Frigoglass
Annual Report 2016 www.frigoglass.com Frigoglass Annual Report 2016 Frigoglass Annual Report 2016
Contents
Who we are 4 Chairman’s letter 7 CEO’s statement 8 2016 Financial highlights 10 Global presence 11
Strategic priorities 12 Customer Focus 13 Innovation Leader 16 Integrated Services 18 Quality First 20 Cost Leadership 23
People 24
Sustainability 27
Business review 31
Corporate governance 38 Board of Directors 42 Remuneration 45 Financial risks 46 Shareholder information 48
2 3 Frigoglass Annual Report 2016 Frigoglass Annual Report 2016
Who we are
Frigoglass is a strategic partner to the world’s leading beverage brands. We are one of the global leaders in the Ice Cold Merchandisers (ICM) market and the principal supplier of glass packaging in the high growth markets of West Africa.
Frigoglass has long-standing relationships With its footprint, Frigoglass is well established In our glass bottle business, we are focused with blue chip customers in the soft drinks in the more mature European markets while on the markets of Africa and the Middle East, and beverage industries. Our bespoke Ice Cold it is evolving and establishing its position in which are prime regions of investment for Merchandisers (beverage coolers) enhance emerging markets. We support our customers our customers. We aim to create value for our customers’ beverage branding and through manufacturing facilities in eight our customers by building on our position facilitate immediate beverage consumption. countries and an extensive network of sales as a leading supplier of glass bottles and At the same time, our leading innovations and after-sales representatives. complementary packaging solutions in in the field of green refrigeration enable our West Africa and the Middle East. customers to meet their sustainability and carbon emissions reduction targets.
4 5 Frigoglass Annual Report 2016 Frigoglass Annual Report 2016
Chairman’s letter
2016 was a year of progress towards our journey to build long-term sustainable value despite continued difficulties.
The world today is facing diverse challenges In 2016, the sharp devaluation of Nigeria’s “With the customer at and continued geo-political volatility. Naira and the overall challenging operating The slowdown in some of our markets, environment impacted our Glass business. the heart of our business, the substantial depreciation of several In this landscape, we remain the leading glass we strengthened our emerging currencies and the trend towards container supplier in West Africa. We focus populist politics are striking examples of an on pricing initiatives and efficiency gains to product portfolio with unpredictable environment. In these times mitigate the effect of foreign exchange rate hybrid solutions in Africa of uncertainty, we have geared up and taken fluctuations that have restrained demand for decisive steps to face the challenges and re- glass packaging and protect the business. and set the foundations energize our business. for developing appealing, Sustainability remains central to our business competitive coolers for In addition to the lingering macro-economic strategy. Early in 2016, the United Nations stress, our industry was marked in 2016 by launched 17 Sustainable Development all our regions” the finalization of the two pending mega Goals (SDGs), a ground-breaking agreement mergers between major beverage brands in that is expected to shape the sustainable the beer and soft-drinks segments. Although development agenda globally in the years to it affected last year’s customer cooler come. Many of the SDGs are already in line investments, we believe that this consolidation with Frigoglass sustainability strategy and phase represents a long-term opportunity for provide a valuable framework for further Frigoglass, due to its well-established position strengthening our business. in Europe and Africa. Frigoglass is a global brand and I am During the year, we made significant conscious of the responsibilities we have to steps in rationalizing our cost structure our shareholders, customers and employees, through optimizing our Cool business but also to our other stakeholders. On behalf manufacturing footprint, efficiency measures of the Board I would like to extend our and cost reduction initiatives. On that greatest appreciation to our shareholders front, we took the decision to discontinue for their continued support, our customers manufacturing operations in China aiming and suppliers for their unwavering loyalty to transform to a leaner organization and the people of Frigoglass for their strong and significantly improving our cost- commitment. Their support has been vital to competitiveness in Asia. With the customer our progress. at the heart of our business, we strengthened our product portfolio with hybrid solutions The Board and I are looking to strengthen in Africa and set the foundations for our company and its balance sheet during developing appealing, competitive coolers for this year, so as to face the challenging trading all our regions. All these product innovations environment as well as remain focused on follow ICOOL’s success with Coca-Cola bottlers driving sustainable value for our stakeholders. in Europe, who placed more than 90,000 coolers in the market, and the rollout of the Haralambos (Harry) G. David Smart range. Chairman
6 7 Frigoglass Annual Report 2016 Frigoglass Annual Report 2016
Statement from the CEO
The past year has been one of challenge and change for Our vision is to put customers at the heart of Through pricing initiatives in our Nigerian Strong foundations have been laid with our operations, integrate their requirements Glass business we limited the effect in regards to our commercial transformation. Frigoglass. The year was marked by the all-important capital into our products and serve them with great our operating profitability caused by the Our revamped commercial organization restructuring process, aiming to create a stable and long-term value, under the leadership of our new ICM Naira’s devaluation. will focus on strengthening partnerships, “The key strategic Chief Commercial Officer. adopting a go-to-market approach and drivers that we have put capital structure for Frigoglass. In April 2017, we reached an Despite the unfavorable macroeconomic developing commercial team capabilities agreement with an ad-hoc committee representing certain 2016 Highlights environment, we have made solid that will help us achieve our goals. in place - Customer Focus, progress on many areas, especially in the Cool business Innovation Leadership, holders of the 8.25% Senior Notes due 2018, core lending implementation of our strategy and the In addition, we will continue to differentiate Our sales in the Cool business declined by improvement of our cost competitiveness in our business through our industry leading Quality First, Winning banks and Frigoglass major shareholder to restructure 8% compared to the prior year. This decline both Cool and Glass businesses. The progress innovation, expanding our product portfolio our indebtedness. was primarily driven by the unfavorable Organization, Integrated we have made would not have been possible pipeline and offering pioneering solutions macroeconomic conditions in Russia and The challenging macroeconomic conditions without the firm commitment of our people. and best-in-class services. Services and Cost increased competition in Asia. In Western in some of the key markets we operate in, I would like to take this opportunity to thank Europe, we experienced sustained sales Leadership - will be at the persisted last year, putting pressure on each and every one of our 5,000 employees I am aware that it will be another challenging growth in double-digits reflecting increased heart of this sustained beverage consumption and, consequently, around the world for their hard work and year, but with the customer at the center demand for ICOOL from Coca-Cola bottlers on our customers’ cooler investments. In the dedication through difficult times. I would of our business, 2017 will be a year of improvement.” in the region. Our Integrated Service system Glass business, Naira’s devaluation continued also like to extend my sincere appreciation further progress. gained further ground in 2016 through the to adversely affect demand for glass products to the Board of Directors for their support, expansion of our services to more countries in Nigeria. guidance and active engagement. Nikos Mamoulis and regions in Russia. Chief Executive Officer Notwithstanding the impact of a volatile Outlook “The year has been Another highlight in 2016 was the decision economic environment and the capital to establish a new operating model in 2016 has been a very challenging year for filled with continued restructuring process, we remained focused the Asian market. In July, we announced Frigoglass, but I remain confident about the on innovation, cost leadership and efficiency product innovation.” the discontinuation of our manufacturing future of this great organization. improvement related initiatives to limit any operations in China. This development will adverse effect on our business. enable the optimization of the production The transformational capital restructuring capacity in Asia, improve the company’s fixed transaction will significantly reduce our The year has been filled with continued cost structure and strengthen its long-term outstanding debt and annual interest cost. product innovation. Particularly in Africa, competitiveness. The new capital structure and improved we piloted Hybrid cooler that is designed liquidity will allow us to focus on delivering to mitigate the impact of power outages, Glass business our strategic priorities going forward. The as it maintains low temperatures for hours Trading conditions in our core Nigeria progress that has been made in the past year without requiring an electrical power source. market were difficult, primarily driven by the will continue and will reap rewards. The key We are pleased with the positive feedback sharp devaluation of the local currency in strategic drivers that we have put in place from our customers in the continent. We also June 2016. Weakened consumer sentiment - Customer Focus, Innovation Leadership, adjusted our coolers business commercial and shrinking disposable income impacted Quality First, Winning Organization, strategy to account for the latest market beverage consumption in terms of value and Integrated Services and Cost Leadership trends and set the way forward in developing made our key customers cautious in injecting - will be at the heart of this sustained cost-competitive coolers and filling gaps in new bottles into their existing pool of bottles. improvement. our product portfolio in the mid to low priced Together with lower demand in our Dubai- market segment. Finally, we strengthened based business resulted in overall Glass sales our relationship with breweries through the declining by 10% in 2016. Smart range that was successfully rolled out in targeted countries around Europe.
8 9 Frigoglass Annual Report 2016 Frigoglass Annual Report 2016
2016 Financial highlights Global presence
Sales Consolidated revenue breakdown Cool Operations Cool Operations Glass Europe & North America Asia & Africa / Middle East Operations Year €m 2016 413.2 By geography Production plants and sales offices Production plants and sales offices Production plants and sales offices Greece, Romania, Russia India, Indonesia, South Africa Nigeria, UAE (Dubai) 2015 453.9 Sales offices Sales offices 2014 487.0 Eastern Europe Germany, Norway, Poland, Turkey, USA China, Kenya, Nigeria, UAE (Dubai) €105.7m (26%) 2013 522.5
2012 581.3 Western Europe €66.1m (16%)
Asia/Oceania EBITDA €68.3m (17%)
Year €m Africa/Middle East €168.3m (41%) Norway 2016 40.1 Russia 2015 52.8 North America €4.8m (1%) 2014 63.0 Poland USA Germany 2013 63.9 China Romania 2012 67.8 India By customer group Turkey Greece Net Profilts Kenya Year €m UAE UAE 2016 -35.3* Coca-Cola Indonesia €229.5m (56%) Nigeria (Glass) 2015 -36.5* Nigeria (ICM) 2014 -20.4* Breweries €87.6m (21%) 2013 -13.8*
2012 0* All others €96.1m (23%) South Africa
* Adjusted Net Profit excludes restructuring costs and one-off items
10 11 Frigoglass Annual Report 2016 Frigoglass Annual Report 2016
Strategic priorities Customer Focus
We are pleased to report that in 2016, we remained In Frigoglass, we keep customers at the heart of our business. relentlessly focused on our strategic priorities and continued In 2016, we made further progress in enhancing our customer creating value-adding, innovative, cold merchandising solutions focus, mainly through redefining Frigoglass ICM Commercial for our customers around the world. Vision which was built around three pillars:
Build on Optimize successful route-to-market partnerships approach
Maintain strong partnership Integrate our customers’ with our Global Accounts requirements into our and deepen relationships products and serve them with Coca-Cola, to serve with great value, while them with a differentiated Innovation & Sustainability offering in line with remain key pillars for any regional requirements. Customer new development. Focus
Enhance commercial capabilities to strengthen customer relationships
Create a strong and ambitious commercial organization and culture as enabler of our go-to-market strategy and reach our targets. Split Sales teams to Coca-Cola and other Accounts to increase focus and reflect customers’ needs.
12 13 Frigoglass Annual Report 2016 Frigoglass Annual Report 2016
Customer Focus (continued)
In the Cool business, we made changes in the In the Glass business, several customer commercial structure after taking into account collaboration initiatives implemented the recent customers’ consolidations and their throughout the year resulted in continuous investment preferences towards customized quality enhancement. Incorporating detailed coolers, at rather low cost. Changes in customer feedback into the new product the structure also reflect the intensified design process has led to product innovation, competition and the imperative to gain back as in the case of lightweight bottles which market share, profitably. have delivered both cost and environmental benefits for customers. A new ICM Chief Commercial Officer joined our leadership team early in 2016, while In addition, the integrated product offering further organizational changes were made of glass bottles and crates, has not only to secure a well-oiled commercial function. reinforced the Frigoglass Glass brand, but Frigoglass sales team is now divided in two has also allowed customers to minimize glass customer focus areas: the Coca-Cola Account breakage and reduce logistics costs. focusing on growing our market share into the Coca-Cola system, and the Market In both our Cool and Glass businesses, Development sales team, with the main customer is at the center of our organization’s objective to expand our market share in other efforts. We strive to provide our customers International Accounts and our customer base with high-quality, innovative and value-adding across all regions and channels. solutions.
A Central Marketing was formulated with the mission to ensure the right prioritization of global and local projects in line with Frigoglass strategy. Finally, Innovation & Product Development was integrated into the Commercial function, aiming to achieve faster commercialization of our pioneering solutions.
The Frigoglass Advantage is a key determinant of our positioning as the global leader in innovative, Ice- Cold Merchandising solutions. The four pillars that form it – Merchandising Strength, Sustainability Leadership, Technical Excellence and Digital Services – remained the key drivers behind every offering of pioneering and sustainable products and services.
14 15 Frigoglass Annual Report 2016 Frigoglass Annual Report 2016
Innovation Leader
Hybrid cooler Market penetration Evocool Our latest breakthrough development, The year was marked by ICOOL and Evocool, the digital cooling device was Hybrid, has created excitement to our Smart ranges commercial expansion, with developed and launched in 2016, adding customers in the emerging markets. Coca-Cola bottlers placing more than 90,000 connectivity capabilities to more than 50,000 ICOOL coolers in the European market, and ICOOL coolers in the market. In Africa, immediate consumption grows Breweries and other Key Accounts started faster than electrical power availability and ordering the new Smart coolers. Both Customers have recognized the benefits of Hybrid cooler is designed to mitigate the ICOOL and Smart ranges offer premium this digital solution that combines energy impact of power outages in the continent. aesthetics and combine the advantages optimization functionality with the latest With the use of eutectic technology, it of merchandising strength, sustainability technology of remote connectivity and maintains low temperatures for more than leadership and technical excellence (Total reduced Total Cost of Ownership (TCO), 16 hours in an environment of 40°C without Cost of Ownership), which have subsequently providing them with a pioneering cooler fleet. requiring electrical power source. generated solid demand. For our beer customers, we successfully R&D In addition, innovative solutions have performed field tests in seven countries in been developed to satisfy the increasing In our R&D lab in India, one test climatic Africa. For Coca-Cola bottlers, field tests were demand for quality coolers at competitive chamber was certified with ISO 17025, while performed in three countries in the same pricing in different markets. In 2016, in our lab in Greece, six chambers received continent. we introduced the Plus range that the same certification. incorporates lower cost options that help The Hybrid solution is available in both deliver cold-drink availability targets, It is worth mentioning that three out of these Smart and ICOOL cooler ranges, keeping as well as faster returns currently sought test climatic chambers, one in India and two their merchandizing efficiency provided by by our customers. Our innovative offering in Greece, were recognized and authorized the glass door and advanced aesthetics. in Asia was complemented with a line-up by The Coca-Cola Company for certification During power-off hours, coolers remain fully of Chest coolers and freezers, which were tests. This significant development makes our illuminated with LED lighting that boosts developed to capture placement needs in labs equivalent to internationally recognized impulse beverage sales. Also it uses HFC-free developing countries. independent labs and allows us to test new refrigerant that is preferred by customers configurations locally. In addition, it leads and aligns with their sustainability goals. to important time and cost savings in the commercialization process.
ICOOL Hybrid cooler Smart Hybrid cooler
16 17 Frigoglass Annual Report 2016 Frigoglass Annual Report 2016
Service Operating Model Integrated Services Warehouse Control Centre Frigoglass Integrated Services that were first launched in 2014, managing: • Warehousing gradually rolled out in Russia, Nigeria and other countries of • Distribution Europe and Africa in 2015, and were further expanded in 2016, • Spoke replenishment • Technicians on-site Spare Parts Distribution resulting in double digit sales growth. • CDE field maintenance • Spare parts Our new Integrated Service offering has In 2016, we made material investments in • Reporting / KPI’s covered twelve countries during the year developing people capabilities, initiating • Administration Customer (Romania, Bulgaria, Serbia, Montenegro, new processes and integrating Information • e-Archiving Kosovo, Greece, Cyprus, Poland, Russia, Technology (IT) systems. Our Service team • E2E integrated process Norway, Nigeria and Kenya), providing has been enriched by specialists, ranging Frigoglass service to more than 750,000 cold drink from highly trained technicians and IT equipment for commercial use. Specifically experts to high-caliber team leaders. The in Nigeria, after the successful pilot with a processes that we put in place include Spoke Field Services fleet of 5,000 units in part of Lagos city, we standard operating procedures manuals, Replenishment rolled out our offering in more regions in the detailed spare parts forecasting and country, servicing a fleet of 25,000 coolers. systematic field audits to secure high In the same country, we also inaugurated a quality services. Frigoglass e-Service is refurbishment center in Ibadan. In Europe, a highly sophisticated IT solution that we added logistics services in our offering allows the management and control of the Refurbishment to Serbia, Montenegro and Kosovo, while entire cycle of integrated services offered, in Russia we expanded our services to featuring industry-unique modules (asset distant regions, like Urals and the North scanning, GPS location tracker, photographs, West district. In other countries, we made e-signature, e-surveys, reporting and real significant improvements in refurbishment, time synchronization). field and logistics services, achieving a strong overall performance. Going forward, we will continue our journey capitalizing on established networks serving The successful roll out of our Integrated more regions and more customers around Services is based on the well-thought-out our refurbishment and distribution centers. design and thorough implementation of We will also continue to expand our business Regional our operating model, which puts customer by offering the complete package of our Distribution priorities at its center. It is a holistic customer Integrated Services to more customer Heavy Centers POS Outlets Field solution that includes advanced warehousing groups. (Main storage) Refurbishment In the market Services and distribution, spare parts management, refurbishment, and field services. It utilizes Medium & Light a network of heavy refurbishment centers, Refurbishment Centers regional distribution centers, medium and light refurbishment hubs, spoke storage at district level and an extensive network of filed services professionals located throughout the countries we operate in.
18 19 Frigoglass Annual Report 2016 Frigoglass Annual Report 2016
Quality First
Quality remains one of our major strategic priorities. During last year, we have taken significant steps in improving the quality of our products and services, ensuring the continuous enhancement of the Quality Management Systems.
Most of our Quality performance metrics All our ICM manufacturing operations have been considerably improved this year, are certified with ISO9001, while most of especially in our Romanian and Indian them have also received ISO14001 and operations. Overall material rejections OHSAS18001. Committed to continuous have impressively reduced by 50%, while improvement, we are preparing to adapt important key performance indicators (KPIs), to the requirements of the recently revised like the First-Time Pass Index and Product ISO9001:2015 and ISO14001:2015 to further Release Index, have improved year-on-year. elevate the overall quality of our processes, We are satisfied with this development solutions and services. and we will continue strengthening our capabilities in the Quality function. In the Service business, the systematic monitoring of field repair data with a new We have also improved internal procedures tool has led to early identification and and established regular meetings to faster response times, as well as significant review all Quality metrics and issues. In improvement of field failure rates. More the Quality Circle meeting, that takes place than 400,000 coolers have been placed on a monthly basis and is attended by the under monitoring in the markets of top management, quality KPIs are closely Romania, Russia, Greece, Cyprus, Serbia, monitored and improvements in quality Nigeria, Montenegro and Kosovo, and more projects are identified and reviewed, aiming are expected to be put under monitoring to achieve sustainable performance. according to the e-Service rollout plan.
As part of our continuous improvement plan, last year we also initiated a new project that aims to further improve Product Development through cross functional teams, communication and monitoring tools. This is expected to secure Product and Engineering data integrity, cost effectiveness and on-time delivery in all our ICM operations and receive tangible results displayed in Quality KPIs in the years ahead.
20 21 Frigoglass Annual Report 2016 Frigoglass Annual Report 2016
Cost Leadership
Cost leadership has been one of our top priorities throughout the year. Our focus on cost efficiency initiatives remained unchanged and was mainly placed on three areas: product standardization, plant efficiency and supplier optimization. We have succeeded in delivering significant savings across these initiatives.
Product standardization Plant efficiency Supplier optimization In the past year, we made further progress Our Lean journey continued in 2016, during In 2016, we put emphasis on several cost- in product standardization, aiming to achieve which we remained consistent to our saving projects in both our Cool and Glass cost efficiencies while enhancing customer commitment for continuous optimization businesses and relied on supplier integration value. Standardization of processes in of our manufacturing footprint, cost base for optimizing our cost structure. Effective design, production and supply chain, and improvement and transformation to a leaner integration of suppliers into the product in components, such as compressors, fan organization. development process and the supply chain motors and heat exchangers, has resulted in has been a key factor in achieving the cost savings. We took the decisive step to reduce improvement necessary to become more complexity within our manufacturing base competitive. In addition, we enriched our product in Asia by discontinuing our manufacturing portfolio with cost-competitive coolers, the operations at the Guangzhou-based facility During the year, our focus on cost Plus range, responding to market trends in China. optimization with suppliers and the and changes in customer demands and implementation of a carefully designed expectations. The new product development Frigoglass changed its operating model in strategic sourcing framework, including was achieved through lean cabin design the Asian market in order to enable the supply base rationalization, standardization and optimization of the cooling mechanism, optimization of the production capacity of specifications and strategic partnerships, which resulted in a robust construction with in Asia, improve the company’s fixed cost remained firmly on track. full size glass door that ensures ultimate structure and strengthen its long-term product visibility and enhances impulse competitiveness. Through our established purchase, while at the same time, provides presence and access to the Chinese supply lower cost options to our customers. base, as well as a robust and efficient supply chain for the group, we maintain our ability to provide high quality and cost efficient products in the market.
Lean manufacturing principles are systematically implemented in all our operations, transforming our plants into cost-efficient entities with standardized and unified processes. Our next goal is not only to align processes among our operations, but also unify them and take advantage of economies of scale in the long-term.
22 23 Frigoglass Annual Report 2016 Frigoglass Annual Report 2016
People
People are the driving force behind Frigoglass innovation and differentiation. In 2016, we focused on cultivating and sustaining a high-performance culture, strengthening the team’s unity and increasing commercial effectiveness.
Lean and customer Talent moves available through online communities, focused organization and building capabilities thus strengthening the alignment of performance across the organization. Lean organization In 2016, new talent with diverse experience Our aim is to be proactive and ready to joined Frigoglass. Approximately 10% of Values respond to the business challenges we newcomers were appointed to managerial face, in the highly volatile socio-economic roles to strengthen our Commercial, Our values define how we do business environment we operate, at all times. Service and Manufacturing capabilities. We and interact with our colleagues, partners, In 2015, we started redesigning our continued implementing a common grading customers and suppliers. organizational structure, focusing on system across our entities and we designed Manufacturing and Service functions. In 2016, tools and solutions to attract and develop we made significant progress towards this talents in our organization. In 2017-2018 we direction as we implemented all necessary intend to roll out these tools globally. organizational changes across ICM and Glass Frigoglass Values operations. We made a careful evaluation A safe place to work of our organizational pains and, through a • Integrity series of group discussions and one-to-one In 2016, we introduced the role of Group interviews, we identified best practices and Health & Safety Manager in our organization • People developed an effective action plan to address to reinforce a health and safety culture. We • Social Responsibility these pains. established a common language across our plants, while we shared the success stories • Quality Improved customer focus and learnings across the company and • Market Leadership Our organizational structure is designed to adopted best practices from the market. better serve our customers and meet their In the upcoming years, we are targeting to • Shareholder Value needs proactively at the highest standards. standardize our tools across all entities and The organizational structure that was elevate health and safety to a way of living introduced in 2016 and was reinforced by consistently across all of our operations. the new Chief Commercial Officer position, enables a more commercially-driven One Team organization through the integration of Innovation & Product Development, Sales In Frigoglass, we are focusing on constructive and Marketing teams, and the establishment collaboration and a lean organization to of a new way of working together. The new achieve our medium to long term business model will allow us to address different priorities. In 2016, we started working on the market segments and changing customer revision of the core functional and cross- needs even more effectively. functional processes, needed capabilities and systems. During the year, Human Resources introduced new tools and developed new trainings to enable the organization to capture knowledge and make it readily
24 25 Frigoglass Annual Report 2016 Frigoglass Annual Report 2016
Sustainability
Sustainability is central to our business and revolves around three key areas: product responsibility, sustainable operations and social responsibility.
We recognized early the need to integrate In the last years, our efforts on noise It is worth mentioning that in our Glass environmental, social and corporate reduction have proven fruitful, especially in operations, defective bottles and other governance issues to the core of our the new cooler ranges, ICOOL and Smart. The containers are 100% recycled as they are business operations, and have harmonized ultimate goal in this area is to create “silent” used as raw material in the production our sustainability and business strategies. coolers with unnoticeable sound. process. Also, we maintain stable rates of material consumption over time, despite the Product responsibility In our new products, we have also achieved varying product mix, that is achieved through a very high recycling rate, as over 95% of raw efficient product and process design. In the area of product responsibility, materials used are recyclable. This has been improving the energy efficiency of our succeeded by developing products that use Social responsibility beverage coolers and reducing their fewer, properly selected materials, as well as environmental impact has been a top through advanced assembly techniques that In Frigoglass, we recognize that our progress product development priority throughout facilitate disassembly and recyclability. depends on our people and therefore the year. Through continuous work on we put all our efforts in developing talent technological innovation we have achieved and safeguarding their wellbeing in the Sustainable operations significant energy consumption reduction. workplace. We implement various programs Our target is to keep on reducing the average In our operations, sustainability is both and projects for strengthening equality and energy consumption of our cooler fleet year a mindset and a practice and guides our eliminating discrimination. Some of our over year and we have managed to reduce it business conduct with suppliers, partners, operations (Greece, Romania, Russia and significantly in the last five years. customers and employees. In combination South Africa) are certified with OHSAS18001, with Lean manufacturing principles, we which sets out the requirements for We have also managed to significantly implement a continuous improvement occupational and safety management increase sales share of environmentally program minimizing the environmental practice. In the years to come, all our plants friendly coolers (e.g. coolers using HFC-free impact from our operations. are planned to be certified. refrigerant) versus previous years across all regions, more specifically from below Most of our plants are certified by the One of our major concerns is also to 25% in 2012 to above 65% of Cool business ISO14001 environmental management contribute towards the community where we sales in 2016. The components used in standard. In 2016 two plants in Nigeria operate. In Greece, where our headquarters our coolers, such as energy management received the certification and our target is are located, we continued the successful devices, LED lighting, fans, high insulation that all our operations are certified with initiative “Cool for Good” for third year in a door glasses and eco-friendly cabin designs, ISO14001 by 2019. row, donating beverage coolers to charity are all carefully selected to improve energy organizations and nonprofit institutions, and efficiency. In all countries we operate in, we respect the supported hundreds of people in need. local legislation relating to all forms of waste Noise reduction has also been a top product management, including water and hazardous Through our Romanian operations we are development priority. The placement of material disposal. Our target is to recycle or systematically supporting the “Lighthouse coolers in the market may create noticeable reuse more than 80% of our waste and we for the Blind of Greece” as the organization impact on the average noise level of are proud to report that in 2016 we achieved is our preferred supplier of shelf clips used the location, especially in the internal once more over 85% collection rate. in our coolers, generating an income of more environment of retail stores and restaurants. than €200,000 annually.
26 27 Frigoglass Annual Report 2016 Frigoglass Annual Report 2016
Sustainability Materiality Matrix Materiality Matrix
In 2016, Frigoglass affirmed its continued New sustainability framework Marketplace support to the Ten Principles of the United 1 In 2016, we decided to take sustainability 1 Nations Global Compact in the areas of Ethics 2 reporting one step further by adopting Human Rights, Labor, Environment and 2 a recognized framework for developing Product responsibility ig Anti-Corruption. In our Communication on and quality a standardized sustainability report. The Progress, we described the practical actions 3 main framework we adopted is the Global Customer satisfaction and their outcomes related to the Ten Reporting Initiative (GRI G4) that provides 4 Principles, which have been implemented Economic performance detailed guidelines and determines and impact as part of the company strategy, culture and 17 9 the content and manner sustainability 5 daily operations. We also have a number of Customer brand promotion information is disclosed. policies, which are closely monitored and 4 6 7 1 Supplier assessment 15 contribute to all four areas of the Global GRI has supported Frigoglass in complying 7 Compact, namely: Code of Business Conduct Responsible procurement with the new EU Directive on Non-Financial and Ethics, Human Rights policy, Speak-up 8 5 Disclosure and has enabled broader Regulatory compliance 14 12 policy, Frigoglass Supplier Code, Frigoglass organizational transparency. The aim is Supplier Audit and Supplier RFQ forms and 19 6 10 to improve corporate performance on Environment Environmental policy. Policy updates are 16 11 environmental and social issues, as well published on our corporate website. as maintaining high level of business 9 1 Product environmental ethics. Greater transparency will also help stewardship
Independent assessment us to better manage risks and identify 10 Resource management Our progress is validated on a yearly basis opportunities. and efficiency
by various independent global organizations 11 Energy efficiency of operations The materiality analysis resulted in four and programs, such as CDP, ECOVADIS 12 Emissions management and SEDEX, which provide objective and core pillars - marketplace, environment, and reduction 20 workplace and community – and 20 identified independent assessment. Every year we try 13 to improve our performance and the relevant sustainability issues, which are portrayed in Waste management ratings. In 2016, we achieved a performance the Materiality Matrix. and reduction Material to stakeholders band of “B” in CPD ratings when the industry You can find more details about Frigoglass average is “D”. In Ecovadis our supply chain Workplace sustainability priorities and metrics on the climate change program was awarded a silver upcoming Sustainability Report 2016. 14 recognition level, which represents less than Employee satisfaction one third of the top performers evaluated by 15 Labour practices the system. and human rights
16 Workforce training and development
17 Diversity and equal opportunity
18 Workplace health and safety
Community
19 Community relations and engagement
20 o Material to business ig Supporting local communities
28 29 Frigoglass Annual Report 2016 Frigoglass Annual Report 2016
Business review Europe and North America
Our sales marginally improved in Europe, In Eastern Europe, sustained momentum compared to the previous year. The of ICOOL demand with Coca-Cola customers, Sales sustained top-line growth in Western could not fully offset the adverse impact Eastern Europe Europe, primarily driven by increased of unfavorable macroeconomic conditions Year €m demand for ICOOL, was partly offset by the in Russia that led to significantly lower lower year-on-year sales in Eastern Europe. investments from Breweries. In Russia, beer 2016 105.7 Sales in Eastern Europe declined as the consumption was adversely affected by unfavorable macroeconomic conditions regulatory restrictions on packaging sizes 2015 113.8 in Russia continued to put pressure on established in the beer industry. 2014 137.1 beverage consumption and, consequently, on our customers’ cooler investments. In North America, we were confronted with 2013 154.9 The successful roll-out of our Integrated significant challenges in our transition to 2012 155.1 Service offering to more countries in 2016 a new business model, leading to lower led to incremental sales, primarily in sales in 2016. Eastern Europe. Western Europe Outlook In Western Europe, our sales were up 16% Going forward, we will maintain our focus Year €m following increased orders mainly from on leading innovations to further strengthen 2016 66.1 Coca-Cola bottlers in Nordics, UK, France, our business. Our renewed commercial Italy, Norway and Belgium. approach will allow us to build stronger 2015 56.8 relationships with our customers. Capitalizing Our focus on gaining share with Coca-Cola on ICOOL’s success, we are targeting to gain 2014 60.8 bottlers in the region through our innovative market share within Coca-Cola bottlers in 2013 56.1 ICOOL range resulted in a double digit Europe. The Integrated Service offering is sales growth. We reported sales growth gaining ground in Europe and, going forward, 2012 75.2 in all quarters of the year, reflecting our we will continue the roll-out of our offering customers’ positive reaction to our new to more European countries and new commercial approach. regions of Russia, as well as exploring any North America opportunities to expand our customer base. Year €m
2016 4.8
2015 13.9
2014 11.6*
2013 22.4
2012 19.3
* Frigoglass ceased manufacturing operations in Q1 2014.
30 31 Frigoglass Annual Report 2016 Frigoglass Annual Report 2016
Business review Asia
Asia remained one of our most challenging Outlook markets in 2016. Our sales declined in In 2017, we will focus on broadening our Sales key countries, such as India, Vietnam and customer base and expanding our Service Asia Malaysia, mainly following lower year-on-year business in Asia. orders by Coca-Cola bottlers in the region Year €m and reduced cooler placements by Pepsi We anticipate the launch of new products, 2016 54.2 in India. Key customers in Southeast Asia which have been developed to cover the region reduced this year’s coolers related placement needs in emerging countries, 2015 63.7 capital spending as they mainly focused their to be well accepted by our customers. We 2014 64.4 investments on incremental capacity and have also started working on a new cost expanding their distribution network. As a competitive range which will help us enhance 2013 94.7 result, sales in the Asia business contracted our customer base in the coming year. 2012 106.6 by 15%. We are also gradually amplifying HFC-free Following continued market headwinds refrigerants in the Asian markets, launching and economic uncertainty, we changed our Hydrocarbon (HC) coolers where we are well operating model in Asia in order to optimize equipped to support this transition, starting our production capacity, improve our fixed from Indonesia and continuing with India. cost structure and strengthen our long-term competitiveness in this highly competitive territory. As a result, in the third quarter of 2016, we discontinued manufacturing operations in China.
32 33 Frigoglass Annual Report 2016 Frigoglass Annual Report 2016
Business review Africa and Middle East
In Africa, we also strengthened our product portfolio with Hybrid, which is designed to Sales mitigate the impact of power outages. ICOOL Africa and Middle East Hybrid for Coca-Cola and Smart Hybrid for Breweries offer a pioneering cooling Year €m solution that functions perfectly in tropical 2016 59.1 conditions and at the same time brings all the merchandising benefits of a regular 2015 68.4 cooler. This new product offering has created 2014 65.8 excitement to our customers in the region. 2013 70.4 Another important development in the 2012 102.7 region was the consolidation of Coca-Cola bottlers towards the formation of Coca-Cola Beverages Africa (CCBA) and the acquisition of the SABMiller business from AB InBev group in Africa. Frigoglass is well positioned to strengthen its relationship with both newly formed beverage conglomerates. We grew our sales with CCBA in the year, which reflects continued cooler customer investments in the region.
In the Middle East, our sales grew by a double-digit rate. This solid performance primarily reflects increased investments by Sales in Africa declined mainly due to the Coca-Cola bottler in Saudi Arabia. economic challenges in key markets and the strong devaluation of Nigeria’s Naira, as Outlook well as lower customer investments in other We are focusing on expanding the Integrated African countries. Increased demand from Service offering in Nigeria and other Ethiopia’s Coca-Cola bottler did not offset countries of the African continent. the lower cooler investments from Coca- Cola bottlers and customers in the brewery We are also optimistic about the prospects segment in Nigeria, South Africa and Kenya. of the breakthrough Hybrid cooler, which is expected to provide growth opportunities for In 2016, we successfully rolled-out the ILOOK Frigoglass in the emerging markets of Africa. range across Coca-Cola bottlers in Africa. ILOOK combines appealing aesthetics with We will continue the roll-out of HFC-free reliable functional features and allows our refrigerant in our Ice Cold Merchandizers. customers to switch to the new look for their We are targeting to replace all existing existing fleet and in new orders. non HFC-free refrigerant products with HC coolers, both in Coca-Cola and Breweries, In Nigeria, we expanded our Integrated which will help us increase our market share Services business in more regions of across the region. the country and also inaugurated a refurbishment center in Ibadan State.
34 35 Frigoglass Annual Report 2016 Frigoglass Annual Report 2016
Business review Glass
Trading conditions in some of our core Our Dubai-based Glass operations also markets remained difficult throughout the experienced contraction in sales due to Sales year, resulting in a 10% sales decline in 2016. lower demand compared to last year, Glass notably with Coca-Cola bottlers and the In our Nigerian container glass operations, slower introduction of new products. Year €m the devaluation of Naira, weakened 2016 123.3 consumer confidence and shrinking Outlook disposable income impacted beverage Going forward, we are equipped with 2015 137.2 consumption in terms of value, making our a clear strategy and a focused team for 2014 147.4 key customers cautious to inject new bottles returning to growth. We are confident that into their existing bottle floats. The decline by capitalizing on existing customer relations 2013 124.1 came from key soft-drinks and brewery and through the continuous optimization 2012 122.4 customers, as well as the fragmented Wines of our Glass business, we will become the & Spirits segment where weak consumer leading Glass packaging manufacturer in confidence hit hard, while the Pharma Sub-Saharan Africa. segment exhibited a very solid growth. In our Nigerian operations, we will continue Our complimentary business of Plastic focusing on pricing initiatives and efficiency Crates was also adversely affected by the gains to mitigate the effect of foreign challenging market environment. Local exchange rate fluctuations, driven by the operations saw sales decreasing by a double devaluation of the Naira. We are also digit rate, mainly reflecting lower sales to the exploring the opportunity to expand our Coca-Cola bottler in Nigeria. customer base in Jebel Ali business to Asia, Australia, the UK and other markets, focusing The Metal Crowns business saw sales growing on recurring agreements with volume by a double digit rate, driven by increased commitment as well as the introduction of demand from Coca-Cola bottlers as well as a Amber glass into our glass portfolio. number of new customers who chose locally produced rather than imported crowns due to the scarcity of foreign exchange.
36 37 Frigoglass Annual Report 2016 Frigoglass Annual Report 2016
Corporate governance
Governance framework According to the Company’s Code of Business Chairman clarity and completeness of the financial Internal Audit Department Human Resources and Conduct and Ethics the members of the statements and the financial information, John Androutsopoulos The Board is responsible for dealing with the Board must avoid any acts or omissions from and the content of results announcements The main duties and obligations of the Remuneration Committee Company’s affairs exclusively in the interests Non-executive/ Independent Internal Audit Department include: which they have, or may have, a direct or prior to their submission to the Board. The The role of the human resources and of the Company and its shareholders within indirect interest and which conflict or may Members Audit Committee also considered reports • Monitoring the accurate implementation remuneration committee (“the Human the existing regulatory framework. The possibly conflict with the interests of the from PwC on their annual audit of 2015 of and compliance with the Company’s Resources and Remuneration Committee”) Board’s key responsibilities are: Company. Loucas Komis and their review of the 2016 half year is to establish the principles governing the Non-executive Articles of Association, Internal Regulation • Setting the Company’s long-term goals. Board of Directors report that forms part of Operation and directives, and in general Company’s human resources policies which
The members of the Board receive Doros Constantinou of the statutory reporting obligations of the any applicable legislation. guide management’s decision-making and • Making all strategic decisions. remuneration which is approved by the Non-executive Company. actions. • Reporting cases of conflict of interests • Making available all required resources for Company’s General Meeting, in accordance between members of the Board or the achievement of the strategic goals of with the specific provisions of the Articles of The above members have substantial past Moreover, in 2016, More specifically, its duties are to: managers and the interests of the the Company. Association and the Law. experience in senior financial positions and the Audit Committee has: Company. • Oversee the management’s succession other comparable experience in corporate • Appointing senior executive management. • Reviewed the results of the audits planning policy activities. • Submitting written reports to the Board at Audit Committee undertaken by Internal Audit and • Establish the principles governing the least once each quarter on any important The Board is appointed by the General According to article 37 of Law 3693/2008 the considered the adequacy of management’s Company’s Corporate Social Responsibility Mr. Androutsopoulos fulfils the requirements findings of the internal audits it has Meeting of the Company and at the time Company has established and operates an response to the matters raised, policy provided by law regarding the requisite conducted. of execution of this present consists of 9 including the implementation of any • Establish the Compensation and Benefits Audit Committee (“the Audit Committee”) knowledge of accounting and auditing. members, 8 of which are non-executive and 4 recommendations made. • Attending the General Meetings. Strategy which is, inter alia, responsible for of which are independent. The only executive • Submit to the Board proposals for monitoring: The Audit Committee shall meet whenever • Reviewed and approved the 2017 Internal • Cooperating with state supervisory member is the Chief Executive Officer. The executive Board members remuneration • the process for provision of financial this is deemed necessary and in no Audit program, including the proposed authorities and facilitating them in their members of the Board serve for a three (3) information; circumstances less than four times a year. audit approach, coverage and allocation of work. The Human Resources and Remuneration year term that can be prolonged until the It must also hold at least two meetings resources. Committee, which is appointed by the Board, Annual General Meeting to be held following • the effective operation of the internal attended by the Company’s regular auditor, The internal auditor acts according to the is comprised of the following 3 non-executive the termination of their term. Their term audit and risk management systems; • Reviewed the effectiveness of Internal without the presence of the members of the International Standards for the Professional Board members: shall in no case exceed four (4) years. Audit, taking into account the views of • the course of the mandatory audit of administration. the Board and senior management on Practice of Internal Auditing and the policies individual and consolidated financial and procedures of the Company and reports Chairman The experience of the members of the matters such as independence, proficiency, statements; The Audit Committee meets validly when to the Audit Committee. Board encompasses diverse professional resourcing, and audit strategy, planning Loucas Komis at least two of its members are present, of backgrounds, representing a high level • matters relating to the existence and and methodology. Non-executive whom one must be its Chairman. The Audit of business, international and financial safeguarding of the impartiality and Committee held a total of five (5) meetings • Reviewed regular reports on control issues knowledge contributing significantly to the independence of the legal auditor or Members in 2016. The said meetings were scheduled of major level significance, as well as successful operation of the Company. The audit office, particularly in relation to the in such a way so as to coincide with the details of any remedial action being taken. Haralambos (Harry) G. David Board is fully balanced as far as the number provision to the Company of other services Non-executive publication of the Company’s financial It considered reports from Internal Audit of independent and non-independent by the legal auditor or audit office. information. and PwC on the Company’s systems of members is concerned. The independent, Evangelos Kaloussis internal control and reported to the Board Non-executive/ Independent non-executive members contribute to the The Audit Committee is also responsible The Audit Committee considered a wide on the results of its review. Board’s decision-making with the provision for the submission of proposals to the range of financial reporting and related The Chief Executive Officer and HR Director of impartial opinions and resolutions, thus Board regarding any change to the chart of matters in respect of the 2015 annual shall normally attend all meetings of said to ensure that the interests of the Company, authorities and the organizational chart of financial statements and the 2016 half-year Committee, except when discussions are the shareholders and the employees are the Company. financial information. In this respect the conducted concerning matters affecting them protected, whereas the executive member is Audit Committee reviewed any significant personally. responsible for ensuring the implementation The members of the Audit Committee have areas of judgment that materially impacted of the strategies and policies decided by the been appointed by the General Meeting of reported results, key points of disclosure The Human Resources and Remuneration Board. the Company as per the provisions of law and presentation to ensure the adequacy, Committee held 3 meetings in 2016. 3693/2008 and are the following:
38 39 Frigoglass Annual Report 2016 Frigoglass Annual Report 2016
Corporate governance
Investment Committee Communication Board of Directors Management Committee Certified auditors
with Shareholders (three-year term ending in 2018) (as of March 2017) The duties of the investment committee (“the PricewaterhouseCoopers Investment Committee“) are to recommend Frigoglass recognizes the importance of the 268 Kifissias Avenue, Haralambos (Harry) G. David to the Board the Company’s strategy and effective and timely communication with Nikos Mamoulis 152 32 Halandri, Athens, Greece business development initiatives, as well as Chairman, Chief Executive Officer shareholders and the wider investment non-executive member to evaluate and suggest to the Board new community. The Company maintains an Legal advisors proposals for investments and/or Company active website www.frigoglass.com which Manolis Fafalios expansion according to the defined strategy Nikos Mamoulis Chief Financial Officer Theodore Rakintzis is open to the investment community and Chief Executive Officer, of the Company. Kyriakides-Georgopoulos, Law Firm to its own shareholders; the site features executive member this Code, as well as a description of Nick Evangelou Moreover, the Investment Committee is also the Company’s corporate governance, Chief Commercial Officer ICM responsible for evaluating and suggesting Ioannis K. Androutsopoulos management structure, ownership Vice Chairman, to the Board opportunities for business Darren Bennett-Voci status and all other information useful or non-executive member / independent development and expansion through necessary to shareholders and investors. Glass Division Director acquisitions and/ or strategic partnerships. Finally, Frigoglass also communicates with Doros Constantinou the investment community through its Manolis Souliotis non-executive member The Investment Committee, which is participation in a number of conferences and Group Human Resources Director appointed by the Board, comprises meetings held in Greece and abroad and the Ioannis Costopoulos 4 members, two of whom are non-executive, schedule of conference calls. Vassilis Soulis non-executive member / independent and is formed as follows: Service Director
Chairman Vassilis Fourlis
non-executive member / independent Haralambos (Harry) G. David Non-executive Evangelos Kaloussis non-executive member / independent Members
Nikos Mamoulis Loucas D. Komis Executive non-executive member Loucas Komis Non-executive George Leventis
non-executive member Manolis Fafalios Executive
The Investment Committee held 2 meetings in 2016.
40 41 Frigoglass Annual Report 2016 Frigoglass Annual Report 2016
Board of Directors
Haralambos (Harry) G. David Nikos Mamoulis John K. Androutsopoulos Doros Constantinou, Ioannis Costopoulos Vassilis Fourlis Chairman (non-executive) Chief Executive Officer (executive) Vice Chairman (independent non-executive) Member (non-executive) Member (independent non-executive) Member (independent non-executive)
Mr. Haralambos (Harry) David was elected Mr. Nikos Mamoulis joined Frigoglass as Mr. John Androutsopoulos was appointed to Mr. Doros Constantinou was appointed to Mr.Ioannis Costopoulos was appointed to Mr. Vassilis Fourlis was appointed to the Chairman of the Board of Directors in Chief Financial Officer in October 2013 and the Board of Directors in July 1996. the Board of Directors in October 2011. the Board of Directors in March 2015. Board of Directors in October 2002. November 2006. He has been a member of was appointed Chief Executive Officer of the Board of Directors since 1999. Frigoglass in July 2015. His long career in the bottling and Mr. Constantinou graduated from the Mr. Costopoulos is currently a Senior He was born in 1960 in Athens. He holds a manufacturing sectors has included positions University of Piraeus in 1974 and holds a Advisor for Societe d’Etudes Techniques Master’s Degree in Economic Development He graduated from Providence College, He has more than twenty-five years of as Technical Manager of the Hellenic Bottling degree in Business Administration. et Economiques in Geneva. He is a Board and Regional Planning from the University USA, in 1987. His career began as a certified experience in senior financial positions within Company (1969-1985), General Manager Member of Fourlis Holdings S.A. in Athens of California/Berkeley and a Master’s Degree investment advisor with Credit Suisse in New different business sectors and a wealth of the Industrial Division of the 3E Group Mr. Constantinou started his career in and Austriacard AG in Vienna. in International Business from Boston York. He then served in several executive of knowledge in finance and international of companies (1986-1994), Chairman of auditing with PricewaterhouseCoopers, University/Brussels. positions within Leventis Group Companies. markets. Before joining Frigoglass, Mr the Board of Directors of Frigorex (1995), where he worked for ten years. In 1985, From 2004 to 2015, he worked for the Today he holds a position on the Boards Mamoulis worked for Coca-Cola Hellenic for member of the Board of Directors of 3E Mr. Constantinou joined Hellenic Bottling Hellenic Petroleum Group, a leading regional He is the Chairman of Fourlis Holdings S.A. of A.G. Leventis PLC (Nigeria), the Nigerian twelve years with his last position being that Group of Companies (1995) and Managing Company, where he held several senior energy player with activities in oil refining and also serves on the Board of Directors Bottling Company, Beta Glass PLC (Nigeria), of the Group Financial Controller. Previous to Director of Frigoglass Company (1996-2001). financial positions. In 1996, he was appointed and marketing, gas trading and electricity of House Market S.A. (IKEA). He is also Ideal Group, Quest Energy and Pikwik that he also held the Chief Financial Officer He holds a master’s degree in Electrical to the position of Chief Financial Officer and generation. From 2004 to 2006 as Executive a member of the Board of the Hellenic (Nigeria) Ltd (a newly formed joint venture position in Lafarge Heracles Group and the Engineering from Aachen Polytechnic where remained in that position until August 2000. Group Board member in charge of the Retail Federation of Enterprises (ΣΕΒ) and that of with Pick n Pay, South Africa). Boutaris Group. Mr Mamoulis is a graduate he also completed additional studies in He was a key member of the management business, the International Operations the Hellenic Corporate Governance Council. of the Athens University of Economics and Economics. team that led the merger of Hellenic Bottling and Business Development and from 2007 In 2004 he was awarded the «KOUROS Mr. David is a member of the General Council Business. Company and Coca-Cola Beverages. In to 2015 as Group CEO and Chairman of a Entrepreneurship Prize” by the President of of the Greek Industries Federation (ΣΕΒ), a 2001, Mr. Constantinou became Managing number of the Group’s subsidiaries. the Hellenic Republic. member of the Organizing Committee of Director of Frigoglass until August 2003 when From 1992 to 2003, Mr. Costopoulos held a the Athens Classic Marathon and member he moved to Coca-Cola Hellenic as Chief number of senior executive positions; namely of the TATE Modern’s Africa Acquisitions Executive Officer until his departure in July CEO of Petrola S.A. a Greek-based merchant Committee. 2011. In October 2011, Mr. Constantinou was refiner, Regional Director of Johnson & appointed Executive Director of Frigoglass Johnson’s consumer business in Central- He has served on the boards of Alpha until May 2012. Eastern Europe and Managing Director of Finance, ΔΕΗ (Hellenic Public Power Corp) Diageo-Metaxa in Athens. and Emporiki Bank (Credit Agricole). From 1980 to 1992, he worked as a Principal for management consultants Booz Allen & Hamilton in London and for the Chase Bank in New York and London.
He has also served on the Boards of the Hellenic Federation of Enterprises (SEV) and the Foundation for Economic & Industrial Research (IOBE) in Athens.
He holds a BSc in Economics from the University of Southampton and a MBA from the University of Chicago.
42 43 Frigoglass Annual Report 2016 Frigoglass Annual Report 2016
Board of Directors Remuneration
Evangelos Kaloussis Loucas D. Komis George Leventis Salary Pension scheme Member (independent non-executive) Member & Secretary (non-executive) Member (non-executive) The salary structure is determined by an Employees participate in the Company’s Mr. Evangelos Kaloussis was appointed Mr. Loucas D. Komis was appointed Mr. George Leventis joined the Board internal grading system, reflecting market pension scheme in countries where it is to the Board of Frigoglass in June 2006. to the Board of Directors in July 1996. of Frigoglass as a non-executive member pay practices. Salary ranges are determined applicable, thereby providing a savings and in April 2014. by a number of factors, including level of incentive tool. He is Chairman of the Federation of Hellenic Currently, he is also Chairman of the Board accountability, know-how and professional Food Industries (ΣΕΒΤ) since 2006 and of Ideal Group S.A. and of the Board of Mr. Leventis is a member of the executive experience. Other benefits
Chairman of Τerra Creta SA. He is also Hellenic Recovery & Recycling Corporation committee of a family office and has Fringe benefits are offered to employees member of the Board of the Federation of (HE.R.R.Co), as well as Vice-Chairman of the previously worked in the fund management Management short-term according to the grade level. These benefits Food & Drink Industry of the European Union Federation of Hellenic Food Industries (ΣΕΒΤ). business as an equities analyst and more incentive plan range from company car, fuel allowance, (FoodDrinkEurope) since June 2015. He is During his career he worked for nine years in recently in private equity. private health care, meal allowance, mobile member of the Board of Directors of Alpha top management positions in the appliance The management short-term incentive plan phone, kindergarten allowance and others Bank, Food Bank and Vice-Chairman of the manufacturing sector (IZOLA S.A.) and He graduated with a degree in Modern is based on the Management by Objectives according to local market practices. Foundation for Economic and Industrial inthe Coca-Cola Hellenic Bottling Company History from Oxford University and holds principle. The incentive plan links individual Research (IOBE). S.A. (CCHBC), where he also served as an a postgraduate Law degree from City performance with company results, aiming to Executive Board Member for several years University. He is an Investment Management increase employee commitment, thus in turn During his professional career he assumed and remains an Advisor to the Chairman Certificate holder. encouraging exceptional performance. several top management positions at until today. the multinational Nestlé Headquarters in All managerial level positions are eligible for Switzerland, France, Nigeria and South Africa He holds degrees from Athens University year-end bonuses. Employee performance and in Greece as President of Nestle Hellas (BSc Physics), the University of Ottawa is appraised and compensated annually SA and responsible for SouthEast Europe. (MSc Electrical Engineering) and McMaster according to objectives achievement. Targets He holds a Master’s Degree in Electrical University, Ontario, Canada (MBA). are set to reflect the Company’s annual Engineering from the Federal Institute of strategy and the plan’s breakdown varies Technology in Lausanne (CH) and in Business according to the individual’s position within Administration from the University of the Company. Bonus payout is calculated Lausanne as well as a graduate degree from on personal objectives achievement, as well IMD Business School in Switzerland. as on the Company, function, region and/or operational targets.
Stock options
Members of the Management Committee and senior management are eligible to participate in Frigoglass’ stock option plan. Options are viewed as part of the total remuneration package addressing potential for development.
Options are granted at a pre-determined exercise price, vested in one-third increments each year and can be exercised for up to ten years from the date they are granted according to the plan. The terms of each plan are subject to approval at the Annual General Meeting.
44 45 Frigoglass Annual Report 2016 Frigoglass Annual Report 2016
Financial risks
Frigoglass’ global business activities expose 1. Market risk b. Price risk 3. Liquidity risk Capital risk management the company to a variety of financial risks The Company is exposed to fluctuations including foreign exchange, raw materials, Liquidity risk is managed by maintaining The objective in managing capital is to a. Foreign exchange risk in raw material prices. This risk is offset credit, liquidity and interest rate risks. The sufficient cash reserves and the availability safeguard our ability to continue as a in various ways, including increased objective of our risk management program The Company operates globally and of funds through adequate credit facilities. going concern in order to provide returns productivity, higher sales volume leading to a is to curtail potential adverse impacts on the is exposed to foreign exchange risks. Due to the dynamic nature of the underlying for shareholders and benefits for other positive operating leverage effect and higher Company’s financial performance. Fluctuations in exchange rates, particularly in businesses, our Treasury function aims stakeholders as well as maintaining an the US Dollar, Nigerian Naira, South African selling prices. We also hedge our exposure to retain flexibility in funding by having optimal capital structure. to price risks associated with the purchase of Treasury risk management is the Rand, Indian Rupee, Norwegian Krone, committed credit lines. raw materials by using commodity futures, responsibility of the Treasury department, Russian Ruble and Chinese Yuan against the In order to sustain or amend the capital option contracts and purchase agreements which aims to effectively manage the Euro may have an adverse impact on our The Company manages liquidity risk by structure, Frigoglass may adjust the amount with suppliers. financial risks of Frigoglass and all its financial performance. effective working capital and cash flow of dividends paid to shareholders, capital subsidiaries, according to the policies management. Frigoglass monitors expected returned to shareholders, new shares approved by the Board of Directors. Treasury Our subsidiaries with functional currencies 2. Credit risk cash flows and ensures that adequate issued or debt raised. Please refer to the other than the reporting currency (Euro) banking facilities and reserve borrowing Group’s 2016 financial statements and public identifies, evaluates, monitors and hedges Credit risk arises from cash and cash use natural hedging to limit their exposure facilities are maintained. Overall, subject announcements for a description of the financial risks alongside the Company’s equivalents as well as from credit exposure to foreign currency risk. Natural currency to completion of the Restructuring, the Restructuring and its expected impact on the operating units. The Board provides to customers, which includes outstanding hedging can be achieved by matching, to Company has sufficient borrowing facilities Group’s capital structure. principles for overall risk management, receivables and committed transactions. as well as policies covering specific areas, the possible maximum extent, revenue and that could be utilized to fund any potential such as foreign exchange, interest rate and expense cash flows in the same currency shortfall in cash resources. credit risks, use of financial instruments in order to limit the impact of currency The Company has policies in place to ensure and investment of excess liquidity. Treasury exchange rate movements. When natural that sales of products and services are made 4. Interest rate risk refrains from speculative transactions or hedging cannot be achieved, the Company to customers with an appropriate credit The Company’s income and operating transactions that are not related to the makes use of derivatives. history. The granting of credit is controlled cash flows are not dependent on interest Company’s operations. by credit limits and the application of Frigoglass has investments in subsidiaries certain terms. All subsidiaries monitor the rate fluctuations since we do not hold any interest-bearing assets other than short-term The Company’s financial instruments consist which operate in various countries. Their creditworthiness of their debtors on an time deposits. Exposure to interest rate risk mainly of bank deposits, trade receivables net financial positions are exposed to ongoing basis with a quarterly central review. on liabilities is limited to cash flow risk from and payables, bank overdrafts, revolving foreign translation exchange risk during the Appropriate provision for impairment losses changes in floating rates. credit facilities, long term bank loans, consolidation to the Company’s financial is made for specific credit risks. At the year corporate bond, loans to/from subsidiaries, statements. The Company is not substantially end, Frigoglass considered that there were The Company continuously reviews equity investments, dividends payable and exposed to this type of risk since most of its no material credit risks that had not been interest rate trends and financing needs. leasing obligations. The Company may use subsidiaries use the Euro as their functional covered by doubtful debt provisions. Consequently, all short- and long-term bank derivative financial instruments in order to currency, with the exception of operations in borrowings are entered into floating rates hedge certain risks. Nigeria, India, Indonesia, Kenya, South Africa No credit limits were exceeded during the and China. reporting period and management does not with re-evaluation dates of less than six months. Our Corporate Bond has a fixed The Group is undergoing a restructuring of expect any losses from non-performance by interest rate. its indebtedness and capital structure (the The Treasury department may use forward these counterparties. “Restructuring”) and entered into a lock-up exchange contracts in a variety of currencies agreement with its main stakeholders in April that mature within one year to mitigate 2017. The Restructuring is expected to close foreign exchange risk, if required. in July 2017. For a description of the risks and uncertainties related to the Restructuring please refer to the risk factors included in the 2016 financial statements.
46 47 Frigoglass Annual Report 2016 Frigoglass Annual Report 2016
Shareholder information
Share capital Dividend history (€ per share) Share price Frigoglass share price performance vs. 50,593,832 shares outstanding Share price at 30 December 2016: ATHEX composite share price index Full year Amount¹ AGM date Ex-dividend date Payment date as at 30th December 2016 at €0.09 a €0.30 nominal value 2001 0.048 31 May 2002 3 Jun 2002 20 Jun 2002 1 0
2002 0.064 18 Jun 2003 22 Jul 2003 1 Aug 2003 120 Market capitalisation Market of share listing 2003 0.080 21 Jun 2004 22 Jun 2004 14 Jul 2004 100 Market capitalisation at 30 December 2016: 2004 0.112 10 Jun 2005 10 Jun 2005 12 Jul 2005 Athens Stock Exchange (ATHEX) €4.6 million 0 2005 0.160 9 Jun 2006 14 Jun 2006 21 Jun 2006 60 2006 0.256 8 Jun 2007 13 Jun 2007 20 Jun 2007 Reuters Trading Volume 0 2007 0.304 6 Jun 2008 10 Jun 2008 18 Jun 2008 FRIr.AT Average daily trading volume in 2016: 20 2008 0.480* 5 Sep 2008** 5 Dec 2008 15 Dec 2008 77,527 shares
2009 0.080 14 May 2010 7 July 2010 14 July 2010 Bloomberg 0 01 0 02 0 0 0 0 0 0 02 06 02 0 01 0 1 0 0 0 0 10 2 11 2 12
FRIGO GA * Interim dividend ** Extraordinary General Meeting Frigoglass ATHEX Composite Share Price Index
Free float Capital return (€ per share) Frigoglass stock price performance 2016 56%
Full year Amount¹ AGM date Ex-dividend date Payment date 2 0
2008 0.72 5 Sep 2008 30 Oct 2008 7 Nov 2008 1 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 1 0 September 2011.
0
2016 share price (€ per share) 0 01 0 02 0 0 0 0 0 0 02 06 02 0 01 0 1 0 0 0 0 10 2 11 2 12
Quarter ended High Low Close
30 Dec 0.09 0.09 0.09
30 Sep 0.10 0.09 0.09
30 Jun 0.15 0.14 0.15
31 Mar 0.63 0.36 0.37
48 49 Frigoglass Annual Report 2016
Contact information
Frigoglass Head Office 15, A. Metaxa Street 145 64 Kifissia Athens, Greece
T +30 210 6165700 F +30 210 6199097 www.frigoglass.com
Marketing Communications
Eva Hioti
T +30 210 6165768 E [email protected]
Investor Relations
John Stamatakos
T +30 210 6165767 E [email protected]
50 www.frigoglass.com