no tricks, no secrets: frosta tastes better, even bean counters agree. annual report 2016
t wo-ye ar annual overvie w and financial calendar 2017 key figures for the frosta group key igures for the frosta group employees (average) revenue ebitda in % of revenue consolidated proit/loss capital expenditure dividend per share financial calendar financial calendar event presentation of annual results bremerhaven annual general meeting bremerhaven civic centre wilhelm-kaisen-platz 27576 bremerhaven half-yearly inancial report 2017 2015 2016 amount 1,631 1,665 meur meur meur meur eur 440 38.3 8.7 % 18.2 14.1 1.36 466 43.8 9.4 % 21.6 26 1.50 date thursday, 23 march 2017 friday, 23 june 2017 monday, 31 july 2017 meur = millions of euros keur = thousands of euros
contents contents 2 3 contents letter to our shareholders about frosta ag management bodies new products in 2016 consolidated management report business environment and general conditions results of operations, net assets and financial position risk management system/internal control system report on risks and opportunities report on post-balance sheet date events branch office report forecast annual financial statements of the frosta group consolidated balance sheet of frosta ag in accordance with ifrss consolidated statement of profit or loss and other comprehensive income of frosta ag in accordance with ifrss consolidated statement of cash flows of frosta ag consolidated statement of changes in equity of frosta ag consolidated statement of changes in fixed assets of frosta ag notes to the consolidated financial statements for the 2016 financial year in accordance with ifrss 4 6 9 10 12 14 16 21 22 23 23 23 24 26 28 30 31 32 36 annual financial statements of frosta ag 64 income statement of frosta ag in accordance with the german commercial code (hgb) 65 balance sheet of frosta ag in accordance with hgb statement of changes in fixed assets of frosta ag notes to the annual financial statements for the 2016 financial year of frosta ag according to hgb ten-year overview for the frosta group report of the supervisory board for the 2016 financial year group structure and addresses publishing information 66 68 70 82 84 86 88
letter to our shareholders k apiteltitel letter to our shareholders our business continued to develop positively in 2016. compared to the overall food market in germany, which grew by 2 % (source: iri), sales of our prod- ucts were up by 5.9 %. our frosta brand once again recorded particularly strong growth, with an increase of 20.7 % across all countries. the issues that we have been committed to for many years are convincing more and more people: • natural ingredients, 100 % free from additives such as lavour enhancers, colouring agents, emulsiiers, stabilisers and lavourings (since january 2003) • declaration of the country of origin on the back of all packaging (since september 2015) • environmental protection with clear annual targets for reducing energy consumption and co₂ emissions • social responsibility: we donate 2 % of our divi- dend amount to charitable initiatives near our plant locations and in the countries where we source our ingredients (since 2015) • transparent production for everyone to see with a 50-metre long glass window at our main produc- tion plant in bremerhaven’s fischereihafen district (since march 2015) this year, we are publishing our irst sustainability report. this gives us an opportunity to present the sometimes highly complex issues in an informative and even entertaining way – why not check it out? for a while now, we have been observing a growing interest in vegan nutrition. we are responding to this trend by extending our vegan frosta range from may 2017. our new “chili con quinoa” brings the lavour of tex-mex cuisine to your table. the selected ingredients don’t just taste good – they also provide all the nutri- ents you need without any animal ingredients. and by the way, we deliberately do not use meat substitutes often typically found in vegan dishes. our personnel expenses rose at a slightly higher rate than revenue by 6.2 %. by contrast, the number of employees increased by only 2.1 %, to 1,665. for their collective contribution to the positive operating result,
le t ter to our shareholders 4 5 from left to right hinnerk ehlers vice president marketing, sales and human resources jürgen marggraf vice president operations maik busse vice president finance and controlling felix ahlers chairman of the executive board our employees beneited from signiicantly higher bonus payments. an increasing number of employees are also becoming shareholders: 405 buyers (5 % more than in the previous year) took advantage of the opportunity to purchase frosta shares at particularly favourable conditions in 2016. another positive factor was the continued low luctuation rate of only 2 %. our operating proit also followed the trend in sales revenues and increased to eur 31.1m, with a similarly improved relative margin. this positive result was achieved through strict cost control and a stronger focus on countries and business segments with more attractive price levels. the increase in earnings is of fundamental importance to enable us to continue to invest in state-of-the-art technology and advertising in the future. in 2016, we raised our capital investments by eur 11.9m and our advertising expenditure by eur 0.7m, while managing to keep the equity ratio almost stable at 53.7 %. 2017 also got of to a positive start, with sales revenues in the irst two months up by almost 8 %. we are there- fore conident that these investments will pay of. we would like to take this opportunity to congratulate all frosta ag employees on their excellent work in 2016. and we would like to thank you, our shareholders, for the conidence you have placed in us. we hope you will continue to do so in future. felix ahlers hinnerk ehlers maik busse jürgen marggraf
about frosta ag about frosta ag our mission: excellence for our customers our mission is to develop and produce excellent frozen fish, ready meals, vegetables, herbs and fruit. in doing so, we are guided by the following values: mission: excellence for our customers n o i t a v o n n i y t i l a u q p i h s r u e n e r p e r t n e sustainability n o i t a r e p o o c y t i c i l p m i s we aim for innovation in all areas of our organisation. our goal is to improve the quality of our products and services at every level. through our entrepreneurship we strive for opportunities in the interest of our customers. trusting oder trust-based cooperation with our customers and throughout the whole organisation is very important to us. simplicity in our processes and clear priorities improve our efficiency.
about frosta ag 6 7 about frosta ag more than 1,600 people work for frosta ag in eight countries. we produce at three plants in germany and one in poland. the frosta brand is a successful provider of frozen ish, vegetables and meals in germany, poland, aus tria, italy and eastern europe. the frosta “purity command” is our way of promising that we will never add any colours, lavourings, lavour enhancers, sta bilisers or emulsiiers to any of our branded products. frosta products are available from supermarkets and include a range of vegetables, ish, fruit and herbs as well as classic dishes such as nasi goreng and paella. in april 2013, frosta was the irst frozen food brand to publish on the internet the countries of origin of each batch of our ingredients. since autumn 2015, 1,665 employees in 8 countries. we have included this information on all of our prod uct packaging as well. frosta ag is also a specialist production partner in the development and production of highquality customer brands for the european retail and whole sale sectors. click here for more information. moscow hamburg bremerhaven bydgoszcz lommatzsch prague paris bobenheimroxheim budapest bucharest rome production sales
about frosta ag our business frozen produc ts and produc tion vegetables fruit herbs fish meals vegetables, fruit and herbs from our own and partner farms bobenheim-roxheim, germany lommatzsch, germany fish and meals bremerhaven, germany bydgoszcz, poland business lines br and business private l abel business non-re tail business frosta brand with purity command tiko brand – fish and meals production partner according to customer requirements elbtal brand – vegetables
management bodies management bodies 8 9 management bodies supervisory board executive board dirk ahlers hamburg businessman chairman oswald barckhahn amsterdam/netherlands businessman vice chairman jürgen schimmelpfennig bremerhaven machine fitter felix ahlers hamburg chairman maik busse (as of 1 july 2016) bremerhaven hinnerk ehlers hamburg jürgen marggraf bremerhaven vice chairman
new products in 2016 ne w products in 2016 hi there, we’re new! new frosta products in 2016 the 23 new products that we launched in 2016 are of course also subject to the strict frosta purity command. our products have been consistently free from all additives and lavourings since 2003. since 2016, we have also included the country of origin of all in- gredients on our packaging. fish for the frying pan or oven caught on the high seas and frozen immediately, these msc-certiied alaska pollack illets meet all the requirements set out by our company founder, dirk ahlers, for good fish. three varieties of fish veggie burgers in our opinion, these vegetable burgers taste much better than meat burgers. if you read the section on climate protection in our sustainability report, you will see why our colleague ur- ban buschmann has another reason to be happy about our veggie burgers. three varieties of veggie burgers vegetables – pure and simple your own garden is probably the only other place you will ind fresher peas. when it comes to these delicate vegetables, the race against time starts immediately once they are harvested and only stops when they reach your plate. or the deep freeze section at –18 degrees, where our peas manage to be within two hours. they‘ve been handled like this for over 40 years by the way! five varieties of vegetables – pure and simple
ne w products in 2016 10 11 buttered vegetables like all the new products that we launched in 2016, our new buttered vegetables come in a cardboard box rather than a plastic bag. in the last two years, we have focused our atten- tion on environmentally friendly packaging and have made excellent progress in this area. buttered vegetables creamed vegetables one of the greatest challenges that we faced when implement- ing our purity command was the omission of modiied star- ches. our solution was to return to high-quality fats like butter and cream and to rediscover a traditional cooking technique – the roux. the result is beautifully creamy sauces for our new creamed vegetables! four varieties of creamed vegetables spinach like our peas, speed is of the essence when it comes to our spinach: its valuable nutrients start to diminish as soon as it is harvested. we also manage to transport our spinach from the ield to the freezer within two hours! three varieties of spinach chicken with sauce all that is missing from our four new chicken dishes is your fa- vourite side dish. a little self-catering is also good for a change! four varieties of chicken
consolidated management report consolidated management report business environment and general conditions business structure employees procurement production capital expenditure r&d report organisation, administration and company structure results of operations, net assets and financial position macroeconomic environment development of the frozen food market business development segment reporting individual financial statements of frosta ag the frosta share risk management system/internal control system report on risks and opportunities procurement market currency situation sales market financing legal risks report on post-balance sheet date events branch office report forecast 14 14 14 15 15 15 15 15 16 16 16 16 18 19 21 21 22 22 22 23 23 23 23 23 23
business environment and genereal conditions consolidated management report consolidated management report for the company and the group of frosta aktiengesellschaft, bremerhaven business environment and general conditions business structure employees it is our 1,665 employees who time and again make our success possible. we are frosta! the number of employees rose by 2.1 % on an annual average. at frosta, our successful business structure was retained in 2016. 3 operating segments 1. frosta – our brand 2. non-retail business including foodservice & home delivery 3. copack – our private label business 9 sales offices prague bucharest budapest moscow hamburg bremerhaven bydgoszcz paris rome 4 plants vegetables and herbs from our own cultivation in lommatzsch and bobenheim-roxheim fish and ready meals in bremerhaven and bydgoszcz/ poland employees frosta head oice administration sales frosta production facilities bydgoszcz bremerhaven lommatzsch bobenheim-roxheim group total 2015 2016 210 131 210 127 79 1,421 83 1,455 591 539 160 131 603 549 162 141 1,631 1,665 proportion of women: we promote equality! first-level management second-level management total frosta 27 % 34 % 39 % we develop our specialists of tomorrow. in the 2016 inancial year, we employed 30 apprentices at frosta. with a sickness rate of 5.1 % and a very low luctuation rate of 2.0 % at our german locations, we once again showed encouraging employment parameters. total personnel expenses increased by 6.2 % to a level of eur 68.3m. while the remuneration of the execu- tive board fell slightly, employees and management participated in the positive inancial results. in 2016, we again offered our employees the oppor- tunity to share in the ownership of frosta ag by purchasing employee shares at a reduced price. the value of shares purchased amounted to eur 855,671.00 (2015: eur 755,376.00). a total of
consolidated management report 14 15 405 buyers took part in the campaign (2015: 387). we are very pleased with our employees’ involvement in this scheme and with the trust demonstrated. we hope that even more employees will become frosta shareholders in future. we would like to warmly thank all of our employees and the works council for their high level of commitment and enthusiastic dedication during the past year. procurement global procurement markets were highly inluenced by currency luctuations between the euro and the us dollar as well as extremely volatile energy costs (oil and gas prices) in the 2016 inancial year. the aim for 2016 was to compensate for these macroeconomic factors and achieve attractive purchasing prices. in some cases, poor harvest yields in certain vege- table commodities in europe caused price increases because of lower availability. production due to extremely strong demand in european markets, we were able to increase production volumes by more than 3 % compared to 2015. as a result, capacity utili- sation was extremely good at all production facilities. all of frosta ag’s production facilities are certiied in accordance with iso 50001 (energy management). frosta ag was able to maintain its energy use per tonne of inished products (measured in co₂ equiva- lents) at a good level. capital expenditure capital expenditures totalled eur 26m for the 2016 inancial year, eur 10m of which lowed into capacity expansion projects with eur 16m being earmarked for replacement investments as well as investments targeting more energy-eicient production at all locations. the capacity expansion relates to a new production line for ready meals in bremerhaven and the start of the production expansion for ish products in bydgoszcz, poland. r&d report product development again contributed to the com- pany’s sustainable success. in 2016, many new product concepts were developed. one highly successful example is the new frosta ish range including prod- ucts for the oven (backofen fisch) and the frying pan (pfannen fisch). organisation, administration and company structure the proven organisation structure was maintained. with the departure of dr hinrichs from the execu- tive board, his executive duties were redistributed. chairman of frosta ag’s executive board is felix ahlers. as vice chairman, jürgen marggraf is respon- sible for the copack and operations segments. hin- nerk ehlers is in charge of marketing and sales for the brand, foodservice and home delivery as well as hr. efective from 1 july 2016, maik busse took over finance and controlling. the supervisory board of frosta ag is chaired by dirk ahlers. oswald barckhahn is vice chairman of the supervisory board and jürgen schimmelpfennig is the elected workers’ representative. the supervisory board appoints the members of the executive board and determines their number. the supervisory board has transferred the completion, amendment and termination of employment contracts to the finance and personnel committee. on the recommendation of its finance and per- sonnel committee, frosta ag’s supervisory board determines the amount and structure of the execu- tive board members’ remuneration. dirk ahlers and oswald barckhahn are members of this committee. the members of the executive board receive remu- neration made up of the following components: • a ixed basic annual salary • a variable remuneration for the purchase of frosta shares • a variable remuneration based on consolidated proit before tax • a long-term bonus based on the three-year average return on investment (roi) of frosta ag (not a ratio generally used in the company; applies only to some members of the executive board) the members of the supervisory board receive remu- neration made up of the following components: • a ixed basic annual salary paid once a year • a bonus related to the proposed dividend payment which is also paid once a year
results of operations, net assets and financial position consolidated management report results of operations, net assets and financial position with strong growth of 25.7 %, the frosta brand con- tinued to successfully establish itself in this ield. the strongest growth was recorded in the sales of com- plete ready meals (up by 18.8 %), vegetables (+35.8 %) and ish products (as much as 46.0 %) (source: iri 2016). macroeconomic environment in 2016, the german economy grew by 1.9 % and the economies of the eu countries by 1.8 %. inlation in the euro zone increased slightly year-on-year to 1.1 %, with energy prices rising faster than average at 2.5 % (source: eurostat). the german food retail segment posted growth of 2.0 % in the 2016 inancial year, which was accounted for by volume growth with 1.0 % and by price increases also with 1.0 %. while large self-service department stores grew at a below-average pace with only 0.3 %, full-range food retailers beneited most from the positive under- lying consumer mood and gained 2.7 % on 2015. the dis- counters also achieved growth of 1.9 %, mainly thanks to listings of branded products (source: iri 2016). business development in 2016, we managed to increase frosta group rev- enue by 5.9 % to eur 466m. the main driver of this positive development was the continued focus on the frosta brand with growth of 21 % and on the food- service business, which posted an increase of 19 % over 2015. revenue performance was also positive in the home delivery and private label business. the development projected in the previous year’s forecast thus occurred both in the consolidated and in the sep- arate inancial statements. group revenue (in meur) 466 440 2016 was marked especially in the last few weeks of the year by the euro’s sharp decline against the dollar. the average exchange rate dropped from usd 1.11 to usd 1.05 at year’s end. 380 386 408 development of the frozen food market 2012 2013 2014 2015 2016 + 5.9 % including hard discounters in 2016, frozen food sales in the german food retail segment, (aldi/lidl/ norma) increased by 2.2 % to eur 6.2 billion. the frosta brand made an above-average contribution to this development in all category segments. performance – 2016 vs. 2015 frozen food excluding ice cream frozen vegetables frozen ish frozen ready meals −3.1 % – complete meals – ready-meal components −11.6 % 2.2 % 1.5 % 3.8 % 1.8 % frosta brand grows by 25.7 % despite the negative purchasing currency effects, the sales increases for the frosta brand and in the foodservice segment with innovative prod- ucts contributed to an improvement of the gross profit margin from 37.1 % to 38.4 %. the gross profit margin is calculated on the basis of group earnings by subtracting other operating income and the cost of materials (cost of goods sold) from total revenue and dividing by total revenue. gross proit margin (in %) 34.1 35.8 38.4 37.1 38.4 2012 2013 2014 2015 2016 +1.3 %p to create additional production capacities, extra shifts were introduced in the plants with corresponding sub- sequent costs.
consolidated management report 16 17 expenditure on brand-building activities increased by eur 0.7m. the consolidated proit/loss totalled eur 21.6m in the 2016 reporting period, up by eur 3.4m on 2015, and was used to inance the increase in working capital necessary to support further business growth. consolidated proit/loss (in meur) 17.3 18.2 21.6 12.0 6.1 the equity ratio at the balance sheet date was impacted by the increase in working capital and capital expendi- tures for new production capacities that will not ensure an additional creation of value until the subsequent year, but nevertheless remained at a high level. capital expenditures amounting to eur 26.0m sig- niicantly exceeded the 2015 igure of eur 14.1m and were completely inanced from the “cash low before change in working capital” amounting to eur 35.3m. thus in the 2016 inancial year, the group was able to fulil its payment obligations at all times. +18.4 % capital expenditure (in meur) 2012 2013 2014 2015 2016 26.0 cash low before change in working capital (in meur) 27.1 30.5 35.3 23.1 18.5 2012 2013 2014 2015 2016 +15.7 % with these results, the company managed to exceed the forecast made for the inancial year 2016. the equity shown in the consolidated balance sheet of frosta ag can be broken down as follows, in each case as at 31 december: equity (in meur) subscribed capital + capital reserves + retained earnings + net result equity total assets equity ratio 31/12/2015 31/12/2016 17.4 12.8 86.3 18.2 134.7 244.7 17.4 12.8 93.9 21,6 145.7 271.6 55.1 % 53.7 % 16.3 14.1 7.8 8.4 2012 2013 2014 2015 2016 + 84.4 % the balance sheet total of eur 272m in 2016 signii- cantly exceeded the previous year’s level of eur 245m. this included an increase of eur 13m in ixed assets due to the investments in capacity expansion. inven- tories at the balance sheet date were eur 8.2m higher than in the previous year. this was due to higher demand as well as to holding safety stocks as a result of the poor harvest for our vegetable and herb prod- ucts. trade receivables increased in line with growth by eur 3.4m. at the end of 2016, cash amounted to eur 14.9m, slightly above the previous year’s level of eur 14.4m. the rise in the balance sheet total was funded by the increase in equity of eur 11m and current and non-cur- rent provisions and liabilities. liabilities to banks were reduced from eur 33m to eur 28m after bank loans came to maturity and were repaid and the inancing of an investment with eur 10m was compensated through a reduction in receivables inancing within the scope of the abs programme. the equity ratio of frosta ag thus remained at a high level of 54 %, allowing the company to retain its inan- cial independence in the future.
consolidated management report equity ratio (in %) proit/loss frosta operating segment (in meur) 48.7 52.5 53.5 55.1 53.7 17,2 14,2 2012 2013 2014 2015 2016 2012* 2013* 2014* 2015 2016 53.7 % + 21.5 % overall, the inancial position of the frosta group developed positively in 2016. the revenue, gross proit margin and total proit/loss projections made in the 2015 management report were surpassed, leading to the higher than projected operating proit. segment reporting performance of the frosta operating segment the frosta operating segment (brand business in germany, austria, poland, hungary, czech republic, romania, russia and italy, some parts of the private label business as well as the foodservice and home delivery service in europe) enjoyed a positive devel- opment in almost all sales areas. various sales and marketing activities resulted in improved consumer demand and increasing turnover of 12.4 % compared to 2015. revenue frosta operating segment (in meur) 227.2 202.2 +12.4 % 2012* 2013* 2014* 2015 2016 *new allocation from 2015 *new allocation from 2015 in the core german market, the frosta brand increased consumer revenue in 2016 by as much as 25.7 % (source: iri 2016). frosta extended its market leadership in stir-fry meals with growth of 18.8 %. among the 15 top-selling products in this segment, frosta was represented with eight products, while its main brand competitor sufered two-digit losses despite numerous new list- ings (source: iri 2016). sales revenues for frosta vegetable mixes grew by 35.8 %. this growth was driven by the continued focus on the core business with an expansion of distribution and excellent results for traditional vegetable varie- ties (source: iri 2016). in the ish segment, frosta – still at a low level – saw a 46 % rise in growth year-on-year (source: iri 2016). the frosta brand also succeeded in further con- solidating its position in the eastern european markets and in italy with double-digit growth. due to the high quality of the range, the foodser- vice (catering) segment also saw a rise in revenue of 19.4 %. even in the challenging home delivery seg- ment, the company generated growth of 5.9 %. expenditure for advertising and brand-building activities was extended; nevertheless the frosta operating segment increasingly beneited from the attained critical mass and improved its proitability. this releases resources that will allow the company to further invest in brand development in the future.
consolidated management report 18 19 performance of the copack operating segment the copack operating segment comprises the pri- vate label business sales channels with food retailers in germany, france and western europe as well as industrial customers. future investments in additional capacities and neces- sary working capital. the anticipated rise in the price of raw materials here will necessitate further price increases and cost cuts in the future. a major contribution to sales revenue growth came from the expansion of distribution in france. individual financial statements of frosta ag revenue copack operating segment (in meur) 237.8 238.9 the individual and consolidated inancial statements of frosta ag are identical with regard to changes in most balance sheet and income statement items. any material diferences between the inancial statements are caused by consolidation of the polish subsidiary and the diferences in inancial reporting standards. unlike the consolidated inancial statements governed by international ifrs rules, the individual inancial statements for frosta ag are prepared in accord- ance with the provisions of the german commercial code (hgb). +0.5 % revenue of frosta ag in 2016 was up by 6.5 % on the previous year. this was mainly due to the good rev- enue performance of the frosta brand in germany and eastern europe and sales in france, italy and the foodservice business. the increase in revenue had a correspondingly positive efect on our earnings. however, currency efects and the diicult harvest situation negatively impacted the cost of materials. personnel expenses were adjusted in line with existing agreements. the line item other expenses item relects increased expenditure for advertising as well as restructuring expenses for the relocation of a production line. the individual inancial statements show a proit after tax of eur 15.5m in accordance with the accounting principles of the german commercial code. the pre- vious year’s igure was eur 13.3m. the detailed diferences between the net income for the year according to german commercial code and the consolidated proit for the year according to ifrss are illustrated below: 2012* 2013* 2014* 2015 2016 *new allocation from 2015 proit/loss copack operating segment (in meur) 4.0 4.4 2012* 2013* 2014* 2015 2016 + 7.6 % *new allocation from 2015 in the ish and vegetables product groups, however, further growth was also achieved in the other markets. one major challenge in the copack operating segment resulted from the current insolvency of competitors. increasingly scant production resources made it repeatedly necessary to optimise the portfolio in an efort to satisfy the additional customer demand thus generated. increased volume, a favourable product mix and fur- ther eiciency-enhancing measures had a positive impact. these are an important contribution towards
consolidated management report reconciliation of 2016 inancial statements net income for the year of frosta ag for 2016 (hgb) adjustments to ifrss: depreciation and amortisation pallet expenditure deferred taxes disposal of shares in bio-frost westhof gmbh other proit for the year of frosta ag for 2016 (ifrss) total annual proit/loss of subsidiaries included in the consolidated inancial statements efects of the consolidating entries recorded to proit or loss proit for the year of the frosta group for 2016 keur 15,451 −2,242 984 507 −307 −128 14,265 7,354 −51 21,568 the higher depreciation/amortisation igures in the ifrs inancial statements result from the fact that ixed assets measured in accordance with ifrss have a higher carrying amount than in the hgb inancial statements, and from diferent depreciation/amorti- sation rules and useful lives. the individual inancial statements according to gen- erally accepted accounting standards in germany remain the basis for determining the dividend amount. the executive board will propose to the annual general meeting to distribute a dividend of eur 1.50 per share from net retained proits and allocate the remainder to reserves. based on 6,812,598 shares, less 10,468 treasury shares not entitled to a dividend in accord- ance with section 71b of the german stock corpora- tion act (aktg), this results in a total dividend amount of eur 10.2m. as a result, 24 % of the frosta group’s proit before tax of eur 31.1m will be distributed as a dividend and 39 % paid as taxes, with 37 % being retained by the company. appropriation of proits 2016 current company taxes capital gains tax including solidarity surcharge on dividends total taxes net dividend retained by the company consolidated proit before tax meur percentage 9.5 2.7 12.2 7.5 11.4 31.1 30 % 9 % 39 % 24 % 37 % 100 % for all other statements made in the management report, the separate and consolidated inancial state- ments correspond, with the exception of the special characteristics typical of a group. relating to the dis- closures pursuant to section 289 (4) hgb – where rele vant – please refer to the disclosures in the notes. overall, the inancial position of the frosta group developed positively in 2016. the revenue, gross proit margin and total proit/loss projections made in the 2015 management report were surpassed, leading to the higher than projected operating proit.
risk management system/internal control system consolidated management report 20 21 the frosta share key data of the frosta share market segment entry standard of frankfurt stock exchange german sin (wkn) 606900 isin de0006069008 nominal share value eur 2.56 the frosta share saw the following development in 2016: in december 2015, the share price was at eur 40.20 and in december 2016 it was at eur 58.80. the dividend yield is 2.6 %. since february 2011, the frosta share has been traded in the entry standard of the frankfurt stock exchange. key igures for the frosta share share capital (meur) number of shares (in thousand) equity acc. to consolidated balance sheet (meur) equity per share (eur) share price at year-end (eur) year high (eur) year low (eur) trading volume in shares p/e ratio (price at year-end/proit for the year) dividend payout per share (eur) dividend yield (dividend/price at year-end) consolidated proit for the year (meur) proit for the year per share (eur) cash low before change in working capital (meur) cash low before change in working capital per share (eur) 2015 17.4 6,813 134.7 19.77 40.20 42.69 26.21 2016 17.4 6,813 145.7 21.39 58.80 65.25 39.40 731,892 516,782 15.11 1.36 3.4 % 18.2 2.67 30.5 4.48 18.55 1.50 2.6 % 21.6 3.17 35.3 5.18 risk management system/ internal control system the risks described afect all segments of the group. the main features of the internal control and risk management process relevant for the group’s inan- cial reporting system are presented as follows: frosta has set up an internal control and monitoring system to be enforced by the group’s financial con- trol, accounting, debtor management and human resources departments. process-integrated and independent monitoring procedures make up the main components of the control system. besides manual measures such as the dual-control principle, automatic controls integrated into our sap-erp system with its bo
report on risks and opportunities consolidated management report integrated analysis tool are also a material compon ent of measures into processes. the strict separation of administrative, executive, accounting and approval functions reduces the likelihood of fraudulent actions. report on risks and opportunities important the most internal control variable at frosta ag alongside “contribution margin ii” (contri- bution margin i less selling expenses and marketing costs) and “operating proit/loss” is “return on invest- ment”. our process-independent monitoring programme includes the internal audits of our quality manage- ment oicers, internal auditing projects and indeed the supervisory board. the compliance and reliability of our corporate accounting is guaranteed by adherence to the work instructions and internal accounting manual, which apply to all relevant group companies. these regula- tions also stipulate the material and formal require- ments concerning the preparation of the inancial statements. despite the large number of regulations, there is still a possibility of risk, for example as a result of extraordinary or complex transactions. all our managerial staf are actively involved in our risk management system. the system ensures that warning signals are given at an early stage, even in times of crisis. market-related business risks are naturally borne by the company itself. these include risks from the development of new products. the company gener- ally tries as far as possible to transfer any risks not stemming from the company’s core areas of activity, such as currency, liability and property damage risks, to third parties. the risk management system at frosta ag is the subject of a continuous improvement process. each year, a management workshop is held to review and assess all of the company’s risks and opportunities. procurement market the production of frozen food involves the use of a wide range of raw materials, the procurement of which can be subject to considerable luctuation. by cooperating with strategic suppliers we smooth out these luctu- ations and avoid dependencies. due to diferent geo- graphical locations, our own vegetable production is also largely secured against the efects of inclement local weather conditions that can lead to poor harvests. despite all this, considerable changes in the prices of raw materials are still possible and, if we are to remain competitive, we cannot always pass these on directly to the customers. this situation presents risks and oppor- tunities. however, price agreements with customers with a term of more than six months increase our risk/ opportunity as we are not normally in a position to secure raw material cover for such a long period. as far as possible, we therefore try to avoid contractual or delivery agreements with our customers which go beyond this period. however, competition sometimes makes this impossible. the quality of the raw materials is monitored by audits at our suppliers’ facilities and by checking goods as they arrive at our plants. quality checks, however, cannot guarantee the absolute safety of raw materials since the thresholds for contamination are becoming ever lower and the checks are only carried out on a random basis. currency situation frosta purchases most of its raw materials from international markets. most of these goods are invoiced in us dollars. we make use of the usual options and futures trading instruments available on the market to hedge exchange rate luctuations. the way these currency hedging instruments are dealt with is precisely stipulated by a set of procedural regulations, and inancial controlling instruments are employed to ensure that these are adhered to. in gen- eral, a deterioration of the eur/usd exchange rate results in higher prices for goods purchased – and vice versa. the hedging of exchange rate risks can only compensate to a limited extent for a continually rising us dollar. opportunities may derive from falling us dollar exchange rates.
report on post-balance sheet date events consolidated management report 22 23 as part of the risk management process, procurement market and currency risks as the risks with the highest exposure rate for frosta are monitored most closely. report on post-balance sheet date events sales market the increasing concentration of trade is leading to risks arising from the potential loss of bulk contracts. our broad customer structure is based on private label and customer brands, as well as supplying home delivery services, caterers and industrial customers, all of which protects us against excessive luctuations in individual market segments. our contracts with our customers normally include items and prices but do not guarantee ixed volumes, which means that frosta carries the risk of reduced purchases by the consumer. there have been no events after the reporting date which would have any bearing on the inancial year under review. branch office report frosta ag has the following branch oices: • f. schottke, bremerhaven, germany • elbtal tiefkühlkost, lommatzsch, germany • rheintal tiefkühlkost, bobenheim-roxheim, germany the risk of losing outstanding receivables is limited by credit risk insurances with the usual deductibles, a strict reminder system and internal credit limits. forecast the frozen food market is subject to constant change. our competitors might respond to product trends more quickly or gain technological leads. in close cooperation with our product development depart- ment, we conduct intensive research to identify market trends. this enables us to produce innovative product concepts to respond to changes or even to ini- tiate changes ourselves within the market. besides market growth in germany and western europe, there are special opportunities for frosta ag particularly in eastern europe. combined with frosta’s strong market position, the low per-capita consumption in these countries ofers good potential for growth. financing our inancing is dependent on loans. by exercising alternative forms of inancing such as selling receiv- ables through asset-backed securities, but also by maintaining an adequate equity base, we aim to reduce our dependence on borrowing and to meet increas- ingly strict requirements from the capital market. in doing so, we are exposed to interest rate risk on the capital market. by using long-term loans and inter- est-rate hedging, we can limit the interest rate risk. we expect the frozen food market in europe to enjoy slightly moderate growth. we also expect the catering business (foodservice) to grow slightly. we are aiming to increase the contribution margins slightly compared to 2016 to enable us to invest in advertising, neces- sary working capital and innovative state-of-the-art technology in the future. we are therefore targeting a slight overall improvement in results from ordinary operating activities, so as to continue to guarantee our independence through a stable equity ratio in 2017. we want to achieve this through strict cost control and increasingly with innovations in the frosta brand and foodservice segments. this will require additional price increases and cost cuts. in the irst two months of 2017, we saw an increase in revenue of 7.8 % compared to the previous year. we believe we have the personnel and organisa- tional capability necessary to continue to develop frosta ag positively. in this endeavour, we will be supported by our long-standing good relations with our customers, suppliers and banks as well as by our dedicated workforce. bremerhaven, march 2017 the executive board legal risks there are no legal risks.
annual financial statements of the frosta group annual financial statements of the frosta group consolidated balance sheet of frosta ag in accordance with ifrss consolidated statement of profit or loss and other comprehensive income of frosta ag in accordance with ifrss consolidated statement of cash flows of frosta ag consolidated statement of changes in equity of frosta ag consolidated statement of changes in fixed assets of frosta ag 2016 consolidated statement of changes in fixed assets of frosta ag 2015 notes to the consolidated financial statements for the 2016 financial year in accordance with ifrss 26 28 30 31 32 34 36
consolidated balance sheet of frosta ag in accordance with ifrss annual financial statements of the frosta group consolidated balance sheet of frosta ag in accordance with ifrss – assets consolidated balance sheet of frosta ag as at 31 december 2016 (in keur) note 2015 2016 change a. non-current assets i. intangible assets 6, 8, 23 1,149 1,298 ii. property, plant and equipment 7, 8, 24 73,357 86,350 iii. financial assets iv. investments accounted for using the equity method v. deferred taxes b. current assets i. inventories ii. receivables and other assets 1. trade receivables 2. receivables from ailiated companies 3. other assets financial assets miscellaneous other assets 4. tax receivables 11 27 28 28 iii. cash and cash equivalents 48 14,439 14,903 168,190 181,844 9, 25 9, 25 120 307 125 0 16, 46 1,553 1,948 76,486 89,721 10, 26 69,384 77,612 79,221 82,584 3 0 −100.0 % 4,412 6,335 290 441 245 165 13.0 % 17.7 % 4.2 % −100.0 % 25.4 % 17.3 % 11.9 % 4.2 % 43.6 % −15.5 % −62.6 % 3.2 % 8.1 % balance sheet total 244,676 271,565 11.0 %
annual financial statements of the frosta group 26 27 consolidated balance sheet of frosta ag in accordance with ifrss – equity and liabilities consolidated balance sheet of frosta ag as at 31 december 2016 (in keur) note 2015 2016 change a. equity i. subscribed capital nominal amount treasury shares ii. capital reserves iii. retained earnings iv. other reserves v. equity earned by the group (without retained earnings) b. non-current liabilities i. provisions for pensions ii. other non-current provisions iii. liabilities to banks iv. deferred tax liabilities c. current liabilities i. current provisions ii. liabilities to banks iii. trade payables iv. other current liabilities financial liabilities other liabilities v. tax liabilities balance sheet total 29 30 31 32 33 32 35 36 37 46 35 37 37 37, 38 38 38 17,440 17,440 0.0 % −16 −27 −68.8 % 17,424 17,413 12,815 12,815 79,914 83,676 −958 −1,896 25,505 33,724 134,700 145,732 892 960 2,302 2,377 12,368 17,715 2,906 2,649 18,468 23,701 0 20,871 1,688 9,904 46,380 62,148 6,248 8,610 15,776 17,077 2,233 2,705 91,508 102,132 244,676 271,565 −0.1 % 0.0 % 4.7 % −97.9 % 32.2 % 8.2 % 7.6 % 3.3 % 43.2 % −8.8 % 28.3 % n.a. −52.5 % 34.0 % 37.8 % 8.2 % 21.1 % 11.6 % 11.0 %
consolidated statement of profit or loss and other comprehensive income of frosta ag in accordance with ifrss annual financial statements of the frosta group consolidated statement of profit or loss and other comprehensive income of frosta ag in accordance with ifrss for the period from 1 january to 31 december 2016 consolidated statement of proit or loss and other comprehensive income of frosta ag (in keur) note 2015 2016 efect on proit/loss 1. 2. 3. 4. 5. 6. revenue reduction/increase in inventories of inished goods and work in progress other own work capitalised other operating income total operating revenue cost of materials 39 439,950 466,059 −1,286 1,871 120 79 40 11,151 9,834 449,935 477,843 a) cost of raw materials, consumables and supplies −266,584 −280,100 5.9 % > 100.0 % −34.2 % −11.8 % 6.2 % −5.1 % 0.8 % −4.9 % −6.2 % −6.4 % −6.2 % −0.5 % −6.9 % 21.1 % −48.8 % −38.9 % 100.0 % 21.2 % 38.9 % 22.9 % −41.4 % > 100.0 % 18.4 % b) cost of purchased services 7. personnel expenses a) wages and salaries b) social security, post-employment and other employee beneit costs – of which post-employment beneits: keur 9 (2015: keur 10) 8. depreciation and amortisation of intangible assets and ixed assets including property, plant and equipment 9. other operating expenses 10. operating proit (ebit) 11. income from equity investments 13. write-downs of inancial assets on securities classiied as current assets 14. interest and similar expenses – of which inancial expenses: keur 728 (2015: keur 937) 15. net inance costs/income 16. proit/loss from ordinary operating activities 17. current taxes on income 18. deferred taxes 19. consolidated proit for the year 41 −9,175 −9,106 −275,759 −289,206 −54,825 −58,201 −9,511 −10,124 −64,336 −68,325 42 −12,178 −12,236 43 −71,562 −76,467 26,100 31,609 160 319 −301 82 195 0 44 −949 −748 −771 −471 25,329 31,138 −7,244 −10,243 125 673 18,210 21,568 45 46 12. other interest and similar income 44
annual financial statements of the frosta group 28 29 consolidated statement of profit or loss and other comprehensive income of frosta ag in accordance with ifrss for the period from 1 january to 31 december 2016 consolidated statement of proit or loss and other comprehensive income (in keur) 1. 2. consolidated proit for the year other comprehensive income a) items that will not be reclassiied to proit or loss actuarial gains and losses – income taxes relating to these gains/losses keur 13 (2015: keur 9) 2015 2016 efect on proit/loss 18,210 21,568 18.4 % −28 −41 −46.4 % b) items that have been or may subsequently be reclassiied to proit or loss gains and losses on the translation of annual inancial statements of foreign subsidiaries 32 –897 > 100.0 % 3. comprehensive income allocation of comprehensive income to shareholders of the parent 18,214 20,630 18,214 20,630 13.3 % 13.3 % non-controlling interests 0 0 18,214 20,630 13.3 %
consolidated statement of cash flows of frosta ag annual financial statements of the frosta group consolidated statement of cash flows of frosta ag consolidated statement of cash lows of frosta ag (in keur) consolidated proit before tax amortisation and depreciation of ixed assets interest income interest expense increase in non-current provisions gains/losses on disposal of ixed assets other non-cash income and expenses interest paid interest received income taxes paid income taxes received cash low before change in working capital decrease/increase in current provisions increase in inventories, trade receivables and other assets not attributable to investing or inancing activities decrease/increase in trade payables and other liabilities not attributable to investing or inancing activities cash low from operating activities proceeds from disposal of ixed assets proceeds from grants capital expenditure on property, plant and equipment capital expenditure on intangible assets capital expenditure on non-current inancial assets cash low from investing activities payments to acquire treasury shares proceeds from disposal of treasury shares dividends to shareholders proceeds from obtaining bank loans payments to repay bank loans increase/decrease in bank overdrafts cash low from inancing activities efect of translation diferences on cash and cash equivalents net change in cash and cash equivalents cash and cash equivalents at beginning of period cash and cash equivalents at end of period 2015 2016 25,329 12,178 31,138 12,236 −319 949 177 −62 597 −925 17 −7,417 15 30,539 −195 748 143 −16 1,630 −690 26 −9,807 43 35,256 −147 1,688 −9,905 −13,297 −2,896 17,597 17,591 41,244 221 − 87 850 −13,383 −25,471 −414 −500 −210 −13,786 −5 −25,039 −2,137 2,189 −9,247 875 −6,162 9,046 −5,436 −1,631 9 −2,690 2,326 −9,234 10,000 −6,525 −9,471 −15,594 611 −147 16,061 14,439 14,439 14,903
consolidated statement of changes in equity of frosta ag annual financial statements of the frosta group 30 31 consolidated statement of changes in equity of frosta ag consolidated statement of changes in equity of frosta ag (in keur) subscribed capital capital reserves retained earnings other retained earnings actuarial gains/ losses adjustment item from foreign currency translation equity equity earned by the group (without retained earnings) 17,407 12,815 77,331 −24 −938 19,090 125,681 −154 171 −1,983 2,018 2,548 −9,247 −9,247 −2,137 2,189 −2,548 0 17,424 12,815 79,914 −28 −52 32 18,210 18,214 −906 25,505 134,700 17,424 12,815 79,914 −52 −906 25,505 134,700 −131 120 −2,559 2,206 −9,234 −9,234 −2,690 2,326 4,115 −4,115 0 17,413 12,815 83,676 −41 −93 −897 21,568 20,630 −1,803 33,724 145,732 as at 1 january 2015 dividends paid acquisition of treasury shares employee share programme appropriation to retained earnings other compre- hensive income as at 31 december 2015 as at 1 january 2016 dividends paid acquisition of treasury shares employee share programme appropriation to retained earnings other compre- hensive income as at 31 december 2016
consolidated statement of changes in fixed assets of frosta ag 2016 annual financial statements of the frosta group consolidated statement of changes in fixed assets of frosta ag 2016 consolidated statement of changes in ixed assets of frosta ag 2016 (in keur) purchase and production costs as at 01/01/2016 currency translation diferences add i tions disposals transfers as at 31/12/2016 14,877 −5 500 14,877 −5 500 0 0 152 15,524 152 15,524 i. intangible assets purchased concessions, industrial and similar rights and assets, and licences in such rights and assets ii. property, plant and equipment 1. land, land rights and 80,844 −322 2,911 58 118 83,493 buildings 2. plant and machinery 3. other operating and oice equipment 153,075 48,084 −585 11,913 −40 4,527 2,915 1,181 1,617 163,105 281 51,671 4. prepayments and assets 3,021 −36 6,120 0 −2,168 6,937 under construction 285,024 −983 25,471 4,154 −152 305,206 iii. non-current inancial assets 1. financial assets 2. investments accounted for using the equity method 531 1,882 2,413 0 0 0 5 0 5 0 1,882 1,882 302,314 −988 25,976 6,036 0 0 0 0 536 0 536 321,266
annual financial statements of the frosta group 32 33 accumulated depreciation, amortisation and impairment net carrying amount as at 01/01/2016 currency translation diferences additions disposals as at 31/12/2016 as at 31/12/2015 as at 31/12/2016 13,728 13,728 −3 −3 501 501 0 0 14,226 1,149 1,298 14,226 1,149 1,298 52,392 −100 2,269 41 54,520 28,452 28,973 120,178 39,097 0 −371 −23 0 6,745 2,721 2,852 1,159 123,700 40,636 32,897 8,987 39,405 11,035 0 0 0 3,021 6,937 211,667 −494 11,735 4,052 218,856 73,357 86,350 411 1,575 1,986 0 0 0 0 0 0 0 1,575 1,575 411 0 411 120 307 427 125 0 125 227,381 −497 12,236 5,627 233,493 74,933 87,773
consolidated statement of changes in fixed assets of frosta ag 2015 annual financial statements of the frosta group consolidated statement of changes in fixed assets of frosta ag 2015 consolidated statement of changes in ixed assets of frosta ag 2015 (in keur) purchase and production costs as at 01/01/2015 currency translation diferences additions disposals transfers as at 31/12/2015 i. intangible assets purchased concessions, industrial and similar rights and assets, and licences in such rights and assets 14,397 14,397 ii. property, plant and equipment 1. land, land rights and 79,066 buildings 2. plant and machinery 147,913 3. other operating and oice 45,700 equipment 4. prepayments and assets 1,095 under construction 1 1 31 57 6 0 414 27 92 14,877 414 27 92 14,877 1,634 76 189 80,844 5,616 3,152 1,159 900 648 126 153,075 48,084 2,981 0 –1,055 3,021 iii. non-current inancial assets 1. 2. financial assets investments accounted for using the equity method 273,774 94 13,383 2,135 –92 285,024 381 1,793 2,174 0 0 0 210 89 299 60 0 60 290,345 95 14,096 2,222 0 0 0 0 531 1,882 2,413 302,314
annual financial statements of the frosta group 34 35 accumulated depreciation, amortisation and impairment net carrying amount as at 01/01/2015 currency translation diferences add i tions disposals transfers as at 31/12/2015 as at 31/12/2014 as at 31/12/2015 13,245 13,245 50,080 114,517 37,269 0 0 0 9 33 2 0 510 27 510 27 2,305 2 6,665 2,698 1,037 872 0 0 201,866 44 11,668 1,911 110 1,575 1,685 0 0 0 301 0 301 0 0 0 216,796 44 12,479 1,938 0 0 0 0 0 0 0 0 0 0 0 13,728 1,152 1,149 13,728 1,152 1,149 52,392 28,986 28,452 120,178 39,097 33,396 8,431 32,897 8,987 0 1,095 3,021 211,667 71,908 73,357 411 1,575 1,986 271 218 489 120 307 427 227,381 73,549 74,933
notes to the consolidated financial statements for the 2016 financial year notes to the consolidated financial statements notes to the consolidated financial statements for the 2016 financial year frosta aktiengesellschaft, bremerhaven registered in the commercial register of the district court of bremen, register no.: hrb 1100 bhv frosta aktiengesellschaft (hereinafter referred to as frosta ag), is a public limited company under german law and is listed in the entry standard of the frankfurt stock exchange. frosta ag and its sub- sidiaries develop, produce and market frozen food products in germany and europe. the products are sold under their frosta, elbtal and tiko own brand labels and as private labels. the group’s registered seat is in 27572 bremerhaven, germany, am lune- deich 116. frosta ag’s executive board released the consolidated financial statements on 9 march 2017 for presentation to the supervisory board. it is the task of the supervisory board to examine the con- solidated financial statements and to state whether it approves them. accounting policies and principles (1) frosta ag’s consolidated financial statements as at 31 december 2016 have been prepared in com- pliance with the international accounting standards board’s (iasb) financial reporting standards – the international accounting standards (iass) and the international financial reporting standards (ifrss) – as applicable within the european union. in doing so, all iass or ifrss to be applied as at 31 december 2016 and the appropriate interpretations provided by the standing interpretations committee (sic) or the international financial reporting inter- pretations committee (ifric) were complied with. the requirements of the above-mentioned regula- tions were fulfilled, so that frosta ag’s consolidated financial statements convey an appropriate picture of the net assets, financial position and results of operations as well as the cash flows within the 2016 financial year. the conditions laid down in section 315a of the german commercial code (hgb) on the exemption from preparing consolidated financial statements according to german accounting standards have been fulfilled. to put the statements on an equal footing with the consolidated financial statements drawn up according to hgb regulations, all legal obligations on disclosure and notes above and beyond the iasb regulations, in particular preparing a management report, have been fulfilled. the financial statements have been prepared under the assumption that frosta ag will continue as a going concern. corresponding figures for compari- son to 2015 are provided for all line items. the consolidated income statement is presented using the total cost (nature of expense) format. comparisons are made based on the reference date of 31 december 2015. the consolidated financial statements are prepared in euros. unless stated other wise, all amounts are shown in thousands of euros (keur).
notes to the consolidated financial statements 36 37 for all business combinations that occurred before the transition date (1 january 2004). frosta ag takes advantage of the following exemptions under ifrs 1: • ifrs 3 will not be applied retrospectively for busi- ness combinations that occurred before the transi- tion date (1 january 2004). • this means that the consolidation method previously applied may be retained. expenses and income as well as accounts receivable and payable between consolidated companies are eliminated. interim profits and losses from inter- company transactions are eliminated through profit or loss. consolidation (2) consolidation principles all signiicant german and foreign subsidiaries over whose inancial and business policies frosta ag has direct or indirect powers of control are included in frosta ag’s consolidated inancial statements. these entities’ statements are drawn up according to uniform accounting principles. the subsidiaries are accounted for using the acqui- sition method in accordance with ifrs 3. under the acquisition method, the carrying amount of the equity investment is ofset against the proportion of the sub- sidiary’s equity to be consolidated at the time when the shares were purchased (acquisition method). in doing so, equity must be determined according to the revaluation method. as a matter of principle, ifrs 3 must be adopted retrospectively for all business com- binations that occurred before the date of initial appli- cation (31 december 2005). (3) group reporting entity fully consolidated subsidiaries name of entity registered seat of entity copack tiefkühlkost-produktions gmbh bremerhaven elbtal tiefkühlkost vertriebs gmbh feldgemüse gmbh lommatzsch copack france s.a.r.l. (formerly frosta france s.a.r.l.) frosta tiefkühlkost gmbh frosta foodservice gmbh frosta italia s.r.l. frosta cr s.r.o. frosta sp. z o.o. bio-freeze gmbh tiko vertriebsgesellschaft mbh lommatzsch lommatzsch boulogne-billancourt/ france bremerhaven bremerhaven rome/italy prague/czech republic bydgoszcz/poland bremerhaven bremerhaven percentage of capital held in 2015 in % percentage of capital held in 2016 in % 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
notes to the consolidated financial statements efective 1 october 2016, frosta ag sold the shares held in bio-frost westhof gmbh, wöhrden, in the inancial year 2016. this transaction resulted in pro- ceeds of eur 849,999.00, which were recognised in other operating income. the impact from this trans- action on the group’s net assets, inancial position and results of operations at 31 december 2016 is not material. in the previous year, this equity investment was recorded using the equity method. the consolidated inancial statements for the inan- cial year do not include the following entities whose impact on the group’s net assets, inancial position and results of operations is not material: companies not included in the consolidated inancial statements name of entity registered seat of entity frosta romania s.r.l. bucharest/romania nordstern america inc. seattle/usa ooo frosta moscow/russia frosta hungary kft. esztergom/hungary copack sp. z o.o. bydgoszcz/poland columbus spedition gmbh bremerhaven percentage of capital held in 2015 in % percentage of capital held in 2016 in % 100.00 100.00 100.00 100.00 100.00 33.33 100.00 100.00 100.00 100.00 100.00 33.33 (4) translation of foreign currency transactions the consolidated inancial statements are prepared in euros, the functional and reporting currency of the group. each entity within the group determines its own functional currency. items included in the inan- cial statements of each entity are measured using that functional currency. foreign currency trans- actions are initially translated to the functional cur- rency at the applicable spot exchange rate on the date the transaction occurred. the assets and liabilities of foreign operations are subsequently translated to euros at the applicable exchange rate on the bal- ance sheet date. income and expenses are translated at average monthly exchange rates, because due to minor exchange rate luctuations in the given period, this is an accurate relection of the exchange rates on the day the transactions occurred. the exchange rate diferences that occur from translation are recorded as an adjustment item from currency translation. the following exchange rates were taken into account when preparing the consolidated inancial statements and the consolidated income statement (equivalent value for eur 1): development of the exchange rates of the most important currencies average rate closing rate 2015 2016 2015 2016 polish zloty 4.2226 4.3745 4.2660 4.4140 czech koruna 27.022 27.020 27.022 27.020
notes to the consolidated financial statements 38 39 accounting policies and measurement methods (5) recognition of income and expenses only product sales resulting from ordinary operating activities are disclosed as revenue. frosta recog- nises revenue for product sales when the goods are handed over to the freight forwarder or, alternatively, upon proof that the delivery has been carried out and the risk has been transferred to the customer, the amount of revenue can be measured reliably, and collection of the related receivable is reasonably assured. investment grants and investment subsidies are rec- ognised if there is reasonable assurance that these grants will actually be received and the require- ments attached to them will be fulilled. they result in a reduction of purchase or production costs. expense-related grants and subsidies are recognised as income in the inancial year in which the related costs were incurred that they are intended to compen- sate. borrowing costs are capitalised as part of the costs of purchase or production in line with ias 23. costs incurred for repairs of items of property, plant and equipment are always expensed. they are only capitalised if the costs result in an enhancement or signiicant improvement of the asset. the assets to be capitalised are subject to separate analyses for the purposes of measuring depreciation expense if signii- cant cost components have diferent economic lives. operating expenses are recognised in proit or loss when the service in question is rendered or the expenses incurred. interest is recognised as an expense or as income at the time it is incurred. finance lease assets, where substantially all risks and beneits associated with an asset are transferred to the group, are carried less accumulated deprecia- tion and an appropriate liability at the lower of the fair value of the asset or the present value of the rent or lease payments. dividends are recognised at the time they are paid out. the assets are depreciated using the straight-line method over their useful lives. gains or losses from the disposal of ixed assets are shown in other operating income or expenses. depre- ciation is carried out uniformly throughout the group over the following useful lives: depreciation period of property, plant and equipment buildings other constructions plant and machinery it equipment other operating and oice equipment useful life 25–40 12–15 7–15 3 – 7 5–13 (6) intangible assets externally acquired intangible assets are carried at cost. intangible assets that have a determinable useful life are amortised on a straight-line basis over their expected useful lives as follows, starting from the date on which they are made available: amortisation period of intangible assets useful life software licences 4 4 (7) property, plant and equipment items of property, plant and equipment are carried at their purchase or production cost and depreciated on a straight-line basis according to their probable useful life. costs of self-constructed items of prop- erty, plant and equipment include all direct costs and all overheads that are incurred as a result of the pro- duction process.
notes to the consolidated financial statements impairment losses on intangible assets, property, plant and equipment and financial assets (8) at each balance sheet date, frosta ag examines the carrying amounts of non-current assets to assess the need to recognise impairment losses as soon as events occur or circumstances change implying that permanent impairment has occurred (“impairment testing”). an impairment loss is recognised when the expected proceeds from a sale (recoverable amount) is lower than the asset’s respective carrying amount. the recoverable amount is the higher of the realisable value and the value in use of the asset. the net real- isable value corresponds to the amount obtainable from the sale of the asset in an arm’s length transac- tion. the value in use is determined on the basis of the expected future cash low from the use of the asset based on the discounted cash low method. if it is not possible to determine the recoverable amount for individual assets, the cash low for the next higher group of assets for which this type of cash low can be established, is determined. at frosta ag these are the production lines. the cash low forecast of these cash-generating units is based on the detailed inancial budget for the next year and the three- years inancial planning strategy. the growth rates assumed do not exceed the average growth rates for the industry in which the respective cash-generating unit is active. the discount rate is based on a weighted average calculation of capital costs taking into account the borrowing capital/equity structure and stands at 8.35 % before taxes. if the reasons for impairment no longer apply, the impairment loss is reversed, with such reversal not exceeding amortised cost. (10) (1) purchase cost of the investee (2) +/– investor’s share of the undistributed proit/loss of the investee (3) – distributions received from the investee (4) = written-down investment carrying amount (equity value) inventories inventories are measured at acquisition or production cost. purchase costs of raw materials and consum- ables as well as merchandise are determined using the weighted average cost formula and result from the purchasing prices plus incidental costs. apart from direct material, machine and labour costs, pro- duction cost includes material and production over- heads directly attributable to the production process, including appropriate depreciation of manufacturing assets assuming normal capacity utilisation. bor- rowing costs are not included in the measurement of inventories, but are recognised as an expense in the period in which they are incurred. write-downs for inventory risks are undertaken to an appropriate and adequate extent. if necessary, inven- tories are measured at the lower net realisable value. the net realisable value is the estimated selling price achievable in the course of ordinary business less the estimated manufacturing and selling costs. should the reasons that have led to an impairment of the inventories no longer apply, an appropriate reversal of the impairment loss is recognised. financial assets and investments accounted for using the equity method (9) receivables and other assets (11) available-for-sale inancial assets are recognised at the balance sheet date at fair value or, if this cannot be established, at amortised cost. financial assets accounted for under the equity method are recognised at the written-down invest- ment carrying amount. this carrying amount is deter- mined as follows: trade receivables and other assets are initially meas- ured and carried at fair value plus transaction costs and subsequently at amortised cost. the fair value (transaction price) is calculated based on quoted prices in active markets for identical assets (level 1). the sales market is used as the active market for assets. if not covered by insurance, counterparty credit risks are taken into account by recognising ade- quate valuation allowances.
notes to the consolidated financial statements (12) cash and cash equivalents liabilities 40 41 (15) the cash holdings and credit balances at banks are recognised at their nominal value. (13) provisions for pensions provisions for pension obligations are determined in accordance with ias 19 using the projected unit credit method, taking into account future payment and pen- sion adjustments. pension obligations are measured based on expert pension reports. the present value of the deined beneit obligations is determined by discounting the estimated future payments of the cur- rent beneits. the interest rate is based here on prime ixed-interest corporate bonds of a comparable term on the reporting date. the currency and maturity of the bonds should be in the same currency and have the same term as the vested pension claims. service costs are recognised under personnel expenses. the in the pension expenses is recognised under interest expense. the actuarial gains and losses are recognised in other reserves. a pension fund does not exist. included interest (14) other provisions other provisions take into account all clear legal and actual obligations a corporation has towards third parties, where settlement is likely and the level of settlement can be reliably estimated. the provisions are recognised in accordance with ias 37 with the expected settlement amount. jubilee beneits and partial retirement obligations are part of the long-term employee beneits. provisions for jubilee beneits are measured in accordance with ias 19 using the projected unit credit method. each year the present value of the rights obtained on the reporting date must be recognised as a provision. provisions for partial retirement beneits must also be made at their present value. existing plan assets are to be set of against provisions for partial retirement, with the plan assets to be measured at fair value. non-current provisions are measured on the basis of their settlement amount, discounted to the bal- ance sheet date. discounting is based on appropriate market interest rates. provisions for restructuring are only taken into account if on the balance sheet date the intended measures have become suiciently concrete and have been communicated. liabilities are initially measured and recognised at fair value plus transaction costs and subsequently at amor- tised cost. the fair value (transaction price) is calculated based on quoted prices in active markets for identical liabilities (level 1). the procurement market is used as the active market for liabilities. there is no counterparty credit risk arising from liabilities. liabilities in foreign currencies are translated at closing rates. hedged items in foreign currency are also meas- ured at the closing rate. deferred taxes (16) under ias 12 (income taxes), deferred tax assets and liabilities are recognised for all temporary diferences in assets and liabilities between tax accounts and the annual inancial statements prepared in accordance with generally accepted accounting principles, and for the future use of tax loss carry forwards. the calcula- tion is made on the basis of the future tax rates applic- able at the balance sheet date. deferred tax assets are only recognised to the extent that it is likely that these can be used against future taxable income. derivative financial instruments currency forwards, options contracts and interest rate swaps (17) currency forwards and option contracts as well as interest rate swaps and caps can be used as deriva- tive inancial instruments. these are only concluded with banks which have an excellent credit rating. these transactions are only carried out strictly in line with frosta’s own internal procedures and are subject to stringent internal controls. these transactions are only concluded to safeguard the operating business and the inancing transactions associated with it. hedging mainly concerns us dollar requirements. these occur because frosta purchases some of the required raw materials in this currency without reporting any us dollar income. in currency forwards, a ixed amount of us dollars is bought on an agreed date at an agreed exchange rate. this reduces the company’s risk of having to use a less favourable exchange rate which would make the pur- chase of raw materials in us dollars more expensive. on the other hand, currency forwards do not allow for currency translation at a more favourable rate should the market develop more positively for the buyer.
notes to the consolidated financial statements in forward options, the company is guaranteed the right to purchase a ixed amount of us dollars on an agreed date at an agreed exchange rate. if, after completion of the contract, the market exchange rate develops unfavourably for the company, it can buy the agreed amount of us dollars at the agreed exchange rate. if the exchange rate develops more positively, there is no obligation to exercise the option and the us dollar amounts required can be purchased on the market at a more favourable rate. by means of forward options, frosta can lower the risk of rising dollar prices without foregoing the opportunities ofered by lower dollar prices. however, for this lexibility charges are incurred which become payable on conclusion of the forward option contract. interest hedging instruments are used to secure medium- and long-term variable inancing. in the case of an interest-rate swap contract, the com- pany pays the bank a ixed interest rate on a ixed amount at regular intervals over an agreed period. each time the interest payment is due, the bank ofers a variable rate (based, for example, on the euribor) for the ixed amount. no matter how the market develops within the agreed period, it cannot be less favourable for the company than the original ixed interest rate. derivative inancial instruments are accounted for at cost when purchased. they are subsequently recog- nised at their fair value. the banks establish the fair values based on market quotations. all derivative inancial instruments are treated as stand alone derivatives, i.e. all realised and unrealised gains and losses resulting from the development of the fair values are immediately recognised in proit or loss. (18) scope and fair values of the derivatives (in keur) financial instrument type 31/12/2015 31/12/2016 nominal amount fair value nominal amount fair value currency forwards purchase kusd 44,882 1,043 37,349 1,663 currency forwards sale kgbp currency swaps sale (2015: purchase) kusd currency swaps sale kgbp 1,298 940 38 34 7 1 94 1,021 0 0 9 0 interest rate swaps loan keur 4,043 –147 1,321 –30 the nominal amount of a derivative hedging transac- tion is the index from which the payments are derived. collateral and risk are not the nominal amount itself, but only the price changes related to it. the fair value is the amount that would have to be paid or would be received on the reporting date assuming termination of the hedging transactions. as the hedging transaction at the time of acquisition only concerns inancial instruments on an arm’s length basis, the fair value is established on the basis of market quotations. hedge accounting is not applied. the positive fair value of inancial instruments is pre- sented in other assets and the negative fair value is presented in other liabilities. as the underlying con- tracts have been agreed with banks with sound credit ratings, no credit risks exist for these inancial instru- ments.
notes to the consolidated financial statements 42 43 due dates for the interest hedging instruments (in keur) within one year between one and ive years over ive years total 31/12/2015 31/12/2016 2,722 1,321 0 4,043 1,007 314 0 1,321 (19) employee share programme balance sheet item (in keur) every year frosta ag employees can purchase a lim- ited amount of shares at a ixed preferential price. the vesting date is the same as the purchase date. there are two diferent purchasing prices per share. the retention period for both is four years, during which the securities may not be sold. employees must opt to take up the ofer within one month. receivables and other assets cash non-current liabilities carrying amount fair value 89,329 89,329 14,903 23,701 14,903 24,114 current liabilities 102,132 102,132 (20) fair values of financial instruments use of estimates (21) the fair values of inancial instruments are determined based on appropriate market values (level 1). cash and cash equivalents and other current primary inancial instruments correspond to the fair values of the car- rying amounts on the respective reporting dates. preparing the ifrs consolidated inancial statements requires estimates and assumptions which afect the identiication of assets and liabilities, the disclosure of contingent liabilities on the balance sheet date and the presentation of income and expenses. for non-current provisions and liabilities, the fair value is determined based on the cash lows to be expected by using the benchmark interest rates valid on the balance sheet date. the derivative inancial instruments are established based on existing for- ward exchange rates and benchmark interest rates on the balance sheet date. the following table shows the allocation of inancial instruments to the balance sheet line items: signiicant estimates and assumptions have in par- ticular been made with regard to establishing depre- ciable lives, the actuarial parameters in assessing pensions, jubilee and partial retirement provisions and the ability to realise deferred tax assets. the actual amounts may difer from the amounts pro- duced by estimates and assumptions. changes are recognised in proit or loss when more accurate ig- ures are available.
notes to the consolidated financial statements application of additional ias and ifrs (22) new standards and interpretations not previously applied the following ifrss adopted by the eu were issued before 31 december 2016 but are only mandatory for subsequent reporting periods and frosta has not exercised the option of earlier application. ifrs 9 (financial instruments) issued in july 2014, ifrs 9 replaces the existing guide- lines in ias 39 (financial instruments: recognition and measurement). ifrs 9 contains revised guidelines for the classiication and measurement of inancial instruments, including a new expected credit loss model for calculating impairment losses on inancial assets, as well as new general accounting standards for hedging transactions. it also incorporates guide- lines on the recognition and derecognition of inancial instruments from ias 39. ifrs 9 becomes efective initially in the irst reporting period of a inancial year commencing on or after 1 january 2018; earlier adoption is also permissible. the group is currently assessing the possible efects of ifrs 9 on the consolidated inancial statements. ifrs 15 (revenue from contracts with customers) ifrs 15 establishes a comprehensive framework for establishing whether, to what extent and at what point revenue should be recognised. it replaces existing revenue recognition guidelines including ias 18 (rev- enue), ias 11 (construction contracts) and ifric 13 (customer loyalty programmes). ifrs 15 becomes efective initially in the irst reporting period of a inancial year commencing on or after 1 january 2018; earlier adoption is also permissible. the group is cur- rently assessing the possible efects of ifrs 15 on the consolidated inancial statements. application of the following new or amended stand- ards and interpretations is mandatory for the irst time for the inancial year ending on 31 december 2016: • annual improvements to ifrss – 2010–2012 cycle (ifrs 2, ifrs 3, ifrs 8, ifrs 13, ias 16, ias 24) • amendments to ias 19: employee contributions to defined benefit plans • amendments to ias 16 and ias 41: bearer plants • amendments to ifrs 11: acquisition of an interest in a joint operation • amendments to ias 16 and ias 38: clarification of permissible methods of depreciation and amorti- sation • annual improvements to ifrss – 2012–2014 cycle (ifrs 5, ifrs 7, ias 19, ias 34) • amendments to ias 1: disclosure initiative • amendments to ias 27: application of the equity method in individual financial statements • amendments to ifrs 10, ifrs 12 and ias 28: invest ment entities: application of the consolida- tion exception these amendments have no efect on the 2016 or ear- lier reporting periods. the following ifrss, ifrics or amendments were pub- lished by the iasb before 31 december 2016, but have not yet been adopted by the eu and were not applied early by frosta: • ifrs 14 regulatory deferral accounts • ifrs 16 leases • amendments to ifrs 10 and ias 28: sale or contri- bution of assets between an investor and an asso- ciate or joint venture • amendments to ias 12: recognition of deferred tax assets for unrealised losses • amendments to ias 7: disclosure initiative • clariication of ifrs 15 revenue from customer contracts • amendments to ifrs 2: classiication and measure- ment of share-based payment transactions • amendments to ifrs 4: application of ifrs 9 finan- cial instruments together with ifrs 4 insurance contracts • annual improvements to ifrss – 2014–2016 cycle • ifric interpretation 22 foreign currency transac- tions and advance consideration • amendments to ias 40: transfer of investment property the impact of these new or amended standards on frosta’s inancial statements cannot be reliably assessed, or has no implications.
44 45 (25) (26) notes to the consolidated financial statements consolidated balance sheet disclosures (23) intangible assets the development of the individual items of intan- gible assets is shown in the consolidated statement of changes in non-current assets (appendix to the notes). the share of foreign subsidiaries in the net carrying amount as per 31 december 2016 amounted to keur 78 (2015: keur 78). in the frosta group development costs have not been capitalised, as their future economic use cannot be reliably determined as long as the products have not been launched on the market. the expenses for product development for the inancial year 2016 amounted to keur 1,595 (2015: keur 1,532). (24) property, plant and equipment as regards the development of property, plant and equipment, please see the consolidated statement of changes in non-current assets. the share of prop- erty, plant and equipment located abroad, primarily in poland, in the net carrying amount as at 31 december 2016 amounted to keur 17,190 (2015: keur 14,595). investment grants and subsidies received in the inan- cial year reduce procurement costs by keur 3,559 (2015: keur 4,278). based on current earnings fore- casts no impairment losses were recognised in the reporting year. in prior years, impairment losses were recognised. if the reasons for impairment no longer apply, the impairment loss is reversed, with such reversal not exceeding amortised cost. this reversal amounted to keur 605 as at 31 december 2016 (2015: keur 821). in the reporting year no borrowing costs were capitalised pursuant to ias 23. financial assets and investments accounted for using the equity method changes in inancial assets and equity-accounted investments are shown in the consolidated state- ment of changes in non-current assets. the non- consolidated equity investments in subsidiaries are measured at amortised cost at the reporting date. write-downs on loans to ailiated companies totalled keur 0 (2015: keur 301). inventories inventories (in keur) raw materials and consumables uninished goods finished products and goods prepayments inventories 31/12/2015 31/12/2016 27,928 33,317 16,692 24,621 143 69,384 16,712 27,452 131 77,612 where necessary, the lower net realisable value was recognised, taking into account selling and produc- tion costs still to be incurred. the carrying amount of inventories recognised at the lower net realisable value amounted to keur 306 in 2016. the impair- ments of inventories shown in expenses amount to keur 39 (2015: keur 183).
notes to the consolidated financial statements (27) trade receivables trade receivables (in keur) trade receivables, gross impairment charges on trade receivables trade receivables impairment losses on trade receivables (in keur) impairment losses as at 1 january exchange rate diferences allocations utilisation reversals impairment losses as at 31 december 31/12/2015 31/12/2016 79,957 –736 79,221 83,077 –493 82,584 2015 500 0 269 –16 –17 736 2016 736 –2 0 –229 –12 493 the expenses for the full derecognition of receiv- ables are based on payment defaults and amount to keur 29 (2015: keur 25). income from derecognised receivables amounts to keur 13 (2015: keur 17). risks included in the trade receivables (in keur) neither past due nor impaired receivables receivables past due but not impaired less than 30 days 30 to 60 days more than 60 days total receivables past due carrying amount (net) 31/12/2015 31/12/2016 76,175 79,809 2,643 145 258 3,046 79,221 2,399 222 154 2,775 82,584
notes to the consolidated financial statements receivables sold in asset-backed securities transac- tions (abs) amounted to keur 6,695. according to the structure of the contract, ownership of the receiv ables is retained by frosta. liabilities resulting from the advance inancing of the receivables collection are rec- ognised under liabilities to banks. in asset-backed securities contracts receivables are sold to a special-purpose entity in the inancial sector, which then ofers the receivables on the cap- ital market. the price paid for the receivables is based on the receivables’ nominal value less the expected deductions. at the same time, a variable interest rate based on current rates for short-term loans is payable until collection. frosta ag collects the receivables as a service provider for the special-purpose entity. there is a risk that the receivables cannot be marketed. how- ever, the special-purpose entity does commit itself to the purchase of the receivables for a one-year period. excess of plan assets over post-employment benefit liability an excess of plan assets over post-employment beneit liability amounting to keur 24 (2015: keur 15) is shown under other assets. these assets relate to reinsurance policies. the asset value of the reinsurance policies is netted against the settlement amount of partial retire- ment obligations. reinsurance policies (in keur) fair value of invested assets costs of invested assets 31/12/2015 31/12/2016 96 85 70 69 for further explanation, please refer to item 36. (28) other assets other assets (in keur) equity 31/12/2015 31/12/2016 292 227 capital management covers the group equity reported in the consolidated balance sheet. 46 47 (29) (30) creditors with debit balances employees vat and consumer tax other inancial assets financial assets prepayments miscellaneous other assets 37 2,438 34 3,556 1,645 2,518 4,412 6,335 290 290 245 245 other assets 4,702 6,580 no counterparty credit risks have been identiied for other assets. changes in group equity are shown in the statement of changes in equity. the minimum capital requirements have been met. an equity ratio is aimed at that safeguards the com- pany’s economic independence. this is to be achieved through self-inancing. subscribed capital subscribed capital amounts to keur 17,440. based on 6,812,598 shares, each share has an arithmetical value of eur 2.56. the number of shares in circulation has remained unchanged in the inancial year 2016. a total of 10,486 individual frosta ag no-par value bearer shares with a nominal value of keur 27 or 0.15 % of the share capital were set off against equity. the portion of purchase costs exceeding the nominal value amounting to keur 592 is reported as a reduction of retained earnings. the no-par value bearer treasury shares are not entitled to any rights under section 71b of the german stock corporation act (aktg).
notes to the consolidated financial statements apart from this there is authorised capital, as yet unused, for a ixed period until 17 july 2018, amounting to keur 201 for the issuing of shares to employees of frosta ag and its ailiated companies, as well as authorised capital of keur 5,000, for a ixed period until 17 july 2018, for a capital increase from cash contributions. (31) capital reserves capital reserves include premiums from issuing shares and personnel expenses from the employee share programme. 2016, other reserves also include actuarial losses totalling keur 93 (2015: keur 52). employee share programme (34) frosta ag has ofered its employees the opportunity of purchasing frosta shares at a preferential price. there are two proposals on ofer with diferent issue prices with a limited purchasing opportunity for each employee. employee share programme: share purchases made 2015 2016 (32) retained earnings and equity earned by the group (without retained earnings) proposal i number of shares 37,419 23,275 retained earnings include proits generated in past periods by companies included in the consolidated inancial statements, to the extent that they were not distributed. issue price (eur) average stock exchange price (eur) the consolidated equity includes the proits achieved in the current period of the companies included in the consolidated inancial statements, unless they have been allocated to reserves. according to the german stock corporation act (aktg), the dividend to be paid out to the shareholders is meas- ured on the basis of the net retained proits shown in frosta ag’s annual inancial statements. as at 31 december 2016, these came to keur 15,451 (2015: keur 13,349). the annual general meeting on 17 june 2016 passed a resolution to pay out a dividend of eur 1.36 per share (totalling a dividend sum of keur 9,234) from the net retained proits of frosta ag as at 31 december 2015. frosta ag’s executive board proposes a dividend of eur 1.50 per share for 2016 subject to the approval of the annual general meeting. (33) other reserves other reserves comprise the diferences arising from currency translation at subsidiaries that report in a currency diferent from that of the parent company. the measurement diference is mainly the result of the equity investment in frosta sp. z o.o., bydgoszcz/ poland, whose annual inancial statements are prepared in polish zloty. the adjustment from cur- rency translation amounted to keur –1,803 on the reporting date (2015: keur –906). as at 31 december 16.50 34.51 18.01 674 27.00 50.29 23.29 542 diference (eur) value (keur) proposal ii number of shares 18,395 16,833 issue price (eur) average stock exchange price (eur) diference (eur) value (keur) 7.50 34.51 27.01 497 13.50 50.29 36.79 619 total (keur) 1,171 1,161 the diference between the market value of the frosta share and the reduced price paid by employees is reported under personnel expenses.
notes to the consolidated financial statements 48 49 share-based payments pension costs (in keur) the company has introduced a bonus scheme for employees at management level in the parent company as well as its subsidiaries. this scheme provides for payment in the form of company shares. the number of shares to be transferred is determined according to a deined-beneit formula which rewards staf based on corporate and personal target achievement as well as other qualitative and quantitative criteria. other pension costs personnel expenses interest expense pensions costs 2015 2016 29 29 13 42 78 78 13 91 share-based payments net obligations recognised in the balance sheet (in keur) 2015 10,845 2016 7,090 shares issued for the previous inancial year (35) pension obligations provisions for pensions are recognised for liabili- ties from future pensions and current payments due to individual commitments to former and current employees of the frosta group and their surviving dependents. provisions as at 1 january pension costs payments to pensioners actuarial losses (+)/ gains (−) provisions as at 31 december 2015 886 42 −64 28 892 2016 892 91 −64 41 960 the group pension schemes are all deined beneit plans. the number of beneiciaries receiving pension pay- ments was 14. the calculation of pension obligations for the deined beneit plan is made in accordance with ias 19 on an actuarial basis. parameters used for calculation of pension provisions the employer contributions to the pension scheme qualify as expenses relating to deined contribution plans and amounted to keur 3,765 in 2016 (2015: keur 3,629). interest rate salary trend 2015 2.29 % 2.00 % 2016 1.72 % 2.00 % pension trend 1.80 % 1.60 % the actuarial assumptions regarding life expectancy are based on the “richttafeln 2005 g” mortality tables by dr klaus heubeck.
notes to the consolidated financial statements (36) other provisions other provisions (in keur) jubilee payments other non-current provisions severance payments impending losses other current provisions as at 01/01/2016 2,299 2,299 0 0 0 other provisions 2,299 268 utilisation reversal addition as at 31/12/2016 268 268 0 0 0 0 0 0 0 0 0 341 341 1,634 54 1,688 2,029 2,372 2,372 1,634 54 1,688 4,060 partial retirement plan assets (in keur) partial retirement plan assets as at 01/01/2016 83 95 utilisation reversal addition 64 84 2 0 34 59 as at 31/12/2016 51 70 provisions for partial retirement obligations are cov- ered by reinsurance policies against insolvency. since these insurances are classiied as plan assets, they are netted out against the provisions for partial retire- ment. as the plan assets are assigned on the basis of individual partial retirement obligations, the principle of item-by-item measurement resulted in a provision for partial retirement obligations of keur 5 (2015: keur 3) as well as a surplus of assets of keur 24 (2015: keur 15). for further details, please refer to item 28. (37) liabilities liabilities (in keur) liabilities to banks (previous year) trade payables (previous year) other liabilities (previous year) total amount of which due within up to 1 year 9,904 (20,871) 62,148 (46,380) 25,687 (22,024) more than 1 year 13,195 (10,173) 0 (0) 0 (0) more than 5 years 4,520 (2,195) 0 (0) 0 (0) 27,619 (33,239) 62,148 (46,380) 25,687 (22,024)
notes to the consolidated financial statements 50 51 the liabilities to banks are guaranteed by mortgages amounting to keur 10,141 (2015: keur 15,503) and sim- ilar rights amounting to keur 1,055 (2015: keur 1,278). the customary retentions of title apply to trade payables. liabilities to banks (in keur) non-current loans current loans other inancial liabilities current liabilities to banks liabilities to banks sold in asset-backed receivables securities (abs) transactions amounted to keur 6,695 as at 31 december 2016. after deducting a discount of keur 1,444, an amount of keur 5,251 is included in other inancial liabilities. loans payable 31/12/2015 in keur 31/12/2016 in keur 375 1,462 750 1,250 2,109 781 1,563 1,925 1,278 0 2,496 1,734 3,166 0 0 0 250 750 1,172 469 937 1,411 1,055 3,500 2,112 1,468 2,744 6,500 18,889 22,368 31/12/2015 31/12/2016 12,368 6,521 14,350 20,871 33,239 17,715 4,653 5,251 9,904 27,619 one of the inancing agreements made with credit institutes includes a inancial covenant. these are prescribed key balance sheet igures with minimum values which must be adhered to. failing this, the loan commitment can be withdrawn. in 2016, all such cov- enants were met. interest rate in % 3.00 euribor 3m. +1.00 4.98 3.29 5.31 3.20 3.20 3.40 3.00 1.05 2.65 3.05 2.05 0.81 due date 30/12/2016 31/12/2016 31/05/2017 29/03/2018 31/03/2018 31/03/2018 31/03/2018 30/09/2019 30/09/2021 30/09/2021 30/06/2022 30/06/2022 30/06/2023 30/03/2026
notes to the consolidated financial statements (38) other current liabilities (in keur) 31/12/2015 31/12/2016 collection commissions 6,120 debtors with a credit balance miscellaneous other inancial liabilities financial liabilities liabilities to employees social security contributions taxes deferred revenue miscellaneous other liabilities 15,776 17,077 other liabilities 22,024 25,687 78 50 6,248 5,800 225 636 9,115 8,425 134 51 8,610 6,604 209 568 9,696 disclosures relating to the consolidated statement of profit or loss and other comprehensive income revenue (39) revenue concerns the sale of goods and is meas- ured at the fair value of the consideration received or receivable. revenue by region (in keur) germany abroad revenue 2015 2016 250,238 266,574 189,712 199,485 439,950 466,059 liabilities to employees include outstanding bonus, wage and salary payments. revenue by product groups (in keur) 2015 2016 accruals include both employee claims for leave and non-working shifts not yet taken as well as other liabil ities. in addition, they include provisions for pos- sible vat back payments for previous years totalling keur 2,510. these potential obligations result from the tax treatment of the low of goods into frosta ag warehouses in italy. fish 203,977 223,441 fruit and vegetables 109,461 115,578 ready meals and other products 126,512 127,040 revenue 439,950 466,059
notes to the consolidated financial statements 52 53 (40) other operating income other operating income (in keur) currency translation gains income from the derecognition of prepaid expenses and deferred revenue income from credits from previous years and the derecognition of liabilities miscellaneous operating income other operating income (41) personnel expenses personnel expenses (in keur) wages and salaries social security contributions pension costs costs of share-based payments personnel expenses interest component the expenses is shown in net inance cost/income. included in personnel employees (annual average) wage earners salaried staf temporary employees number of employees pursuant to section 314 (1) no. 4 hgb apprentices number of employees 2015 8,664 1,108 149 1,230 11,151 2016 6,806 763 348 1,917 9,834 2015 53,654 9,501 10 1,171 64,336 2016 57,039 10,115 9 1,162 68,325 2015 1,051 418 132 1,601 30 1,631 2016 1,057 429 149 1,635 30 1,665
notes to the consolidated financial statements (42) depreciation and amortisation depreciation and amortisation (in keur) amortisation of intangible assets depreciation of property, plant and equipment depreciation and amortisation (43) other operating expenses other operating expenses (in keur) storage and transport costs external personnel costs marketing costs rent and cold-storage expenses maintenance currency losses fees, contributions and insurance other expenses other operating expenses 2015 510 11,668 12,178 2016 501 11,735 12,236 2015 20,547 9,709 11,308 7,610 4,697 5,163 2,921 9,607 71,562 2016 21,579 11,426 11,764 7,215 5,055 5,529 2,859 11,040 76,467 the other operating expenses include severance pay- ments amounting to keur 96 (2015: keur 85). they also contain expenses in connection with the reloca- tion of a production line of keur 1,600 (2015: keur 0), as well as topping-up payments for the early retire- ment scheme amounting to keur 34 (2015: keur 46).
notes to the consolidated financial statements 54 55 (44) interest income/expense interest income/expense (in keur) interest income on bank balances interest income from loans interest income from a reduction in provisions for anticipated losses from interest swaps other interest income interest income interest expense for liabilities to banks interest expense from interest swaps interest expense for provisions for pensions and partial retirement schemes abs other interest expenses interest and similar expenses interest income/expense (45) taxes on income and deferred taxes taxes on income are made up of trade tax, corpor- ation tax, solidarity surcharge and the applicable foreign taxes. tax expense by origin (in keur) current taxes germany current foreign taxes current taxes for the inancial year taxes for previous years taxes on income deferred taxes germany deferred foreign taxes deferred taxes tax expense reported in the income statement 2015 12 13 222 72 319 –865 –6 –12 –64 –2 –949 –630 2015 5,768 1,587 7,355 –111 7,244 –402 277 –125 7,119 2016 25 0 119 51 195 –617 –3 –22 –69 –37 –748 –553 2016 7,670 2,003 9,673 570 10,243 –513 –160 –673 9,570
notes to the consolidated financial statements the expected expense for taxes on income, which would have arisen by applying the tax rate of the con- trolling group parent frosta ag of 30.66 % (2015: 30.53 %) to the ifrs consolidated pre-tax proit, can be reconciled as follows to taxes on income as reported in the income statement: tax expense reconciliation (in keur) proit before taxes on income frosta ag’s tax rate anticipated tax expense diferent tax rates (especially for deferred taxes) taxes on income for previous years tax expense for non-deductible operating expenses tax savings from tax-free income tax expense reported in the income statement for corporations based in germany, 15 % is paid for cor- poration tax and 5.5 % for solidarity surcharge due on cor- poration tax. in addition, these corporations are liable to trade tax with the level depending on a community-based taxation scale. deferred tax assets and liabilities (in keur) intangible assets property, plant and equipment financial assets inventories trade receivables other assets pension provisions other provisions trade payables other liabilities total netting balance 2015 25,329 2016 31,138 30.53 % 30.66 % 7,733 –706 –111 359 –156 7,119 9,547 –953 570 455 –49 9,570 the transition from imputation method to half-income method has resulted in a cooperation tax credit of keur 1,794, which is paid out in ten equal instalments as from 2008. following a tax audit, the corporation tax credit rose in 2010 to keur 1,871. this amount less two payments received in 2008 and 2009 is paid in eight equal annual instalments as from 2010. the present value was recognised in receivables from current taxes on income. 31/12/2015 31/12/2016 deferred tax assets deferred tax liabilities deferred tax assets deferred tax liabilities 3 146 602 0 10 29 159 425 0 179 1,553 –948 605 1 2,535 0 224 16 95 0 0 20 15 2,906 –948 1,958 3 192 216 0 0 0 175 950 0 412 1,948 –1,203 745 15 2,145 0 178 11 281 0 0 16 3 2,649 –1,203 1,446
notes to the consolidated financial statements 56 57 (47) earnings per share earnings per share consolidated proit for the year number of ordinary shares issued consolidated proit for the year per share keur in 1,000 eur a igure of eur 3.17 (2015: eur 2.67) is reported as both basic and diluted earnings per share. 2015 18,210 6,813 2.67 2016 21,568 6,813 3.17 consolidated statement of cash flow disclosures (48) composition of cash funds the cash funds are made up of cash and credit at banks to the amount of keur 14,903 (2015: keur 14,439). (49) segment reporting for more information on segment reporting as pre- sented below, please refer to the management report. due to the amendments to ifrs 8.23 in the version of april 2009, we are now required to adapt our seg- ment reporting to correspond with the frosta ag structure (“management approach”). we manage frosta ag in two separate sales units. firstly, there is the frosta operating segment, which includes the brand business in germany, austria, eastern europe and italy, the private label business in italy and eastern europe as well as sales to home delivery services and catering business in germany; and secondly, there is the copack operating segment, which is responsible for the private label and industrial business in ger- many and the private label business in france and in the rest of western europe. management only considers the proit performance of the segments. segment reporting does not give con- sideration to assets or liabilities. the presentation of the segment report corresponds to the structure of internal reporting. consolidation efects have been included proportionately. however, they are of no sig- niicance overall.
notes to the consolidated financial statements 58 59 net income from investments amounting to keur 82 relates to income from the investment in columbus spedition. in 2015, net income from investments amounting to keur 160 comprised income from the investment in columbus spedition totalling keur 71 and income from the investment in the associated company bio-frost westhof of keur 89. in the inancial year 2016, one customer with revenue of keur 52,491 (2015: keur 43,175) in the frosta and copack segments contributed more than 10 % to group revenue. other disclosures primary financial instruments (50) primary inancial instruments (in keur) 31/12/2015 31/12/2016 carrying amount fair value carrying amount fair value liabilities to banks other inancial liabilities 33,239 6,248 34,045 6,248 27,619 8,610 28,032 8,610 liabilities to banks include loans. the estimated fair value of loans is determined using the present value, which is calculated on the basis of the current interest rate. for the other inancial liabilities, the carrying amounts are identical to their values. (51) contingent liabilities the frosta group believes there are no signiicant contingent liabilities. (52) other financial obligations other inancial obligations (in keur) liabilities from current lease agreements liabilities under current rental and maintenance contracts purchase obligation from expansion investments consignment agreements other inancial obligations liabilities from current lease agreements result mostly from the leasing of cars and industrial trucks and are handled exclusively in the form of operative lease agreements. the existence of a lease agreement is veriied on submission of the agreement or invoice. 2015 1,510 3,101 4,611 2,140 2016 1,665 3,021 4,165 2,511 11,362 11,362 obligations under current leases concern rent for oice space, software and communications systems.
notes to the consolidated financial statements remaining maturities of rental, maintenance and lease agreements as at 31 december 2016 (in keur) future payments from current lease agreements future payments from current rental and maintenance contracts total 3,456 1,227 1 to 5 years > 5 years 731 < 1 year 934 2,522 496 supervisory board the following persons were members of the super- visory board of frosta ag in the inancial year 2016: 0 3 3 • dirk ahlers, businessman, hamburg, chairman of the supervisory board (as at 31 december 2016: 681,259 frosta shares = 10.0 %) • oswald barckhahn, businessman, amsterdam/ netherlands, vice chairman of the supervisory board • jürgen schimmelpfennig, chairman of the works council of frosta ag, bremerhaven total expenditure from rental and lease agreements amounted to keur 3,798 (2015: keur 3,613) in the 2016 inancial year. the total number of frosta ag shares owned by the supervisory board as at 31 december 2016 was 683,459 shares = 10.0 %. (53) auditors’ fees other auditors’ fees (in keur) auditing services other assurance services total (54) related parties executive board the following persons were members of the executive board of frosta ag in the inancial year 2016: • felix ahlers, businessman, hamburg, chairman (as at 31 december 2016: 2,279,429 frosta shares = 33.5 %) • hinnerk ehlers, businessman, hamburg, vice presi- dent marketing, sales and human resources • maik busse, businessman, bremerhaven, vice presi- dent finance and controlling, as of 1 july 2016 • jürgen marggraf, businessman, bremen, vice presi- dent operations the total number of frosta shares owned by the ex - ecutive board as at 31 december 2016 was 2,326,284 shares = 34.2 %. 73 11 84 all business relations with related parties were trans- acted on an arm’s length basis. all business relations are outlined in the following. in 2016, kommanditgesellschaft lenox handels- und speditionsgesellschaft mbh & co. kg, hamburg, a company of which dirk ahlers is managing partner, invoiced keur 40 (2015: keur 70). charges to kommanditgesellschaft lenox handels- und speditionsgesellschaft mbh & co. kg, hamburg, in the amount of keur 4 (2015: keur 5). deliveries of goods from bulgaria foods ltd., a 51 % shareholding of kommanditgesellschaft lenox han- dels- und speditionsgesellschaft mbh & co. kg, ham- burg, a company of which dirk ahlers is managing partner, amounting to keur 318. deliveries of goods to bulgaria foods ltd. totalling keur 2. deliveries of goods from bio-frost westhof gmbh in the period from 1 january to 30 september 2016 amounting to keur 430 (2015: from 1 january to 31 december keur 218).the shares in bio-frost westhof gmbh, wöhrden, were sold with efect from 1 october 2016. in 2016, columbus spedition gmbh keur 1,888 (2015: keur 1,882). invoiced selling expenses from a non-consolidated subsidiary in the amount of keur 325 (2015: keur 322).
notes to the consolidated financial statements 60 61 as at 31 december 2016, business relations with related parties gave rise to liabilities totalling keur 105. on 22 december 2015, mr dirk ahlers, ms friederike ahlers and mr felix ahlers notiied frosta ag of their share in the voting capital. (55) remuneration pursuant to section 314 (1) no. 6 hgb total remuneration of the executive board (in eur) 2014 2015 2016 target at 100 % goal achievement goal achievement in % (performance) efective remuneration +/- previous year fixed remuneration fixed compensation 1,062,156 1,066,956 other non-cash beneits 136,555 140,737 fixed remuneration, total 1,198,711 1,207,693 variable remuneration 882,450 –17.3 % 117,372 –16.6 % 999,822 –17.2 % short-term bonus 2,043,972 1,702,799 1,468,779 long-term bonus 577,355 445,355 325,000 remuneration to purchase shares 973,949 860,772 656,863 123 % 172 % 122 % 1,800,956 5.8 % 558,948 25.5 % 801,307 –6.9 % variable remuneration, total 3,595,276 3,008,926 2,450,642 129 % 3,161,211 5.1 % total expenses 4,793,987 4,216,619 4,161,033 –1.3 % the total remuneration of the executive board for the inancial year 2016 amounted to keur 4,161 (2015: keur 4,217). of this, the ixed remuneration came to keur 1,000 (2015: keur 1,208) and variable remuner- ation to keur 3,161 (2015: eur 3,009). the total remuneration of former members of the executive board was keur 54 in the 2016 inancial year (2015: keur 52). pension provisions for former executive board members amounted to keur 466 on the balance sheet date (2015: keur 477). the remuneration of the supervisory board totalled keur 125, of which keur 111 was variable and keur 14 was ixed remuneration. the remuneration of the pre- vious year at keur 107 comprised variable remuner- ation of keur 93 and ixed remuneration of keur 14. remuneration for the purpose of buying shares is subject to a lock-up period of ive years. the long- term bonus components are based on average per- formance over three years and are payable at the end of the three-year period. appropriation of profits (56) based on 6,812,598 no-par value bearer shares, less 10,468 no-par value bearer treasury shares not en- titled to a dividend in accordance with section 71b of the german stock corporation act (aktg), this results in 6,802,130 no-par value bearer shares entitled to a dividend. at the annual general meeting, we will be pro- posing a gross dividend payment of eur 1.50 per share corresponding to a total dividend payment of eur 10,203,195.00. this payment will be taken from the net income for the year reported by frosta ag as at 31 december 2016 of eur 15,450,769.89. the remaining eur 5,247,574.89 will be allocated to other retained earnings. the gross dividend is subject to capital gains tax (25 %) amounting to eur 2,550,798.75 as well as a 5.5 % solidarity surcharge of eur 140,293.93. this results in a net dividend payment of eur 7,512,102.32. the shareholders of the parent company are fully entitled to the proits. no non-controlling interests are held in the frosta ag group.
notes to the consolidated financial statements (57) risk report the company secures itself against any risks not related to its core activities, such as currency, liability and property damage risks, by concluding agree- ments and contracts. business risks are borne by the group itself. in order to avoid or keep damages as low as possible, an appro- priate risk management system has been put in place. for detailed information about the corporate risks, please refer to the frosta ag combined management report of the company and the group. bremerhaven, 9 march 2017 the executive board responsibility statement in accordance with section 297 (2) sentence 4 hgb and section 315 (1) sentence 6 hgb to the best of our knowledge, and in compliance with the applicable inancial reporting standards, the con- solidated inancial statements give a true and fair view of the net assets, inancial position and results of operations of the group, and the group management report provides a faithful and accurate review of the development and performance of the business and the position of the group, and outlines the signiicant opportunities and risks associated with the expected development of the group. bremerhaven, 9 march 2017 felix ahlers hinnerk ehlers maik busse the executive board jürgen marggraf felix ahlers hinnerk ehlers maik busse jürgen marggraf
notes to the consolidated financial statements 62 63 auditors’ report we have audited the consolidated financial state- ments – comprising the balance sheet, statement of profit or loss and other comprehensive income, the statement of changes in equity, the statement of cash flows and the notes – as well as the con- solidated management report for the company and the group prepared by frosta aktiengesellschaft, bremerhaven, for the financial year from 1 january to 31 december 2016. the preparation of the con- solidated financial statements and the consolidated management report of the company and the group in accordance with ifrss, as adopted by the eu, and the additional requirements of german com- mercial law pursuant to section 315a (1) hgb (han- delsgesetzbuch: german commercial code) are the responsibility of the company’s management. our responsibility is to express an opinion on the con- solidated financial statements and the consolidated management report for the company and the group based on our audit. in germany] we conducted our audit of the consolidated finan- cial statements in accordance with section 317 hgb and german generally accepted standards for the audit of financial statements promulgated by the institut der wirtschaftsprüfer [institute of public auditors (idw). those standards require that we plan and perform the audit such that misstatements materially affecting the presenta- tion of the net assets, financial position and results of operations in the consolidated financial state- ments in accordance with the applicable financial reporting framework and in the consolidated man- agement report for the company and the group are detected with reasonable assurance. knowledge of the business activities and the economic and legal environment of the group and expectations as to possible misstatements are taken into account in the determination of audit procedures. the effect- iveness of the accounting-related internal control system and the evidence supporting the disclos ures in the consolidated financial statements and the consolidated management report of the company and the group are examined primarily on a test basis within the framework of the audit. the audit includes assessing the annual financial statements of the companies included in the consolidated finan- cial statements, the determination of the companies to be included in the consolidated financial state- ments, the accounting and consolidation principles used and significant estimates made by the man- agement as well as evaluating the overall presenta- tion of the consolidated financial statements and the consolidated management report of the company and the group. we believe that our audit provides a reasonable basis for our opinion. our audit has not led to any reservations. in our opinion, based on the findings of our audit, the consolidated financial statements comply with ifrss as adopted by the eu and the additional requirements of german commercial law pursuant to section 315a (1) of the hgb and give a true and fair view of the net assets, financial position and results of operations of the group in accordance with these requirements. the consolidated management report of the company and the group is consistent with the consolidated financial statements, and as a whole provides a suitable view of the group’s posi- tion and accurately presents the opportunities and risks of future development. bremen, 10 march 2017 bdo ag auditors renken auditor weichert auditor
annual financial statements of the frosta group annual financial statements of frosta ag income statement of frosta ag balance sheet of frosta ag statement of changes in fixed assets of frosta ag notes to the annual financial statements for the 2016 financial year in accordance with the german commercial code (hgb) 65 66 68 70
income statement of frosta ag in accordance with hgb annual financial statements of frosta ag 64 65 income statement of frosta ag in accordance with hgb income statement of frosta ag (in keur) 1. 2. 3. 4. sales decrease/increase in inventories of uninished goods other own work capitalised other operating income – of which from currency translation keur 2,149 (2015: keur 4,002) 5. cost of materials note 2015 2016 impact on proit/loss 10 415,477 442,654 6.5 % –1,678 120 9,360 4,306 > 100.0 % 79 8,133 –34.2 % –13.1 % 11 a) cost of raw materials, consumables and supplies –267,963 –288,649 b) cost of purchased services 6. personnel expenses a) wages and salaries b) social security, post-employment and other employee beneit costs – of which post-employment beneits keur 37 (2015: keur 46) 7. 8. amortisation and write-downs of intangible ixed assets and depreciation and write-downs of tangible ixed assets other operating expenses – of which from currency translation keur 1,428 (2015: keur 1,986) 9. operating result 10. income from equity investments 11. other interest and similar income – of which from ailiated companies keur 10 (2015: keur 4) 12. write-downs of long-term inancial assets 13. interest and similar expenses – of which to ailiated companies keur 17 (2015: keur 8) – of which from discounting: keur 98 (2015: keur 102) 14. result from ordinary operating activities 15. taxes on income 16. earnings after taxes 17. other taxes 18. net income for the year 19. balance sheet proit –7,862 –7,776 –275,825 –296,425 –47,561 –50,721 –7,986 –8,509 –55,547 –59,230 3 –7,393 –7,828 –7.7 % 1.1 % –7.5 % –6.6 % –6.5 % –6.6 % –5.9 % 11, 12 –64,366 –67,300 –4.6 % 20,147 24,389 71 165 –301 –896 19,187 –5,680 13,507 –158 13,349 13,349 82 117 0 –751 23,837 –8,206 15,631 –180 15,451 15,451 13 14 –21.1 % 15.5 % –29.1 % 100.0 % 16.2 % 22.3 % –44.5 % 13.2 % –13.9 % 13.2 % 13.2 %
balance sheet of frosta ag annual financial statements of frosta ag balance sheet of frosta ag – assets balance sheet of frosta ag as at 31 december 2016 (in keur) a. fixed assets i. intangible assets purchased concessions, industrial and similar rights and assets, and licences in such rights and assets ii. tangible assets 1. land, land rights and buildings 2. technical equipment and machinery 3. other equipment, operating and oice equipment 4. prepayments and assets under construction iii. long-term inancial assets 1. shares in ailiated companies 2. loans to ailiated companies 3. other long-term equity investments 4. long-term securities and shares in cooperatives 5. other loans b. current assets i. inventories 1. raw materials and consumables 2. work in progress 3. finished goods and merchandise ii. receivables and other assets 1. trade receivables 2. receivables from ailiated companies 3. other assets iii. cash-in-hand, bank balances and cheques c. prepaid expenses d. excess of plan assets over pension liability note 2015 2016 change 3 3 3 4 5 1,070 1,220 14.0 % 50,817 18,560 23,672 6,636 1,949 11,087 11,064 0 17 6 0 61,744 19,568 32,844 8,679 653 11,092 11,069 0 17 6 0 21.5 % 5.4 % 38.7 % 30.8 % –66.5 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 62,974 74,056 17.6 % 56,289 19,699 16,030 20,560 77,629 72,302 2,845 2,483 8,252 63,707 24,002 16,114 23,591 84,822 74,759 6,985 3,078 10,347 142,171 158,876 13.2 % 21.8 % 0.5 % 14.7 % 9.3 % 3.4 % > 100.0 % 24.0 % 25.4 % 11.7 % 265 214 –19.2 % 16 25 56.3 % balance sheet total 205,426 233,171 13.5 %
annual financial statements of frosta ag 66 67 balance sheet of frosta ag – equity balance sheet of frosta ag as at 31 december 2016 (in keur) a. equity i. issued capital 1. subscribed capital 2. treasury shares ii. capital reserves iii. revenue reserves 1. legal reserve 2. other revenue reserves iv. net retained proits b. provisions 1. provisions for pensions and similar obligations 2. provisions for taxes 3. other provisions c. liabilities 1. liabilities to banks 2. trade payables 3. liabilities to ailiated companies 4. other liabilities – of which taxes: keur 518 (2015: keur 1,950) d. deferred income 2015 2016 change note 6 17,424 17,440 –16 11,447 60,347 200 60,147 13,349 17,413 17,440 –27 11,447 64,113 200 63,913 15,451 102,567 108,424 526 2,052 24,378 26,956 31,777 24,501 8,737 10,842 497 2,343 42,763 45,603 27,619 30,033 17,175 4,308 7 8 9 –0.1 % 0.0 % –68.8 % 0.0 % 6.2 % 0.0 % 6.3 % 15.7 % 5.7 % –5.5 % 14.2 % 75.4 % 69.2 % –13.1 % 22.6 % 96.6 % –60.3 % 75,858 79,135 4.3 % 45 9 –79.7 % balance sheet total 205,426 233,171 13.5 %
annual financial statements of frosta ag statement of changes in fixed assets of frosta ag statement of changes in in ixed assets of frosta ag (in keur) purchase and production costs as at 01/01/2016 add i tions disposals transfers as at 31/12/2016 13,225 13,225 471 471 0 0 151 151 13,847 13,847 i. intangible assets purchased concessions, industrial and similar rights and assets, and licences in such rights and assets ii. tangible assets 1. land, land rights and buildings 71,237 2,681 59 79 73,938 2. technical equipment and machinery 3. other equipment, operating and 134,238 11,774 3,061 1,393 144,344 oice equipment 43,842 3,517 590 223 46,992 4. prepayments and assets under construction 1,950 549 0 –1,846 653 251,267 18,521 3,710 –151 265,927 iii. long-term inancial assets 1. shares in ailiated companies 2. loans to ailiated companies 3. equity investments 4. long-term securities 5. other loans 11,515 301 1,768 6 22 13,612 5 0 0 0 0 5 0 0 1,575 0 0 1,575 278,104 18,997 5,285 0 0 0 0 0 0 0 11,520 301 193 6 22 12,042 291,816
annual financial statements of frosta ag 68 69 cumulative depreciation, amortisation and write-downs net carrying amount as at 01/01/2016 additions disposals as at 31/12/2016 as at 31/12/2015 as at 31/12/2016 12,155 12,155 52,677 110,567 37,206 0 200,450 451 301 1,751 0 22 2,525 472 472 1,735 3,941 1,680 0 7,356 0 0 0 0 0 0 215,130 7,828 0 0 12,627 12,627 1,070 1,070 1,220 1,220 42 54,370 18,560 19,568 3,008 111,500 23,671 32,844 573 38,313 6,636 8,679 0 3,623 0 0 1,575 0 0 1,575 5,198 0 204,183 1,950 50,817 653 61,744 451 301 176 0 22 950 11,064 11,069 0 17 6 0 0 17 6 0 11,087 11,092 217,760 62,974 74,056
notes to the annual financial statements for the 2016 financial year notes to the annual financial statements notes to the annual financial statements for the 2016 financial year frosta aktiengesellschaft, bremerhaven registered in the commercial register of the district court of bremen, register no.: hrb 1100 bhv (1) basis of preparation the financial statements of frosta aktienge- sellschaft (hereinafter referred to as frosta ag) are prepared in accordance with the regulations for cor- porations included in the german commercial code (hgb), taking into account the additional provisions of the german stock corporation act (aktg); all figures are specified in thousands of euros (keur). frosta ag also prepares consolidated financial statements, which are published in the federal gazette (bundesanzeiger). accounting policies and measurement methods (2) the inancial statements have been prepared under the assumption that the company will continue as a going concern. income statement frosta ag uses the total cost method for its income statement. the option to capitalise internally created intangible assets was not used. costs for research and develop- ment were therefore expensed in full. tangible assets are recognised at cost, less depreci- ation in the case of assets with a limited useful life. the costs of internally generated tangible assets include all direct costs and an appropriate share of material overheads, production overheads and the depreci ation in the value of assets used for production. the depreciation is calculated on the basis of the normal useful life of the assets concerned. a transition from the declining-balance method to the straight- line method is made as soon as this leads to higher depreciation rates. this rule applies to additions to ixed assets up to 31 december 2009. from 1 january 2010, additions to ixed assets have been depreciated according to the straight-line method based on their economic useful lives. depreciation period of tangible ixed assets buildings other constructions plant and machinery it equipment useful life 25–40 12–19 7–15 3 – 7 5 – 3 fixed assets other operating and oice equipment intangible ixed assets are shown at cost less amort- isation. the amortisation is calculated on a straight- line basis over the assets’ normal useful life, starting from the date on which they are made available. the useful life for software and licences is four years. write-downs are recognised for foreseeable permanent impairments.
notes to the annual financial statements 70 71 low value assets with purchase costs of up to eur 150.00 are recorded as expenditure in the year in which they are acquired. in the case of costs between eur 150.01 and eur 410.00, low value assets are fully depreciated and shown as disposals in the statement of changes in ixed assets. a ixed value is assigned to recognised transport pallets. investment grants and subsidies received or requested lower the purchase or production costs of the sub sidised assets. financial assets are recognised at cost less any write- downs to their fair value. current assets inventories are measured at cost unless a lower measurement is required in accordance with the lower-of-cost-or-market principle. the costs of raw materials, supplies and goods are based on the pur- chase prices plus incidental acquisition expenses less purchase price reductions. in addition to direct costs, production costs also include an appropriate share of the production and material overheads as well as of the depreciation in the value of ixed assets. general administration costs as well as social expenses, voluntary social beneits and company pension schemes are not capitalised. write-downs are measured at the lower of cost or market value and recognised for inventory risks due to excessive storage times or reduced usability. write- downs for inished goods as at the balance sheet date amounted to keur 662 (2015: keur 958) as well as keur 79 (2015: keur 94) for raw materials, consum- ables and supplies. receivables and other assets are shown at nominal value. non-payment and credit risks are accounted for by speciic or global valuation allowances. the percentage used to calculate the global valuation allowance is 1.0. cash and cash equivalents are reported at nominal value at the balance sheet date. deferred taxes deferred taxes on temporary diferences between the carrying amounts of assets, liabilities, prepaid expenses and deferred income measured under german gaap and for tax purposes are shown net. in the event of an excess of deferred tax assets over deferred tax liabilities, the option not to recognise them is used. the calculation is made on the basis of the future tax rates applicable at the balance sheet date. offsetting assets and liabilities, income and expenses assets that are exempt from attachment by all other creditors and that serve exclusively to settle liabilities from partial retirement beneit obligations are meas- ured at their fair value. the related income and expenses are ofset against the income from discounting and shown in the inan- cial result. furthermore, these assets are ofset against the liability they are based on. any excess of obligations over expected beneits is recognised in the provisions. if the fair value of the assets is higher than the amount of the liabilities, this is shown as an excess of plan assets over pension liability. pensions and similar obligations pension obligations are measured in accordance with the recognised principles of actuarial mathematics by means of the projected unit credit method. the amount of the provisions is determined by including expected trends with respect to future pension developments as well as any probabilities of luctuation. the biometric actuarial assumptions are based on the “richttafeln 2005 g” mor- tality tables by dr klaus heubeck. the following additional assumptions are used: measurement parameters underlying interest rate p.a. 4.01 % (10-year average) pension trend p.a. 1.60 % prepaid expenses prepaid expenses relate to expenses incurred prior to the reporting date of the inancial statements which represent expenditure allocatable to future periods. since 1 january 2010, the average interest rate used for discounting has been the rate published by the deutsche bundesbank for a residual term of 15 years. interest expenses are reported under the inancial result.
notes to the annual financial statements currency translation foreign currency transactions are initially trans- lated to the functional currency at the applicable spot exchange rate on the date the transaction occurred. trade payables in foreign currencies are generally measured at the average exchange rate at the balance sheet date. unrealised proits and losses are recog- nised. derivative inancial instruments, in contrast, are recognised according to the imparity principle, i.e. provisions are created for negative values whereas positive values are not recognised. balance sheet disclosures fixed assets (3) an overview of the fixed assets based on total costs is attached to these notes. in the 2016 financial year, no write-downs were rec- ognised (2015: keur 301) with respect to the finan- cial assets of frosta ag. the value of recognised transport pallets was fixed at keur 327 (2015: keur 327). the impairment loss on the purchase or production costs of fixed assets to which investment grants and subsidies relate as at 31 december 2016 amounted to keur 748 (2015: keur 1,006). the release of investment grants and subsidies of keur 258 (2015: keur 322) directly reduces gross depreciation/ amortisation expense. provisions for widow’s beneit entitlements are deter- mined using the collective method, according to which the probability of marriage is used as the underlying basis for the actuarial assumptions applied. other provisions other provisions include to an appropriate and ad equate extent individual provisions for all ascer- tainable risks and contingent liabilities and for any impending losses from onerous contracts. the pro- visions are recognised in the amount deemed ne ces- sary according to prudent business judgement to meet the future obligations. partial retirement obligations are measured in accord- ance with statement idw rs hfa 3 published by the accounting and auditing board (hfa) of the institute of public auditors in germany (idw). jubilee obligations are measured in accordance with recognised actu- arial principles using the projected unit credit method. any increases of salaries and pensions to be expected for the future are taken into account in determining the present value. since 1 january 2010, the interest rate published by the deutsche bundesbank has been used for discounting. time account reinsurance poli- cies have been taken out to cover partial retirement commitments. for the ofsetting of liabilities against assets and income and expenses, please refer to the section “excess of plan assets over pension liability”. liabilities liabilities are recognised with the amount to be paid at the balance sheet date. deferred income deferred income relates to payments received prior to the reporting date of the inancial statements which represent income allocatable to future periods.
notes to the annual financial statements 72 73 equity investments (in keur) name of entity 1. 2. 3. 4. 5. copack tiefkühlkost-produktions gmbh, bremerhaven elbtal tiefkühlkost vertriebs gmbh, lommatzsch frosta tiefkühlkost gmbh, bremerhaven frosta foodservice gmbh, bremerhaven tiko vertriebsgesellschaft mbh, bremerhaven 6. biofreeze gmbh, bremerhaven 7. 8. 9. feldgemüse gmbh lommatzsch, lommatzsch frosta sp. z o.o., bydgoszcz/poland copack france s.a.r.l., (formerly frosta france s.a.r.l) boulogne-billancourt/france 10. frosta italia s.r.l., rome/italy 11. frosta cr s.r.o., prague/czech republic 12. frosta hungary kft., esztergom/hungary 13. copack sp. z o.o., bydgoszcz/poland 14. columbus spedition gmbh, bremerhaven 1 concerns 2015, 2 no data available share of capital in % 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 33.33 subscribed capital equity 256 26 255 256 256 256 26 242 28 265 269 274 253 12 annual proit/loss 2015 annual proit/ loss 2016 –2 –2 0 1 1 1 –1 0 0 2 1 2 0 –2 7,929 39,815 6,558 7,270 153 367 10 37 21 11 225 453 212 59 3 384 1 11 41 6 8 –1 159 12 65 6 8 –2 2 in addition, there are four other equity investments which are not included in the overview with reference to section 286 (3) no. 1 hgb. the euro amounts from inancial statements that have been prepared in foreign currencies are determined using the exchange rate on the balance sheet date.
notes to the annual financial statements (4) receivables and other assets receivables from ailiated companies include receiv- ables from intercompany deliveries and services amounting to keur 2,166 (2015: keur 1,144) and current account transactions amounting to keur 1,319 (2015: keur 1,701) and from inancing activities in an amount of keur 3,500 (2015: keur 0). of the receivables from inancing activities, keur 3,281 have a residual term of more than one year. as at 31 december 2016, trade receivables of keur 6,695 (2015: keur 17,957) were sold in asset-backed security transactions. of the other assets, keur 44 (2015: keur 191) have a residual term of more than one year. excess of plan assets over pension liability (5) the excess of plan assets over pension liability amounted to keur 25 (2015: keur 16). the fair value of assets invested amounted to keur 70 (2015: keur 96); procurement costs amounted to keur 69 (2015: keur 85). the assets in question were reinsurance policies to cover pension obligations. (6) equity on 31 december 2016, share capital amounted to eur 17,440,250.88 and was divided into 6,812,598 no-par value shares. the shares are made out to the bearer. in accordance with a resolution passed at the annual general meeting on 17 june 2016, it was decided to allocate the sum of eur 4,115,280.01 from the net retained proits of eur 13,349,401.21 to other revenue reserves. revenue reserves include proits generated in prior periods to the extent that they were not dis- tributed. additionally, the portion of purchase costs exceeding the nominal value of the shares acquired through the share buyback is reported as a reduction of revenue reserves (change: keur 349.7). a total of 10,468 frosta ag no-par value bearer shares with a nominal value of eur 26,798.08 or 0.15 % of the share capital were ofset against equity. the portion of purchase costs exceeding the nominal value amounting to eur 592,016.47 is reported in a reduction of revenue reserves. these 10,468 no-par value bearer treasury shares result from the following purchase and sales trans- actions: in addition to the 6,448 treasury shares with a nom- inal value of eur 16,506.88 acquired in a share buy- back between 23 april 2015 and 14 december 2015, frosta ag acquired a further 51,218 treasury shares in a share buyback between 6 january 2016 and 29 december 2016. this corresponds to a nominal amount of eur 131,118.08, or 0.75 % of the equity. this cost the company eur 2,661,907.57, which equates to a weighted average price of eur 51.97 per share. frosta ag subsequently sold a total of 47,198 no-par value bearer treasury shares as part of various share-based payments and employee share pro- grammes. this corresponds to a nominal amount of eur 120,826.88 or 0.69 % of the equity as at 31 december 2016. for 40,108 no-par value bearer shares sold under an employee share programme, frosta ag received a total of eur 855,670.50 to be used as it sees it. as part of a bonus scheme, the company issued 7,090 shares to employees at man- agement level. the share buy-backs were quantiied on the basis of the previous year’s share-based payments and employee share programmes. since in the inan- cial year 2016 fewer shares were sold as part of the employee share programme, a total of 10,468 no-par value bearer shares were held as treasury shares by frosta ag. under section 71b of the german stock corporation act (aktg), the no-par value bearer shares held as treasury shares are not entitled to any rights. apart from this there is authorised capital, as yet unused, for a ixed period until 17 july 2018, amounting to eur 201,253.12 for the issuing of shares to employees of the company and its ailiated com panies, as well as authorised capital of eur 5,000,000.00 for a ixed period until 17 july 2018, for a capital increase from cash contributions. provisions for pensions and similar obligations (7) the amount required to cover pension provisions applies exclusively to pensioners already receiving a pension. the carrying amount pursuant to section 253 (2) hgb applying the ten-year average interest rate of 4.01 % was keur 497 in the inancial year 2016. applying the seven-year average interest rate pursuant to section 253 (6) hgb of 3.24 % would have produced a carrying amount of keur 519.
notes to the annual financial statements 74 75 in 2015, the carrying amount applying a seven-year average interest rate of 3.89 % was keur 526. the diference amounting to keur 22 resulting from the change in interest rate for the inancial year 2016 is subject to a distribution limitation. (8) other provisions other provisions include provisions for personnel expenses amounting to keur 12,712. this includes provisions for jubilee beneits with a payment amount of keur 1,674. the discount rate on which this is based is 3.24 %, assuming a residual term of 15 years. pro- visions are also recognised for contingent liabilities in connection with the relocation of a production line in the amount of keur 1,600. partial retirement provisions are measured at a settle- ment amount of keur 50. this was also determined based on a discount rate of 3.24 %. since the plan assets in the amount of keur 70 are assigned on the basis of individual partial retirement obligations, the principle of item-by-item measurement resulted in a surplus of assets of keur 25 as well as a provision for partial retirement obligations of keur 5. provisions are also recognised for potential vat back payments relating to previous accounting periods in the amount of keur 2,510 and outstanding invoices amounting to keur 7,095. other provisions also relate to obligations arising from sales-related agreements on terms and conditions totalling keur 18,313. (9) liabilities liabilities (in keur) liabilities to banks (previous year) trade payables (previous year) liabilities to ailiated companies (previous year) other liabilities (previous year) total amount of which due within up to 1 year more than 1 year more than 5 years 27,619 (31,777) 30,033 (24,501) 17,175 (8,737) 4,308 (10,843) 79,135 (75,858) 9,904 (19,409) 30,033 (24,501) 17,175 (8,737) 4,308 (10,843) 61,420 (63,490) 17,715 (12,368) 4,519 (2,195) 0 (0) 0 (0) 0 (0) 0 (0) 0 (0) 0 (0) 17,715 (12,368) 4,519 (2,195)
notes to the annual financial statements liabilities to banks are guaranteed by mortgages amounting to keur 10,141 (2015: keur 14,040) and simi lar rights amounting to keur 1,055 (2015: keur 1,278). the customary retentions of title apply to trade payables. liabilities to ailiated companies result from inter- company deliveries and services amounting to keur 8,833 (2015: keur 6,566) and current account transactions amounting (2015: keur 2,171) and from inancing activities in an amount of keur 6,096 (2015: keur 0). to keur 2,245 in the inancial year 2016, obligations arising from bonus agreements are recognised for the irst time in other provisions. income statement disclosures (10) sales sales by region (in meur) germany abroad sales allowances sales by product group (in meur) fish fruit and vegetables ready meals and other products 2015 314 167 481 66 415 2015 178 108 129 415 2016 349 178 527 85 442 2016 197 114 131 442 deviation 11.1 % 6.6 % 9.6 % 28.8 % 6.5 % deviation 10.7 % 5.6 % 1.6 % 6.5 % (11) prior-period income and expense other operating expenses (12) the income statement of frosta ag includes income relating to prior accounting periods of keur 3,406 (2015: keur 3,794) and expenses relating to prior accounting periods in the amount of keur 866 (2015: keur 2,761). prior-period income mainly relates to the derecognition of advertising expense allowances and bonus payments, the reversal of personnel provisions and other provisions. other operating expenses include extraordinary expenses amounting to keur 1,600 for recognition of a provision for contingent liabilities in connection with the relocation of a production line.
76 77 (14) notes to the annual financial statements (13) offsetting of income and expenses taxes on income income from plan assets amounting to keur 1 (2015: keur 3) was ofset against interest expense for partial retirement beneit obligations amounting to keur 1 (2015: keur 7). this item includes, among other things, tax expenses of keur 538 relating to prior accounting periods (2015: tax income of keur 87). deferred taxes on temporary diferences between the carrying amounts of assets, liabilities, prepaid expenses and deferred income measured under german gaap and for tax purposes are as follows: deferred tax assets and liabilities (in keur) intangible assets tangible assets other inancial assets prepaid expenses/deferred income pension provisions other provisions trade payables total netting balance 31/12/2015 31/12/2016 deferred tax assets deferred tax liabilities deferred tax assets deferred tax liabilities 0 0 696 29 30 213 0 968 –132 836 0 109 0 0 0 0 23 132 –132 0 0 0 216 0 27 712 0 955 –134 821 15 98 0 0 0 0 21 134 –134 0 the temporary diferences were measured based on the combined tax rate of corporation tax and trade tax of 30.66 % (2015: 30.53 %). the resulting theoretical tax relief was not recognised in accordance with the option as set forth in section 274 hgb, as amended. other disclosures other financial obligations (15) other inancial obligations (in keur) liabilities from current lease agreements liabilities under current rental and maintenance contracts purchase commitments from expansion investments consignment agreements 31/12/2015 31/12/2016 1,378 2,956 4,381 2,140 1,399 2,877 3,558 2,512 10,855 10,346
notes to the annual financial statements remaining maturities of rental, maintenance and lease agreements as at 31 december 2016 (in keur) future payments from current lease agreements future payments from current rental and maintenance contracts purchase commitments from expansion investments consignment agreements < 1 year 814 2,468 3,558 2,512 9,352 1 to 5 years > 5 years 585 406 0 0 991 0 3 0 0 3 (16) hedging transactions/derivatives auditors’ fees and services the total fees invoiced by the auditors, bdo ag wirtschaftsprüfungsgesellschaft, for the inancial year are included in the relevant section of the notes to the consolidated inancial statements. number of employees employees (annual average) wage earners salaried staf temporary employees number of employees pursuant to section 285 no. 7 hgb apprentices 2015 577 291 132 2016 577 295 149 1,000 1,021 30 1,030 30 1,051 currency hedging is used to hedge incoming pay- ments in gbp and outgoing payments in usd. deriv- ative inancial instruments are accounted for at cost at the time of the transaction. as at the balance sheet date, the banks determine the fair values on the basis of market quotations. hedging transactions are measured in accordance with the imparity principle, whereby provisions for contingent losses are recog- nised for negative market values whereas unrealised gains are not recognised. interest rate swaps are entered into in order to hedge interest risks. the following table shows the individual inancial instruments. the fair values were determined on the basis of the individual closing rate: hedging transactions/derivatives financial instrument currency forwards currency forwards currency swaps interest rate swaps type scope fair value in keur purchase kusd 24,988 –29 sale kgbp sale kusd loan keur 80 1,069 0 0 1,321 –30 (17) (18)
notes to the annual financial statements 78 79 (21) (19) executive board the following persons were members of the execu- tive board of frosta ag in the inancial year 2016: • felix ahlers, businessman, hamburg, chairman ( as at 31 december 2016: 2,279,429 frosta shares = 33.5 %) • hinnerk ehlers, businessman, hamburg, vice presi- dent marketing, sales and human resources • maik busse, businessman, bremerhaven, vice presi- dent finance and controlling, as of 1 july 2016 • jürgen marggraf, businessman, bremen, vice presi- dent operations, vice chairman the total number of frosta shares owned by the ex - ecutive board as at 31 december 2016 was 2,326,284 shares = 34.2 %. (20) supervisory board the following persons were members of the super- visory board of frosta ag in the inancial year 2016: • dirk ahlers, businessman, hamburg, chairman of the supervisory board, former chairman of the executive board ( as at 31 december 2016: 681,259 frosta shares = 10.0 %) • oswald barckhahn, businessman, amsterdam/ netherlands, vice chairman of the supervisory board, jacobs douwe eegberts remuneration pursuant to section 285 no. 9 hgb the total remuneration of the executive board of frosta ag in the inancial year amounted to keur 4,161 (2015: keur 4,217). of this the ixed remuneration came to keur 1,000 (2015: keur 1,208) and variable remuneration to keur 3,161 (2015: keur 3,009). the total remuneration of former members of the executive board of frosta ag was keur 54 in the inancial year (2015: keur 52). pension provisions for former executive board members of frosta ag amounted to keur 410 on the balance sheet date (2015: keur 435). the remuneration of the supervisory board amounted to keur 125 (2015: keur 107), of which keur 111 (2015: keur 93) was variable remuneration and keur 14 (2015: keur 14) was ixed remuneration. report on post-balance sheet date events no signiicant events having a material impact on the net assets, inancial position and results of operations as at 31 december 2016 occurred after the balance sheet date. other (22) on 22 december 2015, mr dirk ahlers notiied the company that his shareholding had fallen below 25 %. on 22 december 2015, ms friederike ahlers notiied the company that her shareholding had exceeded 25 %. • jürgen schimmelpfennig, chairman of the works council of frosta ag, bremerhaven on 22 december 2015, mr felix ahlers notiied the company that his shareholding had exceeded 25 %. the total number of frosta ag shares owned by the supervisory board as at 31 december 2016 was 683,459 shares = 10.0 %.
notes to the annual financial statements (23) appropriation of profits based on 6,812,598 no-par value bearer shares, less 10,468 no-par value bearer shares held as treasury shares not entitled to a dividend in accordance with section 71b of the german stock corporation act (aktg), 6,802,130 no-par value bearer shares are enti- tled to a dividend. at the annual general meeting, we will be proposing a dividend of eur 1.50 per share cor- responding to a total dividend of eur 10,203,195.00. this payment will be taken from the net income for the year as at 31 december 2016 of eur 15,450,769.89. the remaining eur 5,247,574.89 will be allocated to other revenue reserves. bremerhaven, 9 march 2017 the executive board felix ahlers hinnerk ehlers maik busse jürgen marggraf responsibility statement in accordance with section 289 (1) sentence 5 hgb to the best of our knowledge, and in compliance with the applicable inancial reporting standards, the annual inancial statements give a true and fair view of the net assets, inancial position and results of oper ations of the company, and the management report provides a faithful and accurate review of the development and performance of the business and the position of the company, and outlines the signiicant opportunities and risks associated with the expected development of the company. bremerhaven, 9 march 2017 the executive board felix ahlers hinnerk ehlers maik busse jürgen marggraf
notes to the annual financial statements 80 81 auditors’ report we have audited the inancial statements – comprising the balance sheet, income statement and the notes – including the accounting records and the consolidated management report for the company and the group prepared by frosta aktiengesellschaft, bremerhaven, for the inancial year from 1 january to 31 december 2016. the accounting records and the preparation of the inancial statements and the consolidated manage- ment report of the company and the group in accord- ance with the requirements of german commercial law are the responsibility of the company’s management. our responsibility is to express an opinion on the inan- cial statements including the accounting records and on the consolidated management report for the com- pany and the group based on our audit. we conducted our audit of the inancial statements in accordance with section 317 hgb (handels- gesetzbuch: german commercial code) and german generally accepted standards for the audit of inan- cial statements promulgated by the institut der wirtschaftsprüfer [institute of public auditors in germany] (idw). those standards require that we plan and perform the audit such that misstatements materially afecting the presentation of the net assets, inancial position and results of operations in the inancial statements in accordance with the applic- able inancial reporting framework and in the con- solidated management report for the company and the group are detected with reasonable assurance. knowledge of the business activities and the eco- nomic and legal environment of the company and expectations as to possible misstatements are taken into account in the determination of audit procedures. the efectiveness of the accounting-related internal control system and the evidence supporting the dis- closures in the accounting records, inancial state- ments and the consolidated management report of the company and the group are examined primarily on a test basis within the framework of the audit. the audit includes assessing the accounting principles used and signiicant estimates made by the manage- ment as well as evaluating the overall pre sentation of the inancial statements and the consolidated management report of the company and the group. we believe that our audit provides a reasonable basis for our opinion. our audit has not led to any reservations. in our opinion, based on the indings of our audit, the inancial statements comply with the requirements of german commercial law and give a true and fair view of the net assets, inancial position and results of operations of the company in accordance with these requirements. the consolidated management report of the company and the group is consistent with the inancial statements, complies with the legal require- ments and as a whole provides a suitable view of the company’s position and accurately presents the opportunities and risks of future development. bremen, 10 march 2017 bdo ag auditors renken auditor weichert auditor
ten-year overview for the frosta group ten-ye ar overvie w for the frosta group ten-year overview for the frosta group ten-year overview for the frosta group employees (average) revenue ebitda (operating result plus depreciation and amortisation) consolidated proit/loss capital expenditure shares total dividend dividend per share earnings per share fixed assets current assets equity equity ratio liabilities to banks debt ratio1 return on investment 2 amount meur meur meur meur 2016 1,665 466 43.8 21.6 26.0 2015 1,631 440 38.3 18.2 14.1 2014 1,559 408 36.2 17.3 16.3 amount 6,812,598 6,812,598 6,812,598 keur eur eur meur meur meur meur 10,203 9,234 1.50 3.17 89.7 181.8 145.7 53.7 % 27.6 10.2 % 15.5 % 1.36 2.67 76.5 168.2 134.7 55.1 % 33.2 13.6 % 13.7 % 9,247 1.36 2.53 75.4 159.7 125.7 53.5 % 29.4 12.5 % 13.8 % 1 bank liabilities / (balance sheet total / 100) 2 [ebit / (average balance sheet total including abs – average trade payables)] * 100
report of the supervisory board for the 2016 financial year report of the supervisory board report of the supervisory board for the 2016 financial year dear shareholders, in the inancial year 2016, the supervisory board of frosta ag discharged the duties incumbent upon it under the law and company’s articles of associa- tion and rules of procedure. during the same period, it was regularly and extensively involved in matters concerning the economic and inancial development as well as the strategic alignment of frosta ag and the group as a whole. it held regular consultations with the executive board and monitored the latter’s activities closely. the supervisory board participated directly in all decisions of fundamental importance to the company. the executive board informed the supervisory board regularly, comprehensively and in a timely manner, in written form and verbally, on all matters concerning the business development and the inancial situation of the group. the chairman of the supervisory board, dirk ahlers, exchanged infor- mation at regular intervals with the executive board, for example by attendance at day-long group manage- ment meetings three times in the course of the year. after thorough examination, the supervisory board approved those decisions of the executive board which require supervisory board consent. these mainly concerned corporate planning for the year, the annual scope of investment and inancial planning. the supervisory board convened four regular meetings: on 5 april, 17 june, 14 september and 21 december 2016. the meetings of the supervisory board were attended by all members. in the reporting period, there arose no conlicts of interest for supervisory board members from their activities as members of the supervisory board of frosta ag. main points discussed by supervisory board during the 2016 inancial year, the supervisory board devoted its eforts to implementing key annual plan- ning objectives. as in the previous year, these were: for the group as a whole • growth through innovation • above-average growth of the frosta brand and the catering business • increased return on sales • examining the possibilities of chilled food production for the frosta brand • intensiication of listing eforts especially for the ish range in germany • standardisation of the brand identity under the frosta purity command in all sales countries • focus on germany, poland, hungary, the czech republic and romania by supporting the brand through consumer advertising in these countries • introduction of the brand in italy for the foodservice (catering) business • growth and expansion of business in other european countries for the private label business • focus on items with a positive return on sales • expansion of a proitable ish range • optimisation and expansion of overall range all supervisory board meetings focused on the cur- rent development of business. additionally, the main topics discussed at the individual supervisory board meetings were: on 5 april 2016 • audit of the 2015 annual inancial statements • long-term strategic alignment of frosta ag (“vision 2020”) on 17 june 2016 • preparation of the annual general meeting • discussion of the opportunities and risks of chilled food • industry 4.0 • disposal of the shareholding in bio-frost westhof gmbh on 14 september 2016 • proit estimate for the inancial year 2016 • introducing the brand in additional markets • possibilities in russia • new advertising campaign
report of the supervisory board 84 85 on 21 december 2016 • annual planning for 2017 • it strategy • new bonus concept for the management finance and personnel committee the finance and personnel committee, consisting of supervisory board members dirk ahlers and oswald barckhahn, met before each supervisory board meeting and made preparations for these meetings. the committee consulted with the supervisory board on the 2015 annual inancial statements at a joint ses- sion in hamburg on 5 april 2016. the current brand strategy was discussed in numerous telephone con- versations with the chairman of the executive board. composition of executive board and supervisory board the composition of the supervisory board did not change in the inancial year 2016. the chairman felix ahlers temporarily took over responsibility for finance and controlling from 1 january 2016 until the new vice president finance and controlling maik busse took up his duties on 1 july 2016. separate and consolidated financial statements in accordance with a decision taken at the annual gen- eral meeting, the supervisory board commissioned bdo ag wirtschaftsprüfungsgesellschaft, bremen, with the task of auditing the separate and consoli- dated inancial statements of frosta ag. the audit ors examined both the separate and the consolidated inancial statements and issued unqualiied auditor’s reports. as the proposal on the appropriation of net retained proits. the supervisory board declares that, having completed its review, it has no objections either to the consolidated and separate inancial statements as at 31 december 2016, nor to the consolidated management report of frosta ag and the group as at 31 december 2016. the supervisory board there- fore unanimously approved the separate and consoli- dated inancial statements prepared by the executive board. the annual inancial statements were thereby adopted. the supervisory board also approved the proposal of the executive board on the appropriation of net retained proits. the finance and personnel committee further dis- cussed the annual bonus target for the members of the executive board. this was subsequently adopted by the entire supervisory board. the ixed remuneration decreased by 17 % in 2016 compared with the previous year due to the tempor ary vacancy of the position of cfo. compared to other companies of a similar size, ixed remuneration comes in at the lower end. the variable, i.e. performance- related remuneration continues to be considerably higher than average. however, despite improved earn- ings of 23 %, the variable component increased by just 5.1 % year-on-year. when comparing with other com- panies, it should also be borne in mind that the execu- tive board remuneration does not include any pension commitments. in total, the executive board remuneration decreased by 1.3 % compared with 2015. given the overall positive results of operations and the fact that in particular the growth targets for the brand were met, the supervisory board deems the level of executive board remuneration appropriate. the consolidated management report of frosta ag and the group was also issued an unqualiied audi- tor’s report. word of thanks the audit reports were submitted to the members of the supervisory board in good time. they were pre- sented to the chairman of the supervisory board by the auditor on 23 february 2017, who duly exam- ined them. on 22 march 2017, they were initially dis- cussed by the finance and personnel committee and then discussed in detail by the complete supervisory board. for its part, the supervisory board thoroughly reviewed the separate inancial statements, the con- solidated inancial statements, the consolidated man- agement report of frosta ag and the group as well the supervisory board would like to express its thanks to the executive board and to all employees for their great commitment in the inancial year 2016. hamburg, 22 march 2017 for the supervisory board dirk ahlers
group structure and addresses frosta ag addresses group structure and addresses s sales p production frosta aktiengesellschaft am lunedeich 116 27572 bremerhaven phone: +49–471–9736–0 fax: e-mail: +49–471–75163 firstname.lastname@example.org locations in germany s frosta tiefkühlkost gmbh mendelssohnstraße 15 d 22761 hamburg phone: fax: e-mail: +49–40–854140–60 +49–40–854140–88 email@example.com s copack tiefkühlkost produktions gmbh am lunedeich 116 27572 bremerhaven phone: fax: e-mail: +49–471–9736–190 +49–471–72076 firstname.lastname@example.org s biofreeze gmbh am lunedeich 116 27572 bremerhaven phone: fax: e-mail: +49–471–9736–304 +49–471–9736–125 email@example.com s elbtal tiefkühlkost vertriebs gmbh messaer straße 3–5 01623 lommatzsch phone: fax: +49–471–9736–117 +49–471–72076 s tiko vertriebsges. mbh am lunedeich 116 27572 bremerhaven phone: fax: +49–471–9736–198 +49–471–72076 s frosta foodservice gmbh p am lunedeich 116 27572 bremerhaven phone: fax: e-mail: +49–471–9736–0 +49–471–9736–445 firstname.lastname@example.org f. schottke zweigniederlassung der frosta ag am lunedeich 116 27572 bremerhaven phone: fax: e-mail: email@example.com +49–471–9736–0 +49–471–74349
frosta ag addresses 86 87 p p elbtal tiefkühlkost zweigniederlassung der frosta ag messaer straße 3–5 01623 lommatzsch phone: fax: e-mail: firstname.lastname@example.org +49–35241–59–0 +49–35241–59–193 rheintal tiefkühlkost zweigniederlassung der frosta ag industriestraße 4 67240 bobenheim-roxheim +49–6239–807–0 phone: fax: +49–6239–807–163 e-mail: email@example.com s frosta italia s.r.l. via lazio 9 0187 rome italy phone: fax: e-mail: +39–06–687 1749 +39–06–687 3197 firstname.lastname@example.org s frosta russia tverskaya street, 16 building 1 125009 moscow russian federation phone/fax: +7495–6428596 e-mail: email@example.com locations abroad s p frosta sp. z o.o. s frosta hungary ul. witebska 63 85–778 bydgoszcz poland phone: fax: e-mail: +48–52–36 06 700 +48–52–34 34 746 firstname.lastname@example.org szent tamás u. 1 2500 esztergom hungary phone: fax: e-mail: +36–33–500 350 +36–33–500 351 email@example.com s copack france s.a.r.l. s frosta čr s.r.o. u nikolajky 833/5 158 00 praha 5 czech republic phone: fax: e-mail: +42 02 51 56 07 35 +42 02 51 56 07 39 firstname.lastname@example.org 36, rue de l’ancienne mairie 92100 boulogne-billancourt france phone: fax: e-mail: +33–1–46 948 460 +33–1–46 948 469 email@example.com s frosta romania 2 ciresilor street mogoșoaia, jud. llfov romania phone: e-mail: +40–722–366555 firstname.lastname@example.org
publishing information publishing information published by: frosta aktiengesellschaft am lunedeich 116 27572 bremerhaven germany phone: fax: e-mail: +49 471 9736–0 +49 471 75163 email@example.com www.frosta-ag.com concept, design and realisation: umpr – agentur für kommunikation www.umpr.de