HELESI PLC 
By 14 June 2011
Helesi PLC
("Helesi", "the Company" or "the Group")
Final Results for the year to 31 December 2010
Helesi PLC (AIM: HLS), the Greece, Italy and Cyprus based waste management products manufacturer and services supplier announces final results for the year to 31 December 2010.
CHAIRMAN'S STATEMENT
I took over as Non-Executive Chairman on 29 September 2010, in succession to Dimitri Goulandris who had taken the role after the death of Roger Parsons in 2009. My appointment came along with a volatile market environment, Greece being hit from the economic crisis, and the Group suffering losses for the first time.
Whilst the Group continues to have strong growth prospects, my immediate focus is to drive cash generation, to restructure debt and to reposition operations to enable the Company to return to growth once a more stable environment has been restored.
Outlook
We expect 2011 to be another difficult year as Greece deals with many structural changes to emerge from recession and as demand in the rest of the world normalizes. We continue to be focused on managing our cost base and our receivables to ensure that we generate as much cash as possible.
Dimitri Kainaros
Non-Executive Chairman
CHIEF EXECUTIVE'S REVIEW OF OPERATIONS
The torrid economic environment and the Greek market Crisis during the year, affected Helesi's operations. The worldwide recession did not allow the reduction of our level of borrowings as planned. Greek State receivables continue to be late in arriving. However the agreed Greek Government grants were received in full, the Italian State also paid €3.8 million as part of the third installment of the subsidy and only €1.7 million are outstanding. This has meant that net debt stood at €62.8 million compared to the previous year higher levels of €71.7 million. We estimate a significant part of Greek State receivables and the remaining Italian grants will be collected within 2011, and allow further reduction of net debt levels.
Results
Group sales revenues decreased by 32% in 2010 to €50.1 million (2009: €73.9 million) due to weak demand across all geographical markets Helesi operates and due to a halt of the Greek Market in the second half of 2010. The extensive restructuring in some parts of the Greek public sector imposed by the EU/IMF support package, postponed the announcement of new projects. EBITDA dropped at €2.7 million (2009: €12.7 million). After increased costs and depreciation largely relating to the additional capacity created by the investment program, this resulted in losses before interest and taxation of €1.9 million (2009: profit €8.9 million). The continuing high levels of debt throughout the year, resulted to cost of financing of €4 million (2009: €4.5 million). Consequently a loss before tax was realized of €5.9 million (2009: profit €4.4 million). Net losses after tax stood at € 5.1 million (2009: profit €2.8 million). Additional information about the Group's borrowings and financial position are further described in notes 2 and 18.
Dividend
No dividend will be paid.
Operations
Due to the experience of budgetary constraints of Helesi clients across all geographical regions, the sales mix of our revenues has changed. In 2010, revenues were split 55%, 30%,15% in terms of Plastic Products (principally bins and pallet boxes), Vehicles and Services. This compares with 43%, 46%,11% in 2009 and reflects slowdown in sales in Vehicles. The changing in sales mix, has slightly effected EBITDA margins which resulted at 18.7% in 2010 (2009: 17.1%).
Plastic Products
Utilisation rates across all production sites were below 50% of the actual capacity. The world recession resulted in volume reduction which combined with slightly lower price levels affected the top line of Group sales.
Waste Management Services
Services Revenue reflect the budgetary restriction the Greek municipalities were facing throughout the year. In addition, the year's results reflect only the last quarter revenue contribution from the waste transfer station for a 10 year contract in Cyprus. This is because the Waste transfer Stations started operations at mid August 2010. Although the construction of one of the two stations is complete, the construction of the second station has not proceeded according to plan. The delay was due to the change of the location of the station, as the local community nearby the original site is opposed to its construction. In accordance with the contract the Group is entitled to significant compensation for delays and non-performance based upon criteria. Encouragingly the authorities have now indicated a new location, and the intention is to operate three stations instead of one station until the construction of the second station is complete.
Waste management Vehicles and Equipment
Helesi has the critical scale necessary to become a leading player in the high margin supply and distribution of specialist waste collection vehicles both in Greece and Cyprus. This new scale was illustrated with the fulfillment of large contracts in 2009. However the EU/IMF mandatory structural reform of the Greek Municipalities under a program named "Kallikratis" postponed the announcement of new projects.
Board
In September, we announced the appointment of Dimitri Kainaros as non-executive Chairman in succession to Dimitri Goulandris. Dimitri is an external consultant for the Greek Ministry of Development, responsible for the assessment and supervision of investment projects related to EU Co-financed Development Programs. Previously, Dimitri held the position of General Director of the Hellenic Arms Industry. Currently he holds the position of CEO at Veltion Ltd, a position he has held for five years.
Outlook
As global recession becomes slowly more distant, the impact of the Greek Market crisis will be more evident in 2011. Helesi will continue to react on market development and build a new operating profile for the future. The management is ready to utilize its capacity in Municipal Waste Collection benefiting from new legislation changes in the Greek Waste Services Sector. Helesi is repositioning itself participating in tenders of BOT projects for Waste Treatment Plants, joining forces with key market players. Managements' strong focus is on international sales of plastic products aiming to mitigate the risks of the Greek market. The principal focus on cash collection and management remains. Net debt will be reduced to lower levels as Greek State receivables are collected.
Sakis Andrianopoulos
Chief Executive Officer
The full text of the Independent Auditor's Report tothe Members of Helesi PLC as it appears in the Financial Statements of the Company for the year ended 31 December 2010 is set out below.
Report on the Financial Statements and the Consolidated Financial Statements
We have audited the accompanying financial statements and the consolidated financial statements of Helesi PLC (the ''Company'') and its subsidiaries ('the Group') on pages 12 to 46, which comprise the statement of financial position and the consolidated statement of financial position of the Company and the Group as at 31 December 2010, and the respective statements of comprehensive income, changes in equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.
Board of Directors' Responsibility for the Financial Statements and the Consolidated Financial Statements
The Board of Directors is responsible for the preparation of financial statements and consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union (EU) and the requirements of the Cyprus Companies Law, Cap. 113, and for such internal control as the Board of Directors determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial statements and consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements and consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements and the consolidated financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements and the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation of financial statements and consolidated financial statements that give a true and fair view 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 entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors as well as evaluating the overall presentation of the financial statements and the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements and the consolidated financial statements give a true and fair view of the financial position of Helesi PLC and its subsidiaries as at 31 December 2010, and of its financial performance and their cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the EU and the requirements of the Cyprus Companies Law, Cap. 113.
Emphasis of Matter
Without qualifying our opinion, we draw attention to note 2 to the consolidated financial statements which indicates that the Group's current liabilities exceed its current assets by €14.2 million. The Group also incurred a loss of €5.1 million for the year ended 31 December 2010. The Group's ability to continue as a going concern is dependent upon receiving the continuing support of domestic and other financial institutions. These factors together with the continuing financial crisis of the Greek economy and public sector indicate the existence of a material uncertainty that may cast significant doubt about the Group's ability to continue as a going concern.
Report on Other Legal and Regulatory Requirements
Pursuant to the requirements of the Law of 2009 on Statutory Audits of Annual and Consolidated Accounts, we report the following:
· We have obtained all the information and explanations we considered necessary for the purposes of our audit.
· In our opinion, proper books of account have been kept by the Company.
· The Company's financial statements and consolidated financial statements are in agreement with the books of account.
· In our opinion and to the best of our information and according to the explanations given to us, the financial statements and consolidated financial statements give the information required by the Cyprus Companies Law, Cap. 113, in the manner so required.
· In our opinion, the information given in the report of the Board of Directors on page XX is consistent with the financial statements and the consolidated financial statements.
Pursuant to the requirements of the Directive DI190-2007-04 of the Cyprus Securities and Exchange Commission, we report that a corporate governance statement has been made for the information relating to paragraphs (a), (b), (c), (f) and (g) of article 5 of the said Directive, and it forms a special part of the Report of the Board of Directors.
Other Matter
This report, including the opinion, has been prepared for and only for the Company's members as a body in accordance with Section 34 of the Law of 2009 on Statutory Audits of Annual and Consolidated Accounts and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whose knowledge this report may come to.
Panicos Constantinou Certified Public Accountant and Registered Auditor for and on behalf of BDO Ltd | |
Certified Public Accountants (CY) and Registered Auditors | |
Nicosia, 10 June 2011 |
Statement of comprehensive income
The Group | |||
Notes | 31 December 2010 | 31 December 2009 | |
€000 | €000 | ||
Sales revenue | 3 | 50.085 | 73.998 |
Other revenue | 4 | 1.232 | 1.228 |
Changes in inventories of finished goods | (1.296) | 2.371 | |
Cost of materials used | (25.882) | (44.125) | |
Personnel-related costs | 5 | (8.216) | (7.750) |
Directors' emoluments | 27 | (287) | (295) |
Depreciation charges | 6 | (4.664) | (3.770) |
Other operating expenses | 7 | (12.895) | (12.722) |
Cost of financing, net | 8 | (4.016) | (4.530) |
------ | ------ | ||
(Loss) / Profit before taxes | (5.939) | 4.405 | |
Income taxes | 9 | 856 | (1.539) |
------ | ------ | ||
(Loss) / Income of the year | (5.083) | 2.866 | |
------ | ------ | ||
EBITDA | 2.740 | 12.705 | |
Currency translation adjustments | 79 | 711 | |
Total comprehensive (loss) / income | (5.161) | 3.577 | |
------ | ------ | ||
Basic and diluted earnings per share (in euro) | 25 | (0.13) | 0.08 |
------ | ------ | ||
Statement of financial position as at 31.12.2010
The Group | |||
Notes | 31 December 2010 | 31 December 2009 | |
(as restated) | |||
Assets Non current assets | €000 | €000 | |
Property Plant and Equipment | 12 | 80.853 | 78.637 |
Goodwill | 13 | 12.559 | 12.559 |
Other intangible assets | 13 | 1.413 | 799 |
Other long-term assets | 14 | 13 | 80 |
Investment in subsidiaries | - | - | |
------ | ------ | ||
Total non current assets | 94.838 | 92.075 | |
------ | ------ | ||
Current assets | |||
Inventories | 15 | 8.851 | 11.948 |
Trade and other receivables | 16 | 36.568 | 53.105 |
Cash and cash equivalents | 17 | 1.002 | 1.411 |
------ | ------ | ||
Total current assets | 46.421 | 66.464 | |
------ | ------ | ||
Total assets | 141.259 | 158.539 | |
------ | ------ | ||
Share capital | 23 | (3.981) | (3.981) |
Share premium | 23 | (33.641) | (33.641) |
Capital reserves | 24 | (9.981) | (9.981) |
Currency translation adjustments | 24 | 1.029 | 950 |
Retained earnings | (3.081) | (8.163) | |
------ | ------ | ||
Total equity | (49.655) | (54.816) | |
Non current liabilities | |||
Long-term borrowings | 18 | (29.613) | (26.129) |
Employee benefits | 21 | (150) | (115) |
Deferred tax liabilities | 26 | (1.152) | (2.590) |
------ | ------ | ||
Total non current liabilities | (30.915) | (28.834) | |
Current liabilities | |||
Trade and other payables | 20 | (25.447) | (26.915) |
Current tax payable | (998) | (958) | |
Short-term borrowings | 18 | (34.244) | (47.016) |
------ | ------ | ||
Total current liabilities | (60.689) | (74.889) | |
------ | ------ | ||
Total liabilities | (91.604) | (103.723) | |
------ | ------ | ||
Total liabilities and equity | (141.259) | (158.539) | |
Statement of changes in equity
The Group | ||||||||||||||
Share Capital | Share premium | Capital Reserves | Currency translation adjustments | Retained earnings | Total | |||||||||
'€ 000 | ||||||||||||||
Balances, as at 31 December 2008 | 3.278 | 29.950 | 8.903 | (1.661) | 6.375 | 46.845 | ||||||||
Total comprehensive income for the year | - | - | - | 712 | 2.866 | 3.578 | ||||||||
New shares issued | 703 | 3.691 | - | - | - | 4.394 | ||||||||
Transferred to capital issued | - | - | 1.078 | - | (1.078) | - | ||||||||
------ | ------ | ------ | ------ | ------ | ------ | |||||||||
Balances, as at 31 December 2009 | 3.981 | 33.641 | 9.981 | (950) | 8.163 | 54.816 | ||||||||
------ | ------ | ------ | ------ | ------ | ------ | |||||||||
Balances, as at 31 December 2009 | 3.981 | 33.641 | 9.981 | (950) | 8.163 | 54.816 | ||||||||
Total comprehensive loss for the year | - | - | - | (79) | (5.082) | (5.161) | ||||||||
------ | ------ | ------ | ------ | ------ | ------ | |||||||||
Balances, as at 31 December 2010 | 3.981 | 33.641 | 9.981 | (1.029) | 3.081 | 49.655 | ||||||||
------ | ------ | ------ | ------ | ------ | ------ | |||||||||
Statements of cash flows
The Group | ||
31 December 2010 | 31 December 2009 | |
Cash flows related to operating activities | €000 | €000 |
(Loss)/ profit before taxes | (5.939) | 4.405 |
Adjustments in respect of non-cash transactions: | - | - |
Depreciation of fixed assets | 4.664 | 3.770 |
Interest expense, net | 4.016 | 4.530 |
Profit/loss from sale units | 549 | 52 |
Employee retirement benefits | 31 | 31 |
Other adjustments | (229) | 645 |
------ | ------ | |
3.092 | 13.433 | |
Decrease (increase) in inventories | 3.097 | 6.733 |
Decrease (increase) in receivables | 7665 | (2.580) |
Increase (decrease) in payables | (5.296) | (11.647) |
------ | ------ | |
8.558 | 5.939 | |
Interest received (paid) | (4.132) | (4.596) |
Income taxes paid | (1.188) | (939) |
------ | ------ | |
Net operating cash inflows (outflows) | 3.238 | 404 |
------ | ------ | |
Cash flows related to investing activities | ||
Acquisition of tangible fixed assets | (5.228) | (17.640) |
Disposal of tangible fixed assets | 1.387 | 348 |
Investment grants received | 10.143 | 7.987 |
Acquisition of intangible fixed assets | (807) | (480) |
Interest received | 117 | 66 |
Acquisition of subsidiaries net of cash acquired | - | - |
------ | ------ | |
Net investment cash inflows (outflows) | 5.612 | (9.719) |
------ | ------ | |
Cash flows related to financing activities | ||
Proceeds of new shares issued | - | 4.395 |
Loans contracted (repaid) | (9.281) | 3.942 |
Finance lease payments | (8) | - |
Loan repaid by (granted to) Helesi AE | - | - |
------ | ------ | |
Net financing cash inflows (outflows) | (9.289) | 8.337 |
------ | ------ | |
Increase (decrease) of cash balances | (439) | (978) |
Cash balances, at the beginning of the period | 1.411 | 2.360 |
Effect of currency translation adjustments | 30 | 29 |
------ | ------ | |
Cash balances, at the end of the period | 1.002 | 1.411 |
------ | ------ | |
Notes
1. Basis of preparation
Helesi PLC is a publicly listed company registered in Cyprus, which serves as the ultimate holding company of the Group. Its registered office is located at the Tseri Industrial Zone, near Nicosia. The Company was incorporated in Cyprus, in May 2006, as part of a Group restructuring process, entailing the exchange of Helesi AE shares for Helesi PLC shares, in anticipation of the admission of the Group to trading on AIM, which materialised in November 2006.
Helesi PLC holds 100% of Helesi SA, the Group's principal operating entity. Helesi SA is an anonymos eteria (corporation) registered in Greece. The full, formal name of the Helesi AE is Hellenic Industrial Environmental Systems SA (Helliniki Viomichania Perivallontikon Systimaton Anonymi Emporiki - Viomichaniki Eteria). Helesi SA was established in 1997, its registered office is located at 19 Agiou Ioannou Street, Aegeo, GR-25100, Greece and its administrative offices are located at Industrial Park of Markopoulo, Location Ntorovateza GR-19003 Attiki Greece. The Company is primarily engaged in the production and trading of injection-moulded refuse containers and in the recycling of rubber tyres, at a production plant located at Komotini, Northern Greece. In the course of 2007, Helesi SA merged with Perivallontiki Environmental Services SA (a wholly owned subsidiary of Helesi PLC at the time) and during the course of the same year with the Vehicles Division of Perivallontiki AE. As a result of these transactions Helesi SA also provides waste management services and special waste management vehicles.
On 3 January 2008, Helesi PLC acquired Perivallontiki AZ Ltd and Helesi Trans Ltd, which were wholly owned subsidiaries of Perivallontiki A.E. Perivallontiki AZ Ltd is a company incorporated in Cyprus, engaged in the distribution of Helesi products in Cyprus. Helesi Trans Ltd is also a company incorporated in Cyprus,engaged in the provision of international transportation services, mainly to the group. The consideration paid for acquiring the shares of these two entities amounted, in total, to € 952 thousand. The existing minority interests were also acquired for € 28 thousand.The acquisition cost of these two entities was impaired in 2010 by €490thousand in total. The impairment was €275 thousand for Perivallontiki AZ Ltd and €215 thousand for Helesi Trans Ltd.
Helesi UK Limited is a wholly-owned subsidiary of Helesi SA, registered in England, whose registered address is Units 14-17 Iron Park Works, Bowling Back Lane, Bradford, England. Helesi UK Limited, which was incorporated on 4 February 2004, is primarily engaged in the production and trading of injection-moulded refuse containers. In 2010 Helesi UK Limited sold the business and some of the assets which constitute Helesi's UK based two-wheeled bin manufacturing operations, to Straight Plc. The company does not operate the facility in Bradford North UK any longer.
Early in 2009 Helesi commenced the waste management of the Western Macedonia area under a profit sharing agreement with Mesogios AE, in which Mesogios AE is entitled to a share of 40% of the profits generated. The Group is in 60% control of the operations and is responsible for its financing and accordingly has recognised 60% of revenues and related costs in the Consolidated Financial Statements.
Helesi Italia srl is also a wholly-owned subsidiary of Helesi SA, registered in Italy, whose registered address is via Giovanni XXIII, N.106, Capri, Modena, Italy. By the first half of 2009, Helesi Italia completed the construction of its factory and commenced its operations.
The consolidated financial information of Helesi PLC includes Helesi SA, Helesi UK Ltd, Helesi Italia srl, Perivallontiki AZ Ltd ,Helesi Trans Ltd and JV Mesogios S.A.The financial statements of Helesi PLC will also be sent to the shareholders. Helesi PLC is referred to as "The Company".
Intragroup balances and intragroup transactions as well as the Helesi PLC Group profits that have arisen on intragroup transactions and have not been realised (at Helesi PLC Group level) as yet, are eliminated on consolidation.
The assets and the liabilities of foreign operations are converted into Euros at the rates of exchange prevailing on the balance sheet date, while the revenues and costs of foreign operations are converted into Euros at rates which tend to approximate the rates prevailing on the dates the transactions are entered into. The currency translation gains or losses that arise from the restatement of assets and liabilities of foreign operations are taken directly to equity and are reported in the "currency translation adjustments".
The financial statements have been compiled on the basis of the International Financial Reporting Standards (IFRS) that have been adopted by the European Union. The financial statements have been compiled on the basis of historical cost and the amounts reported therein are stated in Euro thousand.
These financial statements have been approved for publication by the Board of Helesi PLC, at its meeting held on 10th June 2011.
Helesi PLC Group structure
The Helesi PLC Group comprises the following entities:
Entity | Country of Incorporation | Equity Interest |
Helesi PLC | Cyprus | Holding entity |
Helesi SA* | Greece | 100% |
Helesi UK Ltd | United Kingdom | 100% via Helesi SA |
Helesi Italia srl* | Italy | 99,99% via Helesi SA |
AZ Perivallontiki Ltd | Cyprus | 100% |
Helesi Trans Ltd | Cyprus | 9% |
JV Perivallontiki Mesogeios SA Greece 60% | ||
(*) Entities with production facilities | ||
2. Accountingpolices
Adoption of new and revised IFRSs
As from 1 January 2010, the Company adopted all the following IFRSs and International Accounting Standards (IAS), which are relevant to its operations. The adoption of these Standards did not have a material effect on the financial statements.
At the date of approval of these financial statements the following accounting standards were issued by the International Accounting Standards Board but were not yet effective:
(i) Adopted by the European Union
New standards | ||||||||||||||||||||||||||||||
· IAS 24 (revised): ''Related Party Disclosures'' (effective for annual periods beginning on or after 1 January 2011). | ||||||||||||||||||||||||||||||
Amendments | ||||||||||||||||||||||||||||||
IFRS Interpretations Committee | ||||||||||||||||||||||||||||||
· Amendment to IFRS 1 ''Limited Exemption from Comparative IFRS 7 Disclosures for First Time Adopters'' (effective for annual periods beginning on or after 1 July 2010). | ||||||||||||||||||||||||||||||
· Amendments to IAS 32 ''Financial Instruments: Presentation Share
© Publicnow - 2011
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