Annual Report • Apr 28, 2017
Annual Report
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| Page | |
|---|---|
| ADDRESS BY THE EXECUTIVE CHAIRMAN | 4 |
| NOTICE OF ANNUAL GENERAL MEETING | 6 |
| ANNUAL REPORT AND FINANCIAL STATEMENTS | |
| Officers, professional advisors and bankers | 10 |
| Statement of the Members of the Board of Directors | 11 |
| Management report | 12 |
| Corporate governance report | 16 |
| Remuneration report | 22 |
| Directors' Curricula Vitae | 24 |
| Independent auditors' report | 28 |
| Consolidated statement of profit or loss and other comprehensive income | 34 |
| Company statement of profit or loss and other comprehensive income | 35 |
| Consolidated statement of financial position | 36 |
| Company statement of financial position | 37 |
| Consolidated statement of changes in equity | 38 |
| Company statement of changes in equity | 39 |
| Consolidated statement of cash flows | 40 |
| Company statement of cash flows | 41 |
| Notes to the financial statements | 42 |
Welcome to the 51st Annual General Meeting of our Company. On behalf of the Board of Directors, it is my privilege to present to you the financial results of the Group for the year ended 31st December 2016.
Following the upturn in cement consumption in the domestic market seen during the last half of 2015, 2016 has been a strong growth year, with domestic consumption demonstrating a volume increase of 25,5% versus those of 2015.
On the other hand, in the International arena, both on the Global and on the Regional front, the increase in cement and clinker availability for exports, coupled
with the decrease in demand across most of the traditional import markets, has not only put strong pressure on export volumes and pricing, but has also created challenges for all regional clinker producers in managing their kiln production cycle.
Nevertheless, the Company was well prepared to take advantage of its focus and efforts during the past few years' in positioning itself as a regional supplier and thus could respond well to these challenges so as to maintain its leadership position in the proximal markets and therefore in effect realizing only a small decrease of 4% in export volumes versus those of 2015.
On the cost structure side, the year was very favourable, mainly driven by savings against energy costs, both with regards to imported fossil fuels as well as electricity charges.
The revenues of the Group in 2016 increased to €94.744.000 from €90.035.000 in 2015. This, in combination with the close monitoring of production costs and the decrease in energy costs, have resulted in a further improvement of the operating results for the year, yielding an operating profit of €23.899.000 versus an operating profit of €17.680.000 in the year 2015.
The Board of Directors, having considered the positive results of 2016, the cash liquidity as well as the cashflow forecast of the Company, has decided to propose at the Annual General Meeting the payment of a dividend of €10.071.032 (€0,14 per share). These together with the interim dividend paid in September 2016, of €5.754.876 (€0,08 per share), will result in a total dividend for 2016 of €15.825.908, equal to €0,22 per share.
Investments in projects in line with our strategy to maintain and improve low operating costs in a cleaner and more sustainable environmental capacity continue. These include the operation of a new clinker ship loading facility to begin operation in the first quarter of 2017, and the completion of an additional new clinker silo (capacity 100,000 metric tonnes) by the first quarter of 2018. In addition, the Company has set a target of sustainable feeding of 45% of alternative fuels to replace fossil fuels by the end of 2018. Total investments for 2017 are expected to be in the tune of €13,5 million.
Finally, I would like to recognise all the Management team and our people at Vassiliko, for their work and continuous efforts to raise the bar on all aspects of our operations.
On behalf of all the Directors of the Board, many thanks are extended to all our valuable clients, domestic and regional, as well as our sincere thanks to the shareholders of the Company for the trust which they continue to bestow on us.
In closing, I would like to add my own personal thanks, to my colleagues, members of the Board of Directors, for their active participation, their advice and direction at all our Board meetings, during these challenging times.
Antonios Antoniou Executive Chairman
27 April 2017
The 51st Annual General Meeting of the shareholders of Vassiliko Cement Works Public Company Ltd will be held at the Amathus Beach Hotel, in Limassol, on the 30th of May 2017 at 5:00 p.m. to transact the following business:
By order of the Board M. MAVRIDOU Secretary
27 April 2017
Vassiliko Cement Works Public Company Limited 1A, Kyriakos Matsis Avenue, 4th Floor, CY-1082 Nicosia, Cyprus or by fax at +357 22 762 741 or by email at [email protected]
The formal Notice of the 2017 Annual General Meeting is set out on page 6. The Notice asks the shareholders of Vassiliko Cement Works Public Company Ltd to approve a number of items of business. For your information, the explanatory notes below summarise the purpose of each Resolution to be voted on by Vassiliko Cement Works shareholders at this year's Annual General Meeting.
The Chairman will present the Management Report for the year ended 31 December 2016 to the meeting.
The Chairman will present the Annual Financial Statements and KPMG Limited will present their Audit Report for the year ended 31 December 2016 to the meeting.
The Directors proposed the payment of a dividend for 2016, of €0,14 per Ordinary Share. If approved at the Annual General Meeting, the dividend will be paid to the entitled shareholders registered as at 12 June 2017 (record date). The share of the Company will be traded ex-dividend as of 9 June 2017. Payment of the dividend will be made (effected) till the 7 July 2017.
Messrs Antonis Mikellides, Stavros Galatariotis and Costas Koutsos are the Directors who will retire by rotation this year and offer themselves for re-election in accordance with the Company's Articles of Association.
Brief details of all Directors appear on pages 24 to 27 of the Annual Report.
The Shareholders are asked to approve the remuneration report that appears on pages 22 to 23.
The Shareholders are asked to approve the remuneration of the Directors for the year 2017 to remain the same as for the previous year, i.e.: €25.000 for the Chairman €20.000 for each of the Directors €300 attendance fee per meeting held
This resolution relates to the re-appointment of KPMG Limited as the Company's auditors to hold office until the next Annual General Meeting of the Company, and to authorise the Directors to set their remuneration.
| Directors: | ANTONIOS ANTONIOU(Executive Chairman) GEORGE ST. GALATARIOTIS COSTAS ST. GALATARIOTIS STAVROS G. GALATARIOTIS COSTAS KOUTSOS CHARALAMBOS PANAYIOTOU LEONDIOS LAZAROU MAURIZIO MANSI MONTENEGRO ANTONIS MIKELLIDES CHRISTOPHE ALLOUCHERY (Appointed 21/4/2016) IOANNIS KARIDIS (Appointed 17/11/2016) STEFANO COSTA (Appointed 18/2/2016 - resigned 17/11/2016) SERGE SCHMIDT (Resigned 31/3/2016) |
|---|---|
| General Manager: | GEORGE A. SIDERIS |
| Financial Manager: | GEORGE S. SAVVA |
| Secretary: | MARIA MAVRIDOU |
| Independent Auditors: | KPMG LIMITED 14, ESPERIDON STREET 1087 NICOSIA CYPRUS |
| Legal Advisοrs: | TASSOS PAPADOPOULOS & ASSOCIATES CHRYSSES DEMETRIADES & CO. LLC L. PAPAPHILIPPOU & CO LLC LEONIDAS G. GEORGIOU HERMES S. STYLIANIDES LLC |
| Bankers: | ALPHA BANK LTD BANK OF CYPRUS PUBLIC COMPANY LTD CCS MAKRASYKAS LARNAKAS EPARXIAS AMMOCHOSTOU LTD EUROBANK EFG CYPRUS LTD HELLENIC BANK PUBLIC COMPANY LTD NATIONAL BANK OF GREECE (CYPRUS) LTD NATIONAL BANK OF GREECE SA UBS SWITZERLAND AG |
| Registered office: | 1A, KYRIAKOS MATSIS AVENUE CY-1082 NICOSIA CYPRUS |
| Registered number: | 1210 |
| Internet website: | www.vassiliko.com |
| Antonios Antoniou | Executive Chairman |
|---|---|
| George St. Galatariotis | Non Executive Director |
| Costas St. Galatariotis | Non Executive Director |
| Stavros G. Galatariotis | Non Executive Director |
| Costas Koutsos | Non Executive Director |
| Charalambos Panayiotou | Non Executive Director |
| Leondios Lazarou | Independent Non Executive Director |
| Antonis Mikellides | Independent Non Executive Director |
| Christophe Allouchery | Non Executive Director |
| Ioannis Karidis | Non Executive Director |
The Board of Directors of Vassiliko Cement Works Public Company Ltd (the 'Company') presents to the members its annual report together with the audited financial statements for the year ended 31 December 2016.
The consolidated financial statements for the year 2016 include the results of the holding company, its subsidiaries and associate companies.
The Group's principal activities are the production of clinker and cement, which are distributed in the local and international markets. The Group also has a presence in aggregates quarrying through its associate companies.
The revenue for 2016 reached €94.744.000 compared to €90.035.000 for 2015, showing an increase of 5,2%. Revenue increased as a result of higher sales volumes despite some decreases in pricing.
Production costs decreased, primarily driven by savings on fuels and electricity as a result of lower prices, efficiencies and substitution of fossil fuels with other alternative sources. Increased revenues together with cost reductions, resulted in the improvement of the operating profit to €23.899.000 (2015: €17.680.000).
Profit from investing activities of €464.000 (2015: loss €1.064.000) resulted from gains on the revaluation of investment property and assets classified as held for sale.
The results of the Group are presented in the consolidated statement of comprehensive income. The profit after taxation for the year ended 31 December 2016 amounted to €20.596.000 compared to €12.849.000 in 2015.
On 28 July 2016, the Board of Directors approved the payment of an interim dividend of 8 cents per share of €5.754.876.
The Board of Directors recommends the payment of an additional dividend of €10.071.032 or €0,14 per share. The total dividend to be paid for 2016 will be €15.825.908 or €0,22 per share. The total dividends paid for 2015 were €10.071.032 or €0,14 per share.
Statements made in this report that are not historical facts, including the expectations for future volume and pricing trends, demand for the products, energy costs and other market developments are forward looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions ("Factors"), which are difficult to predict.
Some of the Factors that could cause actual results to differ materially from those expressed in the forward-looking statements include, but are not limited to: the cyclical nature of the Company's business; national and regional economic conditions; currency fluctuations; energy prices; emission rights price fluctuation; seasonal nature of the Company's operations; levels of construction spending and, in particular, in Government infrastructure projects announced; supply/demand structure of the industry; competition from new or existing competitors; unfavourable weather conditions during peak construction periods; changes in and implementation of environmental and other
governmental regulations. In general, the Company is subject to the risks and uncertainties of the construction industry. The forward-looking statements are made as of this date and the Company undertakes no obligation to update them, whether as a result of new information, future events or otherwise.
Further information for risks and uncertainties to which the Group is exposed, is disclosed in note 35 of the financial statements.
The operating cost base of the Company went through an optimisation process, to achieve the full benefits from the new production line through process optimisation, and further reposition according to the new market conditions in the Cyprus economy. The Company has managed to establish itself as a key regional cement producer in the Mediterranean basin, utilising effectively the plant capacity which, in turn, will affect positively the operating results of the Company.
No important events have occurred after the reporting period (note 37 of the financial statements).
The issued share capital of the Company comprises 71.935.947 ordinary shares of €0,43 per share. There were no changes to the share capital of the Company during 2016. The Company's shares are listed on the Cyprus Stock Exchange.
There are no restrictions on the transfer of the Company's shares other than the requirements of the Directive on Insider Dealing and Market Manipulation, which relates to transactions with related parties.
The Company does not have any shares in issue which carry special control rights.
The Company has not contracted any agreement which becomes effective, is amended or ceases to apply in case of change of control following a public tender offer to the Company's shareholders or the proposal of a resolution to the general meeting of the Company for a merger, acquisition or sale of its operations.
There are no agreements with the Executive Directors or employees of the Company providing for compensation in case of resignation or dismissal without a valid reason or for termination of their employment due to a public tender offer for the acquisition of the shares of the Company. In case of termination by the Company of the employment of Executive Directors or employees, prior to their retirement, the Company has to compensate them according to the provisions of the Law and the Company's agreements with the Trade Unions.
The beneficial interest in the Company's shares held by members of the Board of Directors, directly or indirectly, at 31 December 2016 and 21 April 2017, is set out in note 31 of the Financial Statements.
During the year, the Group did not operate any branches.
The members of the Board of Directors on the date of the report appear on page 10. In accordance with the Company's Articles of Association (Article 92), at the next Annual General Meeting, Messrs Leondios Lazarou, Antonis Mikellides, Stavros Galatariotis and Costas Koutsos retire from office by rotation.
All above mentioned Directors, being eligible, offer themselves for re-election except Mr. Leondios Lazarou, Independent non-Executive Director, who is completing nine years on the Board of Directors of the Company, which are the maximum allowed for a Director to be independent under the Corporate Governance Code.
Mr Ioannis Karidis who was appointed by the Board of Directors on 17/11/2016 as non-Executive Director is subject to retirement (Article 97) at the next Annual General Meeting and will not offer himself for election.
The Directors who served during the period from 16 June 2016, the date of the last Annual General Meeting, till this date were the following:
| Antonios Antoniou | |
|---|---|
| George St. Galatariotis | |
| Costas St. Galatariotis | |
| Stavros G. Galatariotis | |
| Costas Koutsos | |
| Charalambos Panayiotou | |
| Leondios Lazarou | |
| Maurizio Mansi Montenegro | |
| Antonis Mikellides | |
| Christophe Allouchery | (Appointed 21/04/2016) |
| Ioannis Karidis | (Appointed 17/11/2016) |
| Stefano Costa | (Appointed 18/02/2016 - resigned 17/11/2016) |
The responsibilities of the Directors as members of the Board Committees are disclosed in the Corporate Governance Report.
There were no material changes to the compensation of the Board of Directors.
The Company recognises the importance of implementing corporate governance principles and adopted the CSE's Corporate Governance Code and applies its principles. The CSE's Corporate Governance Code is available on the CSE website (www.cse.com.cy).
The Company complies with the provisions of the 4th Revised Edition of the Corporate Governance Code of the CSE, except for the Board Balance Principle and the Provision B.1.2 regarding the independence criteria of the members of the Remunerations Committee, which are not fully met as further explained in the Corporate Governance Report.
The Corporate Governance Report of the Company for 2016 is available on the website of the Company (www. vassiliko.com).
The rules governing the composition and function of the Board of Directors and the appointment and replacement of its members as well as the composition and function of the Board Committees are set out in Section B of the Report on Corporate Governance.
Any amendment or addition to the Articles of Association of the Company is only valid if approved by a special resolution at a shareholders' meeting.
The Board of Directors may issue share capital if there is sufficient share capital which has not been issued and as long as the new shares to be issued are offered first to the existing shareholders, pro-rata to their percentage holding. In the event that the new shares will not be offered to existing shareholders, a resolution approved with a special majority of at least the 80% of the shareholders, who are entitled to attend and vote in a General Meeting, must be passed. In the event that a share capital increase requires an increase in the authorised share capital, the approval of the shareholders in a General Meeting must be obtained. The Board of Directors may also propose to the General Meeting of shareholders a share buyback scheme.
There are no restrictions in voting rights and special control rights in relation to the shares of the Company.
The shareholders holding directly or indirectly more than 5% of the issued share capital of the Company as at 31 December 2016 and 21 April 2017, are set out in note 32 of the financial statements.
The Group has in place an effective internal audit system, the adequacy of which is evaluated at least annually by the Board of Directors and the Board's Audit Committee, in respect of financial and operational systems. The adequacy of the Internal Audit System secures the validity of financial data and compliance with relevant legislation and aims to secure the management of risks while providing reasonable assurance that no loss will incur.
The Group's internal audit systems incorporate effective procedures aiming at the identification and prevention of errors, omissions or fraud that could result in material misstatements during the preparation of financial statements and relevant disclosures included in the periodic reporting provided by the Group based on Part II of the Transparency Law of Cyprus (Law Providing for Transparency Requirements in relation to Information about Issuers whose Securities are listed for trading on a Regulated Market) of 2007 and its amendments.
The independent auditors of the Company, KPMG Limited, have expressed their willingness to continue in office. A resolution to fix their remuneration will be proposed at the Annual General Meeting.
On behalf of the Board of Directors ANTONIOS ANTONIOU Executive Chairman
27 April 2017
The Company has adopted the 4th Revised Edition of the Corporate Governance Code, issued by the Cyprus Stock Exchange in April 2014. At the date of this report the principles of the Corporate Governance Code are partly implemented, given that the Principle regarding Board Balance as well as the Provision B.1.2 of the Corporate Governance Code regarding the independence criteria of the members of the Remunerations Committee are not fully met.
The Company is headed by the Board of Directors which at 31 December 2016 comprised one Executive and ten non-Executive Directors and is responsible to the shareholders for the proper management of the company Tsimentopiia Vassilikou Dimosia Eteria Ltd (Vassiliko Cement Works Public Company Ltd) and its subsidiaries. The non-Executive Directors comprised two independent Directors and eight non-independent Directors. The members of the Board (excluding the Chairman) comprised two independent non-Executive Directors and eight non-independent Directors, all of which are non-Executive Directors. The independent non-Executive Directors of the Board were Mr. Leondios Lazarou and Mr. Antonis Mikellides.
The Board of Directors of the Company as at the date of this report comprises the following members:
| Antonios Antoniou | – Executive Chairman |
|---|---|
| George St. Galatariotis | – non-Executive Director |
| Costas St. Galatariotis | – non-Executive Director |
| Stavros G. Galatariotis | – non-Executive Director |
| Costas Koutsos | – non-Executive Director |
| Charalambos Panayiotou | – non-Executive Director |
| Leondios Lazarou | – Independent non-Executive Director |
| Maurizio Mansi Montenegro | – non-Executive Director |
| Antonis Mikellides | – Independent non-Executive Director |
| Christophe Allouchery | – non-Executive Director |
| Ioannis Karidis | – non-Executive Director |
The Company's shares are traded in the Alternative Market of the Cyprus Stock Exchange. Corporate governance provisions regarding Board Balance for Companies listed in the Alternative Market provide that the majority of the non-Executive Directors, or at least two Directors, have to be independent non-Executive Directors. The Company complies with the above Board Balance provision since two members of the Board are Independent non-Executive Directors. Based on the provisions of the Corporate Governance Code, and given that the Board of Directors is comprised of two Independent non-Executive members and nine non-Independent members (executive and non-executive), Board Balance is not met according to Principle A.2 of the Corporate Governance Code.
Mr. Leondios Lazarou, independent non-Executive Director, was appointed on 31 July 2008 as Senior Independent Director. The Senior Independent Director of the Company is available to shareholders if they have concerns that have not been resolved through the normal channels of contact with the Executive Chairman, the Executive Vice-Chairman or the General Manager or for which such contact is inappropriate. The Senior Independent Director will attend sufficient meetings of major shareholders and financial analysts to develop a balanced understanding of the issues and concerns of such shareholders. The Senior Independent Director can be contacted initially via the Company Secretary at the Registered Office of the Company.
The Board has six scheduled meetings a year, setting and monitoring the Group's strategy, reviewing trading performance, ensuring adequate funding, examining major capital expenditure, formulating policy on key issues and reporting to shareholders where appropriate. The Board of Directors convened 7 times during 2016. In accordance with best practice, the Board has established the Audit Committee, the Remunerations Committee and the Nominations Committee as per the requirements of the Code. The Company Secretary is responsible to and appointed by the Board and all Directors have access to her advice and services. Directors may obtain independent professional advice if necessary, at the Company's expense. Formal agendas, papers and reports are supplied to Directors in a timely manner, prior to Board meetings. Briefings are also provided at other times, for example, through operational visits and business presentations.
There is a division of responsibility for the management of the Group between the Executive Chairman, and the General Manager.
The Executive Chairman, Mr. Antonios Antoniou, has, among others, the following duties & responsibilities:
The General Manager of the Company, Mr. George Sideris, among others, has the following duties & responsibilities:
The Nominations Committee is chaired by Mr. G. St. Galatariotis (non-Executive Director) and is composed of two other Directors, Messrs C. Koutsos (non-Executive Director) and L. Lazarou (Independent non-Executive Director). All the members of the Committee are non-Executive Directors. The Nominations Committee is responsible for the selection and nomination of any new Director, for the Board's consideration. The Committee is responsible to carry out a selection process. Upon the appointment of a new Director, appropriate training is provided as required. In accordance with the Articles of Association of the Company and the Corporate Governance Code, four out of the eleven Directors of the Company retire by rotation every year (each Director retires every two or three years) and, if eligible, may offer themselves for re-election. The Board has set the 75th year of age as the year of retirement.
Importance is attached to maintaining a dialogue with the Company's institutional shareholders. The Annual General Meeting is used as a forum for communicating with shareholders, providing briefings on the Company's performance during the year under review and current business activity. There will be an opportunity for shareholders to meet with and put questions to the Directors, including the chairmen of the Audit, Nominations and Remunerations Committees. At Annual General Meetings, separate resolutions are proposed on each substantially separate issue and the number of proxy votes received for and against each resolution is announced. Members with voting rights of 5% may place items on the agenda of Annual General Meetings by submitting such items, either in hard copies or soft copies (electronic), accompanied with relevant explanations, at least 42 days before the date of the Annual General Meeting. Notices of Annual General Meetings are sent to the shareholders at least 21 days before the meeting. The Board of Directors appointed Mr. George Savva as Investor Liaison Officer to facilitate better communication with shareholders and investors.
The preparation and presentation of this report and financial statements and other price sensitive public reports, seek to ensure that reports are prepared in a way that represents a balanced and understandable assessment of the Group's position and prospects.
Risk assessment and review is carried out by the executive management with details of significant risks being documented. Periodic reports relating to significant risks and associated controls are prepared from this documentation and presented to the Board for its review. The Board has overall responsibility for the Group's systems of internal control and for reviewing their effectiveness on an annual basis, as well as of the procedures which confirm the accuracy, completeness and validity of the information that is provided to the investors. The review covers all systems of internal control, including financial and operational systems, as well as compliance systems and systems for the management of risks, which threaten the attainment of the Company's objectives. On the basis of the process described above during the year the Internal Auditors prepare Internal Audit Reports addressed to the Audit Committee which informs the Board through its Annual Internal Audit Report. According to the Internal Auditors Reports, the systems of internal control do not present any significant weaknesses. The Board has reviewed the key risks inherent in the Group, together with the operating, financial and compliance controls that have been implemented to mitigate those key risks. However, any system of internal control can provide only reasonable and not absolute assurance against material misstatement or loss. The Board has put in place an organisation structure with clearly defined lines of accountability and delegated authority. The principles have been designed to establish clear local operating autonomy within a framework of central leadership, stated aims and objectives. Procedures were established for business planning, budgeting, capital expenditure approval and treasury management. The Executive Directors regularly review the operating performance of each business and monitor progress against business plans.
The Audit Committee comprises of Messrs C. St. Galatariotis (Chairman of the Committee - non-Executive Director), L. Lazarou (Independent non-Executive Director) and A. Mikellides (Independent non-Executive Director). The majority of the members of the Audit Committee are Independent non-Executive Directors. The Committee meets at least four times a year and provides a forum for reporting by the Group's external and internal auditors who have access to the Committee for independent discussion, without the presence of the Executive Directors. The Audit Committee reviews a wide range of financial matters including the annual and half-yearly results, statements and accompanying reports, before their submission to the Board and monitors the controls which are in force to ensure the integrity of the financial information reported to shareholders, and also oversees the procedures for the selection of accounting policies and accounting estimates for the Company's financial statements and ensures that a mechanism is in place to ensure the Company's assets, including the prevention and detection of fraud. The Audit Committee also advises the Board on the appointment of external auditors and on their remuneration both for audit and non-audit work, as well as proposes to the Board of Directors the appointment and revocation of appointment of the audit firm assigned with the Internal Audit functions, and ensures its independence. The Group's internal audit function is outsourced to PricewaterhouseCoopers Ltd, a professional Auditors Firm, which monitors the Group's internal financial control, the internal control systems and risk management systems and reports to the management and to the Audit Committee. The Audit Committee considers the above mentioned periodic reports whereas the Management is responsible for the implementation of the recommendations made by internal audit that carry out post-implementation reviews. The external auditors carry out independent and objective reviews and tests of the internal financial control processes, only to the extent that they consider necessary to form their judgement when expressing their audit opinion on the accounts. The Audit Committee discusses extensively with the auditors significant audit findings arising during their audit work, which were resolved or remained unresolved, as well as the auditor's report which refers to weaknesses in the internal control system, in particular those concerning the procedures of financial reporting and the preparation of financial statements.
After making appropriate enquiries, the Directors consider that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the accounts and state that the Company intends to operate as a going concern for the next twelve months.
The Remunerations Committee comprises of three non-Executive Directors. The members of the Remunerations Committee are Messrs Ch. Panayiotou (non-Executive Director), St. Galatariotis (non-Executive Director) and A. Mikellides (Independent non-Executive Director). The Committee is chaired by Mr. Ch. Panayiotou who has knowledge and experience in remuneration policy. Even though all the members of the Remunerations Committee are non-executive Directors, only one director out of the three members of the Remunerations Committee is independent non-executive director according to the criteria of independency of a director as these are defined by the provision A.2.3. of the Corporate Governance Code. The Committee will usually meet at least once a year. The Group Executive Chairman will normally be invited to attend its meetings in order to make recommendations regarding the remuneration of the General Manager. The Committee periodically reviews the remuneration policy for the Executive Directors and the General Manager. Independent external legal and consultancy advice is obtained when necessary. The Group Executive Chairman is not present when his own remuneration is discussed.
The Remuneration policy of the Directors of the Company is included in the Remunerations Report (page 22).
All the Directors are subject to election by the shareholders at the first Annual General Meeting that follows their appointment and thereafter retire every two to three years. According to the Articles of Association, one third of the eleven Company Directors retire from the Board at each Annual General Meeting. The Directors liable to retirement according to the above provisions are those who served as members of the Board for the longest period since their last election.
In accordance with the Company's Articles of Association (Article 92), at the next shareholders Annual General Meeting Messrs Leondios Lazarou (Independent non-Executive Director), Antonis Mikellides (Independent Non-Executive Director), Stavros Galatariotis (Non-executive Director) and Costas Koutsos (Non-Executive Director) shall retire from office by rotation. All above mentioned Directors, being eligible, shall offer themselves for reelection except Mr. Leondios Lazarou, Independent non-Executive Director, who is completing 9 years on the Board of Directors of the Company, which are the maximum allowed for a director to be independent under the Corporate Governance Code.
Mr. Ioannis Karidis who was appointed by the Board of Directors as non-Executive Director on 17 November 2016 is subject to retirement (Article 97) at the next general meeting and will not offer himself for election.
No loans and/or guarantees were granted to the Directors of the Company or to Directors of any subsidiary or related company, either by the Company itself or by its subsidiary or related companies, and there are also no monies receivable from any company a Director and/or any person related to him, is involved with.
The Board of Directors appointed Mr. George Savva, Financial Manager of the Company, at the position of Compliance with the Code of Corporate Governance Officer.
The Board of Directors assures that to the best of its knowledge, there has been no violation of the Securities and Stock Exchange of Cyprus Law and Regulations.
The Remuneration Report of the Company for the year 2016 has been prepared according to Appendices 1 and 2 of the Corporate Governance Code.
The Remunerations Committee of the Board is responsible for ensuring that the remuneration packages awarded to Executive Directors are appropriate to individual levels of responsibility and performance, are consistent with the Company's remuneration policy, and are in line with the principles of the Corporate Governance Code.
The Board's policy is to employ high calibre people for its key positions. It requires a corresponding level of performance from those people and seeks to reward accordingly. The Group may commission special reviews from time to time to assess the Directors' compensation levels. Account is taken of the salary and total remuneration levels prevailing in comparable jobs both inside and outside the Construction and Building Materials sector, together with the individual performance and contribution of each Executive Director.
The remuneration of the Executive Chairman and the General Manager includes variable-pay components to ensure that the executive remuneration is linked to the Company's performance. A maximum limit of the variablepay component is set. The non-variable component is sufficient remuneration when a variable remuneration is not granted. The Board considers that packages of this nature are consistent with prevailing practice and are necessary to attract, retain and reward executives of the calibre the Group requires. In framing the policy, the Board has given full consideration to the provisions of the Corporate Governance Code. The annual incentive plan rewards for the performance of the previous year and is paid in cash. The maximum bonus payment is expressed as a percentage of base salary and is based on the evaluation of the performance of the Executive Chairman and the General Manager conducted by the Remunerations Committee at the year following the performance period. The Remunerations Committee evaluates the performance of the Executive Chairman and the General Manager considering the Company's financial performance, costs containment measures, measures towards the Group's long-term viability, as well as non-financial criteria relating to development and creating long term value for the Group. Bonuses granted in 2016 concern rewards for the financial performance of the Company for the year 2015. The Company reserves the right for full or partial recovery of any bonuses granted on the basis of information which subsequently proves to be inaccurate.
In addition to the base salary and incentive plan participation, the Executive Chairman and the General Manager enjoy the same benefits as other employees of the Company, which include provident fund and medical fund.
No significant changes were made to the remuneration policy of the Company for the year 2016 compared to the previous year.
The total remunerations of the Executive Directors under their capacity as Executives for the year 2016 were €192.161.
All the Employees of the Company including the General Manager and the Executive Chairman are members of the Company's Provident Fund, which is a defined contribution scheme. No other additional pension schemes exist for any of the Executive Members of the Board.
Employment of Executive Directors are for indefinite period, however notice period does not exceed one year as per the requirements of the Corporate Governance Code. In case of termination by the Company of the employment of Executive Directors, prior to their retirement, the Company has to compensate the Executive Directors according to the provisions of the Law.
The remuneration of the Directors, both Executives and non-Executives, for services rendered to the Company as Directors, is determined by the annual general meeting of the Company on the proposal of the Board. The non-Executive Directors have letters of appointment for a three-year term. They do not participate in any profit sharing, share option or other incentive scheme. The remunerations for each of the Directors for 2016 were €20.000, and €25.000 for the Chairman and €300 per meeting for attendance in person.
The remunerations of the Directors, Executives and non-Executives, under their capacity as Directors of the Company and as members of the Board of Directors' Committees as well as under their capacity as Executive Directors for 2016 were as follows:
| Directors | Fees as Members of the Board and its Committees |
Fees and emoluments as executives |
Bonuses | Other Benefits |
Social Benefits |
Provident Fund |
Total Remuneration |
|---|---|---|---|---|---|---|---|
| € | € | € | € | € | € | ||
| Executive Directors | |||||||
| Antonios Antoniou | 27.700 | 150.000 | 25.000 | 4.800 | 4.243 | 8.118 | 219.861 |
| Non-Executive Directors | |||||||
|---|---|---|---|---|---|---|---|
| George St. Galatariotis | 24.500 | - | - | - | - | - | 24.500 |
| Costas St. Galatariotis | 22.700 | - | - | - | - | - | 22.700 |
| Stavros G. Galatariotis | 22.100 | - | - | - | - | - | 22.100 |
| Costas Koutsos | 23.900 | - | - | - | - | - | 23.900 |
| Charalambos Panayiotou | 23.000 | - | - | - | - | - | 23.000 |
| Leondios Lazarou | 23.900 | - | - | - | - | - | 23.900 |
| Serge Schmidt | 4.973 | - | - | - | - | - | 4.973 |
| Maurizio Mansi Montenegro | 21.200 | - | - | - | - | - | 21.200 |
| Antonis Mikellides | 22.700 | - | - | - | - | - | 22.700 |
| Stefano Costa | 15.818 | - | - | - | - | - | 15.818 |
| Christophe Allouchery | 14.834 | - | - | - | - | - | 14.834 |
| Ioannis Karidis | 2.759 | - | - | - | - | - | 2.759 |
No loans and/or guarantees were granted to the Directors of the Company or to Directors of any subsidiary company or to their related parties by the Company and its subsidiary companies.
Mr. Antonios Antoniou was born in London in 1954. He studied at the University of London where he obtained a BSc (Hons) degree and a postgraduate diploma.
Mr. Α. Antoniou worked for 5 years as a Biochemist at University College London and for 3 years as a Computer Systems Analyst at British Gas Headquarters in London. He was a founding partner of AMER World Research Ltd and Deputy General Manager from 1983 until 1998. From 1998 until 2006 he served as Senior Vice President (Operations and Systems) of Nielsen Europe and was a member of the European Executive Committee.
As from February 2008 he has been the Executive Chairman of Vassiliko Cement Works Public Company Ltd.
He is a Member of the Board of Directors of the Cyprus Employers & Industrialists Federation and a Member of its Executive Committee.
Mr. George St. Galatariotis was born in Limassol in 1947. He studied Business Administration at City Polytechnic in London.
Mr. George Galatariotis is Executive Chairman of Galatariotis Group of Companies, Executive Chairman of The Cyprus Cement Public Company Ltd and K&G Complex Public Company Ltd. He is also Member of the Board of Directors of several private and public companies. He is a Trustee of the Cyprus Conservation Foundation (Terra Cypria). Mr. George Galatariotis has also served as a member of the Board of Limassol Chamber of Commerce and Industry and the Cyprus Ports Authority. As from 2017 Mr. Galatariotis is a member of the Board of Directors of the Cyprus Employers & Industrialists Federation.
Mr. Costas St. Galatariotis was born in Limassol in 1963. He graduated the 5th Gymnasium of Limassol and he studied Economics, Industry and Commerce at the London School of Economics and Political Science.
Mr. Costas Galatariotis is Executive Chairman of the Galatariotis Group of Companies, Executive Chairman of C.C.C. Tourist Enterprises Public Company Ltd and member of Boards of Directors of several private and public companies. He is a member of the board of directors of the Association of Cyprus Tourist Enterprises (ACTE). Mr. Costas St. Galatariotis is Chairman of the Audit Committee of Vassiliko Cement Works Public Company Limited since 2008.
Mr. Costas St. Galatariotis has served as Honorary Consul General of Japan in Cyprus from 2007 until 2012. Since September 2014 he is the President of the Board of the Limassol Chamber of Commerce and Industry.
Mr. Stavros Galatariotis was born in Limassol in 1976. In 1999 he graduated from the University of Surrey with a BSc in Business Economics (First Class). During his studies he was awarded the CIMA award by the Chartered Institute of Management Accountants. Stavros holds an MBA from the Cyprus International Institute of Management.
Since 2000, Stavros Galatariotis is an Executive Director of the Galatariotis Group of Companies and a member of the Board of Directors of several private and public companies. He is a Director of Vassiliko Cement Works Public Company Ltd since 2008.
Mr. Costas Koutsos is the Executive Chairman of KEO Plc and Member of the Board of Directors of Hellenic Mining Public Company Ltd. Between 1978 and 2011 he was the Managing Director of BMS Metal Pipes Industries Group. He is a Financial Consultant, Companies Tax Consultant, Secretary and Member of the Board of Directors of other private companies. Mr. C. Koutsos is a qualified accountant and he has worked for twelve years in a senior position in an international audit firm. He has a perennial experience in the Cyprus Stock Exchange Market. He is an active member of various charitable foundations. He served as Member of the Board of Directors of Cyprus Metal Industry Association, member of the Cyprus Employers and Industrialists Federation from 1985 to 2011.
Mr. Charalambos Panayiotou was born on the 6th of July 1971. He studied Management Sciences (BSc) at the London School of Economics and Political Science (1993). He joined Coopers & Lybrand as a Chartered Accountant trainee in the audit and tax department from 1993 to 1996. He is a member of "The Institute of Chartered Accountants in England and Wales" as well as a Member of "The Institute of Certified Public Accountants of Cyprus" since 1996. He then joined the Cyprus Popular Bank Ltd. In 2000 he was appointed Financial Controller of the Holy Bishopric of Paphos, Executive member of the Board of Directors of St. George Hotel (Management) Ltd as well as of SM Tsada Golf Ltd until September 2010, upon which date he was appointed as Managing Director of the KEO PLC Group. He is a Member of the Board of Directors of Hellenic Mining Group Companies. He served as a Member of the Board of the Hellenic Bank Public Company Ltd from June 2005 to January 2014. During this same period he served as Chairman of the Hellenic Bank (Investments) Ltd. As from 2017 Mr. Panayiotou is a member of the Board of Directors of the Cyprus Employers & Industrialists Federation.
Mr. Leondios Lazarou was born in Pano Amiandos in 1952. He studied Chemistry at the University of Athens where he received in 1976 his Bachelors Degree and in 1979 his Doctorate in Analytical Chemistry. During the preparation of his doctorate thesis he worked at the University as a Lecturer. During the period 1979 - 1997 he served the Vassiliko Cement Works from the positions of the Quality Inspection Manager, the General Manager and the Managing Director. He was a Member of the Board of Directors of Hellenic Mining Company, Vassiliko Cement Works and Hellenic Chemical Industries. From 1997 until 1999 was an associate of "Aris Petasis and Associates (Business Consultants)" where he worked as Business Consultant. During the period 1999-2004 he worked as General Manager of Salamis Tours (Holdings) Ltd with main objective the restructuring of the group companies and further development of its activities. In 2004, Mr. L. Lazarou established the consultancy firm "Skepsis – Linchpin in Development" for the provision of consultancy services to businesses.
Mr. Maurizio Mansi Montenegro was born on March 10, 1962. He holds a degree in Statistical Science from Rome University "La Sapienza", and a post-graduate degree in Strategic and International Marketing from SDA Bocconi (Milan), after having attended the International Executive Programme at "Institut Européen d'Administration des Affaires" (INSEAD).
He started his career in Hewlett- Packard as a Business Analyst, then as a Strategic Planning Specialist in Augusta – Westland.
In 1990, he joined Italcementi Group as a Marketing Analyst Coordinator and, after seven years of experience in the Group's Strategic Plan Direction, he has been responsible for Cement Commercial activities in Egypt. In 2007 he was appointed as Assistant to the C.E.O. of Italcementi S.p.A., and between 2009 and 2016 he was the Managing Director of Interbulk Trading S.A.
Since January the 1st 2017 he is the Deputy C.E.O. of HC Trading BV, the trading company of Heidelberg Cement Group. He is also a member of the Board of Directors of Intercom S.r.l., Intercom Libya F.Z.C, Hilal Cement Co., and Al Mahaliya Ready Mix Concrete Co.
Mr. Antonis Mikellides was born in London in 1978. He studied at the University of Westminster where he obtained a BA degree in Business Computing and holds a Postgraduate degree in Shipping, Trade and Finance from City University London as well as a diploma in Terrorism Studies, focusing mainly on Marine Piracy, from the University of St. Andrews in Scotland.
Mr. Α. Mikellides joined Zela Shipping Co Ltd in London in 2002 as a fleet operator, and in 2006 was in charge of restructuring the fleet's management company in Piraeus Greece. As from 2010 he has been a Director, Chief Financial Officer and Vice-President of Olympia Ocean Carriers Ltd and in 2012 also became a Director of Sea Trade Holdings. Mr. Antonis Mikellides has been elected on the Board of Directors of the Cyprus Union of Shipowners since 2009.
Mr. Christophe Allouchery was born in France in 1971. Christophe graduated in Economics from Paris II University, and holds two Master's degrees in Finance awarded in 1996 from Paris School of Business.
He started his career in Grant Thorton in 1997 as financial auditor and in 2000 he joined Ciments Calcia in Guerville (France), member of Italcementi Group, as Head of Analytical Accounting and then Head of Cement Controlling. In 2010 he moved to Italcementi Group Headquarters in Bergamo (Italy) and was promoted Senior Zone Controller – Assistant to the Zone Manager, responsible for Egypt, Greece, Bulgaria, Kuwait, Saudi Arabia, Kazakhstan and Turkey. He is the Finance Director of the Bulgarian and Albanian activities of Heidelberg Cement since October 2016 and Chief Financial Officer and Board member of Halyps Building Materials in Athens (Greece) since 2013. He is also member of the board of Devnya Cement, Vulkan Cement, Lyulyaka Materials and Devnya Business Center, all located in Bulgaria.
Mr. Ioannis Karidis graduated from the Catholic University of Milan (Italy) where he obtained his BA in Economics & Commerce.
His professional career started with Interservice Distribution, as Risk Manager. He then joined Makita Corporation, where he held several positions including Area Manager in the Italian Branch. From 1999 until 2006 he was the Managing Director of Makita Greece S.A.
Since 2006, Ioannis Karidis joined Italcementi. He has been in charge of Calcestruzzi activities as a Zone Director and then as International Development Manager.
Since 2012 he is General Manager of Suez Bags Company as well as Vice President Finance and Board Member of Ready Mix Beton Egypt and Decom.
In 2014, he was also appointed Country Manager for Kuwait (HILAL Cement Company) and Saudi Arabia (ICC Ltd).
We have audited the accompanying consolidated financial statements of Vassiliko Cement Works Public Company Limited and its subsidiaries (the "Group"), and separate financial statements of Vassiliko Cement Works Public Company Limited (the "Company"), which are presented in pages 34 to 77 and comprise the consolidated statement of financial position and the statement of financial position of the Company as at 31 December 2016, and the consolidated statements of profit or loss and other comprehensive income, changes in equity and cash flows, and the statement of comprehensive income, changes in equity and cash flows of the Company for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements and the separate financial statements give a true and fair view of the financial position of the Group and the Company as at 31 December 2016, and of their financial performance and their cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS-EU) and the requirements of the Cyprus Companies Law, Cap. 113, as amended from time to time (the "Companies Law, Cap.113").
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the "Auditors' responsibilities for the audit of the financial statements" section of our report. We are independent of the Company in accordance with the Code of Ethics for Professional Accountants of the International Ethics Standards Board for Accountants (IESBA Code), and the ethical requirements in Cyprus that are relevant to our audit of the consolidated financial statements and the separate financial statements, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements and the separate financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements and the separate financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
| Revenue recognition | |
|---|---|
| Please refer to Note 4 of the financial statements. | |
| The key audit matter | How the matter was addressed in our audit |
| The vast majority of the group's revenue, is generated from the sales of Clinker and Cement to both local and foreign customers. Given the significance of revenue as a major component in the statement of comprehensive income, and the possible pressure on management to increase sales for the interest of all stakeholders involved, we consider that a risk of incorrect revenue recognition, due to either fraud or error exists and hence, revenue recognition has been identified as an area of focus during our audit. |
Our audit procedures consist of the following: • Evaluation and testing of the operating effectiveness of the internal controls relevant to the recognition and measurement of revenue. • Testing on a sample basis the appropriateness of recognition of both revenue and discounts by reference to the relevant invoices and/or other agreements, including specific audit procedures to ensure that the revenue and discounts have been recognized in the correct accounting period. • Performing substantive analytical procedures, developing an expectation of the level of revenue based on historical data and macroeconomic factors. |
| Valuation of plant | |
|---|---|
| Please refer to Note 12 of the financial statements. | |
| The key audit matter | How the matter was addressed in our audit |
| Due to the general economic environment in which the Group operates and because of the volatility of: (i) future demand levels for cement volumes, (ii) future prices and (iii) operating costs, a risk has been identified, that future cash flows may not suffice to support the value of the plant as presented in the financial statements. Due to the inherent uncertainty included in forecasting and discounting future cash flows, which are the basis of the assessment of recoverability, this is one of the key judgemental areas and hence the valuation of the plant has been identified as an area of focus during our audit. |
Our audit procedures consist of the following: • Evaluation of the Group's budgeting procedure upon which the forecasts are based. • Evaluation of the principles and integrity of the Group's discounted cash flow model. • Assessment of the Group's assumptions used with regards to key inputs. • In the context of this process we have also engaged our internal valuation specialists to assist in assessing the reasonableness of the assumptions used by the Group in determining the discounting factor that was used in the cash flow model. |
The Board of Directors is responsible for the other information. The other information comprises the Notice of Annual General Meeting, the Management Report, the Corporate Governance report, the Remuneration report and the Directors Curricula Vitae but does not include the financial statements and our auditors' report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon, except as required by the Companies Law, Cap.113.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. Our report in this regard is presented in the "Report on other legal requirements" section.
The Board of Directors is responsible for the preparation of consolidated and separate financial statements that give a true and fair view in accordance with IFRS-EU and the requirements of the Companies Law, Cap. 113, and for such internal control as the Board of Directors determines is necessary to enable the preparation of consolidated and separate financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated and separate financial statements, the Board of Directors is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting, unless there is an intention to either liquidate the Company or to cease operations, or there is no realistic alternative but to do so.
The Board of Directors is responsible for overseeing the Group's financial reporting process.
Our objectives are to obtain reasonable assurance about whether the consolidated and separate financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated and separate financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the Board of Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Board of Directors, we determine those matters that were of most significance in the audit of the consolidated and separate financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Pursuant to the additional requirements of the Auditors and Statutory Audits of Annual and Consolidated Accounts of Law 2009, L.42(I)/2009, as amended from time to time ("Law 42(I)/2009"), we report the following:
| Note | 2016 | 2015 | |
|---|---|---|---|
| Continuing operations | €000 | €000 | |
| Revenue | 4 | 94.744 | 90.035 |
| Cost of sales | (61.252) | (63.239) | |
| Gross profit | 33.492 | 26.796 | |
| Other operating income | 5 | 543 | 665 |
| Distribution expenses | (5.287) | (4.965) | |
| Administrative expenses | (3.438) | (3.088) | |
| Other operating expenses | (1.411) | (1.728) | |
| Operating profit before financing costs | 6 | 23.899 | 17.680 |
| Finance income | 14 | 5 | |
| Finance expenses | (436) | (374) | |
| Net finance costs | 8 | (422) | (369) |
| Net Profit/(loss) from investing activities | 9 | 464 | (1.064) |
| Share of profit/(loss) from equity-accounted investees | 18 | 161 | (242) |
| Profit before tax | 24.102 | 16.005 | |
| Taxation | 10 | (3.506) | (3.156) |
| Profit for the year | 20.596 | 12.849 | |
| Other comprehensive income | |||
| Items that are or may be reclassified to profit or loss | |||
| Cash flow hedges – effective portion of changes in fair value | (483) | (75) | |
| Deferred tax on revaluation of properties | 10 | 303 | 281 |
| Other comprehensive (loss)/income for the year | (180) | 206 | |
| Total comprehensive income for the year | 20.416 | 13.055 | |
| Profit attributable to: | |||
| Equity holders of the parent | 20.596 | 12.849 | |
| Non-controlling interest | - | - | |
| 20.596 | 12.849 | ||
| Total comprehensive income attributable to: | |||
| Equity holders of the parent | 20.416 | 13.055 | |
| Non-controlling interest | - 20.416 |
- 13.055 |
|
| Basic and diluted earnings per share (cents) The notes on pages 42 to 77 form an integral part of these financial statements |
11 | 28,6 | 17,9 |
34 ANNUAL REPORT AND FINANCIAL STATEMENTS 2016
| Note | 2016 | 2015 | |
|---|---|---|---|
| Continuing operations | €000 | €000 | |
| Revenue | 4 | 94.744 | 90.035 |
| Cost of sales | (61.252) | (63.223) | |
| Gross profit | 33.492 | 26.812 | |
| Other operating income | 5 | 543 | 660 |
| Distribution expenses | (5.287) | (4.963) | |
| Administrative expenses | (3.433) | (3.072) | |
| Other operating expenses | (1.406) | (1.728) | |
| Operating profit before financing costs | 6 | 23.909 | 17.709 |
| Finance income | 14 | 5 | |
| Finance expenses | (434) | (373) | |
| Net finance costs | 8 | (420) | (368) |
| Net profit/(loss) from investing activities | 9 | 555 | (791) |
| Profit before tax | 24.044 | 16.550 | |
| Taxation | 10 | (3.481) | (3.170) |
| Profit for the year | 20.563 | 13.380 | |
| Other comprehensive income | |||
| Items that are or may be reclassified to profit or loss | |||
| Cash flow hedges – effective portion of changes in fair value | (483) | (75) | |
| Deferred tax on revaluation of properties | 10 | 303 | 281 |
| Other comprehensive (loss)/income for the year | (180) | 206 | |
| Total comprehensive income for the year | 20.383 | 13.586 | |
| Basic and diluted earnings per share (cents) | 11 | 28,6 | 18,6 |
The notes on pages 42 to 77 form an integral part of these financial statements
| Assets 12 237.839 240.548 Property, plant and equipment 12.355 Intangible assets 14 12.369 13 9.259 9.027 Investment property 18 3.616 3.345 Investments in equity-accounted investees Available-for-sale financial assets 19 144 135 265.410 Total non-current assets 263.227 20 20.559 21.048 Inventories Trade and other receivables 21 7.280 4.914 Assets classified as held for sale 22 450 360 23 6.335 8.639 Cash and cash equivalents Total current assets 34.624 34.961 297.851 300.371 Total assets Equity 24 30.932 Share capital 30.932 203.089 194.183 Reserves 234.021 225.115 Total equity attributable to equity holders of the parent Non-controlling interest 225.115 234.021 Total equity Liabilities 30.969 47.189 Interest-bearing loans and borrowings 25 26 17.943 Deferred taxation 27 400 Provisions for liabilities and charges 400 49.312 62.745 Total non-current liabilities 25 7.907 7.907 Interest-bearing loans and borrowings 221 Tax payable 28 6.611 4.383 Trade and other payables 14.518 12.511 Total current liabilities 63.830 75.256 Total liabilities Total equity and liabilities 297.851 300.371 |
as at 31 December 2016 | Note | 2016 €000 |
2015 €000 |
|---|---|---|---|---|
| 15.156 | ||||
| as at 31 December 2016 | |||
|---|---|---|---|
| Note | 2016 €000 |
2015 €000 |
|
| Assets | |||
| Property, plant and equipment | 12 | 237.839 | 240.548 |
| Intangible assets | 14 | 12.369 | 12.355 |
| Investment property | 13 | 9.025 | 8.643 |
| Investments in subsidiaries | 17 | ||
| Investments in associates | 18 | 3.330 | 3.080 |
| Available-for-sale financial assets | 19 | 144 | 135 |
| Total non-current assets | 262.707 | 264.761 | |
| Inventories | 20 | 20.559 | 21.048 |
| Trade and other receivables | 21 | 7.778 | 5.411 |
| Assets classified as held for sale | 22 | 450 | 360 |
| Cash and cash equivalents | 23 | 6.335 | 8.637 |
| Total current assets | 35.122 | 35.456 | |
| Total assets | 297.829 | 300.217 | |
| Equity | |||
| Share capital | 24 | 30.932 | 30.932 |
| Reserves | 203.124 | 194.113 | |
| Total equity | 234.056 | 225.045 | |
| Liabilities | |||
| Interest-bearing loans and borrowings | 25 | 30.969 | 47.189 |
| Deferred taxation | 26 | 17.943 | 15.128 |
| Provisions for liabilities and charges | 27 | 400 | 400 |
| Total non-current liabilities | 49.312 | 62.717 | |
| Interest-bearing loans and borrowings | 25 | 7.907 | 7.907 |
| Income tax payable | 221 | ||
| Trade and other payables | 28 | 6.554 | 4.327 |
| Total current liabilities | 14.461 | 12.455 | |
| Total liabilities | 63.773 | 75.172 | |
| 297.829 | 300.217 | ||
| Total equity and liabilities |
| for the year ended 31 Dece | mber 2016 | |||||||
|---|---|---|---|---|---|---|---|---|
| Share | Share | Revaluation | Cash flow | Retained | Total equity attributable to equity holders of |
controlling Non- |
Total | |
| €000 capital |
€000 m miu pre |
€000 reserve |
€000 hedges |
€000 earnings |
€000 the parent |
€000 interest |
€000 equity |
|
| At 1 January 2015 | 30.932 | 45.388 | 46.553 | - | 97.819 | 220.692 | - | 220.692 |
| Profit for the year | - | - | - | - | 12.849 | 12.849 | - | 12.849 |
| comprehensive income Other comprehensive income for the year Total |
- - |
- - |
281 281 |
(75) (75) |
- 12.849 |
206 13.055 |
- - |
206 13.055 |
| Dividends (note 30) | - | - | - | - | (8.632) | (8.632) | - | (8.632) |
| At 1 January 2016 Transfer |
- 30.932 |
- 45.388 |
45.260 (1.574) |
- (75) |
1.574 103.610 |
- 225.115 |
- - |
225.115 |
| Other comprehensive loss Profit for the year |
- | - | - 303 |
- (483) |
20.596 | 20.596 (180) |
- | 20.596 (180) |
| comprehensive income for the year Total |
- - |
- - |
303 | (483) | - 20.596 |
20.416 | - - |
20.416 |
| Dividends (note 30) | - | - | - | - | (11.510) | (11.510) | - | (11.510) |
| mber 2016 At 31 Dece Transfer |
- 30.932 |
- 45.388 |
44.337 (1.226) |
- (558) |
1.226 113.922 |
- 234.021 |
- - |
234.021 |
The notes on pages 42 to 77 form an integral part of these financial statements
| mber 2016 for the year ended 31 Dece |
€000 Share capital |
Share €000 m miu pre |
Revaluation €000 reserve |
Cash flow €000 hedges |
Retained €000 earnings |
€000 equity Total |
|---|---|---|---|---|---|---|
| At 1 January 2015 | 30.932 | 45.388 | 46.456 | - | 98.673 | 221.449 |
| Other comprehensive income Profit for the year |
- - |
- - |
- 281 |
- (75) |
13.380 - |
13.380 206 |
| Total comprehensive income for the year | - | - | 281 | (75) | 13.380 | 13.586 |
| Dividends (note 30) | - | - | - | - | (8.632) | (8.632) |
| Group reorganisation Transfer |
- - |
- - |
- (1.574) |
- - |
1.574 (1.358) |
- (1.358) |
| At 1 January 2016 | 30.932 | 45.388 | 45.163 | (75) | 103.637 | 225.045 |
| Profit for the year | - | - | - | - | 20.563 | 20.563 |
| Total comprehensive income for the year Other comprehensive loss |
- | - | 303 303 |
(483) (483) |
- 20.563 |
20.383 (180) |
| Dividends (note 30) | - - |
- - |
- | - | (11.510) | (11.510) |
| Group reorganisation | - | - | 209 | - | (71) | 138 |
| Transfer | - | - | (1.226) | - | 1.226 | - |
| mber 2016 At 31 Dece |
30.932 | 45.388 | 44.449 | (558) | 113.845 | 234.056 |
Company statement of changes in equity
Companies which do not distribute 70% of their profits after tax, as defined by the Special Contribution for the Defence of the Republic Law, within two years after the end of the relevant tax year, will be deemed to have distributed as dividends 70% of these profits. Special contribution to the defence fund at 17% will be payable on such deemed dividends to the extent that the shareholders (companies and individuals) are Cyprus tax residents. The amount of deemed distribution is reduced by any actual dividends paid out of the profits of the relevant year at any time. This special contribution to the defence fund is payable by the Company for the account of the shareholders.
| for the year ended 31 December 2016 | |||
|---|---|---|---|
| Note | 2016 | 2015 | |
| €000 | €000 | ||
| Cash flows from operating activities | |||
| Profit for the year | 20.596 | 12.849 | |
| Adjustments for: | |||
| Depreciation and amortisation charges | 12, 14 | 12.886 | 13.252 |
| Change in fair value on available-for-sale financial assets | 9 | 4 | 57 |
| Change in fair value of investment property | 13 | (232) | 668 |
| Change in fair value of assets classified as held for sale | 22 | (90) | 300 |
| Impairment loss of assets classified as held for sale | 22 | - | 250 |
| Interest income | 8 | (14) | (5) |
| Dividend income | 9 | (14) | - |
| Interest expense | 8 | 698 | 956 |
| Share of (profit)/loss of equity-accounted investees | 18 | (161) | 242 |
| Gain on disposal of property, plant and equipment | - | (9) | |
| Income tax expense | 10 | 3.506 | 3.156 |
| Operating profit before changes in working capital and provisions | 37.179 | 31.716 | |
| Changes in: | |||
| Trade and other receivables | (2.366) | 693 | |
| Inventories | 489 | 1.004 | |
| Trade and other payables | 1.572 | (283) | |
| Cash generated from operating activities | 36.874 | 33.130 | |
| Interest paid | (525) | (1.242) | |
| Tax paid | (626) | 29 | |
| Net cash inflow from operating activities | 35.723 | 31.917 | |
| Cash flows to investing activities | |||
| Proceeds from disposal of property, plant and equipment | - | 12 | |
| Interest received | 14 | 5 | |
| Dividends received | 143 | 40 | |
| Acquisition of property, plant and equipment | 12 | (10.166) | (4.098) |
| Acquisition of intangibles | 14 | (25) | (15) |
| Acquisition of equity-accounted investee | 18 | (250) | (199) |
| Acquisition of investments available for disposal | 19 | (13) | - |
| Net cash used in investing activities | (10.297) | (4.255) | |
| Cash flows to financing activities | |||
| Repayment of loans | (16.220) | (13.278) | |
| Dividends paid | (11.510) | (8.632) | |
| Net cash used in financing activities | (27.730) | (21.910) | |
| Net (decrease)/increase in cash and cash equivalents | (2.304) | 5.752 | |
| Cash and cash equivalents at 1 January | 8.639 | 2.887 | |
| Cash and cash equivalents at 31 December | 23 | 6.335 | 8.639 |
The notes on pages 42 to 77 form an integral part of these financial statements
40 ANNUAL REPORT AND FINANCIAL STATEMENTS 2016
| for the year ended 31 December 2016 | |||
|---|---|---|---|
| Note | 2016 | 2015 | |
| €000 | €000 | ||
| Cash flows from operating activities | |||
| Profit for the year | 20.563 | 13.380 | |
| Adjustments for: | |||
| Depreciation and amortisation charges | 12, 14 | 12.886 | 13.252 |
| Change in fair value on available-for-sale financial assets | 9 | 4 | 58 |
| Change in fair value of investment property | 13 | (194) | 435 |
| Change in fair value of assets classified as held for sale | 22 | (90) | 300 |
| Impairment loss of assets classified as held for sale | 22 | - | 250 |
| Interest income | 8 | (14) | (5) |
| Dividend income | 9 | (143) | (40) |
| Interest expense | 8 | 696 | 955 |
| Gain on disposal of property, plant and equipment | - | (9) | |
| Income tax expense | 10 | 3.481 | 3.170 |
| Operating profit before changes in working capital and provisions | 37.189 | 31.746 | |
| Changes in: | |||
| Trade and other receivables | (2.367) | 615 | |
| Inventories | 489 | 1.079 | |
| Trade and other payables | 1.549 | (280) | |
| Cash generated from operations | 36.860 | 33.160 | |
| Interest paid | (523) | (1,241) | |
| Tax paid | (612) | 30 | |
| Net cash inflow from operating activities | 35.725 | 31.949 | |
| Cash flows to investing activities | |||
| Proceeds from disposal of property, plant and equipment | - | 12 | |
| Interest received | 14 | 5 | |
| Dividends received | 143 | 40 | |
| Acquisition of property, plant and equipment | 12 | (10.166) | (4.098) |
| Acquisition of intangibles | 14 | (25) | (15) |
| Acquisition of shares in associate company | 18 | (250) | (199) |
| Acquisition of available-for-sale financial assets | 19 | (13) | - |
| Group reorganisation | - | 1 | |
| Net cash used in investing activities | (10.297) | (4.254) | |
| Cash flows to financing activities | |||
| Repayment of loans | (16.220) | (13.278) | |
| Dividends paid | (11.510) | (8.632) | |
| Net cash used in financing activities | (27.730) | (21.910) | |
| Net (decrease)/increase in cash and cash equivalents | (2.302) | 5.785 | |
| Cash and cash equivalents at 1 January | 8.637 | 2.852 | |
| Cash and cash equivalents at 31 December | 23 | 6.335 | 8.637 |
The notes on s 42 to 77 form an integral part of these financial statements
"Τσιμεντοποιία Βασιλικού Δημόσια Εταιρεία Λτδ", translated in English as "Vassiliko Cement Works Public Company Ltd" (the 'Company') is a company domiciled in Cyprus and is a public company in accordance with the requirements of the Cyprus Companies Law, Cap. 113 and the Cyprus Stock Exchange Law and Regulations. The Company's registered office is at 1A Kyriakos Matsis Avenue, CY-1082 Nicosia, Cyprus.
The consolidated financial statements of the Company as at and for the year ended 31 December 2016 comprise the Company and its subsidiaries (together referred to as the 'Group') and the Group's interest in associates.
The Company's and the Consolidated Financial Statements were authorised for issue by the Board of Directors on 27 April 2017.
The Group's principal activity is the production of clinker and cement, which are sold in the local and international markets. The Group also has a presence in aggregates quarrying through its subsidiary and associate companies.
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union ("EU"). In addition, the financial statements have been prepared in accordance with the requirements of the Cyprus Companies Law, Cap. 113, and the Cyprus Stock Exchange Law and Regulations.
The consolidated financial statements have been prepared on the historical cost basis, modified to include the revaluation to fair value of land and buildings, Vassiliko port, financial instruments classified as available for sale and investment property.
The consolidated financial statements as at and for the year ended 31 December 2016 are presented in Euro (€), which is the Company's functional currency. All amounts have been rounded to the nearest thousand, unless otherwise indicated.
The preparation of the consolidated financial statements in accordance with IFRS requires from management the exercise of judgment, to make estimates and assumptions that influence the application of accounting principles and the related amounts of assets and liabilities, income and expenses. The estimates and underlying assumptions are based on historical experience and various other factors that are deemed to be reasonable based on knowledge available at that time. Actual results may deviate from such estimates.
The estimates and underlying assumptions are reviewed on a continuous basis. Revisions in accounting estimates are recognised in the period during which the estimate is revised, if the estimate affects only that period, or in the period of the revision and future periods, if the revision affects the present as well as future periods.
In particular, information about significant areas of estimation, uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amount recognised in the financial statements are described below:
Significant judgment is required in determining the provision for income taxes. There are transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.
The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. The Group uses its judgment to select a variety of methods and makes assumptions that are mainly based on market conditions existing at each reporting date. The Group regularly evaluates the methods used to ensure their validity and appropriateness. Changes in the estimations and assumptions used are possible to affect the fair value of the related financial instruments.
The Group reviews its trade and other receivables for evidence of their recoverability. Such evidence includes the customer's payment record and the customer's overall financial position. If indications of irrecoverability exist, the recoverable amount is estimated and a respective provision for bad and doubtful debts is made. The amount of the provision is charged through the profit or loss. The review of credit risk is continuous and the methodology and assumptions used for estimating the provision are reviewed regularly and adjusted accordingly.
The Company periodically evaluates the recoverability of investments in subsidiaries/associates whenever indicators of impairment are present. Indicators of impairment include such items as declines in revenues, earnings or cash flows or material adverse changes in the economic or political stability of a particular country, which may indicate that the carrying amount of an asset is not recoverable. If facts and circumstances indicate that investment in subsidiaries/associates may be impaired, the estimated future undiscounted cash flows associated with these subsidiaries/associates would be compared to their carrying amounts to determine if a write down to fair value is necessary.
Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units of the Company on which the goodwill has been allocated. The value in use calculation requires the Company to estimate the future cash flows expected to arise from the cash-generating units using a suitable discount rate in order to calculate the present value.
The following accounting policies have been applied consistently to all years presented in these consolidated financial statements and have been applied consistently by the Group entities.
As from 1 January 2016, the Group adopted all changes to International Financial Reporting Standards (IFRSs) as adopted by EU which are relevant to its operations. This adoption did not have a material effect on the financial statements of the Group and the Company.
The following Standards, Amendments to Standards and Interpretations have been issued but are not yet effective for annual periods beginning on 1 January 2016. Those which may be relevant to the Group are set out below. The Group does not plan to adopt these Standards early.
The Board of Directors expects that the adoption of the above financial reporting standards in future periods will not have a significant effect on the financial statements of the Group and the Company.
Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred to the Group. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, the Group takes into consideration potential voting rights that currently are exercisable.
The Group measures goodwill at the acquisition date as:
When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.
The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts generally are recognised in profit or loss.
Transactions costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred.
Acquisitions of non-controlling interests are accounted for as transactions with owners in their capacity as owners and therefore no goodwill is recognised as a result. Adjustments to non-controlling interests arising from transactions that do not involve the loss of control are based on a proportionate amount of the net assets of the subsidiary.
Subsidiaries are entities controlled by the Group. Control exists where the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring them in line with the accounting policies of the Group.
On the loss of control, the Group de-recognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently, it is accounted for as an equity-accounted investee or as an available-for-sale financial asset depending on the level of influence retained.
Associates are those entities in which the Group has significant influence but no control or joint control. Significant influence is the power to participate in the financial and operating policy decisions of the investee. Investments in associates are initially recognised at cost, which includes transactions costs, and are accounted for using the equity method.
The results and assets and liabilities of associates are incorporated in these consolidated financial statements using the equity method of accounting, except when the investment is classified as held for sale, in which case it is accounted for in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations. Under the equity method, an investment in an associate is initially recognised in the consolidated statement of financial position at cost and adjusted thereafter to recognise the Group's share of the profit or loss and other comprehensive income of the associate. When the Group's share of losses of an associate exceeds the Group's interest in that associate (which includes any long-term interests that, in substance, form part of the Group's net investment in the associate), the Group discontinues recognising its share of further losses. Additional losses are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate.
Any excess of the cost of acquisition over the Group's share of the net fair value of the identifiable assets, liabilities and contingent liabilities of an associate recognised at the date of acquisition is recognised as goodwill, which is included within the carrying amount of the investment. Any excess of the Group's share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognised immediately in profit or loss.
The requirements of IAS 39 are applied to determine whether it is necessary to recognise any impairment loss with respect to the Group's investment in an associate. When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance with IAS 36 Impairment of Assets as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount. Any impairment loss recognised forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognised in accordance with IAS 36 to the extent that the recoverable amount of the investment subsequently increases.
When a group entity transacts with its associate, profits and losses resulting from the transactions with the associate are recognised in the Group's consolidated financial statements only to the extent of interests in the associate that are not related to the Group.
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with equityaccounted investees are eliminated against the investment to the extent of the Group's interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
Land and buildings are carried at fair value, based on valuations by external independent valuers, less subsequent depreciation for buildings. Revaluations are carried out every five years so that the carrying amount does not differ materially from that which would be determined using fair value at the reporting date. All other property, plant and equipment are stated at historical cost less accumulated depreciation.
Increases in the carrying amount arising on revaluation of property plant and equipment are credited to other comprehensive income. Decreases that offset previous increases of the same asset are charged against that reserve; all other decreases are charged to the statement of comprehensive income. Each year the difference between depreciation based on the revalued carrying amount of the asset (the depreciation charged to the statement of comprehensive income) and depreciation based on the asset's original cost is transferred from fair value reserves to retained earnings.
Properties under construction are carried at cost, less any recognised impairment loss. Cost includes professional fees and borrowing costs capitalised in accordance with the Group's accounting policy. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.
When the use of a property changes from owner-occupied to investment property, the property is remeasured to fair value and reclassified as investment property. Any gain arising on remeasurement is recognised in profit or loss to the extent that it reverses a previous impairment loss on the specific property, with any remaining gain recognized in other comprehensive income and presented in the revaluation reserve in equity. Any loss is recognised immediately in profit or loss.
Subsequent expenditure is capitalised only when it is probable that the future economic benefits associated with the expenditure will flow to the Group. Ongoing repairs and maintenance is expensed as incurred.
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each component. Land is not depreciated.
Leased assets are depreciated over the shorter of the lease term and their useful lives, unless it is reasonably certain that the Group will obtain ownership by the end of the lease term.
Items of the property, plant and equipment are depreciated from the date that they are installed and are ready for use, or in respect of internally constructed assets, from the date that the assets are completed and are ready for use.
The estimated useful lives are as follows:
| Buildings | 20 – 50 years |
|---|---|
| Vassiliko Port | 50 years (term of lease) |
| Machinery, plant and equipment | 4 – 40 years |
Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset (or disposal group) is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.
When the Group is committed to a sale plan involving loss of control of a subsidiary, all of the assets and liabilities of that subsidiary are classified as held for sale when the criteria described above are met, regardless of whether the Group will retain a non-controlling interest in its former subsidiary after the sale.
Non-current assets (and disposal groups) classified as held for sale are measured at the lower of the assets previous carrying amount and fair value less costs to sell. Any impairment loss on a disposal group is allocated first to goodwill, and then to the remaining assets and liabilities on a pro rata basis, except that no loss is allocated to inventories, financial assets, deferred tax assets, employee benefit assets, investment property or biological assets, which continue to be measured in accordance with the Group's other accounting policies. Impairment losses on initial classification as held for sale or held for distribution and subsequent gains and losses on remeasurement are recognised in profit or loss.
Once classified as held for sale, intangible assets and property, plant and equipment are no longer amortised or depreciated, and any equity-accounted investee is no longer equity accounted.
All business combinations are accounted for by applying the acquisition method. Goodwill represents amounts arising on acquisition of subsidiaries and associates. Goodwill represents the difference between the cost of the acquisition and the fair value of the net identifiable assets of the acquired undertaking at the date of acquisition.
When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.
Goodwill is measured at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units and is tested annually for impairment (note 14). Goodwill on acquisition of associates is included in investments in associates.
Other intangible assets that are acquired by the Group and have finite useful lives are measured at cost less accumulated amortisation and accumulated impairment losses.
Expenditure on internally generated goodwill and brands is recognised in the statement of comprehensive income as an expense as incurred.
Subsequent expenditure on intangible assets is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is expensed as incurred.
Amortisation is charged to profit or loss on a straight-line basis over the estimated useful lives of intangible assets unless such lives are indefinite. Goodwill and intangible assets with an indefinite useful life are systematically tested for impairment at each reporting date. Other intangible assets are amortised from the date they are available for use. The estimated useful lives are as follows:
| Computer software | 3 years |
|---|---|
| Leasehold property | 33 years |
Equity financial instruments held by the Group are classified as being available-for-sale and are recognised initially at fair value plus any directly attributable transaction costs, with any resulted gain or loss being recognised directly in equity, except for impairment losses and, in the case of monetary items such as debt securities, foreign exchange gains and losses. When these investments are de-recognised, the cumulative gain or loss previously recognised directly in equity is recognised in the statement of comprehensive income. Where these investments are interest-bearing, interest calculated using the effective interest method is recognised in the statement of comprehensive income.
The fair value of financial instruments classified as held for trading and available-for-sale is their quoted bid price at the yearend date.
Financial instruments classified as held for trading or available-for-sale investments are recognised / de-recognised by the Group on the date it commits to purchase / sell the investments. Securities held-to-maturity are recognised / de-recognised on the day they are transferred to / by the Group.
Financial instruments designated as available-for-sale are included in non-current assets, unless management has the expressed intention of holding the investment for less than 12 months from the reporting date.
Investment properties are properties which are held either to earn rental income, or for capital appreciation, or for both, but not for sale in the ordinary course of business, or used for the production or supply of goods or services, or for administrative purposes. Investment properties are carried at fair value less cost to sell, representing open market value determined annually by external valuers. An external, independent valuer, having an appropriate recognised professional qualification and recent experience in the location and category of property being valued, values the portfolio at regular intervals. The fair values are based on market values, being the estimated amount for which a property could be exchanged on the date of valuation between a willing buyer and a willing seller in an arm's length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.
Any gain or loss arising from a change in fair value is recognised in profit or loss. Rental income from investment property is accounted for as described in accounting policy for Revenue.
When an item of property, plant and equipment is transferred to investment property following a change in its use, any differences arising at the date of transfer between the carrying amount of the item immediately prior to transfer and its fair value is recognised directly in equity, if it is a gain. Upon disposal of the item the gain is transferred to retained earnings. Any loss arising in this manner is recognised immediately in the statement of comprehensive income.
If an investment property becomes owner-occupied, it is reclassified as property, plant and equipment and its fair value at the date of reclassification becomes its cost for accounting purposes of subsequent recording. When the Group begins to redevelop an existing investment property for continued future use as investment property, the property remains an investment property, which is measured based on fair value model, and is not reclassified as property, plant and equipment during the redevelopment.
When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the derivative is recognized in other comprehensive income and accumulated in the hedging reserve. Any ineffective portion of changes in the fair value of the derivative is recognized immediately in profit or loss. The amount accumulated in equity is retained in other comprehensive income and reclassified to profit or loss in the same period or periods during which the hedged item affects profit or loss. If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, or the designation is revoked, then hedge accounting is discontinued prospectively. If the forecast transaction is no longer expected to occur, then the amount accumulated in equity is reclassified to profit or loss.
Trade receivables are initially measured at fair value, and are subsequently measured at amortised cost using the effective interest rate method. Appropriate allowances for estimated irrecoverable amounts are recognised in statement of comprehensive income when there is objective evidence that the asset is impaired. The allowance recognised is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition.
Inventories are measured at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.
The cost of raw materials, spare parts and other consumables is based on the average cost and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal operating capacity.
Cash and cash equivalents comprise cash in hand and at bank and call deposits. Bank overdrafts that are repayable on demand and form an integral part of the Group's cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.
The carrying amounts of the Group's assets, other than investment property, inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated.
For goodwill, assets that have an indefinite useful life and intangible assets that are not yet available for use, the recoverable amount is estimated at each year end date.
An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognized in the profit or loss.
Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to cash-generating units (group of units) and then, to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis.
When a decline in the fair value of an available-for-sale financial asset has been recognised directly in equity and there is objective evidence that the asset is impaired, the cumulative loss that had been recognised directly in equity is recognised in profit or loss even though the financial asset has not been de-recognised. The amount of the cumulative loss that is recognised in the statement of comprehensive income is the difference between the acquisition cost and current fair value, less any impairment loss on that financial asset previously recognised in the statement of comprehensive income.
Interest-bearing borrowings are recognised initially at fair value plus any direct attributable transaction costs. Subsequently they are measured at amortised cost using the effective interest method.
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and has no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution plans are recognised as an employee benefit expense in profit or loss in the periods during which related services are rendered by employees. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available. Contributions to a defined contribution plan that are due more than 12 months after the end of the period in which the employees render the service are discounted to their present value.
Termination benefits are recognised as an expense when the Group is demonstrably committed, without realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. Termination benefits for voluntary redundancies are recognised as an expense if the Group has made an offer of voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably. If benefits are payable more than 12 months after the reporting date, then they are discounted to their present value.
A provision is recognised when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate of the amount can be made. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.
Trade and other payables are presented at the nominal value outstanding at the year end date.
Revenue from the sale of goods in the course of ordinary activities is measured at the fair value of the consideration received or receivable, net of returns, trade discounts and volume rebates.
Revenue from the sale of goods is recognised in profit or loss when the significant risks and rewards of ownership have been transferred to the buyer. No revenue is recognised if there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods.
Rental income from investment property is recognised in profit or loss on a straight-line basis over the term of the lease.
Government grants are recognised in the statement of financial position initially as deferred income when there is reasonable assurance that it will be received and that the Group will comply with the conditions attached to it. Grants that compensate the Group for expenses incurred are recognised as revenue in profit or loss on a systematic basis in the same periods in which the expenses are incurred. Grants that compensate the Group for the cost of an asset are amortised on a systematic basis using the straight-line method over the expected useful life of the respective asset.
Finance income includes interest income which is recognised using the effective interest method.
Dividend income is recognised in the statement of comprehensive income on the date the entity's right to receive payments is established, which in the case of quoted securities is usually the ex-dividend date.
Rentals payable under operating leases are charged to the statement of comprehensive income on a straight-line basis over the term of the relevant lease. Benefits received and receivable as an incentive to enter into an operating lease are also spread on a straight-line basis over the lease term.
Financing costs comprise interest expense on borrowings calculated using the effective interest rate method, interest receivable on funds invested, dividend income, foreign exchange gains and losses, and gains and losses on hedging instruments that are recognised in the statement of comprehensive income.
Items included in the financial statements of each Group entity are measured using the currency of the primary economic environment in which each entity operates ('the functional currency')."
Foreign currency transactions are translated into respective functional currencies of the Group companies using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at the reporting date exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in profit or loss. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value is determined.
Tax expense on the statement of comprehensive income for the year comprises current and deferred tax. Tax expense is recognised in profit or loss, except to the extent that it relates to items recognised directly in other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using the applicable tax rates enacted or substantially enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognized on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the statement of financial position liability method. Deferred tax liabilities are generally recognized for all taxable temporary differences and deferred tax assets are recognized to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilized. Such assets and liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Ordinary shares are classified as equity.
Dividend distribution to the Company's shareholders is recognised in the Company's financial statements in the year in which they are approved by the Company's shareholders.
Where necessary, comparative figures have been adjusted to conform to changes in presentation in the current year.
| Group | Company | |||
|---|---|---|---|---|
| Revenue analysis: | 2016 | 2015 | 2016 | 2015 |
| €000 | €000 | €000 | €000 | |
| Cement products | 94.659 | 89.946 | 94.659 | 89.946 |
| Other | 85 | 89 | 85 | 89 |
| 94.744 | 90.035 | 94.744 | 90.035 |
| Group | Company | |||
|---|---|---|---|---|
| 2016 | 2015 | 2016 | 2015 | |
| €000 | €000 | €000 | €000 | |
| Income from Vassiliko Port | 284 | 495 | 284 | 495 |
| Other | 259 | 170 | 259 | 165 |
| 543 | 665 | 543 | 660 |
| Group | Company | |||
|---|---|---|---|---|
| 2016 | 2015 | 2016 | 2015 | |
| This is stated after charging: | €000 | €000 | €000 | €000 |
| Staff costs (note 7) | 10.022 | 9.347 | 10.022 | 9.347 |
| Directors remuneration as directors | 254 | 143 | 254 | 143 |
| Directors remuneration as executives | 200 | 205 | 200 | 205 |
| Depreciation of property, plant and equipment | 12.875 | 13.251 | 12.875 | 13.251 |
| Amortisation of intangible fixed assets | 11 | 1 | 11 | 1 |
| Independent auditors' remuneration | 55 | 55 | 45 | 45 |
| Group | Company | |||
|---|---|---|---|---|
| 2016 | 2015 | 2016 | 2015 | |
| €000 | €000 | €000 | €000 | |
| Wages and salaries | 8.638 | 8.074 | 8.638 | 8.074 |
| Social insurance contributions | 630 | 596 | 630 | 596 |
| Provident and medical fund contributions (note 33) | 345 | 299 | 345 | 299 |
| Other contributions | 409 | 378 | 409 | 378 |
| 10.022 | 9.347 | 10.022 | 9.347 | |
| Average number of employees | 222 | 210 | 222 | 210 |
| Group | Company | |||
|---|---|---|---|---|
| 2016 | 2015 | 2016 | 2015 | |
| €000 | €000 | €000 | €000 | |
| Interest income | 14 | 5 | 14 | 5 |
| Finance income | 14 | 5 | 14 | 5 |
| Interest expense | (698) | (956) | (696) | (955) |
| Net foreign exchange differences | 262 | 582 | 262 | 582 |
| Finance expense | (436) | (374) | (434) | (373) |
| Net finance costs | (422) | (369) | (420) | (368) |
Interest income is earned on bank deposits held in current and short term notice accounts. The interest rate on the above deposits is variable.
| Group | Company | |||
|---|---|---|---|---|
| 2016 | 2015 | 2016 | 2015 | |
| €000 | €000 | €000 | €000 | |
| Dividend receivable | 14 | - | 143 | 40 |
| Change in fair value of available-for-sale financial assets | (4) | (58) | (4) | (58) |
| Change in fair value of investment property | 322 | (668) | 284 | (435) |
| Rental of investment property | 132 | 212 | 132 | 212 |
| Change in fair value of assets classified as held for sale | - | (550) | - | (550) |
| 464 | (1.064) | 555 | (791) | |
10. Taxation
| Group | Company | |||
|---|---|---|---|---|
| Recognised in profit or loss | 2016 | 2015 | 2016 | 2015 |
| €000 | €000 | €000 | €000 | |
| Analysis of charge in the year | ||||
| Special contribution to the defence fund | 14 | 5 | 14 | 5 |
| Share of tax from associate | 11 | - | - | - |
| Deferred tax (note 26) | 3.090 | 3.001 | 3.090 | 3.015 |
| Adjustment for prior periods | 391 | 150 | 377 | 150 |
| 3.506 | 3.156 | 3.481 | 3.170 | |
| Recognised in other comprehensive income | ||||
| Deferred tax on revaluation of property | (303) | (281) | (303) | (281) |
| The Group is subject to income tax at 12,5%. | ||||
| Group | Company | |||
| 2016 | 2015 | 2016 | 2015 | |
| Reconciliation of tax based on taxable income and tax based on accounting profits |
€000 | €000 | €000 | €000 |
| Accounting profit before tax | 24.192 | 16.005 | 24.044 | 16.550 |
| Tax calculated at the applicable tax rates | 3.005 | 2.001 | 3.005 | 2.069 |
| Tax effect of expenses not deductible for tax purposes | 1.798 | 1.990 | 1.798 | 1.922 |
| Tax effect of allowances and income not subject to tax | (3.039) | (3.041) | (3.039) | (3.041) |
| Tax effect of tax losses brought forward | (1.764) | (950) | (1.764) | (950) |
| Special contribution to the defence fund | 14 | 5 | 14 | 5 |
| Deferred tax | 3.090 | 3.001 | 3.090 | 3.015 |
Prior year tax 391 150 377 150 Share of tax from associate 11 - - - Tax charge for the year 3.506 3.156 3.481 3.170
The calculation of earnings per share was based on the profit attributable to ordinary shareholders of €20.596.000 (2015: €12.849.000) and the weighted average number of ordinary shares outstanding during the year of 71.935.947 (2015: 71.935.947).
The calculation of earnings per share in the Company Statement of Comprehensive Income was based on the profit for the year of €20.563.000 (2015: €13.380.000).
| Group | Land and buildings |
Vassiliko port | Plant and equipment |
Total |
|---|---|---|---|---|
| €000 | €000 | €000 | €000 | |
| Cost | ||||
| Balance at 1 January 2015 | 70.774 | 24.064 | 244.167 | 339.005 |
| Acquisitions | 1.736 | 2 | 2.360 | 4.098 |
| Disposals | - | - | (57) | (57) |
| Written off | (386) | - | - | (386) |
| Balance at 31 December 2015 | 72.124 | 24.066 | 246.470 | 342.660 |
| Balance at 1 January 2016 | 72.124 | 24.066 | 246.470 | 342.660 |
| Acquisitions | 3.462 | 19 | 6.685 | 10.166 |
| Balance at 31 December 2016 | 75.586 | 24.085 | 253.155 | 352.826 |
| Depreciation | ||||
| Balance at 1 January 2015 | 18.222 | 6.482 | 64.597 | 89.301 |
| Charge for the year on historical cost | 1.325 | 387 | 9.965 | 11.677 |
| Additional charge on revalued amounts | 1.214 | 360 | - | 1.574 |
| Disposals | - | - | (54) | (54) |
| Written off | (386) | - | - | (386) |
| Balance at 31 December 2015 | 20.375 | 7.229 | 74.508 | 102.112 |
| Balance at 1 January 2016 | 20.375 | 7.229 | 74.508 | 102.112 |
| Charge for the year on historical cost | 1.387 | 936 | 9.326 | 11.649 |
| Additional charge on revalued amounts | 1.226 | - | - | 1.226 |
| Disposals | - | - | - | - |
| Balance at 31 December 2016 | 22.988 | 8.165 | 83.834 | 114.987 |
| Carrying amounts | ||||
| At 1 January 2015 | 52.552 | 17.582 | 179.570 | 249.704 |
| At 31 December 2015 | 51.749 | 16.837 | 171.962 | 240.548 |
| At 1 January 2016 | 51.749 | 16.837 | 171.962 | 240.548 |
| At 31 December 2016 | 52.598 | 15.920 | 169.321 | 237.839 |
| Land and | Plant and | |||
|---|---|---|---|---|
| Company | buildings | Vassiliko port | equipment | Total |
| €000 | €000 | €000 | €000 | |
| Cost | ||||
| Balance at 1 January 2015 | 70.388 | 24.064 | 244.167 | 338.619 |
| Acquisitions | 1.736 | 2 | 2.360 | 4.098 |
| Disposals | - | - | (57) | (57) |
| Balance at 31 December 2015 | 72.124 | 24.066 | 246.470 | 342.660 |
| Balance at 1 January 2016 | 72.124 | 24.066 | 246.470 | 342.660 |
| Acquisitions | 3.462 | 19 | 6.685 | 10.166 |
| Balance at 31 December 2016 | 75.586 | 24.085 | 253.155 | 352.826 |
| Depreciation | ||||
| Balance at 1 January 2015 | 17.836 | 6.482 | 64.597 | 88.915 |
| Charge for the year on historical cost | 1.325 | 387 | 9.965 | 11.677 |
| Additional charge on revalued amounts | 1.214 | 360 | - | 1.574 |
| Disposals | - | - | (54) | (54) |
| Balance at 31 December 2015 | 20.375 | 7.229 | 74.508 | 102.112 |
| Balance at 1 January 2016 | 20.375 | 7.229 | 74.508 | 102.112 |
| Charge for the year on historical cost | 1.387 | 936 | 9.326 | 11.649 |
| Additional charge on revalued amounts | 1.226 | - | - | 1.226 |
| Disposals | - | - | - | - |
| Balance at 31 December 2016 | 22.988 | 8.165 | 83.834 | 114.987 |
| Carrying amounts | ||||
| At 1 January 2015 | 52.552 | 17.582 | 179.570 | 249.704 |
| At 31 December 2015 | 51.749 | 16.837 | 171.962 | 240.548 |
| At 1 January 2016 | 51.749 | 16.837 | 171.962 | 240.548 |
| At 31 December 2016 | 52.598 | 15.920 | 169.321 | 237.839 |
Plant and equipment under construction as at 31 December 2016 was €5.598.000 (2015: nil).
The construction of the Vassiliko Port was paid for by the Company. The Cyprus Ports Authority, which according to the Cyprus Ports Authority Law is the owner of the port, leased it to the Company for a period of 50 years as from 1 January 1984.
The last revaluation of land was performed in 2012 by independent professional valuers.
Bank loans of €38.876.000 (2015: €55.096.000) are secured by €25.500.000 mortgages on land and buildings and €25.500.000 fixed charges on plant and machinery.
| Group | Company | |||
|---|---|---|---|---|
| 2016 | 2015 | 2016 | 2015 | |
| €000 | €000 | €000 | €000 | |
| Balance at 1 January | 9.027 | 9.695 | 8.643 | 8.718 |
| Acquired through group reorganisation | - | - | 188 | 360 |
| Change in fair value | 232 | (668) | 194 | (435) |
| Balance at 31 December | 9.259 | 9.027 | 9.025 | 8.643 |
The carrying amount of investment property is the fair value of the property as determined by an independent valuer having an appropriate recognised professional qualification and recent experience in the location and category of the property being valued. Fair values were determined having regard to recent market transactions for similar properties in the same location as the Group's investment property. The last revaluation of investment property was performed in December 2016. Investment property comprises a number of commercial properties that are leased to third parties or land held for capital appreciation.
| Leasehold | ||||
|---|---|---|---|---|
| Group | Goodwill | property | Software | Total |
| €000 | €000 | €000 | €000 | |
| Cost | ||||
| Balance at 1 January 2015 | 12.328 | 174 | 131 | 12.633 |
| Acquisitions | - | - | 15 | 15 |
| Written off | - | (174) | (77) | (251) |
| Balance at 31 December 2015 | 12.328 | - | 69 | 12.397 |
| Balance at 1 January 2016 | 12.328 | - | 69 | 12.397 |
| Acquisitions | - | - | 25 | 25 |
| Balance at 31 December 2016 | 12.328 | - | 94 | 12.422 |
| Amortisation and impairment charge | ||||
| Balance at 1 January 2015 | - | 174 | 118 | 292 |
| Amortisation for the year | - | - | 1 | 1 |
| Written off | - | (174) | (77) | (251) |
| Balance at 31 December 2015 | - | - | 42 | 42 |
| Balance at 1 January 2016 | - | - | 42 | 42 |
| Amortisation for the year | - | - | 11 | 11 |
| Balance at 31 December 2016 | - | - | 53 | 53 |
| Carrying amounts | ||||
| At 1 January 2015 | 12.328 | - | 13 | 12.341 |
| At 31 December 2015 | 12.328 | - | 27 | 12.355 |
| At 1 January 2016 | 12.328 | - | 27 | 12.355 |
| At 31 December 2016 | 12.328 | - | 41 | 12.369 |
| Company | Goodwill | Software | Total |
|---|---|---|---|
| €000 | €000 | €000 | |
| Cost | |||
| Balance at 1 January 2015 | 12.328 | 54 | 12.382 |
| Acquisitions | - | 15 | 15 |
| Balance at 31 December 2015 | 12.328 | 69 | 12.397 |
| Balance at 1 January 2016 | 12.328 | 69 | 12.397 |
| Acquisitions | - | 25 | 25 |
| Balance at 31 December 2016 | 12.328 | 94 | 12.422 |
| Amortisation and impairment charge | |||
| Balance at 1 January 2015 | - | 41 | 41 |
| Amortisation for the year | - | 1 | 1 |
| Balance at 31 December 2015 | - | 42 | 42 |
| Balance at 1 January 2016 | - | 42 | 42 |
| Amortisation for the year | - | 11 | 11 |
| Balance at 31 December 2016 | - | 53 | 53 |
| Carrying amounts | |||
| At 1 January 2015 | 12.328 | 13 | 12.341 |
| At 31 December 2015 | 12.328 | 27 | 12.355 |
| At 1 January 2016 | 12.328 | 27 | 12.355 |
| At 31 December 2016 | 12.328 | 41 | 12.369 |
On 1 July 2016, the Company, based on a reorganisation plan approved by the Court, amalgamated the total assets and liabilities of AES Atlas Etimo Skirodema Ltd.
| Ownership | ||||
|---|---|---|---|---|
| Name and country of incorporation | Principal Activity | 2016 | 2015 | |
| Before reorganisation of 1 July 2016: | ||||
| AES Atlas Etimo Skirodema Ltd - Cyprus | Dormant company | 100.0% | 100.0% | |
| Venus Beton Ltd - Cyprus | Dormant company | 51.0% | 51.0% | |
| CCC Aggregates Ltd - Cyprus | Dormant company | 51.0% | 51.0% | |
| After reorganisation of 1 July 2016: | ||||
| AES Atlas Etimo Skirodema Ltd - Cyprus | Dormant company | - | 100.0% | |
| Venus Beton Ltd - Cyprus | Dormant company | 51.0% | 51.0% | |
| CCC Aggregates Ltd - Cyprus | Dormant company | 51.0% | 51.0% |
The Company has amalgamated the following companies following a court decision issued on 20 September 2016 with effect
| as from 1 July 2016: | Ownership | ||
|---|---|---|---|
| Name and country of incorporation | Principal Activity | 2016 | 2015 |
| AES Atlas Etimo Skirodema Ltd - Cyprus | Dormant company | - | 100% |
| 2016 | 2015 | ||
| €000 | €000 | ||
| Balance at 1 January | - | 3.652 | |
| Amalgamated in group reorganisation | - | (3.652) | |
| Balance at 31 December | - | - | |
| Venus Beton Ltd - Cyprus | - | - | |
| CCC Aggregates Ltd - Cyprus | - | - | |
| - | - |
| Ownership | |||
|---|---|---|---|
| Name and country of incorporation | Principal Activity | 2016 | 2015 |
| Latomio Pyrgon Ltd - Cyprus | Aggregates quarry | 30% | 30% |
| Enerco - Energy Recovery Ltd - Cyprus | Waste to energy | 50% | 50% |
| Latomia Latouros Ltd - Cyprus | Aggregates quarry | 50% | 50% |
| 2016 | 2015 | ||
| €000 | €000 | ||
| Balance at 1 January | 3.345 | 3.428 | |
| Additions | 250 | 199 | |
| Share of profit/(loss) from equity-accounted investees | 161 | (242) | |
| Share of tax from equity-accounted investees | (11) | - | |
| Dividends from equity-accounted investees | (129) | (40) | |
| Balance at 31 December | 3.616 | 3.345 | |
| Latomio Pyrgon Ltd - Cyprus | 371 | 422 | |
| Enerco - Energy Recovery Ltd - Cyprus | 796 | 436 | |
| Latomia Latouros Ltd - Cyprus | 2.449 | 2.487 | |
| 3.616 | 3.345 |
In the Company's statement of financial position, the investments in associates are stated at cost:
| 2016 | 2015 |
|---|---|
| €000 | €000 |
| Balance at 1 January 3.080 |
51 |
| Additions 250 |
199 |
| Acquired through Group reorganisation - |
2.830 |
| Balance at 31 December 3.330 |
3.080 |
The Group provided corporate guarantees to banks for loans held by equity-accounted investees. As at 31 December 2016 these amounted to €3.791.000 (2015: €3.791.000).
| Group | Company | |||
|---|---|---|---|---|
| 2016 | 2015 | 2016 | 2015 | |
| €000 | €000 | €000 | €000 | |
| At 1 January | 135 | 192 | 135 | 192 |
| Additions | 13 | - | 13 | - |
| Change in fair value | (4) | (57) | (4) | (57) |
| At 31 December | 144 | 135 | 144 | 135 |
| Valuation | Valuation | ||||
|---|---|---|---|---|---|
| 2016 | 2015 | 2016 | 2015 | ||
| €000 | €000 | €000 | €000 | ||
| Non-current investments | |||||
| Equity securities available for sale | 144 | 135 | 144 | 135 |
| Group | Company | |||
|---|---|---|---|---|
| 2016 | 2015 | 2016 | 2015 | |
| €000 | €000 | €000 | €000 | |
| Raw materials and work in progress | 2.925 | 3.312 | 2.925 | 3.312 |
| Finished goods | 3.496 | 6.244 | 3.496 | 6.244 |
| Fuel stocks | 1.902 | 583 | 1.902 | 583 |
| Spare parts and consumables | 12.236 | 10.909 | 12.236 | 10.909 |
| 20.559 | 21.048 | 20.559 | 21.048 |
| Group | Company | |||
|---|---|---|---|---|
| 2016 | 2015 | 2016 | 2015 | |
| €000 | €000 | €000 | €000 | |
| Trade receivables | 8.910 | 6.600 | 8.910 | 6.601 |
| Amount owed by subsidiary companies (note 29) | - | - | 516 | 2.093 |
| Amount owed by associate companies (note 29) | 14 | 302 | 14 | 302 |
| Other receivables and prepayments | 2 | 1 | 2 | 1 |
| 8.926 | 6.903 | 9.442 | 8.997 | |
| Less impairment | (1.646) | (1.989) | (1.664) | (3.586) |
| 7.280 | 4.914 | 7.778 | 5.411 | |
| Impairment movement | ||||
| At 1 January | 1.989 | 2.860 | 3.586 | 8.858 |
| Amounts written off as uncollectible | (175) | (972) | (1.754) | (5.373) |
| Amounts recovered during the year | (222) | (29) | (222) | (29) |
| Accrued discounts | 54 | 130 | 54 | 130 |
| At 31 December | 1.646 | 1.989 | 1.664 | 3.586 |
The Group's historical experience in collection of accounts receivable falls within the recorded allowances. Due to these factors, management believes that no additional credit risk beyond amounts provided for collections losses is inherent in the Company's trade receivables.
Information about the Group's exposure to credit and market risks for trade and other receivables, is included in note 35.
| Group | Company | |||
|---|---|---|---|---|
| 2016 | 2015 | 2016 | 2015 | |
| €000 | €000 | €000 | €000 | |
| Balance at 1 January | 360 | 910 | 360 | 910 |
| Change in fair value | 90 | (300) | 90 | (300) |
| Impairment | - | (250) | - | (250) |
| Balance at 31 December | 450 | 360 | 450 | 360 |
Assets classified as held for sale include land valued at €360.000 (2015: €360.000) that is no longer required for the activities of the Group.
| Group | Company | |||
|---|---|---|---|---|
| 2016 | 2015 | 2016 | 2015 | |
| €000 | €000 | €000 | €000 | |
| Cash and bank balances | 6.335 | 8.639 | 6.335 | 8.637 |
| Cash and cash equivalents | 6.335 | 8.639 | 6.335 | 8.637 |
| Cash and cash equivalents in the statement of cash flows | 6.335 | 8.639 | 6.335 | 8.637 |
| Share capital | 2016 | 2015 | ||
|---|---|---|---|---|
| No. of shares | No. of shares | |||
| Authorised: | ||||
| Ordinary shares of €0,43 each | 72.000.000 | 72.000.000 | ||
| 2016 | 2015 | 2016 | 2015 | |
| No. of shares | No. of shares | €000 | €000 | |
| Allotted, called up and fully paid: | ||||
| Ordinary shares of €0,43 each | 71.935.947 | 71.935.947 | 30.932 | 30.932 |
Revaluation reserve comprises the cumulative net change in the fair value of land and buildings and Vassiliko port. When revalued land or buildings are sold, the portion of the revaluation reserve that relates to that asset, and that is effectively realised, is transferred directly to retained earnings.
Revaluation of investments available-for-sale reserve represents accumulated gains and losses arising on the revaluation of available-for-sale financial assets that have been recognised in other comprehensive income, net of amounts reclassified to profit or loss when those assets have been disposed of or are determined to be impaired.
Cash flow hedges reserve represents the accumulated gains and losses arising on the changes in the fair value of the derivatives recognized in other comprehensive income.
| Group | Company | |||
|---|---|---|---|---|
| 2016 | 2015 | 2016 | 2015 | |
| €000 | €000 | €000 | €000 | |
| Non-current liabilities | ||||
| Secured bank loans | 30.969 | 47.189 | 30.969 | 47.189 |
| Current liabilities | ||||
| Current portion of secured bank loans | 7.907 | 7.907 | 7.907 | 7.907 |
| Analysis of maturity of debt: | ||||
| Within one year or on demand | 7.907 | 7.907 | 7.907 | 7.907 |
| Between one and two years | 7.907 | 10.174 | 7.907 | 10.174 |
| Between two and five years | 23.062 | 29.768 | 23.062 | 29.768 |
| After five years | - | 7.247 | - | 7.247 |
| 38.876 | 55.096 | 38.876 | 55.096 | |
The bank loans are secured as follows:
By mortgage against immovable property of the Company for €25.500.000 (2015: €26.800.000).
Fixed charge on the Company's financed plant and machinery for €25.500.000 (2015: €46.732.000).
The rate of interest payable on the loans as at 31 December 2016 was fixed with an interest rate swap agreement until April 2019 at 1,19%. At 31 December 2016, the prevailing rate of interest for these loans was on average 1,19% (2015: 1,42%).
| Group | Company | |||
|---|---|---|---|---|
| 2016 | 2015 | 2016 | 2015 | |
| €000 | €000 | €000 | €000 | |
| Accelerated capital allowances | 10.611 | 9.095 | 10.611 | 9.095 |
| Revaluation of properties | 7.661 | 7.951 | 7.661 | 7.923 |
| Tax losses carried forward | (329) | (1.890) | (329) | (1.890) |
| 17.943 | 15.156 | 17.943 | 15.128 | |
| 2016 | 2015 | 2016 | 2015 | |
| €000 | €000 | €000 | €000 | |
| At 1 January | 15.156 | 12.436 | 15.128 | 12.394 |
| Deferred tax charge in statement of comprehensive | ||||
| income (note 10) | 3.090 | 3.001 | 3.090 | 3.015 |
| Transfer through group reorganisation | - | - | 28 | - |
| Transfer to revaluation reserve | (303) | (281) | (303) | (281) |
| At 31 December | 17.943 | 15.156 | 17.943 | 15.128 |
| Group | Company | ||||
|---|---|---|---|---|---|
| Non-current | Non-current | ||||
| 2016 | 2015 | 2016 | 2015 | ||
| €000 | €000 | €000 | €000 | ||
| Other contingent liabilities | 400 | 400 | 400 | 400 |
| Group | Company | |||
|---|---|---|---|---|
| 2016 | 2015 | 2016 | 2015 | |
| €000 | €000 | €000 | €000 | |
| Current | ||||
| Trade payables | 4.684 | 3.418 | 4.627 | 3.362 |
| Amounts owed to related companies (note 29) | 35 | 273 | 35 | 273 |
| Other payables | 1.146 | 602 | 1.146 | 602 |
| Cash flow hedge liability | 558 | 75 | 558 | 75 |
| Accrued interest | 188 | 15 | 188 | 15 |
| 6.611 | 4.383 | 6.554 | 4.327 |
The Company has entered into agreements with the following related parties:
The transactions between the Group and the related companies, including the above agreements were as follows:
| Sales | Purchases | ||||
|---|---|---|---|---|---|
| 2016 | 2015 | 2016 | 2015 | ||
| €000 | €000 | €000 | €000 | ||
| Hellenic Mining Group | - | 1 | 304 | 427 | |
| Italcementi Group | - | - | 29 | 530 | |
| KEO Plc | - | - | 7 | 9 | |
| The Cyprus Cement Public Company Ltd | - | - | 120 | 80 | |
| Enerco - Energy Recovery Ltd | 734 | 485 | 977 | 270 | |
| 734 | 486 | 1.437 | 1.316 |
In addition to salaries, the Group also contributes to the Provident Fund and Medical Fund which are defined contributions plans (note 33). Key management personnel compensation, including total employer contributions for 2016 was €786.000 (2015: €665.000).
The balances between the Group and the related parties were as follows:
| Group | |
|---|---|
| 2016 | 2015 |
| €000 | €000 |
| Amounts due to related parties | |
| Hellenic Mining Group 30 |
128 |
| Italcementi Group - |
136 |
| KEO Plc 5 |
9 |
| 35 | 273 |
The above balances relate to trading activities between the Group and the respective parties.
| Group | Company | ||||
|---|---|---|---|---|---|
| 2016 | 2015 | 2016 | 2015 | ||
| €000 | €000 | €000 | €000 | ||
| Balances due from associate companies | |||||
| Enerco - Energy Recovery Ltd (note 21) | 14 | 302 | 14 | 302 |
The above balances relate to trading activities and dividends receivable.
The balances between the Company and the Group entities were as follows:
| Company | ||
|---|---|---|
| 2016 | 2015 | |
| €000 | €000 | |
| Balances due from Group entities | ||
| AES Atlas Etimo Skirodema Ltd | - | 1.579 |
| Venus Beton Ltd | 498 | 498 |
| CCC Aggregates Ltd | 18 | 16 |
| 516 | 2.093 | |
| Less impairment | (346) | (1.923) |
| 170 | 170 |
| 2016 | 2015 | |
|---|---|---|
| €000 | €000 | |
| Interim dividend 2016 at €0,08 (2015: €0,06) per share | 5.755 | 4.316 |
| Final dividend 2015 at €0,08 (2014: €0,06) per share | 5.755 | 4.316 |
| 11.510 | 8.632 |
Dividends are subject to defence fund contribution at the rate of 17% when the beneficiary is a physical person resident of Cyprus.
At 31 December 2016, and five days prior to the date of the approval of the financial statements, the proportions of shares held directly or indirectly by the Directors and their related parties were as follows:
| Fully paid shares | |||
|---|---|---|---|
| 31 December 2016 | 21 April 2017 | ||
| Leondios Lazarou | 0,0001% | 0,0001% | |
| Costas Koutsos | 0,0139% | 0,0139% | |
| Stavros Galatariotis | 0,0125% | 0,0125% | |
| Antonios Antoniou | 0,0667% | 0,0667% | |
| 0,0932% | 0,0932% |
At 31 December 2016, the Company had no material agreements in which Directors of the Company, or their related parties, had a direct or indirect interest.
At 31 December 2016 and five days prior to the date of approval of the financial statements the following shareholders were holding at least 5% of the nominal value of the issued share capital.
| Fully paid shares | ||
|---|---|---|
| 31 December 2016 | 21 April 2017 | |
| Holy Archbishopric of Cyprus - directly | 19,52% | 19,52% |
| Holy Archbishopric of Cyprus - indirectly (through KEO Plc) | 6,49% | 6,49% |
| Compagnie Financiere et de Participations - directly | 9,71% | 9,71% |
| Compagnie Financiere et de Participations - indirectly (through Italmed Cement Company Ltd) |
16,27% | 16,27% |
| Anastasios G. Leventis Foundation | 5,34% | 5,34% |
| The Cyprus Cement Public Company Ltd | 25,30% | 25,30% |
| 82,63% | 82,63% |
The Group has two schemes, the Vassiliko Cement Works Ltd Employees' Provident Fund and the Vassiliko Cement Works Ltd Employees' Medical Fund. The two schemes are funded separately and prepare their own financial statements. According to these schemes, the employees are entitled to payment of certain benefits upon retirement, prior termination of service or sickness. These are defined contribution schemes and the contributions of the Group for the year were €345.000 (2015: €299.000) and for the Company €345.000 (2015: €299.000).
Non-cancellable operating lease rentals are payable as follows:
| Group | Company | |||
|---|---|---|---|---|
| 2016 | 2015 | 2016 | 2015 | |
| €000 | €000 | €000 | €000 | |
| Less than one year | 136 | 108 | 136 | 108 |
| Between one and five years | 512 | 127 | 512 | 127 |
| More than five years | 72 | 91 | 72 | 91 |
| 720 | 326 | 720 | 326 |
The Group leases a number of properties under operating leases. None of the leases include contingent rentals.
The Group leases out its investment property under operating leases (see note 13). The future minimum lease payments under non-cancellable leases are as follows:
| Group | Company | |||
|---|---|---|---|---|
| 2016 | 2015 | 2016 | 2015 | |
| €000 | €000 | €000 | €000 | |
| Less than one year | 95 | 130 | 95 | 130 |
| Between one and five years | 74 | 578 | 74 | 578 |
| More than five years | 62 | 142 | 62 | 142 |
| 231 | 850 | 231 | 850 |
During the year ended 31 December 2016, €132.000 was recognised as net rental income in the statement of comprehensive income (2015: €212.000).
The Group is exposed to the following risks from its use of financial instruments:
The Group also has exposure to the following other risks:
This note presents information about the Group's exposure to each of the above risks, the Group's objectives, policies and processes for measuring and managing risk, and the Group's management of capital. Further quantitative disclosures are included throughout these consolidated financial statements.
The Board of Directors has overall responsibility for the establishment and oversight of the Group's risk management framework.
The Group's risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group's activities. The Group, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.
The Group Audit Committee overseas how management monitors compliance with the Group's risk management procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group.
The main monetary financial assets of the Group and the Company are cash and cash equivalents, and the investments in securities and trade receivables. The main monetary financial liabilities are bank overdrafts, loans and trade payables.
Market risk is the risk that changes in market prices such as foreign exchange rates, interest rates and equity prices will affect the Group's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters while optimising the return.
Interest rate risk results from changes in market interest rates. The Group's management monitors the interest rate fluctuations on a continuous basis and acts accordingly. The interest rate and repayment terms of the loans are disclosed in note 25.
Currency risk is the risk that the value of financial instruments will fluctuate due to changes in foreign exchange rates. Currency rate risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency that is not the Group's measurement currency. The Group is exposed to foreign exchange risk arising from various currency exposures primarily with respect to the United States Dollar (US\$). The Groups management monitors the exchange rate fluctuations and exposure on foreign currency transactions on a continuous basis and acts accordingly.
Exposure to currency risk was as follows:
| Group | US\$000 | US\$000 |
|---|---|---|
| 31 December 2016 | 31 December 2015 | |
| Trade receivables | 1.802 | 326 |
| Trade payables | 47 | 52 |
| Net exposure | 1.849 | 378 |
| Company | US\$000 | US\$000 |
| 31 December 2016 | 31 December 2015 | |
| Trade receivables | 1.802 | 326 |
| Trade payables | 47 | 52 |
| Net exposure | 1.849 | 378 |
The following significant exchange rates were applied during the year:
| Reporting date | ||||
|---|---|---|---|---|
| Average rate | spot rate | |||
| 2016 | 2015 | 2016 | 2015 | |
| US\$ | 0.898 | 0.894 | 0.898 | 0.894 |
Credit risk arises when a failure by counter parties to discharge their obligations could reduce the amount of future cash inflows from financial assets on hand at the statement of financial position date. The Company has no significant concentration of credit risk. The Group has policies in place to ensure that sales of products and services are made to customers with an appropriate credit history and monitors on a continuous basis the ageing profile of its receivables. The Company has policies to limit the amount of credit exposure to any financial institution.
The carrying amount of financial assets representing the maximum credit exposure to credit risk at the reporting date was:
| Group Carrying amount |
Company Carrying amount |
||
|---|---|---|---|
| €000 | €000 | €000 | €000 |
| 8.910 | 6.600 | 8.910 | 6.601 |
| 14 | 302 | 14 | 302 |
| 2 | 1 | 2 | 1 |
| 144 | 135 | 144 | 135 |
| 6.335 | 8.639 | 6.335 | 8.637 |
| 15.405 | 15.677 | 15.405 | 15.676 |
The Group has policies to limit the amount of credit exposure to any financial institution. The table below shows an analysis of the Company's bank deposits by the credit rating of the bank in which they are held:
| Group | Company | |||||
|---|---|---|---|---|---|---|
| 2016 | 2015 | 2016 | 2015 | |||
| Bank group based on credit ratings by Moody's | No of banks | €000 | €000 | No of banks | €000 | €000 |
| Caa3 | 2 (1.304) | 5.146 | 2 (1.304) | 5.144 | ||
| Caa2 | 2 | 466 | 2.299 | 2 | 466 | 2.299 |
| Caa1 | 1 | 1.820 | - | 1 | 1.820 | - |
| Aa3 | 1 | 3.540 | 1 | 1 | 3.540 | 1 |
| Banks without credit rating and cash in hand | 3 | 1.813 | 1.193 | 3 | 1.813 | 1.193 |
| 6.335 | 8.639 | 6.335 | 8.637 |
Liquidity risk is the risk that arises when the maturity of assets and liabilities does not match. An unmatched position potentially enhances profitability, but can also increase the risk of losses. The Company has procedures with the object of minimising such losses such as maintaining sufficient cash and other highly liquid current assets and by having available an adequate amount of committed credit facilities.
The following are the contractual maturities of financial liabilities, including estimated interest payments:
| Non-derivative financial liabilities |
Carrying amount €000 |
Contractual cash flow €000 |
Payable on demand and up to 6 months €000 |
6 - 12 months €000 |
1 - 2 years €000 |
2 - 5 years €000 |
More than 5 years €000 |
|---|---|---|---|---|---|---|---|
| 31 December 2016 | |||||||
| Secured bank loans | 38.876 | (40.220) | (4.141) | (4.175) | (8.279) | (23.615) | (10) |
| Trade and other payables | 6.011 | (6.611) | (6.611) | - | - | - | - |
| 45.487 | (46.831) | (10.752) | (4.175) | (8.279) | (23.615) | (10) | |
| 31 December 2015 | |||||||
| Secured bank loans | 55.096 | (57.691) | (4.255) | (4.221) | (11.074) | (30.799) | (7.342) |
| Trade and other payables | 4.383 | (4.383) | (4.383) | - | - | - | - |
| 59.479 | (62.074) | (8.638) | (4.221) | (11.074) | (30.799) | (7.342) |
| Non-derivative financial liabilities |
Carrying amount €000 |
Contractual cash flow €000 |
Payable on demand and up to 6 months €000 |
6 - 12 months €000 |
1 - 2 years €000 |
2 - 5 years €000 |
More than 5 years €000 |
|---|---|---|---|---|---|---|---|
| 31 December 2016 | |||||||
| Secured bank loans | 38.876 | (40.220) | (4.141) | (4.175) | (8.279) | (23.615) | (10) |
| Trade and other payables | 6.554 | (6.554) | (6.554) | - | - | - | - |
| 45.430 | (46.774) | (10.695) | (4.175) | (8.279) | (23.615) | (10) | |
| 31 December 2015 | |||||||
| Secured bank loans | 55.096 | (57.691) | (4.255) | (4.221) | (11.074) | (30.799) | (7.342) |
| Trade and other payables | 4.327 | (4.327) | (4.327) | - | - | - | - |
| 59.423 | (62.018) | (8.582) | (4.221) | (11.074) | (30.799) | (7.342) |
The Group has access to financing facilities of €53.000.000, of which €14.000.000 were unused at the end of the reporting period. The Group expects to meet its other obligations from operating cash flows and proceeds from maturity of financial assets.
The activities of the Group are subject to various risks and uncertainties related to the construction industry and the economy in general. These activities are influenced by a number of factors which include, but are not restricted, to the following:
Operational risk is the risk that derives from any deficiencies relating to the Group's information technology, production processes and control systems as well as the risk of a human error and natural disasters. The Group's systems are evaluated, maintained, and upgraded continuously.
The Cyprus economy has been adversely affected during the last few years by the economic crisis. The negative effects have to some extent been resolved, following the negotiations and the relevant agreements reached with the European Commission, the European Central Bank and the International Monetary Fund (IMF) for financial assistance which was dependent on the formulation and the successful implementation of an Economic Adjustment Program.
During 2016, the Cyprus economy has successfully completed earlier than anticipated the Economic Adjustments Program and exited the IMF program.
Although there are signs of improvement, especially in the macroeconomic environment of the country's economy, significant challenges remain that could affect the estimates of the Company's cash flows and its assessment of impairment of financial and non-financial assets.
The Company's management is unable to predict all developments which could have an impact on the Cyprus and regional economies and consequently, what effect, if any, they could have on the future financial performance, cash flows and financial position of the Company.
The Group has available adequate financial resources to continue its operations as a going concern.
The Group's management believes that it is taking all the necessary measures to maintain the viability of the Group and the development of its business in the current business and economic environment.
Environmental risk is the risk to comply with environmental regulations of the Republic of Cyprus and the EU. The risk is limited through the monitoring controls applied by the Group. Further the Group is exposed to price fluctuations on emission rights depending on its emission rights surplus or deficit. The Group's position is therefore constantly monitored to ensure correct risk management.
Compliance risk is the risk of financial loss, including fines and other penalties, which arises from non-compliance with the laws and regulations of the Republic of Cyprus and the EU. The risk is limited through the monitoring controls applied by the Group.
Litigation risk is the risk of financial loss which arises from the interruption of the Group's operations or any other undesirable situation that arises from the possibility of non-execution or violation of legal contracts and consequently from lawsuits. The risk is restricted through the contracts used by the Group to execute its operations.
The risk of loss of reputation arising from the negative publicity relating to the Group's operations (whether true or false) may result in a reduction of its clientele, reduction in revenue and legal cases against the Group. The management is monitoring such developments through its sustainable development and corporate governance policies and procedures to mitigate such risks.
The Board's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Board of Directors monitors the return on capital which the Group defines as the amount of net income returned as a percentage of total shareholder equity.
The Board seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position.
The fair value of the investments in securities quoted on the Cyprus Stock Exchange is disclosed in note 19. The fair value of investment property is disclosed in note 13. The fair values of the other monetary assets and liabilities are approximately the same as their book values.
There were no material events after the reporting period, which affect the financial statements as at 31 December 2016.
Offices, Factory and Port, Vassiliko Τ: +357 24 845 555, F: +357 24 332 651
Registered office and Postal Address 1Α Kyriakos Matsis Avenue P.O.Box 22281 CY-1519 Nicosia - Cyprus Τ: +357 22 458 100, F: +357 22 762 741, E: [email protected] www.vassiliko.com
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