Annual Report • Aug 23, 2017
Annual Report
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Consolidated Half-Year Report PSr 2017 year
(prepared in accordance with Par. 82.2 and Par. 83.3 of the Regulation of the Minister of Finance dated February 19th 2009 - Dz.U. No. 33, item 259)
for issuers conducting manufacturing, construction, trade or services business
for the 1st half of the financial year 2017, covering the period from January 1st to June 30th 2017,
including condensed consolidated financial statements prepared in accordance with the IFRS
currency: EUR
and condensed non-consolidated financial statements prepared in accordance with the IFRS
currency: PLN
Date of filing: August 23rd 2017
Pfleiderer Group Spólka Akcyjna
(full name)
Pfleiderer Group SA (abbreviated name)
53-611 (postal code)
ul. STRZEGOMSKA (street)
+48 71 747 11 00 (telephone number)
[email protected] (e-mail)
719-10-00-479
(NIP – Tax Identification Number)
wood products (sector according to the Warsaw Stock Exchange's classification)
Wrocław (registered office)
42AB (number)
+48 71 747 11 41 (fax number)
www.pfleiderer.pl (web site)
4500933817
(REGON – Industry Registration Number)
| PLN '000 | EUR '000 | |||
|---|---|---|---|---|
| FINANCIAL HIGHLIGHTS | 1 half cumulative / 2017 Jan 1-Jun 30 2017 |
1 half cumulative / 2016 Jan 1-Jun 30 2016 |
1 half cumulative / 2017 Jan 1-Jun 30 2017 |
1 half cumulative / 2016 Jan 1-Jun 30 2016 |
| Condensed consolidated financial statements data | ||||
| I. Sales revenue | 506 029 | 458 461 | ||
| II. Operating profit/(loss) | 29 295 | 16 126 | ||
| III. Profit/(loss) before tax | 25 282 | 4 975 | ||
| IV. Net profit | 18 618 | 7 110 | ||
| V. Net profit attributable to equity holders of the parent | 18 618 | 7 110 | ||
| VI. Net cash provided by (used in) operating activities | 38 131 | 43 102 | ||
| VII. Net cash provided by (used in) investing activities | -22 689 | -28 709 | ||
| VIII. Net cash provided by (used in) financing activities | -16 219 | 47 319 | ||
| IX. Total net cash flow | -777 | 61 712 | ||
| X. Total assets | 984 761 | 954 580 | ||
| XI. Liabilities | 708 771 | 683 325 | ||
| XII. Non-current liabilities | 141 450 | 472 203 | ||
| XIII. Current liabilities | 567 321 | 211 122 | ||
| XIV. Equity | 275 990 | 271 255 | ||
| XV. Share capital | 6 692 | 6 692 | ||
| XVI. Outstanding shares at the end of the reporting period | 64 701 077 | 64 701 077 | ||
| XVII. Weighted average diluted number of shares | 64 701 077 | 63 127 034 | ||
| XVIII. Earnings per ordinary share (PLN/EUR) | 0,29 | 0,11 | ||
| XIX. Book value per share (PLN/EUR) | 4,27 | 4,19 | ||
| XX. Declared or paid dividend per share (PLN/EUR) | 0,26 | 0,23 |
| XXI. Sales revenue | 0 | 300 421 | 0 | 68 782 |
|---|---|---|---|---|
| XXII. Operating profit/(loss) | -16 611 | 11 716 | -3 891 | 2 682 |
| XXIII. Profit/(loss) before tax | 343 815 | 69 189 | 80 539 | 15 841 |
| XXIV. Net profit/(loss) | 342 077 | 68 433 | 80 132 | 15 668 |
| XXV. Net cash provided by (used in) operating activities | -9 707 | 42 489 | -2 274 | 9 728 |
| XXVI. Net cash provided by (used in) investing activities | -4 | -605 118 | -1 | -138 544 |
| XXVII. Net cash provided by (used in) financing activities | 7 015 | 571 811 | 1 643 | 130 918 |
| XXVIII. Total net cash flow | -2 696 | 9 182 | -632 | 2 102 |
| XXIX. Total assets | 2 311 888 | 2 224 785 | 547 076 | 502 890 |
| XXX. Liabilities | 789 664 | 973 467 | 186 863 | 220 042 |
| XXXI. Non-current liabilities | 2 094 | 356 | 496 | 80 |
| XXXII. Current liabilities | 787 570 | 973 111 | 186 367 | 219 962 |
| XXXIII. Equity | 1 522 224 | 1 251 318 | 360 213 | 282 848 |
| XXXIV. Share capital | 21 351 | 21 351 | 5 052 | 4 826 |
| XXXV. Outstanding shares at the end of the reporting period | 64 701 077 | 64 701 077 | 64 701 077 | 64 701 077 |
| XXXVI. Weighted average diluted number of shares | 64 701 077 | 63 127 034 | 64 701 077 | 63 127 034 |
| XXXVII. Earnings per ordinary share (PLN/EUR) | 5,29 | 1,08 | 1,24 | 0,25 |
| XXXVIII. Book value per share (PLN/EUR) | 23,53 | 19,34 | 5,57 | 4,37 |
| XXXIX. Declared or paid dividend per share (PLN/EUR) | 1,10 | 1,00 | 0,26 | 0,23 |
data in lines : X-XV are presented accordingly: column.3 - for 30.06.2017 column.4 - for 31.12.2016
data in lines : XXIX-XXXIV are presented accordingly: column.1 - for 30.06.2017 column.2 - for 31.12.2016 column.3 - for 30.06.2017 column.4 - for 31.12.2016
AND THE CAPITAL GROUP FOR THE PERIOD FROM 1 JANUARY TO 30 JUNE 2017
| LETTER FROM THE PRESIDENT OF THE MANAGEMENT BOARD 4 | ||
|---|---|---|
| PFLEIDERER GROUP IN HY1, 2017 AT A GLANCE 6 | ||
| KEY EVENTS AND ACHIEVEMENTS OF THE PFLEIDERER GROUP IN HY1, 2017 7 | ||
| 1. | KEY INFORMATION ABOUT THE GROUP 10 | |
| 1.1. | BUSINESS PROFILE – ACTIVITIES OF THE GROUP 10 | |
| 1.2. | STRUCTURE OF THE GROUP 10 | |
| 1.2.1. | PFLEIDERER GROUP COMPANIES AND THEIR BUSINESS ACTIVITIES 12 | |
| 1.2.2. | DESCRIPTION OF CHANGES IN THE STRUCTURE OF THE CAPITAL GROUP IN THE REPORTING PERIOD 17 | |
| 1.3. | INVESTMENT PROGRAM 17 | |
| 1.4. | MARKETING ACTIVITIES IN HY1, 2017 18 | |
| 1.5. | MARKET POSITION AND CONSTRUCTION MARKET OVERVIEW 19 | |
| 1.6. | EXTERNAL AND INTERNAL FACTORS AFFECTING THE GROUP'S BUSINESS 25 | |
| 1.7. | RISK MANAGEMENT 25 | |
| 1.8. | INFORMATION ON MATERIAL AGREEMENTS AND TRANSACTIONS 27 | |
| 1.9. | COURT PROCEEDINGS 27 | |
| 2. | KEY OPERATIONAL DATA 31 | |
| 2.1. | PRODUCTION VOLUME AND STRUCTURE 31 | |
| 2.2. | SALES STRUCTURE 31 | |
| 3. | FINACIAL PERFORMANCE 34 | |
| 3.1. | EXPLANATION OF THE ECONOMIC FINANCIAL DATA DISCLOSED IN THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 34 |
|
| 3.1.1. | CONSOLIDATED STATEMENT OF PROFIT OR LOSS 34 | |
| 3.1.2. | CONSOLIDATED STATEMENT OF FINANCIAL POSITION 35 | |
| 3.1.3. | CONSOLIDATED STATEMENT OF CASH FLOWS 36 | |
| 3.1.4. | KEY FINANCIAL RATIOS – CAPITAL GROUP 38 | |
| 3.1.5. | DESCRIPTION OF SIGNIFICANT OFF-BALANCE SHEET ITEMS - CAPITAL GROUP 38 | |
| 3.2. | EXPLANATION OF THE ECONOMIC FINANCIAL DATA DISCLOSED IN THE CONDENSED INTERIM STANDALONE FINANCIAL STATEMENTS 42 |
|
| 3.2.1. | STANDALONE STATEMENT OF PROFIT OR LOSS 42 | |
| 3.2.2. | STANDALONE STATEMENT OF FINANCIAL POSITION 42 | |
| 3.2.3. | STANDALONE STATEMENT OF CASH FLOWS 43 | |
| 3.2.4. | STANDALONE KEY FINANCIAL RATIOS – PFLEIDERER GROUP S.A. 43 | |
| 3.3. | NON-RECURRING EVENTS 43 | |
| 3.4. | PROJECTED FINANCIAL RESULTS 43 | |
| 3.5. | RATINGS 44 | |
| 3.6. | DIVIDEND POLICY 44 | |
| 3.7. | FINANCIAL INSTRUMENTS 45 |
| 3.8. | FINANCIAL RISKS RELATED TO THE PFLEIDERER GROUP'S OPERATIONS 50 | ||
|---|---|---|---|
| 4. | SHARES AND SHAREHOLDING STRUCTURE 53 | ||
| 4.1. | SHAREHOLDING STRUCTURE 53 | ||
| 4.2. | INVESTOR RELATIONS IN PFLEIDERER GROUP 54 | ||
| 5. | CORPORATE GOVERNANCE 57 | ||
| 5.1. | NUMBER OF THE COMPANY'S SHARES HELD BY PERSONS IN MANAGEMENT AND SUPERVISORY BODIES 57 | ||
| 5.2. | COMPANY'S CORPORATE BODIES 57 | ||
| 5.2.1. | SUPERVISORY BOARD 57 | ||
| 5.2.2. | MANAGEMENT BOARD 58 | ||
| 6. | EVENTS SUBSEQUENT TO THE END OF THE REPORTING PERIOD 60 | ||
| 7. | MANAGEMENT BOARD REPRESENTATION 61 |
TOM K. SCHÄBINGER
Pfleiderer Group is a promising company and it is a great honor for me to lead the Group from June 1st. During recent years the Group has presently grown in order to become one of the leading European producers of fibre-based panels with almost 1 billion euros in sales revenues. Pfleiderer has successfully become the manufacturer of the state-of-the-art, high-quality products that are used in our targeted growing business sectors.
In the first half of 2017, we concentrated our efforts on the operating efficiency, new production capacities utilisation and value–added segments within our core markets. Pfleiderer's already excellent positioning in steadily growing market environment in Europe continued to improve and is supported by the underlying growth of the national economies and in particular the positive outlook for the construction markets in both DACH and Poland.
In the first half of this year the Pfleiderer Goup generated a solid set of financial results. The revenues amounted to EUR 506.0 million and increased by 3.4% to EUR 489.3 million against H1, 2016 (including first 19 days of H1, 2016. Revenues without first 19 days amounted to EUR 458.5 million). The growth of margin on sales followed revenues increase, as the share of sold value-added products increased to 66% of revenues. As a result, the Group's gross profit margin increased from 22.2% in H1, 2016 to 23.6% in H1, 2017.
The Group's reported EBITDA amounted to EUR 66.1 million and was 27.6% higher compared to the same period last year. EBITDA margin stood at 13.1% (compared to 10.6% EBITDA margin in the first half of 2016).
Thanks to the investments launched in 2016 the Group has increased production capacities at its disposal. It intends to achieve more savings by continuing to drive operating efficiency and the duration of uninterrupted operations and by curtailing bottlenecks.
In 2017, the Group continues a long-term investment program designed to align its production capacities to the strong market needs and to enhance its cost effectiveness and productivity. In H1, 2017 capital expenditures were at the level of EUR 20.6 million, compared to EUR 15.8 million in H1, 2016. In the entire 2017, capital expenditures will exceed the level of EUR 60 million. The key projects planned for this year include completion and implementation of the sanding line in the biggest plant in Neumarkt, execution of an investment project to increase recycling wood and cut raw material costs in Neumarkt, and commissioning of a lacquering line in Leutkirch. In 2017, the Pfleiderer Group will also focus on intensifying sales and marketing activities under "ONE COLLECTION".
In H1, 2017 the Group successfully refinanced the debt raised in 2014. The new debt service terms will contribute to a significant reduction of financing expenses. The redemption of the senior secured notes occurred on 1 st August, 2017.
On 21st June, Pfleiderer Group S.A. held Ordinary General Shareholders Meeting, and we want to thank our shareholders for their support. The financial statements for 2016 were approved, the resolution concerning a proposal for a dividend on PLN 1.1 per share was adopted. The dividend was paid to shareholders on 19th July.
Also on 21st June, 2017 the Annual General Meeting unanimously granted a consent for the company to perform a share buyback program. In the opinion of the Company's Management Board, the Pfleiderer Group's fundamental value, together with earnings and current share price, make it the right time to undertake a buyback. This program is an additional form of sharing profits with shareholders, and for this purpose we want to spend up to PLN 390 million. Pfleiderer Group is in a great place in terms of liquid funds and this allows to fund the program with its own funds.
This year is demanding but I am very excited about the Pfleiderer's future. In the recent months there has been significant investments in management capabilities. Starting from new COO – Dirk Hardow who joined the company in November last year, me as new CEO starting on 1st June and the new CCO - Ivo Schintz who joined us on 1st August, a strong team has been established and should enable us to accelerate our profit development.
Thanks to the Pfleiderer Group's solid operational and financial performance in recent years, we have a strong basis to consistently capitalise the benefits of the creation of ONE PFLEIDERER for further growth. On behalf of the Management Board, I would like to thank our shareholders for their trust in Pfleiderer Group and I hope that you will continue to accompany us in the future.
Yours faithfully, Tom K. Schäbinger CEO PFLEIDERER Group
| 13.06% | EBITDA margin thanks to improvement of the operational efficiency over the last periods |
|---|---|
| 30.11% | Growth EBITDA (HY1)* - to EUR 66.1 million |
| EUR 20,609 million |
Capital Expenditures - continued investments on strategic projects with attractive payback |
| 25.18% | Increase of the Pfleiderer Group S.A. market capitalization |
*Calculation comprised HY1 2016 EBITDA without first 19 days of January 2016
18.6
The financial information of the HY1 2016 and HY1, 2017 represents consolidated data of the Pfleiderer Group S.A. Group. The data for HY1 2016 does not comprise first 19 days of the year 2016 of Core West segment.
REPORTED EBITDA (EUR M)
Q2, 2016 Q2, 2017 HY1, 2016 HY1, 2017
NET PROFIT (EUR M)
CAPEX (EUR M)
On 2 March 2017 the Supervisory Board of Pfleiderer Group S.A. appointed Thomas Schäbinger as President and Chief Executive Officer (CEO). Mr. Schäbinger succeeds Michael Wolff, Pfleiderer Group's President and CEO, effectively as from 1 June 2017.
On 28 April Mr. Wojciech Gątkiewicz has resigned from the position of Member of the Management Board, Chief Sales Officer, effectively from 1 August 2017. On 9 May 2017 Mr. Ivo Schintz was nominated on a position of Member of the Management Board, Chief Commercial Officer, effectively from 1 August 2017.
On 7 April 2017, Pfleiderer Group S.A. has successfully priced and allocated a €350.0 million 7-year covenant-lite term loan B facility carrying an interest margin of 325bps (Euribor floor: 0.75%) and 99.0 OID. The new €100.0 million 5-year revolving credit facility will have an interest margin of 300bps (Euribor floor: 0%).
On 1 August 2017 the Pfleiderer Group S.A. (together with its subsidiary PCF GmbH) fully redeemed the existing as of the reporting date €321,684,000 7.875% senior secured notes issued by PCF GmbH (formerly Pfleiderer GmbH). The redemption price was 101.969% (plus accrued and unpaid interest).
On 22 March 2017 the Moody's rating agency upgraded Pfleiderer's CFR (corporate family rating) from B1 to Ba3 with stable outlook. Moody's has assigned provisional (P)Ba3 instrument ratings to the proposed EUR 350 million senior secured term loan B (TLB, 7-year) and EUR 100 million equivalent senior secured revolving credit facility (RCF, 5-year) to be raised by PCF GmbH, a direct subsidiary of Pfleiderer Group S.A.
On 24 March 2017, S&P Global Ratings affirmed its 'B+' long-term corporate credit rating for Pfleiderer Group S.A. and its wholly owned Germany-based subsidiary PCF GmbH. The outlook remained positive. At the same time, S&P assigned 'B+' issue rating to the proposed €350 million senior secured loan due 2024 and the €100 million revolving credit facility (RCF) to be issued by PCF GmbH.
On 25 May 2017 the Management Board of Pfleiderer Group S.A. informed that it resolved to determine the terms of the treasury shares repurchase programme to be implemented in the Company, subject to its approval by the Company's Supervisory Board and the General Meeting of the Shareholders. Also on 25 May the Supervisory Board approved the terms of the Programme.
On 21 June 2017 the Ordinary General Shareholders Meeting of the Pfleiderer Group S.A. adopted a resolution concerning the approval of a treasury share repurchase programme and the establishment of the capital reserve for the purposes of such programme.
On 21 June 2017 the Management Board of Pfleiderer Group S.A. announced that the Ordinary General Shareholders Meeting of the Company appointed Deloitte Polska Spółka z ograniczoną odpowiedzialnością Spółka komandytowa with its registered office in Warsaw as an entity authorized to audit annual and review interim, standalone financial statements of the Company and consolidated financial statements of Company's capital group, prepared for the periods between 1 January 2017 and 31 December 2018. The appointment complied with the binding provisions and professional standards.
On 21 June 2017 the Ordinary General Shareholders Meeting of the Pfleiderer Group S.A. adopted a resolution concerning distribution of net profit for the period from 1 January to 31 December 2016, providing for the dividend payment for the Company's shareholders in the amount of PLN 71,171,107.70 representing PLN 1.10 per each Company' share. All of the Company's shares are covered by the dividend, i.e. 64,701,007 shares. Additionally, the Ordinary General Shareholders Meeting of the Company set the following dates: 1) a dividend date (the date used to prepare the list of shareholders eligible to receive the dividend) set for 5 July 2017, and 2) dividend payment date set for 19 July 2017.
From 1 January 2017, Pfleiderer Group S.A. has rolled over commercial papers in the form of short-term notes on 17 January 2017, 15 February 2017, 15 March 2017, 20 April 2017, 23 May 2017, 20 June 2017 and 17 July 2017 with a view to optimise the Company's financial liquidity management.
The notes were issued under the Note Issue Programme Agreement executed on 22 July 2003 with Bank PEKAO S.A. The notes were issued in accordance with the Polish Bonds Act of 29 June 1995 as PLN-denominated, unsecured, zero-coupon bearer securities in book-entry form. The notes are redeemed at par value. The notes were acquired by subsidiary Pfleiderer Wieruszów Sp. z o.o. (formerly Pfleiderer Prospan S.A.)
FROM 1 JANUARY TO 30 JUNE 2017
The Pfleiderer Group, with 122 years of experience, is a leading European manufacturer of wood based products, specializing in the production of materials for the furniture industry, the interior industry and construction.
Pfleiderer Group provides furniture boards, kitchen worktops, HPL laminates and artificial wall coverings to the biggest furniture manufacturers in Poland and DACH (Germany, Austria and Switzerland) and several thousand medium and lesser companies of furniture industry. Pfleiderer products are known across the Eastern and Southern Europe, and Scandinavia. The company is headquartered in Wrocław (Poland) with offices i.a. in Neumarkt and Warsaw and operates nine manufacturing facilities located in Poland and Germany as well as commercial departments in the UK, the Netherlands, Switzerland, France Austria and Romania. Sustainability is an integral part of our corporate strategy, Pfleiderer sees it as a matter of course to conserve energy and raw materials, reduce emissions and produce environmentally friendly products.
The Pfleiderer Group consists of production plants of various profiles of the activity.
The Pfleiderer Group consists of one-platform enterprises. The Group's parent Company i.e. Pfleiderer Group S.A. ("the Parent", previously Pfleiderer Grajewo S.A.) operates in Wrocław.
At the date of this report, the structure of the Capital Group is as follows:
| Eastern Europe | June 30, 2017 |
Dec. 31, 2016 |
||
|---|---|---|---|---|
| Pfleiderer Polska Sp. z o.o. | Wrocław | 100.00% | 100.00% | |
| Pfleiderer Grajewo Sp. z o.o. | Grajewo | 100.00% | 100.00% | |
| Pfleiderer MDF Grajewo Sp. z o.o. | Grajewo | 100.00% | 100.00% | |
| Pfleiderer Wieruszów Sp. z o.o. (formerly Pfleiderer Prospan S.A.) | Wieruszów | 100.00% | 100.00% | |
| Pfleiderer Silekol Sp. z o.o. | Kędzierzyn Koźle | 100.00% | 100.00% | |
| Jura Polska Sp. z o.o. | Grajewo | 100.00% | 100.00% | |
| Unifloor Sp. z o.o. w likwidacji | Wieruszów | 100.00% | 100.00% | |
| Western Europe | June 30, 2017 |
Dec. 31, 2016 |
||
| PCF GmbH (Previously Pfleiderer GmbH) | Neumarkt, | 100.00% | 100.00% | |
| Germany | ||||
| Pfleiderer Deutchland GmbH (prev. Pfleiderer Holzwerstoffe GmbH) | Neumarkt, | 100.00% | ||
| Germany | 100.00% | |||
| Pfleiderer Neumarkt GmbH | Neumarkt, | 100.00% | 100.00% |
| Germany | ||||
|---|---|---|---|---|
| Neumarkt, | ||||
| Pfleiderer Gütersloh GmbH | Germany | 100.00% | 100.00% | |
| Pfleiderer Leutkirch GmbH | Leutkirch, | 100.00% | ||
| Germany | 100.00% | |||
| Pfleiderer Erwerbergesellschaft GmbH | Neumarkt, | 100.00% | 100.00% | |
| Germany | ||||
| Pfleiderer Arnsberg GmbH | Neumarkt, | 100.00% | 100.00% | |
| Germany | ||||
| Pfleiderer Baruth GmbH | Baruth, | 100.00% | 100.00% | |
| Germany | ||||
| Heller Holz GmbH | Neumarkt, | 100.00% | 100.00% | |
| Germany | ||||
| JURA-Spedition GmbH | Neumarkt, | 100.00% | 100.00% | |
| Germany | ||||
| Pfleiderer Austria GmbH | Wien, | 100.00% | 0.00% | |
| Austria | ||||
| Pfleiderer France S.A.S. | Reims, | 100.00% | 100.00% | |
| France | ||||
| Pfleiderer Benelux B.V. | Deventer, | 100.00% | 100.00% | |
| Netherlands | ||||
| Pfleiderer Suisse AG | Rapperswil, | 100.00% | 100.00% | |
| Switzerland | ||||
| Pfleiderer UK Ltd. | Macclesfiels, | 100.00% | 100.00% | |
| United Kingdom | ||||
| Pfleiderer Southeast Europe SRL | Bucharest, | 100.00% | 0.00% | |
| Romania | ||||
| Pfleiderer Vermögensverwaltung GmbH & Co. KG | Neumarkt, | 100.00% | 100.00% | |
| Germany | ||||
| Pfleiderer Infrastrukturtechnik GmbH & Co. KG (in Insolvency) | Dusseldorf, | 100.00% | 100.00% | |
| Germany | ||||
| Pfleiderer Infrastrukturtechnik Verwaltungs-GmbH (in Insolvency) | Dusseldorf, | 100.00% | 100.00% | |
| Germany | ||||
| Allgäuer Holzindustrie und Imprägnierwerk Aulendorf GmbH (i.L.) | Aulendorf, | 100.00% | 100.00% | |
| Germany | ||||
| Blitz 11-446 GmbH (in liquidation) | Neumarkt, | 100.00% | 100.00% | |
| Germany |
The Group consists of the holding company, which is responsible for governing the Pfleiderer Group, operating companies and production companies.
The Parent Company and holding company of the Group is Pfleiderer Group S.A., registered in Poland, with its shares being publicly traded.
The Company, under its former name of Zakłady Płyt Wiórowych S.A. in Grajewo, was registered on 1 July 1994 by the Direct Court, Commercial Court of Łomża, in section B of the Commercial Register under entry No. 270. Subsequently, on 9 May 2001, it was registered by the District Court of Białystok, XII Commercial Division of the National Court Register, under entry No. KRS 0000011422. On 18 September 2002, the Management Board received the decision of the District Court of Białystok on entering the Company's new name: Pfleiderer Grajewo S.A., in the National Court Register.
On 30 September 2016 the District Court of Białystok registered a change in the Company's name and registered office as well as its bylaws. The Company's name was changed from Pfleiderer Grajewo S.A. to Pfleiderer Group S.A. The Company's registered office was moved from Grajewo to Wrocław. The above mentioned changes were conducted based on resolution no 9 of Ordinary General Shareholder Meeting which took place on 29 June 2016.
The Company's headquarters are located in Wrocław, at Strzegomska St. 42AB.
In accordance with the Polish Classification of Business Activities, the Parent Company's business is registered under No. 1621Z. The business activity of Pfleiderer Group S.A. is manufacture and veneering of wood and wood-based products, paper refine, domestic and abroad trade, rendering industrial services related to its core business, as well as other services based on resources held. The Company conducts holding services and other financial services.
The business of the Eastern European entities consists of:
A company entered in the National Court Register by the District Court for Wrocław – Fabryczna in Wrocław, VI Commercial Division of the National Court Register, under entry no. KRS 0000247423. First entry to the National Court Register was performed on December 20, 2005.
Industry Identification Number (REGON): 200052769
Tax Identification Number (NIP): 719-15-03-973
Registered address: Strzegomska St. 42AB, 53-611 Wrocław, Poland
Principal business activity:
• central Polish sale, supply and service company.
A company entered in the National Court Register by the District Court of Białystok, XII Commercial Division of the National Court Register in Białystok, under entry no. KRS 0000621539 on June 3, 2016.
Industry Identification Number (REGON): 364479779
Tax Identification Number: 7191568458
Registered address: Wiórowa 1, PL-19-203 Grajewo, Poland
Principal business activity:
Pfleiderer Grajewo sp. z o.o. on August 31, 2016, took over the operational activity conducted previously by Pfleiderer Group S.A. pursuant to the resolution No. 8 of the Ordinary General Meeting of Shareholders of Pfleiderer Group S.A. dated June 29, 2016.
A limited liability company established as a result of transformation of joint stock company Pfleiderer Prospan S.A. The transformation of Pfleiderer Prospan S.A. into Pfleiderer Wieruszów Sp. z o.o. was registered on 31 July 2017. Pfleiderer Wieruszów Sp. z o.o. is registered with the District Court of Łódź-Śródmieście in Łódź, XX Division of the National Court Register, under entry no. KRS 0000684630.
Industry Identification Number (REGON): 250744416
Tax Identification Number: 619-17-42-967
Registered address: Bolesławiecka 10, PL-98-400 Wieruszów, Poland
Principal business activity:
A company entered in the National Court Register by the District Court of Opole, VIII Commercial Division of the National Court Register of Opole, under entry no. KRS 0000225788 on January 6, 2005.
Industry Identification Number (REGON): 160003017
Tax Identification Number: 749-19-69-061
Registered address: Mostowa 30K, post box 163, PL-47-220 Kędzierzyn-Koźle, Poland
The company ensures steady supplies of adhesives used in chipboard manufacture to the Parent and its subsidiaries. Principal business activity:
• manufacture of dyes and pigments,
A company entered in the National Court Register by the District Court of Białystok, XII Commercial Division of the National Court Register in Białystok, under entry no. KRS 0000174810 on October 9, 2003.
Industry Identification Number (REGON): 330994545
Tax Identification Number: 719-13-99-317
Registered address: Wiórowa 1, PL-19-203 Grajewo, Poland
A company entered in the National Court Register by the District Court of Katowice, Commercial Division of the National Court Register, under entry no. KRS 0000149282 on November 24, 1999.
Industry Identification Number (REGON): 276746151
Tax Identification Number (NIP):629-21-58-514
Registered address: Wiórowa 1, PL-19-203 Grajewo, Poland
Principal business activity:
A company entered in the National Court Register by the District Court of Białystok, Commercial Division of the National Court Register, under entry no. KRS 0000237233, on June 29, 2005.
Industry Identification Number (REGON): 200021250
Tax Identification Number (NIP): 719-149-38-49
Registered address: Bolesławiecka 10, PL-98-400 Wieruszów, Poland
Unifloor Sp. z o.o. is currently in liquidation.
A company entered in the Commercial Register of Nürnberg, Germany, under entry no. HR B 30135.
Tax Identification Number: 201/116/20203
Registered address: Ingolstädter Straße 51, 92318 Neumarkt, Germany
Principal business activity:
• holding company for the German entities.
A company entered in the Commercial Register of Nürnberg Germany, under entry no. HR B 25279.
Tax Identification Number: 201/116/21099
Registered address: Ingolstädter Straße 51, 92318 Neumarkt, Germany
Principal business activity:
A company entered in the Commercial Register of Nürnberg Germany, under entry no. HR B 19661.
Tax Identification Number: 201 / 116 / 20904
Registered address: Ingolstädter Straße 51, 92318 Neumarkt, Germany
Principal business activity:
A company entered in the Commercial Register of Nürnberg Germany, under entry no. HR B 19716.
Tax Identification Number: 201 / 116 / 20882
Registered address: Ingolstädter Straße 51, 92318 Neumarkt, Germany
Principal business activity:
A company entered in the Commercial Register of Ulm, Germany, under entry no. HR B 610151.
Tax Identification Number: 91080/23247
Registered address: Wurzacher Straße 32, 88299 Leutkirch, Germany
Principal business activity:
A company entered in the Commercial Register of Nürnberg, Germany, under entry no. HR B 21658. .
Tax Identification Number: 201/116/21072
Registered address: Ingolstädter Straße 51, 92318 Neumarkt, Germany
Principal business activity:
A company entered in the Commercial Register of Potsdam, Germany, under entry no. HR B 12965 P. Tax Identification Number: 201 / 116 / 21153 Registered address: An der Birkenpfuhlheide 3, 15837 Baruth/Mark, Germany Principal business activity:
• manufacture of HDF/MDF.
A company entered in the Commercial Register of Nürnberg, Germany, under entry no. HR B 21788. Tax Identification Number: 201 / 116 / 20963 Registered address: Ingolstädter Straße 51, 92318 Neumarkt, Germany Principal business activity:
• purchasing and distribution of recycled wood and other wood.
A company entered in the Commercial Register of Nürnberg, Germany, under entry no. HR B 19659. Tax Identification Number: 201 / 116 / 20890
Registered address: Ingolstädter Straße 51, 92318 Neumarkt, Germany Principal business activity:
A company entered in the Commercial Register of Nürnberg, Germany, under entry no. HR B 32971. Tax Identification Number: 201 / 116 / 21277 Registered address: Ingolstädter Straße 51, 92318 Neumarkt, Germany Principal business activity:
• dormant company.
A company entered in the Commercial Register of Reims, France, under entry no. 441480530 RCS.
Tax Identification Number: 312919
Registered address: 10, Esplanade Roland Garros, F51100 Reims, France
Principal business activity:
• sales agency.
A company entered in the Commercial Register of Brabant, Netherlands, under entry no. 8082957.
Tax Identification Number: 808535920
Registered address: De Ketting 16 a, 5261 LJ Vught, Netherlands
Principal business activity:
• sales agency.
A company entered in the Commercial Register of St. Gallen, Switzerland, under entry no. CH-320.3.043.856-5.
Tax Identification Number: 17966
Registered address: Neue Jonastrasse 60, 8640 Rapperswil SG, Switzerland
Principal business activity:
• sales agency.
A company entered in the Commercial Register of United Kingdom, under entry no. 01330499.
Tax Identification Number: 168 601 8948
Registered address: Oakfield House, Springwood Way, Tytherington Business Park, Macclesfield, Cheshire SK 10 2XA. Great Britain
Principal business activity:
• sales agency.
A company entered on 16 March 2017 in the Commercial Register of Republic of Austria, under register number FN 468194 x.
Registered address: Am Modenpark 10, 1030 Wien
Principal business activity:
• sale of engineered wood.
A company entered in the Commercial Register of Bucharest, Romania, under entry no. 434205. Registered address: Sitrako Center II, 4 Splaiul Unirii Street, Building B3, District 4, Bucharest, Romania Principal business activity:
• sale of engineered wood.
A company entered in the Commercial Register of Nürnberg, Germany, under entry no. HR A 16384. Tax Identification Number: 235 / 172 / 07004 Registered address: Ingolstädter Straße 51, 92318 Neumarkt, Germany Principal business activity:
• holding company.
A company entered in the Commercial Register of Düsseldorf, Germany, under entry no. HR A 21946. Tax Identification Number: 235 / 186 / 00109 Registered address: Cecilienallee 54/55, 40474 Düsseldorf, Germany Principal business activity:
• the company has suspended its operations.
A company entered in the Commercial Register of Düsseldorf, Germany, under entry no. HR B 67504. Tax Identification Number: 201 / 116 / 20467 Registered address: Cecilienallee 54/55, 40474 Düsseldorf, Germany Principal business activity:
• the company has suspended its operations.
A company entered in the Commercial Register of Ulm, Germany, under entry no. HR B 600102.
Tax Identification Number: unknown
Registered address: unknown
Principal business activity:
• the company has suspended its operations and is in liquidation.
A company entered in the Commercial Register of Nürnberg, Germany, under entry no. HR B 28166. Tax Identification Number: 201/116/21366 Registered address: Ingolstädter Straße 51, 92318 Neumarkt, Germany
Principal business activity:
• the company has suspended its operations.
Beginning from 1 January 2017 all sales activities of Pfleiderer Group are concentrated solely in the two sales entities. Pfleiderer Polska Sp. z o.o., which is responsible for all customers allocated to the sales territory "East" and Pfleiderer Deutschland GmbH, which is responsible for all customers allocated to the sales territory "West".
In the first half of 2017 there were no changes of the group structure except for establishing new selling entity in Austria and Romania.
During HY1, 2017 Pfleiderer Group incurred EUR 20,609 thousand capital expenditures.
| Investment | Capex | Rational | Expected outcome (per annum) |
|---|---|---|---|
| Sanding Line (Neumarkt) | EUR 6.2 million | More flexibility in production (planned launch in August 2017) |
EUR 2.0 million EBITDA |
| Recycled wood | EUR 9.6 million | Increasing consumption of recycled wood fibre and reducing cost for wood (planned launch at the end of 2017) |
EUR 5.0 million EBITDA |
| Lacquering line (Leutkirch) | EUR 12.3 million | New functional surface technology, new high gloss and dull surfaces (planned launch in the HY1, 2018) |
EUR 8.4 million EBITDA |
| Commercial Growth Strategy | EUR 9.6 million | Growth of current & new products and exploring new markets; securing & increasing production capacity; development of resins and quality improvement (planned launch in the H2 2018) |
EUR 6.4 million EBITDA |
In January 2017 new ONE COLLECTION was launched, which is an unified offer to all markets with the following segments:
In addition to this unified offer the Group's marketing prepared the following areas around it:
In the forefront of the official market launch in January 2017, Pfleiderer organized preview events for customers and employees to present the new collection and all mentioned additional activities. Over 700 participants joined these very successful events: Warsaw and Frankfurt in October 2016 and gave us thoroughly positive feedback.
Successful work of the marketing mix program in the last years has been very much appreciated by well-known institutes who gave the following rewards to Pfleiderer Group:
| Date | Award | Product/Category | Institution |
|---|---|---|---|
| 2017 | Listed Company of the Year 2016 | Investor Relations | "Puls Biznesu" daily and TNS Polska |
| 2017 | Iconic Award interior innovation | Duropal HPL SolidColor XTreme Rat für Formgebung Service GmbH | |
| 2017 | pro-K Award | Duropal HPL SolidColor XTreme | pro-K Industrieverband Halbzeuge und Konsumprodukte aus Kunststoff e.V. |
| 2017 | German Design Award 2017 | Duropal HPL SolidColor XTreme, Matt Lacquer, Natural Wood |
Rat für Formgebung Service GmbH |
| 2017 | Red Dot Award: Product Design 2017 Duropal HPL SolidColor XTreme red dot GmbH & Co. KG | ||
|---|---|---|---|
| 2017 | Interzum award: intelligent material & design 2017 |
Duropal HPL SolidColor XTreme Interzum | |
| 2017 | German Brand Award | Interior & Living | Rat für Formgebung Service GmbH |
In 2017, the Group's marketing focus is mainly on official rollout of ONE PFLEIDERER and ONE COLLECTION with following activities:
The European economy has entered its fifth year of recovery, which is now reaching all EU Member States. This is expected to continue at a largely steady pace this year and next. According to the European Commission's latest forecasts1 , the Eurozone's economic expansion will reach 1.7 per cent this year and 1.8 per cent in 2018, compared with 1.7 per cent in 2016 (GDP growth). GDP growth in the EU as a whole is expected to remain constant at 1.9% in both years. This steady but moderate expansion should remain driven by domestic demand. The first half of year 2017 seems to be good in the euro zone economy. The business climate indicators are rising, showing that economic growth this year may surprise to the upside again. What is important, for the first time since the crisis started, there seems to be a generalized and, to some extent, coordinated recovery in the largest euro zone economies. The uncertainty surrounding the economic outlook remains elevated but overall, risks have become more balanced. External risks are linked, for instance, to future US economic and trade policy and broader geopolitical tensions. China's economic adjustment, the health of the banking sector in Europe and the upcoming negotiations with the UK on the country's exit from the EU are also considered as possible downside risks in the forecast.
1 Spring 2017 Economic Forecast, EuroCom
Source: European Commission, European Economic Forecast Spring 2017
According to the European Commission's forecasts2 , real GDP growth in Poland in 2017 is expected to rebound to 3.5%, before slowing slightly to 3.2% in 2018, with domestic demand remaining the key driver of the economy. Specifically, private consumption is forecasted to increase strongly in 2017, driven by robust wage growth and the delayed effects of higher social transfers. Public investment is projected to quickly recover from its slump in 2016 and remain strong into 2018 as EU funds are put to use and local governments prepare for the 2018 elections. Solid domestic demand and exports, as well as high capacity utilisation rates, robust corporate profits and low interest rates are all expected to support investment. However, elevated uncertainty is likely to discourage investment decisions. Exports are projected to continue rising strongly in both 2017 and 2018, driven by higher external demand. At the same time, recovering investment, robust private consumption and a somewhat stronger zloty are set to boost import demand.
Construction business was marked by growth of business climate index at the beginning of Q2 and its stabilization at the end of the quarter. Assessments of the current business situation reached even higher level than in Q1, but contractors are still careful in assessment future situation of their companies in months ahead.
As it was predicted, in Poland the second quarter of 2017 was marked by seasonal growth of current situation assessment and expectations about future months.
2 Spring 2017 Economic Forecast, EuroCom
Source: own calculation based on GUS
Pfleiderer strongly builds its position in furniture and construction market. The last one includes not only building residential and non-residential objects, but also interior design. In terms of product portfolio the reference points are chipboard, laminate, MDF and OSB markets. For the nearest 2 years all those markets shows positive trend.
In case of DACH countries OSB market characterizes the highest growth dynamic. Moderate positive change is expected at HPL and MDF/HDF market. In Poland there's expectation that all product market will have comparable growth dynamic with relatively highest development of MDF/HDF and chipboards.
Source: own calculation based on B&L
Source: own calculation based on B&L
Pfleiderer is a leading wood-based panel player on its core markets – Germany (no. 1) and Poland (no. 2), with competitive footprint in Europe*, where Pfleiderer Group is one of the TOP 5 players.
*including Russia & Turkey;
*Sonae Arauco (50%/50% shares of Sonae Industira/Arauco)
Source: own calculation (based on EPF and press news)
Construction business at core markets, in Poland and DACH countries, is expected to grow. DACH market is bigger, Polish market develops more dynamically (at the background of other European countries, Poland is one of most dynamically developing markets). Till 2018 one can expect average yearly growth rate at level of 0.7% for DACH and 4.2% for Poland.
| CAGR 2016-2018 | ||||
|---|---|---|---|---|
| Total | Residential | Non-residential | ||
| Poland | 4.2% | 4.6% | 3.9% | |
| DACH | 0.7% | 0.7% | 0.5% | |
| Germany | 0.6% | 0.8% | 0.2% | |
| Austria | 1.9% | 1.9% | 2.0% | |
| Switzerland | 0.4% | -0.3% | 1.3% | |
| France | 3.7% | 4.4% | 2.6% | |
| Italy | 1.3% | 0.9% | 1.9% | |
| United Kingdom | 2.3% | 1.8% | 2.7% | |
| Belgium | 2.1% | 1.8% | 2.5% | |
| Netherlands | 4.9% | 6.2% | 3.1% |
Source: own calculation based on Euroconstruct
In DACH countries construction market is driven more by residential construction. Opposite to the market is Poland, driven mostly by non-residential buildings.
Total Construction Poland
Source: own calculation based on Euroconstruct
German language speaking countries markets are based mostly on renovation construction (in residential and nonresidential building). In Poland there's different situation – new buildings takes bigger part of the construction business.
Residential Construction Poland
0.3% 2.4% 0.7% 2.4% 1.2% 0.3% 100 100 103 103 106 107 108 0,0% 0,5% 1,0% 1,5% 2,0% 2,5% 3,0% 96 98 100 102 104 106 108 110 2012 2013 2014 2015 2016 2017 2018 Residential Construction DACH yoy Index
Residential Construction Poland
Non-residential Construction Poland
Source: own calculation based on Euroconstruct
All entrepreneurial activity is inextricably linked with risk. For this reason, effective management of risk is an important factor for the success of any effort to sustainably safeguard enterprise value. One of the fundamental tasks of management, in accordance with the applicable requirements of corporate governance and the principles of best practice, is the establishment and operation of an effective Internal Control System (ICS), Risk Management System (RMS) and Compliance Management System (CMS).
Like other companies, Pfleiderer Group is also exposed to risks relating to its business activities. The Company confronts uncertainties and constant change in the legislation and regulations in the various jurisdictions relevant to the Pfleiderer Group with a standard, Group-wide control and risk management system and the internal auditing department. These instruments are evolving on an ongoing basis and are adapted to changing conditions.
Within the scope of existing processes, the Company's management and Supervisory Board are regularly informed of risks that could significantly affect the business performance of the operating divisions and the Group.
The risks are assigned to different risk classes based on a risk matrix using the dimensions of "amount of loss" (less than EUR 5 million, EUR 5-10 million, EUR 10-20 million, and more than EUR 20 million) and "probability" (from 1% "unlikely" via seven levels to 90% " risk is about to occur"). In turn, these risk classes are classified as "low," "medium," "significant," "serious", or "endangering the Group's continued existence" depending on their impact on net assets, financial position and results of operations. Countermeasures are defined, and the identified risks and countermeasures are actively managed and regularly reviewed.
In the view of the management at Pfleiderer, the central risk areas comprise risks of developments that would be likely to have a significant impact on the Company's net assets, financial position and results of operations. We have essentially identified the following issues as risks that go beyond the usual market risks (net risk of more than EUR 1 million):
Past legal violations resulted and could further result in claims for damages against the Pfleiderer Group, the amounts of which could far exceed damage payments associated with the normal course of business and could thus have a serious impact. These risks cannot be quantified based on the evidence and information available at this time. In response to such claims for damages, Pfleiderer pursues legal defenses and court proceedings which it bases on counter-assessments.
The revised German Renewable Energy Resources Act 2014 (EEG 2014) came into effect on August 1, 2014. Because the new legislation considerably tightened the requirements for use of the (partial) exemption from the EEG reallocation charge, there is a risk that, in the future, one or more companies of the Pfleiderer Group will no longer meet the requirements for partial relief from the EEG, or will not come under what is known as the "hardship rule" [Härtefallregelung]. The likelihood that the EEG relief for hardship cases will cease to apply in the future is considered to be occasional and the loss could beserious. This risk is countered by obtaining external expertise and implementing internal measures to ensure that the stricter conditions are met.
The Western European segment is subject to certain tax risks. In the light of the change in shareholders in 2012, there are identified risks with regard to the amount of tax loss utilized by the Group. Due to the acquisition of all shares in PCF GmbH (formerly Pfleiderer AG) by Atlantik S.A. in November 2012, tax losses generated by the German subsidiaries in 2012 may not be utilized in full. The extent to which this also applies to an entity with joint tax-filing status has yet to be fully determined. It cannot be ruled out that the fiscal authorities will reject the position taken by Pfleiderer Deutschland GmbH, which could in turn lead to an assessment requiring payments of tax arrears. In addition, there was a change in shareholders at the level of the shareholder of PCF GmbH in December 2015, which may lead to uncertainty with regard to the possibility of tax loss utilization for the 2015 financial year.
For cross boarder supplies and services between affiliated companies the prices have to be at the arm's length principle. The companies of the Pfleiderer Group have to document this in the Transfer Price Documentation. The companies of the Pfleiderer Group located in Germany can choose the transfer price method as well as the margin. But the tax audits in the foreign countries as well as in Germany could determine that the chosen transfer pricing method or the margin was not correct. Following on from this, taxes could be higher for allocated costs for the supplies and services between the affiliated companies. This would lead to higher taxes and therefore represents a risk.
PCF GmbH is subject to a tax risk regarding the restructuring gain incurred in 2012 in connection with the insolvency plan. The tax treatment of the restructuring gain may be affected by a judgment of the Federal Fiscal High Court published on February 07, 2017 (GrS 1/15). According to the decision, the decree of the Federal Ministry of Finance dated March 27, 2003 (so called "Sanierungserlass") which ensures a preferential treatment of the restructuring gain is not correct. This decision may lead to uncertainty regarding the possibility of receiving a waiver from the tax authorities for any taxes due on the restructuring gain to the extent that PCF is not protected by binding rulings issued by the competent authorities
In 2014 PCF GmbH (and its subsidiaries) recognized valuation allowances on receivables to the so-called "Non Core" companies of the former Pfleiderer Group in respect of foreign currency gains recognized on these receivables and treated these valuation allowances as tax-deductible. It cannot be ruled out that the fiscal authorities will reject the position taken by PCF GmbH, which could cause additional tax payments.
In the event of an inadequate R&D strategy, Pfleiderer could lose market share due to a lack of new and innovative products. Insufficient investment in research and development could mean that new product and process development goals are not achieved to an adequate extent. This could result in lower pricing power and consequently an unfavorable development of the Group. Furthermore there is a lack of innovative projects and culture of innovation, which needs to be improved to strengthen our market position. These are regarded as significant risks. The Company responded to these risks by realigning and reorganizing its R&D activities and improving the innovation culture.
Alternative products such as painted fronts, stone countertops, etc. could represent competition to Pfleiderer's market potential. This is regarded as a medium risk. This risk is countered by developing an appropriate product strategy.
A fairly significant portion of our product range relates to commodities, which are associated with high price volatility. The risk is made up of interchangeability of products, rising material costs, and the disappearance of international sales markets. Especially the current situation, that new competitors enter the market/competitors increasing their capacities are demanding for wood, intensifies the wood price increase. The potential loss of the risk is regarded as medium but it is about to occur. The increasing costs of the Group lead to the consequence that the sales prices need to be increased as well to secure the margins. As price increases are only limitedly feasible due to the market situation and the effects will be achieved delayed, the Group is faced a medium risk which is most likely. Furthermore, it cannot be ruled out that reopening closed plants or expansion of capacity by other competitors may lead to an adverse development of sales prices. This risk is considered to be medium. To counter these risks, emergency plans are drawn up that anticipate the Company's reactions to different scenarios of these developments.
A lack of replacement investments or maintenance in the past could result in a backlog of maintenance and investment. Insufficient replacement investments and postponed repairs and maintenance work may lead to breakdowns of machinery and production facilities. This is classified as a medium risk. In addition, investment requirements may arise due to a failure to meet legal requirements, for example in relation to fire safety. If regulations and specifications are not complied with, there is a need to take action.
Due to the increased occurrence of so-called Fake-President-Frauds at other Groups the Pfleiderer Group intensified their information activities towards the employees. The Pfleiderer Group repeatedly pointed out that, amongst others, nobody – even not board members – is allowed to ask for payments/money transfers via email and nobody within the Group is allowed to circumvent the four-eyes-principle. As it is never ruled out, that an employee makes a mistake, the company is aware, that there is a risk that an employee might execute a payment within the maximum available overdraft limit. The occurrence of the risk is regarded to be conceivable with a serious potential loss amount.
For the information regarding related-party transactions as at 30 June 2017 and for the period from 1 January to 30 June 2017 see Note 15 in the notes to the condensed consolidated interim financial statements of the Pfleiderer Group S.A. In the period from 1 January to 30 June 2017, all related-party transactions were executed on an arm's length basis.
As at 30 June 2017 the Group did not identify any significant contingent liabilities except for an additional potential liability (apart from the amounts already recorded in the balance sheet) resulting from the antitrust proceedings as well as potential tax liability described below.
Following an inspection in October 2011, on 30 March 2012 the Polish Office of Competition and Consumer Protection (the "OCCP") commenced proceedings against Kronospan Szczecinek sp. z o.o., Kronospan Mielec sp. z o.o., Kronopol sp. z o.o., Pfleiderer Group S.A. (formerly Pfleiderer Grajewo S.A.) and Pfleiderer Wieruszów Sp. z o.o. (formerly Pfleiderer Prospan S.A.), regarding possible horizontal price fixing and exchange of information on conditions of sale in the chipboard and fiberboard markets in Poland, which may constitute breaches of Article 6 of the Act on Competition and Consumer Protection and Article 101(1)(a) of the Treaty on the Functioning of the European Union. The maximum fines that the OCCP may impose on Pfleiderer Group S.A. and/or Pfleiderer Wieruszów Sp. z o.o. in these proceedings amount to 10% of their respective tax revenues in the year preceding the issuance of the infringement decision. The end date of the proceedings is still uncertain.
At the date of the publication of these consolidated financial statements it is unclear whether OCCP will determine any breaches of Article 6 of the Act on Competition and Consumer Protection and Article 101(1)(a) of the Treaty on the Functioning of the European Union. At this stage, given the fact-intensive nature of the issues involved and the inherent uncertainty of such investigation, it is not possible to evaluate the outcome and potential financial consequences of this still pending and long-lasting investigation, management has determined that not all of the conditions have been met to require recognition of a provision for this matter. Therefore as at 30 June 2017 no provision has been recognized by the Group in this condensed consolidated interim financial statements.
An earlier investigation by the German Federal Cartel Office in 2009 concluded in 2011 that PCF GmbH (then, Pfleiderer AG) and certain competitors had, for a period from at least 2004 through 2007, violated German competition law by coordinating price increases and minimum prices in the German market. As a result, the German Federal Cartel Office in September 2011 fined this group of market participants and certain individuals a total of EUR 42 million on the grounds of violating German and European competition laws by entering into anticompetitive agreements. PCF GmbH's share of the fine was settled in yearly instalments and fully repaid by the end of 2016.
As described below, two of the Pfleiderer Group's customers have sued the Pfleiderer Group for damages in connection with these antitrust violations. The companies are seeking compensation in connection with these antitrust violations. The outcome of the respective extrajudicial negotiations or proceedings is difficult to predict. Based on its best knowledge the Management estimated as of 30 June 2017 accruals related to antitrust violations of EUR 4 550 thousand including costs related to legal proceedings with Classen as well as legal costs and amicable settlements of claims from Alno and Oesder. Depending on the final outcome of the negotiations and/or the proceedings, the Group could be obligated to make further substantial payments.
There is a risk that additional follow-on claims for damages might be raised by third parties, including customers, against the Group in respect thereof. The amount of any such follow-on claims for damages cannot currently be determined with any certainty, but could be substantial. The realization of any of these risks could have a material adverse effect on the Group's business, financial condition and results of operations.
In December 2012, W. Classen GmbH & Co. KG ("Classen"), one of the Pfleiderer Group's current customers, filed an action with the regional court of Düsseldorf (Landgericht Düsseldorf) against the liquidator (Sachwalter) of PCF GmbH during the insolvency proceedings in 2012 (then Pfleiderer AG) seeking payment of the insolvency quota in the amount of EUR 1.3 million based on the same deliveries as in the case against Pfleiderer Baruth GmbH, described below. By judgement of 27 April 2017 the regional court of Duesseldorf dismissed the claim in its entirety because it deemed the claim against the custodian as inadmissible due to the absence of authority to litigate at the time the claim was served on the (then former) custodian (January 2013). As regards PCF GmbH, the court found that Classen did not meet the exclusion period stipulated in the insolvency plan. This decision is binding.
In December 2012, Classen also filed an action for damages with the regional court of Düsseldorf (Landgericht Düsseldorf) against Pfleiderer Baruth GmbH (then: Pfleiderer Faserplattenwerk Baruth GmbH) currently amounting to approximately EUR 55.4 million (plus interest). The proceeding is still pending and the outcome, i.e. the further potential costs that may arise in connection with this litigation or the amount of damages that might be required to be paid, cannot be assessed yet. The court has not yet indicated if and to what extent it deems the claim to be justified as to the merits. The next oral hearing is scheduled for 7 December 2017. As a result, the management has determined that not all of the conditions have been met to require recognition of a provision for this matter. Therefore as at 30 June 2017 no provision has been recognized by the Group in these consolidated financial statements. Accrued legal costs for Classen are comprised in the total amount of EUR 4 550 thousand.
In December 2014 Alno AG ("Alno"), one of the Pfleiderer Group's customers, has claimed substantial damages from PCF GmbH on its own behalf and on behalf of two of its subsidiaries. Alno claims to have suffered damages due to the Chipboard Cartel and has filed an action for damages against PCF GmbH and another party in late December 2015 (currently in the overall amount of at least EUR 31.2 million plus interest on the basis of joint and several liability). As at 30 June 2017 the Management based on its best knowledge recognised an accrual for the expected outcome which is included in the total amount of EUR 4 550 thousand. It is intended that the parties try to negotiate an out-of-court settlement. The proceeding is still pending and the outcome, i.e. the further potential costs that may arise in connection with this litigation or the amount of damages that might be required to be paid could change significantly. In July 2017, Alno filed for insolvency and the court appointed a preliminary liquidator.
In December 2012, Oeseder Möbel-Industrie Mathias Wiemann GmbH & Co. KG ("Oeseder"), one of the Pfleiderer Group's customers, filed an action for damages with the regional court of Hanover (Landgericht Hannover) against Glunz AG amounting to approximately EUR 26 million (plus interest). The plaintiff claimed to have suffered damages due to the Chipboard Cartel. Following a third party notice (Streitverkündung) by Glunz, PCF GmbH has joined the legal proceedings as an intervener (Nebenintervenient). The court has passed a judgement on 31 May 2016 according to which the claim is justified on the merits but subject to further discussion regarding quantum. Glunz AG has filed an appeal against this decision with the higher regional court in Celle. The oral hearing is scheduled for 17 October 2017. As at 30 June 2017 the Management based on its best knowledge recognised an accrual for the expected outcome, which is included in the total amount of EUR 4 550 thousand. PCF GmbH's obligation for substantial payments may result from a contribution claim (Gesamtschuldnerinnenausgleichsanspruch) based on PCF GmbH's joint and several liability (Gesamtschuld), if Glunz or any other third party is obligated to pay compensation to Oeseder. The proceeding is still pending and the outcome, i.e. the further potential costs that may arise in connection with this litigation or the amount of damages that might be required to be paid could change significantly.
PCF GmbH has successfully reached an out-of-court settlement with Hüls covering all claims for a total payment of EUR 2.5 million paid in April 2017.
The Western European segment is subject to certain tax risks described in point 1.7 Risk Management. As at 30 June 2017 the management assessed the risks related to this uncertain tax position and it has determined that not all of the conditions have been met to require recognition of a provision for this matter. Therefore as at 30 June 2017 no provision has been recognized by the Group in these consolidated financial statements.
FROM 1 JANUARY TO 30 JUNE 2017
In HY1 2017 and HY1 2016 the production volumes of main product groups at the group level were as follows:
| Jan. 1, 2017 - June 30, 2017 |
Jan. 1, 2016 - June 30, 2016 |
Change (%) | Apr. 1, 2017 - June 30, 2017 |
Apr. 1, 2016 - June 30, 2016 |
Change (%) | ||
|---|---|---|---|---|---|---|---|
| Gross production of raw chipboards (finished goods; semi- product for the of laminated chipboards) |
ths. cubic m | 1,665 | 1,545 | 8% | 831 | 776 | 7% |
| Laminated boards | ths. sqm | 56,421 | 53,119 | 6% | 27,561 | 27,173 | 1% |
| Raw MDF/HDF boards (finished goods, semi-product to lacquered MDF boards) |
ths. cubic m | 289 | 265 | 9% | 147 | 129 | 14% |
The sizeable YoY growths resulted from organic development in the East and West part as well as changes within the Group's structures.
| Jan. 1, 2017 - Jun. 30, 2017 |
Jan. 1, 2017 - Jun. 30, 2017 |
Apr. 1, 2017 - Jun. 30, 2017 |
Apr. 1, 2017- Jun. 30, 2017 |
||
|---|---|---|---|---|---|
| Core West | Core East | Core West | Core East | ||
| Gross production of raw chipboards (finished goods; semi- product for the of laminated chipboards) |
ths. cubic m | 991 | 674 | 491 | 340 |
| Laminated boards | ths sqm | 35,170 | 21,251 | 17,295 | 10,266 |
| Raw MDF/HDF boards (finished goods, semi-product to lacquered MDF boards) |
ths. cubic m | 181 | 108 | 91 | 56 |
Revenue reported by the Group in HY1 2017 was EUR 506,029 thousand and increased 10% when compared to HY1, 2016 (excluding 19 days of HY1 2016 for Core West).
Sales volumes by product group were as follows:
| Cbm; Tqm | Jan. 1, 2017 - Jun. 30, 2017 |
Jan. 1, 2016 - Jun. 30, 2016 |
Apr. 1, 2017 - Jun. 30, 2017 |
Apr. 1, 2016 - Jun. 30, 2016 |
|---|---|---|---|---|
| Laminated particleboard [sqm] | 52,899,345 | 49,780,143 | 25,802,601 | 25,292,712 |
| HPL [sqm] | 6,064,165 | 5,863,124 | 3,001,234 | 2,959,498 |
| Raw particleboard [cbm] | 551,202 | 506,163 | 279,243 | 242,913 |
| Laminated MDF/HDF board [sqm] | 1,648,841 | 1,696,819 | 845,627 | 856,970 |
| Raw MDF/HDF board [cbm] | 198,312 | 180,979 | 101,464 | 87,920 |
74%
Top 10 Top 11-22 Other
60%
Distributors Industry Others
ON THE OPERATIONS OF THE PFLEIDERER GROUP S.A. AND THE CAPITAL GROUP FOR THE PERIOD
FROM 1 JANUARY TO 30 JUNE 2017
| '000 Euro | Jan. 1, 2017 – Jun. 30, 2017 |
Jan. 1, 2016 – Jun. 30, 2016 |
Apr. 1, 2017 – Jun. 30, 2017 |
Apr. 1, 2016 – Jun. 30, 2016 |
|---|---|---|---|---|
| Revenue | 506,029 | 458,461 | 253,619 | 242,939 |
| Cost of sales | -386,375 | -353,917 (*) | -193,564 | -184,732 (*) |
| Profit on sales | 119,654 | 104,544 | 60,055 | 58,207 |
| Other income | 10,025 | 4,689 | 5,838 | 2,066 |
| Distribution expenses | -69,046 | -55,288 (*) | -34,660 | -30,431 (*) |
| General and administrative expenses | -26,072 | -24,804 | -13,428 | -12,052 |
| Other expenses | -5,266 | -13,015 | -948 | -4,313 |
| Result from operating activities | 29,295 | 16,126 | 16,857 | 13,477 |
| Financial income | 10,227 | 1,759 | 9,428 | 827 |
| Financial expenses | -22,502 | -13,489 | -15,152 | -7,446 |
| Exchange differences on translating foreign operations | 8,262 | 579 | 342 | -7,289 |
| Net financing costs | -4,013 | -11,151 | -5,382 | -13,908 |
| Profit before tax | 25,282 | 4,975 | 11,475 | -431 |
| Income tax expense | -6,664 | 2,135 | -3,217 | 3,265 |
| Net profit for the period | 18,618 | 7,110 | 8,258 | 2,834 |
TABLE 8: CONSOLIDATED STATEMENTS OF PROFIT AND LOSS IN HY1, 2017
(*) Reclassification of supply chain management costs for comparability purpose
Note: data for HY1 2016 does not comprise first 19 days of Core West segment.
Revenues came in at EUR 506,029 thousand in HY1 2017, growing 10.4% YoY, mostly due to organic developments supported by a strong market. High single-digit sales volumes were recorded on majority of the business lines, with laminated particleboard volume growth of 6.3%, raw practicleboard volumes growing as much as 9% YoY and raw MDF/HDF boards by 9.6% YoY in HY1 2017. The exception was the laminated MDF/HDF boards line, which showed a moderate c.a. 3% volume contraction. The Core West segment revenues reached EUR 357,906 thousand, augmenting by 18% YoY, while the Core East segment added EUR 148,123 thousand, down 4,7% YoY. The divergent dynamics among the segments resulted from changes within segmental allocations – exchange of markets in the reorganization process of sales between East and West (transfer some of West markets from East to West and transfer some of East markets from West to East). In fact some HDF boards' sales which were historically external revenues are now shown under inter-company transactions (internal revenues), lowering the external revenues of the Core East segment, and increasing external revenues of Core West segment, yet not affecting the overall consolidated result.
The Group's profit on sales reached EUR 119,654 thousand in HY1 2017, growing as much as 14.5% YoY, i.e. faster than the Group's top-line, mostly due to a more favourable sales mix. As a result, the gross profit margin expanded YoY in HY1 2017, coming in at 23.6% versus 22.8% in HY1 2016. Moderate growth in costs of sales was implicated by productivity enhancement programs and successful cost initiatives declined by material prices growth. Prices of methanol, urea and electricity increased significantly. Decreased wood costs were due to change of purchased products mix.
There was a sizeable c.19% YoY growth in Group's distribution, general and administrative expenses, which reached EUR 95,118 thousand in HY1 2017. Higher distribution expenses were linked to increase of sales volumes, higher costs of freight, higher sales personnel and marketing costs. This was partially offset by moderate increase of G&A expenses as consequence of cost discipline programs and lower services and consulting expenses.
HY1 2017 was marked by favourable YoY developments on the other income and other expenses lines. Other income in HY1 2017 was positively influenced by release of obligation for repayment of government grant supporting electricity sales of EUR 4.4m..
Other expenses, on the other hand, were negatively affected in HY1 2016 by one-off EUR 5.1m real estate tax payment in the Core East division. Overall, the Group's result from operating activities came in at a strong EUR 29,295 thousand in HY1 2017, growing by c.82% YoY. As a consequence of described changes and one-off events in the key segments, their EBIT contribution changed sizably YoY. The operating result of the Core West reached EUR 23,093 thousand in HY1 2017 versus EUR 3,665 thousand in HY1 2016. The operating result of the Core East division reached EUR 5,812 thousand in HY1 2017 versus EUR 10,808 thousand in HY1 2016.
HY1 2017 also showed favourable developments on the net financing line, with net financing costs reaching EUR 4,013 thousand versus EUR 11,151 thousand in HY1 2016. Firstly, there were EUR 8,262 thousand of positive FX differences booked in HY1 2017. These resulted mainly from EUR/PLN changes affecting loan valuation. The financial income line was positively affected by EUR 8,859 thousand from reassessment of amortized cost valuation due to faster repayment of bonds (non-cash effect). The income was netted off against recognized costs of redemption fee amounting to EUR 6,293 thousand (with cash effect in Q3). Overall, the Group's net profit came in at EUR 18,618 thousand in HY1 2017, up 162% YoY.
In HY1, 2017 the Group decided to substitute the existing financing solution with a more favorable capital market transaction. Pfleiderer redeemed the existing financial agreements on August 1, 2017. Starting from 2018, net finance costs savings are expected to be at approx. EUR 6.5m compared to 2016/2017.
| '000 Euro | Jun. 30, 2017 | Dec. 31, 2016 |
|---|---|---|
| Assets | ||
| Property, plant and equipment | 528,589 | 548,863 |
| Intangible assets | 87,212 | 83,091 |
| Goodwill | 67,241 | 66,171 |
| Long term investments | 515 | 515 |
| Investment property | 913 | 875 |
| Deferred tax asset | 7,132 | 5,948 |
| Advances paid on fixed assets | 10,447 | 3,016 |
| Government grants receivable | 12,931 | 12,921 |
| Other non-current assets | 2 | 2 |
| Non-current assets | 714,982 | 721,402 |
| Inventories | 101,960 | 91,903 |
| Trade and other receivables | 67,613 | 42,531 |
| Income tax receivable | 1,441 | 376 |
| Government grants receivable | 1,232 | 642 |
| Cash and cash equivalents | 96,949 | 97,726 |
| Fair value of hedging instruments | 318 | - |
| Other short-term financial assets | 266 | - |
| Current assets | 269,779 | 233,178 |
| Total assets | 984,761 | 954,580 |
| Equity and liabilities | ||
| Equity | ||
| Share capital | 6,692 | 6,692 |
| Share premium | 146,375 | 146,375 |
| Statutory reserves fund | 122,924 | 91,801 |
| Reserves | -11,364 | -13,937 |
| Retained earnings | 11,363 | 40,324 |
|---|---|---|
| Total equity attributable to owners of the Company | 275,990 | 271,255 |
| Total equity | 275,990 | 271,255 |
| Liabilities | ||
| Loans and borrowings | - | 329,762 |
| Employee related payables | 54,197 | 56,893 |
| Provisions | 2,661 | 3,694 |
| Deferred tax liabilities | 66,719 | 64,176 |
| Deferred income from government grants | 17,678 | 17,439 |
| Other non-current liabilities | 195 | 239 |
| Non-current liabilities | 141,450 | 472,203 |
| Loans and borrowings | 336,759 | 10,898 |
| Income tax payable | 13,817 | 10,559 |
| Trade and other payables | 185,452 | 161,414 |
| Employee related payable | 27,202 | 22,118 |
| Provisions | 3,046 | 5,132 |
| Deferred income from government grants | 1,045 | 1,001 |
| Current liabilities | 567,321 | 211,122 |
| Total liabilities | 708,771 | 683,325 |
| Total equity and liabilities | 984,761 | 954,580 |
The asset side of statement of financial position remained relatively stable in HY1 2017 versus FY 2016 numbers. Noncurrent assets in HY1 2017 constituted 73% of total group assets in HY1 2017 versus 76% in FY 2016. There was a small 4% fall in property, plant and equipment value within the six month period, yet a pick-up in advances paid on fixed assets was also noticeable. There were however changes within the current asset structure composition. Inventories grew c.11% within the six month period, largely in line with revenues and due to growth in stocks of wood and other raw materials. However, receivables level grew much faster than sales in HY1 2017. As a result, despite sizeable YoY increase, the cash and cash equivalents level in HY1 2017 was at the comparable level to the end of 2016.
Contrary to the asset side, the liability side of the statement of financial position changed within the HY1 2017 period. This took place, due to shift of loans and borrowing from non-current to current liabilities, as a consequence of early repayment of corporate bonds which took place in August 2017, i.e. after the reporting date. Higher Group net income translated into higher Group's total equity, which reached EUR 275,990 thousand at the end of HY1 2017. Total equity represented 28% of total equity and liabilities at the end of HY1 2017, with the proportion being relatively stable versus end of year 2016.
| '000 Euro | Jan. 1, – | Jan. 1, – |
|---|---|---|
| Jun. 30, 2017 | Jun. 30, 2016 | |
| Net profit for the reporting year | 18,618 | 7,110 |
| Adjustments for: | ||
| Depreciation and amortisation | 36,846 | 34,629 |
| Foreign exchange gains | -8,262 | -579 |
| Interest for the period | 12,706 | 11,730 |
| Profit on investing activities | 11 | - |
| Income tax disclosed in profit or loss of the period | 6,664 | -2,135 |
| Amortisation of government grants | -421 | -622 |
| Result on forward contracts | -431 | -1,555 |
| Increase/(decrease) in exchange differences on translating foreign operations | 457 | -349 |
| Changes in: |
| - trade and other receivables | -24,428 | -15,589 |
|---|---|---|
| - inventories | -8,474 | 4,974 |
| - trade and other payables | 10,135 | 10,931 |
| - employee benefit obligations | -681 | -1,139 |
| - provisions | -1,035 | -174 |
| Cash flows from operating activities | 41,705 | 47,232 |
| Income tax paid | -3,574 | -4,130 |
| Net cash provided by operating activities | 38,131 | 43,102 |
| Cash flows from investing activities | ||
| Disposal of property, plant and equipment | 18 | -55 |
| Acquisition of intangible assets and property, plant and equipment | -22,759 | -19,015 |
| Acquisition of the subsidiary, net of cash acquired | - | -9,692 |
| Interest received | 52 | 53 |
| Net cash used in investing activities | -22,689 | -28,709 |
| Cash flows from financing activities | ||
| Repayment of borrowings and other debt instruments | -405 | -18,507 |
| Share issue | - | 80,863 |
| Interest paid | -15,814 | -15,117 |
| Other financing activities | - | 80 |
| Net cash used in financing activities | -16,219 | 47,319 |
| Increase/(Decrease) in cash | -777 | 61,712 |
| Cash at beginning of the period | 97,726 | 20,731 |
| Cash at end of the period | 96,949 | 82,443 |
The net cash from operating activities remained at a high level in HY1 2017, reaching EUR 38,131 thousand. The HY1 2017 operating line was favourably affected by higher depreciation and amortisation and lower YoY pick-up in trade and other receivables. However, stronger YoY growth in inventories in HY1 2017 coupled with fall in trade and other payables more than offset the favourable developments.
The YoY comparability of investing and financing cash flows is limited due to changes within the Group's structures which took place over the past quarters. The investing cash flow was EUR 22,689 thousand negative in HY1 2017 (CAPEX net of change in investment liabilities). Organic investments conducted translated into a 20% YoY growth in capex to EUR 22,759 thousand in HY1 2017. In HY1 2016 the investing cash flow additionally contained a EUR 9,692 thousand outlay for subsidiary. The level and sign of net financing cash flow in HY1 2016 was strongly influenced by EUR 80,863 thousand share issuance, part of Group's restructuring process. HY1 2017 financing cash flow came in at a negative EUR 16,219 thousand, mostly due to interest payments.
Below we present key financial ratios describing the Group's performance:
| Definition | HY1, 2017 | HY1, 2016 | ||
|---|---|---|---|---|
| Liquid funds | mEUR | 96.9 | 82.4 | |
| Net debt | Financial debt - liquid funds | mEUR | 239.8 | 259.8 |
| Net leverage | Net debt/ EBITDA (LTM) | factor | 1.93 | 2.35 |
| Equity ratio | Equity/ balance sheet totals | % | 28.0% | 26.9% |
| Gearing | Net debt/ equity | factor | 0.9 | 1.0 |
| EBITDA (LTM) | Profit from operations + depreciation + amortization |
mEUR | 124.1 | 110.5 |
| Interest cover | EBITDA (LTM)/ net finance charges (LTM) | factor | 7.2 | 3.3 |
| ROCE | EBIT (LTM) / Capital employed | % | 8.1% | 7.6% |
| ROA | Net profit (LTM) / total assets at the end of the period |
% | 2.7% | 1.1% |
| ROE | Net profit (LTM) / equity at the end of the period |
% | 9.5% | 4.1% |
The financial ratios of the HY1 2016 and FY 2016 represent data of the Pfleiderer Group S.A. Group including period of 19 days of January 2016.
Looking at the financing position in YoY comparison shows a moderate reduction in net debt which coupled with growing EBITDA levels resulted in favourably lower net leverage levels and comfortably higher interest cover ratio. Such important ratios like ROCE and ROE improved YoY in HY1 2017.
| HY1, 2017 | HY1, 2016 | |
|---|---|---|
| Gross profit margin | 23,65% | 22.80% |
| EBIT margin | 5,79% | 3.52% |
| Pre-tax margin | 5.00% | 1.09% |
| Net income margin | 3.684% | 1.55% |
As at 30 June 2017, certain members of the Group had established the following security for the repayment of claims of Commerzbank Aktiengesellschaft, Filiale Luxemburg acting as security agent (the "Security Agent") arising from the parallel debt in accordance with the intercreditor agreement dated 4 July 2014 (as amended and restated) entered into in connection with the EUR 60 million and PLN 200 million RCF Agreement dated 4 July 2014 (as amended and restated) between, inter alios, Pfleiderer Group S.A. and certain of its subsidiaries as borrowers, the Security Agent and certain financial institutions as original lenders and the EUR 321,684 thousand 7.875% Senior Secured Notes due 1 August 2017 issued by PCF GmbH.
Pfleiderer Group S.A. has entered into agreements for financial and registered pledges over shares in Pfleiderer Wieruszów Sp. z o.o. (formerly Pfleiderer Prospan S.A.), Pfleiderer MDF Grajewo sp. z o.o., Pfleiderer Grajewo Sp. z o.o., Pfleiderer Polska Sp. z o.o. and Pfleiderer Silekol Sp. z o.o. and has granted powers of attorney to exercise corporate rights from the pledged shares in these companies in favour of the Security Agent. The registered pledges over shares were established up to the maximum secured amount of EUR 1,286 million.
Pfleiderer Group S.A., Pfleiderer Wieruszów Sp. z o.o. (formerly Pfleiderer Prospan S.A.), Pfleiderer MDF Grajewo sp. z o.o. , Pfleiderer Grajewo Sp. z o.o., Pfleiderer Polska Sp. z o.o. and Pfleiderer Silekol Sp. z o.o. have entered into agreements for financial and registered pledges over bank accounts and have granted powers of attorney to dispose of funds from their bank accounts in favour of the Security Agent. The registered pledges over bank accounts were established up to the maximum secured amount of EUR 1,286 million.
Pfleiderer Group S.A., Pfleiderer Wieruszów Sp. z o.o. (formerly Pfleiderer Prospan S.A.), Pfleiderer MDF Grajewo sp. z o.o. , Pfleiderer Grajewo Sp. z o.o., Pfleiderer Polska Sp. z o.o. and Pfleiderer Silekol Sp. z o.o. have entered into agreements for registered pledges over movable property and rights (zbiór rzeczy ruchomych i praw). The registered pledges over movable property and rights were established up to the maximum secured amount of EUR 1,286 million.
Pfleiderer Group S.A., Pfleiderer Wieruszów Sp. z o.o. (formerly Pfleiderer Prospan S.A.), Pfleiderer MDF Grajewo sp. z o.o. , Pfleiderer Grajewo Sp. z o.o., Pfleiderer Polska Sp. z o.o. and Pfleiderer Silekol Sp. z o.o. have entered into agreements for assignment of rights under commercial contracts, intercompany loan agreements and insurance agreements.
The following mortgages up to the amount of EUR 1,286 million (each) were established in favour of the Security Agent:
Pfleiderer Group S.A., Pfleiderer Wieruszów Sp. z o.o. (formerly Pfleiderer Prospan S.A.), Pfleiderer MDF Grajewo sp. z o.o. , Pfleiderer Grajewo Sp. z o.o., Pfleiderer Polska Sp. zo.o. and Silekol sp. z o.o. have executed the submissions to enforcement (oświadczenie o poddaniu się egzekucji) in favour of the Security Agent up to the amount of EUR 1,286 million.
As at 30 June 2017, certain members of the Group have established the following security for the liabilities under the RCF Agreement of EUR 60 million and PLN 200 million as well as the liabilities under the PCF GmbH (ex. Pfleiderer GmbH) 7.875% Senior Secured Notes with nominal a value of EUR 321,684 thousand due 1 August 2017 and certain hedging arrangements:
PCF GmbH, Pfleiderer Deutschland GmbH and Pfleiderer Vermögensverwaltung GmbH & Co. KG as pledgors had pledges over shares in Pfleiderer GmbH, Pfleiderer Deutschland GmbH, Pfleiderer Neumarkt GmbH, Pfleiderer Leutkirch GmbH, Pfleiderer Gütersloh GmbH, Pfleiderer Arnsberg GmbH, Pfleiderer Baruth GmbH and Jura-Spedition GmbH and over partnership interests in Pfleiderer Vermögensverwaltung GmbH & Co. KG.
PCF GmbH, Pfleiderer Deutschland GmbH, Pfleiderer Neumarkt GmbH, Pfleiderer Leutkirch GmbH, Pfleiderer Gütersloh GmbH, Pfleiderer Arnsberg GmbH, Pfleiderer Baruth GmbH, Jura-Spedition GmbH and Pfleiderer Vermögensverwaltung GmbH & Co. KG as pledgers, have granted pledges over their bank accounts.
PCF GmbH, Pfleiderer Deutschland GmbH, Pfleiderer Neumarkt GmbH, Pfleiderer Leutkirch GmbH, Pfleiderer Gütersloh GmbH, Pfleiderer Arnsberg GmbH, Pfleiderer Baruth GmbH, Jura-Spedition GmbH and Pfleiderer Vermögensverwaltung GmbH & Co. KG as assignors, have assigned as security their receivables under the intercompany loans, trade and insurance receivables.
Pfleiderer Deutschland GmbH, Pfleiderer Neumarkt GmbH, Pfleiderer Leutkirch GmbH, Pfleiderer Arnsberg GmbH and Pfleiderer Baruth GmbH as transferors, have transferred as security their moveable assets (including machinery and equipment, inventory).
PCF GmbH, Pfleiderer Deutschland GmbH, Pfleiderer Neumarkt GmbH, Pfleiderer Leutkirch GmbH and Pfleiderer Arnsberg GmbH as assignors, have assigned as security their intellectual property rights.
Land charges (Grundschulden) over real estate owned by Pfleiderer Deutschland GmbH and Pfleiderer Baruth GmbH have also been granted as security.
As at 30 June 2017, certain members of the Group have guaranteed the liabilities under the RCF Agreement of EUR 60 million and PLN 200 million as well as the liabilities under the 7.875% Senior Secured Notes with the nominal value of EUR 321,684 thousand issued by PCF GmbH (ex. Pfleiderer GmbH) and due 1 August 2017. These members of the Group are: Pfleiderer Group S.A., PCF GmbH, Pfleiderer Deutschland GmbH, Pfleiderer Neumarkt GmbH, Pfleiderer Leutkirch GmbH, Pfleiderer Gütersloh GmbH, Pfleiderer Arnsberg GmbH, Pfleiderer Baruth GmbH, Jura-Spedition GmbH, Pfleiderer Vermögensverwaltung GmbH & Co. KG, Pfleiderer Wieruszów Sp. z o.o. (Pfleiderer Prospan S.A.), Pfleiderer MDF Grajewo sp. z o.o., Pfleiderer Grajewo Sp. z o.o., Pfleiderer Polska Sp. z o.o. and Pfleiderer Silekol Sp. z o.o. (the "Existing Guarantees").
On 13 April 2017 the Group has finalized and signed refinancing agreements of €450.0 million senior secured credit facilities comprising:
The proceeds from the Facilities will be used to redeem the existing €321 684 000 7.875% senior secured notes issued by PCF GmbH (formerly Pfleiderer GmbH) ("Notes") in full, to refinance the existing senior secured revolving credit facility and to fund related transaction fees, redemption premium and expenses as well as for general corporate purposes and working capital requirements. Subject to the completion of the Facilities, Pfleiderer redeemed subsequently the Notes on August 1, 2017 at a redemption price of 101.969%.
After the reporting period, in order to secure the new obligations under the senior facilities agreement dated April 13, 2017, Pfleiderer Group S.A. on August 1, 2017 established the financial pledge and, subject to registration, the registered pledge over the shares in Pfleiderer Polska sp. z o.o. and granted the power of attorney to exercise corporate right from the pledged shares in favor of Trigon Dom Maklerski S.A. (the "Polish Security Agent").
Following the initial utilization of the facilities under the senior facilities agreement dated April 13, 2017, the existing security interests granted by the Polish Pfleiderer entities will be released. In order to secure the new obligations under the senior facilities agreement dated April 13, 2017, the following security interests will be granted for the benefit of the lenders:
(i) Pfleiderer Group S.A. will enter into the agreements for financial and registered pledges over shares in Pfleiderer Wieruszów Sp. z o.o. (formerly Pfleiderer Prospan S.A.), Pfleiderer MDF Grajewo sp. z o.o., Pfleiderer Grajewo sp. z o.o. and Pfleiderer Silekol sp. z o.o. and will grant powers of attorney to exercise corporate rights from the pledged shares in these companies in favour of Polish Security Agent.
(ii) Pfleiderer Group S.A., Pfleiderer Wieruszów Sp. z o.o. (formerly Pfleiderer Prospan S.A.), Pfleiderer MDF Grajewo sp. z o.o., Pfleiderer Grajewo sp. z o.o., Pfleiderer Polska sp. z o.o. and Pfleiderer Silekol sp. z o.o. will enter into the agreements for financial and registered pledges over major bank accounts and will grant the powers of attorney to dispose funds from their bank accounts in favour of the Polish Security Agent.
(iii) Pfleiderer Group S.A., Pfleiderer Wieruszów Sp. z o.o. (formerly Pfleiderer Prospan S.A.), Pfleiderer MDF Grajewo sp. z o.o., Pfleiderer Grajewo sp. z o.o., Pfleiderer Polska sp. z o.o. and Pfleiderer Silekol sp. z o.o. will enter into the agreements for security assignments of rights under commercial contracts, intercompany loan agreements and insurance agreements.
(iv) The following mortgages will be established in favour of the Polish Security Agent:
(v) Pfleiderer Group S.A., Pfleiderer Wieruszów Sp. z o.o. (formerly Pfleiderer Prospan S.A.), Pfleiderer MDF Grajewo sp. z o.o., Pfleiderer Grajewo sp. z o.o., Pfleiderer Polska sp. z o.o. and Pfleiderer Silekol sp. z o.o. will execute the submissions to enforcement (oświadczenie o poddaniu się egzekucji) in favour of the Security Agent.
Following the initial utilization of the facilities under the senior facilities agreement dated April 13, 2017, the existing security interests granted by the German Pfleiderer entities will be released. In order to secure the new obligations under the senior facilities agreement dated April 13, 2017, the following security interests will be granted for the benefit of the lenders:
(i) Pfleiderer Group S.A., PCF GmbH, Pfleiderer Deutschland GmbH as pledgors will grant pledges over shares in PCF GmbH, Pfleiderer Deutschland GmbH, Pfleiderer Neumarkt GmbH, Pfleiderer Leutkirch GmbH, Pfleiderer Gütersloh GmbH, Pfleiderer Arnsberg GmbH and Pfleiderer Baruth GmbH.
(ii) PCF GmbH, Pfleiderer Deutschland GmbH, Pfleiderer Neumarkt GmbH, Pfleiderer Leutkirch GmbH, Pfleiderer Gütersloh GmbH, Pfleiderer Arnsberg GmbH, Pfleiderer Baruth GmbH as pledgors will grant pledges over their major bank accounts.
(iii) PCF GmbH, Pfleiderer Deutschland GmbH, Pfleiderer Neumarkt GmbH, Pfleiderer Leutkirch GmbH, Pfleiderer Gütersloh GmbH, Pfleiderer Arnsberg GmbH, Pfleiderer Baruth GmbH as assignors will assign as security their receivables under the intercompany loans, material trade and insurance receivables.
(iv) The existing German land charges will be assigned to the Security Agent.
As at April 13, 2017, certain members of the Group have guaranteed the liabilities under the EUR 450 000 000 senior facilities agreement, such members of the Group are: Pfleiderer Group S.A., PCF GmbH, Pfleiderer Deutschland GmbH, Pfleiderer Neumarkt GmbH, Pfleiderer Leutkirch GmbH, Pfleiderer Gütersloh GmbH, Pfleiderer Arnsberg GmbH, Pfleiderer Baruth GmbH, Pfleiderer Wieruszów Sp. z o.o. (formerly Pfleiderer Prospan S.A.), Pfleiderer MDF Grajewo sp. z o.o., Pfeiderer Grajewo sp. z o.o., Pfleiderer Polska sp. z o.o., Pfleiderer Silekol sp. z o.o. The amounts outstanding under the senior secured revolving credit facility dated July 4, 2014 and the senior notes issued on June 27, 2014 will be refinanced by the senior facilities agreement dates April 13, 2017. The Existing Guarantees will be terminated upon this refinancing.
| PLN '000 | EUR '000 | |||
|---|---|---|---|---|
| Jan. 1 – Jun. 30 2017 |
Jan. 1– Jun. 30 2016 |
Jan. 1 – Jun. 30 2017 |
Jan. 1 – Jun. 30 2016 |
|
| Revenue | 0 | 300,421 | 0 | 68,782 |
| Results from operating activity | -16,611 | 11,716 | -3,891 | 2,682 |
| Profit before tax | 343,815 | 69,189 | 80,539 | 15,841 |
| Net profit for the reporting period | 342,077 | 68,433 | 80,132 | 15,668 |
| Basic earnings per share (in PLN/EUR) | 5.29 | 1.08 | 1.24 | 0.25 |
| Diluted earnings per share (in PLN/EUR) | 5.29 | 1.08 | 1.24 | 0.25 |
| Average PLN/EUR exchange rate | 4.2689 | 4.3677 |
| PLN '000 | EUR '000 | |||
|---|---|---|---|---|
| Apr. 1– Jun. 30 2017 |
Apr. 1 – Jun. 30 2016 |
Apr. 1 – Jun. 30 2017 |
Apr. 1 – Jun. 30 2016 |
|
| Revenue | 0 | 149,635 | 0 | 34,230 |
| Results from operating activity | -8,686 | 5,902 | -2,060 | 1,350 |
| Profit before tax | 319,406 | 32,217 | 75,741 | 7,370 |
| Net profit for the reporting period | 323,022 | 38,542 | 76,598 | 8,817 |
| Basic earnings per share (in PLN/EUR) | 4.99 | 0.60 | 1.18 | 0.14 |
| Diluted earnings per share (in PLN/EUR) | 4.99 | 0.60 | 1.18 | 0.14 |
| Average PLN/EUR exchange rate | 4.2171 | 4.3714 |
Starting from 1 September 2016 Pfleiderer Group S.A. is a pure holding company further to the contribution in kind of Operational Activity to Pfleiderer Grajewo Sp. z o.o. executed on 31 August 2016. Positive difference between profit before tax and result from operating activity for HY1 2017 results from dividend income in the amount of PLN 334,212 thousand as well as positive foreign exchange gains in the amount of PLN 37,232 thousand on the valuation of euro denominated loan granted by Pfleiderer Service GmbH (on 1 June 2016 Pfleiderer Service GmbH was merged with Pfleiderer GmbH – currently PCF GmbH) and obligation taken over from Atlantik SA representing proceeds from sale of Pfleiderer Group S.A. shares held by Pfleiderer Service GmbH after the settlement of Secondary Offering to Atlantik S.A., partly offset by interests on these loans (PLN 11,767 thousand).
| PLN '000 | EUR '000 | |||
|---|---|---|---|---|
| Jun. 30, 2017 | Dec. 31, 2016 | Jun. 30, 2017 | Dec. 31, 2016 | |
| Total assets | 2,311,888 | 2,224,785 | 547,076 | 502,890 |
| Liabilities | 789,664 | 973,467 | 186,863 | 220,042 |
| Non-current liabilities | 2,094 | 356 | 496 | 80 |
| Current liabilities | 787,570 | 973,111 | 186,367 | 219,962 |
|---|---|---|---|---|
| Equity | 1,522,224 | 1,251,318 | 360,213 | 282,848 |
| Share capital | 21,351 | 21,351 | 5,052 | 4,826 |
| Number of shares | 64,701,007 | 64,701,007 | 64,701,007 | 64,701,007 |
| Book value per share (in PLN/EUR) | 23.53 | 19.34 | 5.57 | 4.37 |
| PLN/EUR exchange rate as at the end of the reporting period | 4.2259 | 4.4240 |
| PLN '000 | EUR '000 | |||
|---|---|---|---|---|
| Jan. 1 – Jun. 30, 2017 |
Jan. 1 – Jun. 30, 2016 |
Jan. 1 – Jun. 30, 2017 |
Jan. 1 – Jun. 30, 2016 |
|
| Net cash provided by operating activities | -9,707 | 42,489 | -2,274 | 9,728 |
| Net cash provided by/ used in investing activities | -4 | -605,118 | -1 | -138,544 |
| Net cash used in financing activities | 7,015 | 571,811 | 1,643 | 130,918 |
| Total net cash flow | -2,696 | 9,182 | -632 | 2,102 |
| Average PLN/EUR exchange rate | 4.2689 | 4.3677 |
| Jan. 1, – Jun. 30, 2017 |
Jan. 1,– Jun. 30, 2016 |
|
|---|---|---|
| Operating margin | n.a. | 4.00% |
| Operating profit / Revenue | ||
| Pre-tax margin | n.a. | 23.03% |
| Profit before tax / Revenue | ||
| Net margin | n.a. | 22.78% |
| Net profit / Revenue |
Starting from 1 September 2016 Pfleiderer Group S.A. is a pure holding company, thus did not record any revenue in HY1/17.
There were no non-recurring events which might affect the Group or Pfleiderer Group S.A.'s financial performance occurred in HY1, 2017.
The Management Board of Pfleiderer Group S.A. has not published projections of financial results or consolidated financial results for the financial year 2017.
| Rating date | Company's long-term rating | Rating outlook | |
|---|---|---|---|
| Standard & Poor's Ratings Services | 24.03.2017 | B+ | Positive |
| Moody's Investors Service | 22.03.2017 | Ba3 | Stable |
| Standard & Poor's Ratings Services | 20.01.2017 | B+ | Positive |
| Standard & Poor's Ratings Services | 29.01.2016 | B | Positive |
| Moody's Investors Service | 26.01.2016 | B1 | Positive |
Moody's: Moody's rates Pfleiderer's proposed term loan (P)Ba3; upgrades
Pfleiderer Group S.A.'s corporate family rating (CFR) was upgraded to Ba3 from B1 on 22 March 2017. The upgrade recognised the Group's solid performance through fiscal year 2016, which showed strong profit growth thanks to productivity improvements and cost savings, as well as Moody's-adjusted leverage declining below our 3.5x debt/EBITDA guidance for an upgrade. The rating action also followed Pfleiderer's proposed refinancing of its €322 million notes with a new 7-year €350 million term loan, which we expect will significantly lower the group's financing costs and, hence, strengthen its cash flow and coverage metrics.
The Ba3 CFR is further supported by (1) Pfleiderer's leading positions in the concentrated markets of wood based particleboards in Germany and Poland, an elsewhere rather commoditized industry, (2) a portfolio geared towards valueadded and more profitable products, such as high pressure laminates and melamine-faced chipboards (c.60% of group sales), (3) a well-diversified customer base with long-standing relationships, (4) improved profitability in 2016 owing to extensive restructuring measures and synergies associated with the "One Pfleiderer" integration project, and (5) supportive economic and industry fundamentals in the group's core European markets. The rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time.
On January 20, 2017, Standard & Poor's Ratings Services raised long-term corporate credit rating on Poland-based wood panels producer Pfleiderer Group S.A. and its wholly-owned Germanybased subsidiary PCF GmbH to 'B+' from 'B' with positive outlook.
At the same time, S&P raised the issue rating of the senior secured notes issued by PCF GmbH to 'B+' from 'B' and affirmed the recovery rating at '4', indicating S&P expectation of average recovery prospects (30%).
The upgrade follows Pfleiderer's recently improving underlying operational performance and our expectation that lower interest and restructuring expenses will result in improving credit metrics in 2017 and 2018.
The rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time.
At the end of November 2015, the Management Board revised its dividend policy. It assumes that, starting from the financial year ended 31 December, 2016, the Company, after fulfilling the legal requirements and depending on market conditions, will allocate up to 70% of consolidated net profit for dividend payment.
On 25 April 2017, The Management Board of Pfleiderer Group S.A. adopted a resolution on a motion of the Management Board to General Meeting of Shareholders concerning distribution of the Company's profit for business year 2016 amounting to PLN 207,056 thousand.
The Management Board recommended assigning PLN 71,171,107.70 for payment of the dividend amounting to 1.10 PLN per one share and assigning remaining part of the profit to Company's supplementary capital.
On 9 May 2017 the Supervisory board of the Parent Company positively opined the above recommendation of the Management Board.
On 21 June 2017 the Ordinary General Meeting of Shareholders of the Parent Company adopted a resolution concerning distribution of net profit for the period from January 1st to December 31st 2016, providing for the dividend payment for the Company's shareholders in the amount of PLN 71,171,107.70 representing PLN 1.10 per each share. Additionally, the Ordinary General Meeting of Shareholders of the Parent Company set the following dates: 1) a dividend date (the date used to prepare the list of shareholders eligible to receive the dividend) was set for 5 July 2017, and 2) dividend payment date was set for 19 July 2017.
Forward and swap agreements are forward foreign currency transactions conducted at a predetermined exchange rate.
The Group applies hedge accounting, which results in the effective portion of gains or losses on fair value of hedging instruments (forward transactions) is included in other comprehensive income and presented as a separate equity position "cash flow hedge". The gains or losses previously recognized in other comprehensive income are transferred to profit or loss over the same period and in the same position in which the hedged cash flows are recognized in the statement of comprehensive income. The ineffective portion of changes in the fair value of the derivative is recognized immediately in profit or loss.
As at 30 June 2017, the Group did not carry any borrowings from related parties.
| '000 Euro | Jun. 30, 2017 | Dec. 31, 2016 |
|---|---|---|
| Non-current liabilities | ||
| Non-current portion of interest-bearing bonds | - | 329,762 |
| Bank borrowings | - | - |
| Total | - | 329,762 |
| Current liabilities | ||
| Current portion of interest-bearing bonds | 336,435 | 10,555 |
| Other interest bearing liabilities | 324 | 343 |
| Total | 336,759 | 10,898 |
On 27 June 2014, PCF GmbH issued 7.875% Senior Secured Notes originally due 2019 with a face value of EUR 321 684 thousand. When determining fair values during purchase price allocation for the Pfleiderer Group acquisition, the notes were measured at fair value on the aquisition date, 19 January 2016 (EUR 332 943 thousand). On 23 June 2017 the Group announced an irrevocable notice to fully redeem Senior Secured Notes. The redemption occurred subsequently on August 1, 2017 at a redemption price of 101.969% (plus accrued and unpaid interest). The Group recognized redemption fee of EUR 6 293 thousand ( EUR 6 334 thousand as of redemption date) in short term portion of interest bearing bonds. The bonds were revalued at amortized cost and have a carrying value of EUR 319 587 thousand as of 30 June 2017. Due to accelerated repayment date to 1 August 2017 the bonds were classified as short term.
The short term portion of interest bearing notes relates also to accrued interest of EUR 10 555 thousand.
On 5 October 2015, Pfleiderer Group S.A. along with other companies belonging to the Pfleiderer Group:
PCF GmbH (formerly Pfleiderer GmbH), Pfleiderer Services GmbH (meanwhile merged into PCF GmbH), Pfleiderer Deutschland GmbH (formerly Pfleiderer Holzwerkstoffe GmbH),
Pfleiderer Neumarkt GmbH, Pfleiderer Leutkirch GmbH, Pfleiderer Gütersloh GmbH,
Pfleiderer Arnsberg GmbH, Pfleiderer Baruth GmbH, Jura- Spedition GmbH,
Pfleiderer Vermögensverwaltung GmbH & Co. KG, Pfleiderer Wieruszów Sp. z o.o. (formerly Pfleiderer Prospan S.A.), Pfleiderer MDF Grajewo Sp. z o.o., Pfleiderer Silekol Sp. z o.o (formerly Silekol Sp. z o.o.),
concluded the Amendment Agreement amending the super senior revolving credit facility dated 4 July 2014 concluded by entities belonging to the West Segment of the Pfleiderer Group. This Agreement is called the "Revolving Facility Agreement" and was concluded with the mandated lead arrangers, which include:
| Commerzbank Aktiengesellschaft, | Deutsche Bank AG Filiale Deutschlandgeschäft, |
|---|---|
| KFW, | BNP Paribas S.A. Niederlassung Deutschland, |
| Alior Bank S.A. | Powszechna Kasa Oszczędności Bank Polski S.A, |
| Bank Zachodni WBK S.A. | Bank Millennium S.A |
and
Commerzbank International S.A. as the credit agent "Agent",
Commerzbank Aktiengesellschaft, Filiale Luxemburg as a security agent "Security Agent".
On 19 January 2016, an amendment to the RCF Agreement came into force which provided Pfleiderer Group S.A. and its Polish subsidiaries with a limit of PLN 200 million (Tranche B) for financing of working capital and other corporate needs. Furthermore, on 8 July 2016 two more Polish subsidiaries - Pfleiderer Grajewo Sp. z o.o. and Pfleiderer Polska Sp. z o.o. (previously Pfleiderer Services Sp. z o.o.) - acceded to the RCF Agreement. At the reporting date this financing facility was not drawn in cash whilst bank guarantees were issued within this credit line for the total amount of PLN 7,259 thousand as well as Letters of Credit in an amount of EUR 1,523 thousand. The RCF Agreement provides Pfleiderer Deutschland GmbH and PCF GmbH with a limit of up to EUR 60.0 million (Tranche A). This Tranche A is partially drawn for bank guarantees of EUR 2,273 thousand and PLN 1,040 thousand (EUR 246 thousand). Interest on cash drawings is accrued at EURIBOR (for EUR-drawings) plus margin, WIBOR (for PLN-drawings) plus margin, LIBOR (for drawings in other currencies) plus margin.
All amendments to the Revolving Facility Agreement were concluded conditionally and entered into force on 19 January 2016 along with the completion of the reorganization of the Pfleiderer Group S.A. Group.
Several bank credit lines existing at that time were repaid fully on February 11, 2016.
The Lender, or its affiliates, may provide a particular borrower with all or part of the unused funds under the Revolving Facility Agreement through ancillary facilities (such as overdrafts, guarantees, bonds, letters of credit, short-term loans and other loans or solutions required in connection with the operations of Pfleiderer Group S.A. and its subsidiaries, which have been agreed between Pfleiderer Group S.A. and the particular borrower or its associated company).
The total agreed limits for ancillary facilities amount to EUR 20,000 thousand in case of tranches in EUR and PLN 120,000 thousand in case of tranches in PLN.
Funds paid under the Revolving Facility Agreement will be assigned to financing corporate needs and the working capital of Pfleiderer Group SA Group, whereby they cannot be assigned to redeem, repay, repay early, purchase or cancel any Senior Secured Notes issued by PCF GmbH on 7 July 2014.
The date of expiry of the agreement and its full repayment has been established as 30 April 2019.
On April 13, 2017 Pfleiderer Group S.A., PCF GmbH and certain of its German and Polish subsidiaries, Credit Suisse International, Deutsche Bank AG, London Branch, Goldman Sachs Bank USA and others as mandated lead arrangers, Wilmington Trust (London) Limited as security agent (the "Security Agent") and others entered into a EUR 450,000,000 senior facilities agreement which initial utilization took place on August 1, 2017. Pfleiderer used those amounts to repay the Senior Secured Notes issued June 27, 2014 (PCF GmbH), the existing credit facility agreements originally dated 4 July, 2014 (see above) and for general corporate purposes and working capital requirements of the Group.
The EUR 450 000 000 are split into a Term Loan B ("TLB") amounting to EUR 350 000 000 (PCF GmbH) with a tenor of seven years and Revolving Credit Facilities with a tenor of five years amounting to EUR 50 000 000 and PLN 211 480 000.
| Jun . 30 |
201 7 , |
De c. 3 |
1, 201 6 |
||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| LEN DE R |
CU RR EN CY |
INT ERE ST RA TE |
DU N FRO RA TIO M |
DU RA TIO N T O |
IT LIM CR ED IT E UR |
N AM DR AW OU NT EU R |
UN N AM DR AW OU NT EU R |
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UN N AM DR AW OU NT EU R |
|
| Co Eas RC F t – re |
|||||||||||
| k M ille Ban nni S.A um |
PLN | WI BO R + in m arg |
19 Jan 20 16 |
30 Ap r 20 19 |
*) | 2, 366 |
0 | 2, 366 |
2, 267 |
- | 2, 267 |
| k M ille . ( cill ) Ban nni S.A An um ary |
PLN | WI BO R + in m arg |
eb 4 F 201 6 |
30 Ap r 20 19 |
*) | 5, 523 |
0 | 5, 523 |
7, 129 |
- | 7, 129 |
| k Z ach od ni W S.A Ban BK |
PLN | BO in WI R + m arg |
19 20 16 Jan |
30 r 20 19 Ap |
*) | 733 4, |
0 | 733 4, |
535 4, |
- | 535 4, |
| k Z ach od ni W BK S.A . ( An cill ) Ban ary |
PLN | WI BO in R + m arg |
4 F eb 201 6 |
30 Ap r 20 19 |
*) | 099 7, |
0 | 099 7, |
6, 802 |
- | 6, 802 |
| PKO nk Pol ski S.A Ba |
PLN | WI BO in R + m arg |
19 Jan 20 16 |
30 Ap r 20 19 |
*) | 4, 733 |
0 | 4, 733 |
4, 535 |
- | 4, 535 |
| . ( ) PKO nk Pol ski S.A An cill Ba ary |
PLN | WI BO in R + m arg |
4 F eb 201 6 |
30 Ap r 20 19 |
*) | 099 7, |
0 | 099 7, |
6, 802 |
- | 6, 802 |
| Ali Ban k S .A. or |
PLN | WI BO R + in m arg |
19 Jan 20 16 |
30 Ap r 20 19 |
*) | 7, 099 |
0 | 7, 099 |
6, 802 |
- | 6, 802 |
| ( ) Ali Ban k S .A. An cill or ary |
PLN | WI BO R + in m arg |
4 F eb 201 6 |
30 Ap r 20 19 |
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0 | 4, 733 |
4, 535 |
- | 4, 535 |
| Gu Co Eas nte t ara es re |
|||||||||||
| k M ille Ban nni S.A um |
PLN | ul 2 4 J 014 |
30 Ap r 20 19 |
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3, 469 |
1, 487 |
1, 487 |
|||
| ban k g ee/ d in fa r of al s is Na tion ant uar sue vou For est s |
27 Jan 20 14 |
Feb 28 20 18 |
1, 656 |
1, 656 |
1, 428 |
1, 428 |
|||||
| ban k g in f of o f issu ed De nt S ant uar ee avo ur sco p. z o.o |
22 Sep 20 15 |
20 Sep 20 17 |
61 | 61 | 59 | 59 | |||||
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31 Jan 20 17 |
15 De c 2 017 |
495 | 495 | 0 | 0 | |||||
| of Let Cr edi t E UR 1.0 92 .00 0 ter |
22 Jun 20 17 |
22 Ap r 20 18 |
1, 256 |
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|||||||||||
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30 Ap r 20 19 |
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0 | 473 | 453 | 20 | 433 | |
| TO TA L C OR E E AS T |
47, 327 |
3, 469 |
43, 858 |
45, 347 |
1, 507 |
43, 840 |
| Jun . 30 |
201 7 , |
De c. 3 |
1, 201 6 |
|||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| LEN DE R |
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|
| KfW | EU R |
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|
| ban k A Co G mm erz |
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|
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EU R |
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9, 672 |
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| che nk De Ba AG uts |
EU R |
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|
| che nk ( cill ) De Ba AG An uts ary |
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*) Restructuring of Financings envisaged with effective date 01. August 2017
**) drawings under these ancillaries will be roled-into new ancillaries under the new financing
As at 30 June 2017 and 31 December 2016, the Group did not carry any borrowings from related parties.
Loans advanced:
As at 30 June 2017, the Company has loan receivables of PLN 105,609 thousand granted to subsidiary Pfleiderer MDF Grajewo Sp. z o.o. Interest on loans are accrued on a monthly basis and presented as financial income. The loans granted to Pfleiderer MDF Grajewo Sp. z o.o. are denominated in PLN and bear interests at 1M WIBOR rate plus margin.
On 5 October 2015, Pfleiderer Group S.A. in order to finance the acquisition of a subsidiary, entered into a loan agreement with PCF GmbH. Transfer of funds in the amount of EUR 43,587 thousand (PLN 193,919 thousand) took place in January 2016.
On 27 June 2017 the shareholders signed a resolution, pursuant to which profit for 2016 generated by PCF GmbH, a subsidiary, in the amount of EUR 79 170 thousand should be transferred to Pfleiderer Group S.A. with reservation that the portion of EUR 60,000 thousand shall be offset with Company's liabilities and the remaining portion of EUR 19 170 thousand shall be paid by 7 July 2017.
On 30 June 2017 the Company and PCF GmbH, the subsidiary, concluded an Offset and Debt Repayment Agreement. As a result, the entire loan amount of EUR 45 524 thousand, consisting of the capitalized principal of EUR 44 837 thousand and interest accrued by 30 June 2017 of EUR 687 thousand was settled.
In connection with the acquisition of a subsidiary PCF GmbH, on 5 October 2015 Pfleiderer Group S.A. has signed an agreement with Atlantik S.A., under which Pfleiderer Group S.A. took over an obligation of Atlantik S.A. to Pfleiderer Service GmbH regarding sale of Pfleiderer Group S.A. shares held by Pfleiderer Service GmbH after the settlement of Secondary Offering to Atlantik S.A.
As of 30 June 2017 part of obligation in the amount of EUR 14.476 thousand was settled as a result of the compensation and loan repayment agreement signed with PCF GmbH.
The amount of debt due on 30 June 2017 after the abovementioned settlement amounted to EUR 126 501 thousand.
As at 30 June 2017, no such events occurred.
Further to contribution in kind of Operational Activity of the Company to Pfleiderer Grajewo Sp. z o.o. on 31 August 2016, the Company is no longer exposed to currency risk related to business transactions. During first 8 months of 2016 forward contracts were executed in order to hedge currency risk related to sale of products in foreign currencies. The Company applied hedge accounting.
The commercial paper program, carried out pursuant to an agreement of 22 July 2003 with PEKAO S.A., consists of issuance of short-term notes. The notes are issued in accordance with the Polish Bonds Act of 29 June 1995 as PLN-denominated, unsecured, zero-coupon bearer securities in book-entry form.
The notes issued by Pfleiderer Group S.A., maturing in up to one year, are acquired by Pfleiderer Wieruszów Sp. z o.o. (formerly Pfleiderer Prospan S.A.) through Bank PEKAO S.A. Thanks to this arrangement, Pfleiderer Group S.A. does not use higher-rate bank loans and Pfleiderer Wieruszów Sp. z o.o. (formerly Pfleiderer Prospan S.A.) has deposits bearing higher interest than such instruments as treasury bills. The Bank's fee is the cost incurred by the Company in connection with the issue. The notes are a discount instrument – they are issued at a discount to their nominal value and repurchased by the issuer at nominal value.
As at 30 June 2017, the Company's debt under issued notes totaled PLN 138,891 thousand (the nominal value of the notes is EUR 139 000 thousand). The notes are used to optimize the management of financial liquidity within the Group, reduce external debt and finance day-to-day operations.
Pfleiderer Group S.A. rolled over commercial papers on 17 July 2017.
The notes were are used to optimize cash management within the Company, reduce external debt and finance day-to-day operations.
The Group manages all types of financial risk described below, which may have a significant effect on its operations in the future. In its risk management process, the Group focuses on the following risk types:
The objective behind credit risk management is to reduce the Group's losses which could follow from customers' insolvency. This risk is mitigated with the use of receivables insurance and factoring agreements and ABCP program (Asset based commercial papers).
Market risk is the risk that changes in market prices – such as foreign exchange rates and interest rates – will affect the Group's income or the value of its holdings of financial instruments. The objective of market risk management is to reduce the unfavorable effects of changes in market risk factors on the cash flows and financial results.
Market risk management is conducted using derivative instruments which are used solely to reduce the risk of changes in fair value and risk of changes in cash flows.
Derivative (currency forwards) transactions are concluded only with reliable partners, authorized to participate in transactions through the application of appropriate procedures and signing relevant documentation.
The objective of currency risk management is to minimize losses arising out of unfavorable changes in foreign exchange rates. The Group monitors its currency position from the point of view of cash flows. To manage its currency risk, it first relies on natural hedging and where necessary uses forward contracts. The time horizon adopted for position monitoring and hedging transactions is analyzed on a case by case basis.
The objective of financial liquidity management is to protect the Group from insolvency. This objective is pursued through regular projection of debt levels in a five-year horizon, and arrangement of appropriate financing.
The Group is exposed to credit risk, interest rate risk and currency risk in the ordinary course of business. Financial derivatives are used to hedge the risk related to exchange rate fluctuations.
Transactions which expose the Pfleiderer Group companies to credit risk concern trade receivables. The credit risk related to trade receivables is limited, as the customer base is very wide and the risk is highly diversified. Therefore, the credit risk concentration is insignificant. Moreover, the Group operates a strict receivables management policy, whereby the risk of customer insolvency is mitigated through the use of trade credit insurance and factoring (Segment East) and ABCP program (Segment West). In HY1 2017, over 92% of the Group's trade receivables were secured with insurance. In the event of insolvency of customers who have insurance coverage, compensation is paid by the insurer. Each customer has a trade credit limit (usually covered by an insurance limit).
The Group holds funds in bank accounts and has liabilities under bank borrowings. The interest rate risk is related to interest payments with floating interest rates. The Group does not hedge the interest rate risk. The Group monitors the level of interest costs on a regular basis.
Foreign currency transactions relate both to purchases of raw materials and sale of goods. Therefore, in the event of any exchange rate fluctuations the resulting foreign exchange gains and losses are partly offset. Furthermore, the Group makes capital expenditure in foreign currencies, and therefore it monitors its foreign currency positions on an ongoing basis and hedges open positions – first, through natural hedging (that is through carefully selecting currencies for contracts), and second, through forward and swap transactions. The Group monitors its currency risk exposure in terms of cash flows rather than profit or loss.
In 2017, the Pfleiderer Group entered into a number of EUR/PLN forward contracts to hedge against currency risk related to forecasted trade transactions.
Parent and subsidiaries companies are protected against any material cash-flow disruptions thanks to credit facilities available at any time. Material cash-flow disruptions are also unlikely due to customer diversification. All extraordinary expenditure is always planned well ahead and accounted for in the liquidity management process.
The Group monitors its liquidity on an ongoing basis, both with respect to short-term liquidity and long-term liquidity.
Further to contribution in kind of Operational Activity of the Pfleiderer Group S.A. to Pfleiderer Grajewo Sp. z o.o. its credit risk is limited as the Company does not conduct the Operational Activity and does not have trade receivables from external debtors.
The credit risk exposure of the Company relates mostly to the loans granted to its subsidiary, Pfleiderer MDF Grajewo Sp. z o.o. of PLN 105,609 thousand.
Further to contribution in kind of Operational Activity of the Company to Pfleiderer Grajewo Sp. z o.o. on 31 August 2016, the Company is no longer exposed to currency risk related to business transactions. During first 8 months of 2016 forward contracts were executed in order to hedge currency risk related to sale of products in foreign currencies. Additionally the Company hedged the payment of the purchase price for Pfleiderer GmbH shares.
Currency risk in Pfleiderer Group S.A. is connected with euro denominated intercompany loan taken to finance the acquisition of a subsidiary of EUR 45,184 and other financial liabilities of EUR 126,501 thousand representing an obligation taken over from Atlantik S.A.
The Company is not exposed to any material price risk associated with financial instruments.
The Company is protected against any material cash-flow disruptions thanks to credit facilities available at any time. Material cash-flow disruptions were also unlikely due to customer diversification in first 8 months of 2016 and pure holding function since September 2016. All extraordinary expenditure is always planned well ahead and accounted for in the liquidity management process.
The Company monitors its liquidity on an ongoing basis, both with respect to short-term liquidity (a few days forward) and long-term liquidity (a few years forward).
MANAGEMENT BOARD INTERIM CONDENSED CONSOLIDATED REPORT
FROM 1 JANUARY TO 30 JUNE 2017
ON THE OPERATIONS OF THE PFLEIDERER GROUP S.A. AND THE CAPITAL GROUP FOR THE PERIOD
| Number of shares | % of equity | Number of votes on GM |
Percentage of votes on GM |
|
|---|---|---|---|---|
| Strategic Value Partners LLC | 19,183,149 | 29.65% | 19,183,149 | 29.65% |
| Atlantik S.A. | 12,474,561 | 19.28% | 12,474,561 | 19.28% |
| Aviva OFE Aviva BZ WBK | 6,000,000 | 9.27% | 6,000,000 | 9.27% |
| Nationale-Nederlanden OFE | 6,400,000 | 9.89% | 6,400,000 | 9.89% |
| Other shareholders | 20,643,297 | 31.91% | 20,643,297 | 31.91% |
| Total | 64,701,007 | 100.00% | 64,701,007 | 100.00% |
According to latest available information
| Shareholder | Number of shares | % of equity |
|---|---|---|
| Strategic Value Partners LLC* as at 31.12.2016 | 16,772,896 | 25.92% |
| 12.01.2017 purchase of shares – through subsidiaries | 1,241,559 | 1.92% |
| 10.02.2017 purchase of shares – through subsidiaries | 1,168,694 | 1.81% |
| Strategic Value Partners LLC* current date | 19,183,149 | 29.65% |
| Atlantik S.A. as at 31.12.2016 | 16,374,497 | 25.31% |
| 12.01.2017 sale of shares | - 1,241,559 |
-1.92% |
| 10.02.2017 sale of shares | - 1,168,694 |
-1.81% |
| 17.02.2017 transfer of shares | - 613,913 |
-0.95% |
| 20.02.2017 transfer of shares | - 875,770 |
-1.35% |
| Atlantik S.A. current date | 12,474,561 | 19.28% |
| Other shareholders as at 31.12.2016 | 31,553,614 | 48.77% |
| 17.02.2017 transfer of shares | 613,913 | 0.95% |
| 20.02.2017 transfer of shares | 875,770 | 1.35% |
| Other shareholders current date | 33,043,297 | 51.07% |
| Total | 64,701,007 | 100.00% |
There were no changes in a structure shareholder after 30 June 2017. As a result, the shareholder structure at the date of release of financial statements was as follows:
| Number of shares | % of equity | Number of votes on GM |
Percentage of votes on GM |
|
|---|---|---|---|---|
| Strategic Value Partners LLC | 19,183,149 | 29.65% | 19,183,149 | 29.65% |
| Atlantik S.A. | 12,474,561 | 19.28% | 12,474,561 | 19.28% |
| Aviva OFE Aviva BZ WBK | 6,000,000 | 9.27% | 6,000,000 | 9.27% |
| Nationale-Nederlanden OFE | 6,400,000 | 9.89% | 6,400,000 | 9.89% |
| Other shareholders | 20,643,297 | 31.91% | 20,643,297 | 31.91% |
| Total | 64,701,007 | 100.00% | 64,701,007 | 100.00% |
According to latest available information
One year after the transaction of re-IPO and Group integration of the East and West business core, Pfleiderer Group won the prestigious ranking "Listed Company of the Year", category: "Investor Relations", organised by the "Puls Biznesu" daily and TNS Polska.
The competition "Listed Company of the Year" is the oldest and most prestigious ranking on the market and the prizes are awarded by about 100 brokers, analysts and investment advisors selected randomly. The criteria considered by the experts include the competencies of the management board, prospects for development and investor relations. Honest and explicit communication policy of the Pfleiderer Group, as well as its proactive attitude using traditional and modern communication tools in relations with the Group's investors resulted in the 1st place in the Investor Relations category.
Online Annual Report for 2016 – the dedicated Website has a number of functionalities and is an important source of information about the Group. Financial data, corporate events and achievements in 2016 are presented in a user friendly and attractive way. The online report has several infographics, animations and multimedia content. Intuitive menu and storage make it easy for the user to navigate the site.
In the "Interactive charts" tab, the user can analyze individual financially-operative data by comparing them on interactive charts. All data from the annual report are available in the download center under the "For download" tab. The interactive service is also available in the mobile mode.
The Online Annual Report is available at: http://annualreport2016.pfleiderer.pl/
MANAGEMENT BOARD INTERIM CONDENSED CONSOLIDATED REPORT
FROM 1 JANUARY TO 30 JUNE 2017
ON THE OPERATIONS OF THE PFLEIDERER GROUP S.A. AND THE CAPITAL GROUP FOR THE PERIOD
As at the date of this Report, the Management Board's members held the following number of Pfleiderer Group shares:
The nominal value of each share is PLN 0.33.
Other Members of the Pfleiderer Group Management and Supervisory Board did not hold any shares in the Parent.
| Zbigniew Prokopowicz | Chairman of the Supervisory Board |
|---|---|
| Michael F. Keppel | Vice-Chairman of the Supervisory Board |
| Jason Clarke | Vice-Chairman of the Supervisory Board |
| Krzysztof Sędzikowski | Member of the Supervisory Board |
| Jan Woźniak | Member of the Supervisory Board |
| Stefan Wegener | Member of the Supervisory Board |
| Tod Kersten | Member of the Supervisory Board |
The present term of the Supervisory Board began on June 28, 2013 and will expire on June 28, 2018.
The tenures of all the Supervisory Board members incumbent as at June 30, 2017 will expire at the latest on the date of holding the General Meeting which will approve the financial statements for the last full fiscal year during which they held the positions of Supervisory Board members, i.e., on the day of adoption of the resolution on the approval of financial statements for the fiscal year ended December 31, 2017. The tenure of a Supervisory Board member also expires in the event of death, resignation or of being recalled from the Supervisory Board. The tenure of a Supervisory Board members appointed before the end of the given term will expire simultaneously with the tenures of the remaining Supervisory Board members.
There were no changes in the Supervisory Board composition in the reporting period.
Mr. Thomas Schäbinger (born in 1962) is a graduate of the Vienna University of Economies & Business (in 1989 he graduated in Studies of Business Administration) and Secondary School for Mechanical Engineering in St. Pölten (in 1982 he graduated with distinction as Engineer (Ingenieur)). Mr. Thomas Schäbinger has been working as CEO for Bundy Refrigeration Group (cooling technology provider) since 2015 and has been managing partner of TS TRUST GmbH (a capital investment company) since 2014. Between 1998 and 2014 he held several positions in Mondi Europe and International (formerly known as Frantschach – a packaging and paper group with global operations), including several positions as Chief Executive Officer. Previously, Mr. Thomas Schäbinger worked in various management positions including at Unilever and at Beiersdorf.
TOM K. SCHӒBINGER PRESIDENT OF THE MANAGEMENT BOARD
WOJCIECH GĄTKIEWICZ
MEMBER OF THE MANAGEMENT BOARD
DIRK HARDOW MEMBER OF THE MANAGEMENT BOARD
RAFAŁ KARCZ MEMBER OF THE MANAGEMENT BOARD
Mr. Wojciech Gątkiewicz (1961) completed AGH University of Science and Technology with a title of Master of Engineering. Mr. Wojciech Gątkiewicz obtained a title of MBA at Gdańsk Foundation for Management Development with cooperation of Rotterdam School of Management. Mr. Wojciech Gątkiewicz held a position of President of Management Board of Monier Sp. z o.o. (former Lafarge Dachy) from January 2008. In years 2004-2008 Mr. Wojciech Gatkiewicz held a position of President of Management Board of Lafarge Dachy Sp. z o.o. – company established after merger of Braas Polska Sp. z o.o. and Rupp Ceramika Sp. z o.o. Previously Mr. Wojciech Gątkiewicz held in particular the positions of: President of Management Board of Braas Polska Sp. z o.o. (1996-2004) and President of Melaphyre Mine in Czarny Bór (1991-1995). Additionaly Mr. Wojciech Gątkiewicz has been a lecturer of strategic management on MBA studies at Gdańsk Foundation for Management Development since 2005 up to the present time.
Mr. Dirk Hardow (born in 1965) is a graduate of the Technical Univeristy of Hamburg, where in 1993 he graduated in Industrial Engineering & Management ("Hochschulübergreifender Studiengang Wirtschaftsingenieur"). Since 2011 Mr. Dirk Hardow was associated with US corporation Owens – Illinois Inc. Within the Owens – Illinois Inc structures he was i.a. the Vice President of European Operations (August 2011 – May 2015) and since October 2013 he was the Vice – Chairman of the Board of Vetrerie Meridionali, a glass manufacturing company. Furthermore, since June 2015 Mr. Dirk Hardow was the General Manager for South East Europe, where he was responsible for the operations of 11 factories in Italy and Hungary. From October 2011 to April 2013 he was a Member of the Board of Directors of Maltha Groep BV, a glass recycling company. Previously, Mr. Dirk Hardow worked on the management positions i.a. at Cremer-Group, Rohm and Hass Company as well as H.B. Fuller Company.
Mr. Rafał Karcz (born 29.07.1967) graduated from the Katowice Academy of Economics and WEMBA at the University of Minnesota. From 1994, he worked successively as Assistant Director for Finance and Administration at Roltra Morse Poland Sp. z o.o., then as Financial Controller at Continental Can Poland Sp. z o.o. and as Financial Director of Multikino Sp. z o.o. In 1999, he joined Saint-Gobain Sekurit HanGlas Polska Sp. z o.o. as Director for Finance and Administration.
RICHARD MAYER MEMBER OF THE MANAGEMENT BOARD
Mr. Richard Mayer (born in 1962) has a degree in economics. Mr. Richard Mayer in his professional career worked on the management positions in Reichard, CON MOTO, Wacker Neuson SE. In Wacker Neuson SE he also held the position of Member of the Management Board. Since January 2013 Mr. Richard Mayer has been working for Pfleiderer Group as a CFO. Until January 19th,2016 Mr. Richard Mayer held a position of Member of Pfleiderer Grajewo Supervisory Board.
On 9 May Mr. Ivo Schintz was nominated to a position of Member of the Management Board, Chief Commercial Officer, effectively from 1 August 2017. Mr Ivo Schintz (born in 1957) is Dutch. He completed National Agricultural College in Deventer in Netherlands with a title of Engineer and obtained International Management MBA title at Thunderbird School of Global Management in USA. Since 1997 Mr Ivo Schintz has been working for Tarkett SA – a worldwide leader of innovative and sustainable flooring and sports surface solutions - in various management positions. Since 2004 Mr Ivo Schintz has been holding a position of Vice President, member of executive committee of divison EMEA ( Europe, Middle East, Africa) and since 2011 has been holding a position of Area Vice President for Central Europe activity. Previously, Mr Ivo Schintz worked in various management positions including Philips Lighting BV and Dokkumer Vlagen Centrale BV.
On 2 March 2017 the Chairman of the Management Board, Mr. Michael Wolff submitted his resignation from this position. On the same day the Supervisory Board of the Group appointed Mr. Thomas Schäbinger as the President of the Management Board and the Chief Executive Officer. The changes are effective as of 1 June 2017.
On 28 April Mr. Wojciech Gątkiewicz resigned from the position of Member of the Management Board, Chief Sales Officer, effectively from 1 August 2017. On 9 May Mr Ivo Schintz was nominated to a position of Member of the Management Board, Chief Commercial Officer, effectively from 1 August 2017.
On 1 August 2017 the 7.875% Senior Secured Notes were repaid by funds drawn under the new Term Loan B. Furthermore the old revolving credit facility for EUR 60 Mio. and PLN 200 Mio. has been cancelled and replaced by the new revolving credit facilities for EUR 50 Mio. and PLN 211,48 Mio (with an margin of 3,00% p.a., tenor 5-years). For further information, see Note 3.7.
Pursuant to the Regulation of the Minister of Finance on current and periodic information to be published by issuers of securities and conditions for recognition as equivalent of information whose disclosure is required under the laws of a nonmember state, dated 19 February 2009 (consolidated text: Dz.U. of 2014, item 133), the Management Board of Pfleiderer Group S.A. (the Parent) represents that to the best of its knowledge the quarterly condensed consolidated and standalone financial statements for the period ended 30 June 2017 and the comparative data have been prepared in compliance with the applicable accounting policies and give a fair and clear view of the Pfleiderer Group S.A. Group's assets and financial results, and that the interim condensed consolidated and standalone Directors' Report on the Pfleiderer Group S.A. Group's operations gives a fair view of its development, achievements and standing, including a description of the key risks and threats.
Thomas Schäbinger
President of the Management Board
Richard Mayer Dirk Hardow
Member of the Management Board, Chief Financial Officer
Member of the Management Board, Chief Operating Officer
Rafał Karcz Ivo Schintz
Member of the Management Board, Chief Administration Officer
Member of the Management Board, Chief Commercial Officer
| FIGURE 1: PFLEIDERER GROUP ENTITIES 10 | |
|---|---|
| FIGURE 2: STRUCTURE OF THE CAPITAL GROUP AS OF 23 AUGUST, 2017 11 | |
| FIGURE 3: GDP GROWTH IN EST. 2017 (%) 20 | |
| FIGURE 4: BUSINESS CLIMATE IN CONSTRUCTION - GERMANY 20 | |
| FIGURE 5: BUSINESS CLIMATE IN CONSTRUCTION – POLAND 21 | |
| FIGURE 6: MARKET SIZE DYNAMIC (VOLUME) – DACH 21 | |
| FIGURE 7: MARKET SIZE DYNAMIC (VOLUME) – POLAND 22 | |
| FIGURE 8: PRODUCTION CAPACITY IN EUROPE* – TOP 10 PLAYERS x 1000 m3 22 |
|
| FIGURE 9: TOTAL CONSTRUCTION 23 | |
| FIGURE 10: RESIDENTIAL AND NON-RESIDENTIAL CONSTRUCTION 24 | |
| FIGURE 11: REVENUE AND CUSTOMER SPLIT 32 | |
| FIGURE 12: SHAREHOLDING STRUCTURE 54 |
| TABLE 1: SUBSIDIARIES OF THE PFLEIDERER GROUP 11 | |
|---|---|
| TABLE 2: CAPEX 2017 – MAIN PROJECTS AT THE GROUP LEVEL 18 | |
| TABLE 3: REWARDS GIVEN TO PFLEIDERER GROUP IN HY1, 2017 18 | |
| TABLE 4: AVERAGE YEARLY GROWTH 2016-2018 23 | |
| TABLE 5: PRODUCTION VOLUMES OF MAIN PRODUCT GROUPS AT THE GROUP LEVEL 31 | |
| TABLE 6: PRODUCTION VOLUMES OF MAIN PRODUCT GROUPS IN BUSSINES SEGMENTS 31 | |
| TABLE 7: SALES VOLUMES BY PRODUCT GROUP AT THE GROUP LEVEL 31 | |
| TABLE 8: CONSOLIDATED STATEMENTS OF PROFIT AND LOSS IN HY1, 2017 34 | |
| TABLE 9: CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS OF 30 JUNE, 2017 35 | |
| TABLE 10: CONSOLIDATED STATEMENT OF CASH FLOWS IN HY1, 2017 36 | |
| TABLE 11: KEY FINANCIAL RATIOS DESCRIBING THE GROUP'S PERFORMANCE 38 | |
| TABLE 12: MARGINS 38 | |
| TABLE 13: STANDALONE STATEMENT OF PROFIT OR LOSS 42 | |
| TABLE 14: STANDALONE STATEMENT OF FINANCIAL POSITION 42 | |
| TABLE 15: STANDALONE STATEMENT OF CASH FLOWS 43 | |
| TABLE 16: PFLEIDERER GROUP S.A. SALES MARGINS 43 | |
| TABLE 17: RATINGS AWARDED TO PFLEIDERER GROUP 44 | |
| TABLE 18: BORROWINGS AND OTHER DEBT INSTRUMENTS 45 | |
| TABLE 19: FINANCINGS CORE EAST (EXLUDING FACTORING AND OPERATING LEASES) 47 | |
| TABLE 20: FINANCINGS CORE WEST (EXLUDING FACTORING AND OPERATING LEASES) 48 | |
| TABLE 21: SHAREHOLDER STRUCTURE AS OF 30 JUNE 2017 53 | |
| TABLE 22: CHANGES WITHIN THE SHAREHOLDER STRUCTURE IN THE REPORTING PERIOD 53 | |
| TABLE 23: SHAREHOLDER STRUCTURE AS OF 23 August 2017 54 | |
| TABLE 24: THE COMPOSITION OF THE SUPERVISORY BOARD AS AT JUNE 30, 2017 57 | |
| TABLE 25: THE COMPOSITION OF THE PFLEIDERER GROUP S.A. MANAGEMENT BOARD AS AT JUNE 30, 2017 58 |
We have reviewed the accompanying interim condensed consolidated financial statements of Pfleiderer Group S.A. Capital Group (hereinafter: the "Capital Group"), for which Pfleiderer Group S.A. (hereinafter: the "Parent Company") with its registered office in Wrocław, Strzegomska 42AB is the Parent Company, including consolidated statement of financial position prepared as at 30 June 2017, consolidated statement of comprehensive income, consolidated statement of changes in equity, consolidated statement of cash flows for the 6 months period then ended and other explanatory information.
Management Board of the Parent Company is responsible for the preparation and fair presentation of this interim condensed consolidated financial statements in accordance with the International Financial Reporting Standards as adopted for use by the European Union regarding interim financial reporting (IAS 34). Our responsibility is to express a conclusion on this interim condensed consolidated financial statements based on our review.
We conducted our review in accordance with National Auditing Standard 2410 in line with the wording of the International Standard on Review Engagements 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" adopted by Resolution No. 2783/52/2015 of the National Council of Statutory Auditors of 10 February 2015 as amended.
A review of interim financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion on this interim condensed consolidated financial statements.
Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim condensed consolidated financial statements do not comply in all material respects with the requirements of IAS 34 "Interim Financial Reporting".
Marcin Diakonowicz Key certified auditor conducting the review No. 10524
On behalf of Deloitte Polska Spółka z ograniczoną odpowiedzialnością Sp. k. – entity authorized to audit financial statements entered under number 73 on the list kept by the National Council of Statutory Auditors:
Marcin Diakonowicz – Vice-President of the Management Board of Deloitte Polska Sp. z o.o. – which is the General Partner of Deloitte Polska Spółka z ograniczoną odpowiedzialnością Sp. k.
Warsaw, 23 August 2017
The above review report is a translation from the original Polish version. In case of any discrepancies between the Polish and English version, the Polish version shall prevail.
This document is a free translation of the Polish original. Terminology current in Anglo-Saxon countries has been used where practicable for the purpose of this translation in order to aid understanding. The binding Polish original should be referred to in matters of interpretation.
THE PFLEIDERER GROUP S.A. GROUP (PREVIOUSLY PFLEIDERER GRAJEWO GROUP) UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTH PERIOD ENDED 30 JUNE 2017
(all amounts in EUR thousand unless otherwise stated)
| Unaudited interim condensed consolidated statement of financial position 3 | |
|---|---|
| Unaudited interim condensed consolidated statements of profit and loss and other comprehensive income 5 | |
| Unaudited interim condensed consolidated statement of changes in equity 5 | |
| Unaudited interim condensed consolidated statement of cash flows 9 | |
| Notes to the unaudited interim condensed consolidated financial statements 10 |
(all amounts in EUR thousand unless otherwise stated)
Unaudited interim condensed consolidated statement of financial position
| ASSETS | |||
|---|---|---|---|
| '000 EUR | Note | Jun. 30, 2017 | Dec. 31, 2016 |
| Property, plant and equipment | 7. | 528 589 | 548 863 |
| Intangible assets | 87 212 | 83 091 | |
| Goodwill | 67 241 | 66 171 | |
| Long term investments | 515 | 515 | |
| Investment property | 913 | 875 | |
| Deferred tax assets | 7 132 | 5 948 | |
| Advances paid on fixed assets | 10 447 | 3 016 | |
| Government grants receivables | 12 931 | 12 921 | |
| Other noncurrent assets | 2 | 2 | |
| Non-current assets | 714 982 | 721 402 | |
| Inventories | 101 960 | 91 903 | |
| Trade and other receivables | 9. | 67 613 | 42 531 |
| Income tax receivable | 1 441 | 376 | |
| Government grant receivables | 1 232 | 642 | |
| Cash and cash equivalents | 96 949 | 97 726 | |
| Fair value of hedging instruments | 318 | 0 | |
| Other short term financial assets | 266 | 0 | |
| Current assets | 269 779 | 233 178 | |
| Total assets | 984 761 | 954 580 |
| LIABILITIES AND EQUITY | |||
|---|---|---|---|
| '000 EUR | Jun. 30, 2017 | Dec. 31, 2016 | |
| Share capital | 10. | 6 692 | 6 692 |
| Share premium | 10. | 146 375 | 146 375 |
| Statutory reserve funds | 10. | 122 924 | 91 801 |
| Reserves | 10. | -11 364 | -13 937 |
| Retained earnings | 10. | 11 363 | 40 324 |
| Total equity attributable to owners of the Company | 275 990 | 271 255 | |
| Total equity | 275 990 | 271 255 |
| Liabilities | |||
|---|---|---|---|
| Loans and borrowings | 11. | 0 | 329 762 |
| Provisions for employee benefits | 54 197 | 56 893 | |
| Provisions | 2 661 | 3 694 | |
| Deferred tax liabilities | 66 719 | 64 176 | |
| Deferred income from government grants | 17 678 | 17 439 | |
| Other non-current liabilities | 195 | 239 | |
| Non-current liabilities | 141 450 | 472 203 | |
| Loans and borrowings | 11. | 336 759 | 10 898 |
| Income tax payable | 13 817 | 10 559 | |
| Trade and other payables | 12. | 185 452 | 161 414 |
| Employee related payables | 27 202 | 22 118 |
(all amounts in EUR thousand unless otherwise stated)
| Provisions | 3 046 | 5 132 |
|---|---|---|
| Deferred income from government grant | 1 045 | 1 001 |
| Current liabilities | 567 321 | 211 122 |
| Total liabilities | 708 771 | 683 325 |
| Total equity and liabilities | 984 761 | 954 580 |
Unaudited condensed consolidated interim financial statements for the three and six month periods ended 30 June 2017
(all amounts in EUR thousand unless otherwise stated)
Unaudited interim condensed consolidated statements of profit and loss and other comprehensive income
Items that will not be reclassified subsequently to profit or loss 1 601
Cash flow hedge on acquisition of the subsidiary reclassified to goodwill 0
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-12 490 -1 534 -3 149
917 0 917
Unaudited condensed consolidated interim financial statements for the three and six month periods ended 30 June 2017
(all amounts in EUR thousand unless otherwise stated)
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Unaudited condensed consolidated interim financial statements for the three and six month periods ended 30 June 2017
(all amounts in EUR thousand unless otherwise stated)
Unaudited interim condensed consolidated statement of changes in equity
For the six month period ended June 30, 2017:
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||||||||||
| ha ow n s res |
0 | 0 | 3 2 1 8 1 |
-3 2 1 8 1 |
0 | 0 | 0 | 0 | 0 | 0 |
| fe f p f f fo Tr 2 0 1 6 n it t art et an s r o o p ro o r es erv e r o wn |
||||||||||
| ha s res |
0 | 0 | 3 1 1 2 3 |
0 | 0 | 0 | 0 | 0 | -3 1 1 2 3 |
0 |
| de d p D iv i nt n ay me |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | -1 6 4 5 6 |
-1 6 4 5 6 |
| l tr ion it h o ise d in ity To ta ct an sa s w wn er s r ec og n eq u |
0 | 0 | 6 3 3 0 4 |
-3 2 1 8 1 |
0 | 0 | 0 | 0 | -4 7 5 7 9 |
-1 6 4 5 6 |
| 3 0, 2 0 As Ju 1 7 at n. |
6 6 9 2 |
6 3 1 4 7 5 |
9 6 0 3 8 |
2 6 8 8 6 |
1 4 5 |
9 6 -7 5 |
-3 8 8 1 |
2 6 5 |
3 6 3 1 1 |
2 9 9 0 7 5 |
Unaudited condensed consolidated interim financial statements for the three and six month periods ended 30 June 2017
(all amounts in EUR thousand unless otherwise stated)
For the six month period ended June 30, 2016:
| '0 0 0 E U R |
ha S re ita l ca p |
ha S re ium p rem |
Un ist d reg ere iss ua nc e f s ha o res |
Re se rve fo r o wn ha s res |
Sta tu to ry res erv e fu ds n |
lua ion Re t va res erv e |
ha Ex c ng e f fe d i rat e r en ce s |
ia l Ac tu ar ins g a d an los se s |
h Ca s f low he dg es |
ine d Re ta ing ea rn s |
l To ta |
|---|---|---|---|---|---|---|---|---|---|---|---|
| As Ja 1, 2 0 1 6 at n. |
3 5 5 7 |
6 8 2 0 5 |
3 7 5 5 7 |
3 2 3 4 7 |
8 0 4 5 7 |
1 4 5 |
-1 9 3 7 |
0 | -3 8 2 |
4 1 1 4 5 |
2 9 1 4 8 7 |
| he ive inc fo he io d Co r t mp re ns om e p er |
|||||||||||
| f it Ne t p ro |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 7 1 1 0 |
0 7 1 1 |
| Ot he he ive inc r c om p re ns om e |
0 | 0 | 0 | 0 | 0 | 0 | -8 0 7 1 |
9 -4 4 1 |
-4 5 4 |
0 | 2 9 -1 4 4 |
| l c he fo he d To ive inc io ta r t om p re ns om e p er |
0 | 0 | 0 | 0 | 0 | 0 | -8 0 7 1 |
-4 4 1 9 |
-4 5 4 |
7 1 1 0 |
-5 8 3 4 |
| ion it h o ise d in ity Tr ct an sa s w wn er s r ec og n eq u |
|||||||||||
| fe f p f f 2 0 it t Tr 1 5 n art et tat uto an s r o o p ro o s ry re- |
|||||||||||
| fu ds se rve n |
0 | 0 | 0 | 0 | 9 9 3 |
0 | 0 | 0 | 0 | -9 9 3 |
0 |
| S ha iss re ue |
9 1 1 1 |
8 2 7 1 4 |
3 -7 5 5 7 |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 3 6 0 7 |
| iv i de d p D nt n ay me |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | -1 4 8 5 5 |
-1 4 8 5 5 |
| h o d Tr ion it ise in ity ct an sa s w wn er s r ec og n eq u |
1 1 1 9 |
7 8 1 2 4 |
-7 5 5 7 3 |
0 | 9 9 3 |
0 | 0 | 0 | 0 | -1 5 5 7 8 |
-1 0 9 1 5 |
| As Ju 3 0, 2 0 1 6 at n. |
6 6 9 2 |
1 4 6 3 7 4 |
0 | 3 2 7 3 4 |
5 9 0 6 7 |
1 4 5 |
-1 0 0 4 4 |
-4 4 1 9 |
-8 3 6 |
3 2 6 8 6 |
2 6 2 3 9 9 |
the three and six month periods ended 30 June 2017
(all amounts in EUR thousand unless otherwise stated)
Unaudited interim condensed consolidated statement of cash flows
| Jan. 1 - | Jan. 1 - | |
|---|---|---|
| '000 EUR | Jun. 30, 2017 | Jun. 30, 2016 |
| Net profit for the reporting period | 18 618 | 7 110 |
| Depreciation and amortisation | 36 846 | 34 629 |
| Foreign exchange gains | -8 262 | -579 |
| Interest for the period | 12 706 | 11 730 |
| Profit on investing activities | 11 | 0 |
| Income tax disclosed in profit or loss of the period | 6 664 | -2 135 |
| Amortisation of government grants | -421 | -622 |
| Result on forward contracts | -431 | -1 555 |
| Increase in exchange differences on translating foreign operations | 457 | -349 |
| Changes in | ||
| trade and other receivables | -24 428 | -15 589 |
| Inventories | -8 474 | 4 974 |
| trade and other payables | 10 135 | 10 931 |
| employee benefit obligations | -681 | -1 139 |
| Provisions | -1 035 | -174 |
| Cash generated from operating activities | 41 705 | 47 232 |
| Income tax (paid)/received | -3 574 | -4 130 |
| Net cash provided by operating activities | 38 131 | 43 102 |
| Net cash used in investing activities | ||
| Disposal of property, plant and equipment | 18 | -55 |
| Interest received | 52 | 53 |
| Acquisition of intangible assets and property, plant and equipment | -22 759 | -19 015 |
| Acquisition of subsidiary, net of cash acquired | 0 | -9 692 |
| Net cash used in investing activities | -22 689 | -28 709 |
| Net cash used in financing activities | ||
| Repayment of borrowings and other debt instruments | -405 | -18 507 |
| Share issue | 0 | 80 863 |
| Interest paid | -15 814 | -15 117 |
| Other financing activities | 0 | 80 |
| Net cash used in financing activities | -16 219 | 47 319 |
| Total cash flows | -777 | 61 712 |
| Decrease/Increase in cash | -777 | 61 712 |
| Cash at beginning of the period | 97 726 | 20 731 |
| Cash at the end of the period | 96 949 | 82 443 |
| 1. | GENERAL INFORMATION 11 | |
|---|---|---|
| 2. | STRUCTURE OF THE GROUP 12 | |
| 3. | BASIS OF PREPARATION 12 | |
| 4. | OPERATING SEGMENTS 14 | |
| 5. | SEASONALITY OF OPERATIONS 15 | |
| 6. | FINANCE INCOME AND EXPENSES 15 | |
| 7. | PROPERTY, PLANT AND EQUIPMENT 16 | |
| 8. | INCOME TAX EXPENSE 17 | |
| 9. | TRADE RECEIVABLES AND OTHER 17 | |
| 10. | EQUITY 18 | |
| 11. | BORROWINGS AND OTHER DEBT INSTRUMENTS 19 | |
| 12. | TRADE PAYABLES AND OTHER 26 | |
| 13. | FINANCIAL INSTRUMENTS 26 | |
| 14. | CONTINGENT LIABILITIES AND SECURITY 27 | |
| 15. | SIGNIFICANT RELATED PARTIES TRANSACTIONS 33 | |
| 16. | OTHER EVENTS SUBSEQUENT TO THE END OF THE REPORTING PERIOD 35 |
Pfleiderer Group S.A. (the "Company"; the "Parent") is a company domiciled in Poland, which shares are publicly traded. The Company until September 30, 2016, acted under a business name Pfleiderer Grajewo S.A.
The Company is entered into the Entrepreneur Register of national Court Register, maintained by District Court for Wrocław – Fabryczna in Wrocław IV Commercial Division of the National Court Register under entry No. KRS 0000011422.
The Company's registered office is at Strzegomska 42AB Street, Wrocław, Poland. Until September 30, 2016, the Company's registered office was at 1 Wiórowa Street, Grajewo.
In accordance with the Polish Classification of Business Activities, the Parent Company's business is registered under No. 1621Z.
These interim condensed consolidated financial statements of the Pfleiderer Group comprise the interim condensed financial information of the Company and its subsidiaries (collectively the "Group"). They were authorized for issue by the Company's Management Board on 23 August 2017.
The Pfleiderer Group S.A. Group (the "Group" or "Pfleiderer Group") is primarily involved in manufacturing and veneering of wood and wood-based products and paper finishing, as well as domestic and foreign trade.
Pfleiderer Group S.A. is the Parent Company with respect to the following subsidiaries:
| Eastern Europe | Jun. 30, 2017 |
Dec. 31, 2016 |
|
|---|---|---|---|
| Jura Polska Sp. z o.o. | Grajewo | 100% | 100% |
| Pfleiderer Grajewo Sp. z o.o. | Grajewo | 100% | 100% |
| Pfleiderer MDF Grajewo Sp. z o.o. | Grajewo | 100% | 100% |
| Pfleiderer Wieruszów Sp. z o.o. (formerly Pfleiderer Prospan S.A.) | Wieruszów | 100% | 100% |
| Pfleiderer Polska Sp. z o.o. | Wrocław | 100% | 100% |
| Pfleiderer Silekol Sp. z o.o. | Kędzierzyn-Koźle | 100% | 100% |
| Unifloor Sp. z o.o. (in liquidation) | Wieruszów | 100% | 100% |
| Western Europe | Jun. 30, 2017 |
Dec. 31, 2016 |
|
| PCF GmbH, Neumarkt (previously Pfleiderer GmbH) | Neumarkt, Germany | 100% | 100% |
| Pfleiderer Austria GmbH | Wien, Austria | 100% | 0% |
| Pfleiderer Southeast Europe SRL | Bucharest, Romania | 100% | 0% |
| Pfleiderer Deutchland GmbH (prev. Pfleiderer Holzwerkstoffe GmbH) | Neumarkt, Germany | 100% | 100% |
| Pfleiderer Neumarkt GmbH | Neumarkt, Germany | 100% | 100% |
| Pfleiderer Gütersloh GmbH | Neumarkt, Germany | 100% | 100% |
| Pfleiderer Leutkirch GmbH | Leutkirch, Germany | 100% | 100% |
| Pfleiderer Erwerbergesellschaft GmbH | Neumarkt, Germany | 100% | 100% |
| Pfleiderer Arnsberg GmbH | Neumarkt, Germany | 100% | 100% |
| Pfleiderer Baruth GmbH | Baruth, Germany | 100% | 100% |
| Heller Holz GmbH | Neumarkt, Germany | 100% | 100% |
| JURA-Spedition GmbH | Neumarkt, Germany | 100% | 100% |
| Pfleiderer France S.A.S. | Reims, France | 100% | 100% |
| Pfleiderer Benelux B.V. | Deventer, Netherlands | 100% | 100% |
| Pfleiderer Suisse AG | Rapperswil, Switzerland | 100% | 100% |
| Pfleiderer UK Ltd. | Macclesfield, United Kingdom |
100% | 100% |
| Pfleiderer Vermögensverwaltung GmbH & Co. KG | Neumarkt, Germany | 100% | 100% |
| Pfleiderer Infrastrukturtechnik GmbH & Co. KG (in insolvency) | Neumarkt, Germany | 100% | 100% |
| Pfleiderer Infrastrukturtechnik Verwaltungs-GmbH (in insolvency) | Düsseldorf, Germany | 100% | 100% |
| Allgäuer Holzindustrie und Imprägnierwerk Aulendorf GmbH (i.L.) | Aulendorf, Germany | 100% | 100% |
| Blitz 11-446 GmbH (in liquidation) | Neumarkt, Germany | 100% | 100% |
These interim condensed consolidated financial statements were prepared in accordance with the requirements of IAS 34 "Interim financial reporting" as adopted for use by the European Union and in the scope required under the Minister of Finance Regulation of February 19, 2009, on current and periodic information provided by issuers of securities and conditions of recognition as equivalent information required by the law of a non-member state (consolidated text: Official Journal 2014, item 133) (the "Regulation").
(PREVIOUSLY PFLEIDERER GRAJEWO GROUP) Notes to the condensed consolidated interim financial statements as for the three and six month periods ended 30 June 2017 (all amounts in EUR thousand)
These interim condensed consolidated financial statements have been prepared in accordance with the accounting policies described in the audited consolidated financial statements of the Pfleiderer Grajewo S.A. Group for the financial year ended December 31, 2016. These interim condensed consolidated financial statements do not contain all information required in annual financial statements; therefore, they should be read in conjunction with the Group's audited annual consolidated financial statements for the year ended December 31, 2016.
The Group intends to apply new standards, amendments to standards and interpretations that are published, but are not yet effective till the date of publishing this condensed consolidated interim financial statements, for the periods for which they are effective for the first time. Impact of new standards, amendments to standards and interpretations application on the Annual Consolidated Financial Statement for 2016 was estimated in the Annual Consolidated Financial Statement in the note 3a.
These interim condensed consolidated financial statements have been prepared on the historical cost basis, except for derivative financial instruments and investment properties, which are measured at fair value.
These interim condensed consolidated financial statements were prepared under the assumption that the Pfleiderer Group S.A. Group will continue to operate as a going concern for the foreseeable future.
These interim condensed consolidated financial statements are presented in Euro (EUR) and all amounts have been rounded to the nearest thousand ('000 EUR) unless stated otherwise.
The functional currency of the parent Company, Pfleiderer Group S.A. is the Polish Zloty. Nevertheless approximately two-third of the Group's revenues are generated by the West European segment in Euro and additionally a more than insignificant share of the Polish sales and sourcing is conducted in Euro as well. The Western European segment accounts for more than two-thirds of the Group's assets (such as tangible and intangible assets and inventories) and most of the group's liabilities. In view of the share of the Euro-denominated business and assets as well as liabilities, with effect from January 1, 2016 Pfleiderer Group selected the EUR as the presentation currency for its consolidated financial statements.
In preparing these interim financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Any change in accounting estimates is recognised in the period in which such change occurred or in the current and future periods if the estimate change relates to both the current and future periods.
The Group reviews its assets on an ongoing basis and, if necessary, recognises impairment losses in profit or loss. Allowances are primarily recognised on trade receivables and inventories i.e. materials and finished goods. In addition, the Group reviews the useful life of fixed assets and factors influencing the recoverable amount of non-current assets.
Goodwill, recoverable amount of non-financial non-current assets if there is an indicator of impairment, the recoverable amount is determined as the higher of fair value less cost to sell or value in use (based on discounted cash flows) by applying the appropriate discount rate (cost of capital, growth rates),
Corporate income tax and government grants receivables recognition of deferred tax assets; availability of future taxable profit against which carry forward tax losses can be used; availability of future taxable profit against which government grants receivables can be utilized,
The Pfleiderer Group presently consists of two former largely independent business segments which are currently subject to an overall integration project. The project is still ongoing and is planned to result in a fully integrated European company. The Group is taking steps towards creating a fully integrated company and is still regionally and legally broadly separated into business segments which however will coalesce more and more into one integrated company in the future.
The Group has determined two operating segments – Western Europe and Eastern Europe. Both are components of the Group that engage in business activities from which they earn revenues and incur expenses, whose operating results are regularly reviewed by the Company's chief operating decision maker and for which discrete financial information is available.
For the six month period ended June 30, 2017:
| Western | Eastern | Others / | ||
|---|---|---|---|---|
| '000 EUR | Europe | Europe | Consolidation | Group |
| External revenues | 357 906 | 148 123 | 0 | 506 029 |
| Intersegment revenues | 3 997 | 40 358 | -44 355 | 0 |
| Profit/loss before income taxes | 15 346 | 9 547 | 389 | 25 282 |
| Financial result | 7 747 | -3 735 | 1 | 4 013 |
| Result from operating acitivities (EBIT) | 23 093 | 5 812 | 390 | 29 295 |
| Depreciation and amortisation | 27 325 | 9 571 | -50 | 36 846 |
| Segment earnings EBITDA | 50 418 | 15 383 | 340 | 66 141 |
| Cash and cash equivalents | -84 852 | -11 733 | -364 | -96 949 |
| Current financial liabilities | 336 759 | 0 | 0 | 336 759 |
| Non-current financial liabilities | 0 | 0 | 0 | 0 |
| Net debt | 251 907 | -11 733 | -364 | 239 810 |
| Receivables before factoring | 76 093 | 46 930 | 0 | 123 023 |
| Inventories | 62 521 | 39 439 | 0 | 101 960 |
| Liabilities | -60 585 | -44 912 | 0 | -105 497 |
| Net working capital before factoring | 78 029 | 41 457 | 0 | 119 486 |
| Segment capital expenditure | 14 669 | 5 940 | 0 | 20 609 |
| Property, plant and equipment | 357 116 | 171 473 | 0 | 528 589 |
| Intangible assets | 77 452 | 9 760 | 0 | 87 212 |
| Advances paid on fixed assets | 9 493 | 954 | 0 | 10 447 |
(PREVIOUSLY PFLEIDERER GRAJEWO GROUP) Notes to the condensed consolidated interim financial statements as for the three and six month periods ended 30 June 2017
For the six month period ended June 30, 2016:
| Western | Eastern | Others / | ||
|---|---|---|---|---|
| '000 EUR | Europe | Europe | Consolidation | Group |
| External revenues | 303 026 | 155 435 | 0 | 458 461 |
| Intersegment revenues | 2 716 | 14 237 | -16 953 | 0 |
| Profit/loss before income taxes | -4 843 | 8 165 | 1 653 | 4 975 |
| Financial result | 8 508 | 2 643 | 0 | 11 151 |
| Result from operating acitivities (EBIT) | 3 665 | 10 808 | 1 653 | 16 126 |
| Depreciation and amortization | 26 413 | 8 216 | 0 | 34 629 |
| Segment earnings EBITDA | 30 078 | 19 024 | 1 653 | 50 755 |
| Cash and cash equivalents | -60 467 | -21 578 | -398 | -82 443 |
| Current financial liabilities | 10 895 | 0 | 0 | 10 895 |
| Non-current financial liabilities | 332 776 | 0 | 0 | 332 776 |
| Net debt | 283 204 | -21 578 | -398 | 261 228 |
| Receivables before factoring | 61 057 | 42 024 | 0 | 103 081 |
| Inventories | 57 385 | 33 047 | 0 | 90 432 |
| Liabilities | -60 073 | -32 386 | 1 | -92 458 |
| Net working capital before factoring | 58 369 | 42 685 | 1 | 101 055 |
| Segment capital expenditure | 6 235 | 8 681 | 1 640 | 16 556 |
| Property, plant and equipment | 378 070 | 154 658 | 0 | 532 728 |
| Intangible assets | 90 113 | 3 198 | 0 | 93 311 |
| Advances paid on fixed assets | 762 | 8 185 | 0 | 8 947 |
Chipboard sales are subject to seasonal changes, in particular changes relate to the seasonal nature of the construction cycle. The highest sales can be observed in the second half of the year whereas the lowest sales are normally generated in the second quarter of the calendar year.
6.1 Recognized in profit or loss for the period:
| Jan. 1 - | Jan. 1 - | Apr. 1 - | Apr. 1 - | |
|---|---|---|---|---|
| '000 EUR | Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 |
| Interest income | 1 368 | 1 759 | 569 | 827 |
| Other finance income | 8 859 | 0 | 8 859 | 0 |
| Finance income | 10 227 | 1 759 | 9 428 | 827 |
| Interest expense | -16 209 | -13 486 | -8 859 | -7 445 |
| Other finance costs | - 6 293 | -3 | -6 293 | -1 |
| Finance costs | -22 502 | -13 489 | -15 152 | -7 446 |
| Exchange differences | 8 745 | 581 | 66 | -6 845 |
| Losses on translation of foreign currency financial | ||||
| position | -483 | -2 | 276 | -444 |
| Other financial result | 8 262 | 579 | 342 | -7 289 |
| Net finance costs | -4 013 | -11 151 | -5 382 | -13 908 |
The Group announced faster repayment of Senior Secured Notes (1 August 2017), originally scheduled to be repaid in 2019. As a result, the bonds disclosed in the financial statement at amortized cost, were revaluated due to acceleration of repayment terms. The Group recognized financial income of EUR 8 859 thousand from reassessment of loan valuation at amortized cost due to faster repayment of bonds (non-cash effect). Simultaneously the Group recognized costs of redemption fee amounting to EUR 6 293 thousand (EUR 6 334 thousand discounted as of end of June, cash effect).
The most significant amount of interest expense are accrued costs of interests of 7.875% Senior Secured Notes (corporate bonds).
Exchange differences of EUR 8.7 mio (EUR 0.6 mio for 6 months ended 30 June 2016) relate to subsequent valuation of intra-group loan nominal currency (EUR) to functional currency (PLN) at the reporting date.
| Jan. 1 - | Jan. 1 - | Apr. 1 - | Apr. 1 - | |
|---|---|---|---|---|
| '000 EUR | Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 |
| Cash flow hedge - effective portion of changes in fair | ||||
| value net of related tax | 1 403 | -1 082 | 923 | -1 008 |
| Cash flow hedge - reclassified to profit or loss net of | ||||
| related tax | -431 | -289 | -281 | -364 |
| Cash flow hedge on acquisition of subsidiary reclassified | ||||
| to goodwill net of related tax | 0 | 917 | 0 | 917 |
| 972 | -454 | 642 | -455 |
In 2017 the Group continues a long-term investment program designed to align its production capacities to market needs and to enhance its cost effectiveness and productivity. The capital expenditures for the six month period ended June 30th, 2017 were EUR 20 609 thousand (including advance payments), while the capital expenditures including advance payments for the six month period ended June 30, 2016 were EUR 15 827 thousand and EUR 52 038 thousand for the entire financial year 2016.
As at June 30, 2017 the Group has purchase commitments for the property, plant and equipment and intangible assets. These commitments relate to the signed agreements by the members of the Group with respect to future investments plans. The most significant amounts as of 30 June 2017 related to new recycling facility, replacements, new lacquering line and modernizing the existing sanding line.
| '000 EUR | Jun. 30, 2017 | Dec. 31, 2016 |
|---|---|---|
| Property, plant and equipment | 27 776 | 8 761 |
| Intangible assets | 3 128 | 27 |
| Commitment to purchase | 30 904 | 8 788 |
On 27 January 2017 tax capital group was registered for the purposes of settlement of CIT. The Group started tax year on 1 May 2017.
The agreement on tax capital group comprises the following entities: Pfleiderer Polska Sp. z o.o., Pfleiderer Grajewo Sp. z o.o., Pfleiderer Wieruszów Sp. z o.o., Pfleiderer Silekol Sp. z o.o., Jura Polska Sp. z o.o.
The agreement was concluded on 3 tax years, which are:
1 May 2017 – 31 December 2017 1 January 2018 – 31 December 2018
1 January 2019 – 31 December 2019
Income tax expense comprises both current income tax and deferred taxes. Income tax expense is recognized as the best estimate of the weighted-average annual income tax rate expected for the whole year multiplied by the pre-tax income for the interim reporting period.
The Polish Group companies are taxed at a corporate tax rate of 19% (previous year: 19%). The German Group companies are taxed at a corporate tax rate of 15%, plus solidarity surcharge of 5.5% on the corporate tax rate (+0.83%-points) plus an average trade tax rate of 13.02%, thus 28.85% all-in-all. The respective local tax rates apply for other foreign companies.
The fluctuation of the tax rate compared to prior year's tax rate is caused mainly by local differences in tax rate, in particular in Germany with an average tax rate of 28.85%, and numerous permanent differences in the German tax group.
| '000 EUR | Jun. 30, 2017 | Dec. 31, 2016 |
|---|---|---|
| Trade receivables | 31 109 | 18 370 |
| Trade receivables from related parties | 11 | 8 |
| Current prepayments and accrued income | 8 182 | 1 652 |
| Current VAT receivables | 7 500 | 2 857 |
| Other receivables | 20 811 | 19 644 |
| Total | 67 613 | 42 531 |
The amount of EUR 20 811 thousand of other receivables as at 30 June 2017 (EUR 19 644 thousand as of 31 Dec 2016) included, among others:
The par value of the share is denominated in PLN and thus is disclosed in its local currency (last line of the following table) and is translated into EUR at its historical exchanges rates:
| Jun. 30, 2017 | Dec. 31, 2016 | |
|---|---|---|
| Par value of share capital (PLN) | 21 351 332 | 21 351 332 |
| Number of shares at beginning of period (fully paid up) | 64 701 007 | 49 624 000 |
| Number of shares at end of period (fully paid up) | 64 701 007 | 64 701 007 |
| Par value per share (PLN) | 0.33 | 0.33 |
The par value of the share capital translated into Euro at its historical exchange rates was as follows:
| Jun. 30, 2017 | Dec. 31, 2016 | |
|---|---|---|
| Par value of share capital ('000 EUR) | 6 692 | 6 692 |
| Number of shares at beginning of period (fully paid up) | 64 701 007 | 49 624 000 |
| Number of shares at end of period (fully paid up) | 64 701 007 | 64 701 007 |
All shares issued by the Group are ordinary shares. Holders of ordinary shares are entitled to dividends as declared from time to time and are entitled to one vote per share at general meetings of the Company. All shares are entitled to the same rights to share in the distribution, if any, of the Company's assets.
The shareholder structure as of the reporting date is as follows:
| Shareholding structure | Number of shares |
Ownership interest |
Number of votes at GM |
% of votes at GM |
|---|---|---|---|---|
| Strategic Value Partners LLC | 19 183 149 | 29.65% | 19 183 149 | 29.65% |
| Atlantik S.A. | 12 474 561 | 19.28% | 12 474 561 | 19.28% |
| Nationale Nederlanden OFE | 6 400 000 | 9.89% | 6 400 000 | 9.89% |
| Aviva OFE Aviva BZ WBK | 6 000 000 | 9.27% | 6 000 000 | 9.27% |
| Other shareholders | 20 643 297 | 31.91% | 20 643 297 | 31.91% |
| Total | 64 701 007 | 100% | 64 701 007 | 100% |
*according to the latest available information
The General meeting of shareholders approved treasury shares repurchase programme announced by Pfleiderer Group. The entity may repurchase no more than 6,470,100 treasury shares, paid up in full, representing jointly no more than 10% of the entity's share capital.
In order to fund the repurchase of the Shares the Ordinary General Meeting resolved to establish EUR 96 mio (PLN 390 mio) capital reserve from the statutory reserve funds and retained earnings of the Parent Company for buy back.
On 25 April 2017 the Management Board of the Parent Company adopted its recommendation regarding distribution of 2016 net profit of the Parent for the period of January 1, 2016 to December 31, 2016, providing for a dividend payment
to the Company's shareholders in the amount of EUR 16 456 thousand (PLN 71 171 thousand) representing PLN 1.10 per share.
The remaining part of the Parent Company profit for 2016 in the amount of EUR 31 123 thousand (PLN 135 885 thousand) is recommended to be allocated to the Parent's Company reserves.
On 9 May 2017 the Supervisory Board of the Parent Company positively opinioned the above recommendation of the Management Board.
On 21 June 2017 the Ordinary General Shareholders Meeting of the Pfleiderer Group S.A. adopted a resolution concerning distribution of net profit for the period from 1 January to 31 December 2016, providing for the dividend payment for the Company's shareholders in the amount of PLN 71,171,107.70 representing PLN 1.10 per each Company' share. All of the Company's shares are covered by the dividend, i.e. 64,701,007 shares. Additionally, the Ordinary General Shareholders Meeting of the Company set the following dates: 1) a dividend date (the date used to prepare the list of shareholders eligible to receive the dividend) set for 5 July 2017, and 2) dividend payment date set for 19 July 2017.
Non-current borrowings and other debt instruments:
| '000 EUR | Jun. 30, 2017 | Dec. 31, 2016 |
|---|---|---|
| Non-current portion of interest-bearing bonds | 0 | 329 762 |
| Bank borrowings | 0 | 0 |
| Total | 0 | 329 762 |
Current borrowings and other debt instruments:
| '000 EUR | Jun. 30, 2017 | Dec. 31, 2016 |
|---|---|---|
| Current portion of interests–bearing bonds | 336 435 | 10 555 |
| Other interest bearing liabilities | 324 | 343 |
| Total | 336 759 | 10 898 |
On 27 June 2014, PCF GmbH issued 7.875% Senior Secured Notes due 2019 with a face value of EUR 321 684 thousand. When determining fair values during purchase price allocation for the Pfleiderer Group acquisition, the notes were measured at fair value on the acquisition date, 19 January 2016 (EUR 332 943 thousand). On 23 June 2017 the Group announced an irrevocable notice to fully redeem Senior Secured Notes. The redemption will occur on August 1, 2017 at a redemption price of 101.969% (plus accrued and unpaid interest) The Group recognized redemption fee of EUR 6 293 thousand ( EUR 6 334 thousand as of redemption date) in short term portion of interest bearing bonds. The bonds were revalued at amortized cost and have a carrying value of EUR 319 587 thousand as of 30 June 2017. Due to accelerated repayment date to 1 August 2017 the bonds were classified as short term.
The short term portion of interest bearing notes relates also to accrued interest of EUR 10 555 thousand.
On 5 October 2015, Pfleiderer Group S.A. along with other companies belonging to the Pfleiderer Group:
PCF GmbH (formerly Pfleiderer GmbH), Pfleiderer Services GmbH (meanwhile merged into PCF GmbH), Pfleiderer Deutschland GmbH (formerly Pfleiderer Holzwerkstoffe GmbH),
Pfleiderer Neumarkt GmbH, Pfleiderer Leutkirch GmbH, Pfleiderer Gütersloh GmbH,
Pfleiderer Arnsberg GmbH, Pfleiderer Baruth GmbH, Jura - Spedition GmbH,
Pfleiderer Vermögensverwaltung GmbH & Co. KG, Pfleiderer Wieruszów Sp. z o.o. (formerly Pfleiderer Prospan S.A.), Pfleiderer MDF Grajewo Sp. z o.o., Pfleiderer Silekol Sp. z o.o (formerly Silekol Sp. z o.o.).
concluded the Amendment Agreement amending the super master revolving credit facility dated 4 July 2014 concluded by entities belonging to the West Segment of the Pfleiderer Group. This Agreement is called the "Revolving Facility Agreement" and was concluded with the mandated lead arrangers, which include:
Commerzbank Aktiengesellschaft, Deutsche Bank AG Filiale Deutschlandgeschäft, KFW, BNP Paribas S.A. Niederlassung Deutschland, Alior Bank S.A. Powszechna Kasa Oszczędności Bank Polski S.A, Bank Zachodni WBK S.A. Bank Millennium S.A
and
| Commerzbank International S.A. | as the credit agent "Agent", | |
|---|---|---|
| Commerzbank Aktiengesellschaft | Filiale Luxemburg | as a security agent "Security Agent". |
On 19 January 2016, an amendment to the RCF Agreement came into force which provided Pfleiderer Group S.A. and its Polish subsidiaries with a limit of PLN 200 million (Tranche B) for financing of working capital and other corporate needs. Furthermore, on 8 July 2016 two more Polish subsidiaries - Pfleiderer Grajewo Sp. z o.o. and Pfleiderer Polska Sp. z o.o. (previously Pfleiderer Services Sp. z o.o.) - acceded to the RCF Agreement. At the reporting date this financing facility was not drawn in cash whilst bank guarantees were issued within this credit line for the total amount of PLN 7 259 thousand as well as Letters of Credit in an amount of EUR 1 523 thousand. The RCF Agreement provides Pfleiderer Deutschland GmbH and PCF GmbH with a limit of up to EUR 60.0 million (Tranche A). This Tranche A is partially drawn for bank guarantees of EUR 2 273 thousand and PLN 1 040 thousand (EUR 246 thousand). Interest on cash drawings is accrued at EURIBOR (for EUR-drawings) plus margin, WIBOR (for PLN-drawings) plus margin, LIBOR (for drawings in other currencies) plus margin.
All amendments to the Revolving Facility Agreement were concluded conditionally and entered into force on 19 January 2016 along with the completion of the reorganization of the Pfleiderer Group S.A. Group.
Several bank credit lines existing at that time were repaid fully on 11 February 2016.
The Lender, or its affiliates, may provide a particular borrower with all or part of the unused funds under the Revolving Facility Agreement through ancillary facilities (such as overdrafts, guarantees, bonds, letters of credit, short-term loans and other loans or solutions required in connection with the operations of Pfleiderer Group S.A. and its subsidiaries, which have been agreed between Pfleiderer Group S.A. and the particular borrower or its associated company).
The total agreed limits for ancillary facilities amount to EUR 20 000 thousand in case of tranches in EUR and PLN 120 000 thousand in case of tranches in PLN.
Funds paid under the Revolving Facility Agreement are assigned to finance corporate needs and the working capital of Pfleiderer Group SA Group, whereby they cannot be assigned to redeem, repay, repay early, purchase or cancel any Senior Secured Notes issued by PCF GmbH on 7 July 2014.
The date of expiry of the agreement and its full repayment has been established as 30 April 2019.
The EUR 450 000 000 are split into a Term Loan B ("TLB") amounting to EUR 350 000 000 (PCF GmbH) with a tenor of seven years and Revolving Credit Facilities with a tenor of five years amounting to EUR 50 000 000 and PLN 211 480 000.
Notes to the condensed consolidated interim financial statements as for the three and six month periodsended 30 June 2017
(all amounts in EUR thousand)
| Ju 3 n. |
0, 2 0 1 7 |
De 3 c. |
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|---|---|---|---|---|---|---|---|---|---|---|---|
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I S T R N T E R E A T E |
U A I O D N F R T O R M |
U A I O D R N T T O |
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N A D R A W O M T E U N U R |
U N A N D R A W O M T E U N U R |
C T L R E D I T E I M I U R |
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|
| Co Ea R C F st re – |
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| k l len ( l lar ) i ium S. A. An i Ba M n n c y |
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| k ho dn ( l lar ) Ba Za i W B K S. A. An i n c c y |
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P L N |
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0 | 4 7 3 3 |
4 5 3 5 |
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| k ls k ( l lar ) P K O Ba Po i S. A. An i n c y |
P L N |
W I B O R + in ma rg |
b 4 Fe 2 0 1 6 |
3 0 Ap 2 0 1 9 r |
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0 | 7 0 9 9 |
6 8 0 2 |
- | 6 8 0 2 |
| l ior k S. A Ba A. n |
P L N |
O W I B R + in ma rg |
9 2 0 6 1 Ja 1 n |
3 0 2 0 9 Ap 1 r |
*) | 0 9 9 7 |
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6 8 0 2 |
- | 6 8 0 2 |
| l k ( l lar ) A ior Ba S. A. An i n c y |
P L N |
W I B O R + in ma rg |
b 4 Fe 2 0 1 6 |
3 0 Ap 2 0 1 9 r |
*) | 4 7 3 3 |
0 | 4 7 3 3 |
4 5 3 5 |
- | 4 5 3 5 |
| Gu Co Ea nte st ara es re |
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| k l len Ba M i ium S. A. n |
P L N |
l 4 Ju 2 0 1 4 |
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3 4 6 9 |
3 4 6 9 |
1 4 8 7 |
1 4 8 7 |
|||
| / ba k g d f f iss in Na ion nt t n ua ra ee s ue av ou r o l Fo ts a res |
2 7 Ja 2 0 1 4 n |
b 2 8 Fe 2 0 1 8 |
1 6 5 6 |
1 6 5 6 |
1 4 2 8 |
1 4 2 8 |
Notes to the condensed consolidated interim financial statements as for the three and six month periodsended 30 June 2017
(all amounts in EUR thousand)
| ba k g d f f f iss in nt n ua ra ee ue av ou r o o De Sp nt sco . z o.o |
2 2 Se 2 0 1 5 p |
2 0 Se 2 0 1 7 p |
6 1 |
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|---|---|---|---|---|---|---|---|---|---|
| f d Le Cre it E U R 4 3 0. 5 0 0 tte r o |
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| f d Le Cr it E U R 1. 0 9 2. 0 0 0 tte r o e |
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1 2 5 6 |
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| im it o f c d it c ds L Ea st re ar |
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| k l len Ba M i ium S. A. n |
P L N |
l 4 Ju 2 0 1 4 |
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4 7 3 |
0 | 4 7 3 |
4 5 3 |
2 0 |
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| T O T A L C O R E E A S T |
4 7 3 2 7 |
3 4 6 9 |
4 3 8 5 8 |
4 5 3 4 7 |
1 5 0 7 |
4 3 8 4 0 |
Notes to the condensed consolidated interim financial statements as for the three and six month periodsended 30 June 2017
(all amounts in EUR thousand)
Financing Core West (excluding ABCP and operating leases)
| Ju 3 n. |
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De 3 c. |
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|---|---|---|---|---|---|---|---|---|---|---|---|
| L E N D E R |
C U R R E N C Y |
I N T T R E R E S A T E |
D U N F R A T I O R O M |
D U R N T A T I O O |
C T L R E D I I M I T |
N A D R A W M T E O U N U R |
U N A N D R A W M T E O U N U R |
C T L R E D I I M I T |
N A D R A W M T E O U N U R |
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|
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- | |
| ba k g iss d in U E R te n ua ran e ue |
2 2 3 7 |
2 2 3 7 |
2 0 9 2 |
2 0 9 2 |
|||||||
| ba k g iss d in L P N te n ua ran e ue |
2 4 6 |
2 4 6 |
2 3 6 |
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| he k ( l lar ) De Ba A G An i Gu uts nte c n c y – ara es |
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|
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Notes to the condensed consolidated interim financial statements as for the three and six month periodsended 30 June 2017
(all amounts in EUR thousand)
| d d Se ior Se No iss te n cu re s ue |
E U R |
l 7 Ju 2 0 1 4 |
*) 1 Au 2 0 1 9 g |
3 2 1 6 8 4 |
3 2 1 6 8 4 |
0 | 3 2 1 6 8 4 |
3 2 1 6 8 4 |
- |
|---|---|---|---|---|---|---|---|---|---|
| T O T A L C O R E W E S T |
3 8 1 6 8 4 |
3 2 4 2 0 3 |
5 7 4 8 1 |
3 8 1 6 8 4 |
3 2 4 0 1 2 |
5 7 6 7 2 |
*) Restructuring of Financings envisaged with effective date 01. August 2017
**) drawings under these ancillaries will be roled-into new ancillaries under the new financing
(all amounts in EUR thousand unless otherwise stated)
As at 30 June 2017 and 31 December 2016, the Group did not carry any borrowings from related parties.
| '000 EUR | Jun. 30, 2017 | Dec. 31, 2016 |
|---|---|---|
| Trade payables | 105 497 | 89 059 |
| Outstanding dividend distribution | 16 842 | 0 |
| Liabilities under factoring agreements | 30 225 | 32 793 |
| Insolvency-related liabilities of PCF GmbH | 10 322 | 10 322 |
| VAT liabilities | 1 239 | 486 |
| Liabilities for capital expenditures | 304 | 2 527 |
| Liabilities from derivatives (forward transactions) | 24 | 724 |
| Prepaid deliveries | 33 | 354 |
| Other liabilities | 20 966 | 25 149 |
| Total | 185 452 | 161 414 |
Other liabilities as of 30 June 2017 comprised mainly of:
The fair value of financial assets and liabilities approximate their carrying amounts as at 30 June 2017 and 31 December 2016 with the exception of the High Yield Bond, listed at the Irish Stock Exchange, quoted at 102.20% of par value (level 1) on 30 June 2017, equal to EUR 328 761 thousand (carrying amount of EUR 319 587 thousand, plus accrued interest of EUR 10 555 thousand).
As at 30 June 2017, the Group held 15 open forward contracts with a nominal exposure amounting to EUR 24 100 thousand. The fair value of the open contracts amounted to EUR 318 thousand asset and EUR 24 thousand liability, based on level 2 input factors.
As at 31 December 2016 the Group held 15 open forward contracts for sales of EUR for PLN with nominal exposure amounting to EUR 31 100 thousand. The fair value of the open contracts amounted to EUR 724 thousand (liability), based on level 2 input factors.
(all amounts in EUR thousand unless otherwise stated)
Market comparison techniques are used in measuring fair value of currency forward contracts. The fair value is based on brokers quotes. Similar contracts are traded in an active market and the quotes reflect the actual transactions in similar instruments.
As at 30 June 2017, certain members of the Group have established the following security for the repayment of claims of Commerzbank Aktiengesellschaft, Filiale Luxemburg acting as security agent (the "Security Agent") arising from the parallel debt in accordance with the intercreditor agreement dated 4 July 2014 (as amended and restated) entered into in connection with the EUR 60 million and PLN 200 million RCF Agreement dated 4 July 2014 (as amended and restated) between, inter alios, Pfleiderer Group S.A. and certain of its subsidiaries as borrowers, the Security Agent and certain financial institutions as original lenders and the EUR 321 684 thousand 7.875% Senior Secured Notes due 1 August 2017 issued by PCF GmbH.
Pfleiderer Group S.A. has entered into agreements for financial and registered pledges over shares in Pfleiderer Wieruszów Sp. z o.o. (formerly Pfleiderer Prospan S.A.), Pfleiderer MDF Grajewo Sp. z o.o., Pfleiderer Grajewo Sp. z o.o., Pfleiderer Polska Sp. z o.o. and Pfleiderer Silekol Sp. z o.o. and has granted powers of attorney to exercise corporate rights from the pledged shares in these companies in favour of the Security Agent. The registered pledges over shares were established up to the maximum secured amount of EUR 1 286 million.
Pfleiderer Group S.A., Pfleiderer Wieruszów Sp, z o.o. (formerly Pfleiderer Prospan S.A.), Pfleiderer MDF Grajewo Sp. z o.o. , Pfleiderer Grajewo Sp. z o.o., Pfleiderer Polska Sp. z o.o. and Pfleiderer Silekol Sp. z o.o. have entered into agreements for financial and registered pledges over bank accounts and have granted powers of attorney to dispose of funds from their bank accounts in favour of the Security Agent. The registered pledges over bank accounts were established up to the maximum secured amount of EUR 1 286 million.
Pfleiderer Group S.A., Pfleiderer Wieruszów Sp. z o.o. (formerly Pfleiderer Prospan S.A.), Pfleiderer MDF Grajewo Sp. z o.o. , Pfleiderer Grajewo Sp. z o.o., Pfleiderer Polska Sp. z o.o. and Pfleiderer Silekol Sp. z o.o. have entered into agreements for registered pledges over movable property and rights (zbiór rzeczy ruchomych i praw). The registered pledges over movable property and rights were established up to the maximum secured amount of EUR 1 286 million.
Pfleiderer Group S.A., Pfleiderer Wieruszów Sp. z o.o. (formerly Pfleiderer Prospan S.A.), Pfleiderer MDF Grajewo Sp. z o.o. , Pfleiderer Grajewo Sp. z o.o., Pfleiderer Polska Sp. z o.o. and Pfleiderer Silekol Sp. z o.o. have entered into agreements for assignment of rights under commercial contracts, intercompany loan agreements and insurance agreements.
(all amounts in EUR thousand unless otherwise stated)
The following mortgages up to the amount of EUR 1 286 million (each) were established in favour of the Security Agent:
Pfleiderer Group S.A., Pfleiderer Wieruszów Sp. z o.o. (formerly Pfleiderer Prospan S.A.), Pfleiderer MDF Grajewo Sp. z o.o. , Pfleiderer Grajewo Sp. z o.o., Pfleiderer Polska Sp. z o.o. and Silekol sp. z o.o. have executed the submissions to enforcement (oświadczenie o poddaniu się egzekucji) in favour of the Security Agent up to the amount of EUR 1 286 million.
As at 31 March 2017, certain members of the Group have established the following security for the liabilities under the RCF Agreement of EUR 60 million and PLN 200 million as well as the liabilities under the PCF GmbH (ex. Pfleiderer GmbH) 7.875% Senior Secured Notes with nominal a value of EUR 321 684 thousand due 1 August 2017 and certain hedging arrangements:
PCF GmbH, Pfleiderer Deutschland GmbH and Pfleiderer Vermögensverwaltung GmbH & Co. KG as pledgors had pledges over shares in PCF GmbH (ex. Pfleiderer GmbH), Pfleiderer Deutschland GmbH, Pfleiderer Neumarkt GmbH, Pfleiderer Leutkirch GmbH, Pfleiderer Gütersloh GmbH, Pfleiderer Arnsberg GmbH, Pfleiderer Baruth GmbH and Jura-Spedition GmbH and over partnership interests in Pfleiderer Vermögensverwaltung GmbH & Co. KG.
PCF GmbH, Pfleiderer Deutschland GmbH, Pfleiderer Neumarkt GmbH, Pfleiderer Leutkirch GmbH, Pfleiderer Gütersloh GmbH, Pfleiderer Arnsberg GmbH, Pfleiderer Baruth GmbH, Jura-Spedition GmbH and Pfleiderer Vermögensverwaltung GmbH & Co. KG as pledgers, have granted pledges over their bank accounts.
PCF GmbH, Pfleiderer Deutschland GmbH, Pfleiderer Neumarkt GmbH, Pfleiderer Leutkirch GmbH, Pfleiderer Gütersloh GmbH, Pfleiderer Arnsberg GmbH, Pfleiderer Baruth GmbH, Jura-Spedition GmbH and Pfleiderer Vermögensverwaltung GmbH & Co. KG as assignors, have assigned as security their receivables under the intercompany loans, trade and insurance receivables.
Pfleiderer Deutschland GmbH, Pfleiderer Neumarkt GmbH, Pfleiderer Leutkirch GmbH, Pfleiderer Arnsberg GmbH and Pfleiderer Baruth GmbH as transferors, have transferred as security their moveable assets (including machin-
(all amounts in EUR thousand unless otherwise stated)
ery and equipment, inventory).
PCF GmbH, Pfleiderer Deutschland GmbH, Pfleiderer Neumarkt GmbH, Pfleiderer Leutkirch GmbH and Pfleiderer Arnsberg GmbH as assignors, have assigned as security their intellectual property rights.
Land charges (Grundschulden) over real estate owned by Pfleiderer Deutschland GmbH and Pfleiderer Baruth GmbH have also been granted as security.
As at 30 June 2017, certain members of the Group have guaranteed the liabilities under the RCF Agreement of EUR 60 million and PLN 200 million as well as the liabilities under the 7.875% Senior Secured Notes with the nominal value of EUR 321 684 thousand issued by PCF GmbH (ex. Pfleiderer GmbH) and due in 1 August 2017. These members of the Group are: Pfleiderer Group S.A., PCF GmbH, Pfleiderer Deutschland GmbH, Pfleiderer Neumarkt GmbH, Pfleiderer Leutkirch GmbH, Pfleiderer Gütersloh GmbH, Pfleiderer Arnsberg GmbH, Pfleiderer Baruth GmbH, Jura-Spedition GmbH, Pfleiderer Vermögensverwaltung GmbH & Co. KG, Pfleiderer Wieruszów Sp. z o.o. (formerly Pfleiderer Prospan S.A.), Pfleiderer MDF Grajewo Sp. z o.o., Pfleiderer Grajewo Sp. z o.o., Pfleiderer Polska Sp. z o.o. and Pfleiderer Silekol Sp. z o.o. (the "Existing Guarantees").
On 13 April 2017 the Group has finalized and signed refinancing agreements of €450.0 million senior secured credit facilities comprising:
The proceeds from the Facilities will be used to redeem the existing €321 684 000 7.875% senior secured notes issued by PCF GmbH (formerly Pfleiderer GmbH) ("Notes") in full, to refinance the existing senior secured revolving credit facility and to fund related transaction fees, redemption premium and expenses as well as for general corporate purposes and working capital requirements. Subject to the completion of the Facilities, Pfleiderer redeemed subsequently the Notes on August 1, 2017 at a redemption price of 101.969%.
After the reporting period, in order to secure the new obligations under the senior facilities agreement dated April 13, 2017, Pfleiderer Group S.A. on August 1, 2017 established the financial pledge and, subject to registration, the registered pledge over the shares in Pfleiderer Polska sp. z o.o. and granted the power of attorney to exercise corporate right from the pledged shares in favor of Trigon Dom Maklerski S.A. (the "Polish Security Agent").
Following the initial utilization of the facilities under the senior facilities agreement dated April 13, 2017, the existing security interests granted by the Polish Pfleiderer entities will be released. In order to secure the new obligations under the senior facilities agreement dated April 13, 2017, the following security interests will be granted for the benefit of the lenders:
(i) Pfleiderer Group S.A. will enter into the agreements for financial and registered pledges over shares in Pfleiderer Wieruszów Sp. z o.o. (formerly Pfleiderer Prospan S.A.), Pfleiderer MDF Grajewo Sp. z o.o., Pfleiderer Grajewo
(all amounts in EUR thousand unless otherwise stated)
sp. z o.o. and Pfleiderer Silekol sp. z o.o. and will grant powers of attorney to exercise corporate rights from the pledged shares in these companies in favour of Polish Security Agent.
(ii) Pfleiderer Group S.A., Pfleiderer Wieruszów Sp. z o.o. (formerly Pfleiderer Prospan S.A.), Pfleiderer MDF Grajewo Sp. z o.o., Pfleiderer Grajewo Sp. z o.o., Pfleiderer Polska Sp. z o.o. and Pfleiderer Silekol Sp. z o.o. will enter into the agreements for financial and registered pledges over major bank accounts and will grant the powers of attorney to dispose funds from their bank accounts in favour of the Polish Security Agent.
(iii) Pfleiderer Group S.A., Pfleiderer Wieruszów Sp. z o.o. (formerly Pfleiderer Prospan S.A.), Pfleiderer MDF Grajewo Sp. z o.o., Pfleiderer Grajewo Sp. z o.o., Pfleiderer Polska Sp. z o.o. and Pfleiderer Silekol Sp. z o.o. will enter into the agreements for security assignments of rights under commercial contracts, intercompany loan agreements and insurance agreements.
(iv) The following mortgages will be established in favour of the Polish Security Agent:
(v) Pfleiderer Group S.A., Pfleiderer Wieruszów Sp. z o.o. (formerly Pfleiderer Prospan S.A.), Pfleiderer MDF Grajewo Sp. z o.o., Pfleiderer Grajewo Sp. z o.o., Pfleiderer Polska Sp. z o.o. and Pfleiderer Silekol Sp. z o.o. will execute the submissions to enforcement (oświadczenie o poddaniu się egzekucji) in favour of the Security Agent.
Following the initial utilization of the facilities under the senior facilities agreement dated April 13, 2017, the existing security interests granted by the German Pfleiderer entities will be released. In order to secure the new obligations under the senior facilities agreement dated April 13, 2017, the following security interests will be granted for the benefit of the lenders:
(i) Pfleiderer Group S.A., PCF GmbH, Pfleiderer Deutschland GmbH as pledgors will grant pledges over shares in PCF GmbH, Pfleiderer Deutschland GmbH, Pfleiderer Neumarkt GmbH, Pfleiderer Leutkirch GmbH, Pfleiderer Gütersloh GmbH, Pfleiderer Arnsberg GmbH and Pfleiderer Baruth GmbH.
(ii) PCF GmbH, Pfleiderer Deutschland GmbH, Pfleiderer Neumarkt GmbH, Pfleiderer Leutkirch GmbH, Pfleiderer Gütersloh GmbH, Pfleiderer Arnsberg GmbH, Pfleiderer Baruth GmbH as pledgors will grant pledges over their major bank accounts.
(iii) PCF GmbH, Pfleiderer Deutschland GmbH, Pfleiderer Neumarkt GmbH, Pfleiderer Leutkirch GmbH, Pfleiderer Gütersloh GmbH, Pfleiderer Arnsberg GmbH, Pfleiderer Baruth GmbH as assignors will assign as security their receivables under the intercompany loans, material trade and insurance receivables.
(iv) The existing German land charges will be assigned to the Security Agent.
As at April 13, 2017, certain members of the Group have guaranteed the liabilities under the EUR 450 000 000 senior facilities agreement, such members of the Group are: Pfleiderer Group S.A., PCF GmbH, Pfleiderer Deutschland GmbH, Pfleiderer Neumarkt GmbH, Pfleiderer Leutkirch GmbH, Pfleiderer Gütersloh GmbH, Pfleiderer Arnsberg GmbH, Pfleiderer Baruth GmbH, Pfleiderer Wieruszów Sp. z o.o. (formerly Pfleiderer Prospan S.A.), Pfleiderer MDF Grajewo Sp. z o.o., Pfeiderer Grajewo Sp. z o.o., Pfleiderer Polska Sp. z o.o., Pfleiderer Silekol Sp. z o.o. The amounts outstanding under the senior secured revolving credit facility dated July 4, 2014 and the senior notes issued on June 27, 2014 will be refinanced by the senior facilities agreement dates April 13, 2017. The Existing
(all amounts in EUR thousand unless otherwise stated)
Guarantees will be terminated upon this refinancing.
As at 30 June 2017 the Group did not identify any significant contingent liabilities except for an additional potential liability (apart from the amounts already recorded in the balance sheet) resulting from the antitrust proceedings as well as potential tax liability described below.
Following an inspection in October 2011, on 30 March 2012 the Polish Office of Competition and Consumer Protection (the "OCCP") commenced proceedings against Kronospan Szczecinek sp. z o.o., Kronospan Mielec sp. z o.o., Kronopol sp. z o.o., Pfleiderer Group S.A. (formerly Pfleiderer Grajewo S.A.) and Pfleiderer Wieruszów Sp. z o.o. (formerly Pfleiderer Prospan S.A.), regarding possible horizontal price fixing and exchange of information on conditions of sale in the chipboard and fiberboard markets in Poland, which may constitute breaches of Article 6 of the Act on Competition and Consumer Protection and Article 101(1)(a) of the Treaty on the Functioning of the European Union. The maximum fines that the OCCP may impose on Pfleiderer Group S.A. and/or Pfleiderer Wieruszów Sp. z o.o. in these proceedings amount to 10% of their respective tax revenues in the year preceding the issuance of the infringement decision. The end date of the proceedings is still uncertain.
At the date of the publication of these consolidated financial statements it is unclear whether OCCP will determine any breaches of Article 6 of the Act on Competition and Consumer Protection and Article 101(1)(a) of the Treaty on the Functioning of the European Union. At this stage, given the fact-intensive nature of the issues involved and the inherent uncertainty of such investigation, it is not possible to evaluate the outcome and potential financial consequences of this still pending and long-lasting investigation, management has determined that not all of the conditions have been met to require recognition of a provision for this matter. Therefore as at 30 June 2017 no provision has been recognized by the Group in this condensed consolidated interim financial statements.
An earlier investigation by the German Federal Cartel Office in 2009 concluded in 2011 that PCF GmbH (then, Pfleiderer AG) and certain competitors had, for a period from at least 2004 through 2007, violated German competition law by coordinating price increases and minimum prices in the German market. As a result, the German Federal Cartel Office in September 2011 fined this group of market participants and certain individuals a total of EUR 42 million on the grounds of violating German and European competition laws by entering into anticompetitive agreements. PCF GmbH's share of the fine was settled in yearly instalments and fully repaid by the end of 2016.
As described below, two of the Pfleiderer Group's customers have sued the Pfleiderer Group for damages in connection with these antitrust violations. The companies are seeking compensation in connection with these antitrust violations. The outcome of the respective extrajudicial negotiations or proceedings is difficult to predict. Based on its best knowledge the Management estimated as of 30 June 2017 accruals related to antitrust violations of EUR 4 550 thousand including costs related to legal proceedings with Classen as well as legal costs and amicable settlements of claims from Alno and Oeseder. Depending on the final outcome of the negotiations and/or the proceedings, the Group could be obligated to make further substantial payments.
There is a risk that additional follow-on claims for damages might be raised by third parties, including customers, against the Group in respect thereof. The amount of any such follow-on claims for damages cannot currently be determined with any certainty, but could be substantial. The realization of any of these risks could have a material adverse effect on the Group's business, financial condition and results of operations.
In December 2012, W. Classen GmbH & Co. KG ("Classen"), one of the Pfleiderer Group's current customers, filed an action with the regional court of Düsseldorf (Landgericht Düsseldorf) against the liquidator (Sachwalter) of PCF GmbH during the insolvency proceedings in 2012 (then Pfleiderer AG) seeking payment of the insolvency quota in the amount of EUR 1.3 million based on the same deliveries as in the case against Pfleiderer Baruth GmbH de-
(all amounts in EUR thousand unless otherwise stated)
scribed below. By judgement of 27 April 2017 the regional court of Duesseldorf dismissed the claim in its entirety because it deemed the claim against the custodian as inadmissible due to the absence of authority to litigate at the time the claim was served on the (then former) custodian (January 2013). As regards PCF GmbH, the court found that Classen did not meet the exclusion period stipulated in the insolvency plan. This decision is binding.
In December 2012, Classen also filed an action for damages with the regional court of Düsseldorf (Landgericht Düsseldorf) against Pfleiderer Baruth GmbH (then: Pfleiderer Faserplattenwerk Baruth GmbH) currently amounting to approximately EUR 55.4 million (plus interest). The proceeding is still pending and the outcome, i.e. the further potential costs that may arise in connection with this litigation or the amount of damages that might be required to be paid, cannot be assessed yet. The court has not yet indicated if and to what extent it deems the claim to be justified as to the merits. The next oral hearing is scheduled for 7 December 2017. As a result, the management has determined that not all of the conditions have been met to require recognition of a provision for this matter. Therefore as at 30 June 2017 no provision has been recognized by the Group in these consolidated financial statements. Accrued legal costs for Classen are comprised in the total amount of EUR 4 550 thousand.
In December 2014 Alno AG ("Alno"), one of the Pfleiderer Group's customers, has claimed substantial damages from PCF GmbH on its own behalf and on behalf of two of its subsidiaries. Alno claims to have suffered damages due to the Chipboard Cartel and has filed an action for damages against PCF GmbH and another party in late December 2015 (currently in the overall amount of at least EUR 31.2 million plus interest on the basis of joint and several liability). As at 30 June 2017 the Management based on its best knowledge recognised an accrual for the expected outcome which is included in the total amount of EUR 4 550 thousand. It is intended that the parties try to negotiate an out-of-court settlement.. The proceeding is still pending and the outcome, i.e. the further potential costs that may arise in connection with this litigation or the amount of damages that might be required to be paid could change significantly. In July 2017, Alno filed for insolvency and the court appointed a preliminary liquidator.
In December 2012, Oeseder Möbel-Industrie Mathias Wiemann GmbH & Co. KG ("Oeseder"), one of the Pfleiderer Group's customers, filed an action for damages with the regional court of Hanover (Landgericht Hannover) against Glunz AG amounting to approximately EUR 26 million (plus interest). The plaintiff claimed to have suffered damages due to the Chipboard Cartel. Following a third party notice (Streitverkündung) by Glunz, PCF GmbH has joined the legal proceedings as an intervener (Nebenintervenient). The court has passed a judgement on 31 May 2016 according to which the claim is justified on the merits but subject to further discussion regarding quantum. Glunz AG has filed an appeal against this decision with the higher regional court in Celle. The oral hearing is scheduled for 17 October 2017. As at 30 June 2017 the Management based on its best knowledge recognised an accrual for the expected outcome, which is included in the total amount of EUR 4 550 thousand. PCF GmbH's obligation for substantial payments may result from a contribution claim (Gesamtschuldnerinnenausgleichsanspruch) based on PCF GmbH's joint and several liability (Gesamtschuld), if Glunz or any other third party is obligated to pay compensation to Oeseder. The proceeding is still pending and the outcome, i.e. the further potential costs that may arise in connection with this litigation or the amount of damages that might be required to be paid could change significantly.
PCF GmbH has successfully reached an out-of-court settlement with Hüls covering all claims for a total payment of EUR 2.5 million paid in April 2017.
The Western European segment is subject to certain tax risks. In light of the change in shareholders in 2012, there are certain risks with regard to the amount of tax loss utilized by the Group. Due to the acquisition of all shares in PCF GmbH (formerly Pfleiderer AG) by Atlantik S.A. in November 2012, tax losses generated by the German subsidiaries in 2012 may not be utilized in full. The extent to which this also applies to an entity with joint tax-filing status has yet to be fully determined. It cannot be ruled out that the fiscal authorities will reject the position taken by Pfleiderer Deutschland GmbH, which could in turn lead to an assessment requiring payments of tax arrears.In addition, there was a change in shareholders at the level of the shareholder of PCF GmbH in December 2015, which may lead to uncertainty with regard to the possibility of tax loss utilization for the 2015 financial year. As at 30 June 2017 the management assessed the risk related to this uncertain tax position and it has determined that not all of the conditions have been met to require recognition of a provision for this matter. Therefore as at 30 June 2017 no provision has been recognized by the Group in these consolidated financial statements.
The notes are an integral part of these unaudited condensed consolidated interim financial statements. For cross boarder supplies and services between affiliated companies the prices have to be at the arm's length
(all amounts in EUR thousand unless otherwise stated)
principle. The companies of the Pfleiderer Group have to document this in the Transfer Price Documentation. The companies of the Pfleiderer Group located in Germany can choose the transfer price method as well as the margin. But the tax audits in the foreign countries as well as in Germany could determine that the chosen transfer pricing method or the margin was not correct. Following on from this, taxes could be higher for allocated costs for the supplies and services between the affiliated companies. This would lead to higher taxes and therefore represents a risk. As at 30 June 2017 the management assessed the risk related to this uncertain tax position and it has determined that not all of the conditions have been met to require recognition of a provision for this matter. Therefore as at 30 June 2017 no provision has been recognized by the Group in these consolidated financial statements.
In 2014 PCF GmbH (and its subsidiaries) recognized valuation allowances for receivables to the so-called "Non Core"- companies of the former Pfleiderer Group in respect of foreign currency gains recognised on these receivables and treated these valuation allowances as tax-deductible. It cannot be ruled out that the fiscal authorities will reject the position taken by PCF GmbH, which could cause additional tax payments. As at 30 June 2017 the management assessed the risk related to this uncertain tax position and it has determined that not all of the conditions have been met to require recognition of a provision for this matter. Therefore as at 30 June 2017 no provision has been recognized by the Group in these consolidated financial statements.
PCF GmbH is subject to a tax risk regarding the restructuring gain incurred in 2012 in connection with the insolvency plan. The tax treatment of the restructuring gain may be affected by a judgment of the Federal Fiscal High Court published on February 07, 2017 (GrS 1/15). According to the decision, the decree of the Federal Ministry of Finance dated March 27, 2003 (so called "Sanierungserlass") which ensures a preferential treatment of the restructuring gain is incorrect. This decision may lead to uncertainty regarding the possibility of receiving a waiver from the tax authorities for any taxes due on the restructuring gain to the extent that PCF is not protected by binding rulings issued by the competent authorities. As at 30 June 2017 the management assessed the risk related to this uncertain tax position and it has determined that not all of the conditions have been met to require recognition of a provision for this matter. Therefore as at 30 June 2017 no provision has been recognized by the Group in these consolidated financial statements.
No transactions with related parties other than described below were conducted in the reporting period.
According to the new organizational structure the Management Board as of 30 June 2017 consisted of Thomas Schäbinger (President and CEO), Dirk Hardow (COO), Rafal Karcz (CAO), Richard Mayer (CFO) and Wojciech Gątkiewicz (CSO).
Remuneration of members of the Company's Management Board as well as the Company's Supervisory Board, including bonuses, paid and payable for the year 2017 for the reporting period:
(all amounts in EUR thousand unless otherwise stated)
| Jan. 1 - | Jan. 1 - | |
|---|---|---|
| '000 EUR | Jun. 30, 2017 | Jun. 30, 2016 (*) |
| Remuneration of Management Board | 1 021 | 1 155 |
| Remuneration of Supervisory Board | 365 | 229 |
| Total | 1 386 | 1 384 |
(*) The amount presented in the condensed consolidated interim financial statements for six month period ended 30 June 2016 as a Management board remuneration (EUR 2 422 thousand) was calculated on a cash bases, the amount EUR 1 155 is calculated on accrual basis, for comparability reasons.
The aforementioned remuneration includes all payments from all Group companies to the Board. No member of the Company's Management Board had outstanding loan-related debt towards the Group.
As at June 30, 2017, members of the Management and Supervisory Boards held the following number of Pfleiderer Group S.A. shares:
| Function | Name | Number of shares |
|---|---|---|
| President of the Management Board | Thomas Schäbinger | 16,250 |
| Member of the Management Board | Wojciech Gątkiewicz | 5,400 |
| Member of the Management Board | Rafał Karcz | 3,472 |
The other members of the Company's Management Board and Supervisory Board had no shares in the Company.
On 2 March 2017 the Chairman of the Management Board, Mr. Michael Wolff submitted his resignation from this position. On the same day the Supervisory Board of the Group appointed Mr. Thomas Schäbinger as the President of the Management Board and the Chief Executive Officer. The changes are effective as of 1 June 2017.
On 28 April Mr. Wojciech Gątkiewicz resigned from the position of Member of the Management Board, Chief Sales Officer, effectively from 1 August 2017. On 9 May Mr. Ivo Schintz was nominated to a position of Member of the Management Board, Chief Commercial Officer, effectively from 1 August 2017.
(all amounts in EUR thousand unless otherwise stated)
On 1 August 2017 the 7.875% Senior Secured Notes were repaid by funds drawn under the new Term Loan B. Furthermore the old revolving credit facility for EUR 60 Mio. and PLN 200 Mio. has been cancelled and replaced by the new revolving credit facilities for EUR 50 Mio. and PLN 211,48 Mio (with an margin of 3,00% p.a., tenor 5-years). For further information, see Note 11.
Thomas Schäbinger President of the Management Board
Richard Mayer Dirk Hardow Member of the Management Board, Chief Financial Officer
Member of the Management Board, Chief Operating Officer
Rafał Karcz Ivo Schintz
Member of the Management Board, Chief Administration Officer
Member of the Management Board, Chief Commercial Officer
Wrocław, 23 August 2017
We have reviewed the accompanying interim condensed financial statements of Pfleiderer Group S.A. (hereinafter: the "Company") with its registered office in Wrocław, Strzegomska 42AB is the Company, including statement of financial position prepared as at 30 June 2017, statement of comprehensive income, statement of changes in equity, statement of cash flows for the 6 months period then ended and other explanatory information.
Management Board of the Company is responsible for the preparation and fair presentation of this interim condensed financial statements in accordance with the International Financial Reporting Standards as adopted for use by the European Union regarding interim financial reporting (IAS 34). Our responsibility is to express a conclusion on this interim condensed financial statements based on our review.
We conducted our review in accordance with National Auditing Standard 2410 in line with the wording of the International Standard on Review Engagements 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" adopted by Resolution No. 2783/52/2015 of the National Council of Statutory Auditors of 10 February 2015 as amended.
A review of interim financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion on this interim condensed financial statements.
Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim condensed financial statements do not comply in all material respects with the requirements of IAS 34 "Interim Financial Reporting".
Marcin Diakonowicz Key certified auditor conducting the review No. 10524
On behalf of Deloitte Polska Spółka z ograniczoną odpowiedzialnością Sp. k. – entity authorized to audit financial statements entered under number 73 on the list kept by the National Council of Statutory Auditors:
Marcin Diakonowicz – Vice-President of the Management Board of Deloitte Polska Sp. z o.o. – which is the General Partner of Deloitte Polska Spółka z ograniczoną odpowiedzialnością Sp. k.
Warsaw, 23 August 2017
The above review report is a translation from the original Polish version. In case of any discrepancies between the Polish and English version, the Polish version shall prevail.
UNAUDITED CONDENSED SEPARATE INTERIM FINANCIAL STATEMENTS FOR THREE- AND SIX-MONTH PERIODS ENDED 30 JUNE 2017
| UNAUDITED CONDENSED INTERIM SEPARATE STATEMENT OF FINANCIAL POSITION 3 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| UNAUDITED CONDENSED INTERIM SEPARATE STATEMENTS OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME 4 |
||||||||||
| UNAUDITED CONDENSED INTERIM SEPARATE STATEMENT OF CHANGES IN EQUITY 5 | ||||||||||
| UNAUDITED CONDENSED INTERIM SEPARATE STATEMENT OF CASH FLOWS 6 | ||||||||||
| NOTES TO UNAUDITED CONDENSED INTERIM SEPARATE FINANCIAL STATEMENTS 7 | ||||||||||
| 1. | General information 7 | |||||||||
| 2. | Basis of preparation 7 | |||||||||
| 3. | Property, plant and equipment 8 | |||||||||
| 4. | Investments in subsidiaries 8 | |||||||||
| 5. | Equity8 | |||||||||
| 6. | Credit facilities, loans and other financial liabilities 9 | |||||||||
| 7. | Liabilities to related parties arising from debt securities 10 | |||||||||
| 8. | Financial instruments 10 | |||||||||
| 9. | Contingent liabilities and Company's assets used as collateral 10 | |||||||||
| 9.1. | Guarantees given 10 | |||||||||
| 9.2. | Liabilities arising from collateral 11 | |||||||||
| 9.3. | Other contingent liabilities 11 | |||||||||
| 10. | Material related-party transactions 12 | |||||||||
| 11. | Distribution of net profit for 2016 15 | |||||||||
| 12. | Events after the end of the reporting period 15 | |||||||||
| Assets | Note | 30.06.2017 | 31.12.2016 |
|---|---|---|---|
| Property, plant and equipment | 3 | 335 | 353 |
| Investments in subsidiaries | 4 | 2 109 553 | 2 109 553 |
| Other non-current financial assets | 75 | 75 | |
| Long-term loans granted to subsidiaries | 4 | 105 609 | 103 069 |
| Non-current assets | 2 215 572 | 2 213 050 | |
| Inventory | 30 | 23 | |
| Trade and other receivables | 94 305 | 6 183 | |
| Income tax receivables | 0 | 852 | |
| Cash and cash equivalents | 1 981 | 4 677 | |
| Current assets | 96 316 | 11 735 | |
| Total assets | 2 311 888 | 2 224 785 | |
| Equity and Liabilities | Note | 30.06.2017 | 31.12.2016 |
| Share capital | 5 | 21 351 | 21 351 |
| Share premium | 625 240 | 625 240 | |
| Reserves | 510 474 | 374 589 | |
| Retained earnings | 365 159 | 230 138 | |
| Total equity | 1 522 224 | 1 251 318 | |
| Liabilities | |||
| Employee-related liabilities | 172 | 172 | |
| Deferred tax liability | 1 922 | 184 | |
| Non-current liabilities | 2 094 | 356 | |
| Loans and borrowings | 6 | 534 658 | 812 825 |
| Income tax liabilities | 42 | - | |
| Liabilities to related parties arising from debt instruments | 7 | 138 891 | 126 901 |
| Trade and other liabilities | 111 958 | 30 190 | |
| Employee-related liabilities | 2 021 | 3 195 | |
| Current liabilities | 787 570 | 973 111 | |
| Total liabilities | 789 664 | 973 467 | |
| Total equity and liabilities | 2 311 888 | 2 224 785 |
| 01.01.2017 | 01.01.2016 | 01.04.2017 | 01.04.2016 | |
|---|---|---|---|---|
| 30.06.2017 | 30.06.2016 | 30.06.2017 | 30.06.2016 | |
| Sales revenue | - | 300 421 | - | 149 635 |
| Costs of sales | (251 703) | (123 459) | ||
| Profit on sales | - | 48 718 | - | 26 176 |
| - | - | |||
| Other operating income | 1 544 | 3 361 | 755 | 914 |
| Distribution expenses | - | (18 693) | - | (10 313) |
| General and administrative expenses | (17 101) | (19 422) | (8 545) | (9 694) |
| Other operating expenses | (1 054) | (2 248) | (896) | (1 181) |
| Operating profit | (16 611) | 11 716 | (8 686) | 5 902 |
| Financial income | 378 206 | 72 050 | 338 995 | 38 038 |
| Financial expenses | (17 780) | (14 577) | (10 903) | (11 723) |
| Net financing income /expense | 360 426 | 57 473 | 328 092 | 26 315 |
| Profit before tax | 343 815 | 69 189 | 319 406 | 32 217 |
| Income tax | (1 738) | (756) | 3 616 | 6 325 |
| Net profit |
342 077 | 68 433 | 323 022 | 38 542 |
| Other comprehensive income | ||||
| Items that have been or may be subsequently reclassified to profit or loss: |
||||
| Effective portion of changes in the fair value of cash flow hedges |
- | (6 804) | - | (5 825) |
| Net change in the fair value of cash flow hedges reclassified to profit or loss for |
||||
| the current period | - | 1 262 | - | 483 |
| Settlement of instruments hedging the purchase of shares |
- | 23 048 | - | - |
| Other comprehensive income | - | 17 506 | - | (5 342) |
| Comprehensive income for the period | 342 077 | 85 939 | 323 023 | 33 200 |
Basic and diluted earnings per share (PLN) 5.29 1.08 4.99 0.60
For the six-month period ended 30 June 2017
| Statutory | |||||||
|---|---|---|---|---|---|---|---|
| Share | Share | reserve | Other | Cash flow | Retained | ||
| capital | premium | funds | reserves | hedge | earnings | Total | |
| 1 January 2017 | 21 351 | 625 240 | 218 719 | 140 000 | 15 870 | 230 138 | 1 251 318 |
| Comprehensive income for | |||||||
| the period | |||||||
| Net profit | - | - | - | - | - | 342 077 | 342 077 |
| Other comprehensive income | - | - | - | - | - | - | - |
| Total comprehensive income for | |||||||
| the period | - | - | - | - | - | 342 077 | 342 077 |
| Transactions with owners | |||||||
| recognised in equity | |||||||
| Transfer of a portion of 2016 net | |||||||
| profit to reserves | - | - | 135 885 | - | (135 885) | - | |
| Transfer of part of statutory reserve | |||||||
| to reserve for own shares | (250 000) | 250 000 | |||||
| Allocation of a portion of profit for | |||||||
| dividend payment | - | - | - | - | - | (71 171) | (71 171) |
| Total transactions with owners | |||||||
| recognised in equity | - | - | (114 115) | 250 000 | - | (207 056) | (71 171) |
| 30 June 2017 | 21 351 | 625 240 | 104 604 | 390 000 | 15 870 | 365 159 | 1 522 224 |
For the six-month period ended 30 June 2016
| Share | Share | Statutory | Other | Retained | |||
|---|---|---|---|---|---|---|---|
| capital | premium | reserve funds | reserves | Cash flow hedge | earnings | Total | |
| 1 January 2016 | 16 376 | 289 806 | 538 398 | 140 000 | (1 866) | 92 188 | 1 074 902 |
| Comprehensive income for | |||||||
| the period | |||||||
| Net profit | - | - | - | - | - | 68 433 | 68 433 |
| Other comprehensive income | - | - | - | - | 17 506 | - | 17 506 |
| Total comprehensive income for | |||||||
| the period | - | - | - | - | 17 506 | 68 433 | 85 939 |
| Transactions with owners | |||||||
| recognised in equity | |||||||
| Transfer of a portion of 2015 net | |||||||
| profit to supplementary capital | - | - | 4 405 | - | - | (4 405) | - |
| Share issue | 4 975 | 335 434 | (324 084) | - | - | - | 16 325 |
| Dividend payment | - | - | - | - | - | (64 701) | (64 701) |
| Total transactions with owners | |||||||
| recognised in equity | 4 975 | 335 434 | (319 679) | - | - | (69 106) | (48 376) |
| 30 June 2016 | 21 351 | 625 240 | 218 719 | 140 000 | 15 640 | 91 515 | 1 112 465 |
| 01.01.2017 | 01.01.2016 | |
|---|---|---|
| 30.06.2017 | 30.06.2016 | |
| Net profit for the reporting period Adjustments: |
342 077 (352 844) |
68 433 (24 188) |
| Amortisation and depreciation | 19 | 12 567 |
| Foreign exchange gains | (23 195) | (2 807) |
| Dividend and interest for the period | (337 231) | (53 361) |
| Profit from investing activities Income tax expense |
- 1 738 |
(123) 756 |
| Result on forward contracts | - | (1 262) |
| Change in | ||
| - trade and other receivables | (3 801) | 18 109 |
| - inventories | (7) | 719 |
| - trade and other payables | 10 807 | 520 |
| - employee benefit liabilities | (1 174) | 694 |
| Cash flows from operating activities | (10 767) | 44 245 |
| Interest received | 10 | 59 |
| Interest paid | - | - |
| Income tax (paid)/received | 1 050 | (1 815) |
| Net cash from operating activities | (9 707) | 42 489 |
| Cash flows from investing activities | ||
| Disposal of property, plant and equipment and intangible assets | - | 123 |
| Acquisition of shares in a subsidiary | - | (531 439) |
| Inflows related to settlement of derivatives | - | 21 330 |
| Acquisition of property, plant and equipment and intangible assets | (4) | (14 132) |
| Granting loans to subsidiaries | - | (81 000) |
| Net cash flows from investing activities | (4) | (605 118) |
| Cash flows from financing activities | ||
| Increase in borrowings and other debt instruments from related entities | - | 193 919 |
| Inflows from shares issued | - | 336 345 |
| Redemption of debt securities | (793 938) | (671 297) |
| Issue of debt securities | 805 885 | 717 728 |
| Interest paid | (4 932) | (4 884) |
| Net cash flows from financing activities | 7 015 | 571 811 |
| Total net cash flows | (2 696) | 9 182 |
| Decrease/Increase in cash | (2 696) | 9 182 |
| Cash at the beginning of the period | 4 677 | 30 983 |
| Cash at the end of the period | 1 981 | 40 165 |
Pfleiderer Group S.A. ("the Company") is the Parent operating as a holding company registered in Poland, whose shares are publicly traded.
The Company until September 30, 2016, acted under a business name Pfleiderer Grajewo S.A.
The Company is entered into the Entrepreneur Register of national Court Register, maintained by District Court for Wrocław – Fabryczna in Wrocław IV Commercial Division of the National Court Register under entry No. KRS 0000011422.
The Company's registered office is at Strzegomska 42AB Street, Wrocław, Poland. Until September 30, 2016, the Company's registered office was at 1 Wiórowa Street, Grajewo.
The Company provides holding services and other financial services.
These interim condensed standalone financial statements have been prepared in accordance with the requirements of IAS 34 "Interim financial reporting" as adopted for use by the European Union and in the scope required under the Regulation of the Minister of Finance of February 19, 2009, on current and periodic information provided by issuers of securities and conditions for recognizing as equivalent information required under the law of a non-member state (consolidated text: Official Journal 2014, item 133) (the "Regulation").
The Company's interim condensed standalone financial statements are published together with interim condensed consolidated financial statements of Pfleiderer Group S.A. Capital Group. In order to fully understand the performance and financial position of the Company, these financial statements should be read together with interim condensed financial statements of Pfleiderer Group S.A.
These financial statements are presented in Polish zlotys (PLN) and all amounts have been rounded to the nearest thousand ('000) unless stated otherwise.
These interim condensed standalone financial statements for the period from 1 January 2017 to 30 June 2017 have been approved for publication by the Management Board of the Company on 23 August 2017.
These interim condensed standalone financial statements have been prepared in line with the accounting principles described in the audited financial statements of Pfleiderer Group S.A. prepared for the year ended 31 December 2016.
The Company's accounting principles have been applied consistently to all periods presented in these interim condensed financial statements.
Preparing interim financial statements in accordance with EU IFRS requires the Management Board to make assumptions and estimates that affect the application of adopted accounting principles, as well as presented amounts of assets, liabilities, revenue and expenses, whose actual values may differ from estimates.
(all amounts are presented in PLN thousand)
Estimates and related assumptions are subject to ongoing verification. All changes in the accounting estimates are recognized in the period when they were made or in the current and future periods, if they apply both to the current and future periods.
The Group reviews its assets on an ongoing basis and, if necessary, recognises impairment losses in profit or loss. In addition, the Group reviews the useful life of fixed assets and factors influencing the recoverable amount of non-current assets. The amount of provisions arising from future old-age and disability pension liabilities is determined using actuarial methods based on assumptions made.
In the period from 1 January 2017 to 30 June 2017 no material changes occurred in material estimates and judgements vs. standalone financial statements prepared for the prior financial year ended 31 December 2016.
As at 30 June 2017, property, plant and equipment included IT hardware and movables used in the office building.
The Company holds the following investments in subsidiaries:
| 30.06.2017 | 31.12.2016 | |
|---|---|---|
| Shares in subsidiaries | 2 109 553 | 2 109 553 |
| Long-term loans granted to subsidiaries | 105 609 | 103 069 |
| 2 215 162 | 2 212 622 |
Shares in subsidiaries include share in PCF GmbH in the amount of PLN 1 177 243 thousand and share in Pfleiderer Polska Sp. z o.o. in the amount of PLN 932 310 thousand.
An increase in long-term loans granted to subsidiaries results from interest accrued and capitalized.
| 30.06.2017 | 31.12.2016 | |
|---|---|---|
| Par value of share capital (PLN) | 21 351 332 | 21 351 332 |
| Number of ordinary shares (items) | 64 701 007 | 64 701 007 |
| Face value per share (PLN) | 0.33 | 0.33 |
In the reporting period, no changes occurred in the Company's share capital.
| 30.06.2017 | 31.12.2016 | |
|---|---|---|
| Supplementary capital (PLN) | 104 603 944 | 218 718 745 |
| Other reserves (PLN) | 390 000 000 | 140 000 000 |
On 21 June 2017, General Shareholders' Meeting passed a resolution no. 4 on the distribution of net profit for the period from 1 January 2016 to 31 December 2016, approving the payment of dividend to Shareholders in the amount of PLN 71 171 thousand and reclassification of the remaining portion of PLN 135 885 thousand to the reserve.
Subsequently, pursuant to Resolution no. 9 of Extraordinary Shareholders' Meeting of Pfleiderer Group S.A. approving the treasury shares repurchase programme and establishment of reserve capital for this purpose, the Company reclassified the amount of PLN 250 000 thousand from the statutory reserve funds to other reserves.
(all amounts are presented in PLN thousand)
Shareholding structure following the issue of new shares and as at the reporting period end:
| Shareholding structure | |||||
|---|---|---|---|---|---|
| as at 30 June 2017* | Number of | Interest in | Number of votes at | Interest in the General | |
| and as at the publication date |
shares | capital | the General Meeting | Meeting votes | |
| Strategic Value Partners LLC | 19 183 149 | 29.65% | 19 183 149 | 29.65% | |
| Atlantik S.A. | 12 474 561 | 19.28% | 12 474 561 | 19.28% | |
| Nationale Nederlanden OFE | 6 400 000 | 9.89% | 6 400 000 | 9.89% | |
| Aviva OFE Aviva BZ WBK | 6 000 000 | 9.27% | 6 000 000 | 9.27% | |
| Other shareholders | 20 643 297 | 31.91% | 20 643 297 | 31.91% | |
| Total | 64 701 007 | 100.00% | 64 701 007 | 100.00% |
* Pursuant to latest information received.
Until this report's publication date, the Company has not received any information concerning other changes in the shareholding structure.
| Current liabilities | 30.06.2017 | 31.12.2016 |
|---|---|---|
| Borrowings from related parties | - | 198 407 |
| Other financial liabilities | 534 658 | 614 418 |
| Total | 534 658 | 812 825 |
On 5 October 2015, Pfleiderer Group S.A. in order to finance the acquisition of a subsidiary, entered into a loan agreement with PCF GmbH. Transfer of funds in the amount of EUR 43 587 thousand (PLN 193,919 thousand) took place in January 2016.
On 27 June 2017 the shareholders signed a resolution, pursuant to which profit for 2016 generated by PCF GmbH, a subsidiary, in the amount of EUR 79 170 thousand should be transferred to Pfleiderer Group S.A. with reservation that the portion of EUR 60,000 thousand shall be offset with Company's liabilities and the remaining portion of EUR 19 170 thousand shall be paid by 7 July 2017.
On 30 June 2017 the Company and PCF GmbH, the subsidiary, concluded an Offset and Debt Repayment Agreement. As a result, the entire loan amount of EUR 45 524 thousand, consisting of the principal of EUR 44 837 thousand and interest accrued by 30 June 2017 of EUR 687 thousand was settled.
In connection with the acquisition of PCF GmbH, a subsidiary, on 5 October 2015 Pfleiderer Group S.A. concluded an agreement with Atlantik S.A., under which Pfleiderer Group S.A. took over an obligation of Atlantik S.A. representing proceeds from sale of Pfleiderer Group S.A. shares held by Pfleiderer Service GmbH after the settlement of Secondary Offering to Atlantik S.A.
On 30 June 2017, a portion of the related debt amounting to EUR 14 476 thousand was settled under the Offset and Debt Repayment Agreement concluded with the subsidiary PCF GmbH.
Following the above settlement, as at 30 June 2017 the related debt amounted to EUR 126 501 thousand (PLN 534 658 thousand).
(all amounts are presented in PLN thousand)
On 13 April 2017 the Group has finalized and signed refinancing agreements of EUR 450 000 thousand senior secured credit facilities comprising a EUR 350 000 thousand 7-year covenant-lite term loan B facility and the new EUR 100 000 thousand 5-year revolving credit facility. The proceeds from the Facilities will be used to redeem the existing EUR 321 684 thousand 7.875% senior secured notes issued by PCF GmbH ("Notes") in full, to refinance the existing senior secured revolving credit facility and to fund related transaction fees, redemption premium and expenses as well as for general corporate purposes and working capital requirements.
On 23 June 2017 the Company demanded total early redemption of the senior secured notes bearing 7.875% interest, issued by PCF GmbH in the amount of EUR 321 684 thousand. The notes have been redeemed on 1 August 2017 at the early redemption price equal to 101.969% of their nominal value (plus interest accrued by the redemption date).
| 30.06.2017 | 31.12.2016 | |
|---|---|---|
| Liabilities to related entities | ||
| arising from debt securities | 138 891 | 126 901 |
| Total | 138 891 | 126 901 |
Liabilities arising from debt securities and amounting to PLN 138 891 thousand as at 30 June 2017 (PLN 126 901 thousand as at 31 December 2016) included commercial papers issued in the form of short-term notes and purchased by Pfleiderer Wieruszów Sp. z o.o., a subsidiary (formerly Pfleiderer Prospan S.A.).
The notes were issued under an agreement concerning the performance of a bond issue programme of 22 July 2003, concluded with PEKAO S.A. The agreement expires on 30 June 2018. The maximum value of the programme is PLN 500 000 thousand.
The notes, denominated in PLN, are issued pursuant to the Act on Bonds of 29 June 1995 in the form of dematerialized, unsecured, zero-coupon bearer securities.
The purpose of the issue is to optimize the funds management in the Capital Group, reduce external debt of the Company and fund its ongoing operations.
The fair value of financial assets and liabilities is similar to their carrying value as at 30 June 2017 and 31 December 2016. No open forward transactions occurred in the Company as at 30 June 2017.
As at 30 June 2017, Pfleiderer Group S.A. and certain subsidiaries granted guarantees related to the funding received in the form of "RCF" revolving loan in the amount up to EUR 60 000 thousand and PLN 200 000 thousand and to liabilities contracted by PCF GmbH in the nominal amount of EUR 321 684 thousand, related to senior secured notes bearing 7.875% interest and maturing in 2019. The guarantees were granted by: Pfleiderer Group S.A., PCF GmbH, Pfleiderer Deutschland GmbH, Pfleiderer Service GmbH, Pfleiderer Neumarkt GmbH, Pfleiderer Leutkirch GmbH, Pfleiderer Gütersloh GmbH, Pfleiderer Arnsberg GmbH, Pfleiderer Baruth GmbH, Jura-Spedition GmbH, Pfleiderer Vermögensverwaltung GmbH & Co. KG, Pfleiderer Wieruszów Sp. z o.o. (formerly Pfleiderer Prospan S.A.), Pfleiderer MDF Grajewo Sp. z o.o. and Pfleiderer Silekol Sp. z o.o. (the "Existing Guarantees").
(all amounts are presented in PLN thousand)
Following the refinancing of debt described in note 6, as at 13 April 2017 Pfleiderer Group S.A., PCF GmbH, Pfleiderer Deutschland GmbH, Pfleiderer Neumarkt GmbH, Pfleiderer Leutkirch GmbH, Pfleiderer Gütersloh GmbH, Pfleiderer Arnsberg GmbH, Pfleiderer Baruth GmbH, Pfleiderer Wieruszów Sp. z o.o. (formerly Pfleiderer Prospan S.A.), Pfleiderer MDF Grajewo Sp. z o.o., Pfleiderer Grajewo Sp. z o.o., Pfleiderer Polska Sp. z o.o., Pfleiderer Silekol Sp. z o.o. guaranteed liabilities arising from the refinancing agreement of EUR 450 000 thousand. The Existing Guarantees will be terminated upon this refinancing.
As at 30 June 2017, Pfleiderer Group S.A. and its certain subsidiaries have jointly and severally established the following collateral for the repayment of liabilities to Commerzbank Aktiengesellschaft, Filiale Luxemburg acting as the security agent (the "Security Agent") arising from the credit agreement dated 4 July 2014 (as amended) including funding up to EUR 60 million and PLN 200 million and the agreement dated 4 July 2014 (as amended) concluded by, inter alios, Pfleiderer Group S.A. and certain of its subsidiaries as initial borrowers of liabilities resulting from senior secured notes bearing 7.875% interest and totaling to EUR 321 684 thousand, issued by PCF GmbH on 7 July 2014 and maturing in 2019.
Following the initial utilization of the facilities under the senior facilities agreement dated April 13, 2017, the existing security interests granted by Pfleiderer Group S.A. and its certain subsidiaries will be released. In order to secure the new obligations under the senior facilities agreement dated April 13, 2017, new security interests will be granted for the benefit of the lenders. Details regarding existing and new collateral established on shares, bank accounts, movables and property titles, description of assignment of rights arising from commercial contracts, loan agreements and insurance contracts, mortgages and a statement of submission to enforcement, are provided in the consolidated financial statements that constitute an integral part of these standalone financial statements.
As at 30 June 2017 the Company did not identify any material contingent liabilities except for a possible liability arising from anti-monopoly procedures described below.
Following an unannounced inspection in October 2011, on 30 March 2012 the Polish Office of Competition and Consumer Protection (the "OCCP") commenced proceedings against Kronospan Szczecinek sp. z o.o., Kronospan Mielec sp. z o.o., Kronopol sp. z o.o., Pfleiderer Grajewo S.A. and Pfleiderer Wieruszów Sp. z o.o. (formerly Pfleiderer Prospan S.A.), regarding possible horizontal price fixing and exchange of information on conditions of sale in the chipboard and fiberboard markets in Poland, which may constitute breaches of Article 6 of the Act on Competition and Consumer Protection and Article 101(1)(a) of the Treaty on the Functioning of the European Union. The maximum fines that the OCCP may impose on Pfleiderer Grajewo S.A. and/or Pfleiderer Wieruszów Sp. z o.o. in these proceedings amount to 10% of their respective tax revenues in the year preceding the issuance of the infringement decision. The end date of the proceedings is still uncertain.
At the date of the publication of these interim standalone financial statements it is unclear whether OCCP will determine any breaches of Article 6 of the Act on Competition and Consumer Protection and Article 101(1)(a) of the Treaty on the Functioning of the European Union. At this stage, given the fact-intensive nature of the issues involved and the inherent uncertainty of such investigation, it is not possible to evaluate the outcome and potential financial consequences of this still pending and long-lasting investigation, management has determined that not all of the conditions have been met to require recognition of a relevant provision. Therefore as at 30 June 2017 no provision has been recognized by the Company.
Other notes to semi-annual separate financial statements for the period from 1 January 2017 to 30 June 2017
(all amounts are presented in PLN thousand)
Related-party transactions
01.01.2017 – 30.06.2017
| Re la d p te ty ar |
Re ve nu e fro les m sa f o du ts p ro c , ds d g oo an te ia ls ma r |
Re ve nu e fro m les f sa o ice se rv s |
F ina ia l nc inc om e |
O he t r ing t op er a inc om e |
Pu ha rc se s f p du ts, o ro c ds d g oo an te ia ls ma r |
Pu ha rc se f s o ice se rv s d an l ice nc e fee s |
Pu ha rc s f e o f ixe d ts as se |
F ina ia l nc ex p en se s |
Ca i l ise d ta p ex p en se s |
|---|---|---|---|---|---|---|---|---|---|
| P f le i de Po ls ka Sp rer . z o. o. |
- | 6 0 3 |
3 7 7 |
8 4 7 |
- | - | - | - | - |
| P f le i de Gr j Sp rer a ew o . z o. o. |
2 1 0 |
9 5 |
- | - | - | - | - | - | |
| P f le i de W ier ów Sp ( for ly P f le i de rer us z . z o. o. me r rer Pr S. A. ) os p an |
- | 3 3 3 |
3 4 9 |
- | - | - | - | 1 1 0 5 |
- |
| P f le i de M D F Gr j Sp rer a ew o . z o. o. |
- | 1 6 7 |
2 7 2 4 |
- | - | - | - | - | - |
| P f le i de S i le ko l Sp rer . z o. o. |
- | 8 9 |
2 0 5 |
- | - | - | - | - | - |
| Ju Po ls ka Sp ra . z o. o. |
- | 1 | - | - | - | - | - | - | - |
| P C F Gm b H |
- | - | 3 3 6 8 1 8 |
- | - | - | - | 1 1 7 6 7 |
- |
| P f le i de De h lan d Gm b H tsc rer u |
- | - | - | 6 9 1 |
- | - | - | - | - |
| To l ta |
- | 1 4 0 3 |
3 4 0 9 6 4 |
1 4 7 5 |
- | - | - | 1 2 8 7 2 |
- |
(all amounts are presented in PLN thousand)
01.01.2016 - 30.06.2016
| Re la d p te ty ar |
Re fro ve nu e m les f sa o du ts p ro c , ds d g oo an ia ls te ma r |
Re ve nu e fro les m sa f s ice o er s v |
F ina ia l nc inc om e |
O he t r ing t op er a inc om e |
Pu ha f rc se s o du ts p ro c , ds d g oo an ia ls te ma r |
Pu ha rc se s f s ice o er v s d l ice an nc e fee s |
Pu ha rc se f f ixe d o ts as se |
F ina ia l nc ex p en se s |
Ca i l ise d ta p ex p en se s |
|---|---|---|---|---|---|---|---|---|---|
| f Sp P le i de Po ls ka rer . z o. o. |
- | - | - | 3 1 9 |
- | - | - | 1 0 6 5 0 |
9 5 |
| f ów Sp ( for P le i de W ier ly rer us z . z o. o. me r f S. ) P le i de Pr A. rer os p an |
3 9 4 4 |
5 9 0 4 |
3 7 7 2 1 |
2 5 8 0 |
1 0 3 8 |
9 6 |
6 5 7 |
2 2 1 6 |
- |
| Gr Sp P f le i de M D F j rer a ew o o. o. . z |
3 2 3 6 0 |
5 3 0 8 |
1 6 7 3 |
7 2 6 |
3 1 7 9 6 |
2 3 2 1 |
9 8 |
- | - |
| S Sp P f le i de i le ko l rer o. o. . z |
2 3 8 |
5 2 7 |
2 7 3 5 4 |
1 6 6 |
2 4 4 3 6 |
- | 7 | - | - |
| Sp Ju Po ls ka ra o. o. . z |
- | 5 2 2 |
- | 7 7 |
1 8 2 5 |
9 5 7 7 |
5 5 |
- | - |
| Gm P f le i de b H rer |
- | - | - | 5 1 6 9 |
- | 1 6 2 9 |
- | - | 5 7 1 5 |
| Gm P f le i de Ne k b H t rer um ar |
1 1 0 3 |
- | - | - | - | - | 3 5 0 |
- | - |
| Gm P f le i de De h lan d b H tsc rer u |
2 6 9 |
- | - | 1 5 0 |
3 7 |
3 2 3 |
4 2 9 8 |
- | - |
| G Gm P f le i de ü lo h b H ter rer s |
- | - | - | - | - | 4 0 2 |
3 4 6 |
- | - |
| Gm P f le i de Le k irc h b H t rer u |
- | - | - | - | - | - | 4 1 2 |
- | - |
| P f le i de Ba h Gm b H t rer ru |
- | - | - | - | - | - | 5 4 |
- | - |
| P f le i de Ar be Gm b H rer ns rg |
- | - | - | - | - | - | 4 7 7 |
- | - |
| Ju Sp d i ion Gm b H t ra e s |
- | - | - | - | - | - | 2 7 |
- | - |
| Gm He l ler Ho lz b H |
- | - | - | - | - | - | 2 2 |
- | - |
| To l ta |
3 7 9 1 4 |
1 2 2 6 1 |
6 6 7 4 8 |
9 1 8 7 |
5 9 1 3 2 |
1 4 3 4 8 |
6 8 0 3 |
1 2 8 6 6 |
5 8 1 0 |
financial statements for the period from 1 January 2017 to 30 June 2017
(all amounts are presented in PLN thousand)
Related-party receivables/liabilities as at 30 June 2017 and 31 December 2016:
| 30 .06 .20 17 |
31 .12 .20 16 |
|||||
|---|---|---|---|---|---|---|
| Re lat ed art p y |
Gr ted an loa ns |
Tra de iva ble re ce s |
Div ide nd eiv ab les rec |
Gr ted an loa ns |
Tra de iva ble re ce s |
Div ide nd eiv ab les rec |
| Sp Pfl eid r P ols ka ere . z o.o |
- | 1 0 58 |
3 77 |
- | 162 | - |
| Pfl eid r W ier ów Sp .( for rly Pfl eid r P S. A.) ere usz . z o.o me ere ros p an |
- | 25 | - | - | 2 7 08 |
- |
| Pfl eid r M DF G raj Sp ere ew o o.o . z |
105 60 9 |
85 | - | 103 06 9 |
176 | - |
| Pfl eid r G raj Sp ere ew o . z o.o |
- | 90 | - | - | 24 8 |
- |
| Pfl r S Sp eid ilek ol ere . z o.o |
- | 62 | - | - | 1 3 12 |
- |
| Ju Po lsk Sp ra a . z o.o |
- | - | - | - | 4 | - |
| PC F G mb H |
- | 3 3 97 |
80 73 7 |
- | 20 6 |
- |
| Pfl eid r D hla nd Gm bH tsc ere eu |
- | 69 1 |
- | - | 65 | - |
| To tal |
10 5 6 09 |
5 4 08 |
81 51 0 |
10 3 0 69 |
4 8 81 |
- |
| 30 .06 .20 17 |
31 .12 .20 16 |
|||||
|---|---|---|---|---|---|---|
| Re lat ed art p y |
De bt rity se cu lia bil itie nd s a fin cia l li ab ilit ies an |
Tra de lia bil itie s |
Inv tm t es en lia bil itie s |
Lia bil itie ris ing s a fro de bt m riti se cu es |
Tra de lia bil itie s |
Inv t li ab ilit ies tm es en |
| Pfl Sp eid r P ols ka ere . z o.o |
- | 93 | - | - | 20 1 |
- |
| Pfl eid r W ier ów Sp . ( for rly Pfl eid r P ere usz o.o me ere ros p an . z S.A .) |
138 89 1 |
34 | - | 126 90 1 |
65 8 |
- |
| Pfl eid r M DF G raj Sp ere ew o o.o . z |
- | 2 7 22 |
- | - | 2 7 20 |
- |
| Pfl eid r G raj Sp ere ew o o.o . z |
- | 167 | - | - | 29 2 |
- |
| Pfl eid r S ilek ol Sp ere . z o.o |
- | 32 3 |
- | - | 32 3 |
- |
| Ju Po lsk Sp ra a . z o.o |
- | - | - | - | ( 18 ) |
- |
| PC F G mb H |
53 4 6 58 |
8 0 38 |
- | 81 2 8 25 |
89 8 |
- |
| Pfl eid r D hla nd Gm bH tsc ere eu |
- | 81 | - | - | - | - |
| To tal |
67 3 5 49 |
11 45 8 |
- | 93 9 7 26 |
5 0 74 |
- |
Remuneration of Management and Supervisory Board Members of Pfleiderer Group S.A. (including bonuses) paid and due for the period
| Short-term benefits | 01.01.2017 30.06.2017 |
01.01.2016 30.06.2016 |
|---|---|---|
| Remuneration of Management Board members | 3 339 | 1 622 (*) |
| Remuneration of Supervisory Board members | 1 557 | 998 |
| 4 896 | 2 620 |
(*)The amount presented in the condensed interim financial statements for six month period ended 30 June 2016 as a Management board remuneration (PLN 2 107 thousand) was calculated on a cash bases, the amount PLN 1 622 is calculated on accrual basis, for comparability reasons.
As at 30 June 2017 and 31 December 2016, no loans were granted to Members of Management and Supervisory Board of Pfleiderer Group S.A.
With effect from 1 June 2017, the Supervisory Board of Pfleiderer Group S.A. appointed Thomas Schäbinger as President and Chief Executive Officer. Thomas Schäbinger replaced Michael Wolff, former President of the Management Board and CEO of Pfleiderer Group, who decided not to extend the contract expiring with the Group in December 2017.
On 28 April Wojciech Gątkiewicz resigned from the position of Member of the Management Board, Chief Sales Officer, effective as of 1 August 2017. On 9 May Ivo Schintz was nominated to the position of Member of the Management Board, Chief Commercial Officer, effective as of 1 August 2017.
On 25 April 2017, the Management Board of the Company passed a resolution on a motion to the General Meeting regarding distribution of 2016 profit of PLN 207 056 thousand, recommending the use of PLN 71 171 thousand for payment of dividend of PLN 1.10 per share and reclassification to the remaining portion of PLN 135 885 thousand to the reserve.
On 21 June 2017, General Shareholders' Meeting passed a resolution on the distribution of net profit for the period from 1 January 2016 to 31 December 2016, approving the payment of dividend to Shareholders in the amount of PLN 71 171 thousand, i.e. PLN 1.10 per share. The dividend was paid on all shares in the Company (i.e. on 64 701 007 shares).
At the same time, the General Meeting determined the following:
1) dividend record date (the date when the list of shareholders entitled to dividend is determined) of 5 July 2017; and
2) dividend payout date of 19 July 2017.
On 4 July 2017 the Company received dividend of EUR 19 169 thousand from the subsidiary PCF GmbH, while on 17 July 2017 dividend of PLN 773 thousand from the subsidiary Pfleiderer Polska Sp. z o.o.
The dividend amount of PLN 71 171 thousand was transferred to National Deposit of Securities on 17 July 2017.
On 17 July 2017, the Company purchased notes with the nominal value of PLN 139 000 thousand from the subsidiary Pfleiderer Wieruszów Sp. z o.o. (formerly Pfleiderer Prospan S.A.). Subsequently, on 17 July 2017,
(all amounts are presented in PLN thousand)
Pfleiderer Group S.A. issued notes with the nominal value of PLN 139 000 thousand with the redemption date of 24 August 2017. The notes were purchased by Pfleiderer Wieruszów Sp. z o.o. (formerly Pfleiderer Prospan S.A.)
Thomas Schäbinger
President of the Management Board
Richard Mayer Dirk Hardow
Member of the Management Board, Chief Financial Officer
Member of the Management Board, Chief Operating Officer
Member of the Management Board,
Chief Commercial Officer
Ivo Schintz Rafał Karcz
Member of the Management Board, Chief Administration Officer
Wrocław, 23 August , 2017
CONTACT DATA
PFLEIDERER GROUP S.A. Wrocław, ul. Strzegomska 42Ab 53-611 Wrocław Phone: +48 71 747 10 00
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