Annual / Quarterly Financial Statement • Apr 25, 2023
Annual / Quarterly Financial Statement
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REPORT AND CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 December 2022
| CONTENTS | PAGE |
|---|---|
| Board of Directors and other officers | 1 |
| Management Report | 2 - 4 |
| Declaration of the members of the Board of Directors and the company officials responsible for the preparation of the consolidated financial statements |
5 |
| Independent auditor's report | 6 - 9 |
| Consolidated statement of profit or loss and other comprehensive income | 10 |
| Consolidated statement of financial position | 11 |
| Consolidated statement of changes in equity | 13 |
| Consolidated cash flow statement | 14 |
| Notes to the consolidated financial statements | 15 - 44 |
| Board of Directors: | George Mavromaras Panagiotis Tsaggaris Christos Filotheou |
|---|---|
| Company Secretary: | Panagiotis Tsaggaris |
| Independent Auditors: | Meritorius Audit Ltd Certified Public Accountants and Registered Auditors 3A Theodorou Potamianou str. Kato Polemidia 4155 Limassol |
| Registered office: | Riga Fereou 2 Limassol Center, Block B, Off. 401 3095, Limassol, Cyprus |
| Registration number: | ΗΕ185775 |
The Board of Directors presents its report and audited consolidated financial statements of the Company and its subsidiaries (together with the Company, the ''Group'') for the year ended 31 December 2022.
The principle activities of the Group are the import, purchase, sale, trading and distribution of all kinds of bakery and confectionery products and the creation of a network of retail stores of the above products in Greece and abroad.
During the year there were no changes in the Group structure of the Company. The Company does not intend to proceed with any acquisitions or mergers.
The development of the Group to date, its financial results and its financial position, as presented in the consolidated financial statements, are considered satisfactory.
The main suppliers of the Group are from the Greek and European market. The Russian invasion has destabilized the supply chain as Ukraine holds a large percentage of the grain and sunflower oil market, goods that are key raw materials of the Group. The Group strives to maintain a sufficient stock of raw materials and goods in order to cope with the shortages created in the market by the war in Ukraine.
There are no overdue debts to suppliers or other violations. There are no suppliers whose termination of cooperation would endanger the operation of the Group.
The Group recognizes its obligations towards the environment and the need to continuously improve its environmental performance, so as to achieve a balanced economic development in harmony with the protection of the environment. Its environmental policy focuses on the following:
The promotion of equal opportunities and the protection of diversity are key principles of the Group. The Management of the Group does not discriminate in recruitment/selection, remuneration, training, assignment of work duties or any other work activities. The factors that are exclusively considered are the experience, personality, theoretical training, qualifications, efficiency and abilities of the individual. The Group encourages and recommends all its employees to respect the diversity of each employee or supplier or customer of the Group and not to accept any behavior that may create discrimination of any kind. Safety at work for employees is a top priority and a necessary condition in the operation of the Group. The Group maintains in all workspaces materials (medicines, bandages, etc.) of "first aid". The Group has a "safety technician" and an "occupational doctor" in accordance with the applicable Legislation. The procedures for the selection and recruitment of personnel are based on the qualifications required for the position and without discrimination.
The principal risks and uncertainties faced by the Group are disclosed in notes 5, 6, 29 and 34 of the consolidated financial statements.
The Board of Directors does not expect any significant changes or developments in the operations, financial position and performance of the Group in the foreseeable future
The Group maintains the following branches:
The Group is exposed to market price risk from the financial instruments it holds.
Market price risk is the risk that the value of financial instruments will fluctuate as a result of changes in market prices. The Group's financial assets at fair value through other comprehensive income and financial assets at fair value through profit or loss are susceptible to market price risk arising from uncertainties about future prices of the investments. The Group's market price risk is managed through diversification of the investment portfolio.
The Group's results for the year are set out on page 10. Net loss for the year is transferred to reserves.
The Board of Directors does not recommend the payment of a dividend and the net profit for the year is retained.
The Group did not carry out any research and development activities during the year.
There were no changes in the share capital of the Company during the year under review.
The Group places great importance to the implementation of policies, practices and procedures of good corporate governance. Magean Holding Plc does not apply the Corporate Governance Code drawn up by the CSE. The application of the Corporate Governance Code is not mandatory for Magean Holding Plc as long as the company is listed on the alternative market of the Cyprus Stock Exchange (CSE).
The members of the Group's Board of Directors as at 31 December 2022 and at the date of this report are presented on page 1. All of them were members of the Board of Directors throughout the year ended 31 December 2022.
In accordance with the Company's Articles of Association all Directors presently members of the Board continue in office.
There were no significant changes in the assignment of responsibilities and remuneration of the Board of Directors.
Any significant events that relate to the operating environment of the Group are described in note 29 to the consolidated financial statements.
Any significant events that occurred after the end of the reporting period are described in note 36 to the consolidated financial statements.
We have audited the consolidated financial statements of Magean Holding Plc (the ''Company'') and its subsidiaries (the ''Group''), which are presented in pages 10 to 44 and comprise the consolidated statement of financial position as at 31 December 2022, and the consolidated statements of profit or loss and other comprehensive income, changes in equity and cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31 December 2022, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113.
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the ''Auditor's Responsibilities for the Audit of the Consolidated Financial Statements'' section of our report. We remained independent of the Group throughout the period of our appointment in accordance with the International Ethics Standards Board for Accountants' International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code) together with the ethical requirements that are relevant to our audit of the consolidated financial statements in Cyprus, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
The Board of Directors is responsible for the other information. The other information consists of the information contained in the Management Report but does not include the consolidated financial statements and the auditor's report on them.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
6
The Board of Directors is responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113, and for such internal control as the Board of Directors determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Board of Directors is responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group's financial reporting process.
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
We communicate with the those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters.
Pursuant to the requirements of Article 10(2) of the EU Regulation 537/2014 we provide the following information in our Independent Auditor's Report, which is required in addition to the requirements of International Standards on Auditing.
We were first appointed as auditors of the parent Company Magean Holding PLC in 2010 by the Annual General Meeting. Our appointment is renewed annually by resolution of the shareholders and represents a total period of uninterrupted appointment of 12 years.
We declare that no prohibited non-audit services referred to in Article 5 of the EU Regulation 537/2014 and Section 72 of the Auditors Law of 2017 were provided. In addition, there are no non-audit services which were provided by us to the Group and which have not been disclosed in the consolidated financial statements or the Management Report.
Pursuant to the additional requirements of the Auditors Law of 2017, we report the following:
This report, including the opinion, has been prepared for and only for the Group's members as a body in accordance with Article 10(1) of the EU Regulation 537/2014 and Section 69 of the Auditors Law of 2017 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whose knowledge this report may come to.
The engagement partner on the audit resulting in this independent auditor's report is Mr. Christos Metaxas.
Despoina Demetriou Certified Public Accountant and Registered Auditor for and on behalf of Meritorius Audit Ltd Certified Public Accountants and Registered Auditors
Limassol, 24 April 2023
| 2022 | 2021 | ||
|---|---|---|---|
| Note | € | € | |
| Revenue | 7 | 13,290,089 | 8,270,826 |
| Cost of sales | (10,073,518) | (6,357,525) | |
| Gross profit | 3,216,571 | 1,913,301 | |
| Other operating income | 8 | 470,131 | 809,086 |
| Operating expenses | 9 | (1,691,394) | (1,112,130) |
| Administration expenses Net impairment loss on financial and contract assets |
10 | (1,065,982) - |
(1,103,989) (801) |
| Other expenses | 11 | (376,380) | - |
| Operating profit | 552,946 | 505,467 | |
| Net finance costs | 13 | (414,664) | (183,195) |
| Profit before tax | 138,282 | 322,272 | |
| Tax | 14 | (125,135) | (29,522) |
| Net profit for the year | 13,147 | 292,750 | |
| Other comprehensive income | |||
| Fair value revaluation of land and buildings | (20,792) | 13,004 | |
| Other comprehensive income for the year | (20,792) | 13,004 | |
| Total comprehensive (loss)/income for the year | (7,645) | 305,754 | |
| Net profit for the year attributable to: | |||
| Equity holders of the parent | (206,178) | 146,212 | |
| Non-controlling interests | 219,325 | 146,538 | |
| Net profit for the year | 13,147 | 292,750 | |
| Total comprehensive (loss)/income for the year attributable to: | |||
| Equity holders of the parent | (216,574) | 152,714 | |
| Non-controlling interests | 208,929 | 153,040 | |
| Total comprehensive (loss)/income for the year | (7,645) | 305,754 |
The notes on pages 15 to 44 form an integral part of these consolidated financial statements.
As at 31 December 2022
| 2022 | 2021 | ||
|---|---|---|---|
| ASSETS | Note | € | € |
| Non-current assets | |||
| Property, plant and equipment | 16 | 9,515,090 | 3,809,739 |
| Right-of-use assets | 17 | 107,356 | 351,153 |
| Intangible assets | 18 | 2,210 | 2,210 |
| 9,624,656 | 4,163,102 | ||
| Current assets | |||
| Inventories | 19 | 742,740 | 414,051 |
| Trade and other receivables | 20 | 4,321,212 | 2,519,700 |
| Financial assets at fair value through profit or loss Cash at bank and in hand |
21 22 |
2,168,734 1,097,010 |
2,907,198 1,276,415 |
| 8,329,696 | 7,117,364 | ||
| Total assets | 17,954,352 | 11,280,466 | |
| EQUITY AND LIABILITIES | |||
| Equity | |||
| Share capital | 23 | 1,019,155 | 1,019,155 |
| Other reserves | 131,678 | 142,075 | |
| Retained earnings | 2,223,702 | 2,429,880 | |
| 3,374,535 | 3,591,110 | ||
| Non-controlling interests | 866,545 | 657,616 | |
| Total equity | 4,241,080 | 4,248,726 | |
| Non-current liabilities | |||
| Borrowings | 24 | 6,817,224 | 2,721,758 |
| Obligations under finance leases | 25 | 34,277 | 469,318 |
| Deferred tax liabilities | 96,498 | 82,236 | |
| Provisions for other liabilities and charges | 25 | 43,000 | 48,348 |
| 6,990,999 | 3,321,660 | ||
| Current liabilities | |||
| Trade and other payables | 27 | 4,611,128 | 2,289,263 |
| Borrowings | 24 | 1,833,970 | 1,091,293 |
| Obligations under finance leases Other financial liabilities |
25 | 105,641 - |
213,754 33,743 |
| Current tax liabilities | 28 | 171,534 | 82,027 |
| 6,722,273 | 3,710,080 | ||
| Total liabilities | 13,713,272 | 7,031,740 | |
| Total equity and liabilities | 17,954,352 | 11,280,466 |
The notes on pages 15 to 44 form an integral part of these consolidated financial statements.
Year ended 31 December 2022
| Attributable to equity holders of the Company Fair value |
Non | ||||||
|---|---|---|---|---|---|---|---|
| Note | Share capital € |
reserve - land and buildings € |
Statutory reserve € |
Retained earnings € |
controlling interests € |
Total € |
|
| Balance at 1 January 2021 as previously reported Adjustment from IAS Revision 19 |
1,019,155 - |
105,149 - |
30,424 - |
3,275,902 73,752 |
504,576 - |
4,935,206 73,752 |
|
| Balance at 1 January 2021 as restated | 1,019,155 | 105,149 | 30,424 | 3,349,654 | 504,576 | 5,008,958 | |
| Comprehensive income Net profit for the year |
- | - | - | 146,212 | 146,538 | 292,750 | |
| Transactions with owners Dividends Fair value reserve - land and buildings |
15 | - - |
- 6,502 |
- - |
(1,063,466) (2,520) |
- 6,502 |
(1,063,466) 10,484 |
| Balance at 31 December 2021/ 1 January 2022 | 1,019,155 | 111,651 | 30,424 | 2,429,880 | 657,616 | 4,248,726 | |
| Comprehensive income Net profit for the year Fair value reserve - land and buildings |
- - |
- (10,397) |
- - |
(206,178) - |
219,325 (10,396) |
13,147 (20,793) |
|
| Balance at 31 December 2022 | 1,019,155 | 101,254 | 30,424 | 2,223,702 | 866,545 | 4,241,080 |
The fair value reserve for land and buildings arises in relation to the revaluation of land and buildings. When selling revalued land or buildings, the part of the real estate revaluation reserve associated with this asset is transferred directly to the accumulated profits.
The notes on pages 15 to 44 form an integral part of these consolidated financial statements.
| 2022 | 2021 | ||
|---|---|---|---|
| Note | € | € | |
| CASH FLOWS FROM OPERATING ACTIVITIES | |||
| Profit before tax | 138,282 | 322,272 | |
| Adjustments for: Depreciation of property, plant and equipment |
16 | 526,403 | 536,036 |
| Unrealised exchange (profit)/loss | (5,096) | 5,308 | |
| Profit from other opearating activities | (257,536) | - | |
| Fair value losses/(gains) on financial assets at fair value through profit or | |||
| loss | 357,273 | (17,595) | |
| Impairment charge - investments in subsidiaries | - | 801 | |
| Interest income | 1 | - | |
| Interest expense Interest income |
13 | 326,267 (23,150) |
154,065 (23,031) |
| Dividends income | (27,858) | (3,600) | |
| 1,034,586 | 974,256 | ||
| Changes in working capital: | |||
| Increase in inventories Increase in trade and other receivables |
(328,689) (1,865,429) |
(50,118) (827,226) |
|
| Decrease/(increase) in financial assets at fair value through profit or loss | 381,191 | (2,889,603) | |
| (Decrease)/increase in other financial liabilities | (33,743) | 33,743 | |
| Increase in trade and other payables | 2,321,865 | 816,975 | |
| Cash generated from/(used in) operations | 1,509,781 | (1,941,973) | |
| Interest received | 23,150 | 23,031 | |
| Dividends received | 27,858 | 3,600 | |
| Tax paid | (14,219) | (32,190) | |
| Net cash generated from/(used in) operating activities | 1,546,570 | (1,947,532) | |
| CASH FLOWS FROM INVESTING ACTIVITIES | |||
| Payment for purchase of property, plant and equipment | 16 | (6,559,759) | (245,833) |
| Proceeds from disposal of property, plant and equipment | 390,360 | 74,939 | |
| Interest received | (1) | - | |
| Net cash used in investing activities | (6,169,400) | (170,894) | |
| CASH FLOWS FROM FINANCING ACTIVITIES | |||
| Repayments of borrowings | (6,016,047) | (4,345,620) | |
| Repayments of obligations under finance leases | (221,531) | (153,482) | |
| Payments of leases liabilities | - | (39,200) | |
| Proceeds from borrowings | 11,012,144 | 5,111,522 | |
| Interest paid | (326,267) | (154,065) | |
| Dividends paid | - | (1,063,466) | |
| Net cash generated from/(used in) financing activities | 4,448,299 | (644,311) | |
| Net decrease in cash and cash equivalents | (174,531) | (2,762,737) | |
| Cash and cash equivalents at beginning of the year | 1,267,360 | 4,030,097 | |
| Cash and cash equivalents at end of the year | 22 | 1,092,829 | 1,267,360 |
The notes on pages 15 to 44 form an integral part of these consolidated financial statements.
The Company Magean Holding Plc (the ''Company'') was incorporated in Cyprus on 18 October 2006 as a private limited liability company under the provisions of the Cyprus Companies Law, Cap. 113. Its registered office is at Riga Fereou 2, Limassol Center, Block B, Off. 401, 3095, Limassol, Cyprus.
The principle activities of the Group are the import, purchase, sale, trading and distribution of all kinds of bakery and confectionery products and the creation of a network of retail stores of the above products in Greece and abroad.
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union (EU) and the requirements of the Cyprus Companies Law, Cap. 113. These consolidated financial statements have been prepared under the historical cost convention as modified by the revaluation of land and buildings, and financial assets and financial liabilities at fair value through profit or loss.
The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates and requires Management to exercise its judgment in the process of applying the Group's accounting policies. It also requires the use of assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on Management's best knowledge of current events and actions, actual results may ultimately differ from those estimates.
During the current year the Group adopted all the new and revised International Financial Reporting Standards (IFRS) that are relevant to its operations and are effective for accounting periods beginning on 1 January 2022. This adoption did not have a material effect on the accounting policies of the Group.
The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all years presented in these consolidated financial statements unless otherwise stated.
The Company at the end of its financial year has subsidiaries and under section 142(1)(b) of the Cyprus Companies Law, Cap. 113, must prepare consolidated financial statements which it must submit to the Company at the Annual General Meeting. The consolidated financial statements of the Group include the financial statements of the parent company Magean Holdings Plc and its subsidiary, Bakehellas S.A.
The financial statements of all the Group companies are prepared using uniform accounting policies. All intercompany transactions and balances between Group companies have been eliminated during consolidation.
Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. Acquisition-related costs are generally recognised in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value at the acquisition date, except that:
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer's previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer's previously held interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.
Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity's net assets in the event of liquidation may be initially measured either at fair value or at the non-controlling interests' proportionate share of the recognised amounts of the acquiree's identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis. Other types of non-controlling interests are measured at fair value or, when applicable, on the basis specified in another IFRS.
When the consideration transferred by the Group in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the 'measurement period' (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date.
The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or a liability is remeasured at subsequent reporting dates in accordance with IAS 39, or IAS 37 Provisions, Contingent Liabilities and Contingent Assets, as appropriate, with the corresponding gain or loss being recognised in profit or loss.
When a business combination is achieved in stages, the Group's previously held equity interest in the acquiree is remeasured to fair value at the acquisition date (i.e. the date when the Group obtains control) and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss where such treatment would be appropriate if that interest were disposed of.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see above), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognised at that date.
Revenue represents the amount of consideration to which the Group expects to be entitled in exchange for transferring the promised goods or services to the customer, excluding amounts collected on behalf of third parties (for example, value-added taxes); the transaction price. The Group includes in the transaction price an amount of variable consideration as a result of rebates/discounts only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Estimations for rebates and discounts are based on the Group's experience with similar contracts and forecasted sales to the customer.
The Group recognises revenue when the parties have approved the contract (in writing, orally or in accordance with other customary business practices ) and are committed to perform their respective obligations, the Group can identify each party's rights and the payment terms for the goods or services to be transferred, the contract has commercial substance (i.e. the risk, timing or amount of the Group's future cash flows is expected to change as a result of the contract), it is probable that the Group will collect the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer and when specific criteria have been met for each of the Group's contracts with customers.
The Group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement. In evaluating whether collectability of an amount of consideration is probable, the Group considers only the customer's ability and intention to pay that amount of consideration when it is due.
Estimates of revenues, costs or extent of progress toward completion are revised if circumstances change. Any resulting increases or decreases in estimates are reflected in the consolidated statement of profit or loss and other comprehensive income in the period in which the circumstances that give rise to the revision become known by Management.
The Group assesses whether contracts that involve the provision of a range of goods and/or services contain one or more performance obligations (that is, distinct promises to provide a service) and allocates the transaction price to each performance obligation identified on the basis of its stand-alone selling price. A good or service that is promised to a customer is distinct if the customer can benefit from the good or service, either on its own or together with other resources that are readily available to the customer (that is the good or service is capable of being distinct) and the Group's promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (that is, the good or service is distinct within the context of the contract).
Revenue is measured based on the consideration to which the Group expects to be entitled in a contract with a customer and excludes amounts collected on behalf of third parties. The Group recognises revenue when it transfers control of a product or service to a customer.
Sales of goods are recognised at the point in time when the Group satisfies its performance obligation by transferring control over the promised goods to the customer, which is usually when the goods are delivered to the customer, risk of obsolescence and loss have been transferred to the customer and the customer has accepted the goods.
Dividend from investments in securities is recognised when the right to receive payment is established. Withheld taxes are transferred to profit or loss. Interest from investments in securities is recognised on an accruals basis.
Profits or losses from the sale of investments in securities represent the difference between the net proceeds and the carrying amount of the investments sold and is transferred to profit or loss.
The difference between the fair value of investments at fair value through profit or loss as at 31 December 2022 and the mid cost price represents unrealised gains and losses and is included in profit or loss in the period in which it arises. Unrealised gains and losses arising from changes in the fair value of financial assets at fair value through other comprehensive income are recognised in other comprehensive income and then included in the fair value reserve in equity. When financial assets at fair value through other comprehensive income are sold or impaired, the accumulated fair value adjustments are transferred to retained earnings.
Royalty income is recognised on an accruals basis in accordance with the substance of the relevant agreements.
Royalty income from sales or usage-based royalties such as technology licenses or patents that are attributable to a licence of intellectual property, are recognised at the later of:
Interest income is recognised on a time-proportion basis using the effective interest method.
The Group does not have any material contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, the Group elects to use the practical expedient and does not adjust any of the transaction prices for the time value of money.
In case the services rendered by the Group as of the reporting date exceed the payments made by the customer as of that date and the Group does not have the unconditional right to charge the client for the services rendered, a contract asset is recognised. The Group assesses a contract asset for impairment in accordance with IFRS 9 using the simplified approach permitted by IFRS 9 which requires expected lifetime losses to be recognised from initial recognition of the contract asset. An impairment of a contract asset is measured, presented and disclosed on the same basis as a financial asset that is within the scope of IFRS 9. If the payments made by a customer exceed the services rendered under the relevant contract, a contract liability is recognised. The Group recognises any unconditional rights to consideration separately from contract assets as a trade receivable because only the passage of time is required before the payment is due.
Contract assets are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the Group, and a failure to make contractual payments for a period of greater than 180 days past due.
The Group recognises the incremental costs incurred by the Group to obtain contracts with customers and the costs incurred in fulfilling contracts with customers that are directly associated with the contract as an asset if those costs are expected to be recoverable, and record the in ''Other assets'' in consolidated statement of financial position. Incremental costs of obtaining contracts are those costs that the Group incurs to obtain a contract with customer that would not have been incurred if the contract had not been obtained. The asset is amortised on a straight-line basis over the term of the specific contract it relates to, consistent with the pattern of recognition of the associated revenue and recognised in ''cost of sales'' in consolidated statement of profit or loss and other comprehensive income. Additionally the asset is assessed for impairment and any impairment loss is recognised in ''cost of sales'' in consolidated statement of profit or loss and other comprehensive income.
The Group recognise the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the entity otherwise would have recognised is one year or less.
The Group and its employees contribute to the Government Social Insurance Fund based on employees' salaries. The Group's contributions are expensed as incurred and are included in staff costs. The Group has no legal or constructive obligations to pay further contributions if the scheme does not hold sufficient assets to pay all employees benefits relating to employee service in the current and prior periods.
Interest income is recognised on a time-proportion basis using the effective method.
Interest expense and other borrowing costs are charged to profit or loss as incurred.
Income tax expense represents the sum of the tax currently payable and deferred tax.
Current tax liabilities and assets are measured at the amount expected to be paid to or recovered from the taxation authorities, using the tax rates and laws that have been enacted, or substantively enacted, by the reporting date.
Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Currently enacted tax rates are used in the determination of deferred tax.
Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred taxes relate to the same fiscal authority.
Dividend distribution to the Company's shareholders is recognised in the Group's financial statements in the year in which they are approved by the Company's shareholders.
Land and buildings are carried at fair value, based on valuations by external independent valuers, less subsequent depreciation for buildings. Revaluations are carried out with sufficient regularity such that the carrying amount does not differ materially from that which would be determined using fair value at the reporting date. All other property, plant and equipment are stated at historical cost less depreciation.
Increases in the carrying amount arising on revaluation of property, plant and equipment are credited to other comprehensive income. Decreases that offset previous increases of the same asset are charged against that reserve; all other decreases are charged to profit or loss. Each year the difference between depreciation based on the revalued carrying amount of the asset (the depreciation charged to profit or loss) and depreciation based on the asset's original cost is transferred from fair value reserves to retained earnings.
Depreciation is calculated on the straight-line method so as to write off the cost or revalued amount of each asset to its residual value, over its estimated useful life. The annual depreciation rates used are as follows:
| % | |
|---|---|
| Buildings | 4 |
| Machinery - Technical installations and other mechanical equipment | 10-15 |
| Motor Vehicles | 10-20 |
| Furniture, fixtures and office equipment | 20 |
| Main Production Line Machinery | 5 |
| Financial leasing machinery | 8 |
No depreciation is provided on land.
Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group expects to exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset. The depreciation starts at the commencement date of the lease.
The assets residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.
Where the carrying amount of an asset is greater than its estimated recoverable amount, the asset is written down immediately to its recoverable amount.
Expenditure for repairs and maintenance of property, plant and equipment is charged to profit or loss of the year in which it is incurred. The cost of major renovations and other subsequent expenditure are included in the carrying amount of the asset when it is probable that future economic benefits in excess of the originally assessed standard of performance of the existing asset will flow to the Group. Major renovations are depreciated over the remaining useful life of the related asset.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss. When revalued assets are sold, the amounts included in the fair value reserves are transferred to retained earnings.
Government grants on non-current assets acquisitions are credited to profit or loss in instalments over the estimated useful economic lives of the corresponding assets. This is achieved by deducting grants from the book value of these assets and the recognition of income through the reduced depreciation charge. Grants are recognised when there is reasonable assurance that the Group will comply with the conditions attaching to them and that the grants will be received. Government grants that relate to expenses are recognised in profit or loss as revenue.
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. Internally generated intangible assets, excluding capitalised development costs, are not capitalised and expenditure is reflected in profit or loss in the year in which the expenditure is incurred. The useful lives of intangible assets are assessed to be either finite or indefinite.
Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life is reviewed at least at each financial year end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in profit or loss in the expense category consistent with the function of the intangible asset.
Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the cash generating unit level. Such intangibles are not amortised. The useful life of an intangible asset with an indefinite life is reviewed annually to determine whether indefinite life assessment continues to be supportable. If not, the change in the useful life assessment from indefinite to finite is made on a prospective basis.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset is derecognised.
Patents and trademarks are measured initially at purchase cost and are amortised on a straight-line basis over their estimated useful lives.
An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognised in profit or loss when the asset is derecognised.
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group assesses whether:
At inception or on reassessment of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices. However, for the leases of land and buildings in which it is a lessee, the Group has elected not to separate non-lease components and account for the lease and non-lease components as a single lease component.
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of the right-of-use assets are determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing rate.
Lease payments included in the measurement of the lease liability comprise the following:
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Group's estimate of the amount expected to be payable under a residual value guarantee, or if the Group changes its assessment of whether it will exercise a purchase, extension or termination option.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
The Group presents its right-of-use assets that do not meet the definition of investment property in 'Property, plant and equipment' in the consolidated statement of financial position.
The lease liabilities are presented in 'loans and borrowings' in the consolidated statement of financial position.
The Group has elected not to recognise the right of use assets and lease liabilities for short term leases that have a lease term of 12 months or less and leases of low value assets (i.e. IT equipment, office equipment etc.). The Group recognises the lease payments associated with these leases as an expense on a straight line basis over the lease term.
Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to depreciation or amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non financial assets, other than goodwill, that have suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.
The Group classifies its financial assets in the following measurement categories:
The classification and subsequent measurement of debt financial assets depends on: (i) the Group's business model for managing the related assets portfolio and (ii) the cash flow characteristics of the asset. On initial recognition, the Group may irrevocably designate a debt financial asset that otherwise meets the requirements to be measured at amortized cost or at FVOCI or at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.
For investments in equity instruments that are not held for trading, the classification will depend on whether the Group has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income (FVOCI). This election is made on an investment-by-investment basis.
All other financial assets are classified as measured at FVTPL.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For investments in equity instruments that are not held for trading, this will depend on whether the Group has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income (FVOCI).
All purchases and sales of financial assets that require delivery within the time frame established by regulation or market convention (''regular way'' purchases and sales) are recorded at trade date, which is the date when the Group commits to deliver a financial instrument. All other purchases and sales are recognised when the entity becomes a party to the contractual provisions of the instrument.
Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVTPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVTPL are expensed in profit or loss. Fair value at initial recognition is best evidenced by the transaction price. A gain or loss on initial recognition is only recorded if there is a difference between fair value and transaction price which can be evidenced by other observable current market transactions in the same instrument or by a valuation technique whose inputs include only data from observable markets.
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.
Subsequent measurement of debt instruments depends on the Group's business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the Group classifies its debt instruments:
Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included in 'other income'. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other gains/(losses) together with foreign exchange gains and losses. Impairment losses are presented as separate line item in the consolidated statement of profit or loss and other comprehensive income. Financial assets measured at amortised cost (AC) comprise: cash and cash equivalents, bank deposits with original maturity over 3 months, trade receivables and financial assets at amortised cost.
FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets' cash flows represent solely payments of principal and interest, are measured at FVOCI. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest income and foreign exchange gains and losses which are recognised in profit or loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in other gains/(losses). Interest income from these financial assets is included in ''other income''. Foreign exchange gains and losses are presented in ''other gains/(losses)'' and impairment expenses are presented as separate line item in the consolidated statement of profit or loss and other comprehensive income.
FVTPL: Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVTPL. A gain or loss on a debt investment that is subsequently measured at FVTPL is recognised in profit or loss and presented net within ''other gains/(losses)'' in the period in which it arises.
The Group subsequently measures all equity investments at fair value. Where the Group's Management has elected to present fair value gains and losses on equity investments in OCI, there is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment, any related balance within the FVOCI reserve is reclassified to retained earnings. The Group's policy is to designate equity investments as FVOCI when those investments are held for strategic purposes other than solely to generate investment returns. Dividends from such investments continue to be recognised in profit or loss as other income when the Group's right to receive payments is established.
Changes in the fair value of financial assets at FVTPL are recognised in ''other gains/(losses)'' in the consolidated statement of profit or loss and other comprehensive income as applicable. Impairment losses (and reversal of impairment losses) on equity investments measured at FVTPL are not reported separately from other changes in fair value.
The Group assesses on a forward-looking basis the ECL for debt instruments (including loans) measured at amortised cost and FVOCI and exposure arising from loan commitments and financial guarantee contracts. The Group measures ECL and recognises credit loss allowance at each reporting date. The measurement of ECL reflects: (i) an unbiased and probability weighted amount that is determined by evaluating a range of possible outcomes, (ii) time value of money and (iii) all reasonable and supportable information that is available without undue cost and effort at the end of each reporting period about past events, current conditions and forecasts of future conditions.
The carrying amount of the financial assets is reduced through the use of an allowance account, and the amount of the loss is recognised in the consolidated statement of profit or loss and other comprehensive income within ''net impairment losses on financial and contract assets. Subsequent recoveries of amounts for which loss allowance was previously recognised are credited against the same line item.
Debt instruments carried at amortised cost are presented in the consolidated statement of financial position net of the allowance for ECL. For loan commitments and financial guarantee contracts, a separate provision for ECL is recognised as a liability in the consolidated statement of financial position.
For debt instruments at FVOCI, an allowance for ECL is recognised in profit or loss and it affects fair value gains or losses recognised in OCI rather than the carrying amount of those instruments.
The impairment methodology applied by the Group for calculating expected credit losses depends on the type of financial asset assessed for impairment. Specifically:
For trade receivables and contract assets, including trade receivables and contract assets with a significant financing component, and lease receivables the Group applies the simplified approach permitted by IFRS 9, which requires lifetime expected credit losses to be recognised from initial recognition of the financial assets.
For all other financial instruments that are subject to impairment under IFRS 9, the Group applies general approach three stage model for impairment. The Group applies a three stage model for impairment, based on changes in credit quality since initial recognition. A financial instrument that is not credit-impaired on initial recognition is classified in Stage 1.
Financial assets in Stage 1 have their ECL measured at an amount equal to the portion of lifetime ECL that results from default events possible within the next 12 months or until contractual maturity, if shorter (''12 Months ECL''). If the Group identifies a significant increase in credit risk (''SICR'') since initial recognition, the asset is transferred to Stage 2 and its ECL is measured based on ECL on a lifetime basis, that is, up until contractual maturity but considering expected prepayments, if any (''Lifetime ECL''). Refer to note 5, Credit risk section, for a description of how the Group determines when a SICR has occurred. If the Group determines that a financial asset is creditimpaired, the asset is transferred to Stage 3 and its ECL is measured as a Lifetime ECL. The Group's definition of credit impaired assets and definition of default is explained in note 5, Credit risk section.
Additionally the Group has decided to use the low credit risk assessment exemption for investment grade financial assets. Refer to note 5, Credit risk section for a description of how the Group determines low credit risk financial assets.
Financial instruments are reclassified only when the business model for managing those assets changes. The reclassification has a prospective effect and takes place from the start of the first reporting period following the change.
Financial assets are written-off, in whole or in part, when the Group exhausted all practical recovery efforts and has concluded that there is no reasonable expectation of recovery. The write-off represents a derecognition event. The Group may write-off financial assets that are still subject to enforcement activity when the Group seeks to recover amounts that are contractually due, however, there is no reasonable expectation of recovery.
The Group sometimes renegotiates or otherwise modifies the contractual terms of the financial assets. The Group assesses whether the modification of contractual cash flows is substantial considering, among other, the following factors: any new contractual terms that substantially affect the risk profile of the asset (e.g. profit share or equitybased return), significant change in interest rate, change in the currency denomination, new collateral or credit enhancement that significantly affects the credit risk associated with the asset or a significant extension of a loan when the borrower is not in financial difficulties.
If the modified terms are substantially different, the rights to cash flows from the original asset expire and the Group derecognises the original financial asset and recognises a new asset at its fair value. The date of renegotiation is considered to be the date of initial recognition for subsequent impairment calculation purposes, including determining whether a SICR has occurred. The Group also assesses whether the new loan or debt instrument meets the SPPI criterion. Any difference between the carrying amount of the original asset derecognised and fair value of the new substantially modified asset is recognised in profit or loss, unless the substance of the difference is attributed to a capital transaction with owners.
In a situation where the renegotiation was driven by financial difficulties of the counterparty and inability to make the originally agreed payments, the Group compares the original and revised expected cash flows to assets whether the risks and rewards of the asset are substantially different as a result of the contractual modification. If the risks and rewards do not change, the modified asset is not substantially different from the original asset and the modification does not result in derecognition. The Group recalculates the gross carrying amount by discounting the modified contractual cash flows by the original effective interest rate, and recognises a modification gain or loss in profit or loss.
For the purpose of the consolidated cash flow statement, cash and cash equivalents comprise cash on hand, deposits held at call with banks and bank overdrafts. In the consolidated statement of financial position, bank overdrafts are included in borrowings in current liabilities. Cash and cash equivalents are carried at amortised cost because: (i) they are held for collection of contractual cash flows and those cash flows represent SPPI, and (ii) they are not designated at FVTPL.
These amounts generally arise from transactions outside the usual operating activities of the Group. They are held with the objective to collect their contractual cash flows and their cash flows represent solely payments of principal and interest. Accordingly, these are measured at amortised cost using the effective interest method, less provision for impairment. Financial assets at amortised cost are classified as current assets if they are due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current assets.
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets. Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less loss allowance.
Trade receivables are recognised initially at the amount of consideration that is unconditional unless they contain significant financing components, in which case they are recognised at fair value. The Group holds the trade receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method.
Trade receivables are also subject to the impairment requirements of IFRS 9. The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables. See note 5, Credit risk section.
Trade receivables are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the Group, and a failure to make contractual payments for a period of greater than 180 days past due.
Financial guarantee contracts are contracts that require the Group to make specified payments to reimburse the holder of the guarantee for a loss it incurs because a specified debtor fails to make payment when due in accordance with the terms of debt instrument. Such financial guarantees are given to banks, financial institutions and others on behalf of customers to secure loans, overdrafts and other banking facilities.
Financial guarantees are recognised as a financial liability at the time the guarantee is issued.
Financial guarantees are initially recognised at their fair value, which is normally evidenced by the amount of fees received. In the absence of fees received, the fair value of financial guarantees is determined based on the present value of the difference in cash flows between the contractual payments required under the debt instrument and the payments that would be required without the guarantee, or the estimated amount that would be payable to a third party for assuming the obligations.
Financial guarantees are subsequently measured at the higher of (i) the amount determined in accordance with the expected credit loss model under IFRS 9 ''Financial Instruments'', and (ii) the amount initially recognised less, where appropriate, the cumulative amount of income recognised in accordance with the principles of IFRS 15 ''Revenue from Contracts with customers''.
Financial liabilities are initially recognised at fair value and classified as subsequently measured at amortised cost, except for (i) financial liabilities at FVTPL: this classification is applied to derivatives, financial liabilities held for trading (e.g. short positions in securities), contingent consideration recognised by an acquirer in a business combination and other financial liabilities designated as such at initial recognition and (ii) financial guarantee contracts and loan commitments.
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
Borrowings are recorded initially at the proceeds received, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.
Trade payables are initially measured at fair value and are subsequently measured at amortised cost, using the effective interest rate method.
Financial assets and financial liabilities are offset and the net amount reported in the consolidated statement of financial position if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the asset and settle the liability simultaneously. This is not generally the case with master netting agreements, and the related assets and liabilities are presented gross in the consolidated statement of financial position.
Inventories are stated at the lower of cost and net realisable value. The cost is determined using the weighted average method. Net realisable value is the estimated selling price in the ordinary course of business, less the costs to completion and selling expenses.
Prepayments are carried at cost less provision for impairment. A prepayment is classified as non-current when the goods or services relating to the prepayment are expected to be obtained after one year, or when the prepayment relates to an asset which will itself be classified as non-current upon initial recognition. Prepayments to acquire assets are transferred to the carrying amount of the asset once the Group has obtained control of the asset and it is probable that future economic benefits associated with the asset will flow to the Group. Other prepayments are written off to profit or loss when the goods or services relating to the prepayments are received. If there is an indication that the assets, goods or services relating to a prepayment will not be received, the carrying value of the prepayment is written down accordingly and a corresponding impairment loss is recognised in profit or loss.
Ordinary shares are classified as equity.
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. Where the Group expects a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain.
Non-current liabilities represent amounts that are due more than twelve months from the reporting date.
The Group continuously monitors developments with the aim of limiting as much as possible the possible negative effects, which may arise from various events such as market price risk, interest rate risk, credit risk, liquidity risk, currency risk, competition risk, risk of demand decline, operational risk, risk of stock depreciation, stock insurance, reputational loss risk and other risks. The policy that the Group applies to manage the risks, in order to control them, is explained below:
Market price risk is the risk that the value of financial instruments fluctuates due to changes in market prices. Financial assets available for sale and financial assets valued at fair value through the Group's results are subject to market price risk due to uncertainty about future investment prices. The Group manages market price risk through diversification of the investment portfolio.
Interest rate risk is the risk where the value of financial instruments fluctuates due to changes in market interest rates. The income and cash flow from the Group's operations are substantially independent of changes in market interest rates, as long as the Group has no significant interest-bearing assets. The Group is exposed to interest rate risk in relation to its non-short-term borrowings. Borrowing at variable rates exposes the Group to interest rate risk related to cash flows. Borrowing at fixed rates exposes the Group to interest rate risk to fair value. The Company's Management monitors fluctuations in interest rates on an ongoing basis and acts accordingly.
The Management implements credit control procedures with the aim of minimizing bad debts and maintaining high liquidity. The Group's policy is to work with reliable customers. Each new customer is tested on an individual basis for their creditworthiness. Credit limits are set for each customer and specific terms of sales and receipts are applied, which are reviewed at regular intervals and depending on the circumstances. The Management of the Group considers that at the end of the year 2022 there is no substantial credit risk that is not covered by a provision for a bad debt, while it is noted that for those receivables whose collection has been delayed beyond the usual commercial terms of the transaction due to the current conditions prevailing mainly in the Greek market, the Management has taken all measures to collect them.
The Group maintains satisfactory cash resources, while maintaining approved credit limits from credit institutions to further safeguard against liquidity risk. The Group enjoys high reliability both towards the Banks and its suppliers, due to its long and dynamic course in the Cypriot and Greek market.
Exchange rate risk is the risk that the value of financial instruments fluctuates due to changes in exchange rates. Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are in a currency other than the operating currency of the Group. The Group is exposed to foreign exchange risk arising from transactions in various currencies mainly United States Dollars, British Pounds and Euros. The Group's Management monitors exchange rate fluctuations on an ongoing basis and acts accordingly.
The food industry, in which the company operates, is a field of intense competition from both large domestic players and very small or even local competitors. Possible variations in provisions related to this sector in combination with the long economic recession that the country is going through and the continuous contraction of consumer incomes create conditions of intense competition with an impact on the sales cycle of the company. Given that the Group plays a leading role in the frozen and precooked bakery products sub-sector in Greece, it continues to hold a distinct market share in these products.
Operational risk is the risk arising from the weakness of the Group's technology and control systems as well as the risk arising from human mistake and natural disasters. The Group's systems are controlled, maintained and upgraded on a continuous basis. The Group takes all necessary measures to minimize the risk and possible damages due to loss of stock due to poor maintenance / storage or technological or other change. In addition, the Group takes all necessary measures to minimize the risk and potential damages due to loss of stock due to natural disasters or similar related causes and the Company has insured the full value of its stocks.
The prolonged recession in Greece and the constant readjustments of the economic data, contribute to the maintenance of an uncertain economic environment. The Company remains stable for the time being despite the general climate of economic recession and at the same time tries to maintain the "elasticity" of its expenses.
The risk of loss of reputation arising from the negative publicity relating to The Group's operations (whether true or false) may result in a reduction of its clientele, reduction in revenue and legal cases against the Group. The Group applies procedures to minimize this risk.
The Group manages its capital in order to ensure that it continues to operate its business and at the same time has the maximum possible return for shareholders through the optimal ratio of equity and debt. The Group's overall strategy has not changed since last year.
The general economic environment prevailing in Cyprus and internationally may affect the Group's operations to a great extent. Economic conditions such as inflation, unemployment, and development of the gross domestic product are directly linked to the economic course of every country and any variation in these and the economic environment in general may create chain reactions in all areas hence affecting the Group.
The fair values of the Group's financial assets and liabilities are approximately the same as the amounts presented in the consolidated statement of financial position.
The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates and requires Management to exercise its judgment in the process of applying the Group's accounting policies. It also requires the use of assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on Management's best knowledge of current events and actions, actual results may ultimately differ from those estimates.
Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:
When measuring expected credit losses the Group uses reasonable and supportable forward looking information, which is based on assumptions for the future movement of different economic drivers and how these drivers will affect each other.
Loss given default is an estimate of the loss arising on default. It is based on the difference between the contractual cash flows due and those that the lender would expect to receive, taking into account cash flows from collateral and integral credit enhancements.
Probability of default constitutes a key input in measuring ECL. Probability of default is an estimate of the likelihood of default over a given time horizon, the calculation of which includes historical data, assumptions and expectations of future conditions.
The Group reviews its inventory records for evidence regarding the saleability of inventory and its net realizable value on disposal. The provision for obsolete and slow-moving inventory is based on Management's past experience, taking into consideration the value of inventory as well as the movement and the level of stock of each category of inventory.
The amount of provision is recognised in profit or loss. The review of the net realisable value of the inventory is continuous and the methodology and assumptions used for estimating the provision for obsolete and slow-moving inventory are reviewed regularly and adjusted accordingly.
Significant judgment is required in determining the provision for income taxes. There are transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.
Critical judgements in applying the Group's accounting policies
The cost of defined benefit pension plans is determined using actuarial valuations. The actuarial valuation involves making assumptions about discount rates, expected rate of return on plan assets, future salary increases, mortality rates and future pension increases where necessary. The Group sets these assumptions based on market expectations at the reporting date using best-estimates for each parameter covering the period over which obligations are to be settled. Due to the long-term nature of these plans, such estimates are subject to significant uncertainty.
The impairment test is performed using the discounted cash flows expected to be generated through the use of non-financial assets, using a discount rate that reflects the current market estimations and the risks associated with the asset. When it is impractical to estimate the recoverable amount of an asset, the Group estimates the recoverable amount of the cash generating unit in which the asset belongs to.
| 2022 | 2021 | |
|---|---|---|
| Sales of products | € 13,290,089 |
€ 8,270,826 |
| 13,290,089 | 8,270,826 | |
| 8. Other operating income | ||
| 2022 | 2021 | |
| € | € | |
| Provision of services Gain from sale of property, plant and equipment |
100,327 148,587 |
27,139 - |
| Interest income | 27,859 | 24,063 |
| Divindends income | 23,150 | 3,600 |
| Fair value gains on financial assets at fair value through profit or loss | - | 17,595 |
| Government grants | 46,634 | - |
| Non-refundable government grants | - | 233,538 |
| Refundable advances | - | 451,517 |
| Sundry operating income | 123,574 | 51,634 |
| 470,131 | 809,086 | |
| 9. Operating expenses | ||
| 2022 | 2021 |
| € | € | |
|---|---|---|
| Staff costs | 302,806 | 206,368 |
| Costs of transporting of materials | 660,763 | 420,557 |
| Costs of handling exports of goods | 188,436 | 121,847 |
| Travelling expenses | 34,396 | 19,415 |
| Benefits provided by third parties | 298,637 | 188,476 |
| Third-party fees and expenses | 133,632 | 97,173 |
| Depreciation | 18,520 | 16,571 |
| Sundry expenses | 54,204 | 41,723 |
| 1,691,394 | 1,112,130 |
| 2022 | 2021 | |
|---|---|---|
| € | € | |
| Staff costs | 402,682 | 247,972 |
| Insurance | 35,008 | 13,443 |
| Telephone and postage | 15,652 | 11,938 |
| Stationery and printing | 11,252 | 11,145 |
| Donations | 6,974 | 30,372 |
| Auditors' remuneration - current year | 54,300 | 40,690 |
| Auditors' remuneration - prior years | 3,075 | - |
| Accounting fees | 2,400 | 2,800 |
| Other professional fees | 14,577 | 50,127 |
| Traveling expenses | 56,345 | 38,708 |
| Entertaining expenses | 567 | - |
| Motor vehicle running costs | 30,125 | 11,079 |
| Bad Debts | - | 36,191 |
| Other provisions | 18,732 | 23,694 |
| Other fees | 18,426 | 13,717 |
| Services provided by third parties | 100,788 | 64,432 |
| Fees and expenses third party | 69,192 | 309,262 |
| Branch office expenses | 67,800 | - |
| Stock exchange rights | 5,850 | 4,200 |
| Depreciation | 94,067 | 85,082 |
| Sundry expenses | 58,170 | 109,137 |
| 1,065,982 | 1,103,989 | |
| 11. Other expenses |
| 2022 | 2021 | |
|---|---|---|
| € | € | |
| Sundry operating expenses | 19,107 | - |
| Fair value losses on financial assets at fair value through profit or loss | 357,273 | - |
| 376,380 | - |
| 2021 | |
|---|---|
| € | |
| 1,704,050 | 1,216,641 |
| 347,384 | 289,499 |
| 480 | 480 |
| 2,051,914 | 1,506,620 |
| 94 | 83 |
| 2022 € |
| 2022 | 2021 | |
|---|---|---|
| € | € | |
| Exchange profit | 5,096 | - |
| Finance income | 5,096 | - |
| Net foreign exchange losses | (4,733) | (5,308) |
| Interest expense | (326,267) | (154,065) |
| Sundry finance expenses | (88,760) | (23,822) |
| Finance costs | (419,760) | (183,195) |
| Net finance costs | (414,664) | (183,195) |
| 14. Tax |
| 2022 | 2021 | |
|---|---|---|
| € | € | |
| Corporation tax | 112,137 | - |
| Overseas tax | 7,828 | 30,512 |
| Deferred tax - charge/(credit) | 5,170 | (990) |
| Charge for the year | 125,135 | 29,522 |
The corporate tax rate in Cyprus is 12.5%.
The corporate tax rate in Greece is 22%.
Under certain conditions interest income may be subject to defence contribution at the rate of 30%. In such cases this interest will be exempt from corporation tax. In certain cases, dividends received from abroad may be subject to defence contribution at the rate of 17%.
| 2022 | 2021 | |
|---|---|---|
| € | € | |
| Dividends paid | - | 1,063,466 |
| - | 1,063,466 |
The Board of Directors did not approve the payments of any dividends during the year 2022 ( 2021: €1,063,466).
| Land and buildings |
Plant and machinery |
Motor vehicles |
Furniture, fixtures and office equipment |
Total | |
|---|---|---|---|---|---|
| € | € | € | € | € | |
| Cost or valuation | |||||
| Balance at 1 January 2021 | 3,775,367 | 4,836,504 | 190,971 | 415,856 | 9,218,698 |
| Additions | 89,195 | 52,161 | 66,500 | 103,629 | 311,485 |
| Disposals | - | - | (190,971) | - | (190,971) |
| Balance at 31 December 2021/ 1 | |||||
| January 2022 | 3,864,562 | 4,888,665 | 66,500 | 519,485 | 9,339,212 |
| Additions | 4,719,728 | 1,755,203 | - | 66,753 | 6,541,684 |
| Disposals | (378,764) | - | - | - | (378,764) |
| Other adjustments | - | (868,838) | - | (74) | (868,912) |
| Balance at 31 December 2022 | 8,205,526 | 5,775,030 | 66,500 | 586,164 14,633,220 | |
| Depreciation | |||||
| Balance at 1 January 2021 | 1,048,142 | 3,708,532 | 110,000 | 345,630 | 5,212,304 |
| Charge for the year | 106,809 | 240,413 | 2,660 | 74,337 | 424,219 |
| On disposals | - | - | (110,000) | - | (110,000) |
| Depreciation increases for the period | - | - | - | 2,950 | 2,950 |
| Balance at 31 December 2021/ 1 | |||||
| January 2022 | 1,154,951 | 3,948,945 | 2,660 | 422,917 | 5,529,473 |
| Charge for the year | 104,433 | 227,233 | 10,640 | 52,875 | 395,181 |
| Other adjustments | (100,832) | (705,618) | - | (74) | (806,524) |
| Balance at 31 December 2022 | 1,158,552 | 3,470,560 | 13,300 | 475,718 | 5,118,130 |
| Net book amount | |||||
| Balance at 31 December 2022 | 7,046,974 | 2,304,470 | 53,200 | 110,446 | 9,515,090 |
| Balance at 31 December 2021 | 2,709,611 | 939,720 | 63,840 | 96,568 | 3,809,739 |
The properties were valued at fair value. The revaluation is made every four years or earlier if there are significant changes in their value with the last valuation taking place during 2020. The next revaluation is due by 31/12/2023.
| Land and buildings € |
Motor vehicles € |
Total € |
|
|---|---|---|---|
| Cost | |||
| Balance at 1 January 2021 Additions |
568,215 - |
170,517 39,200 |
738,732 39,200 |
| Period reductions | - | (47,297) | (47,297) |
| Balance at 31 December 2021/ 1 January 2022 | 568,215 | 162,420 | 730,635 |
| Additions | 36,420 | 52,323 | 88,743 |
| Adjustment to right-of-use asset | (568,215) | - | (568,215) |
| Balance at 31 December 2022 | 36,420 | 214,743 | 251,163 |
| Depreciation | |||
| Balance at 1 January 2021 | 185,317 | 82,347 | 267,664 |
| Charge for the year | 90,916 | 20,902 | 111,818 |
| Balance at 31 December 2021/ 1 January 2022 | 276,233 | 103,249 | 379,482 |
| Charge for the year | 90,664 | 40,558 | 131,222 |
| Adjustment to right-of-use asset | (366,897) | - | (366,897) |
| Balance at 31 December 2022 | - | 143,807 | 143,807 |
| Net book amount | |||
| Balance at 31 December 2022 | 36,420 | 70,936 | 107,356 |
| Balance at 31 December 2021 | 291,982 | 59,171 | 351,153 |
By applying IFRS 16 on 01 January 2019, the Group recognises rights to use fixed assets at the commencement of the lease (on the date the asset is available for use).
The Group leases from April 2013 a factory in the area of Paleopanagia in Schimatari, Greece, with a lease term of 12 years, i.e. until March 2025. With the application of IFRS 16, the property was recognized as a fixed asset equal to the lease obligation. The lease obligation was recognized as the present value of the remaining payments, discounted at a representative interest rate of 5%. The lease of the building has no right of redemption and can be terminated without penalty at any time before its expiration date. On 27 December 2022 the Group agreed to terminate the lease by 31 March 2023 following a claim that was made.
The Group leases means of transport for its sellers and executives, with a lease term of 3 to 4 years. With the application of IFRS 16, means of transport were recognised as fixed assets equal to the rental obligation, discounted at a representative interest rate of 5%. On 31/12/2022 the bill concerns 12 vehicles, of which 5 leases expire in 2023, 3 leases expire in 2024, 1 lease expires in 2025 and 3 leases expire in 2026.
| Patents and trademarks € |
|
|---|---|
| Cost | |
| Balance at 1 January 2021 | 14,210 |
| Balance at 31 December 2021/ 1 January 2022 | 14,210 |
| Balance at 31 December 2022 | 14,210 |
| Amortisation | |
| Balance at 1 January 2021 | 12,000 |
| Balance at 31 December 2021/ 1 January 2022 | 12,000 |
| Balance at 31 December 2022 | 12,000 |
| Net book amount | |
| Balance at 31 December 2022 | 2,210 |
| Balance at 31 December 2021 | 2,210 |
Intangible fixed assets include the ''MYCAKE'' trademark, the ''TWIST 'N' CRISP'' trademark and the ''BAKE LOVE'' trademark. The value of labels includes the cost of acquiring them, less the amount of accumulated depreciation and any impairments of their value.
| 2022 | 2021 | |
|---|---|---|
| € | € | |
| Raw materials | 261,995 | 189,090 |
| Finished and partly finished products | 480,745 | 224,961 |
| 742,740 | 414,051 |
The cost of inventories recognised as expense and included in ''cost of sales'' amounted to €9,659,702 (2021: €5,913,686).
Inventories are stated at cost.
| Trade receivables | 2022 € 3,669,503 |
2021 € 2,435,782 |
|---|---|---|
| Less: credit loss on trade receivables | (40,772) | (40,772) |
| Trade receivables - net | 3,628,731 | 2,395,010 |
| Deposits and prepayments | 56,707 | 12,921 |
| Other receivables | 206,095 | 111,769 |
| Refundable VAT | 429,679 | - |
| 4,321,212 | 2,519,700 |
The exposure of the Group to credit risk and impairment losses in relation to trade and other receivables is reported in note 5 of the consolidated financial statements.
| 2022 | 2021 | |
|---|---|---|
| € | € | |
| Balance at 1 January | 2,907,198 | - |
| Additions | 1,205,547 | 3,919,759 |
| Disposals | (1,586,738) | (1,030,156) |
| Change in fair value | (357,273) | 17,595 |
| Balance at 31 December | 2,168,734 | 2,907,198 |
The financial assets at fair value through profit or loss are marketable securities and are valued at market value at the close of business on 31 December by reference to Stock Exchange quoted bid prices. Financial assets at fair value through profit or loss are classified as current assets because they are expected to be realised within twelve months from the reporting date.
In the consolidated cash flow statement, financial assets at fair value through profit or loss are presented within the section on operating activities as part of changes in working capital. In the consolidated statement of profit or loss and other comprehensive income, changes in fair values of financial assets at fair value through profit or loss are recorded in operating income.
Cash balances are analysed as follows:
| 2022 | 2021 | |
|---|---|---|
| € | € | |
| Cash at bank and in hand | 1,097,010 | 1,276,415 |
| 1,097,010 | 1,276,415 |
The exposure of the Group to credit risk and impairment losses in relation to cash and cash equivalents is reported in note 5 of the consolidated financial statements.
| 2022 Number of shares |
2022 € |
2021 Number of shares |
2021 € |
|
|---|---|---|---|---|
| Authorised Ordinary shares of €1.15 each |
886,222 | 1,019,155 | 886,222 | 1,019,155 |
| Issued and fully paid Balance at 1 January |
886,222 | 1,019,155 | 886,222 | 1,019,155 |
| Balance at 31 December | 886,222 | 1,019,155 | 886,222 | 1,019,155 |
| 2022 € |
2021 € |
|
|---|---|---|
| Current borrowings | ||
| Bank overdrafts (Note 22) Bank loans |
4,181 1,343,952 |
9,055 842,481 |
| Bond loans | 430,837 | 200,000 |
| Refundable advance | 55,000 | 39,757 |
| 1,833,970 | 1,091,293 | |
| Non-current borrowings | ||
| Bank loans | 6,422,985 | 1,478,391 |
| Bond loans | - | 800,000 |
| Fixed investment grant | - | 64,020 |
| Refundable advance | 394,239 | 379,347 |
| 6,817,224 | 2,721,758 | |
| Total | 8,651,194 | 3,813,051 |
The loans have been granted by Greek banks and are denominated in Euros. The amounts that are payable within one year of the balance sheet date are classified as short-term, while amounts payable at a later stage are classified as long-term.
On 19/03/2020, the Group received from NBG a loan worth €500,000 with a duration of 5 years (after 5 years its repayment will begin), guaranteed by the European Investment Fund. On 31/12/2022 the long-term loan balance amounts to €500,000, while the short-term part of it amounts to €13,310.77.
On 24/11/2020, the Group received from ALPHA BANK an amortised loan of €200,000 (with a withdrawal limit of €800,000), with a maturity of almost 5 years and with a grace period of the first year and guaranteed by the Greek Business Guarantee Fund Covid-19. On 31/12/2022 the long-term balance of the loan amounts to €373,333.36, while the short-term part of it amounts to €213,333.33.
On 20/11/2007, the Group received from PIRAEUS Bank (former MILLENNIUM BANK) an amortised loan of €430,000 with a maturity of 20 years (until 20/01/2028). On 31/12/2022 the long-term loan balance amounts to €529,411.76, while the short-term part of it amounts to €235,294.12.
On 08/03/2023 the Group amended the terms of loan received from ALPHA BANK in amount of €600,000 by extending the repayment date by 48 months and consequently the principal amount is provided for a period of 108 months (by 31/05/2027). On 31/12/2022 the long-term loan balance amounts to €600,000, while the short-term part of it amounts to €9,649.27.
By decision of the Extraordinary General Meeting of 19/5/2020, a bond loan worth € 3,960,000 was issued to ALPHA BANK, with a maturity of 10 years. The bonds are divided into first series bonds worth €1,000,000 to cover the purchase of a new industrial plant in Schimatari, Viotia, Greece, and second-series bonds worth €2,960,000 for the construction of building facilities, the construction of a refrigeration chamber and the purchase of mechanical equipment on the above property in Schimatari, Viotia, Greece. In addition to the usual terms regarding statements, guarantees, positive and negative obligations, the company's obligation is to maintain the Net Bank Lending ratio of less than 6 (six) and the ratio of Earnings Before Tax, Interest, Depreciation to Debit Interest plus installments of Long-Term Loans to be maintained greater than 1 (one). The long-term part of the bond loan on 31/12/2022 amounts to €3,360,016, while the short-term part amounts to €430,837.
On 21/12/2021, the Group received from PIRAEUS Bank an amortised loan of €1,000,000, with a duration of 51 months and guaranteed by the Greek Business Guarantee Fund covid-19. The loan will be repaid in 17 equal quarterly instalments with a final repayment year in 2026. On 31/12/2022 the long-term balance of the loan amounts to €529,411.76, while the short-term part of it amounts to €235,294.12.
On 16/08/2022, the Group received a loan from the subsidiary's related company named GFSC BV in amount of €194,930 with a duration On 31/12/2022 the long-term balance of the loan amounts to €194,930.
In order to secure the loans, the following has been granted to ALPHA BANK:
A. First mortgage of €200,000 and third series mortgage of €300,000 on a factory at Perivoli Miliou in Schimatari, Viotia, Greece.
B. First mortgage of €5,000,000 on a property at LOUTSA in Schimatari, Viotia, Greece.
C. Notional pledge of €1,000,000 on the uninvolved mechanical equipment.
In order to secure the loans, the following has been granted to PIRAEUS Bank:
A. First mortgage of €516,000 on business property.
| The present value of minimum | ||||
|---|---|---|---|---|
| Minimum lease payments | lease payments | |||
| 2022 | 2021 | 2022 | 2021 | |
| € | € | € | € | |
| Not later than 1 year | 105,641 | 213,754 | 105,641 | 213,754 |
| Later than 1 year and not later than 5 years | 34,277 | 469,318 | 34,277 | 469,318 |
| 139,918 | 683,072 | 139,918 | 683,072 | |
| Present value of finance lease liabilities | 139,918 | 683,072 | 139,918 | 683,072 |
The leasing obligations relate to the financial leasing of a factory, machinery and means of transport of the Group located in Greece.
All lease obligations are denominated in Euro.
Estimates of the Group's defined benefit liabilities under IAS 19 were calculated by an independent actuarial firm.
| Pension and other post retirement obligations € |
|
|---|---|
| Balance at 1 January 2021 | 114,473 |
| Charged/(credited) to profit or loss | 23,695 |
| Amount recognised as other total income | (16,068) |
| Adjustment from IAS Revision 19 | (73,752) |
| Balance at 31 December 2021/ 1 January 2022 | 48,348 |
| Charged/(credited) to profit or loss | 18,732 |
| Amount recognised as other total income | (24,080) |
| Balance at 31 December 2022 | 43,000 |
The main actuarial assumptions used for accounting purposes are:
Annual salary growth: 2.40%
Discount rate: 3.57%
Inflation: 2.20%
| 2022 | 2021 | |
|---|---|---|
| € | € | |
| Trade payables | 4,038,171 | 1,457,913 |
| Prepayments from clients | 15,254 | 7,222 |
| VAT | - | 4,248 |
| Shareholders' current accounts - credit balances (Note 30.2) | 303,076 | 529,695 |
| Accruals | 164,157 | 98,943 |
| Other creditors | 90,470 | 191,242 |
| 4,611,128 | 2,289,263 |
| 2022 | 2021 | |
|---|---|---|
| € | € | |
| Corporation tax /(refundable tax) | 108,376 | (2,746) |
| Special contribution for defence | 335 | 335 |
| Overseas tax | 62,823 | 84,438 |
| 171,534 | 82,027 |
The geopolitical situation in Eastern Europe intensified on 24 February 2022 with the commencement of the conflict between Russia and Ukraine. As at the date of authorising these financial statements for issue, the conflict continues to evolve as military activity proceeds. In addition to the impact of the events on entities that have operations in Russia, Ukraine, or Belarus or that conduct business with their counterparties, the conflict is increasingly affecting economies and financial markets globally and exacerbating ongoing economic challenges.
The European Union as well as United States of America, Switzerland, United Kingdom and other countries imposed a series of restrictive measures (sanctions) against the Russian and Belarussian government, various companies, and certain individuals. The sanctions imposed include an asset freeze and a prohibition from making funds available to the sanctioned individuals and entities. In addition, travel bans applicable to the sanctioned individuals prevents them from entering or transiting through the relevant territories. The Republic of Cyprus has adopted the United Nations and European Union measures. The rapid deterioration of the conflict in Ukraine may as well lead to the possibility of further sanctions in the future.
Emerging uncertainty regarding global supply of commodities due to the conflict between Russia and Ukraine conflict may also disrupt certain global trade flows and place significant upwards pressure on commodity prices and input costs as seen through early March 2022. Challenges for companies may include availability of funding to ensure access to raw materials, ability to finance margin payments and heightened risk of contractual non-performance.
The impact on the Group largely depends on the nature and duration of uncertain and unpredictable events, such as further military action, additional sanctions, and reactions to ongoing developments by global financial markets.
The financial effect of the current crisis on the global economy and overall business activities cannot be estimated with reasonable certainty at this stage, due to the pace at which the conflict prevails and the high level of uncertainties arising from the inability to reliably predict the outcome.
The Group has limited direct exposure to Russia, Ukraine, and Belarus and as such does not expect significant impact from direct exposures to these countries.
Despite the limited direct exposure, the conflict is expected to negatively impact the tourism and services industries in Cyprus. Furthermore, the increasing energy prices, fluctuations in foreign exchange rates, unease in stock market trading, rises in interest rates, supply chain disruptions and intensified inflationary pressures may indirectly impact the operations of the Group. The indirect implications will depend on the extent and duration of the crisis and remain uncertain.
Management has considered the unique circumstances and the risk exposures of the Group and has concluded that there is no significant impact in the Group's profitability position. The event is not expected to have an immediate material impact on the business operations.
The following transactions were carried out with related parties:
The remuneration of Directors and other members of key management was as follows:
| 2022 | 2021 | |
|---|---|---|
| € | € | |
| Key Management | 276,086 | 212,851 |
| 276,086 | 212,851 |
30. Related party transactions (continued)
| 2022 | 2021 | |
|---|---|---|
| € | € | |
| Credit balances of shareholders' current accounts | 303,076 | 529,695 |
| 303,076 | 529,695 |
The shareholders' current accounts are interest free, and have no specified repayment date.
The percentage of share capital of the Company held directly or indirectly by each member of the Board of Directors (in accordance with Article (4) (b) of the Directive DI 190-2007-04), as at 31 December 2022 and 20 April 2023 (5 days before the date of approval of the financial statements by the Board of Directors) were as follows:
| 31 December | ||
|---|---|---|
| 2022 20 April 2023 | ||
| % | % | |
| George Mavromaras | 70.87 | 70.87 |
The persons holding more than 5% of the share capital as at 31 December 2022 and 20 April 2023 (5 days before the date of approval of the financial statements by the Board of Directors) were as follows:
| 31 December | ||
|---|---|---|
| 2022 20 April 2023 | ||
| % % |
||
| George Mavromaras | 70.87 70.87 |
|
| Ioulia Lekanidou | 28.40 28.40 |
At the end of the year, no significant agreements existed between the Group and its Management.
As of December 31, 2022, the Group had contingent liabilities in relation to bank guarantees arising in the ordinary course of business from which the Board of Directors does not expect significant liabilities to arise.
For the years 2014 to 2021, the relevant tax compliance reports that the subsidiary Company is subject to in Greece have been submitted on time to the tax authorities in Greece. For the unaudited tax years 2010 to 2013, the right of the Greek state to notify checklists and impose income tax or fines is time-barred.
For the year 2022, the subsidiary Company has been audited in Greece by Certified Public Accountants as provided by the Greek provisions of article 65A of Law 4174/2013. This audit is ongoing and the tax compliance report is expected to be granted after the publication of the financial statements for the year 2022. If additional tax obligations arise by the time of completion of the tax audit, the Group expects that these will not have a material effect on the financial statements.
The Group had no other contingent liabilities as of 31 December 2022.
Mortgages have been granted to banks for the granting of loans and bond loans as mentioned in Note 24.
The Group had no other capital or other commitments as of 31 December 2022.
The Ukrainian crisis that erupted since February 2022 is expected to bring about significant disorders in the global economy in 2023. While the impact of the crisis cannot be fully predicted, the consequences will be significant for Europe's business path. The situation in Ukraine has accelerated the global energy crisis that had begun in the second half of 2021. At the same time, the war significantly affected the grain and sunflower oil markets, two main raw materials for the Group's production. Eurozone inflation, rising energy prices and geopolitical tensions are expected to affect markets throughout the year.
In addition to the above, we note that on 31/03/2023 the Group proceeded to termination of lease for the production unit at the Paleopanagia location of Schimatari and moved all the production lines to the privately owned facilities at the Perivoli Miliou location.
The Group acquired a new production line in amount of approximately €2 million which is expected to be operating soon once the trials are completed.
There were no other significant events after the reporting period that were relevant to the understanding of the consolidated financial statements.
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