Beruflich Dokumente
Kultur Dokumente
2006
2005
Net sales
Cost of sales
100,828
(57,077)
Gross profit
43,751
14
Operating income
29,798
(19,458)
(4,508)
(4,834)
14,951
Interest expense
Currency translation gain/(loss)
Step up acquisition of shares
15
71,126
(41,328)
(12,862)
(2,874)
(3,773)
10,289
(742)
1,142
(406)
14,945
Minority interest
(469)
(6)
-
9,814
(725)
14,220
(1,600)
Net income
12,620
(199)
9,615
8,340
Eli Davidai
President
Leon Schachar
Chief Financial Officer
The accompanying notes on pages 5 to 29 are an integral part of the consolidated financial statements.
1
1,295
11,960
1,956
7,546
Assets
Cash
Trade receivables, net
Inventories, net
Other current assets
Total current assets
5
6
7,444
3,170
23,869
4,576
1,763
15,841
7
8
22,852
324
38
925
24,139
17,523
570
38
18,131
48,008
33,972
7,788
12,855
4,495
__287
25,425
4,419
8,567
2,445
__131
15,562
73
73
28
111
139
Total liabilities
25,498
15,701
Minority interest
1,952
1,633
Total assets
Liabilities and Shareholders Equity
Short-term borrowings
Trade payables
Other liabilities
Capital leases- current portion
Total current liabilities
9
10
Due to affiliates
Capital leases long-term portion
Total non-current liabilities
Shareholders Equity
Common stock (165,000 authorised shares,
139,179 issued and outstanding;
USD 0.01 par value)
12
Additional paid-in capital
12
Preferred stock
13
Accumulated deficit
Total shareholders equity
1,392
6,869
21,016
(8,719)
20,558
33,972
1,392
6,869
26,894
(18,517)
16,638
Leon Schachar
Chief Financial Officer
The accompanying notes on pages 5 to 29 are an integral part of the consolidated financial statements.
2
Common
stock
Balance at December 31, 2004
Dividends declared on
preferred stock
Dividends paid
Net income for 2003
Balance, December 31, 2005
Dividends declared on
preferred stock
Dividends paid
Preferred stock redeemed
Net income for 2004
Balance, December 31, 2006
Additional Preferred
paid-in capital
stock
1,392
6,869
1,392
6,869
1,392
6,869
Accumulated
deficit
Total
shareholders
equity
25,504
(23,797)
9,968
3,060
(1,670)
-
(3,060)
8,340
(1,670)
8,340
26,894
(18,517)
16,638
2,822
(1,800)
(6,900)
-
(2,822)
12,620
(1,800)
(6,900)
12,620
21,016
(8,719)
20,558
Eli Davidai
President
Leon Schachar
Chief Financial Officer
The accompanying notes on pages 5 to 29 are an integral part of the consolidated financial statements.
3
2006
2005
12,620
8,340
4,657
725
76
177
93
406
1,177
742
4,271
199
(96)
154
106
282
469
(4,591)
(2,868)
(1,532)
5,088
16,770
(10,673)
(45)
188
(860)
1,281
(10,109)
(2,377)
(1,652)
(2,188)
3,671
11,073
(5,869)
(300)
(6,169)
(9,500)
(930)
3,987
(618)
(261)
(7,322)
(385)
(1,670)
(487)
2,858
(661)
1,161
(4,059)
(3,743)
1,956
795
1,295
1,956
930
1,902
379
487
796
3,275
The accompanying notes on pages 5 to 29 are an integral part of the consolidated financial statements.
The accompanying notes on pages 5 to 29 are an integral part of the consolidated financial statements.
The accompanying notes on pages 5 to 29 are an integral part of the consolidated financial statements.
Basis of presentation
The Company and QuadGat maintain their statutory books in United States
dollars (USD) in accordance with accounting principles generally accepted in
the United States of America (US GAAP) and ABCCEL and OGBCEL in
accordance with IFRS. These companies are located in either the British Virgin
Islands or Cyprus.
ABC, Vitarom and Sigat maintain their statutory books and prepare their statutory
financial statements in Romanian Lei (ROL) in accordance with Romanian law
and generally accepted accounting principles in Romania (RAS). The statutory
accounts of the above mentioned Romanian entities, which were maintained under
the historical cost convention in the currency of an inflationary economy, have
been adjusted for conformity with US GAAP through certain adjustments and
reclassifications including the re-measurement of ROL financial statements into
USD by applying the re-measurement principles defined in the (SFAS) 52
issued by (FASB).
The cumulative inflation rate in Romania for the last three years ending December
31, 2006 was 46,91%(in the three years ended December 31, 2005 80.7%).
Based on the cumulative inflation rate evolution, Romania will most probably
come off highly inflationary status.
In accordance with SFAS 52, Foreign Currency Translation, non-monetary
balance sheet items recorded in currencies other than the reporting currency are
re-measured at historical rates of exchange, and monetary balance sheet items are
measured at current rates. The translation adjustment resulting from remeasurement is included in the income statement for the year.
The accompanying notes on pages 5 to 29 are an integral part of the consolidated financial statements.
2006
2005
Historical rate
Historical rate
Historical rate
Historical rate
Equity
Tangibles
(b)
Consolidation
The accompanying notes on pages 5 to 29 are an integral part of the consolidated financial statements.
Currency of presentation
The accompanying financial statements are presented in thousands of US Dollars
(USD) or otherwise where indicated.
(b)
Use of estimates
The preparation of financial statements in conformity with US GAAP requires
management to make estimates and assumptions that affect reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
(c)
3.
The accompanying notes on pages 5 to 29 are an integral part of the consolidated financial statements.
Bottler incentives
PepsiCo provides the Company with various forms of marketing support. The
marketing support, including some support that is at its sole direction. The
marketing support is intended to cover a variety of initiatives including direct
marketplace, shared media and advertising support, to support volume and market
share growth. The bottler incentives totaled USD 3,937,362 and USD 3,213,326
for the years ended December 31, 2006 and December 31, 2005, respectively.
Under the 2006 marketing support program, bottler incentives that are directly
attributable to incremental expenses incurred are reported as either an increase to
net sales or a reduction to advertising and marketing expenses, commensurate
with the recognition of the related expenses. Such bottler incentives include
amounts received for direct support of advertising commitments and exclusivity
agreements with various customers. All other bottler incentives are recognized as
a reduction of cost of goods sold when the related products are sold based on the
agreements with vendors. Such bottler incentives primarily include base level
funding amounts which are fixed in amount based on the previous year's volume
and variable amounts that are reflective of the current year's volume performance.
The consolidated income statement include the following bottler incentives
recorded as income or as a reduction of expenses:
Net sales
Cost of goods sold
Advertising and marketing expenses
General and administrative expenses
(e)
1,253
2,684
3,937
1,046
72
2,081
15
3,214
3.
The accompanying notes on pages 5 to 29 are an integral part of the consolidated financial statements.
Trade receivables
Trade receivables are shown net of an allowance for doubtful accounts that is
recorded for purposes of reflecting the estimated recoverable amount of these
accounts. The allowance is based on specific amounts that were considered
having a low probability to be recovered.
(h)
Inventories
Inventories consist of finished goods, packaging and raw materials. Costs of
inventories include the purchase price and related costs of acquisition (transport,
custom duties and insurance). Cost is determined using the first-in, first-out
(FIFO) method. The inventories balance is periodically reviewed by management
relative to its recoverability. If the value of inventory items exceed their market
value, the carrying value of those items is reduced to their market value through
the use of an inventory provision.
(i)
3.
10 - 25
10
3 - 10
5-6
Expenditures incurred after the property, plant and equipment have been put into
operation, such as repairs and maintenance and overhead costs, are normally
charged to the income statement in the period when they are incurred.
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(j)
The accompanying notes on pages 5 to 29 are an integral part of the consolidated financial statements.
Intangible assets
The goodwill, which was previously recognized as such in the consolidated
financial statements, was allocated to the fair value of the net assets acquired on
the previous acquisitions, as no such assessment was done at the time of the
acquisition. The allocation of each item to each identifiable assets at the time of
the transaction was impracticable to be done and so it has been reclassified under
the fixed assets and estimated to be depreciated over a 10 year period .
3.
The accompanying notes on pages 5 to 29 are an integral part of the consolidated financial statements.
10
Related parties
For the purposes of these financial statements, parties are considered to be related
if one party has the ability to control the other party or exercise significant
influence over the other party in making financial or operational decisions as
defined by SFAS 57 Related Party Disclosures. In considering each possible
related party relationship, attention is directed to the substance of the relationship,
not merely the legal form.
(m)
Operating leases
Rental payments in respect of operating leases are recognised as expense when
incurred.
(n)
Capital leases
Leases of property, plant and equipment where the Company assumes
substantially all the benefits and risks of ownership are classified as capital leases.
The leases are capitalised at the estimated present value of the underlying lease
payments. The corresponding rental obligations of finance charges are classified
between current and non-current liabilities. The interest element of finance
charges is recorded in the income statement over the lease period. The property,
plant and equipment acquired under capital leasing contracts is depreciated over
the useful life of the asset.
(o)
3.
Taxation
Current
The accompanying notes on pages 5 to 29 are an integral part of the consolidated financial statements.
11
(q)
Financial instruments
Financial instruments on the balance sheet include cash and bank balances,
investments, receivables, trade creditors, leases and borrowings.
3.
The accompanying notes on pages 5 to 29 are an integral part of the consolidated financial statements.
12
(s)
3.
The accompanying notes on pages 5 to 29 are an integral part of the consolidated financial statements.
13
4.
TRADE RECEIVABLES
Trade receivables consist of the following:
December 31, 2006
Trade receivables, gross
(Less): Allowance for doubtful accounts
Total
12,740
(780)
11,960
The accompanying notes on pages 5 to 29 are an integral part of the consolidated financial statements.
14
INVENTORIES
Inventories consist of the following:
6.
Finished goods
Packaging materials
Raw materials
Other inventory
2,764
296
3,983
400
2,320
400
1,696
160
Total
7,444
4,576
853
306
649
187
375
800
1,131
118
507
3,170
1,763
PepsiCo refunds noted above represent refunds earned but not yet paid by PepsiCo for ABC
marketing expenses shared based on a marketing agreement concluded on an annual basis
(see Note 3 for further details).
7.
Land
Building, roads and platforms
223
4,662
167
3,103
The accompanying notes on pages 5 to 29 are an integral part of the consolidated financial statements.
15
(20,070)
15,680
5,285
11,979
3,126
1,146
40,486
(22,963)
22,852
17,523
In 2006 and 2005, the depreciation expense for property, plant and equipment were
USD 4,517 and USD 4,250, respectively.
The following is a summary of leased property acquired under capital leases:
December 31, 2006
Transportation equipment acquired
under capital lease
Accumulated depreciation
710
(168)
615
(249)
542
366
Future minimum capital lease payments as of December 31, 2006 and 2005 were USD
374 and USD 242 respectively .
Capitallease
298
57
The accompanying notes on pages 5 to 29 are an integral part of the consolidated financial statements.
16
Minimum rentals
Contingent rentals
8.
2006
2005
588
-
270
-
588
270
Software
Other
Total
Accumulated amortisation
Net book value
649
261
910
681
369
1,050
(586)
(480)
324
570
In 2006 and 2005, the amortisation expense for intangible assets were USD 140 and
USD 21, respectively.
During 2006, ABC acquired its accounting software from a related party, Wizrom
Software SRL, in the total amount of USD 142 (2003: USD 171).
9.
BORROWINGS
December 31, 2006
December 31,
2005
The accompanying notes on pages 5 to 29 are an integral part of the consolidated financial statements.
17
4,199
2,041
116
1,760
TOTAL
4,419
7,788
7 ,788
Interest rate
The exposure to the interest rate risk and the effective interest rate are presented below:
December 31, 2006
(USD 000s)
Total borrowings:
The accompanying notes on pages 5 to 29 are an integral part of the consolidated financial statements.
18
4,419
Financial year
ended as at
December 31, 2006
(%)
Financial year
ended as at
December 31, 2005
(%)
4.15%
4.93%
4.74%
4.93%
10.
OTHER LIABILITIES
At December 31, 2006 and 2005, other liabilities consist of the following:
590
215
249
125
1,449
200
1,092
575
4,495
359
164
343
99
748
547
178
2,445
ABChas from time to time granted stock appreciation rights (SARs) to employees and/or
directors of the Company. SARs offer a means of providing deferred, long-term
incentive compensation based on the increase in value of the common stock of
ABCbetween the date of grant and the date of exercise. SARs do not involve the capital
stock of ABCor any of its subsidiaries.
As at December 31, 2005 a total of 2,783.6 SARs were issued and outstanding to five
employees. In 2004 all of them became vested and three of the employees exercised their
right and additional one exercised 40% of it (i.e. $42,500). As at December 31, 2006 one
The accompanying notes on pages 5 to 29 are an integral part of the consolidated financial statements.
19
INCOME TAX
Total income taxes for the year ended December 31, 2006 were allocated as follows:
2006
Income tax from continuing operations
Deferred tax asset
Plant and equipment, due to differences
in depreciation period
2,525
1,600
12.
(925)
COMMON STOCK
The breakdown of the Companys common shareholders together with their common
shareholding percentages in the Company is as follows:
December 31, 2006 and 2005
Number of
Percentage
common shares
(%)
Quadrant-Amroq International Limited (QAIL)
European Beverage Holdings
100,000
71.9
The accompanying notes on pages 5 to 29 are an integral part of the consolidated financial statements.
20
139,179
28.0
0.1
100.0
PREFERRED STOCK
As at December 31, 2001, the Company agreed to exchange certain debt owed by the
Company to affiliates (comprising the loans commonly referred to as the Original
Shareholding Financing , the 1995 Financing and the 1996-97 Financing, including
principal and accrued interest) for shares of Preferred Stock of ABCCL, using an
exchange rate of USD 1,000 per share of Preferred Stock.
Prior to this exchange, the authorised capital of the Company was USD 2,000 divided
into 200,000 shares with a value of USD 0.01 each. Following this exchange the
authorised capital of the Company was divided into two classes consisting of (i) 165,000
shares of Common Stock with a par value of USD 0.01 each and (ii) 35,000 shares of
Preferred Stock with a par value of USD 0.01 each
Dividends on preferred stock
The holders of the Preferred Stock are entitled to receive cumulative dividends based on
the Stated Value of their shares at the rate of 12% per annum, compounded annually, from
the effective date of issuance until the date of redemption.
Liquidation preference
The Preferred Stock has priority over the Common Stock in the event of a liquidation of
the Company.
Redemption
The Company shall have the right to redeem the Preferred Stock in whole or in part at the
Stated Value plus accrued but unpaid dividends at any time, without premium or penalty;
provided that any partial redemption shall be effected proportionately among all holders
of the Preferred Stock.
Conversion rights
The holders of the Preferred Stock shall have no rights to convert the Preferred Stock into
shares of Common Stock.
The accompanying notes on pages 5 to 29 are an integral part of the consolidated financial statements.
21
2006
2005
Operating expenses
Management team remuneration
SARs provision
Travel and entertainment
Management fees
Professional fees
Agricultural taxes
Provision for bonuses
2,464
690
93
375
313
354
545
2,111
493
106
149
512
139
87
176
Total
4,834
3,773
2006
2005
Third party
Affiliates
742
-
444
25
Total
742
469
15.
16.
December 31,
507
-
The accompanying notes on pages 5 to 29 are an integral part of the consolidated financial statements.
22
(c)
Year ended
December 31, 2006
Year ended
December 31,
4,570
142
313
72
430
3,133
Directors compensation
Directors who are also managers of the Company or affiliated with shareholders
of the Company are not paid directors fees as such. One director, who is not in
such position, is paid a directors fee for each meeting attended. All directors
receive reimbursement of expenses in connection with Company business.
As mentioned in Note 10, as at 31 December 2006, the liability resulting from
SARs granted amounts to USD 215 thousand, the 2006 expense being USD 93
thousand.
17.
Taxation
The Romanian taxation system is undergoing a process of consolidation and
harmonization with the European Union legislation. However, there are still
different interpretations of the fiscal legislation. In various circumstances, the tax
authorities may have different approaches to certain issues, and assess additional
tax liabilities, together with late payment interest and penalties. In Romania, tax
periods remain open for 5 years. The companys management considers that the
tax liabilities included in these financial statements are fairly stated.
The accompanying notes on pages 5 to 29 are an integral part of the consolidated financial statements.
23
Transfer pricing
The Romanian fiscal legislation has included regulations regarding transfer
pricing between related parties since 2000. The current legislative framework
defines the arms length principle for transactions between related parties, as
well as the methods for determining the transfer prices. Thus, it is expected that
the tax authorities may initiate in depth inspections of the transfer prices, in order
to ensure that the taxable profit and/or the customs value of imported goods are
not misstated by the effects of transfer prices between related parties. The
Company and its subsidiaries cannot assess the outcome of any such inspection.
(c)
Insurance policies
The Company and its subsidiaries hold insurance policies in relation to their
assets, operations, product liability, public liability and other insurable risks, with
the exception of tangible fixed assets, finished goods and raw materials as well as
for the prevention of business interruption.
(d)
Environmental matters
Environmental regulations are developing in Romania and ABC has not recorded
any liability at 31 December 2004 for any anticipated costs.
The accompanying notes on pages 5 to 29 are an integral part of the consolidated financial statements.
24
FINANCIAL RISK
(a)
Credit risk
Financial assets, which potentially subject the Company and its subsidiaries to
credit risk, consist principally of trade receivables. The Company and its
subsidiaries have policies in place to ensure that sales of products and services are
made to customers with an appropriate credit history. The carrying amount of
accounts receivable, net of provision for impairment, represents the maximum
amount exposed to credit risk. The Company and its subsidiaries have no
significant concentrations of credit risk. Although collection of receivables could
be influenced by economic factors, management believes that there is no
significant risk of loss to the ABC beyond the provision already recorded.
Cash is placed in financial institutions that are considered at time of deposit to
have minimal risk of default.
(b)
Market risk
The substantial majority of the Companys transactions with customers and
suppliers, and of its operations in general, are conducted in Romania, which therefore
creates market risk for the Companys operations.
The Romanian economy is in a relatively early stage of market development, and
there is a considerable degree of uncertainty surrounding the economys future
direction.
(c)
Currency risk
Material exchange restrictions and controls exist relating to converting ROL into
The accompanying notes on pages 5 to 29 are an integral part of the consolidated financial statements.
25
(e)
Liquidity risk
The Companys policy on liquidity is to maintain sufficient liquid resources to
meet its obligations as they fall due.
(f)
Fair values
The carrying amount of Preferred Stock outstanding approximates fair value. The
estimated fair value of Preferred Stock outstanding at December 31, 2006 was
USD 21,017 thousand (December 31, 2005: USD 26, 894 thousand).
19.
SUBSEQUENT EVENTS
In January 2005 the overdraft facilities granted by Alpha Bank and ING Bank to
the Company have been increased from 6.5 mill USD to 8 mill USD Alpha
Bank and from 4.0 mill USD to 5.0 mill USD- ING. The new facilities have been
renewed in the same terms as previous one.
The Company obtained a long term loan (5 years) from Alpha Bank Athens
(March 18, 2005) of 21 mill. USD - scope of this loan is the Redemption of the
Preferred Stock.
The accompanying notes on pages 5 to 29 are an integral part of the consolidated financial statements.
26