Frigoglass Annual Report 2013 Customer value
Frigoglass Annual Report 2013 Customer value 3
Contents
Who we are 5 Letter from the Chairman 6 Statement from the CEO 7 2013 Financial highlights 8 Global presence 10
Strategic priority projects 13
People 16
Innovation 18
Sustainability 22
Business review 26
Corporate governance 32 Board of Directors 36 Remuneration 39 Financial risks 40 Shareholder information 42 4 Customer value Frigoglass Annual Report 2013 Frigoglass Annual Report 2013 Customer value 5
Who we are
We are the global leader in the Ice Cold Merchandisers (ICM) market, ensuring that our customers’ products are uniquely positioned for the consumer. We are also the principal supplier of glass packaging in the high growth markets of West Africa.
Frigoglass has established relationships with the world’s leading brands in the soft drinks and alcoholic beverage sectors. Our bespoke Ice Cold Merchandisers (beverage coolers) enhance our customers’ beverage branding at the point of sale and drive consumption. At the same time, our consistent ability to innovate, particularly in environmentally friendly refrigeration solutions, enables our customers to meet their ambitious sustainability and carbon emission reduction targets.
With a truly global footprint, Frigoglass is well established in the more mature European markets while it is evolving into an emerging markets champion. We provide our customers with global coverage through our network of manufacturing facilities in 9 countries supported by a more extensive network of sales and after-sales representatives across five continents.
In our glass bottle business, we are focused on the markets of Africa and the Middle East, which are a prime spot of investment for our customer base. We create value for our customers by building on our position as leading supplier of glass bottles and complementary packaging solutions in West Africa and the Middle East. 6 Customer value Frigoglass Annual Report 2013
Letter from the Chairman
Following the global recession in 2009, Frigoglass experienced With this mandate, Torsten and his turbulence in its commercial activities but still managed to grow sales team have made substantial progress in 2013. The market headwinds have leading to 2012. This growth was driven by strong investments by our overshadowed the results somewhat, key customers that were expanding in the emerging markets of Asia but have underlined even more that a and Africa. In Europe, despite a brief recovery in 2010, we saw our fundamental transformation is needed. The completion of this transformation sales decline year-on-year thereafter, primarily in Western Europe. requires time and patience. Despite the The expansion into the United States cooler market in 2010, as well current volatility, we are convinced about as into the Glass container market in the Middle East in 2011 added the long term growth potential of the markets in which Frigoglass operates and to our top line growth but diluted our bottom line results. the future expansion plans of our key customers. Frigoglass is exceptionally In 2013, Frigoglass sales contracted well positioned to make a difference for by 10%. We did not see this coming in our customers in those markets. the first half of the year. The sudden “…we are convinced increase in volatility in the emerging On behalf of the Board, I would like about the long term markets in mid-2013 forced some of to express my appreciation for the growth potential of the our key customers to substantially ongoing support of our shareholders, reduce their capital investments in the continuing loyalty of our customers markets in which Frigoglass those markets. We experienced this and the exemplary commitment of operates and the future across both our businesses, coolers Frigoglass’ employees. and the glass containers, although the expansion plans of our glass operation proved more resilient, Haralambos (Harry) G. David key customers.” maintaining its sales in line with Chairman 2012 levels.
When we embarked on an expansion of the Frigoglass footprint, we envisioned that the market segments in which we operate would grow significantly from where they were at the time. This did not happen and on the contrary we have experienced an overall contraction, driven by a more cautious investment policy by our customers. The Board recognizes this and has given the CEO Torsten Tuerling, a clear mandate to overhaul operations, address low performing entities and establish a basis for sustainable, long term profitable growth. Frigoglass Annual Report 2013 Customer value 7
Statement from the CEO
In 2013, we made significant steps forward in what we consider to be a phase of consolidation. We have started this phase of consolidation in 2012 following a period of rapid expansion in prior years. This phase is necessary as newly entered markets have not performed “In 2013, in line with expectations. Our overall operational and financial we made significant performance had started to erode. In addition to those internal steps forward in what factors, changing market dynamics require a new approach from us. we consider a phase of consolidation.” Our Going Forward program, launched in our future positioning. Given current the fourth quarter of 2012, has provided market pressures, as a first step we the first part of our response in 2013. Our focused in 2013, on improving our ultimate goal is to enhance Customer product cost competitiveness and overall Value. Given the strong ties with our key quality performance. We launched a customers, customer value creation is the Lean Operational Excellence initiative prerequisite for a successful long term that delivered progress across all our context, early in 2014 we have announced future for Frigoglass and therewith at the productivity and quality performance the closure of our manufacturing origin to create value for our shareholders indicators. In a second phase, from 2015 operation in the USA and built significant and communities. onwards, we will launch an innovative new restructuring provisions in 2013. cooler range that will further enhance On this basis, we launched at the customer value. In 2014, we expect to complete the beginning of 2013, a new organizational current consolidation phase. We are model. With the creation of regionally Furthermore, in 2013 we strengthened determined to provide a solution to all focused business units, we will be faster our financial funding by replacing short remaining dilutive entities by year-end. and more responsive to the respective term borrowing with a €250 million 5-year We are not looking for easy fixes but market dynamics and to customer needs. bond. We were extremely pleased with the rather for fundamental solutions that We started to build new capabilities and very positive response from international enhance Customer Value and preserve processes that are required to sustain investors as they shared our confidence in long term value creation for our a global market leadership position. the long term prospects of Frigoglass. shareholders and communities. Furthermore, we added high calibre professionals to our talent bench. On this Unfortunately, market conditions I would like to thank all Frigoglass front, I am delighted that Nikos Mamoulis deteriorated in the second half of 2013, employees for their firm commitment joined the Frigoglass leadership team with the unexpected weakening of throughout a very challenging year. in the position of Chief Financial Officer, markets in Asia and Africa. Short term, I am also grateful for the support from building on his invaluable experience from we focused on all the elements within our the Board of Directors. We are all Coca-Cola Hellenic and other multinational direct control. For example, to protect excited about the long term prospects companies. Building a winning organization cash flows we reduced inventory levels by of Frigoglass. The completion of the is the starting point for the creation of a double-digit rate every single quarter in consolidation phase at the end of 2014 enhanced customer value. 2013 versus prior year. will be an important building block towards returning to profitable growth. Another focus area in 2013 relates to our More fundamentally, we have committed product offering. Significant proliferation to address the performance dilution of the Torsten Tuerling in recent years required us to clarify markets entered in recent years. In this CEO 8 Customer value Frigoglass Annual Report 2013
2013 Financial highlights
Sales Year €m 2013 522.5
2012 581.3
2011 555.2
2010 457.2
2009 346.7
EBITDA Year €m 2013 63.9
2012 67.8
2011 81.6
2010 74.2
2009 53.4
Net Profit Year €m 2013 -13.8*
2012 0*
2011 20.1
2010 20.5
2009 8.5**
* Comparable FY 2013 and 2012 Net Profit excludes restructuring charges of €17 million and €15 million respectively. ** Comparable FY 2009 Net Profit excludes one-off Special Contribution Tax (Reported FY2009 Net Profit: €3 million). Frigoglass Annual Report 2013 Customer value 9
Consolidated revenue breakdown
By geography
€m %
Western Europe 58.3 11
Eastern Europe 154.9 30
Asia / Oceania 109.4 21
Africa / Middle East 177.5 34
North America 22.4 4
By customer group
€m %
Coca-Cola 244.8 47
Breweries 152.0 29
All other 125.7 24
Bond transaction
In 2013 we successfully completed our inaugural bond transaction of €250m. The pricing and level of demand demonstrated investors’ confidence in our business model and our attractive prospects. This transaction opened up the international debt capital market for Frigoglass. It diversifies our sources of funding, extends our debt maturity profile and provides the all-important financial stability that will allow us to focus on operational improvements in our business. 10 Customer value Frigoglass Annual Report 2013
Global presence
Norway Russia UK / Ireland
Poland USA Germany China
Romania
India Turkey
Cool Operations Greece
Malaysia Europe & North America
Production plants and sales offices Greece, Russia, Romania, Turkey UAE Sales offices Indonesia Germany, Norway, Poland, UK/Ireland, USA Nigeria (Glass) Asia & Africa / Middle East Nigeria (ICM) Kenya Production plants and sales offices China, India, Indonesia, Nigeria, South Africa
Sales offices Australia, Kenya, Malaysia, UAE (Dubai)
South Glass Operations Africa Australia
Production plants and sales offices Nigeria, UAE (Dubai) Frigoglass Annual Report 2013 Customer value 11
Norway Russia UK / Ireland
Poland USA Germany China
Romania
India Turkey
Greece
Malaysia
UAE
Indonesia
Nigeria (Glass) Nigeria (ICM) Kenya
South Africa Australia 12 Customer value Frigoglass Annual Report 2013 Frigoglass Annual Report 2013 Customer value 13
Going forward
In 2012, we launched four strategic priority projects to build on our position as a leading strategic partner of global beverage brands, enhance the robustness of our business model, and improve our financial performance throughout the business cycle. 14 Customer value Frigoglass Annual Report 2013
Strategic priority projects
For 2013, we are pleased to report significant progress under each project heading. We have also reviewed our operating model towards improved customer responsiveness and higher value creation.
1. Inventory to cash With a sustained and committed focus facilities. We confirm our commitment to operational excellence we achieved to provide a solution for all remaining We have implemented a step change in substantial improvements across all dilutive entities by the end of 2014. inventory and supply chain management our quality performance indicators. For within our business and introduced world- 2014, we will accelerate the rollout of 4. Product optimization: class processes and governance practices. lean manufacturing principles targeting CRISP further, significant productivity and efficiency improvements. Since launch, we have delivered The fourth strategic priority project consistently a reduction in inventory in focuses on our long term Innovation each and every successive quarter. We 3. Address low leadership. We made good progress achieved an 18% reduction in 2013 and performing entities in 2013 towards designing the winning inventories are now 33% or €60 million future product range, called CRISP. lower than they were at the end of 2011. The significant investments we have made The product optimization concept is Inventory reduction positively contributes over the years in entering the ICM and targeted to be highly cost efficient and – to cash flow generation and remains a glass markets in the US, China and the at the same time – to enhance customer key focus for the business. The improved Middle East, have provided substantial value through pioneering innovation. supply chain management processes opportunities for growth but have not CRISP is expected to be launched in have also a positive impact on supplier always generated the expected returns. several stages from 2015 onwards. Initial integration, lead times and customer feedback from customers has been service. We will continue to rollout state- We have committed to address the very positive. We are excited about the of-the-art supply chain management performance of these recently entered opportunity that CRISP presents for our processes and have set aggressive targets markets where they are not positively business and target to grow our market for further working capital reduction by contributing to the business. The leadership position on the basis of the end of 2014. challenging market conditions of sustained innovation leadership over 2013 adversely affected our actions the long term. 2. LEAN operational excellence to turnaround the performance of our recently entered markets and we We are committed to uncompromising continued to experience a substantial quality in our products. We demand dilutive effect from these markets. excellence across all of our operating units Despite significant efforts to turnaround We are pleased to have progressed on and are progressively implementing the our US manufacturing operations, our established targets for 2013. We are lean transformation of our operations. we took the decision to cease targeting significant further progress in Our target is to enhance quality, reduce manufacturing at our Spartanburg 2014 and beyond. We are confident in the waste and improve efficiency and – facility in the first quarter of 2014. prospects for our business and believe ultimately – drive customer satisfaction. We will remain active in the US market that the progress we are making, in each by focusing on our sales and service of our four strategic priority projects, During 2013 we made significant activities and serving our customers with will benefit Frigoglass, our customers, progress in the implementation of lean innovative solutions from our global employees and shareholders, in all manufacturing principles in our plants. network of existing manufacturing market conditions. Frigoglass Annual Report 2013 Customer value 15
Winning organization – We have bundled our cooler and glass The three regional business units are Customer focused operations in Africa and the Middle East complemented by central functions operating structure into one integrated business unit. This safeguarding global efficiency and will allow us to fully capture the long- consistency in the area of Supply Chain, term growth fundamentals in Africa and Innovation, Quality as well as Marketing To better respond to a continuously leverage our unique presence in the and Global Key Account Management. evolving market and to be in a position region. Furthermore, we strengthened to capture the opportunities as they our business unit in Asia by leveraging the arise and efficiently meet our customers’ outstanding customer orientation of our needs, we have implemented a revised leadership team in India throughout Asia. customer-focused operating structure. The business unit in Europe is focusing on enhancing customer value through complementary service offerings.
Frigoglass operating structure
Board of Business Unit Directors Central Function
CEO
Human Finance Resources
ICM Africa & ICM Innovation & Quality & Supply Europe & Marketing Middle East Asia Development Engineering Chain N. America 16 Customer value Frigoglass Annual Report 2013
People
The way Going Forward Simplicity We make things simple for our Customer value is at the core of our customers, partners and colleagues. business and is central to our four At the same time we challenge strategic priority projects. The successful complexity aiming at being efficient and execution of these projects lies with cost effective. Simplicity also applies to We are excited the people that make up the business. the ways in which communicate. Our How we work as a team will define the goal is to be clear, straightforward and to win, to be different success of these priority projects and of honest. We emphasize well-defined and to create pioneering our business as a whole. (and well-understood) targets, clarity of purpose and accountability in order solutions that foster In order to ensure we achieve our goals to allow our people to prioritize and better lives. – and to motivate our team to perform – perform in a focused and efficient way. we have defined a set of behaviors that are directly linked with our corporate Reliability values and which will guide us in our Reliability and transparency in the way objective to improve each and every day. we conduct our business are of essence. Our belief is that these three behaviors We deliver on our commitments and will help us in “the way Going Forward”. trust others to do the same. In addition, we empower our people to act, to be The statement above is our purpose Speed bold and to work collaboratively with and defines what inspires and motivates Speed to market and continuous internal and external stakeholders. us daily to deliver our best performance. innovation is the essence of our This clear and concise declaration was business. We focus on precision, developed with the active participation planning and moving forward at Speed, simplicity and reliability. of our people, reflects our company a fast pace. We address problems These behaviors can and will define spirit and conveys our purpose as immediately and continuously the way we work and conduct our a team. prioritize in order to pursue what is business. They will help us maximize most important for our business and the performance of our people; ensure Excitement is the key word of ultimately for our customers. Delivering that what we do is rewarding for the our purpose statement and what the quality solutions required means individual; and, collectively, help us characterized our work throughout the engaging and developing the right build long-term customer and year. Although 2013 has been a difficult people. Our objective is to create shareholder value. year, the entire Frigoglass team has customer value by being better, worked hard and efficiently in order quicker and more effective. to maximize the performance of our We recently asked Frigoglass people business and deliver customer value. across all functions and operations about what it is that excites them in their job. The response was immediate and enthusiastic and evidenced the team’s commitment and excitement in working at Frigoglass. Selected quotes have been included throughout the report. Frigoglass Annual Report 2013 Customer value 17
“Doing my job well and seeing tangible results of my efforts.” 18 Customer value Frigoglass Annual Report 2013
Innovation
Milestones Innovation progress
Innovation has long been a key 1999 2009 product development driver and Frigoglass begins exploring Launch of Frigoglass Ecocool, 2013 was a particularly strong year environmentally-friendly the world’s first complete range of in this area. Our focus has been refrigeration technologies. eco-friendly Ice Cold Merchandisers. two-fold. On the one hand we have been focusing on further reducing our energy consumption across 2001 2010 our entire ICM fleet; a task we have Development work for three Launch of the EcoCantina and Solar successfully achieved by reducing environmentally-friendly ICM units, two complete solutions more 10% the energy consumed per refrigeration technologies powered by solar energy. ICM. On the other hand, we have CO2 (R744), HC (R290, R600a). been concentrating on developing Short-listed (top 3) in the European customized units that enhance our Business Awards for the Environment customers brand equity and visibility 2003 for the Ecocool product range. at the point of sale. At the same time, we have been in close collaboration Development of successful with our customers and third parties Retro cooler supporting the launch to develop unique ICM solutions that of the Coca-Cola premium bottle. 2012 increase cold drink availability. Production of the lightweight bottle starts in our Glass operations; the 2004 lightweight bottle uses up to 15% Placement of environmentally-friendly fewer raw materials. coolers in the venues of the Athens 2004 Olympic Games. 2013 Achieved a reduction of more 2006 than 10% in energy consumption First commercial production of CO2 throughout the Frigoglass ICM fleet. ICMs and placement at the Torino 2006 Winter Olympic Games. 2008 First place at the European Business Awards for the Environment (Greek scheme) in the “Best Environmental Product” category for the FV650 CO2. Frigoglass Annual Report 2013 Customer value 19
Technological innovation Customization
2013 was a year in which we invested Blue Moon range Stock Spirits heavily in further advancing our We developed a new sub-zero product Stock Spirits is one of the major players in technology and improving the range for one of our key brewery the spirits market in Poland. Up until 2013 performance of our entire fleet. customers: Efes in Turkey. The Blue the company did not have any coolers Moon range features unique aesthetics in the market. Following a very close During the year, we focused our efforts reflecting the Efes brand and distinctive cooperation, we helped our customer on optimizing our complete CO2 range. beer bottle. At the same time, the Blue launch a major initiative placing a large Building on our already outstanding Moon units allow the bottler to promote number of customized ICMs throughout energy efficiency results and through their products in a variety of outlets at Poland. The units feature custom-made continuous work on technological the desired sub-zero temperature. illuminated mega canopies allowing the innovation, we significantly reduced the ICMs to stand out at the point of sale and energy consumption of all our CO2 units. strongly promote the Stock Spirits brand. We continued by further improving our ICM engineering and components in order to produce coolers which require substantially less maintenance, are even more robust and as a result have a lower lifetime cost.
Following up on the above, we applied the engineering advances made in regards to low maintenance to 50% of our entire ICM fleet. We focused particularly on the ICM ranges designed for the Asian markets where the need for low maintenance coolers is greater due to weather and market conditions as well as lack of service infrastructure. We applied stress-resistant components with low failure rates, strengthening the performance of our coolers and minimizing the need for preventive maintenance. 20 Customer value Frigoglass Annual Report 2013
Innovation
Customization Joint innovation
Phone Booth cooler Unipresident Impulse Chest The Booth Cooler is a customized This highly customized cooler was In close collaboration with The Coca-Cola ICM designed to bring to life the developed exclusively for Unipresident, Company we developed the innovative Carling proposition. An exclusive a key player in the Chinese beverage Impulse Chest Cooler. This unique ICM concept with premium aesthetics, market. The distinctive tea bottle is has been specifically designed for small this unique cooler projects the Carling brought to life in the shape of the outlets and check-out areas for the brand, stands out and engages cooler, offering superior aesthetics and global retail market. The innovation lies consumers at the point of sale. enhanced branding at the retail outlets. in the unit’s merchandising flexibility and particularly easy access as it features two door openings, one at the top of the ICM and one on the front. In addition, its small size facilitates the placement in multiple locations within small outlets and throughout various check-out areas. Frigoglass Annual Report 2013 Customer value 21
“Working with people of diverse origins, who bring different experiences and values to the Frigoglass community.” 22 Customer value Frigoglass Annual Report 2013
Sustainability
Throughout 2013, we continued to make progress in our range of sustainability, innovation and efficiency projects. Our objective is to continue to reduce our impact on the environment through constantly measuring and improving what we do, continuing to innovate in our manufacturing process, reducing waste, re-using or recycling materials; and, promoting education and awareness within our business and in our society.
Each of the initiatives set out below Life Cycle Analysis environmental impact of a given product has had, and continues to have, from the design and development stage, a positive impact on our business Conducting a Life Cycle Assessment (LCA) to the manufacturing process, use of the and our environment. We are proud is a new initiative, an integral part of our product and all the way through to the of the progress we have made in 2013. sustainability strategy to identify ways in final disposal of the unit. We are committed to continue to which we can increase energy efficiency enhance and improve how we run our and continue to reduce our overall The modeling and analysis of data was business in 2014 and beyond, for the environmental impact. completed using an advanced LCA benefit of our society, our environment, program. This program provides a user our customers, our employees and In 2013 we successfully carried out our interface for the collection of data and our shareholders. first LCA for one of our most popular an LCA output calculator that can be ICM products, the FV650 unit. The used to explore variations associated assessment followed the ISO 14040 with a number of ICM models which are framework and principles and evaluated manufactured and distributed across a our product’s environmental impact variety of locations. The LCA calculator is a from “cradle-to-grave”. tool that can be used across all functions and departments in order to identify The LCA is a tool used to identify, opportunities for efficiencies throughout quantify and compare the total all stages of a product’s life cycle. Frigoglass Annual Report 2013 Customer value 23
“Facing new challenges and working as a team to tackle them.” 24 Customer value Frigoglass Annual Report 2013
Sustainability
Operations | Reducing our Supplier Collaboration environmental impact Engagement with WWF Greece
As a manufacturing business, we Frigoglass established a supplier audit Our productive collaboration with recognize the potential environmental procedure in 2011 to ensure that our WWF Greece continued for a second impact of our operating facilities. In high standards in corporate governance; consecutive year. Through the “Journey particular, we are heavy consumers human and labor rights; and, to Future City” educational workshop of energy during the manufacturing environmental protection are followed we were able to reach a total of 6,000 process. Consequently, the continuing by our suppliers. students and 150 educators in 125 reduction of carbon emissions is a key schools throughout Athens and the priority for us and at the forefront of our In 2013, we made significant progress in surrounding regions. sustainability initiatives. our supplier engagement program. We introduced a larger number of suppliers The program was originally designed Over the past number of years, into the audit scheme while also refining and established to raise awareness we have put in place a series of the performance measures covered by among students and their families of the initiatives aimed at reducing energy the audits. In the past, we have included consequences of climate change and consumption and emissions across all our largest and most important suppliers on accepted best-practices for energy of our manufacturing sites. In 2013, in the audit process. Our ultimate reduction. Educators were specifically we achieved the targeted reduction [in objective is to include all our suppliers trained to enable them to replicate the energy consumption] per standard ICM – no matter how small – and also workshops on their own at a later stage, unit produced and have set new targets progressively introduce a wider thereby increasing the program’s reach. and KPIs as part of an overall ‘climate range of criteria into our supplier change’ strategy. In addition to the assessment scorecard. positive impact on the environment, a reduction in energy consumption also reduces cost which is positive for the Company’s financial performance.
We also closely monitor our greenhouse gas emissions and have been publishing detailed data on emissions since 2010. In 2013, we completed our third Carbon Disclosure Project submission and achieved a substantial improvement in our performance score. Frigoglass Annual Report 2013 Customer value 25
Initiatives in our Best Environmental Glass operations Sustainability Initiative Award In addition to our ICM operations, we have made substantial progress in Best environmental Our highly successful sustainability initiative introducing a range of sustainability Solar ICM was initiatives in our Glass operations. recognized at the 2013 Beverage A significant improvement has been Innovation Awards the increase in the production of WINNER hosted at Drinktec lightweight bottles in 2013, which in September. accounted for approximately 25% This award scheme identifies the of all bottles manufactured and is most innovative products and expected to be above 45% in 2014. concepts in the beverage industry A lightweight bottle uses about 15% and 2013 marked the largest less glass than a standard bottle. We number of entries with more have also increased the use of cullet than 370 participations from – scraps of broken glass - to account 40 countries. In what was an for 45% of the raw material used in intensely competitive category – production in our Jebel Ali plant. and the largest award category - Cullet allows us to reduce raw material we were proud to receive consumption while also reducing the Best Environmental energy consumption during the Sustainability Initiative Award. manufacturing process. The Solar ICM is a stand-alone unit In addition to reducing raw material that operates through rechargeable consumption, we continue to make batteries powered by solar energy. efforts to re-use and re-cycle where The unit is part of our Ecocool range we can. During 2013, we recovered that uses HFC-free refrigerants and re-used 38,000 pallets and 15,000 and insulation substances. It is a frames from our customers. We are also direct result of our strategy to drive focused on reducing WIP, reusing carton environmental innovation and our trays and recycling obsolete packaging extensive know-how in the use of material. Each of these initiatives alternative power sources. contributes to waste reduction which is better for the environment and also for The Solar ICM allows beverage our bottom line. companies to enhance cold drink availability while minimizing their environmental footprint and reducing energy costs. 26 Customer value Frigoglass Annual Report 2013
Business review
ICM Europe & North America
In an uncertain market in Europe our developing in close collaboration with Sales focus in 2013 was on enhancing customer them bespoke solutions for their local and value by improving efficiency and working international brands. The result of this Western Europe €m closely with our customers to deliver joint effort was a number of ICMs designed tailor-made solutions. In North America, to enhance impulse purchases in on- and 2013 56.1 we took steps towards optimizing our off-trade channels throughout Eastern 2012 75.2 business model in order to better respond and Central Europe. Similarly, we designed 2011 100.6 to our customers’ needs in the region and a series of customized units for six core increase our competitiveness. brands of the Carlsberg Group. These 2010 72.3 unique ICMs are aimed at enhancing 2009 65.9 Europe brand equity and promoting the individual In Europe, improving our performance brands in the Russian market. Eastern Europe €m and offering better service to our customers was the driving force behind We are also proud to have worked 2013 154.9 the consolidation of some of our regional closely with one of our leading 2012 155.1 sales offices. In 2013 we established customers, Coca-Cola Hellenic (CCH) the Central Order Desk (COD) to handle on their cooler placements ahead of 2011 163.2 all European orders and serve as the Sochi Winter Olympics in Russia. 2010 131.4 a cross-border sales support from The exposure achieved through 2009 69.5 a single location at our plant in Romania. partnering with CCH at this high profile The COD allows us to improve efficiency event gave Frigoglass an exceptional North America €m and, most importantly, to respond to our opportunity to showcase its market- customers more quickly and effectively. leading coolers on a world stage. 2013 22.4 In addition, 2013 saw us reaping the 2012 19.3 benefits of consolidating our spare parts North America warehouses into our new European In a mature and relatively stable market 2011 14.3 Central Warehouse (ECW) in Bor, Czech we were able to increase sales in 2013. 2010 7.3 Republic. The ECW has enabled us to The North America market is of significant become much more reliable, efficient and importance to us as it is home to several fast in our delivery of spare parts, further of our leading customers. During the year sub-optimal, making it difficult to enhancing our service offering. we managed to grow our business with sustain our manufacturing overhead. solutions such as cassette-based systems. Consequently, after evaluating all the Increased customization was another The cassette configuration enables options open to us and consistent with area where we continued to invest during beverage companies to switch more easily our commitment to improve efficiency, the year. In close cooperation with our to either HC or CO2 units, depending we have taken the decision to customers we developed a series of on their environmental strategy, while discontinue manufacturing operations tailor-made and proprietary ICM units allowing them to service units in the field at our US facility after the year-end. that meet our customers’ individual more quickly and efficiently. Focusing on our commercial and service requirements and are aimed at promoting activities and sourcing products from our their brands at the point of sale. In this Despite this improvement in volume, global manufacturing network will allow context, we strengthened our long-term the scale of our North American us to serve our customers in the region relationship with Molson Coors manufacturing operation remained more effectively. Frigoglass Annual Report 2013 Customer value 27
“Gathering knowledge is nice but sharing it with the team is exciting.” 28 Customer value Frigoglass Annual Report 2013
Business review
Africa & Middle East
In 2013 our business in the region Our strategically located glass Sales was mainly characterized by increased manufacturing plant in Jebel Ali volatility and significantly different reinforces our well-established position Africa/Middle East €m performances in the first and second in Glass and provides us unique and half of the year for both our ICM and valuable access to the markets of the 2013 70.4 Glass operations. Despite changing Middle East, East Africa and Southeast 2012 102.7 market conditions, we continued Asia. During the year, our focus in our 2011 88.4 building our product offering and Jebel Ali glass business was to expand considerably broadened our customer our product portfolio and customer 2010 75.4 base during the year. base. We delivered against both of 2009 62.1 these objectives. We attracted new Following a strong start of the year, customers such as SABMiller Australia, Glass €m with increased sales in our Glass CCH Italy and GreenSpot in Thailand business and a solid performance in while we also invested in new business 2013 124.1 our Cool operations, we experienced opportunities by establishing a new 2012 122.4 unexpected market volatility in the segment of wine bottles in both flint second half. A slowdown in emerging and green glass. Moreover, the 2011 103.5 markets proved to be the biggest investment in lightweight bottle 2010 82.0 challenge of the year and one that technology is proving to be one of 2009 72.7 affected us signficiantly. Adverse our strongest assets as an increasing currency movements and volatile market number of our customers are shifting conditions led several of our customers their preferences to this product type. Despite these challenges, we did add to put their investments on hold and this The benefits result not only from the Pepsi as a new customer in the Middle impacted both of our business sectors lower cost but also from the enhanced East and were also successful in throughout the region. flexibility the lightweight bottle offers introducing a new unit – the FV650 CO2 as it is easier to carry and lighter to 60 Hz - into the Saudi Arabian market. At the same time, however, we were transport. Finally, by using fewer raw successful in broadening our customer materials and requiring less energy Africa and Middle East are regions with base benefitting from the rapid during the production process it strong growth fundamentals while at development of the spirits market allows our customers to reduce their the same time they represent 40% of in Nigeria. With key global players supply chain emissions and meet their our total business. With this in mind entering the market we are in the sustainability targets. and in order to consolidate our leading unique position to attract the position in the market and further newcomers as we offer beverage The market volatility and adverse enhance the efficiency of our business companies an unparalleled value currency movements also impacted model, in 2013 we combined our ICM proposition through our combined our ICM business during the year. and Glass operations in the Middle product offering. With ICM, The decline in full year ICM sales in East and Africa to form one integrated, glass, plastics and metal crowns the region reflects the combination strong business unit. The new structure manufacturing plants in Nigeria, we of reduced investments by our customers will allow us to focus more closely on are the only company able to offer our together with unfavorable currency our combined offering and benefit from customers in Africa turnkey solutions at movements most notably in the Nigerian the strong market fundamentals in the a lower cost and reduced complexity. Naira and South African Rand. years ahead. Frigoglass Annual Report 2013 Customer value 29
“Working together as a team to come up with a creative proposal: the energy and passion we feel during the brainstorming process.” 30 Customer value Frigoglass Annual Report 2013
Business review
ICM Asia
The performance in our ICM business Providing a complete offering to our Sales in Asia reflected the volatility of the customers throughout the world is broader market environment. Similar what allows us to enter and establish Asia/Oceania €m to the Africa & Middle East region, the our company in new markets. In Asia, slowdown of the emerging market we have accompanied our customers 2013 94.7 economies markedly affected our in new territories such as Vietnam and 2012 106.6 performance during the second half Cambodia, bringing along a full set of 2011 85.2 of the year. At the same time, in a services and investing in infrastructure highly competitive environment, we in order to be able to supply reliable 2010 88.8 are pleased to have added a number of and high quality logistics and after- 2009 75.3 new customers and strengthened our sales service. Meanwhile, we support position in Southeast Asia. them through our global network that enables us to provide state-of-the The unexpected slowdown and art solutions and new technologies adverse currency movements in the such as CO2. While we are helping emerging markets impacted our our partners introduce and apply full year performance. The overall environmentally-friendly technology instability affected the beverage sector in emerging markets, we are also with a number of our customers contributing to and reinforcing their reducing or putting on hold their cooler global sustainability agendas. investments in some countries in the region. Asian markets are exciting and offer compelling long-term prospects. We In this volatile and competitive market are positioned to participate in this we were successful in attracting new growth and are investing in the region customers who are also key players in both in terms of infrastructure as well the industry. We were happy to add as tailor-made product offerings for the Pepsi as a valued partner in India and regional markets and we look forward Thailand. We created value through a to strengthening and growing our complete product offering that included business in Asia. a dedicated, high quality product range developed specifically for Pepsi and the Indian and Thai markets. In addition to our competitive offering and short lead times we provided a full service and after-sales package, offering complete support to our customer in these new territories. We also maintained our position in China and were pleased to add, C’estbon, one of the leading water brands in the country to our customer portfolio during the year. Frigoglass Annual Report 2013 Customer value 31
“Nothing excites me more than a happy customer receiving extraordinary service.” 32 Customer value Frigoglass Annual Report 2013
Corporate governance
Governance framework and the Company has reviewed the size The Audit Committee evaluates the of the Board and feels that the size is internal audit reports and the availability The Board is responsible for dealing appropriate. The independent, non- of human resources and equipment of with the Company’s affairs exclusively executive Directors are able to provide the internal audit department. in the interests of the Company and the Board of Directors with independent its shareholders within the existing unbiased views and advice in its decision The Audit Committee also evaluates the regulatory framework. making, to ensure that the interest of the appropriateness of the system of internal Company, shareholders and employees control, computer system and security, The Board’s key responsibilities are: are protected, whereas the Executive as well as the reports of the external • Setting the Company’s long-term goals Director is responsible to ensure the auditors concerning the financial implementation of the strategies and statements. It also follows the procedure • Making all strategic decisions policies as resolved by the Board. of financial information and the efficient • Making available all required operation of the risk management resources for the achievement The Board has adopted an assessment system. Finally, it is burdened with the of the strategic goals process relating to its operation as task of providing its opinion to the Board well as that of its committees, that in order for it to propose to the General • Appointing senior executive takes place on a two-year basis. This Meeting the appointment of the external management assessment process will be headed by auditors. the Chairman of the Board of Directors. The Board is appointed by the Regarding the female representation on Audit Committee activities shareholders and consists of nine the board this amounts to 11%. members, eight of whom are non- i) Meetings and attendance executive and four of whom are Audit Committee The Audit Committee met on (4) four independent. The members of the Board occasions in 2013 timed to coincide are elected by the General Assembly of with the financial and reporting The Audit Committee ensures that the Shareholders and serve for a three (3) cycles of the Company. At these internal and external audits within year term. The only executive member meetings the Frigoglass Internal Audit the Company comply with statutory is the Chief Executive Officer. The Board Manager and the statutory auditors requirements and are effective and meets on a regular basis to resolve PricewaterhouseCoopers (“PwC”) had the independent. The Audit Committee also on issues including corporate policy, opportunity to discuss matters with the serves to facilitate good communication internal strategy and budget approval. Audit Committee without the presence of between the auditors and the Board any executive management. The experience of the members of the of Directors. The Audit Committee oversees the annual statutory audit Board encompasses diverse professional ii) Financial reporting backgrounds, representing a high level and the half-year statutory review as of business, international and financial well as the ongoing audit work that The Audit Committee considered a wide knowledge which is core to the setting is performed by the internal audit range of financial reporting and related of achievement, ultimately leading function of the Company. It ensures that matters in respect of the 2012 annual to the success of the Company. The all recommendations of external and financial statements and the 2013 Board is very well balanced between internal audits are implemented by the half-year financial information. In this the number of independent and non- Company’s management. respect the Audit Committee reviewed independent Directors and between any significant areas of judgment that executive and non-executive Directors, materially impacted reported results, key points of disclosure and presentation Frigoglass Annual Report 2013 Customer value 33
to ensure the adequacy, clarity and Effectiveness and reappointment Chairman completeness of the financial statements The Audit Committee has undertaken Ioannis Androutsopoulos and the financial information, and the its annual review of the qualification, non-executive/ independent content of results announcements expertise, resources and independence prior to their submission to the Board. of the external auditors and the Members The Audit Committee also considered effectiveness of the external audit reports from PwC on their audit of the Loucas Komis process by: 2012 annual and their review of the 2013 non-executive half year Board of Directors report that • Reviewing, and approving, PwC’s Doros Constantinou forms part of the statutory reporting plans for the audit of the Company’s non-executive obligations of the Company. 2012 financial statements, the terms of engagement for the audit and the Members have past employment iii) External auditors proposed audit fee. experience in either finance or
• Considering the views of Directors, accounting roles or comparable Independence senior management and the PwC experience in corporate activities. The Audit Committee is responsible for engagement partner on PwC’ s Finally Mr. Androutsopoulos fulfills the development, implementation and independence, objectivity, integrity, the prerequisites of article 37 of law monitoring of the Company’s policies on audit strategy and its relationship 3693/2008 by having proven adequate external audit. with the Company, obtained by way knowledge of accounting and auditing. of interview. As a general principle the external Internal audit auditors are excluded from consultancy • Taking into account information provided by PwC on their work and cannot be engaged by The internal audit department is an independence and quality control Frigoglass for other non-audit work independent function that ensures procedures. unless there are compelling reasons to that all operations are executing their do so. Any proposal to use the external duties in accordance with the corporate In making its recommendation to the auditors for non-audit work must be objectives, policies and procedures. In Board that PwC be reappointed for a submitted to the Audit Committee, for particular, internal audit seeks to ensure further year, the Audit Committee took approval prior to appointment. The Audit that internal financial control systems into account their tenure as auditors Committee receives annual confirmation across the Company remain robust and and considered whether there should from PwC as to their independence consistent. and objectivity within the context of be a full tender process. There were no contractual obligations restricting the applicable regulatory requirements The internal auditor acts according to Audit Committee’s choice of external and professional standards, as well as the International Standards for the auditors. management confirmation of compliance Professional Practice of Internal Auditing with the Company’s policies on the and the policies and procedures of the The members of the Audit Committee employment of former employees of Company, and reports directly to the have been appointed by the General the external auditors and the use of the Audit Committee of the Board. While Meeting as per the provisions of the law external auditors for non-audit work. for administrative issues he reports to 3693/2008 and are the following: the Chief Executive Officer and Chief Financial Officer of the company. 34 Customer value Frigoglass Annual Report 2013
Corporate governance
Human Resources The Chief Executive Officer and Members Chief Human Resources Officer shall and Remuneration Committee Torsten Tuerling normally attend meetings, except when executive (CEO) discussions are conducted concerning The role of the Human Resources matters affecting them personally. Loucas Komis and Remuneration Committee is to non-executive establish the principles governing the The Human Resources and Company’s human resources policies Panos Tabourlos Remuneration Committee met three which guide management decision- Director of Corporate Development times in 2013. making and action. The Investment Committee met twice More specifically, its duties are to: Investment Committee in 2013. • Oversee the management’s The duties of the Investment Committee succession planning policy Communication are to recommend to the Board the with shareholders • Establish the principles governing corporate development and strategy the Company’s internal citizenship and to evaluate and suggest to the Frigoglass recognises the importance of policies Board new proposals for investments effective and timely communication with and/or Company expansion according • Establish the compensation strategy shareholders and the wider investment to the defined strategy. Moreover, community. After the announcement • Submit to the Board proposals the Investment Committee is also of the quarterly and year-end results, for executive Board members’ responsible for evaluating and further details together with the remuneration suggesting to the Board opportunities consolidated financial reports and other for business development and expansion announcements can be accessed via the The Human Resources and through acquisitions and/or strategic Company’s website www.frigoglass.com. Remuneration Committee, which is partnerships. The Investment Committee The Company maintains an investor appointed by the Board, comprised of is appointed by the Board of Frigoglass relations section on its website where the following three non-executive Board and consists of four members, two of shareholders and potential investors members in 2013: them non-executive Directors. can find a description of the Company’s corporate governance, as well as the Chairman The Investment Committee, which management and shareholder structure, is appointed by the Board, in 2013 Loucas Komis financial results and press releases. comprised of the following 4 members, non-executive Frigoglass also communicates with two of which are non-executive: the investment community through its Members participation in a number of conferences Chairman Haralambos (Harry) G. David and roadshows (in Greece and abroad) non-executive Haralambos (Harry) G. David and through scheduled conference calls. non-executive Evangelos Kaloussis non-executive/ independent Frigoglass Annual Report 2013 Customer value 35
Board of Directors Management Certified auditors
(three-year term ending in 2015) Torsten Tuerling PricewaterhouseCoopers Chief Executive Officer 268 Kifissias Avenue, Haralambos (Harry) G. David 152 32 Halandri, Athens, Greece Chairman, Nikos Mamoulis non-executive member Chief Financial Officer Legal advisors
Ioannis Androutsopoulos Elias Moschonas Kyriakides-Georgopoulos, Law Firm Vice-Chairman, Chief Human Resources Officer Leonidas Georgopoulos non-executive member/ independent Panos Tabourlos Loucas Komis Director of Corporate Development Member and secretary, non-executive member Dimitris Bostanis Chief Supply Chain Officer Torsten Tuerling Chief Executive Officer, Pierre Boyer executive member Executive Director ICM Europe & North America Doros Constantinou Non-executive member Gerasimos Varvias Executive Director Glass Vassilis Fourlis Non-executive, Tom Aas independent member Executive Director ICM Asia &Africa
Evangelos Kaloussis Chief Marketing Officer Non-executive, TBA (acting Pierre Boyer) independent member
Christo Leventis Non-executive member
Alexandra Papalexopoulou Non-executive, independent member 36 Customer value Frigoglass Annual Report 2013
Board of Directors
Haralambos (Harry) G. David Ioannis K. Androutsopoulos Loucas D. Komis Chairman (non-executive) Vice-Chairman (independent, Member and Secretary (non-executive) non-executive) Haralambos (Harry) G. David serves as Mr. Loucas Komis serves as a non- non-executive Chairman of the Board, to John Androutsopoulos serves as an executive member of the Board, to which which he was elected for the first time in independent, non-executive member of he was elected for the first time in July November 2006. He has been a Member the Board, to which he was elected for 1996. of the Board of Directors of Frigoglass the first time in July 1996. since 1999. Currently, he is also Chairman of the His long career in the bottling and Board of Ideal Group S.A. and of the He graduated with a Business Degree manufacturing sectors has included Board of Hellenic Recovery & Recycling from Providence College, in the USA, positions as Technical Manager of the Corporation (HE.R.R.Co) and Vice- in 1987. His career began as a certified Hellenic Bottling Company (1969-1985), Chairman of the Federation of Hellenic investment advisor with Credit Suisse General Manager of the Industrial Food Industries (SEVT) and Member in New York. He then served in several Division of the 3E Company (1986-1994), of the Board of LARGO Ltd. During his executive positions within Leventis Chairman of the Board of Directors of career he worked for nine years in the Group Companies in Nigeria and Europe. Frigorex (1995), member of the Board appliance manufacturing sector and Today he holds a position on the Boards of Directors of 3E Company (1995) has held top management positions of A.G. Leventis (Nigeria) PLC, the and Managing Director of Frigoglass with IZOLA S.A. Ιn 1982, he joined the Nigerian Bottling Company, Cummins (1996-2001). Coca-Cola Hellenic Bottling Company West Africa, Beta Glass (Nigeria) PLC S.A. (CCHBC), where he also served and Ideal Group. He holds a degree in Electrical as an Executive Board Member and Engineering from Aachen Polytechnic remains an Advisor to the Chairman He is also a member of the General where he also completed additional since 2001. Council of the Greek Industries studies in Economics. Federation (ΣΕΒ), member of the Board He holds degrees from Athens University of the Foundation for Economic and (BSc Physics), the University of Ottawa Industrial Research (IOBE), a member of (MSc Electrical Engineering) and the Organizing Committee of the Athens McMaster University, Ontario (MBA). Classic Marathon and member of the TATE’s Africa Acquisitions Committee.
Finally, he has served on the Boards of Alpha Finance, PPC (Public Power Corporation) and Emporiki Bank (Credit Agricole). Frigoglass Annual Report 2013 Customer value 37
Torsten Tuerling Doros Constantinou Vassilios Fourlis Chief Executive Officer (executive) Member (non-executive) Member (independent, non-executive)
Torsten Tuerling serves as the Chief Doros Constantinou serves as a non- Vassilios Fourlis serves as an Executive Officer for Frigoglass as of May executive member of the Board, to independent non-executive member of 2012. which he was elected for the first time in the Board, to which he was elected for October 2011. the first time in October 2002. Prior to joining Frigoglass, he was President and CEO of Franke Kitchen Mr. Constantinou graduated from the He is the Executive Chairman of Systems Group, a global leader in its University of Piraeus in 1974 and holds Fourlis Holdings SA. He, also, serves field, with operations in 19 countries a degree in Business Administration. on the Board of Directors of Piraeus across four continents. During his He started his career in auditing with Bank SA and of Cement Titan SA. He tenure at Franke, Mr Tuerling delivered PricewaterhouseCoopers, where he holds a Master’s Degree in Economic significant result improvements worked for ten years. In 1985, Mr. Development and Regional Planning and contributed materially to the Constantinou joined the Hellenic from the University of California/ development of their international Bottling Company, where he held several Berkeley and a Master’s Degree in operations. Formerly, he served as senior financial positions. In 1996, he International Business from Boston General Manager of the Food Retail was appointed to the position of Chief University/ Brussels. Division of Carrier Commercial Financial Officer and remained in that Refrigeration EMEA, a subsidiary of position until August 2000. He was a United Technologies Corporation. He key member of the management team successfully led the integration of Linde that led the merger of the Hellenic Refrigeration, following its acquisition by Bottling Company and Coca-Cola Carrier. Beverages. In 2001, Mr. Constantinou became Managing Director of Frigoglass Torsten holds a Master’s degree in until August 2003 when he moved to Business Administration from the Coca-Cola Hellenic as Chief Executive University of Saarbrucken in Germany Officer until his departure in July 2011. and a Master of Science in Management In October 2011, Mr. Constantinou from E.M. Lyon Business School was appointed Executive Director of in France. Frigoglass until May 2012. 38 Customer value Frigoglass Annual Report 2013
Board of Directors
Evangelos Kaloussis Christos Leventis Alexandra Papalexopoulou Member (independent, non-executive) Member (non-executive) Member (independent, non-executive)
Evangelos Kaloussis serves as an Christos Leventis serves as a non- Alexandra Papalexopoulou serves as an independent, non-executive member of executive member of the Board, to independent non-executive member of the Board, to which he was elected for which he was elected for the first time in the Board, to which she was elected for the first time in June 2006. October 2002. the first time in April 2003.
He is Chairman of Nestlé Hellas. He Mr. Leventis is currently a director of a She is an Executive Director at Titan is also Chairman of the Federation of family investment office in London. Prior Cement Group in charge of Group Hellenic Food Industries and member of to this he worked as an equity research Strategic Planning and serves on the the Board of Directors of Alpha Bank and analyst at J.P. Morgan and Credit Suisse. Boards of Directors of Titan Cement SA of Food Bank. During his professional and the National Bank of Greece. She is career he assumed top management also a member of the Board of Directors positions at the Nestlé Headquarters in of the “ALBA Graduate Business School” Switzerland, France, Nigeria and South Foundation and of the Pavlos and Africa. He holds a Master’s Degree in Alexandra Kanellopoulou Foundation. Electrical Engineering from the Federal Her professional career has included Institute of Technology in Lausanne (CH) positions with the OECD as an analyst and in Business Administration from and Booz Allen Hamilton as an associate. the University of Lausanne as well as a graduate degree from IMD. She holds a BA degree in Economics from Swarthmore College and an MBA from INSEAD. Frigoglass Annual Report 2013 Customer value 39
Remuneration
Salary Stock options The salary structure is determined by Members of the Executive Committee an internal grading system, reflecting and senior management are eligible to market pay practices. Salary ranges are participate in Frigoglass’ stock option determined by a number of factors, plan. Options are viewed as part of the including level of accountability, know- total remuneration package addressing how and professional experience. potential for development.
Management short-term Options are granted at a pre-determined incentive plan exercise price, vested in one-third The management short-term incentive increments each year and can be plan is based on the Management by exercised for up to ten years from the Objectives principle. The incentive date they are granted according to the plan links individual performance with plan. The terms of each plan are subject company results, aiming to increase to approval at the Annual General employee commitment, thus in turn Meeting. encouraging exceptional performance. Pension scheme All managerial level positions are Employees participate in the Company’s eligible for year-end bonuses. pension scheme in countries where it is Employee performance is appraised applicable, thereby providing a savings and compensated annually according and incentive tool. to objectives achievement. Targets are set to reflect the Company’s annual Other benefits strategy and the plan’s breakdown varies Fringe benefits are offered to employees according to the individual’s position in their home countries according within the Company. Bonus payout to grade level. These benefits range is calculated on personal objectives from company car, fuel allowance, achievement, as well as on the Company, private health care, meal allowance, function, region or operating unit mobile phone, kindergarten allowance operational targets. and others according to local market practices. 40 Customer value Frigoglass Annual Report 2013
Financial risks
Frigoglass’ global business activities 1. Market risk b. Price risk expose the company to a variety The Company is exposed to fluctuations of financial risks including foreign a. Foreign exchange risk in raw material prices. This risk is offset exchange, raw materials, credit, liquidity The Company operates globally in various ways, including increased and interest rate risks. The objective of and is exposed to foreign exchange productivity, higher sales volume leading our risk management programme is to risks. Fluctuations in exchange rates, to a positive operating leverage effect curtail potential adverse impacts on the particularly in the US Dollar, Nigerian and higher selling prices. We also hedge Company’s financial performance. Naira, South African Rand, Indian Rupee, our exposure to price risks associated Norwegian Krone, Russian Ruble and with the purchase of raw materials Risk management is the responsibility Chinese Yuan against the Euro may by using commodity futures, option of the Treasury department, which aims have an adverse impact on our financial contracts and purchase agreements with to effectively manage the financial risks performance. suppliers. of Frigoglass and all its subsidiaries, according to the policies approved by the Our subsidiaries with functional 2. Credit risk Board of Directors. Treasury identifies, currencies other than the reporting evaluates, monitors and hedges financial currency (Euro) use natural hedging to Credit risk arises from cash and cash risks alongside the Company’s operating limit their exposure to foreign currency equivalents as well as from credit units. The Board provides principles risk. Natural currency hedging can be exposure to customers, which includes for overall risk management, as well as achieved by matching, to the possible outstanding receivables and committed policies covering specific areas, such as maximum extent, revenue and expense transactions. foreign exchange, interest rate and credit cash flows in the same currency in order risks, use of financial instruments and to limit the impact of currency exchange The Company has policies in place investment of excess liquidity. Treasury rate movements. When natural hedging to ensure that sales of products and refrains from speculative transactions or cannot be achieved, the Company makes services are made to customers with transactions that are not related to the use of derivatives. an appropriate credit history. The Company’s operations. granting of credit is controlled by credit Frigoglass has investments in limits and the application of certain The Company’s financial instruments subsidiaries which operate in various terms. All subsidiaries monitor the consist mainly of bank deposits, countries. Their net financial positions creditworthiness of their debtors on an trade receivables and payables, bank are exposed to foreign translation ongoing basis with a quarterly central overdrafts, revolving credit facilities, exchange risk during the consolidation review. Appropriate provision for long term bank loans, corporate bond, to the Company’s financial statements. impairment losses is made for specific loans to/from subsidiaries, equity The Company is not substantially credit risks. At the year end, Frigoglass investments, dividends payable and exposed to this type of risk since most considered that there were no material leasing obligations. The Company may of its subsidiaries use the Euro as their credit risks that had not been covered by use derivative financial instruments in functional currency, with the exception doubtful debt provisions. order to hedge certain risks. of operations in Nigeria, India, Indonesia, Kenya, South Africa and China. No credit limits were exceeded during the reporting period and management The Treasury department may use does not expect any losses from non- forward exchange contracts in a variety performance by these counterparties. of currencies that mature within one year to mitigate foreign exchange risk, if required. Frigoglass Annual Report 2013 Customer value 41
3. Liquidity risk Capital risk management
Liquidity risk is managed by maintaining The objective in managing capital is to sufficient cash reserves and the safeguard our ability to continue as a availability of funds through adequate going concern in order to provide returns credit facilities. Due to the dynamic for shareholders and benefits for other nature of the underlying businesses, stakeholders as well as maintaining an our Treasury function aims to retain optimal capital structure. flexibility in funding by having committed credit lines. In order to sustain or amend the capital structure, Frigoglass may The Company manages liquidity risk adjust the amount of dividends paid by effective working capital and cash to shareholders, capital returned to flow management. Frigoglass monitors shareholders, new shares issued or debt expected cash flows and ensures that raised. adequate banking facilities and reserve borrowing facilities are maintained. Overall, the Company has sufficient borrowing facilities that could be utilized to fund any potential shortfall in cash resources.
4. Interest rate risk
The Company’s income and operating cash flows are not dependent on interest rate fluctuations since we do not hold any interest-bearing assets other than short-term time deposits. Exposure to interest rate risk on liabilities is limited to cash flow risk from changes in floating rates.
The Company continuously reviews interest rate trends and financing needs. Consequently, all short- and long-term bank borrowings are entered into floating rates with re-evaluation dates of less than six months. Our Corporate Bond has a fixed interest rate. 42 Customer value Frigoglass Annual Report 2013
Shareholder information
Share capital Dividend history (€ per share) 50,593,832 shares outstanding as at 31st December 2013 at Full year Amount¹ AGM date Ex-dividend date Payment date a €0.30 nominal value 2001 0.048 31 May 2002 3 Jun 2002 20 Jun 2002 2002 0.064 18 Jun 2003 22 Jul 2003 1 Aug 2003 Market of share listing 2003 0.080 21 Jun 2004 22 Jun 2004 14 Jul 2004 Athens Stock Exchange (ATHEX) 2004 0.112 10 Jun 2005 10 Jun 2005 12 Jul 2005 2005 0.160 9 Jun 2006 14 Jun 2006 21 Jun 2006 Reuters 2006 0.256 8 Jun 2007 13 Jun 2007 20 Jun 2007 FRIr.AT 2007 0.304 6 Jun 2008 10 Jun 2008 18 Jun 2008 2008 0.480* 5 Sep 2008** 5 Dec 2008 15 Dec 2008 Bloomberg 2009 0.080 14 May 2010 7 July 2010 14 July 2010 FRIGO GA * Interim dividend ** Extraordinary General Meeting Free float 56% Capital return (€ per share) Annual General Meeting
Tuesday, 27 May 2014 Full year Amount¹ AGM date Ex-dividend date Payment date
2008 0.72 5 Sep 2008 30 Oct 2008 7 Nov 2008 2011 0.13 31 May 2011 6 Sep 2011 14 Sep 2011
Notes: 1 Adjusted for the issuance of 10,090,659 new bonus shares (one bonus share for every four existing shares) implemented in September 2011.
2013 share price (€ per share)
Quarter ended High Low Close
31 Dec 5.22 5.10 5.11 30 Sep 5.59 5.26 5.47 28 Jun 5.10 5.00 5.05 28 Mar 4.44 4.24 4.35 Frigoglass Annual Report 2013 Customer value 43
Share price Frigoglass share price performance vs. ATHEX composite share price index & FTSE/ATHEX Large Cap Index Share price at 31 December 2013: €5.11 150 140 Market capitalisation 130 120
Market capitalisation at 110
31 December 2013: 100
€258.5 million 90
80
Trading Volume 70 Average daily trading 60 volume in 2013: 50
68,689 shares 01/03 02/01 03/01 03/31 05/02 05/30 06/29 07/28 08/29 09/27 10/31 12/01
Analyst coverage Frigoglass ATHEX Composite Share Price Index FTSE/ATHEX Large Cap Index Alpha Finance Nikos Katsenos Eurobank Equities Frigoglass stock price performance 2013 Katerina Zaharopoulou Euroxx Securities 10 Fotis Zeritis 9 8 Investment Bank of Greece 7 Vassilis Roumantzis 6 5 National P&K 4 Mary Psyllaki 3 Piraeus Securities 2 George Doukas 1
01/03 02/01 03/01 03/31 05/02 05/30 06/29 07/28 08/29 09/27 10/31 12/01 44 Customer value Frigoglass Annual Report 2013 Frigoglass Annual Report 2013 Customer value 45
Notes 46 Customer value Frigoglass Annual Report 2013
Contact
Contact information
Frigoglass Head Office 15, A. Metaxa Street 145 64 Kifissia Athens, Greece
T2+30 210 6165700 F2+30 210 6199097 www.frigoglass.com
Investor Relations Manager
John Stamatakos
T2+30 210 6165767 E [email protected]
Marketing Communications Manager
Venia Zafolia
T2+30 210 6165736 E [email protected] www.frigoglass.com