Financial Statements for the period from January 1 st to December 31 st,2016 1

Transcription

1 GENERATION AND SUPPLIES SOCIÉTÉ ANONYME Register Number: 51526/01ΑΤ/Β/02/0537 G.E.MI. No HEAD OFFICE: 8 ARTEMIDOS STR., PC , MAROUSI Annual Financial Statements for the Financial Year from 1st January up to 31st December 2016 In accordance with the International Financial Reporting Standards Financial Statements for the period from January 1 st to December 31 st,2016 1

2 Contents Α. REPORT OF THE BOARD OF DIRECTORS 4 B. Independent Auditor s Report 11 C. Annual Financial Statements 13 Profit and Loss Statement 14 Statement of Total Income 15 Statement of Financial Position 16 Consolidated Statement of Changes in Equity 17 Statement of Changes in Equity of the Parent Company 18 Cash Flow Statement Information for the Group General Information Nature of Activities Structure of the Group Important Events Summary of significant accounting policies Financial Statements preparation framework Changes in accounting principles Consolidation Information per sector Foreign currency conversion Major accounting judgments, estimations and assumptions Financial assets fair value Tangible assets Intangible assets Impairment of Assets Cash and cash equivalents Share capital Income tax & deferred tax Benefits to personnel Grants Provisions and contingent liabilities Recognition of income and expenses Leases Distribution of dividends Employee benefits Compulsory measurement of pollutant emissions Risk management Financial information per sector Notes on Financial Statements Tangible Assets Goodwill Intangible assets Participation in associated enterprises 54 Financial Statements for the period from January 1 st to December 31 st,2016 2

3 5.5 Deferred tax Long-term Receivables Inventories Customers and other commercial receivables Other receivables Cash and cash equivalents Share Capital and Reserves Loan obligations Obligations of personnel benefits Other long-term obligations Provisions Derivative Financial Instruments Suppliers and Other Liabilities Current Tax Liabilities Other Short-term Liabilities Sales Cost of sales Expenses per class Financial income / expenses Other financial results Income from Associated Enterprises Income Tax Collaterals Contingent receivables liabilities Proposed and distributed dividends Undertaken Operating Lease obligations Number of employed personnel Transactions with associated parties Events after the date of the balance sheet 73 ANNEX Ι SEPARATE FINANCIAL STATEMENTS OF THE INTEGRATED UNDERTAKING OF PRODUCTION AND SUPPLY OF ELECTRICITY 74 Financial Statements for the period from January 1 st to December 31 st,2016 3

4 Α. REPORT OF THE BOARD OF DIRECTORS TO THE ANNUAL GENERAL MEETING OF SHAREHOLDERS OF THE COMPANY GENERATION AND SUPPLIES SOCIÉTÉ ANONYME This Annual Report of the Board of Directors relates to the period of the financial year It contains financial information of the Company GENERATION AND SUPPLIES SOCIÉTÉ ANONYME (hereinafter referred to as the Company ) and its subsidiaries (hereinafter jointly referred to with the Company as the Protergia Group or the Group ) for the financial year 2016 and describes important events that took place during this period, as well as their effect on the financial statements. Furthermore it describes the principal risks and uncertainties that the Protergia Group may deal with the following year. 1. GENERAL REVIEW In the domestic energy market, electricity demand continues to be negatively affected by the weak performance of the Greek economy. Specifically, in 2016 the electricity consumption recorded a marginal decrease of 0.3%. With regard to the production mix, lignite electricity production was for the first time reduced to less than 15 TWhrs, with the participation rate standing at 29.1% from 37.8% in This decrease was further overshot by the sharp increase (+ 71%) of the production of electricity from units with Natural Gas Combustion and due to low gas prices. It is indicative that the contribution of Natural Gas was 24.4%, from 14.1% in The increase was due to the production of RES (+ 8.5%), while the decrease of the hydro production was 10.2% and for the net imports 8.46% respectively. As a result of the above developments, the further reduction of the average System Marginal Price (OTC) decreased to 42.9 / MWh. In the retail market the participation of private suppliers increased to 9.7% from 5.4% at the end of The two combined cycle power plants with combustible natural gas of the Protergia Group, in Agios Nikolaos Viotia of the subsidiary company PROTERGIA AGIOS NIKOLAOS POWER SOCIÉTÉ ANONYME OF GENERATION AND SUPPLY OF ELECTRICITY and in Saints Theodori Corinthia, of the subsidiary company "KORINTHOS POWER SA PRODUCTION AND MARKETING IN ELECTRICITY " operated throughout the financial year 2016 as the rate of production totaled MWh compared to MWh in The Protergia Group operates, maintains and manages the third power station natural gas MYTILINAIOS Group as well, namely the electricity cogeneration plant of ALUMINIUM. The three stations, with a total force of MW, holding share 30.7% in Greek energy production plants fueled by natural gas. At the same time, electricity supply activities continued with satisfactory results. Specifically, in 2016, the Group more than doubled its share in retail and at 31 December held the 1st position among private suppliers with 2.6%. The production of Renewable Energy Sources (RES) stood at GWh for the year 2016 compared to GWh in the year As a result of the above increase in the Group's activities, the number of staff increased by 70 and amounted to 264 persons on 31/12/2016 compared to 194 on 31/12/2015. Financial Statements for the period from January 1 st to December 31 st,2016 4

5 2. FINANCIAL RESULTS The Group's Turnover stems from the Production and Sale of IPPs of Viotia and Corinth in the daily energy market, the Electricity Market and the Production and Sale of Energy from RES stations. Below are summarized the financial results of the parent company and the Group of Protergia. GENERATION AND SUPPLIES SOCIETE ANONYME - Group GENERATION AND SUPPLIES SOCIETE ANONYME - Parent (Amounts in thousands ) 1/1-31/12/2016 1/1-31/12/2015 1/1-31/12/2016 1/1-31/12/2015 Sales Earnings before tax (8.698) (50.318) (18.711) (18.375) Earnings of period after tax (12.588) (41.758) (18.415) (6.404) Earnings Before Interest, Tax, Depreciation and Amortization The Protergia Group recorded strong growth in 2016, boosting its market share in both the production and retail energy markets. In particular, it recorded a turnover of million in 2016, compared to million in the previous year, recording an increase of 88.9%. Earnings before interest, tax, depreciation and amortization (EBITDA) amounted to 64.8 million compared to 20.4 million in SIGNIFICANT EVENTS DURING THE CLOSING FINANCIAL YEAR Flexibility Compensation Mechanism On 31/12/2014 the validity period of the transitional capacity assurance mechanism expired. Regarding the new transitional capacity assurance mechanism (TCAM) which would be valid from 1/1/2015, despite the fact that all public consolation procedures were completed in time, the latest data were delivered by Greece to The Directorate-General for Competition (COMP) of the EU with a great delay (September 2015), thereby the period which was necessary for the activation of the mechanism in order to be used in 2015 expired. Consequently, the earnings before interest, taxes, depreciation and amortization (EBITDA) of the Group for 2015 were negatively impacted because of this fact by approximately 40 milion. The Flexibility Compensation Mechanism was finally adopted by law and entered into force on , following the no. C (2016) 1791 of the European Commission's Approval Decision ( ), with article 150 of Law 4389/2016, in application of the 3rd Memorandum of Understanding between the Hellenic Republic and the Institutions, as incorporated in Law 4336 / According to the same provision, the duration of the mechanism is set at twelve (12) months, ie until (unless the permanent mechanism for ensuring the adequacy or flexibility of the Electricity System is implemented earlier). Financial Statements for the period from January 1 st to December 31 st,2016 5

6 The Unit Power Payment Price, ie the fee paid by the Transmission System Operator to the Producers Selected, has been legally set at 45,000 / MW of available power over the above period and with a maximum payment fifteen (15) million euro per eligible power plant. On , the consultation by the Energy Regulatory Authority on the arrangements for implementing the Regulation was concluded. It is explicitly stipulated in the law that the revenue of the selected units is ensured by the start of application of the Transitional Flexibility Compensation Mechanism, ie from , but it is collected from the time of their registration in the above "Registry of Flexible Units". It is noted that if this mechanism had been in place since 1/1/2016, the EBITDA of the Group would have been increased by 9.8m. Corporate Transformation On the Board of Directors of MYTILINEOS SA-GROUP OF COMPANIES (hereinafter "MYTILINEOS") announced the decision of the Board of Directors, "METKA INDUSTRIAL AND MANUFACTURING SOCIETE ANONYME" (hereinafter "METKA"), "ALUMINUM OF GREECE INDUSTRIAL AND COMMERCIAL SOCIETE ANONYME" (hereinafter "ATE"), " GENERATION AND SUPPLIES SOCIETE ANONYME" (hereinafter "Protergia") and "PROTERGIA AGIOS NIKOLAOS POWER SOCIETE ANONYME OF GENERATION AND SUPPLY OF ELECTRICITY" (hereinafter "Protergia Thermo") of the merger by absorption of METKA, ATE, Protergia and Protergia Thermo by MYTILINEOS. The new flexible structure will benefit from a significant reduction in financial costs, economies of scale, optimization of procurement procedures, homogenization and improvement of human resource utilization, as well as exchange of know-how, experience and best practices between the different parts of the new entity resulting in significant operational synergies. The new, flexible and simplified scheme will provide enhanced financial flexibility, making it possible to diversify the cash flows of the new consolidated company and to strengthen its balance sheet. The merger, as decided in principle by the Boards of Directors of the transformed companies, has as a transformation balance date on and will be effected in accordance with the provisions, provisions and exemptions of Law 4172/2013, article 61 of Law 4438 / 2016, articles of the Codified Law 2190/1920 and in general the Greek commercial legislation. The intended corporate transformation is expected to be completed by 30/08/2017 at the latest. NOME auctions The company PROTERGIA AGIOS NIKOLAOS POWER SOCIETE ANONYME OF GENERATION AND SUPPLY OF ELECTRICITY, implementing the Code of Transactions for Procurement of Future Electricity Products, which stipulates the rights and obligations of Eligible Suppliers and Dealers, the Market Operator and the Seller of Futures, participated in October 2016 in the Auction for the Sale of Fixed Power Products. Out of the total quantity of 460 MWh for the auction, the company purchased 105 MWh at a market price of 37,37 / MWh. Retail market In June the strategic partnership of Protergia Group and OTE Group in the retail market was announced. In this context, COSMOTE and GERMANOS enrich the portfolio of services they offer to their customers with PROTERGIA's electricity supply. At Financial Statements for the period from January 1 st to December 31 st,2016 6

7 the same time, PROTERGIA strengthens the network of points of sale and promotion of its products as they will be available in every corner of Greece through more than 450 COSMOTE and GERMANOS stores. Natural gas supply license RAE, through a decision taken at the end of the first quarter of 2016, granted a natural gas supply license with the right of PROTERGIA AGIOS NIKOLAOS POWER SOCIETE ANONYME OF GENERATION AND SUPPLY OF ELECTRICITY for the sale of natural gas to Eligible customers, which marks the beginning of this new activity, insofar as the relevant market will be liberalized. Renewable energy sources In December 2016, the Wind Farm with a capacity of 23.1 MW of the company "Andros Tsirovlidis SA" was licensed. Also in December 2016, the trial period of the new 15 MW power plant of the Company " Sidirokastro SA, located in the Municipality of Sintiki of Regional Unity of Serres, was successfully completed. The construction of the 12MW Wind Farm Anemomylos of GENERATION AND SUPPLIES SOCIETE ANONYME is expected to be completed by April FINANCIAL RISK MANAGEMENT Protergia Group's activities are subject to financial risks: credit risk, liquidity risk, foreign exchange risk, product price fluctuation risk and interest rate risk. The main policies for financial risk management are defined by the Treasury Department of the Company, which operates in cooperation with the treasury management of MYTILINEOS SA. - Group of Companies, within specific guidelines approved by the Management in order to limit the negative impact on the financial results of the Protergia Group. However, it should be pointed out that risk management systems and policies by their nature provide reasonable and not absolute security because they are designed to limit the likelihood of the risks involved and to mitigate their effects without however being able to exclude them. Credit risk The Group has no significant credit risk arising from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions. In order to minimize credit risk in cash and cash equivalents and other short-term financial products, the Group sets limits on how much it is exposed to each individual financial institution and deals only with recognized financial institutions. Liquidity risk Liquidity risk is linked to the need for adequate financing of the Group's activity and growth. The relevant liquidity needs are managed through careful monitoring of the long-term financial liabilities debt as well as the payments made on a daily basis. The Group ensures that sufficient available credit facilities are available to meet the short-term business needs, after calculating Financial Statements for the period from January 1 st to December 31 st,2016 7

8 the cash inflows resulting from its operation and the cash and cash equivalents it holds. Funds for long-term liquidity needs are additionally secured by a sufficient amount of borrowed funds and the ability to sell long-term financial assets. On 31/12/2016, there is a temporary negative difference between the current assets and the Group's short-term liabilities amounting to 218 million, which will not exist after the absorption under the relevant Merger Agreement Draft, of the GENERATION AND SUPPLIES SOCIÉTÉ ANONYME, of the subsidiary company of Protergia Group "PROTERGIA AGIOS NIKOLAOS POWER SOCIETE ANONYME OF GENERATION AND SUPPLY OF ELECTRICITY" and the related companies "METKA INDUSTRIAL - CONSTRUCTION SA" and "ALUMINUM OF GREECE INDUSTRIAL AND COMMERCIAL SOCIETE ANONYME" by MYTILINEOS SA. - GROUP OF COMPANIES", resulting in the creation of positive working capital at the date of completion of the mergers. For the Protergia Group in particular, in 397 million of existing comprehensive short-term liabilities: An amount of 94.3 million relates to liabilities to the related company METKA SA, 30.7 million to ALUMINUM OF GREECE SA and 58.7 million to other (affiliated) companies of the Group. The amount of 72.5 million of loan liabilities of PROTERGIA AGIOS NIKOLAOS POWER SOCIETE ANONYME OF GENERATION AND SUPPLY OF ELECTRICITY, which appears in the short-term liabilities, concerns the remaining syndicated bond loan of the company, the contract of which provides for an extension of its duration for Years. In particular, the relevant condition of the existing loan agreement provides that "The Issuer is entitled but not required by a written declaration to the Bondholders to request an extension in respect of the total (and not part of) the Bonds." On this basis, the Company negotiates the terms of the original 2-year extension period and the renewal of such borrowing is considered reasonable. This is supported by the other relevant references to the loan agreement, which set the capital installments and the interest rate for the years , as well as the installments of the next extension of two more years, under the original informal framework agreement of the banks for total loan duration of 7-10 years, on the basis of which the capital installments mentioned in the contract are also calculated. Furthermore, significant receivables from the previous financial year are expected to be incurred within the current fiscal year, mainly in respect of the amount of 20 million compensation for the Transitional Capacity Assurance Mechanism (TCAM), against which 2.3 million was received in March 2017 and the gradual repayment of the old balances of the LAGHE amount 26.5 million, against which 2 of the 12 installments of the debt settlement have already been received, following the decision of the Council of Ministers No. 1761/2016. This, coupled with the significant increase in production, as shown by the operation of the first two months, is expected to strengthen the Group's operating profitability and its liquidity and financial position. The maturity of the liabilities of Protergia Group and the Company as at December 31, 2016 and December 31, 2015, respectively, are analyzed in note 3.1 of the consolidated financial statements. Currency risk Exposure to foreign exchange risk is the result of commercial transactions and recognized assets and liabilities denominated in a currency other than the functional currency of the Group. The functional currency of the Group is the Euro. The exchange rate risk arises mainly from trading in the USD. The Group is Financial Statements for the period from January 1 st to December 31 st,2016 8

9 exposed to foreign exchange risk, mainly through the supply of spare parts for gas-fired power plants. For the management of exchange rate risk, the Group takes all measures to hedge the risk of change from the exchange rate. Interest rate risk The Group's assets exposed to interest rate fluctuations mainly concern cash and cash equivalents. The Group's policy regarding financial assets is to invest its cash at floating rates to maintain the necessary liquidity while achieving satisfactory performance for its shareholders. Additionally, the Group for all bank borrowings uses floating rate products. Depending on the amount of floating rate liabilities, the Group proceeds to the interest rate risk assessment and, where appropriate, studies the need to use interest rate financial derivatives. The Group's policy is to minimize exposure to interest rate risk on long-term financing. Product price fluctuation risk The Group is affected by the risk of a change in gas prices as any fluctuation in prices affects production costs. The increase in the prices of raw materials-natural gas also has an increasing effect on the System Marginal Price, depending on the market mix, with an impact on the cost of production as well as on the Group's income. Imposition of capital controls in Greece Greece's economic activity and macroeconomic data have been greatly affected by the impact of capital controls and the additional fiscal adjustment measures following the agreement and implementation of measures for the new support package. The Company and the Group monitored and continues to monitor these developments with great care, taking all necessary measures to ensure the continuity of its business. 5. PROSPECTS FOR THE YEAR 2017 The year 2016 was a landmark for the Energy Sector as the Group strengthened its presence in both the production and the supply of electricity. The Group aims to further increase its share in the retail market while cooperation with COSMOTE is expected to give further impetus in this direction in the coming period. At the same time, within the framework of its investment program, the Group will start within 2017 the construction of 3 new RES (72 MW) with a budget of 98 million. Upon completion of the program in 2018, the Group will consolidate its position in the top team RES producers in Greece with the operation of RES with a total capacity of 202 MW. Despite the progress made in the past years, the energy market is still in transition and will need to push forward major regulatory changes to meet the objectives of strengthening competition and opening up the market. Financial Statements for the period from January 1 st to December 31 st,2016 9

10 6. SIGNIFICANT EVENTS AFTER THE END OF THE FINANCIAL YEAR AND UP TO THE BALANCE SHEET DATE The Boards of Directors of PROTERGIA AGIOS NIKOLAOS POWER SOCIETE ANONYME OF GENERATION AND SUPPLY OF ELECTRICITY, METKA INDUSTRIAL - CONSTRUCTION SA, ALUMINUM OF GREECE INDUSTRIAL AND COMMERCIAL SOCIETE ANONYME and GENERATION AND SUPPLIES SOCIÉTÉ ANONYME decided the merger by absorption by the company MYTILINEOS SA - GROUP OF COMPANIES according to the provisions of Codified Law 2190/1920, Law 4172/2013, Law 4438/2016 and Commercial Law in general. In March 2017, the wind turbines of the Wind Farm Anemomylos (12 MW) of the company GENERATION AND SUPPLIES SOCIETE ANONYME electrified and all the necessary actions have been taken to issue the relevant certificate from the ADMHE and start the trial operation. There are no other events subsequent to the financial statements, which concern the Company and the Group and are subject to reporting by the International Financial Reporting Standards (IFRS). More and more detailed information on the financial position and results of the Group and the Company is reported in the notes to the financial statements in accordance with IFRS. Evangelos Mytilineos Chairman of the Board of Directors Financial Statements for the period from January 1 st to December 31 st,

11 B. Independent Auditor s Report To the Shareholders of GENERATION AND SUPPLIES SA Report on the Audit of the Separate and Consolidated Financial Statements We have audited the accompanying separate and consolidated financial statements of GENERATION AND SUPPLIES SA, which comprise the separate and consolidated statement of financial position as at December 31, 2016, and the separate and consolidated statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management s Responsibility for the Separate and Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these separate and consolidated financial statements in accordance with International Financial Reporting Standards, as adopted by the European Union, and for such internal control as management determines is necessary to enable the preparation of separate and consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these separate and consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing which have been transposed into Greek Law (GG/B /2848/ ). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the separate and consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the separate and consolidated financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the separate and consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the separate and consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the separate and consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the accompanying separate and consolidated financial statements present fairly, in all material respects, the financial position of GENERATION AND SUPPLIES SA and its subsidiaries as at December 31, 2016, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards, as adopted by the European Union. Financial Statements for the period from January 1 st to December 31 st,

12 Report on other Legal and Regulatory Requirements Taking into consideration, that management is responsibility for the preparation of the Board of Directors report that is included to this report according to provisions of paragraph 5, article 2 of Law 4336/2015 (part B), we note the following: a) In our opinion, the Board of Directors report has been prepared in accordance with the legal requirements of articles 43a and 107A of Codified Law 2190/1920 and the content of the Board of Directors report is consistent with the accompanying separate and consolidated financial statements for the year ended 31/12/2016. b) Based on the knowledge we obtained from our audit for the company GENERATION AND SUPPLIES SA and its environment, we have not identified any material misstatements in the Board of Directors report. Moreover, we have audited unbundled per operation Statement of Financial Position of the Company and the Group as at December 31, 2016, as well as unbundled per operations Statement of Comprehensive Income before tax for the period from 1 January 2016 until 31 December The aforementioned separate and consolidated Statement of Financial Position and Statement of Comprehensive Income before tax (hereinafter "unbundled financial statements") were prepared under the responsibility of the Management of the Company GENERATION AND SUPPLIES SA in accordance with the provisions of Law 4001/2011 and the No. 204/2013 decision of the Regulatory Authority for Energy regarding the approval of rules for the allocation of Assets and Liabilities, Expenditure and Income, whose unbundling methodology is analytically described in Attachment I of the notes to the financial statements. The audit of the unbundled financial statements mainly includes the determination of whether the Company has properly applied the unbundling allocation rules and whether it has complied with its obligation for the avoidance of discriminations and cross-subsidizations among operations. Based on our audit, we have determined that unbundled per operation Balance Sheets and unbundled per operation Statements of Comprehensive Income before tax presented in Attachment I of the notes to the financial statements of the Company have been prepared in accordance with the provisions of Law 4001/2011 and the No. 204/2013 approving decision of the Regulatory Authority for Energy. Athens, 27 March 2017 The Chartered Accountant Thanasis Xynas SOEL Reg Financial Statements for the period from January 1 st to December 31 st,

13 C. Annual Financial Statements ANNUAL FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR WHICH ENDED ON DECEMBER 31ST 2016 IN ACCORDANCE WITH THE INTERNATIONAL FINANCIAL REPORTING STANDARDS AS ADOPTED BY THE EU. The attached Financial Statements were approved by the Board of Directors of GENERATION AND SUPPLIES SOCIÉTÉ ANONYME on and they were published by being posted on the internet, under & It is emphasized that the summary financial data and information emerging from the financial statements, which was published in the Press, aim to provide the reader with a general update on the financial position and results of the Company, but do not provide a complete picture of the financial position, financial performance and cash flows of the Company and the Group, according to the International Accounting Standards. Financial Statements for the period from January 1 st to December 31 st,

14 Profit and Loss Statement GENERATION AND SUPPLIES SOCIETE ANONYME - Group GENERATION AND SUPPLIES SOCIETE ANONYME - Parent (Amounts in thousands ) 1/1-31/12/2016 1/1-31/12/2015 1/1-31/12/2016 1/1-31/12/2015 Sales Cost of Sales ( ) ( ) (165) (6.603) Gross Profit Other operating income Distribution Expenses (7.301) (272) - - Administrative Expenses (15.693) (12.201) (3.892) (3.912) Other Operating Expenses (509) (277) (148) (89) Earnings before interest and income tax (10.943) Financial income Financial expenses (22.679) (22.738) (1.591) (667) Other financial results (7.137) (17.313) (17.724) (18.240) Profit/Losses from associates Profit before tax (8.698) (50.318) (18.711) (18.375) Income tax (3.890) Profit after tax from continued operations (12.588) (41.758) (18.415) (6.404) Profit for period after tax (12.588) (41.758) (18.415) (6.404) Attributable to: Attributable to parent's shareholders (10.651) (33.493) (18.415) (6.404) Non-controlling interests (1.937) (8.265) - - Summary of operating results from continued operations Operating Earnings before income tax, financial results, depreciation and amortization (EBITDA) Earnings before interest and income tax (10.943) Profit before tax (8.698) (50.318) (18.711) (18.375) Profit after tax from continued operations (12.588) (41.758) (18.415) (6.404) (Α)Det/tion of accounts: Profits/ losses before income tax, financial results, depreciation and amortization Profit before tax (8.698) (50.318) (18.711) (18.375) Plus: Financial Results Plus: Investment Results (383) (197) - - Plus: Amortizations Profits/Losses before income tax, financial results, depreciation and amortization (Β)Det/tion of Accounts: Oper. Earnings before income tax, financial results, depreciation and amortization (EBITDA) Profit before tax (8.698) (50.318) (18.711) (18.375) Plus: Financial Results Plus: Investment Results (383) (197) - - Plus: Amortizations Subtotal Oper. Profits/ Losses before income tax, financial results, depreciation and amortization (EBITDA) The attached notes of pages form an integral part of these Financial Statements. Financial Statements for the period from January 1 st to December 31 st,

15 Statement of Total Income GENERATION AND SUPPLIES SOCIETE ANONYME - Group GENERATION AND SUPPLIES SOCIETE ANONYME - Parent 31/12/ /12/ /12/ /12/2015 (Amounts in thousands ) Other comprehensive income after tax: Net Profit / (Loss) for the Period (12.588) (41.758) (18.415) (6.404) Cash Flow Hedging Deferred Tax on Actuarial Gains / (Losses) (8) Actuarial Gains / (Losses) (71) (31) (31) (7) Deferred Tax from Cash Flow Hedging (150) Total Comprehensive Income for the period (12.270) (41.764) (18.437) (6.418) Total Comprehensive Income for the period attributable to: Shareholders of the Parent (10.446) (33.601) (18.437) (6.418) Non-controlling interest (1.824) (8.162) - - The attached notes of pages form an integral part of these Financial Statements. Financial Statements for the period from January 1 st to December 31 st,

16 Statement of Financial Position GENERATION AND SUPPLIES SOCIETE ANONYME - Group GENERATION AND SUPPLIES SOCIETE ANONYME - Parent (Amounts in thousands ) 31/12/ /12/ /12/ /12/2015 Assets Non - Current Assets Tangible Assets Goodwill Intangible Assets Investments in Subsidiaries Investments in Affiliated Companies Deferred Tax Assets Other long-term receivables Current Assets Inventories Trade and other receivables Other receivables Cash and cash equivalents Assets Liabilities and Equity Equity Share capital Share premium Other reserves (14) 8 Retained Earnings (21.956) (11.342) (22.319) (3.904) Equity attributable to parent's shareholders Non controlling Interests Equity Non- Current Liabilities Long-term debt Deferred tax liabilities Liabilities for pension plans Other long-term liabilities Non-Current Liabilities Current Liabilities Trade and other payables Tax payable Short term debt Long term liabilities payable in the next fiscal year Derivatives Other short term liabilities Current Liabilities Total Liabilities Equity & Liabilities The attached notes of pages form an integral part of these Financial Statements. Financial Statements for the period from January 1 st to December 31 st,

17 Consolidated Statement of Changes in Equity (Amounts in thousands ) Opening Balance 1st January 2015, according to IFRS -as published- GENERATION AND SUPPLIES SOCIETE ANONYME -GROUP Share capital Share premium Other reserves Retained earnings Total Non controlling Interests Total Change In Equity Dividents Distribution (40) 0 Transfer to Reserves (203) (4) 0 (4) Impact on Assets from Sale of Subsidiary (140) (139) 80 (59) Increase / (Decrease) of Share Capital Transactions With Owners (303) (103) 41 (62) Net Profit/(Loss) For The Period (33.492) (33.492) (8.265) (41.757) Transfer of Participating Interests Impairment to Reserves 607 (607) 0 0 Other Comprehensive Income: Cash Flow Hedging 0 0 (93) 0 (93) Deferred Tax from Actuarial Gain/(Loss) Actuarial Gain/(Loss) 0 0 (28) 0 (28) (3) (31) Deferred Tax from Cash Flow Hedging (4) 7 Total Comprehensive Income For The Period (108) (34.099) (33.601) (8.162) (41.763) Closing Balance 31/12/ (11.342) Opening Balance 1st January 2016, according to IFRS -as published (11.342) Change In Equity Dividents Distribution Transfer to Reserves (56) Impact on Assets from Sale of Subsidiary Increase / (Decrease) of Share Capital Transactions With Owners Net Profit/(Loss) for the Period (10.651) (10.651) (1.937) (12.588) Other Comprehensive Income: Cash Flow Hedging Deferred Tax from Actuarial Gain/(Loss) Actuarial Gain/(Loss) 0 0 (66) 0 (66) (5) (71) Deferred Tax from Cash Flow Hedging 0 0 (102) 0 (102) (49) (150) Total Comprehensive Income for The Period (10.651) (10.446) (1.824) (12.270) Closing Balance 31/12/ (21.956) The attached notes of pages form an integral part of these Financial Statements. Financial Statements for the period from January 1 st to December 31 st,

18 Statement of Changes in Equity of the Parent Company GENERATION AND SUPPLIES SOCIETE ANONYME - Parent (Amounts in thousands ) Share capital Share premium Other reserves Retained earnings Total Opening Balance 1st January 2015, according to IFRS -as published Change In Equity Transfer to Reserves Transactions With Owners Net Profit/(Loss) for The Period (6.404) (6.404) Other Comprehensive Income: Deferred Tax from Actuarial Gain/(Loss) - - (8) - (8) Actuarial Gain/(Loss) - - (7) - (7) Total Comprehensive Income For The Period - - (14) (6.404) (6.418) Closing Balance 31/12/ (3.904) Opening Balance 1st January 2016, according to IFRS -as published (3.904) Change In Equity Transfer to Reserves Transactions With Owners Net Profit/(Loss) for The Period (18.415) (18.415) Other Comprehensive Income: Deferred Tax from Actuarial Gain/(Loss) Actuarial Gain/(Loss) - - (31) - (31) Total Comprehensive Income For The Period - - (22) (18.415) (18.437) Closing Balance 31/12/ (14) (22.319) The attached notes of pages form an integral part of these Financial Statements. Financial Statements for the period from January 1 st to December 31 st,

19 Cash Flow Statement GENERATION AND SUPPLIES GENERATION AND SUPPLIES SOCIETE ANONYME - Group SOCIETE ANONYME- Parent (Amounts in thousands ) 31/12/ /12/ /12/ /12/2015 Cash flows from operating activities Profit for the period (12.588) (41.758) (18.415) (6.404) Adjustment for: Tax (8.560) (296) (11.971) Depreciation of tangible assets Depreciation of intangible assets Impairments Provisions (55) 0 (31) 0 (Gains) / losses from the sale of property, plant and equipment (56) 79 (58) (2) (Profit) / loss from the sale of a subsidiary's share 43 (48) 0 0 Interest income (101) (479) (5) (35) Interest expense Dividend income 0 0 (206) (1.022) Depreciation of Grants - Granted Rights (1.146) (690) 0 0 Share of results in affiliated companies (383) (197) 0 0 Foreign exchange gains / (losses) Other Differences 0 (6) 0 0 Adjustment for: Changes in Working Capital (Increase) / decrease in inventory 122 (2.760) 0 0 (Increase) / decrease in receivables (38.931) (9.028) (3.264) Increase / (decrease) in liabilities Pension Plans Cash flows from operating activities (5.567) Interest paid (20.270) (21.251) (1.117) (766) Income tax paid (554) (2.503) (3) (2) Net cash flows from operating activities (6.687) Net cash flows from investing activities Purchases of tangible assets (54.351) (13.166) (12.410) (120) Purchases of intangible assets (2.434) (201) (45) (18) Sales of tangible assets Dividends received Acquisition of affiliated companies - (2.450) - (2.450) Acquisition / Sale of subsidiaries (less cash subsidiary) - - (76) (31) Interest received Net cash flows from investing activities (55.426) (14.718) (11.099) (1.676) Net cash flows from financing activities - Payment of collection tax (3) (3) - - Return of share capital to shareholders - (11) - - Proceeds from borrowing Repayment of borrowing ( ) (68.430) (3.900) - Net cash flows from financing activities (1.502) Net (decrease) / increase in cash and cash equivalents (11.454) (4.186) Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period The attached notes of pages form an integral part of these Financial Statements. Financial Statements for the period from January 1 st to December 31 st,

20 1. Information for the Group 1.1 General Information The company GENERATION AND SUPPLIES SOCIÉTÉ ANONYME (hereinafter referred to as PROTERGIA S.A. or the Company) was incorporated under the company name ENERTEK TECHNICAL AND COMMERCIAL ENERGY SOCIÉTÉ ANONYME and the distinctive title ENERTEK S.A. in virtue of the notarial deed no / by the Notary of Eleusis, Athena P. Moscona, and the corrective notarial deed no / by the same Notary under the provisions of C.L. 2190/1920. ENERTEK S.A. received the authorization for its incorporation and the approval of its Articles of Association by means of the approval decision no. 667/ by the West Attica Prefect, which was published in the Official Government Gazette Issue on Public and Private Liability Companies no. 2634/ In the year 2007 and under decision no. 5653/ by the Prefect of Athens, following a resolution of the General Meeting of Shareholders of the company on , Article 1 of the Articles of Association of ENERTEK S.A. was amended in accordance with which the name of the Company was changed into ENDESA HELLAS POWER GENERATION AND SUPPLY SOCIÉTÉ ANONYME with the distinctive title ENDESA HELLAS S.A.. This was published in the Official Government Gazette Issue on Public and Private Liability Companies no. 3881/ In the same year, under decision no / by the Prefect of Athens, it was approved to merge the companies MYTILINAIOS POWER GENERATION AND SUPPLIES SOCIÉTÉ ANONYME, with the distinctive title MYTILINEOS - POWER GENERATION AND SUPPLIES S.A., and MYTILINAIOS RENEWABLE ENERGY SOURCES SOCIÉTÉ ANONYME, with the distinctive title Mytilineos S.A. R.E.S., by absorption by the company ENDESA HELLAS S.A. according to the provisions of Articles of C.L. 2190/1920, On Sociétés Anonymes and the provisions of Law 2166/1993, the reports dated by the certified auditor Ant. Prokopidis and the notarial deed of the merger agreement no. 6317/ by the Athens Notary, Maria Stavrianou. The merger approval was published in the Official Government Gazette on under OGG no In the year 2008 and by means of the Sociétés Anonymes Merger Agreement draft dated the company DELTA RENEWABLE ENERGY SOURCES SOCIÉTÉ ANONYME was merged by absorption by the company ENDESA HELLAS S.A. in accordance with the provisions of Articles 68 par. 2 and 69 to 77 of C.L. 2190/1920 and the provisions of Articles 1 to 5 of Law 2166/1993. This draft was published in the Official Government Gazette Issue on Public and Private Liability Companies no. 6281/ On 2/7/2010 the company MYTILINEOS S.A. GROUP OF COMPANIES became the sole shareholder in ENDESA HELLAS POWER GENERATION AND SUPPLY SOCIÉTÉ ANONYME which was renamed into GENERATION AND SUPPLIES SOCIÉTÉ ANONYME by means of the decision no. EM-20678/ by the Prefect of Athens, which approved the amendment of Article 1 of its Articles of Association. This decision was published in the Official Government Gazette Issue on Public and Private Liability Companies no. 9737/ On 14/12/2016, the Boards of Directors of the companies PROTERGIA AGIOS NIKOLAOS POWER SOCIETE ANONYME OF GENERATION AND SUPPLY OF ELECTRICITY, METKA INDUSTRIAL - CONSTRUCTION SA, ALUMINUM OF GREECE INDUSTRIAL AND COMMERCIAL SOCIETE ANONYME and GENERATION AND SUPPLIES SOCIÉTÉ ANONYME decided the merger by absorption by the company MYTILINEOS SA - GROUP OF COMPANIES according to the provisions of Codified Law 2190/1920, Law 4172/2013, Law 4438/2016 and Commercial Law in general. The registered head office of the Company and the Group is located in Marousi, Attica, 8 Artemidos Str. P.C The present financial statements of the Group and the Company, Financial Statements for the period from January 1 st to December 31 st,

21 for the period ended December 31, 2016, were approved by the Board of Directors on March 27, 2017 and are subject to final approval by the Annual General Meeting. 1.2 Nature of Activities The purposes of the Company are: a) the design, construction, operation, maintenance, management and operation in Greece and abroad of power generation stations (own or third party) from each source in general, including power plants fuelled by natural gas, lignite, coal, nuclear energy, wind farms, hydroelectric plants, photovoltaics, as well as electricity heat cogeneration plants; b) the overall acquisition and transfer (including the purchase and sale) of electricity and heat, as well as the acquisition and transfer (including the purchase and sale) of rights of greenhouse gases emissions, in Greece and abroad, and in general the performance of any transaction in any market, whose subject matter are the abovementioned activities; c) the acquisition (including the purchase), storage, gasification, transportation, distribution and transfer (including sale) of natural gas (liquefied or not) to third parties, which gas is derived from domestic fields or imported from abroad, and in general the performance of any transaction whose subject matter is natural gas (liquefied or not); d) the construction, operation and exploitation of infrastructure for electrical connectivity, transmission and distribution of electrical energy and the facilitation of energy trade; e) the provision to any third party of administrative assistance services, consulting services (indicatively collection of information and market research), particularly in relation to the production and exploration and in general to the sectors of electricity, fuels and the rights of greenhouse gases emissions, as well as the provision of power plants management services (including the management and operation of electricity and rights of greenhouse gases emissions and fuels, as well as technical issues); f) the construction, import, acquisition (by domestic or foreign natural or legal persons), rent, lease, sublease and in general exploitation of immovable property (including lignite coal mines) and movable property (including machinery, electrical and mechanical equipment, components, space parts and vehicles of all kinds) in Greece and abroad, regardless of whether they are intended to promote the other purposes of the company or not. In pursuit of its above purposes, the Company may: a) participate in companies of any kind and legal form, established or to be established both in Greece and abroad (even by purchase of shares and other securities through stock transactions), as well as in joint ventures; b) establish new enterprises which shall have similar or related purposes; c) cooperate in any convenient manner with natural or legal persons who are pursuing similar or related purposes; d) represent any domestic or foreign companies which have the same or similar purposes, or their products; e) implement by appropriate investments all aforementioned purposes and activities; f) conclude loan contracts, guarantee and in general provide securities in favour of all the above, as well as in favour of any third natural or legal person or joint venture; g) participate in the wholesale and retail electricity market, in the capacity availability market and mechanisms and in general it may be active in any sector relevant to the aforementioned. Financial Statements for the period from January 1 st to December 31 st,

22 1.3 Structure of the Group The structure of the PROTERGIA Group on is as follows: COMPANY NAME COMPANY HEADQUARTERS % OF INTEREST CONSOLIDATION METHOD GENERATION AND SUPPLIES SOCIÉTÉ ANONYME GREECE PARENT COMPANY - PROTERGIA AGIOS NIKOLAOS POWER SOCIÉTÉ ANONYME OF GENERATION AND SUPPLY OF ELECTRICITY GREECE 100,00% FULL PROTERGIA THERMOELECTRIC SA GREECE 100,00% FULL SPIDER ENERGY S.A. GREECE 100,00% FULL PROTERGIA ENERGY S.A. GREECE 100,00% FULL HELLENIC SOLAR S.A. GREECE 100,00% FULL AIOLIKI SAMOTHRAKIS S.A. GREECE 100,00% FULL NORTH AEGEAN RENEWABLES S.A. GREECE 100,00% FULL SOLIEN S.A. GREECE 100,00% FULL MOVAL S.A. GREECE 100,00% FULL IKAROS ANEMOS S.A. GREECE 100,00% FULL KERASOUDA S.A. GREECE 100,00% FULL ANEMODRASI S.A. GREECE 100,00% FULL ANEMORAHI S.A. GREECE 100,00% FULL CHORTEROU S.A. GREECE 100,00% FULL KISSAVOS DROSERI RAHI S.A. GREECE 100,00% FULL AETOVOUNI S.A. GREECE 100,00% FULL KISSAVOS PLAKA TRANI S.A. GREECE 100,00% FULL KISSAVOS FOTINI S.A. GREECE 100,00% FULL LOGGARIA S.A. GREECE 100,00% FULL ANEMOROI S.A. GREECE 100,00% FULL KILKIS PALAION TRIETHNES S.A. GREECE 100,00% FULL RENEWABLE SOURCES KARYSTIA S.A. GREECE 96,95% FULL FOIVOS ENERGY S.A. GREECE 90,03% FULL HYDROHOOS S.A. GREECE 90,03% FULL SMALL HYDROELECTRIC STATIONS PELOPONNISOU S.A. GREECE 90,03% FULL THESSALIKI ENERGY S.A. GREECE 90,03% FULL HYDROPOWER OPERATION S.A. GREECE 90,03% FULL DELTA ENERGY S.A. GREECE 90,03% FULL HYDRIA ENERGY S.A. GREECE 90,03% FULL AIOLIKI EVOIAS CHELONA S.A. GREECE 80,20% FULL AIOLIKI ANDROU TSIROVLIDI S.A. GREECE 80,20% FULL AIOLIKI SIDIROKASTROU S.A. GREECE 80,20% FULL AIOLIKI EVOIAS PIRGOS S.A. GREECE 80,20% FULL AIOLIKI EVOIAS POUNTA S.A. GREECE 80,20% FULL AIOLIKI ANDROU RAHI XIROKOBI S.A. GREECE 80,20% FULL MYTILINEOS AIOLIKI NEAPOLEOS S.A. GREECE 80,20% FULL METKA AIOLIKA PLATANOU S.A. GREECE 80,20% FULL AIOLIKI EVOIAS DIAKOFTIS S.A. GREECE 80,20% FULL MYTILINEOS HELLENIC WIND POWER S.A. GREECE 80,00% FULL GREEN ENERGY S.A. BULGARIA 80,00% FULL KORINTHOS POWER S.A. GREECE 65,00% FULL AIOLIKI TRIKORFON S.A. GREECE 100,00% FULL MAKRINOROS S.A. GREECE 100,00% FULL IONIA ENERGY S.A. GREECE 49,00% EQUITY MYIS THERMOREMA S.A. GREECE 40,00% EQUITY FTHIOTIKI ENERGY S.A. GREECE 35,00% EQUITY MYTILINEOS FINANCIAL PARTNERS S.A. LUXEMBOURG 25,00% EQUITY AIOLIKI ARGOSTILIAS S.A. GREECE 100,00% FULL ELEKTRON WATT S.A. GREECE 10,00% EQUITY Financial Statements for the period from January 1 st to December 31 st,

23 Changes in the Group Structure: On 05/07/2016 it was registered in the General Commercial Register (GEMΗ), the decision of 31/12/2015 of the General Assembly of the shareholders of the liquidating subsidiary of the Group "KATAVATIS RENEWABLE ENERGY SOCIETE ANONYME", approving the Closing Balance Sheet on 03/12/2015, the Liquidator Report, the Attachment and the final settlement of the company after the expiry of the liquidation. 1.4 Important Events Flexibility Compensation Mechanism On 31/12/2014 the validity period of the transitional capacity assurance mechanism expired. Regarding the new transitional capacity assurance mechanism (TCAM) which would be valid from 1/1/2015, despite the fact that all public consolation procedures were completed in time, the latest data were delivered by Greece to The Directorate-General for Competition (COMP) of the EU with a great delay (September 2015), thereby the period which was necessary for the activation of the mechanism in order to be used in 2015 expired. Consequently, the earnings before interest, taxes, depreciation and amortization (EBITDA) of the Group for 2015 were negatively impacted because of this fact by approximately 40 milion. The Flexibility Compensation Mechanism was finally adopted by law and entered into force on , following the no. C (2016) 1791 of the European Commission's Approval Decision ( ), with article 150 of Law 4389/2016, in application of the 3rd Memorandum of Understanding between the Hellenic Republic and the Institutions, as incorporated in Law 4336 / According to the same provision, the duration of the mechanism is set at twelve (12) months, ie until (unless the permanent mechanism for ensuring the adequacy or flexibility of the Electricity System is implemented earlier). The Unit Power Payment Price, ie the fee paid by the Transmission System Operator to the Producers Selected, has been legally set at 45,000 / MW of available power over the above period and with a maximum payment fifteen (15) million euro per eligible power plant. On , the consultation by the Energy Regulatory Authority on the arrangements for implementing the Regulation was concluded. It is explicitly stipulated in the law that the revenue of the selected units is ensured by the start of application of the Transitional Flexibility Compensation Mechanism, ie from , but it is collected from the time of their registration in the above "Registry of Flexible Units". It is noted that if this mechanism had been in place since 1/1/2016, the EBITDA of the Group would have been increased by 9.8m. Corporate Transformation On the Board of Directors of MYTILINEOS SA-GROUP OF COMPANIES (hereinafter "MYTILINEOS") announced the decision of the Board of Directors, "METKA INDUSTRIAL AND MANUFACTURING SOCIETE ANONYME" (hereinafter "METKA"), "ALUMINUM OF GREECE INDUSTRIAL AND COMMERCIAL SOCIETE ANONYME" (hereinafter "ATE"), " GENERATION AND SUPPLIES SOCIETE ANONYME" (hereinafter "Protergia") and "PROTERGIA AGIOS NIKOLAOS POWER SOCIETE Financial Statements for the period from January 1 st to December 31 st,

24 ANONYME OF GENERATION AND SUPPLY OF ELECTRICITY" (hereinafter "Protergia Thermo") of the merger by absorption of METKA, ATE, Protergia and Protergia Thermo by MYTILINEOS. The new flexible structure will benefit from a significant reduction in financial costs, economies of scale, optimization of procurement procedures, homogenization and improvement of human resource utilization, as well as exchange of know-how, experience and best practices between the different parts of the new entity resulting in significant operational synergies. The new, flexible and simplified scheme will provide enhanced financial flexibility, making it possible to diversify the cash flows of the new consolidated company and to strengthen its balance sheet. The merger, as decided in principle by the Boards of Directors of the transformed companies, has as a transformation balance date on and will be effected in accordance with the provisions, provisions and exemptions of Law 4172/2013, article 61 of Law 4438 / 2016, articles of the Codified Law 2190/1920 and in general the Greek commercial legislation. The intended corporate transformation is expected to be completed by 30/08/2017 at the latest. NOME auctions The company PROTERGIA AGIOS NIKOLAOS POWER SOCIETE ANONYME OF GENERATION AND SUPPLY OF ELECTRICITY, implementing the Code of Transactions for Procurement of Future Electricity Products, which stipulates the rights and obligations of Eligible Suppliers and Dealers, the Market Operator and the Seller of Futures, participated in October 2016 in the Auction for the Sale of Fixed Power Products. Out of the total quantity of 460 MWh for the auction, the company purchased 105 MWh at a market price of 37,37 / MWh. Retail market In June the strategic partnership of Protergia Group and OTE Group in the retail market was announced. In this context, COSMOTE and GERMANOS enrich the portfolio of services they offer to their customers with PROTERGIA's electricity supply. At the same time, PROTERGIA strengthens the network of points of sale and promotion of its products as they will be available in every corner of Greece through more than 450 COSMOTE and GERMANOS stores. Natural gas supply license RAE, through a decision taken at the end of the first quarter of 2016, granted a natural gas supply license with the right of PROTERGIA AGIOS NIKOLAOS POWER SOCIETE ANONYME OF GENERATION AND SUPPLY OF ELECTRICITY for the sale of natural gas to Eligible customers, which marks the beginning of this new activity, insofar as the relevant market will be liberalized. Renewable energy sources In December 2016, the Wind Farm with a capacity of 23.1 MW of the company "Andros Tsirovlidis SA" was licensed. Also in December 2016, the trial period of the new 15 MW power plant of the Company " Sidirokastro SA, located in the Municipality of Sintiki of Regional Unity of Serres, was successfully completed. The construction of the 12MW Wind Farm Anemomylos of GENERATION AND SUPPLIES SOCIETE ANONYME is expected to be completed by April Financial Statements for the period from January 1 st to December 31 st,

25 2. Summary of significant accounting policies The Financial Statements have been prepared under the accounting policies set out by the IFRSs which were implemented at the end of the preparation financial year (31 December 2016). All newly revised or issued Standards and interpretations applicable to the Company and in force on 31st December 2016 were taken into account in order to prepare the financial statements for the current financial year to the extent that they were applicable. The most significant accounting policies which have been applied when preparing these Financial Statements are presented below. 2.1 Financial Statements preparation framework The consolidated financial statements and the financial statements of the parent company GENERATION AND SUPPLIES SOCIÉTÉ ANONYME on 31 December 2016 covering the entire financial year 2016 have been drawn up based on the principle of historic cost as amended through the adjustment of specific assets and liabilities in current values, the principle of going concern and they comply with the International Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards Board (IASB), as well as with their interpretations, as issued by the IFRS Interpretations Committee and adopted by the European Union. The attached separate financial statements are drafted in accordance with C.L. 2190/1920 as in force. The presentation currency is Euro (the currency of the registered head office s country of the Protergia Group Parent Company) and all amounts are denominated in thousands of Euros, unless otherwise stated. The preparation of the financial statements according to the IFRSs requires the use of accounting estimates and judgments by the management when applying the Group s accounting policies. Significant assumptions by the management for the application of the Company s accounting policies have been emphasized where deemed appropriate. It is noted that the Company s financial statements are consolidated by MYTILINEOS S.A. - GROUP OF COMPANIES, with registered head office in Marousi, Attica, by using the full consolidation method Changes in accounting principles New Standards, Interpretations, Revisions and Amendments to existing Standards that are effective and have been adopted by the European Union The following amendments to IFRSs were issued by the International Accounting Standards Board (IASB), adopted by the European Union, and their implementation is mandatory from 01/01/2016 or later. Amendments to IAS 19 "Defined Benefits Scheme: Employee Contributions" (effective for annual periods beginning on or after 01/02/2015) In November 2013, the IASB issued limited-purpose amendments to IAS 19 entitled "Defined Benefits Scheme: Employee Contributions". These amendments apply to contributions of employees or third parties in respect of defined benefit plans. The purpose of the amendments is to simplify the accounting treatment for contributions that are independent of the years of service Financial Statements for the period from January 1 st to December 31 st,

26 of employees, such as contributions calculated as a fixed percentage on payroll. The amendments do not have any impact on the corporate / consolidated financial statements. Annual Improvements to IFRS - Cycle (effective for annual periods beginning on or after 01/02/2015) In December 2013, the IASB issued the "Annual Improvements to IFRSs - Cycle ", which consists of a series of amendments on seven issues and is part of the annual improvement program on IFRS. The amendments apply for annual periods beginning on or after 1 July 2014, although entities may apply them earlier. The issues included in this circle are as follows: IFRS 2: Definition of vesting conditions, IFRS 3: Accounting for a contingent consideration in business combinations, IFRS 8: Reunification of operating segments, IFRS 8: Agreements of all assets IFRS 13: Short-term receivables and payables, IAS 16 / IAS 38: Revaluation method - proportionate reclassification of cumulative depreciation and IAS 24: Principal Services Mentation. The amendments do not have any impact on the corporate / consolidated financial statements. Amendments to IFRS 11: "Accounting Handling of Acquirements in Joint Operations" (effective for annual periods beginning on or after 01/01/2016) In May 2014, the IASB issued amendments to IFRS 11. These amendments add new guidance on accounting for the acquisition of a joint venture that constitutes one business and clarify the appropriate accounting treatment for such acquisitions. The amendments do not have any impact on the corporate / consolidated financial statements. Amendments to IAS 16 and IAS 38: "Clarifications on Acceptable Depreciation Methods" (effective for annual periods beginning on or after 01/01/2016) In May 2014, the IASB adopted amendments to IAS 16 and IAS 38. IAS 16 and IAS 38 establish the principles to clarify how depreciation is treated as expected in the expected future economic outturn. Incorporated into the asset. The IASB has clarified that the use of revenue-based methods for calculating the depreciation of an asset is not appropriate because the income generated by an activity involving the use of an asset generally reflects factors other than the consumption of future financial assets benefits incorporated in the asset. The amendments do not have any impact on the corporate / consolidated financial statements. Amendments to IAS 16 and IAS 41 "Agriculture: Fruit Plantations" (effective for annual periods beginning on or after 01/01/2016) In June 2014, the IASB issued amendments modifying the financial reference for fruit crops. With this amendment, it was decided that fruit plantations should be accounted for in the same way as tangible fixed assets (IAS 16). Therefore, with these amendments, fruit crops fall within the scope of IAS 16 instead of IAS 41. Production under fruit plantations remains within the scope of IAS 41. The amendments have no impact on the Company's consolidated financial statements. Amendments to IAS 27: "Equity Method in Separate Financial Statements" (effective for annual periods beginning on or after 01/01/2016) In August 2014, the IASB issued limited-purpose amendments to IAS 27. With these amendments, an entity has the option of recognizing its investments in subsidiaries, joint ventures and associates under the equity method in the separate financial statements of which, until the adoption of the specific amendments, it did not apply. The amendments do not have any impact on the corporate / consolidated financial statements. Financial Statements for the period from January 1 st to December 31 st,

27 Annual Improvements to IFRS - Cycle (effective for annual periods beginning on or after 01/01/2016) In September 2014, the IASB issued the "Annual Improvements to IFRS - Cycle ", which consists of a series of amendments to four Standards and is part of the program for annual improvements to IFRSs. The amendments are effective for annual periods beginning on or after 1 January 2016, although entities may apply them earlier. The issues included in this circle are as follows: IFRS 5: Changes in Disposal Methods, IFRS 7: Service Contracts and Implementation of Amendments to IFRS 7 in Condensed Interim Financial Statements, IAS 19: Discount Rate: Local Market Issue, and IAS 34: Disclosure of information in the interim financial report. The amendments do not have any impact on the corporate / consolidated financial statements. Amendments to IAS 1: "Disclosure Initiative" (effective for annual periods beginning on or after 01/01/2016) In December 2014, the IASB made amendments to IAS 1. These amendments are intended to resolve issues relating to existing disclosure and disclosure requirements and to ensure that entities are able to exercise judgment in the preparation of the Finance Situations. The amendments do not have any impact on the corporate / consolidated financial statements. Amendments to IFRS 10, IFRS 12 and IAS 28: "Investing Entities: Applying the Exemption from Consolidation" (effective for annual periods beginning on or after 01/01/2016) In December 2014, the IASB issued limited-purpose amendments to IFRS 10, IFRS 12 and IAS 28. These amendments introduce explanations regarding the accounting requirements of investment entities, while providing for exemptions in specific cases, which will reduce the Costs associated with the implementation of the Standards. The amendments do not have any impact on the corporate / consolidated financial statements New Standards, Interpretations, Revisions and Amendments, which have not yet been adopted by the European Union The following new Standards and Standards amendments have been issued by the International Accounting Standards Board (IASB) but either have not yet entered into force or have not been adopted by the European Union. IFRS 14 "Transitional Accounts of Regulated Activities" (effective for annual periods beginning on or after 01/01/2016) In January 2014, the IASB issued a new Standard, IFRS 14. The purpose of this interim standard is to enhance the comparability of financial reporting of entities that have regulated activities. In many countries, there are sectors subject to special regulation, according to which government authorities regulate the provision and pricing of specific types of activities of private economic entities. The Group and the Company will examine the impact of all of the above in the consolidated financial statements, although they are not expected to have any. These have not been adopted by the European Union pending the final version of the Standard. IFRS 15 "Revenue from Contracts with Customers" (effective for annual periods beginning on or after 01/01/2018) In May 2014, the IASB issued a new Standard, IFRS 15. This Standard is fully in line with revenue recognition requirements in accordance with the principles of both IFRS and US GAAP ( US GAAP). The underlying principles on which this Standard is based Financial Statements for the period from January 1 st to December 31 st,

28 are consistent with an important part of current practice. The new Standard is expected to improve financial reporting by establishing a more robust framework for resolving issues arising by enhancing comparability across industries and capital markets by providing additional disclosures and clarifying the accounting treatment of contract costs. The new Standard replaces IAS 18 "Revenue", IAS 11 "Construction Contracts", and some revenue-related Interpretations. The Group and the Company will examine the impact of all of the above in the consolidated financial statements, although they are not expected to have any. These have been adopted by the European Union with effect from 01/01/2018. IFRS 9 "Financial Instruments" (effective for annual periods beginning on or after 01/01/2018) In July 2014, the IASB issued the final version of IFRS 9. The improvements made by the new Standard include the creation of a reasonable model for classification and measurement, a single predictive model for impairment "expected loss" and also one substantially reformed approach for hedge accounting. The Group and the Company will examine the impact of all of the above in the consolidated financial statements, although they are not expected to have any. These have been adopted by the European Union and entered into force on 01/01/2018. Amendments to IFRS 10 and IAS 28 "Sales or Contributions of Assets between an Investor and the Associate or its Consortium" (the IASB postponed indefinitely the entry into force of these amendments) In September 2014, the IASB issued limited-purpose amendments to IFRS 10 and IAS 28. The purpose of these amendments is to address a recognized inconsistency between the requirements of IFRS 10 and those of IAS 28 in dealing with the sale or asset transfer between an investor and his or his associate or consortium. In December 2015, the IASB suspended indefinitely the entry into force of these amendments pending the results of the research project on accounting treatment using the equity method. The Group and the Company will examine the impact of all the above in the consolidated financial statements, although they are not expected to have any. These have not been adopted by the European Union. IFRS 16 "Leases" (effective for annual periods beginning on or after 01/01/2019) In January 2016, the IASB issued a new Standard, IFRS 16. The purpose of the IASB project was to develop a new Lease Model that defines the principles that both parties apply to a contract - that is, the client (The "lessee") and the supplier ("the lessor") - to provide relevant leases information in a manner that faithfully reflects these transactions. To achieve this purpose, the lessee should recognize the assets and liabilities arising from the lease. The Group and the Company will examine the impact of all the above in the consolidated financial statements, although they are not expected to have any. These have not been adopted by the European Union. Amendments to IAS 12 "Recognition of deferred tax assets for unrealized losses" (effective for annual periods beginning on or after 01/01/2017) In January 2016, the IASB issued limited-purpose amendments to IAS 12. The purpose of these amendments is to clarify the accounting treatment of deferred tax assets for unrealized losses on debt securities measured at fair value. The Group and the Company will examine the impact of all the above in the consolidated financial statements, although they are not expected to have any. These have not been adopted by the European Union. Financial Statements for the period from January 1 st to December 31 st,

29 Amendments to IAS 7 "Disclosure Initiative" (effective for annual periods beginning on or after 01/01/2017) In January 2016, the IASB issued limited-purpose amendments to IAS 7. The purpose of these amendments is to make it possible for users of financial statements to assess changes in liabilities arising from financial activities. The amendments require entities to provide disclosures that will enable investors to evaluate changes in liabilities arising from financial activities, including changes in cash flows and non-cash changes. The Group and the Company will examine the impact of all of the above in the consolidated financial statements, although they are not expected to have any. These have not been adopted by the EU. Clarifications to IFRS 15 "Revenue from Contracts with Customers" (effective for annual periods beginning on or after 01/01/2018) In April 2016, the IASB issued clarifications to IFRS 15. The amendments to IFRS 15 do not alter the core principles of the Standard but provide clarification as to the application of those principles. The amendments clarify how an engagement commitment is recognized in a contract, how it is determined whether an entity is the principal or the trustee, and how it is determined whether the income from the grant of a license should be recognized at a particular time; or over time. The Group and the Company will examine the impact of all the above in the consolidated financial statements. These have not been adopted by the European Union. Amendment to IFRS 2 "Classification and measurement of share-based Payment Transactions" (effective for annual periods beginning on or after 01/01/2018) In June 2016, the IASB issued a limited purpose amendment to IFRS 2. The purpose of this amendment is to provide clarification on the accounting treatment of specific types of equity-settled payment transactions. In particular, the amendment introduces the requirements for the accounting treatment of the effect of vesting and non-vesting conditions on the measurement of cashbased equity-settled payments, the accounting treatment of equity-settled payment transactions bearing a settlement characteristic in a deduction basis for a withholding tax, and an amendment to the terms and conditions of a share-based payment which alters the transaction classification from cash-settled to equity-settled. The Group and the Company will examine the impact of all the above in the consolidated financial statements, although they are not expected to have any. These have not been adopted by the European Union. Amendments to IFRS 4: "Application of IFRS 9 Financial Instruments in conjunction with IFRS 4 Insurance Contracts" (effective for annual periods beginning on or after 01/01/2018) In September 2016, the IASB issued amendments to IFRS 4. The purpose of these amendments is to determine the treatment of the temporary accounting effects due to the different date of entry into force of IFRS 9 Financial Instruments and the current version of the Standard on Insurance Contracts. Amendments to the existing requirements of IFRS 4 allow entities whose main insurance-related activities postpone the application of IFRS 9 by 2021 ("temporary exemption") and allow all issuers of insurance contracts to recognize the other Comprehensive Income, rather than profits or losses, the volatility that may result from the application of IFRS 9 before the adoption of the new Standard on Insurance Contracts ("overlapping approach"). The Group and the Company will examine the impact of all of the above in the consolidated financial statements, although they are not expected to have any. These have not been adopted by the European Union. Financial Statements for the period from January 1 st to December 31 st,

30 Annual Improvements to IFRSs - Cycle (effective for annual periods beginning on or after 01/01/2017 and 01/01/2018) In December 2016, the IASB issued the "Annual Improvements to IFRS - Cycle ", which consists of a series of amendments to some Standards and is part of the program for annual improvements to IFRSs. The amendments included in this circle are as follows: IFRS 12: Clarification of the Scope of the Standard, IFRS 1: Deletion of short-term exemptions for first-time adopters of IFRSs, IAS 28: Measurement of a related or a joint venture at fair value. The amendments are effective for annual periods beginning on or after 1 January 2017 with respect to IFRS 12 and on or after 1 January 2018 with respect to IFRS 1 and IAS 28. The Group and the Company will examine the impact of all the above in the Consolidated / Company Financial Statements, although they are not expected to have any. These have not been adopted by the European Union. IFRIC 22 "Foreign Currency Transactions and Advance Payments" (effective for annual periods beginning on or after 01/01/2018) In December 2016, the IASB issued a new IFRIC 22 Interpretation. This Interpretation includes the exchange rate requirements to be used when presenting foreign currency transactions (eg revenue transactions) when payment has been received or paid in advance. The Group and the Company will examine the impact of all of the above in the consolidated financial statements, although they are not expected to have any. These have not been adopted by the European Union. Amendments to IAS 40 "Transfers of Property Investments from or to Other Categories" (effective for annual periods beginning on or after 01/01/2018) In December 2016, the IASB made limited scoping changes to IAS 40. The purpose of these amendments is to strengthen the principle of transfers from or to investment property to determine that (a) a transfer from, or Property investments should be made only if there is a change in the use of the property and (b) such a change in the use of the property would include the valuation of the property that meets the criteria for its classification as an investment property. This change in use should be supported by relevant documentation / evidence. The Group and the Company will examine the impact of all of the above in the consolidated financial statements, although they are not expected to have any. These have not been adopted by the European Union. 2.3 Consolidation (a) Subsidiaries: Subsidiaries are entities (including financial special purpose entities) over which the Group has a participation percentage of more than one half of the voting rights or the ones where the Group has the ability to direct the financial and operating policies followed. The existence of contingent voting rights which may be exercised or converted shall be taken into account, when the Group assesses whether it controls a company. Subsidiaries are fully consolidated (full consolidation) by means of the acquisition method from the date that control over them is acquired and they cease to be consolidated from the date that said control does no longer exist. Financial Statements for the period from January 1 st to December 31 st,

31 The acquisition of a subsidiary by the Group is accounted based on the purchase method. Paragraph 2.9 Intangible assets Goodwill describes the accounting treatment of goodwill. The cost of the acquisition of a subsidiary is measured as the fair value of the assets given, the shares issued and the liabilities assumed on the date of the exchange, plus any costs directly attributable to the transaction. Personalized assets, liabilities and contingent liabilities assumed during a business combination are measured upon acquisition at fair value regardless of the participation percentage. The cost of the acquisition, apart from the fair value of the individual assets acquired, is recorded as goodwill. If the total cost of acquisition is less than the fair value of the individual assets acquired, the difference is entered directly into the profit and loss account. Intercompany transactions, balances and unrealized profits from transactions between Group companies are eliminated. Unrealized losses are also eliminated unless the transaction provides evidence of impairment of the asset transferred. Accounting policies of subsidiaries have been amended where necessary to ensure consistency with the policies adopted by the Group. Transactions with minority interests: For the accounting of transactions with minority interests, the Group applies the accounting principle that treats these transactions as transactions with third parties outside the Group. Sales to minority interests result in profits and losses for the Group, which are recorded in the profit and loss account statement. Purchases from minority interests result in goodwill, which is the difference between the price paid and the percentage of the book value of the equity of the subsidiary acquired. In its separate financial statements Protergia has recognized its investments in subsidiaries, at presumed cost, and particularly at fair value as determined on the date of the initial transition to the IFRSs. (b) Associates: Associates are enterprises over which the Group may exercise significant influence but which do not qualify to be classified as subsidiaries or as participation to a joint venture. The assumptions used by the Group recommend that a shareholding of voting rights between 20% and 50% of a company suggests a significant influence on this company. Investments in associates are initially recognized at cost and subsequently they are deemed to use the equity method. At the end of each financial year, the cost increases along with the investing company in proportion to the changes in equity of the invested company and decreases along with the dividends received from the associate. As regards acquisition goodwill, it reduces the value of the participation at the expense of the results of the financial year, when its value decreases. The Group s share of profits or losses of associated companies after the acquisition is recognized in the profit and loss account, while the share of changes in reserves after the acquisition is recognized in the reserves. Accumulated changes affect the book value of investments in associates. When the Group s share of losses in an associate company is equal to or exceeds its participation in the associate, including any other doubtful receivables, the Group does not recognize any further losses, unless it has covered obligations or made payments on behalf of the associate, and in general those arising from the shareholder status. Unrealized profits from transactions between the Group and its associates are eliminated according to the shareholding of the Group in the associates. Unrealized losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred. The accounting policies of associates are modified so as to be consistent with those used by the Group. Financial Statements for the period from January 1 st to December 31 st,

32 2.4 Information per sector Since 2012 and for management purposes the Group is organized into three major business activities as follows: a) Electricity Production, b) Electricity Supply (Retail and Trading) and c) Other Activities. Electricity (E) is produced by plants fuelled by natural gas (Thermal) and Renewable Energy Sources (RES), which are in operation and participate in the activity (a) Electricity Production. Similarly, the individual activities which created profits during the financial year participate in the activity (b) Supply of Electricity. All other activities, such as investment development and project licensing, as well as the activities of the Company apart from E are monitored under sector (c) Other. In accordance with IFRS 8 Operating Segments, the management reviews the operating results of business segments separately so as to make decisions about resources to be allocated and to assess its performance. 2.5 Foreign currency conversion (a) Functional and presentation currency: The items in the financial statements of the subsidiaries of the Group are measured based on the currency of the primary economic environment in which the Group operates (functional currency). The consolidated financial statements are presented in Euros ( ), which is the functional currency and presentation currency of the parent company and all its subsidiaries. (b) Transactions and account balances: The transactions in foreign currencies are converted into the functional currency using the exchange rates (current rates) prevailing at the transaction date. Profits and losses from foreign exchange differences arising from the settlement of such transactions during the period and from the conversion of monetary items denominated in foreign currency using the current rates at the balance sheet date shall be recognized in the profit or loss statement. Foreign exchange differences from non-monetary items carried at fair value shall be considered as part of the fair value and shall be consequently entered wherever the fair value differences are. The Group s activities in foreign currencies outside Greece (which are normally an inseparable part of the activities of the parent company) are converted into the functional currency by using the exchange rates prevailing at the dates of transactions, whereas the assets and liabilities of the activities abroad, including goodwill and fair value adjustments, which emerge during the consolidation, are converted into Euros at the exchange rates prevailing at the balance sheet date. (c) Group Companies: The operating results and equity of all the Group companies (apart from the ones operating in hyperinflationary economies), whose functional currency is different from the presentation currency of the Group, shall be converted into the presentation currency of the Group as follows: (i) Assets and liabilities for each balance sheet are presented and converted at the exchange rate at the balance sheet date. (ii) Income and expenses in the profit and loss statement of each company are converted according to the average exchange rate configured at the beginning of the financial year until the balance sheet closing date. (iii) All foreign exchange differences resulting from the above shall be entered into the reserve from the conversion of subsidiaries balance sheets into foreign currency included in the equity. Goodwill and fair value adjustments arising during the acquisition of subsidiaries operating abroad are entered as assets/liabilities of the foreign subsidiary and they shall be converted at the closing rate in force at any time. Financial Statements for the period from January 1 st to December 31 st,

33 2.6 Major accounting judgments, estimations and assumptions The preparation of the financial statements according to the IFRSs requires the formation of judgments, estimations and assumptions on behalf of the management, which influence the published records of assets and liabilities, as well as the notification of the contingent receivables and liabilities on the date the financial statements are being drafted and the published amounts of income and expenses during the reporting period. The actual results may differ from the ones which have been estimated. Any estimations and judgments are continuously reassessed and they are based both on past experience and on other factors, including the prospects for future events which are considered reasonable on the grounds of the specific conditions Judgments During the procedure of implementation of the accounting principles and judgments of the management, save the ones which include estimations, which are formed by the management, which have the most significant impact on the amounts which are recognized in the financial statements and which mainly refer to: classification of investments Upon the acquisition of an investment the management decides whether it shall be classified as held to maturity, held for trading, designated at fair value through profit or loss, or available for sale. As regards the ones held to maturity, the management examines whether the criteria set out by IAS 39 are fulfilled and more specifically whether the Group has the positive intention and ability to hold them to maturity. The Group classifies investments as held for trading if they have been acquired or incurred principally for the purpose of selling or repurchasing them in the near term. The classification of investments which are designated at fair value through profit or loss depends on the manner in which the management monitors the yield of such investments. When they are not classified as held for trading, and yet there are available and reliable fair values and any changes in the fair values are included in the profit or loss statements, then they are classified as designated at fair value through profit or loss. All other investments are classified as available for sale. recovery of receivables The commercial receivables are originally designated at fair value and thereafter they are valuated at the unamortized cost minus the provisions for depreciation, by using the method of actual interest rate. When the Company has objective indications that not all amounts due shall be collected, according to the terms of each agreement, it forms a provision for the depreciation of commercial receivables. The amount of such provision is formed from the difference which results between the book value of receivables and the present value of the estimated future cash flows, which are paid in advance using the actual interest rate. The amount of the provision is entered as expenditure among the other operating expenses in the profit and loss statement. impairment of reserves There is no application for the Group and the Company. should a lease agreement which is concluded with an external lesser be entered as operating or leasing agreement? Leases, for which all risk and benefits of the leased property substantially remain with the lesser, are identified as operating leases. The amounts paid for the repayment of the above lease instalments are entered in the profit and loss statement. Any Financial Statements for the period from January 1 st to December 31 st,

34 leases relating to tangible assets for which the Company substantially holds all risks and benefits from the leased assets are identified as leasing agreements Estimations and assumptions Any specific amounts which are included in or affect the financial statements and the relevant disclosures should be estimated, by requiring the formation of assumptions regarding values or conditions which may not be known in certainty when the financial statements are drafted. Significant accounting estimation is the estimation which is important for the image of the financial position of the Company and its results and which requires the most difficult, subjective or complicated management judgments, often as a result of the need to form estimations regarding the influence of uncertain assumptions. The Company assesses such estimations on a constant basis, based on past results and experience, meetings with experts, trends and other methods which are considered as reasonable given the particular conditions, as well as our provisions as to the manner in which they may change in the future. When preparing the financial statements, the significant accounting estimations and judgments adopted by the Management for the application of the accounting policies of the Company and the Group are consistent with those applied in the annual financial statements of 31 December Thereafter and in particular for the financial statements of 31/12/2016 the following is noted: Estimated impairment of goodwill and identifiable intangible assets after company acquisition The Group conducts an annual audit for any impairment of goodwill and intangible assets which have been recognized after acquisitions, as well as intermediate ones, when the events or circumstances enable the existence of impairment (e.g. a significant adverse change in the business climate or a decision to sell or dispose of a unit). The determination of the occurrence of impairment requires the valuation of the respective unit, which is estimated by using the method of discounted cash flows. When available and as appropriate, the relevant market multiplication coefficients are used to corroborate the results of the discounted cash flows. By applying this methodology, the company relies on a number of factors, including actual operating results, future business plans, economic projections and market data. In case any impairment of goodwill or intangible assets, which were recognized after the acquisition, emerges from this analysis, then the measurement of the impairment requires a fair value estimate for each identifiable tangible or intangible asset by using the approach of cash flow data. The Group conducts an annual audit for any goodwill impairment, in accordance with the accounting policy as stated in Note Income taxes The Group and the Company are subject to income tax under multiple tax jurisdictions. Significant estimations are required for the establishment of a provision as regards income tax. There are many transactions and calculations, the exact tax computation for which is uncertain in the normal course of the activities of the undertaking. The Group and the Company recognize their liabilities concerning the anticipated issues of tax audit, based on estimations of whether any additional taxes are due. If the final amount of taxes imposed due to these affairs differs from the amounts as originally calculated, said differences shall affect the income tax and the provisions of deferred taxation for the period during which such amounts have been determined. Financial Statements for the period from January 1 st to December 31 st,

35 Provisions The provisions for Bad Debts are represented by the amounts which may be recovered. As soon as it is known that a specific account is subject to a risk greater than the ordinary credit risk (i.e. poor creditworthiness of customer, dispute as to the existence of debt or the amount thereof, etc.) then said account is analysed and entered in case the conditions indicate that such receivable shall remain outstanding. The provisions for Environmental Liabilities are depicted in the amounts of outflows expected to be required to settle the obligation. Contingent events The Group is involved in litigation and compensation claims in the normal course of its business. The determination of contingent liabilities relating to litigation and claims is a complex process which involves judgments on the potential consequences and interpretations of laws and regulations. Any changes in judgments or interpretations may result to an increase or decrease in the Group s contingent liabilities in the future. 2.7 Financial assets fair value The fair value of a financial asset is the amount which is collected when selling an asset or paid to settle a liability in a transaction under normal conditions between two trading parties at the date of its valuation. The fair value of financial assets in the financial statements of 31 December 2016 was determined at the best possible estimate by the Management. In cases where there are no available data or they are limited due to active markets, the valuations of fair values emerge from the Management s judgment according to available information. The methods of fair value valuation are classified into three levels: Level 1: Exchange values from active markets for identical marketable items. Level 2: Values that are not level 1 but can be traced or identified directly or indirectly through quoted prices from active markets. Level 3: Values for assets or liabilities which are not based on quoted prices from active markets. The following methods and assumptions were used to estimate the fair value of each class of financial asset: Cash and cash equivalents, trade and other receivables, suppliers and other liabilities: The carrying amount is proportional to the fair value because either the maturity of these financial instruments is short-term or there is a limited currency risk which affects fair value. 2.8 Tangible assets Fixed assets are represented in the financial statements at their cost value, minus, firstly, the accumulated amortizations, and secondly, any depreciations of fixed assets. The acquisition cost includes all directly ascribed costs for the acquisition of the assets. Any subsequent costs are entered in augmentation of the book value of tangible fixed assets or as a separate fixed asset solely to the extent that such costs increase the future economic profits which are expected to inflow from the utilization of the fixed Financial Statements for the period from January 1 st to December 31 st,

36 asset and whose cost may be measured in a reliable manner. The cost of repair and maintenance is entered to the profits or losses when they emerge. Amortizations of other fixed tangible assets (save plots of land which are not amortized) are calculated by the fixed method within their useful life, as follows: Buildings years Mechanical Equipment 4-35 years Vehicles 4-10 years Οther Equipment 3-7 years Wind / Photovoltaic Parks 20 years Small Hydroelectric Stations 20 years Residual values and useful lives of tangible assets are subject to review any time the balance sheet is drafted. When the book values of tangible assets exceed their recoverable value, the difference (impairment) is entered directly as an expense in the profit and loss account. Major spare parts qualify as property, plant and equipment when an entity expects to use them during more than one period. Similarly, if the spare parts and servicing equipment can be used only in connection with an item of property, plant and equipment, they are accounted for as property, plant and equipment. Upon the sale of tangible assets, the differences between the consideration collected and their book value are entered as profits or losses to the account. Repairs and maintenance are entered as expenses of the time period to which they refer. Self-produced tangible assets shall constitute an addition to the cost value of tangible assets at values which include the direct payroll costs of the personnel, who participate in the construction (corresponding employer s contributions), the consumed material costs and other general costs. Borrowing Cost The financial entity shall capitalize borrowing costs which may be directly attributable to the acquisition, construction or production of an asset that qualifies as part of the cost of that asset. The financial entity shall recognize other types of borrowing costs as expenses of the period in which they occurred. Borrowing costs that qualify for capitalization are determined in accordance with IAS Intangible assets Intangible assets include goodwill, the rights to use fixed assets, software licenses, licenses for the production, installation and operation of energy plants, the expenditure to restore land. Financial Statements for the period from January 1 st to December 31 st,

37 Goodwill: Goodwill is the difference between the acquisition cost and the fair value of assets and liabilities of the acquired subsidiary / associate at the date of acquisition. The Company at the date of acquisition recognizes the goodwill which arose from the acquisition as an asset, and it presents it at cost. This cost is equal to the amount by which the acquisition cost exceeds the company s share in the assets, liabilities and contingent liabilities of the acquired company. After the initial recognition, goodwill is measured at cost less any accumulated losses due to impairment of its value. Goodwill is not amortized, but it is examined annually for any impairment of its value, if any events occur which indicate a loss according to IAS 36. To facilitate the processing of impairment tests, the amount of goodwill is allocated to cash-generating units. The cash flow unit is the smallest identifiable group of assets that generates independent cash flows and represents the level at which the Group collects and presents financial data for internal reporting purposes. The impairment of goodwill is determined by calculating the recoverable amount from the cash-generating units to which the goodwill relates. Any impairment losses relating to goodwill cannot be reversed in future periods. The Group performs its annual impairment test of goodwill as at 31 December of each financial year. In case the acquisition cost is less than the Company s share in the equity of the acquired company, then the former recalculates the cost of acquisition, evaluates the assets, liabilities and contingent liabilities of the acquired company and recognizes as profit directly in the profit and loss statement any difference which remains after the recalculation. Software: Software licenses are valuated at acquisition cost minus amortizations. Amortizations are performed by the fixed method during the useful life of said assets. Production, installation and operation licenses of power plants: The various types of licenses, which are possessed by the Group, enable it to construct power plants or they grant it the right to generate and sell energy. The current market conditions provide clear evidence of the recoverable value of these licenses. For this reason, the Group has recognized the licenses as intangible assets at fair value, minus the depreciations and any provision for impairment of their value. The Group carries out tests of impairment on an annual basis by using the following methodology: i) It applies the methodology of Discounted Cash Flows using assumptions which prevail in the energy market. The period reviewed by the management is more than five years; a period which is encouraged by IAS 36, since particularly for renewable energy units a longer period is deemed quite satisfactory. ii) It compares the recoverable value, which is computed as the use value of the unit, to its carrying value. Where the recoverable is less than the carrying value, a provision is made for the impairment of the value at the detriment of the results. Rights to Use Tangible Assets: Rights to exploit tangible assets which are granted in the framework of construction contracts (offsets) are valued at their acquisition cost, fair value at the date they were granted, minus depreciations. The depreciations are calculated by using the method of produced units. Research and development expenses: Research expenses are recognized as expenses in the financial year during which they occur. Costs which arise due to development projects (and relate to the design and testing of new or improved products) are recognized as intangible assets when it is likely that they shall provide the company with future economic benefits. Other Financial Statements for the period from January 1 st to December 31 st,

38 development expenditures are entered in expense accounts as soon as they occur. Development expenses, which in previous financial years were recognized as expenses, shall not be recognized as tangible assets in a subsequent financial year. Development expenses which have been capitalized shall be amortized from the commencement of the commercial production of the product, based on the straight-line depreciation method during the period of the expected benefits of the product. The depreciation period which has been adopted by the Group does not exceed 5 years. Access & Restoration Expenditure Access and restoration expenses shall be recognized as intangible assets provided that they offer the Company future economic benefits and their depreciation is based on the method of production units Impairment of Assets Assets that have an indefinite useful life are not amortized and are tested annually for impairment when certain events indicate that their carrying value may not be recoverable. The assets subject to amortization are tested for impairment when there are indications that their carrying value may not be recoverable. The recoverable amount is the largest amount between the net selling price and value in use. The loss due to impairment of assets is recognized by the company when the carrying value of these assets (or of the Cash-Generating Unit) is larger than their recoverable amount. Net selling price is the amount obtainable from the sale of an asset in the context of a reciprocal transaction, in which the parties have full knowledge and participate voluntarily, after deducting any additional direct cost of disposal of the asset, while value in use is the current value of estimated future cash flows expected to inflow to the company after the use of an asset and its disposal at the end of its useful life Cash and cash equivalents Cash and cash equivalents include cash at bank and in hand Share capital Any expenses which occurred for the issue of shares shall be entered after the deductions of the relevant income tax, decreasing the proceeds of the issue Income tax & deferred tax The charge of the financial year with income taxes is formed by current taxes and deferred taxes, namely taxes or tax relief which are related to the economic profits which emerge during said period but which have already been assessed or are to be assessed by tax authorities in different periods. The income tax is entered in the profit and loss account, save the tax which refers to transactions entered directly as equity. Financial Statements for the period from January 1 st to December 31 st,

39 Current income taxes include short-term liabilities or even receivables of fiscal authorities which are related to payable taxes on the taxable income of the financial year and any additional income taxes which refer to previous financial years. Current taxes are calculated according to tax rates and tax laws which apply to accounting periods they are related to, based on the taxable profit for the year. All changes made in short-term tax assets or liabilities are recognized as part of tax expenses in the profit and loss statement. The deferred income tax is defined by means of the method of liability which results from provisional differences between book value and tax base of assets and liabilities. No deferred tax is computed if it results from the original recognition of an asset or liability in a transaction, save in case of consolidation of enterprises, which, when the transaction was performed, did not affect neither the accounting nor the tax profit or loss. Deferred tax receivables and liabilities are evaluated based on tax rates which are expected to be implemented in the period in which such receivable or liability is to be settled, by taking into consideration the tax rates (and tax rules) which have entered into force or which substantially apply until the date of the Statement of Financial Position. In case of failure to clearly determine the time of reversion of provisional differences, the tax rate which is in force in the financial year after the date of the Statement of Financial Position shall apply. Deferred tax receivables are recognized to the extent there shall be a future tax profit for the utilization of the provisional difference which creates the deferred tax receivable. Most changes in deferred receivables or liabilities are recognized as part of the tax expenses in the profit and loss account. Only such changes of assets or liabilities which are directly recognized as the Company s equity, such as the reassessment of the real estate value, have as a result that the relevant change of the deferred tax receivables or liabilities is being debited or credited against the relevant equity account Benefits to personnel Short-term benefits: Short-term benefits to employees (save severance payments due to the termination of employment) in money or in kind are entered as an expense when they become accrued. Any outstanding amount is entered as a liability, whereas in case the amount already paid exceeds the amount of the severance payment, the company recognizes the amount in excess as an asset (prepaid expense) only to the extent that the prepayment shall lead to a reduction of future payments or to a refund. Post-employment benefits: Post-employment benefits include pensions or other benefits (life insurance and medical insurance) after the termination of the employment, as a consideration to the employees service. Therefore they include both defined contributions plans and defined benefits plans. In case of such benefits the accrued cost of defined contributions plans is entered as an expense in the period to which it refers Grants The Group recognizes government grants which cumulatively meet the following criteria: a) There is a presumed certainty that the company has complied or will comply with the terms of the grant; and b) it is probable that the amount of the grant will be Financial Statements for the period from January 1 st to December 31 st,

40 received. Grants are entered at fair value and they are systematically recognized as income, based on the principle of correlation of grants with the related costs which they subsidize. Grants related to assets are included in the long-term liabilities as deferred income and they are systematically and rationally recognized as income during the useful life of the fixed asset Provisions and contingent liabilities Provisions are recognized when the Company has current legal or presumed liabilities resulting from past events, their clearing is possible through outflows of resources and the estimation of the exact amount of the liability may be made accurately. The provisions are reviewed on the date of drawing up of each Statement of Financial Position and they are adjusted in order to reflect the present value of the expense which is expected to be required for the settlement of the liability. Contingent liabilities are not recognized in the financial statements but they are disclosed, save where the possibility of outflows of resources which incorporate economic profits is scarce. Contingent receivables are not recognized in the financial statements but they are disclosed provided that the economic profits inflow is deemed possible Recognition of income and expenses Income: Income includes fair value of sales of goods and supply of services, net of Value Added Tax, deductions and refunds. Intercompany income within the Group is completely eliminated. The recognition of income is carried out as follows: - Sales of goods: Sales of goods are recognized when the Company delivers the goods to customers, such goods are accepted by them and the collection of the debt is reasonably secured. - Supply of services: Income from the supply of services is computed for the period in which such services are supplied, on the grounds of the stage of completion of the supplied service in relation to the total supplied services. - Income from taxes: Income from taxes is recognized on the grounds of time analogy and by applying the actual interest rate. In case of impairment of receivables, their book value is reduced to their recoverable amount which is the current value of the remaining future cash flows discounted by the original actual interest rate. Further on, the interest is computed with the same interest rate on the impaired (new book) value. - Dividends: Dividends are entered as income, when the right to collect them is established. Expenses: Expenses are entered into the profit and loss account on an accrual basis. Payments carried out for operating leases are transferred to the profit and loss account as expenses, during the time of utilization of the leased premises. Expenses from interests are recognized on an accrual basis Leases Any lease agreements where the lesser transfers the right of utilization of an asset for an agreed time period, without, however, also transferring the risks and return of the ownership of the fixed asset, shall be classified as operating leases. Any payments Financial Statements for the period from January 1 st to December 31 st,

41 carried out for operating leases (net of any motives offered by the lesser) are recognized in the profit and loss account mutatis mutandis during the term of the lease Distribution of dividends The distribution of dividends to the shareholders of the parent company is recognized as a liability in the consolidated financial statements on the date when the distribution is approved by the General Meeting of shareholders Employee benefits The IAS 19 has brought a series of changes in the representation of employee benefits, and in particular: - It removes the corridor method and requires that the effect resulting from the recalculations in the current period shall be recognized in other comprehensive income. - It changes the measurement and presentation of specific cost elements of defined benefits. The net amount in the profit and loss account is affected by the removal of the expected income on the plan assets and the interest costs and by their replacement with a net interest rate cost based on the net asset or net liability of the defined benefit plan. - It enhances disclosures, by including more information regarding the characteristics of the defined benefit plans and the risks involved Compulsory measurement of pollutant emissions Pollutant emissions are recognized based on the net liability method whereby the Company recognizes a liability emerging from pollutant emissions when the actual emissions exceed the emission levels as established by the EU. The liability is measured at fair value to the extent that the Company has the obligation to cover the deficit through purchases. Any rights acquired in excess of those required to cover the deficits are recognized as intangible assets at cost. 3. Risk management Financial risk management purposes and policies The Company is exposed to financial risks such as liquidity risk. The risk management plan of the Company aims to limit any possible negative effect on the financial results, which may occur due to the inability to predict financial markets, as well as the fluctuations in cost and sales variables. The basic policies of risk management are defined by the Company s Management. The risk management policy is applied by the Treasury Department of the parent Company, which acts as a service centre operating under specific guidelines as approved by the Management. The procedure followed is presented below: Evaluation of the risks that are related to activities and operations of the Company; Methodology planning and selection of the appropriate financial products to reduce risks; and Implementation/application according to the risk management procedure as approved by the management. Financial Statements for the period from January 1 st to December 31 st,

42 3.1 Financial Instruments The Group's financial instruments mainly consist of deposits in banks and commercial debtors and creditors, loans to and from subsidiaries, associates and lease obligations. Financial assets, as well as financial liabilities at the date of the financial statements can be classified as follows: GENERATION AND SUPPLIES SOCIETE ANONYME - Group GENERATION AND SUPPLIES SOCIETE ANONYME - Parent (Amounts in thousands ) Non - Current Assets Other Long Term Receivables Total Current Assets Financial Instruments Customers and Other Commercial Receivables Cash and cash equivalents Total Long-term liabilities Long Term Debt Obligations Other Long Term Liabilities Total Short Term Liabilities Short Term Loan Liabilities Long Term Liabilities payable in the next financial year Suppliers and other obligations Total The Company adopted the IFRS 13 Fair Value Measurement. The financial assets and liabilities indicated in the financial position statement, which are measured at fair value, are grouped under a fair value hierarchy of three levels. These three levels depend upon the manner the important parameters of measurement are defined. As a result, these three levels are formed as follows: - Level 1: Renegotiation prices within an active market; - Level 2: Prices from valuation models based on observable market data, other than the active market prices which are included in Level 1; - Level 3: Prices from valuation models that are not based on observable market data. Financial Statements for the period from January 1 st to December 31 st,

43 The following table illustrates the three Levels of classification of the Group s financial assets and liabilities which are measured at fair value on 31/12/2016 and 31/12/2015: Protergia Group Financial elements of liabilities Amounts in thousands 31/12/2016 Level 1 Level 2 Level 3 Currency/ Interest rate Swaps Foreign exchange forward Commodity Futures/Forwards Currency options Total Amounts in thousands 31/12/2015 Level 1 Level 2 Level 3 Currency / interest rate swaps Foreign exchange forward Commodity Futures/forwards Currency options Total No transfers occurred during the financial year 2016 between levels 1 and 2. Credit risk analysis The Group has no significant credit risk which arises from cash and cash equivalents, derivatives and deposits with banks and financial institutions. In order to minimize credit risk in cash and cash equivalents, as well as other short-term financial products, the Group sets outs limits to the extent it shall be exposed to each individual financial institution and shall transact only with recognized financial institutions. As regards Commercial and Other Receivables, the Group is not exposed to any significant credit risks. The maturity profile of the financial receivables as of 31 December 2016 and 2015 for the Group and the Company is analysed as follows: GENERATION AND SUPPLIES SOCIETE ANONYME- Group Maturity of Trade Receivables (Amounts in thousands ) Past due but not impaired 0-3 months 3-6 months 6-12 months > 1 year Non past due and not impaired Total Over maturity receivables with a maturity of more than one year, an amount of 26.5 million relates to earlier balances of LAGHE against which 2 of the 12 settlement installments were received in March 2017, following the decision of the Council of State No. 1761/2016. Financial Statements for the period from January 1 st to December 31 st,

44 GENERATION AND SUPPLIES SOCIETE ANONYME- Parent Past due but not impaired 0-3 months 3-6 months 6-12 months > 1 year Non past due and not impaired Total Maturity of Trade Receivables (Amounts in thousands ) Liquidity risk analysis Liquidity risk is linked to the need for adequate financing of the Group's activity and growth. The relevant liquidity needs are managed through careful monitoring of the long-term financial liabilities debt as well as the payments made on a daily basis. The Group ensures that sufficient available credit facilities are available to meet the short-term business needs, after calculating the cash inflows resulting from its operation and the cash and cash equivalents it holds. Funds for long-term liquidity needs are additionally secured by a sufficient amount of borrowed funds and the ability to sell long-term financial assets. On 31/12/2016, there is a temporary negative difference between the current assets and the Group's short-term liabilities amounting to 218 million, which will not exist after the absorption under the relevant Merger Agreement Draft, of the GENERATION AND SUPPLIES SOCIÉTÉ ANONYME, of the subsidiary company of Protergia Group "PROTERGIA AGIOS NIKOLAOS POWER SOCIETE ANONYME OF GENERATION AND SUPPLY OF ELECTRICITY" and the related companies "METKA INDUSTRIAL - CONSTRUCTION SA" and "ALUMINUM OF GREECE INDUSTRIAL AND COMMERCIAL SOCIETE ANONYME" by MYTILINEOS SA. - GROUP OF COMPANIES", resulting in the creation of positive working capital at the date of completion of the mergers. For the Protergia Group in particular, in 397 million of existing comprehensive short-term liabilities: An amount of 94.3 million relates to liabilities to the related company METKA SA, 30.7 million to ALUMINUM OF GREECE SA and 58.7 million to other (affiliated) companies of the Group. At 31 st December 2016, the amount of 72.5 million of loan liabilities of PROTERGIA AGIOS NIKOLAOS POWER SOCIETE ANONYME OF GENERATION AND SUPPLY OF ELECTRICITY, which appears in the short-term liabilities, concerns the remaining syndicated bond loan of the company, the contract of which provides for an extension of its duration for years. In particular, the relevant condition of the existing loan agreement provides that "The Issuer is entitled but not required by a written declaration to the Bondholders to request an extension in respect of the total (and not part of) the Bonds." On this basis, the Company negotiates the terms of the original 2-year extension period and the renewal of such borrowing is considered reasonable. This is supported by the other relevant references to the loan agreement, which set the capital installments and the interest rate for the years , as well as the installments of the next extension of two more years, under the original informal framework agreement of the banks for total loan duration of 7-10 years, on the basis of which the capital installments mentioned in the contract are also calculated. Furthermore, significant receivables from the previous financial year are expected to be incurred within the current Financial Statements for the period from January 1 st to December 31 st,

45 fiscal year, mainly in respect of the amount of 20 million compensation for the Transitional Capacity Assurance Mechanism (TCAM), against which 2.3 million was received in March 2017 and the gradual repayment of the old balances of the LAGHE amount 26.5 million, against which 2 of the 12 installments of the debt settlement have already been received, following the decision of the Council of Ministers No. 1761/2016. This, coupled with the significant increase in production, as shown by the operation of the first two months, is expected to strengthen the Group's operating profitability and its liquidity and financial position. The maturity of liabilities on 31 st December 2016 and 31 st December 2015 for the Group and the Company is analyzed as follows: GENERATION AND SUPPLIES SOCIETE ANONYME - Group Liquidity Risk Analysis- Liabilities (Amounts in thousands ) 2016 Within 6 months 6 to 12 months 1 to 5 years Later than 5 years Total Long-term loans Short term loans Liabilities for leasing Suppliers and other obligations Other Obligations Long Term Liabilities payable in the next financial year Total GENERATION AND SUPPLIES SOCIETE ANONYME - Group Liquidity Risk Analysis- Liabilities (Amounts in thousands ) 2015 Within 6 months 6 to 12 months 1 to 5 years Later than 5 years Total Long-term loans Short term loans Suppliers and other obligations Other Obligations Long Term Liabilities payable in the next financial year Total GENERATION AND SUPPLIES SOCIETE ANONYME - Parent Liquidity Risk Analysis- Liabilities (Amounts in thousands ) 2016 Within 6 months 6 to 12 months 1 to 5 years Later than 5 years Total Long-term loans Short term loans Liabilities for leasing Suppliers and other obligations Other Obligations Long Term Liabilities payable in the next financial year Total GENERATION AND SUPPLIES SOCIETE ANONYME - Parent Liquidity Risk Analysis- Liabilities (Amounts in thousands ) 2015 Within 6 months 6 to 12 months 1 to 5 years Later than 5 years Total Long-term loans Short term loans Liabilities for leasing Suppliers and other obligations Other Obligations Long Term Liabilities payable in the next financial year Total Financial Statements for the period from January 1 st to December 31 st,

46 Currency risk Exposure to foreign exchange risk is the result of commercial transactions and recognized assets and liabilities denominated in a currency other than the functional currency of the Group. The functional currency of the Group is the Euro. The exchange rate risk arises mainly from trading in the USD. The Group is exposed to foreign exchange risk, mainly through the supply of spare parts for gas-fired power plants. For the management of exchange rate risk, the Group takes all measures to hedge the risk of change from the exchange rate. Product price fluctuation risk The Group is affected by the risk of a change in gas prices as any fluctuation in prices affects production costs. The increase in the prices of raw materials-natural gas also has an increasing effect on the System Marginal Price, depending on the market mix, with an impact on the cost of production as well as on the Group's income. Interest rate risk The Group's assets exposed to interest rate fluctuations mainly concern cash and cash equivalents. The Group's policy regarding financial assets is to invest its cash at floating rates to maintain the necessary liquidity while achieving satisfactory performance for its shareholders. Additionally, the Group for all bank borrowings uses floating rate products. Depending on the amount of floating rate liabilities, the Group proceeds to the interest rate risk assessment and, where appropriate, studies the need to use interest rate financial derivatives. The Group's policy is to minimize exposure to interest rate risk on long-term financing. Capital management The management of the Company s capitals aims to ensure its ability to continue its operations and develop its investment program. 3.2 Hedge Accounting Derivative financial instruments such as Commodity Futures and Currency Forwards are used to manage the risk associated with the business activities of the Company, as well as the risk associated with the financing of these activities. With the commencement of the hedge accounting and the subsequent use of derivative financial instruments, the Company documents the hedging relationship between the hedged item and the hedging instrument with respect to risk management and the strategy of undertaking the transaction. Furthermore, the Company documents its assessment of the effectiveness of the hedging regarding the offsetting of changes at fair value or the cash flows of hedged items both at the commencement of the hedging relationship and on an ongoing basis. All derivative financial assets are initially recognized at fair value on the settlement date and they are subsequently measured at fair value. Derivatives are entered as assets when their fair value is positive and as liabilities when their fair value is negative. When derivative financial assets cannot be recognized as hedge instruments, the changes at their fair value are entered into the Profit and Loss Statement. Financial Statements for the period from January 1 st to December 31 st,

47 There are three kinds of hedged relations: Α. Fair Value Hedge Fair value hedge is the hedge of exposure to the variability in the fair value of a recognized asset or liability or an unrecognized firm commitment or part thereof which is attributable to a particular risk and could affect the profit and loss account. If the fair value hedge meets the criteria for hedge accounting, then it will be accounted for as follows: the profit or loss from the remeasurement of the hedging instrument at fair value shall be recognized at the profit or loss account. For non-derivative hedging instruments which are used to hedge the risk from foreign currency, only the foreign currency component of its carrying value shall be recognized as profit or loss the entire instrument needs to be measured again. The profit or loss on the hedged item which is attributable to the hedged risk must be recognized directly in the profit or loss account in order to offset the change in the carrying value of the hedging instrument. This applies to items that are recognized at acquisition cost and for available-forsale financial assets. Any hedge ineffectiveness is recognized immediately as profit or loss. Β. Cash Flow Hedge By hedging the cash flows, the company is trying to cover the risks that cause a change in cash flows and originate from an asset or a liability or a future transaction and this change will affect the profits or losses of the financial year. Examples of the Company s cash flows hedge include future transactions in foreign currency which are subject to changes in exchange rates. The changes in the carrying value of the effective portion of the hedging instrument are recognized in Equity as a Reserves while the ineffective portion is recognized in the Profit and Loss Statement. The amounts accumulated in equity are transferred in the profit and loss account for the periods when the hedged items are recognized as profit or loss such as in case of a forecasted sale. When an a cash flow hedge item expires or is sold, terminated or exercised without being replaced or when a hedged item no longer meets the criteria for hedge accounting, any cumulative profit or loss existing in equity at that time remains in equity and it is recognized when the forecasted transaction occurs. If the related transaction is not expected to occur, the amount is transferred to the profit or loss account. C. Hedges of a Net Investment The hedges of a net investment in foreign operations are accounted for similarly to cash flow hedges. Any profit or loss of the hedging instrument which is documented as an effective hedge is recognized directly in equity. The ineffective portion of the profit or loss is recognized in the profits or losses. Profits and losses which are accumulated in equity are recognized in the profit and loss account during the allocation of the operation abroad. Fair value determination The fair value of financial instruments traded in active markets (exchanges) is determined by the current quoted market prices on the balance sheet date. The fair value of financial instruments not traded in active markets is determined by using valuation techniques and assumptions based on market data on the balance sheet date. Financial Statements for the period from January 1 st to December 31 st,

48 4. Financial information per sector Since 2012 and for management purposes, the Group monitors its main business activities, also taking into account the separation specified for integrated electricity undertakings, as stated on page 32 of the notes, as follows: a) Electricity Production (Thermal and RES in operation); b) Supply of Electricity (Trading & Retail); and c) Other Activities. The activity Production of Electricity Thermal Sector, includes the results of the plants of Agios Nikolaos, Boeotia and Agioi Theodoroi, Corinthia. The activity Production of Electricity RES Sector, includes the following companies: HELLENIC SOLAR S.A., YDROHOOS S.A., AIOLIKI SIDIROKASTRO S.A., AIOLIKI ANDROU TSIROVLIDI S.A., AIOLIKI TRIKORFON S.A. and RENEWABLE ENERGY SOURCES KARYSTIA S.A.. The Other Activities include all other subsidiaries of the Group, as well as other activities of the parent company Protergia apart from electricity and/or those that do not generate any revenue. In accordance with IFRS 8 - Operating Segments, the management reviews the operating results of business segments separately so as to make decisions about resources to be allocated and to assess its performance. The results of the Group per sector for the financial years 2016 and 2015 are analysed as follows: Results per sector 1/1-31/12/2016 (Amounts in thousands ) ENERGY PRODUCTION ENERGY SUPPLY OTHER GROUP 31/12/2016 Total gross sales Inter-company sales 0 0 (4.397) (4.397) Net sales (104) Cost of Sales ( ) ( ) 196 ( ) Gross profit Other operating income Disposal expenses (807) (6.494) 0 (7.301) Administrative expenses (5.389) (4.935) (5.369) (15.693) Other operating costs (258) (11) (239) (509) Earnings before Interest and Income Tax (5.182) Financial Income Financial expenses (20.357) (335) (1.988) (22.679) Other Financial Results 0 (2.074) (5.063) (7.138) Profit / Loss from associates Profit before tax (14) (11.841) (8.698) Income tax (2.824) (1) (1.065) (3.890) Earnings after tax from continuing operations (2.838) (12.906) (12.588) Depreciation Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) (180) Financial Statements for the period from January 1 st to December 31 st,

49 Results per sector 1/1-31/12/2015 (Amounts in thousands ) ENERGY PRODUCTION ENERGY SUPPLY OTHER GROUP 31/12/2015 Total gross sales Inter-company sales 0 0 (3.547) (3.547) Net sales (3.547) Cost of Sales ( ) (75.686) ( ) Gross profit (7.202) Other operating income Disposal expenses (272) 0 0 (272) Administrative expenses (4.613) (6.164) (1.424) (12.200) Other operating costs (35) 0 (242) (277) Earnings before Interest and Income Tax (11.296) (1.264) (10.943) Financial Income Financial expenses (20.972) (204) (1.562) (22.738) Other Financial Results (313) 0 (17.000) (17.313) Profit / Loss from associates Profit before tax (32.147) (19.587) (50.318) Income tax (1.653) (1) Earnings after tax from continuing operations (33.800) (9.373) (41.758) Depreciation Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) (377) The allocation of consolidated assets and liabilities within the business segments is analysed as follows: (Amounts in thousands ) 31/12/2016 ENERGY PRODUCTION ENERGY SUPPLY OTHER ACTIVITIES TOTAL Consolidated Assets Consolidated Liabilities (Amounts in thousands ) 31/12/2015 ENERGY PRODUCTION ENERGY SUPPLY OTHER ACTIVITIES TOTAL Consolidated Assets Consolidated Liabilities Financial Statements for the period from January 1 st to December 31 st,

50 Information by geographic area Sales of the Group and the Company and non-current assets (excluding financial instruments, investments, deferred tax assets, employee benefit plans after retirement) are allocated by geographical area as follows: PROTERGIA GROUP POWER GENERATION AND SUPPLIES SOCIETE ANONYME Non - Current Non - Current Sales Assets Sales Assets (Amounts in thousands ) Greece European Union Other Countries Geographical Sector GENERATION AND SUPPLIES SOCIETE ANONYME - Parent Non - Current Non - Current Sales Assets Sales Assets (Amounts in thousands ) Greece European Union Other Countries Geographical Sector Financial Statements for the period from January 1 st to December 31 st,

51 5. Notes on Financial Statements 5.1 Tangible Assets The tangible assets presented in the financial statements are analysed as follows: PROTERGIA GROUP POWER GENERATION AND SUPPLIES SOCIETE ANONYME (Amounts in thousands ) Land and Buildings Vehicles and Mechanical Equipment Furniture and other Equipment Tangible Assets under Construction Total Gross book value Accumulated depreciation and/or impairment (18.773) ( ) (745) - ( ) Net Book Value as at 01/01/ Gross book value Accumulated depreciation and/or impairment (22.545) ( ) (859) - ( ) Net Book Value as at 31/12/ Gross book value Accumulated depreciation and/or impairment (26.599) ( ) (1.055) (3.559) ( ) Net Book Value as at 31/12/ (Amounts in thousands ) Land and Buildings Vehicles and Mechanical Equipment Furniture and other Equipment Tangible Assets under Construction Total Net Book Value as at 01/01/ Additions Sales - Reductions - (2.825) - (242) (3.068) Depreciation (3.772) (23.459) (134) - (27.365) Transfers (13.372) (265) Net Book Value as at 31/12/ Additions Sales - Reductions - (84) - (1.282) (1.366) Depreciation (4.054) (32.112) (196) (3.559) (39.920) Transfers (15.923) (2.053) Net Book Value as at 31/12/ Financial Statements for the period from January 1 st to December 31 st,

52 GENERATION AND SUPPLIES SOCIETE ANONYME -Parent (Amounts in thousands ) Land and Vehicles and Mechanical Furniture and other Tangible Assets Buildings Equipment Equipment under Construction Total Gross book value Accumulated depreciation and/or impairment Net Book Value as at 01/01/ Gross book value Accumulated depreciation and/or impairment Net Book Value as at 31/12/ Gross book value Accumulated depreciation and/or impairment Net Book Value as at 31/12/ (Amounts in thousands ) Land and Buildings Vehicles and Mechanical Furniture and other Tangible Assets Total Equipment Equipment under Construction Net Book Value as at 01/01/ Additions Sales - Reductions (42) (42) Depreciation - - (18) - (18) Net Book Value as at 31/12/ Additions Sales - Reductions (1.209) (1.209) Depreciation - - (10) - (10) Net Book Value as at 31/12/ Goodwill The goodwill presented in the financial statements of the Group on is analysed as follows: GENERATION AND SUPPLIES SOCIETE ANONYME - Group (Amounts in thousands ) 31/12/ /12/2015 PROTERGIA THERMOELECTRIC S.A. (FORMER ARGIRITIS LAND S.A.) RENEWABLE KARISTIAS SOURCES S.A AEOLIKI SIDIROKASTROU S.A MOVAL S.A SOLIEN S.A Financial Statements for the period from January 1 st to December 31 st,

53 5.3 Intangible assets The intangible assets presented in the financial statements are analysed as follows: PROTERGIA GROUP POWER GENERATION AND SUPPLIES SOCIETE ANONYME Software Energy Plants Licences Rights & Other Intangibles Assets (Amounts in thousands ) Gross book value Accumulated amortization and / or impairment Net book value on 01/01/ Gross book value Accumulated amortization and / or impairment Net book value on 31/12/ Gross book value Accumulated amortization and / or impairment Net book value on 31/12/ Energy Plants Licences Rights & Other Intangibles Assets Software Total (Amounts in thousands ) Net Book Value on 01/01/ Additions Sales - Reductions - (9.608) (50) (9.658) Depreciation (149) (4.032) (468) (4.649) Transfers Net Book Value on 31/12/ Additions Sales - Reductions - - (15) (15) Depreciation (183) (7.191) (819) (8.193) Transfers Net Book Value on 31/12/ Total PROTERGIA GROUP POWER GENERATION AND SUPPLIES SOCIETE ANONYME Financial Statements for the period from January 1 st to December 31 st,

54 GENERATION AND SUPPLIES SOCIETE ANONYME - Parent Energy Plants Rights & Other Software (Amounts in thousands ) Licences Intangibles Assets Total Gross book value Accumulated amortization and / or impairment Net book value on 01/01/ Gross book value Accumulated amortization and / or impairment Net book value on 31/12/ Gross book value Accumulated amortization and / or impairment Net book value on 31/12/ GENERATION AND SUPPLIES SOCIETE ANONYME - Parent Energy Plants Rights & Other Software (Amounts in thousands ) Licences Intangibles Assets Total Net book value on 01/01/ Additions Sales - Reductions - (180) - (180) Depreciation (19) - - (19) Net book value on 31/12/ Additions Depreciation (22) - (1) (23) Net book value on 31/12/ Participation in associated enterprises The participations in associated enterprises are presented in the following tables: GENERATION AND SUPPLIES SOCIETE ANONYME - Group (Amounts in thousands ) 31/12/ /12/ Opening balance Share of Profit/ (loss) after taxation and minority interests Additions Sales/ Impairment (341) (379) Investments In Affiliated Companies Financial Statements for the period from January 1 st to December 31 st,

55 GENERATION AND SUPPLIES SOCIETE ANONYME - Investments in Affiliated Companies (Amounts in thousands ) Parent 31/12/ /12/2015 IONIA ENERGY SA SHPS THERMOREMA SA MYTILINEOS FINANCIAL PARTNERS SA GENERATION AND SUPPLIES SOCIETE ANONYME - Investments in Subsidiaries (Amounts in thousands ) Parent 31/12/ /12/2015 Opening balance Additions Impairment (17.519) (18.480) Closing Balance The impairment which occurred for the assets of the Company and the Protergia Group is analysed as follows: GENERATION AND SUPPLIES SOCIETE ANONYME - Group GENERATION AND SUPPLIES SOCIETE ANONYME - Parent Impairment Analysis (Amounts in thousands ) 31/12/ /12/ /12/ /12/2015 Intangible Assets Goodwill Associates Subsidiaries Total This amount appears in the item Other Financial Results. Financial Statements for the period from January 1 st to December 31 st,

56 5.5 Deferred tax Deferred tax assets / liabilities as arising from the relevant provisional tax differences are as follows: PROTERGIA GROUP POWER GENERATION AND SUPPLIES SOCIETE ANONYME 31/12/2016 (Amounts in thousands ) Opening Balance Recognized in the Profit and Loss Statement Recognized in equity through the Total Income Statement Closing Balance Deferred Tax Receivables Deferred Tax Liabilities Non-current assets Intangible Assets (28.687) (28.070) 75 (28.145) Tangible Assets (25.241) (7.198) - (32.438) 417 (32.855) Long-Term Receivables (9.678) (1.364) - (11.042) 121 (11.162) Impairment of Participation Current assets Receivables - (3.728) - (3.728) - (3.728) Long-term liabilities Long Term Loans (233) 191 (124) (166) 578 (744) Short Term Liabilities Provisions Liabilities from Derivatives (32) Other Short Term Liabilities 81 (72) Total (63.343) (11.295) (130) (74.768) (76.337) Deferred tax from tax losses Deferred Tax (Liabilities) / Receivables (48.773) (3.400) (130) (52.303) (76.337) (Amounts in thousands ) PROTERGIA GROUP POWER GENERATION AND SUPPLIES SOCIETE ANONYME Opening Balance 31/12/2015 Recognized in the Profit and Loss Statement Recognized in equity through the Total Income Statement Closing Balance Deferred Tax Receivables Deferred Tax Liabilities Non-current assets Intangible Assets (26.332) (2.355) - (28.687) 138 (28.825) Tangible Assets (15.465) (9.776) - (25.241) 296 (25.537) Long-Term Receivables (26.412) (9.677) 328 (10.005) Impairment of Participation Current assets Receivables (31) Long-term liabilities Long Term Loans (458) 227 (2) (233) 702 (935) Short Term Liabilities Provisions Liabilities from Derivatives (21) Other Short Term Liabilities (144) Total (68.500) (63.342) (65.245) Deferred tax from tax losses Deferred Tax (Liabilities) / Receivables (58.060) (48.772) (65.245) The Group has recognized on 31/12/2016 a deferred tax asset of million on tax losses of previous years that will be offset against future profits. The corresponding amount on amounted to million. Financial Statements for the period from January 1 st to December 31 st,

57 GENERATION AND SUPPLIES SOCIETE ANONYME - Parent 31/12/2016 (Amounts in thousands ) Opening Balance Recognized in the Profit and Loss Statement Recognized in equity through the Total Income Statement Closing Balance Deferred Tax Receivables Deferred Tax Liabilities Non-current assets Intangible Assets (2.625) (1) - (2.625) 3 (2.629) Tangible Assets (13) (111) - (123) 1 (124) Long-Term Receivables (8.044) (1.158) - (9.202) - (9.202) Impairment of Participation Long-term liabilities Short Term Liabilities Provisions Total (8.959) (8.653) 77 (8.730) Deferred tax from tax losses Deferred Tax (Liabilities) / Receivables (8.959) (8.653) 77 (8.730) GENERATION AND SUPPLIES SOCIETE ANONYME - Parent 31/12/2015 (Amounts in thousands ) Opening Balance Recognized in the Profit and Loss Statement Recognized in equity through the Total Income Statement Closing Balance Deferred Tax Receivables Deferred Tax Liabilities Non-current assets Intangible Assets (2.400) (225) - (2.625) 4 (2.629) Tangible Assets (12) (1) - (13) 1 (14) Long-Term Receivables (25.027) (8.044) - (8.044) Impairment of Participation Long-term liabilities Short Term Liabilities Provisions (8) Total (27.395) (8) (8.959) 63 (9.022) Deferred tax from tax losses (6.471) Deferred Tax (Liabilities) / Receivables (20.924) (8) (8.959) 63 (9.022) 5.6 Long-term Receivables The other long-term receivables of the Group and the Company are analysed in the following table: PROTERGIA GROUP POWER GENERATION AND SUPPLIES SOCIETE ANONYME GENERATION AND SUPPLIES SOCIETE ANONYME - Parent (Amounts in thousands ) 31/12/ /12/ /12/ /12/ Guarantees provided Other long-term receivables Other long-term Receivables Financial Statements for the period from January 1 st to December 31 st,

58 5.7 Inventories The total stock amounting to thousands, mainly regards spare parts of mechanical equipment. 5.8 Customers and other commercial receivables The receivables of the Group and the Company are analysed as follows: PROTERGIA GROUP POWER GENERATION AND SUPPLIES SOCIETE ANONYME GENERATION AND SUPPLIES SOCIETE ANONYME- Parent (Amounts in thousands ) 31/12/ /12/ /12/ /12/ Customers Cheques receivable Total The balance of the customers on 31/12/2016 mainly concerns receivables from LAGHE amounting to 44.5 million, receivables from ADMHE amounting to 33.4 million and from customers of retail amounting to million. Accordingly, the balance of customers as at mainly concerns receivables from LAGHE amounting to 37,2 m., receivables from ADMHE amounting to 27,3 million and receivables from retail customers amounting to 4,8 m. 5.9 Other receivables The other receivables of the Group and the Company are analysed as follows: PROTERGIA GROUP POWER GENERATION AND SUPPLIES SOCIETE ANONYME GENERATION AND SUPPLIES SOCIETE ANONYME - Parent (Amounts in thousands ) 31/12/ /12/ /12/ /12/2015 Other Debtors Receivables from the Greek State Receivables from affiliated parties Accrued Income - Prepaid Expenses Less: Provisions for doubtful debts Total Financial Statements for the period from January 1 st to December 31 st,