Annual Report • Apr 9, 2019
Annual Report
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FOURLIS HOLDINGS S.A. REG. NO: 13110/06/Β/86/01 GENERAL ELECTRONIC COMMERCIAL REGISTRY NO: 258101000 OFFICES: 18-20, SOROU STR. (Building A) – 151 25 MAROUSI
| Statements of Members of the Board of Directors | 3 |
|---|---|
| Annual Report of the Board of Directors of the Company FOURLIS HOLDINGS SA for the period 1/1 – 31/12/2018 |
4 |
| Independent Auditor's Report | 52 |
| Statement of Financial Position (Consolidated and Separate) as at December 31, 2018 and at December 31,2017 |
58 |
| Income Statement (Consolidated) for the period 1/1 to 31/12/2018 and 1/1 to 31/12/2017 | 59 |
| Statement of Comprehensive Income (Consolidated) for the period 1/1 to 31/12/2018 and 1/1 to 31/12/2017 |
60 |
| Income Statement (Separate) for the period 1/1 to 31/12/2018 and 1/1 to 31/12/2017 | 61 |
| Statement of Comprehensive Income (Separate) for the period 1/1 to 31/12/2018 and 1/1 to 31/12/2017 |
62 |
| Statement of Changes in Equity (Consolidated) for the period 1/1 to 31/12/2018 and 1/1 to 31/12/2017 |
63 |
| Statement of Changes in Equity (Separate) for the period 1/1 to 31/12/2018 and 1/1 to 31/12/2017 |
64 |
| Statement of Cash Flows (Consolidated and Separate) for the period 1/1 to 31/12/2018 and 1/1 to 31/12/2017 |
65 |
| Notes to the annual financial statements (consolidated and separate) as of Dec 31, 2018 and for the year then ended |
66 |
| Web site for the publication of the Annual Financial Statements | 132 |
(In accordance with article 4 par. 2 L. 3556/ 2007)
The members of the Board of Directors of FOURLIS HOLDINGS SA
We confirm that to the best of our knowledge:
Maroussi, March 18 2019
The Chairman The Vice Chairman The CEO
Vassilis S. Fourlis Dafni A. Fourlis Apostolos D. Petalas
Dear Shareholders,
This Financial Report of the Board of Directors is for the period 1/1 - 31/12/2018 and was conducted in compliance with the relevant provisions of L. 2190/1920 as applied until 31/12/2018, article 4 of L. 3556/2007 and resolution 7/448/22.10.2007 of Hellenic Capital Market Commission. Consolidated and Separate Financial Statements comply to IFRS as adopted by EU.
Please find below for your approval, the Financial Statements of the period 1/1 – 31/12/2018 of the Company FOURLIS HOLDINGS S.A. and the Group which consists of its direct and indirect subsidiaries.
The FOURLIS Group ("Group"), which consists of the parent Company FOURLIS HOLDINGS S.A. ("Company") along with its subsidiaries and their subsidiaries, is mainly operating in the Retail Trading of Home Furniture and Household Goods (IKEA Stores) and the Retail Trading of Sporting Goods (INTERSPORT and TAF Stores).
The subsidiary companies and their subsidiaries that are included in the consolidated financial statements for the year 2018, grouped per segment and country of operation are the following:
The retail trading of home furniture and household goods segment includes the following Companies:
WYLDES LTD which operates in Cyprus and the parent company has an indirect shareholding of 100%. Through associated companies WYLDES LTD, VYNER LTD and SW SOFIA MALL ENTERPRISES LTD, the group has a shareholding in the company SOFIA SOUTH RING MALL EAD, which operates one of the biggest malls in Sofia Bulgaria as well as its relevant operating activities.
The retail trading of sporting goods segment includes the following Companies:
The Group's consolidated data include, the following affiliated companies:
Sales for retail trading of Furniture and Household Goods (IKEA Stores) increased by 1,8% compared to the corresponding period of 2017 while sales of the retail trading of Sporting Goods (INTERSPORT & TAF Stores) increased by 6,3%. More specifically:
The retail trading of Furniture and Household Goods (IKEA Stores) segment, realized sales of € 296,7 million for the year 2018 (2017: € 291,3 million). The EBITDA totaled € 32,1 million compared to € 31,0 million in 2017 and reported profits before tax € 15,8 million versus € 13,8 million profits in 2017.
The retail trading of Sporting Goods segment (INTERSPORT and TAF Stores), realized sales of € 151,8 million for the year 2018 (2017: € 142,7 million). The segment's EBITDA for the year 2018 totaled € 13,5 million (€ 11,9 million in 2017), while recorded profits before tax € 3,9 million compared to € 1,9 million in 2017.
Group's consolidated profits before tax amounted to € 18,5 million compared to consolidated profits before tax € 14,5 million in 2017. Net profit amounted to € 14,3 million compared to profit € 10,0 million on 2017.
In an effort to present a complete and fair view of the Group's performance, we report the consolidated results per segment for the period 1/1 – 31/12/2018 versus 1/1 – 31/12/2017 at the following tables. Amounts are in thousands of euros.
Retail Trading of Home Furniture and Household Goods (IKEA stores):
| 2018 | 2017 | 2018/2017 | |
|---|---|---|---|
| Revenue | 296.698 | 291.312 | 1,02 |
| EBITDA (*) | 32.134 | 30.981 | 1,04 |
| Profit before Tax | 15.784 | 13.771 | 1,15 |
(*) The alternative performance measures selected are mentioned in note 9.
| Retail Trading of Sporting Goods (INTERSPORT and TAF stores) | |
|---|---|
| -------------------------------------------------------------- | -- |
| 2018 | 2017 | 2018/2017 | |
|---|---|---|---|
| Revenue | 151.787 | 142.735 | 1,06 |
| EBITDA (*) | 13.534 | 11.866 | 1,14 |
| Profit before Tax | 3.910 | 1.861 | 2,10 |
(*)The alternative performance measures selected are mentioned in note 9.
| 2018 | 2017 | 2018/2017 | |
|---|---|---|---|
| Revenue | 448.486 | 434.059 | 1,03 |
| EBITDA (*) | 44.269 | 41.837 | 1,06 |
| Profit before Tax | 18.470 | 14.532 | 1,27 |
| Net Profit After Tax and Minority Interests |
14.291 | 10.039 | 1,42 |
(*)The alternative performance measures selected are mentioned in note 9.
We note that on a consolidated basis the Group's Total Equity (after minority interest) at December 31, 2018 amounts to € 173,7 million versus an amount of € 167,9 million of year end 2017. EBITDA does not include income from depreciation of grant assets.
Below please find basic Indicators for the Group Financial Structure and Performance & Efficiency according to the consolidated financial statements included in the Annual Financial Report of the
Group, for the years 2018 and 2017 respectively.
| 2018 | 2017 | |
|---|---|---|
| Total Current assets / Total Assets | 34,12% | 33,91% |
| Total Liabilities / Total SHAREHOLDERS EQUITY & LIABILITIES | 59,04% | 60,17% |
| Total Shareholders Equity / Total SHAREHOLDERS EQUITY & LIABILITIES |
40,96% | 39,83% |
| Total Current assets / Total Current Liabilities | 113,96% | 113,74% |
| 2018 | 2017 | |
|---|---|---|
| Operating Profit / Revenue | 6,74% | 6,43% |
| Profit before Tax / Total Shareholders Equity | 10,63% | 8,66% |
During the period 1/1 – 31/12/2018 the following share capital changes were realized to the parent company and its subsidiaries:
Following resolutions of the General Assembly of the shareholders of the company held on 15/6/2018 (relevant minutes of the G.A. with number 22/15.06.2018), the share capital of the company a) increased by the amount of € 2.065.747,52 with capitalization, according to the provision of article 71B § 6 L. 4172/2013, of equal amount of the reserve formed in accordance with L. 2065/1992 from shares distribution after capitalization of goodwill which resulted from property revaluation of subsidiaries or other companies in which the Company has a shareholding and increase of the nominal value of the share by the amount of € 0,04, and b) decreased by the amount of € 5.164.368,80 with reduction of nominal value of each share by the amount of € 0,10 and corresponding capital return to shareholders.
The aforementioned change was registered to the General Electronic Commercial Registry (GECR) on 27/6/2018 (Code Registration Number 1411661), with the relevant 1196323/27.06.2018 announcement issued by the Minister of Finance and Development.
Under the context of the previous Stock Option Plan which was approved and established by the resolution of the Extraordinary General Assembly of the shareholders on 27/9/2013 (Stock Option Plan – hereinafter "the Program"), within the year 2018, 163.626 options were exercised (hereinafter "the Options"). Following the resolution of the Board of Directors on 17/12/2018 (relevant minutes of the BoD with number 400/17.12.2018), the exercise of the aforementioned options from the corresponding beneficiaries of the Program was certified by payment of the exercise price of the new shares.
It is noted that the underlying value of the shares to which the remaining stock options reflect, was initially determined at the amount of €3,40 per share, which was the stock closing price of the share on the date of the resolution of the General Assembly for the SOP (27/9/2013). Already, the resolutions 20/11/2017 and 19/11/2018 of the BoD (relevant minutes of the G.A. with number 389/20.11.2017 and 399/19.11.2018) resulted to the readjustment of the historical share price of the Company and therefore the implemented exercise price of stock options of the SOP is € 3,2823 per share.
Following the certification of the payment of the exercise price of the Stock Options by their beneficiaries, namely the amount of € 537.069,61, 163.626 new common nominal shares were issued and delivered to the corresponding beneficiaries of the Program, of nominal value € 0,91 per share, while the share capital of the Company increased by the amount of € 148.899,66 which reflects to the nominal value of the new shares. Moreover, following the exercise of the aforementioned Options by payment of the exercise value, namely € 3,2823 per share according to the aforementioned, the share premium, of total amount € 388.169,95, was transferred to "Share Premium reserve".
The aforementioned change was registered to the General Electronic Commercial Registry (GECR) on 22/1/2019 (Code Registration Number 1638212), with the relevant 7785/22.01.2019 announcement issued by the Minister of Finance and Development.
Following these changes, the share capital of the Company now amounts to € 47.144.655,74 divided into 51.807.314 shares of nominal value € 0,91 per share, totally paid.
Following the resolution of the General Assembly of the shareholders of the company held on 28/6/2018, the share capital of the company increased by the amount of BGN 1.570.000,00 by issuing 157.000 new common nominal vote shares, of nominal value BGN 10,00 each. The share capital increase was totally covered by the shareholder INTERSPORT ATHLETICS S.A. following the resolution of 2/7/2018 of the Board of Directors and was registered in the relevant commercial registers on 19/7/2018. After the aforementioned share capital increase, the share capital amounts to BGN 14.955.170,00 divided into 1.495.517 shares of nominal value BGN 10,00 per share. Exchange rate euro (€) with leva (BGN) is fixed at: 1 € = 1,95583 BGN.
Following resolutions of the General Assembly of the shareholders of the company held on 21/3/2018, the share capital of the company a) decreased by the amount of TL 30.421.662,00, with decrease of nominal value of each share by the amount of TL 0,24, to offset prior years losses and b) increased by the amount of € TL 14.000.000 through cash payment, by issuing 87.500.000 new common nominal shares of nominal value TL 0,16 per share. The share capital increase was totally covered by the shareholder INTERSPORT ATHLETICS S.A. (contribution in kind, by capitalization of advances).
Following the resolution of the shareholders General Assembly of the company on 24/12/2018, the share capital of the company increased by the amount of TL 9.607.448,00 with capitalization of part of this company's liabilities towards the shareholder INTERSPORT ATHLETICS SA, until the aforementioned amount, which arises from sales of goods.
The shareholder INTERSPORT ATHLETICS SA took all shares issued by the company towards capitalization of its aforementioned liabilities.
After the aforementioned changes, which were registered in the commercial registry, the share capital amounts to TL 43.888.556,00 divided into 274.303.475 common nominal shares of nominal value TL 0,16 per share.
Under the ordinary resolution of 21/2/2018 of the Board of Directors of the Company, its share capital increased by the total amount of € 53,00, by issuing 53 ordinary shares, of nominal value €1,00. The underlying price was determined at the amount of € 10.000,00 per share. It is noted that, following the total payment, by the only shareholder HOUSEMARKET S.A., of the underlying amount of the new shares, total amount of € 5.299.947,00 resulted to the increase of the share premium reserve.
Therefore the share capital of the company οn 21/2/2018 amounted to € 7.001,00 divided into 7.001 ordinary shares of nominal value € 1,00 per share, totally paid.
Moreover, under the ordinary resolution of 17/12/2018 of the Board of Directors of the Company, its share capital increased by the total amount of € 3,00, by issuing 3 ordinary shares, of nominal value €1,00. The underlying price was determined at the amount of € 10.000,00 per share. It is noted that, following the total payment, by the only shareholder HOUSEMARKET S.A. based on the minutes of BoD of the latter of 1/10/2018, of total amount of € 29.997,00 resulted to the increase of the share premium reserve.
After the aforementioned share capital increase, the share capital of the company amounts to € 7.004,00, divided in 7.004 ordinary shares, of nominal value € 1,00 per share, totally paid.
Following the resolution of 22/2/2018 of the Board of Directors of the company, the share capital increased by the amount of € 100,00 by issuing 100 new common (ordinary) shares of nominal value €1,00 and share premium value € 99.999,00 per share. This increase, from which a total amount of € 10.000.000,00 was raised (which corresponds by the amount of € 100 to the total nominal value and by the amount of € 9.999.900 to the total premium value of the new shares), was totally covered by the shareholder SEASONAL MARITIME CORPORATION LIMITED.
Also, on 26/2/2018 the shareholder WYLDES LTD acquired, through purchase from the shareholder SEASONAL MARITIME CORPORATION LIMITED 50 common (ordinary) shares, of nominal value € 1,00 per share against a total amount of € 5.000.000,00 (which corresponds by the amount of € 50 to the total nominal value and by the amount of € 4.999.950 to the total premium value of shares transferred).
It is noted that the purpose of the share capital increase of VYNER LTD mentioned above, which was decided by the BoD of the company on 22/2/2018, was to raise funds for the shareholding of VYNER LTD, through its subsidiary, by increasing the share capital of the company SOFIA SOUTH RING MALL EAD in order to raise funds for the reduction of loans of the latter.
Following the resolution of 17/12/2018 of the Board of Directors of the company, the share capital increased by the amount of € 2,00 by issuing 2 new common (ordinary) shares of nominal value €1,00 and share premium value € 9.999,00 per share. This increase, from which a total amount of € 20.000,00 was raised (which corresponds by the amount of € 2 to the total nominal value any by the amount of € 19.998 to the total premium value of the new shares), was made with capitalization of amount € 20.000, which were paid on 15/3/2018 the shareholders WYLDES LTD and SEASONAL MARITIME CORPORATION LIMITED by half, following the BoD resolution of VYNER LTD of 13/3/2018 according to which these shareholders were allowed to proceed to the payment of the aforementioned amount against future share capital increase.
Thence, the shareholding of WYLDES LTD and VYNER LTD was formed at the percentage of 50% (except one share) of the total paid share capital of VYNER LTD (namely 5.087 shares against a total of 10.176 shares).
The G.A. of shareholders of SW SOFIA MALL ENTERPISES LΙΜΙΤΕD, held on 10/1/2018, decided to allow to shareholders WYLDES LTD and SEASONAL MARITIME CORPORATION LIMITED to proceed to payments, towards SW SOFIA MALL ENTERPISES LΙΜΙΤΕD, of amount € 15.000 each one of them, against future share capital increase of SW SOFIA MALL ENTERPISES LΙΜΙΤΕD.
On 16/1/2018 and 10/10/2018 the shareholder WYLDES LTD proceeded to the payment of € 15.000 and € 100.000 respectively to SW SOFIA MALL ENTERPISES LΙΜΙΤΕD, against its shareholding in future share capital increase of SW SOFIA MALL ENTERPISES LΙΜΙΤΕD.
In compliance with BoD resolution of 10/12/2018 of SW SOFIA MALL ENTERPISES LΙΜΙΤΕD, its share
capital increased by the amount of € 230,00, by issuing 230 new common (ordinary) shares of nominal value € 1,00 and share premium value € 999,00 per share. This increase, from which totally € 230.000,00 funds were raised (which corresponds by the amount of € 230 to the total nominal value and by the amount of € 229.770,00 to the total share premium value of new shares), was covered by the shareholders WYLDES LTD and SEASONAL MARITIME CORPORATION LIMITED by half.
Following these, the shareholding of WYLDES LTD to VYNER LTD amounts to 50% of the total paid share capital of SW SOFIA MALL ENTERPISES LΙΜΙΤΕD (namely 4.115 shares against to a total of 8.230 shares).
Apart from the above, no other changes in the share capital of the companies of the Group were made within the year 2018.
The parent company FOURLIS HOLDINGS S.A. does not have any branches.
The subsidiaries and especially the retail trading companies have developed and continue to develop a significant chain of stores in Greece and abroad.
Retail Trading of Home Furniture and Household Goods (IKEA stores): The segment currently operates seven (7) IKEA Stores, five (5) of which in Greece, one (1) in Cyprus and one (1) in Bulgaria. Moreover, five (5) Pick up & Order Points with IKEA products are operating in Greece in Rhodes Island, Patras, Chania, Heraklion and Komotini and three (3) in Bulgaria in Varna, Burgas and Plovdiv which started operating on 5/12/2018. Also, three (3) e-commerce stores are operating in Greece, Cyprus and Bulgaria. On 20/3/2018 a new IKEA Pop UP store started operating in Piraeus with limited duration and terminated its operation on 1/12/2018.
Retail trading of sporting goods (INTERSPORT and TAF stores): The segment currently operates one hundred and seventeen (117) INTERSPORT Stores [fifty (50) in Greece, thirty (30) in Romania, eight (8) in Bulgaria, five (5) in Cyprus and twenty four (24) in Turkey]. INTERSPORT Stores that were added to the network within the period 1/1 – 31/12/2018 are: one (1) new store in Turnkey, Istanbul (20/4/2018) while, on 1/1/2018 a Store in the same city terminated its operation, one (1) new store in Cyprus, Nicosia (21/11/2018), one (1) new Store in Bulgaria, Plovdiv (22/11/2018) and one (1) new Store in Romania, Satu Mare (5/12/2018). Moreover, in Greece, Romania and Cyprus ecommerce Stores are operating. TAF Stores operating on 31/12/2018 are fourteen (14), twelve (12) of which in Greece and two (2) in Turkey.
Below is a chart providing a comparison between FOURLIS HOLDINGS S.A. share price and Athens Stock Exchange General Index (red line) for the period 1/1/2018 to 31/12/2018.
The Ordinary General Assembly of the Company on 16/6/2017, under the context of Stock Option Plan, approved the disposal of 2.566.520 stock options and authorized the Board of Directors to regulate the procedural issues and details. The program will be implemented in four waves, with a maturity period of five years per wave. Options must be exercised within five years since their maturity date. In case that there are undisposed options, after the allocation of options mentioned above, these options will be cancelled. The underlying share price of each wave is the closing stock price of the share at the decision date of the General Assembly regarding the approval of the SOP.
On 20/11/2017, the BoD granted 641.630 stock options, which compose the first of the four waves. The underlying share price to which the granted stock options refer, is determined to the amount of euros 5,768 per share which is the closing stock price of the share adjusted with the share capital decrease which was implemented after the date of the General Assembly.
On 19/11/2018, the BoD granted 641.630 stock options, which compose the second of the four waves. The underlying share price to which the granted stock options refer, is determined to the amount of euros 5,666 per share which is the closing stock price of the share adjusted with the share capital decrease which was implemented after the date of the General Assembly.
On 20/11/2018, the BoD of the Company issued an Invitation to the beneficiaries of the SOP which
was approved by the Extraordinary General Assembly held on 27/9/2013 and the Ordinary General Assembly held on 16/6/2017 regarding the exercise of their options. 16 beneficiaries responded to this Invitation and exercised their option for the purchase of 163.626 shares, of nominal value € 0,91 and underlying price € 3,28 per share and paid the total amount of € 537.069,61.
It is noted that the underlying price of shares to which the distributed options reflect, had been initially determined at the amount of € 3,40 per share, which was the closing stock price of the share on the date of the resolution of the General Assembly regarding the SOP since 27/9/2013 (Extraordinary General Assembly date). Due to corporate events (capital return by cash payment), the historical closing price of the share was readjusted and formed at the amount of € 3,34 per share (following the BoD resolution of 20/11/2017). Following the resolution of Ordinary General Assembly of 15/6/2018, there was a change in the historical share price resulting from corporate action relevant with the share capital decrease of the Company with reduction of the nominal value of the share by the amount of € 0,10 and the capital return to shareholders. Therefore, after the aforementioned adjustment, the historical share price is now amounting to € 3,28.
Also, the underlying share price, which was established by resolution of the Ordinary General Assembly of shareholders of the Company held on 16/6/2017, to which the distributed options reflect, had been initially determined at the amount of € 5,87 per share, which was the closing stock price. Due to corporate events (capital return by cash payment), the historical closing price of the share was readjusted and formed at the amount of € 5,77 per share (following the BoD resolution of 20/11/2017). Following the resolution of Ordinary General Assembly of 15/6/2018, there was a change in the historical share price resulting from corporate action relevant with the share capital decrease of the Company with reduction of the nominal value of the share by the amount of € 0,10 and the capital return to shareholders. Therefore, after the aforementioned adjustment, the historical share price is now amounting to € 5,67.
On 26/1/2018, a) the share capital increase of the Company by the amount of € 303.879,66 through cash payment and the issue of 313.278 new shares of nominal values € 0,97 and underlying price € 3,34 each and b) the certification of the payment of the aforementioned share capital increase by the total amount of € 303.879,66, were registered in the GECR. The Corporate Actions Committee of Hellenic Exchanges - Athens Stock Exchange, on their meeting held on 30/1/2018 approved the trading of the 313.278 new common nominal shares of the Company. According to the decision of the Company, the new shares started trading in ATHEX on 1/2/2018.
On 22/1/2019, a) the share capital increase of the Company by the amount of € 148.899,66 through cash payment and the issue of 163.626 new shares of nominal values € 0,91 and underlying price € 3,28 each (Code Registration Number 1638212) and b) the certification of the payment of the aforementioned share capital increase by the total amount of € 148.899,66 and share premium by the amount of € 388.169,95 (Code Registration Number 163269), were registered in the GECR.
During period 1/1 – 31/12/2018, beneficiaries waived their right to exercise 0 options (2017: 11.580) which were granted by the BoD on 25/11/2013, beneficiaries waived their right to exercise 6.220
options (2017: 13.626) which were granted by the BoD on 24/11/2014 and also beneficiaries waived their right to exercise 6.720 options (2017: 26.097) which were granted by the BoD on 25/11/2015.
Growth rate of Greek economy increased in 2018 compared to 2017 (increase estimation above 2%) and GDP increased by 2,7% during the last 9month period mainly due to the increase of exports and private consumption. The economic environment rate of I.O.B.E. (Foundation for Economic & Industrial Research) for 2018 was 100,9 and the relevant consumer confidence rate is systematically growing for seven consecutive months (until January 2019).
With the expectation that the year 2019 in Greece, the prospects of economy will improve even more provided that:
the Management of the Group aims to:
Taking into consideration all the aforementioned, the Management will proceed to the implementation of its business plan with selective investments in Greece and foreign countries where the Group operates, as follows:
In the retail trading of sporting goods segment, with a network at the end of the year 2018 of one hundred and seventeen (117) stores in Greece, Romania, Bulgaria, Cyprus and Turkey as well as three (3) e-commerce Stores in Greece, Cyprus and Romania, within the year 2019 six (6) new INTERSPORT
Stores are expected to be added to the existing network and the e-commerce stores in Bulgaria and Turkey are expected to start operating. Moreover, three (3) new Stores one (1) new e-commerce Store in Greece is expected to be added to the fourteen (14) already operating TAF stores. At the end of 2019, retail trading of sporting goods segment is expected to have a network of one hundred and twenty-three (123) INTERSPORT Stores and seventeen (17) TAF Stores as well as e-commerce INTERSPORT Stores in Greece, Romania, Cyprus, Bulgaria and Turkey will be fully operating.
The home furniture and household goods segment, which operates seven (7) IKEA Stores, eight (8) Pick up & Order Points and three (3) e-commerce Stores Greece, Bulgaria and Cyprus, will add to its network two (2) new Pick up & Order Points one (1) in Greece and one (1) in Cyprus.
Education and training of human capital, the constant and fair evaluation in all levels as well as dedication to the values of the Group - "Integrity", "Respect" and "Efficiency" – continue to compose major comparative advantages through which the Group aims to achieve its goals.
The Group is exposed to financial risks such as foreign exchange risk, interest rate risk and liquidity risk. The management of risk is achieved by the central Treasury department, which operates under specific guidelines set by the Board of Directors. The Treasury department identifies, determines and hedges the financial risks in cooperation with the Groups' subsidiaries. The Board of Directors provides written instructions and directions for the general management of the risk, as well as specific instructions for the management of specific risks such as foreign exchange risk and interest rate risk.
The Group is exposed to foreign exchange risk arising from transactions in foreign currencies (RON, USD, TRY, SEK) with suppliers which invoice the Group in currencies other than the local. The Group, in order to minimize the foreign exchange risk, according to the needs, in certain cases pre purchases foreign currencies.
The Group is subject to cash flow risk which in the case of possible variable interest rates fluctuation, may affect positively or negatively the cash inflows or outflows related to the Group's assets or liabilities.
Cash flow risk is minimized via the availability of adequate credit lines and cash. Also, the Group has entered into Interest Rate Swap (IRS) contracts in order to face interest rate risk.
There are no litigations or legal issues that might have a material impact on the Company and the Group's Annual Financial Statements for the period 1/1 - 31/12/2018.
Under the implementation of ESMA Guidelines (05/10/2015|ESMA/2015/1415), FOURLIS Group adopted as Alternative Performance Measure (APM) the earnings before taxes, interest and depreciation & amortization (EBITDA). Alternative Performance Measures (APMs) are used under the context of making decisions for financial, operational and strategic planning as well as for the assessment and publication of performance. Alternative Performance Measures (APMs) are taken into account combined with financial results which have been conducted according to IFRS and under no circumstances they do not replace them.
Definition EBITDA (Earnings Before Interest, Taxes and Depreciation & Amortization)/ Operating results before taxes, financing, investing results and total depreciation= Earnings before tax +/- Financial and investing results (Total financial expenses + Total financial income + Contribution in subsidiaries losses) + Total depreciation / amortization (property, plant and equipment and intangible assets).
The amount most directly connected to this specific APM (EBITDA) is operating profits (EBIT) and depreciation/amortization. Operating profits are included in Income Statement and depreciation/amortization in Cash Flow Statement. More analytically, reconciliation of the selected APM and the financial statements of the Group for the corresponding period is as follows:
(amounts in thousands euros)
| Group Consolidated Results | ||
|---|---|---|
| 1/1-31/12/2018 | 1/1-31/12/2017 | |
| Operating Profit | 30.212 | 27.892 |
| Depreciation/Amortization | 14.057 | 13.945 |
| Earnings before interest, tax, depreciation & amortization (EBITDA) |
44.269 | 41.837 |
| Retail trading of home furniture and household goods segment (ΙΚΕΑ Stores) |
|||
|---|---|---|---|
| 1/1-31/12/2018 1/1-31/12/2017 |
|||
| Operating Profit | 22.974 | 22.216 | |
| Depreciation/Amortization | 9.160 | 8.765 | |
| Earnings before interest, tax, depreciation & | ||
|---|---|---|
| amortization (EBITDA) | 32.134 | 30.981 |
| Retail trading of sporting goods segment (INTERSPORT and TAF Stores) |
|||
|---|---|---|---|
| 1/1-31/12/2018 | 1/1-31/12/2017 | ||
| Operating Profit | 8.470 | 6.892 | |
| Depreciation/Amortization | 5.064 | 4.974 |
| Earnings before interest, tax, depreciation & | ||
|---|---|---|
| amortization (EBITDA) | 13.534 | 11.866 |
The content of this non-financial statement has been drafted by taking into consideration the requirements of the GRI Standards (2016 edition). Within this framework, the Group conducts an annual materiality analysis of the sustainable development topics related to its activities, in order to prioritize the topics with the most significant economic, social and environmental impacts and those that significantly influence its stakeholders.
The Group defines as stakeholders anyone affecting or being affected by its operations. Having identified and prioritized its stakeholders, the Group invests in the continuous and two-way contact and communication with them, aiming to maintain a steady flow of information, to and from the Group, regarding their demands, concerns and expectations. The main stakeholder groups of the Group are: employees, shareholders, customers, suppliers/business partners, wider society, local communities, official and supervisory authorities/state, business community/associations, media, NGOs and peer companies.
Additional information regarding the results of the materiality analysis, will be available in the FOURLIS Group's annual Social Responsibility and Sustainable Development Report for 2018, which will be published in June 2019 and uploaded to www.fourlis.gr.
At the present time, the Group, (headquarters located at 18-20 Sorou Street, Building A, 15125 Maroussi), is one of the largest trading groups of consumer goods in Greece, Cyprus, Bulgaria, Romania and Turkey, in the following business activity fields:
The aforementioned activities are complemented by online stores (e-commerce), while, in the context of exploiting synergies between the Group companies, the storage and distribution services for both
sectors and for all countries are provided by TRADE LOGISTICS S.A., a Group's subsidiary. Finally, the Group's parent company's (FOURLIS HOLDINGS S.A.) activity is the investment, in domestic and foreign companies of all types, regardless of their objectives and corporate form.
More information regarding the business environment, strategy, objectives and main progress and factors that could influence the Group's development, are available in the following chapters of the Group's Board of Directors' Report:
as well as in the following chapter.
In the context of our approach to corporate responsibility and our contribution to sustainable development, we consistently identify and prioritize the topics that are linked to our activities and may cause negative impacts to our stakeholders, to the communities in the countries where we operate, as well as to the natural environment.
Taking into consideration the above, we monitor the impacts of our activities in relation to:
The way we manage these topics, is presented in more detail in the following sections.
The Group, in compliance with the applicable legislation, implements a Health & Safety Policy that is applicable to all its subsidiaries and to all countries where it operates. It includes a wide range of relevant procedures, measures and initiatives related to the safe stay of visitors, customers and business partners at its facilities. Any variations in the Group's relevant procedures by country or region, depend on the size of the facilities, as well as on the applicable legislation in the countries where the Group's companies operate.
In this context, some of the practices we apply at the Group are the following:
We regularly train employees, in order to respond to emergency incidents that can affect both their own and visitors' safety at our facilities. Also, in an effort to ensure compliance with the Health & Safety Policy, regular inspections are conducted by safety technicians, in all Group activities.
In the context of our policy, all Health and Safety incidents occurring within the Group's premises and stores are reported, while a Safety Report is compiled for each store, as well as a consolidated one for all of them. The report includes information not only on the number and type of incidents, but also on the way they are addressed. Through these reports we are able to receive useful information on our policies effectiveness and to improve our practices, where needed.
In 2018, the implementation of our policies on Health & Safety topics had significant outcomes. We indicatively mention that:
No accidents occurred in the playgrounds of the ΙΚΕΑ stores
[GRI 416-2]: There were no incidents of non-compliance with legislation concerning Health & Safety topics
The Group manages this topic through the compliance of the products sold by its companies in all the countries where it operates, with manufacturer and supplier specifications, with European and/or national legislation, as well as with all existing laws and regulations concerning their labeling and use (e.g. CE approval).
ΙΚΕΑ products have special labeling and indications aiming to provide information and advice to customers regarding the products' manufacturing details, the cases where a product must be used only by adults, size, etc. It is also worth mentioning that at IKEA, a perennial product guarantee is offered, which in some cases reaches 25 years; IKEA also adheres to and applies a product withdrawal policy. If necessary, and depending on the importance of the incident, the withdrawal case is publicly disclosed.
Respectively, the Commercial Department of INTERSPORT and The Athlete's Foot, which is responsible for product compliance, oversees adherence to market regulations, as well as the European Union CE labeling. The products hold special labeling and indications, in order to provide information and advice to consumers regarding their use, as well as information concerning the manufacturing of the products, etc. Both INTERSPORT's and The Athlete's Foot's policies focus on the inclusion of terms in their contracts with suppliers, which stipulate the compliance with all applicable regulations and laws, regarding products that the company buys from them. In cases of defective products, the company immediately proceeds to their withdrawal and repair and initiates all the necessary procedures in order to inform all the pertinent institutions, such as the Ministry of Commerce, consumers' associations and consumers in general, via a specific press release.
For the advertising and promotion of the Group's IKEA products, the company follows in all countries where it operates, the communication code applied by IKEA worldwide, as well as all conduct, marketing and communication codes and the market regulations that has to comply with, while also taking into consideration local needs. Regarding the promotion of our products, the company's policy is adapted to local consumer needs and specificities. For this reason, the setup of the IKEA stores varies according to their location, in order to meet local community's standards and preferences.
Respectively, INTERSPORT's marketing and communication strategy is set in accordance with its vision, which is to bring Sports to the people, whereas The Athlete's Foot's strategy is set according to its own vision, which is to bring style to sports, while also having as a principle the consumers' needs and particularities. Both companies' marketing strategies focus on two areas: Corporate communication and product promotion. The product communication and promotion methods chosen by the companies include various mass media such as tv, radio broadcasting and online advertising, while they respect all codes of conduct, marketing and communication, including market regulations that they are obliged to adhere to, in all the countries where the company operates.
[GRI 417-2]: In 2018 there were no incidents of non-compliance concerning product and service information and labeling.
[GRI 417-3]: In 2018 there were no cases of non-compliance with regulations and voluntary codes regarding marketing communication, including advertising, promotion and sponsorships.
The Group adheres not only to the European Legislation, but also to the local legislations of the countries where it operates, regarding personal data protection of the parties who transact with the Group. Respecting privacy is a core element of both the Code of Conduct and the Internal Labor Regulation.
At the Group, we value the trust of all those who enter into a transaction with us and we have designed and implement a personal data and sensitive personal data protection policy for all natural persons (visitors, business partners, customers, suppliers, current and former employees). We make sure to protect with due diligence, all personal information we collect for business needs, after obtaining legal consent, and to safeguard the rights of natural persons, in accordance with the existing legislation and Data Protection Authority guidelines (GDPR), in all countries where the Group companies operate.
It is worth mentioning that all the Group employees in all counties where it operates, have received training in GRDP issues, either via classroom seminars or via e-learning. GDPR training is also part of the induction program for new employees.
[GRI 418-1]: In 2018, the implemented policies and procedures regarding the protection of personal data resulted in zero reports, complaints or grievances, from a natural person entering into a transaction with our Group, related with a breach of personal rights, freedoms or privacy, while no related grievances were communicated to us from competent authorities.
At the Group we work daily for the realization of our common commitment and vision: the establishment of the preconditions for a better life for all. In this context, we seek to be in constant connection with the citizens and the wider society in the countries where we operate, aiming to be informed about their needs, to understand and satisfy them, within our capabilities.
[GRI 413-1]: The following are some of the most significant programs and actions implemented during 2018 to support society. Additional information will be included in the Group's annual Social Responsibility and Sustainable Development Report, which will be published in June 2019 and will be uploaded to www.fourlis.gr.
The FOURLIS Group is its People, all those who support its operations on a daily basis. Our approach to employment and our relationships with our employees directly affect their performance, retention and development, while these issues are also significant for our Group's long term sustainability. Our Policy's main pillars, in relation to recruitment and professional development of our Human Resources, are:
When in any of our companies there are job openings, those are readily covered either via internal transfer/promotion of employees (through the Open Resourcing Policy), or via a direct transfer/promotion of an employee (for Executives), or via a new recruitment.
It is also worth mentioning, that in the Group companies, and in all the countries where the Group operates, people from a total of 36 ethnicities are employed.
On 31/12/2018, the Group's total number of employees was 4,038.
| 2018 | ||
|---|---|---|
| Region | Men | Women |
| Greece | 1,133 | 1,332 |
| Cyprus | 178 | 173 |
| Romania | 230 | 240 |
| Bulgaria | 211 | 280 |
| Turkey | 165 | 96 |
| Total | 1,917 | 2,121 |
| 2018 |
|---|
| 53% women in Group's total workforce |
| 35% women in manager/supervisor positions of Group |
| 22% women in the Board of Directors of Group |
At the Group we believe that the employees' need for training is continuous and ever increasing, as the competition and the current market demands are constantly generating new training and educational needs. For this reason, the training of each Group employee begins upon his/her recruitment.
The first training program for every Group employee is an induction program, through which we make sure that all the newly hired employees are informed about the Group's Structure, Values, Code of Conduct and Internal Regulation Charter of each company.
In addition, in 2011 the "Learning Academy" was established in which all of the Group employees are members, participating in programs depending on their role and their needs for personal development.
In the context of the Academy, the Retail MBA program was launched in 2016. The program was designed and created in 2015 with the main objective to provide high level knowledge from University Professors and Senior Executives of both the Market and Group, in a range of fields mainly focusing on Retail Management.
Employees from all the Group companies and from all countries where it operates, participate in the program.
It is also worth mentioning that since 2008 we have adopted an annual single Performance Appraisal and Development Review process for all Group employees, in order to ensure that the evaluation process is and will remain transparent.
[GRI 404-3]: The performance Appraisal and Development Review, which includes both the assessment of the agreed measurable objectives and the employees' skills and behavior, is conducted once a year for all employees in all of the Group companies.
Average training hours per employee
12.3
Given that the creation of a safe and healthy work environment is a fundamental principle for our Group, as it is also depicted in our Values, not only we follow the clauses of the relevant labor legislation in all the countries where we operate, but we also assess potential risks we may face and thus, we take the necessary measures in order to prevent potential accidents.
An important priority for us is to safeguard compliance with the Health & Safety Policy by carrying out intensive inspections led by safety technicians in all the Group companies' facilities, and by having the safety technician conduct an occupational risk assessment study. At the Group, as a minimum prerequisite, we comply with the requirements of the local legislative frameworks and the "ILO Code of Practice on Recording and Notification of Occupational Accidents and Diseases". We also invest in the constant and regular training of all our employees, so that they can respond to emergencies affecting their own safety but also our clients, visitors and business partners' in our stores. Especially at the IKEA stores we have created internal Safety, Fire Protection and First Aid teams, while at the INTERSPORT and The Athlete's Foot stores, specific employees have been trained to be able to manage with relevant issues.
In addition, aiming to inform employees on health and wellbeing issues and to encourage them to adopt a healthier lifestyle, in 2010 the Group's Social Responsibility Department launched the EF ZIN (WELLBEING) program. In the context of this program, a number of actions are taking place every year, such as preventive medical examinations, informative speeches on health and wellbeing topics, sports tournaments, etc.
In 2018, the number of work related accidents for all the Group companies remained at the same low levels as in 2017.
In addition, as a result of our overall management approach regarding Health & Safety topics in the workplace, in the latest biannual Employee Insight Survey conducted in 2018, the topic that gathered the highest satisfaction rate from our employees, was Safety.
More information and data pertaining to the results of the policies on employee Health & Safety issues, will be included in the Group's annual Social Responsibility and Sustainable Development Report for 2018.
In 2018, in the context of the EF ZIN program, some indicative activities that took place were a sports tournament in Greece and Cyprus and ergonomics seminars in Greece, Cyprus, Bulgaria and Romania.
At Group we approach the issues of respect and protection of Human Rights in a systematic way through our policies and initiatives. This effort is comprised of:
All Group employees have signed, depending on their position in the corporate hierarchy, the detailed or concise version of the Code of Conduct, (the concise version is available on the website www.fourlis.gr).
In addition, the Code of Conduct Line of the Group is available 24 hours a day and anyone may call the Line, in order to report (anonymously or not), any concerns related to Code of Conduct violations or non-compliance with the legislation. For the period 1/1-31/12/2018 three (3) anonymous reports from a Group company's employees were recorded, via the Code of Conduct's email and were communicated to the Internal Audit Department. These reports, after being evaluated by the Internal Audit Department, they were forwarded to the Group's Human Resources Department, in order to take appropriate action. These reports did not concern cases of human rights violations.
Aiming to fight corruption, bribery and fraud, the Group has established and implements:
person in the workplace or during any transactions with external business partners. All Group employees are obliged to adopt and implement the Code of Conduct.
Internal Audit Department: The Group's Internal Audit Department is organized in a way that allows it to carry out an independent, confirmative and advisory role and designed to add value and improve the company's processes. The Department helps the Group achieve its objectives through assessment, which contributes to the improvement of the corporate governance, internal audit and risk management systems. The Audit Committee is the supervising body of the Internal Audit Department and it informs on a quarterly basis the Board of Directors of the parent company about the work that is being implemented.
Nomination and Remuneration Committee: The Nomination and Remuneration Committee is responsible for the procedure of electing Board members, selecting Senior Executives and preparing proposals for the Board of Directors regarding the remuneration (basic salary, bonuses or financial incentives and benefits) of Executive Directors and key senior executives.
All Group employees have signed, depending on their position in the corporate hierarchy, the detailed or concise version of the Code of Conduct.
While implementing the Senior Management informational procedure for addressing fraud and corruption incidents, during the period of 1/1-31/12/2018, seven (7) cases of small-scale fraud were recorded. These cases were detected by the Group companies' internal controls.
In all cases, all the necessary measures had been implemented and, where required, the policy to dismiss the responsible employees was implemented. There was no other notification or complaint relating to corruption or bribery incidents that the Group's Management is aware of.
At the FOURLIS Group we regularly monitor the impacts of our operations and we implement a number of voluntary actions and interventions, aiming at the reduction of our environmental impacts, the protection and recycling of natural resources, as well as the employees and the general public awareness raising regarding environmental protection and the adoption of a responsible lifestyle. The annual results of the practices we implement, are communicated in the Group's annual Social Responsibility and Sustainable Development Report, as well as in the Group's Communication on Progress Report, regarding the adherence to the ten Principles of the UN Global Compact.
The data we monitor at our facilities, where possible, include:
ENERGY CONSUMPTION (IKEA GREECE*)
| 2018 | ||
|---|---|---|
| Electricity (kWh): | 18,636,923 | |
| Heating oil (lt): | 70,056 | |
| Natural gas (m3 ): |
267,921 |
Additional information on electricity (kWh), heating oil (lt) and natural gas (m3 ) measurement results for 2018 will be available in the Group's 2018 Annual Social Responsibility and Sustainable Development Report, which will be published in June 2019 and will be uploaded to www.fourlis.gr
CARBON EMISSIONS: Since 2012, TRADE LOGISTICS calculates its CO2 emissions for all of its operations, aiming to implement solutions for emissions reduction. The results for 2018 will be available in the Group's 2018 Social Responsibility and Sustainable Development report, which will be published in June 2019.
PHOTOVOLTAIC SYSTEMS: Since 2013, TRADE LOGISTICS has installed and operates a photovoltaic system of 1,400 MWh average annual capacity for producing electricity, on its building's roof. In 2018, the total electricity production was 1,394 MWh. In addition, during the same period, 1,274 metric tons of CO2e were not released into the atmosphere, due to the fact that the electricity from the photovoltaic park is produced from renewable energy sources.
Respectively, HOUSEMARKET S.A. is in the process of implementing the installation of electric power generation systems on its buildings' roofs, with the aim to maximize the use of installations that do not produce any form of environmental burden. In this context, in 2018, the process of installing a photovoltaic system with offsetting in IKEA Cyprus continued and is expected to be fully operational during the first months of 2019.
LAMPS REPLACEMENT PROGRAM: In 2018, the three-year program (2016-2018) for the replacement of high-consumption lamps with LED bulbs in commercial and non-commercial areas of IKEA stores in Greece, Cyprus and Bulgaria was completed, while INTERSPORT and The Athlete's Foot continued their own relevant program in their stores.
| 2018 | ||
|---|---|---|
| Paper (kg): | 1,106,978 | |
| Batteries (kg): | 6,896 | |
| Cooking fat (lt): | 16,874 | |
| Lamps (kg): | 1,810 | |
| Aluminum (kg): | 2,600 | |
| Glass (kg): | 0 |
Recycling of materials (IKEA Greece)
| Plastic (kg): | 47,670 |
|---|---|
| Metals (kg): | 38,502 |
| Timber (kg): | 35,460 |
Additional data for materials recycling in Group, will be available in the FOURLIS Group's 2018 Annual Social Responsibility and Sustainable Development Report, which will be published in June 2019 and will be uploaded to www.fourlis.gr
It is worth mentioning that since September 2016, HOUSEMARKET Greece has proceeded with the implementation of a system of electronic archiving of invoices and credit copies, with significant papersaving benefits. It is worth mentioning, that via this practice, it is estimated that, in 2018, a total of 757,660 A4 pages were not used for printing in stores, the e-shop and the IKEA Pick Up and Order Points.
A similar practice is implemented at INTERSPORT Greece, and since November 2017 the sales voucher copies are electronically archived, an intervention which in 2018 resulted the avoidance of printing 2,575,159 voucher copies.
In addition, in 2018, INTERSPORT Greece replaced cardboard boxes with boxes made out of reusable plastic for the transportation of its products from its central warehouse (TRADE LOGISTICS) to its stores in Attica and Thessaloniki. Through this initiative, it is estimated that almost 120,000 cardboard boxes were not used.
Water consumption (IKEA Greece*)
| 2018 | |
|---|---|
| ΙΚΕΑ excluding Attica** (lt): | 22,523,000 |
| ΙΚΕΑ Attica (lt): | 31,160,000 |
* The results for the IKEA Pick Up and Order Point in Chania cover the period 12/10/2017 - 11/10/18. In addition, the results for the Pick Up and Order Points in Patra and Rhodes are estimates; the precise results will be published next year.
** The IKEA Pick Up and Order Point in Heraklion is excluded.
Additional data on water consumption in the Group's premises, will be available in the Group's 2018 Annual Social Responsibility and Sustainable Development Report, which will be published in June 2019 and will be uploaded to www.fourlis.gr
IKEA offers eco-friendly products, such as:
The BJÖRNÅN bathroom curtain which is made of 100% recycled polyester originating from plastic PET bottles.
The IKEA mirrors which are 100% lead-free.
The main supply chain services provider for Group is TRADE LOGISTICS. TRADE LOGISTICS (TRADE LOGISTICS S.A.) started its operations in March 2008, with headquarters in Schimatari, Viotia, and according to its Articles of Association, it has as a corporate purpose of providing supply chain services, like the receipt, storage and transport of goods, the creation of promotional and other packaging, the supply of business units and the management of all relevant information. More specifically, its activities are:
The company, with its specialized and experienced personnel, the use of technology and the adoption of innovative methods in the Logistics field, aims at the proper functioning of all storage and delivery procedures, as well as the development of its activities.
With regards to our suppliers, we are in the process of examining various measures and solutions for assessing their social and environmental performance.
As Related parties are considered the Company, the subsidiary companies, the associate companies and joint ventures, the Management and the first line managers and their connected individuals and legal entities (IAS 24). The major transactions, which were eliminated for the purposes of consolidation of financial statements between Group companies, are mainly selling goods among companies in the same segment and logistics services - supply, maintenance - repairs and management fee.
Detailed information on the related parties' receivables/ payables for the Group and the Company for the period 31/12/2018 and 31/12/2017 is analyzed as follows (all amounts in th. euros):
| Group | Company | ||||
|---|---|---|---|---|---|
| 31/12/2018 | 31/12/2017 | 31/12/2018 | 31/12/2017 | ||
| Receivables from: |
HOUSE MARKET SA | 0 | 0 | 5.250 | 5.248 |
| H.M. HOUSE MARKET (CYPRUS) LTD |
0 | 0 | 17 | 14 | |
| INTERSPORT SA | 0 | 0 | 851 | 631 | |
| INTERSPORT (CYPRUS) LTD | 0 | 0 | 5 | 3 | |
| RENTIS SA | 0 | 0 | 2 | 2 | |
| GENCO TRADE SRL | 0 | 0 | 156 | 25 | |
| GENCO BULGARIA | 0 | 0 | 12 | 10 | |
| HOUSE MARKET BULGARIA AD | 0 | 0 | 43 | 111 | |
| INTERSPORT ATLETIK | 0 | 0 | 504 | 323 | |
| TRADE LOGISTICS SA | 0 | 0 | 23 | 21 | |
| SPEEDEX SA | 0 | 0 | 0 | 0 | |
| VYNER | 140 | 0 | 0 | 0 | |
| TRADE STATUS SA | 119 | 132 | 118 | 132 | |
| SW SOFIA MALL ENTERPRISES LTD |
96 | 0 | 0 | 0 | |
| TOTAL | 355 | 132 | 6.980 | 6.520 | |
| Payables to: | HOUSE MARKET SA | 0 | 0 | 0 | 0 |
| TRADE LOGISTICS SA | 0 | 0 | 1 | 1 | |
| SPEEDEX SA | 0 | 181 | 0 | 1 | |
| TRADE STATUS SA | 1 | 1 | 0 | 0 | |
| SOFIA SOUTH RING MALL AED | 3 | 4 | 0 | 0 | |
| MANAGEMENT MEMBERS | 38 | 24 | 38 | 24 | |
| TOTAL | 42 | 210 | 38 | 26 |
Third Parties transactions for the period 1/1 to 31/12/2018 and for the period 1/1 to 31/12/2017 are analyzed as follows:
| Group | Company | |||
|---|---|---|---|---|
| 1/1 - | 1/1 - | 1/1 - | 1/1 - | |
| 31/12/2018 | 31/12/2017 | 31/12/2018 | 31/12/2017 | |
| Revenue | 95 | 107 | 4.288 | 4.114 |
| Other operating income | 0 | 20 | 1.080 | 784 |
| Dividends | 0 | 0 | 5.000 | 5.000 |
| Total | 95 | 128 | 10.368 | 9.898 |
| Group | Company | |||
|---|---|---|---|---|
| 1/1 - 31/12/2018 |
1/1 - 31/12/2017 |
1/1 - 31/12/2018 |
1/1 - 31/12/2017 |
|
| Administrative expenses | 241 | 265 | 12 | 13 |
| Distribution expenses | 0 | 476 | 0 | (0) |
| Total | 241 | 742 | 12 | 13 |
During the years 2018 and 2017 the following transactions have been executed among the companies of the Group:
| Group | Company | |||
|---|---|---|---|---|
| 1/1 - 31/12/2018 |
1/1 - 31/12/2017 |
1/1 - 31/12/2018 |
1/1 - 31/12/2017 |
|
| Revenue | 41.308 | 36.958 | 4.193 | 4.019 |
| Cost of sales | 29.146 | 25.956 | 0 | 0 |
| Other income | 2.245 | 1.925 | 1.080 | 765 |
| Administrative expenses | 9.072 | 8.585 | 11 | 7 |
| Distribution expenses | 5.293 | 4.356 | 0 | 0 |
| Other operating expenses | 43 | 2 | 0 | 0 |
| Dividends | 8.000 | 8.000 | 5.000 | 5.000 |
| Group | Company | |||
| 31/12/2018 | 31/12/2017 | 31/12/2018 | 31/12/2017 | |
| Trade receivables | 14.586 | 14.125 | 6.861 | 6.388 |
| Inventory | 281 | 281 | (0) | (0) |
| Creditors | 14.586 | 14.125 | 1 | 1 |
The total number of employees of the Group as at 31, December 2018 and 31, December 2017 was 4.038 and 3.897 respectively. The total number of employees of the Company for the same reporting periods set above was at 95 and 90 respectively.
During periods 1/1 – 31/12/2018 and 1/1 – 31/12/2017, transactions and fees with the management members were as follows:
| Group | Company | |||
|---|---|---|---|---|
| 1/1 - 31/12/2018 |
1/1 - 31/12/2017 |
1/1 - 31/12/2018 |
1/1 - 31/12/2017 |
|
| Transactions and fees of management members |
2.515 | 2.452 | 568 | 546 |
On 31/12/2018, the Company does not hold any treasury shares. It is noted that, following the resolution of the ordinary General Assembly of the shareholders on 17/6/2016, a treasury shares purchase program had been established until the number of 2.549.616 shares (5% of the paid share capital) which expired on 17/6/2018, namely 24 months from the approval produced by the General
Assembly.
The Company's share capital amounts to € 47.144.655,74 (31/12/2017: € 50.094.377,36) and consists of 51.807.314 shares (31/12/2017: 51.643.688) of nominal value € 0,91 each (31/12/2017: € 0,97).
All the shares are common nominal shares, listed on Athens Stock Exchange (category "Large Capitalization"). Each share entitles to one vote, with an exception of the number of own shares that do not have the right to vote.
The shareholders' responsibility is limited to the nominal value of the shares that they own.
The transfer of shares of the Company is made as prescribed by law and there are no restrictions as to their transfer by the Company's Articles of Incorporation.
On 31/12/2018, the following shareholders owned more than 5% of the voting shares of the Company:
KEM DAFNI A. FOURLIS: (17,369%)
The Company does not have any preference shares.
There are no restrictions to voting rights arising from the Company's Articles of Incorporation.
The Company is not aware of any Shareholder agreements resulting in restrictions to transfer of shares or to their voting rights as it is prescribed by the Company's Articles of Incorporation.
The rules for the appointment and replacement of members of the Board of Directors and the amendment of the Articles of Incorporation do not differ to those prescribed by Law 2190/1920.
A. According to Art 13 par 1 (b) of Law 2190/ 1920 and the Art 4 par. 1 of the Articles of Incorporation of the Company, during the first 5 years from the Shareholders General Assembly resolution, the
Board of Directors has the right, based on a majority of 2/3 of total members, to: a) Increase Share Capital in total or partially through the issue of new shares for an amount that cannot exceed 1/2 of the paid in share capital at the date that Board was awarded the aforementioned right and b) Issue Corporate bonds that will be converted to shares for an amount that cannot exceed 1/2 of the paid in share capital. In this case the provisions of paragraphs 2, 3 and 4 of article 3a of Law 2190/ 1920 are implemented. The Share Capital increases according to the above do not constitute an amendment of the Articles of Incorporation. The aforementioned General Assembly decision has to be published in accordance with Article 7b of Law 2190/ 1920.
This authority of the Board of Directors can be renewed from the General Assembly with a resolution that has to be published in accordance with Art. 7b of Law 2190/ 1920, for a time spread that will not exceed 5 years for every renewal and its validity commences after each 5 years period end.
In case that the Reserves exceed 1/4 of the paid in capital then for a Share Capital increase a decision of the Shareholders General Assembly is obligatory along with an amendment of the corresponding article of Articles of Incorporation. All the above decisions of the shareholders' General Assembly are valid with a presence greater than the 2/3 of the paid in capital representatives.
In case of non presence of the 2/3, the 1st Repeated General Assembly will take place within 20 days from the General Assembly date was cancelled. The 1st Repeated General Assembly has to be announced 10 days before. The 1st Repeated General Assembly is valid if at minimum, the 1/2 of the paid in capital representatives are physically present.
In case of a non presence of the 1/2, the 2nd Repeated General Assembly will take place within 20 days from the 1st Repeated General Assembly date was cancelled. The 2nd Repeated General Assembly has to be announced 10 days before. The 2nd Repeated General Assembly is valid if at minimum, the 1/5 of the paid in share capital representatives are physically present.
These decisions of the General Assembly of shareholders are considered by a majority of two thirds (2/3) of the votes represented therein.
B. 1) The Extraordinary General Assembly of shareholders of the Company "FOURLIS Holdings SA" of 27/9/2013, acting under the provisions of paragraph 13 of Article 13 and paragraphs 3 and 4 of Article 29 and paragraph 2 of Article 31 of Law 2190/ 1920, decided the implementation of a stock option plan - hereinafter "Program A" - to executives of the Company and its affiliated companies within the meaning of paragraph 5 of article 42e of this Act and authorized the Board of Directors, to regulate procedural matters and details. The Board of Directors, under the terms of the plan and the law gives to recipients, who exercised their right, certificates of right to obtain shares and issue and deliver the shares to these recipients, increasing the share capital of the Company and certifying the capital increase. These increases in share capital are not amendments to Articles of Incorporation. The Board of Directors during the last month of the fiscal year within which capital increases occurred, as determined above, must adjust, with its resolution, the article of Articles of Incorporation regarding capital, so as to predict the amount of capital, as shown after these increases, made public in
compliance with Article 7b.
Under the context of the implementation of the aforementioned Program A, within the year 2018, 163.626 options were exercised (hereinafter "the Options"). Following the resolution of the Board of Directors of 17/12/2018 (relative minutes of the BoD with number 400/17.12.2018), the exercise of the aforementioned options by their beneficiaries of the SOP was certified by payment of the exercise price of the new shares.
It is noted that the underlying price of shares to which distributed stock options correspond, was initially determined at the amount of € 3,40 per share, which was the closing stock price of shares on the date of the General Assembly's resolution regarding the Program (27.09.2013). Following the BoD resolutions of 20/11/2017 and 19/11/2018 (relevant minutes with number 389/20.11.2017 and 399/19.11.2018), a readjustment has been made at the historical share price of the Company, and therefore the exercise price implemented for the stock options is € 3,2823 per share.
Following the certification of the exercise price payment of Options by their beneficiaries, namely the total amount of € 537.069,61, 163.626 new common nominal shares were issued and delivered towards their relevant beneficiaries of the Program, of nominal value € 0,91 per share while the share capital of the Company increased by the amount of € 148.899,66, which reflects to the nominal value of the new shares. Also, consequently to the exercise of the aforementioned Options by payment of the exercise value € 3,2823 per share, the share premium of total amount of € 388.169,95 was transferred to "share premium reserve".
The aforementioned change was registered to the General Electronic Commercial Registry (GECR) on 22.01.2019 (Code Registration Number 1638212), with the relevant 7785/22.01.2019 resolution of the Minister of Finance and Development.
2) The Ordinary General Assembly of shareholders of the Company "FOURLIS HOLDINGS SA" of 16/06/2017, acting under the provisions of paragraph 13 of Article 13 and paragraphs 3 and 4 of Article 29 and paragraph 2 of Article 31 of Law 2190/ 1920, decided the implementation of a stock option plan - hereinafter "Program B" - to executives of the Company and its affiliated companies within the meaning of article 32 of L. 4308/2014 as it stands and authorized the Board of Directors, to regulate procedural matters and details. The Board of Directors, under the terms of the plan and the law gives to recipients, who exercised their right, certificates of right to obtain shares and issue and deliver the shares to these recipients, increasing the share capital of the Company and certifying the capital increase. These increases in share capital are not amendments to Articles of Incorporation. The Board of Directors during the last month of the fiscal year within which capital increases occurred, as determined above, must adjust, with its resolution, the article of Articles of Incorporation regarding capital, so as to predict the amount of capital, as shown after these increases, made public in compliance with Article 7b.
No stock options were exercised within the year 2018 under the context of the aforementioned Program B.
Regarding programs that refer to new shares issue for the period 1/1 – 31/12/2018, more information is mentioned above, in the Board of Directors Report in paragraph 6 Stock Option Plan.
C) There is not, until today, a program in force by the Company for treasury shares. Furthermore, during the whole period 1/1 – 31/12/2018, the Company did not have any treasury shares.
Until 31.12.2018, but also until today, there has not been any treasury shares purchase.
There are no significant agreements that the Company has entered into, which come into force, are amended or terminate in the event that there are changes in control due to public offering.
There are no agreements that the Company has entered into with members of the Board of Directors or its employees, which provide for indemnity in the event of termination or redundancy.
According to L. 3873/2010 article 2 paragraph 2, the Board of Directors of the Company declares the following:
a) Reference on the Corporate Governance Code which the Company is coming under or has voluntarily decided to comply with and the website that can be found.
The Hellenic Corporate Governance Council (HCGC) has been established at 2012 as a non-profit company with the joint initiative of Athens Stock Exchange and the Hellenic Federation of Enterprises (SEV). Since October 2018, the Hellenic Banking Association has become a regular member of the HCGC.
The purpose of HCGC is incessant growth of Greek market's credibility among international and domestic investors and improvement of competitiveness of Greek companies. It operates as a specialized body for the expansion of the principles of the corporate governance and aims to develop the culture of good governance in Greek economy and society. Its general plan of action includes: formation of views regarding institutional framework, submission of proposals, participation in deliberations and working groups, organization of educational and informational activities, monitoring and assessment of corporate governance practices and implementation of corporate governance codes, subscription tools supply and rating of Greek companies' performance.
HCGC, as a Non-Profit company, has Members, which are distinguished in Founding (Athens Stock Exchange and SEV), Regular (HBA), Participating and Other. HCGC's supreme body is the General Assembly (GA). HCGC is directed by Administration Council consisted of 3-5 members elected by the GA and has a term of 5 years. Today, the Administration Council has 5 members. Besides the
Administration Council, the HCGC also operates Corporate Governance Council, in which specialists from different sectors participate (audit, investment, business, supervision, legal, consulting, banking and stock market).
Since October 2018, a Working Committee has been established with the participation of representatives of Founding Members and the new Regular Member (Athens Stock Exchange, SEV, HBA) with responsibilities to implement the action plan, organize other actions (conferences, events, promotional actions), find sponsors and other resources, as well as fulfill and implement other purposes of HCGC.
The Company, following its BoD resolution of 28/2/2011, has decided to voluntarily implement the Hellenic Corporate Governance Code which was conducted on the initiative of SEV (Hellenic Federation of Enterprises) and afterwards modified under the context of its first revision (28/6/2013) from Hellenic Corporate Governance Council (HCGC).
The Hellenic Corporate Governance Code is posted on the website of the Hellenic Corporate Governance Council at: http://www.esed.org.gr.
The purpose of Hellenic Corporate Governance Code is the constant improvement of the greek institutional framework and general business environment, as well as the increase of investors' confidence not only towards the listed companies as a whole but also each one of them and the broadening of attraction horizons of investment capitals.
The Hellenic Corporate Governance Code contains two types of provisions: "general principles", which are addressed to all companies, listed or not and "special practices" which only refer to listed companies. The purpose of General principles is to provide a general framework within which principles can be addressed and more issues of corporate governance can be resolved, either of a listed company or not. Each principle is followed by one or more specific practices that further develop the general principles and guide their implementation within the regulatory and ownership structure of listed companies. The Code follows the approach of compliance or explanation and has the following demands of the listed companies which chose to implement it: the disclosure of their intention and either their compliance with all the specific practices of the Code or their explanation of the reasons leading them not to comply with these specific practices.
The general principles of the Code cover the following topics:
Board evaluation
Internal audit system
Whenever Hellenic Corporate Governance Code refers to existing, mandatory legal rules present tense is used to distinguish these requirements from the voluntary practices of the Code.
Indicative, the following Corporate Governance practices applied by the Company and exceed the current provisions of the Law (Law 3016/2002, Law 3693/2008 ar. 37, Law 4403/2016 ar. 2, Law 4449/2017 ar. 44 and Law 2190/1920 wherever it covers the relevant topics):
control.
The Company has developed and implements a process for issuing the financial statements (consolidated and separate) and the Financial Report. The Group companies record their transactions in their information systems and through automated procedures the consolidation application is updated. Crosschecking of data is performed and is reviewed (intra - group transactions, receivables and payables, etc.). Elimination and consolidation entries are recorded and the financial statements with the associate notes are developed. After the completion of audit procedures, the Financial Report that includes the financial statements is submitted to the Board of Directors for approval.
The main characteristics of internal control and risk management systems employed by the Company in connection with the process of preparation of the financial statements and the Financial Report are the following:
During the year no Takeover Bids or Business Combination took place.
e) Information about the General Shareholders Assembly, mode of operation, description of the rights of the shareholders and how these can be exercised
The convocation of General Assembly of Shareholders of the Company is in accordance with the Law 2190/ 1920, as in force.
Regarding the operating method of the General Assembly, the Company follows the practices mentioned below:
The Company, according Law 3884/ 2010, in its first adaption at the convocation of the Annual Ordinary General Assembly of 2011, takes all measures for the consistent process and to ensure the Shareholders rights.
The responsibilities of the General Assembly are mentioned in the Extract of the Article of Incorporation of the Company which is posted on its website: http://www.fourlis.gr.
The Board, its independent members and all members of Audit Committee, have been elected by the Annual General Assembly of shareholders held on 16/6/2017. The term of Board members in accordance with the articles of Incorporation and of members of Audit Committee, is five years and is automatically extended until the first ordinary General Assembly after the termination of its term.
The new BoD was constituted as follows:
| Chairman of the BoD, Executive Member, Chairman of Nomination and Remuneration Committee |
Vassilis S. Fourlis |
|---|---|
| Vice – Chairman of the BoD, Executive Member, Member of Nomination and Remuneration Committee |
Dafni A. Fourlis |
| Independent Vice – Chairman, Independent Non – Executive Member, Member of Audit Committee, Member of Nomination and Remuneration Committee |
Eftichios Th. Vassilakis |
| CEO, Executive Member | Apostolos D. Petalas |
| Director, Executive Member, Corporate Social Responsibility Director | Lida S. Fourlis |
| Director, Non – Executive Member, Member of Audit Committee | Ioannis Ev. Brebos |
| Director, Independent Non - Executive Member, Member of Nomination and Remuneration Committee |
Pavlos K. Triposkiadis |
| Director, Independent Non – Executive Member, Head of Audit Committee | David A. Watson |
| Director, Independent Non – Executive Member, Member of Nomination and Remuneration Committee |
Ioannis A. Kostopoulos |
Short CV's of the members of the Board of Directors as well as of the Company's Secretary Mr Ioannis Zakopoulos are presented on the Company's website: (http://www.fourlis.gr)
The Articles of Incorporation of the Company provide for the Board of Directors to be composed of 3 to 9 members. The Company has elected its Board with the maximum permitted number of Directors to ensure the diversity of gender, age, knowledge, qualification and experience serving the objectives of the Company as well as the balance between executive and non-executive members.
The main responsibilities of the Board of Directors include:
disclosures, as well as the effectiveness of the systems of internal control and risk management.
Company's policy of equal opportunities and diversity is posted on its website (http://www.fourlis.gr) and briefly includes the following:
FOURLIS Group is committed to provide equal opportunities for all employees and qualified applicants for employment, at all levels of hierarchy, regardless of race, color, religion, national origin, gender, sexual orientation, age, disability, marital status, or any other characteristic protected by law. FOURLIS Group expressly prohibits any discrimination or harassment based on these factors.
Affirmative action will be taken to ensure that all employment decisions, including but not limited to those involving recruitment, hiring, promotion, training, compensation, benefits, transfer, discipline, and discharge, are free from unlawful discrimination.
The Group encourages a safe and healthy work environment, free from discrimination, harassment and retaliation. All employment-related decisions are based on an individual qualification, performance and behavior, or other legitimate business considerations.
FOURLIS Group will provide reasonable accommodation to otherwise qualified employees with a disability consistent with the law. What constitutes a reasonable accommodation depends on the circumstances and thus will be addressed by the Group on a case-by-case basis.
With a view to achieving a sustainable and balanced development, the Group sees increasing diversity at the Board & Executive Officers level as an essential element in supporting attainment of its strategic objectives and its sustainable development.
Certain minimum qualifications for Board members & Executive Officers candidates should possess, including strong values and discipline, high ethical standards, a commitment to full participation to the Board and its committees. Candidates should possess individual skills, experience and demonstrated
abilities that help meet the current needs to the Group.
Board & Executive Officers' diversity is based on a number of aspects, including but not limited to gender, age, cultural and educational background, ethnicity, professional experience, skills, knowledge and length of service.
All Board & Executive Officers appointments will be based on meritocracy, and candidates will be considered against objective criteria, having due regard for the benefits of diversity on the Board.
Below, data on the proportion of each gender and age of Board members and Senior Executives are presented:
| Board of Directors | HC Total | % |
|---|---|---|
| Male | 7 | 78% |
| Female | 2 | 22% |
| Grand Total | 9 | 100% |
The age range of the members of the BoD varies from 51 to 78 years old.
| Executive Officers | HC Total | % |
|---|---|---|
| Male | 26 | 81% |
| Female | 6 | 19% |
| Grand Total | 32 | 100% |
The age range of the Executive Officers varies from 36 to 63 years old.
The policy of conducting transactions between subsidiaries of the Company and related parties aims at the timely information of the desired transaction and approval obtaining before its implementation. The policy applies to all new transactions regardless their amount. In case of existing transactions, approval is required for substantial modification of contract terms in force (new customer, new transaction, expansion of the duration, credit terms amendment, pricing conditions amendment etc).
The Board shall meet with the necessary frequency so as to effectively perform its duties. At the beginning of each calendar year, the Board adopts a meeting agenda and a 12-plan action plan, which may be revised depending on the needs of the Company.
The evaluation of the Board and its Committees takes place annually through questionnaires completed by the members of the Board, which are then processed by the Company's Secretary and presented to the Board at its November meeting.
The policy and principles of the Company regarding the form of executive board members' remuneration as well as the method of calculation of board members' variable remuneration, including quantitative and qualitative criteria taken into consideration, are summarized as follows:
Compensation is a fundamental component of employment and one of the most critical HR management policies. With the term "Compensation" we intend: base salary, bonus or incentive plans
(if the position is eligible to such incentives) and benefits.
FOURLIS Group has established and communicates transparent and clear principles by which Executive BoD members, are paid with the aim to ensure fairness and equity. The Compensation Policy of FOURLIS Group is based on objectives and up-to-date job descriptions, effective job evaluation and performance management.
All compensation and benefits are shown in the offer letter and/ or the employment contract; there are no unlisted, "off-agreement" incentives or benefits allowed. Compensation includes base salary, management upon objectives, stock option plan and other incentives in kind. The Group does not tolerate any form of discrimination, as described in the Group Equal Opportunities and Diversity Policy. All employment-related decisions, including decisions on compensation, are based on an individual qualification, performance and behavior, or other legitimate business considerations.
FOURLIS Group collaborates with well-known consultancy firms, with international experience, in order to get the appropriate market benchmarking on Compensation & Benefits trends and establish its own salary range. The market benchmarking is conducted once a year to ensure that the Group policy is in line with the employment market practices for each targeted position within that market, as well as to ensure internal equity.
FOURLIS Group Compensation policy has established the criteria for new hires/ existing Executive BoD Members placement on the salary range. The criteria include the new hires/ existing Executive BoD Members experience and specific skill sets related to the position.
In order to ensure fair and equitable compensation practices, FOURLIS Group has clearly established, communicate and apply decision-making criteria for salary increases. Decisions on salary increases are based on cost of living and performance (merit).
As a guideline for management, the performance ratings should normally follow a typical distribution (gauss curve), depending on the maturity of each FOURLIS Group Company. The Group HR Function provides the appropriate distribution to the Group Companies. The typical distribution guideline is recommended in order to fairly apply the performance system to all individuals and to maintain the approved company budget. Merit increase pay out may change from year to year and are determined by how successful the Group Companies have been as a profit making business.
Salary reviews are conducted annually in conjunction with performance reviews.
The Management by Objectives (MBO) is an optional reward, decided annually and is awarded each time by the decision of the Group Management, which chooses its level, size and way of
Under this decision, the program "Management by Objectives" (MBO) is based on Group, Company and/ or Personal (departmental) Objectives, which will be accomplished during each year.
The MBO program is designed to strengthen our Group's strategy, support the view that we should reward contribution, and is targeted on:
Stock Oprion Plans are approved by the General Assembly of the Shareholders of the Company and aim, to attract, maintain and motivate the Executive BoD Members, since through this program, the participants derive direct interest as shareholders of the company and they will connect their performance with the future performance of the Company, as this is mirrored to the share price increase.
The FOURLIS Group following the market trends, in order to further motivate its Executives BoD Members has in place a benefit in kind policy which includes: health and life insurance plan, pension scheme, company car as well as some other minor benefits.
The remuneration of the Board of Directors is approved by the Annual General Assembly of shareholders.
The functioning of the Board of Directors is detailed in the Board Internal Regulation. The Board Internal Regulation contains the following sections:
The function of the Board is supported by two committees: the Audit Committee and the Nomination
and Remuneration Committee.
The Audit Committee is appointed by the General Assembly of shareholders (Article 37 of Law 3693/2008). The main responsibilities of the Audit Committee are the following:
The function of the Audit Committee is detailed in the Corporate Governance Code and the Audit Committee Charter approved by the Board and posted on the website of the Company (http://www.fourlis.gr). The Audit Committee since its inception (early 2003) and by the end of 2018 held 63 meetings. Each regular meeting of the year 2018 was attended by Executives of the Financial Department of the Company and by the external auditors of the company. The minutes of the Audit Committee are distributed and approved in the next meeting of the BoD.
The main responsibility of the Nomination and Remuneration Committee is to lead the procedure of submission of nominations for the election of Board and submits proposals to the Board of Directors their remuneration. The annual ordinary meeting of the Nomination and Remuneration Committee is held in October of every year before the configuration of budget of the next year. The minutes of the Nomination and Remuneration Committee are distributed and approved in the next meeting of the BoD.
The Nomination and Remuneration Committee is responsible for:
Assembly of shareholders, when required) on the stock option and/ or share award programs.
The function of the Nomination and Remuneration Committee of the Board of Directors is detailed in the Charter of the Committee approved by the Board of Directors and posted on the web site of the Company (http://www.fourlis.gr). The Nomination and Remuneration Committee Charter contains the following sections:
The Company complies with the Hellenic Corporate Governance Code with minor deviations that are presented and explained in the following table.
| Hellenic Corporate Governance Code | Explanation/ Justification of deviations |
|---|---|
| (first modification June 2013) | from special practices of the Hellenic |
| Corporate Governance Code | |
| Board members must be elected by shareholders at a | An amendment on Articles of Incorporation of the |
| maximum term of four (4) years (specific practice 5.1 | Company is required, which is a decision of the |
| Nomination of Board Members) | General Assembly. It will be proposed as a change |
| by the termination of the term of the members of | |
| the current Board of Directors. | |
| The evaluation of the performance of the Board and its | The responsibilities of the Board of Directors include |
| Committees should take place at least every 2 years in | the assessment of its Committees. For the |
| line with a clearly established procedure. The evaluation | evaluation of the effectiveness of the Board, the |
| exercise should be led by the Chairman and its results | Company has ended up with the use of |
| discussed by the Board. The Chairman should act on the | questionnaires completed by the members of the |
| results of the performance evaluation by addressing the | Board, which are processed by the company's |
| weaknesses of the Board. The Board should also |
Secretary and presented annually to the Board |
| evaluate the performance of its Chairman. This |
during the last meeting of every year. The specific |
| procedure should be led by the independent Vice - |
practise of meetings of non executive members |
| Chairman, if appointed, or by another non - executive | without the presence of executive members is about |
| Board member (specific practice 7.1, Board evaluation). | to be applied within 2019. |
| Non - executive Board members should convene |
|
| periodically without the executive members in order to | |
| evaluate the latter performance and discuss their |
|
| remuneration (specific practice 7.2, Board evaluation). | |
| If stock options are granted, they shouldn't mature in | The current stock option plan (SOP program) |
| less than three (3) years from grant date (special |
provides maturity to stock options in less than three |
| practice 1.2, Level and structure of remuneration). | (3) years from grant date. In case of a new SOP |
| program, there will be a revision of this specific | |
| special practice. | |
| Executive Board members' contracts should provide that | The existing contracts of the Company do not |
| the Board may demand full or partial recovery of any | include this term, but a specific reference has been |
| bonuses awarded on the basis of restated financial |
predicted to be made to the last revision of the |
| statements of previous years or otherwise erroneous |
Code of Conduct distributed to all the employees of |
| financial data used to calculate such bonuses (special | the Company. |
| practice 1.3, Level and structure of remuneration). |
There are no other subsequent events that may significantly affect the financial position and results of the Group other than the following:
those mentioned in Note 6 of the Report of Board of Directors and are related to the exercise of stock options of the SOP,
This Report, the Annual Financial Statements of the year 2018, the Notes on the Annual Financial Statements along with the Auditors Report, they are published at the Group's web site, address: http://www.fourlis.gr. At the same web address, all Annual Financial Statements, Audit Reports and Board of Directors Reports of the companies which are consolidated and they are not listed and which cumulatively represent a percentage higher than 5% of consolidated revenues or assets or operating results after the deduction of minority shares proportion, are published.
Maroussi, March 18th 2019
The Board of Directors
The Financial Statements (consolidated and separate) included in pages 58 to 131 are in accordance with the IFRS as applied in the European Union and approved by the Board of Directors of "Fourlis Holdings SA" on 18/3/2019 and are signed by the following:
Chairman of the Board of Directors CEO
Vassilis St. Fourlis ID No. S - 700173 Apostolos D. Petalas ID No. ΑΚ - 021139
Finance Manager Controlling & Planning Chief Accountant
Maria I. Theodoulidou ID No. Τ - 134715
Sotirios I. Mitrou ID No. ΑI – 557890 Ch. Acct. Lic. No. 30609 Α Class
We have audited the accompanying separate and consolidated financial statements of Fourlis Holdings S.A. (the Company), which comprise the separate and consolidated statement of financial position as of December 31, 2018, and the separate and consolidated statements of income, comprehensive income, changes in equity and cash flows for the year then ended and a summary of significant accounting policies and other explanatory information.
In our opinion, the accompanying separate and consolidated financial statements present fairly in all material respects the financial position of Fourlis Holdings S.A and its subsidiaries (the Group) as at 31 December 2018 and its consolidated financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards, as endorsed by the European Union.
We conducted our audit in accordance with International Standards on Auditing (ISAs), as incorporated in Greek Law. Our responsibilities under those standards are further described in the "Auditor's Responsibilities for the Audit of the Separate and Consolidated Financial Statements" section of our report. We remained independent of the Company and Group throughout the period of our appointment in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code), as incorporated in Greek Law, together with the ethical requirements that are relevant to the audit of the consolidated financial statements in Greece, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the separate and consolidated financial statements of the current period. These matters and the related risks of material misstatement, were addressed in the context of our audit of the separate and consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
For each matter below, our description of how our audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the "Auditor's Responsibilities for the Audit of the Separate and Consolidated Financial Statements" section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the separate and consolidated financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying separate and consolidated financial statements.
Tel: +30 210 2886 000 Fax:+30 210 2886 905 ey.com
| Key audit matter | How our audit addressed the Key audit matter |
|---|---|
| Valuation of inventories (consolidated financial statements) | |
| In the consolidated statement of financial position of December 31, 2018, the Group presents inventories amounting to €84 million, which includes a provision for impairment of €1.1 million. As described in Note 3.13 of the consolidated financial statements, the Group records inventories at the lower of cost or net realizable value. Critical judgement and estimates are exercised by the Group management in identifying and assessing the amount of allowance for inventories, which include among other, estimation of the slow-moving inventories, estimation of obsolete inventories that will be destructed during the following period, evaluation of seasonality and estimation of the future selling prices of the products. We consider that because of the judgment involved in inventory valuation and the assumptions used by management, in combination with the significance of the amount of inventories to the Group financial statements, valuation of inventories is a key audit matter. Group discloses the related accounting policies and estimates, and the assumptions used for inventory valuation, in Notes 2.2, 3.13 and 12 of the consolidated financial statements. |
We have performed the following procedures: Historical costs and margins were tested on a sample basis through reconciliation of purchase cost and margins with the original purchase invoices and sales invoices. We recomputed on a test basis the weighted average valuation method that is used to value inventories. We assessed whether there were inventories which were sold with a negative margin and whether this was considered for inventory valuation at the lower of cost or net realizable value. At year end, we attended on a part of inventory counts in Group stores and distribution centers, to validate on a sample basis whether there were indications of obsolesce. We assessed management's estimations for slow moving inventories through observing on a sample basis historical sales and seasonality. We evaluated the historical accuracy of allowance of inventories assessed by management by comparing on a sample basis the actual loss from inventory destruction, inventory write offs or other entries related to inventories to the historical allowance. Furthermore, on a sample basis, we validated the mathematical accuracy of management's calculations for inventory provision. We also assessed the adequacy of the disclosures which are included in the notes to the consolidated financial statements. |
Tel: +30 210 2886 000 Fax:+30 210 2886 905 ey.com
| Key audit matter | How our audit addressed the Key audit matter |
|---|---|
| Impairment exercise on stores (consolidated financial statements) | |
| Property plant and equipment is a material part of Group total assets (2018: €210 million). An amount of €186.4million relates to the net book value of Group stores. In accordance with IFRS, the Group considers each store as a Cash Generating Unit, and performs impairment test to the stores where an indication of impairment exists. Due to the material carrying value of those assets as well as the judgment and assumptions involved in the identification of any impairment indication and the assessment exercised whether there is a need of impairment or not, we consider the impairment exercise on stores a key audit matter. Group discloses the related accounting policies and estimates, and the assumptions used for the impairment exercise on stores, in Notes 2.2, 3.7, 3.10 and 7 of the consolidated financial statements. |
Our audit procedures included, among others, the following: We evaluated the Group policies to identify the Cash Generated Units. We evaluated the Group policies to identify triggering events for potential impairment of assets in each Cash Generated Unit. We evaluated management assumptions underlying the potential impairment calculation for those stores where a triggering event was identified. Valuation specialists supported the audit team. We evaluated the management estimates for the future cash flows by performing the following audit procedures: (a) We compared forecasted future cash flows of prior years with the actual cash flows, and (b) We compared the future cash flows that were used in Group models with market available data and industry trends. We reviewed the discount rate and residual value calculated by the Group with regards to the assumptions used, and compared them with the available industry trends and other financial information. We evaluated the sensitivity analysis of the most significant assumptions used. We also assessed the adequacy of the disclosures which are included in the notes to the consolidated financial statements. |
Management is responsible for the other information in the Financial Statements. The other information, included in the Annual Report, comprises of the Board of Directors Report, for which reference is also made in section "Report on Other Legal and Regulatory Requirements", the Statements of the Members of the Board of Directors, and other complementary information, but does not include the separate and consolidated financial statements and our auditor's report thereon.
Our opinion on the separate and consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the separate and consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the separate and consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Management is responsible for the preparation and fair presentation of the separate and consolidated financial statements in accordance with International Financial Reporting Standards as endorsed by the European Union, and for such internal control as management determines is necessary to enable the preparation of separate and consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the separate and consolidated financial statements, management is responsible for assessing the Company's and Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company and the Group or to cease operations, or has no realistic alternative but to do so.
The Audit Committee (Law 44 ν.4449/2017) is responsible for overseeing the Company's and the Group's financial reporting process.
Our objectives are to obtain reasonable assurance about whether the separate and consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs, as incorporated in Greek Law, will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these separate and consolidated financial statements.
As part of an audit in accordance with ISAs, as incorporated in Greek Law, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the separate and consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the separate and consolidated financial statements of the current period and are therefore the key audit matters.
Taking into consideration that management is responsible for the preparation of the Board of Directors' Report and Corporate Governance Statement that is included therein, according to the provisions of paragraph 5 article 2 of Law 4336/2015 (part B), we report that:
Our opinion on the separate and consolidated financial statements is consistent with our Additional Report to the Audit Committee of the Group, in accordance with Article 11 of the EU Regulation 537/2014.
We have not provided any prohibited non-audit services per Article 5 of the EU Regulation 537/2014.
Non-audit services provided by us to the Company and its subsidiaries during the year ended December 31, 2018, are disclosed in note 6 of the separate and consolidated financial statements.
We were firstly appointed as auditors of the Company by the General Assembly on June 11, 2010. Our appointment has been renewed annually by virtue of decisions of the annual general meetings of the shareholders for a continuous period of 9 years.
Athens, March 18, 2019
The Certified Auditor Accountant
SOFIA KALOMENIDES S.O.E.L. R.N. 13301 ERNST &YOUNG (HELLAS) CERTIFIED AUDITORS ACCOUNTANTS S.A. CHIMARRAS 8B, 151 25 MAROUSSI GREECE SOEL REG. No. 107
(In thousands of Euro, unless otherwise stated)
| Group | Company | ||||
|---|---|---|---|---|---|
| Assets | Note | 31/12/2018 | 31/12/2017 | 31/12/2018 | 31/12/2017 |
| Non-current Assets | |||||
| Property plant and equipment | 7 | 209.624 | 215.224 | 191 | 208 |
| Investment Property | 8 | 23.993 | 21.060 | 0 | 0 |
| Intangible Assets | 9 | 9.023 | 9.174 | 241 | 180 |
| Investments | 10 | 28.246 | 22.838 | 80.328 | 80.042 |
| Long Term receivables | 11 | 4.699 | 5.346 | 47 | 47 |
| Deferred Taxes | 24 | 3.837 | 4.890 | 637 | 714 |
| Total non-current assets | 279.423 | 278.533 | 81.444 | 81.191 | |
| Current assets | |||||
| Inventory | 12 | 83.864 | 77.359 | 0 | 0 |
| Income tax receivable | 1.333 | 2.200 | 910 | 909 | |
| Trade receivables | 13 | 2.541 | 2.140 | 1.980 | 1.521 |
| Other receivables | 14 | 17.130 | 24.596 | 5.017 | 5.101 |
| Cash & cash equivalent | 15 | 39.854 | 36.603 | 1.525 | 2.843 |
| Total current assets | 144.722 | 142.898 | 9.432 | 10.374 | |
| Total Assets | 424.145 | 421.431 | 90.875 | 91.565 | |
| Shareholders equity | |||||
| Share Capital | 16 | 47.145 | 50.094 | 47.145 | 50.094 |
| Share premium reserve | 13.445 | 13.057 | 13.958 | 13.570 | |
| Reserves | 17 | 29.520 | 30.951 | 15.778 | 15.406 |
| Retained earnings | 83.634 | 73.766 | 12.151 | 10.781 | |
| Total shareholders equity (a) | 173.745 | 167.869 | 89.032 | 89.851 | |
| Non controlling interest (b) | 0 | 0 | 0 | 0 | |
| Total Equity (c)=(a)+(b) | 173.745 | 167.869 | 89.032 | 89.851 | |
| LIABILITIES | |||||
| Non Current Liabilities | |||||
| Loans and borrowings | 21 | 113.773 | 118.495 | 0 | 0 |
| Employee retirement benefits | 19 | 4.736 | 4.357 | 515 | 494 |
| Deferred Taxes | 24 | 150 | 282 | 0 | 0 |
| Other non-current liabilities | 22 | 4.751 | 4.792 | 23 | 23 |
| Total non current Liabilities | 123.410 | 127.926 | 539 | 518 | |
| Current Liabilities | |||||
| Short term loans for working capital | 21 | 11.387 | 16.081 | 0 | 0 |
| Current portion of non-current loans and | 21 | 9.117 | 9.285 | 0 | 0 |
| borrowings | |||||
| Short-term portion of non-current Lease | 21 | 586 | 555 | 0 | 0 |
| Income Tax Payable | 158 | 191 | 20 | 20 | |
| Accounts payable and other current liabilities | 23 | 105.743 | 99.526 | 1.285 | 1.177 |
| Total current Liabilities | 126.991 | 125.636 | 1.305 | 1.197 | |
| Total liabilities (d) | 250.400 | 253.562 | 1.844 | 1.715 | |
| Total Equity & Liabilities (c) + (d) | 424.145 | 421.431 | 90.875 | 91.565 |
(In thousands of Euro, unless otherwise stated)
| Group | |||
|---|---|---|---|
| Note | 1/1 - 31/12/2018 | 1/1 - 31/12/2017 | |
| Revenue | 6 | 448.486 | 434.059 |
| Cost of Goods Sold | 6 | (255.728) | (246.347) |
| Gross Profit | 192.758 | 187.712 | |
| Other operating income | 6 | 7.545 | 5.581 |
| Distribution expenses | 6 | (147.834) | (144.241) |
| Administrative expenses | 6 | (21.292) | (20.174) |
| Other operating expenses | 6 | (964) | (986) |
| Operating Profit | 30.212 | 27.892 | |
| Total finance cost | 6 | (12.831) | (13.407) |
| Total finance income | 6 | 1.006 | 1.207 |
| Contribution associate companies earnings / losses | 6 | 83 | (1.160) |
| Profit before Tax | 18.470 | 14.532 | |
| Income tax | 24 | (4.179) | (4.493) |
| Net Profit (A) | 14.291 | 10.039 | |
| Attributable to : | |||
| Equity holders of the parent | 14.291 | 10.039 | |
| Net Profit (A) | 14.291 | 10.039 | |
| Basic Earnings per Share (in Euro) | 25 | 0,2758 | 0,1944 |
| Diluted Earnings per Share (in Euro) | 25 | 0,2726 | 0,1917 |
Revenue is meant as income from contacts with customers
(In thousands of Euro, unless otherwise stated)
| Group | ||||
|---|---|---|---|---|
| Note | 1/1 - 31/12/2018 | 1/1 - 31/12/2017 | ||
| Net Profit /(Loss) (A) | 14.291 | 10.039 | ||
| Other comprehensive income/(loss) Other comprehensive income transferred to the income statement |
||||
| Valuation of financial assets available for sale | 0 | (204) | ||
| Foreign currency translation from foreign operations | (1.896) | (1.727) | ||
| Effective portion of changes in fair value of cash flow hedges |
21,24 | (92) | 226 | |
| Total Other comprehensive income transferred to the income statement |
(1.988) | (1.706) | ||
| Other comprehensive income not transferred to the income statement |
||||
| Actuarial gains (losses) on defined benefit pension plan |
19,24 | (42) | (94) | |
| Total Other comprehensive income not transferred to the income statement |
(42) | (94) | ||
| Comprehensive Income/Losses after Tax (B) | (2.030) | (1.800) | ||
| Total Comprehensive Income/(Losses) after tax (A) + (B) |
12.261 | 8.239 | ||
| Attributable to: Equity holders of the parent |
12.261 | 8.239 | ||
| Total Comprehensive Income/(Losses) after tax (A) + (B) |
12.261 | 8.239 | ||
(In thousands of Euro, unless otherwise stated)
| Company | |||
|---|---|---|---|
| Note | 1/1 - 31/12/2018 | 1/1 - 31/12/2017 | |
| Revenue | 6 | 4.288 | 4.126 |
| Cost of Goods Sold | 6 | (4.100) | (3.721) |
| Gross Profit | 188 | 405 | |
| Other operating income | 6 | 1.300 | 836 |
| Administrative expenses | 6 | (2.856) | (2.237) |
| Depreciation/Amortisation (Administration) | (75) | (53) | |
| Other operating expenses | 6 | (31) | (34) |
| Operating Loss | (1.474) | (1.083) | |
| Total finance cost | 6 | (2) | (2) |
| Total finance income | 6 | 10 | 119 |
| Dividends | 5.000 | 5.000 | |
| Profit before Tax | 3.534 | 4.033 | |
| Income tax | 24 | (84) | (4) |
| Net Profit (A) | 3.450 | 4.030 |
Revenue is meant as income from contacts with customers
(In thousands of Euro, unless otherwise stated)
| Company | |||
|---|---|---|---|
| Note | 1/1 - 31/12/2018 | 1/1 - 31/12/2017 | |
| Net Profit /(Loss) (A) | 3.450 | 4.030 | |
| Other comprehensive income/(loss) Other comprehensive income not transferred to the income statement |
|||
| Actuarial gains (losses) on defined benefit pension plan |
19,24 | (14) | (20) |
| Total other comprehensive income not transferred to the income statement |
(14) | (20) | |
| Comprehensive income/(losses) after Tax (B) | (14) | (20) | |
| Total comprehensive income/(losses) after tax (A) + (B) Attributable to : |
3.436 | 4.010 | |
| Equity holders of the parent | 3.436 | 4.010 | |
| Total comprehensive income/(loss) for the period |
3.436 | 4.010 |
(In thousands of Euro, unless otherwise stated)
| Note | Share Capital |
Share premiu m reserve s |
Reserve s |
Revalua tion Reserve s |
Foreign exchan ge diff. from Statem ent of Financi al Position transl. reserve |
Retained earnings / (Accumul ated losses) |
Total | Non controll ing interest (b) |
Total Equity (c)=(a) +(b) |
|
|---|---|---|---|---|---|---|---|---|---|---|
| Balance at 1.1.2017 | 54.924 | 12.423 | 36.613 | 722 | s (5.569) |
64.493 | 163.605 | 0 | 163.605 | |
| Total comprehensive income/(loss) for the period |
||||||||||
| Profit | 0 | 0 | 0 | 0 | 0 | 10.039 | 10.039 | 0 | 10.039 | |
| Foreign currency translation from foreign operations |
0 | 0 | 0 | 0 | (1.695) | (32) | (1.727) | 0 | (1.727) | |
| Effective portion of changes in fair value of cash flow hedges |
21,24 | 0 | 0 | 226 | 0 | 0 | 0 | 226 | 0 | 226 |
| Actuarial gains (losses) on defined benefit pension plan |
0 | 0 | 0 | 0 | (1) | (93) | (94) | 0 | (94) | |
| Valuation of financial assets available for sale |
0 | 0 | (204) | 0 | 0 | 0 | (204) | 0 | (204) | |
| Total comprehensive income/(loss) | 0 | 0 | 21 | 0 | (1.696) | (125) | (1.800) | 0 | (1.800) | |
| Total comprehensive income/(loss) after taxes |
0 | 0 | 21 | 0 | (1.696) | 9.914 | 8.239 | 0 | 8.239 | |
| Transactions with shareholders | ||||||||||
| recorded directly in equity | ||||||||||
| Share Capital Increase SOP Reserve |
304 0 |
739 0 |
0 219 |
0 0 |
0 0 |
0 0 |
1.043 219 |
0 0 |
1.043 219 |
|
| Reserves | 0 | 0 | 641 | 0 | 0 | (641) | 0 | 0 | 0 | |
| Net Income directly booked in the | 0 | (105) | 0 | 0 | 0 | 0 | (105) | 0 | (105) | |
| statement movement in Equity Share Capital Reduction |
16 | (5.133) | 0 | 0 | 0 | 0 | 0 | (5.133) | 0 | (5.133) |
| Total transactions with shareholders | (4.829) | 634 | 860 | 0 | 0 | (641) | (3.975) | 0 | (3.975) | |
| Balance at 31.12.2017 | 50.094 | 13.057 | 37.495 | 722 | (7.265) | 73.766 | 167.870 | 0 | 167.869 | |
| Balance at 1.1.2018 | 50.094 | 13.057 | 37.495 | 722 | (7.265) | 73.766 | 167.870 | 0 | 167.869 | |
| Effect of adoption of new accounting | ||||||||||
| standards | 23 | 0 | 0 | 0 | 0 | 0 | (2.098) | (2.098) | 0 | (2.098) |
| Balance at 1.1.2018 (Restated) Total comprehensive income/(loss) for the period |
50.094 | 13.057 | 37.495 | 722 | (7.265) | 71.668 | 165.772 | 0 | 165.771 | |
| Profit | 0 | 0 | 0 | 0 | 0 | 14.291 | 14.291 | 0 | 14.291 | |
| Foreign exchange differences | 0 | 0 | 0 | 0 | (1.896) | 0 | (1.896) | 0 | (1.896) | |
| Effective portion of changes in fair value of cash flow hedges |
21,24 | 0 | 0 | (92) | 0 | 0 | 0 | (92) | 0 | (92) |
| Actuarial gains (losses) on defined benefit pension plan |
19,24 | 0 | 0 | 0 | 0 | 0 | (42) | (42) | 0 | (42) |
| Total comprehensive income/(loss) | 0 | 0 | (92) | 0 | (1.896) | (42) | (2.030) | 0 | (2.030) | |
| Total comprehensive income/(loss) after taxes |
0 | 0 | (92) | 0 | (1.896) | 14.249 | 12.261 | 0 | 12.261 | |
| Transactions with shareholders, | ||||||||||
| recorded directly in equity | ||||||||||
| Share Capital Increase SOP Reserve |
16 19 |
2.215 0 |
388 0 |
0 372 |
0 0 |
0 0 |
(2.066) 0 |
537 372 |
0 0 |
537 372 |
| Reserves | 0 | 0 | 217 | 0 | 0 | (217) | 0 | 0 | 0 | |
| Net Income directly booked in the | 0 | 0 | 0 | 0 | (33) | 0 | (33) | 0 | (33) | |
| statement movement in Equity Share Capital Reduction |
16 | (5.164) | 0 | 0 | 0 | 0 | (0) | (5.164) | 0 | (5.164) |
| Total transactions with shareholders | (2.950) | 388 | 590 | 0 | (33) | (2.283) | (4.288) | 0 | (4.288) | |
| Balance at 31.12.2018 | 47.145 | 13.445 | 37.991 | 722 | (9.193) | 83.634 | 173.745 | 0 | 173.745 |
(In thousands of Euro, unless otherwise stated)
| Note | Share Capital |
Share premium reserves |
Reserves | Retained earnings / (Accumulate |
Total Equity (c)=(a)+(b) |
|
|---|---|---|---|---|---|---|
| d losses) | ||||||
| Balance at 1.1.2017 Total comprehensive income/(loss) for the |
54.924 | 12.830 | 15.187 | 6.771 | 89.711 | |
| period | ||||||
| Profit | 0 | 0 | 0 | 4.030 | 4.030 | |
| Actuarial gains (losses) on defined benefit pension | 19,24 | 0 | 0 | 0 | (20) | (20) |
| plan | ||||||
| Total comprehensive income/(loss) after | 0 | 0 | 0 | 4.010 | 4.010 | |
| taxes Transactions with shareholders recorded |
||||||
| directly in equity | ||||||
| Share Capital Increase | 16 | 304 | 739 | 0 | 0 | 1.043 |
| SOP Reserve | 0 | 0 | 219 | 0 | 219 | |
| Share Capital Reduction | 16 | (5.133) | 0 | 0 | 0 | (5.133) |
| Total transactions with shareholders | (4.829) | 739 | 219 | 0 | (3.870) | |
| Balance at 31.12.2017 | 50.094 | 13.570 | 15.406 | 10.781 | 89.851 | |
| Balance at 1.1.2018 | 50.094 | 13.570 | 15.406 | 10.781 | 89.851 | |
| Total comprehensive income/(loss) for the | ||||||
| period Profit |
0 | 0 | 0 | 3.450 | 3.450 | |
| Actuarial gains (losses) on defined benefit pension | ||||||
| plan | 19,24 | 0 | 0 | 0 | (14) | (14) |
| Total comprehensive income/(loss) after | 0 | 0 | 0 | 3.436 | 3.436 | |
| taxes | ||||||
| Transactions with shareholders, recorded | ||||||
| directly in equity | ||||||
| Share Capital Increase | 16 | 2.215 | 388 | 0 | (2.066) | 537 |
| SOP Reserve Share Capital Reduction |
19 16 |
0 (5.164) |
0 0 |
372 0 |
0 0 |
372 (5.164) |
| Total transactions with shareholders | (2.950) | 388 | 372 | (2.066) | (4.255) | |
| Balance at 31.12.2018 | 47.145 | 13.958 | 15.778 | 12.151 | 89.032 |
*Capital reduction (Note 16)
(In thousands of Euro, unless otherwise stated)
| Group | Company | ||||
|---|---|---|---|---|---|
| Note | 1/1 - 31/12/2018 |
1/1 - 31/12/2017 |
1/1 - 31/12/2018 |
1/1 - 31/12/2017 |
|
| Operating Activities | |||||
| (Loss)/Profit before taxes | 18.470 | 14.532 | 3.534 | 4.033 | |
| Adjustments for | |||||
| Depreciation / Amortization Income on depreciation in fixed subsidy |
6 | 14.057 (150) |
13.945 (178) |
75 0 |
53 0 |
| Provisions | 883 | 509 | 88 | 58 | |
| Foreign exchange differences | (70) | 842 | 0 | (0) | |
| Results (Income, expenses, profit and loss) from | |||||
| investment activity | (116) | (349) | (5.010) | (5.002) | |
| Interest Expense | 11.653 | 11.851 | 2 | 2 | |
| Plus/less adj for changes in working | |||||
| capital related to the operating activities Decrease / (increase) in inventory |
(8.342) | (1.418) | 0 | 0 | |
| Decrease / (increase) in trade and other | |||||
| receivables | 6.538 | (7.808) | (373) | 37 | |
| (Decrease) / increase in liabilities (excluding | |||||
| banks) | 4.541 | 5.771 | 108 | (1.919) | |
| Less | |||||
| Interest paid | (11.765) | (12.634) | (2) | (2) | |
| Income taxes paid | (1.770) | (3.021) | (1) | (0) | |
| Net cash generated from operations (a) | 33.930 | 22.044 | (1.579) | (2.739) | |
| Investing Activities | |||||
| Purchase or Share capital increase of | |||||
| subsidiaries and related companies | 10 | (5.325) | (495) | 0 | (0) |
| Purchase of tangible and intangible fixed assets | (11.935) | (11.663) | (123) | (166) | |
| Proceeds from disposal of tangible and | 36 | 7 | 0 | 0 | |
| intangible assets | |||||
| Addition of other investments Proceeds from the sale of other investments |
(341) 0 |
(1.252) 1.535 |
0 0 |
0 0 |
|
| Interest Received | 121 | 100 | 10 | 3 | |
| Proceeds from dividends | 0 | 0 | 5.000 | 8.500 | |
| Total inflow / (outflow) from investing | |||||
| activities (b) | (17.444) | (11.767) | 4.887 | 8.337 | |
| Financing Activities Inflow from share capital increase |
537 | 1.043 | 537 | 1.043 | |
| Outflow from share capital increase | 0 | (105) | 0 | 0 | |
| Payment for returnal share capital | (5.164) | (5.133) | (5.164) | (5.133) | |
| Proceeds from issued loans | 21 | 32.347 | 65.915 | 0 | 0 |
| Repayment of loans | 21 | (40.341) | (67.948) | 0 | 0 |
| Repayment of leasing liabilities | (558) | (1.000) | 0 | 0 | |
| Total inflow / (outflow) from financing activities (c) |
(13.180) | (7.227) | (4.627) | (4.090) | |
| Net increase/(decrease) in cash and cash | 3.306 | 3.049 | (1.319) | 1.508 | |
| equivalents for the period (a)+(b)+(c) | |||||
| Cash and cash equivalents at the beginning of | 36.603 | 33.616 | 2.843 | 1.335 | |
| the period Effect of exchange equivalents at the beginning |
|||||
| of the period | (55) | (62) | 0 | 0 | |
| Closing balance, cash and cash equivalents | 39.854 | 36.603 | 1.525 | 2.843 |
FOURLIS HOLDINGS S.A. with the common use title of FOURLIS SA (hereinafter the Company) was incorporated in 1950 as A. FOURLIS AND CO., and from 1966 operated as FOURLIS BROS S.A. (Government Gazette, AE and EPE issue 618/ 13.6.1966). It was renamed to FOURLIS HOLDING S.A. by a decision of an Extraordinary General Shareholders' Assembly on 10/3/2000, which was approved by decision K2 - 3792/ 25.04.2000 of the Ministry of Development. The Shareholders' General Assembly also approved the conversion of the Company to a holding company and thus also approved the change in its scope.
The headquarters of the Company are located at 18-20 Sorou street, Building A Maroussi. It is registered in the Companies Registry of the Ministry of Development with registration number 13110/06/B/86/01 and general electronic commercial registry number 258101000 and web address www.fourlis.gr.
The Company is listed in the Athens Stock Exchange since April 1988.
The Company's term, in accordance with its Articles of Incorporation, was originally set for 30 years. In accordance with a decision of the Extraordinary Assembly of the Shareholders on 19/2/1988, the term was extended for a further 30 years i.e. to 2026.
The current Board of Directors of the parent Company is as follows:
The total number of employees of the Group as at the end of current and previous year was at 4.038 and 3.897 respectively while the total number of employees of the Company on 31/12/2018 was 95 and on 31/12/2017 was 90.
The Company's activities are the investment in domestic and foreign companies of all types, regardless their objectives and type.
The Company also provides general administration, financial management and information technology services. The centralization of Group support services for the Group Companies in Greece, mainly in the areas of IT, HR, financial planning and controlling, treasury and corporate social responsibility was implemented, aiming to gain benefits from synergies and to organize central coordination of decision making and implementing.
The Financial Statements include the Company and its subsidiaries (the Group) as presented below:
| Name | Location | % Holding | Consolidation Method |
|---|---|---|---|
| HOUSEMARKET SA | Greece | 100,00 | Full |
| INTERSPORT ATHLETICS SA | Greece | 100,00 | Full |
| TRADE LOGISTICS SA* | Greece | 100,00 | Full |
| RENTIS SA* | Greece | 100,00 | Full |
| GENCO TRADE SRL | Romania | 1,57 | Full |
| GENCO TRADE SRL* | Romania | 98,43 | Full |
| GENCO BULGARIA EOOD* | Bulgaria | 100,00 | Full |
| HOUSE MARKET BULGARIA AD* | Bulgaria | 100,00 | Full |
| HM HOUSEMARKET (CYPRUS) LTD* | Cyprus | 100,00 | Full |
| INTERSPORT ATΗLETICS (CYPRUS) LTD* | Cyprus | 100,00 | Full |
| WYLDES LIMITED LTD* | Cyprus | 100,00 | Full |
| INTERSPORT ATLETİK MAĞAZACILIK VE DIŞ TİCARET A.Ş.* |
Turkey | 100,00 | Full |
* Companies in which FOURLIS HOLDINGS S.A. has an indirect participation
Also in Consolidated Financial Statements the below mentioned related companies are included.
| Company | Location | % Holding | Consolidation Method |
|---|---|---|---|
| VYNER LTD* | Cyprus | 50,00 | Net equity |
| SW SOFIA MALL ENTERPISES LTD* | Cyprus | 50,00 | Net equity |
* Companies in which FOURLIS HOLDINGS S.A. has an indirect participation
During the period 1/1 – 31/12/2018 the following share capital changes were realized at the parent company and its direct subsidiaries:
Following resolutions of the General Assembly of the shareholders of the company held on 15/6/2018 (relevant minutes of the G.A. with number 22/15.06.2018), the share capital of the company a) increased by the amount of € 2.065.747,52 with capitalization, according to the provision of article 71B § 6 L. 4172/2013, of equal amount of the reserve formed in accordance with L. 2065/1992 from shares distribution after capitalization of goodwill which arised from property revaluation of subsidiaries or other companies in which the Company has a shareholding and increase of the nominal value of the share by the amount of € 0,04, and b) decreased by the amount of € 5.164.368,80 with reduction of nominal value of each share by the amount of € 0,10 and corresponding capital return to shareholders.
The aforementioned change was registered to the General Electronic Commercial Registry (GECR) on 27/6/2018 (Code Registration Number 1411661), with the relevant 1196323/27.06.2018 announcement issued by the Minister of Finance and Development.
Under the context of the previous Stock Option Plan which was approved and established by the resolution of the Extraordinary General Assembly of the shareholders on 27/9/2013 (Stock Option Plan – hereinafter "the Program"), within the year 2018, 163.626 options were exercised (hereinafter "the Options"). Following the resolution of the Board of Directors on 17/12/2018 (relevant minutes of the BoD with number 400/17.12.2018), the exercise of the aforementioned options from the corresponding beneficiaries of the Program was certified by payment of the exercise price of the new shares.
It is noted that the underlying value of the shares to which the remaining stock options reflect, was initially determined at the amount of €3,40 per share, which was the stock closing price of the share on the date of the resolution of the General Assembly for the SOP (27/9/2013). Already, the resolutions 20/11/2017 and 19/11/2018 of the BoD (relevant minutes of the G.A. with number 389/20.11.2017 and 399/19.11.2018) resulted to the readjustment of the historical share price of the Company and therefore the implemented exercise price of stock options of the SOP is € 3,2823 per share.
Following the certification of the payment of the exercise price of the Stock Options by their beneficiaries, namely the amount of € 537.069,61, 163.626 new common nominal shares were issued and delivered to the corresponding beneficiaries of the Program, of nominal value € 0,91 per share, while the share capital of the Company increased by the amount of € 148.899,66 which reflects to the nominal value of the new shares. Moreover, following the exercise of the aforementioned Options by payment of the exercise value, namely € 3,2823 per share according to the aforementioned, the share premium, of total amount € 388.169,95, was transferred to "Share Premium reserve".
The aforementioned change was registered to the General Electronic Commercial Registry (GECR) on 22/1/2019 (Code Registration Number 1638212), with the relevant 7785/22.01.2019 announcement issued by the Minister of Finance and Development.
Following these changes, the share capital of the Company now amounts to € 47.144.655,74 divided into 51.807.314 shares of nominal value € 0,91 per share, totally paid.
During the period 1/1 – 31/12/2018, no share capital changes were realized at the direct subsidiaries of the Company.
It must be noted that on 8/12/2017, the sale of the percentage (49,55%) of the associated company SPEEDEX S.A. to the third company SFAKIANAKIS S.A. was announced. This action was included in the Group's strategy regarding the focus on the main retail activities of home furniture and household goods (IKEA Stores) and sporting goods (INTERSPORT and TAF Stores).
It must also be noted that on 28/2/2019, Hellenic Capital Market Commission announced the granting of license to the Group company under formation "TRADE ESTATES REAL ESTATES INVESTMENT COMPANY", for its operation as a) a Real Estate Investment Company according to the provisions of L. 2778/1999 and b) an internally managed Alternative Investments Fund Manager ("AIFM") according to the provisions of L. 4209/2013.
The accompanying Financial Statements consist of the separate financial statements of the parent Company and the consolidated financial statements of the Group and have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union. The Board of Directors approved the accompanying financial statements for the year ended on December 31 2018, on March 18, 2019. These financial statements are subject to the approval of the General Assembly of the Company's shareholders.
The accompanying separate and consolidated financial statements have been prepared on the historical cost basis, except for certain data of Assets and Liabilities (investment properties, financial hedging instruments, investments/financial assets available for sale) that have been measured at fair value, and assuming that the Company and its subsidiaries will continue as a going concern. All amounts are presented in thousands of Euro, unless otherwise stated and any differentiations in sums are due to rounding.
The preparation of financial statements based on IFRS requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results may differ from those estimates. Estimates are based on management's previous experience including expectations of future events under normal conditions. The aforementioned judgments, estimates and assumptions are periodically re - assessed in order to be in line with current available data and reflect current risks.
When applying the Group's accounting policies, management has made the following judgments, estimates and assumptions that may have a significant impact on the items reported in the financial statements:
book value and value in use (Note 7 of Financial Statements).
The accounting policies adopted are consistent with those of the previous financial year except for the following amended IFRSs which have been adopted by the Group and /Company as of 1 January 2018.
The final version of IFRS 9 Financial Instruments reflects all phases of the financial instruments project and replaces IAS 39 Financial Instruments: Recognition and Measurement and all previous
versions of IFRS 9. The standard introduces new requirements for classification and measurement, impairment, and hedge accounting. Management of the Company and Group has made an assessment of the effect of the standard and does not expect significant impact on the financial statements. The assessment is based on non-existence of: financial assets available for sale and cases of customers' impairment. Regarding hedge accounting, on 1/1/2018 (implementation date of the standard) the only existing hedge relation of the Group can be characterized as ongoing and therefore the implementation of the new standard has not a significant impact on its financial statements.
IFRS 15 establishes a five-step model which applies for income earned from a contract with a customer (with limited exceptions), regardless the transaction or industry type. Moreover, the standard is implemented for the recognition and calculation of earnings or losses from the sale of financial assets which are not included in ordinary activities of the Group (e.g. sales of property, plant and equipment or intangible assets). Entities are required to allocate the transaction price from contracts to performance obligations, based on independent sale prices, based on the five step model. Afterwards, the income is recognized when the entity satisfies performance obligations, namely when it transfers the goods or services determined by the contract to the customer.
Since 1/1/2018 the Group adopted the new standard by implementing the modified retrospective adoption without any readjustment to comparative information. Therefore, any cumulative impact of the initial implementation of the new standard, is recognized as adjustment to the opening balance of retained earnings (or other amount of net equity, as appropriate) on 1/1/2018. The impact from the implementation of the new standard on the consolidated financial statements is presented in income and liabilities. More specifically, the cumulative readjustment of retained earnings from the adoption of the standard amounts to € 2.098 th. while, the impact on revenue of the year 2018 amounts to € 263 th. For the Group, the total liability arising from customers' loyalty program amounts to € 2.852 th. on 31/12/2018 (€ 2.589 on 1/1/2018).
The new standard is based on the principle that the income is recognized when control of a product or service is transferred to the customer. The Group operates in retail trading of furniture and household goods and sporting goods. According to IFRS 15, Revenue from contracts with customers, the Group recognizes revenue when control of the products is transferred, being when the products are delivered to the customer. Therefore, the adoption of IFRS 15 did not have an impact at the time of the revenue recognition. Net sales revenue is measured at fair value of the amount received. Net sales revenue excludes amounts collected by third parties such as value added taxes (VAT), as these are not included in the transaction price.
However, future discounts related to customer loyalty programs of the Group's companies create a
right which must be recognized when exercised or expired, only if it is considered substantial and the customer would not acquire it if the initial transaction was not implemented. The Group provides discounts to its customers based on the points gathered from transactions made by using the customer loyalty program card. All these discounts are settled within 18 to 24 months depending on the program. According to the requirements of the standard, the Group estimates that these discounts represent substantial right for customers, create obligation for execution and therefore part of the income of each transaction which corresponds to this right will be recognized when exercised (fulfilment of obligation) or expired. IFRS 15 neither excludes nor defines a specific methodology for the estimation of the price of the point gathered as long as the estimation composes a reliable reflection of the price at which the Group would provide separately this product to the customer.
The objective of the clarifications is to clarify the IASB's intentions when developing the requirements of IFRS 15 Revenue from Contracts with Customers, regarding (a) the accounting of identifying performance obligations amending the wording of the "separately identifiable" principle, (b) principal versus agent considerations including the assessment of whether an entity is a principal or an agent as well as applications of control principle and (c) licensing providing additional guidance for accounting of intellectual property and royalties. The clarifications also provide additional practical expedients for entities that either apply IFRS 15 fully retrospectively or that elect to apply the modified retrospective approach.
The Amendments provide requirements on the accounting of (a) the effects of vesting and nonvesting conditions on the measurement of cash-settled share-based payments, (b) share-based payment transactions with a net settlement feature for withholding tax obligations and (c) modifications to the terms and conditions of a share-based payment that changes the classification of the transaction from cash-settled to equity-settled. Management does not expect that the amendment has an impact on the Group's companies.
The Amendments clarify when an entity should transfer property, including property under construction or development into, or out of investment property. The Amendments state that a change in use occurs when the property meets, or ceases to meet, the definition of investment property and there is evidence of the change in use. A mere change in management's intentions for the use of a property does not provide evidence of a change in use. Management does not expect that the amendment has an impact on the Group's companies.
The Interpretation clarifies the accounting for transactions that include the receipt or payment of advance consideration in a foreign currency. The Interpretation covers foreign currency transactions when an entity recognizes a non-monetary asset or a non-monetary liability arising from the payment or receipt of advance consideration before the entity recognizes the related asset, expense or income. The Interpretation states that the date of the transaction, for the purpose of determining the exchange rate, is the date of initial recognition of the non-monetary prepayment asset or deferred income liability. If there are multiple payments or receipts in advance, then the entity must determine a date of the transactions for each payment or receipt of advance consideration. Management does not expect that the amendment has an impact on the Group's companies.
The Group has not adopted any of the following standards, interpretations or amendments which have been published but are not implemented in the current accounting period. Moreover, the Group has assessed all standards, interpretations or amendments which have been published but not implemented in the current period and concluded that except for IFRS 16, which is analysed later, there will not be a significant impact on the financial statements from their implementation.
The standard is effective for annual periods beginning on or after 1 January 2019. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract, i.e. the customer ('lessee') and the supplier ('lessor').
IFRS 16 replaces the current accounting treatment of leases based on IAS 17 Leases, IFRIC 4 Determining Whether an Arrangement Contains a Lease, SIC 15 Operating Leases – Incentives and SIC 27 Evaluating the Substance of Transactions in the Legal Form of a Lease.
The new standard requires lessees to recognize most leases on their financial statements. Lessees will have a single accounting model for all leases, with certain exemptions. Lessor accounting is
substantially unchanged. More specifically, IFRS 16 introduces a single presentation model of all leases at the Statement of Financial Position of all companies. The lessee will have to recognize a right of use which will represent its obligation to pay the relative leases. The standard provides exceptions for current leases and leases of assets of low value. Accounting treatment of leases for lessors remains the same with the currently existing standard, namely the lessors will continue to classify their leases at financial and operating.
The Group has appointed to a project team the assessment of all active leasing contracts under the context of IFRS 16 requirements, within the prior year. The standard is expected to affect mainly the accounting treatment of the Group's operating leasing. The Management of the Group assessed the impact of the initial implementation of the standard on its consolidated financial statements. Particularly, the Group disclosed all information which had knowledge of or could estimate with accuracy at the time of their conduction, regarding the impact of IFRS 16 on its financial statements upon its initial implementation, as analysed below:
The actual impact of the adoption of the standard on 1/1/2019 could be different from the initial estimation due to the fact that the Group / Company has not yet completed the assessment and test of the new IT systems which will be used.
The Group will implement for the first time IFRS 16 on 1/1/2019 by using the modified retrospective approach. Based on this approach the Group:
Any impact of the implementation will be registered as adjustment in retained earnings on 1/1/2019, without any amendment at comparative information.
The Group will also use the exception provided by the standard regarding the determination of leases. This practically means that the requirements of IFRS 16 will be implemented at all contracts which were in force on 1/1/2019 and had been recognized as leasing based on IAS 17 and IFRIC 4.
In addition, the Group will use exceptions of the standard regarding leasing with remaining duration less than 12 months upon the date of the initial implementation of the standard and low value asset leasing.
Also, the Group decided to implement a single discount interest rate at every leasing category with similar characteristics (such as leasing with respective duration, similar assets and respective economic environment).
The Group will recognize new assets and liabilities for operating leasing of Stores, office buildings, cars and equipment. After the initial recognition the Group will:
Before the implementation of the standard, the Group recognized operating leasing expenses during the leasing.
Based on available information and following the completion of the aforementioned implementation tasks, the Group estimates that it will recognize further leasing liabilities of amount from € 120 million to € 130 million on 1/1/2019 and equal rights of use for assets. The estimated impact on Group's EBITDA is expected to be an increase between € 19 million and € 24 million. The Group does not expect an impact from the implementation of the new standard on its capability to serve the terms of its loans.
The amendments address an acknowledged inconsistency between the requirements in IFRS 10 and those in IAS 28, in dealing with the sale or contribution of assets between an investor and its associate or joint venture. The main consequence of the amendments is that a full gain or loss is recognized when a transaction involves a business (whether it is housed in a subsidiary or not). A partial gain or loss is recognized when a transaction involves assets that do not constitute a business, even if these assets are housed in a subsidiary. In December 2015 the IASB postponed the effective date of this amendment indefinitely pending the outcome of its research project on the equity method of accounting. The amendments have not yet been endorsed by the EU.
The Amendment is effective for annual reporting periods beginning on or after 1 January 2019 with earlier application permitted. The Amendment allows financial assets with prepayment features that
permit or require a party to a contract either to pay or receive reasonable compensation for the early termination of the contract (so that, from the perspective of the holder of the asset there may be 'negative compensation'), to be measured at amortized cost or at fair value through other comprehensive income. Management of the Group and Company does not expect that the amendment will have an impact on the financial statements.
The Amendments are effective for annual reporting periods beginning on or after 1 January 2019 with earlier application permitted. The Amendments relate to whether the measurement, in particular impairment requirements, of long term interests in associates and joint ventures that, in substance, form part of the 'net investment' in the associate or joint venture should be governed by IFRS 9, IAS 28 or a combination of both. The Amendments clarify that an entity applies IFRS 9 Financial Instruments, before it applies IAS 28, to such long-term interests for which the equity method is not applied. In applying IFRS 9, the entity does not take account of any adjustments to the carrying amount of long- term interests that arise from applying IAS 28. These Amendments have not yet been endorsed by the EU.
The Interpretation is effective for annual periods beginning on or after 1 January 2019 with earlier application permitted. The Interpretation addresses the accounting for income taxes when tax treatments involve uncertainty, during the accounting treatment of income taxes. The Interpretation provides further guidance on considering uncertain tax treatments separately or together, examination by tax authorities, the appropriate method to reflect uncertainty and accounting for changes in facts and circumstances. Management assesses the impact on the Group's companies.
The Amendments are effective for annual periods beginning on or after 1 January 2019 with earlier application permitted. The Amendments require entities to use updated actuarial assumptions to determine current service cost and net interest for the remainder of the annual reporting period after a plan amendment, curtailment or settlement has occurred. The Amendments also clarify how the accounting for a plan amendment, curtailment or settlement affects applying the asset ceiling requirements. These Amendments have not yet been endorsed by the EU.
The IASB issued the revised Conceptual Framework for Financial Reporting on 29 March 2018. The Conceptual Framework sets out a comprehensive set of concepts for financial reporting, standard setting, guidance for preparers in developing consistent accounting policies and assistance to others in their efforts to understand and interpret the standards. IASB also issued a separate accompanying document, Amendments to References to the Conceptual Framework in IFRS Standards, which sets out the amendments to affected standards in order to update references to the revised Conceptual Framework. Its objective is to support transition to the revised Conceptual
Framework for companies that develop accounting policies using the Conceptual Framework when no IFRS Standard applies to a particular transaction. For preparers who develop accounting policies based on the Conceptual Framework, it is effective for annual periods beginning on or after 1 January 2020.
The IASB issued amendments in Definition of a Business (Amendments to IFRS 3) aimed at resolving the difficulties that arise when an entity determines whether it has acquired a business or a group of assets. The Amendments are effective for business combinations for which the acquisition date is in the first annual reporting period beginning on or after 1 January 2020 and to asset acquisitions that occur on or after the beginning of that period, with earlier application permitted. These Amendments have not yet been endorsed by the EU.
IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors: Definition of 'material' (Amendments)
The Amendments are effective for annual periods beginning on or after 1 January 2020 with earlier application permitted. The Amendments clarify the definition of material and how it should be applied. The new definition states that, 'Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity'. In addition, the explanations accompanying the definition have been improved. The Amendments also ensure that the definition of material is consistent across all IFRS Standards. These Amendments have not yet been endorsed by the EU.
IAS 23 Borrowing Costs: The amendments clarify paragraph 14 of the standard that, when a qualifying asset is ready for its intended use or sale, and some of the specific borrowing related to that qualifying asset remains outstanding at that point, that borrowing is to be included in the funds that an entity borrows generally.
The Financial Statements have been prepared in accordance with the following accounting principles:
Consolidated Financial Statements comprise of the financial statements of the Company and all subsidiaries controlled by the Company directly or indirectly. Control exists when the parent company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.
The subsidiaries' financial statements are prepared as of the same reporting date and using the same accounting policies as the parent company. Intra - group transactions (including investments in related companies), balances and unrealized gains are eliminated. Subsidiaries are fully consolidated from the date that control commences and cease to be consolidated from the date that control is transferred out of the Group. Losses within a subsidiary are attributed to the non - controlling interest even if that results in a deficit balance. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. The financial results of subsidiaries, that are acquired or sold within the year, are included in the consolidated statement of comprehensive income from or up to the date of acquisition or sale, respectively.
Certain of the above - mentioned requirements were applied on a prospective basis based on the revised IAS 27 and therefore the following differences are carried forward in certain instances from the previous basis of consolidation:
Business Combination is a transaction or another event during which an acquirer takes over control of one or more businesses. A Business is a combination of activities and assets that can be leaded and managed in order to return profits directly to its owners.
If the acquired assets do not compose a business, the transaction or any other fact are accounted as an acquisition of an asset and the acquisition cost is allocated among assets and liabilities based on
the relative fair values during the acquisition date.
Business Combination is accounted for using acquisition method. The cost of acquisition of a subsidiary is the fair value of the assets contributed, the shares issued and the liabilities assumed at the transaction date, plus the amount of any non - controlling interest in the acquiree. For each business combination, the acquirer measures the non - controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree's identifiable net asset. Acquisition costs are expensed when incurred.
If the cost of acquisition is less than the fair values of the net identifiable assets acquired, the difference is recorded directly to the income statement.
Goodwill arising from subsidiaries' acquisitions is recorded as an intangible asset. Goodwill is not amortized but at least annually is subject to impairment test. As a result, after initial recognition, goodwill is measured at cost, less any impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each cash generating unit that is expected to benefit from the combination. The impairment test is performed by comparing the recoverable amount of the cash generating unit to its carrying value including the allocated goodwill. The recoverable amount is the higher of the fair value less costs to sell and the value in use. The value in use is determined via a discounted cash flow analysis. Impairment losses relating to goodwill cannot be reversed in future periods.
Gains or losses arising from the disposal of subsidiaries are determined after taking into account the goodwill allocated to the disposed unit.
In the separate financial statements of the parent Company, investments in subsidiaries are accounted for at cost, less any impairment in value. Impairment tests are carried out when there are clear indicators of impairment, in accordance with IAS 36 "Impairment of Assets".
Associates are those entities, in which the Group has significant influence but which are neither a subsidiary nor a joint venture of the Group. A percentage holding from 20% to 50% implies significant influence. Such percentage holding indicates that company is an associate. Investments in associates are accounted for using the equity method based on which the investment is carried at cost plus postacquisition changes in the Group's share of net assets of the associate, less provisions for any impairment in value. Goodwill arising upon the acquisition of associates is included in the value of investment, while any negative goodwill is recorded in the income statement upon acquisition.
The Group's share in the gains or losses of associates after acquisition is recognized in the statement of comprehensive income, while post - acquisition movements in reserves are recognized directly in reserves.
In applying the equity method of accounting, the Group appropriately adjusts the financial statements of those associates who are not applying IFRS so as to comply with IFRS and be uniform with the accounting policies of the Group. Unrealized gains on transactions between the Group and its associates are eliminated to the extent of the Group's interest in the associates. Unrealized losses are eliminated, unless the transaction provides evidence of impairment of the transferred asset.
When the Group's participation to the associate's losses equals or exceeds its interest in an associate, including any other bad debts, the Group does not recognize further losses, unless it has any liabilities or made payments on behalf of the associate and generally those arising from the ownership status. In the separate financial statements of the Parent Company, investments in associates are accounted for at cost less any accumulated impairment losses.
The Board of Directors of the Company is the chief operating decision maker and monitors internal financial reporting information in order to evaluate the performance of the Company and the Group and to take decisions about resource allocation.
Management has defined its segments based on these internal reports according to IFRS 8. The operating segments are defined as those business segments where the Group is active and on which the internal information system of the Group is based.
For the categorization by business segment, the following has been taken into account:
According to the aforementioned, the Group presents information by operating segment as follows (Note 5):
The companies of the Group maintain their books in the currency of the financial environment in which each company operates (functional currency). The consolidated financial statements are presented in Euro's which is the functional currency of the parent Company.
Transactions in foreign currencies are converted to the functional currency according to the foreign exchange rates ruling at the date of the transaction. Foreign exchange differences arising on translation of monetary assets and liabilities denominated in foreign currencies at the reporting date
are recognized in the statement of comprehensive income. Foreign exchange differences on nonmonetary items carried at fair value are considered as part of the fair value of those items and are recorded together with the fair value adjustments.
Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using the functional currency. The translation of the financial statements of the Group's companies which use a different functional currency from the parent company is performed as follows:
Goodwill and adjustments to fair values upon an acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and are translated at the closing rate of the date of the Statement of Financial Position and foreign exchange differences are recognized in equity.
Property, plant and equipment are measured, by category, as follows:
Significant additions and improvements are recognized as part of the cost of the asset when the recognition criteria are met. All other costs (repairs and maintenance) are recognized in the statement of comprehensive income as an expense as incurred.
Upon disposal of an item of property, plant and equipment, the difference between the consideration received and the carrying value is recorded as gain or loss in the Income Statement.
Depreciation is calculated on a straight - line basis over the estimated useful economic life of the assets. Useful lives are reviewed on an annual basis.
The estimated useful lives of the Group's property plant and equipment, except of the land that is not depreciated, are as follows:
| Category | Useful life |
|---|---|
| Buildings - Building installations (owned premises) | 10 - 40 years |
| Buildings on third party land | 10 – 36 years |
| Machinery and equipment | 9 - 10 years |
| Motor vehicles | 6 - 9 years |
| Miscellaneous equipment | 4 - 10 years |
Owner - occupied buildings or buildings whose use has not yet been determined and which are under construction are recorded at cost less any impairment losses. This cost includes professional compensations and borrowing costs. The depreciation of that owner - occupied buildings begins from the time the buildings are ready for use.
Investment property is measured initially at cost, including transaction costs. Subsequent to initial recognition, investment property is stated at fair value, which is evaluated annually. In case of owner occupation, the investment property is derecognized and transferred to property, plant and equipment at fair value on the transfer date. The carrying value of investment property reflects the market conditions at the reporting date. Gains or losses arising from changes in the fair values of investment property fair value are recognized in the Income Statement of the period they occur.
The intangible assets of the Group (excluding goodwill) are depreciated over their useful life which is annually reviewed.
Trademarks and licenses are valued at cost less amortization. Amortization is charged to the statement of comprehensive income on a straight - line basis over the estimated useful lives, which have been determined from 5 to 20 years.
Software licenses are valued at cost less amortization. Amortization is charged on a straight - line basis over the estimated useful lives and the depreciation rate is 15%.
Expenditure on development and maintenance of software is expensed as incurred. Expenditure of development activities for the production of new or substantially improved software (in - house developments), is recognized as intangible assets when the following criteria are met: a) when a specific asset is created, b) when it can be demonstrated that the intangible asset will generate probable future economic benefits and c) when the expenditures of development can be measured reliably. Such expenditures include also labor costs and an appropriate proportion of overheads. In case of software replacement, while the old one is no longer in use, intangible asset is permanently deleted from the Books and the net book value burdens the income statement.
Costs incurred for performing software upgrades, are capitalized and the new gross value forms the depreciable amount.
Property, plant and equipment is constantly tested in order to define if there are indications which show that its book value does not exceed recoverable value or is not representative. The Group considers, for impairment test purposes, that each store is a cash generating unit (CGU). In cases that property, plant and equipment is part of CGU, such as the store and there are impairment indications which could lead to the conclusion that its book value does not exceed recoverable value or is not representative, the recoverable amount of the CGU is determined by the calculation of value in use. Value in use is calculated by implementing the cash flow discount method, taking into consideration Management's estimations and any contingent impairment is determined by the comparison of book value and value in use.
The carrying amounts of the Group's assets are reviewed for possible impairment when there is indication that the book value can't be recovered i.e. when the book value is higher than the recoverable amount from their use or sale.
The recoverable value is the greater of the fair value less costs to sell and the value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre - tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. If the recoverable value is less than the carrying value, then the net book value is reduced to the recoverable value.
Impairment losses are expensed as incurred in the Statement of Income, except if the asset has been revalued, then the impairment loss reduces the related revaluation reserve. An assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exists of have decreased. If such indication exists, the Group estimates the asset's recoverable amount. When in a subsequent period, the impairment loss should be reversed; the carrying value of the asset is increased to the level of the revised estimation of recoverable amount. The new net book value should not exceed the net book value that would have been determined if the impairment losses had not been accounted in previous periods.
A financial instrument consists of every agreement that creates a financial asset in a business and a financial liability or equity instrument in another business.
The Group's financial instruments are classified at initial recognition in the following categories based on the substance of the agreement and the purpose for which they were acquired:
Such financial assets, represent assets, which satisfy any of the following conditions:
Financial assets at fair value through profit and loss are carried in the statement of financial position at fair value with changes in fair value recognized in the Statement of Comprehensive Income.
Loans and receivables are non - derivative financial instruments with fixed or determinable payments that are not quoted in active market. This category does not include:
Loans and receivables are included in current liabilities/ assets, except of those whose maturity extends beyond twelve (12) months after the reporting date and which are classified as non - current liabilities/ assets. After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate method, less impairment. Gains and losses are recognized in income when the loans and receivables are derecognized or impaired, as well as through the amortization process.
Non - derivative financial items with fixed or determinable payments and fixed maturities are classified as held - to - maturity when the Group has the intent and ability to hold to term to maturity. After initial measurement, held - to - maturity investments are measured at amortized cost using the effective interest method, less impairment. Gains and losses are recognized in income when the loans and receivables are derecognized or impaired, as well as through the amortization process.
Available for sale financial assets which are classified under this category or which cannot be classified under any of the three preceding categories. Financial assets available for sales are valued at fair value and the unrealized gains or losses are recognized as other comprehensive income in a reserve under equity until the item is sold or impaired. At the date of sale or impairment, the gains or losses are transferred to the statement of comprehensive income. Impairment losses on equity investments are not reversed through the income statement.
Purchases and sales of investments are recognized on trade date, which is the date that the Group commits to purchase or sell the item. Investments are initially recorded at fair value plus, in the case of investments not at fair value through profit and loss, directly attributable transactions costs. Investments are derecognized when the right to the cash flows of the investment expire or are transferred and the Group has substantially transferred all the risks and rewards related to the ownership of the investment.
The fair values of financial assets, which are traded on active markets, are determined by reference to quoted prices. The fair value of financial assets not traded on active markets is determined by using valuation techniques such as use of recent arm's length transactions, reference to other instruments that are substantially the same and discounted cash flow analysis.
For purposes of subsequent measurement, financial assets are classified at the following categories:
IFRS 9 inducts new requirements for recognition, classification and measurement of financial assets and liabilities, impairment and general hedge accounting.
Classification and measurement of financial assets:
According to IFRS 9, financial assets are measured at fair value plus, in the case of financial assets not measured at fair value through profit and loss (Fair Value through Profit and Loss – FVPL), the transaction cost. Debt instruments are measured subsequently at fair value, through profit and loss, at amortized cost or fair value through other comprehensive income (Fair Value through Other Comprehensive Income – FVOCI). Classification criteria of financial assets are two: a) business model of financial assets management implemented by the Group and b) the financial asset (as a whole) give rise to cash flows that are solely payments of principal and interest on the principal amounts outstanding ( SPPI test - Solely Payments for Principal and Interest).
On 1/1/2018 the Management of the Group, valuated which business models are in force for the Group's financial assets and classified its debt instruments at amortized cost. Indicatively, its financial
instruments consist of trade receivables, investments in term deposits and treasury bills.
Other financial assets are classified and subsequently measured as follows:
Group's investments in equity instruments are classified at fair value through other comprehensive income, without re-recognition of earnings or losses in profit and loss with the de-recognition. The Group's aims to maintain these equity instruments for the near future and irrevocably decided to classify them at fair value through other comprehensive income after the initial recognition or transaction. According to IFRS 9, equity instruments measured at fair value through other comprehensive income are not subject to impairment test. According to IAS 39, the Group's investments in equity instruments had been classified as available for sale financial assets.
Financial assets are classified at fair value through profit and loss.
The Group assesses at each reporting date whether a financial asset or group of financial assets is impaired.
If there is objective evidence that an impairment loss on loans and receivables carried at amortized cost has incurred, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset's original effective interest rate (i.e. the effective interest rate computed at initial recognition). The carrying amount of the asset is reduced either through deletion or through use of an allowance account.
The amount of the loss is recognized in profit or loss. The Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, and individually or collectively for financial assets that are not individually significant. If it is determined that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, the asset is included in a group of financial assets with similar credit risk characteristics and that group of financial assets is collectively assessed for impairment.
Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognized are not included in a collective assessment of impairment. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed. Any subsequent reversal of an impairment loss is recognized in the income statement, to the extent that the carrying value of the asset does not exceed its amortized cost at the reversal date.
For trade receivables the Group implements simplified approach for the calculation of credit losses ECL. Therefore the Group does not monitor changes in credit risk, but recognizes a percentage of
losses which is based on ECL at every reporting period. The Group has conducted a provisions table based on historical experience of credit losses, adjusted with future factors appropriate for debtors and economic environment.
IFRS 9 adoption changed the Group's accounting for impairment losses of financial assets. Therefore, the Group replaced the "incurred loss" approach of IAS 39 with Expected Credit Loss – ECL. IFRS 9 obliges the Group to conduct provision based on expected credit losses for all loans and other debt instruments which are not maintained at fair value through profit and loss. Expected credit losses are based on the difference between due cash flows according to contract and the total of cash flows that the Group expects to receive. Afterwards, the deficit is approximately discounted with the initial actual interest rate of the financial asset.
Regarding trade and other receivables, the Group implements simplified approach of the standard by calculating the expected credit losses based on expected credit losses for the whole life. The Group uses past experience to identify payment default risk as well as information for the future at the end of each reporting period concerning its debtors and general financial environment. Under this strategy, the Group identified the provision for loss on 1/1/2018 without a substantial deviation to the provision for loss of 31/12/2017.
All other financial assets which are measured at amortized cost, are characterized as low credit risk and their fair value approaches book value.
Inventory (goods) is valued at the lower of cost or net realizable value. Cost is determined by using the weighted average method. The net realizable value is the estimated sales price at the ordinary operation of the company less any costs to sell having in mind seasonality and other conditions. The cost of inventory does not include any financial expenses.
Trade receivables are recognized initially at fair value and they are subsequently valuated at the amortized cost by using the effective interest rate method, less provision for impairment.
When there is evidence of impairment of receivables, the carrying value is reduced to its recoverable amount, which is the present value of expected future cash flows discounted at the initial effective interest rate. Then, the interest is calculated at the same rate on the impaired (new book) value.
Cash and cash equivalents include cash at banks and on hand, as well as short term (up to 3 months) investments of high liquidation and low risk.
Non-current assets held for sale and discontinued operation are valued at the lower price between carrying amount and fair value less costs to sell.
Any possible fair value increase in a subsequent valuation is registered in Profit and loss but for amounts not bigger than the initially registered impairment loss. Since the date on which an asset is classified as held for sale, this asset is no longer depreciated or amortized.
Non-current assets held for sale are classified as such, provided that their carrying value will be recovered through sale rather than through continuing use. This condition is considered valid only when the sale is highly probable and the asset is available for immediate sale at its current condition. Management requires commitment to the sale which is expected to be completed either based on stipulated by contractual time commitment or within a year from classification date.
A discontinued operation is an integral part of a financial entity that either has been sold or has been classified as held for sale and:
Direct costs incurred for increases in share capital are recorded, net of related income taxes against the share premium reserve. The cost of treasury shares net of any related income tax is recorded as a reduction of equity, until these shares are sold or cancelled. Any gain or loss on sale of treasury shares, net of direct transaction costs and any related income tax is recorded as a reserve account under equity.
Loans are initially recorded at their fair value less any direct costs related to the transaction. After initial recognition, they are subsequently measured at amortized cost using the effective interest rate method.
Interest and related expenses on loans taken for purchase or construction of fixed assets are capitalized. Capitalization of borrowing costs ceases when the asset is ready for its intended use. In case of borrowing specifically for the purpose of constructing or acquiring an asset, the borrowing costs related to the loan agreement are directly capitalized. Otherwise, in order to determine the part of the loan related with that fixed asset, a method is implemented to determine the proportion of the capitalized interest and the proportion of the interest which will be recorded to the statement of comprehensive income as an expense. Revenues, occurred as a result of investing part of a loan taken for construction of a fixed asset, reduce the amount of borrowing costs capitalized.
Loan expenses paid upon signing of new credits are recognized as loan expenses if part or total of the
new credit line is received. In that case, they are registered as future loan expenses until the loan is received. If the new loans are not used, partly or fully, then these expenses are included in prepaid expenses and are recognized in income statement during the period of the relevant credit line.
The Group uses derivative financial instruments to mitigate the risk arising from fluctuations in interest rates (Note 21). Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently measured at fair value. Any gains or losses arising from changes in fair value on derivatives that do not qualify for hedge accounting are taken directly to the income statement.
The effective part of hedges that qualify for hedge accounting is recognized directly to equity if it is related to cash flow hedges while the ineffective part is charged to the consolidated income statement, while the non - effective part is recognized in the statement of comprehensive income. If the hedge is related to effective fair value hedges, the gain or loss from re-measuring the derivative hedging instrument at fair value is recognized in profit or loss and the gain or loss on the hedged item attributable to the hedged risk adjusts the carrying amount of the hedged item and is also recognized in profit or loss.
Under cash flow hedge accounting, when the hedged firm commitment results in the recognition of non - financial asset or a non - financial liability, then, at the time the asset or liability is recognized the associated gains or losses that had previously been recognized in equity are included in the initial measurement of the acquisition cost or other carrying amount of the asset or liability. For all other cash flow hedges, the gains or losses that are recognized in equity are transferred to the income statement in the same year in which the hedged firm commitment affects the statement of comprehensive income.
The new requirements regarding hedge accounting have improved hedging instruments accounting through risk management measures implemented by the Group and therefore, the number of hedge relationships, which meet the criteria for the implementation of hedge accounting, is expected to increase. On the date of the initial implementation, all Group's current hedge relationships would be recognized as ongoing hedge relationships. Following the implementation of IFRS 9, the Group recognizes changes in time value of stock options as deferred amount at a new reserve "hedge accounting" within the Group's equity. Deferred amounts are recognized against relevant the hedge transaction when it occurs. However, since the amounts were insubstantial, no change occurred at the comparative basis.
Taxes recorded in the statement of comprehensive income include both current and deferred taxes.
Current income tax is recognized in the statement of comprehensive income, except to the extent that it relates to items recognized directly in equity. In this case it is recognized, in a similar way, directly in
equity. Current income taxes include the current liabilities and/ or assets, to or from the tax authorities, relating to the taxes payable on the taxable income of the period. Current taxes are increased by any income taxes related to provisions for tax differences or additional taxes which are imposed by the tax authorities upon audit of the unaudited tax years.
Deferred tax assets and liabilities are measured at the tax rates which are expected to apply in the year where the asset or liability will be settled, taking into account the tax rates (and tax laws) that have been enacted or are virtually applicable at the reporting date.
Deferred taxes arise on temporary differences between the recognition of assets and liabilities for tax purposes and those for the purposes of preparation of the financial statements. Deferred tax is calculated using the liability method on all taxable temporary differences at the reporting date, between the tax basis and book value of assets and liabilities.
The expected tax effects of temporary tax differences are recognized either as future (deferred) tax liabilities or as deferred tax assets. In case of an inability to accurately measure temporary tax differences, the initial recognition is made based on estimation of the reversal time and such estimation is reviewed each year.
Deferred tax assets are recognized for deductible temporary differences and unused tax losses, to the extent that it is probable that sufficient future taxable income will be available against which the unused tax losses and tax credits can be used or sufficient taxable deductible temporary differences that incur in the same company and will be recovered. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that is unlikely that sufficient taxable income will be generated in order to recover the deferred tax asset.
The Group sets off deferred tax assets and deferred tax liabilities only if:
As a result deferred tax assets and liabilities are presented on a net basis in the separate financial statements of the Company while such items are presented separately in the consolidated accounts of the Group.
If the deferred income tax arises from initial recognition of an asset or liability in a transaction other than business combination, then it does not affect the neither the accounting nor the taxable profit or loss and therefore it is not taken into account.
The tax rates in the countries that the Group is operating are presented below:
| Country | % Income Tax/ Deferred Tax |
|---|---|
| Greece | 29,0% |
| Country | % Income Tax/ Deferred Tax |
|---|---|
| Romania | 16,0% |
| Cyprus | 12,5% |
| Bulgaria | 10,0% |
| Turkey | 20,0% |
Employee benefits are:
Short term benefits to employees in money or in kind are recorded as an expense as they accrue.
Companies of the Group pay retirement compensation to their employees. Such compensation varies in relation to the employees' years of service and salary payable at the time of retirement and is accounted for as a defined benefit plan. Post - retirement obligations are calculated at the present value of future employee benefits accrued as at the end of the reporting period, based on the benefits to be earned over their expected labor life. The above mentioned obligations are calculated based on actuarial valuation methods and are determined using the Projected Unit Method. Net costs of the period are included in the attached statement of comprehensive income and consist of the present value of the employee benefits that were accrued during the current year, the interest derived from the employee benefit obligation and the actuarial gains and losses which are recognised in full in the period in which they occur in the comprehensive income and they are not transferred in income statement in next periods. Full yield curve method is used for the definition of the discount interest rate in the calculation of the present value of the employee benefits.
The employees of the Greek subsidiaries of the Group are covered, in terms of insurance programs, mainly through the Social Insurance Institution (IKA) the largest Social Security Organization of the private sector, which supplies pension and medical coverage. Every employee is obliged to participate partially, through his salary, in the costs of the insurance program, while the remaining cost is covered by the Group. Upon retirement, the pension fund is responsible to cover the obligation of pensions and retirement benefits to the employees. As a consequence the Group does not have any other legal or future obligation to cover future employee benefits according to this pension program. This program is considered and accounted for as a defined contribution plan whereby the accrued social security contributions are recorded as an expense in the financial period in which they are incurred.
Every full time employee of the Group belonging to the management team, according to the internal company policy, is covered by a private insurance pension and other benefits program. The Group covers, the contract defined fees, while the financial management of the program is performed by the Insurance Firm. This program is considered and accounted for as a defined contribution plan whereby the accrued cost of the insurance fees is recorded as expense in the period in which they are incurred.
The Company intends to attract, retain and incentivise the executives of the Company and the executives of its subsidiaries and affiliated companies, as through the Stock Options plan, the participants have a direct equity interest in the Company which link their performance to the Company's future performance and the increase of shareholder value. This program regards equity shares transactions.
The Company makes decisions regarding the implementation of the Stock Option Plan – to executives of the Company and its subsidiaries and affiliates in compliance with par.5 of Art.42e of Law 2190/1920.
A basic condition for participation in the Stock Options plan is the salaried working relationship of executives with the Company or its subsidiaries and affiliates. The cost of equity settled transactions is measured by reference to the fair values at the date in which they are granted and is recognized as an expense over the period from grant date to maturity date of the options with a concurrent increase in equity.
The program takes into account the following variables: Exercise price, Share price at grant date, Grant Date, Maturity date(s) of rights, Expected Stock Volatility (Volatility), Dividend Yield, Risk Free Rate.
Government grants are recognized where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. When the grant relates to an asset, it is recognized as deferred income and amortized over the expected useful life of the related asset. Such amortization is presented in other income in Statement of Comprehensive Income (Note 22).
Provisions are recognized when the Group has a present legal, contractual or constructive obligation as a result of past events and it is probable that an outflow of resources embodying economic benefits will be required to settle this obligation, and a reliable estimate of the amount of the obligation can be made.
Provisions are reviewed at each reporting date and adjusted to reflect the present value of the
expense expected to be required to settle the liability.
Contingent liabilities and assets are not recognised in the financial statements but are disclosed unless there is a probability of financial outflow or inflow.
Revenue is measured at the fair value of sales of goods and provision of services, net of Value Added Tax, discounts and returns. Inter - company revenues are eliminated.
The recognition of revenue is accounted for as follows:
IFRS 15 establishes a 5-step model implemented for income arising from a contract with a customer (with limited exceptions), regardless the type of income transaction or segment. Since 1/1/2018, the Group adopted the new standard by implementing the new modified retrospective approach without having a readjustment in comparative information (Note 2.3).
Leases in which all the risks and benefits of the property remain with the lessor are recorded as finance leases. All the other leasing contracts are recorded as operating leases.
basis over the lease term.
Leases which transfer to the Group substantially all of the risks and rewards of ownership of the leased item regardless of whether there is a transfer of the ownership title or not at the end of the lease, are classified as finance leases. The property held under finance leases is capitalized at the inception of the lease at the lower of its fair value and the present value of the minimum lease payments. Lease payments are apportioned between the reduction in the lease liability and the financial expenses in order to achieve a constant interest rate on the residual financial liability.
The related lease liabilities net of financial expenses are classified as liabilities and the related financial expenses are recognized in the statement of comprehensive income over the duration of the lease. Property, plant and equipment acquired through a finance lease are depreciated at the lower of the assets' useful lives and the lease term.
The Group as a Lessor only has operating leasing while as a Lessee has both operating and finance leasing. Both operational and financial leasing are related to buildings and machinery.
Financial assets and liabilities are not offset in the financial statements unless there is a legal right of set - off and intention for settlement of the net amount or settlement of the asset and liability simultaneously.
A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognized where:
Where the Group or the Company has transferred its rights to receive cash flows from an asset and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognized to the extent of the Group's or Company's continuing involvement in the asset. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group or Company could be required to repay.
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognized in profit or loss.
The basic and diluted earnings per share are calculated by dividing net profits after taxes with the weighted average number of shares of each period/ year.
The weighted average number of shares arises by summing the outstanding shares into which the share capital is divided and the rights that can be contingently exercised and are owned by the company and subtracting the shares buy back.
The Group is exposed to financial risks such as foreign exchange risk, credit risk, interest rate risk and liquidity risk. The management of risk is achieved by the central Treasury department, which operates using specific guidelines set by the Board of Directors. The Treasury department identifies, determines and hedges the financial risks in cooperation with the Groups' subsidiaries that face these risks. The Board of Directors provides written instructions and directions for the general management of the risk, as well as specific instructions for the management of specific risks such as foreign exchange risk, interest rate risk and credit risk.
The Group is exposed to foreign exchange risk arising from transactions in foreign currencies (RON, USD, TRY, SEK) with suppliers which invoice the Group in currencies other than the local. The Group, in order to minimize the foreign exchange risk, according to the needs, in certain cases pre purchases foreign currencies.
The Group has diminuated the credit risk due to the focus in retail segments where the payment of goods is mainly achieved by cash in hand or by pre-paid credit cards.
The Group is subject to cash flow risk which in the case of possible variable interest rates fluctuation, may affect positively or negatively the cash inflows or outflows related to the Group's assets or liabilities.
Cash flow risk is minimized via the availability of adequate credit lines and cash. Also, the Group has entered into Interest Rate Swap (IRS) contracts in order to face interest rate risk.
There are no litigations or legal issues that might have a material impact on the Annual Financial Statements of the Group or Company for the period 1/1 - 31/12/2018.
The Group is active on the following two operating segments:
The main financial interest is concentrated on the business classification of the Group's activities, where the various economic environments constitute different risks and rewards. The Group's activities comprise mainly one geographical area, that of the wider European region, primarily in Greece along with countries of Southeastern Europe (Romania, Bulgaria, Cyprus and Turkey).
The Group's sales revenue in 2018 arise 62% from activities in Greece (62% in 2017) with the remaining 38% arising from the other countries of Southeastern Europe (38% in 2017) which is analyzed as follows: 14% from Bulgaria (2017: 14%), 12% from Cyprus (2017: 11%), 9% from Romania (2017: 9%) and 3% from Turkey (2017: 4%). Revenue of the Company concern intrasegment transactions and are eliminated at the Consolidated Financial Statements.
Historically, the consumers' demand for the Group products increases during the last four months of the year.
| Retail Home Furnishings |
Retail Sporting Goods |
Fourlis Holdings SA |
Elim - Cons Entries |
Fourlis Group |
|
|---|---|---|---|---|---|
| Revenue | 296.698 | 151.787 | 4.288 | (4.287) | 448.486 |
| Cost of Goods Sold | (175.429) | (80.299) | (4.100) | 4.100 | (255.728) |
| Gross Profit | 121.269 | 71.488 | 188 | (187) | 192.758 |
| Other operating income | 6.914 | 825 | 1.300 | (1.494) | 7.545 |
| Distribution expenses | (92.823) | (56.448) | 0 | 1.436 | (147.834) |
| Administrative expenses | (11.839) | (6.970) | (2.931) | 447 | (21.292) |
| Other operating expenses | (547) | (426) | (31) | 40 | (964) |
| Operating Profit / (Loss) | 22.974 | 8.470 | (1.474) | 243 | 30.212 |
| Total finance income | 105 | 891 | 10 | 0 | 1.006 |
| Total finance cost | (7.378) | (5.451) | (2) | 0 | (12.831) |
| Contribution associate companies profit and loss |
83 | 0 | 0 | 0 | 83 |
| Dividends | 0 | 0 | 5.000 | (5.000) | 0 |
| Profit / (Loss) before Tax | 15.784 | 3.910 | 3.534 | (4.757) | 18.470 |
| Depreciation / Amortization | 9.160 | 5.064 | 75 | (243) | 14.057 |
Group results by operating segment for the year 2018 are analyzed below:
Group results by operating segment for the year 2017 are analyzed below:
| Retail Home Furnishings |
Retail Sporting Goods |
Fourlis Holdings SA |
Elim - Cons Entries |
Fourlis Group |
|
|---|---|---|---|---|---|
| Revenue | 291.312 | 142.735 | 4.126 | (4.115) | 434.059 |
| Cost of Goods Sold | (171.263) | (75.083) | (3.721) | 3.721 | (246.347) |
| Gross Profit | 120.049 | 67.652 | 405 | (393) | 187.712 |
| Other operating income | 4.701 | 1.122 | 836 | (1.079) | 5.581 |
| Distribution expenses | (90.756) | (54.595) | 0 | 1.110 | (144.241) |
| Administrative expenses | (11.441) | (6.668) | (2.291) | 226 | (20.174) |
| Other operating expenses | (336) | (618) | (34) | 2 | (986) |
| Operating Profit / (Loss) | 22.216 | 6.892 | (1.083) | (134) | 27.892 |
| Total finance income | 438 | 650 | 119 | 0 | 1.207 |
| Total finance cost | (7.723) | (5.681) | (2) | 0 | (13.407) |
| Contribution associate companies profit and loss |
(1.160) | 0 | 0 | 0 | (1.160) |
| Dividends | 0 | 0 | 5.000 | (5.000) | 0 |
| Profit / (Loss) before Tax | 13.771 | 1.861 | 4.033 | (5.134) | 14.532 |
| Depreciation / Amortization | 8.765 | 4.974 | 53 | 153 | 13.945 |
All intra-segment transactions have been eliminated in the tables above. Also, since 1/1/2018 the Group and Company have adopted IFRS 15 Income from contracts with customers which had impact on the consolidated financial statements at revenue and liabilities.
The breakdown structure of assets and liabilities as of 31/12/2018 and 31/12/2017 are as below:
| Retail Home Furnishings |
Retail Sporting Goods |
Fourlis Holdings Elim - Cons SA Entries |
Fourlis Group | ||
|---|---|---|---|---|---|
| 31/12/2018 | 31/12/2018 | 31/12/2018 | 31/12/18 | 31/12/2018 | |
| Total non-current assets | 251.446 | 27.632 | 81.444 | (81.098) | 279.423 |
| Total Assets | 323.929 | 97.399 | 90.875 | (88.059) | 424.145 |
| Total non-current Liabilities |
91.280 | 31.591 | 539 | 0 | 123.410 |
| Total liabilities (d) | 169.672 | 85.846 | 1.844 | (6.961) | 250.400 |
| Retail Home Furnishings |
Fourlis Holdings SA |
Elim - Cons Entries |
|||
|---|---|---|---|---|---|
| 31/12/2017 | 31/12/2017 | 31/12/2017 | 31/12/2017 | 31/12/2017 | |
| Total non-current assets | 249.639 | 28.758 | 81.191 | (81.055) | 278.533 |
| Total Assets | 323.141 | 94.316 | 91.565 | (87.591) | 421.431 |
| Total non-current Liabilities |
98.136 | 29.272 | 518 | 0 | 127.926 |
| Total liabilities (d) | 175.631 | 82.752 | 1.715 | (6.536) | 253.562 |
It is noted that the consolidation entries column includes transactions between the parent company and operating segments of the Group.
(a) The expenses are presented in the financial statements as follows:
| Group | Company | ||||
|---|---|---|---|---|---|
| 1/1 - 1/1 - 31/12/2018 31/12/2017 |
1/1 - 31/12/2018 |
1/1 - 31/12/2017 |
|||
| Distribution expenses | 135.843 | 132.174 | (0) | (0) | |
| Administrative expenses | 19.707 | 18.633 | 2.856 | 2.237 | |
| Depreciation/Amortization (Distribution) | 11.991 | 12.067 | (0) | (0) | |
| Depreciation/Amortization (Administration) | 1.585 | 1.541 | 75 | 53 | |
| Expenses embedded on cost of sales | 3.090 | 2.774 | 4.100 | 3.721 | |
| Depreciation/Amortization on cost of sales | 480 | 337 | (0) | (0) | |
| Other operating expenses | 964 | 986 | 31 | 34 | |
| Total | 173.661 | 168.512 | 7.062 | 6.046 |
The main categories of expenses are analyzed below:
| Group | Company | |||
|---|---|---|---|---|
| 1/1 - 31/12/2018 |
1/1 - 31/12/2017 |
1/1 - 31/12/2018 |
1/1 - 31/12/2017 |
|
| Payroll Expenses | 71.178 | 67.661 | 4.793 | 4.232 |
| Third party services | 57.783 | 57.479 | 989 | 829 |
| Taxes-duties | 2.369 | 2.557 | 2 | 3 |
| Depreciation/Amortization | 14.057 | 13.945 | 75 | 53 |
| Other operating expenses | 28.274 | 26.869 | 1.203 | 929 |
| Total | 173.661 | 168.512 | 7.062 | 6.046 |
For the year ended on 31/12/2018, miscellaneous expenses include auditors remuneration of amount € 47 th. regarding services other than financial statements audit (namely excluding ordinary audit services and tax certificate issue).
Payroll expenses are analyzed as follows:
| Group | Company | ||||
|---|---|---|---|---|---|
| 1/1 - 31/12/2018 |
1/1 - 31/12/2017 |
1/1 - 31/12/2018 |
1/1 - 31/12/2017 |
||
| Salaries and wages | 55.610 | 52.318 | 3.474 | 3.120 | |
| Social security contributions | 11.245 | 11.475 | 793 | 726 | |
| Miscellaneous grants | 4.323 | 3.868 | 527 | 386 | |
| Total | 71.178 | 67.661 | 4.793 | 4.232 |
(b) Other operating income is analysed as follows:
| Group | Company | |||
|---|---|---|---|---|
| 1/1 - 31/12/2018 |
1/1 - 31/12/2017 |
1/1 - 31/12/2018 |
1/1 - 31/12/2017 |
|
| Subsidies Law 3299/04 | 150 | 178 | 0 | 0 |
| Management Fees | 0 | 5 | 0 | 0 |
| Revenue from non-used provisions | 966 | 1.087 | 86 | 14 |
| Fixed Assets Gain | 14 | 4 | 0 | 0 |
| Other Income | 6.415 | 4.306 | 1.214 | 823 |
| Total | 7.545 | 5.581 | 1.300 | 836 |
In other income of the year 2018, € 3.545 thousand (2017: € 2.655 thousand) are included mainly due to income from orders delivery charges and rents receivable of Group's subsidiaries, customers
services € 474 th. (2017: € 194 th.) and photovoltaic income € 334 th. (2017: € 351 th.).
Moreover, other income of the Company of the year 2018, include € 913 thousand (2017: € 584 thousand) due to income from invoicing software to subsidiaries, € 225 thousand (2017: € 165 thousand) due to income from subleasing property and occupancy expenses to subsidiaries and € 75 thousand (2017: € 59 thousand) due to income from invoicing travels under the context of management support services.
(c) Net Financial Results are analyzed as follows:
| Group | Company | |||
|---|---|---|---|---|
| 1/1 - 31/12/2018 |
1/1 - 31/12/2017 |
1/1 - 31/12/2018 |
1/1 - 31/12/2017 |
|
| Interest - expenses Credit Card fees |
(6.785) (4.868) |
(6.867) (4.984) |
0 (2) |
0 (2) |
| Foreign exchange differences (expense)- realized |
(1.178) | (1.528) | (0) | (0) |
| Other financial expenses | 0 | (28) | 0 | 0 |
| Total finance cost | (12.831) | (13.407) | (2) | (2) |
| Interest and related income | 121 | 100 | 10 | 3 |
| Foreign exchange differences (income)- realized |
885 | 685 | 0 | 0 |
| Other financial income | 0 | 422 | 0 | 115 |
| Total finance income | 1.006 | 1.207 | 10 | 119 |
| Financial result | (11.825) | (12.200) | 8 | 116 |
(d) Consolidated financial statements include, through equity method, the associated companies VYNER LTD and SW SOFIA MALL ENTERPISES LTD. During consolidation through equity method, the amount of € 83 th. was registered in income statement as profit in "Expense – income from associate companies" (2017: loss of amount € 1.160 th.) with corresponding increase of Investments in Affiliates and Associates. Further differentiation of the investment value is due to the share capital increase in the associate SW SOFIA MALL ENTERPRISES LTD by the amount of € 315 th. and in VYNER LTD by the amount of € 5.010 th.
Property, plant and equipment for the year 2018 are analyzed as follows:
| Land | Buildings and installations |
Machinery /Installation s |
Vehicles | Furniture | Assets under construction |
Total | |
|---|---|---|---|---|---|---|---|
| Net book value at 31.12.2017 |
55.164 | 139.259 | 5.278 | 967 | 11.579 | 2.977 | 215.224 |
| 1.1 - 31.12.2018 | |||||||
| Additions | 22 | 4.862 | 590 | 221 | 4.698 | (52) | 10.340 |
| Other changes in acquisition cost |
(1.169) | (2.758) | (160) | (115) | (1.747) | (67) | (6.016) |
| Depreciation/amortization | 0 | (8.204) | (998) | (220) | (3.283) | 0 | (12.705) |
| Other Depreciation changes |
0 | 959 | 156 | 114 | 1.550 | 0 | 2.780 |
| Acquisition cost at 31.12.2018 |
54.017 | 217.921 | 11.225 | 5.228 | 54.131 | 2.857 | 345.379 |
| Accumulated depreciation at 31.12.2018 |
0 | (83.803) | (6.358) | (4.260) | (41.335) | 0 | (135.756) |
| Net book value at 31.12.2018 |
54.017 | 134.118 | 4.867 | 968 | 12.796 | 2.857 | 209.624 |
Group
Group
| Land | Buildings and installations |
Machinery /Installation s |
Vehicles | Furniture | Assets under construction |
Total | |
|---|---|---|---|---|---|---|---|
| Net book value at 31.12.2016 |
56.617 | 142.983 | 5.690 | 1.167 | 11.410 | 3.177 | 221.044 |
| 1.1 - 31.12.2017 | |||||||
| Additions | 0 | 5.499 | 605 | 108 | 3.827 | 303 | 10.342 |
| Other changes in acquisition cost |
(1.453) | (1.863) | (175) | (122) | (1.978) | (503) | (6.093) |
| Depreciation/amortization | 0 | (7.985) | (1.003) | (306) | (3.441) | 0 | (12.735) |
| Other Depreciation changes |
0 | 625 | 161 | 120 | 1.760 | 0 | 2.666 |
| Acquisition cost at 31.12.2017 |
55.164 | 215.817 | 10.795 | 5.122 | 51.181 | 2.977 | 341.055 |
| Accumulated depreciation at 31.12.2017 |
0 | (76.558) | (5.517) | (4.154) | (39.602) | 0 | (125.831) |
| Net book value at 31.12.2017 |
55.164 | 139.259 | 5.278 | 967 | 11.579 | 2.977 | 215.224 |
Additions in the Property, Plant and Equipment for the period refer to formation expenses and purchase of equipment for retail stores (new and existing) regarding segments of home furniture and household goods and sporting goods.
In home furniture and household goods segment, on 20/3/2018 a new Pop UP Store with IKEA products started its operation in Piraeus with limited duration, which terminated its operation on 1/12/2018. Also, on 5/12/2018 a new Pick up & Order Point in Plovdiv of Bulgaria started operating.
In sporting goods segment, within the period 1/1 – 31/12/2018, four new INTERSPORT stores started operating: one in Cyprus (Nicosia), one in Turkey (Maltepe, Istanbul), one in Bulgaria (Plovdiv) and one in Romania (Satu Mare).
Most considerable additions in property, plant and equipment in the year 2018 refer to:
a) property, plant and buildings installations of amount € 2,2 million for IKEA Stores and € 2,5
million for INTERSPORT & TAF Stores.
b) machinery – installations, furniture and miscellaneous equipment of amount € 2,7 million for IKEA Stores and € 2,3 million for INTERSPORT & TAF Stores.
Other changes as well as changes in depreciated property, plant and equipment of the period, of amount € 2,6 mil. are related to property transferred from owner-occupied to investment, foreign exchange differences arising from the difference of conversion exchange rates of amount € 592 th. regarding assets of foreign companies. Moreover, other changes include write-offs and sales of assets. Property Plant and Equipment of the Group also include subsidiaries' finance leasing amounting to € 29.336 thousand (31/12/2017: € 29.852 thousand). Regarding the property of IKEA Store of HOUSEMARKET of amount € 27.198 th. (31/12/2017: € 27.391 th.) in Thessaloniki, all obligations arising from the financial leasing contract are fulfilled and procedural issues with National Cadastre are confronted, in order for the contract, regarding the transfer of the property to HOUSEMARKET, to be signed.
The average interest rate of financial leasing for 2018 was 5,50% (2017: 5,24%).
Depreciation/Amortization of Property, Plant and Equipment for the year 2018 amounted to € 12.707 thousand (2017: € 12.735 th.). Total depreciation/amortization of property, plant and equipment and intangible assets of amount € 14.051 th. (2017: € 13.945 th.) was registered by € 480 th. (2017: € 337 th.) in cost of sales, by € 11.993 th. (2017: € 12.067 th.) in distribution expenses and by € 1.577 th. (2017: € 1.541 th.) in administrative expenses. On 31/12/2018 the Group tested the value of property, plant and equipment per store (CGU) and wherever there was existence of indication for impairment of value, an impairment test was implemented. On 31/12/2018, no impairment of the Group's property, plant and equipment value arised. Net book value of property, plant and equipment regarding IKEA, INTERSPORT & TAF Stores for the Group amounts to € 186.385 th. (2017: € 186.737 th.).
For the Company, changes within the year 2018 in property, plant and equipment table are related to additions to the leased building and purchase of furniture.
| Company | |||||
|---|---|---|---|---|---|
| Buildings and installations |
Furniture | Total | |||
| Net book value at 31.12.2017 | 130 | 79 | 208 | ||
| 1.1 - 31.12.2018 | |||||
| Additions | 5 | 25 | 30 | ||
| Other changes in acquisition cost | 0 | (4) | (4) | ||
| Depreciation/amortization | (18) | (27) | (44) | ||
| Other Depreciation changes | 0 | 1 | 1 | ||
| Acquisition cost at 31.12.2018 | 302 | 258 | 560 | ||
| Accumulated depreciation at 31.12.2018 |
(185) | (184) | (369) | ||
| Net book value at 31.12.2018 | 117 | 74 | 191 |
| Buildings and installations |
Vehicles | Furniture | Total | |
|---|---|---|---|---|
| Net book value at 31.12.2016 | 139 | 2 | 83 | 224 |
| 1.1 - 31.12.2017 | ||||
| Additions | 7 | 0 | 21 | 28 |
| Other changes in acquisition cost | 0 | (3) | 0 | (3) |
| Depreciation/amortization | (17) | (0) | (25) | (42) |
| Other Depreciation changes | 0 | 1 | 0 | 1 |
| Acquisition cost at 31.12.2017 | 297 | 0 | 237 | 534 |
| Accumulated depreciation at 31.12.2017 | (167) | 0 | (159) | (326) |
| Net book value at 31.12.2017 | 130 | 0 | 79 | 208 |
Investment property for the year 2018 is analyzed as follows:
| Group | Company | |||
|---|---|---|---|---|
| 31/12/2018 | 31/12/2017 | 31/12/2018 | 31/12/2017 | |
| Opening Balance | 21.060 | 17.395 | 0 | 0 |
| Additions | 341 | 1.002 | 0 | 0 |
| Impairment / Goodwill | (8) | 0 | 0 | 0 |
| Decreases | 0 | (45) | 0 | 0 |
| Other changes | 2.600 | 2.708 | 0 | 0 |
| Closing Balance | 23.993 | 21.060 | 0 | 0 |
The amount of € 24 million (2017: € 21 million) includes:
operating in real estate, leases were: Rent price/month €14/sqm, exit yield 7,50%, TRR 8,75% and annual rent increase 1,00%.
• Property of value € 3,4 million of a subsidiary which is leased for trading use (2017: € 3,4 million). The fair value assessment was conducted by the Management in compliance with the agreed terms of leasing.
Other changes regard leasing to a third company outside the Group, of property part used for trading use (Note 7).
Intangible assets are analyzed as follows:
| Group | ||||
|---|---|---|---|---|
| Royalties | Software | Miscellaneous | Total | |
| Net book value at 31.12.2017 | 4.352 | 3.254 | 1.568 | 9.174 |
| 1.1 - 31.12.2018 | ||||
| Additions | 0 | 1.548 | 47 | 1.595 |
| Other changes in acquisition cost | 0 | (81) | (522) | (603) |
| Depreciation/amortization | (278) | (958) | (109) | (1.344) |
| Other Depreciation changes | 0 | 30 | 172 | 202 |
| Acquisition cost at 31.12.2018 | 8.872 | 13.048 | 2.067 | 23.986 |
| Accumulated depreciation at 31.12.2018 | (4.798) | (9.256) | (909) | (14.963) |
| Net book value at 31.12.2018 | 4.074 | 3.792 | 1.157 | 9.023 |
| Group | |||||
|---|---|---|---|---|---|
| Royalties | Software | Miscellaneous | Total | ||
| Net book value at 31.12.2016 | 4.630 | 2.859 | 1.938 | 9.427 | |
| 1.1 - 31.12.2017 | |||||
| Additions | 0 | 1.214 | 107 | 1.320 | |
| Other changes in acquisition cost | 0 | (61) | (471) | (533) | |
| Depreciation/amortization | (278) | (788) | (145) | (1.211) | |
| Other Depreciation changes | 0 | 31 | 139 | 169 | |
| Acquisition cost at 31.12.2017 | 8.872 | 11.582 | 2.541 | 22.994 | |
| Accumulated depreciation at 31.12.2017 | (4.520) | (8.328) | (973) | (13.821) | |
| Net book value at 31.12.2017 | 4.352 | 3.254 | 1.568 | 9.174 |
Royalties include the use of brand names (IKEA). Other changes in acquisition cost as well as other depreciation changes regard foreign exchange differences. Additions in intangible assets are related to software licenses.
Depreciation of intangible assets of the Group for the year 2018, amounted to € 1.344 thousand.
Intangible assets for the Company for the year 2018 are as follows:
| Company | ||||
|---|---|---|---|---|
| Software | Miscellaneous | Total | ||
| Net book value at 31.12.2017 | 95 | 84 | 180 | |
| 1.1 - 31.12.2018 | ||||
| Additions | 48 | 45 | 92 | |
| Depreciation/amortization | (21) | (10) | (31) | |
| Acquisition cost at 31.12.2018 | 553 | 129 | 682 | |
| Accumulated depreciation at 31.12.2018 | (431) | (10) | (441) | |
| Net book value at 31.12.2018 | 122 | 120 | 241 |
| Company | ||||
|---|---|---|---|---|
| Software | Miscellaneous | Total | ||
| Net book value at 31.12.2016 | 53 | 0 | 53 | |
| 1.1 - 31.12.2017 | ||||
| Additions | 54 | 84 | 138 | |
| Depreciation/amortization | (11) | 0 | (11) | |
| Acquisition cost at 31.12.2017 | 506 | 84 | 590 | |
| Accumulated depreciation at 31.12.2017 | (410) | 0 | (410) | |
| Net book value at 31.12.2017 | 95 | 84 | 180 |
Investments are as analyzed as follows:
| COUNTRY | % SHAREHOLDING 2018 |
31/12/2018 | % SHAREHOLDING 2017 |
31/12/2017 | |
|---|---|---|---|---|---|
| SUBSIDIARIES | |||||
| GENCO TRADE SRL | Romania | 1,57% | 367 | 1,57% | 367 |
| HOUSEMARKET SA | Greece | 100% | 61.956 | 100% | 61.956 |
| INTERSPORT ATHLETICS SA |
Greece | 100% | 15.664 | 100% | 15.664 |
| STOCK OPTION | 2.341 | 2.056 | |||
| TOTAL | 80.328 | 80.042 |
Operation of each aforementioned company is analyzed in the Report of the Board of Directors.
On 31/12/2018 there were no indications for the conduction of impairment test for subsidiaries.
Associated companies VYNER LTD and SW SOFIA MALL ENTERPISES LTD are included in the consolidated financial statements of the Group through the application of equity method. After applying the equity method, a profit of € 83 thousand (2017: € 1.160 thousand loss) was recognized in the consolidated income statement under "Contribution to associate companies losses" with a
corresponding decrease in the carrying value of investments in associates. Further differentiation of the investment value is due to the increase of the share capital of the associate SW SOFIA MALL ENTERPISES LTD of amount € 315 thousand (2017: € 85 thousand) and VYNER LTD of amount € 5.010 thousand (2017: € 410 thousand).
The consolidated financial information of VYNER LTD is as follows:
| Company | Country of establishment |
Total Assets |
Total Liabilities |
Income | Profit/ (Loss) |
% Shareholding |
|---|---|---|---|---|---|---|
| 2018 | Cyprus | 147.375 | 88.779 | 10.420 | 913 | 50,00% |
| 2017 | Cyprus | 145.712 | 101.426 | 9.439 | (1.849) | 50,00% |
The consolidated financial information of SW SOFIA MALL ENTERPISES LTD is as follows:
| Company | Country of establishment |
Total Assets |
Total Liabilities |
Income | Profit/ (Loss) |
% Shareholding |
|---|---|---|---|---|---|---|
| 2018 | Cyprus | 1.538 | 198 | 166 | (747) | 50,00% |
| 2017 | Cyprus | 1.889 | 201 | 156 | (471) | 50,00% |
| Group | Company | |||
|---|---|---|---|---|
| 31/12/2018 | 31/12/2017 | 31/12/2018 | 31/12/2017 | |
| Guarantees given to Property Lease Holders | 4.285 | 4.675 | 47 | 47 |
| Guarantees given to third party | 124 | 56 | 0 | 0 |
| Other Guarantees given | 17 | 43 | 0 | 0 |
| Other Long term claims | 272 | 572 | 0 | 0 |
| Total | 4.699 | 5.346 | 47 | 47 |
Guarantees for property lease are directly related to the operation of the Group's companies as they regard trading property. Also, guarantees have been given for public services and organizations.
Inventory is analyzed as follows:
| Group | Company | |||
|---|---|---|---|---|
| 31/12/2018 | 31/12/2017 | 31/12/2018 | 31/12/2017 | |
| Inventory Advances for purchases of |
83.742 122 |
73.947 3.412 |
0 0 |
0 0 |
| merchandise Total |
83.864 | 77.359 | 0 | 0 |
The inventory cost of the Group which was recorded as an expense under cost of goods sold amounts to € 252.158 thousand (2017: € 243.235 thousand). The inventory value that was written off within the financial year was € 1.242 thousand (2017: € 1.194 thousand). Impairment provisions for properties and idle and slow moving inventory were made within the current year of amount € 340 thousand (2017: € 306 thousand). The total provision for inventory on 31/12/2018 for the Group
amounts to € 1.113 th. (31/12/2017: € 1.590 th.).
Trade receivables are analyzed as follows:
| Group | Company | ||||
|---|---|---|---|---|---|
| 31/12/2018 | 31/12/2017 | 31/12/2018 | 31/12/2017 | ||
| Trade receivables | 9.843 | 9.361 | 1.980 | 1.521 | |
| Cheques receivables | 18 | 18 | 0 | 0 | |
| Bad Debt Provisions | (7.320) | (7.239) | 0 | 0 | |
| Total | 2.541 | 2.140 | 1.980 | 1.521 |
The above balance is formed by numerous customers and there is not a single customer with a significant balance in the Group.
The movement of the provision for bad debt receivables for 2018 and 2017 is analyzed as follows:
| Group | Company | |||
|---|---|---|---|---|
| 1/1 - 31/12/2018 |
1/1 - 31/12/2017 |
1/1 - 31/12/2018 |
1/1 - 31/12/2017 |
|
| Opening Balance | (7.239) | (7.387) | 0 | 0 |
| Reversal of provisions | 9 | 147 | 0 | 0 |
| Provision | (91) | (5) | 0 | 0 |
| Foreign exchange differences | 0 | 6 | 0 | 0 |
| Closing Balance | (7.320) | (7.239) | 0 | 0 |
As at December 31, 2018 and 2017 the ageing of trade receivables is analyzed as follows:
| Total | Not due trade receivables |
Overdue trade receivables |
|
|---|---|---|---|
| 31/12/2018 | 2.541 | 778 | 1.762 |
| 31/12/2017 | 2.140 | 774 | 1.366 |
Not due trade receivables include amounts resulting from leasing and occupancy invoicing € 306 th. (2017: € 251 th.), from e-shop sales € 53 th. (2017: € 242 th.), electricity invoicing to LAGIE € 93 th. (2017: € 148 th.), from administrative services support to associated company € 119 th. (2017: € 133 th.) and from other invoices € 207 th.
Other receivables are analyzed as follows:
| Group | Company | |||
|---|---|---|---|---|
| 31/12/2018 | 31/12/2017 | 31/12/2018 | 31/12/2017 | |
| Debited VAT | 1.717 | 1.422 | 0 | 0 |
| Credit Cards receivable | 3.725 | 7.168 | 0 | 0 |
| Other debtors | 11.688 | 16.007 | 5.017 | 5.101 |
| Total | 17.130 | 24.596 | 5.017 | 5.101 |
On 31/12/2018, other debtors include accrued expenses and income of amount € 3.497 th. (2017: € 4.047 th.) and suppliers advances of amount € 581 th. (2017: € 1.142 th.). Furthermore, other debtors include the amount of € 3.542 th. for credit cards discounting program of a subsidiary through factoring (2017: € 6.775 th.), € 1.209 th. for municipal taxes receivables (2017: € 1.200 th.), € 553 th. for pledged accounts (2017: € 526 th.) and € 306 th. for purchases in transit (2017: € 226 th.) For the Company for the year 2018, other debtors include receivables from subsidiary regarding dividend of amount € 5.000 th (2017: 5.000 th).
Cash represents the Group's and the Company's cash in hand as well as bank deposits available on demand and is analyzed as follows:
| Group | Company | |||
|---|---|---|---|---|
| 31/12/2018 | 31/12/2017 | 31/12/2018 | 31/12/2017 | |
| Cash in hand | 1.765 | 2.232 | 2 | 1 |
| Bank Deposits | 38.089 | 34.372 | 1.523 | 2.842 |
| Total | 39.854 | 36.603 | 1.525 | 2.843 |
The temporary unallocated funds of the Group's companies are invested in short-term deposits in euros. The average weighted deposit interest rate for the year 2018 is 0,70% (2017: 0,70%).
On 31/12/2018 the share capital amounted to € 47.144.655,52 divided into 51.807.314 shares of nominal value € 0,91 per share (Note 1).
On 31/12/2017 the share capital amounted to € 50.094.377,36 divided into 51.643.688 shares of nominal value € 0,97 per share.
Evolution and coverage of share capital of the Company since its composition are analyzed as follows:
| Amount of increase | Amount of decrease |
|||||||
|---|---|---|---|---|---|---|---|---|
| Date of General Assembly |
Government Gazette No. |
Cash Payments |
By capitalization of reserves goodwill assets Difference of share premium account |
By decreae of nominal value of the share and capital return with cash payment to shareholders |
New shares total |
Shares total | Share Capital after the increase/decrease |
Nominal value per share |
| Founding Capital |
618/13.6.66 | 514.673,51 | - | - | 5.000 | 5.000 | 14.673,51 | 2,93 |
| 27/07/1968 | 930/23.8.68 | - | 514.673,51 | - | 5.000 | 10.000 | 29.347,03 | 2,93 |
| 29/11/1971 | 1978/20.12.71 | - | 58.694,06 | - | 20.000 | 30.000 | 88.041,09 | 2,93 |
| 27/06/1975 | 2233/15.10.75 | - | 17.608,22 | - | 6.000 | 36.000 | 105.649,30 | 2,93 |
| 11/10/1982 | 4007/11.11.82 | 3,00 | 109.461,42 | - | 37.300 | 73.300 | 215.113,72 | 2,93 |
| 19/02/1988 | 446/17.3.88 | 528.246,52 | 1.897.872,34 | - | 2.926.700 | 3.000.000 | 2.641.232,58 | 0,88 |
| 24/06/1989 | 4336/29.12.89 | - | 264.123,26 | - | 300.000 | 3.300.000 | 2.905.355,83 | 0,88 |
| 21/12/1992 | 228/21.1.93 | - | 290.535,58 | - | 330.000 | 3.630.000 | 3.195.891,42 | 0,88 |
| 11/06/1994 | 2985/17.6.94 | 479.383,71 | 3.195.891,42 | - | 4.174.500 | 7.804.500 | 6.871.166,54 | 0,88 |
| 27/06/1998 | 5395/7.7.98 | - | 5.496.933,24 | - | 6.243.600 | 14.048.100 | 12.368.099,78 | 0,88 |
| 05/03/1999 | 1572/22.3.99 | 6.648.774,76 | - | - | 7.551.900 | 21.600.000 | 19.016.874,54 | 0,88 |
| 23/06/2000 | 7051/25.7.00 | 3.847.395,45 | - | - | 4.370.000 | 25.970.000 | 22.864.269,99 | 0,88 |
| 22/06/2001 | 5916/11.7.01 | - | 3.105.730,01 | - | - | 25.970.000 | 25.970.000,00 | 1 |
| 21/06/2002 | 6897/8.7.02 | - | 25.970.000,00 | - | 25.970.000 | 51.940.000 | 51.940.000,00 | 1 |
| 20/06/2003 | 12169/4.11.03 | Cancellation 987.080 of own shares |
- | - | 50.952.920 | 50.952.920,00 | 1 | |
| 10/06/2011 | 99/19.1.11 | 39.402,00 | - | - | 39.402 | 50.992.322 | 50.992.322,00 | 1 |
| 13/06/2014 | 243951/3.9.14 | Share capital increase 3.569.462,54 by capitalization of tax free reserves 3.297.339,74 and share premium differences 272.122,08 |
- | - | 50.992.322 | 54.561.784,54 | 1,07 | |
| 22/12/2016 | 881038/03.01.17 | 361.754,16 | - | - | 338.088 | 51.330.410 | 54.923.538,70 | 1,07 |
| 16/06/2017 | 1111376/06.7.17 | - | - | 5.133.041,00 | - | 51.330.410 | 49.790.497,70 | 0,97 |
| 18/12/2017 | 1315305/26.1.18 | 303.879,66 | - | - | 313.278 | 51.643.688 | 50.094.377,36 | 0,97 |
| 15/06/2018 | - | 2.065.747,52 | - | - | 51.643.688 | 52.160.124,88 | 1,01 | |
| 15/06/2018 | 1411661/27.6.18 | - | - | 5.164.368,80 | - | 51.643.688 | 46.995.756,08 | 0,91 |
| 17/12/2018 | 1638212/22.1.19 | 148.899,66 | - | - | 163.626 | 51.807.314 | 47.144.655,74 | 0,91 |
| Total | 51.807.314 | 47.144.655,74 | 0,91 |
The movement of the reserves is analyzed as follows:
| Group | Company | |||
|---|---|---|---|---|
| 31/12/2018 | 31/12/2017 | 31/12/2018 | 31/12/2017 | |
| Statutory Reserves | 19.905 | 19.688 | 6.686 | 6.686 |
| Revaluation Reserves | 722 | 722 | 0 | 0 |
| Foreign exchange diff. from Statement of Financial Position transl. reserves |
(9.193) | (7.265) | 0 | 0 |
| Extraordinary /Taxfree Reserves | 16.313 | 16.313 | 6.970 | 6.970 |
| SOP Reserve | 1.989 | 1.617 | 2.122 | 1.750 |
| IRS Reserve | (217) | (124) | 0 | 0 |
| Total | 29.520 | 30.951 | 15.778 | 15.406 |
Statutory Reserve: In accordance with the provisions of Greek company law, the creation of a statutory reserve, through the transfer of the 5% of the annual after tax profits, is mandatory up until the reserve reaches 1/3 of the share capital. The statutory reserve is only distributable upon dissolution of the Company, it may however be used to set - off accumulated losses.
Extraordinary / Tax-free Reserves: The Group has Extraordinary/Tax-free Reserves of amount € 16.313 thousand (2017: € 16.313 thousand), which was mainly derived from disposal of shares listed in Athens Stock Exchange, dividends, interests and income from bad debt provision of L. 3296/04. In case of distribution or capitalisation, the reserves will be taxed with the official tax rate declared by L.4172/2013 (Note 24).
Exchange Differences from subsidiaries accounts conversion: This reserve is comprised from the foreign exchange differences arising from the retranslation of the financial statements of Subsidiaries which have a different functional currency from the parent company.
Cash Flow Hedging reserve: The hedging reserve comprises of the effective portion of the cumulative net change in the fair value of cash flow hedging instruments (IRS) (Note 21).
SOP Reserves: This reserve is created with the General Assembly approval of the SOP for employees of the Company and Group. After the exercise of the options or waive of beneficiaries, the remaining amount of the reserve can be transferred to Retained Earnings.
Revaluation Reserves: This reserve is created from revaluation on land and buildings. According to Greek Law, revaluation reserves can not be distributed to shareholders.
The Shareholders Ordinary General Assembly held on 15/6/2018 did not propose a dividend distribution for the year 1/1 – 31/12/2017. The parent company registered in its income dividend from subsidiary of amount € 5 million during the year 2018.
The obligation of employee compensation due to termination of service (Law 2112/20, 4093/12 for Greek Companies, Bulgarian Labor Law for Bulgarian Companies and Labor Law 1475 for Turkish
Company) appears in the Financial Statements in compliance with IAS 19 and is based on an actuarial study elaborated by AON Hewitt on December 31st,2018.
Basic assumptions of the actuarial study for Greece are the following:
| Greek Companies | 2018 | 2017 |
|---|---|---|
| Average annual payroll increase | 1,00% | 1,00% |
| Discount interest rate | 1,75% - 2,05% | 1,59% - 1,80% |
| Inflation | 1,00% | 1,00% |
| Plan duration (years) | 15-22 | 16-23 |
In case of an average annual payroll increase by 0,50% (namely 1,50%), the amount of liabilities due to termination of service of Greek companies would increase from 7,46% to 11,12%. In case of a discount rate increase by 0,50%, the amount of liabilities due to termination of service of Greek companies would decrease from 6,73% to 9,76%.
| Bulgarian Companies | 2018 | 2017 |
|---|---|---|
| Average annual payroll increase | 3,50% | 3,50% |
| Discount interest rate | 1,03% | 1,70% |
| Inflation | 2,00% | 2,00% |
| Plan duration (years) | 23-29 | 24-28 |
In case of an average annual payroll increase by 0,50% (namely 4,00%), the amount of liabilities due to termination of service of Bulgarian companies would increase from 11,70% to 15,09%. In case of a discount rate increase by 0,50% (namely 1,53%), the amount of liabilities due to termination of service of Bulgarian companies would decrease from 10,55% to 13,75%.
| Turkish Company | 2018 | 2017 |
|---|---|---|
| Average annual payroll increase | 15,00% | 7,10% |
| Discount interest rate | 18,00% | 10,50% |
| Inflation | 13,00% | 5,10% |
| Plan duration (years) | 24 | 23 |
In case of an inflation increase by 0,50% (namely 13,50%), the amount of liabilities due to termination of service would increase by 11,00% for INTERSPORT ATLETİK MAĞAZACILIK VE DIŞ TİCARET A.Ş. In case of a discount rate increase by 0,50% (namely 18,50%), the amount of liabilities due to termination of service would decrease by 9,50% for INTERSPORT ATLETİK MAĞAZACILIK VE DIŞ TİCARET A.Ş. In the analysis of sensitivity of Turkey, a reference is made to the inflation rate and not to compensation increase because benefits in Turkey are subject to a maximum salary (plafond)
and an increase/decrease of inflation will affect the maximum salary.
The expense derived from the compensation to employees due to retirement, that was recorded in the Income Statement of the financial year 2018 is analysed as follows:
| Group | Company | |||
|---|---|---|---|---|
| 1/1 - 31/12/2018 |
1/1 - 31/12/2017 |
1/1 - 31/12/2018 |
1/1 - 31/12/2017 |
|
| Service Cost | 360 | 346 | 27 | 26 |
| Interest Cost | 77 | 74 | 8 | 8 |
| Cost reduction/settlement/termination service | 273 | 283 | (34) | 2 |
| Total amount allocated in Income statement |
710 | 704 | 1 | 36 |
| Balance of liability at the beginning | 4.357 | 3.921 | 494 | 430 |
| Compensation due to retirement | 710 | 704 | 1 | 36 |
| Paid amounts | (371) | (375) | 0 | 0 |
| Actuarial gains | 53 | 118 | 20 | 28 |
| Foreign exchange difference | (13) | (11) | 0 | 0 |
| Balance of liability in the end | 4.736 | 4.357 | 515 | 494 |
Amounts in Actuarial gains/losses appear in Statement of Comprehensive Income and regard employee retirement defined benefits programs.
The Ordinary General Assembly of the Company of June 16, 2017, under the context of Stock Option Plan, approved the disposal of 2.566.520 stock options and the authorization to the Board of Directors regarding the settlement of procedures and details. The program will be implemented in four waves, with a maturity period of five years per wave. Options should be exercised within five years since their maturity date. In case that, after the grant some of the options remain undisposed, those options will be cancelled. The underlying price of each wave is the closing stock price on the day of General Assembly's resolution regarding the approval of the program.
On 20/11/2017 the board of Directors granted 641.630 Stock Options, which are the first of the four waves. The underlying share price, to which conferred options reflect, is determined at the amount of 5,768 € per share which is the closing stock price of the share (adjusted with the share capital decrease which took place after the date of the General Assembly).
The options of the wave mentioned above are granted within five years as follows:
| Vesting Date | No of Options |
|---|---|
| 31/12/2017 | 128.326 |
| 31/12/2018 | 128.326 |
| 31/12/2019 | 128.326 |
| 31/12/2020 | 128.326 |
| 31/12/2021 | 128.326 |
| The fair value of options has been calculated based on the simulation of the Company's share price | |
| assuming that the price will develop to the "Binomial Pricing" model. Fair value per option and vesting | |
| date has been defined based on model 5 Bermudan option as follows: |
| Vesting Date | Value per Option € |
|---|---|
| 31/12/2017 | 0,962 |
| 31/12/2018 | 1,064 |
| 31/12/2019 | 1,152 |
| 31/12/2020 | 1,225 |
| 31/12/2021 | 1,290 |
The variables upon which the data above were calculated are as follows:
| Variable | Value |
|---|---|
| Exercise Price | € 5,77 |
| Grant Date | 20/11/2017 |
| Stock Volatility | 28,1% |
| Dividend Yield | 1,72% |
| Attrition Rate | 0% |
| Risk Free Rate | 0,3953% |
On 19/11/2018 the board of Directors granted 641.630 Stock Options, which are the second of the four waves. The underlying share price, to which conferred options reflect, is determined at the amount of 5,667 € per share which is the closing stock price of the share (adjusted with the share capital decrease which took place after the date of the General Assembly).
The options of the wave mentioned above are granted within five years as follows:
| Vesting Date | No of Options |
|---|---|
| 31/12/2018 | 128.326 |
| 31/12/2019 | 128.326 |
| 31/12/2020 | 128.326 |
| 31/12/2021 | 128.326 |
| 31/12/2022 | 128.326 |
| The fair value of options has been calculated based on the simulation of the Company's share price |
assuming that the price will develop to the "Binomial Pricing" model. Fair value per option and vesting date has been defined based on model 5 Bermudan option as follows:
| Vesting Date | Value per Option € |
|---|---|
| 31/12/2018 | 0,541 |
| 31/12/2019 | 0,623 |
| 31/12/2020 | 0,694 |
| 31/12/2021 | 0,756 |
| 31/12/2022 | 0,809 |
The variables upon which the data above were calculated are as follows:
| Variable | Value |
|---|---|
| Exercise Price | € 5,67 |
| Grant Date | 19/11/2018 |
| Stock Volatility | 26,6% |
| Dividend Yield | 2,012% 0% |
| Attrition Rate Risk Free Rate |
0,575% |
On 20/11/2018, the BoD of the Company issued an Invitation to the beneficiaries of the SOP which was approved by the Extraordinary General Assembly held on 27/9/2013 and the Ordinary General Assembly held on 16/6/2017, regarding the exercise of their options. 16 beneficiaries responded to
this Invitation and exercised their option for the acquisition of 163.626 shares, of nominal value € 0,91 and underlying price € 3,28 per share and paid the total amount of € 537.069,61.
It is noted that the underlying price of shares to which the distributed options reflect, had been initially determined at the amount of € 3,40 per share, which was the closing stock price of the share on the date of the resolution of the General Assembly regarding the SOP since 27/9/2013 (Extraordinary General Assembly date). Due to corporate events (capital return by cash payment), the historical closing price of the share was readjusted and formed at the amount of € 3,34 per share (Based on the BoD resolution of 20/11/2017). Following the resolution of the Ordinary General Assembly held on 15/6/2018, the historical share price changed resulting from corporate action regarding the decrease of the Company's share capital with decrease of share's nominal value by the amount of € 0,10 and the capital return to shareholders. After this adjustment, the historical share price is now formed at € 3,28.
Also, the underlying price of shares to which the distributed options reflect which was established with resolution of the Ordinary General Assembly of shareholders of the Company on 16/6/2017, had been initially determined at the amount of € 5,87 per share, which was the closing stock price of the share. Due to corporate events (capital return by cash payment), the historical closing price of the share was readjusted and formed at the amount of € 5,77 per share (Based on the BoD resolution of 20/11/2017). Following the resolution of the Ordinary General Assembly held on 15/6/2018, the historical share price changed resulting from corporate action regarding the decrease of the Company's share capital with decrease of share's nominal value by the amount of € 0,10 and the capital return to shareholders. After this adjustment, the historical share price is now formed at € 5,67.
During the period 1/1 – 31/12/2018, beneficiaries waived their right to exercise 0 options (2017: 11.580) which were granted by the BoD on 25/11/2013, beneficiaries waived their right to exercise 6.220 options (2017: 13.626) which were granted by the BoD on 24/11/2014 and also beneficiaries waived their right to exercise 6.720 options (2017: 26.097) which were granted by the BoD on 25/11/2015.
During the period 1/1 – 31/12/2018, the amount of € 372.467 (2017: € 219.258) was registered in the Consolidated Income Statement as an expense.
During the year ended on December 31, 2018 the amount of defined benefit contributions under the private insurance program that was recorded as an expense by the parent Company totaled at € 333 thousand (2017: € 188 thousand) while the respective amount recorded as an expense by the Group amounted to € 896 thousand (2017: € 477 thousand).
The Group has significantly reduced its exposure to credit risk due to the disinvestment of the wholesale trading of electrical equipment segment and the focus in the retail segments where the payment of goods is mainly made by cash or credit cards discounts. The maximum exposure to credit risk at the date of the Statement of Financial Position, without taking into consideration any hedging or insurance strategies, was as follows:
| Book Value | ||||
|---|---|---|---|---|
| €000s | 2018 | 2017 | ||
| Trade receivables | 2.541 | 2.140 | ||
| Other Debtors | 11.688 | 16.007 | ||
| Credit Cards receivable | 3.725 | 7.168 | ||
| Cash & cash equivalent | 39.854 | 36.603 | ||
| Total | 57.808 | 61.917 |
The maximum exposure to credit risk on trade receivables of the Group without taking into consideration any hedging or insurance strategies at the date of the Statement of Financial Position, per geographic segment was as follows:
| Book value | ||||
|---|---|---|---|---|
| Greece | Southeastern Europe Countries |
|||
| 2018 | 2017 | 2018 | 2017 | |
| €000s | ||||
| Trade receivables | 2.455 | 2.079 | 86 | 61 |
| Other Debtors | 9.464 | 13.706 | 2.224 | 2.301 |
| Credit Cards receivable | 2.029 | 4.922 | 1.697 | 2.246 |
| Cash & cash equivalent | 22.769 | 25.634 | 17.085 | 10.969 |
| Total | 36.717 | 46.341 | 21.091 | 15.576 |
The maximum exposure to credit risk at the date of the Statement of Financial Position, per customer
type was:
| Book Value | |||
|---|---|---|---|
| 2018 | 2017 | ||
| €000s | |||
| Wholesale trade customers | 2.356 | 1.884 | |
| Retail trade customers | 185 | 256 |
Liquidity risk is retained at low levels by maintaining adequate bank credit lines and significant cash and cash equivalents which on 31/12/2018 amounted to € 40 million for the Group vs € 36,6 million on 31/12/2017. During year 2018, the Group managed to maintain the improved credit terms from its main suppliers.
The contractual loan dues including interest payments, excluding the net - off agreements, are as per
| Immediate termination |
3 months | 3 to 12 months |
1 to 5 years | More than 5 years |
Total | |
|---|---|---|---|---|---|---|
| 2018 | ||||||
| Credit lines | 0 | 0 | 1.826 | 0 | 0 | 1.826 |
| Short-term loans | 5.000 | 1.000 | 3.561 | 0 | 0 | 9.561 |
| Long-term loans | 494 | 781 | 7.842 | 113.365 | 0 | 122.481 |
| Leasing | 48 | 96 | 443 | 409 | 0 | 995 |
| Total | 5.542 | 1.877 | 13.671 | 113.773 | 0 | 134.863 |
| 2017 | ||||||
| Credit lines | 0 | 400 | 2.378 | 0 | 0 | 2.778 |
| Short-term loans | 68 | 8.500 | 4.735 | 0 | 0 | 13.303 |
| Long-term loans | 495 | 992 | 7.797 | 117.500 | 0 | 126.784 |
| Leasing | 45 | 91 | 419 | 995 | 0 | 1.549 |
| Total | 609 | 9.983 | 15.328 | 118.495 | 0 | 144.414 |
paragraph Borrowings, while for Accounts Payable and Other Liabilities are less than 12 months.
The Group is exposed to foreign exchange risk arising from its transactions in foreign currencies (RON, USD, TRY, SEK). The percentage of the balance of suppliers in currency other than the publication currency (euro) is 18,64% of the total. The Group, in order to minimize the foreign exchange risk, in certain cases pre - purchases foreign currencies.
The Group has investments in companies overseas, the net assets of which are exposed to foreign exchange risk. This type of foreign exchange risk (translation risk) arises due to the operations in Romania (RON), Bulgaria (BGN) and Turkey (TRY). The Management has managed to reduce foreign exchange risk, given the strong capital structure of the companies and to decrease borrowings in currencies other than the local.
More particularly, approximately 90% of GENCO TRADE SRL loans, which is located in Romania, are in local currency (RON) in an effort to avoid the exchange difference charges resulting from RON devaluating vs. the Euro. In Bulgaria the local currency is pegged to the Euro (EUR/ BGN = 1.95583) a fact which can not guarantee that economic problems and consequences of the global crisis on Bulgaria, will not increase the risk that this conversion ratio will remain constant. In Turkey, the financing for commercial activity is in local currency, while for investments is in euro.
| liabilities) thousands euros) |
(Trade creditors and other (Foreign currency in |
|
|---|---|---|
| 31/12/2018 | 31/12/2017 | |
| USD | (70) | 138 |
| GBP | 6 | 0 |
| CHF | 0 | (1) |
| SEK | 284 | 460 |
| RON | 3.187 | 2.800 |
| TRY | 16.299 | 3.566 |
| BGN | 0 | 0 |
| Euro | 4.804 | 7.538 |
A Euro revaluation of 10% at December 31, vs the below currencies would increase (decrease) the Net Equity and the Operating Results as per the amounts indicated at the below summary. It is assumed that all other variables (Interest Rates) would remain constant.The analysis was performed in a similar manner for 2017.
| Impact in €000s Dec 31 , 2018 |
Net Equity | Operating Result |
|---|---|---|
| USD | (7) | (7) |
| GBP | 1 | 1 |
| SEK | 28 | 28 |
| TRY | 1.630 | 1.630 |
| RON | 319 | 319 |
| TOTAL | 1.971 | 1.971 |
| Dec 31 , 2017 | ||
| USD | 14 | 14 |
| SEK | 46 | 46 |
| TRY | 357 | 357 |
| RON | 280 | 280 |
| TOTAL | 697 | 697 |
A Euro devaluation of 10% at December 31, vs the aforementioned currencies would have an equal but opposite impact in comparison to the ones presented above, based on the assumption that all the other variables would remain constant.
The exchange rates of foreign currencies used for the conduction of the financial statements of the year 2018, are presented at the table below:
| Financial Position | 31/12/2018 |
|---|---|
| TRY - Turkish Lira | 6.0588 |
| BGN - Bulgarian Lev | 1.95583 |
| RON - Romanian New Leu | 4.6635 |
| Profit & Loss | 1/1/2018 - 31/12/2018 |
| TRY - Turkish Lira | 5.7077 |
| BGN - Bulgarian Lev | 1.95583 |
| RON - Romanian New Leu | 4.654 |
The Group is subject to cash flow risks which in the case of possible variable interest rates fluctuation, may affect positively or negatively the cash inflows or outflows related to the Group's assets or liabilities. Despite of the fact that we believe that in an environment of prolonged global slowdown, the risk of rising interest rates remains low, the group has entered into Interest Rate Swap (IRS) contracts effectively converting part of the loans from floating to fixed interest rate for a period of 3 to 5 years.
The profile of Group's loan liabilities at the date of the Statement of Financial Position is analysed in paragraph Borrowings.
A 1% fluctuation of the Group's borrowing rate at December 31, would increase (decrease) equally the Net Equity and the Operating Results by € 1.349 thousand for the year 2018 and € 1.444 thousand for the year 2017.
No such Instruments (Assets/Liabilities) valued at fair value through income statement exist.
The carrying amounts of the financial instruments of assets and liabilities (i.e. trade and other receivables, cash and cash equivalents, trade and other payables, derivative financial instruments, borrowings and finance leases) approximate their fair value. The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between two market participants at the measurement date. The fair values of the financial instruments as of 31 December 2018 represent management's best estimate. In situations where there is little, if any, market activity for the asset or liability at the measurement date, the fair value measurement reflects the Group's own judgments about the assumptions that market participants would use in pricing the asset or liability. Those judgments are developed by the Group based on the best information available in the circumstances.
The three levels of the fair value hierarchy are as follows:
The following methods and assumptions were used to estimate the fair value of each class of financial instruments:
Cash and cash equivalents, trade and other receivables, trade and other payables accounts: the carrying amounts approximate their fair value either due to the short maturity of these instruments or because there is no foreign currency risk exposure.
Within the year, there were neither moving between levels 1 and 2 nor moving inside and outside level 3 during the measurement of fair value. Moreover, within the same year, there was no change in the purpose of any financial asset which would lead to a different classification of this asset.
The primary objective of the Group's capital management is to ensure and maintain strong credit ratings and healthy capital ratios in order to support the investment projects and maximizing the return of invested capital for the shareholders.
The Group monitors its capital management through the use of a gearing ratio - net debt divided by equity plus net debt - where net debt includes interest bearing loans and borrowings minus cash. The Group's strategic objective is to maintain the above ratio between 30% and 45%. On 31/12/2018 the ratio stood at 44% (2017: 39%).
Borrowings for the year 2018 and 2017 are analyzed as follows:
| Group | ||
|---|---|---|
| 31/12/2018 | 31/12/2017 | |
| Non - current loans | 122.481 | 126.784 |
| Finance Leases | 995 | 1.549 |
| Total long term loans and short term portion of long term loans | 123.476 | 128.334 |
| Current portion of non-current loans and borrowings | 9.117 | 9.285 |
| Short-term portion of non-current Lease | 586 | 555 |
| Non - current loans | 113.773 | 118.495 |
| Short term loans for working capital | 11.387 | 16.081 |
| Total loans and borrowings | 134.863 | 144.414 |
The Company had no loan liabilities on 31/12/2018 and on 31/12/2017.
The maturity table of the Finance Lease Liability is as follows::
| Group | ||||||||
|---|---|---|---|---|---|---|---|---|
| 1/1 - 31/12/2018 | 1/1 - 31/12/2017 | |||||||
| Up to 1 year |
2 - 5 years |
More than 5 years |
Total | Up to 1 year |
2 - 5 years |
More than 5 years |
Total | |
| Future Lease Payments | 629 | 420 | 0 | 1.049 | 629 | 1.049 | 0 | 1.678 |
| Less Interest | (43) | (11) | 0 | (54) | (75) | (54) | 0 | (129) |
| Present Value of Future Lease Payments |
586 | 409 | 0 | 995 | 555 | 995 | 0 | 1.549 |
The repayment period of non - current loans varies between 1 to 7 years and the average effective interest rate of the Group was 3,97% during the year 2018 (2017: 4,08%). Repayments and proceeds of loans of the current period amounted to € 40.341 thousand (2017: € 67.948 th.) and € 32.347 thousand (2017: € 65.915 th.) respectively. Non - current loans, including their part which is payable within 12 months, cover mainly the Group's growth needs and are analyzed in bond, syndicated and other non - current loans as follows:
| 31/12/2018 | Amount | Issuing Date |
Duration | |
|---|---|---|---|---|
| Bilateral | 2.386 | 17/3/2011 | 5 years from the issuing date (€1.139 th. payable forthcoming period) |
|
| Η.Μ. HOUSEMARKET (CYPRUS) LTD |
Bilateral | 600 | 30/3/2016 | 3,5 years from the issuing date (€600 th. payable forthcoming period) |
| Bilateral | 1.350 | 30/3/2016 | 6 years from the issuing date (€600 th. payable forthcoming period) |
|
| 4.336 | ||||
| TRADE LOGISTICS SA | Bond | 5.950 | 8/3/2017 | 5 years from the issuing date (€600 th. payable forthcoming period) |
| 5.950 | ||||
| RENTIS SA | Bond | 8.250 | 19/7/2017 | 3 years from the issuing date (payment at maturity date) |
| 8.250 | ||||
| HOUSE MARKET BULGARIA AD |
Syndicated | 32.228 | 11/7/2016 | 9 years from the issuing date (€4.257 th. payable forthcoming period) |
| 32.228 | ||||
| INTERSPORT SA | Bond | 27.186 | 28/7/2017 | 5 years from the issuing date (€1.920 th. payable forthcoming period) |
| Bond | 5.000 | 28/7/2018 | 5 years from the issuing date (payment at maturity date) |
|
| 32.186 | ||||
| HOUSEMARKET SA | Bond | 39.531 | 4/10/2016 | 5 years from the issuing date |
| 39.531 | ||||
| Total | 122.481 |
| 31/12/2017 | Amount | Issuing Date |
Duration | |
|---|---|---|---|---|
| Η.Μ. HOUSEMARKET (CYPRUS) LTD |
Bilateral | 300 | 17/8/2011 | 7 years from the issuing date (€305 th. payable forthcoming period) |
| Η.Μ. HOUSEMARKET (CYPRUS) LTD |
Bilateral | 2.900 | 17/3/2016 | 5 years from the issuing date (€514 th. payable forthcoming period) |
| Η.Μ. HOUSEMARKET (CYPRUS) LTD |
Bilateral | 582 | 17/3/2016 | 2 years from the issuing date (€582 th. payable forthcoming period) |
| Η.Μ. HOUSEMARKET (CYPRUS) LTD |
Bilateral | 1.400 | 30/3/2016 | 3,5 years from the issuing date (€800 th. payable forthcoming period) |
| Η.Μ. HOUSEMARKET (CYPRUS) LTD |
Bilateral | 1.950 | 30/3/2016 | 6 years from the issuing date (€600 th. payable forthcoming period) |
| 7.137 | ||||
| TRADE LOGISTICS SA | Bond | 6.550 | 8/3/2017 | 5 years from the issuing date (€600 th. payable forthcoming period) |
| 6.550 | ||||
| RENTIS SA | Bond | 8.250 | 19/7/2017 | 3 years from the issuing date (payment at maturity date) |
| 8.250 | ||||
| HOUSE MARKET BULGARIA AD |
Syndicated | 36.304 | 11/7/2016 | 9 years from the issuing date (€3.948 th. payable forthcoming period) |
| 36.304 | ||||
| INTERSPORT SA | Bond | 29.182 | 28/7/2017 | 5 years from the issuing date (€1.935 th. payable forthcoming period) |
| 29.182 | ||||
| HOUSEMARKET SA | Bond | 39.361 | 4/10/2016 | 5 years from the issuing date |
| 39.361 | ||||
| Total | 126.784 |
Non –current loans include:
a) The bond loan issued by the company HOUSEMARKET S.A. of five-year maturity. The Bond Loan, was disposed through a public offering between 28th and 30th of September 2016 in Greece by cash payment and the available 40 million bearer bonds were issued on 6/10/2016 for trading in the Fixed Income Securities Category of the regulated market of Athens Stock Exchange. The loan is subject to
Greek law, has a five year maturity date with fixed interest rate 5% per year and quarterly interest payment. Direct costs of the bond loan issue amounted to € 853 th., of which € 43 th. have been allocated within the year 2016, € 171 th. within the year 2017, € 171 th. within the year 2018, € 171 th. will be allocated within 12 months of the year 2019 and € 297 th. within the next years.
b) The remaining finance lease liability of amount € 1.000 th. of the company INTERSPORT ATHLETICS S.A. through which it financed the purchase of new mechanical equipment for warehousing and transportation of goods in the warehousing premises of the subsidiary company TRADE LOGISTICS S.A. on 29 September 2015. The finance lease expires on September 2020.
Short term loans of the Group include current loans and overdraft bank accounts which are used for the Group's working capital needs. The amounts drawn are used mainly to cover current obligations to suppliers.
The weighted average interest rate of short term loans for the period 1/1/2018 to 31/12/2018 was approximately 10,18% (2017: 6,05%), as a result of the increase in interest rates in Turkey. The subsidiary INTERSPORT ATLETIK SA despite its low borrowing (TRY 21.170.557 on 31/12/2018), composes 31% of total working capital of the Group and therefore it has a significant impact on the calculation of weighted average interest rate.
During the current period, Interest Rate Swaps or IRSs continue to exist, in order to mitigate the risk of subsidiaries of a sudden increase in interest rates in the interbank market.
The terms of the swap agreements are as follows:
Some of Group's loans include loan covenants. On 31/12/2018 the Group was in compliance with the terms of its loans.
The Group, having centralized its capital management, has the ability to directly identify, quantify, manage and hedge, if necessary, its financial risks created by its operational activities so as to be consistent to the changes in the economic environment. The Group continuously observes and budgets its cash flow and acts appropriately in order to ensure open credit lines for covering current capital needs. The Group has adequate open credit lines with domestic and foreign financial institutions in order to cover the needs of the companies in working capital. On 31/12/2018, the open balance of credit lines amounted to € 95 million.
Other Non-Current Liabilities are analyzed as follows:
| Group | Company | |||
|---|---|---|---|---|
| 31/12/2018 | 31/12/2017 | 31/12/2018 | 31/12/2017 | |
| Received Guarantees | 179 | 173 | 23 | 23 |
| Government Grants | 4.331 | 4.481 | 0 | 0 |
| Reserve for IRS | 241 | 138 | 0 | 0 |
| Total | 4.751 | 4.792 | 23 | 23 |
Trade and other payables are analyzed as follows:
| Group | Company | |||
|---|---|---|---|---|
| 31/12/2018 | 31/12/2017 | 31/12/2018 | 31/12/2017 | |
| Trade payables | 76.049 | 76.472 | 143 | 175 |
| Accrued expenses | 8.816 | 8.715 | 676 | 531 |
| Other payables | 4.951 | 2.260 | 81 | 129 |
| Taxes liability | 11.373 | 7.745 | 219 | 185 |
| Customers advances | 1.768 | 1.458 | 0 | 0 |
| Insurance Organizations | 2.786 | 2.875 | 167 | 157 |
| Total | 105.743 | 99.526 | 1.285 | 1.177 |
Increase in other payables of the Group, is mainly due to liabilities from customers loyalty programs which will be redeemed within the program's validity period. For the Group, the total liability arising from IFRS 15 adoption amounts to € 3.092 th. (1/1/2018: € 2.829 th. and 31/12/2017: € 0).
The impact on retained earnings on 1/1/2018 from the adoption of IFRS 15 is analyzed as follows: liability recognition mainly from customers' loyalty program of amount € 2.829 th. (31/12/2017: € 0), taxes 732 th. (31/12/2017: € 0) and retained earnings € 2.098 th. (31/12/2017: € 0).
The nominal tax rates in the countries that the Group is operating vary between 10% and 29% for the year 2018, as follows:
| Income Tax Rate | Income Tax Rate | |
|---|---|---|
| Country | (31/12/2018) | (31/12/2017) |
| Greece (*) | 29,0% | 29,0% |
| Romania | 16,0% | 16,0% |
| Bulgaria | 10,0% | 10,0% |
| Cyprus | 12,5% | 12,5% |
| Turkey | 22,0% | 20,0% |
(*) According to article 23 of L. 4579/2018, income tax rates of legal entities are gradually decreased
by 1% every year as follows: 28% for tax year 2019, 27% for tax year 2020, 26% for tax year 2021 and 25% for tax year 2022 and so on.
On 31/12/2018, the impact of future tax rates changes on other comprehensive income, amounts to € 230 th. profit for the Group and 99 th. loss for the Company.
The parent company and its subsidiaries have not been audited by the tax authorities for the years noted below:
| COMPANY | YEARS |
|---|---|
| FOURLIS HOLDINGS SA INTERSPORT ATHLETICS SA GENCO TRADE SRL GENCO BULGARIA EOOD TRADE LOGISTICS SA HOUSEMARKET SA HM HOUSEMARKET (CYPRUS) LTD HOUSE MARKET BULGARIA AD RENTIS SA |
2013 – 2018 () 2013 – 2018 () 2007 – 2018 2017 – 2018 2013 – 2018 () 2013 – 2018 () 2012 – 2018 2013 – 2018 2013 – 2018 (*) |
| INTERSPORT ATHLETICS (CYPRUS) LTD WYLDES LTD INTERSPORT ATLETİK MAĞAZACILIK VE DIŞ TİCARET A.Ş. |
2006 – 2010 and 2012 - 2018 2009 – 2018 2018 |
Assosiate companies have not been audited by the tax authorities for the years noted below:
| COMPANY | YEARS |
|---|---|
| VYNER LTD | 2009 – 2018 |
| SW SOFIA MALL ENTERPRISES LTD | 2015 – 2018 |
(*) For the fiscal years 2011, 2012 and 2013 all companies of the Group located in Greece, have been subjected to tax audit by Certified Audit Accountants in compliance with the provisions of Article 82 par. 5 of Law 2238/1994 and for the fiscal years 2014, 2015, 2016 and 2017 in compliance with the provisions of Article 65 a of Law 4174/2013 and received a Tax Compliance Certificate for fiscal years 2011, 2012, 2013, 2014, 2015, 2016 and 2017 while tax audit for the fiscal year 2018 is in progress. Upon completion of the audit, the Management of the Company and Group does not expect any significant liabilities to occur, other than those recorded in the Financial Statements. In order for the years 2011, 2012 and 2013 to be considered integrated, provisions specified in par. 1a of Article 6 POL 1159/2011 should apply. The integration of the years 2014 and 2015 is implemented based on POL 1124/2015.
The income tax expense for the year 2018 and the relative year 2017 is as follows:
| Group | Company | |||
|---|---|---|---|---|
| 1/1 - 31/12/2018 |
1/1 - 31/12/2017 |
1/1 - 31/12/2018 |
1/1 - 31/12/2017 |
|
| Income tax | 2.551 | 2.119 | (0) | (0) |
| Tax audit differences | (0) | 228 | (0) | (0) |
| Deferred Taxes: | ||||
| Differences of fixed assets | 670 | 731 | (2) | (1) |
| Provisions for employee benefits | (101) | (86) | (14) | (11) |
| Effect of changes on tax rates | (230) | (0) | 99 | (0) |
| Supplier adjustment | (0) | (0) | (0) | (0) |
| Provisions | 2 | 272 | (0) | 2 |
| Accrued Taxes | 1.287 | 1.110 | (0) | 14 |
| Inventory Write Off Provision | (0) | 120 | (0) | (0) |
| Total Deferred taxes | 1.628 | 2.147 | 84 | 4 |
| Income Tax Expense | 4.179 | 4.493 | 84 | 4 |
The reconciliation between the nominal tax rate and the effective tax rate is analyzed as follows:
| Group | Company | |||
|---|---|---|---|---|
| 1/1 - | 1/1 - | 1/1 - | 1/1 - | |
| 31/12/2018 | 31/12/2017 | 31/12/2018 | 31/12/2017 | |
| Profit Before Taxes | 18.470 | 14.532 | 3.534 | 4.033 |
| Income tax based on nominal tax rate | (5.356) | (4.214) | (1.025) | (1.170) |
| Tax rate differences | 2.770 | 2.132 | 0 | 0 |
| Tax on tax free income | 0 | 0 | 1.450 | 1.450 |
| Tax on non-deductible expenses | (429) | (696) | 0 | (36) |
| Tax on tax losses | (1.388) | (1.542) | (425) | (221) |
| Tax audit differences | 0 | (228) | 0 | 0 |
| Miscellaneous timing differences | 224 | 56 | (84) | (27) |
| Tax in statement of comprehensive income |
(4.179) | (4.493) | (84) | (4) |
Miscellaneous timing differences include the amount of € 230 th. (31/12/2017: 0) for the Group and € 99 th. (31/12/2017: 0) for the Company, regarding the effect of taxes due the change in tax rates.
Deferred taxes on 31/12/2018, which are presented in the Statement of Changes in Equity and are related to the impact due the adoption of IFRS 15 for the Group amount to € 732 th. (31/12/2017 : 0). (Note 23).
Deferred taxes on 31/12/2018, which are presented in the Statement of Comprehensive Income and compose income due to valuation of cash flow hedging at the fair value, amount to € 10 th. (31/12/2017: € 25 th.) and income due to defined benefits plans, amount to € 11 th. (31/12/2017: € 23 th.). Deferred taxes on 31/12/2018 which are presented in the Statement of Comprehensive Income due to defined benefits plans for the Company, amount to € 6 th. (31/12/2017: € 8 th.)
Deferred taxes as at 31 December 2018 and 31 December 2017 which appear in other Financial Statements are analysed as follows:
| Group | Company | ||||
|---|---|---|---|---|---|
| 1/1 - 31/12/2018 |
1/1 - 31/12/2017 |
1/1 - 31/12/2018 |
1/1 - 31/12/2017 |
||
| Liabilities: | |||||
| Depreciation Difference | 518 | 417 | 0 | 0 | |
| Employee retirement benefits | (183) | (199) | 0 | 0 | |
| Expenses Provision | (17) | 63 | 0 | 0 | |
| Reclass of Revenue account | 8 | 0 | 0 | 0 | |
| Bond interest accruals | 82 | 0 | 0 | 0 | |
| Provision Other Expenses | (241) | 0 | 0 | 0 | |
| Impairment on reserves | (18) | 0 | 0 | 0 | |
| Total | 150 | 282 | 0 | 0 | |
| Assets: | |||||
| Depreciation calc. difference | (3.737) | (4.194) | 7 | 6 | |
| Employee retirement benefits | 938 | 1.003 | 125 | 139 | |
| Stock devaluation | 196 | 295 | 0 | 0 | |
| Provisions | 415 | (146) | 25 | 12 | |
| Provision for doubtful debts | 944 | 1.087 | 0 | 0 | |
| Deferred income tax | 5.370 | 6.846 | 480 | 557 | |
| Fixed assets revaluation | (290) | 0 | 0 | 0 | |
| Total | 3.837 | 4.890 | 637 | 714 |
Deferred income taxes result from temporary differences between assets and liabilities tax recognition and financial statements composition.
On 31/12/2018, the Group had accumulated carried forward tax losses in its subsidiaries on part of which a provision was made for deferred tax asset of amount € 5.370 thousand (31/12/2017: € 6.846 thousand) as the Management considered that the recognition criteria were met. For the part of tax losses on which a deferred tax asset has been recognized, the Management estimates that they will be covered against taxable profits before their expiration date.
Given that some of the Group companies have not been audited by the tax authorities for a few years, as mentioned above, it is considered by the Group that adequate provisions for current and future tax audit differences have been made. On 31/12/2018, the cumulative Group's provision for unaudited tax years amounts to € 114 thousand (€ 139 th. on 31/12/2017) and to € 20 thousand for the Company as at 31/12/2018 (€ 20 th. on 31/12/2017) which is displayed in Income Tax Payable.
The basic earnings per share are calculated by dividing the profit attributable to shareholders of the Company by the weighted average number of shares during the period. The weighted average number of shares as at 31 December 2018 is 51.807.314 (31/12/2017: 51.643.688).
| Group | |||
|---|---|---|---|
| 1/1 - 31/12/2018 |
1/1 - 31/12/2017 |
||
| Profit / (Loss) after tax attributable to owners of the parent |
14.291 | 10.039 | |
| Number of issued shares | 51.807.314 | 51.643.688 | |
| SOP Impact | 608.759 | 731.933 | |
| Effect from purchase of own shares | 0 | 0 | |
| Weighted average number of shares | 52.416.073 | 52.375.621 | |
| Basic Earnings / (Losses) per Share (in Euro) | 0,2758 | 0,1944 | |
| Diluted Earnings / (Losses) per Share (in Euro) | 0,2726 | 0,1917 |
On 31/12/2018, the Company does not hold any treasury shares. It is noted that following the resolution of the ordinary General Assembly of the shareholders on 17/6/2016, a stock option plan has been established until the maximum number of 2.549.616 shares (5% of the paid share capital) which is in force until 17/6/2018, namely 24 months since the approval of the General Assembly.
Group as Lessee: The Group has leasing contracts for plant and equipment in order to cover its
operating needs. This is accomplished through finance and operating leasing contracts. Concerning the finance leasing contracts see above in paragraph "Borrowings".
Concerning operating leasing contracts, the total future dues for rents as below:
| Group | Company | ||||
|---|---|---|---|---|---|
| 31/12/2018 | 31/12/2017 | 31/12/2018 | 31/12/2017 | ||
| Up to 1 year | 20.802 | 24.633 | 197 | 200 | |
| Between 1-5 years | 69.297 | 85.953 | 648 | 676 | |
| More than 5 years | 85.227 | 117.865 | 209 | 351 | |
| Total | 175.326 | 228.451 | 1.054 | 1.227 |
The expense for operating leasing of financial year 2018, that was recorded in the income statement amounted to € 23.128 thousand (€ 23.254 thousand for the year 2017).
Group as Lessor: The future leasing contracts of the Group as a lessor are as below:
| Group | Company | |||
|---|---|---|---|---|
| 31/12/2018 | 31/12/2017 | 31/12/2018 | 31/12/2017 | |
| Up to 1 year | 1.090 | 1.069 | 0 | 0 |
| Between 1-5 years | 3.608 | 4.765 | 0 | 0 |
| More than 5 years | 2.441 | 3.273 | 0 | 0 |
| Total | 7.139 | 9.107 | 0 | 0 |
There are no litigation or arbitration proceedings as well as resolutions of judicial institutions that might have a material impact on the assets of the Group's companies.
Related parties of the Group include the Company, subsidiary and associated companies, the management and the first line managers. The parent company provides advice and services to its subsidiaries in the areas of IT, HR, financial planning and controlling, treasury and social responsibility. The analysis of the related party receivables and payables as at 31 December 2018 and 2017 are as follows:
| Group | Company | ||||
|---|---|---|---|---|---|
| 31/12/2018 | 31/12/2017 | 31/12/2018 | 31/12/2017 | ||
| Receivables from: |
HOUSE MARKET SA | 0 | 0 | 5.250 | 5.248 |
| H.M. HOUSE MARKET (CYPRUS) LTD |
0 | 0 | 17 | 14 | |
| INTERSPORT SA | 0 | 0 | 851 | 631 | |
| INTERSPORT (CYPRUS) LTD | 0 | 0 | 5 | 3 | |
| RENTIS SA | 0 | 0 | 2 | 2 | |
| GENCO TRADE SRL | 0 | 0 | 156 | 25 | |
| GENCO BULGARIA | 0 | 0 | 12 | 10 | |
| HOUSE MARKET BULGARIA AD | 0 | 0 | 43 | 111 | |
| INTERSPORT ATLETIK | 0 | 0 | 504 | 323 | |
| TRADE LOGISTICS SA | 0 | 0 | 23 | 21 | |
| SPEEDEX SA | 0 | 0 | 0 | 0 | |
| VYNER | 140 | 0 | 0 | 0 | |
| TRADE STATUS SA | 119 | 132 | 118 | 132 | |
| SW SOFIA MALL ENTERPRISES LTD |
96 | 0 | 0 | 0 | |
| TOTAL | 355 | 132 | 6.980 | 6.520 | |
| Payables to: | HOUSE MARKET SA | 0 | 0 | 0 | 0 |
| TRADE LOGISTICS SA | 0 | 0 | 1 | 1 | |
| SPEEDEX SA | 0 | 181 | 0 | 1 | |
| TRADE STATUS SA | 1 | 1 | 0 | 0 | |
| SOFIA SOUTH RING MALL AED | 3 | 4 | 0 | 0 | |
| MANAGEMENT MEMBERS | 38 | 24 | 38 | 24 | |
| TOTAL | 42 | 210 | 38 | 26 |
Related party transactions as at 31 December 2018 and 2017 are as follows:
| Group | Company | |||
|---|---|---|---|---|
| 1/1 - | 1/1 - | 1/1 - | 1/1 - | |
| 31/12/2018 | 31/12/2017 | 31/12/2018 | 31/12/2017 | |
| Revenue | 95 | 107 | 4.288 | 4.114 |
| Other operating income | 0 | 20 | 1.080 | 784 |
| Dividends | 0 | 0 | 5.000 | 5.000 |
| Total | 95 | 128 | 10.368 | 9.898 |
| Group | Company | |||
|---|---|---|---|---|
| 1/1 - 31/12/2018 |
1/1 - 31/12/2017 |
1/1 - 31/12/2018 |
1/1 - 31/12/2017 |
|
| Administrative expenses | 241 | 265 | 12 | 13 |
| Distribution expenses | 0 | 476 | 0 | (0) |
| Total | 241 | 742 | 12 | 13 |
During 2018 and 2017, transactions and fees of management members were as follows:
| Group | Company | |||
|---|---|---|---|---|
| 1/1 - 31/12/2018 |
1/1 - 31/12/2017 |
1/1 - 31/12/2018 |
1/1 - 31/12/2017 |
|
| Transactions and fees of management members |
2.515 | 2.452 | 568 | 546 |
There are no other transactions between the Group and the Company with the management. The transactions with related parties are arm's length and include mainly sales and purchases of goods and services under the context of the ordinary operation of the Group.
During financial years 2018 and 2017, between the parent company and its subsidiaries the following transactions occurred:
| Group | Company | |||
|---|---|---|---|---|
| 1/1 - 31/12/2018 |
1/1 - 31/12/2017 |
1/1 - 31/12/2018 |
1/1 - 31/12/2017 |
|
| Revenue | 41.308 | 36.958 | 4.193 | 4.019 |
| Cost of sales | 29.146 | 25.956 | 0 | 0 |
| Other income | 2.245 | 1.925 | 1.080 | 765 |
| Administrative expenses | 9.072 | 8.585 | 11 | 7 |
| Distribution expenses | 5.293 | 4.356 | 0 | 0 |
| Other operating expenses | 43 | 2 | 0 | 0 |
| Dividends | 8.000 | 8.000 | 5.000 | 5.000 |
| Group | Company | |||
|---|---|---|---|---|
| 31/12/2018 | 31/12/2017 | 31/12/2018 | 31/12/2017 | |
| Trade receivables | 14.586 | 14.125 | 6.861 | 6.388 |
| Inventory | 281 | 281 | (0) | (0) |
| Creditors | 14.586 | 14.125 | 1 | 1 |
The Group has issued letters of guarantee for its subsidiary and associated companies guaranteeing liabilities. The analysis of such letters of guarantee is disclosed in which appears in Note «Commitments and Contingencies».
There are no other subsequent events that may significantly affect the financial position and results of the Group other than the following:
subject to the provisions of L. 4399/2016.
The Annual Financial Report of the Group (Consolidated and Separate), The Independent Auditors Report and the Board of Directors Report for the year 2018 has been published by posting on the internet at the web address http://www.fourlis.gr. At the same web address, all Annual Financial Statements, Audit Reports and Board of Directors Reports of the companies which are consolidated and they are not listed and which cumulatively represent a percentage higher than 5% of consolidated revenues or assets or operating results after the deduction of minority shares proportion, are published.
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