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TRANSCRIPT
Offices, Factory and Port, VassilikoΤ: +357 24 845 555, F: +357 24 332 651
Registered office and Postal Address1Α Kyriakos Matsis Avenue P.O.Box 22281 CY-1519 Nicosia - Cyprus
Τ: +357 22 458 100, F: +357 22 762 741E: [email protected], [email protected]
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ANNUAL REPORT AND FINANCIAL STATEMENTS 2018
Annual Report & Financial Statements '18 v
NOTICE OF ANNUAL GENERAL MEETING
ANNUAL REPORT AND FINANCIAL STATEMENTS
Officers,professionaladvisorsandbankers
StatementoftheMembersoftheBoardofDirectors
Managementreport
Corporategovernancereport
Remunerationreport Directors'CurriculaVitae
Independentauditors'report
Consolidatedstatementofprofitorlossandothercomprehensiveincome Companystatementofprofitorlossandothercomprehensiveincome
Consolidatedstatementoffinancialposition
Companystatementoffinancialposition
Consolidatedstatementofchangesinequity
Companystatementofchangesinequity Consolidatedstatementofcashflows Companystatementofcashflows
NOTES TO THE FINANCIAL STATEMENTS
CONTENTS
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Annual Report & Financial Statements '186
The53rdAnnualGeneralMeetingoftheshareholdersofVassilikoCementWorksPublicCompanyLtdwillbeheldatParklaneResort&Spa,inLimassol,on30May2019at5:00p.m.totransactthefollowingbusiness:
1. ConsidertheManagementreportoftheBoardofDirectorsfortheyear2018.2. Receive,considerandapprovetheannualfinancialstatementsandthereportoftheauditorsfortheyear
2018.3. Approveadividendpaymentof€0,12persharefortheyear2018.4. ElectnewDirectorsintheplaceofthosewhoretire.5. Approvetheremunerationreport.6. FixtheremunerationoftheDirectorsfortheyear2019.7. Re-appointKPMGLimitedastheauditorsoftheCompanyandfixtheirremunerationfortheyear2019.8. Transactanyotherbusinesswhich, inaccordancewith theCompany’sArticlesofAssociation, canbe
presentedattheAnnualGeneralMeeting. ByorderoftheBoard M. MAVRIDOU Secretary 11 April 2019
NOTICE OF ANNUAL GENERAL MEETING
Annual Report & Financial Statements '18 7
NOTES TO THE NOTICE OF THE ANNUAL GENERAL MEETING
ENTITLEMENT TO PARTICIPATE IN THE ANNUAL GENERAL MEETING
1. AnypersonappearingasashareholderintheRegisterofMembersoftheCompanyontherecorddateisentitledtoparticipateintheAnnualGeneralMeeting.Eachordinaryshareisentitledtoonevote.TherecorddatefordeterminingtherighttovoteattheAnnualGeneralMeetingis28May2019.Transactionswhichwillbetakingplaceon27May2019andthereafterwillnotbeconsideredindeterminingtherighttovoteattheAnnualGeneralMeeting.
2. AmemberentitledtoattendandvoteattheAnnualGeneralMeetingisentitledtoappointaproxytoattendandvoteonhisbehalf.Shareholdersmayappointanypersonastheirproxy.SuchproxyneednotbeamemberoftheCompany.Shareholderswhoappointaproxytovoteontheirbehalf,butwishtospecifyhowtheirvoteswillbecast,shouldticktherelevantboxesontheFormofProxy.
3. Theinstrumentappointingaproxy,whichwillbeavailableonthewebsiteoftheCompanywww.vassiliko.com
(underInvestorsRelations),mustbedepositedattheRegisteredOfficesoftheCompany(1A,KyriakosMatsisAvenue,4thFloor,CY-1082Nicosia,Cyprus,fax+35722762741)24hourspriortothecommencementofthebusinessoftheAnnualGeneralMeeting.
4. Ifsuchappointorisacompany,theFormofProxymustbearthenameofthecompany,andbesignedbyits
dulyauthorisedofficer/s.Inthecaseofjointshareholders,theFormofProxycanonlybesignedbythepersonwhosenameappearsfirstintheRegisterofMembers.ShareholdersshouldconfirmthattheformofproxyhasbeensuccessfullyreceivedbytheCompanybycalling+35722458100.
5. Shareholdersand/or theirproxieswhowillattendtheAnnualGeneralMeetingarerequestedtocarrywiththemtheiridentitycard,orotherproofofidentification.
6. Anycorporation,whichisashareholderoftheCompany,maybyresolutionofitsDirectorsorothergoverningbody,authorisesuchperson,asitthinksfittoactasitsrepresentativeatanymeetingoftheCompany,andthepersonsoauthorisedshallbeentitledtoexercisethesamepowersonbehalfofthecorporationwhichhe/sherepresents,asthatcorporationcouldexercise,ifitwereanindividualmemberoftheCompany.
VOTING PROCEDURES AT THE ANNUAL GENERAL MEETING
7. AttheAnnualGeneralMeetingaresolutionputtothevoteofthemeetingshallbedecidedonashowofhandsunlessapollis(beforeoronthedeclarationoftheresultoftheshowofhands)demanded:a. bytheChairman,orb. byatleastthreememberspresentinpersonorbyproxy,orc. byanymemberormemberspresentinpersonorbyproxyandrepresentingnotlessthanone-tenthofthe
totalvotingrightsofallthemembershavingtherighttovoteatthemeeting.d. byamemberormembersholdingsharesintheCompanyconferringarighttovoteatthemeetingbeing
sharesonwhichanaggregatesumhasbeenpaidupequaltonotlessthanone-tenthofthetotalsumpaiduponallthesharesconferringthatright.
Annual Report & Financial Statements '188
NOTES TO THE NOTICE OF THE ANNUAL GENERAL MEETING (continued)
8. Ifapollisdemandedinthemanneraforesaid,itshallbetakeninsuchamanner,astheChairmanshalldirect,andtheresultofthepollshallbedeemedtobetheresolutionofthemeetingatwhichthepollwasdemanded.Thedemandforapollmaybewithdrawn.
SHAREHOLDERS RIGHTS AT THE ANNUAL GENERAL MEETING
9. Pursuanttoarticle127BofCompaniesLawCap113,shareholdersoftheCompanyhavetherighttoputanitemontheagendaoftheAnnualGeneralMeeting,providedthattheitemisaccompaniedbyawrittenexplanationjustifyingtheinclusionoftheitemortheproposedresolutionforapprovalattheAnnualGeneralMeetingprovidedthat:a. theshareholderorgroupofshareholdersholdatleast5%oftheissuedsharecapitaloftheCompany,
representingatleast5%ofthevotingrightsofshareholdersentitledtovoteatthemeetingforwhichanitemhasbeenaddedontheagenda,and
b. theshareholders’requesttoputanitemontheagendaorresolution(asdescribedabove)isreceivedbytheCompany’sSecretaryinhardcopyorelectronicallyattheaddressesindicatedbelowatleast42dayspriortotheAnnualGeneralMeeting.
VassilikoCementWorksPublicCompanyLimited1A,KyriakosMatsisAvenue,4thFloor,CY-1082Nicosia,[email protected]
10.Pursuanttoarticle128CoftheCompaniesLawCap113,shareholdershavearighttoaskquestionsrelated
to itemsontheagendaandtohavesuchquestionsansweredbytheBoardofDirectorsof theCompanysubjecttoanyreasonablemeasurestheCompanymaytaketoensuretheidentificationofshareholders.
OTHER INFORMATION AND AVAILABLE DOCUMENTS
11.Asat11April2019,theissuedsharecapitaloftheCompanyis€30.932.457dividedinto71.935.947ordinarysharesofnominalvalue€0,43each.
12.TheAnnualReport andFinancial Statements of theCompany for 2018 (incorporating theNotice to andtheAgenda of theAnnual General Meeting, Explanatory Notes on theAgenda Items, theManagementReport,theCorporateGovernanceReport,theRemunerationReport,theAuditors’ReportandtheFinancialStatements),andtheFormofProxyshallbemadeavailableinelectronicformonthewebsiteoftheCompanywww.vassiliko.com(InvestorRelations)andinhardcopyattheCompany’sRegisteredOffices,1AKyriakosMatsisAvenue,4thFloor,1082Nicosia.
Annual Report & Financial Statements '18 9
NOTES TO THE NOTICE OF THE ANNUAL GENERAL MEETING (continued)
EXPLANATORY NOTESTheformalNoticeofthe2019AnnualGeneralMeetingissetoutonpage6.TheNoticeaskstheshareholdersofVassilikoCementWorksPublicCompanyLtdtoapproveanumberofitemsofbusiness.Foryourinformation,theexplanatorynotesbelowsummarisethepurposeofeachResolutiontobevotedonbyVassilikoCementWorksshareholdersatthisyear’sAnnualGeneralMeeting.
RESOLUTION 1: TO CONSIDER THE MANANGEMENT REPORT TheChairmanwillpresenttheManagementReportfortheyear2018tothemeeting.
RESOLUTION 2: TO RECEIVE, CONSIDER AND APPROVE THE ANNUAL FINANCIAL STATEMENTS AND THE REPORT OF THE AUDITORSTheChairmanwillpresenttheAnnualFinancialStatementsandKPMGLimitedwillpresenttheirAuditReportfortheyearended31December2018tothemeeting.
RESOLUTION 3: APPROVE A DIVIDEND PAYMENT FOR THE YEAR 2018TheDirectorsproposed thepaymentofadividend for2018,of€0,12 perOrdinaryShare. Ifapprovedat theAnnualGeneralMeeting,thedividendwillbepaidtotheentitledshareholdersregisteredasat12June2019(recorddate).TheshareoftheCompanywillbetradedex-dividendasof11June2019.Paymentofthedividendwillbemade(effected)tillthe9July2019.
RESOLUTION 4: RE-ELECTION OF DIRECTORSIn accordancewith thearticlesof associationMessrsGeorgeSt.Galatariotis,CharalambosPanayiotouandChristopheAllouchery,aretheDirectorswhowillretirebyrotationthisyearandofferthemselvesforre-electioninaccordancewiththeCompany’sArticlesofAssociation.
BriefdetailsofallDirectorsappearonpages25to29oftheAnnualReport.
RESOLUTION 5: APPROVE THE REMUNERATION REPORTTheShareholdersareaskedtoapprovetheremunerationreportthatappearsonpages23to24.
RESOLUTION 6: TO FIX THE REMUNERATION OF THE DIRECTORSTheShareholdersareaskedtoapprovetheremunerationoftheDirectorsfortheyear2019toremainthesameasforthepreviousyear,i.e.:€25.000fortheChairman€20.000foreachoftheDirectors€300attendancefeepermeetingheld
RESOLUTION 7: APPOINTMENT OF AUDITORSThisresolutionrelatestothere-appointmentofKPMGLimitedastheCompany’sauditorstoholdofficeuntilthenextAnnualGeneralMeetingoftheCompany,andtoauthorisetheDirectorstosettheirremuneration.
Annual Report & Financial Statements '1810
OFFICERS, PROFESSIONAL ADVISORS AND BANKERS
Directors: ANTONIOSA.ANTONIOU(ExecutiveChairman) GEORGEST.GALATARIOTIS COSTASST.GALATARIOTIS STAVROSG.GALATARIOTIS COSTASKOUTSOS CHARALAMBOSPANAYIOTOU MAURIZIO MANSI MONTENEGRO ANTONISMIKELLIDES CHRISTOPHEALLOUCHERY ANTONIOSKATSIFOS STELIOSS.ANASTASIADES Chief Executive Officer: ANTONIOSA.ANTONIOU Chief Financial Officer: GEORGES.SAVVASecretary: MARIAMAVRIDOU Independent Auditors: KPMGLIMITED 14,ESPERIDONSTREET 1087 NICOSIA CYPRUS
Legal Advisοrs: TASSOSPAPADOPOULOS&ASSOCIATES CHRYSSESDEMETRIADES&CO.LLC L.PAPAPHILIPPOU&COLLC LEONIDASG.GEORGIOU CHRISTYS&COLLC Bankers: ALPHABANKLTD BANKOFCYPRUSPUBLICCOMPANYLTD EUROBANKEFGCYPRUSLTD HELLENICBANKPUBLICCOMPANYLTD NATIONALBANKOFGREECE(CYPRUS)LTD NATIONALBANKOFGREECESA UBSSWITZERLANDAG Registered office: 1A,KYRIAKOSMATSISAVENUE CY-1082NICOSIA CYPRUS
Registered number: 1210
Internet website: www.vassiliko.com
Annual Report & Financial Statements '1812
MANAGEMENT REPORT
TheBoardofDirectorsofVassilikoCementWorksPublicCompanyLtd(the'Company')presentstothemembersitsmanagementreporttogetherwiththeauditedfinancialstatementsfortheyearended31December2018. FINANCIAL STATEMENTS Theconsolidatedfinancialstatementsfortheyear2018includetheresultsoftheholdingcompany,itssubsidiariesandassociatecompanies. PRINCIPAL ACTIVITIES TheGroup'sprincipalactivitiesaretheproductionofclinkerandcement,whicharedistributedinthelocalandoverseasmarkets.TheGroupalsohasapresenceinaggregatesquarryingthroughitsassociatedcompanies. REVIEW OF DEVELOPMENTS, POSITION AND PERFORMANCE OF THE OPERATIONS Therevenuefor2018reached€97.926.000comparedto€102.467.000for2017,showingadecreaseof4,4%. Year2018 resultswereaffectedbyhigherenergyandcarbonemissioncostswithan impactongrossprofitmargin.Electricitycosthadthemostnoticableimpact.Thecostofsolidfuelsalsoincreasedbuttheirimpactwasmoderatedthroughtheuseofalternativefuels.TheCompanyispursuingfurtheritsstrategytoreplacetraditionalsolidfosilfuelswithalternativesources,whichofferbothfinancialandenviromentalbenefitstotheCompany. FINANCIAL RESULTS TheresultsoftheGrouparepresentedintheconsolidatedstatementofprofitorlossandothercomprehensiveincome.Theprofitaftertaxationfortheyearended31December2018amountedto€15.722.000comparedto€19.873.000in2017. DIVIDENDS On4October2018,theBoardofDirectorsapprovedthepaymentofaninterimdividendof3centspershareof€2.158.078. Onthesamedate,theExtraordinaryGeneralMeetingapprovedthepaymentofadividendof6,5centspershareof€4.675.837outoftheprofitsofyear2016.
TheBoardofDirectorsrecommendsthepaymentofanadditionaldividendof€8.632.314or€0,12pershare.Thetotaldividendtobepaidincludingtheinterimdividendabovewillbe€10.790.392or€0,15pershare.Therespectivedividendspaidforthepreviousyearwere€17.264.628or€0,24pershare.
MAIN RISKS AND UNCERTAINTIES Statementsmadeinthisreportthatarenothistoricalfacts,includingtheexpectationsforfuturevolumeandpricingtrends,demandfortheproducts,energycostsandothermarketdevelopmentsareforwardlookingstatements.Thesestatementsarenotguaranteesoffutureperformanceandinvolverisks,uncertaintiesandassumptions("Factors"),whicharedifficulttopredict.
Annual Report & Financial Statements '18 13
MANAGEMENT REPORT (continued)
SomeoftheFactorsthatcouldcauseactualresultstodiffermateriallyfromthoseexpressedintheforward-lookingstatementsinclude,butarenotlimitedto:thecyclicalnatureoftheCompany'sbusiness;nationalandregionaleconomicconditions;currencyfluctuations;energyprices;emissionrightspricefluctuation;seasonalnatureoftheCompany’soperations;levelsofconstructionspendingand,inparticular,inGovernmentinfrastructureprojectsannounced;supply/demandstructureoftheindustry;competitionfromneworexistingcompetitors;unfavourableweatherconditionsduringpeakconstructionperiods;changesinandimplementationofenvironmentalandothergovernmentalregulations.Ingeneral,theCompanyissubjecttotherisksanduncertaintiesoftheconstructionindustry.Theforward-lookingstatementsaremadeasofthisdateandtheCompanyundertakesnoobligationtoupdatethem,whetherasaresultofnewinformation,futureeventsorotherwise. Further information for risksanduncertainties towhich theGroup isexposed, isdisclosed innote36of thefinancialstatements. FUTURE DEVELOPMENTS Thecementindustryisfacingnewchallengeswithoversupplyofcementandhighcostofcarbonandemissionrightswhichhasincreasedfivetimesinaperiodoftwoyears.
PHOTOVOLTAIC PARK TheCompanyisproceedingwithanewinvestmentinrenewableenergy.Thisrelatestoaphotovoltaicparkwithacapacityof8MWthatisexpectedtobeinoperationthefirstquarterof2020,atacostof€6,7million.Theproducedenergywillcover8%to10%ofcurrentelectricityrequirementsandwillreducecarbondioxideemissions.
TheCompanyhasalsobeenworkinghardonreducingcarbonemissionsatitskilnbyreplacingtraditionalfossilfuelswithtreatedstreamsofwaste,currentlyachievingarateofreplacementof45%in2018. EVENTS AFTER THE REPORTING PERIOD Noimportanteventshaveoccuredafterthereportingperiod(seenote39ofthefinancialstatements). SHARE CAPITAL TheissuedsharecapitaloftheCompanycomprises71.935.947ordinarysharesof€0,43pershare.TherewerenochangestothesharecapitaloftheCompanyduring2018.TheCompany’ssharesarelistedontheCyprusStockExchange.
TherearenorestrictionsonthetransferoftheCompany’ssharesotherthantherequirementsoftheDirectiveonInsiderDealingandMarketManipulation,whichrelatestotransactionswithrelatedparties.
TheCompanydoesnothaveanysharesinissuewhichcarryspecialcontrolrights.
Annual Report & Financial Statements '1814
MANAGEMENT REPORT (continued)
AGREEMENTS WHICH ARE EFFECTIVE UPON A CHANGE OF CONTROL OF THE COMPANY TheCompanyhasnotcontractedanyagreementwhichbecomeseffective,isamendedorceasestoapplyincaseofchangeofcontrol followingapublic tenderoffer to theCompany’sshareholdersor theproposalofaresolutiontothegeneralmeetingoftheCompanyforamerger,acquisitionorsaleofitsoperations.
TherearenoagreementswiththeExecutiveDirectorsoremployeesoftheCompanyprovidingforcompensationincaseofresignationordismissalwithoutavalidreasonorforterminationoftheiremploymentduetoapublictenderoffer for theacquisitionof thesharesof theCompany. Incaseof terminationby theCompanyof theemploymentofExecutiveDirectorsoremployees,priortotheirretirement,theCompanyhastocompensatethemaccordingtotheprovisionsoftheLawandtheCompany’sagreementswiththeTradeUnions. DIRECTORS’ INTEREST IN THE SHARE CAPITAL OF THE COMPANY ThebeneficialinterestintheCompany’ssharesheldbymembersoftheBoardofDirectors,directlyorindirectly,at31December2018and6April2019,issetoutinnote32oftheFinancialStatements. BRANCHESDuringtheyear,theGroupdidnotoperateanybranches. BOARD OF DIRECTORS Themembersof theBoardofDirectorsonthedateof thereportappearonpage10.InaccordancewiththeCompany’sArticlesofAssociation(Article92),atthenextAnnualGeneralMeeting,MessrsGeorgeSt.Galatariotis(Non-Executive Director), Charalambos Panayiotou (non-Executive Director) and Christophe Allouchery(Non-ExecutiveDirector)retirefromofficebyrotationand,beingeligible,offerthemselvesforre-election. TheDirectorswhoservedduringtheperiodfrom31May2018,thedateofthelastAnnualGeneralMeeting,tillthisdatewerethefollowing:
AntoniosA.Antoniou GeorgeSt.Galatariotis CostasSt.Galatariotis StavrosG.Galatariotis CostasKoutsos CharalambosPanayiotou MaurizioMansiMontenegro AntonisMikellides ChristopheAllouchery AntoniosKatsifos SteliosS.Anastasiades
The responsibilities of the Directors as members of the Board Committees are disclosed in the CorporateGovernanceReport. TherewerenomaterialchangestothecompensationoftheBoardofDirectors.
Annual Report & Financial Statements '18 15
MANAGEMENT REPORT (continued)
CORPORATE GOVERNANCE STATEMENT TheCompany recognises the importanceof implementing corporate governanceprinciples andadopted theCSE’s Corporate Governance Code and applies its principles. The CSE’s Corporate Governance Code isavailableontheCSEwebsite(www.cse.com.cy).
TheCompanyhasadoptedthe4thRevisedEditionoftheCorporateGovernanceCode,issuedbytheCyprusStockExchangeinApril2014.AtthedateofthisreporttheprinciplesoftheCorporateGovernanceCodearepartlyimplemented,giventhatthePrincipleregardingBoardBalanceandtheProvisionB.1.2oftheCorporateGovernanceCoderegardingtheindependencecriteriaofthemembersoftheRemunerationsCommitteewerenotfullymet.OnJanuary2019theCompanyadoptedthe5thRevisedEditionoftheCorporateGovernanceCodewhichisapplicablefortheCorporateGovernanceReportfortheyearending31/12/2019onwards. The Corporate Governance Report of the Company for 2018 is available on the website of the Company(www.vassiliko.com). TherulesgoverningthecompositionandfunctionoftheBoardofDirectorsandtheappointmentandreplacementofitsmembersaswellasthecompositionandfunctionoftheBoardCommitteesaresetoutinSectionBoftheReportonCorporateGovernance. AnyamendmentoradditiontotheArticlesofAssociationoftheCompanyisonlyvalidifapprovedbyaspecialresolutionatashareholders’meeting. TheBoardofDirectorsmayissuesharecapitalifthereissufficientsharecapitalwhichhasnotbeenissuedandaslongasthenewsharestobeissuedareofferedfirsttotheexistingshareholders,proratatotheirpercentageholding. In theevent that thenewshareswill notbeoffered toexistingshareholders,a resolutionapprovedwithaspecialmajorityofatleastthe80%oftheshareholders,whoareentitledtoattendandvoteinaGeneralMeeting,mustbepassed.Intheeventthatasharecapitalincreaserequiresanincreaseintheauthorisedsharecapital,theapprovaloftheshareholdersinaGeneralMeetingmustbeobtained.TheBoardofDirectorsmayalsoproposetotheGeneralMeetingofshareholdersasharebuybackscheme.
TherearenorestrictionsinvotingrightsandspecialcontrolrightsinrelationtothesharesoftheCompany.
SHAREHOLDERS HOLDING MORE THAN 5% Theshareholdersholdingdirectlyorindirectlymorethan5%oftheissuedsharecapitaloftheCompanyasat31December2018and6April2019,aresetoutinnote33ofthefinancialstatements. PREPARATION OF PERIODIC REPORTING TheGrouphasinplaceaneffectiveinternalauditsystem,theadequacyofwhichisevaluatedatleastannuallyby theBoardofDirectorsand theBoard’sAuditCommittee, in respectof financialandoperational systems.TheadequacyoftheInternalAuditSystemsecuresthevalidityoffinancialdataandcompliancewithrelevantlegislationandaimstosecurethemanagementofriskswhileprovidingreasonableassurancethatnolosswillincur.
Annual Report & Financial Statements '18 17
CORPORATE GOVERNANCE REPORT
SECTION ATheCompanyhasadoptedthe4thRevisedEditionoftheCorporateGovernanceCode,issuedbytheCyprusStockExchangeinApril2014.AtthedateofthisreporttheprinciplesoftheCorporateGovernanceCodearepartlyimplemented,giventhatthePrincipleregardingBoardBalanceandtheProvisionB.1.2oftheCorporateGovernanceCoderegardingtheindependencecriteriaofthemembersoftheRemunerationsCommitteewerenotfullymet.OnJanuary2019theCompanyadoptedthe5thRevisedEditionoftheCorporateGovernanceCodewhichisapplicablefortheCorporateGovernanceReportfortheyearending31/12/2019onwards.
SECTION B
THE BOARD TheCompanyisheadedbytheBoardofDirectorswhichat31December2018comprisedoneExecutiveandtennon-ExecutiveDirectorsandisresponsibletotheshareholdersforthepropermanagementofthecompany«ΤσιμεντοποιίαΒασιλικούΔημόσιαΕταιρείαΛτδ»(Englishtranslation“VassilikoCementWorksPublicCompanyLtd”) and its subsidiaries.Thenon-ExecutiveDirectors comprised two independentDirectors andeight non-independent Directors. The members of the Board (excluding the Chairman) comprised two independentnon-ExecutiveDirectors and eight non-independentDirectors, all of which are non-ExecutiveDirectors.Theindependentnon-ExecutiveDirectorsoftheBoardwereMr.AntonisMikellidesandMr.SteliosS.Anastasiades. TheBoardofDirectorsoftheCompanyasatthedateofthisreportcomprisesthefollowingmembers:
AntoniosAntoniou –ExecutiveChairmanGeorgeSt.Galatariotis –Νon-ExecutiveDirectorCostasSt.Galatariotis –Νon-ExecutiveDirectorStavrosG.Galatariotis –Νon-ExecutiveDirectorCostasKoutsos –Νon-ExecutiveDirectorCharalambosPanayiotou –Νon-ExecutiveDirectorMaurizioMansiMontenegro –Νon-ExecutiveDirectorAntonisMikellides –Independentnon-ExecutiveDirectorChristopheAllouchery –Νon-ExecutiveDirectorAntoniosKatsifos –Νon-ExecutiveDirectorSteliosS.Anastasiades –Independentnon-ExecutiveDirector
TheCompany’ssharesaretradedintheAlternativeMarketoftheCyprusStockExchange.CorporategovernanceprovisionsregardingBoardBalanceforCompanieslistedintheAlternativeMarketprovidethatthemajorityofthenon-ExecutiveDirectors,orat least twoDirectors,have tobe independentnon-ExecutiveDirectors.TheCompanycomplieswiththeaboveBoardBalanceprovisionsincetwomembersoftheBoardareIndependentnon-ExecutiveDirectors.BasedontheprovisionsoftheCorporateGovernanceCode,andgiventhattheBoardof Directors is comprised of two Independent non-Executivemembers and nine non-Independentmembers(executiveandnon-executive),BoardBalanceisnotmetaccordingtoPrincipleA.2oftheCorporateGovernanceCode.
Annual Report & Financial Statements '1818
CORPORATE GOVERNANCE REPORT (continued)
Mr.SteliosS.Anastasiades, independentnon-ExecutiveDirector,wasappointedon30May2017asSeniorIndependentDirector.TheSeniorIndependentDirectoroftheCompanyisavailabletoshareholdersiftheyhaveconcerns thathavenotbeen resolved through thenormalchannelsofcontactwith theExecutiveChairman,or theGeneralManager /DeputyGeneralManagers or forwhich such contact is inappropriate.TheSeniorIndependentDirectorwillattendsufficientmeetingsofmajorshareholdersandfinancialanalyststodevelopabalancedunderstandingoftheissuesandconcernsofsuchshareholders.TheSeniorIndependentDirectorcanbecontactedinitiallyviatheCompanySecretaryattheRegisteredOfficeoftheCompany.
TheBoardhassixscheduledmeetingsayear,settingandmonitoringtheGroup’sstrategy,reviewingtradingperformance,ensuringadequatefunding,examiningmajorcapitalexpenditure,formulatingpolicyonkeyissuesand reporting to shareholderswhere appropriate.TheBoard ofDirectors convened 7 times during 2018. Inaccordancewithbestpractice,theBoardhasestablishedtheAuditCommittee,theRemunerationsCommitteeandtheNominationsCommitteeaspertherequirementsoftheCode.TheCompanySecretaryisresponsibletoandappointedbytheBoardandallDirectorshaveaccesstoheradviceandservices.Directorsmayobtainindependentprofessionaladviceifnecessary,attheCompany’sexpense.Formalagendas,papersandreportsaresuppliedtoDirectorsinatimelymanner,priortoBoardmeetings.Briefingsarealsoprovidedatothertimes,forexample,throughoperationalvisitsandbusinesspresentations.
CHAIRMAN, CHIEF EXECUTIVE OFFICER AND GENERAL MANAGER Thedivisionof responsibilitybetween theExecutiveChairmanand theGeneralManagerof theCompany ispresentedbelow.FollowingtheassignmentofthedutiesandresponsibilitiesoftheGeneralManageronthe1stofAugust2017totheExecutiveChairmanoftheCompany,inhisadditionalroleastheChiefExecutiveOfficeroftheCompany,thedutiesandresponsibilitiesoftheGeneralManagerliewiththeExecutiveChairman.
TheExecutiveChairmanhas,amongothers,thefollowingduties&responsibilities:
• DeterminestheAgendaofthemeetingoftheBoardofDirectors.• Chairs theMeetings of the Board of Directors and the General Meetings of the Shareholders of the
Company.• Reviews the information and documents and confirms their relevance in order to be submitted to the
MembersoftheBoardofDirectorspriortotheBoardMeetings.• ReviewsthestrategyoftheGroupwiththeGeneralManager/DeputyGeneralManagersoftheCompany.• RepresentstheCompanyinallitsmajordealings.• MeetswiththemajorshareholdersoftheCompanyandconveystheirsuggestionstotheBoardofDirectors.• Cooperateswith theGeneralManager /DeputyGeneralManagers of theCompany to determine the
strategictargetsoftheGroupaccordingtothedevelopmentsofthesectorwithinwhichtheGroupoperatesandsecuresthethoroughappraisaloftheCompany’sstrategicorotherdevelopmentproposalsandthepresentationthereoftotheBoardofDirectorsforfinalapproval.
• EvaluatesandpromotesvariousotherproposalsoftheGeneralManager/DeputyGeneralManagers.• RepresentstogetherwiththeGeneralManager/DeputyGeneralManagersand/orselectivemembersof
theManagementTeamtheCompanyatvariousmeetingsforthepromotionofthestrategictargetsoftheCompany.
Annual Report & Financial Statements '18 19
CORPORATE GOVERNANCE REPORT (continued)
• IdentifiestheCompany’smajorandotherstakeholdersandformulatesaclearpolicyoncommunicatingorrelatingwiththemthroughaneffectiveinvestorrelationsprogram.
• Develops and maintains effective relationships with the stakeholders involved in the Company’s life,ensuringthecontinuityanddevelopmentofthebusiness.
• Supervisestheinternalcontrolsystem,securestheproperimplementationoftheCompany’stargetsandupdatestheBoardofDirectorsontherelatedprogress.
• HoldsperiodicmeetingswiththemanagementoftheCompanytodiscussvariousspecificsubjects.
TheGeneralManagerand /or theChiefExecutiveOfficerof theCompany,amongothers,has the followingduties&responsibilities,whichcurrentlyliewiththeExecutiveChairman:
• To manage together with the Deputy General Managers the Company in line with the strategy andthecommercial targetsdeterminedby theBoardofDirectorsand incompliancewithall relevant laws,regulations,CorporateGovernancecodesaswellasinternalpoliciesandprocedures.
• ToensurewiththesupportandcollaborationoftheDeputyGeneralManagersthedailysmoothoperationoftheCompanyinlinewiththepolicy,thetargetsandthebudgetsapprovedbytheBoardofDirectors.
• Toensure timely andeffective implementationof the strategic resolutionsof theBoardofDirectors inagreementwiththeExecutiveChairman.
• In cooperation with the Executive Chairman tomanage the business development of the Company’sactivities,itssubsidiariesandassociates.
• ToinformregularlytheExecutiveChairmanregardingallthemajorissuesoftheCompany,includingthecurrentstatusoftheoperationsoftheCompany.
• Toimplementprocedurestoensureexistenceofanefficientinternalcontrolsystem.• Todefineandintroduceappropriaterules,measuresandprocedurestogovernoperationsatrisk.• Toidentifythemainbusinessrisksandapprovetherelevantactionplanstomitigatethem.
APPOINTMENTS TO THE BOARD TheNominationsCommitteeischairedbyMr.GeorgeSt.Galatariotis(non-ExecutiveDirector)andiscomposedof twootherDirectors,MessrsC.Koutsos (non-ExecutiveDirector)andA.Katsifos (non-ExecutiveDirector).AllthemembersoftheCommitteearenon-ExecutiveDirectors.TheNominationsCommitteeisresponsiblefortheselectionandnominationofanynewDirector,fortheBoard’sconsideration.TheCommitteeisresponsibletocarryoutaselectionprocess.UpontheappointmentofanewDirector,appropriate training isprovidedasrequired.InaccordancewiththeArticlesofAssociationoftheCompanyandtheCorporateGovernanceCode,threeoutoftheelevenDirectorsoftheCompany(excludingtheExecutiveChairmanandChiefExecutiveOfficeroftheCompany)retirebyrotationeveryyear(eachDirectorretireseverythreeyears)and,ifeligible,mayofferthemselvesforre-election.TheBoardhassetthe75thyearofageastheyearofretirement.
Annual Report & Financial Statements '1820
CORPORATE GOVERNANCE REPORT (continued)
RELATIONS WITH SHAREHOLDERS Importance is attached tomaintaining a dialoguewith theCompany’s institutional shareholders.TheAnnualGeneralMeetingisusedasaforumforcommunicatingwithshareholders,providingbriefingsontheCompany’sperformance during the year under review and current business activity. There will be an opportunity forshareholderstomeetwithandputquestionstotheDirectors,includingthechairmenoftheAudit,Nominationsand Remunerations Committees.AtAnnual General Meetings, separate resolutions are proposed on eachsubstantiallyseparateissueandthenumberofproxyvotesreceivedforandagainsteachresolutionisannounced.Memberswithvotingrightsof5%mayplaceitemsontheagendaofAnnualGeneralMeetingsbysubmittingsuchitems,eitherinhardcopiesorsoftcopies(electronic),accompaniedwithrelevantexplanations,atleast42daysbeforethedateoftheAnnualGeneralMeeting.NoticesofAnnualGeneralMeetingsaresenttotheshareholdersat least21daysbeforethemeeting.TheBoardofDirectorsappointedMr.GeorgeSavvaasInvestorLiaisonOfficertofacilitatebettercommunicationwithshareholdersandinvestors.
FINANCIAL REPORTING Thepreparationandpresentationofthisreportandfinancialstatementsandotherpricesensitivepublicreports,seektoensurethatreportsarepreparedinawaythatrepresentsabalancedandunderstandableassessmentoftheGroup’spositionandprospects.
INTERNAL CONTROL Riskassessmentandreviewiscarriedoutbytheexecutivemanagementwithdetailsofsignificantrisksbeingdocumented. Periodic reports relating to significant risks and associated controls are prepared from thisdocumentationandpresentedtotheBoardforitsreview.TheBoardhasoverallresponsibilityfortheGroup’ssystemsofinternalcontrolandforreviewingtheireffectivenessonanannualbasis,aswellasoftheprocedureswhichconfirmtheaccuracy,completenessandvalidityoftheinformationthatisprovidedtotheinvestors.Thereviewcoversallsystemsofinternalcontrol,includingfinancialandoperationalsystems,aswellascompliancesystemsandsystemsforthemanagementofrisks,whichthreatentheattainmentoftheCompany’sobjectives.OnthebasisoftheprocessdescribedaboveduringtheyeartheInternalAuditorsprepareInternalAuditReportsaddressedtotheAuditCommitteewhichinformstheBoardthroughitsAnnualInternalAuditReport.AccordingtotheInternalAuditorsReports,thesystemsofinternalcontroldonotpresentanysignificantweaknesses.TheBoardhasreviewedthekeyrisksinherentintheGroup,togetherwiththeoperating,financialandcompliancecontrolsthathavebeenimplementedtomitigatethosekeyrisks.However,anysystemofinternalcontrolcanprovideonlyreasonableandnotabsoluteassuranceagainstmaterialmisstatementorloss.TheBoardhasputinplaceanorganisationstructurewithclearlydefinedlinesofaccountabilityanddelegatedauthority.Theprincipleshavebeendesignedtoestablishclearlocaloperatingautonomywithinaframeworkofcentralleadership,statedaimsandobjectives.Procedureswereestablishedforbusinessplanning,budgeting,capitalexpenditureapprovalandtreasurymanagement.TheExecutiveChairmanandtheGeneralManagerandDeputyGeneralManagersregularlyreviewtheoperatingperformanceofeachbusinessandmonitorprogressagainstbusinessplans.
Annual Report & Financial Statements '18 21
CORPORATE GOVERNANCE REPORT (continued)
AUDIT COMMITTEE AND AUDITORS TheAuditCommitteecomprisesofMessrsCostasSt.Galatariotis(ChairmanoftheCommittee-non-ExecutiveDirector),A.Mikellides (Independentnon-ExecutiveDirector)andMr.St.S.Anastasiades (Independentnon-Executive Director). The majority of the members of the Audit Committee are Independent non-ExecutiveDirectors.TheCommitteemetfourtimesduring2018.TheCommitteemeetingsprovideaforumforreportingbytheGroup’sexternalandinternalauditorswhohaveaccesstotheCommitteeforindependentdiscussion,withoutthepresenceoftheExecutiveDirectors.
TheAuditCommittee reviewsawide rangeof financialmatters including the annual andhalf-yearly results,statementsandaccompanyingreports,before theirsubmission to theBoardandmonitors thecontrolswhichare in force to ensure the integrity of the financial information reported to shareholders, and also overseestheprocedures for theselectionofaccountingpoliciesandaccountingestimates for theCompany’sfinancialstatementsandensuresthatamechanismisinplacetoensuretheCompany’sassets,includingthepreventionanddetectionof fraud.TheAuditCommitteealsoadvises theBoardon theappointmentofexternalauditorsandontheirremunerationbothforauditandnon-auditwork,aswellasproposestotheBoardofDirectorstheappointment and revocation of appointment of the audit firm assignedwith the InternalAudit functions, andensuresitsindependence.
TheGroup’sinternalauditfunctionisoutsourcedtoPricewaterhouseCoopersLtd,aprofessionalAuditorsFirm,whichmonitorstheGroup’sinternalfinancialcontrol,theinternalcontrolsystemsandriskmanagementsystemsandreportstothemanagementandtotheAuditCommittee.
TheAuditCommitteeconsiderstheabovementionedperiodicreportswhereastheManagementisresponsiblefor the implementation of the recommendations made by internal audit that carry out post-implementationreviews.Theexternalauditorscarryout independentandobjective reviewsand testsof the internalfinancialcontrolprocesses,onlytotheextentthattheyconsidernecessarytoformtheirjudgementwhenexpressingtheirauditopinionontheaccounts.
TheAuditCommitteediscussesextensivelywiththeauditorssignificantauditfindingsarisingduringtheirauditwork,whichwereresolvedorremainedunresolved,aswellastheauditor’sreportwhichreferstoweaknessesintheinternalcontrolsystem,inparticularthoseconcerningtheproceduresoffinancialreportingandthepreparationoffinancialstatements.
GOING CONCERN Aftermakingappropriateenquiries,theDirectorsconsiderthattheGrouphasadequateresourcestocontinueinoperationalexistencefortheforeseeablefuture.ForthisreasontheycontinuetoadoptthegoingconcernbasisinpreparingtheaccountsandstatethattheCompanyintendstooperateasagoingconcernforthenexttwelvemonths.
Annual Report & Financial Statements '1822
CORPORATE GOVERNANCE REPORT (continued)
REMUNERATIONS COMMITTEE TheRemunerationsCommitteecomprisesofthreenon-ExecutiveDirectors.ThemembersoftheRemunerationsCommitteeareMessrsCh.Panayiotou(non-ExecutiveDirector),St.Galatariotis(non-ExecutiveDirector)andA.Mikellides(Independentnon-ExecutiveDirector).TheCommitteeischairedbyMr.Ch.Panayiotouwhohasknowledgeandexperienceinremunerationpolicy.EventhoughallthemembersoftheRemunerationsCommitteearenon-executiveDirectors,onlyonedirectoroutof the threemembersof theRemunerationsCommittee isindependentnon-executivedirectoraccordingtothecriteriaofindependencyofadirectorasthesearedefinedbytheprovisionA.2.3.oftheCorporateGovernanceCode.TheCommitteewillusuallymeetatleastonceayear.TheGroupExecutiveChairmanwillnormallybeinvitedtoattenditsmeetingsinordertomakerecommendationsregardingtheremunerationof theGeneralManager/DeputyGeneralManagers.TheCommitteeperiodicallyreviewstheDirectorsRemunerationundertheircapacityasnon-ExecutiveDirectorsandmembersoftheBoard’sCommittees,aswellastheremunerationpolicyfortheExecutiveDirectorsandtheGeneralManager/DeputyGeneralManagers.Independentexternallegalandconsultancyadviceisobtainedwhennecessary.TheGroupExecutiveChairmanisnotpresentwhenhisownremunerationisdiscussed.
TheRemunerationpolicyoftheDirectorsoftheCompanyisincludedintheRemunerationsReport(page23).
DIRECTORS SEEKING RE-ELECTION AlltheDirectorsaresubjecttoelectionbytheshareholdersatthefirstAnnualGeneralMeetingthatfollowstheirappointmentandthereafterretireeverythreeyears.AccordingtotheArticlesofAssociation,onethirdofthetenCompanyDirectors(excludingtheExecutiveChairman/ChiefExecutiveOfficeroftheCompany)retirefromtheBoardateachAnnualGeneralMeeting.TheDirectorsliabletoretirementaccordingtotheaboveprovisionsarethosewhoservedasmembersoftheBoardforthelongestperiodsincetheirlastelection.
InaccordancewiththeCompany’sArticlesofAssociation(Article92),atthenextshareholdersAnnualGeneralMeeting Messrs George St. Galatariotis (Non-Executive Director), Charalambos Panayiotou (non-ExecutiveDirector) and ChristopheAllouchery (Non-Executive Director), shall retire from office by rotation. All abovementionedDirectors,beingeligible,shallofferthemselvesforre-election.
LOANS AND GUARANTEES GRANTED TO DIRECTORSNoloansand/orguaranteesweregrantedtotheDirectorsoftheCompanyortoDirectorsofanysubsidiaryorrelatedcompany,eitherbytheCompanyitselforbyitssubsidiaryorrelatedcompanies,andtherearealsonomoniesreceivablefromanycompanyaDirectorand/oranypersonrelatedtohim,isinvolvedwith.
COMPLIANCE WITH THE CODE OF CORPORATE GOVERNANCE OFFICERTheBoard ofDirectors appointedMr.GeorgeSavva, FinancialManager of theCompany, at the position ofCompliancewiththeCodeofCorporateGovernanceOfficer.
BOARD OF DIRECTORS CONFIRMATIONTheBoardofDirectorsassuresthattothebestofitsknowledge,therehasbeennoviolationoftheSecuritiesandStockExchangeofCyprusLawandRegulations.
Annual Report & Financial Statements '18 23
REMUNERATION REPORT
TheRemunerationReportoftheCompanyfortheyear2018hasbeenpreparedaccordingtoAppendices1and2oftheCorporateGovernanceCode.
REMUNERATIONS COMMITTEE TheRemunerationsCommitteeoftheBoardisresponsibleforensuringthattheremunerationpackagesawardedtoExecutiveDirectorsareappropriatetoindividuallevelsofresponsibilityandperformance,areconsistentwiththeCompany’sremunerationpolicy,andareinlinewiththeprinciplesoftheCorporateGovernanceCode.
REMUNERATION POLICY TheBoard’spolicy is toemployhighcalibrepeople for itskeypositions. It requiresacorresponding levelofperformancefromthosepeopleandseekstorewardaccordingly.TheGroupmaycommissionspecialreviewsfromtimetotimetoassesstheDirectors’compensationlevels.Accountistakenofthesalaryandtotalremunerationlevels prevailing in comparable jobs both inside and outside theConstruction andBuildingMaterials sector,togetherwiththeindividualperformanceandcontributionofeachExecutiveDirector.
Theremunerationof theExecutiveChairmanandtheGeneralManager includesvariable-paycomponentstoensurethattheexecutiveremunerationislinkedtotheCompany’sperformance.Amaximumlimitofthevariable-paycomponentisset.Thenon-variablecomponentissufficientremunerationwhenavariableremunerationisnotgranted.TheBoardconsidersthatpackagesofthisnatureareconsistentwithprevailingpracticeandarenecessarytoattract,retainandrewardexecutivesofthecalibretheGrouprequires.Inframingthepolicy,theBoardhasgivenfullconsiderationtotheprovisionsoftheCorporateGovernanceCode.Theannualincentiveplanrewardsfortheperformanceofthepreviousyearandispaidincash.ThemaximumbonuspaymentisexpressedasapercentageofbasesalaryandisbasedontheevaluationoftheperformanceoftheExecutiveChairmanandtheGeneralManagerconductedbytheRemunerationsCommitteeattheyearfollowingtheperformanceperiod.TheRemunerationsCommitteeevaluatestheperformanceoftheExecutiveChairmanandtheGeneralManagerconsideringtheCompany’sfinancialperformance,costscontainmentmeasures,measurestowardstheGroup’slong-termviability,aswellasnon-financialcriteriarelatingtodevelopmentandcreatinglongtermvaluefortheGroup.Bonusesgrantedin2018concernrewardsforthefinancialperformanceoftheCompanyfortheyear2017.TheCompanyreservestherightforfullorpartialrecoveryofanybonusesgrantedonthebasisofinformationwhichsubsequentlyprovestobeinaccurate.
Inadditiontothebasesalaryandincentiveplanparticipation,theExecutiveChairmanandtheGeneralManagerenjoythesamebenefitsasotheremployeesoftheCompany,whichincludeprovidentfundandmedicalfund.
NosignificantchangesweremadetotheremunerationpolicyoftheCompanyforyear2018comparedtothepreviousyear.
ThetotalremunerationsoftheExecutiveDirectorsundertheircapacityasExecutivesfortheyear2018were€404.571.
PENSION SCHEME AlltheEmployeesoftheCompanyincludingtheGeneralManagerandtheExecutiveChairmanaremembersoftheCompany’sProvidentFund,whichisadefinedcontributionscheme.NootheradditionalpensionschemesexistforanyoftheExecutiveMembersoftheBoard.
Annual Report & Financial Statements '1824
REMUNERATION REPORT (continued)
EMPLOYMENT CONTRACTS EmploymentofExecutiveDirectorsareforindefiniteperiods,howevernoticeperiodsdonotexceedoneyearas per the requirements of theCorporateGovernanceCode. In caseof termination by theCompanyof theemploymentofExecutiveDirectors,prior to their retirement, theCompanyhas tocompensate theExecutiveDirectorsaccordingtotheprovisionsoftheLaw.
NON-EXECUTIVE DIRECTORS TheremunerationoftheDirectors,bothExecutivesandnon-Executives,forservicesrenderedtotheCompanyasDirectors,isdeterminedbytheannualgeneralmeetingoftheCompanyontheproposaloftheBoard.Thenon-ExecutiveDirectorshavelettersofappointmentforathree-yearterm.Theydonotparticipateinanyprofitsharing,shareoptionorother incentivescheme.The remunerations foreachof theDirectors for2018were€20.000,and€25.000fortheChairmanand€300permeetingforattendanceinperson.
The remunerationsof theDirectors,Executivesandnon-Executives,under their capacityasDirectorsof theCompanyandasmembersoftheBoardofDirectors’CommitteesaswellasundertheircapacityasExecutiveDirectorsfor2018wereasfollows:
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 DirectorsAntoniosAntoniou 28.300 276.000 100.000 4.800 4.243 19.528 432.871
Non-Executive Directors GeorgeSt.Galatariotis 23.600 - - - - - 23.600
CostasSt.Galatariotis 23.900 - - - - - 23.900
StavrosG.Galatariotis 23.300 - - - - - 23.300
CostasKoutsos 23.600 - - - - - 23.600
CharalambosPanayiotou 23.600 - - - - - 23.600MaurizioMansiMontenegro 21.500 - - - - - 21.500AntonisMikellides 23.900 - - - - - 23.900
ChristopheAllouchery 20.900 - - - - - 20.900
AntoniosKatsifos 22.100 - - - - - 22.100
SteliosS.Anastasiades 23.000 - - - - - 23.000
257.700 276.000 100.000 4.800 4.243 19.528 662.271
LOANS AND GUARANTEES GRANTED TO DIRECTORSNo loansand/orguaranteesweregranted to theDirectorsof theCompanyor toDirectorsofanysubsidiarycompanyortotheirrelatedpartiesbytheCompanyanditssubsidiarycompanies.
Annual Report & Financial Statements '18 25
DIRECTORS’ CURRICULA VITAE
ANTONIOS ANTONIOU – EXECUTIVE CHAIRMANMr.AntoniosAntoniouwasborn inLondon.Hestudiedat theUniversityofLondonwhereheobtainedaBSc(Hons)degreeandapostgraduatediploma.
Mr.Α.Antoniouworkedfor5yearsasaBiochemistatUniversityCollegeLondonandfor3yearsasaComputerSystemsAnalystatBritishGasHeadquartersinLondon.HewasafoundingpartnerofAMERWorldResearchLtdandDeputyGeneralManagerfrom1983until1998.From1998untilDecember2006heservedasSeniorVicePresident (OperationsandSystems)ofNielsenEuropeandwasamemberof theEuropeanExecutiveCommittee.
AsfromFebruary2008hehasbeentheExecutiveChairmanofVassilikoCementWorksPublicCompanyLtd,andsinceAugust2017hastakenontheadditionalroleoftheChiefExecutiveOfficeroftheCompany.
HeisaMemberoftheBoardofDirectorsoftheCyprusEmployers&IndustrialistsFederationandViceChairmanofitsExecutiveCommittee.
GEORGE ST. GALATARIOTISMr.GeorgeSt.GalatariotiswasborninLimassolin1947.HestudiedBusinessAdministrationatCityPolytechnicinLondon.
Mr.GeorgeGalatariotisisExecutiveChairmanofGalatariotisGroupofCompanies,ExecutiveChairmanofTheCyprusCementPublicCompanyLtdandK&GComplexPublicCompanyLtd.HeisalsoMemberoftheBoardofDirectorsofseveralprivateandpubliccompanies.HeisaTrusteeoftheCyprusConservationFoundation(TerraCypria).Mr.GeorgeGalatariotishasalsoservedasamemberoftheBoardofLimassolChamberofCommerceandIndustryandtheCyprusPortsAuthority.Asfrom2017Mr.GalatariotisisamemberoftheBoardofDirectorsoftheCyprusEmployers&IndustrialistsFederation.
COSTAS ST. GALATARIOTISMr.CostasSt.GalatariotiswasborninLimassolin1963.Hegraduatedthe5thGymnasiumofLimassolandhestudiedEconomics,IndustryandCommerceattheLondonSchoolofEconomicsandPoliticalScience.
Mr.CostasGalatariotisisExecutiveChairmanoftheGalatariotisGroupofCompanies,ExecutiveChairmanofC.C.C.TouristEnterprisesPublicCompanyLtdandmemberofBoardsofDirectorsofseveralprivateandpubliccompanies.HeisamemberoftheboardofdirectorsoftheAssociationofCyprusTouristEnterprises(ACTE).Mr.CostasSt.GalatariotisisChairmanoftheAuditCommitteeofVassilikoCementWorksPublicCompanyLimitedsince2008.
Mr.CostasSt.GalatariotishasservedasHonoraryConsulGeneralofJapaninCyprusfrom2007until2012.SinceSeptember2014heisthePresidentoftheBoardoftheLimassolChamberofCommerceandIndustryandasfromJuly2018heistheViceChairmanoftheCyprusInvestmentPromotionAgency(CIPA).
Annual Report & Financial Statements '1826
DIRECTORS’ CURRICULA VITAE (continued)
STAVROS G. GALATARIOTISMr. StavrosGalatariotiswasborn in Limassol in 1976. In 1999hegraduated from theUniversity ofSurreywithaBSc inBusinessEconomics(FirstClass).Duringhisstudieshewasawarded theCIMAawardby theCharteredInstituteofManagementAccountants.StavrosholdsanMBAfromtheCyprusInternationalInstituteofManagement.
Since2000,StavrosGalatariotisisanExecutiveDirectoroftheGalatariotisGroupofCompaniesandamemberoftheBoardofDirectorsofseveralprivateandpubliccompanies.HeisaDirectorofVassilikoCementWorksPublicCompanyLtdsince2008.
COSTAS KOUTSOSMr.CostasKoutsosistheExecutiveChairmanofKEOPlcandMemberof theBoardofDirectorsofHellenicMiningPublicCompanyLtd.Between1978and2011hewastheManagingDirectorofBMSMetalPipesIndustriesGroup.HeisaFinancialConsultant,CompaniesTaxConsultant,SecretaryandMemberoftheBoardofDirectorsofotherprivate companies.Mr.C.Koutsos isaqualifiedaccountantandhehasworked for twelveyears inaseniorposition inan internationalauditfirm.Hehasaperennialexperience in theCyprusStockExchangeMarket.Heisanactivememberofvariouscharitablefoundations.HeservedasMemberoftheBoardofDirectorsofCyprusMetalIndustryAssociation,memberoftheCyprusEmployersandIndustrialistsFederationfrom1985to2011.
CHARALAMBOS P. PANAYIOTOUMr.CharalambosPanayiotouwasbornonthe6thofJuly1971.HestudiedManagementSciences(BSc)attheLondonSchoolofEconomicsandPoliticalScience(1993).HejoinedCoopers&LybrandasaCharteredAccountanttraineeintheauditandtaxdepartmentfrom1993to1996.Heisamemberof“TheInstituteofCharteredAccountants inEnglandandWales”aswellasaMemberof “The InstituteofCertifiedPublicAccountantsofCyprus”since1996.HethenjoinedtheCyprusPopularBankLtd.In2000hewasappointedFinancialControlleroftheHolyBishopricofPaphos,ExecutivememberoftheBoardofDirectorsofSt.GeorgeHotel(Management)LtdaswellasofSMTsadaGolfLtduntilSeptember2010,uponwhichdatehewasappointedasManagingDirectoroftheKEOPLCGroup.HeisaMemberoftheBoardofDirectorsofHellenicMiningGroupCompanies.HeservedasaMemberof theBoardof theHellenicBankPublicCompanyLtd fromJune2005 toJanuary2014.DuringthissameperiodheservedasChairmanoftheHellenicBank(Investments)Ltd.Asfrom2017Mr.PanayiotouisamemberoftheBoardofDirectorsoftheCyprusEmployers&IndustrialistsFederation.
Annual Report & Financial Statements '18 27
DIRECTORS’ CURRICULA VITAE (continued)
MAURIZIO MANSI MONTENEGROMr.MaurizioMansiMontenegrowasbornonMarch10,1962.HeholdsadegreeinStatisticalSciencefromRomeUniversity“LaSapienza”,andapost-graduatedegreeinStrategicandInternationalMarketingfromSDABocconi(Milan),afterhavingattendedtheInternationalExecutiveProgrammeat“InstitutEuropéend’AdministrationdesAffaires”(INSEAD).
He started his career inHewlett-Packard as aBusinessAnalyst, thenas aStrategicPlanningSpecialist inAugusta–Westland.
In1990,hejoinedItalcementiGroupasaMarketingAnalystCoordinatorand,aftersevenyearsofexperienceintheGroup’sStrategicPlanDirection,hehasbeenresponsibleforCementCommercialactivitiesinEgypt.In2007hewasappointedasAssistanttotheC.E.O.ofItalcementiS.p.A.,andbetween2009and2016hewastheManagingDirectorofInterbulkTradingS.A.
Sincethe1stofJanuary2017,heistheDeputyC.E.O.ofHCTradingBV,thetradingcompanyofHeidelbergCementGroup.He isalsoamemberof theBoardofDirectorsof IntercomS.r.l., IntercomLibyaF.Z.C,HilalCementCo.,andAlMahaliyaReadyMixConcreteCo.
ANTONIS MIKELLIDESMr.AntonisMikellideswasborninLondonin1978.HestudiedattheUniversityofWestminsterwhereheobtainedaBAdegree inBusinessComputingandholdsaPostgraduatedegree inShipping,TradeandFinance fromCityUniversityLondonaswellasadiplomainTerrorismStudies, focusingmainlyonMarinePiracy, fromtheUniversityofSt.AndrewsinScotland.
Mr.Α.MikellidesjoinedZelaShippingCoLtdinLondonin2002asafleetoperator,andin2006wasinchargeof restructuring the fleet’smanagement company inPiraeusGreece.As from2010he has beenaDirector,ChiefFinancialOfficerandVice-PresidentofOlympiaOceanCarriersLtdandin2012alsobecameaDirectorofSeaTradeHoldings.Mr.AntonisMikellideshasbeenelectedontheBoardofDirectorsoftheCyprusUnionofShipownerssince2009.
Annual Report & Financial Statements '1828
DIRECTORS’ CURRICULA VITAE (continued)
CHRISTOPHE ALLOUCHERY Mr.ChristopheAlloucherywasborninFrancein1971.ChristophegraduatedinEconomicsfromParisIIUniversity,andholdstwoMaster’sdegreesinFinanceawardedin1996fromParisSchoolofBusiness.
Hestartedhis career inGrantThorton in1997asfinancialauditorand in2000he joinedCimentsCalcia inGuerville(France),memberofItalcementiGroup,asHeadofAnalyticalAccountingandthenHeadofCementControlling.In2010hemovedtoItalcementiGroupHeadquartersinBergamo(Italy)andwaspromotedSeniorZoneController–AssistanttotheZoneManager,responsibleforEgypt,Greece,Bulgaria,Kuwait,SaudiArabia,KazakhstanandTurkey.HeistheFinanceDirectoroftheBulgarianandAlbanianactivitiesofHeidelbergCementsince October 2016 and Chief Financial Officer and Board member of Halyps Building Materials inAthens(Greece)since2013.HeisalsomemberoftheboardofDevnyaCement,VulkanCementandLyulyakaMaterials,alllocatedinBulgaria.
ANTONIOS KATSIFOSMr.AntoniosKatsifoswasborn inAthens in1955.Hestudiedat theNationalTechnicalUniversityofAthenswhereheobtainedaDegreeasMiningandMetallurgyEngineerandhesuccessfullycompletedtheAcceleratedDevelopmentprogramatLondonBusinessSchool.
Heworkedfor10years,from1981until1991,asaMiningEngineerinundergroundoperationsatGreekBauxiteofElikonS.A.atDistomonViotiasandatMETVAS.A.atMolaoi Lakonias,Greece.Heworked forHALYPScement,memberof Intalcementigroupof companies inGreeceandnowHeidelbergCement, formore than25years.In1991,hejoinedETBETON,areadymixconcreteproductioncompanyasProductionManagerinAthens,andin1995hebecameVicePresidentandManagingDirectoratDOMIKIBETONatHeraclionCreta,apositionhelduntil2001.
In1999hebecameGeneralDirectorofHALYPSQUARRYinAtticaandin2001SalesandMarketingDirectorofHALYPSCEMENT.HeservedasSalesandMarketingDirectorinCementandAggregatesactivityatHALYPSBUILDINGMATERIALS S.A. until 2017 having served simultaneously the position of Sales Director for theconcreteactivityfrom2013to2015.HewasamemberoftheBoardofDirectorsoftheHellenicCementIndustryAssociationfrom2002until2017andamemberoftheBoardofDirectorsoftheMiningandQuarryAssociationinGreece,as representativeofHALYPS, from2014until2017.PresentlyMr.Katsifos isactively involvedasPartnerintheConsultancyfirmECHMESLtd,whichprovidesintegratedsolutionsinthefieldofEnvironmentalManagementandPermitting,ofMining,Metallurgical,LandPlanning,TouristandIndustrialprojectswithintheframeworkofsustainabledevelopment.
Annual Report & Financial Statements '18 29
DIRECTORS’ CURRICULA VITAE (continued)
STELIOS S. ANASTASIADESMr.SteliosS.AnastasiadesisaMechanicalEngineer,aged65.HewasawardedaFirstClassHonoursB.Sc.(Eng)degreefromtheQueenMaryCollegeandaM.Sc.degreeandD.I.CfromtheImperialCollege,UniversityofLondon.
Mr.AnastasiadesistheManagingDirectorofKONEElevatorsCyprusLtd,theleadingcompanyinCyprusinthefieldofliftsandescalators,with120employeesandanannualturnoverof€15,7million.
HeisthePresidentoftheNicosiaChamberofCommerceandIndustry,amemberoftheexecutivecommitteeoftheCyprusChamberofCommerceandIndustry,amemberoftheCyprusTechnicalChamberandPresidentoftheBoardofDirectorsoftheFinancialOmbudsmanoftheRepublicofCyprus.InthepastheservedasViceChairmanofEurocypriaAirlines,memberoftheBoardofSocialInsurance,memberoftheBoardoftheLoanCommissionersandmemberoftheboardoftheCyprusOrganizationforStandardsandQualityControl.
30
INDEPENDENT AUDITORS’ REPORT
Reportontheauditoftheconsolidatedandseparatefinancialstatements
TothemembersofVassilikoCementWorksPublicCompanyLimited
OPINION WehaveauditedtheaccompanyingconsolidatedfinancialstatementsofVassilikoCementWorksPublicCompanyLimited(the''Company'')anditssubsidiaries(the''Group''),whicharepresentedonpages36to86andcomprisetheconsolidatedstatementoffinancialpositionasat31December2018,andtheconsolidatedstatementsofprofitorlossandothercomprehensiveincome,changesinequityandcashflowsfortheyearthenended,andnotestotheconsolidatedfinancialstatements,includingasummaryofsignificantaccountingpolicies.
Inouropinion,theaccompanyingconsolidatedandseparatefinancialstatementsgiveatrueandfairviewoftheconsolidatedfinancialpositionoftheGroupandtheCompanyasat31December2018,andofitsconsolidatedfinancialperformanceanditsconsolidatedcashflowsfortheyearthenendedinaccordancewithInternationalFinancialReportingStandards as adopted by theEuropeanUnion (“IFRS-EU”) and the requirements of theCyprusCompaniesLaw,Cap.113,asamendedfromtimetotime(the“CompaniesLaw,Cap.113”).
BASIS FOR OPINION Weconductedouraudit inaccordancewith InternationalStandardsonAuditing (“ISAs”).Our responsibilitiesunder thosestandardsare furtherdescribed in the“Auditors’ responsibilities for theauditof theconsolidatedandseparatefinancialstatements”sectionofourreport.WeremainedindependentoftheGroupthroughouttheperiodofourappointmentinaccordancewiththeCodeofEthicsforProfessionalAccountantsoftheInternationalEthics Standards Board for Accountants (“IESBA Code”), and the ethical requirements in Cyprus that arerelevanttoourauditoftheconsolidatedandseparatefinancialstatements,andwehavefulfilledourotherethicalresponsibilitiesinaccordancewiththeserequirementsandtheIESBACode.Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforouropinion.
31
INDEPENDENT AUDITORS’ REPORT (continued)
TothemembersofVassilikoCementWorksPublicCompanyLimited
KEY AUDIT MATTERSKeyauditmattersarethosemattersthat,inourprofessionaljudgementwereofmostsignificanceinourauditoftheconsolidatedandseparatefinancialstatementsofthecurrentperiod.Thesematterswereaddressedinthecontextofourauditoftheconsolidatedandseparatefinancialstatements,asawhole,andinformingouropinionthereonandwedonotprovideaseparateopiniononthesematters.
Revenuerecognition
PleaserefertoNote6ofthefinancialstatements.
The key audit matter How the matter was addressed in our audit
ThevastmajorityoftheGroup’srevenue,isgeneratedfromthesalesofClinkerandCement.
The Group generally recognizes revenue whenproducts are delivered to the customers for thedomesticsales,or inaccordancewith the termsandconditions of sale for export sales. Accordingly theterms and conditions by customers vary and mayaffectthetimingofrecognitionofrevenue.
Giventhesignificanceofrevenueasamajorcomponentinthestatementofcomprehensiveincome,andsincerevenue is oneof the keyperformance indicatorsoftheGroupand is, therefore,subject tomanipulation,weconsideredtherevenuerecognitionasakeyareaoffocusduringouraudit.
Ourauditproceduresconsistofthefollowing:• Evaluation and assessment of the operating
effectivenessoftheinternalcontrolsrelevanttotherecognitionandmeasurementofrevenue.
• Performing substantive analytical procedures,developinganexpectationofthelevelofrevenuebased on historical data and macroeconomicfactors.
• Evaluationoftheappropriatenessofrecognitionofboth revenueanddiscountsby reference tothe relevant invoices and/or agreements withcustomers,inordertoassesswhetherrevenueand discounts have been recognized in thecorrectaccountingperiod.
Valuationofinvestmentproperties
PleaserefertoNote15ofthefinancialstatements.
The key audit matter How the matter was addressed in our audit
At31December2018,themanagementhasassessedthe fair value of its investment properties at Euro8.284.678.
Giventhesignificanceof theaboveamountsaswellas the inherent subjectivity included in determiningthefairvalue,aswellas,thejudgmentinvolvedinthisarea, the valuation of investment property has beenidentifiedasanareaoffocusduringouraudit.
Ourauditproceduresconsistofthefollowing:• Assessment of the capability, competenceand
independenceoftheexternalvaluator.• Assessment of the methodology used by the
externalvaluator.• Assessment of the reasonableness of the
comparabledatausedinthevaluations.• Assessmentoftheaccuracyofthemathematical
calculations.
32
OtherinformationTheBoardofDirectorsisresponsiblefortheotherinformation.Theotherinformationcomprisesthemanagementreport,thecorporategovernancereport,theRemunerationreportandtheDirectorsCurriculaVitaebutdoesnotincludetheconsolidatedandseparatefinancialstatementsandourauditors’reportthereon.
Ouropinionontheconsolidatedandseparatefinancialstatementsdoesnotcovertheotherinformationandwedonotexpressanyformofassuranceconclusionthereon,exceptasrequiredbytheCompaniesLaw,Cap.113.
Inconnectionwithourauditoftheconsolidatedandseparatefinancialstatements,ourresponsibilityistoreadtheotherinformationand,indoingso,considerwhethertheotherinformationismateriallyinconsistentwiththeconsolidatedandseparatefinancialstatementsorourknowledgeobtainedintheauditorotherwiseappearstobemateriallymisstated.If,basedontheworkwehaveperformed,weconcludethatthereisamaterialmisstatementofthisotherinformation,wearerequiredtoreportthatfact.
WithregardstotheremunerationreportandtheDirectors’CurriculaVitaewehavenothingtoreport.
Withregardstothemanagementreportandthecorporategovernancereport,ourreportinthisregardispresentedinthe''Reportonotherlegalandregulatoryrequirements''section.
ResponsibilitiesoftheBoardofDirectorsandthosechargedwithgovernancefortheconsolidatedandseparatefinancialstatementsTheBoardofDirectorsisresponsibleforthepreparationofconsolidatedandseparatefinancialstatementsthatgiveatrueandfairviewinaccordancewithIFRS-EUandtherequirementsoftheCompaniesLaw,Cap.113,and forsuch internalcontrolas theBoardofDirectorsdetermines isnecessary toenable thepreparationofconsolidatedandseparatefinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.
In preparing the consolidated and separate financial statements, the Board of Directors is responsible forassessingtheGroup’sabilitytocontinueasagoingconcern,disclosing,asapplicable,mattersrelatedtogoingconcernandusingthegoingconcernbasisofaccounting,unlessthereisanintentiontoeitherliquidatetheGrouportoceaseoperations,orthereisnorealisticalternativebuttodoso.
TheBoardofDirectorsandthosechargedwithgovernanceareresponsibleforoverseeingtheGroup’sfinancialreportingprocess.
INDEPENDENT AUDITORS’ REPORT (continued)
TothemembersofVassilikoCementWorksPublicCompanyLimited
33
Auditors’responsibilitiesfortheauditoftheconsolidatedandseparatedfinancialstatementsOur objectives are to obtain reasonable assurance about whether the consolidated and separate financialstatements as awhole are free frommaterialmisstatement,whether due to fraud or error, and to issue anauditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not aguaranteethatanauditconductedinaccordancewithISAswillalwaysdetectamaterialmisstatementwhenitexists.Misstatementscanarisefromfraudorerrorandareconsideredmaterialif,individuallyorintheaggregate,theycouldreasonablybeexpected to influence theeconomicdecisionsofusers takenon thebasisof theseconsolidatedandseparatefinancialstatements.
As part of an audit in accordance with ISAs, we exercise professional judgment andmaintain professionalskepticismthroughouttheaudit.Wealso:
• Identifyandassesstherisksofmaterialmisstatementoftheconsolidatedandseparatefinancialstatements,whetherduetofraudorerror,designandperformauditproceduresresponsivetothoserisks,andobtainauditevidencethatissufficientandappropriatetoprovideabasisforouropinion.Theriskofnotdetectingamaterialmisstatement resulting from fraud is higher than for one resulting fromerror, as fraudmayinvolvecollusion,forgery,intentionalomissions,misrepresentations,ortheoverrideofinternalcontrol.
• Obtainanunderstandingofinternalcontrolrelevanttotheauditinordertodesignauditproceduresthatareappropriateinthecircumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessoftheGroup’sinternalcontrol.
• EvaluatetheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccountingestimatesandrelateddisclosuresmadebytheBoardofDirectors.
• ConcludeontheappropriatenessoftheBoardofDirectors’useofthegoingconcernbasisofaccountingand, basedon theaudit evidenceobtained,whetheramaterial uncertaintyexists related toeventsorconditions thatmaycastsignificantdoubton theGroup’sability tocontinueasagoingconcern. Ifweconclude thatamaterialuncertaintyexists,weare required todrawattention inourauditors’ report totherelateddisclosuresintheconsolidatedandseparatefinancialstatementsor,ifsuchdisclosuresareinadequate,tomodifyouropinion.Ourconclusionsarebasedontheauditevidenceobtaineduptothedateofourauditors’report.However,futureeventsorconditionsmaycausetheGrouptoceasetocontinueasagoingconcern.
• Evaluate the overall presentation, structure and content of the consolidated and separate financialstatements, including thedisclosures,andwhether theconsolidatedandseparatefinancialstatementsrepresenttheunderlyingtransactionsandeventsinamannerthatachievestrueandfairview.
• ObtainsufficientappropriateauditevidenceregardingthefinancialinformationoftheentitiesorbusinessactivitiesoftheGrouptoexpressanopinionontheconsolidatedandseparatefinancialstatements.Weare responsible for the direction, supervision and performance of the Group audit.We remain solelyresponsibleforourauditopinion.
INDEPENDENT AUDITORS’ REPORT (continued)
TothemembersofVassilikoCementWorksPublicCompanyLimited
34
Wecommunicatewiththosechargedwithgovernanceregarding,amongothermatters,theplannedscopeandtimingoftheauditandsignificantauditfindings,includinganysignificantdeficienciesininternalcontrolthatweidentifyduringouraudit.
Wealsoprovidethosechargedwithgovernancewithastatementthatwehavecompliedwithrelevantethicalrequirementsregardingindependence,andtocommunicatewiththemallrelationshipsandothermattersthatmayreasonablybethoughttobearonourindependence,andwhereapplicable,relatedsafeguards.
Fromthematterscommunicatedwiththosechargedwithgovernance,wedeterminethosemattersthatwereofmostsignificanceintheauditoftheconsolidatedandseparatefinancialstatementsofthecurrentperiodandarethereforethekeyauditmatters.Wedescribethesemattersinourauditors’report.
Reportonotherlegalandregulatoryrequirements
Other regulatory requirementsPursuant to the requirementsofArticle10(2)ofEuropeanUnion (“EU”)Regulation537/2014weprovide thefollowinginformationinourIndependentAuditor’sReport,whichisrequiredinadditiontotherequirementsofISAs.
Date of appointment and period of engagementWewerefirstappointedauditorsoftheCompanybytheGeneralMeetingoftheCompany’smembersin1988.Ourappointmenthasbeenrenewedannuallybyshareholderresolution.Ourtotaluninterruptedperiodofengagementis32yearscoveringtheperiodsending31December1987to31December2018.
Consistency of auditors’ report with the additional report to the Audit Committee WeconfirmthatourauditopinionisconsistentwiththeadditionalreportpresentedtotheAuditCommitteedated11April2019.
Provision of non-audit services (“NAS”)Wehavenot providedanyprohibitedNAS referred to inArticle 5ofEURegulation537/2014asappliedbySection72oftheAuditorsLawof2017,L.53(I)2017,asamendedfromtimetotime(''LawL.53(I)/2017'').
INDEPENDENT AUDITORS’ REPORT (continued)
TothemembersofVassilikoCementWorksPublicCompanyLimited
Annual Report & Financial Statements '1836
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME fortheyearended31December2018
The notes on pages 44 to 86 form an integral part of these financial statements
Note 2018 2017 Continuing operations €000 €000
Revenue 6 97.926 102.467Costofsales (70.944) (71.576)Gross profit 26.982 30.891
Otheroperatingincome 7 977 1.071Distributionexpenses (4.169) (4.510)Administrativeexpenses (3.803) (3.528)Otheroperatingexpenses (1.606) (1.678)Operating profit before financing costs 8 18.381 22.246
Financeincome 198 -Financeexpenses (114) (439)Net finance income/(cost) 10 84 (439)
Net(loss)/profitfrominvestingactivities 11 (703) 948 Shareofprofitfromequity-accountedinvestees 19 830 500 Profit before tax 18.592 23.255
Taxation 12 (2.870) (3.382)Profit for the year 15.722 19.873
Other comprehensive income
Items that will not be reclassified to profit or lossRevaluationofproperty,plantandequipment 14 (1.509) (290)
Items that are or may be reclassified to profit or lossCashflowhedges–effectiveportionofchangesinfairvalue (254) 812 Deferredtaxonrevaluationofproperties 12 (1.246) 389 Other comprehensive (loss)/income for the year (3.009) 911
Total comprehensive income for the year 12.713 20.784
Profit attributable to:Equityholdersoftheparent 15.722 19.873Non-controllinginterest - -
15.722 19.873
Total comprehensive income attributable to:Equityholdersoftheparent 12.713 20.784Non-controllinginterest - -
12.713 20.784
Basicanddilutedearningspershare(cents) 13 21,9 27,6
Annual Report & Financial Statements '18 37
fortheyearended31December2018
COMPANY STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
The notes on pages 44 to 86 form an integral part of these financial statements
Note 2018 2017 Continuing operations €000 €000
Revenue 6 97.926 102.467Costofsales (70.944) (71.576)Gross profit 26.982 30.891
Otheroperatingincome 7 977 1.071Distributionexpenses (4.169) (4.510)Administrativeexpenses (3.799) (3.524)Otheroperatingexpenses (1.606) (1.678)Operating profit before financing costs 8 18.385 22.250
Financeincome 198 -Financeexpenses (114) (439)Net finance income/(cost) 10 84 (439)
Net(loss)/profitfrominvestingactivities 11 (333) 1.196Profit before tax 18.136 23.007
Taxation 12 (2.776) (3.384)
Profit for the year 15.360 19.623
Other comprehensive income
Items that will not be reclassified to profit or lossRevaluationofproperty,plantandequipment 14 (1.509) (290)
Items that are or may be reclassified to profit or lossCashflowhedges–effectiveportionofchangesinfairvalue (254) 812 Deferredtaxonrevaluationofproperties 12 (1.246) 389 Other comprehensive (loss)/income for the year (3.009) 911
Total comprehensive income for the year 12.351 20.534
Basicanddilutedearningspershare(cents) 13 21,4 27,3
Annual Report & Financial Statements '1840
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Annual Report & Financial Statements '18 41
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Annual Report & Financial Statements '1842
CONSOLIDATED STATEMENT OF CASH FLOWSfortheyearended31December2018
The notes on pages 44 to 86 form an integral part of these financial statements
Note 2018 2017 €000 €000
Cash flows from operating activities
Profitfortheyear 15.722 19.873Adjustmentsfor:Depreciationandamortisationcharges 14,16 14.555 13.788Loss/(profit)fromdisposalofinvestmentproperty 1.749 (104)Changeinfairvalueonfinancialassetsthroughothercomprehensiveincome 11 14 (56)Changeinfairvalueofinvestmentproperty 15 (986) (711)Interestincome 10 (198) -Dividendincome 11 (5) (3)Interestexpense 10 542 569 Shareofprofitofequity-accountedinvestees 19 (830) (500)Lossondisposalofproperty,plantandequipment 30 4 Incometaxexpense 12 2.870 3.382
Operating profit before changes in working capital and provisions 33.463 36.242Changes in:Tradeandotherreceivables 38 880 Inventories (1.249) (5.886)Tradeandotherpayables (236) 1.445Provisions - (100)
Cash generated from operating activities 32.016 32.581Interestpaid (579) (605)Taxpaid (1.011) (1.363)Net cash inflow from operating activities 30.426 30.613
Cash flows to investing activitiesProceedsfromdisposalofproperty,plantandequipment 178 22 Proceedsfromdisposalofinvestmentproperty 1.490 560 Interestreceived 198 -Dividendsreceived 310 128 Acquisitionofproperty,plantandequipment 14 (5.897) (13.893)Acquisitionofintangibles 16 - (59)Acquisitionofequity-accountedinvestee 19 (169) -
Net cash used in investing activities (3.890) (13.242)
Cash flows to financing activitiesRepaymentofloans (7.907) (7.907)Dividendspaid (18.343) (15.826)
Net cash used in financing activities (26.250) (23.733)
Net increase/(decrease) in cash and cash equivalents 286 (6.362)Cashandcashequivalentsat1January (27) 6.335Cash and cash equivalents at 31 December 24 259 (27)
Annual Report & Financial Statements '18 43
COMPANY STATEMENT OF CASH FLOWSfortheyearended31December2018
The notes on pages 44 to 86 form an integral part of these financial statements
Note 2018 2017 €000 €000
Cash flows from operating activities
Profitfortheyear 15.360 19.623Adjustmentsfor:Depreciationandamortisationcharges 14,16 14.555 13.788Loss/(profit)fromdisposalofinvestmentproperty 1.749 (104)Changeinfairvalueonfinancialassetsthroughothercomprehensiveincome 11 14 (56)Changeinfairvalueofinvestmentproperty 15 (1.051) (665)Interestincome 10 (198) -Dividendincome 11 (310) (297)Interestexpense 10 542 569 Lossondisposalofproperty,plantandequipment 30 4 Incometaxexpense 12 2.776 3.384
Operating profit before changes in working capital and provisions 33.467 36.246Changes in:Tradeandotherreceivables 34 873 Inventories (1.249) (5.886)Tradeandotherpayables (236) 1.448Provisions - (100)
Cash generated from operations 32.016 32.581Interestpaid (579) (605)Taxpaid (1.011) (1.363)Net cash inflow from operating activities 30.426 30.613
Cash flows to investing activitiesProceedsfromdisposalofproperty,plantandequipment 178 22 Proceedsfromdisposalofinvestmentproperty 1.490 560 Interestreceived 198 -Dividendsreceived 310 128 Acquisitionofproperty,plantandequipment 14 (5.897) (13.893)Acquisitionofintangibles 16 - (59)Acquisitionofsharesinassociatecompany 19 (169) -
Net cash used in investing activities (3.890) (13.242)
Cash flows to financing activitiesRepaymentofloans (7.907) (7.907)Dividendspaid (18.343) (15.826)Net cash used in financing activities (26.250) (23.733)
Net increase/(decrease) in cash and cash equivalents 286 (6.362)Cashandcashequivalentsat1January (27) 6.335Cash and cash equivalents at 31 December 24 259 (27)
Annual Report & Financial Statements '1844
NOTES TO THE FINANCIAL STATEMENTSfortheyearended31December2018
1. Reporting entity and principal activities
"ΤσιμεντοποιίαΒασιλικούΔημόσιαΕταιρείαΛτδ",translatedinEnglishas"VassilikoCementWorksPublicCompanyLtd"(the'Company')isacompanydomiciledinCyprusandisapubliccompanyinaccordancewiththerequirementsoftheCyprusCompaniesLaw,Cap.113andtheCyprusStockExchangeLawandRegulations.TheCompany'sregisteredofficeisat1AKyriakosMatsisAvenue,CY-1082Nicosia,Cyprus.
The consolidated financial statements of the Company as at and for the year ended 31 December 2018 comprise theCompanyanditssubsidiaries(togetherreferredtoasthe'Group')andtheGroup'sinterestinassociates.TheCompany'sandtheConsolidatedFinancialStatementswereauthorisedforissuebytheBoardofDirectorson11April2019.
Principal activitiesTheGroup'sprincipalactivityistheproductionofclinkerandcement,whicharesoldinthelocalandinternationalmarkets.TheGroupalsohasapresenceinaggregatesquarryingthroughitssubsidiaryandassociatecompanies.
2. Basis of preparation
Statement of complianceTheconsolidatedfinancialstatementshavebeenpreparedinaccordancewithInternationalFinancialReportingStandards("IFRS")asadoptedbytheEuropeanUnion("EU").Inaddition,thefinancialstatementshavebeenpreparedinaccordancewiththerequirementsoftheCyprusCompaniesLaw,Cap.113,andtheCyprusStockExchangeLawandRegulations.
Basis of measurementTheconsolidatedfinancialstatementshavebeenpreparedonthehistoricalcostbasis,modifiedtoincludetherevaluationtofairvalueoflandandbuildings,financialassetsatfairvaluethroughothercomprehensiveincomeandinvestmentproperty.
Functional and presentation currencyTheconsolidatedfinancialstatementsasatandfortheyearended31December2018arepresentedinEuro(€),whichistheCompany'sfunctionalcurrency.Allamountshavebeenroundedtothenearestthousand,unlessotherwiseindicated.
Use of estimates and judgmentsThepreparationoftheconsolidatedfinancialstatementsinaccordancewithIFRSrequiresfrommanagementtheexerciseofjudgment,tomakeestimatesandassumptionsthatinfluencetheapplicationofaccountingprinciplesandtherelatedamountsofassetsandliabilities,incomeandexpenses.Theestimatesandunderlyingassumptionsarebasedonhistoricalexperienceandvariousotherfactorsthataredeemedtobereasonablebasedonknowledgeavailableatthattime.Actualresultsmaydeviatefromsuchestimates.
The estimates and underlying assumptions are reviewed on a continuous basis. Revisions in accounting estimates arerecognisedintheperiodduringwhichtheestimateisrevised,iftheestimateaffectsonlythatperiod,orintheperiodoftherevisionandfutureperiods,iftherevisionaffectsthepresentaswellasfutureperiods.
Annual Report & Financial Statements '18 45
NOTES TO THE FINANCIAL STATEMENTSfortheyearended31December2018
2. Basis of preparation (continued)
In particular, information about significant areas of estimation, uncertainty and critical judgments in applying accountingpoliciesthathavethemostsignificanteffectontheamountrecognisedinthefinancialstatementsaredescribedbelow:
a. Income taxesSignificantjudgmentisrequiredindeterminingtheprovisionforincometaxes.Therearetransactionsandcalculationsforwhichtheultimatetaxdeterminationisuncertainduringtheordinarycourseofbusiness.TheGrouprecognisesliabilitiesforanticipatedtaxauditissuesbasedonestimatesofwhetheradditionaltaxeswillbedue.Wherethefinaltaxoutcomeofthesemattersisdifferentfromtheamountsthatwereinitiallyrecorded,suchdifferenceswillimpacttheincometaxanddeferredtaxprovisionsintheperiodinwhichsuchdeterminationismade.
b. Measurement of fair valuesAnumberoftheGroup'saccountingpoliciesanddisclosuresrequirethemeasurementoffairvalues,forbothfinancialandnon-financialassetsandliabilities.TheGrouphasanestablishedcontrolframeworkwithrespecttothemeasurementoffairvalues.
Thisincludesavaluationteamthathasoverallresponsibilityforoverseeingallsignificantfairvaluemeasurements,includingLevel 3 fair values, and reports directly to the Chief Financial Officer. The valuation team regularly reviews significantunobservableinputsandvaluationadjustments.Ifthirdpartyinformation,suchasbrokerquotesorpricingservices,isusedtomeasurefairvalues,thenthevaluationteamassessestheevidenceobtainedfromthethirdpartiestosupporttheconclusionthatsuchvaluationsmeettherequirementsofIFRS,includingthelevelinthefairvaluehierarchyinwhichsuchvaluationsshouldbeclassified.SignificantvaluationissuesarereportedtotheGroup'sAuditCommittee.
Whenmeasuringthefairvalueofanassetoraliability,theGroupusesobservablemarketdataasfaraspossible.Fairvaluesarecategorizedintodifferentlevelsinafairvaluehierarchybasedontheinputsusedinthevaluationtechniquesasfollows:
- Level1-quotedprices(unadjusted)inactivemarketsforidenticalassetsorliabilities. - Level2-inputsotherthanquotedpricesincludedwithinLevel1thatareobservablefortheassetorliability,eitherdirectly(i.e.asprices)orindirectly(i.e.derivedfromprices).
- Level3-inputsfortheassetorliabilitythatarenotbasedonobservablemarketdata(unobservableinputs).
Iftheinputsusedtomeasurethefairvalueofanassetoraliabilityfallintodifferentlevelsofthefairvaluehierarchy,thenthefairvaluemeasurementiscategorizedinitsentiretyinthesamelevelofthefairvaluehierarchyasthelowestlevelinputthatissignificanttotheentiremeasurement.
TheGrouprecognisestransfersbetweenlevelsofthefairvaluehierarchyattheendofthereportingperiodduringwhichthechangehasoccurred.
c. Provision for bad and doubtful debtsTheGroupreviewsitstradeandotherreceivablesforevidenceoftheirrecoverability.Suchevidenceincludesthecustomer'spaymentrecordandthecustomer'soverallfinancialposition.Ifindicationsofirrecoverabilityexist,therecoverableamountisestimatedandarespectiveprovisionforbadanddoubtfuldebtsismade.Theamountoftheprovisionischargedthroughtheprofitorloss.Thereviewofcreditriskiscontinuousandthemethodologyandassumptionsusedforestimatingtheprovisionarereviewedregularlyandadjustedaccordingly.
Annual Report & Financial Statements '1846
NOTES TO THE FINANCIAL STATEMENTSfortheyearended31December2018
2. Basis of preparation (continued)
d. Impairment of investments in subsidiaries/associatesThe Company periodically evaluates the recoverability of investments in subsidiaries/associates whenever indicators ofimpairment are present. Indicators of impairment include such itemsasdeclines in revenues, earningsor cash flowsormaterialadversechangesintheeconomicorpoliticalstabilityofaparticularcountry,whichmayindicatethatthecarryingamountofanassetisnotrecoverable.Iffactsandcircumstancesindicatethatinvestmentinsubsidiaries/associatesmaybeimpaired,theestimatedfutureundiscountedcashflowsassociatedwiththesesubsidiaries/associateswouldbecomparedtotheircarryingamountstodetermineifawritedowntofairvalueisnecessary.
e. Impairment of goodwillDeterminingwhether goodwill is impaired requires an estimation of the value in use of the cash-generating units of theCompanyonwhichthegoodwillhasbeenallocated.ThevalueinusecalculationrequirestheCompanytoestimatethefuturecashflowsexpectedtoarisefromthecash-generatingunitsusingasuitablediscountrateinordertocalculatethepresentvalue.
3. Changes in accounting policies
TheGrouphasadoptedthefollowingnewstandards,amendmentstoastandardandnewinterpretationswithadateofinitialapplicationof1January2018.Thenatureandeffectsofthechangesareexplainedbelow.
IFRS 15 Revenue from Contracts with Customers:
• IFRS15establishesacomprehensiveframeworkfordeterminingwhether,howmuchandwhenrevenueisrecognised.ItreplacedIAS18Revenue,IAS11ConstructionContractsandrelatedinterpretations.UnderIFRS15,revenueisrecognisedwhenacustomerobtainscontrolofthegoodsorservices.Determiningthetimingofthetransferofcontrol-atapointintimeorovertime-requiresjudgement.
• TheGrouphasadoptedIFRS15usingthecumulativeeffectmethod(withoutpracticalexpedients),withtheeffectofinitiallyapplyingthisstandardrecognisedatthedateofinitialapplication(1January2018).
• DuetothetransitionmethodschosenbytheGroupinapplyingthesestandards,comparativeinformationthroughoutthesefinancialstatementshasnotbeenrestatedtoreflecttherequirementsofthenewstandards
• Accordingly,theinformationpresentedfor2017hasnotbeenrestatedanditispresentedaspreviouslyreportedunderIAS18,IAS11andrelatedinterpretations.Additionally, thedisclosurerequirements inIFRS15havenotgenerallybeenappliedtocomparativeinformation.
• Theadoptionof IFRS15 in theFinancialStatementsof theGrouphasnot resulted in significant changes in theopeningretainedearningsandintherevenuerecognition.
Annual Report & Financial Statements '18 47
NOTES TO THE FINANCIAL STATEMENTSfortheyearended31December2018
3. Changes in accounting policies (continued)
IFRS 9 Financial Instruments:
IFRS9setsoutrequirementsforrecognisingandmeasuringfinancialassets,financialliabilitiesandsomecontractstobuyorsellnon-financialitems.ThisstandardreplacesIAS39FinancialInstruments:RecognitionandMeasurement.AsaresultoftheadoptionofIFRS9,theGrouphasadoptedconsequentialamendmentstoIAS1PresentationofFinancialStatements,whichrequireimpairmentoffinancialassetstobepresentedinaseparatelineiteminthestatementofprofitorlossandOCI.Previously,theGroup'sapproachwastoincludetheimpairmentoftradereceivablesinotheroperatingexpenses.
Additionally,theGrouphasadoptedconsequentialamendmentstoIFRS7FinancialInstruments:Disclosuresthatareappliedtodisclosuresabout2018buthavenotbeengenerallyappliedtocomparativeinformation.
Thereisnoeffectontheopeningretainedearningson1January2018fromtheadoptionofIFRS9.
Classification and measurement of financial assets and financial liabilities
IFRS9containsthreeprincipalclassificationcategoriesforfinancialassets:measuredatamortisedcost,FVOCIandFVTPL.
TheclassificationoffinancialassetsunderIFRS9isgenerallybasedonthebusinessmodel inwhichafinancialasset ismanagedanditscontractualcashflowcharacteristics.IFRS9eliminatesthepreviousIAS39categoriesofheldtomaturity,loansandreceivablesandavailableforsale.UnderIFRS9,derivativesembeddedincontractswherethehostisafinancialassetinthescopeofthestandardareneverseparated.Instead,thehybridfinancialinstrumentasawholeisassessedforclassification.
IFRS9largelyretainstheexistingrequirementsinIAS39fortheclassificationandmeasurementoffinancialliabilities.
ForanexplanationofhowtheGroupclassifiesandmeasuresfinancialinstrumentsandaccountsforrelatedgainsandlossesunderIFRS9,seenote4“Significantaccountingpolicies”.
ThefollowingtableandtheaccompanyingnotesbelowexplaintheoriginalmeasurementcategoriesunderIAS39andthenewmeasurementcategoriesunder IFRS9 foreachclassof theGroup'sfinancialassetsandfinancial liabilitiesasat1January2018.TheeffectofadoptingIFRS9onthecarryingamountsoffinancialassetsat1January2018relatessolelytothenewimpairmentrequirements.
Annual Report & Financial Statements '1848
NOTES TO THE FINANCIAL STATEMENTSfortheyearended31December2018
3. Changes in accounting policies (continued)
Group
Original classification under IAS 39
New classification under IFRS9
Original carrying amount
under IAS39
New carrying amount
under IFRS9
Financial assets €000 €000
Tradeandotherreceivables Loansandreceivables Amortisedcost 6.362 6.362
Equitysecurities Availableforsale FairValuethroughOtherComprehensiveIncome 4.423 4.423
Cashandcashequivalents Loansandreceivables Amortisedcost 259 259
Total financial assets 11.044 11.044
Financial liabilities
Tradeandotherpayables Otherfinancialliabilities Otherfinancialliabilities 7.019 7.019
Securedbankloans Otherfinancialliabilities Otherfinancialliabilities 23.062 23.062
Bankoverdraft Otherfinancialliabilities Otherfinancialliabilities - -
Total financial liabilities 30.081 30.081
Company
Original classification under IAS 39
New classification under IFRS9
Original carrying amount
under IAS39
New carrying amount
under IFRS9
Financial assets €000 €000
Tradeandotherreceivables Loansandreceivables Amortisedcost 6.871 6.871
Equitysecurities Availableforsale FairValuethroughOtherComprehensiveIncome 3.499 3.499
Cashandcashequivalents Loansandreceivables Amortisedcost 259 259
Totalfinancialassets 10.629 10.629
Financial liabilities
Tradeandotherpayables Otherfinancialliabilities Otherfinancialliabilities 6.966 6.966
Securedbankloans Otherfinancialliabilities Otherfinancialliabilities 23.062 23.062
Bankoverdraft Otherfinancialliabilities Otherfinancialliabilities - -
Total financial liabilities 30.028 30.028
Annual Report & Financial Statements '18 49
NOTES TO THE FINANCIAL STATEMENTSfortheyearended31December2018
3. Changes in accounting policies (continued)
Impairement of financial assetsIFRS9replacesthe'incurredloss'modelinIAS39withan'expectedcreditloss'(ECL)model.Thenewimpairmentmodelappliesto:-financialassetsmeasuredatamortisedcost;-debtinvestmentsatFVOCI;-contractassets;-leasereceivables;
Thenewimpairmentmodeldoesnotapplytoinvestmentsinequityinstruments.
UnderIFRS9,creditlossesarerecognisedearlierthanunderIAS39.
4. Significant accounting policies
The following accounting policies have been applied consistently to all years presented in these consolidated financialstatementsandhavebeenappliedconsistentlybytheGroupentities.
Adoption of new and revised IFRS and Interpretations as adopted by the EU:Asfrom1January2018,theGroupadoptedallchangestoInternationalFinancialReportingStandards(IFRSs)asadoptedbytheEU,whicharerelevant to itsoperations.ThisadoptiondidnothaveamaterialeffectontheconsolidatedfinancialstatementsoftheGroupexceptfortheadoptionofIFRS9FinancialInstrumentsandIFRS15RevenuefromContractswithCustomers(seeNote3).
ThefollowingStandards,AmendmentstoStandardsandInterpretationshavebeenissuedbytheInternationalAccountingStandardsBoard (IASB)butarenotyeteffective forannualperiodsbeginningon1January2018.ThosewhichmayberelevanttotheGrouparesetoutbelow.TheGroupdoesnotplantoadopttheseStandardsearly.
i. Standards and Interpretations adopted by the EU• IFRS9''FinancialInstruments''(effectiveforannualperiodsbeginningonorafter1January2018).InJuly2014,theIAS
issuedthefinalversionofIFRS9,whichreplacestheexistingguidanceinIAS39''FinancialInstruments:RecognitionandMeasurement''.IFRS9includesrevisedguidanceontheclassificationandmeasurementoffinancialinstruments,anewexpectedcreditloss(ECL)modelforcalculatingimpairmentonfinancialassets,andnewgeneralhedgeaccountingrequirements.IFRS9largelyretainstheexistingrequirementsinIAS39fortheclassificationoffinancialliabilities.ItalsocarriesforwardtheguidanceonrecognitionandderecognitionoffinancialinstrumentsfromIAS39.
Classification Financial assets
IFRS9containsanewclassificationandmeasurementapproachforfinancialassetsthatreflectsthebusinessmodelinwhichassetsaremanagedandtheircashflowcharacteristics.IFRS9containsthreeprincipalclassificationcategoriesforfinancialassets:measuredatamortisedcost,FVOCIandFVTPL.ThestandardeliminatestheexistingIAS39categoriesofheldtomaturity,loansandreceivablesandavailableforsale.UnderIFRS9,derivativesembeddedincontractswherethehostisafinancialassetinthescopeofthestandardareneverbifurcated.Instead,thehybridfinancialinstrumentasawholeisassessedforclassification.
Annual Report & Financial Statements '1850
NOTES TO THE FINANCIAL STATEMENTSfortheyearended31December2018
4. Significant accounting policies (continued)
Impairment Financial assets and contract assets
IFRS9 replaces the 'incurred loss'model in IAS39witha forward lookingECLmodel.Thiswill requireconsiderablejudgementabouthowchangesineconomicfactorsaffectECLs,whichwillbedeterminedonaprobabilityweightedbasis.ThenewimpairmentmodelwillapplytofinancialassetsmeasuredatamortisedcostorFVOCI,exceptforinvestmentsinequityinstruments,andtocontractassets.
UnderIFRS9,lossallowanceswillbemeasuredoneitherofthefollowingbases: - 12monthECLs:theseareECLsthatresultfrompossibledefaulteventswithinthe12monthsafterthereportingdate;and
- lifetimeECLs:theseareECLsthatresultfromallpossibledefaulteventsovertheexpectedlifeofafinancialinstrument.
LifetimeECLmeasurementappliesifthecreditriskofafinancialassetatthereportingdatehasincreasedsignificantlysinceinitialrecognitionand12monthECLmeasurementappliesif ithasnot.Anentitymaydeterminethatafinancialasset'screditriskhasnotincreasedsignificantlyiftheassethaslowcreditriskatthereportingdate.However,lifetimeECLmeasurementalwaysappliesfortradereceivablesandcontractassetswithoutasignificantfinancingcomponent;theentityhaschosentoapplythispolicyalsofortradereceivablesandcontractassetswithasignificantfinancingcomponent.Thereisarebuttablepresumptionthatdefaultdoesnotoccurlaterthanwhenafinancialassetis90dayspastdueunlessanentityhasreasonableandsupportableinformationtocorroborateamorelaggingdefaultcriterion.
• IFRS15''RevenuefromContractswithCustomers''(effectiveforannualperiodsbeginningonorafter1January2018).TheapplicationofthestandardisnotexpectedtohaveanimpactonthefinancialstatementsoftheGroup
IFRS15establishesacomprehensiveframeworkfordeterminingwhether,howmuchandwhenrevenueisrecognised.Itreplacesexistingrevenuerecognitionguidance,includingIAS18'Revenue',IAS11'ConstructionContracts'andIFRIC13'CustomerLoyaltyPrograms'.Itprovidesaprinciplesbasedapproachforrevenuerecognition,andintroducestheconceptofrecognizingrevenueforperformanceobligationsastheyaresatisfied.Therecognitionofsuchrevenueisinaccordancewithfivestepsto:1)identifyingthecontractwiththecustomer;2)identifyingeachoftheperformanceobligationsincludedinthecontract;3)determiningthetransactionprice;4)allocatingthetransactionpricetotheperformanceobligationsinthecontract;and5)recognisingrevenueaseachperformanceobligationissatisfied.
• IFRS15(Clarifications)''RevenuefromContractswithCustomers''(effectiveforannualperiodsbeginningonorafter1January2018).
Clarifications to IFRS 15 provide additional application guidance but do not change the underlying principles of thestandard.Theclarificationsrelateprincipally to identifyingperformanceobligations(step2),accounting for licensesofintellectualproperty(step5)andagentvsprincipalconsiderations.Theclarificationsalsointroduceadditionalpracticalexpedientsontransitioninrelationtomodifiedandcompletedcontracts.
Annual Report & Financial Statements '18 51
NOTES TO THE FINANCIAL STATEMENTSfortheyearended31December2018
4. Significant accounting policies (continued)
• IFRS16''Leases''(effectiveforannualperiodsbeginningonorafter1January2019).IFRS16 replacesexisting leasesguidance including IAS17 'Leases', IFRIC4Determiningwhether anArrangementcontainsaLease,SIC15'OperatingLeases'IncentivesandSIC27'EvaluatingtheSubstanceofTransactionsInvolvingtheLegalFormofaLease'.Thestandardintroducesasingle,onbalancesheetleaseaccountingmodelforlessees.IFRS16appliesacontrolmodeltotheidentificationofleases,distinguishingbetweenleasesandservicecontractsonthebasisofwhetherthereisanidentifiedassetcontrolledbythecustomer.Thepreviousdistinctionbetweenoperatingandfinanceleasesisremovedforlessees.Instead,alesseerecognisesarightofuseassetrepresentingitsrighttousetheunderlyingassetandaleaseliabilityrepresentingitsobligationtomakeleasepayments.Therearerecognitionexemptionsforshorttermleasesandleasesoflowvalueitems.Lessoraccountingremainssimilartothecurrentstandardi.e.lessorscontinuetoclassifyleasesasfinanceoroperatingleases.
Basedontheassessmentundertakentodate,thetotaleffectonthestatementoffinancialpositionontheCompany’sandGroup’sfinancialstatements,fromtheadoptionofthestandardisexpectedtobe€112.000.
• AnnualImprovementstoIFRSs20142016Cycle(effectiveforannualperiodsbeginningonorafter1January2018(IFRS1andIAS28)).TheamendmentstoIFRS1removetheoutdatedexemptionsforfirsttimeadoptersofIFRS.TheamendmentstoIAS28clarifythattheelectiontomeasureatfairvaluethroughprofitorlossaninvestmentinassociateorajointventurethatisheldbyanentitythatisaventurecapitalorganisation,orotherqualifyingentity,isavailableforeachinvestmentinanassociateorjointventureonaninvestmentbyinvestmentbasis,uponinitialrecognition.Additionally,anoninvestmententityinvestormayelecttoretainthefairvalueaccountingappliedbyaninvestmententityassociateorinvestmententityjointventuretoitssubsidiaries(electioncanbemadeseparatelyforeachinvestmententityassociateorjointventure).
• IFRS 2 (Amendments): Classification andMeasurement of Share based Payment Transactions (effective for annualperiodsbeginningonorafter1January2018).
Theamendmentscoverthreeaccountingareas:a)measurementofcashsettledsharebasedpayments;b)classificationofsharebasedpaymentssettlednetoftaxwithholdings;andc)accountingforamodificationofasharebasedpaymentfromcashsettled toequitysettled.Thenewrequirementscanaffect theclassificationand/ormeasurementsof thesearrangementsandpotentiallythetimingandamountofexpenserecognisedfornewandoutstandingawards.
• IAS28(Amendments):LongtermInterestsinAssociatesandJointVentures(effectiveforannualperiodsbeginningonorafter1January2019).Theamendmentsclarify thatanentityapplies IFRS9 ''Financial Instruments'', including itsimpairmentrequirements,tolongterminterestsinanassociateorjointventurethatformpartofthenetinvestmentintheassociateorjointventure.
• IAS40(Amendments):''TransfersofInvestmentProperty''(effectiveforannualperiodsbeginningonorafter1January2018).Theamendmentsclarifytherequirementsontransfersto,orfrom,investmentproperty.Atransferismadewhen,andonlywhen,thereisanactualchangeinusei.e.anassetmeetsorceasestomeetthedefinitionofinvestmentpropertyandthereisevidenceofthechangeinuse.Achangeinmanagementintentionalonedoesnotsupportatransfer.Inaddition,theamendmentsclarifythattherevisedexamplesofevidenceofachangeinuseintheamendedversionofIAS40arenotexhaustive.
Annual Report & Financial Statements '1852
NOTES TO THE FINANCIAL STATEMENTSfortheyearended31December2018
4. Significant accounting policies (continued)
• AmendmentstoIFRS9:PrepaymentFeatureswithNegativeCompensation(effectiveforannualperiodsbeginningonorafter1January2019).InOctober2017,theIASBissued''PrepaymentFeatureswithNegativeCompensation(AmendmentstoIFRS9)''.Theamendments address the issue that under pre amended IFRS9, financial assetswith such featureswould probablynotmeet theSPPI criterion and as suchwould bemeasured at fair value through profit or loss.The IASBbelievesthat thiswould not be appropriate becausemeasuring themat amortised cost provides useful information about theamount,timinganduncertaintyoftheirfuturecashflows.Financialassetswiththeseprepaymentfeaturescanthereforebemeasuredat amortisedcostor fair value throughother comprehensive incomeprovided that theymeet theotherrelevantrequirementsofIFRS9.Thefinalamendmentsalsocontainaclarificationintheaccountingforamodificationorexchangeofafinancialliabilitymeasuredatamortisedcostthatdoesnotresultinthederecognitionofthefinancialliability.Basedontheclarification,anentityrecognisesanyadjustmenttotheamortisedcostofthefinancialliabilityarisingfromamodificationorexchangeinprofitorlossatthedateofthemodificationorexchange.
• AnnualImprovementstoIFRSs20152017Cycle(effectiveforannualperiodsbeginningonorafter1January2019).
InDecember2017,theIASBpublishedAnnualImprovementstoIFRSs20152017Cycle,containingthefollowingamendmentstoIFRSs:
IFRS3''BusinessCombinations''andIFRS11''JointArrangements''.TheamendmentstoIFRS3clarifythatwhenanentityobtainscontrolofabusinessthatisajointoperation,thenthetransactionisabusinesscombinationachievedinstagesandtheacquiringpartyremeasuresthepreviouslyheldinterestinthatbusinessatfairvalue.
TheamendmentstoIFRS11clarifythatwhenanentitymaintains(orobtains)jointcontrolofabusinessthatisajointoperation,theentitydoesnotremeasurepreviouslyheldinterestsinthatbusiness.
IAS12''IncomeTaxes'':theamendmentsclarifythatallincometaxconsequencesofdividends(i.e.distributionofprofits)arerecognisedconsistentlywiththetransactionsthatgeneratedthedistributableprofitsi.e.inprofitorloss,OCIorequity.
IAS23 ''BorrowingCosts'': theamendmentsclarify that ifanyspecificborrowingremainsoutstandingafter therelatedassetisreadyforitsintendeduseorsale,thatborrowingbecomespartofthefundsthatanentityborrowsgenerallywhencalculatingthecapitalisationrateongeneralborrowings.
• IFRIC22''ForeignCurrencyTransactionsandAdvanceConsideration''(effectiveforannualperiodsbeginningonorafter1January2018).
Theinterpretationclarifiesthatthetransactiondate,forthepurposeofdeterminingtheexchangerate,isthedateofinitialrecognition of theprepayment or deferred incomearising from theadvance consideration. For transactions involvingmultiplepaymentsorreceipts,eachpaymentorreceiptgivesrisetoaseparatetransactiondate.
Annual Report & Financial Statements '18 53
NOTES TO THE FINANCIAL STATEMENTSfortheyearended31December2018
4. Significant accounting policies (continued)
• IFRIC23''UncertaintyoverIncomeTaxTreatments''(effectiveforannualperiodsbeginningonorafter1January2019).
IFRIC 23clarifiestheaccountingforincometaxtreatmentsthathaveyettobeacceptedbytaxauthorities,whilstalsoaiming to enhance transparency.The key test iswhether it is probable that the tax authoritywill accept the chosentaxtreatment,ontheassumptionthattaxauthoritieswillhavefullknowledgeofallrelevantinformationinassessingaproposedtaxtreatment.Theuncertaintyisreflectedusingthemeasurethatprovidesthebetterpredictionoftheresolutionoftheuncertaintybeingeitherthemostlikelyamountortheexpectedvalue.Theinterpretationalsorequirescompaniestoreassessthejudgementsandestimatesappliediffactsandcircumstanceschange.IFRIC23doesnotintroduceanynewdisclosuresbutreinforcestheneedtocomplywithexistingdisclosurerequirementsinrelationtojudgementsmade,assumptionsandestimatesused,andthepotentialimpactofuncertaintiesthatarenotreflected.
ii. Standards and Interpretations not adopted by the EU• ''AmendmentstoReferencestotheConceptualFrameworkinIFRSStandards''(effectiveforannualperiodsbeginningon
orafter1January2020).InMarch2018theIASBissuedacomprehensivesetofconceptsforfinancialreporting,therevised''ConceptualFrameworkforFinancialReporting''(ConceptualFramework),replacingthepreviousversionissuedin2010.Themainchangestotheframework'sprincipleshaveimplicationsforhowandwhenassetsandliabilitiesarerecognisedandderecognisedinthefinancialstatements,whilesomeoftheconceptsintherevisedFrameworkareentirelynew(suchasthe''practicalability''approach to liabilities''.Toassistcompanieswith the transition, the IASB issuedaseparateaccompanyingdocument''AmendmentstoReferencestotheConceptualFrameworkinIFRSStandards''.ThisdocumentupdatessomereferencestopreviousversionsoftheConceptualFrameworkinIFRSStandards,theiraccompanyingdocumentsandIFRSPracticeStatements.
• IFRS 3 “BusinessCombinations”(amendments):DefinitionofaBusiness(effectiveforannualperiodsbeginningonorafter1January2020).Theamendmentsnarrowandclarifythedefinitionofabusiness.Theyalsopermitasimplifiedassessmentofwhetheranacquiredsetofactivitiesandassetsisagroupofassetsratherthanabusiness.Theamendeddefinitionemphasisesthattheoutputofabusinessistoprovidegoodsandservicestocustomers,whereasthepreviousdefinitionfocusedonreturnsintheformofdividends,lowercostsorothereconomicbenefitstoinvestorsandothers.Inadditiontoamendingthewordingofthedefinition,theBoardhasprovidedsupplementaryguidance.Distinguishingbetweenabusinessandagroupofassetsisimportantbecauseanacquirerrecognisesgoodwillonlywhenacquiringabusiness.
• IAS1andIAS8(amendments):DefinitionofMaterial(effectiveforannualperiodsbeginningonorafter1January2020).Theamendmentsclarifyandalign thedefinitionof 'material'andprovideguidance tohelp improveconsistency in theapplicationofthatconceptwheneveritisusedinIFRSStandards.Theamendmentsincludedefinitionguidancethatuntilnowhas featuredelsewhere in IFRSStandards. Inaddition, theexplanationsaccompanying thedefinitionhavebeenimproved.Finally,theamendmentsensurethatthedefinitionofmaterialisconsistentacrossallIFRSStandards.
Olddefinition:Omissionsormisstatementsof itemsarematerial if theycould, individuallyorcollectively, influencetheeconomicdecisionsthatusersmakeonthebasisofthefinancialstatements(IAS1PresentationofFinancialStatements).
Newdefinition:Informationismaterialifomitting,misstatingorobscuringitcouldreasonablybeexpectedtoinfluencethedecisionsthattheprimaryusersofgeneralpurposefinancialstatementsmakeonthebasisofthosefinancialstatements,whichprovidefinancialinformationaboutaspecificreportingentity.
Annual Report & Financial Statements '1854
NOTES TO THE FINANCIAL STATEMENTSfortheyearended31December2018
4. Significant accounting policies (continued)
• IFRS10(Amendments)andIAS28(Amendments)''SaleorContributionofAssetsbetweenanInvestoranditsAssociateorJointVenture''(effectivedatepostponedindefinitely).TheamendmentsaddressanacknowledgedinconsistencybetweentherequirementsinIFRS10andthoseinIAS28,indealingwiththesaleorcontributionofassetsbetweenaninvestoranditsassociateorjointventure.Themainconsequenceoftheamendmentsisthatafullgainorlossisrecognisedwhenatransactioninvolvesabusiness(asdefinedinIFRS3).Apartialgainorlossisrecognisedwhenatransactioninvolvesassetsthatdonotconstituteabusiness.InDecember2015,theIASBpostponedtheeffectivedateofthisamendmentindefinitelypendingtheoutcomeofitsresearchprojectontheequitymethodofaccounting.
TheBoardofDirectorsexpectsthattheadoptionofthesestandardsorinterpretationsinfutureperiodswillnothaveamaterialeffectontheconsolidatedfinancialstatementsoftheGroup.
Basis of consolidation
i. Business combinationsBusinesscombinationsareaccountedforusingtheacquisitionmethodasattheacquisitiondate,whichisthedateonwhichcontrolistransferredtotheGroup.Controlisthepowertogovernthefinancialandoperatingpoliciesofanentitysoastoobtainbenefitsfromitsactivities.Inassessingcontrol,theGrouptakesintoconsiderationpotentialvotingrightsthatcurrentlyareexercisable.
TheGroupmeasuresgoodwillattheacquisitiondateas:•thefairvalueoftheconsiderationtransferred;plus•therecognisedamountofanynon-controllinginterestsintheacquiree;plus•ifthebusinesscombinationisachievedinstages,thefairvalueofthepre-existingequityinterestintheacquiree;less•thenetrecognisedamount(generallyfairvalue)oftheidentifiableassetsacquiredandliabilitiesassumed.
Whentheexcessisnegative,abargainpurchasegainisrecognisedimmediatelyinprofitorloss.
Theconsiderationtransferreddoesnotincludeamountsrelatedtothesettlementofpre-existingrelationships.Suchamountsgenerallyarerecognisedinprofitorloss.
Transactionscosts,otherthanthoseassociatedwiththeissueofdebtorequitysecurities,thattheGroupincursinconnectionwithabusinesscombinationareexpensedasincurred.
ii. Acquisitions of non-controlling interestsAcquisitions of non-controlling interests are accounted for as transactions with owners in their capacity as owners andthereforenogoodwillisrecognisedasaresult.Adjustmentstonon-controllinginterestsarisingfromtransactionsthatdonotinvolvethelossofcontrolarebasedonaproportionateamountofthenetassetsofthesubsidiary.
Annual Report & Financial Statements '18 55
NOTES TO THE FINANCIAL STATEMENTSfortheyearended31December2018
4. Significant accounting policies (continued)
iii. SubsidiariesSubsidiaries are entities controlled by theGroup. Control existswhere theGroup is exposed, or has rights, to variablereturnsfromitsinvolvementwiththeinvesteeandhastheabilitytoaffectthosereturnsthroughitspowerovertheinvestee.The financial statements of subsidiaries are included in the consolidated financial statements from the date that controlcommencesuntilthedatethatcontrolceases.
Wherenecessary,adjustmentsaremadetothefinancialstatementsofsubsidiariestobringtheminlinewiththeaccountingpoliciesoftheGroup.
iv. Loss of controlOnthelossofcontrol,theGroupde-recognisestheassetsandliabilitiesofthesubsidiary,anynon-controllinginterestsandtheothercomponentsofequityrelatedtothesubsidiary.Anysurplusordeficitarisingonthelossofcontrolisrecognisedinprofitorloss.IftheGroupretainsanyinterestintheprevioussubsidiary,thensuchinterestismeasuredatfairvalueatthedatethatcontrolislost.Subsequently,itisaccountedforasanequity-accountedinvesteeorasanavailable-for-salefinancialassetdependingonthelevelofinfluenceretained.
v. Investments in associates and jointly controlled entities (equity-accounted investees)AssociatesarethoseentitiesinwhichtheGrouphassignificantinfluencebutnocontrolorjointcontrol.Significantinfluenceisthepowertoparticipateinthefinancialandoperatingpolicydecisionsoftheinvestee.Investmentsinassociatesareinitiallyrecognisedatcost,whichincludestransactionscosts,andareaccountedforusingtheequitymethod.
The resultsandassetsand liabilitiesofassociatesare incorporated in theseconsolidatedfinancial statementsusing theequitymethodofaccounting,exceptwhen the investment isclassifiedasheld forsale, inwhichcase it isaccounted forinaccordancewith IFRS5Non-currentAssetsHeld forSaleandDiscontinuedOperations.Under theequitymethod,aninvestment inanassociate is initially recognised in the consolidatedstatementof financial positionat costandadjustedthereaftertorecognisetheGroup'sshareoftheprofitorlossandothercomprehensiveincomeoftheassociate.WhentheGroup'sshareoflossesofanassociateexceedstheGroup'sinterestinthatassociate(whichincludesanylong-termintereststhat,insubstance,formpartoftheGroup'snetinvestmentintheassociate),theGroupdiscontinuesrecognisingitsshareoffurtherlosses.AdditionallossesarerecognisedonlytotheextentthattheGrouphasincurredlegalorconstructiveobligationsormadepaymentsonbehalfoftheassociate.
Anyexcessof thecostofacquisitionover theGroup'sshareof thenet fairvalueof the identifiableassets, liabilitiesandcontingentliabilitiesofanassociaterecognisedatthedateofacquisitionisrecognisedasgoodwill,whichisincludedwithinthecarryingamountoftheinvestment.AnyexcessoftheGroup'sshareofthenetfairvalueoftheidentifiableassets,liabilitiesandcontingentliabilitiesoverthecostofacquisition,afterreassessment,isrecognisedimmediatelyinprofitorloss.
TherequirementsofIAS39areappliedtodeterminewhetheritisnecessarytorecogniseanyimpairmentlosswithrespecttotheGroup'sinvestmentinanassociate.Whennecessary,theentirecarryingamountoftheinvestment(includinggoodwill)istestedforimpairmentinaccordancewithIAS36ImpairmentofAssetsasasingleassetbycomparingitsrecoverableamount(higherofvalueinuseandfairvaluelesscoststosell)withitscarryingamount.Anyimpairmentlossrecognisedformspartofthecarryingamountoftheinvestment.AnyreversalofthatimpairmentlossisrecognisedinaccordancewithIAS36totheextentthattherecoverableamountoftheinvestmentsubsequentlyincreases.
Annual Report & Financial Statements '1856
4. Significant accounting policies (continued)
Whenagroupentity transactswith itsassociate,profitsand lossesresultingfromthetransactionswith theassociatearerecognisedintheGroup'sconsolidatedfinancialstatementsonlytotheextentofinterestsintheassociatethatarenotrelatedtotheGroup.
vi. Transactions eliminated on consolidationIntra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions,areeliminated inpreparing theconsolidatedfinancial statements.Unrealisedgainsarising from transactionswithequity-accountedinvesteesareeliminatedagainsttheinvestmenttotheextentoftheGroup’sinterestintheinvestee.Unrealisedlossesareeliminatedinthesamewayasunrealisedgains,butonlytotheextentthatthereisnoevidenceofimpairment.
Property, plant and equipment
i. Recognition and measurementLandiscarriedatfairvalue,basedonvaluationsbyexternalindependentvaluers,lesssubsequentdepreciationforbuildings.Revaluationsarecarriedouteveryfiveyearssothatthecarryingamountdoesnotdiffermateriallyfromthatwhichwouldbedeterminedusingfairvalueatthereportingdate.Allotherproperty,plantandequipment,includingthevassilikoportarestatedathistoricalcostlessaccumulateddepreciationandanyaccumulatedimpairmentlosses.
Increasesinthecarryingamountarisingonrevaluationofpropertyplantandequipmentarecreditedtoothercomprehensiveincome.Decreasesthatoffsetpreviousincreasesofthesameassetarechargedagainstthatreserve;allotherdecreasesarechargedtothestatementofcomprehensiveincome.Eachyearthedifferencebetweendepreciationbasedontherevaluedcarryingamountoftheasset(thedepreciationchargedtothestatementofcomprehensiveincome)anddepreciationbasedontheasset'soriginalcostistransferredfromfairvaluereservestoretainedearnings.
Propertiesunderconstructionarecarriedatcost,lessanyrecognisedimpairmentloss.CostincludesprofessionalfeesandborrowingcostscapitalisedinaccordancewiththeGroup'saccountingpolicy.Depreciationoftheseassets,onthesamebasisasotherpropertyassets,commenceswhentheassetsarereadyfortheirintendeduse.
ii. Reclassification to investment propertyWhentheuseofapropertychangesfromowner-occupiedtoinvestmentproperty,thepropertyisremeasuredtofairvalueandreclassifiedasinvestmentproperty.Anygainarisingonremeasurementisrecognisedinprofitorlosstotheextentthatitreversesapreviousimpairmentlossonthespecificproperty,withanyremaininggainrecognizedinothercomprehensiveincomeandpresentedintherevaluationreserveinequity.Anylossisrecognisedimmediatelyinprofitorloss.
iii. Subsequent expenditureSubsequent expenditure is capitalised only when it is probable that the future economic benefits associated with theexpenditurewillflowtotheGroup.Ongoingrepairsandmaintenanceisexpensedasincurred.
NOTES TO THE FINANCIAL STATEMENTSfortheyearended31December2018
Annual Report & Financial Statements '18 57
4. Significant accounting policies (continued)
iv. DepreciationDepreciationisrecognisedinprofitorlossonastraight-linebasisovertheestimatedusefullivesofeachcomponent.Landisnotdepreciated.
Leasedassetsaredepreciatedovertheshorteroftheleasetermandtheirusefullives,unlessitisreasonablycertainthattheGroupwillobtainownershipbytheendoftheleaseterm.
Itemsoftheproperty,plantandequipmentaredepreciatedfromthedatethattheyareinstalledandarereadyforuse,orinrespectofinternallyconstructedassets,fromthedatethattheassetsarecompletedandarereadyforuse.
Theestimatedusefullivesareasfollows: Buildings 20-50years VassilikoPort 50years(termoflease) Machinery,plantandequipment 4-25years
Non-current assets held for sale
Non-currentassetsanddisposalgroupsareclassifiedasheldforsaleiftheircarryingamountwillberecoveredthroughasaletransactionratherthanthroughcontinuinguse.Thisconditionisregardedasmetonlywhenthesaleishighlyprobableandtheasset(ordisposalgroup)isavailableforimmediatesaleinitspresentcondition.Managementmustbecommittedtothesale,whichshouldbeexpectedtoqualifyforrecognitionasacompletedsalewithinoneyearfromthedateofclassification.
WhentheGroupiscommittedtoasaleplaninvolvinglossofcontrolofasubsidiary,alloftheassetsandliabilitiesofthatsubsidiaryareclassifiedasheldforsalewhenthecriteriadescribedabovearemet,regardlessofwhethertheGroupwillretainanon-controllinginterestinitsformersubsidiaryafterthesale.
Non-currentassets(anddisposalgroups)classifiedasheldforsalearemeasuredattheloweroftheassetspreviouscarryingamountandfairvaluelesscoststosell.Anyimpairmentlossonadisposalgroupisallocatedfirsttogoodwill,andthentotheremainingassetsandliabilitiesonaproratabasis,exceptthatnolossisallocatedtoinventories,financialassets,deferredtaxassets,employeebenefitassets,investmentpropertyorbiologicalassets,whichcontinuetobemeasuredinaccordancewiththeGroup'sotheraccountingpolicies.Impairmentlossesoninitialclassificationasheldforsaleorheldfordistributionandsubsequentgainsandlossesonremeasurementarerecognisedinprofitorloss.
Onceclassifiedasheldforsale,intangibleassetsandproperty,plantandequipmentarenolongeramortisedordepreciated,andanyequity-accountedinvesteeisnolongerequityaccounted.
NOTES TO THE FINANCIAL STATEMENTSfortheyearended31December2018
Annual Report & Financial Statements '1858
4. Significant accounting policies (continued)
Intangible assets
i. GoodwillAllbusinesscombinationsareaccountedforbyapplying theacquisitionmethod.Goodwill representsamountsarisingonacquisitionofsubsidiariesandassociates.Goodwillrepresentsthedifferencebetweenthecostoftheacquisitionandthefairvalueofthenetidentifiableassetsoftheacquiredundertakingatthedateofacquisition.
Whentheexcessisnegative,abargainpurchasegainisrecognisedimmediatelyinprofitorloss.
Goodwillismeasuredatcostlessanyaccumulatedimpairmentlosses.Goodwillisallocatedtocash-generatingunitsandistestedannuallyforimpairment(note16).Goodwillonacquisitionofassociatesisincludedininvestmentsinassociates.
ii. Other intangible assetsOtherintangibleassetsthatareacquiredbytheGroupandhavefiniteusefullivesaremeasuredatcostlessaccumulatedamortisationandaccumulatedimpairmentlosses.
Expenditureon internallygeneratedgoodwillandbrands is recognised in thestatementofcomprehensive incomeasanexpenseasincurred.
iii. Subsequent expenditureSubsequentexpenditureonintangibleassetsiscapitalisedonlywhenitincreasesthefutureeconomicbenefitsembodiedinthespecificassettowhichitrelates.Allotherexpenditureisexpensedasincurred.
iv. AmortisationAmortisationischargedtoprofitorlossonastraight-linebasisovertheestimatedusefullivesofintangibleassetsunlesssuchlivesareindefinite.Goodwillandintangibleassetswithanindefiniteusefullifearesystematicallytestedforimpairmentateachreportingdate.Otherintangibleassetsareamortisedfromthedatetheyareavailableforuse.Theestimatedusefullivesareasfollows:
Computersoftware 3years Leaseholdproperty 33years
Investments
i. Investments in equity securitiesEquityfinancial instrumentsheldbytheGroupareclassifiedasbeingavailable-for-saleandarerecognisedinitiallyatfairvalueplusanydirectlyattributabletransactioncosts,withanyresultedgainorlossbeingrecogniseddirectlyinequity,exceptforimpairmentlossesand,inthecaseofmonetaryitemssuchasdebtsecurities,foreignexchangegainsandlosses.Whentheseinvestmentsarede-recognised,thecumulativegainorlosspreviouslyrecogniseddirectlyinequityisrecognisedinthestatementofcomprehensiveincome.Wheretheseinvestmentsareinterest-bearing,interestcalculatedusingtheeffectiveinterestmethodisrecognisedinthestatementofcomprehensiveincome.
Thefairvalueoffinancialinstrumentsclassifiedasheldfortradingandavailable-for-saleistheirquotedbidpriceattheyear-enddate.
NOTES TO THE FINANCIAL STATEMENTSfortheyearended31December2018
Annual Report & Financial Statements '18 59
4. Significant accounting policies (continued)
Financialinstrumentsclassifiedasheldfortradingoravailable-for-saleinvestmentsarerecognised/de-recognisedbytheGrouponthedateitcommitstopurchase/selltheinvestments.Securitiesheld-to-maturityarerecognised/de-recognisedonthedaytheyaretransferredto/bytheGroup.
Financial instruments designated as available-for-sale are included in non-current assets, unless management has theexpressedintentionofholdingtheinvestmentforlessthan12monthsfromthereportingdate.
ii. Investment propertyInvestmentpropertiesarepropertieswhichareheldeithertoearnrentalincome,orforcapitalappreciation,orforboth,butnotforsaleintheordinarycourseofbusiness,orusedfortheproductionorsupplyofgoodsorservices,orforadministrativepurposes.Investmentpropertiesarecarriedatfairvaluelesscosttosell,representingopenmarketvaluedeterminedannuallybyexternalvaluers.Anexternal,independentvaluer,havinganappropriaterecognisedprofessionalqualificationandrecentexperience in the locationandcategoryofpropertybeingvalued,values theportfolioat regular intervals.The fairvaluesarebasedonmarketvalues,beingtheestimatedamountforwhichapropertycouldbeexchangedonthedateofvaluationbetweenawillingbuyerandawillingsellerinanarm’slengthtransactionafterpropermarketingwhereinthepartieshadeachactedknowledgeably,prudentlyandwithoutcompulsion.
Anygainorlossarisingfromachangeinfairvalueisrecognisedinprofitorloss.RentalincomefrominvestmentpropertyisaccountedforasdescribedinaccountingpolicyforRevenue.
Whenan itemof property, plant and equipment is transferred to investment property following a change in its use, anydifferencesarisingatthedateoftransferbetweenthecarryingamountoftheitemimmediatelypriortotransferanditsfairvalueisrecogniseddirectlyinequity,ifitisagain.Upondisposaloftheitemthegainistransferredtoretainedearnings.Anylossarisinginthismannerisrecognisedimmediatelyinthestatementofcomprehensiveincome.
If an investment property becomesowner-occupied, it is reclassifiedas property, plant andequipment and its fair valueatthedateofreclassificationbecomesitscostforaccountingpurposesofsubsequentrecording.WhentheGroupbeginsto redevelop an existing investment property for continued future use as investment property, the property remains aninvestmentproperty,whichismeasuredbasedonfairvaluemodel,andisnotreclassifiedasproperty,plantandequipmentduringtheredevelopment.
Cash flow hedgesWhenaderivativeisdesignatedasacashflowhedginginstrument,theeffectiveportionofchangesinthefairvalueofthederivative is recognized inothercomprehensive incomeandaccumulated in thehedging reserve.Any ineffectiveportionofchangesinthefairvalueofthederivativeisrecognizedimmediatelyinprofitorloss.Theamountaccumulatedinequityisretainedinothercomprehensiveincomeandreclassifiedtoprofitorlossinthesameperiodorperiodsduringwhichthehedged itemaffectsprofitor loss. If thehedging instrumentno longermeetsthecriteria forhedgeaccounting,expiresorissold,terminatedorexercised,orthedesignationisrevoked,thenhedgeaccountingisdiscontinuedprospectively.Iftheforecasttransactionisnolongerexpectedtooccur,thentheamountaccumulatedinequityisreclassifiedtoprofitorloss.
NOTES TO THE FINANCIAL STATEMENTSfortheyearended31December2018
Annual Report & Financial Statements '1860
4. Significant accounting policies (continued)
Trade and other receivablesTrade receivables are initially measured at fair value, and are subsequently measured at amortised cost using theeffectiveinterestratemethod.Appropriateallowancesforestimatedirrecoverableamountsarerecognisedinstatementofcomprehensiveincomewhenthereisobjectiveevidencethattheassetisimpaired.Theallowancerecognisedismeasuredasthedifferencebetweentheasset'scarryingamountandthepresentvalueofestimatedfuturecashflowsdiscountedattheeffectiveinterestratecomputedatinitialrecognition.
InventoriesInventoriesaremeasuredatthelowerofcostandnetrealisablevalue.Netrealisablevalueistheestimatedsellingpriceintheordinarycourseofbusiness,lesstheestimatedcostsofcompletionandsellingexpenses.
Thecostofrawmaterials,sparepartsandotherconsumablesisbasedontheaveragecostandincludesexpenditureincurredinacquiringtheinventoriesandbringingthemtotheirexistinglocationandcondition.Inthecaseofmanufacturedinventoriesandworkinprogress,costincludesanappropriateshareofproductionoverheadsbasedonnormaloperatingcapacity.
Cash and cash equivalentsCashandcashequivalentscomprisecash inhandandatbankandcalldeposits.Bankoverdrafts thatarerepayableondemandandformanintegralpartoftheGroup’scashmanagementareincludedasacomponentofcashandcashequivalentsforthepurposeofthestatementofcashflows.
Impairment of non-financial assetsThecarryingamountsoftheGroup’sassets,otherthaninvestmentproperty,inventoriesanddeferredtaxassets,arereviewedateachreportingdatetodeterminewhetherthereisanyindicationofimpairment.Ifanysuchindicationexists,theasset’srecoverableamountisestimated.
Forgoodwill,assetsthathaveanindefiniteusefullifeandintangibleassetsthatarenotyetavailableforuse,therecoverableamountisestimatedateachyearenddate.
Animpairmentlossisrecognisedwheneverthecarryingamountofanassetoritscash-generatingunitexceedsitsrecoverableamount.Impairmentlossesarerecognizedintheprofitorloss.
Impairment lossesrecognisedinrespectofcash-generatingunitsareallocatedfirsttoreducethecarryingamountofanygoodwillallocatedtocash-generatingunits(groupofunits)andthen,toreducethecarryingamountoftheotherassetsintheunit(groupofunits)onaproratabasis.
Whenadeclineinthefairvalueofanavailable-for-salefinancialassethasbeenrecogniseddirectlyinequityandthereisobjectiveevidencethattheassetisimpaired,thecumulativelossthathadbeenrecogniseddirectlyinequityisrecognisedin profit or loss even though the financial asset has not beende-recognised.Theamount of the cumulative loss that isrecognisedinthestatementofcomprehensiveincomeisthedifferencebetweentheacquisitioncostandcurrentfairvalue,lessanyimpairmentlossonthatfinancialassetpreviouslyrecognisedinthestatementofcomprehensiveincome.
NOTES TO THE FINANCIAL STATEMENTSfortheyearended31December2018
Annual Report & Financial Statements '18 61
4. Significant accounting policies (continued)
Interest-bearing borrowingsInterest-bearingborrowingsarerecognisedinitiallyatfairvalueplusanydirectattributabletransactioncosts.Subsequentlytheyaremeasuredatamortisedcostusingtheeffectiveinterestmethod.
Employee benefits
i. Defined contribution plansAdefinedcontributionplanisapost-employmentbenefitplanunderwhichanentitypaysfixedcontributionsintoaseparateentityandhasnolegalorconstructiveobligationtopayfurtheramounts.Obligationsforcontributionstodefinedcontributionplans are recognised as an employee benefit expense in profit or loss in the periods duringwhich related services arerenderedbyemployees.Prepaidcontributionsarerecognisedasanassettotheextentthatacashrefundorareductioninfuturepaymentsisavailable.Contributionstoadefinedcontributionplanthatareduemorethan12monthsaftertheendoftheperiodinwhichtheemployeesrendertheservicearediscountedtotheirpresentvalue.
ii. Termination benefitsTerminationbenefitsarerecognisedasanexpensewhentheGroupisdemonstrablycommitted,withoutrealisticpossibilityofwithdrawal, toa formal detailedplan toeither terminateemploymentbefore thenormal retirementdate, or toprovidetermination benefits as a result of an offermade to encourage voluntary redundancy.Termination benefits for voluntaryredundanciesarerecognisedasanexpenseiftheGrouphasmadeanofferofvoluntaryredundancy,itisprobablethattheofferwillbeaccepted,andthenumberofacceptancescanbeestimatedreliably.Ifbenefitsarepayablemorethan12monthsafterthereportingdate,thentheyarediscountedtotheirpresentvalue.
ProvisionsAprovisionisrecognisedwhentheGrouphasapresentlegalorconstructiveobligationasaresultofapastevent,anditisprobablethatanoutflowofeconomicbenefitswillberequiredtosettletheobligationandareliableestimateoftheamountcanbemade.Iftheeffectismaterial,provisionsaredeterminedbydiscountingtheexpectedfuturecashflowsatapre-taxratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyand,whereappropriate,therisksspecifictotheliability.
Trade and other payablesTradeandotherpayablesarepresentedatthenominalvalueoutstandingattheyearenddate.
Revenue
TheGroup has initially applied IFRS15 from 1 January 2018. Information about Group’s accounting policies relating tocontractswithcustomersisprovidedinNote3.ThereisnosignificantimpactonthefinancialstatementsfromtheapplicationofIFRS15.
i. Goods soldRevenuefromthesaleofgoodsinthecourseofordinaryactivitiesismeasuredatthefairvalueoftheconsiderationreceivedorreceivable,netofreturns,tradediscountsandvolumerebates.
Revenuefromthesaleofgoodsisrecognisedinprofitorlosswhenthesignificantrisksandrewardsofownershiphavebeentransferredtothebuyer.Norevenueisrecognisediftherearesignificantuncertaintiesregardingrecoveryoftheconsiderationdue,associatedcostsorthepossiblereturnofgoods.
NOTES TO THE FINANCIAL STATEMENTSfortheyearended31December2018
Annual Report & Financial Statements '1862
4. Significant accounting policies (continued)
ii. Rental incomeRentalincomefrominvestmentpropertyisrecognisedinprofitorlossonastraight-linebasisoverthetermofthelease.iii. Government grantsGovernmentgrantsarerecognisedinthestatementoffinancialpositioninitiallyasdeferredincomewhenthereisreasonableassurancethatitwillbereceivedandthattheGroupwillcomplywiththeconditionsattachedtoit.GrantsthatcompensatetheGroupforexpensesincurredarerecognisedasrevenueinprofitorlossonasystematicbasisinthesameperiodsinwhichtheexpensesareincurred.GrantsthatcompensatetheGroupforthecostofanassetareamortisedonasystematicbasisusingthestraight-linemethodovertheexpectedusefullifeoftherespectiveasset.
iv. Finance incomeFinanceincomeincludesinterestincomewhichisrecognisedusingtheeffectiveinterestmethod.
v. Dividend incomeDividendincomeisrecognisedinthestatementofcomprehensiveincomeonthedatetheentity’srighttoreceivepaymentsisestablished,whichinthecaseofquotedsecuritiesisusuallytheex-dividenddate.
Expenses
i. Operating lease paymentsRentalspayableunderoperatingleasesarechargedtothestatementofcomprehensiveincomeonastraight-linebasisoverthe termof therelevant lease.Benefitsreceivedandreceivableasan incentive toenter intoanoperating leasearealsospreadonastraight-linebasisovertheleaseterm.
ii. Financing costsFinancingcostscompriseinterestexpenseonborrowingscalculatedusingtheeffectiveinterestratemethod,interestreceivableonfundsinvested,dividendincome,foreignexchangegainsandlosses,andgainsandlossesonhedginginstrumentsthatarerecognisedinthestatementofcomprehensiveincome.
iii. Foreign currency transactions
Functional currenciesItemsincludedinthefinancialstatementsofeachGroupentityaremeasuredusingthecurrencyoftheprimaryeconomicenvironmentinwhicheachentityoperates('thefunctionalcurrency').
Transactions and balancesForeign currency transactions are translated into respective functional currencies of theGroup companies using theexchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from thesettlementofsuchtransactionsandfromthetranslationat thereportingdateexchangeratesofmonetaryassetsandliabilitiesdenominatedinforeigncurrenciesarerecognizedinprofitorloss.Non-monetaryassetsandliabilitiesthataremeasuredatfairvalueinaforeigncurrencyaretranslatedintothefunctionalcurrencyattheexchangeratewhenthefairvalueisdetermined.
NOTES TO THE FINANCIAL STATEMENTSfortheyearended31December2018
Annual Report & Financial Statements '18 63
4. Significant accounting policies (continued)
Tax expenseTaxexpenseonthestatementofcomprehensiveincomefortheyearcomprisescurrentanddeferredtax.Taxexpenseisrecognisedinprofitorloss,excepttotheextentthatitrelatestoitemsrecogniseddirectlyinothercomprehensiveincome.
Currenttaxistheexpectedtaxpayableorreceivableonthetaxableincomeorlossfortheyear,usingtheapplicabletaxratesenactedorsubstantiallyenactedatthereportingdate,andanyadjustmenttotaxpayableinrespectofpreviousyears.
Deferredtaxisrecognizedondifferencesbetweenthecarryingamountsofassetsandliabilitiesinthefinancialstatementsandthecorrespondingtaxbasesusedinthecomputationoftaxableprofit,andisaccountedforusingthestatementoffinancialpositionliabilitymethod.Deferredtaxliabilitiesaregenerallyrecognizedforalltaxabletemporarydifferencesanddeferredtaxassetsarerecognizedtotheextentthatitisprobablethattaxableprofitswillbeavailableagainstwhichdeductibletemporarydifferencescanbeutilized.Suchassetsandliabilitiesarenotrecognizedifthetemporarydifferencearisesfromgoodwillorfromtheinitialrecognition(otherthaninabusinesscombination)ofotherassetsandliabilitiesinatransactionthataffectsneitherthetaxableprofitnortheaccountingprofit.
Share capitalOrdinarysharesareclassifiedasequity.
DividendsDividenddistributiontotheCompany'sshareholdersisrecognisedintheCompany'sfinancialstatementsintheyearinwhichtheyareapprovedbytheCompany'sshareholders.
ComparativesWherenecessary,comparativefigureshavebeenadjustedtoconformtochangesinpresentationinthecurrentyear.
NOTES TO THE FINANCIAL STATEMENTSfortheyearended31December2018
Annual Report & Financial Statements '1864
NOTES TO THE FINANCIAL STATEMENTSfortheyearended31December2018
6. Revenue
5. Operating segments
Following an assessment to identify operating segments, the Company has identified asmain segment that of cementoperation.OtheractivitiesthatgiverisetoincomeandexpensesareonlyincidentaltothemainoperationoftheCompanyorthevalueofeithertheirassetsorincomearebelowthequantitativethresholdsofIFRS8toformseparatereportableoperatingsegmentsseparatelyorintheiraggregatevalue.
7. Other operating income
8. Operating profit before financing costs
Group CompanyRevenueanalysis: 2018 2017 2018 2017
€000 €000 €000 €000
Cementproducts 97.811 102.201 97.811 102.201Other 115 266 115 266
97.926 102.467 97.926 102.467
Group Company2018 2017 2018 2017 €000 €000 €000 €000
IncomefromVassilikoPort 787 870 787 870 Lossondisposalofproperty,plantandequipment (30) (4) (30) (4)Other 220 205 220 205
977 1.071 977 1.071
Group Company2018 2017 2018 2017
Thisisstatedaftercharging: €000 €000 €000 €000
Staffcosts(note9) 10.704 10.588 10.704 10.588Directorsremunerationasdirectors 258 246 258 246 Directorsremunerationasexecutives 413 233 413 233 Depreciationofproperty,plantandequipment 14.081 13.773 14.081 13.773Amortisationofintangibleassets 28 15 28 15 Independentauditors'remuneration 55 55 52 52
Annual Report & Financial Statements '18 65
NOTES TO THE FINANCIAL STATEMENTSfortheyearended31December2018
9. Staff Costs
10. Net finance income/(cost)
Group Company2018 2017 2018 2017
€000 €000 €000 €000
Wagesandsalaries 9.169 9.118 9.169 9.118
Socialinsurancecontributions 669 654 669 654
Providentandmedicalfundcontributions(note34) 518 459 518 459
Othercontributions 348 357 348 357
10.704 10.588 10.704 10.588
Averagenumberofemployees 243 238 243 238
Group Company
2018 2017 2018 2017
€000 €000 €000 €000
Interestincome 198 - 198 -Netforeignexchangedifferences 428 130 428 130
Financeincome 626 130 626 130
Interestexpense (542) (569) (542) (569)Financeexpense (542) (569) (542) (569)
Netfinanceincome/(cost) 84 (439) 84 (439)
Interestincomeisearnedonbankdepositsheldincurrentandshorttermnoticeaccounts.Theinterestrateontheabovedepositsisvariable.Interestexpenserelatestoloaninterestchargesaswellasinterestchargesonoverdraftaccounts.
11. Net (loss)/ profit from investing activities Group Company
2018 2017 2018 2017
€000 €000 €000 €000
Dividendincome 5 3 310 297
Changeinfairvalueofavailable-for-salefinancialassets (14) 56 (14) 56 Changeinfairvalueofinvestmentproperty 986 711 1.051 665 Rentalofinvestmentproperty 69 74 69 74 (Loss)/Gainondisposalofinvestmentproperty (1.749) 104 (1.749) 104
(703) 948 (333) 1.196
Annual Report & Financial Statements '1866
NOTES TO THE FINANCIAL STATEMENTSfortheyearended31December2018
12. Taxation
Group CompanyRecognised in profit or loss 2018 2017 2018 2017
€000 €000 €000 €000
Analysis of charge in the year
Incometaxonprofitsoftheyear 1.000 1.311 1.000 1.311Specialcontributiontothedefencefund 61 2 61 2 Shareoftaxfromassociate 99 (7) - -Deferredtax (note27) 1.710 2.076 1.715 2.071
2.870 3.382 2.776 3.384
Recognised in other comprehensive income
Deferredtaxonrevaluationofproperty 1.246 (389) 1.246 (389)
TheGroupissubjecttoincometaxat12,5%. Group Company
2018 2017 2018 2017 Reconciliation of tax based on taxable income and tax based on accounting profits
€000 €000 €000 €000
Accountingprofitbeforetax 18.592 23.255 18.136 23.007
Taxcalculatedattheapplicabletaxrates 2.324 2.907 2.267 2.876Taxeffectofexpensesnotdeductiblefortaxpurposes 1.800 1.864 1.800 1.895Taxeffectofallowancesandincomenotsubjecttotax (3.124) (3.207) (3.067) (3.207)Taxeffectoftaxlossesbroughtforward - (253) - (253)Specialcontributiontothedefencefund 61 2 61 2 Prioryeartax - - - -Deferredtax 1.710 2.076 1.715 2.071Shareoftaxfromassociates 99 (7) - -Taxchargefortheyear 2.870 3.382 2.776 3.384
13. Earnings per share
The calculation of earnings per sharewas based on the profit attributable to ordinary shareholders of €15.722.000(2017:€19.873.000)andtheweightedaveragenumberofordinarysharesoutstandingduringtheyearof71.935.947(2017:71.935.947).
ThecalculationofearningspershareintheCompanyStatementofComprehensiveIncomewasbasedontheprofitfortheyearof€15.360.000(2017:€19.623.000).
Annual Report & Financial Statements '18 67
NOTES TO THE FINANCIAL STATEMENTSfortheyearended31December2018
14. Property, plant and equipment
GroupLand and buildings
Vassiliko port
Plant and equipment Total
€000 €000 €000 €000
Cost
Balanceat1January2017 75.586 24.085 253.155 352.826
Acquisitions 10.117 15 6.210 16.342
Revaluationofassets (290) - - (290)
Disposals - - (1.266) (1.266)
Balanceat31December2017 85.413 24.100 258.099 367.612
Balanceat1January2018 85.413 24.100 258.099 367.612
Acquisitions 2.598 - 3.299 5.897
Revaluationofassets (1.509) - - (1.509)
Transfertoinvestmentproperty (1.787) - - (1.787)Transferfrominvestmentproperty 999 - - 999 Disposals (196) - (55) (251)
Balanceat31December2018 85.518 24.100 261.343 370.961
DepreciationBalanceat1January2017 22.988 8.165 83.834 114.987Chargefortheyearonhistoricalcost 1.028 937 10.162 12.127
Additionalchargeonrevaluedamounts 1.646 - - 1.646Disposals - - (1.240) (1.240)
Balanceat31December2017 25.662 9.102 92.756 127.520
Balanceat1January2018 25.662 9.102 92.756 127.520 Chargefortheyearonhistoricalcost 1.853 492 10.577 12.922 Additionalchargeonrevaluedamounts 1.159 446 - 1.605 Disposals - - (43) (43)Balanceat31December2018 28.674 10.040 103.290 142.004
Carrying amountsAt1January2017 52.598 15.920 169.321 237.839At31December2017 59.751 14.998 165.343 240.092
At1January2018 59.751 14.998 165.343 240.092 At31December2018 56.844 14.060 158.053 228.957
Annual Report & Financial Statements '1868
NOTES TO THE FINANCIAL STATEMENTSfortheyearended31December2018
14. Property, plant and equipment (continued)
CompanyLand and buildings
Vassiliko port
Plant and equipment Total
€000 €000 €000 €000
Cost
Balanceat1January2017 75.586 24.085 253.155 352.826
Acquisitions 10.117 15 6.210 16.342
Revaluationofassets (290) - - (290)
Disposals - - (1.266) (1.266)Balanceat31December2017 85.413 24.100 258.099 367.612
Balanceat1January2018 85.413 24.100 258.099 367.612 Acquisitions 2.598 - 3.299 5.897 Revaluationofassets (1.509) - - (1.509)Transfertoinvestmentproperty (1.787) - - (1.787)Transferfrominvestmentproperty 999 - - 999 Disposals (196) - (55) (251)Balanceat31December2018 85.518 24.100 261.343 370.961
DepreciationBalanceat1January2017 22.988 8.165 83.834 114.987
Chargefortheyearonhistoricalcost 1.028 937 10.162 12.127
Additionalchargeonrevaluedamounts 1.646 - - 1.646Disposals - - (1.240) (1.240)Balanceat31December2017 25.662 9.102 92.756 127.520
Balanceat1January2018 25.662 9.102 92.756 127.520 Chargefortheyearonhistoricalcost 1.853 492 10.577 12.922 Additionalchargeonrevaluedamounts 1.159 446 - 1.605 Disposals - - (43) (43)Balanceat31December2018 28.674 10.040 103.290 142.004
Carrying amountsAt1January2017 52.598 15.920 169.321 237.839At31December2017 59.751 14.998 165.343 240.092
At1January2018 59.751 14.998 165.343 240.092 At31December2018 56.844 14.060 158.053 228.957
ThefairvaluemeasurementfortheLandhasbeencategorizedasaLevel3.
Plantandequipmentunderconstructionasat31December2018was€2.488.000(2017:€13.231.000).
Annual Report & Financial Statements '18 69
NOTES TO THE FINANCIAL STATEMENTSfortheyearended31December2018
15. Investment property
Group Company2018 2017 2018 2017 €000 €000 €000 €000
Balanceat1January 9.964 9.259 9.684 9.025Transferfromproperty,plantandequipment 1.787 - 1.787 -Transfertoproperty,plantandequipment (999) - (999) -
Transferfromassetsclassifiedasheldforsale - 450 - 450 Changeinfairvalue 986 711 1.051 665 Disposals (3.239) (456) (3.239) (456)
Balanceat31December 8.499 9.964 8.284 9.684
Thecarryingamountofinvestmentpropertyisthefairvalueofthepropertyasdeterminedbyanindependentvaluerhavinganappropriaterecognisedprofessionalqualificationandrecentexperienceinthelocationandcategoryofthepropertybeingvalued.FairvaluesweredeterminedhavingregardtorecentmarkettransactionsforsimilarpropertiesinthesamelocationastheGroup’sinvestmentproperty.ThelastrevaluationofinvestmentpropertywasperformedinDecember2018.
Investmentpropertycomprisesanumberofcommercialpropertiesthatareleasedtothirdpartiesor landheldforcapitalappreciation.
ThefairvaluemeasurementforalltheinvestmentpropertieshasbeencategorizedasaLevel3.
Valuation techniqueForinvestmentpropertythecomparablesalesapproachwasused.
Significant Unobservable InputsSalescomparisonapproachofinvestmentpropertiestakesintoconsiderationsthelocationandsizeoftheplot,thebuildingcoefficientandlegalframeworkaswellasthemarketdataatthevaluationdate.
14. Property, plant and equipment (continued)
ThecarryingamountofVassilikoPortconsistsofthenetbookvalueofthecapitalisedcostoftheimprovementsincurredbytheCompanythroughtheyears.TheCyprusPortsAuthority,whichaccordingtotheCyprusPortsAuthorityLawistheowneroftheport,leasedittotheCompanyforaperiodof50yearsasfrom1January1984.
Arevaluationexerciseforlandwasperformedinrelationto2017byindependentprofessionalvaluers.
Bank loans of €23.062.000 (2017: €30.969.000) are secured by €25.500.000 mortgages on land and buildings and€25.500.000fixedchargesonplantandmachinery.
Annual Report & Financial Statements '1870
16. Intangible assets
Group Goodwill Software Total€000 €000 €000
CostBalanceat1January2017 12.328 94 12.422
Acquisitions - 59 59
Balanceat31December2017 12.328 153 12.481
Balanceat1January2018 12.328 153 12.481
Balanceat31December2018 12.328 153 12.481
Amortisation and impairment charge
Balanceat1January2017 - 53 53
Amortisationfortheyear - 15 15
Balanceat31December2017 - 68 68
Balanceat1January2018 - 68 68
Amortisationfortheyear - 28 28
Balanceat31December2018 - 96 96
Carrying amounts
At1January2017 12.328 41 12.369At31December2017 12.328 85 12.413
At1January2018 12.328 85 12.413
At31December2018 12.328 57 12.385
NOTES TO THE FINANCIAL STATEMENTSfortheyearended31December2018
Annual Report & Financial Statements '18 71
18. Investments in subsidiaries Ownership
2018 2017 €000 €000
Balanceat1January - -Balanceat31December - -
VenusBetonLtd-Cyprus - -CCCAggregatesLtd-Cyprus - -
- -
NOTES TO THE FINANCIAL STATEMENTSfortheyearended31December2018
17. Group entities
Company Goodwill Software Total€000 €000 €000
Cost
Balanceat1January2017 12.328 94 12.422
Acquisitions - 59 59
Balanceat31December2017 12.328 153 12.481
Balanceat1January2018 12.328 153 12.481
Balanceat31December2018 12.328 153 12.481
Amortisation and impairment charge
Balanceat1January2017 - 53 53
Amortisationfortheyear - 15 15
Balanceat31December2017 - 68 68
Balanceat1January2018 - 68 68
Amortisationfortheyear - 28 28
Balanceat31December2018 - 96 96
Carrying amountsAt1January2017 12.328 41 12.369At31December2017 12.328 85 12.413
At1January2018 12.328 85 12.413
At31December2018 12.328 57 12.385
OwnershipName and country of incorporation Principal Activity 2018 2017
VenusBetonLtd-Cyprus Dormantcompany 51,0% 51,0%CCCAggregatesLtd-Cyprus Dormantcompany 51,0% 51,0%
16. Intangible assets (continued)
Annual Report & Financial Statements '1872
NOTES TO THE FINANCIAL STATEMENTSfortheyearended31December2018
19. Investments in equity-accounted investees
OwnershipName and country of incorporation Principal Activity 2018 2017
LatomioPyrgonLtd-Cyprus Aggregatesquarry 30% 30%Enerco-EnergyRecoveryLtd-Cyprus Wastetoenergy 50% 50%LatomiaLatourosLtd-Cyprus Aggregatesquarry 50% 50%
2018 2017 €000 €000
Balanceat1January 3.828 3.622Additions 169 -Shareofprofitfromequity-accountedinvestees 830 500 Shareoftaxfromequity-accountedinvestees (99) -Dividendsfromequity-accountedinvestees (305) (294)Balanceat31December 4.423 3.828
LatomioPyrgonLtd-Cyprus 394 393 Enerco-EnergyRecoveryLtd-Cyprus 1.060 940 LatomiaLatourosLtd-Cyprus 2.969 2.495
4.423 3.828
IntheCompany'sstatementoffinancialposition,theinvestmentsinassociatesarestatedatcost:
2018 2017 €000 €000
Balanceat1January 3.330 3.330Additions 169 -Balanceat31December 3.499 3.330
TheGroupprovidedcorporateguaranteestobanksforloansheldbyequity-accountedinvestees.Asat31December2018theseamountedto€2.684.000(2017:€2.630.000).
Thefollowingtablesummarizesthefinancialinformationoftheequityaccountinginvesteesasincludedinitsownfinancialstatementsadjustedforfairvalueadjustmentsatacquisitionsanddifferencesinaccountingpolicies.ThetablealsoreconcilesthethesummarisedfinancialinformationtothecarryingamountoftheGroup’sinterestinequityaccountedinvestees.
Annual Report & Financial Statements '18 73
NOTES TO THE FINANCIAL STATEMENTSfortheyearended31December2018
20. Financial Assets at Fair Value through Other Comprehensive Income (Available for sale -2017)
21. Inventories
Group Company
2018 2017 2018 2017
€000 €000 €000 €000
At1January 200 144 200 144
Changeinfairvalue (14) 56 (14) 56
At31December 186 200 186 200
Valuation Valuation
2018 2017 2018 2017
€000 €000 €000 €000
Non-current investments
Equitysecuritiesatfairvaluethroughothercomprehensiveincome 186 200 186 200
Group Company
2018 2017 2018 2017
€000 €000 €000 €000
Rawmaterialsandworkinprogress 3.387 2.698 3.387 2.698
Finishedgoods 8.266 5.218 8.266 5.218
Fuelstocks 2.434 5.405 2.434 5.405Sparepartsandconsumables 11.158 10.675 11.158 10.675
25.245 23.996 25.245 23.996
In2018,inventoriesof€70.944.000(2017:€71.576.000)wererecognisedasasexpenseduringtheyearandincludedincostofsales.
Latomio Pyrgon Ltd - Cyprus
Enerco - Energy Recovery Ltd -
Cyprus
Latomia Latouros Ltd -
Cyprus
€000 €000 €000 Noncurrentassets 1.703 1.582 9.185
Currentassets 1.023 1.116 3.565
Noncurrentliabilities 894 450 3.914
Currentliabilities 3.234 128 1.930
Netassets(100%) (1.402) 2.120 6.906
Group’sshareofnetassets (421) 1.060 3.453
Revenue 1.898 3.322 3.856
Profitfromcontinuedoperations 2 850 609
Othercomprehensiveincome - - 18
Total comprehensive income 2 850 627
19. Investments in equity-accounted investees (continued)
Annual Report & Financial Statements '1874
NOTES TO THE FINANCIAL STATEMENTSfortheyearended31December2018
22. Trade and other receivables
23. Assets classified as held for sale
Group Company2018 2017 2018 2017 €000 €000 €000 €000
Tradereceivables 7.508 7.638 7.508 7.638
Amountowedbysubsidiarycompanies(note30) - - 527 523
Amountowedbyassociatecompanies(note30) (72) 99 (72) 99
Amountowedbyrelatedcompanies - 10 - 10 Otherreceivablesandprepayments 304 43 304 43
7.740 7.790 8.267 8.313Lessimpairment (1.378) (1.390) (1.396) (1.408)
6.362 6.400 6.871 6.905
Impairment movement
At1January 1.390 1.646 1.408 1.664
Accrueddiscounts (12) (256) (12) (256)
At31December 1.378 1.390 1.396 1.408
TheGroup'shistoricalexperience incollectionofaccounts receivable fallswithin the recordedallowances.Due to thesefactors,managementbelievesthatnoadditionalcreditriskbeyondamountsprovidedforcollectionslossesisinherentintheCompany'stradereceivables.
InformationabouttheGroup'sexposuretocreditandmarketrisksfortradeandotherreceivables,isincludedinnote36.
TheeffectofinitiallyapplyingIFRS9intheGroup'sfinancialinstrumentsisdescribedinNote3.DuetothetransitionmethodchoseninapplyingIFRS9,comparativeinformationhasnotbeenrestatedtoreflectthenewrequirements.
Group Company2018 2017 2018 2017 €000 €000 €000 €000
Balanceat1January - 450 - 450
Transfertoinvestmentproperty - (450) - (450)
Balanceat31December - - - -
Assetsclassifiedasheldforsaleincludelandvaluedin2017at€450.000thatwasnolongerrequiredfortheactivitiesoftheGroupandhasbeenclassifiedasassetsheldforsale.Thiswastransferredtoinvestmentpropertyasitwasnotforeseentobesoldduringthenexttwelvemonths.
Annual Report & Financial Statements '18 75
NOTES TO THE FINANCIAL STATEMENTSfortheyearended31December2018
24. Cash and cash equivalents
25. Capital and reserves
Group Company2018 2017 2018 2017 €000 €000 €000 €000
Cashandbankbalances 259 (27) 259 (27)Cashandcashequivalents 259 (27) 259 (27)
Cashandcashequivalentsinthestatementofcashflows 259 (27) 259 (27)
Share capital 2018 2017
No. of shares No.ofshares
Authorised:
Ordinarysharesof€0,43each 72.000.000 72.000.000
2018 2017 2018 2017
No. of shares No.ofshares €000 €000
Allotted,calledupandfullypaid:
Ordinarysharesof€0,43each 71.935.947 71.935.947 30.932 30.932
Reserves
Revaluation reserveRevaluationreservecomprisesthecumulativenetchangeinthefairvalueoflandandbuildingsandVassilikoport.Whenrevaluedlandorbuildingsaresold,theportionoftherevaluationreservethatrelatestothatasset,andthatiseffectivelyrealised,istransferreddirectlytoretainedearnings.
Cash flow hedges reserveCash flow hedge reserve represents the accumulated gains and losses arising on the changes in the fair value of thederivativesrecognizedinothercomprehensiveincome.
Annual Report & Financial Statements '1876
NOTES TO THE FINANCIAL STATEMENTSfortheyearended31December2018
26. Interest bearing loans and borrowings
27. Deferred taxation
Group Company2018 2017 2018 2017
€000 €000 €000 €000Non-current liabilitiesSecuredbankloans 15.155 23.062 15.155 23.062
Current liabilitiesCurrentportionofsecuredbankloans 7.907 7.907 7.907 7.907
Analysisofmaturityofdebt:Withinoneyearorondemand 7.907 7.907 7.907 7.907Betweenoneandtwoyears 7.907 7.907 7.907 7.907
Betweentwoandfiveyears 7.248 15.155 7.248 15.155
Afterfiveyears - - - -
23.062 30.969 23.062 30.969
Thebankloansaresecuredasfollows:-BymortgageagainstimmovablepropertyoftheCompanyfor€25.500.000(2017:€25.500.000).-FixedchargeontheCompany'sfinancedplantandmachineryfor€25.500.000(2017:€25.500.000).
Weighted average effective interest rateTherateofinterestpayableontheloansasat31December2018wasfixedwithaninterestrateswapagreementuntilApril2019at1,19%.At31December2018,theprevailingrateofinterestfortheseloanswasonaverage1,19%(2017:1,19%).
Group Company
2018 2017 2018 2017
€000 €000 €000 €000
Acceleratedcapitalallowances 14.180 12.367 14.180 12.367
Revaluationofproperties 8.406 7.263 8.406 7.258
22.586 19.630 22.586 19.625
2018 2017 2018 2017
€000 €000 €000 €000
At1January 19.630 17.943 19.625 17.943
Deferredtaxchargeinstatementofcomprehensiveincome(note12) 1.710 2.076 1.715 2.071Transfertorevaluationreserve 1.246 (389) 1.246 (389)
At31December 22.586 19.630 22.586 19.625
Annual Report & Financial Statements '18 77
NOTES TO THE FINANCIAL STATEMENTSfortheyearended31December2018
28. Provisions for liabilities and charges
29. Trade and other payables
30. Related parties
i. Transactions with related companies
TheCompanyhasenteredintoagreementswiththefollowingrelatedparties:
• WithHellenicMiningPublicCompanyLimited(commonshareholderwiththeGroup)fortheprovisionofofficefacilitiesandotherrelatedadministrativeandtechnicalservicesonquarryingactivitiesatanannualfeeof€24.000.Thedurationoftheagreementisforatwo-yearperiod,commencingon1July2018andendingon30June2020.
• WithHellenicSecretarialServicesLtd(commonshareholderwiththeGroup)fortheprovisionofadministrativeandsecretarialservicestotheCompanyatanannualfeeof€138.000.Thedurationoftheagreementisforathreeyearperiod,commencingon1July2016andendingon30June2019.
• WithCCCSecretarialLimited(commonshareholderwiththeGroup)fortheprovisionofcivilengineeringconsultationservicesatanannualfeeof€120.000renewedforanothertwelvemonthsuntil31August2019.
Group Company
Non-current Non-current2018 2017 2018 2017 €000 €000 €000 €000
Provisionsforlitigationandclaims 300 300 300 300
Group Company2018 2017 2018 2017 €000 €000 €000 €000
CurrentTradepayables 5.151 5.241 5.098 5.188Amountsowedtorelatedcompanies 78 34 78 34 Otherpayables 1.566 1.756 1.566 1.756Cashflowhedgeliability/(asset) - (254) - (254)Accruedinterest 115 152 115 152
Dividend 109 109 109 109
7.019 7.038 6.966 6.985
Annual Report & Financial Statements '1878
NOTES TO THE FINANCIAL STATEMENTSfortheyearended31December2018
30. Related parties (continued)
ThetransactionsbetweentheGroupandtherelatedcompanies,includingtheaboveagreementswereasfollows:
Sales Purchases2018 2017 2018 2017 €000 €000 €000 €000
HellenicMiningGroup - 2 363 278 HeidelbergCement - - 3.413 8.393KEOPlc - - 10 8 TheCyprusCementPublicCompanyLtd - - 130 120 Enerco-EnergyRecoveryLtd 903 1.411 1.453 1.362
903 1.413 5.369 10.161
ii. Τransactions with key management personnelInadditiontosalaries,theGroupalsocontribυtestotheProvidendFundandMedicalFundwhicharedefinedcontributionsplans(note34).Keymanagementpersonnelcompensation,includingtotalemployercontributionsfor2018was€956.000(2017:€916.000).
iii. Balances with related companiesThebalancesbetweentheGroupandtherelatedpartieswereasfollows:
Group2018 2017 €000 €000
Amounts due to related partiesHellenicMiningGroup 72 21 C.C.CSecretarialLtd - 12 KEOPlc 6 1
78 34
TheabovebalancesrelatetotradingactivitiesbetweentheGroupandtherespectiveparties.
iv. Balances with equity-accounted investees Group Company
2018 2017 2018 2017 €000 €000 €000 €000
Balances due from/(to) equity-accounted investees
Enerco-EnergyRecoveryLtd(note22) (72) (70) (72) (70)LatourosQuarriesLtd(note22) - 169 - 169
(72) 99 (72) 99
Theabovebalancesrelatetotradingactivitiesanddividendsreceivable.
Annual Report & Financial Statements '18 79
NOTES TO THE FINANCIAL STATEMENTSfortheyearended31December2018
30. Related parties (continued)
31. Dividends
32. Directors’ shareholdings
v. Balances with Group entitiesThebalancesbetweentheCompanyandtheGroupentitieswereasfollows:
Company2018 2017 €000 €000
Balances due from Group entitiesVenusBetonLtd 506 504 CCCAggregatesLtd 21 19
527 523 Lessimpairment (346) (346)
181 177
2018 2017
€000 €000
Interimdividend2018at€0,03(2017:€0,08)pershare 2.158 5.755
Additionaldividend2017at€0,16(2016:€0,14)pershare 11.509 10.071
Dividendfrom2016profitsat€0,065pershare 4.676
18.343 15.826
Dividendsaresubjecttodefencefundcontributionattherateof17%whenthebeneficiaryisaphysicalpersonresidentofCyprus.
At31December2018,andfivedayspriortothedateoftheapprovalofthefinancialstatements,theproportionsofshareshelddirectlyorindirectlybytheDirectorsandtheirrelatedpartieswereasfollows:
Fully paid shares31 December 2018 6 April 2019
AntoniosAntoniou 0,0667% 0,0667%CostasKoutsos 0,0139% 0,0139%StavrosGalatariotis 0,0125% 0,0125%
0,0931% 0,0931%
At31December2018,theCompanyhadnomaterialagreementsinwhichDirectorsoftheCompany,ortheirrelatedparties,hadadirectorindirectinterest.
-
Annual Report & Financial Statements '1880
NOTES TO THE FINANCIAL STATEMENTSfortheyearended31December2018
33. Shareholders holding at least 5% of the issued share capital
35. Operating leases
34. Employee contribution schemes
TheGroupcontributestotheVassilikoCementWorksLtdEmployees’ProvidentFundandemployees’medicalschemes.Theschemesarefundedseparately.Accordingtotheseschemes,theemployeesareentitledtopaymentofcertainbenefitsuponretirement,priorterminationofserviceorsickness.ThesearedefinedcontributionschemesandthecontributionsoftheGroupfortheyearwere€518.000(2017:€459.000)andfortheCompany€518.000(2017:€459.000).
At31December2018andfivedayspriortothedateofapprovalofthefinancialstatementsthefollowingshareholderswereholdingatleast5%ofthenominalvalueoftheissuedsharecapital.
Fully paid shares31 December 2018 6 April 2019
HolyArchbishopricofCyprus-directly 19,52% 19,52%HolyArchbishopricofCyprus-indirectly(throughKEOPlc) 6,49% 6,49%CompagnieFinanciereetdeParticipations-directly 9,71% 9,71%CompagnieFinanciereetdeParticipations-indirectly(throughItalmedCementCompanyLtd) 16,27% 16,27%AnastasiosG.LeventisFoundation 5,34% 5,34%TheCyprusCementPublicCompanyLtd 25,30% 25,30%
82,63% 82,63%
Leases as lesseeNon-cancellable operating lease rentals are payable as follows:
Group Company2018 2017 2018 2017 €000 €000 €000 €000
Lessthanoneyear 21 86 21 86 Betweenoneandfiveyears 35 44 35 44 Morethanfiveyears 65 57 65 57
121 187 121 187
TheGroupleasesanumberofpropertiesunderoperatingleases.Theleasestypicallyrunforperiodsupto50years,withoptionstorenewtheleaseafterthatdate.Theleasesprovideforrentalincreasestoreflectmarketrentals.Noneoftheleasesincludecontingentrentals.
Annual Report & Financial Statements '18 81
NOTES TO THE FINANCIAL STATEMENTSfortheyearended31December2018
35. Operating leases (continued)
36. Financial instruments and risk management
TheGroupisexposedtothefollowingrisksfromitsuseoffinancialinstruments: • Marketrisk • Creditrisk • Liquidityrisk
TheGroupalsohasexposuretothefollowingotherrisks:
• Industryrisk• Operationalrisk• Environmentalrisk • Compliancerisk • Litigationrisk • Reputationrisk
ThisnotepresentsinformationabouttheGroup’sexposuretoeachoftheaboverisks,theGroup’sobjectives,policiesandprocessesformeasuringandmanagingrisk,andtheGroup’smanagementofcapital.Furtherquantitativedisclosuresareincludedthroughouttheseconsolidatedfinancialstatements. The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk managementframework. TheGroup’sriskmanagementpoliciesareestablishedtoidentifyandanalysetherisksfacedbytheGroup,tosetappropriaterisklimitsandcontrols,andtomonitorrisksandadherencetolimits.RiskmanagementpoliciesandsystemsarereviewedregularlytoreflectchangesinmarketconditionsandtheGroup’sactivities.TheGroup,throughitstrainingandmanagementstandards and procedures, aims to develop a disciplined and constructive control environment in which all employeesunderstandtheirrolesandobligations. TheGroupAuditCommitteeoverseeshowmanagementmonitorscompliancewiththeGroup'sriskmanagementproceduresandreviewstheadequacyoftheriskmanagementframeworkinrelationtotherisksfacedbytheGroup.
Leases as lessorTheGroupleasesoutitsinvestmentpropertyunderoperatingleases(seenote15).Thefutureminimumleasepaymentsundernon-cancellableleasesareasfollows:
Group Company2018 2017 2018 2017 €000 €000 €000 €000
Lessthanoneyear 90 77 90 77 Betweenoneandfiveyears 122 167 122 167 Morethanfiveyears - - - -
212 244 212 244
Duringtheyearended31December2018,€69.000wasrecognisedasnetrentalincomeinthestatementofcomprehensiveincome(2017:€74.000).
Annual Report & Financial Statements '1882
NOTES TO THE FINANCIAL STATEMENTSfortheyearended31December2018
36. Financial instruments and risk management (continued)
ThemainmonetaryfinancialassetsoftheGroupandtheCompanyarecashandcashequivalents,andtheinvestmentsinsecuritiesandtradereceivables.Themainmonetaryfinancialliabilitiesarebankoverdrafts,loansandtradepayables. Market riskMarket risk is therisk thatchanges inmarketpricessuchas foreignexchangerates, interest ratesandequitypriceswillaffecttheGroup'sincomeorthevalueofitsholdingsoffinancialinstruments.Theobjectiveofmarketriskmanagementistomanageandcontrolmarketriskexposureswithinacceptableparameterswhileoptimisingthereturn. Interest rate riskInterestrateriskresultsfromchangesinmarketinterestrates.TheGroup'smanagementmonitorstheinterestratefluctuationsonacontinuousbasisandactsaccordingly.Theinterestrateandrepaymenttermsoftheloansaredisclosedinnote26. Currency riskCurrency risk is the risk that the value of financial instrumentswill fluctuate due to changes in foreign exchange rates.Currencyrateriskariseswhenfuturecommercial transactionsandrecognisedassetsandliabilitiesaredenominatedinacurrencythatisnottheGroup’smeasurementcurrency.TheGroupisexposedtoforeignexchangeriskarisingfromvariouscurrencyexposuresprimarilywithrespecttotheUnitedStatesDollar(US$).TheGroupsmanagementmonitorstheexchangeratefluctuationsandexposureonforeigncurrencytransactionsonacontinuousbasisandactsaccordingly.
Exposuretocurrencyriskwasasfollows:
Group US$000 US$00031 December 2018 31December2017
Tradereceivables 368 48 Tradepayables - (12)
Netexposure 368 36
Company US$000 US$00031 December 2018 31December2017
Tradereceivables 368 48 Tradepayables - (12)
Netexposure 368 36
Thefollowingsignificantexchangerateswereappliedduringtheyear:
Average rate Reporting date
spot rate2018 2017 2018 2017
US$ 0,843 0,896 0,869 0,832
Credit risk Creditriskariseswhenafailurebycounterpartiestodischargetheirobligationscouldreducetheamountoffuturecashinflowsfromfinancialassetsonhandatthestatementoffinancialpositiondate.TheCompanyhasnosignificantconcentrationofcreditrisk.TheGrouphaspolicies inplacetoensurethatsalesofproductsandservicesaremadetocustomerswithanappropriatecredithistoryandmonitorsonacontinuousbasistheageingprofileofitsreceivables.TheCompanyhaspoliciestolimittheamountofcreditexposuretoanyfinancialinstitution.
Annual Report & Financial Statements '18 83
NOTES TO THE FINANCIAL STATEMENTSfortheyearended31December2018
Group Company Carrying amount Carrying amount
2018 2017 2018 2017 €000 €000 €000 €000
Tradeandotherreceivables 7.508 7.638 7.508 7.638Amountreceivablefromrelatedparties (72) 109 (72) 109 Otherreceivablesandprepayments 304 43 304 43 Investmentsdesignatedasavailableforsale 186 200 186 200 Cashandcashequivalents 259 (27) 259 (27)
Totalcreditriskexposure 8.185 7.963 8.185 7.963
Group CompanyNoofbanks
2018 2017 Noofbanks
2018 2017 Bank group based on credit ratings by Moody’s €000 €000 €000 €000
B3 2 (385) (1.072) 2 (385) (1.072)B2 1 96 - 1 96 -B1 2 (140) 16 2 (140) 16 Aa2 1 637 741 1 637 741 Bankswithoutcreditratingandcashinhand 1 51 288 1 51 288
259 (27) 259 (27)
TheGrouphaspoliciestolimittheamountofcreditexposuretoanyfinancialinstitution.ThetablebelowshowsananalysisoftheCompany'sbankdepositsbythecreditratingofthebankinwhichtheyareheld:
36. Financial instruments and risk management (continued)
Thecarryingamountoffinancialassetsrepresentingthemaximumcreditexposuretocreditriskatthereportingdatewas:
Gross carrying amount
Weighted average loss
rate
Loss allowances
Current(notpastdue) 6.442 0,8% 49
1-30dayspastdue 6 6,0% -
31-60dayspastdue 23 11,6% 3
61-90dayspastdue 13 19,1% 2
Morethan90dayspastdue 1.024 26,9% 45
7.508 99
Lossratesarebasedonactualcreditlossexperienceoverthepast3years.Theseratesaremultipliedbyscalarfactorstoreflectdifferencesbetweeneconomicconditionsduringtheperiodoverwhichthehistoricaldatahasbeencollected,currentconditionsandtheGroup’sviewofeconomicconditionsovertheexpectedlivesofthereceivables.
ThefollowingtableprovidesinformationaboutestimatedexposuretocreditriskandECL’sfortradereceivables,includingcontractassets,forindividualsandcompaniesasat31December2018:
Annual Report & Financial Statements '1884
NOTES TO THE FINANCIAL STATEMENTSfortheyearended31December2018
36. Financial instruments and risk management (continued)
Liquidity risk
Liquidityriskistheriskthatariseswhenthematurityofassetsandliabilitiesdoesnotmatch.Anunmatchedpositionpotentiallyenhancesprofitability,butcanalsoincreasetheriskoflosses.TheCompanyhasprocedureswiththeobjectofminimisingsuchlossessuchasmaintainingsufficientcashandotherhighlyliquidcurrentassetsandbyhavingavailableanadequateamountofcommittedcreditfacilities.
Thefollowingarethecontractualmaturitiesoffinancialliabilities,includingestimatedinterestpayments:
Group
Non-derivative financial liabilities
Carrying amount
Contractual cash flow
Payable on demand
and up to 6 months
6 - 12 months
1 - 2 years
2 - 5 years
More than 5 years
€000 €000 €000 €000 €000 €000 €000
31 December 2018 Securedbankloans 23.062 (23.612) (4.105) (4.081) (8.091) (7.335) -Tradeandotherpayables 7.019 (7.019) (7.019) - - - -
30.081 (30.631) (11.124) (4.081) (8.091) (7.335) -
31 December 2017 Securedbankloans 30.969 (31.847) (4.105) (4.127) (8.186) (15.429) -Tradeandotherpayables 7.038 (7.038) (7.038) - - - -
38.007 (38.885) (11.143) (4.127) (8.186) (15.429) -
Company
Non-derivative financial liabilities
Carrying amount
Contractual cash flow
Payable on demand and up to 6
months6 - 12
months1 - 2
years2 - 5
yearsMore than
5 years€000 €000 €000 €000 €000 €000 €000
31 December 2018 Securedbankloans 23.062 (23.612) (4.105) (4.081) (8.091) (7.335) -Tradeandotherpayables 6.966 (6.966) (6.966) - - - -
30.028 (30.578) (11.071) (4.081) (8.091) (7.335) -
31 December 2017 Securedbankloans 30.969 (31.847) (4.105) (4.127) (8.186) (15.429) -Tradeandotherpayables 6.985 (6.985) (6.985) - - - -
37.954 (38.832) (11.090) (4.127) (8.186) (15.429) -
Annual Report & Financial Statements '18 85
NOTES TO THE FINANCIAL STATEMENTSfortheyearended31December2018
36. Financial instruments and risk management (continued)
TheGrouphasaccesstofinancingfacilitiesof€37.162.000,ofwhich€14.000.000wereunusedattheendofthereportingperiod.TheGroupexpectstomeetitsotherobligationsfromoperatingcashflowsandproceedsfrommaturityoffinancialassets.
Industry risk TheactivitiesoftheGrouparesubjecttovariousrisksanduncertaintiesrelatedtotheconstructionindustryandtheeconomyingeneral.Theseactivitiesareinfluencedbyanumberoffactorswhichinclude,butarenotrestricted,tothefollowing:
• Nationalandinternationaleconomicandgeopoliticalfactorsandmarkets;• Thegrowthoftheconstructionandrealestatesectors;• Theimpactofwar,terroristacts,diseasesandepidemicswhicharelikelytoinfluencetourists’arrivalsontheislandof
Cyprus; • Increasesinlabourandenergycosts;• Increaseddomesticcompetitionaswellascompetitionfromneighbouringcountries.
Operational risk Operational risk is the risk that derives from any deficiencies relating to theGroup’s information technology, productionprocessesandcontrolsystemsaswellastheriskofahumanerrorandnaturaldisasters.TheGroup’ssystemsareevaluated,maintained,andupgradedcontinuously. Operational environment Cyprushasachievedaturnaroundfollowingthe2013economiccrisisastherecoverycontinuedstrengtheningforfifteenconsecutivequarters.Thebroad-basedeconomicrecoverygatheredpacein2017,withrealGDPincreasingbyanannual4,2%.Cyprus’ realGDPincreasedby3,9%year-onyear in thefirstninemonthsof2018whenseasonallyadjusted.Therecoveryhasbeenbroad-basedandhascontributedtotheincreaseofemploymentinalmostallsectorsandtothereductionofunemployment.
Therecoveryphase,accompaniedbypositivesurprises,haspassedandtheeconomyissettlingintoitsgrowthphase.Inabsoluteterms,thevalueofallfinalgoodsandservicesproduceddomesticallyatconstantprices, i.e,realGDP,stoodat€19,5billionatend2017,recoveringtothepre-crisislevel.Correspondingly,nominalGDP,thevalueofallfinalgoodsandservicesproduceddomesticallyatcurrentprices,reached€19,6billionin2017,upfrom€18,5billioninthepreviousyear.
While consumption continued to be a key recovery driver, investment demand also rebounded, particularly for largeconstructionandinfrastructureprojects.Themainfactordrivingtheincreaseinprivateconsumptionwastheriseinlabourincome,whichresultedfromthegrowthinthenumberofemployedpeople,ratherthanhigherwages.Privateconsumptionwasalsosupportedbytheflourishingtourismsectorwithpositivespillovereffectsinothersectorsoftheeconomy.
Cyprus'macroeconomicoutlook is positiveand is accompaniedbya significant increase in real grossdomestic productduringthefirstninemonthsof2018,arobustemploymentgrowthandfurtherimprovementinkeydomesticindicators.Growthisexpectedtobesupportedbyprivateconsumptionandinvestmentandbyanimprovingandrobustlabourmarket.Publicexpenditure is also expected to contribute positively to growth through higher investment expenditures. In themedium-term,theoutlookoftheeconomyispositiveandgrowthisexpectedtocontinuealbeitataslowerpacenearitslong-termaverage. TheCompany’smanagementisunabletopredictalldevelopmentswhichcouldhaveanimpactontheCypruseconomyandconsequently,whateffect,ifany,theycouldhaveonthefuturefinancialperformance,cashflowsandfinancialpositionoftheCompany. TheCompany’smanagementbelievesthatitistakingallthenecessarymeasurestomaintaintheviabilityoftheCompanyandthedevelopmentofitsbusinessinthecurrentbusinessandeconomicenvironmentandthattheCompanywillbeabletocontinueoperatingasagoingconcern.
Annual Report & Financial Statements '1886
NOTES TO THE FINANCIAL STATEMENTSfortheyearended31December2018
36. Financial instruments and risk management (continued)
Environmental risk Environmentalrisk is therisktocomplywithenvironmentalregulationsof theRepublicofCyprusandtheEU.Therisk islimitedthroughthemonitoringcontrolsappliedbytheGroup.FurthertheGroupisexposedtopricefluctuationsonemissionrights.TheGroup'spositionisthereforeconstantlymonitoredtoensurecorrectriskmanagement. Compliance risk Complianceriskistheriskoffinancialloss,includingfinesandotherpenalties,whicharisesfromnon-compliancewiththelawsandregulationsoftheRepublicofCyprusandtheEU.TheriskislimitedthroughthemonitoringcontrolsappliedbytheGroup. Litigation risk LitigationriskistheriskoffinanciallosswhicharisesfromtheinterruptionoftheGroup’soperationsoranyotherundesirablesituationthatarisesfromthepossibilityofnon-executionorviolationoflegalcontractsandconsequentlyfromlawsuits.TheriskisrestrictedthroughthecontractsusedbytheGrouptoexecuteitsoperations. Reputation TheriskoflossofreputationarisingfromthenegativepublicityrelatingtotheGroup’soperations(whethertrueorfalse)mayresultinareductionofitsclientele,reductioninrevenueandlegalcasesagainsttheGroup.Themanagementismonitoringsuchdevelopmentsthroughitssustainabledevelopmentandcorporategovernancepoliciesandprocedurestomitigatesuchrisks. Capital management TheBoard’spolicy is tomaintainastrongcapitalbasesoas tomaintain investor,creditorandmarketconfidenceandtosustainfuturedevelopmentofthebusiness.TheBoardofDirectorsmonitorsthereturnoncapitalwhichtheGroupdefinesastheamountofnetincomereturnedasapercentageoftotalshareholderequity. TheBoardseekstomaintainabalancebetweenthehigherreturnsthatmightbepossiblewithhigherlevelsofborrowingsandtheadvantagesandsecurityaffordedbyasoundcapitalposition. 38. Fair values ThefairvalueoftheinvestmentsinsecuritiesquotedontheCyprusStockExchangeisdisclosedinnote20.Thefairvalueofinvestmentpropertyisdisclosedinnote15.Thefairvaluesoftheothermonetaryassetsandliabilitiesareapproximatelythesameastheirbookvalues. 39. Events after the reporting period Therewere nomaterial events after the reporting period, until the date of the signing of the financial statementswhichaffectthefinancialstatementsasat31December2018.
Offices, Factory and Port, VassilikoΤ: +357 24 845 555, F: +357 24 332 651
Registered office and Postal Address1Α Kyriakos Matsis Avenue P.O.Box 22281 CY-1519 Nicosia - Cyprus
Τ: +357 22 458 100, F: +357 22 762 741E: [email protected], [email protected]
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