Interpretation of Classification Standards of the
Statistical Office in Łódź, which the Company had.
On May 5, 2004, the Company requested the Centre for Interpretation of Classification Standards of the Statistical
Office in Łódź to issue an interpretation concerning the service referred to above. On May 10, 2004, the Company
received a reply with an indication that, according to the rules of the Polish Classification of Products and Services
[PKWiU] (regulation of the Council of Ministers of April 6, 2004, Official Journal „Dz.U” no. 89, item 844), the invoked
service involving trade in receivables on own account, acquisition of receivables with involvement of own funds and take
over of the risk related to the debtor’s solvency, falls within the following group:
PKWiU 65.23.10-00.00
pension funding”.
„Other financial intermediation, not elsewhere classified, except insurance and
Also, the Centre stated that, invoking § 2 of the regulation of the Council of Ministers of April 6, 2004 (Official Journal
„Dz. U.” no. 89, item 844), the Polish Classification of Products and Services [PKWiU] introduced by virtue of regulation
of March 18, 1997 (Official Journal „Dz. U.” no. 42, item 264 as subsequently amended) continues to apply, and the
service concerned falls within the following group:
PKWiU 65.23.10-00.00
„Financial intermediation, not elsewhere classified”.
In accordance with the above classification and appendix no. 4 to the new VAT Act that contains„List of services exempt
from the tax”, the provided service was classified as the service exempt from the VAT. The Statistical Office did not
183
classify the provided service as factoring or a debt collection, which could possibly be taxed with VAT at the rate of 22%.
In the Polish Classification of Products and Services, factoring services (65.22.10-00.10) and services provided by debt
recovery agencies (74.87.12) are classified separately from financial intermediation services. Such a division introduced
for the purposes of statistics demonstrates separate legal relations that differentiate trade in receivables, i.e. a financial
intermediation service, from factoring and debt collection services.
No reply to the appeal against the decision of the Director of the Revenue Chamber had been received by the date of
the financial statements for 2005.
The Company assessed the amount of a potential liability and its impact on the financial statements and presented
relevant information in a note to the financial statements. The determined amount of the liability was based on the
Executive Board’s estimates concerning the amount of additional charges resulting from the disadvantageous
interpretation. Owing to the Executive Board’s belief that this issue will be solved to the benefit of the Company, the
estimated amounts were not recognised in the financial statements as at December 31, 2005, and this event was
disclosed in additional explanatory notes.
On May 15, 2006, after the financial statements required to be prepared by virtue of statutes were approved, the
Company received decision of the Director of the Revenue Chamber in Łódź that upheld the appealed-against original
interpretations concerning the application of tax law provisions.
The Company once again estimated the amount of tax liability by applying the solutions presented in the decisions
concerned to the letter. This resulted in a necessity to recognize relevant adjustments in the financial statements of the
Company, according to these adjustments the amount of liability towards the revenue office was determined at
PLN 2 890 thousand (including penalty interest), of which PLN 2 086 thousand concerned the years 2004-2005, while
PLN 417 thousand concerned the year 2006. Default interest on late payment of tax liability amounted to
PLN 387 thousand. On July 3, 2006, the Company paid the VAT and adjusted the income tax as a result of reduction of
the tax base following from the decrease of the discount by the VAT calculated using the method that provides for
including VAT in the price, instead of adding it to the price. The amount of PLN 295 thousand concerns the VAT paid in
the period from June to December 2006.
On June 14, 2006, the Company filed an appeal against the decision of the Director of the Revenue Chamber with the
Voivodship Administrative Court. Starting from the month of June 2006, the Company adjusted effective agreements to
comply with the provisions contained in the interpretation and taxed new transactions according to state of facts
contained in the decisions concerned.
On February 27, 2007, the Voivodship Administrative Court rendered judgment (file no. I SA/Łd 1240/06 and I SA/Łd
1239/06), after the case was heard at a trial held on February 13, 2007. The judgment revoked appealed-against
decisions and the preceding decision of the Director of the Revenue Chamber, and adjudged court fees in favour of the
Company as reimbursement of costs of litigation. The Judgment of the Court confirmed also that the Director of the
Revenue Chamber incorrectly classified financial intermediation services provided by the Company as debt collection
services, taxed with the basic rate.
As a result of the advantageous judgment of the Voivodship Administrative Court, the Company recognised paid VAT
amounts as receivables from the Revenue Office: amount of PLN 3 185 thousand on account of paid VAT and interest
on late payment. The Voivodship Administrative Court declared the judgment to be final and binding as from April 28,
2007. In view of the final and binding judgment that revokes the appealed-against decision and the preceding decision
of the Director of the Revenue Chamber in Łódź of February 13, no provisions or write-downs were made to charge the
Company’s profits. Taking the above into account, the Company will immediately apply for refund of the due amount.
However, the Company does not exclude the risk that the revenue office may continue to challenge the grounds for
refund of the paid amount in connection with absence of a valid tax interpretation. In the opinion of the Executive Board,
this risk is insignificant.
4. Revenue
Analysis of the Company’s revenue generated from continuing operations in successive years (with the exception of
revenue from investing activities – see: Note 7) is as follows:
Revenue from provision of services
End of the
period
Dec. 31, 2006
End of the
period
Dec. 31, 2005
End of the
period
Dec. 31, 2004
PLN’ 000
PLN’ 000
PLN’ 000
24 042
20 608
18 015
24 042
20 608
18 015
End of the
period
Dec. 31, 2006
PLN’ 000
Revenue from provision of services
Revenue from receivables financing services (discount and
184
8 004
End of the
period
Dec. 31, 2005
PLN’ 000
9 627
End of the
period
Dec. 31, 2004
PLN’ 000
8 908
fees)
Revenue from fees on loans
Revenue from fees on surety
Revenue from court litigations (adjudicated court fees received)
Revenue from fees on factoring
Revenue from payables refinancing services (fees)
Revenue from other services (fees)
Revenue from interest on individual products (receivables
financing, loans, surety, factoring, payables refinancing, interest
received from the date of statement of claim)
3 608
1 455
832
243
222
513
9 165
172
980
1 314
136
40
1 706
-
589
7 790
241
7 120
24 042
20 608
18 015
Taking into account specific features of the Company’s operations, below presented are figures relating to proceeds,
fees and equivalent receipts that demonstrate the scale of pursued business activity.
The amount of proceeds, fees and equivalent receipts comprises:
proceeds, amounts offset and deducted on account of realization of the financial assets portfolio held (with the
exception of proceeds from loans where revenue is derived solely from fees and interest),
revenue from fees on individual products,
revenue from interest on individual products classified under core business activity.
Cost corresponding to received proceeds represents the value of realized financial assets at cost.
End of the
period
Dec. 31, 2006
End of the
period
Dec. 31, 2005
End of the
period
Dec. 31, 2004
PLN’ 000
PLN’ 000
PLN’ 000
Proceeds, fees and equivalent receipts
Cost corresponding to received proceeds
135 945
119 903
119 759
99 151
100 409
82 394
Received revenue from the sale of services
24 042
20 608
18 015
Business segments
The Company’s basic reporting format is not based on business or geographical segments, owing to immateriality of
transactions that meet the conditions specified in standards. The Company operates predominantly in Poland, in the
sector of public health care institutions. The Company is assumed to operate in one business and geographical
segment.
5.
Wages and salaries
Cost of social insurance and other benefits
Management share option program
Period ended
Dec. 31, 2006
Period ended
Dec. 31, 2005
Period ended
Dec. 31, 2004
PLN ‘000
PLN ‘000
PLN ‘000
3 587
642
3 409
613
2 776
516
509
509
441
4 738
4 531
3 733
Employee benefit expense embraces cost of wages and salaries payable according to the terms of employment
contracts. Costs of social insurance and other benefits comprise old-age pension, disability pension and accident
benefits as well as contributions to the guaranteed employee benefits fund and the labour fund as well as other benefits
such as trainings, medical services and an allowance for the company social benefits fund.
This item includes also valuation of management share options granted to the Company’s management and key
personnel.
185
6.
Other expenses
Other outsourced services
Taxes and charges
Interest and fees on borrowings and interest-bearing liabilities
Cost of interest and fees on bonds issue
Write-downs on adjudicated court fees
Other expenses
Costs related to lawsuits brought to court
Write-downs and redeemed amounts
Period ended
Dec. 31, 2006
Period ended
Dec. 31, 2005
Period ended
Dec. 31, 2004
PLN ‘000
PLN ‘000
PLN ‘000
733
359
647
1428
418
467
87
(92)
472
437
382
874
590
214
272
(654)
601
534
977
0
773
805
592
2 090
4 047
2 587
6 372
Taking into account specific features and the nature of the Company’s core business activity, the adopted solution
provides for classifying the following items as operating expenses:
•
•
•
•
•
•
Cost of interest on taken borrowings related to core business activity;
Cost of interest on trade credits;
Cost of fees related to pending court litigations;
Cost corresponding to redeemed receivables;
Write-downs on adjudicated court fees
Write-downs on held assets portfolio on account of pursued core business activity;
Write-downs and redeemed amounts concern write-downs made to revalue the financial assets portfolio and their
release as well as amounts written down on account of redemption of receivables held.
186
7.
Period ended Period ended Period ended
Dec. 31, 2006 Dec. 31, 2005 Dec. 31, 2004
PLN ‘000
PLN ‘000
PLN ‘000
Gain (loss) from sale of property, plant and equipment
Net foreign exchange gain (loss)
Donations made
Motor vehicle accident damages
Overdue liabilities
Write-down on property, plant and equipment held for sale
Cost related to the transformation of the Company
Cost related to the establishment of a foreign entity
Other gain (loss)
23
15
(47)
(19)
(24)
(164)
66
(5)
(45)
(184)
11
(70)
(150)
(286)
7
(30)
4
(52)
35
80
3
40
Other operating gains and revenue embrace other operating items that include revenue and gains not directly related
to the Company’s operating activities. This category embraces gains from the sale of property, plant and equipment,
damages received, amounts of tax liabilities paid in excess of the due amount, with the exception of the corporate
income tax, as well as damages received as a result of losses in insured property of the Company.
Other operating losses comprise costs and losses not directly related to the Company’s operating activities. This
category includes losses from the sale of property, plant and equipment, donations made both in kind and in cash
towards other entities, including public benefit organizations.
The Company classifies foreign exchange gains and losses relative to settlements within core business activity as
other gains and losses.
8.
Finance income
Dec. 31, 2006 Dec. 31, 2005 Dec. 31, 2004
PLN ‘000
PLN ‘000
PLN ‘000
Bank deposits
Profits of subsidiaries, affiliates and associated companies
Other income
66
8
1
58
187
2
35
198
11
75
247
244
As finance income, the Company classifies interest on bank deposits and cash funds as well as share of profits of
other entities. Revenue from other financial assets is classified as revenue from other activities.
Taking into account specific features of the Company’s business, finance income from financial assets held, except for
the ones specified above, are classified as finance income from core business activity.
Information on classification of individual items can be found in the note concerning recognition of sales revenue.
9.
Finance costs
Dec. 31, 2006 Dec. 31, 2005 Dec. 31, 2004
PLN ‘000
PLN ‘000
PLN ‘000
Interest on borrowings and overdrafts
Interest on finance lease obligations
Other interest cost
90
3
120
-
27
231
-
Other finance costs
15
73
-
105
196
258
Total finance costs
187
Costs of external sources of financing used for purposes other than core business activity as well as interest payable
under finance lease agreements to which the Company is a party as the lessee are classified as finance costs.
10.
Income tax
The current tax charge is computed on the basis of applicable tax regulations, which make a distinction between
taxable profit (loss) and the net book profit (loss) because it excludes non-taxable income and non-deductible
expenses as well as items of income and expenses that will never be taxable. The amount of tax charge is calculated
based on tax rates in effect in a given financial year. Tax regulations in force in the years 2004 – 2006 provided for the
19% tax rate.
As regards the income tax, the Company is subject to the general tax regulations. The Company is not a part of any
capital tax group, nor it pursues any activity in the Special Economic Zone, which would result in the application of
other rules for determining the tax base than those following from general regulations applicable in this respect. In
principle, both the tax and balance sheet year correspond to a calendar year. In 2006, as a result of transformation of
the Company from a limited liability company into a joint-stock company, there were two tax periods, ending on
September 7 and December 31, 2006, accordingly.
Income tax recognised in profit or loss
Period ended
Dec. 31, 2006
PLN ‘000
Statutory tax rate
19%
Current income tax charge
Adjustments recognised in the current year against tax from
preceding years
Deferred tax related to creation and reversal of temporary
differences
Write-downs (reversal of former write-downs) on deferred tax
assets
Tax charge in profit or loss
Period ended Period ended
Dec. 31, 2005 Dec. 31, 2004
PLN ‘000
PLN ‘000
19%
19%
3 425
2 266
1 664
-
26
-
(649)
90
(439)
-
-
-
2 775
2 382
1 225
Total tax charge for a given year may be reconciled with the book profit in the following manner:
Period ended
Dec. 31, 2006
Dec. 31, 2005 Dec. 31, 2004
PLN ‘000
PLN ‘000
Gross profit before tax
13 477
Effective tax rate
25%
PLN ‘000
11 448
20%
6 068
27%
Tax at the effective tax rate
3 425
2 266
1 664
Tax at the statutory rate
2 560
2 175
1 153
Tax effect of non-deductible expenses
453
498
612
Tax effect of revenue that does not constitute revenue according to
tax regulations
412
(407)
(101)
Tax at the effective rate
3 425
2 266
1 664
The tax rate applied in 2004, 2005, 2006 amounted to 19% and was payable by legal persons on the area on which the
188
company pursued its activities on taxable profits in accordance with the regulations in force in the country in which the
company operated.
Deferred tax is established in connection with temporary differences between the taxable base and profit (loss)
disclosed in the financial statements. The deferred tax as at December 31, 2004, 2005 and 2006 results from the items
presented in the table below.
Balance of deferred tax
Deferred tax assets/provision are based on:
Balance sheet
Income statement
end of the
end of the
end of the
end of the
end of the
end of the
period
period
period
period
period
period
Dec. 31, 2006 Dec. 31, 2005 Dec. 31, 2004 Dec. 31, 2006 Dec. 31, 2005 Dec. 31, 2004
PLN ‘000
Deferred tax assets
Interest accrued (not received)
Provisions for wages, salaries and
bonuses
Exchange differences
Write-downs on receivables
Unpaid contributions, wages and
salaries
Discount on bonds
Taxed fees to be settled over time
Write-downs on financial
instruments held
Write-downs on property, plant and
equipment
Provision for VAT costs
Other
PLN ‘000
PLN ‘000
PLN ‘000
PLN ‘000
0
9
14
(9)
(5)
104
57
88
46
(31)
88
17
18
9
18
4
8
-
9
14
(5)
4
5
4
-
1
4
-
83
819
24
114
-
59
705
24
114
-
155
264
383
(109)
(119)
383
-
13
-
(13)
13
-
32
6
1239
512
489
32
6
726
23
429
Balance sheet
end of the end of the
period
period
Dec. 31,
Dec. 31,
2006
2005
PLN ‘000
PLN ‘000
Unsettled discount on valuation of
financial instruments
Interest accrued, not received
Other revenue accrued
Exchange differences
PLN ‘000
end of the
period
Dec. 31,
2004
PLN ‘000
Income statement
end of the end of the
period
period
Dec. 31,
Dec. 31,
2006
2005
PLN ‘000
PLN ‘000
(41)
end of the
period
Dec. 31,
2004
PLN ‘000
382
428
407
(46)
21
41
307
17
1
172
29
1
109
63
29
(1)
(53)
2
135
(12)
-
707
630
518
77
112
(10)
2
In the presented periods, deferred tax was computed on all temporary differences. The Company does not report any
deductible tax losses. According to tax regulations, such losses may be settled over 5 subsequent years, with the
reservation that the tax base may be reduced by no more than 50% in a given year.
11.
Earnings per share
†
†
By virtue of resolution no. 2 of May 22, 2006, the Extraordinary Meeting of Shareholders transformed the company operating under
the business name „Magellan” spółka z ograniczoną odpowiedzialnością z siedzibą w Łodzi [„Magellan” limited liability company with its
registered address in Łódź] into a Joint-Stock Company. The transformation was registered on the basis of decision of the District
Court on September 8, 2006.
On the day of transformation Interests [udziały] in the Company were converted into Shares [akcje].
•
189
Period ended
Dec. 31, 2006
Earnings per share
Weighted average number of shares
Net profit for 12 months (in PLN thousand)
Net earnings per share (in PLN )
Dec. 31, 2005 Dec. 31, 2004
1 395
10 702
7 672
1 374
9 066
6 599
1 209
4 843
4 006
Basic earnings per share is calculated by way of dividing net profit for the financial year, attributable to common
shareholders of the entity, by the weighted average number of issued shares outstanding in the financial year.
Shares do not carry any preference either in respect of voting rights nor dividends.
Computation of the weighted average number of shares:
number of shares
year 2004
2004-01-01
2004-03-04
2004-12-31
year 2005
2005-01-01
2005-02-18
2005-12-31
year 2006
2006-01-01
2006-12-31
number of days
1072
1237
1237
1237
1395
1395
1395
1395
weight
2004
2005
2006
weighted average number of shares
63
302
365
0.173
0.827
1.000
48
316
364
0.132
0.868
1.000
364
1,000
1209
1374
1395
12. Property, plant and equipment
Buildings, premises
Vehicles
Other property, plant and equipment
Including property, plant and equipment used under finance
lease agreements
Period ended
Dec. 31, 2006
Period ended
Dec. 31, 2005
Period ended
Dec. 31, 2004
PLN ‘000
PLN ‘000
PLN ‘000
13
418
37
394
127
905
583
232
468
521
1 720
405
380
646
Since 2004, the Company has been using property, plant and equipment on the basis of finance lease agreements.
Leased assets include vehicles (passenger cars) and computer software. Lease obligations are recognised on the
balance sheet as other financial liabilities and disclosed as broken down into short-term and long-term liabilities. Detailed
reconciliation of the above liabilities is presented in Note 26.
All lease agreements are executed for the term from 24 to 36 months. These agreements do not provide for conditional
lease payments nor any type of sub-leases. The majority of agreements contain a clause concerning an option of
purchase at the contractual price. The agreements do not impose any restrictions on the lessee, except for making lease
payments.
190
The Company’s property, plant and equipment secure the credit line (revolving credit facility) granted to the
Company.
Terms and conditions of disbursements under the credit line are described in Note 25.
Changes in the value of property, plant and equipment are presented in the tables below.
Changes in the balance of property, plant and equipment from January 1, 2004 to December 31, 2004.
No.
Description
Buildings,
premises and
structures
Vehicles
Gross value
PLN ‘000
PLN ‘000
1
Opening balance
2
a
b
Other
property,
plant and
equipment
Total
PLN ‘000
PLN ‘000
999
823
486
2 3137
Additions
0
473
274
746
take over from assets under construction
purchase of property, plant and equipment
0
0
67
67
donations received
property, plant and equipment from
finance lease
0
0
0
0
39
4
39
4
0
473
163
636
e
other
0
0
1
1
3
Deductions
0
485
117
602
a
b
c
sale
liquidation
other
0
0
0
485
0
0
110
2
5
595
2
5
4
Closing balance
999
816
643
2457
c
d
No.
Description
Buildings,
premises and
structures
Write-off
PLN ‘000
Vehicles
Other
property,
plant and
equipment
Total
PLN ‘000
PLN ‘000
PLN ‘000
1
Opening balance
69
164
352
585
2
Additions
25
231
93
350
a
b
depreciation/ for the period
Internal movements
25
0
231
0
87
6
344
6
3
Deductions
0
162
35
197
a
b
c
sale
liquidation
Internal movements
0
0
0
162
0
0
30
2
3
192
2
3
4
Closing balance
94
234
410
738
5
Net value at the beginning of the period
930
664
134
1 727
6
Net value at the end of the period
905
583
232
1 720
No.
Description
Buildings,
premises and
structures
Gross value
PLN ‘000
Vehicles
Other
property,
plant and
equipment
Total
PLN ‘000
PLN ‘000
PLN ‘000
1
Opening balance
999
817
642
2 457
2
Additions
0
105
48
154
a
0
38
29
67
191
c
finance lease
other
0
0
67
0
19
0
86
0
3
Deductions
0
86
89
1 175
a
b
c
d
sale
liquidation
reclassification to assets held for sale
other
0
0
999
0
0
0
0
86
47
42
0
0
47
42
999
86
4
Closing balance
0
836
601
1 436
b
No.
Description
Buildings,
premises and
structures
Write-off
PLN ‘000
Vehicles
Other
property,
plant and
equipment
Total
PLN ‘000
PLN ‘000
PLN ‘000
1
Opening balance
94
234
411
738
2
Additions
95
242
141
478
a
b
depreciation/ for the period
impairment
25
70
242
0
141
0
408
70
3
Deductions
0
34
78
300
a
b
c
d
sale
liquidation
reclassification to assets held for sale
other
0
0
189
0
0
0
0
34
41
37
0
0
41
37
189
34
4
Closing balance
0
442
474
915
5
6
905
583
232
1 720
0
394
127
521
No.
Description
Buildings,
premises and
structures
Gross value
PLN ‘000
1
Opening value
2
Additions
a
b
c
e
take over from assets under construction
donations received
finance lease
other
3
Deductions
a
b
c
sale
liquidation
other
4
Closing balance
d
No.
Vehicles
Other
property,
plant and
equipment
Total
PLN ‘000
PLN ‘000
PLN ‘000
0
836
601
1436
14
421
164
599
14
2
164
180
419
0
14
Description
Buildings,
premises and
structures
Write-off
PLN ‘000
192
419
315
184
498
169
81
118
42
285
122
942
581
1 538
Vehicles
Other
property,
plant and
equipment
Total
PLN ‘000
PLN ‘000
PLN ‘000
1
Opening balance
0
442
474
916
2
Additions
1
321
248
570
a
b
depreciation for the period
internal movements
1
321
248
570
3
Deductions
0
239
177
416
a
b
c
d
sale
liquidation
internal movements
other
93
81
113
40
206
121
65
24
89
4
Closing balance
1
524
545
1 070
5
0
394
127
521
6
13
418
37
468
Impairment losses are recognised in the income statement items.
13. Other intangible assets
Period ended
Dec. 31, 2006
Period ended
Dec. 31, 2005
Period ended
Dec. 31, 2004
PLN ‘000
PLN ‘000
PLN ‘000
Intangible assets
Licenses
225
8
233
2
including leased assets
380
15
395
171
497
16
513
389
Intangible assets include computer software and licenses to use photos for marketing purposes.
The Company does not conduct, and did not conduct in the past, any research or development works.
Changes in the balance of intangible assets from January 1, 2004 to December 31, 2004
No.
Description
Licenses
Other
intangible
assets
Gross value
PLN ‘000
PLN ‘000
Total
PLN ‘000
1
Opening balance
475
48
523
2
Additions
653
0
653
a
348
0
348
c
purchase
used under rental, tenancy and lease
agreements
other
300
5
0
0
300
5
3
Deductions
390
0
390
a
sale
390
0
390
4
Closing balance
738
48
786
0
0
0
b
Write-off
5
Opening balance
86
19
105
6
Additions
155
12
167
a
b
amortization for the period
other
152
3
12
0
164
3
7
Deductions
0
0
0
a
other
0
0
0
193
8
Closing balance
241
31
272
9
389
29
417
10
497
17
513
No.
Description
Licenses
Other
intangible
assets
Gross value
PLN ‘000
PLN ‘000
Total
PLN ‘000
1
Opening balance
738
48
786
2
Additions
128
13
141
a
purchase
98
13
111
b
3
a
b
4
agreements
Deductions
sale
liquidation
Closing balance
30
28
25
3
838
0
0
0
0
61
30
28
25
3
899
5
Opening balance
6
Additions
220
14
234
a
220
14
234
7
Deductions
3
0
3
a
8
liquidation
Closing balance
3
458
0
45
3
503
9
497
17
514
10
380
15
395
Write-off
0
0
0
241
31
272
No.
Description
Licenses
Other
intangible
assets
Gross value
PLN ‘000
PLN ‘000
Total
PLN ‘000
1
Opening balance
838
61
2
Additions
26
4
30
a
purchase
26
4
30
b
agreements
3
Deductions
0
0
0
a
b
sale
liquidation
4
Closing balance
864
65
929
5
Opening balance
458
45
503
6
Additions
181
12
193
a
181
12
193
7
Deductions
0
0
0
a
liquidation
899
Write-off
194
8
Closing balance
639
57
696
9
380
15
395
10
225
8
233
14. Subsidiaries, affiliates and associated companies
Investments in subsidiaries, affiliates and associated companies
Write-down
Dec. 31, 2006
Dec. 31, 2005
Dec. 31, 2004
PLN ‘000
PLN ‘000
PLN ‘000
10
10
20
20
10
10
Detailed information concerning subsidiaries, affiliates and associated companies as at December 31, 2006:
Name of company
Kancelaria P.
Pszczółkowski i
Wspólnik, Spółka
Komandytowa
[Law Office P.
Pszczółkowski &
Partner, Limited
Partnership]
Place of registration and
operation
Proportion of
shares (%)
Proportion of votes at the
GM (%)
The Partnership registered
in the Court in Łódź,
operates in Łódź
n/a
Limited Partnership
Magellan S.A. is a limited
partner
Contribution to the
Partnership
– PLN 10 thousand,
commandite sum
– PLN 100 thousand
Core business
activity
Legal services
Kancelaria P. Pszczółkowski i Wspólnik Spółka Komandytowa renders services to the Company pursuant to agreements
in force, in accordance with the “priority of service” rule. The Law Office was established in 2005 and executes all the
orders placed by the Company related to court and debt collection proceedings for the benefit of the Company. Profit
generated by the Law Office is divided and the Company’s share in profits is established on a progressive basis,
depending on the amount of profit generated by the Law Office. The Law Office does not have legal personality and,
hence, appropriate shares of profit are recognised in the accounting books of Magellan S.A. and taxed according to
general rules. In 2005 and 2004 Kancelaria A.Sękowski i Wspólnik Spółka Komandytowa was a subordinated entity
(associated company). As a result of instituted liquidation proceedings, in 2006 the significant influence was lost and the
partnership was reclassified to other companies.
15. Other companies
Investments in other companies
Write-down
Dec. 31, 2006
Dec. 31, 2005
Dec. 31, 2004
PLN ‘000
PLN ‘000
PLN ‘000
60
(60)
-
50
(50)
-
50
(50)
-
Detailed information on other companies as at December 31, 2006:
Name of company
Magellan Farmacja
Sp. z o.o.
[Magellan Farmacla
limited liability
Place of registration and
operation
Proportion of
shares (%)
The Company was
dissolved on September 29,
2006
Proportion of votes at the
GM (%)
Core business
activity
The Company did
not conduct any
activity in the
period 2004 -
195
company]
Kancelaria A.
Sękowski i Wspólnik
Spółka
Komandytowa
[Law Office A.
Sękowski & Partner
Limited Partnership]
2006
Partnership in liquidation
n/a
Limited Partnership
Magellan S.A. is a limited
partner
Contribution to the
partnership
– PLN 10 thousand
commandite sum
– PLN 100 thousand
Legal services – the
partnership did not
conduct business
activity
In the years 2004-2006 the Company Magellan Farmacja did not conduct any business activity, and Magellan S.A. did not
have the controlling power over the company in the presented years. The Company was dissolved in 2006.
On April 21, 2006, an application was filed with the Court to have the Partnership Kancelaria Sękowski i Wspólnicy
removed from the court register.
Condensed financial statements of subordinated (associated) companies:
Kancelaria P. Pszczółkowski i Wspólnik Spółka Komandytowa
Assets
Revenue
Profit
Kancelaria A. Sękowski i Wspólnik Spółka Komandytowa
Assets
Revenue
Profit
2006
2005
2004
PLN ‘000
PLN ‘000
PLN ‘000
198
461
168
243
412
210
-
-
13
296
189
60
496
147
Magellan S.A.’s share in profits of Kancelaria P. Pszczółkowski i Wspólnik Spółka Komandytowa depends on the
amount of generated profits and is computed on a progressive basis, while the share of profits of Kancelaria A.
Sękowski i Wspólnik Spółka Komandytowa amounts to 60 % of generated profits.
16. Other financial assets
Current
Fixed
Dec. 31, 2006 Dec. 31, 2005 Dec. 31, 2004
PLN ‘000
PLN ‘000
PLN ‘000
40 507
37 345
Dec. 31,
2006
Dec. 31,
2005
Dec. 31,
2004
PLN ‘000
PLN ‘000
PLN ‘000
Loans and receivables measured using
the amortised cost method
Portfolio of receivables with
determined repayment
schedule (i)
Portfolio of receivables
without a determined
repayment schedule (ii)
Granted loans (iii)
Total
61 922
30 213
25 615
4 530
5 071
2 729
-
27 770
-
27 855
5 498
19
5 143
150
11
119 990
71 620
65 134
9 673
5 221
2 740
(i)
the Company holds financial assets constituting novation agreements with a determined schedule of repayment of
amounts resulting from financial services related to financing of receivables, sureties, factoring, refinancing of
payables and other products. Novation agreements are executed for the term from 1 month to 48 months.
(ii)
the Company holds financial assets constituting receivables without a determined schedule of repayment prior to
196
the execution of a novation agreement resulting from sureties, financing of receivables, factoring, refinancing of
payables.
(iii)
the Company grants loans to non-related parties for the term from 1 month to 48 months. Public hospitals
represent the core group of borrowers.
Based on historic data, the risk of earlier repayment of assets is negligible.
17. Taxes receivable
Receivables on account of paid VAT
Receivables on account of interest paid on late payment of VAT
Dec. 31, 2006
Dec. 31, 2005
Dec. 31, 2004
PLN ‘000
PLN ‘000
PLN ‘000
2 797
388
3 185
-
-
This item comprises receivables following from compliance with the tax interpretation provided by the Revenue Chamber
concerning the VAT on the provided financial service. The state of facts concerning taxation and emergence of
receivables from the Revenue Office was presented in point 3.2 of explanatory notes.
18. Other assets
Current
Dec. 31, 2006
PLN ‘000
Dec. 31, 2005 Dec. 31, 2004
PLN ‘000
PLN ‘000
Prepayments
25
29
44
Other
29
5
39
TOTAL
55
34
83
The Company classifies prepayments related to insurance, subscriptions and other expenses settled over time as other
assets.
19. Trade and other receivables
Receivables from related parties
Other receivables
Write-downs
Dec. 31, 2006
Dec. 31, 2005
Dec. 31, 2004
PLN ‘000
PLN ‘000
PLN ‘000
147
639
(133)
212
214
(93)
256
69
-
653
333
325
The Company classifies receivables on account of profits in other entities, reinvoicing of costs of space rental and
deposits to secure bank borrowings and amounts due from rents.
Changes in the balance of write-downs for threatened receivables
Balance as at the beginning of the financial year
Amounts written down during the year
Amounts recovered during the year
Increase/(decrease) in the write-down recognised in profit or loss
197
Year ended
Dec. 31, 2006
Year ended
Dec. 31, 2005
Year ended
Dec. 31, 2004
PLN ‘000
PLN ‘000
PLN ‘000
93
40
93
-
Balance as at the end of the financial year
133
93
-
The write-down for threatened receivables comprises receivables from related parties on account of absence of payment
of profit from Kancelaria Sękowski i Wspólnik Spółka Komandytowa. The Partnership was put into liquidation in 2006
and the outstanding claim against the Partner was settled by means of an appropriate agreement, whereby the claim
was secured with a promissory note and a conditional redemption in the amount equal to the write-down of PLN 93
thousand was established. At the end of 2006, the write-down for receivables from the Law Office was increased by a
subsequent amount of PLN 40 thousand.
(i)
20. Assets pledged as security
The below presented assets are pledged as security for borrowings or other agreements executed by the Company
(see: Note 32):
Land and buildings owned
Leased property, plant and equipment
Other leased intangible assets
Financial assets (receivables, loans)
Dec. 31, 2006
Dec. 31, 2005
Dec. 31, 2004
PLN ‘000
PLN ‘000
PLN ‘000
405
2
29 306
810
380
171
5 250
905
646
389
9 000
29 713
6 611
10 940
The Company’s finance lease obligations are secured with the lessor’s ownership titles to leased assets.
Financial assets secure bank borrowings and are convertible as a result of repayment of receivables or loans and may
be supplemented in case credit involvement increases. Amounts of security for individual borrowings are presented in
Note 25.
21. Cash and cash equivalents
Agreements in the course of performance as at the balance sheet date:
Cash in hand
Cask at banks
Short-term deposits
Dec. 31, 2006
Dec. 31, 2005
Dec. 31, 2004
PLN ‘000
PLN ‘000
PLN ‘000
3
2868
53
2 924
2
3 775
50
3 827
5 404
135
5 539
Cash at banks carry floating interest rates that depend on the interest rate on one-day bank deposits.
Bank deposits recognised in the balance for individual periods 2004/2005 concern deposits to secure a transaction
related to the sale of receivables to the bank. These deposits are reduced as receivables are collected, interest rate on
these deposits depends on the interest rate on rediscount credit determined by the National Bank of Poland.
Additionally, in 2006 the Company established a security in the form of funds, in the amount of PLN 500 thousand,
deposited on the bank account as a security for bank borrowings. These funds are to be kept on the account until the
date of repayment of borrowings, until the end of July 2007, and carry a fixed interest rate of 3.5% p.a.
The indicated deposits are subject to certain restrictions in terms of disposal of funds owing to the fact that they
represent a security.
The Company has open credit lines in the current account which are presented in detail in Note 25.
22. Held-for-sale fixed assets
198
Dec. 31, 2006
Dec. 31, 2005
Dec. 31, 2004
PLN ‘000
PLN ‘000
PLN ‘000
Building held for sale
-
810
-
810
-
In 2005, the Company classified a tenement house, where the Company’s corporate seat was located, as a fixed asset
held for sale, and valued it at the selling price less costs to sell.
The real property was sold on March 27, 2006 at its net value recognised in the Company’s balance sheet (the amount
of PLN 70,005.04 represents a write-down on the real property as at December 31, 2005 ).
23. Share capital, supplementary capital and reserves
The nominal value of shares, the number of shares as well as the amount of share capital as at respective balance
sheet dates are presented in the table below:
Number of
Value
Nominal value
shares ∗
PLN
PLN
1 250
1 250
1 250
1 237
1 395
1 395
1 546 250
1 743 750
1 743 750
Fully paid-up common shares, with a nominal value of PLN 1 250, entitle to one vote at the general meeting of
shareholders and carry a right to dividend.
Detailed information on series, registration dates and terms of capital acquisition as at December 31, 2004.
Series/issue
Number of
shares
-
48
60 000.00
340
425 000.00
88
110 000.00
84
105 000.00
40
472
165
50 000.00
590 000.00
206 250.00
Total number of
shares
1 237
Terms of
acquisition
Nominal value
contribution in
kind
contribution in
kind
contribution in
kind
contribution in
kind
cash
cash
cash
Date of
registration
Right to
dividend
(starting from)
Dec. 14, 2000
Dec. 31, 2000
Dec. 14, 2000
Dec. 31, 2001
Dec. 14, 2000
Dec. 31, 2002
Dec. 14, 2000
Dec. 31, 2003
Jan. 8, 2000
March 19, 2003
March 4, 2004
Dec. 31, 2004
Dec. 31, 2003
Dec. 31, 2004
1 546 250.00
Detailed information on series, registration dates and terms of capital acquisition as at December 31, 2005 and
December 31, 2006.
199
Series/issue
value at
nominal value
Series/issue
Number of
shares ∗
A series
48
60 000.00
340
425 000.00
88
110 000.00
84
105 000.00
40
472
165
50 000.00
590 000.00
206 250.00
contribution in
kind
contribution in
kind
contribution in
kind
contribution in
kind
cash
cash
cash
158
197 500.00
cash
A series
A series
A series
A series
A series
A series
A series
Total number of
shares
1 395
Terms of
acquisition
Right to
dividend
(starting from)
Date of
registration
Dec. 14, 2000
Dec. 31, 2000
Dec. 14, 2000
Dec. 31, 2001
Dec. 14, 2000
Dec. 31, 2002
Dec. 14, 2000
Dec. 31, 2003
Jan. 8, 2000
March 19, 2003
March 4, 2004
Dec. 31, 2004
Dec. 31, 2003
Dec. 31, 2004
Feb. 22, 2005
Dec. 31, 2005
1 743 750.00
On November 26, 2003, an agreement was executed between Mrs. Mariola Błaszkowska and Polish Enterprise
Fund IV L.P. Under the agreement, Polish Enterprise Fund IV L.P. received for use all the shares in the Company
Magellan along with all the rights and obligations ensuing from the right to use them.
On November 24, 2005 a share sale agreement was signed. Pursuant to this agreement, December 13, 2005
Mrs. Mariola Błaszkowska sold all the 600 shares she held in Polish Enterprise Fund IV L.P. On December 28,
2005 the change in the Company’s shareholding structure was registered.
The Company’s shareholding structure is presented below:
Dec. 31, 2006
PLN ‘000
Mariola Błaszkowska
Polish Enterprise Fund IV L.P.
Dec. 31, 2005
PLN ‘000
100%
100%
100%
100%
Dec. 31, 2004
PLN ‘000
48.50%
51.50%
100%
Information on the issue price of capital issued in respective periods is presented in the table below:
Number of shares
Shares issued before Dec. 31, 2002
Shares issued from Dec. 31, 2002 to Dec. 31, 2003
600
472
165
158
-
1 395
Share capital
PLN
Share
premium
PLN
750 000
590 000
206 250
197 500
-
14 410 000
5 037 386
4 823 678
-
1 743 750
24 271 064
By virtue of no. 2 of May 22, 2006, the Extraordinary Meeting of Shareholders transformed the company operating under
the business name „Magellan” spółka z ograniczoną odpowiedzialnością z siedzibą w Łodzi [„Magellan” limited liability
company with its registered address in Łódź] into a Joint-Stock Company. The share capital of the transformed Company
∗
Pursuant to resolution no. 2 of May 22, 2006, the Extraordinary Meeting of Shareholders transformed the company
operating under the business name „Magellan” spółka z ograniczoną odpowiedzialnością z siedzibą w Łodzi [„Magellan”
limited liability company with its registered address in Łódź] into a Joint-Stock Company. The transformation was
registered on the basis of decision of the District Court on September 8, 2006.
On the day of transformation Interests [udziały] in the Company were converted into Shares [akcje].
•
200
amounts to PLN 1 743 750 (one million seven hundred forty three thousand seven hundred fifty) and is divided into 1 395
(one thousand three hundred ninety five) A series shares with a nominal value of PLN 1 250.00 (one thousand two
hundred fifty) each. The shares were acquired by the former sole shareholder – Polish Enterprise Fund IV L.P. The
transformation was registered on the basis of decision of the District Court for Łódź – Śródmieście in Łódź, XX Division of
the National Court Register of September 8, 2006 (file no. L.D.XX.NS-REJ. KRS/012354/06/679).
Supplementary capital is used accumulate profits from preceding years in the Company and the share premium.
Dec. 31, 2006
PLN ‘000
Dec. 31, 2005
PLN ‘000
Dec. 31, 2004
PLN ‘000
23 946
14 410
9 165
Share premium
24 271
24 271
19 448
48 217
38 681
28 613
Reserves
Reserves comprise funds for employee benefits, arisen as a result of the management share option program which
granted share purchase options to the management. When the Company operated as a limited liability company, the
Company recognised capital contributions at nominal values made pursuant to resolutions, registered after the balance
sheet date, in reserves.
Dec. 31, 2006
PLN ‘000
Dec. 31, 2005
PLN ‘000
Dec. 31, 2004
PLN ‘000
1 774
-
1 265
-
756
5 021
1 774
1 265
5 777
Valuation of management share options
24. Retained earnings and dividends
Retained earnings (losses) attributable to implementation of IFRS –
options
Gains (losses) of the current period
As at the end of the financial year
2006
PLN ‘000
(1 266)
2005
PLN ‘000
2004
PLN ‘000
10 702
(757)
9 066
(316)
4 843
9 436
8 309
4 527
The Company measured and recognised the management share option program in effect starting from 2003. The
valuation of share options was recognised in reserves in correspondence with costs of wages and salaries of respective
years starting from 2003.
25. Borrowings received
Current
Dec. 31, 2006
PLN ‘000
Overdrafts (i)
Bank borrowings (ii)
3 004
12 753
Long-term
Dec. 31, 2005 Dec. 31, 2004 Dec. 31, 2006 Dec. 31, 2005 Dec. 31, 2004
PLN ‘000
PLN ‘000
348
3 183
1 958
201
PLN ‘000
-
PLN ‘000
-
PLN ‘000
16
15 757
(i)
3 531
1 958
-
-
16
As at December 31, 2005, the Company used an overdraft facility granted by the bank BISE S.A. branch in Łódź.
The overdraft limit was set at PLN 1 million. The interest rate on the facility was based on WIBOR 1M + bank’s
margin. The overdraft facility was extended for a period of one year, until September 30, 2006. The facility was
secured with a conditional assignment of receivables from health care institutions amounting to PLN 3 million, a
blank promissory note and an authorisation to dispose of the account. On September 27, 2006 an annex to the
agreement with BISE S.A. was executed and the limit was increased up to PLN 4 million. The agreement was
entered into for the term until September 30, 2007. As at December 31, 2006, funds disbursed under the overdraft
facility amounted to PLN 2 897 thousand.
On October 19, 2006, an agreement was executed with the bank PKO BP for a multi-purpose loan of PLN 2 million,
50% of the said amount was extended as revolving loan and 50% as a loan to be disbursed in tranches. The
agreement was executed for the term until March 14, 2007 (and was subsequently renewed for a successive year by
virtue of an annex) and the interest rate stood at WIBOR 1M + bank’s margin. The agreement was secured with a
blank promissory note. As at December 31, 2006, funds disbursed under this loan amounted to PLN 107 thousand
(revolving loan) and PLN 822 thousand (loan disbursed in tranches).
On August 10, 2006 a revolving loan agreement was executed with Raiffeisen Bank Polska SA (RBP) with a limit of
involvement amounting to PLN 9 million, for the term until November 30, 2007. The interest rate on the loan was
based on WIBOR 1W + bank’s margin. The loan is secured with an authorisation to dispose of the account and
assignment of receivables up to twice the amount of the used limit. As at December 31, 2006, funds disbursed under
the limit amounted to PLN 8 932 thousand.
On March 17, 2006, an agreement was executed with BISE for a working capital facility with a repayment schedule
for the amount of PLN 2 million and for the term until July 31, 2007. The interest rate on the facility is based on
WIBOR 3M plus bank’s margin. The facility was secured with assignment of receivables from health care institutions
in the amount not lower than 2.5-times the involved amount, blank promissory note, surety granted by BGK, transfer
of cash to the bank (interest-bearing) and authorisation to dispose of the account.
The weighted average interest rate on borrowings (including fees) amounted to 11.70% in 2004, 9.51% in 2005 and
8.56% in 2006.
202
(ii) Bank borrowings as at December 31, 2004:
No.
Type of
borrowings
Name of
bank/creditor
Contractual
amount
Value of
liability as at
Dec. 31, 2004
Short-term
portion
Long-term
portion
PLN ‘000
PLN ‘000
PLN ‘000
PLN ‘000
Security for repayment
1
Short-term working
capital facility
Bank
Przemysłowy
1 115
310
310
2
Short-term working
capital facility
Bank Inicjatyw
Społeczno
Ekonomicznych
3 000
1 600
1 600
3
Motor vehicle loan
agr. no. 12949
Volkswagen
Bank Polska
45
11
11
- Transfer of ownership title to the motor vehicle to the bank,
assignment under the policy
4
Motor vehicle loan
agr. no. 11422
Volkswagen
Bank Polska
66
26
18
8 Transfer of ownership title to the motor vehicle to the bank,
5
Motor vehicle loan
agr. no. 07236
Volkswagen
Bank Polska
67
27
19
8 Transfer of ownership title to the motor vehicle to the bank,
1 974
1 958
TOTAL
203
- Individual assignments of receivables from public hospitals
- Assignments of receivables in the amount not lower than 2.5times the involved amount, blank promissory note,
authorisation to dispose of the account.
16
X
No.
Type of
borrowings
Name of
bank/creditor
Contractual
amount
Value of
liability as at
Dec. 31, 2005
Short-term
portion
Long-term
portion
PLN ‘000
PLN ‘000
PLN ‘000
PLN ‘000
1.
Short-term working
capital facility
Bank Inicjatyw
Społeczno
Ekonomicznych
1 900
987
987
- Ordinary mortgage on real property of PLN 470 thousand
and cap mortgage on real property of PLN 70 thousand,
assignments of receivables in the amount not lower than 2.5times the involved amount, assignment of rights under the
real property insurance policy, surety granted by BGK up to
EUR 50 thousand, blank promissory note, authorization to
dispose of the account.
2.
Short-term working
capital facility
Bank Inicjatyw
Społeczno
Ekonomicznych
1 600
1 181
1 181
- Ordinary mortgage on real property of PLN 170 thousand and
cap mortgage on real property of PLN 40 thousand,
assignments of receivables in the amount not lower than 2.5times the involved amount, assignment of rights under the
real property insurance policy, surety granted by BGK up to
EUR 50 thousand, blank promissory note, authorization to
dispose of the account.
3.
Short-term overdraft
facility
Bank Inicjatyw
Społeczno
Ekonomicznych
1 000
348
348
- Blank promissory note, assignments of receivables in the
amount not lower than PLN 3 million, authorization to dispose
of the account.
4.
Short-term working
capital facility
Dominet Bank
1 000
1 000
1 000
- Assignments of receivables in the amount not lower than 1.5times the involved amount, blank promissory note,
authorization to dispose of the account.
5.
Motor vehicle loan
agr. no. 11422
Volkswagen
Bank Polska
66
8
8
6.
Motor vehicle loan
agr. no. 07236
Volkswagen
Bank Polska
67
7
7
3 532
3 532
TOTAL
204
-
X
No.
Type of
borrowings
Name of
bank/creditor
Contractual
amount
Value of
liability as at
Dec. 31, 2006
Short-term
portion
Long-term
portion
PLN ‘000
PLN ‘000
PLN ‘000
PLN ‘000
1.
Working capital
facility
Bank Inicjatyw
Społeczno
Ekonomicznych
2 000
2 000
2 000
- Assignments of receivables in the amount not lower than 2.5times the involved amount, blank promissory note, surety
granted by BGK, transfer of funds, authorization to dispose of
the account.
2.
facility
Bank Inicjatyw
Społeczno
Ekonomicznych
4 000
2 897
2 897
- Blank promissory note, assignments of receivables in the
amount not lower than PLN 8 million, authorization to dispose of
the account
3.
Short-term loan
Dominet Bank
1 000
1 000
1 000
- Assignments of receivables in the amount not lower than 1.5times the involved amount, blank promissory note, authorization
to dispose of the account
4.
Short-term loan
Raiffeisen Bank
9 000
8 932
8 932
- Assignments of receivables in the amount not lower than 2times the involved amount, blank promissory note, authorization
to dispose of the account
5.
Working capital
facility
PKO BP
1 000
822
822
- Blank promissory note, authorization to dispose of the account
6.
facility
PKO BP
1 000
107
107
- Blank promissory note, authorization to dispose of the account
15 757
15 757
TOTAL
205
-
X
26. Other financial liabilities – obligations under finance leases
Terms and conditions of leases
Finance lease arrangements apply to 15 agreements executed with various financial institutions, of which 13
agreements concern the lease of 13 company motor vehicles, while the remaining 2 concern: one – lease of a Xerox
machine and another one - lease of computer hardware and software.
Lease agreements were entered into for the term of up to 5 years but agreements related to motor vehicles were
concluded for the term not exceeding 3 years.
The most significant lease agreement was the one executed with ECS International Polska Sp. z o.o. on December 1,
2003 concerning sale-and-lease-back of computer hardware and software for the amount of PLN 820 thousand.
Following subsequent changes to the agreement of December 22, 2004 whereby the value of the lease was increased
up to PLN 890 thousand, ultimately the value of the agreement based on the annex of July 22, 2005 was set at PLN 920
thousand. The interest rate on this lease agreement was based on WIBOR 3M plus margin of the financial institution.
The term of this agreement is 36 months running from the date of the last annex (July 2008).
Dec. 31, 2006
Dec. 31, 2005
Dec. 31, 2004
PLN ‘000
PLN ‘000
PLN ‘000
Obligations under finance leases payable within:
one year
two to five years
over five years
Total
402
367
769
389
477
866
(118)
(159)
(276)
Value of future obligations
651
707
958
Amounts due within next 12 months (recognised under shortterm liabilities)
342
320
346
Amounts due after the period of 12 moths, within:
- two to five years
- over five years
309
309
-
387
387
-
612
612
-
Future interest costs
465
769
1 234
Dec. 31, 2006
Dec. 31, 2005
Dec. 31, 2004
PLN ‘000
PLN ‘000
PLN ‘000
List of property, plant and equipment and intangible
assets held under leases
passenger cars
400
Xerox machine
277
460
11
23
computer hardware
5
92
163
computer software
2
171
389
407
551
1 035
Total
27. Obligations under bonds and other financial liabilities
Other financial liabilities comprise obligations under issued bonds and obligations under finance leases.
Dec. 31, 2006
Dec. 31, 2005
Dec. 31, 2004
PLN ‘000
PLN ‘000
PLN ‘000
Value of obligations under bonds
Adjustment by unsettled discount
Adjustment by charges and fees
Carrying amount of bonds
29 140
(665)
(86)
28 389
222
10 410
(540)
(62)
9 808
-
Obligations under finance leases
Unsettled starting fees under guarantees
Carrying amount
402
304
389
187
465
29 095
10 385
465
On March 25, 2005, the Company executed an agreement with Raiffeisen Bank Polska S.A. (RBP S.A.) for handling the
short-term bonds issue program with a limit of PLN 10 million. The execution of the agreement was preceded by a
resolution of the Meeting of Shareholders of March 23, 2005 concerning the launch of the PLN 10 million program.
Based on effective agreements, the Company was responsible for soliciting potential investors to participate in the
program.
On April 18, 2005, the Company issued bonds for PLN 400 thousand designated for private investors. The 1-year
physical coupon bonds were deposited in a bank safe box until their redemption. This was the only issue of bonds in a
paper form.
On October 14, 2005, the Company executed the Agent and Dealer Agreement with Raiffeisen Bank Polska S.A. (RBP
S.A.) for launching the short-term bonds issue program with a limit of PLN 20 million. The execution of the agreement
was preceded by resolution no. 4 of the Extraordinary Meeting of Shareholders of October 5, 2005 concerning the
launch of the PLN 20 million program. By virtue of resolution of the Extraordinary Meeting of Shareholders of October
20, 2006 the value of the existing program was increased up to PLN 30 million. This increase was provided for in the
annex to the agreement with RBP S.A. of October 26, 2006.
Within the framework of this program, RBP S.A. acted in the capacity of Issue Dealer and Agent.
The bonds issue program is used to finance core business activity related to the financing and restructuring of public
health care institutions. The Company issues bonds with maturity from 1 month to 12 months depending on current
needs for funds and maturity of assets financed through issues.
Obligations under bonds issue at the beginning of the period
Year 2006
Year 2005
Year 2004
PLN '000
10 000
PLN '000
PLN '000
-
Bonds issued by the Company without intermediation of a bank
Bonds issued under bonds issue program - RBP S.A.
39 970
400
16 500
-
Total additions on account of issue
39 970
16 900
-
Bonds repayment in the period
20 830
6 900
-
Obligations under bonds issue at nominal value
29 140
10 000
-
In aggregate, the value of bonds issued in the period 2004-2006 amounted to PLN 56 870 thousand. Issued bonds
carried interest at the rate ranging from 6.75% to 14% p.a. The highest interest rate was reported when the program was
launched. Moreover, the interest rate was to a large extent conditional upon the period for which funds were invested.
The interest rate was fixed over the term of the obligation. Bonds issued under the PLN 30 million program are discount
bonds, while bonds issued during previous programs had coupons.
28. Other liabilities
Current
Dec. 31, 2006 Dec. 31, 2005 Dec. 31, 2004
PLN ‘000
PLN ‘000
PLN ‘000
Donated property, plant and equipment
Provisions for interest obligations on
borrowings
Provisions for employee benefits (bonuses)
2
3
4
32
7
-
548
300
462
582
310
466
223
29. Trade and other payables
Dec. 31, 2006
PLN ‘000
Other payables, of which:
Unpaid dividend for shareholders
Other payables of cost nature
Other liabilities
Dec. 31, 2005
PLN ‘000
Dec. 31, 2004
PLN ‘000
29 724
358
358
17 537
299
208
91
31 343
486
159
257
70
30 082
17 836
31 829
Trade and other payables concern liabilities arising from acquisition of financial assets within the framework of financing
of receivables for suppliers. Under performed agreements, the Company acquires receivables and takes trade credits
with maturities depending on the nature of transaction, including also the risk of financing of a given debtor of a medical
unit.
The average payables turnover was 4.5 months in 2004, 2.9 months in 2005 and 1.3 months in 2006. In the years 2005
and 2006 the Company did not enter into any agreement that would provide for any interest on the Company’s
instalments.
In 2004, the value of such agreements amounted to PLN 14 202 574. The average interest rate on the Company’s
payments under interest-bearing agreements of 2004 stood at 5.99% p.a.
30. Paid and declared dividends as well as other earn-out payments
Dividend paid for the period
Dividend declared
Paid costs of capital increase
Period ended
Dec. 31, 2006
Period ended
Dec. 31, 2005
Period ended
Dec. 31, 2004
‘000
‘000
‘000
39
39
150
159
281
In the period from December 2003 to October 2004 advances towards dividends from 2004 profit in the amount of PLN
150 thousand were paid to the Shareholder Mariola Błaszkowska (in 2003, the advance amounted to PLN 40 thousand).
The dividend for 2004 in the amount of PLN 159 thousand due to the Shareholder Polish Enterprise Fund IV L.P. was
paid on January 31, 2005.
Paid costs of capital increase in the years 2004/2005 concerned expenses incurred in connection with capital increase
and solicitation of an investor, and amounted to PLN 280 749.29 in 2004, PLN 39 333.85 in 2005 and PLN 39 400.00 in
2006. Pursuant to § 14.1. 5 of the Company’s Articles of Incorporation, profit may be appropriated for other purposes
specified by a resolution of the Meeting of Shareholders. The costs of capital increase and solicitation of an investor do
not concern current business activity of the Company Magellan, these expenses are borne by the Shareholders.
Pursuant to tax regulations, dividend paid is taxed at the rate of 19%.
31. Financial instruments
The most crucial role in the Company’s balance sheet is played by financial instruments that include principal and
interest receivables and loans, trade receivables and payables, bonds, bank borrowings, finance lease agreements,
cash and deposits. The main objective of these instruments is to enable the Company to pursue and finance its on-going
business activity. The Company does not execute any transactions involving derivative instruments nor conducts any
activities related to hedge accounting.
Detailed description of major accounting policies and applied methods, including criteria for recognition, basis of
measurement and disclosure of revenue and expense in respect of individual categories of financial assets, financial
liabilities and equity instruments, is presented in Note 3 to the financial statements.
224
Categories of financial instruments
Dec. 31, 2006
PLN ‘000
Dec. 31, 2005 Dec. 31, 2004
PLN ‘000
PLN ‘000
Financial assets
Loans and receivables
Granted loans
Portfolio of receivables with determined repayment schedule
Portfolio of receivables without determined repayment schedule
Financial liabilities
Obligations under finance leases
Borrowings
Obligations under bonds issue
Trade payables
129 664
32 999
66 452
30 213
76 842
5 649
45 578
25 615
67 875
30
40 075
27 770
2 924
3 827
5 539
75 301
769
15 757
28 389
304
30 082
32 230
866
3 532
9 808
187
17 836
35 037
1 234
1 973
31 829
Financial risk management
The Company provides financial services using available sources of cash, i.e. borrowings and bonds issue. The
Company monitors financial risk related to the Company’s business activity on an on-going basis and the risk is
managed through internal reports on financial risk which analyse the degree of exposure and level of risk. The risks to
which the Company is exposed embrace market risk (including currency risk, interest rate risk and price risk), as well as
credit risk, liquidity risk and cash flow interest risk.
Cash investments in the Company’s assets portfolio are subject to the rules applicable in the Company, approved by
the Executive Board, that specify methods of controlling the credit risk of individual transactions. Employees of the risk
department control compliance with the rules and involvement limits on an on-going basis. The Company does not use,
nor trade in, financial instruments – including derivative instruments – for speculative purposes.
Risk of market loss
The risk entails a possibility that the market may be lost, i.e. the demand for financial services provided by the Company
may slump.
In the Company’s assessment, this risk is marginal. The volume of turnover on which the Company operates reaches of
approx. 40 billion per year (Budget of the National Health Fund). Such a large market will always need external financing
indispensable to open liquidity channels of market participants. Depending on the current liquidity of the sector, the
Company is prepared to operate in the setting of both low liquidity (specialization in handling financing of receivables)
and high liquidity (specialization in financing of on-going activities, current and future receivables and project financing).
In general, the Company is not afraid of the market risk.
Business activity pursued by the Company involves a limited financial risk following from fluctuations in foreign exchange
and interest rates. The Company does not conclude any agreements involving financial derivatives for the purposes of
managing the foreign exchange and currency risks. Currency risk entails threatened changes in the value of assets and
liabilities of the Company as a result of fluctuations in foreign exchange rates. The Company conducts and develops its
business activity and provides, on a limited scale, receivables financing services on the Czech and Slovak markets.
Ultimately, business activity will be pursued in the local currency, both as regards investing and soliciting funds. Hence,
specific areas of activities conducted abroad have closed forex positions and do not generate currency risk. The only
item exposed to the currency risk will be the value of the Company’s shares in a subsidiary company operating on the
Czech market.
System risk
225
This risk entails a possibility that central or local authorities, organizations and self-governments of medical milieus may
take political actions that would result in changes in the functioning of the public health care system, in particular
changes in principles of functioning of this sector’s financial system. Crucial risk factors in this area include:
1. Actions aimed at cancellation of debt and providing the financial system with additional funds within the framework of
public assistance. The Company is prepared to act in conditions of improved liquidity of this sector. The Company holds
a diversified product portfolio that, in case the problem of overdue debts becomes less acute, will be appropriated to
handle current and future receivables of the medical market, i.e. sureties for future receivables, financing of projects,
equipment, etc. (guarantees, factoring, long-term financing. The Company already operated in such a setting in the
years 2005-2006 and reported very high growth in sales.
2. Deterioration of system’s liquidity as a result of court decisions, pressure for salary rises, etc. Just as in the preceding
case, the Company is prepared to operate if the system’s liquidity deteriorates. The Company holds a diversified product
portfolio that, in case the problem of overdue debts becomes more severe, will be appropriated to handle current
receivables. The Company already operated in such a setting (in the years 2003-2004) and reported very high growth in
sales and a considerable increase in profits. Historic experience indicates that a drop in the system’s liquidity and growth
in debt, viewed as a political problem, will sooner or later induce a response from the authorities and provision of
additional financing to cover the deficit.
3. Systemic restructuring that would imply reduction of costs, decrease in debt and growth in effectiveness. Slim
chances for marked results – resistance of powerful lobbies (self-governments, trade unions). Restructuring will focus on
the weakest entities and system entities with the highest level of debt, with which the Company cooperates now to a
highly limited extent and, therefore, if they are liquidated or the scope of their operations is reduced, the volume of the
Company’s business will not be affected. On the other hand, if their financial standing gets better, opportunities for
cooperation will improve and the volume of contracted products will increase.
The Company holds a portfolio of alternative investments (self-governments, neighbouring countries’ markets) and is
capable of increasing its volume of business on these markets so as to make up for any reduction in business on the
Polish public health care market.
4. Ownership changes within the system, transformation of medical units into commercial law companies (which may
declare bankruptcy), changed owners (self-governments, going public, privatizations).
The Company ranks among leaders on the market of financing of non-public health care institutions, has experience in
this area and products adjusted to the needs of this sector. Changes, in any, in this respect may offer a chance for the
Company to further develop its business.
Interest rate risk management
The interest rate risk that involves indexation of interest rates on assets and liabilities to various base parameters with
different restatement dates. The return on the Company’s assets is correlated with the level of statutory interest, while
part of financial liabilities carry interest rates that depend on current market rates (WIBOR, Treasury bills). The Company
reduces this risk by pursuing an active policy aimed at maintaining return on so as to guarantee an appropriate margin
on transactions that would be sufficient to cover the risk of changes in costs of involvement.
The Company is exposed to the interest rate risk because financial assets it holds carry interest at both fixed and floating
rates. The Company manages this risk by maintaining an appropriate proportion of assets with fixed and floating interest
rates. Regular assets usually carry fixed interest rates, while non-regular assets usually bear interest equal to statutory
interest rate or a multiple of a statutory interest rate. Statutory interest is floating but subject to minor fluctuations.
Securing the risk involves regular assessment of interest rates to adapt to prevailing conditions and a specific readiness
to bear the risk and to ensure optimum security strategy by positioning the balance sheet or by protecting interest costs
by means of differentiated interest cycles. High IRR generated on individual transactions guarantees coverage of
possible losses related to interest rate fluctuations and constitutes a parameter that secures the Company’s interest rate
risk. Moreover, changes in interest rates reported in recent years are small and do not pose any significant threat to the
Company’s revenue.
The table below presents exposure to the interest rate risk for individual categories of assets and liabilities. The average
interest rate is based on unsettled balances as at the beginning of the financial year.
Portfolio of receivables with determined repayment schedule
Average fixed % rate XIRR
Carrying amount in PLN ‘000
Maturity
up to 1 year
2006
2005
2004
2006
26.89%
44.65%
43.37%
226
55 952
2005
37 063
2004
33 348
from 1 year to 2 years
24.15%
35.70%
from 2 to 3 years
13.41%
TOTAL
26.31%
37.31%
9 599
3 982
6 726
31.60%
900
4 533
0
42.57%
66 452
45 578
40 074
Loans
Average fixed % rate XIRR
Maturity
2006
2005
2004
2006
2005
2004
up to 1 year
37.37%
45.77%
19 860
4 851
30
27.96%
28.67%
10 609
797
0
from 2 to 3 years
25.63%
TOTAL
33.45%
2 529
43.36%
32 998
0
5 648
30
Respective maturity ranges contain values of agreements with date of final payment falling within a given
range.
Liabilities with fixed interest rate
Bonds
Average fixed % rate
Carrying amount w thousand PLN
Maturity
2006
up to 1 year
2004
2006
2004
9 808
0
0
0
0
from 2 to 3 years
0
0
0
28 389
9 808
0
8.04%
10.55%
2005
28 389
TOTAL
8.04%
2005
10.55%
Liabilities with floating interest rates
Bank borrowings
Average floating % rate
Maturity
2006
up to 1 year
8.66%
2005
8.92%
2004
2006
12.51%
2005
2004
15 757
3 531
1 958
0
0
16
from 2 to 3 years
0
0
0
227
TOTAL
8.66%
8.92%
12.51%
15 757
3 531
1 974
Credit risk management
Credit risk means that a business partner will not comply with its obligations which may expose the Company to a
financial loss. The Company adheres to the principle that provides for transacting solely with partners with checked
creditworthiness; whenever necessary, the Company obtains necessary security as a tool reducing the risk of financial
losses on account of failure to meet contractual terms and conditions. The Company’s exposure to the risk related to
credit ratings of business partners is monitored on a current basis, and the aggregate value of transactions is spread
over approved business partners. The limits which are verified and approved by the credit committee on a quarterly
basis allow to control the credit risk.
Assets held by the Company comprise predominantly loans and receivables from public health care institutions, i.e.
entities with legal personality that independently manage funds received from the National Health Fund pursuant to
contracts for provision of health care services. The most important information from the point of view of the Company’s
business activity is the fact that the founding authority is always liable for the liabilities of hospitals after their liquidation
(as stipulated in provisions of the law). This significantly reduces economic risk related to operations on the receivables
trading market. Such a reduction of credit risk, coupled with existence of long-term demand for financial services
rendered by the Company, has become a basis for the Company to focus on the financing of the public sector, which the
Company considers to be its targeted market. The sector in which the Company pursues its core business activity is safe
from the point of view of the risk related to the loss of acquired financial assets. Pursuant to the Act of August 30, 1991
on Health Care Institutions (Official Journal „Dz.U.” of October 14, 1991), public health care institutions are not subject to
the provisions of the composition and bankruptcy law, and in case they are liquidated the founding authority, i.e. the
State Treasury or Local -Government Units, is liable for their payables.
In the years 2004-2005, the Company’s business activity focused on financing of receivables and refinancing of
payables of selected hospitals under a novation agreement. In the analyzed period, the Company was actively involved
in the restructuring of public health care institutions and contributed to improvement of financial liquidity in the sector.
And, therefore, credit analysis of individual transactions aims predominantly at an analysing of liquidity risk of individual
assets generated through provision of services by the Company.
As regards financial assets, credit risk equals the carrying amount of such assets disclosed on the Company’s balance
sheet. Additionally, products following from executed conditional agreements, agreements concerning disbursement of
loan tranches and refinancing of payables as well as granted sureties are exposed to the credit risk , with the value of
exposure to this risk being equal to amounts disclosed as contingent liabilities in Note 36.
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Executive Board. The Executive Board has elaborated
an appropriate system to manage this risk for the needs of management of the portfolio of short-term, medium-term and
long-term assets. The Company manages the liquidity risk by maintaining an appropriate level of reserves, taking
advantage of offered bank services and reserve credit lines, constantly monitoring projected and actual cash flows and
adjusting profiles of maturity dates of financial assets and liabilities maturity dates. At the end of successive periods, the
Company has additional, unused borrowings and bond issue limits available for its use to further reduce the liquidity risk.
In order to minimize this risk, the Company pursues a policy of conservative financing of assets, which involves:
−
−
−
−
−
−
close monitoring of proceeds and active policy of collecting overdue amounts by a team of specialists
on-going projections and daily updates of projections of proceeds over a short-term, medium-term and longterm horizon,
managing the structure of the liabilities side of the balance sheet through appropriate selection of sources of
financing, taking into account the structure of the assets side of the balance sheet and specific features of
individual products, and in particular the stability and foreseeability of financial proceeds from these products,
keeping debt ratios (e.g. equity/external capital, equity/EBIT, etc.) at a conservative level that guarantees
development of business activity, all while ensuring, based on historic experience, safe liquidity for the
Company,
keeping reserve sources of financing for the needs of current payments,
soliciting specific external financing with flows profile adapted to the profile of cash flows within assets.
In an emergency situation the Company may withdraw from contracting new transactions and appropriate all proceeds
for handling liabilities and renegotiate dates of payment of trade payables. Proceeds are monitored on a current basis by
a specialized organizational unit that takes direct actions in order to ensure that funds are transferred immediately after
228
absence of payment is reported.
In view of stable margins on specific products charged by the Company, the Executive Board regards carrying amounts
of financial assets and liabilities, disclosed at amortised cost, as a reliable approximate of their fair value.
32. Share-based payments
Incentive program entitling to acquire Magellan S.A. shares.
The Company operates a management share option program for the Company’s top management and key employees.
Managers acquired the right, under the management share option program in effect in the Company since 2003, to
acquire shares in the amount not exceeding 5% of share capital of Magellan Sp. z o.o. as at March 14, 2003. Managers
will exercise this right by taking up shares of a new issue at a nominal price, provided that the Company is listed on
the stock exchange before the end of 2007. Once the newly created shares have been taken up by Managers in
accordance with the management share option program guidelines, it will not be possible for the Managers to sell the
shares before the lapse of 2 years from the first listing on the stock exchange. The Company valued the option at a
nominal price of PLN 1 250 (PLN 0.30 per share after the shares are divided). The priority right may be exercised at any
moment after expiry of 2 years from the Company’s first listing on the stock exchange. The option may be acquired on
condition that the IPO takes place in 2007.
Dec. 31, 2003
Dec. 31, 2004
Dec. 31, 2005
Dec. 31, 2006
Number of
options (pcs)
Number of
options (pcs)
Number of
options (pcs)
Number of
options (pcs)
Balance at the beginning
of the period
0
62
70
70
Rights to options
acquired during the year
62
8
-
-
Non-exercise option
-
-
-
-
Exercised during the
year
-
-
-
-
Balance at the end of
the period
62
70
70
70
Options convertible into
shares at the end of the
period
0
0
0
0
Black Scholes model was used to price the program. Subsequent purchases of shares by the holder (Polish Enterprise
Fund IV) changed the number of shares coming under the program and, consequently, the value of the share option
program. Hence, they are treated as changes of program terms and conditions (award of additional options). The
following parameters were used to value the program including additional options:
229
Figures in PLN
March 14, 2003
PLN 31 780
PLN 1 250
60%
Sept. 30, 2009
5.3%
PLN 0
Share price
Option exercise price
Expected volatility
Expected option exercise date
Risk-free yield
Expected dividend
Aug. 6, 2003
PLN 31 780
PLN 1 250
60%
Sept. 30, 2009
5.5%
PLN 0
Oct. 29, 2004
PLN 31 780
PLN 1 250
40%
Sept. 30, 2009
6.9%
PLN 0
The projected volatility rate was determined on the basis of a historic judgment, supported by a volatility analysis for
companies with a similar profile. The pricing assumed that the share price as at the pricing date equals the price at
which Polish Enterprise Fund IV, L.P. acquired shares, i.e. PLN 31 780. The option exercise price equals the nominal
share price, i.e. PLN 1 250. It was assumed for the purposes of pricing that the anticipated option exercise date used in
the model was based on the best estimates of the Executive Board. As at the date of program creation and modification,
the Company did not plan to pay dividends until the end of the option program. The risk-free interest rate was based on
quotations for deposits and IRS.
List of costs recognised by the Company in subsequent years is presented in the table below (figures in
PLN ‘000):
Amount to be settled during the balance sheet period
Figures in PLN
Dec. 31, 2003
Dec. 31, 2004
Dec. 31, 2005
100%
100%
100%
Dec. 31, 2006
Expected program
implementation rate
100%
Total amount recognised in
costs of wages and salaries
and equity in the year
PLN 315 906
PLN 440 814
PLN 508 592
PLN 508 592
PLN 315 906
PLN 756 720
PLN 1 265 312
PLN 1 773 905
Total amount recognised in
costs of wages and salaries
and equity
33. Related party transactions
Polish Enterprise Fund IV, L.P. has been the shareholder with a stake of 100% in the Company’s share capital (parent
company) since December 13, 2005.
On February 3, 2005, the Company established a Law Office in the form of a limited partnership together with the Partner
Attorney Piotr Pszczółkowski. By virtue of decision of March 30, 2005, the Company was entered as a limited partner of
Kancelaria Prawnicza Piotr Pszczółkowski i Wspólnik Spółka Komandytowa [Law Office Piotr Pszczółkowski & Partner
Limited Partnership] in the Register of Business Operators of the National Court Register by the District Court for Łódź –
Śródmieście in Łódź. The amount contributed by „Magellan” Sp. z o.o. was PLN 10 000.00, the commandite sum was set
at PLN 100 000.00. In accordance with the Partnership Deed, the share of the Partnership’s profits depends on the result
generated in a given financial year.
The tasks vested in the Law Office embrace, among others, provision of on-going legal services to the Issuer and
representation of the Issuer in courts as well as state and local administration bodies. Employees of the Law Office
include persons who have co-operated with the Issuer for many years.
On March 19, 2003, „Magellan” Sp. z o.o. became a limited partner with a 60% share of profits of Kancelaria Prawnicza
Aleksander Sękowski i Wspólnik Spółka Komandytowa [Law Office Aleksander Sękowski & Partner Limited Partnership].
„Magellan” Sp. z o.o. made a monetary contribution of PLN 10 000.00, the commandite sum was set at PLN 100 000.00.
On August 29, 2003, the District Court for Łódź – Śródmieście in Łódź, XX Division of the National Court Register entered,
on the basis of decision of August 29, 2003, Kancelaria Prawnicza A. Sękowski i Wspólnik Spółka Komandytowa in the
Register of Business Operators of the National Court Register under number 0000171653 (file no. LD.XX NSREJ.KRS/3714/03/854).
On April 12, 2006, Partners of the Limited Partnership A. Sękowski i Wspólnik Kancelaria Prawnicza passed a resolution
on dissolution of the Partnership. On April 21, 2006 A. Sękowski i Wspólnik Kancelaria Prawnicza Spółka Komandytowa
filed an application for removing the Partnership from the National Court Register (file no.: LD. XX Ns-REJ. KRS
6538/06/120). In connection with the foregoing, since 2006 the Company has lost significant influence on the Law Office’s
business activity.
230
Trade transactions
In the successive years, the entities related to the Company executed the following transactions:
Sale
Receivables from related
parties
Purchase
Year
ended
Year
ended
Year
ended
Year
ended
Year
ended
Year
ended
Dec. 31,
2006
Dec. 31,
2005
Dec. 31,
2004
Dec. 31,
2006
Dec. 31,
2005
Dec. 31,
2004
Dec. 31,
2006
Dec. 31,
2005
Dec. 31,
2004
Payables to related parties
Dec. 31,
2006
Dec. 31,
2005
Dec. 31,
2004
PLN ‘000 PLN ‘000 PLN ‘000 PLN ‘000 PLN ‘000 PLN ‘000 PLN ‘000 PLN ‘000 PLN ‘000 PLN ‘000 PLN ‘000 PLN ‘000
Kancelaria A.
Sękowski i
Wspólnik Spółka
Komandytowa
-
19
96
-
370
454
-
133
256
-
-
-
Kancelaria P.
Pszczółkowski i
Wspólnik Spółka
Komandytowa
60
50
-
441
502
-
14
79
-
18
-
-
The Company generated revenue from related parties on account of rental of office space as well as use of IT network
and data bases. Purchases were made on the basis of effective agreements for provision of legal, debt collection and
court representation services at market prices, taking into account specific rules applicable to settlement of court fees
stipulated by law.
Amounts of unsettled payments are not secured and will be settled in cash. No guarantees were given nor obtained. In
2005, costs of write-downs of PLN 93 thousand related to receivables that were redeemed conditionally in respect of the
Partner as a result of dissolution of Kancelaria A. Sękowski i Wspólnik were recognised. In 2006, entire amount of
receivables from Kancelaria A. Sękowski i Wspólnik was written down.
Remunerations of top management
Remunerations of Members of the Executive Board, Supervisory Board and management in the financial year were as
follows:
Year ended
Dec. 31, 2006
PLN ‘000
Short-term benefits
Post-service benefits
Other long-term benefits
Year ended
Dec. 31, 2004
PLN ‘000
2 075
1 972
1 674
509
509
441
2 481
2 115
2 584
Year ended
Dec. 31, 2006
PLN ‘000
231
Year ended
Dec. 31, 2005
PLN ‘000
Year ended
Dec. 31, 2005
PLN ‘000
Year ended
Dec. 31, 2004
PLN ‘000
Remunerations of the Executive Board
Remunerations of the Supervisory Board
Remunerations of Directors
1 273
89
713
509
2 584
1 090
89
793
509
797
89
788
441
2 481
2 115
Amounts of remunerations of Members of the Executive Board are determined by a resolution of the Supervisory Board,
while amounts of remunerations of Members of the Supervisory Board are defined by a resolution of the Meeting of
Shareholders. Amounts of remunerations of Directors and Department Managers are set by the Company’s Executive
Board.
In the period 2004-2006, no loans were extended to any Members of the Executive Board, Members of the Supervisory
Board, Directors nor Managers. Two loans granted to Managers in 2003 amounting in total to PLN 27 thousand were
repaid in 2004. These loans carried the interest rate of 8%-10% p.a. and were secured with blank promissory notes.
34. Cash and cash equivalents
For the purposes of preparation of the cash flow statement, cash and cash equivalents comprise cash in hand and at
bank. Owing to the nature of pursued activity, the Company classifies flows from granted loans and received interest as
cash flows from operating activities; similarly, interest paid on borrowings and issued bonds is treated as cash flows from
operating activities. Cash and cash equivalents at the end of the financial year disclosed in the cash flow statement may
be reconciled with balance sheet items in the following manner:
Dec. 31, 2006
PLN ‘000
Cash in hand and at banks
Overdraft facility
Cash and cash equivalents classified as held for sale
(Note 12)
Dec. 31, 2005
PLN ‘000
2 924
3 827
Dec. 31, 2004
PLN ‘000
5 539
2 924
3 827
5 539
35. Non-cash transactions and sources of financing
Non-cash transactions – investments and financing
In the financial year 2006, the Company sold property, plant and equipment with a total fair value of PLN 810 thousand,
i.e. a tenement house in Łódź in Wólczańska street, where the Company’s corporate seat was located until March 21,
2006. The sale of the real property was executed on March 27, 2006 at the net value recognised in the Company’s
balance sheet (write-down on the real property as at December. 31, 2005 amounts to PLN 70 005.04).
In the financial year 2004, the Company purchased non-financial fixed assets with the value of PLN 937 thousand within
the framework of finance lease, while in 2005 the value of these assets amounted to PLN 117 thousand. This acquisition
will be reflected as lease payments in the cash flow statement over the term of the finance lease.
Dec. 31, 2006
PLN ‘000
Dec. 31, 2005
PLN ‘000
Dec. 31, 2004
PLN ‘000
Sources of financing
Unsecured bonds: (i)
1. amount used
2. amount not used
29 140
860
30 000
232
10 000
10 000
20 000
-
Secured overdraft facility
3. amount used
4. amount not used
Secured bank borrowings with various dates of maturity
until 2009 with an option of deferment by mutual
agreement:
5. amount used
6. amount not used
(i)
3 004
1 996
5 000
348
652
1 000
-
15 757
246
16 003
3 184
3 184
1 973
1 973
In January 2007, the Company concluded an agreement with the bank BRE S.A. for handling the short-term bonds
issue program for the amount of PLN 70 million and maturity not shorter than 1.5 year. The Bank performs the
function of Dealer and Agent for the issue which is floated off-exchange market. In the 1st quarter of 2007, the
Company issued bonds for the amount of PLN 29 million and maturity of two years, hence the limit to be used
stands at the level of PLN 41 million. The launched program is designated predominantly for the Company’s
products with maturity exceeding 12 months.
36. Contingencies
Dec. 31, 2006
PLN ‘000
Dec. 31, 2005
PLN ‘000
Dec. 31, 2004
PLN ‘000
Contingent liabilities
Court proceedings
-
-
36
1 183
10 133
4 477
-
-
55 237
24 785
1 896
Liabilities under executed conditional agreements (i)
6 538
Liabilities under executed, but not performed, agreements
for disbursement of loan tranches and refinancing of
payables
Liabilities under granted sureties (ii)
Dec. 31, 2006
PLN ‘000
Off-balance sheet assets
Dec. 31, 2005
PLN ‘000
Dec. 31, 2004
PLN ‘000
Financial assets under executed conditional agreements (i)
7 130
1 379
12 000
(i)
Within the framework of pursued activity, the Company enters into conditional agreements for financing of
receivables which provide that an amount claimed constitutes an off-balance-sheet asset until the ban on the
assignment stipulated in the agreement is shifted. The difference between the value of contingent liabilities and a
financial asset is the Company’s remuneration in the form of discount.
(ii)
In 2004, the Company expanded its portfolio of products sold to include the „Guarantee”, i.e. a product based on
the legal structure of surety. Within the framework of the offered product, the Company provides a financial
service consisting in allocation of a limit available to a hospital’s supplier; within this limit the supplier is authorized
to request the Company to make a payment in lieu of the debtor as a result of occurrence of a “claim”. The
Company charges a starting fee for allocating the limit (term and amount stipulated in the agreement) and a fee in
case of a claim. A claim results in a receivable being reported on the Company’s balance sheet. Assets
generated from the “Guarantee” product are characterised by high turnover. In the analysed period, claims
frequency under this product declined gradually as the number of limits sold went up. At end 2006, claims
frequency exceeded slightly the level of 57% of limits sold. The basic instrument securing liquidity on this product
is the overdraft facility, the level of which amounted to PLN 5 million at the end of 2006. The value of funds
involved in handling this product in successive months of 2006 did not exceed PLN 3 million per month.
Below presented are values of sold limits and claims frequency in respective years:
233
Dec. 31, 2006
Dec. 31, 2005
Dec. 31, 2004
PLN ‘000
PLN ‘000
PLN ‘000
Granted sureties
Value of limits sold
Value of assets from claims
Claims frequency %
70 371
23 178
57%
Revenue from fees on limits
Revenue from fees on claims
56 712
12 145
76%
2 285
381
87%
537
917
468
512
27
13
1 454
980
40
37. Events after the balance sheet date
(i)
In January 2007, the Company entered into an agreement with the bank BRE S.A. for handling the short-term
bonds issue program for the amount of PLN 70 million and maturity not shorter than 1.5 year. The Bank performs
the function of Dealer and Agent for the issue which is floated off-exchange market. In the 1st quarter of 2007, the
Company issued bonds for the amount of PLN 29 million and maturity of two years, hence the limit to be used
stands at the level of PLN 41 million. The launched program is designated predominantly for the Company’s
products with maturity exceeding 12 months.
(ii)
On April 6, the Extraordinary General Meeting of Shareholders amended the Company’s Statutes. Pursuant to
the provisions of respective resolutions:
1)
2)
3)
Resolution concerning adoption of amendments to the Statutes. Provisions changed related to the number
and nominal value of common bearer shares of A series in such a manner that the Company’s share
capital amounts to PLN 1 743 750 and is divided into 5 812 500 shares with a nominal value of PLN 0.30
each.
Resolution concerning determination of rules of the Incentive Program to be run by the Company. The
resolution was adopted on the basis of arrangements, made in 2003 between the Company’s
shareholders, Members of the Executive Board and key employees, concerning the award of
management share options. The program covered 5 persons from the Company’s key personnel.
Resolution concerning increase of the Company’s share capital through the issue of B series shares with
the exclusion of the right to acquire shares conferred on existing shareholders.
The share capital of the Company was increased from the amount of PLN 1 743 750.00 by the amount not
higher than PLN 78 476.40 by way of issue of no more than 261 588 common bearer shares of B series
with a nominal value of PLN 0.30 each. In connection with the increase of the share capital through the
issue of B series shares, the Company’s Statutes were amended, i.e. §6.1 was replaced by the following:
„The share capital of the Company amounts to from PLN 1 743 750.30 to PLN 1 822 226.40 and is
divided into:
a) 5 812 500 common bearer shares of A series with a nominal value of PLN 0.30 each,
b) from one to 261 588 common bearer shares of B series with a nominal value of PLN 0.30 each.
This resolution was adopted with the reservation that it will be binding if the Registration Court registers
amendments to the Company’s Statutes made by virtue of resolution no. 1 of the Extraordinary General
Meeting of Shareholders of April 6, 2007 and will enter into force on the date of registration of the above
mentioned amendments. Conclusion of agreements for acquisition of B series shares will commence only
after the amendments to the Company’s Statutes referred to above have been registered.
Pursuant to the decision of the District Court for Łódź Śródmieście in Łódź of April 27, 2007 the number
and nominal value of Company shares was changed. The share capital remains unchanged.
(iii)
Increase of the share capital through the issue of C series shares, issued pursuant to the Resolution no. 1 of the
Extraordinary General Meeting of Shareholders of the Issuer of April 26, 2007 concerning increase of the
Issuer’s share capital by way of issue of no more than 440 000 C Series Shares with the exclusion of the right to
acquire shares conferred on existing shareholders and concerning amendments to the Issuer’s Statutes in
connection with the C Series Shares Issue.
(iv)
By virtue of resolution no. 2/01/2007 of March 19, 2007 the Supervisory Board of Magellan S.A. granted consent
for establishing a counterpart of a limited liability company on the territory of the Czech Republic. Magellan S.A.
will acquire 100% shares in the newly established company.
234
•
In view of the foregoing, the Executive Board of the Company Magellan S.A., based on resolution no.
1/05/04/2007 of April 5, 2007, decided to establish the following commercial limited liability company on the
territory of the Czech Republic:
•
Name of the limited liability company: MedFinance Magellan, s.r.o.
•
Corporate seat of the limited liability company: Prague
•
Business activity of the limited liability company:
- administrative services as well as organizational and economic services,
- business, financial, organizational and economic advising activities,
- advertising and marketing activities.
•
Executive Board of the limited liability company: Dr Dariusz Zbigniew Strojewski, Ing Dariusz Błaszczyk.
•
Share capital of the limited liability company: CZK 200 000. 00.
•
Administrator of contribution to the limited liability company: Magellan S.A., with its corporate seat in Łódź,
85/87 Sienkiewicza street, postal code 90-057, Poland.
•
100% shareholder of the limited liability company: Magellan S.A.,
Based on the Company’s application of April 25, 2007, the Municipal Court in Prague registered the Company
MedFinance Magellan s.r.o. under number 124667.
(v)
On February 27, 2007, the Voivodship Administrative Court issued judgement (file no. I SA/Łd 1240/06 and I
SA/Łd 1239/06), after the case was heard at a trial on February 13, 2007. The judgment revoked appealedagainst decisions and the preceding decision of the Director of the Revenue Chamber, and adjudged court fees
in favour of the Company as reimbursement of costs of litigation. The Judgment of the Court confirmed also that
the Director of the Revenue Chamber incorrectly classified financial intermediation services provided by the
Company as debt collection services, taxed with the basic rate. Following the advantageous judgement of the
Voivodship Administrative Court, the Company verified recognised adjustments and reversed entries made in the
financial statements for 2006. Consequently, the Company reported an amount receivable from the Revenue
Office of PLN 3 185 thousand on account of paid VAT and interest on late payment. The Voivodship
Administrative Court declared the judgement to be final and binding as from April 28, 2007.
38. Differences in respect of previously published financial statements
Until the end of 2006, the Company prepared its financial statements in accordance with Polish accounting policies
following from the Polish Accounting Act.
The presented historic financial information covering the years 2004 – 2006 has been prepared in accordance with
IFRS as approved by the European Union. January 1, 2004 has been set as the date of transition to IFRS. As at the
date of transition to IFRS, the Company identified all areas of differences between the accounting policies applied by
the Company to date and IFRS. The differences identified in these areas concern values as well as method of
presentation and disclosures.
The identified differences that influence the results generated in the respective years concern only valuation of the
management share option program which was not measured in the financial statements prepared in accordance with
the Polish Accounting Act owing to absence of regulations in this respect. However, in the financial statements prepared
in accordance with IFRS, these options are subject to measurement and disclosure under IFRS 2. Moreover, the
Company introduced also presentation changes in respect of former financial statements prepared according to the
Polish Accounting Act; these changes did not exert any significant influence on the financial standing of the Company
and its property. Presentation changes concerned changes in the balance sheet, income statement as well as cash flow
statement.
Below presented are the differences between IFRS approved by the European Union and accounting policies applied in
Poland that the Company has identified and disclosed. The differences concern equity as at December 31, 2003 and
December 31, 2004, December 31, 2005, December 31, 2006 and the net financial result for the period of 12 months
ended December 31, 2003 and December 31, 2004, December 31, 2005, December 31, 2006.
Equity
Equity as at
Equity as at
Equity as at
Equity as at
December 31, 2003 December 31, 2004 December 31, 2005 December 31, 2006
PLN ‘000
Equity according to PAA
Impact on equity – valuation
of the management share
PLN ‘000
PLN ‘000
PLN ‘000
30 748
40 463
49 999
61 171
316
441
509
509
235
option program
Impact on profit/loss –
valuation of the management
share option program
Equity according to IFRS
(316)
(441)
(509)
(509)
30 748
40 463
49 999
61 171
Net financial result
Net financial result Net financial result
as at
as at
December 31, 2003 December 31, 2004
PLN ‘000
Valuation of the
management share option
program
according to IFRS
PLN ‘000
as at
December 31, 2005
as at
December 31, 2006
PLN ‘000
PLN ‘000
4 524
5 284
9 575
11 211
(316)
(441)
(509)
(509)
4 208
4 843
9 066
10 702
39. Approval of the financial statements
The financial statements were approved by the Executive Board i and authorised for issue on April 30, 2007.
236
Condensed Historic Financial Information
in Accordance with IFRS
Magellan S.A.
for the period of six months ended June 30, 2007
222
Table of contents
CONDENSED HISTORIC FINANCIAL INFORMATION FOR THE PERIOD OF SIX MONTHS ENDED JUNE 30, 2007
INCOME STATEMENT
BALANCE SHEET
STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
CASH FLOW STATEMENT
223
The financial statements prepared for the period from January 1, 2007 to June 30, 2007 and for the comparable period
of the preceding year were not subject to the interim review procedure.
1.
Income statement
Period ended June
30, 2007
Period ended June
30, 2006
PLN ’000
PLN ’000
Sales revenue
Depreciation/amortization
Cost of advisory services
14 967
10 999
99
88
2 497
2 160
198
489
115
366
Costs of portfolio financing 4
2 298
567
Other expenses
1 696
950
Operating profit
8 065
6 379
(86)
18
Finance income
37
50
Finance costs
30
42
7 986
6 405
Income tax
1 636
1 393
Net profit (loss) from continuing operations
6 350
5 012
Discontinued operations
0
0
Net profit (loss) from discontinued operations
0
0
6 350
5 012
5 838 659
1 395
1.09
3 593
from continuing and discontinued operations:
1.09
3 593
Basic
1.09
3 593
from continuing operations:
1.09
3 593
Basic
1.09
3 593
Net profit (loss)
Number of shares
Earnings (loss) per share
(in PLN/gr per share)
Diluted
Diluted
•
4
In view of significance of this item, costs related to seeking and maintaining external financing of the assets portfolio held have
been separated from other expenses.
224
2.
Balance sheet
Period ended June
30, 2007
Period ended June
30, 2006
PLN ’000
PLN ’000
ASSETS
Fixed assets
486
635
221
301
38
20
Investments in subsidiaries, affiliates and associated companies
Deferred tax assets
1 440
697
8 503
12 753
10 688
14 406
501
1 247
135 830
70 028
Total fixed assets
Current assets
Taxes receivable
3 185
0
663
46
6 922
11 386
Total current assets
147 100
82 707
Total assets
157 788
97 113
Other assets
225
Period ended June
30, 2007
Period ended June
30, 2006
PLN ’000
PLN ’000
SHAREHOLDERS’ EQUITY AND LIABILITIES
1 822
1 744
57 654
48 216
Reserves
1 883
1 517
Retained earnings
6 350
3 748
67 709
55 225
39 779
476
868
636
40 648
1 112
8 552
19 828
17 094
3 000
22 766
17 060
701
332
18
169
300
387
Total short-term liabilities
49 431
40 776
Total liabilities
90 079
41 888
157 788
97 113
Total shareholders’ equity
Total long-term liabilities
Other liabilities
226
3.
Statement of changes in shareholders’ equity
Share
capital
Supplementary
capital
Reserves
Retained
earnings
Total
PLN ’000
PLN ’000
PLN ’000
PLN ’000
PLN ’000
1 744
48 217
61 171
78
6 350
6 350
109
109
0
11 211
1 822
59 428
(11 211)
1 883
4 575
67 708
Share
capital
Supplementary
capital
Reserves
Retained
earnings
Total
PLN ’000
PLN ’000
PLN ’000
PLN ’000
PLN ’000
1 744
38 681
1 265
8 309
50 000
5 013
5 013
252
(39)
(39)
252
Dividend
As at June 30, 2006
9 436
78
Dividend
As at June 30, 2007
1 774
9 536
1 744
48 217
227
(9 536)
1 517
3 747
55 226
4.
Cash flow statement
Period ended June
30, 2007
Period ended June
30, 2006
PLN ’000
PLN ’000
Cash flows from operating activities
Profit for the financial year
Income tax paid
(Profit)/loss from investing activities
Interest paid
Depreciation of fixed assets
7 986
6 662
(1 220)
(1 326)
(24)
(13)
39
42
198
489
153
(571)
(Increase)/decrease in other financial assets
(15 054)
(6 540)
Increase/(decrease) in balance of trade and other payables
(21 926)
2 046
179
39
(997)
(162)
109
254
44
(121)
(30 513)
798
(Increase)/decrease in balance of trade and other receivables
Increase/(decrease) in provisions
Increase/(decrease) in other liabilities
Valuation of management share option
Valuation of borrowings and bonds
Cash generated from operating activities
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
Expenditure on acquisition of property, plant and equipment
24
874
(65)
(209)
Net cash (expended)/generated in connection with investing activities
(41)
665
78
0
Cash flows from financing activities
Proceeds from issue of equity shares
Proceeds from borrowings
17 176
2 000
Repayment of borrowings
(15 876)
(2 532)
Proceeds from bonds issue
Redemption of bonds
Repayment of obligations under finance leases
70 291
12 354
(36 850)
(5 424)
(229)
(261)
(39)
(42)
34 551
6 096
Net increase in cash and cash equivalents
3 997
7 560
Cash and cash equivalents at the beginning of the financial year
2 924
3 827
Cash and cash equivalents at the end of the financial year
6 922
11 386
Interest paid
Net cash used in financing activities
228
CHAPTER 25
SCHEDULES
Schedule No 1: Articles of Association
Articles of Association
Magellan Spółka Akcyjna
I. General Provisions
§1
The Company operates under the business name Magellan Spółka Akcyjna, hereinafter referred to as “the
Company”. The Company may trade under the abbreviated business name of Magellan S.A.
§2
The registered seat of the Company is in the city of Łódź.-----------------------------------
§3
The object of the Company’s operations comprises: ---------------------------------------------------------------12. 65.12. B Other pecuniary intermediation, not classified elsewhere;--------------------------------------------13. 65.21. Z Financial leasing; -------------------------------------------------------------------------------------------14. 65.22. Z Other forms of extending credit facilities; --------------------------------------------------------------15. 65.23. Z Other financial intermediation, not classified elsewhere; ---------------------------------------------16. 67.13. Z Auxiliary financial activities, not classified elsewhere;---------17. 74.87. B Other commercial activities, not classified elsewhere;----------18. 93.05. Z Other service activities, not classified elsewhere;------------------------------------------------------19. 74.13.Z Market and public opinion studies; -----------------------------------------------------------------------20. 74.14.A Advisory services with respect to pursuit of business activity and management;-------------------21. 74.14.B Management and administration with respect to pursuit of business activity; ----------------------22. 74.30. Z Technical studies and analyses. ----------------------------------------------------------------------------
§4
The Company operates within the Republic of Poland and abroad. The Company establishes and
maintains representative offices and domestic and foreign branches as well as participating in other companies in
Poland and abroad.----------------------------------------------227
§5
The Company is established for an indefinite term. ----------------------------------------------------------------
§6
1.
The share capital of the Company is PLN 1,743,750 (one million seven hundred and forty-three thousand
seven hundred and fifty złoty) and is divided into 5,812,500 (five million eight hundred twelve thousand five
hundred) ordinary A-series bearer shares with a nominal value of PLN 0.30 (thirty grosz) each. ----------------
2.
The Company may issue registered shares and bearer shares.---------------------------------------------------------
§7
The Company may increase its share capital by way of new share issues. Decisions concerning priority
rights in acquisition of new shares by existing shareholders at the request of the Executive Board are adopted by
the General Meeting by way of a resolution. ----------------------------------------------------------------------------------
§8
Shares may be redeemed with the permission of the shareholder by way of their purchase by the Company.
Voluntary redemption may not be effected more often than once every financial year. ---------------------------------
II. Governing Bodies of the Company
§9
The governing bodies of the Company comprise the Executive Board, the Supervisory Board, and the
General Meeting.------------------------------------------------------------------------------------------------------------------
A. The Executive Board
§ 10
1.
Executive Board members are appointed by the Supervisory Board by way of a resolution. ---------------------
228
2.
The Company’s Executive Board is composed of between three (3) and four (4) members appointed for a joint
period in office. The period in office of the first Executive Board shall be two (2) years, and the period in
office of every consecutive Executive Board – four (4) years. --------------------------------------------------------
3.
From amongst the Executive Board members, the Supervisory Board shall appoint – by way of a resolution – a
President, with whom an employment contract or another contract shall be executed. The Supervisory Board
shall sign this contract and represent the Company in dealings with the Executive Board; this provision shall
apply mutatis mutandis to other members of the Executive Board.---------------------------------------------------
4.
The mandates of the Executive Board members shall expire as at the day of the General Meeting approving the
financial report for the last full financial year of the Executive Board member’s service.-------------------------
5.
Executive Board members may be removed at any time by the Supervisory Board or by the General Meeting;
such removal shall remain without prejudice to claims extending to the Executive Board members under their
employment relations. ------------------------------------------------------------------------------------------------------
§ 11
1.
The Executive Board is empowered to take any and all decisions not reserved for other governing bodies of the
Company. The Executive Board is obligated to manage the assets and the affairs of the Company with due care
and skill of a standard appropriate for business activity, to abide the law, by the provisions of these Articles of
Association, and by the resolutions adopted by the General Meeting and the Supervisory Board within the
scope of their competences. ------------------------------------------------------------------------------------------------
2.
The Executive Board manages the affairs of the Company, representing the Company before the courts and out
of court. -----------------------------------------------------------------------------------------------------------------------
3.
The Executive Board pursues its activities on authority of these Articles of Association and of the Executive
Board By-Laws approved by the Supervisory Board. ------------------------------------------------------------------
§ 12
1. Authority to make binding declarations with respect to rights and obligations of the Company and to sign on
behalf of the Company extends to two Executive Board members acting jointly or to one Executive Board
member acting jointly with a proxy. -------------------------------------------------------------------------------------2. The Executive Board may authorise plenipotentiaries, acting independently within the powers of attorney
extended to them by the Executive Board, to perform acts of a specific kind. -------------------------------------3. Appointment of a proxy shall require permission of all the Executive Board members; proxy powers may be
revoked by a decision of any Executive Board member. ---------------------------------------------------------------
§ 13
The Company, acting on the basis of an Executive Board resolution, may pay out to its shareholders an
advance towards the dividend projected for the end of the financial year, provided that the Company holds
229
sufficient funds for such a pay-out and as qualified by pertinent provisions of the Polish Commercial Companies
and Partnerships Code. -------------A pay-out of an advance towards dividends shall require permission of the Supervisory Board, expressed in
the form of a resolution.----------------------------------------------------------------------------------------------------------
B. The Supervisory Board
§ 14
2.
The Company’s Supervisory Board is composed of between five (5) and seven (7) members.-------------------
3.
The Supervisory Board is appointed and removed by the General Meeting, as qualified by § 14.3 and 14.4
below. -------------------------------------------------------------------------------------------------------------------------
4.
For as long as Polish Enterprise Fund IV, L.P. continues to hold shares in the Company entitling it to 50% or
more of the votes at the General Meeting, Polish Enterprise Fund IV, L.P. shall be entitled to appoint and
remove:------------------------------------------------------a.
Three (3) members of a five-person Supervisory Board, including the Chairman;-----------------------------------------------------------------------
b.
Four (4) members of a six- or seven-person Supervisory Board, including the Chairman.--------------------------------------------------------------
5.
For as long as Polish Enterprise Fund IV, L.P. continues to hold shares in the Company entitling it to 20% or
more – but less than 50% - of the votes at the General Meeting, Polish Enterprise Fund IV, L.P. shall be
entitled to appoint and remove:---------------------a.
Two (2) members of a five-person Supervisory Board, including the Chairman;-----------------------------------------------------------------------
b.
Three (3) members of a six- or seven-person Supervisory Board, including the Chairman.-----------------------------------------------------------------
6.
At least half the Supervisory Board’s composition should be independent members.
7.
A Supervisory Board member is deemed to be independent when she/he:--------------------a.
Is not employed at the Company;---------------------------------------------------------------
b.
Does not hold more than 5% of shares in the Company; ------------------------------------
c.
Is not an employee of the firm auditing the Company’s financial report; ---------
d.
Is not a relative (up to the second degree) of an employee of the Company or of shareholders holding
more than 5% of shares in the Company;-------------------------
e.
Is not an employee, member of the governing bodies, owner, or shareholder of a business enterprise
pursuing activities competitive vis a vis those of the Company. ---
230
8.
The conditions of independence discussed in § 14.6 above must be fulfilled by a member of the Company’s
Supervisory Board also with respect to parent companies and to subsidiaries of the Company. ------------------------------------------------------------------------
9.
A candidate for the Supervisory Board should present to the Company a written declaration of fulfilment of the
conditions laid down in § 14.6 and 14.7 above and promptly notify the Company in the event that the situation
described therein changes in the course of her/his period in office.-------------------------------
10. Supervisory Board members are appointed for a joint period in office of three (3) years. The mandates of the
Supervisory Board members shall expire as at the day of the General Meeting approving the financial report
for the last full financial year of the Supervisory Board member’s service.--------------------------------------------------------------------------11. Departing Supervisory Board members may be re-elected or re-appointed for another period in office.--------------------------------------------------------------------------------------
§ 15
1.
As qualified by § 14.3 and 14.4 above, the Supervisory Board shall, at its first session, appoint a Chairman and
a Vice Chairman by an absolute majority of the votes of the Supervisory Board members in attendance cast in
a secret ballot.----------------------------------------------------------------------------------------------------------------
2.
Supervisory Board members shall exercise their rights and perform their duties in person only.-----------------
3.
Supervisory Board sessions shall be called by the Chairman or, in the event of her/his absence, by the Vice
Chairman.---------------------------------------------------------------------------------------------------------------------
4.
Where requested by the Executive Board, a Supervisory Board session should be held within fourteen (14)
days following submission of the request to the Chairman or the Vice Chairman. ---------------------------------
§ 16
1.
Supervisory Board resolutions are adopted by an absolute majority of the votes cast by the Supervisory Board
members in attendance at the session. In the event of a tied vote, the Chairman shall have the deciding vote.-
2.
In order for a Supervisory Board resolution to be valid, all the Supervisory Board members must have been
invited to the session and at least half the Supervisory Board members must be in attendance. ------------------
3.
As qualified by pertinent provisions of the Polish Commercial Companies and Partnerships Code, Supervisory
Board members may participate in the adoption of Supervisory Board resolutions by casting their vote in
writing through the intermediation of another Supervisory Board member. Such written voting may not refer to
issues added to the agenda while the given Supervisory Board session was already underway. ------------------
4.
As qualified by pertinent provisions of the Polish Commercial Companies and Partnerships Code, the
Supervisory Board may adopt resolutions by way of a written procedure or by using means of direct longdistance communication (by telephone or by other means guaranteeing that all the Supervisory Board
231
Members may communicate with one another). A resolution adopted in accordance with the above shall be
valid only if all the Supervisory Board members have been presented with that resolution’s draft. In the event
of a written ballot, the Supervisory Board Chairman shall cast her/his vote first and then forward the text of the
resolution to the remaining Supervisory Board members. The resolution shall become legally binding once
signed by an absolute majority of the Supervisory Board members. The adoption of a resolution by using
means of direct long-distance communication shall be endorsed by the Supervisory Board Chairman, who
collects the votes of the remaining Supervisory Board members, with such endorsement assuming the form of
an annotation on the resolution about the procedure of its adoption and of the votes cast by the individual
Supervisory Board Members. Under both the procedures described above, in the event of a tied vote, the
Chairman shall have the deciding vote. ---------------------------------------------------------------------------------5.
Unless the body empowered to appoint Supervisory Board members decides otherwise, Supervisory Board
members shall receive remuneration for the performance of their duties. The amount of this remuneration shall
be set by way of a General Meeting resolution. -------------------------------------------------------------------------
6.
The Supervisory Board operates on the basis of these Articles and of the by-laws defining its organisation and
the means of performance of its duties, as adopted by the General Meeting.----------------------------------------
§ 17
1. The Supervisory Board maintains ongoing supervision of the Company’s activities. --------2. The Supervisory Board’s scope of responsibilities shall include, in particular:---------------------------------------a) Approval of the Company’s annual financial plans (the budget) and strategic business plans; the budget should
include, at the very least, the Company’s operating plan, the plan of revenues and expenses for the given
financial year, a projection of the balance sheet as at the end of the financial year, a cash flow plan for the
financial year, and a plan of Company expenditures departing beyond the scope of its ordinary course of
business; ----------------------------------------------------------------------------------------------------------------------b) Expressing permission for incurring by the Company of loans and credit facilities not provided for in the annual
budget as well as for extending guarantees and for instituting any encumbrances upon the assets of the
Company and for incurring by the Company of liabilities with respect to guarantees and other off-balance sheet
liabilities other than such liabilities as have been provided for in the budget;---------------------------------------c) Expressing permission for incurring by the Company of liabilities – with respect to a single transaction or to a
series of interrelated transactions – of an aggregate value in excess of EUR 150,000 (one hundred and fifty
thousand euro), or the equivalent thereof in another currency, within a single financial year where such
liabilities are not provided for in the budget approved in accordance with the Company’s Articles of Association
and do not follow from the Company’s ordinary operations; ----------------------------------------------------------d) Expressing permission for institution of a pledge or lien or of a mortgage upon assets of the Company or for
transfer of the Company’s assets for security and for other encumbrances of the Company’s assets not provided
for in the budget approved in accordance with the Company’s Articles of Association; ----------------------------
232
e) Expressing permission for purchase or acquisition by the Company of shares in other commercial companies and
for the Company’s accession to other business entities as well as for establishment of branches of the Company;
---------------------------------------------------------------------------------------------------------------------------------f) Expressing permission for divestment of assets of the Company to a value exceeding 10% (ten percent) of the
Company’s net book value established on the basis of the most recent audited financial report; -----------------g) Expressing permission for divestment or transfer of copyrights or other intellectual property, in particular rights
in patents and technologies and trademarks, departing beyond the scope of ordinary management and not
provided for in the budget; -------------------------------------------------------------------------------------------------h) Expressing permission for retaining by the Company, or by the Company’s subsidiaries, of advisors and other
parties external vis a vis the Company or the Company’s subsidiaries in the capacity of consultant, legal
counsel. or agent where the aggregate annual cost of retaining such persons to be borne by the Company not
provided for in the budget were to exceed EUR 40,000.00 (forty thousand euro) or the equivalent thereof in
another currency; ------------------------------------------------------------------------------------------------------------i) Approval of management options by-laws; --------------------------------------------------------------------------------j) Selection of the qualified auditor for examination of the Company’s annual financial reports, as discussed in art.
395 of the Polish Commercial Companies and Partnerships Code, in keeping with Polish and international
accounting principles; -------------------------------------------------------------------------------------------------------k) Appointment and removal of members of the Company’s Executive Board, suspension of individual Executive
Board members or of the entire Executive Board, and defining the principles for remuneration of the members
of the Company’e Executive Board as well as the remuneration policies for the Company; ----------------------l) Expressing permission for the execution of contracts between the Company, or subsidiaries of the Company, on
the one hand and members of the Company’s Executive Board, members of the Supervisory Board, or affiliates
of any member of the Company’s Executive Board or member of the Supervisory Board on the other, defining
limits for the value of such contracts and the conditions the fulfilment of which exempts the given contract from
the necessity of securing Supervisory Board authority; ----------------------------------------------------------------ł) Expressing permission for the manner of voting by the Company in its capacity as significant shareholder on the
governing bodies of other companies with respect to, per analogam, the matters specified in § 17.a – 17.o of
these Articles of Association; ----------------------------------------------------------------------------------------------m) Expressing permission for effecting by the Company, or by subsidiaries of the Company, of any free-of-charge
disposals, or for the incurring of any free-of-charge obligations or liabilities, within the scope of the Company’s
business activities in a value exceeding PLN 1,000,000.00 (one million złoty); ------------------------------------n) Expressing permission for effecting by the Company, or by subsidiaries of the Company, of any free-of-charge
disposals, or for the incurring of any free-of-charge obligations, departing beyond the scope of the Company’s
business activities in a value exceeding PLN 80,000.00 (eighty thousand złoty); ----------------------------------------233
o) Disposal of rights or incurring of liabilities in excess of PLN 10,000,000.00 (ten million złoty);-------------------------------------------------------------------------p) Other matters, as specified in these Articles of Association and in the Polish Commercial Companies and
Partnerships Code.
For these purposes, the term “equivalent” shall denote the Polish złoty equivalent of an amount denominated in
euro or in another currency calculated in accordance with the average currency exchange rates announced by
the National Bank of Poland on the day directly preceding that on which the Company, or a subsidiary of the
Company, has applied for permission to the Supervisory Board .--------------------
C. The General Meeting
§ 18
1.
The General Meeting may hold ordinary or extraordinary sessions.--------------------------------------------------
2.
An ordinary General Meeting should be held within six (6) months following every financial year. ------------
3.
An extraordinary General Meeting is called by the Executive Board acting of its own initiative or at the request
of the Supervisory Board or at the request of shareholders representing at least one-tenth of the share capital.
An extraordinary General Meeting should be called within fourteen (14) days following submission of the
request to that effect along with a proposed agenda and with draft resolutions. ------------------------------------
4.
The General Meeting shall be called by way of an announcement published in Monitor Sądowy i Gospodarczy
at least twenty-one (21) days before the designated time.------------
5.
General Meetings shall be held at the Company’s registered seat or in Warsaw.------------------------------------
6.
The General Meeting shall consider only such matters as are included on the agenda. The General Meeting
may adopt resolutions on matters not included on the agenda under the condition that the entire share capital is
represented and that none of the attending shareholders has objected to the adoption of such resolution.-----------------------------------
7.
The General Meeting operates on the basis of these Articles of Association and of the by-laws adopted by the
General Meeting. ------------------------------------------------------------------------------------------------------------
§ 19
1.
Shareholders shall participate in General Meetings in person or by proxy, pursuant to written powers of
attorney.------------------------------------------- ----------------------------------------------------------------------------
2.
Shareholders participating in the General Meeting shall have a number of votes corresponding to the number
of shares held by them. -------------------------------------------------------- ---------------------------------------------
3.
The General Meeting shall be chaired by a representative of the shareholders appointed by the General
Meeting; the chair should be appointed before the General Meeting embarks on its deliberations.---------------------------------------------------------------------------------234
4.
General Meeting sessions shall be opened by the Supervisory Board Chairman - or, in the event of her/his
absence, by the Vice Chairman – who shall chair the proceedings until a chair of the session has been
appointed.------------------------------------------------------------- --------------------------------------------------------
§ 20
1.
The General Meeting shall be competent to adopt binding resolutions irrespective of the number of shares
represented at the given session, as qualified by provisions of the Polish Commercial Companies and
Partnerships Code which call for a qualified majority. -----------------------------------------------------------------
2.
All General Meeting resolutions shall be adopted by an absolute majority of the votes unless pertinent
provisions of the Polish Commercial Companies and Partnerships Code institute stricter requirements for such
resolutions. ------------------------------------------------------------------- ------------------------------------------------
§ 21
Validity of General Meeting resolutions concerning material change of the object of the Company’s
activities shall not require buying up the shares of any shareholders who do not agree to such change provided that
these resolutions have been adopted by a majority of two-thirds of the votes in the presence of persons representing
at least half the share capital. ----------------------------------------------------------------------------------------------------
§ 22
Responsibilities of the General Meeting shall include, in particular: ---------------------------------------------1.
Defining, at the request of the Executive Board, the general directions of the Company’s growth and
programmes for its operations; ---------------------------------------------------------------------------------------
2.
Consideration and approval of the Executive Board’s report on activities of the Company and of the
financial report for the financial year; -------------------------------------------------------------------------------
3.
Distribution of profits and covering of losses, earmarking of the development fund and of the reserve
funds; --------------------------------------------------------------------------------------------------------------------
4.
Approval of the records in office of the members of the Company’s Supervisory Board and Executive
Board;--------------------------------------------------------------------------------------------------------------------
5.
Increase or decrease of the share capital; ---------------------------------------------------------------------------
6.
Amendment of the Company’s Articles of Association, including changes in the object of the Company’s
activities;
7.Merger of companies;----------------------------------------------------------------------------------------------------8.Winding down of the Company; ---------------------------------------------------------------------------------------9.Consideration of, and ruling on, motions submitted by the Supervisory Board; ---------------------------------10.Adopting by-laws for General Meeting sessions and for operations of the Supervisory Board; -------------235
11.Other matters, as specified in these Articles of Association and in the Polish Commercial Companies and
Partnerships Code.-----------------------------------------------------------------------------------------------------------
III. Accounting of the Company
§ 23
1.
The financial year of the Company shall coincide with the calendar year. -----------------------------------------
2.
The first financial year shall end on 31.12.2006 (December the thirty-first in the year two thousand and six).
§ 24
Within three (3) months following the elapse of the financial year, the Company’s Executive Board shall
draw up and present to the Supervisory Board the Executive Board’s report on operations of the Company and the
financial report for the preceding financial year.------------------------------------------------------------------------------
§ 25
The Company shall establish the following funds: ------------------------------------------------------------------1.
Contingency fund; until the contingency fund has attained at least one-third of the amount of the share
capital, at least 8% of the profit for the given financial year shall be credited to the contingency fund; ---
2.
Reserve funds, in accordance with resolutions of the General Meeting. ----------------------------------------
§ 26
The Company may establish funds, including: -----------------------------------------------------------------------1.
A social benefits fund; -------------------------------------------------------------------------------------------------
2.
Other funds, as defined by applicable laws. ------------------------------------------------------------------------
IV. Final Provisions
§ 27
In the event that the balance sheet drawn up by the Executive Board shows a loss in excess of the sum of the
contingency fund, the reserve funds, and one-third of the share capital, the Executive Board shall promptly call a
General Meeting with a view to resolving on continued existence of the Company. -----------------------------------236
§ 28
Winding down of the Company shall be effected upon the completion of liquidation, as at the moment in
which the Company is struck out from the register. Liquidation shall proceed under the business name of the
Company with the suffix “in liquidation”. The General Meeting shall appoint two liquidators who will be jointly
empowered to sign on behalf of the Company. -------------------------------------------------------------------------------
§ 29
Issues not addressed in these Articles of Association shall be regulated by pertinent provisions of the Polish
Commercial Companies and Partnerships Code and of other applicable legal instruments. ----------------------------
§ 30
Announcements by the Company shall be placed in Monitor Sądowy i Gospodarczy.--------------------------
§ 31
Any disputes arising in connection with these Articles of Association shall be considered by the court with
jurisdiction over the seat of the Company.---
237
238
Schedule No 2: Register Court Extract
______________________________________________________________________________________
CODo
WA/20.08/111/2007
Operator: OSIK BOŻENA
Page 1 of 7
DIVISION OF CENTRAL INFORMATION OFFICE
OF THE NATIONAL COURT REGISTER
ul. Barska 28/30
Warsaw
THE NATIONAL COURT REGISTER
OFFICIAL COPY
OF CURRENT RECORD
IN THE REGISTER OF ENTREPRENEURS
KRS NUMBER: 0000263422
August 20, 2007 - 11:04:22 hours
08.09.2006
Date of registration
at the National Court Register
Latest entry
Entry number
4
Date of entry
File number
LD.XX NS-REJ.KRS/10292/07/921
Court
THE DISTRICT COURT FOR ŁÓDŹ ŚRÓDMIEŚCIE
IN ŁÓDŹ
THE NATIONAL COURT
REGISTER 20TH DIVISION
Section 1
−
1. Legal form
Box 1 – Business entity
JOINT STOCK COMPANY (SPÓŁKA AKCYJNA)
239
12.06.2007
2. REGON number
REGON: 471987671; NIP: 9471800271
3. Company business name
MAGELLAN SPÓŁKA AKCYJNA
4. Previous court registration
-------
5. Does the enterprise
NO, IT DOES NOT.
pursue business activity
together with other entities
under a deed of partnership?
6. Does the enterprise have
NO, IT DOES NOT.
the status of an organisation
of public benefit?
−
1. Registered office
Box 2 – Registered office and company address
country: POLAND, voivodeship: ŁÓDZKIE, poviat: ŁÓDŹ,
location: ŁÓDŹ
2. Company address:
SIENKIEWICZA 85/87, office: FLAT 9, ZIP CODE: 90-057 ŁÓDŹ
−
Box 3 – Branches
No entries
−
1. Information about
signing of or
amendments to Company
Box 4 – Company Deed
1
COMPANY ARTICLES OF AUGUST 17, 2006, NOTARIAL DEED BY OLGA
BOGUSZ, ASSISTANT NOTARY TO ALICAJ JANOWSKA, NOTARY PUBLIC,
NOTARY’S OFFICE IN WARSAW; REPERTORIUM A 7956/2006
2
24.11.2006, MARIA ALICJA JANOWSKA, NOTARY PUBLIC,
Deed
NOTARY’S OFFICE IN WARSAW, REPERTORIUM A 11583/2006 – AMENDED
PARAGRAPH 14 SECTION 3, PARAGRAPH 18 SECTION 5, PARAGRAPH 20
SECTION 3 OF COMPANY’S ARTICLES
3
APRIL 6, 2007, REPERTORIUM A NUMBER 2792/2007, NOTARY PUBLIC
TADEUSZ SWIECICKI , NOTARY’S OFFICE IN ZGIERZ, BY RESOLUTION NO.
1/2007 GENERAL MEETING OF SHAREHOLDERS AMENDED THE WHOLE
EXISTING ARTICLES BY ADOPTION OF ITS NEW CONTENTS.
4
6.04.2007, NOTARY PUBLIC TADEUSZ SWIECICKI , NOTARY’S OFFICE IN
ZGIERZ REPERTORIUM A NO 2792/2007, AMENDMENT TO PARAGRAPH 6
SECTION 1 OF THE ARTICLES
9.05.2007, NOTARY PUBLIC GRZEGORZ ROGALA, NOTARY’S OFFICE IN
WARSAW REPERTORIUM A NO.1995/2007, EXISTING PARAGRAPHS 20-33 OF
THE ARTICLES WERE DESIGNATED AS PARAGRAPHS 18- 31
23.05.2007, NOTARY PUBLIC ARTUR STRZEPEK, NOTARY’S OFFICE IN
240
LODZ, REPERTORIUM A NO. 5090/07, EXECUTIVE BOARD DECISION TO
SPECIFY THE AMOUNT OF THE INITIAL CAPITAL IN PARAGRAPH 6
SECTION 1 OF THE ARTICLES
−
Box 5
1. Term for which the company
was formed
NOT SPECIFIED
2. Gazette for company’s
announcements, other than
---------
Monitor Sądowy
i Gospodarczy
NO, IT DOES NOT.
4. Does the statute grant
individual shareholder’s rights
or titles to participate in company’s
profits or assets other than those in
shares?
NO, THEY ARE NOT.
5. Are the bondholders entitled to
participate in profits?
−
Box 6 – Manner of company formation
1. Circumstances of formation
TRANSFORMATION
2.Description of formation,
TRANSFORMATION OF MAGELLAN SPOLKA Z OGRANICZONA
ODPOWIEDZIALNOSCIA IN LODZ INTO MAGELLAN SPOLKA AKCYJNA IN
LODZ –SHAREHOLDERS MEETING RESOLUTION OF 22.05.2006.
information about resolution
NOTARIAL DEED, NOTARY PUBLIC MARIA ALICJA JANOWSKA, NOTARY’S
OFFICE IN WARSAW, REPERTORIUM A NO. 4727/2006, AMENDED BY
RESOLUTION OF SHAREHOLDERS MEETING OF AUGUST 16, 2006,
NOTARIAL DEED BY OLGA BOGUSZ ASSISTANT TO NOTARY PUBLIC
MARIA ALICJA JANOWSKA, NOTARY’S OFFICE IN WARSAW,
REPERTORIUM A 7939/2006
3. Number and date of decision of
the President of Office for Competition and
------
Consumer Protection to give
consent to concentration.
1. Entities from which the company was created
1
1. Business name
MAGELLAN SPOLKA Z OGRANICZONA ODPOWIEDZIALNOSCIA
2. Register
THE NATIONAL COURT REGISTER
241
3. Register number
0000038232
4. Name of court maintaining companies -----register
5. REGON number
471987671
Box 7 – The sole shareholder
−
−
No entries
Box 8 – Company equity
−
1. Share capital
PLN 1,822,226.40
2. Target capital
------
3. Number of shares from all
issues
6074088
4. Nominal value of a share
PLN 0.30
5. Amount paid for capital
PLN 1,822,226.40
6. Nominal value of conditional -----initial capital increase
Sub-Box 1
In-kind contributions
No entries
−
1
2
Box 9 – Share issue
1. Name of series of shares
A
2. Number of series shares
5812500
3. Kind of preference and number of
preference shares
NON PREFERENCE SHARES
1. Name of series of shares
B
2. Number of series shares
261588
3. Kind of preference and number of
preference shares
−
NON PREFERENCE SHARES
Box 10 –Resolution on issue of convertible bonds
No entries
−
Box 11 –Resolution on issue of convertible bonds
242
1. Is the executive or administrative board
authorised to issue subscription warrants?
NO, IT IS NOT.
Section 2
−
Box 1 – Company representation
1.
Body authorised to represent
the company.
2. Manner of representation
THE EXECUTIVE BOARD
TO MAKE STATEMENTS CONCERNING COMPANY’S
PROPRIETARY RIGHTS AND DUTIES AND TO SIGN DOCUMENTS
IN COMPANY’S NAME – TWO EXECUTIVE BOARD MEMBERS
ACTING JOINTLY OR ONE EXECUTIVE BOARD MEMBER ACTING
TOGETHER WITH A COMMERCIAL PROXY.
−
Sub-Box 1
Members of the body
1.
1. Surname
STROJEWSKI
2. Names
DARIUSZ ZBIGNIEW
3. PESEL/REGON number
60031703671
4. KRS number
****
5. Function performed in the body
PRESIDENT OF EXECUTIVE BOARD
authorised to represent the entity
6. Has the person being member
NOT SUSPENDED.
been suspended in the performance
his/her duties?
2.
7. The end of the period of suspension
****
1. Surname
KAWALEC
2. Names
KRZYSZTOF BOGUMIŁ
74011302479
4. KRS number
****
VICE PRESIDENT OF EXECUTIVE BOARD
NOT SUSPENDED.
his/her duties?
243
3.
****
1. Surname
GRABOWICZ
2. Names
GRZEGORZ MARIUSZ
73081506392
4. KRS number
****
MEMBER OF EXECUTIVE BOARD
NOT SUSPENDED.
his/her duties?
****
−
1
Box 2 – Supervision
1. Body to perform supervision
THE SUPERVISORY BOARD
−
−
1
2
3
4
5
Sub-Box 1
Members of the body
1. Surname
PROŃCZUK
2. Names
DARIUSZ
3. PESEL number
61101402294
1. Surname
KORNATOWSKI
2. Names
MICHAŁ
3. PESEL number
56031005776
1. Surname
KRÓL
2. Names
SEBASTIAN
3. PESEL number
72031208018
1. Surname
PIEKARSKI
2. Names
ZDISŁAW
3. PESEL number
55010507232
1. Surname
DUSZYŃSKI
2. Names
TADEUSZ
3. PESEL number
61020600678
244
6
−
1. Surname
GRABOWSKI
2. Names
BOGUSŁAW
3. PESEL number
59111502152
−
Box 3 – Commercial Proxy
−
Box 1 – Business objectives
No entries
Section 3
1. Company’s business objectives
1
74, 13, Z MARKET RESEARCH AND PUBLIC OPINION POLLING
2
74, 14, A BUSINESS AND MANAGEMENT CONSULTANCY ACTIVITIES
3
74, 14, B BUSINESS AND MANAGEMENT ACTIVITIES
4
74, 30, Z TECHNICAL TESTING AND ANALYSIS
5
74, 87, B OTHER COMMERCIAL ACTIVITIES N.E.C.
6
93, 05, Z OTHER SERVICE ACTIVITIES N.E.C.
7
65, 12, B OTHER MONETARY INTERMEDIATION N.E.C.
8
65, 21, Z FINANCIAL LEASING
9
65, 22, Z OTHER CREDIT GRANTING
10
65, 23, Z OTHER FINANCIAL INTERMEDIATION N.E.C.
11
67, 13, Z ACTIVITIES AUXILIARY TO FINANCIAL INTERMEDIATION
N.E.C.
−
Box 2 –Documents filed
No entries
−
Box 3 – Reports of capital group
No entries
−
Box 4 – Statutory objectives of public benefit organization’s activity
No entries
245
Section 4
Box 1 – Arrears
−
No entries
−
Box 2 – Debts
No entries
−
Box 3 – Security established on debtor’s assets in bankruptcy proceedings, in the form of: suspension of execution proceedings being
conducted against it, dismissal of application for declaration of bankruptcy due to the fact that the bankrupt debtor’s assets are
insufficient for satisfaction of the costs of proceedings
No entries
−
Box 4 – Limitation of the execution proceedings being conducted against the company due to the fact that it is impossible to obtain an
amount that would be higher than the costs of execution proceedings
No entries
Section 5
−
Box 1 – Trustee
No entries
Section 6
−
Box 1 – Liquidation
No entries
−
Box 2 – Information concerning the liquidation or voiding of the Company
No entries
−
Box 3 – Receivership
No entries
−
Box 4 – Information concerning merger, division or transformation
246
No entries
Box 5 – Information concerning liquidation proceedings
−
No entries
−
Box 6 – Information concerning arrangement proceedings with creditors
No entries
−
Box 7 – Information concerning reorganization proceedings
No entries
Warsaw, 20.08.2007, 11:04:24
Schedule No 3: Subscription order form
Subscription order form
The subscription order form for ordinary bearer Series A and C Shares (“Offered Shares”) of Magellan S.A. with its
registered seat in Łódź (“Company”). By virtue of this document a subscription order is made for Offered Shares with the
nominal value of PLN 0.30 each share, offered on the terms and conditions and in accordance with the principles as
described in the Issue Prospectus of Magellan S.A. approved on August 28, 2007 (“Prospectus”).
Investor placing subscription order:
□ Institutional Investor
□Individual Investor
Name and surname/ Business name:...............................................................................................................................................
Address of residence/registered business address:..........................................................................................................................
Address for correspondence ...........................................................................................................................................................
(1)
Foreign exchange status:
□ Resident
□ Non-resident
Type, series and number of identity document, PESEL / series and no. of passport / or KRS number, REGON number or
another identification number / number of register relevant for the country of registration:
.................................................................................................................................................................................................................
Investor’s plenipotentiary or representative of legal person or organizational unit not having legal personality (name
and surname, series and number of identity document, PESEL / series and number of passport/ address of place of
residence):
.................................................................................................................................................................................................................
Number
of
subscribed
Offered
Shares:
...............................................................................................................
Maximum Price/Price of one Offered Share: PLN ...............................................................................................................
Amount paid for Offered Shares: PLN .........................................................................................................................................
Manner
of
payment:
……………………………………….....................................................................................................
Bank or investment account, for possible reimbursement of amount paid, in the event of allocation of a lower number
of Offered Shares or none:
Account number: ……….....................................................................................................................................................................
Bank:
…...................................................................................................................................................................................
Attention: Any consequences of improper or incomplete fulfilment of this subscription order form for Offered Shares will
be incurred by Investor.
247
Investor’s Declaration
I hereby declare that:
I know the contents of the Company’s Prospectus and Articles of Association; I give consent for such text of the
Company’s Articles of Association and accept the terms and conditions of the Public Offering;
I give consent for the allocation of Offered Shares as prescribed in Prospectus;
I give consent to processing of my personal data to the extent as necessary for the performance of the Public Offering,
specifically to processing of the data by the Offeror, i.e. UniCredit CA IB Polska S.A., ul. Emilii Plater 53, 00-113 Warsaw,
and declare that the data presented in this order for subscription form have been put in it voluntarily; I acknowledge
that I am entitled to review my personal data and to introduce corrections.
I give consent to the Offeror and to the entity taking this order for subscription of shares to disclose the information
constituting professional secret relating to my order for subscription of Offered Shares to Issuer and Selling Shareholder,
to the extent being necessary for performance of the Public Offering, and authorize those entities to receiving such
information.
...............................................................................
Date and signature of investor or plenipotentiary
...............................................................................
Date of taking order for subscription, signature and
stamp of person taking the order and address stamp
of the brokerage house
248
ORDER FOR DEPOSITING OF SHARES
I hereby place an irrevocable and unconditional order for depositing on my securities account no.:
.................................................................................................................................................................................................................
operated by (full name of the entity operating the account and its KDPW code):
.................................................................................................................................................................................................................
all Offered Shares allocated under the Prospectus of Magellan S.A. with its registered seat in Wrocław.
...............................................................................
...............................................................................
Date and signature of investor or plenipotentiary
Date of taking order for subscription, signature and
stamp of person taking the order and address stamp
of the brokerage house
Attention: Any consequences of improper filling out of this order for depositing of Offered Shares by reasons caused by
the party placing the order will be incurred by that party.
249
Schedule 4: List of Customer Service Locations taking orders for subscription of Offered Shares
Orders placed by Institutional Investors
UniCredit CA IB – UniCredit CA IB Polska S.A.
Location
Warszawa
Post code
00-113
Street address
ul. Emilii Plater 53
Telephone number
(22) 520 99 99
Brokerage House
UniCredit CA IB
Orders placed by Individual Investors
BPH – Biuro Maklerskie Banku BPH S.A.
No.
Post code
Location
Street address
Brokerage House
1
15-950
Białystok
Rynek Kościuszki 7
BPH
2
17-100
Bielsk Podlaski
ul. Adama Mickiewicza 53
BPH
3
43-300
Bielsko Biała
ul. R. Dmowskiego 16
BPH
4
32-700
Bochnia
ul. Kazimierza Wielkiego 9
BPH
5
85-004
Bydgoszcz
ul. Jagiellońska 34
BPH
6
89-600
Chojnice
ul. Stary Rynek 11-13
BPH
7
32-500
Chrzanów
al. Henryka 20
BPH
8
32-500
Chrzanów
al. Henryka 55
BPH
9
39-200
Dębica
ul. Tadeusza Kościuszki 6
BPH
10
80-237
Gdańsk
ul. Jana Uphagena 27
BPH
11
44-100
Gliwice
ul. Studzienna 5
BPH
12
88-100
Inowrocław
ul. Solankowa 2
BPH
13
40-161
Katowice
al. Wojciecha Korfantego 56
BPH
14
47-220
Kędzierzyn Koźle
al. Jana Pawła II 7
BPH
15
25-519
Kielce
al. 1000 lecia Państwa Polskiego 4
BPH
16
78-100
Kołobrzeg
ul. Ppor. Edmunda Łopuskiego 6
BPH
17
30-955
Kraków
ul. Józefińska 18
BPH
18
30-019
Kraków
ul. Mazowiecka 25
BPH
19
31-072
Kraków
ul. Starowiślna 2
BPH
20
38-400
Krosno
ul. Tysiąclecia 1
BPH
21
20-076
Lublin
ul. Krakowskie Przedmieście 72
BPH
22
18-400
Łomża
ul. Zawadzka 4
BPH
23
90-950
Łódź
al. Tadeusza Kościuszki 63
BPH
24
90-950
Łódź
ul. Pilota Stanisława Wigury 21
BPH
25
06-500
Mława
ul. Joachima Lelewela 6
BPH
26
41-400
Mysłowice
ul. Mikołowska 6
BPH
27
33-300
Nowy Sącz
ul. Jagiellońska 26
BPH
28
32-300
Olkusz
ul. Kazimierza Wielkiego 49
BPH
29
10-959
Olsztyn
ul. Dąbrowszczaków 11
BPH
30
45-018
Opole
pl. Wolności 3
BPH
250
31
07-410
Ostrołęka
ul. Inwalidów Wojennych 23/2
BPH
32
32-600
Oświęcim
ul. Władysława Jagiełły 12
BPH
33
09-400
Płock
ul. Tysiąclecia 10
BPH
34
61-738
Poznań
pl. Wolności 18
BPH
35
05-800
Pruszków
al. Wojska Polskiego 23
BPH
36
26-600
Radom
ul. Tadeusza Kościuszki 2
BPH
37
44-200
Rybnik
ul. Chrobrego 8
BPH
38
35-017
Rzeszów
ul. Bernardyńska 7
BPH
39
41-200
Sosnowiec
ul. Małachowskiego 3
BPH
40
70-233
Szczecin
Pl. Zwycięstwa 1
BPH
41
33-100
Tarnów
ul. Wałowa 10
BPH
42
34-100
Wadowice
ul. Lwowska 9
BPH
43
00-513
Warszawa
ul. Nowogrodzka 11
BPH
44
00-958
Warszawa
ul. Towarowa 25
BPH
45
00-374
Warszawa
al. Jerozolimskie 2
BPH
46
00-987
Warszawa
ul. ks.I. Kłopotowskiego 15
BPH
47
00-693
Warszawa
ul. Nowogrodzka 50
BPH
48
00-060
Warszawa
ul. Królewska 27
BPH
49
87-800
Włocławek
ul. Reja 7/9
BPH
50
50-950
Wrocław
ul. Ruska 51
BPH
51
41-800
Zabrze
pl. Warszawski 9
BPH
52
65-213
Zielona Góra
ul. Podgórna 9a
BPH
53
34-300
Żywiec
ul. Kościuszki 46
BPH
CDM – Centralny Dom Maklerski Banku Pekao S.A.
No.
Post
code
Location
Street address
Brokerage House
1
21-500
Biała-Podlaska
Pl. Wolności 23
CDM
2
15-443
Białystok
Al. Piłsudskiego 11/2
CDM
CDM
3
43-300
Bielsko-Biała
ul. Stojałowskiego 31
4
49-300
Brzeg
ul. Bolesława Chrobrego 14C
CDM
5
85-824
Bydgoszcz
ul. Wojska Polskiego 20a
CDM
6
85-034
Bydgoszcz
ul. Długa 57
CDM
7
22-100
Chełm
Pl. Niepodległości 1
CDM
8
42-200
Częstochowa
ul. Kopernika 17/19
CDM
9
39-200
Dębica
ul. Kolejowa 29
CDM
10
82-300
Elbląg
ul. Stary Rynek 18A
CDM
11
19-300
Ełk
ul. Piłsudskiego 14
CDM
12
08-400
Garwolin
ul. Kościuszki 32
CDM
13
80-244
Gdańsk
ul. Grunwaldzka 92/98
CDM
14
80-391
Gdańsk
ul. Kołobrzeska 43
CDM
15
81-319
Gdynia
ul. Śląska 23/25
CDM
16
44-100
Gliwice
ul. Berbeckiego 4
CDM
17
66-400
Gorzów Wielkopolski
ul. Wełniany Rynek 18
CDM
18
86-300
Grudziądz
ul. Chełmińska 68
CDM
19
14-200
Iława
ul. Jana III Sobieskiego 47
CDM
20
37-500
Jarosław
Pl. Mickiewicza 2
CDM
251
21
38-200
Jasło
ul. Kościuszki 33
CDM
22
43-600
Jaworzno
ul. Mickiewicza 17
CDM
23
58-500
Jelenia Góra
Pl. Wyszyńskiego 35
CDM
24
62-800
Kalisz
ul. Śródmiejska 29
CDM
25
40-121
Katowice
ul. Chorzowska 1
CDM
26
25-301
Kielce
ul. Sienkiewicza 18
CDM
27
46-203
Kluczbork
ul. Grunwaldzka 13c
CDM
28
57-300
Kłodzko
Pl. Bolesława Chrobrego 20
CDM
29
62-510
Konin
ul. Kosmonautów 14
CDM
30
75-204
Koszalin
ul. Jana z Kolna 11
CDM
31
30-005
Kraków
ul. Bracka 1a
CDM
32
23-203
Kraśnik
ul. Kochanowskiego 1
CDM
33
38-400
Krosno
ul. Powstańców Warszawskich 3
CDM
34
99-300
Kutno
ul. 29 Listopada 15
CDM
35
64-100
Leszno
ul. Wróblewskiego 6
CDM
36
59-300
Lubin
ul. Bankowa 16a
CDM
37
20-104
Lublin
ul. Królewska 1
CDM
38
20-076
Lublin
ul. Krakowskie Przedmieście 62
CDM
39
18-400
Łomża
ul. Małachowskiego 1
CDM
40
99-400
Łowicz
ul. Długa 27
CDM
41
90-418
Łódź
Al. Kościuszki 3
CDM
42
90-361
Łódź
ul. Piotrkowska 270
CDM
43
90-051
Łódź
Al. Piłsudskiego 12
CDM
44
39-300
Mielec
ul. Pisarka 10
CDM
45
05-300
Mińsk Mazowiecki
ul. Warszawska 133
CDM
46
34-400
Nowy Targ
Al. Tysiąclecia 35A
CDM
47
48-300
Nysa
ul. Marcinkowskiego 1
CDM
48
10-118
Olsztyn
ul. 1-go Maja 10
CDM
49
45-027
Opole
ul. Osmańczyka 15
CDM
50
27-400
Ostrowiec Świętokrzyski
ul. Kilińskiego 15
CDM
51
64-920
Piła
ul. Browarna 21
CDM
52
97-300
Piotrków Trybunalski
ul. Armii Krajowej 24
CDM
53
09-400
Płock
ul. Jachowicza 32
CDM
54
61-807
Poznań
ul. Św. Marcin 52/56
CDM
55
61-767
Poznań
ul. Masztalarska 8a
CDM
56
37-700
Przemyśl
ul. Mickiewicza 6
CDM
57
24-100
Puławy
ul. Partyzantów 8
CDM
58
26-610
Radom
ul. Kilińskiego 15/17
CDM
59
97-500
Radomsko
ul. Piastowska 16
CDM
60
41-709
Ruda Śląska
ul. Niedurnego 34
CDM
61
35-959
Rzeszów
Al. Cieplińskiego 1
CDM
62
27-600
Sandomierz
ul. Kościuszki 4
CDM
63
38-500
Sanok
ul. Kościuszki 12
CDM
64
08-110
Siedlce
ul. Wojskowa 24
CDM
65
26-100
Skarżysko-Kamienna
ul. Bolesława Prusa 12
CDM
66
76-200
Słupsk
ul. Tuwima 30
CDM
67
81-874
Sopot
ul. Mikołaja Reja 13/15
CDM
68
37-450
Stalowa Wola
ul. Jana Pawła II 13
CDM
69
73-110
Stargard Szczeciński
ul. Czarnieckiego 16
CDM
70
16-400
Suwałki
ul. Kościuszki 72
CDM
CDM
71
71-419
Szczecin
Pl. Żołnierza Polskiego 16
72
70-400
Szczecin
ul. Bogurodzicy 5
CDM
73
70-412
Szczecin
Al. Niepodległości 31
CDM
252
74
58-100
Świdnica
ul. Rynek 30
CDM
75
72-600
Świnoujście
ul. Piłsudskiego 4
CDM
76
33-100
Tarnów
Pl. Kazimierza Wielkiego 3a
CDM
77
97-200
Tomaszów Mazowiecki
ul. Mościckiego 31/33
CDM
78
87-100
Toruń
ul. Grudziądzka 29
CDM
79
58-300
Wałbrzych
ul. Sienkiewicza 8
CDM
80
00-549
Warszawa
ul. Piękna 18
CDM
81
00-095
Warszawa
Pl. Bankowy 2
CDM
82
00-043
Warszawa
ul. Czackiego 21/23
CDM
83
00-828
Warszawa
ul. Jana Pawła II 15
CDM
84
03-472
Warszawa
ul. Brechta 3
CDM
85
02-019
Warszawa
ul. Grójecka 1/3
CDM
86
02-675
Warszawa
ul. Wołoska 18
CDM
87
02-776
Warszawa
ul. Dereniowa 9
CDM
88
98-300
Wieluń
Pl. Kazimierza Wielkiego 3
CDM
89
87-800
Włocławek
Pl. Wolności 15
CDM
90
50-125
Wrocław
ul. Św. Mikołaja 8-11
CDM
91
50-123
Wrocław
ul. Oławska 2
CDM
92
22-400
Zamość
ul. Grodzka 2
CDM
93
98-220
Zduńska Wola
Al. Kościuszki 2
CDM
94
65-054
Zielona Góra
ul. Dr. Pieniężnego 24
CDM
253
ISSUER
Magellan S.A.
ul. Sienkiewicza 85/87
90-057 Łódź
Tel.: (42) 637 1790
www.magellan.pl
LEGAL ADVISORS
of Issuer
GESSEL. Beata Gessel-Kalinowska vel Kalisz i Wspólnicy Spółka Komandytowa
ul. Sienna 39, 00-121 Warsaw
Tel. (022) 318 69 01
www.gessel.com.pl
of Offeror
Dewey Ballantine Grzesiak Spółka Komandytowa
Budynek Giełdy Papierów Wartościowych
ul. Książęca 4
00-498 Warsaw
Tel. (22) 690 61 00
www.deweyballantine.com
QUALIFIED AUDITOR
Deloitte Audyt Sp. z o.o.
ul. Piękna 18
00-549 Warsaw
Tel.: (22) 511 08 11
www.deloitte.pl
254
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