Quarterly Report • Nov 14, 2018
Quarterly Report
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Consolidated Quarterly Report QSr 3 / 2018
quarter / 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 3rd quarter of the financial year 2018, covering the period from January 1st to September 30th 2018,
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: November 14th 2018
(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 | 3 quarter cumulative / 2018 Jan 1-Sep 30 2018 |
3 quarter cumulative / 2017 Jan 1-Sep 30 2017 |
3 quarter cumulative / 2018 Jan 1-Sep 30 2018 |
3 quarter cumulative / 2017 Jan 1-Sep 30 2017 |
| Condensed consolidated financial statements data | ||||
| I. Sales revenue | 799 690 | 750 910 | ||
| II. Operating profit/(loss) | 47 124 | 41 058 | ||
| III. Profit/(loss) before tax | 26 277 | 25 954 | ||
| IV. Net profit | 15 596 | 19 067 | ||
| V. Net profit attributable to equity holders of the parent | 15 596 | 19 067 | ||
| VI. Net cash provided by (used in) operating activities | 49 200 | 74 106 | ||
| VII. Net cash provided by (used in) investing activities | -58 319 | -45 624 | ||
| VIII. Net cash provided by (used in) financing activities | -33 378 | -40 356 | ||
| IX. Total net cash flow | -42 497 | -11 874 | ||
| X. Total assets | 922 394 | 944 483 | ||
| XI. Liabilities | 773 877 | 704 581 | ||
| XII. Non-current liabilities | 544 944 | 465 447 | ||
| XIII. Current liabilities | 228 933 | 239 134 | ||
| XIV. Equity | 148 517 | 239 902 | ||
| XV. Share capital | 6 692 | 6 692 | ||
| XVI. Outstanding shares at the end of the reporting period | 64 701 007 | 64 701 007 | ||
| XVII. Earnings per ordinary share (EUR) | 0,27 | 0,29 | ||
| XVIII. Book value per share (EUR) | 2,30 | 3,71 | ||
| XIX. Declared or paid dividend per share (EUR) | 0,28 | 0,26 |
| XX. Sales revenue | 0 | 0 | 0 | 0 |
|---|---|---|---|---|
| XXI. Operating profit/(loss) | -19 673 | -26 460 | -4 632 | -6 204 |
| XXII. Profit/(loss) before tax | 26 274 | 320 334 | 6 186 | 75 106 |
| XXIII. Net profit/(loss) | 29 971 | 322 322 | 7 056 | 75 572 |
| XXIV. Net cash provided by (used in) operating activities | -1 575 | -15 218 | -371 | -3 568 |
| XXV. Net cash provided by (used in) investing activities | 189 866 | 81 916 | 44 700 | 19 206 |
| XXVI. Net cash provided by (used in) financing activities | -118 168 | -67 246 | -27 820 | -15 767 |
| XXVII. Total net cash flow | 70 123 | -548 | 16 509 | -128 |
| XXVIII. Total assets | 2 217 459 | 2 282 384 | 518 413 | 546 417 |
| XXIX. Liabilities | 1 196 957 | 839 146 | 279 833 | 200 897 |
| XXX. Non-current liabilities | 285 | 4 121 | 67 | 987 |
| XXXI. Current liabilities | 1 196 672 | 835 025 | 279 766 | 199 910 |
| XXXII. Equity | 1 020 502 | 1 443 238 | 238 580 | 345 520 |
| XXXIII. Share capital | 21 351 | 21 351 | 4 992 | 5 112 |
| XXXIV. Weighted average number of shares | 64 701 077 | 64 701 077 | 64 701 077 | 64 701 077 |
| XXXV. Earnings per ordinary share (PLN/EUR) | 0,51 | 4,98 | 0,12 | 1,17 |
| XXXVI. Book value per share (PLN/EUR) | 15,77 | 22,31 | 3,69 | 5,34 |
| XXXVII. Declared or paid dividend per share (PLN/EUR) | 1,20 | 1,10 | 0,28 | 0,26 |
data in lines : X-XV, XXVIII-XXXIII are presented accordingly: column.1 - for 30.09.2018 column.2 - for 31.12.2017 column.3 - for 30.09.2018 column.4 - for 31.12.2017
| LETTER FROM THE PRESIDENT OF THE MANAGEMENT BOARD 4 | ||
|---|---|---|
| OUR VISION – FOR AN INTEGRATED PFLEIDERER GROUP IN EUROPE 5 | ||
| PFLEIDERER GROUP IN Q3 2018 AT A GLANCE 5 | ||
| KEY EVENTS AND ACHIEVEMENTS OF THE PFLEIDERER GROUP IN 9M 2018 6 | ||
| 1. | KEY GROUP HIGHLIGHTS 9 | |
| 1.1. | BUSINESS PROFILE – ACTIVITIES OF THE GROUP 9 | |
| 1.2. | STRUCTURE OF THE GROUP 10 | |
| 1.2.1. | PFLEIDERER GROUP COMPANIES AND THEIR BUSINESS ACTIVITIES 11 | |
| 1.2.2. | DESCRIPTION OF CHANGES IN THE STRUCTURE OF THE GROUP IN THE REPORTING PERIOD 12 | |
| 1.3. | PFLEIDERER GROUP STRATEGY 13 | |
| 1.4. | INVESTMENT PROGRAM 16 | |
| 1.5. | MARKETING ACTIVITIES IN 9M 2018 16 | |
| 1.6. | MARKET POSITION AND CONSTRUCTION MARKET OVERVIEW 18 | |
| 1.7. | EXTERNAL AND INTERNAL FACTORS AFFECTING THE GROUP'S BUSINESS 25 | |
| 1.8. | RISK MANAGEMENT 25 | |
| 1.9. | INFORMATION ON MATERIAL AGREEMENTS AND TRANSACTIONS 28 | |
| 1.10. | COURT PROCEEDINGS 28 | |
| 2. | KEY OPERATIONAL DATA 32 | |
| 2.1. | PRODUCTION VOLUME AND STRUCTURE 32 | |
| 2.2. | SALES STRUCTURE 32 | |
| 3. | FINANCIAL PERFORMANCE 35 | |
| 3.1. | EXPLANATION OF THE ECONOMIC FINANCIAL DATA DISCLOSED IN THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 35 |
|
| 3.1.1. | CONSOLIDATED STATEMENT OF PROFIT OR LOSS 35 | |
| 3.1.2. | CONSOLIDATED STATEMENT OF FINANCIAL POSITION 36 | |
| 3.1.3. | CONSOLIDATED STATEMENT OF CASH FLOWS 37 | |
| 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 INTERIM CONDENSED STANDALONE FINANCIAL STATEMENTS 40 |
|
| 3.2.1. | STANDALONE STATEMENT OF PROFIT OR LOSS 40 | |
| 3.2.2. | STANDALONE STATEMENT OF FINANCIAL POSITION 41 | |
| 3.2.3. | STANDALONE STATEMENT OF CASH FLOWS 41 | |
| 3.2.4. | STANDALONE KEY FINANCIAL RATIOS – PFLEIDERER GROUP S.A. 41 | |
| 3.3. | NON-RECURRING EVENTS 41 | |
| 3.4. | PROJECTED FINANCIAL RESULTS 42 | |
| 3.5. | RATINGS 42 | |
| 3.6. | FINANCIAL INSTRUMENTS 42 | |
| 3.7. | FINANCIAL RISKS RELATED TO THE PFLEIDERER GROUP'S OPERATIONS 47 | |
| 4. | SHARES AND SHAREHOLDING STRUCTURE 50 |
| 7. | MANAGEMENT BOARD REPRESENTATION 57 | ||
|---|---|---|---|
| 6. | EVENTS SUBSEQUENT TO THE END OF THE REPORTING PERIOD 56 | ||
| 5.2.2. | MANAGEMENT BOARD 55 | ||
| 5.2.1. | SUPERVISORY BOARD 54 | ||
| 5.2. | COMPANY'S CORPORATE BODIES 54 | ||
| 5.1. | NUMBER OF THE COMPANY'S SHARES HELD BY PERSONS IN MANAGEMENT AND SUPERVISORY BODIES 54 | ||
| 5. | CORPORATE GOVERNANCE 54 | ||
| 4.4. | RECOMMENDATIONS 52 | ||
| 4.3. | INVESTOR RELATIONS IN PFLEIDERER GROUP 52 | ||
| 4.2. | DIVIDENDS POLICY 51 | ||
| 4.1. | SHAREHOLDING STRUCTURE 50 |
PRESIDENT OF THE
MANAGEMENT BOARD
Dear Investors,
I have the pleasure of presenting you with the report on activities of Pfleiderer Group S.A. for the first nine months of 2018. It was a period of continued growth of our business: Pfleiderer's top line increased by 6.5% y/y, reaching nearly EUR 800m, while reported EBITDA enjoyed a nearly 9% y/y increase to EUR 104.6m. However, it was also a time which saw a number of challenges appear ahead of the Group, our customers and more broadly our competitive and market environment.
Pfleiderer Group is consistently implementing its strategy of focusing on the growth of high value-added products. In view of high commoditisation of basic particle boards, it is our duty to seek market opportunities which will bring the Company and its shareholders the highest possible returns as well as prospects of growth on the market. This is why, a year after
presenting the Group's new strategy, we have conducted, together with one of the top three strategy consulting firms in the world, a broad-ranging and detailed analysis across our business accounts to identify sources of business and profitability growth. As a result, we have identified 12 initiatives in the field of commercial activities, operations, as well as related to incremental growth in Poland.
I am convinced that this thorough analysis, conducted with the help of renowned business consultants, will have a tangible positive effect on our business. The clearly identified efficiency initiatives give us confidence that we can deliver and beat the announce 2021 strategic goals. This is why the Group decided to raise the targets it will be pursuing in the perspective of the year 2021: We now expect to reach revenues of EUR 1.3B and an EBITDA margin of over 16% in that timeframe.
We are well on track to achieve these goals. We are very pleased with the initial performance of our new lacquering line in Leutkirch, the biggest and most advanced lacquering line worldwide, an investment whose positive EBITDA impact will be increasingly visible in the quarters to come.
Concurrently to growing our business, we are focusing on optimising costs. The management team is pleased to see positive cost developments in our Q3 and 9M profit and loss statement. As we strive to continuously improve our operating efficiency and G&A costs, we hope to see a further reduction in costs as percentage of our growing business in the coming quarters.
At the same time, our entire industry is under pressure of increasing prices of raw materials, especially electricity, chemicals, and wood. Pfleiderer has successfully transferred this growth to the prices of our final products. This increase was received with understanding with our clients, who observe similar market trends, but are able to absorb price growth thanks to a favourable consumer environment. This price growth is also a strong incentive to improve operational efficiency (with initiatives such as debottlenecking and increasing the capacity to use recycled wood as input for production) and confirms the validity of the initiatives that the management team has undertaken.
One of our key duties as management board is to safeguard the interest of our shareholders. That is why we want to continue the Firm's attractive dividend policy, which this year was accompanied by a share buyback, completed in Q3 2018.
We are convinced that the buyback was beneficial for all shareholders and, after accumulating nearly 20% of share capital, we now want to focus on deleveraging the company. Thanks to our strong ability to generate cash, we expect to see a decline in our net leverage ratio next year.
On behalf of the Management Board, I would like to thank all of our Employees, Stakeholders, Shareholders and Supervisory Board members for the trust and their enormous contribution towards the development of Pfleiderer Group S.A. I look forward to seeing through all the undertaken initiatives in order to continue to build the value of Pfleiderer Group.
My best regards,
Tom K. Schäbinger
President of the Management Board of Pfleiderer Group S.A.
EBITDA - Earnings before Interest, Tax and Amortisation and Depreciation
Analytical review – please see Chapter 3
On 24 August 2018 the Company purchased 7 543 268 treasury shares. The treasury shares were purchased in connection with the implementation of the treasury shares repurchase programme approved under the resolution of the Company's Annual General Meeting of the Shareholders dated 11 June 2018. The total number of treasury shares purchased by the Company at the date of publication of this report is 12 940 201, representing approximately 20% of the Company's share capital.
On 31 July 2018, the Senior Facilities Agreement originally dated 13 April 2017 was amended and restated. The total amount of senior secured term loan B increased by EUR 95 million from EUR 350 million to EUR 445 million, the volume of the Revolving Credit Facilities remains unchanged. Final maturity dates within the senior facilities agreement remain unchanged.
The Ordinary General Meeting of Shareholders of the Company resolved on 11 June 2018 to allocate the net profit for the period from 1 January to 31 December 2017, amounting in total to PLN 415 542 thousand, as follows:
a) in the amount of PLN 71 164 888.80, i.e. PLN 1.20 per share, to the payment of dividends to the Company's shareholders, b) the remaining amount to the Company's supplementary capital.
The Ordinary General Meeting of Shareholders of the Company set the date used to prepare the list of shareholders eligible to receive the above dividend (record date) for 17 June 2018. The dividend payment date was set for 11 July 2018.
On 11 June 2018 the Ordinary General Meeting of Shareholders appointed to the Supervisory Board for the new term of office the following persons: Zbigniew Prokopowicz, Michael F. Keppel, Jason R. Clarke, Florian Kawohl, Anthony O'Carroll, Krzysztof Sędzikowski and Jan Woźniak. On 11 June 2018 the Supervisory Board appointed Zbigniew Prokopowicz the Chairman of the Supervisory Board and Michael F. Keppel and Jason R. Clarke the Deputies Chairman of the Supervisory Board.
The Ordinary General Meeting of Shareholders of the Company adopted on 11 June 2018 the resolution on the approval of a treasury share repurchase programme and the establishment of the capital reserve for the purposes of such programme and the resolution regarding the acquisition by the Company of treasury shares for the purpose of their redemption. After the balance sheet date, on 24 August 2018 the Company purchased 7 543 268 treasury shares, representing approximately 11.66% of the share capital. The purchase of the treasury shares was concluded based on an invitation to submit offers for the sale of the shares in the Company announced by the Company on 4 August 2018. The purchase price for the treasury shares amounted to PLN 40 per one share. The total price for all of the purchased shares amounted to PLN 301 730 720.
On 27 February 2018, the Supervisory Board of Pfleiderer Group S.A., has appointed Dr. Nico Reiner as the new Board Member and Chief Financial Officer starting 1 April 2018. Dr. Nico Reiner replaced Richard Mayer, who decided not to extend his contract.
On 18 January 2018 Management Board resolved to determine the detailed terms of the repurchase of the shares of Pfleiderer Group S.A. The detailed terms of the buy-back were also approved on this date by the Supervisory Board.
On 7 February 2018 the Company purchased 2 150 883 treasury shares, with a nominal value of PLN 0.33 each. On 27 February 2018 the Company purchased 11 000 treasury shares, with a nominal value of PLN 0.33 each. Apart from the above mentioned purchased shares, the Company holds 3 235 050 treasury shares in the Company, which in total represents approximately 8.34% of the Company's share capital.
On 29 January 2018 the Management Board of Pfleiderer Group S.A. informed that the company and its subsidiary Pfleiderer Wieruszów Sp. z o.o. filed the appeals against the Decision of the President of the Office of Competition and Consumer Protection.
OF THE PFLEIDERER GROUP S.A. AND THE GROUP FOR THE PERIOD FROM 1 JANUARY TO 30 SEPTEMBER 2018
MANAGEMENT BOARD INTERIM CONDENSED CONSOLIDATED REPORT ON THE OPERATIONS
The Pfleiderer Group, with 123 years of experience, is a leading European manufacturer of wood products, specialising 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 smaller companies in the furniture industry. Pfleiderer products are known across Europe. The company is headquartered in Wrocław (Poland) with offices i.a. in Neumarkt, Silesia and Warsaw and operates nine manufacturing facilities 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 necessity to conserve energy and raw materials, reduce emissions and produce environmentally friendly products.
The Pfleiderer Group consists of entities with varying profiles of activity.
The Pfleiderer Group consists of single-platform businesses. The Group's parent company i.e. Pfleiderer Group S.A. ("Parent Company", previously Pfleiderer Grajewo S.A.) operates in Wrocław.
At the date of this report, the structure of the Group is as follows:
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. 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.
| Activities | Company | ||||
|---|---|---|---|---|---|
| Holding entities | Pfleiderer Group S.A., Wrocław, Poland – holding company of Pfleiderer Group | ||||
| PCF GmbH, Neumarkt, Germany - holding company for West Segment entities | |||||
| Eastern Europe | Western Europe | ||||
| Distribution | Pfleiderer Polska Sp. z o.o., | Pfleiderer Deutschland GmbH, | |||
| Wrocław, Poland | Neumarkt, Germany | ||||
| Pfleiderer Grajewo Sp. z o.o., | Pfleiderer Neumarkt GmbH, | ||||
| Grajewo, Poland | Neumarkt, Germany | ||||
| Pfleiderer Wieruszów Sp. z o.o., | Pfleiderer Gütersloh GmbH, | ||||
| Wieruszów, Poland | Neumarkt, Germany | ||||
| Production of | Pfleiderer MDF Grajewo Sp. z o.o., | Pfleiderer Leutkirch GmbH, | |||
| boards | Grajewo, Poland | Neumarkt, Germany | |||
| Pfleiderer Arnsberg GmbH, | |||||
| Neumarkt, Germany | |||||
| Pfleiderer Baruth GmbH, | |||||
| Neumarkt, Germany | |||||
| Transportation | Jura Polska Sp. z o.o., | Jura-Spedition GmbH, | |||
| Grajewo, Poland | Neumarkt, Germany |
| Sales agency | Pfleiderer France S.A.S., Reims, France Pfleiderer Benelux B.V., Deventer, Netherlands Pfleiderer Suisse AG, Rapperswil, Switzerland |
|
|---|---|---|
| Pfleiderer UK Ltd., Macclesfield, United Kingdom Pfleiderer Austria GmbH, Vienna, Austria |
||
| Pfleiderer Southeast Europe SRL, Bucharest, Romania |
||
| Wood delivery | Heller Holz GmbH, Neumarkt, Germany |
|
| Production of glue and other |
Pfleiderer Silekol Sp. z o.o., Kędzierzyn-Koźle, Poland |
|
| Unifloor Sp. z o.o., Wieruszów, Poland (in liquidation) |
Pfleiderer Erwerbergesellschaft mbH, Neumarkt, Germany |
|
| Pfleiderer Vermӧgensverwaltung GmbH & Co. KG, Neumarkt, Germany |
||
| Other | Pfleiderer Infrastrukturtechnik GmbH & Co. KG, Neumarkt (in insolvency), Germany |
|
| Pfleiderer Infrastrukturtechnik Verwaltungs-GmbH, Düsseldorf (in insolvency), Germany |
||
| Allgӓuer Holzindustrie und Imprӓgnierwerk Aulendorf GmbH, Aulendorf (in liquidation), Germany |
||
| Blitz 11-446 GmbH, Neumarkt (in liquidation), Germany |
Beginning from 1 January 2017 all sales activities of Pfleiderer Group are concentrated in two sales entities: Pfleiderer Polska Sp. z o.o., which is responsible for all customers allocated to the "East" sales territory and Pfleiderer Deutschland GmbH, which is responsible for all customers allocated to the "West" sales territory. In 9M 2018 there were no changes to the group structure.
In September 2017, the management board of Pfleiderer Group S.A. presented the top-down "Diamond Strategy" for the company's long-term orientation. Ambitious initiatives and targets along the five dimensions Commercial, Operations, People, Corporate Culture and Shareholder Value were introduced to strengthen our competitiveness and accelerate further shareholder value growth. The clearly identified efficiency initiatives give us confidence that we can deliver and beat the announce 2021 strategic goals. This is why the Group decided to raise the targets it will be pursuing in the perspective of the year 2021: We now expect to reach revenues of EUR 1.3 b and an EBITDA margin of over 16% in that timeframe.
Pfleiderer teams recently detailed and further developed initiatives to achieve these goals in a bottom-up detailing of the strategy plan. As a result of this assessment, we were able to confirm our 2021 targets and even identified opportunities for significant, further upsides until 2023. To capture the full potential of our strategy, we have now set up an implementation program that is currently being rolled-out across the organization.
We will drive operational and procurement efficiency, aiming for continuous margin improvement
Over the coming years, we plan to implement at least 12 major initiatives, organized in three Workstreams (Commercial, Operations and Poland), that are sponsored by members of the management board.
The Group will strengthen its commercial excellence with the introduction of new tools that facilitate smart customer segmentation and improved pricing through margin transparency. In light of our strong, long-standing customer relationships, this will allow us to grow our business with existing customers. At the same time, it enables our targeted approach to realize selected opportunities with new customers in core segments.
In addition, we expect a large share of top-line expansion in 2019 to originate from growth in high-potential market segments and geographies currently not or underserved by Pfleiderer that can be tapped using our structured, repeatable approach for market entry and unique value proposition. Our strong innovation pipeline of new and add-on products supports this growth and we will see continuous upside from our high-margin value-added products that give Pfleiderer an edge over its competition. With the addition of our new Leutkirch lacquering line, we have created a strong basis for expanding our portfolio to new decors and surfaces that not only satisfy, but also shape our evolving customer needs.
Pfleiderer Group's ongoing operational efficiency improvement program continues to have a significant, positive contribution to our operating results. Now organized in dedicated initiatives, it is rolled out to all production areas given its proven success, i.e. in our PB, MDF and HPL lines. The program aims to optimize cost with focus on output increase through productivity and uptime measures as well as continuous reduction of direct material consumption through operational improvements. Increasing the share of more cost-efficient recycling wood to the maximum technical capacity across selected plants is just one example of how our improvements in operational efficiency will be a major driver of bottom-line growth.
Our efforts to maximize operational efficiency are complemented by a procurement excellence program, which includes a systematical review of direct and indirect spend across all Pfleiderer business functions. Relevant potential for continuous improvement has been identified and the program is set to deliver sustainable savings over the coming years.
The comprehensive bottom-up detailing of our strategy plan for Poland specific initiatives revealed particular upside potential in our Silekol business. Beyond its high-quality supply to our production, its external customers also recognize Silekol as a leading manufacturer of resin adhesives and hardeners. It is our plan to expand this adjacent business with the addition of new and improved products, underlining Pfleiderer's successful downward integration and position at the forefront of our industry's innovation.
We will continue to make strategic investments into capacity expansion across our lines and foresee capital expenditures into new tools that enable our full-potential strategy.
In 9M 2018 Pfleiderer Group incurred EUR 50 719 thousand capital expenditures.
| Investment | Capex (EUR m) | Description, start – finish of the investment | Ramp up / Start of operation |
Expected outcome (EUR m EBITDA p.a.) |
|---|---|---|---|---|
| Recycled wood Neumarkt |
10.8 | Increasing consumption of recycled wood 03.2017 – 10.2018 |
Q1 2018 | 5.0 |
| Lacquering line Leutkirch |
13.9 | New functional surface technology, new high gloss and dull surfaces 12.2016 – 10.2018 |
Q1 2018 | 9.6 |
| Plant concept Leutkirch |
22.1 | Increase production volume for raw particleboards. Installation new drying area incl. new dryer and hot gas generator 06.2017 – 06.2019 |
Q1 2019 | 8.1 |
| New KT press line Grajewo |
8.5 | Increase volume of laminated particle boards in large format 04.2018-12.2019 |
H2 2019 | 3.1 |
In 2018, the Group's marketing focus is mainly on official rollout of ONE PFLEIDERER and ONE COLLECTION as well as the introduction of PrimeBoard (high-quality lacquered surface in matt and high-gloss finishes) and Duropal HPL Compact Exterior. In addition to the usual marketing materials such as brochures and samples, this product launch also included special pages on the website, high-quality sample folders and a marketing movie.
| 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 |
| 2018 | Red Dot Award: Product Design 2017 | Xtra Worktop | Rat für Formgebung Service GmbH |
|---|---|---|---|
| 2018 | KitchenInnovation of the year | Xtra Worktop | Initiative LifeCare |
| 2018 | MERCURY Awards 2017/18 | Customer Magazine | Mercury Excellence Awards // Bronce |
| 2018 | German Brand Award | Industry Excellence in Branding | Rat für Formgebung Service GmbH |
| 2018 | Orły Wprost | "Wprost" Eagle for the largest companies |
Wprost weekly magazine |
Pfleiderer will take part on the following fairs in 2018:
According to the European Commission's latest forecasts1 GDP growth is set to remain strong in 2018 and 2019, at 2.1% this year and 2% next year in both the EU and the euro area. However, after five consecutive quarters of vigorous expansion, the economic momentum moderated in the first half of 2018 and is now set to be 0.2 percentage points lower in both the EU and the euro area than had been projected in the spring. Growth momentum is expected to strengthen somewhat in the second half of this year, as labour market conditions improve, household debt declines, consumer confidence remains high and monetary policy remains supportive.
Source: European Commission, European Economic Forecast Summer 2018
All Member States are experiencing the economic upswing. In 2018 and 2019 Poland, is expected to be in TOP 5 economic outperformers, with real GDP growth rates high above the EU average in both years. Very good performance is also expected to be achieved in Spain and Netherlands. Germany, France, UK and Italy are expected to grow below the average rate in 2018 in 2019.
German construction business In Q3 of 2018 was market with further growth of business climate index. Assessment of current situation and perspectives for the branch for the nearest future have got noticeably better since August.
1 Summer 2018 Economic Foreast, EuroCom
Source: own calculation based on ifo
In Poland Q3 of 2018 brings stabilization in perception of current situation, perspectives for future months started to decrease slightly. Nevertheless both changes are seasonal and general business climate index is better than year ago.
Source: own calculation based on GUS
Pfleiderer strongly builds its position in furniture and construction market. The last one includes not only residential and non-residential objects, but also interior design. In terms of product portfolio the reference points are chipboard, laminate, MDF and OSB markets. Up to 2019 all those markets show positive trend, in 2020 it's expected that the market will slow down.
OSB market characterizes the highest growth dynamic. Moderate positive change is expected at HPL market in both regions and also at MDF/HDF and chipboard market in Poland.
In DACH countries the highest growth one should notice in case of HPL and MDF/HDF market. Chipboard and OSB markets are expected to slowly decrease its growth.
Source: own calculation based on reliable construction& furniture market data provider
Source: own calculation based on reliable construction& furniture market data provider
Pfleiderer is a leading wood-based panel player on its core markets – Germany (no. 1) and Poland (no. 2), with competitive footprint in Europe (incl. Russia and Turkey), where Pfleiderer Group is one of the TOP 5 players.
*Sonae Arauco (50%/50% shares of Sonae Industira/Arauco)
Source: own calculation (based on reliable market data provider 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 2019 one can expect average yearly growth rate at level of 0.4% for DACH and 3.8% for Poland.
| CAGR 2017-2019 | ||||||
|---|---|---|---|---|---|---|
| Total | Residential | Non-residential | ||||
| Poland | 3.8% | 4.2% | 3.5% | |||
| DACH | 0.4% | 0.4% 0.3% |
||||
| Germany | 0.0% | 0.3% | -0.5% | |||
| Austria | 1.3% | 1.3% | 1.4% | |||
| Switzerland | 1.5% | 0.3% | 3.1% | |||
| France | 3.2% | 3.6% | 2.7% | |||
| Italy | 1.8% | 1.6% | 2.0% | |||
| United Kingdom | 0.5% | 1.1% | 0.0% | |||
| Belgium | 1.7% | 1.6% | 1.8% | |||
| Netherlands | 3.8% | 3.8% | 3.7% |
Source: own calculation based on reliable construction market data provider
In DACH countries construction market is driven more by residential construction. Opposite to the market is Poland, driven mostly by non-residential buildings. German language speaking countries markets are based mostly on renovation construction (in residential and non-residential building). In Poland there's different situation – new buildings takes bigger part of the construction business.
Construction market in France, Italy, Netherlands and Belgium is driven more by residential building and especially renovation works. Construction business in UK is equally based on residential and non-residential housing, and similarly to Poland – new buildings play bigger role here.
Construction - United Kingdom
non residential - renovation non residential - new residential - renovation
Residential Construction DACH
Residential Construction Poland
Source: Reliable construction market data provider
Non-residential Construction Poland
External factors affecting the Group's business:
All entrepreneurial activity is inextricably linked with risk. For this reason, effective management of risks 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 "potential loss amount" (less than EUR 5 million, EUR 5-10 million, EUR 10-20 million, and more than EUR 20 million) and "probability of occurrence" (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.
Furthermore the decision of the President of the Office of Competition and Consumer Protection no. DOK-3/2017 issued on 28 December 2017 results in a risk of claims for damages against the companies Pfleiderer Group S.A. and Pfleiderer Wieruszów Sp. z o.o. This risk cannot be quantified based on the evidence and information available at this time.
Based on the recently implemented GDPR, Pfleiderer is facing the risk, that in case of a lack of the implementation of necessary measures or in case of a violation of personal data, the data protection authorities may impose a fine to Pfleiderer Group. Potential fines have increased (up to EUR 20 million or 4% of the group's revenues, whatever is higher). This leads to a Potential Loss Amount, which is estimated to be serious. Due to measures taken, Pfleiderer tries to fulfill all obligations. Therefore the occurrence of this risk seems to be rather unlikely.
To prevent market abuse, the EU adopted a market abuse regulation (MAR). It regulates insider dealing, the unlawful disclosure of inside information and market manipulation (market abuse) and also gives measures to prevent it. As Pfleiderer Group S.A. is a listed company, it needs to assess whether an event constitutes an inside information solely and consequently needs to judge if it needs to be published. As Pfleiderer is responsible for the analysis and disclosing of the events and bears the corresponding risks, there is a risk, that other parties might come to a different assessment and accuse Pfleiderer to non-disclosure of relevant insider information. This might lead to a serious potential loss amount, which is rather unlikely to occur after measures like training of the relevant employees or internal audits.
Pfleiderer is also subject to a risk concerning further claims resulted from German insolvency code following the claim from ALNO Aktiengesellschaft ("Alno") described in point 1.10 – part Contingent liabilities – Western Europe. The Group also received payments for deliveries from two subsidiaries of Alno for which the insolvency proceedings were opened in July 2017. It has not been challenged yet but currently this cannot be excluded.
The revised German Renewable Energy Resources Act 2014 (EEG 2014) came into effect on 1 August 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 conceivable (after measures) and the loss could be serious. This risk is countered by obtaining external expertise and implementing internal measures to ensure that the stricter conditions are met.
As the FSC (Forest Stewardship Council) Standards have become more stringent, the minimum requirements for wood Pfleiderer uses to produce chipboards also got stricter. Due to a lack of resources and also due to the increased minimum requirements it might be possible that we will not be able to comply with the regulations and therefore might lose our FSC certification. This would mean that we could not meet the requirements of several customers, which corresponds with a serious potential loss amount. However, the probability of occurrence of this risk seems to be conceivable.
Titanium dioxide is one of the most important pigments in decorative papers. It is used as a color pigment and filler. Partly the degree of filling is up to 40%. In the course of the REACH (Registration, Evaluation, Authorization and Restriction of Chemicals) process the reclassification of titanium dioxide into class 2 might take place. This would mean that all titanium dioxide-containing dusts and other production residues would be classified as "hazardous waste". The consequences can't be measured at the moment, but they might lead to a medium potential loss amount, which occurrence is estimated to be occasional.
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 7 February 2017 (GrS 1/15). According to the decision, the decree of the Federal Ministry of Finance dated 27 March 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. The potential loss is assessed with medium and the probability of occurrence seems to be conceivable.
Financial risks:
The Group is exposed to currency risk mainly due to the extent that there is a mismatch between the currencies in which trade transactions, purchases of materials and merchandise and borrowings are denominated and the respective functional currencies of Group companies. The functional currency of Group companies is primarily Euro (EUR) and Polish zloty (PLN). The main currencies in which foreign currency transactions are denominated are Euro, US dollars and pound sterling (GBP). However, foreign exchange gains or losses resulting from exchange rate fluctuations mostly offset each other (natural hedging). The potential loss amount, resulting from transaction risks only and not considering any translation risks, is considered to be low and its probability of occurrence is estimated as occasional.
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 unfavourable 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 low or medium risks. The Company responded to these risks by realigning and reorganizing its R&D activities and improving the innovation culture.
Due to construction of new production facilities by competitors on north east of Poland there is a risk of declining orders number for the products of Pfleiderer Group entities.
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 and other costs, like fuel prices, as well as 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 low but it is about to occur. Furthermore, the wood price is also influenced by demanders from the co-firing industry. As they do not only burn forest waste, but also fully valuable wood like sawmill residue, pulpwood or middle-sized logs, there is a high competition from the side of the power plants. The potential loss amount is estimated to be low, which is also about to occur. Additionally we expect price increases for Methanol caused by the ratio of demand and supply in Europe, just as for Melamine, which price depends on the development of gas and crude oil. Further on, for Urea there are also negative deviations forecasted, which are based on the fact that the prices for it are increasing on all markets. The corresponding potential loss is estimated to be medium, but more likely than unlikely to occur due to the implementation of measures, like a continuous market monitoring.
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.
Finally, other economic events, like the withdrawal of countries from the EU, can also influence the business of the company and can lead to a medium potential loss, which is more likely than unlikely to occur.
Due to technical defects or a lack of order and cleanliness there is a risk of fire or explosion. The potential loss complies with the deductibles according to the insurance policies for each plant. Therefore the potential loss is evaluated to be serious but rather unlikely to occur.
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. In conjunction with the distinctive product portfolio of the different plants there is a low risk, which occurrence seems to be occasional.
In addition, investment requirements may arise due to a failure to meet legal requirements, for example in relation to fire safety. This is classified as a significant risk, which is rather unlikely, after implementing measures. 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. Considering the measures in place, the occurrence of the risk is regarded to be rather unlikely with a serious potential loss amount.
For the information regarding related-party transactions as at 30 September 2018 and for the period from 1 January to 30 September 2018 see Note 20 in the Notes to the unaudited interim condensed consolidated financial statements of Pfleiderer Group S.A.
In the period from 1 January to 30 September 2018, all related-party transactions were executed on an arm's length basis.
As at 30 September 2018 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, German insolvency code (Alno case) 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. , 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.
On 28 December 2017 the President of the Office of Competition and Customer Protection (hereinafter referred to as 'President of the OCCP') issued a decision no. DOK-3/2017 (hereinafter referred to as 'Decision') considering as an anticompetitive practice the conclusion by Kronospan Szczecinek Sp. z o.o., Kronospan Mielec Sp. z o.o., Swiss Kronos Sp. z o.o. (formerly Kronopol Sp. z o.o.), Pfleiderer Group S.A. (formerly Pfleiderer Grajewo S.A.) and Pfleiderer Wieruszów Sp. z o.o. an agreement limiting competition on the national market of sales of chipboard and on the national market of sales of fibreboard, consisting in:
According to the Decision, the agreement was in force from the beginning of 2008 to 7 September 2011.
The President of the OCCP imposed a fine of PLN 15 958 thousand on Pfleiderer Group S.A. and PLN 19 805 thousand on Pfleiderer Wieruszów Sp. z o.o.
The Decision ended the antimonopoly proceedings initiated by the President of the OCCP in 2012. The decision is not legally final. On the 29 January 2018, the Company and Pfleiderer Wieruszów Sp. z o.o. appealed against the Decision to the Court of Competition and Consumer Protection.
The Company and Pfleiderer Wieruszów Sp. z o.o., established provisions in order to secure funds for anticipated legal costs related to the appeal against the Decision and for the payment of possible fines if the Company and Pfleiderer Wieruszów Sp. z o.o. are obliged to pay the fines specified in the Decision. As of 30 June 2018 the provisions amount to PLN 37 858 thousand. Furthermore the Decision results in a risk of claims for damages against the companies Pfleiderer Group S.A. and Pfleiderer Wieruszów Sp. z o.o. This risk cannot be quantified based on the evidence and information available at this time.
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 2018 provisions related to antitrust violations of EUR 3 700 thousand including costs related to legal proceedings with Classen as well as legal costs and amicable settlements of claims with 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, 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. At oral hearing on 2 February 2017, the court has not clearly indicated whether it deems the claim justified as to the merits or not. The next oral hearing was held on 3 May 2018. The outcome is difficult to predict. The court has postponed the decision till 15 November 2018. 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 September 2018 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 3 700 thousand.
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 Hannover (Landgericht Hannover) against Sonae Arauco Deutschland AG (then: 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 Sonae Arauco Deutschland AG, 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. Sonae Arauco Deutschland AG has filed an appeal against this decision with the higher regional court in Celle. The court meeting was held in March 2018. The outcome is difficult to predict at this moment as the claiming party can file further arguments to the court until 31 October 2018.
As at 30 September 2018 the Management based on its best knowledge recognised a provision for the expected outcome, which is included in the total amount of EUR 3 700 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 Sonae Arauco Deutschland AG 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.
Pfleiderer Deutschland GmbH (Pfleiderer) received the letter dated 24 July 2018 from the insolvency administrator of Alno Aktiengesellschaft (Alno) in which he challenges all payments made by Alno for delivery of Pfleiderer's products from 30 June 2014 to 6 July 2017 in a total amount of EUR 19 346 327.50. With respect to all payments made within three months prior to the filing for opening of insolvency proceedings the insolvency administrator argues that they are subject to the three months claw-back right (sec. 130 German Insolvency Code). With respect to the remaining payments made within four years prior to the filing for opening of insolvency proceedings the insolvency administrator argues that they are subject to the claw-back right for intended damage (sec. 133 German Insolvency Code). The insolvency administrator bases both claw-back claims on the assumption that Alno was illiquid during the whole claw-back period and Pfleiderer was aware of it. The insolvency administrator relies on a – to Pfleiderer unknown - expert's opinion regarding Alno being illiquid during the claw-back period. Based on the facts known so far it is not possible to estimate in a reliable way an amount of the alleged claw-back claim for which it is more likely than not that Pfleiderer has to pay it. Company and its legal advisors will further verify the claim but at this stage the alleged claw-back claim is an uncertain liability. In case of a litigation Pfleiderer and its legal advisors estimated the cost for lawyers and the court and created the provision in the amount of EUR 550 thousand.
The Western European segment is subject to certain tax risks described in point 1.8 Risk Management. As at 30 September 2018 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 September 2018 no provision has been recognized by the Group in these interim condensed consolidated financial statements.
Moreover the Group has tax liabilities for the outcome of the tax audit for years 2010-2015 in Germany amounting to EUR 1.3 million (in Q3 2018 the Group repaid the liability in the amount of EUR 7.9 million).
OF THE PFLEIDERER GROUP S.A. AND THE GROUP FOR THE PERIOD FROM 1 JANUARY TO 30 SEPTEMBER 2018
MANAGEMENT BOARD INTERIM CONDENSED CONSOLIDATED REPORT ON THE OPERATIONS
In 9M 2018 and 9M 2017 the production volumes of main product groups at the Group level were as follows:
| '000 | 1 Jan. - 30 Sep. 2018 |
1 Jan. - 30 Sep. 2017 |
Change (%) |
1 Jul. - 30 Sep. 2018 |
1 Jul. - 30 Sep. 2017 |
Change (%) |
|
|---|---|---|---|---|---|---|---|
| Gross production of raw chipboards (finished goods; semi- product for the of laminated chipboards) |
cbm | 2 477 | 2 477 | 0% | 833 | 812 | 3% |
| Laminated boards | sqm | 80 707 | 82 800 | -3% | 26 664 | 26 380 | 1% |
| Raw MDF/HDF boards (finished goods, semi product to lacquered MDF boards) |
cbm | 456 | 425 | 7% | 152 | 136 | 12% |
| 1 Jan. - | 1 Jan. - | 1 Jul. - | 1 Jul. - | ||
|---|---|---|---|---|---|
| '000 | 30 Sep. 2018 | 30 Sep. 2018 | 30 Sep. 2018 | 30 Sep. 2018 | |
| Core West | Core East | Core West | Core East | ||
| Gross production of raw chipboards (finished goods; semi | |||||
| product for the of laminated chipboards) | cbm | 1 472 | 1 005 | 500 | 334 |
| Laminated boards | sqm | 50 501 | 30 206 | 16 521 | 10 144 |
| Raw MDF/HDF boards (finished goods, semi-product to | |||||
| lacquered MDF boards) | cbm | 281 | 175 | 96 | 56 |
Revenue reported by the Group in 9M 2018 was EUR 799 690 thousand and increased 6.5% compared to 9M 2017. The sales volumes by product groups were as follows:
| 1 Jan. - | 1 Jan. - | 1 Jul. - | 1 Jul. - | ||
|---|---|---|---|---|---|
| 30 Sep. 2018 | 30 Sep. 2017 | 30 Sep. 2018 | 30 Sep. 2017 | ||
| Laminated particleboard | spm | 74 933 886 | 77 182 498 | 24 600 487 | 24 283 153 |
| HPL | spm | 9 042 063 | 8 979 662 | 3 044 122 | 2 915 497 |
| Raw particleboard | cbm | 838 732 | 827 727 | 275 466 | 276 525 |
| Laminated MDF/HDF board | spm | 2 099 143 | 2 473 392 | 748 320 | 824 551 |
| Raw MDF/HDF board | cbm | 311 038 | 282 817 | 96 304 | 84 505 |
OF THE PFLEIDERER GROUP S.A. AND THE GROUP FOR THE PERIOD FROM 1 JANUARY TO 30 SEPTEMBER 2018
MANAGEMENT BOARD INTERIM CONDENSED CONSOLIDATED REPORT ON THE OPERATIONS
TABLE 8: CONSOLIDATED STATEMENTS OF PROFIT AND LOSS FOR 9M 2018
| 1 Jan. - | 1 Jan. - | 1 Jul. - | 1 Jul. - | |
|---|---|---|---|---|
| '000 EUR | 30 Sep. 2018 | 30 Sep. 2017 | 30 Sep. 2018 | 30 Sep. 2017 |
| Revenue | 799 690 | 750 910 | 266 507 | 244 881 |
| Cost of sales | -616 450 | -576 347 | -206 048 | -189 972 |
| Profit on sales | 183 240 | 174 563 | 60 459 | 54 909 |
| Other operating income | 5 396 | 11 854 | 1 061 | 1 829 |
| Distribution expenses | -98 203 | -103 509 | -32 035 | -34 463 |
| General and administrative expenses | -37 130 | -38 610 | -11 315 | -12 538 |
| Other operating expenses | -6 179 | -3 240 | -2 933 | 2 026 |
| Result from operating activities | 47 124 | 41 058 | 15 237 | 11 763 |
| Financial income | 281 | 8 145 | 207 | -2 082 |
| Financial expenses | -17 836 | -29 286 | -6 981 | -6 784 |
| Exchange differences | -3 292 | 6 037 | 4 277 | -2 225 |
| Net financing cost | -20 847 | -15 104 | -2 497 | -11 091 |
| Profit before tax | 26 277 | 25 954 | 12 740 | 672 |
| Income tax expense | -10 681 | -6 887 | -2 915 | -223 |
| Net profit for the reporting period | 15 596 | 19 067 | 9 825 | 449 |
Revenues came in at EUR 799 690 thousand in 9M 2018, growing 6.5% YoY, mostly due to positive price performance. The Core West segment revenues reached EUR 559 019 thousand, augmenting by 5.3% YoY, while the Core East segment added EUR 240 671 thousand, up 9.4% YoY.
The Group's profit on sales reached EUR 183 240 thousand in 9M 2018, growing as much as 5% YoY. The gross profit margin decreased slightly YoY in 9M 2018, coming in at 22.91% versus 23.25% in 9M 2017. The Group managed to almost fully cover raw material prices growth. Moderate growth in costs of sales was implicated by material prices growth resulted mainly from wood, paper and chemicals.
The cost discipline initiatives resulted in 4% decrease in general and administrative expenses, which reached EUR 37 130 thousand in 9M 2018. G&A costs for 9M 2018 comprised consulting fees of EUR 2m for strategic support in future development. Distribution expenses noted slight decline as a result of packaging materials costs decline and lower marketing costs.
Overall, the Group's result from operating activities came in at a strong EUR 47 124 thousand in 9M 2018, growing by c. 15% YoY. The operating result of the Core West reached EUR 36 149 thousand in 9M 2018 versus EUR 32 307 thousand in 9M 2017 while the operating result of the Core East division reached EUR 11 120 thousand in 9M 2018 versus EUR 8 524 thousand in 9M 2017.
The net financial cost was negatively impacted by non-cash effect of negative exchange differences. The Group has significantly lowered interest cost in 9M 2018 by ca. 27% due to refinancing of debt (cash effect). The above mentioned negative exchange differences (non-cash) result from revaluation of intercompany loan originally in EUR revaluated to PLN in Pfleiderer Group S.A. (as a result, on the level of consolidated financial statement the forex difference from Pfleiderer Group S.A. books are not excluded. The amount for 9M 2018 was EUR 2 620 thousand cost and EUR 6 554 thousand income for 9M 2017).
Income tax expense is higher than estimated via effective tax rate, mainly due to effect of German tax rate 28.85% as well as additional tax paid for the years 2016-2017 in Germany (EUR 5 347 thousand – cash effect) and costs for the outcome of the tax audit for years 2010-2015 conducted in Germany (costs recorded in 9M 2018 amounted to EUR 2 million). Overall, the Group's net profit came in at EUR 15 596 thousand in 9M 2018, down 18.2 % YoY.
| ASSETS | ||
|---|---|---|
| '000 EUR | 30 Sep. 2018 | 31 Dec. 2017 |
| Property, plant and equipment | 545 714 | 554 279 |
| Intangible assets | 79 470 | 82 907 |
| Goodwill | 66 933 | 67 541 |
| Long term investments | 508 | 511 |
| Investment property | 830 | 850 |
| Deferred tax assets | 5 870 | 6 471 |
| Advances paid on fixed assets | 12 964 | 9 877 |
| Government grants receivables | 5 151 | 5 275 |
| Other non current assets | 3 | 3 |
| Non-current assets | 717 443 | 727 714 |
| Inventories | 113 982 | 96 301 |
| Trade and other receivables | 48 657 | 35 673 |
| Income tax receivable | 579 | 244 |
| Cash and cash equivalents | 41 348 | 83 845 |
| Fair value of hedging instruments | 61 | 380 |
| Other short term financial assets | 324 | 326 |
| Current assets | 204 951 | 216 769 |
| Total assets | 922 394 | 944 483 |
| LIABILITIES AND EQUITY | ||
|---|---|---|
| '000 EUR | 30 Sep. 2018 | 31 Dec. 2017 |
| Share capital | 6 692 | 6 692 |
| Share premium | 146 375 | 146 375 |
| Statutory reserve funds | 79 397 | 87 281 |
| Reserves | -11 799 | -10 330 |
| Retained earnings | -72 148 | 9 884 |
| Total equity attributable to owners of the Company | 148 517 | 239 902 |
| Total equity | 148 517 | 239 902 |
| Liabilities | ||
|---|---|---|
| Loans and borrowings | 424 775 | 336 155 |
| Provisions for employee benefits | 51 525 | 53 389 |
| Provisions | 1 419 | 1 453 |
| Deferred tax liabilities | 59 012 | 65 625 |
| Deferred income from government grants | 8 195 | 8 807 |
| Other non-current liabilities | 18 | 18 |
| Non-current liabilities | 544 944 | 465 447 |
| Loans and borrowings | 1 977 | 2 529 |
| Income tax payable | 9 601 | 15 734 |
| Trade and other payables | 174 473 | 182 968 |
| Employee related payables | 27 230 | 21 794 |
| Provisions | 15 111 | 15 555 |
| Deferred income from government grant | 541 | 554 |
| Current liabilities | 228 933 | 239 134 |
| Total liabilities | 773 877 | 704 581 |
| Total equity and liabilities | 922 394 | 944 483 |
The asset side of statement of financial position remained relatively stable in Q3 2018 versus FY 2017 numbers. Noncurrent assets as at 30 September 2018 constituted 78% of total group assets versus 77% in FY 2017. Within 9M 2018 a pick-up in advances paid on fixed assets was noticeable due to ongoing significant investment projects. There were however changes within the current asset structure composition. Net working capital worsened in comparison to the yearend, which is connected with seasonality of the business. Cash and cash equivalents level as at 30 September 2018 was at level lower by 51% comparing to the end of 2017 mainly because of conducted shares buy back, dividend payment, tax payments in Germany and investment expenditures.
The structure of liabilities changed slightly in comparison to the end of FY 2017. Non-current liabilities constitutes 70% of the total liabilities, in comparison to 66% at YE 2017 – these resulted from amendment of bank loan and increase of long term borrowing. Within current liabilities significant decrease of income tax payables can be observed as a result of repayment of liability connected with tax audit in Germany (total amount paid in Q3 2018 was EUR 7.9m, the remaining liability is EUR 1.3m). On the other hand, there is significant increase of the employee related liabilities that grew up by 25% mainly due to obligatory built provision for not used vacation provision, which declines after holidays season (non-cash effect in the normal course of a business).
Drop in Group's total equity, from EUR 239 902 thousand at YE 2017 to EUR 148 517 thousand at the end of 9M 2018 was a net effect of positive net income, share buyback programme and dividend payment. In 9M 2018 the Company repurchased the shares for the amount of EUR 88 793 thousand including costs and paid dividend of EUR 16 719 thousand.
Total equity represented 16% of total equity and liabilities at the end of Q3 2018 in comparison to 25% at the end of year 2017.
| 1 Jan. - | 1 Jan. - | |
|---|---|---|
| '000 EUR | 30 Sep. 2018 | 30 Sep. 2017 |
| Net profit for the reporting period | 15 596 | 19 067 |
| Depreciation and amortisation | 57 449 | 55 156 |
| Foreign exchange gains | 3 292 | -6 037 |
| Interest for the period | 17 728 | 21 648 |
| Profit on investing activities | -18 | 124 |
| Income tax disclosed in profit or loss of the period | 10 681 | 6 887 |
| Amortisation of government grants | -264 | -632 |
| Result on forward contracts | -172 | -508 |
| Increase in exchange differences on translating foreign operations | -1 004 | 399 |
| Changes in | ||
| trade and other receivables | -13 070 | -18 610 |
| inventories | -18 863 | -11 769 |
| trade and other payables | 5 780 | 18 770 |
| employee benefit obligations | -2 318 | -1 019 |
| provisions | -2 334 | -4 252 |
| Cash generated from operating activities | 72 483 | 79 224 |
| Income tax (paid)/received | -23 283 | -5 118 |
| Net cash provided by operating activities | 49 200 | 74 106 |
| Net cash used in investing activities | ||
| Disposal of property, plant and equipment | 71 | 26 |
| Interest received | 280 | 67 |
| Acquisition of intangible assets and property, plant and equipment | -58 670 | -45 717 |
| Net cash used in investing activities | -58 319 | -45 624 |
| Net cash used in financing activities | ||
| Repayment of borrowings and other debt instruments | 0 | -321 684 |
| Increase of borrowings and other debt instruments | 95 000 | 350 000 |
| Share buy-back | -88 793 | 0 |
| Dividend payments | -16 915 | -16 842 |
| Interest paid | -12 384 | -29 705 |
| Redemption fee and refinancing costs | 0 | -20 519 |
| Other financing activities | -10 286 | -1 606 |
| Net cash used in financing activities | -33 378 | -40 356 |
| Total cash flows | -42 497 | -11 874 |
| Decrease/Increase in cash | -42 497 | -11 874 |
| Cash at beginning of the period | 83 845 | 97 726 |
| Cash at the end of the period | 41 348 | 85 852 |
Cash earned on operating activities in 9M 2018 was consumed by significant investment programme (EUR 58 670 thousand) and shares buyback of EUR 88 793 thousand. The net cash from operating activities reached high level in 9M 2018, amounting to EUR 49 200 thousand. The 9M 2018 operating line was negatively affected by higher YoY pick-up in working capital, which is rather one off situation resulting from working capital management. Moreover in 9M 2018 the Group paid extra taxes for years 2016 and 2017 in the amount of EUR 5 347 thousand as well as tax resulting from the tax audit in Germany for years 2010-2015 in the amount of EUR 7 856 thousand.
The investing cash flow was EUR 58 319 thousand cash out in 9M 2018 due to conducted significant investments. The total amount of investing cash flows for 9M 2018 includes repayment of investment liabilities in the amount of EUR 8 369 thousand.
The level and sign of net financing cash flow in 9M 2018 was strongly influenced by shares buy back in the amount of EUR 88 793 thousand as well as additional financing in the amount of EUR 95 000 thousand. Due to performed refinancing of debt the significant YoY decrease of interests paid can be observed.
Below we present key financial ratios describing the Group's performance:
| 9M 2018 | |||||
|---|---|---|---|---|---|
| Definition | 9M 2018 | (*) | 2017 | ||
| Liquid funds | Cash and cash equivalents | mEUR | 41.3 | 165.7 | 85.9 |
| Net debt | Financial debt - liquid funds | mEUR | 385.4 | 261.0 | 251.4 |
| Net leverage | Net debt / EBITDA (LTM) | factor | 2.80 | 1.90 | 1.95 |
| Equity ratio | Equity / balance sheet totals | % | 16.1% | 26.1% | 28.4% |
| Gearing | Net debt / equity | factor | 2.60 | 0.96 | 0.90 |
| EBITDA (LTM) | Result from operating activities + depreciation + | mEUR | 137.4 | 137.4 | 128.8 |
| (**) | amortization for last 12 months | ||||
| Interest cover | EBITDA (LTM) / net financing costs (LTM) | factor | 6.4 | 6.4 | 5.0 |
| ROCE | Result from operating activities (LTM) / Capital employed | % | 8.1% | 8.1% | 8.7% |
| ROA | Net profit (LTM) / total assets at the end of the period | % | 1.5% | 1.3% | 1.8% |
| ROE | Net profit (LTM) / equity at the end of the period | % | 9.2% | 5.0% | 6.3% |
(*) Ratios excluding cash effect of shares buyback in the total amount of EUR 124 436 thousand.
(**) Reported EBITDA for last 12 months adjusted for EUR 9.1m of one-off provision for OCCP penalty and related costs
Looking at the financing position in YoY comparison shows a higher level of the net debt resulting mainly from lower level of liquid funds as well as amendment of long term bank loan agreement.
Starting from 1 January 2019, due to implementation of new IFRS 16, the amount of net debt and tangible assets will visibly increase.
| 9M 2018 | 9M 2017 | |
|---|---|---|
| Gross profit margin (Profit on sales/Revenue) | 22.91% | 23.25% |
| EBIT margin (Result from operating activities/Revenue) | 5.89% | 5.47% |
| Pre-tax margin (Profit before tax/Revenue) | 3.29% | 3.46% |
| Net income margin (Net profit/Revenue) | 1.95% | 2.54% |
On 13 April 2017 the Group has finalized and signed refinancing agreements of EUR 450.0 million senior secured credit facilities comprising:
The proceeds from the Facilities have been used to redeem the EUR 321 684 000 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.
On 31 July 2018, the Senior Facilities Agreement originally dated 13 April 2017 was amended and restated. The total amount of senior secured term loan B increased by EUR 95 million from EUR 350 million to EUR 445 million, the volume of the Revolving Credit Facilities remains unchanged.
In order to secure the new obligations under the senior facilities agreement originally dated 13 April 2017, and having been amended and restated on 31 July 2018, Pfleiderer Group S.A. on 1 August 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 originally dated 13 April 2017, and having been amended and restated on 31 July 2018, the existing security interests granted by the Polish Pfleiderer entities to secure 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 Senior Secured Notes due 1 August 2017 issued by PCF GmbH were released.
In order to secure the new obligations under the senior facilities agreement originally dated 13 April 2017, and having been amended and restated on 31 July 2018, the following security interests have been granted for the benefit of the lenders:
(i) Pfleiderer Group S.A. entered into the agreements for financial and registered pledges over shares in Pfleiderer Wieruszów Sp. z o.o., Pfleiderer MDF Grajewo Sp. z o.o., Pfleiderer Grajewo Sp. z o.o. and Pfleiderer Silekol Sp. z o.o. and granted powers of attorney to exercise corporate rights from the pledged shares in these companies in favor of Polish Security Agent.
(ii) Pfleiderer Group S.A., Pfleiderer Wieruszów Sp. z o.o., 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. entered into the agreements for financial and registered pledges over major bank accounts and granted the powers of attorney to dispose funds from their bank accounts in favor of the Polish Security Agent.
(iii) Pfleiderer Group S.A., Pfleiderer Wieruszów Sp. z o.o., 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. entered into the agreements for security assignments of rights under commercial contracts, intercompany loan agreements and insurance agreements.
(iv) The following mortgages have been established in favor of the Polish Security Agent:
(v) Pfleiderer Group S.A., Pfleiderer Wieruszów Sp. z o.o., 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. executed the submissions to enforcement (oświadczenie o poddaniu się egzekucji) in favor of the Security Agent.
Following the initial utilization of the facilities under the senior facilities agreement originally dated 13 April 2017, and having been amended and restated on 31 July 2018, the existing security interests granted by the German Pfleiderer entities to secure 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 alias, 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 Senior Secured Notes due 1 August 2017 issued by PCF GmbH have been released.
In order to secure the new obligations under the senior facilities agreement originally dated 13 April 2017, and having been amended and restated on 31 July 2018, the following security interests have been granted for the benefit of the lenders, whereby Wilmington Trust (London) Limited is acting as new security agent (the "New Security Agent"):
(i) Pfleiderer Group S.A., PCF GmbH, Pfleiderer Deutschland GmbH as pledgors granted 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 granted 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 assigned as security their receivables under the intercompany loans, material trade and insurance receivables.
(iv) The existing German land charges have been assigned to the New Security Agent.
As at 13 April 2017, certain members of the Group have guaranteed the liabilities under the senior facilities agreement (as amended and restated), 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., 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. The amounts outstanding under the senior secured revolving credit facility dated 4 July 2014 and the senior notes issued on 27 June 2014 have been refinanced by the senior facilities agreement dated 13 April 2017 (as amended and restated).
| '000 PLN | '000 EUR | |||
|---|---|---|---|---|
| 1 Jan. - | 1 Jan. - | 1 Jan. - | 1 Jan. - | |
| 30 Sep. 2018 | 30 Sep. 2017 | 30 Sep. 2018 | 30 Sep. 2017 | |
| Revenue | n.a. | n.a. | n.a. | n.a. |
| Results from operating activity | -19 673 | -26 460 | -4 632 | -6 204 |
| Profit before tax | 26 274 | 320 334 | 6 186 | 75 106 |
| Net profit for the reporting period | 29 971 | 322 322 | 7 056 | 75 572 |
| Basic earnings per share (in PLN/EUR) | 0.51 | 4.98 | 0.12 | 1.17 |
| Diluted earnings per share (in PLN/EUR) | 0.51 | 4.98 | 0.12 | 1.17 |
| Average PLN/EUR exchange rate | 4,2476 | 4,2651 | ||
Operating result in both 9M 2018 and 9M 2017 reflects purely the holding activity of the Company. Lower loss from operating activity in 9M 2018 of PLN 19 673 thousand compared to loss of PLN 26 460 thousand in 9M 2017 results from higher revenues from intercompany services rendered by the Company to Group companies (PLN 8 002 thousand in the period 1 Jan – 30 Sep 2018, PLN 2 413 thousand in the period 1 Jan – 30 Sep 2017) and lower general and administrative expenses (PLN 17 777 thousand in the period 1 Jan – 30 Sep 2018, PLN 27 506 thousand in the period 1 Jan – 30 Sep 2017) coming mostly from lower intercompany service charges (PLN 1 304 thousand in the period 1 Jan – 30 Sep 2018 compared to PLN 11 047 thousand in the period 1 Jan – 30 Sep 2017).
In the period 1 Jan – 30 Sep 2018 Pfleiderer Group S.A. generated profit on financial activity of PLN 45 947 thousand compared to profit of PLN 346 794 thousand in 9M 2017. Lower net financing income in the period 1 Jan – 30 Sep 2018 results mostly from lower dividends (PLN 74 015 thousand in the period 1 Jan – 30 Sep 2018, PLN 334 212 thousand in the period 1 Jan – 30 Sep 2017) and negative foreign exchange differences on intercompany loans from PCF GmbH and on obligation taken over from Atlantik SA (foreign exchange loss of PLN 13 376 thousand in the period 1 Jan – 30 Sep 2018 compared to foreign exchange gain of PLN 27 158 thousand in the period 1 Jan – 30 Sep 2017). This negative difference was partly offset by income from intercompany sureties (PLN 3 943 thousand in the period 1 Jan – 30 Sep 2018).
| '000 PLN | '000 EUR | ||||
|---|---|---|---|---|---|
| 30 Sep. 2018 | 31 Dec. 2017 | 30 Sep. 2018 | 31 Dec. 2017 | ||
| Total assets | 2 217 459 | 2 282 384 | 518 413 | 546 417 | |
| Liabilities | 1 196 957 | 839 146 | 279 833 | 200 897 | |
| Non-current liabilities | 285 | 4 121 | 67 | 987 | |
| Current liabilities | 1 196 672 | 835 025 | 279 766 | 199 910 | |
| Equity | 1 020 502 | 1 443 238 | 238 580 | 345 520 | |
| Share capital | 21 351 | 21 351 | 4 992 | 5 112 | |
| Number of shares | 64 701 007 | 64 701 007 | 64 701 007 | 64 701 007 | |
| Book value per share (in PLN/EUR) | 15.77 | 22.31 | 3.69 | 5.34 | |
| PLN/EUR exchange rate as at the end of the reporting period |
4.2774 | 4.1770 |
| '000 PLN | '000 EUR | ||||
|---|---|---|---|---|---|
| 1 Jan. - | 1 Jan. - | 1 Jan. - | 1 Jan. - | ||
| 30 Sep. 2018 | 30 Sep. 2017 | 30 Sep. 2018 | 30 Sep. 2017 | ||
| Net cash provided by operating activities | -1 575 | -15 218 | -371 | -3 568 | |
| Net cash provided by/ used in investing activities | 189 866 | 81 916 | 44 700 | 19 206 | |
| Net cash used in financing activities | -118 168 | -67 246 | -27 820 | -15 767 | |
| Total net cash flow | 70 123 | -548 | 16 509 | -129 | |
| Average PLN/EUR exchange rate | 4.2476 | 4.2651 | |||
| 1 Jan. - | 1 Jan. - | ||
|---|---|---|---|
| 30 Sep. 2018 | 30 Sep. 2017 | ||
| Operating margin | Operating profit / Revenue | n.a. | n.a. |
| Pre-tax margin | Profit before tax / Revenue | n.a. | n.a. |
| Net margin | Net profit / Revenue | n.a. | n.a. |
Starting from 1 September 2016 Pfleiderer Group S.A. is a pure holding company, thus did not record any revenue in both 9M 2018 and 9M 2017.
There were no non-recurring events which might affect the Group or Pfleiderer Group S.A.'s financial performance occurred in 9M 2018.
The Management Board of Pfleiderer Group S.A. has not published projections of financial results or consolidated financial results for the financial year 2018.
| Rating date | Company's long-term rating | Rating outlook | |
|---|---|---|---|
| Standard & Poor's Ratings Services | 13.07.2018 | B+ | Stable |
| Moody's Investors Service | 13.07.2018 | B1 | Stable |
| Standard & Poor's Ratings Services | 28.03.2018 | B+ | Stable |
| Moody's Investors Service | 26.02.2018 | Ba3 | Stable |
| 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 |
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 recognised 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 recognised in the statement of comprehensive income. The ineffective portion of changes in the fair value of the derivative is recognised immediately in profit or loss.
As at 30 September 2018, the Group did not carry any borrowings from related parties.
Bank loans and corporate bonds
Use of bank borrowings
| '000 Euro | 30 Sep. 2018 | 31 Dec. 2017 |
|---|---|---|
| Bank borrowings | 424 775 | 336 155 |
| Non-current liabilities | 424 775 | 336 155 |
| Current portion of bank borrowings | 1 731 | 2 333 |
| Other interest bearing liabilities | 246 | 196 |
| Current liabilities | 1 977 | 2 529 |
| TOTAL | 426 752 | 338 684 |
Senior Facilities Agreement – entered into force on 1 August 2017
On 13 April 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 and Trigon Dom Maklerski S.A. as security agents (the "Security Agent") and others entered into a EUR 450 000 000 senior facilities agreement which initial utilization took place on 1 August 2017. Pfleiderer used those amounts to repay the Senior Secured Notes issued 27 June 2014 (PCF GmbH), the existing credit facility agreements originally dated 4 July 2014 and for general corporate purposes and working capital requirements of the Group. The EUR 450 000 000 is split into a Term Loan B ("TLB") amounting to EUR 350 000 000 (PCF GmbH) with a tenor of seven years – fully drawn and Revolving Credit Facilities with a tenor of five years amounting to EUR 50 000 000 (Revolving Facility 1) and PLN 211 480 000 (Revolving Facility 2).
On 31 July 2018, the Senior Facilities Agreement originally dated 13 April 2017 was amended and restated. The total amount of senior secured term loan B increased by EUR 95 million from EUR 350 million to EUR 445 million, the volume of the Revolving Credit Facilities remains unchanged. Final maturity dates within the senior facilities agreement remain unchanged.
At the reporting date these Revolving Credit Facilities were not drawn in cash whilst bank guarantees were issued within the Revolving Facility 2 for the total amount of PLN 6 265 thousand as well as Letters of Credit in an amount of EUR 1 129 thousand. The Revolving Facility 1 is partially drawn for bank guarantees of EUR 2 296 thousand and PLN 520 thousand (EUR 122 thousand) as well as Letters of Credit in an amount of EUR 5 040 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.
| '00 0 E UR |
30 Sep . 20 18 |
31 De c. 2 017 |
||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| der Len |
Cu rre ncy |
Int st rat ere e |
Du ion rat fro m |
Du ion rat to |
dit lim Cre it E UR |
Dra wn am nt EU ou R |
dra Un wn am nt EU R ou |
dit lim Cre it E UR |
Dra wn am nt EU ou R |
dra Un wn am nt EU R ou |
| ( ) Rev olv ing Cr edi t F aci lity PLN |
||||||||||
| Ban k M ille nni S.A um |
PLN | WI BO R + in m arg |
1 A 201 7 ug |
1 A 202 2 ug |
20 148 |
0 | 20 148 |
18 930 |
0 | 18 930 |
| Ali k S Ban .A. or |
PLN | WI BO R + in m arg |
1 A 201 7 ug |
1 A 202 2 ug |
18 435 |
0 | 18 435 |
18 878 |
0 | 18 878 |
| Rai ffe ise ank lska S.A n B Po |
PLN | BO in WI R + m arg |
201 1 A 7 ug |
202 2 1 A ug |
7 6 28 |
0 | 7 6 28 |
7 8 11 |
0 | 7 8 11 |
| Gu Co Eas nte t ara es re |
||||||||||
| Ba nk Mi llen ium S.A |
PLN | 1 A 201 7 ug |
1 A 202 2 ug |
2 7 63 |
2 7 63 |
0 | 4 5 32 |
4 5 32 |
0 | |
| ban k g ee/ d in s is PL N ant uar sue |
1 4 65 |
1 4 65 |
0 | 1 7 40 |
1 7 40 |
0 | ||||
| ee/ ban k g s is d in ant EU R uar sue |
0 | 0 | 0 | 0 | 0 | 0 | ||||
| /s o f C red d in d [ 00] Let it is EU R y EU R 2 42 8 0 ter sue ear -en |
0 | 0 | 0 | 2 7 92 |
2 7 92 |
0 | ||||
| /s o f C red d in al [ 70] Let it is EU R a EU R 1 12 9 0 ter ctu sue |
1 2 98 |
1 2 98 |
0 | 0 | 0 | 0 | ||||
| Lim it o f cr ed it c ard s E ast |
||||||||||
| k M ille Ban niu m S .A. |
PLN | 1 A 201 7 ug |
1 A 202 2 ug |
468 | 0 | 468 | 479 | 0 | 479 | |
| red it f aci litie TO TA L C OR E E AS T C s |
49 442 |
2 7 63 |
46 679 |
50 630 |
4 5 32 |
46 098 |
| '00 0 E UR |
30 Sep . 20 18 |
31 De c. 2 017 |
|||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| der Len |
Cu rre ncy |
Int st rat ere e |
ion Du rat fro m |
ion Du rat to |
dit lim Cre it E UR |
Dra wn am nt EU ou R |
dra Un wn am EU R nt ou |
dit lim Cre it E UR |
Dra wn am nt EU ou R |
dra Un wn am EU R nt ou |
|
| olv edi lity ( R) Rev ing Cr t F aci EU |
|||||||||||
| Ali k S Ban .A. or |
EU R |
EU RIB OR in + m arg |
1 A 201 7 ug |
1 A 202 2 ug |
5 0 00 |
0 | 5 0 00 |
5 0 00 |
0 | 5 0 00 |
|
| k o f C hin Ban a |
EU R |
in EU RIB OR + m arg |
1 A 201 7 ug |
1 A 202 2 ug |
10 000 |
0 | 10 000 |
10 000 |
0 | 10 000 |
|
| Co ban k A G mm erz |
EU R |
EU RIB OR in + m arg |
1 A 201 7 ug |
1 A 202 2 ug |
*) | 7 5 42 |
0 | 7 5 42 |
12 370 |
0 | 12 370 |
| che nk De Ba AG uts |
EU R |
EU RIB OR in + m arg |
1 A 201 7 ug |
2 A 201 8 ug |
**) | 0 | 0 | 0 | 12 000 |
0 | 12 000 |
| Go ldm Sac hs k U SA Ban an |
EU R |
OR in EU RIB + m arg |
2 A 201 8 ug |
202 2 1 A ug |
**) | 000 15 |
0 | 000 15 |
0 | 0 | 0 |
| ffe ank lska Rai ise n B Po S.A |
EU R |
EU RIB OR in + m arg |
1 A 201 7 ug |
1 A 202 2 ug |
5 0 00 |
0 | 5 0 00 |
5 0 00 |
0 | 5 0 00 |
|
| Gu Co re W nte est ara es |
|||||||||||
| ban k A Co G mm erz |
EU R |
1 A 201 7 ug |
1 A 202 2 ug |
7 4 58 |
7 4 58 |
0 | 2 6 30 |
2 6 30 |
0 | ||
| ban k g ed issu in E UR ant uar ee |
2 2 96 |
2 2 96 |
0 | 2 2 57 |
2 2 57 |
0 | |||||
| ban k g issu ed in P ant LN uar ee |
122 | 122 | 0 | 373 | 373 | 0 | |||||
| lett of c red it is d in EU R er sue |
5 0 40 |
5 0 40 |
0 | 0 | 0 | 0 | |||||
| che nk ( cill ) De Ba AG An – G uts ant ary uar ees |
1 A 201 7 ug |
2 A 201 8 ug |
**) | 0 | 0 | 0 | 3 0 00 |
0 | 3 0 00 |
||
| Oth deb t in str ent er um s |
|||||||||||
| B ( ) Te Lo TLB rm an |
EU R |
1 A 201 7 ug |
1 A 202 4 ug |
445 00 0 |
445 00 0 |
0 | 350 00 0 |
350 00 0 |
0 | ||
| ed it f litie TO TA L C OR E W EST Cr aci s |
495 00 0 |
452 45 8 |
42 542 |
400 00 0 |
352 63 0 |
47 370 |
*) Total RCF-limit with Commerzbank AG is EUR 15m, adding cash-line and ancillary used for guarantees
**) Transfer/Assignment of RCF-participation from Deutsche Bank AG to Goldman Sachs Bank USA (EUR 15m) as per 2 August 2018
As at 30 September 2018 and 31 December 2017, the Group did not carry any borrowings from related parties.
Loans advanced:
As at 30 September 2018, the Company has loan receivables of PLN 29 162 thousand (compared to PLN 108 213 thousand as of 31 Dec 2017) granted to subsidiary Pfleiderer MDF Grajewo Sp. z o.o. Interest on loans are accrued on a monthly basis. 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 29 June 2018 PLN 82 000 thousand was repaid by Pfleiderer MDF Grajewo Sp. z o.o. to the lender.
Liabilities under borrowings from related parties comprise the following balances:
Interest accrued in 9M 2018 on the above loans amounted to EUR 4 252 thousand (PLN 18 106 thousand). In the period 1 Jan – 30 Sep 2018 the Company has repaid interests of EUR 3 050 thousand (PLN 12 904 thousand) due on obligation taken over from Atlantik S.A. and of EUR 293 thousand (PLN 1 232 thousand) due on first buy back loan.
As at 30 September 2018, no such events occurred.
On 30 September 2018 the Company did not have any open foreign exchange forward transactions.
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. and Pfleiderer Polska Sp. z o.o. 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. as well as Pfleiderer Polska Sp. z o.o. 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 September 2018, the Company's debt under issued notes totaled PLN 76 940 thousand (as at 31 December 2017 146 869 thousand). The notes are used to optimize the management of financial liquidity within the Group, reduce external debt and finance day-to-day operations.
The Group's Management has overall responsibility for the establishment and oversight of the Group's risk management framework.
The Group's financial risk management policies are established to identify and analyze the risks faced by the Group, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group's activities.
The Group's operations are exposed to the following risks:
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.
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group's receivables from customers.
Transactions which expose the Group to credit risk include trade receivables and cash and cash equivalents. In accordance with the Management Board's policy, the Group's credit risk exposure is monitored on an ongoing basis.
Credit risk associated with bank deposits is assessed by the Group as low due to deposits of its assets only in financial institutions which have a high short-term credit rating.
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 the first three quarters 2018, approximately 95% 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 did not incur any significant losses due to customer default. Allowances for impairment losses are recognized on uninsured receivables and on amounts corresponding to the Group's deductibles for receivables that are insured, based on detailed impairment analysis of accounts receivable.
The carrying amount of each financial asset, including financial derivatives, represents the maximum credit risk exposure.
Interest rate risk
The Group holds funds in bank accounts and has liabilities under bank borrowings and TLB. The interest rate risk is related to interest payments with floating interest rates. The Group does not hedge the interest rate risk for the time being. The Group monitors the level of interest costs on a regular basis.
The Group is exposed to currency risk mainly due to the extent that there is a mismatch between the currencies in which trade transactions, purchases of materials and merchandise and borrowings are denominated and the respective functional currencies of Group companies. The functional currency of Group companies is primarily the Euro (EUR) and Polish zloty (PLN). The main currencies in which foreign currency transactions are denominated are Euro, US dollars and pound sterling (GBP). However, foreign exchange gains or losses resulting from exchange rate fluctuations mostly offset each other (natural hedging).
The Group also incurs capital expenditures in foreign currencies. The Group monitors its foreign currency positions on an ongoing basis and hedges its currency risk of open positions with forward transactions. The Group uses forward contracts to hedge its currency risk related to commercial transactions (export of goods). The forward contracts used to hedge the Group's commercial transactions in Core East consist of the sale of EUR at a pre-determined rate. This helps to secure margins on export sales and to mitigate the risk of adverse changes of the margins due to appreciation of the Polish zloty. Forward contracts are measured at the end of each month.
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 to Pfleiderer Grajewo Sp. z o.o. executed on 31 August 2016, credit risk is limited due to the fact that the Company does not perform any operating activity and does not have any trade receivables, with exception to the intercompany receivables.
The credit risk exposure of the Company relates mostly to the loans granted to its subsidiary, Pfleiderer MDF Grajewo Sp. z o.o. in the amount of PLN 29 162 thousand.
The currency risk of the Company is mainly related to the euro denominated loans from subsidiary, drawn to finance buy backs of own shares (EUR 24 742 thousand, EUR 9 124 thousand and EUR 95 000 thousand), and other finance liabilities related to obligation taken over from Atlantik SA (EUR 127 001 thousand).
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. 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 and long-term liquidity (a few years forward).
OF THE PFLEIDERER GROUP S.A. AND THE GROUP FOR THE PERIOD FROM 1 JANUARY TO 30 SEPTEMBER 2018
MANAGEMENT BOARD INTERIM CONDENSED CONSOLIDATED REPORT ON THE OPERATIONS
| Number of shares |
% of equity | Number of votes an 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 | 6 241 000 | 9.65% | 6 241 000 | 9.65% |
| Treasury shares (*) | 12 940 201 | 20.00% | 12 940 201 | 20.00% |
| Other shareholders | 13 862 096 | 21.42% | 13 862 096 | 21.42% |
| TOTAL | 64 701 007 | 100.00% | 64 701 007 | 100.00% |
According to the latest available information
(*) In accordance with article 364 Paragraph 2 of the Commercial Companies Code the Company does not execute the shareholding rights attached to the treasury shares, except for the right to transfer the shares or perform the actions aiming at preserving the shareholding rights.
In accordance with the notifications received from shareholders, the following transactions took place in 2018 involving shares in Pfleiderer Group S.A.:
On 15 February 2018, the Company received a notification from its shareholder Nationale Nederlanden OFE on the sale of the Company's shares as part of the share repurchase program announced by the Company. Following the settlement of the transaction, Nationale Nederlanden OFE holds 3 102 115 shares in the Company, representing 4.79% of its share capital and entitling the holder to 3 102 115 votes at the Company's General Meeting of Shareholders, or 4.79% of the total number of votes at the Company's General Meeting of Shareholders.
On 24 August 2018 the Company purchased 7 543 268 treasury shares, representing approximately 11.66% of the share capital. The purchase of the treasury shares was concluded based on an invitation to submit offers for the sale of the shares in the Company announced by the Company on 4 August 2018. The purchase price for the treasury shares amounted to PLN 40 per one share. The total price for all of the purchased shares amounted to PLN 301 730 720. The treasury shares were purchased in connection with the implementation of the treasury share repurchase programme approved under the resolution no. 24 of the Company's Annual General Meeting of the Shareholders dated 11 June 2018.
Pursuant to the resolution no. 24 of the Ordinary General Meeting of Shareholders of the Company dated 11 June 2018, the shares purchased under the programme may be: (i) redeemed; or (ii) otherwise disposed of by the Management Board of the Company, subject to a consent of the Supervisory Board, with a view to the needs resulting from the Company's business.
Prior to the above described acquisition of the treasury shares, which took place on 24 August 2018, the Company held 5 396 933 treasury shares representing approximately 8.34% of the share capital.
The total number of treasury shares purchased by the Company at the date of publication of this report is 12 940 201. The total nominal value of all purchased treasury shares is PLN 4 270 266.33, representing approximately 20% of the Company's share capital. The purchased treasury shares entitle the holder thereof to a total of 20% of the votes at the general meeting of the Company, which represents 20% of the overall number of votes in the Company, provided that the Company does not exercise the voting rights attached to the treasury shares.
| Number of shares |
% of equity | Number of votes an 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 | 6 241 000 | 9.65% | 6 241 000 | 9.65% |
| Treasury shares | 12 940 201 | 20.00% | 12 940 201 | 20.00% |
| Other shareholders | 13 862 096 | 21.42% | 13 862 096 | 21.42% |
| TOTAL | 64 701 007 | 100.00% | 64 701 007 | 100.00% |
According to the information from last General Meeting of Shareholders
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.
At 11 May 2018 the Management Board adopted a resolution on a motion of the Management Board to General Meeting of Shareholders concerning distribution of the Company's profit for year 2017 and recommended assigning PLN 71 164 888.80 for payment of the dividend amounting to PLN 1.20 per share. The above motion was positively opined by the Supervisory Board of the Company on 15 May 2018.
The Ordinary General Meeting of Shareholders of the Company resolved on 11 June 2018 to allocate the net profit for the period from 1 January to 31 December 2017, amounting in total to PLN 415 542 thousand, as follows:
a) in the amount of PLN 71 164 888.80, i.e. PLN 1.20 per share, to the payment of dividends to the Company's shareholders,
b) the remaining amount to the Company's supplementary capital.
The Ordinary General Meeting of Shareholders of the Company set the date used to prepare the list of shareholders eligible to receive the above dividend (record date) for 17 June 2018. The dividend payment date was set for 11 July 2018.
As of 17 June 2018 the Company held 5 396 933 treasury shares. Pursuant to Article 364 Paragraph 2 of the Commercial Companies Code the Company did not receive any dividends as the holder of the above mentioned treasury shares.
In order to meet the strictest information governance requirements for public companies and fulfil the information needs of various stakeholders, Pfleiderer Group S.A. undertakes numerous investor relations activities to ensure efficient communication with the representatives of the capital markets. What's important, Pfleiderer Group S.A. takes active and open approach to communications with both institutional and retail investors.
In 9M 2018, Pfleiderer Group S.A. held investor meetings in Poland and abroad to discuss its financial results, key developments and accomplishments and to outline the company's growth perspectives. The events gathered a number of capital market professionals, including analysts and fund managers, as well as journalists. To enable them to fully understand the company's business and growth potential, the Group provides accurate and high quality IR materials, including factsheet, press releases, presentations and reports.
What's more, Pfleiderer Group S.A. fully grasps the potential of new digital communications tools to reach a large group of investors based not only in Poland, but also in the DACH region (Germany, Austria, Switzerland) and beyond. For instance, Pfleiderer Group S.A. broadcasted live the conferences devoted to its earnings, so every investor and other stock market observers could watch the events online from any location. By doing so, the Group gives current and prospective investors an opportunity to learn from the management team about the latest financial results and stay abreast of important developments in Pfleiderer Group S.A. and its plans for the future.
In the first nine months of 2018, brokerage houses released two analytical reports on Pfleiderer Group.
| Target price (PLN) | Recommendation | Share price on the date of the report (PLN) |
Institution | Date |
|---|---|---|---|---|
| 44.1 | Buy | 37.0 | Dom Maklerski BZ WBK S.A. | 07.06.2018 |
| 47.9 | Buy | 37.5 | Dom Maklerski BDM S.A. | 27.03.2018 |
| 43.0 | Accumulate | 37.8 | Erste Group Research | 23.02.2018 |
| Institution | Analyst | Contact details |
|---|---|---|
| BZ WBK | Michał Sopiel | +48 22 586 82 33 |
| [email protected] | ||
| BDM | Krystian Brymora | +48 32 208 14 35 |
| [email protected] | ||
| Erste Group Research | Karol Brodzinski | +48 22 538 62 52 |
| [email protected] |
OF THE PFLEIDERER GROUP S.A. AND THE GROUP FOR THE PERIOD FROM 1 JANUARY TO 30 SEPTEMBER 2018
MANAGEMENT BOARD INTERIM CONDENSED CONSOLIDATED REPORT ON THE OPERATIONS
As at the date of this Report, the Management Board's members held the following number of Pfleiderer Group shares:
• President of the Management Board Tom K. Schäbinger – 16 750 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.
| Supervisory Board | |
|---|---|
| Zbigniew Prokopowicz | Chairman of the Supervisory Board |
| Michael F. Keppel | Deputy Chairman of the Supervisory Board |
| Jason R. Clarke | Deputy Chairman of the Supervisory Board |
| Florian Kawohl | Member of the Supervisory Board |
| Anthony O'Carroll | Member of the Supervisory Board |
| Krzysztof Sędzikowski | Member of the Supervisory Board |
| Jan Woźniak | Member of the Supervisory Board |
The present term of the Supervisory Board began on 11 June 2018 and will expire on 28 June 2023.
The tenures of all the Supervisory Board members incumbent as at 30 September 2018 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 31 December 2022. 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.
Ordinary General Meeting of Shareholders on 11 June 2018 appointed to the Supervisory Board for the new term of office the following persons: Zbigniew Prokopowicz, Michael F. Keppel, Jason R. Clarke, Florian Kawohl, Anthony O'Carroll, Krzysztof Sedzikowski and Jan Woźniak. On 11 June 2018 the Supervisory Board appointed Zbigniew Prokopowicz the Chairman of the Supervisory Board and Michael F. Keppel and Jason R. Clarke the Deputies Chairman of the Supervisory Board.
TOM K. SCHӒBINGER PRESIDENT OF THE MANAGEMENT BOARD
DIRK HARDOW MEMBER OF THE MANAGEMENT BOARD
DR. NICO REINER MEMBER OF THE MANAGEMENT BOARD
Mr. Tom K. 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. Tom K. 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. Tom K. Schäbinger worked in various management positions including at Unilever and at Beiersdorf.
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.
Dr. Nico Reiner (born in 1969) graduated business administration at the University Regensburg, Germany. He obtained PhD title at the HHL – Leipzig Graduate School of Management. Since 2014 Dr. Reiner has been working as the CFO of AL-KO Kober SE, Germany, a globally active company specialized in vehicle technology, garden technology and air technology. Dr. Reiner has been holding a position of Member of Management Board, CFO of holding company of AL-KO Kober Group. In a period 2005 – 2014 Dr. Reiner was working as the CFO, Member of the Executive Board of Schueco International KG, a worldwide leading supplier of building envelopes, active in the market of windows, doors and facades. Earlier Dr. Reiner was working on managerial positions for Droege & Comp. GmbH, International Management Consultancy.
IVO SCHINTZ MEMBER OF THE MANAGEMENT BOARD
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 27 February 2018 Mr. Richard Mayer submitted the resignation from the Management Board. The resignation of Mr. Richard Mayer took effect from 31 March 2018. The same day the Supervisory Board of the Company decided to appoint Dr. Nico Reiner to the Management Board of the Company as the Member of the Management Board (Chief Financial Officer). The appointment of Dr. Nico Reiner took effect from 1 April 2018.
After the balance sheet date two new ancillary facilities connected with existing Senior Facilities Agreements have been established: overdraft agreement for the amount of EUR 5 000 thousand and Credit limit agreement for the amount of PLN 32 628 thousand. The expiry date for both agreements is 30 June 2022.
There were no other events subsequent to the end of the reporting period that would require disclosure in this interim condensed consolidated report.
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 non-member state, dated 29 March 2018 (consolidated text: Dz.U. of 2018, item 757), the Management Board of Pfleiderer Group S.A. (the Parent) represents that to the best of its knowledge the unaudited interim condensed consolidated and standalone financial statements for the period from 1 January to 30 September 2018 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 Management Board Report on the operations of Pfleiderer Group S.A. and the Group for the period from 1 January to 30 September 2018 gives a fair view of its development, achievements and standing, including a description of the key risks and threats.
Tom K. Schäbinger President of the Management Board
Dr. Nico Reiner Dirk Hardow Member of the Management Board, Member of the Management Board, Chief Financial Officer Chief Operating Officer
Ivo Schintz
Member of the Management Board, Chief Commercial Officer
| FIGURE 1: PFLEIDERER GROUP ENTITIES 9 | |
|---|---|
| FIGURE 2: OPERATING STRUCTURE OF THE GROUP AS OF 14 NOVEMBER 2018 10 | |
| FIGURE 3: PFLEIDERER STRATEGY – THE DIAMOND APPROACH 14 | |
| FIGURE 4: GDP GROWTH IN 2018 – est. (Y/Y IN %) 18 | |
| FIGURE 5: BUSINESS CLIMATE IN CONSTRUCTION – GERMANY 19 | |
| FIGURE 6: BUSINESS CLIMATE IN CONSTRUCTION – POLAND 19 | |
| FIGURE 7: MARKET SIZE DYNAMIC (VOLUME) – DACH 20 | |
| FIGURE 8: MARKET SIZE DYNAMIC (VOLUME) – POLAND 20 | |
| FIGURE 9: PRODUCTION CAPACITY IN EUROPE – TOP 10 PLAYERS x 1 000 m3 21 | |
| FIGURE 10: TOTAL CONSTRUCTION – DACH AND POLAND 22 | |
| FIGURE 11: TOTAL CONSTRUCTION – OTHER COUNTRIES 23 | |
| FIGURE 12: RESIDENTIAL AND NON-RESIDENTIAL CONSTRUCTION 24 | |
| FIGURE 13: SHAREHOLDING STRUCTURE 51 |
| TABLE 1: LIST OF THE GROUP'S ENTITIES WITH THEIR ACTIVITIES (AT THE TIME OF THE REPORT'S PUBLICATION): 11 | |
|---|---|
| TABLE 2: CAPEX 2018 – MAIN PROJECTS AT THE GROUP LEVEL 16 | |
| TABLE 3: REWARDS GIVEN TO PFLEIDERER GROUP IN 2017/2018 16 | |
| TABLE 4: AVERAGE YEARLY GROWTH OF CONSTRUCTION MARKET IN 2017-2019 21 | |
| TABLE 5: PRODUCTION VOLUMES OF MAIN PRODUCT GROUPS AT THE GROUP LEVEL 32 | |
| TABLE 6: PRODUCTION VOLUMES OF MAIN PRODUCT GROUPS IN BUSSINES SEGMENTS 32 | |
| TABLE 7: SALES VOLUMES BY PRODUCT GROUP AT THE GROUP LEVEL 32 | |
| TABLE 8: CONSOLIDATED STATEMENTS OF PROFIT AND LOSS FOR 9M 2018 35 | |
| TABLE 9: CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS OF 30 SEPTEMBER 2018 36 | |
| TABLE 10: CONSOLIDATED STATEMENT OF CASH FLOWS IN 9M 2018 37 | |
| TABLE 11: KEY FINANCIAL RATIOS DESCRIBING THE GROUP'S PERFORMANCE 38 | |
| TABLE 12: MARGINS 38 | |
| TABLE 13: STANDALONE STATEMENT OF PROFIT OR LOSS 40 | |
| TABLE 14: STANDALONE STATEMENT OF FINANCIAL POSITION 41 | |
| TABLE 15: STANDALONE STATEMENT OF CASH FLOWS 41 | |
| TABLE 16: PFLEIDERER GROUP S.A. SALES MARGINS 41 | |
| TABLE 17: RATINGS AWARDED TO PFLEIDERER GROUP 42 | |
| TABLE 18: BORROWINGS AND OTHER DEBT INSTRUMENTS 42 | |
| TABLE 19: FINANCINGS CORE EAST (EXLUDING FACTORING AND OPERATING LEASES) 44 | |
| TABLE 20: FINANCINGS CORE WEST (EXLUDING FACTORING AND OPERATING LEASES) 45 | |
| TABLE 21: SHAREHOLDER STRUCTURE AS OF 30 SEPTEMBER 2018 50 | |
| TABLE 22: SHAREHOLDER STRUCTURE AS OF 14 NOVEMBER 2018 51 | |
| TABLE 23: RECOMMENDATIONS FOR PFLEIDERER GROUP IN Q3 2018 52 | |
| TABLE 24: INSTITUTIONS ISSUING RECOMMENDATIONS FOR PFLEIDERER GROUP IN Q3 2018 52 | |
| TABLE 25: THE COMPOSITION OF THE SUPERVISORY BOARD AS AT 30 SEPTEMBER 2018 54 | |
| TABLE 26: THE COMPOSITION OF THE PFLEIDERER GROUP S.A. MANAGEMENT BOARD AS AT 30 SEPTEMBER 2018 55 |
This document is a free translation of the Polish original. Terminology current in Anglo-Saxon countries has been used where practicable for the purposes of this translation in order to aid understanding. The binding Polish original should be referred to in matters of interpretation.
| MANAGEMENT BOARD'S STATEMENT 3 | |
|---|---|
| UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION 4 | |
| UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME 5 |
|
| UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 7 | |
| UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS 9 | |
| NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 10 |
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 29 March 2018 (consolidated text: Official Journal from 2018, item 757), the Management Board of Pfleiderer Group S.A. (the Parent) represents that to the best of its knowledge the unaudited interim condensed consolidated and standalone financial statements for the period from 1 January to 30 September 2018 and the comparative information have been prepared in compliance with the applicable accounting policies and give a true and fair view of the Pfleiderer Group S.A. Group's assets and financial results, and that the interim condensed Management Board report on the operations of the Pfleiderer Group S.A. and the Group for the period from 1 January to 30 September 2018 gives a fair view of its development, achievements and standing, including a description of the key risks and threats.
Tom K. Schäbinger President of the Management Board
Dr. Nico Reiner Dirk Hardow Member of the Management Board, Member of the Management Board, Chief Financial Officer Chief Operating Officer
Ivo Schintz
Member of the Management Board, Chief Commercial Officer
Wrocław, 14 November 2018
(all amounts in EUR thousand)
| ASSETS | |||
|---|---|---|---|
| '000 EUR | Notes | 30 Sep. 2018 | 31 Dec. 2017 |
| Property, plant and equipment | 9. | 545 714 | 554 279 |
| Intangible assets | 79 470 | 82 907 | |
| Goodwill | 66 933 | 67 541 | |
| Long term investments | 508 | 511 | |
| Investment property | 830 | 850 | |
| Deferred tax assets | 5 870 | 6 471 | |
| Advances paid on fixed assets | 9. | 12 964 | 9 877 |
| Government grants receivables | 5 151 | 5 275 | |
| Other non-current assets | 3 | 3 | |
| Non-current assets | 717 443 | 727 714 | |
| Inventories | 12. | 113 982 | 96 301 |
| Trade and other receivables | 11. | 48 657 | 35 673 |
| Income tax receivable | 579 | 244 | |
| Cash and cash equivalents | 41 348 | 83 845 | |
| Fair value of hedging instruments | 61 | 380 | |
| Other short term financial assets | 324 | 326 | |
| Current assets | 204 951 | 216 769 | |
| Total assets | 922 394 | 944 483 |
| LIABILITIES AND EQUITY | |||
|---|---|---|---|
| '000 EUR | 30 Sep. 2018 | 31 Dec. 2017 | |
| Share capital | 6 692 | 6 692 | |
| Share premium | 146 375 | 146 375 | |
| Statutory reserve funds | 79 397 | 87 281 | |
| Reserves | -11 799 | -10 330 | |
| Retained earnings | -72 148 | 9 884 | |
| Total equity attributable to owners of the Company | 13. | 148 517 | 239 902 |
| Total equity | 148 517 | 239 902 |
| Liabilities | |||
|---|---|---|---|
| Loans and borrowings | 14. | 424 775 | 336 155 |
| Provisions for employee benefits | 51 525 | 53 389 | |
| Provisions | 15. | 1 419 | 1 453 |
| Deferred tax liabilities | 59 012 | 65 625 | |
| Deferred income from government grants | 8 195 | 8 807 | |
| Other non-current liabilities | 18 | 18 | |
| Non-current liabilities | 544 944 | 465 447 | |
| Loans and borrowings | 14. | 1 977 | 2 529 |
| Income tax payable | 9 601 | 15 734 | |
| Trade and other payables | 16. | 174 473 | 182 968 |
| Employee related payables | 27 230 | 21 794 | |
| Provisions | 15. | 15 111 | 15 555 |
| Deferred income from government grant | 541 | 554 | |
| Current liabilities | 228 933 | 239 134 | |
| Total liabilities | 773 877 | 704 581 | |
| Total equity and liabilities | 922 394 | 944 483 |
| 1 J an . - |
1 J an . - |
l. - 1 J u |
l. - 1 J u |
||
|---|---|---|---|---|---|
| '00 0 E UR |
No tes |
30 Se 20 18 p. |
30 Se 20 17 p. |
30 Se 20 18 p. |
30 Se 20 17 p. |
| Re ve nu e |
79 9 6 90 |
75 0 9 10 |
26 6 5 07 |
24 4 8 81 |
|
| f s les Co st o a |
-61 6 4 50 |
-57 6 3 47 |
-20 6 0 48 |
-18 9 9 72 |
|
| f les Pro it o n s a |
18 3 2 40 |
17 4 5 63 |
60 45 9 |
54 90 9 |
|
| he Ot ing in rat r o pe co me |
6. | 5 3 96 |
11 85 4 |
1 0 61 |
1 8 29 |
| Dis tri bu tio n e xp en ses |
-98 20 3 |
-10 3 5 09 |
-32 03 5 |
-34 46 3 |
|
| l an Ge d a dm ini ati str ne ra ve ex pe nse s |
-37 13 0 |
-38 61 0 |
-11 31 5 |
-12 53 8 |
|
| he Ot ing rat r o pe ex pe nse s |
7. | -6 17 9 |
-3 24 0 |
-2 93 3 |
2 0 26 |
| fro Re lt ing iv it ies t t su m op era ac |
47 12 4 |
41 05 8 |
15 23 7 |
11 76 3 |
|
| l in Fin cia an co me |
28 1 |
8 1 45 |
20 7 |
-2 08 2 |
|
| Fin cia l ex an pe nse s |
-17 83 6 |
-29 28 6 |
-6 98 1 |
-6 78 4 |
|
| ha di f fer Exc ng e en ces |
-3 29 2 |
6 0 37 |
4 2 77 |
-2 22 5 |
|
| f Ne ina ing t st nc co |
8. | -20 84 7 |
-15 10 4 |
-2 49 7 |
-11 09 1 |
| f it be for Pro e t ax |
26 27 7 |
25 95 4 |
12 74 0 |
67 2 |
|
| Inc e t om ax ex pe nse |
10 | -10 68 1 |
-6 88 7 |
-2 91 5 |
-22 3 |
| fit for he d Ne rtin eri t p t ro re po g p o |
15 59 6 |
19 06 7 |
9 8 25 |
44 9 |
(all amounts in EUR thousand)
| OT HE R C OM PR EH EN SIV E I NC OM E |
||||
|---|---|---|---|---|
| l ga d los f re lat d t Ac ria ins tua t o an ses ne e ax |
46 3 |
1 8 79 |
46 3 |
37 6 |
| tiv Inc en e p rog ram me |
49 6 |
0 | 12 0 |
0 |
| ha di f fer lat ion tio f t he Gr Exc tr to nta ng e en ces on an s pr ese n c urr en cy o ou p |
-2 17 5 |
-1 49 8 |
-55 | -1 59 6 |
| ha i l l n be las i f ie d s bse ly f it o los Ite t t w ot t to ms re c s u qu en pro r s |
-1 21 6 |
38 1 |
52 8 |
-1 22 0 |
| h f low he dg f fec f c ha fai lue lat d t Ca tiv ion in ort t to s e - e e p o ng es r v a ne re e ax |
-42 6 |
1 1 46 |
34 1 |
-25 7 |
| h f low he dg ha f fai lue las fie d t fit los f ta Ca si t c t y et s e - ne ng e o r v a re c o c urr en ea r p ro or s n o x |
17 3 |
-50 8 |
-34 | -77 |
| ha be las i f ie d s bse ly f it o los Ite t t a t to ms re or ma y re c s u qu en pro r s |
-25 3 |
63 8 |
30 7 |
-33 4 |
| OT HE R C OM PR EH EN SIV E I NC OM E |
-1 46 9 |
1 0 19 |
83 5 |
-1 55 4 |
| l co he ive inc for he io d To ta t mp re ns om e pe r |
14 12 7 |
20 08 6 |
10 66 0 |
-1 10 5 |
| fit for he d a bu b le t Pro rio i t ttr ta pe o: |
||||
| ha ho l de f t he S Co re rs o mp an y |
15 59 6 |
19 06 7 |
9 8 25 |
44 9 |
| fit for he d Pro rio t pe |
15 59 6 |
19 06 7 |
9 8 25 |
44 9 |
| To l co he nsi inc i bu b le t ta ttr ta mp re ve om e a o: |
||||
| ha ho l de f t he S Co re rs o mp an y |
14 12 7 |
20 08 6 |
10 66 0 |
-1 10 5 |
| l co he for he d To nsi inc rio ta t mp re ve om e pe |
14 12 7 |
20 08 6 |
10 66 0 |
-1 10 5 |
| be f s ha he d o f t he d (ex lu din ha ) Nu rtin eri at t tre m r o res en re po g p o c g asu ry s res |
51 76 0 8 06 |
64 70 1 0 07 |
59 30 4 0 74 |
64 70 1 0 07 |
| (ex ) Av be f s ha du rin he rtin eri d lu din ha t tre era ge nu m r o res g re po g p o c g asu ry s res |
58 54 7 9 04 |
64 70 1 0 07 |
56 18 8 3 76 |
64 70 1 0 07 |
| ha Ba sic rni ea ng s p er s re |
0.2 7 |
0.2 9 |
0.1 7 |
0.0 1 |
| lut d e ha Di ing e arn s p er s re |
0.2 7 |
0.2 9 |
0.1 7 |
0.0 1 |
| 1 J an . - |
1 J an . - |
l. - 1 J u |
l. - 1 J u |
||
|---|---|---|---|---|---|
| hte d-a be f o din ha (ex lu din ha ) We ig tre ve rag e n um r o r ary s res c g asu ry s res |
da ys |
30 Se 20 18 p. |
30 Se 20 17 p. |
30 Se 20 18 p. |
30 Se 20 17 p. |
| inn ing f t he rtin eri d Be g o re po g p o |
37 | 61 46 5 9 57 |
64 70 1 0 07 |
59 30 4 0 74 |
64 70 1 0 07 |
| ha bu ba k I ( ) S 7.0 2.2 01 8 res y- c |
20 | -2 15 0 8 83 |
n.a | n.a | n.a |
| ha bu ba k I ( ) S I 28 .02 .20 18 res y- c |
17 8 |
-11 00 0 |
n.a | n.a | n.a |
| ha bu ba k I ( ) S II 24 .08 .20 18 res y- c |
38 | -7 54 3 2 68 |
n.a | -7 54 3 2 68 |
n.a |
| d o f t he d En rtin eri re po g p o |
51 76 0 8 06 |
64 70 1 0 07 |
51 76 0 8 06 |
64 70 1 0 07 |
|
| Av be f s ha era ge nu m r o res |
27 3 |
58 54 7 9 04 |
64 70 1 0 07 |
56 18 8 3 76 |
64 70 1 0 07 |
(all amounts in EUR thousand)
For the nine month period ended 30 September 2018:
| '00 0 E UR |
S ha re l ita ca p |
S ha re mi pre um |
Re ve for ser ow n ha s res |
Sta tut ory res e fun erv ds |
Re - va lua tio n res erv e |
ha Exc ng e rat e di f fer en ces |
Inc tiv en e pro - gra mm e |
l Ac ria tua ins d los ga an ses |
h f low Ca s he dg es |
tai d Re ne rni ea ng s |
TO TA L |
|---|---|---|---|---|---|---|---|---|---|---|---|
| As 1 Jan . 2 01 8 at |
6 6 92 |
14 6 3 75 |
60 39 5 |
26 88 6 |
14 5 |
-7 98 7 |
45 | -2 86 7 |
33 4 |
9 8 84 |
23 9 9 02 |
| he for he d Co ive inc io t mp re ns om e pe r |
|||||||||||
| fit Ne t p ro |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 15 59 6 |
15 59 6 |
| Ot he he nsi in r c om pre ve co me |
0 | 0 | 0 | 0 | 0 | -2 17 5 |
49 6 |
46 3 |
-25 3 |
0 | 46 9 -1 |
| l co he for he d To nsi inc rio ta t mp re ve om e pe |
0 | 0 | 0 | 0 | 0 | -2 17 5 |
49 6 |
46 3 |
-25 3 |
15 59 6 |
14 12 7 |
| ion it h o ise d in ity Tra ct nsa s w wn ers re cog n eq u |
|||||||||||
| fer f p f 2 01 fit for Tra art 7 n et to ns o o pro res erv e fun ds ow n |
0 | 0 | 80 90 9 |
0 | 0 | 0 | 0 | 0 | 0 | -80 90 9 |
0 |
| fer f p f st fun d t Tra art atu tor ns o o y r ese rve o r ese rve |
|||||||||||
| for ha ow n s res |
0 | 0 | 83 19 4 |
-83 19 4 |
0 | 0 | 0 | 0 | 0 | 0 | 0 |
| de d Div i n |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | -16 71 9 |
-16 71 9 |
| ha ha Ow n s res pu rc se |
0 | 0 | -88 79 3 |
0 | 0 | 0 | 0 | 0 | 0 | 0 | -88 79 3 |
| l tr h o d i To tio wi ise ity ta t an sac ns wn ers re co gn n e qu |
0 | 0 | 75 31 0 |
-83 19 4 |
0 | 0 | 0 | 0 | 0 | -97 62 8 |
-10 5 5 12 |
| As 30 Se 20 18 at p. |
6 6 92 |
14 6 3 75 |
13 5 7 05 |
-56 30 8 |
14 5 |
-10 16 2 |
54 1 |
-2 40 4 |
81 | -72 14 8 |
14 8 5 17 |
(all amounts in EUR thousand)
For the nine month period ended 30 September 2017:
| '00 0 E UR |
ha S re ita l ca p |
ha S re mi pre um |
Re ve for ser ow n ha s res |
Sta tut ory res e fun erv ds |
Re - va lua tio n res erv e |
ha Exc ng e rat e di f fer en ces |
ria l Ac tua d los ins ga an ses |
h f low Ca s he dg es |
d Re tai ne rni ea ng s |
TO TA L |
|---|---|---|---|---|---|---|---|---|---|---|
| As 1 Jan . 2 01 7 at |
6 6 92 |
14 6 3 75 |
32 73 4 |
59 06 7 |
14 5 |
-8 05 4 |
-5 32 1 |
-70 7 |
40 32 4 |
27 1 2 55 |
| he ive inc for he io d Co t mp re ns om e pe r |
||||||||||
| fit Ne t p ro |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 19 06 7 |
19 06 7 |
| he he Ot nsi in r c om pre ve co me |
0 | 0 | 0 | 0 | 0 | -1 49 8 |
1 8 79 |
63 8 |
0 | 1 0 19 |
| l co he nsi inc for he rio d To ta t mp re ve om e pe |
0 | 0 | 0 | 0 | 0 | -1 49 8 |
1 8 79 |
63 8 |
19 06 7 |
20 08 6 |
| ion it h o ise d in ity Tra ct nsa s w wn ers re cog n eq u |
||||||||||
| fer f p f 2 fit for Tra 01 6 n art et to ns o o pro res erv e ow n fun ds |
0 | 0 | 31 12 3 |
0 | 0 | 0 | 0 | 0 | -31 12 3 |
0 |
| fer f p f st fun d t for Tra art atu tor ns o o y r ese rve o r ese rve ha ow n s res |
0 | 0 | 32 18 1 |
-32 18 1 |
0 | 0 | 0 | 0 | 0 | 0 |
| Div i de d n |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | -16 45 6 |
-16 6 45 |
| l tr h o d i To tio wi ise ity ta t an sac ns wn ers re co gn n e qu |
0 | 0 | 63 30 4 |
-32 18 1 |
0 | 0 | 0 | 0 | -47 57 9 |
-16 45 6 |
| As 30 Se 20 17 at p. |
6 6 92 |
14 6 3 75 |
96 03 8 |
26 88 6 |
14 5 |
-9 2 55 |
-3 44 2 |
-69 | 11 81 2 |
27 4 8 85 |
| 1 Jan. - | 1 Jan. - | |
|---|---|---|
| '000 EUR | 30 Sep. 2018 | 30 Sep. 2017 |
| Net profit for the reporting period | 15 596 | 19 067 |
| Depreciation and amortisation | 57 449 | 55 156 |
| Foreign exchange gains | 3 292 | -6 037 |
| Interest for the period | 17 728 | 21 648 |
| Profit on investing activities | -18 | 124 |
| Income tax disclosed in profit or loss of the period | 10 681 | 6 887 |
| Amortisation of government grants | -264 | -632 |
| Result on forward contracts | -172 | -508 |
| Increase in exchange differences on translating foreign operations | -1 004 | 399 |
| Changes in | ||
| trade and other receivables | -13 070 | -18 610 |
| inventories | -18 863 | -11 769 |
| trade and other payables | 5 780 | 18 770 |
| employee benefit obligations | -2 318 | -1 019 |
| provisions | -2 334 | -4 252 |
| Cash generated from operating activities | 72 483 | 79 224 |
| Income tax (paid)/received | -23 283 | -5 118 |
| Net cash provided by operating activities | 49 200 | 74 106 |
| Net cash used in investing activities | ||
| Disposal of property, plant and equipment | 71 | 26 |
| Interest received | 280 | 67 |
| Acquisition of intangible assets and property, plant and equipment | -58 670 | -45 717 |
| Net cash used in investing activities | -58 319 | -45 624 |
| Net cash used in financing activities | ||
| Repayment of borrowings and other debt instruments | 0 | -321 684 |
| Increase of borrowings and other debt instruments | 95 000 | 350 000 |
| Share buy-back | -88 793 | 0 |
| Dividend payments | -16 915 | -16 842 |
| Interest paid | -12 384 | -29 705 |
| Redemption fee and refinancing costs | 0 | -20 519 |
| Other financing activities | -10 286 | -1 606 |
| Net cash used in financing activities | -33 378 | -40 356 |
| Total cash flows | -42 497 | -11 874 |
| Decrease/Increase in cash | -42 497 | -11 874 |
| Cash at beginning of the period | 83 845 | 97 726 |
| Cash at the end of the period | 41 348 | 85 852 |
| 1. | GENERAL INFORMATION 11 | |
|---|---|---|
| 2. | STRUCTURE OF THE GROUP 12 | |
| 3. | BASIS OF PREPARATION 13 | |
| 4. | OPERATING SEGMENTS 14 | |
| 5. | SEASONALITY OF OPERATIONS 16 | |
| 6. | OTHER OPERATING INCOME 16 | |
| 7. | OTHER OPERATING COSTS 16 | |
| 8. | FINANCIAL INCOME AND COSTS 17 | |
| 9. | PROPERTY, PLANT AND EQUIPMENT 17 | |
| 10. | INCOME TAX EXPENSE 18 | |
| 11. | TRADE AND OTHER RECEIVABLES 18 | |
| 12. | INVENTORIES 18 | |
| 13. | EQUITY 19 | |
| 14. | BORROWINGS AND OTHER DEBT INSTRUMENTS 20 | |
| 15. | PROVISIONS 24 | |
| 16. | TRADE AND OTHER PAYABLES 24 | |
| 17. | FINANCIAL INSTRUMENTS 25 | |
| 18. | SECURITIES 26 | |
| 19. | CONTINGENT LIABILITIES 28 | |
| 20. | SIGNIFICANT RELATED PARTY TRANSACTIONS 30 | |
| 21. | EVENTS SUBSEQUENT TO THE END OF THE REPORTING PERIOD 31 | |
(all amounts in EUR thousand)
Pfleiderer Group S.A. (the "Company"; the "Parent") is a company domiciled in Poland, which shares are publicly traded. The Company, until 30 September 2016, acted under the business name of Pfleiderer Grajewo S.A.
The Company was registered by the District Court of Białystok, XII 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 30 September 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 consolidated financial statements of the Pfleiderer Group S.A. comprise the financial information of the Company and its subsidiaries (collectively the "Group"). They were authorized for issue by the Company's Management Board on 14 November 2018.
The Pfleiderer Group S.A. Group is primarily involved in manufacturing and veneering of wood and wood-based products and paper finishing, as well as domestic and foreign trade.
(all amounts in EUR thousand)
The Pfleiderer Group consists of Pfleiderer Group S.A. and its subsidiaries (together "the Group" or "the Pfleiderer Group"). As of 30 September 2018, the Pfleiderer Group S.A. was the parent company with respect to the following subsidiaries:
| 30 Sep. | 31 Dec. | ||
|---|---|---|---|
| Eastern Europe | 2018 | 2017 | |
| Jura Polska Sp. z o.o. | Grajewo, Poland | 100% | 100% |
| Pfleiderer Grajewo Sp. z o.o. | Grajewo, Poland | 100% | 100% |
| Pfleiderer MDF Grajewo Sp. z o.o. | Grajewo, Poland | 100% | 100% |
| Pfleiderer Wieruszów Sp. z o.o. | Wieruszów, Poland | 100% | 100% |
| Pfleiderer Polska Sp. z o.o. | Wrocław, Poland | 100% | 100% |
| Pfleiderer Silekol Sp. z o.o. | Kędzierzyn-Koźle, Poland |
100% | 100% |
| Unifloor Sp. z o.o. (in liquidation) | Wieruszów, Poland | 100% | 100% |
| Western Europe | 30 Sep. 2018 |
31 Dec. 2017 |
|
| PCF GmbH | Neumarkt, Germany | 100% | 100% |
| Pfleiderer Austria GmbH | Vienna, Austria | 100% | 100% |
| Pfleiderer Southeast Europe S.R.L. | Bucharest, Romania | 100% | 100% |
| Pfleiderer Deutschland GmbH | Neumarkt, Germany | 100% | 100% |
| Pfleiderer Neumarkt GmbH | Neumarkt, Germany | 100% | 100% |
| Pfleiderer Gütersloh GmbH | Neumarkt, Germany | 100% | 100% |
| Pfleiderer Leutkirch GmbH | Neumarkt, Germany | 100% | 100% |
| Pfleiderer Erwerbergesellschaft mbH | Neumarkt, Germany | 100% | 100% |
| Pfleiderer Arnsberg GmbH | Neumarkt, Germany | 100% | 100% |
| Pfleiderer Baruth GmbH | Neumarkt, 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 29 March 2018, 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 2018, item 757) (the "Regulation").
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 Group S.A. Group for the financial year ended 31 December 2017. 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 31 December 2017.
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 year 2017 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.
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.
Segment reporting is as follows:
For the nine month period ended 30 September 2018:
| Western | Eastern | Others / | ||
|---|---|---|---|---|
| '000 EUR | Europe | Europe | Consolidation | Group |
| External revenues | 559 019 | 240 671 | 0 | 799 690 |
| Intersegment revenues | 15 973 | 59 309 | -75 282 | 0 |
| Profit/loss before income taxes | 23 258 | 3 089 | -70 | 26 277 |
| Net financing cost | 12 891 | 8 031 | -75 | 20 847 |
| Result from operating activities (EBIT) | 36 149 | 11 120 | -145 | 47 124 |
| Depreciation and amortisation | 42 512 | 15 013 | -76 | 57 449 |
| Segment earnings EBITDA | 78 661 | 26 133 | -221 | 104 573 |
| Cash and cash equivalents | -15 239 | -26 108 | -1 | -41 348 |
| Current financial liabilities | 1 977 | 0 | 0 | 1 977 |
| Non-current financial liabilities | 424 775 | 0 | 0 | 424 775 |
| Net debt | 411 513 | -26 108 | -1 | 385 404 |
| Receivables before factoring | 75 484 | 53 121 | 0 | 128 605 |
| Inventories | 70 612 | 43 370 | 0 | 113 982 |
| Liabilities | -61 977 | -55 545 | 0 | -117 522 |
| Net working capital before factoring | 84 119 | 40 946 | 0 | 125 065 |
| Segment capital expenditure | 32 680 | 18 039 | 0 | 50 719 |
| Property, plant and equipment | 374 535 | 171 179 | 0 | 545 714 |
| Intangible assets | 69 703 | 9 767 | 0 | 79 470 |
| Goodwill | 41 655 | 25 278 | 0 | 66 933 |
| Advances paid on fixed assets | 7 211 | 5 753 | 0 | 12 964 |
For the nine month period ended 30 September 2017:
| Western | Eastern | Others / | ||
|---|---|---|---|---|
| '000 EUR | Europe | Europe | Consolidation | Group |
| External revenues | 530 896 | 220 014 | 0 | 750 910 |
| Intersegment revenues | 6 929 | 60 536 | -67 465 | 0 |
| Profit/loss before income taxes | 17 080 | 8 535 | 339 | 25 954 |
| Net financing cost | 15 227 | -11 | -112 | 15 104 |
| Result from operating activities (EBIT) | 32 307 | 8 524 | 227 | 41 058 |
| Depreciation and amortisation | 41 268 | 13 965 | -77 | 55 156 |
| Segment earnings EBITDA | 73 575 | 22 489 | 150 | 96 214 |
| Cash and cash equivalents | -65 307 | -20 182 | -363 | -85 852 |
| Current financial liabilities | 1 420 | 0 | 0 | 1 420 |
| Non-current financial liabilities | 335 815 | 0 | 0 | 335 815 |
| Net debt | 271 928 | -20 182 | -363 | 251 383 |
| Receivables before factoring | 78 535 | 46 397 | 0 | 124 932 |
| Inventories | 64 993 | 39 571 | 1 | 104 565 |
| Liabilities | -68 360 | -51 929 | -1 | -120 290 |
| Net working capital before factoring | 75 168 | 34 039 | 0 | 109 207 |
| Segment capital expenditure | 33 786 | 9 839 | 0 | 43 625 |
| Property, plant and equipment | 359 068 | 167 105 | 0 | 526 173 |
| Intangible assets | 75 168 | 9 726 | 0 | 84 894 |
| Goodwill | 41 655 | 25 121 | 0 | 66 776 |
| Advances paid on fixed assets | 15 132 | 1 693 | 0 | 16 825 |
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.
| '000 EUR | 1 Jan. - | 1 Jan. - | 1 Jul. - | 1 Jul. - |
|---|---|---|---|---|
| 30 Sep. 2018 | 30 Sep. 2017 | 30 Sep. 2018 | 30 Sep. 2017 | |
| Profit on sale of property, plant and equipment | 37 | 27 | 7 | 9 |
| Reversal of impairment loss on receivables | 554 | 505 | 283 | 106 |
| Compensation and penalties received | 663 | 1 376 | 180 | 340 |
| Rental income | 150 | 154 | 42 | 41 |
| Derecognition of EEG liability | 0 | 4 363 | 0 | 0 |
| Release of unused accruals and provisions | 42 | 408 | -77 | 160 |
| Other, including: | 3 950 | 5 021 | 626 | 1 173 |
| Government grants and public assistance | 408 | 776 | 134 | 259 |
| Sales of excess CO2 emission rights | 254 | 0 | -2 | 0 |
| Operating foreign exchanges gains | 1 378 | 1 857 | -10 | 405 |
| Operational management (sewage treatment | ||||
| plant Baruth) | 338 | 338 | 113 | 113 |
| Income from forward contracts | 415 | 367 | 102 | 130 |
| Indemnity | 36 | 176 | -4 | 0 |
| Refund for electricity tax | 19 | 31 | 19 | 31 |
| Proceeds from the sale of scrap | 233 | 216 | 75 | 84 |
| Sale of diesel | 132 | 116 | 38 | 38 |
| Other income | 737 | 1 144 | 161 | 113 |
| TOTAL | 5 396 | 11 854 | 1 061 | 1 829 |
| '000 EUR | 1 Jan. - | 1 Jan. - | 1 Jul. - | 1 Jul. - |
|---|---|---|---|---|
| 30 Sep. 2018 | 30 Sep. 2017 | 30 Sep. 2018 | 30 Sep. 2017 | |
| Loss on disposal of property, plant and equipment | -20 | -151 | -16 | -122 |
| Allowance for receivables | -138 | -319 | -13 | -93 |
| Bad debt loss | -404 | -522 | -131 | -158 |
| Damages paid | 0 | -20 | 20 | 223 |
| Other, including: | -5 617 | -2 228 | -2 793 | 2 176 |
| Operating foreign exchange losses | -1 879 | -1 743 | -387 | -374 |
| Social plan release accrual | 259 | 2 476 | 259 | 1 062 |
| Antitrust provisions costs and related costs | -224 | -537 | -224 | -537 |
| Consulting | -2 596 | -1 080 | -2 360 | 108 |
| Real estate and other taxes | -337 | 0 | 154 | 0 |
| Costs related to restructuring of the Group | 0 | -315 | 0 | -315 |
| Donations | 0 | -31 | 0 | -31 |
| Other expenses | -840 | -998 | -235 | 2 263 |
| TOTAL | -6 179 | -3 240 | -2 933 | 2 026 |
Notes to the unaudited interim condensed consolidated financial statements for the nine month period ended 30 September 2018 (all amounts in EUR thousand)
Disclosed in profit or loss of the period:
| '000 EUR | 1 Jan. - | 1 Jan. - | 1 Jul. - | 1 Jul. - |
|---|---|---|---|---|
| 30 Sep. 2018 | 30 Sep. 2017 | 30 Sep. 2018 | 30 Sep. 2017 | |
| Interest income | 281 | 1 383 | 207 | 15 |
| Other financial income | 0 | 6 762 | 0 | -2 097 |
| Financial income | 281 | 8 145 | 207 | -2 082 |
| Interest expense (1) | -14 409 | -19 818 | -5 537 | -5 482 |
| Refinancing costs (2) | -2 016 | -277 | -667 | -14 |
| Redemption fee | 0 | 0 | 0 | 6 334 |
| Other finance costs | -1 411 | -9 191 | -777 | -7 622 |
| Financial costs | -17 836 | -29 286 | -6 981 | -6 784 |
| Exchange differences on translating foreign | ||||
| operations (3) | -3 292 | 6 554 | 4 277 | -2 191 |
| Losses on translation of foreign currency financial | ||||
| position | 0 | -517 | 0 | -34 |
| Other financial result | -3 292 | 6 037 | 4 277 | -2 225 |
| TOTAL | -20 847 | -15 104 | -2 497 | -11 091 |
(1) The interest expenses include:
In 9M 2018 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 nine month period ended 30 September 2018 were EUR 50 719 thousand (including advance payments), while the capital expenditures including advance payments for the nine month period ended 30 September 2017 were EUR 43 625 thousand and EUR 76 328 thousand for the entire financial year 2017.
As at 30 September 2018 the Group has purchased 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 September 2018 are related to Plant concept Leutkirch, Electro filter Bison dryer Grajewo and Plates and Belts.
| '000 EUR | 30 Sep. 2018 | 31 Dec. 2017 |
|---|---|---|
| Property, plant and equipment | 25 843 | 27 783 |
| Intangible assets | 841 | 863 |
| Commitment purchase | 26 684 | 28 646 |
(all amounts in EUR thousand)
On 27 January 2017 tax capital group was registered in Poland for the purposes of settlement of CIT. The Group started tax year on 1 May 2017 (first tax year 1 May 2017 - 31 December 2017). The agreement on tax capital group comprised 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, however as a result of not meeting the profitability threshold the tax group ceased to exist effective 31 March 2018.
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.
The income tax expense for the 9M 2018 in the amount of EUR 10 681 thousand presented in the statement of profit and loss included, apart from the tax for current period also additional taxes due for the year 2016 (EUR 1 485 thousand – cash effect) and 2017 (EUR 3 862 thousand – cash effect). Moreover, the tax expenses were influenced by payments of tax liabilities for the outcome of the tax audit for years 2010-2015 conducted in Germany in the amount of EUR 7 856 thousand (cash effect). Therefore the accrual for the tax audit decreased in Q3 2018 from EUR 9.2 million to EUR 1.3 million.
| '000 EUR | 30 Sep. 2018 | 31 Dec. 2017 |
|---|---|---|
| Trade receivables | 24 649 | 7 310 |
| Trade receivables from related parties | 18 | 13 |
| Current prepayments and accrued income | 3 125 | 764 |
| Current VAT receivables | 5 362 | 7 280 |
| Other receivables | 15 503 | 20 306 |
| TOTAL | 48 657 | 35 673 |
The amount of EUR 15 503 thousand of other receivables as at 30 September 2018 (EUR 20 306 thousand as at 31 December 2017) included, among others:
| '000 EUR | 30 Sep. 2018 | 31 Dec. 2017 |
|---|---|---|
| Materials and merchandise | 60 169 | 51 135 |
| Semi-finished products and work in progress | 2 409 | 1 749 |
| Finished goods | 51 340 | 42 849 |
| Advances for deliveries | 64 | 568 |
| TOTAL | 113 982 | 96 301 |
Inventories are presented in the consolidated statement of financial position at net realisable value, i.e. net of write-downs of EUR 11 071 thousand (31 December 2017: EUR 9 820 thousand).
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:
| 30 Sep. 2018 | 31 Dec. 2017 | |
|---|---|---|
| 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 | 64 701 007 |
| 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 |
| Par value of share capital ('000 EUR) | 6 692 | 6 692 |
| Number of shares at beginning of period (fully paid up) | 64 701 007 | 64 701 007 |
| 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 30 September 2018 is as follows:
| Shareholding structure | Number of share |
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% |
| Aviva OFE Aviva BZ WBK | 6 241 000 | 9.65% | 6 241 000 | 9.65% |
| Treasury shares (*) | 12 940 201 | 20.00% | 12 940 201 | 20.00% |
| Other shareholders | 13 862 096 | 21.42% | 13 862 096 | 21.42% |
| TOTAL | 64 701 007 | 100.00% | 64 701 007 | 100.00% |
(*) In accordance with article 364 Paragraph 2 of the Commercial Companies Code the Company does not execute the shareholding rights attached to the treasury shares, except for the right to transfer the shares or perform the actions aiming at preserving the shareholding rights.
In accordance with the notifications received from shareholders, the following transactions took place in 2018 involving shares in Pfleiderer Group S.A.:
On 15 February 2018, the Company received a notification from its shareholder Nationale Nederlanden OFE on the sale of the Company's shares as part of the share repurchase program announced by the Company. Following the settlement of the transaction, Nationale Nederlanden OFE holds 3 102 115 shares in the Company, representing 4.79% of its share capital and entitling the holder to 3 102 115 votes at the Company's General Meeting of Shareholders, or 4.79% of the total number of votes at the Company's General Meeting of Shareholders.
On 24 August 2018 the Company purchased 7 543 268 treasury shares, representing approximately 11.66% of the share capital. The purchase of the treasury shares was concluded based on an invitation to submit offers for the sale of the shares in the Company announced by the Company on 4 August 2018. The purchase price for the treasury shares amounted to PLN 40 per one share. The total price for all of the purchased shares amounted to PLN 301 730 720. The treasury shares were purchased in connection with the implementation of the treasury share repurchase programme approved under the resolution no. 24 of the Company's Annual General Meeting of the Shareholders dated 11 June 2018.
Pursuant to the resolution of the Ordinary General Meeting of Shareholders of the Company dated 11 June 2018, the shares purchased under the programme may be: (i) redeemed; or (ii) otherwise disposed of by the Management Board of the Company, subject to a consent of the Supervisory Board, with a view to the needs resulting from the Company's business.
Prior to the above described acquisition of the treasury shares, which took place on 24 August 2018, the Company held 5 396 933 treasury shares representing approximately 8.34% of the share capital.
The total number of treasury shares purchased by the Company at the date of publication of this report is 12 940 201. The total nominal value of all purchased treasury shares is PLN 4 270 266.33, representing approximately 20% of the Company's share capital. The purchased treasury shares entitle the holder thereof to a total of 20% of the votes at the general meeting of the Company, which represents 20% of the overall number of votes in the Company, provided that the Company does not exercise the voting rights attached to the treasury shares.
The shareholder structure as of 14 November 2018 is as follows:
| Shareholding structure | Number of share |
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% |
| Aviva OFE Aviva BZ WBK | 6 241 000 | 9.65% | 6 241 000 | 9.65% |
| Treasury shares (*) | 12 940 201 | 20.00% | 12 940 201 | 20.00% |
| Other shareholders | 13 862 096 | 21.42% | 13 862 096 | 21.42% |
| TOTAL | 64 701 007 | 100.00% | 64 701 007 | 100.00% |
*According to the information from last General Meeting of Shareholders
The negative balance of retained earnings as at 30 September 2018 results from the distribution of profits from the Parent company received as dividends, which were generated before first consolidation by subsidiaries.
At 11 May 2018 the Management Board adopted a resolution on a motion of the Management Board to General Meeting of Shareholders concerning distribution of the Company's profit for year 2017 and recommended assigning PLN 71 164 888.80 for payment of the dividend amounting to PLN 1.20 per share. The above motion was positively opined by the Supervisory Board of the Company on 15 May 2018.
The Ordinary General Meeting of Shareholders of the Company resolved on 11 June 2018 to allocate the net profit for the period from 1 January to 31 December 2017, amounting in total to PLN 415 542 thousand, as follows:
a) in the amount of PLN 71 164 888.80, i.e. PLN 1.20 per share, to the payment of dividends to the Company's shareholders,
b) the remaining amount to the Company's supplementary capital.
The Ordinary General Meeting of Shareholders of the Company set the date used to prepare the list of shareholders eligible to receive the above dividend (record date) for 17 June 2018. The dividend payment date was set for 11 July 2018.
As of 17 June 2018 the Company held 5 396 933 treasury shares. Pursuant to Article 364 Paragraph 2 of the Commercial Companies Code the Company did not receive any dividends as the holder of the above mentioned treasury shares.
Non-current borrowings and other debt instruments:
| '000 EUR | 30 Sep. 2018 | 31 Dec. 2017 |
|---|---|---|
| Bank borrowings | 424 775 | 336 155 |
| TOTAL | 424 775 | 336 155 |
Current borrowings and other debt instruments:
| '000 EUR | 30 Sep. 2018 | 31 Dec. 2017 |
|---|---|---|
| Current portion of bank borrowings | 1 731 | 2 333 |
| Other interest bearing liabilities | 246 | 196 |
| TOTAL | 1 977 | 2 529 |
for the nine month period ended 30 September 2018 (all amounts in EUR thousand)
On 13 April 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 and Trigon Dom Maklerski S.A. as security agents (the "Security Agent") and others entered into a EUR 450 000 000 senior facilities agreement which initial utilization took place on 1 August 2017. Pfleiderer used those amounts to repay the Senior Secured Notes issued 27 June 2014 (PCF GmbH), the existing credit facility agreements originally dated 4 July 2014 and for general corporate purposes and working capital requirements of the Group. The EUR 450 000 000 is split into a Term Loan B ("TLB") amounting to EUR 350 000 000 (PCF GmbH) with a tenor of seven years – fully drawn and Revolving Credit Facilities with a tenor of five years amounting to EUR 50 000 000 (Revolving Facility 1) and PLN 211 480 000 (Revolving Facility 2).
On 31 July 2018, the Senior Facilities Agreement originally dated 13 April 2017 was amended and restated. The total amount of senior secured term loan B increased by EUR 95 million from EUR 350 million to EUR 445 million, the volume of the Revolving Credit Facilities remains unchanged. Final maturity dates within the senior facilities agreement remain unchanged.
At the reporting date these Revolving Credit Facilities were not drawn in cash whilst bank guarantees were issued within the Revolving Facility 2 for the total amount of PLN 6 265 thousand as well as Letters of Credit in an amount of EUR 1 129 thousand. The Revolving Facility 1 is partially drawn for bank guarantees of EUR 2 296 thousand and PLN 520 thousand (EUR 122 thousand) as well as Letters of Credit in an amount of EUR 5 040 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.
Notes to the condensed consolidated interim financial statements for the nine month period ended 30 September 2018 (all amounts in EUR thousand)
| '00 0 E UR |
30 Se 20 18 p. |
31 De c. 2 01 7 |
||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Len de r |
Cu rre ncy |
Int st ere rat e |
ion Du rat fro m |
ion Du rat to |
dit Cre lim it E UR |
Dra wn nt am ou EU R |
dra Un wn nt am ou EU R |
dit Cre lim it E UR |
Dra wn nt am ou EU R |
dra Un wn nt am ou EU R |
| ( ) lvin Cre dit ci lity Re Fa PL N vo g |
||||||||||
| k M l len Ba i niu S.A n m |
PL N |
W IBO R + in m arg |
1 A 20 17 ug |
1 A 20 22 ug |
20 14 8 |
0 | 20 14 8 |
18 93 0 |
0 | 18 93 0 |
| lio k S A r B .A. an |
PL N |
W IBO R + in m arg |
1 A 20 17 ug |
1 A 20 22 ug |
18 43 5 |
0 | 18 43 5 |
18 87 8 |
0 | 18 87 8 |
| i f fei k P ls ka S.A Ra Ba sen n o |
PL N |
W IBO in R + m arg |
1 A 20 17 ug |
1 A 20 22 ug |
7 6 28 |
0 | 7 6 28 |
7 8 11 |
0 | 7 8 11 |
| Gu Co Eas nte t ara es re |
||||||||||
| k M i l len ium S. Ba A. n |
PL N |
20 1 A 17 ug |
20 22 1 A ug |
2 7 63 |
2 7 63 |
0 | 32 4 5 |
32 4 5 |
0 | |
| /s ba k g d i iss n P LN tee n ua ran ue |
1 4 65 |
1 4 65 |
0 | 1 7 40 |
1 7 40 |
0 | ||||
| /s ba k g iss d i UR tee n E n ua ran ue |
0 | 0 | 0 | 0 | 0 | 0 | ||||
| /s f C dit d i d [ ] Let iss n E UR EU R 2 42 8 0 00 ter o re ue ye ar- en |
0 | 0 | 0 | 2 7 92 |
2 7 92 |
0 | ||||
| /s f C dit d i l [ ] Let iss n E UR EU R 1 12 9 0 70 ter tua o re ue ac |
1 2 98 |
1 2 98 |
0 | 0 | 0 | 0 | ||||
| f c dit ds Lim it o Eas t re ca r |
||||||||||
| k M l len Ba i ium S. A. n |
PL N |
1 A 20 17 ug |
1 A 20 22 ug |
46 8 |
0 | 46 8 |
47 9 |
0 | 47 9 |
|
| d fac l TO TA L C OR E E AS T C it i it ies re |
49 44 2 |
2 7 63 |
46 67 9 |
50 63 0 |
4 5 32 |
46 09 8 |
452 458 42 542 400 000 352 630 47 370
Notes to the condensed consolidated interim financial statements for the nine month period ended 30 September 2018 (all amounts in EUR thousand)
| '00 0 E UR |
30 Se 20 18 p. |
31 De c. 2 01 7 |
|||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| de Len r |
Cu rre ncy |
Int st ere rat e |
ion Du rat fro m |
ion Du rat to |
dit Cre lim it E UR |
Dra wn nt EU am ou R |
dra Un wn nt EU am ou R |
dit Cre lim it E UR |
Dra wn nt EU am ou R |
dra Un wn nt EU am ou R |
|
| lvin dit ci lity ( ) Re Cre Fa EU R vo g |
|||||||||||
| lio k S A r B .A. an |
EU R |
EU RIB OR in + ma rg |
1 A 20 17 ug |
1 A 20 22 ug |
5 0 00 |
0 | 5 0 00 |
5 0 00 |
0 | 5 0 00 |
|
| k o f C hin Ba n a |
EU R |
EU RIB OR in + ma rg |
1 A 20 17 ug |
1 A 20 22 ug |
10 00 0 |
0 | 10 00 0 |
10 00 0 |
0 | 10 00 0 |
|
| Co ba k A G mm erz n |
EU R |
OR in EU RIB + ma rg |
1 A 20 17 ug |
1 A 20 22 ug |
*) | 42 7 5 |
0 | 42 7 5 |
12 37 0 |
0 | 12 37 0 |
| he k A De Ba G uts c n |
EU R |
EU RIB OR in + ma rg |
1 A 20 17 ug |
2 A 20 18 ug |
** ) |
0 | 0 | 0 | 12 00 0 |
0 | 12 00 0 |
| l dm hs k U Go Sa Ba SA an c n |
EU R |
EU RIB OR in + ma rg |
2 A 20 18 ug |
1 A 20 22 ug |
** ) |
15 00 0 |
0 | 15 00 0 |
0 | 0 | 0 |
| i f fei k P ls ka Ra Ba S.A sen n o |
EU R |
in EU RIB OR + ma rg |
1 A 20 17 ug |
1 A 20 22 ug |
5 0 00 |
0 | 5 0 00 |
5 0 00 |
0 | 5 0 00 |
|
| Gu Co We nte st ara es re |
|||||||||||
| Co ba k A G mm erz n |
EU R |
20 1 A 17 ug |
20 22 1 A ug |
58 7 4 |
58 7 4 |
0 | 2 6 30 |
2 6 30 |
0 | ||
| ba k g d i iss n E UR tee n ua ran ue |
2 2 96 |
2 2 96 |
0 | 2 2 57 |
2 2 57 |
0 | |||||
| ba k g iss d i n P LN tee n ua ran ue |
12 2 |
12 2 |
0 | 37 3 |
37 3 |
0 | |||||
| let f c dit d i iss n E UR ter o re ue |
5 0 40 |
5 0 40 |
0 | 0 | 0 | 0 | |||||
| ( ) he k A G ci l lar G De Ba An uts tee c n y – ua ran s |
20 1 A 17 ug |
2 A 20 18 ug |
) ** |
0 | 0 | 0 | 3 0 00 |
0 | 3 0 00 |
||
| he de bt Ot ins tru nts r me |
|||||||||||
| ( ) Te Lo B TL B rm an |
EU R |
1 A 20 17 ug |
1 A 20 24 ug |
44 5 0 00 |
44 5 0 00 |
0 | 35 0 0 00 |
35 0 0 00 |
0 |
*) Total RCF-limit with Commerzbank AG is EUR 15m, adding cash-line and ancillary used for guarantees
**) Transfer/Assignment of RCF-participation from Deutsche Bank AG to Goldman Sachs Bank USA (EUR 15m) as per 2 August 2018
Notes to the condensed consolidated interim financial statements for the nine month period ended 30 September 2018 (all amounts in EUR thousand)
For the nine month period ended 30 September 2018:
| '000 EUR | 1 Jan. 2018 |
Additions | Utilisation | Release | Currency difference |
30 Sep. 2018 |
|---|---|---|---|---|---|---|
| Severance payments | 504 | 711 | -203 | -532 | 0 | 480 |
| Other provisions | 949 | 14 | -14 | 0 | -10 | 939 |
| Total non-current | 1 453 | 725 | -217 | -532 | -10 | 1 419 |
| Court proceedings (*) | 3 150 | 550 | 0 | 0 | 0 | 3 700 |
| OCCP penalty and related costs | 9 261 | 0 | -319 | 0 | -214 | 8 728 |
| Restructuring costs | 3 144 | 0 | -157 | -304 | 0 | 2 683 |
| Total current | 15 555 | 550 | -476 | -304 | -214 | 15 111 |
| TOTAL | 17 008 | 1 275 | -693 | -836 | -224 | 16 530 |
For the nine month period ended 30 September 2017:
| '000 EUR | 1 Jan. 2017 |
Additions | Utilisation | Release | Currency difference |
30 Sep. 2017 |
|---|---|---|---|---|---|---|
| Restructuring costs | 1 926 | 0 | -147 | -79 | 0 | 1 700 |
| Severance payments | 775 | 874 | -23 | -1 236 | 0 | 390 |
| Other provisions | 993 | 0 | -37 | -300 | 0 | 656 |
| Total non-current | 3 694 | 874 | -207 | -1 615 | 0 | 2 746 |
| Court proceedings (*) | 7 650 | 0 | -3 900 | -600 | 0 | 3 150 |
| Restructuring costs | 5 132 | 0 | -1 860 | -1 445 | 0 | 1 827 |
| Total current | 12 782 | 0 | -5 760 | -2 045 | 0 | 4 977 |
| TOTAL | 16 476 | 874 | -5 967 | -3 660 | 0 | 7 723 |
(*)Provision for court proceedings – the category covers the provision regarding antitrust and other court proceedings for West (for details please see Note 19). The data for 9M 2017 has been changed for comparability reasons.
| '000 EUR | 30 Sep. 2018 | 31 Dec. 2017 |
|---|---|---|
| Trade payables | 117 522 | 112 591 |
| Liabilities under factoring agreements | 31 075 | 38 052 |
| Insolvency-related liabilities of PCF GmbH | 7 748 | 7 748 |
| VAT liabilities | 2 954 | 898 |
| Liabilities for capital expenditures | 2 754 | 11 282 |
| Prepaid deliveries | 28 | 6 |
| Other liabilities | 12 392 | 12 391 |
| TOTAL | 174 473 | 182 968 |
Other liabilities as of 30 September 2018 comprised mainly of:
• tax liability related to the acquisition of EUR 5 201 thousand (EUR 5 326 thousand as of 31 December 2017),
• other tax payables of EUR 507 thousand (EUR 2 718 thousand as of 31 December 2017),
Notes to the condensed consolidated interim financial statements for the nine month period ended 30 September 2018 (all amounts in EUR thousand)
The Group's Management has overall responsibility for the establishment and oversight of the Group's risk management framework.
The Group's financial risk management policies are established to identify and analyze the risks faced by the Group, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group's activities.
The Group's operations are exposed to the following risks:
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.
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group's receivables from customers.
Transactions which expose the Group to credit risk include trade receivables and cash and cash equivalents. In accordance with the Management Board's policy, the Group's credit risk exposure is monitored on an ongoing basis.
Credit risk associated with bank deposits is assessed by the Group as low due to deposits of its assets only in financial institutions which have a high short-term credit rating.
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 the first three quarters 2018, approximately 95% 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 did not incur any significant losses due to customer default. Allowances
Notes to the condensed consolidated interim financial statements for the nine month period ended 30 September 2018 (all amounts in EUR thousand)
for impairment losses are recognized on uninsured receivables and on amounts corresponding to the Group's deductibles for receivables that are insured, based on detailed impairment analysis of accounts receivable.
The carrying amount of each financial asset, including financial derivatives, represents the maximum credit risk exposure.
The Group holds funds in bank accounts and has liabilities under bank borrowings and TLB. The interest rate risk is related to interest payments with floating interest rates. The Group does not hedge the interest rate risk for the time being. The Group monitors the level of interest costs on a regular basis.
The Group is exposed to currency risk mainly due to the extent that there is a mismatch between the currencies in which trade transactions, purchases of materials and merchandise and borrowings are denominated and the respective functional currencies of Group companies. The functional currency of Group companies is primarily the Euro (EUR) and Polish zloty (PLN). The main currencies in which foreign currency transactions are denominated are Euro, US dollars and pound sterling (GBP). However, foreign exchange gains or losses resulting from exchange rate fluctuations mostly offset each other (natural hedging).
The Group also incurs capital expenditures in foreign currencies. The Group monitors its foreign currency positions on an ongoing basis and hedges its currency risk of open positions with forward transactions. The Group uses forward contracts to hedge its currency risk related to commercial transactions (export of goods). The forward contracts used to hedge the Group's commercial transactions in Core East consist of the sale of EUR at a pre-determined rate. This helps to secure margins on export sales and to mitigate the risk of adverse changes of the margins due to appreciation of the Polish zloty.
Forward contracts are measured at the end of each month.
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.
On 13 April 2017 the Group has finalized and signed refinancing agreements of EUR 450.0 million senior secured credit facilities comprising:
The proceeds from the Facilities have been used to redeem the EUR 321 684 000 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.
On 31 July 2018, the Senior Facilities Agreement originally dated 13 April 2017 was amended and restated. The total amount of senior secured term loan B increased by EUR 95 million from EUR 350 million to EUR 445 million, the volume of the Revolving Credit Facilities remains unchanged.
In order to secure the new obligations under the senior facilities agreement originally dated 13 April 2017 and having been amended and restated on 31 July 2018, Pfleiderer Group S.A. on 1 August 2017 established the financial pledge and, subject to
Notes to the condensed consolidated interim financial statements for the nine month period ended 30 September 2018 (all amounts in EUR thousand)
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 originally dated 13 April 2017, and having been amended and restated on 31 July 2018, the existing security interests granted by the Polish Pfleiderer entities to secure 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 Senior Secured Notes due 1 August 2017 issued by PCF GmbH were released.
In order to secure the new obligations under the senior facilities agreement originally dated 13 April 2017, and having been amended and restated on 31 July 2018, the following security interests have been granted for the benefit of the lenders:
(i) Pfleiderer Group S.A. entered 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 granted powers of attorney to exercise corporate rights from the pledged shares in these companies in favor 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. entered into the agreements for financial and registered pledges over major bank accounts and granted the powers of attorney to dispose funds from their bank accounts in favor 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. entered into the agreements for security assignments of rights under commercial contracts, intercompany loan agreements and insurance agreements.
(iv) The following mortgages have been established in favor 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. executed the submissions to enforcement (oświadczenie o poddaniu się egzekucji) in favor of the Security Agent.
Following the initial utilization of the facilities under the senior facilities agreement originally dated 13 April 2017, and having been amended and restated on 31 July 2018, the existing security interests granted by the German Pfleiderer entities to secure 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 alias, 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 Senior Secured Notes due 1 August 2017 issued by PCF GmbH have been released.
In order to secure the new obligations under the senior facilities agreement originally dated 13 April 2017, and having been amended and restated on 31 July 2018, the following security interests have been granted for the benefit of the lenders, whereby Wilmington Trust (London) Limited is acting as new security agent (the "New Security Agent"):
(i) Pfleiderer Group S.A., PCF GmbH, Pfleiderer Deutschland GmbH as pledgors granted 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.
Notes to the condensed consolidated interim financial statements for the nine month period ended 30 September 2018 (all amounts in EUR thousand)
(ii) PCF GmbH, Pfleiderer Deutschland GmbH, Pfleiderer Neumarkt GmbH, Pfleiderer Leutkirch GmbH, Pfleiderer Gütersloh GmbH, Pfleiderer Arnsberg GmbH, Pfleiderer Baruth GmbH as pledgors granted 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 assigned as security their receivables under the intercompany loans, material trade and insurance receivables.
(iv) The existing German land charges have been assigned to the New Security Agent.
As at 13 April 2017, certain members of the Group have guaranteed the liabilities under the senior facilities agreement (as amended and restated), 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., Pfleiderer 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 4 July 2014 and the senior notes issued on 27 June 2014 have been refinanced by the senior facilities agreement dated 13 April 2017 (as amended and restated).
As at 30 September 2018 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, German insolvency code (Alno case) as well as potential tax liability described below.
On 28 December 2017 the President of the Office of Competition and Customer Protection (hereinafter referred to as 'President of the OCCP') issued a decision no. DOK-3/2017 (hereinafter referred to as 'Decision') considering as an anticompetitive practice the conclusion by Kronospan Szczecinek Sp. z o.o., Kronospan Mielec Sp. z o.o., Swiss Kronos Sp. z o.o. (formerly 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.) an agreement limiting competition on the national market of sales of chipboard and on the national market of sales of fibreboard, consisting in:
According to the Decision, the agreement was in force from the beginning of 2008 to 7 September 2011.
The President of the OCCP imposed a fine of PLN 15 958 thousand on Pfleiderer Group S.A. and PLN 19 805 thousand on Pfleiderer Wieruszów Sp. z o.o.
The Decision ended the antimonopoly proceedings initiated by the President of the OCCP in 2012. The decision is not legally final. On the 29 January 2018, the Company and Pfleiderer Wieruszów Sp. z o.o. appealed against the Decision to the Court of Competition and Consumer Protection.
The Company and Pfleiderer Wieruszów Sp. z o.o., established provisions in order to secure funds for anticipated legal costs related to the appeal against the Decision and for the payment of possible fines if the Company and Pfleiderer Wieruszów Sp. z o.o. are obliged to pay the fines specified in the Decision. As of 30 September 2018 the provisions amount to PLN 37 858 thousand. Furthermore the Decision results in a risk of claims for damages against the companies Pfleiderer Group S.A. and Pfleiderer Wieruszów Sp. z o.o. This risk cannot be quantified based on the evidence and information available at this time.
Notes to the condensed consolidated interim financial statements for the nine month period ended 30 September 2018 (all amounts in EUR thousand)
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 con-nection 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 September 2018 a provision related to antitrust violations of EUR 3 700 thousand including costs related to legal proceedings with Classen as well as legal costs and amicable settlements of claims with 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, 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. At oral hearing on 2 February 2017, the court has not clearly indicated whether it deems the claim justified as to the merits or not. The next oral hearing was held on 3 May 2018. The outcome is difficult to predict. The court has postponed the decision till 15 November 2018. 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 September 2018 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 3 700 thousand.
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 Hannover (Landgericht Hannover) against Sonae Arauco Deutschland AG (then: 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 Sonae Arauco Deutschland AG, PCF GmbH has joined the legal proceedings as an intervener (Nebenintervenient). The court has passed a judgement on 31 May 2016. According to it the claim is justified on the merits but subject to further discussion regarding quantum. Sonae Arauco Deutschland AG has filed an appeal against this decision with the higher regional court in Celle. The court meeting was held in March 2018. The outcome is difficult to predict at this moment as the claiming party can file further arguments to the court until 31 October 2018.
As at 30 September 2018 the Management based on its best knowledge recognised a provision for the expected outcome, which is included in the total amount of EUR 3 700 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 Sonae Arauco Deutschland AG 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.
Pfleiderer Deutschland GmbH (Pfleiderer) received the letter from the insolvency administrator of Alno Aktiengesellschaft (Alno), dated 24 July 2018 in which he challenges all payments made by Alno to Pfleiderer Deutschland GmbH (Pfleiderer) for delivery of Pfleiderer's products from 30 June 2014 to 6 July 2017 in a total amount of EUR 19 346 thousand. With respect to all payments made within three months prior to the filing for opening of insolvency proceedings he argues that they are subject to the three months claw-back right (sec. 130 German Insolvency Code). With respect to the remaining payments made within four years prior to the filing for opening of insolvency proceedings he argues that they are subject to the claw-back right for intended damage (sec. 133 German Insolvency Code). The insolvency administrator bases both claw-back claims on the assumption that Alno was illiquid during the whole claw-back period and Pfleiderer was aware of it. The insolvency
Notes to the condensed consolidated interim financial statements for the nine month period ended 30 September 2018 (all amounts in EUR thousand)
administrator relies on a – to Pfleiderer unknown - expert's opinion regarding Alno being illiquid during the claw-back period. Based on the facts known so far it is not possible to estimate in a reliable way an amount of the alleged claw-back claim for which it is more likely than not that Pfleiderer has to pay it. Company and its legal advisors will further check the claim and all related documentation but at this stage the alleged claw-back claim is an uncertain liability. In case of a litigation the Management estimated the cost for lawyers and the court and created the provision in the amount of EUR 550 thousand.
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 7 February 2017 (GrS 1/15). According to the decision, the decree of the Federal Ministry of Finance dated 27 March 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. As at 30 September 2018 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 September 2018 no provision has been recognized by the Group in these consolidated financial statements.
Moreover the Group has tax liabilities for the expected outcome of the tax audit for years 2010-2015 conducted in Germany. Like described in Note 10 "Income tax expense" most of this liability has already been paid in Q3 2018, so the remaining liability is amounting to EUR 1.3 million.
No transactions with related parties other than described below were conducted in the reporting period.
As of 30 September 2018 the Management Board consists of Tom K. Schäbinger (President and CEO), Dirk Hardow (COO), Ivo Schintz (CCO) and Dr. Nico Reiner (CFO).
Remuneration of members of the Company's Management Board, including bonuses, paid and payable, for the reporting period:
| '000 EUR | 1 Jan. - | 1 Jan. - |
|---|---|---|
| 30 Sep. 2018 | 30 Sep. 2017 | |
| Remuneration of Management Board | 2 926 | 3 159 |
| Remuneration of Supervisory Board | 462 | 532 |
| TOTAL | 3 388 | 3 691 |
The aforementioned remuneration includes all payments from all Group companies to the Board.
No member of the Company's Management Board had loan-related debt towards the Group.
As at 30 September 2018 members of the Management held the following number of Pfleiderer Group shares:
On 27 February 2018 Mr Richard Mayer submitted the resignation from the Management Board of the Company. The resignation took effect from 31 March 2018.
On 27 February 2018 the Supervisory Board of the Company decided to appoint Dr. Nico Reiner to the Management Board of the Company as the Member of the Management Board (Chief Financial Officer). The appointment of Dr. Nico Reiner took effect from 1 April 2018.
Notes to the condensed consolidated interim financial statements for the nine month period ended 30 September 2018 (all amounts in EUR thousand)
In the reporting period the Group recognized the costs of the long term incentive programme in the amount of EUR 496 thousand. The amount has been included in the employee benefit costs versus reserves in Equity.
After the balance sheet date two new ancillary facilities connected with existing Senior Facilities Agreements have been established: overdraft agreement for the amount of EUR 5 000 thousand and Credit limit agreement for the amount of PLN 32 628 thousand. The expiry date for both agreements is 30 June 2022.
There were no other events subsequent to the end of the reporting period that would require disclosure in this interim condensed consolidated financial statements.
Management Board of Pfleiderer Group S.A.
Tom K. Schäbinger President of the Management Board
Dr. Nico Reiner Dirk Hardow Chief Financial Officer Chief Operating Officer
Member of the Management Board, Member of the Management Board,
Ivo Schintz Member of the Management Board, Chief Commercial Officer
Wrocław, 14 November 2018
PFLEIDERER GROUP S.A.
UNAUDITED CONDENSED SEPARATE INTERIM FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTH PERIOD ENDED 30 SEPTEMBER,2018
| Assets | 30.09.2018 | 31.12.2017 |
|---|---|---|
| Property, plant and equipment | 298 | 318 |
| Investments in subsidiaries | 2 109 775 | 2 109 775 |
| Other non – current financial assets | 75 | 75 |
| Non-current loans advanced to subsidiaries | - | 108 213 |
| Non-current assets | 2 110 148 | 2 218 381 |
| Trade and other receivables | 3 613 | 59 577 |
| Income tax receivables | - | 13 |
| Cash and cash equivalents | 74 536 | 4 413 |
| Current loans advanced to subsidiaries | 29 162 | - |
| Current assets | 107 311 | 64 003 |
| Total assets | 2 217 459 | 2 282 384 |
| Equity and liabilities | 30.09.2018 | 31.12.2017 |
|---|---|---|
| Equity | ||
| Share capital | 21 351 | 21 351 |
| Share premium | 625 240 | 625 240 |
| Reserves | 320 858 | 358 023 |
| Retained earnings | 53 053 | 438 624 |
| Total equity | 1 020 502 | 1 443 238 |
| Liabilities | ||
| Employee related payables | 128 | 128 |
| Deferred tax liabilities | 157 | 3 993 |
| Non-current liabilities | 285 | 4 121 |
| Loans and borrowings | 1 061 613 | 639 582 |
| Liabilities to related parties under debt securities | 76 940 | 146 869 |
| Income tax liabilities | 42 | 200 |
| Trade and other payables | 55 773 | 47 028 |
| Employee related payables | 2 304 | 1 346 |
| Current liabilities | 1 196 672 | 835 025 |
| Total liabilities | 1 196 957 | 839 146 |
| Total equity and liabilities | 2 217 459 | 2 282 384 |
| 01.01.2018- 30.09.2018 |
01.01.2017- 30.09.2017 |
01.07.2018- 30.09.2018 |
01.07.2017- 30.09.2017 |
|
|---|---|---|---|---|
| Other operating income | 8 198 | 2 370 | 2 469 | 826 |
| General and administrative expenses | (17 777) | (27 506) | (4 713) | (10 308) |
| Other operating expenses | (10 094) | (1 324) | (9 996) | (367) |
| Loss from operating activities | (19 673) | (26 460) | (12 240) | (9 849) |
| Financial income | 82 683 | 413 440 | 8 119 | 35 234 |
| Financial expenses | (36 736) | (66 646) | 7 781 | (48 866) |
| Net financial income /(loss) | 45 947 | 346 794 | 15 900 | (13 632) |
| Profit /(loss) before tax | 26 274 | 320 334 | 3 660 | (23 481) |
| Income tax expense | 3 697 | 1 988 | (1 022) | 3 726 |
| Net profit /(loss) for the reporting period | 29 971 | 322 322 | 2 638 | (19 755) |
| Other comprehensive income: | ||||
|---|---|---|---|---|
| Items that may not be reclassified to profit or loss | ||||
| Long term incentive program | 2 118 | - | 706 | - |
| Other comprehensive income | 2 118 | - | 706 | - |
| Total comprehensive income for the period | 32 089 | 322 322 | 3 344 | (19 755) |
| Basic and diluted earnings per share (PLN) | 0.51 | 4.98 | 0.05 | (0.31) |
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| 01.01.2018 | 01.01.2017 | |
|---|---|---|
| 30.09.2018 | 30.09.2017 | |
| Cash flows from operating activities | ||
| Net profit for the reporting periods | 29 971 | 322 322 |
| Adjustments | (31 303) | (338 620) |
| Depreciation and amortisation | 20 | 27 |
| Foreign exchange losses / (gains) | 13 376 | (27 158) |
| Dividends and interest for the period | (59 324) | (319 636) |
| Income tax expense | (3 697) | (1 988) |
| Changes in: | ||
| - trade and other receivables | 10 427 | (3 388) |
| - inventories | - | (96) |
| - trade and other payables | 4 819 | 12 024 |
| - employee benefit obligations | 958 | 1 595 |
| Other adjustments | 2 118 | - |
| Cash flows from operating activities | (1 332) | (16 298) |
| Interest received | 44 | 32 |
| Interest paid | (3) | (2) |
| Income tax received/(paid) | (284) | 1 050 |
| Net cash provided by operating activities | (1 575) | (15 218) |
| Cash flows from investing activities | ||
| Dividend received | 108 088 | 81 920 |
| Acquisition of a subsidiary | (222) | - |
| Acquisition of intangible assets, property, plant and equipment | - | (4) |
| Proceeds from repayment of loans advanced | 82 000 | - |
| Net cash provided by/ used in investing activities | 189 866 | 81 916 |
| Cash flows from financing activities | ||
| Redemption of debt securities | (1 523 332) | (1 071 522) |
| Issue of debt securities | 1 453 440 | 1 083 341 |
| Increase in loans and borrowings from related entities | 443 729 | - |
| Decrease in loans and borrowings from related entities | (24 951) | - |
| Refinancing costs and bank fees | (3 975) | (6 325) |
| Own shares purchase | (383 660) | - |
| Dividend payments | (71 165) | (71 171) |
| Interest paid | (15 763) | (1 569) |
| Other financial inflows | 10 685 | - |
| Other financial outflows | (3 176) | - |
| Net cash used in financing activities | (118 168) | (67 246) |
| Total net cash flows | 70 123 | (548) |
| Balance sheet change in cash, including: | 70 123 | (548) |
| Net cash flow | 70 123 | (548) |
| Cash and cash equivalents at beginning of the reporting period | 4 413 | 4 677 |
| Cash at end of the period | 74 536 | 4 129 |
Tom K. Schäbinger President of the Management Board
Nico Reiner Member of the Management Board,
Chief Financial Officer
Dirk Hardow Member of the Management Board, Chief Operating Officer
Member of the Management Board, Chief Commercial Officer
Wrocław, 14 November 2018 r.
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