Annual Report • Mar 23, 2018
Annual Report
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Our new Deceuninck Group showroom at our head office in Belgium, inaugurated in 2017
| KEY FIGURES (in € million) | 2015 | 2016 | 2017 VARIANCE % | |
|---|---|---|---|---|
| CONSOLIDATED INCOME STATEMENT | ||||
| Sales | 644.5 | 670.9 | 687.2 | 2.4% |
| Adjusted EBITDA | 55.9 | 65.1 | 66.7 | 2.4% |
| EBIT | 26.9 | 36.1 | 36.7 | 1.5% |
| Net profit | 13.3 | 21.0 | 13.8 | (34.1%) |
| CONSOLIDATED STATEMENT OF FINANCIAL POSITION | ||||
| Equity | 269.3 | 275.0 | 257.6 | (6.3%) |
| Net debt | 92.1 | 88.4 | 118.3 | 33.8% |
| Total assets | 562.6 | 601.1 | 558.6 | (7.1%) |
| Capital expenditure | 38.7 | 79.4 | 54.2 | (31.8%) |
| Working capital | 142.9 | 111.1 | 135.9 | 22.3% |
| Capital employed | 397.9 | 402.6 | 418.2 | 3.9% |
| RATIOS | ||||
| Net profit on sales | 2.1% | 3.1% | 2.0% | |
| Adjusted EBITDA/sales | 8.7% | 9.7% | 9.7% | |
| Net debt/Adjusted EBITDA | 1.65 | 1.36 | 1.78 | |
| EBIT/Capital employed | 6.7% | 9.0% | 8.8% | |
| HEADCOUNT | ||||
| Total Full Time Equivalents (FTE) | 3.593 | 3.682 | 3.927 |
(1) Definitions: see Glossary p. 173
| KEY FIGURES PER SHARE | 2015 | 2016 | 2017 |
|---|---|---|---|
| Number of shares as at 31 December | 135,039,121 | 135,382,446 | 136,383,256 |
| Market capitalisation as at 31 December (in € million) | 328.1 | 306.0 | 409.1 |
| Net profit per share as at 31 December (in €) | 0.10 | 0.15 | 0.09 |
| Book value per share (in €) | 1.99 | 2.03 | 1.89 |
| Gross dividend per share (in €) | 0.025 | 0.030 | 0.030 |
| Share price at 31 December (in €) | 2.43 | 2.26 | 3.00 |
DECEUNINCK GROUP ANNUAL REPORT 2017 DECEUNINCK GROUP ANNUAL REPORT 2017 3
Message from the Chairman & the CEO 4 Our mission 6 Milestones 2017 8 Operational & commercial footprint 2017 12 Our products & innovations 14 Making the difference 24 Some of our recent references 34
About this chapter 44 Our code of conduct 45 Our people 50 Our society 54 Our planet 58
Corporate Governance Statement 66 Legal Structure 94 The Deceuninck Group Share 96
Deceuninck consolidated 100 Consolidated financial statements and notes 104 Deceuninck NV 161 External auditor's report 164 Declaration regarding the information given in this annual report 168
Addresses 169 Glossary 173
NET DEBT (in %)
SALES (in € million)
Dear customers, business partners, shareholders and colleagues worldwide,
In 2017 we focused on the realization of various strategic projects which will make Deceuninck Group a more effective and more agile company, ready to react to challenges and opportunities. The confidence we get from all of you motivates us to accelerate these efforts in 2018.
Consolidated sales rose by 2.4% from € 670.9 million in 2016 to € 687.2 million in 2017. In North America we outperformed the market thanks to our customers taking market share and a growing customer base. In Turkey volumes increased despite challenging market conditions thanks to strong business development and the value of our brands. Sales in Europe remained stable, mainly due to the one-off effect of some larger 2016 projects. Consolidated Adjusted EBITDA remained stable around € 66.7 million or 9.7% on sales. The sharp rise of raw material prices, higher levels of inflation and the strengthening of the Euro have been compensated by efficiency gains and price increases.
We serve our customers with wide range of beautiful, energy efficient and fully recyclable products. New product launches in 2017 were well received by the markets. For instance, in North America the Rovex XF Window Mullion received the 2017 Green Award for sustainability. In the UK, Deceuninck's Heritage Flush Sash won the prestigious New Product of the Year award at the G-Awards. Storbox 2.0 was successfully launched after winning the innovation award at the major French trade exhibition Equip'baie in November 2016. Also in 2018 various other innovative products will be launched. We are for instance particularly proud of Elegante, a new system for the Central European market which looks like aluminum but benefits from the thermal performance of PVC.
Superior quality and service has always been a top priority. And although in general we made further progress, we regret that the implementation of a new ERP-system in Western Europe affected service to our customers. Addressing the remaining issues and further improving this new system so that it outperforms what we had remains one of our top priorities.
We also continued to strengthen our operational footprint. In Turkey we moved to our new state-of-the-art Menemen factory, which was fully operational as of Q3. In the US, our new factory in Fernley is operational 24/7 and we upgraded part of the equipment in the Monroe facility. In Colombia we started an extrusion facility, which will serve as a production hub for Latin America. Most of the plants worldwide also further invested in renewable energy. We are convinced that these investments, combined with our ambitious 2018 plans, will not only improve quality and service for our customers, but also bring additional efficiency gains, enable further growth, and further reduce our ecological footprint.
Finally, 2017 was also the year we celebrated the 80th anniversary of our company. We want to take this occasion once more to thank first and foremost all our customers worldwide. Some of these relationships are multigenerational and the strength and depth of these relationships represent a significant advantage for both our customers and our company. Second, we want to thank our colleagues worldwide. Their industry experience and product knowledge, their motivation and enthusiasm, and their desire to win is what makes Deceuninck Group to what it is today: a worldwide leading designer and manufacturer of beautiful, energy efficient and fully recyclable systems for windows and doors.
Francis Van Eeckhout CEO
Paul Thiers Chairman
Consistent with our aspiration to build a sustainable home, we relentlessly pursue to bring superior value to our customers. "
By designing beautiful, energy-efficient and fully recyclable products, which we supply with superior quality and service, driven by a high-performing team and enabled by a
solid free cash flow."
MAY MAY
FEBRUARY
80th anniversary event in Tour & Taxis Brussels.
January - June
JUNE
Centralisation of distribution for Czech Republic/Slovakia/Hungary in Poland, bringing additional customer service to these countries.
Move to the state-of-the-art Menemen facility in Turkey.
Launch of low carbon footprint EcoPowerCore range in Germany.
Inauguration of a 4,000 sqm warehouse in India which will further increase service in the Indian market.
First official Deceuninck showroom launched in New Delhi.
Launch of hurricane proof multi-track sliding door in the US.
Fernley plant fully operational 24/7 and servicing customers in Western US.
NOVEMBER
NOVEMBER
Merger of Pimas and EGE Profil in Turkey finalized, marking the final step of the Pimas integration.
Deceuninck Group wins award of BEL Small Company of the Year 2017 at Euronext.
Deceuninck Russia wins 3rd place at the highly recognized Russian HR conference 'Best HR Practices'.
Deceuninck Zendow #Neo Premium windows project wins Belgian joinery award 2017.
Turkey: market introduction of new IQ Aluminum platform.
SEPTEMBER
Launch of Revolution XL Tilt & Turn system in the United States. Aimed at commercial markets this system will support ongoing growth of Deceuninck Group's Commercial Alliance.
AUGUST
Start compounding in Jasin (Poland).
Inoutic Poland wins Solid Employer Award 2017.
NOVEMBER
Deceuninck SAS Colombia starts
first extrusion.
July - December
Deceuninck Heritage Flush Sash wins New Product of the Year at the G-Awards in the UK.
1 Belgium Deceuninck nv Hooglede-Gits (headquarters)
Decalu nv Hooglede-Gits Deceuninck nv - Divisie Compound Diksmuide
24 Czech Republic Inoutic/Deceuninck spol. s r.o. Brno
25 Bulgaria Deceuninck Bulgaria EOOD Plovdiv
10
20
Our ambition is to offer the best possible thermal and acoustic performance, at the lowest possible material consumption. Our standard PVC windows have proven to be extremely efficient providing a perfect balance between energy efficiency and comfortable living. In addition, we have achieved top performance in security by passing the most stringent tests in burglary resistance. A wide and original color palette is available to meet regional style requirements.
Combining design and expert craftsmanship, our top performing door ranges provide endless design combinations to complement any façade. Applying our innovative Linktrusion technology, has allowed to offer our PVC composite doors extreme stability and strength. We have also introduced a panel door solution based on our Rovex pultrusion technology, achieving top level performance in thermal stability and insulation.
The sliding door range has become an increasingly important product line answering market trends of slimline designs providing maximum glazing surface. Benefitting from our Linktrusion technology we succeeded in reducing profile sections to an absolute minimum, and improve insulation at the same time.
To answer to market trends and needs, Deceuninck Group is further developing and expanding its Aluminum range for windows, doors, sliding doors, ventilation and sun shading in selected markets." "
The group's new roller shutter platform is now fully deployed, which will serve as a strong basis for further development and personalized solutions to our customers. Both the roller shutter and louvre shutter systems are available in a wide range of colors to meet regional market requirements.
To prevent overheating, shading solutions are becoming more and more popular, ensuring shading applications complement our cladding
Deceuninck Group developed dedicated in your home. The range comprises trickle
Our cladding range is under continuous development, focusing heavily on integrated solutions, available in a wide range of colors, embossings and other surface textures.
Apart from the traditional wall & ceiling claddings, the interior range now also offers the Stonosil stone-look window board, offering endless interior decoration possibilities, from the most traditional to the most modern.
Deceuninck Group has continued to invest in its highly engineered wood composite material and technology. The Twinson range now provides both hollow and solid decking planks, available in different colors and textures.
Innovation, ecology and design are the key drivers to fulfill our ambition to build a sustainable home.
Technology links product innovation and product requirements through new processes and materials into Deceuninck Group's operational activities. The development of value-added products is aligned with cost-efficient manufacturing processes, raw materials and processing equipment. Further investment in the unique composite Linktrusion technology, has allowed to further optimize the Zendow#neo and iSlide product ranges.
Continued investment in the Rovex technology has opened routes to new products and applications. The pultrusion technology provides a material that is lightweight, yet very strong and stable. It provides an ideal basis for further structural solutions in the building envelope. The Zentrada panel door is one of the latest examples to use this proprietary technology.
R&D activities are highly focused on an increased usage of recycled materials. To maximize on quality requirements, we have adopted a state-of-the-art granulation technology as a standard process step in upgrading our regrind materials.
Deceuninck Group continues to invest in its recycling plant to close the loop of post-industrial and post-consumer material waste, and as such deliver on its sustainable manufacturing promise.
To ensure a maximized usage of recycled material, we continue to heavily invest in optimizing our co-extrusion technology. Dedicated product design and adapted tooling and extrusion technology will allow to maintain a consistent high quality level of the final product.
These high quality requirements of Deceuninck Group's products and processes demand extensive in-house testing. We have therefore heavily invested in top-of-the-range testing equipment. In 2017, the central lab obtained its BELAC and ILAC accreditation certificate as an independent testing laboratory. Services are also available for third parties (www.a-proof.be).
The Applications Test Center invested in a unique, large-scale climate test chamber, allowing to subject newly developed products to perform even in extreme weather conditions. Also closely monitoring the latest developments in window fabrication technology, state-of-the-art machining and welding equipment have been acquired.
Coating Foil Mass colour
Introducing design and color in new product developments have become a definite goal. As such, our finishing processes play a vital role. Numerous new colors and designs have been introduced in both foiling and coating finishes. The development of the Aluroc coating range for the aluminum window and door range is further proof of that ambition. Also in creating new solutions, the look and feel of the product has become a critical parameter. The award-winning flush timber-look window is just one of such examples.
For the new Majestic terrace plank, a new polymer co-extrusion layer has been developed to reduce maintenance to an absolute minimum. Combined with a dedicated embossing and streaker technology, the new decking plank offers a unique brushed wood-look.
The Netherlands
Deceuninck Group has a clear commitment to act with respect for people, society and environment and to create a safe, healthy and learning workplace for its employees worldwide. We honour our PPQSP principle. That means: when confronted with a choice, we choose in the following order: People (Safety & Health), Planet (Environment & Ecological footprint), Quality, Service and Profit (Cost).
In this chapter, Deceuninck Group reports on its policies, goals and efforts made throughout 2017 with respect to its people, the society and our planet (through performance measures and targets or "KPIs"). The report is inspired by the Global Reporting Initiative standards. We will continue to work throughout 2018 to report our sustainability efforts in accordance with GRI or other international standards.
Risks related to the topics described in this chapter can be found in the "Internal Control and Risk Management Systems" section of the annual report.
During the risk assessment process, Deceuninck Group's Executive Team identified the following material topics with regard to people, society and environment:
The following stakeholders are key to our business and financial results:
Deceuninck Group cares about their thoughts and ideas on various topics. Here is how they can raise any concerns with the company or how their engagement is triggered:
| OUR PEOPLE | OUR SOCIETY | OUR PLANET |
|---|---|---|
| q Ethical behavior q Attracting and retaining great people q Learning and development q Health and safety q Automation of HR processes |
q Caring for the community through local and global charity projects |
q Recycling q Green Technologies |
Deceuninck employees act ethically and with integrity, in terms of good practice, safety and compliance with laws and regulations. That is fundamental to our long-term future and company reputation.
In 2017, the HR departments of the Deceuninck Group joined forces with Corporate Legal and collaborated for the review of our former Ethical Code. All principles were reviewed and updated into a new Code of Conduct. The Code was approved by the Board of Directors at Group Level. Deceuninck Group's Code of Conduct highlights the policies and procedures, which are essential for the operation of its business.
The following four elements of Deceuninck Group's Code of Conduct provide the ethical framework on which decisions should be based – as individuals and as members of the group:
| OUR CORE VALUES | SUSTAINABLE PRINCIPLES |
|---|---|
| Is the action consistent with our core values? |
What do these guiding principles state? |
| PEOPLE | LONG LASTING RELATIONSHIPS |
these are the sustainable principles that form the framework in which Deceuninck Group operates:
q We provide innovative and sustainable building products but also ensure these products are safe. Products must be designed, produced and serviced to Deceuninck Group standards and should comply with applicable regulations and contractual obligations.
q We must comply with all applicable laws, rules and regulations in all countries, and report suspected violations. We are driven to do not only what is expected from an entrepreneur, but also what is required by law. We expect our business partners to do the same.
We are committed to safeguard human rights. At Deceuninck Group, we value and respect the unique character and contribution of each person and each employee. Treating each other with dignity, respect and fairness is the foundation of good business. We treat each other the way we would expect to be treated ourselves:
q Safety and Health: we are committed to providing a safe and healthy workplace and to having a duty of care to each other, the company and environment. Each of us is responsible for observing all of the safety and health rules that apply to our jobs. We are all responsible for taking precautions to protect ourselves and our fellow employees from an accident, injury or unsafe condition. Additionally, each of us must promptly report unsafe or unhealthy conditions and take steps to correct those conditions immediately.
To make sure that all of our employees have the same understanding of the Code of Conduct principles, Corporate Legal launched an e-learning program for white collars in 2017. The aim of the e-learning program was to explain the main principles and rules of Deceuninck Group's Code of Conduct. The training is a perfect way to determine whether the employees are sufficiently familiar with the main principles of integrity as envisaged at our company. The topics covered are:
The employees receive a certificate after completion of the training.
The e-learning program will remain active and will be rolled out to blue collar workers throughout 2018, the year in which Corporate Legal will analyze and report on the results of the training.
Deceuninck Group expects its suppliers to comply with the same ethical standards we do in particular (but not limited to) with regard to non-discrimination, anti-bribery, anti-corruption and human rights in general. It is the intention to set up a formal supplier compliance program in 2018.
"The growth dynamics and international dimension of Deceuninck Group have given me the opportunity to develop an international career around the globe that fulfilled both my professional needs and pleased my adventurous and cultural interests.
Indeed, They allowed me to develop a career within the company over a period of 23 year that both met my expectations of personal development and the company's needs at that time.
I started as Activity Based Costing Controller, allowing me to visit and learn all major production and logistic processes of an industrial company. As a starter this is a great opportunity and it resulted in a knowledge base I still use today. After 2 year I moved to the export department as Financial Controller. Learning about customers needs, their behavior, market dynamics in various countries in Central and Eastern Europe was a new dimension opening up to me. In that same position I got involved in the Due Diligence of the acquisition of Ege Profil in Turkey. Valuating a company in an economic environment characterized by 50% inflation, severe devaluation proved to be a real Challenge. But despite the technical difficulties it became clear that Turkey had the potential to become a star market. After negotiating 2 years the Joint Venture got signed. At that moment, Deceuninck Group was looking for someone who knew the house inside
out and could help integrate Ege Profil in the Deceuninck Group. So on a late Friday afternoon I was called to the office of the CEO. He offered me to move to Izmir - Turkey as Business Analyst; I had 1 weekend to think it over. The next Monday I agreed to go for 1 year and ended up staying 17 years. It was a fascinating time in which we grew the company's sales 10 fold through a process of organic growth and 2 acquisitions. We also built 2 state-of-the-art new production sites (Kartepe and Menemen). Part of the growth was also coming from Emerging Markets. I got involved in establishing and following up companies in Australia, India, Chile and Brazil.
In 2017 the decision was made to establish a production plant for Latin and Central America in Colombia. Once again a win/win opportunity presented itself. I was ready to make a next move, this time to a General Management position as Deceuninck Group needed a "Deceuninck person" coordinating people in different subsidiaries like Turkey, Belgium, Chile and US, all involved putting up a integrated production facility. So in August 2017 I moved with my family to Colombia to start up a brown field production site in Cartagena. After 7 months of intense work the plant was officially opened on February 24, 2018. The given opportunity to lead a 45 people strong Colombian team for Deceuninck Group makes me feel proud every day. The future in LATAM belongs to Deceuninck Group, that is what every team member believes in."
Further to the testimonial of Igor Gorgodts in the Annual Report on 2016, Koen Vergote testifies about the opportunities he was given in his learning and development trajectory within the Deceuninck Group:
We are here to build a sustainable 'home' for our people and our customers. We build long-lasting relationships and intimacy, based on our core values: Candor, Top Performance and Entrepreneurship. We believe that great people deliver great results.
Creating a culture of excellence by:
Deceuninck Group's HR Managers agreed that a state-of-the-art cloud-based employee data system was needed in order to have the right data and have the right processes in place to manage our human capital in a better way, and in order to further develop the Human Resources department in a professional and responsible manner.
An investment was made in an integrated solution that covers all HR processes and that, at the same time, is available for both staff members and managers through a self-service portal.
In 2017, the HR Self Service portal went live, providing employees, managers and HR instant access to their personal and team data.
The project provided new collaborations between the international teams, working together to deliver a new culture of working through digital transformation, transparency and data protection. The objective was to deliver one single point of truth by aligning all countries and working towards a multifunction system to empower employees to work more efficiently and effectively.
Internally, the project was branded 'Connect', to reflect the digital cross-border link between employees, teams and managers; creating a level playing field across our group worldwide in the way we manage, protect and report on data.
Currently, employees receive trainings locally, aiming to be fully online across 25 countries by the end of February 2018. The project team will then initiate the planning of the next module within Connect, focusing on Recruitment and enhancing candidate experience, from applying online to joining the company, further enabling Deceuninck to attract and retain talent to the business.
The HR Software platform will allow the HR managers to take faster and better founded support, given the fact that the required data and reports will be available for consultation from wherever and at any moment, taking into account the applicable data protection rules.
Digitalization also implies the use of less paper and, in doing so, ensures that Deceuninck Group contributes to a smaller ecological footprint.
For the second year in a row DNA held a Health Fair for its employees. The event was held on site at the Monroe, Ohio facility and 300 employees attended. The event featured local nurses who assess blood pressure, blood sugar, height, weight and BMI. There also was a Certified Diabetic Educator on hand to help employees with better dietary choices and lifestyle. Representatives from the American Heart Association and United Health Care were on hand to educate and answer employee's questions related to heart health and our health care plan. The Fernley plant also held a similar event for their workforce.
DNA had a Mammogram Bus on site that provided mammograms to 16 employees.
DNA hosted several Blood Drives during the year. Employees donated a total of 60 pints of blood.
During the year Monroe and Fernley began offering free fruit (bananas, oranges, apples) as a healthier snack option for employees.
In 2017, Deceuninck Group continued to employ young graduates on various positions within the framework of the international training program for talented young graduates and are now ready for the next challenge on their track. Efforts in the field of diversity were also continued.
This commitment related to its employees remained a major challenge and required a clear focus of each of the regional and local managers.
Building a sustainable home can only be done with healthy people and in a safe way. In the Belgian plants, for example, a Safety Barometer was introduced, together with internal trainings, in order to create both awareness and accountability with regard to safety (behavior based safety) on the floor.
We also care about the safety of our customers.
Today, our pvc cladding products are subject to CE marking (compulsory). The CE marking signifies that products sold in the European Economic Area have been assessed to meet high safety, health, and environmental protection requirements.
The CE mark covers the following seven basic requirements:
The safety and performance of pvc cladding products are officially stated in a Declaration of Performance, published on the website of Deceuninck, made directly available to the customers.
Even without compulsory CE marking, Deceuninck safeguards the safety and performance of its products by carrying out voluntary quality tests and achieving technical approvals. Those technical approvals are based on national quality standards, such as ATG (Belgium), KOMO (The Netherlands), NF-CSTB (France), RAL (Germany), etc.
PVC window profiles are not subject to CE marking, unlike the PVC windows and doors. The CE marking of these products is provided by the window manufacturer, among other things based on ITT (initial type testing) reports provided by Deceuninck.
In 2017, a group of employees volunteered to receive an extensive heart massage course. In 2018, this important training will be rolled out towards all Deceuninck Group employees.
The CEO introduced free fruit in 2016. Also in 2017, the employees could pick and choose free fruit at lunch time.
In December 2017, a Saint Nicholas event was organized at the movies for our employees and their children.
Deceuninck believes it has a role to play in society and therefore supports charity projects worldwide, both big and smaller ones, making a difference for each and everyone involved.
When the current CEO came on board in 2016, he reduced his salary with 20% compared to the salary of the previous CEO. He committed to donate 10% thereof to charity projects worldwide.
In 2017, Deceuninck made three major donations to charity projects, amongst other, smaller projects.
Deceuninck Group supports the "Opening the future" campaign of the Catholic University of Leuven. The campaign supports advanced scientific research with regard to Alzheimer's and Parkinson's disease, ALS, muscular dystrophy and autism.
Kouter Kids in Kortrijk (Belgium) is a charity organization that takes care of children from a problematic education environment, such as poverty, drugs and alcohol abuse. The Kouter Kids aims at focusing on meaningful and useful leisure activities. With a.o. the financial support of Deceuninck Group the organisation was able to buy a minibus, so that they can more easily be transported to a doctor, hospital or school, but also leisure activities such as soccer training, dancing, music, drawing lessons etc. and to support other project such as the purchase of laptops. They also offered bicycles and a cargo bike.
Studio Hive Five is a charity project in Haiti founded and managed by Philip Deceuninck, grandson of Benari Deceuninck (founder of the company), with the support of the 'Koning Boudewijnstichting'.
This year our contribution primarily went to the Beauséjour project. Beauséjour is the most remote place of Leogane, the epicentre of the devastating earthquake of 2010. Here "Les Petits Frères de Sainte Thérèse", a local organisation helping the poor, have started several initiatives. After 20 years they have built up a reliable and respected reputation. Hive Five supports their initiative that provides small loans to families to start their own farming business.
Together with 6 other companies in the Flemish region, we sponsored the purchase of a very innovative piano by the Concerthall in Bruges (Belgium). The project reflects a strong example of cultural entrepreneurship. In a time where pianos are heavily standardized, the Chris Maene Factory launched a bold new generation of grand pianos that offer an innovative and refreshing alternative. Combining in-depth knowledge of more than 300 years of piano manufacturing with the most modern and state of-the-art techniques, the Chris Maene straight strung pianos are unprecedented and unique.
Based on a completely new straight-strung design and handcrafted to perfection, the instruments have no equal. For the first time in decades musicians can discover a genuinely new world of sound.
We decided to sponsor the straight strung piano because we believe that music connects people, carrying out a message of interconnectivity while demonstrating and supporting the importance of innovation and entrepreneurship.
Each year, our employees in Calne, Wiltshire (United Kingdom) nominate their personal choice for the Company Charity of the Year; one is selected and employees are then encouraged to support this charity through cake sales, raffles, office run tuck shop and sponsored walks. Our chosen charity for 2017 was MacMillan Cancer Support who provides specialist health care, information and financial support to people affected by cancer.
Our employees raised an amazing £2,148.19 during 2017 and are now planning fundraising for a new charity in 2018.
This project in Germany combines the interests of business and school. The aim is to get young people interested in technical professions.
The industry is sending people to school to make some practices with a group of pupils. With the help of the tutors, the pupils assembled flashlights, turn signals and electric sirens. At the end of the course, if it is possible, the company invites the young people and shows the inside of a production hall.
We are supporting this project by sending our apprentices to school. They show the pupils special skills and tell about experiences in a profession
In 2017, for the 4th consecutive year Deceuninck North America was proud to support Habitat for Humanity of Great Dayton. The windows used in the 2017 house were donated by us and manufactured locally in Cincinnati by our long-time customer Tri-State Building Products.
Deceuninck Group, once again this year sponsored the Fire Safety training materials for the Monroe School children in partnership with the Monroe Fire Department. This training is given to young school children in the Monroe school district.
Deceuninck Group is here to help you build a home that is more energy efficient to live in. We create long-lasting, low maintenance building products with top insulating properties. Our products are created with the lowest ecological footprint and can be fully recycled at end of life.
Making the world a "greener" place through the implementation of innovative "Green Technologies" projects on all of our production sites worldwide. The Company wants to contribute to that target on two levels:
National building codes are gradually introducing stricter insulation and ventilation targets in order to meet European insulation legislation (EPBD – Energy Performance of Buildings Directive). The EPBD is the main legislative instrument at EU level to achieve energy performance in buildings. The Directive requires Member States to set performance standards for buildings; apply energy performance certificates (EPCs) to buildings; and ensure that from the end of the decade only 'nearly zero energy buildings' (NZEBs) are built.
To manufacture PVC (polyvinyl chloride) two main feedstocks are needed, chlorine and ethylene. The ethylene is mainly derived from non-renewable fossil fuels, either crude oil or natural gas (and also shale gas). PVC uses less than 1% of fossil fuels consumed worldwide. 40% of fossil fuels is used for heating buildings. Deceuninck Group's vision is to use this 1% to significantly reduce the 40% for heating or cooling buildings.
Plastic building products are lightweight, require low maintenance and provide superior insulation. Plastic products save energy and reduce CO2 emissions. In order to preserve natural resources we are continuously developing PVC and composite products that drastically help reduce the energy that escapes from buildings through windows and walls. PVC and PVC composite products are the most economical solution for insulation.
We believe that true sustainability goes beyond energy efficiency.
Deceuninck Group's latest window designs provide an improved energy performance at an ever lower weight. Our latest product developments assure the best insulation at the lowest material consumption.
For Western Europe we launched Zendow#neo®: a new generation energy-efficient window system, meeting tomorrow's energy-efficiency needs.
Zendow#neo uses Linktrusion technology. Linktrusion has been developed to substitute badly insulating steel reinforcements in traditional PVC windows.
Linktrusion links continuous glass fibre strips within the main profile extrusion. The Linktrusion approach also led to the development of the Zendow thermal reinforcement, a reinforcement profile with steel wire, embedded in PVC foam extrusion.
An LCA (Life Cycle Assessment) or ecological footprint calculation made by Futureproofed (www.futureproofed.com) shows that the latest Zendow#neo premium window frame has a 40.8% lower impact as compared with the traditional Zendow window frame. Lower heat loss of the Zendow#neo window frame during the 50 years use phase accounts for 90% of the improved ecological impact.
As a result major environment gain comes from further improvement of the insulation degree of the framing material. In Zendow#neo premium pultruded glassfibre reinforcements in the PVC window sash and embedded steel wires in cellular foam reinforcement for the outer frame replace the badly insulating steel reinforcements. Zendow#neo premium offers 30% better insulation.
Replacing 60% of the virgin PVC by recycled PVC could result in a further ecological footprint gain of 37%.
Production sites in Belgium (Gits and Diksmuide), Turkey (Izmir & Kartepe) and the United Kingdom (Calne) are ISO 14001 certified.
ISO 14001 certification takes into account a number of prevention principles to limit or prevent the impact for people, the environment and the neighborhood. The Plan-Do-Check-Act approach of ISO 14001 results in continuous improvements of the environment performance based on procedures and instructions. All five production sites concluded their ISO 14000 environmental audit successfully in 2016. The Belgian production sites in Gits and Diksmuide are already certified up to the latest standard ISO14001/2015.
On June 22nd 2017, the Belgian production site in Gits succeeded in renewing its 'Charter Duurzaam Ondernemen' (Charter Sustainable Entrepreneurship). By signing the Charter Sustainable Entrepreneurship, Deceuninck commits to realize a concrete and structured action plan for ten themes: Corporate Governance, Social responsibility, Communication and dialogue, People-friendly Entrepreneurship, Risk Management, Sustainable investment, purchases and product & service development, Chain management, Climate change and energy, Quality of the direct environment and Sustainable logistics and mobility.
The Charter Sustainable Entrepreneurship is based on the 'to measure is to know' principle and the implementation of concrete actions.
The results of this action plan are assessed by a team of independent experts who constructively come up with points of interest and options to do better in these fields. Companies that signed the Charter Sustainable Entrepreneurship and that are evaluated positively, receive a certificate that is valid for a year.
Deceuninck Group signed the then called Environment Charter in 1999. It was one of the first companies to support the Charter Sustainable Entrepreneurship in 2007.
At the end of 2012, we started recycling postindustrial waste and end-of-life rigid PVC windows and shutters in Diksmuide (Belgium). The factory has a capacity of 20,000 tonnes. PVC is a valuable material and should not end up in a landfill or incinerator. Deceuninck Recycling is EuCertplast certified.
Old dismantled windows can be returned to Deceuninck Group for recycling. For the collection and transport we cooperate with waste management companies, builders, window fabricators and installers within a radius of 500km including Northern France and Western Germany.
50 years ago we started designing 100% recyclable products. This investment guarantees a closed loop for all PVC and composite products that are put on the market.
Deceuninck Recycling focused its efforts in 2017 on the implementation of improved post sorting & pelletizing technologies in combination with further automation. New technologies for processing recycled PVC into new products have been developed in order to increase the volume of recycled PVC in new building products, in line with both European and national trends towards a circular economy model.
Overall, Deceuninck Group recycled 12,000 tonnes of postindustrial and postconsumer rigid PVC waste in 2017. We reuse a part of it and transform it into high added value products, such as new window profiles and thermal reinforcements. Interior wall cladding and internal sills made from recycled PVC are finished with a decorative film. Sound barriers made from recycled PVC are either laminated or coated.
coating - foiling
| Also in 2017, we continued our support for Vinylplus (www.vinylplus.eu). VinylPlus is the voluntary commitment of the PVC industry in Europe. Among its most significant achievements was the establishment of an infrastructure for the annual collection and recycling of PVC. |
|---|
| The VinylPlus commitment includes an ambitious set of sustainable development targets centered on five commitments: |
| q Controlled Loop Management. Achieving a quantum leap in recycling rates of PVC (target 800,000 tons/year by 2020) and the development of innovative recycling technologies; q Addressing concerns about organochlorine emissions; q Ensuring the sustainable use of additives; q Enhancing energy efficiency and the use of renewable energy and raw materials in PVC production; q Promoting sustainability throughout the whole PVC value chain. |
| As a founding member of EPPA (www.eppa-profiles. org), through its contribution to the Vinyl Foundation, Deceuninck Group endorses the VinylPlus commitment. |
Inoutic in Bogen is ISO 50001 certified. The energy management system ISO 50001 specifies the requirements for establishing, implementing, maintaining and improving an energy management system, whose purpose is to enable an organization to follow a systematic approach in achieving continual improvement of energy performance, including energy efficiency, energy security and energy use. The standard aims to help organizations continually reduce their energy use, and therefore their energy costs and their greenhouse gas emissions.
A systematic energy management system is based on detection of all energy flows in the company and the evaluation of the state of energy efficiency, especially important for the energy-consuming equipment such as: extrusion systems, injection moulding machines, laminating machines, compound mixing, heating, cooling, water and compressed air supply. ISO 50001 certification helps the production site in Bogen to critically review and improve all processes to reduce energy consumption per processed kg.
All worldwide production sites further focused on scrap reduction as well as reduced energy & water consumption.
In an effort to make the world a "greener" place, our CEO called for the implementation of innovative "Green Technologies" projects on all Deceuninck production sites worldwide. Below are a few examples.
In 2016 the installation of a trigeneration system in our plant in plant in Kartepe (Turkey) was completed. The system started to generate electricity, cooling and heating at the beginning of 2017.
A trigeneration installation generates simultaneously power, heating and cooling using natural gas. The installation couples a combined heat and power engine with an absorption cooling system.
The combined heat and power unit consists of a gas engine, which runs on natural gas, coupled to an electric generator. This produces electricity and releases heat at the same time. The heat is partially injected in our plant's process heating circuit or the building's CV system, and the rest of the heat is recuperated by the absorption cooling system. This cooling system consumes heat instead of electricity as its energy source, and uses a thermo chemical compressor to generate cooling.
This reduces energy costs by generating own electricity, by using less electricity for cooling, and by applying excess heat usefully
In a low pressure system an absorption fluid (the refrigerant) is evaporated, removing heat from one place and transferring it to another. The energy from the heat source is used to regenerate the absorption solution. This generates 1580 kW of cooling and is used in our production process to cool PVC materials after the extrusion process.
In addition to the trigeneration installation, in 2014 we installed solar panels on the roof of our plant in Kartepe.
The installation converts sunlight into useful electricity. This photovoltaic installation generates 650 kWp. and consists of photovoltaic panels, a mounting system, solar cables, inverters, and a monitoring unit that measures the amount of electricity produced.
The panels capture the sun's energy using photovoltaic cells that convert sun's radiation into direct current power. The direct current power is transformed into useful alternating current power by inverters. This alternating current is then fed to the main electricity supply of the building or to the grid, using a transformer.
Thanks to the investment in the trigeneration installation our entire cooling energy needs (except in the summer when it only covers about 80%) are covered. And the electricity produced by the photovoltaic panels combined with the trigeneration plant provides for over 50% of our total electricity use.
Our plant in Russia (Protvino) has installed solar batteries for its lighting system. The idea of this project is to use renewable energy. The first step was the installation of completely autonomous lighting in the unloading zone of a Production Shop. The autonomous lighting system uses only LED lamps, which is very cost-effective. Besides, autonomous lighting on solar energy is impossible without rechargeable batteries, as the energy that was generated during the day, should accumulate to be consumed at night. Rechargeable batteries were chosen in accordance with module productivity and duration of working time.
The sunlight is caught by solar panels, where it is converted into electrical power and is sent to accumulators. Advantages are that the lights on solar batteries are autonomous, they turn on/off automatically with help of sensors, durability is over 10 years, they are environmentally friendly and absolutely harmless to people, because they work at low voltage.
In 2017, a plan was rolled out to replace all the warehouse and production lightning, based on Hg technology, by LED technology. The estimated savings amount to 80% of the energy consumption for lighting. This plan will continue during 2018 and 2019.
All outdoor lighting in our Spanish branch is now controlled by solar sensors, turning on the lighting only when the sun is down.
In 2017, SolarDec CVBA was incorporated. SolarDec is a cooperative company that manages the operation of solar panels and in which Deceuninck Group, Decalu and Plastics Deceuninck participate as co-proprietors/partners. SolarDec CVBA is recognized as a cooperative society with the National Cooperations Council ("Nationale Raad voor de Coöperatie"). In 2018, the solar panels will be installed on the roof of our plant in Gits (Belgium) and our employees will be invited to participate in this smart investment in sustainable and renewable energy production and consumption.
Deceuninck's honorary Directors are:
The Secretary of the Board of Directors is Ann Bataillie, Director HR & Legal.
The Board of Directors currently consists of seven Directors. One member is Executive Director ("CEO") and four members are Independent Directors in accordance with article 526ter of the Belgian Companies Code. Three Directors were appointed on the recommendation of important shareholders.
These are the functions and memberships of the Directors within the Board of Directors and its Committees per 23 March 2018:
Deceuninck Group's Corporate Governance Charter, which can be consulted at www.deceuninck.com, contains the main aspects of its corporate governance policy. It is based on the principles of corporate governance and transparency as determined by the Belgian Corporate Governance Code of 12th March 2009 (hereinafter "the Code"). The Code has been adopted as reference code for our corporate governance.
This Corporate Governance Statement contains further information on the application of Deceuninck Group's corporate governance policy during 2017.
| FUNCTION | NAME | MEMBERSHIP COMMITTEES | LATEST RENEWAL MANDATE |
MANDATE EXPIRY |
|---|---|---|---|---|
| EXECUTIVE DIRECTOR | ||||
| CEO | Beneconsult BVBA represented by Francis Van Eeckhout |
12/05/2015 | AGM 2019 | |
| NON-EXECUTIVE DIRECTORS | ||||
| Chairman Independent Director |
Pentacon BVBA represented by Paul Thiers |
- Audit Committee (member) - Remuneration and Nomination Committee (Chairman) |
12/05/2015 | AGM 2019 |
| Vice Chairman Independent Director |
Marcel Klepfisch SARL represented by Marcel Klepfisch |
- Audit Committee (Chairman) - Remuneration and Nomination Committee (member) |
13/05/2014 | AGM 2018 |
| Director | Bene Invest BVBA represented by Benedikte Boone |
- Remuneration and Nomination Committee (member) |
12/05/2015 | AGM 2019 |
| Director | Mardec Invest BVBA represented by Evelyn Deceuninck |
16/12/2015 | AGM 2019 | |
| Independent Director | Alchemy Partners BVBA, represented by Anouk Lagae |
25/04/2017 | AGM 2021 | |
| Independent Director | Homeport Investment Management BVBA, represented by Wim Hendrix |
- Audit Committee (member) | 01/01/2018 | AGM 2018 |
The Board of Directors has set up specialized committees to deal with specific matters and to give advice to the Board of Directors. The Committees have an advisory role. The ultimate decision making responsibility lies with the Board of Directors.
The current Audit Committee consists of three members, all of which are Non-Executive Directors. All members of the Audit Committee are independent as defined in article 526ter of the Belgian Companies Code:
The Audit Committee members as a whole have competence relevant to the sector in which Deceuninck is operating and at least one member has competence in accounting and/ or auditing.
François Gillet was member of the Audit Committee until 20th December 2017.
| The current Remuneration and Nomination Committee consists of three members, all of which are Non-Executive Directors. Two members of the Remuneration and Nomination Committee are independent as defined in article 526ter of the Belgian Companies Code: |
|---|
| q Pentacon BVBA, represented by Paul Thiers, Chairman q Marcel Klepfisch SARL, represented by Marcel Klepfisch q Bene Invest BVBA, represented by Benedikte Boone |
| Taking into account their education and professional experience, the members have the necessary expertise in the field of remuneration policy. |
| François Gillet was member of the Remuneration and Nomination Committee until 20th December 2017. Bene Invest BVBA, represented by Benedikte Boone was appointed as member of the Remuneration and Nomination Committee on 21 December 2017, effective January 1st, 2018. |
| BOARD OF DIRECTORS | AUDIT COMMITTEE | REMUNERATION AND NOMINATION COMMITTEE |
|
|---|---|---|---|
| TOTAL MEETINGS HELD IN 2017 | 6 | 7 | 5 |
| Beneconsult BVBA, represented by Francis Van Eeckhout | 6 | / | / |
| Pierre-Alain Baron De Smedt | 2 (until 25/04/2017) | / | 1 (until 25/04/2017) |
| François Gillet | 3 | 5 | 3 |
| Marcel Klepfisch SARL, represented by Marcel Klepfisch | 6 | 7 | 5 |
| Bene Invest BVBA, represented by Benedikte Boone | 6 | / | / |
| Mardec Invest BVBA, represented by Evelyn Deceuninck | 6 | / | / |
| Pentacon BVBA, represented by Paul Thiers | 6 | 7 | 5 |
| Alchemy Partners BVBA, represented by Anouk Lagae | 6 | / | / |
The Board of Directors convened six times, mainly dealing with the following topics:
Furthermore, the Board also took note of the reports and proposed resolutions of the Audit Committee and the Remuneration and Nomination Committee and, when necessary, took decisions based on the recommendations of these Committees.
The Audit Committee convened seven times. It assisted the Board of Directors in the execution of its responsibilities in the broadest sense and it mainly dealt with the following topics:
The Remuneration and Nomination Committee convened five times, mainly dealing with the following topics:
The CEO attended all meetings of the Remuneration and Nomination Committee except when the appointment and remuneration of Bene Invest BVBA, represented by Benedikte Boone, and of himself were discussed.
The Executive Team is a Management Committee in accordance with article 524bis of the Belgian Companies Code. The Executive Team supports the CEO in the day-to-day operational management of the Group and the execution of its responsibilities in accordance with the values, strategies, policies, plans and budgets that are determined by the Board of Directors.
In 2017, Wim Clappaert resigned as member of the Executive Team.
The regions Northwest Europe and Southwest Europe were merged into Western Europe as of 1 April 2017. The region is led by Dilec BVBA, represented by Didier Leclercq.
Representative of Beneconsult BVBA CEO Chairman of the Executive Team
Representative of Fienes BVBA CFO
Director HR & Legal Secretary of the Board of Directors and the Executive Team
Director Turkey & Emerging Markets Didier Leclercq Representative of Dilec BVBA Director Western Europe
Filip Geeraert Director United States of America
Bernard Vanderper Sales Manager Benelux General Manager Decalu
Deceuninck Group aims for both diversity and complementarity in the composition of the Board of Directors and the Executive Team. The diversity criteria relate to gender, age, educational/professional background, geographical provenance, international experience and expertise/knowhow, taking into account the rules and generally accepted principles of non-discrimination.
The Remuneration and Nomination Committee nominates one or more candidates for appointment as member of the Board of Directors, taking into account the needs of Deceuninck Group, the appointment procedures and selection criteria drawn up by the Board of Directors. Board members are appointed by the General Meeting of shareholders, to whom the relevant resumes are disclosed. Other than that, Deceuninck Group does not provide detailed information about diversity criteria and objectives to its shareholders.
The members of the Executive Team are appointed by the Board of Directors on the proposal of and after consultation with the CEO and the Remuneration and Nomination Committee.
Deceuninck Group complies with the rules on gender diversity in the composition of the Board of Directors. In accordance with the Law of 28 July 2011, at least onethird of the Board's members must be of a different gender than the other members, by no later than 1 January 2019. On 31 December 2017, three women and four men sat on the Board. On 23 March 2018, the Board also consists of three women and four men.
The Executive Team currently contains only one female member. In case of vacancies, there will be at least two candidates of a different gender, upon which the most competent member will be chosen.
q Age:
The age of the Board members ranges between 38 and 66 years of age. The youngest Executive Team member is 45 years old and the oldest member is 64 years of age.
Given their educational and/or professional backgrounds, the expertise and know-how of the Board and Executive Team members fulfils Deceuninck Group's aim for diversity and complementarity.
Deceuninck Group's policy regarding transactions and other contractual relations between the Company (including its affiliated companies) and its Directors, not covered by the conflict of interest rules set out in Articles 523, 524 or 524ter of the Belgian Companies Code is incorporated in the Corporate Governance Charter.
The Charter provides that every transaction between the Company (or any of its subsidiaries) and any Director must be approved in advance by the Board of Directors, whether or not such a transaction is subject to applicable legal rules. Such a transaction can only take place based on terms in accordance with market practices.
The Board has drawn up a dealing code regulating transactions and the disclosure of such transactions in shares of Deceuninck Group or in derivatives or other financial instruments linked to them carried out for their own account by persons discharging managerial responsibilities and certain key employees.
In 2017, the Board has extended the closed period before publication of the half year and the year results. This means that an insider and any person closely associated with him/her, shall neither directly nor indirectly buy or sell shares from January 1st of each year until the first business day following the day of publication of the Company's annual results and from July 1st of each year until the first business day following the day of publication of the Company's half year results.
The principles of our Dealing Code have been annexed to the Corporate Governance Charter.
The Board of Directors is responsible for a regular evaluation of its own performance with a view to constantly improving the management of the group. To this end, the Board of Directors, led by its Chairman, carries out an evaluation of its scope, composition, activities and interaction with the Executive Team, preferably every three years.
The Board of Directors also assesses the functioning of the Committees and the individual Directors.
The evaluation process has four objectives:
On the basis of the results of the evaluation, the Chairman provides the Board of Directors with a report describing the weaknesses and strengths and, if necessary, proposes the appointment of a new Director or the non-renewal of a Director's mandate to the Remuneration and Nomination Committee.
A new performance evaluation process will start early 2018, the results of which will be available by the end of the year.
Procedure for developing the remuneration policy and for determining the remuneration granted to individual Directors and members of the Executive Team
The General Meeting of the Company fixes the remuneration of Directors following the proposal of the Board of Directors which is based on the recommendations of the Remuneration and Nomination Committee.
In line with the overall remuneration strategy of the Company, the Remuneration and Nomination Committee regularly establishes a benchmark for the remuneration of Non-Executive Directors with comparable Belgian listed companies. This is done in order to ensure that the remuneration is still appropriate, and in conformity with market practices, taking into account the size of the Company, its financial situation, its position within the Belgian economic environment, and the responsibilities that the Directors bear.
The remuneration of the members of the Executive Team, including the CEO, is determined by the Board of Directors based on the recommendations of the Remuneration and Nomination Committee. The aim of the general remuneration policy of the Group is to attract, retain and motivate competent and professional employees. For this reason, the amount of the remuneration is determined in proportion to the individual tasks and responsibilities. The Remuneration and Nomination Committee annually reviews and fixes the total compensation based on the strategic positioning of each of the functions versus the benchmark in the market and the expected market trends. Every two years, a thorough benchmark is conducted with comparable international companies of similar size and structure. The contribution made by members of the Executive Team to the development of the activities and the results of the Group constitutes an important part of the remuneration policy.
Declaration regarding the remuneration policy used for members of the Board and the Executive Team during 2017
Non-Executive Directors receive a fixed amount as remuneration for the execution of their mandate and a fixed amount for each Board meeting attended, limited to a maximum amount. Performance-based remuneration such as bonuses, stock-related incentive programs and fringe benefits are excluded. The amount of remuneration is different for the Chairman, the Vice-Chairman and the other Non-Executive Directors. If the Non-Executive Directors are also members of a Committee, their remuneration will be increased by a fixed amount per meeting of the relevant Committee.
| (IN EUR) | MIN/YEAR (FIX) |
ALLOWANCE PER BOARD OF DIRECTORS |
ALLOWANCE PER COMMITTEE MAX/YEAR |
|
|---|---|---|---|---|
| Chairman | 40,000 | 3,000 | 1,000 | 80,000 |
| Vice-Chairman | 30,000 | 1,500 | 1,000 | 60,000 |
| Director | 20,000 | 1,500 | 1,000 | 40,000 |
The Group does not issue any personal loans, guarantees, etc. to the members of the Board of Directors or the Executive Team.
If Directors are assigned special tasks and projects, they may receive an appropriate remuneration for this. No termination compensation is provided for Non-Executive Directors.
The Annual General Meeting of 2017 approved the possibility to grant warrants to non-executive directors. The Annual General Meeting of 2018 shall be requested to approve the granting of warrants to the non-executive directors as follows: 30,000 to the Chairman and 15,000 to each of the nonexecutive directors.
It is not the intention to make changes to the remuneration policy for non-executive directors in the two financial years to come.
The total remuneration of the Executive Team members consists of the following elements: the fixed remuneration, the short term variable remuneration, options and/or warrants.
The fixed remuneration of the members of the Executive Team is determined according to their individual responsibilities and skills. It is awarded independently of any result. Part of this fixed remuneration may be used, at the discretion of the Executive Team member, for pension and insurance contributions like:
In order to align the interests of the Company and its shareholders with the interests of Executive Team members, part of the remuneration package is linked to Company performance and another part to individual performance. By weighing both factors against each other in a responsible manner (70% corporate results / 30% individual results) a balance can be achieved between a result-oriented approach (Top Performance) and the manner in which these results are obtained (taking into account the core values, i.e. Candor, Top Performance and Entrepreneurship). If the manner in which results were obtained is not totally in line with the core values, the Remuneration and Nomination Committee reserves the right to decide not to pay any bonus.
For the members of the Executive Team, the performance of the Company (70%) is based on the Adjusted EBITDA and on the Adjusted Free Cash Flow of the past financial year. The Board of Directors reviews these criteria annually on the proposal of the Remuneration and Nomination Committee, and may revise them if necessary. For 2017, the evaluation criteria for the performance of the CEO and the other members of the Executive Team were: Adjusted EBITDA Group (35%) and Adjusted Free Cash Flow Group (35%). For members
of the Executive Team who bear an ultimate responsibility at a regional level, the Adjusted EBITDA of the Group (10%), the Adjusted EBITDA of the region (25%), and the Adjusted Free Cash Flow Group (5%) the Adjusted Free Cash Flow Region (30%) are taken into account to consider the Company performance.
The individual performance (30%) is based on a clearly defined evaluation system that is built around the achievement of specific measurable individual targets, the realization of important key figures and compliance with core values which are important to the Company. All the targets must always be in line with the group strategy, the business plan, the core values and the guidelines. The individual targets are set annually during individual interviews at the start of the financial year. The Remuneration and Nomination Committee evaluated the achievement of the 2017 objectives for the members of the Executive Team and proposed to the Board of Directors to pay a short-term variable remuneration based on the 2017 performance criteria to a member of the Executive Team.
The short-term variable remuneration is in principle 35% of the fixed annual remuneration for the members of the Executive Team and 75% of the annual fixed remuneration of the CEO. This percentage may be exceeded as far as the Company results are concerned, but should never exceed 37.65% (for the members of the Executive Team) or 97.5% (for the CEO). The variable remuneration related to the Company objectives are only granted if 90% or more of the preestablished financial targets have been achieved.
The basis for the variable remuneration is the remuneration earned during the financial year. The payment takes place end of February of the following year.
The variable remuneration is not spread over time. The Extraordinary General Meeting of the Company of 16 December 2011 decided that the Company is not bound by the limitations of the rules of article 520ter paragraph 2 of the Belgian Companies Code concerning the spreading of the variable remuneration of the Directors, the CEO and members of the Executive Team, over time.
The Company also offers options and/or warrants on shares of the Company. The purpose of this kind of remuneration is to motivate and retain employees who (can) have a significant
impact on the Company results in the medium-term. When granting options and/or warrants, due account is taken of the strategic impact of the function that the employee performs and his/her future (growth) potential. The underlying philosophy of this form of remuneration is to raise Deceuninck Group's value to the maximum extent in the long term, by linking the interests of the warrant holders to those of shareholders, and to strengthen the long-term vision of the management. In this context, the exercise period of an option and warrant is max. 10 years. The stock options and warrants can only be exercised the 3rd year following the year in which the options and warrants were offered. If they are not exercised at the end of the exercise period, they are, ipso facto, reduced to zero, and lose all value.
One third of the warrants/options are each time released for exercise in the fourth, in the fifth and in the sixth calendar year after the year in which the offer has been made up to the end of the term.
In the event of voluntary or involuntary dismissal (except in case of termination of contract for cause), the accepted and acquired stock options/ warrants can only be exercised during the first exercise period following the date of the termination of contract. The options/warrants that are not acquired shall be cancelled. In the event of involuntary dismissal for cause, the unexercised, accepted stock options and warrants are cancelled, whether or not they were acquired. These terms and conditions relating to the acquisition and exercise of options and warrants in the event of voluntary or involuntary dismissal can be applied without prejudice to the competence of the Board of Directors to make changes to these stipulations to the advantage of the beneficiary, based on objective and relevant criteria. If the employment agreement ends due to legal retirement or end of career, the warrants/options shall remain exercisable. The shares that may be acquired in connection with the exercise of the options/warrants are listed on Euronext Brussels; they are of the same type and have the same rights as the existing ordinary Deceuninck Group shares.
In its meeting of 21 December 2017, the Board of Directors, upon recommendation of the Remuneration and Nomination Committee, approved a Performance Share Plan for the members of the Executive Team. The members are granted Performance Share Rights, which can be converted into "matching" or Performance Shares of Deceuninck NV at the vesting date (i.e. the 3rd calendar year following the year of the grant), provided the beneficiaries invested in Deceuninck Group Shares before 30 June 2018, at the Investment Price (i.e. the average share price of the 30 trading days preceding 31 December 2017). For each invested Share, the Executive Team member will be entitled to one or more matching Deceuninck Group Shares pursuant to the fulfillment of the Performance Condition, defined as a cumulative annual average increase of the Total Shareholder Return as determined in the Plan, the realization of which determines the fraction or the multiple (if any) of Performance Shares a vested Performance Share Right effectively entitles to.
Other than that, it is not the intention to make any changes to the remuneration policy for the members of the Executive Team in the two financial years to come.
The total remuneration (gross) paid to the non-executive members of the Board of Directors in the financial year 2017 amounted to € 263,500. The amount includes an additional remuneration for the attendance at Committee meetings.
In 2017, the Company or any affiliated Company of the Group did not grant any loans to any of the Directors, nor are there any outstanding repayments owed by the Directors to the Company or any affiliated Company of the Group.
| BOARD | AUDIT COMMITTEE | REMUNERATION AND NOMINATION COMMITTEE |
FIXED REMUNERATION |
TOTAL GROSS REMUNERATION |
|
|---|---|---|---|---|---|
| Pierre-Alain Baron De Smedt | € 3,000 | - | € 1,000 | € 20,000 | € 24,000 |
| François Gillet | € 4,500 | € 5,000 | € 3,000 | € 30,000 | € 42,500 |
| Marcel Klepfisch SARL, represented by Marcel Klepfisch |
€ 9,000 | € 7,000 | € 5,000 | € 20,000 | € 40,000 |
| Bene Invest BVBA, represented by Benedikte Boone |
€ 9,000 | - | - | € 20,000 | € 29,000 |
| Mardec Invest BVBA, represented by Evelyn Deceuninck |
€ 9,000 | - | - | € 20,000 | € 29,000 |
| Pentacon BVBA, represented by Paul Thiers |
€ 18,000 | € 7,000 | € 5,000 | € 40,000 | € 70,000 |
| Alchemy Partners BVBA, represented by Anouk Lagae |
€ 9,000 | - | - | € 20,000 | € 29,000 |
| Beneconsult BVBA, represented by Francis Van Eeckhout |
- | - | - | - | - |
The member of the Executive Team who also sits on the Board as executive director, Beneconsult BVBA, represented by Francis Van Eeckhout, did not receive a fixed remuneration nor any attendance fees.
In 2017, the CEO received a fixed remuneration in the amount of 460,080 EUR. This amount also includes a pension allowance of 34,080 EUR, which can be contributed for pension plans or for insurance, at the sole discretion of the CEO. No variable remuneration was acquired in 2017.
The CEO does not have a company car.
The members of the Executive Team (including 1 member that left the Company in July 2017 and excluding the CEO) received a remuneration of 2,046,940 EUR, including a variable remuneration of 81,640 EUR based on the performance criteria for 2017 for the Executive Team member responsible for Turkey & Emerging Markets. This variable remuneration was paid in February 2018. The remuneration package awarded to members of the Executive Team does not include a long-term cash bonus. This amount also includes a pension allowance of 48,124 EUR, which can be contributed for pension plans or for insurance, at the sole discretion of the members of the Executive Team.
Deceuninck Group provides a company car to the members of the Executive Team, except for the members acting through a management company. In this context, the Company tries to achieve a maximum balance between the representative attributes of the car and the personal needs of the members of the Executive Team. Under the Environments charter, the environmental impact, including consumption and CO 2 emissions, plays a substantial role during the selection of these types of cars.
Shares, stock options and other rights to acquire Deceuninck Group shares that were granted, exercised or that have lapsed during 2017
The Extraordinary General Meeting of October 2006 approved a stock option plan on existing shares under which the Board of Directors is authorized to allocate 75,000 options on existing shares each year.
In 2017, no stock options were granted to the members of the Executive Team, no stock options were exercised by the members of the Executive Team and no stock options lapsed.
The Extraordinary General Meeting of 16 December 2015 approved a warrant plan for 2015 for the issue of 3,000,000 warrants ("Warrant Plan 2015"), 1,255,000 warrants of which were offered by the Board of Directors on 21 December 2016. In 2017, the members of the Executive Team accepted all 710,000 warrants of this Warrant Plan 2015 (500,000 by the CEO and 30,000 by each other member of the Executive Team).
On 21 December 2017, the Board of Directors approved a new warrant plan ("Warrant Plan 2017") of 4,500,000 warrants. The members of the Executive Team were offered 770,000 warrants, granted as follows:
The warrants offered in 2017 have an exercise price of € 3.06 (for the members of the Executive Team and the CEO).
During the same meeting, the following warrants and warrant plans were cancelled:
In 2017, the following members of the Executive Team exercised warrants:
No warrants of the members of the Executive Team lapsed during 2017.
The stipulations of the agreements between the Company and the CEO and the members of the Executive Team do not contain recovery clauses.
For the members of the Executive Team and the CEO, special severance pay conditions of 12 months base salary have been agreed in the management agreements. No special agreements that could deviate from the applicable current employment laws and practice were made with the regional managers in France, North America and Turkey.
Deceuninck Group's core values are Candor, Top Performance and Entrepreneurship. Taking calculated risks is an integral part of operational management. The purpose of risk management is to identify and to manage the risks.
The most important features of the internal control and risk management systems, including the financial reporting, can be summarized as follows:
The ISO 31000 standard has been selected as a framework for the risk management system. The following steps can be distinguished within this process:
In order to detect the risks, it is important to have a clear understanding of the context in which Deceuninck Group operates. On the one hand, there is the ever changing external context which includes our social, cultural, political, legal, legislative, financial, technological, economical, natural and competitive environment. On the other hand, there is the internal context in which the objectives of Deceuninck as a Group, as well as the objectives of each individual entity, need to be defined.
Risk identification is the first step within the risk assessment process. The risks that might have an impact on the achievement of targets are identified in various brainstorming sessions, and subsequently summarized in a Risk Register.
Risk analysis is the process that seeks to identify the possibility that the risk will occur and what the possible impact will be on achieving the objectives. For this, we take into account the impact on the core objectives i.e. people, planet, quality, service and cost.
Risks are evaluated and ranked on the basis of the probability that they will occur and the impact they will have. The outcome of this is summarized in a Risk Matrix.
| Risks can be treated in four possible ways: |
|---|
| q Completely avoid the risk by changing or stopping the activity; |
| q Take action to reduce the probability (prevention) or to lower the impact (protection). |
| q Transfer the risk through insurance or through other contracts with third parties; |
| q Accept the risk without further action; |
| The risk process is a continuous effort and the different phases continuously have to be reviewed and monitored. At Deceuninck Group this is organized as follows: |
| q Group Finance maintains the Risk Register and Risk Matrix for all risks which are relevant at Group level, as well as a list of actions which have been agreed to treat these Risks. Actions are assigned to cross regional teams and overseen by an Executive Team member. |
| q These are reviewed twice a year by the Executive Team, to ensure completeness of the Risk Register and to ensure |
| that agreed actions are implemented. q Twice a year there is a similar review with the Audit Committee of the Board, typically during a dedicated risk management session or as separate agenda item during the scheduled meetings of the Audit Committee q Internal Audit applies a risk based internal audit approach which aims to identify potential new risks |
| during their audits at legal entity level. This helps to ensure completeness. |
Deceuninck Group structures its risks along following dimensions:
The most relevant risks are highlighted below:
The exchange rate risks, interest risks, credit risks and liquidity risks are further discussed in this report under Note 24.
As most companies, Deceuninck Group is exposed to the risks of an economic recession, the volatility on the credit and capital market and the economic and financial situation in general. These factors have a negative influence on product demand.
Deceuninck Group primarily manufactures window profiles destined for the residential construction sector and related products. Consequently, our future results will mainly depend on the evolution of these markets. Against this background the current financial and economic situation has a considerable impact on the economy in general and influences all markets in which we operate.
Deceuninck Group cannot predict how the markets will evolve in short term. Although the authorities of some geographical markets in which we operate have taken policy measures to stimulate economic growth, Deceuninck Group cannot guarantee that these measures will suffice in order to achieve this effect. Furthermore, the measures that were taken can be withdrawn or adjusted. The markets in which Deceuninck Group operates are subject to strong competition. We compete with other companies based on different factors, such as (i) knowledge of and access to new technologies and new production processes, (ii) the ability to launch new products that offer improved functionality or that are less expensive than the existing range, (iii) completeness of the solutions that are offered, (iv) reputation and vision, (v) geographical presence, (vi) distribution network and (vii) prices. Furthermore, competition can increase
by consolidation or by new competitors offering similar products that enter the market. Strong competition can cause market overcapacity and price pressure.
In addition, contracting parties, customers or other parties that operate in Deceuninck Group's market can change their operational model in a matter that influences our activities.
In other words, Deceuninck Group's success depends on its capacity to maintain competitiveness as the market structure changes. Although Deceuninck Group was able to do so by adjusting to the market structure changes, future changes could have a considerable impact on its activities, operating profit or financial position.
The activities, operating profit and financial position of Deceuninck Group fluctuate according to the general economic climate. The decision whether or not to buy capital goods, which would enable Deceuninck Group's customers to integrate its products, concerns relatively high amounts of money.
Such a decision on investment can among other things be associated with the general economic climate. The decision by end users of our products to invest in real estate can also be associated with the general economic climate and credit access. The renovation market is less sensitive to economic fluctuations than new construction.
Future profitability of Deceuninck Group is partly determined by changes regarding the purchase prices of raw materials (especially PVC resins and additives), components, capital goods, salaries and other corporate services, as well as by sales prices Deceuninck Group can charge for its products and services. For most of these components there are no hedging possibilities.
If the increase of raw material prices is substantial and longlasting, and if market conditions allow it, experience shows that charging higher raw material prices to the market takes about 3 – 6 months' time, with large differences between markets.
Deceuninck Group's compound factories are considered to be a critical infrastructure that deliver compound to most of the Group's extrusion factories. They are situated in a limited number of countries (Germany, Belgium, the United States, Russia and Turkey). Although no considerable problems arose in the past, an activity interruption at one of the compound factories could substantially interrupt the production process of the extrusion facilities, as it is difficult to ship compounds under commercially attractive conditions. Such unavailability could substantially influence our activities, operating profit and financial position.
People risks
The success of Deceuninck Group will depend to a large extent on its ability to attract and retain skilled staff and managers who have a thorough knowledge of and are familiar with its markets, technology and products. Deceuninck Group is active in a competitive labor market and therefore no assurance can be given that it will be able to retain its key personnel. If we fail to attract or retain skilled persons, this could have a material adverse effect on Deceuninck Group's business or results of operations.
Deceuninck Group relies on a combination of trademarks, trade names, trade secrets, patents and knowhow to define and protect its intellectual property rights of its products and operational processes. So it is of the utmost importance that Deceuninck Group is able to continue to use its intellectual properties and to sufficiently protect all valuable intellectual properties by acting against violations of its intellectual property rights, by maintaining trade secrets and by using the available legal means such as trademarks, patents and design registrations. Although there are no important disputes, the Company cannot exclude judicial procedures in order to protect its rights.
In case the above-mentioned methods cannot sufficiently protect Deceuninck Group's intellectual property rights in its most important markets or in case the protection is no longer valid, third parties (competitors included) could commercialize its innovations or products or use its knowhow, which could affect our activities and/or operating results. We cannot guarantee that all trademarks and patents that are applied for will be approved in the future. Deceuninck Group cannot exclude the risk that certain trademark and patent registrations of Deceuninck Group will expire should we not succeed in extending such trademark and patent registrations. In certain geographical markets it might be more difficult for Deceuninck Group to obtain property rights.
Deceuninck Group's success will partially depend on its ability to exercise its activities without infringing on third parties' property rights, or without unlawfully appropriating those rights. Although there are currently no important claims against Deceuninck Group regarding the violation of intellectual property rights, Deceuninck Group cannot guarantee that it will not (unintentionally) infringe on third parties' patents from time to time. Deceuninck Group might be obliged to spend a lot of time and efforts or might incur judicial costs should the Company have to deal with legal claims on intellectual property rights, irrespective of their justifiability.
If Deceuninck Group indeed infringes or has infringed on patents or other intellectual property rights of third parties, it can be subject to substantial insurance claims that could impact the Group's cash flow, activities, financial situation or operating results. The Group might also be required to put a halt to the development, use or sales of the product or process concerned. It might also need to obtain a license in order to be able to use the disputed rights, which is not available at commercially reasonable conditions or not available at all. To reduce probability of such a violation, the management has implemented a process to continuously examine possible infringements of patents and intellectual property rights.
Deceuninck Group's activities are subject to possible product liability risks that are characteristic to the production and distribution of its products. Product liability can also apply to new products that will be manufactured or distributed in the future. A possible insufficiency of the product liability insurance to cover product liability claims could substantially influence the Company's activities, financial situation and operating results. Furthermore, defense against such claims can exert considerable pressure on the management,
considerable damages can be claimed or Deceuninck Group's reputation can be influenced negatively, even if the Company's defense against such claims regarding the products they put on the market is successful.
Violations by employees of the Group of applicable laws and regulations as well as Deceuninck Group's Code of Conduct can have a material adverse effect on the Group's business, results of operations or financial position. Within an international company, individual employee actions can lead to an infringement in the area of compliance. This can have a negative impact on the image of the company, on the activities and on the value of the share. Despite internal training and Deceuninck Group's Code of Conduct (dealing with a.o. human rights, anti-bribery, anti-corruption), the Group cannot avoid that some employees would commit individual breaches of applicable laws and regulations or Deceuninck Group's Code of Conduct.
Deceuninck Group operates in markets with different strict and evolving environmental requirements. Compounding and storage of hazardous industrial products always involves an environmental risk. Although Deceuninck Group has taken all necessary measures to mitigate this risk and no significant problems have occurred in the past, environmental liability can not be excluded, especially as environmental legislation and regulations can provide for a system of strict liability by which Deceuninck Group becomes liable, regardless of whether Deceuninck Group has been negligent or has committed any other offense. Failure to comply with existing or future environmental legislation and regulations may result in criminal or administrative penalties, which could have a material adverse effect on Deceuninck Group's business, results of operations or financial position. Deceuninck Group may be liable to third parties for any agreement, guarantee, declaration, compensation or similar provision that is contained in agreements with which Deceuninck Group has disposed of production facilities.
Ernst & Young Bedrijfsrevisoren BCVBA, represented by Marnix Van Dooren was re-appointed as Deceuninck Group's statutory auditor for a period of three years at the Annual General Meeting of 2017, which means until the closing of the Annual General Meeting of 2020.
Each Director and each member of the Executive Team are encouraged to arrange their personal and business interests so that there is no direct or indirect conflict of interest with the Company. Deceuninck Group has no knowledge of any potential conflict of interest affecting the members of the Board of Directors and the Executive Team between any of their duties to the Company and their private and/or other duties.
The conflict of interest settlement procedure of article 523 of the Belgian Companies Code was applied once in 2017: On 21 December 2017, the Board of Directors convened to approve a new warrant plan ("Warrant Plan 2017"). Before the meeting, Beneconsult BVBA, represented by Francis Van Eeckhout, informed the Board of his potential patrimonial interest as an executive director conflicting with the agenda of the Board of Directors, as he would be a beneficiary of the new Warrant Plan 2017. The executive director left the meeting and did not deliberate nor decide on the approval of the new Warrant Plan 2017. Also the statutory auditor was informed of this potential patrimonial conflict of interest. In accordance with the legal provisions, this annual report contains an extract of the board minutes (in Dutch):
"Before the discussion with regard to this matter commenced, the private company with limited liability 'BENECONSULT', with Mr. Francis VAN EECKHOUT as its permanent representative, being the Executive Director of the Company, stated that there may occur a conflict of interest of a property-related nature with regard to the decisions that the Board of Directors will take regarding the approval of the warrant plan, since it is also beneficiary to it.
The Board of Directors has taken note of this conflict of interest and also the fact that this was reported by the director involved to the statutory auditor of the company.
In accordance with the provisions of article 523 of the Companies Code – and taking into account the fact that the Company makes public use of the savings system – the director concerned was asked to leave the room during the discussion of those items on the agenda. Consequently, the director concerned did not take part in the deliberations or the vote. The grounds for justification for the conflict of interest named above are:
The initiative taken by the Board of Directors regarding the proposal of the Remuneration Committee to launch the 'Warrant Plan 2017', which aims to motivate certain members of staff, executives of the Company and its subsidiaries, certains consultants who provide services through a management company to the Company and/or its subsidiaries, to take part in this Plan, in order to contribute to the growth of Deceuninck Group and to ensure continued loyalty. It is important for the Company to approve a new warrant plan. The Company strongly believes that the work, the initiative and the entrepreneurship of each of the beneficiaries of the warrant plan will make an important contribution to the development of our activities and the results of the Company.
It therefore wishes to give the beneficiaries the opportunity to acquire (additional) shares at a predetermined issue price so that they can participate financially in the creation of added value and the growth of the Company. The experience of the past years has shown that stock options, warrants and share ownership by employees and executive members is an important element of motivation and commitment to the Company. After all, such a plan aims to increase the long-term commitment and motivation of employees,
executive members and directors. Doing so, their efforts will contribute to the realization of the implemented restructurings. The Company intends to grant further annual warrants on shares. The offer of these new warrants will not constitute a renunciation on the part of the beneficiaries on previous options and/or warrants on shares that they accepted. As such, this initiative matches the interests of the Company, and consequently, the Board of Directors deems the cancellation of the right of pre-emption of the existing shareholders justifiable.
The property consequences are the following: The property consequences for the Company that arise from the fact that warrants are granted to the Executive Director are minimal, taking into account on the one hand the total number of securities to which this transaction relates to and on the other hand the fact that the strike price of the warrants is based on the current share price. The Board of Directors declares that, on behalf of the other directors of the Company, being the non-executive directors, no conflict of interest is present, given that the 'Warrant Plan 2017' provides that the possible grant of the created warrants will be the result of a decision by the Annual General Meeting of the Company."
The conflict of interest settlement procedure of article 524 of the Belgian Companies Code was not applied in 2017.
The share capital was fully paid up and was represented by 136,383,256 shares without nominal value.
The Company offers stock options and warrants on shares of the Company. Stock options and warrants are assigned personally and are not transferable, except in case of decease of the holder.
None
None
The voting rights attached to the shares held by Deceuninck Group and its direct and indirect subsidiaries are suspended. At 31 December 2017, these rights were suspended for 97,871 shares (0.07% of the shares in circulation at that time).
None
The members of the Board of Directors are appointed by the General Meeting of Shareholders. Their initial term of office lasts maximum 4 years (based on the Company's Corporate Governance Charter) but can be renewed. The Remuneration and Nomination Committee presents one or more candidates, considering the needs of the Company and taking into account the nomination and selection criteria established by the Board of Directors. In the composition of the Board of Directors an appropriate balance is sought, based on (a.o.) gender, skills, experience and knowledge (see above "Diversity Policy").
The age limit for Directors is set at 70 years at the time of the (re)appointment. In principle, a Director's term ends after the Annual General Meeting, at which moment his or her mandate can be considered ended.
The amendment of Deceuninck Group's Articles of Association
is to be executed in accordance with legal provisions of the Belgian Companies Code.
At the Extraordinary General Meeting of 21 December 2016, it was decided to grant the Board of Directors the authority to acquire treasury shares, by purchase or exchange, directly or by intervention of a person who acts in his own name but at the expense of the Company at a minimum price of 1.00 EUR and at a maximum price of 10.00 EUR, provided that by doing so, not for a moment the Company possesses treasury shares whose nominal value is higher than 20% of the Company's subscribed capital. No preceding decision by the General Meeting is necessary in case the acquisition of stocks occurs in order to offer them to the Company's staff.
Furthermore, the Board of Directors is authorized to sell these shares without being bound to above-mentioned price and time limitations.
This authorization is valid for a period of five years starting on 21 December 2016 and can be renewed in accordance with article 620 of the Belgian Companies Code.
During the financial year 2017, no treasury shares were purchased.
At the Extraordinary General Meeting of 21 December 2016, it was decided to grant the Board of Directors the authority to acquire or sell treasury shares, profit-sharing bonds or certificates which relate to these bonds, according to articles 620 and the following of the Companies Code, when the acquisition or alienation is necessary to avoid threatening serious damages to the Company. This authorization is valid for a period of three years as from its publication in the Annexes to the Belgian Official Gazette and can be renewed in accordance with article 620 of the Companies Code.
The Board of Directors is authorized, for a period of 5 years as from the date of publication of the deed concerning the modification of the articles of association dated 21 December 2016, to increase the Company's issued capital on one or several occasions to a maximum amount of 53,324,946.55 EUR. This capital increase can take place in conformity with the conditions determined by the Board of Directors by a cash contribution, a contribution in kind, an incorporation of the reserves or share premiums, with or without the issuance of new shares, as well as by issuing debt securities that can be converted to shares on one or several occasions, debt securities with warrants or warrants that whether or not are linked to other stocks. However, the capital increase as decided by the Board of Directors cannot be reimbursed by shares without indication of nominal value issued below accountable par value of the old shares.
The Extraordinary General Meeting of 21 December 2016 authorized the Board of Directors, for a period of 3 years, under the conditions and within the limitations of article 607 of the Belgian Companies Code, to use the authorized capital in case of notification by the Financial Services and Markets Authority (FSMA) of a public takeover bid on the Company's shares. The Board of Directors determines the data and conditions of the instructed capital increases in application of the foregoing, including the possible payment of issue premiums.
If the foregoing occurs (including for the issuance of convertible debt securities or warrants), the Board of Directors determines, in accordance with articles 592 and following of the Belgian Companies Code, the term and other conditions concerning the exercise of the shareholder's preferential rights as assigned by the law.
Furthermore, it can, in accordance with articles 592 and following, in the Company's interest and under the conditions determined by law, limit or cancel the shareholder's preferential rights in favour of one person or several people that are selected, no matter whether or not these people are part of the Company's or its subsidiaries' staff.
Every shareholder holding a minimum of 3% of the voting rights needs to comply with the Law of 2 May 2007 in respect of the notification of significant investments, the Royal Decree of 14 February 2008 and the Belgian Companies Code.
The involved parties need to submit a notification to the Financials Services and Markets Authority (FSMA) and to the Company.
In application of the Law of 2 May 2007, the latest report of participations that have been received shows the following breakdown of shareholders on 31 December 2017:
| Gramo BVBA 1 | 38,915,739 | 28.53% |
|---|---|---|
| H.P. Participaties Comm.V. | 10,000,000 | 7.33% |
| Sofina NV | 9,461,513 | 6.94% |
| Fidec NV 2 | 6,881,869 | 5.05% |
| Lazard Frères Gestion SAS | 6,695,000 | 4.91% |
| Allacha (Burgerlijke maatschap) 3 | 5,379,317 | 3.94% |
| Evalli (Burgerlijke maatschap) 4 | 4,258,171 | 3.12% |
| Treasury shares | 97,871 | 0.07% |
| Others | 54,693,776 | 40.10% |
| TOTAL | 136,383,256 | 100.00% |
(1) Holding controlled by Francis Van Eeckhout (2) Holding controlled by Frank Deceuninck (3) Civil company represented by its statutory manager Willy Deceuninck and partners Alain, Laurenz and Charlotte Deceuninck (4) Civil company represented by its statutory manager Arnold Deceuninck and partners Evelyn, Alexander and Lieselot Deceuninck
In January of this year, Deceuninck Group won the Euronext award of BEL Small Company of the year 2017 thanks to the highest relative increase in terms of market capitalization. Market capitalization of Deceuninck Group ('DECB') increased over 2017 from € 306.2 million to € 410.2 million thanks to the increase of the share price.
If an issue premium is paid as a consequence of a capital increase, then it is transferred by right to an unavailable account named "issue premiums" which can only be used under the conditions required for the capital decrease. It can, however, always be added to the instructed capital; this decision can be taken by the Board of Directors as stated above. Furthermore, said extraordinary general meeting of the Company authorized the Board of Directors, considering the coordination of the articles of association, as soon as the authorized capital or a part of it is converted into instructed capital, to amend the relevant article of the articles of association.
In 2017, there were no capital increases within the authorized capital, other than the three confirmatory capital increases within the framework of authorized capital as a result of the exercise of warrants (on 21 June, 25 September and 21 December 2017).
None
Agreements between Deceuninck NV and its Directors or employees providing for compensation if the directors resign or are made redundant, or if employees are made redundant, without valid reason following a public takeover bid
None
Deceuninck Group has continuously and consistently informed the financial community about the evolution of the Company. Press releases with the annual and half year results were issued at scheduled intervals before stock exchange opening and published on the Investors page on our website (www.deceuninck.com) and on the website of the FSMA.
Institutional investors at home and abroad were informed by Deceuninck Group during one-to-one meetings, as well as in group meetings during roadshows and investor events. Opportunities were offered to institutional investors to meet or set up conference calls with the CEO and CFO at the head offices in Hooglede-Gits. Deceuninck Group participated in investor conferences and/or roadshows in Brussels, Paris and London.
Retail investors had the opportunity to inform themselves during the retail investor events of the VFB (Flemish Federation of Investors and Investor Clubs), which took place in Antwerp on March 25th.
Financial analysts covering Deceuninck Group: Nathalie Debruyne (Degroof Petercam), Giel-Jan Triest (ING), Wim Hoste (KBC Securities), Gert De Mesure (VFB).
Investor relations: Bert Castel Telephone: +32 (0) 51 239 204 E-mail: [email protected] Website: http://www.deceuninck.com/investors Address: Deceuninck NV, Bruggesteenweg 360, 8830 Hooglede-Gits, Belgium
On the Investors page of the Deceuninck Group corporate website (http://www.deceuninck.com/investors) you can register to receive financial news and financial press releases per e-mail.
FEBRUARY 2018 APRIL 2018 AUGUST 2018
23 H1 2018 results
The Company capital amounts to € 53,787,565.92 and is represented by 136,383,256 shares. Deceuninck Group holds 97,871 treasury shares as at 31 December 2017. There are 115,737,750 dematerialized shares and 20,645,506 registered shares.
Deceuninck Group shares are listed under the code DECB and are traded on the Continuous segment of Euronext Brussels. DECB is part of the BELSMALL index.
ICB sectorial classification: 2353 Building materials & fixtures.
The closing price of the Deceuninck Group share increased from € 2.26 on 31 December 2016 to € 3.01 on 31 December 2017. The Volume Weighted Average Price (VWAP) for 2017 was € 2.91. The lowest closing price was € 2.10 on 10 January 2017 and the highest closing price was € 3.60 on 13 June 2017.
At the Annual General Meeting scheduled on 24 April 2018, the Board of Directors will propose to pay a dividend of € 0.03 per share for the financial year 2017.
FY 2017 sales increased 2.4% to € 687.2 million mainly driven by double-digit volume growth in the US. Price increases have been offset by unfavourable FX.
Deceuninck activities are divided into 4 regions, namely Western Europe, Central and Eastern Europe, Turkey & Emerging Markets and North America.
Sales in Western Europe decreased 3.1% to € 171.1 million (2016: € 176.5 million). This is primarily explained by the absence of one-off project sales (€ 5.0 million in 2016 of which € 3.1 million related to a TGV sound wall project) and lower volumes in the Benelux and France, which is partially compensated by growth in Italy and Spain and revenues from the new aluminium and ventilation business. Price increases necessary to compensate for the higher raw material costs, increasing inflation and the weakening of the GBP have been implemented in all Western European countries.
In Central and Eastern Europe sales increased 3.7% to € 167.8 million (2016: € 161.8 million). Higher volumes in Czech Republic, Poland and the Balkan have partially been offset by lower volumes in Russia following a further decline of this market. The positive FX impact is explained by the stronger RUB (+11% vs 2016).
Sales in Turkey & Emerging Markets increased 2.4% to € 219.1 million (2016: € 214.0 million) despite challenging market conditions in Turkey. Price increases to compensate for the higher raw material prices and inflation have been offset by the weakening of the TRY (-23% vs 2016). Australia, Brazil and India continued to grow, while sales in Chile have declined following an unfavourable tax reform.
In North America sales increased 8.9% to € 129.1 million (2016: € 118.6 million). Volumes increased by 10.4% (+13.5% if corrected for the sale of the decking business in 2016) thanks to strong business development, our customers taking market share and market growth. Sales are positively impacted by price increases driven by the automatic indexing of higher PVC resin prices and by a more favourable product mix. The 2.2% negative FX effect is explained by the weakening of the USD in the second half of 2017.
The Gross Margin decreased from 30.5% in 2016 to 28.6% in 2017, as higher raw material prices, negative FX and inflation have not yet been entirely compensated by higher sales prices and efficiency gains resulting from strategic investments. In addition operational inefficiencies incurred in the US (due to difficulties to recruit qualified people in a tight labour market) and in Western Europe (following the launch of a new ERPsystem) put further pressure on margins.
Adjusted EBITDA increased to € 66.7 million (2016: € 65.1 million) while the Adjusted EBITDA-margin remained stable at 9.7%. This is explained by the fact that the decrease in Gross Margin has been compensated by higher volumes and lower fixed costs. The decrease in fixed costs is mainly explained by the depreciation of the Turkish Lira and lower bad debt expenses incurred in 2017.
EBITDA remained stable at € 67.2 million (2016: € 67.0 million).
Operating result (EBIT) amounted to € 36.7 million (2016: € 36.1 million). Depreciation and amortization expenses decreased slightly from € 30.9 million in 2016 to € 30.5 million in 2017 as the one-off costs incurred in 2016 have been entirely offset by the negative impact from higher investments.
Income tax expenses increased to € -8.2 million (2016: € -1.3 million) which is mainly explained by one-off tax benefits in 2016 and € -4.7 million one-off tax expenses booked in 2017 resulting from the revaluation of previously recognized deferred tax assets to the lower tax rates that will apply starting 2018 as a result of the 2017 US and Belgian tax reforms.
Net profit in 2017 decreased to € 13.8 million which is completely attributable to the higher income tax expenses given the stable EBT.
Trade working capital on 31 December 2017 increased to 19.8% of LTM sales compared to 16.6% on 31 December 2016, which is mainly explained by higher raw material prices (est. €10m) and the decision to shorten payment terms to suppliers in Turkey (est. € 14 million). Factoring at the end of December 2017 amounted to € 24.3 million (vs € 27.9 million end of December 2016).
Capital expenditures
Capital expenditures in 2017 amounted to € 54.2 million
compared to € 79.4 million in 2016.
Net financial debt on 31 December 2017 amounted to € 118.3 million compared to € 88.4 million on 31 December 2016, resulting in a net financial debt / LTM Adjusted EBITDA
| % OF SALES | TOTAL | WESTERN EUROPE | CENTRAL & EASTERN EUROPE |
TURKEY & EMERGING MARKETS |
NORTH AMERICA |
|---|---|---|---|---|---|
| SALES 2016 (in € million) | 670.9 | 176.5 | 161.8 | 214.0 | 118.6 |
| Volume | 1.1% | (4.3%) | 0.5% | 1.9% | 10.4% |
| Exchange rate | (6.9%) | (1.0%) | 2.7% | (21.8%) | (2.2%) |
| Other (price & mix) | 8.3% | 2.3% | 0.5% | 22.2% | 0.7% |
| TOTAL | 2.4% | (3.1%) | 3.7% | 2.4% | 8.9% |
| SALES 2017 (in € million) | 687.2 | 171.1 | 167.8 | 219.1 | 129.1 |
This annual report needs to be read together with the audited consolidated financial statements of Deceuninck Group, referred to as the Group, and the notes to the financial statements. These audited consolidated financial statements were determined by the Board of Directors on 21 February 2018.
On 31 December 2017 Deceuninck employed worldwide 3,927 full time equivalents (FTEs) (including temporary workers and external staff) (31 December 2016: 3,682).
For an analysis of the Group risk management, see Note 24 of the consolidated financial statements.
The non-financial information of the Group is described on pages 44 to 63.
The research and development activities of the Group are described in the report of the board of directors on pages 24 to 33
Please refer to Note 24 of the consolidated financial statements.
Besides the circumstances included in the paragraph on risk management, no other circumstances should be disclosed that had a significant influence on the Group's situation.
| CONSOLIDATED INCOME STATEMENT (in € million) |
2015 | 2016 | 2017 | VARIANCE % |
|---|---|---|---|---|
| Sales | 644.5 | 670.9 | 687.2 | 2.4% |
| Adjusted EBITDA | 55.9 | 65.1 | 66.7 | 2.4% |
| EBIT | 26.9 | 36.1 | 36.7 | 1.5% |
| Net profit | 13.3 | 21.0 | 13.8 | (34.1%) |
| CONSOLIDATED STATEMENT OF FINANCIAL POSITION (in € million) |
2015 | 2016 | 2017 | VARIANCE % |
|---|---|---|---|---|
| Equity | 269.3 | 275.0 | 257.6 | (6.3%) |
| Net debt | 92.1 | 88.4 | 118.3 | 33.8% |
| Total assets | 562.6 | 601.1 | 558.6 | (7.1%) |
| Capital expenditure | 38.7 | 79.4 | 54.2 | (31.8%) |
| Working capital | 142.9 | 111.1 | 135.9 | 22.3% |
| Capital employed | 397.9 | 402.6 | 418.2 | 3.9% |
| RATIOS | 2015 | 2016 | 2017 |
|---|---|---|---|
| Net profit on sales | 2.1% | 3.1% | 2.0% |
| Adjusted EBITDA/sales | 8.7% | 9.7% | 9.7% |
| Net debt/Adjusted EBITDA | 1.65 | 1.36 | 1.78 |
| EBIT/Capital employed | 6.7% | 9.0% | 8.8% |
| HEADCOUNT | 2015 | 2016 | 2017 |
|---|---|---|---|
| Total Full Time Equivalents (FTE) | 3,593 | 3,682 | 3,927 |
(1) Definitions: see Glossary p. 173.
| FOR THE 12 MONTH PERIOD ENDED 31 DECEMBER (in € thousand) | NOTES | 2016 | 2017 |
|---|---|---|---|
| SALES | 2 | 670,880 | 687,157 |
| Cost of goods sold | 3 | (466,150) | (490,453) |
| GROSS PROFIT | 204,730 | 196,704 | |
| Marketing, sales and distribution expenses | (113,122) | (107,365) | |
| Research and development expenses | (8,034) | (8,267) | |
| Administrative and general expenses | (45,875) | (44,771) | |
| Other net operating result | 3 | (1,576) | 380 |
| Impairment on goodwill | (96) | 0 | |
| OPERATING PROFIT (EBIT) | 36,123 | 36,681 | |
| Financial charges | 3 | (25,551) | (21,663) |
| Financial income | 3 | 11,655 | 6,996 |
| PROFIT BEFORE TAXES (EBT) | 22,226 | 22,014 | |
| Income taxes | 4 | (1,272) | (8,199) |
| NET PROFIT | 20,954 | 13,815 |
| THE NET PROFIT IS ATTRIBUTABLE TO | 2016 | 2017 |
|---|---|---|
| Shareholders of the parent company | 20,795 | 12,453 |
| Non-controlling interests | 159 | 1,362 |
| EARNINGS PER SHARE DISTRIBUTABLE TO THE SHAREHOLDERS OF THE PARENT COMPANY (in €) |
2016 | 2017 |
|---|---|---|
| Normal earnings per share | 0.15 | 0.09 |
| Diluted earnings per share | 0.15 | 0.09 |
| FOR THE 12 MONTH PERIOD ENDED 31 DECEMBER (in € thousand) |
2016 | 2017 |
|---|---|---|
| NET PROFIT | 20,954 | 13,815 |
| Currency translation adjustments | (8,662) | (28,431) |
| Income tax impact | (510) | 872 |
| Net other comprehensive income potentially to be reclassified to profit or loss in subsequent periods | (9,172) | (27,559) |
| Actuarial gains (+) / losses (-) on defined benefit plans | (4,833) | 198 |
| Income tax impact | 1,294 | (317) |
| Net other comprehensive income not to be reclassified to profit or loss in subsequent periods | (3,538) | (119) |
| OTHER COMPREHENSIVE INCOME (+) / LOSS (-) AFTER TAX IMPACT | (12,710) | (27,678) |
| TOTAL COMPREHENSIVE INCOME (+) / LOSS (-) | 8,243 | (13,863) |
| THE TOTAL COMPREHENSIVE INCOME (+) / LOSS (-) IS ATTRIBUTABLE TO (in € thousand) |
2016 | 2017 |
| (in $\bm{\epsilon}$ thousand). | |
|---|---|
| Shareholders of the parent company | |
| THE TOTAL COMPREHENSIVE INCOME (+) / LOSS (-) IS ATTRIBUTABLE TO (in € thousand) |
2016 | 2017 |
|---|---|---|
| Shareholders of the parent company | 8,847 | (14,527) |
| Non-controlling interests | (604) | 664 |
| ASSETS (in € thousand) | NOTES | 2016 | 2017 |
|---|---|---|---|
| Intangible fixed assets | 6 | 4,420 | 6,119 |
| Goodwill | 7 | 10,710 | 10,677 |
| Tangible fixed assets | 8 | 253,998 | 252,945 |
| Financial fixed assets | 65 | 65 | |
| Deferred tax assets | 4 | 19,406 | 10,707 |
| Long-term receivables | 9 | 2,882 | 1,765 |
| NON-CURRENT ASSETS | 291,481 | 282,278 | |
| Inventories | 10 | 98,963 | 114,342 |
| Trade receivables | 11 | 113,773 | 109,036 |
| Other receivables | 11 | 20,580 | 9,422 |
| Cash and cash equivalents | 12 | 72,425 | 41,993 |
| Fixed assets held for sale | 13 | 3,829 | 1,529 |
| CURRENT ASSETS | 309,570 | 276,322 | |
| TOTAL ASSETS | 601,051 | 558,600 |
| QUITY AND LIABILITIES (in € thousand) |
|---|
| ued capital |
| are premiums |
| nsolidated reserves |
| ish flow hedge reserve |
| tuarial gains / losses: |
| easury shares |
| irrency translation adjustments |
| QUITY EXCLUDING NON-CONTROLLING INTEREST |
| on-controlling interest |
| QUITY INCLUDING NON-CONTROLLING INTEREST |
| erest-bearing loans |
| ng-term provisions |
| eferred tax liabilities |
| ON-CURRENT LIABILITIES |
| erest-bearing loans |
| ade payables . |
| x liabilities |
| nployee related liabilities |
| ort term provisions |
| her liabilities |
| JRRENT LIABILITIES |
| STAL FAILLTY AND LIADU ITIEC |
| EQUITY AND LIABILITIES (in € thousand) | NOTES | 2016 | 2017 |
|---|---|---|---|
| Issued capital | 14 | 53,393 | 53,788 |
| Share premiums | 14 | 87,056 | 87,887 |
| Consolidated reserves | 198,954 | 207,712 | |
| Cash flow hedge reserve | (91) | 0 | |
| Actuarial gains / losses | (6,173) | (6,291) | |
| Treasury shares | 14 | (320) | (115) |
| Currency translation adjustments | 14 | (61,176) | (87,957) |
| EQUITY EXCLUDING NON-CONTROLLING INTEREST | 271,644 | 255,024 | |
| Non-controlling interest | 3,395 | 2,601 | |
| EQUITY INCLUDING NON-CONTROLLING INTEREST | 275,039 | 257,625 | |
| Interest-bearing loans | 17 | 129,206 | 129,599 |
| Long-term provisions | 15,16 | 28,439 | 27,811 |
| Deferred tax liabilities | 4 | 2,277 | 1,684 |
| NON-CURRENT LIABILITIES | 159,922 | 159,094 | |
| Interest-bearing loans | 17 | 31,640 | 30,720 |
| Trade payables | 18 | 101,593 | 87,488 |
| Tax liabilities | 9,721 | 5,048 | |
| Employee related liabilities | 15,456 | 13,114 | |
| Short term provisions | 15,16 | 1,321 | 1,616 |
| Other liabilities | 18 | 6,359 | 3,895 |
| CURRENT LIABILITIES | 166,090 | 141,881 | |
| TOTAL EQUITY AND LIABILITIES | 601,051 | 558,600 |
| (in € thousand) | ISSUED CAPITAL | SHARE PREMIUMS | CONSOLIDATED RESERVES |
CASH FLOW HEDGE RESERVE |
ACTUARIAL GAINS / LOSSES |
TREASURY SHARES | CURRENCY TRANSLATION ADJUSTMENTS |
TOTAL EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF THE PARENT COMPANY |
NON-CONTROLLING INTEREST |
TOTAL |
|---|---|---|---|---|---|---|---|---|---|---|
| AS PER 31 DECEMBER 2015 | 53,257 | 86,777 | 180,969 | (91) | (2,634) | (261) | (52,765) | 265,253 | 3,999 | 269,252 |
| Net profit | 20,797 | 20,797 | 159 | 20,956 | ||||||
| Other comprehensive income (+) / loss (-) | (3,539) | (8,411) | (11,950) | (763) | (12,713) | |||||
| TOTAL COMPREHENSIVE INCOME (+) / LOSS (-) | 0 | 0 | 20,797 | 0 | (3,539) | 0 | (8,411) | 8,847 | (604) | 8,243 |
| Capital increase | 135 | 280 | 0 | 415 | 415 | |||||
| Own shares purchased | (238) | (238) | (238) | |||||||
| Exercise of options | 179 | 179 | 179 | |||||||
| Share based payments | 559 | 559 | 559 | |||||||
| Dividends paid | (3,371) | (3,371) | (3,371) | |||||||
| AS PER 31 DECEMBER 2016 | 53,393 | 87,056 | 198,954 | (91) | (6,173) | (320) | (61,176) | 271,644 | 3,395 | 275,039 |
| (in € thousand) | ISSUED CAPITAL | SHARE PREMIUMS | CONSOLIDATED RESERVES |
CASH FLOW HEDGE RESERVE |
ACTUARIAL GAINS / LOSSES |
TREASURY SHARES | CURRENCY TRANSLATION ADJUSTMENTS |
TOTAL EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF THE PARENT COMPANY |
NON-CONTROLLING INTEREST |
TOTAL |
|---|---|---|---|---|---|---|---|---|---|---|
| AS PER 31 DECEMBER 2016 | 53,393 | 87,056 | 198,954 | (91) | (6,173) | (320) | (61,176) | 271,644 | 3,395 | 275,039 |
| Net income (loss) for the current period | 12,373 | 12,373 | 1,442 | 13,815 | ||||||
| Other comprehensive income (+) / loss (-) | (119) | (26,781) | (26,900) | (778) | (27,678) | |||||
| TOTAL COMPREHENSIVE INCOME (+) / LOSS (-) | 0 | 0 | 12,373 | 0 | (119) | 0 | (26,781) | (14,527) | 664 | (13,863) |
| Capital increase | 395 | 831 | 0 | 1,225 | 0 | 1,225 | ||||
| Own shares purchased | 0 | 0 | ||||||||
| Exercise of options | 206 | 206 | 206 | |||||||
| Non-controlling interest due to business combinations | 0 | (1,323) | (1,323) | |||||||
| Share based payments | 534 | 534 | 534 | |||||||
| Dividends paid | (4,058) | (4,058) | (135) | (4,193) | ||||||
| Transfer | (91) | 91 | 0 | 0 | ||||||
| AS PER 31 DECEMBER 2017 | 53,788 | 87,887 | 207,712 | 0 | (6,291) | (115) | (87,957) | 255,024 | 2,601 | 257,625 |
The minorities are mainly related to the minority shareholders of Ege Profil. The legal structure of the group is included in the first part of the annual report.
| FOR THE 12 MONTH PERIOD ENDED 31 DECEMBER (in € thousand) |
NOTES | 2016 | 2017 |
|---|---|---|---|
| OPERATING ACTIVITIES | |||
| Net profit | 20,954 | 13,815 | |
| Depreciations of (in)tangible fixed assets | 6, 8, 14 | 26,455 | 29,283 |
| Impairments on (in)tangible fixed assets | 6, 8, 14 | 4,396 | 1,246 |
| Provisions for pensions and other risks & charges | (783) | 507 | |
| Impairments on current assets | 5,137 | (988) | |
| Net financial charges | 3 | 13,897 | 14,667 |
| Profit on sale of tangible fixed assets | 3 | (2,117) | (739) |
| Loss on sale of tangible fixed assets | 3 | 1,123 | 686 |
| Income taxes | 4 | 1,272 | 8,199 |
| Share-based payment transactions settled in equity | 559 | 534 | |
| Cash flow from operating activities before movements in working capital and provisions | 70,892 | 67,210 | |
| Decrease / (increase) in trade and other receivables | (7,523) | (8,381) | |
| Decrease / (increase) in inventories | (7,507) | (21,865) | |
| Increase / (decrease) in trade payables | 36,310 | (2,141) | |
| Decrease / (increase) in other non-current assets | (1,677) | 842 | |
| Decrease / (increase) in other current assets/liabilities | (4,183) | (3,937) | |
| Increase / (decrease) in other non-current liabilities | 406 | (176) | |
| Cash flow generated from operating activities | 86,718 | 31,552 | |
| Interest received | 1,294 | 1,527 | |
| Income taxes paid (-) / received (+) | (1,142) | (1,537) | |
| CASH FLOW FROM OPERATING ACTIVITIES | 86,870 | 31,542 |
| CASH FLOW FROM INVESTING ACTIVITIES | (72,783) | (49,625) | |
|---|---|---|---|
| Purchases of intangible fixed assets | 6 | (639) | (1,207) |
| Purchases of tangible fixed assets | 8, 13 | (78,791) | (52,949) |
| Cash receipts on sale of tangible fixed assets | 6,647 | 4,531 | |
| FOR THE 12 MONTH PERIOD ENDED 31 DECEMBER (in € thousand) |
NOTES | 2016 | 2017 |
|---|---|---|---|
| FINANCING ACTIVITIES | |||
| Capital increase | 415 | (640) | |
| New (+) / repayments (-) of long-term debts | 17 | (8,571) | 9,229 |
| New (+) / repayments (-) of short-term debts | 17 | 11,955 | 992 |
| Interests paid | (8,873) | (9,950) | |
| Dividends paid | (3,371) | (4,193) | |
| Net financial result, excl interests | (474) | (1,889) | |
| CASH FLOW FROM FINANCING ACTIVITIES | (8,917) | (6,452) | |
| Net increase (+) / decrease (-) in cash and cash equivalents | 5,170 | (24,535) | |
| Cash and cash equivalents as per beginning of period | 12 | 70,720 | 72,425 |
| Impact of exchange rate fluctuations | (3,464) | (5,897) | |
| Cash and cash equivalents as per end of period | 12 | 72,425 | 41,993 |
The consolidated financial statements have been prepared in accordance with the 'International Financial Reporting Standards' (IFRS), as endorsed by the European Union. The consolidated financial statements were determined by the Board of Directors on 21 February 2018. They can still be modified until the General Meeting of Deceuninck NV takes place, which is scheduled to be held on 24 April 2018.
The consolidated financial statements are presented in € thousand, unless noted otherwise. These statements have been prepared on the basis of the historic cost price method, except for the valuation of the fair value of derivatives. The consolidated financial statements present the financial position on 31 December 2017. They have been prepared prior to the distribution of profits proposed by the parent company at the Annual General Meeting of Shareholders.
Please note that numbers in certain tables in the financial statements may not add up due to rounding.
The consolidated financial statements include the individual financial statements of Deceuninck NV and its subsidiaries ('the Group').
The Group controls a subsidiary if, and only if, the Group has:
Generally, there is a presumption that a majority of voting rights result in control.
The acquisition of subsidiaries is accounted for under the acquisition method. The annual reporting date of subsidiaries is identical to that of the parent company. The same valuation principles apply to their financial statements.
Associated companies are companies in which Deceuninck NV exercises, either directly or indirectly significant influence, without controlling them. This is generally the case if the Group holds between 20% and 50% of the shares with voting rights. Associated companies are consolidated using the equity method, from the date the significant influence begins until the date it ends. If the Group's share in the losses exceeds the carrying value of the associated company, then this value is reduced to zero and the losses exceeding this amount are not recognized, except when the Group has contractual obligations relating to this company. On 31 December 2016 and 31 December 2017, the Group does not own any associated companies. A list of the subsidiaries of Deceuninck NV is disclosed in Note 26 of these financial statements.
In order to produce the annual financial statements in accordance with the IFRS standards, management has to use a number of estimates and assumptions, that have an impact on the amounts disclosed in the financial statements. The estimates made on the reporting date reflect the existing conditions on this date, such as market prices, interest rates and foreign exchange rates.
Even though management makes these assumptions and estimates based on its best possible knowledge of current business transactions, and of the transactions the Group may undertake, the actual results can vary in relation to these estimates.
In accordance with the Group's accounting principles, the following assumption has been made:
The Company considers it has a constructive obligation in Belgium, and that the existing collective labour agreement will be renewed on an ongoing basis.
The most important estimates that are likely to have a significant influence on the net carrying value of assets and liabilities for the coming year relate to:
Goodwill relating to business combinations is assessed on an annual basis by means of an impairment test. This test requires an estimate of the value in use of cash generating units, to which the goodwill is attributed. The estimation of the value in use requires an estimate of expected future cash flows of the cash generating units and the choice of an appropriate discount rate in order to determine the present value of these cash flows. For more details on this subject, please see Note 7.
The costs of the granted pension schemes and the current value of the pension obligations are determined on the basis of an actuarial calculation. The actuarial calculation uses assumptions with regard to the discount rate, future increases in compensation, mortality tables and future increases in pensions. All the assumptions are reassessed on the reporting date. Further details with regard to these assumptions are documented in Note 15.
The Group values the cost of the stock option plans granted to employees on the basis of the actual value of the instruments, on the date they are granted. The estimation of the fair value of compensations in shares requires an adapted valuation model, which depends on the condition under which the grant is made. The valuation model also requires adapted input data, such as the expected life of the option, the volatility of the share price and the dividend yield. The assumptions and the valuation model used for the estimation of the actual value of compensations in shares are explained in Note 19.
Deferred tax assets related to tax losses carry forward are only recognized if it is probable that sufficient taxable profits will be generated in the future. Significant estimates are required from management in order to determine the amount of the deferred tax assets, based on the time period and the level of future taxable profits. More details on this subject are provided in section Income Taxes and in Note 4.
Open trade receivables are evaluated on a regular basis, and bad debt allowances are recorded on an individual client-perclient basis if there is a deterioration in payment behaviour and indicators of going concern.
In estimating the bad debt allowance, credit insurance limits and guarantees received are considered in the calculation of the allowance.
Transactions in foreign currencies are accounted for using the end of month exchange rate (exchange rate on the last working day of the preceeding month) or the exchange rate on the date the transaction occurs. Monetary assets and liabilities in foreign currencies are converted using the exchange rate on the balance sheet date. Profits and losses resulting from conversion of monetary assets and liabilities in foreign currencies into the local currency of the entity are recognized in the consolidated income statement as operating or financial exchange result, depending on the nature of the transaction. Non-monetary assets and liabilities are converted into the local currency of the entity using the historic exchange rate. The Group's reporting currency is the euro. Assets and liabilities from subsidiaries outside the eurozone are converted to euro on balance sheet date, using the exchange rates applicable on that date. The income statements of these subsidiaries are converted into euro at the annual average exchange rate, which approximates the exchange rates applicable on the transaction date. The components of equity are converted at their historic exchange rate. Exchange rate differences, caused by the conversion of equity into euro at the closing rate applicable on the balance sheet date, are disclosed as 'currency translation adjustments' under the heading 'Equity'.
Exchange rate differences resulting from the translation of foreign currency intra-group current accounts, loans or trade receivables and payables are recognized in the consolidated income statement as operating or financial exchange result, depending on the nature of the transaction. Exception to this accounting treatment is when the intra-group loans are considered as part of an entity's net investment in a foreign operation. Then the exchange difference is recognized in other comprehensive income and accumulated in a separate component of equity until the disposal of the foreign operation.
The following exchange rates were used when preparing the financial statements:
| 1 EUR IS EQUAL TO |
CLOSING RATE 2016 |
CLOSING RATE 2017 |
AVERAGE RATE 2016 |
AVERAGE RATE 2017 |
|---|---|---|---|---|
| AUD | 1.4596 | 1.5346 | 1.4886 | 1.4729 |
| BAM | 1.9558 | 1.9558 | 1.9558 | 1.9558 |
| BGN | 1.9558 | 1.9558 | 1.9558 | 1.9558 |
| BRL | 3.4305 | 3.9729 | 3.8616 | 3.6041 |
| CLP | 698.5100 | 735.2100 | 749.0014 | 732.3850 |
| COP | 3,163.0484 3,578.7112 | 3,378.9937 3,334.4159 | ||
| CZK | 27.0210 | 25.5350 | 27.0343 | 26.3272 |
| GBP | 0.8562 | 0.8872 | 0.8189 | 0.8761 |
| HRK | 7.5597 | 7.4400 | 7.5345 | 7.4644 |
| INR | 71.5935 | 76.6055 | 74.3553 | 73.4980 |
| LTL | 3.4528 | 3.4528 | 3.4528 | 3.4528 |
| PLN | 4.4103 | 4.1770 | 4.3636 | 4.2563 |
| RON | 4.5390 | 4.6585 | 4.4908 | 4.5687 |
| RSD | 123.4723 | 118.4727 | 123.1912 | 121.2221 |
| SEK | 9.5525 | 9.8438 | 9.4673 | 9.6369 |
| RUB | 63.8111 | 68.8668 | 74.2224 | 65.8877 |
| THB | 37.7260 | 39.1210 | 39.0423 | 38.2785 |
| TRY | 3.7099 | 4.5155 | 3.3427 | 4.1214 |
| UAH | 28.4226 | 33.4954 | 28.3050 | 27.4927 |
| USD | 1.0541 | 1.1993 | 1.1066 | 1.1293 |
Expenditure for acquired patents and licenses are capitalized at their cost price and are subsequently amortized over their estimated useful life using the straight line method, or over the term of the contract, if this should be shorter. The useful life is usually estimated at 3 years. The useful life of patents recognized in North America is estimated at 15 years.
Research expenditure, incurred with the purpose of acquiring new scientific or technological knowledge, is included in the income statement. The cost of development activities, for which the results are applied in a plan or a design for the production of new or substantially improved products and processes, are capitalized if and only if all the criteria defined in IAS 38 are met. Such capitalized costs include directly attributable costs of creating, producing or making ready for use assets (such as raw materials and direct labour costs) less the accumulated amortization and impairment. These costs are currently amortized on a straight line basis over their estimated useful life of 5 years.
Expenditures relating to intangible fixed assets, subsequent to their purchase or completion are only capitalized if they increase the future economic benefits specific to the asset they relate to. All other expenditures are considered as costs.
The Group applies the purchase method of accounting to account for acquisitions of businesses. The cost of an acquisition is measured as the aggregate of the fair values at the date of exchange of the assets given, liabilities incurred and equity instruments issued. Identifiable assets, liabilities and contingent liabilities acquired or assumed are measured separately at their fair value as of the acquisition date.
The allocation of fair values to the identifiable assets acquired and liabilities assumed is based on various assumptions requiring management judgment. Acquisition-related costs are expensed as incurred.
Goodwill is the positive difference between the cost of the business combination and the share of the Group in the fair value of the acquired identifiable net assets of a subsidiary or associated company at the moment of acquisition. Goodwill is not amortized, but is subject to an annual impairment test. Goodwill is expressed in the currency of the related company and is converted into euro at the closing exchange rate on the balance sheet date.
If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Group reassesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognised at the acquisition date. If the reassessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognised in profit or loss.
Tangible fixed assets are recognized at historic cost price, less accumulated depreciation and impairment. Historic cost is the initial purchase price plus any other directly attributable acquisition costs (such as non-recoverable taxes and transportation costs). The cost price of fixed assets produced by the company itself (such as tool sets) includes the cost price of materials, direct labour costs and a proportion of production related overhead costs. Subsequent expenditure is only capitalized, if it increases the future economic benefits of the fixed assets it relates to. Repair and maintenance costs, which do not increase future economic benefits, are expensed as incurred.
Depreciation is calculated using the straight line method, starting from the first date of use over the entire duration of their expected useful life.
The expected economic useful life is determined as follows:
| ASSETS | |
|---|---|
| Buildings | 40 years |
| Building fixtures and furniture | 10-20 years |
| External infrastructure | 20-40 years |
| Machinery and equipment | 8-20 years |
| Small equipment | 5 years |
| Screws and cylinders | 6 years |
| Dies and calibrators (tool sets) | 5 years |
| Installations | 10-25 years |
| Office equipment | 4-10 years |
| Logistics equipment | 8 years |
| Furniture | 10 years |
| Vehicles | 4-5 years |
Land, which is deemed to have an infinite useful life, is not depreciated.
Assets held for sale relate to assets or groups of assets that are available for immediate sale in its present condition and the sale is highly probable. These assets are valued at the lower of carrying value or fair value less costs to sell. The same valuation principle applies for business units held for sale.
Financial lease contracts, for which the Group bears the majority of the risks and benefits inherent to the ownership of the leased property, are recognized as tangible fixed assets at the present value of their minimum lease payments, at the moment when the lease contract was entered into, or at market value if lower. Lease payments are partly considered as financial costs and partly as reimbursement of the lease debt. The finance charge is allocated to periods during the lease term, so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Lease contracts, for which the lessor retains the majority of the risks and benefits of the assets, are considered as operational leases. Payments made under an operational lease are expensed, on a straight line basis over the entire term of the contract.
Financial instruments are recognized initially when the Group subscribes to the related contractual provisions. Purchases and sales of financial assets are recognized on the transaction date. Financial assets (or parts thereof) are derecognized, when the Group exercises their contractual rights, when these rights mature, when the Group renounces them, or when the Group loses control of the contractual rights associated with the financial assets. Financial liabilities (or parts thereof) are derecognized, if the obligation stipulated in the contract is withdrawn, cancelled or expired.
A financial asset and a financial liability are offset and the net amount is recorded in the balance sheet, if there is a legally enforceable right to offset the recognized amounts, and if there is an intention to settle the liability and simultaneously realize the asset or to settle the liability on a net basis.
All financial assets are initially recognized at their cost price plus the cost of acquisition of such an investment. Unrealized profits or losses, resulting from changes in the fair value of financial assets available for sale, are directly recognized in other comprehensive income within the equity until the asset is sold, cashed in or disposed of, or when the financial asset is subject to an impairment. At that time, the accumulated profits and losses previously booked in equity are recognized in the income statement of the related period. Reversals of impairments booked in relation to shares will not be recorded in the income statement.
Financial assets valued at fair value through the income statement consist of financial assets that are held for trading purposes or financial assets that are initially recognized at fair value through the income statement. Financial assets held for trading purposes are those acquired with the objective of selling them in a short-term notice. This category also contains derivative financial instruments, which do not fulfil the criteria of IAS 39 for 'hedge accounting'. Unrealized profits or losses, resulting from the changes in the fair value of financial assets held for trading, are directly booked in the income statement.
Trade receivables are booked at their nominal value less possible provisions for bad debt. When recovery of the full amount becomes improbable an estimate is made of the provisions for bad debt. Provisions for bad debts are recognized in the income statement of the period during which they are identified.
Cash and cash equivalents consist mainly of cash in hand, short-term deposits and short-term investments (maturing within three months after their acquisition date) which are readily convertible into cash and which are subject to a limited risk of changes in value. Within the cash flow statement, cash and cash equivalents include bank balances (current and deposit accounts). Any negative cash position is presented net of short-term debts with financial institutions ('bank overdrafts').
Interest bearing loans are initially valued at the fair value of the amounts received minus any costs related to the transaction. After the initial recognition interest-bearing financial debts are valued at their amortized cost. The difference between the amortized cost and the repayment value is expensed over the duration of the loan based on the effective interest rate method or until the debt is no longer held.
The Group uses derivative financial instruments (mainly interest rate swaps and FX forward contracts) in order to limit the risks associated with interest and exchange rate fluctuations. The Group's policy prohibits the use of these instruments for speculative purposes.
Derivative financial instruments are classified as either 'fair value' hedges, if these instruments hedge changes in the fair value of recognized assets and liabilities, or as 'cash flow' hedges, if they cover cash flow variations associated with a specific risk in relation to a recognized asset or liability or an expected transaction.
For 'fair value' hedges, profits or losses resulting from the revaluation of 'fair value' hedging instruments are directly recorded through profit or loss. Gains or losses on the hedged position lead to an adjustment of the book value of the hedged position and should be recorded through profit
or loss. If the adjustment is associated with the book value of an interest bearing financial debt, it is amortized through profit or loss until it is entirely amortized upon maturity.
Financial instruments, not meeting the special requirements for recognition as a hedging transaction are valued at their fair value, and any profit or loss resulting from a change in the fair value of the instrument is directly expensed.
Inventories are valued at the lower of cost price or net realizable value. The net realizable value is defined as the estimated selling price under normal operating conditions net of any estimated costs for handling and selling the product. Costs incurred in bringing each product to its current location and conditions are recorded as follows:
The amount paid, including any directly attributable expenses, for treasury shares acquired by the Company is deducted from equity.
The Group's assets, excluding inventories and deferred tax assets, are assessed for impairment indicators at each balance sheet date. If impairment indicators are present, the recoverable amount of the asset is estimated. An impairment is recognized, if the carrying value of an asset, or that of the cash-generating unit to which it belongs, is higher than its recoverable amount. Impairments are recorded in the income statement.
The realizable value of held-to-maturity financial assets and of receivables is calculated as the net present value of expected, future cash flows, discounted at the initial effective interest rate inherent to these assets.
Impairments on held-to-maturity investments or receivables are reversed if a subsequent increase in their realizable value can be objectively associated with an event arising after the recognition of an impairment loss.
The recoverable amount of other assets is the higher of their fair value less cost to sell or its value in use of the corresponding assets. In order to determine the value in use, the net present value of expected future cash flows is calculated using a pre-tax discount rate, which reflects both current market rates and the asset's specific inherent risks. When an asset does not generate cash flows, that are largely independent of the other assets, the recoverable amount of the cash generating unit to which this asset belongs, is determined.
Impairments relating to goodwill are not reversed. Impairments of other assets are reversed, if a change takes place in the estimates used to determine the recoverable amount. An increase in the carrying value of an asset, resulting from the reversal of an impairment, cannot be higher than the carrying value (after depreciation) that would have been obtained, if no impairments had been recorded for this asset in previous years.
Provisions are accounted for whenever the Group has to settle a legal or constructive obligation resulting from a past event, when it is probable that a cash outflow will be required to settle these obligations, and to the extent that these can be reliably estimated.
When the Group expects that all or part of the expenditure, which is required to settle legal obligations, will be reimbursed by another party, the amount to be reimbursed will only be recognized as an asset if it is practically certain that they will be effectively collected. A warranty provision is established for all products under warranty, based on historical data relating to repairs and returns of goods.
The Group participates primarily in defined contribution plans, and has defined benefit plans in Belgium, Germany and Turkey. The funds of these plans consist of employer contributions. The Group treats the employer and employee contributions for the defined contribution plans as expenses for the year in which they were made, except for Belgian defined contribution plans which are accounted for as defined benefit plans. For defined benefit plans, the pension obligation is estimated by using the projected unit credit method.
Remeasurements, comprising of actuarial gains and losses and the return on plan assets (excluding net interest), are recognised immediately in the statement of financial position with a corresponding debit or credit through other comprehensive income (OCI) in the period in which they occur. Remeasurements are not reclassified to profit or loss in subsequent periods.
Past service costs are recognised in profit or loss on the earlier of:
Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Group recognises the following changes in the net defined benefit obligation under 'other net operating result' in the consolidated income statement (by function):
Various stock option and warrant programs enable the staff members, senior management members and members of the Executive Team to acquire company shares. The exercise price for options or warrants is equal to the average market price of the underlying shares in the 30 days period preceding the grant date. Equity is increased respectively by the amounts received or the exercise price, when such options or warrants are exercised. The cost of share-based payment transactions is valued at fair value on the grant date. The fair value is determined by an expert, using a binominal tree structure. The cost of share-based payment transactions and at the same time as the corresponding increase in equity, is recognized over the vesting period.
If the conditions of equity settled share-based payment transactions are modified, the minimal cost equals the cost as if the conditions had not been changed. An additional cost is recognized for any modification which increases the fair value of share-based payment transaction or includes a benefit for the employee as of the date of modification (IFRS 2.28).
When a share-based payment is cancelled, then this is considered as a compensation that was granted on the date of cancellation and the relating unamortized cost is immediately recognized. However, if a new share-based payment is granted as a replacement for the cancelled compensation and if this is recorded as a replacement compensation on the grant date, then the cancelled and the new compensations are treated as a modification of the original share-based payment transaction, as described in the preceding paragraph.
Contractual bonuses are granted based on planned key financial objectives and personal performances. The estimated amount of the bonus is recognized as a cost, based on an estimate as of the balance sheet date.
Sales (which consists primarily of the sales of goods) are considered to be earned when it is probable that the economic benefits associated with the transaction will be received by the Group, if the amount of revenue can be reliably determined, when the risks and rewards of the sale are entirely transferred to the purchaser, and when there is no longer uncertainty in terms of the collection of the consideration, the transaction costs and any possible return of the goods.
Government grants are recognized at their fair value, when there is reasonable assurance that they will be received and that the Group will fulfil all of the conditions attached to them. When the grant relates to an expense item, it is recognized as income over the period necessary to match the grant on a systematic basis to the costs that is intended to compensate. Where the grant relates to an asset, it is recognized as deferred income.
Borrowing costs are capitalized when they are directly attributable to the acquisition, construction or production of a qualifying asset.
Income taxes include current and deferred taxes. Taxes are recognized in the income statement, unless they are associated with items that are booked immediately to equity. In that case, the corresponding tax is recognized directly against equity. Current taxes include the expected amount payable on taxable earnings for the period, along with adjustments of fiscal liabilities for previous years. A taxable earnings calculation for the year is based on the tax rates applicable on the reporting date. Deferred taxes are calculated in accordance with the liability method, for all temporary differences between the tax base of assets and liabilities and their carrying amount for financial reporting purposes. The calculation is based on rates of taxation for which the legislative process has been considered as enacted on the reporting date. Under this method, the Group also has to calculate deferred taxes on the difference between the fair value of the net assets acquired and their tax base as a result of a new acquisition. Deferred tax assets are only recognized if it is probable that sufficient taxable profits will be generated in the future in order to use the tax benefit or the tax losses. Two elements are considered to assess the likelihood of future taxable profits: 1/ the profitability in the past, at least two consecutive years of profitability is needed and 2/ the expected profitability of the next three years according to the detailed budget of next year and the higher level business plan of the two following years. The carrying amount of a deferred tax asset is reduced, when it becomes unlikely that the relating tax benefit will be realized.
Interest income includes interest earned on bank deposits or received from customers as compensation for extended payment terms, and interest charges include interest due on loans contracted by the Group. Recorded interest is based on the 'effective interest' method. Financial income or charges, next to realized and unrealized exchange rate gains or losses related to interest-bearing loans and deposits, also include recorded gains or losses due to a revaluation of the fair value of financial derivatives, which are considered as 'fair value' hedging instruments if the hedged risks are of a financial nature, or if financial instruments do not meet the special 'hedge accounting' requirements.
The entity applied the same IFRSs as those adopted in the previous years, except for the new IFRSs and interpretations the entity adopted as of 1st January 2017.
The Group applied for the first time certain standards and amendments, which are effective for annual periods beginning on or after 1 January 2017. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.
The nature and the impact of each of the following new standards, amendments and/or interpretations are described below:
The improvements become effective for annual periods beginning on or after 1 January 2017.
The Group has applied these changes and concluded that these changes did not result in a material impact on the IFRS financial statements. We refer to Note 12 and 17 regarding the net debt reconciliation.
The standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Group's financial statements are disclosed below. The Group intends to adopt these standards and interpretations, if applicable, when they become effective.
The Group has examined these changes and is currently assessing the results. In the course of 2017 the Group started with the assessment on the impact of IFRS 9 and IFRS 16 and completed the assessment on IFRS 15.
IFRS 9 Financial Instruments replaces IAS 39 Financial Instruments: Recognition and Measurement and all previous versions of IFRS 9. IFRS 9 brings together all three aspects of the accounting for financial instruments project: classification and measurement, impairment and hedge accounting. IFRS 9 is effective for annual periods beginning on or after 1 January 2018. Except for hedge accounting, retrospective application is required but providing comparative information is not compulsory. For hedge accounting, the requirements are generally applied prospectively, with some limited exceptions. The Group will apply the standard as from the data on which it becomes effective. The Group has investigated the impact on the financial statements. Application of the standard will not have a material impact on the financial position and the equity of the Group.
IFRS 15 establishes a five-step model to account for revenue arising from contracts with customers. Under IFRS 15, revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The new revenue standard will supersede all current revenue recognition requirements under IFRS. Either a full retrospective application or a modified retrospective application is required for annual periods beginning on or after 1 January 2018. The Group will adopt the new standard on the required effective date using the full retrospective method. During 2017, the Group performed an assessment of IFRS 15. Based on the assessment made the impact on the Group financial statements will not be material.
IFRS 16 replaces IAS 17 Leases, IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases-
Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under IAS 17. The standard includes two recognition exemptions for lessees – leases of 'low-value' assets (e.g., personal computers) and short-term leases (i.e., leases with a lease term of 12 months or less). At the commencement date of a lease, a lessee will recognise a liability to make lease payments (i.e., the lease liability) and an asset representing the right to use the underlying asset during the lease term (i.e., the right-of-use asset). Lessees will be required to separately recognise the interest expense on the lease liability and the depreciation expense on the right-of-use asset. Lessees will be also required to remeasure the lease
liability upon the occurrence of certain events (e.g., a change in the lease term, a change in future lease payments resulting from a change in an index or rate used to determine those payments). The lessee will generally recognise the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset.
Lessor accounting under IFRS 16 is substantially unchanged from today's accounting under IAS 17. Lessors will continue to classify all leases using the same classification principle as in IAS 17 and distinguish between two types of leases: operating and finance leases.
IFRS 16 also requires lessees and lessors to make more extensive disclosures than under IAS 17.
IFRS 16 is effective for annual periods beginning on or after 1 January 2019. Early application is permitted, but not before an entity applies IFRS 15. A lessee can choose to apply the standard using either a full retrospective or a modified retrospective approach. The standard's transition provisions permit certain reliefs. In 2018, the Group will continue to assess the potential effect of IFRS 16 on its financial statements, which is expected to be material.
The Group anticipates that the other changes will have no material effect on the financial statements.
An operating segment is a separate business unit in the Group, which produces goods or provides specific services within a defined economic environment, whose risks and profitability differ from those of the other operating segments.
Four segments have been defined based on the location of legal entities. They include the following entities:
There are no segments aggregated in order to establish the above segments.
Transfer prices between the operational segments are based on an 'at arm's length basis' equal to transactions with third parties.
The accounting policies for the operational segments are equal to these of the consolidated financial statements.
The Group identified the Executive Team as its Chief Operating Decision Maker. The segments have been defined based on the information provided to the Executive Team.
The Executive Team monitors the performance of its operational segments based on sales and adjusted EBITDA per segment.
Bosnia, Bulgaria, Croatia, Czech Republic, Germany, Lithuania, Poland,
Romania, Russia and Serbia
Australia, Brazil, Chile, Colombia, India, Thailand and Turkey.
Segment information includes results, assets and liabilities that can be attributed directly to a segment.
| FOR THE 12 MONTH PERIOD ENDED 31 DECEMBER | WESTERN EUROPE CENTRAL & EASTERN EUROPE |
NORTH AMERICA | TURKEY & EMERGING MARKETS | INTERSEGMENT ELIMINATIONS | CONSOLIDATED | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in € thousand) | 2016 | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | 2017 |
| External sales | 176,484 | 171,087 | 161,817 | 167,832 | 118,567 | 129,090 | 214,012 | 219,147 | 0 | 0 | 670,880 | 687,157 |
| Intersegment sales | 14,737 | 9,725 | 15,443 | 4,549 | 377 | 790 | 7,341 | 6,200 | (37,899) | (21,264) | (0) | 0 |
| Total sales | 191,221 | 180,813 | 177,260 | 172,381 | 118,944 | 129,880 | 221,354 | 225,347 | (37,899) | (21,264) | 670,880 | 687,157 |
| Adjusted EBITDA | 17,504 | 11,805 | 5,775 | 6,284 | 14,088 | 15,913 | 28,306 | 32,365 | (591) | 290 | 65,082 | 66,657 |
| Financial result | (13,897) | (14,667) | ||||||||||
| Income taxes | (1,272) | (8,199) | ||||||||||
| Depreciations of (in)tangible fixed assets | (9,522) | (10,884) | (6,371) | (6,257) | (5,368) | (6,259) | (5,013) | (5,401) | 464 | (482) | (25,810) | (29,283) |
| Impairments on (in)tangible fixed assets | (206) | (1,234) | (3,632) | (0) | (295) | (8) | (908) | (4) | 0 | 0 | (5,041) | (1,246) |
| Capital expenditures (capex) | 24,162 | 17,434 | 5,107 | 9,526 | 12,249 | 16,075 | 39,645 | 12,685 | (1,734) | (1,564) | 79,430 | 54,156 |
| FOR THE 12 MONTH PERIOD ENDED 31 DECEMBER | CONSOLIDATED | |
|---|---|---|
| (in € thousand) | 2016 | 2017 |
| Western Europe | 176,471 | 199,434 |
| Central & Eastern Europe | 115,123 | 114,344 |
| North America | 78,844 | 81,161 |
| Turkey and Emerging Markets | 199,751 | 178,467 |
| SEGMENT ASSETS | 570,190 | 573,406 |
| Cash and Cash Equivalents | 72,425 | 41,993 |
| Intersegment Eliminations | (41,564) | (56,799) |
| TOTAL GROUP ASSETS | 601,051 | 558,600 |
| CONSOLIDATED | |||
|---|---|---|---|
| 2016 | 2017 | ||
| 59,449 | 59,898 | ||
| 48,648 | 51,551 | ||
| 18,638 | 14,801 | ||
| 91,518 | 80,480 | ||
| 218,254 | 206,729 | ||
| 275,039 | 257,625 | ||
| 129,206 | 129,599 | ||
| 16,056 | 16,947 | ||
| (37,504) | (52,301) | ||
| 601,051 | 558,600 | ||
| FOR THE 12 MONTH PERIOD ENDED 31 DECEMBER | WESTERN EUROPE | CENTRAL & EASTERN EUROPE | NORTH AMERICA | TURKEY & EMERGING MARKETS | CONSOLIDATED | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| (in %) | 2016 | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | 2017 |
| Window and door systems | 72.8% | 78.0% | 80.2% | 83.4% | 97.0% | 100.0% | 93.9% | 95.9% | 85.6% | 89.2% |
| Outdoor living | 7.1% | 16.6% | 8.2% | 5.3% | 1.9% | 0.0% | 0.0% | 0.1% | 4.2% | 5.4% |
| Home protection | 20.1% | 5.4% | 11.6% | 11.3% | 1.1% | 0.0% | 6.1% | 4.0% | 10.2% | 5.4% |
| TOTAL | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% |
There is no significant concentration of sales (>10%) with one or a limited number of customers.
All liabilities that are attributable to the regions are included in the segment liabilities. These include long-term provisions, deferred tax liabilities, trade payables, tax liabilities, employee related liabilities, short term provisions and other liabilities.
All assets that are attributable to the regions are included in the segment assets. These include intangible fixed assets, goodwill, tangible fixed assets, financial fixed assets, deferred tax assets, long-term receivables, inventories, trade receivables, other receivables and fixed assets held for sale.
| INCOME STATEMENT BY NATURE (in € thousand) | 2016 | 2017 |
|---|---|---|
| SALES | 670,880 | 687,157 |
| Material costs | (328,449) | (343,283) |
| Operating costs | (130,473) | (125,011) |
| Personnel costs | (148,450) | (153,280) |
| Depreciation on (in)tangible fixed assets | (25,810) | (29,282) |
| Other net operating result | (1,576) | 380 |
| OPERATING PROFIT BEFORE IMPAIRMENT ON GOODWILL | 36,123 | 36,681 |
| Impairment on goodwill | (96) | 0 |
| OPERATING PROFIT (EBIT) | 36,123 | 36,681 |
| Financial charges | (25,551) | (21,663) |
| Financial income | 11,655 | 6,996 |
| PROFIT BEFORE TAXES (EBT) | 22,226 | 22,014 |
| Income taxes | (1,272) | (8,199) |
| NET PROFIT | 20,954 | 13,815 |
For a high level analysis of revenue and costs we refer to the "2017 results" on page 103.
| 2016 OPERATING COSTS (in € thousand) |
2017 |
|---|---|
| Transport (30,475) |
(32,769) |
| Maintenance (21,600) |
(21,203) |
| Services (21,027) |
(21,122) |
| Energy (17,299) |
(16,892) |
| Rent (8,484) |
(9,594) |
| Communication (8,771) |
(9,493) |
| Local taxes and fines (4,008) |
(4,562) |
| Travel (4,247) |
(4,512) |
| Manufacturing support (3,774) |
(2,862) |
| Insurances (2,726) |
(2,485) |
| Loss on the realization of trade debtors (3,502) |
(209) |
| Increase / (decrease) of provisions (5,137) |
988 |
| Other 578 |
(312) |
| TOTAL (130,473) |
(125,028) |
The operating costs decreased compared to 2016 due to a decrease in provision for doubtful debtors and write-off on inventory and a decrease in losses on the realization of trade debts which have been partly offset by an increase in transport costs and rent.
| PAYROLL COSTS AND OTHER SOCIAL BENEFITS (in € thousand) 2016 |
2017 |
|---|---|
| Wages and salaries (112,384) |
(114,423) |
| Social security contributions (28,819) |
(32,205) |
| Contributions to defined contribution plans (1,883) |
(1,348) |
| Other (5,363) |
(5,304) |
| TOTAL (148,450) |
(153,280) |
The increase of the payroll costs is mainly explained by higher direct labour costs, as a result of higher production volumes.
| 2016 HEADCOUNT (Total Full Time Equivalents (FTE) by category) |
2017 |
|---|---|
| Blue collars 2,726 |
2,920 |
| White collars 956 |
1,007 |
| TOTAL 3,682 |
3,927 |
| OTHER OPERATING INCOME (in € thousand) | 2016 | 2017 |
|---|---|---|
| Grants received | 89 | 288 |
| Exchange rate gains* | 6,420 | 7,258 |
| Decrease of provisions | 783 | 0 |
| Gains on disposal of (in)tangible fixed assets | 2,117 | 739 |
| Other | 3,378 | 4,410 |
| TOTAL | 12,787 | 12,695 |
The other operating income remained stable as higher exchange rate gains have been offset by a one-off gain
on the disposal of the assets of the US building products division in 2016.
| 2016 OTHER OPERATING COSTS* (in € thousand) |
2017 |
|---|---|
| Non-recurring costs (171) |
450 |
| Exchange rate losses* (5,310) |
(8,695) |
| Increase of provisions | 0 (507) |
| Impairments (5,041) |
(1,247) |
| Loss on disposal of tangible fixed assets (1,123) |
(686) |
| Other (2,718) |
(1,629) |
| TOTAL (14,363) |
(12,315) |
The 2016 impairment mainly include the impairment of the building and infrastructure costs in Czech Republic
The decrease in other operating costs compared to 2016 is primarily due to a decrease in impairments partly offset by higher exchange rate losses. (€ 3,604 thousand). The Czech building was reclassified to assets held for sale in 2016 and sold in 2017. The remainder of the impairment cost relate to machinery components and tools sets.
* As of 2017 exchange rate gains and losses originating from the same currency have been netted. In order to allow for comparison 2016 figures have been adjusted accordingly.
| 2016 FINANCIAL INCOME (in € thousand) |
2017 |
|---|---|
| Interest income 1,300 |
1,526 |
| Financial discounts - Suppliers 870 |
894 |
| Exchange rate gains* 9,018 |
1,156 |
| Other 466 |
3,421 |
| TOTAL 11,655 |
6,996 |
| FINANCIAL COSTS (in € thousand) | 2016 | 2017 |
|---|---|---|
| Interest costs | (8,736) | (10,165) |
| Financial discounts - Customers | (1,113) | (1,346) |
| Exchange rate losses | (13,113) | (7,172) |
| Bank costs | (826) | (1,084) |
| Other | (1,763) | (1,897) |
| TOTAL | (25,551) | (21,663) |
Financial results were negatively influenced by FX losses resulting from the weakening of the TRY and higher interest rates in Turkey.
The breakdown of the income tax charge for the financial year 2017 is presented as follows:
| INCOME TAXES RECOGNIZED IN THE INCOME STATEMENT (in € thousand) | 2016 | 2017 |
|---|---|---|
| Current income taxes | (2,907) | (514) |
| Relating to current year | (2,090) | (525) |
| Relating to previous years | (645) | 713 |
| Other | (172) | (702) |
| Deferred income taxes | 1,635 | (7,684) |
| Relating to temporary differences - current year | (1,009) | (1,412) |
| Relating to temporary differences - adjustment previous years | 1,013 | (232) |
| Recognition of deferred income tax asset on tax losses of current year | 352 | 157 |
| Utilization of deferred income tax asset on tax losses of previous years | (4,599) | (1,162) |
| Recognition (+) and derecognition (-) of deferred income tax asset on tax losses of previous years | 1,614 | (4,671) |
| Relating to tax incentives | 3,851 | 123 |
| Other | 412 | (488) |
| INCOME TAXES RECOGNIZED IN THE INCOME STATEMENT | (1,272) | (8,199) |
| year 2017 is presented as follows: | ||||
|---|---|---|---|---|
| EARNINGS BEFORE TAX - IFRS 22,226 Statutory tax rate of the parent company 33.99% INCOME TAXES CALCULATED AT THE STATUTORY TAX RATE OF THE PARENT COMPANY (7,555) Tax effect of: Difference between local tax rate and statutory tax rate of the parent company 164 Non-deductible items (46) Government grants and other excempted income 5,919 Use of tax losses carried forward for which no deferred income tax asset has been recognized 114 Current income taxes relating to previous years (645) Non-recognition of deferred income taxes on current years losses (1,004) Recognition (+) and derecognition (-) of deferred income tax asset on tax losses of previous years 1,614 Other 167 INCOME TAXES RECOGNIZED IN THE INCOME STATEMENT (1,272) |
RECONCILIATION BETWEEN EARNINGS BEFORE TAX (EBT) – IFRS AND INCOME TAXES (in € thousand) |
2016 | 2017 |
|---|---|---|---|
| 22,014 | |||
| 33.99% | |||
| (7,482) | |||
| 4,251 | |||
| 5,955 | |||
| 2,129 | |||
| 20 | |||
| 713 | |||
| (8,434) | |||
| (4,671) | |||
| (680) | |||
| (8,199) | |||
| Effective rate rate | 5.72% | 37.24% |
* As of 2017 exchange rate gains and losses originating from the same currency have been netted. In order to allow for comparison 2016 figures have been adjusted accordingly.
The following table gives an overview of the deferred income taxes, after net presentation by legal entity as per 31 December 2016 and 2017:
| (in € thousand) | 2016 | CHARGED / CREDITED TO PL |
CHARGED / CREDITED TO EQUITY |
TRANSFERS | TRANSLATION ADJUSTMENTS TOTAL |
2017 |
|---|---|---|---|---|---|---|
| DEFERRED INCOME TAX ASSETS BY TYPE OF TEMPORARY DIFFERENCE: | ||||||
| Tax losses carried forward | 24,987 | (4,781) | 237 | (325) | (842) | 19,276 |
| Tangible fixed assets | (10,762) | (5,036) | 293 | 74 | (15,431) | |
| Provisions | 3,773 | 924 | (674) | (41) | (186) | 3,796 |
| Inventories | 1,119 | 117 | (254) | (89) | 893 | |
| Other assets | 289 | 846 | 1,002 | 41 | (53) | 2,125 |
| DEFERRED INCOME TAX ASSETS | 19,407 | (7,879) | 565 | (287) | (1,098) | 10,707 |
| NET DEFERRED INCOME TAXES | 17,130 | (7,685) | 565 | 0 | (986) | 9,023 |
|---|---|---|---|---|---|---|
| DEFERRED INCOME TAX LIABILITIES | 2,277 | (194) | 0 | (287) | (112) | 1,684 |
| Other liabilities | 565 | 70 | (119) | 515 | ||
| Interest bearing borrowings | 7 | 0 | 7 | |||
| Inventories | (75) | 71 | (4) | (9) | ||
| Provisions | (928) | (29) | 176 | (781) | ||
| Tangible fixed assets | 4,502 | (305) | (287) | (165) | 3,745 | |
| Tax losses carried forward | (1,794) | (1,794) | ||||
In 2017, the Group recognized deferred income tax assets for tax losses carried forward, for which utilization depends on future taxable profits. The total amount of this deferred income tax asset amounted to € 21,070 thousand at the end of 2017 (end 2016: € 26,781 thousand).
The outlook provides adequate assurance that the company will generate sufficient taxable profits in the near future in order to utilize the deferred income tax assets recognized.
As per 31 December 2017, the Group did not recognize deferred income tax assets on a total amount of tax credits of € 79,198 thousand (2016: € 70,243 thousand), in Belgium, Germany, Turkey, France, the United Kingdom, Poland, Russia and Bosnia in current and previous financial years.
Basic earnings per share are calculated by dividing the net profit for the year, attributable to ordinary shareholders by the weighted average number of ordinary shares,
excluding ordinary shares purchased by the Group and held as treasury shares. This results in a net profit per share of € 0.09.
| (in € thousand) | 2016 | 2017 |
|---|---|---|
| Earnings attributable to ordinary shareholders | 20,795 | 12,453 |
| Weighted average number of ordinary shares (in thousands) | 135,026 | 135,869 |
| EARNINGS PER SHARE (IN €) | 0.15 | 0.09 |
Diluted earnings per share are calculated by dividing the net profit attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year increased with the weighted average number of ordinary shares which would be issued upon conversion into ordinary shares of all potential shares leading to dilution. The potential dilution arises from warrants granted to staff members, senior management members and members
of the Executive Team. For 2017, 1,234,000 shares attributable to the exercise of outstanding warrants were excluded from the calculation of diluted earnings per share as their effect was accretive (for 2016: 607,500). It concerns exercisable warrants that are 'out of the money'. This means that the exercise price of the warrants is higher than the share price Deceuninck at balance sheet date.
The calculation for 2017 leads to a net profit per share of € 0.09.
| (in € thousand) | 2016 | 2017 |
|---|---|---|
| Earnings attributable to ordinary shareholders | 20,795 | 12,453 |
| Weighted average number of ordinary shares (in thousands) | 135,026 | 135,869 |
| Dilution effect of non-exercised warrants (in thousands) | 3,360 | 3,225 |
| Weighted average number of shares after dilution (in thousands) | 138,386 | 139.094 |
| DILUTED EARNINGS PER SHARE (IN €) | 0.15 | 0.09 |
Amortization of intangible assets other than goodwill is included in cost of goods sold.
As per 31 December 2017, the intangible assets with indefinite useful lives were tested for impairment, based on the same methodology and assumptions as described in Note 7 – Goodwill. The intangible assets with indefinite useful lives mainly relate to the trade names Winsa and Pimapen. For these kind of assets there is no foreseeable end of the cash generating period. The net carrying value of these assets is € 3,197 thousand. The impairment test of this asset is included in the goodwill impairment test for Turkey (see Note 7 – Goodwill) and did not result in the recognition of an impairment on 31 December 2017.
| PATENTS, LICENSES AND SIMILAR RIGHTS, DEVELOPMENT COSTS (in € thousand) | 2016 | 2017 |
|---|---|---|
| COST | ||
| At the beginning of current year | 25,222 | 25,508 |
| Additions | 639 | 1,207 |
| Disposals | (2) | (5,563) |
| Transfers | 30 | 2,723 |
| Translation adjustments | (381) | (1,585) |
| At the end of | 25,508 | 22,288 |
| AMORTIZATIONS AND IMPAIRMENTS | ||
| At the beginning of current year | (19,829) | (21,088) |
| Additions to amortizations | (1,082) | (1,673) |
| Additions to impairments | (11) | 0 |
| Disposals | 2 | 5,561 |
| Transfers | (1) | 0 |
Translation adjustments (166) 1,029 At the end of (21,088) (16,170)
| INTANGIBLE FIXED ASSETS | |
|---|---|
| NET CARRYING VALUE | 4,420 | 6,119 | |
|---|---|---|---|
| Accumulated amortizations and impairments | (21,088) | (16,170) | |
| Cost | 25,508 | 22,288 | |
| (in € thousand) | 2016 | 2017 |
|---|---|---|
| COST | ||
| At the beginning of | 67,754 | 66,593 |
| Translation adjustments | (1,161) | (4,572) |
| At the end of | 66,593 | 61,950 |
| IMPAIRMENTS | ||
| At the beginning of | (57,013) | (55,883) |
| Translation adjustments | 1,130 | 4,539 |
| At the end of | (55,883) | (51,273) |
| GOODWILL | ||
| Cost | 66,593 | 61,950 |
| Accumulated impairments | (55,883) | (51,273) |
| NET CARRYING VALUE | 10,710 | 10,677 |
| The application of IFRS 3 'Business combinations' stipulates | value defined at the time of the acquisition should be |
that all identifiable assets and liabilities should be recognized at their fair value at the moment of acquisition. All differences between the cost of the business combination and the fair
attributed to goodwill and any potential remaining differences in equity.
The net carrying value of goodwill is allocated as follows:
| CASH-GENERATING UNIT (in € thousand) | 2016 | 2017 |
|---|---|---|
| Turkey | 9,494 | 9,463 |
| Belgium | 1,247 | 1,247 |
| NET CARRYING VALUE | 10,741 | 10,710 |
At 31 December 2017, the net carrying value of goodwill amounts to € 9.5 million for Turkey and € 1.2 million for Belgium.
In accordance with IAS 36, goodwill is not amortized but is subject to an annual impairment test. This test is always performed at year end whenever there is an indication of a possible impairment.
The test consists in comparing the recoverable amount of each cash-generating unit with its carrying amount. An impairment loss is recognized whenever the recoverable amount is lower than the net book value. The Group carried out the impairment test at 31 December 2017, consistent with previous years.
The cash generating unit is Ege Profil, which holds the brands Ege Pen Deceuninck, Winsa and Pimas, following the merger of Ege Profil and Pimas in 2017.
The discount rate is based on the risk free rate based on the currency region zone where the activities are deployed and current market assessment of the risks specific to the Deceuninck Group. The discount rate was estimated based on the weighted average cost of capital (WACC) and is 10.3% for 2017 (2016: 10.9%).
For EBITDA of 2018, management has worked out a target based on detailed plans and actions. For the period 2019 - 2020 the EBITDA estimate is based on longer term plans, taking into account reasonable growth levels in line with country specific evolutions of the building industry. For subsequent years a terminal growth rate of 2% is assumed.
One scenario with reasonable growth expectations has been worked out. Given the available headroom under the base case assumptions there is no need for a detailed sensitivity analysis.
No need for impairment of goodwill.
The cash generating unit is Western Europe, composed of legal entities Deceuninck NV (Belgium), Deceuninck Ltd (UK), Deceuninck SAS (France), Inoutic d.o.o. (Croatia) and Deceuninck Sucursal en España (Spain).
This is the lowest level at which EBITDA can be measured without being influenced by transfer prices. It is also the level of our segment reporting. The discount rate is 4.0% in 2017 (2016: 5.1%)
The discount rate is based on the WACC of the currency region zone where the activities are deployed and current market assessment of the risks specific to Deceuninck Group.
For EBITDA of 2018, the management has worked out a target based on detailed plans and actions. For the period 2019-2020 the EBITDA estimate is based on longer term plans, taking into account reasonable growth levels in line with country specific evolutions of the building industry.
For subsequent years a terminal growth rate of 0% is assumed.
One scenario with reasonable growth expectations has been worked out. Taking into account the cautious assumptions, there is no need to include more scenario's.
No need for impairment of goodwill.
| 2016 (in € thousand) |
LAND & BUILDINGS |
MACHINES & EQUIPMENT |
FURNITURE & VEHICLES |
LEASED FIXED ASSETS |
OTHER TANGIBLE FIXED ASSETS |
ASSETS UNDER CON STRUCTION |
TOTAL |
|---|---|---|---|---|---|---|---|
| COST | |||||||
| At the beginning of previous year | 168,879 | 465,930 | 15,949 | 222 | 136 | 27,487 | 678,604 |
| Additions | 34,727 | 30,723 | 1,438 | 0 | 2 | 11,670 | 78,559 |
| Disposals | (491) | (14,612) | (1,027) | (20) | 0 | (464) | (16,614) |
| Transfers | 2,953 | 11,010 | 300 | 0 | 0 | (23,162) | (8,899) |
| Translation adjustments | (7,552) | 1,764 | (178) | 1 | 0 | (832) | (6,796) |
| At the end of previous year | 198,516 | 494,815 | 16,482 | 203 | 138 | 14,699 | 724,854 |
| DEPRECIATIONS AND IMPAIRMENTS | |||||||
| At the beginning of previous year | (69,045) | (376,390) | (14,132) | (211) | (25) | 0 | (459,802) |
| Additions to depreciations | (4,609) | (19,685) | (417) | (6) | (11) | 0 | (24,728) |
| Additions to impairments | (3,111) | (1,199) | (3) | 0 | 0 | 0 | (4,313) |
| Disposals | 975 | 12,337 | 632 | 20 | 0 | 0 | 13,964 |
| Transfers | 4,895 | 87 | (1) | 0 | 0 | 0 | 4,981 |
| Translation adjustments | 165 | (1,316) | 194 | (1) | 0 | 0 | (959) |
| At the end of previous year | (70,730) | (386,165) | (13,727) | (197) | (36) | 0 | (470,856) |
| TANGIBLE FIXED ASSETS | |||||||
| Cost | 198,516 | 494,815 | 16,482 | 203 | 138 | 14,699 | 724,854 |
| Accumulated depreciations and impairments |
(70,730) | (386,165) | (13,727) | (197) | (36) | 0 | (470,856) |
| NET CARRYING VALUE | 127,786 | 108,650 | 2,755 | 6 | 102 | 14,699 | 253,998 |
| 2016 (in € thousand) |
LAND & BUILDINGS |
MACHINES & EQUIPMENT |
FURNITURE & VEHICLES |
LEASED FIXED ASSETS |
OTHER TANGIBLE FIXED ASSETS |
ASSETS UNDER CON STRUCTION |
TOTAL |
|---|---|---|---|---|---|---|---|
| COST | |||||||
| At the beginning of previous year | 168,879 | 465,930 | 15,949 | 222 | 136 | 27,487 | 678,604 |
| Additions | 34,727 | 30,723 | 1,438 | 0 | 2 | 11,670 | 78,559 |
| Disposals | (491) | (14,612) | (1,027) | (20) | 0 | (464) | (16,614) |
| Transfers | 2,953 | 11,010 | 300 | 0 | 0 | (23,162) | (8,899) |
| Translation adjustments | (7,552) | 1,764 | (178) | 1 | 0 | (832) | (6,796) |
| At the end of previous year | 198,516 | 494,815 | 16,482 | 203 | 138 | 14,699 | 724,854 |
| DEPRECIATIONS AND IMPAIRMENTS | |||||||
| At the beginning of previous year | (69,045) | (376,390) | (14,132) | (211) | (25) | 0 | (459,802) |
| Additions to depreciations | (4,609) | (19,685) | (417) | (6) | (11) | 0 | (24,728) |
| Additions to impairments | (3,111) | (1,199) | (3) | 0 | 0 | 0 | (4,313) |
| Disposals | 975 | 12,337 | 632 | 20 | 0 | 0 | 13,964 |
| Transfers | 4,895 | 87 | (1) | 0 | 0 | 0 | 4,981 |
| Translation adjustments | 165 | (1,316) | 194 | (1) | 0 | 0 | (959) |
| At the end of previous year | (70,730) | (386,165) | (13,727) | (197) | (36) | 0 | (470,856) |
| TANGIBLE FIXED ASSETS | |||||||
| Cost | 198,516 | 494,815 | 16,482 | 203 | 138 | 14,699 | 724,854 |
| Accumulated depreciations and impairments |
(70,730) | (386,165) | (13,727) | (197) | (36) | 0 | (470,856) |
| NET CARRYING VALUE | 127,786 | 108,650 | 2,755 | 6 | 102 | 14,699 | 253,998 |
| 2016 (in € thousand) |
LAND & BUILDINGS |
MACHINES & EQUIPMENT |
FURNITURE & VEHICLES |
LEASED FIXED ASSETS |
OTHER TANGIBLE FIXED ASSETS |
ASSETS UNDER CON STRUCTION |
TOTAL |
|---|---|---|---|---|---|---|---|
| COST | |||||||
| At the beginning of previous year | 168,879 | 465,930 | 15,949 | 222 | 136 | 27,487 | 678,604 |
| Additions | 34,727 | 30,723 | 1,438 | 0 | 2 | 11,670 | 78,559 |
| Disposals | (491) | (14,612) | (1,027) | (20) | 0 | (464) | (16,614) |
| Transfers | 2,953 | 11,010 | 300 | 0 | 0 | (23,162) | (8,899) |
| Translation adjustments | (7,552) | 1,764 | (178) | 1 | 0 | (832) | (6,796) |
| At the end of previous year | 198,516 | 494,815 | 16,482 | 203 | 138 | 14,699 | 724,854 |
| DEPRECIATIONS AND IMPAIRMENTS | |||||||
| At the beginning of previous year | (69,045) | (376,390) | (14,132) | (211) | (25) | 0 | (459,802) |
| Additions to depreciations | (4,609) | (19,685) | (417) | (6) | (11) | 0 | (24,728) |
| Additions to impairments | (3,111) | (1,199) | (3) | 0 | 0 | 0 | (4,313) |
| Disposals | 975 | 12,337 | 632 | 20 | 0 | 0 | 13,964 |
| Transfers | 4,895 | 87 | (1) | 0 | 0 | 0 | 4,981 |
| Translation adjustments | 165 | (1,316) | 194 | (1) | 0 | 0 | (959) |
| At the end of previous year | (70,730) | (386,165) | (13,727) | (197) | (36) | 0 | (470,856) |
| TANGIBLE FIXED ASSETS | |||||||
| Cost | 198,516 | 494,815 | 16,482 | 203 | 138 | 14,699 | 724,854 |
| Accumulated depreciations and impairments |
(70,730) | (386,165) | (13,727) | (197) | (36) | 0 | (470,856) |
| NET CARRYING VALUE | 127,786 | 108,650 | 2,755 | 6 | 102 | 14,699 | 253,998 |
| 2017 (in € thousand) |
LAND & BUILDINGS |
MACHINES & EQUIPMENT |
FURNITURE & VEHICLES |
LEASED FIXED ASSETS |
OTHER TANGIBLE FIXED ASSETS |
ASSETS UNDER CON STRUCTION |
TOTAL |
|---|---|---|---|---|---|---|---|
| COST | |||||||
| At the beginning of current year | 198,516 | 494,815 | 16,482 | 203 | 138 | 14,699 | 724,854 |
| Additions | 4,454 | 22,865 | 2,100 | 37 | 0 | 21,478 | 50,934 |
| Disposals | (6,581) | (68,547) | (1,369) | (0) | 0 | (978) | (77,475) |
| Transfers | 460 | 6,923 | 409 | 0 | 0 | (10,515) | (2,723) |
| Translation adjustments | (11,854) | (26,482) | (482) | (13) | 0 | (1,394) | (40,226) |
| At the end of current year | 184,995 | 429,575 | 17,140 | 227 | 138 | 23,291 | 655,365 |
| At the beginning of current year | (70,730) | (386,165) | (13,727) | (197) | (36) | 0 | (470,856) |
| DEPRECIATIONS AND IMPAIRMENTS | |||||||
| Additions to depreciations | (4,711) | (22,158) | (723) | (6) | (11) | 0 | (27,610) |
| Additions to impairments | 0 | (1,215) | (4) | 0 | 0 | 0 | (1,218) |
| Disposals | 6,515 | 69,286 | 1,364 | 0 | 0 | 0 | 77,164 |
| Transfers | 0 | (0) | (4) | 0 | 0 | 0 | (4) |
| Translation adjustments | 2,229 | 17,463 | 402 | 10 | 0 | 0 | 20,104 |
| At the end of current year | (66,698) | (322,790) | (12,692) | (193) | (47) | 0 | (402,419) |
| TANGIBLE FIXED ASSETS | |||||||
| NET CARRYING VALUE | 118,297 | 108,785 | 4,448 | 34 | 91 | 23,291 | 252,945 |
|---|---|---|---|---|---|---|---|
| Accumulated depreciations and impairments |
(66,698) | (322,790) | (12,692) | (193) | (47) | 0 | (402,419) |
| Cost | 184,995 | 429,575 | 17,140 | 227 | 138 | 23,291 | 655,365 |
The Group has € 4.2 million fixed asset related commitments spread over the next year which are mainly related to machinery and tools .
Tangible fixed assets under construction can be explained as follows:
| 2016 (in € thousand) |
2017 |
|---|---|
| Land and buildings 2,096 |
2,860 |
| Machines and equipment 9,360 |
16,053 |
| Other 3,243 |
4,377 |
| TOTAL 14,699 |
23,291 |
In 2017 the Group has recognized impairments on tangible fixed assets for € 1.2 million (2016: € 4.3 million). These impairments mainly relate to machinery components and tool sets. These impairments have been included in other operating costs.
| (in € thousand) | 2016 | 2017 |
|---|---|---|
| Trade receivables | 409 | 325 |
| Other receivables | 2,473 | 1,440 |
| TOTAL | 2,882 | 1,765 |
The maturity of such trade receivables ranges from 1 to 3 years.
| (in € thousand) | 2016 | 2017 |
|---|---|---|
| Raw materials and consumables | 32,697 | 37,684 |
| Work in progress | 0 | 110 |
| Finished products | 40,422 | 46,958 |
| Trade goods | 25,844 | 29,590 |
| TOTAL | 98,963 | 114,342 |
During 2017 a net amount of € 91 thousand was posted as an increase in the provision related to the write-down on inventory (in 2016: € 2.0 million). These costs are shown as Marketing, sales and distribution expenses. The cost of
| inventories recognized as an expense during 2017 amounted |
|---|
| to € 4.9 million (2016: € 4.7 million). |
| No inventories were pledged as security for liabilities |
| (2016: idem). |
| 2016 (in € thousand) |
2017 |
|---|---|
| Gross trade receivables 135,743 |
127,413 |
| Impairments (21,970) |
(18,376) |
| TRADE RECEIVABLES 113,773 |
109,036 |
| VAT and other taxes 11,748 |
4,265 |
| Derivative financial instruments 1,947 |
255 |
| Prepaid charges 2,833 |
2,358 |
| Accrued revenues 1 |
7 |
| Short-term warranties 247 |
104 |
| Other 3,804 |
2,433 |
| OTHER RECEIVABLES 20,580 |
9,422 |
Net trade receivables decreased € 4.7 million as the impact of higher sales volumes, higher selling prices and less factoring has been compensated by FX (mainly TRY devaluation) and shorter payment terms in Turkey. Total factoring amounted to € 24.3 million at 31 December 2017 (2016 € 27.8 million).
Days sales outstanding (DSO) remained stable year-on-year at 60 days in 2016 versus 59 days in 2017.
The factoring cost for 2017 amounts to € 792 thousand (2016 € 660 thousand). The effect of the factoring agreement is shown as a decrease in trade receivables, as substantially
all risks and rewards relating to the trade receivables are transferred to the factor company (non-recourse factoring).
The gross trade receivables consist of invoiced sales, an accrual for invoices to be issued, an accrual for credit notes to be received, exchange rate differences and advance payments made.
An analysis is provided below, which shows the ageing of gross outstanding trade receivables granted to customers, after deduction of impairments on those amounts:
| AGEING ANALYSIS OF TRADE RECEIVABLES (in € thousand) |
NET CARRYING VALUE |
OVERDUE BUT NOT IMPAIRED | ||||||
|---|---|---|---|---|---|---|---|---|
| NOT DUE NOR IMPAIRED |
<30 DAYS |
31-60 DAYS |
61-90 DAYS |
91-120 DAYS |
>120 DAYS |
|||
| As per 31 December 2016 | 113,773 | 104,022 | 6,222 | 1,474 | 555 | 503 | 998 | |
| As per 31 December 2017 | 109,036 | 95,870 | 6,775 | 1,601 | 635 | 1,852 | 2,304 |
As per 31 December 2017 an amount of € 18,376 thousand (2016 € 21,970 thousand) was recognized as an impairment on trade receivables to customers.
The movements during the last 2 financial years are presented in the following table:
| IMPAIRMENT ALLOWANCE (in € thousand) | 2016 | 2017 |
|---|---|---|
| AT THE BEGINNING OF (18,791) |
(21,970) | |
| Additions | (7,383) | (196) |
| Reversals | 201 | 1,246 |
| Utilizations | 3,623 | 185 |
| Transfers | (1,428) | (1,268) |
| Translation adjustments | 1,809 | 3,627 |
| AT THE END OF (21,970) |
(18,376) |
| (in € thousand) | 2016 | 2017 |
|---|---|---|
| Cash and current bank accounts | 46,439 | 34,247 |
| Short term deposits | 25,986 | 7,746 |
| TOTAL | 72,425 | 41,993 |
| (in € thousand) | 2016 | 2017 |
|---|---|---|
| COST | ||
| At the beginning | 4,828 | 10,091 |
| Additions | 232 | 2,120 |
| Disposals | (3,684) | (10,688) |
| Transfers | 8,831 | 0 |
| Translation adjustments | (116) | 123 |
| At the end of | 10,091 | 1,646 |
| DEPRECIATIONS AND IMPAIRMENTS | ||
| At the beginning | (1,355) | (6,262) |
| Additions to impairments | (717) | (104) |
| Disposals | 645 | 6,386 |
| Transfers | (4,943) | 0 |
| Translation adjustments | 108 | (137) |
| At the end of | (6,262) | (117) |
| FIXED ASSETS HELD FOR SALE | ||
| Cost | 10,091 | 1,646 |
| Accumulated depreciations and impairments | (6,262) | (117) |
| NET CARRYING VALUE | 3,829 | 1,529 |
| The fixed assets held for sale relate to land in Poland and | Following the reclassification to 'held-for-sale', assets held for |
| FIXED ASSETS HELD FOR SALE |
|---|
The fixed assets held for sale relate to land in Poland and apartments in Turkey. All assets are available for immediate sale in its present condition and the sale is highly probable. Necessary actions have been taken in order to place these assets on the market and sales are expected during 2018.
Following the reclassification to 'held-for-sale', assets held for sale are no longer depreciated.
| ISSUED CAPITAL | 2016 | 2017 |
|---|---|---|
| Amount (in € thousand) | 53,393 | 53,788 |
| Number of shares (without nominal value) 135,382,446 |
136,383,256 |
| 2016 SHARE PREMIUMS |
2017 |
|---|---|
| Amount (in € thousand) 87,056 |
87,887 |
As per 31 December 2017, issued capital is set at € 53,788 thousand and is composed of 136,383 thousand shares without a nominal value.
| TREASURY SHARES | 2016 | 2017 |
|---|---|---|
| Amount (in € thousand) | (320) | (115) |
| Number of shares (without nominal value) | 102,121 | 97,871 |
On 31 December 2017, the Group held 97,871 treasury shares to fulfil its commitments with respect to stock option plans.
Currency translation adjustments include all exchange rate differences resulting from the conversion of the financial statements of subsidiaries into euro. The total currency translation adjustments amount to € -87,957 thousand at 31 December 2017.
An overview of the currency translation adjustments by currency is given below, the increase in currency translation adjustment in TRY is related to the strong devaluation of the currency in 2017:
| 2016 CURRENCY TRANSLATION ADJUSTMENTS (in € thousand) |
2017 |
|---|---|
| USD (4,440) |
(12,495) |
| TRY (42,299) |
(60,379) |
| RUB (8,434) |
(8,896) |
| PLN (3,016) |
(2,297) |
| GBP (1,803) |
(2,865) |
| CZK (248) |
307 |
| Other (936) |
(1,330) |
| TOTAL (61,176) |
(87,957) |
| NET LIABILITY (ASSET) RECONCILIATION (in € thousands) |
INOUTIC / DECE UNINCK GMBH (GERMANY) |
DECEUNINCK NV (BELGIUM) |
EGE PROFIL AS (TURKEY) |
OTHER | TOTAL |
|---|---|---|---|---|---|
| AS PER 31 DECEMBER 2016 | 14,906 | 6,596 | 1,350 | 444 | 23,297 |
| Pension cost recognized in income statement | (82) | 131 | 170 | 50 | 270 |
| Remeasurements recognized in OCI | (412) | (924) | 1.184 | 0 | (152) |
| Transfers | 0 | 0 | 268 | (231) | 37 |
| Translation adjustments | 0 | 0 | (382) | (30) | (412) |
| AS PER 31 DECEMBER 2017 | 14,413 | 5,804 | 2,590 | 219 | 23,025 |
| Non-current | 13,888 | 2,590 | 2,590 | 2,504 | 21,571 |
| Current | 525 | 0 | 0 | 928 | 1,453 |
| DECEUNINCK NV (BELGIUM) – PRINCIPAL ACTUARIAL ASSUMPTIONS | 2016 | 2017 |
|---|---|---|
| Discount rate | 1.75% | 1.50% |
| Increase in compensations - white collar | 2.45% | 2.45% |
| Increase in compensations - blue collar | 2.20% | 2.20% |
| Increase in social security | 1.70% | 1.70% |
| Increase in pensions | 1.95% | 1.80% |
| Inflation | 1.70% | 1.70% |
The main risks for Deceuninck NV relate to future salary increases, inflation and mortality notes.
For Deceuninck NV, the provisions for post-employment benefits relate to the early retirement obligation and Belgian pension plans previously accounted for as defined contribution plans. According to IAS19, Belgian defined contribution plans that guarantee a specified return are defined benefit plans, as the employer has to cover the investment risk until the legal minimum rates applicable. The returns guaranteed by the insurance company are in most cases lower, as a result the Group has not fully hedged its risk and a provision needs to be accounted for.
The early retirement plan is available for all early-retired employees when in conformity with the current collective labour agreement (CLA).
In accordance with IFRS, the actuarial present value of the defined pension benefits must be calculated, as that value represents the total of the amounts that can currently be allocated to each participant in the plan. The early retirement obligation is not financed and is considered to be a constructive obligation. The actuarial present value was calculated based on the mortality tables MR:FR (age correction -3 years) and the following actuarial assumptions:
For Inoutic/Deceuninck GmbH and Inoutic / Deceuninck Productions GmbH & Co. KR, the provisions for employee benefits refer to the provision for pensions. This plan is available for all employees and is unfunded.
There is no legal obligation to offer such a plan to the employees. The actuarial present value was calculated based on the following assumptions:
| INOUTIC/DECEUNINCK GMBH AND INOUTIC / DECEUNINCK PRODUCTIONS GMBH & CO. KG (GERMANY) – PRINCIPAL ACTUARIAL ASSUMPTIONS |
2016 | 2017 |
|---|---|---|
| Discount rate | 1.50% | 1.60% |
| Increase in compensations - white collar | 3.00% | 3.00% |
| Increase in compensations - blue collar | 3.00% | 3.00% |
| Increase in social security | 3.00% | 3.00% |
| Increase in pensions | 1.75% | 1.75% |
| Inflation | 1.75% | 1.75% |
For Ege Profil AS, the provisions for employee benefits refer to the provision for pensions. This plan is available for all
employees. The actuarial present value was calculated based on the following assumptions:
| 2016 EGE PROFIL AS (TURKEY) – PRINCIPAL ACTUARIAL ASSUMPTIONS |
2017 |
|---|---|
| Discount rate 10.50% |
9.80% |
| Increase in compensations - white collar 6.00% |
6.00% |
| Increase in compensations - blue collar 6.00% |
6.00% |
| Increase in social security 6.00% |
6.00% |
| Increase in pensions N/A |
N/A |
| Inflation 6.50% |
6.50% |
These provisions for employee benefits refer to local pension regulations. The tables below provide an overview of the pension costs included in the consolidated income statement, and the amounts recognized in the statement of financial position for the defined pension plan of Inoutic/Deceuninck GmbH, Deceuninck Productions GmbH & Co. KG, Ege Profil AS and the Belgian subsidiaries of the last 2 years:
| 2016 | 2017 | |||||||
|---|---|---|---|---|---|---|---|---|
| COMPONENTS OF PENSION COST (in € thousand) |
INOUTIC / DECEUNINCK GMBH (GERMANY) |
EGE PROFIL (TURKEY) |
DECEUNINCK NV (BELGIUM) |
TOTAL | INOUTIC / DECEUNINCK GMBH (GERMANY) |
EGE PROFIL (TURKEY) |
DECEUNINCK NV (BELGIUM) |
TOTAL |
| Current service cost | 211 | 104 | 753 | 1,068 | 234 | 256 | 972 | 1,462 |
| Interest cost | 310 | 101 | 312 | 723 | 220 | 122 | 278 | 620 |
| RECOGNIZED IN INCOME STATEMENT |
521 | 205 | 1,065 | 1,791 | 454 | 378 | 1,250 | 2,082 |
| AMOUNTS | 2016 | 2017 | ||||||
|---|---|---|---|---|---|---|---|---|
| RECOGNIZED IN THE STATEMENT OF FINANCIAL POSITION (in € thousand) |
INOUTIC / DECEUNINCK GMBH (GERMANY) |
EGE PROFIL (TURKEY) |
DECEUNINCK NV (BELGIUM) |
TOTAL | INOUTIC / DECEUNINCK GMBH (GERMANY) |
EGE PROFIL (TURKEY) |
DECEUNINCK NV (BELGIUM) |
TOTAL |
| Present value of defined benefit obligation |
14,905 | 1,350 | 6,596 | 22,851 | 14,412 | 2,589 | 5,803 | 22,805 |
| NET LIABILITY (ASSET) | 14,905 | 1,350 | 6,596 | 22,851 | 14,412 | 2,589 | 5,803 | 22,805 |
| 2016 | 2017 | |||||||
|---|---|---|---|---|---|---|---|---|
| CHANGE IN PENSION OBLIGATIONS (in € thousand) |
INOUTIC / DECEUNINCK GMBH (GERMANY) |
EGE PROFIL (TURKEY) |
DECEUNINCK NV (BELGIUM) |
TOTAL | INOUTIC / DECEUNINCK GMBH (GERMANY) |
EGE PROFIL (TURKEY) |
DECEUNINCK NV (BELGIUM) |
TOTAL |
| AT THE BEGINNING OF | 13,178 | 1,494 | 3,317 | 17,989 | 14,905 | 1,350 | 6,596 | 22,851 |
| Current service cost | 211 | 104 | 753 | 1,068 | 234 | 256 | 972 | 1,462 |
| Interest cost | 310 | 101 | 312 | 723 | 220 | 122 | 278 | 620 |
| Plan participants' contributions |
172 | 172 | 189 | 189 | ||||
| Actuarial (gain) / loss | 1,739 | 35 | 1,164 | 2,938 | (411) | 1,187 | (815) | (40) |
| Benefits paid directly | (532) | (162) | (418) | (1,112) | (536) | (221) | (2,166) | (2,923) |
| Initial recognition of present value of funded obligations |
10,008 | 10,008 | 278 | 278 | ||||
| Change in fair value of plan assets |
(8,712) | (8,712) | 749 | 749 | ||||
| Exchange rate differences | (222) | (222) | (382) | (382) | ||||
| AT THE END OF | 14,905 | 1,350 | 6,596 | 22,851 | 14,412 | 2,589 | 5,803 | 22,805 |
5 Year evolution of the pension assets and liabilities is ass follows:
| AS PER 31 DECEMBER (in € thousand) | 2013 | 2014 | 2015 | 2016 | 2017 |
|---|---|---|---|---|---|
| Present value of defined benefit obligation | 14,394 | 17,636 | 16,495 | 31,563 | 30,768 |
| Fair value of plan assets | 0 | 0 | 0 | (8,712) | (7,963) |
| DEFICIT (SURPLUS) IN THE PLAN | 14,394 | 17,636 | 16,495 | 22,851 | 22,805 |
Sensitivity analysis on discount rate shows the following impacts:
| AS PER 31 DECEMBER 2017 | INOUTIC / DECEUNINCK GMBH (GERMANY) |
DECEUNINCK NV (BELGIUM) |
||
|---|---|---|---|---|
| Change in discount rate | (0.20%) | 0.20% | (0.25%) | (0.25%) |
| IMPACT ON PRESENT VALUE OF DEFINED BENEFIT OBLIGATION (IN € THOUSAND) |
(447) | 424 | 89 | (85) |
| (in € thousand) | WARRANTIES | CLAIMS | OTHER | TOTAL |
|---|---|---|---|---|
| AS PER 31 DECEMBER 2016 | 1,753 | 1,199 | 3,511 | 6,463 |
| Additions | 400 | 81 | 2,125 | 2,607 |
| Utilizations | (424) | (125) | (161) | (710) |
| Reversals | (354) | 0 | (1,307) | (1,660) |
| Translation adjustments | (138) | 0 | (343) | (481) |
| AS PER 31 DECEMBER 2017 | 1,238 | 1,155 | 4,008 | 6,402 |
| Non-current | 1,238 | 1,155 | 3,846 | 6,239 |
| Current | 0 | 0 | 162 | 162 |
Provisions are recognized for indemnities related to warranties on products sold during the past 10 years, on the basis of experience with repairs and returns. The Group expects that most of the provisions intended to cover warranty obligations will be utilized within a period of 2 to 3 years.
The provisions for claims mainly relate to claims for quality issues of products sold. It is currently not clear when the legal procedures will be concluded and what the outcome will be.
The other provisions include a large number of items such as provisions for legal disputes.
The following tables provide an overview of the interest bearing debts of the Group at year end:
Long-term interest bearing debts mainly consist of the € 100 million retail bond issued by Deceuninck NV in December 2015 with maturity date 8 December 2022
and a fixed interest rate of 3.75%. A second component of the long-term interest bearing loans is a term loan (initially € 25 million with a fixed interest rate ot 3.17%) with the European Bank for Reconstruction and Development ('EBRD loan') to finance the construction of the new factory in Menemen (TR).
| LONG-TERM INTEREST BEARING LOANS (in € thousand) | 2016 | 2017 |
|---|---|---|
| Loans from financial institutions | 29,479 | 29,826 |
| Retail Bond 3.75% - 08 Dec 2022 | 99,727 | 99,773 |
| TOTAL | 129,206 | 129,599 |
Short-term interest bearing debts mainly consist of working capital loans received from commercial banks in Turkey.
As of 31 December 2017 Deceuninck had € 50 million committed but undrawn credit lines available.
| SHORT-TERM INTEREST BEARING LOANS (in € thousand) | 2016 | 2017 |
|---|---|---|
| Loans from financial institutions | 31,640 | 30,720 |
| TOTAL | 31,640 | 30,720 |
All interest bearing debt of Deceuninck is unsecured following the execution of a release agreement whereby the memberbanks of the 2015 syndicated credit facility have agreed to release the securities that were pledged before to guarantee Deceuninck's obligations under this credit facility. Usual financial covenants (Leverage, Interest Cover, ...) are applicable to the syndicated credit facility, the retail bond and the
| EBRD loan. As per 31 December 2017 and at all preceding |
|---|
| testing dates throughout 2017, Deceuninck Group has met all |
| its covenants. |
| The following table provides a summary of the outstanding |
| financial debt by currency, the average interest rates and |
| maturity profile as per 31 December 2017: |
| TERMS AND MATURITY PROFILE (in € thousand) | INTEREST % | DUE WITHIN 1 YEAR |
DUE BETWEEN 1 AND 5 YEARS |
DUE AFTER 5 YEARS |
TOTAL |
|---|---|---|---|---|---|
| 2016 | 31,640 | 24,934 | 104,272 | 160,846 | |
| 2017 | 30,735 | 29,812 | 99,773 | 160,320 | |
| Of which | 0 | ||||
| EUR | 3.60% | 4,381 | 19,182 | 99,773 | 123,336 |
| TRY | 10.90% | 26,354 | 10,630 | 0 | 36,984 |
The Group leases mainly vehicles, office equipment and buildings. The total amount paid in 2017 for operational leasing amounts to € 8,291 thousand (2016: € 8,390 thousand).
The table below provides an overview of the payments to be made over the coming financial years:
| 2016 OPERATIONAL LEASING (in € thousands) |
2017 |
|---|---|
| <1 year 7,208 |
8,777 |
| 1-5 years 14,245 |
25,128 |
| >5 years 14,367 |
12,107 |
| TOTAL 35,820 |
46,013 |
| (in € thousand) | 2016 | 2017 |
|---|---|---|
| TRADE DEBTS | 101,593 | 87,488 |
| Derivative financial instruments | 330 | 1,099 |
| Guarantees from Customers | 1,546 | 882 |
| Accrued interests | 1,188 | 1,039 |
| Accrued charges | 1,427 | 450 |
| Deferred income | 1,064 | 561 |
| Other | 803 | (136) |
| OTHER LIABILITIES | 6,359 | 3,895 |
The conditions for the above mentioned trade debts and other debts are as follows:
Trade debts include, besides the invoiced purchases also a provision for invoices to be received, a provision for credit notes to be issued, foreign currency translation differences
and advance payments received.
| AGEING ANALYSIS OF TRADE DEBTS | NET CARRYING | PAYABLE | |||
|---|---|---|---|---|---|
| (in € thousand) | VALUE | <90 DAYS | 91-180 DAYS | 181-365 DAYS | >365 DAYS |
| As per 31 December 2016 | 101,593 | 100,896 | 145 | 226 | 326 |
| As per 31 December 2017 | 87,488 | 86,401 | 781 | (25) | 331 |
The Group offers the possibility to staff members, senior management members and the members of the Executive Team to register for stock option and warrant agreements. The purpose for such a decision is to motivate the staff members, senior management and the members of the Executive Team, by enabling them to acquire shares in the company under relatively advantageous terms, thereby increasing and improving their commitment to the company.
The balance of outstanding options (Plans 2003-2010) at the end of December 2017 is 197,875. One option entitles the holder to buy one Deceuninck share at a fixed exercise price. All options relating to the stock option plans granted in 1999, 2000, 2001 and 2002 have been exercised, forfeited or expired. The options expire if they are not exercised on the last day of the last exercise period. The options can be exercised for the first time after the end of the third calendar year, following the year in which the offer has taken place. The exercise period, relating to the plans of 2003, 2004, 2005 and 2007, has been extended with 5 years in 2009.
The exercise price of an option will be equal to the lowest of (i) the average price of the share on the stock exchange during the 30-day period preceding the offer, or (ii) the latest closing price preceding the day of the offer.
| STOCK OPTIONS OVERVIEW |
2003 | 2004 | 2005 | 2007 | 2008 | 2009 | 2010 | TOTAL |
|---|---|---|---|---|---|---|---|---|
| Grant date | 19/12/03 | 23/12/04 | 22/12/05 | 19/12/07 | 12/12/08 | 27/10/09 | 23/12/10 | |
| Acceptance date | 17/02/04 | 21/02/05 | 20/02/06 | 17/02/08 | 11/02/09 | 26/12/09 | 22/02/11 | |
| Number of beneficiaries at grant date |
42 | 33 | 53 | 74 | 68 | 2 | 4 | |
| Exercise price (in €) | 25.22 | 22.7 | 22.81 | 15.54 | 2.95 | 1.36 | 1.7 | |
| Granted | 64,000 | 49,000 | 66,250 | 70,750 | 70,750 | 75,000 | 75,000 | 470,750 |
| Accepted | 47,500 | 35,375 | 64,250 | 64,500 | 64,150 | 75,000 | 75,000 | 425,775 |
| Exercised | 0 | 0 | 0 | 0 | 0 | (50,000) | (65,000) | (115,000) |
| Forfeited | (15,000) | (11,750) | (23,750) | (29,250) | (28,150) | (0) | (5,000) | (112,900) |
| Expired | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| OUTSTANDING 31/12/2017 | 32,500 | 23,625 | 40,500 | 35,250 | 36,000 | 25,000 | 5,000 | 197,875 |
| Excercisable 31/12/2017 | 32,500 | 23,625 | 40,500 | 35,250 | 36,000 | 25,000 | 5,000 | 197,875 |
| Exercisable 31/12/2017 | 32,500 | 23,625 | 40,500 | 35,250 | 36,000 | 25,000 | 5,000 | |
| Exercise periods | 2007-2013 | 2008-2014 | 2009-2015 | 2011-2017 | 2012-2018 | 2013-2019 | 2014-2020 | |
| Extension of exercise periods | 2014-2018 | 2015-2019 | 2016-2020 | 2018-2022 | NA | NA | NA |
| OPTIONS MOVEMENTS IN 2016 |
2003 | 2004 | 2005 | 2007 | 2008 | 2009 | 2010 | TOTAL | WEIGHTED AVERAGE EXERCISE PRICE |
|---|---|---|---|---|---|---|---|---|---|
| OUTSTANDING 2015 |
34,500 | 25,625 | 43,000 | 39,750 | 41,000 | 75,000 | 75,000 | 333,875 | 10.19 |
| Accepted | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | N/A |
| Exercised | 0 | 0 | 0 | 0 | 0 | (50,000) | (65,000) | (115,000) | N/A |
| Forfeited | (1,000) | (1,000) | (1,500) | (2,500) | (2,750) | 0 | (5,000) | (13,750) | 10.01 |
| Expired | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | N/A |
| OUTSTANDING 2016 |
33,500 | 24,625 | 41,500 | 37,250 | 38,250 | 25,000 | 5,000 | 205,125 | 15.04 |
| OPTIONS MOVEMENTS IN 2017 |
2003 | 2004 | 2005 | 2007 | 2008 | 2009 | 2010 | TOTAL | WEIGHTED AVERAGE EXERCISE PRICE |
|---|---|---|---|---|---|---|---|---|---|
| OUTSTANDING 2016 |
33,500 | 24,625 | 41,500 | 37,250 | 38,250 | 25,000 | 5,000 | 205,125 | 15,04 |
| Accepted | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | N/A |
| Exercised | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | N/A |
| Forfeited | (1,000) | (1,000) | (1,000) | (2,000) | (2,250) | 0 | 0 | (7,250) | 14.96 |
| Expired | 0 | N/A | |||||||
| OUTSTANDING 2017 |
32,500 | 23,625 | 40,500 | 35,250 | 36,000 | 25,000 | 5,000 | 197,875 | 15.04 |
The balance of the outstanding warrants at the end of December 2017 is 3,225,025. One warrant entitles the holder to buy one Deceuninck share at a fixed exercise price. Within the scope of the warrant plans, 2,317,467 warrants were exercised in the course of 2017. The warrants expire if they have not been exercised at the last day of the last exercise period. The warrants can be exercised for the first time at the end of the third calendar year of the grant.
The exercise price of a warrant will be fixed by the Remuneration Committee on the date of offer and:
| WARRANT PLANS DECEUNINCK NV | PLAN 2009 | PLAN 2010 | PLAN 2010 | PLAN 2010 | PLAN 2011 | PLAN 2011 | PLAN 2011 | PLAN 2011 | PLAN 2013 | PLAN 2013 | PLAN 2013 | PLAN 2015 | PLAN 2015 | PLAN 2015 | TOTAL |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Grant date | 30/11/09 | 31/12/09 | 31/12/09 | 23/12/10 | 21/12/11 | 21/12/11 | 21/12/12 | 21/12/12 | 17/12/13 | 17/12/13 | 17/12/14 | 16/12/15 | 21/12/16 | 21/12/16 | |
| Acceptance date | 29/01/10 | 28/02/10 | 28/02/10 | 22/02/11 | 15/02/12 | 15/02/12 | 17/02/13 | 17/02/13 | 14/02/14 | 14/02/14 | 16/02/15 | 15/02/16 | 21/02/17 | 21/02/17 | |
| Number of beneficiaries at grant date | 13 | 16 | 1 | 37 | 42 | 1 | 49 | 1 | 59 | 9 | 66 | 78 | 8 | 66 | |
| Exercise price (in €) | 1.44 | 1.46 | 1.48 | 1.7 | 0.73 | 0.85 | 1.17 | 1.18 | 1.71 | 1.76 | 1.79 | 2.395 | 2.395 | 2.2271 | |
| Share price on acceptance date (in €) | |||||||||||||||
| Granted | 549,564 | 285,000 | 67,435 | 607,500 | 490,000 | 300,000 | 485,000 | 350,000 | 332,500 | 570,000 | 910,000 | 630,000 | 710,000 | 524,000 | 6,810,999 |
| Accepted | 519,564 | 240,000 | 67,435 | 562,500 | 487,500 | 300,000 | 482,500 | 350,000 | 332,500 | 570,000 | 892,500 | 607,500 | 710,000 | 524,000 | 6,645,999 |
| Exercised | 402,564 | 150,000 | 67,435 | 404,999 | 337,499 | 300,000 | 206,657 | 233,333 | 61,650 | 153,330 | 0 | 0 | 0 | 0 | 2,317,467 |
| Forfeited | 117,000 | 90,000 | 0 | 132,501 | 127,501 | 0 | 132,502 | 0 | 91,670 | 73,334 | 140,000 | 130,000 | 30,000 | 39,000 | 1,103,508 |
| Expired | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||
| Outstanding 31/12/16 | 0 | 0 | 0 | 25,000 | 22,500 | 0 | 143,341 | 116,667 | 179,180 | 343,336 | 752,500 | 477,500 | 680,000 | 485,000 | 3,225,024 |
| Exercisable 31/12/16 | 0 | 0 | 0 | 25,000 | 22,500 | 0 | 95,561 | 175,001 | 59,727 | 114,445 | 0 | 0 | 0 | 0 | 492,233 |
| Exercise periods | 2013-2019 | 2013-2019 | 2013-2019 | 2014-2019 | 2015-2021 | 2015-2021 | 2016-2021 | 2016-2021 | 2017-2023 | 2017-2023 | 2018-2023 | 2019-2025 | 2020-2024 | 2020-2024 | |
| ASSUMPTIONS | |||||||||||||||
| Volatility | 40% | 40% | 40% | 40% | 40% | 40% | 40% | 40% | 45% | 45% | 45% | 23.95% | 23.95% | 23.95% | |
| Risk-free interest | 2.55% | 2.41% | 2.41% | 3.51% | 2.49% | 2.49% | 0.99% | 0.99% | 0.99% | 0.99% | (0.03%) | 0.49% | 0.49% | 0.49% | |
| Dividend as from 2017 (in €) | 0.03 | 0.03 | 0.03 | 0.03 | 0.03 | 0.03 | 0.03 | 0.03 | 0.03 | 0.03 | 0.03 | 0.03 | 0.03 | 0.03 | |
| Early exercised – Minimum gain | 25% | 25% | 25% | 25% | 25% | 25% | 25% | 25% | 25% | 25% | 25% | 25% | 25% | 25% | |
| Early exercised – Probability to exercise | 50% | 50% | 50% | 50% | 50% | 50% | 50% | 50% | 50% | 50% | 50% | 50% | 50% | 50% |
| MOVEMENTS 2016 | PLAN 2009 | PLAN 2010 | PLAN 2010 | PLAN 2010 | PLAN 2011 | PLAN 2011 | PLAN 2011 | PLAN 2011 | PLAN 2013 | PLAN 2013 | PLAN 2013 | PLAN 2015 | PLAN 2015 | PLAN 2015 | TOTAL | WEIGHTED AVERAGE EXERCISE PRICE |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| OUTSTANDING 2015 | 37,820 | 45,000 | 0 | 225,006 | 301,341 | 200,000 | 395,000 | 350,000 | 307,500 | 515,000 | 887,500 | 0 | 0 | 0 | 3,264,167 | 1.47 |
| Accepted | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 607,500 | 607,500 | 2.40 | ||
| Exercised | (15,000) | 0 | 0 | (110,004) | (78,001) | (47,140 | (60,826) | (32,354) | 0 | 0 | 0 | 0 | (343,325) | 1.21 | ||
| Forfeited | 0 | (15,000) | 0 | (22,501) | (35,001) | 0 | (25,834) | 0 | (30,000) | 0 | (20,000) | (20,000) | (168,336) | 1.49 | ||
| Expired | 0 | N/A | ||||||||||||||
| OUTSTANDING 2016 | 22,820 | 30,000 | 0 | 92,501 | 188,339 | 152,860 | 308,340 | 317,646 | 277,500 | 515,000 | 867,500 | 587,500 | 0 | 0 | 3,360,006 | 1.66 |
| MOVEMENTS 2017 | PLAN 2009 | PLAN 2010 | PLAN 2010 | PLAN 2010 | PLAN 2011 | PLAN 2011 | PLAN 2011 | PLAN 2011 | PLAN 2013 | PLAN 2013 | PLAN 2013 | PLAN 2015 | PLAN 2015 | PLAN 2015 | TOTAL | WEIGHTED AVERAGE EXERCISE PRICE |
|
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| OUTSTANDING 2016 | 22,820 | 30,000 | 0 | 92,501 | 188,339 | 152,860 | 308,340 | 317,646 | 277,500 | 515,000 | 867,500 | 587,500 | 0 | 0 | 3,360,006 | 1.66 | |
| Accepted | 710,000 | 524,000 | 1,234,000 | 2.32 | |||||||||||||
| Exercised | (22,820) | (30,000) | 0 | (67,501) | (165,839) | (152,860) | (145,831) | (200,979) | (89,150) | (125,830) | 0 | 0 | 0 | 0 | (1,000,810) | 1.22 | |
| Forfeited | 0 | 0 | 0 | 0 | 0 | 0 | (19,168) | 0 | (36,670) | (18,334) | (115,000) | (82,500) | (27,500) | (69,000) | (368,172) | 2.01 | |
| Expired | N/A | ||||||||||||||||
| OUTSTANDING 2017 | 0 | 0 | 0 | 25,000 | 22,500 | 0 | 143,341 | 116,667 | 151,680 | 370,836 | 752,500 | 505,000 | 682,500 | 455,000 | 3,225,024 | 2.01 |
IFRS 2 has a negative impact of € 534 thousand on the results of 2017. Stock option and warrant plans were valued on the basis of the binominal tree structure. Volatility was determined on the basis of historical data.
During 2017, the Group made purchases of € 154 thousand (€ 1,570.4 thousand in 2016) and sales of € 1,465 thousand (€ 1,445 thousand in 2016), under normal market conditions, from or to companies to which Directors of the company are related to.
The purchases involved repair and maintenance of containers and purchase of an energy installation.
Total remuneration of members of the Board of Directors in 2017 amounted to € 263,500 (€ 259,500 in 2016). This amount includes additional remunerations granted to Directors for their involvement in Board committees. These remunerations are granted by the General Meeting and are included in general expenses.
Directors charged with special missions and projects can receive appropriate remuneration.
In 2017, the CEO received a remuneration in the amount of € 460,080. The members of the Executive Team (including one member that no longer works for the Company since July 2017) excluding CEO received total remunerations of € 2,046,940 (€ 2,521,475 in 2016).
In order to align the interests of the company and its shareholders with the interests of Executive Team members, part of the remuneration package shall be linked to company performance and another part to individual performance. By weighing both factors against each other in a responsible manner (70% corporate results/30% individual results) a balance can be achieved between a result oriented approach (Top Performance) and the manner in which these results are obtained (taking into account the core values: Candor, Top Performance and Entrepreneurship).
Options and/or warrants on the shares of the company are granted to members of the Executive Team. Pursuant to a new warrant plan issued on December 21th, 2017 770,000 (710,000 as per 21/12/2016) warrants were granted to the members of the Executive Team. These option and warrant plans are not related to the performance of the Group.
During 2017 the following charges of the external auditor were included in the Group's income statement:
| Audit related services | € 571,410 |
|---|---|
| Other services | € 53,000 |
There are no indicators of circumstances that might question the continuity of the activities.
The most important financial risks for the Group are exchange rate risk, interest rate risk, credit risk and liquidity risk.
The exchange rate risk of the Group can be split into two categories: translation risk and transaction risk.
Translation risk arises from the conversion of financial figures of foreign subsidiaries outside the Eurozone into the Group's reporting currency, the euro. The main currencies for this kind of risk are the US dollar and the Turkish lira. This kind of exchange rate risk is not hedged.
Transactional exchange rate risk arises when an entity of the Group enters into a transaction which will be settled in a currency which is not the functional currency of that entity. Transactional exchange rate risk within Deceuninck can be of operational or financial nature.
When this risk is associated with sales and purchases in foreign currencies as a result of the commercial activities of the Group, it is denominated as operational. The most important transactional exchange rate risks of operational nature originate from purchases of raw materials in Euro and US dollar by the Turkish subsidiaries. Sales in Euro by the Turkish subsidiaries mitigate to some extent this risk.
When transactional exchange rate risk is associated with loans in foreign currencies it is denominated as financial. The most important risks of this nature originate from loans in EUR taken by the Turkish subsidiaries. Some intercompany loans in RUB and USD for which repayment is neither planned nor likely in the near future have been designated as 'Net Investment in Foreign Operations'. As such, the exchange results on these intercompany loans are recognized directly in Other Comprehensive Income and accumulated in a separate component of equity until the disposal of the foreign operation.
The Group aims to minimize the impact on the profit and loss accounts of exchange rate fluctuations on the monetary assets and liabilities recognized on the balance sheet. These exchange rate risks are hedged as much as possible by
offsetting monetary assets in one currency (for example trade receivables) against monetary liabilities (for example trade debts) in the same currency ('natural hedging'). The remaining exchange rate risk, after the optimization of natural hedging, is hedged with financial instruments ('financial hedging') if the cost is considered as reasonable.
The most important financial instruments used by the Group for the hedging of foreign exchange rate risks are 3-month forward contracts.
It is the policy of the Group to protect its subsidiaries as much as possible from exchange rate risks. Therefore these risks are centralized as much as possible at the parent company Deceuninck NV and are primarily managed at Group level. Exchange rate risks at the Turkish subsidiary Ege are monitored closely by Corporate Treasury, but are hedged by the Turkish subsidiaries through local banks.
The table below provides an overview of the existing FX forward contracts, grouped by currency, at the end of December 2017:
| PURCHASE OR SALE |
CURRENCY | AMOUNT | MATURITY DATE |
MTM 2017 (IN €) |
|---|---|---|---|---|
| CLP 4,196,555,000 | Q1 2018 | (186,408) | ||
| COP 7,522,500,000 | Q1 2018 | (10,407) | ||
| GBP | 3,000,000 | Q1 2018 | 12,167 | |
| HRK | 47,376,000 | Q1 2018 | (89,730) | |
| Forward | INR | 192,625,000 | Q1 2018 | (5,490) |
| sales | PLN | 37,800,000 | Q1 2018 | (67,974) |
| RUB | 236,878,000 | Q1 2018 | (27,517) | |
| TRY | 12,900,000 | Q1 2018 | 161,388 | |
| TRY | 8,600,000 | Q2 2018 | 81,139 | |
| USD | 490,000 | Q1 2018 | 5,358 | |
| EUR | 7,500,000 | Q1 2018 | (204,139) | |
| Forward purchases |
USD | 1,900,000 | Q1 2018 | (22,952) |
| USD | 22,063,885 | Q1 2018 | (489,578) |
Future transactions imply future purchases and sales that are not recognized yet as monetary assets or liabilities on the balance sheet. Normally these transactions are not hedged, but if opportunities arise on the foreign exchange markets, a part of the future purchases in US dollar in Turkey might be hedged.
As required by IFRS 7, 'Financial instruments: Disclosures', a sensitivity analysis was carried out on the evolution of the exchange rates. Based on the volatility of the relevant currencies, we have estimated the impact of the possible exchange rate movements on our financial result as follows:
| SENSITIVITY ANALYSIS ON THE POSITIONS IN FOREIGN CURRENCIES AS PER 31 DECEMBER 2017* | ||||||||
|---|---|---|---|---|---|---|---|---|
| CURRENCY | AMOUNT (IN THOUSAND) |
CLOSING RATE 31/12/2017 |
POSSIBLE VOLATILITY OF THE EXCHANGE RATE IN %** |
RATE USED FOR THE SENSITIVITY ANALYSIS |
EFFECT ON REVALUATION (IN € THOUSAND) |
|||
| USD | (622) | 1.1993 | 3.62% | 1.2427 | 1.1559 | 18 | (19) | |
| GBP | (1,028) | 0.88723 | 3.87% | 0.9216 | 0.8529 | 43 | (47) | |
| PLN | 3,340 | 4.1770 | 5.65% | 4.4132 | 3.9408 | (43) | 48 | |
| CZK | 12,763 | 25.535 | 2.05% | 26.0592 | 25.0108 | (10) | 10 | |
| TRY | (89,339) | 4.5155 | 1.55% | 4.5853 | 4.4457 | 301 | (310) | |
| RUB | 28,162 | 68.8668 | 5.41% | 72.5953 | 65.1383 | (21) | 23 | |
| TOTAL | 288 | (295) |
(*) Position after financial hedging (net exposures) (**) 3 month volatility
If the euro would have weakened/strengthened during 2017 in line with the above mentioned possible rates, the profit of the financial year would have been about € 288 thousand higher / € 295 thousand lower.
Since at 31 December 2017 and 2016 there are no outstanding debts at variable interest rate, there was no necessity to – as required by IFRS 7, 'Financial instruments: disclosures' – carry out a sensitivity analysis on the evolution of the interest rates
The products of Deceuninck are used almost exclusively in the construction industry. Hence, the exposure to credit risk is highly dependent on the performance of the building industry and the general economic conditions.
In order to minimize the credit risk, we are closely monitoring the payment behavior of each debtor. Deceuninck uses credit insurance to mitigate the credit risk related to trade receivables. Two credit insurance policies have been taken out with two different insurers. Commercial limits, set based on financial information and on business knowledge, can deviate from the insured limits.
Deceuninck Group holds sufficient cash, cash equivalents and committed credit facilities for the funding of its operating activities.
Liquidity problems could arise if an event of default would occur under the syndicated loan agreement or the retail bond which is not remedied within the foreseen remedy period. In that case, the outstanding amounts under the syndicated loan agreement and the retail bond might become immediately due and payable, which would jeopardize the liquidity situation of Deceuninck.
In order to detect possible events of default as a consequence of non-compliance with financial covenants at an early stage and to enable the Group to take corrective measures, a mid term financial forecast is kept up to date and resulting impact on covenants is simulated.
For the Turkish subsidiaries, liquidity problems could arise if loans becoming due could not be refinanced through local Turkish banks. However, given the good health of the Turkish banking sector, and given the excellent reputation and track record of the Turkish subsidiaries of the Group, this is very unlikely. Moreover, under the current financing terms it is possible for the Restricted Group to give intercompany loans to the Turkish subsidiaries. These intercompany loans are however limited in duration (up to 3 months) and amount (up to € 7,500,000).
In addition to the above mentioned risk of non-compliance with the financial covenants, the liquidity risk is also linked to the evolution of the working capital of the Group, which is highly subject to seasonal fluctuations and the capital expenditure level of the Group. This is therefore closely monitored.
A comparison is provided below between the net carrying value and the fair value of financial instruments, which have been included in the financial statements. The fair value of
the loans was calculated by defining the expected future cash flows, and by discounting these on common, accepted interest rates.
| FAIR VALUE OF FINANCIAL INSTRUMENTS | NET CARRYING VALUE | FAIR VALUE | ||
|---|---|---|---|---|
| (in € thousand) | 2016 | 2017 | 2016 | 2017 |
| FINANCIAL ASSETS | ||||
| Cash and cash equivalents | 72,425 | 41,993 | 72,425 | 41,993 |
| Long-term trade receivables | 409 | 325 | 409 | 325 |
| Financial fixed assets | 65 | 65 | 65 | 65 |
| Derivative financial instruments | 1,947 | 255 | 1,947 | 255 |
| FINANCIAL LIABILITIES | ||||
| Loans with a variable interest rate | 0 | 0 | 0 | 0 |
| Loans with a fixed interest rate | 160,846 | 160,320 | 166,452 | 164,675 |
| Financial leasing | (0) | (0) | (0) | (0) |
| Derivative financial instruments | 330 | 1,099 | 330 | 1,099 |
| FAIR VALUE OF FINANCIAL INSTRUMENTS | NET CARRYING VALUE | FAIR VALUE | |||
|---|---|---|---|---|---|
| (in € thousand) | 2016 | 2017 | 2016 | 2017 | |
| FINANCIAL ASSETS | |||||
| Cash and cash equivalents | 72,425 | 41,993 | 72,425 | 41,993 | |
| Long-term trade receivables | 409 | 325 | 409 | 325 | |
| Financial fixed assets | 65 | 65 | 65 | 65 | |
| Derivative financial instruments | 1,947 | 255 | 1,947 | 255 | |
| FINANCIAL LIABILITIES | |||||
| Loans with a variable interest rate | 0 | 0 | 0 | 0 | |
| Loans with a fixed interest rate | 160,846 | 160,320 | 166,452 | 164,675 | |
| Financial leasing | (0) | (0) | (0) | (0) | |
| Derivative financial instruments | 330 | 1,099 | 330 | 1,099 |
The Group uses the following hierarchical classification in determining and explaining the fair value of financial instruments by valuation technique:
q Level 3: techniques that use input with a significant impact on the recorded fair value that is not based on observable market data.
During the reporting period ending 31 December 2017, there were no transfers between Level 1 and Level 2 fair value measurements and no transfers into and out of Level 3 fair value measurements.
| DERIVATIVE FINANCIAL INSTRUMENTS – HIERARCHICAL CLASSIFICATION OF FAIR VALUE (in € thousand) |
2016 | LEVEL 1 | LEVEL 2 | LEVEL 3 |
|---|---|---|---|---|
| FX forward contracts | 1,947 | 1,947 | ||
| ASSETS AT FAIR VALUE | 1,947 | 0 | 1,947 | 0 |
| FX forward contracts | 330 | 330 | ||
| LIABILITIES AT FAIR VALUE | 330 | 0 | 330 | 0 |
As per 31 December 2017 the Group has the following financial instruments
| DERIVATIVE FINANCIAL INSTRUMENTS – HIERARCHICAL CLASSIFICATION OF FAIR VALUE (in € thousand) |
2017 | LEVEL 1 | LEVEL 2 | LEVEL 3 |
|---|---|---|---|---|
| FX forward contracts | 255 | 255 | ||
| ASSETS AT FAIR VALUE | 255 | 0 | 255 | 0 |
| FX forward contracts | 1,099 | 1,099 | ||
| LIABILITIES AT FAIR VALUE | 1,099 | 0 | 1,099 | 0 |
No significant events have occurred after the balance sheet date.
All financial periods close on 31 December 2017
| OWNERSHIP PERCENTAGE | ||||
|---|---|---|---|---|
| NAME OF THE COMPANY | REGISTERED OFFICE | 2016 | 2017 | |
| AUSTRALIA | ||||
| Deceuninck Pty. Ltd. | 71 Premier Drive Campbellfield 3061 Victoria |
100.00 | 100.00 | |
| BELGIUM | ||||
| Solardec CVBA | Bruggesteenweg 360 8830 Hooglede-Gits |
100.00 | ||
| Plastics Deceuninck NV | Bruggesteenweg 360 8830 Hooglede-Gits |
100.00 | 100.00 | |
| Decalu NV | Bruggesteenweg 360 8830 Hooglede-Gits |
100.00 | 100.00 | |
| BOSNIA AND HERZEGOVINA | ||||
| Inoutic / Deceuninck d.o.o | Prvi mart bb 75270 Zivinice |
100.00 | 100.00 | |
| BRAZIL | ||||
| Deceuninck do Brazil | Rua da Barra, 242 Parque Rincão CEP 06705 420 Cotia – SP Brazil |
100.00 | 100.00 | |
| BULGARIA | ||||
| Deceuninck Bulgaria EOOD | 41 Sankt Peterburg Blvd 4000 Plovdiv |
100.00 | 100.00 | |
| CHILE | ||||
| Deceuninck Importadora Limitada | Volcán Lascar number 801, 3G and 3H, 9031078 Pudahuel, Santiago |
99.99 | 99.99 | |
| CHINA | ||||
| Rep. Office Deceuninck NV China (Qingdao) | 128 Xiang Gang Dong Lu Shuang Long Yuan 3-2-402 266071 Laoshan, Qingdao, Shandong |
100.00 | 100.00 | |
| CROATIA | ||||
| Inoutic d.o.o. | Industrijska ulica 3 10370 Dugo Selo (Zagreb) |
100.00 | 100.00 | |
| Deceuninck d.o.o. | Kipišće 13 10434 Strmec Samoborski |
|||
| CZECH REPUBLIC | ||||
| Inoutic / Deceuninck Spol. s r.o | Tuřanka 1519/115a 627 00 Brno-Slatina |
100.00 | 100.00 |
| OWNERSHIP PERCENTAGE | |||
|---|---|---|---|
| NAME OF THE COMPANY | REGISTERED OFFICE | 2016 | 2017 |
| COLOMBIA | |||
| Deceuninck S.A.S. | Calle 1 n) 2 05 Sec Aguas prietas | ||
| VTE Cartagena Turbaco 14, 45, 16 Zona Franca Turbaco |
|||
| Bolívar | 100.00 | ||
| FRANCE | |||
| Deceuninck SAS | Zone Industrielle – Impasse des Bleuets 80700 Roye |
100.00 | 100.00 |
| Distridec SAS | Zone Industrielle – Impasse des Bleuets 80700 Roye |
100.00 | 100.00 |
| GERMANY | |||
| Inoutic / Deceuninck GmbH | Bayerwaldstrasse 18 94327 Bogen |
100.00 | 100.00 |
| Inoutic / Deceuninck Produktions GmbH & Co KG | Bayerwaldstrasse 18 | ||
| 94327 Bogen | 100.00 | 100.00 | |
| Deceuninck Holding Germany GmbH | Bayerwaldstrasse 18 94327 Bogen |
100.00 | 100.00 |
| INDIA | |||
| Ege Profil Tic. ve San. A.S. (branch) | Mannur Village No 523 B Block | ||
| Mannur Village – Sriperumbudur Taluk 631203 Chennai |
100.00 | 100.00 | |
| Deceuninck Profiles India Private Limited | Building 09, Casa Grande Distripark | ||
| Satharai Village, Thiruvallur Taluk | |||
| Thiruvallur Thiruvallur TN 631203 | 100.00 | 100.00 | |
| IRELAND | |||
| Deceuninck Ireland Unltd. | 25-28 Adelaide Road 4th floor |
||
| Dublin 2 | 100.00 | ||
| ITALY | |||
| Deceuninck Italia S.r.l. | Via Padre Eugenio Barsanti, 1 | ||
| LITHUANIA | 56025 Pontedera (PI) | 100.00 | 100.00 |
| Deceuninck Baltic UAB (in liquidation) | Saltoniskiu str. 29/3 | ||
| 08105 Vilnius | 100.00 | 100.00 | |
| POLAND | |||
| Inoutic / Deceuninck Sp. z o.o. | Jasin, Ul Poznanska 34 62-020 Swarzedz |
100.00 | 100.00 |
| ROMANIA | |||
| Deceuninck Romania SRL | Sos. De Centura nr. 13A | ||
| Complex "Key Logistics Center" Chiajna |
|||
| Jud.Ilfov | 100.00 | 100.00 | |
| RUSSIA | |||
| Deceuninck Rus OOO | Profsoyusnaya str., 65 | ||
| 117342 Moscow | 100.00 | 100.00 |
| OWNERSHIP PERCENTAGE | ||||
|---|---|---|---|---|
| NAME OF THE COMPANY | REGISTERED OFFICE | 2016 | 2017 | |
| SERBIA | ||||
| Inoutic / Deceuninck d.o.o. | Kruzni put bb 11309 Beograd – Lestane |
100.00 | 100.00 | |
| THAILAND | ||||
| Deceuninck (Thailand) Co.,Ltd. | 2/3 Bangna Towers A 17fl RM 1704B Bangna-Trad, Km 6.5 Bangkaew, Bangplee Samutprakarn 10540 |
74.00 | 74.00 | |
| Asia Profile Holding Co. Ltd. | 2/3 Bangna Towers A 17fl RM 1704B Bangna-Trad, Km 6.5 Bangkaew, Bangplee Samutprakarn 10540 |
48.95 | 48.95 | |
| THE NETHERLANDS | ||||
| Deceuninck Kunststof B.V. | Prins Bernhardplein 200 1097 JB Amsterdam |
100.00 | 100.00 | |
| Deceuninck Beheer B.V. | Prins Bernhardplein 200 1097 JB Amsterdam |
100.00 | 100.00 | |
| TURKEY | ||||
| Ege Profil Ticaret ve Sanayi AS | Atatürk Plastik OSB Mahallesi, 5. Cadde No: 4 Menemen/İZMİR 35660 IZMIR |
97.54 | 95.88 | |
| Ege Pen AS | Atatürk Plastik OSB Mahallesi, 5. Cadde No: 4 Menemen/İZMİR 35660 IZMIR |
99.99 | 99.99 | |
| UNITED KINGDOM | ||||
| Deceuninck Ltd. | 2 Temple Back East Temple Quay Bristol BS1 6EG |
100.00 | 100.00 | |
| Status Systems PVCu Ltd. | 2 Temple Back East Temple Quay Bristol BS1 6EG |
100.00 | 100.00 | |
| Range Valley Extrusions Ltd. | 2 Temple Back East Temple Quay Bristol BS1 6EG |
100.00 | 100.00 | |
| Deceuninck Holdings (UK) Ltd. | 2 Temple Back East Temple Quay Bristol BS1 6EG |
100.00 | 100.00 | |
| UNITED STATES | ||||
| Deceuninck North America Inc. | 351 North Garver Road Monroe, 45050 Ohio |
100.00 | 100.00 | |
| Deceuninck North America, LLC | 203B North Garver Road Monroe, 45050 Ohio |
100.00 | 100.00 |
Within the framework of the financial restructuring in 2009, the obligations of the Group under the credit agreement ('Credit Facility 2009') are covered by guarantees and securities pledged on a large portion of the assets of the Group.
The most important securities provided by Deceuninck NV (Belgium) can be detailed as follows: A mortgage on real estate
The other companies in the Group mainly issued securities over their real estate, receivables and bank accounts, inventory, machinery and other equipment and the shares they hold in other entities within the Group. In addition, there is a security over the material intellectual property rights. The Group also pledged the shares in Ege Profil. The Turkish subsidiaries did not issue guarantees or securities in relation to the financial restructuring.
These securities have not been released with the repayment of the Credit Facility 2009.
The credit facility for Deceuninck NV of 2012, as amended and extended in May 2015, was secured by a package of guarantees and securities consisting of:
On 31 October 2016, Deceuninck NV and the other companies in the Group entered into a Release Agreement in connection with the Senior Facilities Agreement dated 11 September 2009, as amended and restated, in which the Security Agent, the Coordinator, the Facility Agent and the Lenders agreed to release and discharge Deceuninck NV and the Group companies on the date of the Release Agreement from the Security and all their obligations and liabilities under the Security Documents. The execution of the release was started in 2017 and shall continue in 2018.
The following pages are extracts from the annual report and financial statements of Deceuninck NV. The complete version of the financial statements and the annual report will be available on request and via the Deceuninck website, at the times stipulated by the Belgian Code on Companies. The annual financial statements and the annual report are
prepared in accordance with Belgian legal requirements, which differ considerably from the IFRS accounting principles that are applied to the consolidated financial statements. The External Auditor has issued an unqualified opinion regarding the annual financial statements of Deceuninck NV.
The income statement for 2017 is presented below:
| 2016 INCOME STATEMENT (in € thousand) |
2017 |
|---|---|
| Operating revenues 180,415 |
180,378 |
| Operating costs (175,232) |
(178,833) |
| OPERATING PROFIT 5,183 |
1,545 |
| Financial income 17,580 |
11,025 |
| Financial costs (40,230) |
(17,423) |
| PROFIT (+) / LOSS (-) FOR THE FINANCIAL YEAR BEFORE TAXES (17,467) |
(4,853) |
| Transfer from deferred taxes | 0 0 |
| Income tax (11) |
(571) |
| PROFIT (+) / LOSS (-) FOR THE FINANCIAL YEAR (17,478) |
(5,424) |
| Transfer from taks-free reserves | 0 0 |
| PROFIT (+) / LOSS (-) FOR THE FINANCIAL YEAR AVAILABLE FOR APPROPRIATION (17,478) |
(5,424) |
The operating revenues are more or less stable, while we have an increase of the operating costs of € 4 million. These are mainly explained by an increase of raw material prices and depreciations.
The increase of the financial results is explained by the impairments on financial fixed assets of daughter companies in 2016.
The 2017 financial year closed with a loss of € 5,4 million compared to a loss of 17.5 million in 2016.
| BALANCE SHEET (in € thousand) | 2016 | 2017 |
|---|---|---|
| Intangible fixed assets | 1,604 | 4,467 |
| Tangible fixed assets | 36,807 | 38,312 |
| Financial fixed assets | 217,133 | 184,778 |
| Non-current assets | 255,544 | 227,557 |
| Inventories | 22,891 | 27,551 |
| Trade receivables | 34,682 | 29,598 |
| Other receivables | 11,089 | 30,026 |
| Cash and cash equivalents | 18,787 | 18,429 |
| Other current assets | 3,135 | 3,645 |
| Current assets | 90,584 | 109,249 |
| TOTAL ASSETS 346,128 |
336,807 | |
| Issues capital | 53,393 | 53,787 |
| Share premiums | 91,337 | 92,168 |
| Reserves | 15,415 | 15,454 |
| Retained earnings | 22,905 | 13,353 |
| Equity | 183,050 | 174,763 |
| Provisions and deferred taxes | 1,510 | 1,830 |
| Long-term debts | 100,000 | 100,000 |
| Short-term debts | 60,103 | 58,954 |
| Other liabilities | 1,465 | 1,261 |
| Liabilities | 161,568 | 160,215 |
| TOTAL EQUITY AND LIABILITIES 346,128 |
336,807 |
The most important fluctuations are:
q Decrease of financial fixed assets is explained by the merger of Pimas and EGE Profil and because of an intercompany loan which was forgiven in 2017.
q Increase in other receivables is mainly explained by an increase in intercompany receivables, resulting primarily from the merger of Pimas and EGE Profil.
q Decrease of equity due to result of the year and dividend payable over 2017.
The allowance for trade receivables is important to our audit due to the magnitude of the gross trade receivables amount (€ 127.4 million) and related allowance, and because the calculation of the allowance involves management's judgment in assessing the recoverability of the trade receivables of the Group based on the elements described above.
We have, amongst others, performed following procedures:
The provision for post-employment employee benefits amounts to € 23 million or 4.1% of the consolidated balance sheet as at 31 December 2017. The provisions for postemployment employee benefits of the Group and the underlying plans are described in Note 15 of the Consolidated Financial Statements. The Group recognizes the provision for post-employment employee benefits based on the requirements of IAS19R.
The valuation of this provision is significant to our audit because it is a complex calculation process that requires the involvement of an external actuarial specialist, and because it contains various judgmental decisions of management in respect of the underlying assumptions of the calculation. The valuation of the provision is based on the personnel data of the participants in the pension plans and to which certain actuarial assumptions are applied such as expected inflation, discount rate, projected average salary increase, pension age
As required by law and the Company's articles of association, we report to you as statutory auditor of Deceuninck NV (the "Company") and its subsidiaries (together the "Group"). This report includes our opinion on the consolidated statement of financial position as at 31 December 2017, the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year ended 31 December 2017 and the disclosures (all elements together the "Consolidated Financial Statements") and includes as well our report on other legal and regulatory requirements. These two reports are considered as one report and are inseparable.
We have been appointed as statutory auditor by the shareholders meeting of 25 April 2017, in accordance with the proposition by the Board of Directors following recommendation of the Audit Committee and on recommendation of the workers council. Our mandate expires at the shareholders meeting that will deliberate on the annual accounts for the year ending 31 December 2019. We have been performing the audit of the Consolidated Financial Statements of the Group since before 1990.
We have audited the Consolidated Financial Statements of Deceuninck NV, which consist of the consolidated statement of financial position as at 31 December 2017, the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year ended 31 December 2017 and the disclosures, which show a consolidated balance sheet total of € 558,600 thousands and of which the consolidated income statement shows a net profit for the year of € 13,815 thousands.
In our opinion the Consolidated Financial Statements of the Group give a true and fair view of the consolidated net equity and financial position as at 31 December 2017, as well as its consolidated results and its consolidated cash flows for the year then ended in accordance with the International Financial Reporting Standards as adopted by the European Union ("IFRS") and with applicable legal and regulatory requirements in Belgium.
We conducted our audit in accordance with International Standards on Auditing ("ISAs"). Our responsibilities under those standards are further described in the section "Our responsibilities for the audit of the consolidated financial statements" of our report.
We have complied with all ethical requirements that are relevant to our audit of the Consolidated Financial Statements in Belgium, including those with respect of independence. We have obtained from the Board of Directors and the officials of the Company the explanations and information necessary for the performance of our audit and we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Consolidated Financial Statements of the current reporting period.
These matters were addressed in the context of our audit of the Consolidated Financial Statements as a whole and in forming our opinion thereon, and consequently we do not provide a separate opinion on these matters.
The allowance for trade receivables amounts to € 18.4 million as at 31 December 2017 and relates to provisions for customer balances that are deemed uncollectible. The allowance for trade receivables is calculated based on the age of the receivables, available guarantees received, amounts covered by credit insurance contract, country specific political or economic risks and history of individual customer payment behavior.
increase, personnel turnover and mortality rates. A change in these assumptions or the use of incorrect personnel data could have a material impact on the Consolidated Financial Statements.
We have, amongst others, performed following procedures:
The Board of Directors is responsible for the preparation of the Consolidated Financial Statements that give a true and fair view in accordance with IFRS and with applicable legal and regulatory requirements in Belgium. This responsibility involves implementing internal controls relevant to the preparation of the Consolidated Financial Statements that give a true and fair view and that are free from material misstatement, whether due to fraud or error.
As part of the preparation of the Consolidated Financial Statements, the Board of Directors is responsible for assessing the Group's ability to continue as a going concern, and provide, if applicable, information on matters impacting going concern. The Board of Directors should prepare the financial statements using the going concern basis of accounting, unless the Board of Directors either intends to liquidate the Company or to cease business operations, or has no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the Consolidated Financial Statements are free from material misstatement, whether due to fraud or error, and to express an opinion on these Consolidated Financial Statements based on our audit. Reasonable assurance is a high level of assurance, but not a guarantee that an audit conducted in accordance with the ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Consolidated Financial Statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and we maintain professional scepticism throughout the audit. We also perform the following tasks:
in our auditor's report to the related disclosures in the Consolidated Financial Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on audit evidence obtained up to the date of the auditor's report. However, future events or conditions may cause the Company or Group to cease to continue as a going-concern;
q Evaluating the overall presentation, structure and content of the Consolidated Financial Statements, and whether these financial statements reflect the underlying transactions and events in a true and fair view.
We communicate with the Audit Committee within the Board of Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
Because we are ultimately responsible for the opinion, we are also responsible for directing, supervising and performing the audits of the subsidiaries. In this respect we have determined the nature and extent of the audit procedures to be carried out for group entities.
We provide the Audit Committee within the Board of Directors with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the Audit Committee within the Board of Directors, we determine those matters that were of most significance in the audit of the Consolidated Financial Statements of the current period and are therefore the key audit matters. We describe these matters in our report, unless the law or regulations prohibit this.
The Board of Directors is responsible for the preparation and the content of the Board of Director's report and other information included in the annual report.
In the context of our mandate and in accordance with the additional standard to the ISA's applicable in Belgium, it is our responsibility to verify, in all material respects, the Board of Director's report and other information included in the annual report, as well as to report on these matters.
In our opinion, after carrying out specific procedures on the Board of Director's report, the Board of Director's report is consistent with the Consolidated Financial Statements and has been prepared in accordance with article 119 of the Belgian Companies Code.
In the context of our audit of the Consolidated Financial Statements, we are also responsible to consider whether, based on the information that we became aware of during the performance of our audit, the Board of Director's report and other information included in the annual report, being: q Message from the Chairman & the CEO (page 4)
q Key figures 2017 (page 103)
contain any material inconsistencies or contain information that is inaccurate or otherwise misleading. In light of the work performed, we do not need to report any material inconsistencies. In addition, we do not provide reasonable assurance regarding the Board of Director's report.
The non-financial information required by article 119 §2 of the Belgian Companies Code has been included in the Board of Director's report on the Consolidated Financial Statements, which is part of the annual report. The Group has not based the non-financial information on a European or internationally recognized framework, but did adopt certain aspects of the Global Reporting Initiative ("GRI") Standards. Consequently, we do not comment on whether this non-financial information has been prepared, in all material respects, in accordance with GRI Standards. We do not express any form of assurance regarding the individual elements included in this nonfinancial information.
We have not performed any services that are not compatible with the audit of the Consolidated Financial Statements and we have remained independent of the Company and the Group during the course of our mandate.
The fees for additional services that are compatible with the audit of the Consolidated Financial Statements intended by article 134 of the Belgian Companies Code have been correctly disclosed and detailed in the notes to the Consolidated Financial Statements.
q This report is consistent with our supplementary declaration to the Audit Committee as specified in article 11 of the regulation (EU) nr. 537/2014.
Ghent, 23 March 2018
Ernst & Young Bedrijfsrevisoren BCVBA Statutory auditor represented by
Partner*
(*) Acting on behalf of a BVBA/SPRL
7 DECEUNINCK GROUP ANNUAL REPORT 201 7 167
The undersigned declare that:
Beneconsult BVBA Pentacon BVBA Represented by Represented by Francis Van Eeckhout Paul Thiers CEO Chairman
Deceuninck Pty. Ltd. 71 Premier Drive Campbellfield 3061 Victoria T +61 3 93 088 300 – F +61 3 93 037 548 [email protected]
8830 Hooglede-Gits T +32 51 239 211 – F +32 51 227 993 www.deceuninck.com [email protected]
Cardijnlaan 15 8600 Diksmuide T +32 51 502 021 – F +32 51 504 948
Bruggesteenweg 360 8830 Hooglede-Gits T +32 51 239 211 – F +32 51 227 993
Bruggesteenweg 360 8830 Hooglede-Gits T +32 51 239 211 – F +32 51 227 993
Inoutic/Deceuninck d.o.o. Prvi mart bb 75270 Zivinice T +387 35 773313 – F +387 35 773312
Deceuninck do Brazil Rua da Barra, 242 Parque Rincão
CEP 06705 420 Cotia – SP Brazil T 11 2338 9190 www.deceuninck.com.br
Deceuninck Bulgaria EOOD 41, Sankt Peterburg Blvd. 4000 Plovdiv T +359 32 63 72 95 – F +359 32 63 72 96 [email protected]
Deceuninck Importadora Limitada Volcán Lascar number 801, 3G and 3H, Pudahuel, Santiago T +56 95 149 87 54 www.deceuninck.cl [email protected]
128 Xiang Gang Dong Lu Shuang Long Yuan 3-2-402 266071 Laoshan, Qingdao, Shandong T +86 532 858 903 57 – F +86 532 858 903 52 [email protected]
Inoutic d.o.o. Industrijska ulica 3 10370 Dugo Selo (Zagreb) T +385 1 278 1353 – F +385 1 278 1351 [email protected]
Kipišće 13 10434 Strmec Samoborski T +385 1 278 1353 – F +385 1 278 1351 [email protected]
Inoutic / Deceuninck Spol. s r. o. Tuřanka 1519/115a 627 00 Brno-Slatina T +420 547 427 777 www.inoutic.cz [email protected]
Distridec SAS Zone Industrielle – Impasse des Bleuets 80700 Roye T +33 3 22 876 666 www.deceuninck.fr [email protected]
Inoutic / Deceuninck GmbH Deceuninck Holding Germany GmbH Bayerwaldstraße 18 94327 Bogen T +49 94 22 821 0 – F +49 94 22 821 379 www.inoutic.com [email protected]
Deceuninck Profiles India Private Limited Ege Profil Tic. ve San. A.S. Building 09, Casa grande Distripark Satharai Village, Thiruvallur Taluk 631203 Chennai T +919717707732 – F +91 9717707732 www.deceuninck.in [email protected]
Deceuninck Italia S.r.l. Via Padre Eugenio Barsanti, 1 56025 Pontedera (Pl) T +39 0587 484426 – F +39 0587 54432 www.deceuninck.it [email protected]
Deceuninck Baltic UAB (in liquidation) Saltoniškiu str. 29/3, 08105 Vilnius
Inoutic / Deceuninck Sp. z o.o. Jasin, Ul. Poznanska 34 62-020 Swarzedz T +48 61 81 87000 – F +48 61 81 87001 [email protected]
Deceuninck Romania SRL Sos. De Centura nr. 13A Complex "Key Logistics Center" Chiajna Jud.Ilfov T +40 21 327 49 52 – F +40 21 323 52 90 [email protected]
Deceuninck Rus OOO Profsoyusnaya, 65, bld. 1 117342 Moscow T +7 495 642 87 95 – F +7 495 642 87 96 www.deceuninck.ru [email protected]
pr. Naumova, 5 142281 Protvino, Moscow Region T +7 4967 31 12 44 – F +7 4967 31 12 43
Pilot Pilyutov street, 11, bld. 1, liter A 198206 St. Petersburg T-F +7 812 644 43 89; +7 911 956 54 23 [email protected]
Inoutic / Deceuninck d.o.o. Kruzni put bb 11309 Beograd-Lestane T +381 11 3443217 – F +381 11 2442343
Deceuninck NV Sucursal en España Avda. de la Industria, 1007 Pol. Ind. Antonio del Rincón 45222 Borox – Toledo T +34 902 209 001 – F +34 902 209 002 www.deceuninck.es [email protected]
Deceuninck (Thailand) Co. Ltd. Asia Profile Holding Co. Ltd. 2/3 Bangna Towers A, 17 Fl., Rm.1704B Bangna-Trad, Km. 6.5, Bangkaew, Bangplee, Samutprakarn 10540 T +66 2 751 9544-5 – F +66 2 751 9546 [email protected]
Deceuninck Kunststof B.V. Deceuninck Beheer B.V. Prins Bernhardplein 200 1097JB Amsterdam [email protected]
Ege Profil Ticaret ve Sanayi AS (production) Ege Pen AS Atatürk Plastik OSB Mahallesi, 5. Cadde No: 4 Menemen/İZMİR T +90 232 398 98 98 – F +90 232 398 99 00 www.egepen.com.tr [email protected]
Sarımese Beldesi Kızılcıklık Mahallesi, İnonu Cad. Suadiye Yolu uzeri No:1 41320 Sarımeşe / Kartepe /Kocaeli T +90 262 371 57 27 – F +90 262 371 57 48 www.winsa.com.tr [email protected]
A.O.S.B. 10003 Sokak No:5 35620 Cigli – Izmir T +90 232 398 98 98 – F +90 232 398 99 83
A.O.S.B. 10003 Sokak No:5 35620 Cigli – Izmir T +90 232 328 11 37 – F +90 232 328 11 39
Ruzgarli Bahce Mahallesi, Kavak Sokak, Impa Plaza No:12, Kat:2 Beykoz/Istanbul T +90 216 537 13 60 – F +90 216 537 13 64
Icerenkoy Mahallesi, Hal Yolu Caddesi, No:5 Bay Plaza Kat:12 (Regional Office) 34752 Atasehir/Istanbul T +90 216 574 58 65 – F +90 216 574 10 53
Icerenkoy Mahallesi, Hal Yolu Caddesi, No:5 Bay Plaza Kat:3 (Sales & Marketing) 34752 Atasehir/Istanbul T +90 216 574 58 65 – F +90 216 574 10 53
Kizilirmak Mah. Alternatif Plaza 12/26 Çukurambar/Çankaya 06550 Yıldız /Cankaya/Ankara T +90 312 440 16 15 – F +90 312 441 11 18
Beştepe Mahallesi Yaşam Caddesi No:13 A/74 Merkez Yenimahalle Ankara T +90 312 442 83 60 – F +90 312 442 71 11
Yeni Mahalle 87071 Sk. Bozkurtlar Residence 50 k-3 d-3 Seyhan/Adana T +90 322 247 23 90 – F +90 322 247 23 85
Yeni Mahalle 87071 Sk. Bozkurtlar Residence 50 k-3 d-3 Seyhan/Adana T +90 322 247 23 80 – F +90 322 247 23 81
Deceuninck Ltd. Status Systems PVCu Ltd. Range Valley Extrusions Ltd. Deceuninck Holdings (UK) Ltd.
Porte Marsh Industrial Estate Calne – Wiltshire SN11 9PX T +44 1249 816 969 – F +44 1249 815 234 www.deceuninck.com/uk [email protected]
Temple Quay Bristol BS1 6EG
351 North Garver Road Monroe, 45050 Ohio
240 North Pacific Parkway 89408 Fernley, Nevada T +1 513 539 4444 – F +1 513 539 5404 www.deceuninckna.com [email protected]
| 1 | EBITDA | Earnings before interest, taxes, depreciation/ impairments of fixed assets as well as amortisation/impairment of goodwill and effect of negative goodwill = operating cash flow |
|---|---|---|
| 2 | Adjusted EBITDA | Recurring earnings before interest, taxes, depreciation/ impairments of fixed assets as well as amortisation/impairment of goodwill and effect of negative goodwill = EBITDA excluding non-recurring costs/benefits,eg restructuring costs = recurring operating cash flow |
| 3 | EBITA | Earnings before interest, taxes and amortization |
| 4 | EBIT | Earnings before interest and taxes = operational result |
| 5 | EBT | Earnings before taxes |
| 6 | EPS (non-diluted) | (Non-diluted) earnings per share |
| 7 | EPS (diluted) | (Diluted) earnings per share |
| 8 | Net debt | Financial debts – cash and cash equivalents |
| 9 | Working capital | Trade receivables + inventories – trade debts |
| 10 Liquidity | Current assets/current liabilities | |
| 11 ROCE | Return on capital employed = EBIT/Capital employed (CE) | |
| 12 Capital employed (CE) | The sum of goodwill, intangible, tangible and financial fixed assets and working capital | |
| 13 Subsidiaries | Companies in which the group owns a participation in excess of 50% | |
| 14 Gearing | Net debt compared to the equity capital | |
| 15 MTM | Marked-to-Market | |
| 16 Headcount (FTE) | Total Full Time Equivalents including temporary and external staff | |
| 17 Restricted Group | The Restricted Group consists of all entities of the Group excluding Turkish subsidiaries and their subsidiaries. |
|
| 1 | EBITDA | Earnings before interest, taxes, depreciation/ impairments of fixed assets as well as |
|---|---|---|
| 2 | Adjusted EBITDA | non-recurring costs/benefits,eg restructuring costs = recurring operating cash flow |
| 3 | EBITA | Earnings before interest, taxes and amortization |
| 4 | EBIT | Earnings before interest and taxes = operational result |
| 5 | EBT | Earnings before taxes |
| 6 | EPS (non-diluted) | (Non-diluted) earnings per share |
| 7 | EPS (diluted) | (Diluted) earnings per share |
| 8 | Net debt | Financial debts – cash and cash equivalents |
| 9 | Working capital | Trade receivables + inventories – trade debts |
| 10 Liquidity | Current assets/current liabilities | |
| 11 ROCE | Return on capital employed = EBIT/Capital employed (CE) | |
| 12 Capital employed (CE) | The sum of goodwill, intangible, tangible and financial fixed assets and working capital | |
| 13 Subsidiaries | Companies in which the group owns a participation in excess of 50% | |
| 14 Gearing | Net debt compared to the equity capital | |
| 15 MTM | Marked-to-Market | |
| 16 Headcount (FTE) | Total Full Time Equivalents including temporary and external staff | |
| 17 Restricted Group | The Restricted Group consists of all entities of the Group excluding Turkish subsidiaries and their subsidiaries. |
Linktrusion, Building a sustainable home, Zendow, Decoroc, Winsa, Inoutic, Rovex, Revolution Tilt and Turn, Genius, Grandparc, Belface, Cyclefoam, e.a. are registered trademarks of Deceuninck NV and its subsidiaries.
This annual report is available in Dutch and English. Dit jaarrapport is verkrijgbaar in het Nederlands en het Engels.
Wim Van Acker Representative of Fienes BVBA CFO
Copyright © 2017 Deceuninck NV – All rights reserved Registered office & business address: Deceuninck NV Bruggesteenweg 360 – B-8830 Hooglede-Gits (Belgium) VAT BE405.548.486 – RPR GHENT, DIVISION COURTRAI
Bruggesteenweg 360 B-8830 Hooglede-Gits (Belgium) T +32 51 23 92 11 F +32 51 22 79 93 [email protected]
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