Emitents | Olainfarm, AS (213800WCG52W62ENOP27) |
Veids | Citi |
Valoda | EN |
Statuss | Publicēts |
Versija | |
Datums | 2015-05-10 23:31:51 |
Versijas komentārs | |
Teksts |
Report of the Supervisory Council of JSC „Olainfarm” to the General
Meeting of Shareholders
Supervisory Council of JSC „Olainfarm” has read the Consolidated
and Parent Company’s Annual reports for 2014, as well as
Independent Auditors’ Report about it. In addition, the Council has
assessed financial position of the Company and Operations of the
Management Board during this financial year and hence produced this
Report.
The Council is satisfied that this has been the sixth consecutive
year since the Company is demonstrating considerable profitability
and sales of the Company continue growing. Although during 2014
serious economic turbulences were experienced by four markets
important to the Company, it managed to increase its sales in
almost all of them. It resulted in overall sales of the
Company increasing by more than 20%. We would like to
particularly stress Company’s successful cooperation with its
Polish partners as well as increasing shipments to the World Health
Organization. In both cases Company’s sales during this year have
grown by different factors, and, which is particularly important,
they contribute to independence from currently unstable markets of
CIS countries.
Because of successfully established and growing chain of pharmacies
as well as improving operations of SIA Silvanols, company managed
to stabilize its positions on Latvian market even further as Latvia
is now very clearly a second most important market for the
Company. Every fifth euro during 2014 was received from
Company’s Latvian partners, while every third euro came from sales
to EU countries. Since pharmaceutical sector is very seriously
regulated, the Supervisory Council regards this as an important
achievement for market diversification.
Consolidated profit of the Company in 2014 was 12.2 million euros,
while profit of the parent company exceeded 11.4 million
euro. Throughout the year we had reasonable expectations that
the Company will be able to meets its profit guidances of 15 and 14
million euros respectively. However, the rapid devaluation of
Russian Ruble versus the Euro at the end of 2014, as well as
adverse fluctuations of other currencies generated the total
foreign exchange loss of 4.5 million euro, which made the meeting
of initial profit targets practically impossible. The Council
has drawn the attention of the Management Board to the fact that
this is yet another proof that further diversification of sales
markets is of utmost importance for stable development of the
company.
Since over the last number of years Company has been undergoing a
phase of very significant sales increases, the Council has
repeatedly drawn Board’s attention to the necessity to follow
carefully if the Company has all the technological capacities
necessary for further development. Council very highly
appreciates the work conducted by the Board for modernization of
the production and respective raising of funding. While
during the last two years significant improvements have been made
to modernize production processes, a lot remains to be done in the
near future for improving production infrastructure. Not only
will it significantly improve environmental standards of the
Company, but if funded using different sources of support, should
also provide considerable economic effect.
Because of the necessity to continue with investments, including
investments into production related infrastructure, as well as
taking into consideration still unstable situation in sales markets
important to the Company, the Council maintains its previously
expressed proposal, to abstain from declaring dividends until the
profits of 2015 are distributed. If the situation does not
deteriorate, the Council might ask the shareholders to approve
dividends from the profit of 2015, with a payout ratio of 17.5%
The Council continues carefully following recent developments in
Russia, which remains the main market of the Company.
Although on a numerous occasions, including this Report, the
Council has drawn Board’s attention to necessity to diversify
Company’s sales markets, in order to reduce dependency on a market
as unstable as Russia today, by no means is the Council supporting
any reduction of operations or activity in Russia. Instead,
the diversification should be promoted by achieving even bigger
sales increases in other countries. The council still regards
an acquisition of similar profile company, whose sales markets are
significantly different from Company’s markets as one of the
particularly efficient ways for increasing sales diversity. Council
invites the Board to put even more effort in considering
development of this kind.
Council regards acquisition
of 70.88% stake of SIA “Silvanols” and a further increase to nearly
97% an important but insufficient step to better sales market
diversity. In collaboration with SIA “Silvanols” the Company
has a very real chance to strengthen its positions domestically, in
CIS countries and other countries, where entry with food
supplements is easier.
During 2014 the Council of
the Company has performed its duties and supervised operations of
the Company according to legislation, decisions by the general
meetings. The Council has approved financial statements and
overviewed operations of Company’s management. During the
reporting period 25 Council meetings were held. During these
meetings, Board reports, plans, planned and actual budgets were
reviewed. Agenda items of general meetings were pre-approved.
Council found no insufficiencies in Boards operations in
2014. To a large extent the Board has been consulting the
Council and has taken into account all previously mentioned and
other recommendations of the Council targeted at safe further
development of the Company.
The Council would like to
take this opportunity to thank the Board, all employees of the
Company, its partners for successful operations in 2014,
congratulate shareholders with good results and wish a successful,
stable and positively challenging 2015 and the further years.
Approved by the Council
Meeting on May 5, 2015
Chairwoman of the
Council
Valentina Andrejeva
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