Annual Report • Sep 23, 2015
Annual Report
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Titan Cement Company S.A. and its Subsidiaries Group Annual Financial Statements For the year ended 31 December 2009
Titan Cement Company S.A. Company's No 6013/06/Β/86/90 in the register of Societes Anonymes 22A Halkidos Str. - 111 43 Athens
Titan Cement Company S.A.
| a) Statements of Members of the Board of Directors |
1 |
|---|---|
| b) Report of the Board of Directors |
2 |
| c) Auditors' Report on the Financial Statements |
17 |
| d) Annual Financial Statements |
19 |
| e) Figures and information |
84 |
The Annual Financial Statements presented through pages 1 to 16 and 19 to 78 both for the Group and the Parent Company, have been approved by the Board of Directors on 18.03.2010.
Chairman of the Board of Directors Managing Director
ID No AB500997 ID No Ξ163588
ANDREAS L. CANELLOPOULOS DIMITRIOS TH. PAPALEXOPOYLOS
Chief Financial Officer Chief Accountant
Financial Consolidation Senior Manager
Pages
CHARALAMPOS G. MAZARAKIS EMM. CH. MAVRODIMITRAKIS ATHANASIOS S. DANAS
ID No ΑΕ096808 ID No Ν237613 ID No ΑΒ006812
(In accordance with article 4 of Law 3556/2007)
The members of the Board of Directors of TITAN CEMENT COMPANY S.A.:
In our above mentioned capacity declare that:
As far as we know:
Α) the enclosed financial statements of TITAN CEMENT COMPANY S.A. for the period of 1.1.2009 to 31.12.2009 drawn up in accordance with the applicable accounting standards, reflect in a true manner the assets and liabilities, equity and results of TITAN CEMENT COMPANY S.A. as well as of the businesses included in Group consolidation, taken as a whole.
Β) the enclosed report of the Board of Directors reflects in a true manner the development, performance and financial position of TITAN CEMENT COMPANY S.A., and of the businesses included in Group consolidation, taken as a whole, including the description of the principal risks and uncertainties.
Athens, 18 March 2010
Andreas Canellopoulos Dimitrios Papalexopoulos Nellos Canellopoulos Chairman of the Board Managing Director Board Member
2009 was a year marked by recession in the global economy, a result of the severe repercussions of the global financial crisis. According to the International Monetary Fund (IMF), economic activity contracted, with global Gross Domestic Product (GDP) declining by 0.8% (compared to a 3.0% increase in 2008), international trade declined by 12.3% (compared to a 2.8% increase in 2008) and the unemployment rate in the 30 OECD countries reaching 8.3% (compared to 6.1% in 2008). The unfavourable economic situation, coupled with the financial crisis and its repercussions on housing credit, had a severe negative impact on property markets and, by extension, on building activity.
The Group"s turnover in 2009 stood at €1361 million, a 13.8% decline compared to 2008. Earnings before interest, taxes, depreciation and amortisation (EBITDA) declined by 13.2% to €330 million. At constant exchange rates, Group turnover would have declined by 14.8% and Group EBITDA would have declined by 13.1%. Group net profit in 2009, after minority interests and the provision for taxes, stood at €123 million, a decline of 40.7% compared to 2008.
It should be noted that the extraordinary tax credit of €22.6 million recorded by the Group in 2008, as well as the extraordinary tax charge of €10.9 million in 2009 (according to law 3808/09, a social responsibility tax is imposed on Greek companies that had profit above €5.0 million for the fiscal year of 2008) also affect the comparison of net profit after tax and minority interests between 2008 and 2009. Net of these two effects, net profit declined by 27.6% and stood at €134.3 million.
This decline is primarily due to the contraction in cement consumption in the USA and Greece for the fourth and third consecutive year respectively, as well as the abrupt downturn in Southeastern European markets, which exerted intense pressures on the Group"s profitability.
The growth in cement consumption in Egypt, coupled with the Group"s increase of its production capacity in the country as of the end of the last quarter of 2009, only partially offset the downward pressures on Group profitability. The significant decline in solid fuel prices had a positive impact on Group results, especially in the second half of 2009.
In the USA, the housing market continued to decline throughout 2009. The significant increase in unemployment (9.3% in 2009 compared to 5.8% in 2008), the decline in the value of household assets, the credit squeeze and the overall cautious stance owing to the unfavourable economic conditions, all contributed to a significant decline in demand for housing. Additionally, the already large inventory of homes grew as more homes were foreclosed, thereby adding to the excess supply of housing stock. As a result of all the above, housing starts recorded their lowest level in the last 50 years. According to the Portland Cement Association (PCA), housing starts declined by 39% in 2009, resulting in an attendant sharp decline in demand for building materials. All these negative factors are reflected in the significant property price corrections as recorded in 20 major cities by the S&P / Case Shiller Composite – 20 Home Price Index which declined by 19.0% in January 2009 compared to January 2008 reaching a decline of 3.1% in December 2009 compared to December 2008. The financial stimulus package approved in February 2009 did not flow through quickly enough to substantially affect cement consumption in the course of 2009 during which only 21% of the total ARRA* funds were absorbed. According to the Portland Cement Association, cement consumption in the USA fell by 27% in 2009 compared to 2008. In Florida, which represents a significant portion of the Group"s US operations, consumption fell by 37% in 2009 compared to 2008.
Overall and taking account of the effects of foreign exchange differences, the Group"s turnover in the USA declined by 24.4% in 2009 compared to 2008, to €366 million and earnings before interest, taxes, depreciation and amortisation (EBITDA) declined by 39.9% to €26 million.
Despite the major decline in cement consumption in the USA, it is noteworthy that the Group"s company, Separation Technologies LLC (ST) reported a marginal increase in sales. Separation Technologies LLC is engaged in the installation and running of fly ash processing units. The globally innovative, "green" technology employed by ST converts fly ash – an industrial waste product resulting from the incineration of coal used to generate energy – into a useful re-usable product. In 2009 ST continued to expand by opening a new plant in Europe and by commencing construction work on a second plant.
Building activity in Greece contracted significantly in 2009. According to the National Statistical Service of Greece, the volume of building activity as per building permits issued in 2009 decreased by 26% compared to 2008 directly affecting cement consumption which it is estimated, declined by a similar amount. The significant decline in building activity resulted from the contraction in demand for housing amidst the worsening of the economic climate – affecting potential buyers" sentiment and curtailing credit – as well as the large housing stock built-up which resulted form the peak in building activity in the period 2005-2006. The decline in the domestic market was only partially offset by the increase in exports.
As a result, turnover in Greece and Western Europe declined by 20.3% in 2009 compared to 2008, and stood at €504 million. EBITDA fell by 24.2% compared to 2008 and stood at €128 million.
The global economic recession had a substantial negative impact on Southeastern Europe. After several years of rapid development, the economies of Southeastern Europe suddenly began to slow down in 2009 which translated negatively for building activity, and consequently on the demand for building materials. This resulted in a 24.9% decline in turnover compared to 2008 to €216 million while EBITDA declined by 30.0% to €74 million. The Group"s position in the wider region will be enhanced with the addition of a new cement plant with a 1.5 million tonne capacity in Albania which will commence operations in the second quarter of 2010.
Lastly, in the Eastern Mediterranean, the acquisitions which took place in 2008 coupled with the major increase in cement consumption in Egypt led to a significant improvement in financial results for 2009. Turnover in the Group"s Eastern Mediterranean division increased by 57.6% in 2009 compared to 2008, reaching €275 million. EBITDA increased by 61.6% to €103 million. In November 2009, the second production line at the Beni Suef plant in Egypt, with a capacity of 1.5 million tonnes became operational, allowing the Group to cater to the increasing market demand in Egypt.
Group administrative, operating and selling expenses in 2009 declined by 11.7% compared to 2008, reaching €128 million, which reflects the Group"s continuing efforts towards cost containment.
During 2009 the Group continued to make investments to expand its activities and to modernise its facilities. In 2009 total capex investment reached €166 million. The most important of these investments are set out in the "EXPANSION OF OPERATIONS – INVESTMENTS" section of this report.
In the course of 2009, the Group focused on reducing external borrowing by limiting investments and keeping tighter control over working capital. Group net debt declined from €1,114 million in December 2008 to €971 million in December 2009. Financial expenses in 2009 stood at €59 million, a 2.2% decline over 2008.
*American Recovery and Reinvestment Act of 2009
On 30.7.2009 the Group completed the offering of a 4-year tenure, €200 million nominal value notes, with an annual coupon of 6.90%, issued by its subsidiary TITAN GLOBAL FINANCE PLC and guaranteed by Titan Cement Company S.A. The notes have been listed on the regulated market of the Luxembourg Stock Exchange.
During the year, the credit rating agency Standard & Poor"s upgraded the Group"s outlook twice: the first time was in the first quarter, from negative credit watch to stable outlook and the second time, in the last quarter, from stable to positive outlook. The Group"s long term rating continues to be BB+.
The Group has granted to non controlling interest shareholders, European Bank for Reconstruction and Development (EBRD) and International Finance Corporation (IFC) the option to have the Group to purchase their shares in ANTEA Cement SHA at predetermined conditions. On 31.12.2009 the put option"s fair value recognized as liability is € 19.4 million.
As per resolution dated 17.12.2009 of the Board of Directors, the share capital of the Company was increased in cash by €117,376 with the issuance of 29,344 new registered common shares, of a nominal value of €4.00 each, following the exercise by senior executives of Titan Group of stock option rights granted to them in implementation of Stock Option Plans that have been approved by resolutions dated 8.6.2004 and 29.5.2007 of the General Meeting of Shareholders.
Pursuant to its Board of Directors resolutions dated 24.6.2009 and 14.10.2009, the Company completed between 25.6.2009 and 31.12.2009 the sale through the Athens Stock Exchange of 18.403 treasury common shares, representing 0.022% of the Company"s paid up Share Capital, at an average sale price equal to €20.90 per share, within the three year statutory period commencing from the date they were acquired by the Company. The total number of its own shares that the Company holds as at 31.12.2009 is 3,175,213 of aggregate value €91,622 thousand and they have been deducted from the Shareholders Equity of the Group and the Company.
Titan Cement S.A."s share closed on 31.12.2009 at a price of €20.32, an increase of 46.2% from that of the end of last year. Titan"s share significantly outperformed the General Index of the Athens Stock Exchange which posted a 22.9% increase in the same period.
On 6 July 2009 the Company paid out the amount of €35 million as dividend for fiscal year 2008.
The Board of Directors will propose to the Annual General Meeting of Shareholders, the distribution of dividend of €0.18 per share (2008: €0.42) for the financial year 2009. Dividend proposed relates to all issued shares (84,576,118) as of 31.12.2009 and is expected to be ratified at the Annual General Meeting to be held in May 2010. According to article 16 of Greek law 2190/1920, dividend amount relating to treasury shares is distributed to the remaining shareholders.
Τhe Group"s voluntary commitment to corporate social responsibility and sustainable development has been embedded in its values and integrated in its strategy and standards.
In 2009 the Group made progress in safety at work which is always at the heart of its endeavours, moving towards our goal of zero accidents. A noteworthy example was the completion of two large and demanding construction projects in Egypt and Albania, on which more than 3,000 people worked for more than two years, without a single accident.
In respect to sustainable development, the Group"s endeavours focused on mitigating and reducing the impact of its operations so as to do less harm and on positive contribution so as to do more good. Notwithstanding the outcome of the climate change negotiations at global level, the Group continues to reduce emissions by investing in innovation, energy and raw materials savings and the use of alternative fuels.
Having met the targets set in 2005 for a 15% reduction in Group CO2 emissions per tonne of cement compared to 1990 (in line with the Kyoto protocol), in 2009 the Group revised its targets for the next five-year period.
2009 was the end year of a decade of many initiatives undertaken by the Group to foster partnerships at national, sectoral, European and international level, as well as to enhance transparency, credibility and stakeholder engagement in line with international standards and best practice.
Among others, the Group participated in the U.N. Global Compact "Seal the Deal" Campaign for the Copenhagen Summit, and developed a new partnership in Egypt focused on education and provision of better nutrition for children of poor families. In addition, a number of training courses were organised in Albania for employees that will staff the new cement production plant. A certified technical training centre was set up in the region where the new plant will operate, in order to provide opportunities for training of technicians, electricians and other related areas of specialisation to local people.
The Group"s long-standing commitment to live in practice the principles and values which it has adopted, have been recognised in many ways by stakeholder groups in 2009. For the second consecutive year, TITAN was ranked top in the list of the Accountability Rating Greece and achieved the No. 1 position in Europe and No. 8 position in the world in the "Top Company for Leaders" survey, a recognition for companies excelling in human resources and leadership skills development.
The World Bank and the European Development Bank have also recognised as an example of best practice the way TITAN has integrated and implemented corporate social responsibility and sustainable development in the construction of the new cement plant in Albania.
During 2009 construction continued on two major projects which seek to further increase the Group's production capacity in developing countries with favourable demographic and development prospects.
The first of these regards the construction of the second line at the Beni Suef plant in Egypt (with a capacity of 1.5 million tonnes per annum) which was completed in November 2009. Total investment outlay for the project in 2009 amounted to €133 million.
The second project was the construction of a new plant of with a 1.5 tonne annual production capacity, in Kruje, Albania. Total investment outlay for the project in 2009 amounted to €153 million. The plant has already commenced operation in March 2010.
On 22.4.2009, the Group acquired with public offer the 3.6529% of Titan's Cementara Kosjeric A.D. in Serbia by paying the amount of € 2.6 m. After this acquisition the Group now owns the total share capital of the above mentioned subsidiary.
On 3.6.2009 the Group acquired 25% of the Pozolani S.A. shares for the amount of € 0.5 m.. On 23.12.2009, the Group completed the acquisition Pozolani S.A. by purchasing the remaining 75% of Pozolani S.A. shares for the amount of € 1.3 m. Pozonali S.A. was accounted for with equity consolidation method till 23.12.2009 and after that it is included in the Group's financial statements with the full consolidation method.
On 30.12.2009 the Group acquired 99% of the shares of Tanagra Quarries S.A. for the amount of € 9.2 m, which was included in the Group's financial statements with the full consolidation method.
The goodwill which arose from the acquisitions that took place in the fiscal year 2009 was amounted to €9.7m. The finalization of the goodwill will be completed within twelve months from the dates of acquisitions.
The U.S. Army Corps of Engineers (ACE) published on February 1, 2010 a Record of Decision (ROD) that paves the way for new mining permits in the Lake Belt area of Miami-Dade, Florida. The ROD pertains to nine ACE permit applications held by several companies, including Group's subsidiary, Tarmac America. Tarmac America operates a limestone quarry and a large cement plant in the Lakebelt area.
The ROD marks the conclusion of a 3-year process, following a Federal-Court-mandated Supplemental Environmental Impact Study (SEIS). The SEIS, which was issued for public comment in May 2009, addresses the issues raised by the District and subsequent Appellate Court decisions. It affirms the company"s long standing conviction that limestone mining, which provides a valuable base for future economic growth and jobs in Florida, can be conducted in ways that respect the environment.
The Tarmac America expects to soon receive its mining permit. This will not have a significant impact on current operations and profitability, within the context of current depressed market conditions. However, it removes a source of uncertainty and allows to the Group a longer term focus on operating excellence and environmental stewardship, consistent with its values.
Pursuant to its Board of Directors resolution dated 12.1.2010, the Company proceeded to the sale through the Athens Stock Exchange and between 13.1.2010 and 18.3.2010 of 15,597 treasury common shares, representing 0.018 % of the Company"s paid up Share Capital, at an average sale price equal to € 20.65 per share. The sale of these treasury shares was held within the three year statutory period commencing from the date they were acquired by the Company. After this sale, all treasury shares currently held by the Company amount to 3,159,616 (3,153,697 common and 5,919 preferred) of nominal value € 4.00 each, which represent 3.74% of the issued share capital of the Company.
The Company is in advanced procedures for the renewal of a loan that amounts €125 million and matures in March 2010. From this loan, €50 million is expected to be renewed for four years and €75 million for two years.
There is a restrained sense of optimism about the world economy in 2010 although the current uncertainty renders formulating any forecast very challenging. Recovery is expected to be fragile and slow, with emerging and developing economies recording a GDP growth rate triple that of developed economies. According to the International Monetary Fund, the rate of growth in emerging and developing economies is expected to be around 6.0% while that in developed economies is expected to be around 2.1%, which is also reflected in the prospects for building activity in those economies. As far as far as demand for building materials is concerned, we expect in general, growth in the emerging and developing economies and stagnation or decline in the developed economies.
In Greece, we expect a further decline in building activity and consequently in the consumption of cement and other building materials. The squeeze on the spending power of citizens resulting from the measures to restructure and reform the Greek economy, coupled with the uncertainty arising from the exceptionally unfavourable economic conditions and the tightness of credit, are expected to result in a further decline in demand for real estate. At the same time, housing stock remains high and it is very unlikely that it will be absorbed over the course of the year.
In the USA we do not expect a significant upturn in building activity in 2010. For 2010, Portland Cement Association forecasts a 5% increase on the 2009 depressed cement consumption levels. This increase incorporates the potential impact of the measures taken by the US government to bolster the housing market and stimulate public works. Any increase, is expected to actually occur in the second half of 2010 given that decline in consumption continues throughout the initial months of the year
No substantive changes compared to 2009 are expected in Southeastern European markets in terms of building activity. We expect that building materials consumption in the region will continue to run at low levels. However, Group results will be enhanced by the commencement of operations of the 1.5 million tonnes capacity plant in Albania.
In Egypt, demand for cement is expected to grow further but at a rate below that recorded in 2009. That, coupled with the Group"s increased production capacity thanks to the new production line which became operational in November 2009 at the Beni Suef plant, is expected to positively impact the Group"s results in the region.
In Turkey, we expect the market to begin recovering in 2010.
Fuel prices have begun to rise and if this continues during 2010 it is expected to have a negative impact on the Group"s results in the second half of 2010.
The Group will continue to focus on reducing external borrowing by limiting investments and keeping working capital under check. The efforts at cost-containment undertaken by the Group during 2009 will also continue in 2010.
The Group remains committed to its four strategic priorities, which are geographical spread, continued improvements in competitiveness, vertical integration of Group operations and a focus on both human resources and corporate social responsibility.
Financial risk factors: Group operations give rise to various financial risks including foreign exchange and interest rate risks, credit risks and liquidity risks. The Group"s overall risk management programme focuses on financial market fluctuations and aims to minimise the potential unfavourable impacts of those fluctuations on its financial performance. The Group does not engage in speculative transactions or transactions which are not related to commercial, investing or borrowing activities.
The financial products used by the Group are primarily bank deposits, loans, foreign currency transactions at spot prices or futures, bank overdrafts, accounts receivable and payable, investments in securities, dividends payable and liabilities arising from financial leases.
Liquidity Risk: Prudent liquidity management is achieved by employing a suitable mix of liquid cash assets and approved bank credit facilities. The Group manages the risks which could arise from the lack of adequate liquidity by ensuring that there are always secured bank credit facilities in place ready for use. Existing unused approved bank credit limits available to the Group are adequate to confront any possible shortfall in cash assets.
Interest rate risk: The fact that 28% of total Group debt is based on fixed, pre-agreed interest rates and an additional 51% is based on pre-agreed interest rate spreads means that the impact of changes in liquidity on money supply, on P&L and on cash flows from Group"s operating activities is small. This is demonstrated in the sensitivity analysis below:
| Sensitivity Analysis of Group's Borrowings due to Interest Rate Changes (all amounts in Euro thousands) |
Interest Rate Variation |
Effect on profit before tax |
|
|---|---|---|---|
| Year ended 31 December 2009 | EUR | 1,0% | -5.116 |
| -1,0% | 5.116 | ||
| USD | 1,0% | -1.520 | |
| -1,0% | 1.520 | ||
| GBP | 1,0% | - | |
| -1,0% | - | ||
| 1,0% | -313 | ||
| BGN | -1,0% | 313 | |
| EGP | 1,0% | -205 | |
| -1,0% | 205 | ||
| Year ended 31 December 2008 | EUR | 1,0% | -7.919 |
| -1,0% | 7.919 | ||
| 1,0% | -1.347 | ||
| USD | -1,0% | 1.347 | |
| GBP | 1,0% | - | |
| -1,0% | - | ||
| 1,0% | -282 | ||
| BGN | -1,0% | 282 | |
| 1,0% | -162 | ||
| EGP | -1,0% | 162 | |
| Note: Table above excludes the positive impact of interest received from deposits. |
Exposure to interest rate risk from liabilities and investments is monitored by making forecasts. Group financing has been developed in line with a pre-determined combination of fixed and floating rates to ameliorate the risk of a change in interest rates. The ratio of fixed to floating rates of Group"s net borrowing is determined based on market conditions, Group strategy and financing requirements. Occasionally interest rate derivatives may also be used, but solely to ameliorate the relevant risk and to change the said combination of fixed/floating rates, if that is considered necessary. In 2009 the Group used vanilla interest rate swaps for a period of 5 years. Using these derivatives, fixed interest rates now account for 31% of total Group borrowing.
Group policy is to constantly monitor interest rate trends and the duration of its financing needs. Consequently, decisions about duration, and the balance between fixed to floating cost of a new loan, etc. are taken on an ad-hoc basis. As a result, all short-term loans have been concluded with floating rates. Medium to long-term loans have been concluded partly with fixed and partly with floating rates.
Foreign Currency risk: Group exposure to exchange rate risk derives primarily from existing or expected cash flows in foreign currency (imports / exports) and from foreign investments. This risk is addressed in the context of approved policies.
FX risks are managed using natural hedges and FX forwards. Group policy is to use borrowing in the relevant currency (where feasible) as a hedge for investments in foreign subsidiaries whose equity is exposed to FX conversion risk. Thus, the FX risk for the equity of Group subsidiaries in the USA is partially hedged by concluding dollar-denominated loans.
In other markets where the Group operates, company financing needs are evaluated, and where feasible, financing is obtained in the same currency as the assets being financed. Exceptions to this are Turkey, Egypt and Albania, where Group investments are in Turkish Liras and Egyptian Pounds and Albanian Lek, whereas part of the financing is in Euro in Turkey and Albania, and in Yen in Egypt. The Group has decided that the cost of refinancing its liabilities from Euro to Turkish Liras and Albanian Lek and from Yen to Egyptian Pounds is not financially attractive for the time being. This issue will be re-examined at regular intervals. During 2009, Titan Global Finance granted a Euro loan to Titan America LLC, who hedged the FX differences by FX forward contracts for the same amount and tenor with the loan.
The table below refers to the sensitivity analysis of foreign exchange volatility to profit before tax and net assets:
| Sensitivity Analysis in Foreign Exchange Rate Changes | ||||
|---|---|---|---|---|
| (all amounts in Euro thousands) | Foreign Currency |
Increase/ Decrease of Foreign Currency vs. € |
Effect on Profit Before Tax |
Effect on equity |
| Year ended 31 December 2009 | 5% | -1.884 | 30.526 | |
| USD | -5% | 1.704 | -27.619 | |
| 5% | 1.017 | 2.633 | ||
| RSD | -5% | -920 | -2.382 | |
| 5% | 3.572 | 26.194 | ||
| EGP | -5% | -3.232 | -23.699 | |
| 5% | 45 | 442 | ||
| GBP | -5% | -41 | -400 | |
| TRY | 5% | -40 | 828 | |
| -5% | 37 | -749 | ||
| ALL | 5% | -500 | 2.419 | |
| -5% | 452 | -2.188 | ||
| Year ended 31 December 2008 | 5% | -1.336 | 33.456 | |
| USD | -5% | 1.209 | -30.270 | |
| RSD | 5% | 1.218 | 3.080 | |
| -5% | -1.102 | -2.786 | ||
| EGP | 5% | 1.734 | 25.593 | |
| -5% | -1.569 | -23.156 | ||
| GBP | 5% | 75 | 367 | |
| -5% | -68 | -332 | ||
| TRY | 5% | -86 | 871 | |
| -5% | 77 | -788 | ||
| ALL | 5% | -103 | 3.231 | |
| -5% | 93 | -2.923 |
Note: a) Calculation of "Effect on Profit before tax" is based on year average FX rates; calculation of "Effect on Equity" is based on year end FX rate changes b) The above sensitivity analysis is used on floating currencies and not on fixed.
Credit risk: The Group is not exposed to major credit risk. Customer receivables primarily come from a large, widespread customer base. The financial status of customers is constantly monitored by Group companies.
When considered necessary, additional collateral is requested to secure credit. Provisions for impairment losses are made for special credit risks. At the end of 2009, it is deemed that there are no significant credit risks which are not already covered by insurance as a guarantee for the credit extended or by a provision for doubtful receivables.
There is also potential credit risk from the cash and cash equivalents, investments and derivatives. In these cases, the risk may arise from the counterparty"s inability to meet its obligations to the Group. In order to minimise this credit risk, as part of the policies approved by the Board of Directors, the Group sets limits on the degree of exposure to each individual financial institution. Moreover, as far as deposit products are concerned, the Group only does business with recognised financial institutions with a high credit rating.
Transactions between the Group and the Company and related entities, as these are defined according to IAS 24, (related companies within the meaning of Article 42e of Codified Law 2190/1920) where undertaken as per ordinary market workings.
The most important transactions between the Company and related entities, are presented in the table below:
| Year ended 31 December 2009 | ||||
|---|---|---|---|---|
| (all amounts in Euro thousands) | ||||
| Amounts owed | Amounts owed | |||
| Group | Sales to related | Purchases from | by related | to related |
| parties | related parties | parties | parties | |
| Other related parties | - | 2.613 | - | 706 |
| Executives and members of the Board | - | - | 4 | 650 |
| - | 2.613 | 4 | 1.356 | |
| Amounts owed | Amounts owed | |||
| Company | Sales to related | Purchases from | by related | to related |
| parties | related parties | parties | parties | |
| Aeolian Maritime Company | 2 | 2.701 | - | 1.605 |
| Achaiki Maritime Company | 6 | 7.944 | - | 6.202 |
| Albacem S.A. | 1 | - | - | - |
| Interbeton Construction Materials S.A. | 46.835 | 5.884 | 15.658 | - |
| Intertitan Trading International S.A. | 6.251 | - | - | - |
| Ionia S.A. | 1.086 | 360 | 129 | - |
| Quarries Gournon S.A. | 2 | - | 814 | - |
| Naftitan S.A. | 66 | 767 | - | 422 |
| Polikos Maritime Company | - | - | - | 225 |
| Titan Cement International Trading S.A. | 5 | - | 270 | - |
| Fintitan SRL | 11.669 | - | 5.937 | - |
| Aemos Cement Ltd | - | - | 58 | - |
| Titan Cement U.K. Ltd | 6.761 | - | 2.261 | - |
| Usje Cementarnica AD | 6.419 | - | 51 | - |
| Beni Suef Cement Co.S.A.E. | 438 | 9 | 101 | - |
| Alexandria Portland Cement Co. S.A.E | 6.567 | - | 882 | - |
| Cementara Kosjeric AD | 75 | - | - | - |
| Zlatna Panega Cement AD | 1 | - | 3 | - |
| Τitan Αmerica LLC | 172 | 137 | - | 9 |
| Essex Cement Co. LLC | 10.964 | - | 1.224 | - |
| Alvacim Ltd | - | 105 | - | - |
| Antea Cement SHA | 29.190 | - | 8.683 | - |
| Titan Global Finance PLC | - | 22.832 | - | 637.217 |
| Ecobeton S.A. | 1.366 | - | 58 | - |
| TCK Montenegro DOO | 737 | - | 79 | - |
| Adocim Cimento Beton Sanayi ve Ticaret A.S. | 85 | - | - | - |
| Domiki Beton S.A. | 193 | |||
| Dancem APS | - | - | 26 | - |
| Cementi Crotone S.R.L. Other subsidiaries |
1.149 11 |
- - |
455 - |
- - |
| Other related parties | - | 2.613 | - | 706 |
| Executives and members of the Board | - | - | 4 | 650 |
| - | - | - | - | |
| 130.051 | 43.352 | 36.693 | 647.036 |
Regarding the transactions above, the following clarifications are made:
The revenue presented relates to sales of the company"s finished goods (cement and aggregates) to the aforementioned subsidiaries while purchases relate to purchases of raw materials and services by the company from the said subsidiaries.
Company liabilities primarily relate to three open loan agreements of €534 million maturing in 2011 at the Euribor rate plus a 1.35% spread per year, and one open loan agreement of €100 million maturing in 2013 at a fixed rate of 7.62% per year to maturity, which were concluded with the subsidiary TITAN GLOBAL FINANCE PLC which is based in the UK.
Company receivables primarily relate to receivables from cement sales to the said subsidiaries and the provision of consultancy services.
Lastly, the total remuneration of senior executives and members of the Group"s Board of Directors stood at €7.4 million for the period 1.1 - 31.12.2009 compared to €6.7 million the previous year.
In 2009 the Company recorded sales of €450 million, a decrease of 18.0% compared to 2008. EBITDA decreased by 19.5% and stood at €120 million, primarily reflecting the decline in domestic sales. Net profits declined by 56.2% to €46 million.
The statutory tax audit for the Company for the years 2006 through 2007 has been completed and the total obligation amounted to €2.6 million. An amount of €1.0 million was charged to the Income Statement and the remaining amount of €1.6m was offset against a provision established over those years.
The Company's share capital amounts to Euro 338,304,472, divided among 84,576,118 shares with a nominal value of 4 Euro each, of which 77,007,158 are common shares representing 91.051% of the total share capital and 7,568,960 are preferred shares without voting rights, representing 8.949 % of the total share capital.
All Company shares are registered and listed for trading in the Securities Market of the Athens Exchange (under "Large Cap" classification).
Each Company share carries all the rights and obligations set out in law and in the Articles of Association of the Company. The ownership of a Company share automatically entails acceptance of the Articles of Association of the Company and of the decisions made in accordance with those by the various Company bodies.
Each common share entitles the owner to one vote. The preferred shares provide no voting rights.
In accordance with the resolution dated 27.06.90 of the Ordinary General Meeting of the Shareholders of the Company, on the basis of which it was resolved an increase in the share capital of the Company through the issuance of preferred non-voting shares, the privileges enjoyed by holders of preferred non-voting shares are as follows:
A. Receipt, in priority to common shares, of a first dividend from the profits of each financial year; in the event of non distribution of dividend or of distribution of a dividend lower than the first dividend, in one or more financial years, holders of preferred shares are entitled to a preferential payment of this first dividend cumulatively and corresponding to the financial years in question, from the profits of subsequent years. Holders of preferred non-voting shares are entitled, on equal terms with holders of common shares, to receive any additional dividend which may be distributed in any form. It is worth noting that following the amendment, made in accordance with article 79 section 8 of Law 3604/2007, of the provisions of section 2 of article 45 of Law 2190/1920 on the distribution of profits of Societes Anonymes, the mandatory distribution of a first minimum dividend equal to 6% of the paid up share capital has been annulled and from now on it is only the mandatory distribution of dividend equal to 35% of the net profits that applies.
B. They are also entitled to preferential return of the capital paid up by holders of preferred non-voting shares from the product of the liquidation of Company assets in the event of the Company being wound up. Holders of preferred non-voting shares have equal rights with holders of common shares to a further share, proportionally, in the product of liquidation, if the product in question is higher than the total paid-up share capital.
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 31.12.2009 the following shareholders held more than 5% of the total voting rights of the Company: Andreas L. Canellopoulos, 12.92%, The Paul and Alexandra Canellopoulos Foundation 9.80% and MITICA LTD controlled by Ioannis Tzivelis, 5.34% of the voting rights of the Company.
None of the Company shares carry any special rights of control.
With the exception of the preferred non- voting shares, 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.
The Company's Articles of Association, within the powers granted under Codified Law 2190/1920, as in force following the enactment of Law 3604/2007, provide the following regarding the appointment and substitution of its Directors:
a. The Board of Directors may elect Directors to replace any Directors who have resigned, passed away or lost their status in any other way, provided that it is not possible to replace said Directors with substitute Directors elected by the General Meeting. The above election by the Board of Directors is effected by a decision of the remaining Directors if these are at least seven (7) and is valid for the remaining term of office of the Director being substituted.
b. The remaining Directors may continue to manage and represent the Company even if the missing Directors are not replaced as per the previous paragraph, provided that they are more than half the number of Directors prior to the occurrence of the above events.
c. In any case, the remaining Directors, irrespective of their number, may convoke the General Meeting for the sole purpose of electing a new Board of Directors.
The provisions of the Company's Articles of Association regarding the amendment of their own provisions do not depart from the provisions of Codified Law 2190/1920.
According to the provisions of article 6 par. 3 of the Company's Articles of Association, the General Meeting may, by a resolution passed by the extraordinary quorum and majority of article 20 of the Articles of Association, delegate to the Board of Directors the power to increase the share capital by its own decision, pursuant to the provisions of article 13, par. 1, subparagraph (c) of Codified Law 2190/1920 and without prejudice to par. 4 of the same article.
Also, according to the provisions of article 13, par. 13 of Codified Law 2190/1920, 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 paragraph 2 of article 31 of Codified Law 2190/1920, a programme can be established for the offering of shares to the Directors and to the Company's 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 publication formalities of article 7b of Codified Law 2190/1920. 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.
In line with the above provisions and the relevant resolutions passed by the General Meetings of Shareholders on 8.6.2004, 29.05.2007 and 4.6.2008 and, following the exercise in December 2009 by Directors of the Board of Directors and business executives of the Company and its affiliated companies, in the sense of article 42e of the Codified Law 2190/1920, of their options for the acquisition of 29,344 common shares of the Company, at a price of Euro 4 per share, the Board of Directors decided on 17.12.2009 to increase the Company's share capital by the amount of Euro 117,376 through a payment in cash and the issuing of 29,344 new common registered shares with a nominal value of 4 euro per share. According to par. 13 of article 13 of Codified Law 2190/1920, such capital increase does not constitute an amendment of the Company's Articles of Association.
According to the provisions of article 16 of Codified Law 2190/1920, 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 determine the terms and conditions of the acquisitions, the maximum number of shares that may be acquired, the duration of the period for which the authorization is given, which may not exceed 24 months, and, in the case of acquisition for value, the maximum and minimum consideration.
In line with the above provisions, the General Meeting of Company Shareholders on 20.5.2008 approved the purchase by the Company, whether directly or indirectly, of own shares, both common and preferred, up to 10% of its then paid-up share capital within a period of 24 months, i.e. from 20.5.2008 to 20.5.2010, with the maximum purchase price set at Euro 50 per share and the minimum purchase price set at Euro 4 per share. Implementing the above resolution of the General Meeting, the Board of Directors issued a decision on 20.5.2008, pursuant to which the Company was authorized to proceed to purchases of own shares during the interim period from 26.05.2008 to 20.05.2009, provided that the purchases in question were deemed to be beneficial and the Company's available funds in relation to its investment needs, so permitted.
Pursuant to the above resolution of the Board of Directors, the Company, from 05.06.2008 to 06.10.2008, purchased 1,099,916 common shares, at an average price (including duties, commission and other expenses) of Euro 24.7061 per share and 5,119 preferred shares without voting rights, at an average purchase price (including duties, commission and other expenses) of Euro 18.8172 per share. Following the end, on 20.05.2009, of the above interim time period, no other resolution was passed by the Board of Directors in connection with the implementation of the resolution of the General Meeting dated 20.05.2008
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.
It is should be noted, though, that the below significant agreements: a) the Multicurrency Revolving Facility Agreement up to the amount of Euro 800 million entered into among the Group's subsidiary, Titan Global Finance Plc and a syndicate of lending banks and the Company as Guarantor and b) the European Bond for an amount of Euro 200 million, issued on 28.7.2009 by the same as above subsidiary of the Group, Titan Global Finance Plc, under the guarantee of the Company, provide, as it is customary in similar agreements, in the event of a change in the control of the Company, for the right of the lending banks or the bond holders respectively to request, under certain conditions, the
immediate payment from Titan Global Finance Plc of the loans or bonds in question, prior to their maturity date, however, this right is not granted specifically against the event of a change in the control of the Company following a public offer.
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.
To the Shareholders of TITAN CEMENT COMPANY S.A.
We have audited the accompanying financial statements of TITAN CEMENT COMPANY S.A., and the consolidated financial statements of the Company and its subsidiaries ("the Group"), which comprise the statement of financial position as at December 31, 2009, the income statement, comprehensive income, statement of changes in equity and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information.
Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards as adopted by the European Unionand for such internal controls as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards of Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
In our opinion, the aforementioned financial statements present fairly, in all material respects, the financial position of TITAN CEMENT COMPANY S.A. and the Group as at December 31, 2009, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union.
We confirm that the information given in the Directors' Report is consistent with the accompanying financial statements and complete in the context of the requirements of articles 43a, 107 and 37 of Codified Law 2190/1920.
| (all amounts in Euro thousands) | Group | Company | |||
|---|---|---|---|---|---|
| Notes | 2009 | 2008 | 2009 | 2008 | |
| Turnover | 3 | 1.360.571 | 1.578.458 | 450.092 | 548.620 |
| Cost of sales | -901.496 | -1.046.968 | -293.539 | -352.691 | |
| Gross profit before depreciation | 459.075 | 531.490 | 156.553 | 195.929 | |
| Other income | 4 | 25.085 | 23.197 | 15.424 | 11.790 |
| Share in profit of associates | 15 | 1.080 | 3.519 | - | - |
| Administrative expenses | -106.301 | -119.437 | -38.326 | -43.529 | |
| Selling and marketing expenses | -21.886 | -25.755 | -1.809 | -4.709 | |
| Other expenses | 4 | -27.297 | -32.962 | -12.331 | -11.001 |
| Profit before interest, taxes, depreciation and amortization | 329.756 | 380.052 | 119.511 | 148.480 | |
| Depreciation and amortization related to cost of sales | 5 | -105.211 | -102.219 | -10.574 | -9.907 |
| Depreciation and amortization related to administrative and selling | |||||
| expenses | 5 | -7.189 | -7.259 | -1.081 | -1.112 |
| Profit before interest and taxes | 217.356 | 270.574 | 107.856 | 137.461 | |
| Income from participations and investments | - | 283 | 5.119 | 7.699 | |
| Finance income | 6 | 19.818 | 23.818 | 3.940 | 2.697 |
| Finance expense | 6 | -79.035 | -84.659 | -37.068 | -34.565 |
| Profit before taxes | 158.139 | 210.016 | 79.847 | 113.292 | |
| Less: income tax expense | 8 | -36.238 | 7 | -33.401 | -7.328 |
| Profit after taxes | 121.901 | 210.023 | 46.446 | 105.964 | |
| Attributable to: | |||||
| Equity holders of the parent | 123.393 | 208.224 | 46.446 | 105.964 | |
| Non-controlling interests | -1.492 | 1.799 | - | - | |
| 121.901 | 210.023 | 46.446 | 105.964 | ||
| Basic earnings per share (in €) | 9 | 1,5166 | 2,5336 | 0,5709 | 1,2893 |
| Diluted earnings per share (in €) | 9 | 1,5127 | 2,5254 | 0,5694 | 1,2852 |
| (all amounts in Euro thousands) | Group | Company | |||
|---|---|---|---|---|---|
| 2009 | 2008 | 2009 | 2008 | ||
| Profit for the period | 121.901 | 210.023 | 46.446 | 105.964 | |
| Other comprehensive income/(expenses): | |||||
| Exchange differences on translation of foreign operations | -38.913 | 1.136 | - | - | |
| Available-for-sale financial assets | -51 | -179 | - | - | |
| Cash flow hedges | -916 | - | - | - | |
| Income tax effect | 357 | - | - | - | |
| -559 | - | - | - | ||
| Asset revaluation surplus | - | 164.619 | - | - | |
| Income tax effect | - | -31.687 | - | - | |
| - | 132.932 | - | - | ||
| Other comprehensive (expenses)/income for the period, net of tax | -39.523 | 133.889 | - | - | |
| Total comprehensive income for the period | 82.378 | 343.912 | 46.446 | 105.964 | |
| Total comprehensive income attributable to: | |||||
| Equity holders of the parent | 87.275 | 339.493 | 46.446 | 105.964 | |
| Non-controlling interests | -4.897 | 4.419 | - | - | |
| 82.378 | 343.912 | 46.446 | 105.964 | ||
| (all amounts in Euro thousands) | Group | Company | |||
|---|---|---|---|---|---|
| ASSETS | Notes | 2009 | 2008 | 2009 | 2008 |
| Property, plant & equipment | 11 | 1.915.211 | 1.896.579 | 266.759 | 270.592 |
| Investment properties | 12 | 1.088 | - | 6.396 | 6.796 |
| Intangible assets and goodwill | 13 | 542.816 | 545.088 | 671 | - |
| Investments in subsidiaries | 14 | - | - | 1.268.502 | 1.262.303 |
| Investments in associates | 15 | 10.551 | 10.178 | - | - |
| Available-for-sale financial assets | 16 | 2.338 | 2.418 | 107 | 107 |
| Other non current assets | 17 | 20.969 | 39.297 | 3.460 | 3.551 |
| Deferred income tax asset | 18 | 2.546 | 2.622 | - | - |
| Non-current assets | 2.495.519 | 2.496.182 | 1.545.895 | 1.543.349 | |
| Inventories | 19 | 238.803 | 287.867 | 68.250 | 99.994 |
| Receivables and prepayments | 20 | 254.131 | 312.934 | 83.723 | 96.621 |
| Derivative financial instruments | 35 | 679 | 2.524 | 34 | - |
| Available-for-sale financial assets | 16 | 62 | 62 | 61 | 61 |
| Cash and cash equivalents | 21 | 16.426 | 94.521 | 204 | 31.263 |
| Current assets | 510.101 | 697.908 | 152.272 | 227.939 | |
| TOTAL ASSETS | 3.005.620 | 3.194.090 | 1.698.167 | 1.771.288 | |
| EQUITY AND LIABILITIES | |||||
| Share capital ( 84,576,118 shares of € 4.00) | 22 | 338.304 | 338.187 | 338.304 | 338.187 |
| Share premium | 22 | 22.826 | 22.826 | 22.826 | 22.826 |
| Share options | 22 | 5.977 | 10.713 | 5.977 | 10.713 |
| Treasury shares | 22 | -91.622 | -92.299 | -91.622 | -92.299 |
| Other reserves | 23 | 434.350 | 433.747 | 501.465 | 462.987 |
| Retained earnings | 739.218 | 682.882 | 32.532 | 53.110 | |
| Equity attributable to equity holders of the parent | 1.449.053 | 1.396.056 | 809.482 | 795.524 | |
| Non-controlling interests | 11.135 | 38.078 | - | - | |
| Total equity (a) | 1.460.188 | 1.434.134 | 809.482 | 795.524 | |
| Long-term borrowings | 24 | 725.665 | 945.193 | 634.499 | 759.000 |
| Derivative financial instruments | 35 | 376 | - | - | - |
| Deferred income tax liability | 18 | 196.572 | 204.433 | 24.018 | 21.625 |
| Retirement benefit obligations | 25 | 41.828 | 41.157 | 23.762 | 23.702 |
| Provisions | 26 | 16.660 | 23.115 | 1.929 | 2.062 |
| Other non-current liabilities | 27 | 37.434 | 13.791 | 5.806 | 6.104 |
| Non-current liabilities | 1.018.535 | 1.227.689 | 690.014 | 812.493 | |
| Short-term borrowings | 24 | 261.835 | 263.145 | 127.609 | 87.580 |
| Trade and other payables | 28 | 242.825 | 255.151 | 60.345 | 75.571 |
| Derivative financial instruments | 35 | 29 | - | 29 | - |
| Income tax payable | 8 | 19.549 | 10.708 | 10.379 | - |
| Provisions | 26 | 2.659 | 3.263 | 309 | 120 |
| Current liabilities | 526.897 | 532.267 | 198.671 | 163.271 | |
| Total liabilities (b) | 1.545.432 | 1.759.956 | 888.685 | 975.764 | |
| TOTAL EQUITY AND LIABILITIES (a+b) | 3.005.620 | 3.194.090 | 1.698.167 | 1.771.288 |
Group (all amounts in Euro thousands) Ordinary shares Share premium Preferred shares Share options Ordinary treasury shares Preferred treasury shares Other reserves Retained earnings Total Noncontrolling interests Total equity Balance at 1 January 2008 153.927 22.826 15.138 7.016 -35.936 -9 396.997 612.868 1.172.827 22.112 1.194.939 Profit for the period - - - - - - - 208.224 208.224 1.799 210.023 Other comprehensive income - - - - - - 132.453 -1.184 131.269 2.620 133.889 Total comprehensive income for the period - - - - - - 132.453 207.040 339.493 4.419 343.912 Treasury shares purchased - - - - -56.246 -108 - - -56.354 - -56.354 Dividends paid to ordinary and preferred shares - - - - - - - -63.399 -63.399 -2.764 -66.163 Share Capital increase due to capitalization of reserves 153.927 - 15.138 - - - -166.221 -2.844 - - - Share Capital increase due to share options exercised 57 - - - - - - - 57 - 57 Provision for share options (IFRS 2) - - - 3.697 - - - - 3.697 - 3.697 Non-controlling interest related to share capital increase in subsidiaries - - - - - - - -265 -265 24.373 24.108 Acquisition of non-controlling interest - - - - - - - - - -12.732 -12.732 Non-controlling interest arising on business combination - - - - - - - - - 2.670 2.670 Transfer among reserves - - - - - - 70.518 -70.518 - - - Balance at 31 December 2008 307.911 22.826 30.276 10.713 -92.182 -117 433.747 682.882 1.396.056 38.078 1.434.134 Balance at 1 January 2009 307.911 22.826 30.276 10.713 -92.182 -117 433.747 682.882 1.396.056 38.078 1.434.134 Profit for the period - - - - - - - 123.393 123.393 -1.492 121.901 Other comprehensive income - - - - - - -32.589 -3.529 -36.118 -3.405 -39.523 Total comprehensive income for the period - - - - - - -32.589 119.864 87.275 -4.897 82.378 Dividends paid to ordinary and preferred shares - - - - - - - -35.510 -35.510 -2.262 -37.772 Treasury shares sold - - - - 677 - - -293 384 - 384 Share Capital increase due to share options exercised 117 - - - - - - - 117 - 117 Provision for share options (IFRS 2) - - - -4.736 - - 7.257 - 2.521 - 2.521 Non-controlling interest's put option recognition & transfer between Attributable to equity holders of the parent
reserves - - - - - - 25.935 -27.725 -1.790 -17.569 -19.359 Non-controlling interest due to acquisitions of subsidiaries - - - - - - - - - -2.215 -2.215 Balance at 31 December 2009 308.028 22.826 30.276 5.977 -91.505 -117 434.350 739.218 1.449.053 11.135 1.460.188
| (all amounts in Euro thousands) | Ordinary shares |
Share premium |
Preferred shares |
Share options |
Ordinary treasury shares |
Preferred treasury shares |
Other reserves | Retained earnings |
Total equity |
|---|---|---|---|---|---|---|---|---|---|
| Balance at 1 January 2008 | 153.927 | 22.826 | 15.138 | 7.016 | -35.936 | -9 | 558.753 | 83.844 | 805.559 |
| Profit for the period | - | - | - | - | - | - | - | 105.964 | 105.964 |
| Total comprehensive income for the period | - | - | - | - | - | - | - | 105.964 | 105.964 |
| Treasury shares purchased | - | - | - | - | -56.246 | -108 | - | - | -56.354 |
| Dividends paid to ordinary and preferred shares | - | - | - | - | - | - | - | -63.399 | -63.399 |
| Share Capital increase due to capitalization of reserves | 153.927 | - | 15.138 | - | - | - | -166.221 | -2.844 | - |
| Share Capital increase due to share options exercised | 57 | - | - | - | - | - | - | - | 57 |
| Provision for share options (IFRS 2) | - | - | - | 3.697 | - | - | - | - | 3.697 |
| Transfer among reserves | - | - | - | - | - | - | 70.455 | -70.455 | - |
| Balance at 31 December 2008 | 307.911 | 22.826 | 30.276 | 10.713 | -92.182 | -117 | 462.987 | 53.110 | 795.524 |
| Balance at 1 January 2009 | 307.911 | 22.826 | 30.276 | 10.713 | -92.182 | -117 | 462.987 | 53.110 | 795.524 |
| Profit for the period | - | - | - | - | - | - | - | 46.446 | 46.446 |
| Total comprehensive income for the period | - | - | - | - | - | - | - | 46.446 | 46.446 |
| Dividends paid to ordinary and preferred shares | - | - | - | - | - | - | - | -35.510 | -35.510 |
| Treasury shares sold | - | - | - | - | 677 | - | - | -293 | 384 |
| Share Capital increase due to share options exercised | 117 | - | - | - | - | - | - | - | 117 |
| Provision for share options (IFRS 2) | - | - | - | -4.736 | - | - | 7.257 | - | 2.521 |
| Transfer among reserves | - | - | - | - | - | - | 31.221 | -31.221 | - |
| Balance at 31 December 2009 | 308.028 | 22.826 | 30.276 | 5.977 | -91.505 | -117 | 501.465 | 32.532 | 809.482 |
| (all amounts in Euro thousands) Group |
Company | ||||
|---|---|---|---|---|---|
| Notes | 2009 | 2008 | 2009 | 2008 | |
| Cash flows from operating activities | |||||
| Cash generated from operations | 29 | 388.763 | 418.386 | 140.385 | 177.702 |
| Income tax paid | -15.218 | -48.627 | -20.714 | -35.161 | |
| Net cash generated from operating activities (a) | 373.545 | 369.759 | 119.671 | 142.541 | |
| Cash flows from investing activities | |||||
| Purchase of property, plant and equipment and intangible assets | 11 | -166.112 | -207.657 | -5.592 | -20.598 |
| Decrease/(increase) in other non current assets | 19.546 | -6.693 | - | - | |
| Purchase of intangible assets | 13 | -13.857 | -1.448 | -671 | - |
| Proceeds from sale of property, plant and equipment | 29 | 7.486 | 7.736 | 2.675 | 704 |
| Proceeds from dividends | 671 | 3.325 | 4.770 | 10.313 | |
| Acquisition of subsidiaries, net of cash acquired & increase in subsidiaries' share capital |
30 | -10.696 | -387.590 | -749 | -745.225 |
| Acquisition of non-controlling interest | -3.720 | -14.118 | - | - | |
| Proceeds from sale of available-for-sale financial assets | 268 | 2.987 | - | - | |
| Purchase of available-for-sale financial assets | -202 | -1.400 | -2 | -118 | |
| Interest received | 8.803 | 8.859 | 2.024 | 538 | |
| Net cash flows (used in)/from investing activities (b) | -157.813 | -595.999 | 2.455 | -754.386 | |
| Net cash flows after investing activities (a)+(b) | 215.732 | -226.240 | 122.126 | -611.845 | |
| Cash flows from financing activities | |||||
| Proceeds from issuance of ordinary shares | 22 | 117 | 57 | 117 | 57 |
| Proceeds from non-controlling interest's participation in subsidiaries' share capital increase |
- | 24.108 | - | - | |
| Sale/(purchase) of treasury shares | 384 | -56.712 | 384 | -56.712 | |
| Proceeds from government grants | 345 | - | - | - | |
| Interest paid | -46.073 | -63.406 | -30.515 | -22.424 | |
| Dividends paid | -37.805 | -66.400 | -35.531 | -63.401 | |
| Proceeds from borrowings | 748.739 | 778.326 | 260.781 | 1.167.499 | |
| Payments of borrowings | -957.393 | -464.819 | -348.421 | -381.924 | |
| Net cash flows (used in)/from financing activities (c ) | -291.686 | 151.154 | -153.185 | 643.095 | |
| Net (decrease)/increase in cash and cash equivalents (a)+(b)+(c) | -75.954 | -75.086 | -31.059 | 31.250 | |
| Cash and cash equivalents at beginning of the year | 21 | 94.521 | 167.478 | 31.263 | 13 |
| Effects of exchange rate changes | -2.141 | 2.129 | - | - | |
| Cash and cash equivalents at end of the year | 21 | 16.426 | 94.521 | 204 | 31.263 |
| Contents | Page |
|---|---|
| 1. General information and summary of significant accounting policies | 26 |
| 1.1 Basis of preparation | 26 |
| 1.2 Consolidation | 28 |
| 1.3 Foreign currency translation | 29 |
| 1.4 Property, plant and equipment | 30 |
| 1.5 Investment properties | 30 |
| 1.6 Intangible assets | 30 |
| 1.7 Deferred stripping costs | 31 |
| 1.8 Impairment of long lived assets other than Goodwill | 31 |
| 1.9 Leases – where a Group entity is the lessee | 31 |
| 1.10 Inventories | 31 |
| 1.11 Trade receivables | 31 |
| 1.12 Cash and cash equivalents | 31 |
| 1.13 Share capital | 31 |
| 1.14 Borrowings | 32 |
| 1.15 Current and deferred income taxes | 32 |
| 1.16 Employee benefits | 32 |
| 1.17 Government grants relating to purchase of property, plant and equipment | 33 |
| 1.18 Provisions | 33 |
| 1.19 Environmental restoration costs | 34 |
| 1.20 Revenue recognition | 34 |
| 1.21 Dividends paid | 34 |
| 1.22 Segment information | 34 |
| 1.23 CO2 Emission rights | 34 |
| 1.24 Financial instruments | 34 |
| 1.25 Borrowing costs | 36 |
| 2. Significant accounting estimates and judgements | 36 |
| 2.1 Estimated impairment of goodwill | 36 |
| 2.2 Income taxes | 36 |
| 2.3 Fair value and useful lives of Property, plant and equipment | 36 |
| 3. Operating segment information | 37 |
| 4. Other revenue and expenses | 40 |
| 5. Profit before interest and taxes | 40 |
| 6. Finance revenue/(cost) | 41 |
| 7. Staff costs | 41 |
| 8. Income tax expense | 42 |
| 9. Earnings per share | 43 |
| 10. Dividend proposed and distributed | 43 |
| 11. Property, plant and equipment | 44 |
| 12. Investment properties | 45 |
| 13. Intangible assets and Goodwill | 46 |
| 14. Principal subsidiaries, associates and joint ventures | 47 |
| 15. Investment in associates | 49 |
| 16. Available-for-sale financial assets | 49 |
| 17. Other non current assets | 50 |
| 18. Deferred income taxes | 50 |
| 19. Inventories | 53 |
| 20. Receivables and prepayments | 53 |
| 21. Cash and cash equivalents | 54 |
| 22. Share capital and premium | 55 |
| 23. Other reserves | 57 |
| 25. Retirement and termination benefit obligations | 60 |
|---|---|
| 26. Provisions | 62 |
| 27. Other-non current liabilities | 63 |
| 28. Trade and other payables | 63 |
| 29. Cash generated from operations | 64 |
| 30. Business combinations | 65 |
| 31. Interest in joint ventures | 67 |
| 32. Contingencies and Commitments | 68 |
| 33. Related party transactions | 70 |
| 34. Financial risk management objectives and policies | 72 |
| 35. Financial instruments | 75 |
| 36. Fiscal years unaudited by the tax authorities | 77 |
| 37. Reclassifications | 77 |
| 38. Events after the balance sheet date | 78 |
TITAN CEMENT S.A. (the Company) and, its subsidiaries, joint ventures and associates (collectively the Group) are engaged in the production, trade and distribution of a wide range of construction materials, from aggregates, cement, concrete, cement blocks, dry mortars and fly ash, as well as porcelain ware. The Group operates primarily in Greece, the Balkans, Egypt and the United States of America.
The Company is a limited liability company incorporated and domiciled in Greece and is listed on the Athens Stock Exchange.
These financial statements have been approved for issue by the Board of Directors on March 18, 2010 and are expected to be ratified at the Annual General Meeting.
The principal accounting policies adopted in the preparation of these financial statements are set out below:
These financial statements have been prepared by management in accordance with International Financial Reporting Standards (I.F.R.S.), including the International Accounting Standards (IAS) and issued Interpretations by International Financial Reporting Interpretations Committee (IFRIC), as they have been adopted by the European Union as of December 31, 2009.
These financial statements have been prepared under the historical cost convention, as modified by the revaluation of certain equity investments, investment property, and derivative instruments (comprising forward exchange contracts) at fair value.
The preparation of financial statements, in conformity with IFRS, requires the use of critical accounting estimates. It also requires management to exercise its 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 Significant accounting estimates and judgments in note 2.
Α) The financial statements have been prepared with the same accounting policies of the prior financial year, except the following new standards and interpretations that had to be adopted as of 1 January 2009:
• IFRIC 13 Customer Loyalty Programmes effective 1 July 2008
• IFRIC 9 Remeasurement of Embedded Derivatives (Amended) and IAS 39 Financial Instruments: Recognition and Measurement (Amended) effective for periods ending on or after 30 June 2009
• IFRS 1 First-time Adoption of International Financial Reporting Standards (Amended) and IAS 27 Consolidated and Separate Financial Statements (Amended) effective 1 January 2009
Except of the standards and interpretations below, the adaptation of the new and amended standards and interpretations did not have any impact on the financial position of the Group and the Company. The standards and interpretations below have had impact in the presentation and the notes of the financial statements:
The revised standard requires that the statement of changes in equity includes only transactions with shareholders; introduces a new statement of comprehensive income that combines all items of income and expense recognized in profit or loss together with "other comprehensive income" (either in one single statement or in two linked statements); and requires the inclusion of a third column on the balance sheet to present the effect of restatements of financial statements or retrospective application of a new accounting policy as at the beginning of the earliest comparative period. The Group / Company made the necessary changes to the presentation of its financial statements in 2009 and has elected to present the statement of comprehensive income in two related statements.
The amended standard requires additional disclosures about fair value measurement and liquidity risk. Fair value measurements related to items recorded at fair value are to be disclosed by the source of inputs, using a three-level hierarchy, by class, for all financial instruments recognized at fair value. In addition, a reconciliation between the beginning and ending balance for level 3 fair value measurements is now required, as well as significant transfers between the levels in the fair value hierarchy. The amendments also clarify the requirements for liquidity risk disclosures with respect to derivative transactions and assets used for liquidity management. The liquidity risk disclosures are not significantly impacted by the amendments and are presented in Note 34.
This Standard replaces IAS 14 "Segment reporting". IFRS 8 adopts a management approach to segment reporting. The Group concluded that the operating segments determined in accordance with IFRS 8 are the same as the operating segments previously identified under IAS 14. IFRS 8 disclosures are shown in note 3, including the relevant revised comparative information.
Β) The following new standards, amendments to standards and interpretations have been issued but are not effective for the financial year beginning 1 January 2009. They have not been early adopted and the Group and the Company is currently assessing possible impacts in the financial statements from their adaptation.
This interpretation is effective for annual periods beginning on or after 1 July 2009 with early application permitted. The interpretation provides guidance on how to account for non-cash distributions to owners. The interpretation clarifies when to recognize a liability, how to measure it and the associated assets, and when to derecognize the asset and liability.
The interpretation is effective for annual periods beginning on or after 1 July 2010. This interpretation addresses the accounting treatment when there is a renegotiation between the entity and the creditor regarding the terms of a financial liability and the creditor agrees to accept the entity"s equity instruments to settle the financial liability fully or partially. IFRIC 19 clarifies such equity instruments are "consideration paid" in accordance with paragraph 41 of IAS 39. As a result, the financial liability is derecognized and the equity instruments issued are treated as consideration paid to extinguish that financial liability. This interpretation has not yet been endorsed by the EU.
The amendment is effective for annual periods beginning on or after 1 January 2011. The purpose of this amendment was to permit entities to recognize as an asset some voluntary prepayments for minimum funding contributions. This Earlier application is permitted and must be applied retrospectively. This amendment has not yet been endorsed by the EU.
The revision and amendment is effective for annual periods beginning on or after 1 July 2009. The revised IFRS 3 introduces a number of changes in the accounting for business combinations which will impact the amount of goodwill recognized, the reported results in the period that an acquisition occurs, and future reported results. Such changes include the expensing of acquisition-related costs and recognizing subsequent changes in fair value of contingent consideration in the profit or loss (rather than by adjusting goodwill).
The amended IAS 27 requires that a change in ownership interest of a subsidiary is accounted for as an equity transaction. Therefore such a change will have no impact on goodwill, nor will it give raise to a gain or loss. Furthermore the amended standard changes the accounting for losses incurred by the subsidiary as well as the loss of control of a subsidiary. The changes introduced by IFRS 3 (Revised) and IAS 27 (Amendment) will be applied for business combinations after 1 January 2010 and will affect future acquisitions and transactions with non-controlling interests.
• IAS 39 Financial Instruments: Recognition and Measurement (Amended) – eligible hedged items
The amendment is effective for annual periods beginning on or after 1 July 2009.The amendment clarifies that an entity is permitted to designate a portion of the fair value changes or cash flow variability of a financial instrument as hedged item. This also covers the designation of inflation as a hedged risk or portion in particular situations.
• IFRS 9 Financial Instruments – Phase 1 financial assets, classification and measurement
The new standard is effective for annual periods beginning on or after 1 January 2013. Phase 1 of this new IFRS introduces new requirements for classifying and measuring financial assets. Early adoption is permitted. This standard has not yet been endorsed by the EU.
• IFRS 2 Group Cash-settled Share-based Payment Transactions (Amended)
The amendment is effective for annual periods beginning on or after 1 January 2010. This amendment clarifies the accounting for group cash-settled share-based payment transactions and how such transactions should be arranged in the individual financial statements of the subsidiary. This interpretation has not yet been endorsed by the EU.
• IAS 32 Classification on Rights Issues (Amended)
The amendment is effective for annual periods beginning on or after 1 February 2010. This amendment relates to the rights issues offered for a fixed amount of foreign currency which were treated as derivative liabilities by the existing standard. The amendment states that if certain criteria are met, these should be classified as equity regardless of the currency in which the exercise price is denominated. The amendment is to be applied retrospectively.
The revision is effective for annual periods beginning on or after 1 January 2011.This revision relates to the judgment which is required so as to assess whether a government and entities known to the reporting entity to be under the control of that government are considered a single customer. In assessing this, the reporting entity shall consider the extent of economic integration between those entities. Early application is permitted and adoption shall be applied retrospectively. This interpretation has not yet been endorsed by the EU.
The amendment is effective for annual periods beginning on or after 1 July 2010. This interpretation has not yet been endorsed by the EU.
In April 2009 the IASB issued its second omnibus of amendments to its standards, primarily with a view to removing inconsistencies and clarifying wording. The effective dates of the improvements are various and the earliest is for the financial year beginning 1 July 2009. This annual improvements project has not yet been endorsed by the EU.
Subsidiaries, are entities (including special purpose entities) in which the Group has an interest of more than one half of the voting rights or otherwise has power to govern the financial and operating policies.
The existence and effect of potential voting rights that are presently exercisable or presently convertible are considered when assessing whether the Group controls another entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group and are no longer consolidated from the date that control ceases. The purchase method of accounting is used to account for the acquisition of subsidiaries. Note 1.6(a) outlines the accounting policy on goodwill. The cost of an acquisition is measured as the sum of the fair values, at the date of exchange, of the assets given, liabilities incurred or assumed, and equity instruments issued by the Group, in exchange for control of the acquired plus any costs directly attributable to the acquisition. The acquired identifiable assets, liabilities and contingent liabilities are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interests.
The excess of the cost of acquisition over the fair value of the acquired identifiable assets, liabilities and contingent liabilities of the subsidiary acquired is recorded as goodwill. Where 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 cost cannot be recovered.
Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Group.
The financial statements of the subsidiaries are prepared for the same reporting date with the parent company.
Non-controlling interest reflects the portion of profit or loss and net assets attributable to equity interests that are not owned by the Group. Non-controlling interest is reported separately in the consolidated income statement as well as in the consolidated balance sheet separately from the Share capital and reserves. In case of purchase of non-controlling interest, the difference between the value of acquisition and the book value of the share of net assets acquired is recognized as goodwill.
At the Company"s balance sheet, investment in subsidiaries is stated at cost less provision for impairment, if any.
(b) Joint ventures (Jointly controlled entities)
A joint venture is an entity jointly controlled by the Group and one or more other ventures in terms of a contractual arrangement. The Group"s interest in jointly controlled entities is accounted for by the proportional consolidation method of accounting, taking into consideration the percentage controlled by the Group as at the date of consolidation. The Group combines its share of the joint ventures" individual income and expenses, assets and liabilities and cash flows on a line-by-line basis with similar items in the Group"s financial statements. The Group recognises the portion of gains or losses on the sale of assets by the Group to the joint venture that is attributable to the other ventures.
The Group does not recognise its share of profits or losses from the joint venture that result from the purchase of assets by the Group from the joint venture until it resells the assets to an independent party. However, if a loss on the transaction provides evidence of a reduction in the net realisable value of current assets or an impairment loss, the loss is recognised immediately.
Accounting policies of joint ventures have been adjusted where necessary to ensure consistency with the policies adopted by the Group.
The financial statements of the joint ventures are prepared for the same reporting date with the parent company.
(c) Associates
Notes to the Financial Statements
Associates are entities over which the Group generally has between 20% and 50% of the voting rights, or over which the Group has significant influence, but which it does not control. Investments in associates are accounted for by the equity method of accounting and are initially recognised at cost. The Group"s investment in associates includes goodwill (net of any cumulative impairments losses) identified on acquisition.
Under this method the Group"s share of the post-acquisition profits or losses of associates is recognised in the income statement and its share of post-acquisition movements in other reserves is recognised in other reserves. The cumulative post-acquisition movements in balance sheet assets and liabilities are adjusted against the carrying amount of the investment.
Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group"s interest in the associates; unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. The Group"s investment in associates includes goodwill on acquisition. When the Group"s share of losses in an associate equals or exceeds its interest in the associate, the Group does not recognise further losses, unless the Group has incurred obligations or made payments on behalf of the associates.
Accounting policies of associates have been adjusted where necessary to ensure consistency with the policies adopted by the Group.
The financial statements of the associates are prepared for the same reporting date with the parent company.
d) Commitments to purchase interests held by minorities
As part of the acquisition process of certain entities, the Group has granted third party shareholders the option to require the Group to purchase their shares at predetermined conditions. These shareholders could be either international institutions, such as the European Bank for Reconstruction and Development (EBRD), or private investors which are essentially financial or industrial investors or former shareholders of the acquiring entities.
The Group applies the following process for the recognition of such put options:
• Any difference between the fair value of the liability under the put option at the end of the reporting period and the non controlling interest reclassified is calculated based on the current policy of the Group for acquisitions of non-controlling interests.
If the put option is ultimately exercised, the same treatment will be applied up to the date of exercise. The amount recognized as the financial liability at that date will be extinguished by the payment of the exercise price. If the put option expires unexercised, the position will be unwound such that the non-controlling interest at that date is reclassified back to equity and the financial liability is derecognized.
Items included in the financial statements of each entity in the Group are measured in the functional currency, which is the currency of the primary economic environment in which each Group entity operates. The consolidated financial statements are presented in Euros, which is the functional and presentation currency of the Company and the presentation currency of the Group.
Foreign currency transactions are translated into the functional currency using the exchange rates (i.e. spot rates) prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at yearend exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement, except when deferred in equity as qualifying net investment hedges.
Translation differences on non-monetary items, such as equity investments held at fair value are included as part of the fair value gain or loss in the income statement.
The operating results and financial position of all group entities (none of which operate in a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
-Assets and liabilities for each balance sheet presented are translated at the closing rate at the date of the balance sheet.
-Income and expenses for each income statement are translated at average exchange rates.
-All exchange differences resulting from the above are recognised as a "foreign currency translation reserve" in shareholders equity.
-On the disposal of a foreign operation, the cumulative exchange differences relating to that particular foreign operation, deferred in "foreign currency translation reserve" in shareholders equity, are recognised in the income statement as part of the gain or loss on sale.
On consolidation, exchange differences arising from the translation of borrowings designated as hedges of investments in foreign entities, are taken to "currency translation differences on derivative hedging position" included in other reserves in equity.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.
Property, plant and equipment is stated at historical cost less subsequent depreciation and impairment, except for land (excluding quarries), which is shown at cost less impairment.
Cost includes expenditure that is directly attributable to the acquisition of the items and any environmental rehabilitation costs to the extent that they have been recognised as a provision (refer to note 1.19). 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 entity and the cost of the item can be measured reliably. Subsequent costs are depreciated over the remaining useful life of the related asset or to the date of the net major subsequent cost whichever is the sooner. Depreciation, with the exception of quarries, is calculated on the straight-line method to write off bring the assets to their residual values over their estimated useful lives as follows:
| Up to 50 years | |
|---|---|
| Up to 40 years | |
| 5 to 15 years | |
| Office equipment furniture and fittings* | 3 to 10 years |
| Up to 2 years | |
* (incl. computer equipment and software)
Land on which quarries are located is depreciated on a depletion basis. This depletion is recorded as the material extraction process advances based on the unit-of-production method. Other land is not depreciated.
Where 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 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. (Refer to note 1.8)
Gains and losses on disposals are determined by comparing proceeds with carrying amount and are included in operating profit.
Interest costs on borrowings specifically used to finance the construction of property, plant and equipment are capitalised during the construction period.
Investment properties are held to earn rental income and appreciate capital value. Owner-occupied properties are held for production and administrative purposes. This distinguishes owner-occupied properties from investment properties.
Investment properties are treated as long-term assets and carried at fair value, representing open market value determined internally on an annual basis based on comparable transactions that take place around the balance sheet date, by management. Changes in fair values are recorded in net income and are included in other operating income.
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group"s share of the acquired identifiable assets, liabilities and contingent liabilities of the acquired subsidiary, joint venture and associate at the date of acquisition. Goodwill on acquisitions of subsidiaries and joint ventures are included in intangible assets. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. A cash generated unit is the smallest identifiable group of assets generating cash inflows independently and represents the level used by the Group to organise and present each activities and results in its internal reporting. Impairment is determined for goodwill by assessing the recoverable amount of the cash-generating units, to which the goodwill relates. Where the recoverable amount (typically the value in use) of the cash-generating units is less than their carrying amount an impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in future periods. The Group performs its annual impairment test of goodwill as at 31 December each year.
Negative goodwill is recognised where the fair value of the Group"s interest in the net assets of the acquired entity exceeds the cost of acquisition and is taken to the income statement as an income immediately.
(b) Computer software
Costs associated with developing or maintaining computer software programmes are recognised as an expense as incurred. Costs that are directly associated with identifiable and unique software products controlled by the Group and that will probably generate economic benefits exceeding costs beyond one year, are recognised as part of office equipment, in property, plant and equipment. Direct costs include staff costs of the software development team and an appropriate portion of relevant overheads.
The cost of a separately acquired software, which comprises its purchase price and any directly associated costs of preparing the software for its intended use is recognized as an intangible asset, when it concerns an identifiable and unique software product which will generate economic benefits beyond one year. Computer software costs recognized as intangible assets are amortized using the straight-line method over their useful lives (three years).
Patents, trademarks, mining permits and customer relationships are shown at historical cost. These intangible assets have a definite useful life, and their cost is amortised using the straight-line method over their useful lives, not exceeding 20 years.
Costs associated with removing overburden from mineral deposits are deferred in other non current receivables and amortized on the units-of-production method proportionate to the extraction of the related mineral deposits. Amortization of deferred stripping is included in total depreciation and amortization related to cost of sales in the accompanying consolidated statements of income.
Assets that have an indefinite useful life (land not related to quarries) are not subject to amortisation and are tested annually for impairment. 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 determined by comparable transactions less costs to sell and value in use as determined by discounted cash flows. Assets are grouped at the lowest possible levels.
Leases where all the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease.
Leases of property, plant and equipment where the Group 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 property or 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 balance outstanding. The corresponding rental obligations, net of finance charges, are included in liabilities. 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 useful life of the asset or the lease term.
Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted average method. The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related production overheads (based on normal operating capacity) but excludes borrowing costs. Net realisable value is the estimated selling price in the ordinary course of business, less the costs of completion and selling expenses.
Appropriate allowance is made for damaged, obsolete and slow moving items. Write-downs to net realisable value and inventory losses are expensed in cost of sales in the period in which the write-downs or losses occur.
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all of the amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset"s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of the provision is recognised in other expenses in the income statement.
Cash and cash equivalents comprise cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are included within borrowings in current liabilities on the balance sheet. The components of cash and cash equivalents have a negligible risk of change in value.
(a) Ordinary shares and non-redeemable non-voting preferred shares with minimum statutory non-discretionary dividend features are classified as equity. Share capital represents the value of company"s shares in issue. Any excess of the fair value of the consideration received over the par value of the shares issued is recognized as "share premium" in shareholders equity.
(b) Incremental external costs directly attributable to the issue of new shares are shown as a deduction in equity, net of tax, from the proceeds.
(c) Where the Company or its subsidiaries purchases the Company"s own equity share capital, the consideration paid including any attributable incremental external costs net of income taxes is deducted from total shareholders" equity as treasury shares until they are cancelled. Where such shares are subsequently sold or reissued, any consideration received is included in shareholders" equity.
Borrowings are recognised initially at fair value, net of transaction costs incurred. In subsequent periods, borrowings are stated at amortised cost using the effective yield method. Any difference between proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings.
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.
Current income tax is calculated using the financial statements of every company included in the consolidated financial statements, along with the applicable tax law in the respective countries. The income tax charge consists of the current income tax calculated upon the results of the Group companies, as they have been reformed in their taxation return applying the applicable tax rate.
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. However, if the deferred income tax 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 and loss, it is not accounted for.
Deferred income tax assets are recognised only to the extent that is it probable that taxable profits and reversals of deferred tax liabilities will be available against which deductible temporary differences can be utilised.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, joint ventures and associates, except where the Group is able to control the reversal of the temporary difference and 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 on 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, except when it relates to items credited or charged directly to equity, in which case the deferred tax is also presented in equity.
(a) Pension and other retirement obligations
Certain Group companies have various pension and other retirement schemes in accordance with the local conditions and practices in the countries in which they operate. These schemes are both funded and unfunded. The funded scheme is funded through payments to a trustee-administered fund as determined by periodic actuarial calculations. A defined benefit plan is a pension or a similar retirement plan that defines an amount of pension or retirement benefit to be provided, usually as a function of one or more factors such as age, years of service or compensation.
A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity (a fund) and will have no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees benefits relating to employee service in the current and prior periods.
The liability in respect of defined benefit pension or retirement plans, including certain unfunded termination indemnity benefit plans, is the present value of the defined benefit obligation at the balance sheet date minus the fair value of plan assets (where funded) together with adjustments for actuarial gains/ losses and past service cost. The defined benefit obligation is calculated at periodic intervals 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 which have terms to maturity approximating the terms of the related liability.
Actuarial gains and losses arising from experience adjustments, changes in actuarial assumptions and amendments to pension plans, which exceed 10% of the estimated benefit liability at the beginning of every period, are recognized in other income/expenses in the income statement over the average remaining service lives of the related employees.
For defined contribution plans, the company will pay contributions into a separate fund on a mandatory, contractual or voluntary basis. Once the contributions have been paid, the company has no further payment obligations. The regular contributions constitute net periodic costs 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. Where the employee"s employment is terminated at the normal retirement date, the entitlement to these benefits is usually based on the employee remaining in service up to retirement age and the completion of a minimum service period.
As regards termination before the normal retirement date or voluntary redundancy, the Group recognises termination benefits when it is demonstrably committed to either terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Any such benefits falling due more than 12 months after balance sheet date are discounted to present value.
A liability for employee benefits in the form of profit sharing and bonus plans is recognised in other provisions when and at least one of the following conditions is met:
there is a formal plan and the amounts to be paid are determined before the time of issuing the financial statements; or
past practice has created a valid expectation by employees that they will receive a bonus/ profit sharing and the amount can be determined before the time of issuing the financial statements.
Liabilities for profit sharing and bonus plans are expected to be settled within 12 months and are measured at the amounts expected to be paid when they are settled.
Share options are granted to certain members of senior management at a discount to the market price of the shares at the time the scheme was put into force (in respect of the old scheme) and at par value (in respect of the new schemes) on the respective dates of the grants and are exercisable at those prices. Options are exercisable beginning six months from the date of grant, in respect of the old scheme, and as regards the new schemes each option must be exercised within twelve months of its respective vesting period. Both schemes have a contractual option term of three years.
The fair value, calculated using statistical models, of the employee services received in exchange for the grant of the options is recognised as an expense during the period that the serviced are received against which the salaries are given. The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted, specified by the date of grant. At each balance sheet date, the Group revises its estimates of the number of options that are expected to become exercisable and recognises the impact of the revision of original estimates, if any, in administrative expenses and cost of goods sold in the income statement, with a corresponding adjustment to equity. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium reserve when the options are exercised.
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. Estimating fair value for share-based payments requires determining the most appropriate valuation model for a grant of equity instruments, which is dependent on the terms and conditions of the grant. This also requires determining the most appropriate inputs to the valuation model including the expected life of the option, volatility and dividend yield and making assumptions about them.
Government grants are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Group will comply with all attached conditions.
Government grants relating to costs are deferred and recognised in the income statement over the period necessary to match the grants to the costs they are intended to compensate.
Government grants relating to the purchase of property, plant and equipment are included in other non-current liabilities and are credited to depreciation and amortization related to cost of sales in the income statement on a straight-line basis over the expected lives of the related assets.
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. Where the Group expects a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain.
The Group recognises a provision for onerous contracts when the benefits to be derived from a contract are less than the unavoidable costs of meeting the obligations under the contract.
Restructuring provisions comprise lease termination penalties and employee termination payments, and are recognised in the period in which the Group becomes legally or constructively committed to payment. Costs related to the ongoing activities of the Group are not provided in advance.
Long-term provisions are determined by discounting the expected future cash flows and taking the risks specific to the liability into account.
Companies within the Group are generally required to restore quarries and processing sites at the end of their producing lives to a condition acceptable to the relevant authorities and consistent with the Group"s environmental policies. Provisions for environmental restoration are recognised when the Group has a present legal or constructive obligation as a result of past events and, it is probable that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated.
Estimating the future costs of these obligations is complex and requires management to make estimates and judgments because most of the obligations will be fulfilled in the future and contracts and laws are often not clear regarding what is required. Furthermore, the resulting provisions are further influenced by the changing technologies and, environmental, safety, business, political and statutory considerations.
Estimated costs associated with such rehabilitation activities are measured at the present value of future cash outflows expected to be incurred and are recognized as a separate asset, within property, plant and equipment, and a corresponding liability. The capitalized cost is depreciated over the useful life of the asset and any change in the net present value of the expected liability is included in finance costs, unless they arise from changes in accounting estimates of valuation.
Revenue comprises the fair value for the sale of goods and services net of value-added tax, rebates and discounts, and after eliminating sales within the Group. Revenue from the sale of goods is recognised when significant risks and rewards of ownership of the goods are transferred to the buyer (usually upon delivery and customer acceptance) and the realization of the related receivable is reasonably assured.
Revenue arising from services is recognised on an accrual basis in accordance with the substance of the relevant agreements.
Interest income is recognised on a time proportion basis, taking account of the principal outstanding and the effective rate over the period to maturity, when it is determined that such income will accrue to the Group.
Dividend income is recognised when the right to receive the payment is established.
Dividends are recorded in the financial statements when the Board of Directors" proposed dividend is ratified at the Shareholders" Annual General Meeting.
Segment information is presented on the same basis as the internal information provided to the chief operating decision maker. The chief operating decision maker is the person (or the group of persons) that allocates resources to and assesses the operating results of the segments.
For management purposes, the Group is structured in four geographic regions: Greece and Western Europe, North America, South East Europe and Eastern Mediterranean. Each region is a cluster of countries. The aggregation of countries is based on proximity of operations and to an extent in similarity of economic and political conditions. Each region has a regional Chief Executive Officer (CEO) who reports to the Group's CEO. In addition, the Finance Department is organized also by geographic region for effective financial controlling and performance monitoring.
Emission rights are accounted for under the net liability method, based on which the Company recognizes a liability for emissions when the emissions are made and are in excess of the allowances allocated. The Group has chosen to measure the net liability on the basis of the period for which the irrevocable right to the cumulative emissions rights have been received. Emission rights acquired in excess of those required to cover its shortages are recognized as an asset, at cost.
Accounting for Derivative Financial Instruments and Hedging Activities
Derivative financial instruments are initially recognised in the balance sheet at cost and subsequently are measured at their fair value. The method of recognising the resulting gain or loss is dependent on the nature of the item being hedged. The Group designates certain derivatives as either (1) a hedge of the fair value of a recognised asset or liability (fair value hedge), or (2) a hedge of a forecast transaction or of a firm commitment (cash flow hedge), or (3) a hedge of a net investment in a foreign entity on the date a derivative contract is entered into. Certain derivative transactions, while providing effective economic hedges under the Group"s risk management policies, do not qualify for hedge accounting under the specific rules in IFRS.
Gains and losses on subsequent measurement are recognised as follows:
Gains and losses arising from a change in the fair value of financial instruments that are not part of a hedging relationship are included in net finance cost in the income statement for the period in which they arise.
Gains and losses from measuring fair value hedging instruments, including fair value hedges for foreign currency denominated transactions, are recognised immediately in net finance cost in the income statement.
Gains and losses from measuring cash flow hedging instruments, including cash flow hedges for forecasted foreign currency denominated transactions and for interest rate swaps, are initially recognised directly in currency translation differences on derivative hedging position in other reserves. Should the hedged firm commitment or forecasted transaction result in the recognition of an asset or a liability, then the cumulative amount recognised in equity is adjusted against the initial measurement of the asset or liability. For other cash flow hedges, the cumulative amount recognised in equity is included in income statement in the period when the commitment or forecasted transaction affects profit or loss.
When a hedging instrument or hedge relationship is terminated but the hedged transaction is still expected to occur, the cumulative unrealised gain or loss at that point remains in equity and is recognised in accordance with the above policy when the transaction occurs. If the hedged transaction is no longer probable, the cumulative unrealised gain or loss is recognised immediately in other income/expenses in the income statement.
Hedges of net investments in foreign entities are accounted for similarly to cash flow hedges. Where the hedging instrument is a derivative, any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognised in currency translation differences on derivative hedging position in other reserves. The gain or loss relating to the ineffective portion is recognised immediately in other income/expenses in the income statement. However, where the hedging instrument is not a derivative (for example, a foreign currency borrowing), all foreign exchange gains and losses arising on the translation of a borrowing that hedges such an investment (including any ineffective portion of the hedge) are recognised in currency translation differences on derivative hedging position in other reserves.
The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk management objective strategy for undertaking various hedge transactions. This process includes linking all derivatives designated as hedges to specific assets and liabilities or to specific firm commitments or forecast transactions. The Group also documents its assessment, both at the hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.
Offset
Where a legally enforceable right to offset recognised financial assets and financial liabilities exists, and there is an intention to settle the liability and realise the asset simultaneously, or to settle on a net basis, all related financial effects are offset.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are carried at amortized cost using the effective interest method. Gains and losses are recognized in income when the loans and receivables are derecognized or impaired, as well as through the amortization process.
(i) Financial assets: A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognized where:
• the rights to receive cash flows from the asset have expired;
• the Group retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a "pass-through" arrangement; Or
• the Group has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all the risks and rewards of the assets, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. Where the Group has transferred its rights to receive cash flows from an asset and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognized to the extent of the Group"s continuing involvement in the asset.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay. Where continuing involvement takes the form of a written and/or purchase option (including a cash-settled option or similar provision) on the transferred asset, the extent of the Group"s continuing involvement is the amount of the transferred asset that the Group may repurchase, except that in the case of a written put option (including a cash-settled option or similar provision) on an asset measured at fair value, the extent of the Group"s continuing involvement is limited to the lower of the fair value of the transferred asset and the option exercise price.
(ii) Financial liabilities: A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a de-recognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognized in the consolidated statement of income.
Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.
The preparation of the financial statements requires management to make estimations and judgments that affect the reported disclosures. On an ongoing basis, management evaluates its estimates, including those related to the estimated useful life of non financial assets, impairment of property, plant and equipment, impairment of goodwill.
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 the circumstances.
These management"s estimation and assumptions form the bases for making judgments about the carrying value of assets and liabilities that are not readily available from other sources. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
Management tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated in Note 1.6. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. The basic assumptions that are used in the calculations are explained further in note 13. These calculations require the use of estimates which mainly relate to future earnings and discount rates.
Group entities are subject to income taxes in numerous jurisdictions. Significant judgment is required in determining the worldwide provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made
In addition, management makes estimations in relation to useful lives of amortized assets. Further information is given in paragraph 1.4.
For management purposes, the Group is structured in four operating (geographic) segments: Greece and Western Europe, North America, South East Europe and Eastern Mediterranean. Each operating segment is a cluster of countries. The aggregation of countries is based on proximity of operations and to an extent in similarity of economic and political conditions.
Each region has a regional Chief Executive Officer (CEO) who reports to the Group's CEO. In addition, the Finance Department is organized also by operating segment for effective financial controlling and performance monitoring.
Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on Earnings before Interest, Taxes, Depreciations & Amortization (EBITDA). The Group financing (including finance costs and finance revenue) is managed on a group basis and is allocated to operating segments.
| Greece and | Adjustments | |||||
|---|---|---|---|---|---|---|
| Western | North | South Eastern | Eastern | and | ||
| (all amounts in Euro thousands) | Europe | America | Europe | Mediterranean | eliminations | Total |
| Gross revenue | 555.576 | 366.094 | 215.768 | 274.576 | - | 1.412.014 |
| Inter-segment revenue | -51.231 | -177 | - | -35 | - | -51.443 |
| Revenue from external customers | 504.345 | 365.917 | 215.768 | 274.541 | - | 1.360.571 |
| Share in profit of associates | -46 | - | 1.126 | - | - | 1.080 |
| Profit before interest, taxes and depreciation | 128.952 | 25.793 | 73.034 | 102.730 | -753 | 329.756 |
| Depreciation & amortization | -16.725 | -62.381 | -14.056 | -19.414 | 176 | -112.400 |
| Profit before interest and taxes | 112.227 | -36.588 | 58.978 | 83.316 | -577 | 217.356 |
| Finance costs - net | -6.818 | -27.258 | -1.646 | -24.092 | 597 | -59.217 |
| Profit before taxes | 105.409 | -63.846 | 57.332 | 59.224 | 20 | 158.139 |
| Less: income tax expense | -33.640 | 21.436 | -7.915 | -16.119 | - | -36.238 |
| Profit after taxes | 71.769 | -42.410 | 49.417 | 43.105 | 20 | 121.901 |
| Attributable to: | ||||||
| Titan Cement S.A. shareholders | 71.755 | -42.410 | 51.748 | 42.280 | 20 | 123.393 |
| Minority interests | 14 | - | -2.331 | 825 | - | -1.492 |
| 71.769 | -42.410 | 49.417 | 43.105 | 20 | 121.901 | |
| Greece and | Adjustments | |||||
| Western | North | South Eastern | Eastern | and | ||
| (all amounts in Euro thousands) | Europe | America | Europe | Mediterranean | eliminations | Total |
| ASSETS | ||||||
| Non-current assets | 2.444.011 | 888.814 | 440.567 | 906.489 | -2.184.362 | 2.495.519 |
| Current assets | 231.523 | 146.946 1.035.760 |
216.293 | 105.197 | -189.858 | 510.101 |
| TOTAL ASSETS | 2.675.534 | 656.860 | 1.011.686 | -2.374.220 | 3.005.620 |
| TOTAL LIABILITIES | 1.822.323 | 456.578 | 161.662 | 254.177 | -1.149.308 | 1.545.432 |
|---|---|---|---|---|---|---|
| Current liabilities | 394.522 | 136.128 | 87.306 | 99.050 | -190.109 | 526.897 |
| Non-current liabilities | 1.427.801 | 320.450 | 74.356 | 155.127 | -959.199 | 1.018.535 |
| LIABILITIES |
| Greece and | |||||
|---|---|---|---|---|---|
| Western | North | South Eastern | Eastern | ||
| Europe | America | Europe | Mediterranean | Total | |
| Capital expenditure | 9.684 | 8.157 | 77.828 | 85.268 | 180.937 |
| Impairment of property, plant and equipment | -390 | 2.275 | - | - | 1.885 |
| Impairment of Goodwill | 41 | - | 624 | - | 665 |
| Provision for doubtful debtors | 3.112 | 2.378 | 514 | - | 6.004 |
| Investment in an associate | 5.501 | - | 5.050 | - | 10.551 |
Capital expenditure consists of additions of property, plant and equipment, intangible assets and investment properties including assets from acquisition of subsidiaries.
Impairment charges are included in the Income Statement.
Revenue is reported in the country in which the customer is located and comprises of the sale of goods and services. There are sales between geographical segments at arms length. Total assets and capital expenditure are presented at the geographical segment of the company that owns the assets.
| Ready mix, | ||||
|---|---|---|---|---|
| aggregates | ||||
| Cement | and blocks | Other | Total | |
| Revenue | 950.843 | 396.001 | 13.727 | 1.360.571 |
| Profit before interest, taxes and depreciation | 381.428 | 17.234 | -68.906 | 329.756 |
| Profit before interest and taxes | 313.272 | -24.590 | -71.326 | 217.356 |
| Total assets | 2.282.751 | 701.779 | 21.090 | 3.005.620 |
| Capital expenditure | 177.514 | 2.940 | 483 | 180.937 |
The cement activity includes cement and cementitious materials.
Other operations of the Group mainly consist of administrative expenses not directly attributable to the Group's main activities. It also includes porcelain, shipping and transportation activities that are not of sufficient size to be reported separately.
Note that the Company sold cement and aggregates to its subsidiary Interbeton S.A. that approached the 10.3% of the Company's turnover.
Notes to the Financial Statements
For the year ended 31 December 2008
| Western North South Eastern Eastern Adjustments (all amounts in Euro thousands) Europe America Europe Mediterranean and eliminations Total Gross revenue 684.160 484.132 287.307 174.247 - 1.629.846 Inter-segment revenue -51.388 -51.164 -219 -5 - - Revenue from external customers 632.996 483.913 287.302 174.247 - 1.578.458 Share in profit of associates 16 - 3.503 - - 3.519 Profit before interest, taxes and depreciation 171.549 42.196 107.481 63.597 -4.771 380.052 Depreciation & amortization -17.374 -60.841 -15.066 -16.399 202 -109.478 Profit before interest and taxes 154.175 -18.645 92.415 47.198 -4.569 270.574 Income from participations 22 - 85 176 - 283 Finance costs - net -11.109 -24.579 5.361 -34.052 3.538 -60.841 Profit before taxes 143.088 -43.224 97.861 13.322 -1.031 210.016 Less: income tax expense -8.422 19.473 -3.992 -7.052 - 7 Profit after taxes 134.666 -23.751 93.869 6.270 -1.031 210.023 Attributable to: Titan Cement S.A. shareholders 134.671 -23.751 92.508 5.827 -1.031 208.224 Minority interests -5 - 1.361 443 - 1.799 134.666 -23.751 93.869 6.270 -1.031 210.023 Greece and (all amounts in Euro thousands) Western North South Eastern Eastern Adjustments Europe America Europe Mediterranean and eliminations Total ASSETS Non-current assets 2.496.182 1.606.594 976.177 452.795 836.983 -1.376.367 Current assets 1.019.550 186.586 149.087 91.808 -749.123 697.908 TOTAL ASSETS 2.626.144 1.162.763 601.882 928.791 -2.125.490 3.194.090 |
|---|
| LIABILITIES |
| Non-current liabilities 1.386.068 384.494 27.961 140.441 -711.275 1.227.689 |
| Current liabilities 397.803 144.857 95.883 84.638 -190.914 532.267 |
| TOTAL LIABILITIES 1.783.871 529.351 123.844 225.079 -902.189 1.759.956 |
| Greece and Western |
North | South Eastern | Eastern | ||
|---|---|---|---|---|---|
| Europe | America | Europe | Mediterranean | Total | |
| Capital expenditure | 39.270 | 45.927 | 109.225 | 344.984 | 539.406 |
| Impairment of property, plant and equipment | - | 1.050 | - | - | 1.050 |
| Impairment of Goodwill | 859 | - | - | - | 859 |
| Provision for doubtful debtors | 4.664 | 2.957 | 561 | 67 | 8.249 |
| Investment in an associate | 5.582 | - | 4.596 | - | 10.178 |
Capital expenditure consists of additions of property, plant and equipment, intangible assets and investment properties including assets from acquisition of subsidiaries. Impairment charges are included in the Income Statement.
| Ready mix, | ||||
|---|---|---|---|---|
| aggregates and | ||||
| Cement | blocks | Other | Total | |
| Revenue | 1.027.991 | 530.451 | 20.016 | 1.578.458 |
| Profit before interest, taxes and depreciation | 414.721 | 45.894 | -80.563 | 380.052 |
| Profit before interest and taxes | 350.758 | 3.049 | -83.233 | 270.574 |
| Total assets | 2.521.716 | 649.962 | 22.412 | 3.194.090 |
| Capital expenditure | 511.835 | 27.542 | 29 | 539.406 |
Titan Cement Company S.A. Notes to the Financial Statements
| Group | Company | ||||
|---|---|---|---|---|---|
| (all amounts in Euro thousands) | 2009 | 2008 | 2009 | 2008 | |
| Scrap sales | 890 | 1.554 | 224 | 468 | |
| Compensation income | - | 1.019 | - | - | |
| Income from subsidies | 1.439 | - | - | - | |
| Income from services | 761 | 1.291 | 2.852 | 2.231 | |
| Rental income | 4.448 | 5.387 | 3.972 | 5.129 | |
| Gains on disposal of property, plant and equipment (note 29) | 6.590 | 6.951 | 2.438 | 245 | |
| Reversal of provisions | 5.033 | 3.866 | 2.806 | 2.256 | |
| Other income | 5.924 | 3.129 | 3.132 | 1.461 | |
| Other income total | 25.085 | 23.197 | 15.424 | 11.790 | |
| Provisions | -6.897 | -15.185 | -4.815 | -3.597 | |
| Losses on disposal of property, plant and equipment (note 29) | -2.895 | -2.446 | -618 | -219 | |
| Impairment of tangible and intangible assets (note 11, 13, 29) | -2.274 | -1.940 | - | - | |
| Goodwill impairment (note 13, 29) | -665 | -859 | - | - | |
| Inventory impairment (note 19, 29) | -3.292 | -1.206 | -691 | -840 | |
| Staff leaving indemnities (not provided) (note 25) | -3.535 | -4.053 | -3.535 | -2.709 | |
| Staff leaving indemnities provision (note 25) | -4.065 | -5.767 | -2.188 | -3.195 | |
| Other expenses | -3.674 | -1.506 | -484 | -441 | |
| Other expenses total | -27.297 | -32.962 | -12.331 | -11.001 |
The following items have been included in arriving at profit before interest and taxes:
| Group | Company | ||||
|---|---|---|---|---|---|
| (all amounts in Euro thousands) | 2009 | 2008 | 2009 | 2008 | |
| Depreciation on property, plant and equipment (note 11) | |||||
| Owned assets | 95.109 | 93.947 | 11.957 | 11.360 | |
| Leased assets under finance leases | 457 | 482 | - | - | |
| 95.566 | 94.429 | 11.957 | 11.360 | ||
| Amortisation of government grants received | -414 | -451 | -302 | -341 | |
| 95.152 | 93.978 | 11.655 | 11.019 | ||
| Stripping costs amortisation | 868 | 961 | - | - | |
| Net profit on disposal of property, plant and equipment (note 29) | 3.695 | 4.505 | 1.820 | 26 | |
| Amortisation of intangibles (note 13) | 16.380 | 14.539 | - | - | |
| Repairs and maintenance expenditure on property, plant and equipment | 40.019 | 54.142 | 15.617 | 18.262 | |
| Costs of inventories recognized as an expense in Cost of Sales: | |||||
| Raw materials | 154.829 | 194.952 | 93.756 | 127.861 | |
| Maintenance stores | 47.558 | 74.399 | 13.815 | 15.993 | |
| Finished goods | 163.318 | 168.290 | 9.460 | 1.160 | |
| 365.705 | 437.641 | 117.031 | 145.014 | ||
| Trade receivables - Net provision for doubtful receivables (note 29, 20) | 4.606 | 9.377 | 1.950 | 3.067 | |
| Staff costs (note 7) | 235.077 | 267.279 | 71.877 | 76.749 |
Notes to the Financial Statements
| 2009 | 2008 | 2009 | 2008 |
|---|---|---|---|
| 8.803 | 8.859 | 2.024 | 538 |
| 10.546 | 11.671 | 1.576 | 1.892 |
| 288 | 3.039 | 201 | 123 |
| 42 | 105 | - | - |
| 139 | 144 | 139 | 144 |
| 19.818 | 23.818 | 3.940 | 2.697 |
| -19.024 | -18.780 | -1.557 | -5.757 |
| -59.911 | -63.142 | -32.528 | -24.259 |
| -4.400 | -4.431 | -2.980 | -4.431 |
| -3 | -744 | -3 | -118 |
| -178 | -264 | - | - |
| -83.516 | -87.361 | -37.068 | -34.565 |
| 4.481 | 2.702 | - | - |
| -79.035 | -84.659 | -37.068 | -34.565 |
| Group | Company |
During 2009, the Group capitalized interest expense (note 11) of € 4,481 thousands (2008: € 2,702 thousands) generated from the U.S and Egypt operations. The amounts capitalized were calculated on an weighted average borrowing rate basis. At the end of 2009 the average weighted interest for the operations in U.S. (loans in dollar) was 5.25% (2008:4.56%) and in Egypt (loans in Egyptian pounds ) was 10,79% (2008: 10,60%) . The capitalization of interest for the Group's operations in United States relates to significant capital projects, which requires uses of the borrowing facility, specifically the development of a quarry operation in Florida and the implementation of an advanced computer system in order to conform to parent company's system. The capitalization of interest for the Group's operations in Egypt relates to the construction of the second production line in Group's subsidiary Beni Suef.
| Company | |||
|---|---|---|---|
| 2009 | 2008 | 2009 | 2008 |
| 197.890 | 223.137 | 53.484 | 56.411 |
| 26.067 | 29.125 | 10.148 | 10.538 |
| 3.535 | 4.065 | 3.535 | 2.709 |
| 2.520 | 3.697 | 1.522 | 2.396 |
| 1.000 | 1.500 | 1.000 | 1.500 |
| 4.065 | 5.755 | 2.188 | 3.195 |
| 235.077 | 267.279 | 71.877 | 76.749 |
| Group |
| The employees in the Group are employed on a full-time basis and | Group | Company | ||
|---|---|---|---|---|
| analysed as follows: | 2009 | 2008 | 2009 | 2008 |
| Greece and Western Europe | 1.659 | 1.767 | 1.027 | 1.101 |
| North America | 1.966 | 2.260 | - | - |
| South Eastern Europe | 1.240 | 1.412 | - | - |
| Eastern Mediterranean | 940 | 1.066 | - | - |
| 5.805 | 6.505 | 1.027 | 1.101 |
| Group | Company | |||||||
|---|---|---|---|---|---|---|---|---|
| (all amounts in Euro thousands) | 2009 | 2008 | 2009 | 2008 | ||||
| Current tax | 24.849 | 15,71% | 18.350 | 8,74% | 17.001 | 21,29% | 23.132 | 20,42% |
| Deferred tax (note 18) | -2.692 | -1,70% | -3.395 | -1,62% | 2.393 | 3,00% | -7.454 | -6,58% |
| Non deductible taxes and differences from tax audit | 3.628 | 2,29% | 1.031 | 0,49% | 3.628 | 4,54% | 774 | 0,68% |
| Tax incentives | -447 | -0,28% | -5.341 | -2,54% | - | - | - | - |
| Tax provision reversal for reserve L.3220/2004 (note 23) | - | - | -10.652 | -5,07% | - | - | -9.124 | -8,05% |
| Social responsibility tax L3808/2009 | 10.900 | 6,89% | - | - | 10.379 | 13,00% | - | - |
| 36.238 | 22,92% | -7 | 0,00% | 33.401 | 41,83% | 7.328 | 6,47% |
Current tax for the fiscal year 2009 includes tax benefits of € 7,089 thousands (2008: € 25,651 thousands), accounted for the tax losses at the Group's subsidiary in the U.S. Titan America LLC.
According to Law 3808/09, a social responsibility tax is imposed on Greek companies that had profit above €5.0 m for the fiscal year of 2008. The total charge amounts to €10.9 m for the Group and €10.4 m for the Company.
The deferred taxes both for the Group and the Company are reviewed each year, in order the balance on the balance sheet to reflect the effective tax rates for each of the countries the Group's operates. In 2008 the Greek state passed the tax reform law 3697/2008, according to which the tax rates will be reduced by 1% each year for the years 2010 to 2014.
The tax on the Group's profit differs from the amount that would arise had the Group used the nominal tax rate of the home country of the parent The statutory tax audit for the Company for the years 2006 through 2007 has been completed and the total liability assessed amounts to €2,6 m. An amount of €1,0m. was charged to the Income Statement and the remaining amount of €1.6m was offset against a provision established over those years.
Company as follows:
| Group | Company | |||||||
|---|---|---|---|---|---|---|---|---|
| (all amounts in Euro thousands) | 2009 | 2008 | 2009 | 2008 | ||||
| Profit before tax | 158.139 | 210.016 | 79.847 | 113.292 | ||||
| Tax calculated at the statutory tax rate of 25% (2008: 25%) | 39.535 | 25,00% | 52.504 | 25,00% | 19.962 | 25,00% | 28.323 | 25,00% |
| Income not subject to tax | -1.821 | -1,15% | -12.291 | -5,85% | -1.559 | -1,95% | -7.355 | -6,49% |
| Expenses not deductible for tax purposes | 6.797 | 4,30% | 4.318 | 2,06% | 3.204 | 4,01% | 2.164 | 1,91% |
| Dividends tax | 3.594 | 2,27% | - | - | - | - | - | - |
| Effect of changes in future tax rates and tax revaluation | - | - | -8.241 | -3,92% | - | - | -6.829 | -6,03% |
| Other taxes | 2.555 | 1,62% | 5.877 | 2,80% | 855 | 1,07% | 149 | 0,13% |
| Social responsibility tax L3808/2009 | 10.900 | 6,89% | - | - | 10.379 | 13,00% | - | - |
| Tax provision reversal for reserve L.3220/2004 | - | - | -10.652 | -5,07% | - | -9.124 | -8,05% | |
| Tax incentives | -447 | -0,28% | -5.341 | -2,54% | -447 | -0,56% | - | - |
| Effect of different tax rates in other countries | -25.814 | -16,32% | -24.739 | -11,78% | - | - | - | - |
| Provision's differences of prior years | 939 | 0,59% | -1.442 | -0,69% | 1.007 | 1,26% | - | - |
| Effective tax charge | 36.238 | 22,92% | -7 | 0,00% | 33.401 | 41,83% | 7.328 | 6,47% |
Basic earnings per share are calculated by dividing net profit for the year attributable to shareholders by the weighted average number of ordinary and preference shares in issue during the year, excluding ordinary and preference shares purchased by the Company and held as treasury shares (see note 22).
| Group | Company | ||||
|---|---|---|---|---|---|
| (all amounts in Euro thousands unless otherwise stated) | 2009 | 2008 | 2009 | 2008 | |
| Net profit for the year attributable to Titan S.A. shareholders | 123.393 | 208.224 | 46.446 | 105.964 | |
| Weighted average number of ordinary shares in issue | 73.799.095 | 74.618.744 | 73.799.095 | 74.618.744 | |
| Weighted average number of preferred shares in issue | 7.563.041 | 7.566.766 | 7.563.041 | 7.566.766 | |
| Total weighted average number of shares in issue for basic earnings per | |||||
| share | 81.362.136 | 82.185.510 | 81.362.136 | 82.185.510 | |
| Basic earnings per ordinary and preferred share (in € ) | 1,5166 | 2,5336 | 0,5709 | 1,2893 | |
The diluted earnings per share are calculated adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Company has one category of dilutive potential ordinary shares: share options. For the share options a calculation is done to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the Company's shares) based on the monetary value of the subscription rights attached to outstanding share options. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options. The difference is added to the denominator as an issue of ordinary shares for no consideration. No adjustment is made to net profit (numerator).
| Group | Company | ||||
|---|---|---|---|---|---|
| (all amounts in Euro thousands unless otherwise stated) | 2009 | 2008 | 2009 | 2008 | |
| Net profit for the year attributable to Titan S.A. shareholders for diluted earnings per share |
123.393 | 208.224 | 46.446 | 105.964 | |
| Weighted average number of ordinary shares for diluted earnings per share | 73.799.095 | 74.618.744 | 73.799.095 | 74.618.744 | |
| Share options | 206.700 | 265.506 | 206.700 | 265.506 | |
| Weighted average number of preferred shares in issue | 7.563.041 | 7.566.766 | 7.563.041 | 7.566.766 | |
| Total weighted average number of shares in issue for diluted earnings per | |||||
| share | 81.568.836 | 82.451.016 | 81.568.836 | 82.451.016 | |
| Diluted earnings per ordinary and preferred share (in € ) | 1,5127 | 2,5254 | 0,5694 | 1,2852 | |
| 10. Dividend proposed and distributed |
| (all amounts in Euro thousands) | Company | ||
|---|---|---|---|
| Declared and distributed during the year: | 2009 | 2008 | |
| Equity dividends on ordinary and preference shares: | |||
| Final dividend for 2008: € 0.42 per share (2007: € 0.75 per share) | 35.510 | 63.399 | |
| Proposed for approval at Annual General Meeting (not recognised as a liability as at 31 | 2009 | 2008 | |
| December): | |||
| Equity dividends on ordinary and preference shares: | |||
| Final dividend for 2009: € 0.18 per share (2008: € 0.42 per share) | 15.224 | 35.510 |
Dividend proposed relates to all issued shares (84,576,118) as of 31.12.2009 and is expected to be ratified at the Annual General Meeting to be held in May 2010. According to article 16 of Greek law 2190/1920, dividend amount relating to treasury shares is distributed to the remaining shareholders.
| Group | Quarries | Land | Buildings | Plant & equipment |
Motor vehicles |
Office furniture, fixtures and equipment |
Assets under construction |
Total |
|---|---|---|---|---|---|---|---|---|
| Year ended 31 December 2008 | ||||||||
| (all amounts in Euro thousands) | ||||||||
| Opening balance | 122.032 | 129.058 | 154.850 | 612.289 | 126.716 | 15.364 | 137.941 | 1.298.250 |
| Additions | 1.132 | 6.231 | 2.306 | 8.133 | 2.776 | 2.675 | 184.404 | 207.657 |
| Revaluation during the period resulting from acquisition of joint |
-2.345 | - | - | - | - | - | - | -2.345 |
| venture | - | 55.119 | 17.897 | 64.795 | 137.811 | |||
| Disposals (NBV) | - | -1.102 | -691 | -159 | -1.073 | -206 | - | -3.231 |
| Assets contributed for participation to associate | - | -4.475 | -209 | -408 | -234 | - | - | -5.326 |
| Additions due to acquisitions | 13 | 61.556 | 46.644 | 147.842 | 975 | 529 | 35.991 | 293.550 |
| Reclassification of assets to other categories | 2.978 | 8.671 | 18.682 | 81.228 | 8.706 | 4.933 | -125.198 | - |
| Transfers from/(to) inventories (note 19) | - | - | 164 | -439 | 31 | 62 | - | -182 |
| Interest capitalized (note 6, 29) | - | - | - | - | - | - | 2.702 | 2.702 |
| Depreciation charge (note 5,29) | -1.908 | -2.075 | -10.923 | -54.215 | -21.270 | -3.556 | - | -93.947 |
| Exchange differences | 6.110 | 10.157 | 3.283 | 24.209 | 3.572 | 657 | 8.202 | 56.190 |
| Impairment of PPE (note 4, 29) | - | - | -500 | -550 | - | - | - | -1.050 |
| Ending balance | 128.012 | 263.140 | 231.503 | 882.725 | 120.199 | 20.458 | 244.042 | 1.890.079 |
| Leased assets under finance leases | ||||||||
| Opening balance | - | - | - | 5.674 | - | - | - | 5.674 |
| Additions due to acquisitions | - | - | - | 806 | 277 | - | - | 1.083 |
| Exchange differences | - | - | - | 238 | -13 | - | - | 225 |
| Depreciation charge (note 5,29) | - | - | - | -426 | -56 | - | - | -482 |
| Ending balance | - | - | - | 6.292 | 208 | - | - | 6.500 |
| At 31 December 2008 | ||||||||
| Cost | 147.871 | 271.740 | 351.874 | 1.277.202 | 237.298 | 48.603 | 244.042 | 2.578.630 |
| Accumulated depreciation | -19.859 | -8.600 | -119.871 | -382.126 | -116.891 | -28.145 | - | -675.492 |
| Accumulated losses of impairment of PPE | - | - | -500 | -6.059 | - | - | - | -6.559 |
| Net book value | 128.012 | 263.140 | 231.503 | 889.017 | 120.407 | 20.458 | 244.042 | 1.896.579 |
| Year ended 31 December 2009 | ||||||||
| Opening balance | 128.012 | 263.140 | 231.503 | 882.725 | 120.199 | 20.458 | 244.042 | 1.890.079 |
| Additions | 436 | 26 | 687 | 2.807 | 166 | 760 | 160.726 | 165.608 |
| Disposals (NBV) (note 29) | -13 | -321 | -743 | -694 | -1.389 | -105 | -442 | -3.707 |
| Additions due to acquisitions | - | 64 | 250 | 494 | 2 | 51 | 50 | 911 |
| Reclassification of assets to other categories | 2.669 | 13.983 | 3.668 | 155.528 | 453 | 769 | -177.070 | - |
| Transfers from inventories (note 19) | - | - | 5 | 2.644 | 336 | 12 | - | 2.997 |
| Transfers to investment properties | - | -86 | -499 | - | - | - | - | -585 |
| Interest capitalized (note 6) | - | - | - | - | - | - | 4.481 | 4.481 |
| Depreciation charge (note 5, 29) | -1.145 | -2.394 | -9.975 | -56.816 | -20.800 | -3.979 | - | -95.109 |
| Impairment of PPE (note 4, 29) | -3.325 | - | 500 | 940 | - | - | - | -1.885 |
| Exchange differences | -3.955 | -7.661 | -4.550 | -21.812 | -2.176 | 781 | -13.980 | -53.353 |
| Ending balance | 122.679 | 266.751 | 220.846 | 965.816 | 96.791 | 18.747 | 217.807 | 1.909.437 |
| Leased assets under finance leases | ||||||||
| Opening balance | - | - | - | 6.292 | 208 | - | - | 6.500 |
| Write-offs (note 29) | - | - | - | -397 | 313 | - | - | -84 |
| Exchange differences | - | - | - | -186 | 1 | - | - | -185 |
| Depreciation charge (note 5, 29) | - | - | - | -334 | -123 | - | - | -457 |
| Ending balance | - | - | - | 5.375 | 399 | - | - | 5.774 |
| At 31 December 2009 | ||||||||
| Cost Accumulated depreciation |
146.353 -20.349 |
277.366 -10.615 |
345.360 -124.514 |
1.404.283 -427.973 |
224.258 -127.068 |
48.555 -29.808 |
217.807 - |
2.663.982 -740.327 |
| Accumulated losses of impairment of PPE | -3.325 | - | - | -5.119 | - | - | - | -8.444 |
| Net book value | 122.679 | 266.751 | 220.846 | 971.191 | 97.190 | 18.747 | 217.807 | 1.915.211 |
| Company | Plant & | Motor | Office furniture, fixtures and |
Assets under |
||||
|---|---|---|---|---|---|---|---|---|
| Quarries | Land | Buildings | equipment | vehicles | equipment | construction | Total | |
| (all amounts in Euro thousands) | ||||||||
| Year ended 31 December 2008 | ||||||||
| Opening balance | 959 | 5.319 | 52.973 | 163.106 | 1.214 | 11.880 | 26.763 | 262.214 |
| Additions | - | 244 | 6 | 1.640 | 493 | 1.844 | 16.371 | 20.598 |
| Disposals (NBV) (note 29) | - | - | -3 | -62 | -49 | -564 | - | -678 |
| Reclassification of assets to other categories | - | - | 2.771 | 18.875 | - | 50 | -21.696 | - |
| Transfers from/(to) inventories (note 19) | - | - | - | -182 | - | - | - | -182 |
| Depreciation charge (note 5, 29) | -60 | - | -1.450 | -8.340 | -168 | -1.342 | - | -11.360 |
| Ending balance | 899 | 5.563 | 54.297 | 175.037 | 1.490 | 11.868 | 21.438 | 270.592 |
| At 31 December 2008 | ||||||||
| Cost | 1.337 | 5.563 | 89.510 | 292.961 | 5.348 | 25.719 | 21.438 | 441.876 |
| Accumulated depreciation | -438 | - | -35.213 | -115.224 | -3.858 | -13.851 | - | -168.584 |
| Accumulated losses of impairment of PPE | - | - | - | -2.700 | - | - | - | -2.700 |
| Net book value | 899 | 5.563 | 54.297 | 175.037 | 1.490 | 11.868 | 21.438 | 270.592 |
| Year ended 31 December 2009 | ||||||||
| Opening balance | 899 | 5.563 | 54.297 | 175.037 | 1.490 | 11.868 | 21.438 | 270.592 |
| Additions | 181 | - | 70 | 754 | 58 | 397 | 4.132 | 5.592 |
| Disposals (NBV) (note 29) | - | - | -3 | -744 | -18 | -90 | - | -855 |
| Reclassification of assets to other categories | - | - | 412 | 4.937 | - | 79 | -5.428 | - |
| Transfers from inventories (note 19) | - | - | - | 2.997 | - | - | - | 2.997 |
| Depreciation charge (note 5, 29) | -71 | - | -1.480 | -8.919 | -183 | -1.304 | - | -11.957 |
| Impairment reversal of assets | - | - | - | 390 | - | - | - | 390 |
| Ending balance | 1.009 | 5.563 | 53.296 | 174.452 | 1.347 | 10.950 | 20.142 | 266.759 |
| At 31 December 2009 | ||||||||
| Cost | 1.517 | 5.563 | 89.983 | 300.494 | 5.213 | 25.987 | 20.142 | 448.899 |
| Accumulated depreciation | -508 | - | -36.687 | -123.732 | -3.866 | -15.037 | - | -179.830 |
| Accumulated losses of impairment of PPE | - | - | - | -2.310 | - | - | - | -2.310 |
| Net book value | 1.009 | 5.563 | 53.296 | 174.452 | 1.347 | 10.950 | 20.142 | 266.759 |
Impairment of property, plant and equipment:
Assets that have an indefinite useful life (land) are not subject to amortisation and are tested annually for impairment. 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 in other expenses, 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. Group's impairment for 2009 is amounted to €1.9 million (2008: €1.0 million) whereas the Company had reversed impairment of € 0.4 m. (2008: nil).
The assets of the Company have not been pledged. The assets of the Group have a pledge for the amount of € 54 m. The pledge concerns the Group's joint venture Adocim Cimento Beton Sanayi ve Ticaret A.S. in Turkey for the purpose of securing its debt of € 36 m. and is on the assets of this entity.
For Group purposes, there are no investment properties as the Company leases out such qualifying assets to certain of its subsidiary companies and therefore such properties are reclassified as property, plant and equipment on consolidation. Investment properties are measured at fair values based on management's estimations.
| Group | |||||
|---|---|---|---|---|---|
| (all amounts in Euro thousands) | 2009 | 2008 | 2009 | 2008 | |
| Opening balance | - | - | 6.796 | 6.996 | |
| Purchases | 504 | - | - | - | |
| Gain/(loss) from measurement at fair value | - | - | -400 | -200 | |
| Transfer from property, plant and equipment | 584 | - | - | - | |
| Ending balance | 1.088 | - | 6.396 | 6.796 | |
The estimation of the fair value of investment properties that are located in urban areas, was made in accordance with the current market values of similar properties. The estimation of fair value for land located in rural areas as well as quarries, was made taking into consideration local valuations.
Notes to the Financial Statements
| Group | Initial goodwill |
Goodwill impairment |
Total goodwill |
Licences | Patends | Trade marks |
Customer relation ships |
Other intangible assets |
Total |
|---|---|---|---|---|---|---|---|---|---|
| (all amounts in Euro thousands) | |||||||||
| Year ended 31 December 2008 | |||||||||
| Opening balance | 244.452 | -16.310 | 228.142 | 5.977 | 3.407 | 9.645 | 52.347 | 1.671 | 301.189 |
| Additions | - | - | - | - | - | - | - | 1.448 | 1.448 |
| Revaluation resulting from | |||||||||
| acquisition of joint venture | - | - | - | - | - | 12.718 | 24.992 | -41 | 37.669 |
| Subsidiaries acquired (note 30) | 183.094 | - | 183.094 | - | - | 11.981 | 24.407 | 363 | 219.845 |
| Acquisition of minority interest | 175 | - | 175 | - | - | - | - | - | 175 |
| Impairment | - | -859 | -859 | -5 | - | - | -238 | -647 | -1.749 |
| Amortization charge (note 5,29) | - | - | - | -236 | -706 | -1.171 | -11.446 | -980 | -14.539 |
| Exchange differences | -5.321 | - | -5.321 | 285 | 56 | 3.854 | 3.064 | -888 | 1.050 |
| Ending balance | 422.400 | -17.169 | 405.231 | 6.021 | 2.757 | 37.027 | 93.126 | 926 | 545.088 |
| Year ended 31 December 2009 | |||||||||
| Opening balance | 422.400 | -17.169 | 405.231 | 6.021 | 2.757 | 37.027 | 93.126 | 926 | 545.088 |
| Additions | - | - | - | 10.089 | - | - | - | 3.768 | 13.857 |
| Subsidiaries acquired (note 30) | 9.119 | - | 9.119 | 57 | - | - | - | - | 9.176 |
| Acquisition of minority interest | 628 | - | 628 | - | - | - | - | - | 628 |
| Impairment | - | -665 | -665 | - | - | - | -375 | -14 | -1.054 |
| Amortization charge (note 5,29) | - | - | - | -452 | -737 | -1.728 | -12.281 | -1.182 | -16.380 |
| Exchange differences | -4.469 | - | -4.469 | -212 | -45 | -1.016 | -2.593 | -164 | -8.499 |
| Ending balance | 427.678 | -17.834 | 409.844 | 15.503 | 1.975 | 34.283 | 77.877 | 3.334 | 542.816 |
| Company | Initial goodwill |
Goodwill impairment |
Total goodwill |
Mining permits |
Patends | Trade marks |
Customer relation ships |
Other intangible assets |
Total |
| (all amounts in Euro thousands) |
| Additions | - | - | - | - | - | - | - | 671 | 671 |
|---|---|---|---|---|---|---|---|---|---|
| Ending balance | - | - | - | - | - | - | - | 671 | 671 |
Impairment charges are included in the Income Statement.
Goodwill acquired through business combinations has been allocated to the following cash-generating units ("CGU's") per region of operation and business segment:
Carrying amount of goodwill (by geographical segment):
| 2009 | 2008 | |
|---|---|---|
| Greece and Western Europe | 26.405 | 16.910 |
| North America | 151.912 | 157.323 |
| South Eastern Europe | 56.013 | 53.919 |
| Eastern Mediterranean | 175.514 | 177.079 |
| 409.844 | 405.231 | |
| Carrying amount of goodwill (by business segment): | ||
| Cement | 228.111 | 226.479 |
| Blocks, ready mix and aggregates | 180.729 | 177.748 |
| Porcelain, shipping and transport activities | 1.004 | 1.004 |
| 409.844 | 405.231 | |
The recoverable amount of a CGU is determined based on value-in-use calculations. These calculations use cash flow projections based on financial budgets approved by management covering a five-year period.
The following describes each key assumption on which management has based its cash flow projections to undertake impairment testing of goodwill pertaining to those CGU's to which management expects an impairment to occur.
Budgeted gross profits - the basis used to determine the value assigned to the budgeted gross profits is the average gross profits achieved in the year immediately before the budgeted year adjusted to reflect expected changes in operations.
Key assumptions used for value in use calculations (for the fiscal year 2009):
| Greece and Western | South Eastern | Eastern Mediter | ||
|---|---|---|---|---|
| Europe | North America | Europe | ranean | |
| Discount rate: | 8,0%-9,5% | 9,5% - 10,1% | 9% - 16,2% | 13,4% - 14,6% |
| Gross margin: | 15,0%-47,5% | 12,5%-56% | 42% - 58% | 22% - 51% |
| Perpetuity growth: | 0%-2% | 3%-4% | 2% - 3% | 3% - 5% |
The key assumptions used for the value in use of the prior year were the following: discount rate 7,4% to 20%, gross margin 6% to 57% and perpetuity growth 2% to 4%.
| 2009 | 2008 | |||||
|---|---|---|---|---|---|---|
| Subsidiary, associate and joint venture name | Country of incorporation | Nature of business | Direct | % of investment (1) Indirect |
Direct | % of investment (1) Indirect |
| Full consolidation method | ||||||
| Τitan Cement Company S.A | Greece | Cement Producer | Parent company | Parent company | ||
| Achaiki Maritime Company | Greece | Shipping | 100,000 | - | 100,000 | - |
| Aeolian Maritime Company | Greece | Shipping | 100,000 | - | 100,000 | - |
| Albacem S.A. | Greece | Import & Distribution of Cement | 99,996 | 0,004 | 99,996 | 0,004 |
| Arktias S.A. (2) | Greece | Quarries & Aggregates | - | 100,000 | - | - |
| AVES AFOI Polikandrioti S.A. | Greece | Ready Mix | - | 100,000 | - | 100,000 |
| Dodekanesos Quarries S.A. | Greece | Quarries & Aggregates | - | 100,000 | - | 100,000 |
| Domiki Beton S.A. (4) | Greece | Ready Mix & Aggregates | - | - | - | 100,000 |
| Ecobeton S.A. | Greece | Ready Mix & Aggregates | - | 100,000 | - | 100,000 |
| Interbeton Construction Materials S.A. | Greece | Ready Mix & Aggregates | 99,679 | 0,321 | 99,679 | 0,321 |
| Intercement S.A. | Greece | Import & Distribution of Cement | 99,950 | 0,050 | 99,950 | 0,050 |
| Intertitan Trading International S.A. | Greece | Trading Company | 99,995 | 0,005 | 99,995 | 0,005 |
| Ionia S.A. | Greece | Porcelain | 100,000 | - | 100,000 | - |
| Lakmos S.A. | Greece | Trading Company | 99,950 | 0,050 | 99,950 | 0,050 |
| Lateem S.A. (5) | Greece | Quarries & Aggregates | - | - | - | 100,000 |
| Leecem S.A. | Greece | Trading Company | 3,172 | 96,828 | 3,172 | 96,828 |
| Naftitan S.A. | Greece | Shipping | 99,900 | 0,100 | 99,900 | 0,100 |
| Pozolani S.A. (3) | Greece | Quarries & Aggregates | - | 100,000 | - | - |
| Polikos Maritime Company | Greece | Shipping | 100,000 | - | 100,000 | - |
| Porfirion S.A. | Greece | Production and Trade of Electricity | - | 100,000 | - | 100,000 |
| Gournon Quarries S.A. (8) | Greece | Quarries & Aggregates | 54,930 | 45,070 | 54,930 | 45,070 |
| Quarries of Tagaradon Community S.A. | Greece | Quarries & Aggregates | - | 79,928 | - | 79,928 |
| Quarries of Tanagra S.A. (3) | Greece | Quarries & Aggregates | - | 99,000 | - | - |
| Thisvis Quarries S.A. (5) | Greece | Quarries & Aggregates | - | - | - | 100,000 |
| Vahou Quarries S.A. | Greece | Quarries & Aggregates | - | 100,000 | - | 100,000 |
| Sigma Beton S.A. | Greece | Quarries & Aggregates | - | 100,000 | - | 100,000 |
| Titan Atlantic Cement Industrial and Commercial S.A. | Greece | Investment Holding Company | 43,947 | 56,053 | 43,947 | 56,053 |
| Titan Cement International Trading S.A. | Greece | Trading Company | 99,800 | 0,200 | 99,800 | 0,200 |
| Double W & Co OOD | Bulgaria | Port | - | 99,989 | - | 99,989 |
| Granitoid AD | Bulgaria | Trading Company | - | 99,668 | - | 99,668 |
| Gravel & Sand PIT AD | Bulgaria | Investment Holding Company | - | 99,989 | - | 99,989 |
| Trojan Cem EOOD (2) | Bulgaria | Trading Company | - | 94,835 | - | - |
| Zlatna Panega Beton EOOD | Bulgaria | Ready Mix | - | 99,989 | - | 99,989 |
| Zlatna Panega Cement AD | Bulgaria | Cement Producer | - | 99,989 | - | 99,989 |
| Cementi Crotone S.R.L. (2) | Italy | Import & Distribution of Cement | - | 100,000 | - | - |
| Fintitan SRL | Italy | Import & Distribution of Cement | 100,000 | - | 100,000 | - |
| Separation Technologies Canada Ltd | Canada | Converter of waste material into fly ash | - | 100,000 | - | 100,000 |
| Aemos Cement Ltd | Cyprus | Investment Holding Company | 100,000 | - | 100,000 | - |
| Alvacim Ltd | Cyprus | Investment Holding Company | - | 100,000 | - | 100,000 |
| Balkcem Ltd | Cyprus | Investment Holding Company | - | 100,000 | - | 100,000 |
| East Cement Trade Ltd | Cyprus | Investment Holding Company | - | 100,000 | - | 100,000 |
| Feronia Holding Ltd | Cyprus | Investment Holding Company | - | 100,000 | - | 100,000 |
| Iapetos Ltd | Cyprus | Investment Holding Company | 100,000 | - | 100,000 | - |
| KOCEM Limited | Cyprus | Investment Holding Company | - | 100,000 | - | 100,000 |
| Rea Cement Ltd | Cyprus | Investment Holding Company | - | 100,000 | - | 100,000 |
| Themis Holdings Ltd | Cyprus | Investment Holding Company | - | 51,006 | - | 51,006 |
| Titan Cement Cyprus Limited | Cyprus | Investment Holding Company | - | 100,000 | - | 100,000 |
| Tithys Ltd | Cyprus | Investment Holding Company | - | 100,000 | - | 100,000 |
| Alexandria Portland Cement Co. S.A.E | Egypt | |||||
| Cement Producer | - | 97,721 | - | 97,717 | ||
| Beni Suef Cement Co.S.A.E. | Egypt | Cement Producer | - | 99,886 | - | 99,886 |
| Misrieen Titan Trade & Distribution | Egypt | Cement Silo Operations | - | 98,943 | - | 98,943 |
| Titan Beton & Aggregate Egypt LLC | Egypt | Quarries & Aggregates | - | 97,800 | - | 97,796 |
| Separation Technologies U.K. Ltd | U.K. | Converter of waste material into fly ash | - | 100,000 | - | 100,000 |
| Titan Cement U.K. Ltd | U.K. | Import & Distribution of Cement | 100,000 | - | 100,000 | - |
| Titan Global Finance PLC | U.K. | Financial Services | 100,000 | - | 100,000 | - |
| Alexandria Development Co.Ltd | U.K. (Ch. Islands) | Investment Holding Company | - | 100,000 | - | 100,000 |
| Titan Egyptian Inv. Ltd | U.K. (Ch. Islands) | Investment Holding Company | - | 100,000 | - | 100,000 |
| Central Concrete Supermix Inc. | U.S.A. | Ready Mix | - | 100,000 | - | 100,000 |
| Essex Cement Co. LLC | U.S.A. | Trading Company | - | 100,000 | - | 100,000 |
| Markfield America LLC | U.S.A. | Insurance Company | - | 100,000 | - | 100,000 |
| Mechanicsville Concrete INC. | U.S.A. | Ready Mix | - | 100,000 | - | 100,000 |
| Metro Redi-Mix LLC | U.S.A. | Ready Mix | - | 100,000 | - | 100,000 |
| Miami Valley Ready Mix of Florida LLC | U.S.A. | Ready Mix | - | 100,000 | - | 100,000 |
| 2009 | 2008 | ||||||
|---|---|---|---|---|---|---|---|
| % of investment (1) | % of investment (1) | ||||||
| Subsidiary, associate and joint venture name | Country of incorporation | Nature of business | Direct | Indirect | Direct | Indirect | |
| Full consolidation method | |||||||
| Pennsuco Cement Co. LLC | U.S.A. | Cement Producer | - | 100,000 | - | 100,000 | |
| Roanoke Cement Co. LLC | U.S.A. | Cement Producer | - | 100,000 | - | 100,000 | |
| S&W Ready Mix Concrete Co. Inc. | U.S.A. | Ready Mix | - | 100,000 | - | 100,000 | |
| Separation Technologies LLC | U.S.A. | Converter of waste material into fly ash | - | 100,000 | - | 100,000 | |
| Standard Concrete LLC | U.S.A. | Trading Company | - | 100,000 | - | 100,000 | |
| Summit Ready-Mix LLC | U.S.A. | Ready Mix | - | 100,000 | - | 100,000 | |
| Tarmac America LLC | U.S.A. | Cement Producer | - | 100,000 | - | 100,000 | |
| Titan Virginia Ready Mix LLC | U.S.A. | Ready Mix | - | 100,000 | - | 100,000 | |
| Τitan Αmerica LLC | U.S.A. | Investment Holding Company | - | 100,000 | - | 100,000 | |
| Cementara Kosjeric AD | Serbia | Cement Producer | - | 100,000 | - | 96,347 | |
| Stari Silo Copmany DOO | Serbia | Trading Company | - | 100,000 | - | 100,000 | |
| TCK Montenegro DOO | Montenegro | Trading Company | - | 100,000 | - | 96,347 | |
| Cement Plus LTD | F.Y.R.O.M | Trading Company | - | 61,643 | - | 61,328 | |
| Rudmark DOOEL | F.Y.R.O.M | Trading Company | - | 94,835 | - | 94,351 | |
| Usje Cementarnica AD | F.Y.R.O.M | Cement Producer | - | 94,835 | - | 94,351 | |
| Vesa DOOL | F.Y.R.O.M | Trading Company | - | 100,000 | - | 100,000 | |
| Alba Cemento Italia, SHPK | Albania | Trading Company | - | 39,000 | - | 39,000 | |
| Antea Cement SHA | Albania | Cement Producer | - | 60,000 | - | 60,000 | |
| Dancem APS (3) | Denmark | Import & Distribution of Cement | - | 100,000 | - | - | |
| Aeas Neverlands B.V. (Mamaja Real Estate B.V.) (3) (6) | Holland | Investment Holding Company | - | 100,000 | - | - | |
| Colombus Properties B.V. (7) | Holland | Investment Holding Company | 100,000 | - | 100,000 | - | |
| Holtitan B.V. | Holland | Investment Holding Company | - | 100,000 | - | 96,347 | |
| Salentijn Properties1 B.V. | Holland | Investment Holding Company | 100,000 | - | 100,000 | - | |
| Titan Cement Netherlands BV | Holland | Investment Holding Company | - | 100,000 | - | 99,489 | |
| Proportionate consolidation method | |||||||
| Balkan Cement Enterprises Ltd | Cyprus | Investment Holding Company | - | 51,006 | - | 51,006 | |
| Adocim Cimento Beton Sanayi ve Ticaret A.S. | Turkey | Cement Producer | - | 50,000 | - | 50,000 | |
| Equity consolidation method | |||||||
| Karieri AD | Bulgaria | Quarries & Aggregates | - | 48,711 | - | 48,711 | |
| Karierni Materiali AD | Bulgaria | Quarries & Aggregates | - | 48,764 | - | 48,764 | |
| Transbeton - Domiki S.A. | Greece | Ready Mix & Aggregates | - | 49,900 | - | 49,900 | |
The movement of the Company's participation in subsidiaries, is analyzed as follows (all amounts in Euro thousands):
| 2009 | 2008 |
|---|---|
| Participation in Subsidiaries at 1st January 1.262.303 |
515.777 |
| Share capital increase in subsidiaries 7.150 * |
430.902 |
| Acquisition and increase in share capital of new subsidiaries - |
314.323 |
| Provision for impairment of investments -1.150 |
- |
| Decrease in investment -800 |
- |
| Other 999 |
1.301 |
| Participation in Subsidiaries at 31st December 1.268.502 |
1.262.303 |
*The increase in share capital in subsidiaries includes the amount of € 6,501 thousand that involves contribution of assets and capitalization of receivables.
(1) Percentage of investment represents both percentage of shareholding and percentage of control.
(2) Formed Subsidiaries for the fiscal year 2009.
(3) Acquired Subsidiaries for the fiscal year 2009 (note 30).
(4) The company Domiki Beton S.A. was merged by Interbeton Construction Materials S.A., as of 1.4.2009
(5) The companies Lateem S.A. and Thisvi Quarries S.A. were merged by Interferon Construction Materials S.A., as of 1.7.2009
(6) The company Mamaja Real Estate B.V. was renamed to AEAS Netherlands B.V., as of 23.10.2009.
(7) The company DNJEPR Investments II B.V. was renamed to Colombus Properties B.V., as of 6.1.2009.
(8) On 26.5.2009 the Group signed an acquisition agreement for 100% of the shares of Zofori Building Materials S.A., which was included in the Group's financial statements with the full consolidation method (note 30). On 31.12.2009 the above mentioned company has been merged with the company Gournon Quarries S.A..
Titan Cement Company S.A. Notes to the Financial Statements
(all amounts in Euro thousands)
On 31.12.2009 the Group included in the financial statements with the equity method of consolidation the companies below: Karieri AD (ownership percentage 2009 & 2008:48,711%) and Karierni Materiali AD (with ownership percentage 2009 & 2008:48,764%), both based in Bulgaria, and the Greek Transbeton-Domiki S.A. (with ownership percentage 2009 & 2008: 49,9%).
All the above mentioned companies operate in the aggregates business, Transbeton-Domiki S.A. also operates in the readymix business. All companies are not listed on any public exchange.
The following table illustrates summarised financial information for the companies mentioned above:
| Group | ||
|---|---|---|
| 2009 | 2008 | |
| Property, plant and equipment | 10.584 | 9.973 |
| Intangibles and other non current assets | 498 | 1.160 |
| Current assets | 3.597 | 4.765 |
| Total assets | 14.679 | 15.898 |
| Non-current liabilities | 1.083 | 1.086 |
| Current liabilities | 6.901 | 8.490 |
| Total liabilities | 7.984 | 9.576 |
| Net assets | 6.695 | 6.322 |
| Revenue | 10.221 | 13.685 |
| Cost of sales | -7.228 | -8.134 |
| Gross profit before depreciation | 2.993 | 5.551 |
| Other income/expense | 76 | -114 |
| Administrative expenses | -821 | -984 |
| Selling expenses | -283 | -154 |
| Profit before interest, taxes and depreciation | 1.965 | 4.299 |
| Depreciation | -450 | -438 |
| Profit before interest, taxes | 1.515 | 3.861 |
| Finance costs | -200 | -4 |
| Profit before income tax | 1.315 | 3.857 |
| Income tax expense | -235 | -338 |
| Profit after tax | 1.080 | 3.519 |
| Group | ||||
|---|---|---|---|---|
| (all amounts in Euro thousands) | 2009 | 2008 | 2009 | 2008 |
| Opening balance | 2.480 | 4.858 | 168 | 168 |
| Additions | 160 | 1.399 | - | - |
| Additions due to acquisitions | - | 24 | - | - |
| Disposals | -229 | -3.625 | - | - |
| Revaluations | -9 | -179 | - | - |
| Exchange differences | -2 | 3 | - | - |
| Ending balance | 2.400 | 2.480 | 168 | 168 |
| Analysis of available-for-sale financial assets: | ||||
| Non-current portion | 2.338 | 2.418 | 107 | 107 |
| Current portion | 62 | 62 | 61 | 61 |
| 2.400 | 2.480 | 168 | 168 |
Available-for-sale financial assets include non listed securities.
Trading and other investments, comprising marketable equity securities, are fair valued annually at the close of business on 31 December. For investments traded in an active market, fair value is determined by reference to Stock Exchange quoted bid prices. For other investments, fair value is estimated by reference to the current market value of similar instruments or by reference to the discounted cash flows of the underlying net assets.
| 2009 | 2008 | 2009 | 2008 |
|---|---|---|---|
| 4.004 | 4.123 | 3.460 | 3.551 |
| 5.057 | 5.398 | - | - |
| 4.037 | 23.583 | - | - |
| 7.871 | 6.193 | - | - |
| 20.969 | 39.297 | 3.460 | 3.551 |
| Group | Company |
Deferred income taxes are calculated in full on temporary differences under the liability method using the principal tax rates that apply to the countries where the companies of the Group operate.
The calculation of the deferred taxes both for the Group and the Company are reviewed each year, as the balance on the balance sheet to reflect the effective tax rates. In 2008, the Greek state has passed the tax reform Law 3697/2008, according to which the tax rates will be reduced by 1% each year for the years 2010 to 2014. The deferred tax of the Greek subsidiaries has been calculated taking into account the above mentioned change.
The movement on the deferred income tax account after set-offs is as follows:
| Group | Company | |||
|---|---|---|---|---|
| (all amounts in Euro thousands) | 2009 | 2008 | 2009 | 2008 |
| Opening balance, net deferred liability | 201.811 | 123.860 | 21.625 | 29.079 |
| Income statement charge (note 8) | -2.692 | -3.395 | 2.393 | -7.454 |
| Exchange differences | -5.598 | 11.938 | - | - |
| Additions due to acquisitions | 148 | 37.721 | - | - |
| Tax charged to equity | 357 | 31.687 | - | - |
| Ending balance, net deferred liability | 194.026 | 201.811 | 24.018 | 21.625 |
The deferred tax charged to equity during the fiscal year 2008 refers to acquired identifiable assets, liabilities and contingent liabilities which are acquired in Egypt. The deferred tax charged to equity during the fiscal year 2009 is related to the effect of cash flow hedges.
| Group | Company | |||
|---|---|---|---|---|
| Analysis of deferred tax liabilities (before set - offs) | ||||
| (all amounts in Euro thousands) | 2009 | 2008 | 2009 | 2008 |
| Property, plant and equipment | 214.694 | 210.306 | 28.205 | 26.208 |
| Intangible assets | 19.586 | 22.931 | - | - |
| Provisions | 5.237 | 4.106 | 2.000 | 1.671 |
| Receivables and prepayments | 1.750 | 2.741 | 1.517 | 1.434 |
| Long term borrowings | - | 44 | - | - |
| Financial instruments | 4 | - | 4 | - |
| 241.271 | 240.128 | 31.726 | 29.313 | |
| Analysis of deferred tax assets (before set - offs) | ||||
| (all amounts in Euro thousands) | ||||
| Intangible assets | -3.245 | -6.824 | - | - |
| Investments & other non-current receivables | - | - | -384 | -154 |
| Inventories | -1.670 | -2.074 | -990 | -943 |
| Post-employment and termination benefits | -5.387 | -5.742 | -3.800 | -4.051 |
| Receivables and prepayments | -4.971 | -5.704 | -194 | -225 |
| Net operating losses carried forward | -18.912 | -3.456 | - | - |
| Long term borrowings | -1.136 | -1.082 | - | - |
| Government grants | -2.031 | -1.137 | -1.143 | -1.121 |
| Provisions | -9.518 | -11.552 | -478 | -462 |
| Trade and other payables | -717 | -746 | -704 | -732 |
| Financial instruments | 342 | - | -15 | - |
| -47.245 | -38.317 | -7.708 | -7.688 | |
| Net deferred tax liability | 194.026 | 201.811 | 24.018 | 21.625 |
The movement in deferred tax assets and liabilities (prior to offsetting balances within the same tax jurisdiction) during the year is as follows:
| Group | January 1, 2009 |
Debit/ (Credited) charged to net profit |
Debit/ (Credited) charged to equity |
Exchange differences |
Additions due to acquisitions |
December 31, 2009 |
|---|---|---|---|---|---|---|
| (all amounts in Euro thousands) | ||||||
| Deferred tax liabilities (before set - offs) | ||||||
| Property, plant and equipment | 210.306 | 11.487 | - | -7.247 | 148 | 214.694 |
| Intangible assets | 22.931 | -2.624 | - | -721 | - | 19.586 |
| Provisions | 4.106 | 1.331 | - | -200 | - | 5.237 |
| Receivables and prepayments | 2.741 | -710 | - | -281 | - | 1.750 |
| Financial instruments | - | 4 | - | - | - | 4 |
| Long term borrowings | 44 | -44 | - | - | - | - |
| 240.128 | 9.444 | - | -8.449 | 148 | 241.271 | |
| Deferred tax assets (before set - offs) | ||||||
| Intangible assets | -6.824 | 2.843 | - | 736 | - | -3.245 |
| Inventories | -2.074 | 379 | - | 25 | - | -1.670 |
| Post-employment and termination benefits | -5.742 | 300 | - | 55 | - | -5.387 |
| Receivables and prepayments | -5.704 | 667 | - | 66 | - | -4.971 |
| Net operating loss carried forward | -2.396 | -16.516 | - | - | - | -18.912 |
| Long term borrowings | -1.082 | -52 | - | -2 | - | -1.136 |
| Government grants | -1.137 | -922 | - | 28 | - | -2.031 |
| Provisions | -12.612 | 1.152 | - | 1.942 | - | -9.518 |
| Trade and other payables | -746 | 28 | - | 1 | - | -717 |
| Financial instruments | - | -15 | 357 | - | - | 342 |
| -38.317 | -12.136 | 357 | 2.851 | - | -47.245 | |
| Net deferred tax liability | 201.811 | -2.692 | 357 | -5.598 | 148 | 194.026 |
| Company | January 1, 2009 |
Debit/ (Credited) charged to net profit |
Debit/ (Credited) charged to equity |
Exchange differences |
December 31, 2009 |
|---|---|---|---|---|---|
| (all amounts in Euro thousands) | |||||
| Deferred tax liabilities (before set - offs) | |||||
| Property, plant and equipment | 26.208 | 1.997 | - | - | 28.205 |
| Provisions | 1.671 | 329 | - | - | 2.000 |
| Receivables and prepayments | 1.434 | 83 | - | - | 1.517 |
| Financial instruments | - | 4 | - | - | 4 |
| 29.313 | 2.413 | - | - | 31.726 | |
| Deferred tax assets (before set - offs) | |||||
| Investments & other non-current receivables | -154 | -230 | - | - | -384 |
| Inventories | -943 | -47 | - | - | -990 |
| Receivables and prepayments | -225 | 31 | - | - | -194 |
| Government grants | -1.121 | -22 | - | - | -1.143 |
| Provisions | -462 | -16 | - | - | -478 |
| Post-employment and termination benefits | -4.051 | 251 | - | - | -3.800 |
| Trade and other payables | -732 | 28 | - | - | -704 |
| Financial instruments | -` | -15 | - | - | -15 |
| -7.688 | -20 | - | - | -7.708 | |
| Net deferred tax liability | 21.625 | 2.393 | - | - | 24.018 |
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred income taxes relate to the same fiscal authority.
The movement in deferred tax assets and liabilities (prior to offsetting balances within the same tax jurisdiction) during the prior year is as follows:
| Group | January 1, 2008 |
Debit/ (Credited) charged to net profit |
Debit/ (Credited) charged to equity |
Exchange differences |
Additions due to acquisitions |
December 31, 2008 |
|---|---|---|---|---|---|---|
| (all amounts in Euro thousands) | ||||||
| Deferred tax liabilities (before set - offs) | ||||||
| Property, plant and equipment | 143.888 | 1.619 | 25.231 | 7.906 | 31.662 | 210.306 |
| Intangible assets | 3.762 | 1.291 | 6.919 | 3.809 | 7.150 | 22.931 |
| Provisions | 3.737 | 897 | -533 | 5 | - | 4.106 |
| Receivables and prepayments | 2.129 | 616 | -4 | - | - | 2.741 |
| Long term borrowings | 47 | -27 | - | - | 24 | 44 |
| 153.563 | 4.396 | 31.613 | 11.720 | 38.836 | 240.128 | |
| Deferred tax assets (before set - offs) | ||||||
| Intangible assets | -8.075 | 913 | 178 | 160 | - | -6.824 |
| Inventories | -1.887 | -178 | - | - | -9 | -2.074 |
| Post-employment and termination benefits | -2.107 | -3.634 | - | - | -1 | -5.742 |
| Receivables and prepayments | -1.153 | -4.493 | - | - | -58 | -5.704 |
| Net operating loss carried forward | -3.456 | 1.060 | - | - | - | -2.396 |
| Long term borrowings | -15 | -34 | - | - | -1.033 | -1.082 |
| Government grants | -1.407 | 282 | - | - | -12 | -1.137 |
| Provisions | -11.573 | -991 | -104 | 58 | -2 | -12.612 |
| Trade and other payables | -30 | -716 | - | - | - | -746 |
| -29.703 | -7.791 | 74 | 218 | -1.115 | -38.317 | |
| Net deferred tax liability | 123.860 | -3.395 | 31.687 | 11.938 | 37.721 | 201.811 |
| Company | January 1, 2008 |
Debit/ (Credited) charged to net profit |
Debit/ (Credited) charged to equity |
Exchange differences |
December 31, 2008 |
|---|---|---|---|---|---|
| (all amounts in Euro thousands) | |||||
| Deferred tax liabilities (before set - offs) | |||||
| Property, plant and equipment | 31.628 | -5.420 | - | - | 26.208 |
| Provisions | 1.600 | 71 | - | - | 1.671 |
| Receivables and prepayments | 1.149 | 285 | - | - | 1.434 |
| Financial instruments | - | - | - | - | - |
| 34.377 | -5.064 | - | - | 29.313 | |
| Deferred tax assets (before set - offs) | |||||
| Investments & other non-current receivables | -193 | 39 | - | - | -154 |
| Inventories | -923 | -20 | - | - | -943 |
| Receivables and prepayments | - | -225 | - | - | -225 |
| Government grants | -1.383 | 262 | - | - | -1.121 |
| Provisions | -1.516 | 1.054 | - | - | -462 |
| Post-employment and termination benefits | -1.261 | -2.790 | - | - | -4.051 |
| Trade and other payables | -22 | -710 | - | - | -732 |
| -5.298 | -2.390 | - | - | -7.688 | |
| Net deferred tax liability | 29.079 | -7.454 | - | - | 21.625 |
| (all amounts in Euro thousands) | Group | Company | ||
|---|---|---|---|---|
| 2009 | 2008 | 2009 | 2008 | |
| Inventories | ||||
| Raw materials-Maintenance stores | 168.865 | 188.917 | 61.775 | 77.310 |
| Finished goods | 82.866 | 108.420 | 14.176 | 26.874 |
| 251.731 | 297.337 | 75.951 | 104.184 | |
| Provision for obsolete inventory | -9.931 | -9.652 | -4.704 | -4.372 |
| 241.800 | 287.685 | 71.247 | 99.812 | |
| Transfer of major spare parts from/(to) property, plant and equipment (note | ||||
| 11) | -2.997 | 182 | -2.997 | 182 |
| 238.803 | 287.867 | 68.250 | 99.994 |
| Analysis of provision for inventories | Group | Company | ||
|---|---|---|---|---|
| 2009 | 2008 | 2009 | 2008 | |
| Balance at 1 January | 9.652 | 6.106 | 4.372 | 3.692 |
| Charge for the year (note 4, 29) | 3.656 | 1.206 | 691 | 840 |
| Unused amounts reversed (note 29) | -364 | - | -359 | -160 |
| Utilized | -2.900 | -796 | - | - |
| Additions due to acquisitions | - | 2.794 | - | - |
| Exchange differences | -113 | 342 | - | - |
| Balance at 31 December | 9.931 | 9.652 | 4.704 | 4.372 |
The Group has not pledged its inventories as collateral.
| Company | |||
|---|---|---|---|
| 2009 | 2008 | 2009 | 2008 |
| 118.910 | 139.226 | 19.158 | 28.313 |
| 51.790 | 86.898 | 25.760 | 40.939 |
| -15.682 | -13.613 | -4.916 | -4.096 |
| 155.018 | 212.511 | 40.002 | 65.156 |
| 2.824 | 11.361 | - | - |
| 15.450 | 31.487 | 1.488 | 906 |
| 34.065 | 11.120 | - | - |
| 48.194 | 49.398 | 6.486 | 7.158 |
| -1.424 | -2.964 | -946 | -1.070 |
| 99.109 | 100.402 | 7.028 | 6.994 |
| 4 | 21 | 36.693 | 24.471 |
| 254.131 | 312.934 | 83.723 | 96.621 |
| Group |
Income tax receivables include € 12,138 thousand for the fiscal year 2009 (2008: € 27,986 thousand) that are related to income tax claims due to the losses incured in Group's subsidiary in US Titan America LLC.
| (all amounts in Euro thousands) | Group | Company | |||
|---|---|---|---|---|---|
| 2009 | 2008 | 2009 | 2008 | ||
| Neither past due nor impaired | 88.879 | 120.841 | 61.980 | 81.365 | |
| Past due nor impaired : | |||||
| < 30 days | 24.362 | 35.702 | 4.508 | 1.878 | |
| 30-60 days | 18.760 | 24.197 | 3.825 | 3.560 | |
| 60-90 days | 12.825 | 16.590 | 1.803 | 207 | |
| 90-120 days | 5.562 | 7.442 | 1.615 | 206 | |
| >120 days | 4.634 | 7.760 | 2.964 | 2.411 | |
| 155.022 | 212.532 | 76.695 | 89.627 |
Trade receivables are non-interest bearing and are normally settled on: Group 0-170 day's terms, Company 0-170 day's terms.
(all amounts in Euro thousands)
| Analysis of provisions for doubtful debtors | Group | Company | ||
|---|---|---|---|---|
| 2009 | 2008 | 2009 | 2008 | |
| Balance at 1 January | 13.613 | 7.069 | 4.096 | 2.329 |
| Charge for the year (note 5, 29) | 9.619 | 8.781 | 3.362 | 2.499 |
| Unused amounts reversed (note 5, 29) | -3.615 | -532 | -1.429 | -502 |
| Utilized | -4.144 | -2.421 | -1.113 | -230 |
| Additions due to acquisitions | 358 | 653 | - | - |
| Exchange differences | -149 | 63 | - | - |
| Balance at 31 December | 15.682 | 13.613 | 4.916 | 4.096 |
| Analysis of provisions for other doubtful receivables | Group | Company | ||
|---|---|---|---|---|
| 2009 | 2008 | 2009 | 2008 | |
| Balance at 1 January | 2.964 | 1.689 | 1.070 | - |
| Charge for the year (note 5, 29) | 59 | 1.128 | 17 | 1.070 |
| Unused amounts reversed (note 5, 29) | -1.457 | - | - | - |
| Utilized | -140 | - | -141 | - |
| Additions due to acquisitions | - | 145 | - | - |
| Exchange differences | -2 | 2 | - | - |
| Balance at 31 December | 1.424 | 2.964 | 946 | 1.070 |
| (all amounts in Euro thousands) | Group | Company | ||
|---|---|---|---|---|
| 2009 | 2008 | 2009 | 2008 | |
| Cash at bank and in hand | 294 | 302 | 83 | 5 |
| Short-term bank deposits | 16.132 | 94.219 | 121 | 31.258 |
| 16.426 | 94.521 | 204 | 31.263 |
Short-term bank deposits comprise primarily of time deposits and repository notes (REPOS). The effective interest rates on these short-term bank deposits are based on Euribor rates, are negotiated on a case by case basis and have an average maturity period of seven days.
(all amounts are shown in Euro thousands unless otherwise stated)
| Ordinary shares of €4.00 each | 77.007.158 | 76.977.814 | |||||
|---|---|---|---|---|---|---|---|
| Preference shares of €4.00 each | 7.568.960 | 7.568.960 | |||||
| 84.576.118 | 84.546.774 | ||||||
| Ordinary shares | Preference shares | Share | Total | ||||
| Shares issued and fully paid | Number of shares |
€'000 | Number of shares |
€'000 | premium €'000 |
Number of shares |
€'000 |
| Balance at 1 January 2008 | 76.963.614 | 153.927 | 7.568.960 | 15.138 | 22.826 | 84.532.574 | 191.891 |
| Capitalization of reserves | - | 153.927 | - | 15.138 | - | - | 169.065 |
| Issue of shares - share option scheme | 14.200 | 57 | - | - | - | 14.200 | 57 |
| Balance at 31 December 2008 | 76.977.814 | 307.911 | 7.568.960 | 30.276 | 22.826 | 84.546.774 | 361.013 |
| Issue of shares - share option scheme | 29.344 | 117 | - | - | - | 29.344 | 117 |
| Balance at 31 December 2009 | 77.007.158 | 308.028 | 7.568.960 | 30.276 | 22.826 | 84.576.118 | 361.130 |
2009 2008
| Ordinary shares | Preference shares | Total | ||||
|---|---|---|---|---|---|---|
| Number of | Number of | Number of | ||||
| Treasury shares | shares | €'000 | shares | €'000 | shares | €'000 |
| Balance at 1 January 2008 | 1.085.887 | 35.936 | 300 | 9 | 1.086.187 | 35.945 |
| Treasury shares purchased | 2.101.810 | 56.246 | 5.619 | 108 | 2.107.429 | 56.354 |
| Balance at 31 December 2008 | 3.187.697 | 92.182 | 5.919 | 117 | 3.193.616 | 92.299 |
| Treasury shares sold | -18.403 | -677 | - | - | -18.403 | -677 |
| Balance at 31 December 2009 | 3.169.294 | 91.505 | 5.919 | 117 | 3.175.213 | 91.622 |
For the year 2008, the average stock price of Titan's ordinary shares was € 19.12 (2008: €24.23) and the trading price of the Titan Cement ordinary shares at December 31, 2009 was € 20.32 (2008: €13.90).
Share options are granted to members of senior management. Movements in the number of share options outstanding are as follows:
| 2004 scheme | 2007 scheme | Total | |
|---|---|---|---|
| Balance at 1 January 2008 | 142.840 | 142.950 | 285.790 |
| Granted | - | 169.470 | 169.470 |
| Exercised | -14.200 | - | -14.200 |
| Non vested | -81.480 | - | -81.480 |
| Cancelled | -20.220 | -17.580 | -37.800 |
| Balance at 31 December 2008 | 26.940 | 294.840 | 321.780 |
| Granted | - | 86.880 | 86.880 |
| Exercised | -23.950 | -5.394 | -29.344 |
| Non vested | - | -114.135 | -114.135 |
| Cancelled | -2.990 | -10.065 | -13.055 |
| Balance at 31 December 2009 | - | 252.126 | 252.126 |
Share options outstanding at the end of the year have the following terms:
| 2009 | ||||
|---|---|---|---|---|
| Expiration date | Exercise price | 2004 scheme | 2007 scheme | Total |
| 2010 | € 4,00 | - | 8.406 | 8.406 |
| 2011 | € 4,00 | - | 156.840 | 156.840 |
| 2012 | € 4,00 | - | 86.880 | 86.880 |
| - | 252.126 | 252.126 |
(all amounts are shown in Euro thousands unless otherwise stated)
| 2008 | |||
|---|---|---|---|
| Exercise price | 2004 scheme | 2007 scheme | Total |
| € 4,00 | 26.940 | - | 26.940 |
| € 4,00 | - | 129.870 | 129.870 |
| € 4,00 | - | 164.970 | 164.970 |
| 26.940 | 294.840 | 321.780 | |
On June 8, 2004 the Company approved a new share incentive scheme for the distribution of up to 400,000 ordinary voting shares by granting share options for the three year period 2004 to 2006 to certain executives of the Company and its subsidiaries. The exercise price was set at the nominal price of the share. Under this scheme, the options granted each year have a maturity period of three years and can be exercised after the completion of the three year period. Each option must be exercised within twelve months from its respective vesting period. If the deadline is exceeded then those particular options will irrevocably lapse. All vesting is conditional on the employee's continued employment throughout the vesting period. The number of options to be granted each year will depend on a number of market based performance features such as the performance of Titan shares compared to the performance of the Athens Stock Exchange and the share performance of other international cement producing companies. The number of options that vest each year will be determined as follows:
1) One-third of options granted vest based on an individuals performance at the completion of the three year period.
2) One-third of options granted vest based on the Titan Cement's stock performance relative to three Athens Stock Exchange indices during the three year period.
3) One-third of options granted vest based on the Titan Cement's stock performance relative to that of twelve predefined cement producing companies during the three year period.
The options granted under the new scheme have been accounted for in terms of the requirements of IFRS 2 "Share based payments". The options granted under the old scheme are not subject to IFRS 2 as they were granted prior to the effective date of IFRS 2.
The fair value of the options granted in 2006, determined using the Black-Scholes valuation model, was €37.27 per option. The significant inputs into the valuation model were share price at grant date of €40.74, expected volatility of share price 22.03%, dividend yield of 1.56% and an annual risk free rate of 3.67%.
During 2009, 23,950 shares options were exercised, while 2,990 share options were canceled. There are no remaining options to be exercised.
On May 29, 2007 the Company approved the introduction of a new, three-year Stock Option Programme (2007 Programme). In the years 2007, 2008 and 2009, executive members of the Company"s Board of Directors and senior executives of the Company and its affiliates in Greece and abroad shall be granted options, the exercise of which is subject to the financial results of the Company and the performance of its ordinary share, to acquire up to 500,000 ordinary shares of the Company at a sale price equal to the share"s nominal value, that is 4 Euros per share.
Under this Programme, the options granted each year have a maturity period of three years and can be exercised after the completion of the three year period. Each option must be exercised within twelve months from its respective vesting period. If the deadline is exceeded then those particular options will irrevocably lapse. All vesting is conditional on the employee"s continued employment throughout the vesting period. The number of options that vest each year will be determined as follows:
1) One-third of options granted vest based on the financial results of the Company.
2) One-third of options granted vest based on the Titan Cement"s stock performance relative to three Athens Stock Exchange indices during the three year period.
3) One-third of options granted vest based on the Titan Cement"s stock performance relative to that of twelve predefined international cement producing companies during the three year period.
The options granted under the 2007 Programme have been accounted for in terms of the requirements of IFRS 2 "Share based payments".
During 2009, 5,394 share options were exercised, 114,135 share options did not vest while 10,065 share options were cancelled. The remaining options for 252,126 shares have not yet been exercised.
In May 2009, 86,880 share options were granted, in accordance with the above Stock Option Programme.
The fair value of the options granted in 2009, determined using the 2-dimensional Black-Scholes valuation model, was €8.41 per option. The significant inputs into the valuation model were share price at grant date of €20.60, standard deviation of share price 36.71%, dividend yield of 2.07% and average annual yield of the rate of the three-year Greek Government Bonds of 3.649%.
Notes to the Financial Statements
| Group | Legal reserve |
Special reserve |
Contingency reserve |
Tax exempt reserves under special laws |
Revaluation reserve |
Currency translation differences on derivative hedging position |
Foreign currency translation reserve |
Total other reserves |
|---|---|---|---|---|---|---|---|---|
| (all amounts in Euro thousands) | ||||||||
| Balance at 1 January 2008 | 64.145 | 14.995 | 331.003 | 143.806 | 3.421 | 48.346 | -208.719 | 396.997 |
| Other comprehensive income | -196 | -160 | - | 61 | 126.950 | - | 5.798 | 132.453 |
| Share Capital increase due to capitalization of | ||||||||
| reserves | - | - | -143.249 | -22.972 | - | - | - | -166.221 |
| Transfer (from)/to retained earnings | 7.733 | - | 54.680 | 10.477 | -2.372 | - | - | 70.518 |
| Balance at 31 December 2008 | 71.682 | 14.835 | 242.434 | 131.372 | 127.999 | 48.346 | -202.921 | 433.747 |
| Other comprehensive income | -664 | -6 | - | 3.655 | -277 | -558 | -34.739 | -32.589 |
| Transfer from share options programme 2004 | - | - | 7.257 | - | - | - | - | 7.257 |
| Non-controlling interest's put option | ||||||||
| recognition & transfer between reserves | 7.395 | - | 20.625 | 8.074 | -10.159 | - | - | 25.935 |
| Balance at 31 December 2009 | 78.413 | 14.829 | 270.316 | 143.101 | 117.563 | 47.788 | -237.660 | 434.350 |
| Legal | Special | Contingency | Tax exempt reserves under special |
Revaluation | Currency translation differences on derivative hedging |
Total other | |
|---|---|---|---|---|---|---|---|
| Company | reserve | reserve | reserve | laws | reserve | position | reserves |
| (all amounts in Euro thousands) | |||||||
| Balance at 1 January 2008 | 56.638 | 1.769 | 319.141 | 132.859 | - | 48.346 | 558.753 |
| Capitalization of reserves | - | - | -143.249 | -22.972 | - | - | -166.221 |
| Transfer (from)/to retained earnings | 5.298 | - | 54.680 | 10.477 | - | - | 70.455 |
| Balance at 31 December 2008 | 61.936 | 1.769 | 230.572 | 120.364 | - | 48.346 | 462.987 |
| Capitalization of reserves | - | - | - | - | - | - | - |
| Transfer from share options programme 2004 | - | - | 7.257 | - | - | - | 7.257 |
| Transfer (from)/to retained earnings | 4.631 | - | 20.622 | 5.968 | - | - | 31.221 |
| Balance at 31 December 2009 | 66.567 | 1.769 | 258.451 | 126.332 | - | 48.346 | 501.465 |
Certain Group companies are obliged according to the applicable commercial law to form as legal reserve a percentage of their annual net profits. This reserve can not be distributed during the operational life of the company.
Based on existing Greek tax law, tax exempt reserves under special laws are exempt from income tax, provided that they are not distributed to shareholders. The Group does not intend to distribute these reserves and has thus not provided for the tax liability that would arise in the event that these reserves were to be distributed. Any distribution from these reserves can only occur following the approval of shareholders in a general meeting and after the applicable taxation is paid by the Company.
The Group's tax exempt reserves include reserves that have been created by the Company and some of its Greek subsidiaries following the application of developmental laws. The Law 3614/07 provided the interest-bearing retrieval of the special tax exempt reserves that have been made be the companies, among them Titan S.A., for the fiscal years 2003 and 2004, in accordance with the Law's provisions 3220/04 that were considered illegal by the European Commission. Concerning the applicable income tax, the Group has made a provision. Compliant with the above law's provision 3614/07, the reserves of the low 3220/04 which actually were taxed, companies had the right to deduct investment expenses covered by the provision of the developmental laws 3601/98 and 3299/04. This had the result of the Group to reverse part of the formed provision in the fiscal year 2008 (note 8).
The revaluation reserve records a) the fair value of tangible and intangible assets of € 116.2 million, the Group had in Egypt through its participation in the joint venture Lafarge-Titan Egyptian Investments Ltd, till it acquired the joint venture fully, b) the fair value changes of € 3.1 million on available-for-sale financial assets and c) the debit difference of € 1.8 million, between the fair value and the book value of the put option recognition for the sale of ANTEA Cement SHA 's shares by the minority.
The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries.
The currency translation differences on derivative hedging position is used to record the effect of hedging net investments in foreign operations and the exchange rate differences from the valuation of the financial instruments that are used as means of cash flow hedge for transactions in foreign currency.
Titan Cement Company S.A. Notes to the Financial Statements
| Group | Company | |||
|---|---|---|---|---|
| (all amounts in Euro thousands) | 2009 | 2008 | 2009 | 2008 |
| Current | ||||
| Loans in local currency - (€ denominated) | 244.773 | 116.786 | 127.432 | 65.187 |
| Loans in foreign currency | 16.217 | 145.416 | 177 | 3.393 |
| Loans to associates | - | - | - | 19.000 |
| Finance lease liabilities | 845 | 943 | - | - |
| 261.835 | 263.145 | 127.609 | 87.580 | |
| Non-current | ||||
| Bank borrowings in local currency - (€ denominated) | 357.517 | 664.881 | 499 | 125.000 |
| Bank borrowings in foreign currency | 147.948 | 87.107 | - | - |
| Debentures - Notes in local currency | 217.914 | 189.960 | - | - |
| Loans to associates | - | - | 634.000 | 634.000 |
| Finance lease liabilities | 2.286 | 3.245 | - | - |
| 725.665 | 945.193 | 634.499 | 759.000 | |
| Total borrowings | 987.500 | 1.208.338 | 762.108 | 846.580 |
The fair values of the borrowings closely approximate their carrying amounts, as the Group's and the Company's borrowings are mainly with floating interest rates.
Maturity of non-current bank borrowings (excluding finance lease liabilities):
| (all amounts in Euro thousands) | Group | |||
|---|---|---|---|---|
| 2009 | 2008 | 2009 | 2008 | |
| Up to 2 years | 29.158 | 172.563 | 534.499 | 125.000 |
| Between 2 and 5 years | 635.868 | 684.074 | 100.000 | 634.000 |
| Over 5 years | 58.353 | 85.311 | - | - |
| 723.379 | 941.948 | 634.499 | 759.000 |
| Group | Company | ||||
|---|---|---|---|---|---|
| 2009 | 2009 | 2008 | |||
| Bank borrowings (USD) | 5,25% | 4,56% | 2,04% | 4,00% | |
| Bank borrowings (JPY) | 2,70% | 2,70% | - | - | |
| Bank borrowings (EGP) | 10,79% | 10,60% | - | - | |
| Bank borrowings (GBP) | 2,45% | 6,94% | 2,45% | 6,94% | |
| Bank borrowings (BGN) | 6,59% | 7,58% | - | - | |
| Bank borrowings (TRY) | 17,01% | 22,81% | - | - | |
| Bank borrowings (MKD) | 8,42% | - | - | - | |
| Bank borrowings (€) | 3,33% | 5,23% | 3,26% | 5,33% | |
| Finance lease liabilities (USD) | 5%-7% | 5%-7% | - | - | |
| Finance lease liabilities (TRY) | 17%-19% | 17%-19% | - | - | |
| Finance lease liabilities (€) | 6%-8% | 6%-8% | - | - |
| Group | Company | |||
|---|---|---|---|---|
| (all amounts per currency thousands) | 2009 | 2008 | 2009 | 2008 |
| USD | 290.517 | 488.879 | 254 | 4.718 |
| JPY | 3.001.128 | 3.501.316 | - | - |
| EGP | 160.000 | 122.300 | - | - |
| GBP | - | 3 | - | 3 |
| BGN | 60.467 | 54.413 | - | - |
| CAD | - | - | - | - |
| TRY | 14.794 | 2.693 | - | - |
| (all amounts in Euro thousands) | Group | Company | ||||
|---|---|---|---|---|---|---|
| Floating rate: | 2009 | 2008 | 2009 | 2008 | ||
| - Expiring within one year | 225.702 | 206.446 | 91.311 | 111.563 | ||
| - Expiring beyond one year | 647.421 | 471.245 | 39.501 | 50.000 |
The Group has adequate undrawn committed and uncommitted borrowing facilities to meet future business requirements.
| (all amounts in Euro thousands) | Group | |
|---|---|---|
| Finance lease liabilities - minimum lease payments | 2009 | 2008 |
| Not later than 1 year | 1.006 | 962 |
| Later than 1 year and not later than 5 years | 2.484 | 3.599 |
| Later than 5 years | - | 104 |
| 3.490 | 4.665 | |
| Future finance charges on finance leases | -359 | -477 |
| Present value of finance lease liabilities | 3.131 | 4.188 |
Lease liabilities are effectively secured as the rights to the leased assets revert to the lessors in the event of default.
Greek labor legislation requires that the payment of retirement and termination indemnities be based on the number of years of service to the Company by the employees and taking into consideration their final remuneration. The Group grants retirement indemnities which exceed the legal requirements. These retirement indemnities are unfunded and the liabilities arising from such obligations are actuarially valued by an independent firm of actuaries. The last actuarial valuation was undertaken in December 2009. The principal actuarial assumptions used were a discount rate of 5.9% (2009:5.2%), future salary increases of between 5.5% and 6.4% (2008: 5.5%-6.4%) and future pension increases of 3% (2008: 3%) per annum.
The Group's U.S. subsidiaries operate defined benefit plans and other post-retirement benefit plans. The method of accounting for the latter, as well as the valuation assumptions and the frequency of valuations are similar to those used for defined benefit plans.
Certain employees participate in a union sponsored, defined benefit multi-employer pension plan. This plan is not administered by the Group's U.S. subsidiary and contributions are determined in accordance with the provisions of the negotiated labor contract. These contributions are affected by the funded status of the plan.
This plan is intended to constitute an unfunded plan of deferred compensation for a selected group of highly compensated employees under the Employee Income Security Act of 1974 ("ERISA"). For this purpose the Group's U.S. subsidiary created an irrevocable trust to facilitate the payment of deferred compensation to participants under this plan. Under this plan, the participants are eligible to defer a certain percentage of eligible compensation for the applicable plan year. The Company matches 50% of the participants' contributions to the plan. Again, the Company's contributions are affected by the funded status of the plan.
All of the Group's U.S. subsidiary's defined benefit pension plans and all but one of its other post-retirement plans have been frozen as to new participants and credited service. These plans do not materially impact the Group. One post-retirement benefit plan exists (for certain active and former employees) whereby eligible retirees receive benefits consisting primarily of assistance with medical insurance costs between the dates of early retirement and medicare eligibility. The Company operates a defined contribution plan for it's employees.
Some of the plan assets of the Group's subsidiaries in US are invested approximately 55% in equity investments and 45% in fixed investments. The main assumptions that have been adopted for the study of the pension plans of the Group's subsidiaries in the U.S. were a discount rate of 6% (% 2008:6,5) and an expected return on assets of 8% (2008: 8.5%).
The amounts relating to defined benefit pension plans and other post retirement and termination benefits (defined benefit plans) recognized in the income statement in the account other expenses (see note 4) are as follows:
| Group | Company | |||
|---|---|---|---|---|
| 2009 | 2008 | 2009 | 2008 | |
| (all amounts in Euro thousands) | ||||
| Current service cost | 3.079 | 2.233 | 1.663 | 1.743 |
| Interest cost | 3.021 | 3.020 | 1.959 | 1.775 |
| Business combination | 2 | 102 | - | - |
| Actuarial losses / (gains) | 1.465 | 4.202 | 525 | 1.452 |
| 7.567 | 9.557 | 4.147 | 4.970 | |
| Expected return on plan assets | -481 | -782 | - | - |
| Net periodic cost | 7.086 | 8.775 | 4.147 | 4.970 |
| Additional provision required | - | 12 | - | - |
| Additional post retirement and termination benefits paid out, not provided for | 3.535 | 4.053 | 3.535 | 2.709 |
| 10.621 | 12.840 | 7.682 | 7.679 | |
| Amounts recognised in the other operating expense income statement | 7.600 | 9.820 | 5.723 | 5.904 |
| Amounts recognised in finance income | 3.021 | 3.020 | 1.959 | 1.775 |
| Amounts recognised in the income statement | 10.621 | 12.840 | 7.682 | 7.679 |
| Present value of the liability at the end of the period | 58.693 | 60.306 | 35.458 | 37.665 |
| Minus US benefit plans assets | -6.407 | -5.904 | - | - |
| 52.286 | 54.402 | 35.458 | 37.665 | |
| Minus unrecognized actuarial losses | -10.458 | -13.245 | -11.696 | -13.963 |
| Net liability at the Statement of Financial Position | 41.828 | 41.157 | 23.762 | 23.702 |
| Liabilities' movement recognized in the balance sheet: | Group | Company | ||
| (all amounts in Euro thousands) | 2009 | 2008 | 2009 | 2008 |
| Opening balance | 41.157 | 39.332 | 23.702 | 21.102 |
| Total expense - as shown above | 7.086 | 8.775 | 4.147 | 4.970 |
| Additional provision required | - | 12 | - | - |
| Additions due to acquisitions | 21 | 846 | - | - |
| Exchange differences | -184 | 227 | - | - |
| Benefits paid during the year | -6.252 | -8.035 | -4.087 | -2.370 |
| Ending balance | 41.828 | 41.157 | 23.762 | 23.702 |
| Group | ||||
| Analysis of the US benefit plan assets' movement | 2009 | 2008 | ||
| Fair value of plan assets at the beginning of the period | 5.904 | 8.195 | ||
| Expected return | 481 | 782 | ||
| Company contributions | 375 | 299 | ||
| Benefits paid | -748 | -852 |
Actuarial gains / (losses) 619 -2.843 Exchange difference -224 323 Fair value of plan assets at the end of the period 6.407 5.904
| Group | January 1, 2009 |
Charge for the year |
Unused amounts reversed |
Utilized | Additions due to acquisitions |
Exchange differences |
December 31, 2009 |
|
|---|---|---|---|---|---|---|---|---|
| (all amounts in Euro thousands) | ||||||||
| Provisions for restoration of quarries | a | 11.166 | 857 | -1.175 | -708 | 253 | -141 | 10.252 |
| Provisions for other taxes | b | 1.016 | 40 | - | -438 | - | -27 | 591 |
| Litigation provisions | c | 2.961 | 434 | -6 | -429 | - | -100 | 2.860 |
| Other provisions | d | 11.235 | 187 | -3.039 | -2.620 | - | -147 | 5.616 |
| 26.378 | 1.518 | -4.220 | -4.195 | 253 | -415 | 19.319 |
| (all amounts in Euro thousands) | 2009 | 2008 |
|---|---|---|
| Non current provisions | 16.660 | 23.115 |
| Current provisions | 2.659 | 3.263 |
| 19.319 | 26.378 |
| Company | January 1, 2009 |
Charge for the year |
Unused amounts reversed |
Utilized | Additions due to acquisitions |
December 31, 2009 |
|
|---|---|---|---|---|---|---|---|
| (all amounts in Euro thousands) | |||||||
| Provisions for restoration of quarries | a | 2.182 | 341 | -463 | -165 | - | 1.895 |
| Other provisions | d | - | 343 | - | - | - | 343 |
| 2.182 | 684 | -463 | -165 | - | 2.238 | ||
| (all amounts in Euro thousands) |
| 2009 | 2008 | |
|---|---|---|
| Non current provisions | 1.929 | 2.062 |
| Current provisions | 309 | 120 |
| 2.238 | 2.182 |
a. This provision represents the present value of the estimated costs to reclaim quarry sites and other similar post-closure obligations. It is expected that this amount will be used over the next 2 to 50 years.
b. This provision relates to future obligations that may result from tax audits. It is expected that this amount will be fully utilized in the next five years.
c. This provision has been established with respect to claims made against certain companies in the Group by third parties. It is expected that this amount will be utilized mainly in the next twelve months.
d. Comprises other provisions relating to other risks none of which are individually material to the Group. It is expected that the remaining amounts will be used over the next 2 to 20 years.
| Group | Company | |||
|---|---|---|---|---|
| (all amounts in Euro thousands) | 2009 | 2008 | 2009 | 2008 |
| Government grants | 6.533 | 6.598 | 5.806 | 6.104 |
| Additional consideration for subsidiaries' acquisition (note 34) | 1.070 | 4.545 | - | - |
| Other-non current liabilities (note 34) | 29.831 | 2.648 | - | - |
| 37.434 | 13.791 | 5.806 | 6.104 |
The other non-current liabilities of the fiscal year 2009 include among others: a) the amount of € 19.4 million relates to the fair value of the put option, given by the Group to the non-controlling interests, specifically the European Bank for Reconstruction and Development (EBRD) and International Finance Corporation (IFC), so that such non-controlling interests have the right for the Group purchase their shares in ANTEA Cement SHA at predetermined conditions and b) the amount of € 6.2 million relates to a contingency of the Group's subsidiary in Egypt, Beni Suef, towards the Public Power Corporation.
| Analysis of Government grants: | Group | |||
|---|---|---|---|---|
| 2009 | 2008 | 2009 | 2008 | |
| Non - current | 6.533 | 6.598 | 5.806 | 6.104 |
| Current (note 28) | 298 | 302 | 298 | 302 |
| 6.831 | 6.900 | 6.104 | 6.406 |
| (all amounts in Euro thousands) | Group | Company | ||
|---|---|---|---|---|
| 2009 | 2008 | 2009 | 2008 | |
| Opening balance | 6.900 | 7.308 | 6.406 | 6.747 |
| Additions due to acquisitions | - | 43 | - | - |
| Additions | 345 | - | - | - |
| Amortization (note 29) | -414 | -451 | -302 | -341 |
| Ending balance | 6.831 | 6.900 | 6.104 | 6.406 |
Government grants are recognised at fair value when there is a certainty that the grant will be received and also when the Group complies with the terms and conditions of the grant.
Government grants relating to capital expenses are reflected as long term liabilities and are amortised on a straight line basis that reflects the estimated useful life of the asset for which the grant was received.
Government grants received in respect of expenses are reflected in the income statement when the related expense is incurred so that the expense is matched to the income received.
| Group | Company | |||
|---|---|---|---|---|
| (all amounts in Euro thousands) | 2009 | 2008 | 2009 | 2008 |
| Trade payables | 111.265 | 134.755 | 24.808 | 26.569 |
| Amounts due to related parties (note 33) | 1.356 | 675 | 13.036 | 13.111 |
| Other payables | 33.248 | 36.277 | 7.224 | 8.403 |
| Accrued expenses | 35.232 | 38.970 | 9.245 | 20.877 |
| Social security | 4.583 | 5.182 | 2.956 | 3.115 |
| Customer down payments/advances | 37.144 | 18.969 | 872 | 1.053 |
| Dividends payable | 377 | 410 | 332 | 353 |
| Government grants (note 27) | 298 | 302 | 298 | 302 |
| Other taxes | 19.322 | 19.611 | 1.574 | 1.788 |
| 242.825 | 255.151 | 60.345 | 75.571 |
Other payables comprise mainly of liabilities relating to transportation for cement and raw materials as well as employee benefit payables.
Terms and conditions of the above financial liabilities:
Trade payables are non-interest bearing and are normally settled on: Group 0-120 day's terms, Company 10- 120 day's terms.
Other payables are non-interest bearing and have an average term of one both for the Group and the Company.
Titan Cement Company S.A.
Notes to the Financial Statements
| Group | Company | |||
|---|---|---|---|---|
| (all amounts in Euro thousands) | 2009 | 2008 | 2009 | 2008 |
| Net Profit for the year as per income statement | 121.901 | 210.023 | 46.446 | 105.964 |
| Adjustments for: | ||||
| Tax (note 8) | 36.238 | -7 | 33.401 | 7.328 |
| Depreciation (note 11) | 95.566 | 94.429 | 11.957 | 11.360 |
| Amortization of intangibles (note 13) | 16.380 | 14.539 | - | - |
| Amortization of government grants received (note 27) | -414 | -451 | -302 | -341 |
| Stripping amortization | 868 | 961 | - | - |
| Impairment of assets (note 4,11,13) | 2.939 | 2.799 | 760 | - |
| Net profit on sale of property, plant and equipment (note 4, 5) | -3.695 | -4.505 | -1.820 | -26 |
| Provision for impairment of debtors charged to income statement (note 5, 20) |
4.606 | 9.377 | 1.950 | 3.067 |
| Provision for inventory obsolescence (note 4, 19) | 3.292 | 1.206 | 332 | 680 |
| Provision for restoration of quarries (note 26.a) | -318 | -106 | -342 | -588 |
| Provision for litigation (note 26.c) | 428 | 2.752 | - | - |
| Other provisions (note 26.d) | -2.852 | -704 | 343 | -4.413 |
| Provision for retirement and termination benefit obligations (note 4, 25) | 4.065 | 5.767 | 2.188 | 3.195 |
| Impairment of investment property (note 12) | - | - | 400 | 200 |
| Loss on early repayment of debts | 1.321 | 58 | - | - |
| Interest income and net foreign exchange transaction gains (note 6) | -19.349 | -20.530 | -3.600 | -2.430 |
| Dividend income | - | -283 | -5.119 | -7.699 |
| Interest expense and net foreign exchange transaction losses (note 6) | 74.632 | 79.484 | 34.085 | 30.016 |
| Loss on financial instruments (note 6) | 4.112 | 1.392 | 2.779 | 4.308 |
| (Gains)/loss on investments (note 6) | -39 | 639 | 3 | 118 |
| Tax discount due to one off payment (note 6) | -139 | -144 | -139 | -144 |
| Share stock options (note 7) | 2.520 | 3.697 | 1.522 | 2.396 |
| Share in profit of associates (note 15) | -1.080 | -3.519 | - | - |
| Changes in working capital: | ||||
| Decrease/(increase) in inventories | 38.844 | -35.024 | 24.629 | -15.403 |
| Decrease in trade and other receivables | 38.115 | 17.128 | 9.342 | 27.428 |
| Decrease/(increase) in other operating long-term receivables | 1.221 | -2.647 | 91 | -165 |
| (Decrease)/increase in trade and other payables (excluding banks) | -30.399 | 42.055 | -18.521 | 12.851 |
| Cash generated from operations | 388.763 | 418.386 | 140.385 | 177.702 |
In the cash flow statement, proceeds from the sale of property, plant and equipment comprise:
| Net book amount (note 11) | 3.791 | 3.231 | 855 | 678 |
|---|---|---|---|---|
| Profit/(loss) on sale of property, plant and equipment (note 4) | 3.695 | 4.505 | 1.820 | 26 |
| Proceeds from the sale of property, plant and equipment | 7.486 | 7.736 | 2.675 | 704 |
On 22.4.2009, the Group acquired through a public offer the 3.6529% of Titan's Cementara Kosjeric A.D. in Serbia by paying the amount of € 2.6 m. After this acquisition the Group now owns the entire share capital of the above mentioned subsidiary.
On 3.6.2009 the Group acquired 25% of the Pozolani S.A. shares for the amount of € 0.5 m.. On 23.12.2009, the Group completed the acquisition of the remaining 75% shares of Pozolani S.A. for the amount of € 1.3 m. Pozonali S.A. was accounted for with equity consolidation method till 23.12.2009 and after that it is included in the Group's financial statements with the full consolidation method.
On 26.5.2009 the Group signed an acquisition agreement for 100% of the shares of Zofori Building Materials S.A., which was included in the Group's financial statements with the full consolidation method.
On 23.10.2009 the Group acquired 100% of the shares of Mamaja Real Estate B.V. for the amount of € 0.02 m, which was included in the Group's financial statements with the full consolidation method.
On 13.11.2009 the Group acquired 100% of the shares of Dancem Aps for the amount of € 0.06 m, which was included in the Group's financial statements with the full consolidation method.
On 30.12.2009 the Group acquired 99% of the shares of Tanagra Quarries S.A. for the amount of € 9.2 m, which was included in the Group's financial statements with the full consolidation method.
The assets and liabilities of the above mentioned companies, as they were preliminary recorded at the date of acquisition, are as follows:
| (all amounts in Euro thousands) Quarries of Tanagra S.A. |
Other | ||||
|---|---|---|---|---|---|
| Fair value | Fair value | ||||
| recognised on | Previous carrying | recognised on | Previous carrying | ||
| Assets | acquisition | value | acquisition | value | |
| Non current assets | 857 | 857 | 130 | 130 | |
| Inventory | 606 | 606 | 4 | 4 | |
| Receivables and prepayments | 5.400 | 5.400 | 60 | 60 | |
| Cash and cash equivalents | 378 | 378 | 80 | 80 | |
| Total assets | 7.241 | 7.241 | 274 | 274 | |
| Liabilities | |||||
| Long term borrowings | 182 | 182 | - | - | |
| Short term borrowings | 1.694 | 1.694 | - | - | |
| Deferred tax liabilities | 148 | 148 | - | - | |
| Other liabilities and taxes payable | 3.427 | 3.427 | 12 | 12 | |
| Total liabilities | 5.451 | 5.451 | 12 | 12 | |
| Net assets | 1.790 | 1.790 | 262 | 262 | |
| Minority Interest | -18 | - | |||
| Total net assets acquired | 1.772 | 262 | |||
| Goodwill arising on acquisition (note 13) | 7.429 | 1.690 | |||
| Consideration, satisfied by cash | 9.201 | 1.952 | |||
| Cash flow on acquisition: | |||||
| Purchase consideration settled in cash | 9.201 | 1.952 | |||
| Net cash acquired with the subsidiary | -378 | -79 | |||
| Net cash outflow on acquisitions | 8.823 | 1.873 |
Purchase price allocation of the acquired companies will be completed within twelve months from acquisition date.
From the date of acquisition, the above acquired companies have contributed € 57 thousands of revenue and € (8) thousands to the earnings before interest, tax , depreciation and amortization of the Group. If the combination had taken place at the beginning of the year, the earnings before interest, tax , depreciation and amortization would have been € 331,410 thousand and revenue from continuing operations would have been € 1,366,765 thousand.
On May 6th 2008 the Group acquired the remaining 50% of the JV company Lafarge Titan Egyptian Inv.Ltd and its subsidiaries Alexandria Portland Cement Co. S.A.E, Beni Suef Cement Company S.A.E., Four M Titan Silo Co. LLC, Misrieen Titan Trade & Distribution, East Cement Trade Ltd, Alexandria Development Co. Ltd. Since the above acquisition date, these companies are fully consolidated in the Group's financial statements - having been previously consolidated proportionately. On 17.4.2008 the Group acquired a 50% equity interest in Adocim Cimento Beton Sanayi ve Ticaret A.S. in Turkey, which was included in the Group's financial
On 21.12.2007 the Group signed an acquisition agreement for 100% of the shares of Domiki Beton S.A., which was included in the Group's financial statements at 15.1.2008 with the full consolidation method. statements as of the day of acquisition under the proportional consolidation method.
On 6.5.2008 the Group acquired a 65% equity stake in Alba Cemento Italia SHPK in Albania. The above company was included on the same day in the Group's financial statements with the full consolidation method. At 20.11.2008 Croup's participation in the above mentioned company was indirectly reduced to 39%, as a consequence of the equity participation in Antea Cement Sh.A,
The Group acquired 100% of Quarries Vahou S.A in Greece which has been included in the Group's financial statements since 14.5.2008, with the full consolidation method.
On 22.10.2008 the Group acquired 100% of Quarries Thisvis S.A. in Greece. The above company was included on the same day in the Group's financial statements with the full consolidation method.
On 04.11.2008 the Group acquired 100% of DNJEPR Investments I B.V in Netherlands, through Group's subsidiary Titan Cementara Kosjeric A.D. The above company was included on the same day in the Group's financial statements with the full consolidation method. At 20.11.2008, DNJEPR Investments I B.V in Netherlands has been renamed to Holtitan B.V.
Finally, on 22.11.2008 the Group acquired 100% of DNJEPR Investments II B.V. in Netherlands. The above company was included on the same day in the Group's financial statements with the full consolidation method.
The assets and liabilities of the above mentioned companies, as they were preliminary recorded at the date of acquisition, are as follows:
| (all amounts in Euro thousands) | Lafarge Titan Egyptian | Adocim Cimento Beton Sanayi ve | Other | ||||
|---|---|---|---|---|---|---|---|
| Fair value | Fair value | Fair value | |||||
| recognised on | Previous carrying | recognised on | Previous carrying | recognised on | Previous carrying | ||
| Assets | acquisition | value | acquisition | value | acquisition | value | |
| Non current assets | 273.437 | 109.815 | 48.468 | 39.376 | 10.276 | 6.417 | |
| Deferred tax assets | - | - | - | 275 | - | - | |
| Inventory | 14.931 | 14.931 | 4.386 | 4.386 | 702 | 702 | |
| Receivables and prepayments | 7.893 | 7.893 | 11.109 | 11.109 | 5.740 | 5.741 | |
| Cash and cash equivalents | 26.627 | 26.627 | 86 | 86 | 184 | 184 | |
| Total assets | 322.888 | 159.266 | 64.049 | 55.232 | 16.902 | 13.044 | |
| Liabilities | |||||||
| Long term borrowings | 26.090 | 26.090 | 35.713 | 35.713 | 230 | 230 | |
| Short term borrowings | 13.205 | 13.205 | 7.359 | 7.359 | 3.486 | 3.486 | |
| Deferred tax liabilities | 35.522 | 2.015 | 1.235 | - | 964 | - | |
| Other liabilities and taxes payable | 27.512 | 26.697 | 10.424 | 10.416 | 4.351 | 4.260 | |
| Total liabilities | 102.329 | 68.007 | 54.731 | 53.488 | 9.031 | 7.976 | |
| Net assets | 220.559 | 91.259 | 9.318 | 1.744 | 7.871 | 5.068 | |
| Minority Interest | -5.874 | - | -481 | ||||
| Total net assets acquired | 214.685 | 9.318 | 7.390 | ||||
| Goodwill arising on acquisition (note 13) | 94.570 | 76.641 | 11.883 | ||||
| Consideration, satisfied by cash | 309.255 | 85.959 | 19.273 | ||||
| Cash flow on acquisition: | |||||||
| Purchase consideration settled in cash | 309.255 | 85.959 | 19.273 | ||||
| Net cash acquired with the subsidiary | -26.627 | -86 | -184 | ||||
| Net cash outflow on acquisitions | 282.628 | 85.873 | 19.089 |
Purchase price allocation of the acquired companies was completed within the fiscal year 2009 without any change.
The Group has a 50% interest in a joint venture, Adocim Cimento Beton Sanayi ve Ticaret A.S a company incorporated in Turkey with main activity the production of cement. The following amounts represent the Group"s share of the assets and liabilities and profit after tax of the joint ventures and are included in the consolidated balance sheet and consolidated income statement:
| (all amounts in Euro thousands) | 2009 | 2008(1) |
|---|---|---|
| Property, plant and equipment | 44.760 | 47.309 |
| Intangibles and long-term receivables | 2.836 | 2.751 |
| Current assets | 13.176 | 12.033 |
| Total assets | 60.772 | 62.093 |
| Non-current interest bearing borrowings | 22.079 | 28.996 |
| Provisions | 50 | 36 |
| Minority interests | 51 | - |
| Current non-interest bearing borrowings | 19.384 | 13.818 |
| Other short-term liabilities | 3.481 | 2.696 |
| Total liabilities | 45.045 | 45.546 |
| Net assets | 15.727 | 16.547 |
| Revenue | 26.950 | 50.952 |
| Cost of sales | -22.491 | -32.914 |
| Gross profit before depreciation | 4.459 | 18.038 |
| Other income/expense | 1.300 | 210 |
| Administrative expenses | -1.362 | -2.348 |
| Selling expenses | -362 | -267 |
| Profit before interest, taxes and depreciation | 4.035 | 15.633 |
| Depreciation | -1.778 | -3.716 |
| Profit before interest, taxes | 2.257 | 11.917 |
| Finance costs | -3.206 | -6.583 |
| Profit before income tax | -949 | 5.334 |
| Income tax expense | 182 | 530 |
| Profit after tax | -767 | 5.864 |
On 17.4.2008, the Group has acquired 50% of Adocim Cimento Beton Sanayi ve Ticaret AS in Turkey which is incorporated in 2008 Group's financial statements with the proportional method of consolidation.
(1) The consolidated income statement for the period 1.1 to 31.12.2008 includes the results of the joint venture Adocim Cimento Beton Sanayi ve Ticaret AS for the period 1.4 to 31.12.2008 and the results of the joint venture Lafarge Titan Egyptian Inv. Ltd with its subsidiaries Alexandria Portland Cement Co. SAE, Beni Suef Cement Company SAE, Four M Titan Silo Co. LLC, Misrieen Titan Trade & Distribution, East cement Trade Ltd, Alexandria Development Co. Ltd for the period 1.1 to 30.4.2008 (note 30).
The number of employees in the joint venture at the end of the reporting period was 254 (2008: 260).
| Contingent liabilities | Group | Company | ||
|---|---|---|---|---|
| (all amounts in Euro thousands) | 2009 | 2008 | 2009 | 2008 |
| Guarantees to third parties on behalf of subsidiaries | - | - | 832.038 | 903.442 |
| Bank guarantee letters | 68.515 | 84.936 | 25.103 | 30.213 |
| Other | 14.718 | 19.421 | 3.020 | 5.720 |
| 83.233 | 104.357 | 860.161 | 939.375 |
In January 2009 the US South Florida Federal District Court issued a ruling which cancelled all mining and extraction permits in the Lake Belt area, with immediate effect. The same court had annulled the same permits in an earlier ruling in July 2007. Following the appeal of Tarmac America, a Titan America subsidiary and of other affected companies, the Circuit Court of Appeals in Atlanta, in May 2008 reversed that ruling and referred the case to the South Florida Federal District Court, instructing the court to judge anew the case in a more objective way.
Tarmac America appealed to the Federal Appeals Court of Atlanta on this new ruling of the District Court. In January 2010, the Federal Court of Appeal upheld the decision of the District Court. In the meanwhile the Company had been well-prepared to continue the operations and maintain production at the Pennsuco plant and, in the context of current depressed market conditions, to address its customers' needs.
The U.S. Army Corps of Engineers (ACE) published on February 1, 2010 a Record of Decision (ROD) that paves the way for new mining permits in the Lake Belt area of Miami-Dade, Florida (see also note 38).
A number of ready-mix concrete and construction companies filed class action lawsuits in the United States District Court for the Southern District of Florida (the "District Court") alleging certain antitrust violations made by cement and ready mix concrete companies in the State of Florida.
These lawsuits were consolidated in two complaints which were filed with the District Court naming as defendants eight building materials companies in Florida, including the Company's subsidiary, Tarmac America LLC.
Tarmac America LLC refuses the plaintiffs' allegations, and intends to defend the case vigorously.
There are no other litigation matters which may have a material impact on the financial position of the Company and the Group.
Given the reduced demand resulting from the underlying economic crisis, it is estimated that the the Group's production levels will not be constrainted by the allocation of carbon dioxide emissions allowances for the period 2008-2012.
The Group has granted to non controlling interest shareholders, European Bank for Reconstruction and Development (EBRD) and International Finance Corporation (IFC) the option to have the Group purchase their shares in ANTEA Cement SHA at predetermined conditions. The Group recognize this put option under the method as it is described in the note 1.2.d. On 31.12.2009 the put option's fair value recognized as liability is € 19.4 million.
The financial years, referred to in note 36, have not been audited by the tax authorities and therefore the tax obligations of the Company and its subsidiaries for those years have not yet been finalized.
Other than the items referred to in the preceding paragraph, it is not anticipated that any material contingent liabilities will arise.
| Contingent assets | Group | |||
|---|---|---|---|---|
| (all amounts in Euro thousands) | 2009 | 2008 | 2009 | 2008 |
| Bank guarantee letters | 14.808 | 15.481 | 14.808 | 15.481 |
| 14.808 | 15.481 | 14.808 | 15.481 |
On July 25, 2007 Antea Cement Sh.A., a Titan Group subsidiary in Albania, entered into a commitment to construct a new cement plant in Kruje, Albania. The total project cost is estimated at € 170 m. The amount of € 153 m has been invested as of 31.12.2009.
Capital commitments contracted for at the balance sheet date but not recognized in the financial statements is as follows:
| 2009 | 2008 | 2009 | 2008 | |
|---|---|---|---|---|
| 37.663 | 98.586 | 12.872 | 13.586 | |
| Company | ||||
| 2009 | 2008 | 2009 | 2008 | |
| 240.505 | 281.052 | - | - | |
| Group Group |
Company |
The Group's US subsidiary has contracted to purchase raw materials and manufacturing supplies as part of its ongoing operations in Florida. This includes a contract to buy construction aggregates through a multi-year agreement at prevailing market prices.
The Group leases motor vehicles, properties and other equipment under non-cancellable operating lease agreements. The leases have varying terms, escalation clauses and renewal rights.
| (all amounts in Euro thousands) | Group | Company | ||
|---|---|---|---|---|
| 2009 | 2008 | 2009 | 2008 | |
| Not later than 1 years | 7.411 | 6.597 | 986 | 1.041 |
| Later than 1 years and not later than 5 years | 18.248 | 13.643 | 3.078 | 3.251 |
| Later than 5 years | 17.485 | 9.802 | - | - |
| 43.144 | 30.042 | 4.064 | 4.292 |
The Group is controlled by Titan Cement S.A. ("The Company") which owns 100% of the Group's ordinary shares. Group directors own 18.4% (2008:18.3%) of the Company's shares. The Company owns 4.1% (2008:4.1%) while the remaining 77.5% (2008: 77.6%) of shares belongs to the public (including members of the key shareholders' families and institutional investors).
Various transactions are entered into by the Company and its subsidiaries during the year with related parties. The sales to and purchases from related parties are made at normal market prices. Outstanding balances at year-end are unsecured and settlement occurs in cash. For the years ended 31 December 2009 and 31 December 2008, the Group has not raised any provision for doubtful debtors relating to amounts owed by related parties as the payment history has been excellent. Intra-group transactions are eliminated on consolidation. Related party transactions exclusively reflect transactions between the companies of the Group.
The following is a summary of transactions that were carried out with related parties during the year:
Domiki Beton S.A. 193
(all amounts in Euro thousands)
| Group | Sales to related parties |
Purchases from related parties |
Amounts owed by related parties |
Amounts owed to related parties |
|---|---|---|---|---|
| Other related parties | - | 2.613 | - | 706 |
| Executives and members of the Board | - | - | 4 | 650 |
| - | 2.613 | 4 | 1.356 | |
| Company | Sales to related parties |
Purchases from related parties |
Amounts owed by related parties |
Amounts owed to related parties |
| Aeolian Maritime Company | 2 | 2.701 | - | 1.605 |
| Achaiki Maritime Company | 6 | 7.944 | - | 6.202 |
| Albacem S.A. | 1 | - | - | - |
| Interbeton Construction Materials S.A. | 46.835 | 5.884 | 15.658 | - |
| Intertitan Trading International S.A. | 6.251 | - | - | - |
| Ionia S.A. | 1.086 | 360 | 129 | - |
| Quarries Gournon S.A. | 2 | - | 814 | - |
| Naftitan S.A. | 66 | 767 | - | 422 |
| Polikos Maritime Company | - | - | - | 225 |
| Titan Cement International Trading S.A. | 5 | - | 270 | - |
| Fintitan SRL | 11.669 | - | 5.937 | - |
| Aemos Cement Ltd | - | - | 58 | - |
| Titan Cement U.K. Ltd | 6.761 | - | 2.261 | - |
| Usje Cementarnica AD | 6.419 | - | 51 | - |
| Beni Suef Cement Co.S.A.E. | 438 | 9 | 101 | - |
| Alexandria Portland Cement Co. S.A.E | 6.567 | - | 882 | - |
| Cementara Kosjeric AD | 75 | - | - | - |
| Zlatna Panega Cement AD | 1 | - | 3 | - |
| Τitan Αmerica LLC | 172 | 137 | - | 9 |
| Essex Cement Co. LLC | 10.964 | - | 1.224 | - |
| Alvacim Ltd | - | 105 | - | - |
| Antea Cement SHA | 29.190 | - | 8.683 | - |
| Titan Global Finance PLC | - | 22.832 | - | 637.217 |
| Ecobeton S.A. | 1.366 | - | 58 | - |
| TCK Montenegro DOO | 737 | - | 79 | - |
| Adocim Cimento Beton Sanayi ve Ticaret A.S. | 85 | - | - | - |
Dancem APS - - 26 - Cementi Crotone S.R.L. 1.149 - 455 - Other subsidiaries 11 - - - Other related parties - 2.613 - 706 Executives and members of the Board - - 4 650
Year ended 31 December 2008
(all amounts in Euro thousands)
| Group | Sales to related parties |
Purchases from related parties |
Amounts owed by related parties |
Amounts owed to related parties |
|---|---|---|---|---|
| Other related parties | - | 2.044 | - | 536 |
| Executives and members of the Board | - | - | 21 | 139 |
| - | 2.044 | 21 | 675 |
| Company | Sales to related | Purchases from | Amounts owed by related |
Amounts owed to related |
|---|---|---|---|---|
| parties | related parties | parties | parties | |
| Aeolian Maritime Company | 1 | 2.507 | - | 1.405 |
| Achaiki Maritime Company | 8 | 7.132 | - | 4.518 |
| Albacem S.A. | 272 | - | - | - |
| Interbeton Construction Materials S.A. | 59.005 | 5.671 | 4.875 | - |
| Intertitan Trading International S.A. | 6.839 | - | - | - |
| Ionia S.A. | 1.446 | 7.171 | - | 112 |
| Quarries Gournon S.A. | 5 | - | 528 | - |
| Naftitan S.A. | 62 | 749 | - | 375 |
| Polikos Maritime Company | - | - | - | 871 |
| Titan Cement International Trading S.A. | 1.140 | - | 471 | - |
| Fintitan SRL | 13.295 | - | 6.947 | - |
| Iapetos Ltd | - | - | 11 | - |
| Titan Cement U.K. Ltd | 7.230 | - | 1.190 | - |
| Usje Cementarnica AD | 16.495 | - | 5.302 | - |
| Beni Suef Cement Co.S.A.E. | 646 | - | 177 | - |
| Cementara Kosjeric AD | 65 | - | - | - |
| Zlatna Panega Cement AD | 1.589 | - | 43 | - |
| Essex Cement Co. LLC | 11.483 | 3 | 163 | - |
| Alvacim Ltd | - | 2 | - | 19.002 |
| Antea Cement SHA | 19.111 | 5 | 4.047 | - |
| Titan Global Finance PLC | - | 16.636 | - | 639.152 |
| Ecobeton S.A. | 1.127 | - | 5 | - |
| TCK Montenegro DOO | 1.094 | - | 288 | - |
| Salentijn Properties1 B.V. | - | - | 312 | - |
| Domiki Beton S.A. | 1.975 | - | 91 | - |
| Thisvis Quarries S.A. | - | 1 | - | 1 |
| Other related parties | - | 2.044 | - | 536 |
| Executives and members of the Board | 21 | 139 | ||
| 142.888 | 41.921 | 24.471 | 666.111 |
| Group | Company | |||
|---|---|---|---|---|
| 2009 | 2008 | 2009 | 2008 | |
| Salaries and other short-term employee benefits | 5.043 | 4.713 | 4.851 | 4.522 |
| Post-employment benefits | 300 | 238 | 300 | 238 |
| Other long term benefits | 372 | 316 | 372 | 316 |
| Termination benefits | 562 | - | 562 | - |
| Share based payments | 1.140 | 1.455 | 1.140 | 1.455 |
| 7.417 | 6.722 | 7.225 | 6.531 |
Key management includes executive committee members.
| Directors | 2009 | 2008 |
|---|---|---|
| Executive members on the Board of Directors | 5 | 5 |
| Non-executive members on the Board of Directors | 9 | 10 |
The Group"s activities give rise to a variety of financial risks, including foreign exchange, interest rate, credit and liquidity risks. The Group"s overall risk management programme focuses on the volatility of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group as a whole.
Risk management is carried out by a central treasury department (Group Treasury) under policies approved by the Board of Directors. Group Treasury operates as a cost and service centre and provides services to all business units within the Group, co-ordinates access to both domestic and international financial markets and manages the financial risks relating to the Group"s operations. This includes identifying, evaluating and if necessary, hedging financial risks in close co-operation with the various business units within the Group. Group Treasury does not undertake any transactions of a speculative nature or transactions that are unrelated to the Group"s trading, investment and financing activities.
The Group"s financial instruments consist mainly of deposits with banks, bank overdrafts, FX spot and forwards, trade accounts receivable and payable, loans to and from subsidiaries, associates, joint ventures, investments in bonds, dividends payable and lease obligations.
The Group"s foreign exchange exposure arises from actual or anticipated cash flows (exports/ imports) in currencies other than its base currency as well as investments in overseas operations. Exchange rate exposures are managed within approved policy parameters.
Exposures are managed through the use of natural hedges and forward foreign exchange contracts. It is the policy of the Group to use as natural hedges any material foreign currency loans against underlying investments in foreign subsidiaries whose net assets are exposed to currency translation risk, when possible. Hence currency exposure to the net assets of the Group"s subsidiaries in the United States of America is partially mitigated through borrowings denominated in US Dollars. Via the 2007 syndicated facility, Titan Global Finance, the Group"s funding and cash management vehicle, granted a US Dollar loan to Titan America LLC. This loan creates no FX exposure in the results, as any gains/ losses from the revaluation of the loan are recorded in equity and thay are offset by losses/ gains from the revaluation of US equity.
In other markets where the Group operates, such as Egypt and certain Balkan countries, the Group assesses the financing needs of the business unit and where possible matches the currency of financing with the underlying asset exposure. The exception to this is partially Egypt (since its financing obligations consist mainly by Egyptian pounds), Turkey and Albania where the Group has an asset exposure in Egyptian pounds, in Turkish Lira and Albanian Lek and a financing obligation in Japanese Yen in Egypt and in Euro in Turkey and Albania. The Group has determined that the cost of refinancing the Yen obligations to Egyptian pounds and the Euro obligations to Turkish Lira and to Albanian Lek is prohibitive. To more effectively manage the yen exposure, part of the Yen obligation has been swapped into US Dollars via the use of forward foreign exchange contracts.
During 2009, Titan Global Finance granted a euro loan to Titan America LLC, who hedged the FX differences be FX forwards contracts for the same amount and tenor with the loan.
The following table demonstrates the sensitivity of the Group"s profit before tax and the Group"s equity to reasonable changes in the US Dollar, Serbian Dinar, Egyptian Pound, British Pound, Turkish Lira and Albanian Lek floating exchange rates, with all other variables held constant:
| (all amounts in Euro thousands) | Foreign Currency |
Increase/ Decrease of Foreign Currency vs. € |
Effect on Profit Before Tax |
Effect on equity |
|---|---|---|---|---|
| Year ended 31 December 2009 | USD | 5% | -1.884 | 30.526 |
| -5% | 1.704 | -27.619 | ||
| RSD | 5% | 1.017 | 2.633 | |
| -5% | -920 | -2.382 | ||
| EGP | 5% | 3.572 | 26.194 | |
| -5% | -3.232 | -23.699 | ||
| GBP | 5% | 45 | 442 | |
| -5% | -41 | -400 | ||
| 5% | -40 | 828 | ||
| TRY | -5% | 37 | -749 | |
| ALL | 5% | -500 | 2.419 | |
| -5% | 452 | -2.188 | ||
| Year ended 31 December 2008 | USD | 5% | -1.336 | 33.456 |
| -5% | 1.209 | -30.270 | ||
| RSD | 5% | 1.218 | 3.080 | |
| -5% | -1.102 | -2.786 | ||
| EGP | 5% | 1.734 | 25.593 | |
| -5% | -1.569 | -23.156 | ||
| GBP | 5% | 75 | 367 | |
| -5% | -68 | -332 | ||
| TRY | 5% | -86 | 871 | |
| -5% | 77 | -788 | ||
| ALL | 5% | -103 | 3.231 | |
| -5% | 93 | -2.923 |
Note: a) Calculation of "Effect on Profit before tax" is based on year average FX rates; calculation of "Effect on Equity" is based on year end FX rate changes b) The above sensitivity analysis is used on floating currencies and not on fixed.
The fluctuations of the interest rates have no material impact in the profit / loss and the operating cash flow of the Group.
As of 31.12.2009, 28% of total Group debt is based on fixed interest rates and an additional 51% is based on pre-agreed interest rate spreads. As a result, base interest rate volatility has a small impact on cash flow and P&L, as it is described below at the sensitivity analysis.
The following table demonstrates the sensitivity of the Group"s profit before tax (through the impact of the outstanding floating rate borrowings at the end of the period on profits) to reasonable changes in interest rates, with all other variables held constant:
| (all amounts in Euro thousands) | Interest Rate Variation |
Effect on profit before tax |
|
|---|---|---|---|
| Year ended 31 December 2009 | 1,0% | -5.116 | |
| EUR | -1,0% | 5.116 | |
| 1,0% | -1.520 | ||
| USD | -1,0% | 1.520 | |
| 1,0% | - | ||
| GBP | -1,0% | - | |
| 1,0% | -313 | ||
| BGN | -1,0% | 313 | |
| EGP | 1,0% | -205 | |
| -1,0% | 205 | ||
| Year ended 31 December 2008 | EUR | 1,0% | -7.919 |
| -1,0% | 7.919 | ||
| USD | 1,0% | -1.347 | |
| -1,0% | 1.347 | ||
| GBP | 1,0% | - | |
| -1,0% | - | ||
| BGN | 1,0% | -282 | |
| -1,0% | 282 | ||
| EGP | 1,0% | -162 | |
| -1,0% | 162 |
Note: Table above excludes the positive impact of interest received from deposits.
Exposure to interest rate risk on liabilities and investments is monitored on a proactive basis. In order to mitigate interest rate risk, the Group"s financing is structured at a pre-determined combination of fixed and floating rate debt. Group Treasury steers the Group"s fixed- floating rate ratio of net debt according to market conditions, the Group"s strategy and its funding needs. Interest rate derivatives may occasionally be used, if deemed necessary, only as a means of mitigating this risk and changing the above mentioned ratio. In 2009, the Group entered into vanilla fixed to floating swaps for a five year tenor. Through these products, the percentage of fixed rates on Group's total debt has reached 31%.
It is the policy of the Group to continuously review interest rate trends and the tenor of financing needs. In this respect, decisions are made on a case by case basis as to the tenor and the fixed versus floating cost of a new loan. Consequently, all short term borrowings are based on floating rates. Medium and longterm facilities consist of either fixed or floating interest rate debt.
The Group has no significant concentrations of credit risk. 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 considered appropriate, credit guarantee insurance cover is purchased. The granting of credit is controlled by application and account limits. Appropriate provision for impairment losses is made for specific credit risks and at the year-end management did not consider there to be any material credit risk exposure that was not already covered by credit guarantee insurance or a doubtful debt provision.
The Group also has potential credit risk exposure arising from cash and cash equivalents, investments and derivative contracts. To minimize this credit risk, the Group operates within an established counterparty policy approved by the Board of Directors, which limits the amount of credit exposure to any one financial institution. Also, as regards money market instruments, the Group only deals with well-established financial institutions of high credit standing.
As of 31 December 2009, the Group's cash and cash equivalents were held at time deposits and current accounts with financial institutions of high investment grade profile. Note 21 includes an analysis on cash & cash equivalents.
Prudent liquidity risk management implies the availability of funding through adequate amounts of committed credit facilities, cash and marketable securities and the ability to close out those positions as and when required by the business or project.
The Group manages liquidity risk by monitoring forecasted cash flows and ensuring that adequate banking facilities and reserve borrowing facilities are maintained. The Group has sufficient undrawn call/demand borrowing facilities that can be utilised to fund any potential shortfall in cash resources.
Group The table below summarizes the maturity profile of financial liabilities at 31 December 2009 based on contractual undiscounted payments.
| Year ended 31 December 2009 | On demand | Less than 6 months | 6 to 12 months | 1 to 5 years | >5years | Total |
|---|---|---|---|---|---|---|
| (all amounts in Euro thousands) | ||||||
| Borrowings (note 24) | 65.851 | 132.428 | 67.859 | 936.245 | 89.449 | 1.291.832 |
| Other non current liabilities (note 27) | - | - | - | 30.901 | - | 30.901 |
| Trade and other payables (note 28) | 33.535 | 137.210 | 28.302 | 8.546 | 207.593 | |
| 99.386 | 269.638 | 96.161 | 975.692 | 89.449 | 1.530.326 | |
| Year ended 31 December 2008 | On demand | Less than 6 months | 6 to 12 months | 1 to 5 years | >5years | Total |
| (all amounts in Euro thousands) | ||||||
| Borrowings (note 24) | 176.608 | 28.672 | 35.922 | 1.010.870 | 121.146 | 1.373.218 |
| Other non current liabilities (note 27) | - | - | - | 7.193 | - | 7.193 |
| Trade and other payables (note 28) | 35.644 | 140.566 | 31.138 | 8.833 | - | 216.181 |
| 212.252 | 169.238 | 67.060 | 1.026.896 | 121.146 | 1.596.592 | |
| Company | ||||||
| Year ended 31 December 2009 | On demand | Less than 6 months | 6 to 12 months | 1 to 5 years | >5years | Total |
| (all amounts in Euro thousands) | ||||||
| Borrowings (note 24) | 2.609 | 125.631 | - | 678.182 | - | 806.422 |
| Trade and other payables | 33.672 | 16.443 | 524 | 461 | - | 51.100 |
| 36.281 | 142.074 | 524 | 678.643 | - | 857.522 | |
| Year ended 31 December 2008 | On demand | Less than 6 months | 6 to 12 months | 1 to 5 years | >5years | Total |
| (all amounts in Euro thousands) | ||||||
| Borrowings (note 24) | 66.991 | 1.579 | 19.612 | 855.326 | - | 943.508 |
| Trade and other payables (note 28) | 33.138 | 20.226 | 719 | 611 | - | 54.694 |
| 100.129 | 21.805 | 20.331 | 855.937 | - | 998.202 |
Borrowings include the floating and fixed rate outstanding principal at year end plus accrued interest up to maturity.
The amounts that are described as "on demand", they are short-term uncommitted facilities.
The primary objective of the Group"s capital management is to ensure that it maintains a strong investment grade credit rating and healthy capital ratios in order to support its operations and maximize shareholder value.
The Group manages its capital structure conservatively with the leverage ratio, as this is shown from the relationship between net debt and EBITDA.
Titan"s policy is to maintain leverage targets in line with an investment grade profile. During 2009, the Group reduced its level of net debt despite the increased capex due to the construction of a new greenfield in Albania and the new line in Egypt. The Group focuses on cash flow management to reduce its leverage ratio in line with an investment grade profile.
The Group monitors capital using net debt to EBITDA ratio. The Group includes within net debt, interest bearing loans and borrowings, less cash and cash equivalents.
| Group | Company | |||
|---|---|---|---|---|
| (all amounts in Euro thousands) | 2009 | 2008 | 2009 | 2008 |
| Long term borrowings | 725.665 | 945.193 | 634.499 | 759.000 |
| Short term borrowings | 261.835 | 263.145 | 127.609 | 87.580 |
| Debt | 987.500 | 1.208.338 | 762.108 | 846.580 |
| Less: cash and cash equivalents | 16.426 | 94.521 | 204 | 31.263 |
| Net Debt | 971.074 | 1.113.817 | 761.904 | 815.317 |
| EBITDA | 329.756 | 380.052 | 119.511 | 148.480 |
Fair value estimation
The fair value of forward foreign exchange contracts is determined using forward exchange market rates at the balance sheet date. When interest rate swaps are used, their fair value is calculated as the present value of the estimated future cash flows.
In assessing the fair value of non-traded derivatives and other financial instruments, the Group uses a variety of methods and makes assumptions that are based on market conditions existing at each balance sheet date. Quoted market prices or dealer quotes for the specific or similar instruments are used for long-term debt. Other techniques, such as option pricing models and estimated discounted value of future cash flows, are used to determine fair value for the remaining financial instruments.
The face value less any estimated credit adjustment for financial assets and liabilities with a maturity of less than one year is assumed to approximate its fair value. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate available to the Group for similar financial instruments.
Set out below is a comparison by category of carrying amounts and fair values of all of the Group"s financial instruments, that are carried in the financial statements:
| Group | Company | |||||||
|---|---|---|---|---|---|---|---|---|
| Carrying amount | Fair value | Carrying amount | Fair value | |||||
| (all amounts in Euro thousands) | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 |
| Financial assets | ||||||||
| Available for-sale financial assets Other non current receivables |
2.400 20.969 |
2.480 39.297 |
2.400 20.969 |
2.480 39.297 |
168 3.460 |
168 3.551 |
168 3.460 |
168 3.551 |
| Receivables and prepayments | 254.131 | 312.934 | 254.131 | 312.934 | 83.723 | 96.621 | 83.723 | 96.621 |
| Cash and cash equivalents | 16.426 | 94.521 | 16.426 | 94.521 | 204 | 31.263 | 204 | 31.263 |
| Derivative financial instruments | 679 | 2.524 | 679 | 2.524 | 34 | - | 34 | - |
| Financial liabilities | ||||||||
| Long term borrowings | 725.665 | 945.193 | 729.639 | 988.305 | 634.499 | 759.000 | 634.499 | 759.000 |
| Short term Borrowings | 261.835 | 263.145 | 261.835 | 263.145 | 127.609 | 87.580 | 127.609 | 87.580 |
| Other non current liabilities | 37.434 | 13.791 | 37.434 | 13.791 | 5.806 | 6.104 | 5.806 | 6.104 |
| Trade and other payables | 242.825 | 255.151 | 242.825 | 255.151 | 60.345 | 75.571 | 60.345 | 75.571 |
| Derivative financial instruments | 405 | - | 405 | - | 29 | - | 29 | - |
Note: Derivative financial instruments consist of forward foreign exchange contracts and swaps.
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuing technique:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly.
Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.
During the reporting period there were no transfers between level 1 and level 2 fair value measurement, and no transfers into and out of level 3 fair value measurement.
As at December 31, 2009, the Group and the Company held the following financial instruments measured at fair value:
| Group | Company | Fair value hierarchy | ||||
|---|---|---|---|---|---|---|
| Fair value | Fair value | |||||
| (all amounts in Euro thousands) | 2009 | 2008 | 2009 | 2008 | ||
| Financial assets | ||||||
| Available for-sale financial assets | 2.400 | 2.480 | - | - | Level 2 | |
| Derivative financial instruments | 679 | 2.524 | 34 | - | Level 2 | |
| Financial liabilities | ||||||
| Other non current liabilities | 19.359 | - | - | - | Level 3 | |
| Derivative financial instruments | 405 | - | 29 | - | Level 2 |
The amounts below represent the net Yen and Dollar equivalents to purchase and sell foreign currencies. The Yen contracts will be utilized during the next twelve months and the Dollar contacts till 2013.
| Foreign Amount | Average Rate | ||||
|---|---|---|---|---|---|
| (all amounts in local currency thousands) | 2009 | 2008 | 2009 | 2008 | |
| Japanese Yen (Bought) | USD/JPY | 4.801.805 | 4.801.805 | 93,73 | 96,79 |
| US Dollars (Sold) | EUR/USD | 146.177 | - | 1,4618 | - |
| Japanese Yen (Sold) | USD/JPY | 2.400.902 | 2.400.902 | 92,15 | 90,59 |
The swap contracts are payments of fixed interest rate until 2014 against receipts of floating rates of one month euribor.
| Amount | Average interest rate | |||
|---|---|---|---|---|
| (all amounts in Euro thousands) | 2009 | 2008 | 2009 | 2008 |
| Fixed rate (sale) | 30.000 | - | 2,36% | - |
Notes to the Financial Statements
| Τitan Cement Company S.A | 2008-2009 | Salentijn Properties1 B.V. | 2009 |
|---|---|---|---|
| Achaiki Maritime Company | 2000-2009 | Titan Cement Cyprus Limited | 2006-2009 |
| Aeolian Maritime Company | 2000-2009 | KOCEM Limited | 2007-2009 |
| Albacem S.A. | 2006-2009 | Fintitan SRL | (1) |
| AVES AFOI Polikandrioti S.A. | 2007-2009 | Colombus Properties B.V. | 2007-2008 |
| Dodekanesos Quarries S.A. | 2007-2009 | Holtitan BV (*) | 2007-2009 |
| Ecobeton S.A. | 2007-2009 | Aeas Neverlands B.V. | 2009 |
| Interbeton Construction Materials S.A. | 2005-2009 | Titan Cement U.K. Ltd | (1) |
| Intercement S.A. | 2007-2009 | Separation Technologies U.K. Ltd | (1) |
| Intertitan Trading International S.A. | 2007-2009 | (2) Τitan Αmerica LLC | 2008-2009 |
| Ionia S.A. | 2007-2009 | Separation Technologies Canada Ltd | 2008-2009 |
| Lakmos S.A. | 2007-2009 | Stari Silo Copmany DOO (*) | 2008-2009 |
| Leecem S.A. | 2007-2009 | Cementara Kosjeric AD | 2005-2009 |
| Naftitan S.A. | 2007-2009 | Adocim Cimento Beton Sanayi ve Ticaret A.S. | 2005-2009 |
| Pozolani S.A. (*) | 2007-2009 | TCK Montenegro DOO | 2007-2009 |
| Porfirion S.A. | 2008-2009 | Double W & Co OOD | 2007-2009 |
| Polikos Maritime Company | 2000-2009 | Granitoid AD | 2007-2009 |
| Vahou Quarries S.A. | 2008-2009 | Gravel & Sand PIT AD | 2002-2009 |
| Quarries of Tanagra S.A. (*) | 2007-2009 | Zlatna Panega Beton EOOD | 2002-2009 |
| Quarries Gournon S.A. | 2007-2009 | Zlatna Panega Cement AD | 2005-2009 |
| Quarries of Tagaradon Community S.A. | 2009 | Cement Plus LTD | 2007-2009 |
| Sigma Beton S.A. | 2007-2009 | Rudmark DOOEL | 2006-2009 |
| Titan Atlantic Cement Industrial and Commercial S.A. | 2007-2009 | Usje Cementarnica AD | 2009 |
| Titan Cement International Trading S.A. | 2007-2009 | Titan Cement Netherlands BV | 2007-2009 |
| Aemos Cement Ltd | 2004-2009 | Alba Cemento Italia, SHPK | 2008-2009 |
| Alvacim Ltd | 2006-2009 | Antea Cement SHA | 2009 |
| Balkcem Ltd | 2004-2009 | Alexandria Development Co.Ltd | (1) |
| Iapetos Ltd | 2003-2009 | Alexandria Portland Cement Co. S.A.E | 2005-2009 |
| Rea Cement Ltd | 2003-2009 | Balkan Cement Enterprises Ltd | 2003-2009 |
| Themis Holdings Ltd | 2004-2009 | Beni Suef Cement Co.S.A.E. | 2006-2009 |
| Tithys Ltd | 2003-2009 | East Cement Trade Ltd | 2003-2008 |
| Feronia Holding Ltd | 2006-2009 | Titan Beton & Aggregate Egypt LLC | 2008-2009 |
| Vesa DOOL | 2007-2009 | Titan Egyptian Inv. Ltd | (1) |
| Misrieen Titan Trade & Distribution | 2005-2009 |
(1) Under special tax status.
(2) Companies operating in the U.S., are incorporated in Titan America LLC subgroup (note 14).
An amount of €3,015 thousand concerning 2008 prepayments for inventories in the Group's subsidiary in US, Titan America LLC was transferred from "other receivables and prepayments" to "inventories", in order to be comparable with the statement of financial position as of 31.12.2009.
The account "provisions" in non-current liabilities concerning 2008 decreased by the amount of €120 thousand for the Group and the Company which was posted to the "provisions" in the current liabilities in order to be comparable with the statement of financial position as of 31.12.2009.
The account "other non-current liabilities" concerning 2008 decreased by the amount of €302 thousand for the Group and the Company which was posted to the "trade and other payables" in order to be comparable with the statement of financial position as of 31.12.2009.
The U.S. Army Corps of Engineers (ACE) published on February 1, 2010 a Record of Decision (ROD) that paves the way for new mining permits in the Lake Belt area of Miami-Dade, Florida. The ROD pertains to nine ACE permit applications held by several companies, including Group's subsidiary, Tarmac America. Tarmac America operates a limestone quarry and a large cement plant in the Lakebelt area.
The ROD marks the conclusion of a 3-year process, following a Federal-Court-mandated Supplemental Environmental Impact Study (SEIS) . The SEIS, which was issued for public comment in May 2009, addresses the issues raised by the District and subsequent Appellate Court decisions. It affirms the company"s long standing conviction that limestone mining, which provides a valuable base for future economic growth and jobs in Florida, can be conducted in ways that respect the environment.
Tarmac America expects to soon receive its mining permit. This will not have a significant impact on current operations and profitability, within the context of current depressed market conditions. However, it removes a source of uncertainty and allows the Group a longer term focus on operating excellence and environmental stewardship, consistent with its values.
Pursuant to its Board of Directors resolution dated 12.1.2010, the Company proceeded to the sale through the Athens Stock Exchange between the period 13.1.2010 and 18.3.2010, 15,597 treasury common shares, representing 0.018 % of the Company"s paid up Share Capital, at an average sale price equal to € 20.65 per share. The sale of these treasury shares was held within the three year statutory period commencing from the date they were acquired by the Company. After this sale, total treasury shares currently held by the Company amount to 3,159,616 (3,153,697 common and 5,919 preferred) with nominal value € 4.00 each, which represent 3.74% of the issued share capital of the Company.
On 02.02.2010 the Group's subsidiary in Bulgaria, Zlatna Panega Cement AD, formed its 100% subsidiary in Skopje, Geospan DOOEL.
The Company is in advanced procedures for the renewal of a loan that amounts €125 million and matures in March 2010. From this loan, €50 million is expected to be renewed for four years and €75 million for two years.
Regarding Company transactions with affiliated companies, in accordance to article 2, par.4 of Codified Law 3016/2002, for 2009.
During 2009, Company´s transactions with the previously mentioned companies are as listed below:
| INTERBETON CONSTRUCTION MATERIALS S.A. | value in Euro | 42.459.894,89 |
|---|---|---|
| ΙΝΤΕΡΤΙΤΑΝ SA | 6.250.160,00 | |
| FINTITAN SRL | 11.668.480,00 | |
| ANTEA CEMENT SHA | 27.039.464,30 | |
| TITAN CEMENT U.K. LTD | 6.741.520,27 | |
| ESSEX CEMENT CO. LLC | 10.963.665,33 | |
| TCK MONTENEGRO DOO | 737.062,60 | |
| ΟΙΚΟΜΠΕΤΟΝ Α.Ε. | 1.364.471,69 | |
| CEMENTARNICA USJE A.D. | 918.750,14 | |
| ΔΟΜΙΚΗ ΜΠΕΤΟΝ Α.Ε. | 192.911,25 | |
| CEMENTARA KOSJERIC A.D. | 75.478,24 | |
| ALEXANDRIA PORTLAND CEMENT CO | 6.553.223,52 | |
| ADOCIM | 85.069,20 | |
| CEMENTI CROTONE SRL | 1.148.994,00 | |
| 116.199.145,43 |
| TOTAL A. | 11.418.588,12 | |
|---|---|---|
| ZLATNA PANEGA CEMENT A.D. INTERBETON CONSTRUCTION MATERIALS S.A. |
26.566,58 2.826,24 29.392,82 |
|
| 6. Spare parts sales | ||
| IONIA S.A. INTERBETON CONSTRUCTION MATERIALS S.A. QUARRIES GOURNON S.A. |
value in Euro | 1.399.801,03 9.998,38 347,75 1.410.147,16 |
| 5. Porcelain products sales | ||
| 427.423,94 | ||
| DOMIKI BETON S.A. | 13.952,48 732,00 |
|
| INTERBETON CONSTRUCTION MATERIALS S.A. IONIA |
value in Euro | 358.739,46 54.000,00 |
| 4. Fixed assets sales | ||
| CEMENTARNICA USJE AD | value in Euro | 5.498.808,01 5.498.808,01 |
| 3. Solid Fuels sales | ||
| 4.052.816,19 | ||
| INTERBETON CONSTRUCTION MATERIALS S.A. | value in Euro | 4.052.816,19 |
| INTERBETON CONSTRUCTION MATERIALS S.A. value in Euro |
194.425,00 |
|---|---|
| NAFTITAN S.A. | 20.896,00 |
| TITAN CEMENT INTERNATIONAL TRADING CO. S.A. | 5.025,00 |
| TITAN ATLANTIC CEMENT S.A. | 485,00 |
| ALBACEM S.A. | 1.000,00 |
| LEECEM S.A. | 423,00 |
| INTERTITAN S.A. | 355,00 |
| LAKMOS S.A. | 423,00 |
| LATEEM S.A. | 423,00 |
| OIKOBETON S.A | 423,00 |
| AFOI POLYKANDRIOTI AVES S.A. | 100,00 |
| 223.978,00 |
| 2.581.687,77 | |
|---|---|
| 2.357.709,77 | |
| 4.616,83 | |
| 1.376.901,92 | |
| 230,00 | |
| 2.387,50 | |
| 11.299,49 | |
| 3.202,00 | |
| 36.284,09 | |
| 879,48 | |
| 7.937,39 | |
| 7.792,14 | |
| 41.274,09 | |
| 13.948,20 | |
| 205.306,94 | |
| value in Euro | 645.649,70 |
| INTERBETON CONSTRUCTION MATERIALS S.A. IONIA S.A. |
value in Euro | 47.511,13 46.304,28 93.815,41 |
|---|---|---|
| TOTAL C. | 93.815,41 | |
| Total of inflows | 14.094.091,30 |
| INTERBETON CONSTRUCTION MATERIALS S.A. QUARRIES THISVIS S.A. |
value in Euro | 5.120.426,22 637,53 5.121.063,75 |
|---|---|---|
| 2. Ready-mix concrete purchases | ||
| INTERBETON CONSTRUCTION MATERIALS S.A. | value in Euro | 502.245,23 502.245,23 |
| 3. Klinker purchases | ||
| CEMENTARNICA USJE A.D. | 0,00 0,00 |
|
| 4. Fixed assets purchases | ||
| INTERBETON CONSTRUCTION MATERIALS S.A. | value in Euro | 0,00 0,00 |
| TOTAL A. | 5.623.308,98 |
|---|---|
| C. Services - Prepaid Expenses | ||
|---|---|---|
| Total of outflows | 39.524.595,86 | |
| TOTAL B. | 33.901.286,88 | |
| ANTEA CEMENT SHA | 4.852,00 17.091.923,82 |
|
| TITAN AMERICA LLC | 2.864,99 | |
| ALVACIM LTD INTERBETON CONSTRUCTION MATERIALS S.A. |
1.684,67 48.585,50 |
|
| TITAN GLOBAL FINANCE PLC | 16.284.812,74 | |
| NAFTITAN S.A. | value in Euro | 749.123,92 |
| 3. Various payments from services | ||
| 7.170.651,39 | ||
| IONIA S.A. | value in Euro | 7.170.651,39 |
| 2. Services for the production of porcelain | ||
| 9.638.711,67 | ||
| AEOLIAN M.C. | 2.507.100,00 | |
| ACHAIKI M.C. | value in Euro | 7.131.611,67 |
The balances at 31.12.2008 are as follows:
| 31/12/2008 | ||
|---|---|---|
| DEBIT | CREDIT | |
| BALANCE | BALANCE | |
| INTERBETON CONSTRUCTION MATERIALS S.A. | 4.874.131,77 | |
| FINTITAN SRL | 6.947.460,00 | |
| TITAN CEMENT U.K. LTD | 1.189.962,20 | |
| TITAN CEMENT INTERNATIONAL TRADING CO. S.A. | 471.000,00 | |
| CEMENTARNICA USJE AD | 5.302.160,83 | |
| ANTEA CEMENT SHA | 4.047.000,39 | |
| BENI SUEF CEMENT CO. | 176.999,97 | |
| OIKOBETON S.A. | 4.781,04 | |
| QUARRIES GOURNON S.A. | 527.738,89 | |
| ZLATNA PANEGA CEM. A.D. | 42.967,50 | |
| TITAN AMERICA LLC | 163.098,10 | |
| TCK MONTENEGRO DOO | 288.144,00 | |
| DOMIKI BETON S.A. | 91.183,72 | |
| IAPETOS LTD | 11.125,00 | |
| SALENTIJN PROPERTIES 1 B.V. | 312.347,00 | |
| TITAN GLOBAL FINANCE PLC | 639.152.831,50 | |
| ALVACIM LTD | 19.001.684,67 | |
| AEOLIAN M.C. | 1.404.876,00 | |
| ACHAIKI M.C. | 4.517.610,18 | |
| NAFTITAN S.A. | 375.466,69 | |
| POLIKOS M.C. | 871.105,50 | |
| IONIA S.A. | 111.642,45 | |
| QUARRIES THISVIS S.A. | 758,67 | |
| 24.450.100,41 | 665.435.975,66 | |
39.877.373,64
Note : All the transactions involving sales, purchases and provision of services were made at the current value on the date of their realization.
True Copy from the Book of Minutes of the Board of Directors
The following Announcements/Notifications have been sent to the Daily Official List Announcements and are posted to the Athens Exchange website as well as to our Company's website www.titan-cement.com
| 16/1/2009 Trading in the Athens Exchange of new shares after share capital increase due to exercise of stock |
|---|
| option rights |
| 21/1/2009 Transaction notification |
| 21/1/2009 Announcement pursuant to Law 3556/2007 |
| 23/1/2009 Trnsaction notification |
| 23/1/2009 Announcement pursuant to Law 3556/2007 |
| 29/1/2009 Financial Calendar 2009 of TITAN CEMENT S.A. |
| 2/2/2009 New district court order cancels all 2002 Florida Lakebelt mining permits ; cement production from |
| Pennsuco plant will continue to serve market |
| 24/2/2009 2008 full year results |
| 24/2/2009 2008 Group full year results |
| 24/2/2009 Press release regarding financial results |
| 4/3/2009 Transaction notification |
| 4/3/2009 Announcement pursuant to Law 3556/2007 |
| 1/4/2009 Transaction notification |
| 1/4/2009 Announcement pursuant to Law 3556/2007 |
| 8/4/2009 Presentation to Greek Institutional Investors |
| 29/4/2009 Comment of press articles 29/4/2009 |
| 14/5/2009 Transaction notification |
| 14/5/2009 Announcement pursuant to Law 3556/2007 |
| 21/5/2009 Termination of interim period of share buy back |
| 28/5/2009 Invitation to the Annual Shareholders Meeting |
| 28/5/2009 2009 Q1 results |
| 28/5/2009 2009 Group Q1 results |
| 28/5/2009 Press release regarding financial results |
| 19/6/2009 Transaction notification |
| 19/6/2009 Announcement pursuant to Law 3556/2007 |
| 22/6/2009 Transaction notification |
| 22/6/2009 Announcement pursuant to Law 3556/2007 |
| 24/6/2009 Transaction notification |
| 24/6/2009 Announcement of payment of dividend for the financial year 2008 |
| 25/6/2009 Resolution for the sale of treasury stock |
| 25/6/2009 Notice of decisions taken by the annual general meeting of shareholders on24/6/2009 |
| 9/7/2009 Completion of sale of treasury shares |
| 16/7/2009 Transaction notification |
| 16/7/2009 Announcement pursuant to Law 3556/2007 |
| 20/7/2009 TITAN GLOBAL FINANCE PLC Eurobond Issuance |
| 27/8/2009 2008 Interim Results |
| 27/8/2009 2008 Group Interim Results |
| 27/8/2009 Press release regarding financial results |
| 2/10/2009 Transaction notification |
| 2/10/2009 Announcement pursuant to Law 3556/2007 |
| 15/10/2009 Transaction notification |
| 15/10/2009 Announcement pursuant to Law 3556/2007 |
| 15/10/2009 Resolution for the sale of treasury stock |
| 19/10/2009 Comment of press articles |
| 20/10/2009 Transaction notification |
| 20/10/2009 Announcement pursuant to Law 3556/2007 |
| 21/10/2009 Transaction notification |
| 21/10/2009 Announcement pursuant to Law 3556/2007 |
| 23/10/2009 Transaction notification |
| 23/10/2009 Announcement pursuant to Law 3556/2007 |
| 5/11/2009 Transaction notification |
| 5/11/2009 Announcement pursuant to Law 3556/2007 |
| 24/11/2009 Transaction notification |
25/11/2009 Nine months results 2008
25/11/2009 Groups Nine months results 2008 25/11/2009 Press release regarding financial results 9/12/2009 Transaction notification 9/12/2009 Announcement pursuant to Law 3556/2007 9/12/2009 Stock option plans 11/12/2009 Transaction notification 11/12/2009 Announcement pursuant to Law 3556/2007 15/12/2009 Transaction notification 15/12/2009 Announcement pursuant to Law 3556/2007 15/12/2009 Transaction notification 15/12/2009 Announcement pursuant to Law 3556/2007 16/12/2009 Transaction notification 16/12/2009 Announcement pursuant to Law 3556/2007 17/12/2009 Resignation of Mr A. Tamvakakis from the B.o.D. 17/12/2009 Notification according to the Law 3556/2007 article 9 par. 5 23/12/2009 Transaction notification 23/12/2009 Announcement pursuant to Law 3556/2007 24/12/2009 Transaction notification 24/12/2009 Announcement pursuant to Law 3556/2007 28/12/2009 Transaction notification
28/12/2009 Announcement pursuant to Law 3556/2007
28/12/2009 Document providiing information under Law 3401/2005 (article 4 par. 2f)
The annual financial statements, the auditors reports and the Board of Directors reports of the companies included in the consolidated financial statements are available on the Company's website titancement.com.
| CASH FLOW STATEMENT | ||||||
|---|---|---|---|---|---|---|
| (Amounts in € thousand) | ||||||
| GROUP | COMPANY | |||||
| 1/1-31/12/2009 1/1-31/12/2008 1/1-31/12/2009 1/1-31/12/2008 | ||||||
| Cash flows from operating activities | ||||||
| Profits before taxes | 158.139 | 210.016 | 79.847 | 113.292 | ||
| Adjustments for: | ||||||
| Depreciation | 112.400 | 109.478 | 11.655 | 11.019 | ||
| Impairment of tangible and intangible assets | 2.939 | 2.799 | - | - | ||
| Provisions | 9.221 | 18.292 | 5.231 | 1.941 | ||
| Exchange differences | 8.477 | 7.109 | -19 | 3.865 | ||
| Income from participations & investments | - | -283 | -5.119 | -7.699 | ||
| Interest expense | 46.806 | 51.846 | 30.504 | 23.721 | ||
| Other non cash items | 3.000 | -2.383 | 2.745 | 6.852 | ||
| Operating profit before changes in working capital | 340.982 | 396.874 | 124.844 | 152.991 | ||
| Decrease/(increase) in inventories | 38.844 | -35.024 | 24.629 | -15.403 | ||
| Decrease in trade and other receivables | 38.115 | 17.128 | 9.342 | 27.428 | ||
| Decrease/(increase) in operating long-term receivables | 1.221 | -2.647 | 91 | -165 | ||
| (Decrease)/increase in trade & other payables (excluding banks) | -30.399 | 42.055 | -18.521 | 12.851 | ||
| Proceeds from sale of available-for-sale financial assets | 268 | 2.987 | - | - | ||
| Proceeds from non-controlling interest's participation in subsidiaries' share capital | ||||||
| increase | ||||||
| Net (decrease)/increase in cash and cash equivalents (a)+(b)+(c) | -75.954 | -75.086 | -31.059 | 31.250 | ||
| Cash and cash equivalents at beginning of the year | 94.521 | 167.478 | 31.263 | 13 | ||
| Effects of exchange rate changes | -2.141 | 2.129 | - | - | ||
| Cash and cash equivalents at end of the year | 16.426 | 94.521 | 204 | 31.263 |
| Supervising Authority: | Ministry of Economy, Competitiveness and Shipping (Department for | CASH FLOW STATEMENT (Amounts in € thousand) |
|||||||
|---|---|---|---|---|---|---|---|---|---|
| Company's web address: | limited companies) www.titan-cement.com |
GROUP | COMPANY | ||||||
| Board of Directors: | Andreas Canellopoulos - Chairman, Dimitrios Krontiras*-Deputy Chairman, Dimitrios Papalexopoulos-Managing Director, |
Cash flows from operating activities | 1/1-31/12/2009 1/1-31/12/2008 1/1-31/12/2009 1/1-31/12/2008 | ||||||
| Nellos Canellopoulos, Takis-Panagiotis Canellopoulos, George David*, | Profits before taxes | 158.139 | 210.016 | 79.847 | 113.292 | ||||
| Basilios Fourlis, Elias Paniaras, Panagiotis Marinopoulos, Alexandra Papalexopoulou-Benopoulou, Michael Sigalas, Spyridon Theodoropoulos*, |
Adjustments for: Depreciation |
112.400 | 109.478 | 11.655 | 11.019 | ||||
| Eftihios Vasilakis, Efthimios Vidalis. | Impairment of tangible and intangible assets Provisions |
2.939 9.221 |
2.799 18.292 |
- 5.231 |
- 1.941 |
||||
| *Independent non-executive directors | Exchange differences | 8.477 | 7.109 | -19 | 3.865 | ||||
| Date of approval of the Financial Statements : | 18 March 2010 | Income from participations & investments Interest expense |
- 46.806 |
-283 51.846 |
-5.119 30.504 |
-7.699 23.721 |
|||
| Name of the auditor: | Christos Glavanis | Other non cash items | 3.000 | -2.383 | 2.745 | 6.852 | |||
| Auditing firm: | ERNST & YOUNG | Operating profit before changes in working capital | 340.982 | 396.874 | 124.844 | 152.991 | |||
| Report of the Auditors: | Without qualification CONDENSED STATEMENT OF FINANCIAL POSITION |
Decrease/(increase) in inventories Decrease in trade and other receivables |
38.844 38.115 |
-35.024 17.128 |
24.629 9.342 |
-15.403 27.428 |
|||
| (Amounts in € thousand) | Decrease/(increase) in operating long-term receivables | 1.221 | -2.647 | 91 | -165 | ||||
| ASSETS | GROUP 31/12/2009 |
31/12/2008 | COMPANY 31/12/2009 |
31/12/2008 | (Decrease)/increase in trade & other payables (excluding banks) Cash generated from operations |
-30.399 388.763 |
42.055 418.386 |
-18.521 140.385 |
12.851 177.702 |
| Tangible assets | 1.915.211 | 1.896.579 | 266.759 | 270.592 | Taxation paid | -15.218 | -48.627 | -20.714 | -35.161 |
| Investment properties Intangible assets |
1.088 542.816 |
- 545.088 |
6.396 671 |
6.796 - |
Net cash flows from operating activities (a) Cash flows from investing activities |
373.545 | 369.759 | 119.671 | 142.541 |
| Other non current assets | 36.404 | 54.515 | 1.272.069 | 1.265.961 | Purchase of tangible assets | -166.112 | -207.657 | -5.592 | -20.598 |
| Inventories | 238.803 | 287.867 | 68.250 | 99.994 | Decrease/(increase) in other long-term receivables | 19.546 | -6.693 | - | - |
| Trade receivables Other current assets |
155.018 99.854 |
212.511 103.009 |
70.990 12.828 |
85.999 10.683 |
Purchase of intangible assets Proceeds from the sale of property, plant and equipment |
-13.857 7.486 |
-1.448 7.736 |
-671 2.675 |
- 704 |
| Cash and cash equivalents | 16.426 | 94.521 | 204 | 31.263 | Proceeds from dividends | 671 | 3.325 | 4.770 | 10.313 |
| TOTAL ASSETS | 3.005.620 | 3.194.090 | 1.698.167 | 1.771.288 | Acquisition of subsidiaries, net of cash Proceeds from sale of available-for-sale financial assets |
-14.416 268 |
-401.708 2.987 |
-749 - |
-745.225 - |
| SHΑREHOLDERS EQUITY AND LIABILITIES | Purchase of available-for-sale financial assets | -202 | -1.400 | -2 | -118 | ||||
| Share Capital (84,576,118 shares of € 4.00) Share Premium |
338.304 22.826 |
338.187 22.826 |
338.304 22.826 |
338.187 22.826 |
Interest received Net cash flows (used in)/from investing activities (b) |
8.803 -157.813 |
8.859 -595.999 |
2.024 2.455 |
538 -754.386 |
| Share stock options | 5.977 | 10.713 | 5.977 | 10.713 | Net cash flows after investing activities (a)+(b) | 215.732 | -226.240 | 122.126 | -611.845 |
| Treasury Shares Retained earnings and other reserves |
-91.622 1.173.568 |
-92.299 1.116.629 |
-91.622 533.997 |
-92.299 516.097 |
Cash flows from financing activities Share capital increase |
117 | 57 | 117 | 57 |
| Total share capital and reserves (a) | 1.449.053 | 1.396.056 | 809.482 | 795.524 | Proceeds from non-controlling interest's participation in subsidiaries' share capital | ||||
| Non-controlling interests (b) Total Equity (c)=(a)+(b) |
11.135 1.460.188 |
38.078 1.434.134 |
- 809.482 |
- 795.524 |
increase Treasury shares sold/(purchased) |
- 384 |
24.108 -56.712 |
- 384 |
- -56.712 |
| Long-term borrowings | 725.665 | 945.193 | 634.499 | 759.000 | Proceeds from government grants | 345 | - | - | - |
| Provisions and other long-term liabilities Short-term borrowings |
292.870 261.835 |
282.496 263.145 |
55.515 127.609 |
53.493 87.580 |
Interest paid Dividends paid |
-46.073 -37.805 |
-63.406 -66.400 |
-30.515 -35.531 |
-22.424 -63.401 |
| Other short-term liabilities | 265.062 | 269.122 | 71.062 | 75.691 | Proceeds from borrowings | 748.739 | 778.326 | 260.781 | 1.167.499 |
| Total liabilities (d) TOTAL SHAREHOLDERS EQUITY AND LIABILITIES (c)+(d) |
1.545.432 3.005.620 |
1.759.956 3.194.090 |
888.685 1.698.167 |
975.764 1.771.288 |
Payments of borrowings Net cash flows (used in)/from financing activities (c) |
-957.393 -291.686 |
-464.819 151.154 |
-348.421 -153.185 |
-381.924 643.095 |
| Net (decrease)/increase in cash and cash equivalents (a)+(b)+(c) | -75.954 | -75.086 | -31.059 | 31.250 | |||||
| CONDENSED INCOME STATEMENT (Amounts in € thousand) |
Cash and cash equivalents at beginning of the year Effects of exchange rate changes |
94.521 -2.141 |
167.478 2.129 |
31.263 - |
13 - |
||||
| GROUP | COMPANY | Cash and cash equivalents at end of the year | 16.426 | 94.521 | 204 | 31.263 | |||
| 1/1-31/12/2009 | 1/1-31/12/2008 | 1/1-31/12/2009 | 1/1-31/12/2008 | NOTES | |||||
| Revenue | 1.360.571 | 1.578.458 | 450.092 | 548.620 | 1. As per resolution dated 17.12.2009 of the Board of Directors, the share capital of the Company was increased in cash by €117,376 with the issuance of |
||||
| Cost of sales Gross profit before depreciation and amortization |
-901.496 459.075 |
-1.046.968 531.490 |
-293.539 156.553 |
-352.691 195.929 |
29,344 new registered common shares, of a nominal value of €4.00 each, following the exercise by senior executives of Titan Group of stock option rights granted to them in implementation of Stock Option Plans that have been approved by resolutions dated 8.6.2004 and 29.5.2007 of the General |
||||
| Other operating income/(expense) | -1.132 | -6.246 | 3.093 | 789 | Meeting of Shareholders. | ||||
| Administrative expenses Selling and marketing expenses |
-106.301 -21.886 |
-119.437 -25.755 |
-38.326 -1.809 |
-43.529 -4.709 |
2. Pursuant to its Board of Directors resolutions dated 24.6.2009 and 14.10.2009, the Company completed between 25.6.2009 and 31.12.2009 the sale through the Athens Stock Exchange of 18.403 treasury common shares, representing 0.022% of the Company's paid up Share Capital, at an average |
||||
| sale price equal to €20.90 per share, within the three year statutory period commencing from the date they were acquired by the Company. The total | |||||||||
| Profit before interest, taxes and depreciation and amortization Depreciation & amortization |
329.756 -112.400 |
380.052 -109.478 |
119.511 -11.655 |
148.480 -11.019 |
number of its own shares that the Company holds as at 31.12.2009 is 3,175,213 of aggregate value €91,622 thousand and they have been deducted from the Shareholders Equity of the Group and the Company. |
||||
| Profit before interest and taxes | 217.356 | 270.574 | 107.856 | 137.461 | 3. The assets of the Company have not been pledged. Certain assets of the Group, owned by the Group's joint venture Adocim Cimento Beton Sanayi ve |
||||
| Income from participations & investments Finance costs - net |
- -59.217 |
283 -60.841 |
5.119 -33.128 |
7.699 -31.868 |
Ticaret A.S. in Turkey, have been pledged for the amount of €54 m. in securing debt of €36 m. Number of employees at the end of the reporting period: Group 5,805 (2008: 6,505), Company 1,027 (2008: 1,101). 4. |
||||
| Profit before taxes | 158.139 | 210.016 | 79.847 | 113.292 | 5. Capital expenditure excluding acquisitions and intangible assets for the fiscal year of 2009 amounted to: Group €165.6 m (31.12.2008 €207.7m), Parent |
||||
| Less: Income tax expense Profit after taxes (a) |
-36.238 121.901 |
7 210.023 |
-33.401 46.446 |
-7.328 105.964 |
Company €5.6m (31.12.2008 €20.6m). 6. The Board of Directors will propose to the Annual General Meeting of Shareholders, the distribution of dividend of €0.18 per share (2008: €0.42) for the |
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| Attributable to: | financial year 2009. | ||||||||
| Equity holders of the parent Non-controlling interests |
123.393 -1.492 |
208.224 1.799 |
46.446 - |
105.964 - |
Earnings per share have been calculated on the total weighted average number of common and preference shares, excluding the average number of 7. treasury shares. |
||||
| 8. Transactions during the fiscal year 2009 and balances as of 31 December 2009 with related parties, as defined in IAS 24, are as follows: |
|||||||||
| Basic earnings per share (in €) Diluted earnings per share (in €) |
1,5166 1,5127 |
2,5336 2,5254 |
0,5709 0,5694 |
1,2893 1,2852 |
Amounts in € thousand a) Income |
Group - |
Company 130.051 |
||
| Proposed dividend per issued share (in €) | 0,1800 | 0,4200 | 0,1800 | 0,4200 | b) Expenses | 2.613 | 43.352 | ||
| CONDENSED STATEMENT OF COMPREHENSIVE INCOME (*) | c) Receivables d) Payables |
- 706 |
36.689 646.386 |
||||||
| Amounts in € thousand | e) Key management compensations | 7.417 | 7.225 | ||||||
| GROUP 1/1-31/12/2009 |
1/1-31/12/2008 | COMPANY 1/1-31/12/2009 |
1/1-31/12/2008 | f) Receivables from key management g) Payables to key management included in above |
4 650 |
4 650 |
|||
| Profit after taxes (a) | 121.901 | 210.023 | 46.446 | 105.964 | 9. Companies included in the consolidated financial statements of fiscal year 2009 are presented in the note 14 of the Group's annual financial statements |
||||
| Other comprehensive income/(expenses): Exchange differences on translation of foreign operations |
-38.913 | 1.136 | - | - | including locations, percentage Group ownership and consolidation method. The unaudited by the tax authorities fiscal years for the Company and the Group's subsidiaries are presented in detail in the note 36 of the annual 10. |
||||
| Cash flow hedges | -916 | - | - | - | financial statements. There are no material provisions accounted for the unaudited by the tax authorities fiscal years as well as for litigation issues both | ||||
| Net losses on financial assets available for sale Asset revaluation surplus |
-51 - |
-179 164.619 |
- - |
- - |
for the Group and the Company. The balance of other provisions (short and long term) as of 31.12.2009 amounted to €19.3 m. for the Group (31.12.2008 €26.4 m.) and €2.2 m. for the 11. |
||||
| Income tax relating to components of other comprehensive income | 357 | -31.687 | - | - | Company (31.12.2008 €2.2 m.). | ||||
| Other comprehensive (expenses)/income net of tax (b) Total comprehensive income net of tax (a)+(b) |
-39.523 82.378 |
133.889 343.912 |
- 46.446 |
- 105.964 |
12. On 30.7.2009 the Group completed the offering of a 4-year tenure, €200 m. nominal value notes, with an annual coupon of 6.90%, issued by its subsidiary TITAN GLOBAL FINANCE PLC and guaranteed by Titan Cement Company S.A. The notes have been listed on the regulated market of the |
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| Luxembourg Stock Exchange. | |||||||||
| Total comprehensive income attributable to: Shareholders |
87.275 | 339.493 | 46.446 | 105.964 | On December 31st of 2009, the Group equity decreased by €19.4 m. as a result of recognizing put options on selling shares of Group's subsidiary (note 13. 32 of annual financial statements). |
||||
| Non-controlling interests | -4.897 | 4.419 | - | - | 14. In the consolidated financial statements at December 31, 2009 the following are additionally included: Zofori Building Materials SA (consolidated from |
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| May 26th, 2009), Pozolani S.A. (consolidated from June 3rd, 2009), AEAS Netherlands B.V. (consolidated from October 23rd, 2009), Dancem ApS (consolidated from November 13th, 2009), Quarries of Tanagra S.A (consolidated from December 30th, 2009) and the newly established companies |
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| (*) The statement of comprehensive income has been prepared in accordance with the requirements of the revised IAS 1 that are effective from 1.1.2009. It | Arktias S.A. (consolidated from February 2nd, 2009), Cementi Crotone S.R.L. (consolidated from May 6th, 2009), Trojan Cem EOOD (12.5.2009). |
SUMMARY FINANCIAL RESULTS for the year ended 31 December 2009
(in terms of article 135 of Law 2190, for companies publishing annual financial statements in accordance with IAS/IFRS)
The figures illustrated below provide summary information about the financial position of Titan Cement S.A. and its subsidiaries. We advise the reader who seeks a complete picture of the financial position to visit the Company's web site, where the full year financial statements according to International Financial Reporting Standards together with the auditor's report, are presented.
Company's Number in the Register of Societes Anonymes: 6013/06/Β/86/90
22A Halkidos Street - 111 43 Athens
| 8. Transactions during the fiscal year 2009 and balances as of 31 December 2009 with related parties, as defined in IAS 24, are as follows: |
||||||
|---|---|---|---|---|---|---|
| a) Income | ||||||
| b) Expenses | ||||||
| c) Receivables | - | 36.689 | ||||
| d) Payables | 706 | 646.386 | ||||
| e) Key management compensations | 7.417 | 7.225 | ||||
| GROUP | COMPANY | f) Receivables from key management | 4 | |||
| 1/1-31/12/2009 | 1/1-31/12/2008 | 1/1-31/12/2009 | 1/1-31/12/2008 | g) Payables to key management included in above | 650 | 650 |
| (Amounts in € thousand) | m. was charged to the Income Statement and the remaining amount of €1.6m was offset against a provision established over those years. | |||||
|---|---|---|---|---|---|---|
| GROUP | COMPANY | 18. According to the Law 3808/09, a social responsibility tax was imposed on Greek companies that had profit above € 5.0 m. for the fiscal year of 2008. |
||||
| 31/12/2009 | 31/12/2008 | 31/12/2009 | 31/12/2008 | The total charge amounted to €10.9 m for the Group and €10.4 m for the Company. | ||
| Equity balance at beginning of the year (1/1/2009 and 1/1/2008 respectively) | 1.434.134 | 1.194.939 | 795.524 | 805.559 | 19. On February 1, 2010 the U.S. Army Corps of Engineers (ACE) published a Record of Decision (ROD), paving the way for new mining permits in the Lake |
|
| Total comprehensive income | 82.378 | 343.912 | 46.446 | 105.964 | Belt area of Miami-Dade, Florida. The Group's subsidiary Tarmac America, expects to receive its mining permit soon. | |
| Share Capital increase due to share options | 2.638 | 3.754 | 2.638 | 3.754 | ||
| Treasury shares sold/(purchased) | 384 | -56.354 | 384 | -56.354 | ||
| Dividends paid | -35.510 | -63.399 | -35.510 | -63.399 | ||
| Dividends paid to non-controlling interest | -2.262 | -2.764 | - | - | ||
| Non-controlling interest's put option recognition | -19.359 | - | - | - | ||
| Non-controlling interest related to share capital increase in subsidiaries | - | 24.108 | - | - | ||
| Non-controlling interest arising on business combination | - | 2.670 | - | - | ||
| Acquisition of non-controlling interests | -2.215 | -12.732 | - | - | ||
| Equity balance at year end (31/12/2009 and 31/12/2008 respectively) | 1.460.188 | 1.434.134 | 809.482 | 795.524 | ||
| - | - | - | - | |||
| Athens 18 March 2010 | ||||||
| Chairman of the Board of Directors | Managing Director | Chief Financial Officer | Chief Accountant Financial Consolidation Senior Manager |
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| ANDREAS L. CANELLOPOULOS | DIMITRIOS TH. PAPALEXOPOULOS | CHARALAMPOS G. MAZARAKIS | EMM. CH. MAVRODIMITRAKIS ATHANASIOS S. DANAS |
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| I.D.No ΑΒ500997 | I.D.No Ξ163588 | I.D.No AE096808 | I.D.No Ν237613 I.D.No AB006812 |
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demonstrates the transactions that would directly affect equity according to the requirements which were valid till 31.12.2008 and it combines them with the profit after taxes as they appear in the income statement. These transactions do not include transactions with the equity holders of the parent company in their capacity as owners.
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