Annual Report
2020
2
Table of Contents
Message from the Chairman ....................................................................................................... 4
Segments & Companies ............................................................................................................... 6
Key Figures 2020 ......................................................................................................................... 8
Financial highlights of the year .................................................................................................. 9
Group financial review ...................................................................................................................... 9
Outlook .............................................................................................................................................. 11
Segments’ Activities & Outlook ................................................................................................. 12
Cables ................................................................................................................................................ 12
Steel pipes ......................................................................................................................................... 20
Subsequent events ..................................................................................................................... 25
Risks and Uncertainties ............................................................................................................. 26
Non-Financial Information ........................................................................................................ 35
Business Model ................................................................................................................................. 35
Management Approach in Policy Framework ................................................................................ 38
Materiality Analysis and KPIs ......................................................................................................... 40
Key Non-Financial Risks .................................................................................................................. 46
Corporate Governance Statement ............................................................................................. 50
Board of Directors ............................................................................................................................ 50
Executive management .................................................................................................................... 57
Remuneration policy ........................................................................................................................ 59
External Audit................................................................................................................................... 64
Risk Management and Internal Audit ............................................................................................. 64
Shareholders’ Structure ............................................................................................................. 66
Consolidated Financial Statements 2020 ................................................................................. 69
Statutory Auditor's Report ...................................................................................................... 146
Declaration of responsible persons ........................................................................................ 152
Condensed Statutory Financial Statements ........................................................................... 153
Alternative Performance Measures ........................................................................................ 155
Information to our Shareholders ............................................................................................ 159
Glossary .................................................................................................................................... 161
3
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Cenergy Holdings S.A. (“Cenergy Holdings”, “the Company”, or “the Holding”) invests in
industrial companies positioned at the forefront of high growth sectors, such as energy
distribution and telecommunications.
Based in Belgium, the Company was founded in 2016 and is listed on Euronext Brussels and
the Athens Stock Exchange (Athex).
Cenergy Holdings is a subsidiary of Viohalco S.A., a holding company of several leading metal
processing companies across Europe. Viohalco’s subsidiaries specialise in the manufacture of
aluminium, copper and steel products, steel pipes and cables, as well as other technologically
advanced industrial applications. They have production facilities in Greece, Bulgaria,
Romania, the United Kingdom, North Macedonia, Russia and Turkey.
The Management Report attached to the Consolidated Financial Statements (Rapport de
Gestion sur les Comptes Consolidés), prescribed by article 3:32 of the Belgian Code of
Companies and Associations (the “BCCA”), includes the regulatory disclosure obligations of
the Company and consists of the following sections:
A. Business Review (pages 9-34);
B. Non-financial information (pages 35-49);
C. Corporate Governance Statement (pages 50-66).
The Management Report should be read in conjunction with Cenergy Holdings’ audited
consolidated financial statements.
4
Message from the Chairman
Dear Shareholders,
First of all, I would like to pay tribute to Mr. Jacques Moulaert, Chairman of the Board of
Directors of Cenergy Holdings, who passed away on November 10, 2020. An experienced
businessman who had earned the trust of shareholders for many years, he had been Chairman
of the Board of Directors of the company since its creation in 2016. He skilfully guided the
debates within the Board of Directors, provided sound advice to directors and officers, and
listened carefully to the various opinions until a consensus was reached. He distinguished
himself by his loyalty, integrity and trust in his collaborators.
Those who have had the privilege of working with him express their respect for a man who
taught them a great deal on both the professional and human levels.
Turning to the year we left behind, we must all admit that 2020 was an extremely difficult
year for humanity with the Covid-19 pandemic claiming globally more than 2.5 million lives
until now and changing fundamentally most of our everyday life. Despite this unprecedented
turmoil, it has proven to be a positive year for Cenergy Holdings. All segments succeeded in
providing effective solutions in the energy and data transfer sector, while our vision to a
“greener” future gained momentum through a number of initiatives.
During the year, all key financial objectives set for the year were realised, despite the
unprecedented global health and economic crisis. Cenergy Holdings demonstrated its ability
to create value for its stakeholders and outperformed its previous results, both in operational
profitability and free cash flow, leading to a record-low net debt.
As the world was experiencing the outbreak of the SARS-Cov-2 virus, all companies in Cenergy
Holdings managed, immediately and effectively, to shield their most valuable asset, the health
of their personnel. They also took prompt action to prevent the spread of the virus, provide
a flexible working framework, where possible, and ensure the best possible working
conditions in an uncertain economic environment. While adapting their activities to the new
Health and Safety standards, both segments mitigated the financial impact of the pandemic
by focusing on liquidity, guaranteeing raw material availability and closely monitoring local
and global developments.
The growth in all profitability measures recorded by the Group during 2020 demonstrates
both the resilience created in recent history and the outcomes of the above measures which
allowed all plants to work at satisfactory levels throughout the year. As a result, operational
profitability (adjusted EBITDA) increased by 13% compared to 2019, despite the 5% fall in
sales, as both segments successfully delivered high technology and high margin projects in the
energy transition markets. The tendering activity continued without disruptions and total
backlog as of December 31
st
, 2020 reached EUR 500 million.
In the cables segment, the good momentum of 2019 persisted throughout 2020. The high
utilization of submarine cables production lines and the smooth execution of high-profile
projects cemented its solid performance. Demand in cable products was affected by the
outbreak of the COVID-19 pandemic during the 2
nd
quarter; it, however, rebounded later in
the year and led to a marginally lower turnover in the cables products business unit. The
overall focus in value added projects and products allowed higher profit margins and a lift in
profitability, leading the entire segment to a remarkable performance with a-EBITDA
5
exceeding EUR 80 million. The above was further stimulated by initiatives to enter new
geographical markets and the ongoing investment program to further enhance the production
capacity of the offshore business unit.
On the other hand, the steel pipes segment was affected by the historical decrease in oil &
gas prices observed during 2020, further amplified by the effects of the pandemic. Market
conditions being highly volatile, a large number of exploration projects, especially in the USA,
were postponed, if not cancelled, narrowing the available tender opportunities for Corinth
Pipeworks, the Group’s main company in the segment. Turnover fell compared to 2019 and
operational profitability also suffered. To compensate for the general slowdown in demand
and protect profitability, Corinth Pipeworks focused in new geographical markets and
implemented a cost optimization programme, undertaking cost reduction initiatives and
maintaining the industrial excellence programme in their Thisvi plant. At the same time,
working capital management in the steel pipes segment tightened and contributed
significantly in the free cash flow generation of the Group. In brief, Corinth demonstrated
considerable stamina throughout these hard times, strengthening its presence in existing and
emerging markets (Europe, North Africa, Asia, Central America), winning important new
onshore and offshore projects and securing an uninterrupted production process all through
the year.
The pandemic, however, has pushed the world to accelerate energy transition scenarios to
renewable energy sources such as wind, solar and hydrogen. Corinth Pipeworks is a pioneer
in international developments in this field, with an emphasis on research and development of
innovative hydrogen transport products and became the first pipe production company in the
world to be certified as "carbon neutral" by TÜV NORD.
As the new year begins, we aim at our continuous improvement through the program of
Industrial Excellence (BEST): in 2020, we started a series of transformation projects in all
production units, an important milestone being the successful implementation of a holistic
work system (IWS - Integrated Work System) in a pilot factory in Corinth Pipeworks.
All those who make up Cenergy Holdings have put into practice the strong foundations we
have been building on over the years. With morale, mental endurance and hard work we
managed to maintain our companies at the top, for another year, one of the most difficult
and uncertain of the last half century.
I am sure that as our lives slowly return to the coveted "normality", social and economic
conditions will greatly improve for all of us and the post-COVID era will bring us back on the
path to sustainable development with the best prospects for acceleration. The new trend of
“green deals” greatly favours our industry and gives us the opportunity to look to the future
with optimism. Despite current world market volatility, Cenergy Holdings expects to maintain
the positive momentum gained during the last two years. Our values, our companies’ diverse
and flexible business model and a solid organizational structure continue to provide resilience
in this challenging environment. The professionalism and passion that distinguishes each and
every one of our people provide confidence for long-term sustainable growth.
Xavier Bedoret
Chairman of the Board of Directors
6
Segments & Companies
Cenergy Holdings’ companies provide turnkey solutions and services to a large number of
clients in the energy, telecommunications and construction sectors. With significant
experience implementing large-scale projects globally and a strong focus on customer
satisfaction, the companies are considered to have a leading role in their respective sectors.
Cenergy Holdings’ portfolio operates under the following organisational structure which
comprises two business segments:
Cables segment
Hellenic Cables S.A. (“Hellenic Cables”), one of the largest cable producers in Europe,
manufacturing power and telecom cables for various sectors including oil and gas,
renewables, energy transmission and distribution, construction and
telecommunications.
Fulgor S.A. (“Fulgor”), a subsidiary of Hellenic Cables, which manufactures submarine
cables (ranging from medium to extra high voltage), submarine fibre optic cables,
composite cables, special purpose cables, and copper and aluminium wires and rods.
Icme Ecab S.A. (“Icme Ecab”), which manufactures cables for indoor installations,
energy, control, industrial and external applications, low and medium voltage, fire-
retardant, fire-resistant and halogen-free cables, mine cables, marine and special-
requirement cables, telecommunication cables, signalling, remote control and data
transmission cables, copper and aluminium conductors, and plastic and rubber
compounds
Lesco O.o.d. (Bulgaria), a subsidiary of Hellenic Cables, located in Bulgaria producing
wooden packaging products.
Lesco Romania S.A., based in Bucharest, Romania, assembles, repairs, and recycles
wooden packaging products.
De Laire Ltd, incorporated in Cyprus, an acquisition vehicle (holding company).
Hellenic Cables America, a wholly owned subsidiary of Hellenic Cables, providing US
customers with direct support and expertise throughout the entire lifetime of energy
projects in the US market.
Steel pipes segment:
Corinth Pipeworks Pipe Industry S.A. (“Corinth Pipeworks”, CPW) is a leading
manufacturer of steel pipes for the oil and gas sector and a major producer of hollow
sections for the construction sector, with production facilities located in Thisvi,
Greece.
CPW America is based in Houston, USA and aims to promote Corinth Pipeworks’
products and provide customer service to the Group’s customers, as well as to
customers of other Viohalco companies located in North and South America.
Warsaw Tubulars Trading, incorporated in Poland, an acquisition vehicle.
AO TMK-CPW is an associate company of Cenergy Holdings (49% ownership) formed
between Corinth Pipeworks and TMK, the largest manufacturer of steel pipes in
Russia and one of the top three globally. AO TMK-CPW has its production facilities in
Polevskoy, Russia, where it manufactures pipes and hollow structural sections.
Humbel Ltd. is a Cenergy Holdings 100% subsidiary, incorporated in Cyprus and
holding 49% of shares in AO TMK-CPW.
7
In detail:
Notes:
* Consolidated as equity accounted investees.
** Non-consolidated entities (other significant investments).
8
Key Figures 2020
The companies in Cenergy Holdings’ portfolio:
have a long history of implementing large-scale projects in more than 70 countries;
have served major customers worldwide for nearly 70 years;
invest more than €400 million in the last 10 years
provide value-added products for niche markets; and
employ more than 2,000 highly skilled people.
Revenue: €908 million
Adjusted EBITDA: €102 million
Adjusted EBIT: €78 million
Profit before tax: €35 million
Profit after tax of the year from continuing operations: €25 million
Equity: €252 million
Total assets: €1,012 million
Net debt: €331 million
Revenue (in EUR million)
Per segment:
a-EBITDA (in EUR million)
Per segment:
9
Financial highlights of the year
Group financial review
Table 1: Profitability Analysis
(Source: Consolidated Statement of Profit or Loss and Alternative Performance Measures)
Amounts in EUR thousand
FY 2020
FY 2019
Revenue
908,417
958,016
Gross profit
103,493
98,514
Gross profit margin (%)
11.4%
10.3%
a-EBITDA
101,800
90,098
a-EBITDA margin (%)
11.2%
9.4%
EBITDA
91,121
90,273
EBITDA margin (%)
10.0%
9.4%
a-EBIT
77,729
62,942
a-EBIT margin (%)
8.6%
6.9%
EBIT
67,049
63,117
EBIT margin (%)
7.4%
6.6%
Net finance costs
(31,640)
(34,626)
Profit before income tax
35,410
28,492
Profit after tax for the year
24,771
20,177
Net profit margin (%)
2.7%
2.1%
Profit attributable to owners
24,772
20,189
FY 2020
FY 2019
0.13027
0.10617
Consolidated revenue for 2020 stands at EUR 908 million, a 5.2% y-o-y decrease reflecting the
pandemic effects on products demand and the impact of lower oil & gas prices on the steel
pipes segment.
On the contrary, adjusted EBITDA increased by 13% y-o-y to EUR 102 million. The cables
segment achieved a rise in operational profits for the second consecutive year, from EUR 35
million in 2018 to EUR 65 million in 2019 reaching EUR 81 million in 2020 which covered the
decline in steel pipes segment (EUR 22 million vs. EUR 27 million in 2019). Overall, the a-
EBITDA margin increased further to 11.2% compared to 9.4% during 2019 attesting to the
emphasis given in value-added solutions; most of this increase stemmed from the effective
delivery of challenging cables projects.
Net finance costs fell by EUR 3 million (9%) to EUR 31.6 million, as net interest and related
costs were EUR 2.4 million lower (7% y-o-y) due to both lower interest rates and tighter
working capital management, mainly in the steel pipes segment.
The stronger EBITDA and lower finance costs yield a profit before income tax of EUR 35.4
million, a 24% jump compared to the EUR 28.5 million in 2019.
10
Profit after tax for the period stood at EUR 24.8 million, compared to EUR 20.2 million in 2019,
representing 2.7% of revenue (against 2.1% in 2019).
Table 2: Consolidated Statement of Financial Position (Simplified)
Amounts in EUR thousand
31 Dec 2020
31 Dec 2019
ASSETS
Property, plant and equipment
457,937
422,066
Investment property
764
764
Other non-current assets
80,219
73,982
Non-current assets
538,921
496,812
Inventories
213,192
228,495
Trade and other receivables
112,872
112,577
Contract assets
64,875
118,573
Cash and cash equivalents
81,035
90,408
Other current assets
1,129
760
Current assets
473,103
550,814
TOTAL ASSETS
1,012,024
1,047,626
EQUITY
251,762
231,862
LIABILITIES
Loans and borrowings
174,625
177,730
Lease liabilities
3,681
3,990
Deferred tax liabilities
31,668
22,985
Other non-current liabilities
32,999
29,395
Non-current liabilities
242,973
234,100
Loans and borrowings
231,592
320,827
Lease liabilities
1,752
1,768
Trade and other payables
249,092
213,794
Contract liabilities
30,196
43,528
Other current liabilities
4,657
1,746
Current liabilities
517,289
581,663
TOTAL LIABILITIES
760,262
815,763
TOTAL EQUITY & LIABILITIES
1,012,024
1,047,626
Due to the significant amount of orders received in cables business, total capital expenditure
for the Group reached EUR 65 million, split between EUR 49.4 million for the cables segment
and EUR 15.5 million for the steel pipes segment. Investments in the former concerned mainly
the expansion of Fulgor’s inter-array cables production capacity in order to supply a wide
range of offshore wind developers worldwide. In the steel pipes segment, the “double
jointing” project that will better position CPW in the US pipe market was completed in 2020,
while a number of smaller scale investments targeted productivity and cost improvements in
the Thisvi plant.
Working capital (incl. contract assets & liabilities) decreased significantly to EUR 100 million
on December 31
st
, 2020, down by 49% y-o-y (EUR 195 million on 31.12.2019). This was the
noteworthy outcome of the strict working capital management in the steel pipes segment and
the successful completion of milestones for cables projects. Its future evolution will depend
11
on the timing of both prepayments and milestone payments of energy projects undertaken
by subsidiaries.
Consequently, net debt fell to record-low levels (EUR 331 million on December 31
st
, 2020),
down EUR 83 million from the 31.12.2019 level (EUR 414 million), further proving the Group’s
effort and commitment to deleveraging.
Outlook
As the world lives through a third wave of the Covid-19 pandemic, the prediction of the full
extent and duration of its business and economic impact remains challenging. Consequently,
the extent of the pandemic’s impact on the operational and financial performance of Cenergy
Holdings is uncertain and will depend on several factors outside our control. These factors
depend largely on the duration of the pandemic, the application of pandemic controls and
restrictions, and the availability and effectiveness of treatments and vaccines worldwide. The
range of potential outcomes for the global economy are difficult to predict and the outlook
for 2021, is itself subject to the manner the pandemic will continue to impact different
geographical areas.
Overall, despite current world market volatility, Cenergy Holdings expects to maintain the
positive momentum gained during the last two years. Its companies’ diverse business model
and solid organizational structure continue to provide resilience in this challenging
environment, providing confidence for long-term sustainable growth.
12
Segments’ Activities & Outlook
Cables
Activities
The cables segment of Cenergy Holdings is made up of three companies, hereafter collectively
referred as Hellenic Cables:
Hellenic Cables Industry S.A. (hereafter “Hellenic Cables Industry”) and its subsidiary
Fulgor S.A. (hereafter “Fulgor”), operating in Greece, and
Icme Ecab S.A. (hereafter “Icme Ecab”), operating in Romania.
Hellenic Cables is an approved supplier of the largest electricity Transmission System
Operators (“TSOs”) globally and operates one of the largest and most advanced submarine
cable plants in the world, located in Corinth, Greece. Ever since its beginning, Hellenic Cables
has adopted modern technologies to develop a wide range of innovative cable solutions,
aiming to provide competitive, cutting-edge products and services targeting international
markets. The product range includes a variety of cables and wires that cater to a number of
different market demands. It consists of submarine and land cables, low, medium, high and
extra high voltage power cables, umbilicals, fibre optic, data, signalling and
telecommunication cables as well as flexible subsea pipes.
Hellenic Cables Industry has more than 60 years of experience in the manufacture of power
and telecom cables and owns two plants in Greece, located in Thiva and Oinofyta. It
manufactures submarine and land power cables, ranging from low to extra high voltage,
telecom cables, all individually tailored to customers’ specifications.
Fulgor was established in 1957 and was acquired by Hellenic Cables in 2011. Over the past
sixty years, Fulgor has installed a large proportion of all power and telecommunications
networks and most submarine cable links in Greece. Its plant manufactures submarine cables
(ranging from medium to extra high voltage), submarine fibre optic cables, composite cables,
special purpose cables, and copper and aluminium wires and rods.
An intensive capital investment program in the last few years has enabled Fulgor to
successfully implement cost-effective, reliable and innovative solutions in complex turnkey
projects and won it a leading position in the submarine cable manufacturing market and in
the global offshore energy industry.
Icme Ecab, with over 50 years’ experience in the Romanian and international cable markets,
joined Hellenic Cables companies in 1999. It has a diverse product portfolio, focusing on
cables for indoor installations and selling both to the local and international markets, either
through the Hellenic Cables network or directly to end customers.
Cables segment’s clients include E.ON, Vattenfall, Tennet, Energinet, Ørsted, Enel, DEME,
Tideway, ENBW, SSE, Iberdrola, Electricity Northwest, Terna, DEWA, HEDNO, ADMIE (IPTO),
EAC Cyprus, Litgrid, Sonelgaz, Takreer, Motor Oil, Hellenic Petroleum, Carillion, Semco
Maritime, Aktor, Metka, ABB, Schneider Electric, Landis+Gyr, Siemens, Hyundai, Sagem,
Thales, Vivacom, Vodafone, Cyta, DNO, Cosmote, GO (Malta), Armentel, Santerne, ALSTOM
Transport, Bombardier, Siemens, Network Rail (U.K.), OSE (Greece), MAV (Hungary), Bulgarian
Railways, BKV (Hungary), Attiko Metro (Greece), and TE connectivity (Belgium).
13
Corporate strategy
The strategic objectives that guide the operational activities of the companies comprising the
Cables segment are as follows:
Continuously develop high added value products and services such as high and extra
high voltage submarine and underground cables as well as installation services and
turnkey solutions;
Diversify geographical footprint in dynamic regions such as Europe and the USA.
These are markets which invest heavily in the development of power and
telecommunication networks and in renewable energy projects;
Maintain high levels of productivity by further rationalising the cost base, enforcing
stricter inventory management and further improving the operational performance
of the production units;
Further improve liquidity through prudent working capital management; and
Preserve focus on human capital and on the sustainable development of its
companies.
Product portfolio
Hellenic Cables offers a wide
range of submarine and land
power cables (from low to
extra high voltage),
installation services and
turnkey solutions for power
grids, interconnections,
offshore and onshore wind,
solar energy, oil and gas and heavy industries. They also produce telecommunication and
data transmission cables, gauging and control cables, optical fibre cables (submarine, single-
mode and multi-mode), signalling and railway signalling cables, etc.
Turnkey solutions
Over the last years, Hellenic Cables has moved beyond being a pure supplier of cable products
for diverse applications and has evolved into Service Provider with the capability to manage
and deliver full turnkey projects, both onshore and offshore. To do so, Hellenic Cables has
established a dedicated, in-house Project Management Office which employs highly skilled
personnel and experienced subcontractors to accommodate the supply and installation of
medium to extra high voltage submarine cable systems, repeaterless optical fibre submarine
cable systems, underground power and composite power with rated voltage up to 400kV and
optical fibre underground systems.
Their capabilities include:
Project Management according to international standards;
System engineering according to specifications in consultation with the customer;
Cable route surveys at shore ends, in the open sea and in underground segments;
Design and manufacture of suitable cable types;
Transportation and installation on-site using specialised Cable Laying Vessels;
Supply of joints, passive branching units (repeaterless optical fibre links), transition
joints, terminations and repair joints, as required;
Cenergy Holdings cables segment
14
Protection of cables as necessary, through related civil works;
Commissioning of installed systems; and
Training customer personnel in operation and maintenance of the system.
Production and port facilities
Having invested significantly in the expansion and improvement of its manufacturing facilities,
Hellenic Cables and its subsidiaries operate an effective production base comprising three
plants in Greece, one in Romania and one in Bulgaria:
a. Thiva, Greece | Power and Optical Fibre Cables plant
Annual production capacity: 60,000 tonnes
The Thiva plant, owned by Hellenic Cables, covers a total surface area of 175,082 m
2
, including
53,237 m
2
of building facilities. It specialises in the production of land power and
telecommunications cables.
b. Corinth, Greece |Submarine Cables plant and port
Annual production capacity: 60,000 tonnes of cables & 90,000 tonnes of 8mm
diameter copper wire rod
The plant, owned by Fulgor, is located in Soussaki, Corinth, on a 210,630 m
2
land plot, with a
covered area of 87,292 m
2
facilities (incl. copper and aluminium foundries). Following the
implementation of an extensive investment plan during the last decade, the plant is now one
of the most advanced factories in the world for high and extra high voltage submarine cables.
Among its many unique advantages is vertical integration through in-house production of
copper and aluminium wire rod, the production of submarine cables up to 500 kV in very long
continuous lengths, direct loading on board cable-laying vessels at plant’s own port, accessible
all year around and one of the highest storage capacities (4 turntables with 8,000 – 12,000
tonnes of storage) in the world.
c. Bucharest, Romania |Power and Telecom Cables plant
Annual production capacity: 50,000 tonnes
The plant, owned by Icme Ecab, is located in Bucharest, Romania on a plot with a total surface
area of 268,000 m
2
. including buildings of 102,138 m
2
. It produces a wide range of land power
and telecom cables as well as other special-requirement cables.
d. Oinofyta, Greece |Plastic and rubber compounds plant
Annual production capacity: 24,000 tonnes
The Compounding Plant in Oinofyta, Greece supports Hellenic Cables for the production of
PVC and rubber compounds and covers a total surface area of 21,263 m
2
, including 9,072 m
2
of building facilities. A state-of-the-art, advanced polymer laboratory is part of the plant and
allows polymer analysis and specialised chemical testing focused on quality control.
15
e. Blagoevgrad, Bulgaria |Wooden packaging products plant
Annual production capacity: 16,500 tonnes of wooden packaging products
The plant, owned by Lesco O.o.d., is a modern timber company founded in 1998, located in
Blagoevgrad, Bulgaria and exclusively involved in the manufacturing of wooden packaging
products (pads, reels, pallets, packing cases) for the reeling of various cables.
Innovation, Technology and Investments
Following a comprehensive investment program during the last decade, in 2020 the Cables
segment further invested EUR 49.4 million. This allowed the Corinth plant to manufacture
submarine cables of up to 500kV in long continuous lengths and expand its annual capacity to
exceed 400km of high voltage cables. In the same context, the Corinth plant expanded its
inter-array cables production capacity to optimize its capabilities to serve a wide range of
offshore wind projects worldwide.
More important than investment in capital is, however, Hellenic Cables’ continued dedication
to Research and Development (R&D). A dedicated R&D Department, with top-tier researchers
and engineers, supported by advanced software tools and modern testing facilities, pursues
core research, product development, innovation and product optimization while also
providing technical support in engineering and manufacturing. This effort supports further the
strategy to more green products, with less environmental impact.
Hellenic Cables collaborates with a number of universities and research institutions to build
research networks and foster new technologies. Among those, we note numerous institutions
in Greece (National Technical University of Athens, University of Patras, Aristotle University
of Thessaloniki, Democritus University of Thrace), Exeter University (UK), Southampton
University (UK), University of Montpelier (FR), University of Torino (IT), as well as certification
bodies such as SINTEF (NO), KEMA-DNV GL (NL), EdF (FR).
2020 Research & Development activities
Hellenic Cables has a strong in-house, lean-type, R&D department, which supports the 5-year
growth plan of the segment focusing on the following topics:
New product development
During 2020, the R&D team delivered several new products related to awarded commercial
projects of ca. EUR 280 million gross revenues, including framework contracts. The successful
completion of the qualification plan for the longest ca.136 km subsea 150kV High Voltage
Alternative Current (HVAC) cable, designed for the Crete – Peloponnese subsea
interconnection in Greece and depths of around 1,100m was a great achievement. At the
same time designs proposed for several projects (such as those listed in the next section) were
accepted and the respective projects awarded to Hellenic Cables.
The Company is advancing fast in the development of High Voltage Direct Current (HVDC)
technology as it remains one of the core strategic choices of further growth. The qualification
plan is on track, while the new facility for in-house manufacturing and testing of AC and DC
accessories completed in 2019 is now fully operational.
16
Product redesign
The R&D compounding department accelerated its efforts towards a “greener” economy by
increasing the usage ratio of recycled materials. The process of collecting and processing
business units’ waste into raw materials was challenging but allowed the company to
demonstrate its commitment to the “circular economy” and CO
2
emissions control. As several
compounds were invented in house, the technological knowhow of the company increased,
making our products competitive in cost and quality.
Innovation
In 2020, the R&D team published seven original articles on technology topics in worldwide
scientific journals and conferences, together with related advanced calculation methods. This
scientific research is a central feature in attracting invitations by several international
consortia of the cables industry to cooperate on new projects, with notable financial and
development benefits for the segment.
The total R&D expenses for 2020 amounted to EUR 8.2 million (2019: EUR 7.5 million), out of
which EUR 2.7 million (2019: EUR 3 million) concerned fundamental research and customer
specific research activities.
Recent projects
Despite a full production schedule, Hellenic Cables continued its tendering efforts across a
number of geographical areas and succeeded to secure several awards for new projects and
frame contracts, both in the offshore and onshore sector:
In the Offshore segment, Hellenic Cables was awarded the biggest-ever inter-array
cables contract to supply of 650 km 66 kV inter-array cables for phases A & B of the
Dogger Bank offshore wind farm in the UK. Other major offshore projects were the
Skiathos island 150 kV interconnection in Greece and the Seagreen offshore wind
project in the UK, for the supply of 66 kV inter-array cables.
In the Onshore segment, important frame agreements and turnkey contracts across
Europe were awarded to Hellenic Cables. SP Transmission plc., one of UK’s largest
grid operators, awarded a turnkey contract for the supply and installation of 132 kV
cables for the Douglas North project. In Denmark, TSO Energinet selected Hellenic
Cables as one of three cable manufacturers in its 8-year frame agreement for High
Voltage underground cable systems (145-170 kV). Furthermore, a 5-year frame
contract was awarded by DSO purchasing consortium Fluvius in Belgium, for Low
Voltage cables.
17
A list of major projects awarded in 2020 follows.
Project /
Frame contract
Customer
Description & Scope
Execution
period
Dogger Bank
A&B, UK
DEME
Offshore
Design, manufacture, test and supply
approx. 650 km of 66 kV inter-array
cables and associated accessories.
Dogger Bank Wind Farm is developed in
three 1.2 GW phases by JV partners SSE
Renewables and Equinor.
2020-24
Seagreen
Offshore Wind,
UK
Subsea 7
Design, manufacture, test and supply
approx. 320 km of 66 kV inter-array
cables and associated accessories.
Seagreen offshore wind is a 1,075 MW
project jointly developed by SSE
Renewables and Total SA.
2020-22
Douglas North,
UK
SP
Transmission
Supply approx. 10 km of 132 kV cables
and associated accessories, including
installation and testing services through
selected partners in the UK.
2020-21
HV Frame
contract,
Denmark
Energinet
8-year frame contract for High Voltage
underground cable systems (145-
170 kV)
2020-28
LV Frame
contract,
Denmark
Purchasing
consortium
Fluvius
5-year frame contract for Low Voltage
cables
2021-25
18
A list of major projects ongoing or delivered in 2020 follows.
Project
Customer
Description & Scope
Execution
period
Crete-
Peloponnese,
Greece
ADMIE
1
Onshore segment (290 km underground
cables, 150kV) delivered successfully.
2018-22
Hollandse Kust
Zuid A&B, The
Netherlands
TenneT
Phase A was completed in the
Netherlands, with the delivery of the
first of two 220 kV subsea cables.
2018-22
Skiathos island
interconnection,
Greece
ADMIE
The subsea cable was tested
successfully several months ahead of
schedule.
2020-21
Otary Seamade,
Belgium
Seamade NV
Design, engineering, manufacturing,
testing and supply of two submarine
cables of approx. 30 km length to
interconnect MOG OSY platform with
Mermaid OSS and Seastar OSS
platforms.
2019-20
Rio-Antirio 400 kV
Link, Greece
ADMIE
Onshore segment (42 km underground
cables, 400 kV) delivered successfully.
2019-20
It is important to note here that, despite the implementation of several restrictions in the free
flow of people and goods globally due to Covid-19, Hellenic Cable accomplished on-time
delivery of such complicated projects. Such success is fully attributable to the company’s strict
adherence not only to external mandates, but also to internal safety protocols and procedures
and continuous coordination with clients and supply chain partners.
2020 financial performance
Cables segment’s 2020 results are characterized by the solid growth of projects’ business and
the financial resilience demonstrated throughout the Covid-19 crisis. The products business
and especially telecom cables, was, as expected, hit during the 2nd quarter by the pandemic
crisis, despite a promising start during the first months of the year. However, the second half
of the year witnessed a sound recovery for this business in our main markets in Central Europe
and the Mediterranean, as lockdown measures ceased or softened. Despite the challenges
faced, all companies achieved a high capacity utilisation level in all production units that drove
operational profitability (adjusted EBITDA) higher by 24.5% compared to 2019.
As described in the previous section, the projects’ business did very well throughout the year,
winning important new awards and securing a robust order backlog. On the other hand, the
products business units recorded a steady sales volume in line with 2019 and succeeded in
improving the sales mix towards higher value-added products. In other words, the negative
1
The Transmission System Operator (TSO) for electrical power in Greece
19
impact of the Covid-19 crisis on telecom products was counterbalanced by solid demand for
medium voltage power cables coming from Central Europe, together with a recovery in the
low voltage market from the 3
rd
quarter onwards.
It is also worth noting that all plants, irrespective of their specific product range, remained
fully operational throughout the Covid-19 crisis, since an action plan to adapt to stricter health
and safety standards, secure an undisrupted supply chain and mitigate financial impact with
liquidity preservation, was immediately put in place from mid-March 2020 onwards.
Driven by the above, cables segment exhibited a EUR 15.9 million increase in adjusted EBITDA,
reaching EUR 80.8 million in 2020, up from EUR 64.9 million in 2019.
Corresponding profit before income tax reached EUR 35.0 million, compared to EUR 26.1
million in 2019, while net profit after tax followed the same trend and reached EUR 26.2
million (EUR 18.5 million in 2019).
The segment’s net debt decreased by more than 5% y-o-y (from EUR 256 million on
31.12.2019 to EUR 242 million on 31.12.2020). The determination to re-profile debt, secure
lower financing costs and achieve an effective capital structure continued with actions
including, among others, the issuance of a EUR 20 million-bond loan to finance offshore
projects.
The summary consolidated profit and loss statement of the cables segment is as follows:
Table 3: Profitability Analysis – Cables segment
(Source: Consolidated Statement of Profit or Loss and Alternative Performance Measures)
Amounts in EUR thousand
FY 2020
FY 2019
Revenue
599,858
579,716
Gross profit
79,609
66,674
Gross profit margin (%)
13.3%
11.5%
a-EBITDA
80,791
64,900
a-EBITDA margin (%)
13.5%
11.2%
EBITDA
71,341
64,905
EBITDA margin (%)
11.9%
11.2%
a-EBIT
65,566
48,374
a-EBIT margin (%)
10.9%
8.3%
EBIT
56,116
48,380
EBIT margin (%)
9.4%
8.3%
Net finance costs
(21,034)
(22,273)
Profit before income tax
35,082
26,107
Net margin before income tax (%)
5.8%
4.5%
Profit after tax for the year
26,236
18,504
Profit attributable to owners
26,237
18,516
2021 Outlook
Regarding the cables projects business, given the existing backlog and the nature of projects
assigned and based on currently available data and information, the impact from Covid-19 on
long term business and on short-term financial results is expected to be limited. Considering
the strong forecast of new projects and the potential of expanding to new markets, the
20
secured orders and the growth potential of the offshore cables sector, the overall outlook for
cables segment remains positive for 2021. The European “Green Deal”, EU’s roadmap for
economic sustainability and climate neutrality by 2050, the promising emerging offshore wind
market in the USA and the projects announced in the Mediterranean area create a favourable
environment for projects business, as demand for both offshore and onshore power cable
systems is expected to increase. Fulgor’s plant (i.e., the submarine cables business unit) is
expected to retain its high capacity utilisation throughout 2021, continuing to drive the entire
segment’s profitability.
Furthermore, in the cable products business unit, some signs of demand stability in its main
markets of Western Europe, Middle East and the Balkans, start to appear as demand from
construction and industrial use showed signs of recovery during H2 2020, after being strongly
hit during the first wave of the pandemic. Such markets, however, continue to experience
competitive challenges and the segment subsidiaries will actively seek to geographically
diversify their revenue streams.
Finally, the focus for the cables segment always remains the successful execution of existing
projects and the award of new ones, while optimising internal processes to take advantage of
any arising new market opportunity.
Further information is available on the Hellenic Cables website: www.hellenic-cables.com
Steel pipes
Activities
With a manufacturing plant in Greece and extensive expertise in delivering complex projects
on a global scale, Corinth Pipeworks (hereafter “CPW”) is the supplier of choice for oil, gas and
international construction companies with its production of steel pipes used in the extraction
and transportation of oil and gas, and hollow structural sections for construction applications.
Corinth Pipework's clients include ABB, Allseas, AnlgoAmerican, BP, Cheniere Energy,
Chevron, DCP Midstream, Denbury, DEPA, DESFA, DNOW, E.ON, EDF, Enbridge, Energy
Transfer, ENGIE, ENI, EPCO, EXXON MOBIL, GASCO, Gaz System, Genesis, KPO, MRC Global,
National Grid, Noble Energy, OGC, OMV, PDO, PEMEX, Plains All American, Qatar Petroleum,
Repsol, Saipem, Sapura energy, Saudi Aramco, Shell, Snam, Socar, Sonatrach, Spartan, Spectra
Energy, STEG, Subsea 7, TechnipFMC, Terega, Total, Whitewater Midstream, Wintershall etc.
The segment’s ability to manufacture cutting edge products and remain at the forefront of its
industry through investment in R&D, drives operational efficiency and commercial
achievements across the world. CPW often collaborates with international research
organisations, including the European Pipeline Research Group (EPRG) and the Welding
Institute, as well as regularly participates in research projects linked to its core business
activities.
Corporate Strategy
CPW is a global manufacturer and supplier of high-quality steel pipes and hollow sections for
the energy and construction sector.
Steel pipes segment’s strategic priorities consist of:
21
A commitment to contribute in a positive way to the energy transition and confront
climate change by developing innovative solutions and decrease segment’s carbon
footprint.
Establishing CPW as our customers’ first choice: meeting their expectations, gaining
their trust, offering high quality products and excellent service in a particularly
competitive market.
Striving to always be one step ahead, by developing products and services based on
new technologies and well-established technical practices.
Constantly investing in state-of-the-art technologies as well as in the development of
our experienced human resources. We are committed in achieving long-term growth,
which benefits our customers, suppliers, people and shareholders, as well as the local
community.
Product portfolio
CPW produces high-quality steel
pipes to safely transport oil, gas
and water, to carry CO
2
and slurry,
as well as casing pipes for drilling
operations. Its key products
include longitudinal and helical
seam welded steel pipes (with
medium and large diameters), as
well as hollow structural sections
for construction applications. Its long history of innovation and integrated services have
cemented its position as a major steel pipe supplier.
CPW’s three main product categories are:
1. Line pipes – manufactured either in the plant’s high frequency induction welding unit
(HFW), or the helically submerged arc welding unit (HSAW) and the longitudinal
submerged arc welding unit (LSAW/JCOE).
2. Casing pipes – these high-frequency induction welded pipes (HFW) are used in oil and
gas extraction drills; their product range was expanded by the installation of the new
LSAW mill in 2016.
3. Hollow structural sections – used in the construction sector.
Services
Internal and external coating of pipes produced by other pipe manufacturers;
Accredited laboratory for raw material and pipe testing, in accordance with ISO
17025:2006;
In-house corrosion testing laboratory for sour service applications;
Weld-on connector facilities for casing pipes;
Pipe storage;
Supply of pipes or assignment of pipe coating to third party authorised subcontractors
in the context of a major project implementation;
Pipe transportation.
Cenergy Holdings steel pipes segment
22
Production and port facilities
CPW’s industrial plants are located in Thisvi, Viotia, Greece and Polevskoy, Russia.
a. Corinth Pipeworks Pipe Industry plant and port | Thisvi (Greece)
Annual production capacity: 925,000 tonnes
CPW’s owns a state-of-the-art production plant in Thisvi, in the Viotia province of Greece,
covering a total surface area of 103,000 m
2
inside a larger area of 497,000 m
2
. The plant has
the exclusive use of port facilities located approximately 1.5 km away, a strategical advantage
as it enables CPW to reduce transportation costs on raw materials and offer more competitive
pricing and faster delivery of its products. The port includes a fully operational set of cranes,
forklifts and other machinery, in line with the provisions of the International Ship and Port
Facility Security Code.
Inside that plant, CPW has recently installed a concrete weight coating facility, enabling it to
offer, in one location, all pipe manufacturing and pipe coating operations required for the
supply of a complete offshore pipeline package.
b. AO TMK-CPW plant | Polevskoy (Russia)
Annual production capacity: 200,000 tonnes
AO TMK-CPW plant in Russia manufactures high frequency welded pipes and hollow structural
sections. It uses equipment with very high technical specifications, which allows for the
production of pipes measuring 168-530mm in diameter, with 2.9-12.7mm wall thickness and
up to 18m in length, and hollow sections in line with international quality standards.
Innovation, Technology and Investments
CPW focuses on programs that ensure its technological superiority, digital transformation and
business excellence. It is systematically investing in the research and development of new
technologies related to pipe manufacturing:
Developing pipes for transporting hydrogen and hydrogen–natural mixes;
Improving HFW autogenous welding technology/Improvement of submerged arc
welding (SAW) technology;
BEST, operational excellence program;
Digital human resources management;
Non-destructive technologies testing;
Hydrogen sulphide resistant steel pipes;
High pressure bearing offshore pipes/Depth bearing submarine pipes;
Potential pipe breakage at low (sub-zero) temperatures;
Wind energy: market study regarding wind energy sector and the potential of offshore
parks.
Last but not least, following the investment programs that took place during the last decade,
the steel pipes segment further invested EUR 15.5 million in 2020.
2020 Research & Development activities
CPW is constantly following international trends regarding the objectives of the Paris
Agreement and accordingly adapts its actions and plans. This is a strategic choice for the
company, as it endeavours to strengthen its competitiveness and create value for its
23
stakeholders in a dynamic environment that promotes transition to a low-carbon future. CPW
closely follows all initiatives and commitments set out in the European “Green Deal” and takes
necessary measures to reduce its environmental impact and carbon footprint in its production
processes, enabling its own customers to reduce their emissions in turn.
Our actions in 2020 for tackling climate change and integrating CPW within the future world
markets of energy included:
Carbon Emissions: We are proud to announce that we are, globally, the 1
st
steel pipe
manufacturer for the energy sector, whose operations have net zero carbon
emissions (ISO 14064 GHG scope 1 & 2).
Carbon Capture, Usage and Storage (CCUS): CPW already has a marked, lengthy
experience in CCUS as it has produced for the last 15 years, CO
2
transportation
pipelines with a total length of over 1,150 km and is ready to face any new challenges.
Digitalization: CPW implements a digital transformation program, using all
advantages offered by the use of new technologies. It has already digitised a large
percentage of its human resources system, through the “SAP SuccessFactors” cloud
platform. The Intelex digital platform is also used to report all Health and Safety
incidents as well as environmental events. Finally, a specialised and customised
platform is used to automate Quality Management System processes.
Hydrogen: CPW is currently conducting research regarding the development of
hydrogen and hydrogen-natural gas mix transportation pipes.
Recent projects
2020 was indeed a challenging year for steel pipes segment: energy markets were strongly
shaken by the historic oil & gas price drop in 2020, rooted in a price war between major
suppliers and leading to the postponement or even cancellation of many fossil fuel
distribution projects. Capital expenditure from Exploration and Production (E&P) companies
around the world suffered major drawbacks: exploration capex for prospective gas plays in
2020 hit the lowest level in at least two decades
2
, while E&P companies in North America had,
during Q2, to almost halve their 2020 capex budgets, already lower than the 2019 levels.
International Oil companies and National Oil companies followed suit, though at a more
contained pace.
3
The outbreak of the Covid-19 pandemic further disturbed energy demand due to the extended
lockdowns around the globe. Last but not least, the strong protectionist measures, mostly in
the USA, on the steel market and particularly on large diameter welded pipes impacted even
more the global market access of CPW.
In such an unwelcome environment, the company still achieved a solid presence in
international markets though it suffered a decrease in sales volumes compared to prior years.
CPW succeeded in maintaining its reputation as a top-quality producer keeping its market
share and effectively entering new markets.
2
International Energy Agency, “Gas Market Report – Q1-2021”
3
International oil companies revised 28% downwards their capex budgets while NOCs decreased them by 24% (Duff & Phelps,
Oil and Gas Advisory, Capex Cut Tracker, June 01, 2020)
24
During 2020, CPW was awarded major projects, including:
A 142 km gas pipeline of 32-36” pipes (“Baltic Pipe” project), operated by Energinet
in Denmark;
A project by Anglo American Sur S.A. for the manufacture and supply of 35km of 24”
steel pipes to transfer slurry for the Los Bronces Pipeline Replacement project, located
in the Andean Mountains at an average altitude of 3,500m;
93km of 16” offshore pipeline in the Gulf of Mexico, awarded by Shell (“Colibri”
project);
150 km of 12” gas pipeline awarded by Petroleum Pipelines Company in Egypt;
An agreement to manufacture and supply HFW steel pipes to Subsea 7 (US) LLC for
the development of the King’s Quay deep-water project in the Gulf of Mexico
operated by Murphy Exploration & Production Company – USA.
Finally, in the course of the year, CPW successfully continued its intense program of
qualifications from major Oil & Gas companies along with innovative programs to enhance
competitiveness like “Manufacturing Excellence”, the road to digitalization of processes and
the revolution of Industry 4.0.
2020 financial performance
In a difficult year for the steel pipes segment, as dictated by adverse market conditions
outlined above, revenue for the segment declined considerably to EUR 309 million in 2020,
18% lower from its 2019 levels of EUR 378 million.
Nonetheless, Corinth Pipeworks showed a lot of resilience, first and foremost by safeguarding
its personnel safety and securing uninterrupted production for all current projects. It also
swiftly initiated a strict working capital management program that secured liquidity and
allowed the operating activities to finance the investments of EUR 15.5 million that took place
during 2020.
During the latter part of the year, CPW managed to execute a significant part of its backlog,
while implementing a cost optimization programme. This action plan led the segment
increasing its profit margins in terms of a-EBITDA (8.1% for H2 2020 versus 7.2% for H2 2019
and 5.7% in H1 2020) and recording profit before tax of EUR 3.4 million, which covered losses
recorded during the first semester of the year.
Overall for 2020, gross profit decreased to EUR 23.9 million in 2020 (from EUR 31.8 million in
2019) and adjusted EBITDA followed, down to EUR 21.7 million (EUR 26.8 million in 2019). As
a result, the segment recorded a marginal profit before tax of EUR 1.3 million for 2020,
compared to EUR 4.0 million in 2019.
In 2020, the segment managed to produce significant free cash flows, in spite of the decrease
in operating profits. This was a result of a large decline in net debt from EUR 160 million as of
31 December 2019, to EUR 89 million. Long-term debt was also partially refinanced with more
favourable terms, through the issuance of two bond loans amounting to EUR 16 million in
total.
25
The summary P/L consolidated statement of the steel pipes segment is as follows:
Table 4: Profitability Analysis – Steel pipes segment
(Source: Consolidated Statement of Profit or Loss and Alternative Performance Measures)
Amounts in EUR thousand
FY 2020
FY 2019
Revenue
308,559
378,276
Gross profit
23,884
31,816
Gross profit margin (%)
7.7%
8.4%
a-EBITDA
21,681
26,760
a-EBITDA margin (%)
7.0%
7.1%
EBITDA
20,767
26,744
EBITDA margin (%)
6.7%
7.1%
a-EBIT
12,838
16,340
a-EBIT margin (%)
4.2%
4.3%
EBIT
11,924
16,324
EBIT margin (%)
3.9%
4.3%
Net finance costs
(10,603)
(12,336)
Profit before income tax
1.321
3,988
Net margin before income tax (%)
0.4%
1.1%
Profit (loss) after tax for the year
(472)
3,276
Profit (loss) attributable to owners
(472)
3,276
2021 Outlook
The global economic environment in which Corinth Pipeworks operates remains volatile.
Main points are expected to be the confrontment of the COVID-19 pandemic that will lead to
the rebound of energy demand and the accelerated energy transition scenario. Despite these
headwinds, Corinth Pipeworks remains focused on maintaining its leading position, through
new investments, research & development initiatives concerning hydrogen and wind sector
and the penetration of new geographical and product markets. It intensifies its efforts to
enhance competitiveness and qualify for tenders offered from major Oil & Gas companies.
This effort involves, among other projects, the “Manufacturing Excellence” program, an
attempt to process digitization and schemes to introduce Industry 4.0 into CPW’s production
lines. The transformation of CPW to a more diversified product profile is an essential part of
its innovation agenda throughout 2021. Corinth Pipeworks maintains its positive outlook for
2021, with the execution of its backlog and the upcoming finalization of many projects that
had been put on hold due to the pandemic.
Further information is available on the Corinth Pipeworks website: www.cpw.gr
Subsequent events
There are no subsequent events affecting the Consolidated Financial Information presented
in this Annual Report.
26
Risks and Uncertainties
Cenergy Holdings’ Board of Directors is the highest body responsible for assessing the risk
profile of its companies. Being a holding company, Cenergy does not have itself any
production operations, customers, suppliers, or personnel (besides employees for
administrative tasks), therefore any risks affecting it originate at its subsidiaries and their
operations, suppliers, clients and personnel.
Cenergy Holdings’ companies operate in dynamic markets with quite different characteristics,
hence risks are to be managed in a structured way in order to reduce potential negative
financial impact. The goal for each company is consequently to identify, measure and
prioritize risks and to react appropriately with suitable actions that mitigate, reduce or control
the impact of negative events. Cenergy views risk management as a tool which adds value by
raising awareness of risks and places focus on efficient daily operations in line with each
company’s strategy.
Still, a set of common guidelines for an Entreprise-wide Risk Management (ERM) framework
across Cenergy Holdings’ subsidiaries exist: these include principles for effectively managing
risks in all subsidiaries. Furthermore, the framework provides guidelines on how best to
address these risks and facilitates discussion on risk management issues.
In turn, Cenergy Holdings’ executive management in consultation with the Board of Directors
is responsible with successfully exploring business opportunities, whilst at the same time
assessing possible risks and their control mechanisms across subsidiaries, with the help of an
independent Internal Audit department. The objective of this evaluation is to enable the
Company to determine whether the subsidiaries have managed risks in a proactive and
dynamic way to mitigate them down to an acceptable level.
The ERM process in Cenergy’s subsidiaries comprises the following steps:
a) Identify key risks and measure / analyse their potential impact and likelihood. This is
done at company level as all financial, operational, compliance and strategic risks are
associated with each company’s operation.
b) Manage (i.e., respond to) those risks by considering existing controls as well as
selecting, prioritising and implementing appropriate actions. This step is also done at
company level, following the general principles outlined in the ERM framework.
c) Control and monitor internal and external environment for potential changes to risks,
ensuring risk responses continue to be effective. Each company monitors its risks and
risk responses, using the common ERM guidelines but separate procedures, systems
and mechanisms put in place by each company’s management.
d) Finally, companies report both internally and at Cenergy Holdings’ level, a
consolidated evaluation on their risks, integrated with a review of their financial
performance. Hence, Cenergy Holdings’ executive management judges their overall
risk – return trade off and presents the outcome to the Audit Committee and the
Board of Directors. Needless to say that the Audit Committee monitors the
effectiveness of the subsidiaries’ internal controls and looks into specific aspects of
controls and risk responses on an on-going basis.
The fact that each company’s main revenue streams originate from separate markets with
independent market dynamics provides, to some degree, a “natural” risk diversification
effect. Still, the fact that Cenergy companies are in one way or another, related to the global
trends of the energy markets, means that they would in principle, face similar risks. We could,
27
however, say that the businesses of the HV cables segment of cables and of the large diameter
pipes segment are primarily driven by large infrastructure projects and are, hence, essentially
decoupled from short-term macroeconomic developments. On the other hand, a part of
cables sales and the hollow section of CPW is linked to construction activities, a highly cyclical
sector.
In pages 12-25, the development per business line in 2020 is described. The company’s
enterprise risk management (ERM) model outlined above ensures that risks are captured and
dealt with primarily by the business line managements and, if needed, by the support
functions. This tailored reporting structure ensures company-wide awareness of risks,
opportunities and mitigating actions.
Key risks
Risks are classified into two major families, Financial and Business Risks. The former includes
different types of market risk affecting the activity of each subsidiary (mainly, exchange rate,
interest rate and commodities risk) as well as credit risk, counterparty risk and liquidity risk.
The Business Risk family, broadly defined as all risks that are not balance-sheet related, is
broken down into further sub-categories, to help better understand and react to the different
risk events:
A. Operational and technology risks defined as the risk of loss resulting from inadequate
or failed processes, people and systems or from external events. Operations risks
comprise all risks associated with the day-to-day operations such as Health & Safety,
environmental issues, legal risk (as it refers to processes) but not strategic or
reputational risks.
B. Compliance and reputational risks include possible negative impacts (economic –
fines, penalties, etc. and other – exclusion from markets, etc.) from noncompliance
with existing regulations and standards. Also included are potential impacts to the
subsidiaries’ (and the Holdings’) brand image and business
4
reputation, as well as
accounting risk
5
.
C. Strategic risks include risks related to the wider business environment (e.g. the
macroeconomic environment, the sector / industry conditions, etc.) the market and
the competition, and medium to long-term decision making that may impact on
business continuity and profitability.
A brief business risk taxonomy for Cenergy Holdings’ subsidiaries is presented below, together
with the actions taken to identify, measure, react, control and monitor them. Then it is
prudent to sketch a “risk matrix” for the 5 most important risks faced by Cenergy companies.
4
The set of perceptions about the company by the different stakeholders with whom it interacts, both internal and external.
5
The risk which concerns the proper and true economic and financial reflection of the companies’ reality as well as compliance
with all related regulations (IFRS, etc.).
28
Business Risks
Operations and technology
Channel effectiveness risk
Poorly performing or positioned distribution channels may threaten the companies’ capacity
to effectively and efficiently access current and potential customers and end users, so in turn,
they manage it through experienced commercial executives per project / market; periodic
financial reviews serve as the main monitoring tool.
Procurement risk
Since a disruption in the supply of energy, metals and other key raw materials and component
parts may threaten the companies’ ability to produce quality products at competitive prices
on a timely basis, they all take relevant measures to reduce such risks (e.g. a diverse supplier
base, alternate material lists, Service Level Agreements with key vendors, lower spot market
exposure).
Operation interruption risk
Apart from the unexpected unavailability of raw materials or other crucial resources, a lack of
skilled labour, a delay in adapting new technologies and / or the danger for equipment
breakdowns may threaten all subsidiaries’ capacity to continue operations. Consequently, all
companies use specialized maintenance departments to minimize the latter, upgrade plant
equipment and production lines to reduce obsolescence risk and constantly monitor safety
stock levels. Moreover, some of the plants, facilities and production lines are interchangeable
and have been mapped to ensure shifting and continuation of production if such a need arises.
Any residual risk is mitigated through business interruption insurance policies.
Product failure risk
Faulty or non-performing products may expose companies to penalties, complaints, claims
and returns, which lead to loss of revenues, market share and business reputation. To
proactively mitigate such risk, all companies follow rigorous quality management systems at
their plants and maintain appropriate insurance coverage against such claims as well as
product liability insurance. Quality control includes batch or item sample testing, defect
capturing monitoring systems spread out in production phases, end-to-end traceability
systems, etc.
Information technology (IT) risk
IT risk is usually defined as the likelihood of occurrence of a particular threat (accidentally
triggered or by intentionally exploiting a vulnerability) and the resulting impact of such an
occurrence.
Most of Cenergy Holdings’ subsidiaries being capital intensive, they rely on IT systems to guide
and optimize their production. IT equipment failure, human errors and/or the unauthorized
29
use, disclosure, modification or destruction of information, pose serious risks to the
companies’ operation and profitability. Hence, the continuous identification and application
of appropriate and proportional controls that limit exposure against the aforementioned
threats is vital to the integrity of IT systems in all companies as well as against legal
requirements.
Furthermore, all subsidiaries are complying with 2016/679 EU General Data Protection
Regulation (GDPR), taking this opportunity to evaluate and ameliorate their overall IT risk
posture, beyond regulatory requirements.
Compliance and reputation risks
Financial Regulation risk
In regards with the requirements arising from its stock exchange listings, Cenergy Holdings
has established necessary structures and procedures in order to ensure continuous
compliance, including the adoption of its Corporate Governance Charter, which covers issues
such as directors’ and managers’ accountability, good governance principles, insider dealing,
and conflicts of interest.
Compliance Risk
Laws and regulations apply to many aspects of subsidiaries’ operations including but not
limited to, labour laws, Health & Safety, environmental regulations, building and operational
permits, etc.
Cenergy Holdings requires all companies in its holding portfolio to abide by all laws and
regulations, whether at the local, European or international level accordingly, regarding
Health and Safety in the production plants, labour and human rights, the protection of the
environment, anti-corruption, bribery and financial fraud. Being a holding company, Cenergy
Holdings requires its subsidiaries to develop their own policies for all such matters and the
subsidiaries are exclusively responsible for the compliance with these policies.
Additional details are further given in the Non-Financial Information section (pp. 35-49).
Strategic risks
Country risk
Political risk of countries where Cenergy’s companies are active, commercially or in
production, may threaten future product and cash flows, both upstream and downstream.
The main answer to that risk is geographical diversification, in manufacturing, supply chain
and distribution.
For manufacturing, Cenergy companies are currently present in 3 EU countries (Greece,
Romania and Bulgaria) that pose a minimum, if not zero, political risk. The availability and
prices of basic raw materials, such as copper, aluminium and steel follow international
markets, not affected by development in any particular country. Finally, subsidiaries
distributed their products in more than 50 countries worldwide in 2020, with more than 65%
of any company’s 2020 turnover derived from markets outside their production sites.
30
Cenergy Holdings’ subsidiaries follow closely and on a continuous basis the developments in
the international and domestic environment and timely adapt their business strategy and risk
management policies in order to minimize the impact of the macroeconomic conditions on
their operations.
Concerning potential implications from the Brexit, Cenergy Holdings is closely monitoring
relevant developments and taking measures to mitigate any disruption. As of January 1
st
,
2021, customs formalities, like those applied on the movement of goods between the EU and
any other third country, apply to all goods being exported from an EU Member State to GB.
There is no transition period for imports into the EU. Formalities and relevant controls may
lead to longer delays at customs. In general, goods entering the EU from GB after the end of
the transition period must also be covered by an entry summary declaration. Cenergy
Holdings companies follows the guidelines provided by the competent authorities in order to
mitigate any delays related to imports or exports of goods and to avoid any business
disruption. Exports to the United Kingdom accounted for approximately 7% of total revenues
for 2020, while most of direct competitors in the cables and steel pipes segments operate
within the Eurozone. Thus, it is likely they will react to potential significant currency
fluctuations accordingly. To summarize, from the analysis performed up to date, Brexit is not
expected to have any material adverse effect on the operations of Cenergy Holdings.
Industry risk
Industry risk of Cenergy companies related to the specific sector they operate in, is associated
either with the cyclicality of demand or the substitution rate of some of their products. The
former is mitigated by expanding into global markets, so that the cycle effects are
differentiated away across geographical areas. As for the latter, substitution risk is addressed
through the differentiation of their product mix, shifting for example into lower substitution
rate products.
Competitor risk
Strategic issues regarding competition are assessed as part of the annual budget process of
all Cenergy Holdings’ subsidiaries, as well as the strategic markets plan of each company. Daily
management of competitor risk, on the other hand, is captured through daily review of market
information and mitigated by a strong commitment to quality, a competitive pricing policy in
commodity products and a targeting on high-margin products.
Technological innovation risk
In a world of rapidly changing technology, not following the technology wave in an efficient
manner or not investing in the necessary IT infrastructure may seriously affect current and
future business results. Alternatively, companies that do not leverage such technology
advancements to extend their competitive advantage, may be “left out in the dark” and suffer
from competition. This strategic risk is primarily managed by Cenergy’s subsidiaries through
the establishment of technical assistance and knowledge transfer agreements with global
leaders in their sectors. All companies invest strongly in research and development (R&D),
cooperating with scientific bodies and prominent international research centres, and most of
them host dedicated R&D departments.
31
The segments’ primary business risks are shown in the risk matrix below according to
likelihood and impact.
Figure 1: Cenergy Holdings Risk Map for 2021
R1
R2
R3
R4
R5
Likelihood
Impact
Low Medium High
Low
Medium
High
32
Table 5: Major Risks for Cenergy Holdings companies (2021 estimate)
No.
Segment /
Taxonomy
Identification
Monitoring
Mitigation
R1
Steel Pipes /
Competitor
risk
Sales to the US
US project orders
expected to
decrease from 2020
levels with tariffs
protecting local
suppliers
CPW expects to be well
positioned to capture
relevant market share
despite intense
competition. CPW also
seeks new market and
customer opportunities to
maintain or increase sales
volumes and revenue.
R2
Cables /
Technological
innovation
risk
New product
qualifications
Ongoing test
processing
Hellenic Cables believes
adequate resources are
allocated to new product
qualifications and that such
processes are monitored
closely to achieve timely
completion
R3
Steel Pipes /
Procurement
risk
Steel prices
Price pressure and
demands on
Working Capital
CPW continually seeks to
obtain the most favourable
trade terms with its
suppliers
R4
Cables /
Product
failure risk
Offshore project
execution
Hellenic Cables has a
history of successful
project execution
and closely monitors
activities, addressing
issues in all project
phases with
dedicated teams
Specific risk management
guidelines and actions as
well as production testing,
insurance and provisions.
R5
Steel Pipes /
Industry risk
De- carbonization
trend in energy
supply
CPW monitors oil
and gas
infrastructure trends
as well as those for
alternative energy
sources.
CPW continuously
examines new business
opportunities, including
markets away from the oil
and gas sector and seeks to
diversify its revenue
sources.
As for the global macroeconomic risk of a new upsurge of the Covid-19 pandemic, we must
note that it has had so far limited operational impact on both segments; all companies do,
however, continue to keep in place all supplementary health and safety measures in favour
of their personnel initiated in 2020 and are scrutinizing their workplace for any event that may
disrupt their production continuity.
Financial risks
As complex, international businesses Cenergy Holdings’ companies are also exposed to
financial risks not covered in the above risk matrix. These risks arise from financial market
fluctuations and primarily consist of currency and commodity risk exposures. Cenergy
33
companies first try, if possible, to “naturally hedge” any such risks, and then utilize varied
financial derivatives to hedge large exposures and protect earnings and assets from significant
fluctuations.
Interest rate risk
As a rule, Cenergy entities do not enter into speculative positions on interest rates of any kind
and always try to follow natural immunization strategies. On the other hand, given the current
low interest rate environment, each entity tries, in the measure possible, to secure fixed and
low rate credit lines to avoid cash flow shocks and facilitate capital budgeting.
The interest rate profile of Cenergy Holdings, on a consolidated basis, as of 31 December 2020
consists of EUR 39.5 million of fixed-rate financial instruments and EUR 372.1 million of
variable-rate instruments. Moreover, a change of 25 basis points in interest rates of variable-
rate financial liabilities would have a positive or negative effect of EUR 1.31 million after tax
in the Consolidated Profit / Loss statement of 2020.
Currency risk
Cenergy Holdings holds stakes in companies with production plants and commercial relations
spanning the globe. As such, they are exposed to financial (transaction), accounting
(translation) and economic losses due to volatility in foreign exchange rates. Companies
manage this risk in a prudent manner, trying for natural hedges whenever possible (i.e.
matching currencies in anticipated sales and purchases, as well as receivables and liabilities)
and using standard hedging products, such as forward contracts, if necessary.
Commodity risk
Cenergy Holdings’ subsidiaries are using metal raw materials as inputs, so price fluctuations
(esp. aluminium, copper, nickel and zinc) may expose them to lower product margins or
trading losses.
Future contracts traded in the London Metal Exchange (LME) offer the obvious hedging choice
for them: first, all Cenergy Holdings’ subsidiaries record metal positions resulting from LME
price fixing for purchases and sales. They monitor the metal price risk and try to match
purchases with sales. The resulting net exposure is centrally hedged using LME contracts,
resulting in almost immune margins.
Liquidity risk
Cenergy’s subsidiaries constantly monitor cash flow needs on a monthly basis, reporting
liquidity and leverage ratios and continuously assessing available funding, both in the local
and international markets. They mitigate liquidity risk by maintaining unused, committed
financing facilities from a diversified number of financial institutions
Cenergy Holdings’ total debt (incl. lease liabilities) amounts to EUR 411.7 million (31/12/2019:
EUR 504.3 million). Considering EUR 81.0 million of cash & cash equivalents, Net Debt
amounts to EUR 330.6 million with 43.3% (31.12.2019: 36.0%) of total debt being long-term
and the rest, short-term. Loans and borrowings are held with banks and financial institutions,
which are rated from A- to Β based on ratings of Standard & Poor's. Approximately 74% of
these loans and borrowings are held with Greek banks.
34
Long term facilities have an average maturity of 4.6 years, whereas short term ones are
predominately revolving lines, reviewed annually with anniversaries spread out through the
year and renewed automatically at maturity, if necessary. There are sufficient credit limits in
place to serve working capital requirements and refinance short term loans.
Credit risk
Cenergy Holdings’ subsidiaries sell to a large number of customers across countries and
sectors, trying to avoid customer concentration, if possible. For large infrastructure projects,
though, that make a significant portion of both segments’ turnover, this is however
unavoidable. Hence, companies mitigate this risk by executing robust creditworthiness
checks of final customers via credit rating agents and carefully setting relevant payment.
For the product business units, the use of real or financial security and of credit insurance
contracts is standard.
35
Non-Financial Information
This Non-Financial Statement addresses the requirements of the Belgian Code of Companies
and Associations – BCCA (article 3:32§2), as amended by the Belgian Law of September 3rd,
2017, on the disclosure of non-financial and diversity information by certain large companies
and groups [which transposes Directive 2014/95/EU “Disclosure of non-financial and diversity
information” into Belgian law] and relates to the financial year ended on December 31, 2020.
Cenergy Holdings (the Company, the Holding) is a Belgian listed company holding
participations positioned in the energy and telecommunications sectors. The Holding’s
portfolio comprises companies with a global presence; the management report on pages 12-
25 presents a thorough description of each business segment.
The Statement has been drawn up in accordance with the UN’s Sustainable Development
Goals (SDGs) reporting framework which embrace a very wide and universal approach to all
sustainability issues facing today’s societies. Although Cenergy companies have a direct or
indirect impact on all 17 SDGs, emphasis is placed on the SDGs directly impacted by their
activities. The SDGs reporting framework serves as the basis for the reporting structure of
non-financial matters of the Company as it contains non-financial key performance indicators
(KPIs) for the monitoring of all main risks associated with the non-financial matters under
scope in the BCCA, namely:
Environmental
Social and labour
Human rights
Anti-corruption and bribery
This Non-Financial Statement includes non-financial information of the Holding and its
material subsidiaries in both operating segments (Cables and Steel Pipes); it focuses on
established policies in relation to these matters, due diligence processes implemented,
outcome of the policies and performance monitoring of the main risks related to these non-
financial matters.
Business Model
The Holding invests with a long-term view, among others in significant (controlling or non-
controlling) equity investments. It invests without a defined investment and divestment
policy and is not bound by any specific target or criteria regarding geographical and industrial
features of its investments, holding period and achievements of targets. The Company
generates returns, which may be reversed, reinvested or distributed to shareholders at the
absolute discretion of the company (subject only to shareholder vote on dividend
distribution). It is an active shareholder, combining its entrepreneurial approach with sound
financial discipline. It brings in finance to further develop its companies, to improve their
competitive position and profitability, and it maintains an open line of communication with
the management of the companies in which it invests, while valuing their operational
autonomy.
36
Figure 2: Cenergy Holdings’ Business Model
The segment of cables is a significant enabler of the energy transition and the European
“Green Deal” since over 50% of its revenue is coming from projects contributing to the
expansion of Renewable Energy Sources in the energy mix and the gradual decarbonization of
the global economy and the advancement towards a climate neutral future.
The steel pipe segment is also well positioned to contribute significantly in the energy
transition with 70% of its revenues coming from natural gas projects while at the same time
developing solutions that adapt to new needs of energy transport (Green hydrogen, Carbon
Capture & Storage).
Our companies are well positioned not only to operate in a low carbon economy, but to
increase market share as their product line is very instrumental in the realization of a climate
neutral economy. They increasingly rely on the use of renewable power in their energy mix,
developing additional goals towards carbon footprint improvement. They are also trying to
further decrease indirect carbon footprint, thus contributing to Europe’ ambitious goals of a
decarbonized economy.
Due to the nature of their industrial processes as well as their products’ markets, the
companies’ future is strongly correlated to their ability to operate in a sustainable manner.
They are currently in the process of taking measures for higher energy efficiency while
becoming more engaged with and ensuring responsible sourcing of raw materials and
services.
37
Impact of COVID-19 pandemic on non-financial matters
The specific policies and procedures for managing all issues relating to the pandemic was
initiated and monitored throughout the year by Cenergy’s affiliate Steelmet S.A. (Steelmet).
Steelmet also has the operational due diligence responsibility for all other non-financial
matters.
As the SARS-Cov-2 virus outbreak reached Europe, the health and safety of our employees,
their families as well as close partners was immediately considered a top priority across all
companies. The pandemic posed a great challenge for Cenergy and its subsidiaries not only
on a business but also on a society level. All companies acted swiftly in a responsible manner
to support not only their workforce but the general public through an extensive list of
donations, both in medical equipment and protective gear.
Upon the first signs of widespread infection, an emergency response plan was implemented
including identification of contagion risk areas within the companies’ premises and also during
transport of personnel. After the thorough risk assessment in all work places, corresponding
mitigating measures were executed to reduce the risk and allow business to continue across
all production sites as smoothly as possible. Whenever a noticeable reduction of demand was
expected (or experienced) production levels were modified to match lower demand and
guarantee operational resilience.
All Cenergy Holdings companies implemented a multitude of preventive measures in all
aspects of work life including transportation to and from work, obligatory mask use in all
company sites, extensive hygiene measures, medical advice and support to all work force,
especially vulnerable groups, and finally remote work arrangements for all personnel whose
presence was not required at company premises. Due to the nature of manufacturing
business, such “work from home” schemes were limited to about 10% in industrial plants
while it reached 50% in white-collar workers. Such schemes were always compliant with the
guidelines or requirements set out by competent national authorities.
Throughout 2020, over 9,500 PCR tests were regularly performed on the workforce of all
subsidiaries in order to allow for early detection and quarantine of positive cases as well as
their close contacts. This approach resulted in a minimal spread of COVID-19 within company
premises. Moreover, it helped the workforce protect their families and close social network
as they all got early warning from the mandatory proactive testing at work. As a result, all
companies were able to continue their operations smoothly and without interruptions
throughout 2020, even during the peak of the second wave late in the year.
The augmented health and safety preventive measures still remain in place across Cenergy
companies and the same model will be followed throughout 2021.
The COVID-19 pandemic did not have an effect on other aspects of non-financial matters
except the personal development and training of a significant portion of its workforce as
physical meetings were not allowed for the most part of the year. As a result, training
programs were significantly curtailed. An accelerated training program will compensate for
such loss of scheduled training, when conditions allow.
As for the supply chain, mitigating measures were put in place to ascertain business continuity
(orders for critical materials placed in advance, alternative suppliers identified, increased
safety stock for certain materials). As a result, no interruption of regular operation was
experienced throughout 2020 as well as in projects under construction/commissioning.
38
Management Approach in Policy Framework
Cenergy Holdings is a listed holding company, with a very lean structure, making long-term
investments focused on companies active in South Eastern Europe in the energy and
telecommunications sectors.
Cenergy Holdings strongly believes that its subsidiaries must demonstrate the same
responsibility and share the same principles and commitment in sustainability issues in order
to foster resilient and sustainable growth and employment, provide transparency to all its
stakeholders (including employees and customers) and preserve long term value for its
shareholders.
Cenergy and its companies are committed to operating safely in an environmentally and
socially responsible manner and to partnering with their customers and community
stakeholders to build a sustainable future for all parties involved. They aim to establish a
relationship of responsibility and trust with its counterparties and to meet expectations by
keeping faith with commitments undertaken. The responsible operation of all companies is
considered a primary goal and fundamental for the sustainable operations of the companies.
Cenergy’s policy principles are reflected in its “Sustainability policy”
6
which constitutes a
“reference code” that its subsidiaries should follow, at a minimum, regarding sustainability
matters. The companies in turn have developed their own respective, detailed policies
adhering to those policy principles.
The policy covers all important sustainability and non-financial issues required by BCCA. The
policy requires complete adherence by the subsidiaries to all European and National laws as
well as to internal procedures developed in order to have a uniform and robust monitoring
system that can be objectively audited and verified. More specifically, the following matters
are included:
Environment
Cenergy Holdings subsidiaries are committed to operate with absolute responsibility and
respect for the environment. Sound environmental management of production and storage
installations is one of the most important targets and is absolutely essential to the
sustainability of the Companies’ activities.
All companies operate in full compliance with applicable national and EU environmental
legislation, as well as with the specific environmental operational terms of each plant. They
also operate in a state of absolute transparency and participate in an open dialogue on
environmental issues with all the stakeholders.
Social and Labour
Cenergy Holdings and its companies are committed to operate responsibly in all their business
activities while at the same time expecting the same responsibility from its business partners.
Concern for employee health and safety, respect and protection of the environment,
comprehensive coverage of customer needs, responsible business practices from its suppliers
6
For more information, please refer to http://www.cenergyholdings.com/sustainability/overview/.
39
and harmonious coexistence with the local communities in which they operate are the main
issues with a wider social impact.
Cenergy Holdings and its companies have zero tolerance for any discrimination of race,
gender, religion, age, nationality, social or ethnic origin, disability, sexual orientation, or
political and trade union engagement. These principles apply to the recruitment of new
employees, to employees with an employment contract and to the professional promotion of
their employees. The only decisive factors of employment are performance, experience,
personality, efficiency, skills and qualifications.
The Holding and its subsidiaries reject any form of forced labour. All work performed in the
companies must be voluntary. The employment of individuals under the applicable statutory
minimum age for workers is prohibited.
All Cenergy Holdings companies are committed to continually promote health and safety for
their employees as well as for their partners, including customers, suppliers, contractors and
visitors. Cenergy companies strictly comply with all applicable legislation and fully implement
all suitable standards, instructions and procedures regarding health and safety.
Human rights
The Holding and its companies recognise the right of all employees and stakeholders to work
with dignity and believe that everyone in the Companies is responsible for having due regard
for human rights.
All entities support and respect the fundamental principles, as articulated in the Universal
Declaration of Human Rights. All Companies support the protection of international human
rights within the sphere of their influence, and will not be complicit in human rights abuses.
The Companies’ policies and procedures adhere to all applicable domestic laws concerning
freedom of association and collective bargaining, non-discrimination, forced labour and
underage workers in the workplace.
Business Ethics & Anti-Corruption
Cenergy Holdings and its companies are committed to conducting their business with honesty
and integrity and in compliance with all relevant laws. All companies ensure transparency in
all interactions and acknowledge that they have a moral and legal obligation to act responsibly
in all jurisdictions. Companies’ business growth and success shall rest on the excellence of
their products and services and under no circumstances, may tolerate illegal or unethical
business activity. Their performance and competitiveness are strengthened solely through
lawful conduct.
Cenergy Holdings and its companies are fully opposed to all kinds of bribery and corruption.
They are determined to maintain a culture of honesty and opposition to fraud and corruption.
They also vouch they maintain a system of internal accounting controls and keep their books
and records in reasonable detail that accurately and fairly reflect transactions and dispositions
of assets.
Outcome of the policy
All companies operate in full compliance with applicable European and local environmental
and labour laws.
40
The policies’ implementation is ensured by due diligence actions performed by Steelmet.
Steelmet is responsible, among other things, for the monitoring of all companies’
performance in these matters. It employs proficient auditors in their respective field of
expertise and they perform periodic reviews and assessments of the subsidiaries. During their
periodic business reviews, the top management of Cenergy companies reports to Steelmet
auditors on performance metrics, where applicable, and analyses risks and challenges as well
as corrective actions that are deemed necessary. Steelmet reports back to Cenergy Holdings’
Audit Committee on a regular basis identifying potential issues.
The progress of corrective actions as well as any non-compliance matters are addressed and
the subsidiaries are required to commit to a verifiable course of action within a specific
timeframe.
In addition, due diligence in the issues of environment and health and safety is performed by
external auditors during periodic management system certification reviews. The entirety
(100%) of the Holding’s production companies under the scope of this report are certified with
the environmental Management System ISO 14001:2015, the Occupational Health and Safety
Management System ISO 45001:2018 and 75% of the companies under scope of the
Statement are certified with the Energy management System 50001:2015.
Based on the above assessments, the principles of Cenergy Holdings’ sustainability policy are
all in compliance although there is room for improvement in several areas that are elaborated
in the Risk Management section below. In order to ensure that all subsidiaries are following a
continuous improvement path, Steelmet professionals have close cooperation with
subsidiaries’ top management and pertinent personnel in order to draw road maps with
specific, prioritized, improvement actions as well as benchmarks that need to be achieved
within certain time frameworks.
Materiality Analysis and KPIs
The scope of Non-Financial Information reporting focuses on “material” production
companies in terms of revenue and personnel employed. The criteria used for their selection
are
Contributing more than 1% of the total Cenergy Holdings’ consolidated revenue, and
Having a minimum of 100 employees.
These criteria lead to the selection of the following four (4) entities:
1. Hellenic Cables (Cables segment)
2. Fulgor (Cables segment)
3. Icme Ecab(Cables segment)
4. CPW (Steel pipes segment)
These companies, due to their comparatively large labour force, raw materials’ use and energy
intensity, present the highest potential overall impact in terms of the non-financial issues
under scope in this report. The non-financial information for the above-mentioned
companies are consolidated and presented based on the segment they operate as the
companies within the same segment have similar non-financial issues and risks.
As for the selection of “material issues” in this report, this was based on an extensive
materiality analysis performed by each of the companies in the list above. The materiality
analysis in each subsidiary was performed according to the pertinent GRI Standard. Based on
41
these analyses, the major and more commonly found non-financial risks related to these
material issues were selected due to their potential to negatively impact the companies’
business relations, products and long-term sustainable operation.
Then, these different challenges and issues identified in the materiality analysis (MA) phase
were correlated to the UN’s Sustainable Development Goals (SDGs) reporting framework
which serves as the basis for the reporting structure of the non-financial issues.
SDGs are a list of 17 interconnected global goals designed to be a "blueprint to achieve a better
and more sustainable future for all" that address current challenges facing societies all over
the globe. The 17 goals have 169 underlying specific targets that stimulate action in areas of
concern. Cenergy, as previously mentioned, has identified the major and more commonly
found areas of material impact that have been selected by the individual companies’
materiality analysis as well as stakeholder assessment, and has concluded that the main non-
financial risks of concern are those listed in Table 6. Based on the non-financial risks identified,
specific key performance indicators (KPIs) from the SDG reporting framework (where
available) have been selected to be used in order to assess the performance and risk exposure.
Table 6: Main non-financial risks of concern identified for Cenergy Holdings companies after the MA.
Issue identified in
MA
Category
under BCCA
Relevant
SDG
Description
Companies’ area of material impact
Energy
consumption,
sources of energy
Environment
Affordable and
clean energy
Availability of low carbon energy at
competitive cost
Health and safety,
labour rights
Social &
Labour,
Human rights
Decent work
and economic
growth
Provision of safe working
environment, equal treatment among
workers, training for human
development of workforce.
Climate change
Environment
Climate action
Carbon intensity of production,
carbon intensity of raw materials
Waste
management,
production of
circular products
Environment,
Human rights
Responsible
consumption
and production
Waste intensity, method of waste
management, circularity of
production process, supply chain
responsibility
Transparency, Anti-
Corruption
Business
Ethics, anti-
bribery, anti-
corruption
Peace, justice
and strong
institutions
Business transactions, data privacy,
regulatory compliance
Based on the SDGs selected and the scope of the materiality issues, the following KPIs were
selected to be assessed for Cenergy Holdings’ companies. Wherever a relevant SDG indicator
already exists from the SDG reporting framework, that indicator is used; otherwise, other
42
indicators (such as UNCTAD’s
7
indicators – in italics, or KPIs commonly used by standard
industrial practice – marked with an asterisk *) are used.
Table 7: KPIs for Non-Financial Risks to be assessed for Cenergy Holdings companies
Relevant
SDG
Relevant
SDG
target(s)
KPIs representing key issues
7.2
7.2.1 Renewable energy share of total energy consumption
8.5
8.8
Average hours of training per employee per year
8.8.1 Frequency incident rates of occupational injuries (LTIR, SR, fatalities)
Annual employee turnover*
Percent of women in labour force*
Incidents of discrimination*
9.4
9.4.1 Total greenhouse gas emissions per tonne of product
- Total Emissions (Scope 1 & 2)
12.5
Reduction of waste generation
Waste reused, remanufactured and recycled
No environmental impact incidents
16.5
16.B
Fines paid due to settlements
Incidents of corruption or bribery*
Incidents of data privacy breach*
The reporting structure for each of the companies in the scope will be analysed per selected
SDG.
SDG 7 – Energy consumption – Clean energy
Cenergy companies are electrointensive and it is important to have access to competitive, low
carbon energy in order to minimize their carbon footprint as well as decrease their exposure
to carbon pricing. They generally purchase electricity from the main energy suppliers of the
countries they operate as none of the companies own their own energy source. The numbers
shown in the following table reflect the grid energy mix and renewable energy share for the
respective grid.
Due to lack of competitive pricing in low carbon electricity, three out of the four material
companies in Cenergy Holdings’ portfolio (Hellenic Cables, Fulgor and CPW) sourced 100% of
their electricity needs from renewable energy in 2020 by the purchase of Guarantees of Origin
(GOs) supporting, in this manner, the renewable energy market for further investments in the
years to come. The table below shows the share of renewable electricity in the total electricity
consumption.
7
Cf. the “Guidance on Core Indicators for Entity Reporting on Contribution Towards Implementation on the Sustainable
Development Goals” by the UN Conference on Trade and Development (UNCTAD, 25 July 2019).
43
Table 8: SDG7 – Clean energy consumption
Cables
Steel pipes
Year
2018
2019
2020
2018
2019
2020
Renewable energy share in electricity
23.5
72.2
8
68.9
8
28.3
100
8
100
8
SDG 8 – Health & Safety – Labour issues
The nature of Cenergy companies results in different occupational health and safety risk
profiles per company. The difference is attributed to many factors such as type of production,
(kind of metallurgy (thermal or not), loading/unloading, chemical coating, etc.), technology of
infrastructure, equipment condition and safety features, manufacturing processes and
materials used. Irrespective of the nature of the activity, the health and safety of the
companies’ personnel is of utmost importance and the companies intend to invest significant
amount of resources in order to improve working conditions and create a safer working
environment.
The Holding’s companies make a continuous effort to improve their risk capacity realization,
develop detailed risk assessments by conducting a systematic hazard identification associated
risks evaluation, facilitating subsequently the implementation of reasonable control
measures. Emphasis is also given in performing accurate incidents analysis to ensure there is
a robust framework in place which provides for a systematic approach to incident reporting,
management and investigation, thereby enabling effective corrective and preventive actions
to be set.
Regarding health and safety metrics, the main one used for the performance of companies is
the Lost Time Incident Rate (LTIR – the number of LTI incidents per million working hours)
which measures the number of incidents per working hours that led to an employee’s absence
from work. Severity rate (SR – the number of lost work days per million working hours), on
the other hand, reflects how serious the incident was:
Table 9: SDG8 – Health & Safety data
Cables
Steel pipes
Year
2018
2019
2020
2018
2019
2020
LTIR
8.7
5.4
6.4
3.4
1.0
1.7
SR
122
321
167
118
106
119
No. of fatalities
0
0
0
0
0
0
Both segments showed a small deterioration in LTIR in 2020 compared to the previous year
and management realizes that a greater effort is needed in order to create a safer working
environment. The severity rate on the other hand, improved significantly in the cables
segment while a small increase occurred in 2020 in the steel pipes segment. The companies
have an extensive list of internal KPIs that follow the leading actions needed to create robust
8
Due to GOs purchased for sourcing of renewable energy.
44
H&S programs. Since, however, we aim for a “zero accident” working environment in all
Cenergy Holdings companies, the effort by management everywhere to promote Health and
Safety at work and to raise safety awareness in a timely fashion (alert – analysis) is ongoing
and continuous.
All companies recognise the decisive contribution of their people to current success and
future growth. In line with this, all subsidiaries are committed to implementing responsible
working practices. So, they seek to offer their employees an equal opportunities workplace
that respects the personality of each one and also invest materially and steadily in their
training and development. All companies focus on creating a work environment of fair
reward, respecting human rights and diversity, applying objective evaluation systems, and
ensuring ongoing employee training and education.
The following table gives some indicative KPIs like employee turnover, the percentage of
employees who leave the organization voluntarily or due to dismissal, retirement, or death in
service and the average hours of training per employee per year. Total workforce equals the
total number of employees at the end of the year (December 31
st
data).
Table 10: SDG8 – Labour KPIs
Cables
Steel pipes
Year
2018
2019
2020
2018
2019
2020
Employee Turnover
20
25
10
2.7
3.1
8.2
% of women
14
15
13
8.6
9.7
9.8
Hours of Training
10
22.6
12.6
19.3
14.8
3.7
The special circumstances caused by the pandemic crisis affected the employee turnover ratio
in rather different directions. Although relatively stable in the previous years, the employee
turnover improved significantly in the cables segment while it deteriorated in the steel pipe
one due to required adjustments in the number of personnel during the crisis.
The companies also decreased the level of training on personnel as physical meetings were
forbidden due to national lockdowns and social distancing measures imposed to curb the
spread of COVID-19 for most of the duration of 2020. Provided that normal operating
conditions return within 2021, the companies will resume their personnel development
programs with an accelerated rate to compensate for time lost.
The relatively low proportion of women in the workforce is explained by the nature of the
companies’ business, all belonging to those sectors considered as “heavy” industry. It has
nevertheless improved through the last three years.
There was no incident of discrimination recorded or reported during 2020, as was the case in
all previous years. There has also been no incident of forced or voluntary child labour in any
Cenergy Holdings company.
SDG 9 – Climate change
The Holding’s companies have a low direct carbon footprint (Scope 1) while their indirect
carbon footprint (Scope 2) is significantly higher. The cables segment operates a thermal
metallurgy production process, yielding direct emissions from the combustion of natural gas:
these cannot be eliminated unless there is a low carbon fuel alternative.
45
The vast majority of the remainder carbon footprint originates from the consumption of
electricity: this part, all companies try to eliminate it to a large extent by consuming renewable
electricity as stated previously. The table below shows carbon emissions intensity as well as
total emissions for materiality purposes. Starting with this year’s statement, carbon related
disclosures are reported according to the Greenhouse Gas Protocol Scope 2 Guidance
9
which
is the more commonly used standard internationally.
For transparency reasons, we present both these metrics, with and without accounting for
the purchase of GOs, as GOs originate from a different supplier. The latter is known as the
“location-based” method, the former as the “market-based” method:
Table 11: SDG9 – Carbon emissions
Cables
Steel pipes
Year
2018
2019
2020
2018
2019
2020
Carbon emissions Intensity (t
CO
2
/t product)
0.522
0.499
0.437
0.086
0.091
0.101
Carbon Emissions Intensity with
GOs (t CO
2
/t product)
0.522
0.167
0.158
0.086
0.007
0.008
Total carbon emissions (t CO
2
)
57,567
56,514
51,188
37,260
29,130
25,298
Total carbon emissions with GOs
(t CO
2
)
57,567
18,869
18,457
37,260
2,389
1,881
From the table above, it is apparent that the cables segment is on a continuous path to
improve its overall carbon footprint; the sourcing of renewable electricity is the major factor
here. The steel pipes segment has a very low initial carbon footprint as its energy
requirements are low. Still, there was no improvement in carbon intensity during 2020
comparing to the previous year. Both segments, however, decreased their total carbon
footprint significantly through the purchase of GOs.
All companies are committed to continuously purchase energy from environmentally friendly
sources in order to produce products with minimal carbon footprint.
SDG12 – Waste management – Circular economy
Cenergy companies are committed to robust waste management. Their principal aim is waste
generation reduction but they also seek improvements related with reusing and recycling. It
goes without saying that they practice a sound management of hazardous wastes.
Although waste generation intensity varies significantly depending on the production process,
the waste intensity per company has remained at similar levels in the past three years with
small fluctuations due to the product mix and the shipment frequency of waste accumulated
over time that may affect the waste intensity for a single year:
9
See https://ghgprotocol.org/scope_2_guidance.
46
Table 12: SDG12 – Waste management
Cables
Steel pipes
Year
2018
2019
2020
2018
2019
2020
Waste generation
(kg of waste / t product)
121
129
128
83
86
100
Waste reused, re manufactured and
recycled as % of total waste generated
92.1
92.3
93.1
99.5
99.3
99.2
In 2020, waste intensity for both segments either remained constant (cables segment) or
slightly increased (steel pipes). It should be noted, however, that the vast majority of wastes
are now sent for recycling avoiding landfill disposal, especially in the pipes segment where
almost the entirety of the waste is either recovered or recycled. The effort in all companies
is to increase the percentage of recovery/recycling to 100% supporting the transformation to
a circular economy.
As for environmental accidents or other incidents (leaks of chemicals, fires that could cause
noxious emissions, fuel spills, etc.) that could cause serious concern to the ecosystem, there
were no such events in any of the plants in 2020.
SDG 16 – Transparency and Anti-Corruption
Cenergy Holdings acknowledges the significance of business ethics and anti-corruption issues.
In order to ensure the implementation of the respective policy, it has asked all subsidiaries to
apply, with the utmost care, the proper internal controls and procedures of operation
demonstrating accountability, fairness and transparency in the relationship with all
stakeholders.
During 2020, no incident of corruption or bribery was recorded or reported while there were
no incidents of data privacy breaches. In addition, there were no fines paid due to settlements
for unethical business practices or corruption issues.
Key Non-Financial Risks
The Holding’s companies face a variety of non-financial risks as previously mentioned and has
a risk identification process in order to identify those risks and implement mitigation measures
wherever possible. All industrial activity-related risks such as environmental, health and
safety, etc. are exclusively associated with subsidiaries that have industrial operations.
Managing non-financial risks is considered to be a very critical task by management as these
risks have the potential to create a direct or indirect impact on the companies’ continuous
operation as well as to create future liabilities.
In order to improve risk management in non-financial issues among subsidiaries, Steelmet
professionals have established policies and procedures for managing risks that companies’
management have to comply with.
The companies have their own skilled personnel and consultants managing these matters and
they implement certified management systems ISO 14001:2015 and ISO 45001:2018 as well
as the energy management system 50001:2015, thus providing an additional management
tool for all related risks. The management systems are the pillars for taking the proper
47
preventive steps, specific plans and actions, and provide the continuous improvement culture
necessary to ensure improving performance and risk management.
Risks are analysed from a financial, environmental and social perspective in order to get a full
understanding of the complete array of impacts of non-financial issues. Below is a description
of the main non-financial risks identified that may affect business operations, reputation, and
ultimately the financial results of Cenergy.
Environmental issues
The major risk related to environmental issues is climate change. Climate is a material issue
not only in respect to financial materiality (negative impact on the company) but also from an
environmental and social perspective (negative impact to climate, hence to the environment
and society).
The financial materiality stems from the fact that the subsidiaries have transition as well as
physical risks. Transition risks relate to risks that arise from the transition to a low carbon
economy such as policies that:
Require demanding energy efficiency measures;
Impose carbon pricing mechanisms which intend to increase carbon price, thus,
increase cost of electricity;
Impose carbon border adjustments that can disrupt supply chains as well as cause
retributions from other countries where customers are currently located.
Physical risks relate to risks associated with long chronic effects such as extreme weather,
rising sea levels and reduced fresh water availability. The physical risks for the companies
remain low due to the geographical locations most plants are, but Cenergy and its companies
continuously monitor changing conditions that may create physical risks in the future.
The risk mitigation measures taken by the companies are, among others, the following:
early policy trend identification;
close cooperation with national and European federations for proper representation
of the matters faced by the subsidiaries;
development of action plans and long-term targets for investments in energy efficient
equipment and carbon abatement measures;
procurement of electricity from producers of clean, renewable energy;
increase of capacity for utilization of secondary raw materials instead of primary
(cables segment); and
proper budget management practices that incorporate projected carbon costs.
From an environmental and social perspective, production plants of Cenergy subsidiaries are
characterized by very low direct emissions in greenhouse gases in the atmosphere due to their
routine production operations, but higher indirect emissions through consumption of
electricity (more than 80% of total emissions of Cenergy companies relate to indirect
emissions). The sum of the direct and indirect footprint of Cenergy Holdings’ subsidiaries is
shown in the previous chapter as these are the most closely watched KPIs at each company
level.
As for risks related to the supply chain, upstream production of raw materials like aluminium,
copper and steel introduce significant carbon emissions to the environment. Careful selection
of raw materials suppliers is critical to identify areas of improvement and is considered the
48
highest contributor to the overall emissions of the subsidiaries’ products. As more than 80%
of the environmental footprint of the final products is carbon footprint attributed to upstream
activities, all subsidiaries are in the process of identifying and evaluating different suppliers
and their potential exposure to higher carbon costs as the increasing cost of carbon may
eventually affect their competitiveness.
Finally, all companies could be affected by their inability to meet EU, current or future,
compliance obligations concerning emissions. To mitigate this risk, they are following closely
policy trends and actively taking compliance measures related to climate change, together
with proper budget management practices (e.g. incorporate projected higher carbon costs in
the future).
Social and labour issues
The major risks related to social and labour issues are the occupational health and safety of
the labour force as well as employee issues. These risks are significant from a financial and
social perspective.
Due to the nature of Cenergy companies’ industrial operations (thermal metallurgy with high
temperature processes, heavy equipment, chemical treatment, work at heights, etc.) there is
an inherent risk for accidents among either full time employees or part-time contractors with
a substantial impact on human life, local communities and reputation. Regarding the former,
all subsidiaries have in place systems that include a comprehensive approach for
improvement including, among others, equipment upgrading, implementation of
management principles (safety audits, guidelines, work instructions, etc.), the establishment
of a targeted safety training program and the direct involvement of management.
The companies’ management clearly understand how important it is to provide a safe working
environment to the labour force and how vital it is to continuously strive for improvement as
this is fundamental for good labour relations and business performance.
Employee-related risks also include potential violations of equal treatment and statutory
working hours, as well as social action by personnel that may lead to operation interruption
risks (stoppages, slowdowns). These risks are mitigated by subsidiaries through a
comprehensive employee Code of Conduct, periodic personnel evaluation, a fair
remuneration policy together with proper training and regular internal audits.
Finally, social risks are especially significant in the supply chain of Cenergy’s companies as the
raw materials used are located in various geographic locations with varying degrees of labour
and environmental standards. Typically, the vast majority of the environmental and social
footprint of our companies’ products originates from the supply chain.
Human rights issues
The major risks related to human rights are related to the supply chain of the subsidiaries
since many suppliers are not located in Europe or North America. Cenergy companies are in
the process of developing a proper and comprehensive supplier evaluation management
system in order to ascertain that all major suppliers meet certain sustainability standards such
as standards in minimum environmental performance and compliance, worker safety, labour
conditions, human rights and business ethics.
49
Anti-bribery and corruption risks
The risks related to anti-bribery and corruption lie in the failure to conduct business
operations ethically and to comply with the laws and regulations in the jurisdictions in which
Cenergy Holdings and its companies operate. Examples could be the intentional
misstatement of financial reporting or the by-passing of internal controls.
To prevent and mitigate such risks, Cenergy Holdings ensures its “Reference Code” is applied
by its companies in order to raise employee awareness to the Holding’s corporate values and
related anti-corruption practices. The internal audit function is responsible for monitoring
and reporting timely and properly any related deviation or misconduct. Simultaneously,
subsidiaries separately organize training courses and communication actions in order to
increase awareness and encourage compliance.
Detailed sustainability reports of the major companies in the Holding’s portfolio are found on
their websites:
Hellenic Cables – http://www.cablel.com/778/en/corporate-responsibility-and-
sustainability-reports/
Corinth Pipeworks – http://www.cpw.gr/en/media-center/Publications/
50
Corporate Governance Statement
As a company incorporated under Belgian law and listed on Euronext Brussels, Cenergy
Holdings is committed to high standards of corporate governance and relies on the 2020
Belgian Corporate Governance Code (the “Corporate Governance Code”) as a reference code.
The Corporate Governance Code is available on the website of the Corporate Governance
Committee(https://www.corporategovernancecommittee.be/en).
The Corporate Governance Code is structured around principles, provisions, guidelines, and
the “comply or explain” principle. Belgian listed companies must abide by the Corporate
Governance Code but may deviate from some provisions, if they provide a considerate
explanation for any such deviation.
During the 2020 financial year, the Company complied with the principles of the 2020 Belgian
Corporate Governance Code, except for the following:
Principle 7.8 “The variable part of the executive remuneration package
should be structured to link reward to overall corporate and individual
performance, and to align the interests of the executives with the
sustainable value-creation objectives of the company.”.
Explanation: The remuneration policy of the Company is set out in the remuneration report.
Such policy does not include variable remuneration. The Board of Directors considers the
proposals submitted by the Nomination and Remuneration Committee in order to determine
whether, and to what extent, a modification of this policy is justified in the light of the
Company’s specific nature and strategy.
The Board of Directors of Cenergy Holdings has adopted a Corporate Governance Charter to
reinforce its standards for the Company, in accordance with the recommendations set out in
the Corporate Governance Code. It aims to provide a comprehensive and transparent
disclosure of the Company’s governance and is reviewed and updated as needed. The
Corporate Governance Charter is available on the Company’s website
(https://www.cenergyholdings.com/).
In order to have a complete overview of Cenergy Holdings’ corporate governance rules, the
Corporate Governance Statement must be read in conjunction with the Company’s Articles of
Association, the Corporate Governance Charter as well as the corporate governance
provisions laid down in the BCCA.
As a company with a secondary listing on the Athens Stock Exchange (Athex), Cenergy
Holdings also complies with the provisions of the applicable Greek capital market laws and
regulations.
Board of Directors
Role
Cenergy Holdings has chosen a one-tier governance structure. The Board of Directors (the
“Board”) is vested with the power to perform all acts that are necessary or useful for the
Company’s purpose, except for those actions that are specifically reserved by law or the
Articles of Association to the Shareholders’ Meeting or other management bodies.
In particular, the Board is responsible for:
51
defining the general orientations of the Company;
deciding on all major, strategic, financial and operational matters of the Company;
deciding on the Executive Management structure and determining the powers and
duties entrusted to them;
taking all necessary measures to guarantee quality, integrity and timely disclosure of
the Company’s financial statements and other material financial or non-financial
information about the Company;
monitoring and reviewing the effectiveness of the Audit Committee and the
Nomination and Remuneration Committee;
approving a framework of internal control and risk management set up by Executive
Management and reviewing its implementation;
monitoring the quality of the services provided by the statutory auditor and the
internal audit, taking into account the Audit Committee’s review;
determining the remuneration policy and approving the remuneration report
submitted by the Nomination and Remuneration Committee; and
all other matters reserved to the Board.
The Board is entitled to delegate part of its powers related mainly to the day-to-day
management of the Company to the members of Executive Management.
Composition of the Board
In accordance with Article 8 of the Articles of Association, the Board is composed of 9
members:
Table 13: Board of Directors Composition
Name
Position
Term started
Term expires
Jacques Moulaert
Chairman – Non-Executive
member of the Board
May 2020
November
2020
Dimitrios Kyriakopoulos
Vice-Chairman – Executive
member of the Board
May 2020
May 2021
Xavier Bedoret
Chairman (as of 11/2020) – Non-
Executive member of the Board
May 2020
May 2021
Simon Macvicker
Non-Executive member of the
Board
May 2020
May 2021
Rudolf Wiedenmann
Non-Executive member of the
Board
May 2020
May 2021
Margaret Zakos
Non-Executive member of the
Board
November
2020
May 2021
Marina Sarkisian-
Ochanesoglou
Independent, Non-Executive
member of the Board
May 2020
May 2021
Manuel Iraola
Independent, Non-Executive
member of the Board
May 2020
May 2021
Joseph Rutkowski
Independent, Non-executive
member of the Board
May 2020
May 2021
William Gallagher
Independent, Non-executive
member of the Board
May 2020
May 2021
The mandate of all members of the Board expires at the Annual Ordinary Shareholders’
Meeting to be held in 2021.
52
Information on the members of the Board
Over the past five years, the members of the Board have held the following directorships
(apart from their directorship of the Company) and memberships of administrative,
management or supervisory bodies and/or partnerships.
Jacques Moulaert (Chairman, Non-Executive member)
Mr Moulaert held a Ph.D. in Law from Ghent University and a Master in Public Administration
from Harvard University. He served as Honorary Managing Director at Groupe Bruxelles
Lambert S.A. and as Honorary President on the Board of ING Belgium. He was a founder and
Honorary Vice-President of the Louvain Foundation. In the past, Mr Moulaert served as
visiting professor at the Catholic University of Louvain (UCL).
Dimitrios Kyriakopoulos (Vice-Chairman, Executive Member)
Mr Kyriakopoulos is a graduate in Business Administration from the Athens University of
Economics and Business and holds degrees in Business Studies from the City of London College
and in Marketing from the Institute of Marketing (CIM – UK). He also serves as Executive Vice-
President of ElvalHalcor S.A. Mr Kyriakopoulos joined Viohalco in 2006, and since then he has
held various managerial positions, including Chief Financial Officer of Viohalco and Vice-
President of non-ferrous metals. Prior to joining Viohalco, he had a long career with
Pfizer/Warner Lambert, serving as President Europe/ Middle East/ Africa of Adams (Pfizer’s
Confectionery Division), as Warner Lambert’s Regional President Consumer Products Italy,
France and Germany, Regional Director Middle East/ Africa and President and Managing
Director of Warner Lambert Greece. He has also been Deputy Managing Director of Hellenic
Duty Free Shops.
Xavier Bedoret (Non-Executive member)
Mr Bedoret holds a Master’s degree in Law and Psychology from the Catholic University of
Louvain (UCL) and is a certified public accountant (IRE). He holds also a Certificate in Corporate
Governance (INSEAD). After ten years of financial auditing at KPMG in Brussels (Belgium) and
Stamford (USA), he joined the Finance Department and then the Audit & Risks Department of
ENGIE (France). Since 2017, he advises boards and audit committees on governance matters.
Simon Macvicker (Non-Executive member)
Mr Macvicker holds an MBA from Warwick Business School and a Bachelor’s degree in Modern
Languages from the University of Leeds. Since 2004, he has been working at Bridgnorth
Aluminium, an affiliate company of Viohalco, as Managing Director. Previously, he held
various commercial positions including 10 years at British Steel. Mr Macvicker served as
President of the Aluminium Federation in the UK from 2014 to 2015, and was Chair of the UK
Metals Council from 2016 to 2019. He is a director of the Shropshire Chamber of Commerce.
Rudolf Wiedenmann (Non-Executive member)
Mr Wiedenmann holds a Master’s degree in Chemistry from Ludwig-Maximilians Universität
München and a PhD in Natural Sciences. He is a member of the Board of Directors of Icme
Ecab S.A. In the past, he worked as director in the research and development centre and as
Managing Director of the Energy Cables division of Siemens in Germany. He also served as
President in the European Association of Cable Manufacturers.
53
Margaret Zakos (non-executive member of the Board)
Ms. Zakos holds a Bachelor’s degree from Queens University (Kingston, Ontario, Canada). She
is a Registered Insurance Broker in Ontario and previously owned Harbour Insurance Services
Limited. She is currently active in Real Estate Holding Companies. In the past, she was a
consultant with Medicus Systems Corporation (Chicago), and was Associate Director of
Nursing (Mt. Sinai Medical Centre, New York). Her philanthropic work included serving on the
Board of Directors of Kingston General Hospital, participating as a member of the Finance
Committee and the Audit Committee, and as well serving on the Board of the Community
Foundation for Kingston. She is presently a member of the Health Sciences Campaign Cabinet
Board (Queens University).
Marina Sarkisian-Ochanesoglou (Independent, Non-Executive member)
Mrs Sarkisian Ochanesoglou holds a Master’s degree in Environmental Engineering and a
Bachelor’s degree in Civil Engineering from Imperial College of Science Technology &
Medicine. She has more than 20 years’ experience in environmental engineering and
management. Over this period, she has acted as an independent consultant working with Ecos
Consultancy and Panagopoulos & Associates, and as a senior member of the Environmental
Services Department at Athens International Airport S.A.
Manuel J. Iraola (Independent, Non-Executive member)
Mr Iraola is CEO of Aloaris, a company providing strategic and leadership development
services to a wide range of industries. Prior to Aloaris, he spent 20 years with Phelps Dodge
Corporation, as President and CEO of Phelps Dodge Industries, a diversified manufacturing
concern with annual sales in excess of $3.0 billion and employing over 5,000 people in 27
countries. Iraola has served on the boards of several NYSE traded companies including Phelps
Dodge Corporation, Central Hudson Energy Group, Schweitzer Mauduit International Inc. and
Southern Peru Copper. He holds an MBA from Sacred Heart University in Fairfield,
Connecticut, and a BS in Industrial Engineering from the University of Puerto Rico. He is also
a graduate of Pennsylvania State University’s Executive Management Programme, the
Wharton/Spencer Stuart Directors Institute and PD-Thunderbird Global Management
Programme.
Joseph Rutkowski (Independent, Non-Executive member)
Retired Executive Vice-President of Nucor Corporation responsible for Domestic and
International Business Development from 2001 – 2010. Mr Rutkowski became Executive Vice
President in 1998 responsible for all steelmaking activities. Prior to that, he served as Vice
President and General Manager of Nucor Steel in Darlington, South Carolina and Hertford
County, North Carolina. He joined Nucor in 1989 as Manager of Nucor Cold Finish and also
served as Manager of Melting and Casting at Nucor Steel-Utah. Mr Rutkowski held various
positions within the steel and steel-related industries after graduating from Johns Hopkins
University in 1976 with a Bachelor of Science in Mechanics and Materials Science. He was also
a President of the Association of Iron and Steel Engineers. He is currently Principal of Winyah
Advisors, LLC, a management consulting firm.
William Gallagher (Independent, Non-Executive member)
54
Mr Gallagher is an independent advisor and investor. More recently, Mr Gallagher was an
advisor to Credit Suisse in London, working in Capital Markets between 2015 and 2017. From
2000 to 2014, he was at UBS in London, heading up EMEA Emerging Markets Lending. At UBS,
he was also the global chair of UBS’ Debt Capital Markets Commitments Committee. From
1998 to 2000, he worked in Lehman Brothers’ Loan Syndicate Department in New York. He
also worked as a corporate and finance lawyer at Gibson, Dunn & Crutcher in New York from
1991 to 1998. Mr Gallagher holds a BA in Economics from Yale University, a JD (Law) from the
University of Michigan (Ann Arbor), and a Diploma of Advanced European Legal Studies from
the College of Europe, Bruges, Belgium.
Appointment of the Board
The members of the Board are appointed by the Shareholders’ Meeting under the quorum
and majority conditions applicable to an amendment of the Articles of Association of the
Company, upon proposal by the Board. They are appointed for a term of one year and their
term of office is renewable.
In the event that a member’s seat on the Board of Directors becomes vacant, such a vacancy
may be filled temporarily by virtue of a unanimous vote of the remaining members of the
Board until the next Shareholder Meeting which will proceed to the definitive appointment of
a Board member.
Any proposal for the appointment of a Board member originating from the Shareholders’
Meeting must be accompanied by a Board recommendation based on the advice of the
Nomination and Remuneration Committee. The Nomination and Remuneration Committee
reviews all the candidacies and seeks to ensure that a satisfactory balance of expertise,
knowledge, and experience is maintained among Board members.
The Board decides which candidates satisfy the independence criteria set by law. To be
considered independent, a member of the Board must fulfil the criteria set forth in Principle
3.5 of the 2020 Corporate Governance Code. Any Independent member of the Board who no
longer fulfils the above criteria of independence is required to immediately inform the Board.
The Board of Cenergy Holdings, having reviewed the independence criteria pursuant to the
BCCA and the 2020 Corporate Governance Code, has decided that Mrs. Sarkisian-
Ochanesoglou, Mr. Manuel Iraola, Mr. Joseph Rutkowski, and Mr. William Gallagher fulfil the
criteria and are independent members.
Being a holding orientated towards industrial sector companies, Cenergy Holdings does not
have in place a concrete diversity policy for its Board of Directors or its senior executives. The
nature of the business and the required expertise limits the possibility of gender
diversification. It is common worldwide that, in the industrial environment of metals
processing, the vast majority of personnel consists of males. Nevertheless, Cenergy Holdings
employs skilled and experienced personnel without any discrimination and make efforts to
ensure diversity in terms of nationality, age, religion, and ethnic origin.
The Company has, however, acknowledged the legal requirement of Article 7:86 of the BCCA
according to which at least one third of the Company’s Board members must be of different
gender as of the financial year starting on January 1, 2022. To this effect, the Board has
entrusted the Nomination and Remuneration Committee to review the matter and propose
the appropriate profiles so that the Board may appoint the new members of the Board and
thus ensure that the Company complies with this legal requirement.
55
Functioning
The Board had elected among its members, Jacques Moulaert as Chairman of the Board (the
“Chairman”). As a consequence of the death of Jacques Moulaert in November 2020, the
Board elected Mr. Xavier Bedoret as Chairman of the Board.
The Chairman ensures the leadership of the Board and promotes effective interaction
between the Board and Executive Management. The Chairman is responsible for ensuring that
all members of the Board receive accurate, clear and timely information.
The Board has appointed a Company Secretary, Mr. Xavier Bedoret, to advise the Board on all
corporate governance matters (the “Corporate Governance Secretary”).
The Board meets as frequently as the interests of the Company require so, and in any case, at
least four times a year. The majority of the Board meetings in any year take place at the
Company’s registered offices.
The meetings of the Board can also be held by teleconference, videoconference or by any
other means of communication that allow the participants to hear each other continuously
and to actively participate in these meetings. Participation in a meeting through the above-
mentioned means of communication is considered as physical presence to such meeting. The
Board may adopt unanimous written decisions, expressing its consent in writing.
The following table provides an overview of the Board meetings held in 2020:
Table 14: Board meetings held in 2020
Date and Place
Attendance
February 17, 2020 (videoconference call)
Present: 6
Represented: 1
Absent: 1
March 18, 2020 (videoconference call)
Present: 7
Represented: 1
Absent: -
April 15, 2020 (videoconference call)
Present: 8
Represented:
Absent: -
May 26, 2020 (videoconference call)
Present: 8
Represented: -
Absent: -
September 23, 2020 (videoconference call)
Present: 9
Represented: -
Absent: -
November 16, 2020(videoconference call)
Present: 8
Represented:
Absent: 1
December 9, 2020 (videoconference call)
Present: 8
Represented: 1
Absent: -
56
Committees of the Board
The Board has established two Board committees to assist and advise the Board on specific
areas: the Audit Committee and the Nomination and Remuneration Committee. The terms of
reference of these committees are set out in the Corporate Governance Charter.
The Audit Committee
The Board has established an Audit Committee, in accordance with Article 7:99 of the BCCA
(the “Audit Committee”), which consists of the following members:
Xavier Bedoret, Chairman;
Simon Macvicker; and
William Gallagher.
All the members of the Audit Committee have sufficient experience and expertise, notably in
accounting, auditing and finance, acquired during their previous or current professional
assignments.
Pursuant to the Corporate Governance Charter, the Audit Committee is convened at least four
times a year and meets with the Company’s statutory auditors at least twice a year.
The Audit Committee advises the Board on accounting, audit and internal control matters,
and in particular:
monitors the financial reporting process;
monitors the effectiveness of the Company’s system of internal control, risk
management systems and the internal audit function;
monitors the quality of the statutory audit of the consolidated annual accounts,
including the follow-up on questions and recommendations made by the statutory
auditor;
presents recommendations to the Board with respect to the appointment of the
statutory auditor; and
reviews and monitors the independence of the statutory auditor, in particular
regarding the provision of non-audit services to the Company.
The Audit Committee reports regularly to the Board on the exercise of its duties, identifying
any matters in respect of which, it considers that action or improvement is needed, and at
least when the Board reviews the consolidated annual accounts, intended for publication.
In 2020, the Audit Committee met four times: on March 18, on May 26, and on September 23,
via videoconference call, with all members present; and on December 9, via video-conference
call, with two members present.
Nomination and Remuneration Committee
The Board has established a Nomination and Remuneration Committee in accordance with
Article 7:100 of the BCCA (the “Nomination and Remuneration Committee”) which consists
of the following members:
Joseph Rutkowski, Chairman,
Manuel Iraola, and
Margaret Zakos.
57
As a consequence of the death of Jacques Moulaert in November 2020, the Board, upon
recommendation of the Nomination and Remuneration Committee, designated Ms. Margaret
Zakos as new member of the Nomination & Remuneration Committee, replacing Jacques
Moulaert, and Mr. Joseph Rutkowski as Chairman of the Nomination & Remuneration
Committee.
The Nomination and Remuneration Committee meets at a minimum twice a year, and
whenever necessary in order to carry out its duties.
The Nomination and Remuneration Committee advises the Board principally on matters
regarding the appointment and the remuneration of the members of the Board and Executive
Management, and in particular:
submits recommendations to the Board with regard to the appointment and the
remuneration of the members of the Board and Executive Management;
identifies and nominates, for the approval of the Board, candidates for filling
vacancies as they arise;
advises on appointment proposals originating from shareholders;
periodically assesses the composition and size of the Board and submits
recommendations to the Board with regard to any change, and
drafts and submits a remuneration report to the Board, including proposals regarding
the remuneration policy and recommendations based on its findings.
In 2020, the Nomination and Remuneration Committee met three times: on March 18, and
on September 22, via videoconference call, with all Committee members present, and on
November 16, via videoconference call, with two members present.
Evaluation of the Board and its Committees
The Board regularly assesses (at least every two or three years) its size, composition and
performance of its committees, as well as the Board’s interaction with Executive
Management. On December 4, 2019, the Board made its first assessment and concluded that,
overall, the Board and its Committees operate effectively and in compliance with the
applicable corporate governance rules, meeting the objectives set by the Corporate
Governance Code (principle 4.11).
Non-Executive members of the Board meet regularly after Board meetings to assess their
interaction with Executive Management.
The performance of Executive Management is also assessed on an informal basis through the
presentation of the Company’s performance in respect of the interim and annual financial
statements.
Executive management
The Executive Management of the Company comprises the Executive Vice-President, Mr
Dimitrios Kyriakopoulos; the Chief Executive Officer (CEO), Mr Alexios Alexiou; and the Chief
Financial Officer (CFO), Mr Alexandros Benos.
In the past five years, the members of Executive Management held the following directorships
and memberships of administrative, management or supervisory bodies and/or partnerships:
58
Dimitrios Kyriakopoulos, Executive Vice-President
Please see above, “Information on the members of the Board” in the section on the Board of
Directors.
Alexios Alexiou, Co-Chief Executive Officer
Mr Alexiou serves as CEO and Executive Member of the Board of Directors for the Hellenic
Cables Group, a Cenergy Holdings company. He has been working for Viohalco since 1996.
He holds a BSc in Economics from the University of Piraeus and a MSc. in Finance from
Strathclyde University. With more than 16 years’ experience in the finance and cables
technology sectors, he joined Viohalco in 1996 as internal auditor. Since then, he has held the
positions of Financial Manager of Hellenic Cables (2002-2003), General Manager of Icme Ecab
(2003–2008) and since 2009 has held the position of CEO for Hellenic Cables.
Ilias Bekiros, Co-Chief Executive Officer
Mr. Bekiros has been CEO of Corinth Pipeworks since June 2019. He is a Mechanical Engineer,
graduate of the National Technical University of Athens (NTUA) and also holds an MBA from
the Athens University of Economics and Business (AUEB). Prior to this position, he served as
the Commercial Director in Corinth Pipeworks since June 2014. From 2005 to 2014, he had
assumed several sales management positions for a vast range of steel products of Sidenor
Group.
Alexandros Benos, Chief Financial Officer
Mr. Benos has been CFO of Cenergy Holdings since May 2018. He holds a degree in Economic
Sciences from Athens University, a B.A. and an M.A. in Economics from the University of
Cambridge, UK, and a Ph.D. in Finance from Stanford University, USA. He has extensive
banking experience. He joined National Bank of Greece Group in early 2000, tasked with
establishing the Value at Risk Estimation Framework for Market Risk, then to develop obligor
rating systems for corporate clients and then spearheaded the “Basel II & III” implementation
projects. Mr Benos was appointed Director of Group Risk Control & Architecture Division at
the Bank in 2010, then Deputy General Manager for NBG Group Risk Management in 2013
and, finally, Group Chief Risk Officer (CRO) in 2015. He served on the Board of Directors and
as Chairman of the Board Risk Committee of United Bulgarian Bank, as well as on the Board
of Directors at NBG Asset Management M.F.M.C. and the Asset Liability Committee of Ethniki
Asfalistiki Insurance Co. He previously held academic positions in the US (GSB, Stanford
University), France (M.S. Finance International, HEC School of Management in Paris),
Switzerland (Dept. of Economics, University of Geneva) and Greece (Dept. of Banking and
Finance, University of Piraeus).
In September 2020, the Board decided that: a) a single CEO structure be adopted in order to
further promote management synergies and enhance cost efficiency of the Company, and
that b) Mr. Alexios Alexiou be appointed as the sole Chief Executive Officer (CEO) of Cenergy
Holdings. Mr. Ilias Bekiros will no longer act as co-CEO and member of the Executive
Management of Cenergy Holdings, but will retain his position as General Manager of Corinth
Pipeworks SA, the steel pipes segment of the Company.
The Executive Management is vested with the day-to-day management of the Company. They
are also entrusted with the implementation of the resolutions of the Board.
59
In particular, the Board has assigned the following responsibilities to Executive Management:
preparing strategic proposals for the Board;
preparing annual and strategic plans;
implementing internal controls;
monitoring and managing the Company’s results and performance against strategic
and financial plans;
presenting to the Board a complete, timely, reliable and accurate set of the
Company's draft financial statements, in accordance with the applicable accounting
standards, and the related press releases to be published by the Company;
providing the Board with a balanced and comprehensive assessment of the
Company's financial situation; and making recommendations to the Board with
respect to matters within its competency.
Remuneration policy
This remuneration policy sets forth the principles applicable to the remuneration of the
members of the Board of directors and the Executive Management of Cenergy Holdings.
Procedure
This remuneration policy has been prepared by the Board of directors upon recommendation
of the Nomination & Remuneration Committee. It will be submitted to the approval of the
shareholders’ meeting of 25 May 2021.
This policy may be revised by the Board upon recommendation of the Nomination &
Remuneration Committee. Upon approval by the shareholders’ meeting, this remuneration
policy will be applicable for four years, it being understood that any material change to the
remuneration policy during this period will be submitted to the approval of the shareholders’
meeting.
In exceptional circumstances, the Board of directors may, upon recommendation of the
Nomination & Remuneration Committee, temporarily derogate from the remuneration policy
if the derogation is necessary to serve the long-term interests and sustainability of the
Company or to assure its viability.
For the preparation of this remuneration policy, the Board, with the assistance of the
Nomination & Remuneration Committee, takes into consideration whether events of conflicts
of interests exist. For the prevention of such events, each member of the Board and each
member of the Executive Management is required to always act without conflict of interests
and always put the interest of Cenergy Holdings before his individual interest. They are also
required to inform the Board of conflicts of interests as they arise. In the event a conflict of
interests may arise, the Board is required to implement the specific procedures of conflict
resolution set forth in articles 7:96 of the BCCA.
The remuneration policy is based on the prevailing market conditions for comparable
companies, paying at market-competitive level achieved through benchmarking. It takes into
account the responsibilities, experience, required competencies, and
participation/contribution of the members of the Board of Directors and the members of the
Executive Management.
60
The Board of Cenergy Holdings, a holding company of a predominantly industrial portfolio,
aims at preserving long-term value for its shareholders. The determination and evolution of
the Company’s remuneration policy is closely linked with the growth, results and success of
the Company as a whole. The Company’s remuneration policy is built around internal fairness
and external market competitiveness. The Company's objective is to balance offering
competitive salaries while maintaining focus on performance and results.
Board of Directors
The remuneration of the members of the Board of Directors consists in a fixed annual fee
amounting to EUR 25,000. In addition, Board members who are members of a Board
committee receive a fixed fee of EUR 25,000 per committee.
Additional fees or other benefits, such as company car, training, or other benefits ‘in natura’
may be attributed either by the Company or by its subsidiaries based on the responsibilities
and number of functions each member of the Board of Directors holds within the Company
or in one or more of its subsidiaries.
The fees are allocated on a “pro rata temporis” basis for the period extending from the Annual
Ordinary Shareholders’ Meeting until the Annual Ordinary Shareholders’ Meeting of the
following year and are payable at the end of such period.
Members of the Board of directors do not receive any variable remuneration or remuneration
in shares.
Members of the Board of directors are not entitled to retirement pension plans or severance
payments.
Executive Management
The remuneration of the members of the Executive Management of Cenergy Holdings consists
in a fixed annual fee, which is attributed either by the Company or by its subsidiaries.
Members of the Executive Management do not receive any variable remuneration, or
remuneration in shares.
Members of the Executive Management are not entitled to retirement pension plans or
severance payments other than what is provided by the applicable law in each case.
Remuneration report
This remuneration report provides an overview of the remuneration granted during the
financial year 2020 to the members of the Board of directors and the members of the
Executive Management, in accordance with the remuneration policy. It will be submitted to
the vote of the shareholders’ meeting of 25 May 2021.
With regard to the contribution of the remuneration to the long-term performance of the
Company, the Company uses its KPIs (i.e. Profitability, Revenue) as a measure of its financial
performance. The evolution of the measurement during the last five years as published in the
Company’s financial statements is presented under a later section.
Board of Directors
Table 15 provides an overview of the fees paid to the members of the Board of Directors in
the financial year 2020; all amounts are in EUR. The following Notes apply to both Tables 15
and 16.
61
(a) Base salary: this column includes the fixed base salary in exchange for professional
services regarding their mandate or for any other executive or non-executive services
or functions provided during the reported financial year under a specific contract.
(b) Fees: this column includes all fees of the members of the Board for the participation in
the administrative, management or supervisory bodies of the Company’s meetings
during the reported financial year.
(c) Other benefits: this column includes the value of any benefits and perquisites, such as
non-business or non-assignment related travel, medical, car, residence or housing,
credit cards, and other benefits in kind.
(d) Extra-ordinary items: this column includes any other non-recurring remuneration,
whether in cash or in other form, such as a sign-on fee, retention bonus, redundancy
payment, compensation for relocation, indemnity for non-competition, compensation
or buyout from previous employment contracts or severance and termination
payments or benefits.
During the financial year 2020, neither any member of the Board nor any member of the
Executive Management received any variable remuneration, hence there is no such
information recorded in the Tables to follow.
Table 15: Board of Directors – Remuneration Report (amounts in EUR)
Name
Paid by
Fixed remuneration
Total Remuneration
Proportion of fixed remuneration
Base Salary
(a)
Fees
(b)
Other benefits
(c)
Jacques Moulaert
10
Cenergy Holdings
-
45,833
-
45,833
100%
Subsidiaries
-
-
0
-
Total
0
45,833
0
45,833
100%
Xavier Bedoret
Cenergy Holdings
-
50,000
-
50,000
100%
Subsidiaries
-
-
0
-
Total
0
50,000
0
50,000
100%
Dimitrios Kyriakopoulos
Cenergy Holdings
-
25,000
-
25,000
100%
Subsidiaries
-
-
0
-
Total
0
25,000
0
25,000
100%
Margaret Zakos
11
Cenergy Holdings
-
6,250
-
6,250
100%
Subsidiaries
-
-
0
-
Total
0
6,250
0
6,250
100%
Simon Macvicker
Cenergy Holdings
-
50,000
-
50,000
100%
Subsidiaries
-
-
0
-
Total
0
50,000
0
50,000
100%
Rudolf Wiedenmann
Cenergy Holdings
-
25,000
-
25,000
100%
Subsidiaries
2,679
-
2,679
100%
Total
2,679
25,000
0
27,679
100%
Manuel Iraola
Cenergy Holdings
-
50,000
-
50,000
100%
Subsidiaries
-
-
0
-
Total
0
50,000
0
50,000
100%
Joseph Rutkowski
Cenergy Holdings
-
50,000
-
50,000
100%
Subsidiaries
-
-
0
-
Total
0
50,000
0
50,000
100%
William Gallagher
Cenergy Holdings
-
50,000
-
50,000
100%
Subsidiaries
-
-
0
-
Total
0
50,000
0
50,000
100%
Marina Sarkisian-
Ochanesoglou
12
Cenergy Holdings
-
14,583
-
14,583
100%
Subsidiaries
-
-
0
-
Total
0
14,583
0
14,583
100%
Total Remuneration
Cenergy Holdings
0
366,666
0
366,666
100%
Subsidiaries
2,679
0
0
2,679
100%
Total
2,679
366,666
0
369,345
100%
10
This Board member passed away on 10.11.2020.
11
This Board member was co-opted on 16.11.2020
12
This Board member was nominated on 27.05.2020
63
Executive Management
Table 16 provides an overview of the fees paid to the members of the Executive Management during
the financial year 2020:
Table 16: Executive Management – Remuneration Report (amounts in EUR)
Evolution of the remuneration
The following Table provides an overview of the evolution over the three most recent financial years
of the overall remuneration of the members of the Board of directors and the members of the
Executive Management, and the performance of the Company through the reporting of some of its
KPIs:
Table 17: Remuneration and Company performance
15
Amounts in EUR thousand
2018
2019
2020
Remuneration of the members of the Board
of directors and the Executive Management
908
991
1,146
Performance of the Company
[EBITDA]
56,223
90,273
91,121
[a-EBITDA]
60,951
90,098
101,800
[Revenue]
963,797
958,016
908,417
13
Mr. Alexiou was co-CEO until 22.09.2020 and CEO afterwards.
14
Mr. Bekiros was co-CEO until 22.09.2020. His remuneration amounts are therefore pro rata.
15
The information is provided on the basis of the available information from previous remuneration reports and the annual accounts of
the Company. Cenergy Holdings was founded and listed on the Stock Exchange in 2016. Therefore, the available information starts in
2017.
Name
Paid by
Fixed remuneration
Extraordinary
items
(d)
Total
Remuneration
Proportion of
fixed
remuneration
Base Salary
(a)
Fees
(b)
Other
benefits
(c)
Alexios
Alexiou
13
Cenergy Holdings
-
-
-
-
0
Subsidiaries
198,694
-
8,832
150,000
357,526
100%
Total
198,694
0
8,832
150,000
357,526
100%
Ilias Bekiros
14
Cenergy Holdings
-
-
-
0
Subsidiaries
140,700
-
7,668
45,000
193,368
100%
Total
140,700
0
7,668
45,000
193,368
100%
Alexandros
Benos
Cenergy Holdings
141,600
-
3,750
80,500
225,850
100%
Subsidiaries
-
-
-
-
0
Total
141,600
0
3,750
80,500
225,850
100%
Total
Remuneration
Cenergy Holdings
141,600
0
3,750
80,500
225,850
100%
Subsidiaries
339,394
0
16,500
195,000
550,894
100%
Total
480,994
0
20,250
275,500
776,744
100%
64
The remuneration ratio, as defined by Section3:6 of the BCCA, was 5.8x for 2020. For its calculation,
the Company used the remuneration of the CEO as the highest paid management member and the
remuneration of the full-time employee of the holding company - who has worked for a full year - as
the lowest paid employee.
Publishing of this ratio is a new practice required by the law and the presentation adopted is intended
to comply with the new transparency requirements. The disclosure on this ratio will be assessed and
evaluated in the future subject to the evolution of the ratio and to potential future
guidance/clarifications that may be published on this requirement.
External Audit
The statutory auditor, appointed by the Shareholders’ Meeting among the members of the Belgian
Institute of Certified Auditors, is entrusted with the external audit of the Company’s consolidated
financial statements.
The statutory auditors’ mission and powers are those defined by the law. The Shareholders’ Meeting
sets the number of statutory auditors and determines their remuneration in compliance with the law.
The statutory auditors are appointed for a renewable term of three years.
On May 29, 2019, the Company appointed PriceWaterhouseCoopers - Reviseurs d’entreprises SCRL,
in abbreviation PwC Reviseurs d’Entreprises, represented by Marc Daelman, as statutory auditor for
a three-year period.
Risk Management and Internal Audit
The Belgian legislative and regulatory framework on risk management and internal control consists
of the relevant provisions of the law of 17 December 2008 on the establishment of an Audit
Committee, and the law of 6 April 2010 on the enhancement of corporate governance, as well as of
the Corporate Governance Code.
As set out in the “Risks and Uncertainties” chapter of this Annual Report, Executive Management is
responsible for risk management and the systems of internal control. Under the strict supervision of
Executive Management, the management team of each Company’s subsidiary is responsible for
developing an adequate organisation and an appropriate system of internal control for running the
subsidiary’s operations and managing risk.
The Audit Committee is responsible for monitoring the effectiveness of the Company’s risk
management, its systems of internal control and its internal audit function.
Risk Management
Risk management, incorporating market risk and operational risk, is mainly the responsibility of the
Management of the subsidiaries. The managers of the subsidiaries report on risk assessment and risk
mitigation to Executive Management on a regular basis; they provide the Board and the Audit
Committee with a detailed business review which analyses risks and challenges.
Internal Audit Function
The Audit Committee supervises the internal audit function. Internal auditing is an independent,
objective assurance and consulting activity designed to add value and improve the organization's
65
operations. It helps the organization accomplish its objectives by bringing a systematic, disciplined
approach to evaluate and improve the effectiveness of risk management, control, and governance
processes. Internal audit is conducted in accordance with the International Standards for the
Professional Practice of Internal Auditing (IPPF).
The internal audit function is responsible for performing audit engagements in accordance with its
annual internal audit plan, which is prepared and reviewed in order to assist the organization to
effectively mitigate risk throughout its operations. The audit engagements follow the audit
methodology described in the internal audit charter and the internal audit manual as well as aim at
ensuring that subsidiaries comply with shared services processes with regards to their operations,
industrial production and consolidation guidelines. At the end of each audit engagement, the internal
audit function issues an audit report containing its audit findings and recommendations. The
subsidiaries’ management is responsible to design and implement remedial actions towards each of
the internal audit findings and recommendations in due time.
The internal audit function reports to the Audit Committee. The Audit Committee ensures that the
internal audit work is focused on the activities and the risk areas it deems critical. It ensures that the
internal audit function reduces the probability of fraud and error and provides effective mitigation of
risk.
Control Activities and Relationship with Subsidiaries
Cenergy Holdings is a holding company that operates in a decentralised manner. Each of the
subsidiaries is responsible for its performance and results. The management of the subsidiaries is
organised around solid global and regional teams, with responsibility assigned to the members of
their respective executive management team.
All Cenergy Holdings’ companies are accountable for their own organisation, risk management and
system of internal control as these are developed and implemented depending on the business
segment, the geographical location and the type of production plant concerned.
In order to secure consistency of approach when separate companies deal with similar issues, and to
optimise coordination throughout the network of the Company’s subsidiaries, the Board sets out
corporate policies aimed at providing the local management of the companies with solid guidance
and a workable framework for optimal local implementation and monitoring.
Financial Reporting and Monitoring Activities
Cenergy Holdings has established procedures for the adequate recording and reporting of financial
and non-financial information. The objective is to ensure that financial and non-financial information
produced by each entity is homogeneous, coherent and comparable, and that consolidated financial
information is fair, reliable and can be obtained in a timely manner.
Each subsidiary reports financial information on a monthly basis. This includes the balance sheet, the
income statement, the statement of cash flows and a working capital analysis.
A review of each business segment is presented to the Board. The review includes “actual versus
budgeted” financial and non-financial information, the highlights of the reporting period, the outlook
for each business segment, and is a key component of Cenergy Holdings’ decision-making process.
Conflict of interests
Pursuant to Article 8 of the Corporate Governance Charter, in the event that a conflict of interest
arises with a Board member, a shareholder or other Cenergy Holdings’ company, the Board is
66
required to implement the specific procedures of conflict resolution set forth in articles 7:96 and 7:97
of the BCCA.
Each member of the Board and Executive Management is required to always act without conflicts of
interest and put the interests of the Company before his or her individual interests. Each member of
the Board and Executive Management is required to always arrange his or her personal and business
affairs so as to avoid direct and indirect conflicts of interest with the Company.
All Board members are required to inform the Board on conflicts of interest once they arise. If the
conflict of interest is of a proprietary nature, they will also abstain from participating in the
discussions and deliberations on the matter involved, in accordance with Article 7:96 of the BCCA. If
the conflict of interest is not covered by the provisions of the BCCA, and involves a transaction or
contractual relationship between the Company or one of its related entities on the one hand, and
any member of the Board or Executive Management (or a company or entity with which such member
of the Board or Executive Management has a close relationship) on the other hand, such member will
inform the Board of the conflict. The Board is under an obligation to check that the approval of the
transaction is motivated by the Company’s interest only and that it takes place at arm’s length.
In all cases involving a conflict of interest not covered by Article 7:96 of the BCCA, the Board member
affected by the conflict of interest is required to judge whether he or she should abstain from
participating in the discussions of the Board and the vote.
Since the listing of the Company, the Board has not been notified of any transaction or other
contractual relationship between Cenergy Holdings and its Board members which cause a conflict of
interest as defined by articles 7:96 and 7:97 of the BCCA.
Shareholders’ Structure
Capital Structure
On December 31, 2020, the Company’s share capital amounted to EUR 117,892,172.38 represented
by 190,162,681 shares without nominal value. There is no authorised share capital.
Cenergy Holdings has received a transparency notification dated 22 December 2016 indicating that
Viohalco S.A. holds, directly and indirectly, 81.93% of the voting rights of the Company. Viohalco S.A.
holds directly 56.77% of the voting rights of the Company and 25.16% through its subsidiary,
ElvalHalcor S.A.
According to its obligation under Article 14 of the Belgian Law of 2 May 2007 on the disclosure of
significant shareholdings in listed companies, Cenergy Holdings publishes the content of the
notification that it has received on its website (www.cenergyholdings.com).
All shares of the Company belong to the same class of securities and are in registered or
dematerialised form. Shareholders may select, at any time, to have their registered shares converted
into dematerialised shares and vice versa.
Share transfers are not restricted in the Company’s Articles of Association. All shares of the Company
are freely transferable. Each share entitles the holder to one voting right.
67
Restrictions on Voting Rights
The Articles of Association do not provide for special restrictions on the shareholders’ voting rights.
Provided that the shareholders are admitted to the Shareholders’ Meeting and their rights are not
suspended, they enjoy unrestricted freedom in exercising their voting rights.
The relevant provisions governing the shareholders’ admission to the Shareholders’ Meeting are set
out in Article 19 of Cenergy Holdings’ Articles of Association.
Article 6.4 of the Articles of Association provides that the Company’s shares are indivisible and
recognises only one holder per share. The Board has the right to suspend the exercise of all rights
attached to jointly owned shares until a single representative of the joint owners has been appointed.
Transparency
Pursuant to the Belgian Law of 2 May 2007 on the disclosure of major holdings in issuers whose shares
are admitted to trading on a regulated market and laying down miscellaneous provisions (the
“Transparency Law”), the Company requires that any natural and legal person, who directly or
indirectly acquires voting securities in the Company, notifies the Company and the Financial Services
and Markets Authority (the “FSMA”) of the number and proportion of existing voting rights they hold,
where the voting rights attached to the voting securities reach 5% or more of the total existing rights.
A similar notification is required in the following cases:
direct or indirect acquisition, or disposal, of voting securities, or change of the breakdown of
the voting rights, where the proportion of voting rights attached to the securities held
reaches or exceeds 10%, 15%, 20% and so on, by increments of 5%, of the total existing voting
rights;
first admission of the Company’s shares to trading on a regulated market, where the voting
rights attached to the voting securities represent 5% or more of the total existing voting
rights;
conclusion, modification or termination by natural or legal persons of an agreement to act in
concert where the proportion of the voting rights that are the subject of the agreement, or
the proportion of the voting rights held by a party to the agreement, reaches, exceeds or falls
below one of the thresholds provided for in § 1, or the nature of the agreement to act in
concert is modified;
breaching of stricter notification thresholds added by the Company’s Articles of Association.
The notification must be made promptly and no later than within four trading days following the
acquisition or disposal of the voting rights triggering the reaching of the threshold. The Company
must publish the information within three trading days following receipt of the notification.
At Shareholders’ Meetings, shareholders cannot cast more votes than those attached to the
securities or rights they have notified to the Company, in pursuance to the Transparency Law, before
the date of the Shareholders’ Meeting, subject to certain exceptions.
The form, on which such notifications must be made, together with additional explanations, is
available on the FSMA website (www.fsma.be).
The voting rights held by major shareholders of the Company are available on the website of Cenergy
Holdings (www.cenergyholdings.com).
Cenergy Holdings is not aware of the existence of any agreement between its shareholders
concerning the transfer or the exercise of the voting rights attached to the shares of the Company.
68
Distribution and dividend policy
Cenergy Holdings does not have a history of dividend distribution. No dividends have been paid to
shareholders during the Company’s lifetime as it reinvests profits back into its business.
The dividend distribution policy will be reviewed by the Board in due course and, if the policy changes,
the Company will inform the market accordingly. No assurance can be given, however, that the
Company will make dividend payments in the future. Such payments will depend upon a number of
factors, including the Company’s prospects, strategies, results of operations, earnings, capital
requirements and surplus, general financial conditions, contractual restrictions and other factors
considered relevant by the Board. Due to its interest and participation in a number of subsidiaries
and affiliated companies, the Company’s stand-alone income and its ability to pay dividends depends
in part on the receipt of dividends and distributions from these subsidiaries and affiliated companies.
The payment of dividends by these subsidiaries and affiliated companies is contingent upon the
sufficiency of earnings, cash flows, and distributable reserves.
Pursuant to Belgian law, the calculation of amounts available for distribution to shareholders, as
dividends or otherwise, must be determined on the basis of the Company’s non-consolidated
financial statements. In accordance with BCCA, the Company’s Articles of Association also require
that the Company allocates at least 5% of its annual net profits to its legal reserve each year, until the
legal reserve equals at least 10% of the Company’s share capital. As a consequence of these factors,
there can be no assurance as to whether dividends or similar payments will be distributed in the
future.
Shareholders’ Meeting
Meetings
The Annual Ordinary Shareholders’ Meeting of the Company is held on the last Tuesday of May at
10:00 a.m. or, if the day is a public holiday in Belgium, on the previous business day, at the same time.
It takes place in Brussels, at the registered office of the Company or at the place indicated in the
convening notice of the Shareholders’ Meeting.
The other Shareholders' Meetings of the Company must take place on the date, hour and place
indicated in the convening notice of the Meeting. They may take place at locations other than the
Company’s registered office.
The Annual, the Special and Extraordinary Shareholders' Meetings of the Company may be convened
by the Board or by the statutory auditor of the Company, or at the request of shareholders
representing at least 10% of the Company’s share capital.
Quorum and Majority required for modification of the articles of association
The modification of Cenergy Holdings’ Articles of Association requires at least the majority of the
share capital to be present or represented, and that it is approved by a qualified majority of 75% of
the votes cast. If the quorum is not reached at the first meeting, a second meeting can be convened
with the same agenda. This new general meeting is considered to have reached the quorum and to
be validly convened irrespective of the proportion of the Company’s share capital represented.
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
69
Consolidated Financial Statements 2020
Table of Contents
Consolidated Statement of Financial Position ............................................................................... 71
Consolidated Statement of Profit or Loss ........................................................................................ 72
Consolidated Statement of Profit or Loss and Other Comprehensive Income ................ 73
Consolidated Statement of Changes in Equity ............................................................................... 74
Consolidated Statement of Cash Flows ............................................................................................ 75
Notes to the Consolidated Financial Statements .......................................................................... 76
1. Reporting entity 76
2. Basis of accounting 76
3. Functional currency and presentation currency 76
4. Use of estimates and judgements 76
5. Significant accounting policies 77
6. Operating segments 95
7. Revenue 98
8. Income and expenses 102
9. Net finance costs 104
10. Earnings per share 104
11. Employee benefits 105
12. Employee benefit expenses 107
13. Income tax 108
14. Inventories 112
15. Trade and other receivables 113
16. Cash and cash equivalents 114
17. Property, plant and equipment 114
18. Leases 116
19. Intangible assets 117
20. Investment property 120
21. Equity-accounted investees 120
22. Other investments 122
23. Derivatives 123
24. Capital and reserves 125
25. Capital management 126
26. Debt 127
27. Trade and other payables 129
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
70
28. Grants 130
29. Financial instruments 130
30. Impact of Covid-19 pandemic 140
31. List of subsidiaries 142
32. Joint operations 142
33. Commitments 143
34. Contingent liabilities 143
35. Related parties 144
36. Auditor’s fees 145
37. Subsequent events 145
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
71
Consolidated Statement of Financial Position
Amounts in EUR thousand
31 December 2020
31 December 2019
ASSETS
Note
Property, plant and equipment
17
457,937
422,066
Right of use assets
18
5,598
5,881
Intangible assets
19
29,323
24,773
Investment property
20
764
764
Equity - accounted investees
21
34,339
34,583
Other investments
22
5,657
5,015
Derivatives
23
871
-
Trade and other receivables
15
1,303
1,482
Contract costs
7.E
222
84
Deferred tax assets
13
2,908
2,164
Non-current assets
538,921
496,812
Inventories
14
213,192
228,495
Trade and other receivables
15
112,872
112,577
Contract assets
7.D
64,875
118,573
Contract costs
7.E
491
512
Income tax receivables
54
35
Derivatives
23
584
213
Cash and cash equivalents
16
81,035
90,408
Current assets
473,103
550,814
Total assets
1,012,024
1,047,626
EQUITY
Share capital
117,892
117,892
Share premium
58,600
58,600
Reserves
24
30,427
34,699
Retained earnings
44,556
20,377
Equity attributable to owners of the Company
251,475
231,568
Non-controlling interests
287
295
Total equity
251,762
231,862
LIABILITIES
Loans and borrowings
26
174,625
177,730
Lease liabilities
18
3,681
3,990
Employee benefits
11
6,406
5,677
Grants
28
16,487
14,006
Trade and other payables
27
217
2,170
Deferred tax liabilities
13
31,668
22,985
Contract liabilities
7.D
9,889
7,543
Non-current liabilities
242,973
234,100
Loans and borrowings
26
231,592
320,827
Lease liabilities
18
1,752
1,768
Trade and other payables
27
249,092
213,794
Contract liabilities
7.D
30,196
43,528
Current tax liabilities
2,081
18
Derivatives
23
2,576
1,728
Current liabilities
517,289
581,663
Total liabilities
760,262
815,763
Total equity and liabilities
1,012,024
1,047,626
The notes on pages 76 to 145 are an integral part of these Consolidated Financial Statements.
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
72
Consolidated Statement of Profit or Loss
Amounts in EUR thousand
For the year ended 31 December
Note
2020
2019
Revenue
7
908,417
958,016
Cost of sales
8.C
(804,924)
(859,502)
Gross profit
103,493
98,514
Other income
8.A
5,088
8,095
Selling and distribution expenses
8.C
(13,719)
(16,237)
Administrative expenses
8.C
(24,895)
(24,044)
Reversal of / (Impairment loss) on receivables and
contract assets
29.C.1
55
(1,511)
Other expenses
8.B
(3,810)
(3,301)
Operating profit
66,211
61,517
Finance income
9
356
42
Finance costs
9
(31,996)
(34,667)
Net finance costs
(31,640)
(34,626)
Share of profit of equity-accounted investees,
net of tax
21
838
1,600
Profit before tax
35,410
28,492
Income tax
13
(10,638)
(8,315)
Profit for the year
24,771
20,177
Profit/(Loss) attributable to:
Owners of the Company
24,772
20,189
Non-controlling interests
(1)
(12)
24,771
20,177
Earnings per share (in EUR per share)
Basic and diluted
10
0.13027
0.10617
The notes on pages 76 to 145 are an integral part of these Consolidated Financial Statements.
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
73
Consolidated Statement of Profit or Loss and Other Comprehensive
Income
For the year ended 31 December
Amounts in EUR thousand
Note
2020
2019
Profit for the year
24,771
20,177
Items that will never be reclassified to profit or loss
Remeasurements of defined benefit liability
11
(447)
(1,372)
Changes in the fair value of equity instruments at fair value
through other comprehensive income
22
640
7,650
Share of other comprehensive income of associates
accounted for using the equity method
21
(161)
(17)
Related tax
106
525
139
6,786
Items that are or may be reclassified to profit or loss
Foreign currency translation differences
(4,330)
1,117
Cash flow hedges – effective portion of changes in fair
value
(2,130)
(1,235)
Cash flow hedges – reclassified to profit or loss
1,235
2,040
Related tax
212
(293)
(5,012)
1,628
Other comprehensive income / (loss)
(4,872)
8,414
Total comprehensive income after tax
19,899
28,590
Total comprehensive income / (loss) attributable to:
Owners of the Company
19,907
28,612
Non-controlling interests
(8)
(22)
19,899
28,590
The notes on pages 76 to 145 are an integral part of these Consolidated Financial Statements.
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
74
Consolidated Statement of Changes in Equity
Amounts in EUR thousand
Share
capital
Share
premium
Translation
reserve
Other
reserves
Retained
earnings
Total
Non-
controlling
interests
Total
equity
Balance at 1 January 2020
117,892
58,600
(17,552)
52,251
20,377
231,568
295
231,862
Total comprehensive income
Profit / (Loss) for the period
-
-
-
-
24,772
24,772
(1)
24,771
Other comprehensive income /
(loss)
-
-
(4,324)
(40)
(501)
(4,865)
(7)
(4,872)
Total comprehensive income
-
-
(4,324)
(40)
24,271
19,907
(8)
19,899
Transactions with owners of the
company
Contributions and distributions
Transfer of reserves
-
-
-
93
(93)
-
-
-
Total contributions and
distributions
-
-
-
93
(93)
-
-
-
Total transactions with owners of
the Company
-
-
-
93
(93)
-
-
-
Balance at 31 December 2020
117,892
58,600
(21,876)
52,303
44,556
251,475
287
251,762
Amounts in EUR thousand
Share
capital
Share
premium
Translation
reserve
Other
reserves
Retained
earnings
Total
Non-
controlling
interests
Total
equity
Balance at 1 January 2019
117,892
58,600
(18,676)
51,950
(6,784)
202,981
317
203,298
Total comprehensive income
Profit / (Loss) for the period
-
-
-
-
20,189
20,189
(12)
20,177
Other comprehensive income /
(loss)
-
-
1,124
8,164
(864)
8,424
(10)
8,414
Total comprehensive income
-
-
1,124
8,164
19,325
28,612
(22)
28,590
Transactions with owners of the
company
Contributions and distributions
Transfer of reserves
-
-
-
(7,600)
7,600
-
-
-
Total contributions and
distributions
-
-
-
(7,600)
7,600
-
-
-
Changes in ownership interests
Acquisition of subsidiary
(Common control transaction)
-
-
-
-
(26)
(26)
-
(26)
Disposal of subsidiary
-
-
-
(263)
263
-
-
-
Total changes in ownership
interests
-
-
-
(263)
237
(26)
-
(26)
Total transactions with owners of
the Company
-
-
-
(7,862)
7,836
(26)
-
(26)
Balance at 31 December 2019
117,892
58,600
(17,552)
52,251
20,377
231,568
295
231,862
The notes on pages 76 to 145 are an integral part of these Consolidated Financial Statements.
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
75
Consolidated Statement of Cash Flows
For the year ended 31 December
Amounts in EUR thousand
Note
2020
2019
Cash flows from operating activities
Profit/(Loss) of the period
24,771
20,177
Adjustments for:
- Income tax
10,638
8,315
- Depreciation
17, 18, 20
21,179
25,197
- Amortization
19
3,801
2,696
- Amortization of grants
28
(908)
(736)
- (Reversal of) impairment losses on investment property
8
-
(10)
- Net finance costs
9
31,640
34,626
- Share of profit of equity-accounted investees, net of tax
21
(838)
(1,600)
- (Gain) / loss from sale of property, plant & equipment
8
(6)
377
- Loss from write-offs of intangible assets
8
142
137
- Gain from disposal of subsidiaries
8
-
(3,630)
- Unrealised (Gain) / Loss from valuation of derivatives
(1,289)
(1,484)
- (Reversal of) / Impairment loss on receivables & contract assets
29.C.1
(55)
1,511
- (Reversal of) / Impairment of inventories
275
262
89,349
85,835
Changes in:
- Inventories
15,028
(10,615)
- Trade and other receivables
3,011
73,803
- Trade and other payables
38,230
6,842
- Contract assets
53,699
(4,246)
- Contract liabilities
(10,986)
(11,076)
- Contract costs
(117)
1,384
- Employee benefits
283
(15)
Cash generated from operating activities
188,497
141,910
Interest charges & related expenses paid
(29,437)
(31,711)
Income tax paid
(484)
(300)
Net Cash from operating activities
158,575
109,898
Cash flows from investing activities
Acquisition of property, plant and equipment
(66,285)
(51,276)
Acquisition of intangible assets
19
(3,683)
(4,224)
Proceeds from grants
28
317
169
Proceeds from sale of property, plant & equipment & intangible assets
126
1,030
Disposal of subsidiaries, net of cash disposed of
-
6,629
Acquisition of subsidiary, net of cash acquired
-
(23)
Acquisition of equity-accounted investee
21
(3,285)
-
Dividends received
21
915
498
Interest received
31
13
Acquisition of financial assets
22
(26)
(1)
Proceeds from disposal of financial assets
22
24
-
Net Cash flows used in investing activities
(71,865)
(47,185)
Cash flows from financing activities
Proceeds from new borrowings
26
38,030
62,930
Repayment of borrowings
26
(132,217)
(98,909)
Principal elements of lease payments
26
(1,267)
(1,066)
Net cash flows used in financing activities
(95,454)
(37,045)
Net (decrease)/ increase in cash and cash equivalents
(8,744)
25,669
Cash and cash equivalents at 1 January
90,408
65,203
Effect of movement in exchange rates on cash held
(630)
(463)
Cash and cash equivalents at 31 December
16
81,035
90,408
The notes on pages 76 to 145 are an integral part of these Consolidated Financial Statements.
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
76
Notes to the Consolidated Financial Statements
1. Reporting entity
Cenergy Holdings S.A. (hereafter referred to as “the Company”, “the Holding” or “Cenergy Holdings”)
is a Belgian limited liability company. The Company’s registered office is located at 30 Avenue Marnix,
1000 Brussels Belgium. The Company’s Consolidated Financial Statements include those of the
Company and its subsidiaries (together referred to as “Cenergy Holdings” or the “Group”), and Cenergy
Holdings’ interest in associates accounted for using the equity method.
Cenergy Holdings is a holding company and holds participations in 11 subsidiaries. With production
facilities in Greece, Bulgaria and Romania, Cenergy Holdings’ subsidiaries specialise in manufacturing
steel pipes and cables products. Its shares are traded on Euronext Brussels since December 2016 and
has its secondary listing on the Athens Stock exchange (trading ticker “CENER”). The Company’s
electronic address is www.cenergyholdings.com, where the Consolidated Financial Statements have
been posted.
Cenergy Holdings is a subsidiary of Viohalco S.A. (81.93% of voting rights). Viohalco S.A. (“Viohalco”) is
a Belgium-based holding company whose subsidiaries are specialised in the manufacture of aluminium,
copper, cables, steel and steel pipes products and technological advancement.
2. Basis of accounting
Statement of compliance
The Consolidated Financial Statements have been prepared by Management in accordance with the
International Financial Reporting Standards (IFRS) as adopted by the European Union and authorized
for issue by the Company’s Board of Directors on 6 April 2021.
Details of the Company’s accounting policies are included in Note 5.
Basis of measurement
The Consolidated Financial Statements have been prepared in accordance with the historical cost
principle with the exception of the following assets and liabilities which are measured on an alternative
basis on each reporting date.
Derivative financial instruments held for hedging purposes (fair value);
Equity investments at FVOCI (fair value);
Net defined benefit liability (present value of the obligation).
3. Functional currency and presentation currency
The functional and presentation currency of the Company is the euro. All amounts in the Consolidated
Financial Statements are rounded to the nearest thousand, unless otherwise indicated. As such, due to
rounding, figures shown as totals in certain tables may not be arithmetic aggregations of the figures
that precede them.
4. Use of estimates and judgements
Preparing financial statements in line with IFRS requires that Management makes judgements,
estimates and assumptions that affect the application of Cenergy Holdings’ accounting policies and the
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
77
reported amounts of assets, liabilities, income and expenses. The actual results may differ from these
estimates.
Management’s estimates and judgements are reviewed on an ongoing basis. Revisions to estimates are
recognised prospectively.
When preparing the Consolidated Financial Statements, Management took into account the
consequences of the Covid-19 pandemic in its estimates and assumptions, despite the prevailing
uncertainty concerning the coronavirus’s mutation and how the resulting crisis will evolve. The
pandemic’s consequences are described in Note 30 and are taken into account in the estimates
described below, where applicable.However, the effect on the outcome of such estimates and
assumptions due to the pandemic was rather limited.
Information about judgements, assumptions and estimation uncertainties that have significant risk of
resulting in a material adjustment to the carrying amounts of assets and liabilities in the next financial
year is included in the following notes:
Note 7 – Revenue recognition;
Note 11 – Measurement of defined benefit obligations: key actuarial assumptions;
Note 13 – Recognition of deferred tax assets, availability of future taxable profits against which
carryforward tax losses can be used;
Note 15 – Recoverability of overdue receivable from a former customer in the Middle-East ;
Note 19– Impairment test: key assumptions underlying recoverable amounts;
Note 29.C1 – Measurement of expected credit losses on trade receivables and contract assets:
key assumptions in determining expected loss rates.
5. Significant accounting policies
The accounting principles described below have been consistently applied to all periods presented in
these Consolidated Financial Statements and have also been consistently applied by Cenergy Holdings
and its subsidiaries and its equity-accounted investees.
5.1 Basis of Consolidation
(a) Business combinations
Acquisition of subsidiaries is accounted for using the acquisition method on the acquisition date, i.e.
the date on which control is transferred to Cenergy Holdings. To assess control, Cenergy Holdings takes
into account substantive potential voting rights.
Cenergy Holdings measures goodwill on the acquisition date as follows:
the fair value of the consideration paid; plus
the value of any non-controlling interest in the acquired subsidiary; less
the fair value of identifiable assets and liabilities assumed.
Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is
immediately recognized in the Consolidated Statement of Profit or Loss. Any expenses directly linked
with acquisition are directly posted in the Consolidated Statement of Profit or Loss. Any contingent
consideration is recognized at its fair value on the acquisition date.
(b) Common control transactions
A business combination, in which all of the combining entities or businesses are ultimately controlled
by the same party or parties both before and after the business combination and when control is not
transitory, is a common control transaction. The Group has chosen to account for such common control
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
78
transactions at book value (carry-over basis). The identifiable net assets acquired are not measured at
fair value but recorded at their carrying amounts; intangible assets and contingent liabilities are
recognized only to the extent that they were recognised before the business combination in accordance
with applicable IFRS. Any difference between the consideration paid and the capital of the acquiree is
presented in retained earnings within equity. Transaction costs are expensed as incurred.
(c) Subsidiaries
Subsidiaries are entities controlled by Cenergy Holdings. Cenergy Holdings controls an entity when it is
exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to
affect those returns through its power over the entity. The financial statements of the subsidiaries are
included in the Consolidated Financial Statements from the date on which control commences until the
date on which control ceases.
(d) Non-controlling interests
Non-controlling interests (NCI) are measured at fair value or at their proportionate share of the
acquiree’s identifiable net assets at the date of acquisition. This measurement is done on an acquisition
by acquisition basis.
Changes in Cenergy Holdings’ interest in a subsidiary that do not result in a loss of control are accounted
for as equity transactions.
(e) Loss of control
When Cenergy Holdings loses control over a subsidiary, the assets and liabilities of the subsidiary are
derecognised, and any related NCI and other components of equity. Any resulting gain or loss is
recognised in profit or loss. Any interest retained in the former subsidiary is measured at fair value
when control is lost.
(f) Associates
Associates are those entities in which Cenergy Holdings has significant influence, but not control or
joint control, over the financial and operating policies. This is generally the case where Cenergy
Holdings holds between 20% and 50% of the voting rights. Investments in associates are accounted for
using the equity method of accounting (see (h) below), after initially being recognised at cost.
(g) Joint arrangements
Under IFRS 11 Joint Arrangements, investments in joint arrangements are classified as either joint
operations or joint ventures. The classification depends on the contractual rights and obligations of
each investor, rather than the legal structure of the joint arrangement.
Joint operations
Cenergy Holdings recognises its direct right to the assets, liabilities, revenues and expenses of joint
operations and its share of any jointly held or incurred assets, liabilities, revenues and expenses. These
have been incorporated in the financial statements under the appropriate headings.
Joint ventures
A joint venture is an arrangement in which Cenergy Holdings has joint control, whereby Cenergy
Holdings has rights to the net assets of the arrangement, rather than rights to its assets and obligations
for its liabilities.
Interests in joint ventures are accounted for using the equity method (see (h) below), after initially
being recognised at cost in the consolidated balance sheet.
(h) Equity method
Under the equity method of accounting, the investments are initially recognised at cost and adjusted
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
79
thereafter to recognise Cenergy Holdings’ share of the post-acquisition profits or losses of the investee
in profit or loss, and Cenergy Holdings’ share of movements in other comprehensive income of the
investee, until the date on which significant influence or joint control ceases. Dividends received or
receivable from associates and joint ventures are recognised as a reduction in the carrying amount of
the investment.
When the Cenergy Holdings’ share of losses in an equity-accounted investment equals or exceeds its
interest in the entity, Cenergy Holdings does not recognise further losses, unless it has incurred
obligations or made payments on behalf of the other entity.
Cenergy Holdings’ interests in equity-accounted investees comprise only of interests in associates.
(i) Transactions eliminated on consolidation
Intra group balances and transactions, and any unrealised income and expenses arising from intra
group transactions, are eliminated. Unrealized gains arising from transactions with equity accounted
investees are eliminated against the investment to the extent the Group’s interest in the investee.
Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there
is no evidence of impairment.
5.2 Foreign currency
(a) Foreign currency transactions
Transactions in foreign currencies are translated into the respective functional currencies of Cenergy
Holdings’ companies at the exchange rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies are translated into functional
currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that are
measured at fair value in a foreign currency are translated into the functional currency at the exchange
rate, when the fair value was determined. Foreign currency gains and losses are recognized and
classified in the Consolidated Statement of Profit or Loss based on the nature of the related item of the
Consolidated Statement of Financial Position.
Non-monetary items that are measured based on historical cost in a foreign currency are translated at
the exchange rate at the date of the transaction.
Foreign currency differences arising from the translation of qualifying cash flow hedges to the extent
that the hedges are effective and investments in equity securities designated as at FVOCI are recognised
as Other Comprehensive Income (OCI).
(b) Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on
acquisition, are translated into Euro at the exchange rates of the reporting date. The income and
expenses of foreign operations are translated into Euro at the exchange rates at the date of the
transactions. The average rate for the period is deemed to be an appropriate rate.
Foreign currency differences are recognised in OCI and accumulated in the translation reserve, except
to the extent that the translation difference is allocated to NCI.
5.3 Revenue
Cenergy Holdings recognizes revenue from the following major sources:
Sale of products;
Energy projects;
o Steel pipes projects, i.e. onshore and offshore customized pipelines produced for
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
80
applications based on customers’ specifications.
o Cables projects, i.e. high-tech customized underground and submarine cables and
"turnkey" cable systems for power or data transmission and distribution.
Rendering of services.
Revenue is measured based on the consideration specified in a contract with a customer and excludes
amounts collected on behalf of third parties. Cenergy Holdings recognizes revenue when it transfers
control of a product or service to a customer.
Consideration can vary because of trade discounts, volume rebates, returns or other similar items.
Depending on the type of variable consideration, the most appropriate method for measuring this
variable consideration is used.
Sale of products
Cenergy Holdings sells hollow structural sections for the construction sector, power cables, telecom
cables, wires and raw materials.
For sales of products, revenue is recognised at a point of time, when the control of the goods sold has
been transferred.
The timing of the transfer of control occurs when the goods have been shipped to the customers’
location, unless otherwise specified in the terms of the contract. The terms defined on the contracts
with customers are according to Incoterms.
Revenue recognised at a point in time is invoiced either simultaneously with its recognition or within a
short time period from its recognition. A receivable is recognised when the control is transferred to the
customer, as this represents the point in time at which the right to consideration becomes
unconditional.
Energy projects
The Group produces and sells customized products to customers for energy projects.
In the cables sector, Cenergy Holdings’ subsidiaries also produce and sell "turnkey" cable systems, i.e.
supply and install complete cable systems.
Under the terms of the contracts and due to the high degree of customization, these products have no
alternative use, since they are produced according to customers’ specifications, while there is an
enforceable right to payment for performance completed to date if the contract is terminated by the
customer or another party for reasons other than Cenergy Holdings’ failure to perform as promised.
Revenue from such projects is therefore recognised over time.
For distinct performance obligations identified, the most appropriate method to measure progress is
used. The methods used are the following:
For performance obligations related to production of customized products, depending on the
type of contract concerned, the methods to measure progress is estimated based on:
i. Production time elapsed, i.e. the ratio between the actual time spent on the
production and the total number of scheduled production time. This method is used
for submarine cables produced in long continuous lengths, when time elapsed is the
most relevant method to measure the progress of the performance obligation.
ii. The quantity of manufactured and tested cable drums or steel pipes compared with
the total quantity to be produced according to the contract. This method is used for
customized land cables and steel pipes, since the production of such products is
performed in batches and as a result the performance obligations related are satisfied
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
81
as certain batches of agreed quantities have been produced.
For installation phases of cables sector’s turnkey projects, the method to measure progress is
based on appraisal of results achieved or milestones reached, based to clearly defined
technical milestones, such as transport or meters of cables installed. When milestones are
being used as a method to measure progress, these milestones faithfully depict the
performance.
Management considers that these methods are appropriate measures of the progress towards
complete satisfaction of these performance obligations under IFRS 15.
The timing of revenue recognition, billings and cash collections results in billed accounts receivable,
unbilled receivables (contract assets), and customer advances (contract liabilities). These contract
assets and contract liabilities are presented on the Consolidated Statement of Financial Position in the
lines “Contract assets” and “Contract liabilities” respectively. For products and services for which
revenue is recognised over time, amounts are billed as work progresses in accordance with agreed-
upon contractual terms, either upon achievement of contractual milestones, or at the final delivery and
acceptance of the manufactured items.
Generally, billing occurs subsequent to revenue recognition for customized products and services
performed over time resulting in contract assets. However, when advances from customers are
received before revenue is recognized, a contract liability is recognized.
There is not considered to be a significant financing component in energy projects contracts with
customers, as the period between the recognition of revenue and the milestone payment is less than
one year.
Rendering of services
Cenergy Holdings recognises revenue from rendering of services in proportion to the stage of
completion of the transaction at the reporting date. The stage of completion is assessed based on
surveys of work performed.
Services provided by Cenergy Holdings are mainly related with the products sold by its subsidiaries and
mainly include:
Metal processing technical support service;
Design and engineering of customized applications;
Supervision services;
Installation services;
Repairs and replacements.
All of the above, when related to Energy projects, are reported in the Cables’ and Steel pipes’ revenue
streams, respectively.
If payment for services is not due from the customer until the services are complete, a contract asset
is recognised over the period in which the services are performed representing the right to
consideration for the services performed to date. These contract assets are presented on the
Consolidated Statement of Financial Position in the line “Contract assets”.
Contract costs
Cenergy Holdings recognize the incremental costs of obtaining contracts with customers and the costs
incurred in fulfilling contracts with customers that are directly associated with the contract as an asset,
if those costs are expected to be recoverable, and record them in the line “Contract costs” in the
Consolidated Statement of Financial Position. Incremental costs of obtaining contracts are costs
incurred to obtain a contract with a customer that would not have been incurred if the contract had
not been obtained.
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Fulfilment costs are only capitalised if they generate or enhance resources that will be used to satisfy
performance obligations in the future.
Assets arising from contract costs are amortized using either the straight-line method over a period
based on the estimated contract duration or based on the portion of revenue recognised during the
execution of the related contract.
Incremental costs of obtaining contracts are recognised as an expense when incurred if the
amortisation period of the assets would be one year or less.
5.4 Employee benefits
(a) Short-term employee benefits
Short-term employee benefits are expensed as the related service is provided. A liability is recognised
for the amount expected to be paid if Cenergy Holdings and its companies have a present legal or
constructive obligation to pay this amount, as a result of past service provided by the employee and
the obligation can be estimated reliably.
(b) Defined contribution plans
Defined-contribution plans are plans for the period after the employee has ceased to work during which
Cenergy Holdings pays a defined amount to a third legal entity without any other obligation. The
accrued cost of defined-contribution programs is recorded as an expense in the period that the related
service is provided.
(c) Defined benefit plans
Cenergy Holdings’ net obligation in respect of defined benefit plans is calculated separately for each
plan by estimating the amount of future benefit that employees have earned in the current and prior
periods, discounting that amount and deducting the fair value of any plan assets. The discount rate is
based on high-quality corporate bonds that are denominated in the currency in which the benefits will
be paid.
The calculation of defined benefit obligations is performed annually by a qualified actuary using the
projected unit credit method.
Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, are
recognised immediately in OCI. Cenergy Holdings determines the net interest expense on the net
defined benefit liability for the period by applying the discount rate used to measure the defined
benefit obligation at the beginning of the annual period to the then-net defined benefit liability, taking
into account any changes in the net defined benefit liability during the period as a result of
contributions and benefit payments. Net interest expense and other expenses related to defined
benefit plans are recognised in profit or loss.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit
that relates to past service or the gain or loss on curtailment is recognised immediately in profit or loss.
Cenergy Holdings recognises gains and losses on the settlement of a defined benefit plan when the
settlement occurs.
(d) Termination benefits
Termination benefits are expensed at the earlier of when Cenergy Holdings can no longer withdraw the
offer of those benefits and when Cenergy Holdings recognises costs for a restructuring. If benefits are
not expected to be settled wholly within 12 months of the reporting date, then they are discounted.
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5.5 Government Grants
Grants from the government are recognized at their fair value where there is a reasonable assurance
that the grant will be received and Cenergy Holdings will comply with all attached conditions.
Government grants relating to costs are deferred and recognized in the statement of profit or loss over
the period necessary to match them with the costs that they are intended to compensate.
Government grants relating to the purchase of property, plant and equipment are included in non-
current liabilities as deferred government grants and are credited to the Consolidated Statement of
Profit or Loss (line “Other income”) on a straight line basis over the expected useful lives of the related
assets.
5.6 Finance income and finance costs
Cenergy Holdings’ finance income and finance costs mainly include:
interest income;
interest expense;
dividend income;
foreign currency gains and losses from loans and deposits.
Dividend income is recognised in profit or loss on the date on which the right to receive payment is
established.
Interest income or expense is recognised using the effective interest method.
The “effective interest rate” is the rate that exactly discounts estimated future cash payments or
receipts through the expected life of the financial instrument to:
the gross carrying amount of the financial asset; or
the amortised cost of the financial liability.
In calculating interest income and expense, the effective interest rate is applied to the gross carrying
amount of the asset or to the amortised cost of the financial liability.
5.7 Income tax
Income tax expense comprises current and deferred tax. It is recognised in profit or loss except to the
extent that it relates to a business combination, or items recognised directly in equity or in OCI.
A. Current tax
Current tax comprised the expected tax payable or receivable on the taxable income or loss for the year
and any adjustment to the tax payable or receivable in respect of previous years. It is measured using
tax rates enacted or substantively enacted at the reporting date. Current tax also includes any tax
arising from dividends.
Current tax assets and liabilities are offset only if certain criteria are met.
B. Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the amounts used for taxation purposes.
Deferred tax is not recognised for:
Temporary differences on the initial recognition of assets or liabilities in a transaction that is
not a business combination and that affects neither accounting nor taxable profit or loss;
Temporary differences related to investments in subsidiaries, associates and joint
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84
arrangements to the extent that Cenergy Holdings is able to control the timing of the reversal
of the temporary differences and it is probable that they will not reverse in the foreseeable
future; and
Taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary
differences to the extent that is probable that future taxable profits will be available against which they
can be used. Deferred tax assets are reviewed at each reporting date and are reduced to the extent
that it is no longer probable that the related tax benefit will be realised; such reductions are reversed
when the probability of future taxable profits improves.
Unrecognised deferred tax assets are reassessed at each reporting date and recognised to the extent
that is has become probable that future taxable profits will be available against which they can be used.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences
when they reverse, using tax rates enacted or substantively enacted at the reporting date.
The measurements of deferred tax reflects the tax consequences that would follow from the manner
in which Cenergy Holdings expects, at the reporting date, to recover or settle the carrying amount of
its assets and liabilities.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset
current tax assets against current tax liabilities and when the deferred income taxes relate to the same
fiscal authority.
5.8 Inventories
Inventories are stated at the lower of cost and net realisable value. The cost is determined by applying
the method of weighted average cost and includes the production and conversion cost and all direct
expenses required to bring inventories at their current condition. The net realisable value is estimated
based on the inventory’s current sales price, in the ordinary course of business activities, less any
possible selling expenses, whenever such a case occurs.
The write-down of inventories to net realisable value and any reversals are recognized in “Cost of sales”
in the period in which the write-downs occur.
5.9 Property, plant and equipment
A. Recognition and measurement
Property, plant and equipment are presented at their acquisition cost less accumulated depreciation
and impairment. The acquisition cost includes all expenses that are directly associated with the asset’s
acquisition or self-construction. The cost of self-constructed fixed assets includes the cost of direct
labour, materials and any other cost that is required for the fixed asset to be ready for use as well as
any borrowing costs.
Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated
with the expenditure will flow to Cenergy Holdings. Repair and maintenance costs are recorded in the
Consolidated Statement of Profit or Loss when these are incurred.
On the sale of property, plant and equipment, any difference that may arise between the price that is
received and the carrying value thereof is recorded through profit or loss in the category “Other income
(expenses)”.
Borrowing costs related to the construction of qualifying assets are capitalised during the period
required for the construction to be completed.
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B. Depreciation
Depreciation is calculated to write off the cost of items of property, plant and equipment less their
estimated residual values using the straight-line method over their estimated useful lives, and is
generally recognised in profit or loss. Land is not depreciated.
Administrative buildings
20-50 years
Plants
33-50 years
Heavy machinery
12-40 years
Light machinery
8-18 years
Furniture
4-10 years
Other equipment
4-12 years
Transport means
4-10 years
Depreciation methods, useful lives and residual values are reviewed at each reporting date and
adjusted if appropriate.
C. Reclassification to investment property
When the use of a property changes from owner-occupied to investment property, the property is
reclassified accordingly.
The item is reclassified at its net book value at the date of reclassification which becomes its deemed
cost for subsequent accounting purposes.
D. Reclassification to assets held for sale
Non-current assets and disposal group of assets are reclassified as held for sale if their carrying amount
will be recovered principally through a sale transaction rather than continuing use.
5.10 Intangible assets
A. Recognition and measurement
Research and Development: Expenditure on research activities is recognised in profit and loss as
incurred. Development expenditure is capitalised only if the expenditure can be measured reliably, the
product or process is technically and commercial feasible, future economic benefits are probable and
Cenergy Holdings intends to and have sufficient resources to complete development and to use or sell
the asset. Otherwise, it is recognised in profit or loss as incurred. Subsequent to initial recognition,
development expenditure is measured at cost less accumulated amortisation and any accumulated
impairment losses.
Software programs: Software licenses are recorded at their acquisition cost less accumulated
amortisation. These assets are amortised on the straight line method over their estimated useful lives,
which ranges between 3 to 10 years. Expenses that are associated with the software’s maintenance are
recognised in profit or loss in the year in which they are incurred.
Other intangible assets: Other intangible assets, including customer relationships, “know-how”, patents
and trademarks, which are acquired by Cenergy Holdings and have finite useful lives are measured at
cost less accumulated amortisation and any accumulated impairment losses. These assets are
amortised on the straight line method over their estimated useful lives. Other intangible assets having
indefinite useful lives are measured at cost less accumulated impairment losses.
B. Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied
in the specific asset to which it relates. All other expenditure, including expenditure on internally
generated goodwill and brands, is recognised in profit or loss as incurred.
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C. Amortisation and useful lives
Amortisation is calculated to write off the cost of intangible assets less their estimated residual values
using the straight-line method over their estimated useful lives, and is recognised in profit or loss.
Goodwill and other intangible assets with indefinite useful lives are not amortised.
The estimated useful lives for the current and comparative periods are as follows:
Trademarks and licenses 10 – 15 years
Software programs 3 – 10 years
Intangible assets with indefinite useful lives are not amortised and are subject to an annual impairment
test.
Amortisation methods, useful lives and residual values are reviewed at each reporting date and
adjusted if appropriate.
5.11 Investment property
Investment property, which includes land, is owned by Cenergy Holdings either for the collection of
rents or for capital appreciation and is not used for owner-purposes. Investment property is presented
at cost less depreciation. When the carrying amounts of investment property exceed their recoverable
value, the difference (impairment) is directly recorded in profit and loss as expense. The reversal of
previously recognised impairment losses is also recognised in profit and loss as income. The land is not
depreciated. The buildings are depreciated by applying the straight line method.
5.12. Cash and cash equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash
on hand and deposits held at call with financial institutions.
5.13 Impairment
A. Non-derivative financial assets
Cenergy Holdings recognises loss allowances for expected credit losses (ECLs) on:
financial assets measured at amortised cost; and
contract assets.
Loss allowances for trade receivables and contract assets are always measured at an amount equal to
lifetime ECLs. Lifetime ECLs are the ECLs that result from all possible default events over the expected
life of trade receivables and contract assets.
Cenergy Holdings considers a financial asset to be in default when the borrower is unlikely to pay its
credit obligations in full, without recourse by Cenergy Holdings companies to actions such as realising
security (if any is held).
The maximum period considered when estimating ECLs is the maximum contractual period over which
the Cenergy Holdings companies are exposed to credit risk.
Measurement of ECLs
ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present
value of all cash shortfalls (i.e. the difference between the cash flows due to the entity in accordance
with the contract and the cash flows that the Group expects to receive). ECLs are discounted at the
effective interest rate of the financial asset.
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87
Presentation of allowance for ECL in the statement of financial position
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying
amount of the assets.
Impairment losses related to trade and other receivables, including contract assets, are presented
separately in the statement of profit or loss and OCI.
Write-off
The gross carrying amount of a financial asset is written off when Cenergy Holdings has no reasonable
expectations of recovering a financial asset in its entirety or a portion thereof. Cenergy Holdings
subsidiaries make an assessment on an individual basis with respect to the timing and amount of write-
off based on whether there is a reasonable expectation of recovery. Cenergy Holdings expects no
significant recovery from the amount written off. However, financial assets that are written off could
still be subject to enforcement activities in order to comply with the Group’s procedures for recovery
of amounts due.
B. Non-financial assets
At each reporting date, Cenergy Holdings and its companies review the carrying amounts of its non-
financial assets (other than inventories and deferred tax assets) to determine whether there is any
indication of impairment. If any such indication exists, then the asset’s recoverable amount is
estimated. Goodwill and intangible assets with indefinite useful life is tested annually for impairment.
For impairment testing, assets are grouped together into the smallest group of assets that generates
cash inflows from continuing use that are largely independent of the cash inflows of other assets or
CGUs. Goodwill arising from a business combination is allocated to CGUs or groups of CGUs that are
expected to benefit from the synergies of the combination.
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs
to sell. Value in use is based on the estimated future cash flows, discounted to their present value using
a pre-tax discount rate that reflects current market assessments of the time value of money and the
risks specific to the asset or CGU.
An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable
amount.
Impairment losses are recognised in profit or loss under “Other expenses”. They are allocated first to
reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying
amounts of the other assets in the CGU on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is
reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that
would have been determined, net of depreciation or amortisation, if no impairment loss had been
recognised.
5.14 Leases
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is,
or contains, a lease if the contract conveys the right to control the use of an identified asset for a period
of time in exchange for consideration. To assess whether a contract conveys the right to control the
use of an identified asset, the Group uses the definition of a lease in IFRS 16.
Accounting for lease contracts as a lessee
Cenergy Holdings companies lease various offices, warehouses, machinery and cars. Rental contracts
are typically made for fixed periods of 1 to 5 years. Lease terms are negotiated on an individual basis
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88
and contain a wide range of different terms and conditions.
Cenergy Holdings recognises a right-of-use asset and a lease liability at the lease commencement date.
The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease
liability adjusted for any lease payments made at or before the commencement date, plus any initial
direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to
restore the underlying asset or the site on which it is located, less any lease incentives received.
Subsequently they are measured at cost less any accumulated depreciation and impairment losses, and
adjusted for certain remeasurements of the lease liability. The right-of-use asset is depreciated using
the straight-line method from the commencement date to the end of the lease term, unless the lease
transfers ownership of the underlying asset to the Group by the end of the lease term or the cost of
the right-of-use asset reflects that the Group will exercise a purchase option. In that case the right-of-
use asset will be depreciated over the useful life of the underlying asset, which is determined on the
same basis as those of property and equipment.
The lease liability is initially measured at the present value of the following lease payments:
• fixed payments (including in-substance fixed payments), less any lease incentives receivable ;
• variable lease payment that are based on an index or a rate ;
• amounts expected to be payable by the lessee under residual value guarantees ;
• the exercise price of a purchase option if the lessee is reasonably certain to exercise that
option; and
• payments of penalties for terminating the lease, if the lease term reflects the lessee exercising
that option.
These payments are discounted using the interest rate implicit in the lease or, if that rate cannot be
readily determined, the incremental borrowing rate of the component entered into the lease
agreement. Generally, Cenergy Holdings uses its incremental borrowing rate as the discount rate.
This is the rate that the lessee, i.e. each subsidiary of Cenergy Holdings, would have to pay on the
commencement date of the lease for a loan of a similar term, and with similar security, to obtain an
asset of similar value to the right-of-use asset in similar economic environment.
The lease liability is subsequently increased by the interest cost on the lease liability and decreased by
lease payment made. It is remeasured if there is a modification that is not accounted for as a separate
lease; when there is a change in future lease payments arising from a change in an index or rate; a
change in the estimate of the amount expected to be payable under a residual value guarantee; and
changes in the assessment of whether a purchase or extension option is reasonably certain to be
exercised or a termination option is reasonably certain not to be exercised.
Cenergy Holdings elected not to separate non-lease components from lease components.
Lease liabilities and right-of-use assets are presented separately in the statement of financial position.
Cenergy Holdings has elected to present interest paid related to lease liabilities in the Consolidated
Statement of Cash Flows, within the line “Interest charges & related expenses paid” in operating
activities.
Short-term leases and leases of low-value assets
Payments associated with short-term leases and leases of low-value assets are recognised on a straight-
line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months
or less. Low-value assets comprise IT-equipment, small items of office furniture and other equipment.
Cenery Holdings companies lease administration offices and warehouses by the ultimate parent
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company Viohalco S.A. and other related companies. All contracts for administration offices and
warehouses do not include any early termination penalty clauses and they are cancellable at any time.
For this reason, all intercompany contracts for administration offices and warehouses are considered
as short term and Cenergy Holdings recognises the lease payments associated with these leases as an
expense on a straight-line basis over the lease term.
Rental income
Rental income is recognised as other income on a straight-line basis over the term of the lease. Lease
incentives granted are recognised as an integral part of the total rental income, over the term of the
lease.
5.15 Financial instruments
A. Recognition and initial measurement
Trade receivables are initially recognised when they are originated. All other financial assets and
financial liabilities are initially recognised when Cenergy Holdings becomes a party to the contractual
provisions of the instrument.
A financial asset (unless it is a trade receivable without a significant financing component that is initially
measured at the transaction price) is initially measured at fair value plus, for an item not at FVTPL,
transaction costs that are directly attributable to its acquisition. A trade receivable without a significant
financing component is initially measured at the transaction price.
B. Classification and subsequent measurement
Financial assets
On initial recognition, a financial asset is classified as measured at: amortised cost; FVOCI – debt
investment; FVOCI – equity investment; or FVTPL.
Financial assets are not reclassified subsequent to their initial recognition, unless Cenergy Holdings
changes its business model for managing financial assets, in which case all affected financial assets are
reclassified on the first day of the first reporting period following the change in the business model.
A financial asset is measured at amortised cost if it meets both of the following conditions and is not
designated as at FVTPL:
it is held within a business model whose objective is to hold assets to collect contractual cash
flows; and
its contractual terms give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
A debt investment is measured at FVOCI if it meets both of the following conditions and is not
designated as at FVTPL:
it is held within a business model whose objective is achieved by both collecting contractual
cash flows and selling financial assets; and
its contractual terms give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
On initial recognition of an equity investment that is not held for trading, Cenergy Holdings may
irrevocably elect to present subsequent changes in the investment’s fair value in OCI. This election is
made on an investment-by-investment basis.
All financial assets (except derivatives held for hedging purposes) not classified as measured at
amortised cost or FVOCI as described above are measured at FVTPL. On initial recognition, Cenergy
Holdings may irrevocably designate a financial asset that otherwise meets the requirements to be
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measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an
accounting mismatch that would otherwise arise.
Financial assets – Business model assessment:
Cenergy Holdings makes an assessment of the objective of the business model in which a financial asset
is held at a portfolio level because this best reflects the way the business is managed and information
is provided to management. Transfers of financial assets to third parties in transactions that do not
qualify for derecognition are not considered sales for this purpose, consistent with the Group’s
continuing recognition of the assets.
Financial assets – Assessment whether contractual cash flows are solely payments of principal and
interest:
For the purposes of this assessment, “principal” is defined as the fair value of the financial asset on
initial recognition. “Interest” is defined as consideration for the time value of money and for the credit
risk associated with the principal amount outstanding during a particular period of time and for other
basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin. In
assessing whether the contractual cash flows are solely payments of principal and interest, Cenergy
Holdings considers the contractual terms of the instrument. This includes assessing whether the
financial asset contains a contractual term that could change the timing or amount of contractual cash
flows such that it would not meet this condition. In making this assessment, Cenergy Holdings
considers:
contingent events that would change the amount or timing of cash flows;
terms that may adjust the contractual coupon rate, including variable-rate features;
prepayment and extension features; and
terms that limit the claim to cash flows from specified assets (e.g. non-recourse features).
Financial assets – Subsequent measurement and gains and losses:
Financial assets at FVTPL
These assets are subsequently measured at fair value. Net gains and losses,
including any interest or dividend income, are recognised in profit or loss.
Financial assets at
amortised cost
These assets are subsequently measured at amortised cost using the
effective interest method. The amortised cost is reduced by impairment
losses. Interest income, foreign exchange gains and losses and impairment
are recognised in profit or loss. Any gain or loss on derecognition is
recognised in profit or loss.
Debt investments at
FVOCI
These assets are subsequently measured at fair value. Interest income
calculated using the effective interest method, foreign exchange gains and
losses and impairment are recognised in profit or loss. Other net gains and
losses are recognised in OCI. On derecognition, gains and losses accumulated
in OCI are reclassified to profit or loss.
Equity investments at
FVOCI
These assets are subsequently measured at fair value. Dividends are
recognised as income in profit or loss unless the dividend clearly represents
a recovery of part of the cost of the investment. Other net gains and losses
are recognised in OCI and are never reclassified to profit or loss.
Financial liabilities
Financial liabilities are classified as measured at amortised cost.
All financial liabilities (except derivatives held for hedging purposes) are subsequently measured at
amortised cost using the effective interest method. Interest expense and foreign exchange gains and
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losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or
loss.
C. Derecognition
Financial assets
Cenergy Holdings derecognises a financial asset when
- the contractual rights to the cash flows from the financial asset expire; or
- it transfers the rights to receive the contractual cash flows in a transaction:
o in which substantially all of the risks and rewards of ownership of the financial asset
are transferred; or
o in which Cenergy Holdings neither transfers nor retains substantially all of the risks
and rewards of ownership and it does not retain control of the financial asset.
Cenergy Holdings enters into transactions whereby it transfers assets recognised in its statement of
financial position, but retains either all or substantially all of the risks and rewards of the transferred
assets. In these cases, the transferred assets are not derecognised.
Financial liabilities
Cenergy Holdings derecognises a financial liability when its contractual obligations are discharged or
cancelled, or expire. Cenergy Holdings also derecognises a financial liability when its terms are modified
and the cash flows of the modified liability are substantially different, in which case a new financial
liability based on the modified terms is recognised at fair value.
On derecognition of a financial liability, the difference between the carrying amount extinguished and
the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognised
in profit or loss.
D. Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the Consolidated
Statement of Financial Position when, and only when, Cenergy Holdings currently has a legally
enforceable right to setoff the amounts and it intends either to settle them on a net basis or to realise
the asset and settle the liability simultaneously.
E. Derivatives and hedge accounting
Cenergy Holdings has elected not to adopt the provisions of IFRS 9 regarding the hedge accounting and
continues to apply IAS 39.
Cenergy Holdings holds derivative financial instruments designated as fair value or cash flow hedges.
Derivatives are used to cover risks arising from changes in prices of metals, fluctuations of foreign
exchange rates and changes in interest rates on borrowings.
Derivatives are initially measured at fair value; any directly attributable transaction costs are recognised
in profit or loss as incurred. Subsequent to initial recognition, derivatives are measured at fair value,
and changes therein are generally recognised in profit or loss, unless the instrument qualifies for cash
flow hedge accounting.
Fair value hedge
Derivatives are designated as fair value hedges when the exposure to changes in the fair value of a
recognized financial asset or liability is hedged.
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are
recognized in the Consolidated Statement of Profit or Loss, along with any changes in the fair value of
the hedged asset or liability that are attributable to the hedged risk.
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Cash flow hedge
The effective portion of changes in the fair value of derivatives designated as cash flow hedges is
recognized in the “Hedging reserve”. Any ineffective proportion is recognized immediately in profit or
loss.
The amounts recognized in the “Hedging reserve” are reclassified to the Consolidated Statement of
Profit or Loss when the hedged items affect profit or loss.
When a hedge item matures or is sold or when the hedge no longer meets the hedge accounting
criteria, hedge accounting is discontinued prospectively, amounts recorded in “Hedging reserve” the
profits and losses accrued to “Equity” remain as a reserve and are reclassified to profit or loss when the
hedged asset affects profit or loss. In the case of a hedge on a forecast future transaction which is no
longer expected to occur, amounts recorded in “Hedging reserve” are reclassified to profit and loss.
Cenergy Holdings’ companies examine the effectiveness of the cash flow hedges at inception
(prospectively) by comparing the critical terms of the hedging instrument with the critical terms of the
hedged item, and then at every reporting date (retrospectively), the effectiveness of the cash flow
hedges is examined by applying the dollar offset method on a cumulative basis.
5.16 Share capital
Shareholder’s equity is composed of ordinary shares.
Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction
from equity. Income tax relating to transaction costs of an equity transaction is accounted in equity
(see Note 5.7).
5.17 Provisions
Provisions are measured by discounting the expected future cash flows at a pre-tax rate. The discount
rate used for the determination of present value reflects current market assessments of the time value
of money and the risks specific to the obligation.
Provisions are recognised when:
i. There is a present legal or constructive obligation as a result of past events.
ii. Payment is probable to settle the obligation.
iii. The amount of the payment in question can be reliably estimated.
Provisions for pending court rulings are recognised when it is more likely than not, that a present
obligation from this litigation exists, and payment is probable.
Assurance warranty provisions are recognised when the product is sold and according to historical
experience (probability that sold products will need to be replaced). The initial estimate of warranty-
related costs is revised annually.
Restructuring provisions are recognised only when Cenergy Holdings has a constructive obligation,
which is when a detailed formal plan identifies the business or part of the business concerned, the
location and number of employees affected, a detailed estimate of the associated costs, and an
appropriate timeline, and the employees affected have been notified of the plan’s main features or
when the company has already started to implement the plan.
A provision for onerous contracts is measured at the present value of the lower of the expected cost of
terminating a contract and the expected net cost of continuing with the contract. Before the provision
is established, Cenergy Holdings recognises any impairment loss on the associated assets with the
contract.
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
93
5.18 Earnings per share
Cenergy Holdings presents basic and diluted earnings per share. Basic earnings per share are calculated
by dividing the net profit/ loss (-) attributable to holders of the Company’s ordinary shares by the
average weighted number of outstanding ordinary shares during each period.
Diluted earnings per share are determined by adjusting the profit or loss attributable to holders of
ordinary shares and the average weighted number of outstanding ordinary shares by the effect of all
diluted eventual ordinary shares consisting of convertible notes and shares with options granted to the
staff.
5.19. Operating profit
Operating profit is the result generated from the continuing principal revenue-producing activities of
Cenergy Holdings, as well as other income and expenses related to operating activities. Operating profit
excludes net finance costs, share of profit of equity-accounted investees and income taxes.
5.20. Fair value measurement
“Fair value” is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date in the principal or, in its absence,
the most advantageous market to which Cenergy Holdings has access at that date. The fair value of a
liability reflects its non-performance risk.
A number of Cenergy Holdings’ accounting policies and disclosures require the measurement of fair
values, for both financial and non-financial assets and liabilities.
When one is available, Cenergy Holdings measures the fair value of an instrument using the quoted
price in an active market for that instrument. A market is regarded as “active” if transactions for the
asset or liability take place with sufficient frequency and volume to provide pricing information on an
ongoing basis.
If there is no quoted price in an active market, then Cenergy Holdings uses valuation techniques that
maximise the use of relevant observable inputs and minimise the use of unobservable inputs. The
chosen valuation technique incorporates all of the factors that market participants would take into
account in pricing a transaction.
If an asset or a liability measured at fair value has a bid price and an ask price, then Cenergy Holdings
measures assets and long positions at a bid price and liabilities and short positions at an ask price.
The best evidence of the fair value of a financial instrument on initial recognition is normally the
transaction price – i.e. the fair value of the consideration given or received. If Cenergy Holdings
determines that the fair value on initial recognition differs from the transaction price and the fair value
is evidenced neither by a quoted price in an active market for an identical asset or liability nor based
on a valuation technique for which any unobservable inputs are judged to be insignificant in relation to
the measurement, then the financial instrument is initially measured at fair value, adjusted to defer the
difference between the fair value on initial recognition and the transaction price. Subsequently, that
difference is recognised in profit or loss on an appropriate basis over the life of the instrument but no
later than when the valuation is wholly supported by observable market data or the transaction is
closed out.
5.21. New standards, amendments to standards and interpretations
A number of new or amended standards became applicable for the current financial year and
subsequent years. The Group has applied all of the new standards, interpretations and amendments to
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
94
existing standards that were mandatory for the first time in the fiscal year beginning 1 January 2020
and none of the new or amended standards and interpretations has had material impact on recognition
and measurement in the Consolidated Financial Statements.
Standards and Interpretations effective for the current financial year
The following new standards and amendments to standards are mandatory for the first time for the
financial year beginning 1 January 2020 and have been endorsed by the European Union:
Amendments to References to the Conceptual Framework in IFRS Standards (effective 1 January
2020). The revised Conceptual Framework includes a new chapter on measurement; guidance on
reporting financial performance; improved definitions and guidance—in particular the definition of a
liability; and clarifications in important areas, such as the roles of stewardship, prudence and
measurement uncertainty in financial reporting.
Amendments to the definition of material in IAS 1 and IAS 8 (effective 1 January 2020). The
amendments clarify the definition of material and make IFRSs more consistent. The amendment
clarifies that the reference to obscuring information addresses situations in which the effect is similar
to omitting or misstating that information. It also states that an entity assesses materiality in the
context of the financial statements as a whole. The amendment also clarifies the meaning of “primary
users of general purpose financial statements” to whom those financial statements are directed, by
defining them as “existing and potential investors, lenders and other creditors” that must rely on
general purpose financial statements for much of the financial information they need. The amendments
are not expected to have a significant impact on the preparation of financial statements.
Amendments to IFRS 9, IAS 39 and IFRS 7: Interest Rate Benchmark Reform (effective 1 January 2020).
The amendments require qualitative and quantitative disclosures to enable users of financial
statements to understand how an entity’s hedging relationships are affected by the uncertainty arising
from interest rate benchmark reform.
Amendments to the guidance of IFRS 3 Business Combinations, that revises the definition of a
business (effective 1 January 2020). The new guidance provides a framework to evaluate when an
input and a substantive process are present (including for early stage companies that have not
generated outputs). To be a business without outputs, there will now need to be an organised
workforce. The changes to the definition of a business will likely result in more acquisitions being
accounted for as asset acquisitions across all industries, particularly real estate, pharmaceutical, and oil
and gas. Application of the changes would also affect the accounting for disposal transactions.
The following new amendments have been issued, is not mandatory for the first time for the financial
year beginning 1 January 2020 but have been endorsed by the European Union:
Amendment to IFRS 16 Leases Covid-19-Related Rent Concessions (effective 01/06/2020, with early
application permitted). If certain conditions are met, the Amendment would permit lessees, as a
practical expedient, not to assess whether particular Covid-19-related rent concessions are lease
modifications. Instead, lessees that apply the practical expedient would account for those rent
concessions as if they were not lease modifications.
Standards and Interpretations effective for subsequent periods
The following new standards and amendments have been issued, but are not mandatory for the first
time for the financial year beginning 1 January 2020 and have not been endorsed by the European
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
95
Union. The following amendments are not expected to have a material impact on Cenergy Holdings
Consolidated Financial Statements in the current or future reporting periods.
Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as current or
non-current (effective 1 January 2022), affect only the presentation of liabilities in the statement of
financial position — not the amount or timing of recognition of any asset, liability income or expenses,
or the information that entities disclose about those items. The IASB has issued an exposure draft to
defer the effective date to 1 January 2023. They:
Clarify that the classification of liabilities as current or non-current should be based on rights
that are in existence at the end of the reporting period and align the wording in all affected
paragraphs to refer to the "right" to defer settlement by at least twelve months and make
explicit that only rights in place "at the end of the reporting period" should affect the
classification of a liability;
Clarify that classification is unaffected by expectations about whether an entity will exercise
its right to defer settlement of a liability; and make clear that settlement refers to the transfer
to the counterparty of cash, equity instruments, other assets or services.
Amendments to IFRS 3 Business Combinations; IAS 16 Property, Plant and Equipment; IAS 37
Provisions, Contingent Liabilities and Contingent Assets as well as Annual Improvements (effective
01/01/2022). The package of amendments includes narrow-scope amendments to three Standards as
well as the Board’s Annual Improvements, which are changes that clarify the wording or correct minor
consequences, oversights or conflicts between requirements in the Standards.
Amendments to IFRS 3 Business Combinations update a reference in IFRS 3 to the Conceptual
Framework for Financial Reporting without changing the accounting requirements for
business combinations.
Amendments to IAS 16 Property, Plant and Equipment prohibit a company from deducting
from the cost of property, plant and equipment amounts received from selling items produced
while the company is preparing the asset for its intended use. Instead, a company will
recognise such sales proceeds and related cost in profit or loss.
Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets specify which
costs a company includes when assessing whether a contract will be loss-making.
Annual Improvements make minor amendments to IFRS 1 First-time Adoption of International
Financial Reporting Standards, IFRS 9 Financial Instruments, IAS 41 Agriculture and the
Illustrative Examples accompanying IFRS 16 Leases.
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Interest Rate Benchmark Reform – Phase 2
(effective 01/01/2021). These amendments address issues that might affect financial reporting after
the reform of an interest rate benchmark, including its replacement with alternative benchmark rates.
The amendments are effective for annual periods beginning on or after 1 January 2021, with earlier
application permitted.
6. Operating segments
A. Basis for the division into segments
Cenergy Holdings is divided into 2 reportable segments:
Cables;
Steel Pipes.
For management purposes, Cenergy Holdings is split into two major strategic reportable segments
which operate in different industries. These segments offer different products and services, and are
managed separately because they require different technology and marketing strategies.
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
96
Such structural organization is determined by the nature of risks and returns associated with each
business segment. It is based on the management structure, as well as the internal reporting system. It
represents the basis on which Cenergy Holdings reports its segmental information.
The segment analysis presented in these Consolidated Financial Statements reflects operations
analysed by business. This is the way the chief operating decision maker of Cenergy Holdings regularly
reviews the operating results of the Group in order to allocate resources to segments and in assessing
their performance.
A brief description of the segments is as follows:
Cables: Hellenic Cables, its subsidiaries, and Icme Ecab S.A. are a cable producer, manufacturing
power, telecommunication and submarine cables, as well as wires and compounds.
Steel pipes: Corinth Pipeworks engages in the production of steel pipes for the transportation of
natural gas, oil and water networks, as well as steel hollow sections which are used in
construction projects.
Other activities: The segment includes the activities of the Holding company.
B. Information about reportable segments and reconciliations to IFRS measures
The information disclosed in the tables below is derived directly from the internal financial reporting
system used by the Board (i.e. chief operating decision maker) to monitor and evaluate the
performance of the operating segments separately.
The following tables illustrate the information about the reportable segments’ profit or loss, assets and
liabilities at 31 December 2020 and 2019, and for the years then ended.
2020
Reportable segments
Amounts in EUR thousand
Note
Cables
Steel Pipes
Other
activities
Total
Segment revenue
920,644
340,430
-
1,261,074
Inter-segment revenue
(320,786)
(31,871)
-
(352,657)
External revenue
7
599,858
308,559
-
908,417
Gross profit
79,609
23,884
-
103,493
Operating profit / (loss)
56,116
11,962
(1,867)
66,211
Finance income
206
150
-
356
Finance costs
(21,240)
(10,753)
(3)
(31,996)
Share of profit of equity accounted investees, net
of tax
-
(38)
877
838
Profit / (Loss) before tax
35,082
1,321
(993)
35,410
Income tax expense
(8,846)
(1,792)
-
(10,638)
Profit/(Loss) for the year
26,236
(472)
(993)
24,771
Depreciation and amortization
(15,225)
(8,844)
(2)
(24,071)
Segment assets
644,481
339,189
28,354
1,012,024
Non-current assets excl. deferred tax and
financial instruments
306,157
202,532
20,797
529,485
Equity-accounted investees
13,570
20,769
34,339
Segment liabilities
566,244
193,500
518
760,262
Capital expenditure
17/19
49,381
15,486
-
64,867
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
97
2019
Reportable segments
Amounts in EUR thousand
Note
Cables
Steel Pipes
Other
activities
Total
Segment revenue
873,991
458,090
24
1,332,106
Inter-segment revenue
(294,275)
(79,815)
-
(374,090)
External revenue
7
579,716
378,276
24
958,016
Gross profit
66,674
31,816
24
98,514
Operating profit / (loss)
48,380
14,898
(1,760)
61,517
Finance income
13
28
42
Finance costs
(22,286)
(12,364)
(17)
(34,667)
Share of profit of equity accounted investees, net
of tax
-
1,426
174
1,600
Profit / (Loss) before tax
26,107
3,988
(1,603)
28,492
Income tax expense
(7,602)
(712)
-
(8,315)
Profit/(Loss) for the year
18,504
3,276
(1,603)
20,177
Depreciation and amortization
(16,526)
(10,420)
(210)
(27,156)
Segment assets
602,426
416,842
28,358
1,047,626
Non-current assets excl. deferred tax and
financial instruments
273,994
195,216
20,423
489,633
Equity-accounted investees
-
14,161
20,422
34,583
Segment liabilities
548,654
266,540
570
815,763
Capital expenditure
17/19
42,453
10,853
2
53,307
C. Geographic information
Cenergy Holdings’ segments are managed on a worldwide basis, but operate manufacturing facilities
and sales offices primarily in Greece, Bulgaria and Romania.
The segmental information below is based on the segment revenue from external customers by country
of domicile of customers and segment assets were based on the geographic location of the assets.
Amounts in EUR thousand
For the year ended 31 December
Revenue
2020
2019
Belgium
4,781
8,224
Greece
313,327
251,157
Germany
91,868
92,452
Romania
33,382
54,076
United Kingdom
59,596
90,075
Other European Union countries
285,460
310,066
Other European countries
11,228
21,143
Asia
48,729
38,119
Americas
49,901
85,403
Africa
10,094
7,244
Oceania
51
56
Total
908,417
958,016
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
98
The geographic information below analyses the consolidated non-current assets by the Company’s
country of domicile and other countries. In presenting the geographic information, segment assets
were based on the geographic location of the assets.
Amounts in EUR thousand
At 31 December
Property, Plant & Equipment
2020
2019
Belgium
1
1
Greece
433,093
397,193
Other
24,844
24,871
Total
457,937
422,066
Amounts in EUR thousand
At 31 December
Right of use assets
2020
2019
Belgium
27
-
Greece
2,493
2,620
Other
3,078
3,261
Total
5,598
5,881
Amounts in EUR thousand
At 31 December
Intangible assets
2020
2019
Belgium
-
-
Greece
27,832
22,958
Other
1,490
1,815
Total
29,323
24,773
Amounts in EUR thousand
At 31 December
Investment property
2020
2019
Belgium
-
-
Greece
764
764
Other
-
-
Total
764
764
Amounts in EUR thousand
At 31 December
Additions in Property, Plant & Equipment,
Intangible assets & Right of use assets
2020
2019
Belgium
29
2
Greece
62,265
48,596
Other
4,201
6,448
Total
66,495
55,047
7. Revenue
A. Significant accounting policy
Revenue is measured based on the consideration specified in a contract with a customer and excludes
amounts collected on behalf of third parties. Cenergy Holdings recognises revenue when it transfers
control over a product or service to a customer. For the detailed accounting policy, see Note 5.3.
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
99
B. Nature of goods and services
Steel pipes projects
Corinth Pipeworks produces and sells customized products to customers mainly for onshore and
offshore pipelines for oil and gas transportation and casing pipes. Under the terms of the contracts and
due to the high degree of customization, these products have no alternative use, since they are
produced according to customers’ specifications, while there is an enforceable right to payment for
performance completed to date if the contract is terminated by the customer or another party for
reasons other than Cenergy Holdings’ failure to perform as promised. Revenue from such projects is
therefore recognised over time.
Hollow structural sections
These steel products are primarily used in the construction sector and they are used as structural
components in metal constructions. For sales of such products, revenue is recognised at a point of time,
when the control of the goods sold has been transferred.
Cables projects
Cenergy Holdings’ subsidiaries in the cables segment produces and sells "turnkey" cable systems, i.e.
supplies and installs complete cable systems. In addition, customized products are produced for grid
connections, offshore/onshore wind farms and other energy projects. Under the terms of the contracts
and due to the high degree of customization, these products have no alternative use, since they are
produced according to customers’ specifications, while there is an enforceable right to payment for
performance completed to date if the contract is terminated by the customer or another party for
reasons other than Cenergy Holdings’ failure to perform as promised. Revenue from such projects is
recognised over time. The typical length of a contract for turnkey projects exceeds 12 months. For
turnkey projects, the Group accounts for individual products and services separately if they are distinct
– i.e. if a product or service is separately identifiable from other items in the contracts and if a customer
can benefit from it.
Power & telecom cables
The key products in this category are power cables and overhead conductors for electric power
distribution networks for electric power operators, utilities, industrial applications, renewable energy
applications, railway transportation networks and buildings. The category also includes
telecommunication, data transmission cables, optical fibre cables and signalling cables. For sales of such
products, revenue is recognised at a point of time, when the control of the goods sold has been
transferred.
Enameled cables
Cenergy Holdings’ subsidiaries in the cables segment produces and sells enamelled cables for electric
motors and transformers, copper wires for grounding and can manufacture. For sales of such products,
revenue is recognised at a point of time, when the control of the goods sold has been transferred. Upon
the sale of the subsidiary Cablel Wires which took place in 2019, there are no sales in this product
category from 2020 and onwards, since the Group no longer produces such products.
C. Disaggregation of revenue
In the following table revenue is disaggregated by primary geographical market, major products and
service lines and timing of revenue recognition.
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
100
The table includes a reconciliation with the Group's reportable segments (see Note 6):
Primary geographical markets
Segment
Steel Pipes
Cables
Other activities
Total
Amounts in EUR thousand
2020
2019
2020
2019
2020
2019
2020
2019
Greece
18,095
15,640
295,232
235,494
-
24
313,327
251,157
Other European Union countries
228,636
266,743
246,450
288,150
-
-
475,086
554,893
Other European countries
4,722
12,680
6,506
8,463
-
-
11,228
21,143
America
49,040
83,213
861
2,190
-
-
49,901
85,403
Rest of the world
8,065
-
50,809
45,420
-
-
58,874
45,420
308,559
378,276
599,858
579,716
-
24
908,417
958,016
Major products and service lines
Segment
Steel Pipes
Cables
Other activities
Total
Amounts in EUR thousand
2020
2019
2020
2019
2020
2019
2020
2019
Steel pipes projects
273,741
345,589
-
-
-
-
273,741
345,589
Hollow structural sections
23,071
18,439
-
-
-
-
23,071
18,439
Cables projects
-
-
242,198
217,787
-
-
242,198
217,787
Power & telecom cables
-
-
308,923
314,093
-
-
308,923
314,093
Enameled cables
-
-
-
29,625
-
-
-
29,625
Other (wires, raw materials etc.)
11,746
14,248
48,738
18,211
-
24
60,484
32,482
308,559
378,276
599,858
579,716
-
24
908,417
958,016
Timing of revenue recognition:
Steel Pipes
Cables
Other activities
Total
2020
2019
2020
2019
2020
2019
2020
2019
Products transferred at a point in
time
34,818
32,687
357,661
361,929
-
24
392,478
394,640
Products transferred over time
273,741
345,589
242,198
217,787
-
-
515,939
563,375
308,559
378,276
599,858
579,716
-
24
908,417
958,016
Consolidated revenue for 2020 stands at EUR 908 million, a 5.2% y-o-y decrease reflecting the
slowdown of demand in steel pipes segment mainly due to the impact of lower oil & gas prices.
Revenue expected to be recognised in the future related to performance obligations that are
unsatisfied (or partially unsatisfied) at the reporting date amounts to EUR 189.2 million. An amount of
EUR 152.9 million is expected to be recognised during 2021, while the remaing EUR 36.3 million is
expected to be recognised during the periods from 2022 and onwards based on the time schedules
included in the open contracts as of 31 December 2020, which have original expected durations of more
than one year and revenue recognition started during 2020 or prior periods.
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
101
D. Contract balances
The following table provides information about contracts assets and contracts liabilities from contracts
with customers:
Amounts in EUR thousand
31 December 2020
31 December 2019
Contract assets
64,875
118,573
Contract liabilities
40,085
51,071
Out of which: Long term Contract liabilities
9,889
7,543
Significant changes in the contract assets and the contract liabilities balances during the period are as
follows:
Amounts in EUR thousand
Contract assets
Contract liabilities
2020
2019
2020
2019
Opening balance
118,573
114,327
51,071
62,147
Revenue recognised that was included in the
contract liability balance at the beginning of the
period
-
-
(38,755)
(33,246)
Increases due to cash received, excluding
amounts recognised as revenue during the
period
-
-
27,808
22,180
Transfers from contract assets recognised at the
beginning of the period to receivables
(109,532)
(108,638)
-
-
Increases as a result of changes in the measure
of progress
55,895
111,920
-
-
Foreign exchange differences
(35)
838
(40)
(10)
Impairment loss
(48)
-
-
-
Impairment loss reversal
21
126
-
-
Closing balance
64,875
118,573
40,085
51,071
Contract assets decreased by EUR 53.7 million compared to 31 December 2019 due to lower project-
related activities in the steel pipes segment during 2020 compared to 2019.
Contract liabilities primarily relate to the advance consideration received from customers for
construction of customized products or energy projects for which revenue is recognized over time.
Contract liabilities which are expected to be settled within more than one year are classified as non-
current liabilities (EUR 9,889 thousand as of 31 December 2020).
E. Contract costs
Management expects that fees, commissions & other costs associated with obtaining contracts for
energy projects are recoverable. Cenergy Holdings recorded costs incurred to obtain a contract of EUR
545 thousand as Contract costs at 31 December 2020 (31 December 2019: EUR 285 thousand).
In addition, costs to fulfill a contract are capitalised, if they are directly associated with the contract and
are recoverable. Such contract costs may include materials used for tests necessary for the production,
labor costs, insurance fees and other costs necessary to fulfil performance obligations under a contract
once it is obtained, but before transferring the control of goods or rendering services to the customer.
Cenergy Holdings recorded costs incurred to fulfil a contract of EUR 167 thousand as Contract costs at
31 December 2020 (31 December 2019: EUR 311 thousand).
Therefore, at 31 December 2020 Cenergy Holdings has recorded as contract costs an amount of EUR
713 thousand, out of which an amount of EUR 222 thousand is classified as non-current assets.
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
102
Contract costs of obtaining or fulfilling a contract are expensed to cost of sales when the related
revenue is recognised. In 2020, there was no impairment loss in relation to contract costs.
F. Significant judgments in revenue recognition
In recognizing revenue the Group makes judgements regarding the timing of satisfaction of
performance obligations, the identification of distinct performance obligations, as well as the
transaction price and the amounts allocated to performance obligations. The most significant of these
estimates are described below:
- Contracts including multiple performance obligations are mainly identified in cables segment
for turnkey projects and for customized products in both segments, as described in Note 7.B
and Note 5.3. In such cases the total transaction price is allocated to these performance
obligations on the basis of the relative standalone selling prices of the promised goods or
services. If these goods and services are not sold separately, a cost plus margin approach is
used to estimate the standalone selling price.
- Revenue deriving from the production of customized products for energy projects is
recognized overtime. In such projects, contracts signed by Cenergy Holdings’ subsidiaries may
prescribe the promises of both:
o producing customized products based on customers’ specifications; and
o transporting them to the customer’s site.
In such cases, transportation is considered as a separate performance obligation, since both
criteria prescribed in IFRS 15.27 are met, since the customer benefits from the offered
transportation service and the promise to transport the goods to the customer is separately
identifiable from the production of these customized products.
Revenue for orders of standardized products (i.e. hollow structural sections, wires and non-
customized power & telecom cables) is recognized at a specific point in time and
transportation is not considered a separate performance obligation, since the second criterion
of IFRS 15.27 is not met.
- Some contracts with customers involve a variable transaction cost as they include a volume or
trade discount based on the total sales to the customer within a time period. In such case
revenue is recognised based on the anticipated sales to the customer throughout the year, as
these sales are realized and new orders are received and up to an extent it is highly probable
that a significant reversal of cumulative revenue recognised will not be needed.
8. Income and expenses
A. Other income
For the year ended 31 December
Amounts in EUR thousand
Note
2020
2019
Government grants
18
42
Rental income
568
526
Income from fees, commissions & costs recharged
2,373
2,299
Indemnities and income from claims
17
114
Gain from disposal of property, plant & equipment
6
7
Amortization of grants
28
908
736
Gain from disposal of subsidiaries
-
3,630
Reversal of impairment losses on investment property
20
-
89
Income from valuation of options
23
936
-
Other
262
652
Other Income
5,088
8,095
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
103
B. Other expenses
For the year ended 31 December
Amounts in EUR thousand
Note
2020
2019
Loss from disposal of Property, plant & equipment
-
(384)
Loss from write-offs of Property, plant & equipment
17
(142)
(137)
Impairment of investment property
20
-
(79)
Depreciation and amortisation
20
-
(200)
Expenses recharged
(682)
(502)
Indemnities and claims
(116)
(29)
Other taxes
(214)
(419)
Other penalties
(11)
(421)
Incremental coronavirus costs
(1,837)
-
Employee benefits
11
(292)
(149)
Other
(515)
(981)
Other expenses
(3,810)
(3,301)
The line “Incremental coronavirus costs” presented in the table above includes all incremental costs
incurred due to the coronavirus outbreak. Such costs are directly attributable to the coronavirus
outbreak and are incremental to costs incurred prior to the outbreak and not expected to recur once
the crisis has subsided and operations return to normal, while they are clearly separable from normal
operations. “Incremental coronavirus costs” includes temporary premium payments to compensate
employees for performing their normal duties at increased personal risk, charges for cleaning and
disinfecting facilities more thoroughly and more frequently, medical equipment, nursery staff and other
expenses directly associated with the coronavirus outbreak.
C. Expenses by nature
For the year ended 31 December
Amounts in EUR thousand
Note
2020
2019
Cost of inventories recognized as an expense
(539,680)
(621,672)
Employee benefits
12
(70,629)
(68,225)
Energy
(11,605)
(14,108)
Depreciation and amortisation
17, 18, 19
(24,979)
(27,693)
Amortization of contract costs
(342)
(1,890)
Taxes - duties
(1,679)
(1,504)
Insurance premiums
(13,790)
(11,337)
Rental fees
(2,356)
(2,151)
Transportation
(31,981)
(26,742)
Promotion & advertising
(433)
(686)
Third party fees and benefits
(120,995)
(96,577)
Loss from derivatives
(5,660)
(7,535)
Maintenance expenses
(9,220)
(9,907)
Travel expenses
(2,393)
(3,145)
Commissions
(3,269)
(3,057)
Foreign exchange gains/(losses)
(1,192)
111
Other expenses
(3,335)
(3,667)
Total cost of sales, selling & distribution
expenses and administrative expenses
(843,539)
(899,782)
The increase in “Τhird party fees and benefits” is attributed mainly to fees paid to subcontractors for
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
104
coating services in the context of steel pipes projects and for installation services in the context of
turnkey contracts executed during 2020 by subsidiaries in the cables segment. Specifically, during 2020
the installation for the submarine interconnection of Cyclades (second phase), the submarine
interconnection of Skiathos island with Evia, Greece, the Crete – Peloponese interconnection and
several other onshore projects were undertaken by subcontractors in Cables segment. During 2019,
installation services provided in the context of cables projects assigned to subcontractors were more
limited in the onshore cables business, while only two submarine projects, i.e. the installation phases
for the interconnection of the Kafireas wind park in Evia, Greece, with the national power grid via
submarine cables and the 400kV submarine cable in Rio-Antirio, were executed.
The fluctuation in transportation costs relate to the geographical mix of sales and volume of deliveries
in steel pipes segment that took place in 2020 compared to 2019. As mentioned in note 7.F, when
certain criteria are met, transportation is considered as a separate performance obligation and the
relevant costs are recognized when such performance obligations are fulfilled.
Cenergy Holdings significantly invests in research and development in order to continuously bring
value-added products and services to the market and improve production processes, as well as to
promote materials recycling and the proper use of natural resources. The aggregate amount of research
and development expenditure recognised as an expense for 2020 amounts to EUR 3.8 million (2019:
EUR 3.8 million).
9. Net finance costs
For the year ended 31 December
Amounts in EUR thousand
2020
2019
Finance income
Interest income
31
42
Foreign exchange gains
325
-
356
42
Finance costs
Interest expense and related costs
(31,333)
(33,714)
Foreign exchange losses
(662)
(954)
(31,996)
(34,667)
Net finance costs
(31,640)
(34,626)
Interest expenses and related costs were lower by 7% compared to 2019 as a result of lower interest
rates agreed and lower working capital needs for the execution of projects in the steel pipes segment.
10. Earnings per share
Considering that there are neither share options, nor convertible bonds, basic and diluted earnings per
share are identical and have been based on the following profit attributable to ordinary shareholders
and weighted-average numbers of ordinary shares outstanding.
A. Profit attributable to ordinary shareholders
For the year ended 31 December
Amounts in EUR thousand
2020
2019
Profit attributable to the owners of the Company
24,772
20,189
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
105
B. Weighted-average number of ordinary shares outstanding
The number of ordinary shares in issue for 2020 and 2019 was 190,162,681 shares. No shares were
issued during 2020.
C. Earnings per share
The basic and diluted earnings per share are as follows:
For the year ended 31 December
In EUR per share
2020
2019
Basic and diluted
0.13027
0.10617
11. Employee benefits
At 31 December
Amounts in EUR thousand
Note
2020
2019
Net defined benefit liability
6,406
5,677
Liability for social security contributions
27
2,561
2,413
Total employee benefit liabilities
8,967
8,089
Non-current
6,406
5,677
Current
2,561
2,413
For details on the related employee benefit expenses, see Note 12.
A. Post-employment plans
The following post-employment plans exist:
Defined contribution plan
All the employees of the Company’s subsidiaries are insured for their main pension by the respective
social insurance organizations as required by the local legislation. Once the contributions have been
paid, the Company’s subsidiaries have no further payment obligations. The regular contributions
constitute net periodic costs for the year in which they are due, and as such are included in employee
benefit expenses.
Defined benefit plan
The employees of the Company’s subsidiaries in Greece and Bulgaria, are entitled to receive a lump
sum when they retire. This lump sum is determined in accordance with the years of service and the
salary at the retirement date. This obligation meets the definition of defined benefit plans and charges
the accumulated benefits through profit or loss in each period with a corresponding increase of the
retirement liability. Benefits paid to pensioners during each period are charged against this liability.
These plans are unfunded.
B. Movement in net defined benefit liability
The following table shows the reconciliation from the opening balance to the closing balance for net
defined benefit liability and its components.
For the year ended 31 December
Amounts in EUR thousand
2020
2019
Balance at 1 January
5,677
4,320
Included in profit or loss
Current service cost
372
263
Past service cost
138
1
Settlement/curtailment/termination loss
798
214
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
106
For the year ended 31 December
Amounts in EUR thousand
2020
2019
Interest cost
43
69
1,351
547
Included in OCI
Remeasurement loss/(gain)
Actuarial loss/(gain) arising from:
- Demographic assumptions
-
31
- Financial assumptions
415
1,149
- Experience adjustments
31
192
447
1,372
Other movements
Disposal of subsidiary
-
(239)
Benefits paid
(1,068)
(323)
Balance at 31 December
6,406
5,677
During the financial year 2020, Cenergy Holdings’ companies provided EUR 1,068 thousand in benefit
payments to employees who left the Group during the year. An additional cost that arose due to these
payments (Settlement/Curtailment/Termination loss of EUR 798 thousand) was recognized. More
specifically, in the cases of dismissal, voluntary withdrawals with benefit payment and retirement, the
additional cost is the difference between the benefit paid and the amount recorded in the defined
benefit liability for the respective employees.
The increase in benefits paid and in Settlement/curtailment/termination loss is attributed to the cost
optimization initiatives undertaken in steel pipes segment during 2020.
C. Defined benefit obligation
a) Actuarial assumptions
The following were the weighted average principal actuarial assumptions at the reporting date:
2020
2019
Discount rate
0.30%
0.77%
Inflation
1.25%
1.30%
Future salary growth
1.86%
1.78%
Plan duration (expressed in years)
16.25
14.54
Assumptions regarding future mortality have been based on published statistics and mortality tables.
b) Expected maturity analysis
The analysis of Group’s expected undiscounted benefits cash flows in the future years out of the
defined benefit plan liability is as follows:
Amounts in EUR thousand
2020
2019
Up to 1 year
127
111
Between 1 and 2 years
74
95
Between 2 and 5 years
320
239
Over 5 years
6,212
5,986
Total
6,733
6,430
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
107
c) Sensitivity analysis
The sensitivity analysis for each significant actuarial assumption, which was reasonably possible, at the
end of the reporting period and shows how the defined benefit obligation would have been affected
by the following changes:
Amounts in EUR thousand
Increase
Decrease
Discount rate (0.5% movement)
(484)
536
Future salary growth (0.5% movement)
515
(475)
If zero withdrawal rates were used when determining the defined benefit liability as of 31 December
2020, the liability would have been increased by EUR 636 thousand.
The above sensitivity analysis is based on a change in one assumption while all other assumptions
remain constant. In practice, this is unlikely to occur as changes in some of the assumptions may be
correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial
assumptions the same method (present value of the defined benefit obligation calculated with the
projected unit credit method at the end of the reporting period) has been applied as when calculating
the employee benefit liability recognized on the statement of financial position. The methods and the
formula of the assumptions used for the defined analysis have not changed compared to the previous
year.
12. Employee benefit expenses
For the year ended 31 December
Amounts in EUR thousand
2020
2019
Employee remuneration & expenses
56,589
54,436
Social security expenses
11,057
11,053
Defined benefit plan
1,351
547
Other
3,977
4,113
Total
72,974
70,149
Employee benefits were allocated as follows:
For the year ended 31 December
Amounts in EUR thousand
2020
2019
Cost of goods sold
53,085
49,931
Distribution expenses
7,874
9,351
Administrative expenses
9,670
8,943
Other expenses
292
149
Incremental coronavirus costs
154
-
Capitalised in assets under construction
1,899
1,775
Total
72,974
70,149
The number of employees, as well as their profile and gender, employed by the Group is presented in
the following tables:
2020
2019
Number of employees
2,238
2,088
18 - 30
30-50
51+
Total
Male
297
1,202
467
1,966
Female
55
158
59
272
Total
352
1,360
526
2,238
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
108
Office
employees &
professionals
Workers
Management
Total
Number of employees
778
1,343
117
2,238
13. Income tax
A. Amounts recognised in profit or loss
For the year ended 31 December
Amounts in EUR thousand
2020
2019
Current tax expense
(2,494)
(274)
Origination and reversal of temporary differences
(6,960)
(9,577)
Change in tax rate or composition of new tax
-
(502)
Recognition of previously unrecognised tax losses, tax credit or
temporary differences of a prior period
42
2,105
Derecognition of previously recognised tax losses
(1,226)
(66)
Deferred tax expense
(8,144)
(8,041)
Income Tax
(10,638)
(8,315)
B. Reconciliation of effective tax rate
For the year ended 31 December
Amounts in EUR thousand
2020
2019
Profit before tax
35,410
28,492
Tax using the domestic tax rate in Greece (24% )
(8,498)
(6,838)
Non-deductible expenses for tax purposes
(1,026)
(2,955)
Tax-exempt income
736
1,078
Recognition of previously unrecognised tax losses, tax credit or
temporary differences of a prior period
42
2,105
Effect of tax rates in foreign jurisdictions
134
143
Current-year losses for which no deferred tax asset is recognised
(377)
(1,049)
Incremental R&D tax incentives
297
-
Change in tax rate or composition of new tax
-
(502)
Derecognition of previously recognised tax losses
(1,226)
(66)
Adjustment for prior year income tax
(720)
(231)
Income tax expense reported in the statement of profit or loss
(10,638)
(8,315)
Effective tax rate
(30.0%)
(29.2%)
According to the Greek law N. 4646/2019, the corporate income tax rate for legal entities in Greece for
the fiscal year 2019 and onwards is set at 24%. The corporate income tax rate of legal entities in
Romania is set at 16% and in USA is set at 21%.
The effective income tax rate of the Group was influenced by the fact that certain loss making
subsidiaries did not recognize deferred tax on current year’s tax losses, while the current assessment
regarding the recoverability of available tax losses to offset future taxable income in steel pipes
segment led to the derecognition of deferred tax asset on previously recognised tax losses.
Since 2019, based on Greek legislation, research and development (R&D) expenditure, including the
tax depreciation costs of equipment and instruments used in R&D activities, may be deducted from
gross revenue when incurred at a rate 130%. Further, on 29 July 2020, the Greek government passed
new legislation increasing the R&D expenditure deduction from 30% to 100% and accelerating the
certification procedure by the General Secretariat for Research and Technology (GSRT) (Law
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
109
4712/2020, art.46, Government Gazette A’ 146/29/7/2020). The new law amended article 22A of Law
4172/2013 and is effective since 1 September 2020. Therefore, R&D expenditure may be deducted
from gross revenue when incurred at a rate of 200% from 1 September 2020, onwards instead of 130%,
rate applicable for expenditure incurred up to 31 August 2020. The subsidiaries of Cenergy Holdings
make use of the above tax provisions and the expected tax benefit is presented in the line “Incremental
R&D tax incentives” of the table above.
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
110
C. Movement in deferred tax balances
The movement in deferred tax assets and liabilities during the year is as follows:
Change in tax rate
Balance at 31
December
2020
Net
balance
at 1
January
Recognised
in profit or
loss
Recognised
in OCI
Foreign
exchange
differences
Effect
recognised
in profit or
loss
Effect
recognised
in OCI
Disposal of
subsidiaries
Net
Deferred
tax
assets
Deferred
tax
liabilities
Amounts in EUR thousand
Property, plant & equipment
(30,268)
(3,127)
-
4
-
-
-
(33,391)
2
(33,392)
Right of use assets
(6)
10
-
-
-
-
-
4
9
(5)
Intangible assets
(1,799)
(134)
-
-
-
-
-
(1,934)
410
(2,343)
Investment property
71
-
-
-
-
-
-
71
71
-
Inventories
96
(23)
-
-
-
-
-
73
73
-
Contracts with customers
(6,271)
(5,152)
-
-
-
-
-
(11,423)
-
(11,423)
Derivatives
352
(98)
212
-
-
-
-
466
534
(68)
Loans and borrowings
(2,448)
480
-
-
-
-
-
(1,968)
-
(1,968)
Employee benefits
1,359
68
106
-
-
-
-
1,534
1,534
-
Provisions
632
(320)
-
-
-
-
-
313
313
-
Other items
(720)
460
-
(115)
-
-
-
(375)
307
(682)
Carry forward tax loss
7,689
(2,424)
-
-
-
-
-
5,265
5,265
-
Thin-cap interest
10,493
2,114
-
(4)
-
-
-
12,603
12,603
-
Tax assets / (liabilities) before set-off
(20,821)
(8,144)
319
(114)
-
-
-
(28,761)
21,121
(49,882)
Set-off tax
(18,213)
18,213
Net tax assets / (liabilities)
(20,821)
(8,144)
319
(114)
-
-
-
(28,761)
2,908
(31,668)
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
111
The movement in deferred tax assets and liabilities during the prior year is as follows:
Change in tax rate
Balance at 31
December
2019
Net
balance
at 1
January
Recognised
in profit or
loss
Recognised
in OCI
Foreign
exchange
differences
Effect
recognised
in profit or
loss
Effect
recognised
in OCI
Disposal of
subsidiaries
Net
Deferred
tax
assets
Deferred
tax
liabilities
Amounts in EUR thousand
Property, plant & equipment
(31,268)
(1,669)
-
5
2,189
-
474
(30,268)
-
(30,268)
Right of use assets
-
(6)
-
-
-
-
-
(6)
6
(12)
Intangible assets
(1,074)
(102)
-
-
(623)
-
-
(1,799)
539
(2,338)
Investment property
74
-
-
-
(3)
-
-
71
71
-
Inventories
(696)
832
-
-
(41)
-
-
96
96
-
Contracts with customers
5,667
(11,250)
-
(3)
(686)
-
-
(6,271)
-
(6,271)
Derivatives
1,072
(356)
(127)
-
(71)
(167)
-
352
370
(19)
Loans and borrowings
(3,167)
507
-
-
212
-
-
(2,448)
-
(2,448)
Employee benefits
1,078
(147)
645
-
(38)
(120)
(57)
1,359
1,359
-
Provisions
5,936
(4,484)
-
-
(819)
-
-
632
632
-
Other items
(909)
103
-
(4)
90
-
-
(720)
200
(920)
Carry forward tax loss
3,118
5,005
-
-
(434)
-
-
7,689
7,689
-
Thin-cap interest
6,751
4,028
-
(6)
(278)
-
(2)
10,493
10,493
-
Tax assets / (liabilities) before set-off
(13,419)
(7,539)
518
(7)
(502)
(287)
414
(20,821)
21,455
(42,276)
Set-off tax
(19,291)
19,291
Net tax assets / (liabilities)
(13,419)
(7,539)
518
(7)
(502)
(287)
414
(20,821)
2,164
(22,985)
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
112
On 31 December 2020, the accumulated tax losses carried forward available for future use amounted
to EUR 36.7 million. Cenergy Holdings’ companies have recognised a deferred tax asset on tax losses of
EUR 22 million because management considered it probable that future taxable profits would be
available against which such losses can be used. Such tax losses are expected to be used during the next
five years.
Deferred tax assets on tax losses relate mainly to steel pipes segment and the recoverability of such
asset is based on the expected profitability during the following years, due to the existing initiatives
undertaken in order to secure high utilisation of Thisvi plant in the following years, while the history of
tax profits during prior years demonstrate the ability to use available tax losses against future profits in
the forthcoming years. Finally, it is noted that the main part of the tax losses on which deferred tax has
been recognized occurred due a non-recurring event, i.e. originate from the tax recognition of
impairment loss for a specific former customer (see note 15) during 2019.
Based on management’s estimates regarding the future taxable profits and the utilization period of tax
losses according to applicable tax legislation deferred tax assets have not been recognised in respect of
tax losses carried forward for an amount of EUR 14.8 million with expiration date during the period
2021 to 2025. Such tax losses for which deferred tax assets have not been recognised mainly concern
the parent company.
According to the provisions of articles 49 and 72 of the Greek Law 4172/2013 concerning thin
capitalization, net interest expense is deductible from current year’s tax profits, if it is equal or less than
30% of EBITDA and any excess can be settled with future tax profits without time limitations. Similar
thin capitalization rules apply to the tax deductibility of interest in Romania. Specifically, net interest
cost higher than the deductible limit of EUR 200 thousand is deductible only up to 10% of EBITDA. The
excess net interest costs are non-deductible in the relevant tax period, but may be carried forward to
an unlimited number of tax years. During 2020, deferred tax asset recognised related on thin
capitalization rules increased by EUR 2.1 million.
14. Inventories
Amounts in EUR thousand
2020
2019
Finished goods and merchandise
52,443
52,560
Semi-finished goods
33,732
26,247
Raw and auxiliary materials
113,612
137,373
Consumables
2,517
2,348
Packaging materials
1,947
1,817
Spare parts
8,940
8,150
Total
213,192
228,495
In 2020, the amount of inventories recognised as expense during the period and included in “Cost of
sales” was EUR 539.7 million (2019: EUR 621.7 million). This decrease is due to the execution of a more
profitable projects mix in 2020 and the decrease in sales of steel pipes projects.
Inventories have been reduced by EUR 732 thousand in 2020 as a result of the write-down to net
realizable value (2019: EUR 417 thousand).
Inventories with a carrying amount of EUR 21.5 million are pledged as security for borrowings received
by Cenergy Holdings’ companies (see Note 26).
The decrease in inventories is mainly due to less raw material purchases for steel pipes projects
compared to the respective prior year’s period.
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
113
15. Trade and other receivables
Amounts in EUR thousand
Note
2020
2019
Current assets
Trade receivables
75,941
74,595
Less: Impairment losses
29.C.1
(23,824)
(26,263)
52,118
48,332
Other downpayments
725
3,236
Cheques and notes receivables
50
23
Receivables from related entities
35
28,942
33,842
VAT & other tax receivables
12,064
7,391
Other receivables
6,580
9,902
Other debtors
12,960
10,265
Less: Impairment losses
29.C.1
(567)
(414)
60,754
64,244
Total
112,872
112,577
Non-current assets
Non-current receivables from related
parties
208
115
Other non-current receivables
1,094
1,367
Total
1,303
1,482
A. Transfer of trade receivables
The carrying amount of receivables includes amounts that are subject to factoring arrangements.
Cenergy Holdings and its subsidiaries, enter into factoring agreements with recourse to sell trade
receivables for cash proceeds. These trade receivables are not being derecognised from the
Consolidated Statement of Financial Position, because substantially all of the risk and rewards are
retained within the Group - primarily credit risk. The amount received on transfer by the factor is
recognised as a secured bank loan.
The following information shows the carrying amount of trade receivables at the year-end that have
been transferred but have not been derecognised and the associated liabilities.
At 31 December
Amounts in EUR thousand
2020
2019
Carrying amount of trade receivables transferred
31,000
15,882
Carrying amount of associated liabilities
2,245
9,662
The fair value of the trade receivables transferred approximate the carrying amount.
As of 31 December 2020 and 2019, Cenergy Holdings had not used the total amount of credit line
available by the factoring companies.
B. Credit and market risks and impairment losses on trade receivables
During 2010, the subsidiary Corinth Pipeworks SA initiated in Greece and Dubai legal actions against a
former customer in the Middle-East regarding the recovery of an overdue receivable of USD 24.8 million
(EUR 20.3 million at 31 December 2020), plus legal interest.
Following a series of court proceedings, the Dubai Court of Cassation issued its final judgment, during
2017, and ruled to reject any counterclaim of the former customer and to confirm the amount due to
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
114
Corinth Pipeworks.
In order to recover this long overdue balance, Corinth Pipeworks has initiated the enforcement
procedures against the assets of the former customer that are located within any of the countries,
where the Court of Cassation judgment issued against the former customer is enforceable (i.e. UAE and
various other countries in the Middle East). There were no other substantial developments during 2020.
Corinth Pipeworks had recorded in the past an impairment loss for the whole outstanding amount, i.e.
USD 24.8 million. However, the subsidiary will continue any and all actions required to collect the full
amount of that receivable.
Information about Cenergy Holdings’ exposure to credit and market risks and impairment losses for
trade and other receivables is included in Note 29.C.1.
16. Cash and cash equivalents
Amounts in EUR thousand
2020
2019
Cash in hand and cash in bank
98
265
Short-term bank deposits
80,937
90,144
Total
81,035
90,408
Short term deposits have duration of less than 90 days and are available for use.
17. Property, plant and equipment
A. Reconciliation of carrying amount
Amounts in EUR thousand
Land, plants
& other
buildings
Machinery
Furniture
and other
equipment
Assets under
construction
Total
Cost
Balance at 1 January 2019
177,125
481,473
21,987
31,682
712,267
Change in accounting policy
-
(2,618)
(308)
-
(2,926)
Effect of movement in exchange rates
(492)
(1,048)
(125)
(38)
(1,704)
Additions
254
7,496
1,954
39,378
49,083
Disposals
(2,188)
(4)
(111)
-
(2,303)
Write-offs
-
-
(157)
(137)
(295)
Disposal of subsidiaries
(4,835)
(8,250)
(754)
(108)
(13,948)
Reclassification from inventory
-
1,755
-
-
1,755
Other reclassifications
2,089
38,593
(891)
(42,118)
(2,327)
Balance at 31 December 2019
171,954
517,396
21,594
28,659
739,603
Balance at 1 January 2020
171,954
517,396
21,594
28,659
739,603
Effect of movement in exchange rates
(383)
(845)
(68)
(26)
(1,323)
Additions
1,402
3,491
3,628
52,663
61,184
Disposals
(16)
(46)
(356)
(121)
(538)
Write-offs
(48)
-
(1)
(94)
(142)
Other reclassifications
4,313
19,716
767
(29,528)
(4,732)
Balance at 31 December 2020
177,222
539,713
25,564
51,553
794,052
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
115
Amounts in EUR thousand
Land, plants
& other
buildings
Machinery
Furniture
and other
equipment
Assets under
construction
Total
Accumulated depreciation and
impairment losses
Balance at 1 January 2019
(65,207)
(224,428)
(17,302)
-
(306,938)
Change in accounting policy
-
307
100
-
407
Effect of movement in exchange rates
338
680
5
-
1,023
Depreciation
(3,641)
(18,680)
(1,236)
-
(23,557)
Disposals
798
3
97
-
898
Write-offs
-
-
157
-
157
Other reclassifications
(8)
(35)
1,222
-
1,179
Disposal of subsidiaries
1,597
6,959
737
-
9,293
Balance at 31 December 2019
(66,124)
(235,193)
(16,220)
-
(317,538)
Balance at 1 January 2020
(66,124)
(235,193)
(16,220)
-
(317,538)
Effect of movement in exchange rates
262
544
50
-
856
Depreciation
(3,019)
(15,142)
(1,565)
-
(19,726)
Disposals
58
18
343
-
418
Write-offs
-
-
1
-
1
Other reclassifications
3
(5)
(124)
-
(126)
Balance at 31 December 2020
(68,821)
(249,778)
(17,516)
-
(336,115)
Carrying amounts
At 1 January 2019
111,918
257,045
4,685
31,682
405,330
At 31 December 2019
105,830
282,204
5,374
28,659
422,066
At 31 December 2020
108,401
289,935
8,048
51,553
457,937
The net amount in other reclassifications concerns intangible assets under construction reclassified
during the year to intangible assets.
B. Security
Property, plant & equipment with a carrying amount of EUR 136.4 million are mortgaged as security for
borrowings received by Cenergy Holdings (see Note 26).
C. Property, plant and equipment under construction
The most important items in property, plant and equipment under construction as of 31 December
2020 concern the expansion of Fulgor’s inter-array cables production capacity and certain productivity
and capacity improvement investments in Thisvi’s plant of steel pipes segment. The majority of such
capital expenditure projects are expected to be completed during 2021.
The amount of EUR 29.5 million reclassified from assets under construction in 2020 mostly relates to
the conclusion of part of the productivity improvements at the Fulgor plant and the conclusion of
development projects related to the acquisition of licenses.
Borrowing costs of EUR 505 thousand related to the acquisition of new machinery were capitalised,
calculated using a capitalisation rate of 4.55%.
D. Change in estimate of useful lives
During 2020, the Group conducted an operational efficiency review at all of its plants, which resulted
in changes in the expected useful life of plants and production machinery.
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
116
The factors taken into account for this operational review were the following:
the frequent and consistent maintenance of the machinery and plants,
the level of capacity utilization of certain assets since their initial acquisition compared to
industry’s standards and
technological developments and technical advances in production methods in the industries
where the subsidiaries are operating.
As a result, in cables segment, the expected useful life of plants was extended by 7 years on average
and the useful life of heavy machinery was extended by 6 years on average. In steel pipes segment, the
expected useful life of plants was extended by 10 years on average and the useful life of heavy
machinery extended by 9 years on average.
Upon the application of the changes described above, the ranges of useful lives as described in the
relative accounting policy remained unaffected.
The effect of these changes on annual depreciation expense, included in “Cost of sales”, was EUR 5.2
million for 2020 and approximately EUR 5 million for the period 2021-2024 on an annual basis.
18. Leases
A. Amounts recognised in the Consolidated Statement of Financial Position
The Consolidated Statement of Financial Position shows the following amounts relating to leases:
Right-of-use assets
Amounts in EUR thousand
2020
2019
Buildings
442
325
Machinery
2,229
2,204
Transportation means
2,927
3,352
Total
5,598
5,881
Lease liabilities
Amounts in EUR thousand
Note
2020
2019
Current lease liabilities
26
1,752
1,768
Non-current lease liabilities
26
3,681
3,990
Total
5,433
5,758
B. Reconciliation of carrying amount of Right-of-use assets
Amounts in EUR thousand
2020
2019
Balance at 1 January
5,881
-
Effect of movement in exchange rates
(95)
(394)
Additions
1,628
1,739
Terminations
(497)
(36)
Modifications
(20)
2
Depreciation
(1,453)
(1,440)
Other reclassifications
155
-
Disposal of subsidiary
-
(14)
Change in accounting policy
-
6,025
Balance at 31 December
5,598
5,881
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
117
C. Amounts recognised in the Consolidated Statement of Profit or Loss
The Consolidated Statement of Profit or Loss shows the following amounts relating to leases:
Amounts in EUR thousand
2020
2019
Depreciation charge of right-of-use assets
Buildings
51
121
Machinery
159
190
Transportation means
1,243
1,129
Total
1,453
1,440
Interest expense (included in finance cost)
212
181
Variable rental fees
105
196
Low value rental fees
137
133
Short term rental fees
1,718
1,709
19. Intangible assets
A. Reconciliation of carrying amount
Amounts in EUR thousand
Development
costs
Trademarks
and
licenses
Software
Other
Total
Cost
Balance at 1 January 2019
1,042
22,940
9,731
304
34,017
Effect of movement in exchange rates
-
-
(101)
-
(101)
Additions
510
1,980
1,735
-
4,224
Disposals
-
-
(33)
-
(33)
Other reclassifications
-
502
1,824
-
2,327
Disposal of subsidiaries
-
(3)
(146)
-
(150)
Balance at 31 December 2019
1,552
25,418
13,010
304
40,284
Balance at 1 January 2020
1,552
25,418
13,010
304
40,284
Effect of movement in exchange rates
-
-
(92)
-
(92)
Additions
23
1,118
2,542
-
3,683
Other reclassifications
-
3,653
1,053
(2)
4,704
Balance at 31 December 2020
1,575
30,189
16,512
303
48,578
Amounts in EUR thousand
Development
costs
Trademarks
and
licenses
Software
Other
Total
Accumulated amortisation and
impairment losses
Balance at 1 January 2019
(493)
(4,790)
(6,250)
(200)
(11,733)
Effect of movement in exchange rates
-
-
59
-
59
Amortisation
(171)
(1,135)
(1,377)
(13)
(2,696)
Disposals
-
-
32
-
32
Other reclassifications
-
-
(1,179)
-
(1,179)
Disposal of subsidiaries
-
3
1
-
5
Balance at 31 December 2019
(663)
(5,922)
(8,713)
(213)
(15,511)
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
118
Amounts in EUR thousand
Development
costs
Trademarks
and
licenses
Software
Other
Total
Balance at 1 January 2020
(663)
(5,922)
(8,713)
(213)
(15,511)
Effect of movement in exchange rates
-
-
56
-
56
Amortisation
(239)
(1,692)
(1,857)
(13)
(3,801)
Disposals
-
-
-
-
-
Other reclassifications
-
(2)
-
2
-
Balance at 31 December 2020
(902)
(7,616)
(10,514)
(224)
(19,256)
Carrying amounts
At 1 January 2019
549
18,150
3,481
105
22,284
At 31 December 2019
888
19,497
4,296
92
24,773
At 31 December 2020
673
22,574
5,997
79
29,323
The additions for the current period mainly concerned externally purchased know-how regarding
production methods and associated software programmes. The useful lives for the know-how and
associated software programmes is set to 10 years. Furthermore, several development projects leading
to licenses have been concluded.
B. Amortisation
The amortization of trademarks & licenses with finite useful lives, software programs and other
intangible assets is allocated to the cost of inventory and is included in “cost of sales” as inventory is
sold, as trademarks & licenses and software programs are mainly used directly for the production of
products and they are considered as production overheads. The amortization of intangible assets not
used for production is allocated to administrative expenses.
C. Intangible assets with indefinite useful lives
All intangible assets have finite useful life, except for the following assets, included in trademarks and
licenses:
a. Trade Name “Fulgor” (carrying amount of EUR 1.4 million at 31 December 2020)
It relates to the sector of medium voltage submarine cables and terrestrial high voltage cables that
Fulgor was operating prior to its acquisition by Hellenic Cables in 2011 and which has revealed
significant economic benefits. Based on the analysis of relevant factors (e.g. knowledge, no
longstanding engagement with a wide range of clientele, future development of the sector), the useful
life of the brand was considered indefinite.
b. License of Port use in Soussaki, Corinth (carrying amount of EUR 8.3 million at 31 December
2020)
Fulgor holds a license for permanent and exclusive use of a port located in the premises of the factory
in Soussaki, Corinth. The port is necessary for the production of submarine cables of medium and high
voltage. Since the acquisition of the subsidiary, significant investments for the upgrade and expansion
of production capacity in producing high-voltage submarine cables took place. Since 2014, the
production started as planned. The useful life of the asset is considered indefinite, since the use of these
port facilities is for an indefinite period of time, in the context of the significant development of the
sector.
D. Impairment testing
As these intangible assets do not generate independent cash inflows, it was considered appropriate to
carry out the impairment test on the basis of the Cash Generating Unit (CGU) of Fulgor submarine cables
production plant, which incorporates these assets. In order to evaluate the value in use, cash flow
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
119
projections based on estimates by management covering a five-year period (2021 – 2025) were used.
These estimates take into consideration the contracts already signed, as well as contracts estimated to
be awarded in Greece and abroad.
The submarine cables CGU operates in a project-based business. Therefore, assumptions related to
revenue and profitability growth are based on the contracts already signed, as well as those estimated
to be undertaken in the forthcoming period. The main assumptions regarding the operations of
submarine cables CGU and the projects to be executed within the five-year period are:
Progressively high capacity utilization of Fulgor’s plant, as in 2019 & 2020, based on contracts
already awarded & expected awards based on tendering activity. Given the continued growth,
the existing backlog, the growth of renewables business around the world, which is a significant
driver in the attractive outlook for the offshore power generation market, the continuously high
level of activity is expected to be retained throughout the period 2021-2025.
Capital expenditure of approx. EUR 92 million in the following 5 years, in order to cover
estimated production and capacity needs. Capital expenditure reflects investments for both
maintenance purposes and expectations of organic growth. Based on the high order intake of
the offshore business unit, investments are high for 2021 before being normalized over the
period 2022–2025. For the terminal period, the investments are set equal to depreciation.
Compound annual growth rate of revenue from offshore business for the five-year period at
ca. 6.7% attributable to assignment of new projects mainly in Greece, North Europe and the USA.
Profitability per offshore project in terms of EBITDA at ca. 15%-28% of revenue. Estimated
profitability per project varies mainly due to different type of cable and technical specifications,
geographic region and project’s timeframe.
Compound annual growth rate of fixed operating expenses at ca. 1.4% for the five-year period.
Cash flows after the first five years were calculated using an estimated long term growth rate of 1.38%,
which mainly reflects management's estimates for the world economy as well as long-term growth
prospects of the offshore cable sector. The expected long-term growth rate was set equal to the growth
rate used in 2019. The pre-tax rate used to discount these cash flows is from 9.5% to 8.2% for the five
year period and 8.5% for the terminal value and was based on the following:
Risk free rate was determined according to AAA Eurozone rates in the range of -0.68% to -0.64%
for the five years and 0% for the terminal value.
The country risk for operating in Greece determined in the range of 0.6% to 0.7% for the first five
years and 0.5% for the terminal value.
The market risk premium was determined at 5.96%, i.e. stable compared to prior year’s
impairment test.
Despite the fact that the commodity prices for copper and aluminium are part of the assumptions for
the impairment test performed, due to the hedging activities undertaken and the customized nature of
the products sold by Fulgor, the value of the business unit is not significantly affected by fluctuations in
commodity prices. Neutral result from metal price fluctuations is assumed in the context of the
impairment test.
The results of this test indicated that the recoverable amount as of 31 December 2020 exceeds the
carrying amount of the CGU amounting to EUR 206 million by EUR 530 million.
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
120
A sensitivity analysis was carried out on the key assumptions of the model (discount rates and growth
in perpetuity), so as to examine the adequacy of the headroom. The result of the sensitivity analysis
indicated that the recoverable amount still exceeds the carrying value of the CGU. Assumptions may
change as follows so as the recoverable amount equals the carrying amount:
Assumptions used
Change in rates (percentage points
change)
Discount rate
9.5% to 8.2%
+13.2 ppc
Terminal growth
1.38%
-50.2 ppc
20. Investment property
A. Reconciliation of carrying amount
Amounts in EUR thousand
2020
2019
Balance at 1 January
764
5,837
Impairment
-
(79)
Reversal of impairment
-
89
Depreciation
-
(200)
Disposal of subsidiary
-
(4,883)
Balance at 31 December
764
764
Gross carrying amount
1,348
1,348
Accumulated depreciation and impairment losses
(584)
(584)
Carrying amount at 31 December
764
764
Investment property at 31 December 2020 consists of several land properties in Greece. None of these
is currently leased. These properties are not currently used by Cenergy Holdings and are held either for
capital appreciation or to be leased in the foreseeable future.
B. Measurement of fair value – Impairment loss and subsequent reversal
Based on management’s assessment, during the current period, there were no indications for
impairment or reversal of impairment for any property. The fair value of investment property amounts
to EUR 804 thousand on 31 December 2020 in line with 2019, while the accumulated impairment loss
amounts to EUR 584 thousand. The inputs used for fair value measurement of investment property
have been categorised Level 2, based on the inputs to the valuation techniques used.
C. Restrictions - Contractual obligations
There are neither restrictions nor contractual obligations.
21. Equity-accounted investees
A. Reconciliation of carrying amount
Amounts in EUR thousand
Note
2020
2019
Balance at 1 January
34,583
11,929
Share in profit after taxes
838
1,600
Share in other comprehensive income
(161)
(17)
Reclassification from Other investments
22
-
12,004
Additions
3,285
8,149
Dividends received
(915)
(498)
Foreign exchange differences
(3,292)
1,416
Balance at 31 December
34,339
34,583
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
121
During January 2020, the subsidiary CPW America acquired an interest of 20% of Bellville Tube
Company based in Texas, USA in exchange of USD 3.3 million. Bellville Tube Company manufactures
steel tubular products for the local market. Due to changes incurred during the period in the
shareholding structure of the associate the interest held at 31 December 2020 was 19.4%.
During December 2019, the Group acquired an additional interest of 8.29% of the affiliate company
International Trade S.A. Up to that date, the Group held a percentage of 12.21% in this affiliate and
such investment was categorized as FVOCI. Upon the acquisition of the additional percentage, the
Group can exercise significant influence over International Trade, as the voting power of the Group
exceeds 20%. Therefore at 31 December 2019, the interest of EUR 12,004 thousand previous classified
as Other investments was reclassified to equity-accounted investees.
B. Financial information per associate
The following tables present financial information per associate. The disclosed financial information
reflects amounts in the financial statements of the relevant associates.
2020
Company
Principal place of
business
Revenue
Profit / (Loss)
from
continuing
operations
Total
comprehensive
income
Ownership
interest
Amounts in EUR thousand
STEELMET S.A.
Greece
32,052
752
647
29.56%
DIA.VIPE.THIV. S.A.
Greece
2,487
109
107
26.19%
AO TMK-CPW
Russia
41,141
1,775
1,775
49.00%
INTERNATIONAL TRADE S.A.
Belgium
990,559
3,192
2,562
20.50%
BELLVILLE TUBE COMPANY
USA
14,548
(4,826)
(4,826)
19.40%
Company
Segment
Current
assets
Non-current
assets
Current
liabilities
Non-current
liabilities
Amounts in EUR thousand
STEELMET S.A.
Other activities
6,786
3,260
9,047
2,531
DIA.VIPE.THIV. S.A.
Steel Pipes
1,882
12,239
352
8,258
AO TMK-CPW
Steel Pipes
25,397
4,734
9,794
-
INTERNATIONAL TRADE S.A.
Other activities
141,997
8,559
105,841
7,082
BELLVILLE TUBE COMPANY
Steel Pipes
1,975
14,200
3,773
3,428
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
122
2019
Company
Principal place of
business
Revenue
Profit / (Loss)
from
continuing
operations
Total
comprehensive
income
Ownership
interest
Amounts in EUR thousand
STEELMET S.A.
Greece
18,385
590
443
29.56%
DIA.VIPE.THIV. S.A.
Greece
2,130
(237)
(242)
26.19%
AO TMK-CPW
Russia
60,860
3,037
3,037
49.00%
INTERNATIONAL TRADE S.A.
Belgium
1,037,393
2,168
1,956
20.50%
Company
Segment
Current
assets
Non-current
assets
Current
liabilities
Non-current
liabilities
Amounts in EUR thousand
STEELMET S.A.
Other activities
3,723
2,012
2,570
2,255
DIA.VIPE.THIV. S.A.
Steel Pipes
2,077
12,232
592
8,313
AO TMK-CPW
Steel Pipes
23,639
6,542
4,101
69
INTERNATIONAL TRADE S.A.
Other activities
113,172
8,879
83,321
2,659
The following table analyzes the interest in AO TMK-CPW and other significant associates:
At 31 December
Amounts in EUR thousand
2020
2019
Net assets of AO TMK-CPW at 1 January (100%)
26,011
20,886
Total comprehensive income of AO TMK-CPW (100%)
1,775
3,037
Foreign exchange differences (100%)
(6,120)
2,889
Dividends (100%)
(1,330)
(801)
Net assets of AO TMK-CPW at 31 December (100%)
20,336
26,011
Carrying amount of interest in AO TMK-CPW at 31 December
(49%)
9,965
12,745
Carrying amount of interest in International Trade
20,473
20,153
Carrying amount of interest in Bellville Tube Company
2,162
-
Carrying amount of interest in other individually immaterial
associates
1,739
1,684
Total
34,339
34,583
There are no restrictions on the ability of joint ventures or associates to transfer funds to the Company
in the form of cash dividends, or to repay loans or advances made by the Company.
There are no unrecognised share of losses of an associate, both for the reporting period and
cumulatively.
22. Other investments
Amounts in EUR thousand
Note
2020
2019
Balance at 1 January
5,015
4,579
Additions
26
4,790
Change in fair value
640
7,650
Reclassification to equity-accounted investees
21
-
(12,004)
Disposals
(24)
-
Balance at 31 December
5,657
5,015
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
123
Other investments are equity investments at FVOCI and concern unlisted shares (equity instruments)
of Greek entities.
23. Derivatives
The following table sets out the carrying amount of derivatives:
At 31 December
Amounts in EUR thousand
2020
2019
Non-Current assets
Options
871
-
Total
871
-
Current assets
Forward foreign exchange contracts
584
213
Total
584
213
Current liabilities
Forward foreign exchange contracts
143
322
Future contracts
2,433
1,407
Total
2,576
1,728
Hedge accounting
Cenergy Holdings’ companies hold derivative financial instruments for cash flow and fair value hedges.
The abovementioned derivative financial instruments cover risks from:
Changes in the prices of metals;
Fluctuations of foreign exchange rates.
The maturity and the nominal value of derivatives held by Cenergy Holdings’ companies match the
maturity and nominal value of the underlying assets / liabilities (hedged items).
Derivatives held by Cenergy Holdings’ companies concern mainly:
Future contracts to hedge the risk from the change of the price of metals listed in LME (London
Metal Exchange) and used in production of Cenergy Holdings’ companies in the cables
segment (i.e. mainly copper and aluminium). Such hedges are designated as cash flow hedges.
Foreign exchange forwards to hedge the risk from the change in exchange rate of US Dollar
and British Pound (i.e. currencies to which Cenergy Holdings’ companies are mainly exposed).
Such hedges are either designated as fair value or cash flow hedges depending on the item
hedged. Foreign exchange forwards, when used for hedging foreign exchange risk on
outstanding receivables and suppliers denominated in foreign currency these instruments, are
designated under fair value hedging. Foreign exchange forwards, when used for hedging
foreign exchange risk on the forecasted sales of goods or purchase of materials, are designated
as cash flow hedges.
Derivatives are recognised when Cenergy Holdings’ companies enter into the transaction in order either
to hedge the fair value of receivables, liabilities or commitments (fair value hedges) or highly probable
transactions (cash flow hedges).
Fair value hedges
Derivatives are designated as fair value hedges when the exposure to changes in the fair value of a
recognized financial asset or liability is hedged. Changes in the fair value of derivatives that are
designated and qualified as fair value hedges are recorded in the Consolidated Statement of Profit or
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
124
Loss, along with any changes in the fair value of the hedged asset or liability that are attributable to the
hedged risk.
Cash flow hedges
The effective portion of change in fair value of derivatives designated as a cash flow hedge is recognised
in other comprehensive income (OCI), under “Hedging Reserve”. The gain or loss on the non-effective
proportion is recorded to the profit or loss.
The amounts recorded in “Hedging Reserve” are reclassified to the Consolidated Statement of Profit or
Loss of the period when the event hedged occurs, i.e. at the date when the forecasted transaction
which constitutes the object of the hedge took place or the hedged item affects profit and loss (for
example, in case of a forward sale of aluminium, the reserve is recognised in Consolidated Statement
of Profit or Loss after the net cash settlement of future contract and at the date the aluminium sold).
When a hedge item is sold or when the hedging proportion no longer meets the hedge accounting
criteria, hedge accounting is discontinued prospectively, the amounts recorded in “Hedging reserve”
remain as a reserve and are reclassified to the Consolidated Statement of Profit or Loss when the
hedged asset affects profits or losses. In the case of a hedge on a forecast future transaction, which is
no longer expected to be realized, the amounts recorded in “Hedging reserve” are reclassified to the
consolidated statement of profit or loss.
The change in fair value recognized in equity under cash flow hedging as of 31 December 2020 will be
recycled to the consolidated statement of profit or loss during 2021, as all the hedged events will occur
(the forecasted transactions will take place or the hedged items will affect profit or loss) in 2021.
Cenergy Holdings’ companies examine the effectiveness of the cash flow hedge at inception
(prospectively) by comparing the critical terms of the hedging instrument with the critical terms of the
hedged item, and then at every reporting date (retrospectively) the effectiveness of the cash flow hedge
by applying the dollar offset method on a cumulative basis is examined.
Cenergy Holdings’ companies’ results from the hedging activities recorded in the statement of profit or
loss are presented for metal future contracts and foreign exchange contracts in “Revenue” and “Cost
of sales”. The amounts recognized in the consolidated statement of profit or loss are the following:
For the year ended 31 December
Amounts in EUR thousand
2020
2019
Gain / (loss) on future contracts
(3,308)
1,026
Gain / (loss) on foreign exchange forward contracts
424
(5,824)
Total
(2,884)
(4,798)
Profit or loss related to derivatives used for cash flow hedging and recognized in other comprehensive
income (Hedging reserve) at 31 December 2020 will be recognized in profit or loss during the next
financial year.
Options related to the associate Bellville Tube Company
Based on the purchase agreement, the shareholders of Bellville Tube Company (see note 21) granted
CPW America with a call option to purchase the remaining outstanding capital stock of Bellville Tube
Company. The calculation of the purchase price prescribed in the call option is based on a
predetermined formula. The exercise period for the call option starts in 2022 and expires in 2025. Upon
the exercise of the call option CPW America will own 100% of outstanding capital stock of Bellville Tube
Company.
In addition, the purchase agreement prescribes that if CPW America does not exercise the call option
described above, CPW America shall have the option (“put option”), but not the obligation, during the
period 2022-2025 to require Bellville Tube Company’s shareholders to redeem all, but not less than all,
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
125
of the shares of Bellville Tube Company then held by CPW America. The aggregate purchase price for
the redeemed shares if the put option is exercised will be USD 3.3 million, i.e. equal to the amount
initially disbursed.
The options described above were recognized on the statement of financial position upon valuation
performed and as a result a gain of EUR 936 thousand, included in “Other Income” in the statement of
Profit or loss. Based on the inputs used in order to determine the fair value of the put and the call
options, such options are categorized as Level 3. The options are valuated in USD and based on year
end exchange rates, the valuation of such options was EUR 871 thousand. The valuation of the call &
put options was based on a widely acceptable pricing model methodology considering the complexity
of the option plan.
The basic inputs that have been used in the valuation model are the following:
expected turnover & EBITDA margins of the associate;
future working capital needs;
risk free rate;
volatility, defined as the range of values for all inputs used in the valuation model.
Regarding the fair values of the call and put options, reasonably possible changes at the reporting date
to one of the significant unobservable inputs stated above, keeping other inputs constant, would have
the following effect:
If turnover was higher by 1%, then the fair value of the options would be higher by EUR 14
thousand or 1.4%.
If working capital was higher by 1%, then the fair value of the options would be lower by EUR
48 thousand or 4.9%.
If risk free rate was higher by 0,5%%, then the fair value of the options would be higher by EUR
23 thousand or 2.4%.
If volatility was higher by 1%, then the fair value of the options would be higher by EUR 46
thousand or 4.7%.
24. Capital and reserves
A. Share capital and share premium
The outstanding share capital and number of shares of the Company are as follows:
Total outstanding share capital: EUR 117,892,172.38; and
Total number of shares: 190,162,681.
The shares of the Company have no nominal value. Holders of shares are entitled to one vote per share
at the shareholders meetings of the Company.
Share premium of the Company amounts to EUR 58,600 thousand.
B. Nature and purpose of reserves
(a) Statutory reserve
Pursuant to the Belgian tax legislation, the companies are obliged, from their fiscal year profits, to form
5% as a legal reserve until it reaches 10% of their paid share capital. The distribution of the legal reserve
is prohibited.
Pursuant to Greek company law, the companies are obliged to allocate each year at least 5% of its
annual net profits to its statutory reserve, until this reserve equals at least 1/3 of the company’s share
capital. The distribution of the statutory reserve is prohibited but it can be used to offset losses.
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
126
(b) Hedging reserve
The hedging reserve includes the effective portion of the cumulative net change in the fair value of
hedging instruments used in cash flow hedges pending subsequent recognition in profit or loss as the
hedged cash flows affect profit or loss.
(c) FVOCI reserve
This category relates to reserves formed by the application of the provisions of IFRS 9 regarding the
treatment of other investments classified as FVOCI.
(d) Special reserves
This category relates to reserves formed by the application of the provisions of certain developmental
laws, which were granting tax benefits to companies that invested their retained earnings rather than
distribute them to the shareholders. More specifically, the aforementioned reserves either have
exhausted their income tax liability or have been permanently exempted from income tax, after the
lapse of a specified period beginning from the completion of the investments they concern.
(e) Tax exempt reserves
This category relates to reserves formed by the application of the provisions of certain tax laws and are
exempt from income tax, provided that they are not distributed to the shareholders. In case these
reserves are distributed, they will be taxed using the tax rate applying at such time.
(f) Translation reserve
The translation reserve comprises all foreign currency differences arising from the translation of the
financial statements of foreign operations.
C. Reconciliation of reserves
Amounts in EUR thousand
Statutory
reserve
Hedging
reserve
FVOCI
reserve
Special
reserves
Tax
exempt
reserves
Translation
reserve
Total
Balance at 1 January 2019
7,569
(1,463)
-
9,525
36,318
(18,676)
33,273
Other comprehensive income,
net of tax
-
514
7,650
-
-
1,124
9,288
Transfer of reserves
50
-
(7,650)
-
-
-
(7,600)
Disposal of subsidiary
-
-
-
(263)
-
-
(263)
Balance at 31 December 2019
7,619
(949)
-
9,263
36,318
(17,552)
34,699
Balance at 1 January 2020
7,619
(949)
-
9,263
36,318
(17,552)
34,699
Other comprehensive income,
net of tax
-
(681)
640
-
-
(4,324)
(4,364)
Transfer of reserves
93
-
-
-
-
-
93
Balance at 31 December 2020
7,712
(1,630)
640
9,263
36,318
(21,876)
30,427
25. Capital management
Cenergy Holdings’ policy consists in maintaining a strong capital structure to keep the confidence of
investors, creditors and the market and enable the future development of its activities. The Board of
Directors closely monitors the return on capital and the level of dividends distributed to holders of
ordinary shares.
The Board of Directors tries to maintain an equilibrium between higher returns that would be feasible
through higher borrowing levels and the advantages and security offered by a strong and robust capital
structure. In this context, the Board of Directors monitors the Return on Capital Employed (ROCE) index
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
127
defined as EBIT (result of the period (earnings after tax) before income taxes & net finance costs)
divided by total Capital Employed, (i.e. equity and debt). The Board of Directors seeks opportunities
and examines feasibility to leverage Cenergy Holdings with relatively high ROCE (in any case higher than
the cost of debt) and deleverage companies that go through a relatively low ROCE performance period.
Amounts in EUR thousand
2020
2019
Profit for the period
24,771
20,177
Income tax
10,638
8,315
Net finance costs
31,640
34,626
EBIT
67,049
63,117
Equity
251,762
231,862
Long term debt (incl. Lease liabilities)
178,306
181,719
Short term debt (incl. Lease liabilities)
233,344
322,595
Capital employed
663,412
736,176
ROCE
10.1%
8.6%
26. Debt
A. Overview
At 31 December
Amounts in EUR thousand
2020
2019
Non-current liabilities
Secured bank loans
6,833
9,355
Unsecured bank loans
11,084
16,770
Secured bond issues
81,835
93,166
Unsecured bond issues
74,874
58,439
Loans and borrowings - Long term
174,625
177,730
Lease liabilities - Long term
3,681
3,990
Total long term debt
178,306
181,719
Current liabilities
Secured bank loans
6,909
1,962
Factoring with recourse
2,245
9,662
Unsecured bank loans
180,692
276,589
Current portion of secured bond issues
13,798
12,800
Current portion of unsecured bond issues
19,354
11,222
Current portion of secured bank loans
2,543
2,504
Current portion of unsecured bank loans
6,050
6,088
Loans and borrowings - Short term
231,592
320,827
Lease liabilities - Short term
1,752
1,768
Total Short term debt
233,344
322,595
Total Debt
411,650
504,314
Information about Cenergy Holdings’ exposure to interest rate, foreign currency and liquidity risk is
included in Note 29.
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
128
The maturities of non-current loans are as follows:
Amounts in EUR thousand
2020
2019
Between 1 and 2 years
42,338
35,012
Between 2 and 5 years
111,759
103,689
Over 5 years
24,209
43,019
Total
178,306
181,719
The effective weighted average interest rates of the main categories of loans and borrowings at the
reporting date are as follows:
2020
2019
Amounts in EUR thousand
Carrying
amount
Interest rate
Carrying
amount
Interest rate
Bank lending (non-current) - EUR
17,681
2.6%
26,125
3.0%
Bank lending (non-current) - USD
37
1.0%
-
-
Bank lending (current) - EUR
195,441
3.5%
292,282
3.8%
Bank lending (current) - GBP
1,437
3.0%
448
4.3%
Bank lending (current) - USD
198
1.0%
644
5.4%
Bank lending (current) - RON
1,562
4.0%
2,140
5.0%
Bank lending (current) - LEV
-
-
1,290
4.6%
Bond issues - EUR
189,860
4.3%
175,626
4.7%
During 2020, Cenergy Holdings’ subsidiaries obtained new bank loans amounting to EUR 38.0 million
and paid back loans of EUR 132.2 million maturing within the year. New loans are mainly drawdowns
from existing revolving credit facilities and new ones with similar terms and conditions, project
financing facilities as well as three new long-term loans, described below. Loans and borrowings had
an average effective interest rate of 3.8% (2019: 4.0%).
During Q4 2020, the Group obtained the following long-term loans:
Corinth Pipeworks entered an agreement with a major Greek bank for a long-term bond loan of
EUR 10 million for 5 years from the date of signing. The loan is guaranteed by Hellenic
Development Bank.
Corinth Pipeworks entered an agreement with a major Greek bank for a long-term bond loan of
EUR 6 million for 5 years from the date of signing.
Fulgor entered an agreement with a major Greek bank for a long-term bond loan of EUR 20
million for 5 years from the date of signing.
All the above long term bond loans are fully drawn.
Short-term facilities are predominately revolving credit facilities, funding working capital needs, and
project financing facilities for specific ongoing and new projects.
Total Debt decreased by EUR 92.7 million, pushed by lower working capital needs in the steel pipes
segment in addition to higher operational profitability in the cables segment.
As of 31 December 2020, Cenergy Holdings’ consolidated current liabilities exceeded consolidated
current assets by EUR 44.2 million (31 December 2019: EUR 30.8 million). Even so, Cenergy Holdings’
subsidiaries have never in the past experienced any issues in financing their activities, renewing their
working capital lines or refinancing long-term loans and borrowings. Management expects that any
mandatory repayment of banking facilities will be met with operating cash flows or from currently
unutilized and committed credit lines. Regarding the funding of project-based activities, Cenergy
Holdings’ subsidiaries have secured the necessary funds through project finance facilities.
Mortgages and pledges in favor of banks have been recorded on property, plant and equipment and
inventories of subsidiaries. The carrying amount of assets mortgaged or pledged is EUR 157.9 million
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
129
(amount of EUR 21.5 million relates to pledged inventories and amount of EUR 136.4 million relates to
mortgaged property, plant and equipment).
In the bank loan agreements of Cenergy Holdings’ companies there are clauses of change of control
that provide the lenders with an early redemption clause.
There was no incident in 2020 of breach of covenants of the loans of Cenergy Holdings’ companies.
B. Reconciliation of movements of liabilities to cash flows arising from financing activities
2020
2019
Amounts in EUR thousand
Loans &
borrowings
Lease
liabilities
Total
Loans &
borrowings
Lease
liabilities
Total
Balance at 1 January
498,556
5,758
504,314
537,007
1,639
538,645
Changes from financing cash flows:
Proceeds from new borrowings
38,030
-
38,030
62,930
-
62,930
Repayment of borrowings
(132,217)
-
(132,217)
(98,909)
-
(98,909)
Principal elements of lease payments
-
(1,267)
(1,267)
-
(1,066)
(1,066)
Total changes from financing cash flows
(94,187)
(1,267)
(95,454)
(35,979)
(1,066)
(37,045)
Other changes:
New leases
-
1,628
1,628
-
1,739
1,739
Effect of changes in foreign exchange
rates
(133)
(92)
(225)
73
(11)
62
Capitalised borrowing costs
505
-
505
785
-
785
Interest expense
20,079
212
20,291
24,102
181
24,282
Interest paid
(18,603)
(212)
(18,815)
(22,004)
(181)
(22,184)
Terminations
-
(573)
(573)
-
(36)
(36)
Modifications
-
(20)
(20)
-
2
2
Disposal of subsidiaries
-
-
-
(5,427)
(15)
(5,443)
Change in accounting policy
-
-
-
-
3,507
3,507
1,848
943
2,790
(2,471)
5,185
2,714
Balance at 31 December
406,217
5,433
411,650
498,556
5,758
504,314
27. Trade and other payables
Amounts in EUR thousand
Note
2020
2019
Suppliers
114,881
137,165
Notes payable
93,230
47,349
Social security contributions
11
2,561
2,413
Amounts due to related parties
35
9,026
9,945
Sundry creditors
5,195
1,891
Accrued expenses
20,644
14,338
Other taxes
3,771
2,865
Total
249,309
215,964
Current balance of trade and other payables
249,092
213,794
Non-current balance of trade and other payables
217
2,170
Balance at 31 December
249,309
215,964
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
130
The increase in trade and other payables is mainly attributed to the improved credit terms agreed with
the supply chain partners of the Group related mainly to the purchase of primary raw materials.
28. Grants
Amounts in EUR thousand
Note
2020
2019
Balance at 1 January
14,006
14,655
New grants received during the year
317
169
New grants for which receipt is pending
3,073
-
Amortisation of grants
8.A
(908)
(736)
Disposal of subsidiary
-
(80)
Effect of movement in exchange rates
(1)
(2)
Balance at 31 December
16,487
14,006
Government grants have been received mainly for investments in property, plant and equipment.
During 2020, Fulgor recorded an amount of EUR 3,073 thousand related to a government grant for the
purchase of certain items of property, plant and equipment for which all relative conditions were
fulfilled during the year. The receipt of such government grant is pending and is expected shortly.
In addition, Fulgor received a new grant of EUR 72 thousand for the participation in a development
programme related to floating dynamic cables.
Corinth Pipeworks recorded a grant of EUR 245 thousand in the context of the receipt of a new loan
guaranteed by the Hellenic Development Bank. Such grant will be amortized during the term of the
loan.
All conditions attached to the grants received by Cenergy Holdings were met as of 31 December 2020.
29. Financial instruments
A. Accounting classifications and fair values
The following table shows the carrying amounts and fair values of financial assets and financial
liabilities, including the levels in the fair value hierarchy.
31/12/2020
Amounts in EUR thousand
Carrying
amount
Level 1
Level 2
Level 3
Total
Equity investments at FVOCI
5,657
-
-
5,657
5,657
Derivative financial assets
1,455
-
584
871
1,455
7,112
-
584
6,528
7,112
Derivative financial liabilities
(2,576)
(2,433)
(143)
-
(2,576)
4,536
(2,433)
441
6,528
4,536
31/12/2019
Amounts in EUR thousand
Carrying
amount
Level 1
Level 2
Level 3
Total
Equity investments at FVOCI
5,015
-
-
5,015
5,015
Derivative financial assets
213
-
213
-
213
5,228
-
213
5,015
5,228
Derivative financial liabilities
(1,728)
(1,407)
(322)
-
(1,728)
3,499
(1,407)
(109)
5,015
3,499
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
131
The various levels are as follows:
Level 1: Quoted prices (unadjusted) in an active market for identical assets and liabilities.
Level 2: Inputs that are observable either directly or indirectly.
Level 3: Unobservable inputs for assets and liabilities.
The fair value of the following financial assets and liabilities measured at amortised cost approximate
their carrying amount:
Trade and other receivables;
Cash and cash equivalents;
Trade and other payables;
Loans and borrowings.
Specifically, the carrying amount of loans and borrowings is considered as a good approximation of
their fair value as:
90% of consolidated loans and borrowings concern floating-rate debt, which are a very good
approximation of current market rates;
As for fixed-rate instruments (EUR 39.5 million as of 31 Dec 2020), the fair value test based on
current market rates indicates that their fair value determined to EUR 41.4 million.
The following table shows the reconciliation between opening and closing balances for Level 3 financial
assets, which are classified as Equity investments at:
Amounts in EUR thousand
2020
2019
Balance at 1 January
5,015
4,579
Additions
26
4,790
Change in fair value
640
7,650
Reclassification to equity-accounted investees
-
(12,004)
Disposals
(24)
-
Balance at 31 December
5,657
5,015
B. Measurement of fair values
(a) Valuation techniques and significant unobservable inputs
The fair values of financial assets that are traded in active markets (stock markets) (e.g. derivatives such
as futures, shares, bonds, mutual funds) are set according to the published prices (Level 1 inputs) that
are valid on the reporting date. The fair value of financial assets is determined by their offer price, while
the fair value of financial liabilities is determined by their bid price.
The fair values of financial assets that are not traded in active markets are set through the use of
valuation techniques and standards that are based on market data on the reporting date.
The fair values of financial liabilities, for the purpose of being recorded in Financial Statements, are
estimated based on the present value of the future cash flows that arise from specific contracts using
the current interest rate that is available for Cenergy Holdings and its companies for the use of similar
financial-credit means.
Inputs that do not meet the respective criteria and cannot be classified in Level 1 but are observable,
either directly or indirectly, fall under Level 2. Over-the-counter derivative financial instruments based
on prices obtained from brokers are classified in this level.
The financial assets, such as unlisted shares or option schemes that are not traded in an active market
whose measurement is based either on the Cenergy Holdings’ companies’ forecasts for the issuer’s
future profitability or on other widely acceptable method are classified under Level 3.
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
132
The following table shows the valuation techniques used in measuring fair values, as well as the
significant unobservable inputs used:
Type
Valuation technique
Significant unobservable inputs
Inter-relationship
between key
unobservable inputs and
fair value measurement
Forwards
exchange
contracts
Market comparison
technique: The fair values
are based on broker quotes.
Similar contracts are traded
in an active market and the
quotes reflect the actual
transactions in similar
instruments
Broker quotes
Not applicable
Future
contracts
Market value: Price as
traded in active market.
Not applicable.
Not applicable.
Options
Options pricing model:
The model is based on widely
acceptable methodology
considering the complexity
of the options plan
The basic inputs that have been
used in the valuation model are
the following:
• expected turnover &
EBITDA margins of the
associate;
• future working capital
needs;
risk free rate
volatility, defined as the
range of values for all
inputs used in the valuation
model
• If turnover of the
associate is higher,
then the fair value of
the options would be
higher;
• If future working
capital is higher, then
the fair value of the
options would be
lower;
• If risk free rate is
higher, then the fair
value of the options
would be higher;
• If volatility is higher,
then the fair value of
the options would be
higher
(See also note 23)
Equity
securities
not traded
in active
markets
Adjusted Net Asset Method:
According to this method the
Group adjusts the book
values of an investment’s
assets and liabilities, if and
when necessary, to arrive at
their fair market value at the
time of valuation
Investment in Noval Property :
Noval Property is a real estate
company following fair value
model to value its assets.
Therefore, net assets is
considered a reliable metric for
the estimation of fair value of
the investment
The estimated fair value
would increase (decrease)
based on the fair value of
underlying properties held
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
133
(b) Transfers between Levels 1 and 2
There were no transfers from Level 2 to Level 1 or from Level 1 to Level 2 in 2020 and no transfers in
either direction in 2019.
C. Financial risk management
Cenergy Holdings and its companies are exposed to credit, liquidity and market risk due to the use of
its financial instruments. This Note sets forth information on their exposure to each one of the above
risks, their objectives, the policies and procedures applied to risk measurement and management and
Cenergy Holdings’ Capital Management (Note 25).
The risk management policies are applied in order to identify and analyze the risks facing Cenergy
Holdings and its companies, set risk-taking limits and apply relevant control systems. The risk
management policies and relevant systems are examined from time to time so as to take into account
any changes in the market and the companies’ activities.
The implementation of risk management policies and procedures is supervised by the Internal Audit
department, which performs recurring and non-recurring audits and the results of such audits are
notified to the Board of Directors.
C.1. Credit risk
Credit risk is the risk of the financial loss to Cenergy Holdings, if a customer or counterparty to a financial
instrument fails to meet its contractual obligations, and arises principally from the companies’
receivables from customers and contract assets & deposits with banks.
The carrying amount of financial assets represents the maximum credit exposure.
At 31 December
Amounts in EUR thousand
Note
2020
2019
Trade & Other receivables - Current
15
112,872
112,577
Trade & Other receivables - Non-current
15
1,303
1,482
Contract assets
7.D
64,875
118,573
Less:
Other downpayments
15
(725)
(3,236)
Tax assets
15
(12,064)
(7,391)
Other receivables
15
(6,580)
(9,902)
Subtotal
159,680
212,103
Equity investments at FVOCI
22
5,657
5,015
Cash and cash equivalents
16
81,035
90,408
Derivatives
23
1,455
213
Subtotal
88,147
95,636
Grand total
247,827
307,739
(a) Trade and other receivables & contract assets
Cenergy Holdings’ exposure to credit risk is influenced mainly by the individual characteristics of each
customer. However, the companies’ management also considers the factors that may influence the
credit risk of its customer base, including the default risk of the industry and country in which customers
operate. As of the reporting dates, no client exceeds 10% of consolidated sales and, consequently,
commercial risk is spread over a large number of clients. However, due to the fact that the business of
certain subsidiaries (i.e. CPW Pipe Industry, Hellenic Cable Industry and Fulgor) is project oriented,
there are cases where this threshold is individually exceeded for a rather short period of time. For 2020,
this threshold was exceeded from only one client of cables segment, namely ADMIE (Greek TSO), due
to the execution of certain signed contracts for cables projects.
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
134
Cenergy Holdings has established a credit policy where each new customer is examined on an individual
basis in terms of creditworthiness before the standard payment and delivery terms are proposed to
such customer. Cenergy Holdings’ review includes external ratings, if they are available, and in some
cases bank references. Credit limits are set for each individual customer, which are reviewed in
accordance with current circumstances and the terms of sales and collections are readjusted, if
necessary. As a rule, the credit limits of customers are set on the basis of the insurance limits received
for them from insurance companies and, subsequently, receivables are insured according to such limits.
When monitoring the credit risk of customers, the latter are grouped according to their credit
characteristics, the maturity characteristics of their receivables and any past problems of recoverability
they have shown. Trade and other receivables mainly include wholesale customers of Cenergy Holdings’
companies. For any customer characterized as being “high risk”, any subsequent sale is required to be
paid in advance. Depending on the background of the customer and its status, Cenergy Holdings’
subsidiaries may demand collateral or other security (e.g. letters of guarantee) in order to secure its
receivables, if possible.
Cenergy Holdings records an impairment that represents its estimate of expected credit losses in
respect of trade and other receivables.
At 31 December, the maximum exposure to credit risk for trade and other receivables by geographic
region was as follows:
Amounts in EUR thousand
2020
2019
Greece
84,151
76,719
Other EU Member States
63,320
124,915
Other European countries
81
2,005
Asia
7,586
2,988
America (North & South)
4,065
5,347
Africa
477
129
Total
159,680
212,103
At 31 December, the aging of trade and other receivables that were not impaired was as follows:
Amounts in EUR thousand
2020
2019
Neither past due nor impaired
149,942
190,759
Overdue
- Up to 6 months
6,531
17,602
- Over 6 months
3,207
3,742
Total
159,680
212,103
Subsidiaries’ management believes that the amounts that are past due up to 6 months and over 6
months are still collectible in full, based on historical payment behaviour and extensive analysis of
customer credit risk, including underlying customers’ credit ratings, if they are available.
On 31 December 2020 and 2019, the remaining receivables past due but not impaired mainly related
to leading industrial groups, major public and private utilities and major resellers.
Cenergy Holdings’ companies insure the majority of their receivables in order to be secured in case of
default. As of 31 December 2020, 72% of the balances owed by counterparties were insured.
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
135
The movement in impairment of trade and other receivables and contract assets is as follows:
2020
2019
Amounts in EUR thousand
Trade &
other
receivables
Contract
assets
Total
Trade &
other
receivables
Contract
assets
Total
Balance at 1 January
26,678
115
26,793
25,467
242
25,708
Impairment loss recognized
292
48
341
1,880
-
1,880
Impairment loss reversed
(375)
(21)
(395)
(243)
(126)
(370)
Reversal of / (Impairment loss) on
receivables and contract assets
(82)
28
(55)
1,637
(126)
1,511
Write-offs
(321)
-
(321)
(183)
-
(183)
Foreign exchange differences
(1,884)
-
(1,884)
347
-
347
Disposal of subsidiary
-
-
-
(590)
-
(590)
Balance at 31 December
24,390
143
24,533
26,678
115
26,793
The allowance for expected credit losses for trade receivables and contract assets are calculated at
individual level when there is an indication of impairment. For receivables and contract assets without
any indication of impairment the expected credit losses are based on the historical credit loss
experience combined with forward-looking information in macroeconomic factors effecting the credit
risk, such as country risk and customers’ industry related risks.
In 2020, a net reversal of impairment loss was recorded as a result of the improvement of the expected
loss rates of major clients operating in the energy sector and domestic
The following collateral exists for securing non-insured receivables & contract assets:
Amounts in EUR thousand
2020
2019
Bank letters of guarantee
-
2,953
Payables which can be offset by receivables
3,858
2,191
Total
3,858
5,144
(b) Cash and cash equivalents
Cenergy Holdings and its companies held cash and cash equivalents of EUR 81,035 thousand at 31
December 2020. The cash and cash equivalents are held with bank and financial institution
counterparties, which are rated from AA- to CCC+ based on ratings of Fitch.
C.2. Liquidity risk
Liquidity risk is the risk that Cenergy Holdings and its companies will encounter difficulty in meeting the
obligations associated with its financial liabilities that are settled by delivering cash or another financial
asset. The approach to manage liquidity is to ensure, as much as possible, that they will have sufficient
liquidity to meet their liabilities when they are due, under both normal and stressed conditions, without
incurring unacceptable losses or risking damage to their reputation.
In order to avoid liquidity risks, Cenergy Holdings and its companies estimate the expected cash flows
for the next year when preparing the annual budget and monitor the monthly rolling forecast of its cash
flows for the next quarter, so as to ensure sufficient cash on hand to meet its operating needs, including
coverage of its financial obligations. This policy does not take into account the relevant effect from
extreme conditions that cannot be foreseen.
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
136
The companies monitor their cash needs through Steelmet S.A., an affiliate company, which agrees
upon financing terms with the credit institutions in Greece and other countries.
Exposure to liquidity risk
Financial liabilities and derivatives based on contractual maturity are broken down as follows:
31/12/2020
Contractual cash flows
Amounts in EUR thousand
Carrying
Amount
Up to
1 year
1 to 2
years
2 to 5
years
Over 5
years
Total
Bank loans and factoring with
recourse
216,356
202,283
9,448
9,628
461
221,821
Bond issues
189,860
43,154
38,217
109,089
31,625
222,084
Lease liabilities
5,433
1,929
1,401
2,044
466
5,840
Derivatives
2,576
2,576
-
-
-
2,576
Trade and other payables
242,977
242,760
227
-
-
242,987
657,203
492,701
49,294
120,761
32,552
695,309
31/12/2019
Contractual cash flows
Amounts in EUR thousand
Carrying
Amount
Up to
1 year
1 to 2
years
2 to 5
years
Over 5
years
Total
Bank loans and factoring with
recourse
322,930
298,151
9,541
16,977
1,335
326,003
Bond issues
175,626
36,912
29,260
91,397
48,967
206,536
Lease liabilities
5,758
2,193
1,699
2,014
223
6,129
Derivatives
1,728
1,728
-
-
-
1,728
Trade and other payables
210,687
209,017
1,953
217
-
211,187
716,729
548,002
42,452
110,605
50,525
751,583
Cenergy Holdings’ companies have syndicated loans that contain loan covenants. A future breach of
covenants may require the companies to repay the loans earlier than indicated in the above table.
Under the agreement, the covenants are monitored on a regular basis and regularly reported to
companies’ management to ensure compliance with the agreements.
C.3. Market risk
Market risk is the risk that changes in the market prices – such as commodity prices, foreign exchange
rates and interest rates - will affect Cenergy Holdings and its companies’ income or the value of their
financial instruments. Cenergy Holdings’ companies use derivatives to manage market risk.
Generally, the companies seek to apply hedge accounting to manage volatility in profit or loss.
(a) Currency risk:
Cenergy Holdings and its companies are exposed to currency risk in relation to the sales and purchases
carried out and the loans issued in a currency other than the functional currency of Cenergy Holdings
and its companies, which is mainly EUR. The most important currencies in which these transactions are
held are mainly EUR, USD and GBP.
Over time, Cenergy Holdings’ companies hedge the greatest part of their estimated exposure to foreign
currencies in relation to the anticipated sales and purchases, as well as to the receivables and liabilities
in foreign currency. Cenergy Holdings’ companies enter mainly into forward contracts with external
counterparties so as to deal with the risk of the exchange rates varying, which mainly expire within less
than a year from the reporting date. When deemed necessary, these contracts are renewed upon
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
137
expiry. As the case may be, the foreign exchange risk may also be covered by taking out loans in the
respective currencies.
Loan interest is denominated in the same currency as that of cash flows that arise from the Cenergy
Holdings’ companies’ operating activities.
The investments of Cenergy Holdings and its companies in their subsidiaries are not hedged, because
these exchange positions are considered to be long-term and have been made mainly in EUR.
The summary quantitative data about Cenergy Holdings and its companies’ exposure to currency risk
as reported is as follows.
31/12/2020
Amounts in EUR thousand
USD
GBP
RON
OTHER
TOTAL
Trade and other receivables
10,999
8,398
9,277
-
28,674
Contract assets
-
-
-
-
-
Cash & cash equivalents
7,288
37
758
43
8,127
Loans and Borrowings
(732)
(1,624)
(1,562)
-
(3,918)
Trade and other payables
(14,280)
(430)
(11,023)
(8)
(25,741)
Contract liabilities
(2,302)
-
(144)
-
(2,446)
974
6,381
(2,693)
35
4,696
Derivatives for risk hedging
(Nominal Value)
(16,581)
(16,183)
-
-
(32,764)
Total risk
(15,607)
(9,802)
(2,693)
35
(28,068)
31/12/2019
Amounts in EUR thousand
USD
GBP
RON
OTHER
TOTAL
Trade and other receivables
4,045
6,946
11,727
-
22,718
Contract assets
4,470
-
-
-
4,470
Cash & cash equivalents
11,369
825
875
24
13,094
Loans and Borrowings
(1,045)
(770)
(2,140)
-
(3,955)
Trade and other payables
(14,452)
(393)
(9,514)
(53)
(24,412)
Contract liabilities
(2,071)
-
(1,168)
-
(3,239)
2,317
6,609
(221)
(29)
8,676
Derivatives for risk hedging
(Nominal Value)
(10,422)
(6,913)
-
-
(17,334)
Total risk
(8,105)
(304)
(221)
(29)
(8,659)
The following exchange rates have been applied during the year.
Average exchange rate
Year end spot rate
2020
2019
2020
2019
USD
1.1422
1.1195
1.2271
1.1234
GBP
0.8897
0.8778
0.8990
0.8508
ROΝ
4.8376
4.7452
4.8694
4.7793
Α reasonably possible strengthening (weakening) of the EUR, USD, GBP or RON against other currencies
at 31 December would have affected the measurement of financial instruments denominated in a
foreign currency and affected equity and profit or loss by the amounts shown below. This analysis
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
138
assumes that all other variables, in particular interest rates, remain constant and ignores any impact of
forecast sales and purchases.
Profit or loss
Equity, net of tax
Amounts in EUR thousand
Strengthening
Weakening
Strengthening
Weakening
2020
USD (10% movement in relation to EUR)
511
(624)
1,383
(1,690)
GBP (10% movement in relation to EUR)
891
(1,089)
891
(1,089)
RON (10% movement in relation to EUR)
245
(299)
245
(299)
2019
USD (10% movement in relation to EUR)
(61)
75
587
(718)
GBP (10% movement in relation to EUR)
28
(34)
28
(34)
RON (10% movement in relation to EUR)
20
(25)
20
(25)
(b) Interest rate risk:
Exposure to interest rate risk
Cenergy Holdings’ companies during the prolonged low interest period have adopted a flexible policy
of ensuring that between 5% and 20% of its interest rate risk exposure is at a fixed rate. This is achieved
partly by entering into fixed-rate instruments and partly by borrowing at a float rate. The interest rate
profile of Cenergy Holdings’ companies’ interest-bearing financial instruments, as reported is as
follows.
At 31 December
Amounts in EUR thousand
2020
2019
Fixed-rate instruments
Financial liabilities
(39,518)
(37,561)
Variable-rate instruments
Financial liabilities
(372,133)
(466,753)
Fixed-rate instruments
The Group does not account for any fixed-rate financial assets or financial liabilities at fair value through
profit or loss, and the Group does not currently use derivatives (interest rate swaps) as hedging
instruments under a fair value or cash flow hedge accounting model. Therefore, a change in interest
rates at the reporting date would not affect either profit or loss or equity.
Cash flow sensitivity analysis for variable-rate instruments
A reasonably possible change of 0.25% in interest rates at the reporting date would have increased /
(decreased) equity and profit or loss by the amount shown below. This analysis assumes that all other
variables, in particular foreign currency exchange rate, remain constant.
Profit or loss &
Equity, net of tax
Amounts in EUR thousand
0.25% increase
0.25% decrease
2020
Financial liabilities
(1,314)
1,314
2019
Financial liabilities
(1,481)
1,481
The Group does not currently use derivatives (interest rate swaps) as hedging instruments under a fair
value or cash flow hedge accounting model and as a result the impact presented in the table above in
profit or loss and equity is the same.
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
139
(c) Derivatives assets and liabilities designated as cash flow hedges
The following table indicates the periods in which the cash flows associated with cash flow hedges are
expected to occur:
2020
Expected cash flows
Amounts in EUR thousand
Carrying
Amount
1-6
months
6-12
months
> 1 year
Total
Foreign exchange forwards
Assets
326
326
-
-
326
Liabilities
-
-
-
-
-
Future contracts
Assets
-
-
-
-
-
Liabilities
(2,433)
(2,433)
-
-
(2,433)
Options
Assets
871
-
-
871
871
Liabilities
-
-
-
-
-
(1,235)
(2,107)
-
871
(1,235)
2019
Expected cash flows
Amounts in EUR thousand
Carrying
Amount
1-6
months
6-12
months
> 1 year
Total
Foreign exchange forwards
Assets
213
213
-
-
213
Liabilities
(136)
(136)
-
-
(136)
Future contracts
-
Assets
-
-
-
-
-
Liabilities
(1,407)
(954)
(453)
-
(1,407)
(1,329)
(877)
(453)
-
(1,329)
The tables below provides information about the items designated as cash flow hedging instruments
during the year and also at 31 December 2020 and the reconciliation of hedging reserve.
Amounts in EUR
thousands
Nominal
Amount
Carrying amount
Line item in the
statement of
financial
position where the
hedging instrument
is included
Balance 1
January
2020
Changes in
the value
of the
hedging
instrument
recognised
in OCI
Amount
reclassified
from
hedging
reserve to
profit or
loss
Effect of
movement
in
exchange
rates
Balance 31
December
2020
Assets
Liabilities
Forward foreign
exchange contracts
8,141
326
-
Derivatives -
Assets & (Liabilities)
77
(172)
304
117
326
Future contracts
14,624
-
(2,433)
Derivatives -
Assets & (Liabilities)
(1,407)
1,407
(2,433)
-
(2,433)
22,766
326
(2,433)
(1,329)
1,235
(2,130)
117
(2,107)
(d) Commodity price risk
The commodity markets have experienced and are expected to continue to experience price
fluctuations. Cenergy Holdings subsidiaries have exposure to the following commodities: steel,
aluminum, copper and lead. Cenergy Holdings subsidiaries therefore use future contracts to minimize
exposure to commodity price volatility, when possible. Subsidiaries in cables segment use back to back
matching of purchases and sales, or derivative instruments (future contracts) in order to minimize the
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
140
effect of the metal price fluctuations on their results.
As of 31 December 2020 the net derivative balance per commodity was:
Amounts in EUR thousand
2020
Aluminium - Long / (short) position
487
Copper - Long / (short) position
(2,859)
Lead - Long / (short) position
(58)
Nickel - Long / (short) position
(4)
Total
(2,433)
These hedges are designated in a cash flow hedge accounting relationship.
C.4. Risk of macroeconomic and financial environment
Cenergy Holdings’ subsidiaries follow closely and on a continuous basis the developments in the
international and domestic environment and timely adapt their business strategy and risk management
policies in order to minimize the impact of the macroeconomic conditions on their operations.
Concerning potential implications from the Brexit, Cenergy Holdings is closely monitoring relevant
developments and taking measures to mitigate any disruption. On 31 December 2020 the transitional
period for the United Kingdom to leave the European Union has expired. As of 1 January 2021, customs
formalities, like those applied on the movement of goods between the EU and any other third country,
apply to all goods being exported from an EU Member State to the United Kingdom. There is no
transition period for imports into the EU. Therefore, formalities and relevant controls may lead to
longer delays at customs. In general, goods entering the EU from the United Kingdom after the end of
the transition period must also be covered by an entry summary declaration. Cenergy Holdings
companies follows the guidelines provided by the competent authorities in order to mitigate any delays
related to imports or exports of goods and to avoid any business disruption. Exports to the United
Kingdom accounted for approximately 7% of total revenues for 2020, while most of our competitors in
both steel pipes and cables segments operate within the Eurozone and is expected to react accordingly
to any currency fluctuation or bureaucratic procedures may arise in the initial implementation phase
of the agreement. To summarize, from the analysis performed up to date, Brexit is not expected to
have any material adverse effect on the operations of Cenergy Holdings.
30. Impact of Covid-19 pandemic
The Covid-19 pandemic has had a limited impact on the financial performance of the Group’s cables
segment, during 2020, while the steel pipes segment experienced a negative sway, mainly due to the
large oil & gas prices fall and the subsequent drop in demand of steel pipes products.
The health and safety of the Group’s employees is of the highest priority for the Executive Management,
which continues to closely monitor the situation, observing national and local authority guidelines and
ensuring an undisrupted supply chain. Since the beginning of the Covid-19 outbreak, Cenergy Holdings
Management has put in place a multi-faceted action plan to mitigate negative effects and focusing on
the following pillars:
Workforce protection, to avoid production interruptions;
Operational stability and customer engagement;
Continuity of the supply chain;
Sufficient liquidity;
Commercial resilience (both sales & orders).
The measures introduced were successfully implemented at all sites, and until now all production plants
of both segments in Greece, Romania and Bulgaria are in undisrupted operation. Production continuity
was maintained, while health & safety measures were enforced. Raw material supply was safeguarded
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
141
and the Group faced no shortage whatsoever in all critical inputs.
The incremental costs incurred due to the coronavirus outbreak amounted to EUR 1,837 thousand.
Such cost includes temporary premium payments to compensate employees for performing their
normal duties at increased personal risk, charges for cleaning and disinfecting facilities more thoroughly
and more frequently, medical equipment, nursery staff and other expenses directly associated with the
coronavirus Covid-19 pandemic.
In the context of uncertainty caused by the pandemic, Cenergy Holdings subsidiaries have also taken
the following, more detailed actions to anticipate any negative financial feedback:
Secure the subsidiaries’ liquidity position through a close monitoring of operating cash flows
coupled to confirming sufficient unutilised credit lines.
Review the capital expenditures plans and suspend any non-strategic and/or non-essential
outlays.
Put in place a cost savings plan for 2020 onwards, without jeopardizing the projected growth
of both segments.
Investigate the extent to which subsidiaries may apply for and receive government assistance
in the countries they operate.
All of the above areas will continue to be a high priority for the Group’s Executive Management.
On the other hand, so far, the commercial implications for Cenergy Holdings have been limited.
In the cables segment, only the telecom market experienced a downturn during 2020, while and low
voltage markets were hit during the first wave of the pandemic and showed signs of recovery from Q3
onwards. On the contrary, a number of medium and high voltage cable projects and/or corresponding
frame agreements were awarded during that same period.
Despite the fact that the steel pipes segment has seen a significant drop in customer demand, mainly
due to the significant decrease in oil prices that particularly impacted the feasibility of planned
exploration projects, Corinth Pipeworks was awarded significant onshore and offshore projects in
Europe, Americas, North Africa and Asia. The successful execution of such projects enhanced Corinth
Pipeworks’ performance during the second half of the year.
Given the present economic downturn and besides the aforementioned actions, the Group has re-
examined non-financial and financial assets for possible impairment.
Regarding intangible assets with indefinite useful life related to the offshore cables business unit,
management concluded that the recoverable amount of the business unit as at 31 December 2020
significantly exceeds the carrying amount of the CGU, as described in note 19. Such assessment is
further grounded by the fact that demand in offshore cables sector seems unaffected by the downturn
and the fact that operating profitability for 2020 of the business unit was in line with expectations.
For trade and other receivables allowances in the context of the Expected Credit Loss model, Cenergy
Holdings’ subsidiaries used provisional rates based on, among others, revised forecasts of future
economic conditions, in addition with specific information for individual trade receivables. The
reassessment shows that the recoverability of the receivables was not significantly altered.
A reassessment of the recoverability of deferred tax assets was equally performed by subsidiaries based
on forecasted taxable profits. It was concluded that deferred tax assets remain recoverable, as
described in note 13.
Finally, regarding loan covenants, Cenergy Holdings subsidiaries will make every effort to obtain a
waiver from our banking partners at the next measurement date (December 31st, 2021) in view of the
covenants which are expected to be breached, as has always been the case in the past whenever such
a waiver was necessary. In the unlikely event that no waivers will be obtained, existing credit lines will
cover any obligations that may arise from such breaches.
The future impact of Covid-19 pandemic remains challenging to foresee and will be closely linked to the
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
142
pace of vaccinations across the world, potential next waves of the pandemic and the duration of
restrictions imposed across the globe.
31. List of subsidiaries
The Company’s subsidiaries and the interest held at the end of the reporting period are as follows:
Subsidiaries
County
Direct &
indirect
interest 2020
Direct &
indirect
interest 2019
CORINTH PIPEWORKS INDUSTRY S.A.
GREECE
100.00%
100.00%
CPW AMERICA CO
USA
100.00%
100.00%
HUMBEL LTD
CYPRUS
100.00%
100.00%
WARSAW TUBULAR TRADING SP. ZOO.
POLAND
100.00%
100.00%
FULGOR S.A.
GREECE
100.00%
100.00%
ICME ECAB S.A.
ROMANIA
98.59%
98.59%
LESCO OOD
BULGARIA
100.00%
100.00%
LESCO ROMANIA S.A.
ROMANIA
65.00%
65.00%
DE LAIRE LTD
CYPRUS
100.00%
100.00%
HELLENIC CABLES S.A.
HELLENIC CABLE INDUSTRY S.A.
GREECE
100.00%
100.00%
HELLENIC CABLES AMERICA CO
USA
100.00%
100.00%
For all the above entities, Cenergy Holdings S.A. does exercise control directly and/or indirectly.
32. Joint operations
Hellenic Cables has a 62.48% interest in a joint arrangement called VO Cablel VOF, which was set up as
a partnership together with Van Oord. The scope of this joint operation scheme is to supply and install
sea and land cables for the Hollandse Kust (South) Alpha project and Hollandse Kust (South) Beta
project. The principal place of business of the joint operation is in the Netherlands.
Hellenic Cables has a 50.77% interest in a joint arrangement called DEME Offshore NL - Hellenic Cables
V.O.F., which was set up as a partnership together with Tideway. The scope of this joint operation
scheme is to execute a turnkey contract for the supply and installation of submarine cables for the
connection of the Seamade offshore wind project to the Belgian grid. The principal place of business of
the joint operation is in Belgium.
Fulgor has a 10% interest in a joint arrangement called Fulgor – JDN Consortium, which was set up as a
partnership together with Jan De Nul. The scope of this joint operation scheme is to execute a turnkey
contract for the installation of submarine cables for the interconnection Crete-Peloponnese in Greece.
The principal place of business of this joint operation is in Greece.
The agreements in relation to the VO Cablel VOF, Fulgor – JDN Consortium and DEME Offshore NL -
Hellenic Cables V.O.F. require unanimous consent from all parties for all relevant activities. The two
partners have direct rights to the assets of the partnership and are jointly and severally liable for the
liabilities incurred by the partnership. These entities are therefore classified as a joint operations and
the Group recognises its direct right to the jointly held assets, liabilities, revenues and expenses as
described in note 5.1(g).
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
143
33. Commitments
A. Purchase commitments
Cenergy Holdings’ subsidiaries have entered into contracts according to their investment plans, which
are expected to be concluded during the next year.
At 31 December
Amounts in EUR thousand
2020
2019
Property, plant and equipment
9,845
13,327
B. Guarantees
At 31 December
Amounts in EUR thousand
2020
2019
Guarantees for securing liabilities to suppliers
6,999
5,376
Guarantees for securing the good performance of contracts
with customers
252,397
195,018
Guarantees for securing grants
9,573
13,929
34. Contingent liabilities
A. Litigations
Reference is made to the ongoing claim described in Note 15.B.
B. Contingent tax liabilities
The tax filings of the subsidiaries are routinely subjected to audit by the tax authorities in most of the
jurisdictions in which Cenergy Holdings conduct business. These audits may result in assessments of
additional taxes. Cenergy Holdings provide for additional tax in relation to the outcome of such tax
assessments at the amount expected to be settled (or recovered).
Cenergy Holdings believe that its accruals for tax liabilities are adequate for all open tax years based on
its assessment of underlying factors, including interpretations of tax law and prior experience.
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
144
35. Related parties
A. Related party transactions
The following transactions have been made with Viohalco and its subsidiaries, equity-accounted
investees and other related parties:
For the year ended 31 December
Amounts in EUR thousand
2020
2019
Sales of goods
Equity-accounted investees
118,139
1
Other related parties
40,420
135,479
158,559
135,480
Sales of services
Equity-accounted investees
273
525
Other related parties
1,801
1,385
2,074
1,909
Sales of property, plant & equipment
Other related parties
65
1,019
65
1,019
Purchases of goods
Equity-accounted investees
17
-
Other related parties
13,973
19,606
13,990
19,606
Purchases of services
Viohalco
82
259
Equity-accounted investees
7,929
7,337
Other related parties
10,452
12,325
18,463
19,922
Purchase of property, plant and equipment
Equity-accounted investees
96
323
Other related parties
3,638
4,382
3,733
4,704
Other related parties comprise subsidiaries, associates and joint ventures of Viohalco Group.
During 2020, the sales of goods to related parties have increased, due to sales performed through
Viohalco’s commercial companies in the main European markets. International Trade is accounted as
an equity accounted investee since 27 December 2019. Therefore, all transactions with International
Trade and its subsidiaries are presented as transactions with equity accounted investees for 2020, while
such transactions are presented as transactions with other related parties for 2019, in the table above.
Closing balances that arise from sales/purchases of goods, services, fixed assets, etc. are as follows:
At 31 December
Amounts in EUR thousand
2020
2019
Non-current receivables from related parties
Other related parties
208
115
208
115
Current receivables from related parties
Equity-accounted investees
14,457
15,497
Other related parties
14,485
18,345
28,942
33,842
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
145
Current liabilities to related parties
Parent company
82
82
Equity-accounted investees
1,214
3,584
Other related parties
7,730
6,279
9,026
9,945
The outstanding balances from related parties are not secured and the settlement of those current
balances is expected to be performed in cash during the next year, since the balances concern only
short-term receivables & payables, except for the balances classified as Non-current receivables from
related parties, which concerns to long-term guarantees given to related parties providing energy
services to Group’s subsidiaries.
B. Key management personnel compensation
The table below provides an overview of the transactions with Board members and executive
management.
For the year ended 31 December
Amounts in EUR thousand
2020
2019
Compensation to BoD members and executives
1,146
991
The compensation to directors and executive management in the table above is fixed. No variable
compensation, post-employment benefits or share based benefits were paid.
36. Auditor’s fees
The Company’s statutory auditor (PwC Reviseurs d’Entreprises SRL / Bedrijfsrevisoren BV) and a
number of other member firms of the auditor’s network, received fees for the following services:
For year ended 31 December
Amounts in EUR thousand
2020
2019
PwC Reviseurs d’Entreprises SRL / Bedrijfsrevisoren BV
Audit
105
100
Audit related services
-
-
105
100
PwC Network
Audit
283
319
Tax related services
77
75
Other services
7
58
366
452
Total
471
552
37. Subsequent events
No significant subsequent event for which disclosure is required in the Consolidated Financial
Statements has occurred since 31 December 2020.
PwC Bedrijfsrevisoren BV - PwC Reviseurs d'Entreprises SRL - Financial Assurance Services
Maatschappelijke zetel/Siège social: Woluwe Garden, Woluwedal 18, B-1932 Sint-Stevens-Woluwe
T: +32 (0)2 710 4211, F: +32 (0)2 710 4299, www.pwc.com
BTW/TVA BE 0429.501.944 / RPR Brussel - RPM Bruxelles / ING BE43 3101 3811 9501 - BIC BBRUBEBB /
BELFIUS BE92 0689 0408 8123 - BIC GKCC BEBB
STATUTORY AUDITOR'S REPORT TO THE GENERAL SHAREHOLDERS’ MEETING OF
CENERGY HOLDINGS SA ON THE CONSOLIDATED ACCOUNTS FOR THE YEAR
ENDED 31 DECEMBER 2020
We present to you our statutory auditor’s report in the context of our statutory audit of the consolidated
accounts of Cenergy Holdings SA (the “Company”) and its subsidiaries (jointly “the Group”). This
report includes our report on the consolidated accounts, as well as the other legal and regulatory
requirements. This forms part of an integrated whole and is indivisible.
We have been appointed as statutory auditor by the general meeting d.d. 28 May 2019, following the
proposal formulated by the board of directors and following the recommendation by the audit
committee. Our mandate will expire on the date of the general meeting which will deliberate on the
annual accounts for the year ended 31 December 2021. We have performed the statutory audit of the
Company’s consolidated accounts for 2 consecutive years.
Report on the consolidated accounts
Unqualified opinion
We have performed the statutory audit of the Group’s consolidated accounts, which comprise the
consolidated statement of financial position as at 31 December 2020, the consolidated statement of
profit or loss, the consolidated statement of profit or loss and other comprehensive income, the
consolidated statement of changes in equity and the consolidated statement of cash flows for the year
then ended, and notes to the consolidated financial statements, including a summary of significant
accounting policies and other explanatory information, and which is characterised by a consolidated
statement of financial position total of EUR 1,012,024 thousand and a profit for the year attributable to
owners of the Company of EUR 24,772 thousand.
In our opinion, the consolidated accounts give a true and fair view of the Group’s net equity and
consolidated financial position as at 31 December 2020, and of its consolidated financial performance
and its consolidated cash flows for the year then ended, in accordance with International Financial
Reporting Standards as adopted by the European Union and with the legal and regulatory
requirements applicable in Belgium.
Basis for unqualified opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs) as applicable in
Belgium. Furthermore, we have applied the International Standards on Auditing as approved by the
IAASB which are applicable to the year-end and which are not yet approved at the national level. Our
responsibilities under those standards are further described in the “Statutory auditor’s responsibilities
for the audit of the consolidated accounts” section of our report. We have fulfilled our ethical
responsibilities in accordance with the ethical requirements that are relevant to our audit of the
consolidated accounts in Belgium, including the requirements related to independence.
We have obtained from the board of directors and Company officials the explanations and information
necessary for performing our audit.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
2 of 6
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the consolidated accounts of the current period. These matters were addressed in the
context of our audit of the consolidated accounts as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters.
Key audit matter 1: Availability of financing resources and compliance with covenants
Description of the Key Audit Matter
The subsidiaries of the Group have significant non-current and current financial debts. The terms and
conditions of the related financing agreements often include financial covenants that are to be
complied with at each balance sheet date. Any breach in such financial covenants could result in its
lenders exercising the right to claim early repayment of certain non-current and/or current financial
debts. For these reasons, we considered the availability of financing resources and failure to comply
with covenants as most significant to our audit.
Reference is made to Note 5: Significant accounting policies: Financial instruments and Note 26: Debt.
How our Audit addressed the Key Audit Matter
Our testing included, amongst others, an understanding of the financing agreements and the Group’s
procedures and controls in place both to ensure its compliance with the financial covenants and to
understand the used and unused financing resources. We tested the calculation, performed by
Management, of the financial covenants related to the most significant financing agreements and
assessed compliance with the terms and conditions stipulated therein. Furthermore, we evaluated
both the presentation of the financial debts on the Consolidated Statement of Financial Position and
the adequacy of the relevant disclosures in the Notes to the Consolidated Financial Statements.
We found the tested financial covenants to be complied with and company’s disclosures of financial
debts appropriate.
Key audit matter 2: contract assets (note 7)
Description of the Key Audit Matter
We focused on revenue recognition of construction contracts and its relating contract assets because
the Group substantially generates its revenue from projects which qualifies as construction contracts
under IFRS. The recognition of revenue and the estimation of the outcome of fixed price construction
contracts is complex and requires significant management judgement, in particular with respect to
estimation of the cost incurred and the cost to complete the contracts. For these reasons, we identified
the contract assets from these construction contracts as most significant during our audit.
Reference is made to Note 5: Significant accounting policies: Revenue and Note 7: Revenue. At
December 31, 2020 contract assets amounted to EUR 65 million
3 of 6
How our Audit addressed the Key Audit Matter
Our testing on contract assets included procedures to gain an understanding of the related process
and controls as well as substantive test procedures related to the recording of the contract assets, the
related revenues and determination of the stage of completion of the contracts. Our audit procedures
included considering the appropriateness of the Group’s revenue recognition accounting policies. We
also included an evaluation of the significant judgements made by management based on the
examination of the associated project documentation and the discussion on the status of projects
under construction with finance and technical staff of the Group for specific individual
transactions/projects. In addition, in order to evaluate the reliability of management’s estimates, we
performed a rundown of subsequent costs incurred for closed projects. We also performed testing
over manual journals posted to revenue to identify unusual or irregular items that could influence
contracts and the relating accrued profit included in this balance.
We found management’s judgements in respect of the contract assets to be consistent and in line with
our expectations.
Responsibilities of the board of directors for the preparation of the consolidated accounts
The board of directors is responsible for the preparation of consolidated accounts that give a true and
fair view in accordance with International Financial Reporting Standards as adopted by the European
Union and with the legal and regulatory requirements applicable in Belgium, and for such internal
control as the board of directors determines is necessary to enable the preparation of consolidated
accounts that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated accounts, the board of directors is responsible for assessing the Group’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the board of directors either intends to liquidate
the Group or to cease operations, or has no realistic alternative but to do so.
Statutory auditor’s responsibilities for the audit of the consolidated accounts
Our objectives are to obtain reasonable assurance about whether the consolidated accounts as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these consolidated accounts.
4 of 6
In performing our audit, we comply with the legal, regulatory and normative framework applicable to
the audit of the consolidated accounts in Belgium. A statutory audit does not provide any assurance as
to the Group’s future viability nor as to the efficiency or effectiveness of the board of directors’ current
or future business management at Group level. Our responsibilities in respect of the use of the going
concern basis of accounting by the board of directors are described below.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the consolidated accounts, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override
of internal control;
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control;
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the board of directors;
• Conclude on the appropriateness of the board of directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Group’s ability to continue
as a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our statutory auditor’s report to the related disclosures in the consolidated accounts
or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the
audit evidence obtained up to the date of our statutory auditor’s report. However, future events or
conditions may cause the Group to cease to continue as a going concern;
• Evaluate the overall presentation, structure and content of the consolidated accounts, including
the disclosures, and whether the consolidated accounts represent the underlying transactions
and events in a manner that achieves fair presentation;
• Obtain sufficient and appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the Group
audit. We remain solely responsible for our audit opinion.
We communicate with the audit committee regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
5 of 6
We also provide the audit committee with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with the audit committee, we determine those matters that were of
most significance in the audit of the consolidated accounts of the current period and are therefore the
key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes
public disclosure about the matter.
Other legal and regulatory requirements
Responsibilities of the board of directors
The board of directors is responsible for the preparation and the content of the directors’ report on the
consolidated accounts and the other information included in the annual report on the consolidated
accounts.
Statutory auditor’s responsibilities
In the context of our engagement and in accordance with the Belgian standard which is
complementary to the International Standards on Auditing (ISAs) as applicable in Belgium, our
responsibility is to verify, in all material respects, the directors’ report on the consolidated accounts
and the other information included in the annual report on the consolidated accounts and to report on
these matters.
Aspects related to the directors’ report on the consolidated accounts and to the other
information included in the annual report on the consolidated accounts
In our opinion, after having performed specific procedures in relation to the directors’ report on the
consolidated accounts, this directors’ report is consistent with the consolidated accounts for the year
under audit and is prepared in accordance with article 3:32 of the Companies' and Associations' Code.
In the context of our audit of the consolidated accounts, we are also responsible for considering, in
particular based on the knowledge acquired resulting from the audit, whether the directors’ report on
the consolidated accounts and the other information included in the annual report on the consolidated
accounts is materially misstated or contains information which is inadequately disclosed or otherwise
misleading. In light of the procedures we have performed, there are no material misstatements we
have to report to you.
The non-financial information required by virtue of article 3:32, §2 of the Companies' and Associations'
Code is included in the directors’ report which is part of the section ‘Non-financial information’ of the
annual report. The Company has prepared the non-financial information, based on the UN’s
Sustainable Development Goals (SDG’s) reporting framework. However, in accordance with article
3:80, §1, 5° of the Companies' and Associations' Code, we do not express an opinion as to whether
the non-financial information has been prepared in accordance with the UN’s Sustainable
Development Goals (SDG’s) reporting framework as disclosed in the directors’ report on the
consolidated accounts.
6 of 6
Statement related to independence
Our registered audit firm and our network did not provide services which are incompatible with the
statutory audit of the consolidated accounts, and our registered audit firm remained independent of the
Group in the course of our mandate.
The fees for additional services which are compatible with the statutory audit of the consolidated
accounts referred to in article 3:65 of the Companies' and Associations' Code are correctly disclosed
and itemized in the notes to the consolidated accounts.
Other statements
●
This report is consistent with the additional report to the audit committee referred to in article 11 of
the Regulation (EU) N° 537/2014.
Sint-Stevens-Woluwe, 8 April 2021
The statutory auditor
PwC Reviseurs d'Entreprises SRL / PwC Bedrijfsrevisoren BV
Represented by
Marc Daelman
Réviseur d’Entreprises / Bedrijfsrevisor
152
Declaration of responsible persons
Statement on the true and fair view of the consolidated financial statements and the fair
overview of the management.
In accordance with the article 12, §2, 3° of the Royal Decree of 14 November 2007, the
members of the Executive Management, (i.e. Dimitrios Kyriakopoulos, Alexios Alexiou and
Alexandros Benos) declare that, on behalf and for the account of the Company, to the best of
their knowledge:
a) the consolidated financial statements for the year ended 31 December 2020 which
have been prepared in accordance with the International Financial Reporting
Standards as adopted by the European Union, give a true and fair view of the Equity,
Financial position and Financial Performance of the Company, and the entities included
in the consolidation as a whole,
b) the management report on the consolidated financial statements includes a fair
overview of the development and performance of the business and the position of the
Company, and the entities included in the consolidation, together with the description
of the main risks and uncertainties with which they are confronted.
153
Condensed Statutory Financial Statements
In accordance the BCCA (Articles 3:17 and 3:36), the Company’s annual accounts are
presented hereafter in a condensed version, which does not include all the notes required by
law or the Statutory Auditor’s report. The full version of the Company’s annual accounts that
shall be deposited with the National Bank of Belgium, is available on the Company’s website
and can be obtained free of charge upon request.
The statutory Auditor’s report on the annual accounts was unqualified.
Table 18: Condensed Statutory Balance Sheet
As of 31 December
Amounts in EUR thousand
2020
2019
Non- current assets
175,940
176,120
Start-up costs
189
365
Tangible assets
1
1
Financial assets
175,750
175,754
Current assets
5,127
6,967
Amounts receivable
4,403
5,523
Cash at the bank and in hand
652
1,374
Deferred charges and accrued income
71
70
Total assets
181,067
183,086
Capital and reserves
177,646
178,869
Capital
117,892
117,892
Share premium account
59,591
59,591
Reserves
8,575
8,575
Losses carried forward
-8,412
-7,189
Creditors
3,420
4,217
Amounts payable within one year
3,175
3,966
Accrued charges and deferred income
245
251
Total liabilities
181,067
183,086
154
Table 19: Condensed Statutory Income Statement
For the year ended December 31
Amounts in EUR thousand
2020
2019
Sales and services
20
21
Operating charges
-2,074
-1,903
Miscellaneous goods and services
-1,299
-1,181
Remuneration, social security and
pensions
-436
-260
Depreciation and amounts written off on
start-up costs, intangible and tangible
assets
-176
-177
Amounts written off stocks, contracts in
progress and trade debtors
0
-67
Other operating expenses
-64
-54
Other non-recurring operating expenses
-100
-164
Loss of operating activities
-2,054
-1,881
Financial income
836
518
Income from financial assets
826
493
Non-recurring income
10
25
Financial expenses
-4
-100
Other financial expenses
-1
0
Amounts written off financial fixed assets
-4
-100
Loss for the year before income taxes
-1,223
-1,464
Income taxes on result
0
0
Loss for the year
-1,223
-1,464
155
Alternative Performance Measures
In addition to the results reported in accordance with International Financial Reporting
Standards (“IFRS”) as adopted by the European Union, this Annual Report includes
information regarding certain alternative performance measures which are not prepared in
accordance with IFRS (“Alternative Performance Measures” or “APMs”). The APMs used in
this Annual Report are: Earnings Before Interest and Tax (EBIT), Adjusted EBIT, Earnings
Before Interest, Tax, Depreciation and Amortisation (EBITDA), Adjusted EBITDA and Net
debt. Reconciliations to the most directly comparable IFRS financial measures are presented
below.
We believe these APMs are important supplemental measures of our operating and financial
performance and are frequently used by financial analysts, investors and other interested
parties in the evaluation of companies in the steel pipes and cables production, distribution
and trade industries. By providing these measures, along with the reconciliations included in
this appendix, we believe that investors will have better understanding of our business, our
results of operations and our financial position. However, these APMs shall not be considered
as an alternative to the IFRS measures.
These APMs are also key performance metrics on which Cenergy Holdings prepares, monitors
and assesses its annual budgets and long-range (5 year) plans. However, it must be noted that
adjusted items should not be considered as non-operating or non-recurring.
EBIT, Adjusted EBIT, EBITDA and Adjusted EBITDA have limitations as analytical tools, and
investors should not consider it in isolation, or as a substitute for analysis of the operating
results as reported under IFRS and may not be comparable to similarly titled measures of
other companies.
APM definitions remained unmodified compared to those applied as at 31 December 2019.
The definitions of APMs are as follows:
EBIT is defined as result of the period (earnings after tax) before:
income taxes,
net finance costs
EBITDA is defined as result of the period (earnings after tax) before:
income taxes,
net finance costs, and
depreciation and amortisation
a-EBIT and a-EBITDA are defined as EBIT and EBITDA, respectively, adjusted to exclude:
metal price lag;
impairment / reversal of impairment of fixed, intangible assets and investment
property;
impairment / reversal of impairment of investments;
gains/losses from sales of fixed assets, intangible assets, investment property and
investments;
exceptional litigation fees and fines and,
other exceptional or unusual items.
Net Debt is defined as the total of:
156
Long term loans & borrowings and lease liabilities,
Short term loans & borrowings and lease liabilities,
Less Cash and cash equivalents
Reconciliation tables
Table 20: EBIT and EBITDA
Cables
Steel Pipes
Other activities
Total
Amounts in EUR thousand
2020
2019
2020
2019
2020
2019
2020
2019
Profit/(Loss) before tax
(as reported in
Consolidated Statement
of Profit or Loss)
35,082
26,107
1,321
3,988
(993)
(1,603)
35,410
28,492
Adjustments for:
Net finance costs
21,034
22,273
10,603
12,336
3
17
31,640
34,626
EBIT
56,116
48,380
11,924
16,324
(991)
(1,586)
67,049
63,117
Add back:
Depreciation &
Amortisation
15,225
16,526
8,844
10,420
2
210
24,071
27,156
EBITDA
71,341
64,905
20,767
26,744
(988)
(1,376)
91,121
90,273
157
Table 21: a-EBIT and a-EBITDA
Cables
Steel pipes
Other activities
Total
Amounts in EUR thousand
2020
2019
2020
2019
2020
2019
2020
2019
EBIT
56,116
48,380
11,924
16,324
(991)
(1,586)
67,049
63,117
Adjustments for:
Metal price lag
(1)
8,086
3,088
-
-
-
-
8,086
3,088
Reorganization costs
-
-
447
-
-
-
447
-
Exceptional legal fees
-
-
-
-
315
-
315
-
Gain from sale of subsidiaries
-
(3,538)
-
-
-
(92)
-
(3,630)
Incremental coronavirus costs
(2)
1,370
-
467
-
-
-
1,837
-
Impairment/ (Reversal of
Impairment) on investment
property
-
79
-
-
-
(89)
-
(10)
(Gains)/ Loss from sales of fixed
assets
(6)
366
-
16
-
(5)
(6)
377
Adjusted EBIT
65,566
48,374
12,838
16,340
(675)
(1,772)
77,729
62,942
Add back:
Depreciation & Amortisation
15,225
16,526
8,844
10,420
2
210
24,071
27,156
Adjusted EBITDA
80,791
64,900
21,681
26,760
(673)
(1,562)
101,800
90,098
Notes:
(1) Metal price lag is the P&L effect resulting from fluctuations in the market prices of the underlying
commodity metals (ferrous and non-ferrous) which Cenergy Holdings’ subsidiaries use as raw
materials in their end-product production processes. Metal price lag exists due to:
i. the period of time between the pricing of purchases of metal, holding and processing the
metal, and the pricing of the sale of finished inventory to customers;
ii. the effect of the inventory opening balance (which in turn is affected by metal prices of
previous periods) on the amount reported as Cost of Sales, due to the costing method used
(e.g. weighted average);
iii. certain customer contracts containing fixed forward price commitments which result in
exposure to changes in metal prices for the period of time between when our sales price
fixes and the sale actually occurs.
Subsidiaries in cables segment use back to back matching of purchases and sales, or derivative
instruments in order to minimise the effect of the Metal Price Lag on their results. There will, however,
always be some impact (positive or negative) in the P&L, since in Cables segment part of the inventory
is treated as fixed asset and not hedged and in the Steel Pipes segment no commodities hedging is
possible.
(2) Incremental coronavirus costs concern all incremental costs incurred due to the coronavirus
outbreak. Such costs are directly attributable to the coronavirus outbreak and are incremental to
costs incurred prior to the outbreak and not expected to recur once the crisis has subsided and
operations return to normal, while they are clearly separable from normal operations.
158
Table 22: Net debt
Cables
Steel pipes
Other activities
Total
Amounts in EUR thousand
31 Dec
2020
31 Dec
2019
31 Dec
2020
31 Dec
2019
31 Dec
2020
31 Dec
2019
31 Dec
2020
31 Dec
2019
Loans and borrowings (incl.
Lease liabilities) - Long term
133,295
132,628
44,989
49,091
21
-
178,306
181,719
Loans and borrowings (incl.
Lease liabilities) - Short term
168,428
192,232
64,911
130,363
6
-
233,344
322,595
Cash and cash equivalents
(59,694)
(69,229)
(20,689)
(19,805)
(652)
(1,374)
(81,035)
(90,408)
Net debt
242,029
255,630
89,211
159,649
(625)
(1,374)
330,615
413,905
159
Information to our Shareholders
Cenergy Holdings is a Belgian listed subsidiary of Viohalco S.A. (81.93% of voting rights).
On 14 December 2016, Cenergy Holdings S.A. announced the completion of the cross-border
merger by absorption of Corinth Pipeworks Holdings S.A. and Hellenic Cables S.A. Holdings
Société Anonyme by Cenergy Holdings S.A. On 21 December 2016, the trading of Cenergy
Holdings’ shares commenced on Euronext Brussels and on the Athens Stock Exchange (Athex).
During 2019, Hellenic Cables sold its 100% subsidiary Cablel Wires, which had absorbed its
enamelled wires sector during the year. Hellenic Cables, during the last quarter of 2019,
established Hellenic Cables America Inc., a wholly owned subsidiary in order to provide US
customers with direct support and expertise throughout the lifetime of energy projects.
No changes in Group structure took place during 2020 (see also note 31 of the Consolidated
Financial Statements).
Market data
The table below sets forth, for the periods indicated, the maximum and minimum year-end
closing prices and the end of the year closing prices of Cenergy Holdings on Euronext Brussels
and Athens Stock Exchange (Athex).
Market Euronext Brussels and Athens Stock Exchange
Ticker
CENER
ISIN code
BE 0974303357
Share price EURONEXT BRUSSELS in EUR
2020
2019
At the end of the year
1.62
1.32
Maximum
2.25
1.53
Minimum
0.61
1.05
Dividends
0.00
0.00
Gross annual return in %
22.88
8.20
Share price ATHENS EXCHANGE in EUR
2020
2019
At the end of the year
1.73
1.36
Maximum
1.94
1.60
Minimum
0.61
1.20
Dividends
0.00
0.00
Gross annual return in %
27.39
7.10
160
Investor relations contact details
Sofia Zairi
Chief Investor Relations Officer
Email: ir@cenergyholdings.com, szairi@cenergyholdings.com
Cenergy Holdings S.A.
Cenergy Holdings S.A. – Greek Branch
30, Marnix Avenue
33, Amarousiou-Halandriou Str.
1000 Brussels
151 25 Maroussi
Belgium
Greece
(+32) 2 224 0960
(+30) 210 6787 111, (+30) 210 6787 773
Financial calendar
Date
Publication / Event
12 May 2021
2021Q1 trading update
25 May 2021
Ordinary General Meeting 2021
22 September 2021
Half Yearly 2021 results
161
Glossary
The following explanations are intended to assist the general reader in understanding certain
terms used in this Annual Report. The definitions set out below apply throughout the annual
report, unless the context requires otherwise.
ABB
ABB is a global technology company in power and automation.
Aramco
Saudi Aramco is the state-owned oil company of the Kingdom of
Saudi Arabia. It is the world’s top exporter of crude oil and natural
gas liquids.
BCCA
the Belgian Code of Companies and Associations
Belgian GAAP
the applicable accounting framework in Belgium
BG
BG Group is an international exploration and production and LNG
company.
Board of Directors
or Board
the Board of Directors of the Company from time to time appointed
in accordance with the Articles of Association
BP
British Petroleum (BP) is one of the world's leading integrated oil and
gas companies.
Cheniere Energy
Houston-based energy company primarily engaged in LNG-related
businesses
Chevron
Chevron is one of the world's leading integrated energy companies.
Cross-Border
Merger
the cross-border merger through absorption of Corinth Pipeworks
Holdings S.A. and Hellenic Cables S.A. Holdings Société Anonyme
(both formally listed in Greece), by the Company in accordance with
articles 772/1 and following of the BCC and the Greek law 3777/2009
in conjunction with articles 68 §2 and 69 to 77a of the Greek Codified
Law 2190/1920
DCP Midstream
is an energy company that sits squarely between a growing resource
base and expanding petrochemical and energy markets.
Denbury
Denbury Resources Inc. is an independent oil and natural gas
company
EBIT
Operating result as reported in the Profit or loss statement plus share
of profit/(loss) of equity accounted investees
EBITDA
EBIT plus depreciation and amortisation
EDF
EDF Energy, the UK's largest producer of low-carbon electricity
Enbridge
Enbridge, Inc. is an energy delivery company based in Calgary,
Canada which operates the longest crude oil and liquid hydrocarbons
transportation system in the world. As a distributor of energy, it owns
and operates Canada's largest natural gas distribution network.
Energy Transfer
Energy Transfer is a Texas-based company and one of the largest and
most diversified investment grade master limited partnerships in the
United States. It operates approx. 71,000 miles of natural gas, natural
162
gas liquids (NGLs), refined products, and crude oil pipelines today,
and remains dedicated to providing exceptional service to its
customers and attractive returns to its investors.
EPCO
Energy Planners Company is an energy management and
consultation firm. EPCO works with commercial, industrial, and non-
profit clientele to aid them in better understanding how and where
energy is consumed in their facility.
FSMA
Financial Services and Market Authority, which succeeded the
Belgian Banking, Finance and Insurance Commission as the financial
regulatory agency for Belgium on 1 April 2011
Greek Public
Natural Gas
Corporation (DEPA)
DEPA is the public natural gas supply corporation of Greece
GRI
Global Reporting Initiative
Gross annual return
the gross annual return is calculated on the share price it equals to
(change in price from January 1 to 31 December/share price on
January)
IAS
International Accounting Standards
IFRS
International Financing Reporting Standards, as adopted by the EU
IPTO S.A.
Independent Hellenic Transmission Operator
LSAW
Longitudinal Submerged Arc Welded mill for the production of high-
strength offshore and onshore energy pipes
National Grid
United Kingdom-based utilities company
OGC
a leading organisation in the Sultanate’s Oil and Gas sector and
managing Oman’s major natural gas distribution network
OMV
OMV, one of the largest listed industrial companies in Austria,
produces and markets oil and gas, as well as chemical solutions in a
responsible way and develops innovative solutions for a circular
economy.
PDO
Petroleum Development Oman is the major exploration and
production company in the Sultanate
Pioneer Pipe Inc
Pioneer is one of the largest full-service construction, maintenance,
and fabrication companies in the Midwest.
Plains All American
Plains All American Pipeline is one of the largest and most admired
midstream energy companies in North America. Plains All American
Pipeline (Plains) is a publicly-traded master limited partnership that
owns and operates midstream energy infrastructure and provides
logistics services for crude oil, natural gas liquids (NGL), natural gas,
and refined products.
Shell
Shell Global is a global group of energy and petrochemical companies
163
Snam
an Italian natural gas infrastructure company. The utility mainly
operates in Italy and is one of Europe’s leading regulated gas utilities
Socar
The State Oil Company of the Azerbaijan Republic (SOCAR) is involved
in exploring oil and gas fields, producing, processing, and
transporting oil, gas, and gas condensate, marketing petroleum and
petrochemical products in domestic and international markets, and
supplying natural gas to industry and the public in Azerbaijan.
Spartan
Spartan Energy Corp. is an oil and gas company based in Calgary,
Alberta.
Spectra Energy
Spectra Energy Corp is a S&P500 company headquartered in Houston
Texas, that operates in transmission and storage, distribution, and
gathering and processing of natural gas.
STEG
Tunisian Company of Electricity and Gas is a Tunisian public company,
established in 1962, with a mission to produce and distribute
electricity and natural gas on the Tunisian territory.
Subsea
Subsea7 is a world-leading seabed-to-surface engineering,
construction and services contractor the offshore energy industry.
Tideway
Tideway is a subsidiary of the Belgian dredging, environmental and
marine engineering group DEME, an international market leader for
complex marine engineering works.
TIGF
Transport et Infrastructures Gaz France offers and develops natural
gas transport and storage solutions for the European market
Transparency Law
the law of 2 May 2007 on the disclosure of significant shareholdings
in issuers whose securities are admitted to trading on a regulated
market
Van Oord
Van Oord is a Dutch family-owned company with 150 years of
experience as an international marine contractor.
The annual report, full versions of the statutory and consolidated annual accounts, as well as
the audit reports regarding said annual accounts are available on the website
(www.cenergyholdings.com).
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