2014 Annual Report - Heurtey Petrochem

Transcription

A N N U A L
R E P O R T
2 0 1 4
2
| HEURTEY PETROCHEM 2014 | ANNUAL REPORT
2 0 1 4 W A S A H I G H LY
SUCCESSFUL YEAR FOR
HEURTEY PETROCHEM GROUP.
FOR 2015, IN A MARKET
E N V I R O N M E N T
CHARACTERISED BY
DIMINISHED VISIBILITY, WE
ARE CONFIDENT IN OUR
RESILIENCE.
HEURTEY PETROCHEM 2014 | ANNUAL REPORT |
CHAIRMAN’S STATEMENT
For Heurtey Petrochem, 2014 was
a highly successful year, with a sharp
increase in earnings, substantial
strengthening of our financial
resources due to our capital increase
and the full consolidation of our gas
subsidiary.
Our 2014 revenue, which increased
by 9%, amounted to €437 million.
Our current operating income posted
a 25% increase and came out
to €20.7 million, significantly up
for both our businesses.
Group net income increased by 57%
to €9.2 million.
opening a factory in India
in addition to our Romanian
manufacturing facility.
This additional factory, which
provides us with a major
competitive advantage in markets
in India and the Middle East,
is already at full capacity.
n strengthening Prosernat’s
technological portfolio with
the acquisition of SmartSulfTM,
an advanced sulphur recovery
technology.
n In the first half, we launched a capital
increase to enhance our financial
flexibility and to have the resources
to continue the Group’s development,
particularly in gas. This transaction
was very successful, as it was
oversubscribed by 1.5, and raised
€35.3 million.
In a sluggish market, impacted by
the drop in oil prices and the decline
of investments by oil companies, we
succeeded in maintaining our order
book at over €500 million, due notably
to sales growth in our gas business.
We also saw considerable success in
the Middle East, with our furnaces
business making a significant
breakthrough in this market.
Following this transaction,
we took full control of Prosernat,
our subsidiary specialising in gas,
in which IFP Investissements had until
that point held a 40% stake.
For 2015, despite the low visibility
in the market, we are confident
in our ability to stand firm by relying
on both our order backlog and the
resilience of our model.
We continued our selective
investment policy by:
The complementary nature of our two
businesses, the flexibility provided by
our international network,
our expertise in executing projects
and our strong financial position
are all assets on which the Group
will continue to capitalise.
We have a clear strategy. In order
to bolster our positions, we will
maintain our selective investment
policy and continue to actively work
to improve our competitiveness, while
maintaining a selective approach
when responding to calls for tender.
We are convinced that the Group
is now well-equipped to face the new
market context and take advantage
of new opportunities that arise.
Dominique Henri,
Chairman and Chief Executive Officer
3
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CONTENTS
01 02
BUSINESS ACTIVITIES
ACHIEVEMENTS
AND ORGANISATION
06
& KEY EVENTS
18
01.1 Group profile 08
02.1 Key events 20
01.2 Governance
10
02.2 2014 in pictures 22
01.3 Business lines
and expertise 12
01.4 Facilities and resources 16
03 04
THE PEOPLE
28
THE FIGURES34
03.1 Human resources 30
04.1 2014 in figures 03.2 Health and safety 32
04.2 Stock market information 38
36
04.3 Consolidated financial statements at 31 December 2014 40
5
6
BUSINESS ACTIVITIES AND ORGANISATION
01
THE COMPLEMENTARY NATURE
OF OUR BUSINESSES, OUR
INTERNATIONAL NETWORK AND
OUR EXPERTISE IN EXECUTING
PROJECTS ARE ALL ASSETS ON
WHICH THE GROUP WILL
CONT I NU E TO CAPITALISE.
7
8
01.1
INTERNATIONAL OIL AND GAS
ENGINEERING GROUP
Two market segments:
process furnaces for refining,
petrochemicals and hydrogen
production
natural
gas processing
n n
One of the world leaders in these
two market segments.
OVER
1,000
EMPLOYEES
SUBSIDIARIES IN
11
COUNTRIES
REVENUES OF
€437 MILLION
IN 2014
ORDER BOOK OF
€507 MILLION
AT 31 DECEMBER 2014
GROUP PROFILE
9
10
01.2
GOVERNANCE
BOARD OF DIRECTORS
Heurtey Petrochem’s Board of Directors
determines the Group’s strategic
policies and ensures that they are
correctly implemented. It currently
has eight members, including three
independent members (*):
n
M. Pascal BARTHELEMY
n
M. Jean DESEILLIGNY *
n
Ms. Claire GIRAUT *
n
M. Dominique HENRI
n
M. Henri MARION *
n
M. Jacques MOULIN
n
M. Georges PICARD
n
M. Jean SENTENAC
GOVERNANCE
COMMITTEES
The Board bases its decisions on the
recommendations of three specialized
committees, each of which includes
at least one independent director.
APPOINTMENTS AND
REMUNERATION COMMITTEE
This committee’s members are
Mr. Pascal Barthélemy (Committee
Chairman), Mr. Jean Deseilligny,
Mr. Henri Marion and Mr. Georges Picard.
Its role is to make recommendations
to the Board of Directors concerning
the appointment and remuneration
of the key management personnel and,
more generally, to make any proposals
about policy and tools for staff
remuneration and motivation.
AUDIT COMMITTEE
This committee’s members are
Mr. Henri Marion (Committee Chairman),
Mr. Georges Picard and Ms. Claire Giraut.
Its role is to examine the accounts
and annual budgets before they are
presented to the Board of Directors
and to assess financial and internal
control procedures with a view
to reducing the risks inherent
in the Group’s activity.
STRATEGY COMMITTEE
This committee’s members
are Mr. Dominique Henri (Committee
Chairman), Mr. Pascal Barthélemy,
Mr. Jean Deseilligny and Mr. Jean Sentenac.
The Committee examines the Group’s
main strategic policies and gives
an opinion on decisions to acquire
strategic assets, strategic agreements,
and technological and industrial
alliances and cooperation.
From left to right:
M. Dominique Henri
M. Jacques Moulin
Ms. Françoise Peugnet
M. Grégory Matouskoff
M. Jérôme Illouz
MANAGEMENT
EXECUTIVE COMMITTEE
n
n
n
n
n
M. Dominique HENRI
Chairman and Chief Executive Officer
M. Jacques MOULIN
Chief Operating Officer
Ms. Françoise PEUGNET
Corporate Secretary
M. Grégory MATOUSKOFF
Group Chief Financial Officer
M. Jérôme ILLOUZ
Chairman and CEO of Prosernat
STATUTORY AUDITORS
PricewaterhouseCoopers Audit
63 rue de Villiers,
92208 Neuilly sur Seine cedex
n Ernst & Young et Autres
1-2 place des Saisons
92400 Courbevoie Paris La Défense 1
n 11
12
01.3
BUSINESS LINES
AND EXPERTISE
> REFINING
BUSINESS LINE: PROCESS FURNACES
DESIGN AND MANUFACTURING
OF PROCESS FURNACES Three areas of expertise:
n
n
n
Refining
Petrochemicals
Hydrogen
Each furnace is unique and
custom-designed by Heurtey’s teams
in accordance with the client’s
specific needs.
The Group stands out for the diversity
of its expertise and its ability to manage
every stage of the project execution
process from the feasibility assessment
to the delivery of turnkey equipment.
Through its two production unitsone in Buzau, Romania and one
in Baroda, India-Heurtey Petrochem
is able to offer its clients comprehensive
management of equipment
manufacturing activities and to control
each stage of the manufacturing
process in terms of quality, cost
and timeframes.
60 YEARS OF EXPERIENCE
OVER 2,000 REFERENCES
THREE QUESTIONS
FOR JACQUES MOULIN,
COO
In 2014, you launched
a new production facility in India.
What prompted that decision?
Our production facility in Buzau,
Romania, which has a production
capacity of 4,000 tonnes per year,
had previously only manufactured
furnace equipment.
> PETROCHEMICALS
We expanded its scope of operations
to gas processing modules, and today
its operations are shared evenly among
gas and furnaces. We therefore needed
an increased production capacity.
This new production facility also serves
as a real driver of our competitiveness
and constitutes a major strategic asset
for reaching the markets in India and the
Middle East. Our Indian production facility
is already operating at full capacity.
> HYDROGEN
Do you have a strong presence
in the Middle East?
What are the most dynamic
markets in 2015?
It’s a very promising region at the
present moment, where a number
of very large projects are concentrated.
Though we hadn’t been very active
in the Middle East historically,
we made significant inroads in 2014
with the signing of a several contracts
totalling over €50 million as part
of a major refining project in Kuwait.
In addition to the Middle East,
we believe that the United States
will remain an active market, particularly
for petrochemicals and gas liquefaction.
We also anticipate a recovery in the Asian
market, particularly in India.
We have a major asset in our international
network, which gives us the flexibility
to target the market wherever it may be.
13
14
> DEHYDRATION
01.3
BUSINESS LINES AND EXPERTISE
> DEACIDIFICATION
BUSINESS LINE:
GAS PROCESSING
CUTTING-EDGE SOLUTIONS
FOR GAS PROCESSING
Through its Prosernat subsidiary,
Heurtey Petrochem offers cutting-edge
solutions for the entire natural gas
processing chain through technology
licenses and the supply of modular
units. Prosernat has a comprehensive
technological portfolio.
Four areas of expertise:
n Dehydration
n Deacidification
n MEG reclaiming
n Sulphur recovery
35 YEARS OF EXPERIENCE
OVER 400 REFERENCES
THREE QUESTIONS FOR
JÉRÔME ILLOUZ,
CHAIRMAN AND CEO
OF PROSERNAT
In 2014, you acquired
SmartSulf TM technology.
What prompted this acquisition?
> MEG RECLAIMING
SmartSulfTM is an innovative
technology in the area
of sulphur recovery.
We had already been active
on this market, but this acquisition
reinforces our position through
one of the most advanced, efficient
and cost-effective processes
available. SmartSulfTM has seen
excellent feedback from the units
currently in operation.
> SULPHUR RECOVERY
What role does technology play
in your operations?
Technology is truly at the heart
of Prosernat’s growth because it is
critical for access to the gas processing
market. Today, we have a comprehensive
portfolio of technologies which we are
continuously developing.
In 2013, we developed a new area
of expertise through the acquisition
of an MEG reclaiming technology.
What is MEG reclaiming,
and do you already have projects
underway?
The reclaiming of MEG (monoethylene
glycol) is an important undertaking
for the gas industry because MEG
is used intensively to inhibit the formation
of hydrates, particularly in deep-sea
offshore projects. We have already signed
our first contract with ENI Group
for an offshore project in Indonesia.
15
16
01.4
FACILITIES
AND RESOURCES
AN EXTENSIVE GLOBAL NETWORK
Heurtey Petrochem has a wide network of subsidiaries around
the world: in the United States, India, Romania, South Korea,
South Africa, Saudi Arabia, Brazil, China, Malaysia, and Russia.
This network is a major strategic asset for the Group,
enabling it to handle projects all around the world.
EXPANDED SCOPE
OF OPERATIONS FOR
OUR RESEARCH OFFICES
IN INDIA AND ROMANIA
As part of the programme to develop
synergies between the process
furnaces and gas processing units,
Heurtey Petrochem is expanding
the scope of operations of its two
research offices in India and Romania,
with the aim of expanding their
expertise to the design of skids
for gas units.
THE HEURTEY PETROCHEM
MANUFACTURING WORKSHOP’S
OPERATIONS ARE NOW SHARED
EVENLY AMONG FURNACES
(50%) AND GAS (50%)
With the expansion in the gas processing
business, Heurtey Petrochem is devoting
an increasing share of its Romanian
workshop’s operations to the
manufacturing of skids for gas
processing equipment. The workshop’s
operational load is now evenly shared
among the manufacturing of process
furnaces and skids.
PETRO-CHEM DEVELOPMENT
Houston /Tulsa, USA
PFR ENGINEERING
SYSTEMS
Los Angeles, USA
NEW MANUFACTURING
WORKSHOP IN INDIA:
HEURTEY PETROCHEM
INDIA WORKSHOP
The Group has commissioned a brand
new manufacturing workshop in Baroda,
India. This 40,000 m² workshop has an
annual production capacity of 3,000
tonnes and employs just over 200
people (20 employees who make up the
management team and approximately
200 sub-contracted workers).
n Head office
n Process furnaces subsidiaries
n G
as processing subsidiaries
n Manufacturing workshops
HEURTEY PETROCHEM
Vincennes, France
Headquarters
HEURTEY PETROCHEM
FRANCE
Vincennes, France
PROSERNAT
HEURTEY PETROCHEM
RUSSIA
St. Petersburg, Russia
Paris, France
HEURTEY PETROCHEM
ROMANIA
Bucharest, Romania
HEURTEY PETROCHEM
TECHNOLOGY BEIJING
Beijing, PRC
HEURTEY PETROCHEM
MANUFACTURING
Buzau, Romania
HEURTEY PETROCHEM
MIDDLE-EAST
PETRO-CHEM KOREA
Seoul, South Korea
HEURTEY PETROCHEM
INDIA
Mumbai, India
HEURTEY PETROCHEM
INDIA WORKSHOP
Baroda, India
Dubai, United Arab Emirates
PROSERNAT MALAISIE
Kuala Lumpur, Malaysia
HEURTEY PETROCHEM
BRASIL
Rio de Janeiro, Brazil
HEURTEY PETROCHEM
SOUTH AFRICA
Johannesburg, South Africa
17
18
ACHIEVEMENTS & KEY EVENTS
02
WITH THE SUCCESS OF
OUR CAPITAL INCREASE
AND THE ACQUISITION
OF 100% OF OUR GAS
SUBSIDIARY, 2014 WAS
RICH IN POSITIVE
DEVELOPMENTS FOR
T H E G R O U P.
19
20
2014
02.1
KEY EVENTS
FOR THE YEAR
MAY
CAPITAL INCREASE In May 2014, the Group successfully
launched a capital increase with
preferential subscription rights
maintained. Subscribed 1.5 times,
the operation resulted in the creation
of 1,356,834 new shares at a unit
price of €26, generating gross
proceeds of €35.3 million. Following
this operation, the company’s share
capital amounted to 4,896,402 shares
with a par value of €3.34 per share.
The purpose of this capital increase
was to strengthen the Group’s
financial flexibility and to provide
it with the resources to continue
its development, particularly
in gas processing.
JUNE
ACQUISITION
OF 100% OF PROSERNAT
Prosernat, a subsidiary of Heurtey
Petrochem specialised in natural gas,
had been 60%-owned by the Group
since 2011. On 4 June 2014,
Heurtey Petrochem acquired
the remaining 40% of Prosernat’s
shares, held by IFP Investissements,
for €13.3 million.
The Group also acquired 100%
of Prosernat’s subsidiary in Malaysia.
Prosernat is now 100%
Group-owned.
JUNE
DECEMBER
FIRST MEG RECLAIMING
CONTRACT MARKET BREAKTHROUGH
IN THE MIDDLE EAST In 2013, Prosernat had acquired
a technology for the reclaiming of MEG
(monoethylene glycol). MEG reclaiming
is an important undertaking for the gas
industry because MEG is used intensively
to inhibit the formation of hydrates,
particularly in deep-sea offshore projects.
In December 2014, Heurtey Petrochem
announced the signing of several
contracts in the Middle East,
totalling €54 million, as part
of a major refining project in Kuwait
called the Clean Fuel Project.
These contracts concern the provision
of 24 refining furnaces and one
hydrogen reformer, to be delivered
in the course of 2016.
In 2014, the Group signed its first contract
for MEG reclaiming as part of an offshore
project in Indonesia for ENI Group.
The contract’s value was €11 million.
SEPTEMBER
COMMISSIONING OF A
MANUFACTURING UNIT IN INDIA
The Group commissioned a manufacturing
unit in India to complement the
operations of its production facility
in Buzau, Romania. Situated in the state
of Gujarat, an industrial hub with strong
infrastructure, this 40,000 m2 facility
employs approximately 200 people
and has an annual production capacity
of 3,000 tonnes.
This manufacturing unit represents
a major competitive strength for
the Group in terms of quality,
process and timeline management.
A major strategic asset for reaching
the Indian and Middle Eastern markets,
this facility is already operating at full
capacity with the Jamnagar 3 project in
India and the Clean Fuel Project in Kuwait.
OCTOBER
ACQUISITION OF SMARTSULFTM,
A SULPHUR RECOVERY
TECHNOLOGY In October 2014, Prosernat acquired
100% of ITS Reaktortechnik GmbH.
Through this acquisition, Prosernat
became the owner of the SmartSulf™
sulphur recovery technology.
This technology, which has already
seen a number of commercial
successes, constitutes a major
technological advance in this industry,
as it enables a high rate of sulphur
recovery with a reduced quantity
of equipment.
Through this transaction,
Prosernat reinforced its position
on the rapidly-expanding sulphur
recovery market and enhanced
its portfolio with one of the industry’s
most efficient and cost-effective
technologies.
These contracts mark
Heurtey Petrochem’s market
breakthrough in the Middle East,
a region which accounted for 16%
of the Group’s order book at 31
December 2014 compared to only
3% one year earlier.
21
22
02.2
TOTAL FINA ANTWERP
OLEFINS (FAO)
Site
Antwerp, Belgium
n
Contract amount
€59 million
n
Scope
Delivery of two prefabricated
ethylene furnaces
n Technology
Technip Stone & Webster
n
In early July 2012,
Heurtey Petrochem signed
a €59 million contract with
its client Total Fina Antwerp
Olefins (FAO) for the modularised
delivery of two ethylene furnaces
based on Technip technology
for their petrochemical platform
in Antwerp, Belgium.
2014
IN PICTURES
Between 10 June and 22 September
2014, under the supervision
of Heurtey teams, 68 prefabricated
modules weighing between 20
and 150 tonnes each were assembled
on their foundations in 15 weeks,
at an average rate of one module
per day.
The assembly was subject
to numerous constraints imposed
by the site: surrounding equipment
remained in operation, the assembly
area was very restricted, daily conveys
had to travel at night to transport
modules from the yard to the site,
and there was reduced visibility
between the lifting crane
and the assembly area, situated
50 metres apart.
23
24
EXXONMOBIL
CHEMICAL (EMC)
Five years after the success
yard in Thailand to the final site:
of its Singapore Parallel Train Olefins
the petrochemical complex
Furnaces (SPTOF) project, in late 2013
in Baytown, Texas.
BAYTOWN, UNITED STATES
Heurtey Petrochem signed a similar
n
Scope
Delivery of a train of eight modularized
ethylene furnaces
n
Technology
Exxon
contract for ExxonMobil Chemical,
in consortium with Mistui Engineering
Once the semi-modularisation
is complete, the eight furnaces
& Shipbuilding. This contract covers
will be delivered by sea to the Port
the semi-modularized fabrication
of Houston, to be then installed
and sea delivery of eight ethylene
on their foundations at Exxon’s
furnaces from a manufacturing
petrochemical complex in Baytown.
SEA TRANSPORT OF EIGHT FURNACES FROM SATTAHIP DISTRICT IN THAILAND TO THE PORT OF HOUSTON
HOUSTON
SATTAHIP
AXION
CAMPANA, ARGENTINA
€61 MILLION
n
Scope
Delivery of modules for a sulphur
recovery unit
This €61 million contract covers
the provision of equipment
and modules to a sulphur recovery
unit for the refinery in Campana,
Buenos Aires province, Argentina.
The pre-fabrication of the modules
is underway and the equipment
is expected to be delivered
in the second half of 2016.
25
26
RELIANCE
INDUSTRIES LIMITED
(JAMNAGAR III PROJECT)
JAMNAGAR, INDIA
€24 MILLION
n
Scope
Turnkey delivery of six furnaces
for a paraxylene production unit
PDVSA
SAN JOAQUÍN, VENEZUELA
€52 MILLION
n
Scope
Molecular sieve and removal
of mercury for a gas processing field
ROSNEFT
SYZRAN & KUIBYSHEVSK,
RUSSIA
€86 MILLION
n
cope
S
Delivery of two identical
steam methane reformers
(one for each site)
27
28
THE PEOPLE
03
OUR EMPLOYEES HANDLE
INTERNATIONAL PROJECTS
THAT REQUIRE STRONG
P RO J E C T M A N AG E M E NT
ABILITIES IN MULTICULTURAL
TEAM SETTINGS.
29
30
THE PEOPLE
03.1
The Group had 1,059 employees
at 31 December 2014, a 4% increase
from 31 December 2013.
This increase is attributable
to the expansion of the gas branch
in France and Malaysia, with the furnaces
branch headcount remaining stable.
Given Heurtey Petrochem’s leadership
position on a highly competitive global
market, employees are responsible
for international projects that require,
in addition to technical skills,
strong project management abilities
in multicultural team settings.
HR VALUES
Our HR strategy is to support
the Group’s development by clearly
defining everyone’s roles and
responsibilities. Human Resources
works with the subsidiaries to ensure
that their organisation is in line
with that of the Group.
HUMAN
RESOURCES
The main goals of our training
activities are to develop technical
know-how and managerial skills,
especially those required
for the recruitment and retention
of talent within the Group.
The HR policy pursued by the Group
aims to develop synergies between
our various entities in order to:
n Develop
Heurtey Petrochem Group’s
culture by promoting its values:
> professionalism and client
satisfaction;
> respect for the culture
and environment of the countries
where we work;
> team development and motivation.
n Share
talent between the Group’s
various entities, in particular through
provisional assignments and foreign
postings
n Ensure
equity in the Group’s
employee performance evaluation
process.
52 %
ENGINEERS
AND EXECUTIVES
48 %
OTHER
DISTRIBUTION OF GROUP STAFF
300
324
198
FRANCE
ROMANIA
INDIA
92
USA
GEOGRAPHIC DISTRIBUTION
75%
25%
MEN
WOMEN
GENDER DISTRIBUTION
145
OTHER
31
32
THE PEOPLE
03.2
Heurtey Petrochem considers
Health and Safety a top priority.
Our goal is to provide our employees
and subcontractors’ personnel with
a safe work environment, by creating
and maintaining a “zero accident” culture.
We have made 8 key commitments
which have to be applied by all employees
in each entity of the Group:
Ensure Health & Safety requirements
are considered as the first priority
in all Company activities : engineering,
fabrication, construction and start-up,
n Implement and maintain a Health
& Safety management system that
responds to our clients’ requirements
and international standards,
n Check the understanding
and the implementation of the Health
& Safety Policy at every level
within the Company,
n Collect Health & Safety indicators
for the whole Group, analyzing
and setting improvement actions,
n HEALTH AND SAFETY
Ensure that all accidents, incidents
and near misses are fully reported
and investigated to identify lessons
learned and prevent the occurrence
of similar events,
n Set objectives and targets
for promoting Health & Safety
and review them on a regular basis,
as part of a continuous improvement
process,
n Consider Health & Safety
performance as a major criterion
when selecting subcontractors,
n Support Heurtey Petrochem
employees by providing training
and development of Health & Safety
knowledge and skills.
n These 8 key commitments are
the foundation of the Group Health
& Safety Policy.
As part of this policy, Heurtey
Petrochem SA and Prosernat have
undertaken the process for OHSAS
18001certification.
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34
T HE FI GU RE S
04
STRONG
INCOME
GROWTH IN 2014
AND
INCREASED
CURRENT OPERATING
I N CO M E F O R B OT H
BUSINESS BRANCHES.
35
T HE FI GU RE S
04.1
THE GROUP’S ACTIVITIES
IN 2014 WERE MARKED
BY REVENUE EXPANSION
AND STRONG INCOME
GROWTH:
2014
IN FIGURES
n
Revenues:
With an order intake of €372 million
for the year, with strong momentum
in the gas segment (53% of order intake)
and a major breakthrough in the Middle East
(24% of order intake), the Group posted
an order book total of €507 million
at 31 December 2014.
€437 million (+9%)
Current operating income: €20.7 million (+25%)
n n
Net income, Group share:
20
.7
REVENUES
€ MILLION
2014
2 013
2 012
€ MILLION
CURRENT OPERATING INCOME
NET INCOME, GROUP SHARE
+57%
78
.2
€ MILLION
51
.2
2 013
2 012
€ MILLION
2014
2 013
2 012
€ MILLION
2014
2 013
2.
1
48
.5
5.
9
42
5
54
3
50
7
+25%
9.
2
+9%
2014
2014
2 013
2 012
11
.2
16
.6
40
1
34
1
43
7
€9.2 million (+57%)
2 012
36
ORDER BOOK AT 31 DECEMBER
SHAREHOLDERS’ EQUITY AT 31 DECEMBER
-7%
+53%
BREAKDOWN OF 2014 REVENUE
20 %
GAS
38 %
PETROCHEMICALS
25 %
REFINING
44 %
AMERICAS
17 %
5 %
HYDROGEN
MIDDLE EAST,
AFRICA
BREAKDOWN BY BUSINESS
32 %
EUROPE,
RUSSIA
19 %
ASIA, OCEANIA
BREAKDOWN BY REGION
BREAKDOWN OF ORDER BOOK AT 31 DECEMBER 2014
45 %
GAS
24 %
REFINING
64 %
AMERICAS
11 %
EUROPE,
RUSSIA
28 %
PETROCHEMICALS
BREAKDOWN BY BUSINESS
3 %
HYDROGEN
16 %
MIDDLE EAST,
AFRICA
BREAKDOWN BY REGION
9 %
ASIA, OCEANIA
37
38
T HE FI GU RE S
04.2
STOCK MARKET
INFORMATION
SHARE OVERVIEW
Trading market: Alternext
(Euronext Paris)
ISIN: FR0010343186
Ticker symbol: ALHPC
Number of shares: 4,896,402
MARKET DATA AT 30 APRIL
2015 AND CHANGE OVER
ONE-YEAR PERIOD
Price at 30 April 2015: €29.24
Market capitalisation: €143 million
Share price over one year: -21%
Average daily volume over
one year: 6,178
Capital turnover rate over
one year: 34%
CHANGE IN MARKET PRICE IN € OVER 1 YEAR AT APRIL 30, 2015
45
40
35
30
25
20
15
10
5
0
may 14
june 14
july 14
aug14
sept 14
oct 14
nov 14
dec 14
jan 15
feb 15
mar 15
apr 15
2015 FINANCIAL CALENDAR
Q1 2015 revenue
18 May 2015
Q2 2015 revenue
6 August 2015
H1 2015 results
16 September 2015
Q3 2015 revenue
12 November 2015
BREAKDOWN OF CAPITAL AT 31 DECEMBER 2014
1.5 %
MANAGEMENT AND
EMPLOYEES
36.1 %
IFP INVESTISSEMENTS
62.4 %
PUBLIC &
INSTITUTIONALS
DIVIDENDS IN 2014
Heurtey Petrochem’s Board of Directors
will propose an unchanged gross
dividend payment of €0.55 per share,
corresponding to a dividend payout
of 28%, to the Shareholders’ Meeting
convened to approve the financial
statements for 2014. This dividend
will be detached on 18 June 2015
and paid on 22 June 2015.
CONTACTS
Anaïs de Scitivaux, Investor Relations / Tel.: +33 (0)1 41 93 46 42 / +33 (0)6 73 21 35 84 / [email protected]
All of the Group’s financial publications are also available from the Group’s website: www.heurtey.com
n 39
40
T HE FI GU RE S
04.3
1 CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
42
2 COMPREHENSIVE INCOME
44
3 STATEMENT OF CHANGES
IN SHAREHOLDERS’ EQUITY
45
CONSOLIDATED FINANCIAL STATEMENTS,
DECEMBER 31, 2014
NOTE 4
NOTES ON THE STATEMENT OF CONSOLIDATED FINANCIAL POSITION
5.6 Other financial income and expenses 74
56
5.7 Corporate income tax
74
5.8 Earnings per share
75
NOTE 6
INFORMATION ON RELATED PARTIES
4.1 Goodwill
56
4.2 Intangible fixed assets
57
4.3 Tangible fixed assets
58
4.4 Financial assets
59
5 NOTES TO THE CONSOLIDATED
ANNUAL FINANCIAL STATEMENTS
47
4.5 Equity-accounted joint ventures
59
4.6 Deferred taxes
61
7.1 Interest-rate risk
76
4.7 Inventories
61
7.2 Foreign exchange risk
76
NOTE 1
OVERVIEW
4.8 On-going construction contracts
62
7.3 Liquidity risk
77
7.4 Credit risk
77
4 CONSOLIDATED CASH
FLOW STATEMENT
46
47
4.9 Trade receivables and related accounts62
1.1 Information about the Group
47
4.10 Current taxes (assets)
62
1.2 Presentation of Group activities
47
4.11 Other current assets
62
4.12 Cash and cash equivalents
63
4.13 Shareholders’ equity
63
4.14 Financial debt
NOTE 2
NOTE 2. KEY EVENTS IN THE FINANCIAL YEAR
2.1 Capital increase
47
47
47
in Petro-Chem Korea
77
65
8.1 Commitments received
77
68
8.2 Commitments given
78
68
4.17 Other current and non-current
liabilities69
2.3 Purchase of an additional stake
47
4.18 Financial instruments
70
2.4 Acquisition of sulphur recovery
technology47
NOTE 3
ACCOUNTING PRINCIPLES
47
NOTE 5
NOTES ON THE PROFIT
AND LOSS STATEMENT
72
5.1 Segment reporting
72
73
3.1 Accounting standards
47
5.2 Type of expenses allocated by type
3.2 Valuation methods and rules
48
5.3 Breakdown of employee costs
by type
5.4 Average headcount
NOTE 7
EXPOSURE TO FINANCIAL RISKS 76
NOTE 8
OFF-BALANCE SHEET COMMITMENTS
4.16 Provisions for pension obligations
and similar benefits
2.2 Buyout of minority interests
in Prosernat
4.15 Provisions
76
73
73
5.5 Other operating income and expenses 74
NOTE 9
LITIGATION AND CONTINGENT
LIABILITIES
79
NOTE 10
POST-CLOSING EVENTS
79
NOTE 11
AUDITORS’ FEES
80
NOTE 12
SCOPE OF CONSOLIDATION
80
41
42
T HE FI GU RE S
1
04.3
CONSOLIDATED FINANCIAL STATEMENTS, DECEMBER 31, 2014
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
In € thousands
NOTES
DECEMBER 31, 2014
DECEMBER 31, 2013
Goodwill
4.1
65,282
56,814
Intangible fixed assets
4.2
8,010
8,568
Tangible fixed assets
4.3
8,816
9,157
Financial assets
4.4
1,377
1,767
88
6
4.5
186
371
4.18
101
141
ASSETS
NON-CURRENT ASSETS
Other non-current assets
Interests in equity-accounted joint ventures
Derivative financial instruments
Deferred tax assets
4.6
3,779
3,798
87,640
80,623
CURRENT ASSETS
Inventories
4.7
3,083
3,148
On-going construction contracts (assets)
4.8
88,441
91,048
Trade receivables and related accounts
4.9
156,932
100,553
Current taxes (assets)
4.10
3,470
2,173
Other current assets
4.11
36,875
55,890
4.18
187
619
Cash and cash equivalents
4.12
TOTAL ASSETS
56,210
42,835
345,198
296,267
432,838
376,890
In € thousands
NOTES
DECEMBER 31, 2014
DECEMBER 31, 2013
Share capital
16,354
11,822
Issue premiums
35,538
5,617
Consolidated reserves – Group share
22,985
15,826
9,165
5,851
EQUITY AND LIABILITIES
Profit for the period – Group share
Translation reserves
(5,995)
(3,997)
SHAREHOLDERS' EQUITY (GROUP SHARE)
78,047
35,120
Non-controlling interests (minority interests)
186
16,044
4.13
78,233
51,163
Financial debt
4.14
7,305
11,030
Provisions
4.15
118
72
TOTAL EQUITY
NON-CURRENT LIABILITIES
Provisions for pension obligations and similar benefits
4.16
1,985
1,474
4.18
1,058
50
4.6
2,333
1,435
4.17
2,384
Deferred tax liabilities
Other non-current liabilities
15,183
14,062
CURRENT LIABILITIES
Financial debt
4.14
26,832
20,913
Provisions
4.15
4,383
3,746
On-going construction contracts (liabilities)
4.8
Trade payables and related accounts
Current tax liabilities
99,915
72,945
184,262
188,775
2,548
1,404
4.18
160
3,677
Other current liabilities
4.17
21,322
20,205
339,422
311,665
432,838
376,890
TOTAL EQUITY AND LIABILITIES
43
44
T HE FI GU RE S
2
04.3
COMPREHENSIVE INCOME
CONSOLIDATED PROFIT AND LOSS STATEMENT
In € thousands
NOTES
2014
2013
REVENUE
5.1
437,481
400,536
Cost of sales
5.2
(376,897)
(347,933)
60,584
52,603
(39,860)
(35,991)
20,724
16,612
228
2
GROSS MARGIN
Administrative and commercial expenses
5.2
CURRENT OPERATING INCOME
Other operating income
5.5
Other operating expenses
5.5
OPERATING INCOME
Share of net income from equity-accounted joint ventures
OPERATING INCOME, INCLUDING THE SHARE OF NET PROFIT FROM EQUITY-ACCOUNTED
JOINT VENTURES
Income from cash and cash equivalents
Gross cost of financial debt
NET COST OF FINANCIAL DEBT
Other financial income and expenses
5.6
OTHER FINANCIAL INCOME AND EXPENSES
INCOME BEFORE TAX
Income tax expense
5.7
CONSOLIDATED NET INCOME
Net income attributable to non-controlling interests (minority interests)
Net income, Group share
(794)
(1,824)
20,158
14,790
(155)
(417)
20,003
14,373
448
326
(1,371)
(1,406)
(923)
(1,080)
(4,488)
(1,524)
(4,488)
(1,524)
14,592
11,768
(4,966)
(4,932)
9,626
6,837
462
985
9,165
5,851
EARNINGS PER SHARE (IN €):
Basic
5.8
2.12
1.67
Diluted
5.8
2.11
1.64
OTHER COMPREHENSIVE INCOME ITEMS
In € thousands
Translation adjustments
Cash flow hedges
2014
2013
9,626
6,837
(1,987)
(2,702)
2,375
(2,623)
Deferred tax on items that will be reclassified to profit or loss
(773)
876
TOTAL OTHER ITEMS OF COMPREHENSIVE INCOME THAT WILL BE RECLASSIFIED TO PROFIT OR LOSS
(385)
(4,449)
Actuarial gains and losses
(135)
15
53
(3)
(82)
12
9,159
2,400
8,648
1,262
511
1,138
Deferred tax on items that will not be reclassified to profit or loss
TOTAL OTHER ITEMS OF COMPREHENSIVE INCOME THAT WILL NOT BE RECLASSIFIED TO PROFIT OR LOSS
CONSOLIDATED COMPREHENSIVE INCOME
Of which: Group share
Net income attributable to non-controlling interests (minority interests)
3
STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
in € thousands
BALANCE AT JANUARY
1, 2013
NUMBER
OF SHARES
RESERVES FOR
FAIR SHAREHOLDERS'
NON-CONTROLLING
CONSOLIDATED
TOTAL
ISSUE TREASURY
VALUE
INTERESTS SHAREHOLDERS'
INCOME TRANSLATION ACTUARIAL GAINS
EQUITY
CAPITAL PREMIUMS SHARES AND RESERVES
RESERVES
AND LOSSES RESERVES (GROUP SHARE) (MINORITY INTERESTS)
EQUITY
3,389,568 11,321
4,408
(85)
18,504
(1,326)
4
5,851
Consolidated net income
6
Gains and losses
on hedging instruments
(1,924)
Other items
of comprehensive income
Total other items
COMPREHENSIVE
INCOME
Share-based payments
150,000
501
Dividends paid
Change in scope
BALANCE AT DECEMBER
3,539,568 11,822
31, 2013
5,617
(64)
(1,924)
177
(1,747)
(2,670)
(32)
(2,702)
(4,437)
5,853
(2,672)
6 (1,924)
1,262
1,138
2,400
21
21
178
178
178
3,405
1
3,406
(251)
(1,946)
(840)
(2,786)
(270)
(270)
(329)
(598)
35,120
16,044
51,163
9,164
462
9,626
(85)
3
(82)
1,597
5
1,602
(2,028)
41
(1,987)
1,597
(516)
49
(467)
(85) 1,597
8,648
511
9,159
24,015
(3,997)
10 (2,282)
1,597
(2,028)
Total other items
(2,028)
9,164
(2,028)
(85)
(133)
(133)
88
1,356,834
12
152
Capital increase
6,837
6
(4,589)
Gains and losses
on hedging instruments
985
6
6 (1,924)
(85)
Trading in own shares
5,851
(2,672)
COMPREHENSIVE
INCOME
48,542
2
9,164
16,074
(2,672)
2,904
(1,695)
32,468
2
21
Trading in own shares
Capital increase
(358)
4,532 29,921
(133)
88
88
34,453
34,453
Dividends paid
(1,947)
(1,947)
(480)
(2,427)
Change in scope
1,617
30
3
167
1,818
(15,889)
(14,071)
32,938
(5,995)
(73)
(518)
78,047
186
78,233
BALANCE AT DECEMBER
4,896,402 16,354 35,538
31, 2014
(197)
45
46
T HE FI GU RE S
4
04.3
CONSOLIDATED CASH FLOW STATEMENT
In € thousands
NOTES
Elimination of income from equity-accounted joint ventures
Elimination of amortization, depreciation and provisions
Elimination of revaluation gains/losses (fair value)
2014
2013
9,626
6,837
155
417
4,049
4,672
356
14
5
(45)
(319)
(739)
Elimination of income from transfers and dilution losses and profits
71
187
Income and expenses in connection with share-based payments
88
178
14,031
11,521
4,966
4,932
Elimination of the discounting effect
Elimination of other items without cash impact
CASH FLOW AFTER THE NET COST OF FINANCIAL DEBT AND TAX
Elimination of tax expenses (income)
Elimination of the net cost of financial debt
CASH FLOW BEFORE THE NET COST OF FINANCIAL DEBT AND TAX
Impact of changes in WCR
Taxes paid
CASH FLOW FROM OPERATING ACTIVITIES
Impact of changes in scope
4.1.2
Acquisition of tangible and intangible fixed assets
Changes in loans and advances granted
Disposal of tangible and intangible fixed assets
CASH FLOW FROM INVESTING ACTIVITIES
Capital increase - other
923
1,080
19,920
17,533
(14,794)
6,900
(5,485)
(3,914)
(358)
20,519
(1,527)
(2,646)
(9,638)
724
52
(400)
2
(3,849)
(9,584)
34,447
Loan issues
4.14
3,394
7,359
Loan repayments
4.14
(8,762)
(5,424)
Shareholder transactions: partial disposals / acquisitions
4.1.2
(14,092)
(599)
(721)
(894)
(1,947)
(1,945)
(480)
(840)
Net financial interest paid
Dividends paid to Group shareholders
Dividends paid to minority interests
Other flows from financing operations
(96)
CASH FLOW FROM FINANCING ACTIVITIES
11,840
(2,439)
Impact of changes in foreign exchange rates
(2,658)
(86)
CHANGE IN CASH POSITION
4,975
8,410
Opening cash position
4.12
30,599
22,189
Closing cash position
4.12
35,574
30,599
4,975
8,410
CHANGE IN CASH POSITION
5
NOTES TO THE CONSOLIDATED
ANNUAL FINANCIAL STATEMENTS
NOTE 1. OVERVIEW
1.1. I NFORMATION ABOUT
THE GROUP
Heurtey Petrochem (the «Company»)
is a public limited company under French
law governed by a Board of Directors
and having its registered offices at 8 Cours
Louis Lumière, 94300 Vincennes, France.
The Company’s shares are traded
on the Alternext market of Euronext Paris
(ISIN: FR0010343186, ticker symbol:
ALHPC).
1.2. PRESENTATION OF GROUP
ACTIVITIES
Heurtey Petrochem is a global oil and gas
engineering group operating across
two market segments:
Process heaters for refining,
petrochemicals and hydrogen production.
Heurtey Petrochem is one of the global
leaders in this segment.
n Natural gas processing via its Prosernat
subsidiary. In this segment, the Group
operates both as a technology supplier
and as an EPC provider.
n Heurtey Petrochem’s growth draws
on a large international network of
subsidiaries and branches, with a presence
in South Africa, South Korea, the United
States, India, Malaysia, Romania, Russia,
China, Brazil and the Middle East (the
«Group»).
NOTE 2.
KEY EVENTS
IN THE FINANCIAL YEAR
2.1. CAPITAL INCREASE
On May 6, 2014, the Group increased
its capital, maintaining shareholders’
preferential subscription rights. The share
issue was oversubscribed by 153%.
Gross income from the transaction
amounted to €35.277 million (including
the issue premium), after the full exercise
of the extension option, and €34.453
million after issue fees, net of tax. The deal
resulted in the issue of 1,356,834 new
shares priced at €26.
After the capital increase, the company’s
share capital totaled €16,353,982.68,
divided into 4,896,402 shares with
a par value of €3.34. Following
the transaction, IFP Investissements holds
36.1% of the company’s share capital
and 36.2% of voting rights.
2.2. BUYOUT OF MINORITY
INTERESTS IN PROSERNAT
In April 2011, Heurtey Petrochem
acquired 60% of Prosernat’s share capital
from IFP Investissements. Following
the capital increase, the Group purchased
the remaining 106,580 shares held by IFP
Investissements, representing 40%
of the share capital. The shares
were valued at €13.277 million based
on an independent expert appraisal.
The impact of this acquisition
on the Group’s financial statements
is described in Note 4.1.
2.3. PURCHASE OF AN ADDITIONAL
STAKE IN PETRO-CHEM KOREA
In early October 2014, Heurtey Petrochem
SA acquired 10.81% of the share capital
of Petro-Chem Korea, increasing its holding
in this subsidiary to 94.8%.
2.4. ACQUISITION OF SULPHUR
RECOVERY TECHNOLOGY
On October 15, 2014 Prosernat acquired
100% of the shares in ITS Reaktortechnik
GmbH, for an estimated total acquisition
price of €4.850 million (excluding fees).
As part of this deal, Prosernat acquired the
SmartSulf™ technology developed by ITSR. NOTE 3.
ACCOUNTING PRINCIPLES
3.1. ACCOUNTING STANDARDS
The Group’s consolidated financial
statements for the year ended December
31, 2014 were closed and approved
for publication by the Board of Directors
on March 17, 2015. They are presented
in thousands of euros and all values
are rounded to the nearest thousand
unless otherwise indicated.
In application of European Regulation
no. 1606/2002 of July 19, 2002,
the consolidated financial statements
for financial year 2014 were prepared
in accordance with International Financial
Reporting Standards (IFRS) with mandatory
application as from January 1, 2014,
as adopted by the European Union
and available online at:
http://ec.europa.eu/internal_market/
accounting/ias/index_fr.htm.
The accounting principles and valuation
methods used to prepare these
consolidated financial statements
are identical to those applied by the Group
as at December 31, 2013 and described
in Note 3.2, with the exception of new
applicable standards and interpretations
as described in paragraph 3.1.1.
3.1.1. New standards and
interpretations with mandatory
application as of January 1, 2014
New standards or amendments with
mandatory application as of January 1,
2014 had no material impact on the
Group’s financial statements at December
31, 2014. They concern:
n I FRS 10*, «Consolidated Financial
Statements»;
n I FRS 11* «Partnerships», which replaces
IAS 31 «Interests in Joint Ventures»
and SIC-13, «Jointly-Controlled Entities Non-Monetary Contributions
by Venturers»;
n I FRS 12*, «Disclosure of Interests
in Other Entities»;
n A mendment to IAS 28*, «Investments
in Associates and Joint Ventures».
*These standards were adopted early
by the Group as of January 1, 2013.
Amendment to IFRS 32, «Financial
Instruments: Presentation - Offsetting
Financial Assets and Financial
Liabilities»;
n 47
48
T HE FI GU RE S
5
NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS
Amendment to IAS 36, «Recoverable
Amount Disclosures for Non-Financial
Assets»;
n A mendment to IAS 39, «Novation
of Derivatives and Continuation
of Hedge Accounting»;
n A mendment to IAS 27, «Consolidated
and Separate Financial Statements».
n 3.1.2. New standards and
interpretations not applicable
as of January 1, 2014
The new standards, amendments to
existing standards and interpretations
that follow are not applicable as from
January 1, 2014 and were not early
adopted by the Group:
Standards adopted by the European Union
as at December 31, 2014:
Amendments to IAS 19, «Defined
Benefit Plans: Employee Contributions»,
to be applied no later than annual
periods beginning as of February 1,
2015;
n IFRIC 21, «Levies», with mandatory
application as of January 1, 2015.
n Standards not adopted by the European
Union as at December 31, 2014:
IFRS 9, «Financial instruments»,
with mandatory application as of January
1, 2015;
n IFRS 15 «Revenues from Contracts
with Customers», applicable for annual
periods beginning as of January 1, 2017;
n Amendments to IFRS 11 «Joint
Arrangements: Acquisition of an Interest
in a Joint Operation», effective for annual
periods beginning as of January 1, 2016;
n Amendments to IAS 16, «Property,
Plant and Equipment», and to IAS 38,
«Intangible Assets», to be applied
no later than annual periods beginning
as of January 1, 2016;
n Amendments to IFRS 10 and IAS 28,
«Sale or Contribution of Assets
between an Investor and its Associate
or Joint Venture», to be applied no later
than annual periods beginning
as of January 1, 2016.
n 04.3
The Group is assessing the impacts
of these new standards.
3.2. VALUATION METHODS
AND RULES
3.2.1. Consolidation methods
The subsidiaries’ financial statements
are prepared over the same reference
period as the parent company’s financial
statements, on the basis of uniform
accounting methods.
All intragroup balances and transactions,
as well as the income, expenses and profit
included in the net book value of the
assets resulting from internal transactions,
are eliminated.
All companies in which the Group directly
or indirectly exercises control are
consolidated using the full consolidation
method. Control exists whenever the Group
is exposed or entitled to variable returns
as a result of its connections with the
entity that is being invested in, and
whenever it has the capacity to influence
these returns due to the power it holds
over that entity.
All Group entities over which the parent
company exercises joint control
are consolidated using the equity method.
Joint control in a partnership occurs
only if the decisions on the relevant
activities require the unanimous consent
of all the parties that control
the agreement jointly.
Associates are entities in which
the Group exercises notable influence.
Associates are consolidated using
the equity method.
3.2.2. Conversion Methods
Conversion of foreign companies’
financial statements
The functional currency of a consolidated
entity is the currency of the basic
economic environment in which this entity
conducts its transactions. In the majority
of cases, the functional currency is the
local currency. However, a functional
currency other than the local currency
must be used for some entities
if it represents the currency
of the principal transactions carried
out by the entity and ensures a
faithful representation of its economic
environment.
The financial statements of foreign
entities whose functional currency
is different from the currency in which
the Group’s consolidated financial
statements are presented are converted
using the so-called «closing price»
method.
Under this method, balance sheet items
are translated based on the foreign
exchange rate at year-end. Profit and loss
statement items are translated based
on the average exchange rate for the year.
The resulting translation adjustments
are recognized directly in other
comprehensive income items under
the heading «Translation adjustments».
Goodwill relating to foreign entities whose
functional currency is not the euro is
considered to belong to existing assets
and liabilities and, as such, is converted
at the foreign exchange rate in force
on the closing date.
Transactions in foreign currencies
Transactions in foreign currencies are
converted into euros at the exchange
rate in force on the transaction date,
or at the hedged rate.
At the financial year end, unhedged
financial assets and monetary liabilities
denominated in foreign currencies
are converted to euros at the year-end
exchange rate. The resulting exchange
gains and losses are booked as foreign
exchange gains and losses and presented
as «Other financial income and expenses»
in the profit and loss statement.
To reduce the risk arising from currency
fluctuations, the Group uses currency
hedging contracts.
Derivatives are valued and booked in
keeping with the general principles
described in Note 3.2.14. Consequently,
currency derivatives are booked on the
balance sheet at their fair value.
3.2.3. Significant estimates
and accounting judgements
In the course of preparing the financial
statements, the Group may perform
estimates and form assumptions that
affect the evaluation and presentation
of certain assets and liabilities, information
disclosed on contingent liabilities
on the closing date and income
and expenses for the period.
These estimates are based on the
information available on the year-end
closing date. They may change according
to events or information that affect
the circumstances in which the estimates
were developed and, where applicable,
a sensitivity test may be performed
if it is significant. Thus, real income
may be different from these estimates.
Owing to the uncertainty of such
estimates and assumptions,
the settlement of underlying transactions
may result in a significant adjustment
to the amounts recognized during
a subsequent period.
The use of judgements and estimates
is particularly important for the following:
n recoverable value of non-financial
assets, specifically goodwill see Note 3.2.7,
n f air value of derivatives see Note 3.2.14,
n provisions – see Note 3.2.15,
n deferred tax assets - see Note 3.2.19,
n recognition of construction contracts
(particularly estimating the margin
at completion) - see Note 3.2.22.
3.2.4. Business combinations
and goodwill
The assets, liabilities and contingent
liabilities acquired in the context
of business combinations are recorded
and measured at fair value.
Goodwill, which is measured as the
difference between the consideration
transferred (acquisition cost plus the fair
value of the proportion previously held
and the value of interest attributable
to non-controlling holdings)
and the fair-value measurement
of the identifiable assets acquired,
liabilities assumed and contingent
liabilities identified, is recognized under
«Goodwill» in the Statement of Financial
Position.
For each business combination, the Group
may opt to recognize the non-vested
portion of the interest (non-controlling
holdings):
Either at fair value on the acquisition
date with, consequently, the recognition
of goodwill on that non-vested portion
(the full goodwill method),
n O r on the basis of its share of the net
identifiable assets of the acquired
entity measured at fair value,
which results in the recognition of only
the goodwill attributable to owners
of the parent company (the partial
goodwill method).
n Direct costs of the acquisition are recorded
as expenses in the period during which
they are incurred.
During the allocation period - limited
to twelve months from the acquisition
date - changes in the value of the
identifiable assets acquired, liabilities
assumed and contingent liabilities relating
to booked acquisitions are recorded
as a retroactive adjustment to goodwill.
After this allocation deadline, changes
to the estimated value of the identifiable
assets acquired, liabilities assumed
and contingent liabilities are recorded
as income, with no adjustment
to goodwill.
Goodwill is allocated to cash-generating
units (CGU) or groups of CGU, defined
by the Group within the operating
segments (Heaters and Gas) as presented
in Note 4.1.
A cash-generating unit is defined,
for internal management purposes,
as the smallest identifiable group
of assets generating cash inflows largely
independently of the cash inflows
generated by other groups of assets.
3.2.5. Intangible fixed assets
Intangible fixed assets are valued using
the amortized cost method as long as
future economic benefits attributable
to the asset will go to the Group
and that cost can be reliably evaluated.
3.2.5.1. Research & development
expenses
Research & development expenses
incurred when new programs are designed
are booked as assets in the statement
of financial position when the following
six general criteria are met:
the completion of the intangible fixed
asset is technically feasible so that
it may be used or sold;
n t here is intent to complete production
of the asset to use or sell it;
n t he asset produced can be used or sold;
n t he asset is able to generate future
economic benefits;
n t he technical, financial or other resources
required to successfully complete
the project are or will be available;
n t he expenses for this asset during
its development phase can be reliably
measured.
n These development costs include
the gross wages and payroll expenses
for the employees who work on these
programs and are calculated on the basis
of their time plus a proportion
of indirect costs. The costs related
to service providers involved in these
projects are also recognized. Finally,
the proportion of Research Tax Credits
relative to development costs is deducted
from the amount of the projects activated,
see Note 3.2.18.
Amortization begins as soon as
the development project is finalized.
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04.3
The useful life of these development
costs is estimated according to each
project, and the equipment is amortized
on a straight-line basis over a fiveto ten-year period.
Residual values and useful lives
are reviewed at each closing date
and revised if need be.
Development costs that do not meet
the activation criteria and research
costs are booked as expenses under
«Administrative and commercial
expenses» over the course of the financial
year in which they are incurred.
3.2.5.2. Patents and software
Software is valued at its acquisition
cost (purchase price plus ancillary costs).
Depreciation is calculated using
the straight-line method over
a three-year period.
Patents are amortized over the legal
protection period.
3.2.6. Tangible fixed assets
Tangible fixed assets are recognized
at their acquisition cost (purchase price
plus ancillary costs) or their production
cost for certain tangible fixed assets
produced internally.
Depreciation is calculated using
the straight-line method, based on each
fixed asset’s expected useful life.
Industrial equipment
5 years
Reprographic equipment
5 years
> Fixtures and installations
10 years
> Office and computer equipment
> Excluding laptop computers 5 years
> Laptop computers
3 years
> Moveable property
10 years
>
>
3.2.7. Impairment losses
on intangible or tangible fixed
assets or goodwill
The book value of non-current
non-financial assets is revised
at every closing date to identify
any impairment losses:
For goodwill: at every closing date,
or more frequently if there are
any impairment loss indicators;
n For all other assets: as soon as there
are any impairment loss indicators.
n External indicators are used as impairment
loss indicators likely to trigger an
impairment test (market value, significant
changes in the business environment,
trend in the commercial success of a
product, technology trends, etc.)
With regard to goodwill, impairment testing
is done for the cash-generating unit(s)
to which the goodwill has been allocated
by comparing the recoverable value with
the book value of the cash-generating
units.
The recoverable value of a cash-generating
unit is the higher of the fair value
(generally the market price), net of disposal
costs, and the useful value.
The useful value is assessed by
discounting the after-tax future financial
flows generated on activities to which
the goodwill is allocated, based on the
most likely assumptions applied
by Management.
The assumptions selected are based
on budgets and «business plans»
for each activity, prepared by Management.
Budgets are approved by the Board
of Directors. Other assumptions
that influence the assessment
of the recoverable value are: growth rate,
operating margin, discount rate
and tax rate.
Like any estimate, the assumptions
used for these calculations include
a degree of uncertainty and are, therefore,
liable to be adjusted in subsequent periods.
The detailed assumptions applied
are presented in Note 4.1.1.
If the book value of the cash-generating
unit exceeds the recoverable value,
the assets of the cash-generating
unit are depreciated to be restored
to their recoverable value.
The impairment loss is charged to goodwill
first and recorded in the profit and loss
statement. It cannot be recovered.
It is booked as other operating expenses.
3.2.8. Financial assets
Financial assets include available-for-sale
assets, held-to-maturity assets, loans
and receivables, and cash and cash
equivalents.
The valuation and accounting of financial
assets and liabilities are defined by IAS 39,
«Financial Instruments: Recognition
and Measurement».
3.2.8.1. Assets available for sale
Available-for-sale assets mainly include
securities that do not meet the definition
of other financial asset categories.
They are measured at fair value,
and changes in value are booked in equity.
Fair value is the market price for listed
securities or an estimate of useful value
for unlisted securities, determined using
the most appropriate financial criteria
for each security’s particular situation.
When there is an objective indication
of these securities’ impairment, the total
loss that is booked as equity is recognized
as income.
3.2.8.2. Assets held to maturity
These assets are fixed-income securities
or those that can be determined
at fixed maturities, other than loans
and receivables, which the company
has the intent and ability to hold until
maturity. After their initial recognition
at fair value, they are evaluated and
recognized at the amortized cost using
the effective interest rate method (EIR).
Held-to-maturity assets are assessed
for any objective evidence of impairment.
A financial asset is impaired if its book
value is higher than its recoverable value
estimated during impairment testing.
Impairment losses are booked in the profit
and loss statement.
3.2.8.3. Loans and Receivables
This category includes receivables held on
joint ventures, other loans and receivables,
and trade receivables.
These instruments are initially recognized
at fair value then at amortized cost
calculated using the EIR. Short-term
receivables without declared interest rates
are valued at the amount of the original
invoice unless the application of an implied
interest rate has a significant impact.
For variable-rate loans and receivables,
a periodic re-estimate of cash flows
to reflect the trend in market interest
rates, adjusts the actual interest rate
and, consequently, the valuation
of the loan or receivable.
Loans and receivables are assessed
for any objective evidence of impairment.
A financial asset is impaired if its book
value is higher than its recoverable value
estimated during impairment testing.
Impairment losses are booked in the profit
and loss statement.
Loans and receivables also include deposits
and guarantees, posted as non-current
financial assets on the balance sheet.
3.2.8.4. Assets held for trading
at fair value by the profit and loss
statement
Held-for-trading assets include assets
that the company intends to sell
in the near future to realize a capital gain,
that belong to a portfolio of financial
instruments managed together,
and for which there is a practice of shortterm disposal. Held-for-trading assets can
also include assets voluntarily classified
in that category, regardless of the criteria
listed above (fair value option).
3.2.9. Leases
Operating Leases
Payments made for operating leases
are booked as expenses in the profit
and loss statement, on a straight-line basis
throughout the contract period.
Rental income is recognized as profit using
the straight-line method.
Finance Leases
Finance leases are contracts that have
the effect of transferring to the lessee
most of the risks and benefits inherent
in the ownership of the property subject
to the contract. In such cases, the
property thus financed appears under
assets on the balance sheet at the lower
of the fair value of the asset
or the discounted value of the minimum
payments. They are amortized over
their probable useful life,
the corresponding debt is entered
as a liability, and the finance lease
payments are recognized as loan
repayments and financial expenses.
3.2.10. Inventories and work
in progress (excluding construction
contracts)
Inventories and works in progress
(industrial output) are valued at their
lowest cost and net realizable value.
This cost is determined using the first-in,
first-out method and includes the costs
of merchandise and direct labor as well
as a share of indirect production costs.
The gross value of inventories and supplies
includes the purchase price, customs
duties, and other fees, as well as handling
and shipping costs, and other costs directly
attributable to the acquisitions.
A provision for impairment is made
on a case-by-case basis when the
useful value is less than the book value;
specifically, when inventories are booked
at a higher amount than the company
expects to get from their sale or use.
The cost of inventories may also not
be recoverable if those inventories have
been damaged, or become fully or partially
obsolete, or if their sale price has suffered
a loss.
3.2.11. Cash and cash equivalents
The amount shown on the assets side
of the balance sheet as «Cash and cash
equivalents» includes cash at bank
as well as cash equivalents (highly liquid
short-term investments which can easily
be converted into known amounts
of cash and are subject to a negligible
risk of a change in value).
Short-term investments are measured
at the market value at each closing date.
Investments in listed securities,
investments with initial maturities
of more than three months without
the possibility of early completion
and bank accounts subject to restrictions
(blocked accounts), are not presented
as cash or cash equivalents and are
classified as other current or non-current
financial assets.
Overdrafts are included as loans
on the liabilities side of the balance sheet.
For the purposes of the consolidated cash
flow table, cash and cash equivalents
include cash and cash equivalents
as defined above, net of overdrafts.
3.2.12. Treasury shares
Shares held by the Group are deducted
from equity using their acquisition cost.
Any profits or losses from the purchase,
sale, issue or cancellation of treasury
shares are recognized directly as equity
without affecting income.
3.2.13. Valuation and recognition
of financial liabilities
3.2.13.1. Loans
All loans are initially booked
at fair value of the amount received,
net of directly-attributable transaction
costs. Subsequent to the initial
recognition, interest-bearing loans
are valued at their amortized cost,
using the effective interest rate
(EIR) method.
The EIR is the rate that equalizes
the expected future cash outflows
with the current net book value
of the financial liability in order
to calculate its amortized cost.
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04.3
3.2.14. Derivatives
To hedge its exposure to market (mainly
interest rate and currency) risks, the Group
uses derivatives.
Most interest rate and currency derivatives
used by the Group are qualified
as hedge instruments. Hedge accounting
is applicable if the conditions set out
in IAS 39 are met:
the hedging relationship must be clearly
identified and documented as of the
date on which the hedge is put in place;
n the «efficacy» of the hedging
relationship must be demonstrated at
its origin and at each closing date, in a
forward- and backward-looking way.
n The fair value of the derivatives considered
hedges, with maturity of greater than
one year, is presented on the balance
sheet under «Derivatives» as non-current
or current assets or liabilities, depending
on the instrument’s maturity.
Financial instruments considered
hedges
Financial instruments that are considered
hedge instruments are automatically
recognized at fair value on the balance
sheet. However, their recognition depends
on whether they are qualified as:
Fair value hedges of an asset or liability,
or of an unrecognized firm commitment;
n Cash flow hedges;
n Hedges of a net investment made
in a foreign entity.
n Fair value hedging
Fair value hedging is used to hedge
exposure to the risk of changes in the fair
value of a financial asset, financial liability
or unrecognized firm commitment.
Changes in the fair value of the hedge
instrument are booked as income f
or the period in «Other financial income
and expenses». The change in value
of the hedged item that is attributable
to the hedged risk is booked in the profit
and loss statement for the period
(and adjusted to the value of the hedged
item). These two revaluations offset
each other within the same headings
of the profit and loss statement,
notwithstanding the amount of the
«ineffective» part of the hedge.
Cash flow hedges
With cash flow hedging, the changes
in value of future cash flows attached
to existing assets or liabilities,
or to a highly likely planned transaction,
are hedged. Changes in the fair value
of the derivative are recognized as equity
for the «effective» part of the hedge,
and as «Other financial income
and expenses» for the period
for the «ineffective» part.
Cumulative gains or losses in equity
are reported as income under the same
heading as the hedged item i.e. operating profit for operating cash
flow hedges and financial income
for the others - when the hedged cash
flow affects income.
If the hedging relationship is interrupted,
in cases where it becomes «ineffective»,
cumulative gains or losses on the
derivative are held in equity and recognized
symmetrically to the hedged cash flows.
If future cash flow is no longer expected,
gains and losses previously recognized
as equity are then reported in the profit
and loss statement.
Hedging a net investment
Hedging a net investment in foreign
currency hedges the currency risk
attached to net stake in a consolidated
foreign subsidiary. Like hedging the cash
flow, the «effective» portion of changes
in the value of the hedged instrument
are booked as equity under «Translation
adjustments», while the share of changes
in value that are considered «ineffective»
is taken to income.
Changes in the value of the hedge
instrument booked as «Translation
adjustments» are taken to income
on the disposal of the foreign entity
that was the object of the initial
investment.
Derivatives not considered hedges
Derivatives not considered as hedge
instruments are recognized
on the balance sheet at their fair value,
and the change in fair value is booked
as income under «Other financial income
and expenses».
3.2.15. Provisions
Provisions are recognized when,
on the closing date, the Group has a legal,
contractual or implied obligation toward
a third party resulting from a past
event, and it is likely that a withdrawal
of resources representing economic
benefits will be required to extinguish
the obligation without at least equivalent
compensation, and when the amount
of the obligation can be reliably
estimated.
If the Group is expecting full or partial
compensation for the provision, e.g.
because of an insurance contract,
the repayment is recognized as a separate
asset, but only if the repayment
is virtually certain.
Since provisions are estimated
on the basis of future risks or charges,
their amounts include a degree
of uncertainty and are liable
to be adjusted in later periods.
The impact of discounting provisions
is factored in if it is significant.
P rovisions for bonds related
to construction contracts
n Bonds related to on-going construction
contracts are factored into the valuation
of the margin at completion.
On the contract completion date,
these bonds are recognized as liabilities
as separate items, particularly those
that exist in the context of legal
and/or contractual guarantees regarding
the projects delivered.
Provisions for losses at completion
n Provisions for losses at completion include
losses created once the contract
is estimated to be or become a loss-maker.
These provisions are shown on the balance
sheet under «On-going construction
contracts (assets)» or «On-going
construction contracts (liabilities)».
Other provisions
n Other bonds are recognized as Provisions
if they meet the aforementioned criteria.
3.2.16. Provisions for pension
obligations and similar benefits
Depending on the country, the Group
participates in defined-contribution
pension plans and defined-benefit
pension plans.
For defined-contribution pension plans,
the Group pays contributions to an outside
organization and it is never committed
in excess of the contributions paid.
These are recognized as expenses only
when they are due. On the balance sheet,
debts relating to these plans are booked
under operating debt.
In both plans, the amount of benefits
that will be payable to employees
when they retire or for their pension
fund are paid either directly by the Group,
which provisions the costs of the benefits
to be served, or via pension funds
to which the Group contributes.
In both cases, the Group recognizes
a pension debt corresponding
to the current value of future payments
estimated on the basis of internal
and external parameters and rules
and regulations specific to each
of the Group’s entities.
The Group’s estimated obligations under
defined-benefit pension plans and benefits
payable upon retirement are calculated
annually by independent actuaries,
per IAS 19 Revised - «Employee Benefits»,
using the projected unit credit method.
Based on actuarial assumptions,
this method factors in the estimated years
of service at retirement, final wages,
life expectancy and staff turnover.
3.2.18. Prepayments, subsidies
and tax credits
The obligation is revised using an
appropriate discount for each country
where the commitments are located.
It is recorded prorata to employees’
length of service.
The Group enjoys a certain amount
of assistance in the form of subsidies
or repayable prepayments.
Changes to actuarial assumptions that
affect the valuation of the obligations,
as well as the difference between
the expected long-term yield on the
pension fund investments and the yield
actually obtained, are treated as actuarial
gains and losses and booked to equity
for the financial year.
The cost of services rendered, which
records the increase in obligations related
to the acquisition of one year of additional
seniority and the interest charge on
the obligation that reflects the accretion
of the obligations, is posted to the profit
and loss statement.
The expected long-term yield of pension
fund investments is subtracted from
those charges.
The effect of changes to plans
on the obligations of the Group’s
companies is generally recognized
on the profit and loss statement.
The cost of past services is immediately
recognized in income.
3.2.17. Share-based payment
transactions
Since its creation, the Company has set
up several compensation plans based on
equity instruments in the form of free
shares awarded to executives and some
employees in the Group.
Free share plans come under the scope
of IFRS 2, as share-based payments paid
out in equity instruments. These plans
are subject to performance terms. The free
shares are valued as at their grant date.
Fair values are amortized using the straight
line method over the vesting period for
the rights of the plan as employee expenses,
with the offsetting entry consisting
of an equivalent increase in equity.
Subsidies are recognized when there is
a reasonable assurance that:
the Group will meet the conditions
attached to the subsidies, and
n the subsidies will be received.
n A conditional non-repayable loan
is treated as a public subsidy if there
is a reasonable assurance that
the company will meet the conditions
for loan forgiveness. Otherwise,
it is classified as a debt and valued
at the amortized cost.
The difference between valuation
of the loan at the amortized cost
and its face value is recognized as subsidy
income and spread over the life
of the financed project, as per IAS 20.
A public subsidy receivable either
as compensation for expenses or losses
already incurred, or as immediate financial
support to the company without related
future costs, is recognized as income
for the financial year in which it becomes
receivable. Tax credits for inactivated
operating expenses are recognized
as operating income, subtracted from
the charges to which they relate.
Subsidies and tax credits related
to capitalized development expenses
are recognized as a deduction
from «intangible fixed assets» see Note 3.2.5.1.
3.2.19. Taxes
The Group determines its current taxes
by calculating them in compliance with tax
laws in force in the country in which
the income is taxable.
The current tax burden is calculated
on the basis of tax laws adopted
or virtually adopted at the balance sheet
date in those countries where the Group’s
subsidiaries do business and generate
taxable revenue.
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04.3
Deferred taxes are determined using
the comprehensive liability method for:
all temporary differences between
the tax base and the accounting base
of the assets and liabilities, except
for goodwill;
n t ax loss carryforwards.
n Deferred tax assets are only recognized
if it is likely that the Group will have future
taxable profits to which they may
be charged.
To assess the Group’s ability to recover
these assets, the following is considered:
projected taxable profits;
history of taxable earnings from
previous years.
n n The CVAE is a contribution based
on the added value produced
by the French entities. The Group considers
that the added value on which the CVAE
is calculated is an intermediate aggregate
of net profit and therefore recognizes
the CVAE as an income tax.
3.2.20. Current liabilities
Current liabilities are the liabilities
that must be settled or negotiated
as part of the normal operating cycle
or in the twelve months following
the year-end closing.
3.2.21. Presentation of the Profit
and Loss Statement
The Group has opted for the presentation
of operating expenses by purpose.
The aggregates «Current operating
income», «Operating income», «Gross
cost of financial debt» and «Net cost of
financial debt» included in the statement
of net profit and gains and losses booked
directly as equity are presented in keeping
with the criteria set out by the ANC
(French accounting standards setter)
in its recommendation 2013-03.
The «Net cost of financial debt»
is equal to all financial expenses related
to the debt, less financial income
from cash investments.
Current operating income
Current operating income includes
all income and costs directly related
to the Group’s activities, except
for «Other operating income
and expenses».
3.2.22. Recognition of revenue
and associated costs
Revenue is composed of revenue
from construction contracts and from
the sale of goods and services provided
as part of the Group’s activities.
Other operating income
and expenses
Valuation and presentation methods
specific to construction contracts
Other operating income and expenses
are added to when a major event
that occurs during the accounting period
is likely to skew the reading of
the company’s performance.
The Heurtey Petrochem Group primarily
carries out long-term contracts
and recognizes the revenue and margins
on these contracts based on the physical
stage of completion for all contracts
in accordance with IAS 11 («Construction
Contracts»).
Therefore, it includes a very limited number
of unusual, abnormal and infrequent
income and expenses for especially
significant amounts.
Operating income
Operating income includes all income
and costs directly related to the Group’s
activities, whether the income and
expenses are recurring or result from
one-off decisions or transactions.
The physical stage of completion
of a contract is measured prorata to
its different phases. Each phase is then
weighted by the costs incurred in order to
determine the overall stage of completion.
Revenue at completion of a contract
includes:
the initial sale price;
the riders, claims, incentives
and amendments to the contract,
to the extent that they can be measured
reliably and as soon as they are accepted
by clients.
n n Operating income including the share
of net profit from equity-accounted
joint ventures
This income is obtained by taking
operating income including the share
of the equity-accounted joint venture’s
income as long as these are an extension
of the Group’s activity and belong to the
Group’s operating activity.
Consolidated net income is obtained
from operating income including the share
of net profit from equity-accounted joint
ventures, and factors in the following
elements:
n T he net cost of financial debt,
which is equal to all financial expenses
related to the debt, less financial
income from cash investments;
n I ncome from other financial income
and expenses, which primarily includes
foreign exchange gains and losses;
n C urrent and deferred taxes.
The estimated cost at completion
is essentially composed of:
purchases of material, and other services
required for the fulfilment of contracts;
n t he costs pertaining to employees
directly assigned to the contract,
including payroll costs;
n w here applicable, other costs specifically
billable to clients, as specified
in the contract clauses.
n The amount of revenue and expenses
provided for in respect of a contract
reflects Management’s best estimate of
future benefits and obligations expected
for this contract. The assumptions applied
in determining the current and future
obligations factor in the technological,
commercial and contractual constraints
as evaluated for each contract.
For loss-making projects, a provision
is booked in anticipation of the future loss
that will be incurred over the subsequent
year or years.
A provision for accrued warranty costs
is set aside for each construction project
in progress. The unused balance
of the provision is reversed at the end
of the warranty period.
For construction contracts, the cumulative
amount of costs incurred at each closing
date plus margins, minus bills issued
as well as any losses at completion,
is determined on a contract-by-contract
basis. If the amount is positive,
it is booked to assets under «On-going
construction contracts (assets)».
If it is negative, it is booked to liabilities
under «On-going construction contracts
(liabilities)».
number of ordinary shares in circulation
during the year. Diluted earnings per share
are obtained by dividing the net earnings
due to the Group’s shareholders, net
of the impact of the corresponding tax.
The number of shares used in calculating
diluted earnings includes the conversion
into shares of the dilutive instruments
in circulation that are likely to
be exercised at the year-end closing.
Own shares subtracted from equity
are not taken into account in calculating
basic and diluted earnings per share.
3.2.24. Segment reporting
The surplus of bills issued over payments
received appears as client receivables.
Pursuant to IFRS 8, «Operating
Segments», the operating segments
used for segment reporting were
identified on the basis of internal
reporting used by Management to allocate
resources to the different segments
and evaluate their performance.
There is no grouping of segments.
The 100% completion stage is achieved
at provisional acceptance (or equivalent
event). Expenses still to be incurred,
if any, to obtain the removal of
reservations, are covered in a reserve
for expenses. Provisional warranty costs
are covered in a contingency reserve.
The Executive Committee is the Group’s
«chief operating decision maker»
as per IFRS 8. The methods used
to measure key indicators of each
segment when preparing internal reports
are identical to those used for preparing
the consolidated financial statements.
Sale of goods and rendering
of services
Recognition of sales of goods
and provision of services comes under
IAS 18 and meets the criteria
for recognition of revenue:
revenue arising from the sale of goods
is recognized when the company
has transferred the significant risks
and rewards of ownership to the buyer;
n revenue arising from the rendering
of services is recognized according
to the stage of completion.
n 3.2.23. Basic earnings and diluted
earnings per share
Basic earnings per share are obtained
by dividing the net earnings due to the
Group’s shareholders by the average
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NOTE 4. NOTES ON THE STATEMENT OF CONSOLIDATED FINANCIAL POSITION
4.1. GOODWILL
At December 31, 2014, the goodwill shown on the assets side of the balance sheet, with a net book value of €65.282 million, breaks down as follows:
In € thousands
DECEMBER 31, 2014
DECEMBER 31, 2013
HEATERS CGU (USA
AND SOUTH KOREA)
GAS TREATMENT
CGU
OTHER CGU
23,429
31,200
OPENING NET BOOK VALUE
Change in foreign exchange rates
TOTAL
HEATERS CGU (USA
AND SOUTH KOREA)
GAS TREATMENT
CGU
OTHER CGU
TOTAL
2,185
56,814
24,504
31,200
2,259
57,963
222
3,407
(1,075)
(74)
(1,149)
3,185
Acquisitions
5,061
5,061
NET BALANCE
26,614
36,261
2,407
65,282
23,429
31,200
2,185
56,814
Gross
Depreciation
26,614
36,261
2,407
65,282
23,429
31,200
2,185
56,814
CLOSING NET BOOK VALUE
26,614
36,261
2,407
65,282
23,429
31,200
2,185
56,814
The increase in goodwill on the Gas Treatment CGU in 2014 was due to the following transactions:
Acquisition of ITS Reaktortechnik GmbH
On October 15, 2014 the Group purchased the entire share capital of ITS Reaktortechnik GmbH for an estimated total acquisition price
of €4.850 million, plus €207,000 in acquisition fees net of tax, which were recorded as an expense in the consolidated financial statements.
This price includes a variable portion in the form of an earn-out clause for a maximum of €2.5 million. The variable portion will be payable in five
years, depending on the sales generated by the SmartSulf™ technology acquired as part of the deal.
Analysis of the breakdown of the acquisition cost had not been completed as of the account closing date. The difference between
the acquisition cost and the fair-value measurement of identifiable assets acquired, liabilities assumed and any contingent liabilities
was allocated to goodwill, on a non-final basis, in the amount of €4.759 million.
Takeover of KPN
On May 30, 2014 the Group acquired an additional 50% of the shares in KPN Gas Technology, for €218,000, taking its holding in this company
to 100%, versus 50% previously. This acquisition generated goodwill of €303,000.
4.1.1. Assumptions applied for impairment testing of goodwill
The cash-generating units (CGU) identified by the Group correspond to the principal strategic development and investment areas.
Goodwill that has been allocated to the various CGU has been impairment-tested using the method described in Note 3.2.7.
The following assumptions have been applied for the primary CGU:
Medium-term plan
Perpetual growth rate
WACC (Weighted Average Cost of Capital)
No impairment seemed necessary as a result of this test.
HEATERS CGU (USA AND SOUTH KOREA)
GAS TREATMENT CGU
OTHER CGU
2014-2017
2014-2017
2014-2017
1.5%
1.5%
1.5%
11.5%
10.5%
10.5%
Sensitivity Testing
Sensitivity testing on enterprise value has been conducted by varying the following key assumptions:
n
+/- 0.5 point of perpetual growth rate
n
+/- 0.5 point of WACC
n
+/- 10% of estimated future cash flow
On these bases, the results would be unchanged.
4.1.2. Impact of changes in consolidation scope and transaction with minority interests
In € thousands
TRANSACTIONS WITH MINORITY INTERESTS
CHANGE IN SCOPE
TOTAL
(14,092)
(5,068)
(33,251)
2,500
2,500
(14,092)
(2,568)
(16,660)
1,041
1,041
(1,527)
(15,619)
Acquisition cost of shares
o/w debt on acquisition
CASH PAID OUT
CASH ACQUIRED
IMPACT ON GROUP CASH POSITION
(14,092)
The changes in scope concern the transactions involving ITS Reaktortechnik GmbH and Prosernat Malaysia (formerly KPN Gas Technology).
Transactions with minority interests mainly include the full acquisition of Prosernat.
4.2. INTANGIBLE FIXED ASSETS
4.2.1. Intangible fixed assets at December 31, 2014
LICENSES AND
PATENTS
DEVELOPMENT COSTS
ASSETS UNDER
CONSTRUCTION
OTHER INTANGIBLE
FIXED ASSETS
TOTAL
Gross
12,349
4,463
165
33
17,010
Accumulated depreciation
(7,284)
(1,131)
(26)
(8,442)
5,065
3,332
7
8,568
4
230
In € thousands
NET BOOK VALUE AT DECEMBER 31, 2013
226
Accretion
(16)
Acquisitions
379
Disposals
(17)
Reclassification
165
Amortization/Depreciation
NET BALANCE
165
(16)
418
64
861
(17)
(165)
12
12
(1,035)
(580)
(15)
(1,630)
4,766
3,171
73
8,010
Gross
11,945
4,881
115
16,942
(7,179)
(1,711)
(42)
(8,932)
4,766
3,171
73
8,010
57
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04.3
T HE FI GU RE S
5
4.2.2. Intangible fixed assets at December 31, 2013
In € thousands
Gross
NET BOOK VALUE AT JANUARY 1, 2012
LICENSES AND
PATENTS
DEVELOPMENT COSTS
ASSETS UNDER
CONSTRUCTION
OTHER INTANGIBLE FIXED
ASSETS
TOTAL
9,803
4,099
102
51
14,055
(33)
(7,336)
18
6,719
(6,571)
(732)
3,231
3,367
Accretion
(110)
(111)
(16)
(16)
Acquisitions
3,114
Disposals
(143)
NET BALANCE
364
62
(1,012)
(400)
5,065
3,332
165
165
Gross
12,349
4,463
(7,284)
(1,131)
5,065
3,332
102
3,541
165
(7)
(150)
(4)
(1,416)
7
8,568
33
17,010
(26)
(8,442)
7
8,568
4.3. TANGIBLE FIXED ASSETS
4.3.1. Tangible fixed assets at December 31, 2014
LAND AND
BUILDINGS
PRODUCTION
FACILITIES
Gross
1,185
4,348
1,297
7,986
1,279
905 16,998
(452)
(1,724)
(224)
(4,717)
(724)
(7,841)
733
2,624
1,073
3,269
554
905
9,157
7
105
35
4
(2)
99
56
3
195
232
16
1,120
103
311
1,785
(196)
(11)
In € thousands
Change in scope
Acquisitions
4
Disposals
Reclassifications
TRANSPORT OFFICE FURNITURE
EQUIPMENT
AND EQUIPMENT
(17)
OTHER PROPERTY,
PROPERTY, PLANT AND
PLANT AND EQUIPMENT EQUIPMENT UNDER CONSTRUCTION
TOTAL
112
(223)
843
44
41
23
(231)
(538)
(113)
(1,149)
(150)
NET BALANCE
1,383
2,350
1,021
3,272
554
237
Gross
2,072
4,121
1,387
6,930
971
237 15,719
(689)
(1,771)
(367)
(3,658)
(418)
1,383
2,350
1,021
3,272
554
(981)
(30)
(2,180)
8,816
(6,903)
237
8,816
4.3.2. Tangible fixed assets at December 31, 2013
In € thousands
LAND AND PRODUCTION
BUILDINGS
FACILITIES
Gross
TRANSPORT OFFICE FURNITURE
EQUIPMENT
AND EQUIPMENT
OTHER PROPERTY,
PLANT AND
EQUIPMENT
PROPERTY, PLANT
AND EQUIPMENT UNDER
CONSTRUCTION
44
1 11,540
1
967
2,470
160
6,738
1,160
ADVANCES
AND
DEPOSITS
TOTAL
(350)
(1,215)
(116)
(4,071)
(670)
NET BOOK VALUE AT JANUARY 1, 2012
617
1,256
45
2,667
491
44
(17)
(22)
(12)
(106)
(81)
(10)
(248)
Acquisitions
239
1,902
1,114
1,668
236
939
6,098
Disposals
(4)
Reclassifications
19
37
12
(107)
(527)
(110)
(936)
NET BALANCE
(6,421)
(35)
(1)
5,119
(40)
(68)
(91)
(1,771)
733
2,624
1,073
3,269
554
905
9,157
Gross
1,185
4,348
1,297
7,986
1,279
905
16,998
(452)
(1,724)
(224)
(4,717)
(724)
733
2,624
1,073
3,269
554
(7,841)
905
9,157
In 2013, Heurtey Petrochem Manufacturing acquired manufacturing equipment previously leased to the former joint shareholder and fitted out
a manufacturing building to keep pace with the growth in business, specifically for the manufacture of modular gas treatment units, for a total
investment of €4.1 million.
4.4. FINANCIAL ASSETS
In € thousands
DECEMBER 31, 2014
DECEMBER 31, 2013
Loans, deposits and guarantees
1,377
2,801
Financial assets
1,377
Provision for impairment
TOTAL NON-CURRENT FINANCIAL ASSETS
2,801
(1,033)
1,377
1,767
At December 31, 2013, the impairment provision concerned a security deposit for the recovery of a performance bond. This dispute was resolved
in the Group’s favor and the provision was reversed in full.
4.5. EQUITY-ACCOUNTED JOINT VENTURES
4.5.1. Joint ventures’ contribution
At December 31, 2014, joint ventures not controlled by the Group and accounted for under the equity method include:
A 50% stake in the joint venture Petrochem Zamil Co. Ltd;
A 70% stake in Prosernat Saudi Arabia (LLC);
n A 50% stake in Heurtey Premier Services Limited.
n n Following the takeover of KPN Gas Technology as of May 30, 2014, this entity is now fully consolidated.
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04.3
The main financial data on these stakes are:
COUNTRY
ASSETS
LIABILITIES
REVENUE
CURRENT
OPERATING INCOME
Saudi Arabia
5,271
4,664
10,095
173
Malaysia
3,518
2,758
5,998
805
Saudi Arabia
94
37
Saudi Arabia
2,147
1,721
194
(160)
Malaysia
1,520
1,274
2,500
(468)
Saudi Arabia
53
2
Petro-Chem Zamil Co Ltd
Saudi Arabia
1,468
1,197
Prosernat Saudi Arabia (LLC)
Saudi Arabia
60
3
Heurtey Premier Services Limited
South Africa
163
141
In € thousands
AT JANUARY 1, 2013
KPN - Joint venture
(294)
AT DECEMBER 31, 2013
KPN - Joint venture
(147)
AT DECEMBER 31, 2014
17
(196)
(3)
138
9
The Group has not contracted any significant commitment through the joint ventures.
There is no significant liability in these entities.
4.5.2. Changes to stakes in joint ventures during the period
In € thousands
OPENING SHARE OF NET ASSETS
Share of income for the period
Impact of exchange rate movements
Change in scope
Capital increase
CLOSING SHARE OF NET ASSETS
DECEMBER 31, 2014
DECEMBER 31, 2013
371
724
(155)
(417)
28
(35)
(64)
6
100
186
371
4.6. DEFERRED TAXES
Deferred taxes are itemized by category of temporary differences, as follows:
In € thousands
DECEMBER 31, 2014
DECEMBER 31, 2013
2,478
2,947
(2,013)
(2,013)
1,422
1,060
542
411
(2,451)
(1,439)
717
377
Financial instruments
389
1,085
Other differences
363
(65)
TOTAL
1,446
2,363
Deferred tax assets
3,779
3,798
(2,333)
(1,435)
1,446
2,363
Tax loss carryforwards
Special depreciation allowances
Acquisition costs of financial assets
Retirement obligations
Special amortization of US goodwill
Employee statutory profit-sharing
Deferred tax liabilities
NET DEFERRED TAX POSITION
Deferred tax assets on loss carryforwards are only recognized where there is a likelihood that the company concerned can recover them within
a reasonable time frame owing to future taxable profits.
Recognized losses mainly concern Heurtey Petrochem France, Heurtey Petrochem Russia and Heurtey Petrochem India.
The Group’s non-capitalized losses are primarily linked to its subsidiary in Serbia (€3.3 million), the subsidiary Heurtey Petrochem South Africa
(€2.1 million), the subsidiary Heurtey Beijing (€0.7 million) and the subsidiary in Brazil (€0.6 million).
4.7. INVENTORIES
In € thousands
DECEMBER 31, 2014
DECEMBER 31, 2013
Materials and other supplies
1,828
1,964
Work in progress
1,255
770
TOTAL NET INVENTORY
3,083
3,148
Depreciable costs
4,073
3,706
Goods for resale
Provision for depreciation
TOTAL NET INVENTORY
415
(990)
(558)
3,083
3,148
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04.3
4.8. ON-GOING CONSTRUCTION CONTRACTS
In € thousands
DECEMBER 31, 2014
DECEMBER 31, 2013
On-going construction contracts (assets)
88,441
91,048
On-going construction contracts (liabilities)
99,915
72,945
(11,474)
18,103
DECEMBER 31, 2014
DECEMBER 31, 2013
996,671
841,666
(1,007,772)
(823,563)
NET TOTAL
In € thousands
Aggregate expense and income
Interim invoices issued
Provisions for losses at completion
NET TOTAL
(373)
(11,474)
18,103
DECEMBER 31, 2014
DECEMBER 31, 2013
154,641
100,007
4,682
1,679
4.9. TRADE RECEIVABLES AND RELATED ACCOUNTS
In € thousands
Trade receivables and related accounts
Invoices to be drawn up
Provisions for trade receivables
TOTAL TRADE RECEIVABLES AND RELATED ACCOUNTS
(2,392)
(1,134)
156,932
100,553
DECEMBER 31, 2014
DECEMBER 31, 2013
4.10. CURRENT TAXES (ASSETS)
In € thousands
State, Income tax
3,470
2,173
TOTAL TAX ASSETS RECEIVABLE
3,470
2,173
Current tax assets are comprised mainly of receivables on the research tax credit, in the amount of €1.533 million, and advance tax payments.
4.11. OTHER CURRENT ASSETS
In € thousands
Advances and deposits received on orders in progress
Social security receivables
Tax receivables
Other
Prepaid expenses
TOTAL OTHER CURRENT ASSETS
DECEMBER 31, 2014
DECEMBER 31, 2013
10,570
24,245
66
136
22,762
28,195
950
1,276
2,527
2,039
36,875
55,890
The reduction in advances and deposits received on orders in progress in 2014 essentially came from the Heurtey Petrochem Russia subsidiary,
for €15.6 million.
4.12. CASH AND CASH EQUIVALENTS
In € thousands
DECEMBER 31, 2014
DECEMBER 31, 2013
55,701
42,405
509
430
Total cash and cash equivalents
56,210
42,835
Current bank loans
20,636
12,236
TOTAL NET CASH
35,574
30,599
Cash
Cash equivalents
Over the period, exchange rate effects negatively impacted the Group’s net cash position for a total of €2.658 million.
4.13. SHAREHOLDERS’ EQUITY
4.13.1. Share capital
CHANGES IN THE PARENT COMPANY’S CAPITAL
NUMBER OF SHARES
SHARE PAR VALUE
SHARE CAPITAL (IN € THOUSANDS)
3,389,568
3.34
11,321
150,000
3.34
501
Share capital at December 31, 2013
3,539,568
3.34
11,822
Capital increase
1,356,834
3.34
4,532
4,896,402
3.34
16,354
Share capital at January 1, 2013
Capital increase through conversion of bonds
SHARE CAPITAL AT DECEMBER 31, 2014
SHAREHOLDERS OF THE PARENT COMPANY
IFP Investissements
Management and employees
DECEMBER 31, 2014
DECEMBER 31, 2013
36.1%
36.1%
1.5%
2.7%
Float and Institutional investors
62.3%
61.3%
TOTAL
100%
100%
NUMBER OF SHARES
TREASURY SHARES (IN € THOUSANDS)
2,920
(84)
TREASURY SHARES
Treasury shares at January 1, 2013
Change
(486)
21
Treasury shares at December 31, 2013
2,434
(64)
Change
4,225
(133)
TREASURY SHARES AT DECEMBER 31, 2014
6,659
(196)
The Group has a market-making contract with Natixis. At December 31, 2014, the Group held 6,659 treasury shares valued at €196,000.
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T HE FI GU RE S
5
04.3
Bonus shares
On June 5, 2009, the Shareholders approved a program to allocate free shares to all employees and executives of the Group, in one or more increments, for a
number not to exceed 3.76% of the capital, giving the Board of Directors the power to fix the procedures for this allocation and record the list of holders.
This was contingent upon the holders’ continued employment for not less than two years from the allocation date, as well as the Group’s performance, and
the shares also had to be held for a period of not less than two years from the final acquisition date of said shares.
As the authorization granted by the Shareholders on June 5, 2009 expired on September 16, 2012, the Shareholders granted the Board of Directors a new
authorization on May 24, 2012. The new approval covers the allocation of free existing shares for up to 4% of the share capital as of the date of the first
allocation decided by the Board of Directors. Since the authorization was granted, no free shares have been awarded.
4.13.1.1.Change in the number of instruments in circulation and/or in vesting phase
TOTAL
2012 PLAN
Date approved by the General Meeting
June 5, 2009
Date awarded by the Board of Directors
May 22, 2012
SHARES OUTSTANDING AT JANUARY 1, 2013
30,000
SHARES OUTSTANDING AT DECEMBER 31, 2013
Shares cancelled
SHARES OUTSTANDING AT DECEMBER 31, 2014
30,000
30,000
30,000
(11,683)
(11,683)
18,323
18,323
4.13.1.2.Compensation costs of share-based payments
The accounting cost for a free share plan must correspond to the fair value deferred using the straight line method over the vesting period
per plan regulations. These costs are recognized as employee expenses, with the offsetting entry consisting of an equivalent increase in equity.
In € thousands
2014
2013
2012
Bonus share award program
(88)
(178)
104
EXPENSE/INCOME FOR THE PERIOD
(88)
(178)
104
The fair value of free share plans is determined according to the price on the allocation date minus discounted future dividends.
The assumptions applied in the valuation of these plans are as follows:
2012 PLAN
DATE AWARDED BY THE BOARD OF DIRECTORS
Share price on the award date (in euros)
Dividend yield
Turnover rate
FAIR VALUE OF THE BONUS SHARE ON THE AWARD DATE
MAY 22, 2012
25.65
1.51
0%
24.14
4.14. FINANCIAL DEBT
4.14.1. Changes in financial debt at December 31, 2014
DECEMBER
31, 2013
LOAN
ISSUES
LOAN
REPAYMENTS
Loans from credit institutions
9,586 3,360
(297)
Other loans and similar debt
1,444
In € thousands
NON-CURRENT BORROWINGS
AND FINANCIAL DEBT
11,030 3,360
(297)
4,104
7
(3,941)
4,504
26
(4,525)
Bank credit facilities
PREPAYMENTS
CHANGE IN CASH
CALLED UP BUT
LIABILITIES AND
NOT YET PAID INTEREST PAYABLE
(8,465)
TOTAL BORROWINGS
AND FINANCIAL DEBT
31,943 3,394
(8,762)
DECEMBER
31, 2014
7,108
(309)
196
(1,380)
442
(5,851)
7,305
146
119
5,541
5,839
183
16
309
331
7
(25)
34
RECLASSIFICATION
(5,541)
8,050
20,913
ACCRETION
442
103
CURRENT BORROWINGS AND
FINANCIAL DEBT
FOREIGN
EXCHANGE
EFFECT
(1,380)
12,202
Interest payable
CHANGE
IN SCOPE
(1,380)
20,585
333
78
8,024
7
334
135
5,851 26,832
8,024
7
334
577
34,136
4.14.2. Changes in financial debt at December 31, 2013
In € thousands
Loans from credit
institutions
Other loans
and similar debt
Non-current borrowings
and financial debt
Loans from credit
institutions
JANUARY 1,
2013
LOAN
LOAN
ISSUES REPAYMENTS
CONVERSION OF CLEARANCE OF
CHANGE IN CASH
FOREIGN
CONVERTIBLE NON-REPAYABLE
LIABILITIES AND EXCHANGE
BOND PREPAYMENTS INTEREST PAYABLE
EFFECT ACCRETION RECLASSIFICATION
DECEMBER 31,
2013
(2,177)
9,586
6,464 5,299
6,244
114
(458)
48
(4,504)
1,444
12,708 5,414
(458)
48
(6,682)
11,030
117
2,177
4,104
19
(3,405)
23
4,504
2,088 1,946
(2,224)
Convertible bond issues
3,771
Other loans
and similar debt
3,177
4,105
8,571
167
(64)
Interest payable
(386)
(3,200)
Current borrowings
and financial debt
13,308 1,946
(5,424)
(386)
Total borrowings
and financial debt
26,016 7,359
(5,424)
(386)
(458)
4,504
12,202
(475)
103
8,507
(475)
160
3,277
20,913
8,507
(475)
208
3,405
31,943
65
66
T HE FI GU RE S
5
04.3
4.14.2.1.Loans from credit institutions
At year-end 2014, the Group’s financial debt amounted to €12.947 million, essentially comprising:
A syndicated loan taken out by Heurtey Petrochem France with BNP Paribas and Natixis to acquire the Prosernat shares in April 2011.
This loan is divided into several tranches:
> A first tranche of €8 million, subscribed in April 2011. This five-year loan is being reimbursed on a straight-line basis with the first
instalment paid on June 10, 2012. At December 31, 2014, the residual financial debt amounted to €3.147 million, for an outstanding
principal amount due of €3.2 million.
> A second credit line of €8.16 million intended to refinance the vendor financing granted by IFPEN when 60% of the Prosernat shares
were acquired in April 2011. This credit line consists of two tranches of €2.4 million drawn in April 2012 and April 2013 and one €3.36
million tranche drawn in April 2014. At December 31, 2014, the residual financial debt amounted to €6.149 million, for an outstanding
principal amount due of €6.16 million.
> A third tranche granted by a rider in 2013 for €3.75 million to finance the acquisition of equipment from the subsidiary HPM and the
balance of 50% of HPM shares. This tranche is repayable in four equal annuities of €938,000, until November 2017. As at December 31,
2014, the residual financial debt amounted to €2.754 million, for an outstanding principal amount due of €2.813 million.
n A €1.2 million loan taken out by Prosernat in 2013 to finance the acquisition of technology licensing rights, repayable by continuous
monthly instalments over four years. At December 31, 2014, the outstanding balance was €887,000.
n Interest rates on these loans are as follows:
Syndicated loan of €8 million: 3 month Euribor variable rate +160 bp. In 2011, this variable rate was hedged against interest rates
at a fixed rate of 2.24%;
n € 8.16 million in lines of credit: 3 month Euribor variable rate +160 bp;
n € 3.75 million loan: 3 month Euribor variable rate +180 bp;
n € 1.2 million loan: 2.55% fixed rate.
n 4.14.2.2.Other loans and similar debt
This item primarily consists of:
the balance of prepayments for Prosernat (€196,000) corresponding to the advances received from government bodies (FSH, RTPG
and others) to finance research projects. In October 2014, several advances made by the French Ministry of Ecology via former
hydrocarbon support funds were cancelled, for a total of €1.11 million, with a demand for repayment of €270,000 to be made in 2015.
In response to this, the Group cancelled advances granted to its partners. The Group recorded income of €257,000 on this transaction;
n An Oséo loan for €834,000 repayable over four years. At December 31, 2014, the outstanding balance stood at €314,000 (zero interest loan).
n The vendor loan granted by IFP Investissements for the acquisition of 60% of Prosernat, which was recorded under liabilities
for €4.2 million as at December 31, 2013, was repaid in full in 2014.
4.14.2.3.Short-term loans
To finance its operations, the Group has credit lines and authorized overdrafts totaling €40.7 million, of which €17.6 million was used
as at December 31, 2014.
4.14.3. Financial debt schedule at December 31, 2014
In € thousands
LESS THAN 1 YR
FROM 1 TO 2 YRS
FROM 2 TO 3 YRS
TOTAL
6,178
930
7,108
196
196
NON-CURRENT BORROWINGS AND FINANCIAL DEBT
6,375
930
7,305
5,839
5,839
331
331
20,585
20,585
78
78
CURRENT BORROWINGS AND FINANCIAL DEBT
26,832
26,832
TOTAL BORROWINGS AND FINANCIAL DEBT
26,832
Interest payable
6,375
930
34,136
4.14.4. Analysis of financial debt by interest rate and currency at December 31, 2014
FIXED RATE
VARIABLE
RATE
TOTAL
EURO
590
6,518
7,108
7,108
7,108
196
196
196
196
NON-CURRENT BORROWINGS AND FINANCIAL DEBT
787
6,518
7,305
7,305
301
5,538
5,839
5,834
331
331
304
20,585
20,585
16,550
78
78
78
632
26,200
26,832
22,766
4,034
31
26,832
1,419
32,718
34,136
30,071
4,034
31
34,136
In € thousands
Interest payable
CURRENT BORROWINGS AND FINANCIAL DEBT
TOTAL BORROWINGS AND FINANCIAL DEBT
RUPEE
OTHER
CURRENCIES
TOTAL
7,305
4
27
4,034
5,839
331
20,585
78
4.14.5. Bank guarantees
The overall credit facility contracted by Heurtey Petrochem SA includes the usual undertaking and default clauses found on this type of structured
financing facility. It also includes three financial ratios that the company must observe at all times, failing which the lenders can require early
repayment. These ratios, set according to IFRS, correspond to:
R2: Financial debt/EBITDA ratio to be respected < 2.2
R3: Free cash flow/Debt service coverage ratio to be respected > 1
n R4: Financial debt/equity: ratio to be respected < 1
n n At December 31, 2014, all these ratios were respected.
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04.3
4.15. PROVISIONS
In € thousands
DECEMBER 31, 2013
ALLOWANCES
REVERSALS OF PROVISIONS
(1)
Provisions for litigation
41
24
Other provisions
32
19
NON-CURRENT PROVISIONS
Provision for accrued warranty costs
EXCHANGE RATE DIFFERENCES
DECEMBER 31, 2014
5
55
63
72
42
(1)
5
118
2,284
882
(1,106)
134
2,194
Other provisions
1,462
1,226
(586)
86
2,188
CURRENT PROVISIONS
3,746
2,108
(1,692)
220
4,383
TOTAL PROVISIONS
3,818
2,151
(1,693)
225
4,501
The Group wrote back used warranty provisions totaling €1 million over the period.
JANUARY 1, 2013
ALLOWANCES
REVERSALS OF PROVISIONS
Provisions for litigation
In € thousands
27
6
(201)
Other provisions
18
32
(9)
NON-CURRENT PROVISIONS
EXCHANGE RATE DIFFERENCES
DECEMBER 31, 2013
41
32
(4)
44
38
(210)
(4)
72
585
1,551
(43)
(38)
2,284
Other provisions
1,328
434
(328)
CURRENT PROVISIONS
1,914
1,985
(370)
(38)
3,746
TOTAL PROVISIONS
1,958
2,023
(580)
(42)
3,818
Provision for accrued warranty costs
1,462
4.16. PROVISIONS FOR PENSION OBLIGATIONS AND SIMILAR BENEFITS
a) Change in net commitment recognized on the balance sheet
In € thousands
Actuarial liabilities, beginning of period
Interest expenses
DECEMBER 31, 2014
DECEMBER 31, 2013
1,474
1,278
70
60
Cost of services rendered
482
299
135
(15)
(204)
(133)
30
(15)
1,985
1,474
Contributions paid during the period
Exchange rate differences
ACTUARIAL LIABILITIES, END OF PERIOD
Since the Group does not have any hedging assets, the full commitment set out above is booked to the Group’s liabilities.
In accordance with IAS 19 Revised, all actuarial gains and losses are recognized as equity. The cost of services rendered is posted to
«Operating expenses», and interest charges are recorded as «Other financial income and expenses».
b) Actuarial assumptions
The main actuarial assumptions applied in France, which accounts for the majority of provisions for retirement benefits, are as follows:
Assumptions
DECEMBER 31, 2014
DECEMBER 31, 2013
Discount rate for Retirement Benefits
1.66%
3.00%
Annual revaluation rate of wages net of inflation
2.00%
2.00%
2% smoothed/age
2% smoothed/age
TF 002
TF 002
Turnover (age-based)
Mortality table
c) Sensitivity to the discount rate
The following table shows the sensitivity of the retirement benefit scheme to the discount rate on actuarial debt.
(In € thousands)
2014
2013
1.00% increase
(327)
(229)
1.00% decrease
407
283
1.00% increase
(45)
(32)
1.00% decrease
59
42
DECEMBER 31, 2014
DECEMBER 31, 2013
IMPACT ON DEBT
IMPACT ON COSTS FOR THE YEAR
4.17. OTHER CURRENT AND NON-CURRENT LIABILITIES
In € thousands
Debt on acquisition of shares
TOTAL OTHER NON-CURRENT LIABILITIES
Tax and social security liabilities
Customer advances and deposits received
Other liabilities
Prepaid income
2,384
2,384
14,375
13,607
200
830
1,384
2,135
5,362
3,633
TOTAL OTHER CURRENT LIABILITIES
21,322
20,205
TOTAL OTHER LIABILITIES
23,706
20,205
The «Debt on acquisition of shares» line represents the earn-out clause payable to the sellers of ITSR shares.
69
70
04.3
T HE FI GU RE S
5
4.18. FINANCIAL INSTRUMENTS
In € thousands
DECEMBER 31, 2014
DECEMBER 31, 2013
Non-current derivative assets
101
141
Current derivative assets
187
619
CURRENT AND NON-CURRENT DERIVATIVE ASSETS
288
760
72
50
Non-current derivative liabilities
Current derivative liabilities
1,147
3,677
CURRENT AND NON-CURRENT DERIVATIVE LIABILITIES
1,218
3,728
NET DERIVATIVES POSITION
(930)
(2,968)
Itemized change in net position
In € thousands
NET DERIVATIVES POSITION
DECEMBER 31, 2013
CHANGE THROUGH
PROFIT OR LOSS
CHANGE THROUGH
EQUITY
FOREIGN EXCHANGE
EFFECT
31 DÉCEMBRE 2014
(2,968)
(341)
2,375
3
(930)
Sensitivity analysis
SENSITIVITY OF FOREIGN EXCHANGE RISK HEDGING PORTFOLIO
POSITION
MTM
EUR/GBP
6
EUR/USD
(914)
USD/INR
USD/KRW
EUR/KRW
THB/USD
TOTAL
(11)
161
(94)
2
(850)
VARIATION IN CURRENCY TRADED
MTM
IMPACT ON OCI
+10%
63
0
IMPACT ON P/L
63
-10%
(52)
0
(52)
+10%
(1,510)
(1,598)
88
-10%
(319)
(89)
(230)
+10%
(88)
(101)
13
-10%
68
55
13
+10 %
(1,105)
(1,029)
(76)
-10%
1 410
1 506
(95)
+10%
125
125
(0)
-10%
(303)
(303)
0
+10 %
364
368
(5)
-10%
(360)
(356)
(4)
+10%
(2,152)
(2,235)
83
-10%
445
813
(367)
SENSITIVITY OF HEDGING PORTFOLIO TO INTEREST RATE RISK
TYPE
NUMBER
NOTIONAL AMOUNT
CURRENCY
AVERAGE TERM TO MATURITY
CLEAN MTM
FULL MTM
0.50% FALL IN INTEREST RATES
0.50% RISE IN NTEREST RATES
2
6M
EUR
1.4
(80)
(85)
(115)
(55)
(80)
(85)
(115)
(55)
SWAP
TOTAL
Summary of positions at December 31, 2014
In € thousands
DECEMBER 31, 2014
DECEMBER 31, 2013
Interest rate derivatives: cash flow hedges
(80)
(127)
Total interest rate derivatives
(80)
(127)
Foreign exchange derivatives: fair value hedge
(72)
29
Foreign exchange derivatives: cash flow hedge
(778)
(2,869)
Total foreign exchange derivatives
(850)
(2,840)
TOTAL DERIVATIVES
(930)
(2,968)
Measuring the fair value of a non-financial asset includes the capacity of a market player to generate economic benefits by making
optimal use of the asset or by selling it to another market player who would make optimal use of it.
Per IFRS 13, the inputs used to measure fair value are categorized into three different levels:
Level 1 inputs: Quoted (non-adjusted) prices in active markets for identical assets or liabilities that the entity can access
at the measurement date.
n Level 2 inputs: Inputs other than quoted market prices included within Level 1 that are observable for the asset or liability,
either directly or indirectly.
n Level 3 inputs are unobservable inputs for the asset or liability. An entity develops unobservable inputs using the best information
available in the circumstances, which might include the entity’s own data, taking into account all information about market participant
assumptions that is reasonably available.
n The level of the fair value is thus determined by reference to the input level in the valuation technique. If a valuation technique based
on data from different levels is used, the fair value is then constrained by the lowest level.
All derivatives are classified using Level 2.
71
72
04.3
T HE FI GU RE S
5
NOTE 5. NOTES ON THE PROFIT AND LOSS STATEMENT
5.1. SEGMENT REPORTING
The Group applies IFRS 8 (Operating segments).
The information presented is based on internal reporting used by the Executive Board for measuring the performance of the different segments.
The main performance indicator is current operating income.
The Group has divided the monitoring of its activity into two separate segments:
n
The design and creation of process heaters: «Heaters» segment
n
The design and creation of modular gas processing units: «Gas» segment
The Group’s internal organization places priority on analyzing profitability by contract without any breakdown other than revenue by segment
and by geographic zone. This breakdown can vary significantly from one year to the next.
Current operating income by segment
2014
In € thousands
Revenue
Inter-segment sales
2013
PROCESS HEATERS
BUSINESS
GAS TREATMENT
BUSINESS
INTER-SEGMENT
SALES
349,235
83,627
4,619
(4,619)
TOTAL
PROCESS
HEATERS BUSINESS
GAS TREATMENT
BUSINESS
INTER-SEGMENT
SALES
TOTAL
437,481
335,151
58,185
7,200
400,536
(7,200)
563
4,056
1,502
5,698
REVENUE
349,798
87,683
437,481
336,653
63,883
400,536
Cost of sales
(305,263)
(71,634)
(376,897)
(297,199)
(50,734)
(347,933)
44,534
16,050
60,584
39,454
13,149
52,603
Administrative and
commercial expenses
(29,242)
(10,618)
(39,860)
(26,037)
(9,955)
(35,991)
CURRENT OPERATING
INCOME
15,292
5,432
20,724
13,417
3,194
16,612
GROSS MARGIN
Statement of financial position by segment
DECEMBER 31, 2014
In € thousands
Segment assets
DECEMBER 31, 2013
PROCESS HEATERS BUSINESS
GAS TREATMENT BUSINESS
TOTAL
PROCESS HEATERS BUSINESS
GAS TREATMENT BUSINESS
TOTAL
181,066
128,341
309,406
191,403
82,933
274,336
Other assets
123,432
102,554
TOTAL
432,838
376,890
Segment liabilities
Shareholders’ equity
Other liabilities
TOTAL
179,947
136,920
316,866
78,233
201,267
88,789
290,056
51,163
37,738
35,671
432,838
376,890
Revenue breakdown by geographic zone (linked to customer location)
In € thousands
Europe/Russia
Middle East/Africa
Asia/Oceania
2014
2013
139,757
190,816
21,400
16,873
83,715
111,807
Americas
192,609
81,040
TOTAL REVENUE
437,481
400,536
Revenue with one client represents 25% of total revenue. Revenue generated with the top five and top ten clients accounts for 44% and 56%
of the total.
5.2. TYPE OF EXPENSES ALLOCATED BY TYPE
COST OF SALES
ADMINISTRATIVE AND
COMMERCIAL EXPENSES
2014
COST OF
SALES
ADMINISTRATIVE AND
COMMERCIAL EXPENSES
2013
(305,820)
1,597
(304,223)
(287,156)
(1,495)
(288,650)
Salaries and fringe benefits
(35,074)
(25,091)
(60,166)
(30,574)
(22,682)
(53,257)
External charges
(31,989)
(12,708)
(44,697)
(23,059)
(11,227)
(34,286)
(876)
(1,635)
(2,511)
(813)
(680)
(1,493)
(4,022)
(2,625)
(6,647)
(4,024)
(1,194)
(5,218)
In € thousands
Purchases consumed
Taxes and charges
Depreciation, provisions and impairment losses
885
603
1,487
(2,306)
1,285
(1,021)
(376,897)
(39,860)
(416,757)
(347,933)
(35,991)
(383,924)
Other operating income and expenses
TOTAL
5.3. BREAKDOWN OF EMPLOYEE COSTS BY TYPE
In € thousands
2014
2013
Salaries and wages
(45,846)
(40,372)
Salaries and fringe benefits and employers' contributions
(14,213)
(12,480)
Competitiveness and employment tax credit
115
73
Allowance/reversal of retirement obligations
(134)
(299)
(88)
(178)
(60,166)
(53,257)
Share-based payments expenses
Total salaries and fringe benefits
5.4. AVERAGE HEADCOUNT
The Group’s average headcount was 1,047 in 2014, compared with 988 in 2013.
73
74
T HE FI GU RE S
5
04.3
5.5. OTHER OPERATING INCOME AND EXPENSES
In € thousands
Gain (loss) on disposals
Amortization, depreciation and provisions
2014
2013
(1,104)
(261)
1,033
Other income and expenses
(495)
(1,561)
OTHER OPERATING INCOME AND EXPENSES
(566)
(1,822)
In 2014, other operating income and expenses primarily comprised the acquisition cost of shares in ITSR, Prosernat and Prosernat Malaysia, for a
total of €499,000.
5.6. OTHER FINANCIAL INCOME AND EXPENSES
In € thousands
2014
2013
(3,031)
(2,581)
Income from non-trade receivables and short-term investments
Net foreign exchange gain (loss)
1
Other financial income and expenses
(1,457)
1,056
OTHER FINANCIAL INCOME AND EXPENSES
(4,488)
(1,524)
5.7. CORPORATE INCOME TAX
5.7.1. Analysis of tax expenses (income)
In € thousands
2014
2013
Current taxes
(5,027)
(5,097)
61
166
(4,966)
(4,932)
Deferred taxes
TOTAL TAX EXPENSE
5.7.2. Analysis of the difference between the income tax expense calculated at the statutory rate and the actual income tax
In € thousands
Consolidated net income before share of net income from joint ventures
Tax expense
2014
2013
9,781
7,254
(4,966)
(4,932)
NET INCOME BEFORE INCOME TAX
14,747
12,186
ASSUMED TAXATION AT 33.33%
(4,916)
(4,062)
(127)
(526)
152
896
Share in dividends + withholding tax
(775)
(437)
CVAE (Company value-added contribution)
(525)
(384)
Uncapitalized losses
Parent company/subsidiary tax rate difference
Temporary differences
Permanent and other differences
(31)
1,256
(420)
(4,966)
(4,932)
Effective tax rate
34%
40%
Effective tax rate excluding CVAE
29%
36%
ACTUAL TAX EXPENSE
The «Permanent and other differences» line primarily comprises tax credits for €679,000 and sundry permanent differences for €343,000.
The tax rates of the primary subsidiaries for 2013 and 2014 are as follows:
France 33.33%
United States 35.68%
n Russia 20.00%
n South Korea 24.20%
n
n
5.8. EARNINGS PER SHARE
The following table provides information on income and the shares used to calculate basic and diluted earnings per share for all activities.
Net income, Group share
2014
2013
9,165
5,851
Interest expense on convertible bonds, before tax
NET INCOME ADJUSTED FOR DILUTED NET EARNINGS PER SHARE
Weighted average number of shares outstanding during the period, excluding treasury shares
Weighted average number of performance shares
1
9,165
5,853
4,330,535
3,498,891
18,323
30,000
Weighted average number of bonds convertible into shares
Weighted average number of shares outstanding during the period (excluding treasury shares)
adjusted for net earnings per share
37,500
4,348,852
3,566,391
EARNINGS PER SHARE
€2.12
€1.67
NET DILUTED EARNINGS PER SHARE
€2.11
€1.64
75
76
T HE FI GU RE S
5
04.3
NOTE 6. INFORMATION ON RELATED PARTIES
The compensation shown below is granted to the company’s executive officers. They were recognized as expenses during the following
financial years:
In € thousands
2014
2013
Remuneration and benefits in kind
915
794
915
794
Executive unemployment insurance benefits in kind
TOTAL
The procedures for evaluating share-based payments are included in Note 3.2.17
NOTE 7. EXPOSURE TO FINANCIAL RISKS
7.1. INTEREST-RATE RISK
The Group’s main financial debts are supported by the holding company Heurtey Petrochem France and the subsidiaries Prosernat and Heurtey
Petrochem India.
Given the Group’s position at December 31, 2014, variable-rate debts essentially consist of:
The syndicated bank loan taken out by Heurtey Petrochem France
The line of credit drawn by Heurtey Petrochem France
n Bank facilities with Heurtey Petrochem France and Heurtey Petrochem India
n The renewable credit line drawn by Heurtey Petrochem France
n
n
The Group’s cash is invested short-term to ensure its liquidity. Financial income is subject to fluctuations in money market interest rates.
At December 31, 2014, the Group used an interest rate derivative to hedge the interest rate risk on the first four variable-rate tranches
of the syndicated loan. A 1% change in the interest-rate risk would result in an annual outlay of €126,000.
7.2. FOREIGN EXCHANGE RISK
The Heurtey Petrochem Group carries out “multiple currency” projects that expose it to the risk of fluctuating foreign exchange rates.
The Group uses forward currency contracts to protect itself against this risk.
At December 31, 2014, the outstanding operations contracted were:
Heurtey Petrochem SA
HPIP
> Forward currency
> Forward currency sales:
purchases: €4.196 million
€824,000
Prosernat
€9.601 million
PCK
€13.386 million
> Forward currency
PCD
> Forward currency
7.3. LIQUIDITY RISK
The Group’s policy is to maintain a positive available cash flow so it can successfully carry out its development strategy in complete
independence.
The Group’s cash surplus and requirements are directly managed or steered by the Group’s Cash department, following a prudent policy,
the purpose of which is to prevent any risk of losses on the capital, and to preserve a satisfactory cash position.
Surplus cash is mainly invested in money market UCITS and cash equivalents, with less than 0.5% sensitivity, and the recommended
investment period is less than three months.
The items recognized by the Group as «Cash and cash equivalents» respond strictly to the criteria set by the AMF (French financial markets
authority). Investments are reviewed regularly and in compliance with Group procedures, and in strict compliance with the qualification
criteria defined by IAS 7, Statement of Cash Flows, and the AMF’s recommendations.
The Group may hedge a portion of its debts and receivables against interest rate fluctuations using financial instruments such as swaps
and rate derivatives.
7.4. CREDIT RISK
The credit risk comes from cash and cash equivalents, derivatives and deposits with banks and financial institutions, as well as exposures
to client credits, specifically outstanding receivables and transactions initiated.
The credit risk on cash, cash equivalents and current financial instruments is not significant with regard to the quality of the co-contracting
financial institutions.
The credit risk on receivables is limited due to the quality of the client portfolio at the 2014 closing.
Receivables not settled at December 31, 2014
O/W FINANCIAL ASSETS DUE BY THE BALANCE SHEET DATE
BOOK VALUE AT
DECEMBER 31, 2014
O/W FINANCIAL ASSETS NOT DUE
BY THE BALANCE SHEET DATE
0 - 3 MONTHS
3 - 6 MONTHS
MORE THAN 6 MONTHS
IMPAIRED
FINANCIAL ASSETS
154,641
39,729
44,049
27,438
41,033
2,392
Other accounts receivable
739
268
204
23
243
Other financial assets
391
391
155,771
40,388
44,253
27,461
41,277
(In € thousands)
Customers
Total unsettled receivables
2,392
NOTE 8. OFF-BALANCE SHEET COMMITMENTS
8.1. COMMITMENTS RECEIVED
(In € thousands)
DECEMBER 31, 2014
DECEMBER 31, 2013
Guarantees received from suppliers
22,602
24,193
TOTAL GUARANTEES RECEIVED
22,602
24,193
77
78
04.3
T HE FI GU RE S
5
Breakdown by Group company
In € thousands
Heurtey Petrochem SA
DECEMBER 31, 2014
DECEMBER 31, 2013
15,012
9,572
Heurtey Petrochem IP
1,753
Petro-Chem Development
1,427
Petro-Chem Korea
4,190
Prosernat
TOTAL GUARANTEES RECEIVED
7,590
7,251
22,602
24,193
8.2. COMMITMENTS GIVEN
In € thousands
DECEMBER 31, 2014
DECEMBER 31, 2013
Guarantees given to customers
233,323
214,027
Guarantees given to suppliers
15,460
7,253
Prosernat shares
Prosernat shares
Pledged securities
Commitments given by Heurtey Petrochem
The company pledged all of its Prosernat shares as a guarantee for the loan taken out with BNP Paribas and Natixis.
The company used €139.197 million in guarantee facilities at December 31, 2014. This amount includes €58.885 million in guarantees
underwritten by Heurtey Petrochem SA on behalf of:
> €30.117 million
HPIP
> €1.607 million
HPSA
> €980,000
HP Russia
> €28.408 million
HP Serbia
> €4.574 million
HP Canada
> €827,000
HP China
> €13,000
Commitments given by the Subsidiaries
At December 31, 2014:
Prosernat
> €55.154 million
PCD
> €16.005 million
Guarantees given to suppliers
Guarantees given to suppliers concern Prosernat suppliers.
Covenants
Heurtey Petrochem SA has contracted debts whose early redemption can be required by the lenders if certain financial ratios are not respected. As
indicated in Note 4.14, the company respected these ratios at December 31, 2014.
Lease commitments
Lease commitments by maturity are presented in the following table as at December 31, 2014:
2014
2015
Heurtey Petrochem France
€1.0 M
€1.0 M
€0.5 M
€0.5 M
Prosernat
€1.6 M
€1.6 M
Heurtey Petrochem Manufacturing
€1.1 M
€1.1 M
Heurtey Petrochem India Private Ltd
€0.4 M
€0.4 M
Heurtey Petrochem Russia
€0.4 M
€0.4 M
TOTAL
€5.0 M
€5.0 M
NOTE 9. LITIGATION AND CONTINGENT LIABILITIES
Litigation
None
Contingent liabilities
None
NOTE 10. POST-CLOSING EVENTS
In February 2015, Heurtey Petrochem was notified of a tax audit for the financial years 2013 and 2012.
79
80
04.3
T HE FI GU RE S
5
NOTE 11. AUDITORS’ FEES
In € thousands
2014
AUDIT, CERTIFICATION,
AUDIT OF SEPARATE
AND CONSOLIDATED
FINANCIAL STATEMENTS
PwC
342
Ernst & Young
249
Deloitte
2013
OTHER REVIEWS AND
SERVICES DIRECTLY RELATED
TO THE STATUTORY
AUDITORS' ASSIGNMENT
38
TOTAL
AUDIT, CERTIFICATION,
AUDIT OF SEPARATE
AND CONSOLIDATED
FINANCIAL STATEMENTS
OTHER REVIEWS AND
SERVICES DIRECTLY
RELATED TO THE STATUTORY
AUDITORS' ASSIGNMENT
342
365
365
287
216
216
71
TOTAL
69
69
71
Other
135
135
49
49
TOTAL
795
833
701
701
38
NOTE 12. SCOPE OF CONSOLIDATION
The consolidated financial statements include the financial statements of Heurtey Petrochem, the financial statements of its subsidiaries and the
proportional share of the net assets and net profit of the joint ventures booked according to the equity method.
Entities included in the scope of consolidation:
Companies
Heurtey Petrochem France
CONSOLIDATION METHOD
AT DEC. 31, 2014
PERCENT CONTROLLED
AT DEC. 31, 2014
PERCENT INTEREST
DEC. 31, 2014
DEC. 31, 2013
Parent
Heurtey Petrochem Germany
FC
90%
90%
90%
Heurtey Petrochem Romania
FC
100%
100%
100%
Heurtey Petrochem South Africa
FC
100%
100%
100%
Heurtey Petrochem India Private ltd
FC
100%
100%
100%
Heurtey Petrochem Asia
FC
100%
100%
100%
Heurtey Petrochem Manufacturing
FC
100%
100%
100%
Petro-Chem Development (USA)
FC
100%
100%
100%
Petro-Chem India
FC
100%
100%
100%
Petro-Chem Korea
FC
95%
95%
83%
Heurtey Petrochem Russia
FC
100%
100%
100%
Heurtey Petrochem Turkey
FC
100%
100%
100%
PFR Engineering
FC
100%
100%
100%
PFR Technologies LLC
FC
100%
100%
100%
EM
50%
50%
50%
Heurtey Petrochem Serbia
FC
100%
100%
100%
Heurtey Petrochem Beijing
FC
100%
100%
100%
Heurtey Petrochem Brazil
FC
100%
100%
100%
Heurtey Premier Services Limited
EM
50%
50%
0%
Heurtey Petrochem Development Canada
FC
100%
100%
0%
ITS Reaktortechnik GMBH
FC
100%
100%
0%
Prosernat
FC
100%
100%
60%
Prosernat Saudi Arabia
EM
70%
70%
42%
Prosernat Malaysia (formerly KPN)
FC
100%
100%
30%
FC : Full Consolidation / EM : Equity Method
NOTES
81
82
NOTES
Heurtey Petrochem S.A.
8, cours Louis Lumière / 94306 Vincennes Cedex - France / www.heurtey.com

2014 Annual Report - Heurtey Petrochem

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