Information on the audit opinion

The text of the audit opinion

The AUDITOR’S OPINION (INDEPENDENT AUDITOR’S REPORT) was provided to the National Commission for Securities and Stock Market to the Participants and management of PJSC “International Energy Company” by the independent auditing firm PE ACC “INTERNATIONAL STANDARD” in accordance with contract No. МЕК-27/12/12-Д dated 27.12. 2012, Kyiv, March 18, 2013 Auditor’s opinion (Report of an independent auditor) on the financial statements of the Private Joint Stock Company “International Energy Company” as of 12/31/2012 for 2012. Kyiv, March 18, 2013. To the National Commission for Securities and the Stock Market To the participants and management PJSC “International Energy Company” 1. On the basis of contract No. МЕК-27/12/12-Д dated 12.27.2012. which consists of the Financial Report of the small business entity of the Balance sheet as of 12/31/2012 (form #1), the Report on financial results for 2012 (form #2). 2. Basic information about the Company whose financial statements are subject to verification 2.1. Additional information on the audit of financial statements General information about the Company: Name Private joint-stock company “International Energy Company” (hereinafter – PrJSC “MEK” or the Company) Code according to EDRPOU 36285564 Organizational and legal form of the subject of the audit (KOPFG) 230 Joint-Stock Company N of the certificate of state registration and date of issuance of the certificate Series A 01 No. 212334 The company was registered on January 29, 2009, entry number in the Unified State Register of Legal Entities and Individual Entrepreneurs 1 068 102 0000 023987. Series A 01 No. 372861 – making changes in connection with the name change of the Company, registered on 04/28/2011, entry number in the Unified State Register of Legal Entities and Individual Entrepreneurs 1 068 105 0004 023987. The body that issued the certificate Holosiivska District in the city of Kyiv, the state administration Legal address 03127, Kyiv, 40-ryechi Zhovtnia ave., bldg. 93, k. 212 Actual address 01004, Kyiv, str. Gorkogo, 7-V Telefax Phone: (097)718-60-77 Registration with tax authorities Taken for tax registration: at the DPI in the Holosiivskyi district of Kyiv on 02.03.2009. under No. 10169/29-219. Main activity (KVED-2005, KVED-2010) 46.69 Wholesale trade of other machines and equipment 51.87.0 Wholesale trade of other machines and equipment 40.12.0 Electricity transmission 45.21.1 Construction of buildings 51.90.0 Other types of wholesale trade 73.10. 2 Research and development in the field of technical sciences Date of the last meeting of the founders The meeting of the founders based on the results of 2012 was not held on the date of the audit, they will be held after the date of the audit. Name, location, telephone number of the custodian (if available) Prybutok Plus LLC EDRPOU 25395301, Kyiv, Volodymyrska St., 101, 01033. Agreement No. Name, location, telephone number of the depository (permit number, by whom and when issued). Details and term of validity of the contract with him. The full name is Public Joint-Stock Company “National Depository of Ukraine”. CODE according to EDRPOU – 30370711 Location – 01001, Kyiv, str. B. Grinchenko, 3 License series – AB No. 189650, issued by the State Securities Commission of Ukraine on September 19, 2006, No. 823, for carrying out depository activities of the securities depository. The license is valid until September 19, 2016. Tel./fax: (044) 279-10-78; (044) 377-70-16 Agreement No. E-69/Art. dated 16.01.2009, valid for an indefinite period 2.2. The company has the following accounts in banks: Name of the bank institution, MFI Account name Account number Branch of AB “Pivdenny” m. Kyiv MFI 320917 Current (hryvnias) 26000310831001 The company has a seal and is a legally independent, independent legal entity. There are no structural divisions, as well as separate divisions and branches. 2.4. Data on the participants (founders) of PJSC “International Energy Company” as of 12/31/2012: Name Division into shares, units Share in authorized capital, % Monetary expression of share, UAH. PJSC “International Investment Group” 399.0 99.75 960093.75 Babenko Ya.O. 1.0 0.25 2406.25 Total: 400.0 100.0 962500.00 3. An audit was conducted of the set of financial statements of PJSC “International Energy Company” for 2012, which consists of the following reports: • Balance sheet as of December 31, 2012 (form No. 1), • Report on financial results for 2012 (form No. 2-m), /reporting forms are attached/. In addition, the founding and registration documents of the Company and changes to them, primary financial and economic documents, protocols, contracts, bank documents and accounting registers for 2012 were checked, as well as access to the 1C: Accounting program, in which financial records are kept – economic activity of the Company. 3.1. Management’s Responsibility for Financial Reporting The Company’s management is responsible for the preparation and fair presentation of these financial statements in accordance with National Financial Reporting Standards and for such internal control as management determines is necessary to ensure the preparation of financial statements that are free from material misstatement. as a result of fraud or error. Management’s responsibility also includes selecting and applying appropriate accounting policies and accounting estimates that are appropriate in the circumstances. In the period during which the inspection was carried out, those responsible for the financial and economic activity of the enterprise were: Director – Oleksandr Markiyanovych Maslyak (accepted to the position of director according to order No. 1-k dated September 29, 2009); The position of chief accountant is not provided for. 3.2. Auditor’s responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted an audit in accordance with International Auditing Standards. International auditing standards require us to plan and perform an audit to obtain reasonable assurance that the financial statements are free of material misstatements. An audit involves performing audit procedures to obtain audit evidence regarding amounts and disclosures in financial statements. Selection of procedures depends on the professional judgment of the auditor. Such procedures include the assessment of the risks of material misstatement of the financial statements due to fraud or error. When assessing these risks, the auditor considers internal control measures, relating to the preparation and fair presentation of financial statements, for the purpose of developing audit procedures that are appropriate in the circumstances, and not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used, the acceptability of accounting estimates made by management, and the overall presentation of financial statements. During the audit, the auditors assumed that the data and information provided in the primary documents are reliable and correspond to the essence of the business transactions. The audit did not consider the issue of correct payment of taxes, fees, and mandatory payments. Every year, at the end of each current year, PJSC “International Energy Company” conducts an inventory. In accordance with order No. 02/11/12 dated 02.11.2012, as of 31.12.2012, an inventory of the Company’s assets and liabilities was carried out. The auditors did not observe the inventory, which was carried out before the preparation of the financial statements for 2012, because this date preceded the date scheduled for the audit. The audit includes an assessment of the applied principles of the National Accounting Regulations (standards) in Ukraine and significant preliminary assessments made by the management staff of the Company, as well as an assessment of the general presentation of financial statements as a whole. 4. The audit established: 4.1. Availability and immutability of the Company’s accounting policy In accordance with the requirements of the Law of Ukraine “On Accounting and Financial Reporting in Ukraine” dated 16.07.1999 under No. 996-XIV, Provisions (Standards) of accounting and with the aim of ensuring uniform principles, methods, and procedures for displaying business transactions in accounting and preparing financial statements, the Company issued Order No. 04/01/12 dated 04.01.2012 “On the organization of accounting and accounting policy”. The accounting policy reflects all fundamental issues of the Company’s accounting organization. The audit established that the accounting policy adopted by the Company remained unchanged during 2012. 4.2. Description of audited financial information by types of assets As of December 31, 2012, the Company’s assets consist of non-current and current assets. The auditor considered the principles of correct classification and assessment of assets in the Company’s accounting, namely: 4.2.1. As of 31.12.2012 fixed assets and intangible assets are not included in the Company’s balance sheet. 4.2.2. Formation of the initial value and subsequent evaluation of financial investments is carried out in accordance with P(S)BO 12 “Financial Investments”. Financial investments are reflected in accounting at cost. Long-term financial investments are recorded on the balance sheet of the Company as of December 31, 2012 in the amount of UAH 963.5 thousand. Balances on account 14 “Long-term financial investments” correspond to analytical accounting data. 4.2.3. Accounts receivable according to calculations with the budget – UAH 4.0 thousand. 4.2.4. Other current accounts receivable as of the reporting date is UAH 7.7 thousand. 4.2.5. There are no other current assets as of 12/31/2012. 4.2.6. There is no cash balance as of December 31, 2012. The auditor considers it possible to confirm, that the accounting of assets is carried out in accordance with the current legislation. The company ensures that the methods of classification and valuation of assets remain unchanged during the reporting period. Total balance sheet assets in the amount of UAH 975.2 thousand. are confirmed by the actual presence of fixed and current assets, settlement documents, etc. 4.3. Confirmation of the correct application of the principles of formation in accounting of information about obligations and its disclosure in financial statements 4.3.1. As of December 31, 2012, the Company has no long-term liabilities. 4.3.2. As of December 31, 2012, accounts payable for goods, works, and services amounted to UAH 4.2 thousand. 4.3.3. According to calculations, current obligations as of 12/31/2012 amount to: • with the budget – UAH 0.7 thousand. • from insurance – UAH 21,000. • from wages – UAH 59.2 thousand. 4.3.4. Other current liabilities amount to UAH 140.1 thousand. 4.4. Results of checking the compliance of the disclosure of information about the correctness of the definition of the structure, the assignment of own capital 4.4.1. As of December 31, 2012, the Company’s equity has the following structure: – Authorized capital – UAH 962.5 thousand. – Retained earnings (uncovered loss) – UAH (208.3) thousand. The total equity capital of the Company is UAH 754.2 thousand. 4.4.2. The value of net assets (equity) reflected in the Company’s balance sheet as of December 31, 2012 is UAH 754.2 thousand, which is UAH 208.3 thousand. less than its authorized capital. The value of the net assets of the joint-stock company is calculated in accordance with the “Methodical recommendations for determining the value of the net assets of joint-stock companies”, approved by the decision of the State Securities and Stock Market Commission No. 485 dated November 17, 2004. Thus, the value of the Company’s net assets does not meet the requirements of Article 155 of the Civil Code of Ukraine dated January 16, 2003 No. 435-IV (as amended) , namely: “If, after the end of the second and every subsequent financial year, the value of the net assets of the joint-stock company turns out to be less than the authorized capital, the company is obliged to announce the reduction of its authorized capital and register the corresponding changes to the charter in the prescribed manner. If the value of the company’s net assets becomes less than the minimum amount of authorized capital established by law, the company is subject to liquidation.” Auditors confirm that the value of the Company’s net assets does not meet the requirements of Article 155 of the Civil Code of Ukraine dated January 16, 2003 N 435-IV (as amended). 5. State of accounting and reporting The organization and methodology of accounting of the Company’s financial and economic activity is carried out in accordance with: • the Law of Ukraine “On Accounting and Financial Reporting in Ukraine” dated 07/16/1999 No. 996 – XIV; • National Regulations (standards) of accounting (P(S)BO). In accordance with the provision on the accounting policy, which takes into account clause 2 of article 11 of Law No. 996 – XIV as part of the annual financial statements – Financial report of a small business entity – “Balance” (f. no. 1-m), in accordance with P(S) BO 25; – “Report on financial results” (f. No. 2-m), in accordance with P(S)BO 25. During the audit, the accounting principles used in financial and economic activity and the application of the conceptual basis of financial reporting approved by the regulation on the accounting policy of the Company were analyzed, the principles of assessment of balance sheet items and reporting as a whole were considered. The correlation of the reported data with the data of the primary accounting documentation was checked. The compliance of the accounting with the regulatory requirements of the current legislation on the organization of accounting and reporting in Ukraine, and the compliance of the Company’s actual activity with the founding documents was assessed. Accounting is conducted in a computer environment using the “1C: Accounting” program. The audit did not reveal any accounting violations that would have a significant impact on the indicators. The information collected during the audit provides a reasonable basis for the formation of an auditor’s independent opinion regarding the compliance of these financial statements with their conceptual basis for individual classes of transactions, the absence of distortions and the reliability of financial statements and the presentation of his opinion in the auditor’s opinion. The financial statements of the Company comply with the established accounting standards, in particular, the norms of the Regulations (standards) of accounting in Ukraine No. 25. 6. Results of checking the compliance of disclosure of information in the financial statements of the Company Based on the results of the audit, the auditors confirm that the provided information provides reliable and complete an idea of ​​the real composition of the assets and liabilities of the subject of the inspection. Forms of financial statements are agreed and do not contain distortions. Financial statements of the Company for 2012 consists of the Financial Report of a small business entity, which includes the Balance Sheet (file No. 1) and the Report on Financial Results (file No. 2). The Company’s balance sheet as of December 31, 2012, with the balance currency of UAH 975.2 thousand. we confirm As of the end of the day on December 31, 2012, the equity capital of the Private Joint-Stock Company “International Energy Company” consists of authorized capital in the amount of UAH 962,500.0, divided into 400 ordinary registered shares in the undocumented form of existence, with a nominal value of UAH 2,406.25 per share action As of the end of the day on December 31, 2012, the uncovered loss is UAH 208.3 thousand. Report on financial results for 2012 with a net loss of UAH 74.4 thousand. we confirm On the basis of the above, the auditors state that the articles of the Balance Sheet (f. No. 1) of the Company as of 12/31/2012 and indicators of the “Report on financial results” (f. No. 2-m) for 2012 generally correspond to primary documents, analytical and synthetic accounting data, current legislation and existing regulations. The general conclusions about the results of the Company’s activities for 2012 were made correctly, which is confirmed by accounting data and primary documents. 7. Disclosure of additional information about the Company 7. 1. Disclosure of information about actions that took place during the reporting year and may affect the financial and economic condition of the Company Without changing our opinion regarding the completeness and reliability of the financial statements of PJSC “International Energy Company” as of 31 December 2012, the auditors consider it expedient to provide information, requirements for the disclosure of which are contained in Article 41 “Special information about the issuer” of the Law of Ukraine “On Securities and the Stock Market” No. 3480-IV of February 23, 2006 (as amended). We believe that during the reporting year of 2012 there were no actions that could affect the financial and economic condition of the issuer and lead to a significant change in the value of its securities (actions defined by the first part of Article 41 of the Law of Ukraine “On Securities and the Stock Market”). 7.2. Execution of significant legal acts In 2012, the Company did not have significant acts according to the data of the last annual financial statements. 7.3. Correspondence of the state of corporate governance, including the state of internal audit, to the requirements of the law During the reporting year, the following bodies of corporate governance functioned in the joint-stock company: – General meeting of shareholders of the Company; – Supervisory Board of the Company; – President of the Society; – Auditor of the Company. The creation of an internal audit service is not provided for by the internal documents of the joint-stock company. The quantitative composition of the formed corporate management bodies meets the requirements of the Charter and the requirements established by the decision of the general meeting of shareholders. The Company’s charter establishes the quantitative composition of the corporate management bodies: the Chairman of the Board, represented by the President of the Company – one person, the Supervisory Board – the chairman and members of the board, the quantitative composition is not determined by the charter, the Auditor – one person. The state of corporate management of the company complies with the Law of Ukraine “On Joint-Stock Companies”. As of December 31, 2012, the shares of the company are owned by 2 shareholders (a legal entity and an individual), of which 1 shareholder owns 99, 75 percent of the Company’s shares (PJSC “International Investment Group”). 7.4. Identification and assessment by the auditor of the risks of material misstatement of the financial statements due to fraud When performing risk assessment procedures and related activities to obtain an understanding of the entity and its environment, including its internal control, as required by ISA 315 “Identification and Assessment of Risks material misstatements due to the understanding of the business entity and its environment”, the auditor did not receive evidence regarding the material misstatement of the Private Joint Stock Company “International Energy Company” as a result of fraud. Statement of opinion (independent auditor’s report) The auditors conducted an audit of the financial statements of the Private Joint-Stock Company “International Energy Company” as of December 31, 2012, namely, the Financial Report of a small business entity, which includes: “Balance sheet as of December 31, 2012.” (form No. 1), “Report on financial results for 2012” (form No. 2). The management staff of the Private Joint-Stock Company “International Energy Company” is responsible for these financial reports. The auditors are responsible for expressing an opinion on these financial statements based on the audit. The auditors believe that the conducted audit provides a reasonable basis for expressing an independent opinion. In the opinion of the auditors, the financial statements reflect fairly, in all material respects, the financial condition of the Private Joint-Stock Company “International Energy Company” as of December 31, 2012 in accordance with the accounting principles generally accepted in the Company’s jurisdiction. Basic information about the audit firm Private enterprise “Audit Consulting Company “International Standard”, certificate of the Audit Chamber of Ukraine on entry into the register of entities of audit activity No. 4314, issued in accordance with the decision of the APU No. 207/3 of October 29, 2009. Code EDRPOU 34880853. Location: str. Kostyantynivska, 64, office 313, Kyiv, 04080. Phone/fax: (044) 383-31-91. Certificate of inclusion of PE “Audit consulting company “International Standard” in the Register of auditors who can carry out inspections of financial institutions operating on the securities market, issued on February 15, 2011 by the State Commission for Securities and the Stock Market (hereinafter – the State Securities and Stock Market Commission), registration No. 165, AB series certificate No. 001298, valid until 10/29/2014. Audit contract No. МЕК-27/12/12-Д dated 12/27/2012. Audit venue: Kyiv, st. Saksaganskyi, 41. Audit start date – February 25, 2013 Audit end date – March 5, 2013 Director of PE “Audit Consulting Company “International Standard” (certificate No. 004834) ______________ R.V.Prannychuk Auditor ______________ B.I.Prannychuk Date of issuance of the audit opinion (independent auditor’s report) 03/18/2013. Attachments: 1. Financial statements of the Private Joint-Stock Company “International Energy Company” as of 12/31/2012 2. “Balance Sheet” Form No. 1 3. “Report on Financial Results” Form No. 2 Prannychuk Auditor ______________ B.I. Prannychuk Date of issuance of the audit opinion (independent auditor’s report) 03/18/2013. Attachments: 1. Financial statements of the Private Joint-Stock Company “International Energy Company” as of 12/31/2012 2. “Balance Sheet” Form No. 1 3. “Report on Financial Results” Form No. 2 Prannychuk Auditor ______________ B.I. Prannychuk Date of issuance of the audit opinion (independent auditor’s report) 03/18/2013. Attachments: 1. Financial statements of the Private Joint-Stock Company “International Energy Company” as of 12/31/2012 2. “Balance Sheet” Form No. 1 3. “Report on Financial Results” Form No. 2