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Samsonite Group S.A. Annual Report 2018
50259_rns_2019-04-15_f2317dc8-13ef-4921-a0c0-e1913f090eec.pdf
Annual Report
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Samsonite
Samsonite International S.A.
(Société Anonyme)
Annual accounts
As at December 31, 2018
(with the report of the Réviseur d'Entreprises Agréé thereon)
Address of the registered office:
13–15 avenue de la Liberte
L-1931 Luxembourg
R.C.S. Luxembourg: B 159.469
— 1 —
Table of contents
Report of the Réviseur d'Entreprises Agréé 2 – 4
Directors’ Report 5 – 9
Balance Sheet 10 – 11
Profit and Loss Account 12
Notes to the Annual Accounts 13 – 26
KPMG
KPMG Luxembourg, Société coopérative
39, Avenue John F. Kennedy
L - 1855 Luxembourg
Tel.: +352 22 51 51 1
Fax: +352 22 51 71
E-mail: [email protected]
Internet: www.kpmg.lu
To the Shareholders of
Samsonite International S.A.
13-15, avenue de la Liberté
L-1931 Luxembourg
REPORT OF THE REVISEUR D'ENTREPRISES AGREE
Report on the audit of the annual accounts
Opinion
We have audited the annual accounts of Samsonite International S.A. (the “Company”), which comprise the balance sheet as at 31 December 2018, and the profit and loss account for the year then ended, and notes to the annual accounts, including a summary of significant accounting policies.
In our opinion, the accompanying annual accounts give a true and fair view of the financial position of the Company as at 31 December 2018, and of the results of its operations for the year then ended in accordance with Luxembourg legal and regulatory requirements relating to the preparation and presentation of the annual accounts.
Basis for Opinion
We conducted our audit in accordance with the Law of 23 July 2016 on the audit profession (“Law of 23 July 2016”) and with International Standards on Auditing (“ISAs”) as adopted for Luxembourg by the “Commission de Surveillance du Secteur Financier” (“CSSF”). Our responsibilities under the Law of 23 July 2016 and ISAs are further described in the « Responsibilities of “Réviseur d’Entreprises agréé” for the audit of the annual accounts » section of our report. We are also independent of the Company in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (“IESBA Code”) as adopted for Luxembourg by the CSSF together with the ethical requirements that are relevant to our audit of the annual accounts, and have fulfilled our other ethical responsibilities under those ethical requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the annual accounts of the current period. Those matters were addressed in the context of our audit of the annual accounts as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on those matters.
We have determined that there are no key audit matters to communicate in our report.
Other information
The Board of Directors is responsible for the other information. The other information comprises the information stated in the management report but does not include the annual accounts and our report of “Réviseur d’Entreprises agréé” thereon.
Our opinion on the annual accounts does not cover the other information and we do not express any form of assurance conclusion thereon.
KPMG Luxembourg, Société coopérative, à Luxembourg entity and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
T.V.A. LU 27351518
R.C.S. Luxembourg B 149133
KPMG
In connection with our audit of the annual accounts, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the annual accounts 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 this fact. We have nothing to report in this regard.
Responsibilities of the Board of Directors and those charged with governance for the annual accounts
The Board of Directors is responsible for the preparation and fair presentation of these annual accounts in accordance with Luxembourg legal and regulatory requirements relating to the preparation and presentation of the annual accounts, and for such internal control as the Board of Directors determines is necessary to enable the preparation of annual accounts that are free from material misstatement, whether due to fraud or error.
In preparing the annual accounts, the Board of Directors is responsible for assessing the Company'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 the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company's financial reporting process.
Responsibilities of the Réviseur d'Entreprises agréé for the audit of the annual accounts
The objectives of our audit are to obtain reasonable assurance about whether the annual accounts as a whole are free from material misstatement, whether due to fraud or error, and to issue a report of "Réviseur d'Entreprises agréé" that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Law of 23 July 2016 and with ISAs as adopted for Luxembourg by the CSSF 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 annual accounts.
As part of an audit in accordance with the Law of 23 July 2016 and with ISAs as adopted for Luxembourg by the CSSF, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
-
Identify and assess the risks of material misstatement of the annual accounts, 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.
-
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.
-
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board of Directors.
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KPMG
-
Conclude on the appropriateness of Board of Directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our report of the "Réviseur d'Entreprises agréé" to the related disclosures in the annual accounts or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our report of the "Réviseur d'Entreprises agréé". However, future events or conditions may cause the Company to cease to continue as a going concern.
-
Evaluate the overall presentation, structure and content of the annual accounts, including the disclosures, and whether the annual accounts represent the underlying transactions and events in a manner that achieves fair presentation.
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.
Report on other legal and regulatory requirements
The management report is consistent with the annual accounts and has been prepared in accordance with the applicable legal requirements.
Luxembourg, 19 March 2019
SAMSONITE INTERNATIONAL S.A.
Société Anonyme
Registered office: 13–15 avenue de la Liberté, L-1931 Luxembourg
R.C.S. Luxembourg: B 159.469
(the “Company”)
REPORT OF THE BOARD OF DIRECTORS
TO THE SHAREHOLDERS OF THE COMPANY
RELATING TO THE STATUTORY ANNUAL ACCOUNTS
(STAND ALONE ANNUAL ACCOUNTS)
OF THE COMPANY FOR THE PERIOD
FROM JANUARY 1, 2018 TO DECEMBER 31, 2018
March 13, 2019
Dear Shareholders,
We are pleased to present you the Company’s statutory annual accounts (stand alone annual accounts), being the balance sheet, the profit and loss account as well as the notes for the financial year having started on January 1, 2018 and ended on December 31, 2018 (the “Financial Year”).
At the end of the Financial Year, the share capital of the Company amounts to US$14,309,403.80 and the authorized share capital of the Company (including the issued share capital of the Company) amounts to US$35,000,000.-, represented by 3,500,000,000 shares having a par value of US$0.01 each.
At the end of the Financial Year, the Company’s issued share capital is represented by 1,430,940,380 shares with a par value of US$0.01 each, all of which are listed on the Main Board of The Stock Exchange of Hong Kong Limited.
The principal activity of the operating subsidiaries of the Company is the design, manufacture, sourcing and distribution of luggage, business and computer bags, women’s bags, outdoor and casual bags, travel accessories and slim protective cases for personal electronic devices throughout the world, primarily under the Samsonite®, Tumi®, American Tourister®, Speck®, High Sierra®, Gregory®, Lipault®, Kamiliant®, Hartmann® and eBags® brand names as well as other owned and licensed brand names.
Issuance of €350.0 Million 3.500% Senior Notes Due 2026
On April 25, 2018 (the “Issue Date”), Samsonite Finco S.à r.l., a wholly-owned, indirect subsidiary of the Company (the “Issuer”), issued €350.0 million aggregate principal amount of its 3.500% senior notes due 2026 (the “Senior Notes”). The Senior Notes were issued at par pursuant to an indenture (the “Indenture”), dated the Issue Date, among the Issuer, the Company and certain of its direct or indirect wholly-owned subsidiaries (together with the Company, the “Guarantors”).
The Senior Notes are guaranteed by the Company and the other Guarantors on a senior subordinated basis.
The Indenture contains a number of customary negative covenants that, among other things and subject to certain exceptions, may restrict the ability of the Company to: (i) incur or guarantee additional indebtedness, (ii) make investments or other restricted payments, (iii) create liens, (iv) sell assets and subsidiary stock, (v) pay dividends or make other distributions or repurchase or redeem the capital stock or subordinated debt of the Company, (vi) engage in certain transactions with affiliates, (vii) enter into agreements that restrict the payment of dividends by subsidiaries or the repayment of intercompany loans and advances, and (viii) engage in mergers or consolidations. The Indenture also contains certain customary provisions relating to events of default.
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SAMSONITE INTERNATIONAL S.A.
Société Anonyme
Registered office: 13–15 avenue de la Liberté, L-1931 Luxembourg
R.C.S. Luxembourg: B 159.469
(the “Company”)
Amended and Restated Senior Credit Facilities Agreement
On May 13, 2016, an indirect wholly-owned subsidiary of the Company entered into a credit and guaranty agreement (the “Original Senior Credit Facilities Agreement”) with certain lenders and financial institutions. On August 1, 2016, the Company acceded to the Original Senior Credit Facilities Agreement as revolving borrower. The Original Senior Credit Facilities Agreement provided for (1) a US$1,250.0 million senior secured term loan A facility (the “Original Term Loan A Facility”), (2) a US$675.0 million senior secured term loan B facility (the “Original Term Loan B Facility”) and, together with the Original Term Loan A Facility, the “Original Term Loan Facilities”) and (3) a US$500.0 million revolving credit facility (the “Original Revolving Credit Facility,” and, together with the Original Term Loan Facilities, the “Original Senior Credit Facilities”).
In conjunction with the Senior Notes offering, on April 25, 2018, the Company and certain of its indirect, wholly-owned subsidiaries, as borrowers and guarantors and certain of the Company’s other direct and indirect wholly-owned subsidiaries, as guarantors, entered into an amended and restated credit and guaranty agreement (the “Credit Agreement”) with certain lenders and financial institutions. The Credit Agreement provides for (1) a new US$828.0 million senior secured term loan A facility (the “New Term Loan A Facility”), (2) a new US$665.0 million senior secured term loan B facility (the “New Term Loan B Facility”) and, together with the New Term Loan A Facility, the “New Term Loan Credit Facilities”) and (3) a new US$650.0 million revolving credit facility (the “New Revolving Credit Facility,” and, together with the New Term Loan Credit Facilities, the “New Senior Credit Facilities”).
On April 25, 2018 (the “Closing Date”) the gross proceeds from drawings under the New Senior Credit Facilities were used, together with the gross proceeds from the offering of the Senior Notes and existing cash on hand, to (i) repay in full the Original Senior Credit Facilities and (ii) pay certain commissions, fees and expenses in connection thereto.
The obligations of the borrowers under the New Senior Credit Facilities are unconditionally guaranteed by the Company and certain of the Company’s existing direct or indirect wholly-owned material restricted subsidiaries (the “Credit Facility Guarantors”). All obligations under the New Senior Credit Facilities, and the guarantees of those obligations, are secured, subject to certain exceptions, by substantially all of the assets of the Company, the other borrowers and the Credit Facility Guarantors. The security granted by the Company includes (a) the shares (parts sociales) of Samsonite Sub Holdings S.à r.l. (the direct, wholly-owned subsidiary of the Company), (b) the Company’s receivables, and (c) all the present and future assets, rights and claims the Company has or will have in relation to the Company’s bank accounts.
The New Senior Credit Facilities contain a number of customary negative covenants that, among other things and subject to certain exceptions, may restrict the ability of the Company to: (i) incur additional indebtedness; (ii) pay dividends or distributions on its capital stock or redeem, repurchase or retire its capital stock or its other indebtedness; (iii) make investments, loans and acquisitions; (iv) engage in transactions with its affiliates; (v) sell assets, including capital stock of its subsidiaries; (vi) consolidate or merge; (vii) materially alter the business it conducts; (viii) incur liens; and (ix) prepay or amend any junior debt or subordinated debt.
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SAMSONITE INTERNATIONAL S.A.
Société Anonyme
Registered office: 13–15 avenue de la Liberté, L-1931 Luxembourg
R.C.S. Luxembourg: B 159.469
(the “Company”)
The New Senior Credit Facilities also contain certain financial covenants that are applicable to the Company and its subsidiaries on a consolidated basis. The Company was in compliance with these financial covenants as of December 31, 2018.
On May 31, 2018, Mr. Ramesh Dungarmal Tainwala resigned as Director and Chief Executive Officer of the Company. The shareholders of the Company acknowledged his resignation at the general shareholders meeting of the Company held on September 26, 2018. Mr. Kyle Gendreau was appointed Chief Executive of the Company effective May 31, 2018.
The Company’s share award scheme (the “Share Award Scheme”) was amended by the Board of Directors of the Company on August 29, 2018, which amendment was approved by the shareholders of the Company at the general meeting held on September 26, 2018. At such general meeting the shareholders of the Company also granted the Board of Directors a mandate to grant awards of restricted shares units (“RSUs”) pursuant to the Share Award Scheme.
On September 26, 2018, the extraordinary general shareholders meeting of the Company approved the amendment of the articles of association of the Company to extend the authorization of the Board of Directors of the Company to allocate existing shares or issue new shares paid up of available reserves to employees and to corporate officers (including directors) of the Company and/or its affiliated companies subject to the conditions and restrictions as set out in article 4.2 of the articles of association of the Company.
During the Financial Year, no advance was drawn down by the Company on the interest bearing master loan facility of a maximum principal amount of US$10,000,000.- granted on September 16, 2014 to the Company by Samsonite Sub Holdings S.à r.l., the direct wholly-owned subsidiary of the Company.
The interest bearing loan in the amount of US$12,000,000.- granted on August 11, 2017 by the Company to Samsonite IP Holdings S.à r.l. (an indirect wholly owned subsidiary of the Company) was fully repaid.
During the Financial Year, the Company did not proceed with any acquisition of its own shares.
The Company has a branch named “Samsonite International S.A., Hong Kong Branch” which is located at 25th Floor, Tower 2, The Gateway, Harbour City, Kowloon, Hong Kong.
Upon the exercise of options granted by the board of directors of the Company on the dates referred to below, pursuant to the rules of the Company’s share award scheme adopted by the shareholders of the Company on September 14, 2012, as amended on January 8, 2013, on May 26, 2017 and amended by the Board on August 29, 2018 and approved by the shareholders of the Company on September 26, 2018 (the “Share Award Scheme”), new ordinary shares were issued during the Financial Year, in the amounts referred to below:
- upon the exercise of options granted on January 8, 2013: 1,385,081 ordinary shares were issued during the Financial Year;
- upon the exercise of options granted on January 7, 2014: 2,227,508 ordinary shares were issued during the Financial Year;
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SAMSONITE INTERNATIONAL S.A.
Société Anonyme
Registered office: 13–15 avenue de la Liberté, L-1931 Luxembourg
R.C.S. Luxembourg: B 159.469
(the “Company”)
— upon the exercise of options granted on January 7, 2015: 3,878,185 ordinary shares were issued during the Financial Year;
— upon the exercise of options granted on May 6, 2016: 1,618,334 ordinary shares were issued during the Financial Year; and
— upon the exercise of options granted on May 26, 2017: 20,170 ordinary shares were issued during the Financial Year.
During the year ended December 31, 2018, pursuant to the rules of the Share Award Scheme, the Company granted share options and RSUs to an executive director of the Company, certain key management personnel and other employees of subsidiaries of the Company as follows:
On October 11, 2018, the Company granted share options exercisable for 8,565,676 ordinary shares with an exercise price of HK$27.06 per share, and on December 4, 2018, the Company granted share options exercisable for 1,194,180 ordinary shares with an exercise price of HK$25.00 per share. Such options are subject to pro rata vesting over a four-year period from the date of grant, with 25% of the options vesting on each anniversary of the date of the grant, subject to the grantee continuing to be employed by, or continuing to provide services to, the Group on the applicable vesting date. Such options have a 10-year term.
On October 11, 2018, the Company awarded time-based RSUs (“TRSUs”) with respect to 4,431,075 shares and on December 4, 2018, the Company awarded TRSUs with respect to 462,762 shares. Such TRSUs are subject to pro rata vesting over a three-year period, with one-third of such TRSUs vesting on each anniversary of the date of the grant, subject to the grantee continuing to be employed by, or continuing to provide services to, the Group on the applicable vesting date.
On October 11, 2018, the Company granted performance-based RSUs (“PRSUs”) with respect to a target number of 1,406,918 shares assuming target level achievement of the performance conditions applicable to the PRSU grants. The performance targets cover the three-year (fiscal) period ending December 31, 2020. The actual number of shares that will vest under the PRSUs will vary depending on the level of achievement of the performance conditions applicable to the PRSU grants made to the relevant grantees, thereby ensuring that the actual payout is linked to the Company’s performance. The maximum number of shares underlying the PRSUs granted on October 11, 2018 is 2,813,838 shares. The PRSUs granted on October 11, 2018 will vest on the third anniversary of the grant date, subject to the achievement of the performance conditions and subject to the applicable grantee continuing to be employed by, or continuing to provide services to, the Group on the vesting date.
On December 4, 2018, the Company granted PRSUs with respect to a target number of 157,448 shares assuming target level achievement of the performance conditions applicable to the PRSU grant. The performance targets cover the three-year (fiscal) period ending December 31, 2020. The actual number of shares that will vest under the PRSUs will vary depending on the level of achievement of the performance conditions applicable to the PRSU grant made to the grantee, thereby ensuring that the actual payout is linked to the Company’s performance. The maximum number of shares underlying the PRSUs granted on December 4, 2018 is 314,896 shares. The PRSUs granted on December 4, 2018 will vest on the third anniversary of the grant date, subject to the achievement of the performance conditions and subject to the grantee continuing to be employed by the Group on the vesting date.
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SAMSONITE INTERNATIONAL S.A.
Société Anonyme
Registered office: 13–15 avenue de la Liberté, L-1931 Luxembourg
R.C.S. Luxembourg: B 159.469
(the “Company”)
During the Financial Year, the Company did not engage in any research and/or development activity.
The Company’s directors considered that the Company may potentially be impacted by the principal risks and uncertainties to which the Company’s group is exposed (for more explanation on this matter, please refer to Note 21 of the Company’s consolidated financial statements).
The Company will continue to exercise its activities of a holding company during the next financial year.
The operating results indicate a loss for the Financial Year of US$9,210,041.41. The balance sheet total amounts to US$2,077,641,812.34 as at December 31, 2018.
We propose to approve the annual accounts for the financial year ending December 31, 2018 as presented to you and to carry forward the loss of US$9,210,041.41 to the next financial year.
We recommend that a cash distribution in the amount of US$125,000,000.- (the “Distribution”) be made to the Company’s shareholders from its ad hoc distributable reserve created on June 14, 2011. The payment of this Distribution shall be made in United States dollars, except that payment to shareholders whose names appear on the register of shareholders in Hong Kong shall be made in Hong Kong dollars.
We remind you that this Distribution will be subject to your approval at the forthcoming annual general meeting of the Company to be held on June 6, 2019 at 10.00 a.m., Luxembourg time.
Finally, by special resolution, we kindly request you to grant discharge to the members of the board of directors of the Company and to the approved statutory auditor (réviseur d’entreprises agréé) for the performance of their duties during the Financial Year.
By: Kyle F. Gendreau
Capacity: Director
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Samsonite International S.A.
Balance Sheet
as at December 31, 2018
(expressed in USD)
| Note(s) | 12/31/2018 | 12/31/2017 | |
|---|---|---|---|
| ASSETS | |||
| Fixed assets | 3 | ||
| Shares in affiliated undertakings | 3.1 | 2,059,943,754.10 | 2,139,943,754.10 |
| Other loans | 3.2 | 12,768.80 | — |
| Total financial assets | 2,059,956,522.90 | 2,139,943,754.10 | |
| Total fixed assets | 2,059,956,522.90 | 2,139,943,754.10 | |
| Current assets | |||
| Debtors | 4 | ||
| Amounts owed by affiliated undertakings | 4.1 | ||
| becoming due and payable within one year | 6,009,980.88 | 13,222,335.19 | |
| becoming due and payable after more than one year | — | 12,209,056.43 | |
| Total amounts owed by affiliated undertakings | 6,009,980.88 | 25,431,391.62 | |
| Other debtors | 4.2 | ||
| becoming due and payable within one year | 153,552.85 | 78,191.95 | |
| Total other debtors | 153,552.85 | 78,191.95 | |
| Total debtors | 6,163,533.73 | 25,509,583.57 | |
| Cash at bank and in hand | 5 | 11,452,002.76 | 8,075,951.89 |
| Total current assets | 17,615,536.49 | 33,585,535.46 | |
| Prepayments | 69,752.95 | 42,716.57 | |
| TOTAL ASSETS | 2,077,641,812.34 | 2,173,572,006.13 |
The notes in the annex form an integral part of the annual accounts
Samsonite International S.A.
Balance Sheet (continued)
as at December 31, 2018
(expressed in USD)
| Note(s) | 12/31/2018 | 12/31/2017 | |
|---|---|---|---|
| CAPITAL, RESERVES AND LIABILITIES | |||
| Capital and reserves | 6 | ||
| Subscribed capital | 14,309,403.80 | 14,218,111.02 | |
| Share premium account | 288,607,874.18 | 262,261,490.24 | |
| Reserves | |||
| Other reserves, including the fair value reserve | |||
| Other available reserves | 1,805,253,863.75 | 1,915,253,863.75 | |
| Total reserves | 1,805,253,863.75 | 1,915,253,863.75 | |
| Profit or loss brought forward | (24,805,797.50) | (22,692,978.17) | |
| Profit or loss for the financial year | (9,210,041.41) | (2,112,819.33) | |
| Total capital and reserves | 2,074,155,302.82 | 2,166,927,667.51 | |
| Provisions | 7 | ||
| Provisions for taxation | 7.1 | 101,761.03 | 58,222.80 |
| Other provisions | 7.2 | 1,105,459.58 | 522,254.54 |
| Total provisions | 1,207,220.61 | 580,477.34 | |
| Creditors | 8 | ||
| Amounts owed to credit institutions | 8.1 | ||
| becoming due and payable within one year | 53,934.00 | 81,056.98 | |
| Total amounts owed to credit institutions | 53,934.00 | 81,056.98 | |
| Trade creditors | 8.2 | ||
| becoming due and payable within one year | 158,993.53 | 978,931.93 | |
| Total trade creditors | 158,993.53 | 978,931.93 | |
| Amounts owed to affiliated undertakings | 8.3 | ||
| becoming due and payable within one year | 1,986,448.32 | 2,470,993.41 | |
| Total amounts owed to affiliated undertakings | 1,986,448.32 | 2,470,993.41 | |
| Other creditors | 8.4 | ||
| Tax authorities | 79,913.06 | 257,878.92 | |
| Other creditors | |||
| becoming due and payable within one year | — | 2,275,000.04 | |
| Total other creditors | 79,913.06 | 2,532,878.96 | |
| Total creditors | 2,279,288.91 | 6,063,861.28 | |
| TOTAL CAPITAL, RESERVES AND LIABILITIES | 2,077,641,812.34 | 2,173,572,006.13 |
The notes in the annex form an integral part of the annual accounts
Samsonite International S.A.
Profit and Loss Account
for the year ended December 31, 2018
(expressed in USD)
| Note(s) | 12/31/2018 | 12/31/2017 | |
|---|---|---|---|
| Other operating income | 9 | 4,964,150.10 | 11,692,264.80 |
| Raw materials and consumables and other external expenses | 10 | ||
| Other external expenses | (10,891,237.04) | (7,724,241.54) | |
| Total raw materials and consumables and other external expenses | (10,891,237.04) | (7,724,241.54) | |
| Staff costs | 11 | ||
| Wages and salaries | (1,635,971.26) | (4,565,481.49) | |
| Social security costs | |||
| Other social security costs | (1,530.94) | (967.25) | |
| Total staff costs | (1,637,502.20) | (4,566,448.74) | |
| Other operating expenses | 12 | (1,939,906.98) | (1,990,537.20) |
| Other interest receivable and similar income | 13 | ||
| derived from affiliated undertakings | 270,630.06 | 213,169.63 | |
| other interest and similar income | 744,786.69 | 585,373.46 | |
| Total other interest receivable and similar income | 1,015,416.75 | 798,543.09 | |
| Interest payable and similar expenses | 14 | ||
| Other interest and similar expenses | (517,404.63) | (263,379.61) | |
| Total interest payable and similar expenses | (517,404.63) | (263,379.61) | |
| Tax on profit or loss | 15 | (83,328.40) | (44,812.53) |
| Profit or loss after taxation | (9,089,812.40) | (2,098,611.73) | |
| Other taxes not included in the previous captions | 16 | (120,229.01) | (14,207.60) |
| Profit or loss for the financial year | (9,210,041.41) | (2,112,819.33) |
The notes in the annex form an integral part of the annual accounts
Samsonite International S.A.
Notes to the Annual Accounts
as at December 31, 2018
(expressed in USD)
- GENERAL
Samsonite International S.A. (“the Company”) was incorporated on March 8, 2011 and organized under the laws of Luxembourg as a “société anonyme” for an unlimited period.
The registered office of the Company is at 13–15 avenue de la Liberté, L-1931 Luxembourg. The Company is registered with the Register of Commerce of Luxembourg under the section B Number 159.469.
The Company’s financial year starts on January 1 and ends on December 31 of each year.
The purpose of the Company is the holding of participations, in any form whatsoever, in Luxembourg and foreign companies and any other form of investment, the acquisition by purchase, subscription or in any other manner as well as the transfer by sale, exchange or otherwise of securities of any kind and the administration, control and development of its portfolio. It may in particular acquire by way of contribution, subscription, option, purchase or otherwise all and any transferable securities of any kind and realise the same by way of sale, transfer, exchange or otherwise.
The Company may likewise acquire, hold and assign, as well as license and sub-license all kinds of intellectual property rights, including without limitation, trademarks, patents, copyrights and licenses of all kinds. The Company may act as licensor or licensee and it may carry out all operations which may be useful or necessary to manage, develop and profit from its portfolio of intellectual property rights.
The Company may borrow and grant all and any support, loans, advances or guarantees to companies in which it holds a direct or indirect participating interest or which form part of the same group of companies as the Company.
The Company may also carry out any and all operations in relation to its business, both in Luxembourg and abroad, including, but not limited to, the design, manufacture, marketing, importation, exportation, warehousing, distribution and sale of, among others, luggage, bags, travel, and other accessories and related goods, as well as all products and materials used in manufacture.
The Company may moreover carry out all and any commercial, industrial and financial operations, both movable and immovable, which may directly or indirectly relate to its own corporate purpose or likely to promote its development or fulfillment.
The Company has been listed on the Main Board of the Stock Exchange of Hong Kong Limited since June 16, 2011.
The Company set up a branch in Hong Kong on December 12, 2011. From a Hong Kong law perspective, the Company has established a Place of Business in Hong Kong since April 16, 2011 and has been registered as a “Non-Hong Kong company” under Part XI of the Hong Kong Companies Ordinance since May 26, 2011.
The Company also prepares consolidated financial statements, which are published according to the provisions of the Luxembourg law.
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Samsonite International S.A.
Notes to the Annual Accounts (continued)
as at December 31, 2018
(expressed in USD)
2. SIGNIFICANT ACCOUNTING POLICIES
2.1 Basis of presentation
The annual accounts have been prepared in accordance with Luxembourg legal and regulatory requirements under the going concern assumption and the historical cost convention.
The annual accounts have been prepared in accordance with legal and regulatory requirements and generally accepted accounting principles in the Grand Duchy of Luxembourg. Accounting policies and valuation principles are, besides the ones laid down by the law of December 19, 2012, as amended, determined and applied by the Board of Directors.
The preparation of annual accounts requires the use of certain critical accounting estimates. It also requires the Board of Directors to exercise its judgement in the process of applying the accounting policies. Changes in assumptions may have a significant impact on the annual accounts in the period in which the assumptions changed. The Board of Directors believes that the underlying assumptions are appropriate and that the annual accounts therefore present the financial position and its results fairly.
The books and records are maintained in US dollars (USD) and the annual accounts have been prepared in accordance with the valuation rules and accounting policies described below.
2.2 Basis of conversion for items originally expressed in foreign currency
Transactions expressed in currencies other than USD are translated into USD at the exchange rate effective at the time of the transaction.
Long-term assets expressed in currencies other than USD are translated into USD at the exchange rate effective at the time of the transaction. At the balance sheet date these assets remain translated at historical exchange rates.
Other assets are valued individually at the lower of and other liabilities are valued at the higher of their value at the historical exchange rate or their value determined at the exchange rates prevailing at the balance sheet date. Only unrealized exchange losses are recorded in the profit and loss account. Realized exchange gains are recorded in the profit and loss account at the moment of their realization.
Cash at bank is translated at the exchange rate effective at the balance sheet date. Exchange losses and gains are recorded in the profit and loss account of the year.
2.3 Financial assets
Shares in affiliated undertakings and other loans held as fixed assets are valued at purchase price.
In case of durable depreciation in value according to the opinion of the Board of Directors, value adjustments are made in respect of financial assets, so that they are valued at the lower figure to be attributed to them at the balance sheet date. These value adjustments are not continued if the reasons for which the value adjustments were made ceased to apply.
— 14 —
Samsonite International S.A.
Notes to the Annual Accounts (continued)
as at December 31, 2018
(expressed in USD)
2.4 Debtors
Debtors are valued at their nominal value. They are subject to value adjustments where their recoverability is compromised. These value adjustments are not continued if the reasons for which the value adjustments were made ceased to apply.
2.5 Prepayments
This asset comprises the insurance premium.
2.6 Provisions
Provisions are intended to cover losses or debts, the nature of which is clearly defined and which, at the date of balance sheet, are either likely to be incurred or certain to be incurred but uncertain as their amount or the date on which they will arise.
Provisions for taxation correspond to the tax liability estimated by the Company for the financial years for which the tax return has not yet been filed. The advance payments are shown in the assets of the balance sheet under the “Other debtors” item.
2.7 Creditors
Creditors are recorded at their reimbursement value. Where the amount repayable on account is greater than the amount received, the difference is shown as an asset and is written off over the period of the debt based on a linear method.
3. FINANCIAL ASSETS
3.1 Shares in affiliated undertakings
| Name (registered office) | Ownership % | Annual accounts (*) as at | Currency | Net equity (result included) | Net result |
|---|---|---|---|---|---|
| Samsonite Sub Holdings S.à r.l. | |||||
| 13–15 avenue de la Liberté, | |||||
| L-1931 Luxembourg | 100.00% | Dec 31, 2018 | USD | 4,933,149,845.08 | 90,487,671.99 |
(*) Based on annual accounts to be approved by the Board of Directors on June 6th, 2019
The movements of the year are as follows:
| Name | Acquisition cost at the beginning of the year USD | Reimbursement of share premium for the year USD | Acquisition cost at the end of the year USD | Net book value at the end of the year USD |
|---|---|---|---|---|
| Samsonite Sub Holdings S.à r.l. | ||||
| Luxembourg | 2,139,943,754.10 | (80,000,000.00) | 2,059,943,754.10 | 2,059,943,754.10 |
— 15 —
Samsonite International S.A.
Notes to the Annual Accounts (continued)
as at December 31, 2018
(expressed in USD)
3.2 Other loan
| | Dec 31, 2018
USD | Dec 31, 2017
USD |
| --- | --- | --- |
| Deposit for the office lease | 12,768.80 | — |
4. DEBTORS
4.1 Amounts owed by affiliated undertakings
The amounts owed by affiliated undertakings are comprised of as follows:
| | Dec 31, 2018
USD | Dec 31, 2017
USD |
| --- | --- | --- |
| Becoming due and payable within one year: | | |
| PTL Holdings Inc | 4,588,245.98 | 4,588,245.98 |
| Samsonite LLC | 1,350,535.49 | 7,620,228.30 |
| Samsonite Mexico | 71,199.41 | — |
| Speck Product Design LLC | — | 601,343.96 |
| Cross-charges Samsonite IP Holdings S.à r.l. | — | 412,516.95 |
| | 6,009,980.88 | 13,222,335.19 |
Becoming due and payable after more than one year:
| Borrower | Initial amount | Effective date | Maturity date | Currency | Interest % | Dec 31, 2018 | Dec 31, 2017 |
|---|---|---|---|---|---|---|---|
| Loan to Samsonite IP Holdings S.à r.l. | 12,000,000.00 | 08/11/2017 | 08/11/2046 | USD | Libor +3% | — | 12,000,000.00 |
| Interest on loan to Samsonite IP Holdings S.à r.l. (payable at the maturity date) | — | 209,056.43 |
The full repayment of the loan to Samsonite IP Holdings and the interest occurred in 2018.
There was no interest receivable for the year ended Dec 31, 2018.
— 16 —
Samsonite International S.A.
Notes to the Annual Accounts (continued)
as at December 31, 2018
(expressed in USD)
4.2 Other debtors
The other debtors are comprised of as follows:
| | Dec 31, 2018
USD | Dec 31, 2017
USD |
| --- | --- | --- |
| Becoming due and payable within one year: | | |
| Corporate income tax advance 2011 | 2,277.77 | 2,277.77 |
| Corporate income tax advance 2012 | 2,106.32 | 2,106.32 |
| Corporate income tax advance 2013 | 4,443.75 | 4,443.75 |
| Corporate income tax advance 2014 | 4,513.63 | 4,513.63 |
| Corporate income tax advance 2015 | 3,593.76 | 3,593.76 |
| Corporate income tax advance 2016 | 3,478.52 | 3,478.52 |
| Net wealth tax advance 2017 | 7,994.93 | 7,994.93 |
| Miscellaneous Receivable | 6,489.32 | 76.87 |
| VAT Receivable | 118,654.85 | 49,706.40 |
| | 153,552.85 | 78,191.95 |
5. CASH AT BANK AND IN HAND
The cash at bank is comprised of as follows:
| | Dec 31, 2018
USD | Dec 31, 2017
USD |
| --- | --- | --- |
| HSBC Luxembourg current account USD | 1,156,535.41 | 1,151,705.96 |
| HSBC Hong Kong current account USD | 72,590.21 | 813,658.13 |
| HSBC Hong Kong current account HKD1,855,102.86 | 236,749.78 | 920,407.10 |
| HSBC Hong Kong current account HKD417,877.02 | 53,934.00 | 81,056.98 |
| HSBC Hong Kong share options HKD77,783,642.90 | 9,932,193.36 | 5,109,123.72 |
| | 11,452,002.76 | 8,075,951.89 |
6. CAPITAL AND RESERVES
During 2018, the share capital of the Company has been increased by an amount of USD91,292.78 by the issuance of 9,129,278 shares with a nominal value of USD0.01 each. In 2018, the share premium has been increased by an amount of USD26,346,383.94.
The authorized capital including the subscribed capital amounts to USD35,000,000.00.
As at December 31, 2018 the share capital amounts to USD14,309,403.80 represented by 1,430,940,380 shares with a nominal value of USD0.01 each.
— 17 —
Samsonite International S.A.
Notes to the Annual Accounts (continued)
as at December 31, 2018
(expressed in USD)
The movements of the year are as follows:
| Subscribed capital USD | Share premiums and similar premiums USD | Other Reserves USD | Retained earnings USD | Result for the year USD | Total USD | |
|---|---|---|---|---|---|---|
| Balance as at January 1, 2018 | 14,218,111.02 | 262,261,490.24 | 1,915,253,863.75 | (22,692,978.17) | (2,112,819.33) | 2,166,927,667.51 |
| Allocation of the result | — | — | — | (2,112,819.33) | 2,112,819.33 | — |
| Distribution to Shareholders | — | — | (110,000,000.00) | — | — | (110,000,000.00) |
| Capital Increase | 91,292.78 | 26,346,383.94 | — | — | — | 26,437,676.72 |
| Result of the year ended | — | — | — | — | (9,210,041.41) | (9,210,041.41) |
| Balance as at December 31, 2018 | 14,309,403.80 | 288,607,874.18 | 1,805,253,863.75 | (24,805,797.50) | (9,210,041.41) | 2,074,155,302.82 |
In accordance with Luxembourg law, the Company is required to allocate to a legal reserve a minimum of 5% of the annual net income, until this reserve equals 10% of the subscribed share capital. This reserve may not be distributed.
- PROVISIONS
7.1 Provisions for taxation
The provisions for taxation are comprised of as follows:
| Dec 31, 2018 USD | Dec 31, 2017 USD | |
|---|---|---|
| Corporate income tax | 56,948.50 | 13,410.27 |
| Net wealth tax | 44,812.53 | 44,812.53 |
| 101,761.03 | 58,222.80 |
7.2 Other Provisions
The other provisions are comprised of as follows:
| Dec 31, 2018 USD | Dec 31, 2017 USD | |
|---|---|---|
| Audit fees | 222,560.19 | 149,794.20 |
| Director fees | 166,522.17 | 101,602.50 |
| Legal fees | 88,286.61 | — |
| Miscellaneous fees | 628,090.61 | 270,857.84 |
| 1,105,459.58 | 522,254.54 |
- CREDITORS
8.1 Amount owed to credit institutions
The amounts owed to credit institutions are comprised of as follows:
| Dec 31, 2018 USD | Dec 31, 2017 USD | |
|---|---|---|
| Becoming due and payable within one year: | ||
| Undrawn checks | 53,934.00 | 81,056.98 |
Samsonite International S.A.
Notes to the Annual Accounts (continued)
as at December 31, 2018
(expressed in USD)
8.2 Trade creditors
The trade creditors are comprised of as follows:
| | Dec 31, 2018
USD | Dec 31, 2017
USD |
| --- | --- | --- |
| Becoming due and payable within one year: | | |
| Trade creditors | 158,993.53 | 978,931.93 |
| | 158,993.53 | 978,931.93 |
8.3 Amounts owed to affiliated undertakings
The amounts owed to affiliated undertakings are comprised of as follows:
| | Dec 31, 2018
USD | Dec 31, 2017
USD |
| --- | --- | --- |
| Becoming due and payable within one year: | | |
| Samsonite Asia current account | 15,890.93 | 44,265.01 |
| Samsonite LLC current account | — | 371,768.93 |
| Samsonite UK current account | 1,337.87 | 39,330.46 |
| Samsonite SAS current account | 2,612.62 | — |
| Samsonite India current account | — | 13,453.00 |
| Samsonite Middle East current account | — | 5,132.27 |
| Samsonite Singapore current account | — | 3,799.43 |
| Samsonite Chile current account | — | 24,916.20 |
| Cross-charges Samsonite IP Holdings S.à r.l. | 1,240,297.50 | 1,234,498.14 |
| Tumi Inc | 138,675.96 | — |
| Americas Headquarters | 374,575.33 | 620,859.42 |
| Global Licensing | 3,893.12 | — |
| US Wholesale | 100,247.67 | — |
| Speck | 49,164.41 | — |
| Samsonite AG Switzerland | 28,740.61 | — |
| Tumi Asia | — | 1,940.36 |
| Samsonite Belgium current account | — | 108,318.69 |
| Delilah EU Investments S.à r.l. | 31,012.30 | 2,711.50 |
| | 1,986,448.32 | 2,470,993.41 |
As at Dec 31, 2018 there was no intercompany interest payable.
8.4 Other creditors
The other creditors are comprised of as follows:
| | Dec 31, 2018
USD | Dec 31, 2017
USD |
| --- | --- | --- |
| Tax Authorities | 79,913.06 | 257,878.92 |
| Bonus | — | 2,275,000.04 |
| | 79,913.06 | 2,532,878.96 |
Samsonite International S.A.
Notes to the Annual Accounts (continued)
as at December 31, 2018
(expressed in USD)
- OTHER OPERATING INCOME
The other operating income are comprised of as follows:
| | Dec 31, 2018
USD | Dec 31, 2017
USD |
| --- | --- | --- |
| Recharge G&A Luxembourg | 3,074,314.43 | 4,617,538.48 |
| Reversal of NWT provisions | — | 7,210.50 |
| Recharge of share options fees | 1,889,835.67 | 7,067,515.82 |
| | 4,964,150.10 | 11,692,264.80 |
- OTHER EXTERNAL EXPENSES
The other external expenses are comprised of as follows:
| | Dec 31, 2018
USD | Dec 31, 2017
USD |
| --- | --- | --- |
| Rental fees | 67,835.17 | 65,641.65 |
| Legal fees | 1,962,752.35 | 1,419,589.81 |
| Accounting and administration fees | 13,617.67 | 9,474.12 |
| Bank fees | 7,789.99 | 8,056.18 |
| Audit fees | 146,457.17 | 63,669.88 |
| Tax advisory fees | 329,078.60 | 77,780.72 |
| Travel and representation fees | 375,069.77 | 182,201.11 |
| General expenses | 7,769,373.77 | 5,545,463.41 |
| Consulting services fees | 98,342.58 | 247,597.80 |
| Insurances premiums | 120,919.97 | 104,766.86 |
| | 10,891,237.04 | 7,724,241.54 |
The director fees and the non-deductible VAT on director fees were reclassified to note 12 "Other operating expenses".
- STAFF COSTS
The Company employed 3 persons during the financial period broken down by category as follows:
| Dec 31, 2018 | Dec 31, 2017 | |
|---|---|---|
| Employee (Hong-Kong Branch) | 2 | 2 |
| Employee (Luxembourg) | 1 | 1 |
The staff costs are composed as follows:
| | Dec 31, 2018
USD | Dec 31, 2017
USD |
| --- | --- | --- |
| Salaries and wages (Hong-Kong Branch) | 146,897.87 | 105,376.32 |
| Salaries and wages (Luxembourg) | 1,489,073.39 | 4,460,105.17 |
| Social security on salary and wages (Hong-Kong Branch) | 1,530.94 | 967.25 |
| | 1,637,502.20 | 4,566,448.74 |
— 20 —
Samsonite International S.A.
Notes to the Annual Accounts (continued)
as at December 31, 2018
(expressed in USD)
12. OTHER OPERATING EXPENSES
The other operating expenses are comprised of as follows:
| | Dec 31, 2018
USD | Dec 31, 2017
USD |
| --- | --- | --- |
| Director fees | 1,741,057.19 | 1,733,017.02 |
| Non-deductible VAT on director fees | 198,849.79 | 257,520.18 |
| | 1,939,906.98 | 1,990,537.20 |
13. OTHER INTEREST RECEIVABLE AND SIMILAR INCOME
The other interest receivable and similar income are comprised of as follows:
| | Dec 31, 2018
USD | Dec 31, 2017
USD |
| --- | --- | --- |
| Other interest receivable and similar income | | |
| Derived from affiliated undertakings | 270,630.06 | 213,169.63 |
| Realized exchange gains | 744,786.69 | 585,373.46 |
| | 1,015,416.75 | 798,543.09 |
14. INTEREST PAYABLE AND SIMILAR EXPENSES
The interest payable and similar expenses are comprised of as follows:
| | Dec 31, 2018
USD | Dec 31, 2017
USD |
| --- | --- | --- |
| Other interest payable and similar expenses | | |
| Unrealized exchange losses | 194,740.07 | 197,622.91 |
| Realized exchange losses | 322,664.56 | 65,756.70 |
| | 517,404.63 | 263,379.61 |
15. TAX ON PROFIT OR LOSS
| | Dec 31, 2018
USD | Dec 31, 2017
USD |
| --- | --- | --- |
| Corporate income tax and Municipal business tax | 83,328.40 | 44,812.53 |
| | 83,328.40 | 44,812.53 |
16. OTHER TAXES NOT SHOWN UNDER ITEMS 1 TO 15
| | Dec 31, 2018
USD | Dec 31, 2017
USD |
| --- | --- | --- |
| Net wealth tax | 120,229.01 | 14,207.60 |
— 21 —
Samsonite International S.A.
Notes to the Annual Accounts (continued)
as at December 31, 2018
(expressed in USD)
17. OFF BALANCE SHEET FINANCIAL COMMITMENTS
Issuance of €350.0 Million 3.500% Senior Notes Due 2026
On April 25, 2018 (the “Issue Date”), Samsonite Finco S.à r.l., a wholly-owned, indirect subsidiary of the Company (the “Issuer”), issued €350.0 million aggregate principal amount of its 3.500% senior notes due 2026 (the “Senior Notes”). The Senior Notes were issued at par pursuant to an indenture (the “Indenture”), dated the Issue Date, among the Issuer, the Company and certain of its direct or indirect wholly-owned subsidiaries (together with the Company, the “Guarantors”).
The Senior Notes are guaranteed by the Company and the other Guarantors on a senior subordinated basis.
The Indenture contains a number of customary negative covenants that, among other things and subject to certain exceptions, may restrict the ability of the Company to: (i) incur or guarantee additional indebtedness, (ii) make investments or other restricted payments, (iii) create liens, (iv) sell assets and subsidiary stock, (v) pay dividends or make other distributions or repurchase or redeem the capital stock or subordinated debt of the Company, (vi) engage in certain transactions with affiliates, (vii) enter into agreements that restrict the payment of dividends by subsidiaries or the repayment of intercompany loans and advances, and (viii) engage in mergers or consolidations. The Indenture also contains certain customary provisions relating to events of default.
Please refer to the Company’s consolidated financial statements for further details.
Amended and Restated Senior Credit Facilities Agreement
On May 13, 2016, an indirect wholly-owned subsidiary of the Company entered into a credit and guaranty agreement (the “Original Senior Credit Facilities Agreement”) with certain lenders and financial institutions. On August 1, 2016, the Company acceded to the Original Senior Credit Facilities Agreement as revolving borrower. The Original Senior Credit Facilities Agreement provided for (1) a US$1,250.0 million senior secured term loan A facility (the “Original Term Loan A Facility”), (2) a US$675.0 million senior secured term loan B facility (the “Original Term Loan B Facility”) and, together with the Original Term Loan A Facility, the “Original Term Loan Facilities”) and (3) a US$500.0 million revolving credit facility (the “Original Revolving Credit Facility,” and, together with the Original Term Loan Facilities, the “Original Senior Credit Facilities”).
In conjunction with the Senior Notes offering, on April 25, 2018, the Company and certain of its indirect, wholly-owned subsidiaries, as borrowers and guarantors and certain of the Company’s other direct and indirect wholly-owned subsidiaries, as guarantors, entered into an amended and restated credit and guaranty agreement (the “Credit Agreement”) with certain lenders and financial institutions. The Credit Agreement provides for (1) a new US$828.0 million senior secured term loan A facility (the “New Term Loan A Facility”), (2) a new US$665.0 million senior secured term loan B facility (the “New Term Loan B Facility”) and, together with the New Term Loan A Facility, the “New Term Loan Credit Facilities”) and (3) a new US$650.0 million revolving credit facility (the “New Revolving Credit Facility,” and, together with the New Term Loan Credit Facilities, the “New Senior Credit Facilities”).
— 22 —
Samsonite International S.A.
Notes to the Annual Accounts (continued)
as at December 31, 2018
(expressed in USD)
On April 25, 2018 (the “Closing Date”) the gross proceeds from drawings under the New Senior Credit Facilities were used, together with the gross proceeds from the offering of the Senior Notes and existing cash on hand, to (i) repay in full the Original Senior Credit Facilities and (ii) pay certain commissions, fees and expenses in connection thereto.
The obligations of the borrowers under the New Senior Credit Facilities are unconditionally guaranteed by the Company and certain of the Company’s existing direct or indirect wholly-owned material restricted subsidiaries (the “Credit Facility Guarantors”). All obligations under the New Senior Credit Facilities, and the guarantees of those obligations, are secured, subject to certain exceptions, by substantially all of the assets of the Company, the other borrowers and the Credit Facility Guarantors. The security granted by the Company includes (a) the shares (parts sociales) of Samsonite Sub Holdings S.à r.l. (the direct, wholly-owned subsidiary of the Company), (b) the Company’s receivables, and (c) all the present and future assets, rights and claims the Company has or will have in relation to the Company’s bank accounts.
The New Senior Credit Facilities contain a number of customary negative covenants that, among other things and subject to certain exceptions, may restrict the ability of the Company to: (i) incur additional indebtedness; (ii) pay dividends or distributions on its capital stock or redeem, repurchase or retire its capital stock or its other indebtedness; (iii) make investments, loans and acquisitions; (iv) engage in transactions with its affiliates; (v) sell assets, including capital stock of its subsidiaries; (vi) consolidate or merge; (vii) materially alter the business it conducts; (viii) incur liens; and (ix) prepay or amend any junior debt or subordinated debt.
The New Senior Credit Facilities also contain certain financial covenants that are applicable to the Company and its subsidiaries on a consolidated basis. The Company was in compliance with these financial covenants as of December 31, 2018.
Please refer to the Company’s consolidated financial statements for further details.
Share Award Scheme
On September 14, 2012, the Company’s shareholders adopted the Company’s Share Award Scheme.
On October 11, 2018, the Company granted share options exercisable for 8,565,676 ordinary shares to an executive director of the Company, certain key management personnel and other employees of the Group with an exercise price of HK$27.06 per share. Such options are subject to graded (“pro rata”) vesting over a four-year period from the date of grant, with 25% of the options vesting on each anniversary of the date of the grant, subject to the grantee continuing to be employed by, or continuing to provide services to, the Group on the applicable vesting date. Such options have a 10-year term.
On December 4, 2018, the Company granted share options exercisable for 1,194,180 ordinary shares to an employee of the Group with an exercise price of HK$25.00 per share. Such options are subject to pro rata vesting over a four-year period from the date of the grant, with 25% of the options vesting on each anniversary of the date of the grant, subject to the grantee continuing to be employed by, or continuing to provide services to, the Group on the applicable vesting date. Such options have a 10-year term.
— 23 —
Samsonite International S.A.
Notes to the Annual Accounts (continued)
as at December 31, 2018
(expressed in USD)
Particulars and movements of share options during the year ended December 31, 2018 were as follows:
| Number of options | Weighted-average exercise price | |
|---|---|---|
| Outstanding at January 1, 2018 | 84,925,858 | HK$25.61 |
| Granted during the year | 9,759,856 | HK$26.81 |
| Exercised during the year | (9,129,278) | HK$22.71 |
| Canceled/forfeited (“lapsed”) during the year | (8,822,813) | HK$28.04 |
| Outstanding at December 31, 2018 | 76,733,623 | HK$25.83 |
| Exercisable at December 31, 2018 | 32,986,377 | HK$23.77 |
| Number of options | Weighted-average exercise price | |
| Outstanding at January 1, 2017 | 70,989,059 | HK$22.93 |
| Granted during the year | 25,820,736 | HK$31.10 |
| Exercised during the year | (10,522,201) | HK$20.75 |
| Canceled/lapsed during the year | (1,361,736) | HK$26.94 |
| Outstanding at December 31, 2017 | 84,925,858 | HK$25.61 |
| Exercisable at December 31, 2017 | 20,818,997 | HK$21.81 |
Restricted Share Units ("RSUs")
Two types of RSU awards have been granted by the Company: time-based RSUs ("TRSUs") and performance-based RSUs ("PRSUs").
Time-based Restricted Share Units
TRSUs granted by the Company are subject to pro rata vesting over a three-year period, with one-third of such TRSUs vesting on each anniversary of the date of the grant, subject to the grantee continuing to be employed by, or continuing to provide services to, the Group on the applicable vesting date. Expense for TRSUs is based on the closing market price of the Company's shares on the date of grant, discounted by the present value of expected future dividends, and is recognized ratably over the vesting period, net of expected forfeitures.
On October 11, 2018, the Company awarded TRSUs with respect to 4,431,075 shares to an executive director of the Company, certain key management personnel and other employees of the Group.
On December 4, 2018, the Company awarded TRSUs with respect to 462,762 shares to an employee of a subsidiary of the Company.
— 24 —
Samsonite International S.A.
Notes to the Annual Accounts (continued)
as at December 31, 2018
(expressed in USD)
Particulars and movements of TRSUs during the year ended December 31, 2018 were as follows:
| Number of TRSUs | Weighted-average Fair Value per TRSU | |
|---|---|---|
| Outstanding at January 1, 2018 | — | — |
| Granted during the year | 4,893,837 | HK$22.50 |
| Vested during the year | — | — |
| Canceled/lapsed during the year | (9,765) | HK$22.40 |
| Outstanding at December 31, 2018 | 4,884,072 | HK$22.50 |
Performance-based Restricted Share Units
PRSUs vest in full on the third anniversary of the date of grant, subject to the grantee continuing to be employed by, or continuing to provide services to, the Group on the vesting date, and only to the extent certain pre-established cumulative performance targets are met. Expense related to PRSUs with non-market performance criteria is recognized ratably over the performance period, net of forfeitures, based on the probability of attainment of the related performance targets. The potential number of shares that may be issued upon vesting of the PRSUs ranges from 0% of the target number of shares subject to the PRSUs, if the minimum level of performance is not attained, to up to 200% of the target number of shares subject to the PRSUs, if the level of performance is at or above the predetermined maximum achievement level. For PRSUs subject to market conditions, the expense is recognized over the vesting period based on the fair value as determined on the grant date utilizing a Monte Carlo simulation.
On October 11, 2018, the Group granted PRSUs with respect to a target number of 1,406,918 shares to an executive director and certain members of the Company's senior management team assuming target level achievement of the performance conditions applicable to the PRSU grants. The performance targets cover the three-year (fiscal) period ending December 31, 2020. The actual number of shares that will vest under the PRSUs will vary depending on the level of achievement of the performance conditions applicable to the PRSU grants made to the relevant grantees, thereby ensuring that the actual payout is linked to the Company's performance. The maximum number of shares underlying the PRSUs is 2,813,838 shares. The PRSUs granted on October 11, 2018 will vest on October 11, 2021, subject to the achievement of the performance conditions and subject to the applicable grantee continuing to be employed by, or continuing to provide services to, the Group on the vesting date.
On December 4, 2018, the Group granted PRSUs with respect to a target number of 157,448 shares to an employee of a subsidiary of the Company assuming target level achievement of the performance conditions applicable to the PRSU grant. The performance targets cover the three-year (fiscal) period ending December 31, 2020. The actual number of shares that will vest under the PRSUs will vary depending on the level of achievement of the performance conditions applicable to the PRSU grant made to the grantee, thereby ensuring that the actual payout is linked to the Company's performance. The maximum number of shares underlying the PRSUs is 314,896 shares. The PRSUs granted on December 4, 2018 will vest on December 4, 2021, subject to the achievement of the performance conditions and subject to the grantee continuing to be employed by the Group on the vesting date.
— 25 —
Samsonite International S.A.
Notes to the Annual Accounts (continued)
as at December 31, 2018
(expressed in USD)
Particulars and movements of PRSUs during the year ended December 31, 2018 were as follows:
| Number of PRSUs | Weighted-average Fair Value per PRSU | |
|---|---|---|
| Outstanding at January 1, 2018 | — | — |
| Granted during the year | 1,564,366 | HK$17.91 |
| Increase (decrease) due to performance condition achievement | — | — |
| Vested during the year | — | — |
| Canceled/lapsed during the year | — | — |
| Outstanding at December 31, 2018 | 1,564,366 | HK$17.91 |
Shares underlying an award of TRSUs or PRSUs that lapse without the issuance of such shares upon vesting of such award may be available for future grant under the Share Award Scheme.
Please refer to the Company’s consolidated financial statements for further details.
18. SUBSEQUENT EVENTS
The Group has evaluated events occurring subsequent to December 31, 2018, the reporting date, through March 13, 2019, the date this financial information was authorized for issue by the Board.
On March 13, 2019, the Company’s Board of Directors recommended that a cash distribution in the amount of US$125.0 million, or approximately US$0.0873 per share, be made to the Company’s shareholders. The distribution will be subject to approval by the shareholders at the forthcoming Annual General Meeting of the Company.
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