Annual Report • Mar 28, 2019
Annual Report
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This document has been translated from the original version in Greek. In the event that differences exist between this translation and the original Greek text , the document in the Greek language will prevail over this document.
15, A. Metaxa Street GR‐145 64 Kifissia Athens – Greece General Commercial Registry:1351401000
It is confirmed that the present Annual Financial Report (pages 3 – 170) is prepared in accordance with article 4 of Law 3556/2007 and decision 8/754/14.04.2016 of the Board of Directors of the Hellenic Capital Market Commission and was approved by the Board of Directors of "FRIGOGLASS S.A.I.C." on the 22nd March 2019.
The present Annual Financial Report is available on the company's website www.frigoglass.com. The Financial Statements and the Auditors' Reports for the subsidiaries which are consolidated and they are not listed (in accordance with Capital Markets Board of Director's Decision 8/754/14.04.2016) can be found on the following link: https://www.frigoglass.com/financial‐results/
Pages
| A) | Board of Directors΄ Statement | 3 |
|---|---|---|
| B) | Board of Directors΄ Report | 4 |
| C) | Independent Auditor΄s Report | 73 |
| D) | Financial Statements for the period | |
| 1st January to 31st December 2018 | 80 | |
| E) | Alternative Performance Measures ("APMs") | 167 |
It is asserted that for the preparation of the Financial Statements the following individuals are responsible:
| The Chairman of the Board of Directors | The Managing Director |
|---|---|
| Haralambos David | Nikolaos Mamoulis |
| The Group Chief Financial Officer | The Head of Financial Controlling |
| Charalampos Gkoritsas | Vasileios Stergiou |
In accordance with article 4 paragraph 2 of Law 3556/30.04.2007, we confirm that to the best of our knowledge:
the attached Annual Financial Statements of the Company and the Group of " FRIGOGLASS S.A.I.C." for the year 01.01.2018 ‐ 31.12.2018, which were compiled according to the standing accounting standards, describe in a truthful way the assets and the liabilities, the equity and the results of FRIGOGLASS S.A.I.C, as well as the subsidiary companies which are included in the consolidation as a total.
the enclosed Board of Directors' report presents in a true manner the development, performance and financial position of FRIGOGLASS S.A.I.C. as well as of the companies included in the consolidated financial statements taken as a whole, including the description of the principal risks and uncertainties that they face.
Haralambos David
Nikolaos Mamoulis
Loukas Komis
Dear Shareholders,
According to Law 3556/2007 and the implementing decisions of the Hellenic Capital Market Commission, we are submitting the present annual report of the Board of Directors referring to the consolidated and the parent company financial data of FRIGOGLASS S.A.I.C. (the "Company") for the fiscal year ended on 31 December 2018.
Frigoglass (the 'Group') is one of the leading international producers of Ice‐Cold Merchandisers (ICMs) and one of the foremost glass container producers in the high growth markets of West Africa. Frigoglass is a strategic partner of the global beverage brands throughout the world. The Group's customer base includes most of the significant bottlers in The Coca‐Cola System, a number of Pepsi bottlers, several of the world's leading breweries, including Heineken, Diageo, Carlsberg and AB InBev, and leading dairy companies, including, among others, Nestlé and Danone.
Frigoglass has a strong relationship with The Coca‐Cola System through long‐ term ICM supply arrangements with Coca‐Cola bottlers, such as Coca‐Cola HBC AG and Coca‐Cola European Partners Plc, two of the largest bottlers of non‐ alcoholic beverages in the world.
Additionally, Frigoglass has strong and long‐standing relationships with many of its other key customers, many of which are served through both ICM and Glass operations. This allows Frigoglass to leverage its customer base across both operating segments. The Group's position as a long‐standing partner to these customers and relationship with them across both ICM and Glass operations provides Frigoglass valuable insight into their strategic business and merchandizing needs.
In ICM Operations, Frigoglass manufactures and sells commercial refrigeration products, as well as, related parts and services. Frigoglass ICMs are strategic merchandizing tools for its customers, serving not only to chill their products, but also as retail space and merchandizing tools that encourage immediate consumption of customer products while enhancing Frigoglass customers' brands. Frigoglass works with its customers to provide high quality, bespoke ICM solutions that address their business needs for their various trade channels. Through this close collaboration, Frigoglass helps its customers to realize their strategic merchandizing plans, from conception and development of new, customized ICMs to offering a full portfolio of after‐sale services. Frigoglass also helps its customers to achieve their sustainability goals and reduce their carbon footprint through its innovative, environmentally friendly ICM solutions, which consume substantially less energy than conventional ICMs.
In Glass Operations, Frigoglass manufactures and sells glass bottles and containers of high‐quality and specification in an array of shapes, sizes, colors and weights to a variety of customers operating primarily in the soft drinks, beer and spirits industries, as well as, in the cosmetics and pharmaceutical industries. Glass Operations are more regionally focused, concentrating on sales in West Africa. In Nigeria, Glass Operations also produce plastic crates and metal crowns, allowing the Group to offer its customers a complete packaging solution for their products.
Frigoglass operates in both emerging and mature markets, which exhibit different beverage consumption, macroeconomic and demographic trends, thus offering diversity and creating a range of growth opportunities for its business. Emerging markets exhibit low ICM penetration levels, combined with favorable long‐term macroeconomic and demographic trends. These factors provide substantial growth opportunities for Frigoglass and its customers as a result of expectations for increased beverage consumption. Despite a high level of ICM penetration, demand for Frigoglass products in mature markets is primarily driven by its customers' sustainability initiatives, such as carbon footprint reduction, lower energy consumption and demand for innovative and sophisticated products featuring better product performance, trade channel specific customization and high quality after‐sale service offerings.
Frigoglass production facilities are located in seven countries: Greece, India, Indonesia, Nigeria, South Africa, Romania and Russia. To strengthen this strategic geographic positioning, Frigoglass also operates stand‐alone sales offices in Kenya, Norway, Hungary, Poland and Nigeria.
In March 2014, the Group discontinued its manufacturing operations at Spartanburg, South Carolina. This follows Frigoglass decision to change its operating model in the United States and focus on commercial activities of sales and marketing, distribution and service.
In the fourth quarter of 2014, the Group also integrated the Turkey‐based manufacturing volume into its European flagship plant in Timisoara, Romania. As part of this process, Frigoglass' Silivri‐based Turkish manufacturing plant ceased operations. The continued productivity improvements following the implementation of Lean manufacturing principles in our plant in Romania have made available sufficient capacity to absorb the volume from Turkey and meet any potential future demand.
In July 2016, the Group announced the discontinuation of its manufacturing operations in China. This development has enabled the optimization of the production capacity in Asia, improved the company's fixed cost structure and strengthened its long‐term competitiveness.
In December 2018, the Group completed the divestment of its glass container subsidiary Frigoglass Jebel Ali FZE. This divestment is in line with Frigoglass' strategy and will enable the Company to focus on its commercial refrigeration business and the high growth Nigerian glass business operations.
The following table presents the consolidated income statements for fiscal years 2018, 2017 and 2016.
FRIGOGLASS S.A.I.C.
Income Statement
in € 000's
| Consolidated | % Change | % Of Net Trade Sales | ||||||
|---|---|---|---|---|---|---|---|---|
| Year ended | ||||||||
| 31.12.2018 31.12.2017 31.12.2016 | 2018 | 2017 | 2018 | 2017 | 2016 | |||
| Restated | ||||||||
| Continuing Operations: | ||||||||
| Revenue from contracts with customers | 417.297 | 386.049 | 382.338 | 8,1% | 1,0% 100,0% 100,0% 100,0% | |||
| Cost of goods sold | (339.996) | (318.508) (319.088) | 6,7% | ‐0,2% | 81,5% | 82,5% | 83,5% | |
| Gross profit | 77.301 | 67.541 | 63.250 | 14,5% | 6,8% | 18,5% | 17,5% | 16,5% |
| Administrative expenses | (21.095) (22.157) (23.080) | ‐4,8% | ‐4,0% | 5,1% | 5,7% | 6,0% | ||
| Selling, distribution & marketing expenses | (20.736) (19.142) (26.566) | 8,3% | ‐27,9% | 5,0% | 5,0% | 6,9% | ||
| Research & development expenses Other operating income |
4.454 | (3.585) (3.738) 6.387 |
(4.085) 3.521 |
‐4,1% ‐30,3% |
‐8,5% 81,4% |
0,9% 1,1% |
1,0% 1,7% |
1,1% 0,9% |
| Other gains |
303 | 4.110 | (205) | 0,1% | 1,1% | 0,1% | ||
| Impairment of Fixed Assets | (2.071) (1.607) | (1.785) | 28,9% | ‐10,0% | 0,5% | 0,4% | 0,5% | |
| Operating Profit / |
34.571 | 31.394 | 11.050 | 10,1% 184,1% | 8,3% | 8,1% | 2,9% | |
| Finance costs | (24.702) (20.931) (10.727) | 18,0% | 95,1% | 5,9% | 5,4% | 2,8% | ||
| Finance income | 3.535 | 1.627 | 982 | 117,3% | 65,7% | 0,8% | 0,4% | 0,3% |
| Finance costs ‐ net | (21.167) (19.304) | (9.745) | 9,7% | 98,1% | 5,1% | 5,0% | 2,5% | |
| Profit / |
13.404 | 12.090 | 1.305 | 11% | 826% | 3,2% | 3,1% | 0,3% |
| Restructuring gains / |
(301) | 38.243 | (22.326) | 0,1% | 9,9% | 5,8% | ||
| Profit / |
13.103 | 50.333 | (21.021) | ‐74,0% ‐339,4% | 3,1% | 13,0% | 5,5% | |
| Income tax expense | (13.863) (15.438) | (19.516) | ‐10,2% | ‐20,9% | 3,3% | 4,0% | 5,1% | |
| Profit / |
||||||||
| continuing operations | (760) | 34.895 | (40.537) | ‐102,2% ‐186,1% | 0,2% | 9,0% | 10,6% | |
| Discontinued Operations: | ||||||||
| Profit / |
||||||||
| discontinued operations | (1.304) | (19.958) | (39.735) | ‐93,5% | ‐49,8% | 0,3% | 5,2% | 10,4% |
| Profit/ |
(2.064) | 14.937 | (80.272) | ‐113,8% ‐118,6% | 0,5% | 3,9% | 21,0% | |
| Attributable to: | ||||||||
| Non controlling interests | 6.644 | 7.289 | 8.958 | ‐8,8% | ‐18,6% | 1,6% | 1,9% | 2,3% |
| Shareholders | (8.708) | 7.648 | (89.230) | ‐213,9% ‐108,6% | 2,1% | 2,0% | 23,3% | |
| Depreciation | 19.791 | 21.108 | 24.105 | ‐6,2% | ‐12,4% | 4,7% | 5,5% | 6,3% |
| EBITDA | 56.433 | 54.109 | 36.940 | 4,3% | 46,5% | 13,5% | 14,0% | 9,7% |
Group's net sales revenue increased by 8,1% to €417,3 million for the year ended 31 December 2018. This increase reflects higher year‐on‐year commercial refrigeration (ICM) sales in Europe and Africa, as well as, strong demand for glass containers and plastic crates in Nigerian Glass operations.
Commercial refrigeration net sales revenue increased by 6,8% for the year ended 31 December 2018, primarily driven by ICM placements from Coca‐Cola bottlers in Europe and Africa. In Eastern Europe, net sales revenue increased 19,2%, reflecting growth across most of our markets. Sales in Western Europe declined 19,8%, reflecting an exceptionally strong fourth quarter last year following increased orders from Coca‐Cola bottlers. In Africa and Middle East, net sales revenue increased by 63,7%, driven by customers' ICM investments in Nigeria and South Africa, as well as, market share gains with Coca‐Cola bottlers in North Africa. Net sales revenue in Asia declined by 17,7%, mainly led by lower demand in India and Southeast Asia.
The Glass business reported a strong performance, with net sales revenue increasing by 12,4% for the year ended 31 December 2018, following solid demand for glass containers and plastic crates, as well as, price initiatives. This performance was tempered by lower orders in the metal crowns business. In local currency terms, net sales revenue increased by approximately 18% year‐on‐year. Supported by the recent startup of an international beverage player's Nigerian brewery in Sagamu, the beer segment enjoyed solid demand growth in the year. The plastic crates business benefited from increasing glass related demand from breweries and soft drink customers, with sales growing by a double digit rate. Sales in our metal crowns business were lower year‐on‐year due to soft demand from a key soft drink customer, more than offsetting the positive impact of price increases.
Cost of goods sold increased by 6,7% to €340,0 million, reflecting higher year‐ on‐year volume in the commercial refrigeration and glass businesses. Cost of goods sold benefited by input cost reduction initiatives and ICM plants productivity related savings. Overall, cost of goods sold as a percentage of the Group's net sales revenue improved by approximately 100 basis points to 81,5%. Fixed cost absorption in the commercial refrigeration business and input cost savings, as well as, volume growth in the Nigeria‐based Glass businesses were the main drivers of this improvement.
Administrative expenses declined by 4,8% to €21,1 million, mainly due to lower employee related expenses and depreciation charges. The ratio of administrative expenses to net sales revenue improved to 5,1%, from 5,7% in the prior year.
Selling, distribution and marketing expenses increased by 8,3% to €20,7 million, mainly driven by higher warranty related expenses due to increased sales. As a percentage of net sales revenue, selling, distribution and marketing expenses were stable at 5,0%.
Research and development expenses decreased by 4,1% to €3,6 million, driven by lower year‐on‐year depreciation charges and miscellaneous expenses. As a percentage of net sales revenue, research and development expenses improved to 0,9%, from 1,0% in the prior year.
Other income was €4,5 million, compared to €6,4 million last year. Last year's other income mainly includes a one‐off gain as insurance compensation. Other gains reached €0,3 million, compared to €4,1 million last year following a one‐off gain from China's building disposal.
Finance costs increased by 9,7% year‐on‐year to €21,2 million, reflecting foreign exchange losses caused by the impact of Naira appreciation against the Euro and South Africa's currency devaluation against the US\$.
The Group incurred restructuring costs of €0,3 million related to the termination of one production shift in Indonesia. Frigoglass incurred restructuring gains of €38,2 million for the year ended 31 December 2017 related to the Group's capital restructuring process.
Income tax expense decreased by 10,2% to €13,9 million, driven by lower pre‐tax profits in Nigeria.
Frigoglass reported net losses of €1,3 million from discontinued operations, compared to losses of €20,0 million in the prior year period. Including discontinued operations, Frigoglass reported net losses of €8,7 million, also impacted by impairment charges of €2,1 million related to the performance of our business in India, compared to profits of €7,6 million last year.
Net sales revenue increased by 1,0% to €386,0 million for the year ended 31 December 2017. This increase primarily reflects higher year‐on‐year commercial refrigeration (ICM) sales in Europe.
Net sales revenue from ICM Operations increased by 1,9% to €295,5 million for the year ended 31 December 2017. In Eastern Europe, net sales revenue increased by 12,8%, mainly reflecting Russia's macroeconomic recovery throughout the year and the expansion of our Integrated Service offering to more regions in Russia. Following signs of macroeconomics improvement, key customers in Russia's beer segment invested in coolers to improve their execution in the marketplace. Sales to Coca‐Cola bottlers in the region increased by high single digit, primarily reflecting increased orders in Romania and Bulgaria. In Western Europe, net sales revenue grew 47,2%, mainly led by strong demand for ICOOL from the Coca‐Cola bottlers in Germany and France. During the year, a stronger customer orientation resulted in gaining market share with the existing customer base as well as new customers.
Net sales revenue in Asia decreased by 36,8%, mainly reflecting the closure of China's plant which had a significant adverse impact on orders in this market. Excluding China, sales in our Asia business declined by 9,8% following lower ICM placements in Southeast Asia and intense competition. Net sales revenue in Africa and the Middle East region decreased by 36,4%. The market conditions in Nigeria remain difficult. The lower year‐on‐year sales in Nigeria also reflect orders being transferred to the first quarter of 2018. Sales in East Africa declined year‐on‐year on lower demand from the Coca‐Cola bottler and a brewery customer in the region.
Net sales revenue from Glass Operations decreased by 2,0% to €90,6 million for the year ended 31 December 2017, primarily reflecting the adverse Naira translation impact and lower demand for our glass container business, more than offsetting the good performance in Metal Crowns. In local currency terms, sales in our Nigerian operations increased by 21% year‐on‐year. Price increases to partially absorb the cost inflation caused by the devaluation of the Naira and increased demand from wine and spirit companies, as well as, breweries, resulted in this solid performance. Metal Crowns had a good performance, with sales growing by a double digit rate mainly on strong demand from soft‐drinks and breweries. Plastic Crates' sales declined by 2,8%, primarily due to the lower year‐on‐year demand from customers in the soft‐drinks beverage market segment.
Cost of goods sold remained broadly unchanged at €318,5 million for the year ended 31 December 2017, as the reduction of fixed costs due to the discontinuation of the manufacturing operations in China and the positive impact from the devaluation of the Naira were fully offset by the higher year‐on‐year volume and increased raw material cost. Overall, cost of goods sold as a percentage of the Group's net sales revenue decreased to 82,5% for the year ended 31 December 2017, from 83,5% for the year ended 31 December 2016.
Administrative expenses decreased by 4,0% to €22,2 million for the year ended 31 December 2017. This was primarily attributable to lower employee related expenses, assisted by the discontinuation of manufacturing operations in China. The ratio of administrative expenses to net sales revenue decreased at 5,7%, from 6,0% in the year ended 31 December 2016.
Selling, distribution and marketing expenses decreased by 27,9% to €19,1 million for the year ended 31 December 2017. This decrease mainly reflects lower warranty and miscellaneous expenses, as well as, an additional provision regarding the recoverability of certain receivables in 2016. As a percentage of net sales revenue, selling, distribution and marketing expenses decreased to 5,0%, from 6,9% in the year ended 31 December 2016.
Research and development expenses decreased by 8,5% to €3,7 million for the year ended 31 December 2017. This decrease is principally attributable to lower employee related expenses. As a percentage of net sales revenue, research and development expenses decreased to 1,0%, from 1,1% in the year ended 31 December 2016.
Other income increased by €2,9 million to €6,4 million for the year ended 31 December 2017, mainly due to higher scrap related sales and insurance claims. Other gains reached €4,1 million, compared to losses of €0,2 million, including the gains from the disposal of the building in China.
Operating profit impacted by charges related to impairments of fixed assets amounted to €1,6 million for the year ended 31 December 2017, compared to impairments of €1,8 million for the year ended 31 December 2016.
Finance costs reached €19,3 million for the year ended 31 December 2017, from €9,7 million in the year ended December 2016. This increase primarily reflects foreign exchange gains in 2016.
In the year ended 31 December 2017, the Group incurred net gains of €38,2 million following the write‐off of €45,0 million debt triggered by the Group's capital restructuring, €35,5 million gains from the difference between the fair value of the issued shares and the nominal value of the convertible bonds converted into shares and €42,3 million of expenses related to the capital restructuring process.
Income tax expense decreased to €15,4 million for the year ended 31 December 2017.
Net losses from discontinued operations were €20,0 million for year ended 31 December 2017, impacted by impairment charges of €11,4 million, compared to losses of €39,7 million in the year ended 31 December 2016 that were adversely affected by impairments of €29,7 million.
Net profit attributable to shareholders amounted to €7,6 million for year ended 31 December 2017, compared to net losses of €89,2 million in the year ended 31 December 2016.
The following table presents the cash flow for fiscal years 2018, 2017 and 2016. FRIGOGLASS S.A.I.C. Cash Flow Statement
in € 000's
| Consolidated | |||
|---|---|---|---|
| Year ended | |||
| 31.12.2018 | 31.12.2017 | 31.12.2016 | |
| Restated | |||
| Profit / |
(2.064) | 14.937 | (80.272) |
| Adjustments for: | |||
| Income tax expense | 13.863 | 15.438 | 19.516 |
| Depreciation | 19.791 | 24.625 | 29.784 |
| Provisions | 3.517 | 8.119 | 15.909 |
| Impairment of Fixed Assets | 2.071 | 9.591 | 31.500 |
| Payment of Pension Scheme | (8.182) | (1.106) | (598) |
| Finance costs, net | 21.412 | 20.724 | 17.257 |
| P&L from the Disposal of Subsidiary | (6.817) | ‐ | ‐ |
| Discount to Notes and Bank debt | ‐ (45.000) |
‐ | |
| Gain from the Conversion of Debt to Equity | ‐ (35.499) |
‐ | |
| Loss/ |
(293) | (4.670) | 41 |
| Changes in Working Capital: | |||
| Decrease / (increase) of inventories | (2.325) | (19.260) | 3.625 |
| Decrease / (increase) of trade receivables | 4.744 | (14.431) | 5.694 |
| Decrease / (increase) of other receivables | (4.363) | (2.505) | 2.910 |
| Decrease / (increase) of other long term receivables | 42 | 515 | 453 |
| (Decrease) / increase of trade payables | 17.923 | 4.437 | (6.994) |
| (Decrease) / increase of other liabilities | 158 | 599 | 3.403 |
| Less: | |||
| Income taxes paid | (18.791) | (9.871) | (13.947) |
| (a) Cash flows from operating activities | 40.686 | (33.357) | 28.281 |
| Investing Activities: | |||
| Purchase of property, plant and equipment | (31.648) | (17.349) | (11.044) |
| Purchase of intangible assets | (4.576) | (1.880) | (2.728) |
| Proceeds from disposal of property, plant & equipment | 1.530 | 10.318 | 5.106 |
| Proceeds from Discontinued Operations | 972 | ‐ | ‐ |
| (b) Net cash flows(used in) /from investing activities | (33.722) | (8.911) | (8.666) |
| Net cash flows after investing activities (a) + (b) | 6.964 | (42.268) | 19.615 |
| Financing activities: | |||
| Proceeds from loans | 111.646 | 99.549 | 146.012 |
| (112.305) | (100.095) | (125.196) | |
| Interest paid | (10.938) | (17.216) | (28.540) |
| Acquisition of subsidiary's non‐controlling interests | ‐ | ‐ | ‐ |
| Dividends paid to shareholders | ‐ | ‐ | (3) |
| Dividends paid to non‐controlling interests | (448) | (613) | (167) |
| Share Capital Increase | ‐ 63.459 |
‐ | |
| Costs for the Share capital Increase | ‐ | (2.235) | ‐ |
| (c) Net cash flows from/(used in ) financing activities | (12.045) | 42.849 | (7.894) |
| Net increase / (decrease) in cash and cash equivalents | |||
| (a) + (b) + (c) | (5.081) | 581 | 11.721 |
| Cash and cash equivalents at the beginning of the year | 53.130 | 57.526 | 57.492 |
| Effects of changes in exchange rate | 1.008 | (4.562) | (11.687) |
| Cash and cash equivalents at the end of the year from discontinued | |||
| operations | ‐ | (415) | ‐ |
| Cash and cash equivalents at the end of the year | 49.057 | 53.130 | 57.526 |
Net cash from operating activities amounted to €40,7 million for the year ended 31 December 2018, compared to net cash used in operating activities of €33,4 million in the prior year. This improvement mainly reflects a higher year‐on‐year operating profit, lower restructuring costs and improved collections.
Net cash used in operating activities amounted to €33,4 million for the year ended 31 December 2017, compared to net cash from operating activities of €28,3 million a year ago. This decrease is primarily attributable to the capital restructuring related expenses incurred in 2017, as well as, an increase in inventories and receivables.
Net cash used in investing activities amounted to €33,7 million in the year ended 31 December 2018, compared to net cash used in investment activities of €8,9 million in 2017. Last year's net cash flow from investment activities was supported by proceeds from the sale of China building. The increase reflects investments in materials and machinery related to a furnace rebuild in Nigeria and SAP platform implementation.
Net cash used in investing activities amounted to €8,9 million in the year ended 31 December 2017, including proceeds from the sale of the building in China, compared to net cash used in investing activities of €8,7 million in the year ended 31 December 2016.
Net cash used in financing activities amounted to €12,0 million in the year ended 31 December 2018, compared to net cash from financing activities of €42,8 million in the year ended 31 December 2017. The decrease reflects the share capital increase completed in October 2017 and lower interest paid.
Net cash from financing activities amounted to €42,8 million in the year ended 31 December 2017, compared to net cash used in financing activities of €7,9 million in the year ended 31 December 2016.
Net trade working capital from continuing operations as of 31 December 2018 amounted to €101,7 million, compared to €112,9 million as of 31 December 2017. This decrease mainly reflects higher trade creditors related to pre‐buying of materials and machinery for the upcoming furnace rebuild in Nigeria.
Net trade working capital from continuing operations as of 31 December 2017 amounted to €112,9 million, compared to €90,3 million as of 31 December 2016. This increase mainly reflects inventory build‐up to cater demand in the first quarter of 2018 and higher trade receivables following a double digit sales growth in the fourth quarter of 2017.
| (in €m) | 31 December 2018 | 31 December 2017 | 31 December 2016 |
|---|---|---|---|
| Trade Debtors | 77.606 | 84.824 | 71.845 |
| Inventories | 101.739 | 89.075 | 76.305 |
| Trade Creditors | 77.643 | 60.985 | 57.881 |
| Net Trade Working Capital | 101.702 | 112.914 | 90.269 |
Capital expenditures from continuing operations amounted to €35,9 million in the year ended 31 December 2018, of which €31,3 million related to the purchase of property, plant and equipment and €4,6 million related to the purchase of intangible assets, compared to €18,1 million in the year ended 31 December 2017, of which €16,2m related to the purchase of property, plant and equipment and €1,9 million related to the purchase of intangible assets. The increase mainly reflects pre‐buying materials and related machinery for the upcoming furnace rebuild in Nigeria, as well as, the related expenditure for the SAP platform implementation.
Capital expenditures from continuing operations amounted to €18,1 million in the year ended 31 December 2017, of which €16,2 million related to the purchase of property, plant and equipment and €1,9 million related to the purchase of intangible assets, compared to €12,4 million in the year ended 31 December 2016, of which €9,7 million related to the purchase of property, plant and equipment and €2,7 million related to the purchase of intangible assets. The increase reflects pre‐buying materials and related machinery for a furnace cold repair in Nigeria in 2018, as well as, efficiency enhancement and capacity increase related projects in Romania and India facilities.
The Parent Company's Net Sales increased by €16,1 million and reached the amount of €42,1 million.
Gross Profit increased by €1,7 million and reached the amount of €3,0 million.
Net Losses after tax decreased by €46,6 million and reached the amount of €1,3 million.
The total Equity of the company from €24,2 million in 2017 decreased by €1,6 million and reached the amount of €22,6 million.
We delivered a good performance in the first year post its capital restructuring completion. We drove sales and comparable EBITDA growth, as well as, EBITDA margin enhancement and free cash flow generation in‐line with our expectations, representing a milestone in bringing back the company to sustainable growth over the longer term. In 2019, we anticipate commercial refrigeration top‐line momentum to continue following increased customer cooler investments and market share gains. In Glass business, we expect increased demand for glass containers, driven by solid beverage market fundamentals, recently added beer capacity and customers' new product launches.
We are also taking steps to deliver further cost efficiencies to assist the profit margin expansion, again in 2019. In commercial refrigeration business, we are implementing initiatives to realize raw material cost savings and productivity gains, as well as, production rebalancing and product range simplification savings. We continue our innovation journey by further developing bespoke ICMs and engaging closely with our customers. The EcoVadis Gold distinction we were awarded is an evidence of our commitment on sustainability. We are also gradually step changing our design for manufacturing process and continuously fine‐tuning our manufacturing capabilities to drive further efficiencies. Frigoserve business is gaining traction and we are expecting the expansion of our customer base going forward. Volume leverage, pricing and furnace efficiency improvements will support Glass business profit margin in 2019.
Frigoglass continues to invest for future growth. In 4Q18, the group announced a €25‐30 million investment to expand its furnace capacity at the Beta Glass Guinea plant, located in Agbara, Ogun state. The investment includes the replacement of an end of its lifetime furnace with a new larger one, an additional production line, upgrades to existing production lines, as well as, new quality inspection equipment. The new furnace is expected to become fully operational in 2020. With this investment, we support the growth of our international and regional beverage customers in the high growth potential West African region. Following the kick off of SAP platform business transformational project late in 2018, we are currently working to finalize the blueprint phase of our 3‐years journey. Finally, we have planned investments to drive cost optimization and operational efficiency improvements in our commercial refrigeration business. Overall, we expect Group's capital expenditure in 2019 in the range of €25‐30 million.
Details over Frigoglass principal sources of liquidity, material commitments and financing agreements, as well as material debt instruments and credit facilities are set out on to Note 13 "Non‐Current & Current Borrowings".
For Frigoglass critical accounting policies and judgments please refer to Notes 2 & 4. The related party transactions are set out on Note 20 "Related Party transactions".
For an overview of the Group's management activities and responsibilities, please refer to section 4 "Corporate Governance Statement" of the Board of Directors Statement.
This present statement has been drafted in accordance with Article 152 of Law 4548/2018, as in force (the "Law") and contains all the information required by the respective Greek legislation.
In the framework of its policy of adopting high corporate governance standards, FRIGOGLASS S.A.I.C. (hereinafter the "Company" or "Frigoglass") has drafted and adopted its own code of corporate governance, by virtue of the Company's Board of Directors' (hereinafter the "Board") resolution dated 10/12/2014, which, as amended, remains in force until today (hereinafter the "Code"). The Code was drafted in accordance with the provisions of laws 2190/1920, 3016/2002, 3873/2010, 4403/2016 and 4449/2017, in accordance with the resolution 5/204/14.11.2000 of the Hellenic Capital Market Commission (hereinafter the "HCMC"), as amended and in force, and in accordance with any other relevant resolution of the Board of Directors of the HCMC, as amended and in force. The Company shall in due time amend the Code for harmonisation purposes with the provisions of the Law, following the abolition of Codified Law 2190/1920 effective as of January, 1 2019.
The purpose of the Code is to set out the best practices in corporate governance as implemented by the Company, in the pursuit of transparency in communication with its shareholders and on‐going improvement of the corporate framework for the Company's operations and competitiveness.
The Code is also intended to lay down the methods by which the Company will operate and to establish administrative rules and procedures governing the relations between the administration, the Board of Directors, the shareholders and all other persons associated with and affected by actions taken by the Company's decision‐making bodies.
The Code is publicly available on the Company's website http://www.frigoglass.com/corporate‐governance.
Apart from this Code and the Internal Regulation of Operation, adopted according to Article 6, par. 1 of Law 3016/2002, the Company is further applying:
The purpose of applying the Code of Business Conduct and Ethics is, inter alia, to shape a framework for business operations consistent with the principles and rules of morality and transparency, to ensure compliance with international commercial law and the law applicable in the states where the Company is active, to maintain high‐level services and products, to improve the Company's profitability, to develop an environmentally friendly operating framework and to safeguard human rights through granting of equal rights and avoiding discriminatory treatment of all parties associated with the Company.
The Code of Business Conduct and Ethics is available on the Company's website at the address http://www.frigoglass.com.
Through the implementation of the Supplier Code, the Company seeks to create a business environment of cooperation with its suppliers governed by the principles of morality, transparency, protection of the environment and respect for human rights and the rules of health and safety. More specifically, the Company focuses on avoiding unfair competition and any involvement in situations of conflict of interest or bribery.
The Supplier Code is available on the Company's website at the address http://www.frigoglass.com.
The Company attaches considerable importance to the systems of internal audit and risk management.
More specifically, the Company's Board adopts procedures and implements policies which aim at establishing and maintaining systems that optimize the identification, evaluation, monitoring and management of risks that the Company may be facing, the effective management thereof, and contribute to the reliable provision of financial information.
In this framework, the Board carries out periodic reviews and is regularly briefed on the existence of any issues which may have significant financial and business consequences for the Company.
Furthermore, the Company's operational and functional units report to the Chief Executive Officer within a defined timetable and in compliance with specific instructions and guidelines. The general management of the Company receives monthly reports on the financial and operational situation from each business area and function. These reports and financial information are based on a standardized process and are discussed at the meetings of the Board of Directors to ensure adequate execution of Board decisions by the management team. The Board reviews the Company's systems of internal audit and risk management on an ongoing basis by:
Furthermore, the Company has in place systems and procedures of internal audit and risk management in respect of financial reporting and the preparation of individual and consolidated financial statements.
The above systems and procedures include:
access to the above reporting application is restricted to the appropriate individuals of each of the Company's subsidiaries;
access controls are in place to maintain the integrity of the chart of accounts;
The General Meeting of shareholders (hereinafter the "General Meeting") is convened by the Board, which decides the items to be placed on the agenda, and mandatorily meets at the registered offices of the Company or in the region of another municipality within the prefecture of the Company's registered offices, or another municipality neighbouring the Company's registered offices, at least once in every financial year and until the first ten (10) calendar days of the ninth month following the end of the financial year. An Extraordinary General Meeting may be held whenever the Board deems that necessary.
The General Meeting is the Company's supreme corporate body and may decide on any matter affecting the Company. More specifically, the General Meeting is the only body competent to decide on:
Every shareholder is entitled to attend the General Meeting ‐ whether in person or by proxy ‐ provided that he owns at least one share. Minors, wards of court and legal entities must be represented by their legal representatives. The documents of authorization need not be formal, notarized instruments, provided they are dated and have been signed by the issuing party.
Only those that appear as shareholders in the files of the Company's securities depository body, namely the company "Central Securities Depository S.A.", have the right to attend the General Meeting. In order for the shareholder capacity to be proven, a written certificate issued by the depository body shall be provided or this can electronically be verified, if the Company is electronically connected with the files of the depository body. The capacity of a shareholder shall exist at the beginning of the fifth day prior to the meeting and the aforementioned written certificate or the electronic verification must be provided to the Company at least three days prior to the meeting.
The other rights of the shareholders are set out in the Company's Articles of Assocation and in Law.
The Chairman of the Board, the Chief Executive Officer, the chairmen of each Board Committee, as well as the internal and external auditors of the Company are always available to answer shareholders' questions.
The Board is responsible for dealing with the Company's affairs exclusively in the interest of the Company and its shareholders within the existing regulatory framework. The Board's key responsibilities are:
The Board is appointed by the General Meeting of the Company and as of today consists of 9 members, 8 of which are non‐executive and 5 of which are independent. The only executive member is the Chief Executive Officer. The members of the Board serve for a three (3) year term that can be prolonged until the Annual General Meeting to be held following the termination of their term. Their term shall in no case exceed four (4) years.
The experience of the members of the Board encompasses diverse professional backgrounds, representing a high level of business, international and financial knowledge contributing significantly to the successful operation of the Company. The Board is fully balanced as far as the number of independent and non‐independent members is concerned. The independent, non‐executive members contribute to the Board's decision‐making with the provision of impartial opinions and resolutions, thus to ensure that the interests of the Company, the shareholders and the employees are protected, whereas the executive member is responsible for ensuring the implementation of the strategies and policies decided by the Board.
The table below lists the members of the Board, the dates of commencement and termination of office for each member, as well as the frequency of attendance of each member in the meetings held in 2018.
| Title | Name | Executive/ Non‐ Executive |
Independence | Office Commence ment |
Office Termination |
Board Member Attenda nce in 2018 |
|---|---|---|---|---|---|---|
| Chairman | Haralambos (Harry) G. David | Non‐ executive |
14/12/2017 | 14/12/2020 | 11/12 | |
| Vice Chairman | George G. Leventis | Non‐ executive |
14/12/2017 | 14/12/2020 | 12/12 | |
| Chief Executive Officer |
Nikolaos Mamoulis | Executive | 14/12/2017 | 14/12/2020 | 12/12 | |
| Member | Loukas Komis | Non‐ executive |
14/12/2017 | 14/12/2020 | 12/12 | |
| Member | Evangelos Kaloussis | Non‐ executive |
Independent | 14/12/2017 | 14/12/2020 | 12/12 |
| Member | Ioannis Costopoulos | Non‐ executive |
Independent | 14/12/2017 | 14/12/2020 | 12/12 |
| Member | Jeremy Jensen | Non‐ executive |
Independent | 14/12/2017 | 14/12/2020 | 12/12 |
| Member | Stephen Graham Bentley | Non‐ executive |
Independent | 14/12/2017 | 14/12/2020 | 12/12 |
| Member | Iordanis Aivazis | Non‐ executive |
Independent | 14/12/2017 | 14/12/2020 | 12/12 |
According to the Company's Code of Business Conduct and Ethics the members of the Board must avoid any acts or omissions from which they have, or may have, a direct or indirect interest and which conflict or may possibly conflict with the interests of the Company.
The members of the Board receive remuneration which is approved by the Company's General Meeting, in accordance with the specific provisions of the Articles of Association and the law.
The remuneration of the members of the Board is presented in the annual financial statement (see Note 20).
Mr. David was elected Chairman of the Board in November 2006. He has been a member of the Board since 1999. He is a Providence College USA alumni, class of 1987. His career began as a certified investment advisor with Credit Suisse in New York. He then served in several executive positions within Leventis Group Companies. Today he holds a position on the Boards of A.G. Leventis (Nigeria) PLC, the Nigerian Bottling Company, Beta Glass (Nigeria) PLC, Ideal Group, Pikwik (Nigeria) Ltd. (A newly formed Joint venture with Pick n Pay, South Africa) and ΤΙΤΑΝ Cement International S.A. Mr. David is a member of the Organizing Committee of the Athens Classic Marathon and member of the TATE Modern's Africa Acquisitions Committee. He has served on the boards of Alpha Finance, ΔΕΗ (Hellenic Public Power Corp) and Emporiki Bank (Credit Agricole).
Mr. Leventis joined the Board of Frigoglass as a non‐executive member in April 2014. Mr. Leventis is a member of the executive committee of a family office with the responsibility of overseeing investments in real estate. He has previously worked in the fund management business as an equities analyst. He graduated with a degree in Modern History from Oxford University and holds a postgraduate Law degree from City University. He is an Investment Management Certificate holder. He also sits on the board of HD Insurance Ltd.
Mr. Mamoulis joined Frigoglass as Chief Financial Officer in October 2013 and was appointed Chief Executive Officer of Frigoglass in July 2015. He has more than twenty‐five years of experience in senior financial positions within different business sectors. Before joining Frigoglass, Mr. Mamoulis was with Coca‐Cola HBC for twelve years with his last position being that of Group Financial Controller. Previous to that he also held the Chief Financial Officer position in Lafarge Heracles Group and the Boutaris Group. Mr. Mamoulis is a graduate of the Athens University of Economics and Business.
Mr. Komis was appointed to the Board in July 1996. Currently, he is also chairman of Ideal S.A. and of Recovery & Recycling S.A. and vice‐chairman of the Federation of Hellenic Food Industries. During his nine‐year career in the appliance manufacturing sector he has held top management positions with Izola S.A. and the Hellenic Bottling Company (Coca‐Cola HBC), where he also served as an executive board member. He also remains an advisor to the chairman since 2001. He holds degrees from Athens University (BSc Physics), the University of Ottawa (MSc Electrical Engineering) and McMaster University, Ontario (MBA) Canada.
Mr. Kaloussis was appointed to the Board of Frigoglass in June 2006. Currently, Mr. Kaloussis is chairman of the Federation of the Hellenic Food Industries (SEVT‐since 2006) and chairman of Terra Creta SA. He is also member of the board of the European Federation of Food & Drink Industries (FoodDrinkEurope) in Brussels since June 2015. Mr. Kaloussis is also a member of the board of directors of Food Bank & vicechairman of the Foundation for Economic & Industrial Research (IOBE), while he was a member of the board of directors of Alpha Bank. During his professional career he assumed top management positions at the Nestlé Headquarters in Switzerland, France, Nigeria, South Africa and Greece. He holds a master's degree in Electrical Engineering from the Federal Institute of Technology in Lausanne (CH) and in Business Administration from the University of Lausanne, as well as a graduate degree from IMD Business School in Switzerland.
Mr. Costopoulos was appointed to the Board in March 2015. Mr. Costopoulos is currently working for the company Société d'Etudes Techniques et Economiques S.A. (SETE S.A.) in London. He is a board member of Fourlis Holdings S.A. and Austriacard AG in Vienna. From 2004 to 2015, he worked for the Hellenic Petroleum Group. From 2004 to 2006, he was an executive member of the board of the Hellenic Petroleum Group being responsible for the areas of International Business Activities and Strategic Development. From 2007 to 2015, he served as Chief Executive Officer of the Hellenic Petroleum Group and chairmanof several of his subsidiaries. From 1992 to 2003, he held senior management positions, namely: Chief Executive Officer of Petrola SA, Regional Director of Johnson & Johnson Consumer for Central and Eastern Europe and Chief Executive Officer of Diageo‐Metaxa in Athens. From 1980 to 1992, he served in the senior management of Booz Allen & Hamilton business consultants in London and Chase Bank in New York and London. He has also been a board member of the Hellenic Federation of Enterprises (SEV) and the Foundation for Economic & Industrial Research (IOBE) in Athens. He holds a BSc Honours in Economics from the University of Southampton, U.K. and a MBA from the University of Chicago, U.S.A.
Mr. Jensen was appointed to the Board in November 2017. Mr. Jensen is a financial and managerial consultant. He has comprehensive experience in both managerial and financial roles as a non‐executive director in board of directors of a wide range of industries and has chaired several board committees. Mr. Jensen was Chief Financial Officer of Cable and Wireless Worldwide, a British telecommunications company, and also held a number of senior financial and general management roles at Reuters, in Europe, Middle East, Far East and Africa. He is currently a non‐executive member of the board of directors of Stemcor Group, the world's largest steel logistics trading company, a non‐executive member of the board of Patisserie Holdings PLC and vice chairman of the Chelsea and Westminster Hospital. Mr. Jensen is a UK qualified chartered accountant and holds a degree in Economics (Bsc) from the London School of Economics.
Mr. Aivazis was appointed to the Board in November 2017. He was born on 24th February 1950 in Cairo. He is a graduate from the University of Athens with a degree in Economics (Political and Economics Science Department). He completed his postgraduate studies at the University of Lancaster (Postgraduate Diploma in Economics) and M.A. in Marketing and Finance. He worked at senior positions with national and foreign banks in Greece and he was Chief Financial Officer and Chief Operating Officer of OTE S.A. (Hellenic Telecommunications Organisation S.A). After the Deutsche Telekom's (DT) acquisition of OTE he was a member of OTE's board of directors and DT's European Management Board. Moreover, he has served on the board of directors of several Greek pubicly quoted companies. Currently, he is chair of the Board of Directors of HCL, a subsidiary of Davidson & Kempner and Bain Capital Credit, being at the same time a Special Adviser of Bain for investment in Greece, as well as a NED of ELLAKTOR S.A. He is also chair of the Special Liquidations Committee of the Bank of Greece. He is an English and French speaker.
Mr. Bentley was appointed to the Board in November 2017. Mr. Bentley is a Chartered Accountant (with BA Hons in Accountancy) who has over thirty years' experience as Chief Financial Officer of publicly quoted and private equity backed businesses in the UK. Mr. Bentley was previously Corporate Finance Executive of Tricentrol PLC, which was a UK independent Oil & Gas exploration and development company and was quoted in London and New York. In addition, he has been Group Finance Director of several companies quoted in London, namely Ellis & Everard PLC, a chemical distributor in the UK and in the USA; TDG PLC, a leading logistics company in the UK with operations in Continental Europe; and Brunner Mond PLC, a medium sized chemical manufacturer with production in the UK, the Netherlands and Kenya where he led the company's initial public offering of shares. More recently Mr. Bentley worked with a private company as a Group Finance Director and helped with the sale of James Dewhurst Limited to a large Belgian textile group. Mr. Bentley has more recently joined the board of directors of Frenkel Topping Group, an independent financial advisor and fund management business, which is quoted on AIM of the LSE. He is a Fellow of the Institute of Chartered Accountants and qualified with Whinney Murray & Co (now Ernst & Young) in London. He is also a Fellow of the Association of Corporate Treasurers.
The Board shall meet at the registered offices of the Company whenever so required by the law or the needs of the Company. The Board held twelve (12) meetings in 2018.
The items on the agenda of the Board meetings are notified to its members beforehand, enabling the members who are unable to attend to comment on the items to be discussed.
The Board is in quorum and meets validly when half (1/2) of the directors plus one are present or represented, provided that no fewer than three (3) directors are present.
The Board resolves validly by absolute majority of the directors who are present (in person) and represented, except for occassions where the Articles of Association provide for an increased majority. In case of personal matters the Board resolves with a secret vote by ballot. Each director has one vote, whereas when he represents an absent director, he has two (2) votes. Exceptionally, in the case of articles 10(3) and 9(2) of the Company's Articles of Association, the decisions of the Board shall be taken unanimously by the members who are present and represented.
The Board must evaluate at regular intervals the effectiveness of the performance of its duties, as well as that of its committees. This procedure is overseen by the Chairman of the Board and the chairman of the relevant committee, and where an improvement is necessary for any reason whatsoever, the taking of relevant measures shall directly be decided.
According to Article 44 of Law 4449/2017, the Company has established and operates an Audit Committee ("the Audit Committee") which is, inter alia, responsible for:
Further, the Audit Committee is also responsible for the submission of proposals to the Board regarding any change to the chart of authorities, in principle with the organizational chart of the Company.
The members of the Audit Committee have been appointed by the Extraordinary General Meeting of the Company that took place on 14.12.2017 as per the provisions of Law 4449/2017 and are the following:
| Chairman: | Kyriakos Riris – independent member |
|---|---|
| Member: | Loukas Komis – non‐executive Board member |
| Member: | Ioannis Costopoulos – independent, non‐executive Board member |
The majority of the members of the Audit Committee are independent, as per the provisions of Law 3016/2002.
The above members have sufficient knowledge and hold substantial past experience in senior financial positions and other comparable experience in corporate activities.
Finally, Mr. Kyriakos Riris fulfils the requirements provided by law regarding the requisite knowledge of accounting and auditing.
The Audit Committee shall meet whenever this is deemed necessary and in no circumstances less than four times a year. It must also hold at least two meetings attended by the Company's regular auditor, without the presence of the members of the management.
The Audit Committee meets validly when at least two of its members are present, of whom one must be its Chairman. The Audit Committee held a total of six (6) meetings in 2018. The said meetings were scheduled in such a way so as to coincide with the publication of the Company's financial information.
The Audit Committee considered a wide range of financial reporting and related matters in respect of the 2017 annual financial statements and the 2018 half‐year financial information.
In this respect the Audit Committee reviewed any significant areas of judgment that materially impacted reported results, key points of disclosure and presentation to ensure the adequacy, clarity and completeness of the financial statements and the financial information, and the content of results announcements prior to their submission to the Board. The Audit Committee also considered reports from PwC on their annual audit of 2017 and their review of the 2018 half year Board of Directors report that forms part of the statutory reporting obligations of the Company.
Moreover, in 2018, the Audit Committee has:
The main duties and obligations of the Internal Audit Department include:
The internal auditor acts according to the International Standards for the Professional Practice of Internal Auditing and the policies and procedures of the Company and reports to the Audit Committee.
The role of the human resources and remuneration committee ("the Human Resources and Remuneration Committee") is to establish the principles governing the Company's human resources policies which guide management's decision‐making and actions.
More specifically, its duties are – inter alia ‐ to:
The Human Resources and Remuneration Committee, which is appointed by the Board, is comprised of the following 3 non‐executive Board members:
| Chairman: | Iordanis Aivazis – Independent/ Non‐executive member |
|---|---|
| Member: | Haralambos (Harry) G. David ‐ Non‐executive member |
| Member: | Evaggelos Kaloussis ‐ Independent/Non‐executive member |
The Chief Executive Officer and HR Director shall normally attend all meetings of said Committee, except when discussions are conducted concerning matters affecting them personally. The Group HR Director act as the Secretary of the Committee.
The Human Resources and Remuneration Committee held four (4) meetings in 2018.
The duties of the investment commitee ("the Investment Committee") are to recommend to the Board the Company's strategy and business developmant initiatives, as well as to evaluate and suggest to the Board new proposals for investments and/or Company expansion according to the defined strategy of the Company.
Moreover, the Investment Committee is also responsible for evaluating and suggesting to the Board opportunities for business development and expansion through acquisitions and/ or strategic partnerships.
The Investment Committee, which is appointed by the Board, is comprised of four members, two of which are non‐executive, and is formed as follows:
Chairman: Haralambos (Harry) G. David ‐ Non‐executive member
Member: Nikolaos Mamoulis ‐ Executive member
Member: Loucas Komis ‐ Non‐executive member
Member: Haralambos Gkoritsas1 ‐ Chief Financial Officer
The Investment Committee held two (2) meetings in 2018.
1 Mr. Haralambos Gkoritsas has been appointed as member of the Investment Committee by the Board in replacement of Mr. Emmanouil Fafalios (former Chief Financial Officer of the Company – who left the Company as of 31.5.2018).
Frigoglass recognizes the importance of the effective and timely communication with shareholders and the wider investment community. The Company maintains an active website www.frigoglass.com which is open to the investment community and to its own shareholders; the site features this Code, as well as a description of the Company's corporate governance, management structure, ownership status and all other information useful or necessary to shareholders and investors. Finally, Frigoglass also communicates with the investment community through its participation in a number of conferences and meetings held in Greece and abroad and the schedule of conference calls.
The financial statements have been prepared by management according to the International Financial Reporting Standards (IFRS) and the International Financial Reporting Interpretations Committee (IFRIC), as adopted by the European Union and IFRS issued by the International Accounting Standards Board (IASB).
The financial statements have been prepared according to the going concern basis of accounting. The use of this basis of accounting takes into consideration the Group's current and forecasted financing position.
For the year ended 31 December 2018, the Group reported net losses of €8,7m, compared to profits of €7,6m in the year ended December 2017.
Net profits in the prior year included a gain from the write‐off of €45,0m debt triggered by the Group's capital restructuring and €35,5m gains from the difference between the fair value of the issued shares and the nominal value of the convertible bonds converted into shares. The Group's profit before tax in 2017 was also impacted by €42,3m of expenses related to the capital restructuring process.
For the year ended 31 December 2018, the Group has a negative equity position of €43,0m, compared to a negative equity position of €42,3m in the year ended 31 December 2017.
Frigoglass SAIC has an equity position of €22,6m for the year ended December 2018 and, therefore, is lower than half (1/2) of the share capital.
As a consequence, the requirements of article 47 of Law 2190/1920, as replaced by article 119 of the Companies Act 4548/2018 are applicable.
The Group's operating restructuring has started in 2014. Following the restructuring, the Group's financial results were impacted by €36,1m in 2014, €16,8m in 2015 and €13,5m in 2016. In ICM Operations, the Group discontinued its manufacturing operations at Spartanburg, South Carolina in 2014 in order to focus on commercial activities of sales and marketing, distribution and service. As a result, the Group incurred restructuring related costs of €17,0m (recorded in 2013). In the fourth quarter of 2014, the Group also integrated the Turkey‐based manufacturing volume into its European flagship plant in Timisoara, Romania. As part of this process, Frigoglass' Silivri‐based Turkish manufacturing plant ceased operations. As a result, the Group incurred restructuring related costs of €36,0m. Frigoglass continued to rationalise its product range in 2015, focusing on the production and sale of high quality goods. The result of this process is the gradual phase out of old models and, consequently, the inventory write‐off of €14,1m that were included in the related provisions for the year. In July 2016, the Group announced the discontinuation of its manufacturing operations in China in order to optimize its production capacity in Asia and improve the company's fixed cost structure. As a result, the Group incurred restructuring related costs of €13,5m. Over the last three years, the Group also proceeded with various changes regarding its organizational structure in the ICM Operations that will have a significant impact on the way the business activity is carried out.
On October 23, 2017, the Group successfully completed its capital restructuring. The following important events contributed to the restructuring:
Therefore, the Group received €70,0m of additional liquidity to fund its business needs, as well as restructuring related expenses. This comprises €30,0m in new cash contributed by Boval as equity through the Company's rights issue and €40,0m provided in the form of new first lien secured funding.
As a result, the capital restructuring reduced Frigoglass outstanding gross indebtedness by approximately €138,0m (before the incurrence of the €40,0m in new first lien secured funding).
The maturities of almost all of the Group's indebtedness have been extended and committed for around 4,5 years.
At the same time, within the framework of the Group's business policy, management is targeting to reduce costs, improve long‐term profitability and generate cash flows, coupled with maintaining and improving product quality and increasing customer value. Management has undertaken specific actions to achieve the above, including (a) cost reduction through the simplification of the product portfolio; (b) reduction of inventory levels; (c) Lean manufacturing alongside improvements in product quality; and (d) creating value from recent strategic investments.
In December 2018, the Company completed the divestment of its glass container subsidiary Frigoglass Jebel Ali FZE. This divestment is in line with Frigoglass' strategy and will enable the Company to focus on its commercial refrigeration business and the high growth Nigerian glass business operations.
The Group's financial projections for the upcoming 12 months indicate that it will be able to meet its obligations as they fall due, however, this assessment is subject to a number of risks as described in the "Risks and uncertainties" section of the Directors' Report and in Note 3 to the Group's financial statements, particularly if such risks were to materialize in combination.
Taking into consideration the above, the Directors have a reasonable expectation that the Group will be able to successfully navigate the present uncertainties and continue its operation. Therefore, the financial statements have been prepared on a going concern basis.
The Group is exposed to a number of risks. The risks and uncertainties outlined below are the ones the Company was aware of on the date the 2018 Financial Statements were published, and relate specifically to the Group or the ICM and Glass Operations (from continuing operations).
The Group has a strong international presence, selling to more than 110 countries outside of Greece through its subsidiaries. The Group's operating results depend on the prevailing economic conditions in the markets it operates, such as the level of GDP growth, unemployment rates, interest rates, inflation, tax rates as well as other conditions which specifically affect the Commercial Refrigeration (ICM) and Glass operations.
Sales from international operations accounted for 96,4% and 96,8% of group sales in 2018 and 2017 respectively. Sales in Nigeria and Russia in particular, which are the Company's largest markets, accounted for 43,8% and 42,5% of group sales in 2018 and 2017 respectively.
The Group's international operations are in emerging markets, such as Nigeria and Russia, which from time to time experience major changes in their policies and regulations.
More specifically, the introduction of capital controls in Nigeria and the pegging of the local currency to the USD and EUR resulted in a Nigerian naira's exchange rate that did not reflect supply and demand dynamics. The Group has entered into long‐ term supply agreements with certain clients in the Glass and the ICM Operations in Nigeria, which, among other commercial terms, include provisions that allow the Group to adjust the base prices based on the Nigerian naira's exchange rate. However, price increases as a result of those devaluation mechanisms do not reflect the actual devaluation rate of the Nigerian naira. On 20 June 2016, Nigeria introduced a new flexible exchange rate regime which resulted in an immediate devaluation of 42% to the official fixed rate that had been previously set. Moreover, Nigeria has recently experienced political instability, violence, kidnappings, religious unrest and terrorism, and also suffers from a lack of infrastructure, such as roads and power supply. These are factors that could adversely impact the orderly operation of markets and negatively affect consumer demand and, in turn, could also have a negative impact on the business, results and financial performance in Nigeria.
Having regard to those points, these adverse conditions and negative developments in these regions could negatively impact overall consumer demand, which could directly impact demand for the ICM business from customers in the region, which could negatively affect business activity, the operation's financial situation and prospects and, consequently, those of the Group.
Although the Group's Greek operations are relatively limited, the registered office of the Group's parent company is located in Greece. Moreover, the Group has production facilities in Greece. Sales in Greece are limited and accounted for just 3,6% and 3,2% of consolidated sales in 2018 and 2017 respectively. Total tangible and intangible assets in Greece accounted for 8,5% of the Group's overall assets on 31.12.2018 and 10% on 31.12.2017. Consequently, it is reasonable for it to be affected by the macroeconomic and financial environment in Greece. The restrictions affecting the Greek banking system after the imposition of capital controls have led to a decrease in capital movements abroad, meaning there are also restrictions on currency conversions and the free movement of capital between the Group's subsidiaries. Around 11% of the Group's debt is with Greek banks. Consequently, the Group is affected by, as well as dependent on, the confidence and the liquidity of the Greek banking system.
The governments of emerging markets exert significant influence over the economies of those countries. This influence, coupled with the economic and political conditions in those countries, may negatively impact the Group's business activity, financial results and prospects
The governments of certain emerging markets in which the Group operates, including Nigeria and Russia, exert influence over the economy, changing their policies and regulations, leading to measures such as, among others, interest rate rises, application of exchange controls, changes in taxation policies, imposition of price controls, currency devaluation, capital controls and restrictions on imports. Those changes may exert a negative impact on the Group's operations since they affect various factors such as interest rates, monetary policies, foreign exchange controls and limitations on remittances abroad, fluctuations in exchange rates, inflation and deflation, social instability, price fluctuations, crimes and non‐ enforcement of the law, political instability, and volatility in domestic economic and capital markets.
The financial risks of operating in emerging and developing markets also include the risk of liquidity, inflation, devaluation, price volatility, currency convertibility and transferability, the risk of the country breaching its obligations, as well as austerity measures imposed as a result of major deficits, and other factors as well. Those factors have and will continue to affect the Group's results, resulting in its operations being suspended, its operating costs rising in those countries or its ability to repatriate profits from those markets being restricted.
Changes in general economic conditions directly affect consumer confidence and spending on consumer goods. Those factors may directly affect the Group's customers and demand for its products.
Uncertainty over volatility of raw material prices, energy costs, geo‐political issues and the availability and cost of financing have contributed to increased volatility and diminished recovery related expectations for the economy and global markets.
In addition, in the ICM Operation, customers have shown great price sensitivity resulting in increased pressure on ICM pricing and, subsequently, to a negative effect on profit margin in Europe.
Adverse economic conditions can lead customers to forego or postpone new purchases in favour of repairing and maintaining their existing equipment. Each of these factors can lead to reduced demand for beverage coolers or a drop in product prices or both, which in turn can affect the Group's operations and financial position, as well as its financial results and cash balance.
Taking these points into account, adverse macroeconomic developments and other events that the Group cannot control may significantly reduce consumer spending and have major negative repercussions on the Group's operations, financial results, financial position and prospects going forward.
In countries where the local currency can only be converted and/or cash can only become transferable within specified limits or for predefined purposes, it may be necessary for Group companies to comply with foreign exchange control requirements and ensure that all relevant permits have been obtained before profits from Group companies in those countries can be repatriated.
Foreign exchange controls may result in major negative impacts on the Group's business operations, financial and operating results, due to restrictions on the ability to repatriate profits and on the free flow of monies between the Group's subsidiaries and other restrictions on export and import activities.
The Group derives a significant amount of revenues from a small number of large multinational customers. In 2018, around 67% of revenues in the Commercial Refrigeration business and around 81% of revenues in Glass Operations came from the five largest customers, and in 2017 the corresponding figures were approximately 65% and 74% of revenues.
The loss of any large customer, a decline in sales to these customers or the deterioration of their financial condition could adversely affect the business, financial results and cash balance of the Group.
In 2018, CCH accounted for around 45% of sales in ICM Operations and around 26% of sales in Glass Operations. Other Coca‐Cola bottlers accounted for around 26% of sales in ICM Operations in 2018. The Group's relationship with CCH began in 1999 and, following successive renewals, it is currently governed by an agreement that was renewed in January 2018 and expires on 31 December 2020 under which CCH purchases ICM units and relevant spare parts from the Group at prices and quantities negotiated annually. As for other buyers of ICM units, sales agreements are negotiated annually and do not include a clause of exclusive supplier of ICM and spare parts.
In the Glass Operations, although the Group has entered into certain long‐term supply agreements with Nigerian Bottling Company Ltd (NBC) and Guinness Nigeria Plc., glass sales are primarily based on short‐term fixed price contractual arrangements with various bottlers, which are negotiated annually.
The Group cannot assure that it will be in a position to renew those agreements on a timely basis, or on terms reasonably acceptable to it. Inability to renew or extend the Group's sales agreements with its customers, for any reason, could have a material adverse effect on the business and financial results of the Group.
The Group's major customers either require that Group's companies to undergo a manufacturer certification process for every new design the Group sells to them or require the Group's products to meet specific standards. The certification inspection process is particularly strict and time‐consuming, taking up to two years to complete. The Group cannot guarantee that it will not face difficulties in obtaining new certificates, if and where they are required. The inability to obtain such new certificates may adversely impact on the Group's operations and financial results.
Several large international sellers, including certain of the Group's customers, account for significant share of the beverage market. The main end‐product producers in these markets outweigh their size and exert downward pressure on prices of the bottling companies and ICM suppliers, including the Group. In this context, the Group provides discounts to its customers according to the customers' sales mix. There can be no assurance that the Group will not be pressured in the future by customers to accept further cuts in prices, which would have a material adverse effect on the Group's business, financial condition and results of operations.
The Group's ICM Operations are subject to intense competition from regional competitors in specific markets. The criteria determining whether a product outperforms another from a competitor are price, design, the quality of service, product features, maintenance costs and warranties.
In Europe, the Group's main competitors in the commercial refrigerator market are Metalfrio Solutions S.A., UBC Group and Vestfrost Solutions, which are local manufacturers, most of which have low‐cost manufacturing capabilities and compete with the Group on price. Although the Group's customers that operate in Europe are price sensitive, they also take into account other factors such as the product's lifetime, energy consumption, serviceability and aesthetics. In Asia and Africa, the Group's primary competitors are Sanden Intercool, Sanyo and Western Refrigeration Pvt. Ltd and customers are also price sensitive. Western Refrigeration Pvt. Ltd is the key competitor in the Indian market. In the Middle East the main competitors are Everest Industrial, Sanden Intercool and Western Refrigeration Pvt. Ltd.
In Glass Operations, the Group's main competitors in terms of glass container manufacturers in Africa is Glass Force. In addition to competition from other large, established manufacturers in the glass container industry, the Group also competes with manufacturers of other forms of rigid packaging, principally plastic containers (PET) and aluminium cans, on the basis of quality, price, service and consumer preference. The Group also competes against manufacturers of non‐rigid packaging alternatives. The use of glass bottles for alcoholic and non‐alcoholic beverages in emerging markets is primarily subject to cost.
The Group's Glass operations in Nigeria are subject to limited competition due to the Group's long‐term operations in the region. Moreover, the Glass Operations in Nigeria and ICM Operations in Russia and India benefit from major barriers to entering or importing into those markets as a result of import duties and tariff restrictions. Sales to customers in Nigeria, Russia and India may be adversely impacted if the local governments lift the entry barriers or reduce import duties and so competition intensifies, which could negatively affect the Group's financial results.
In all events, any rise in competitive trends which result in pricing pressure and any inability by the Group to respond, could negatively affect its profit margin and, consequently, the Group's financial results and cash flows in future periods.
The Group operates internationally and a significant percentage of its revenue is generated in currencies other than the euro, which is the Group's functional currency. Consequently, the Group's financial position and results are subject to currency translation risks. Exchange rate risk arises through fluctuations in the exchange rate of currencies in countries which are not part of a monetary union and from the impact that has on the Group's results and balance sheet positions when it translates its financial results generated by subsidiaries in those countries to the euro. The Group also faces transactional currency exchange rate risks if sales generated in one foreign currency are accompanied by costs in another currency. Net currency exposure from sales denominated in non‐euro currencies arises to the extent that the Group does not incur corresponding expenses in the same foreign currencies. In 2018 more than two‐thirds of net sales revenue was denominated in currencies other than the euro, mainly the Nigerian naira, the U.S. dollar, the Indian rupee, the South African rand, the Norwegian krone, the Russian ruble and the Romanian lei. Consequently, the group is exposed to foreign currency exchange rate risk in terms of sales, expenses, financing and investment transactions conducted in currencies other than the euro. Significant fluctuations in exchange rates may have an adverse impact on the Group's financial performance. In Nigeria, the introduction of capital controls and the pegging of the local currency to the USD and EUR at rates which may not reflect supply and demand dynamics for the currency resulted in increased volatility of the Nigerian naira. The Group has entered into long‐term supply agreements with certain clients in the Glass Operations in Nigeria, which contain provisions that allow the Group's Nigerian companies to adjust the prices in line with the devaluation of the Nigerian naira. However, price increases as a result of these devaluation mechanisms do not reflect the actual devaluation rate of the Nigerian naira.
The Group companies use natural hedging to limit their exposure to foreign currency exchange rate risk. Hedging can be achieved by matching cash inflows and outflows in the same currency to the maximum degree possible in order to limit the impact of exchange rate movements. When natural hedging cannot be achieved, the Group makes use of derivatives, mainly in the form of forward foreign currency exchange contracts. Recently, derivatives have not been used, only natural hedging of exchange rate risks to the extent that this feasible. It is not possible to predict whether the Group's hedging activities cover its entire exposure to all foreign currency exchange rate risks and potentially in relation to exchange rates could have a negative impact on the Group's financial results.
The raw materials that are used by the Group or contained in the components and materials that the Group uses have historically been available in adequate supply from multiple suppliers. For certain raw materials, however, there may be temporary shortages due to production delays, transportation or other factors. In such an event, no assurance can be given that the Group would be able to secure its raw materials from sources other than current suppliers on terms as favourable as the current terms, or at all. Any such shortages, as well as material increases in the cost of any of the principal raw materials, including the cost to transport materials to the Group's production facilities, could have a material adverse effect on the Group's business, financial condition and results of operations.
The primary raw materials relevant to ICM Operations are steel, copper, plastics and aluminium which accounted for around 20%, 7%, 7% and 4% of the total cost of raw materials, respectively, in 2018. For 2017, steel, copper, plastics and aluminium accounted for around 20%, 7%, 8% and 4% of the total cost of raw materials, respectively. These raw materials are commodities, many of which are sold at prices linked to the US Dollar. Occasionally, the purchase prices of some of these key raw materials increase significantly, also increasing Group's expenses.
The Group generally purchases steel via annual contracts at predefined prices, although in some cases the contracts may have smaller time validity (semester or quarter) due to the volatility of the global steel market, in the last couple of years. However, from time to time, the Group may also purchase steel under multi‐year contracts or purchase higher volumes to stock at its warehouses or with suppliers in order to advantage of favourable fluctuations in steel prices. When these multi‐year contracts are renewed, the cost of steel under these contracts will be subject to prevailing the global/local steel prices at the time of renewal, which may differ from historical prices. While the Group does not generally purchase copper and aluminium directly as a raw materials for its products, these metals are contained in certain components and other materials that the Group uses in the ICM operations, the prices of which are directly or indirectly related to copper and aluminium prices on the London Metal Exchange (LME), where historically prices have been quite volatile.
The Group's Glass Operations also require significant quantities of raw materials, especially soda ash (natural or synthetic), cullet (recycled glass), limestone and glass‐ sand, which accounted for 26%, 10%, 2% and 1% of the operations total raw material expenses in 2018. The cost of soda ash, cullet, limestone and glass‐sand for 2017 was 22%, 12%, 2% and 1%. Increases in the price of raw materials can also be caused by suppliers' concentration that could intensify in the future and develop for the raw materials that the Group uses. The price of cullet varies significantly depending on the region due to regulatory and financial disparities concerning the collection and recycling of used glass, as well as the distance of cullet procurement centres from production sites. Consequently, changes in the regulations related to glass collection and recycling can have a major impact on the availability and price of cullet. Any major change in the price of raw materials in the Glass Operations could negatively impact on the Group's operations, financial situation and operating results.
The Group may not be able to pass on all or part of raw materials price increases to its customers now or in the future. In addition, the Group may not be able to successfully hedge increases in the cost of raw materials. Moreover, while adequate quantities of steel, copper and aluminium were available on the market in general in the past, those quantities may not be available in the future, or even if available, it may not be at current prices. Further increases in the cost of raw materials may adversely affect the Group's operating margins and cash flows. If in the future the Group is not able to reduce product costs in other areas or pass the increase in the price of raw materials to customers, the Group's margins could be adversely affected.
The Group offers its ICM customers the option of a warranty or limited supply of free spare parts with every purchase. The warranties the Group offers for its products are for a limited time period, normally two to five years. Longer warranties are offered to customers as an option, by adjusting prices accordingly. Warranties to a large extent cover work done, and in some cases materials for products manufactured by the Group. There are also other warranty options, such as price discounts or free spare parts, instead of warrants associated with the sale of products. Certain of the sales agreements impose further obligations on the Group if there is a delay in the supply of the ICM unit or if the unit is rejected by the customer, including an obligation on the relevant Group Company to, at the option of the customer, repair, replace or refund the price. In addition, the Group must indemnify certain customers for defects pursuant to the terms of some of the agreements. If a product does not comply with the warranty, the Group may be obliged, at own expense, to repair any defects or replace the defective product. Group expenses relating to key warranties stood at €5,8m in 2016, €5,5m in 2017 and €6,7m in 2018.
From time to time, the Group may also recall products voluntarily or based on a court order. The Group consumes considerable resources in connection with product recalls, which as a rule include the cost of spare parts and work required to remove and replace all defective parts. In addition, product recalls may harm the Group's reputation and a loss of customers if, as result, consumers question the safety or reliability of ICM units. The Group has voluntarily recalled products over the last 3 years in cases which are characterised as "epidemics" where the failure rate, which relates to defects in a specific product, exceeds 3% of the total ICM units of that model.
Although the Group maintains warranty and epidemic reserves, it cannot provide an assurance that future warranty claims and epidemic recalls will follow historical examples or that the Group will be able to accurately predict the level of future warranty claims or the cost of such cases. An increase in the rate of warranty claims and the cost of recalls in epidemic cases could adversely impact on the Group's operations and financial results to a significant degree.
According to the 16th November 2017 notification received by the Company by virtue of Law 3556/2007, Truad Verwaltungs AG holds indirectly through the companies it controls 48,55% of shares and voting rights in the Company. Consequently, that shareholder may exert significant influence on the shareholders voting result, on the election of Board of Directors members and on other decisions affecting the Company, but does not control the Company. In addition, on 31 December 2018, Truad Verwaltungs AG indirectly owned 23,0% of the overall share capital in CCH, which is the Group's largest customer. Furthermore, on 31 December 2018, CCH indirectly held 23,9% of Frigoglass Industries Nigeria Ltd and Frigoglass West Africa Ltd, through its holding in Nigeria Bottling Company (NBC). In addition, Frigoglass Industries has signed an office lease with A.G Leventis plc for its offices in Lagos, Nigeria. Truad Verwaltungs A.G. holds around 50,7% of the share capital of A.G Leventis plc. The lease is renewed each year under arm's length terms.
Where the Company or other companies in the Group do not comply with financial covenants in the Group's First and Second Lien Facilities, such as maintaining the leverage ratio and the minimum liquidity covenant or in other current or future financing agreements, it could lead to those agreements or other financing agreements being cancelled (cross‐default). That would allow lenders to suspend financing or even terminate the loan agreements, to demand immediate repayment of all loans, to seize any guarantees and collateral provided and to take compulsory enforcement measures. In that case there will be major uncertainty about the ability of the Company and other companies in the Group to continue as going concern, since they may find themselves unable to pay their debt obligations.
capital and resources to meet its liabilities against its lenders and creditors. In that case, there will be a negative impact on the financial condition and prospects of the Company and the Group, since they may find themselves unable to pay their debt obligations. That would allow lenders to suspend financing or even terminate the loan agreements, to demand immediate repayment of all loans, to seize any guarantees and collateral provided and to take compulsory enforcement measures.
The Group's primary focus is to improve the performance, usefulness, design and other physical attributes of its products, and to develop new products that meet customer needs. To ensure that Group Companies remain competitive, new and innovative products need to be constantly developed, investments in new product R&D are needed, including environmentally friendly and energy‐efficient ICM platforms. Consequently, the activities of Group Companies re exposed to risks associated with developing new products and technologies such as (a) achieving energy consumption levels that match customer expectations, (b) cost optimization, (c) developing new refrigeration technologies before the competition does and (d) developing innovative ICMs whose performance and unexpected technical problems can be monitored online. Any of these factors could result in the delay or abandonment of the development of a new technology or product. The Group cannot guarantee that the Group will be able to implement new technologies, or that it will be able to launch new products successfully. The Group's failure to develop successful new products may impact relationships with customers and cause existing as well as potential customers to choose to purchase used equipment or competitors' products, rather than invest in new products manufactured by the Group, which could have a material adverse effect on the Group's business, financial condition and results of operations.
There are no post‐balance events which are likely to affect the financial statements or the operations of the Group and the Parent company apart from the ones mentioned above.
The most important related parties' transactions of the Company, in the sense used in IAS 24, are listed in the following table:
| in € 000's | Year ended | 31.12.2018 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Sales of Goods | 167.558 Coca‐Cola HBC AG Group | ||||||||
| Consolidated: | Purchases of Goods & Services | 1.156 Coca‐Cola HBC AG Group | |||||||
| Receivables | 22.424 Coca‐Cola HBC AG Group | ||||||||
| Parent Company: | Sales of Goods |
Income from Other Services |
Income from Commission s on Sales |
Management Fees Income |
Purchases of Goods & Services |
Receivables | Payables | Loans Payable | Interest expense |
| Frigoglass Cyprus Limited | 12 | ‐ | ‐ | ‐ | ‐ | 2 | ‐ | 1.337 | 72 |
| Frigoglass South Africa Ltd | 42 | ‐ | ‐ | 1.532 | 6 | 1.319 | 6 | ‐ | ‐ |
| Frigoglass Indonesia PT | 10 | 26 | 179 | 1.010 846 | 266 | 1.061 | ‐ | ‐ | |
| Frigoglass East Africa Ltd. | 11 | ‐ | ‐ | 68 ‐ | ‐ | 9 | ‐ | ‐ | |
| Frigoglass Romania SRL | 488 | 621 | 224 | 7.150 | 22.774 | 2.108 | 24.339 | ‐ | ‐ |
| Frigoglass Eurasia LLC | 284 | 142 | 10 | 7.915 | 910 | 2.970 | 2.467 | ‐ | ‐ |
| Frigoglass India PVT.Ltd. | 9 | 5 | 2 | 1.462 | 1.658 | 4.986 | 403 | ‐ | ‐ |
| Frigoglass Hungary Kft | 105 | ‐ | ‐ | ‐ | 10 ‐ | ‐ | ‐ | ‐ | |
| Scandinavian Appliances A.S | 5.543 | ‐ | ‐ | ‐ | 4 | 579 | 16 | ‐ | ‐ |
| Frigoglass Sp Zoo | 2 | ‐ | ‐ | ‐ | ‐ | 4 | ‐ | ‐ | ‐ |
| 3P Frigoglass Romania SRL | ‐ | ‐ | ‐ | 50 | 93 | 50 | 12 | ‐ | ‐ |
| Frigoglass Global Ltd. | ‐ | ‐ | ‐ | 905 | ‐ | 390 | ‐ | ‐ | ‐ |
| Frigoglass West Africa Ltd. | 113 | ‐ | ‐ | ‐ | ‐ | 295 | 15 | ‐ | ‐ |
| Frigoglass GmbH | ‐ | ‐ | ‐ | ‐ | ‐ | ‐ | 3 | ‐ | ‐ |
| Frigoglass Nordic | ‐ | ‐ | ‐ | ‐ | ‐ | ‐ | 24 | ‐ | ‐ |
| Frigoglass Industries (Nig.) Ltd | ‐ | ‐ | ‐ | 1 ‐ | ‐ | ‐ | ‐ | ‐ | |
| Beta Glass Plc. | 185 | ‐ | ‐ | ‐ | ‐ | 108 | ‐ | ‐ | ‐ |
| Frigoinvest Holdings B.V. | ‐ | ‐ | ‐ | ‐ | ‐ | ‐ | ‐ | 25.143 | 1.601 |
| Total | 6.804 | 794 | 415 | 19.860 | 26.524 | 13.087 | 28.355 | 26.480 | 1.673 |
| Coca‐Cola HBC AG Group | 22.560 | ‐ | ‐ | ‐ | 83 | 1.627 | ‐ | ‐ | ‐ |
| Grand Total | 29.364 | 794 | 415 | 19.860 | 26.607 | 14.714 | 28.355 | 26.480 | 1.673 |
| Consolidated | Parent Company |
|
|---|---|---|
| 31.12.2018 | ||
| Fees of member of Board of Directors | 360 | 360 |
| Management compensation | 2.765 | 2.356 |
Management compensation 2.765 2.356
The main objectives of the Research and Development (R&D) function are to develop innovative, pioneering cooler solutions for Group's customers.
R&D focuses on developing products along the guiding principles of standardization and simplification, as well as increased customization.
Frigoglass provides Ice‐Cold Merchandising solutions that are designed to help its customers to achieve their sustainability goals. Frigoglass focuses on the design, development and improvement of its products in order to reduce carbon dioxide emissions, energy consumption and greenhouse gas emissions consistently with the needs and requirements of its customers.
Frigoglass operates Research and Development (R&D) centers which are located in Greece and India.
The Company's share capital amounts to Euro 127.957.590,36 divided among 355.437.751 shares with a nominal value of Euro 0,36 each.
All the shares are registered and listed for trading in the Securities Market of the Athens Exchange.
Each ordinary share entitles the owner to one vote and carries all the rights and obligations set out in law and in the Articles of Association of the Company.
The liability of the shareholders is limited to the nominal value of the shares they hold.
The Company shares may be transferred as provided by the law and the Articles of Association provide no restrictions as regards the transfer of shares.
On 31.12.2018 the following shareholders held more than 5% of the total voting rights of the Company:
1 Mr. Marc Lasry is the ultimate managing member of Avenue Europe International Management GenPar, LLC and Avenue Capital Management II GenPar, LLC which in turn indirectly control in total voting rights corresponding to 11,68% shares in the Company.
None of the Company shares carry any special rights of control.
The Articles of Association make no provision for any limitations on voting rights.
The Company is not aware of any agreements among shareholders entailing limitations on the transfer of shares or limitations on voting rights, nor is there any provision in the Articles of Association providing the possibility of such agreements.
The rules set out in the Articles of Association of the Company on the appointment and replacement of members of the Board of Directors and the amendment of the provisions of the Articles of Association do not differ from those envisaged in Codified Law 2190/20, as replaced by Law 4548/2018.
According to the provisions of article 13, par. 1subpar. b' and c; of the Codified Law 2190/1920 (as replaced today by article 24 par. 1 sub. b' and c' of Law 4548/2018), the General Meeting by its own decision, which is subject to the disclosure formalities of the art. 7b. of the Codified Law 2190/1920 (as replaced today by article 13 of Law 4548/2018), may authorize the Board of Directors to increase the share capital by its own decision.
Also, according to the provisions of article 13, par. 13 of Codified Law 2190/1920 (as replaced today by article 113 of Law 4548/2018), by a resolution of the General Meeting passed under an increased quorum and majority in accordance with the provisions of paragraphs 3 and 4 of article 29 and of par. 2 of article 31 of Codified Law 2190/1920 (as replaced today by articles 130 par. 3 and 4 and 132 par. 2 of Law 4548/2018), a programme can be established for the offer of shares to the Directors and to company personnel, as well as to personnel of affiliated companies, in the form of stock options, according to the more specific terms of such resolution, a summary of which is subject to the publicity formalities of article 7b of Codified Law 2190/1920 (as replaced today by article 13 of Law 4548/2018). The par value of the shares offered may not exceed, in total, one tenth (1/10) of the paid‐up capital on the date of the resolution of the General Meeting. The Board of Directors issues a decision regarding every other related detail which is not otherwise regulated by the General Meeting and, depending on the number of beneficiaries who have exercised their options, the Board of Directors decides on the corresponding increase of the Company's share capital and on the issuing of new shares.
According to the provisions of article 16 of Codified Law 2190/1920 (as replaced today by article 49 of Law 4548/2018), subject to prior approval by the General Meeting, the Company may acquire its own shares, under the responsibility of the Board of Directors, provided that the par value of the shares acquired, including the shares previously acquired and still held by the Company, does not exceed one tenth (1/10) of its paid‐up share capital. The resolution of the General Meeting must also set the terms and conditions of the acquisitions, the maximum number of shares that may be acquired, the effective period of the approval granted, which may not exceed 24 months, and, in the case of acquisition for any consideration, the maximum and minimum range of such consideration.
The Company has no agreements which are put in force, amended or terminated in the event of a change in the control of the Company following a public offer.
The parent company and the subsidiaries do not hold any treasury shares.
The Company has no significant agreements with members of the Board of Directors or its employees providing for the payment of compensation, especially in the case of resignation or dismissal without good reason or termination of their period of office or employment due to of a public offer.
Frigoglass is a strategic partner to the world's leading beverage brands.
We are one of the global leaders in Ice Cold Merchandisers (ICM), providing our customers with a complete range of innovative merchandising solutions, which uniquely position and promote their brands to consumers around the world. Frigoglass supplies Ice Cold Merchandisers (beverage coolers) to soft drinks and alcoholic beverage companies. Our market‐leading products combined with our commitment for consistent, superior after‐ sales support, have allowed us to build and continuously develop long standing partnerships with our customers, who include leading beverage companies in more than 100 countries that we serve globally. Our innovative coolers enhance our customers' beverage branding at the point of sale, drive impulse consumption and maximize merchandising opportunities. We are committed to providing increasingly environmentally friendly product solutions which enable our customers to meet their ambitious sustainability and carbon emission reduction targets. Frigoglass is also a principal supplier of glass bottles and complimentary packaging solutions in the high‐growth markets of Africa. These markets present an attractive long‐term investment opportunity for our customers and as such we remain committed to supporting them in capitalizing on this opportunity.
With its footprint, Frigoglass is well established in the more mature European markets while it is evolving and establishing its position in emerging markets. We support our customers through manufacturing facilities in seven countries and an extensive network of sales and after‐sales representatives.
In our glass bottle business, we are focused on the markets of Africa. We aim to create value for our customers by building on our position as a leading supplier of glass bottles and complementary packaging solutions in West Africa.
| Cool Operations: | |
|---|---|
| Europe | |
| Production plants and sales offices: | Greece, Romania, Russia |
| Sales offices: | Norway, Poland and Hungary |
| Asia & Africa | |
|---|---|
| Production plants and sales offices: | India, Indonesia, South Africa |
| Sales offices: | Kenya, Nigeria |
| Africa | |
|---|---|
| Production plants and sales offices: | Nigeria |
In 2018, Frigoglass remained focused on its strategic priorities and continued creating value‐adding, innovative, cold merchandising solutions for its customers around the world.
In Frigoglass, we put the customer in the center of our business model. During the last years, we have redefined our ICM Commercial Vision and have taken a number of steps to further improve our Customer Focus. Our ICM Commercial Vision is supported by three pillars:
In 2018, our customer‐centric culture continued its positive impact on the company's revenue, proving the success of our highly effective commercial function for a consecutive year. Frigoglass key account management accelerated speed of translating market messages into actions, and high quality customer service across all regions and continents. For our Glass division, 2018 was a strong year as market demand across West Africa rebounded after the challenges of the two previous years. Despite what was overall a muted year for manufacturers in Nigeria our output grew by 5% in terms of volume. We carried out the full Cold Repair of our flint glass furnace in Ughelli (35 days glass to glass) which increased capacity post‐repair by 25‐30 tons of glass per day.
In the Beer segment, one of our key customers inaugurated their new brewery in Ogun State, which drove growth in the segment throughout the year. The Food segment continued to grow from a small base whilst international players' penetration of the Nigerian market with locally produced international Spirits brands continued apace. We were able to manage both inbound and outbound supplies through the port of Apapa in spite of the severe congestion and impact on truck and container availability to increase our glass container exports by 18% y‐o‐y. Our Crate division kept pace with demand from new customers to deliver in excess of 60% volume growth, whilst our Crowns plant felt the impact of lower demand from the Soft Drinks segment.
At the end of the year, we secured our future growth strategy with the announcement that we will invest 25‐30 million Euro in a furnace capacity expansion project at our Agbara glass plant over the period 2018‐2020, which will increase our capacity at the plant by 35,000 tons per year.
The latest breakthrough development, Hybrid, has created excitement to customers in the emerging markets. In several regions of Africa and Asia, where immediate consumption grows faster than electrical power availability, the Hybrid cooler is designed to mitigate the impact of power outages in the continent. With the use of eutectic technology, it maintains low temperatures for more than 16 hours in an environment of 40°C without requiring electrical power source. During power‐off hours, coolers remain fully illuminated with LED lighting that boosts impulse beverage sales. Also it uses HFC‐free refrigerant that is preferred by customers and aligns with their sustainability goals. In 2018, upon wide market acceptance of the Hybrid concept, Frigoglass expanded the Hybrid line of models to serve more placement needs. The significant increase of annual sales clearly indicated the success of the Hybrid models performance and the trend towards green cooling solutions that depend less on electricity net power.
In 2018 the newly developed Plus range in Russia continued showing positive momentum by doubling its sales compared to the previous year, delivering quality coolers at competitive pricing and helping our customers reach their market penetration targets.
In Africa the readiness to transit more countries and customers to environmentally‐friendly HFC‐free refrigerants led us to expand the Hydrocarbons to the complete Super range of coolers, including the Subzero models for beer related product placements. With Super and Hybrid, Frigoglass completed its line‐up for the continent, offering cooling and aesthetical options to serve any local demand.
In Europe we focused together with our big customers on configuring a solid plan towards a greener future through standardization of the product and options portfolio. This allows for common raw materials, less spare parts and waste, easier recycling and focus on sustainable sourcing of components. The implementation of the plan is expected to start in 2019.
The Flex cooler range, launched in 2017, continued its successful market penetration increasing its sales in both Europe and Africa. In 2018 the Flex family was enhanced with more models to cover further needs, thus becoming one of the core ranges of Frigoglass ICM portfolio.
Finally in Asia, and more specifically in India, we launched "Norcool by Frigoglass", a complete line‐up of freezers, ranging from curved glass‐top to hard‐top design, which are ideal for tropical climate, use natural refrigerants and operate with high energy efficiency.
2018 was the year that, following the European plants transition, also the South African operation produced solely HC coolers, leaving India and Indonesia the only remaining Frigoglass operations still producing HFC refrigerants, for servicing the countries that lack the infrastructure to support greener solutions. The move to HFC‐free coolers production will be gradually implemented also in these two plants, which are already appropriately equipped to support a full‐scale transition following market needs.
In addition to the labs of India and Greece, in 2018 also the labs in Romania got accreditation according to ISO17025 standard and were recognized by The Coca‐Cola Company, PepsiCo and Heineken for certification tests.
This significant development makes more of our labs equivalent to internationally recognized independent labs and allows us to test new configurations locally, avoiding transportation of new model samples to external labs, thus reducing outbound freight and respectively emissions. In addition, it leads to important time and cost savings in the commercialization process.
Our connectivity solutions have become integral part of our product offering. We provide connectivity capabilities and digital services, while enhancing technical excellence. In 2018 more than 100,000 IoT‐enabled coolers were sold, clearly indicating the increasing market trend towards digitalization.
At Frigoglass, our approach to key non‐financial sustainability aspects is underpinned by a set of guiding principles; in specific, upholding high professional standards, being transparent, trusted and fair, fostering a culture of partnership and collaboration, valuing the long‐term relationships with our customers and suppliers, and leading by example to create a more sustainable future.
The group‐wide framework on non‐financial issues focuses on four areas, which are complementary and mutually supportive.
Quality and innovation are two important drivers in our sustainability strategy. Frigoglass aims to create value for its business and customers by developing high quality, reliable products and services, continuously enhancing their efficiency, whilst following fair business practices and ensuring regulatory compliance with applicable laws in all areas of our operation.
Frigoglass creates value by recognizing and reducing its products' impact on the environment. In the operations, we measure performance through regularly monitoring the environmental impact of our products and undertaking actions to improve the efficiency of materials' use. Performance and efficiency constitute key drivers behind all our efforts to minimise our environmental impact.
Our people are our greatest asset. Engaging and developing our people for the long term is our firm objective. We are therefore strongly committed to attracting, developing and retaining the best people to successfully support our business strategy, whilst providing them a safe and inclusive working environment.
It is important for us to be a responsible corporate citizen by supporting the local society. We work closely with our community stakeholders to find out how we can achieve greater social impact through our business operations and focus our efforts on creating value for the communities in which we operate.
Frigoglass approach, the specific policies and the outcomes of those policies as well as Key Performance Ιndicators associated with the above focus areas are presented in chapters: 5. Marketplace, 6. Environment, 7. Workplace
For us at Frigoglass, engaging in sustainability means aligning with the needs and expectations of our stakeholders ‐ customers, consumers, employees and shareholders around the globe.
As we aim to maintain our stakeholders' engaged in a business environment that is continuously shifting, we regularly revaluate our business and sustainability priorities as well as those of our stakeholders.
Our top ten material issues remain as follows:
At Frigoglass, we highly appreciate the role of stakeholders and the significance of their involvement when it comes to defining our sustainability strategy. Engaging with them is essential for understanding their needs and creating value for the organization. Their insight also helps us acquire a multi‐angle perspective that supports our decision making process and ensures that our sustainability targets and actions respond to their concerns and meet their expectations. In the process of mapping our stakeholders, we have identified those for which we have legal, commercial or moral responsibility, such as our investors, clients and the communities in which we operate. Our employees and our suppliers are equally important stakeholder groups because we depend on them for our operation. Finally, we are conscious of external groups, such as our business partners and product end users, who are influenced by our products and performance. Continuous dialogue and engagement with different stakeholder groups enable us to understand various perspectives, identify opportunities to improve our performance, create value for our customers and shareholders and set our sustainability targets. Integrity, transparency and compliance are the key principles behind all our engagement initiatives. Stakeholder engagement outcomes inform our strategy, risk management and resource allocation, and help us meet stakeholders' expectations and address their concerns.
Our ongoing engagement with our stakeholders helps us understand:
• The impact of our activities and how to handle them in a responsible manner
• The potential risks and opportunities associated with each stakeholder group and how we can effectively manage them in a proactive way
• The effectiveness of our sustainability strategy
Feedback from our stakeholders on how we can improve our management and reporting of sustainability issues has included the following recommendations:
• Promote standardisation of procedures on quality, labour management and environmental issues across all operations
In 2018, we continued the implementation of the risk management identification process across our operations, which was an upgrade of our Operational Risk Management tool and update of our reporting system to better assess potential risks and develop mitigation actions.
Frigoglass CEO and the Management Committee oversee the risk and opportunity identification process, which includes regulatory reviews, carbon emission and energy use data collection, as well as consultation with both suppliers and customers. Data collection is used to identify where climate change and other risks and opportunities exist across the company. Specifically, data on carbon emission and energy are used to assess energy efficiency opportunities at a number of our plants, as well as help us set our carbon emission target for 2022 to reduce emissions intensity by 10%. Customers' consultation has been guiding our research and development efforts to produce more energy efficient ICMs.
The updated Operational Risk Management program consists of three major assessment categories. For each of them a series of issues and potential risks have been outlined to allow us to have an accurate overview of the risks at asset level i.e. in each individual plant. Under this program, climate change has been recognized as a key risk that relates to both business continuity and environmental management. Annual Environmental, Health and Safety audits have been carried out in each plant by third parties.
These audits assess how effectively this risk is managed in relation to the program's goals and more specifically:
These audits have also been used as an opportunity to identify additional potential risks. The findings from the annual audits have been compiled and shared with the Management Committee for their further assessment and action planning.
Frigoglass has used a risk assessment process to prioritize the identified risks and opportunities, based on the following criteria:
The identified risks have been categorized in three groups, and more specifically, as risks resulting from:
Increasing reporting obligations imposed by regulators may require changes to how we collect and report data today.
Potential impact
Increased operational cost
Impact magnitude
The financial implications of emissions reporting obligations are associated with the cost to collect, check and collate emissions data across all of Frigoglass businesses and report in the required format. This could be quite a complex task given that Frigoglass operates in some jurisdictions that may have very different reporting requirements.
Frigoglass started collecting emission data in 2010 and continues to annually collect, check and collate emissions data to feed into the development and tracking of emissions reduction targets across the business. In addition, the level of reporting for each operation is continually being improved to increase the accuracy of the collected data on all 3 emission scopes. It is anticipated that collecting emissions data now will reduce any risks associated with future emission reporting obligations.
Participation in the EU ETS and introduction of similar schemes in the US and throughout the World may have a flow‐on impact on the cost of business inputs such as electricity and fuels.
Potential impact
Increased operational cost
Impact magnitude
Low‐medium
Estimated implications
Existing and future regulations on GHG emissions and a trading scheme will serve to monetise the environmental cost of GHG emissions and will increase the cost of traditional fossil fuel‐based energy usage including electricity, stationary and transport fuel as well as refrigerant gas for both Frigoglass and our suppliers. This could lead to a small increase in costs associated with our raw materials and components as well as direct increases in energy costs for our production facilities.
We use three methods to manage emissions and associated costs:
1) Measuring energy use and emissions including improving quality of collected data. 2) Managing operational costs by analysing collected data and identifying and implementing energy efficiency projects to reduce energy use across our operations. This has included dematerialising our supply chain and products (e.g., modular product design, fewer item codes and a higher degree of standardization, more efficient component selection).
3) Investment in research and development to produce ICMs that use natural refrigerants and are powered by solar cells and eutectics technology. It is anticipated that by implementing these management measures, we will be able to offset the increase in costs associated with the implementation of a carbon price and will be an industry leader with respect to natural refrigerants.
Changes to refrigerant regulation, including phasing out or banning of different refrigerant gases.
Potential impact
Increased operational cost
Impact magnitude
Low‐medium
Estimated implications
Frigoglass is fully equipped in all its plants to produce with HFC free refrigerants. Should additional changes to refrigerant types be required, it is estimated that costs of the magnitude of €3 million will be needed to upgrade production facilities.
Management method
Frigoglass is investing in research and development into alternative refrigerants and in 2018, 82% of our ICM placements worldwide were with Hydrocarbon (HC) refrigerants. Other refrigerant related projects include the development of cooling circuits that can operate with a lower HC charge to extend usage to larger size coolers.
Greater variability of temperature including high temperature which may lead to production downtime.
Potential impact
Reduction/disruption in production capacity
Impact magnitude
Temperature extremes could reduce revenue by disrupting production. Production costs may increase due to increased electricity load for additional cooling of production sites and increased energy costs where energy providers need to upgrade their infrastructure to guarantee supply during periods of extreme weather. The financial implications could range from small increases in operational costs to significant costs related to plant shut down as a result of damage from extreme weather events. The financial costs of production disruptions from weather‐related events is estimated 1.3% of total spending.
Management method
Frigoglass has an Operational Risk Management program which includes new standards as well as a new, structured and detailed reporting system to identify and address risks associated with climate change. The major risk categories we have identified are site construction, safety measures, and critical hazards while some of the issues included in these groups are business continuity, environmental management and health, and safety, among others. The potential impacts from changes in temperature extremes are considered under the Operational Risk Management program where critical thresholds on business continuity are reached. Regarding managing certainty of supply, our regular supplier assessment ensures that we continually identify those suppliers that are able to provide materials to different manufacturing sites around the world, ensuring a certain degree of resilience in the availability of the materials and components required for manufacture of products. Diversification of our suppliers is another means of addressing the risk of climate impacts up and down our supply chain.
On the market side we manage risk of production capacity disruption through possibility to supply same and/or similar products from different manufacturing sites.
Increase in average temperature over longer time frames which may lead to increased operation and production costs associated with cooling in factories. Additional impacts to personnel expected.
Potential impact
Increased operational cost
Impact magnitude
Medium
Estimated implications
Change in average temperature will increase the production costs within our factories due to increased cooling requirements. Should temperatures exceed tolerable ranges, production must cease which would reduce supply and potentially impact on Frigoglass ability to meet customer requirements. This would result in a loss of revenue of max 10%.
Management method
Currently factories operate within the acceptable temperature tolerance range. However the risk of increased average temperatures is incorporated into our Operational Risk Management program. Heat risk to personnel is currently considered within the health and safety category of our Operational Risk Management Program. Should temperatures increase beyond acceptable tolerance levels, Frigoglass will implement facility upgrades to ensure that production can continue uninterrupted.
Damage to the reputation of Frigoglass as a provider of environmentally‐friendly technologies by its customers and investors if the company fails to meet compliance requirements or is seen to be insufficiently managing all business risks associated with climate change.
Potential impact
Reduced demand for goods/ services
Impact magnitude
High
The loss of Frigoglass reputation as a supplier of environmentally friendly technologies would have a significant financial impact as we could lose a large proportion of our customer base to other suppliers.
We manage reputation risk by maintaining our reputation as a leader in technology and innovation by funding our research hubs in Europe and Asia to ensure that our technology meets our customers' needs for energy efficiency, natural refrigerants and IoT‐enabled ICMs that allow for more efficient control of their operation and servicing.
Expectations of major customers with respect to environmental performance (from a design and use perspective).
Potential impact
Reduced demand for goods/ services
Impact magnitude
High
Estimated implications
The financial implication of not being able to provide our customers with both supply chain management information and innovative emissions and energy‐related solutions pose a significant financial loss (up to 50% of sales) to Frigoglass if these customers move to other suppliers who can provide the required information, products and solutions.
Management method
As a technology and innovation leader in our sector, with research and development hubs in Europe, Asia and Africa, we are best positioned to provide global beverage companies with the most advanced product range to reduce their carbon footprint and address the rapidly rising energy costs. The innovations we develop then flow through to our capital investment strategies in our plants in order to equip manufacturing sites with the capability and capacity to manufacture newer models to meet the increasing demand, as well as supplier sourcing strategies to ensure the appropriate components are available in expected quantities and meet our supplier quality standards. In addition, Frigoglass has been collecting and reporting on carbon emission data since 2010 and continues to improve and refine its emissions data. It also reports on a range of sustainability indicators that would be of interest to our customers.
Ensuring economic growth forms an integral part of Frigoglass' sustainable development. We aim to ensure that economic value is created on a constant basis and distributed among all stakeholders. At the same time we strive to fulfil the company's social and environmental responsibilities to the greatest possible extent. We are committed to achieving long‐term economic growth, as well as generating and distributing broader economic value for our stakeholders.
Economic value is distributed through various means:
In pursuit of value creation, considerable effort has been put forward and several initiatives have been implemented which are directly related to it.
The financial performance of the group is presented in detail in 2018 Financial Statements.
Our core values guide our actions, aiming at conducting business in a socially responsible and ethical manner. Our policies and procedures related to Human Rights, Business Ethics, Anti‐Corruption and Bribery have been effectively communicated to all (permanent) employees and business partners (e.g. customers and suppliers) through business contract terms and in‐person, online training programs. For our internal stakeholders, we have initiated an e‐learning platform, the "Frigoglass Academy", which offers systematic
training and uses comprehension test to verify understanding of our policies. It also provides reliable statistical data on the population coverage of the training.
The training focuses on the following policies and takes place regularly with updated content, including policy revisions and newly introduced policies:
Given the nature of our business model and our commercial relationships, responsible procurement is a particularly important matter for Frigoglass.
As a global corporation with plants operating in several countries, we always strive to establish honest working relationships with our suppliers which adhere to the principles
of sustainable development. An audit process is in place for our largest and most important suppliers, as well as for all our new suppliers. Our ultimate objective is to progressively include a wider range of criteria into our supplier assessment processes and audit forms. This refers not only to operational issues, such as the mitigation of supply chain constraints, but also to sustainability aspects such as:
In 2018 we initiated a plan to automate the audit process through cooperation with online consulting services that engage our suppliers into annual registration of key sustainability related information. This online platform helps our suppliers not only define their sustainability targets but also track their progress towards reaching the performance, as required by the Frigoglass Supplier Code.
Our business relationships with suppliers are underpinned by the Supplier Code which Frigoglass has put forward. In this code, Frigoglass lays out the standards and principles to which we expect our suppliers to adhere. Ethics, labour and human rights, health & safety but also the environment are integral parts of our Supplier Code. Every new party, defined by Frigoglass as Supplier or Business Partner, is required to sign the Supplier Code thus committing themselves to complying with its defined principles.
Compliance covers all activities throughout all Suppliers' premises and operations, including their own supply chain, whilst contracts may also contain specific provisions addressing these issues. By requiring our suppliers to comply with the requirements as outlined in the Supplier Code, Frigoglass helps "cascade" good practice throughout its supplier base and minimise its indirect negative impacts. By doing so, it is not only protecting its own reputation, but also the reputation of its suppliers – some of whom might be vulnerable to consumer activism. Suppliers are achieving a level of performance
that is in line with our customers' own requirements (for example, requirements about supplier environmental performance). As part of our risk management strategy, compliance with the Frigoglass Supplier Code is subject to audit by Frigoglass or an independent third party. We have also revised our supplier auditing to give more weight to sustainability‐ related factors. In cases where Suppliers fail to comply with the requirements addressed in this Code, Frigoglass reserves the right to renegotiate and/or terminate an agreement.
| New supplier audits | 2014 ‐ 2018 |
|---|---|
| % of new suppliers assessed on sustainability criteria | 100% |
| Instances of identified actual or potential negative impact on the assessment criteria | 0 |
We assess a wide range of suppliers representing annual purchases of over 90% of our total group spent. Out of those, in 2018 over 40% were audited on‐site. As part of our responsible procurement strategy, we run training programs on the sustainability criteria we place on our suppliers. As per Group target, in 2018 all our buyers completed the Sustainable Procurement training. This is an obligatory training that every new buyer of Frigoglass receives, as part of the standard employment process. In addition, we regularly conduct risk analysis on key purchasing categories to ensure security of supply. When we identify suppliers with high probability of non‐compliance with our Supplier Code of Conduct, we manage supply chain risk by proactively finding potential suppliers with higher probability to comply.
| We expect all of our suppliers to sign and comply with our Supplier Code of Conduct. By doing so we impose and ensure minimum standards with respect to issues concerning: |
|||||||||
|---|---|---|---|---|---|---|---|---|---|
| Ethics | Anti‐trust Bribery Conflict of interest Protection of information and intellectual property |
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| Labour | Freedom of association Work conditions Wages and benefits |
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| Human rights | Child and forced labour Diversity and equal opportunity Harassment and violence |
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| Health and Safety | Occupational health and safety Hygiene Work conditions |
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| Environment | Regulatory compliance Pollution and waste Use of recycled materials |
At Frigoglass, we are engaged in the preservation and conservation of the global environment and as such we remain committed to reducing the environmental impact of our business. We closely monitor the impact of our products, processes, supply chain and operations on the environment and take concrete measures to minimize it. We follow environmentally conscious and sustainable business practices, which directly inform our corporate strategy and drive our approach to innovation. In the previous years, we made considerable progress towards minimizing the environmental impact of our products, rationalizing our manufacturing processes and improving the efficiency of our operations. We also systematically enhance environmental awareness through the environmental education of our employees. In this frame, in 2018 we launched an e‐learning platform, the "Frigoglass Academy", with the objective to promote environmental awareness, among other things, throughout the company.
As a global manufacturer of beverage coolers, we are committed to designing and producing innovative products, which are energy efficient with minimum environmental impact. ICMs make up the most significant proportion of our customers' carbon footprint, in some cases from 40% to 60% of their overall footprint. Therefore, offering energy efficient solutions has long been an integral part of our product strategy and one of our main competitive advantages.
Glass operations, on the other hand, are characterized by energy intensive production and require large quantities of raw materials. Therefore, in these operations our primary goal is to recycle and reuse as many materials as possible. Another important goal for Glass is to continue innovating on lightweight bottle production, which again leads to use fewer raw materials and helps us to meet our primary goal.
Continuously improving the environmental performance of our coolers is one of our top priorities, which is aligned with our customers' expectations and upcoming global regulations. During the previous years, our efforts to this front have been intense and have yielded substantial results.
In close collaboration with our customers and suppliers, we gradually convert our product portfolio into a fleet of coolers with environmentally friendly refrigerants. The share of our so‐called "Eco range" has grown considerably in the last years, reaching 82% of our total ICM sales in 2018.
| Evolution of green ICM sales in | 2014 | 2015 | 2016 | 2017 | 2018 |
|---|---|---|---|---|---|
| relation to total ICM sales | 41% | 48% | 60% | 70% | 82% |
After conducting a life‐cycle assessment (LCA) for an average cooler, from extraction of raw materials to disposal, we have concluded that the processes with the most important environmental impact are the following:
Following this assessment, all our new ranges are been developed taking into consideration the impact of the above key outcomes.
In our Nigeria operations, we continued our lightweighting efforts, developing even lighter returnable bottles, which reduce the carbon footprint of our customers. We have also applied rightweighting processes in the development of one‐way bottles and jars, for the spirits and food segments respectively, with optimized weight to ensure safe product transportation in the country. We have also produced returnable bottles which are heavier than non‐returnable or one‐way containers, but have considerable benefits for the environment. These containers are heavier to withstand multiple trips in large glass bottles floats, but have considerable benefits for the environment as they can be used more than 25 times before being downcycled to cullet and reused.
Over the last years we have realized several investments, aiming to protect the environment and enhance the energy efficiency of our plants. Our investments covered a wide spectrum of processes, ranging from simple process optimizations to sophisticated equipment upgrades in our production facilities. Below we highlight some of these investments in our plants:
Also on the product side we have made extended efforts to optimize the design, standardize the parts, reduce the weight of materials and packaging e.g. pallets. Those actions led mainly to reduction of material use, better warehouse arrangements and space usage optimization as well as more efficient logistics.
Finally, as part of our environmental management system, over 85% of our operation facilities were certified as per ISO14001 in 2018, while our plan remains for all facilities to be certified by 2019.
In addition, as every year, also in 2018 we invested about 5% of our annual IT budget in "Green IT", allowing for reduction of business travels, while maintaining or even improving internal and external communication capabilities.
In our efforts to continuously enhance the sustainable character of our operations, every year we are allocating approximately 1% of our ICM sales revenue to projects related to improving energy efficiency in operations and reducing our environmental impact. As a result we have never received grievances about the environmental impact of our operations as long as we monitor them.
At Frigoglass, we recognized early that our ICM operations are material‐intensive. Since 2010, we have been monitoring and reporting on our material use, with the objective to keep rates of material consumption over produced volume at low levels, despite varying product mix. Furthermore, our Procurement cooperates with strategic suppliers to ensure that stock of raw materials is maintained at warehouses close to the plants. This helps avoid sub‐optimal freights (e.g. by air) while still enables us to satisfy our customers' needs for shorter delivery times. The following table shows the material quantities used in the last 4 years:
| Tonnes of | Metal | Glass | |||||||
|---|---|---|---|---|---|---|---|---|---|
| materials | 2015 | 2016 | 2017 | 2018 | 2015 | 2016 | 2017 | 2018 | |
| Europe | 10.595 | 10.066 | 13.106 | 14.619 | 3.391 | 3.996 | 5.233 | 5.275 | |
| Asia | 9.481 | 6.330 | 6.012 | 5.250 | 2.721 | 1.647 | 1.552 | 1.147 | |
| Africa | 2.256 | 2.127 | 1.743 | 1.977 | 639 | 602 | 498 | 971 | |
| Total | 22.331 | 18.523 | 20.861 | 21.846 | 6.751 | 6.245 | 7.283 | 7.392 |
| Tonnes of | Plastics | Refrigerants | ||||||
|---|---|---|---|---|---|---|---|---|
| materials | 2015 | 2016 | 2017 | 2018 | 2015 | 2016 | 2017 | 2018 |
| Europe | 1.140 | 1.105 | 1.438 | 2.399 | 41 | 37 | 42 | 25 |
| Asia | 2.840 | 2.490 | 2.311 | 1.327 | 47 | 32 | 24 | 26 |
| Africa | 176 | 163 | 120 | 0 | 19 | 14 | 4 | 3 |
| Total | 4.156 | 3.758 | 3.869 | 3.726 | 107 | 83 | 70 | 54 |
| Tonnes of | Insulation | Paint | |||||||
|---|---|---|---|---|---|---|---|---|---|
| materials | 2015 | 2016 | 2017 | 2018 | 2015 | 2016 | 2017 | 2018 | |
| Europe | 1.299 | 1.196 | 2.288 | 1.913 | 123 | 100 | 81 | 87 | |
| Asia | 1.045 | 624 | 633 | 731 | 126 | 41 | 34 | 19 | |
| Africa | 337 | 320 | 238 | 341 | 33 | 12 | 5 | 2 | |
| Total | 2.681 | 2.140 | 3.159 | 2.984 | 282 | 153 | 120 | 108 |
| 2015 | 2016 | 2017 | 2018 | |
|---|---|---|---|---|
| Tonnes of total material consumption | 36.309 | 30.902 | 35.362 | 36.110 |
| kg of materials / ICM standard unit sales | 61,7 | 61,6 | 56,1 | 55,8 |
The evolution of our material consumption demonstrates the payoff of our strategies, with steady year by year reduction of the materials used per ICM standard unit sale. Specifically for 2018 we managed to reduce material intensity by a further 0,5% compared to 2017.
In Glass operations, materials consumption is mainly based on recycled cullet and therefore this part of our business is by definition very material efficient.
| Tonnes of | Silica sand | Cullet | ||||||
|---|---|---|---|---|---|---|---|---|
| materials | 2015 | 2016 | 2017 | 2018 | 2015 | 2016 | 2017 | 2018 |
| Asia | 47.170 | 51.952 | 33.895 | 0 | 18.829 | 8.484 | 37.265 | 0 |
| Africa | 94.208 | 84.517 | 73.859 | 89.722 | 67.837 | 65.294 | 83.588 | 82.869 |
| Total | 141.378 | 136.469 | 107.754 | 89.722 | 86.666 | 73.778 | 120.853 | 82.869 |
| Tonnes of | Soda ash | Limestone powder | ||||||
|---|---|---|---|---|---|---|---|---|
| materials | 2015 | 2016 | 2017 | 2018 | 2015 | 2016 | 2017 | 2018 |
| Asia | 16.453 | 17.765 | 12.071 | 0 | 11.864 | 12.850 | 8.923 | 0 |
| Africa | 23.070 | 22.765 | 19.037 | 23.642 | 21.696 | 20.988 | 17.620 | 21.978 |
| Total | 39.523 | 40.530 | 31.108 | 23.642 | 33.560 | 33.838 | 26.543 | 21.978 |
| Tonnes of | Other | |||||||
|---|---|---|---|---|---|---|---|---|
| materials | 2015 | 2016 | 2017 | 2018 | ||||
| Asia | 7.703 | 8.638 | 6.996 | 0 | ||||
| Africa | 4.918 | 5.002 | 4.667 | 5.577 | ||||
| Total | 12.621 | 13.640 | 11.663 | 5.577 |
| 2015 | 2016 | 2017 | 2018 | |
|---|---|---|---|---|
| Tonnes of total material consumption | 313.748 | 298.255 | 297.921 | 223.788 |
| kg of materials / Tonnes of glass production | 1,99 | 1,22 | 1,36 | 1,30 |
| % of recycled input materials (cullets) | 28% | 25% | 41% | 37% |
In 2018, glass production was reduced by 20%, due to the divestment of the Jebel Ali plant, however material intensity improved by 4,3%, highlighting the efficiency of our Nigeria plants.
Water is a key input of our manufacturing process, especially in Glass operations, and we recognize its scarcity. We are committed to making every effort to avert water losses in the production processes through water recycling and reuse, both in our Cool and Glass operations.
In our Cool operations, used water is being properly treated according to the required specifications for discharge back into the sewage system.
In our Glass operations, we have set procedures for leakage avoidance and maximum recycling. Especially in our Effluent Treatment plant in Nigeria, where we utilize the latest advances in water treatment technologies, we have achieved over 95% water recycling and reuse in our operations. The remaining 5% mostly evaporates during the process, while a negligible part is being treated and discharged in the sewage system.
In our ICM operations, hazardous and non‐hazardous waste is generated from the manufacturing process of coolers.
Reducing waste from production, without undermining the effectiveness of the process, is a key priority for Frigoglass.
In 2018, general waste was increased due to the increase in production and progress towards improving our waste intensity was slower in relation to 2017, however still lower than 2016 levels. In terms of recycling levels, we are on track with our goal to recycle 90% of our waste by 2020, achieving an 87,9% rate in 2018.
| 2015 | 2016 | 2017 | 2018 | |
|---|---|---|---|---|
| General waste | 5.668 | 4.554 | 4.721 | 5.327 |
| Recycled general waste | 4.848 | 4.022 | 4.043 | 4.681 |
| % Recycled waste | 85,5% | 88,3% | 85,6% | 87,9% |
At Frigoglass, we respect local legislation and comply with internal policies governing the handling of hazardous waste. No hazardous waste is shipped internationally, whilst all is collected from the plants by authorized agencies using their own transportation methods for further disposal and/or recycling.
| 2015 | 2016 | 2017 | 2018 | |
|---|---|---|---|---|
| Hazardous waste | 44,6 | 43,1 | 34,9 | 34,8* |
| % change | ‐3% | ‐19% | ‐0,2% |
* Accounting only for hazardous waste associated with production activities.
In 2018, we continued to limit the generation of hazardous waste associated with our production activities (reduced by 0,2% in relation to 2017), while an additional 30,2 tonnes are attributed to the disposal of obsolete stock.
In our Glass operations, both general and hazardous waste are of negligible quantities. General waste is fully recyclable, while hazardous waste comes mainly in form of machinery oil and water contaminated with oil, and is all properly discharged by authorized companies.
At Frigoglass, our people are our greatest asset. We believe that our long‐term success depends on our ability to attract, develop and maintain an engaged workforce. We implement a long‐term strategy that focuses on finding and retaining talent, promoting their development whilst supporting and safeguarding their rights. We always strive to attract highly qualified personnel, respect their aspirations and ensure their continued professional growth. We also pay special attention to providing a healthy, safe and supportive working environment. We always operate with the highest ethical standards and promote diversity in the workplace.
| Permanent employees |
Managerial | Non‐Managerial | ||||
|---|---|---|---|---|---|---|
| 2017 | 2018 | 2017 | 2018 | 2017 | 2018 | |
| Head offices | 75 | 77 | 43 | 44 | 32 | 33 |
| Nigeria | 737 | 737 | 76 | 78 | 661 | 659 |
| Dubai | 309 | ‐ | 22 | ‐ | 287 | ‐ |
| India | 235 | 232 | 18 | 14 | 217 | 218 |
| Indonesia | 247 | 175 | 10 | 10 | 237 | 165 |
| Greece | 98 | 97 | 11 | 11 | 87 | 87 |
| Romania | 1348 | 1129 | 19 | 19 | 1329 | 1110 |
| Russia | 717 | 624 | 17 | 18 | 700 | 606 |
| South Africa | 337 | 279 | 23 | 7 | 314 | 272 |
| Total | 4.103 | 3.350 | 239 | 201 | 3.864 | 3.150 |
The following table refers to Frigoglass permanent employees in operational sites and Head Offices for 2017 and 2018 (not including seasonal staff):
We are always looking for ways to attract qualified personnel, to respect their aspirations and we remain committed to their continued professional growth. The data below reports on the diversity of our people for 2018:
| 2018 | Male | Female | <30 | 31‐40 | 41‐50 | >51 |
|---|---|---|---|---|---|---|
| Head offices | 49 | 28 | 3 | 25 | 34 | 15 |
| Nigeria | 716 | 21 | 26 | 179 | 270 | 262 |
| India | 228 | 4 | 45 | 116 | 62 | 9 |
| Indonesia | 148 | 27 | 25 | 100 | 48 | 2 |
| Greece | 88 | 10 | ‐ | 7 | 46 | 45 |
| Romania | 799 | 330 | 332 | 318 | 327 | 152 |
| Russia | 542 | 82 | 105 | 282 | 144 | 93 |
| South Africa | 230 | 49 | 43 | 118 | 85 | 33 |
| Total | 2.800 | 551 | 579 | 1.145 | 1.016 | 611 |
| 84% | 16% | 17% | 34% | 30% | 18% |
Our main areas of focus include maintaining employee satisfaction by creating an inclusive, diverse and safe working environment, promoting their training and development, and encouraging proactiveness in the workplace. We strive to provide an engaging and motivating environment that empowers our people to give their best and develop their full potential.
In 2018, Frigoglass Greece (Head Office & KA plant) and Frigoglass India were certified with the SA8000 Social Responsibility Standard. It is worth mentioning that zero (0) non‐ conformities occurred and we achieved a very high score (4.2 /5). Last year, Frigoglass Greece was also certified with ISO27001, the international standard for information security management systems.
Respect for human rights is a fundamental value of Frigoglass. Some countries, where Frigoglass operates, are identified as presenting higher risk of labour and human rights violations. In these locations, we regularly evaluate our standards and procedures for identifying, preventing and mitigating adverse labour practices and adverse human rights impacts in our operations and value chain.
Our Labour Relations policy ensures compliance with the national legislation, and internationally agreed human rights standards and regulations such as the Universal Declaration of Human Rights (UNDHR).
Our Human Rights Policy, which is guided by the International Bill of Human Rights and the ILO Declaration on Fundamental Principles and Rights at Work, sets out the principles for how we relate to our employees, contractors, suppliers and partners. We are committed to respecting all internationally recognized human rights. Forced or slave labour and child labour are strictly forbidden, while we prohibit the employment of persons under 18 years of age in occupations that require exposure to hazardous conditions, as provided for in ILO Convention 182. Our employees have the right to join and support a union and be covered by a collective agreement. In the majority of our plants there are unions or authorized employee representatives. We encourage constructive dialogue with our employees' freely chosen representatives and we are committed to bargaining in good faith.
Our Speak up policy, which is intended to allow employees and business partners raise any concerns and indicate any violation of the company policies and procedures, provides a free communication channel around the clock, every day of the year.
At Frigoglass, we aim to provide competitive compensation to our employees, based on a structured remuneration process. We offer wages which are well above the local law, always complying with all national laws on overtimes and working hours. In the case of significant operational changes, our employment contracts contain at least one week's notice to employees, unless otherwise required by local laws.
We aim to foster an inclusive environment where our people can meet and exceed their expectations, regardless of race, gender, or socioeconomic background, and conversely benefit from diversity to deliver the highest value to our stakeholders. Diversity and inclusion are a vital part of our corporate culture. During the recruitment process, we undertake a number of steps to ensure workforce diversity without any form of discrimination based on gender identity, ethnicity, national origin, age, disability, marital status or any other characteristics protected by law. We do not tolerate any form of harassment, abuse or exploitation.
Our Code of Business Conduct upholds our commitment to providing equal employment opportunities in the workplace and treating all employees without bias. Our Code of Conduct is read and signed by all employees during the hiring process. Besides that, it is an integral part of the training program of our new e‐learning tool.
We provide non‐discriminatory, fair employee compensation, and firmly believe that talent diversity has a direct impact on our success. We embrace diversity and celebrate our people's unique qualities, differences and similarities, so much that our success is attributed to it. Diversity is part of our culture that drives creativity and leads to innovative solutions for our customers. We're proud that there have been no recorded incidents of discrimination during the reporting period. Our internal audits and whistleblowing procedures are aiming at maintaining zero incident levels.
Frigoglass is committed to promoting gender diversity and equality in the workplace. We strive to provide equal job and advancement opportunities for men and women in our operations. Our goal is to become more gender balanced and gradually increase the representation of women in leadership positions.
The table below demonstrates our progress towards gender diversity in leadership positions with steady year by year increase of female representation, reaching 12,7% within 2018.
| Governance | 2016 | 2017 | 2018 | |||
|---|---|---|---|---|---|---|
| personnel | Male | Female | Male | Female | Male | Female |
| Head offices | 7 | 0 | 43 | 0 | 6 | 0 |
| Nigeria | 76 | 6 | 68 | 8 | 72 | 6 |
| UAE (Dubai) | 7 | 1 | 5 | 0 | ‐ | ‐ |
| India | 6 | 1 | 15 | 3 | 14 | 0 |
| Indonesia | 3 | 1 | 6 | 4 | 6 | 4 |
| Greece | 3 | 1 | 11 | 0 | 10 | 0 |
| Romania | 5 | 1 | 16 | 3 | 14 | 5 |
| Russia | 6 | 1 | 14 | 3 | 14 | 4 |
| South Africa | 7 | 1 | 20 | 3 | 9 | 2 |
| Total | 120 | 13 | 198 | 24 | 145 | 21 |
| 90,2% | 9,8% | 89,2% | 10,8% | 87,3% | 12,7% |
Occupational health and safety have always been a top priority for Frigoglass. Our manufacturing operations are part of the heavy industry and consequently the work environment and several production processes in our facilities hold potential risks. At Frigoglass, we aim to maintain high level of safety across the business whilst consistently improving our safety culture. It is of outmost importance to ensure that all employees are aware of the hazards and potential risks, and always comply with safety standards and regulations. In this respect, at Frigoglass we:
We are committed to keeping workplace accidents at zero levels by applying and implementing various structural and technical measures, as well as conducting risk assessments on our facilities and equipment. More specifically, risk assessments are conducted on a periodic basis in order to promptly identify and mitigate potential hazards. They include the following steps:
In 2018 over 75% of our operational sites have been certified per OHSAS 18001. In line with our commitment to workplace health and safety, we target to obtain OHSAS 18001 certification for all the remaining plants by 2020. In all our plants we also implement a concrete and comprehensive safety management system, which is subject to strict approval processes. As part of this system, we closely monitor the accident frequency
rates in all our plants and we are constantly working towards minimising them.
In 2018 injury and absenteeism rates per 1000 hours of work were 0,58% and 0,68% respectively compared to 0,62% and 0,31% in 2017.
At Frigoglass we recognize the importance of employee training and development. We continuously try to provide our people with opportunities to grow professionally and resources to advance their career. The company ensures that all employees are equipped with the right mix of knowledge, skills and abilities to fulfil their job requirements. Frigoglass systematically invests in employee training, providing a wide range of training opportunities. We view employee training and development as an essential element of our success, as it effectively aligns action with objectives. The company puts emphasis on the development of technical skills and is committed to supporting employee professional advancement. We also provide training on ethical issues, such as anti‐corruption, anti‐ competitive behaviour and human rights, which aim at further promoting an equal and fair working environment. The average hours of recorded training per employee in 2018 amounted to 22,6.
2018 was the second year of operation of the "Frigoglass Academy", the online platform that provides a wide range of training courses to our people. The program addresses all our permanent employees with computer access and in the following years will also cover those currently lacking access. The program offers extensive training on our Code of Business Conduct, Values and core operating policies i.e. Human Rights, Labor, Environment, Speak‐ up and Health & Safety.
Performance reviews are also a key component of employee development. At Frigoglass, reviews take place twice a year and give our people the opportunity to provide and receive feedback through individual guidance. 100% of our supervisory and managerial level employees receive annual performance reviews based on pre‐determined and agreed‐upon performance criteria. Career development needs and actions are often tackled through informal meetings and mentoring, while we always listen closely to our workforce's views on how their career goals can be met.
| 2018 | Total new hires | % workforce |
|---|---|---|
| Head offices | 10 | 13% |
| Nigeria | 27 | 3,7% |
| India | 21 | 9,1% |
| Indonesia | 4 | 2,3% |
| Greece | 0 | 0% |
| Romania | 602* | 53,3% |
| Russia | 9 | 1,4% |
| South Africa | 37 | 13,3% |
| Total | 710 | 21% |
The new hires and employee turnover for 2018 are presented in the tables below:
*New hires mainly reflect the increase in production shifts in 2018
| 2018 | Voluntary turnover |
Total turnover, including dismissals and contract expirations |
|---|---|---|
| Head offices | 3 | 12 |
| Nigeria | 31 | 44 |
| India | 23 | 19 |
| Indonesia | 5 | 5 |
| Greece | 0 | 2 |
| Romania | 247 | 820 |
| Russia | 49 | 106 |
| South Africa | 37 | 17 |
| Total | 395 | 1025 |
Yours Faithfully,
The Board of Directors
To the Shareholders of "Frigoglass S.A.I.C."
We have audited the accompanying separate and consolidated financial statements of Frigoglass S.A.I.C. (Company and Group) which comprise the separate and consolidated balance sheet as of 31 December 2018, the separate and consolidated statements of income, comprehensive income, changes in equity and cash flow statements for the year then ended, and notes to the separate and consolidated financial statements, including a summary of significant accounting policies.
In our opinion, the consolidated financial statements present fairly, in all material respects the separate and consolidated financial position of the Company and the Group as at 31 December 2018, their separate and consolidated financial performance and their separate and consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards, as adopted by the European Union and comply with the statutory requirements of Codified Law 2190/1920.
We conducted our audit in accordance with International Standards on Auditing (ISAs), as they have been transposed into Greek Law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the separate and consolidated financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
During our audit we remained independent of the Company and the Group in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code) that has been transposed into Greek Law, and the ethical requirements of Law 4449/2017 and of Regulation (EU) No 537/2014, that are relevant to the audit of the separate and consolidated financial statements in Greece. We have fulfilled our other ethical responsibilities in accordance with Law 4449/2017, Regulation (EU) No 537/2014 and the requirements of the IESBA Code.
We declare that the non-audit services that we have provided to the Company and its subsidiaries are in accordance with the aforementioned provisions of the applicable law and regulation and that we have not provided non-audit services that are prohibited under Article 5(1) of Regulation (EU) No 537/2014.
The non-audit services that we have provided to the Company and its subsidiaries, in the period from January 1, 2018 to December 31, 2018 during the year ended as at 31 December 2018, are disclosed in note 30 of the separate and consolidated financial statements.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the separate and consolidated financial statements of the current period. These matters were addressed in the context of our audit of the separate and consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
PricewaterhouseCoopers SA, 268 Kifissias Avenue, 15232 Halandri, Greece T: +30 210 6874400, F: +30 210 6874444, www.pwc.gr
(Note 4 Critical Accounting Estimates and Judgments, Note 6 Property plant and equipment )
At 31 December 2018, property, plant and equipment amount to €121.2mn for the Group and €3.9mn the Company and are presented at cost less accumulated depreciation and any impairment. Management tests non-financial assets subject to amortization for impairment whenever there are relevant indications of potential impairment.
Challenging trading and operating conditions exist in some of the countries in which the Group operates, resulting in an increased risk of impairment. Based on the indicators that the carrying amount exceeds the recoverable amount, an impairment assessment has been performed for the following three cash generating units ('CGUs'), namely: Ice Cold Merchandisers (ICM) operations in Greece, India and Indonesia.
This is a key audit matter for our audit given that management in determining the recoverable amount of each CGU (as the higher of fair value less costs to sell and value-in-use), exercised judgement in calculating the future cash flows of each CGU, (e.g. expectations on market development, and discount rates applied to future cash flow forecast.)
Details on the assumptions used are included in Note 6 "Property, plant and equipment".
In the year ended 31 December 2018, an impairment charge of €2.1 mn was recognized with respect to the Group's operations in India, which was allocated to machinery and technical installation.
We evaluated management's overall impairment testing process, including process for identifying indicators for impairment, preparation of impairment testing models as well as their review and approval.
The key assumptions assessed per case included, the revenue growth rates, margin trends and discount rates.
We discussed extensively with management, the suitability of the impairment model and reasonableness of the assumptions and with the support of our valuation specialists we performed the following procedures:
We validated the appropriateness of the related disclosures included in Note 6, in the financial statements.
Based on our procedures, we noted no exceptions on the impairment test and consider management's key assumptions to be within a reasonable range.
(Note 4 Critical Accounting Estimates and Judgments Note 14 of separate financial statements )
At 31 December 2018, the Company has an investment in Frigoinvest Holdings B.V. of €60 mn, which holds the Group's subsidiaries in the ICM and Glass segments. This investment is accounted for at cost adjusted for any impairment occurred and is tested for impairment when indications exist that its carrying value may not be recoverable.
Challenging trading and operating conditions exist in some of the countries in which the Group operates resulting in an increased risk of impairment. Based on the indicators that the carrying amount exceeds the recoverable amount an impairment assessment has been performed for this investment.
The recoverable amount of the investments in subsidiaries is determined on value in use calculations, which requires the use of assumptions. The calculations use cash flow projections based on financial budgets approved by management covering a one year period and cash projections for four additional years.
This is a key audit matter for our audit given that management, in determining the recoverable amount exercised judgement in calculating the future cash flows, (e.g. expectations on market development, and discount rates applied to future cash flow forecast.)
In the year ended 31 December 2018 no impairment charge was recognized with respect to the Company's investment in subsidiary.
(Refer to Note 2.1 Basis of Preparation. Note 11 Cash and cash equivalents, Note 13 Noncurrent and current borrowing (separate and consolidated financial statements)
As explained in the Board of Directors Report, challenging trading and operating conditions in the countries in which the Group operated the previous years led to extensive restructuring costs incurred in order to close
We evaluated management's overall impairment testing process, including process for identifying indicators for impairment, preparation of impairment testing models as well as their review and approval.
The key assumptions assessed per case included the revenue growth rates, margin trends and discount rates.
We discussed extensively with management the suitability of the impairment model and reasonableness of the assumptions and with the support of our valuation specialists we performed the following procedures:
Based on our procedures, we noted no exceptions on the impairment test and consider management's key assumptions to be within a reasonable range.
We performed the following procedures to understand the Group's going concern review process.
down certain operating units. This resulted in the Group reporting a negative equity position of €43.0 mn for the year ended 31 December 2018, while the Company has an equity position lower than half (1/2) of the share capital, thus triggering the provisions of article 47 of the Companies Act 2190/1920 as replaced on 1/1/2019 by Article 119/4548/2018.
As at 31 December 2018 the Group has cash and cash equivalents of €49.1 mn out of which €14 mn represent Nigerian Naira cash balance which is subject to cash restrictions. For the year ended 31 December 2018, the Group reported net loss of €0.7 mn,. When adopting the going concern basis, the Group has, among other things, prepared a liquidity forecast based on cash flow projections for 2019. These cash flow projections include assumptions regarding cash generated from operations, scheduled investments, debt repayments and available credit facilities.
We focused on this area due to the significant level of management judgement involved and the complexity of corroborating the assumptions that underpin the ability of the Group to return to profitable operations in the near term.
Finally, we assessed the adequacy of disclosures related to going concern in the financial Statements section Basis of Preparation, "Main Risks and Uncertainties" section of the Directors' Report and in Note 2.1 of the separate and consolidated financial statements.
Refer to Note 18 for taxation (consolidated financial statements).
The Group operates in a complex multinational tax environment which gives rise to uncertain tax positions in relation to corporate income tax, transfer pricing and indirect taxes. The Group establishes provisions based on management's judgements of the probable amount of the liability. Given the number of judgements involved in estimating the provisions relating to uncertain tax positions and the complexities of dealing with tax rules and regulations in numerous jurisdictions, this was considered as a key audit matter.
We evaluated the related accounting policy for provisioning for tax exposures and found it to be appropriate.
In conjunction with our tax specialists, we evaluated management's judgements in respect of estimates of tax exposures and contingencies in order to assess the adequacy of the Group's tax provisions. In order to understand and evaluate management's judgements, we considered the status of current tax authority audits and enquiries, the outcome of previous tax authority audits, judgmental positions taken in tax returns and current year estimates and recent developments in the tax environments in which the Group operates.
We challenged management's key assumptions, in particular on cases where there had been significant developments with tax authorities, noting no significant deviation from our expectations. From the evidence obtained and in the context of the consolidated financial statements, taken as a whole, we consider the provisions in relation to uncertain tax positions as at 31 December 2017 to be appropriate.
The members of the Board of Directors are responsible for the Other Information. The Other Information, which is included in the Annual Report in accordance with Law 3556/2007, is the Statements of Board of Directors members, the Board of Directors Report and the Alternative Performance Measures ("APMs") (but does not include the financial statements and our auditor's report thereon), which we obtained prior to the date of this auditor's report.
Our opinion on the separate and consolidated financial statements does not cover the Other Information and except to the extent otherwise explicitly stated in this section of our Report, we do not express an audit opinion or other form of assurance thereon.
In connection with our audit of the separate and consolidated financial statements, our responsibility is to read the Other Information identified above and, in doing so, consider whether the Other Information is materially inconsistent with the separate and consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
We considered whether the Board of Directors Report includes the disclosures required by Codified Law 2190/1920 and the Corporate Governance Statement required by article 43bb of Codified Law 2190/1920 has been prepared.
Based on the work undertaken in the course of our audit, in our opinion:
In addition, in light of the knowledge and understanding of the Company and Group and their environment obtained in the course of the audit, we are required to report if we have identified material misstatements in the Board of Directors' Report and Other Information that we obtained prior to the date of this auditor's report. We have nothing to report in this respect.
The Board of Directors is responsible for the preparation and fair presentation of the separate and consolidated financial statements in accordance with International Financial Reporting Standards, as adopted by the European Union and comply with the requirements of Codified Law 2190/1920, and for such internal control as the Board of Directors determines is necessary to enable the preparation of separate and consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the separate and consolidated financial statements, the Board of Directors is responsible for assessing the Company's and 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 Board of Directors either intends to liquidate the Company and Group or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company's and Group's financial reporting process.
Our objectives are to obtain reasonable assurance about whether the separate and consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these separate and consolidated financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
We communicate with 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 and consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report.
Our opinion on the accompanying separate and consolidated financial statements is consistent with our Additional Report to the Audit Committee of the Company.
We were first appointed as auditors of the Company by the decision of the annual general meeting of shareholders on 30/06/1999. Our appointment has been renewed annually by the decision of the annual general meeting of shareholders for a total uninterrupted period of appointment of 20 years.
PricewaterhouseCoopers S.A. Athens, 28 March 2019 Certified Auditors – Accountants The Certified Auditor 268, Kifissias Avenue 152 32 Halandri SOEL Reg. No 113 Despina Marinou
SOEL Reg. No 17681
| Table of Contents | Pages | ||
|---|---|---|---|
| 1. | Income Statement | 82 | |
| 2. | Statement of Comprehensive Income | 83 | |
| 3. | Balance Sheet | 84 | |
| 4. | Statement of Changes in Equity | 85 | |
| 5. | Cash Flow Statement | 87 | |
| 6. | Notes to the Financial Statements | ||
| (1) | General Information | 88 | |
| (2) | Summary of significant accounting policies | 89 | |
| (3) | Financial risk management | 113 | |
| (4) | Critical accounting estimates and judgments | 117 | |
| (5) | Segment Information | 120 | |
| (6) | Property, Plant & equipment | 123 | |
| (7) | Intangible assets | 127 | |
| (8) | Inventories | 130 | |
| (9) | Trade receivables | 131 | |
| (10) | Other receivables | 133 | |
| (11) | Cash & cash equivalents | 134 | |
| (12) | Other payables | 134 | |
| (13) | Non‐current & current borrowings | 135 | |
| (14) | Investments in subsidiaries | 141 | |
| (15) | Share capital ‐ Treasury shares ‐ Dividends & Share options | 143 | |
| (16) | Other reserves | 145 | |
| (17) | Financial expenses | 146 | |
| (18) | Income tax | 147 | |
| (19) | Commitments | 150 | |
| (20) | Related party transactions | 150 | |
| (21) | Earnings per share | 151 | |
| (22) | Contingent liabilities | 152 | |
| (23) | Seasonality of operations | 153 | |
| (24) | Post balance sheet events | 153 |
| Average number of personnel | 153 |
|---|---|
| Other operating income & Other gains / |
|
| 155 | |
| 156 | |
| 159 | |
| 160 | |
| 161 | |
| 163 | |
| 165 | |
| 165 | |
| financial liabilities | 166 |
| Reconciliation of EBITDA Restructuring gains / Discontinued operations 157 Expenses by nature Provisions for other liabilities & charges Retirement benefit obligations Deferred tax Bank deposits analysis Short & long term borrowing analysis Maturity of the undiscounted contractual cash flows of |
| FRIGOGLASS | ||
|---|---|---|
| Consolidated | Parent Company | |||||
|---|---|---|---|---|---|---|
| Note | Year ended | Year ended | ||||
| 31.12.2018 31.12.2017 | 31.12.2018 31.12.2017 | |||||
| Continuing operations: | ||||||
| Revenue from contracts with customers | 5 & 23 | 417.297 | 386.049 | 42.073 | 26.007 | |
| Cost of goods sold | 30 | (339.996) | (318.508) | (39.064) | (24.728) | |
| Gross profit | 77.301 | 67.541 | 3.009 | 1.279 | ||
| Administrative expenses | 30 | (21.095) | (22.157) | (15.133) | (15.243) | |
| Selling, distribution & marketing expenses | 30 | (20.736) | (19.142) | (4.669) | (4.141) | |
| Research & development expenses | 30 | (3.585) | (3.738) | (2.648) | (2.373) | |
| Other operating income | 26 | 4.454 | 6.387 | 20.758 | 18.523 | |
| Other gains |
26 | 303 | 4.110 | (11) | (24) | |
| Impairment of fixed assets | 6&7 | (2.071) | (1.607) | (784) | ||
| Operating Profit / |
34.571 | 31.394 | 1.306 | (2.763) | ||
| Finance costs | 17 | (24.702) | (20.931) | (1.799) | (9.828) | |
| Finance income | 17 | 3.535 | 1.627 | 1 | 5. | |
| Finance costs - net | (21.167) | (19.304) | (1.798) | (9.823) | ||
| Profit / |
13.404 | 12.090 | (492) | (12.586) | ||
| Restructuring gains/ |
28 | (301) | 38.243 | (34.501) | ||
| Profit / |
13.103 | 50.333 | (492) | (47.087) | ||
| Income tax expense | 18 | (13.863) | (15.438) | (779) | (780) | |
| Profit / |
||||||
| continuing operations | (760) | 34.895 | (1.271) | (47.867) | ||
| Discontinued operations: | ||||||
| Profit / |
||||||
| discontinued operations attributable to the shareholders | 29 | |||||
| of the company | (1.304) | (19.958) | ||||
| Profit / |
(2.064) | 14.937 | (1.271) | (47.867) | ||
| Attributable to: | ||||||
| Non-controlling interests | 6.644 | 7.289 | ||||
| Shareholders | (8.708) | 7.648 | (1.271) | (47.867) | ||
| 30 | ||||||
| Depreciation | 19.791 | 21.108 | 3.542 | 3.515 | ||
| EBITDA | 27 | 56.433 | 54.109 | 4.848 | 1.536 | |
| Amounts in € | ||||||
| Basic Earnings / |
||||||
| attributable to the shareholders | ||||||
| - Continuing operations | 21 | (0,0208) | 0,3298 | (0,0036) | (0, 5718) | |
| - Discontinued operations | 21 | (0,0037) | (0, 2384) | |||
| Total | (0,0245) | 0,0914 | (0,0036) | (0,5718) | ||
| Diluted Earnings / |
||||||
| attributable to the shareholders | ||||||
| - Continuing operations | 21 | (0,0208) | 0,3298 | (0,0036) | (0, 5718) | |
| - Discontinued operations | 21 | (0,0037) | (0, 2384) | |||
| Total | (0,0245) | 0,0914 | (0,0036) | (0,5718) |
The primary financial statements should be read in conjunction with the accompanying notes.
| Consolidated | ||
|---|---|---|
| Year ended | ||
| 31.12.2018 | 31.12.2017 | |
| Profit / |
(2.064) | 14.937 |
| Other Compehensive Income: | ||
| Items that will be reclassified to Profit & Loss in subsequent periods: | ||
| Discontinued operations: Currency translation differences recycled to P&L | (3.684) | |
| Currency translation differences | 2.231 | (13.028) |
| Items that will be reclassified to Profit & Loss in subsequent periods: | 2.231 | (13.028) |
| Items that will not be reclassified to Profit & Loss in subsequent periods: | ||
| Actuarial gains/ |
(413) | 40 |
| Income tax effect of actuarial gain/ |
(55) | |
| Items that will not be reclassified to Profit & Loss in subsequent periods | (413) | (15) |
| Other comprehensive income / |
1.818 | (13.043) |
| Total comprehensive income / |
(246) | 1.894 |
| Attributable to: | ||
| - Non-controlling interests | 8.591 | 2.396 |
| - Shareholders | (8.837) | (502) |
| (246) | 1.894 | |
| Total comprehensive income / |
||
| attributable to the shareholders of the company from: | ||
| - Continuing operations - Discontinued operations |
(9.409) 572 |
18.586 |
| (8.837) | (19.088) (502) |
|
| Parent Company | ||
| Year ended | ||
| 31.12.2018 | 31.12.2017 | |
| Profit / |
(1.271) | (47.867) |
| Other compehensive income: | ||
| Items that will not be reclassified to Profit & Loss in subsequent periods: | ||
| Actuarial gains/ |
(413) | 52 |
| Items that will not be reclassified to Profit & Loss in subsequent periods | (413) | 52 |
The primary financial statements should be read in conjunction with the accompanying notes.
| Consolidated | Parent Company | |||||
|---|---|---|---|---|---|---|
| Note | 31.12.2018 | 31.12.2017 | 31.12.2018 | 31.12.2017 | ||
| Assets: | ||||||
| Property, plant & equipment | 6 | 121.235 | 106.755 | 3.908 | 4.415 | |
| Intangible assets | 7 | 11.133 | 10.776 | 7.369 | 7.289 | |
| Investments in subsidiaries | 14 | 60.005 | 60.005 | |||
| Deferred tax assets | 33 | 400 | 1.432 | |||
| Other long term assets | 29 | 3.323 | 329 | 78 | 115 | |
| Total non current assets | 136.091 | 119.292 | 71.360 | 71.824 | ||
| Inventories | 8 | 101.739 | 89.075 | 2.232 | 1.747 | |
| Trade receivables | 9 | 77.606 | 84.824 | 3.952 | 4.223 | |
| Other receivables | 10 | 27.441 | 25.475 | 1.005 | 2.299 | |
| Current tax assets | 4.163 | 1.463 | ||||
| Intergroup receivables | 20 | 13.087 | 14.312 | |||
| Cash & cash equivalents | 11 | 49.057 | 53.130 | 2.352 | 998 | |
| 260.006 | 253.967 | 22.628 | 23.579 | |||
| Assets held for sale | 29 | 17.575 | ||||
| Total current assets | 260.006 | 271.542 | 22.628 | 23.579 | ||
| Total Assets | 396.097 | 390.834 | 93.988 | 95.403 | ||
| Liabilities: | ||||||
| Non current borrowings | 13 | 227.998 | 233.414 | |||
| Deferred tax liabilities | 33 | 16.698 | 13.533 | |||
| Retirement benefit obligations | 32 | 6.582 | 14.510 | 5.480 | 5.056 | |
| Intergroup bond loans | 13 | 26.480 | 33.702 | |||
| Provisions | 31 | 3.468 | 3.910 | |||
| Deferred income from government grants | 18 | 17 | ||||
| Total non current liabilities | 254.746 | 265.385 | 31.960 | 38.775 | ||
| Trade payables | 77.643 | 60.985 | 6.052 | 3.745 | ||
| Other payables | 12 | 53.539 | 42.485 | 5.067 | 4.750 | |
| Current tax liabilities | 5.867 | 11.830 | ||||
| Intergroup payables | 20 | 28.355 | 23.895 | |||
| Current borrowings | 13 | 47.261 | 42.441 | |||
| 184.310 | 157.741 | 39.474 | 32.390 | |||
| Liabilities associated with assets held for sale | 29 | 9.973 | ||||
| Total current liabilities | 184.310 | 167.714 | 39.474 | 32.390 | ||
| Total Liabilities | 439.056 | 433.099 | 71.434 | 71.165 | ||
| Equity: | ||||||
| Share capital | 15 | 127.958 | 127.958 | 127.958 | 127.958 | |
| Share premium | 15 | (33.801) | (33.801) | (33.801) | (33.801) | |
| Other reserves | 16 | (11.948) | (12.232) | 25.463 | 25.463 | |
| Retained earnings | (174.194) | (165.073) | (97.066) | (95.382) | ||
| Equity attributable to equity holders of the | ||||||
| parent | (91.985) | (83.148) | 22.554 | 24.238 | ||
| Non-controlling interests | 49.026 | 40.883 | ||||
| Total Equity | (42.959) | (42.265) | 22.554 | 24.238 | ||
| Total Liabilities & Equity | 396.097 | 390.834 | 93.988 | 95.403 |
The primary financial statements should be read in conjunction with the accompanying notes.
| Consolidated | |||||||
|---|---|---|---|---|---|---|---|
| Share Capital | Share premium |
Other reserves |
Retained earnings |
Total | Non- Controlling Interests |
Total Equity |
|
| Balance at 01.01.2017 | 15.178 | 2.755 | (13.773) | (172.113) | (167.953) | 39.100 | (128.853) |
| Profit / |
7.648 | 7.648 | 7.289 | 14.937 | |||
| Other Comprehensive income / |
٠ | ٠ | (7.542) | (608) | (8.150) | (4.893) | (13.043) |
| Total comprehensive income / |
|||||||
| net of taxes | ٠ | $\blacksquare$ | (7.542) | 7.040 | (502) | 2.396 | 1.894 |
| Dividends to non controlling interest | ٠ | ٠ | ٠ | (613) | (613) | ||
| Share capital increase (Note 15) | 121.887 | (34.321) | ٠ | 87,566 | 87.566 | ||
| Cost for the Share capital increase (Note 15) | (2.235) | ٠ | (2.235) | ۰ | (2.235) | ||
| Share option reserve (Note 16) | (24) | ۰ | (24) | (24) | |||
| Transfers between reserves | (9.107) | 9.107 | ٠ | ||||
| Total Transactions with owners in their | |||||||
| capacity as owners | 112.780 | (36.556) | 9.083 | ۰. | 85.307 | (613) | 84.694 |
| Balance at 31.12.2017 | 127.958 | (33.801) | (12.232) | (165.073) | (83.148) | 40.883 | (42.265) |
| Balance at 01.01.2018 | 127.958 | (33,801) | (12.232) | (165.073) | (83.148) | 40.883 | (42.265) |
|---|---|---|---|---|---|---|---|
| Profit / |
۰ | $\overline{\phantom{a}}$ | $\overline{a}$ | (8.708) | (8.708) | 6.644 | (2.064) |
| Other Comprehensive income / |
|||||||
| tax | $\overline{\phantom{0}}$ | 284 | (413) | (129) | 1.947 | 1.818 | |
| Total comprehensive income / |
|||||||
| net of taxes | - | $\overline{a}$ | 284 | (9.121) | (8.837) | 8.591 | (246) |
| Dividends to non-controlling interests | $\overline{\phantom{a}}$ | ۰ | $\blacksquare$ | $\overline{\phantom{a}}$ | (448) | (448) | |
| Total Transactions with owners in their | |||||||
| capacity as owners | $\blacksquare$ | $\overline{\phantom{a}}$ | $\blacksquare$ | (448) | (448) | ||
| Balance at 31.12.2018 | 127.958 | (33.801) | (11.948) | (174.194) | (91.985) | 49.026 | (42.959) |
The primary financial statements should be read in conjunction with the accompanying notes.
| Parent Company | |||||
|---|---|---|---|---|---|
| Share Capital |
Share premium |
Other reserves |
Retained earnings |
Total Equity |
|
| Balance at 01.01.2017 | 15.178 | 2.755 | 16.380 | (47.567) | (13.254) |
| Profit / |
(47.867) | (47.867) | |||
| Other comprehensive income / |
52 | 52 | |||
| Total comprehensive income / |
|||||
| net of taxes | (47.815) | (47.815) | |||
| Dividends to shareholders (note 15) | |||||
| Share capital increase (Note 15) | 121.887 | (34.321) | 87.566 | ||
| Share capital decrease | |||||
| Cost fot the Share capital increase (Note 15) | (2.235) | (2.235) | |||
| Transfers between reserves (Note 15) | (9.107) | 9.107 | |||
| Share option reserve (Note 16) | (24) | (24) | |||
| Total Transactions with owners in their | |||||
| capacity as owners | 112.780 | (36.556) | 9.083 | 85.307 | |
| Balance at 31.12.2017 | 127.958 | (33.801) | 25.463 | (95.382) | 24.238 |
| Balance at 01.01.2018 | 127.958 | (33.801) | 25.463 | (95.382) | 24.238 |
|---|---|---|---|---|---|
| Profit / |
- | $\overline{\phantom{a}}$ | $\overline{\phantom{0}}$ | (1.271) | (1.271) |
| Other comprehensive income / |
- | $\overline{\phantom{a}}$ | $\overline{\phantom{0}}$ | (413) | (413) |
| Total comprehensive income / |
|||||
| net of taxes | ٠ | ٠ | $\blacksquare$ | (1.684) | (1.684) |
| Total Transactions with owners in their | |||||
| capacity as owners | - | ٠ | $\overline{\phantom{0}}$ | ||
| Balance at 31.12.2018 | 127.958 | (33.801) | 25.463 | (97.066) | 22.554 |
The primary financial statements should be read in conjunction with the accompanying notes.
| Consolidated | Parent Company | |||||
|---|---|---|---|---|---|---|
| Note | Period ended | Period ended | ||||
| 31.12.2018 31.12.2017 | 31.12.2018 31.12.2017 | |||||
| Profit / |
(2.064) | 14.937 | (1.271) | (47.867) | ||
| Adjustments for: | ||||||
| Income tax expense | 18 | 13.863 | 15.438 | 779 | 780 | |
| Depreciation | 19.791 | 24.625 | 3.542 | 3.515 | ||
| Provisions | 3.517 | 8.119 | 477 | (180) | ||
| Impairment of fixed assets | 6 & 29 | 2.071 | 9.591 | 784 | ||
| Retirement benefit obligations paid | 32 | (8.182) | (1.106) | (617) | (585) | |
| Finance costs, net | 17 | 21.412 | 20.724 | 1.798 | 9.823 | |
| Profit/ |
29 | (6.817) | ||||
| Discount to notes and bank debt | 28 | (45.000) | ||||
| Gain from the conversion of debt to equity | 28 | (35.499) | ||||
| Loss/ |
26 | (293) | (4.670) | 11 | ||
| Changes in working capital: | ||||||
| Decrease / (increase) of inventories | (2.325) | (19.260) | (435) | 846 | ||
| Decrease / (increase) of trade receivables | 4.744 | (14.431) | 271 | (408) | ||
| Decrease / (increase) of intergroup receivables | 20 | 1.226 | 15.754 | |||
| Decrease / (increase) of other receivables | (4.363) | (2.505) | 515 | (2.314) | ||
| Decrease / (increase) of other long term receivables | 42 | 515 | 36 | |||
| (Decrease) / increase of trade payables | 17.923 | 4.437 | 2.307 | (1.641) | ||
| (Decrease) / increase of intergroup payables | 20 | 4.460 | 7.232 | |||
| (Decrease) / increase of other liabilities | 158 | 599 | 302 | (2.109) | ||
| Less: | ||||||
| Income taxes paid | (18.791) | (9.871) | ||||
| (a) Cash flows from /(used in) operating activities | 40.686 | (33.357) | 13.401 | (16.370) | ||
| Cash flows from investing activities | ||||||
| Purchase of property, plant and equipment | 6 | (31.648) | (17.349) | (214) | (372) | |
| Purchase of intangible assets | 7 | (4.576) | (1.880) | (2.944) | (1.610) | |
| Increase of investment in subsidiaries | 14 | (37.459) | ||||
| Proceeds from disposal of property, plant & equipment | 1.530 | 10.318 | $\overline{2}$ | 20 | ||
| Proceeds from disposal of subsidiary | 29 | 972 | ||||
| (b) Net cash flows(used in) /from investing activities | (33.722) | (8.911) | (3.156) | (39.421) | ||
| Net cash generated from operating and investing activities $(a) + (b)$ Cash flows from financing activities |
6.964 | (42.268) | 10.245 | (55.791) | ||
| Proceeds from borrowings | 13 | 111.646 | 99.549 | |||
| 13 | ||||||
| 13 | (112.305) | (100.095) | 10.200 | 13.900 | ||
| Proceeds from intergroup loans | ||||||
| 13 | (17.906) | (10.800) | ||||
| Interest paid | 13 | (10.938) | (17.216) | (1.185) | (8.680) | |
| Dividends paid to non-controlling interests | (448) | (613) | ||||
| Share capital increase | 15 | 63.459 | 63.459 | |||
| Cost for the share capital increase | 15 | (2.235) | (2.235) | |||
| (c) Net cash flows from/(used in ) financing activities | (12.045) | 42.849 | (8.891) | 55.644 | ||
| Net increase/(decrease) in cash and cash equivalents (a) + (b) + (c) | (5.081) | 581 | 1.354 | (147) | ||
| Cash & cash equivalents at the beginning of the period | ||||||
| - Continuing operations | 53.130 | 56.655 | ||||
| Cash & cash equivalents at the beginning of the period | ||||||
| - Discontinued operations | 29 | 871 | ||||
| Cash and cash equivalents at the beginning | ||||||
| of the period | 53.130 | 57.526 | 998 | 1.145 | ||
| Effects of changes in exchange rate | 1.008 | (4.562) | ||||
| Cash and cash equivalents from discontinued operations | 29 | (415) | ||||
| Cash and cash equivalents at the end of the period | 11 | 49.057 | 53.130 | 2.352 | 998 |
The primary financial statements should be read in conjunction with the accompanying notes.
These financial statements include the financial statements of the Parent Company FRIGOGLASS S.A.I.C. (the "Company") and the Consolidated financial statements of the Company and its subsidiaries (the "Group"). The names of the subsidiaries are presented in Note 14 of the financial statements.
FRIGOGLASS S.A.I.C. and its subsidiaries are engaged in the manufacturing, trade and distribution of commercial refrigeration units and packaging materials for the beverage industry. The Group has manufacturing plants and sales offices in Europe, Asia and Africa.
The Company's' shares are listed on the Athens Stock Exchange.
The address of its registered office is:
15, A. Metaxa Street GR 145 64, Kifissia Athens, Greece
The company's web page is: www.frigoglass.com
The financial statements have been approved by the Board of Directors on 22 March 2019 and are subject to the approval of the Shareholders General Assembly.
The significant accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied to all years presented, unless otherwise stated.
These financial statements have been prepared by management in accordance with International Financial Reporting Standards (IFRS) and IFRIC interpretations as adopted by the European Union, and International Financial Reporting Standards issued by the IASB. The financial statements have been prepared on a historical cost basis, except for assets held for sale which are measured at fair value less cost of disposal.
The preparation of financial statements in accordance with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise judgement in the process of applying the accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 4.
Differences that may exist between the figures of the financial statement and those of the notes are due to rounding. Wherever it was necessary, the comparative figures have been reclassified in order to be comparable with the current year's presentation.
The financial statements have been prepared in accordance with the going concern basis of accounting. The use of this basis of accounting takes into consideration the Group's current and forecasted financing position.
For the year ended 31 December 2018, the Group reported net losses of €8,7m, compared to profits of €7,6m in the year ended December 2017.
Net profits in the prior year included a gain from the write‐off of €45,0m debt triggered by the Group's capital restructuring and €35,5m gains from the difference between the fair value of the issued shares and the nominal value of the convertible bonds converted into shares. The Group's profit before tax in 2017 was also impacted by €42,3m of expenses related to the capital restructuring process.
For the year ended 31 December 2018, the Group has a negative equity position of €43,0m, compared to a negative equity position of €42,3m in the year ended 31 December 2017.
Frigoglass SAIC has an equity position of €22,6m for the year ended December 2018 and, therefore, is lower than half (1/2) of the share capital.
As a consequence, the requirements of article 47 of Law 2190/1920, as replaced by article 119 of the Companies Act 4548/2018 are applicable.
The Group's operating restructuring has started in 2014. Following the restructuring, the Group's financial results were impacted by €36,1m in 2014, €16,8m in 2015 and €13,5m in 2016. In ICM Operations, the Group discontinued its manufacturing operations at Spartanburg, South Carolina in 2014 in order to focus on commercial activities of sales and marketing, distribution and service. As a result, the Group incurred restructuring related costs of €17,0m (recorded in 2013). In the fourth quarter of 2014, the Group also integrated the Turkey‐based manufacturing volume into its European flagship plant in Timisoara, Romania. As part of this process, Frigoglass' Silivri‐based Turkish manufacturing plant ceased operations. As a result, the Group incurred restructuring related costs of €36,0m. Frigoglass continued to rationalise its product range in 2015, focusing on the production and sale of high quality goods. The result of this process is the gradual phase out of old models and, consequently, the inventory write‐off of €14,1m that were included in the related provisions for the year. In July 2016, the Group announced the discontinuation of its manufacturing operations in China in order to optimize its production capacity in Asia and improve the company's fixed cost structure. As a result, the Group incurred restructuring related costs of €13,5m. Over the last three years, the Group also proceeded with various changes regarding its organizational structure in the ICM Operations that will have a significant impact on the way the business activity is carried out.
On October 23, 2017, the Group successfully completed its capital restructuring. The following important events contributed to the restructuring:
Therefore, the Group received €70,0m of additional liquidity to fund its business needs, as well as restructuring related expenses. This comprises €30,0m in new cash contributed by Boval as equity through the Company's rights issue and €40,0m provided in the form of new first lien secured funding.
As a result, the capital restructuring reduced Frigoglass outstanding gross indebtedness by approximately €138,0m (before the incurrence of the €40,0m in new first lien secured funding).
The maturities of almost all of the Group's indebtedness have been extended and committed for around 4,5 years.
At the same time, within the framework of the Group's business policy, management is targeting to reduce costs, improve long‐term profitability and generate cash flows, coupled with maintaining and improving product quality and increasing customer value. Management has undertaken specific actions to achieve the above, including (a) cost reduction through the simplification of the product portfolio; (b) reduction of inventory levels; (c) Lean manufacturing alongside improvements in product quality; and (d) creating value from recent strategic investments.
In December 2018, the Company completed the divestment of its glass container subsidiary Frigoglass Jebel Ali FZE. This divestment is in line with Frigoglass' strategy and will enable the Company to focus on its commercial refrigeration business and the high growth Nigerian glass business operations.
The Group's financial projections for the upcoming 12 months indicate that it will be able to meet its obligations as they fall due, however, this assessment is subject to a number of risks as described in the "Risks and uncertainties" section of the Directors' Report and in Note 3 to the Group's financial statements, particularly if such risks were to materialize in combination.
Taking into consideration the above, the Directors have a reasonable expectation that the Group will be able to successfully navigate the present uncertainties and continue its operation. Therefore, the financial statements have been prepared on a going concern basis.
Subsidiaries are all entities (including structured entities) over which the group has control. The group controls an entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the date that control ceases.
The purchase method of accounting is used to account for business combinations by the group. The consideration transferred for the acquisition of a subsidiary comprises of the fair values of the assets transferred, liabilities incurred to the former owners of the acquired business, equity interests issued by the group, fair value of any asset or liability resulting from a contingent consideration arrangement, and fair value of any pre‐existing equity interest in the subsidiary. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date.
Acquisition‐related costs are expensed as incurred.
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer's previously held equity interest in the acquiree is remeasured to fair value at the acquisition date. Any gains or losses arising from such remeasurement are recognised in profit or loss.
Any contingent consideration to be transferred by the group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with IAS 39 either in profit or loss or as a change to other comprehensive income. Contingent consideration that is classified as equity is not re‐measured, and its subsequent settlement is accounted for within equity.
The excess of the cost of acquisition over the Group's share of the fair value of the net assets of the subsidiary acquired is recorded as goodwill. Note 2.6.1 describes the accounting treatment of goodwill. Whenever the cost of the acquisition is less than the fair value of the Group's share of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement.
Inter‐company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless there is evidence of impairment. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
The Company accounts for investments in subsidiaries in its separate financial statements at historic cost less impairment losses.
Impairment losses are recognised in the income statement.
The Group treats transactions with non‐controlling interests that do not result in a loss of control as transactions with equity owners of the group. A change in ownership interests results in an adjustment between the carrying amounts of the controlling and non‐ controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non‐controlling interests and any consideration paid or received is recognised in a separate reserve within equity attributable to the owners.
When the group ceases to consolidate or equity account for an investment because of a loss of control, joint control or significant influence, any retained interest in the entity is remeasured to its fair value with the change in carrying amount recognised in profit or loss. This fair value becomes the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision‐maker. The chief operating decision‐maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the managing director and his executive committee that makes strategic decisions.
Items included in the financial statements of each entity in the Group are measured using the currency that best reflects the economic substance of the underlying events and circumstances relevant to that entity ("the functional currency").
The consolidated financial statements are presented in Euros, which is the Company's functional currency.
Foreign currency transactions are translated into the functional currency using exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions, and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates, are generally recognised in profit or loss.
The results and financial position of all group entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
Goodwill and other fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and are translated at the closing rate at the balance sheet date. Exchange differences arising are recognized in other comprehensive income.
Buildings comprise mainly factories, machinery and offices. All property, plant and equipment are stated at historic cost less accumulated depreciation and any impairment losses, except for land which is shown at cost less any impairment losses.
Cost includes expenditure that is directly attributable to the acquisition of the tangible assets. Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance costs are charged to the income statement during the financial period in which they are incurred.
Depreciation is calculated using the straight‐line method to write off the cost of each asset to its residual value over its estimated useful life as follows:
| Buildings | up to 40 years |
|---|---|
| Vehicles | up to 6 years |
| Glass Furnaces | up to 10 years |
| Glass Moulds | 2 years |
| Machinery | up to 15 years |
| Furniture & Fixtures | up to 6 years |
The cost of subsequent expenditures is depreciated during the estimated useful life of the asset and costs for major periodic renovations are depreciated to the date of the next scheduled renovation. When an item of plant and machinery comprises major components with different useful lives, the components are accounted for as separate items of plant and machinery.
The tangible assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.
In the case where an asset's carrying amount is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount and the difference (impairment loss) is recorded as expense in the income statement.
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount.
Gains and losses on disposals are determined by the difference between the sales proceeds and the carrying amount of the asset. These gains or losses are included in the income statement.
Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred, the amount of any non‐controlling interest in the acquire and the acquisition‐date fair value of any previous equity interest in the acquire over the fair value of the identifiable net assets acquired. If the total of consideration transferred, non‐ controlling interest recognised and previously held interest measured at fair value is less than the fair value of the net assets of the subsidiary acquired, in the case of a bargain purchase, the difference is recognised directly in the income statement.
Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. At each balance sheet date the Group assesses whether there is any indication of impairment. If such indications exist, an analysis is performed to assess whether the carrying amount of goodwill is fully recoverable.
Goodwill is allocated to cash‐generating units for the purpose of impairment testing. The allocation is performed on the cash‐generating units that are expected to benefit from the acquisition from which goodwill was derived.
Loss from impairment is recognised if the carrying amount exceeds the recoverable amount. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Research expenditure is recognised as an expense as incurred.
Costs incurred on development projects (relating to the design and testing of new or improved products) are recognised as intangible assets when it is probable that the project will be successful, considering its commercial and technological feasibility, and also the costs can be measured reliably. Other development expenditures are recognised as an expense in the income statement as incurred. Development costs that have a finite useful life and that have been capitalised, are amortised from the commencement of their production on a straight line basis over the period of its useful life, not exceeding 5 years.
Capitalised software licenses are carried at acquisition cost less accumulated amortisation, less any accumulated impairment.
Computer software development costs which are assets controlled by the entity and from which the entity expects to derive future economic benefits are capitalised.
These costs may be acquired externally or generated internally when they are directly attributable to the development of the computer software.
Computer software licences & development costs are amortised using the straight‐line method over their useful lives, not exceeding a period of 10 years.
Computer software maintenance costs are recognised as expenses in the income statement as they incur.
Patents, trademarks, licenses and other intangible assets are shown at historical cost less accumulated amortization and less any accumulated impairment.
Costs that meet the asset recognition criteria are controlled by the entity and from which the entity expects to derive future economic benefits are capitalised. These costs may be acquired externally or generated internally.
These intangible assets have a definite useful life, and their cost is amortized using the straight‐line method over their useful lives not exceeding a period of 15 years.
Assets that have an indefinite useful life are not subject to amortisation and are tested for impairment annually and whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognised as an expense immediately, for the amount by which the asset's carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash‐generating units).
From 1 January 2018, the group classifies its financial assets in the following measurement categories:
The classification depends on the entity's business model for managing the financial assets and the contractual terms of the cash flows. For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For investments in equity instruments that are not held for trading, this will depend on whether the group has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income (FVOCI).
The group reclassifies debt instruments when and only when its business model for managing those assets changes.
Regular way purchases and sales of financial assets are recognised on trade‐date, the date on which the group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the group has transferred substantially all the risks and rewards of ownership.
At initial recognition, the group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss.
Subsequent measurement of debt instruments depends on the group's business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the group classifies its debt instruments:
Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other gains/(losses) together with foreign exchange gains and losses. Impairment losses are presented as separate line item in the statement of profit or loss.
From 1 January 2018, the group assesses on a forward looking basis the expected credit losses associated with its debt instruments carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. For trade receivables, the group applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables, see note 9 for further details.
The group has applied IFRS 9 retrospectively, but has elected not to restate comparative information. As a result, the comparative information provided continues to be accounted for in accordance with the group's previous accounting policy.
Until 31 December 2017, the group classified its financial assets in the following categories:
As at 31 December 2017, the Group had only loans and receivables.
The classification depended on the purpose for which the investments were acquired. Management determined the classification of its investments at initial recognition and, in the case of assets classified as held‐to‐maturity, re‐evaluated this designation at the end of each reporting period.
The measurement at initial recognition did not change on adoption of IFRS 9, see description above. Subsequent to the initial recognition, loans and receivables were carried at amortised cost using the effective interest method.
The group assessed at the end of each reporting period whether there was objective evidence that a financial asset or group of financial assets was impaired. A financial asset or a group of financial assets was impaired and impairment losses were incurred only if there was objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a 'loss event') and that loss event (or events) had an impact on the estimated future cash flows of the financial asset or group of financial assets that could be reliably estimated.
For loans and receivables, the amount of the loss was measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future credit losses that had not been incurred) discounted at the financial asset's original effective interest rate. The carrying amount of the asset was reduced and the amount of the loss was recognised in profit or loss. If a loan had a variable interest rate, the discount rate for measuring any impairment loss was the current effective interest rate determined under the contract. As a practical expedient, the group could measure impairment on the basis of an instrument's fair value using an observable market price. If, in a subsequent period, the amount of the impairment loss decreased and the decrease could be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor's credit rating), the reversal of the previously recognised impairment loss was recognised in profit or loss. Impairment testing of trade receivables is described in note 9.
Leases where the lessor retains a significant portion of the risks and rewards of ownership are classified as operating leases. Payments made under operating leases (net of any incentives received by the lessor) are charged to the income statement on a straight‐line basis over the lease term.
Leases of property, plant and equipment where a Group entity has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased assets and the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance lease liability outstanding.
The corresponding rental obligations, net of finance charges, are included as other long‐ term payables. The interest element of the finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Property, plant and equipment, acquired under finance leases are depreciated over the shorter of the asset's useful life and the lease term.
When assets are leased out under a finance lease, the present value of the lease payments is recognised as a receivable. The difference between the gross receivable and the present value of the receivable is recognised as accrued finance income. Lease income is recognised over the term of the lease using the net investment method, which reflects a constant periodic rate of return.
Assets leased out under operating leases are included within tangible assets in the balance sheet. They are depreciated over their expected useful lives, which are defined on the basis of similar tangible assets owned by the Group. Rental income (net of any incentives given to lessees) is recognised on a straight‐line basis over the lease term.
Inventories are recorded at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less any applicable selling expenses.
The cost of finished goods and work in progress is measured on a weighted average bases and comprises raw materials, direct labour cost and other related production overheads.
Appropriate allowance is made for excessive, obsolete and slow moving items. Write‐ downs to net realisable value and inventory losses are expensed in the period in which the write‐downs or losses occur.
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. They are generally due for settlement within 60‐ 180 days and therefore are all classified as current. Trade receivables are recognised initially at the amount of consideration that is unconditional unless they contain significant financing components, when they are recognised at fair value. The group holds the trade receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method.
Trade receivables and contract assets are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the group, and a failure to make contractual payments for a period of greater than 120 days past due.
Impairment losses on trade receivables and contract assets are presented as net impairment losses within operating profit in a separate line in the income statement. Subsequent recoveries of amounts previously written off are credited against the same line item.
Previous accounting policy for impairment of trade receivables.
In the prior year, the impairment of trade receivables was assessed based on the incurred loss model. Individual receivables which were known to be uncollectible were written off by reducing the carrying amount directly. The other receivables were assessed collectively to determine whether there was objective evidence that an impairment had been incurred but not yet been identified. For these receivables the estimated impairment losses were recognised in a separate provision for impairment. The group considered that there was evidence of impairment if any of the following indicators were present:
Receivables for which an impairment provision was recognised were written off against the provision when there was no expectation of recovering additional cash.
Subsequent recoveries of amounts previously written off are credited against 'selling and marketing costs' in the income statement.
For the purpose of presentation in the statement of cash flows, cash and cash equivalents include cash on hand, deposits held at call with banks, other short‐term, and highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.
Ordinary shares are classified as equity.
Incremental external costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds.
When the Company or its subsidiaries purchase the Company's own equity share the amount paid ‐ including any attributable incremental external costs net of income taxes ‐ is deducted from total shareholders' equity as treasury shares until they are cancelled or reissued. Where such shares are subsequently sold or reissued, any proceed received is included in shareholders' equity.
Borrowings are recognised initially at fair value, as the proceeds received, net of any transaction cost incurred. Borrowings are subsequently recorded at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non‐cash assets transferred or liabilities assumed, is recognised in profit or loss as other income or finance costs.
Where the terms of a financial liability are renegotiated and the entity issues equity instruments to a creditor to extinguish all or part of the liability (debt for equity swap), a gain or loss is recognised in profit or loss, which is measured as the difference between the carrying amount of the financial liability and the fair value of the equity instruments issued.
Borrowings are classified as current liabilities unless the Group entity has an unconditional right to defer settlement for at least 12 months after the balance sheet date.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company's subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulations is subject to interpretation and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is provided in full, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements.
The deferred income tax that arises from initial recognition of an asset or liability in a transaction other than a business combination, that at the time of the transaction affects neither accounting nor taxable profit nor loss, is not accounted for.
Deferred tax assets are recognised to the extent that future taxable profit, against which the temporary differences can be utilised, is probable.
Deferred tax liabilities are provided for taxable temporary differences arising on investments in subsidiaries, except for when the Group is able to control the reversal of the temporary difference, thus it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred income taxation is determined using tax rates that have been enacted at the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the related deferred income tax liability is settled. Deferred tax is charged or credited in the income statement, unless it relates to items credited or charged directly to equity, in which case the deferred tax is also recorded in equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non‐current liabilities.
Group entities operate various post‐employment schemes in accordance with the local conditions and practices in the countries they operate. These schemes include both funded and unfunded schemes. The funded schemes are funded through payments to insurance companies or trustee‐administered funds, as determined by periodic actuarial calculations. Post‐employment obligations include both defined benefit and defined contribution pension plans.
A defined benefit plan is a pension or voluntary redundancy plan that defines an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.
The liability regarding defined benefit pension or voluntary redundancy plans, including certain unfunded termination indemnity benefits plans, is measured as the present value of the defined benefit obligation at the balance sheet date. The defined benefit obligation is calculated at periodic intervals not exceeding two years, by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by the estimated future cash outflows using interest rates applicable to high quality corporate bonds or government securities that are denominated in the currency in which the benefits will be paid, with terms approximating to the terms of the related obligation.
Actuarial gains and losses arising from experience adjustments, changes in actuarial assumptions and amendments to pension plans are charged or credited to equity in other comprehensive income during the assessment period by external actuaries. Past service cost is recognised directly to the profit or loss.
A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity that is either publicly or privately administered. Once the contributions have been paid, the Group has no further legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. The regular contributions are recorded as net periodic expenses for the year in which they are due, and as such are included in staff costs.
Termination benefits are payable whenever an employee's employment is terminated before the normal retirement date or whenever an employee accepts voluntary redundancy in exchange for these benefits.
The group recognises termination benefits at the earlier of the following dates: (a) when the group can no longer withdraw the offer of those benefits; and (b) when the entity recognises costs for a restructuring that is within the scope of IAS 37 and involves the payment of terminations benefits. Benefits falling due more than 12 months after balance sheet date are discounted to present value.
The group recognizes a liability and an expense for bonuses and profit‐sharing based on a formula that takes into consideration the profit attributable to the company's shareholders after certain adjustments. The group recognizes a provision where contractually obliged or where there is a past practice that has created a constructive obligation.
Frigoglass issues equity‐settled share‐based payments to its senior managers and members of the Executive Committee in the form of an employee stock option plan. The employee stock option plan is measured at fair value at the date of grant.
The fair value of the employee services received in exchange for the grant of the options is recognized as an expense. The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted, excluding the impact of any non‐market vesting conditions.
When the options are exercised, the Company transfers the appropriate amount of shares to the employee. The proceeds received net of any directly attributable transaction costs are credited directly to share capital (nominal value) and share premium when the options are exercised.
Provisions are recognised when a) a Group entity has a present legal or constructive obligation as a result of past events, b) it is probable that an outflow of resources will be required to settle the obligation, c) and of the amount can be reliably estimated. The provisions for restructuring costs include fines related to the premature ending of lease agreements, personnel redundancies as well as provisions for restructuring activities that have been approved and communicated by Management. These costs are recognised when the Group has a present legal or constructive obligation. Personnel redundancies are expensed only when an agreement with the personnel representatives is in place or when employees have been informed in advance for their redundancy.
Provisions are not recognised for future operating losses related to the Group's ongoing activities.
When there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
In the case that a Group entity expects a provision to be reimbursed from a third party, for example under an insurance contract, the reimbursement is recognised as a separate asset provided that the reimbursement is virtually certain.
The Group entity recognises a provision for onerous contracts when the expected benefits to be derived from a contract are less than the unavoidable costs of settling the obligations under the contract.
Provisions are measured at the present value of the expenditures that, according to the management's best estimations, are expected in order to settle the current obligation at the balance sheet data. The discounting rate used for the calculation of the present value reflects current market assessments of the time value of money and the risks specific to the obligation.
The Group recognises revenue, other than interest and dividend income and other such income from financial instruments recognised in accordance with IFRS 9, upon transfer of promised goods or services to customers in amounts that reflect the consideration to which the Group expects to be entitled in exchange for those goods or services based on the following five step approach:
Step 1: Identify the contracts with customers
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation
The Group manufactures and sells commercial refrigeration units (ICM segment) and packaging materials (glass segment) for the beverage industry. Revenue from the sale of goods is recognised when control of the products has transferred, being when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products and there is no unfullfilled obligation that could affect the wholesaler's acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risk of obsolescence and loss have been transferred to the customer and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed or the group has objective evidence that all criteria for acceptance have been satisfied.
The ICM units are often sold with retrospective volume discounts based on aggregate sales over a 12 months period. Revenue is recognised based on the price specified in the contract, net of estimated volume discounts. Accumulated experience is used to estimate and provide for the discounts, using the expected value method, and revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur. A refund liability (included in trade and other payables) is recognised for expected volume discounts payable to customers in relation to sales made until the end of the reporting period. No element of financing is deemed present as the sales are made with a credit term of 60 ‐ 180 days, which is consistent with market practice.
The group's obligation to repair or replace fully faulty commercial refrigerator units under the standard and extended warranty terms is recognised as a provision, see notes 31 & 12.
A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.
The ICM segment provides also logistic services, extended warranty services and refurbishment services under fixed price contracts. Revenue from providing services is recognised over time in the accounting period in which the services are rendered. Extended warranty revenue is recognised based on actual service provided at the end of the reporting periodas a proportion of the total services to be provided because the customer receives and uses benefits simultaneously.
In the case of logistics services and refurbshiment where the contract includes a fee per unit, revenue is recognised in the amount to which Frigoglass has a right to invoice.
Customers are invoiced on a monthly basis and consideration is payable when invoiced.
Interest income is calculated by applyingthe effective interest rate to the gross carrying amount of a financial asset except for financial assets that subsequently become credit impaired. For credit impaired financial assets the effective interest rate is applied to the net carrying amount of the financial asset (after deduction of the loss allowance).
Interest income is presented as finance income where it is earned from financial assets that are held for cash management purposes. Any other interest income is included in other income.
Dividend income are recognised as other income in profit or loss (whether relating to interim dividends or final dividends) is recognised when the right to receive payment is established.
Dividends are recorded in the financial statements, as a liability, in the period in which they are approved by the Annual Shareholder Meeting.
Grants from the government are recognized at their fair value where there is a reasonable assurance that the grant will be received and the Group entity will comply with anticipated conditions.
Government grants relating to costs are deferred and recognized in the income statement over the period corresponding to the costs they are intended to compensate.
Government grants relating to the purchase of property, plant and equipment are included in long‐term liabilities as deferred income and are credited to the income statement on a straight‐line basis over the expected lives of the related assets.
Borrowing costs are recognised in profit or loss in the period in which they are incurred.
Non‐current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell.
A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single co‐ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately in the statement of profit or loss.
Certain new standards, amendments to standards and interpretations have been issued that are mandatory for periods beginning on or after 01.01.2018.
None of the standards and interpretations issued is expected to have a significant effect on the Consolidated or the Parent Company financial statements with the exception of IFRS 16 "Leases" effective after 1 January 2019. The effect of this standard on the Group is disclosed below.
IFRS 9 replaces the guidance in IAS 39 which deals with the classification and measurement of financial assets and financial liabilities and it also includes an expected credit losses model that replaces the incurred loss impairment model that was applied under IAS 39. IFRS 9 establishes a more principles‐based approach to hedge accounting and addresses inconsistencies and weaknesses in the previous model in IAS 39.
The Group and the Company applied the Standard from 1 January 2018 retrospectively, without revising comparative information from previous years.
During 2017, the Group and the Company completed their study of the requirements of IFRS 9 on Classification and Measurement (including impairment), concluding that their financial instruments will be accounted for in a manner similar to IAS 39. In particular, the examination of the business model and cash flow characteristics does not affect the classification and measurement of trade and other receivables of the Group and the Company that will continue to be measured at amortized cost. The effect of the new impairment model was also examined. The Group and the Company have determined that their trade receivables and other financial assets generally have a low credit risk.
The effect of applying the new model of expected loss to the Group and the Company does not affect the financial statements.
IFRS 15 has been issued in May 2014. The objective of the standard is to provide a single, comprehensive revenue recognition model for all contracts with customers to improve comparability within industries, across industries, and across capital markets. It contains principles that an entity will apply to determine the measurement of revenue and timing of when it is recognised. The underlying principle is that an entity recognises revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services.
The Group and the Company adopted the Standard on January 1, 2018.
The Group and the Company examined contracts with customers in order to identify changes in the time or amount of revenue recognition including receipts from sales of commercial refrigeration, service provision, and sales of glass.
Results have shown that no adjustment is required during the transition.
The amendment clarifies the measurement basis for cash‐settled, share‐based payments and the accounting for modifications that change an award from cash‐settled to equity‐ settled. It also introduces an exception to the principles in IFRS 2 that will require an award to be treated as if it was wholly equity‐settled, where an employer is obliged to withhold an amount for the employee's tax obligation associated with a share‐based payment and pay that amount to the tax authority.
The interpretation provides guidance on how to determine the date of the transaction when applying the standard on foreign currency transactions, IAS 21. The interpretation applies where an entity either pays or receives consideration in advance for foreign currency‐denominated contracts.
IFRS 16 has been issued in January 2016 and supersedes IAS 17. The objective of the standard is to ensure the lessees and lessors provide relevant information in a manner that faithfully represents those transactions. IFRS 16 introduces a single lessee accounting model and requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. IFRS 16 substantially carries forward the lessor accounting requirements in IAS 17. Accordingly, a lessor continues to classify its leases as operating leases or finance leases, and to account for those two types of leases differently.
The Group will apply IFRS 16 from its mandatory adoption date of 1 January 2019. It will apply the simplified transition approach and will not restate comparative amounts for the year prior to first adoption. The standard will affect primarily the accounting for the Group and Parent Company operating leases. The Group will apply the practical expedients for short‐term leases and low value leases. It also intends to apply the transition expedient and exclude leases for which the lease term ends within 2019.
Right‐of‐use assets will be measured at an amount equal to the lease liability.
The Lease liability is the present value of the remaining lease payments, discounted using lessee's incremental borrowing rate at the date of initial application.
Right‐of‐use asset is the amount of lease liability (adjusted by the amount of any previously recognised prepaid or accrued lease payments relating to that lease)
less Impairment provision calculated under IAS 36 (or onerous provision under IAS 37 using the practical expedient on first adoption).
Based on the information currently available, and subject to the completion of the above mentioned implementation tasks the Group estimates that it will recognize lease liabilities in the range of €6,5million to € 7,5 million as at 1 January 2019. The respective amount for the Parent Company will be € 1,5 million.
The estimated impact on the EBITDA of the Group is an increase in the range of €2 million to €3 million. The respective amount for the Parent Company will be € 0,6 million.
The Group does not expect the adoption of IFRS 16 to impact its ability to comply with Group's loan covenants.
The interpretation explains how to recognise and measure deferred and current income tax assets and liabilities where there is uncertainty over a tax treatment. IFRIC 23 applies to all aspects of income tax accounting where there is such uncertainty, including taxable profit or loss, the tax bases of assets and liabilities, tax losses and credits and tax rates.
The amendments specify how companies determine pension expenses when changes to a defined benefit pension plan occur. The amendments have not yet been endorsed by the EU.
The amendments clarify the definition of material and how it should be applied by including in the definition guidance which until now was featured elsewhere in IFRS. In addition, the explanations accompanying the definition have been improved. Finally, the amendments ensure that the definition of material is consistent across all IFRS. The amendments have not yet been endorsed by the EU.
The amended definition emphasises that the output of a business is to provide goods and services to customers, whereas the previous definition focused on returns in the form of dividends, lower costs or other economic benefits to investors and others. The amendments have not yet been endorsed by the EU.
The amendments set out below include changes to four IFRSs. The amendments have not yet been endorsed by the EU.
The amendments clarify that a company remeasures its previously held interest in a joint operation when it obtains control of the business.
The amendments clarify that a company does not remeasure its previously held interest in a joint operation when it obtains joint control of the business.
The amendments clarify that a company accounts for all income tax consequences of dividend payments in the same way.
The amendments clarify that a company treats as part of general borrowings any borrowing originally made to develop an asset when the asset is ready for its intended use or sale.
The Group's activities expose it to a variety of financial risks: market risk (foreign exchange risk and cash flow and fair value interest rate risk risk,), credit risk, liquidity risk.
The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance.
Risk management is carried out by a central treasury department (Group Treasury) under policies approved by the Board of Directors. Group Treasury identifies, evaluates and hedges financial risks in close co‐operation with the Group's operating units. The Board provides written principles for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non‐derivative financial instruments, and investment of excess liquidity.
The Group Treasury does not perform speculative transactions or transactions that are not related to the Group's operations.
The Group's overall risk management program focuses on the natural hedging of monetary items in order to minimize the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group's financial performance.
The Company's and the Group's monetary items consist mainly of deposits with banks, bank overdrafts, trade accounts receivable and payable, loans to and from subsidiaries, equity investments, dividends payable and leases obligations.
The Group/Company operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the Euro, US dollar, Nigerian Naira, South African Rand, Indian Rupee, Norwegian Crone, Russian Rοuble, Romania Leu and the Indian Rouble. The Group is exposed to the effect of foreign currency risk on future transactions, recognised monetary assets and liabilities that are denominated in currencies other than the local entity's functional currency.
Entities in the Group use natural hedging, transacted with the Group Treasury, to hedge their exposure to foreign currency risk in connection with the presentation currency. The Group has certain investments in subsidiaries that operate in foreign countries, whose net positions are exposed to foreign exchange risk during the consolidation of their financial statements to the Group's financial statements.
The following tables present details of the Group's sensitivity to reasonably possible increases and decreases in the US dollar against the relevant foreign currencies. In determining reasonably possible changes, the historical volatility over a 12‐month period of the respective foreign currencies in relation to the US dollar has been considered. The sensitivity analysis includes outstanding foreign currency denominated monetary items, external loans, and loans between operations within the Group where the denomination of the loan is in a currency other than the functional currency of the local entity.
| Exchange risk sensitivity to reasonably possible changes in the US dollar against relevant other currencies |
|||||||
|---|---|---|---|---|---|---|---|
| US dollar weakens against local currency |
US dollar strengthens against local currency |
||||||
| % historical volatility over a 12‐month period |
Gain)/loss in income statement € million |
Gain)/loss in income statement € million |
|||||
| Euro | 7,3% | ‐447 | 517 | ||||
| Romanian Lei | 6,8% | ‐73 | 84 | ||||
| Indian Rupee | 5,8% | ‐99 | 111 | ||||
| South African Rand | 13,9% | ‐421 | 558 | ||||
| Nai ra Nigeria | 8,7% | ‐754 | 899 | ||||
| ‐1.795 | 2.169 |
The Group's/Company's income and operating cash flows are substantially independent of changes in market interest rates since the Group does not hold any interest bearing assets other than short‐term time deposits.
Exposure to interest rate risk on liabilities is limited to cash flow risk from changes in floating rates.
The Group continuously reviews interest rate trends and the tenure of financing needs. Consequently, all short, medium and long term borrowings are entered into at floating rates with re‐evaluation dates in less than 6 months.
For the interest rate risk sensitivity analysis refer Note 17.
Credit risk arises from cash and cash equivalents as well as credit exposures to customers, including outstanding receivables and committed transactions.
For banks and financial institutions, independently rated parties with high quality credit credentials are accepted. (Note 34).
While cash and cash equivalents are also subject to the impairment requirements of IFRS 9, the identified impairment loss was immaterial.
The group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables and contract assets.
To measure the expected credit losses, trade receivables and contract assets have been grouped based on shared credit risk characteristics and the days past due. The contract assets relate to unbilled work in progress and have substantially the same risk characteristics as the trade receivables for the same types of contracts. The group has therefore concluded that the expected loss rates for trade receivables are a reasonable approximation of the loss rates for the contract assets. The identified impairment loss was immaterial.
For customers, the Group/Company has policies in place to ensure that sales of products and services are made to customers with an appropriate credit history. (Note 9) Trade accounts receivable consist mainly of a large, widespread customer base. All Group companies monitor the financial position of their debtors on an ongoing basis.
Where necessary, credit guarantee insurance cover is purchased. The granting of credit is controlled by credit limits and application of certain terms. Appropriate provision for impairment losses is made for specific credit risks. At the year‐end, management considered that there was no material credit risk exposure that had not already been covered by credit guarantee insurance or a doubtful debt provision. The Group and the Company do not use derivative financial products.
The Group and the Company have a significant concentration of credit risk exposures regarding cash and cash equivalent balance and revenues from the sale of products and merchandise.
Management does not expect any losses from non‐performance by these counterparties.
Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities and the ability to close out adverse market positions.
Due to the dynamic nature of the underlying businesses, Group treasury aims at maintaining flexibility in funding by maintaining committed (exclusive) credit lines.
The Group manages liquidity risk by proper management of working capital and cash flows. It monitors forecasted cash flows and ensures that adequate banking facilities and reserve borrowing facilities are maintained. (Note 34)
The Group's objectives when managing capital are to safeguard the group's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders as well as maintain an optimal capital structure to reduce the cost of capital.
Frigoglass completed a capital restructuring that effectively:
Further details can be found in Note 13
The equity position of the Parent Company has become less than 1/2 of its share capital. As a consequence, the requirements of article article 47 of Law 2190/1920, as replaced by article 119 of the Companies Act 4548/2018 are applicable.
The nominal value less impairment provision of trade receivables is assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments.
The fair value of investments in subsidiaries is tested for impairment when indications exist that these investments may be impaired. The fair value is determined by using discounted cash flow techniques and makes assumptions that are based on market conditions existing at each balance sheet date.
Other than trade receivables and cash and cash equivalents, the Group does not have any other financial assets that subject to fair value estimation.
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under current circumstances.
The Group makes estimates and assumptions concerning the future. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year concern income tax.
The Group is subject to income taxes in numerous jurisdictions. Significant judgement is required by the Group Management in determining the worldwide provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain. If the final tax outcome is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax.
The Group tests annually whether Assets or Goodwill has suffered any impairment, in accordance with the accounting policy stated in Note 2.5 & 2.6.1. of the annual financial statements. The recoverable amounts of cash‐generating units have been determined based on value‐in‐use calculations. These calculations require the use of estimates (see Note 6 & 7).
The Group's investments in subsidiaries are tested for impairment when indications exist that its carrying value may not be recoverable. The recoverable amount of the investments in subsidiaries is determined on value in use calculations, which requires the use of assumptions. The calculations use cash flow projections based on financial budgets approved by management covering a one year period and cash projections for four additional years. At the year end, the Company has an investment in Frigoinvest Holdings B.V. of €60 m, which holds the Group's subsidiaries in the ICM and Glass segments which represent the two identifiable, separate cash generating units. Based on the assessment performed by management no impairment charge was recognized with respect to the Company's investment in subsidiary.
The Group assesses on an annual basis, the useful lives of its property, plant and equipment and intangible assets. These estimates take into account the relevant operational facts and circumstances, the future plans of Management and the market conditions that exist as at the date of the assessment.
The provision for doubtful debts has been based on the outstanding balances of specific debtors after taking into account their ageing and the agreed credit terms. This process has excluded receivables from subsidiaries as Management is of the view that these receivables are not likely to require an impairment provision. The analysis of the provision is presented in Note 9. Further information with respect to customer receivables is presented in Note 9.
The present value of the retirement benefit obligations depend on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the relevant obligation comprises the discount rate, the expected return on plan assets, the rate of compensation increase, the rate of inflation and future estimated pension increases. Any changes in these assumptions will impact the carrying amount of the retirement benefit obligations. The Group determines the amount of the retirement benefit obligations using suitably qualified independent actuaries at each year‐end's balance sheet date refer to Note 32 for detailed information).
The Group's property, plant & equipment is tested for impairment when indications exist that its carrying value may not be recoverable. The recoverable amount of the property, plant & equipment is determined under IAS 36 at the higher of its value in use and fair value less costs of disposal. When the recoverable amount is determined on a value in use basis, the use of assumptions is required.
There are no areas that Management required to make critical judgements in applying accounting policies except the below.
The Group proceeded with the restructuring of its indebtedness, with its key stakeholders, including its largest shareholder, Boval, holders of the Existing Notes, and the Group's core lending banks. The Noteholders, the Participating Lenders and Boval negotiated together the terms of the Restructuring. Therefore, the different steps were linked and accounted for as one transaction to reflect the substance of the Restructuring rather than its legal form. ( Note 13,14,15 )
A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments.
The operating segment information presented below is based on the information that the Management Committee uses to assess the performance of the Group's operating segments.
Taking into account the above, the categorization of the Group's operations in business segments is the following:
Ice Cold Merchandise ( ICM ) Operations
Glass Operations
The consolidated Statement of Financial Position and Statement of Profit & Loss per business segment are presented below:
| Continuing operations: | ||||||||
|---|---|---|---|---|---|---|---|---|
| a) Analysis per business segment i) Statement of Profit & Loss |
Year ended 01.01-12.12.18 |
31.12.2017 | Year ended 31.12.2018 |
Year ended 31.12.2017 |
||||
| Discontinued Glass Operations | ICM Operations |
Glass Operations |
Total | ICM | Operations Glass Operations | Total | ||
| Revenue from contracts with customers | ||||||||
| At a point in time | 24.819 | 20.760 | 262.980 | 101.840 | 364.820 | 244.373 | 90.599 | 334.972 |
| Over time | - | - | 52.477 | - | 52.477 | 51.077 | - | 51.077 |
| Total Revenue from contracts with customers | 24.819 | 20.760 | 315.457 | 101.840 | 417.297 | 295.450 | 90.599 | 386.049 |
| Operating Profit / |
(7.729) | (18.538) | 11.865 | 22.706 | 34.571 | 11.455 | 19.939 | 31.394 |
| Finance costs - net | (392) | (1.420) | (22.849) | 1.682 | (21.167) | (28.213) | 8.909 | (19.304) |
| Profit / |
||||||||
| costs | (8.121) | (19.958) | (10.984) | 24.388 | 13.404 | (16.758) | 28.848 | 12.090 |
| Restructuring gains/ |
- | - | (301) | - | (301) | 38.243 | - | 38.243 |
| Profit / |
(8.121) | (19.958) | (11.285) | 24.388 | 13.103 | 21.485 | 28.848 | 50.333 |
| Income tax expense | - | - | (5.711) | (8.152) | (13.863) | (5.867) | (9.571) | (15.438) |
| Profit / continuing operations |
(8.121) | (19.958) | (16.996) | 16.236 | (760) | 15.618 | 19.277 | 34.895 |
| Profit / the company from continuing operations |
(8.121) | (19.958) | (16.610) | 9.206 | (7.404) | 15.768 | 11.838 | 27.606 |
| Depreciation | 74 | 3.517 | 12.591 | 7.200 | 19.791 | 13.962 | 7.146 | 21.108 |
| Impairment of fixed assets | - | (7.984) | (2.071) | - | (2.071) | (1.607) | - | (1.607) |
| EBITDA | (7.655) | (7.037) | 26.527 | 29.906 | 56.433 | 27.024 | 27.085 | 54.109 |
There are no sales between the two segments.
| Y-o-Y % | ||||||
|---|---|---|---|---|---|---|
| 31.12.2018 vs 31.12.2017 | ||||||
| ICM | Operations Glass Operations | Total | ||||
| Total Revenue from contracts with customers | 6,8% | 12,4% | 8,1% | |||
| Operating Profit / |
3,6% | 13,9% | 10,1% | |||
| -1,8% | 10,4% | 4,3% | ||||
| EBITDA |
ii) Statement of Financial Position
| 01.01-12.12.18 | Year ended 31.12.2018 |
Year ended 31.12.2017 |
|||||
|---|---|---|---|---|---|---|---|
| Discontinued ICM Glass Operations Operations |
Glass Operations |
Total | Held for sale |
ICM | Operations Glass Operations | Total | |
| Total assets | 16.224 247.816 |
148.281 | 396.097 | 17.575 | 255.438 | 117.821 | 390.834 |
| Total liabilities | 10.442 427.778 |
11.278 | 439.056 | 9.973 | 372.862 | 50.264 | 433.099 |
| Capital expenditure | 359 11.402 |
24.464 | 35.866 | 1.127 | 6.971 | 11.131 | 19.229 |
| Reference Note 6 & 7 |
Segment liabilities are measured in the same way as in the financial statements. These liabilities are allocated based on the operations of each segment.
| Consolidated | Discontinued Glass Operations |
|||
|---|---|---|---|---|
| Year ended | Year ended | |||
| 31.12.2018 31.12.2017 | 01.01-12.12.18 | 31.12.2017 | ||
| ICM Operations : | ||||
| East Europe | 142.043 | 119.200 | ||
| West Europe / America | 83.681 | 104.391 | ||
| Africa / Middle East | 61.533 | 37.587 | ||
| Asia/Oceania | 28.200 | 34.272 | ||
| Total | 315.457 | 295.450 | ||
| Glass Operations : | ||||
| Africa | 101.840 | 90.599 | ||
| Total | 101.840 | 90.599 | ||
| Total Sales : | ||||
| East Europe | 142.043 | 119.200 | - | - |
| West Europe / America | 83.681 | 104.391 | 64 | 247 |
| Africa / Middle East | 163.373 | 128.186 | 10.358 | 8.839 |
| Asia/Oceania | 28.200 | 34.272 | 14.397 | 11.674 |
| Consolidated | 417.297 | 386.049 | 24.819 | 20.760 |
A significant amount of our revenues is derived from a small number of large multinational customers each year. In the year ended December 31 2018, our five largest customers accounted for approximately 65% of our net sales revenue in ICM Operations and approximately 62% of our net sales revenue in Glass Operations.
in € 000's
Net sales revenue analysis per geographical area (based on customer location)
| Year ended | ||
|---|---|---|
| 31.12.2018 | 31.12.2017 | |
| ICM Operations : | ||
| East Europe | 1.337 | 1.231 |
| West Europe / America | 27.066 | 16.956 |
| Africa / Middle East | 6.864 | 2.095 |
| Asia/Oceania | 2 | 373 |
| Sales to third parties | 35.269 | 20.655 |
| Intercompany sales (Note 20) | 6.804 | 5.352 |
| Total Sales | 42.073 | 26.007 |
Parent Company
| Consolidated | |||
|---|---|---|---|
| c) Capital expenditure per geographical area | Period ended | ||
| 31.12.2018 31.12.2017 | |||
| ICM Operations : | |||
| East Europe | 6.464 | 3.374 | |
| West Europe / America | 4.226 | 1.972 | |
| Africa / Middle East | 304 | 630 | |
| Asia/Oceania | 408 | 995 | |
| Total | 11.402 | 6.971 | |
| Glass Operations: | |||
| Africa | 24.464 | 11.131 | |
| Total | 24.464 | 11.131 | |
| Consolidated | 35.866 | 18.102 | |
| Discontinued οperations | 359 | 1.127 |
| Consolidated | ||||||||
|---|---|---|---|---|---|---|---|---|
| Land | Building & technical works |
Machinery technical installation |
Motor vehicles |
Furniture & fixtures |
Total | |||
| Cost | ||||||||
| Balance at 01.01.2018 | 5.097 | 60.013 | 202.320 | 5.751 | 11.445 | 284.626 | ||
| Additions | - | 655 | 17.164 | 1.012 | 886 | 19.717 | ||
| Construction in progress & advances | - | 269 | 11.075 | - | 228 | 11.572 | ||
| Disposals | (252) | (2.191) | (953) | (677) | (346) | (4.419) | ||
| Tangible Assets Write off | - | (39) | (2.784) | (29) | (551) | (3.403) | ||
| Exchange differences | 11 | 163 | 4.623 | 120 | 52 | 4.969 | ||
| Balance at 31.12.2018 | 4.856 | 58.870 | 231.445 | 6.177 | 11.714 | 313.062 | ||
| Accumulated Depreciation | ||||||||
| Balance at 01.01.2018 | - | 27.585 | 136.469 | 4.275 | 9.542 | 177.871 | ||
| Additions | - | 1.784 | 12.492 | 736 | 763 | 15.775 | ||
| Disposals | - | (1.700) | (558) | (591) | (333) | (3.182) | ||
| Impairment charge | - | - | 2.071 | - | - | 2.071 | ||
| Tangible Assets Write off | - | (44) | (2.720) | (44) | (551) | (3.359) | ||
| Exchange differences | - | 144 | 2.731 | (254) | 30 | 2.651 | ||
| Balance at 31.12.2018 | - | 27.769 | 150.485 | 4.122 | 9.451 | 191.827 | ||
| Net book value at 31.12.2018 | 4.856 | 31.101 | 80.960 | 2.055 | 2.263 | 121.235 | ||
| Net book value at 31.12.2017 | 5.097 | 32.428 | 65.851 | 1.476 | 1.903 | 106.755 |
Pledged assets are described in detail in Note 13 - Non current and current borrowings.
Costs related to Construction in progress and advances are capitalised until the end of the forthcoming year.
Exchange differences: Negative foreign exchange differences arise from currency devaluation against the Euro and positive exchange differences from currencies appreciation against the Euro.
Impairment assessment has been performed for those cash-generating units (CGUs) with an indication that their carrying amount exceeds their recoverable amount.
The recoverable amount of each cash-generating unit was determined through a value-in-use calculation. That calculation uses cash flow projections based on financial budgets approved by management covering a one-year period and cash projections for four additional years.
Subjective estimates and judgements by management about the future results of the CGU were included in the above calculation. These estimates and judgements include assumptions surrounding revenue growth rates, direct costs, and discount rates.
The following table sets out the key assumptions for the calculation of the Value in Use:
| ICM segment: Frigoglass India | |
|---|---|
| 12,6% | After - Tax discount rate: |
| 8,4% - 11,0% | Gross margin pre Depreciation: |
| 4,0% | Growth rate in perpetuity: |
Due to adverse operating results impairment assessment at 31.12.2018, was carried out, using the assumptions stated above, which resulted to impairment loss of € 2,1 m. for the Frigoglass India PVT Ltd..
As at 31.12.2018, the recoverable amount of the CGU of the ICM manufacturing Frigoglass India was € 6,9 m..
If the growth rate used in the value-in-use calculation had been 1% lower than management's estimates as at 31.12.2018 (3,0% instead of 4,0%), the Group would not have to recognise an additional impairment against the carrying amount of property, plant and equipment. If the after-tax discount rate applied to the cash flow projections of this CGU had been 1% higher than management's estimates (13,6% instead of 12,6%), the Group would have had to recognise an additional impairment against property, plant and equipment of € 0,54 m..
| Consolidated | ||||||||
|---|---|---|---|---|---|---|---|---|
| Land | Building & technical works |
Machinery technical installation |
Motor vehicles |
Furniture & fixtures |
Total | |||
| Cost | ||||||||
| Balance at 01.01.2017 | 5.509 | 88.126 | 305.628 | 6.271 | 13.545 | 419.079 | ||
| Additions | - | 444 | 6.995 | 733 | 694 | 8.866 | ||
| Construction in progress & advances | - | 221 | 8.130 | 46 | 86 | 8.483 | ||
| Disposals | - | (6.648) | (8.542) | (606) | (1.377) | (17.173) | ||
| Transfer to / from & reclassification(Note 7) | - | (16) | (3) | - | 114 | 95 | ||
| Tangible Assets Write off | - | - | (7.661) | (11) | (439) | (8.111) | ||
| Assets held for sale | - | (16.706) | (74.412) | (180) | (762) | (92.060) | ||
| Exchange differences | (412) | (5.408) | (27.815) | (502) | (416) | (34.553) | ||
| Balance at 31.12.2017 | 5.097 | 60.013 | 202.320 | 5.751 | 11.445 | 284.626 | ||
| Accumulated Depreciation | ||||||||
| Balance at 01.01.2017 | - | 44.330 | 226.488 | 4.451 | 11.653 | 286.922 |
|---|---|---|---|---|---|---|
| Additions | - | 2.538 | 12.532 | 629 | 738 | 16.437 |
| Additions-Discontinued operations | - | 332 | 3.155 | 5 | 25 | 3.517 |
| Disposals | - | (1.752) | (7.829) | (589) | (1.355) | (11.525) |
| Impairment charge | - | 784 | 715 | 19 | 89 | 1.607 |
| Impairment charge-Discontinued operations | - | 1.939 | 5.708 | 337 | - | 7.984 |
| Tangible Assets Write off | - | - | (7.661) | (11) | (439) | (8.111) |
| Assets held for sale | - | (16.705) | (74.448) | (180) | (726) | (92.059) |
| Exchange differences | - | (3.881) | (22.191) | (386) | (443) | (26.901) |
| Balance at 31.12.2017 | - | 27.585 | 136.469 | 4.275 | 9.542 | 177.871 |
| Net book value at 31.12.2017 | 5.097 | 32.428 | 65.851 | 1.476 | 1.903 | 106.755 |
The major variance in exchange differences derives from the devaluation of Naira against the Euro.
The related exchange rate at 31.12.2017 was 366,2640 and at 31.12.2016 was 321,5825.
Pledged assets as at 31.12.2017 are described in detail in Note 13 - Non current and current borrowings.
Costs related to Construction in progress and advances are capitalised until the end of the forthcoming year.
Impairment assessment has been performed for those cash-generating units (CGUs) with an indication that their carrying amount exceeds their recoverable amount.
The recoverable amount of each cash-generating unit was determined through a value-in-use calculation. That calculation uses cash flow projections based on financial budgets approved by management covering a one-year period and cash projections for four additional years.
Subjective estimates and judgements by management about the future results of the CGU were included in the above calculation. These estimates and judgements include assumptions surrounding revenue growth rates, direct costs, and discount rates. The following table sets out the key assumptions for the calculation of the Value in Use:
| ICM Manufacturing Facility in Patras |
South Africa | |
|---|---|---|
| After - Tax discount rate: | 8,7% | 11,1% |
| Gross margin pre Depreciation: | 1,8%- 6,4% | -1,3% - 0,5% |
| Growth rate in perpetuity: | 1,5% | 1,5% |
Due to adverse operating results impairment assessment for the year ended 31.12.2017 was carried out, using the assumptions stated above, which resulted to impairment loss of € 0,784 m. for the manufacturing facility in Patras and € 0,821 m. for Frigoglass South Africa.
As at 31.12.2017, the recoverable amount of the CGU of the ICM manufacturing facility in Patras was € 4,2 m..
If the growth rate used in the value-in-use calculation had been 1% lower than management's estimates as at 31.12.2017 ( 0,5% instead of 1,5% ), the Group would have had to recognise an additional impairment against the carrying amount of property, plant and equipment of € 0,46 m..
If the after-tax discount rate applied to the cash flow projections of this CGU had been 1% higher than management's estimates ( 9,7% instead of 8,7% ), the Group would have had to recognise an additional impairment against property, plant and equipment of € 0,585 m..
After the impairment of € 0,821 m. the value of the assets of this CGU was zero.
| Parent Company | ||||||
|---|---|---|---|---|---|---|
| Land | Building & technical works |
Machinery technical installation |
Motor vehicles |
Furniture & fixtures |
Total | |
| Cost | ||||||
| Balance at 01.01.2018 | 303 | 9.014 | 14.292 | 267 | 2.906 | 26.782 |
| Additions | - | 32 | 87 | 95 | - | 214 |
| Disposals | - | - | (33) | - | - | (33) |
| Tangible Assets Write off | - | - | (418) | - | (345) | (763) |
| Balance at 31.12.2018 | 303 | 9.046 | 13.928 | 362 | 2.561 | 26.200 |
| Accumulated Depreciation | ||||||
| Balance at 01.01.2018 | - | 6.333 | 13.308 | 255 | 2.471 | 22.367 |
| Additions | - | 300 | 247 | 5 | 128 | 680 |
| Disposals | - | - | (20) | - | - | (20) |
| Tangible Assets Write off | - | - | (390) | - | (345) | (735) |
| Balance at 31.12.2018 | - | 6.633 | 13.145 | 260 | 2.254 | 22.292 |
| Net book value at 31.12.2018 | 303 | 2.413 | 783 | 102 | 307 | 3.908 |
| Net book value at 31.12.2017 | 303 | 2.681 | 984 | 12 | 435 | 4.415 |
Costs related to Construction in progress and advances are capitalised until the end of the forthcoming year.
Pledged assets are described in detail in Note 13 - Non current and current borrowings.
| Parent Company | ||||||
|---|---|---|---|---|---|---|
| Land | Building & technical works |
Machinery technical installation |
Motor vehicles |
Furniture & fixtures |
Total | |
| Cost | ||||||
| Balance at 01.01.2017 | 303 | 9.030 | 14.181 | 267 | 2.615 | 26.396 |
| Additions | - | - | 135 | - | 237 | 372 |
| Disposals | - | - | (21) | - | (60) | (81) |
| Transfer to / from & reclassification (Note 7) | - | (16) | (3) | - | 114 | 95 |
| Balance at 31.12.2017 | 303 | 9.014 | 14.292 | 267 | 2.906 | 26.782 |
| Accumulated Depreciation | ||||||
| Balance at 01.01.2017 | - | 5.162 | 12.993 | 250 | 2.451 | 20.856 |
| Additions | - | 387 | 315 | 5 | 81 | 788 |
| Disposals | - | - | - | - | (61) | (61) |
| Impairment charge | - | 784 | - | - | - | 784 |
| Balance at 31.12.2017 | - | 6.333 | 13.308 | 255 | 2.471 | 22.367 |
| Net book value at 31.12.2017 | 303 | 2.681 | 984 | 12 | 435 | 4.415 |
The charge for Frigoglass SAIC from the decrease of the net book value of the building to approximate the fair value was € 0,784 m..
Note 7 - Intangible assets
| Consolidated | |||||||
|---|---|---|---|---|---|---|---|
| Development costs |
Patents & trademarks |
Software & other intangible assets |
Total | ||||
| Cost | |||||||
| Balance 01.01.2018 | 28.833 | 212 | 24.088 | 53.133 | |||
| Additions | 110 | - | 2.103 | 2.213 | |||
| Construction in progress & advances | 2.335 | - | 28 | 2.363 | |||
| Disposals | - | - | (21) | (21) | |||
| Write off of Intangible Assets | (1.439) | (178) | (396) | (2.013) | |||
| Exchange differences | 27 | 3 | 15 | 45 | |||
| Balance at 31.12.2018 | Discontinued Glass Operations 29.866 |
37 | 25.817 | 55.720 | |||
| Accumulated Depreciation | |||||||
| Balance at 01.01.2018 | 22.250 | 212 | 19.895 | 42.357 | |||
| Additions | 2.198 | - | 2.033 | 4.231 | |||
| Disposals | - | - | (21) | (21) | |||
| Write off of Intangible Assets | (1.439) | (178) | (389) | (2.006) | |||
| Exchange differences | 25 | 3 | (2) | 26 | |||
| Balance at 31.12.2018 | 23.034 | 37 | 21.516 | 44.587 | |||
| Net book value at 31.12.2018 | 6.832 | - | 4.301 | 11.133 | |||
| Net book value at 31.12.2017 | 6.583 | - | 4.193 | 10.776 |
Costs related to Construction in progress and advances are capitalised until the end of the forthcoming year.
Pledged assets are described in detail in Note 13 - Non current and current borrowings.
| Consolidated | ||||
|---|---|---|---|---|
| Development costs |
Patents & trademarks |
Software & other intangible assets |
Total | |
| Cost | ||||
| Balance at 01.01.2017 | 31.715 | 225 | 25.953 | 57.893 |
| Additions | 135 | - | 658 | 793 |
| Construction in progress & advances | 1.075 | - | 12 | 1.087 |
| Transfer to / from & reclassification (Note 6) | (86) | - | (9) | (95) |
| Tangible Assets Write off | (3.655) | - | (2.034) | (5.689) |
| Assets held for sale | - | - | (175) | (175) |
| Exchange differences | (351) | (13) | (317) | (681) |
| Balance at 31.12.2017 | 28.833 | 212 | 24.088 | 53.133 |
| Accumulated Depreciation | ||||
| Balance at 01.01.2017 | 23.320 | 225 | 20.188 | 43.733 |
| Additions | 2.514 | - | 2.330 | 4.844 |
| Write off of Intangible Assets | (3.655) | - | (2.034) | (5.689) |
| Assets held for sale | - | - | (159) | (159) |
| Exchange differences | 71 | (13) | (430) | (372) |
| Balance at 31.12.2017 | 22.250 | 212 | 19.895 | 42.357 |
| Net book value at 31.12.2017 | 6.583 | - | 4.193 | 10.776 |
Costs related to Construction in progress and advances are capitalised until the end of the forthcoming year.
| Parent Company | ||||
|---|---|---|---|---|
| Development costs |
Patents & trademarks |
Software & other intangible assets |
Total | |
| Cost | ||||
| Balance at 01.01.2018 | 21.429 | 35 | 16.959 | 38.423 |
| Additions | 45 | - | 1.806 | 1.851 |
| Construction in progress & advances | 1.093 | - | - | 1.093 |
| Write off of Intangible Assets | - | - | (7) | (7) |
| Balance at 31.12.2018 | 22.567 | 35 | 18.758 | 41.360 |
| Accumulated Depreciation | ||||
| Balance at 01.01.2018 | 16.617 | 35 | 14.482 | 31.134 |
| Additions | 1.512 | - | 1.345 | 2.857 |
| Balance at 31.12.2018 | 18.129 | 35 | 15.827 | 33.991 |
| Net book value at 31.12.2018 | 4.438 | - | 2.931 | 7.369 |
| Net book value at 31.12.2017 | 4.812 | - | 2.477 | 7.289 |
Costs related to Construction in progress and advances are capitalised until the end of the forthcoming year.
Pledged assets are described in detail in Note 13 - Non current and current borrowings.
| Parent Company | ||||||||
|---|---|---|---|---|---|---|---|---|
| Development costs |
Patents & trademarks |
Software & other intangible assets |
Total | |||||
| Cost | ||||||||
| Balance at 01.01.2017 | 20.403 | 35 | 16.470 | 36.908 | ||||
| Additions | 43 | - | 498 | 541 | ||||
| Construction in progress & advances | 1.069 | - | - | 1.069 | ||||
| Transfer to / from & reclassification (Note 6) | (86) | - | (9) | (95) | ||||
| Balance at 31.12.2017 | 21.429 | 35 | 16.959 | 38.423 | ||||
| Accumulated Depreciation | ||||||||
| Balance at 01.01.2017 | 15.300 | 35 | 13.089 | 28.424 | ||||
| Additions | 1.317 | - | 1.393 | 2.710 | ||||
| Balance at 31.12.2017 | 16.617 | 35 | 14.482 | 31.134 | ||||
| Net book value at 31.12.2017 | 4.812 | - | 2.477 | 7.289 |
Construction in progress and advances is always capitalised until the end of the forthcoming year.
| Consolidated | Parent Company | |||
|---|---|---|---|---|
| 31.12.2018 | 31.12.2017 | 31.12.2018 | 31.12.2017 | |
| Raw materials | 66.597 | 64.384 | 3.046 | 2.760 |
| Work in progress | 2.533 | 2.671 | 28 | 29 |
| Finished goods | 42.023 | 31.659 | 1.056 | 851 |
| Less: Provision | (9.414) | (9.639) | (1.898) | (1.893) |
| Total | 101.739 | 89.075 | 2.232 | 1.747 |
| Analysis of Provisions : | Consolidated | Parent Company | ||
| 31.12.2018 | 31.12.2017 | 31.12.2018 | 31.12.2017 | |
| Opening Balance at 01/01 | 9.639 | 17.441 | 1.893 | 2.076 |
| Additions during the year | 2.095 | 5.932 | 50 | - |
| Unused amounts reversed | (547) | (520) | - | - |
| Total Charges to the income statement | 1.548 | 5.412 | 50 | - |
| Realised during the year | (1.754) | (6.885) | (45) | (183) |
| Transfer to / from & reclassification | - | (1.364) | - | - |
| Assets held for sale | - | (3.953) | - | - |
| Exchange differences | (19) | (1.012) | - | - |
| Closing Balance at 31/12 | 9.414 | 9.639 | 1.898 | 1.893 |
The reclassification includes provision for raw materials that has been expensed in previous years and was recorded directly against raw materials stock.
Pledged assets are described in detail in Note 13 - Non current and current borrowings.
in € 000's
| Consolidated | Parent Company | |||||
|---|---|---|---|---|---|---|
| 31.12.2018 31.12.2017 |
31.12.2018 | 31.12.2017 | ||||
| Trade receivables | 78.611 | 91.018 | 4.570 | 9.846 | ||
| Less: Provisions ( Note 35 ) | (1.005) | (6.194) | (618) | (5.623) | ||
| Total | 77.606 | 84.824 | 3.952 | 4.223 |
The decrease in the balance of the trade receivables is mainly attributable to the seasonality of sales ( Note 23).
The fair value of trade debtors closely approximates their carrying value. The Group and the Company have a significant concentration of credit risk with specific customers which comprise large international groups such as Coca - Cola HBC, other Coca - Cola bottlers, Diageo - Guinness and Heineken.
The Group does not require its customers to provide any pledges or collateral due to the general high calibre and international reputation of portfolio.
Management does not expect any losses from non-performance of trade receivables, other than as provided for as at 31.12.2018.
Provisions for Trade receivables: The decrease in the balance mainly derives from the accounting write off of a residual customer in Libya and the corresponding reversal of the relevant provision.
Pledged assets are described in detail in Note 13 - Non current and current borrowings.
From 1 January 2018, the Group applies the simplified approach of IFRS 9 and calculates ECLs based on lifetime expected credit losses. Regarding trade receivables, an impairment analysis is performed at each reporting date using a provision matrix to measure expected credit losses (ECLs). The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable.
| Analysis of provisions for trade receivables: | Consolidated | Parent Company | ||
|---|---|---|---|---|
| 31.12.2018 | 31.12.2017 | 31.12.2018 | 31.12.2017 | |
| Opening balance at 01/01 | 6.194 | 9.154 | 5.623 | 6.556 |
| Additions during the year | 69 | 61 | - | 40 |
| Used amounts reversed | (4.996) | (680) | (4.990) | (680) |
| Total charges to income statement | (4.927) | (619) | (4.990) | (640) |
| Realized during the year | (246) | (2.179) | (15) | (293) |
| Exchange differences | (16) | (162) | - | - |
| Closing Balance | 1.005 | 6.194 | 618 | 5.623 |
in € 000's
| Trade debtors: Credit rating (S&P rating) | Consolidated | Parent Company | ||
|---|---|---|---|---|
| 31.12.2018 | 31.12.2017 | 31.12.2018 | 31.12.2017 | |
| CCH Group (BBB+) | 22.424 | 18.165 | 1.627 | 2.272 |
| Other Coca-Cola bottlers (N/A) | 10.319 | 27.450 | 532 | 5.152 |
| Diageo Group / Guinness (Α-) | 2.272 | 2.635 | - | - |
| Heineken Group (BBB+) | 7.102 | 10.336 | 705 | 277 |
| Pepsi Group (A+) | 5.918 | 5.904 | 2 | 3 |
| Other (N/A) | 30.576 | 26.528 | 1.704 | 2.142 |
| Total | 78.611 | 91.018 | 4.570 | 9.846 |
Sales to key customers are made based on an annual planning that has been agreed with the customer.
| The aging analysis of the trade debtors | Consolidated | Parent Company | ||
|---|---|---|---|---|
| is the following: | 31.12.2018 | 31.12.2017 | 31.12.2018 | 31.12.2017 |
| 00 - 30 days | 51.305 | 53.034 | 1.652 | 1.787 |
| 31 - 60 days | 14.616 | 21.242 | 868 | 984 |
| 61 - 90 days | 5.158 | 5.124 | 321 | 794 |
| 91 - 120 days | 1.226 | 2.702 | 206 | 214 |
| 121 - 150 days | 1.346 | 928 | 135 | 66 |
| 151 - 180 days | 648 | 820 | - | - |
| > 180 days | 4.312 | 7.168 | 1.388 | 6.001 |
| Total | 78.611 | 91.018 | 4.570 | 9.846 |
| The overdue analysis | Consolidated | Parent Company | ||
|---|---|---|---|---|
| of the trade debtors is the following: | 31.12.2018 31.12.2017 |
31.12.2018 | 31.12.2017 | |
| Not yet Overdue | 65.671 | 75.992 | 3.619 | 4.404 |
| Overdue 00 - 30 days | 7.797 | 6.155 | 84 | 247 |
| Overdue 31 - 60 days | 1.216 | 1.643 | 19 | 70 |
| Overdue 61 - 90 days | 1.196 | 544 | 82 | 12 |
| Overdue 91 - 120 days | 876 | 515 | 49 | 14 |
| Overdue 121 - 150 days | 780 | 332 | 127 | 5 |
| Overdue 151 - 180 days | 120 | 213 | - | - |
| Overdue > 180 days | 955 | 5.624 | 590 | 5.094 |
| Total | 78.611 | 91.018 | 4.570 | 9.846 |
| Less: Provisions | (1.005) | (6.194) | (618) | (5.623) |
| Net trade debtors | 77.606 | 84.824 | 3.952 | 4.223 |
The customers of Frigoglass comprise large international groups like Coca - Cola HBC AG, Coca - Cola Amatil, Coca Cola India, other Coca - Cola bottlers, Diageo - Guinness, Heineken , Efes Group. The Group does not require its customers to provide any pledges or collaterals given the high calibre and international reputation of their portfolio.
The provisions for trade debtors mainly relate to the overdue balances over 180 days.
Expected credit losses for trade receivables past due up to 180 days are not material and are based on history of default adjusted for forward looking information on macroeconomic factors.
| Consolidated | Parent Company | |||
|---|---|---|---|---|
| 31.12.2018 | 31.12.2017 | 31.12.2018 | 31.12.2017 | |
| V.A.T receivable | 9.846 | 11.904 | 329 | 842 |
| Grants for exports receivable | 8.714 | 7.306 | - | - |
| Insurance prepayments | 1.228 | 1.282 | 160 | 201 |
| Prepaid expenses | 1.287 | 1.131 | 57 | 86 |
| Receivable from the disposal of subsidiary ( Note 29 ) | 2.286 | - | - | - |
| Other taxes receivable | 1.425 | 921 | - | - |
| Advances to employees | 550 | 561 | 23 | 15 |
| Other receivables | 2.105 | 2.370 | 436 | 1.155 |
| Total | 27.441 | 25.475 | 1.005 | 2.299 |
The amount of Grants for exports receivable of € 8.7m (2017 € 7.3m) comprise of Export Expansion Grants (EEG) and Negotiable Duty Credit Certificate (NDCC). Export Expansion Grants (EEG) are granted by the Nigerian Government on exports of goods produced in the country, having met certain eligibility criteria. These are recognized at fair value, and Management does not expect any losses from the non-recoverability of these grants. Negotiable Duty Credit Certificates (NDCC) originate from export grants received from government and the instrument is useful for settlement of custom duties payable to government, with no expiry date, under the previous scheme.
A revised scheme has been proposed to be implemented as of 2018 whereby the Settlement of Claims for EEG by the Nigerian Government will be done through the issue of negotiable tax credit certificates to the beneficiaries. This instrument, known as Export Credit Certificate (ECC), will be used to settle all Federal Government taxes such as company income tax, VAT, WHT, etc. and the following:
a. purchase of Federal Government Bonds b. settlement of credit facilities by Bank of Industry, NEXIM Bank and Central Bank of Nigeria intervention Facilities c. settlement of AMCON liabilities. The Certificate shall be valid for two years and transferable once to final beneficiaries.
Existing EEG claims not yet settled continue to be eligible under the revised scheme. It is proposed that the existing NDCCs with the Exporters will be swapped with promissory notes (under-written by the Federal Government). In January 2018 the NDCC was handed over to the government.
The V.A.T receivable is fully recoverable through the operating activity of the Group and the Company.
Other receivables comprise various prepayments and accrued income not invoiced. The fair value of other receivables closely approximates their carrying value.
Pledged assets are described in detail in Note 13 - Non current and current borrowings.
| Consolidated | Parent Company | |||
|---|---|---|---|---|
| 31.12.2018 31.12.2017 |
31.12.2018 | 31.12.2017 | ||
| Cash on hand | 7 | 8 | 1 | 1 |
| Short term bank deposits | 49.050 | 53.122 | 2.351 | 997 |
| Total | 49.057 | 53.130 | 2.352 | 998 |
The tight liquidity in 2017 and 2018 in the foreign exchange market in Nigeria has significantly limited our ability to execute payments in foreign currency, leading to a high Nigerian Naira cash balance of € 14 m. (2017: € 20m). We expect the excess cash to be utilised among others to fund capital expenditure and raw material purchases over the coming years.
The effective interest rate on short term bank deposits as at 31.12.2018 was 0,05% ( December 2017: 2,9% ).
| Consolidated | Parent Company | |||
|---|---|---|---|---|
| 31.12.2018 | 31.12.2017 | 31.12.2018 | 31.12.2017 | |
| Taxes and duties payable | 3.807 | 1.785 | 530 | 1 |
| VAT payable | 1.371 | 1.028 | - | - |
| Social security insurance | 1.506 | 1.704 | 473 | 493 |
| Customers' advances | 1.886 | 1.293 | 87 | 87 |
| Other taxes payable | 2.067 | 1.645 | - | - |
| Accrued discounts on sales | 13.957 | 11.327 | 374 | 273 |
| Accrued fees & costs payable to third parties | 5.494 | 5.538 | 555 | 1.110 |
| Accrued payroll expenses | 8.214 | 5.765 | 2.425 | 1.953 |
| Other accrued expenses | 2.697 | 2.843 | 64 | 144 |
| Accrued interest for bank loans | 5.096 | 2.454 | - | - |
| Expenses for restructuring activities | - | 126 | - | - |
| Accrual for warranty expenses | 3.332 | 2.542 | 297 | 367 |
| Other payables | 4.112 | 4.435 | 262 | 322 |
| Total | 53.539 | 42.485 | 5.067 | 4.750 |
The fair value of other creditors approximates their carrying value.
Accrued discount on sales: The increase in the balance is mainly attributable to the higher discounts, sales and seasonality.
Accrued interest for bank loans: The increase in the balance is mainly attributable to different payment patterns.
| Consolidated | Parent Company | |||
|---|---|---|---|---|
| 31.12.2018 | 31.12.2017 | 31.12.2018 | 31.12.2017 | |
| Bank loans | 53.014 | 55.485 | - | - |
| Intergroup bond loans | - | - | 26.480 | 33.702 |
| Bond loans | 174.984 | 177.929 | - | - |
| Total Non current borrowings | 227.998 | 233.414 | 26.480 | 33.702 |
| Consolidated | Parent Company | ||||
|---|---|---|---|---|---|
| 31.12.2018 | 31.12.2017 | 31.12.2018 | 31.12.2017 | ||
| Bank overdrafts | 1.259 | 2.584 | - | - | |
| 46.002 | 39.857 | - | - | ||
| Total current borrowings | 47.261 | 42.441 | - | - | |
| 275.259 | 275.855 | 26.480 | 33.702 |
| Maturity of non current borrowings | Consolidated | Parent Company | ||
|---|---|---|---|---|
| 31.12.2018 | 31.12.2017 | 31.12.2018 | 31.12.2017 | |
| Between 1 & 2 years | - | - | - | - |
| Between 2 & 5 years | 227.998 | 233.414 | 26.480 | 33.702 |
| Over 5 years | - | - | - | - |
| Total | 227.998 | 233.414 | 26.480 | 33.702 |
| Effective interest rates | Consolidated | Parent Company | ||
|---|---|---|---|---|
| 31.12.2018 | 31.12.2017 | 31.12.2018 | 31.12.2017 | |
| Bond loans | 5,80% | 5,77% | 5,90% | 8,60% |
| Non current borrowings | 4,28% | 4,29% | - | - |
| Bank overdrafts | 9,40% | 9,15% | - | - |
| Current borrowings | 3,35% | 3,13% | - | 9,13% |
| Consolidated | Parent Company | |||
| Net debt / Total capital | 31.12.2018 | 31.12.2017 | 31.12.2018 | 31.12.2017 |
| Total borrowings | 275.259 | 275.855 | 26.480 | 33.702 |
| Cash & cash equivalents | |||
|---|---|---|---|
| Net debt (A) | |||
| Total equity (B) | |||
| Total capital $(C) = (A) + (B)$ | |||
| Net debt / Total capital $(A) / (C)$ |
| Consolidated | Parent Company | |||
|---|---|---|---|---|
| Net debt / Total capital | 31.12.2018 | 31.12.2017 | 31.12.2018 | 31.12.2017 |
| Total borrowings | 275.259 | 275.855 | 26.480 | 33.702 |
| Cash & cash equivalents | (49.057) | (53.130) | (2.352) | (998) |
| Net debt (A) |
226.202 | 222.725 | 24.128 | 32.704 |
| Total equity (B) | (42.959) | (42.265) | 22.554 | 24.238 |
| Total capital (C) = (A) + (B) | 183.243 | 180.460 | 46.682 | 56.942 |
| Net debt / Total capital (A) / (C) | 123,44% | 123,42% | 51,69% | 57,43% |
The foreign currency exposure of borrowings is as follows:
| Consolidated | ||||||
|---|---|---|---|---|---|---|
| 31.12.2018 | 31.12.2017 | |||||
| Current borrowings |
Non current borrowings |
Total | Current borrowings |
Non current borrowings |
Total | |
| - EURO | 40.751 | 215.697 | 256.448 | 37.937 | 213.836 | 251.773 |
| - USD | 3.410 | 12.301 | 15.711 | 1.920 | 19.578 | 21.498 |
| - INR | 3.100 | - | 3.100 | 2.584 | - | 2.584 |
| Total | 47.261 | 227.998 | 275.259 | 42.441 | 233.414 | 275.855 |
| Discontinued Glass Operations | 31.12.2018 | 31.12.2017 |
Committed unutilized Revolving Credit Facilities ( RCFs ) 15.330 14.075
| Parent Company | ||||||
|---|---|---|---|---|---|---|
| 31.12.2018 | 31.12.2017 | |||||
| Current borrowings |
Non current borrowings |
Total | Current borrowings |
Non current borrowings |
Total | |
| - EURO | - | 26.480 | 26.480 | - | 33.702 | 33.702 |
| Total | - | 26.480 | 26.480 | - | 33.702 | 33.702 |
The movement of liabilities from financing activities is listed below:
| Total borrowings | Non current borrowings |
Current borrowings |
Total |
|---|---|---|---|
| Balance 01.01.2018 | 233.414 | 42.441 | 275.855 |
| Cash flows | (6.213) | 4.852 | (1.361) |
| Other non-cash movements | 797 | (32) | 765 |
| Balance 31.12.2018 | 227.998 | 47.261 | 275.259 |
| The raised funds of € 111.6 million and repayments of € 112.3 million relate to the use of available loan lines and similar |
Consolidated
repayments by the Group's subsidiaries.
Parent Company
Total borrowings
Total borrowings
| Non current | Current | Total | |
|---|---|---|---|
| Intergroup bond loans | borrowings | borrowings | |
| Balance 01.01.2018 | 33.702 | - | 33.702 |
| Cash flows | (8.891) | - | (8.891) |
| Other non-cash movements | 1.669 | - | 1.669 |
| Balance 31.12.2018 | 26.480 | - | 26.480 |
| Consolidated | |||
|---|---|---|---|
| Total borrowings | Non current borrowings |
Current borrowings |
Total |
| Balance 01.01.2017 | 4 | 381.871 | 381.875 |
| Cash flows | (15.555) | 15.009 | (546) |
| Conversion of debt to equity | - | (104.605) | (104.605) |
| Reclassification | 248.965 | (248.965) | - |
| Other non-cash movements | - | (869) | (869) |
| Balance 31.12.2017 | 233.414 | 42.441 | 275.855 |
Parent Company
| Intergroup bond loans | Non current borrowings |
Current borrowings |
Total |
|---|---|---|---|
| Balance 01.01.2017 | - | 91.559 | 91.559 |
| Cash flows | - | (5.580) | (5.580) |
| Conversion of debt to equity | (59.605) | - | (59.605) |
| Reclassification | 93.307 | (93.307) | - |
| Other non-cash movements | - | 7.328 | 7.328 |
| Balance 31.12.2017 | 33.702 | - | 33.702 |
Total cash flows in the movement of the Group's borrowings relate to proceeds from new loans of € 99,5 m. and repayments of € 100,6 m.. Proceeds from new loans arise from Group's restructuring of € 26 m. while the remaining € 73 m. refer mainly to subsidiaries in India, Nigeria and Russia. Total repayments of € 33,45 million relate to Group's restructuring while the remaining € 66,6 m. come from the subsidiaries in India, Russia and Turkey.
FRIGOGLASS S.A.I.C. Notes to the Financial Statements in € 000's
With the exception of the Second Lien Notes, the Group borrows at floating interest rates.
Following the completion of the capital restructuring on 23 October 2017, Frigoglass entered into new debt arrangements that replaced part of the existing Group financing with new financing with extended maturities. The remaining existing debt was either capitalized or repaid. The €250m Senior Notes (the "2013 Notes") issued by Frigoglass Finance B.V. in May 2013 were cancelled and delisted from the Luxembourg Stock Exchange, while new Notes of lower value were issued. The Bank facilities granted to the Group from its four core banks were similarly adjusted and extended. The loan received by the Company's largest shareholder Boval S.A., was capitalized and an additional share capital cash injection took place.
The First Lien Facilities comprise a €25.000.000 First Lien RCF with a base currency amount denominated in Euro (also available in US Dollars and other currencies approved by the lenders), a US\$10.000.000 First Lien Term Loan Facility and a €7.100.937,38 First Lien Term Loan Facility. Following the mandatory and voluntary partial redemption of the First Lien Facilities on 31 December 2018, the total RCF commitments adjusted to €24.376.041,14 and the First Lien Term Loan Facilities to US\$9.405.802,23 and €6.730.455,01 respectively.
The maturity date of the First Lien Facilities Agreement is 31 December 2021. A €2m aggregate amortisation payment will be paid every six months starting from March 2019 to repay the First Lien Debt.
Interest is accrued based on EURIBOR/LIBOR (as applicable) plus an interest rate of 4,25% per annum.
There are two financial covenants: (i) a Minimum Liquidity Covenant which is tested weekly and (ii) a Leverage Covenant which will be tested semi‐annually.
On 23 October 2017, the Borrower issued the €79.394.180 Senior Secured Guaranteed Notes, with an interest rate of Euribor plus 4,25% per annum due 31 December 2021 (the "First Lien Notes"). Following the mandatory and voluntary partial redemption of the First Lien Notes on 31 December 2018, the principal amount reduced to €76.449.252,17.
The First Lien Notes Subscription Agreement contains the same financial covenants and undertakings as the First Lien Facilities, except for the financial covenants.
Interest is paid on January 15 and June 15 each year, starting as of 15 January 2018. The First Lien Notes are listed on the official list of the International Stock Exchange and are private notes held in certificated form and settled through the Notes Agent/Issuer.
The Second Lien Facilities comprise a €24.850.000 Second Lien RCF with a base currency amount denominated in Euro (also available in US Dollars and other currencies approved by the lenders) and a €17.393.375,21 Second Lien Term Loan Facility.
The maturity date of the Second Lien Facilities Agreement is 31 March 2022. There is no amortisation.
Interest is accrued as EURIBOR/LIBOR (as applicable) plus a rate of 3,25% per annum.
Representations, covenants and events of default are substantially the same as those in the First Lien Facilities Agreement.
On 23 October 2017, the Issuer issued the €98.535.239 Second Priority Secured Notes due 31 March 2022 (the "Second Lien Notes") at a fixed interest rate of 7% per annum.
The Second Lien Notes indenture contains a series of common restrictions and undertakings for the Group, including, among other, restrictions on financial indebtedness, distribution of dividends, the disposal of assets and mergers and acquisitions.
Interest is paid on January 15 and July 15 each year, starting as of 15 January 2018. The Second Lien Notes are listed on the official list of The International Stock Exchange. The notes are settled through the Clearstream/Euroclear.
The following companies have granted guarantees in respect of the First and Second Lien Debt:
Following the completion of Frigoglass Jebel Ali FZE sale on 12 December 2018, the securities and guarantees granted by Frigoglass Jebel Ali FZE were released.
The security granted in favour of the creditors under the First Lien Facilities, First Lien Notes, Second Lien Facilities and Second Lien Notes will initially include the following:
| Asset | in € 000's |
|---|---|
| as at 31.12.2018 | |
| Tangible assets | 35.071 |
| Other long term assets | 43 |
| Inventories | 34.023 |
| Trade debtors | 22.233 |
| Intergroup receivables | 55.178 |
| Intergroup loan receivables | 266.257 |
| Other debtors | 2.838 |
| Cash & cash equivalents | 6.650 |
| Total | 422.293 |
| Parent Company | ||
|---|---|---|
| 31.12.2018 | 31.12.2017 | |
| Net book value |
Net book value |
|
| 60.005 | 58.045 | |
| - | 1.960 - |
|
| Total Frigoinvest Holdings B.V (The Netherlands) | 60.005 | 60.005 |
In its separate financial statements, the Parent Company accounts for investments in subsidiaries at historic cost less any impairment losses.
The increase in Parent Company's investment in the subsidiary Frigoinvest Holdings B.V. derived as a result of the capital restructuring process. The increase incurred with the payment of € 37,5 m. in cash reduced by the effect of the capitalisation of intergroup borrowing of € -35,5 m., as described in Note 13.
The subsidiaries of the Group, the country of incorporation and their shareholding status as are described below:
| Country of | Consolidation | % | |
|---|---|---|---|
| Company name & business segment | incorporation | method | Shareholding |
| ICM Operations | |||
| Frigoglass S.A.I.C. | Greece | Parent Company | |
| SC. Frigoglass Romania SRL | Romania | Full | 100,00% |
| PT Frigoglass Indonesia | Indonesia | Full | 99,98% |
| Frigoglass South Africa Ltd. | South Africa | Full | 100,00% |
| Frigoglass Eurasia LLC | Russia | Full | 100,00% |
| Frigoglass (Guangzhou) Ice Cold Equipment Co. ,Ltd. Scandinavian Appliances A.S |
China Norway |
Full Full |
100,00% 100,00% |
| Frigoglass Spzoo | Poland | Full | 100,00% |
| Frigoglass India PVT.Ltd. | India | Full | 100,00% |
| Frigoglass East Africa Ltd. | Kenya | Full | 100,00% |
| Frigoglass GmbH | Germany | Full | 100,00% |
| Frigoglass Hungary Kft | Hungary | Full | 100,00% |
| Frigoglass Nordic AS | Norway | Full | 100,00% |
| Frigoglass West Africa Limited | Nigeria | Full | 76,03% |
| Frigoglass Cyprus Limited | Cyprus | Full | 100,00% |
| Norcool Holding A.S | Norway | Full | 100,00% |
| Frigoinvest Holdings B.V | The Netherlands | Full | 100,00% |
| Frigoglass Finance B.V | The Netherlands | Full | 100,00% |
| 3P Frigoglass Romania SRL | Romania | Full | 100,00% |
| Frigoglass Ltd. | Ireland | Full | 100,00% |
| Glass Operations | |||
| Frigoglass Global Limited | Cyprus | Full | 100,00% |
| Beta Glass Plc. | Nigeria | Full | 55,21% |
| Frigoglass Industries (NIG.) Ltd. | Nigeria | Full | 76,03% |
The Parent Company does not have any shareholdings in the preference shares of subsidiary undertakings included in the Group.
Frigoglass North America Ltd. Co, Frigoglass Iberica SL, Frigoglass Philippines Inc. and Frigoglass Turkey S Sanayi İç ve Dış Ticaret AŞ were liqudated during 2018.
Frigoglass Jebel Ali FZE was sold in December 2018 (Note 29).
Below is the summarised financial information of the Group's subsidiaries with non-controlling interests. Total assets and liabilities include intergroup balances.
| Frigoglass Industries ( Nigeria ) Ltd. | 2018 | 2017 |
|---|---|---|
| Total assets | 91.101 | 78.659 |
| Total liabilities | 35.414 | 31.098 |
| Total equity | 55.687 | 47.561 |
| Net sales revenue | 28.926 | 26.288 |
| Profit / |
5.852 | 9.620 |
| Non controlling interest - % | 23,97% | 23,97% |
| Profit / |
||
| non-controlling interests | 1.403 | 2.306 |
| Dividends to non-controlling interests | - | - |
| Capital expenditure | 2.556 | 1.110 |
| Beta Glass Plc. | 2018 | 2017 |
| Total assets | 131.944 | 104.899 |
| Total liabilities | 48.446 | 36.246 |
| Total equity | 83.498 | 68.653 |
| Net sales revenue | 72.914 | 64.311 |
| Profit / |
13.056 | 11.928 |
| Non controlling interest - % | 44,79% | 44,79% |
| Profit / |
||
| non-controlling interests | 5.847 | 5.342 |
| Dividends to non-controlling interests | 448 | 613 |
| Capital expenditure | 21.908 | 10.021 |
| Frigoglass West Africa Ltd. | 2018 | 2017 |
| Total assets | 24.024 | 14.917 |
| Total liabilities | 26.104 | 15.325 |
| Total equity | (2.080) | (408) |
| Net sales revenue | 17.130 | 8.006 |
| Profit / |
(1.609) | (623) |
| Non controlling interest - % | 23,97% | 23,97% |
| Profit / |
||
| non-controlling interests | (386) | (149) |
| Dividends to non-controlling interests | - | - |
| Capital expenditure | 86 | 493 |
The tight liquidity in 2017 and 2018 in the foreign exchange market in Nigeria has significantly limited our ability to execute payments in foreign currency, leading to a high Nigerian Naira cash balance of € 14 m. (2017: € 20m). We expect the excess cash to be utilised among others to fund capital expenditure and raw material purchases over the coming years.
The share capital of the Group as at 31.12.2018 comprised of 355.437.751 fully paid up ordinary shares with an nominal value of € 0,36 each.
The 1st Repetitive General Meeting of shareholders of "FRIGOGLASS S.A.I.C." took place on June 27, 2017. The following items of the agenda were discussed and resolved:
a) the increase of the nominal value of each common registered share of the Company from € 0,30 to € 0,90 through merger of every 3 existing shares to 1 new share and parallel decrease of the total number of shares from 50.593.832 to 16.864.610 (reverse share split 3:1).
b) the nominal decrease of the Company's share capital by the amount of € 9.106.889,40, by a corresponding decrease of the nominal value of each Company's share from € 0,90 (as such will be adjusted following the reverse share split) to € 0,36, according to article 4 para. 4a of C.L. 2190/1920, for the purpose of forming a special reserve of equal amount the use of which will be decided in the future.
c) the share capital increase of the Company up to the amount of € 136.398.446,64, in accordance with article 13a of C.L. 2190/1920, with pre-emptive rights for the existing shareholders of the Company at a ratio of 22,46 new shares for each existing share through payment in cash and the issuance of 378.884.574 new common voting registered shares, with a nominal value of € 0,36 each, and subscription price of € 0,36.
The share capital increase through cash payment was completed on 18.10.2017 and the amount paid was € 63.459.341,82 which was allocated to € 62.851.774,68 in the share capital account and € 607.567,14 to the share premium account.
d) issuance of 163.984.878 new shares of the Company with a nominal value of € 0.36348 each following the conversion of 163.984.878 Convertible Bonds of a nominal value of € 0,36348 each held by the participating bank lenders and the Scheme creditors.
The Board of Directors of Frigoglass on 23.10.2017 ratified the relevant share capital increase as a result of the above conversion by the amount of € 59.034.556,08. Due to the fact that the share capital increase resulted from the conversion of existing borrowings, the issued capital was recognized at its fair value, ie the stock market value of the shares at the date of the issue, which on November 16, 2017 was € 0,147 per share. As a result, the difference from the nominal value of the shares of € 34.929 thousands was recognized to the share premium account.
The share capital of the Group as at 31.12.2017 comprised of 355.437.751 fully paid up ordinary shares with an nominal value of € 0,36 each.
| Number of shares | Share capital -000' Euro |
Share premium -000' Euro- |
||
|---|---|---|---|---|
| Balance at 01.01.2017 | 50.593.832 | 15.178 | 2.755 | |
| Reverse Share Split | (33.729.222) | - | - | |
| Transfer to reserves due to the decrease of the nominal value of each share |
- | (9.107) | - | |
| Share capital increase at 18.10.2017 | 174.588.263 | 62.852 | 608 | |
| Share capital increase at 23.10.2017 | 163.984.878 | 59.035 | (34.929) | |
| Cost for the share capital increase | - | - | (2.235) | |
| Balance at 31.12.2017 | 355.437.751 | 127.958 | (33.801) | |
| - | - | - | ||
| Balance at 31.12.2018 | 355.437.751 | 127.958 | (33.801) |
Dividends are recorded in the financial statements in the period in which they are approved by the Shareholders' Meeting.
The establishment of the Frigoglass Stock Option Plan was approved by shareholders at the 2007 Annual General Meeting and subsequently in 2009, 2010, 2012 and 2014.
The Stock Option Plan is designed to provide long-term incentives for senior managers and members of the Management Committee to deliver long-term shareholder returns. Participation in the plan is at the board's discretion and no individual has a contractual right to participate in the plan or to receive any guaranteed benefits.
Options vest in one-third increments each year for three years and can be exercised for up to 10 years from the date of award. When the options are exercised, the proceeds received, net of any transaction costs, are credited to share capital (at the nominal value) and share premium.
The exercise price of options is determined by the General Meeting.
In the 1st Repetitive General Meeting of shareholders of Frigoglass S.A.I.C. held on Tuesday June 27, 2017, shareholders approved the increase of the nominal value of each common registered share of the Company from € 0,30 to € 0,90 through the merger of every 3 existing shares to 1 new share and the parallel decrease of the total number of shares from 50.593.832 to 16.864.610 (reverse share split 3:1).
A summary of stock option activity under all plans is as follows:
| 2018 | 2017 | ||||
|---|---|---|---|---|---|
| Weighted Average exercise price (€) |
Number of stock options |
Weighted Average exercise price (€) |
|||
| Beginning Balance 01.01 | 9,32 | 334.234 | 3,76 | 1.833.541 | |
| Adjusted* Balance 01.01 | 9,32 | 334.234 | 11,27 | 611.096 | |
| Grants | - | - | - | - | |
| Expirations | 9,21 | (51.360) | 47,49 | (8.658) | |
| Forfeitures | - | - | 12,53 | (268.204) | |
| Ending Balance 31.12 | 9,34 | 282.874 | 9,32 | 334.234 | |
* Adjusted for the 3:1 reverse share split in 2017
| Vested and exercisable at the end of the | ||||
|---|---|---|---|---|
| period | 9,34 | 282.874 | 10,05 | 308.625 |
Share options outstanding at the end of the year have the following expiry date and exercise prices:
| Grant date | Expiry date | Exercise price (€) | Share options |
|---|---|---|---|
| 17.11.2010 | 31.12.2019 | 16,62 | 21.663 |
| 03.01.2011 | 31.12.2020 | 16,62 | 24.232 |
| 10.12.2012 | 31.12.2021 | 16,62 | 30.897 |
| 23.10.2013 | 31.12.2022 | 16,77 | 31.160 |
| 27.06.2014 | 31.12.2023 | 11,37 | 42.328 |
| 15.05.2015 | 31.12.2024 | 5,70 | 49.657 |
| 04.11.2015 | 31.12.2024 | 6,63 | 6.666 |
| 26.07.2016 | 31.12.2025 | 0,45 | 76.271 |
| Total | 282.874 |
Weighted average remaining contractual life of options outstanding at the end of period
4,85
Note 16 - Other reserves
| Consolidated | ||||||
|---|---|---|---|---|---|---|
| Statutory reserves |
Share option reserve |
Extraordinary reserves |
Tax free reserves |
Currency translation reserve |
Total | |
| Balance at 01.01.2017 | 4.177 | 694 | 7.746 | 6.831 | (33.221) (13.773) | |
| Transfer from share capital Expiration / Cancellation of |
- | - | 7.178 | 1.929 | - | 9.107 |
| share option reserve | - | (24) | - | - | - | (24) |
| Exchange differences | - | - | (286) | - | (7.256) | (7.542) |
| Balance at 31.12.2017 | 4.177 | 670 | 14.638 | 8.760 | (40.477) (12.232) |
| Balance at 01.01.2018 | 4.177 | 670 | 14.638 | 8.760 | (40.477) (12.232) | |
|---|---|---|---|---|---|---|
| Exchange differences from discontinued | ||||||
| operations recycled to P&L | - | - | - | (3.684) | (3.684) | |
| Exchange differences from continuing | ||||||
| operations | - | - | 91 | - | 3.877 | 3.968 |
| Balance at 31.12.2018 | 4.177 | 670 | 14.729 | 8.760 | (40.284) (11.948) |
| Parent Company | |||||||
|---|---|---|---|---|---|---|---|
| Statutory reserves |
Share option reserve |
Extraordinary reserves |
Tax free reserves |
Total | |||
| Balance at 01.01.2017 | 4.020 | 694 | 4.835 | 6.831 | 16.380 | ||
| Expiration / Cancellation of share | |||||||
| option reserve | - | (24) | - | - | (24) | ||
| Transfer from share capital | - | - | 7.178 | 1.929 | 9.107 | ||
| Balance at 31.12.2017 | 4.020 | 670 | 12.013 | 8.760 | 25.463 | ||
| Balance at 01.01.2018 | 4.020 | 670 | 12.013 | 8.760 | 25.463 | ||
| Balance at 31.12.2018 | 4.020 | 670 | 12.013 | 8.760 | 25.463 |
A statutory reserve is created under the provisions of Hellenic law (Law 2190/20) according to which, an amount of at least 5% of the profit (after tax) for the year must be transferred to this reserve until it reaches one third of the paid up share capital. The statutory reserve can not be distributed to the shareholders of the Company except for the case of liquidation.
The share option reserve refers to the established Stock Option Plan provided to senior managers and members of the Management Committee, as described in Note 15.
The Company has created tax free reserves, in accordance with several Hellenic tax laws, during the years, in order to achieve tax deductions, either
a) by postponing the settlement of tax liabilities until the distribution of the reserves to the shareholders, or
b) by eliminating any future income tax payment related to the issuance of bonus shares to the shareholders.
Should the reserves be distributed to the shareholders as dividends, the distributed profits will be taxed with the applicable rate at the time of distribution.
No provision has been recognized for contingent income tax liabilities in the event of a future distribution of such reserves to the Company's shareholders since such liabilities are recognized at the same time as the dividend liability associated with such distributions.
| Consolidated | Parent Company | |||
|---|---|---|---|---|
| 31.12.2018 | 31.12.2017 | 31.12.2018 | 31.12.2017 | |
| Finance income | ||||
| Interest income | (3.535) | (1.627) | (1) | (5) |
| Interest Expense | 17.115 | 16.918 | 1.673 | 7.335 |
| Exchange loss / (gain) & | ||||
| Other Financial costs | 7.587 | 4.013 | 126 | 2.493 |
| Total finance cost | 24.702 | 20.931 | 1.799 | 9.828 |
| Total finance cost / |
21.167 | 19.304 | 1.798 | 9.823 |
| Total finance cost / |
||||
| discontinued operations | - | 1.420 |
The Group's principal sources of finance consist of Bond Loans, local overdraft facilities, short- and long-term local bank borrowing facilities and Revolving Credit Facilities (RCFs).
The ratio of the fixed to floating interest rates of the Group's principal sources of finance as at 31.12.2018 amounts to 64% / 36%.
The exposure to interest rate risk on the Group's income and cash flows from financing activities is set out below with the relevant sensitivity analysis.
| Volatility of | Effect on | |
|---|---|---|
| Interest Rates | Profit / |
|
| in € 000's | ( +/-) | before income tax |
| 01.01.2018 - 31.12.2018 -EURO |
1,00% | 1.579 |
| -USD | 1,00% | 167 |
| -INR | 1,00% | 31 |
| Total | 1.777 |
| Consolidated | Parent Company | |||
|---|---|---|---|---|
| 31.12.2018 | 31.12.2017 | 31.12.2018 | 31.12.2017 | |
| Corporate tax | 10.127 | 16.497 | 779 | 780 |
| Deferred tax | 3.736 | (1.059) | - | - |
| Total | 13.863 | 15.438 | 779 | 780 |
| Consolidated | Parent Company | |||
| 31.12.2018 | 31.12.2017 | 31.12.2018 | 31.12.2017 | |
| Profit / |
13.103 | 50.333 | (492) | (47.087) |
| Tax calculated at the nominal tax rates | 5.262 | (1.831) | (143) | (13.655) |
| Tax effects of: | ||||
| Income not subject to tax | (829) | (7.806) | - | - |
| Expenses not deductible for tax purposes | 1.862 | 13.445 | 866 | 10.778 |
| Utilization of previously unrecognized tax losses | (103) | - | (695) | - |
| Tax losses for which no deferred income tax asset | ||||
| was recognized | 6.027 | 9.726 | - | 2.877 |
| Other taxes | 1.644 | 1.904 | 751 | 780 |
| Tax expense as of income statement | 13.863 | 15.438 | 779 | 780 |
The Group did not recognize deferred tax assets for accumulated tax losses € 29 m., for Greece, Indonesia, India, South Africa, Kenya, Cyprus, Germany, Norway because the future taxable profits within the next years, most probably, will not be adequate to cover the current accumulated tax losses.
For 2018 in Greece tax rate is 29%, as from 2019 applicable in Greece new tax rate 28%, as from 2020 will be 27%, as from 2021 will be 26% and as from 2022 will be 25%.
The Group and the Company calculate the period income tax using the tax rate that would be applicable to the expected annual earnings.
The income tax rates in the countries where the Group operates are between 0% and 33%.
A part of non deductible expenses, tax losses for which no deferred income tax asset was recognised, the different tax rates in the countries in which the Group operates, incomes not subject to tax and other taxes create the final effective tax rate for the Group.
For the financial years 2011 to 2018, all Hellenic Societe Anonyme and Limited Liability Companies that are required to prepare audited statutory financial statements must in addition obtain an "Annual Tax Certificate" as provided for by paragraph 5 of Article 82 of L.2238/1994 for the financial years 2011-2013 and the Article 65A of L.4174/2013 for the financial years 2014-2018. This "Annual Tax Certificate" must be issued by the same statutory auditor or audit firm that issues the audit opinion on the statutory financial statements.
Upon completion of the tax audit, the statutory auditor or audit firm must issue a "Tax Compliance Report" which will subsequently be submitted electronically to the Ministry of Finance.
For the years 2011 up to 2017 a respective "Tax Certificate" has been issued by the statutory Certified Auditors in accordance with art 65A of Law 4174/2013, without any qualification or matter of emphasis as pertains to the tax compliance of the Company.
The Parent Company has not been audited by tax authorities for the 2010 financial year.
Consequently, the State is not anymore entitled, due to the lapse of the statute of limitation, to issue assessment sheets and Up to 31.12.2018 we have not been officially served with any audit mandate by the competent Greek tax authorities for the
assessment acts for taxes, duties, contributions and surcharges for the years up to and including 2010, pursuant to the
following provisions:
(a) para. 1 art. 84 of Law 2238/1994 (unaudited cases of Income taxation),
(b) para. 1 art. 57 of Law 2859/2000 (unaudited cases of Value Added Tax), and,
(c) para. 5 art. 9 of Law 2523/1997 (imposition of penalties for income tax cases).
For the Parent Company, the "Tax Compliance Report" for the financial years 2011-2017 has been issued with no substantial adjustments with respect to the tax expense and corresponding tax provision as reflected in the annual financial statements of 2011 - 2017.
The Parent company received an audit mandate for a tax re-examination for 2012.
The tax returns of the Parent Company and the Group's subsidiaries have not been assessed by the tax authorities for different periods (see the table below).
For the unaudited tax years of the Group, a cumulative provision of € 1,6 m. has been raised up to 31 December 2018. Until such time the special tax audit of the companies in the below table is completed, the tax burden for the Group relating to those years cannot be accurately determined. The Group is raising provisions for any additional taxes that may result from future tax audits to the extent that the relevant liability is probable and may be reliably measured.
In some countries, the tax audit is not mandatory and may only be performed under certain conditions.
| Company | Unaudited Country tax years |
Line of Business | ||
|---|---|---|---|---|
| Frigoglass S.A.I.C. - Parent Company | Greece | 2018 | Ice Cold Merchandisers | |
| SC. Frigoglass Romania SRL | Romania | 2012-2018 | Ice Cold Merchandisers | |
| PT Frigoglass Indonesia | Indonesia | 2015-2018 | Ice Cold Merchandisers | |
| Frigoglass South Africa Ltd. | S. Africa | 2012-2018 | Ice Cold Merchandisers | |
| Frigoglass Eurasia LLC | Russia | 2013-2018 | Ice Cold Merchandisers | |
| Frigoglass (Guangzhou) Ice Cold Equipment Co. ,Ltd. |
China | 2017-2018 | Sales Office | |
| Scandinavian Appliances A.S | Norway | 2010-2018 | Sales Office | |
| Frigoglass Spa zo.o | Poland | 2009-2018 | Service & Repair of ICM's | |
| Frigoglass India PVT.Ltd. | India | 2016-2018 | Ice Cold Merchandisers | |
| Frigoglass East Africa Ltd. | Kenya | 2014-2018 | Sales Office | |
| Frigoglass GmbΗ | Germany | 2016-2018 | Sales Office | |
| Frigoglass Hungary Kft | Hungary | 2017-2018 | Service & Repair of ICM's | |
| Frigoglass Nordic AS | Norway | 2010-2018 | Sales Office | |
| Frigoglass West Africa Limited | Nigeria | 2015-2018 | Ice Cold Merchandisers | |
| Frigoglass Cyprus Limited | Cyprus | 2011-2018 | Holding Company | |
| Norcool Holding A.S | Norway | 2010-2018 | Holding Company | |
| Frigoinvest Holdings B.V | Netherlands | 2013-2018 | Holding Company | |
| Frigoglass Finance B.V | Netherlands | 2013-2018 | Financial Services | |
| 3P Frigoglass Romania SRL | Romania | 2017-2018 | Plastics | |
| Frigoglass Global Limited | Cyprus | 2015-2018 | Holding Company | |
| Beta Glass Plc. | Nigeria | 2014-2018 | Glass Operation | |
| Frigoglass Industries (NIG.) Ltd. | Nigeria | 2014-2018 | Crowns & Plastics |
The Group Management is not expecting significant tax liabilities to arise from the specific tax audit of the open tax years of the Company as well as of other Group entities in addition to the ones already disclosed in the consolidated financial statements and estimates that the results of the tax audit of the unaudited tax years will not significantly affect the financial position, the asset structure, the profitability and the cash flows of the Company and the Group.
Notes to the Financial Statements in € 000's
The capital commitments contracted for but not yet incurred at the balance sheet date 31.12.2018 for the Group amounted to € 597 thousands (31.12.2017: € 709 thousands) and relate mainly to purchases of machinery. There are no capital commitments for the Parent Company for the years ended 31.12.2017 and 31.12.2018.
The Group leases buildings and vehicles under operating leases.
Total future lease payments under operating leases are as follows:
| Consolidated | ||||||
|---|---|---|---|---|---|---|
| 31.12.2018 | 31.12.2017 | |||||
| Buildings | Vehicles | Total | Buildings | Vehicles | Total | |
| Within 1 year | 1.124 | 374 | 1.498 | 1.936 | 435 | 2.371 |
| Between 1 to 5 years | 725 | 891 | 1.616 | 3.460 | 1.150 | 4.610 |
| Over 5 years | - | - | - | 1.368 | 9 | 1.377 |
| Total | 1.849 | 1.265 | 3.114 | 6.764 | 1.594 | 8.358 |
| Parent Company | ||||||
| 31.12.2018 | 31.12.2017 | ||||||
|---|---|---|---|---|---|---|---|
| Buildings | Vehicles | Total | Buildings | Vehicles | Total | ||
| Within 1 year | 273 | 166 | 439 | 273 | 241 | 514 | |
| Between 1 to 5 years | 273 | 527 | 800 | 545 | 877 | 1.422 | |
| Over 5 years | - | - | - | - | 9 | 9 | |
| Total | 546 | 693 | 1.239 | 818 | 1.127 | 1.945 |
Truad Verwaltungs A.G is the main shareholder of Frigoglass S.A.I.C with 48,55% shareholding.
Truad Verwaltungs A.G. has also a 23% stake in Coca-Cola HBC AG share capital.
In April 2016 Frigoglass Finance B.V. signed a loan agreement of a total amount of € 30 m. with BOVAL S.A on the same terms as the RCFs.
BOVAL S.A in Luxembourg is a subsidiary of Truad Verwaltungs A.G.
Ιn October 2017 BOVAL S.A. participated in the share capital increase and the loan was paid.
| in € 000's | 31.12.2018 | 31.12.2017 |
|---|---|---|
| BOVAL S.A. : Participation in the share capital increase | - | 60.000 |
| Balance of loan with the BOVAL S.A. | - | - |
| Loan interest to BOVAL S.A. | - | 248 |
The Coca-Cola HBC AG is a non alcoholic beverage company. Apart from the common share capital involvement of Truad Verwaltungs A.G. at 23% with Coca-Cola HBC AG, Frigoglass is the major shareholder in Frigoglass Industries Ltd. and Frigoglass West Africa Ltd. based on Nigeria, with shareholding of 76,0%, where Coca-Cola HBC AG also owns a 23,9% equity interest.
Based on a contract that has been renewed until 31.12.2020 the Coca-Cola HBC AG purchases ICM's from the Frigoglass Group at yearly negotiated prices.
Truad Verwaltungs A.G. has also a 50,75% stake in A.G. Leventis Nigeria Plc.
Frigoglass Industries Nigeria is party to an agreement with A.G. Leventis Nigeria Plc. for the lease of office space in Lagos, Nigeria. The lease agreement is renewed annually.
The investments in subsidiaries are reported to Note 14.
a) The amounts of related party transactions and balances were:
| Consolidated | Parent Company | ||||
|---|---|---|---|---|---|
| 31.12.2018 | 31.12.2017 | 31.12.2018 | 31.12.2017 | ||
| Sales of goods and services | 167.558 | 123.621 | 22.560 | 13.611 | |
| Purchases of goods and services | 1.156 | 219 | 83 | 15 | |
| Receivables / |
22.424 | 18.165 | 1.627 | 2.272 |
b) The intercompany transactions and balances of the Parent company with the Group's subsidiaries were:
| Sales of goods | 6.804 | 5.352 |
|---|---|---|
| Other services | 794 | 771 |
| Income from subsidiaries: Services fees and royalties on sales | 19.860 | 16.797 |
| Income from subsidiaries: commissions on sales | 415 | 350 |
| Purchases of goods / Expenses from subsidiaries | 26.524 | 13.583 |
| Interest expense | 1.673 | 7.335 |
| Receivables | 13.087 | 14.312 |
| Payables | 28.355 | 23.895 |
| Loans payables (Note 13) | 26.480 | 33.702 |
c) The fees to members of the Board of Directors and Management compensation include wages, indemnities and other employee benefits and the amounts are:
| Consolidated | Parent Company | |||
|---|---|---|---|---|
| 31.12.2018 | 31.12.2017 | 31.12.2018 | 31.12.2017 | |
| Fees for Board of Directors | 360 | 130 | 360 130 |
|
| Management compensation | 2.765 | 2.488 | 2.356 | 2.137 |
Basic earnings per share are calculated by dividing the profit attributable to shareholders, by the weighted average number of ordinary shares in issue during the year, excluding ordinary shares purchased by the company (treasury shares).
The weighted average number of ordinary shares outstanding during the year is the number of ordinary shares outstanding at the beginning of the year, adjusted by the decrease in the number of ordinary shares due to the reverse split adjusted retrospectively and the increase in the number of ordinary shares issued during the year due to the share capital increase with cash and the share capital increase with the conversion of bonds ( Note 15) , multiplied by a time-weighting factor.
Given that the average share price for the year is not in excess of the available stock options' exercise price, there is no dilutive effect.
According IAS 33, the weighted average number of shares for 2017 has been adjusted to a 1/3 rate to reflect the effect of reverse split on earnings per share, which was decided at the 1st Repetitive General Meeting of shareholders on June 27, 2017.
| Consolidated | Parent Company | |||
|---|---|---|---|---|
| in 000's € | Year ended | Year ended | ||
| (apart from earning per share and number of shares) | 31.12.2018 | 31.12.2017 | 31.12.2018 | 31.12.2017 |
| Profit / |
||||
| attributable to the shareholders of the company | ||||
| (7.404) | 27.606 | (1.271) | (47.867) | |
| Profit / |
||||
| operations attributable to the shareholders of the company | ||||
| (1.304) | (19.958) | - | - | |
| Profit / |
||||
| shareholders of the company | (8.708) | 7.648 | (1.271) | (47.867) |
| Weighted average number of ordinary shares for the | ||||
| purposes of basic earnings per share | 355.437.751 | 83.709.741 | 355.437.751 | 83.709.741 |
| Weighted average number of ordinary shares for the purpose | ||||
| of diluted earnings per share | 355.437.751 | 83.709.741 | 355.437.751 | 83.709.741 |
| a) Basic: | ||||
| Profit / |
||||
| operations attributable to the shareholders of the company | ||||
| (0,0208) | 0,3298 | (0,0036) | (0,5718) | |
| Profit / |
||||
| operations attributable to shareholders of the company | ||||
| (0,0037) | (0,2384) | - | - | |
| Basic earnings / |
(0,0245) | 0,0914 | (0,0036) | (0,5718) |
| b) Diluted: | ||||
| Profit / |
||||
| operations attributable to the shareholders of the company | ||||
| (0,0208) | 0,3298 | (0,0036) | (0,5718) | |
| Profit / |
||||
| operations attributable to the shareholders of the company | ||||
| (0,0037) | (0,2384) | - | - | |
| Diluted earnings / |
(0,0245) | 0,0914 | (0,0036) | (0,5718) |
The Parent company has contingent liabilities in respect of bank guarantees on behalf of its subsidiaries arising from the ordinary course of business.
Pledged assets are described in detail in Note 13 - Non current and current borrowings.
Based on the loan agreements each guarantor guarantees separately for the total amount of the loan up the amount of € 257 m.. See Note 13 for the guarantors.
| Consolidated | Parent Company | |||
|---|---|---|---|---|
| 31.12.2018 | 31.12.2017 | 31.12.2018 | 31.12.2017 | |
| Guarantees | 256.596 | 260.612 | 256.549 | 260.612 |
There are no significant litigations or arbitration disputes between judicial or administrative bodies that have a significant impact on the financial statements or the operation of the Company or the Group.
| Consolidated | |||||
|---|---|---|---|---|---|
| Quarter | 2018 | 2017 | |||
| Q1 | 105.664 | 25% | 88.214 | 23% | |
| Q2 | 142.449 | 34% | 115.561 | 30% | |
| Q3 | 80.299 | 19% | 76.045 | 20% | |
| Q4 | 88.885 | 21% | 106.229 | 28% | |
| Total Year | 417.297 | 100% | 386.049 | 100% |
As shown above the Group's operations exhibit seasonality.
There are no post-balance events which are likely to affect the financial statements or the operations of the Group and the Parent company apart from the ones mentioned above.
The average number of personnel per operation for the Group & for the Parent company are listed below:
| Consolidated | ||
|---|---|---|
| Operations | 31.12.2018 | 31.12.2017 |
| ICM Operations | 3.744 | 3.644 |
| Glass Operations | 1.410 | 1.398 |
| Total | 5.154 | 5.042 |
| Discontinued operations | - | 327 |
| Parent Company | ||
| 31.12.2018 | 31.12.2017 | |
| Average number of personnel | 207 | 206 |
| Consolidated | Parent Company | |||
|---|---|---|---|---|
| 31.12.2018 | 31.12.2017 | 31.12.2018 | 31.12.2017 | |
| Wages & salaries | 58.321 | 52.771 | 11.741 | 11.087 |
| Social contribution | 6.480 | 6.042 | 2.060 | 1.946 |
| Total Payroll (Note 30) | 64.801 | 58.813 | 13.801 | 13.033 |
| Pension plan (defined contribution) | 1.377 | 2.188 | 550 | 1.397 |
| Retirement benefit (defined benefit) (Note 32) Provision for stock option plan Employee benefits, personnel expenses |
(126) - 8.222 |
2.357 (24) 8.979 |
628 - 1.429 |
605 (24) 2.195 |
| Total Continuing operations | 74.274 | 72.313 | 16.408 | 17.206 |
in € 000's
| Note 26 - Other operating income & Other gains/ |
|||||
|---|---|---|---|---|---|
| Consolidated | Parent Company | ||||
| 31.12.2018 | 31.12.2017 | 31.12.2018 | 31.12.2017 | ||
| Other operating income | |||||
| Income from subsidiaries: Services fees & royalties on sales |
- | - | 19.860 | 16.797 | |
| Income from subsidiaries: Commission on sales |
- | - | 415 | 350 | |
| Revenues from insurance claims | 155 | 1.345 | 155 | 1.345 | |
| Revenues from scraps sales | 894 | 858 | - | - | |
| Other charges to customers | 2.178 | 1.253 | - | - | |
| Other | 1.227 | 2.931 | 328 | 31 | |
| Total: Other operating income | 4.454 | 6.387 | 20.758 | 18.523 |
| Total: Other gains/ |
303 | 4.110 | (11) | (24) |
|---|---|---|---|---|
| Other | 10 | (560) | - | (24) |
| Profit/ equipment |
293 | 4.670 | (11) | - |
Profit/
| Continuing operations | Consolidated | Parent Company | ||
|---|---|---|---|---|
| Year ended | Year ended | |||
| 31.12.2018 | 31.12.2017 | 31.12.2018 | 31.12.2017 | |
| Profit / |
13.103 | 50.333 | (492) | (47.087) |
| plus: Depreciation | 19.791 | 21.108 | 3.542 | 3.515 |
| plus: Impairment of tangible assets | 2.071 | 1.607 | - | 784 |
| plus: Restructuring costs | 301 | (38.243) | - | 34.501 |
| plus: Finance |
21.167 | 19.304 | 1.798 | 9.823 |
| EBITDA | 56.433 | 54.109 | 4.848 | 1.536 |
* Finance
| Note 28 - Restructuring gains/ |
||
|---|---|---|
| Consolidated | Parent Company | |
| 31.12.2018 | ||
| Restructuring activities of ICM Operations: | ||
| (301) | - | |
| Restructuring gains/ |
(301) | - |
The Group incurred during 2018 restructuring costs of € 0.3 mil. related to the termination of one production shift in Frigoglass Indonesia PT.
| Consolidated | Parent Company | |
|---|---|---|
| Capital restructuring expenses: | 31.12.2017 | |
| Capital restructuring expenses - Consulting fees | (42.256) | (34.501) |
| Profit from debt restructuring | 80.499 | - |
| Restructuring gains/ |
38.243 | (34.501) |
The Group has completed the process of its capital restructuring in October 2017.
The profit from the restructuring of the debt of € 80,5 m. consists of the write-off of loans of € 45 m. and € 35,5 m. from the difference between the fair value of the issued shares and the nominal value of the convertible bonds converted into shares. (see Note 13 & Note 15)
The Company announced on 2 April 2018 that it has entered into an agreement to sell the entire share capital of its wholly owned glass container subsidiary Frigoglass Jebel Ali FZE to ATG Investments Limited.
The decision to sell this operation was taken at the Board of Directors meeting held on 2 March 2018.
In the context of this sale the Group will leave two geographical areas of Glass Industry (United Arab Emirates, Asia - Oceania) and for this reason it has been portrayed as discontinued operations.
On 12th December 2018 Frigoglass S.A.I.C announced that it has completed the divestment of its glass container subsidiary Frigoglass Jebel Ali FZE to ATG Investments Limited.
| 01.01-12.12.18 | 31.12.2017 | |
|---|---|---|
| Revenue from contracts with customers | 24.819 | 20.760 |
| Cost of goods sold | (31.789) | (30.427) |
| Gross profit/ |
(6.970) | (9.667) |
| Administrative expenses | (170) | (59) |
| Selling, distribution & marketing expenses | (926) | (1.078) |
| Research & development expenses | - | - |
| Other operating income | 337 | 250 |
| Impairment of fixed assets | - | (7.984) |
| Operating Profit / |
(7.729) | (18.538) |
| Finance |
(392) | (1.420) |
| Profit / |
(8.121) | (19.958) |
| Profit / |
(8.121) | (19.958) |
| Profit / |
(8.121) | (19.958) |
| Attributable to: | ||
| Non-controlling interests | - | - |
| Shareholders | (8.121) | (19.958) |
| Depreciation | 74 | 3.517 |
| EBITDA | (7.655) | (7.037) |
in € 000's
| C) Balance Sheet | 12.12.2018 | 31.12.2017 |
|---|---|---|
| Property, plant & equipment | 750 | 38 |
| Intangible assets | - | 16 |
| Inventories | 4.161 | 12.264 |
| Trade receivables | 6.289 | 3.139 |
| Other receivables | 2.390 | 1.703 |
| Cash & cash equivalents | 2.634 | 415 |
| Assets held for sale | 16.224 | 17.575 |
| Retirement benefit obligations | 1.671 | 1.760 |
| Trade payables | 7.729 | 7.073 |
| Other payables | 1.042 | 1.140 |
| Liabilities associated with assets held for sale | 10.442 | 9.973 |
| Net assets classified as held for sale | 5.782 | 7.602 |
| D) Cash Flow Statement | 12.12.2018 | 31.12.2017 |
| Profit / |
(8.121) | (19.958) |
| (a) Cash flows from /(used in) operating activities | (3.100) | (2.889) |
| (b) Net cash generated from investing activities | (359) | (861) |
|---|---|---|
| (c) Net cash generated from intergroup balances | 5.565 | 3.378 |
| Net increase/(decrease) in cash and cash equivalents (a) + (b) + (c) | 2.106 | (372) |
| Cash and cash equivalents at the beginning of the year | 415 | 871 |
| Effects of changes in exchange rate | 113 | (84) |
| Cash and cash equivalents at the end of the period | 2.634 | 415 |
Consideration Received or Receivable:
| Cash | 3.606 | Consideration Received | 3.606 |
|---|---|---|---|
| Short Term Fair Value of Deferred Consideration | 2.286 | Less: Cash & cash equivalents | (2.634) |
| Long Term Fair Value of Deferred Consideration | 3.023 | ||
| Total Disposal Consideration | 8.915 | Net Proceeds from disposal | 972 |
| Carrying amount of Net Assets Sold | 5.782 | ||
| Gain on Sale before tax & reclassification of foreign currency | |||
| translation reserve | 3.133 | ||
| Income Tax Expense on Gain | - | ||
| Reclassification of foreign currency translation reserve | 3.684 | ||
| Gain on sale after income tax | 6.817 | ||
| Profit after tax of discontinued operation 01.01-12.12.18 | (8.121) | ||
| Profit & & |
(1.304) |
The expenses of the Group and Parent company are analyzed below:
| Consolidated | Parent Company | |||
|---|---|---|---|---|
| 31.12.2018 | 31.12.2017 | 31.12.2018 | 31.12.2017 | |
| Raw materials, consumables, energy & maintenance | 226.517 | 215.463 | 28.864 | 15.963 |
| Wages & salaries (Note 25) | 64.801 | 58.813 | 13.801 | 13.033 |
| Transportation expenses | 12.617 | 11.666 | 1.785 | 995 |
| Employee benefits, personnel expenses (Note 25) | 8.222 | 8.979 | 1.429 | 2.195 |
| Travel & car expenses Provision for staff leaving indemnities |
4.245 | 4.396 | 1.213 | 1.377 |
| and actual cost paid (Note 25) | (126) | 2.357 | 628 | 605 |
| Audit & third party fees | 17.890 | 15.728 | 4.141 | 3.391 |
| Rent, insurance, leasing payments and security expenses Provisions for trade debtors, inventories, warranties and |
7.597 | 6.864 | 995 | 1.089 |
| free of charge goods | 8.730 | 5.764 | (107) | (614) |
| Promotion and after sales expenses | 13.635 | 11.270 | 3.711 | 3.138 |
| Telecommunications, subscriptions and office supply | ||||
| expenses | 952 | 1.018 | 163 | 209 |
| Other expenses | 1.656 | 941 | 1.349 | 1.613 |
| Provision for stock options (Note 15 & 16) | - | (24) | - | (24) |
| Depreciation | 19.791 | 21.108 | 3.542 | 3.515 |
| Government grant income for exports | (1.115) | (798) | - | - |
| Total | 385.412 | 363.545 | 61.514 | 46.485 |
| Categorized as: | ||||
| Cost of goods sold | 339.996 | 318.508 | 39.064 | 24.728 |
| Administration expenses | 21.095 | 22.157 | 15.133 | 15.243 |
| Selling, distribution & marketing expenses | 20.736 | 19.142 | 4.669 | 4.141 |
| Depreciation allocated to: | Consolidated | Parent Company | ||
|---|---|---|---|---|
| 31.12.2018 | 31.12.2017 | 31.12.2018 | 31.12.2017 | |
| Cost of goods sold | 14.795 | 15.294 | 326 | 434 |
| Administration expenses | 2.500 | 3.039 | 1.139 | 1.131 |
| Selling, distribution & marketing expenses | 144 | 158 | 71 | 71 |
| Research & development expenses | 2.352 | 2.617 | 2.006 | 1.879 |
| Total | 19.791 | 21.108 | 3.542 | 3.515 |
3.585 3.738 2.648 2.373 385.412 363.545 61.514 46.485
Audit fees and other services of the auditor:
Research & development expenses
Total
Audit and other fees charged in the income statement concerning the audit firm PricewaterhouseCoopers and its network in Greece, were as follows, in € 000's:
| 2018 | 2017 | |
|---|---|---|
| Audit fees | 200 | 397 |
| Tax certificate | 70 | 75 |
| Other fees | 73 | 378 |
| Total fees | 343 | 850 |
| Note 31 - Provisions for other liabilities & charges | ||||
|---|---|---|---|---|
| -- | ------------------------------------------------------ | -- | -- | -- |
| Consolidated | Parent Company | |||
|---|---|---|---|---|
| 31.12.2018 | 31.12.2017 | 31.12.2018 | 31.12.2017 | |
| Provisions for warranties | 2.689 | 3.356 | - | - |
| Other provisions | 779 | 554 | - | - |
| Total provision for other liabilities and charges | 3.468 | 3.910 | - | - |
| Provisions for Warranties | Consolidated | Parent Company | ||
|---|---|---|---|---|
| 31.12.2018 | 31.12.2017 | 31.12.2018 | 31.12.2017 | |
| Opening balance | 3.356 | 2.904 | - | - |
| Additional provision for the year | 220 | 1.377 | - | - |
| Unused amounts reversed | (849) | (592) | - | - |
| Charged to income statement | (629) | 785 | - | - |
| Utilized during the year | - | (218) | - | - |
| Exchange difference | (38) | (115) | - | - |
| Closing balance | 2.689 | 3.356 | - | - |
As at 31 December 2018 the total provision is consistent with the Group's warranty policy and assumes that no extraordinary quality control issues will arise on the basis that no such indicators exist as at the date of approval of these financial statements.
| Other Provisions | Consolidated | Parent Company | |||
|---|---|---|---|---|---|
| 31.12.2018 | 31.12.2017 | 31.12.2018 | 31.12.2017 | ||
| Opening balance | 554 | 616 | - | 56 | |
| Additional provision for the year | 38 | 36 | - | - | |
| Unused amounts reversed | (18) | (56) | - | (56) | |
| Charged to income statement | 20 | (20) | - | (56) | |
| Utilized during the year | 227 | - | - | - | |
| Exchange difference | (22) | (42) | - | - | |
| Closing balance | 779 | 554 | - | - |
The category "Other provisions" includes mainly provisions for taxes on sales.
| Total provisions for other liabilities & charges | 3.468 | 3.910 | - | - |
|---|---|---|---|---|
| Consolidated | Parent Company | |||
|---|---|---|---|---|
| 31.12.2018 | 31.12.2017 | 31.12.2018 | 31.12.2017 | |
| Retirement benefit | 6.582 | 14.510 | 5.480 | 5.056 |
| Total retirement benefit obligations | 6.582 | 14.510 | 5.480 | 5.056 |
| The amounts recognized in the income statement | Consolidated | Parent Company | ||
|---|---|---|---|---|
| are as follows: | 31.12.2018 | 31.12.2017 | 31.12.2018 | 31.12.2017 |
| Current service cost | 818 | 1.027 | 203 | 241 |
| Interest cost | 1.216 | 1.210 | 80 | 85 |
| Past service cost | 448 | 120 | 345 | 279 |
| Other Expenses (income) | (2.608) | - | - | - |
| Total | (126) | 2.357 | 628 | 605 |
| Movement in the net liability recognized on the | Consolidated | Parent Company | ||
|---|---|---|---|---|
| balance sheet: | 31.12.2018 | 31.12.2017 | 31.12.2018 | 31.12.2017 |
| Net liability at the beginning of the period | 14.510 | 16.536 | 5.056 | 5.088 |
| Benefits paid | (8.182) | (1.106) | (617) | (585) |
| Total expenses recognized in the income statement | (126) | 2.357 | 628 | 605 |
| Total expenses recognized in the income statement / | ||||
| Discontinued operations | - | 204 | - | - |
| Total amount recognized in the OCI | 413 | (40) | 413 | (52) |
| Exchange difference | (33) | (1.681) | - | - |
| Net liability at the end of the period | 6.582 | 16.270 | 5.480 | 5.056 |
| Liabilities directly associated with assets classified as held | ||||
| for sale | - | (1.760) | - | - |
| Net liability at the end of the period | 6.582 | 14.510 | 5.480 | 5.056 |
| Main assumptions used: | Consolidated | Parent Company | ||
|---|---|---|---|---|
| 31.12.2018 | 31.12.2017 | 31.12.2018 | 31.12.2017 | |
| Discount rate | 2,62% | 7,52% | 1,73% | 1,58% |
| Salary increase | 2,48% | 9,01% | 1,75% | 1,75% |
| Plan duration | 17,04 | 10,76 | 14,20 | 15,12 |
The components of recognized actuarial
| Consolidated | Parent Company | ||||
|---|---|---|---|---|---|
| 31.12.2018 | 31.12.2017 | 31.12.2018 | 31.12.2017 | ||
| Change in financial and other assumptions | 413 | (40) | 413 | (52) | |
| Recognized actuarial |
413 | (40) | 413 | (52) |
The major defined benefit plans of the Group are those of the Greek and Nigerian entities, which are subject to the local legislation.
Employees of Frigoglass subsidiaries in Greece and Nigeria are entitled to retirement indemnities, generally based on the employee's length of service, employment category and remuneration.
These are unfunded plans with obligation of payment at the date when they fall due.
The liabilities arising from such obligations are valued by independent firm of actuaries. The last actuarial valuations were undertaken in December 2018.
The Defined Pension scheme in Nigeria was a voluntary scheme by the company and based on agreement between Unions and the management of the 3 companies located in Nigeria. There was no legal requirement to have a Pension scheme in Nigeria. Following various discussions, after 2017, with the Employee Unions on managing the pension sceme, the Company entered into an Agreement with the Unions.
The Agreement with the Unions confirmed that the scheme will be discontinued with effect from 01.01.2019, and all outstanding liabilities per employee as of 31.12.2018 will be settled in the month of December 2018.
Consequently all the pension scheme liabilities per employee were settled in December 2018 and paid directly to the employees. During settlement a gain of € 2,6 mil. arose.
A quantitative sensitivity analysis for significant assumptions is shown below:
| Consolidated | Parent Company | |||
|---|---|---|---|---|
| 31.12.2018 31.12.2017 |
31.12.2018 | 31.12.2017 | ||
| Discount rate 0,5% higher | (431) | (412) | (359) | (355) |
| Discount rate 0,5% lower | 463 | 461 | 391 | 388 |
In the following 12 months no significant cash outflows are expected.
| Consolidated | ||||||
|---|---|---|---|---|---|---|
| Deferred tax asset | Tax losses carried forward |
Provisions & Liabilities |
Pensions & employee benefit plan |
Unrealized exchange differences |
Other | Total |
| Balance at 01.01.2018 | 840 | 2.476 | 2.666 | 95 | 6 | 6.083 |
| Charged to income statement | (852) | (611) | (2.705) | 1.745 | 148 | (2.275) |
| Exchange differences | 12 | 58 | 39 | 90 | (20) | 179 |
| Balance at 31.12.2018 | - | 1.923 | - | 1.930 | 134 | 3.987 |
| Deferred tax liabilities | Accelerated tax depreciation |
Unrealized exchange differences |
Other | Total |
|---|---|---|---|---|
| Balance at 01.01.2018 | 11.938 | 6.228 | 18 | 18.184 |
| Charged to income statement | 991 | 475 | (5) | 1.461 |
| Exchange differences | 338 | 304 | (2) | 640 |
| Balance at 31.12.2018 | 13.267 | 7.007 | 11 | 20.285 |
| Net deferred tax asset / (liability) | (16.298) |
|---|---|
| Consolidated | |||
|---|---|---|---|
| Closing balance at: | 31.12.2018 | 31.12.2017 | |
| Deferred tax assets | 400 | 1.432 | |
| Deferred tax liabilities | 16.698 | 13.533 | |
| Net deferred tax asset / (liability) | (16.298) | (12.101) | |
| Consolidated | ||||||
|---|---|---|---|---|---|---|
| Deferred tax asset | Tax losses carried forward |
Provisions & Liabilities |
Pensions & employee benefit plan |
Unrealized exchange differences |
Other | Total |
| Balance at 01.01.2017 | - | 2.590 | 2.698 | 1.669 | 4 | 6.961 |
| Charged to income statement | 891 | (112) | 366 | (1.499) | 4 | (350) |
| Charged to equity | - | - | (55) | - | - | (55) |
| Exchange differences | (51) | (2) | (343) | (75) | (2) | (473) |
| Balance at 31.12.2017 | 840 | 2.476 | 2.666 | 95 | 6 | 6.083 |
| Deferred tax liabilities | Accelerated tax depreciation |
Unrealized exchange differences |
Other | Total |
|---|---|---|---|---|
| Balance at 01.01.2017 | 14.295 | 7.326 | 14 | 21.635 |
| Charged to income statement | (1.198) | (215) | 4 | (1.409) |
| Exchange differences | (1.159) | (883) | - | (2.042) |
| Balance at 31.12.2017 | 11.938 | 6.228 | 18 | 18.184 |
Net deferred tax asset / (liability)
(12.101)
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against tax liabilities and when the deferred income taxes relate to the same fiscal authority. The majority portion of deferred tax asset / liability is to be recovered after more than 12 months. The Group recognised a deferred tax asset with respect to tax losses carried forward only to the extend that it believes can be utilised in the immediate future.
Bank credit rating (S&P, Fitch, Moody's rating)
| Consolidated | Parent Company | ||||
|---|---|---|---|---|---|
| 31.12.2018 | 31.12.2017 | 31.12.2018 | 31.12.2017 | ||
| BBB+ | Citibank | 1.395 | 1.456 | 18 | 15 |
| Β | I.B.T.C ( Stanbic ) | 27.025 | 29.010 | - | - |
| Α | HSBC | 4.809 | 8.991 | 616 | 544 |
| BBB+ | China Merchand Bank ( CMB ) | 4 | 133 | - | - |
| AA- | TD Bank | - | 613 | - | - |
| BBB+ | First National Bank (S.Africa) | 286 | 1.451 | - | - |
| CCC+ | Alpha Bank | 833 | 4.860 | 125 | 106 |
| Ba2 | Sberbank | 8.747 | 3.170 | - | - |
| CCC+ | Eurobank Ergasias | 2.982 | 946 | 1.554 | 325 |
| Α+ | D n B Nor Bank (Norway) | 687 | 725 | - | - |
| Baa1 | ING Group | 494 | 61 | - | - |
| N/A | Other Banks | 1.788 | 1.706 | 38 | 7 |
| Total | 49.050 | 53.122 | 2.351 | 997 |
| Bank credit rating (S&P, Fitch, Moody's rating) | Consolidated | Parent Company | |||
|---|---|---|---|---|---|
| 31.12.2018 | 31.12.2017 | 31.12.2018 | 31.12.2017 | ||
| N/A | Bond loan | 174.984 | 177.929 | 26.480 | 33.702 |
| BBB+ | Citibank | 9.928 | 9.330 | - | - |
| Β | I.B.T.C ( Stanbic ) | 4.161 | 2.857 | - | - |
| Α | HSBC | 21.958 | 23.369 | - | - |
| CCC+ | Alpha Bank | 17.479 | 18.359 | - | - |
| Ba2 | Sberbank | 30.000 | 27.000 | - | - |
| CCC+ | Eurobank Ergasias | 13.650 | 14.427 | - | - |
| N/A | Other Banks | 3.099 | 2.584 | - | - |
| Total | 275.259 | 275.855 | 26.480 | 33.702 |
The Group has available sufficient credit facilities and is also able to obtain new facilities to cover both operational requirements as well as any strategic expansion initiatives.
| Less than 1 | Between 1 | Between 2 & | |
|---|---|---|---|
| year | & 2 years | 5 years | |
| Consolidated 31.12.2018 | |||
| Trade creditors | 77.643 | - | - |
| Other creditors | |||
| (excluding taxes -duties & social security insurance | |||
| payable ) | 44.788 | - | - |
| Loans | 61.407 | 12.418 | 245.383 |
| Consolidated 31.12.2017 | |||
| Trade creditors | 60.985 | - | - |
| Other creditors | |||
| (excluding taxes -duties & social security insurance | |||
| payable ) | 36.323 | - | - |
| Loans | 56.572 | 12.647 | 263.766 |
| Parent Company 31.12.2018 | |||
| Trade creditors | 6.052 | - | - |
| Other creditors | |||
| ( excluding taxes -duties & social security insurance | |||
| payable ) | 4.064 | - | - |
| Loans | 1.562 | 1.562 | 29.604 |
| Parent Company 31.12.2017 | |||
| Trade creditors | 3.745 | - | - |
| Other creditors | |||
| ( excluding taxes -duties & social security insurance | |||
| payable ) | 4.256 | - | - |
| Loans | 1.987 | 1.987 | 39.664 |
The Group uses certain Alternative Performance Measures ("APMs") in making financial, operating and planning decisions, as well as, in evaluating and reporting its performance. These APMs provide additional insights and understanding to the Group's operating and financial performance, financial condition and cash flow. The APMs should be read in conjunction with and do not replace by any means the directly reconcilable IFRS line items.
In discussing the performance of the Group, certain measures are used, which are calculated by deducting from the directly reconcilable amounts of the Financial Statements the impact of restructuring costs. In this context, we are focusing on the APMs from Continuing Operations, while we also present Discontinued Operations for reconciliation purposes.
Restructuring costs comprise costs arising from significant changes in the way the Group conducts business, such as the discontinuation of manufacturing operations, as well as expenses related to the Group's capital restructuring, debt write‐off and gains from the conversion of the convertible bonds. These costs are included in the Company's/Group's Income Statement, while the payment of these expenses are included in the Cash Flow Statement. However, they are excluded from the results in order for the user to obtain a better understanding of the Group's operating and financial performance achieved from ongoing activity.
EBITDA is calculated by adding back to profit before income tax, the depreciation, the impairment of property, plant and equipment and intangible assets and net finance cost/income. EBITDA margin (%) is defined as EBITDA divided by Net Sales Revenue.
(in € 000's) 4Q18 4Q17 FY18 FY17 Profit / (Loss) before income tax (2,568) 76,526 13,103 50,333 Depreciation 5,251 5,343 19,791 21,108 Restructuring costs 4 (70,799) 301 (38,243) Finance costs 5,352 3,081 21,167 19,304 Impairment of fixed assets and goodwill (4) 1,607 2,071 1,607 EBITDA 8,035 15,758 56,433 54,109 Net sales revenue 88,885 106,230 417,297 386,049 EBITDA margin, % 9.0% 14.8% 13.5% 14.0%
EBITDA is intended to provide useful information to analyze the Group's operating performance.
Net Trade Working Capital is calculated by subtracting Trade Payables from the sum of Inventories and Trade Receivables. The Group presents Net Trade Working Capital because it believes the measure assists users of the financial statements to better understand its short term liquidity and efficiency.
| 31 December | 31 December | |
|---|---|---|
| (in € 000's) | 2018 | 2017 |
| Continuing operations | ||
| Trade debtors | 77,606 | 84,824 |
| Inventories | 101,739 | 89,075 |
| Trade creditors | 77,643 | 60,985 |
| Net Trade Working Capital | 101,702 | 112,914 |
Free cash flow is an APM used by the Group and defined as cash generated by operating activities after cash generated from investing activities. Free cash flow is intended to measure the cash generation from the Group's business, based on operating activities, including the efficient use of working capital and taking into account the purchases of property, plant and equipment and intangible assets. The Group presents free cash flow because it believes the measure assists users of the financial statements in understanding the Group's cash generating performance as well as availability for interest payment, dividend distribution and own retention.
| (in € 000's) | FY18 | ||
|---|---|---|---|
| Continuing operations |
Discontinued operations |
Reported | |
| Net cash from operating activities | 43,786 | (3,100) | 40,686 |
| Net cash from investing activities | (33,363) | (359) | (33,722) |
| Free Cash Flow | 10,423 | (3,459) | 6,964 |
| (in € 000's) | FY17 | ||
|---|---|---|---|
| Continuing operations |
Discontinued operations |
Reported | |
| Net cash from operating activities | (30,468) | (2,889) | (33,357) |
| Net cash from investing activities | (8,050) | (861) | (8,911) |
| Free Cash Flow | (38,518) | (3,750) | (42,268) |
Adjusted Free Cash Flow facilitates comparability of Cash Flow generation with other companies, as well as enhances the comparability of information between reporting periods. Adjusted Free Cash Flow is calculated by excluding from the Free Cash Flow (defined above) the restructuring related cost, the proceeds from disposal of property, plant and equipment (PPE), the payment of pension scheme in Nigeria and the proceeds from the sales of discontinued operations.
| FY18 | ||
|---|---|---|
| Continuing operations |
Discontinued operations |
Reported |
| 10,423 | (3,459) | 6,964 |
| 838 | 838 | |
| 7,311 | 7,311 | |
| (972) | (972) | |
| (1,530) | (1,530) | |
| 16,070 | (3,459) | 12,611 |
| (in € 000's) | FY17 | ||
|---|---|---|---|
| Continuing operations |
Discontinued operations |
Reported | |
| Free Cash Flow | (38,518) | (3,750) | (42,268) |
| Restructuring Costs | 45,463 | 45,463 | |
| Payment of Pension Scheme in Nigeria | 495 | 495 | |
| Proceeds from disposal of PPE | (10,318) | (10,318) | |
| Adjusted Free Cash Flow | (2,878) | (3,750) | (6,628) |
Net debt is an APM used by Management to evaluate the Group's capital structure and leverage. Net debt is defined as long‐term borrowings plus short‐term borrowings less cash and cash equivalents as illustrated below.
| 31 December | 31 December | |
|---|---|---|
| (in € 000's) | 2018 | 2017 |
| Continuing operations | ||
| Long‐term borrowings | 227,998 | 233,414 |
| Short‐term borrowings | 47,261 | 42,441 |
| Cash and cash equivalents | 49,057 | 53,130 |
| Net Debt | 226,202 | 222,725 |
Capital expenditure is defined as the purchases of property, plant and equipment and intangible assets. The Group uses capital expenditure as an APM to ensure that capital spending is in line with its overall strategy for the use of cash.
| (in € 000's) | FY18 | ||
|---|---|---|---|
| Continuing | Discontinued | ||
| operations | operations | Reported | |
| Purchase of PPE | (31,289) | (359) | (31,648) |
| Purchase of intangible assets | (4,576) | (4,576) | |
| Capital expenditure | (35,865) | (359) | (36,224) |
| (in € 000's) | FY17 | ||
|---|---|---|---|
| Continuing | Discontinued | ||
| operations | operations | Reported | |
| Purchase of PPE | (16,222) | (1,127) | (17,349) |
| Purchase of intangible assets | (1,880) | (1,880) | |
| Capital expenditure | (18,102) | (1,127) | (19,229) |
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