Interim / Quarterly Report • Jul 26, 2018
Interim / Quarterly Report
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of the Group and Titan Cement
Company S.A.
These financial statements have been translated from the original Greek version. In the event that differences exist between this translation and the original Greek language financial statements, the Greek language financial statements will prevail over this
document.
| Pages | ||
|---|---|---|
| 1. | Statements of the Board of Directors' Members | 1 |
| 2. | Report of the Board of Directors | 2 |
| 3. | Report on Review of Interim Financial Information | 8 |
| 4. | Interim Condensed Financial Statements | 9 |
| 5. | Notes to the Interim Condensed Financial Statements | 17 |
The Interim Condensed Financial Statements presented through pages 9 to 42 both for the Group and the Parent Company, have been approved by the Board of Directors on 25th of July 2018.
Chairman of the Board of Directors
Chief Executive Officer
EFSTRATIOS - GEORGIOS ATH. ARAPOGLOU ID No AB309500
DIMITRIOS TH. PAPALEXOPOULOS ID No ΑΚ031353
Chief Financial Officer
Finance Director Greece
Financial Consolidation Senior Manager
MICHAEL H. COLAKIDES Passport No K00373844
ID No ΑΒ291692
GRIGORIOS D. DIKAIOS ATHANASIOS S. DANAS ID No ΑΝ023225
(In accordance with article 5 of Law 3556/2007)
The following members of the Board of Directors of TITAN CEMENT COMPANY S.A., namely:
in our above mentioned capacity, hereby state that, as far as we know:
Α) the half-yearly Financial Statements of TITAN CEMENT COMPANY S.A. (the Company) for the period 1.1.2018-30.6.2018, which were drawn up in accordance with the applicable accounting standards, reflect in a true manner the assets, liabilities, equity and results for the period above period of the Company as well as of the businesses included in the Group consolidation taken as a whole, in accordance with article 5 paragraphs 3 to 5 of Law 3556/2007
and
1
Β) the Report of the Board of Directors for the same above period reflects in a true manner the information required in accordance with article 5 paragraph 6 of Law 3556/2007.
Athens, July 25th, 2018
EFSTRATIOS-GEORGIOS ARAPOGLOU DIMITRIOS PAPALEXOPOULOS VASSILIOS ZARKALIS Board Member
Chairman
Managing Director
ΤΙΤΑΝ Group recorded a decline in turnover but an increase in net profit in the first half of 2018. Consolidated turnover reached €712.5 m., posting a 8% decline compared to the first half of 2017 and Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) reached €122.2 m, recording a decline of 14%. Net profit after minority interests and the provision for taxes was higher compared to 2017, reaching €24.8 m, versus €13.9 m in net profit in the first half of 2017.
The growing US market remained the main profit driver for the Group, although the combination of record wet weather and prolonged maintenance shutdowns at the group's key productive units did not allow for an improvement in EBITDA in the first half of 2018. In contrast, conditions remained challenging in Greece, with turnover and operating results declining.
The strengthening of the Euro against the US dollar and other currencies in the first half of 2018, had a negative impact on Group results. At constant exchange rates, consolidated turnover would have been higher by €57 m and stable versus the previous year, while EBITDA, would have been higher by €10 m recording a 7% decline.
Group operating cash flow reached €29 m, higher by €12 m compared to the first half of 2017, benefitting from lower capex and working capital requirements.
Group net debt on 30.06.2018 stood at €751 m, lower by €36 m compared to 30.06.2017 and higher by €28 m versus net debt levels on 31.12.2017.
In January 2018, Titan Global Finance PLC issued Additional Guaranteed notes of nominal value €100 mil. This was in connection with the reopening of €250 mil issue of November 2017 with 2.375% coupon per annum and raised the total amount of the issue to €350 mil due in November 2024.
On 19 February 2018, the Group's subsidiary in USA, Titan America LLC (TALLC), submitted to the Bank of New York Mellon Trust Company, N.A. the required notification to call for redemption the Miami-Dade County Industrial Revenue Bonds, Series 2004 on April 2 nd 2018. These bonds, amounting to €18.2 mil, had an original maturity date of April 26th 2034.
The stock price of the Company closed at €21.70 a share on 30.06.2018, decreasing by 5.2% since 31.12.2017. During the same period, the Athens Stock Exchange (ASE) General Index posted a 5.6% decline.
In the US, demand for cement continued to grow, supporting a positive evolution of prices. The particularly rainy weather in the eastern states in the first half of 2018 held back sales, while production challenges in Florida had to be addressed through increased imports via our Tampa terminal, in order to satisfy demand. Additionally, as aforementioned, results were affected by the strengthening of the Euro against the US dollar.
In Greece, turnover declined, reflecting the conclusion of major infrastructure works and subdued activity in the housing sector. There was an increase in building activity from the hospitality sector, which however, represents only a small share of the total construction market. Cement exports continued at high volumes. Margins improved somewhat in US dollars, although not in Euro terms.
The markets of Southeastern Europe, recovered after a slow start to the year due to inclement weather. Performance was stable overall, since the growth in the eastern and northern markets counterbalanced the decline in demand witnessed in the south and southwestern Balkans.
In Egypt, performance improved mainly due to the increase in prices in the beginning of the year, compared to the particularly low levels of 2017. It is estimated that demand remained stable against the first half of 2017. However, the sales ramp-up of significant new capacity heightened competitive pressures during the second quarter, as expected. The sliding of the Egyptian pound against the Euro, affected results, limiting growth in Euro terms.
Turnover in Egypt in the first half remained essentially flat at €80.6 m., while recording a 12.4% increase in local currency. EBITDA reached €12.8 m recording a
In Turkey, macroeconomic concerns are already affecting the construction sector. The net results of Adocim were close to the previous year's levels, despite the 26% decline of the Turkish Lira against the Euro in the first half of 2018.
Finally, the Brazilian market is showing encouraging signs, despite the disturbance caused by the truckers' national strike in May which halted deliveries and interrupted the positive evolution of the market. Apodi results improved year on year, limiting the net loss attributable to TITAN to lower levels.
2
Group capex in the first half of 2018 stood at €55 m, being €17 m below the first half of 2017.
Turnover at TITAN Cement S.A. in the first half of 2018 declined by 12.5 % reaching €109.7 m, while EBITDA reached €4.1 m versus €12.2 m in the first half of the previous year. The net result was a €8.9 m loss versus losses of €8.1 m in the first half of 2017.
The Annual General Meeting of Shareholders held on June 1, 2018, decided the distribution of dividend of a total amount of €4,231,626 (€0.05 per share) and the return of capital of a total amount of €42,316,264 (€0.50 per share). Concurrently, it approved the increase of the company's share capital through capitalization of reserves of a total amount €80,400,901 and increase of the nominal value of each share from €2.50 to €3.45.
There are no events after the 30th of June 2018 that relate to the Group and the Company and which would significantly affect the consolidated and the Company's financial statements.
In the US, the outlook for the construction sector remains favourable, with demand expected to increase in the second half of 2018, weather permitting, as well as in the mid-term. TITAN is wellplaced to make the most of the market's momentum, having a strong presence in expanding metropolitan areas and the spare capacity to meet the growing demand. Moreover, the recently legislated tax reform should also have a beneficial effect on construction.
In Greece, the commencement of new major works which would help reactivate the construction sector is facing delays while housing activity remains at extremely low levels. Once again, cement production will, by-and-large, be diverted to exports.
In the countries of Southeastern Europe there are expectations for a longer term, mild increase in construction activity. Τhe Group's plants are operating significantly below capacity and thanks to recent investments have increased their competitiveness through the expansion of alternative fuel usage, to their own benefit as well as to that of local communities.
In Egypt, while the sector benefitted from the stability in demand and the increase in prices in the first half, it is now called upon to address new challenges. The entry into operation of the new 12m MT Army cement plant adds to the already excessive supply, thereby further squeezing the utilization rates and operating margins of existing plants. Moreover, the significant increases in energy costs and additional levies imposed on the production of cement, as of July 1st, make price increases imperative in order to recoup costs. However, current market conditions do not support this prospect in the short term.
In Turkey, the unfavourable evolution of macroeconomic indicators (inflation, interest rates, foreign exchange rates) coupled with the pressures on the banking system are expected to have a severe effect on the construction sector and Adocim's performance, which is well prepared to face these challenges effectively.
In Brazil, the positive development of the economy is raising expectations for the establishment of new growth cycle in the cement market.
TITAN Group's long-term commitment to sustainable development has been further underlined by extending existing sustainability targets and by setting new stricter ones for 2020, as published in the Annual Report of the Board of Directors in March 2017.
Following a fifteen-year tradition, the Group published all its results for 2017 according to international standards, the new EU Directive on disclosure of non-financial information and industry best practice. The Integrated Annual Report 2017 is the sixth consecutive report published by the Group in the context of its strategy for sustainable growth. Since 2007, the compliance and accomplishment levels of the Group for sustainable growth (nonfinancial data) are verified at "reasonable assurance" level by independent auditors. The evaluation for the 2017 Report verifies the fulfillment of the "advanced" level criteria for the UN Global Compact (UNGC) Communication on Progress.
Continuing the dialogue with its stakeholders on material issues in which the Group can contribute improving long-term strategy and performance, TITAN proceeded into the implementation of bilateral meetings and interviews with stakeholders, which focused on the assessment of material issues and TITAN's response to stakeholders' expectations.
2
Apart from health, safety and environmental footprint prioritizing climate change, another important issue remains to ensure protection of human rights in workplace and supply chain, especially in certain areas and under certain circumstances, and products' innovation focusing on an improved social and environmental footprint.
During the first semester of 2018, the effort for accomplishment of the goals set on safety in the workplace continued. It is encouraging that no fatalities have been recorded during this period while the Lost Time Injuries Frequency Rate has been improved compared to 2017.
Aiming to accomplish the Group's strategic goals for the environmental protection, during the first semester of 2018 the environmental policy of the Group was reviewed as well as the climate change mitigation strategy with focus on circular economy and the evaluation of long-term impacts of climate change.
In addition, the 2020 sustainability targets of the Group, focusing on environmental protection, health and safety and sustainability of communities were linked to the UN 2030 Sustainable Development Goals (SDGs).
Concluding, during this period, the evaluation of the work accomplished since 2015 as part of TITAN's commitment to EU Pact for Youth, aiming to strengthen professional skills of young people, the Group recorded in total during the three-years period (2015-2018) the implementation of more than 2000 internship programs in collaboration with educational institutions and academia and more than 300 of them resulted in new hires.
At the end of 2017, a new Quality Internships Guide was presented to all the Group's subsidiaries aiming to constitute the Guide for planning more suitable and effective programs during the 2018-2020 period. This initiative is included in the Group's goals for expansion of the local plans for collaboration with local communities in order to correspond with the issues that have been assessed as material by shareholders in the respective region.
The Group's goal is to remain a pioneer in issues of transparency and social responsibility in the regions where it operates, in accordance with its principles and values.
The Group's operating and financial performance is influenced by general economic conditions and the level of residential, commercial and infrastructure construction activity in the countries in which it operates, particularly in the United States, S.E. Europe and Eastern Mediterranean.
The level of construction activity in local and national markets is inherently cyclical and is affected by many factors including global and national economic circumstances, allocation of government funding for public infrastructure projects, weather conditions and swings in fuel and raw material prices.
TITAN's market and product diversification strategy, its industrial presence across 10 countries and its commitment to ongoing cost control, strong cash generation and disciplined financial management, all contribute to the mitigation of the volatility associated with cyclicality and local market conditions.
The Group operates and may seek new opportunities in countries and regions with differing and at times fast changing economic, social and political conditions. These conditions could include political unrest, civil disturbance, currency devaluation and other forms of instability, and may result in sudden changes to the operating and regulatory environment. Changes in these conditions may adversely affect the Group's business, results of operation, financial performance and/ or prospects.
The annual budgeting and strategic review process along with the regular monitoring of financial results and forecasts, help track political and economic events which may create uncertainties regarding the financial performance. Where political tensions are heightened, mitigation measures are in place to provide maximum protection of TITAN's people and assets.
Changes in legislation and public policies relating to climate change could increase capital expenditure and reduce future revenue and earnings. Particularly in EU markets, these laws and regulations may give rise to significant compliance costs, limitations on local production being exported and substitution of traditional binders and products.
The Group closely monitors relevant regulatory developments and takes proactive measures to mitigate potential negative consequences. At the same time TITAN continues its efforts to reduce its carbon footprint. Other mitigation measures include the use of alternative raw materials and alternative fuels, fuel efficiency, reduction of thermal energy consumption, development of new products and continuous innovation across the value chain.
For more details on TITAN's climate mitigation strategy please refer to our website:
Thermal energy, electricity and raw materials constitute the most important elements of the Group's cost base. The fluctuation in the price of fossil fuels poses a risk which affects production cost. In order to reduce costs and also curtail its environmental footprint, the Group is investing in low energy-requirement equipment and in the use of alternative fuels.
Ensuring access to the required quality and quantity of raw materials is an additional priority, which is taken into account when planning a new investment. With regard to existing facilities, care is taken to secure the adequacy of supply of raw materials during their entire lifetime.
The Group is investing in the use of alternative raw materials in order to gradually lessen its dependence on natural raw materials. To this end, the Group has set specific quantifiable targets for and monitors the substitution of natural raw materials by alternative raw materials.
Ensuring health and safety and preventing accidents at work is a priority for TITAN. Excellence in the area of health and safety is embedded in all TITAN operations and activities. The Group has implemented detailed policies and procedures promoting Health and Safety including the coverage by an adequate number of safety engineers of all production units. Particular emphasis is placed on training and raising safety awareness and on strict application of safety systems and processes.
TITAN's Group Health and Safety Policy provides assessment of all incidents, proactive planning, setting of specific targets, safety training and monitoring of progress.
In parallel with all the other preventive measures, Titan's production and construction sites are regularly audited by the Group's safety specialists. (For more details on Health and Safety please refer to our website:
http://www.titancement.com/en/corporate-socialresponsibility/care-for-our-people/occupationalhealth-and-safety/
The Group is subject to stringent and evolving laws, regulations, standards and best practices with respect to the environment, relating to, amongst other things, climate change, noise, air, water and soil emissions, as well as waste disposal. With a view to continuous improvement of the environmental impact of its operations, TITAN applies in all its plants management systems to monitor and report their environmental impact. The Group's environmental management provides targets for reduction of air emissions, protection of biodiversity, water management and recycling and quarry rehabilitation.
Despite the Group's policy and efforts to comply with all applicable environmental laws, due to the nature of our business, the risk of potential legal proceedings concerning environmental matters cannot be safely excluded.
For more details on the Group's environmental management please refer to our website:
The Group operates in countries and regions such as Greece, Egypt, Turkey and the USA which are exposed to natural hazards such as earthquakes, hurricanes and sandstorms.
Among the measures adopted by the Group to mitigate the disastrous effects of these phenomena, is the adoption of stricter designing standards for the Group's plants than the ones stipulated in the relevant legislation. In addition, the Group has in place emergency plans to safeguard its industrial infrastructure and protect the lives of the Company's employees.
The Group, due to the nature of its business and its geographical positioning, is exposed to financial risks associated with foreign currency, interest rates, liquidity and leverage, as well as counterparties. Financial risks are managed by Group Finance and Treasury.
The Group does not engage in speculative transactions or transactions which are not related to its commercial and business activities.
Group exposure in foreign currency derives from existing or expected cash flows and from acquisitions/investments denominated in currencies other than the euro. The Group's net foreign currency transaction risk mainly arises from USD, EGP, RSD, LEK, GBP, BRL and TRY.
Natural hedges (equity invested in long tern fixed assets and borrowings in the same currency as the activities that are being financed), currency swaps and forward foreign currency contracts are used to manage currency exposures.
The Group's exposure to changes of interest rates and increased borrowing costs are managed through employing a mix of fixed and floating rate debt and interest rate derivatives, where appropriate. The ratio of fixed to floating rates of the Group's borrowings is decided on the basis of market conditions, Group strategy and financing requirements.
As at 30th June 2018, the Group's ratio of fixed to floating interest rates, taking into account outstanding cross currency swaps and interest rate swaps, stood at 87%/13% (31 December 2017: 82%/18%).
In order to manage liquidity risks and to ensure the fulfilment of its financial obligations, the Group, maintains sufficient cash and other liquid assets, as well as extensive committed credit lines with several international banks, which complement its operating cash flows.
The Group's financial position allows it to have access to the international financial markets and raise needed funds.
Counterparty risk relating to financial institutions' inability to meet their obligations towards the Group, is mitigated by pre-set limits on the degree of exposure to each individual financial institution. As at 30 th June 2018, the majority of Group liquidity was held with investment grade financial institutions. Similarly, the Group has entered into derivative transactions only with investment grade financial institutions.
The Group is also exposed to counterparty risks relating to customer receivables. Customer receivables primarily derive from a large, widespread customer base. The financial status of customers is constantly monitored at business unit level and, where it is deemed necessary, additional security is requested to cover credit exposure. As at 30 th June 2018, all outstanding doubtful receivables were adequately covered by relevant provisions.
Transactions between the Company and related entities, as these are defined according to IAS 24 were undertaken in line with ordinary market terms.
The amounts of sales and purchases undertaken in the 1st Half of 2018, and the balances of payables and receivables as at 30 June 2018 for the Group and the Company, arising from transactions between related parties are presented in Note 21 of the financial statements.
The revenue presented relates to sales of goods to subsidiaries, while purchases relate to purchases of goods and services by the company from subsidiaries.
Company receivables primarily relate to receivables from cement sales to subsidiaries
Company liabilities relate to three loans of total nominal amount of €390.7 mil concluded with the UK based subsidiary Titan Global Finance Plc.
The remuneration of senior executives and members of the Group's Board of Directors for 1st Half of 2018 was at €4.5 mil versus €4.1 mil during the same period last year.
The total number of treasury shares held by the Company on 30th June 2018 was 4,360,811 of which 4,201,682 were common shares and 159,129 were preferred shares. The shares represent 5.15% of the share capital of the Company.
In implementation of the decision dated 17th June 2016 of the Annual General Meeting of Shareholders and resolution dated 17th June 2016 of the Board of Directors, the Company purchased in the 1 st Half of 2018 162,932 own common shares of nominal value €488,796 at a total purchase price of €3,394,238.64 and 48,656 own preference shares of nominal value €145,968 at a total purchase price of €845,919.36. The own shares purchased in the 1st Half of 2018 2
represented 0.25% of the share capital of the company.
In the 1st Half of 2018, under the existing framework of approved Stock Option Plans, the Company carried out off – exchange sales of common treasury shares to TITAN Group executives who exercised their stock options. The corresponding common shares sold were 15,496 of nominal value €154,960, representing 0.02% of the share capital of the Company.
The Board of Directors having taken into account:
and states that it considers it appropriate for the Company to continue to adopt the going concern basis in preparing its Financial Statements and that no material uncertainties are identified to the Company's ability to continue to adopt the going concern basis in preparing its Financial Statements in the foreseeable future and in any event over a period of at least twelve months from the date of approval of the Financial Statements.
[Translation from the original text in Greek]
We have reviewed the accompanying condensed company and consolidated statement of financial position of Titan Cement Company S.A. (the "Company"), as of 30 June 2018 and the related condensed company and consolidated statements of income and comprehensive income, changes in equity and cash flow statements for the six-month period then ended, and the selected explanatory notes that comprise the interim condensed financial information and which form an integral part of the six-month financial report as required by L.3556/2007. Management is responsible for the preparation and presentation of this condensed interim financial information in accordance with International Financial Reporting Standards as they have been adopted by the European Union and applied to interim financial reporting (International Accounting Standard "IAS 34"). Our responsibility is to express a conclusion on this interim condensed financial information based on our review.
We conducted our review in accordance with International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing, as they have been transposed into Greek Law and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim financial information is not prepared, in all material respects, in accordance with IAS 34.
PricewaterhouseCoopers S.A. 268 Kifissias Avenue 152 32 Halandri SOEL Reg. No 113 Konstantinos Michalatos
Athens, 26 July 2018 The Certified Auditor - Accountant
SOEL Reg. No 17701
PricewaterhouseCoopers SA, 268 Kifissias Avenue, 15232 Halandri, Greece T: +30 210 6874400, F: +30 210 6874444, www.pwc.gr
260 Kifissias Avenue & Kodrou Str., 15232 Halandri, T: +30 210 6874400, F:+30 210 6874444 17 Ethnikis Antistassis Str., 55134 Thessaloniki, T: +30 2310 488880, F: +30 2310 459487
(all amounts in Euro thousands)
| (all amounts in Euro thousands) | Group | Company | |||||
|---|---|---|---|---|---|---|---|
| For the six months ended 30/6 | For the six months ended 30/6 | ||||||
| Note | 2018 | 2017* | 2018 | 2017* | |||
| Sales of goods | 5 | 712,505 | 773,821 | 109,696 | 125,427 | ||
| Cost of sales Gross profit before depreciation, amortization and impairment |
-520,233 192,272 |
-554,661 219,160 |
-93,022 16,674 |
-98,604 26,823 |
|||
| Other income | 8,068 | 7,189 | 8,967 | 8,864 | |||
| Administrative expenses Selling and marketing expenses |
-62,081 -10,790 |
-63,663 -11,602 |
-21,173 -162 |
-22,009 -147 |
|||
| Other expenses | -5,252 | -8,966 | -249 | -1,346 | |||
| Profit before interest, taxes, depreciation, amortization and impairment |
122,217 | 142,118 | 4,057 | 12,185 | |||
| Depreciation and amortization related to cost of sales | 8,9 | -52,994 | -53,103 | -7,055 | -7,345 | ||
| Depreciation and amortization related to administrative and selling expenses |
8,9 | -2,367 | -3,218 | -963 | -596 | ||
| Impairment of tangible and intangible assets related to cost of sales |
8,9 | - | -1,002 | - | - | ||
| Profit/(loss) before interest and taxes | 66,856 | 84,795 | -3,961 | 4,244 | |||
| Expenses from participations and investments | -123 | - | -123 | - | |||
| Finance income | 839 | 564 | 65 | 2 | |||
| Finance costs | -32,756 | -29,091 | -7,483 | -8,108 | |||
| Gains/(losses) from foreign exchange differences | 27 | 4,542 | -17,140 | 619 | -2,006 | ||
| Share of losses of associates and joint ventures | 10 | -4,141 | -7,426 | - | - | ||
| Profit/(loss) before taxes | 35,217 | 31,702 | -10,883 | -5,868 | |||
| Income tax | 7 | -9,565 | -16,540 | 1,977 | -2,255 | ||
| Profit/(loss) for the period | 25,652 | 15,162 | -8,906 | -8,123 | |||
| Attributable to: | |||||||
| Equity holders of the parent | 24,843 | 13,937 | |||||
| Non-controlling interests | 809 | 1,225 | |||||
| 25,652 | 15,162 | ||||||
| Basic earnings per share (in €) | 19 | 0.3091 | 0.1727 | ||||
| Diluted earnings per share (in €) | 19 | 0.3076 | 0.1714 |
*IFRS 9 and 15 have been applied with the cumulative impact recognised in retained earnings without restating the 2017 comparatives (note 2).
| (all amounts in Euro thousands) | Group | Company | |||
|---|---|---|---|---|---|
| For the six months ended 30/6 |
For the six months ended 30/6 |
||||
| Note | 2018 | 2017* | 2018 | 2017* | |
| Profit/(loss) for the period | 25,652 | 15,162 | -8,906 | -8,123 | |
| Other comprehensive (loss)/income: | |||||
| Other comprehensive loss to be reclassified to profit or loss in subsequent periods: |
|||||
| Exchange differences on translation of foreign operations |
18 | -6,034 | -68,469 | - | - |
| Currency translation differences on transactions designated as part of net investment in foreign operation |
1,597 | -6,384 | - | - | |
| Deferred tax | 7 | -359 | 1,437 | - | - |
| 1,238 | -4,947 | - | - | ||
| Net other comprehensive loss to be reclassified to profit or loss in subsequent periods: |
-4,796 | -73,416 | - | - | |
| Other comprehensive income not to be reclassified to profit or loss in subsequent periods: |
|||||
| Asset revaluation surplus | - | 140 | - | 150 | |
| Deferred tax | 7 | - | -44 | - | -44 |
| - | 96 | - | 106 | ||
| Net other comprehensive income not being reclassified to profit or loss in subsequent periods: |
- | 96 | - | 106 | |
| Other comprehensive (loss)/income for the period, net of | |||||
| tax | -4,796 | -73,320 | - | 106 | |
| Total comprehensive income/(loss) for the period net of | |||||
| tax | 20,856 | -58,158 | -8,906 | -8,017 | |
| Attributable to: | |||||
| Equity holders of the parent | 18,863 | -55,816 | |||
| Non-controlling interests | 1,993 | -2,342 | |||
| 20,856 | -58,158 |
The primary financial statements should be read in conjunction with the accompanying notes. *IFRS 9 and 15 have been applied with the cumulative impact recognised in retained earnings without restating the 2017 comparatives (note 2).
| (all amounts in Euro thousands) | Group | Company | ||||
|---|---|---|---|---|---|---|
| For the three months ended 30/6 | For the three months ended 30/6 | |||||
| Note | 2018 | 2017* | 2018 | 2017* | ||
| Sales of goods | 390,036 | 411,986 | 62,692 | 64,685 | ||
| Cost of sales | -275,440 | -279,412 | -53,041 | -48,135 | ||
| Gross profit before depreciation, amortization and impairment |
114,596 | 132,574 | 9,651 | 16,550 | ||
| Other income | 4,645 | 3,966 | 4,653 | 4,800 | ||
| Administrative expenses | -32,610 | -33,425 | -10,649 | -11,420 | ||
| Selling and marketing expenses | -5,581 | -6,107 | -86 | -99 | ||
| Other expenses | -2,348 | -5,994 | -430 | -838 | ||
| Profit before interest, taxes, depreciation, amortization and impairment |
78,702 | 91,014 | 3,139 | 8,993 | ||
| Depreciation and amortization related to cost of sales | -27,225 | -26,309 | -3,511 | -3,495 | ||
| Depreciation and amortization related to administrative and selling expenses |
-1,201 | -1,483 | -482 | -278 | ||
| Impairment of tangible and intangible assets related to cost of sales |
- | -1,002 | - | - | ||
| Profit/(loss) before interest and taxes | 50,276 | 62,220 | -854 | 5,220 | ||
| Expenses from participations and investments | -123 | - | -123 | - | ||
| Finance income | 547 | 366 | 59 | 2 | ||
| Finance costs | -18,420 | -15,094 | -3,836 | -4,080 | ||
| Gains/(losses) from foreign exchange differences | 2,497 | -12,160 | 1,219 | -1,359 | ||
| Share of losses of associates and joint ventures | -2,166 | -2,933 | - | - | ||
| Profit/(loss) before taxes | 32,611 | 32,399 | -3,535 | -217 | ||
| Income tax | -8,102 | -13,310 | 81 | -3,647 | ||
| Profit/(loss) for the period | 24,509 | 19,089 | -3,454 | -3,864 | ||
| Attributable to: | ||||||
| Equity holders of the parent | 23,899 | 17,808 | ||||
| Non-controlling interests | 610 | 1,281 | ||||
| 24,509 | 19,089 | |||||
| Basic earnings per share (in €) 19 |
0.2974 | 0.2207 | ||||
| Diluted earnings per share (in €) 19 |
0.2959 | 0.2191 |
*IFRS 9 and 15 have been applied with the cumulative impact recognised in retained earnings without restating the 2017 comparatives (note 2).
| (all amounts in Euro thousands) | Group | Company | ||||
|---|---|---|---|---|---|---|
| For the three months ended 30/6 |
For the three months ended 30/6 |
|||||
| Note | 2018 | 2017* | 2018 | 2017* | ||
| Profit/(loss) for the period | 24,509 | 19,089 | -3,454 | -3,864 | ||
| Other comprehensive income/(loss): | ||||||
| Other comprehensive incoce/(loss) to be reclassified to profit or loss in subsequent periods: |
||||||
| Exchange differences on translation of foreign operations |
17,325 | -55,261 | - | - | ||
| Currency translation differences on transactions designated as part of net investment in foreign operation |
3,084 | -5,196 | - | - | ||
| Deferred tax | -694 2,390 |
1,170 -4,026 |
- - |
- - |
||
| Net other comprehensive income/(loss) to be | ||||||
| reclassified to profit or loss in subsequent periods: | 19,715 | -59,287 | - | - | ||
| Other comprehensive income not to be reclassified to profit or loss in subsequent periods: |
||||||
| Asset revaluation surplus | - | 140 | - | 150 | ||
| Deferred tax | - | -44 | - | -44 | ||
| - | 96 | - | 106 | |||
| Net other comprehensive income not being reclassified to profit or loss in subsequent periods: |
- | 96 | - | 106 | ||
| Other comprehensive income/(loss) for the period, net of tax |
19,715 | -59,191 | - | 106 | ||
| Total comprehensive income/(loss) for the period net of tax |
44,224 | -40,102 | -3,454 | -3,758 | ||
| Attributable to: | ||||||
| Equity holders of the parent | 41,929 | -38,556 | ||||
| Non-controlling interests | 2,295 | -1,546 | ||||
| 44,224 | -40,102 |
*IFRS 9 and 15 have been applied with the cumulative impact recognised in retained earnings without restating the 2017 comparatives (note 2).
| (all amounts in Euro thousands) | Group | Company | |||
|---|---|---|---|---|---|
| Assets | Note | 30/06/2018 | 31/12/2017* | 30/06/2018 | 31/12/2017* |
| Property, plant & equipment | 8 | 1,482,364 | 1,466,046 | 249,970 | 252,944 |
| Investment properties | 15 | 12,130 | 12,130 | 8,937 | 8,937 |
| Intangible assets and goodwill | 9 | 357,991 | 345,971 | 9,187 | 8,093 |
| Investments in subsidiaries | 11 | - | - | 663,209 | 778,805 |
| Investments in associates & joint ventures | 10,11 | 150,251 | 160,904 | - | - |
| Derivative financial instruments | 15 | 671 | 1,434 | - | - |
| Available-for-sale financial assets | 15 | - | 517 | - | 122 |
| Other non-current assets | 16 | 17,935 | 11,442 | 3,396 | 3,375 |
| Deferred tax asset | 7 | 4,480 | 2,926 | - | - |
| Non-current assets | 2,025,822 | 2,001,370 | 934,699 | 1,052,276 | |
| Inventories | 23 | 277,740 | 258,204 | 68,704 | 65,410 |
| Trade receivables | 15 | 124,151 | 115,429 | 36,985 | 37,883 |
| Prepayments and other current assets | 24 | 95,852 | 64,205 | 78,199 | 29,966 |
| Derivative financial instruments | 15 | 1,653 | 2,012 | - | - |
| Cash and cash equivalents | 15 | 189,430 | 154,247 | 83,120 | 29,323 |
| Current assets | 688,826 | 594,097 | 267,008 | 162,582 | |
| Assets held for sale | 353 | - | - | - | |
| Total Assets | 2,715,001 | 2,595,467 | 1,201,707 | 1,214,858 | |
| Equity and Liabilities | |||||
| Share Capital 84,632,528 shares of €3.45 (2017: €3.00) | 17 | 291,982 | 253,897 | 291,982 | 253,897 |
| Share premium | 17 | 22,826 | 22,826 | 22,826 | 22,826 |
| Share options | 12 | 2,724 | 3,003 | 2,724 | 3,003 |
| Treasury shares | 17 | -109,229 | -105,384 | -109,229 | -105,384 |
| Other Reserves | 18 | 561,145 | 723,716 | 458,185 | 540,288 |
| Retained earnings | 503,280 | 409,155 | 14,820 | 29,502 | |
| Equity attributable to equity holders of the parent | 1,272,728 | 1,307,213 | 681,308 | 744,132 | |
| Non-controlling interests | 62,782 | 62,459 | - | - | |
| Total equity (a) | 1,335,510 | 1,369,672 | 681,308 | 744,132 | |
| Long-term borrowings | 15,26 | 907,960 | 820,382 | 390,720 | 379,218 |
| Deferred tax liability | 7 | 50,445 | 39,644 | 4,101 | 6,078 |
| Retirement benefit obligations | 30,751 | 32,440 | 15,187 | 15,410 | |
| Provisions | 14 | 26,893 | 30,172 | 7,012 | 6,944 |
| Other non-current liabilities | 6,209 | 6,711 | 3,775 | 3,795 | |
| Total non-current liabilities | 1,022,258 | 929,349 | 420,795 | 411,445 | |
| Short-term borrowings | 15,26 | 32,543 | 56,825 | 8 | 32 |
| Trade payables | 146,272 | 131,885 | 28,382 | 20,811 | |
| Current contract liabilities | 15,038 | - | 235 | - | |
| Οther current liabilities | 25 | 139,435 | 96,548 | 63,426 | 30,170 |
| Derivative financial instruments | 15 | 3,622 | - | - | - |
| Current income tax payable | 1,335 | 2,630 | - | - | |
| Provisions | 14 | 18,988 | 8,558 | 7,553 | 8,268 |
| Total current liabilities | 357,233 | 296,446 | 99,604 | 59,281 | |
| Total liabilities (b) | 1,379,491 | 1,225,795 | 520,399 | 470,726 | |
| Total Equity and Liabilities (a+b) | 2,715,001 | 2,595,467 | 1,201,707 | 1,214,858 |
*IFRS 9 and 15 have been applied with the cumulative impact recognised in retained earnings without restating the 2017 comparatives (note 2).
| (all amounts in Euro thousands) | Attributable to equity holders of the parent | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Group | Ordinary shares |
Share premium | Preferred ordinary shares |
Share options | Ordinary treasury shares |
Preferred treasury shares |
Other reserves (note 18) |
Retained earnings |
Total | Non controlling interests |
Total equity |
| Balance at 1 January 2017 | 308,254 | 22,826 | 30,276 | 2,978 | -100,408 | -1,045 | 839,364 | 374,106 | 1,476,351 | 76,465 | 1,552,816 |
| Profit for the period | - | - | - | - | - | - | - | 13,937 | 13,937 | 1,225 | 15,162 |
| Other comprehensive loss | - | - | - | - | - | - | -69,753 | - | -69,753 | -3,567 | -73,320 |
| Total comprehensive (loss)/income for the period | - | - | - | - | - | - | -69,753 | 13,937 | -55,816 | -2,342 | -58,158 |
| Share capital decrease (note 20) | -77,064 | - | -7,569 | - | - | - | - | - | -84,633 | - | -84,633 |
| Dividends distributed to ordinary and preferred shares (note 20) | - | - | - | - | - | - | - | -8,463 | -8,463 | - | -8,463 |
| Dividends distributed to non-controlling interests | - | - | - | - | - | - | - | - | - | -788 | -788 |
| Treasury shares purchased (note 17) | - | - | - | - | - | -63 | - | - | -63 | - | -63 |
| Sale - disposal of treasury shares for option plan | - | - | - | - | 607 | - | - | -373 | 234 | - | 234 |
| Costs for share capital increase in subsidiaries | - | - | - | - | - | - | - | -481 | -481 | - | -481 |
| Non-controlling interest's participation in share capital increase | - | - | - | - | - | - | - | - | - | 807 | 807 |
| Acquisition of non-controlling interests (note 22) | - | - | - | - | - | - | 60 | 1,167 | 1,227 | -1,227 | - |
| Non-controlling interest's put option recognition (note 22) | - | - | - | - | - | - | -1,061 | - | -1,061 | -815 | -1,876 |
| Share based payment transactions | - | - | - | 605 | - | - | - | - | 605 | - | 605 |
| Transfer among reserves | - | - | - | -1,100 | - | - | 17,454 | -16,354 | - | - | - |
| Balance at 30 June 2017 | 231,190 | 22,826 | 22,707 | 2,483 | -99,801 | -1,108 | 786,064 | 363,539 | 1,327,900 | 72,100 | 1,400,000 |
| Balance at 31 December 2017 | 231,190 | 22,826 | 22,707 | 3,003 | -103,952 | -1,432 | 723,716 | 409,155 | 1,307,213 | 62,459 | 1,369,672 |
| Change in accounting policy (note 2) | - | - | - | - | - | - | 888 | -1,357 | -469 | 1 | -468 |
| Restated balance at 1 January 2018 | 231,190 | 22,826 | 22,707 | 3,003 | -103,952 | -1,432 | 724,604 | 407,798 | 1,306,744 | 62,460 | 1,369,204 |
| Profit for the period | - | - | - | - | - | - | - | 24,843 | 24,843 | 809 | 25,652 |
| Other comprehensive (loss)/income | - | - | - | - | - | - | -5,980 | - | -5,980 | 1,184 | -4,796 |
| Total comprehensive (loss)/income for the period | - | - | - | - | - | - | -5,980 | 24,843 | 18,863 | 1,993 | 20,856 |
| Share capital decrease (notes 17,20) | -38,531 | - | -3,784 | - | - | - | - | - | -42,315 | - | -42,315 |
| Share capital increase (note 17) | 73,210 | - | 7,190 | - | - | - | -80,400 | - | - | - | - |
| Taxes and other expenses due to share capital increase | - | - | - | - | - | - | -2,946 | - | -2,946 | - | -2,946 |
| Dividends distributed to ordinary and preferred shares (note 20) | - | - | - | - | - | - | - | -4,231 | -4,231 | - | -4,231 |
| Dividends distributed to non-controlling interests | - | - | - | - | - | - | - | - | - | -975 | -975 |
| Treasury shares purchased (note 17) | - | - | - | - | -3,394 | -846 | - | - | -4,240 | - | -4,240 |
| Costs for share capital increase in subsidiaries | - | - | - | - | - | - | - | -1,100 | -1,100 | - | -1,100 |
| Sale - disposal of treasury shares for option plan | - | - | - | - | 395 | - | - | -240 | 155 | - | 155 |
| Increase of non-controlling interest's participation (note 11) | - | - | - | - | - | - | -3 | -23 | -26 | 86 | 60 |
| Non-controlling interest's put option recognition (note 22) | - | - | - | - | - | - | 1,219 | - | 1,219 | -782 | 437 |
| Share based payment transactions | - | - | - | 605 | - | - | - | - | 605 | - | 605 |
| Transfer among reserves | - | - | - | -884 | - | - | -75,349 | 76,233 | - | - | - |
| Balance at 30 June 2018 | 265,869 | 22,826 | 26,113 | 2,724 | -106,951 | -2,278 | 561,145 | 503,280 | 1,272,728 | 62,782 | 1,335,510 |
(all amounts in Euro thousands)
| Company | Ordinary shares |
Share premium | Preferred ordinary shares |
Share options | Ordinary treasury shares |
Preferred treasury shares |
Other reserves (note 18) |
Retained earnings |
Total equity |
|---|---|---|---|---|---|---|---|---|---|
| Balance at 1 January 2017 | 308,254 | 22,826 | 30,276 | 2,978 | -100,408 | -1,045 | 538,403 | 25,985 | 827,269 |
| Loss for the period | - | - | - | - | - | - | -8,123 | -8,123 | |
| Other comprehensive income | - | - | - | - | - | - | 106 | - | 106 |
| Total comprehensive income/(loss) for the period | - | - | - | - | - | - | 106 | -8,123 | -8,017 |
| Share capital decrease (note 20) | -77,064 | - | -7,569 | - | - | - | - | - | -84,633 |
| Dividends distributed to ordinary and preferred shares (note 20) | - | - | - | - | - | - | - | -8,463 | -8,463 |
| Treasury shares purchased (note 17) | - | - | - | - | - | -63 | - | - | -63 |
| Sale - disposal of treasury shares for option plan | - | - | - | - | 607 | - | - | -373 | 234 |
| Share based payment transactions | - | - | - | 605 | - | - | - | - | 605 |
| Transfer among reserves | - | - | - | -1,100 | - | - | 1,890 | -790 | - |
| Balance at 30 June 2017 | 231,190 | 22,826 | 22,707 | 2,483 | -99,801 | -1,108 | 540,399 | 8,236 | 726,932 |
| Balance at 31 December 2017 | 231,190 | 22,826 | 22,707 | 3,003 | -103,952 | -1,432 | 540,288 | 29,502 | 744,132 |
| Change in accounting policy (note 2) | - | - | - | - | - | - | - | -946 | -946 |
| Restated balance at 1 January 2018 | 231,190 | 22,826 | 22,707 | 3,003 | -103,952 | -1,432 | 540,288 | 28,556 | 743,186 |
| Loss for the period | - | - | - | - | - | - | - | -8,906 | -8,906 |
| Total comprehensive loss for the period | - | - | - | - | - | - | - | -8,906 | -8,906 |
| Share capital decrease (notes 17,20) | -38,531 | - | -3,784 | - | - | - | - | - | -42,315 |
| Share capital increase (note 17) | 73,210 | - | 7,190 | - | - | - | -80,400 | - | - |
| Taxes and other expenses due to share capital increase | - | - | - | - | - | - | -2,946 | - | -2,946 |
| Dividends distributed to ordinary and preferred shares (note 20) | - | - | - | - | - | - | - | -4,231 | -4,231 |
| Treasury shares purchased (note 17) | - | - | - | - | -3,394 | -846 | - | - | -4,240 |
| Sale - disposal of treasury shares for option plan | - | - | - | - | 395 | - | - | -240 | 155 |
| Share based payment transactions | - | - | - | 605 | - | - | - | - | 605 |
| Transfer among reserves | - | - | - | -884 | - | - | 1,243 | -359 | - |
| Balance at 30 June 2018 | 265,869 | 22,826 | 26,113 | 2,724 | -106,951 | -2,278 | 458,185 | 14,820 | 681,308 |
| (all amounts in Euro thousands) | Group | Company | ||||
|---|---|---|---|---|---|---|
| For the six months ended 30/6 | For the six months ended 30/6 | |||||
| Note | 2018 | 2017* | 2018 | 2017* | ||
| Cash flows from operating activities | ||||||
| Profit/(loss) before taxes | 35,217 | 31,702 | -10,883 | -5,868 | ||
| Adjustments for: | ||||||
| Depreciation/amortization & impairment of tangible and intangible assets | 8.9 | 55,361 | 57,323 | 8,018 | 7,941 | |
| Provisions | -214 | 3,974 | -1,531 | 771 | ||
| Exchange differences | -4,542 | 17,140 | -196 | 1,458 | ||
| Expenses from participations & investments | 123 | - | 123 | - | ||
| Interest expense/income | 31,486 | 28,319 | 7,299 | 7,923 | ||
| Other adjustments | 4,977 | 9,009 | 1,018 | 410 | ||
| Adjusted profit before changes in working capital | 122,408 | 147,467 | 3,848 | 12,635 | ||
| Increase in inventories | -14,340 | -35,664 | -3,279 | -11,465 | ||
| (Increase)/decrease in trade and other receivables | -30,604 | -27,293 | -10,844 | 6,467 | ||
| (Increase)/decrease in operating long-term payables/receivables | -7,507 | -418 | -17 | 1 | ||
| Increase/(decrease)/in trade and other payables (excluding banks) | 14,591 | 3,542 | -7,679 | 3,232 | ||
| Cash generated from/(used in) operations | 84,548 | 87,634 | -17,971 | 10,870 | ||
| Income tax paid | -4,514 | -7,799 | -774 | -2,686 | ||
| Net cash flows from/(used in)operating activities | 80,034 | 79,835 | -18,745 | 8,184 | ||
| Cash flows from investing activities | ||||||
| Acquisition of subsidiary, associate and joint venture | - | -14,392 | - | - | ||
| (Payments)/proceeds for share capital increase/decrease in subsidiaries, joint | ||||||
| ventures and associates | -14,206 | -23,061 | 75,618 | 84,133 | ||
| Purchase of tangible assets and investment properties | 8 | -41,804 | -71,200 | -5,070 | -7,519 | |
| Purchase of intangible assets | 9 | -13,297 | -781 | -1,169 | -675 | |
| Proceeds from sale of tangible and intangible assets | 8.9 | 1,090 | 322 | 6 | 36 | |
| Costs paid for the disposal of tangible assets | 8 | - | -602 | - | - | |
| Proceeds from dividends | 593 | 939 | 4,712 | 792 | ||
| Interest received | 832 | 411 | 51 | 2 | ||
| Net cash flows (used in)/from investing activities | -66,792 | -108,364 | 74,148 | 76,769 | ||
| Cash flows from financing activities | ||||||
| Proceeds from non-controlling interest's participation in subsidiary's share capital | ||||||
| increase | - | 807 | - | - | ||
| Costs paid for share capital increases | -1,157 | -481 | -80 | - | ||
| Interest paid | -22,117 | -29,700 | -6,912 | -7,961 | ||
| Payments from share capital decrease of the Parent Company | -16 | -83,781 | -16 | -83,781 | ||
| Proceeds from sale of treasury shares | 155 | 234 | 155 | 234 | ||
| Payments for purchase of treasury shares | -4,240 | -63 | -4,240 | -63 | ||
| Dividends paid to shareholders | -500 | -8,399 | -500 | -8,399 | ||
| Dividends written-off and paid to the Greek State | - | -23 | - | -23 | ||
| Dividends paid to non-controlling interests | -254 | - | - | - | ||
| Proceeds from government grants | 72 | - | 72 | - | ||
| Proceeds from borrowings | 193,284 | 365,280 | 14,003 | 110,340 | ||
| Repayment of borrowings | -145,928 | -303,467 | -4,030 | -94,262 | ||
| Net cash flows from/(used in) financing activities | 19,299 | -59,593 | -1,548 | -83,915 | ||
| Net increase/(decrease) in cash and cash equivalents | 32,541 | -88,122 | 53,855 | 1,038 | ||
| Cash and cash equivalents at start of period | 154,247 | 179,710 | 29,323 | 11,218 | ||
| Effects of exchange rate changes | 2,642 | -2,172 | -58 | -264 | ||
| Cash and cash equivalents at end of period | 189,430 | 89,416 | 83,120 | 11,992 |
*IFRS 9 and 15 have been applied with the cumulative impact recognised in retained earnings without restating the 2017 comparatives (note 2).
The primary financial statements should be read in conjunction with the accompanying notes.
4
| 1. General information | 18 |
|---|---|
| 2. Basis of preparation and summary of significant accounting policies | 18 |
| 3. Estimates | 24 |
| 4. Seasonality of operations | 24 |
| 5. Segment information | 25 |
| 6. Number of employees | 25 |
| 7. Income tax | 26 |
| 8. Property, plant and equipment | 26 |
| 9. Intangible assets | 27 |
| 10. Interest in associates and joint ventures | 27 |
| 11. Group composition | 28 |
| 12. Share-based payments | 30 |
| 13. Fiscal years unaudited | 31 |
| 14. Provisions | 31 |
| 15. Financial instruments and fair value measurement | 32 |
| 16. Other non-current assets | 34 |
| 17. Share capital and premium | 35 |
| 18. Other reserves | 36 |
| 19. Earnings per share | 37 |
| 20. Dividends and return of capital | 37 |
| 21. Related party transactions | 37 |
| 22. Contingencies and commitments | 39 |
| 23. Inventories | 41 |
| 24. Prepayments and other current assets | 41 |
| 25. Οther current liabilities | 41 |
| 26. Borrowings | 41 |
| 27. Foreign exchange differences | 42 |
| 28. Events after the reporting period | 42 |
| 29. Principal exchange rates | 42 |
5
Titan Cement Co. S.A. (the Company) and, its subsidiaries (collectively the Group) are engaged in the production, trade and distribution of a wide range of construction materials, including cement, concrete, aggregates, cement blocks, dry mortars and fly ash. The Group operates primarily in Greece, the Balkans, Egypt, Turkey, the USA and Brazil.
Information on the Group's structure is provided in note 11. Information on other related party relationships of the Group and the Company is provided in note 21.
The Company is a limited liability company incorporated and domiciled in Greece at 22A Halkidos Street - 111 43 Athens with the registration number in the General Electronic Commercial Registry: 224301000 (formerly the Register of Sociétés Anonymes Number: 6013/06/Β/86/90) and is listed on the Athens Stock Exchange.
These interim condensed financial statements (the financial statements) were approved for issue by the Board of Directors on 25 July 2018.
These financial statements for the six-month period ended 30 June 2018 have been prepared by management in accordance with International Accounting Standard (IAS) 34 "Interim Financial Reporting".
The financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's annual financial statements as at 31 December 2017.
However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual group financial statements.
The accounting policies adopted in the preparation of the interim condensed financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2017, except for the new or revised standards, amendments and/or interpretations that are mandatory for the periods beginning on or after 1 January 2018.
IFRS 16 has issued in January 2016 and supersedes IAS 17. The objective of the standard is to ensure the lessees and lessors provide relevant information in a manner that faithfully represents those transactions. IFRS 16 introduces a single lessee accounting model and requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. IFRS 16 substantially carries forward the lessor accounting requirements in IAS 17. Accordingly, a lessor continues to classify its leases as operating leases or finance leases, and to account for those two types of leases differently.
The standard will affect primarily the accounting for the Group's and the Company's operating leases. As at the reporting date, the Group and the Company have non-cancellable operating lease commitments of €45,068 thousand and €1,811 thousand respectively (note 22). However, the assessment has not yet been completed and it has not yet been determined to what extent
5
these commitments will result in the recognition of an asset and a liability for future payments and how this will affect their profit and classification of cash flows.
The standard is mandatory for first interim periods within annual reporting periods beginning on or after 1 January 2019. The Group and the Company do not intend to adopt the standard before its effective date and they may use the exception for short-term and low-value leases.
IFRS 15 supersedes IAS 11 "Construction Contracts", IAS 18 "Revenue" and related Interpretations and it applies to all revenue arising from contracts with customers, unless those contracts are in the scope of other standards. The new standard establishes a five-step model to account for revenue arising from contracts with customers. Under IFRS 15, revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The standard requires entities to exercise judgement, taking into consideration all of the relevant facts and circumstances when applying each step of the model to contracts with their customers. The standard also specifies the accounting for the incremental costs of obtaining a contract and the costs directly related to fulfilling a contract.
On 1.1.2018, the Group and the Company adopted IFRS 15 by using the modified retrospective approach, meaning that the cumulative impact of the adoption was recognized in retained earnings and comparatives were not restated. However, they had no impact on their profitability, liquidity or financial position by applying IFRS 15 for the first time. Therefore, opening retained earnings for 2018 were not adjusted.
Revenue is the amount of consideration expected to be received in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties (value-added tax, other sales taxes etc.). Variable considerations are included in the transaction price and they are estimated using either the expected value method, or the most likely amount method.
Revenue is recognized when (or as) a performance obligation is satisfied by transferring the control of a promised good or service to the customer. A customer obtains control of a good or service if it has the ability to direct the use of and obtain substantially all of the remaining benefits from that good or service. Control is transferred over time or at a point in time.
Revenue from the sale of goods is recognised when control of the good is transferred to the customer, usually upon delivery and there is no unfulfilled obligation that could affect the customer's acceptance of the products. The main products of the Group are cement, clinker, ready-mix, fly ash and other cementitious products.
Revenue arising from services is recognised in the accounting period in which the services are rendered, and it is measured using either output methods or input methods, depending on the nature of service provided.
A receivable is recognised when there is an unconditional right to consideration for the performance obligations to the customer that are satisfied.
A contract asset is recognized when the performance obligation to the customer is satisfied before the customers pays or before payment is due, usually when goods or services are transferred to the customer before the Group or the Company has a right to invoice.
A contract liability is recognized when there is an obligation to transfer goods or services to a customer
for which the Group or the Company has received consideration from the customer (prepayments) or there is an unconditional right to receive consideration before the Group or the Company transfers a good or a service (deferred income). The contract liability is derecognized when the promise is fulfilled and revenue is recorded in the profit or loss statement.
Revenue from rental income arising, from operating leases, is accounted for on a straight-line basis over the lease terms.
5
IFRS 9 "Financial Instruments" replaces IAS 39 "Financial Instruments: Recognition and Measurement" for annual periods beginning on or after 1 January 2018, bringing together all three aspects of the accounting for financial instruments: classification and measurement, impairment and hedge accounting.
The Group and the Company applied the standard retrospectively without restatement of the comparative information for prior years, on 1 January 2018, except for hedge accounting. In 2017, the Group and the Company neither had applied hedge accounting, nor they chose application of hedge accounting on 1 January 2018 under the new standard. Therefore, they continue to apply their current accounting policy for hedge accounting, even though they will examine the commencement of hedge accounting requirements under IFRS 9, whenever a new hedge relationship arises.
IFRS 9 was adopted without restating comparative information and therefore the adjustments arising from the new classification and impairment rules are not reflected in the statement of financial position on 31 December 2017, but are recognised in the opening statement of financial position on 1 January 2018.
On 1 January 2018 (the date of initial application of IFRS 9), the Group's (and the Company's) management has assessed which business models apply to the financial assets held by the Group and the Company and has classified its financial assets into the appropriate IFRS 9 categories. The main effects resulting from this reclassification are as follows: (all am ounts in Euro thousands)
| Group | Financial assets | |||||||
|---|---|---|---|---|---|---|---|---|
| Categories under IFRS 9 | Fair value through profit or loss |
Fair value through other comprehensive income |
Amortized cost | |||||
| Categories under IAS 39 | Fair value through profit or loss |
Available-for sale |
Loans and receivables |
|||||
| Balance at 31 December 2017 - IAS 39 | 3,446 | 517 | 305,067 | |||||
| Reclassification of investments from available-for sale to FVPL |
517 | -517 | - | |||||
| Increase in provision for trade receivables - full method of consolidation affiliates |
- | - | -438 | |||||
| Decrease in net deferred tax liabilities relating to impairment provisions |
- | - | 39 | |||||
| Restated balance at 1 January 2018 - IFRS 9 | 3,963 | - | 304,668 |
On 1 January 2018, the investments of the Group's subsidiaries in non-listed shares and funds in property were reclassified from available-for-sale financial assets to financial assets at FVPL, as their cash flows do not represent solely payments of principal and interest. Moreover, the related revaluation reserve that amounted to a loss of €888 thousand on 1 January 2018, was transferred to retained earnings.
In addition, the Group applied the IFRS 9 simplified approach to measure expected credit losses (ECLs) on the trade and other receivables balances at the date of initial application. The result of the new requirements was an increase in the Group's impairment allowances of €438 thousand and a decrease
in deferred tax liability of €39 thousand with a corresponding impact in the opening retained earnings. Moreover, the new requirements impacted the entities that are consolidated with the equity method of consolidation, resulting in a decrease in the investments of associates and joint ventures, amounted to €70 thousand, with a corresponding decrease in the opening retained earnings.
There was no impact from the classification and measurement of the financial liabilities of the Group.
Likewise, the Company's management assessed the business models and the contractual cash flow characteristics of its previously held available-for-sale financial assets amounted to €122 thousand. The assessment resulted in their reclassification to the financial assets at fair value through profit or loss category with no impact in the opening retained earnings on 1.1.2018.
However, there was a loss of €946 thousand recognised in the Company's retained earnings because of a financial liability modification. Specifically, on 30.11.2017, the Company entered into an amendment with a Group's subsidiary modifying the terms of an intragroup loan.
The impact of the changes of classification and impairment on the Group's and Company's equity is as follows:
| Revaluation reserve | Retained earnings | |||
|---|---|---|---|---|
| (all am ounts in Euro thousands) |
Group | Company | Group | Company |
| Balance at 31 December 2017 - IAS 39 | 39,281 | 2,515 | 409,155 | 29,502 |
| Reclassification of investments from available-for sale to FVPL |
888 | - | -888 | - |
| Increase in provision for trade receivables - full method of consolidation affiliates |
- | - | -438 | - |
| Increase in provision for trade receivables - equity method of consolidation affiliates |
- | - | -70 | - |
| Decrease in net deferred tax liabilities relating to impairment provisions |
- | - | 39 | - |
| Increase in long-term borrowings due to modification of contractual cash flows |
- | - | - | -946 |
| Adjustment to Retained Earnings from adoption of IFRS 9 on 1 January 2018 |
888 | - | -1,357 | -946 |
| Restated balance at 1 January 2018 - IFRS 9 | 40,169 | 2,515 | 407,798 | 28,556 |
5
The Group and the Company initially measure a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Transaction costs of financial assets carried at fair value through profit or loss are expenses. Trade receivables are initially measured at their transaction price.
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.
Under IFRS 9, debt financial instruments are subsequently measured at amortised cost, fair value through other comprehensive income (FVOCI) or fair value through profit or loss (FVPL). The classification is based on two criteria: a) the business model for managing the assets and b) whether the instruments' contractual cash flows represent "solely payments of principal and interest" on the principal amount outstanding (the 'SPPI criterion').
The new classification and measurement of the Group's and the Company's debt financial assets are, as follows:
Other financial assets are classified and subsequently measured, as follows:
The Group and the Company record an allowance for expected credit losses (ECLs) for all financial assets not held at FVPL.
ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group (or the Company) expects to receive. The shortfall is then discounted at an approximation to the asset's original effective interest rate.
For contract assets, trade receivables and lease receivables, the Group and the Company have applied the standard's simplified approach and have calculated ECLs based on lifetime expected credit losses.
For other financial assets, the ECL is based on the 12-month ECL. The 12-month ECL is the portion of lifetime ECLs that results from default events on a financial instrument that are possible within 12 months after the reporting date. However, when there has been a significant increase in credit risk since origination, the allowance will be based on the lifetime ECL.
The following table summarizes the adjustments recognised for each individual line item of the statements of financial position on 1.1.2018, because of the adoption of IFRS 9 and IFRS 15:
| statements of financial position on 1.1.2018, because of the adoption of IFRS 9 and IFRS 15: | ||||||||
|---|---|---|---|---|---|---|---|---|
| (all am ounts in Euro thousands) |
Group | Company | ||||||
| Assets | 31/12/2017 | IFRS 15 - transition adjustments |
IFRS 9 - transition adjustments |
1/1/2018 - restated |
31/12/2017 | IFRS 15 - transition adjustments |
IFRS 9 - transition adjustments |
1/1/2018 - restated |
| Property, plant & equipment | 1,466,046 | - | - | 1,466,046 | 252,944 | - | - | 252,944 |
| Investment properties | 12,130 | - | - | 12,130 | 8,937 | - | - | 8,937 |
| Intangible assets and goodwill Investments in subsidiaries |
345,971 - |
- - |
- - |
345,971 - |
8,093 778,805 |
- - |
- - |
8,093 778,805 |
| Investments in associates & joint ventures | 160,904 | - | -70 | 160,834 | - | - | - | - |
| Derivative financial instruments | 1,434 | - | - | 1,434 | - | - | - | - |
| Available-for-sale financial assets | 517 | - | -517 | - | 122 | - | -122 | - |
| Other non-current assets | 11,442 | - | 487 | 11,929 | 3,375 | - | 122 | 3,497 |
| Deferred tax asset | 2,926 | - | - | 2,926 | - | - | - | - |
| Non-current assets | 2,001,370 | - | -100 | 2,001,270 | 1,052,276 | - | - | 1,052,276 |
| Inventories | 258,204 | - | - | 258,204 | 65,410 | - | - | 65,410 |
| Trade receivables | 115,429 | - | -437 | 114,992 | 37,883 | - | - | 37,883 |
| Prepayments and other current assets | 64,205 | - | 30 | 64,235 | 29,966 | - | - | 29,966 |
| Derivative financial instruments | 2,012 | - | - | 2,012 | - | - | - | - |
| Available-for-sale financial assets | - | - | - | - | - | - | - | - |
| Cash and cash equivalents | 154,247 | - | - | 154,247 | 29,323 | - | - | 29,323 |
| Current assets | 594,097 | - | -407 | 593,690 | 162,582 | - | - | 162,582 |
| Total Assets | 2,595,467 | - | -507 | 2,594,960 | 1,214,858 | - | - | 1,214,858 |
| Equity and Liabilities | ||||||||
| Share Capital | 253,897 | - | - | 253,897 | 253,897 | - | - | 253,897 |
| Share premium Share options |
22,826 3,003 |
- - |
- - |
22,826 3,003 |
22,826 3,003 |
- - |
- - |
22,826 3,003 |
| Treasury shares | -105,384 | - | - | -105,384 | -105,384 | - | - | -105,384 |
| Other Reserves | 723,716 | - | 888 | 724,604 | 540,288 | - | - | 540,288 |
| Retained earnings | 409,155 | - | -1,357 | 407,798 | 29,502 | - | -946 | 28,556 |
| Equity attributable to equity holders of the | ||||||||
| parent | 1,307,213 | - | -469 | 1,306,744 | 744,132 | - | -946 | 743,186 |
| Non-controlling interests | 62,459 | - | 1 | 62,460 | - | - | - | - |
| Total equity (a) | 1,369,672 | - | -468 | 1,369,204 | 744,132 | - | -946 | 743,186 |
| Long-term borrowings | 820,382 | - | - | 820,382 | 379,218 | - | 946 | 380,164 |
| Derivative financial instruments | - | - | - | - | - | - | - | - |
| Deferred tax liability | 39,644 | - | -39 | 39,605 | 6,078 | - | - | 6,078 |
| Retirement benefit obligations | 32,440 | - | - | 32,440 | 15,410 | - | - | 15,410 |
| Provisions | 30,172 | - | - | 30,172 | 6,944 | - | - | 6,944 |
| Other non-current liabilities | 6,711 | - | - | 6,711 | 3,795 | - | - | 3,795 |
| Total non-current liabilities | 929,349 | - | -39 | 929,310 | 411,445 | - | 946 | 412,391 |
| Short-term borrowings | 56,825 | - | - | 56,825 | 32 | - | - | 32 |
| Trade payables | 131,885 | - | - | 131,885 | 20,811 | - | - | 20,811 |
| Current contract liabilities | - | 11,610 | - | 11,610 | - | 378 | - | 378 |
| Οther current liabilities | 96,548 | -11,610 | - | 84,938 | 30,170 | -378 | - | 29,792 |
| Current income tax payable | 2,630 | - | - | 2,630 | - | - | - | - |
| Provisions | 8,558 | - | - | 8,558 | 8,268 | - | - | 8,268 |
| Total current liabilities | 296,446 | - | - | 296,446 | 59,281 | - | - | 59,281 |
| Total liabilities (b) | 1,225,795 | - | -39 | 1,225,756 | 470,726 | - | 946 | 471,672 |
| Total Equity and Liabilities (a+b) | 2,595,467 | - | -507 | 2,594,960 | 1,214,858 | - | - | 1,214,858 |
The preparation of the interim condensed financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.
In preparing these interim condensed financial statements, the significant judgments made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the financial statements for the year ended 31 December 2017.
The Group is a supplier of cement, concrete, aggregates and other building materials. The demand for these products is seasonal in temperate countries such as in Europe and North America. Therefore, the Group generally records lower revenues and operating profits during the first and fourth quarters when adverse weather conditions are present in the northern hemisphere. In contrast, sales and profitability tend to be higher during the second and third quarters, as favorable weather conditions support construction activity.
For management information purposes, the Group is structured in five operating segments: Greece and Western Europe, North America, South Eastern Europe, Eastern Mediterranean and Joint Ventures. Each operating segment is a set of countries. The aggregation of countries is based mainly on geographic position.
Each region has a regional Chief Executive Officer (CEO) who reports to the Group's CEO. In addition, the Group's finance department is organized by region for effective financial control and performance monitoring.
Management monitors the operating results of its business units separately for the purpose of making decisions, allocating resources and assessing performance. Segment performance is evaluated based on Earnings before interest, taxes, depreciation, amortization & impairment.
| (all amounts in Euro thousands) | Greece and Western Europe |
North America | Southeastern Europe |
Eastern Mediterranean |
Total | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| Period from 1/1-30/6 | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 |
| Gross revenue | 145,137 | 166,764 | 414,375 | 456,163 | 104,183 | 112,536 | 80,559 | 80,679 | 744,254 | 816,142 |
| Inter-segment revenue | -30,562 | -37,625 | -102 | -114 | -1,085 | -4,582 | - | - | -31,749 | -42,321 |
| Revenue from external customers | 114,575 | 129,139 | 414,273 | 456,049 | 103,098 | 107,954 | 80,559 | 80,679 | 712,505 | 773,821 |
| Profit before interest, taxes, depreciation, amortization and impairment |
5,243 | 13,732 | 80,219 | 92,411 | 23,936 | 23,594 | 12,819 | 12,381 | 122,217 | 142,118 |
| Depreciation, amortization and impairment of tangible and intangible assets |
-10,065 | -11,700 | -29,008 | -28,759 | -11,108 | -11,569 | -5,180 | -5,295 | -55,361 | -57,323 |
| Profit/(loss) before interest and taxes | -4,822 | 2,032 | 51,211 | 63,652 | 12,828 | 12,025 | 7,639 | 7,086 | 66,856 | 84,795 |
| (all amounts in Euro thousands) | Greece and Western Europe |
North America | Southeastern Europe |
Eastern Mediterranean |
Total | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| 30/6/2018 | 31/12/2017 | 30/6/2018 | 31/12/2017 | 30/6/2018 | 31/12/2017 | 30/6/2018 | 31/12/2017 | 30/6/2018 | 31/12/2017 | |
| Total assets of segments excluding Joint Ventures Total assets of Joint Ventures |
630,152 | 580,878 | 1,033,219 | 996,778 | 505,630 | 481,987 | 404,436 | 382,622 | 2,573,437 141,564 |
2,442,265 153,202 |
| Total assets | 2,715,001 | 2,595,467 | ||||||||
| Total liabilities | 422,830 | 375,486 | 537,044 | 461,473 | 142,586 | 137,395 | 277,031 | 251,441 | 1,379,491 | 1,225,795 |
Finance income/expenses, and fair value gains and losses on financial assets are not allocated to individual segments as the underlying instruments are managed on a Group basis.
| (all amounts in Euro thousands) | Group | |
|---|---|---|
| ended 30/6 | For the six months | |
| 2018 | 2017 | |
| Profit before interest and taxes | 66,856 | 84,795 |
| Expenses from participations and investments | -123 | - |
| Finance income | 839 | 564 |
| Finance costs | -32,756 | -29,091 |
| Gains/(losses) from foreign exchange differences | 4,542 | -17,140 |
| Share of profit of associates | 535 | 664 |
| Share of loss of joint ventures | -4,676 | -8,090 |
| Profit before taxes | 35,217 | 31,702 |
Number of employees at the end of the reporting period: Group 5,384 (30.6.2017: 5,524), Company 809 (30.6.2017: 847).
The Group and the Company calculate the period income tax using the tax rate that would be applicable to the expected total annual earnings. The major components of income tax in the interim consolidated income statement and the interim statement of comprehensive income are:
| Group | Company | ||||
|---|---|---|---|---|---|
| For the six months ended 30/6 | For the six months ended 30/6 | ||||
| (all amounts in Euro thousands) | 2018 | 2017 | 2018 | 2017 | |
| Current income tax - expense | -1,450 | -6,574 | - | -2,483 | |
| Provision for other taxes | -69 | -2,129 | - | -2,085 | |
| Deferred tax (expense)/benefit | -8,046 | -7,837 | 1,977 | 2,313 | |
| Income tax recognised in income statement - (expense)/benefit Income tax benefit/(expense) recognised in other comprehensive |
-9,565 | -16,540 | 1,977 | -2,255 | |
| income | -359 | 1,393 | - | -44 | |
| Total income tax - (expense)/benefit | -9,924 | -15,147 | 1,977 | -2,299 |
The movement of the net deferred tax liabilities is analyzed as follows:
| Group | Company | |||
|---|---|---|---|---|
| (all amounts in Euro thousands) | 2018 | 2017 | 2018 | 2017 |
| Opening balance 1/1 * | 36,679 | 35,626 | 6,078 | 12,438 |
| Tax expense/(income) during the period recognised in the income statement |
8,046 | 7,837 | -1,977 | -2,313 |
| Income tax (benefit)/expense recognised in other comprehensive | ||||
| income | 359 | -1,393 | - | 44 |
| Exchange differences | 881 | -1,133 | - | - |
| Ending balance 30/6 | 45,965 | 40,937 | 4,101 | 10,169 |
* Restated on 1/1/2018 for IFRS 9 - transition adjustments (note 2)
Deferred income taxes are calculated in full on temporary differences under the liability method using the principal tax rates that apply to the countries in which the companies of the Group operate.
| Group | Company | ||||
|---|---|---|---|---|---|
| (all amounts in Euro thousands) | 2018 | 2017 | 2018 | 2017 | |
| Opening balance 1/1 | 1,466,046 | 1,573,235 | 252,944 | 242,777 | |
| Additions due to acquisitions | - | 978 | - | - | |
| Additions/capitalizations | 44,012 | 71,200 | 5,070 | 7,519 | |
| Disposals (net book value) | -1,193 | -397 | -8 | -17 | |
| Depreciation charge/impairments | -53,650 | -54,864 | -8,033 | -7,938 | |
| Transfers from inventories | - | 282 | - | - | |
| Transfer to intangible assets (note 9) | -3 | -93 | -3 | - | |
| Transfer to investment property | - | -1,116 | - | -150 | |
| Transfer to assets held for sale | -353 | - | - | - | |
| Asset revaluation surplus | - | 140 | - | 150 | |
| Exchange differences | 27,505 | -72,151 | - | - | |
| Other | - | 107 | - | - | |
| Ending balance 30/6 | 1,482,364 - |
1,517,321 - |
249,970 - |
242,341 - |
The assets of the Company have not been pledged. On the Turkish subsidiary Adocim Marmara Cimento Beton Sanayi ve Ticaret A.S. assets, there is a mortgage of €4.6 million, securing its bank credit facilities.
Assets with a net book value of €1,193 thousand were disposed of by the Group during the six months ended 30 June 2018 (1.1-30.6.2017: €397 thousand) resulting in a net loss of €103 thousand (1.1-30.6.2017: loss €677 thousand), part of this loss is cost associated with the disposal of assets amounted to €602 thousand).
The Board of Directors of the Group subsidiary in Bulgaria, Zlatna Panega Cement AD, decided to sell a piece of land located in Sofia. The selling price of the land approximates its carrying amount and the land is expected to be sold to a particular buyer during the year. Hence, the land was transferred from the account of property, plant and equipment to the account assets held for sale.
During the prior period (ended 30.6.2017), an impairment of €1.0 mil. was recognized on items of property, plant and equipment of Group subsidiaries that operate in the segment of North America, Greece and Western Europe. Due to the nature of these items of property, plant and equipment, their recoverable amount was estimated lower than their carrying amount and hence the impairment was recognized in the profit or loss of the period ended 30.6.2017.
(all amounts in Euro thousands)
| Group | Goodwill | Other intangible assets |
Total |
|---|---|---|---|
| Opening balance 1/1/2018 | 287,669 | 58,302 | 345,971 |
| Additions | - | 6,908 | 6,908 |
| Reclassification of assets from property, plant & equipment assets (note 8) |
- | 3 | 3 |
| Depreciation charge/impairments | - | -1,910 | -1,910 |
| Exchange differences | 6,218 | 801 | 7,019 |
| Ending balance 30/6/2018 | 293,887 | 64,104 | 357,991 |
| Opening balance 1/1/2017 | 318,936 | 56,180 | 375,116 |
| Additions | 3 | 781 | 784 |
| Reclassification of assets from property, plant & equipment | |||
| assets (note 8) | - | 93 | 93 |
| Depreciation charge/impairments | - | -2,591 | -2,591 |
| Exchange differences | -19,402 | -2,512 | -21,914 |
| Other | -11 | - | -11 |
| Ending balance 30/6/2017 | 299,526 | 51,951 | 351,477 |
Goodwill is tested for impairment at the end of each fiscal year and whenever circumstances indicate that the carrying value may be impaired.
| Company | Intangible assets | |
|---|---|---|
| 2018 | 2017 | |
| Opening balance 1/1 | 8,093 | 4,458 |
| Additions | 1,169 | 677 |
| Depreciation charge/impairments | -78 | -94 |
| Reclassification of assets from property, plant & equipment | ||
| assets (note 8) | 3 | - |
| Ending balance 30/6 | 9,187 | 5,041 |
The Group interim condensed financial statements incorporate the following companies with the equity method of consolidation:
a) Karierni Materiali Plovdiv AD with ownership percentage 48.711% (31.12.2017: 48.711%), Karierni Materiali AD with ownership percentage 48.764% (31.12.2017: 48.764%), Vris OOD with ownership percentage 48.764% (31.12.2017: 48.764%). The aforementioned companies are based in Bulgaria and operate in the aggregates business.
b) Adocim Cimento Beton Sanayi ve Ticaret A.S. with ownership percentage 50% (31.12.2017: 50%). The Group has joint control over the joint venture and therefore applies the equity method of consolidation. Adocim Cimento Beton Sanayi ve Ticaret A.S. is based in Turkey and operates in the production of cement.
c) ASH Venture LLC with ownership percentage 33% (31.12.2017: 33%) which beneficiates, markets and sells fly ash. ASH Venture LLC is based in USA.
d) Companhia Industrial De Cimento Apodi (Apodi) with ownership percentage 50% (31.12.2017: 50%). The Group has joint control over the joint venture and therefore applies the equity method of consolidation. Apodi is based in Brazil and operates in the production of cement.
e) Ecorecovery S.A. with ownership percentage 48% (31.12.2017: 48%) that processing, managing and trading solid waste for the production of alternative fuels. The company is based in Greece.
f) On 23.2.2018, Ecorecovery S.A., an associate of the Group, acquired the 97% of the voting rights of the Greek company Nordeco S.A., which also processes, manages and trades solid waste for the production of alternative fuels. Since the acquisition date, the company is consolidated in the Group's financial statements with the equity method of consolidation and percentage ownership 46,56%.
The aforementioned companies are not listed on a public exchange market.
The movement of the Group's participation in associates and joint ventures is analyzed as follows:
| 30/06/2018 | 31/12/2017 | |
|---|---|---|
| Opening balance 1/1 * | 160,834 | 170,803 |
| Share of (loss)/profit of associates and joint ventures | -4,141 | -7,488 |
| Dividends | -1,247 | -4,526 |
| Share capital increases | 14,206 | 28,678 |
| Change in ownership interests | - | 209 |
| Exchange differences | -19,401 | -26,767 |
| Other comprehensive losses | - | -5 |
| Ending balance | 150,251 | 160,904 |
* Restated on 1/1/2018 for IFRS 9 - transition adjustments (note 2)
| 30/06/2018 | 31/12/2017 | |||||
|---|---|---|---|---|---|---|
| Subsidiary, associate and joint venture | Country of | % of investment (*) | % of investment (*) | |||
| name | incorporation | Nature of business | Direct | Indirect | Direct | Indirect |
| Full consolidation method | ||||||
| Τitan Cement Company S.A | Greece | Cement producer | Parent company | Parent company | ||
| Aeolian Maritime Company | Greece | Shipping | 100.000 | - | 100.000 | - |
| Aitolika Quarries S.A. | Greece | Quarries & aggregates | - | 63.723 | - | 63.723 |
| Albacem S.A. | Greece | Trading company | 99.996 | 0.004 | 99.996 | 0.004 |
| Arktias S.A. | Greece | Quarries & aggregates | - | 100.000 | - | 100.000 |
| Interbeton Construction Materials S.A. | Greece | Ready mix & aggregates | 99.910 | 0.090 | 99.910 | 0.090 |
| Intertitan Trading International S.A. | Greece | Trading company | 99.999 | 0.001 | 99.999 | 0.001 |
| Porfirion S.A. (1) | Greece | Production and trade of electricity |
- | - | - | 100.000 |
| Gournon Quarries S.A. | Greece | Quarries & aggregates | 54.930 | 45.070 | 54.930 | 45.070 |
| Quarries of Tagaradon Community S.A. (2) | Greece | Quarries & aggregates | - | 67.587 | - | 79.928 |
| Vahou Quarries S.A. | Greece | Quarries & aggregates | - | 100.000 | - | 100.000 |
| Sigma Beton S.A. | Greece | Quarries & aggregates | - | 100.000 | - | 100.000 |
| Titan Atlantic Cement Industrial and Commercial S.A. Greece | Investment holding company | 43.947 | 56.053 | 43.947 | 56.053 | |
| Titan Cement International Trading S.A. | Greece | Trading company | 99.960 | 0.040 | 99.960 | 0.040 |
| Brazcem Participacoes S.A. | Brazil | Investment holding company | - | 100.000 | - | 100.000 |
| Double W & Co OOD | Bulgaria | Port | - | 99.989 | - | 99.989 |
| Granitoid AD | Bulgaria | Trading company | - | 99.760 | - | 99.760 |
| Gravel & Sand PIT AD | Bulgaria | Quarries & aggregates | - | 99.989 | - | 99.989 |
| Trojan Cem EOOD | Bulgaria | Trading company | - | 83.599 | - | 83.599 |
| Zlatna Panega Cement AD | Bulgaria | Cement producer | - | 99.989 | - | 99.989 |
| Green Alternative Energy Assets EAD | Bulgaria | Alternative fuels | - | 100.000 | - | 100.000 |
| Titan Investment EAD | Bulgaria | Own/develop real estate | - | 99.989 | - | 99.989 |
| Cementi ANTEA SRL | Italy | Trading company | - | 80.000 | - | 80.000 |
| Cementi Crotone S.R.L. | Italy | Import & distribution of Cement | - | 100.000 | - | 100.000 |
| Fintitan SRL | Italy | Import & distribution of cement | 100.000 | - | 100.000 | - |
| Separation Technologies Canada Ltd | Canada | Processing of fly ash | - | 100.000 | - | 100.000 |
| Aemos Cement Ltd | Cyprus | Investment holding company | 100.000 | - | 100.000 | - |
| Alvacim Ltd | Cyprus | Investment holding company | - | 100.000 | - | 100.000 |
| East Cement Trade Ltd | Cyprus | Investment holding company | - | 100.000 | - | 100.000 |
| Feronia Holding Ltd | Cyprus | Investment holding company | - | 100.000 | - | 100.000 |
| Iapetos Ltd | Cyprus | Investment holding company | 100.000 | - | 100.000 | - |
| KOCEM Limited | Cyprus | Investment holding company | - | 100.000 | - | 100.000 |
| Themis Holdings Ltd | Cyprus | Investment holding company | - | 100.000 | - | 100.000 |
| Titan Cement Cyprus Limited | Cyprus | Investment holding company | - | 88.151 | - | 88.151 |
| Alexandria Portland Cement Co. S.A.E | Egypt | Cement producer | - | 82.513 | - | 82.513 |
| Beni Suef Cement Co.S.A.E. | Egypt | Cement producer | - | 82.513 | - | 82.513 |
| GAEA -Green Alternative Energy Assets | Egypt | Alternative fuels | - | 64.825 | - | 64.825 |
| Titan Beton & Aggregate Egypt LLC | Egypt | Quarries & aggregates | - | 83.118 | - | 83.118 |
| Sharr Beteiligungs GmbH | Germany | Investment holding company | - | 88.151 | - | 88.151 |
| Arresa Marine Co Adocim Marmara Cimento Beton Sanayi ve |
Marshall Islands | Shipping Processing and trading of |
- | 100.000 | - | 100.000 |
| Ticaret A.S. | Turkey | cement | - | 100.000 | - | 100.000 |
Notes to the Interim Condensed Financial Statements
| 30/06/2018 | 31/12/2017 | ||||||
|---|---|---|---|---|---|---|---|
| % of investment (*) | % of investment (*) | ||||||
| Subsidiary, associate and joint venture name | Country of incorporation |
Nature of business | Direct | Indirect | Direct | Indirect | |
| Full consolidation method | |||||||
| Titan Cement U.K. Ltd | U.K. | Import & distribution of cement | 100.000 | - | 100.000 | - | |
| Titan Global Finance PLC | U.K. | Financial services | 100.000 | - | 100.000 | - | |
| Alexandria Development Co.Ltd | U.K. | Investment holding company | 82.717 | - | 82.717 | ||
| Titan Egyptian Inv. Ltd | U.K. | Investment holding company | - | 100.000 | - | 100.000 | |
| Carolinas Cement Company LLC | U.S.A. | Own/develop real estate | - | 100.000 | - | 100.000 | |
| Essex Cement Co. LLC | U.S.A. | Trading company | - | 100.000 | - | 100.000 | |
| Markfield America LLC | U.S.A. | Insurance company | - | 100.000 | - | 100.000 | |
| Massey Sand and Rock Co | U.S.A. | Quarries & aggregates | - | 100.000 | - | 100.000 | |
| Mechanicsville Concrete LLC | U.S.A. | Ready mix | - | 100.000 | - | 100.000 | |
| Metro Redi-Mix LLC | U.S.A. | Ready mix | - | 100.000 | - | 100.000 | |
| Miami Valley Ready Mix of Florida LLC | U.S.A. | Ready mix | - | 100.000 | - | 100.000 | |
| Pennsuco Cement Co. LLC | U.S.A. | Cement producer | - | 100.000 | - | 100.000 | |
| Roanoke Cement Co. LLC | U.S.A. | Cement producer | - | 100.000 | - | 100.000 | |
| S&W Ready Mix Concrete Co. Inc. | U.S.A. | Ready mix | - | 100.000 | - | 100.000 | |
| S&W Ready Mix LLC | U.S.A. | Ready mix | - | 100.000 | - | 100.000 | |
| Separation Technologies LLC | U.S.A. | Processing of fly ash | - | 100.000 | - | 100.000 | |
| Trading company | - | 100.000 | - | 100.000 | |||
| Standard Concrete LLC | U.S.A. | Processing of fly ash | - | 100.000 | - | 100.000 | |
| ST Mid-Atlantic LLC | U.S.A. | Sales of fly ash processing | |||||
| ST Equipment & Technology LLC | U.S.A. | equipment | - | 100.000 | - | 100.000 | |
| ST Equipment & Technology Trading Company LLC | U.S.A. | Trading company | - | 100.000 | - | 100.000 | |
| Summit Ready-Mix LLC | U.S.A. | Ready mix | - | 100.000 | - | 100.000 | |
| Titan Florida LLC | U.S.A. | Cement producer | - | 100.000 | - | 100.000 | |
| Titan Mid-Atlantic Aggregates LLC | U.S.A. | Quarries & aggregates | - | 100.000 | - | 100.000 | |
| Titan Virginia Ready Mix LLC | U.S.A. | Ready mix | - | 100.000 | - | 100.000 | |
| Τitan Αmerica LLC | U.S.A. | Investment holding company | - | 100.000 | - | 100.000 | |
| Trusa Realty LLC | U.S.A. | Real estate brokerage | - | 100.000 | - | 100.000 | |
| Cementara Kosjeric AD | Serbia | Cement producer | - | 88.151 | - | 88.151 | |
| Stari Silo Company DOO | Serbia | Trading company | - | 88.151 | - | 88.151 | |
| TCK Montenegro DOO | Montenegro | Trading company | - | 88.151 | - | 88.151 | |
| Esha Material DOOEL | F.Y.R.O.M | Quarries & aggregates | - | 88.151 | - | 88.151 | |
| GAEA Zelena Alternative Enerjia DOOEL | F.Y.R.O.M | Alternative fuels | - | 100.000 | - | 100.000 | |
| Renting and leasing of machines, | |||||||
| MILLCO-PCM DOOEL | F.Y.R.O.M | equipment and material goods | - | 88.151 | - | 88.151 | |
| Rudmak DOOEL | F.Y.R.O.M | Trading company | - | 88.151 | - | 88.151 | |
| Usje Cementarnica AD | F.Y.R.O.M | Cement producer | - | 83.599 | - | 83.599 | |
| Vesa DOOL | F.Y.R.O.M | Trading company | - | 100.000 | - | 100.000 | |
| Cement Plus LTD | Kosovo | Trading company | - | 57.297 | - | 57.297 | |
| Esha Material LLC | Kosovo | Quarries & aggregates | - | 88.151 | - | 88.151 | |
| Kosovo Construction Materials L.L.C. | Kosovo | Quarries & aggregates | - | 88.151 | - | 88.151 | |
| Sharrcem SH.P.K. | Kosovo | Cement producer | - | 88.151 | - | 88.151 | |
| Alba Cemento Italia, SHPK | Albania | Trading company | - | 80.000 | - | 80.000 | |
| Antea Cement SHA | Albania | Cement producer | - | 80.000 | - | 80.000 | |
| GAEA Enerjia Alternative e Gjelber Sh.p.k. | Albania | Alternative fuels | - | 100.000 | - | 100.000 | |
| Dancem APS | Denmark | Trading company | - | 100.000 | - | 100.000 | |
| Aeas Netherlands B.V. | Holland | Investment holding company | - | 88.151 | - | 88.151 | |
| Colombus Properties B.V. | Holland | Investment holding company | 100.000 | - | 100.000 | - | |
| Salentijn Properties1 B.V. | Holland | Investment holding company | 100.000 | - | 100.000 | - | |
| Titan Cement Netherlands BV | Holland | Investment holding company | - | 88.151 | - | 88.151 |
| 30/06/2018 | 31/12/2017 | |||||
|---|---|---|---|---|---|---|
| % of investment (*) | % of investment (*) | |||||
| Subsidiary, associate and joint venture name |
Country of incorporation |
Nature of business | Direct | Indirect | Direct | Indirect |
| Equity consolidation method | ||||||
| Adocim Cimento Beton Sanayi ve Ticaret A.S. |
Turkey | Cement producer | - | 50.000 | - | 50.000 |
| Companhia Industrial De Cimento Apodi |
Brazil | Cement producer | - | 50.000 | - | 50.000 |
| Apodi Concretos Ltda | Brazil | Ready mix | - | 50.000 | - | 50.000 |
| ASH Venture LLC | U.S.A. | Processing of fly ash | - | 33.000 | - | 33.000 |
| Karierni Materiali Plovdiv AD | Bulgaria | Quarries & aggregates | - | 48.711 | - | 48.711 |
| Karierni Materiali AD | Bulgaria | Quarries & aggregates | - | 48.764 | - | 48.764 |
| Vris OOD | Bulgaria | Quarries & aggregates | - | 48.764 | - | 48.764 |
| Ecorecovery SA | Greece | Engineering design services for solid and liquid waste facilities |
- | 48.000 | - | 48.000 |
| Nordeco S.A. (3) | Greece | Engineering design services for solid and liquid waste facilities |
- | 46.560 | - | - |
(*) Percentage of investment represents both percentage of shareholding and percentage of control
1) Merge of the subsidiary Porfirion S.A. by its parent company, also Group's subsidiary
2) Decrease in percentage ownership of the subsidiary "Quarries of Tagaradon Community S.A."
3) Acquisition of the subsidiary Nordeco S.A. (note 10)
| (all amounts in Euro thousands) | 30/06/2018 | 31/12/2017 |
|---|---|---|
| Participation in subsidiaries on 1 January | 778,805 | 862,657 |
| Share capital decrease in subsidiaries | -115,839 | -84,133 |
| Provision for impairment of investments | - | -178 |
| Other | 243 | 459 |
| Participation in subsidiaries | 663,209 | 778,805 |
On 1 June 2018, 402,370 share options were granted to Group executives under the three-year Stock Option Programme of 2017. The exercise price of the options is €10.0. The final option rights number, which the beneficiaries will be entitled to exercise will depend: a) by 50% on the average three year Return on Average Capital Employed (ROACE) compared to the target of each year period and b) by 50% on the overall performance of the Company's common share compared to the average overall performance of the shares of the eight predefined international cement producing companies.
The fair value of the options granted in 2018 was €5.99 per option, determined using the Binomial Method and the Monte Carlo Simulation valuation model. The significant inputs used in the aforementioned methodologies were the share price at grant date of €21.00, the employee forfeiture rate 2.5%, the volatility of the share price estimated at 42.71%, the dividend yield of 0.86% and the yield of the 1 year EURIBOR rate of - 0.184%.
| (1) Τitan Cement Company S.A | 2012-2017 | Aeas Netherlands B.V. | 2010-2017 |
|---|---|---|---|
| (2) Aeolian Maritime Company | - | Titan Cement U.K. Ltd | 2017 |
| (1) Albacem S.A. | 2012-2017 | (3) Τitan Αmerica LLC | 2014-2017 |
| (1) Arktias S.A. | 2012-2017 | Separation Technologies Canada Ltd | 2013-2017 |
| (1) Interbeton Construction Materials S.A. | 2012-2017 | Stari Silo Copmany DOO | 2008-2017 |
| (1) Intertitan Trading International S.A. | 2012-2017 | Cementara Kosjeric DOO | 2006-2017 |
| (1) Porfirion S.A. | 2012-2017 | TCK Montenegro DOO | 2007-2017 |
| (1) Vahou Quarries S.A. | 2012-2017 | Double W & Co OOD | 2007-2017 |
| (1) Quarries Gournon S.A. | 2012-2017 | Granitoid AD | 2007-2017 |
| (1) Quarries of Tagaradon Community S.A. | 2012-2017 | Gravel & Sand PIT AD | 2005-2017 |
| (1) Aitolika Quarries S.A. | 2012-2017 | Zlatna Panega Beton EOOD | 2010-2017 |
| (1) Sigma Beton S.A. | 2012-2017 | Zlatna Panega Cement AD | 2010-2017 |
| (1) Titan Atlantic Cement Industrial and Commercial S.A. | 2012-2017 | Titan Investment EAD | 2017 |
| (1) Titan Cement International Trading S.A. | 2012-2017 | Cement Plus LTD | 2014-2017 |
| (1) KTIMET Quarries S.A. | 2012-2017 | Rudmark DOOEL | 2006-2017 |
| Aemos Cement Ltd | 2012-2017 | Esha Material LLC | 2016-2017 |
| Alvacim Ltd | 2010-2017 | Esha Material DOOEL | 2016-2017 |
| Balkcem Ltd | 2012-2017 | Usje Cementarnica AD | 2009-2017 |
| Iapetos Ltd | 2007-2017 | Titan Cement Netherlands BV | 2010-2017 |
| Rea Cement Ltd | 2012-2017 | Alba Cemento Italia, SHPK | 2012-2017 |
| Themis Holdings Ltd | 2012-2017 | Antea Cement SHA | 2015-2017 |
| Tithys Ltd | 2012-2017 | Sharr Beteiligungs GmbH | 2011-2017 |
| Feronia Holding Ltd | 2007-2017 | Kosovo Construction Materials L.L.C. | 2010-2017 |
| Vesa DOOL | 2006-2017 | SharrCem Sh.P.K | 2011-2017 |
| Trojan Cem EOOD | 2010-2017 | (2) Alexandria Development Co.Ltd | - |
| Dancem APS | 2012-2017 | Alexandria Portland Cement Co. S.A.E | 2010-2017 |
| Titan Global Finance PLC | 2007-2017 | GAEA Green Alternative Energy Assets Ltd | 2012-2017 |
| Terret Enterprises Ltd | 2012-2017 | Beni Suef Cement Co.S.A.E. | 2011-2017 |
| Salentijn Properties1 B.V. | 2010-2017 | East Cement Trade Ltd | 2006-2017 |
| Titan Cement Cyprus Limited | 2011-2017 | Titan Beton & Aggregate Egypt LLC | 2010-2017 |
| KOCEM Limited | 2007-2017 | (2) Titan Egyptian Inv. Ltd | - |
| Fintitan S.R.L. | 2015-2017 | Green Alternative Energy Assets EAD | 2012-2017 |
| Cementi Crotone S.R.L. | 2013-2017 | GAEA Zelena Alternative Enerjia DOOEL | 2013-2017 |
| Cementi ANTEA SRL | 2010-2017 | GAEA Enerjia Alternative e Gjelber Sh.p.k. | 2014-2017 |
| Colombus Properties B.V. | 2010-2017 | GAEA -Green Alternative Energy Assets | 2015-2017 |
| Brazcem Participacoes S.A. | 2016-2017 | MILLCO-PCM DOOEL | 2016-2017 |
| Holtitan BV | 2010-2017 | Adocim Marmara Cimento Beton Sanayi ve Ticaret A.S. | - |
(1) For the fiscal years 2011-2013, Certified Auditors Accountants tax audited the above companies and issued tax certificates without qualifications, according to the terms of article 82, par. 5 of the Law 2238/1994. For the fiscal years 2014-2016 the tax audit was conducted again by the Certified Auditors Accountants and tax certificates without qualifications have also been issued according to the article 65A, par. 1 of L. 4174/2013. Based on their recent decisions for similar cases (i.e., the decisions of Supreme Administrative Court 1738/2017, 675/2017, and Appeal Administrative Court decision 1490/2016), the Administrative Courts have stated that the fiscal year 2011 forfeited for tax purposes (five years limitation period).
(2) Under special tax status.
(3) Companies operating in the U.S.A. are incorporated in the Titan America LLC subgroup (note 11).
Group provisions presented in short and long term liabilities on 30 June 2018 amounted to €45.9 mil. (31.12.2017: €38.7 mil.).
The above amount includes among others, the provision for the rehabilitation of quarries amounting to €18.2 mil. (31.12.2017: €15.8 mil.), the provision for litigation matters €11.6 mil. (31.12.2017: €7.3 mil.), the provision for staff costs of €7.0 mil. (31.12.2017: €7.2 mil.) and other provisions for risks, none of which are individually material to the Group.
Company provisions presented in short and long term liabilities on 30 June 2018 amounted to €14.5 mil. (31.12.2017: €15.2 mil.). The above amount includes among others, the provision for the rehabilitation of quarries amounting to €2.4 mil. (31.12.2017: €2.4 mil.), the provision for staff costs of €7.0 mil. (31.12.2017: €7.2 mil.) and the provision of €2.4 mil. for Litigation matters (31.12.2017: €2.4 mil.).
Set out below is a comparison by category of carrying amounts and fair values of the Group's and the Company's financial instruments.
| Financial assets | Group | Company | |||||||
|---|---|---|---|---|---|---|---|---|---|
| (all amounts in Euro thousands) | Carrying amount | Fair value | Carrying amount | Fair value | |||||
| 30/06/2018 | 31/12/2017 | 30/06/2018 | 31/12/2017 | 30/06/2018 | 31/12/2017 | 30/06/2018 | 31/12/2017 | ||
| At amortised cost | |||||||||
| Other non-current financial assets | 11,993 | 7,273 | 11,993 | 7,273 | - | - | - | - | |
| Trade receivables | 124,151 | 115,429 | 124,151 | 115,429 | 36,985 | 37,883 | 36,985 | 37,883 | |
| Cash and cash equivalents | 189,430 | 154,247 | 189,430 | 154,247 | 83,120 | 29,323 | 83,120 | 29,323 | |
| Other current financial assets | 38,965 | 28,118 | 38,965 | 28,118 | 50,247 | 15,307 | 50,247 | 15,307 | |
| Fair value through other comprehensive income | |||||||||
| Available for-sale financial assets | - | 517 | - | 517 | - | 122 | - | 122 | |
| Fair value through profit and loss | |||||||||
| Derivative financial instruments - non current | 671 | 1,434 | 671 | 1,434 | - | - | - | - | |
| Other non-current financial assets | 365 | - | 365 | - | - | - | - | - | |
| Derivative financial instruments - current | 1,653 | 2,012 | 1,653 | 2,012 | - | - | - | - | |
| Other current financial assets | 30 | - | 30 | - | - | - | - | - | |
| Financial liabilities | |||||||||
| At amortised cost | |||||||||
| Long term borrowings | 907,960 | 820,382 | 910,000 | 849,276 | 390,720 | 379,218 | 392,039 | 388,995 | |
| Other non-current financial liabilities | 2,372 | 2,394 | 2,372 | 2,394 | - | - | - | - | |
| Short term borrowings | 32,543 | 56,825 | 32,543 | 56,825 | 8 | 32 | 8 | 32 | |
| Other current financial liabilities | 203,169 | 184,239 | 203,169 | 184,239 | 78,982 | 44,473 | 78,982 | 44,473 | |
| Fair value through profit and loss | |||||||||
| Derivative financial instruments - current | 3,622 | - | 3,622 | - | - | - | - | - | |
| Other current financial liabilities - Put option (note 22) | 11,616 | 12,054 | 11,616 | 12,054 | - | - | - | - |
Note: Derivative financial instruments consist of fx forwards, cross currency interest rate swaps (CCS) and interest rate swaps (IRS).
The management assessed that the cash and cash equivalents, trade receivables, trade payables, bank overdrafts and other current liabilities (excluding the put option) approximate their carrying amounts largely due to the short-term maturities of these instruments.
The Group and the Company use the following hierarchy for determining and disclosing the fair value of the assets and liabilities by valuation method:
Level 1: based on quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2: based on valuation techniques whereby all inputs having a significant effect on the fair value are observable, either directly or indirectly and includes quoted prices for identical or similar assets or liabilities in markets that are not so much actively traded.
Level 3: based on valuation techniques whereby all inputs having a significant effect on the fair value are not observable market data. The following table provides the fair value measurement hierarchy of the Group's and the Company's assets and liabilities.
| Group | Company | ||||
|---|---|---|---|---|---|
| (all amounts in Euro thousands) | Fair value | Fair value | |||
| 30/06/2018 | 31/12/2017 | 30/06/2018 | 31/12/2017 | hierarchy | |
| Assets | |||||
| Investment property | 12,130 | 12,130 | 8,937 | 8,937 | Level 3 |
| Available for-sale financial assets | - | 517 | - | 122 | Level 3 |
| Other financial assets at fair value through profit and | |||||
| loss | 395 | - | - | - | Level 3 |
| Derivative financial instruments | 2,324 | 3,446 | - | - | Level 2 |
| Liabilities | |||||
| Long-term borrowings | 910,000 | 849,276 | 392,039 | 388,995 | Level 2 |
| Short-term borrowings | 32,543 | 56,825 | 8 | 32 | Level 2 |
| Derivative financial instruments | 3,622 | - | - | - | Level 2 |
| Put option (note 22) | 11,616 | 12,054 | - | - | Level 3 |
There were no transfers between level 1 and 2 fair value measurements during the period and no transfers into or out of level 3 fair value measurements during the six-month period ended 30 June 2018.
The fair value of level 3 investment property is estimated by the Group and the Company by external, independent, certified valuators. The fair value measurement of the investment property of the Company has been mainly conducted in accordance with the comparative method or the current market values of similar properties. The main factors that were taken into consideration, are the property location, the surface area, the local urban planning, the bordering road networks, the regional infrastructure, the property maintenance status and merchantability, the technical construction standards in the case of buildings and the impact of environmental issues if any.
The fair value of the financial assets and liabilities is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than a forced liquidation or sale. The following methods and assumptions were used to estimate the fair values:
Level 2 long and short term borrowings are evaluated by the Group and the Company based on parameters such as interest rates, specific country risk factors, or price quotations at the reporting date. Especially for long-term borrowings, quoted market prices or dealer quotes for the specific or similar instruments are used.
Level 2 derivative financial instruments comprise fx forwards, cross currency interest rate swaps and interest rate swaps.
Τhe Group and the Company use a variety of methods and make assumptions that are based on market conditions existing at each reporting date. The aforementioned contracts have been fair valued using: a) forward exchange rates that are quoted in the active market, b) forward interest rates extracted from observable yield curves.
In addition with the interest rate swap (IRS) and the cross currency interest rate swap agreements (CCS) that expire in July 2019, the Group's subsidiary in USA, Titan America LLC (TALLC) entered into €-dollar fx forward agreements from January to July 2018, in order to hedge relative foreign currency exposure from loans. Until 30.6.2018, TALLC has prepaid the amount of €12.1 mil. for the aforementioned fx forward agreements.
Finally, in April 2018, Titan Global Finance (TGF) entered into €/TRY fx forward agreements until July 2018 in order to hedge relative equity exposure of the Group.
5
Level 3 financial assets at fair value through profit and loss refer mainly to investments in foreign property funds in which the Group owns an insignificant percentage. Their valuation is made based on their financial statements, which present the assets at fair value. Until 31.12.2017, these financial assets at fair value through profit and loss were classified into the category of available-for-sale financial assets.
Level 3 put option consists of the put option that the Group has granted to non-controlling interest shareholder of its subsidiary in Albania, ANTEA Cement SHA. The put option, which expires in 2019, is valued using a discounted cash flow model. The valuation requires management to make certain assumptions about unobservable inputs to the model. Certain significant unobservable inputs are disclosed in the table below:
| 2018-2019 | ||
|---|---|---|
| 30/06/2018 | 31/12/2017 | |
| Gross margin growth rate | 27.1% | -4.3% |
| Discount rate | 8.0% | 8.0% |
In addition to the above, forecast cash flows for the following two years are a significant unobservable input. The management regularly assesses a range of reasonably possible alternatives for those significant unobservable inputs and determines their impact on the total fair value.
An increase of the forecast cash flows or the change in gross margin for cash flows in the subsequent periods would lead to an increase in the fair value of the put option. On the other hand, an increase in the discount rate used to discount the forecast cash flows would lead to a decrease in the fair value of the put option.
The significant unobservable inputs are not interrelated. The fair value of the put option is not significantly sensitive to a reasonable change in the forecast cash flows or the discount rate; however it is sensitive to a reasonable fluctuation of the change in gross margin, as described in the following table:
| (all amounts in Euro thousand) | Effect on the fair value |
|---|---|
| Increase by half the gross margin growth rate: | 153 |
| Decrease by half the gross margin growth rate: | -125 |
| (all amounts in Euro thousand) | Group | Company | |||
|---|---|---|---|---|---|
| 30/06/2018 | 31/12/2017 | 30/06/2018 | 31/12/2017 | ||
| Utility deposits | 2,950 | 2,966 | 2,567 | 2,575 | |
| Excess benefit plan assets | 3,548 | 4,169 | - | - | |
| Other non-current assets | 11,437 | 4,307 | 829 | 800 | |
| 17,935 | 11,442 | 3,396 | 3,375 |
(all amounts are shown in Euro thousands unless otherwise stated)
| Shares issued and fully paid Ordinary shares Preference shares |
Total | |||||||
|---|---|---|---|---|---|---|---|---|
| Number of shares |
€'000 | Number of shares |
€'000 | Share premium €'000 |
Number of shares |
€'000 | ||
| Balance at 1 January 2017 | 77,063,568 | 308,254 | 7,568,960 | 30,276 | 22,826 | 84,632,528 | 361,356 | |
| Share capital decrease | - | -77,064 | - | -7,569 | - | - | -84,633 | |
| Balance at 30 June 2017 | 77,063,568 | 231,190 | 7,568,960 | 22,707 | 22,826 | 84,632,528 | 276,723 | |
| Balance at 1 January 2018 | 77,063,568 | 231,190 | 7,568,960 | 22,707 | 22,826 | 84,632,528 | 276,723 | |
| Share capital increase | - | 73,210 | - | 7,190 | - | - | 80,400 | |
| Share capital decrease | - | -38,531 | - | -3,784 | - | - | -42,315 | |
| Balance at 30 June 2018 | 77,063,568 | 265,869 | 7,568,960 | 26,113 | 22,826 | 84,632,528 | 314,808 |
| Ordinary shares | Preference shares | Total | ||||
|---|---|---|---|---|---|---|
| Treasury shares | Number of shares |
€'000 | Number of shares |
€'000 | Number of shares |
€'000 |
| Balance at 1 January 2017 | 3,871,677 | 100,408 | 85,514 | 1,045 | 3,957,191 | 101,453 |
| Purchase of treasury shares | - | - | 4,388 | 63 | 4,388 | 63 |
| Sale of treasury shares | -23,401 | -607 | - | - | -23,401 | -607 |
| Balance at 30 June 2017 | 3,848,276 | 99,801 | 89,902 | 1,108 | 3,938,178 | 100,909 |
| Balance at 1 January 2018 | 4,054,246 | 103,952 | 110,473 | 1,432 | 4,164,719 | 105,384 |
| Purchase of treasury shares | 162,932 | 3,394 | 48,656 | 846 | 211,588 | 4,240 |
| Sale of treasury shares | -15,496 | -395 | - | - | -15,496 | -395 |
| Balance at 30 June 2018 | 4,201,682 | 106,951 | 159,129 | 2,278 | 4,360,811 | 109,229 |
In the first half of 2018, the average price of Titan Cement Company S.A. ordinary shares was €22.12 (1.1-30.6.2017: €23.72) and the trading price of the ordinary shares as at 30 June 2018 was €21.7 (30.6.2017: €24.77).
(all amounts in Euro thousands)
| Group | Legal reserve | Special reserve |
Contingency reserve |
Tax exempt reserves under special laws |
Revaluation reserve |
Actuarial differences reserve |
Ηedging reserves |
Foreign currency translation reserve |
Total other reserves |
|---|---|---|---|---|---|---|---|---|---|
| Balance at 1 January 2017 | 96,501 | 572,870 | 333,294 | 93,754 | 45,545 | 138 | 41,115 | -343,853 | 839,364 |
| Other comprehensive loss | - | - | - | - | 96 | - | - | -69,849 | -69,753 |
| Acquisition of non-controlling interests | 2 | - | - | 7 | - | - | - | 51 | 60 |
| Non-controlling interest's put option recognition | - | - | - | - | -1,061 | - | - | - | -1,061 |
| Transfer from reserves & retained earnings | -2,890 | 7 | 1,100 | 4,780 | 14,695 | - | - | -238 | 17,454 |
| Balance at 30 June 2017 | 93,613 | 572,877 | 334,394 | 98,541 | 59,275 | 138 | 41,115 | -413,889 | 786,064 |
| Opening balance 1/1 - Restated * | 93,819 | 572,877 | 334,702 | 98,534 | 40,169 | -161 | 41,115 | -456,451 | 724,604 |
| Other comprehensive loss | - | - | - | - | - | - | - | -5,980 | -5,980 |
| Share capital increase | - | -834 | -202 | -79,364 | - | - | - | - | -80,400 |
| Taxes and other expenses due to share capital increase | - | - | -80 | -2,866 | - | - | - | - | -2,946 |
| Acquisition of non-controlling interests | -3 | - | - | - | - | - | - | - | -3 |
| Non-controlling interest's put option recognition | - | - | - | - | 1,219 | - | - | - | 1,219 |
| Transfer from reserves & retained earnings | 381 | -85,000 | 884 | 9,825 | -1,434 | - | - | -5 | -75,349 |
| Balance at 30 June 2018 | 94,197 | 487,043 | 335,304 | 26,129 | 39,954 | -161 | 41,115 | -462,436 | 561,145 |
* IFRS 9 - transition adjustments (note 2)
| Company | Legal reserve | Special reserve |
Contingency reserve |
Tax exempt reserves under special laws |
Revaluation reserve |
Actuarial differences reserve |
Ηedging reserves |
Total other reserves |
|---|---|---|---|---|---|---|---|---|
| Balance at 1 January 2017 | 72,950 | 3,550 | 321,404 | 90,379 | 2,409 | -636 | 48,347 | 538,403 |
| Other comprehensive income | - | - | - | - | 106 | - | - | 106 |
| Transfer between reserves | 790 | - | 1,100 | - | - | - | - | 1,890 |
| Balance at 30 June 2017 | 73,740 | 3,550 | 322,504 | 90,379 | 2,515 | -636 | 48,347 | 540,399 |
| Balance at 1 January 2018 | 73,739 | 3,550 | 322,812 | 90,379 | 2,515 | -1,054 | 48,347 | 540,288 |
| Share capital increase | - | -834 | -202 | -79,364 | - | - | - | -80,400 |
| Taxes and other expenses due to share capital increase | - | - | -80 | -2,866 | - | - | - | -2,946 |
| Transfer between reserves | 359 | - | 884 | - | - | - | - | 1,243 |
| Balance at 30 June 2018 | 74,098 | 2,716 | 323,414 | 8,149 | 2,515 | -1,054 | 48,347 | 458,185 |
In the statement of other comprehensive income, the exchange differences resulting from the translation of foreign operations in the first six months of 2018 amounted to a net loss of €6.0 mil. (30.6.2017: loss of €68.5 mil.), of which loss €7.0 mil. (30.6.2017: €64.9 mil.) are attributable to the shareholders of the Parent Company and gain €1.0 mil. (30.6.2017: loss €3.6 mil.) to the non-controlling interests. The decrease of €62.4 mil. between the two periods is mainly due to the weakening of US dollar against Euro.
5
Basic earnings per share have been calculated on the total weighted average number of common and preferred shares, excluding the average number of treasury shares. The diluted earnings per share are calculated adjusting the weighted average number of ordinary shares outstanding to assume conversion of share options. No adjustment is made to net profit (numerator).
0 The Annual General Meeting, which was held on 1st June 2018, approved the distribution of dividend of a total amount of €4,231,626 i.e. €0.05 per share , a return of capital of a total amount of €42,316,264 i.e. €0.50 per share and, in addition, an increse in share capital of a total amount €80.400.901 i.e €0.95 per share. Pursuant to article 16 paragraph 8 of L. 2190/1920, the final amounts distributed per share were increased by the amount, corresponding to the treasury shares held by the Company.
The Annual General Meeting, which was held on 12th May 2017, approved the distribution of dividend of a total amount of €8,463,253 i.e. €0.10 per share and, in addition, a return of capital of a total amount of €84,632,528 i.e. €1.0 per share. Pursuant to article 16 paragraph 8 of L. 2190/1920, the final amounts distributed per share were increased by the amount, corresponding to the treasury shares held by the Company.
Transactions with related parties during the six month period ending 30 June 2018 as well as balances with related parties as at 30 June 2018 for the Group and the Company, according to IAS 24 are as follows:
(all amounts in Euro thousands)
| Group | Sales of goods & services |
Purchases of goods & services |
Receivables | Liabilities |
|---|---|---|---|---|
| Other interrelated parties | - | 630 | - | 123 |
| Executives and members of the Board | - | - | - | 2 |
| - | 630 | - | 125 | |
| Company | ||||
| Aeolian Maritime Company | - | - | - | 252 |
| Interbeton Construction Materials S.A. | 11,360 | 3,214 | 4,593 | 1,553 |
| Intertitan Trading International S.A. | 3,446 | - | 2,460 | - |
| Adocim Cimento Beton Sanayi ve Ticaret A.S. . | 27 | - | 25 | - |
| Alexandria Portland Cement Co. S.A.E. | 812 | 4 | 779 | 8 |
| Antea Cement SHA | 1,307 | - | 1,445 | - |
| Beni Suef Cement Co.S.A.E. | 994 | - | 911 | - |
| Cementara Kosjeric AD | 684 | - | 847 | - |
| Cementi Crotone S.R.L. | 168 | - | 126 | - |
| Essex Cement Company LLC | 16,544 | - | 1,490 | - |
| Fintitan SRL | 2,953 | - | 2,953 | - |
| Iapetos Ltd | 6 | - | 6 | - |
| Roanoke Cement LLC | 4,017 | - | 719 | - |
| Sharrcem SH.P.K. | 793 | - | 299 | - |
| T.C.U.K. Ltd | 5,549 | - | - | - |
| Titan America LLC | 3,522 | - | 2,042 | 2 |
| Τιτάν Τσιμέντα Ατλαντικού Α.Β.Ε.Ε. | 1 | - | 40,222 | - |
| Titan Florida LLC | 8,733 | - | 1,616 | - |
| Titan Beton & Aggregate Egypt LLC | 1 | - | 25 | - |
| Titan Global Finance PLC | 77 | 7,230 | 691 | 391,907 |
| Usje Cementarnica AD | 1,870 | - | 863 | - |
| Zlatna Panega Cement AD | 482 | - | 469 | - |
| Other subsidiaries | 10 | - | 8 | - |
| Other interrelated parties | - | 630 | - | 123 |
| Executives and members of the Board | - | - | - | 2 |
| 63,356 | 11,078 | 62,589 | 393,847 |
Transactions with related parties during the six month period ending 30 June 2017 as well as balances with related parties as at 31 December 2017 for the Group and the Company, according to IAS 24 are as follows:
(all amounts in Euro thousands)
| Group | Sales of goods & services |
Purchases of goods & services |
Receivables | Liabilities |
|---|---|---|---|---|
| Other interrelated parties | - | 219 | 11 | 64 |
| Executives and members of the Board | - | - | - | 15 |
| - | 219 | 11 | 79 | |
| Company | ||||
| Aeolian Maritime Company | - | - | - | 252 |
| Interbeton Construction Materials S.A. | 13,545 | 3,593 | 9,038 | 16,173 |
| Intertitan Trading International S.A. | 3,208 | - | 2,176 | - |
| Gournon Quarries S.A. | - | - | 3 | - |
| Adocim Cimento Beton Sanayi ve Ticaret A.S. | - | - | 221 | - |
| Adocim Marmara Cimento Beton Sanayi ve Ticaret A.S. | 623 | - | - | - |
| Aemos Cement Ltd | 698 | - | 3 | |
| Alexandria Portland Cement Co. S.A.E | 788 | 2 | 1,516 | 4 |
| Antea Cement SHA | 2,157 | - | 1,053 | - |
| Beni Suef Cement Co.S.A.E. | 1,209 | - | 3,403 | - |
| Cementara Kosjeric AD | 469 | - | 279 | - |
| Essex Cement Company LLC | 20,229 | - | 1,369 | 12 |
| Fintitan S.r.l. | 294 | - | - | - |
| Iapetos Ltd | 19 | - | 4,799 | - |
| Roanoke Cement LLC | 2,704 | - | - | - |
| Sharrcem SH.P.K | 737 | - | 356 | - |
| T.C.U.K. Ltd | 8,698 | - | - | 1 |
| Τitan Αmerica LLC | 2,566 | - | 1,481 | 2 |
| Titan Beton & Aggregate Egypt LLC | - | - | 25 | - |
| Titan Florida LLC | 8,155 | - | - | - |
| Titan Global Finance PLC | - | 7,786 | 788 | 380,203 |
| Usje Cementarnica AD | 6,323 | - | 829 | - |
| Zlatna Panega Cement AD | 560 | - | 222 | - |
| Other subsidiaries | 12 | 11 | 3 | - |
| Other interrelated parties | - | 219 | 11 | 64 |
| Executives and members of the Board | - | - | - | 15 |
| 72,994 | 11,611 | 27,575 | 396,726 |
| (all amounts in Euro thousands) | Group | Company | |||
|---|---|---|---|---|---|
| For the six months ended 30/6 | For the six months ended 30/6 | ||||
| 2018 | 2017 | 2018 | 2017 | ||
| Salaries and other short-term employee benefits | 4,465 | 4,111 | 4,465 | 4,111 |
(all amounts in Euro thousands)
5
| Group | Company | |||
|---|---|---|---|---|
| 30/06/2018 | 31/12/2017 | 30/06/2018 | 31/12/2017 | |
| Guarantees to third parties on behalf of subsidiaries | - | - | 993,956 | 641,497 |
| Bank guarantee letters | 16,837 | 27,906 | 4,714 | 3,375 |
| Other | 1,431 | 947 | - | - |
| 18,268 | 28,853 | 998,670 | 644,872 |
In 2011, two former employees of Beni Suef Cement Company SAE (Beni Suef), filed an action before the Administrative Court of Cairo, seeking the nullification of the privatization of Beni Suef which took place in 1999 through the sale of Beni Suef's shares to Financiere Lafarge after a public auction. Titan Group acquired in 1999 50 per cent and in 2008 the balance of Lafarge's interest in Beni Suef. Approximately 99.98 per cent in the share capital of Beni Suef is held today by Alexandria Portland. The Administrative Court of Cairo issued on 15 February 2014 a first instance judgment which entirely dismissed the request for cancellation of the privatization of Beni Suef. The Court further judged the re-employment of ex-employees who had left the company in the framework of voluntary redundancy schemes. Beni Suef and the plaintiffs have already appealed against the judgment of the first instance court. On 19 January 2015, the Supreme Administrative Court issued a judgment suspending the case until the issuance of a ruling by the Supreme Constitutional Court on a lawsuit challenging the constitutionality of Law no. 32/2014 (''Appeal Procedures on State Contracts Law''). The case is still suspended and no further action has been taken until now. The view of Beni Suef's lawyers is that the plaintiffs' action is devoid of any legal or factual ground.
In June 2013, Beni Suef was notified of another action filed before the Administrative Court of Cairo seeking as in the above case to cancel the sale of the shares of Beni Suef to Financiere Lafarge. The Administrative Court of Cairo issued on 25 June 2015 a first instance judgment referring the case to the Investment Circuit no. 7. The latter has recently referred the case to the commissioners' panel and no hearing date has been scheduled until now. The view of Beni Suef's lawyers is that the action is devoid of any legal or factual ground.
In 2012, an ex-employee of Alexandria Portland Cement Company SAE ( Alexandria Portland) brought an action before the Administrative Court of Alexandria against the President of the Republic of Egypt, the Prime Minister, the Minister of Investments, the Minister of Industry, the Governor of Alexandria, the Manager of the Mines and Salinas Project in Alexandria and the Manager of the Mines and Quarries Department in Alexandria seeking the annulment of the sale of the shares of Alexandria Portland to Blue Circle Cement Group in 1999. Alexandria Portland was not named defendant in the action. Following a capital market transaction concluded in 2001, Blue Circle Cement Group was acquired by Lafarge Group, which subsequently sold its interest in Alexandria Portland through two private transactions to Titan Group in 2002 and 2008. The Administrative Court of Alexandria issued on 31 January 2015 a first instance judgment which suspended the case initially until 28 May 2016 and subsequently until 15 October 2016, provided that by such date the Supreme Constitutional Court had ruled on the lawsuit challenging the constitutionality of Law no. 32/2014 (''Appeal Procedures on State Contracts Law''). The case has been referred to the Administrative Court of Cairo, Investment Circuit no.1 but no hearing has been scheduled until now. The view of Alexandria Portland's lawyers is that the action is devoid of any legal and factual ground.
In May 2013, a new action was filed by three ex-employees of Alexandria Portland seeking as in the above case the annulment of the sale of the shares of Alexandria Portland to Blue Circle Cement Group. The action has been raised against the Prime Minister, the Minister of Investment, and the Chairman of the holding company for chemical industries, the President of the Central Auditing Organization, the legal representative of Alexandria Portland and the legal representative of Blue Circle industries. The case has been repeatedly adjourned and no judgment will be handed down from the administrative Court until the issuance of a ruling by the Supreme Constitutional Court on the lawsuit challenging the constitutionality of Law no. 32/ 2014. The view of Alexandria Portland's lawyers is that the action is devoid of any legal and factual ground.
5
1.An individual residing in the vicinity of the plant of Alexandria Portland has filed a claim before the Administrative Court of Alexandria against the Governor of Alexandria, the Head of El-Agamy District, the Minister of Trading and Industry, the Minister of Environment, the President of Alexandria Environmental Affairs Agency, the President of Industrial Development Authority and Alexandria Portland, seeking the abolition of the administrative decision of the competent Egyptian authority which issued the operating license for the Alexandria Portland plant in Alexandria, alleging violations of environmental and related regulation. On 25 May 2014 the court decided to refer this case to the Cairo Administrative Court due to lack of jurisdiction. The case has been repeatedly adjourned and on 24 October 2015 it was referred to another division of the Court for deliberation. On 18.4.2018 the Court decided in favor of Alexandria Portland and rejected the case.
In 2007, Beni Suef obtained the license for the construction of a second production line at the company's plant through a bidding process run by the Egyptian Trading and Industrial Authority( IDA) for the amount of EGP 134.5 million. IDA subsequently raised the value of the license to EGP 251 million. In October 2008 Beni Suef filed a case before the Administrative Court rejecting the raised value of the license and requesting that the price should be EGP 500 and, in case this request would be rejected by the Court, that the price of the license should be EGP 134.5 million, which was the amount offered by Beni Suef in the bid. The Administrative Court by virtue of decision in case No 2626/63 JY, dismissed Beni Suef's action. Beni Suef has already lodged an appeal before the High Administrative Court requesting the reversal of the issued court decision. Until today no hearing has been scheduled yet. Beni Suef has also lodged an action against IDA requesting the calculation of the payable interest on the basis of the legal interest of 4% and not on the basis of the CBE interest (varying from 9% to 19%) as calculated by IDA. In June 2018, BSCC and IDA entered into an agreement, pursuant to which Beni Suef paid to IDA the amount of EGP 251 million for the value of the license plus the amount of EGP 24, 9 million, as down payment for interest, calculated on the basis of the CBE interest. Moreover, Beni Suef agreed to pay the remaining amount of interest amounting to EGP 224 million in 12 monthly instalments, under the express agreement that, in case the Egyptian Courts accept the above appeal of Beni Suef on the value of the license and/or the above action of Beni Suef on the calculation of the payable interest, IDA will pay back to Beni Suef the relevant amounts. The view of Beni Suef's lawyers is that there is high probability that the High Administrative Court will adopt the price of EGP 134.5 million for the license. Likewise, the view of Beni Suef's lawyers is that there is very high probability that BSCC's action on the payable interest will be accepted by the Court.
A non-governmental organization, the Nile Agricultural Organization, has raised a court case against Beni Suef claiming that Beni Suef has illegally occupied the plaintiff's land and is seeking compensation to the amount of EGP 300 million. The contested land however had been legally allocated to Beni Suef many years ago by the relevant authority, the New Urban Communities Agency, and since 1988 Beni Suef has held the licenses for the exploitation of the quarries on this land. The case has been postponed until August 5, 2018 for decision. The view of Beni Suef's lawyers is that the case has a high probability of being won.
The Group had granted to non controlling interest shareholder (International Finance Corporation - IFC) the option to sell its shares in ANTEA Cement SHA (Antea) at predetermined conditions. On 30 June 2018, the option's fair value of €11.6 mil. (31.12.2017: €12.1 mil.) is recognized as a current liability in the statement of financial position.
The financial years, referred to in note 13, have not been audited by the tax authorities and therefore the tax obligations of the Company and its subsidiaries for those years have not yet been finalized.
Other than the items referred to in the preceding paragraph, it is not anticipated that any material contingent liabilities will arise.
| (all amounts in Euro thousands) | Group | Company | |||
|---|---|---|---|---|---|
| 30/06/2018 | 31/12/2017 | 30/06/2018 | 31/12/2017 | ||
| Bank guarantee letters for securing trade | |||||
| receivables | 21,565 | 19,440 | 9,058 | 8,463 | |
| Other collaterals against trade receivables | 6,369 | 7,060 | 354 | 354 | |
| 27,934 | 26,500 | 9,412 | 8,817 | ||
| Collaterals against other receivables | 1,875 | 1,410 | 1,875 | 1,410 | |
| 29,809 | 27,910 | 11,287 | 10,227 |
Capital commitments contracted for at the balance sheet date but not recognized in the financial statements are as follows:
| (all amounts in Euro thousands) | Group | Company | |||
|---|---|---|---|---|---|
| 30/06/2018 | 31/12/2017 | 30/06/2018 | 31/12/2017 | ||
| Property, plant and equipment | 2,800 | 2,227 | - | - |
Energy supply contracts (electricity etc.)
| Group | Company | ||||
|---|---|---|---|---|---|
| (all amounts in Euro thousands) | 30/06/2018 | 31/12/2017 | 30/06/2018 | 31/12/2017 | |
| Not later than 1 year | 623 | 1,019 | - | - |
In addition to the aforementioned purchase commitments, the Group's US subsidiaries have entered into a contract to purchase raw materials and manufacturing supplies as part of their on-going operations in Florida. This contract includes the purchase of construction aggregates through a multi-year agreement at prevailing market prices.
The Group leases motor vehicles, properties and other equipment under non-cancellable operating lease agreements. The leases have varying terms, escalation clauses and renewal rights.
| Group | Company | ||||
|---|---|---|---|---|---|
| (all amounts in Euro thousands) | 30/06/2018 | 31/12/2017 | 30/06/2018 | 31/12/2017 | |
| Not later than 1 year | 11,916 | 11,679 | 679 | 737 | |
| Later than 1 year and not later than 5 years | 25,537 | 27,356 | 1,132 | 1,354 | |
| Beyond 5 years | 7,615 | 7,462 | - | - | |
| 45,068 | 46,497 | 1,811 | 2,091 |
The increase in Group inventories by €19.5 mil. is mainly due to the increased deliveries of spare parts and solid fuels.
The prepayments and other current assets of the Group and the Company have been increased mainly due to prepayments to electricity suppliers.
The increase in Group "other non-current liabilities" by €42.9 mil. includes the payable of the capital return to the shareholders of the Parent Company, amounting to €42.3 mil..
In January 2018, Titan Global Finance PLC issued Additional Guaranteed notes of nominal value €100 million. This was in connection with the reopening of €250 million issue of November 2017 with 2.375% coupon per annum and raised the total amount of the issue to €350 million due in November 2024.
On 19 February 2018, the Group's subsidiary in USA, Titan America LLC (TALLC), submitted to the Bank of New York Mellon Trust Company, N.A. the required notification to call for redemption the Miami-Dade County Industrial Revenue Bonds, Series 2004 on April 2, 2018. These bonds, amounting to \$21.8 mil. had an original maturity date of 26 April 2034.
The variance of €21.7 mil. in the account "losses from foreign exchange differences" in the income statement for the period ended 30 June 2018 compared to the six months of the previous year is mainly due to the valuation of loans and other liabilities (including intercompany loans) in Euro, recorded by the Group's subsidiaries that operate in Egypt and US and have other functional currency. The volatility arising from foreign exchange rate fluctuations will continue to affect the Group's performance until the full repayment of the respective loans.
There are no subsequent events to 30 June 2018, which would materially influence the Group's and the Company's financial position.
| Balance sheet | 30/06/2018 | 31/12/2017 | 30/6/2018 vs 31/12/2017 |
|---|---|---|---|
| €1 = USD | 1.17 | 1.20 | -2.8% |
| €1 = EGP | 20.90 | 21.34 | -2.0% |
| €1 = TRY | 5.34 | 4.55 | 17.4% |
| €1 = BRL | 4.49 | 3.97 | 13.3% |
| €1 = RSD | 118.07 | 118.47 | -0.3% |
| 1USD=EGP | 17.93 | 17.79 | 0.8% |
| Profit and loss | Ave 6M 2018 | Ave 6M 2017 | Ave 6M 2018 vs 6M 2017 |
| €1 = USD | 1.21 | 1.08 | 12.1% |
| €1 = EGP | 21.46 | 19.47 | 10.2% |
| €1 = TRY | 4.96 | 3.94 | 25.8% |
| €1 = BRL | 4.14 | 3.45 | 20.1% |
| €1 = RSD | 118.30 | 123.38 | -4.1% |
22A Halkidos Street - 111 43 Athens
Condensed financial information for the period of 1 January 2018 until 30 June 2018
Company's web address: www.titan-cement.com Board of Directors approval date: Name of the auditor: Auditing firm: PricewaterhouseCoopers S.A. Type of Auditor's Review Report:
| CONDENSED STATEMENT OF FINANCIAL POSITION (Amounts in € thousand) |
CONDENSED CASH FLOW STATEMENT (Amounts in € thousand) |
||||||||
|---|---|---|---|---|---|---|---|---|---|
| GROUP COMPANY |
GROUP | COMPANY | |||||||
| 1/1- | 1/1- | 1/1- | 1/1- | ||||||
| ASSETS | 30/06/2018 31/12/2017 30/06/2018 31/12/2017 | Profit/(loss) before taxes | 30/6/2018 35,217 |
30/6/2017 31,702 |
30/6/2018 -10,883 |
30/6/2017 -5,868 |
|||
| Tangible assets | 1,482,364 | 1,466,046 | 249,970 | 252,944 | Depreciation, amortization and impairment of tangible | ||||
| Investment properties | 12,130 | 12,130 | 8,937 | 8,937 | and intangible assets | 55,361 | 57,323 | 8,018 | 7,941 |
| Intangible assets Other non current assets |
357,991 173,337 |
345,971 177,223 |
9,187 666,605 |
8,093 Interest expense/(income) 782,302 Other non-cash adjustments |
31,485 345 |
28,319 30,123 |
7,299 -586 |
7,923 2,639 |
|
| Inventories | 277,740 | 258,204 | 68,704 | 65,410 | 122,408 | 147,467 | 3,848 | 12,635 | |
| Trade receivables | 124,151 | 115,429 | 36,985 | 37,883 Increase in inventories | -14,340 | -35,664 | -3,279 | -11,465 | |
| Other current assets | 97,858 | 66,217 | 78,199 | 29,966 (Increase)/decrease in trade and other receivables | -38,111 | -27,711 | -10,861 | 6,468 | |
| Cash and cash equivalents | 189,430 | 154,247 | 83,120 | 29,323 | Increase/(decrease) in trade and other payables | ||||
| TOTAL ASSETS | 2,715,001 | 2,595,467 1,201,707 | 1,214,858 | (excluding banks) | 14,591 | 3,542 | -7,679 | 3,232 | |
| Cash generated from/(used in) operations | 84,548 | 87,634 | -17,971 | 10,870 | |||||
| SHΑREHOLDERS EQUITY AND LIABILITIES | Income tax paid Net cash flows from/(used in) operating activities (a) |
-4,514 80,034 |
-7,799 79,835 |
-774 -18,745 |
-2,686 8,184 |
||||
| Acquisition of subsidiaries, net of cash | - | -14,392 | - | - | |||||
| Share Capital 84,632,528 shares of €3.45 (2017: €3.00) Share Premium |
291,982 22,826 |
253,897 22,826 |
291,982 22,826 |
253,897 22,826 |
(Payments)/proceeds for share capital increase/decrease in subsidiaries, joint ventures and associates |
-14,206 | -23,061 | 75,618 | 84,133 |
| Share stock options | 2,724 | 3,003 | 2,724 | 3,003 Payments for tangible and intangible assets | -55,101 | -71,981 | -6,239 | -8,194 | |
| Treasury Shares | -109,229 | -105,384 | -109,229 | -105,384 Other proceeds from investing activities | 2,515 | 1,070 | 4,769 | 830 | |
| Retained earnings and other reserves | 1,064,425 | 1,132,871 | 473,005 | 569,790 Net cash flows (used in)/from investing activities (b) | -66,792 | -108,364 | 74,148 | 76,769 | |
| Total share capital and reserves (a) | 1,272,728 | 1,307,213 | 681,308 | 744,132 Dividends paid | -754 | -8,399 | -500 | -8,399 | |
| Non-controlling interests (b) | 62,782 | 62,459 | - | - Net payments due to changes in share capital | -1,173 | -83,455 | -96 | -83,781 | |
| Total Equity (c)=(a)+(b) | 1,335,510 | 1,369,672 | 681,308 | 744,132 Net (payments)/proceeds related to treasury shares transactions | -4,085 | 171 | -4,085 | 171 | |
| Long-term borrowings Provisions and other long-term liabilities |
907,960 114,298 |
820,382 108,967 |
390,720 30,075 |
379,218 Interest paid 32,227 Net proceeds/(payments) of borrowings |
-22,045 47,356 |
-29,723 61,813 |
-6,840 9,973 |
-7,984 16,078 |
|
| Short-term borrowings | 32,543 | 56,825 | 8 | 32 Net cash flows from/(used in) financing activities (c) | 19,299 | -59,593 | -1,548 | -83,915 | |
| Other short-term liabilities | 324,690 | 239,621 | 99,596 | 59,249 | Net increase/(decrease) in cash and cash equivalents | ||||
| Total liabilities (d) | 1,379,491 | 1,225,795 | 520,399 | 470,726 | (a)+(b)+(c) | 32,541 | -88,122 | 53,855 | 1,038 |
| Cash and cash equivalents at beginning of the period | 154,247 | 179,710 | 29,323 | 11,218 | |||||
| TOTAL SHAREHOLDERS EQUITY AND LIABILITIES (c)+(d) | 2,715,001 | 2,595,467 1,201,707 | 1,214,858 Effects of exchange rate changes | 2,642 | -2,172 | -58 | -264 | ||
| Cash and cash equivalents at end of period | 189,430 | 89,416 | 83,120 | 11,992 | |||||
| - | - | ||||||||
| CONDENSED STATEMENT OF COMPREHENSIVE INCOME (Amounts in € thousand) |
CONDENSED STATEMENT OF COMPREHENSIVE INCOME (Amounts in € thousand) |
||||||||
| GROUP | COMPANY | GROUP | COMPANY | ||||||
| 1/4- | 1/4- | 1/4- | 1/4- | 1/1- | 1/1- | 1/1- | 1/1- | ||
| Revenue | 30/6/2018 | 30/6/2017 | 30/6/2018 | 30/6/2017 | 30/6/2018 | 30/6/2017 | 30/6/2018 | 30/6/2017 | |
| Cost of sales | 390,036 -275,440 |
411,986 -279,412 |
62,692 -53,041 |
64,685 Revenue -48,135 Cost of sales |
712,505 -520,233 |
773,821 -554,661 |
109,696 -93,022 |
125,427 -98,604 |
|
| Gross profit before depreciation,amortization | Gross profit before depreciation, amortization | ||||||||
| and impairment | 114,596 | 132,574 | 9,651 | 16,550 | and impairment | 192,272 | 219,160 | 16,674 | 26,823 |
| Other operating income/(expenses) | 2,297 | -2,028 | 4,223 | 3,962 Other operating income/(expenses) | 2,816 | -1,777 | 8,718 | 7,518 | |
| Administrative expenses | -32,610 | -33,425 | -10,649 | -11,420 Administrative expenses | -62,081 | -63,663 | -21,173 | -22,009 | |
| Selling and marketing expenses Profit before interest, taxes, depreciation, |
-5,581 | -6,107 | -86 | -99 Selling and marketing expenses Profit before interest, taxes, depreciation, |
-10,790 | -11,602 | -162 | -147 | |
| amortization and impairment | 78,702 | 91,014 | 3,139 | 8,993 | amortization and impairment | 122,217 | 142,118 | 4,057 | 12,185 |
| Depreciation, amortization and impairment | Depreciation, amortization and impairment | ||||||||
| of tangibles/ intangibles assets | -28,426 | -28,794 | -3,993 | -3,773 | of tangibles/ intangibles assets | -55,361 | -57,323 | -8,018 | -7,941 |
| Profit/(loss) before interest and taxes | 50,276 | 62,220 | -854 | 5,220 Profit/(loss) before interest and taxes | 66,856 | 84,795 | -3,961 | 4,244 | |
| Expenses from participations and investments | -123 | - | -123 | - Expenses from participations and investments | -123 | - | -123 | - | |
| Finance costs Share of loss of associates and joint ventures |
-15,376 -2,166 |
-26,888 -2,933 |
-2,558 - |
-5,437 Finance costs - Share of loss of associates and joint ventures |
-27,375 -4,141 |
-45,667 -7,426 |
-6,799 - |
-10,112 - |
|
| Profit/(loss) before taxes | 32,611 | 32,399 | -3,535 | -217 Profit/(loss) before taxes | 35,217 | 31,702 | -10,883 | -5,868 | |
| Income tax | -8,102 | -13,310 | 81 | -3,647 Income tax | -9,565 | -16,540 | 1,977 | -2,255 | |
| Profit/(loss) after taxes (a) | 24,509 | 19,089 | -3,454 | -3,864 Profit/(loss) after taxes (a) | 25,652 | 15,162 | -8,906 | -8,123 | |
| Attributable to: | Attributable to: | ||||||||
| Equity holders of the parent | 23,899 | 17,808 | Equity holders of the parent | 24,843 | 13,937 | ||||
| Non-controlling interests | 610 | 1,281 | Non-controlling interests | 809 | 1,225 | ||||
| Other comprehensive income/(loss) net of tax (b) | 19,715 | -59,191 | - | 106 Other comprehensive (loss)/income net of tax (b) | -4,796 | -73,320 | - | 106 | |
| Total comprehensive income/(loss) net of tax (a)+(b) | 44,224 | -40,102 | -3,454 | -3,758 Total comprehensive income/(loss) net of tax (a)+(b) | 20,856 | -58,158 | -8,906 | -8,017 | |
| Attributable to: | Attributable to: | ||||||||
| Equity holders of the parent | 41,929 | -38,556 | -3,454 | -3,758 Equity holders of the parent | 18,863 | -55,816 | -8,906 | -8,017 | |
| Non-controlling interests | 2,295 | -1,546 | Non-controlling interests | 1,993 | -2,342 | ||||
| Basic earnings per share (in €) | 0.2974 | 0.2207 | Basic earnings per share (in €) | 0.3091 | 0.1727 |
The following financial data provide summary information about the financial position and the results of operations of Titan Cement Co. S.A. (the Company) and, its subsidiaries (collectively the Group). We advise the reader, before making any investment decision or other transaction with the Group or the Company, to visit the Company's web site where the consolidated and separate financial statements, according to the IFRS, together with the review report of the external auditor are presented.
Without qualification Konstantinos Michalatos (SOEL R.N. 17701) July 25, 2018
Company's Number in the General Electronic Commercial Registry: 224301000 (former Company's Number in the Register of Societes Anonymes: 6013/06/Β/86/90)
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