The consolidated report
of RAINBOW TOURS S.A. Capital Group
for the fourth quarter of 2009
prepared in accordance with IFRS
1
CONTENT
1. Consolidated quarterly financial statement .......................................................................................... 3
1.1. Consolidated balance sheet ............................................................................................................... 4
1.2. Profit and loss account ....................................................................................................................... 5
1.3. Consolidated statement of changes in equity ................................................................................... 8
1.4. Consolidated cash flow statement ................................................................................................... 10
2. Selected explanatory data .................................................................................................................... 12
2.1. Issuer’s data ...................................................................................................................................... 12
2.2. The base and the form of preparing the financial statement ........................................................ 13
2.3. Information on rules applied while preparing the quarterly report as on 31 December 2009 .... 13
2.4. Information on rules changes (Accounting Policies), and on essential changes in estimated data,
including adjustments of provisions, and deferred tax provision and assets, impairment losses
for assets ........................................................................................................................................... 31
2.5. Brief description of achievements and failures in the report period including the most significant
events with regards to these achievements and failures .............................................................. 31
2.6. Type and amounts of items affecting the assets, liabilities, net financial result or cash flows,
which are untypical with regard to their type, amount or influence exerted ............................... 34
2.7. Explanations concerning seasonality or periodicity of issuer’s activities in the period presented.
........................................................................................................................................................... 34
2.8. Presentation of the results according to particular activity segments of Rainbow Tours S.A.
Capital Group .................................................................................................................................... 35
2.9. Information on issue, repurchase and repayment of non-equity and equity securities.............. 35
2.10.Dividends paid (total or per share), divided into ordinary shares and other shares. ................. 36
2.11. . Significant events after the interim period, which were not reflected in the financial statement
for the first quarter of 2009. ............................................................................................................ 36
2.12.Changes in contingent liabilities or assets, which took place after the end of the last financial
year.................................................................................................................................................... 37
2.13.Description of organization of the Issuer’ s Capital Group, indication of consolidated entities 37
2.14. Result of changes in economic entity’s structure within the interim period including mergers of
economic entities, acquisition or sales of subsidiaries, and long-term investments, restructuring
and abandonment of activity. ......................................................................................................... 37
3. Other additional information .............................................................................................................. 38
2
3.1. Selected financial data including basic items of abridged financial statement ( translated into
Euro as well) ...................................................................................................................................... 38
3.2. The Position of the Management Board concerning possibility of realizing previously published
forecasts for the given year, in the light of results presented in the quarterly report in
comparison to the anticipated results ............................................................................................ 40
3.3. Shareholders holding at least 5% of the total number of votes at the Issuer’s General Assembly.
........................................................................................................................................................... 40
3.4. Company’s shares or right to shares (options) held by the members of the Management Board
and Supervisory Board. .................................................................................................................... 40
3.5. Information on significant legal proceedings concerning the Company. ....................................... 41
3.6. Information on transactions concluded with associated units. ...................................................... 41
3.7. Information on credit or loans warranties, or guaranties granted by the issuer or its subsidiary
to, jointly, one entity or its subsidiary, if total value of warranties and guarantees granted
constitute at least 10% of Issuer’s equity ........................................................................................ 43
3.8. Other information, which are in opinion of the Issuer, significant to asses situation of staff,
assets and finance and its changes, and information essential to assess possibility of realization
of liabilities by the Issuer................................................................................................................. 43
3.9. Indication of factors, which in the opinion of the Issuer will influence results reached within at
least following quarter ..................................................................................................................... 43
1.
Consolidated quarterly financial statement
3
1.1. Consolidated balance sheet
Rainbow Tours Capital Group S.A.
Rainbow Tours S.A.
Legal basis: IFRS
description
Fixed assets
Tangible fixed assets
Intangible assets
Investment assets
Related undertakings
Investment in subsidiary
Investments in associates under equity
method
Other financial assets
Finance lease receivables
Deferred tax assets
Other assets
Current assets
Stocks
Trade and other receivables
Other financial assets
Financial lease receivables
Cash and cash equivalents
Other assets
Fixed assets for sale
Total assets
Rainbow Tours Capital Group S.A.
RTSA 100% PLN’000
assets
D
a
31 December 2008
a
31 December 2009
13 177
10 497
2 538
2 172
8 386
8 275
0
0
0
0
0
0
2 000
0
237
34
0
16
16
45 411
52 976
4
0
31 648
39 954
125
0
0
0
4 282
5 972
9 352
7 050
0
58 588
0
63 473
RTSA 100% PLN’000
4
Rainbow Tours S.A.
1
Legal basis: IFRS
description
Equity
Authorized capital
Spare capital ( without results)
Valuation reserves
Ownership interest
Accumulated profit
Accumulated profit (loss)
Net profit for the financial period
Currency differences of entities operating
abroad
Shareholders equity in dominating entities
Minority interest
Long-term liabilities
Bank credit and loans
Other financial commitments
Deferred tax liability
Pension liabilities
Long-term capital lease obligation
Long-term provisions
Current liabilities
Trade and other liabilities
Leave and pension liabilities
Current capital lease obligations
Short-term bank debt
Other financial commitments
Short-term provisions
Liabilities directly related to fixed assets for
sale
Total liabilities
liabilities
C
b
31 December 2008
31 December 2009
17 870
23 872
1 200
1 205
16 860
16 860
5
0
0
0
-2 157
5 269
6 434
4 327
-8 591
942
1 530
0
17 438
23 334
432
538
1 454
492
1 017
252
0
0
332
223
26
17
79
0
0
0
39 264
39 109
16 953
21 460
119
131
178
66
3 183
4 906
542
542
18 289
12 004
0
58 588
0
63 473
1.2. Profit and loss account
5
Rainbow Tours Capital Group S.A.
Rainbow Tours S.A.
Legal basis: IFRS
description
Continuing activity, sales revenues
Continuing activity, cost of sales
Gross profit (loss) on sales
Continuing activity, costs of disposal
Continuing activity, general administration
costs
Continuing activity, other operating income
Continuing activity, other operating cost
Profit (loss) on operating activity
Continuing activity, return on investment
Continuing activity, loss on investment
Continuing activity, finance revenue
Continuing activity, financial cost
Net financial profit (loss)
Profit (loss) sharing of associates
Profit sharing of associates
Loss sharing of associates
Pretax earnings (loss)
Continuing activity, income tax
Current tax
Deferred tax
Deferred tax increase in charges
Deferred tax decrease in charges
Profit (loss) from continuing activity
Profit (loss) from abandoned activity
Net profit from abandoned activity
Net loss from abandoned activity
Net profit (loss)
For shareholders in dominating entity
For minority shareholders
Number of preferred shares in the period
(with respect to dividend)
Degree of preference
Number of ordinary shares in the period
(with respect to dividend)
Profit (loss) per share from continuing
activity
(basic)
Profit (loss) per share from continuing
activity diluted
Profit (loss) per share from continuing and
abandoned activity
-basic
Profit (loss) per share from continuing and
RTSA 100% PLN’000
account
C
c
0
1-12.2008
1-12.2009
269 872
288 407
237 412
253 296
32 460
35 111
22 994
20 561
18 822
14 716
478
1 310
560
301
-9 438
843
957
0
1 718
2 092
457
2 623
1 261
426
0
0
0
0
0
0
-8 177
1 269
-369
-221
338
135
-31
-86
45
86
14
0
-8 546
1 048
0
0
0
0
0
0
-8 546
1 048
-8 591
942
45
106
0
0
0
0
0
0
0
6
abandoned activity
-diluted
7
1.3. Consolidated statement of changes in equity
Rainbow Tours Capital Group S.A.
RTSA 100% PLN’000
Rainbow Tours S.A.
Legal basis: IFRS
statement of changes in equity C
description
Total equity opening balance
Shareholders’ equity in dominating entity
opening balance
Authorized capital opening balance
Issue
Other increases
amortization
Other decreases
Authorized capital closing balance
Spare capital opening balance
Agio
Other increases
Other decreases
Spare capital closing balance
Revaluation reserve opening balance
Created purposely
Other increases
Used purposely
Other decreases
Revaluation reserve closing balance
Own shares opening balance
Purchase of own shares
Other increases
Disposal of own shares
Other decreases
Own shares closing balance
Undistributed result brought forward
opening balance
Results carried forward
Other increases
Dividend payment
Result carried forward “-“
Other decreases
Undistributed result brought forward, closing
balance
Profit in the period
Loss in the period
Net profit (loss) opening balance
Currency exchange differences of entities
operating abroad
Shareholders’ equity in dominating activity
closing balance
Minority interest opening balance
e
1-12. 2008
1-12.2009
25 022
17 870
24 635
17 438
1 200
1 200
5
0
0
0
1 200
1 205
16 725
16 860
0
135
0
0
16 860
16 860
0
5
0
5
0
0
5
5
0
0
0
0
0
0
0
0
0
4 275
-2 157
2 159
0
6 484
0
0
0
6 434
4 327
942
8 591
0
-8 591
942
1 530
0
17 438
23 334
387
432
8
Other increases
Other decreases
Minority interest, closing balance
total equity closing balance
45
106
0
0
432
538
17 870
23 872
9
1.4. Consolidated cash flow statement
Rainbow Tours Capital Group S.A.
Rainbow Tours S.A.
Legal basis: IFRS
cashFlow
RTSA 100% PLN’000
C
description
I.
Profit (loss) before tax
II. Total adjustments
Amortization and depreciation
Foreign exchange gains (losses)
Interest and profit sharing (dividends)
Investment profits (losses)
Movements in reserves
Movements in stocks
Movements in receivables, and prepayments
and accruals
Movements in short-term liabilities,
prepayments, except loans, credit and
finance lease
Other adjustments
Net cash from operating activities
Income tax paid
Net operating cash flow
Interest received
Dividends received from entities
consolidated under equity method
Sales revenue from financial assets available
for sale
Sales revenue from fixed assets
Sales revenue from short term-securities/
purchase of short-term securities
Sales revenues from short-term securities
Purchase of short-term securities
Contract (repayment) of loans (credits)
Repayment of loans ( credits)
Granting loans and credits
Inflows from sales of subsidiary/ purchase of
subsidiary
Inflows from sales of subsidiary
Purchase of subsidiary
Contracting/repayment other
Contracting other
Repayment other
Cost of fixed asset acquisition
Net cash from operating activity
Inflows from issue of shares
Contracting /repayment of loans/credits
Contracting credit /loans
0
e
1-12.2008
d
1-12.2009
-8 177
1 269
-4 423
-5 303
610
495
-3
0
38
296
-19
-647
394
-523
0
-10
-15 426
-3 171
12 131
-3 096
-2 148
1 353
-12 600
-4 034
-359
-180
-12 959
-4 214
6
22
0
0
0
2 000
92
21
0
0
0
0
0
0
3 058
-500
3 183
-550
125
-50
0
0
0
0
0
0
0
2 958
0
2 958
0
0
913
126
2 243
4 375
5
0
0
1 723
0
1 723
10
Repayment of credits/loans
Other contracting/ repayment
Other contracting
Other repayment
Finance lease repayment
Dividends paid
Interest paid
Net cash from financial activity
Increase/ decrease in cash and cash
equivalents
Net change in cash
Movements due to foreign exchange
gains/losses
Opening balance of cash and cash
equivalents
Closing balance of cash and cash equivalents
0
0
0
51
0
51
0
0
177
181
0
0
20
305
-192
1 288
-10 908
1 449
-10 908
1 690
0
0
15 190
4 282
4 282
5 972
11
2. Selected explanatory data
2.1. Issuer’s data
The name of the Company: Rainbow Tours S.A.
The address of the Issuer: 90-361 Lodz, Piotrkowska street 270.
A competent court: District Court for Łódź – Śródmieście, XX Department of National
Court Register KRS: 0000178650
NIP ( tax identification number) : 725-18-68-136
Regon: 473190014
Core business activity:
Core business activity of the Dominating Entity and the Capital Group according to
Polish Classification of Activities comprise the following activities:
1.
2.
3.
4.
5.
6.
79.12.Z. – tour operator activities
79.11.A. – travel office activities
79.11.A. – travel agent activities
79.90.A. – activities of tour leaders and tour guides
79.90.A – activities concerning providing tourist information
79.90.A –n other reservation services, not classified elsewhere
A duration period
The Dominating entity and the Capital Group is established for an undefined period of time.
Periods for which the consolidated financial statement and the comparable financial data
are presented.
The abridged consolidated financial statement of Rainbow Tours S.A. Capital Group includes
data as at 31 December 2009 and 31 December 2008 for the comparable data in the
balance sheet and for four quarters of 2009 (that is from 1st January to 31 December 2009)
for four quarters of 2009 (that is from 1 January to 31 December 2008) for the comparable
data in the profit and loss account. The presented financial statement is a consolidated
financial statement comprising Rainbow Tours S.A, which is the Dominating entity and
subsidiaries. Owing to disposal of shares of subsidiary OOO Rainbow Tours Ukraina ( the
equivalent of Polish Sp. z o.o.) the results of the Capital Group include only revenues and
costs of this company in the period when it was controlled by Rainbow Tours. The below
chart presents the state of the Capital Group as at 31 December of 2009.
12
Rinbow Tours S.A
Rainbow Tours Ukraina
capital share 100%*
Portal Turystyczny Sp. z
o.o.
Rainbow Tours - Biuro
Podróży sp. z o.o.
capital share 65%
capital share 50%
Travelovo Sp. z o.o.
capital share
75,4%
Traveltech Sp. z o.o.
capital share 71%
ABC Świat Podróży Sp. z
o.o.
capital share 100%
* The company OOO Rainbow Tours Ukraina was sold on 23 December 2009. The details are
described in the Current Report NO 44/2009 and the Amended Current Report No 44/2009 as
of 22 January 2010.
Information on personal composition of the Management Board and the Supervisory Board of
the Dominating Entity
As on 31 December 2009 the bodies comprising the Dominating Entity consisted of following
persons:
The composition of the Management Board of Rainbow Tours S.A. is as follows:
Grzegorz Baszczyński – the President of the Management Board
Remigiusz Talarek – the vice-chairman of the Management Board
Tomasz Czapla - the vice-chairman of the Management Board
The personal composition of the Management Board did not change in the period from 1st
January to 31st December 2009.
Listing on stock exchange
The Dominating Entity, “Rainbow Tours” S.A. is listed at Warsaw Stock Exchange under short
name Rainbow Tours S.A. and a mark “RBW”.
2.2. The base and the form of preparing the financial statement
The presented quarterly financial statement was prepared in accordance with IRS 34 “Interim
financial reporting”, and requirements of Minister of Finance ordinance of 19th February 2009 on
current and periodical information submitted by the issuers of securities and conditions of
recognition information required by the law of non-member countries as equal. (Journal of Law No
33 item 259 with subsequent amendments).
2.3. Information on rules applied while preparing the quarterly report as on 31 December
2009
13
When preparing the quarterly report for the three quarters of 2009 the below mentioned accounting
policy was used, which was created on the basis of the Accounting Act of 29th September 1994 (with
subsequent amendments) and records of International Financial Reporting Standards and
interpretation issued by International Accounting Standards Board, and also International Financial
Reporting Interpretations Committee (IFRIC) in the shape approved and published by EU.
General accounting rules
Recognition of economic transaction:
Economic transactions are recognized in accounting books at the moment of their appearance and
recognized in the respective period.
Historical cost principle
The base of recognition in the accounting books and recognizing for the first time each asset and
liability as historical cost. They are subsequently valued according to presented below rules of this
policy, differently for different assets and liabilities (adjusted historical cost, fair value or achievable
value)
Superiority of economic content over the legal form
Transactions are recognized in the accounting books and reported in financial statements according
to their economic content, and not only legal form of the transaction. The Company up to date
analyses economic content of agreements and transactions concluded and registers them in way that
ensure true and reliable reflection of the entity’s economic situation.
Materiality concept
Financial ( or not financial information) is regarded as significant if not included or distorted ( in
accounting books or notes to financial statement) could influence economic decisions taken on the
base of financial statement by their users.
Consolidation
The objectives of financial statement consolidation
The consolidation is aimed at presenting the assets, financial situation and financial results of entities
within the Capital Group, in a way if it was one entity. Rainbow Tours S.A. Capital Group consist of
dominating entity and its subsidiaries.
The related undertakings, dominating entities, subsidiaries and associated entities
Entities related with the Company are as follows:
1. Entities, which directly or indirectly through one or more agents,
a) control or are controlled, or jointly controlled by an entity (these are dominating
entities of Capital Groups, subsidiaries, or subsidiaries within the same Capital Group)
b) Hold share in entity, which allows to significantly influence the entity, or
c) Jointly control the entity
2. Entities affiliated with this entity ( within the meaning of IRS 28 “Investments in affiliates)
14
3.
4.
5
6
Joint-ventures, in which the entity have shares
Members of the key management personnel of the entity or dominating entity
Close relatives of the persons mentioned in point 1 and 4.
Entities, over which persons mentioned in point 4 and 5 have control, joint control,
significant influence, or directly or indirectly share in voting rights.
The dominating entity is an economic entity which possesses one or more subsidiary.
A subsidiary is the economic entity, which is controlled by the dominating entity. It is assumed that
the subsidiary is controlled, if the dominating entity have directly or indirectly – through its
subsidiaries – more than half of voting rights in the subsidiary. The company have control if the
dominating entity have half or less of voting rights in subsidiary and if:
1) Have more than half of voting rights pursuant to agreements with other investors
2) Is able to manage financial and operating policy of subsidiary pursuant to Statutes or an
agreement
3) Is able to appoint and dismiss members of the Management Board of the subsidiary, or
4) Has majority of votes at the meetings of the Management Board of the subsidiary.
An affiliate is the entity, which is significantly influenced by an investor, and is not entity dependent
on the investor, or a joint- venture with the investor. It is assumed that significant influence is
exerted , if the investor has directly or indirectly, through its subsidiaries 20% or more votes in the
entity, in which it invested. The significant influence of the Investor on the affiliate may take
following forms:
Being a member of the Management Board of the entity, participation in creating strategy of entity’s
operations, including decisions concerning dividend payment, significant transactions between the
investor and the entity, mutual exchange of the management personnel, providing access to
significant technology information.
Obligation to prepare consolidated financial statement and exclusions from consolidation.
The subsidiaries of Rainbow Tours S.A., which are dominating entities towards their own subsidiaries
do not prepare a consolidated financial statement if the following conditions are met:
1. Minority shareholders in dominating entities were informed about this fact and did not
object,
2. Debt and equity securities issued by the dominating entities are not traded at the official
market.
In order to determine the list of entities included in the consolidated financial statement and the list
of entities excluded from consolidation, quality criteria are applied, which are supplemented by
quantity criteria. Relating connections between the entities within the Capital Group to these criteria
is the base of stating whether given entity is insignificant with respect to correct presentation of the
Capital Group as a whole , and if it can be excluded from consolidation.
The entity cannot be deemed insignificant, if:
15
1. Provides goods and services, which are consistent with core- business activity of the
dominating entity or other entities within the Capital Group, and the absence of this entity
can negatively influence economic situation of the whole Group,
2. Is for the dominating entity the source of long-term funds or funds supporting its core
business activities.
3. The entity runs a great risk related with possession of this entity or the assets which could
bring most benefits from this activities
4. Carry out activities , from which entity the dominating gains benefits, on behalf of the
dominating entity in conformity with its economic needs,
Investment valuation in subsidiaries, associated entities and shares in joint-ventures
In non-consolidated financial statement prepared by the companies of Rainbow Tours S.A. Capital
Group investments in subsidiaries and interests in joint-ventures are valued as at the balance sheet
date at the purchase price including impairment losses. In a consolidated financial statement
Investments in subsidiaries are valued as at the balance sheet date using consolidation exemptions
described in point 3.6 of the report.
The consolidated financial statement of the Capital Group
The consolidated financial statement is the financial statement of the Capital Group prepared in a
way , as if it was a financial statement of single economic unit. The consolidated financial statement
is prepared by dominating entities. The consolidated financial statement consists of following
components:
1.
2.
3.
4.
5.
Consolidated balance sheet,
Consolidated profit and loss account,
Consolidated cash flow account,
statement of changes in equity,
additional information.
Transactions excluded, which are concluded between companies within the Capital Group.
The consolidated financial statement should present operations between companies of Rainbow
Tours S.A. Capital Group and external units.
To achieve this objective the following should be done:
1. identify in each company accounts, on which operations of other companies within the
holding are recorded,
2. make reconciliation of balances and turnovers between each of consolidated company
3. include operations concerning:
a. value of share (stock) acquisition by the dominating entity in subsidiaries (exemption
from the financial statement of the dominating entity),
b. parts of subsidiaries’ equity corresponding with share of the dominating entity in
properties of these entities ( exemption from the financial statements of
subsidiaries)
16
c. intercompany receivables and liabilities and other similar settlements of entities
consolidated
d. revenues and costs of transactions concluded between entities consolidated
e. profits and losses, which are results of economic transactions between entities
consolidated; they are included in value of assets consolidated.
Goodwill of subsidiaries in the consolidated financial statement.
Goodwill of subsidiaries in consolidated financial statement is a surplus between value of share in
subsidiary’s assets at the price of acquisition and its fair value determined as at the acquisition date.
Goodwill of subsidiaries is presented in separate item of assets in the consolidated balance sheet.
Goodwill of subsidiaries is not amortized, however decreased by possible impairment charges.
At the end of every financial year an impairment test on the goodwill with respect to subsidiaries is
carried out. Impairment test on the goodwill is carried out also at the other balance sheet dates as , if
there are circumstances which would suggest the necessity to carry out the test.
Negative difference, if any , between value of share in net assets of subsidiary at the acquisition
price and its fair value determined as at the acquisition date and recognized in the financial result for
the period when the share was acquired.
Translation of foreign companies’ financial statements
When the functional currencies of financial statements of companies within Rainbow Tours S.A.
Capital Group differ from presentation currency, then financial statements are translated to
presentation currency as follows:
a) assets and liabilities are recognized at closing price ruling on the balance date.
b) revenue and costs in profit and loss account are stated at the average of closing prices
ruling as at the last days of months in the given financial period.
c) All currency translation differences , which are a result of this situation are recognized as
separate component of equity.
Valuation of assets and liabilities of the Company.
Intangible assets
Recognition of purchased/manufactured intangible asset in the accounting books.
Intangible assets are recognized in the accounting books if an inflow of future economic benefits is
probable from them, and their cost can be reliably assessed.
Purchased intangible assets are recognized in the accounting books in the moment of purchase or
manufacture. The entity purchases only such intangible assets which, from which it expects to gain
economic benefits.
Lost ability to generate economic benefits in the periods after the purchase is reflected through
impairment test on intangible asset.
17
Determining the period of intangible assets’ useful life
The Management Board of the company determines whether intangible asset is indefinite or
definite period of useful life. The indefinite period of useful life refers to intangible assets, for
which, as at the date of their acceptance to use , the entity could not determine the period in which
economic benefits will be gained.
This situation may refer to successfully accomplished development works, production technologies,
or brands purchased.
Intangible assets of indefinite period of useful life are not amortized. As at every balance sheet date
the entity:


Reviews assets with respect to permanent diminution,
Verify whether the assumption concerning indefinite period of usufruct is still justified
General amortization periods for intangible assets.
Period of intangible assets’ useful life used pursuant to the agreement is equal to duration of the
agreement or shorter if the entity intends to use intangible assets described in the agreement for the
period shorter than defined in the agreement. If the agreement can be renewed, the period of
useful life include renewed periods only when there is possibility to renew the agreement and no
additional costs are incurred.
The entity amortizes intangible assets on the straight line basis. The amortization starts in the month
after the month, when the asset was available to use . The entity stops the amortization in the
month when the intangible asset is recognized as noncurrent assets available for sale according to
IFRS or is withdrawn from usufruct (liquidated or sold).
Amortization period of particular categories of intangible assets.
Software
5 years
Goodwill
Goodwill is the surplus of the acquisition cost over the share in fair value of Company’s possible to
identify assets, liabilities, and contingency of acquired entity as at the date of acquisition.
The entity recognized in the financial statement only the goodwill arisen in economic transaction of
acquisition concluded by the entity.
The goodwill is not amortized. An impairment test on goodwill is taken annually.
Goodwill is recognized in the balance sheet at cost less impairment losses. Impairment loss, if any is
recognized in the profit and loss account and is not reversed in the subsequent periods.
Impairment tests on intangible assets
Impairment tests are carried out on intangible assets when there are circumstances described in
point 3.15, or annually in case of intangible assets of indefinite period of usufruct.
18
Tangible fixed assets
Recognition of purchased/ manufactured assets in the accounting books.
The entity recognizes fixed assets in the accounting books if there is probable inflow of economic
benefits, and when their cost may be reliably assessed.
Purchased or manufactured within one’s capacity fixed assets are recognized as at the moment of
purchase or manufacturing. The entity purchases only those fixed assets, from which she expect to
gain economic benefits. Lost ability to generate economic benefits in the period after the purchase is
reflected by analyzing impairment of fixed assets.
Subsequent inputs are included in the balance sheet value of a given fixed asset or recognized as
separate fixed asset only when it is probable that this item will result in inflow of economic
benefits for the Company, and the cost of this item may be reliably assessed. All other expenditures
for repair and maintenance are recognized in the profit and loss account in the financial period when
the expenditures were incurred.
When part of the fixed asset is replaced, the replacement cost of the part of the fixed asset is
recognized in the balance value of the given assets, and at the same time balance sheet value of the
replaced assets is removed from the balance sheet, irrespective of the fact that it was separately
amortized or not. Net value of the removed assets is recognized in the profit and loss account.
Fixed assets in the entity are depreciated in the determined for them period. The amount to be
depreciated is the difference between acquisition cost of fixed asset and its residual value ( the
amount, which the entity expects to receive from sales after its period of useful life). This amount
and the period of useful life is determined by the Management Board, or unit responsible for a
purchase of fixed assets, in the moment of obtaining the invoice for purchase of the fixed asset
before it is recorded in the accounting books. If the residual value determined in such way is
insignificant in relation to the value of fixed asset (constitute no more than 10% of acquisition cost),
it is assumed that it amounts to zero.
For assets of useful life longer than a year, for which acquisition unit cost is insignificant in relation
to all fixed assets of the given group, the entity makes single capital allowance of such fixed asset, in
the month when it was recorded in the books. Limit of value to recognize fixed asset as subject of
single capital allowance is the amount of PLN 3.500.
In the moment of purchase of fixed assets, the unit responsible for these purchases determines
whether fixed assets purchased comprise elements of varied period of useful life and whether the
value of these element is significant in relation to the value of the whole fixed asset. When such
elements are identified, they are separately recorded in register of fixed assets and depreciated
within their individual period of usufruct. Acquisition cost of these assets is determined by the unit
responsible for purchases as cost percentage of the whole fixed asset.
Selecting valuation method of fixed assets owned.
The entity applies a cost model to assess net book value of fixed assets. The cost model is the initial
recognition of fixed asset at the acquisition cost and its subsequent depreciation to residual value
over the period of useful life.
19
Overall depreciation periods for particular categories of fixed assets.
Periods of depreciation of particular categories of fixed assets are as follows:
Acquired perpetual usufruct of land
20 years
Buildings
40 years
Appliances – computer hardware
3-4 years
Means of transport
3-5 years
Other fixed assets
5-8 years
Value of depreciated fixed asset is apportioned systematically throughout the period of useful life.
The period of their usufruct and the residual value is verified at least once a year.
Depreciation starts in the month after the month when the fixed asset is available for use.
Depreciation ends when the fixed asset is withdrawn from useful life ( liquidation or sale).
Fixed assets for sale.
Terms of classification
The entity classifies the fixed assets as fixed assets for sale, if economic benefits from these assets
will be gained by sale of these assets, not their further useful life.
Decision to change the classification taken by the Management Board is binding. The assets are
classed as fixed assets for sale if their immediately available for sale.
The period from the classification as fixed asset for sale till sale should not exceed one year.
Valuation method
Fixed assets for sale are recognized in lower value of:
a) Book value
b) Fair value less sales costs
Fixed assets for sale are not depreciated.
The way of determining fair value less indispensible sales costs.
Fair value of assets for sale is determined on the base of comparing prices of similar or the same
asset transactions. Such information are gathered by unit managers which are responsible for the
given asset. This is accomplished in the following way:
a) Based on the expertise concerning price behaviour of similar assets;
b) Based on information received from agents, which services the entity intends to use;
c) Based on purchase offers received.
Determined in this way fair value is lessen by indispensible sales cost, which are in particular:
20
a) Estimated commission payable to agents related to sales,
b) estimated cost of repairs, which must be done before sales,
c) estimated tax and other fees connected with sales transaction, which the entity is obliged
to pay pursuant to legal provisions or a sales agreement,
d) All the fees not paid yet connected with dismantling and transportation of assets to a
purchaser.
Financial instruments
Financial instruments - financial assets for sale
Classification rules
Assets for sale are nonderivative financial assets which are not included in financial assets
recognized in fair value through profit and loss account, loans, account receivables and assets
maintained till maturity date.
Assets for sale are shares and interests in companies, which are not subsidiaries, associated
companies, not traded at the active market, and they are current or noncurrent assets.
Recognition and derecognition in the balance sheet.
The assets are recorded in the books as at the transaction completion date, and derecognized in the
balance sheet when contractual rights to cash flow with respect to financial assets expire, or the
asset is transferred together with the whole profit and benefits related with possession of this asset.
Valuation rules.
As the date of recording in books, they are valued at the fair value plus transaction cost, whereas as
at the balance sheet the assets are valued at the fair value including impairment charges recognized
in revaluation capital. In case of debt instruments, difference between an instrument value
determined by using effective interest rate and fair value is recognized in the revaluation capital.
Profits and losses from changes in fair value of the assets are recognized directly in equity.
Assets for sale, for which there is no active market, and which fair value is impossible to assess; are
valued at the purchase price less impairment charges, and results of valuation are recognized in the
financial result.
Rules of determining fair value of financial instruments.
Fair value of assets or liabilities is best reflected in generally available market price at the active
public stock exchange. Active market means that transactions are completed enough regularly , that
the price determined at the market does not have to adjusted due to changing economic conditions,
and in such amounts which guarantee the following:
a) That the price determined is not result of off-market agreement of parties completing the
transaction,
21
b) That it is possible to sale financial instruments owned by the entity without significant
influence on the market price.
When the market fails to meet criteria of the active market, the entity while evaluating financial
instruments will reflect changes in the economic environment ( with regard to credit rating of the
instrument issuer, changes in market return, changes of basis risk and others) and in this way adjust
the price, which was previously determined on the market.
If the instrument is not listed at the stock exchange the entity:
a. The instruments with the right to share ownership will be valued at the acquisition cost
adjusted by impairment loss, if there are circumstances for the loss
b. Will take into account prices of owned financial instrument transactions off the regular
market ( if such information will be available) and adjust by available information on
changes in economic environment influencing the instrument price;
If off regular market price will not be available the entity will use generally recognized valuation
methods of given financial instrument, the methods which would be used by market participants
to determine the price of the given instrument in market transaction. A debt instrument value,
in particular, is assessed using effective interest rate calculated on the base of all cash flows
from the given financial instrument. Any value assessed in this way is tested for impairment, if
there are circumstances for impairment.
assessment of value of instrument available for sale by effective interest rate.
Value of Instrument available for sale value determined by effective interest rate is assessed in
the same way as are loans granted by the entity.
If the original maturity date of the debt instruments does not exceed twelve months, then the
approximate of effective interest rate is a linear settlement of discount and interests, unless the
difference is insignificant for the financial statement with respect to owned instrument value.
Account receivables
Recognition and valuation of trade receivables
Trade receivables are recognized at the date, when services, materials, and goods are sold according
to policy of sales revenue recognition.
Trade receivables are recognized in a nominal value. The entity up-to-date monitors receivables
recoverability. In case, when receivables recoverability is improbable a valuation allowance is
created, which verifies the value of recoverability in relation to recoverable value.
Cash
Criteria of recognition assets as cash.
Cash on hand and demand deposits are recognize as cash by the entity. Other monetary assets (cash
equivalents) are current investments of high liquidity. They are considered cash equivalents if they
22
are easily convertible for determined in advance amounts of cash and are in a small degree exposed
to risk of value change.
The entity recognizes as cash, except cash on hand and cash, and cash at bank, in particular:


Bills of exchange and checks received ,
Treasury bills and other money instruments of original repurchase date not exceeding 3
months if there is active market for them,
Prepaid expenses
In case of incurred expenditures concerning future reporting periods the Company makes cost
prepayments. To costs accounted in time the Company include costs of organizing events,
incurred commission payable from events and catalogues, which refer to sales in subsequent
financial year, insurance and the subscription in the following year.
valuation
Value of this costs is valued at the value paid including prudence.
Equity
Authorized capital
Recognition of the authorized capital in the financial statement.
Authorized capital is recognized in the financial statement at the moment of its registration in the
National Registry Court.
Valuation of the authorized capital.
Authorized capital is recognized in the nominal value of shares delivered in exchange for payments
or contribution made. Surplus of payments over the share nominal value or surplus of fair value of
contribution over the nominal value of shares delivered is recognized as spare capital.
Amounts of unpaid capital with respect to shares delivered are recognized in minus as decrease in
equity , in liabilities.
Spare capital arisen on share issue surplus over their nominal value.
Spare capital is created from surplus of share issue price ( or fair value of contributed assets) over
their nominal value.
Currency translation differences of entities operating abroad.
This capital serves to recognize currency translation differences which are result of different
currency rates applied to translate the balance sheet and profit and loss account of the companies
within Rainbow Tours S.A. Capital Group, for which functional currencies differ from presentation
currency.
Liabilities
Definition of a liability
23
A liability is a current obligation of the entity to pay in the future the expenses, which are a
consequence of past events which will result in outflow of economic benefits from the entity in the
future.
Method of determining liability value in case of significantly deferred payment date
In case of liabilities, which payment date is extended enough, that delivery contains funding element
of the entity ( the entity assumes that liability payment date should exceed 12 months, so that
delivery contain funding element) the entity recognizes liabilities in the nominal amount less
discount input according to effective interest rate, which is as follows:
a) Embedded in the agreement, if a price of delivery was determined at the level different
than would be determined, if delivery was paid for immediately,
b) Is result of interest rate assessment of loan, which would the entity be granted, if it would
like to finance such purchase by loan, if the embedded in the agreement rate of return does
not exist or does not meet market conditions.
The difference between nominal amounts to be transferred to deliverers , and the value of
acquisition cost is recognized is financial cost.
Method of determining capital lease obligation
Value of capital lease obligation as the moment of concluding the agreement is equal to discounted
value of finance lease payments by discount rate embedded in the lease agreement.
In the subsequent periods value of obligation is lessen by capital part of every payment determined
by deduction from the whole payment the value of finance part resulting from multiplying
obligation value as at the end of previous period by determined discount rate embedded in the lease
agreement.
Provisions
Definition of provision
Provisions are created when the Company has legal or customary obligation resulting from past
events, an d it is probable that in order to fulfil the obligation an outflow of resources must follow,
and the amount of the outflow can be reliably assessed.
Provisions are created and classed according to their purpose of creation to following groups:
1. Provisions for liabilities, in particular, for agreements which incur liabilities, for guarantees
and warranties granted and results of legal proceedings,
2. Restructuring provisions.
Provisions for future operating losses are not created.
The method of assessing provisions for the agreements entered into, which unavoidable costs of
expenses arising on the agreement will exceed expected revenues.
24
Provisions for agreements concluded, in which unavoidable costs of executing the agreement will
exceed expected economic benefits coming from the agreement, the entity recognizes loss which
will be referred to the agreement in the period, when the cost surplus was stated.
The entity creates provision for the above mentioned loss in the following amount:
a) Entire loss coming from the agreement – if till balance sheet date revenue recognized
exceeded costs incurred;
b) Difference between the loss from agreement and the surplus of cost incurred over revenue
achieved - if till balance sheet date costs incurred exceeded recognized revenue.
Way of identification and determining the amount of other provisions
Other provisions are recognized in the balance sheet if as at the balance sheet dates exists the
obligation to make financial consideration in the future, which date or payable amount currently
unknown.
The entity assess provisions , in particular, for:


Unfavourable results of litigation, in which the entity is a defendant ( if liabilities arising on
this situation are not recognized in different items) if unfavourable result of a trial is
probable for the entity. The amount of provision is assessed by the Management Board of
the entity based on the opinion of the legal expert.
Costs of provision, which were not invoiced, for services sold in the financial year, which will
be charged to the entity by a tour operator at the beginning of the following year.
Employment benefits
Identification and valuation of short-term employee benefits
As at the balance sheet date the entity assesses employee costs related to receiving additional
economic benefits with regard to unused part of paid holidays by the employees. The additional
cost is recognized as the accrued expenses in the value of paid holiday working days in the given
year or in previous years including due mark-ups. Revaluation of costs settled in times takes place
when the employee acquire the right to transfer unused holiday leave to the following year (31st
December). Unsettled liabilities in this respect as at the balance sheet date are not discounted.
Identification and valuation of other long-term employee benefits
The entity does not have any regulations concerning jubilee payments or deferred earn-out
payments, therefore the entity is not legally or customarily bound to provide long-term benefits in
this respect.
Payment obligation of severance pay provision is a result of binding legal regulations. The
provisions are created in the amount assessed by the accounting department using individual
method including significance criteria.
25
Identification and valuation of termination benefits
The entity creates provision if she has a clear obligation to terminate a contract of employment with
current employees without possibility to withdraw or provide termination benefit. The entity
discounts the benefits, if maturity date is longer than a year starting from the balance sheet date.
Deferred tax
Definition of deferred tax assets and liabilities
Deferred tax assets are determined in relation to deductible temporary differences or unused tax
losses in the amount, in which it is probable that taxable income achieved will allow to use these
assets.
Deferred tax liabilities are recognized in relation to taxable temporary differences in the amount of
income tax payable in the future.
The method of assessing the tax value of assets and liabilities – main items affecting arising of
deductible and taxable temporary differences.
The book value of assets and liabilities is the value determined according to International Financial
Reporting Standards.
Tax value of assets and liabilities is the value which constitute base to calculate income tax liabilities
Deductible temporary differences appear, when:
Book value < tax base
Book value> tax base
For assets
For liabilities
Taxable temporary differences appear, when:
Book value> tax base
Book value < tax base
For assets
For liabilities
Main items , which influence the appearing of deductible temporary differences are among others
as follows:







Using lower amortization rate for tax purposes than for accounting purposes,
Calculated but not paid loan interests under agreement concluded,
Calculated, unrealized foreign exchange losses
Losses resulting from discounting of receivables
Asset valuation allowances, which will decrease tax base in the future
Created provisions for liabilities expected and accruals , for which is certain that when they
are used tax cost will appear.
Tax losses and advantages to be used in subsequent reporting periods.
26
Main items affecting the appearance of taxable temporary differences are among others as follows:




Using higher amortization rate for tax purposes than for accounting purposes
Applying towards interest not received on granted loans and other financial assets
Calculated, but unrealized taxable temporary differences
Asset revaluation in order to reach fair value exceeding acquisition value of these assets
If the difference between book value and tax value will decrease in the future a tax liability ( a
permanent difference), it is assumed that tax value of such balance sheet item is equal to its book
value.
Tax rate adopted and recognition of deferred income tax results.
The entity calculates the value of deferred tax assets and liabilities including income tax rate in the
year when the tax obligation appeared, as sum product of ( respectively taxable and deductible )
temporary differences and income tax rate valid in the year when tax obligation arose.
Deferred tax from revenues and costs, which were directly recognized in equity is also recognized in
equity.
Contingent assets and liabilities
Contingent liabilities are as follows:


A probable liability, which is a result of past events, and which presence will be confirmed by
occurrence or absence of one or more uncertain future events, which are not controlled by
the Company, or
Present liability, which is a result of past event, but is not recognizable, as:
 Inflow of benefits in order to settle liability is highly improbable
 It is impossible to reliably assess the amount of this liability.
Contingent assets are probable assets, which are the results of past events, which existence will be
confirmed by occurrence or absence of one or more future event, which are not controlled by the
Company.
Assets and liabilities denominated in foreign currency.
The functional and presentation currency.
The functional and presentation currency is Polish zloty.
The rule of determining proper exchange rate for particular group of assets and liabilities as at the
balance sheet.
27
Balance sheet components classed as monetary as at the balance sheet date will be valued at the
closing price on the balance sheet date. This in particular refer to the following groups of assets :
receivables, liabilities, loans granted received loans and credits, and cash.
Balance sheet components classed as nonmonetary valued at fair value will be translated to Polish
zloty at the average rate ruling on the date of determining the fair value. If the Company will be
determining fair value as at the balance sheet date, then it will be applying the exchange rate valid
for the given currency on the balance sheet date, to translate nonmonetary balance sheet
components valued at fair value.
If the fair value of the given balance sheet component will not be determined as at the balance sheet
date, its value translated into Polish zloty will be determined using the exchange rate ruling on the
day, when the fair value of balance sheet component is determined for the last time, if the difference
will be significant to the financial statement. This situation refers particular to components of fixed
assets for d sale.
Other balance sheet components ( nonmonetary components valued at historical cost or modified
historical cost) will be valued as at the balance sheet date at the exchange rate ruling on the
transaction date of acquisition given component.
In order to make matters simpler, for practical purposes the entity uses as closing rate an average
exchange rate published by NBP.
The rule of determining proper exchange rate for particular groups of assets and liabilities during a
year and stating currency translation difference results.
Transactions and balances denominated in foreign currencies are translated into functional currency
at the exchange rate ruling for transaction settlement. Profit on exchange and foreign exchange loss
referring to settlement of these transactions and valuation of monetary assets and liabilities
denominated in foreign currencies are recognized respectively in profit and loss account, on
following conditions:
o
o
They are not deferred in equity, when they qualify to be recognized as cash flow hedge and
hedging the share in assets, and
Does not refer to construction in progress built, within the funding period – up to amount of
interest cost adjustment.
Foreign exchange gains and losses concerning transactions related with obtaining external funding
(credits, loans, lease agreements, cash and cash equivalents) constitute financial costs. Currency
translation differences arising on nonmonetary items, such as equity instruments classes as financial
instruments available for sale are recognized as revaluation capital at fair value. Currency translation
differences concerning funding of manufactured fixed assets – up to interest cost adjustment, less
revenues in this respect are subject to capitalization in fixed asset value.
Currency translation differences with regard to other transactions ( completion and balance sheet
valuation of trade settlement ) increase or decrease revenue or cost items of related operations.
Lease
28
Lease classification
The entity classes leasing as at the lease beginning date, that is at the w date of concluding lease
agreement.
Leasing is classed as finance lease, when conditions in the agreement transfer, in principle, all
potential benefits and risks connected with ownership to lessee. All other types of leasing are
treated as operating lease.
The entity treats a lease agreement as a finance lease agreement, when:
a) Lease agreement transfer ownership of lease object to the entity within lease period.
b) Lease agreement includes purchase option of lease object at the price enough favourable in
relation to value of lease object, that using this option is highly probable,
c) Lease period is similar to period of economic useful life of lease object
d) current value of lease payments is similar or higher than value of object lease at the
moment of entering into agreement
e) lease object is highly specialized and only lessee can take advantage of it,
f) in case of breaking the agreement by the lessee , the lessee covers all losses of lesser,
which are related with agreement breaking
g) all fluctuations of lease object residual value are reflected through modification of lease
amounts;
h) lessee can continue lease after original period under the agreement, and lease amounts in
this additional period are significantly lower than market leases.
Valuation of lease subject initial value
Assets used under the lease agreement , which are treated as Company’s assets are valued at the
fair value at the moment of concluding the agreement, however, the value cannot be higher than
the current value of minimal lease payments.
Depreciations of lease objects
When the agreement is classed as finance lease agreement, the entity recognizes the lease object as
its asset and depreciates it within lease period, or proper for the given group of assets period of
useful life, however , only then when it is certain that the lessee will obtain ownership and will use
asset in the period longer than the period under the agreement .
Settlement of lease payments
Lease payments are distributed among financial costs and decrease in lease liability balance, in such
way that the effective interest rate of the rest of liability balance was a constant amount. Financial
costs are recognized directly in the profit and loss account.
Rules of determining the financial result
In Rainbow Tours S.A. net financial profit comprise as follows:
29

o
o



Profit (loss) from operating activities
Gross profit (loss) on sales – profit from core-business activities
Profit (loss) from other operating activities
Financial transactions and investment
Obligatory income tax charges to financial result; the income tax paid by the Company, and
payments equal to it , according to separate legal regulations,
Profit on abandoned activity
Sales revenues
The revenue is recognized, when inflow of future economic benefits to the entity is probable.
Sales revenues are recognized at the fair value of payment received or due, less goods and services
tax , rebates, and discounts. The moment of sale is the moment of receiving of services or goods by
the recipient. The Company recognizes as revenues from goods sales above all fee earned on:


Tourist services
Agency
In case of organizing tourist events fee earned is recognized as the date of the tourist event ending.
The entity makes simplification with regard to short durations of touristic events, and assumes that
the date of origination of sales revenue is the date of completing the service . also for those tourist
events, which began at the end of one financial year, and end at the beginning of another financial
year. Service prepayments received are recognized in balance sheet liabilities as received
prepayments for services, which will be provided in future periods.
Origination date of revenues from agency of tourist events, airline and coach tickets, and insurance
sales, is the date of entering into agreement by the recipient of service. Received payments are the
base to assess due revenues. Final amounts of actual commissions on sales above mentioned is
determined at the moment of settlement of sold services with a carrier or tour operator.
Costs of goods and products sold
Costs of goods and services sold are recognized in the income statement according to matching
principle of revenues and cost ( revenues and costs referring to the same transactions are
recognized parallel).
Profit on other operating activities
Revenues and profits directly related to operating activities include as follows:





Profits and losses on disposal of fixed assets , construction in progress, and intangible assets,
Write-down of outdated, amortized, and uncollectible receivables and liabilities
Creating and reversing provision other than those related to the financial activity
Creating and reversing asset valuation allowance and their adjustments, which are result of
changes in estimated values, except write-downs charged to costs of services and goods sold
or financial costs.
Compensation, penalties and fines.
30

Transferring or obtaining free of charge, including as donation of assets.
Finance revenues and financial costs
Company’ s finance revenues and financial costs include:







Interests on assets owned
Interests on loans and credits granted
Currency translation differences on loans and credits
Interests arising from purchase or sale on prolonged payment conditions,
Loss on derivatives, which are recognized in profit and loss account
Interest on finance lease payments – recognized using internal rate of return method
Profit (loss) on sales of investment
All interests and other financial costs are recognized in the period, to which they refer. Dividend
revenue are recognized as the rights to receiving payments are obtained.
Income tax
Current income tax which charged to financial result of the reporting period is determined in the
amount of tax due arising from tax declaration for a current reporting period.
Deferred income tax charged to financial result of the reporting period is classified as changes in
assets and provision for deferred tax , which are a consequence of events recognized in financial
result of this period.
2.4. Information on rules changes (Accounting Policies), and on essential changes in
estimated data, including adjustments of provisions, and deferred tax provision and
assets, impairment losses for assets
In the presented period neither rules of Accounting policies did change nor the estimated data
including adjustments of provisions, deferred tax provision and assets, impairment losses for assets.
In relation to the previously published semi-annual data the Issuer recognized an impairment loss in
the amount of PLN 1.6 million for the shares in subsidiaries , in the financial statement. The amount
of impairment is subject to elimination in the presented consolidated balance sheet since the results
of particular companies are charged to consolidated results of the Capital Group. At the end of the
financial year this write-off was removed from the non-consolidated financial statement owing to
sale of subsidiary OOO Rainbow Tours Ukraina.
2.5. Brief description of achievements and failures in the report period including the most
significant events with regards to these achievements and failures
31
Year 2009 was the most difficult period in the entire history of the Company. It could be compared to
the year 2001, when terrorist attacks took place in September 2001. Following this event tourists
movement substantially slowed down. Similarly, in 2009 as a consequence of the events that started
in 2008, when American financial institutions declared bankruptcy there was a definite decline in
appropriating free resources for consumption. It should be noted that the company offers services in
higher segment than satisfying first needs. The factor which affected consumptions spending was
the mass-media campaign revolving around financial crisis, which influenced costumers’ attitude
towards lesser consumption spending and appropriating free resources for savings. Limiting
customers’ consumption resulted in substantial slow-down in purchase of tourism services in the
first few months of 2009. These decisions were also influenced by situation on currency markets.
The services offered by the company are provided mainly abroad and that is the reason why costs of
the trips are borne mainly in foreign currencies. Costs paid in Polish zloty were affected by a price
of the avgas and rising currency rates purchased by the carriers.
The below chart shows changes in average exchange rates published by NBP for USD and EUR in the
period from 31 January till 31 December 2009 at the end of each presented month.
Table - The average exchange rates published by NBP in 2008 and 2009.
Average exchange rates published by Polish Central Bank
in years 2008 & 2009
5
4.7013
4.1082
4
3.6758
PLN
3.2026
2.8503
3
2.0509
2
USD
EUR
There was exceptional increase in currency rates. The price of EUR increased from 3.2026 at the
end of July 2008 up to 4.6578 at the end of February 2009 what is a total increase by 46.8%. The
same situation was in place with USD which price at the end of July 2008 amounted to 2.0509,
whereas in February 2009 one dollar cost PLN 3.6758 which constitute the increase of 79.2%. The
Management Board informs that in February 2009 currency rates reached their peaks and on 18
February 2009 the average NBP rate four EUR amounted to PLN 4.8999 whereas USD cost PLN
3.8978. The prices of both currencies increased within 7 to 8 months. Negative exchange differences
are presented in profit and loss account in 2009 amounted to PLN 2.8 million.
Such great currency rates fluctuations are impredictible in all branches. The attempt to transfer
increased costs of trips to customers was impossible owing to the fact that few of present customers
32
of the company would accept increase in prices of trips up to 50%-80%. The Management Board of
the issuer renegotiated contracts regarding trips and introduce scheme of economizing own costs. It
should also be mentioned the catalogues of offers including price lists are prepared in few moths
advance and the offers are binding for the customers.
A typical trend for the tourism markets is making reservations for summer trips already in the first
quater of a year. The customers making reservation pay an advance, which is a prerequisite for the
reservation. In 2009 the reservation process slowed down substantially which affected liquidity of
the company. Economic stabilization in the world and good economic results restored the climate of
cunsumption purchase. Customers having no previous reservation started choosing the company’s
offer in masses. An exceptionally rainy summer was another decisive factor for buying trips abroad.
In the period analysed profit on sales amounted to almost PLN 35.1 million and was higher by 8.2 %
of the profit for 2008. Inspite of similar amount of tourists taking advantage of the touristic trips in
2009 in comparison with 2008, the gross margin (trade margin)amounted ot 13.0% whereas in 2008
it was 12.0%.
Despite noticeable fall of currency rates on the currency market in each of the quarters starting from
the second quarter of 2009 one should explain why there were prepayments for reservation of
touristic destinations. The prepayments were made at the beginnig of the summer season but they
become costs at the moment of the realization of touristic trips. The issuer took actions to secure
currency rates (above all EUR) at the lowest level possible. To achieve this it completes forward and
corridor transactions. Moreover, the company renegotiated purchase agreements with contractors
(air transportation, accomodation) in order to level down the cost of services. The below described
situation increases cost of selling by 6.7% in 2009 compared to 2008.
The Issuer’s Capital Group brought in place some resolute restructuring activities regarding activities
referring to self-costs incurred by the Capital Group. It should be stressed that the Issuer’s selling
costs decreased by PLN 2.4 million compared to 2008 which was a fall by 10.6%. Also, the costs of
company’s management were reduced. In comparison with 2008 the general cost was reduced by
almost PLN 4.1 million which is a fall by 21.8 % compared with the similar period.
All actions underatken by the Issuer’s Management Board resulted in in achieving operating profit
(EBIT) at the level of PLN 0.9 million. This result is higher than in the similar period by around PLN
10.3 million in comparison with 2008 when the company suffered the operating loss in the amount
of PLN 9.4 million.
Rainbow Tours S.A.’s net profit achieved in 2009 amounted to PLN 1.1 million and was higher by
almost PLN 9.6 million in comparison with 2008 when the company suffered the net loss in the
amount of PLN -8.5 million.
EBITDA in 2009 amounted to PLN 1.3 million, whereas in 2008 this indicator was negative and
amounted to PLN -8.8 million.
Rainbow’s net yield (ROS) was throughtout 2009 at the level of 0.4%. This indicatow was negative in
2008 and amounted to -3.2%.
33
2.6. Type and amounts of items affecting the assets, liabilities, net financial result or cash
flows, which are untypical with regard to their type, amount or influence exerted
In the fourth quarter of 2009 there were no untypical events, which , in the opinion of the Issuer
and the Capital Group, affected assets, liabilities, equity, financial results and cash flows.
2.7. Explanations concerning seasonality or periodicity of issuer’s activities in the period
presented.
Activities of the Group are seasonal. The below chart presents value of revenue from sales of
touristic services since January 2006 till December 2009. The presented data refer exclusively
to the dominating entity. The Issuer desisted from comparing the consolidated data taking into
account various dates taking control over subsidiaries and close cooperation of all entities, and
subsequent exclusions of mutual transactions.
Table - monthly sales revenues in years 2006-2009
Monthly revenues from sales per years
60,000
50,000
40,000
30,000
20,000
10,000
0
Monthly revenues from sales per years
Table - comparing quarterly sales revenues in years 2006-2009
34
Comparison of quarterly revenues - since 2006
till 2009
150,000.0
100,000.0
50,000.0
0.0
I Kw
II Kw
2006
III Kw
2007
2008
IV Kw
2009
2.8. Presentation of the results according to particular activity segments of Rainbow Tours S.A.
Capital Group
the below table presents activities of the Capital Group divided into particular activity segments
Segments of activities
description
Continuing activity, sales
revenues
Continuing activity, cost of sales
Gross profit (loss) on sales
Continuing activity, cost of
selling
Continuing activity , general and
administrative cost
Continuing activity, other
operating income
Continuing activity, operating
cost
Profit (loss) on operations
Activities of
tour
operator
Activities of as
travel agents
Other
activities
Total
247 488
37 596
3323
288 407
-221 272
-29 411
-2613
-253 296
26 216
8 185
710
35 111
-14 644
-5 680
-237
-20 561
-12 128
-2 418
-170
-14 716
1 310
1 310
-301
-301
247 488
37 596
3323
288 407
2.9. Information on issue, repurchase and repayment of non-equity and equity securities
In 2008 Rainbow Tours S.A. started introducing Share Incentive Plans based on Company’s shares.
The rules of the new Share Incentive Plan was resolved at Ordinary General Assembly of 6th June
2008. The Plan comprises years 2008-2010.
35
The main goal of the plan is a stronger motivation of greater team of employers, in order to increase
Company’s goodwill for shareholders and introduce a factor enabling to retain key persons in the
Capital Group for a long time.
On 8 September 2008 a conditional increase of share capital by the amount not higher than PLN 20
thousand by issue of ordinary bearer serried D shares of nominal value PLN 0.10 each was
registered in National Registry Court. Series D share will be subscribed by authorised persons from
Issue A subscription warrants. On 30 October 2008 52 thousand registered series A subscription
warrants were distributed (“series 2008”). On 15 December 2008 the Management Board of Polish
National Depository for Securities by resolution 684/08 took to deposit up to 200.000 series D shares
of nominal value PLN 0.10 each issued within conditional share capital increase of Rainbow Tours
S.A., on condition that the company which run regular market will take a decision to trade the shares
on this market.
On 31 December WSE Management Board adopted resolution No 992/2008 concerning admission
and introduction to trading at the WSE Main Market ordinary series D bearer shares of Rainbow
Tours ( 52 thousand of ordinary series D bearer shares of nominal value 0.10 each). According to the
above mentioned resolution it was decided to admit, as of 7 January 2009, in usual way, shares to
trading on regular market; on condition that the shares are registered by Polish National Depository
for Securities on 7 January 2009 and marked with code: “PLNRNBWT00031”. On 6 January 2009 the
Operating Department of Polish Depository for Securities published an information concerning the
registration, and therefore the shares were admitted to trading.
2.10.
Dividends paid (total or per share), divided into ordinary shares and other shares.
The dominating company did not declare or paid out the dividend during the four quarter of 2009.
2.11.
Significant events after the interim period, which were not reflected in the financial
statement for the first quarter of 2009.
Rainbow Tours S.A.’s Management Board advised that on 1 February 2010 ( the Current
Report No 5/2010) that the Issuer purchased and acquired the part of the company
comprising 8 retail outlets selling tourism offer from Forte Trip Spółka Cywilna with its seat
in Koszalin. The company acquired these assets using its own resources.
The acquired assets that is 8 travel agencies located in shopping centres will be included in
ABC Świat Podróży Sp. z o.o. which is 100% owned Rainbow Tours’s subsidiary. ABC Świat
Podróży will possess 16 retail outlets including 8 located in Wielkopolska, 3 in Koszalin, 2 in
Płock and one in each of the following towns: Gryfice, Białystok and Szczecin. The
Management Board of ABC Świat Podróży Sp. z o.o. estimates the company will generate
gross revenues at the level of PLN 50 million. The company plans to open new travel
agencies of ABC Świat Podróży, first of all in Lodz.
Until the moment of the publication of the respective report there were no events
identified which could, in the opinion of the Management Board, affect the company’s
future financial results.
36
2.12.
Changes in contingent liabilities or assets, which took place after the end of the last
financial year
On 5 January 2009 the deposit for the amount PLN 870 thousand was released, which was a bank
guarantee for related undertaking Rainbow Tours – Biuro Podróży Sp. z o.o. The guarantee was
submitted by accredited agent which is Rainbow Tours – Biuro Podróży Sp. z o.o. to International Air
Transportation Association. The guarantee was valid till 31 December 2008. This item is not
presented as at the end of the fourth quarter of 2009.
2.13.
Description of organization of the Issuer’ s Capital Group, indication of consolidated
entities
The below diagram presents the structure of Rainbow Tours S.A. Capital Group and the percentage
share in equity of particular companies.
Rainbow Tours S.A
Rainbow Tours Ukraina*
capital share 100%
Portal Turystyczny Sp. z
o.o.
Rainbow Tours - Biuro
Podróży sp. z o.o.
capital share 65%
capital share 50%
Travelovo Sp. z o.o.
capital share 75,4%
Traveltech Sp. z o.o.
capital share 71%
ABC Świat Podróży Sp. z
o.o.
capital share 100%
As at 31 December 2009 all entities controlled by the issuer were consolidated. The Comparable
data for the similar period of 2008 include in the profit and loss account, and changes in equity
information on ABC Świat Podróży Sp. z o.o., starting from the moment of taking over the control –
that is from June 2008.
The Company OOO Rainbow Tours Ukraina was sold on 23 December 2009, about which the Issuer
informed in the Current Report No 44/2009 as of 30 December 2009 and the Amended Current
Report No 44/2009 as of 22 January 2010. Owing to sales of subsidiary OOO Rainbow Tours Ukraina
( the equivalent of Polish Sp. z o.o.) the Capital Group’s results include only revenues and costs of this
company until the company was under control.
2.14.
Result of changes in economic entity’s structure within the interim period including
mergers of economic entities, acquisition or sales of subsidiaries, and long-term
investments, restructuring and abandonment of activity.
In the fourth quarter of 2009 the share in subsidiaries Travelovo Sp. z o.o. and Travelovo Sp. z o.o
was increased. As a result of transactions share capital and share in votes at the general meeting of
the shareholders was increased from 56% to 75.4 % whereas the share capital and the share in votes
at the general meeting of the shareholders was increased from 56% to 71.0%.
37
The Company OOO Rainbow Tours Ukraina was sold on 23 December 2009, about which the Issuer
informed in the Current Report No 44/2009 as of 30 December 2009 and the Amended Current
Report No 44/2009 as of 22 January 2010. Owing to sales of subsidiary OOO Rainbow Tours Ukraina
(the equivalent of Polish Sp. z o.o.) the Capital Group’s results include only revenues and costs of this
company until the company was under control.
3. Other additional information
3.1. Selected financial data including basic items of abridged financial statement ( translated
into Euro as well)
To translate the below items following foreign exchange rates were used:
- Average Euro exchange rate ruling as at the last day of the period, set by National bank of
Poland ( as at 31 December 2009 – PLN 4.1082, as at 31 December 2008 – PLN 4.1724, as
at 31 December 2008 – PLN 4.1724) – for asset and liabilities
- arithmetic average of exchange rates set by National Bank of Poland ruling as at the last day
of every finished month of the financial period ( as at 1 December 2009 – PLN 4.3406, as at
1 December 2008 – PLN 3.5321 ) – for profit and loss account and cash flow account items.
Rainbow Tours S.A. Capital Group
RTSA
100%
PLN’000
Rainbow Tours S.A.
selectdata C
f
0
Legal Basis: IFRS
Sheet: type 2
Description
31 December 2008
31 December 2009
4,1724
4,1082
Average exchange rate set by NBP Euro
Weighted average exchange rate by NBP
3,5321
4,3406
Euro
Continuing activity sales revenues
269 872
288 407
PLN
76 406
66 444
Euro
Profit (loss) on operations
-9 438
843
PLN
-2 672
194
Euro
Profit (loss) before tax
-8 177
1 269
PLN
-2 315
292
Euro
For shareholders of dominating entity
-8 591
942
PLN
-2
432
217
Euro
Net operating cash flow
-12 959
-4 214
PLN
-3 669
-971
Euro
Net cash on investment activities
2 243
4 375
PLN
635
1 008
Euro
38
Net cash on financial activities
PLN
Euro
Net Increase/ (decrease) in cash and cash
equivalents
PLN
Euro
Total assets
PLN
Euro
Long-term liabilities
PLN
Euro
Current liabilities
PLN
Euro
Equity
PLN
Euro
Authorized capital
PLN
Euro
Number of ordinary shares ( with respect to
dividend)
Profit (loss) per ordinary share
PLN
Euro
Book value per share
PLN
Euro
Diluted profit ( loss) per ordinary share
Net profit (loss)
Element diluting the number of ordinary
shares
Number of ordinary shares ( with respect to
dividend)
Element diluting the number of ordinary
shares
PLN
Euro
Book value per share
PLN
Euro
-192
1 288
-54
297
-10 908
1 449
-3 088
334
58 588
63 473
14 042
15 450
1 454
492
348
120
39 264
39 109
9 410
9 520
17 870
23 872
4 283
5 811
1 200
1 205
288
293
12 000
12 052
-0,72
0,08
-0,20
0,02
1,49
1,98
0,36
0,48
-8 591
942
-8 591
942
0
0
12 000
12 052
0
0
-0,72
0,08
-0,20
0,02
1,49
1,98
0,36
0,48
39
3.2. The Position of the Management Board concerning possibility of realizing previously
published forecasts for the given year, in the light of results presented in the quarterly
report in comparison to the anticipated results
The Management Board of Rainbow Tours S.A. did not published the forecast of financial result
referring to 2009 and the fourth quarter of 2009.
3.3. Shareholders holding at least 5% of the total number of votes at the Issuer’s General
Assembly.
Shareholder
of
Number
of
votes
per each
share
Percentage of
the
number
of share
at
the
General
Assembly
of
the
Company
Share
percentag
e in the
share
capital of
the
Company
Sławomir Adam
Wysmyk
2.331.000
4.221.000
22,12
19,28
Grzegorz
Baszczyński
2.292.000
4.147.000
21,77
19,02
2.026.300
3.671.300
19,27
16,81
1.990.000
3.600.00
18,90
16,51
Remigiusz Cezary
Talarek
Tomasz
Piotr
Czapla
Number
shares
held
The above table presents the situation as at the date of submitting this quarterly report, that is at 1
March 2010. In the period starting after submitting previous quarterly report there was change in
number of shares held by Mr Sławomir Wysmyk- the chairman of the Supervisory Board – a decrease
in number of shares by 12.000 pieces which is the decrease in share capital of the Company by 0.10%
and the decrease in the percentage share of votes at the General Assembly by 0.06%.
3.4. Company’s shares or right to shares (options) held by the members of the Management
Board and Supervisory Board.
Company’ shares as at the 31 December 2009 are held by following persons:
Grzegorz Baszczyński – the President of the Management Board
Remigiusz Talarek – the vice-chairman of the Management Board
Tomasz Czapla - the vice-chairman of the Management Board
Sławomir Wysmyk – the Chairman of the Supervisory Board.
40
A number of shares held and their share in Company’ s share capital, and the number of votes at the
General Assembly are presented in point 3.3.
Managing personnel, which do not seat in the Management Board or the Supervisory Board hold
neither Issuer’s shares nor rights to these shares. Four out of five members of Company’s Supervisory
Board comply with criteria of Independent Member according to the Statutes. Only the Chairman of
the Supervisory Board: Mr Sławomir Wysmyk hold shares , which give him 19.28% share in the share
capital of the Company and 22.12 % of votes at the General Assembly. The ownership of shares held
by the managing persons including information on changes is presented in point 3.3.
3.5. Information on significant legal proceedings concerning the Company.
The Issuer or its subsidiaries is not a party in any legal or administrative proceedings and the value
of the subject matter of the litigation does not constitute 10% of Issuer’s equity.
3.6. Information on transactions concluded with associated units.
The issuer and associated units failed to conclude transaction which would meet the criteria
indicated in the Ordinance.
All sales transaction were typical and of routine nature, and were a result of core business activity of
the entities. In 2009 the dominating entity granted loans to associated units in the following
amount:
Travelovo Sp. z o.o. – PLN 300 thousand
Traveltech Sp. z o.o. – PLN 140 thousand
Sales transactions of goods and services between companies within Rainbow Tours S.A. Capital
Group in the period from 1st January 2009 till 31st December 2009 are subject to elimination.
Revenues
1-12/2009
Rainbow Tours
S.A.
Rainbow Tours
Ukraina Sp. z
o.o.
Portal Turyst.
Sp. z o.o
Rainbow Biuro
Podróży Sp. z
o.o.
Traveltech Sp. z
o.o
Travelovo
Sp. z o.o.
Biuro Podróży
ABC
5 518,00
2 904,00
001
0,00
1 204,00
237,00
258,00
600,00
315,00
0
1 204
216
215
529
315
0
0
0
0
0
0
0
0
0
0
66
0
5
0
002
1 420
003
6
0
004
24
0
0
005
6
0
0
0
006
6
0
0
21
43
007
1 442
0
0
0
0
0
0
41
Costs
1-12/2009
Rainbow Tours
S.A.
Rainbow Tours
Ukraina Sp. z
o.o.
Portal Turyst.
Sp. z o.o
Rainbow Biuro
Podróży Sp. z
o.o.
Traveltech Sp. z
o.o
Travelovo
Sp. z o.o.
Biuro Podróży
ABC
4 318,00
2 479,00
1 420,00
6,00
90,00
11,00
70,00
242,00
1 420
6
24
6
6
242
0
0
0
0
0
0
0
0
0
0
21
0
43
0
001
002
0
003
1 204
0
004
216
0
0
005
215
0
0
0
006
529
0
0
66
5
007
315
0
0
0
0
0
0
The difference in the amount of PLN 1200 thousand refers to intangible assets
Receivables/ liabilities presented in the balance sheet of the particular companies within Rainbow
Tours S.A. Capital Group as at 31 December 2009, which are subject to elimination
Receivables
1-12/2009
Rainbow Tours
S.A.
Rainbow Tours
Ukraina Sp. z
o.o.
Portal Turyst.
Sp. z o.o
Rainbow Biuro
Podróży Sp. z
o.o.
Traveltech Sp. z
o.o
Travelovo
Sp. z o.o.
Biuro Podróży
ABC
Liabilities
1-12/2009
Rainbow Tours
S.A.
Rainbow Tours
Ukraina Sp. z
o.o.
Portal Turyst.
4 421,00
1 865,00
001
0,00
219,00
2 291,00
46,00
0,00
0,00
0
219
869
42
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
002
36
003
0
0
004
0
0
0
005
0
0
0
0
006
0
0
0
1 422
4
007
1 829
0
0
0
0
0
1 130,00
0,00
0,00
0,00
0,00
1 425,00
1 829,00
0
0
0
0
0
1 829
0
0
0
0
0
0
0
0
0
4 384,00
001
002
0
003
219
0
0
42
Sp. z o.o
Rainbow Biuro
Podróży Sp. z
o.o.
Traveltech Sp. z
o.o
Travelovo
Sp. z o.o.
Biuro Podróży
ABC
004
869
0
0
0
005
42
0
0
0
006
0
0
0
0
0
007
0
0
0
0
0
1 421
0
4
0
0
0
3.7. Information on credit or loans warranties, or guaranties granted by the issuer or its
subsidiary to, jointly, one entity or its subsidiary, if total value of warranties and
guarantees granted constitute at least 10% of Issuer’s equity
In the presented period neither the issuer nor the subsidiaries granted loan warranties or
guaranties, which would meet the above criteria.
3.8. Other information, which are in opinion of the Issuer, significant to asses situation of
staff, assets and finance and its changes, and information essential to assess possibility of
realization of liabilities by the Issuer.
Rainbow Tours S.A. takes advantage of two operating credits in Deutsche Bank and Raiffeisen Bank .
The credits support current liquidity in low tourist season (November – March, which s is also the
period of payment of advances to contractors for services provided in high season. Currently after
the end of the third quarter the issuer made some changes in cooperation with banks , which are
financing the activities of the issuer. On 28 October 2008 the dominating entity contracted a current
credit in BOŚ bank, in order to pay out the funding in Deutsche Bank S.A. Additionally on 10
November 2009 in order to secure liquidity the dominating entity obtained funding in BPS S.A. in
form of current credit on current account.
Currently the company has 3 credit limits in Raiffeisen Bank S.A. , BOŚ S.A. and BPS S.A. in the total
amount of PLN 8.8 million.
3.9. Indication of factors, which in the opinion of the Issuer will influence results reached
within at least following quarter
Financial results reached in the future key periods will be influenced by the following factors:
-
Maintaining stable economic situation of the Company with reference to the economic
situation in Poland
Improvement of customer moods through consumption growth
Sales of Winter 2009 offer
Advance sale of Summer 2010 offer
43
-
Renegotiating purchase agreements with contractors and increasing in this way profitability
of most products,
Cost restructuring started in the previous quarters in order to lower costs of functioning of
the Capital Group.
The Management Board of Rainbow Tours S.A.
Lodz, 1 March 2009
44