SYSTEMS SUNLIGHT S.A

Transcription

1 ANNUAL REPORT FROM JANUARY 1 ST, 2017 TO DECEMBER 31 ST, 2017 ACCORDING TO L. 3556/2007, ARTICLE 4 SYSTEMS SUNLIGHT S.A Registration Number: 31055/04/B/94/157 (2006) No G.E.C.R ERMOY 2 & NIKIS, ATHENS

2 CONTENTS 1 Representations of the members of the Board of Directors Management report of the Board of Directors of the company SYSTEMS SUNLIGHT S.A on the separate and consolidated financial statements for the year Independent Auditor s Report Financial Statements Statement of Financial Position as at (Separate and Consolidated) Comprehensive Income for the year 2018 (Separate and Consolidated) Statement of Comprehensive Income for the year 2017 (Consolidated and separate) Consolidated Statement of Changes in Equity Separate Statement of Changes in Equity Cash Flow Statement (Separate and Consolidated) General information for the Group Activities Basis for the preparation of the financial statements Statement of Compliance Presentation currency Use of estimations and management judgements Basis of measurement Changes in Accounting policies Comparability Changes in Accounting policies New Standards, Interpretations, Revisions and Amendments to existing Standards that are effective and have been adopted by the European Union New Standards, Interpretations, Revisions and Amendments to existing Standards that have not been applied yet or have not been adopted by the European Union Basic Accounting policies Consolidation Foreign Currency Translation Tangible Assets Intangible Assets Impairment of value of non-financial assets Financial Instruments Inventories Trade receivables Cash & Cash equivalents Share Capital Loans and factoring settlements Current and Deferred Income Taxes Employee Benefits Grants Provisions Recognition of income and expenses Leases Functional Segments Dividend Distribution Significant accounting estimations and judgments of the Management Group Structure Consolidated companies of the Group at 31/12/ Changes in the Group s structure Changes in non-controlling interests during the year ended at 31/12/ Other changes (disposal/establishments/initial acquisitions) for the year ended at 31/12/ Subsidiaries with material non-controlling interests Tangible Assets Annual Report for the period from 1 st January to 31 st December

3 12 Intangible Assets Investments in Subsidiaries Investments in Associates Investment Portfolio Other long-term receivables Inventories Trade Receivables Other receivables Cash and cash equivalents Equity Current and Deferred tax Liabilities from employee benefits Borrowings Reconciliation of liabilities movements from financial activities Other long-term liabilities Trade Liabilities Other short-term Liabilities Provisions Sales Operating expenses per category Other operating income/expenses Financial income/expenses- other financial results Earnings per share Related parties transactions Contingent Liabilities Segment Reporting Dividends Number of Staff and employee benefits Income taxes Fair Value of Financial Instruments Risk Management and policies Post balance sheet events Approval of Financial Statements Report for the Funds Raised from the Common Bond Loan issuance with cash deposit for the period from 20/06/2017 to 31/12/ Financial Information Annual Report for the period from 1 st January to 31 st December

4 1 Representations of the members of the Board of Directors The below statements, which are based on the provisions of article 4, par.2 of the law 3556/2007, are made by the following representatives of the Company s board of Directors: 1. Vasileios Billis, Chairman of the Board of Directors and Chief Executive Officer. 2. Dimitrios Goumas, Vice Chairman. 3. Michael Mastorakis, Chief Financial Officer and member of Board of Directors. The undersigned, under the aforementioned authority, appointed for this purpose from the board of directors of the company with the name Systems Sunlight S.A declare and certify that: (a) The attached annual separate and consolidated financial statements of SYSTEMS SUNLIGHT S.A for the fiscal period 01/01/ /12/2017, prepared according to the prevailing accounting standards, present truly and fairly the assets and liabilities, the equity and the financial results of the Company as well as the companies included in the consolidation as aggregate, and (b) The attached BoD Report provides a true view of the Company s and the companies included in the consolidation as aggregate, performance and results including a description of the main risks and uncertainties to which they are exposed. Athens, 16 March 2018 The designees THE CHAIRMAN OF THE BoD & THE CHIEF EXECUTIVE OFFICER THE VICE CHAIRMAN THE CHIEF FINANCIAL OFFICER & MEMBER OF THE BoD. VASILEIOS A. BILLIS DIMITRIOS.G.GOUMAS MICHAEL Κ. MASTORAKIS I.D ΑΚ I.D ΑΚ I.D. Χ Annual Report for the period from 1 st January to 31 st December

5 2 Management report of the Board of Directors of the company SYSTEMS SUNLIGHT S.A on the separate and consolidated financial statements for the year The current report of the Board of Directors pertains the financial year of The Report has been prepared in compliance with the relevant provisions of the Law 3356/2007 as well as the published executive decisions of the Hellenic Capital Market Commission. The current report briefly describes financial and non-financial information of the Group and the Company for the year 2017, significant events that took place in the reporting period (before and after the financial statements reporting date) and the prospects of the Company and the Group. Moreover, it provides a description of the main risks and uncertainties the Group and the Company might face and it illustrates the most significant related parties transactions. 1. FINANCIAL DEVELOPMENTS AND PERFORMANCE DURING THE YEAR Performance and Financial Position of the Group In 2017, the Company succeeded on the one hand to increase its turnover, as a result of the strategy of extroversion that has been systematically followed in the last few years and, on the other hand, to further improve its operating profitability. The reporting period was characterized by intense price volatility of the basic metals, including lead, which is the main raw material of the batteries production, but also the decline of dollar, that led to an unfavorable business environment in the basic markets that the Group operates. Despite of the above, the significant geographic and product dispersion of the customer base, in combination with the significant volume sales increase and the further improvement of its cost base, contributed to the absorption of the above difficulties. It should be noted that, over 90% of the Group s Sales is from foreign markets and mainly in European Union countries. At the same time, Group continues its investment program of rationally expanding its production capacity and the production cost decrease, in order to achieve its strategic target for further penetration and improvement of its competitive position, in the large markets for motive application of Europe and America. Moreover, the after sales service, the high quality and the competitive cost are the critical success factors in the international markets that the Group operates. In addition, there was a significant contribution to the Group s operations by the subsidiary Sunlight Recycling, with headquarters in Komotini and main activity the recycling of scrap lead based batteries. By increasing its production capacity, especially during the 2 nd semester of the year, and its raw materials mix, the company has improved its production indicators and its operational profitability. It is noted, that the production unit of Komotini, provides over 50% of the lead demand of the battery production plant in Xanthi. More specifically, the Group s revenues during the year 2017 reached 194,5 mil., compared to 153,9 mil. of the corresponding period of 2016 (26% increase), whereas the Company s revenues reached 222,8 mil., versus 168,4 mil. in 2016, (32% increase). The aforementioned improvement is mainly attributed to the market share and sales volume increase of the industrial sectors, and secondarily in the lead price increase and hence the products selling price, compared to the previous period. Special reference should be given to Annual Report for the period from 1 st January to 31 st December

6 the continues sales increase of the traction batteries, especially in demanding markets of Europe, due to the growth in the electronic forklifts market and also in the significant improvement of the Company s competitive position in terms of product quality, reliability and after sales service. Gross Profit: Group s gross profit for the year 2017 reached 40,8 mil., versus 32,5 mil. in 2016 (26% increase), attributed on the one hand to the sales volume increase and the product mix improvement and on the other hand to the increased productivity in both Group s production plants. It should be noted that, the Group s subsidiary, Sunlight Recycling, in its second year of actual operation, managed to substantially improve its production figures and significantly contribute to the lead purchase portfolio of the parent Company by over 50%. Earnings (losses) before interest, taxes, depreciation and amortization. (EBITDA): At Group level, EBITDA reached 22,0 mil. (21,5 mil. for the Company) increased by 28% (25% at Company level), as a result of the aforementioned improvement in gross profit, as well as, in the proportionally low increase of distribution and administrative expenses. EBITDA margin, reached 11,3% compared to 11,2% in the previous year. Earnings (losses) before tax (ΕΒΤ): The above mentioned improvement in profitability, combined with decreased financial costs, as a result of the deleverage of the Financial Position, led to earnings before taxes amounting to 8,4 mil., versus 2,3 mil. in the previous year. Respectively, the Company s earnings before taxes amounted to 9,1 mil. versus 5,3 mil. in Group s net borrowings, amounted to 67,1 mil. versus 75 mil. at 31/12/2016. It should be noted that in June 2017, the Company issued a common bond loan, amounting 50 mil., of which 27 mil. were used for the repayment of the existing group borrowings. The Equity reached 38,1 mil., versus 31,4 mil. in Alternative performance measurement indicators The Group uses alternative performance measurement indicators for the decision making of its financial, operating and strategic design and the evaluation of its performance. These indicators improve the understandability of the Group s financial and operating results, its financial positions and liquidity. The Group considers that these figures relate to and are reliable for the assessment of the Group s financial position and performance, however they do not replace the financial figures according to IFRS and they should be read in combination with the Financial Statements prepared under IFRS. The evolution of the basic financial ratios of Group is as follows: Financial Ratios 31/12/ /12/2016 General Liquidity 125% 77% Equity / Total Liabilities 26% 24% Net Borrowings / EBITDA 3 4,4 EBITDA Margin 11,3% 11,2% Annual Report for the period from 1 st January to 31 st December

7 Explanation of the alternative performance measurement indicators use General Liquidity: Current Assets divided by short term Liabilities. The figures are coming directly from the Statement of Financial Position. Net Borrowings: The Net Borrowings is calculated as the total borrowings (included long and short-term loans as presented in the Statement of Financial Position) minus the Cash and Cash Equivalents. The relevant calculation is presented in the paragraph 4 Capital Management. EBITDA (Earnings Before Interest Taxes Depreciation & Amortization): Results before taxes, interest and investment results and depreciation & amortization. The total amount of depreciation arises after the offset of the depreciation of tangible assets, the amortization of intangible assets and the depreciation of any possible grants attributed to these assets. This indicator is used from the Management as an internal performance indicator for the Group s operating activities. Αποτελέσματα προ φόρων, χρηματοδοτικών, επενδυτικών αποτελεσμάτων και συνολικών αποσβέσεων. The higher the indicator, the more effective the business operation is. The calculation of the indicator for the Group and the Company is as follows: Amount THE GROUP THE COMPANY EBITDA Calculation 31/12/ /12/ /12/ /12/2016 Earnings before taxes Earnings/ (losses) from companies consolidated by the equity method Financial result Depreciation & Amortization Grants Depreciation EBITDA EBITDA Margin (%): The EBITDA (%) margin is calculated as the EBITDA divided by the total amount of the turnover. 2. SIGNIFICANT EVENTS DURING 2017 Corporate common Bond loan issuance of 50 mil. and admission of the bonds for trading in the Athens Stock Exchange Market: Regarding the Common Bond Loan issuance and the admission of the Company s bonds for trading in the category of the Fixed Income Securities in the Athens Stock Exchange Market, the Company announced at 20/06/2017 that after the completion of the public offer of the 16th June 2017, and according to allocation data generated by the use of the Electronic Book of Bids of the Athens Stock Exchange, common bond shares were issued with nominal value of each which raised funds amounted to The total demand from the investors, participated in the Public Offer, reached the amount of 124,416 mil. The final yield of the bonds was set at 4,25%. The purpose of the loan is the restructuring of the existing borrowing with terms that coincides with the Company s current financial status and perspectives, as well as the funding of its investment plans, such Annual Report for the period from 1 st January to 31 st December

8 as purchase of machinery and further enhancement of the Group international presence. More specifically, the raised funds of 50mil., will be used according to the purposes of the Company s prospectus, and especially 27 mil. will be used for the repayment part of the existing short term and long-term borrowing, 3 mil. for the establishment of two subsidiaries abroad, 7 mil. for the purchase of new machinery, 8 mil. for working capital needs and 5 mil. for share capital increase of the subsidiary Sunlight Recycling. The use of funds raised for working capital funding needs commenced during the current financial year and in case of any remaining amount, this will be used during the 5 year period of the Common Bond Loan. The amount raised from the bond issuance, until it is fully used, will be invested in short term, low risk investments, such as short term time deposits and repurchase agreements. At 21/06/2017, the trading of the Company s bond ( bonds) begun in the category of the fixed income securities of the Athens Stock Exchange Market. The bond trading code is «SUNLB1». In January 2017, the Company bought the remaining minority of 10,48% of SUNLIGHT RECYCLING which resulted in obtaining the 100% of the company s share capital. The cost of acquisition amounted to 556 thous., while the value of non-controlling interest at the acquisition date amounted to 346 thous. The difference was recognized directly to the Group s Equity as a result from increase in the participation of existing subsidiary. In November 2017, SYSTEMS SUNLIGHT established a new subsidiary under the title RELIABLE BATTERY SOLUTIONS SRL in North Italy, with main activity the assembly and trade of industrial batteries. This business decision is part of the broader strategy of the Company, for penetration in new segments of the European forklift market and further enhancement of its presence in new existing markets. Within 2017, OLYMPIA GROUP HOLDINGS acquired 100% of the share capital of SYSTEMS SUNLIGHT. 3. PROSPECTS The Group s management believes that there are opportunities for further sales increase and market share improvement in the main markets that the Group operates, the motive and reserve power markets, mainly in Europe. The last 18 months, the lead price volatility, has created temporary but controllable supply and demand imbalances which is expected to continue in the near future. However, the fundamentals of the motive and reserve power markets are positive, as on the one hand the global economic growth has led to increased need in transportation and storage of goods, and on the other hand the trend in many developed regions of the world (EU, North America and East Asia) is to promote clean energy sources and the best possible efficient use of them. Furthermore, the Group, after the recent bond loan issuance of the 50 mil. has the available resources for its expansion plan, not only in the production sector by continuing the capacity increase and cost reduction program, but also commercially, by enhancing its presence in significant foreign markets and penetrating in new ones. Finally, it will continue allocate resources and have as priority the development of technologically advanced products and solutions for energy storage, with a goal to further Annual Report for the period from 1 st January to 31 st December

9 improve its competitive position and make Sunlight one of the most innovative and reliable batteries suppliers in the world. 4. RISKS AND UNCERTAINTIES Risk Management and policies Sources of Risk The Group s activities create several financial risks, including foreign exchange risk and interest rate risk, metal price risk, credit risk and liquidity risk. The Group s overall risk management program focuses on the volatility of financial markets and aims at minimizing the possible adverse effects of such volatility on the Group s financial performance. Risk management is applied by the Company s financial management division based on approved policies. The procedure is as follows: Evaluation of the risks associated with the Group s activities and operations. Appropriate Methodology planning and selection of appropriate financial products to reduce risks and Execution / implementation of the risk management process, in accordance with the procedure approved by management. The Company s Financial Management Division does not perform speculative transactions or transactions not related to the commercial, investment or financing activities of the Group. The financial products used by the Group mainly consist of bank deposits, transactions in foreign currency, FX and Lead purchases forward agreements, bank overdrafts, receivables and payable accounts, loans, investments in securities and liabilities that arise from financial leasing contracts. Foreign Exchange Risk The Group operates globally and therefore is exposed to currency risk, that arises mainly from fluctuations of the USD ($) against the EUR ( ) and, in a significantly lower degree, from fluctuations of the Romanian Lei, while the bulk of transactions are made in the Group's functional currency, Euro ( ). The risk arises from future trade transactions, receivables and liabilities in foreign currency and net investments in foreign operations. In order to minimize the foreign exchange risk, the Company attempts to offset the future outflows in foreign currency with respective inflows and where this is not possible, FX forward contracts are used. If foreign currencies fluctuated by 5% against the Euro with all other variables remain constant and the Group had not made currency hedging effects, the impact in operating results, in equity and the net profit of the Group, for the current and prior year would result as follows: Exchange rate /$ (amounts in 000) -5,00% 5,00% -5,00% 5,00% Results before Tax Annual Report for the period from 1 st January to 31 st December

10 Results after Tax Equity Price Risk Main products prices (commodities) that the Group purchases, are mainly quoted in international markets and determined by global demand and supply and as a result the Group is exposed to such fluctuations. More specifically the Group is exposed to price fluctuations of lead and lead alloys, which is the key raw material for lead acid batteries production (up to 50%) and as a consequence significantly influence their cost and selling price. Lead is considered one of the major metals (base metals) whose price is traded in the international commodity markets with the most significant being the London Metal Exchange. The Group mainly adopts the natural hedging strategy, by matching the lead base price in the selling price list to the purchase price. In cases where natural hedging strategies cannot operate, the Group has started using hedging instruments (OTC contracts), which up to now appears to satisfy in significant degree its needs and are compatible to its operations. Interest Rate Risk The Group's assets which are exposed to interest rate fluctuations relate mainly to cash and cash equivalents. Nevertheless, under the current economic situation with low interest rates and low need to retain cash, the respective risk is consider to be low. In addition, the Group, after the recent 5-years bond loan issue, with fixed rate (4,25%), has a balanced loan portfolio by using fixed and floating interest rate. In any case, the Group s policy is to minimize exposure to cash flow interest rate risk. At 31/12/2017, the Group is exposed to interest rate market changes with regard to bank borrowing and its cash and cash equivalents, which is subject to a floating interest rate. The following table illustrates the sensitivity of the period s results as well as of the equity in a reasonable change of the interest rate of + 1% or -1%: THE GROUP 01/01/ /12/ /01/ /12/2016 Amounts in 1% -1% 1% -1% Impacts in year s results Impact in Equity Annual Report for the period from 1 st January to 31 st December

11 THE COMPANY 01/01/ /12/ /01/ /12/2016 Amounts in 1% -1% 1% -1% Impacts in year s results Impact in Equity Credit Risk The Group's exposure to credit risk is limited to financial assets which is analyzed in the items of the Statement of Financial Position, "Other Long Term receivables", "Trade receivables", "Other receivables" and "Cash and cash equivalents. The Group s Credit control department constantly monitors its customers credit rating characteristics and develops accordingly its credit policy. As a result of its large and diverse customer base, the Group does not face significant credit risks, while, at the same time, makes use of the available credit insurance facilities, factoring and, when necessary, prepayments, bank guarantees and letter of credits (LCs). Moreover, the Group applies approved credit control procedures relating to the provision of credit, the credit limits and the management of its receivables. The amounts due are constantly evaluated and a provision for a doubtful debt is recognized when necessary. Liquidity Risk Efficient liquidity risk management requires sufficient cash availability and availability of necessary funding sources. The Group s Treasury department manages its cash flow needs based on systematic cash flow monitoring of the expected cash inflows and outflows, which is performed on daily basis, within the terms of continuing operations and uninterrupted funding of its business activities. Liquidity management is succeeded through maximization of working capital management, as well as the appropriate mixture of own cash and approved borrowing facilities. The Group and the Company, at the reporting date present positive working capital, amounting at 18,1 mil. and 24,4 mil. respectively. At the same time, the Group and the company have positive cash flows from operating activities as well as strong capital adequacy. The cash of the Group at the balance sheet date was 19 mil.. Furthermore, unused borrowing facilities are available for the Company, which can be used if deemed necessary. Capital Management The primary objective of capital management of the Group and the Company is to ensure high credit rating, uninterrupted business operation and achievement of their development plans in order to support and expand the activities of the Group and of the Company and to maximize shareholder value. For capital management, the Group monitors the ratio "Net Debt to Total Equity". As net debt, the Group defines interest bearing bank debt less cash and cash equivalents. Annual Report for the period from 1 st January to 31 st December

12 Amount in GROUP COMPANY Financial Indicators 31/12/ /12/ /12/ /12/2016 Long-term Borrowings Short-term Borrowings Long-term loans payables in the next 12 months Cash and Cash equivalents Net Bank Debt Total Equity Net Bank Debt / Total Equity 1,76 2,39 1,25 1,41 Environmental Risk The environmental protection and care are totally compatible goals with the Groups financial and business development. As a result, the Group closely monitors all the changes in the relevant laws for the protection of the environment and ensures that it takes in advance all necessary measures to avoid the risk of failure to comply with the environmental legislation and minimize its environmental impact. Suppliers Risk The two productive plants of the Group have a significant number of suppliers for raw materials, both in Greece and abroad. Group s goal is to maintain close and long standing relationship with the suppliers, which will be based on high quality standards, credibility, high competitive cost, transparency and ethical trading behavior. The Group applies policies for monitoring alternative sources of supply in order to secure the normal course of its activities. However, given that significant part of its supplies is coming from abroad, this may create difficulties in the whole supply chain. As such, the Group annually evaluates the performance of its suppliers and take corrective actions, while within this frame of securing its supply chain (besides the reduction of its environmental impact), it proceeded in investing to the recycling plant in Komotini. Risk for information and personal data protection In the current era of the new industrial revolution and the IoT, companies face risks relating to the safety of its information systems and infrastructure, which may influence the integrity and safety of the information they handle, such as confidential corporate and personal data. Data protection is one of the top priorities of Sunlight. Furthermore, the Company collects, stores and uses data within the ordinary course of business and protects them according to the relevant laws of data protection. Despite the fact that relevant precautions for data protection are taken, according to the provisions of the relevant laws, these actions may fail due to human or technological error. The rules for data protection includes extensive obligations for the entities with regards to procedures and mechanisms for personal data processing and the rights of the owners of those data and in case of breach, entitles the regulation authorities to impose significant fines. Data protection regulation will come into force at 25 May 2018, after a transitional period of two years. Annual Report for the period from 1 st January to 31 st December

13 In order to mitigate the respective risks, the Group in cooperation with external consultants, develops all necessary policies and procedures, monitors their application, designs new safety systems and infrastructure and evaluates their effectiveness through regular penetration tests in different systems. 5. RELATED PARTIES TRANSACTIONS The related parties transactions are analyzed in the note 35 of the attached financial statements. 6. POST BALANCE SHEET EVENTS At 16/02/2018, the Board of Directors of the companies Systems Sunlight and Sunlight Recycling decided to commence the preparatory activities for the merger by absorption of the latter. The purpose of the merge is the accomplishment of synergies and the optimization of the productive and administrative operations of the Group. The merger will be based on the provisions of the articles and 78 of the codified Law 2190/1920, and the pre-merger balance sheet was defined that of 31/12/2017. The completion of the merger is subject to the relevant decisions of the Board of Directors and General Shareholders Meeting of the two companies, as well as the approvals from the local authorities according to the applicable legislation. 7. NON FINANCIAL INFORMATION Business Model The business model constitutes the basis of the business strategy and operation of the Group, or in other words the way the Group consumes its sources, creates and adds value. SUNLIGHT s activities for the production and distribution of lead batteries for several applications, includes all necessary actions which are required for value creation, market satisfaction, the creation and preservation of customer relations and the satisfaction of the remaining stakeholders. For the accomplishment of the above, several different sources are needed such as monetary, natural, industrial and human resources. A set of rules should be established for the smooth operation of the Group, which will determine the frameworks within which goals satisfaction will be sought. With Corporate Governance, Corporate Social Responsibility, risk management systems and performance evaluation and analysis, the management and organization of the Group is accomplished with the aim to increase the value, to produce competitive products and services, to develop the human power, to protect the environment and to contribute to society. In the following chart, the Groups business model is being presented: Annual Report for the period from 1 st January to 31 st December

14 Human Resources employees - Management and employees skills Value Creation Monetary Resources - Equity - Borowings Lead Battery Production Human Resources Development Industrial Resources - Battery Production Plant - Recycling Plant Environmental Protection Natural Resources - Lead - Other Raw Materials Contribution to society and country Research and Development Innovation is one of the key points in Company s strategy. The group operates in several foreign markets, has developed and continues to develop products which aims to improve quality and other technical features of the provided solutions, in a way to minimize the cost of ownership of the final customer. The R&D sources are attributed on the one hand to the development of batteries with alternative technologies and on the other to design and production of batteries for different application or for penetration to different geoprapghical markets with specific technical and quality features. Furthermore, the Group cooperates with institutes for energy issues and training institutions and participates in European research programs, thus increasing the effectiveness and efficiency of financial and human resources used for research and development. Finally, part of the Group s R&D activities, focuses on the improvement of the production process and raw materials consumption aiming at cost leadership. Environmental Issues The responsibility towards the environment is very high in the value chain of SUNLIGHT group, since this is an integral part of its activities. Our goal is to achieve growth, which will satisfy the current needs, without jeopardizing the needs of future generations. Within this framework, a System for Environmental Management is being applied according to the requirements of ISO 14001:2004 for SUNLIGHT and SUNLIGHT RECYCLING and the Regulation 1221/2009 for the participation of entities in the EMAS, with the aim of the environmental protection within the frameworks of our activities. For the design and implementation of the Environmental Management System, the beginning is the detection of all environmental aspects derived from the Group s activities. For every environmental aspect identified in each activity, the impact that this may have on the environment is being determined. The identification and examination of the environmental aspects was accomplished taking into consideration all operational conditions, normal and abnormal, abnormal incidents and impact from other operations. In addition, the indirect environmental risks were identified and determined, through which the company s operation may affect the environment. The following risks were determined: Air pollution. Annual Report for the period from 1 st January to 31 st December

15 Uncontrollable supply and possibility of dangerous materials leakage in the environment and waste of raw or finished goods in liquid state during the storage of raw and finished goods. Ground and underground contamination, which can be caused from dangerous waste destruction or in an emergency situation. For all the above risks, suitable measures have been applied and continue to apply. Energy and Recycling ratios Presented below are ratios which the Company and the Group monitors for the determination of the environmental impact, applying in the best possible way the best practices. Indicative of the above is the fact that the logistics center located in Xanthi is powered by photovoltaic systems in a significant scale. Furthermore, SUNLIGHT RECYCLING besides the power energy that is being supplied, uses natural gas for its production process. The unit, has been designed taking into consideration several issues such as energy savings mainly from the reduction of the energy loss from ancillary activities (exploiting the thermal gasses etc.). The table below presents, based on 2015 (index 100), the use of several energy sources (electrical power, propane, natural gas) in relation to the produced quantity, in the 2 production plants, in the last 3 years: Production Unit Electrical power consumption GWh/cell 100,0 99,7 92,2 Systems Sunlight Electrical power consumption GWh/tone of lead 100,0 45,6 40,9 Sunlight Recycling Propane consumption (tones / cell) 100,0 84,1 67,1 Systems Sunlight Natural Gas Consumption (Nm3 / tone of lead) 100,0 52,7 50,2 Sunlight Recycling The Group manages responsibly the final quantity of waste resulting from the production process. Within this framework, it annually increases the percentage of the waste it recycles, as illustrated in the table below, justifying in practice its interest for sustainable development. In addition, the Group operates only with authorized entities for the transportation, processing and destruction of its waste, which constantly evaluates for their legality and the validity of the necessary licenses according to the applicable laws. Percentage of recycled and non recycled waste per year (tns) Recycled / Total % 82,3 84,2 89,8 Non Recycled /Total % 17,7 15,8 10,2 Quantites of solid recycled waste per year (tns) Plastic 27,1 9,9 37,2 Wood 136,9 128,1 489 Paper 68,9 101,9 152,3 Annual Report for the period from 1 st January to 31 st December

16 Plaster , Copper 15,1 0,5 9,5 Iron 32,3 89,2 301,4 Water Consumption Water Consumption (m 3 ) Envirnmental Initiative GREEN MISSION SUNLIGHT RECYCLING management, presented in 2016 the environmental initiative Green Mission, which aims to make the public and business world sensitive towards the correct recycling of lead acid batteries. The program actions have already commenced and aim at increasing the sensitivity and information of Greek companies which produce or/ and manage significant quantities of industrial waste. There are already more than 50 large companies for different sectors which participate in Green Mission. Labor Issues Α. Discrimination and equal opportunities policy Code of Business Conduct sets the integrity as core value for the daily behavior for all employees, highlighting at the same time the management s commitment towards this direction. The Group adopts and applies the necessary procedures, in order to spot the training needs, to motive the employees, in order to accomplish their maximum efficiency, within a business environment without eliminations. Each individual is expected to act honestly in his interaction with other colleagues and external sources, to report concerns regarding equal opportunities and not to tolerate discrimination in any form. If a matter of subjective treatment comes in the attention of an employee or he feels that he or someone else is a victim of racial, religious, sexual or other harassment, he is encourage to report it to the Human Resources Department or to the Compliance Officer through electronic communication (compliance@sunlight.gr). Company s human resources per sex and age % of governance members % other employees Sex Men 67* 88* Women 33* 12* Age <30 -* 11* * 75* >50 27* 14* Other Ratios of diversification Non orthodox - 16,3 Evolution of women participation in SYSTEMS SUNLIGHT s management Year Men Women % of women in management % % % * 4* 33%* Annual Report for the period from 1 st January to 31 st December

17 *For 2017 remain the same as of 2016 Β. Health and Safety, training systems SUNLIGHT Group is one of the pioneers in Greece which applied in 2004 a complete Health & Safety Management Systems based on OHSAS standard. This System aims at supporting, organizing, applying and constantly improving the models and practices, so that the Company s operation to comply with the Greek and European legislation and at the same time with highest quality standards, minimizing the risk for accidents or other hazardous incidents. At the same time, SUNLIGHT as a member of Eurobat has active participation in relevant forums and constantly monitors the global development. More specifically: Every accidents or close accidents in the working area are constantly documented. The levels of employees exposure to lead is monitored and the relevant authorities are regulartly notified The condifition in the wort place are daily examined. Furthermore, in order to achieve the best possible working environment, the fair treatment of the personell is being secured by the Internal labor Regulation which emphasizes on training and personal development, descripes the rules of communication among the emloyees and describes the policies for remuneration and benefits. Training Development in health and safety issues SYSTEMS SUNLIGHT SUNLIGHT RECYCLING 40, Medical Examination Results for SYSTEMS SUNLIGHT employees Total Employees who were examined Total employees who exceed the permitted limits Dealing with Corruption SUNLIGHT Group vision is to constitute the most reliable partnet and the first choice of its customers, while operating with integrity. For this, specific attention is given to the monitor of transaction with external parties as well as to the integridy of the Groups employees, building on a daily basis an environment of transparency free from corruption. A series of significant initiatives have been taken to this direction: - Policy against corruption, which rules influence every commercial and operational procedure of the Company. Annual Report for the period from 1 st January to 31 st December

18 - Questionnaires to all suppliers, based on which they commit to comply with the rules of eliminating corruption. - Policy that explicitly forbids bribery, which is supported by tight internal and accounting audits. - Training at different layers of the organization on a regular basis. Moreover, the Group is committed in regards to its compliance with the provision of the Greek and European competition regulations, as well as the national competition regulations in the Countries that it operates. Within the frames of the new ISO for the elimination of corruption, for which SUNLIGHT was the first entity in Greece to be certified, procedures for the assessment and management of possible risks for corruption areas are put in place. Care for a working environment free from corruption The Group supports the total compliance of the Greek and European anticorruption regulations as well as the national legislation against corruption in the Countries in which it operates. The final target of the anti- Corruption Group policy is the notification in regards to possible breach of the rules against corruption and the avoidance of such breach from the employees. The commitment to fight corruption is communicated in the Group s employees on a regular basis while at the same time organizes training for all employees in relation to fighting corruption. Prior to any contract finalization with customers, representatives, partners to any consortium, contractors, distributors, resalers or other intermediate and third parties or other who acts or will act on behalf of the Group, due diligence procedures are performed and the Group obtains from the third party its fully awareness and agreement in regards to the compliance of the policy against corruption. CORPORATE GOVERNANCE STATEMENT Ι. General Corporate Governance refers to a set of principles with the aim to establish adequate organization, operation, management and control for a business in order to maximize its value in a long-term basis and safeguard the legal interests of all those associated with it. The current Corporate Governance statement is a special section of the Annual Report of the Board of Directors, according to the provision of the article 43b of the Law 2190/1920 as applied until today. II. Corporate Governance code Annual Report for the period from 1 st January to 31 st December

19 The company has decided to adopt the Greek Corporate Governance code for listed companies (referred from now on as Code ). The code is presented in the website of Athens Stock Exchange, in the following link: +Internet.pdf/a1b406ab-52e4-4d76-a915-9abefd0a9d09 The Company deviates from the Code and the Corporate Governance Policies, as it has the right, in the points which analyzed in the following section. ΙΙΙ. Deviations from the Corporate Governance Code and their justifications. The Company, in some cases, deviate from or does not apply in total all the provisions of the code, in relation to the following: The role and the responsibilities of the Board of Directors The Board of Directors has not set up separate committees to proceed in the procedure of the nomination of candidates for election in the Board of Directors and to prepare proposals to the Board of Directors for the executive members and basic senior executives fees, given that the Company policies in relation to these fees are determined and fixed. Size and composition of Board of Directors Based on the articles of association, the number of members of Board of Directors is not between 7-15 members, but between 3-7 members, the majority of which are non-executive members. Today, the Board of Directors consists of 2 executive members, 1 non-executive member and 3 independent non-executive members. This composition has ensured the effective and productive operation of the BoD. The Board of Directors also appoints an independent Vice president, from its independent members. Duties and Behavior of the Board of Directors members There is no obligation to disclose any professional commitments of the members of the Board of Directors (including significant non-executive commitments to companies and non-profit institutions) prior to their election to the Board of Directors, nor to a restriction on the number of Board of Directors of listed companies in which they may participate, as long as all the members of the Board of Directors are able to fulfill their duties, devote sufficient time and are informed about the developments in matters pertaining to their tasks. Approval from the Board of Directors for the election of an executive member in a company that is not subsidiary or a related party is not required. Appointment of candidates for the Board of Directors There is no committee for the appointment of candidates for the Board of Directors, because due to the structure and operation of the company, this committee is not considered as necessary at the current time. Annual Report for the period from 1 st January to 31 st December

20 The duration of service of the BoD member according to the Articles of Association is set at 5 years (and not 4 years), because this provision ensures over the last years a more stable performance and effectiveness of the BoD. BoD Function The Board of Directors at the beginning of each year does not adopt a calendar of meeting and a 12 months action plan as it is easy to conduct a Board of Directors meeting, when the Company s needs or the Law impose without the existence of a defined action plan. The Chairman has no regular meetings with non-executive members, without the presence of executive members, in order to discuss the performance and fees of the latter and other relevant issues as each issue is discussed in the presence of all the members. There are no introductory information programs that are guaranteed by the Board of Directors for the new members of the Board of Directors nor continuous professional training for the other members, as the member that are proposed for election as members of the BoD, are individulas with good and proven experience and organizational-management skills. There is no specific estimation for the provision of adequate resources to the BoD committees for the performance of their duties and for the recruitment of external consultants as the relevant resources are approved by the company's management on a case-by-case basis, based on the company's needs. Evaluation of Board of Directors There is not any established procedure with the aim to evaluate the effectiveness of the Board of Directors and its committees nor to evaluate the performance of the Chairman during a process which the independent Vice-Chairman or other non-executive member of the Board of Directors in the absence of an independent Vice-President leads the meeting. This process is not considered as necessary according to the organizational structure of the company. The Board of Directors does not describe in the annual corporate governance statement the evaluation of its performance and its committees. Internal Control System In the first year of the Audit Committee operation, the Board of Directors did not proceed to an annual evaluation of the internal control system. The Audit Committee examines and expresses its opinion to the Board of Directors on the periodic reports of the internal audit department. Audit Committee There is a specific regulation for the operation of the Audit Committee, as the basic duties and responsibilities of the Committee are adequately specified by the applicable regulations. However, no significant budget is Annual Report for the period from 1 st January to 31 st December

21 available to the Commission for the use of external consultancy services, as the composition of the Commission and the expertise knowledge and experience of its members ensure its effective operation. Fees The contracts of the executive member of Board of Directors do not include any clause so that the Board of Directors may require the reimbursement of all or part of the bonus received due to revised financial statements of previous years or generally based on incorrect financial data used to calculate the bonus. There is no remuneration committee, consisting exclusively of non-executive members, most of them independent, which purpose is to determine the remuneration of executive and non-executive members of the Board of Directors, and consequently there are no arrangements for the duties of that committee, its frequency of meetings and other matters relating to its operation. The establishment of this committee, in accordance with the structure and operation of the Company, has not been determined as necessary until today. The fee of each executive member of the Board of Directors is not approved by the Board of Directors after the proposal from the Remuneration Committee without the presence of its executive members, as there is no remuneration committee. Any fees and benefits to the executive members of the Board of Directors are determined by decision of the Board of Directors and according to the provisions of the Codified Law 2190/1920. Members of the Board of Directors may receive compensation, the amount of which is determined by a special decision of the ordinary General Shareholders Meeting. Any other fee or compensation to the members of the Board of Directors is charged to the Company if it is approved by a special decision of the Regular General Meeting. General Meeting No method of electronic voting or voting by mail exists until now. IV. Corporate Governance Practices additional to the provision of the Law The Company, within the framework of a structured and adequate corporate governance system, has implemented specific practices of good corporate governance, some of which are in addition to those provided for by the relevant laws (C.L. 2190/1920 as in force, 3016/2002 and 3693/2008 ). In particular, the Company applies the following additional corporate governance practices, which are all related to the size, composition, duties and overall operation of the Board : Due to the nature and the scope of the Company as well as the issues complexity, the BoD which consist of six members, three more than the minimum required by the law - has set up committees so as to assist its work which comprises members with advisory, supervisory and / or approval duties. These committees are listed below: o Audit Committee. o Compliance Committee. From 2015, the Company has adopted a Code of Professional Conduct and has established a Compliance Committee, which is responsible for monitoring the application of this Code. Annual Report for the period from 1 st January to 31 st December

22 V. Main characteristics of the Internal Control Systems in relation with the Preparation of the Financial Statements and Financial Reports The Internal Control System in relation with the preparation of the Financial Statements and the Financial Reports includes safety nets and control mechanisms at several levels of the organization as described below: Α) Safety Nets in Company Level Risk identification, evaluation, measurement and management : The size, scale and complexity of the Group's operations require a complex system of systematic risk approach and mitigation that is applied by all Group companies. Risk prevention and management is the core of the Company's strategy. Adequacy of the Internal Control System The Internal Control System consists of the policies, procedures and duties that the Company's Management and its human resources have designed and implemented for the effective risk management, business objectives achievement, the reliability of financial and administrative information assurance and the compliance with laws and regulations. The Internal Control Department of the Company prepares an Annual Audit Plan based on the risk evaluation that has been carried out for this purpose as well as on issues identified by the Audit Committee and the Management. The Audit Committee is the supervisory body of the Company's Internal Control Department. The Internal Control Department of the Company submits every quarter reports to the Audit Committee, so as to be able to monitor systematically the adequacy of the Internal Control System. The Management and the Internal Control Department reports provide an evaluation of the significant risks and the effectiveness of the Internal Control System towards their mitigation. Through the reports the weaknesses that may be identified are communicated, as well as the impact they have or may have, and the actions of the Management to correct them. The results of the audits and the monitoring of the implementation of the improvement actions are taken into account in the Risk Evaluation System Of the Company. In order to ensure the independence of the Regular Audit of the Company's financial statements, the BoD follows a specific policy for making a recommendation to the General Meeting regarding the election of a Regular Auditor. Prevention and suppression of financial fraud In the framework of the risk management, areas that are considered to be at high risk for financial fraud are monitored by appropriate Control Systems and are accordingly subject to increased safety nets. Indicatively, there are detailed organizational charts, operating regulations and detailed procedures and approval limits. In addition to the control mechanisms applied by each Department, all activities of the company are subject to audits by the Internal Control Department, the results of which are presented to the BoD of the Company. Annual Report for the period from 1 st January to 31 st December

23 Internal Operations Regulation: The company has conduct a relevant internal operations regulation, approved by the BoD. Within the framework of Regulation, the responsibilities and the duties of the key positions are determined, promoting in this way the adequate segregation of duties within the Company. Β) Safety nets for information systems Company s IT Division is responsible for the determination of the strategy concerning the technology and IT as well as the staff training to meet any needs that may arise. In addition, it is responsible for the applications support by maintaining and updating users manuals, in cooperation, with external partners where needed. The Company has developed an adequate framework for monitoring and controlling its IT systems, which is defined by individual control mechanisms, policies and procedures. Also, specified Access Rights have been determined in the various IT systems for all employees depending on their position and role, and a relevant entry log is maintained in the Company's systems C ) Financial statements and financial reports preparation safety nets As part of the Company's financial reporting procedures, specific safety nets exist and operate, which relate to the use of tools and methodologies commonly accepted by international practices. The most important areas in which security safety nets operate, for the preparation of financial statements and financial reports of the Company are as follows: Procedures for accounting monitoring and financial statements preparation Existence of uniform policies and ways of monitoring the Company and its subsidiaries Performing verifications between different information systems, with the requirement of special approval for non-recurring accounting treatment. Assets safeguarding procedures Existence of safety nets for the fixed assets, stocks, cash - checks and other assets of the company, such as the physical security of cash or warehouses and the inventory count and comparison of the quantities counted with those of the accounting books. Periodic physical inventory counts program so as to confirm the balances of physical and accounting warehouses and the existence of a detailed manual for the inventory count. Transaction approval limits Annual Report for the period from 1 st January to 31 st December

24 The existence of a Chart of Authorities, which describes the power delegated to the various executives of the Company to carry out specific transactions or actions (eg payments, receipts, legal transactions, etc.). VI. General Meeting and Shareholders rights The role, responsibilities, convocation, participation, the ordinary and extraordinary quorum and the majority of the participants, the Bureau, the Agenda and the general operation of the General Meeting of the Company's shareholders are described in the Company's Articles of Association as it has been updated according to the provisions of CL. 1920, as amended and in force with the incorporation of Law 3884/2010 VII. Composition and Function of the Board of Directors, Supervisory Board and Company s Committees Board of Directors (BoD) General The Company s Board of Directors is consisted by six members, with a duration of 5 years, beginning from their election at 15/03/2017, which can be automatically extended until the first Ordinary General Meeting of Shareholders, without exceeding the duration of six years (until 10/09/2022). The members of the BoD are: 1. Vasileios Billis, Chairman of the BoD and Chief Executive Officer, Executive member of BoD. 2. Dimitrios Goumas, Vice president and Non-executive member of BoD. 3. Alexandros Manos, Non-executive member of BoD. 4. Michael Mastorakis, Executive member of BoD. 5. Stergios Nezis, Non-executive member of BoD. 6. Ioannis Pantoleon, Non-executive member of BoD. Provided below are information for each BoD member: 1. Vasileios Billis, Chairman of the BoD and Chief Executive Officer Vasileios Billis is the Chairman and Chief Executive Officer of Systems Sunlight SA, member of the Olympia Group. Before taking over the position of the CEO, he was responsible for the development of Olympia Group foreign subsidiaries in the mobile sector, PLAY in Poland and MTN in Cyprus. He possesses a Master degree in Electrical Engineer from the University of Southampton and possesses an MBA from INSEAD Business University. 2. Dimitrios Goumas, Vice president and Non-executive member of BoD Dimitrios Goumas holds a diploma from the Athens University of Economics and Bussiness (AUEB) in the field of Economic Science. He has started his career in 1963 in the National Bank of Greece where he worked for 41 year in difference departments and key managerial positions. From 1987 to 1996, he was appointed vice director in the Capital & Investment department of National Bank of Greece, while in 1997 took the position of director in the same department, up to January 2001 when we has appointed CEO at E.T.E.B.A. After the merger of E.T.E.B.A with the National Bank of Greece in December 2002, he become General Director at Annual Report for the period from 1 st January to 31 st December

25 National Bank having the responsibility of the Investment Banking sector, up to 2004, when he retired from the service. He has been a member of several BoDs in the past, for Companies for which National bank had a share interest. Today he is Vice- President and non executive member of Systems Sunlight S.A. BoD, Chairman of the Compliance committee and chairman of the Audit committee of the same company. In addition he is vice chairman and non-executive member of the subsidiary company SUNLIGHT RECYCLING SA. Moreover, he is a member of the audit committee of the company Trastor SA. 3. Alexandros Manos, Non-executive member of BoD Alexandros Manos commenced his professional career in 1989 in the Company British Gas-Midlands Research Centre. In 1992 he started working in Salomon Brothers as analyst in the department of Transportation & Infrastructure of the Investment Bank. After working for a short period in the respective department of Societe Generale, in 1998 reentered Citigroup being responsible for Investment Bank initially in Greece and then for Greece, Central and Eastern Europe and North Africa. In May 2007 he took over the position of non executive member of Piraeus Bank BoD and Vice CEO. From June 2008 to December 2012, he was appointed CEO of Piraeus bank, Chairman of Piraeus Securities SA and he participated in the BODs of several foreign subsidiaries of the Group. From December 2012 to December 2013 he was CEO in Geniki Bank, subsidiary of the Piraeus Group. From December 2013 untill today he acts as a consultant to the management. Mr Manos possesses MSc in Mechanical Engineer from Imperial College of Science, Technology & Medicine and M.B.A from Insead. 4. Michael Mastorakis, Executive member of BoD Michael Mastorakis is an economist, holds an ΜΒΑ diploma from the Athens University of Economic and Business, while he had post graduate studies in Wharton School of Pensylvania University. He has worked for a long period in the Companis of Viochalco Group (Corinth PipeWorks SA, Hellenic Cables SA, ICME ECAB Romania), as CFO and Deputy General Manager, while form 2012 to 2016 as CFO in the listed companies CRETA FARMS and Karamolegkos. 5. Stergios Nezis, Non-executive member of BoD Stergios Nezis is the Deputy CEO and executive member of the BOD of Chipita Group since early 2011, responsible for manufacturing, purchasing, HR and New Business Development. He served as COO of Lambrakis Press Group ( ) and CEO in 6 subsidiaries of the Group. Mr. Nezis also held the position of CEO in Delta Ice Cream Group and Deputy CEO and COO of Delta Holdings S.A (today Vivartia) ( ). He was CEO of the Public Power Corporation S.A ( ), leading the successful IPO in 2001, followed by 2 additional placements in 2002 and He has served as the CEO of SCA Hygiene Products S.A subsidiary of the Swedish multinational SCA Group ( ) and Phosphoric Fertilizers Industry S.A ( ). Mr. Nezis was BOD member and Executive Director responsible for the Industrial activities of Annual Report for the period from 1 st January to 31 st December

26 the Commercial Bank of Greece ( ). He graduated as a Chemical Engineer from the National Technical University of Athens and holds a post graduated diploma in Business Administration from the Athens University of Economics and Business. 6. Ioannis Pantoleon, Non-executive member of BoD Ioannis Pantoleon holds a Bachelor s Degree in Economics from the Athens University of Economics and Business and a postgraduate degree with an emphasis on Financial Management and Accounting from the University of Manchester. He possesses extensive and long-term experience in the fields of Economics, international business and investments. From 1999 to 2013 he held the position of Group Chief Financial Officer in Intralot, whereas from 2014 to 2015 he worked as Group Chief Operations Officer in the same company. In 2015, he assumed the duties of Group Chief Financial Officer in Marinopoulos Group of Companies. Since February 2017 he is the Group Chief Financial Officer of Olympia Group of Companies. Roles and Responsibilities of the BoD The BoD is the ultimate managerial body of the Company and it forms the strategy and development policy, monitors and controls the management of the Company s property. The composition and the responsibilities of the member of the BoD are defined by the lae and the Company s article of association. Main responsibility and duty of the BoD members is to constantly pursue the reinforcement of the long term economic value of the Company and to secure the general company interest. For the accomplishment of the company s goals and the uninterrupted operation of the Company, the BoD can pass on a part of its responsibility, with the exception of those which require common action, as well as the management or handling of its cases or the representation of the Company to the Operations Committee, the Chairman of the BoD and the CEO, to one or more members, to directors or employees of the Company. BoD member and any other third party to whom the responsibility of the BoD has been assigned, are forbidden to pursuit own interest that conflict those of the Company. BoD member and any other third party to whom the responsibility of the BoD has been assigned, are obliged to disclose to the other BoD members own interests, which may occur from Company s activities that fall into their duties, as well as any other conflict of interest with those of the Company or related companies, arising from the execution of their duties. The Bod indicatively decides and approves the following: Acceptance of the company s commitment under mortgages of company s property and other encumbarces. Sales and Purchase of fixed assets if the historical cost in the accounting records or the purchasing value whichever is higher at each case- exceeds a certain limit. Establishment of new entities with the participation of the Company or change in the participation of existing companies, irrespective of the percentage of participation Purchases, Sales and mergers of companies in which the company participates by any means (capital or management). Acceptance of any obligation in the name of the Company or contract signing if the value exceeds a certain limit. Annual Report for the period from 1 st January to 31 st December

27 Executive and Non Executine BoD Memebers The Bod at every change in its composition, determines the status and responsibility of its members both for the executive and the non executives. The number of non executive BoD members cannot be less that the 1/3 of the total number of its members. Chairman of the BoD and CEO The Chairman and CEO is the legal representative of the Company and has the responsibilities for all Company s departments. Vice Chairman of the BoD The vice president of the BoD is a non executive member and the chairman of the audit Committee and the Compliance committee. Audit Committee 1. Monitors the procedure of the obligatory audit of the separate and consolidated financials statements of the Company. Within this frame, it informs the BoD by submitting relevant report for the issues that come up from the specific audit, explaining in detail: a) the contribution of the obligatory audit to the quality and integrity of the financial information, and in accuracy, completeness and correctness of the financial information including the relevant disclosures, which are approved by the BoD and become public. b)its role under the a) above procedure, which is the recording of the actions that the audit committee took during the performance of the obligatory audit. 2. Monitors, examines and evaluates the procedure for the preparation of the financial information, which means the mechanisms and the systems for the production, the flow and the distribution of the financial information which are performed by the involving organizational structures of the Company. The audit Committee informs the BoD as to its conclusions and submits improvement suggestions for the process, if deemed necessary. 3. Monitors, examines and evaluates the adequacy and effectiveness of the total of the policies, procedures and safety nets of the Company in relation from the one hand to the internal audit system and on the other hand to the evaluation and management of risk, regarding the financial information. As far as the internal control function is concerned, the audit committee monitors and inspects the correct function of the Groups Internal Controls Department and evaluates its services, its adequacy and effectiveness without however influence its independence. In addition, it reviews the published information in regards to the internal control and the major risks and uncertainties that the Company face relating to the financial information. Within this frame, the Audit Committee informs the BoD with its conclusions and submits improvement suggestions, if deemed necessary. Annual Report for the period from 1 st January to 31 st December

28 4. Reviews and monitors the independence of the auditors or the auditing firms according to L 4449/2017 (articles 21, 22, 23, 26 and 27), as well all the article 6 of regulation (ΕΕ) num. 537/2014 of the European Parliament and the European Council of April 2014 and especially the appropriateness of non audit services to the audited entity according to article 5 of the regulation. 5. It is responsible gor the procedure of selecting the audtiros or the auditing forms and suggest the auditors or auditing firms which will be appointed be the General Shareholders Meeting. BOD EXPLANATORY REPORT (ACCORDING TO PAR. 7 & 8 OF ARTICLE 4 OF L.3556/2007) The current explanatory report of the BoD to the Ordinary Shareholders Meeting includes analytical information according to the provisions of paragraph 7&8 of article 4 of L. 3556/2007: 1. Share Capital Structure. Cοmpany;s share capital total Euro divided into shares, 2,93 euro nominal value each. Company share are common shares with voting rights. 2. Restrictions in the transfer of Company shares. The transfer of the shares takes place according to the provisions of the law and there are no restriction in place in the Company s articles of association. 3. Important direct or indirect participation under the provision of articles 9-11 of L. 3556/2007. Olympia Group Holding company possesses the 100% of the Company s share capital. 4. Owners of any kind of shares that give specific control rights. No share exist that give rise to specifc control rights to its owners. 5. Restriction in voting rights. No restriction in voting right are included in the Company s articles. 6. Agreements between shareholders. The Company is not aware of any agreement between shareholders which may lead to restriction in the transfer of shares or to voting rights. 7. Rules for the appointment and replacement of the members of the BoD and the alteration of the articles that differ from the provisions of L. 2190/20. The rules that are included in the article for the appointment and replacement of the members of the BoD and the alteration of the layout of the articles do not differ from the provisions of L. 2190/ ΒoD or separate members responsibility for the issuance of new shares or the purchase of treasury shares. The rules that are included in the Company s articles for the issuance of new shares or the purchase of treasury shares as a responsibility of the BoD do not differ from the provision of L. 2190/20. Annual Report for the period from 1 st January to 31 st December

29 9. Significant Agreement that the Company has signed and which comes into force, is altered, or expires in case of a change in the control of the Company after public offer and the results of such agreement. The common bond loan which is traded in the Athens Stock Exchange and other Group Loan Agreements include a covenant for no change in the control without the prior approval from the creditors. In case the covenant becomes effective, the creditors have the right to demand the repayment of the respective loan liabilities. 10. Any agreement that the Company has signed with the members of the BoD or its personnel which provide for compensation in case of resignation or dismissal without justifiable cause or the termination of the service or employment due to the public offer. There are no such agreement between the Company and the member of the BoD or its personnel, which provide for compensation in case of resignation or dismissal without justifiable cause or the termination of the service or employment due to the public offer. Athens, 16 March 2018 For the Board of Directors THE CHAIRMAN & CEO VASILLEIOS BILLIS ID. ΑΚ Annual Report for the period from 1 st January to 31 st December

30 3. Independent Auditor s Report To the Shareholders of SYSTEMS SUNLIGHT S.A. Report on the Audit of the Financial Statements Opinion We have audited the accompanying separate and consolidated financial statements of SYSTEMS SUNLIGHT SA (the Company) and its subsidiaries, which comprise the separate and consolidated statements of financial position as at December , the separate and consolidated income statements, statements of comprehensive income, statements of changes in equity and cash flow statements for the year then ended, including a summary of significant accounting policies an selected explanatory notes to the financial statements. In our opinion, the accompanying separate and consolidated financial statements present fairly, in all material respects, the financial position of the Company and its subsidiaries as at December , the financial performance and cash flows for the year then ended, in accordance with the International Financial Reporting Standards (IFRSs) as adopted by the European Union. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs), as incorporated into the Greek Law. Our responsibilities, under those standards are further described in the Auditor s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company and its subsidiaries, during the whole period of our audit, in accordance with the International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants as incorporated into the Greek Law and we have fulfilled our ethical responsibilities in accordance with current legislation requirements and the aforementioned Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the separate and consolidated financial statements of the current year. These matters and the related risks of material misstatement were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not express a separate opinion on these matters. Annual Report for the period from 1 st January to 31 st December

31 Key audit matters How our audit addressed the key audit matter Recoverability of long term receivables As at December , the Group s and Company s other non - current assets, presented in note 16 of the financial statements, include receivables from compensation paid against third parties amounting to k. and grants receivable of k. relating to ongoing litigation claims. At each reporting date, Group s management assesses the recoverability of the abovementioned receivables and makes estimates regarding the possible need to recognize impairment losses and reduce the receivables to their recoverable amount.this assessment involves a significant degree of judgement, as management evaluates the current status of the related litigations and assesses the possible risk of impairment, mainly based on the legal opinion of external legal advisors. In case additional information becomes available, Group s management reassesses the recoverability of the receivables, which is likely to lead to a revision of estimates. Group s disclosures relating to the nature of the aforementioned receivables, judgements and estimates used during the recoverability assessment and the progress of the litigation cases are included in notes 9, 16 and 36.1 of the financial statements. Our audit approach included, among other, the following procedures: Obtained and reviewed minutes of management internal meetings, in order to identify new facts and circumstances, regarding the status of the litigation cases. Received and reviewed external legal advisor s opinions to corroborate management assumptions in connection with the receivables recoverability assessment. Held discussions with Group s management and legal counsels in connection with the specific litigation cases. Assessed management s estimates regarding the recoverability of the aforementioned receivables. Assessed the adequacy of the related disclosures within the accompanying financial statements. We considered this matter to be a key audit matter, due to the high degree of judgement involved in the assessment of the above receivables recoverability. Annual Report for the period from 1 st January to 31 st December

32 Assessment of impairment for investments in subsidiaries (separate financial statements) As at December , the Company has recognized k. relating to investments in subsidiaries which are measured at cost less any accumulated impairment losses. In accordance with the IFRS, an entity shall assess whether there are indications that an asset may be impaired. The assessment of indications that could lead to recognition of impairment losses requires a high degree of judgement. The recoverable amount of each Cash Generating Unit (CGU /investment in subsidiary) is the higher of a CGU s fair value less costs of disposal and its value in use. The assessment of recoverable amounts requires judgement by management regarding the future cash inflows of each CGU and the discount rates applied to future cash flows. Regarding the future cash flows, management s judgement relates to variables attached to revenue growth rate, gross profit margin and operating expenses. Due to the level of subjectivity in assumptions used in the impairment analysis and the significant judgements and estimates required by management, we considered the impairment assessment of investments in subsidiaries as a key audit matter. The Company s disclosures regarding the accounting policy, judgements, and estimates used for the impairment assessment in investments in subsidiaries, are included in the notes 8.1, 9 and 13 of the financial statements. Our audit approach included, among others, the following procedures: Evaluated management s estimates regarding the existence of impairment indications in investments in subsidiaries by assessing their performance and by comparing the carrying amounts to the net assets values ay the percentage shareholding. For those investments in subsidiaries that indications of impairment identified, we evaluated, with the support of our specialists: (i) the reasonableness of the assumptions used for determining future cash flows, (ii) the application of generally accepted valuation methods, (iii) the reasonableness of the discount rates, by comparing these with external financial and industry specific information and (iv) confirmed the mathematical accuracy of the models applied. Assessed the reliability of management s estimates by comparing actual performance to management s prior estimates. Confirmed the appropriateness of the disclosures regarding the aforementioned matter in the accompanying financial statements Annual Report for the period from 1 st January to 31 st December

33 Other Information Management is responsible for the other information. The other information included in the Annual Financial Report is comprised of the Management Report of the Board of Directors, which mentioned in the Report on Other Legal and Regulatory Requirements and the Representations of the Members of the Board of Directors, but do not include the financial statements and the auditor s report thereon. Our opinion on the separate and consolidated financial statements do not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the separate and consolidated financial statements, our responsibility is to read the other information, and in doing so, consider whether the other information is materially inconsistent with the separate and consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we conclude, based on our audit, that there is a material misstatement therein, we are required to communicate that matter. We have nothing to report, regarding the aforementioned matter. Responsibilities of Management and Those Charged with Governance for the separate and consolidated Financial Statements Management is responsible for the preparation and fair presentation of the separate and consolidated financial statements in accordance with the IFRSs as adopted by the European Union and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the separate and consolidated financial statements, management is responsible for assessing the Company s and Group s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting, unless there is an intention to liquidate the Company or the Group or to cease operations, or there is no realistic alternative but to do so. The Audit Committee (artic. 44 Law 4449/2017) of the Company is responsible for overseeing the Company s financial reporting process. Auditor s Responsibilities for the Audit of the separate and consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the separate and consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs, as incorporated into the Greek Law, will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with ISAs, as incorporated into the Greek Law, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the separate and consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company s and Group s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. Conclude on the appropriateness of management s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company s or Group s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor s report to the related disclosures in the Annual Report for the period from 1 st January to 31 st December

34 financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor s report. However, future events or conditions may cause the Company of the Group to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the separate and consolidated financial statements, including the disclosures, and whether the separate and consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company and the Group to express audit opinions on the separate and consolidated financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the separate and consolidated financial statements of the current period and are therefore the key audit matters. Report on Other Legal and Regulatory Requirements 1. Management Report of the Board of Directors Taking into consideration that Management is responsible for the preparation of the Management Report of the Board of Directors for the year ended 31 December 2017, according to the provisions of paragraph 5 of article 2 of Law 4336/2015 (part B) we note the following: α. The Management Report of the Board of Directors includes a statement of corporate governance that provides the information required by Article 43bb of Codified Law 2190/1920. β. In our opinion, the Management Report of the Board of Director s has been prepared in accordance with the legal requirements of article 43a and 107A and paragraph 1 (c and d) of Article 43bb of the Codified Law 2190/1920 and the content of the report is consistent with the accompanying separate and consolidated financial statements for the year ended 31 December γ. Based on the knowledge we obtained during our audit of the Group and the Company SYSTEMS SUNLIGHT SA and their environment, we have not identified any material misstatements in the Management Report of the Board of Directors. 2. Complementary Report to the Audit Committee Our audit opinion on the accompanying separate and consolidated financial statements is consistent with the complementary report to the Company s Audit Committee in accordance with Article 11 of the European Union (EU) Regulation 537/ Non-audit Services We have not provided the prohibited non-audit services referred to in Article 5 of EU Regulation 537/2014. The permitted non-audit services that we have provided to the Company and its subsidiaries during the financial year that ended 31 st December 2017, are disclosed in note 31 of the accompanying separate and consolidated financial statements. Annual Report for the period from 1 st January to 31 st December

35 4. Auditor s Appointment We have been appointed statutory auditors by the Annual General Meeting of the Company on 30/06/2014. Since, we have been appointed as the statutory auditors for a total period of four years based on the decisions of the shareholder s Annual General Meetings. Athens,16 th March 2018 Certified Accountant (C.A.) Dimitra Pagoni I.C.P.A. Reg. No. : Annual Report for the period from 1 st January to 31 st December