Annual Report • Apr 26, 2017
Annual Report
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a multinational company with more than 30 years of experience in the automotive industry
more than 2.100 employees (without JV)
one of the leading companies for the development and production of automotive components in Eastern Europe
49,704 Net profit (in thsd. of HRK)
935,750 Operating income (in thsd. of HRK)
14.5% EBITDA margin
135,855 EBITDA (in thsd. of HRK)
Argentina
India Italy
UK USA
372,452 Net financial debt
5.3% Net profit margin
| A | About us4 | |
|---|---|---|
| Letter from the President of the Management | ||
| Board | 5 | |
| Company history | 6 | |
| AD Plastik Group | 7 | |
| Mission and Vision | 8 | |
| Key values | 8 | |
| Significant events in 2016 | 9 | |
| Nominations (new deals) | 9 | |
| Remunerations | 11 | |
| Changes of Management and SB | 12 | |
| Exit from the Faurecia ADP Luga JV | 12 | |
| Overview of markets and customers | 13 | |
| Production sites | 14 | |
| B | Capital market 15 |
|
| Ownership structure | 16 | |
| Overview of 10 largest shareholders | 17 | |
| Information on the share ADPL-R-A | 18 | |
| ADPL-R-A in 2016 and 2015 | 19 | |
| Stock exchange trading calendar | 20 | |
| C | Corporate governance 21 |
|
| Corporate matrix | 22 | |
| Governance in the AD Plastik Group | 23 | |
| General Assembly | 23 | |
| Supervisory Board | 24 | |
| Members of the Supervisory Board | 24 | |
| Statement on the remuneration policy | 25 | |
| Supervisory Board Committees | 26 | |
| Audit Committee | 26 | |
| Remuneration Committee | 26 | |
| Appointment Committee | 26 |
| Management Board | 27 | |
|---|---|---|
| President of the Management Board | 27 | |
| Members of the Management Board | 28 | |
| Statement on the remuneration policy | 29 | |
| Application of corporate governance Principles | 30 | |
| Statement on the application of the | ||
| Corporate Governance Code | 31 | |
| D | Research and Development 32 |
|
| Significance and activities of | ||
| Research and Development | 33 | |
| Injection moulding, painting, blow moulding | 34 | |
| Thermoforming and non-woven textile | 35 | |
| Extrusion | 36 | |
| Machinery and equipment, spatial | ||
| Planning and workshop | 37 | |
| Systems and software solutions | 38 | |
| Ecology and recycling materials | 39 | |
| E | Products and technologies 40 |
|
| Products | 41 | |
| Key products by manufacturing sites | 44 | |
| Technologies by manufacturing sites | 45 | |
| Manufacture and logistics | 46 | |
| Supplier relations | 47 | |
| F | Quality Management System48 | |
| Quality Management System | 49 | |
| Audits in 2016 | 50 | |
| G | Sustainable business51 | |
| Environmental protection and occupational safety |
52 |
| Raw material, energy and water consumption | 53 | |
|---|---|---|
| Atmospheric emissions and waste water | 54 | |
| Waste | 55 | |
| Workplace injuries | 55 | |
| Human resources | 56 | |
| Annual sustainable business report | 61 | |
| H | Business operations 62 |
|
| Business operations in 2016 | 63 | |
| European Union + Serbia | 65 | |
| Euro APS, JV Romania | 66 | |
| Russia | 67 | |
| Industry and competition | 68 | |
| Business plan for 2017 | 70 | |
| I | Business risks 71 |
|
| Operational risks | 72 | |
| Financial risks | 74 | |
| Financial risk management | 75 | |
| J | Financial statements 77 |
|
| Financial results in 2016 | 78 | |
| Key indicators | 79 | |
| Financial position | 79 | |
| Operating revenue by markets | 80 | |
| Associated companies | 81 | |
| Interim Management's | ||
| Statement of Responsibility | 82 | |
| K | Separate and Consolidated | |
| 83 Financial Statements for Year 2016 |
||
| AD Plastik d.d., Solin and Subsidiaries | 84 | |
| AD Plastik d.d., Solin | 130 |
AD Plastik Group is constantly and inexorably evolving and adapting, just like the industry in which we operate. All car manufacturers have to monitor changes within the automotive industry together with their suppliers. Our Company has successfully endured and is becoming a significantly more serious factor in the global automotive market.
We've entered into some very important contracts in 2016, which expanded our portfolio of customers and products and strengthened the Group's offer for the upcoming period. New business arrangements have been signed for Maserati, Fiat, Volkswagen, Renault Clio and Ford, with a total value of over EUR 20 million annually in full production years. We've shifted our focus on developing products with better strategic potential and plan on pursuing this direction going further.
The investing public recognized and acknowledged our company due to successfully realized negotiations and new contracts, overall improvement of business operations, as well as regular and revised business reporting practices and frequent and transparent communication with investors. These developments consequently contributed to the growth rate of our shares – reaching 40.2 percent in 2016. Record dividend with a yield of 12 percent on the average share price in 2015 was also paid out in the last year. This confirms the positive cash flow and good liquidity of the Group.
We have achieved very good operating results for the second year in a row. Our goal was to strengthen the financial stability of the Company and improve profitability – which we undoubtedly achieved. Group's net profit increased by 7.5 percent in 2016 and amounted to HRK 49.7 million, despite the 9 percent decline in operating income. We've considerably reduced our operating expenses in comparison to our operating income, and EBITDA accordingly amounted to HRK 135.9 million with an EBITDA margin of 14.5 percent – an increase of 18.3 percent over the previous year.
Sales in the European market have been slightly lower due to diminished number of orders placed by our Hella client and lower revenues generated through project activities, while the drop in revenue observed in Russia can be attributed to exchange rate fluctuations, rather than a decline in sales.
AD Plastik exited FADP – a joint company established in Russia together with Faurecia – in 2016. This was one of our strategic goals for the past year, which we've successfully achieved. We'll continue with business activities in Russia through companies of which we are the majority owners. The Russian market is finally stabilizing and all forecasts for the current year predict an increase in car sales and an overall economic recovery. This represents an opportunity which we certainly know how to recognize and seize.
We are dedicated and focused on developing and expanding business operations in new markets with new customers, pursuant to which we've already started researching Eastern and Central European markets in 2016, as well as conducting significant analysis of markets outside the European Union.
We are ambitiously creating a dynamic business environment that aims at continually developing and growing our Company. We will continue our activities regarding a further reduction in the Group's loan liabilities and optimization of cash flows. Our key objectives for 2017 include persistent growth in existing and new markets, further increase of business efficiency, risk management and, ultimately, ensuring a further boost in the market value of the Company, i.e. the value of our shares.
Marinko Došen President of the Management Board
AD Plastik Group is the leading company in the development and manufacture of interior and exterior car components in Croatia and one of the leading companies in Eastern Europe. It is a multinational company with more than thirty years of experience in the automotive industry, and eight production sites in four countries.
AD Plastik Group owns three facilities in Croatia, one in Solin and two in Zagreb, and employs 1,200 workers. In addition, approx. 200 workers are employed in the plant in Serbia, and over 700 in two plants in Russia. AD Plastik also owns a joint venture company Euro APS in Romania in cooperation with Faurecia. The Company exports a hundred percent of its products from Croatia, while EU and Serbia markets make up 75 percent of total Group revenue, and Russian plants manufacture products mainly for the Russian market.
Thirty years of history provided us with experience and specific maturity that AD Plastik Group is known for today. Continu-
ous business operations of the Company are based on tradition, knowledge, exceptional expertise and commitment of each and every employee. Cooperation with customers is built on trust, reliability and quality. AD Plastik Group cooperates with customers from the early development stages to the finished product, using modern tools and techniques and applying specific professional know-how, skills and experience. Focusing on customer needs, while maintaining high quality and competitiveness of products and services, is a prerequisite for the survival and development of any company. Long-term survival in the demanding automotive community serves as confirmation of business operations' quality, primarily due to skilled professional employees and incessant investments in the development and improvement of various technologies.
AD Plastik Group places its strategic focus on expanding and improving the automotive industry's program with the goal of becoming a major developmental supplier of key technologies and products. Creating and managing commercial relations with suppliers and subcontractors for the purpose of ensuring competitive prices of materials, tools, equipment and services are our important strategic objectives. Diversification of customers and markets and improving developmental recognition should also be highlighted as very important guidelines for the development of the Company. We plan to achieve strategic objectives by continuously increasing production sites efficiency and strengthening our financial stability and optimising the balance sheet structure, while ensuring the maximum return on investment for our investors.
Long-term strategy of AD Plastik Group is to ensure quality and stable business operations to the satisfaction of all its stakeholders.
To be the market leader in the development and production of automotive components in Eastern Europe and to expand our business into new markets.
By creating innovative and creative solutions and constantly improving research and product development, we want to contribute to the quality of the final product and the success of our customers. We meet our objectives by applying the principles of corporate social responsibility and business ethics to the satisfaction and benefit of all our stakeholders employees, business partners, customers, and our shareholders.
| Reliability | Relationships with all stakeholders are based on trust, open and honest communication. Continuous long-term partnerships with all our stakeholders are based on mutual respect. |
|---|---|
| Excellence | We strive to meet the highest quality standards across all business segments, including products, work methods or competences of employees performing it. |
| Innovation | We apply our own ideas and creativity on a daily basis to improve and develop the com pany and each internal segment, keeping up with developments and trends in the global market. |
| Responsibility | Responsibility is an important prerequisite for company's development, growth and per formance. It is expressed every day through relations with each individual, work, partners, stakeholders and our actions aimed at society, nature and the community in which we operate. |
| Commitment | Loyalty, productivity and satisfaction highlight the commitment we are trying to encour age together with a conscious business approach. Employees should identify with the company and its values. |
| Togetherness | We encourage mutual cooperation on all levels and teamwork that is essential for the development and growth of the company, but also of every individual. Sharing ideas and knowledge, multiculturalism, mutual respect and solidarity are key ideas of developing company togetherness. |
AD Plastik won the nomination for the manufacture of painted front and rear bumpers and side covers for the rear bumper of the Renault Clio which will be manufactured at the Revoz site in Slovenia. Start of mass production is planned for August 2017, with
AD Plastik won the nomination for the manufacture of grabhandles for four Volkswagen vehicles, namely Golf Variant, Golf Sportsvan, Touran and Tiguan. Grabhandles will be manufactured in Solin, and mass production is planned for 2017. Grabhandles will be shipped from Solin to facilities in Germany (Wolfsburg and Sachsen) and Mexico (Puebla). The cooperation with Volkswagen was signed for a minimum period of four years, and in addition to income it will facilitate improvements in terms of organization due to the fact that Volkswagen is a customer who insists not only on the quality of products, but also the efficiency of all manAD Plastik doing injection moulding, painting and assembly of components under this project.
Expected revenue is valued at EUR 16.5 million in the two-year period.
ufacturing processes. Considering the volumes produced by the Volkswagen Group, expanding our cooperation is extremely important for company's overall business operations.
Expected annual revenue is valued at EUR 2.5 million.
"We possess the necessary knowledge and experience for manufacturing grabhandles, and are certain that this project will have a very positive impact on the operations of AD Plastik in the long term", said Kristijan Žaper, sales manager for VW and BMW.
Following the successful grab handles development project with Fiat - Chrysler (FCA), AD Plastik found itself in the role of a development partner in the air ducts project for the luxury Maserati Levante. Eleven positions have been designed in total under this project, namely the central air ducts frame, central air ducts, grill, connecting air duct and front air ducts. AD Plastik won the nomination for the manufacture of air ducts intended for a new product in Maserati's product line which carries air for cooling/heating of passenger space from the instrument panel to the rear part of the vehicle. The project includes seven components
produced using blow moulding technology that will be manufactured at ADP Mladenovac plant, and five injection moulded components manufactured in Solin.
Expected project revenue is valued at EUR 3 million.
"This is our first joint development project with the FCA Group, and Levante is categorised as a luxury vehicle on which we have not often collaborated. This stands as proof that we have the knowledge, capacity and quality necessary to meet the challenges of most demanding customers and models in the automotive market," said Uroš Pavlović, Deputy Director of Development for Injection Moulded, Painted and Blow Moulded products.
AD Plastik won the nomination for EcoSport, Ford's class B vehicle to be manufactured in Craiova, Romania. Start of manufacture is scheduled for October 2017 with the planned production period of three and a half years. AD Plastik will manufacture front wheel arch housing and rear wheel deflectors for the new EcoSport model at its Solin plant.
Expected project revenue is valued at EUR 4.8 million.
"AD Plastik become a supplier for another Ford production site in Europe, thereby proving their quality and beating tough competition from manufacturers located in the vicinity of their plant in Romania. EcoSport is the sixth Ford model in the portfolio of AD Plastik, following the Fiesta, Mondeo, Galaxy, S-Max and Vignale," said Tonći Jakaša, Ford Program Manager.
We have also won the nomination for manufacturing injection moulded interior lining for Ford EcoSport in Russia, with respective parts manufactured at AD Plastik Group's site in Vintai. According to current customer information, mass production is planned for mid-2017 at the Ford Sollers plant, Naberezhny Chelny, Russia.
Expected annual revenue for a full production year is valued at EUR 1.5 million.
"Given the current decline in sales on the Russian market, majority of Tier I suppliers have excess available capacity meaning that the competition for winning this nomination was extremely strong. This nomination positions us back on the panel of strategic Ford suppliers in Russia, which is of great significance and provides us with more opportunities to compete for other vehicle models of this customer," said Mislav Čelar, Sales Manager for Russia.
AD Plastik won the nomination for the manufacture of painted instrument panel parts, bumpers, air duct connectors and steering wheel padding for Fiat 500. Parts included in this project will be manufactured in three AD Plastik Group's sites: Solin, Zagreb and Mladenovac. According to current customer information, mass production is planned for 2017 at the FCA Kragujevac plant in Serbia. This is AD Plastik's first painting operation for Fiat, which ensures a much better starting position for potential future nominations for painting multiple components, as well as other vehicle models of this renowned manufacturer. In addition to painting, bumper components will be injection moulded at the Zagreb site, blow moulded parts in Mladenovac, while some injection
AD Plastik won the nomination for an additional job under the Edison project, namely the manufacture of the central console for Smartforfour (S4S) and Smartfortwo (S2S) vehicles. It involves a transfer of manufacture from the Reydel plant in Rougegoutte, France. These consoles will be manufactured at our sites in Zagreb and Solin, with first shipments starting in early 2017.
Expected revenue from this project is estimated at EUR 3 million annually..
moulded parts will be manufactured in Solin.
Expected annual revenue for a full production year is valued at EUR 6 million.
"Winning this nomination has substantially increased our cooperation with Fiat, and the realization of said project would place Fiat in the second place in our customers portfolio with regard to overall value, just behind Renault. This job provides us with new opportunities, and the results we managed to achieve with Fiat are due to hard work invested on building our partnership," said Toni Štambuk, Sales Manager for the European market.
"I am very pleased that we are increasing the production share for vehicles under the Edison project. This project is not complex from a technological aspect, but the schedule is challenging and requires the preparation of the manufacture process for mass production and validation of products in short periods," said Nino Kaćanski, Project Manager.
AD Plastik stock was recognized as the Top Price Gainer for the first time at the Zagreb Stock Exchange Awards. Ceremony of the 5th Zagreb Stock Exchange Awards was held in Zagreb - Awards were founded in 2012 with the aim of strengthening the recognition of the capital market and its active participants among the financial and general public. Maintaining that excellence deserves recognition, rewarding aimed at garnering recognition and support for leading companies has become a tradition.
Awards Committee of the Zagreb Stock Exchange decided on the awards across seven categories, taking into consideration the objective, statistical criteria, and the overall contribution toward educating and developing the domestic capital market.
"In these challenging times for our business operation, the confidence of our shareholders is among the top priorities of the Company. We will press on with our designated business plans, increasing operating efficiency and profitability and developing business reporting quality, and will continue to enhance high transparency and reporting standards. This award is both an encouragement and a responsibility in our further business development towards creating added value for the Company, based on a relationship of harmony with all our stakeholders," said Marinko Došen upon receiving the award on behalf of AD Plastik.
AD Plastik received the Best progress award according to the Corporate Social Responsibility Index for 2016. Based on the results from questionnaires sent to numerous companies, Croatian Chamber of Economy (HGK) and the Croatian Business Council for Sustainable Development (HR BCSD) annually give out the CSR Index Award for the successful implementation of corporate social responsibility in the category of small, medium, large and public companies.
CSR Index uses a specific methodology for assessing responsible practices in business operations of Croatian companies, modelled after similar global methodologies, primarily the Business in the Community CR Index. The above method of assessing corporate social responsibility in Croatia is based on a ranking system that enables an objective assessment and comparison of socially responsible practices used by companies.
AD Plastik received two Golden Key Awards in the past year - for the most innovative exporter and the best exporter to France in 2015. In addition to these awards, the Company also competed in the category of "emerging markets" for the best exporter to Russia and the best exporter to Slovenia in 2015. The awards were presented at the 11th Convention of Croatian exporters held in Zagreb.
"I am particularly pleased to receive the award the most innovative exporter because it shows that our exceptional work and invested efforts have been duly recognized. Our Company's mission is to create innovative and creative solutions and constantly improve research and development process to ultimately contribute to the quality of the final product and the success of our customers. It is extremely important to follow the trends and innovations of the automotive industry in order to keep up or get ahead of competition. We've been awarded the Golden Key for several consecutive years, which is a great honour and validates the continuity of our successful business," said Marinko Došen upon receiving the award.
AD Plastik d.d. has been recognized as one of the most successful companies in the field of corporate governance in Croatia and won the award for excellence in corporate governance. At the second "Corporate governance in Croatia" business conference companies were awarded for the first time for the excellence in corporate governance according to the methodology developed as part of an international research project initiated and performed by members of the South East Europe Corporate Governance Academic Network (SEECGAN).
At its session held in July 2016, General Assembly of shareholders elected two new members to the AD Plastik's Supervisory Board, Ivica Tolić and Hrvoje Jurišić, replacing former members Josip Boban and Nikola Zovko whose mandate has expired.
New Management Board of AD Plastik was appointed at the Supervisory Board session held in July, comprising of the Board's President Marinko Došen, and members Katija Klepo, Sanja Biočić and Mladen Peroš. Mandates of former members Ivica Tolić and Hrvoje Jurišić have expired, while Denis Fušek resigned in April for personal reasons.
AD Plastik won the award in the category of medium manufacturing investments - given out as part of the new Lider Invest project aimed at finding best manufacturing investments in Croatia - for an investment of 141 million kunas made under the Edison project.
Best medium manufacturing investment
Lider Invest is a new project with the aim of giving well-deserved social recognition to entrepreneurs who dared to invest in manufacture. Its intention is to encourage entrepreneurs who are considering making investments, but also highlight the importance of manufacture in the Croatian economy. All investments exceeding 150 million kunas were considered for the "100 percent Lider Invest" award for best large manufacturing investment, all investments between 10 million and 150 million kunas were competing for the best medium manufacturing investment, and investments with a value less than 10 million kunas qualified for the small manufacturing investment award.
AD Plastik and Faurecia Automotive Holdings, France, signed a Share Purchase Agreement according to which AD Plastik sells, and Faurecia buys 278,136 shares (40 percent) of the Faurecia ADP Holding s.a.s., France, which is the sole owner of the OOO Faurecia ADP company from Luga. Transfer of shares pursuant to the Agreement was executed on 16 December 2016. Faurecia consequently become the sole owner of Faurecia ADP Holding s.a.s, i.e. FADP plant in Luga, Russia. The aforementioned sale of shares has no impact on the operating results of AD Plastik Group and its scheduled activities in the Russian market. Cooperation between AD Plastik and Faurecia continues under the Euro Auto Plastic Systems s.r.l. JV company in Romania, without any changes.
AD Plastik was awarded the National Champion for Croatia certificate in the import/export category at the European Business Awards 2016/2017. European Business Awards is one of the largest European competitions that promotes and rewards excellence and best business practices in the European business community. AD Plastik was chosen during the first stage of selection by an independent jury which evaluated key EBA values - innovation, ethics and business success.
A | About us
• Córdoba
• Mulhouse
• Poissy • Rennes • Sandouville • Sevelnord • Sochaux India
• Ranjangaon
Italy • Cassino • Melfi • Mirafiori
Mexico
Poland • Gliwice • Tychy Romania • Craiova • Mioveni Russia • Izhevsk • Kaluga
Chelny • Nizhny Novgorod • Barcelona • Madrid
• Palencia • Valencia
PEUGEOT
TOYOTA
AVTOVAZ
MITSUBISHI
UAZ
VOLKSWAGEN
CITROËN
OPEL
ŠKODA
ALFA ROMEO
BMW
DAEWOO
DAIMLER
CHRYSLER
NISSAN
| 1 | AD PlastikSolin, Croatia • Headquarters, R&D • Employees632 • Facility area26 618 m2 |
|
|---|---|---|
| 2 | AD Plastik Zagreb I, Croatia • Employees411 • Facility area24 136 m2 |
|
| 3 | AD Plastik Zagreb II, Croatia • Employees156 • Facility area7 336 m2 |
|
| 4 | ADPMladenovac, Serbia • Employees172 • Facility area13 952 m2 |
|
| 5 | ADP Kaluga Kaluga, Russia • Employees229 • Facility area8 524 m2 |
|
| 6 | AD Plastik Vintai, Russia • Employees521 • Facility area24 500 m2 |
|
| 7 | EAPSMioveni, Romania • Joint Venture |
JV |
| AD Plastik Zagreb II, Croatia |
|
|---|---|
| • Employees156 |
|
| • Facility area7 336 m2 |
| ADPMladenovac, Serbia | |
|---|---|
| • | Employees172 |
| • | Facility area13 952 m2 |
| ADP Kaluga | Kaluga, Russia |
|---|---|
| • | Employees229 |
| • | Facility area8 524 m2 |
| AD Plastik | Vintai, Russia |
|---|---|
| • | Employees521 |
| • | Facility area24 500 m2 |
| EAPSMioveni, Romania | ||
|---|---|---|
| • Joint Venture • AD Plastik |
50 percent |
| 2016 AD Plastik Group Annual Report 15 | |||
|---|---|---|---|
| B | Capital market | ||
The equity capital of AD Plastik d.d. amounts to HRK 419,958,400, and it is divided in 4,199,584 shares of the nominal value of HRK 100.00. The shareholders are legal and natural persons from the Republic of Croatia that realise their interests through the General Assembly and the Supervisory Board in accordance with the
| No | Shareholder | No. of shares 31 Decem ber 2016 |
Share (%) |
No. of shares 31 December 2015 |
Share (%) |
Trend |
|---|---|---|---|---|---|---|
| 1 | OAO HOLDING AUTOKOMPONENTI | 1,259,875 | 30.00 | 1,259,875 | 30.00 | ■ |
| 2 | RAIFFEISEN MANDATORY PENSION FUND - category B | 269,462 | 6.42 | 269,462 | 6.42 | ■ |
| 3 | RAIFFEISEN VOLUNTARY PENSION FUND | 148,645 | 3.54 | - | - | ▲ |
| 4 | ADP-ESOP D.O.O. | 130,532 | 3.11 | 212,776 | 5.07 | ▼ |
| 5 | PBZ CO MANDATORY PENSION FUND - category B | 119,640 | 2.85 | 119,640 | 2.85 | ■ |
| 6 | KAPITALNI FOND D.D. | 116,541 | 2.78 | 116,541 | 2.78 | ■ |
| 7 | ERSTE PLAVI - category B | 115,353 | 2.75 | 115.353 | 2.75 | ■ |
| 8 | ERSTE & STEIERMARKISCHE BANK D.D. - Joint custodial account |
105,349 | 2.51 | 105,349 | 2.51 | ■ |
| 9 | AZ MANDATORY PENSION FUND - category B | 93,900 | 2.24 | 93,900 | 2.24 | ■ |
| 10 | PBZ D.D. - STATE STREET CLIENT ACCOUNT | 92,948 | 2.21 | 111,366 | 2.65 | ▼ |
| TOTAL | 2,452,245 | 58.39 | 2,491,039 | 59.32 | ▼ |
The Company has no majority shareholder, the largest shareholder is the Open Joint Stock Company "Holding Autokomponenti" from St. Petersburg, Russia, which owns 1,259,875 shares representing a 30 percent share of Company equity capital.
Movement of the closing daily stock price of ADPL-R-A and Crobex between 30 December 2015 to 31 December 2016:
| ADPL-R-A (HRK) | 2016 | 2015 | Change |
|---|---|---|---|
| Highest price | 144.2 | 112.5 | 28.18% |
| Lowest price | 92.06 | 77.01 | 19.54% |
| Final price | 138.00 | 98.46 | 40.16% |
| Volume | 293,021 | 331,418 | -11.59% |
| Turnover | 36,179,476 | 31,042,628 | 16.55% |
| Market capitalization | 579,542,592 | 413,491,041 | 40.16% |
• Price increase of 40.16 percent was achieved compared to 2015, which resulted in AD Plastik being awarded the Zagreb Stock Exchange award in December 2016 in the Top Price Gainer category
• A dividend of HRK 12 was paid in 2016
| Month | Date | Financial statements | Supervisory Board and General Assembly |
|---|---|---|---|
| 2 | 17 February 2017 | Unaudited Annual Report of AD Plastik Group for 2016 | |
| 3 | 16 March 2017 | Session of the Supervisory Board | |
| No later than 28 April 2017 | Management Interim Report of AD Plastik Group for the first quarter of 2017 | ||
| 4 | No later than 28 April 2017 | Audited Annual Report of AD Plastik Group for 2016 | |
| 5 | 25 May 2017 | Session of the Supervisory Board | |
| 20 July 2017 | Session of the Supervisory Board | ||
| 7 | 20 July 2017 | General Assembly 2017 | |
| No later than 31 July 2017 | Management Interim Report of AD Plastik Group for the second quarter of 2017 | ||
| 9 | 14 September 2017 | Session of the Supervisory Board | |
| 10 | No later than 31 October 2017 | Management Interim Report of AD Plastik Group for the third quarter of 2017 | |
| 12 | 14 December 2017 | Session of the Supervisory Board |
All financial statements are published on www.zse.hr and www.adplastik.hr websites.
Parent company
AD Plastik d.d. Matoševa 8, 21 210 Solin, Republic of Croatia
Daughter companies / subsidiary companies
The structure of AD Plastik corporate governance is based on a dual system which consists of the Management Board and the Supervisory Board. Management and Supervisory Board together with the General Assembly form the three fundamental Company bodies in accordance with Company Statute and Companies Act.
Shareholders that partake in the business of joint stock companies can exercise their rights at the General Assembly. The General Assembly is authorized to decide on the following issues:
Extraordinary session of the General Assembly was held on 6 April 2016 at which a decision was adopted on advance payment of dividend from retained (undistributed) earnings and other reserves from 2014, in accordance with Company Statute and Companies Act.
Regular session of the General Assembly was held on 14 July 2016 at which decisions were adopted on the acceptance of the Annual Report on the state of AD Plastik Group for 2015, reports of the Supervisory Board on the supervision of Group's business operations for 2015, appropriation of profit, decision on dividend payment, on granting the relieve from duty to Management and Supervisory Board members, appointment of the auditor, and decision on the election of two members of the Supervisory Board, all in accordance with Company Statute and Companies Act.
In accordance with the previously published calendar, the Supervisory Board held five regular meetings in 2016. The Supervisory Board adopted five decisions outside regular sessions in accordance with the Rules of Procedure of the Supervisory Board.
Mandates of the Chairman of the Supervisory Board, Josip Boban, and member of the Supervisory Board, Nikola Zovko, expired on 19 July 2016, and new members, Ivica Tolić and Hrvoje Jurišić, were appointed with a mandate starting on 20 July 2016, and lasting for four years, in accordance with the decision of the General Assembly.
According to the Company Statute, Supervisory Board members may be remunerated for their work in the amount specified by the General Assembly in due decision for the business year in which such remuneration shall be paid, depending on business results and the position of the Company.
According to the Decision of regular AD Plastik General Assembly of 18 July 2008, remuneration for Supervisory Board members was set as follows:
The amount of remuneration is determined on the basis of gross average monthly salaries in AD Plastik achieved in the three months prior to the payment of such remuneration. Remuneration is paid after each meeting of the Supervisory Board. The aforementioned decision entered into force upon its adoption and shall be applied starting from 1 July 2007.
In the year 2016, the decision on the payment of remuneration to members of the Supervisory Board was not made.
In accordance with the Companies Act and the Rules of Procedure of the Supervisory Board, AD Plastik has established three committees whose activities assist the work of the Supervisory Board by preparing decisions that shall later be taken by the Supervisory Board, and supervising their implementation.
The Audit Committee has four members, while the Remuneration Committee and the Appointment Committee each have three members.
At least one member of such committee or board must be a member of the Supervisory Board.
Chairman: Nikola Zovko
Members: Nenad Škomrlj Dmitrij Leonidovič Drandin Anatolij Janovskis
Audit Committee performs a detailed analysis of financial reports, provides support to the accounting department, and supports the establishment of effective internal control in the Company.
To this end, it performs the following activities:
Proposes the following to the Supervisory Board:
It performs the following activities, and in particular:
Chairman: Ana Luketin
Chairman: Nikola Zovko
Members: Nenad Škomrlj
Dmitrij Leonidovič Drandin
Members: Dmitrij Leonidovič Drandin Nikola Zovko
At the session of the Supervisory Board held on 19 July 2016 a new Management Board was appointed, as follows:
Mandates of members Ivica Tolić and Hrvoje Jurišić expired on 19 July 2016.
Denis Fusek turned in his resignation as a member of the Management Board on 30 April 2016 due to personal reasons.
Management Board held 24 sessions in 2016.
President of the Management Board
Graduated from the Faculty of Engineering - University of Rijeka and gained the Master of Science degree in Mechanical Engineering. He completed an MBA programme at the Zagreb School of Business, orientation Petroleum, and attended several additional seminars and professional training courses in Croatia and abroad.
He started his career as an intern in the Croatian petrochemical industry and held several managerial and executive functions from 1997 to 2004, including the position of the President of the Management Board of DINA d.d. Afterwards, as the director of the investment company CocaCola Bottling Energy Ltd., he managed the construction of several energy projects in the Republic of Hungary. He was the executive director and member of the Management Board of Trast d.d., one of the leading logistics companies in the Republic of Croatia, after which he managed the project for the operative restructuring of Mirna d.d. Rovinj.
Before coming to AD Plastik in 2012, Marinko Došen was general director of ZAO PHR (today AO AD Plastik) in Russia, and was appointed as the President of the Management Board of AD Plastik Group in 2015.
Member of the Management Board - Sales and Strategic Procurement
Katija Klepo graduated from the Faculty of Economics in Split and started her career in AD Plastik's Department of Price Calculations in 1994.
Afterwards, she worked as the Manager of Economic Affairs and Assistant Executive Director of development of other programmes, procurement and finances. She became the Head of the Controlling and Internal Audit Service following its formation, and was charged with financial supervision of all companies within the Group.
In February 2008, after per-
forming duties as the Director of Controlling and Internal Audit, she became a member of the Management Board of AD Plastik, which is a position she still holds today.
Member of the Management Board – Research & Development, Procurement of tools
After graduating from the Faculty of Mechanical Engineering and Naval Architecture in Zagreb, orientation Engines and Motor Vehicles, Mladen Peroš began his business career as a construction engineer at the Department of Research & Development at Končar EVA in Zagreb. He joined the AD Plastik team as a construction engineer at the Department of Construction in June 1999. His career within the Company advanced quickly. He became a project manager, director of construction, director of development, assistant to the member of the Management
Board for commerce and development, and member of the Management Board for commerce and development. During that period he spent a significant amount of time in Russia, dealing with market development and establishment of new companies. Mladen was President of the Management Board of AD Plastik Group from July 2012 until February 2015, after which he continued to perform his function as a member of the Management Board.
Member of the Management Board - Finance, Accounting, IT and Controlling
Sanja Biočić graduated from the Faculty of Economics and Business in Zagreb, and began her career as an intern at Chromos, holding multiple managerial functions, including the position of a member of the Management Board. She then transferred to the position of a member of the Management Board at Magma d.d., in charge of finances, accounting and controlling. Following her employment in Magma, she worked for seven years as the financial director for various projects and companies. In 2015, she came to AD Plastik as the Executive Director for finances
and accounting. In July 2016, Sanja became a member of the Management Board. Throughout her career she attended numerous seminars, consulting sessions and different forms of additional training in the field of accounting, tax policies, foreign exchange transactions, business analytics and planning, as well as finances. She is a member of the Croatian Accountants' Association and Croatian Association of Corporate Treasurers.
Members of the Management Board concluded managerial contracts with AD Plastik, which define the rights and obligations of Management Board members as follows:
In addition, managerial contracts shall include provisions on the following:
The total amount of remuneration paid to Supervisory Board and Management Board members, and Executive Directors, amounted to 10,422 thsd. kunas in 2016.
At its session held on 24 May 2016, Supervisory Board granted the following remunerations to members of the Management Board for successful business operations in 2015:
These remunerations were fully paid in Company shares.
Scope of internal audit ac-
tivities
AD Plastik Group bases its business activities on good corporate governance practices; and by implementing everyday business practices, strategies, Company policies and internal regulations aims to contribute to transparent and efficient business operation and establish better relations in the environment where it operates.
Given that AD Plastik shares are listed on the Official Market of the Zagreb Stock Exchange, AD Plastik d.d. applies the Corporate Governance Code issued by the Zagreb Stock Exchange. By regularly submitting annual surveys published on the official website of the Zagreb Stock Exchange (www.zse.hr) and on the Company's website (www.adplastik.hr), AD Plastik conclusively demonstrates its commitment to adhere to the principles of corporate governance and social responsibility.
In 2016, AD Plastik fully complied with provisions of the aforementioned Code.
AD Plastik Group has implemented its Code of Business Conduct and policies to define rules of business conduct that aim to ensure the avoidance of conflicts of interest and any form of corruption, as well as to assume obligations under international human rights law.
The Controlling and Internal Audit Department is responsible for performing internal control functions within AD Plastik. Controlling subsequently notifies the Management Board, whereas the Internal Audit department informs the Management Board and the Audit Committee on monitoring results.
Such notifications are provided through the report on conducted monitoring.
The scope of internal audit activities includes as follows:
By signing the Code of Business Ethics issued by the Croatian Chamber of Commerce, AD Plastik committed to exhibit responsible and ethical behaviour as a necessary precondition for effective functioning of the market. Defining clear ethical criteria contributes and facilitates transparent and efficient business
Code of Business Conduct of operations. AD Plastik Group
Controlling and Internal Audit Department
Report on conducted monitoring
The Controlling and Internal Audit Department is responsible for performing internal control functions within AD Plastik. Controlling subsequently notifies the Management Board, whereas the Internal Audit department informs the Management Board and the Audit Committee on monitoring results. Such informing is provided through the report on conducted monitoring. Supervision and coordination of business reporting by the Controlling include encouraging communication between different functions of the Company, and coordination with the preparation of report and analysis of business results; evaluating the overall business efficiency, and proposing guidelines for improvement; giving orders and determination of preventive and corrective activities; and forecasting the impact of external and internal changes in the overall business of the Company.
The scope of internal audit activities includes as follows:
areas of business, anticipating and managing risks, and protecting Company's assets.
The provisions of the Companies Act and the provisions of the Company Statute are applied on the aforementioned relations.
The Company acquired no own shares in 2016, and as of 31 December 2016 owns 27,957 of own shares.
Overview of the 10 largest shareholders on 31 December 2016 is given on page 17.
The shareholders exercise their rights with regard to the operation of the joint stock Company at the General Assembly, and the same is competent to decide on the following issues:
Activities of the General Assembly are regulated by the Companies Act and the Rules of Procedure of the General Assembly published on the Company's website (www.adplastik.hr).
Members of the Management Board and Supervisory Board are listed on pages 24, 27 and 28.
AD Plastik has three committees whose activities are focused on assisting
the functions of the Supervisory Board by preparing decisions that shall later be adopted by the Supervisory Board, and supervising their implementation. Committees are as follows: Audit Committee, Remuneration Committee and the Appointment Committee
Members of Management and Supervisory Boards will be appointed on the basis of their competence and knowledge, taking into consideration various diversity criteria such as gender, age, length of work service, nationality and individual differences in professional and personal experiences.
First criteria for appointment are skills and experience of candidates, knowledge of the industry in which the Company operates, as well as personal qualities and integrity.
Company has established an Appointment Committee tasked with electing members of the Management Board and the Supervisory Board, and implementing Diversity policy objectives by suggesting candidates for members of the Management Board and the Supervisory Board according to these criteria.
New Management Board was appointed in 2016, balancing the criteria regarding gender, skills, experience and competencies of new members of the Board depending on their education, as can be seen from their CVs.
Seven members were appointed to the Supervisory Board. Chairman and two members of the Supervisory Board are Russian citizens, thus respecting the significance of our largest market.
With respect to the gender criteria, the Supervisory Board consists of two women and five men, and the age criteria was fulfilled by having a good age balance ranging from 31 to 65 years of age.
Marinko Došen President of the Management Board
Katija Klepo Member of the Management Board
Sanja Biočić Member of the Management Board
Mladen Peroš Member of the Management Board
Car manufacturers are no longer able to target their research and development activities on individual car parts, but rather focus on core activities and leave research and development of specific components to suppliers.
In accordance with stated market requirements, our Company has invested significant resources in research and development. One of the main objectives of AD Plastik Group's Research and Development Department is the growth and increase of development Tier 1 jobs regarding strategic products and technologies. At the same time, we are already thinking up new processes, technologies and materials which would represent a big step forward in developmental and production-technological sense in the near future. The aim is to focus on the development of complete modules which combine multiple technologies due to customer need to obtain a complete solution from a single supplier. Responding to these challenges requires maximum competence in development terms and flexible solutions in order to meet cost and quality requirements.
The result of our continuous investment in research and development is the current standing of AD Plastik Group as a reliable and stable partner to nearly all global automobile manufacturers.
The Company invested approx. 4 percent of its total revenue in research and development in 2016, which highlights the importance this area has within the organization. Research and development department of AD Plastik Group employs more than 100 engineers with modern systems and tools at their disposal.
AD Plastik Group's Research and Development is organized across five departments:
Research and development engineers >100
Research and Development Department for Injection Moulded, Painted and Blow Moulded products is focused on products such as bumpers, air ducts, instrument panels, door panels, wheel arch liners, grab handles, sunvisors, belts, etc.
Injection moulding is a technology in which the molten thermoplastic material is injected under pressure into a mould, i.e., pre-made injection moulding tools. Its advantages include high productivity, mass production and automation possibilities, minimal additional operations and material loss, precision manufacturing, possibility of injecting on other materials and using various fillers to change material properties. Quality design of tools and products, proper selection of materials and corresponding parameters of the injection process are basic prerequisites for creating a quality product.
Painting plastic components can be technologically divided into several sections:
Blow moulding technology is used for products that distribute air into the passenger space of the vehicle (air ducts).
Employees of the Research and Development Department for Injection Moulded, Painted and Blow Moulded products are divided into products, processes and tools development.
Department was also handling direct development activities for the Ford exterior as a Tier I supplier:
AD Plastik won the nomination for Edison exterior project at the end of 2016 - Phase 2 (22 positions). Winning this nomination means that AD Plastik Group started using a new technology of "hot foil stamping" - transferring a metal layer from the foil to a solid surface through the mould.
Winning the Fiat 500L instrument panel nomination means that AD Plastik Group started using a new technology for connecting parts with adhesive technology (application of adhesive using a robotic arm).
Research and Development Department for Thermoforming and Non-woven Textile is focused on products such as headliners, carpets, shelves, side trims and developing proprietary materials (non-woven textile). The primary objective is to make optimal decisions when choosing materials and design specific products and processes to ensure and deliver a product that will use recycled materials, be lighter, and provide satisfactory acoustic, physical and air-quality properties. This method ultimately ensures simple use for workers in manufacturing, but also the end customer. We take into consideration the safety characteristics of our products and the manufacturing process, as well as complying with and meeting regulatory requirements. One of our objectives is to replace existing products made using other technologies with thermoformed products in order to increase the number and share of thermoformed products in the vehicle, differentiate manufacture and line capacity, all in accordance with the trend to reduce the weight of the car.
Thermoforming technology is based on permanent forming of materials at specific temperatures and under specific pressure. There are two types of the thermoforming process - moulding in a hot or cold tool:
Non-woven textile is a flexible flat product which is fixed mechanically, by needle-punching or with bonding agents. Most commonly used fibres have a fineness of 6 to 17 dtex, and these products are later thermoformed into the final product.
Employees of the Research and Development Department for Thermoforming and Non-woven Textile are divided into products, processes and tools development.
In addition to project activities for the customers, research and development sector for thermoforming and non-woven textile is focused on the development of materials and prototype samples for vehicle underbody and development of materials for thermoformed wheel arch liners. By manufacturing these products, AD Plastik Group expands its developmental and manufacturing potential and enters the market of vehicle exteriors with thermoformed products, guided by the principle of increasing the share of lighter products and better sound-absorption properties of the vehicle. The Company is also focused on introducing the digital print technology for applying the air bag label on the sunvisor.
Research and Development Department for Extrusion is focused on products such as static seals (inner and outer hidden frames and scrapers, outer belts, roof moulding...). Extrusion encompasses the processing of plastic mass to produce items with fixed cross-sections. Extrusion can be continuous or semi-continuous. This procedure softens and plasticises input materials which are then homogenised and finally formed into the desired shape or profile. Products are stamped after extrusion and often sprayed onto vertical injectors. Most commonly used materials in the extrusion process are polypropylene and thermoplastic elastomers.
Employees of the Research and Development Department for Extrusion are divided into products, processes and tools development.
Nominations for the VW Touareg and the Audi Q3 are the result of well implemented development on VW Touran and Golf 7 projects. AD Plastik Group is in charge of design, product and process development and manufacture as a developmental supplier under the Touareg and Audi Q3 VW projects.
Static seals for the Lada Vesta caravan are a continuation of the Lada Vesta project. Lada Vesta is made on an entirely new B/C platform developed by engineers of AvtoVAZ in cooperation with specialists from the Renault-Nissan Group. AD Plastik Group won the nomination for this vehicle regarding the development of products and processes, and the vehicle will be produced in AvtoVAZ, Togliatti, Russia.
Machinery and Equipment Department is focused on standardizing and procuring new machinery and equipment within the AD Plastik Group. The workshop is equipped for manufacturing gauges and other devices and providing support in maintaining technical functions of production sites.
Employees of the Machinery and Equipment Department are divided into development of manufacturing equipment and manufacture of devices, gauges and templates.
• Protective door trims for the Twingo RS Development and production of the ultrasonic welding machine
• Sunvisor and gear shift cover for the Fiat 500L Development and production of the ultrasonic welding machine
Computer software is one of the main research and development tools used for product analysis and creating new solutions. Online databases are an important source of information on innovations and market trends, and our engineers can access global services that provide detailed and reliable information on all products that are installed in cars throughout the world.
Constructors use several different CAD design software solutions, most important of which is CATIA.
In addition, special CAE software for the numerical simulation of
product behaviour is also used in close relation with CAD software.
Monitoring projects and making progress on individual product development stages is an extremely complex process which is why Enovia software suit is used to manage this function.
Developing new products in this day and age is unthinkable without a 3D printer for creating prototypes which will be presented to the customer so they can view and experience new products during the vehicle's development stage.
Digitalization of existing products is also considered a standard research and development practice in the automotive industry which is why our engineers use a 3D scanner to scan different models of existing or new products, transfer the images to a digital format and process them further using a computer.
In the near future, every car part that ended its life span should be usable as raw material for future production. This will greatly impact environmental protection efforts. Therefore, substituting existing materials with new recyclable materials is of great importance. AD Plastik has recognised the processing of recyclable "green" materials as an important business element. Many car parts are currently manufactured using a certain percentage of recyclable materials, which reduces the environmental impact due to the possibility of re-using such materials.
| Injection moulding | Painting | Non-woven textile | Thermoforming | Extrusion | Blow moulding | |
|---|---|---|---|---|---|---|
| Solin Croatia |
44 IMMs 50 - 2,300 t |
4 TPE lines 4 IMMs |
||||
| Zagreb I Croatia |
11 IMMs 400 - 3,200 t |
1 automated painting line |
||||
| Zagreb II Croatia |
9 IMMs 80 - 2,000 t |
|||||
| Vintai Russia |
7 IMMs 400 - 1,600 t |
1 non-woven textile line | 2 headliner production lines 2 carpet production lines 2 parcel shelves pro duction lines 4 water jets |
5 TPE lines 10 IMMs |
||
| Kaluga Russia |
8 IMMs 100 - 2,700 t |
1 headliner production line 1 carpet production line 1 sun visor production line 1 water jet |
||||
| Mladenovac Serbia |
2 IMMs 420 t |
3 non-woven textile lines |
1 headliner production line 1 water jet |
3 blow moulding machines |
Main activities of AD Plastik Group during 2016 with regard to manufacture and logistics were focused on:
Despite the unfavourable mix of products, especially in production sites in Croatia and Serbia, implementation of corrective measures in 2016 helped mitigate negative market impacts on plant operations and improve results when compared to 2015.
In the past year we have achieved the desired quality of products and deliveries to customers in accordance with their customers' requirements or even exceeded said requirements.
By investing in the renovation of warehouses we've increased capacity of storage spaces in Solin and Kaluga, which will be compensated from savings achieved on renting external storage. We have also realized the industrialization of all new projects successfully and without unforeseen costs.
AD Plastik increased the accuracy of operational plans from 84 percent to 95 percent in 2016 thanks to the cooperation between commerce and supply chain, as well as joint activities aimed at customers.
Business operations of AD Plastik Group largely depend on the supply chain and its performance. Financial effects are not the only factor directly affecting profits, but also effects on the over all status of the Group in the automotive industry market and society as a whole. Suppliers are expected to actively cooper ate during product development with the aim of finding common solutions for providing our customers with new and improved products in terms of price and quality, while complying with high standards of corporate social responsibility in the automotive in dustry.
All suppliers that affect the quality of products manufactured by AD Plastik Group are subject to the prescribed rules of supplier selection and supervision in accordance with automotive indus try standards. One of the main criteria when choosing new sup pliers of materials and components is their compliance with ISO TS 16949 and ISO 14001 standards.
During 2016 we carried out regular evaluation of suppliers ac cording to prescribed criteria. Evaluation of suppliers of materi als is carried out once a month, and the evaluation of suppliers of equipment and tools and services is carried out annually. In addition to regular evaluation, a survey was conducted for sup pliers of Solin and Zagreb sites regarding their compliance with the guidelines of corporate social responsibility.
The quality of services and products of AD Plastik Group is of utmost importance for maintaining and improving our competitive position on the market, as well as expected added value provided to customers. Quality assurance is based on the proven ADP quality system and the highest industry standards.
The quality management system and corporate standards are improved using the best internal and external practices, while promoting a culture of constant improvement ensures that they are developed in accordance with high expectations of customers and specific requirements of the automotive industry.
Customer criteria and requirements also apply to suppliers, and together with them we define and implement activities which ensure satisfaction and fulfilment of expectations to end users.
Evaluation of suppliers is handled by the Strategic Procurement Department, and is carried out according to the criteria of quality management, environmental management and compliance with corporate social responsibility provisions.
The emphasis in 2016 was on activities aimed at strengthening the organizational structure of quality and standardization of manufacturing methods for all production sites of the Group, regardless of the technological or geographical specificity, by applying the experience gained from exchanging knowledge and best practices. The objectives and expectations of customers were expressed and communicated via internal objectives and processes at all sites, as shown by an increase in customer satisfaction and new deals.
External audits and certification is carried out by an independent certification company Bureau Veritas Certification (BVC), as follows:
The following external audits of implemented standards were carried out in 2016 across the AD Plastik Group:
| ISO TS 16949:2009 Valid until |
ISO 14001:2004 Valid until |
OHSAS 18001:2007 Valid until |
ISO 50001:2011 Valid until |
|
|---|---|---|---|---|
| Solin, Croatia | 14 September 2018 | 15 September 2018 | 9 October 2017 | 27 November 2019 |
| Zagreb, Croatia | 14 September 2018 | 15 September 2018 | 9 October 2017 | 27 November 2019 |
| Samara, Russia | 1 April 2017 | 18 October 2017 | ||
| Kaluga, Russia | 14 September 2018 | 15 September 2018 | ||
| Mladenovac, Serbia | 14 September 2018 | 15 June 2018 | 20 December 2018 | 14 February 2020 |
AD Plastik has a permanent responsibility and awareness of the impact its activities have on the environment and human health.
During 2016, the Company continued the implementation of best practices and development in the field of sustainable energy, health and safety management.
In accordance with applicable legislation, professional services for environmental protection, occupational safety and fire protection regularly monitor and improve protection levels.
Basic raw materials used in our technological processes are polypropylene and polyethylene. 16.42 percent of all our used raw materials were recycled. Energy consumption refers to the consumption of non-renewable energy sources and includes the consumption of electricity, natural gas, fuel oil and liquefied petroleum gas. Electricity is our main energy source with a 75 percent share in total consumption.
Water supply is provided by local water supply systems, and to a lesser extent from our own well located at the AD Plastik's Zagreb site where 5,445 m3 of water was pumped out.
| Raw materials | Energy | Water | |
|---|---|---|---|
| PP, PE (t) | Paints, varnishes and solvents (t) |
(GJ) | (m3 ) |
| 12,762 | 480 | 163,969 | 71,390 |
Atmospheric emissions are the result of combustion of energy sources used in boiler rooms and include the combustion of fuel oil and natural gas, as well as VOC emissions from the painting line. Discharged waste water includes sanitary, storm water and industrial waste water. Type and amount of emissions into the atmosphere and water are managed in accordance with applicable regulations. All emission measurements were consistent with prescribed requirements and there were no cases of accidental discharge of hazardous substances into the environment.
Waste is classified and collected in separate containers at the place of origin and is submitted for further disposal to authorised waste collectors. There were 1,249t of non-hazardous and 320t of hazardous waste in 2016.
| Waste disposal methods | Weight (t) |
|---|---|
| Recycling | 565.33 |
| Waste storage before applying any disposal method | 271.73 |
| Using waste as fuel or other method for generating energy | 0.00 |
| Physical and chemical waste processing | 12.59 |
| Waste incineration on land | 130.25 |
| Waste disposal at specially prepared landfills | 589.30 |
| TOTAL | 1,569.20 |
In 2016, we had 23 workplace accidents of which three were serious, but fortunately without lasting consequences for the health of workers. Serious injuries were caused by falls in the same plane and the collision with moving objects used to perform work related activities. Of the total number of injuries, five occurred during the arrival and departure of workers to and from the workplace. There were no occupational illnesses and deaths related to workplace accidents.
We provide conditions for the growth and development of the company through optimal management of human resources to the satisfaction of employees and all other stakeholders.
Employees of AD Plastik Group, share by country of employment in 2016
AD Plastik Group employs a total of 2,121 persons, of which 1,193 are employed in Croatia, 172 in Serbia and 750 in Russia. The largest share of AD Plastik Group employees are in Croatia, most of which are between the ages of 30 and 35.
The employee trend of AD Plastik Group is an indicator of maintaining a stable number of employees for the last two years.
AD Plastik Group's employee trends between 2012 and 2016
Age structure of AD Plastik Group in 2016
Given the fact that we are manufacturers of car components, the largest proportion of our employees are direct workers, which affects the educational structure of employees. Direct workers are directly involved with the manufacturing process, while indirect workers are directly involved with providing support to the manufacturing process, and their number is proportional to the volume and organization of manufacture, as well as corporate
The total number of employees of AD Plastik Group sorted by gender shows an almost equal representation of women (47 percent) and men (53 percent), while the share of women in the management structure is 33.04 percent.
in 2016
Automotive industry trends set new, high requirements for product and process quality in developmental and mass production stages. To ensure the competence and expertise of employees, key areas of their education are divided into product and process development and technical and technological knowledge related to the installed equipment.
Notable education and training activities during 2016:
Conducted regular cooperation with consulting companies of customers and equipment suppliers or authorized companies, thus ensuring necessary upgrades of employee knowledge and skills.
Management Academy was organized for members of the management structure at AD Plastik Group, which included interactive workshops divided in eight modules. All employees have the opportunity to attend regular education and learning programmes for foreign languages in order to facilitate easier communication with business partners.
At the end of the year we conducted a survey on the effectiveness of educational programs implemented in 2016 and noted a very good effect of education on business results, organizational climate, motivation, employee engagement, quality of work and the application of new knowledge at the workplace.
Introducing new employees to the workplace and training provided when changing jobs within the Company has been regularly monitored. During 2016 we have launched 148 programmes related to introducing new employees to the workplace, and successfully concluded 117 of these programmes.
A total of 261 awards were given out in 2016 at Solin and Zagreb sites as part of the "AD 5" rewarding model implementing the process of recognizing and rewarding outstanding employees.
At our sites in Russia, rewarding of employees is carried out through a continuous management process which takes into account the achievement of set objectives which improves engagement, resulting in increased process efficiency.
AD Plastik launched a new project for encouraging the creativity of employees at Zagreb and Solin sites, that has been previously successfully implemented at or sites in Russia. Every idea or new development that raises the work quality, conditions and methods to a higher level is subject to rewarding.
AD Plastik supported the Private Sector Youth Initiative initiated by the Croatian Employers' Association Support and the European Bank for Reconstruction and Development, with the longterm good cooperation with FESB, Faculty of Chemical Technology and the Faculty of Economics, which enabled more students to gain experience by working at AD Plastik. We have formalized our cooperation with the Faculty of Textile Technology and the University College of Management and Design Aspira.
AD Plastik also continued its cooperation with higher education institutions in the implementation of projects of common interest in the research and development field and the field of study programs tailored to the needs of the AD Plastik Group, with one of the goals being the early selection of talent and further development of business and professional cooperation.
For the third consecutive year, AD Plastik has participated in the "Experience is worth gold" project aimed at sensitizing business and the wider community on the employment of particularly disadvantaged persons on the labour market.
During 2016 we continued with activities aimed at positioning the AD Plastik Group as a desirable employer through internal and external activities, defining employer profiles and key values, designing and activation of our LinkedIn page, researching the perception of the Company as an employer among students from targeted faculties. We have also realized a carried out other activities in order to improve the recognition of the Company in the labour market.
In order to better understand the needs and expectations of AD Plastik Group's stakeholders, we have drafted and published the third Sustainability Report in accordance with G4 guidelines for sustainability reporting issued by the Global Reporting Initiative (GRI) for 2015. The report is available on the Company website.
The third Sustainability Report of the AD Plastik Group implemented a modern approach and design to completely fulfil the purpose of non-financial reporting, which is to understand the needs and expectations of stakeholders regarding information and provide a review of non-financial impacts according to their needs. The report shows the results achieved by companies within the Group in 2015, and the content is compliant with the G4 guidelines for sustainability reporting issued by the Global Reporting Initiative (GRI) - core option.
Sustainability Report of the Group for 2015 was written as clear and understandable as possible, with transparent presentation of data and detailed description of specific aspects. The report was made in accordance with reporting principles which sought to provide a balanced view of all the important features of business operations associated with sustainable development and social responsibility.
AD Plastik Group is a growing international company with an ambition to become the market leader in Eastern Europe regarding the development and manufacture of automotive components. This demanding market places sustainable business as one of the most important elements of competitiveness, and understanding the expectations and interests of stakeholders as a necessary prerequisite for establishing quality communications.
Therefore it should come as no surprise that the AD Plastik Group's report highlights as many as 34 material aspects that reflect significant economic, environmental and social impacts of the Group, i.e. significantly influence assessments and decisions made by stakeholders. The vast majority of said material aspects, as many as 21, relate to the social category, that is, employees and human rights.
Identifying material aspects is a very important determinant of this reporting method. These exact priorities make up the bulk of the report and focus on topics that are important for all stakeholders. However, too many material aspects can mean that the Company has not recognized the key impacts and hasn't focused its attention properly. Therefore, we commend the process of defining priorities and key aspects in accordance with changes in external and business impacts. We expect the development of communication with stakeholders on the subject of the sustainability report's content to continue in the coming years.
Last year was very successful for AD Plastik Group's financial results, and this positive trend reflected in increased investments in employee education, implementation of a new rewarding system and improved information exchange and communications. We would like to see a clearer strategy for managing human resources underpinning this successful practice of investing in employees in future reports.
The purpose of the report is not only to show understanding regarding the application of correct principles of social responsibility, but also to attract and engage readers on sustainability topics. The announcement that future reports will be published annually and contain clear objectives for certain aspects in order to better and more transparently monitor their implementation is therefore particularly valuable. AD Plastik Group also uses the reporting process for analysis and evaluation of impact, and to build its continuous improvement programme, which is the main objective of reporting. We will follow this progress with great interest using future reports, and commend the AD Plastik Group on successful implementation of the reporting process.
Commission of the Administrative Council - Croatian Business Council for Sustainable Development (HR BCSD)
As in previous years, AD Plastik Group's plants in Croatia and Serbia sell their products mainly on the EU and Serbian markets, but also on new markets such as Mexico, Brazil and the United States. Russian companies from the AD Plastik Group sell their production assortment mostly on the market of the Russian Federation.
The Group is strongly positioned in the market of automotive components manufacturers in Europe, especially with regard to the manufacture of grab handles. AD Plastik grab handles are installed in a wide range of vehicles of well-known car manufac turers such as Fiat, Jeep, Renault, PSA Group, and we should point out new grab handle manufacturing project for the VW Group. This increase in grab handle manufacture is specially vis ible thanks to the exceptional growth of manufacture in Serbia.
The Edison project continues to have the greatest impact on production volume and realization in 2016, and we must high light the transfer of console production which began at the end of the year.
The Russian market was marked by stabilization if compared to the previous two years, and this has created a basis for further growth.
Last year was marked by a series of inquiries and technical pres entations, which are a good foundation for implementing new business operations and plans.
Overview of revenue by sites
| EU + Serbia |
75% |
|---|---|
| Russia | 25% |
| Injection moulding + Blow moulding 65% |
|---|
| Painting 14% |
| Thermoforming + Non-woven textile 12% |
| Extrusion 9% |
Revenues, EBITDA
Total operating revenue in mHRK
EBITDA margin
| FCA | |
|---|---|
| Currently in production: Technologies: Sales market: Won nominations in 2016: |
air ducts, grab handles, vehicle underbody protection blow moulding and injection moulding Serbia, Italy, Poland, Mexico, Brazil, USA cargo holder for the Alfa Romeo Giulia, Painted interior components for the Fiat 500L, Painted exterior components for the Fiat 500L, gear shift cover for the Fiat 500L, Grab handles for the Indian market |
| Ford | |
| Currently in production: Technologies: Sales market: Won nominations in 2016: |
wheel arch liners, protection under the engine, roof spoiler components injection moulding Germany, Spain, Romania, Russia wheel arch liners, |
| rear wheel deflectors for the EcoSport model | |
| Grupo Antolin | |
| Currently in production: Technologies: Sales market: |
door panels injection moulding, UV welding Slovenia |
| Hella | |
|---|---|
| Currently in production: Technologies: Sales market: |
headlamp housings injection moulding, assembly Slovenia |
| PSA | |
| Products: | grab handles, glass run channel, speaker mounts and screens |
| Technologies: | injection moulding and extrusion |
| Sales market: | France, Spain, Czech Republic, Slovakia, Argentina, Brazil, China, Russia |
| Reydel | |
| Currently in production: | instrument panel, steering wheel trim, gear shift and handbrake console |
| Technologies: | injection moulding, UV welding |
| Sales market: | Slovenia, France |
| Won nominations in 2016: | console |
| RSA | Dacia | |
|---|---|---|
| Currently in production: | painted exteriors, injection moulded components, motor fans, headliners, painted and unpainted deco rative strips, all exterior spare parts |
|
| Technologies: | injection moulding, painting, thermoforming of head liners (assembly) |
|
| Sales market: | Slovenia, France | |
| Won nominations in 2016: | painted bumpers for the Clio transfer |
| Currently in production: | scrapers |
|---|---|
| Technologies: | extrusion |
| Sales market: | Germany |
| Won nominations in 2016: | grab handles for the Golf Variant, Touran, Tiguan and Sportsvan, wind shield scrapers for the Audi Q3 |
| Currently in production: | headliner trims, sunroof parts |
|---|---|
| Technologies: | injection moulding and painting |
| Sales market: | Germany, Slovakia |
Currently in production: headliner trims, sunroof parts Technologies: injection moulding and painting
| Currently in production: | sunvisors and headliners |
|---|---|
| Technologies: | injection moulding, thermoforming |
| Sales market: | Romania |
| Won nominations in 2016: | sunvisors with covers |
| Vehicle production location: | Romania, Colombia |
| AvtoVaz | PCMA (Peugeot Citroen Mitsubishi Automotive) | ||
|---|---|---|---|
| Currently in production: Technologies: Sales market: Won nominations in 2016: |
headliners, carpets, injection moulded interior and exterior positions, static seals, air ducts thermoforming, injection moulding and extrusion Russia injection moulded exterior positions for the new Logan and Sandero (VAZ production) |
Currently in production: Technologies: Sales market: |
injection moulded exterior positions injection moulding Russia for the new Peugeot K0 (LCV) |
| Ford | Renault | ||
| Currently in production: Technologies: Sales market: Won nominations in 2016: |
headliners thermoforming Russia injection moulded interior positions for the EcoSport |
Technologies: Sales market: |
exterior positions, parcel shelves thermoforming, injection moulding Russia |
| GM-VAZ | VW Rus | ||
| Currently in production: Technologies: Sales market: |
headliners, static seals thermoforming and extrusion Russia |
Sales market: | Tiguan Russia |
| Nissan | |||
| Currently in production: Technologies: Sales market: |
injection moulded exterior positions injection moulding Russia |
| Currently in production: Technologies: Sales market: Won nominations in 2016: |
injection moulded exterior positions injection moulding Russia injection moulded exterior positions and parcel shelf |
|---|---|
| Renault | for the new Peugeot K0 (LCV) |
| Currently in production: | headliners, carpets, injection moulded interior and exterior positions, parcel shelves |
| Technologies: | thermoforming, injection moulding |
| Sales market: | Russia |
| Won nominations in 2016: | injection moulded exterior positions for the new vehicles Renault Duster and Renault LJC |
| VW Rus | |
| Won nominations in 2016: | injection moulded wheel arch liners for the VW Tiguan |
| Sales market: | Russia |
For the third consecutive year new vehicle registrations in the European Union are on the raise with 14.6 million vehicles regis tered during the previous year, which is 6.8 percent more than in 2015. This is an indication that the market has stabilized and re tained the trust of customers. Despite significant political events in Europe, such as Brexit or the Italian referendum, the auto motive market has continued its successful growth. Increased car sales in comparison with last year's results were recorded in 2016 even on individual markets, with the fastest growth of sales occurring on small markets like Iceland, Hungary, Croatia and Cyprus. The largest major market growth was recorded in Italy with 15.8 percent and Spain with 10.9 percent, while sales in Germany increased by 4.5 percent, France 5.1 percent, and the United Kingdom by 2.3 percent. The decline in sales was record ed in only two countries: Norway and Switzerland.
Despite a difficult year, the Volkswagen Group still leads the car sales market with a share of 24.1 percent, followed by the Re nault Group with 10.1 percent, PSA Group with 9.7 percent and FCA Group with 6.6 percent. The most significant increase in comparison to 2015 can be attributed to the FCA Group with 14.1 percent, followed by Daimler with 14.1 percent and Renault Group with 12.1 percent, while Volkswagen Group increased its sales by 3.3 percent, and Ford increased by 2.9 percent. Volkswa gen was still the best-selling brand of 2016, and the Golf was the best-selling model in Europe.
14.6 million registered vehicles in 2016
14.6 million cars were sold in the European Union in 2016, which is the largest number of vehicles sold in the last nine years. The automotive industry of the European Union employs 12.2 million people, i.e. 5.6 percent of total employees. Automotive industry sector is a key carrier of knowledge and innovation. Of the total number of employees in manufacturing, 10.4 percent are manufacturing jobs in the automotive industry. The European car market has definitely stabilized with a tendency for further predicted growth of 5 percent by 2020.
AD Plastik strengthened its market position in 2016 by winning new nominations whose initial production is planned for the coming years. This is particularly true of VW Group and Fiat programmes with mass deliveries planned for mid-2017. New nominations are compliant with our strategy to increase sales of said programmes.
Car sales in the Russian market dropped by 50 percent between 2013 and 2015, but the trend slowed down in 2016, when a decline of 11 percent in comparison with the previous year was recorded. Due to the stabilization of the Russian ruble during 2016 and the increase in oil prices in the last quarter, expectations indicate that during 2017 the market decline will stop and sales will increase by 5-10%.
The business plan for 2017 sets key work guidelines of the AD Plastik Group that will ensure the realization of planned objectives for customers, shareholders and the Company as a whole. Revenue growth of AD Plastik Group is planned for 2017 at the rate of 6% with the EBITDA margin amounting to 14%.
The priority of the Management Board of AD Plastik Group is the realization of strategic growth and development goals through the necessary transformation and restructuring, with the aim of positioning the Company as the automotive supplier of high reliability, cost and technical competitiveness, as well as market and developmental flexibility. AD Plastik Group is a desirable and technical- technologically modern employer with a motivating remuneration system that ensures employee satisfaction and long-term business operations, which is the position that Management Board wants to keep and further develop.
Key elements of the investment plan are closely related to the preparation of plants for the start of new projects regarding Fiat, Renault Clio, VW, PSA and the transfer of the production of console for the Edison project, while a new project for the customer Renault is being initiated at the plant in Mladenovac.
It is necessary to point out the increased investments in research and development, without which it is impossible to survive in the automotive industry, and which will certainly improve business operations of AD Plastik. Research of the global market, in which AD Plastik operates, indicates an increased interest for painted interior components. One of the drivers of sales growth in the medium term will be researching developmental activities and introducing new technologies that will increase the capacity of painting technology. The project has been registered with the Croatian Agency for Small Business, Innovation and Investments for the purpose of obtaining funds from the European Union after the Call for submission of applications - Increasing the development of new products and services resulting from research and development.
In accordance with the main strategy, Management Board of AD Plastik Group is focused on activities that enable the achievement of growth objectives through organic growth or acquisitions. Business expansion is directed towards existing and new customers in the markets of Central and Eastern Europe (CEE), which contain target customers (OEMs) with whom the Company does not have significant operations. We are continuously exploring opportunities in these markets because of the possible business expansion. Additional activities have been executed in order to investigate the possibilities of entering the extremely promising and vast market of Iran, which continue through this year.
The focus of sales activities remains on A, B and C class vehicle segment regarding strategic technologies and products of AD Plastik Group. The plan is to develop relationships with customers and external engineering centres integrated with research and development facilities of customers and higher education institutions, along with continued investment in knowledge and excellence of own engineering staff. These operational paths are aimed at strengthening the developmental recognition of strategic technologies and products, and increasing the proportion of Tier1 projects.
Medium-term forecasts of movements of the Russian economy show signs of growth, and also the ruble exchange rate continuously strengthens. After the last three years of decline in car sales in the Russian Federation, a market recovery is expected. According to the information from the last Automotive Forum held in March in Moscow, predicted growth in car sales amounts to 5 to 10%.
Our business plan for 2017 ensures stable cash flows and financial stability of the Group. Primarily, the realization of the plan, as well as transparent and regular reporting and continuation and improvement of current activities will be carried out in order to further increase the share price and raise the Company's value.
2016 AD Plastik Group Annual Report | 71
Business risks are related to the risks present in everyday business activities that directly affect the stability of the Company and maintaining competitive advantage. They are determined by the business environment in which the Company operates, level of specific industry's cyclicality and regular business policies and decisions.
The business environment risk includes political, macroeconomic and social risks present in markets where the Company operates. Single company generally cannot influence these risks, but it can diversify them by operating in many different countries. The degree of diversification will largely depend on the risks in countries in which it operates.
Political risk refers to all risks associated with a possible political instability in a certain country. Business operations of individual companies are affected by macroeconomic risks, and the magnitude of the impact depends primarily on the cyclicality of the industry in which the Company operates.
Business activities of AD Plastik Group are, in addition to production located in Croatia, Serbia, the Russian Federation and Romania, based on the export of products to foreign customers, organised on a global level. Subject to the macroeconomic environment, economic conditions and the movement of economic activity. Political stability at both global and regional level, as well as the operational stability of countries in which we operate, therefore represent an important factor in our business stability and directly influence Company results.
Macroeconomic trends on affected markets, along with the exchange rate and the price of goods and services in particular, directly affect Company's competitiveness on the global market where we place our products and where we obtain raw materials and intermediate goods. Due to strong presence of Company's product placement on foreign markets, major changes in macroeconomics of countries where production takes place (increasing interest rates, the growth of the exchange rate of the kuna against EUR and RUR, increasing energy prices, the growth of tax burden and the like) could negatively reflect on business performance and the ability to regularly meet obligations.
AD Plastik Group operates in a relatively diverse business environment. Since the sale of Group's product range is affected by such macroeconomic variables as private consumption, levels of disposable personal income and trends in the sale of vehicles, the Company must continuously monitor the aforementioned macroeconomic factors.
Company can manage political risk by doing business in different countries, investing in opening new markets and continuous monitoring of macroeconomic and long-term market indicators. Special attention is given to macroeconomic trends in the Russian market which are somewhat more favourable in comparison to 2015.
Automotive industry demands strict adherence to the defined terms of delivery of products in addition to providing set high level of quality of ordered products. The Company is exposed to the risk of non fulfillment of contractual obligations on time by of individual suppliers and, consequently, would not be able to meet its obligations to the customer in time. Failure to fulfil con tractual obligations can lead to loss of customers and a negative impact on operating results. Therefore, significant operational attention and responsibility is given to the accuracy of the fulfil ment of contractual obligations toward customers.
In order to meet the growing and dynamic market requirements, the automotive industry is unavoidably focused on investing in the development of new products and new technologies in order to preserve and enhance the competitiveness of its products. Technology plays a major role in added value, price and quality of products. Falling behind on technological development can reduce competitiveness and weaken the acquired market posi tion, as well as reduce the chances of acquiring future business opportunities and consequently adversely affect business re sults of the Company. There is serious market competition be tween car manufacturers and therefore AD Plastik Group con tinuously monitors technological changes and invests in new technologies in order to maintain and increase its existing com petitiveness.
Business activities carried out by the AD Plastik Group expose it to a variety of financial risks, including:
The Group hasn't implement a formal risk management pro gramme, however the Finance Department handles overall risk management. It provides services for various Group activities, coordinates access to domestic and international financial mar kets, carefully monitors financial risks related to business, and manages such risks through internal reports on risks that ana lyse the exposure by the degree and magnitude of certain risk, as well as implements various measures with the aim to effi ciently manage and reduce risk.
Currency risks include transaction risk, i.e. the risk of negative impacts of changes in exchange rates relative to the kuna on cash flows from commercial activities, and balance sheet risk, i.e. the risk of a lower value of net monetary assets in foreign currencies from the conversion to kuna as a result of changes in exchange rates.
The Group operates in an international environment and is mainly exposed to the fluctuations of the euro and the Russian ruble as revenues from the EU market are achieved mainly in euros, while revenues from sales on the Russian market are achieved in rubles. Exposure to currency risk arises from the purchase of raw materials which is mainly made in euros.
In addition, the Group is exposed to foreign currency risk related to the expression of operations of foreign subsidiaries that generate revenue in foreign currencies, and the same being listed in Croatian kuna in consolidated financial statements. Companies located in Russia manage currency risk by using natural hedging, i.e. selling price is adjusted together with the customers according to the fluctuation of the ruble against the euro.
Most long-term and short-term loans were stipulated by contracts that contain a currency clause, that is they are linked to the euro. The Group is also exposed to the fluctuation of the Serbian dinar and Romanian lei.
Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. Interest rate risk is related to changes in the restitution of assets and liabilities and the values resulting from movements in interest rates.
Interest rate risk of AD Plastik arises from credit commitments. The Group continuously monitors fluctuations and predictions of interest rates. Various scenarios are simulated taking into consideration refinancing, renewal of existing positions and alternative financing. Group's exposure to interest rate risk is low, as it holds no financial instruments at variable rates.
The Group is exposed to the price risk associated with changes in prices of key raw materials, transportation, other production costs and strong pressure from competitors and customers. In the automotive industry there is an open product price calculation present, and the price fluctuations of raw materials and other costs, higher and lower, are adjusted together with customers through the selling price on a monthly, quarterly or semi-annual basis (depending on the customer). The largest markets on which the Group provides its services and sells its products comprise of the EU market and the market of the Russian Federation. Group's management determines the prices of its services for each foreign market separately.
Credit risk refers to the default risk of one party to a financial instrument by which it creates a financial loss for the other party. Company assets bearing credit risk generally consist of loans and receivables. Since loans are granted to subsidiaries, due credit risk is under the control of the Company.
Trade receivables are made with minimal credit risk because the Company works with customers who are essentially financially stable companies with minimal charge risk, which is also the business policy of the Group. The correction of trade receivables to the amount of bad debts has been made.
Five largest customers of the Group include:
The responsibility for liquidity risk management is born by the Management Board which sets an appropriate framework for liquidity risk management, with the objective of managing short, medium and long-term funding and liquidity requirements.
Liquidity risk is observed as a risk that the Company will not be able to fulfil its obligations to creditors. The Company manages liquidity risk by maintaining sufficient cash and working capital, arranging favourable credit frameworks in various banks that allow quick withdrawal of short-term funds under favourable conditions and continuous monitoring of planned and actual cash flows, as well as the adjustment of financial assets and financial liabilities.
Cash flow projections are created for each company within the Group and the same are then aggregated at the Group level. Parent company monitors the plan and the realization of cash flows of all companies within the Group and continuously monitors liquidity to ensure sufficient funds for carrying out business activities. In doing so, the Group takes into account the plans for the settlement of debts, compliance with contractual relations and internal balance sheet ratio targets.
The Supervisory Board have not yet considered and determined the financial statements, but shall give its decision at the meeting scheduled in May.
J | Financial statements of AD Plastik Group
AD Plastik Group is comprised of the following companies during the reporting period:
AD Plastik Group achieved outstanding business results in 2016, thus continuing last year's trend of successful Company operations. We are pleased to announce good operating results of AD Plastik d.d. and AD Plastik Group for the year 2016.
AD Plastik Group recorded a slightly lower operating revenue of HRK 935.8 million in the reporting period, which represents a 9% decrease compared to the previous year, while AD Plastik d.d. generated an operating revenue in the amount of HRK 717.9 million, i.e. 6.9% less than in the previous year.
A decrease in realization was primarily caused by the smaller number of orders placed by our client Hella and a slightly lower volume of revenue generated through our project activities. In addition, we must note the negative impact of foreign exchange movements on the amount of our operating revenue expressed in kuna, especially euro and Russian rouble. Due to the Croatian monetary policy of maintaining exchange rate stability of the kuna against the euro, throughout 2016 the euro was exposed to appreciation pressures of the kuna. Such weakening of the euro weakened the position of operating revenue and overall AD Plastik d.d. business results brought about by our strong focus on export. The total revenue of AD Plastik Group was, in addition to the euro exchange rate, significantly affected by the twofold Russian rouble exchange rate in 2016. An above average value of rouble had a negative effect on the amount of operating revenue, while the strengthening of the rouble at the end of the year had a positive impact on business results in the form of reduced foreign exchange losses.
Significantly lower operating expenses in the reporting period were the result of a series of activities undertaken in order to improve business efficiency and rationalize production processes at all AD Plastik Group sites.
The decline in operating expenses of AD Plastik Group in 2016, which was greater than the decline in operating revenue, resulted in the EBITDA in the amount of HRK 135.9 million, which is 18.3% more than in the previous year. By improving the cost efficiency of the AD Plastik Group, we've achieved high EBITDA margin of 14.5 percent compared with 11.2% in 2015.
Net profit of the AD Plastik Group in 2016 increased by 7.5 percent compared to the previous year, and amounted to HRK 49.7 million, while the realized net profit margin rose to 5.31 percent compared to 4.49% in 2015.
14.5%
EBITDA margin
Reduction in loan liabilities
| Indicators Group | 2015 | 2016 | Index |
|---|---|---|---|
| Operating revenue (in thsd. of HRK) | 1,028,491 | 935,750 | 90.98 |
| Sales revenue (in thsd. of HRK) | 1,002,364 | 913,383 | 91.12 |
| NFD (in thsd. of HRK) | 408,519 | 372,452 | 91.17 |
| EBITDA (in thsd. of HRK) | 114,880 | 135,855 | 118.26 |
| NFD/EBITDA | 3.56 | 2.74 | |
| EBITDA margin | 11.17% | 14.52% | |
| Net profit margin | 4.49% | 5.31% |
There has been a continuing trend of improving financial position of AD Plastik Group and AD Plastik d.d. which started in 2015. Credit debt was reduced by HRK 38 million on 31 December 2016, compared to the same date last year. During this period, accounts payable to the suppliers were reduced by HRK 42.4 million. Debt ratio was also decreased from 0.52 to 0.45, and all indicators point to a positive cash flow and good liquidity of the AD Plastik Group.
The results stabilized at higher levels throughout 2016 and despite a small decline in revenue, left our investors with the feeling of security while earning trust in the Management Board and values of AD Plastik, as previously reported. In 2016 we paid out a dividend of 12 kunas per share, and the price of share ADPL-R-A increased by 40.2%, for which AD Plastik d.d. won the Zagreb Stock Exchange Award in the Top Price Gainer category. The price of the share on 31 December 2016 amounted to HRK 138.00, while it amounted to HRK 98.46 on the same day the previous year.
We are pleased to announce that we have fulfilled one of the strategic objectives that we have set in the past year - exiting the JV agreement with Faurecia Automotive Holding s.a.s., France. AD Plastik d.d and Faurecia Automotive Holdings s.a.s.u. have signed the Agreement of Purchase and Sale of Shares according to which AD Plastik sells and Faurecia purchases 278,136 shares (40%) of the company Faurecia ADP Holding s.a.s., France, which is a hundred percent owner of the company OOO Faurecia ADP in Luga. Transfer of shares pursuant to the Agreement was executed in December 2016. Faurecia consequently become the sole owner of Faurecia ADP Holding s.a.s, i.e. FADP plant in Luga, Russia. Said sale of shares has no impact on the operating results of the AD Plastik Group and plans in the Russian Federation.
AD Plastik continues the successful cooperation with Faurecia through the joint company Euro Auto Plastic Systems s.r.l, Romania.
The ratio of operating revenue generated by the Group on the EU and Serbian market and the Russian market remains unchanged in 2016 compared to 2015.
Three-quarters of the total revenue of the AD Plastik Group are realized on the market of the EU and Serbia through the sites in Solin and Zagreb in Croatia and the site in Mladenovac in Serbia. In 2016 the operating revenue on the EU and Serbian market decreased by 9% compared to the previous year, primarily due to the reasons mentioned above - exchange rate effect when expressing revenue in kuna, lower revenue generated through project activities and smaller orders placed by our client Hella. It is important to emphasize that the revenue generated through the project Edison, which has the greatest impact on the revenue of AD Plastik d.d., in the reporting period, is higher than the revenue generated through this project in the previous period, despite the aforementioned euro exchange rate.
In the past year we have focused on development in the field of products with greater strategic potential in order to strengthen our offer and expand the portfolio of customers and products. The objectives were achieved through new deals for the following multi-year period with Maserati, Fiat, Volkswagen and Renault, with a total value of over EUR 20 million annually in the years of full production.
AD Plastik Group companies operating on the Russian Federation market place the total of their production on the Russian market. Last year the sales of cars on the Russian market decreased by 11% compared to the previous year, whereby the decline in sales significantly slowed down in the last quarter. November was the first month after seven consecutive quarters in which we did not record a decline. Operating revenue of AD Plastik Group subsidiaries in Russia has in the observed period decreased by 9.6% compared to the previous year, which was for the most part a consequence of the kuna exchange rate, rather than the decline in sales themselves.
However, it should be noted that the lower utilization of production capacities and sales still has not stabilized at higher levels. With regular adjustments to selling prices prompted by exchange rate fluctuations and a strive to improve cost efficiency, Russian companies have in the observed period operated quite successfully. We are therefore satisfied with the profit they realized. Medium and long-term movements of the Russian economy are currently following a trend of growth dynamics. Moreover, the rouble exchange rate is moving towards its stabilization. Current 2017 projections indicate a growth of the Russian economy and the strengthening of the Russian rouble associated with the price of crude oil barrel and forecasts about an increase in crude oil prices. Expectations indicate that the decline in car sales will stop and sales will increase by 4%.
With the aim of presenting a clearer picture of business of AD Plastik Group, we have created an abbreviated consolidated profit and loss account for 2015 and 2016 with consolidated profit and loss account of affiliated companies Euro Auto Plastic Systems s.r.l. Mioveni, Romania (50% of ownership of AD Plastik d.d.), and Centre for research and development of automotive industry Croatia (24% of ownership AD Plastik d.d.).
Taking into consideration that AD Plastik sold its shares in Faurecia ADP Holding s.a.s., France, in 2016, operative results of this company was not included in the abbreviated consolidated profit and loss account for 2016, and the impact of operations of this company in 2015 has been reclassified and shown under the "Share of loss of associated companies" position for comparison purposes.
AD Plastik Group's operating revenue with the corresponding ownership interest in associated companies decreased by 5.5 percent compared to last year, while EBITDA increased by 6.7 percent compared to the previous year and amount to HRK 196,4 million in total.
The results of associated companies are included in the result of the AD Plastik Group using the equity method, and these companies have no financial borrowings to external entities.
AD Plastik Group's consolidation of the corresponding part of the ownership interest in associates
| Positions | 2015 (in kkn) | 2016 (in kkn) | Index |
|---|---|---|---|
| OPERATING REVENUE | 1.403.196 | 1.326.137 | 94,51 |
| OPERATING EXPENSES | 1.299.961 | 1.212.112 | 93,24 |
| Material costs | 818.017 | 740.990 | 90,58 |
| Staff costs | 221.638 | 215.250 | 97,12 |
| Amortization | 80.811 | 82.369 | 101,93 |
| Other costs | 179.495 | 173.503 | 96,66 |
| FINANCIAL REVENUE | 120.559 | 45.512 | 37,75 |
| FINANCIAL EXPENSES | 155.447 | 98.666 | 63,47 |
| Share of loss from associated companies | 10.934 | 0 | 0,00 |
| TOTAL REVENUE | 1.523.755 | 1.371.649 | 90,02 |
| TOTAL EXPENSES | 1.466.342 | 1.310.778 | 89,39 |
| Profit before taxation | 57.413 | 60.871 | 106,02 |
| Income tax | 11.190 | 11.168 | 99,80 |
| PROFIT FOR THE PERIOD | 46.223 | 49.704 | 107,53 |
| EBITDA | 184.046 | 196.395 | 106,71 |
Solin, April 2017
The financial statements of the AD Plastik Group and AD Plastik d.d. Solin are prepared in accordance with International Financial Reporting Standards (IFRS) and Croatian Accounting Act.
The consolidated financial statements of AD Plastik Group and financial statements of the Company AD Plastik d.d. for the period starting from 1 January to 31 December 2016 provide a true and fair view of assets and liabilities, profit and loss, financial positions and business activities of the issuer, and companies included in the consolidation as a whole.
Management statement for the period ending on 31 December 2016 provides a true and fair view of the development and operating results with due description of the most significant risks and uncertainties to which the Company is exposed.
President of the Management Board
Marinko Došen
Member of the Management Board:
Sanja Biočić
The Company is registered at the Court Register of the Commercial Court of Split under the Registered Company Number (MBS): 060007090, Company Identification Number (OIB): 48351740621 IBAN: HR04 2340 0091 1101 5371 1, Privredna banka Zagreb d.d., Zagreb
The capital stock in the amount of HRK 419,958,400 was paid in full. AD Plastik issued a total of 4,199,584 of ordinary shares, in nominal amount of HRK 100. President of the Management Board: Marinko Došen, members of the Management Board: Katija Klepo, Sanja Biočić, Mladen Peroš Chairman of the Supervisory Board: Dmitrij Leonidovič Drandin
Consolidated Financial Statements Together with Independent Auditor's Report For the Year Ended 31 December 2016
| Responsibility for the consolidated financial statements | 85 |
|---|---|
| Independent Auditor's Report | 86 |
| Consolidated statement of comprehensive income | 92 |
| Consolidated statement of financial position | 94 |
| Consolidated statement of changes in shareholders' equity | 95 |
| Consolidated statement of cash flows | 97 |
| Notes to the consolidated financial statements | 99 |
Pursuant to the Accounting Act of the Republic of Croatia, the Management Board is responsible for ensuring that consolidated financial statements are prepared for each financial year in accordance with International Financial Reporting Standards ("the IFRSs"), as adopted in the European Union, which give a true and fair view of the financial position and results of operations of AD Plastik d.d., Solin ('the Company') and its subsidiaries ('the Group') for that period.
After making enquiries, the Management Board has a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, the Management Board continues to adopt the going concern basis in preparing the financial statements.
In preparing those financial statements, the Management Board is responsible for:
The Management Board is responsible for keeping proper accounting records, which disclose with reasonable accuracy at any time, the financial position of the Group and its' compliance with the Croatian Accounting Act. The Management Board is also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of embezzlement and other irregularities.
Signed on behalf of AD Plastik d.d. Solin by the members of the Management Board:
For AD Plastik d.d. Solin by:
Marinko Došen, President of the Management Board
Katija Klepo, Member of Management Board
Sanja Biočić, Member of Management Board
Mladen Peroš, Member of Management Board
AD Plastik d.d. Matoševa 8, 21210 Solin, Republic of Croatia
19 April 2017
To the owners of AD Plastik d.d., Solin:
We have audited the consolidated financial statements of AD Plastik d.d. and its subsidiaries ("the Group") which comprise the consolidated statement of financial position as at 31 December 2016, the consolidated statement of comprehensive income, the consolidated statement of changes in shareholders' equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Group as at 31 December 2016, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.
We conducted our audit in accordance with Audit Act and 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 are independent of the Group in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code) 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 company was registered at Zagreb Commercial Court: MBS 030022053; paid-in initial capital: Kn 44,900.00; Board Members: Branislav Vrtačnik, Eric Daniel Olcott, Marina Tonžetić, Juraj Moravek, Dražen Nimčević and John Jozef H. Ploem; Bank: Zagrebačka banka d.d., Trg bana Josipa Jelačića 10, 10 000 Zagreb, bank account no. 2360000-1101896313; SWIFT Code: ZABAHR2X IBAN: HR2723600001101896313; Privredna banka Zagreb d.d., Radnička cesta 50, 10 000 Zagreb, bank account no. 2340009–1110098294; SWIFT Code: PBZGHR2X IBAN: HR3823400091110098294; Raiffeisenbank Austria d.d., Petrinjska 59, 10 000 Zagreb, bank account no. 2484008– 1100240905; SWIFT Code: RZBHHR2X IBAN: HR1024840081100240905.
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see http:// www.deloitte.com/hr/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.
Member of Deloitte Touche Tohmatsu Limited
According to the disclosures made in Note 6, the total sales of the Group for the financial year amount to HRK 913,383 thousand (2015: HRK 1,002,363 thousand).
Sales are important for assessing the Group's performance. There is a risk that the reported sales may be higher than the actual amount earned by the Group. Operating income is accounted for when a sales transaction is completed, the goods are delivered to the customer and when all economic risks are transferred by the Group. The Group generates revenue from foreign and domestic sales. The transfer of the risks and rewards takes place when goods or services are transferred to the customer, when the goods are paid and available at the location of a third or related party. The sales process is supported by internal controls implemented in the Group's IT systems.
Given a high degree of reliance on the IT systems and the potential impact of incorrect revenue accounting, we have concluded that the accuracy of the revenue is a key audit issue to be focused on during the audit.
Our substantive audit procedures included the test of the design and the operational efficiency of internal automated and manual controls at the Group, as well as tests of details so as to ensure that the revenue and the transactions are correctly accounted for. The key internal automatic control the Group relies on in asserting the correct recognition of revenue is the automatic matching of the order numbers and contract numbers in the Group's IT environment.
We tested the design and operating effectiveness of the key internal controls surrounding the sales process. Our test procedures included:
Based on the internal control test results, we defined the scope and nature of tests to be performed to consider whether the revenue is properly accounted for, which included test of details of internal documents, by matching them with the recognised sales and the related payment transactions. Based on all the audit evidence obtained by applying the procedures described above, we consider the methodology of revenue recognition to be appropriate.
Report on the Audit of the Consolidated Financial Statements (continued)
As disclosed in the Group's consolidated statement of comprehensive income, the total increase in the value of work in progress and finished products amounts to HRK 541 thousand (2015: a decrease of HRK 593 thousand), while Inventories stated in separate statement of financial position at December 31, 2016 amount to HRK 107,565 thousand (at December 31, 2015 HRK 97,786 thousand). Inventory items are subject to the risk of capitalisation of non-production costs, i.e. those costs that, according to IAS 2 "Inventories", do not qualify for capitalisation as other production overheads.
Other production overheads are important for the purpose of assessing the Group's performance, as they affect the carrying amount of finished products and hence the calculations of the Group's KPIs.
The Group defines the costs to be recognised as expenses for the period and those to be included in the carrying amount of finished products in its internal regulations, procedures and based on past experience and industry practice. The costs are reviewed and apportioned to the production process of the Group.
Given the high degree of reliance on the IT systems and the potential impact of incorrect inventory accounting, as well as the methodology used to perform the calculations, we have concluded that the accuracy in determining capitalised non-production costs is a key audit issue to be focused on during the audit.
Our audit procedures included mapping the production accounting process, identifying internal controls the Group has established over those processes and testing the production calculations by means of tests of details of capitalised costs. This included analysing the nature of the cost incurred, the cost centres, the functions of the costs in the Group's production process as well as the management estimate of the portion of non-production costs associated with the production process to be capitalised and the portion to be recognised directly as an expense for the period.
In addition, we re-performed and checked the calculations of the inventory values on the entire Group's inventory population in accordance with the Group's internal cost accounting methodology.
While performing the audit procedures, we identified all items split by internal allocation keys to production and non-production costs. We identified the costs we considered material and performed an assessment of the compliance of the capitalised costs with IAS 2. We considered the nature of the costs, the cost centres as well as the methodology for capitalising the costs of finished products. Based on all the audit evidence obtained by applying the procedures described above, we consider the methodology of capitalising non-production and production costs of finished products to be appropriate.
Management is responsible for the other information. The other information comprises the information included in the Annual Report, but does not include the consolidated annual financial statements and our auditor's report.
Our opinion on the consolidated annual financial statements does not cover the other information.
In connection with our audit of the consolidated annual financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated annual financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. With respect to the Management Board Report and the Declaration of application of the Code of Corporate Governance, which are included in the Annual Report, we have also performed the procedures prescribed by the Accounting Act. These procedures include examination of whether the Management Board Report and Declaration of application of the Code of Corporate Governance include required disclosures as set out in Article 21 of the Accounting Act and whether the Corporate Governance Strategy includes the information specified in Article 22 of the Accounting Act.
Based on the procedures performed during our audit, to the extent we are able to assess it, we report that:
Based on the knowledge and understanding of the Group and its environment, which we gained during our audit of the consolidated financial statements, we have not identified material misstatements in the other information. We have nothing to report in this respect.
The Management Board is responsible for the preparation and fair presentation of the consolidated annual financial statements in accordance with IFRSs, as adopted by the European Union, and for such internal control as the Management Board determines is necessary to enable the preparation of consolidated annual financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated annual financial statements, the Management Board 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 management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
The Supervisory Board is responsible for oversight of financial reporting process established by the Management Board.
Report on the Audit of the Consolidated Financial Statements (continued)
Our objectives are to obtain reasonable assurance about whether the consolidated annual 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 annual financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with 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, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated annual financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Audit of the Consolidated Financial Statements (continued)
The engagement partner on the audit resulting in this independent auditor's report is Branislav Vrtačnik.
Branislav Vrtačnik President of the Management Board
Vanja Vlak
Certified auditor
Deloitte d.o.o.
Zagreb, 19 April 2017
and certified auditor
Radnička cesta 80, 10 000 Zagreb, Croatia
| Notes | 2016 | 2015 | |
|---|---|---|---|
| Sales | 6 | 913,383 | 1,002,363 |
| Other income | 7 | 22,367 | 23,032 |
| Total income | 935,750 | 1,025,395 | |
| Increase/(decrease) in the value of work in progress and finished products | 541 | (593) | |
| Cost of raw material and supplies | 8 | (461,912) | (482,238) |
| Cost of goods sold | 9 | (26,377) | (52,627) |
| Service costs | 12 | (60,376) | (72,702) |
| Staff costs | 10 | (181,044) | (187,560) |
| Depreciation and amortisation | 11 | (77,115) | (73,198) |
| Other operating expenses | 13 | (64,688) | (109,243) |
| Provisions for risks and charges | 14 | (6,040) | (5,553) |
| Total operating expenses | (877,010) | (983,714) | |
| Profit from operations | 58,739 | 41,681 | |
| Financial income | 15 | 45,512 | 121,454 |
| Financial expenses | 16 | (98,308) | (153,231) |
| Share in the profit of associates | 17 | 43,172 | 36,458 |
| (Loss)/profit from financing activities | (9,625) | 4,681 | |
| Profit before taxation | 49,115 | 46,362 | |
| Income tax expense | 19 | 589 | (140) |
| Profit for the year | 49,704 | 46,222 |
| Notes | 2016 | 2015 | |
|---|---|---|---|
| Items that may be reclassified subsequently to profit or loss | |||
| Exchange differences on translation of a foreign operation, net | 19 | 24,120 | (34,908) |
| Items that will not be reclassified subsequently to profit or loss | |||
| Change in the revaluation reserve of non-current assets, net | (3,388) | (6,904) | |
| Other comprehensive income/(loss) for the year, net of income tax | 20,732 | (41,812) | |
| Total comprehensive income for the year | 70,436 | 4,410 | |
| Profit attributable to: | |||
| Equity holders of the Company | 49,704 | 46,225 | |
| Non-controlling interests | - | (3) | |
| Total comprehensive income attributable to: | |||
| Equity holders of the Company | 70,436 | 4,413 | |
| Non-controlling interests | - | (3) | |
| Basic and diluted earnings per share (in kunas and lipas) | 20 | 11.92 | 11.09 |
| ASSETS | Notes | 31.12.2016 | 31.12.2015 |
|---|---|---|---|
| Non-current assets | |||
| Intangible assets | 21 | 119,136 | 125,980 |
| Goodwill | 40 | 9,411 | 7,612 |
| Property, plant and equipment | 22 | 699,947 | 695,404 |
| Investment property | 23 | 8,064 | - |
| Investments in associates | 24 | 82,964 | 86,508 |
| Other financial assets | 25 | 4,961 | 46,085 |
| Long-term receivables | 95 | 14,176 | |
| Deferred tax assets | 18 | 5,764 | 22,399 |
| Total non-current assets | 930,341 | 998,164 | |
| Current assets | |||
| Inventories | 26 | 107,565 | 97,786 |
| Trade receivables | 27 | 132,831 | 143,355 |
| Other receivables | 28 | 40,462 | 34,209 |
| Current financial assets | 29 | 60,656 | 6,505 |
| Cash and cash equivalents | 30 | 10,422 | 12,384 |
| Prepaid expenses and accrued income | 31 | 58,478 | 45,190 |
| Total current assets | 410,416 | 339,429 | |
| TOTAL ASSETS | 1,340,757 | 1,337,593 |
| EQUITY AND LIABILITIES | Notes | 31.12.2016 | 31.12.2015 |
|---|---|---|---|
| Capital and reserves | |||
| Share capital | 32 | 419,958 | 419,958 |
| Reserves | 166,463 | 105,282 | |
| Retained earnings | 61,260 | 51,496 | |
| Profit for the year | 49,704 | 46,225 | |
| Equity attributable to the owners of the Company | 697,385 | 622,961 | |
| Non-controlling interests | - | (5) | |
| Total equity | 697,385 | 622,956 | |
| Long-term provisions | 33 | 3,743 | 3,483 |
| Long-term borrowings and other non-current liabilities |
34 | 185,759 | 291,080 |
| Total non-current liabilities | 189,502 | 294,563 | |
| Advances received | 35 | 34,442 | 23,613 |
| Trade payables | 36 | 143,681 | 180,511 |
| Short-term borrowings | 37 | 223,058 | 163,100 |
| Other current liabilities | 38 | 17,854 | 26,623 |
| Short-term provisions | 33 | 9,352 | 8,607 |
| Accrued expenses and deferred income | 39 | 25,483 | 17,620 |
| Total current liabilities | 453,870 | 420,074 | |
| Total liabilities | 643,371 | 714,637 | |
| TOTAL EQUITY AND LIABILITIES | 1,340,757 | 1,337,593 |
(All amounts are expressed in thousands of kunas)
| Share capital | Capital reserves |
Legal and statutory reserves |
General reserves |
Reserve from revaluation of long-term fixed assets |
Reserve from revaluation of long-term receivables |
Reserves for own shares |
Own shares | Retained earnings |
Exchange dif ferences on translation of a foreign operation |
Total equity attributable to the equity holders of the parent |
Non-con trolling interests |
Total | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Balance at 31 December 2015 | 419,958 | 191,971 | 6,139 | 25,410 | 25,257 | (112,292) | 3,107 | (3,107) | 97,721 | (31,203) | 622,961 | (5) | 622,956 |
| Profit for the year | - | - | - | - | - | - | - | - | 49,704 | - | 49,704 | - | 49,704 |
| Other comprehensive income for the year, net of income tax |
- | - | - | - | (3,388) | 31,292 | - | - | 6,452 | (7,169) | 27,187 | - | 27,187 |
| Total comprehensive income for the year |
- | - | - | - | (3,388) | 31,292 | - | - | 56,156 | (7,169) | 76,891 | - | 76,891 |
| Realisation of recognised exchange differences |
- | - | - | - | - | 44,802 | - | - | - | - | 44,802 | - | 44,802 |
| Dividends paid | - | - | - | (4,769) | - | - | - | - | (45,275) | - | (50,044) | - | (50,044) |
| Effect of the combination of business KZA |
- | - | - | - | - | - | - | - | 2,367 | - | 2,367 | - | 2,367 |
| Acquisition of a part of a non-controlling interest |
- | - | - | - | - | - | - | - | (5) | - | (5) | 5 | - |
| Release of own shares | - | - | - | 414 | - | - | (414) | 414 | - | - | 414 | - | 414 |
| Valuation of own shares | - | - | - | - | - | - | 1,182 | (1,182) | - | - | - | - | - |
| Balance at 31 December 2016 | 419,958 | 191,971 | 6,139 | 21,055 | 21,869 | (36,201) | 3,875 | (3,875) | 110,964 | (38,372) | 697,385 | - | 697,385 |
| Share capital | Capital reserves |
Legal and statutory reserves |
General reserves |
Reserve from revaluation of tangible and intan gible fixed assets |
Reserve from revaluation of long-term receivables / liabilities |
Reserves for own shares |
Own shares | Retained earnings |
Exchange dif ferences on translation of a foreign operation |
Total equity attributable to the equity holders of the parent |
Non-con trolling interests |
Total | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Balance at 31 December 2014 | 419,958 | 191,971 | 6,139 | 25,866 | 32,161 | (81,277) | 2,945 | (2,945) | 44,592 | (34,880) | 604,530 | (7) | 604,523 |
| Profit for the year | - | - | - | - | - | - | - | - | 46,225 | - | 46,225 | (4) | 46,221 |
| Other comprehensive income for the year, net of income tax |
- | - | - | - | (6,904) | (38,585) | - | - | 6,904 | 3,677 | (34,908) | - | (34,908) |
| Total comprehensive income for the year |
- | - | - | - | (6,904) | (38,585) | - | - | 53,159 | 3,677 | 11,317 | (4) | 11,313 |
| Realisation of recognised exchange differences |
- | - | - | - | - | 7,570 | - | - | - | - | 7,570 | - | 7,570 |
| Acquisition of a part of a non-controlling interest |
- | - | - | - | - | - | - | - | - | - | 6 | 6 | |
| Valuation of own shares | - | - | - | - | - | - | 162 | (162) | - | - | - | - | - |
| Purchase of own shares | - | - | - | (456) | - | - | - | - | - | - | (456) | - | (456) |
| Balance at 31 December 2015 | 419,958 | 191,971 | 6,139 | 25,410 | 25,257 | (112,292) | 3,107 | (3,107) | 97,721 | (31,203) | 622,961 | (5) | 622,956 |
(All amounts are expressed in thousands of kunas)
| Profit for the year | 49,704 | 46,222 | |
|---|---|---|---|
| Income tax (credit)/expense | 18 | (589) | 140 |
| Depreciation and amortisation | 11 | 77,115 | 73,198 |
| Net book value of disposed of property, plant and equipment, and intangible assets |
4,189 | 7,614 | |
| Increase in long-term and short-term provisions | 33 | 1,005 | 2,494 |
| Share in the profit of associates | 24 | (43,172) | (35,781) |
| Increase in accrued expenses and deferred income | 39 | 7,864 | 3,950 |
| (Increase)/decrease in accrued income and prepaid expenses | 31 | (13,289) | 40,099 |
| Exchange differences, net | 42,791 | 51,700 | |
| Profit from operations before working capital changes | 125,618 | 189,636 | |
| Increase in inventories | 26 | (9,779) | (3,471) |
| Decrease/(increase) in current and non-current trade receivables | 14,016 | (16,448) | |
| (Increase)/decrease in other receivables | (5,107) | 14,319 | |
| Decrease in trade payables | (8,580) | (62,155) | |
| Increase/(decrease) in advances received | 35 | 10,829 | (33,611) |
| Decrease in other short-term and long-term liabilities | (9,468) | (154) | |
| Interest paid | 37 | (18,567) | (24,903) |
| Net cash generated from operating activities | 98,961 | 63,213 | |
| Purchase of treasury shares | - | (456) | |
| Proceeds from the sale of shares and interests in unrelated companies | 129 | - | |
| Dividends from associates | 46,080 | 41,731 | |
| Decrease in deposits | 426 | 6,604 | |
| Proceeds from given long-term and short-term loans | 3,155 | 9,128 | |
| Proceeds from the sale of plant and equipment, and intangible assets | 6,708 | 5,643 | |
| Purchases of property, plant and equipment | 22 | (32,625) | (84,021) |
| Purchases of intangible assets | 21 | (21,662) | (26,428) |
| Investments in associates | - | (24) | |
| Net cash generated from/(used in) investing activities | 2,210 | (47,823) |
Cash flows from operating activities Note 2016 2015
| Cash flows from financing activities | Note | 2016 | 2015 |
|---|---|---|---|
| Dividends paid | (50,044) | (56) | |
| Repayment of finance leases | (3,528) | (2,856) | |
| Proceeds from received short-term and long-term borrowings | 34,37 | 100,065 | 180,537 |
| Repayment of short-term and long-term borrowings | 37 | (149,625) | (188,901) |
| Net cash used in financing activities | (103,133) | (11,276) | |
| Net (decrease)/increase in cash and cash equivalents | (1,961) | 4,114 | |
| Cash and cash equivalents at the beginning of the year | 12,384 | 7,806 | |
| Cash and cash equivalents at the end of the year | 30 | 10,422 | 12,384 |
AD Plastik d.d., Solin, a public limited company for the production of motor vehicle spare parts and accessories and of plastic masses (abbreviated firm: AD PLASTIK d.d.), was established by a decision of the Founding Assembly dated 15 June 1994 following the transformation of the socially-owned entity Autodijelovi – Solin pursuant to the decision on the transformation of ownership and the Decision of the Croatian Privatisation Fund No. 01-02/92-06/392 of 6 December 1993. The Company is the legal successor of the socially-owned entity Autodijelovi and, according to the decision of the Commercial Court in Split No. Fi 6215/94 of 28 June 1994, assumed all of its assets and liabilities as of the date of registration in the court register.
By decision of the General Shareholders' Assembly dated 21 June 2007, the Statute of the Company of 8 July 2004 was amended and a decision was made to increase the share capital of the Company in cash. Pursuant to the Decision No. Tt-07/2145-3 of 25 September 2007, the increase of the share capital by HRK 125,987,500 effected by OAO Saint Petersburg Investment Company was registered, and the total subscribed capital now amounts to HRK 419,958,400 and consists of 4,199,584 shares, with a nominal amount of HRK 100.00 each. Under the Share Transfer Agreement of 29 June 2009 OAO Spik transferred the shares of the AD Plastik d.d. to OAO Group Aerokosmicheskoe Oborutovanie, St. Petersburg, which transferred those shares to OAO HAK, Sankt Petersburg on 4 August 2011.
The Company has been included in the listing of public limited companies on the Official Market of the Zagreb Stock Exchange since 1 October 2010.
The primary activity of the Company comprises manufacture of motor vehicle spare parts and accessories. The registered activities of the Company comprise the following:
• representation of foreign companies;
• international forwarding and shipping
1) Closed-end company (ZAO) ADP Luga, established by an Articles of Association of the Closed-end Company ADP LUGA of 26 March 2007.
In early 2012 ZAO ADP Luga, Luga, changed both its official name and registered seat to ZAO AD Plastik, 248016, Skladskaja ulica 6, Kaluška oblast, Russian Federation. Ad Plastik d.d. Solin, holds all the Company's shares and is the sole owner of the Company.
The company's registered activities comprise the following:
On 6 July 2015 the company was renamed to public limited company AO AD Plastik (abbreviated firm: AO ADP).
AD Plastik d.d., Solin, has an equity share of 99.99 percent.
The company's registered activities comprise the following:
The registered activities of the Company comprise the following:
1) EURO Auto Plastik Systems s.r.l., Romania, established on 20 August 2002 as a limited liability company with its registered seat in Romania, Mioveni, ul. Uzinei, No. 1.
The equity share of AD Plastik d.d., Solin, in the company is 50 percent.
The principal activities of the associate are as follows:
The equity share of AD Plastik d.d., Solin, in the associate is 24 percent.
The principal activities of the associate are as follows:
An associate is an entity over which the Group has significant influence but which it does not control. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. Commonly, an equity share from 20 to 50 percent represents an investment in an associate.
In these consolidated financial statements, investments in associates are presented under the equity method.
At 31 December 2016, the number of staff employed was 2,121 (31 December 2015: 2,134).
| 31.12.2016 | 31.12.2015 | |
|---|---|---|
| AD Plastik d.d. | 1,193 | 1,203 |
| AO ADP / ZAO PHR | 521 | 529 |
| AD Plastik d.o.o. Novo Mesto | 6 | 3 |
| ADP d.o.o. Mladenovac | 172 | 186 |
| ZAO AD Plastik Kaluga | 229 | 213 |
| 2,121 | 2,134 |
At 31 December 2016 the number of staff employed by associates Centar za istraživanje i razvoj automobilske industrije d.o.o. Zagreb, Croatia, and EURO AUTO PLASTIC SYSTEMS Mioveni, Romania, was 579 (31 December 2015: 610).
| Members of the Supervisory Board: | Mandate from | Mandate to |
|---|---|---|
| Drandin Dmitrij Leonitovič (President) | 19. 10. 2015 | 19. 10. 2019 |
| Ivica Tolić (Deputy) | 20. 07. 2016 | 20. 07. 2020 |
| Hrvoje Jurišić | 20. 07. 2016 | 20. 07. 2020 |
| Marijo Grgurinović | 23. 07. 2015 | 23. 07. 2019 |
| Igor Anatoljevič Solomatin | 23. 07. 2015 | 23. 07. 2019 |
| Nikitina Nadežda Anatoljevna | 19. 10. 2015 | 19. 10. 2019 |
| Dolores Čerina | 02. 06. 2015 | 02. 06. 2019 |
| Members of the Company's Management Board |
Mandate from | Mandate to |
|---|---|---|
| Marinko Došen (President) | 20. 07. 2016 | 20. 07. 2020 |
| Katija Klepo | 20. 07. 2016 | 20. 07. 2020 |
| Mladen Peroš | 20. 07. 2016 | 20. 07. 2020 |
| Sanja Biočić | 20. 07. 2016 | 20. 07. 2020 |
The following amendments to the existing standards and new interpretation issued by the International Accounting Standards Board (IASB) and adopted by the EU are effective for the current reporting period:
• Amendments to IFRS 10 "Consolidated Financial Statements", IFRS 12 "Disclosure of Interests in Other Entities" and IAS 28 "Investments in Associates and Joint Ventures" – "Investment Entities: Applying the Consolidation Exception" – adopted by the EU on 22 September 2016 (effective for annual periods beginning on or after 1 January 2016),
The following amendments to the existing standards and new interpretation issued by the International Accounting Standards Board (IASB) and adopted by the EU are effective for the current reporting period:
• Amendments to IAS 27 "Separate Financial Statements" Equity Method in Separate Financial Statements, adopted by the EU on 18 December 2015 (effective for annual periods beginning on or after 1 January 2016),
• Amendments to various standards "Improvements to IFRSs (cycle 2010-2012)" resulting from the annual improvement project of IFRS (IFRS 2, IFRS 3, IFRS 8, IFRS 13, IAS 16, IAS 24 and IAS 38) primarily with a view to removing inconsistencies and clarifying wording, adopted by the EU on 17 December 2014 (amendments are to be applied for annual periods beginning on or after 1 February 2015),
The adoption of the amended and revised Standards and Interpretations has not lead to any material changes in the Company's financial statements.
At the date of authorisation of these financial statements, the following new standards and amendments to standards issued by IASB and adopted by the EU are not yet effective:
At present, IFRS as adopted by the EU to not significantly differ from regulations adopted by the International Accounting Standards Board (IASB) except for the following new standards, amendments to the existing standards and new interpretation, which were not endorsed for use in EU as at 18 April 2017 (the effective dates stated below is for IFRS in full):
• Amendments to IAS 7 "Statement of Cash Flows" Disclosure Initiative (effective for annual periods beginning on or after 1 January 2017),
• Amendments to IAS 12 "Income Taxes" Recognition of Deferred Tax Assets for Unrealised Losses (effective for annual periods beginning on or after 1 January 2017),
The Company anticipates that the adoption of IFRS 15 "Revenue from Contracts with Customers" will have effect on financial statements in the period of initial application, however, currently is not possible to determine their significance.
The Company anticipates the adoption of other stated standards and amendments of existing standards will not have a material effect on the financial statements in the period of initial application.
Issue of hedge accounting of financial assets and financial liabilities remains unregulated due to the fact that the principles of hedge accounting in the European Union have not yet been adopted. According to the Company's estimates, the application of hedge accounting to the portfolio of financial assets or liabilities pursuant to IAS 39: "Financial Instruments: Recognition and Measurement" as of the date of the statement of financial position would not significantly impact the financial statements.
Set out below are the principal accounting policies consistently applied in the preparation of the financial statements for the current and prior year.
The separate financial statements are prepared in accordance with the Accounting Act of the Republic of Croatia and International Financial Reporting Standards (IFRSs), as adopted by the European Union.
The Group maintains its accounting records in the Croatian language, in Croatian kuna and in accordance with Croatian laws and the accounting principles and practices observed by enterprises in Croatia.
The preparation of the financial statements in accordance with the Accounting Act of the Republic of Croatia and International Financial Reporting Standards (IFRSs) requires from management to make estimates and 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. These estimates are based on the information available as at the date of preparation of the financial statements, and actual results could differ from those estimates.
The consolidated financial statements of the Group represent aggregate amounts of assets, liabilities, capital and reserves of the Group as of 31 December 2016, and the results of its operations for the year then ended. The accounting policies are consistently applied by all the Group entities.
The consolidated financial statements of the Group comprise the consolidated financial statements of the Company and its subsidiaries.
Subsidiaries are entities controlled by the Company. Parent has control over the subsidiary if, based on its control, is exposed to variable returns and has the capability to influence the variable returns of the subsidiary. Intra-group balances and transactions, and any unrealised gains arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.
Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business less accumulated impairment losses, if any.
Revenue is measured at the fair value of the consideration received or receivable for products, goods or services sold in the regular course of operations.
Revenue is stated net of value added tax, estimated returns, rebates and discounts. The Group recognises revenue when the amount of the revenue can be measured reliably and when it is probable that future economic benefits will flow into the Group.
Product sales are recognized when the products are delivered to, and accepted by the customer and when the significant risks and rewards associated with the ownership of a product are transferred to the customer. Sales to customers with whom self- invoicing has been arranged are recognised upon receiving from such a customer the confirmation of delivery, i.e. when significant risks are transferred to the customer.
Accrued revenues are matched with contracts that are specifically concluded for developing an asset, or a group of assets, closely linked and interdependent on the design, technology and function, or their final use or application. The Group is required to recognize revenue according to the stage of completion of a contractual performance. Pursuant to IAS 18, when the outcome of a production contract can be estimated reliably, the revenue and costs associated with the contract should be recognized according to the stage of completion of the contractual performance at the date of the statement of financial position. Interest income
Interest income is recognised on a pro rata basis, using the effective interest method. Interest earned on balances with commercial banks (demand and term deposits) is credited to income for the period as it accrues. Interest on trade receivables is recognised as income when accrued.
Transactions in foreign currencies are translated into Croatian kunas at the rates of exchange in effect at the dates of the transactions. Cash, receivables and payables denominated in foreign currencies are retranslated at the rates of exchange in effect at the date of the statement of financial position. Gains and losses arising on translation are included in profit and loss for the year. At 31 December 2016, the official exchange rate of the Croatian kuna against 1 euro (EUR) was HRK 7.557787 (31 December 2015: HRK 7.635047 for 1 EUR).
Income tax expense represents the sum of the tax currently payable and deferred tax. Income tax is recognised in profit and loss, except where it relates to items recognised directly in equity, in which case it is also recognised in equity. Current tax represents tax expected to be paid on the basis of taxable profit for the year, using the tax rates enacted at the date of the statement of financial position, adjusted by appropriate prior-period tax liabilities. The income tax rate for years 2015 and 2016 amounts to 20 %.
Under Croatian tax regulations, group entities are not subject to taxation on a consolidated bases, and tax losses cannot be transferred within group entities. Subsidiaries are subject to taxation in their respective jurisdictions.
Deferred tax is calculated using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax assets and liabilities are measured at the tax rate expected to apply to taxable profit in the period in which the liability is expected to be settled or the asset realised, based on the tax rates in effect at the date of the statement of financial position. The income tax rate applicable to deferred tax assets is 18 %, given that the application of the new law is in force since 1 January 2017.
The measurement of deferred tax liabilities and assets reflects the amount that the Group expects, at the date of the statement of financial position, to recover or settle the carrying amounts of its assets and liabilities.
Deferred tax assets and liabilities are not discounted and are classified in the statement of financial position as non-current assets and/or non-current liabilities. Deferred tax assets are recognised only to the extent that it is probable that the related tax benefit will be realised. At each date of the statement of financial position, the Group reviews the unrecognised potential deferred tax assets and the carrying amount of the recognised deferred tax assets.
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 they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities.
In the case of a business combination, the tax effect is taken into account in calculating goodwill or in determining the excess of the acquirer's interest in the net fair value of the acquiree's identifiable assets, liabilities and contingent liabilities over cost.
Property, plant and equipment as well as intangible assets are recognised at purchase cost and subsequently reduced by accumulated depreciation/amortisation. The purchase cost comprises the purchase price, import duties and non-refundable sales taxes (on property, plant and equipment) and any directly attributable costs of bringing an asset to its working condition and location for its intended use, such as employee remuneration, professional fees directly arising from putting an asset into its working condition, test costs (for intangible assets), as well as all other costs directly attributable to brining an asset to a condition for its intended use. Maintenance and repairs, replacements and improvements of minor importance are expensed as incurred. Where it is obvious that expenses incurred resulted in an increase of expected future economic benefits to be derived from the use of an item of property, plant and equipment or intangible assets in excess of the originally assessed standard performance of the asset, they are added to the carrying amount of the asset. Gains or losses on the retirement or disposal of property, plant and equipment or intangible assets are included in profit or loss in the period in which they occur. Depreciation commences on putting an asset into use. Depreciation is provided so as to write town the cost or revalued amount of an asset other than land, property, plant and equipment and intangible assets under development over the estimated useful life of the asset using the straight-line method as follows:
| Tangible and intangible assets | Depreciation rates in 2016 |
Depreciation rates in 2015 |
|---|---|---|
| Buildings | 1.50 | 1.50 |
| Machinery | 7.00 | 7.00 |
| Tools, furniture, office and laboratory equipment and accessories, measuring and control instruments |
10.00 | 10.00 |
| Vehicles | 20.00 | 20.00 |
| IT equipment | 20.00 | 20.00 |
| Others | 10.00 | 10.00 |
| Projects | 20.00 | 20.00 |
| Software | 20.00 | 20.00 |
ues of the identifiable net assets of a business at the acquisition date. Goodwill is presented as an intangible asset.
Goodwill is tested for impairment anually or more often if the events and circumstances that indicate potential impairment occur. Goodwill is measured as cost of acquisition less accumulated losses due to impairment. Impairment losses on goodwill are not reversed. Gains and losses from the sale of a business include the net book value of goodwill, which relates to the sold business. For the purposes of impairment testing, goodwill is allocated to each of the Group's cash-generating units (or groups of cash-generating units) that is expected to benefit from the synergies of the combination.
Investment property is property held to earn rentals or for capital appreciation, or both. Investment properties are measured at cost, which includes transaction costs.
All of the Group's property interests held under operating leases are accounted for as investment properties.
An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use as well as when no future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period in which the property is derecognised.
At each reporting date, the Group reviews the carrying amounts of its property, plant and equipment as well as of its intangible assets to determine whether there is an indication that the assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
An associate is an entity over which the Company has significant influence, but no control over the entity. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but it is not control or joint control over those policies.
The results of operations of associates are incorporated in these financial statements using the equity method of accounting. Under this method, the Group's share in the profit or loss of associates is recognised in profit and loss from the date of acquisition of significant influence until the date on which significant influence is lost. The results of operations of associates are incorporated in these financial statements using the equity method of accounting.
Investments are recognised initially at cost and are subsequently adjusted by the changes in the acquirer's share of the net profit of the investee. Where the Group's share of losses in an associate is equal to or higher than the equity investment in the associate, no further losses are recognised, except where the Group has assumed an obligation or committed to make a payment on behalf of the associate.
Inventories of raw material and spare parts are stated at the lower of cost and net realisable value. Cost is determined using the weighted-average cost method. Net realisable value represents the estimated selling price in the ordinary course of business less all variable selling costs.
Cost of work in progress and finished products comprises the cost of raw material and supplies, direct labour and other costs and the portion of overheads directly attributable to work in progress.
Small inventory is written off when put in use.
The cost of product inventories i.e. the production costs is based on direct material used, the cost of which is determined using the weighted average cost method, then direct labour costs, and fixed overheads at the actual level of production which approximates the normal capacities, as well as variable overheads that are based on the actual use of the production capacities.
Merchandise on stock is recognised at purchase cost.
Trade debtors and prepayments are carried at nominal amounts less an appropriate allowance for impairment for uncollectible amounts.
Impairment is made whenever there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, the probability of bankruptcy proceedings at the debtor, or default or delinquency in payment are considered objective evidence of impairment. The amount of the impairment loss is determined as the difference between the assets carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate.
Management determines the level of impairment allowance for doubtful receivables based on a specific review of the recoverability of amounts owed by strategic customers of the ADP Group and of the overall ageing of other current receivables. The allowance for amounts doubtful of collection is charged to the statement of profit and loss for the year.
Cash comprises account balances with banks, cash in hand, deposits and securities at call or with maturities of less than three months.
Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event and it is probable (i.e. more likely than not) that an outflow of resources will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Provisions are reviewed at each date of the statement of financial position and adjusted to reflect the current best estimate. Where the effect of discounting is material, the amount of the provision is the present value of the expenditures expected to be required to settle the obligation, determined using the estimated risk free interest rate as the discount rate. Where discounting is used, the reversal of such discounting in each year is recognised as a financial expense and the carrying amount of the provision increases in each year to reflect the passage of time.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the date of the statement of financial position, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.
In the normal course of business, the Group makes payments, through salary deductions, to mandatory pension funds on behalf of its employees, as required by law. All contributions made to the mandatory pension funds are recognised as salary expense when accrued. The Group does not have any other retirement benefit plan and, consequently, has no other obligations in respect of the retirement benefits for its employees. In addition, the Company is not obliged to provide any other post-employment benefits.
Termination benefits are payable when employment is terminated by the Group before the normal retirement date. The Group recognises its termination benefit obligations in accordance with the applicable Union Agreement.
Otpremnine koje dospijevaju u razdoblju duljem od 12 mjeseci nakon izvještajnog datuma, diskontiraju se na njihovu sadašnju vrijednost.
For defined benefit retirement benefit plans, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at each reporting date. Actuarial gains and losses are recognised in the period in which they arise.
Past service cost is recognised immediately to the extent that the benefits are already vested. Otherwise, it is amortised on a straight-line basis over certain period until the benefits become vested.
Financial assets and financial liabilities included in the accompanying financial statements consist of cash and cash equivalents, marketable securities, trade and other receivables, trade and other payables, long-term receivables, loans, borrowings and investments. The details of the recognition and measurement of those items are presented in the corresponding policies.
Investments are recognised and derecognised on a trade date basis where the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, net of transaction costs, except for those financial assets classified as at fair value through profit or loss.
The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.
Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.
The effective interest method is a method of calculating the amortised cost of a financial asset or liability, and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial asset or liability, or, where appropriate, a shorter period.
Financial assets are assessed for indications of impairment at each date of the statement of financial position. A financial asset is impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted. For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate.
Impairment loss on a financial asset is recognised by reducing the carrying amount of the asset through the use of an allowance account. When a trade receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are recoded as income for the period.
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset have expired, when the asset is transferred and when substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the underlying contractual arrangement.
A part of the Group companies have elected the revaluation method as a method of subsequent measurement. When the carrying amount of such assets increases on revaluation, the increase is recognized in other comprehensive income and accumulated within equity as a revaluation reserve. Revaluation is performed with sufficient regularity to ensure that the carrying amount does not differ materially from the one that would be measured at fair value at the date of the statement of financial position. On derecognition of such an asset (as a result of retirement or disposal), the revaluation reserve accumulated in equity relating to that asset can be transferred directly to retained earnings.
The Group may have a monetary item as an amount receivable from, or payable to a foreign entity. An item neither planned to be settled nor likely to arise in the foreseeable future is essentially part of the entity's net investment in a foreign operation and accounted for in accordance with IAS 21. The Group recognizes foreign exchange differences arising from monetary items that are part of the net foreign investment initially in other comprehensive income and accumulates them under a separate component of equity – revaluation reserves.
On disposal of a net investment in a foreign operation, the entire balance of exchange differences is transferred from equity to profit or loss (as a reclassification adjustment).
Contingent liabilities are not recognised in financial statements. They are disclosed only when the possibility of outflow of resources embodying economic benefits is certain. A contingent asset is not recognised in the financial statements but it is disclosed when the inflow of economic benefits becomes probable.
Events after the date of the statement of financial position that provide additional information about the Group's position at that date (adjusting events) are reflected in the financial statements. Post-year-end events that are not adjusting events are disclosed in the notes when material.
The Group monitors and presents the results of its principal operating segments separately. The segment reporting is based on identified geographical areas. Certain financial information about the geographical segments are presented in Note 5.
The Group presents the revenue by geographical location, but does not monitor information about the long-term assets and the revenue generated in those areas from external customers.
In the application of the Group's accounting policies, which are described in Note 3, the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on past experience and other factors that are considered to be relevant. Actual results may differ from those estimates.
The estimates and underlying assumptions are continually reviewed. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of revision and future periods if the revision affects both current and future periods.
Areas of estimation include, but are not limited to, depreciation periods and residual values of property, plant and equipment, and of intangible assets, value adjustment of inventories, impairment of receivables, and litigation provisions. The key areas of management estimation in applying the Group's accounting policies that had a most significant impact on the amounts recognized in the financial statements were as follows:
As described in Note 3.7, the Group reviews the estimated useful lives of property, plant and equipment at the end of each annual reporting period. Property, plant and equipment are recognised initially at cost, less accumulated depreciation.
A deferred tax asset is recognized for unused tax losses only to the extent that it is probable that the related tax benefit will be realised. In determining the amount of deferred taxes that can be recognised significant judgements are required, which are based on the probable quantification of time and level of future taxable profits, together with the future tax planning strategy. In 2016, deferred tax assets on available tax differences were recognised.
Management provides for doubtful receivables based on a review of the overall ageing of all receivables and a specific review of significant individual amounts receivable. The allowance for amounts doubtful of collection is charged to the profit and loss for the year.
The cost of defined benefits is determined using actuarial estimates. Actuarial estimates involve assumptions about discount rates, future salary increases and the mortality or fluctuation rates. Because of the long-term nature of those plans, there is uncertainty surrounding those estimates.
The Group has adopted IFRS 8 Operating Segments with effect from 1 January 2009. IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segments and to assess their performance.
(in thousands of kunas)
Segment revenue analysis by country:
| 2016 | 2015 | |
|---|---|---|
| Slovenia | 390,767 | 428,796 |
| Russia | 229,242 | 271,697 |
| France | 133,355 | 117,435 |
| Germany | 36,443 | 52,304 |
| Italy | 32,272 | 24,483 |
| Spain | 25,431 | 16,406 |
| Romania | 18,093 | 9,135 |
| Croatia | 15,452 | 11,705 |
| Serbia | 14,762 | 16,030 |
| Slovakia | 7,619 | 4,070 |
| Other countries | 9,947 | 50,303 |
| 913,383 | 1,002,363 |
Sales represent amounts receivable (excluding excise and similar duties) for goods sold and services rendered.
| 2016 | 2015 | |
|---|---|---|
| Foreign sales | 897,931 | 990,658 |
| Domestic sales | 15,452 | 11,705 |
| 913,383 | 1,002,363 |
| 2016 | 2015 | |
|---|---|---|
| Service sales – cardboard packaging | 3,997 | 1,326 |
| Rental income | 3,240 | 2,978 |
| Income from recovery of written-off receivables (note 27) | 2,794 | 256 |
| Income on reconciliation of trade payables with suppliers | 2,538 | 307 |
| Income from the sale of non-current assets | 1,701 | 1,241 |
| Income from damages and insurance | 1,360 | 15 |
| Income from consumption of own products and services | 1,046 | 3,761 |
| Income from the sale of services to tenants | 1,003 | 525 |
| Income from waste management and disposal services | 342 | 2,121 |
| Income from reversal of provisions for penalties | 272 | - |
| Income from transport services | 121 | 112 |
| Income from accounting services | 16 | - |
| Other operating income | 3,937 | 10,390 |
| 22,367 | 23,032 |
Other operating income consist mostly of compensations for damages, overstock and other extraordinary income.
| 2016 | 2015 | |
|---|---|---|
| Cost of basic and auxiliary materials | 411,321 | 429,985 |
| Electricity | 18,529 | 19,441 |
| Other raw material and supplies | 32,062 | 32,812 |
| 461,912 | 482,238 |
| 2016 | 2015 | |
|---|---|---|
| Cost of goods and spare parts sold | 20,723 | 27,601 |
| Cost of direct material sold | 5,144 | 18,338 |
| Cost of goods sold | 510 | 6,661 |
| Other costs of goods sold | - | 27 |
| 26,377 | 52,627 |
(in thousands of kunas)
| 2016 | 2015 | |
|---|---|---|
| Net wages and salaries | 102,658 | 104,781 |
| Taxes and contributions out of salaries | 34,296 | 36,571 |
| Contributions on salaries | 25,656 | 28,508 |
| Other staff costs | 18,434 | 17,700 |
| 181,044 | 187,560 |
Other staff costs comprise per diems, overnight accommodation costs and business travel costs, costs of commutation and reimbursement of other business related costs.
| 2016 | 2015 | |
|---|---|---|
| Depreciation (Note 22) | 49,928 | 54,489 |
| Amortisation (Note 21) | 26,972 | 18,709 |
| Depreciation of investment property (Note 23) | 215 | - |
| 77,115 | 73,198 |
(in thousands of kunas)
| 2016 | 2015 | |
|---|---|---|
| Transport | 33,189 | 25,329 |
| Current and preventive maintenance of machinery | 8,609 | 5,847 |
| Rental costs | 8,436 | 9,966 |
| Tool modification costs | 2,303 | 2,115 |
| Telecommunication and information system costs | 1,809 | 1,365 |
| Municipal utility fees | 1,151 | 3,293 |
| Water supply | 1,007 | 1,261 |
| Forwarding and shipping costs | 308 | 551 |
| Other service costs | 3,566 | 22,975 |
| 60,376 | 72,702 |
(in thousands of kunas)
| 2016 | 2015 | |
|---|---|---|
| Vacation accruals | 4,322 | - |
| Litigation provisions | 1,243 | 1,710 |
| Provisions under actuarial calculations | 260 | 3,483 |
| Other provisions for risks and charges | 215 | 360 |
| 6,040 | 5,553 |
| 2016 | 2015 | |
|---|---|---|
| Temporary and occasional service costs - tools | 24,567 | 46,569 |
| Professional service cost | 9,995 | 6,277 |
| Insurance premiums | 2,598 | 2,165 |
| Customer complaints | 2,560 | 3,953 |
| Items directly written off | 2,488 | 1,801 |
| Other taxes, duties and fees | 2,348 | 2,928 |
| Other non-material expenses | 1,690 | 5,323 |
| Communal fees for the use of construction plots | 1,507 | 1,706 |
| Entertainment | 1,426 | 733 |
| Bank and payment operation charges | 1,232 | 4,020 |
| Professional training costs | 1,189 | 638 |
| Property tax | 652 | 533 |
| Occupational health and safety services | 586 | 601 |
| Measuring equipment and laboratory tests | 488 | 584 |
| Net book value of tangible and intangible fixed assets | 475 | 2,842 |
| Property security services | 394 | 362 |
| Costs of goods provided free of charge | 271 | 920 |
| Support to employees and their families | 240 | 233 |
| Forest reproduction levies | 198 | 209 |
| Gifts, donations and sponsorships of up to 2 % of prior-period revenue |
186 | 150 |
| Other expenses | 9,598 | 26,696 |
| 64,688 | 109,243 |
Service costs for tools comprise of purchase price of tools and dependant costs of completion.
Other operating expenses consist mostly of damages paid, shortfalls and other extraordinary expenses.
(in thousands of kunas)
| 2016 | 2015 | |
|---|---|---|
| Foreign exchange gains | 44,740 | 111,741 |
| Interest income | 763 | 9,675 |
| Other financial income | 9 | 38 |
| 45,512 | 121,454 |
| 2016 | 2015 | |
|---|---|---|
| Balance at 1 January | 22,399 | 15,568 |
| Recognised deferred tax assets | (16,635) | 6,831 |
| Balance at 31 December | 5,764 | 22,399 |
| 2016 | Opening balance |
Charged to the statement of comprehensive income |
Closing balance |
|---|---|---|---|
| Temporary differences: | |||
| Provisions for long-service and termi nation benefits |
4,043 | (1,145) | 2,898 |
| Reserves from translation of foreign currencies, net |
26,619 | (19,379) | 7,240 |
| Movements in reserves on revaluation of property, plant and equipment and intangible fixed assets |
(8,263) | 3,889 | (4,374) |
| Balance at 31 December | 22,399 | 16,635 | 5,764 |
| 2015 | Opening balance |
Charged to the statement of comprehensive income |
Closing balance |
|---|---|---|---|
| Temporary differences: | |||
| Provisions for long-service and termi nation benefits |
3,806 | 237 | 4,043 |
| Reserves from translation of foreign currencies, net |
24,766 | 1,854 | 26,619 |
| Movements in reserves on revaluation of tangible and intangible fixed assets |
(13,004) | 4,741 | (8,263) |
| Balance at 31 December | 15,568 | 6,831 | 22,399 |
| 16. FINANCIAL EXPENSES |
(in thousands of kunas) | |
|---|---|---|
| 2016 | 2015 | |
| Foreign exchange losses | 74,334 | 123,634 |
| Interest expense | 23,974 | 29,597 |
| 98,308 | 153,231 |
| 17. | SHARE IN THE PROFIT FROM | (in thousands of kunas) |
|---|---|---|
| INVESTMENTS IN ASSOCIATES |
| 2016 | 2015 | |
|---|---|---|
| Share in the profit of associates recognised as income | 43,172 | 36,458 |
| 43,172 | 36,458 |
Income tax comprises the following:
| 2016 | 2015 | |
|---|---|---|
| Deferred tax | 589 | 299 |
| Current tax | - | (439) |
| 589 | (140) |
Reconciliation between the accounting and tax results is shown as follows:
| 2016 | 2015 | |
|---|---|---|
| Accounting profit before tax and deferred taxation | 49,115 | 46,362 |
| Effect of tax base increasing items | 21,986 | 6,330 |
| Effect of tax base decreasing items | (107,118) | (2,425) |
| Tax base | (36,017) | 50,267 |
| Tax at the weighted average rate | - | 4,444 |
| Tax reliefs | - | (4,883) |
| Income tax expenses before effects of deferred taxation | - | (439) |
| Deferred tax recognised in profit or loss | 589 | 299 |
| Income tax expense | 589 | (140) |
The income tax rate for years 2015 and 2016 amounts to 20 %. The income tax rate applicable to deferred tax assets is 18 %, given that the application of the new law is in force since 1 January 2017.
(in thousands of kunas)
| 2016 | 2015 | |
|---|---|---|
| Balance at beginning of the year | (143,495) | (116,157) |
| Exchange differences on translation of a foreign operation | 31,943 | (44,552) |
| Income tax on exchange rate losses from translation of a foreign operation |
(7,823) | 9,646 |
| Exchange differences on translation of a foreign operation, net |
24,120 | (34,908) |
| Realization of exchange differences | 44,802 | 7,570 |
| Balance at end of year | (74,573) | (143,495) |
(in thousands of kunas)
Basic earnings per share are determined, by dividing the Group's net profit by the weighted average number of ordinary shares in issue during the year, excluding the average number of ordinary shares redeemed and held by the Group as treasury shares. The basic earnings per share equal the diluted earnings per share, as there are currently no share options that would potentially increase the number of issued shares.
| 2016 | 2015 | |
|---|---|---|
| Net profit attributable to the shareholders of the Group | 49,704 | 46,222 |
| Weighted average number of shares | 4,169,725 | 4,167,822 |
| Basic and diluted earnings per share (in kunas and lipas) | 11.92 | 11.09 |
| Licences | Software | Projects | Other intangible assets |
Intangible assets under development |
Total | |
|---|---|---|---|---|---|---|
| Cost | ||||||
| Balance at 31 December 2014 | 55 | 7,792 | 196,211 | 1,301 | 34,588 | 239,947 |
| Additions | - | - | - | - | 26,428 | 26,428 |
| Assets put into use | 722 | 2,535 | 18,923 | 526 | (22,705) | - |
| Disposals and retirements | - | (3,940) | (31,666) | 324 | 816 | (34,465) |
| Effect of exchange differences | (74) | (156) | (5,886) | (364) | (968) | (7,449) |
| Balance at 31 December 2015 | 702 | 6,231 | 177,582 | 1,787 | 38,158 | 224,461 |
| Additions | - | - | - | - | 21,662 | 21,662 |
| Assets put into use | - | 454 | 32,552 | 24 | (33,030) | - |
| Disposals and retirements | (55) | (613) | (3,838) | (4) | (2,470) | (6,979) |
| Effect of exchange differences | (16) | 5 | 3,725 | (32) | 230 | 3,912 |
| Balance at 31 December 2016 | 631 | 6,077 | 210,021 | 1,776 | 24,551 | 243,055 |
| Accumulated amortisation | ||||||
| Balance at 31 December 2014 | - | 4,284 | 108,916 | 15 | - | 113,215 |
| Charge for the year (Note 11) | 443 | 950 | 17,305 | 11 | - | 18,709 |
| Disposals and retirements | - | (597) | (29,467) | 1 | - | (30,063) |
| Effect of exchange differences | (22) | (86) | (3,267) | (4) | - | (3,380) |
| Balance at 31 December 2015 | 421 | 4,551 | 93,487 | 23 | - | 98,481 |
| Charge for the year (Note 11) | 126 | 604 | 26,148 | 94 | - | 26,972 |
| Disposals and retirements | - | (392) | (692) | - | - | (1,084) |
| Effect of exchange differences | (10) | (34) | (407) | 2 | - | (449) |
| Balance at 31 December 2016 | 536 | 4,728 | 118,536 | 119 | - | 123,920 |
| Net book value | ||||||
| At 31 December 2015 | 282 | 1,680 | 84,095 | 1,764 | 38,158 | 125,980 |
| At 31 December 2016 | 95 | 1,349 | 91,485 | 1,656 | 24,551 | 119,136 |
Projects comprise investments in the development of new products that are expected to generate revenue in future periods.
Consequently, the costs are amortized over the period in which the related economic benefits flow into the Group.
| Land | Buildings | Plant and equip ment |
Assets under development |
Other tangible assets |
Prepayments for tangible assets |
Total | |
|---|---|---|---|---|---|---|---|
| Cost | |||||||
| Balance at 31 December 2014 | 142,392 | 314,676 | 690,497 | 69,796 | 360 | 23 | 1,217,745 |
| Additions | - | - | - | 60,317 | - | - | 60,317 |
| Transfer from assets under development | - | 37,416 | 78,761 | (116,177) | - | - | - |
| Disposals and retirements | - | - | (17,186) | - | - | - | (17,186) |
| Effect of exchange differences | (1,259) | (11,076) | (46,263) | (3,392) | (147) | - | (60,156) |
| Balance at 31 December 2015 | 141,133 | 341,016 | 707,790 | 10,544 | 213 | 23 | 1,200,720 |
| Additions | - | - | - | 31,390 | - | 696 | 32,625 |
| Revaluation | 1,832 | 4,118 | - | - | - | - | 5,950 |
| Transfer from assets under development | 7,307 | 5,657 | 23,829 | (37,282) | 488 | - | - |
| Disposals and retirements | - | - | (9,436) | (710) | - | - | (10,146) |
| Transferred to investment property (Note 23) | - | (14,303) | - | - | - | - | (14,303) |
| Effect of exchange differences | 580 | 14,965 | 57,589 | 83 | 108 | - | 73,326 |
| Balance at 31 December 2016 | 150,852 | 351,453 | 779,773 | 4,566 | 810 | 719 | 1,288,173 |
| Accumulated depreciation | |||||||
| Balance at 31 December 2014 | - | 74,994 | 396,843 | - | (139) | - | 471,698 |
| Charge for the year (Note 11) | - | 4,139 | 50,072 | - | 278 | - | 54,489 |
| Disposals and retirements | - | - | (8,346) | - | - | - | (8,346) |
| Effect of exchange differences | - | - | (12,525) | - | - | - | (12,525) |
| Balance at 31 December 2015 | - | 79,133 | 426,044 | - | 139 | - | 505,316 |
| Charge for the year (Note 11) | - | 6,056 | 43,771 | - | 102 | - | 49,929 |
| Disposals and retirements | - | - | (5,143) | - | - | - | (5,143) |
| Transferred to investment property (Note 23) | - | (6,024) | - | - | - | - | (6,024) |
| Effect of exchange differences | - | 1,783 | 42,308 | - | 57 | - | 44,149 |
| Balance at 31 December 2016 | - | 80,949 | 506,980 | - | 297 | - | 588,226 |
| Net book value | |||||||
| At 31 December 2015 | 141,133 | 261,883 | 281,746 | 10,544 | 75 | 23 | 695,404 |
| At 31 December 2016 | 150,852 | 270,505 | 272,793 | 4,566 | 513 | 719 | 699,947 |
At 31 December 2016 the estimated value of land and buildings pledged as collateral with commercial banks amounts to HRK 344,007 thousand (31 December 2015: HRK 360,948 thousand), and the balance of short-term and long-term borrowings covered by the collateral amounts to HRK 283,988 thousand (31 December 2015: HRK 374,740 thousand). Total value of liabilities under financial leases at December 31 2016 amounts to HRK 2,239 thousand (31 December 2015: HRK 4,743 thousand).
| Buildings | Total | |
|---|---|---|
| Cost | ||
| At 31 December 2014 | - | - |
| At 31 December 2015 | - | - |
| Reclassified from property, plant and equipment (Note 22) | 14,303 | 14,303 |
| At 31 December 2016 | 14,303 | 14,303 |
| Accumulated depreciation | ||
| At 31 December 2014 | - | - |
| At 31 December 2015 | - | - |
| Reclassified from property, plant and equipment (Note 22) | 6,024 | 6,024 |
| Charge for the year (Note 11) | 215 | 215 |
| At 31 December 2016 | 6,239 | 6,239 |
| Net book value | ||
| At 31 December 2015 | - | - |
| At 31 December 2016 | 8,064 | 8,064 |
In 2016, the part of the building used to rent office space was reclassified. Income from the rental of the building in 2016 amounts to HRK 404 thousand, and the depreciation charge for the year amounts to HRK 215 thousand.
(in thousands of kunas)
| Name of associate | Principal activity | Country of incorpora tion and business |
Ownership interest in % | Amount of equity investment, HRK'000 |
||
|---|---|---|---|---|---|---|
| 2016 | 2015 | 2016 | 2015 | |||
| EURO AUTO PLASTIC SYSTEMS | Manufacture of other motor vehicle spare parts and acces sories |
Mioveni, Romania | 50.00% | 50.00% | 82,928 | 86,481 |
| CENTAR ZA ISTRAŽIVANJE I RAZVOJ AUTOMOBILSKE INDUSTRIJE |
Automotive industry research and development |
Zagreb, Croatia | 24.00 % | 24.00 % | 35 | 27 |
| 82,964 | 86,508 |
| Name of associate | Country of incorpora tion and business |
Amount of equity investment |
Share in the result for the year 2015 |
New investments made during the period |
Dividends paid | Amount of equity investment |
|---|---|---|---|---|---|---|
| 31.12.2014 | 31.12.2015 | |||||
| EURO AUTO PLASTIC SYSTEMS | Mioveni, Romania | 81,732 | 46,712 | - | (41,963) | 86,481 |
| FAURECIA ADP HOLDING | Nanterre, France | 10,934 | (10,934) | - | - | - |
| CENTAR ZA ISTRAŽIVANJE I RAZVOJ AUTOMOBILSKE INDUS TRIJE |
Zagreb, Croatia | - | 3 | 24 | - | 27 |
| Total | 92,666 | 35,781 | 24 | (41,963) | 86,508 |
| Name of associate | Country of incorpora tion and business |
Amount of equity investment |
Share in the re sult for the year 2016 |
New investments made during the period |
Dividends paid | Amount of equity investment |
|---|---|---|---|---|---|---|
| 31.12.2015 | 31.12.2016 | |||||
| EURO AUTO PLASTIC SYSTEMS | Mioveni, Romania | 86,481 | 43,164 | - | (46,716) | 82,929 |
| CENTAR ZA ISTRAŽIVANJE I RAZVOJ AUTOMOBILSKE INDUS TRIJE |
Zagreb, Croatia | 27 | 8 | - | - | 35 |
| Total | 86,508 | 43,172 | - | (46,716) | 82,964 |
Euro Auto Plastic Systems s.r.l. is considered to be related because the management of its operations is under the control of Faurecia Automotive Holdings s.a.s. In 2016 AD PLASTIK d.d., Solin, sold its entire 40-percent equity share in Faurecia ADP Holding Nanterre and as of December 31 2016s has no more financial investment in named associate.
(in thousands of kunas)
(in thousands of kunas)
(in thousands of kunas)
| 31.12.2016 | 31.12.2015 | |
|---|---|---|
| Long-term loans to unrelated companies | 6,400 | 9,788 |
| Other financial assets | 62 | 62 |
| Current portion of long-term loan receivables (Note 29) | (1,500) | (1,500) |
| Long-term loans to associates | - | 37,735 |
| 4,961 | 46,085 |
Long-term loans have been provided to associated companies at an interest rate of 5.14% percent (2015: 20.16 %) and mature in period 2019-2022. Long-term loans to third parties have been provided at an interest rate of 6.00% percent (2015: 6.00 %), with the ultimate maturity in 2021.
| 31.12.2016 | 31.12.2015 | |
|---|---|---|
| Raw material and supplies on stock | 68,929 | 65,039 |
| Finished products | 19,117 | 18,576 |
| Merchandise on stock | 13,940 | 9,907 |
| Work in progress | 5,442 | 4,264 |
| Advances for inventory | 137 | - |
| 107,565 | 97,786 |
| 31.12.2016 | 31.12.2015 | |
|---|---|---|
| Foreign trade receivables | 131,357 | 140,470 |
| Domestic trade receivables | 3,701 | 6,273 |
| Impairment allowance on receivables | (2,226) | (3,388) |
| 132,831 | 143,355 |
The average credit period on sales is 63 days (2015: 70 days). The Group has provided for all for all sued debtors, regardless of the past due period, as well as for all receivables that are past due and assessed as doubtful of collection.
Movements in the impairment allowance on doubtful trade receivables are presented as follows:
| 2016 | 2015 | |
|---|---|---|
| Balance at beginning of the year | 3,361 | 7,417 |
| Written-off during the year | (567) | (4,056) |
| Collected during the year (Note 7) | (2,794) | - |
| Total impairment allowance on domestic trade receivables | - | 3,361 |
| Balance at beginning of the year | 27 | 1,152 |
| New impairments and writte-offs during the year | 2,199 | (869) |
| Collected during the year (Note 7) | - | (256) |
| Total impairment allowance on foreign trade receivables | 2,226 | 27 |
| Total impairment allowance | 2,226 | 3,388 |
All receivables provided against are under litigation or included in bankruptcy estate. Ageing analysis of impaired receivables:
| 31.12.2016 | 31.12.2015 | |
|---|---|---|
| Over 365 days | 2,226 | 3,388 |
| 2,226 | 3,388 |
| 31.12.2016 | 31.12.2015 | |
|---|---|---|
| 0 - 365 days | 19,529 | 19,430 |
| Over 365 days | 2,313 | - |
| 21,842 | 19,430 |
(in thousands of kunas)
Receivables from associated companies:
| 31.12.2016 | 31.12.2015 | |
|---|---|---|
| Trade receivables | 5,453 | 4,883 |
| 5,453 | 4,883 | |
Short-term loans to unrelated companies represent loans given to Faurecia ADP LLC, with maturity date in second quarter of 2017. Most of interest receivables also relate to above mentioned loans and will be collected in second quarter of 2017.
Deposits relate to a deposit of AO ADP/ZAO PHR for a term of six months and with an interest rate of 8.15 percent, with a maturity of four months.
| 31.12.2016 | 31.12.2015 | |
|---|---|---|
| Current account balance | 10,422 | 12,384 |
| 10,422 | 12,384 |
Accrued income in the amount of HRK 50,185 thousand (31 December 2015: HRK 31,739 thousand) relates to the value of investment made in the manufacture of tools for a known customer.
| 31.12.2016 | 31.12.2015 | |
|---|---|---|
| Other accrued income on tools | 50,185 | 31,739 |
| Prepaid expenses | 3,702 | 7,280 |
| Other accrued income | 4,592 | 6,171 |
| 58,478 | 45,190 |
Amounts due from the State and state institutions comprise receivables from the State Budget in respect of VAT refund, refunds from the Croatian Health Insurance Fund and similar.
Prepayments made comprise mainly prepayments for purchases of production equipment and tools.
| 31.12.2016 | 31.12.2015 | |
|---|---|---|
| Short-term loans | 46,651 | 2,259 |
| Current portion of given long-term loans (Note 25) | 1,500 | 1,500 |
| Interest receivable | 9,704 | 389 |
| Deposits | 2,802 | 2,357 |
| 60,656 | 6,505 |
Subscribed capital amounts to HRK 419,958 thousand and consists of 4,199,584 shares, with a nominal value of HRK 100.00 per share (2015: HRK 419,958 thousand; 4,199,584 shares, with a nominal value of HRK 100.00 each).
Shareholders holding over 2 percent of the shares at 31 December 2016 were as follows:
| Shareholder | Headquarters | Number of shares |
Ownership in % |
Type of account |
|---|---|---|---|---|
| OAO HOLDING AUTOKOMPONENTI | Saint Petersburg, Russia | 1,259,875 | 30.00% | Primary account |
| ADDIKO BANK D.D. / RAIFFEISEN MANDATORY PENSION FUND | Zagreb, Croatia | 269,462 | 6.42% | Custody account |
| ADDIKO BANK D.D. / RAIFFEISEN VOLUNTARY PENSION FUND | Zagreb, Croatia | 148,645 | 3.54% | Custody account |
| ADP-ESOP D.O.O. | Zagreb, Croatia | 130,532 | 3.11% | Primary account |
| ADDIKO BANK D.D. PBZ CO B-CATEGORY MANDATORY PF (1/1) | Zagreb, Croatia | 119,640 | 2.85% | Custody account |
| HRVATSKA POŠTANSKA BANKA D.D./ KAPITALNI FOND D.D. | Zagreb, Croatia | 116,541 | 2.78% | Custody account |
| SOCIETE GENERALE-SPLITSKA BANKA D.D./ / ERSTE PLAVI B-CATEGORY MANDATORY PF | Split, Croatia | 115,353 | 2.75% | Custody account |
| ERSTE & STEIERMARKISCHE BANK D.D./ / JOINT CUSTODY ACCOUNT FOR A FOREIGN LEGAL PERSON | Zagreb, Croatia | 105,349 | 2.51% | Custody account |
| SOCIETE GENERALE-SPLITSKA BANKA D.D./ / AZ B-CATEGORY MANDATORY PENSION FUND | Split, Croatia | 93,900 | 2.24% | Custody account |
| PBZ D.D./ STATE STREET CLIENT ACCOUNT | Zagreb, Croatia | 92,948 | 2.21% | Custody account |
| Other shareholders | - | 1,747,339 | 41.61% | - |
| Total: | 4,199,584 | 100.00% |
According to the Union (Collective) Agreement, the Company has the obligation to pay long-service (jubilee awards), retirement-related and other benefits to employees. The Company operates a defined benefit plan for qualifying employees. Benefits payable upon retirement and long-service benefits are defined in the Collective Agreement and employment agreements. No other post-retirement benefits are provided.
Long-service benefits are paid for full years of service in the month of the current year in which the service is determined as completed.
The present value of defined benefit obligations arising from long-service benefits and benefits payable upon retirement is determined using the Projected Credit Unit method and serves as the basis for arriving at the past and current service costs, the interest expense and the actuarial gain or loss.
Key assumptions used in calculating the required provisions are the discount rate of 3.60 % and the fluctuation rate of 6.60 %.
| 31.12.2016 | 31.12.2015 | |
|---|---|---|
| Long-term borrowings | 268,498 | 340,517 |
| Long-term borrowings for purchase of machinery |
16,520 | 28,488 |
| 285,018 | 369,005 | |
| Current portion of long-term borrowings (Note 37) |
(99,259) | (77,925) |
| 185,759 | 291,080 |
| Short-term | Long-term | |||
|---|---|---|---|---|
| 31.12.2016 | 31.12.2015 | 31.12.2016 | 31.12.2015 | |
| Jubilee awards (long-service benefits) |
- | - | 1,474 | 1,759 |
| Retirement benefits | - | - | 2,269 | 1,724 |
| Legal actions | 4,474 | 5,430 | - | - |
| Vacation accrual | 4,477 | 2,631 | - | - |
| Other provisions | 401 | 546 | - | - |
| 9,352 | 8,607 | 3,743 | 3,483 |
Movement in provisions is presented as follows:
| Jubilee awards (long-ser vice benefits) |
Termina tion and retirement benefits |
Legal actions |
Provision for taxes |
Vacation accrual |
Other pro visions |
Total | |
|---|---|---|---|---|---|---|---|
| At 1 January 2015 | 1,302 | 688 | 3,720 | 51 | 3,197 | 638 | 9,596 |
| Increase/(decrease) of provisions |
457 | 1,036 | 1,710 | (51) | (566) | (92) | 2,494 |
| At 31 December 2015 | 1,759 | 1,724 | 5,430 | - | 2,631 | 546 | 12,090 |
| Increase/(decrease) of provisions |
(285) | 545 | (956) | - | 1,846 | (145) | 1,005 |
| At 31 December 2016 | 1,474 | 2,269 | 4,474 | - | 4,477 | 401 | 13,095 |
Long-term borrowings are mainly those realized through programs of HBOR and are used to finance capital investments and development projects. Instruments of collateral provided for the for longterm loans include mortgage on real estate and/or equipment and payment instruments. The existing long-term loans are ultimately repayable in the period 31 March 2017 – 31 December 2021.
In 2016, the weighted average interest rate on the long-term loans in 2016 was 3.85 percent (2015: 4.40%).
The Group regularly meets all its obligations arising from the loans and observes all the conditions specified in the underlying contracts.
Movements in long-term borrowings during the year:
| 2016 | 2015 | |
|---|---|---|
| Balance at 1 January | 291,080 | 212,344 |
| New loans raised | - | 116,906 |
| Exchange differences, net | 763 | (173) |
| Reclassification to short-term (Note 37) | (106,084) | (66,658) |
| Balance at 31 December | 185,759 | 291,080 |
| 35. ADVANCES RECEIVED |
(in thousands of kunas) | |||
|---|---|---|---|---|
| 31.12.2016 | 31.12.2015 | |||
| Foreign customers | 31,942 | 16,441 | ||
| Domestic customers | 2,500 | 7,172 | ||
| 34,442 | 23,613 |
Advances received from foreign customers represent cash advanced from known customers for ordered tools.
| 31.12.2016 | 31.12.2015 | |
|---|---|---|
| Foreign trade payables | 113,733 | 99,987 |
| Domestic trade payables | 29,948 | 80,524 |
| 143,681 | 180,511 |
Average payment period for trade payables during 2016 equalled to 99 days (2015: 110 days).
(in thousands of kunas)
| 31.12.2016 | 31.12.2015 | |
|---|---|---|
| Short-term loans - principal payable | 122,052 | 84,108 |
| Current portion of long-term borrowings (Note 34) | 99,259 | 77,925 |
| Short-term borrowings - interest payable | 1,747 | 1,067 |
| 223,058 | 163,100 |
The short-term borrowings were used to finance development projects and for working capital purposes. Instruments of collateral provided for the short-term borrowings are payment instruments. Of the total balance of the short-term borrowings, 75 percent represent revolving facilities and approved overdrafts on current accounts, with the limits renewable on an annual basis.
The short-term borrowings represent loans provided by commercial banks, with an average interest rate of 4.54 percent (2015: 5.49 %).
| 2016 | 2015 | |
|---|---|---|
| Balance at 1 January | 163,100 | 221,712 |
| New loans raised | 100,065 | 63,631 |
| Current portion of long-term borrowings (Note 34) | 106,084 | 66,658 |
| Invoiced interest | 20,355 | 26,002 |
| Exchange differences | 1,646 | (1,099) |
| Interest paid | (18,567) | (24,903) |
| Repayments of received loans | (149,625) | (188,901) |
| Balance at 31 December | 223,058 | 163,100 |
(in thousands of kunas)
| 31.12.2016 | 31.12.2015 | |
|---|---|---|
| Amounts due to employees | 9,075 | 9,899 |
| Due to the State and State institutions | 8,647 | 15,042 |
| Other current liabilities | 133 | 1,682 |
| 17,854 | 26,623 |
| 31.12.2016 | 31.12.2015 | |
|---|---|---|
| Accrued tool expenses | 19,677 | 15,400 |
| Due to the State and State institutions | 663 | 29 |
| Other current liabilities | 5,143 | 2,191 |
| 25,483 | 17,620 |
| 31.12.2016 | 31.12.2015 | |
|---|---|---|
| Goodwill | 9,411 | 7,612 |
| 9,411 | 7,612 |
Recognized goodwill relates to the difference between the net assets of KZA and the value paid for the purchase of KZA by ZAO AD Plastik Kaluga.
Pursuant to International Financial Reporting Standard 3 "Business Combinations", the Group recognized at 31 December 2013 the business combination at provisional amounts because the fair values of identifiable assets, liabilities and contingent liabilities of the acquiree could be determined only provisionally. The Group acquired the control of the acquiree at 31 December 2013 and completed the recognition of the business combination within 12 months from the acquisition.
| 2016 | 2015 | |
|---|---|---|
| At 1 January | 7,612 | 8,908 |
| Effect of exchange differences | 1,799 | (1,296) |
| At 31 December | 9,411 | 7,612 |
The total remuneration provided to the members of the Supervisory Board, the Management Board and executive directors in 2016 amounts to HRK 12,459 thousand (2015: HRK 15,576 thousand).
(in thousands of kunas)
The Group's gearing ratio, expressed as the ratio of net debt to equity, is as follows:
| 31.12.2016 | 31.12.2015 | |
|---|---|---|
| Short-term borrowings (Note 37) | 223,058 | 163,100 |
| Long-term borrowings (Note 34) | 185,759 | 291,080 |
| Cash and cash equivalents (Note 30) | (10,422) | (12,384) |
| Deposits (Note 29) | (2,802) | (2,357) |
| Net debt | 395,593 | 439,439 |
| Equity | 697,385 | 622,956 |
| Net debt-to-equity ratio | 56.73% | 70,54% |
Net debt includes credits extended to purchase goods in the amount of HRK 16,520 thousand (31 December 2015: HRK 28,488 thousand).
Equity consists of share capital, reserves, own shares and retained earnings.
| 31.12.2016 | 31.12.2015 | |
|---|---|---|
| Financial assets | 238,004 | 333,040 |
| Loans and receivables | 224,780 | 318,299 |
| Cash and cash equivalents and deposits (Notes 29 and 30) |
13,224 | 14,741 |
| Financial liabilities | 596,147 | 669,885 |
| Trade and other payables | 187,330 | 215,705 |
| Borrowings (Notes 34 and 37) | 408,817 | 454,180 |
At the reporting date there are no significant concentrations of credit risk for loans and receivables designated at fair value through the statement of comprehensive income. Excluded from the balance are amounts receivable from and payable to the State.
The Finance function of the Group, which coordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Group, performs risk management at Company's by means of internal risk reports, which analyse exposures by the degree and magnitude of risks, and implementing activities to manage the risks effectively and minimise them. These risks include market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk and cash flow interest rate risk. The Group does not enter into, or trade in financial instruments, including derivative financial instruments, for speculative purposes.
The Group's operations expose it to price risk, which is the risk associated with changes in the prices of key raw materials, transportation, other production costs and strong pressure from competitors and customers. However, in the automotive industry, open product price calculations prevail, and the price fluctuations of raw materials and other costs, either the upward or downward, are being adjusted with customers through selling price on a monthly, quarterly or semi-annual basis (depending on the customer). The largest markets on which the Group provides its services and sells its products comprise the EU market and the market of the Russian Federation. The Management Board of the Group determines the prices of its products for each foreign market separately.
Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. The Group's interest rate risk arises from its borrowings. The interest rate risk exposure is low, as there are no significant financial instruments at variable rates.
Credit risk is the risk that a party to a financial instrument will not meet its obligations arising therefrom and hence incur losses to the other party. The assets that expose the Group to credit risk consist mainly of loans and trade receivables. Loans are granted to its subsidiaries and as such credit risk is under the control of the Group. Trade receivables are presented net of allowance for bad and doubtful accounts.
The five largest customers of the Group are Revoz, Slovenia; Reydel Automotive France; OAO Avtovaz Russia; Hella Saturnus, Slovenia; and Renault Russia. In 2016 the Company generated 61.41% percent of its sales from its major customer, Renault and its subsidiaries (2015: 61.23 %).
It is the policy of the Group to transact with financially sound companies where the risk of default is minimised.
The Group undertakes certain transactions denominated in foreign currencies. Hence, exposures to exchange rate fluctuations arise. The carrying amounts of the Group's foreign-currency denominated monetary assets and monetary liabilities at the reporting date are provided in the table below using the middle exchange rates of the Croatian National Bank:
| As at Assets |
Liabilities | Net FX position | ||||
|---|---|---|---|---|---|---|
| 31 De cember |
2016 | 2015 | 2016 | 2015 | 2016 | 2015 |
| EUR | 115,921 | 131,250 | 286.864 | 587,527 | (170,943) | (456,277) |
| RUB | 108,062 | 90,612 | 19,561 | 57,868 | 88,501 | 32,744 |
| RSD | 3,748 | 3,744 | 4,901 | - | (1,153) | 3,744 |
| USD | 118 | 356 | 218 | 1,029 | (100) | (673) |
| GBP | 35 | 3 | - | 239 | 35 | (236) |
| 227,884 | 225,965 | 311,544 | 646,663 | (83,660) | (420,698) |
The Group is mainly exposed to the risk of changes in the exchange rates for the euro (EUR) and the Russian rouble (RUB). The following table details the Group's sensitivity to a 2 percent change of the Croatian kuna against the euro and a 10 percent change of the Croatian kuna against the Russian rouble in 2016 and 2015. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and their translation at the year-end. A negative figure below indicates a decrease in profit and a positive figure where the Croatian kuna changes against the relevant currency for the percentage specified above.
| EUR impact | 2016 | 2015 |
|---|---|---|
| Change in exchange differences (2%) | +/- 3,419 | +/- 9,119 |
| RUB impact | 2016 | 2015 |
| Change in exchange differences (10%) | +/- 8,850 | +/- 3,275 |
Ultimate responsibility for liquidity risk management rests with the Management Board. The Group manages its liquidity using banking facilities (overdrafts) and by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.
The following tables detail the Group's remaining contractual maturity for its non-derivative financial assets and liabilities. The tables have been drawn up based on the undiscounted cash flows of financial assets and liabilities based on the earliest date on which the Group can require payment i.e. can be required to pay.
| 2016 | Weighted average interest rate |
Up to 1 month | 1 to 3 months | 3 months to 1 year | 1 to 5 years | Over 5 years | Total |
|---|---|---|---|---|---|---|---|
| Assets | |||||||
| Non-interest bearing | - | 82,401 | 67,249 | 22,638 | 99 | 62 | 172,449 |
| Interest bearing | 6.58% | 2,818 | - | 58,194 | 5,297 | - | 66,309 |
| 85,219 | 67,249 | 80,832 | 5,396 | 62 | 238,758 | ||
| Liabilities | |||||||
| Non-interest bearing | - | 80,585 | 64,423 | 42,323 | - | - | 187,331 |
| Interest bearing | 3.76% | 4,569 | 44,139 | 183,116 | 198,674 | 29 | 430,527 |
| 85,154 | 108,562 | 225,439 | 198,674 | 29 | 617,858 |
| 2015 | Weighted average interest rate |
Up to 1 month | 1 to 3 months | 3 months to 1 year | 1 to 5 years | Over 5 years | Total |
|---|---|---|---|---|---|---|---|
| Assets | |||||||
| Non-interest bearing | - | 65,184 | 74,935 | 41,952 | - | 86,508 | 268,579 |
| Interest bearing | 9.48% | 41 | - | 4,887 | 65,435 | 1,709 | 72,072 |
| 65,225 | 74,935 | 46,839 | 65,435 | 88,217 | 340,651 | ||
| Liabilities | |||||||
| Non-interest bearing | - | 84,468 | 81,151 | 46,535 | 3,551 | - | 215,705 |
| Interest bearing | 4.62% | 3,693 | 25,960 | 145,108 | 280,770 | 37,022 | 492,553 |
| 88,161 | 107,111 | 191,643 | 284,321 | 37,022 | 708,258 |
Financial instruments held to maturity in the ordinary course of business are carried at the lower of cost and net amount less repaid portion.
The fair value represents the amount for which an asset could be exchanged between knowledgeable, willing parties in an arm's length transaction, except in the event of a forced sale or liquidation. The fair value of a financial instrument is the price quoted on a stock exchange or arrived at using the discounted cash flow method.
At 31 December 2016 the carrying amounts of cash, receivables, short-term liabilities, accrued expenses, short-term borrowings and other financial instruments approximate their fair values due to the short-term maturity of these assets and liabilities.
After 31 December 2016, there were no events that would have a significant impact on the financial statements for the year 2016, respectively they are not of such significance to the Group to require disclosure in the notes to the financial statements.
Based on the Management's estimate, the Group had no material contingent liabilities at 31 December 2016 which would require to be disclosed in the notes to the consolidated financial statements.
As at 31 December 2016 there were no material legal actions with a potential negative outcome for the Group other than those reflected in these consolidated financial statements.
These financial statements were approved by the Management Board of AD Plastik d.d. and authorised for issue on 19 April 2017.
For AD Plastik d.d., Solin:
Marinko Došen, President of the Management Board
Katija Klepo, Member of Management Board
Sanja Biočić, Member of Management Board
Mladen Peroš, Member of Management Board
Separate Financial Statements for the Year Ended 31 December 2016 together with Independent Auditor's Report
| Responsibility for the separate financial statements | 131 |
|---|---|
| Independent Auditor's Report | 132 |
| Separate statement of comprehensive income | 140 |
| Separate statement of financial position | 141 |
| Separate statement of changes in shareholders' equity | 142 |
| Separate statement of cash flows | 144 |
| Notes to the separate financial statements | 146 |
Pursuant to the Accounting Act of the Republic of Croatia, the Management Board is responsible for ensuring that separate financial statements are prepared for each financial year in accordance with International Financial Reporting Standards (IFRSs), as adopted in the European Union, which give a true and fair view of the financial position and results of operations of AD Plastik d.d. Solin (the "Company") for that period.
After making enquiries, the Management Board has a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. For this reason, the Management Board continues to adopt the going concern basis in preparing the separate financial statements.
In preparing those separate financial statements, the Management Board is responsible for:
The Management Board is responsible for keeping proper accounting records, which disclose with reasonable accuracy at any time, the financial position of the Company and their compliance with the Croatian Accounting Act. The Management Board is also responsible for safeguarding the assets of the Company, and hence, for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Signed on behalf of the Management Board:
For AD Plastik d.d. Solin by:
Marinko Došen, President of the Management Board
Katija Klepo, Member of Management Board
Sanja Biočić, Member of Management Board
Mladen Peroš, Member of Management Board
AD Plastik d.d. Matoševa 8, 21210 Solin, Republic of Croatia
19 April 2017
To the owners of AD Plastik d.d., Solin:
We have audited the separate annual financial statements of AD Plastik d.d., Solin ("the Company") which comprise the separate statement of financial position as at 31 December 2016 and the separate statement of comprehensive income, the separate statement of changes in equity and the separate statement of cash flows for the year then ended, and notes to the separate financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying separate annual financial statements present fairly, in all material respects, the financial position of the Company as at 31 December 2016, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.
We conducted our audit in accordance with Audit Act and International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Annual Separate Financial Statements section of our report. We are independent of the Company in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code) 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 separate annual financial statements of the current period. These matters were addressed in the context of our audit of the separate annual financial statements as a whole and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
The company was registered at Zagreb Commercial Court: MBS 030022053; paid-in initial capital: Kn 44,900.00; Board Members: Branislav Vrtačnik, Eric Daniel Olcott, Marina Tonžetić, Juraj Moravek, Dražen Nimčević and John Jozef H. Ploem; Bank: Zagrebačka banka d.d., Trg bana Josipa Jelačića 10, 10 000 Zagreb, bank account no. 2360000-1101896313; SWIFT Code: ZABAHR2X IBAN: HR2723600001101896313; Privredna banka Zagreb d.d., Radnička cesta 50, 10 000 Zagreb, bank account no. 2340009–1110098294; SWIFT Code: PBZGHR2X IBAN: HR3823400091110098294; Raiffeisenbank Austria d.d., Petrinjska 59, 10 000 Zagreb, bank account no. 2484008– 1100240905; SWIFT Code: RZBHHR2X IBAN: HR1024840081100240905.
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see http:// www.deloitte.com/hr/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.
Member of Deloitte Touche Tohmatsu Limited
Report on the Audit of the Separate Financial Statements (continued)
According to the disclosures made in Note 5, the total sales of the Company for the financial year amount to HRK 701,423 thousand (2015: HRK 753,704 thousand).
Sales are important for assessing the Company's performance. There is a risk that the reported sales may be higher than the actual amount earned by the Company. Operating income is accounted for when a sales transaction is completed, the goods are delivered to the customer and when all economic risks are transferred by the Company. The Company generates income from foreign and domestic sales. The transfer of the risks and rewards takes place when goods or services are transferred to the customer, when the goods are paid and available at the location of a third or related party. The sales process is supported by internal controls embedded in Company's IT systems.
Given a high degree of reliance on the IT systems and the potential impact of incorrect revenue accounting, we have concluded that the accuracy of the revenue is a key audit issue to be focused on during the audit.
Our substantive audit procedures included the test of the design and the operational efficiency of internal automated and manual controls at the Company, as well as tests of details so as to ensure that the revenue and the transactions are correctly accounted for. The key internal automatic control the Company relies on in asserting the correct recognition of revenue is the automatic matching of the order numbers and contract numbers in the Company's IT environment.
We tested the design and operating effectiveness of the key internal controls surrounding the sales process. Our test procedures included:
Based on the internal control test results, we defined the scope and nature of tests to be performed to consider whether the revenue is properly accounted for, which included test of details of internal documents, by matching them with the recognised sales and the related payment transactions. Based on all the audit evidence obtained by applying the procedures described above, we consider the methodology of revenue recognition to be appropriate.
Report on the Audit of the Separate Financial Statements (continued)
As disclosed in the Company's separate statement of comprehensive income, the total increase in the value of work in progress and finished products in 2016 amounts to HRK 1,528 thousand (2015: a decrease of HRK 3,256 thousand), while Inventories stated in separate statement of financial position at December 31, 2016 amount to HRK 54,644 thousand (at December 31, 2015 HRK 50,539 thousand). Inventory items are subject to the risk of capitalisation of non-production costs, i.e. those costs that, according to IAS 2 "Inventories", do not qualify for capitalisation as other production overheads.
Other production overheads are important for assessing the Company's performance, as they affect the carrying amount of finished products and hence the calculations of the Company's KPIs.
The Company defines the costs to be recognised as expenses for the period and those to be included in the carrying amount of finished products in its internal regulations, procedures and based on past experience and industry practice. The costs are reviewed and apportioned to the production process at the Company.
Given a high degree of reliance on manual calculations performed and the potential impact of incorrect inventory accounting, as well as the methodology used to perform the calculation, we have concluded that the accuracy of the capitalisation of non-production is a key audit issue to be focused on during the audit.
Our audit procedures included mapping the production accounting process, identifying internal controls the Company has established over those processes and testing the production calculations by means of tests of details of capitalised costs. This included analysing the nature of the cost incurred, the cost centres, the functions of the costs in the Company's production process as well as the management estimate of the portion of non-production costs associated with the production process to be capitalised and the portion to be recognised directly as an expense for the period.
In addition, we re-performed and checked the calculations of the inventory values on the entire Company's inventory population in accordance with the Company's internal cost accounting methodology.
In addition, we re-performed and checked the calculations of the inventory values on the entire Company's inventory population in accordance with the Company's internal cost accounting methodology.
While performing the audit procedures, we identified all items split by internal allocation keys to production and non-production costs. We identified the costs we considered material and performed an assessment of the compliance of the capitalised costs with IAS 2. We considered the nature of the costs, the cost centres as well as the methodology for capitalising the costs of finished products. Considering all the audit evidence above, we consider the methodology of capitalising non-production and production costs of finished products to be appropriate.
Report on the Audit of the Separate Financial Statements (continued)
As disclosed in Note 23 to the Company's separate financial statements, investments in subsidiaries and associates amount to HRK 66,163 thousand (2015: HRK 66,155 thousand).
The investments are subject to the risk of impairment in accordance with International Accounting Standard (IAS) 36 "Impairment of Assets".
In accordance with IAS 36 and accounting policy adopted, the Company reviews, at least annually, the carrying amounts of its investments in subsidiaries and associates using generally accepted methodologies for performing impairment tests. The Company tests its investments in subsidiaries and associates for impairment using the discounted cash flow (DCF) method. This includes using assumptions such as the discount rates used, and exchange rates if applicable, cash flow projections, etc.
Investments are considered to be impaired if there is objective evidence of impairment such as a reduced level of economic benefits flowing in from the investment, as a result of which the carrying amount of the investment in a subsidiary or associate becomes impaired.
Because of the significance of these judgements and the size of the investments in the subsidiaries and associates, the risk of impairment is a key area of focus.
Our procedures included evaluation and critical assessment of impairment testing process, taking into consideration the following:
We reviewed the accuracy of the pro-forma statement of comprehensive income of the identified companies to identify any instances of inconsistently estimated net operating profits of those companies. Based on the audit evidence obtained, we concluded that the pro-forma statements of comprehensive income are appropriate. We assessed the time horizon used in the investment impairment model and, based on the audit evidence obtained, we concluded that the time horizon of five (5) years is a common industry practice and therefore appropriate.
Based on the re-performed calculations of the remaining inputs and a verification of their respective sources, we concluded that the DCF calculations for the identified subsidiaries and associates are appropriate.
Report on the Audit of the Separate Financial Statements (continued)
During the financial year the Company entered into significant transactions with its subsidiaries and associates, which are considred to be its related companies. At 31 December 2016 the Company's exposure with respect to receivables from its related companies amounts to HRK 278,844 thousand (2015: HRK 302,590 thousand) and its liabilities to related parties amount to HRK 5,537 thousand (2015: HRK 17,882 thousand). Based on the separate statement of comprehensive income, the Company's operating income from related companies amounts to HRK 58,546 thousand (2015: HRK 86,227 thousand) and its operating expenses with respect to related companies amount to HRK 41,703 thousand (2015: HRK 20,607 thousand). Other related-party transactions include financial income in the amount of HRK 50,481 thousand (2015: HRK 47,373 thousand) and financial expenses in the amount of HRK 181 thousand (2015: HRK 87 thousand).
In addition to the transactions involving legal entities, the Company also transacted with the members of its Supervisory and Managing Boards as well as its executives, who are classified as related parties in accordance with International Accounting Standard (IAS) 24.
Given the Company's high exposure to the related parties and the long-term nature of the exposures, the related-party transactions have been identified as one of key audit issues..
Our audit procedures included identifying the Company's related parties. The related parties were identified based on the following audit procedures:
Given the Company's exposure to its related parties, the audit procedures applied to substantiate the related-party transactions involved tests of details on the outstanding balances and the amounts arisen from the related-party transactions. The tests of details substantiate all the open balances, income and expenses arising from the Company's related-party transactions. The balances and transactions were substantiated by means of confirmation letters in which we sought from the responsible persons at the subsidiaries and associates to confirm their exposures to the Company. After having identified the manner in which the Company monitors its related-party transactions, we independently reconciled the balances with the list of transactions. Due to the importance of the related-party transactions, we also assessed the appropriateness and completeness of the related-party disclosures. Based on all the audit evidence obtained by applying the procedures described above, we consider that transactions with related parties are appropriately presented in separate financial statements.
Report on the Audit of the Separate Financial Statements (continued)
Management is responsible for the other information. The other information comprises the information included in the Annual Report, but does not include the separate annual financial statements and our auditor's report.
Our opinion on the separate annual financial statements does not cover the other information.
In connection with our audit of the of the separate annual financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the separate annual financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. With respect to the Management Board Report and the Declaration of application of the Code of Corporate Governance, which are included in the Annual Report, we have also performed the procedures prescribed by the Accounting Act. These procedures include examination of whether the Management Board Report and Declaration of application of the Code of Corporate Governance include required disclosures as set out in Article 21 of the Accounting Act and whether the Corporate Governance Strategy includes the information specified in Article 22 of the Accounting Act.
Based on the procedures performed during our audit, to the extent we are able to assess it, we report that:
Based on the knowledge and understanding of the Company and its environment, which we gained during our audit of the unconsolidated separate financial statements, we have not identified material misstatements in the other information. We have nothing to report in this respect.
The Management Board is responsible for the preparation and fair presentation of the of the separate annual financial statements in accordance International Financial Reporting Standards (IFRSs) as adopted by the European Union and for such internal control as the Management Board determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the separate annual financial statements, the Management Board is responsible for assessing the Company'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 management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Supervisory Board is responsible for oversight of financial reporting process as established by the Management Board.
Report on the Audit of the Separate Financial Statements (continued)
Our objectives are to obtain reasonable assurance about whether the separate annual 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 separate annual financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the separate financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the separate annual financial statements, including the disclosures, and whether the separate annual financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with 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, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the separate annual financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Audit of the Separate Financial Statements (continued)
Certified auditor
The engagement partner on the audit resulting in this independent auditor's report is Branislav Vrtačnik.
Vanja Vlak
Branislav Vrtačnik President of the Management Board and certified auditor
Deloitte d.o.o.
Zagreb, 19 April 2017
Radnička cesta 80, 10 000 Zagreb, Croatia
| Notes | 2016 | 2015 | |
|---|---|---|---|
| Sales | 5 | 701,423 | 753,704 |
| Other income | 6 | 16,453 | 14,325 |
| Total income | 717,876 | 768,029 | |
| Increase / (decrease) in the value of work in progress and finished products | 1,528 | (3,256) | |
| Cost of raw material and supplies | 7 | (340,681) | (365,394) |
| Cost of goods sold | 8 | (62,704) | (56,203) |
| Service costs | 9 | (45,978) | (55,908) |
| Staff costs | 10 | (132,489) | (133,677) |
| Depreciation and amortisation | 11 | (48,918) | (42,878) |
| Other operating expenses | 12 | (50,283) | (76,394) |
| Provisions for risks and charges | 13 | (3,842) | (5,194) |
| Impairment of investments in subsidiaries and associates | 14 | - | (30,220) |
| Total operating expenses | (683,367) | (769,124) | |
| Profit / (loss) from operations | 34,509 | (1,095) | |
| Financial income | 15 | 72,696 | 65,388 |
| Financial expenses | 16 | (68,312) | (32,041) |
| Profit from financing activities | 4,384 | 33,347 | |
| Profit before taxation | 38,894 | 32,252 | |
| Income tax expense | 17 | (547) | 299 |
| Profit for the year | 38,347 | 32,551 | |
| Items that may be included subsequently in profit or loss | |||
| Exchange differences on translation of a foreign operation, net | 18 | 5,436 | (12,273) |
| Items that are not subsequently reclassified to profit or loss | |||
| Changes in revaluation reserves of fixed assets, net | (1,696) | - | |
| Total comprehensive income for the year | 42,087 | 20,278 | |
| Earnings per share | |||
| Basic and diluted earnings per share (in kunas and lipas) | 19 | 9.20 | 7.81 |
ASSETS Notes 31.12.2016 31.12.2015 Non-current assets Intangible assets 20 93,749 99,186 Property, plant and equipment 21 490,887 511,442 Investment property 22 8,064 - Investments in subsidiaries and associates 23 66,163 66,155 Other financial assets 24 86,950 121,108 Long-term receivables 25 135,937 212,619 Deferred tax assets 17 3,161 11,968 Total non-current assets 884,910 1,022,478 Current assets Inventories 26 54,644 50,539 Trade receivables 27 139,730 113,878 Other receivables 28 27,431 24,716 Current financial assets 29 65,054 21,244 Cash and cash equivalents 30 4,033 3,414 Prepaid expenses and accrued income 31 48,634 36,922 Total current assets 339,526 250,713 TOTAL ASSETS 1,224,436 1,273,191
Shareholders' equity and liabilities Notes 31.12.2016 31.12.2015 Share capital 32 419,958 419,958 Reserves 207,413 192,463 Profit for the year 38,347 32,551 Total shareholders' equity 665,718 644,972 Long-term provisions 33 3,576 3,483 Long-term borrowings 34 174,412 265,343 Total non-current liabilities 177,988 268,826 Advances received 35 12,249 10,805 Trade payables 36 124,815 163,556 Short-term borrowings 37 211,430 147,381 Other current liabilities 38 11,136 14,302 Short-term provisions 33 6,980 8,062 Accrued expenses 39 14,119 15,287 Total current liabilities 380,729 359,393 Total liabilities 558,717 628,219 TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 1,224,436 1,273,191
| ASSETS | Notes | 31.12.2016 | 31.12.2015 |
|---|---|---|---|
| Non-current assets | |||
| Intangible assets | 20 | 93,749 | 99,186 |
| Property, plant and equipment | 21 | 490,887 | 511,442 |
| Investment property | 22 | 8,064 | - |
| Investments in subsidiaries and associates | 23 | 66,163 | 66,155 |
| Other financial assets | 24 | 86,950 | 121,108 |
| Long-term receivables | 25 | 135,937 | 212,619 |
| Deferred tax assets | 17 | 3,161 | 11,968 |
| Total non-current assets | 884,910 | 1,022,478 | |
| Current assets | |||
| Inventories | 26 | 54,644 | 50,539 |
| Trade receivables | 27 | 139,730 | 113,878 |
| Other receivables | 28 | 27,431 | 24,716 |
| Current financial assets | 29 | 65,054 | 21,244 |
| Cash and cash equivalents | 30 | 4,033 | 3,414 |
| Prepaid expenses and accrued income | 31 | 48,634 | 36,922 |
| Total current assets | 339,526 | 250,713 |
| Share capital | Capital reserves |
Legal reserve | General reserves |
Reserve from revaluation of non-cur rent tangible assets |
Reserve from revaluation of non-current receivables |
Reserves for own shares |
Treasury shares |
Retained earnings |
Total | |
|---|---|---|---|---|---|---|---|---|---|---|
| Balance at 31 December 2015 |
419,958 | 191,565 | 6,129 | 25,410 | 1,696 | (45,062) | 3,108 | (3,108) | 45,275 | 644,972 |
| Profit for the year | - | - | - | - | - | - | - | - | 38,347 | 38,347 |
| Other comprehensive income for the year, net of income taxes |
- | - | - | - | (1,696) | 5,436 | - | - | - | 3,740 |
| Total comprehensive income for the year |
- | - | - | - | (1,696) | 5,436 | - | - | 38,347 | 42,087 |
| Dividends paid | - | - | - | (4,769) | - | - | - | - | (45,275) | (50,044) |
| Disposal of own (treasury) shares |
- | - | - | 415 | - | - | (415) | 415 | - | 415 |
| Valuation of own (treasury) shares |
- | - | - | - | - | - | 1,182 | (1,182) | - | - |
| Realization of the recog- nised exchange differences (Note 18) |
- | - | - | - | - | 28,289 | - | - | - | 28,289 |
| Balance at 31 December 2016 |
419,958 | 191,565 | 6,129 | 21,056 | - | (11,337) | 3,875 | (3,875) | 38,347 | 665,718 |
| Share capital | Capital reserves |
Legal reserve | General reserves |
Reserve from revaluation of non-cur rent tangible assets |
Reserve from revaluation of non-current receivables |
Reserves for own shares |
Treasury shares |
Retained earnings |
Total | |
|---|---|---|---|---|---|---|---|---|---|---|
| Balance at 31 December 2014 |
419,958 | 191,565 | 6,129 | 25,866 | 1,696 | (32,686) | 2,945 | (2,945) | 12,724 | 625,252 |
| Profit for the year | - | - | - | - | - | - | - | - | 32,551 | 32,551 |
| Other comprehensive income for the year, net of income taxes |
- | - | - | - | - | (12,273) | - | - | - | (12,273) |
| Total comprehensive income for the year |
- | - | - | - | - | (12,273) | - | - | 32,551 | 20,278 |
| Exchange differences recog- nised (Note 18) |
- | - | - | - | - | (103) | - | - | - | (103) |
| Valuation of own (treasury) shares |
- | - | - | - | - | - | 163 | (163) | - | - |
| Purchase of own (treasury) shares |
- | - | - | (456) | - | - | - | - | - | (456) |
| Balance at 31 December 2015 |
419,958 | 191,565 | 6,129 | 25,410 | 1,696 | (45,062) | 3,108 | (3,108) | 45,275 | 644,972 |
(All amounts are expressed in thousands of kunas)
| Cash flows from operating activities | Notes | 2016 | 2015 |
|---|---|---|---|
| Profit for the year | 38,447 | 32,551 | |
| Adjusted for: | |||
| Income tax expense/(credit) | 17 | 547 | (299) |
| Depreciation and amortisation | 11 | 48.918 | 42.878 |
| Value adjustment of investments in subsidiaries and associates | 14 | - | 30,220 |
| Net book value of retired property, plant and equipment and intangible assets | 20,21 | 2,399 | 103 |
| Interest expense and exchange rates recognised in profit or loss | 42,853 | 23,534 | |
| Interest income | 15 | (4,282) | (14,368) |
| Increase in long-term and short-term provisions | 33 | 1,642 | 2,638 |
| Profit from operations before working capital changes | 130.424 | 117,257 | |
| (Increase)/decrease in inventories | 26 | (4,104) | 6,343 |
| Increase in current and non-current trade receivables | (12,947) | (7,515) | |
| (Decrease)/increase in other receivables | 28 | (2,715) | 10,651 |
| Decrease in trade payables | (38,947) | (57,416) | |
| Increase/(decrease) of advances received | 5,423 | (45,183) | |
| (Decrease)/increase in other current liabilities | (5,797) | 2,131 | |
| (Decrease)/increase in accrued expenses and deferred income | 39 | (1.168) | 5.010 |
| (Increase)/decrease in accrued income and prepaid expenses | 31 | (11,712) | 25,585 |
| Interest paid | 37 | (17,608) | (23,944) |
| Cash flows from operating activities | 40,850 | 32,919 | |
| Cash flows from investing activities | |||
| New investments in subsidiaries and associates | 23 | (7) | (24) |
| Interest received | 9,875 | 1,275 | |
| Purchases of property, plant and equipment | 21 | (17,768) | (28,462) |
| Purchases of intangible assets | 20 | (19,240) | (23,973) |
| Proceeds from sale of property, plant and equipment and intangible assets | 3,624 | 11,933 | |
| New loans given | (1,770) | - | |
| Decrease in given long-term and short-term loans | 16,337 | 16,437 | |
| Decrease/(increase) in deposits | 436 | (428) | |
| Proceeds from sale of financial assets | 129 | - | |
| Dividends received | 46,080 | 41,731 | |
| Cash generated from investing activities | 37,686 | 18,490 |
| Cash flows from financing activities | Notes | 2016 | 2015 |
|---|---|---|---|
| Purchase of treasury shares | - | (456) | |
| Dividends paid | (50,044) | - | |
| Proceeds from borrowings | 34,37 | 95,927 | 180,537 |
| Repayment of borrowings | 37 | (120,459) | (227,021) |
| Repayment of financial lease | (3,339) | (2,856) | |
| Cash used in financing activities | (77,916) | (49,796) | |
| Increase in cash and cash equivalents, net | 620 | 1,613 | |
| Cash and cash equivalents at the beginning of the year | 3,414 | 1,801 | |
| Cash and cash equivalents at the end of the year | 30 | 4,033 | 3,414 |
AD Plastik d.d., Solin, a public limited company for the production of motor vehicle spare parts and accessories and of plastic masses (abbreviated firm: AD PLASTIK d.d.), was established by a decision of the Founding Assembly dated 15 June 1994 following the transformation of the socially-owned entity Autodijelovi – Solin pursuant to the decision on the transformation of ownership and the Decision of the Croatian Privatisation Fund No. 01-02/92-06/392 of 6 December 1993. The Company is the legal successor of the socially-owned entity Autodijelovi and, according to the decision of the Commercial Court in Split No. Fi 6215/94 of 28 June 1994, assumed all of its assets and liabilities as of the date of registration in the court register.
By decision of the General Shareholders' Assembly dated 21 June 2007, the Statute of the Company of 8 July 2004 was amended and a decision was made to increase the share capital of the Company in cash. Pursuant to the Decision No. Tt-07/2145-3 of 25 September 2007, the increase of the share capital by HRK 125,987,500 effected by OAO Saint Petersburg Investment Company was registered, and the total subscribed capital now amounts to HRK 419,958,400 and consists of 4,199,584 shares, with a nominal amount of HRK 100.00 each. Under the Share Transfer Agreement of 29 June 2009 OAO Spik transferred the shares of the AD Plastik d.d. to OAO Group Aerokosmicheskoe Oborudovanie, St. Petersburg, which transferred those shares to OAO HAK, Sankt Petersburg on 4 August 2011.
The Company has been included in the listing of public limited companies on the Official Market of the Zagreb Stock Exchange since 1 October 2010.
The primary activity of the Company comprises manufacture of motor vehicle spare parts and accessories. The registered activities of the Company comprise the following:
• representation of foreign companies;
• international forwarding and shipping
At 31 December 2016, the number of staff employed was 1,193 (31 December 2015: 1,203).
| Members of the Supervisory Board | mandate from | mandate to |
|---|---|---|
| Drandin Dmitrij Leonidovič (President) | 19. 10. 2015 | 19. 10. 2019 |
| Ivica Tolić (Deputy Chairman) | 20. 07. 2016 | 20. 07. 2020 |
| Hrvoje Jurišić | 20. 07. 2016 | 20. 07. 2020 |
| Marijo Grgurinović | 23. 07. 2015 | 23. 07. 2019 |
| Igor Anatoljevič Solomatin | 23. 07. 2015 | 23. 07. 2019 |
| Nikitina Nadežda Anatoljevna | 19. 10. 2015 | 19. 10. 2019 |
| Dolores Cerina | 02. 06. 2015 | 02. 06. 2019 |
| The members of the Company's Management Board |
mandate od | mandate do |
|---|---|---|
| Marinko Došen (President) | 20. 07. 2016 | 20. 07. 2020 |
| Katija Klepo | 20. 07. 2016 | 20. 07. 2020 |
| Mladen Peroš | 20. 07. 2016 | 20. 07. 2020 |
| Sanja Biočić | 20. 07. 2016 | 20. 07. 2020 |
The following amendments to the existing standards and new interpretation issued by the International Accounting Standards Board (IASB) and adopted by the EU are effective for the current reporting period:
• Amendments to IFRS 10 "Consolidated Financial Statements", IFRS 12 "Disclosure of Interests in Other Entities" and IAS 28 "Investments in Associates and Joint Ventures" – "Investment Entities: Applying the Consolidation Exception" – adopted by the EU on 22 September 2016 (effective for annual periods beginning on or after 1 January 2016),
The adoption of the amended and revised Standards and Interpretations has not lead to any material changes in the Company's financial statements.
At the date of authorisation of these financial statements, the following new standards and amendments to standards issued by IASB and adopted by the EU are not yet effective:
At present, IFRS as adopted by the EU do not significantly differ from regulations adopted by the International Accounting Standards Board (IASB) except for the following new standards, amendments to the existing standards and new interpretation, which were not endorsed for use in EU as at 19 April 2017 (the effective dates stated below is for IFRS in full):
• Amendments to IFRS 4 "Insurance Contracts" Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts (effective for annual periods beginning on or after 1 January 2018 or when IFRS 9 "Financial Instruments" is applied for the first time).
• Amendments to IFRS 10 "Consolidated Financial Statements" and IAS 28 "Investments in Associates and Joint Ventures" – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture and further amendments (effective date deferred indefinitely until the research project on the equity method has been concluded),
The Company anticipates that the adoption of IFRS 15 "Revenue from Contracts with Customers" will have effect on financial statements in the period of initial application, however, currently it is not possible to determine their significance.
The Company anticipates the adoption of other stated standards and amendments of existing standards will not have a material effect on the financial statements in the period of initial application.
Issue of hedge accounting of financial assets and financial liabilities remains unregulated due to the fact that the principles of hedge accounting in the European Union have not yet been adopted.
According to the Company's estimates, the application of hedge accounting to the portfolio of financial assets or liabilities pursuant to IAS 39: "Financial Instruments: Recognition and Measurement" as of the date of the statement of financial position would not significantly impact the financial statements.
Set out below are the principal accounting policies consistently applied in the preparation of the financial statements for the current and prior year.
The separate financial statements are prepared in accordance with the Accounting Act of the Republic of Croatia and International Financial Reporting Standards (IFRSs), as adopted by the European Union.
The Company maintains its accounting records in the Croatian language, in Croatian kunas and in accordance with Croatian laws and the accounting principles and practices observed by enterprises in Croatia.
The preparation of the separate financial statements in accordance with the Accounting Act of the Republic of Croatia and International Financial Reporting Standards (IFRSs) effective in European Union requires from the Management Board to make estimates and 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. These estimates are based on the information available as at the date of preparation of the financial statements, and actual results could differ from those estimates.
The separate financial statements of the Company represent aggregate amounts of assets, liabilities, capital and reserves of the Company as of 31 December 2016, and the results of operations for the year then ended.
The Company also prepares its consolidated financial statements in accordance with International Financial Reporting Standards, which include the financial statements of the Company, as the parent, and the financial statements of the subsidiaries controlled by the Company. In these financial statements, investments in entities controlled by the Company or in which the Company has significant influence are carried at cost less impairment, if any. For a full understanding of the financial positions of the Company and its subsidiaries, as a group, and of the results of their operations and their cash flows for the year, users are advised to read the consolidated financial statements of the Group AD Plastik d.d. Details of the investments in subsidiaries and associates are presented in Note 23.
Revenue is measured at the fair value of the consideration received or receivable for products, goods or services sold in the regular course of operations.
Revenue is stated net of value added tax, estimated returns, rebates and discounts. The Company recognises revenue when the amount of the revenue can be measured reliably and when it is probable that future economic benefits will flow into the Company.
Product sales are recognized when the products are delivered to, and accepted by the customer and when the significant risks and rewards associated with the ownership of a product are transferred to the customer. Sales to customers with whom self- invoicing has been arranged are recognised upon receiving from such a customer the confirmation of delivery, i.e. when significant risks are transferred to the customer.
Accrued revenues are matched with contracts that are specifically concluded for developing an asset, or a group of assets, closely linked and interdependent on the design, technology and function, or their final use or application. The Company is required to recognize revenue according to the stage of completion of a contractual performance because the costs incurred in connection with the transaction can be measured reliably. Pursuant to IAS 18, income and expenses related to the same transaction are recognized simultaneously. When the outcome of a production contract can be estimated reliably, the revenue and costs associated with the contract should be recognized according to the stage of completion of the contractual performance at the date of the statement of financial position.
Interest income is recognised on a pro rata temporis basis, using the effective interest method. Interest earned on balances with commercial banks (demand and term deposits) is credited to income for the period as it accrues. Interest on trade receivables is recognised as income when accrued.
Transactions in foreign currencies are translated into Croatian kunas at the rates of exchange in effect at the dates of the transactions. Cash, receivables and payables denominated in foreign currencies are retranslated at the rates of exchange in effect at the date of the statement of financial position. Gains and losses arising on translation are included in the statement of comprehensive income for the year. At 31 December 2016, the official exchange rate of the Croatian kuna against 1 euro (EUR) was HRK 7.557787 (31 December 2015: HRK 7.635047 for EUR 1).
Income tax expense is based on taxable profit for the year and represents the sum of the tax currently payable and deferred tax. Income tax is recognised in the statement of comprehensive income, except where it relates to items recognised directly in equity, in which case it is also recognised in equity. Current tax represents tax expected to be paid on the basis of taxable profit for the year, using the tax rates enacted at the date of the statement of financial position, adjusted by appropriate prior-period tax liabilities. The income tax rate for years 2015 and 2016 amounts to 20 %.
Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax assets and liabilities are measured at the tax rate expected to apply to taxable profit in the period in which the liability is expected to be settled or the asset realised, based on the tax rates in effect at the date of the statement of financial position. The income tax rate applicable to deferred tax assets is 18 %, given that the application of the new law is in force since 1 January 2017.
The measurement of deferred tax liabilities and assets reflects the amount that the Company expects, at the date of the statement of financial position, to recover or settle the carrying amounts of its assets and liabilities.
Deferred tax assets and liabilities are not discounted and are classified in the statement of financial position as non-current assets and/or non-current liabilities. Deferred tax assets are recognised only to the extent that it is probable that the related tax benefit will be realised. At each date of the statement of financial position, the Company reviews the unrecognised potential tax assets and the carrying amount of the recognised tax assets.
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 they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities.
In the case of a business combination, the tax effect is taken into account in calculating goodwill or in determining the excess of the acquirer's interest in the net fair value of the acquiree's identifiable assets, liabilities and contingent liabilities over cost.
Property, plant and equipment as well as intangible assets are recognised at purchase cost and subsequently reduced by accumulated depreciation/amortisation. The purchase cost comprises the purchase price, import duties and non-refundable sales taxes (for property, plant and equipment) and any directly attributable costs of bringing an asset to its working condition and location for its intended use, such as employee remuneration, professional fees directly arising from putting an asset into its working condition, test costs (for intangible assets), as well as all other costs directly attributable to bringing an asset to a condition for its intended use. Maintenance and repairs, replacements and improvements of minor importance are expensed as incurred. Where it is obvious that expenses incurred resulted in an increase of expected future economic benefits to be derived from the use of an item of property, plant and equipment or intangible assets in excess of the originally assessed standard performance of the asset, they are added to the carrying amount of the asset. Gains or losses on the retirement or disposal of property, plant and equipment or intangible assets are included in the statement of comprehensive income in the period in which they occur. Depreciation commences on putting an asset into use. Depreciation is provided so as to write down the cost or revalued amount of an asset other than land, property, plant and equipment and intangible assets under development over the estimated useful life of the asset using the straight-line method as follows:
| Property, plant and equipment, and intangible assets |
Depreciation rates in 2016 |
Depreciation rates in 2015 |
|---|---|---|
| Buildings | 1.50 | 1.50 |
| Machinery | 7.00 | 7.00 |
| Tools, furniture, office and laboratory equipment and accessories, measuring and control instruments |
10.00 | 10.00 |
| Vehicles | 20.00 | 20.00 |
| IT equipment | 20.00 | 20.00 |
| Others | 10.00 | 10.00 |
| Projects | 20.00 | 20.00 |
| Software | 20.00 | 20.00 |
Investment property is property held to earn rentals or for capital appreciation, or both. Investment properties are measured at cost, which includes transaction costs.
All of the Company's property interests held under operating leases to earn rentals are accounted for as investment properties.
An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use as well as when no future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period in which the property is derecognised.
At each reporting date the Company reviews the carrying amounts of its property, plant and equipment and intangible assets to determine whether there is an indication that the assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, The Company's assets are also allocated to individual cash-generating units or, it this is not possible, they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
A subsidiary is an entity over which the Company has effective control over financial and operating policy decisions of the Company. The results, assets and liabilities of subsidiaries are incorporated in these separate financial statements using the cost method of accounting.
An associate is an entity over which the Company has significant influence and usually an ownership interest from 20 to 50 percent, but no control over the entity. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but it is not control or joint control over those policies. The results of operations of associates are incorporated in these financial statements using the cost method of accounting.
Inventories of raw material and spare parts are stated at the lower of cost and net realisable value, whichever is lower. Cost is determined using the weighted-average cost method. Net realisable value represents the estimated selling price in the ordinary course of business less all variable selling costs.
Small inventory is written off when put in use.
the cost of which is determined using the weighted average cost method, then direct labour costs and fixed overheads at the actual level of production which approximates the normal capacities, as well as variable overheads that are based on the actual use of the production capacities.
Merchandise on stock is recognised at purchase cost.
Trade debtors and prepayments are carried at nominal amounts less an appropriate allowance for impairment for estimated irrecoverable amounts.
Impairment is recognised whenever there is objective evidence that the Company will not be able to collect all amounts due according to the originally agreed terms. Significant financial difficulties of the debtor, the probability of bankruptcy proceedings at the debtor, or default or delinquency in payment are considered objective evidence of impairment. The amount of the impairment loss is determined as the difference between the assets carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate.
Management determines the level of impairment allowance for doubtful receivables based on a specific review of the recoverability of amounts owed by strategic customers of the ADP Group and of the overall ageing of other current receivables. The allowance for amounts doubtful of collection is charged to the statement of comprehensive income for the year.
Cash comprises account balances with banks, cash in hand, deposits and securities at call or with maturities of less than three months.
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event and it is probable (i.e. more likely than not) that an outflow of resources will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
Provisions are reviewed at each date of the statement of financial position and adjusted to reflect the current best estimate. Where the effect of discounting is material, the amount of the provision is the present value of the expenditures expected to be required to settle the obligation, determined using the estimated risk free interest rate as the discount rate. Where discounting is used, the reversal of such discounting in each year is recognised as a financial expense and the carrying amount of the provision increases in each year to reflect the passage of time.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the date of the statement of financial position, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.
In the normal course of business, the Company makes payments, through salary deductions, to mandatory pension funds on behalf of its employees, as required by law. The contributions paid to the mandatory pension funds are recognised as salary expense when accrued. The Company does not have any other retirement benefit plan and, consequently, has no other obligations in respect of the retirement benefits for its employees. In addition, the Company is not obliged to provide any other post-employment benefits.
Termination benefits are payable when employment is terminated by the Company before the normal retirement date. The Company recognises its termination benefit obligations in accordance with the applicable Union Agreement.
Benefits falling due more than 12 months after the reporting date are discounted to their present value.
For defined benefit retirement benefit plans, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at each reporting date. Actuarial gains and losses are recognised in the period in which they arise.
Past service cost is recognised immediately to the extent that the benefits are already vested. Otherwise, it is amortised on a straight-line basis over certain period until the benefits become vested.
Financial assets and financial liabilities included in the accompanying financial statements consist of cash and cash equivalents, marketable securities, trade and other receivables, trade and other payables, long-term receivables, loans, borrowings and investments. The details of the recognition and measurement of those items are presented in the accounting policies below.
Investments are recognized and derecognized on a trade date basis, where the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned. They are initially measured at fair value, net of transaction costs, except for those financial assets classified as at fair value through profit or loss in the statement of comprehensive income.
The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition..
Trade, loan and other receivables with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables, where the recognition of interest would be immaterial.
The effective interest method is a method of calculating the amortised cost of a financial asset or liability, and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial asset or liability, or, where appropriate, a shorter period.
Financial assets are assessed for indications of impairment at each date of the statement of financial position. A financial asset are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted. For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate.
Impairment loss on a financial asset is recognised by reducing the carrying amount of the asset through the use of an allowance account. When a trade receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account.
The Company derecognises a financial asset only when the contractual rights to the cash flows from the asset have expired, when the asset is transferred and when substantially all the risks and rewards of ownership of the asset are passed onto another entity. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the underlying contractual arrangement.
Contingent liabilities have not been recognised in these separate financial statements. They are disclosed unless the possibility of outflow of resources embodying economic benefits is remote. A contingent asset is not recognised in financial statements, but it is disclosed when the inflow of economic benefits becomes probable.
Events after the date of the statement of financial position that provide additional information about the Company's position at that date (adjusting events) are reflected in the financial statements. Subsequent events that are not adjusting events are disclosed in the notes to the separate financial statements when material.
The Company monitors and presents the results of its principal operating segments separately. The segment reporting is based on identified geographical areas. Certain financial information about the geographical segments are presented in Note 5.
The Company presents the revenue by geographical location, but does not monitor information about the long-term assets and the revenue generated in those areas from external customers.
In the application of the Company's accounting policies, which are described in Note 3, the Management Board is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on past experience and other factors that are considered to be relevant. Actual results may differ from those estimates.
The estimates and underlying assumptions are continually reviewed. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of revision and future periods if the revision affects both current and future periods.
Areas of estimation include, but are not limited to, depreciation periods and residual values of property, plant and equipment and intangible assets, impairment of receivables, and actuarial estimates. The key areas of estimation in applying the Company's accounting policies that had a most significant impact on the amounts recognized in the financial statements were as follows:
As described in Note 3.6., the Company reviews the estimated useful lives of property, plant and equipment and intangible assets at the end of each annual reporting period. Property, plant and equipment are recognised initially at cost less accumulated depreciation.
A deferred tax asset is recognized for all unused tax losses to the extent that it is probable that taxable profit will be available against which the related tax benefit could be realised. In determining the amount of deferred taxes that can be recognised significant judgement is required, which is based on the probable quantification of time and level of future taxable profits, together with the future tax planning strategy. In 2016, deferred tax assets were recognised in respect of tax differences available for utilisation.
Management provides for doubtful receivables based on a review of the overall ageing of all receivables and a specific review of significant individual amounts receivable. The allowance for amounts doubtful of collection is charged to the statement of comprehensive income for the year.
The cost of defined benefits is determined using actuarial estimates. Actuarial estimates involve assumptions about discount rates, future salary increases and the mortality or fluctuation rates. Because of the long-term nature of those plans, there is uncertainty surrounding those estimates.
| 2016 | 2015 | |
|---|---|---|
| Slovenia | 376,880 | 432,542 |
| France | 129,226 | 106,456 |
| Russia | 37,606 | 62,630 |
| Germany | 36,440 | 52,304 |
| Italy | 32,272 | 20,601 |
| Spain | 25,431 | 16,363 |
| Serbia | 19,294 | 16,816 |
| Croatia | 15,452 | 10,792 |
| Others | 28,822 | 35,200 |
| 701,423 | 753,704 |
| (in thousands of kunas) | |
|---|---|
| ------------------------- | -- |
| 2016 | 2015 | |
|---|---|---|
| Service income – cardboard packaging | 3,997 | 1,326 |
| Rental income | 3,258 | 2,181 |
| Income from damages and insurance | 1,351 | 15 |
| Income from recovery of written-off receivables (Note 27) | 1,335 | 26 |
| Income from written-off liabilities | 1,055 | 248 |
| Income from consumption of own products and services | 1,009 | 1,773 |
| Income from the sale of services to tenants | 1,003 | 525 |
| Income from waste management services | 257 | 223 |
| Income from transport services | 117 | 107 |
| Income from sale of non-current assets | 58 | 123 |
| Other operating income | 3,013 | 7,778 |
| 16,453 | 14,325 |
| 2016 | 2015 | |
|---|---|---|
| Indirect materials | 168,669 | 167,753 |
| Direct materials | 133,621 | 153,782 |
| Electricity | 13,095 | 14,182 |
| Other raw material and supplies | 25,296 | 29,677 |
| 340,681 | 365,394 |
Cost of goods sold in the amount of HRK 36,531 thousand (2015: HRK 31,871 thousand) relate mainly to the purchase cost of tools, equipment and intermediary products for the start-up of new production and projects in subsidiaries.
| 2016 | 2015 | |
|---|---|---|
| Cost of merchandise | 36,531 | 31,871 |
| Cost of materials sold | 18,739 | 16,916 |
| Re-export costs | 7,228 | 6,661 |
| Other costs of goods sold | 206 | 755 |
| 62,704 | 56,203 |
| 2016 | 2015 | |
|---|---|---|
| Net wages and salaries | 72,709 | 71,720 |
| Taxes and contributions out of salaries | 28,507 | 29,883 |
| Contributions on salaries | 16,757 | 17,930 |
| Other staff costs | 14,516 | 14,144 |
| 132,489 | 133,677 |
Other staff costs comprise jubilee awards, termination benefits, per diems, overnight accommodation costs and business travel costs, commuting costs and other business-related costs.
| 2016 | 2015 | |
|---|---|---|
| Transport | 25,450 | 29,722 |
| Rental and lease costs | 7,593 | 8,236 |
| Current maintenance and preventive maintenance of machin ery |
4,672 | 4,849 |
| Tool modification costs | 1,496 | 2,115 |
| Info-communication costs | 1,352 | 938 |
| Water | 993 | 871 |
| Communal fees | 948 | 1,012 |
| Forwarding and shipping costs | 123 | 135 |
| Other service costs | 3,351 | 8,030 |
| 45,978 | 55,908 |
| 2016 | 2015 | |
|---|---|---|
| Depreciation of property, plant and equipment (Note 21) | 28,439 | 28,404 |
| Amortisation of intangible assets (Note 20) | 20,265 | 14,474 |
| Depreciation of investment property (Note 22) | 215 | - |
| 48,918 | 42,878 |
| 2016 | 2015 | |
|---|---|---|
| Temporary and occasional service costs - tools | 24,362 | 41,672 |
| Professional service cost | 7,787 | 6,295 |
| Customer complaints | 2,376 | 3,518 |
| Other non-material costs | 1,690 | 5,323 |
| Insurance premiums | 1,607 | 1,834 |
| Communal fees for the use of construction plots | 1,507 | 1,561 |
| Professional training costs | 963 | 531 |
| Entertainment | 745 | 524 |
| Bank and payment operation charges | 638 | 2,787 |
| Measuring equipment and laboratory tests | 488 | 518 |
| Net book value of tangible and intangible fixed assets | 404 | 2,555 |
| Support to employees and their families | 240 | 233 |
| Cost of goods provided free of charge | 208 | 920 |
| Forest reproduction levies | 198 | 209 |
| Gifts, donations and sponsorships of up to 2 % of prior-period revenue |
186 | 150 |
| Other expenses | 6,884 | 7,764 |
| 50,283 | 76,394 |
Service costs for tools comprise of purchase price of tools and dependant costs of completion.
(in thousands of kunas)
(in thousands of kunas)
| 2016 | 2015 | |
|---|---|---|
| Vacation provisions, net | 2,506 | - |
| Litigation provision, net | 1,243 | 1,711 |
| Provisions for long-service and retirement-benefit plans, net | 93 | 3,483 |
| 3,842 | 5,194 |
The Company, based on impairment indicators, recognised impairment of its investment in FADP in the amount of HRK 30,220 thousand in 2015, based on which impairment of investment is made. As a result, the carrying amount of the investment in FADP Holding amounts to nil. At the end of year 2016, the associate FADP Holding was sold, and the Company no longer has control over the financial asset.
| 2016 | 2015 | |
|---|---|---|
| Dividend income | 46,724 | 41,969 |
| Foreign exchange gains | 21,690 | 9,050 |
| Interest income | 4,282 | 14,368 |
| Other financial income | - | 1 |
| 72,696 | 65,388 |
The dividends consist mainly of dividends received from associate EURO APS, Romania, in the amount of HRK 46,716 thousand (2015: HRK 41,963 thousand).
| 2016 | 2015 | |
|---|---|---|
| Foreign exchange losses | 46,508 | 8,507 |
| Interest expense | 21,804 | 23,534 |
| 68,312 | 32,041 |
Income tax comprises the following:
| 2016 | 2015 | |
|---|---|---|
| Deferred tax | (547) | 299 |
| Current tax | - | - |
| (547) | 299 |
(in thousands of kunas)
Deferred tax, as presented in the statement of financial position, is as follows:
| 2016 | 2015 | |
|---|---|---|
| Balance at 1 January | 11,968 | 8,575 |
| (Reversal)/recognition of deferred tax assets | (8,807) | 3,393 |
| Balance at 31 December | 3,161 | 11,968 |
Deferred tax assets arise from the following:
Reserves from translation of foreign
| 2016 | Opening balance |
Credited / (charged) to statement of comprehen sive income |
Closing balance |
|---|---|---|---|
| Temporary differences: | |||
| Provisions for long-service and termina tion benefits |
697 | (123) | 574 |
| Reserves from translation of foreign currencies, net |
11,271 | (8,684) | 2,587 |
| Balance at 31 December | 11,968 | (8,807) | 3,161 |
| 2015 | Opening balance |
Credited / (charged) to statement of comprehen sive income |
Closing balance |
| Temporary differences: | |||
| Provisions for long-service and termi nation benefits |
398 | 299 | 697 |
currencies, net 8,177 3,094 11,271 Balance at 31 December 8,575 3,393 11,968 Odnos između računovodstvenog i poreznog rezultata prikazan je kako slijedi:
| 2016 | 2015 | |
|---|---|---|
| Accounting profit before tax | 38,894 | 32,252 |
| Effect of tax base increasing items | 11,782 | 36,552 |
| Effect of tax base decreasing items | (81,081) | (44,394) |
| Tax base | (30,405) | 24,410 |
| Tax at the rate of 20 % | - | 4,882 |
| Tax reliefs | - | (4,882) |
| Deferred tax recognised in profit or loss | (547) | 299 |
| Income tax expense | (547) | 299 |
The income tax rate effective in the Republic of Croatia for the years 2016 and 2015 was 20 percent. Income tax rate applicable to deferred tax assets in 2016 was 18 %, given that the new income tax rate is applicable as of 1 January 2017.
On 24 October 2012 the Company filed with the Ministry of Economy the Application for Incentive Measures for the investment project "Expansion of Production for the Purpose of Export of Car Industry Products", in accordance with the Act on Investment Promotion and Development of Investment Climate (OG 111/2012 and 28/2013) and the Investment Promotion and Development of Investment Climate (OG 40/2013).
As a result, the Company made investments in fixed assets in 2016, having thus met the prerequisites for the utilization of the tax incentives for 2016.
Pursuant to the tax regulations, the tax authorities may at any time inspect the Company's books and records within three years subsequent to the year in which the tax liability is reported and may assess additional tax liabilities and impose penalties. The Company's management is not aware of any circumstances which may give rise to a potential material liability in this respect.
(in thousands of kunas)
| 2016 | 2015 | |
|---|---|---|
| Balance at beginning of the year | (45,062) | (32,686) |
| Exchange differences on translation of a foreign operation | 6,629 | (15,341) |
| Income tax on exchange rate losses from translation of a foreign operation |
(1,193) | 3,068 |
| Exchange differences on translation of a foreign operation, net |
5,436 | (12,273) |
| Realization / (Recognition) of exchange differences | 28,289 | (103) |
| Balance at end of year | (11,337) | (45,062) |
(in thousands of kunas)
Basic earnings per share are determined by dividing the Company's net profit by the weighted average number of ordinary shares in issue during the year, excluding the average number of ordinary shares redeemed and held by the Company as treasury shares. The basic earnings per share equal the diluted earnings per share, as there are currently no share options that would potentially increase the number of issued shares.
| 2016 | 2015 | |
|---|---|---|
| Net profit (in HRK'000) | 38,347 | 32,551 |
| Weighted average number of shares | 4,169,725 | 4,167,822 |
| Basic and diluted earnings per share (in kunas and lipas) | 9,20 | 7.81 |
| (in thousands of kunas) | ||
|---|---|---|
| -- | ------------------------- | -- |
| Licences | Software | Projects | Intangible assets under development |
Total | |
|---|---|---|---|---|---|
| Cost | |||||
| Balance at 31 December 2014 | 55 | 5,443 | 108,149 | 62,868 | 176,515 |
| Additions | - | - | - | 23,973 | 23,973 |
| Transfer from assets under development | - | 205 | 52,031 | (52,236) | - |
| Disposals and retirements | - | - | (5,351) | - | (5,351) |
| Balance at 31 December 2015 | 55 | 5,648 | 154,829 | 34,604 | 195,137 |
| Additions | - | - | - | 19,240 | 19,240 |
| Transfer from assets under development | - | 408 | 31.039 | (31,447) | - |
| Disposals and retirements | (55) | (392) | (2,775) | (2,343) | (5,565) |
| Balance at 31 December 2016 | - | 5,664 | 183,093 | 20,053 | 208,811 |
| Accumulated amortisation | |||||
| Balance at 31 December 2014 | - | 3,412 | 78,078 | - | 81,490 |
| Charge for the year (Note 11) | - | 888 | 13,586 | - | 14,474 |
| Disposals and retirements | - | - | (13) | - | (13) |
| Balance at 31 December 2015 | - | 4,300 | 91,651 | - | 95,951 |
| Charge for the year (Note 11) | - | 518 | 19,747 | - | 20,265 |
| Disposals and retirements | - | (392) | (761) | - | (1,154) |
| Balance at 31 December 2016 | - | 4,425 | 110,637 | - | 115,062 |
| Net book value | |||||
| At 31 December 2015 | 55 | 1,347 | 63,179 | 34,604 | 99,186 |
| At 31 December 2016 | - | 1,238 | 72,457 | 20,053 | 93,749 |
Projects comprise investments in the development of new products that are expected to generate economic benefits in future periods. Consequently, the costs are amortised over the period in which the related economic benefits flow into the Company.
| Total development |
(in thousands of kunas) |
|---|---|
| Land | Buildings | Plant and equipment | Assets under development |
Total | |
|---|---|---|---|---|---|
| Cost | |||||
| Balance at 31 December 2014 | 139,976 | 228,500 | 393,193 | 63,671 | 825,340 |
| Additions | - | - | - | 28,462 | 28,462 |
| Transfer from assets under development | - | 37,416 | 46,906 | (84,322) | - |
| Disposals and retirements | - | - | (26,886) | - | (26,886) |
| Balance at 31 December 2015 | 139,976 | 265,916 | 413,213 | 7,811 | 826,916 |
| Additions | - | - | - | 17,768 | 17,768 |
| Transfer from assets under development | 7,307 | 1,777 | 11,177 | (20,260) | - |
| Disposals and retirements | - | - | (5,682) | 5 | (5,677) |
| Transfer to investment property (Note 22) | - | (14,303) | - | - | (14,303) |
| Balance at 31 December 2016 | 147,283 | 253,390 | 418,708 | 5,324 | 824,704 |
| Accumulated depreciation | |||||
| Balance at 31 December 2014 | - | 68,204 | 239,054 | - | 307,258 |
| Charge for the year (Note 11) | - | 3,938 | 24,466 | - | 28,404 |
| Disposals and retirements | - | - | (20,188) | - | (20,188) |
| Balance at 31 December 2015 | - | 72,142 | 243,332 | - | 315,474 |
| Charge for the year (Note 11) | - | 3,784 | 24,655 | - | 28,439 |
| Disposals and retirements | - | - | (4,702) | - | (4,702) |
| Transfer to investment property (Note 22) | - | (6,024) | - | - | (6,024) |
| Balance at 31 December 2016 | - | 69,902 | 263,915 | - | 333,817 |
| Net book value | |||||
| At 31 December 2015 | 139,976 | 193,774 | 169,881 | 7,811 | 511,442 |
| At 31 December 2016 | 147,283 | 183,488 | 154,792 | 5,324 | 490,887 |
At 31 December 2016 the estimated value of land and buildings pledged as collateral with commercial banks amounts to HRK 323,435 thousand (31 December 2015: HRK 340,166 thousand), and the balance of short-term and long-term borrowings covered by the collateral amounts to HRK 267,003 thousand (31 December 2015: HRK 340,347 thousand).
Total value of liabilities under financial leases at December 31 2016 amounts to HRK 2,239 thousand (31 December 2015: HRK 4,743 thousand).
(in thousands of kunas)
| Buildings | Total | |
|---|---|---|
| Cost | - | - |
| Balance at 31 December 2014 | - | - |
| Balance at 31 December 2015 | - | - |
| Transferred from property, plant and equipment (Note 21) |
14,303 | 14,303 |
| Balance at 31 December 2016 | 14,303 | 14,303 |
| Accumulated depreciation | ||
| Balance at 31 December 2014 | - | - |
| Balance at 31 December 2015 | - | - |
| Transferred from property, plant and equipment (Note 21) |
6,024 | 6,024 |
| Charge for the year (Note 11) | 215 | 215 |
| Balance at 31 December 2016 | 6,239 | 6,239 |
| Net book value | ||
| Balance at 31 December 2015 | - | - |
| Balance at 31 December 2016 | 8,064 | 8,064 |
In 2016 the part of the building used to rent office space was reclassified. Income from the rental of the building in 2016 amounts to HRK 404 thousand, and the depreciation charge for the year amounts to HRK 215 thousand.
Set out below are details of the Company's material subsidiaries at the end of the reporting period:
| Country of incorporation and | Ownership interest in % | Amount of equity investment, in HRK '000 | ||||
|---|---|---|---|---|---|---|
| Name of subsidiary | Principal activity | business | 31.12.2016 | 31.12.2015 | 31.12.2016 | 31.12.2015 |
| ZAO AD Plastik Kaluga | Manufacture of other vehicle spare parts and accessories |
Kaluga, Russian Federation | 100.00 % | 100.00 % | 24,235 | 24,235 |
| ADP d.o.o. | Manufacture of other vehicle spare parts and accessories |
Mladenovac, Serbia | 100.00 % | 100.00 % | 15,014 | 15,014 |
| AO ADP / ZAO PHR | Manufacture of other vehicle spare parts and accessories |
Samara, Russian Federation | 99.99 % | 99.95 % | 5,077 | 5,069 |
| AD PLASTIK d.o.o. | Manufacture of other vehicle spare parts and accessories |
Novo Mesto, Slovenia | 100.00 % | 100.00 % | 58 | 58 |
| 44,384 | 44,376 |
In 2015 ZAO PHR, Russia, was renamed to AO ADP, Russia. Further information about subsidiaries partly owned by the Company, but in which the Company holds a significant non-controlling interest is set out in the following table:
| Country of incorporation and | Ownership interest in % | Amount of equity investment, HRK '000 | ||||
|---|---|---|---|---|---|---|
| Name of associate | Principal activity | business | 31.12.2016 | 31.12.2015 | 31.12.2016 | 31.12.2015 |
| EURO AUTO PLASTIC SYSTEMS |
Manufacture of other vehicle spare parts and accessories |
Mioveni, Romania | 50.00 % | 50.00 % | 21,755 | 21,755 |
| CENTAR ZA IS TRAŽIVANJE I RAZVOJ AUTOMOBILSKE INDUSTRIJE d.o.o. |
Automotive industry research and development |
Zagreb, Croatia | 24.00 % | 24.00 % | 24 | 24 |
| 21,779 | 21,779 | |||||
| Total investments in subsidiaries and associates | 66,163 | 66,155 |
Centar za istraživanje i razvoj automobilske industrije d.o.o., Croatia, established in 2015, is engaged in the research and development in the automotive industry.
In 2016 AD Plastik d.d. sold its 40-percent equity share in Faurecia ADP Holding, and hence no investment is recognised in that company as at 31 December 2016.
Ad Plastik d.d., Solin has a 50-percent equity share in EURO AUTO PLASTIC SYSTEMS, but has no control over the entity. However, the company is treated as an associate.
Set out below is a summary of financial information about the subsidiaries:
| AD PLASTIK d.o.o., Novo Mesto, Slovenia | 31.12.2016 | 31.12.2015 |
|---|---|---|
| Total assets | 3,663 | 11,203 |
| Total liabilities | (183) | (8,107) |
| Net assets | 3,480 | 3,096 |
| Share in the net assets of the subsidiary | 100.00 % | 100.00 % |
| AO ADP / ZAO PHR, Samara, Russian Federation | 31.12.2016 | 31.12.2015 |
|---|---|---|
| Total assets | 157,261 | 153,062 |
| Total liabilities | (161,089) | (189,757) |
| Net assets | (3,827) | (36,695) |
| Share in the net assets of the subsidiary | 99.99 % | 99.95 % |
| ZAO AD Plastik Kaluga, Kaluga, Russian Federation | 31.12.2016 | 31.12.2015 |
|---|---|---|
| Total assets | 142,805 | 118,351 |
| Total liabilities | (135,265) | (137,670) |
| Net assets | 7,540 | (19,319) |
| Share in the net assets of the subsidiary | 100,00% | 100,00% |
| ADP d.o.o, Mladenovac, Serbia | 31.12.2016 | 31.12.2015 |
|---|---|---|
| Total assets | 78,394 | 85,383 |
| Total liabilities | (70,719) | (79,098) |
| Net assets | 7,675 | 6,285 |
| Share in the net assets of the subsidiary | 100,00% | 100,00% |
| 31.12.2016 | 31.12.2015 | |
|---|---|---|
| Long-term loans to subsidiaries | 81,989 | 75,024 |
| Long-term loans to unrelated companies | 6,399 | 9,788 |
| Other financial assets | 62 | 62 |
| Long-term loans to associates | - | 37,734 |
| Current portion of long-term loan receivables (Note 29) | (1,500) | (1,500) |
| 86,950 | 121,108 |
Long-term investment loans were granted to the subsidiaries and associates, with maturities of four to five years and an interest rate from 5.14 % to 6.00 %.
| 31.12.2016 | 31.12.2015 | |
|---|---|---|
| AO ADP, Russia | 86,146 | 127,598 |
| ADP Kaluga, Russia | 49,791 | 70,845 |
| FADP Holding, Russia | - | 14,176 |
| 135,937 | 212,619 |
Long-term receivables from FADP Holding were reclassified as short-term, as AD Plastik d.d., Solin, expects imminent payment of these receivables.
The Company has concluded with its subsidiaries contracts on deferred payment of the receivables, which fall due from 2018; hence, they are classified as non-current. Long-term receivables bear no interest.
| in thousands of kunas) | |
|---|---|
| 31.12.2016 | 31.12.2015 | |
|---|---|---|
| Raw material and supplies on stock | 36,553 | 35,087 |
| Finished products | 10,693 | 9,812 |
| Work in progress | 4,063 | 3,416 |
| Merchandise on stock | 3,335 | 2,224 |
| 54,644 | 50,539 |
| 27. TRADE RECEIVABLES |
(in thousands of kunas) | ||
|---|---|---|---|
| 31.12.2016 | 31.12.2015 | ||
| Foreign trade receivables | 137,421 | 110,993 | |
| Domestic trade receivables | 3,701 | 6,273 | |
| Impairment allowance on receivables | (1,392) | (3,388) | |
The average credit period on sales is 77 days (2015: 82 days). The Company has provided for all for all sued debtors, regardless of the past due period, as well as for all receivables that are past due and assessed as doubtful of collection. The Company seeks and obtains from its domestic customers debentures as collateral for receivables, which are issued in the amount of the receivables.
| 2016 | 2015 | |
|---|---|---|
| Balance at beginning of the year | 3,361 | 7,417 |
| Amounts written-off in total during the year | (661) | (4,030) |
| Collected during the year (Note 6) | (1,335) | (26) |
| Total impairment allowance on domestic trade receivables | 1,365 | 3,361 |
| Balance at beginning of the year | 27 | 1,152 |
| Amounts collected or written-off during the year (note 6) | - | (1,125) |
| Total impairment allowance on foreign trade receivables | 27 | 27 |
| Total impairment allowance | 1,392 | 3,388 |
Sva ispravljena potraživanja su utužena ili prijavljena u stečajnu masu. Starosna analiza ispravljenih potraživanja od kupaca može se prikazati kako slijedi:
| 139,730 | 113,878 | 31.12.2016 | 31.12.2015 | |
|---|---|---|---|---|
| 0 - 365 days | - | - | ||
| Over 365 days | 1,392 | 3,388 | ||
| 1,392 | 3,388 |
Ageing analysis of receivables past due but not impaired can be presented as follows:
| 31.12.2016 | 31.12.2015 | |
|---|---|---|
| 0 - 365 days past due | 56,462 | 48,665 |
| Over 365 days past due | 7,123 | 9,502 |
| 63,585 | 58,167 |
The majority of the receivables past due beyond 365 days comprise amounts owed by the subsidiaries.
| 31.12.2016 | 31.12.2015 | |
|---|---|---|
| Foreign prepayments made | 17,436 | 18,132 |
| Receivables from the State and State institutions | 5,315 | 5,254 |
| Domestic prepayments made | 4,548 | 1,026 |
| Amounts due from employees | 132 | 302 |
| Other receivables | - | 2 |
| 27,431 | 24,716 |
Amounts due from the State and State institutions comprise receivables from the State Budget in respect of VAT refund, refunds from the Croatian Health Insurance Fund and similar. Domestic and foreign prepayments comprise mainly prepayments made for purchases of production equipment and tools.
(in thousands of kunas)
(in thousands of kunas)
| 31.12.2016 | 31.12.2015 | |
|---|---|---|
| Short-term loans to unrelated companies | 46,651 | 2,259 |
| Interest receivables | 16,893 | 3,675 |
| Current portion of long-term loan receivables (Note 24) | 1,500 | 1,500 |
| Other deposits | 10 | 441 |
| Short-term loans to subsidiaries | - | 13,369 |
| 65,054 | 21,244 |
Short-term loans to unrelated companies represent a loan given to Faurecia ADP LLC, which is due in the second quarter of 2017. Interest receivables mostly relate to loans given to Faurecia ADP LLC, which will be collected in the second quarter of 2017.
| 31.12.2016 | 31.12.2015 | |
|---|---|---|
| Foreign account balance | 2,677 | 2,862 |
| Current account balance | 1,343 | 547 |
| Cash in hand | 14 | 5 |
| 4,033 | 3,414 |
(in thousands of kunas)
| 31.12.2016 | 31.12.2015 | |
|---|---|---|
| Accrued income on tools | 40,722 | 26,020 |
| Other accrued income | 4,527 | 4,285 |
| Prepaid operating expenses | 3,386 | 6,617 |
| 48,634 | 36,922 |
Accrued income in the amount of HRK 40,722 thousand (31 December 2015: HRK 26,020 thousand) relates to the manufacture of tools for a known customer.
Subscribed capital amounts to HRK 419,958 thousand and consists of 4,199,584 shares, with a nominal value of HRK 100 per share (2015: HRK 419,958 thousand, comprising 4,199,584 shares, with a nominal value of HRK 100 each).
Shareholders with over 2 percent of the shares at 31 December 2016 were as follows:
| Shareholder | Headquarters | Number of shares |
Ownership in % |
Type of account |
|---|---|---|---|---|
| OAO HOLDING AUTOKOMPONENTI | Saint Petersburg, Russia | 1,259,875 | 30.00 % | Primary account |
| ADDIKO BANK D.D. / RAIFFEISEN MANDATORY PENSION FUND | Zagreb, Croatia | 269,462 | 6.42 % | Custody account |
| ADDIKO BANK D.D. / RAIFFEISEN VOLUNTARY PENSION FUND | Zagreb, Croatia | 148,645 | 3.54 % | Custody account |
| ADP-ESOP D.O.O. | Zagreb, Croatia | 130,532 | 3.11 % | Primary account |
| ADDIKO BANK D.D./ PBZ CO OMF – B-CATEGORY | Zagreb, Croatia | 119.640 | 2.85 % | Custody account |
| HRVATSKA POŠTANSKA BANKA D.D./ KAPITALNI FOND D.D. | Zagreb, Croatia | 116,541 | 2.78 % | Custody account |
| SOCIETE GENERALE-SPLITSKA BANKA D.D. / ERSTE PLAVI MANDATORY PENSION FUND | Split, Croatia / Zagreb, Croatia |
115,353 | 2.75 % | Custody account |
| ERSTE & STEIERMAERKISCHE BANK d.d. / JOINT CUSTODY ACCOUNT FOR A FOREIGN LEGAL PERSON | Zagreb, Croatia | 105,349 | 2.51 % | Custody account |
| SOCIETE GENERALE-SPLITSKA BANKA D.D. / AZ B-CATEGORY MANDATORY PENSION FUND | Split, Croatia | 93,900 | 2.24 % | Custody account |
| PBZ D.D. / STATE STREET CLIENT | Zagreb, Croatia | 92,948 | 2.21 % | Custody account |
| Remaining shareholders | - | 1,708,545 | 41.61 % | - |
| Total | 4.199.584 | 100,00% |
| Short-term | Long-term | ||||
|---|---|---|---|---|---|
| 31.12.2016 | 31.12.2015 | 31.12.2016 | 31.12.2015 | ||
| Legal cases | 4,474 | 5,431 | - | - | |
| Vacation accrual | 2,506 | 2,631 | - | - | |
| Jubilee awards (long-service benefits) |
- | - | 1,474 | 1,759 | |
| Termination benefits | - | - | 2,102 | 1,724 | |
| 6,980 | 8,062 | 3,576 | 3,483 |
Movement in provisions was as follows:
| Jubilee awards |
Retirement / termination benefits |
Legal cases |
Vacation accrual |
Total | |
|---|---|---|---|---|---|
| Balance at 1 January 2016 |
1,759 | 1,725 | 5,431 | 2,630 | 11,545 |
| Increase/(decrease) in provisions |
(285) | 378 | (957) | (125) | (989) |
| Balance at 31 December 2016 |
1,474 | 2,103 | 4,474 | 2,506 | 10,556 |
| Jubilee awards |
Retirement / termination benefits |
Legal cases |
Vacation accrual |
Total | |
|---|---|---|---|---|---|
| Balance at 1 January 2015 |
1,302 | 688 | 3,720 | 3,197 | 8,907 |
| Increase/(decrease) in provisions |
457 | 1,037 | 1,711 | (567) | 2,638 |
| Balance at 31 December 2015 |
1,759 | 1,725 | 5,431 | 2,630 | 11,545 |
According to the Collective Agreement, the Company has the obligation to pay long-service (jubilee awards), retirement-related and other benefits to employees. The Company operates a defined benefit plan for qualifying employees. Benefits payable upon retirement and long-service benefits are defined in the Union Agreement and employment agreements. No other post-retirement benefits are provided.
Long-service benefits are paid for full years of service in the month of the current year in which the service is determined as completed.
The present value of defined benefit obligations arising from long-service benefits and benefits payable upon retirement is determined using the Projected Credit Unit method and serves as the basis for arriving at the past and current service costs, the interest expense and the actuarial gain or loss.
Key assumptions used in calculating the required provisions are the discount rate of 3.60 % and the fluctuation rate of 6.60 %.
| 31.12.2016 | 31.12.2015 | |
|---|---|---|
| Long-term borrowings | 244,892 | 304,249 |
| Long-term commodity credits provided by suppliers | 17,155 | 19,263 |
| 262,047 | 323,512 | |
| Current portion of long-term borrowings (Note 37) | (87,634) | (58,169) |
| Total long-term borrowings | 174,412 | 265,343 |
Long-term borrowings are mainly those realized through programs of HBOR and are used to finance capital investments and development projects. Instruments of collateral provided for the for longterm loans include mortgage on real estate and/or equipment and payment instruments. All the long-term loans are repayable on a quarterly basis.
In 2016, the weighted average interest rate on the long-term loans was 3.65 percent.
The Company regularly meets all its obligations arising from the loans and observes all the conditions specified in the underlying contracts.
Movements in the long-term borrowings during the year were as follows:
| 2016 | 2015 | |
|---|---|---|
| Balance at 1 January | 265,343 | 201,365 |
| New loans raised | - | 116,906 |
| Amounts repaid | (425) | (157) |
| Reclassification to short-term loans (Note 37) | (90,506) | (52,771) |
| Total long-term borrowings | 174,412 | 265,343 |
(in thousands of kunas)
| 31.12.2016 | 31.12.2015 | |
|---|---|---|
| Foreign customers | 9,750 | 10,378 |
| Domestic customers | 2,499 | 427 |
| 12,249 | 10,805 |
| (in thousands of kunas | |||||
|---|---|---|---|---|---|
| ------------------------ | -- | -- | -- | -- | -- |
| 31.12.2016 | 31.12.2015 | |
|---|---|---|
| Foreign trade payables | 94,867 | 118,534 |
| Domestic trade payables | 29,948 | 45,022 |
| 124,815 | 163,556 |
In 2016 the average days payables outstanding was 110 (2015: 132 days).
(in thousands of kunas)
| 31.12.2016 | 31.12.2015 | |
|---|---|---|
| Short-term borrowings – principal payable | 122,052 | 87,955 |
| Current portion of long-term borrowings (Note 34) | 87,634 | 58,169 |
| Short-term borrowings – interest payable | 1,743 | 1,257 |
| 211,430 | 147,381 |
The short-term borrowings were used to finance development projects and for working capital purposes. Instruments of collateral provided for the short-term borrowings are payment instruments. Of the total balance of the short-term borrowings, 75 percent represent revolving facilities and approved overdrafts on current accounts, with the limits renewable on an annual basis.
In 2016, the weighted average interest rate on the short-term loans was 4.53 percent.
The Company fulfils all its obligations under the loans regularly.
| 2016 | 2015 | |
|---|---|---|
| Balance at 1 January | 147,381 | 257,778 |
| New loans raised | 95,927 | 63,631 |
| Reclassification from long-term loans (Note 34) | 90,506 | 52,771 |
| Interest invoiced | 18,297 | 23,944 |
| Exchange rate change | (2,614) | (222) |
| Interest paid | (17,608) | (23,944) |
| Amounts repaid | (120,459) | (227,021) |
| Balance at 31 December | 211,430 | 147,381 |
(in thousands of kunas)
| 31.12.2016 | 31.12.2015 | |
|---|---|---|
| Amounts due to employees | 7,075 | 8,045 |
| Due to the State and State institutions | 4,016 | 6,218 |
| Other current liabilities | 46 | 39 |
| 11,136 | 14,302 |
| 39. | ACCRUED EXPENSES | |||
|---|---|---|---|---|
| -- | ----- | -- | ------------------ | -- |
| 31.12.2016 | 31.12.2015 | |
|---|---|---|
| Accrued tool expenses | 12,920 | 14,611 |
| Other current liabilities | 1,199 | 647 |
| 14,119 | 15,287 |
(in thousands of kunas)
Transactions with related companies were as follows:
| Receivables and payables for goods, | Receivables | Payables | ||
|---|---|---|---|---|
| services and interest | 31.12.2016 | 31.12.2015 | 31.12.2016 | 31.12.2015 |
| AO ADP, Russia / ZAO PHR, Russia | 103,639 | 127,598 | 2,111 | 5,468 |
| ZAO ADP KALUGA, Russia | 66,366 | 70,845 | 58 | 545 |
| ADP d.o.o. Mladenovac, Serbia | 22,699 | 11,244 | 2,355 | 4,440 |
| EURO APS, Romania | 4,149 | 4,880 | 79 | - |
| Centar za istraživanje i razvoj, Croatia | 2 | 3 | 5 | 8 |
| AD Plastik d.o.o., Slovenia | - | 9 | 929 | 1,695 |
| 196,855 | 214,579 | 5,537 | 12,156 |
| Receivables | Payables | |||
|---|---|---|---|---|
| Receivables and payables for loans | 31.12.2016 | 31.12.2015 | 31.12.2016 | 31.12.2015 |
| AO ADP, Russia / ZAO PHR, Russia | 22,673 | 22,905 | - | - |
| ZAO ADP KALUGA, Russia | 38,154 | 32,535 | - | - |
| ADP d.o.o. Mladenovac, Serbia | 21,162 | 32,571 | - | - |
| AD Plastik d.o.o., Slovenia | - | - | - | 5,726 |
| 81,989 | 88,011 | - | 5,726 |
| Purchase transactions | Income | Expenses | ||
|---|---|---|---|---|
| Operating income and expenses | 2016 | 2015 | 2016 | 2015 |
| ADP d.o.o. Mladenovac, Serbia | 17,181 | 13,727 | 40,223 | 5,717 |
| AO ADP, Russia / ZAO PHR, Russia | 16,489 | 35,496 | - | 9,399 |
| ZAO ADP KALUGA, Russia | 14,760 | 16,832 | 243 | 5,490 |
| EURO APS, Romania | 9,658 | 9,169 | 73 | - |
| AD Plastik d.o.o., Slovenia | 450 | 11,001 | 1,140 | - |
| Centar za istraživanje i razvoj, Croatia | 8 | 2 | 24 | 1 |
| 58,546 | 86,227 | 41,703 | 20,607 |
| Financial transactions | Income | Expenses | |||
|---|---|---|---|---|---|
| Financial income and expenses | 2016 | 2015 | 2016 | 2015 | |
| EURO APS, Romania | 46,716 | 41,963 | - | - | |
| ZAO ADP KALUGA, Russia | 1,611 | 2,349 | - | - | |
| AO ADP, Russia / ZAO PHR, Russia | 1,161 | 1,600 | - | - | |
| ADP d.o.o. Mladenovac, Serbia | 993 | 1,461 | - | - | |
| AD Plastik d.o.o., Slovenia | - | - | 181 | 87 | |
| 50,481 | 47,373 | 181 | 87 |
The total remuneration provided to the members of the Supervisory Board, the Management Board and executive directors in 2016 amounts to HRK 10,422 thousand (2015: HRK 11,605 thousand).
The Company's gearing ratio, expressed as the ratio of net debt to equity, is expressed as follows:
| 31.12.2016 | 31.12.2015 | |
|---|---|---|
| Short-term borrowings (Note 37) | 211,430 | 147,381 |
| Long-term borrowings (Note 34) | 174,412 | 265,343 |
| Cash and cash equivalents (Note 30) | (4,033) | (3,414) |
| Deposits (Note 29) | (10) | (441) |
| Net debt | 381,799 | 408,869 |
| Equity | 665,718 | 644,972 |
| Net debt-to-equity ratio | 57.35 % | 63.39 % |
Net debt includes credits extended to purchase goods in the amount of HRK 17,155 thousand (31 December 2015: HRK 19,263 thousand).
Equity consists of share capital, reserves, own shares and retained earnings.
| 31.12.2016 | 31.12.2015 | |
|---|---|---|
| Financial assets | 453,820 | 495,400 |
| Non-current trade receivables (Note 25) | 135,937 | 212,619 |
| Given loans (Notes 24, 29) | 151,932 | 141,849 |
| Trade receivables | 139,730 | 117,553 |
| Other receivables and other financial assets | 22,178 | 19,524 |
| Cash and cash equivalents and deposits (Notes 29, 30) | 4,043 | 3,855 |
| Financial liabilities | 530,028 | 595,169 |
| Loans received (Notes 34, 37) | 385,842 | 412,724 |
| Trade and other payables (Notes 35, 36, 38) | 144,186 | 182,445 |
(in thousands of kunas)
Other receivables include the balances from the following line items in the statement of financial position: other receivables less receivables from the State, and other financial assets.
Trade and other payables include the balances from the following line items in the statement of financial position: trade payables, advances received and other current liabilities, less amounts owed to the State.
At the reporting date there are no significant concentrations of credit risk on loans and receivables designated at fair value through the statement of comprehensive income.
The Finance function of the Company, which coordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Company, performs risk management at Company's by means of internal risk reports, which analyse exposures by the degree and magnitude of risks, and implementing activities to manage the risks effectively and minimise them. These risks include market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk and cash flow interest rate risk. The Company does not enter into, or trade in financial instruments, including derivative financial instruments, for speculative purposes.
The Company's operations expose it to price risk, which is the risk associated with changes in the prices of key raw materials, transportation, other production costs and strong pressure from competitors and customers. However, in the automotive industry, open product price calculations prevail, and the price fluctuations of raw materials and other costs, either the upward or downward, are being adjusted with customers through selling price on a monthly, quarterly or semi-annual basis (depending on the customer). The largest markets on which the Company provides its services and sells its products comprise the EU market and the market of the Russian Federation. The Management Board determines the prices of its products for each foreign market separately.
Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates relative to the interest rate, which applies to the financial instrument. The Company's interest rate risk arises from its borrowings. The interest rate risk exposure is low, as there are no significant financial instruments at variable rates.
default is minimised.
The Company is exposed to credit risk in respect of given loans and trade receivables. Loans have been granted to its subsidiaries, and as such the credit risk is under the control of the Company. Trade receivables are presented net of allowance for bad and doubtful accounts. The largest five customers of the Company are as follows: Revoz, Slovenia; Reydel Automotive France; Hella Saturnus Slovenia; Peugeot Citroen Automobiles, France; and Grupo Antolin Turnov Czech Republic. Operating income generated from the sales made to the business partners represents 64.61 percent of the total operating income (2015: 66.55 %). It is the policy of the Company to transact with financially sound companies where the risk of
The Company undertakes certain transactions denominated in foreign currencies. Hence, exposures to exchange rate fluctuations arise. The carrying amounts of the Company's foreign-currency denominated monetary assets and monetary liabilities at the reporting date are provided in the table below using the middle exchange rates of the Croatian National Bank:
| At | Assets | Liabilities | Net FX position | |||
|---|---|---|---|---|---|---|
| 31.12. | 2016. | 2015. | 2016. | 2015. | 2016. | 2015. |
| EUR | 334,772 | 502,570 | 242,093 | 277,557 | 92,679 | 225,013 |
| RUB | 100,376 | 84,086 | - | 215 | 100,376 | 83,871 |
| RSD | 3,525 | 3,744 | - | - | 3,525 | 3,744 |
| USD | 118 | 8,476 | 191 | 463 | (74) | 8,013 |
| GBP | 35 | 3 | - | 239 | 35 | (236) |
| 438,826 | 598,879 | 242,284 | 278,474 | 196,541 | 320,405 |
The Company is mainly exposed to the risk of changes in the exchange rates for the EUR and RUB. The following table details the Company's sensitivity to a 2-percent change of the Croatian kuna against the euro and a 10-percent change of the Croatian kuna against the Russian rouble (RUB) in 2016 and 2015. The sensitivity analysis includes only outstanding foreign-currency denominated monetary items and presents their translation at the year-end. A negative figure below indicates a decrease in profit, and a positive figure an increase in profit where the Croatian kuna changes against the relevant currencies by the percentages specified above.
| EUR impact | 2016 | 2015 |
|---|---|---|
| Change in exchange differences (2 %) | +/- 1,854 | +/- 4,519 |
| RUB impact | 2016 | 2015 |
| Change in exchange differences (10 %) | +/- 10,038 | +/- 8,607 |
Ultimate responsibility for liquidity risk management rests with the Management Board. The Company manages its liquidity using banking facilities (overdrafts) and by continuously monitoring forecast and actual cash flows and matching the maturity profiles of its financial assets and liabilities.
The following tables detail the Company's remaining contractual maturity for its non-derivative financial assets and liabilities. The tables have been drawn up based on the undiscounted cash flows of financial assets and liabilities based on the earliest date on which the Company can require payment and can be required to pay.
| 2016 | Weighted average interest rate |
Up to 1 month | 1 to 3 months | 3 months to 1 year | 1 to 5 years | Over 5 years | Total |
|---|---|---|---|---|---|---|---|
| Assets | |||||||
| Non-interest bearing | - | 58,095 | 58,280 | 49,509 | 135,941 | 62 | 301,887 |
| Interest bearing | 5.20 % | 1,532 | 4,360 | 63,566 | 92,293 | 4,675 | 166,427 |
| 59,627 | 62,640 | 113,076 | 228,234 | 4,737 | 468,314 | ||
| Liabilities | |||||||
| Non-interest bearing | - | 68,706 | 62,637 | 12,841 | - | - | 144,184 |
| Interest bearing | 3.76 % | 4,569 | 42,200 | 174,389 | 187,196 | 29 | 408,384 |
| 73,275 | 104,838 | 187,230 | 187,196 | 29 | 552,568 |
| 2015 | Weighted average interest rate |
Up to 1 month | 1 to 3 months | 3 months to 1 year | 1 to 5 years | Over 5 years | Total |
|---|---|---|---|---|---|---|---|
| Assets | |||||||
| Non-interest bearing | - | 39,063 | 55,777 | 41,952 | 212,619 | - | 349,411 |
| Interest bearing | 9.48 % | 937 | 1,792 | 24,389 | 128,273 | 6,237 | 161,628 |
| 40,000 | 57,569 | 66,341 | 340,892 | 6,237 | 511,039 | ||
| Liabilities | |||||||
| Non-interest bearing | - | 74,594 | 68,635 | 35,665 | 3,551 | - | 182,445 |
| Interest bearing | 4.34 % | 3,510 | 22,632 | 134,692 | 264,258 | 37,022 | 462,114 |
| 78,104 | 91,267 | 170,357 | 267,809 | 37,022 | 644,559 |
Financial instruments held to maturity in the ordinary course of business are carried at the lower of cost and net amount less repaid portion.
The fair value represents the amount for which an asset could be exchanged between knowledgeable, willing parties in an arm's length transaction, except in the event of a forced sale or liquidation. The fair value of a financial instrument is the price quoted on a stock exchange or arrived at using the discounted cash flow method.
At 31 December 2016, the carrying amounts of cash, receivables, short-term liabilities, accrued expenses, short-term borrowings and other financial instruments match their fair values.
After 31 December 2016, there were no events that would have a significant impact on the financial statements for the year 2016, respectively they are not of such significance to the Company to require disclosure in the notes to the financial statements.
Based on the Management's estimate, the Company had no material contingent liabilities at 31 December 2016 which would require to be disclosed in the notes to the financial statements.
As at 31 December 2016 there were no material legal actions outstanding against the Company with an expected negative outcome other than those reflected in these financial statements.
These financial statements were approved by the Management Board of AD Plastik d.d. and authorised for issue on 19 April 2017.
Marinko Došen, President of the Management Board
Katija Klepo, Member of Management Board
Sanja Biočić, Member of Management Board
Mladen Peroš, Member of Management Board
Solin, April 2017
www.adplastik.hr
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