|Emitents||Olainfarm, AS (213800WCG52W62ENOP27)|
|Veids||3.1. Papildu regulētā informācija, kas ir jāatklāj saskaņā ar dalībvalsts tiesību aktiem|
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 2017, 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.
In Council’s opinion, the last year has been a year of challenges. AS the second quarter of the year passed with foreign exchange loss created predominantly by fluctuations of Russian Rouble, it became obvious that not only will the Company have difficulties meeting revenue and earnings guidances, but it may as well fail to repeat the results of 2016. Increasing administrative and marketing costs only contributed to such possibility. The following quarters did not break this trend in any meaningful manner. Although, the worsening of financial performance was largely caused by foreign exchange loss, reduced profitability makes the Council to invite the Board to pay more attention to issues related to profitability. Such issues include, but are not limited to feasibility and transparency marketing and sales costs of the Company and its daughter enterprises. Although the Council fully realizes that increased marketing costs are vital to successful entry to the new markets and launching of new products, it invites to take a more critical view on necessity for high marketing costs for existing products in existing markets. The Council also suggests that the Board carefully watches the developments of value of investment properties, so they can provide maximum benefit for the company in future.
The Council would like to compliment activities of the Board in relation to Company’s receivables, particularly those from Ukrainian company OLFA, which is one of the major partners of the Company. The developments that have been achieved in this respect during 2017 have allowed the company to reduce the provisions made to secure receivables from this partner. Similarly, the Council would like to point to successful operations of some of the daughter companies in 2017, as Latvijas Aptieka, Silvanols and Tonus Elast paid total dividends of 1.5 million euros to the Parent company.
Council is glad to see that during 2017 the Company managed to significantly reduce related party lending. Largely this has been possible due to relatively large dividend payments during 2017, when 0.64 euros per share were paid as dividends. However, the Council would like to draw the attention of the Board and shareholders, that maintaining such practice for extended periods may cause liquidity complications and limit Company’s longer-term development and therefore could not be supported. Therefore, the Council supports the proposal of the Board to pay 0.21 euros per share in dividends in 2018 splitting in in two payments.
During 2017, the Council of the Company has performed its duties and supervised operations of the Company according to legislation, decisions by the general meeting. The Council has approved financial statements and overviewed operations of Company’s management. During the reporting period up until preparation of this report 15 Council meetings were held. During these meetings, Board reports, Board composition, plans, planned and actual budgets were reviewed. Agenda items of general meeting was pre-approved. Council found no significant insufficiencies in Boards operations in 2017. The Board has been in constant consultations with 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 cannot omit mentioning the unexpected passing away of Mr. Valerijs Maligins at the end of 2017. Input of Mr. Maligins in development, growth and strengthening of the Company is impossible to overestimate. Although this sudden loss of the long-term leader of the company created a whole range of challenges to the Company, the Council is sure that management structure of the Company and its entire team have made their best effort, to make this tragic event leave as little impact on daily operations of the Company, as possible.
The Council would like to take this opportunity to thank the Board, all employees of the Company and its partners for cooperation in 2017, and to wish successful, stable and positively challenging next year.
Approved by the Council Meeting on May 8, 2018
Chairman of the Council Ivars Godmanis
Information prepared by: