HERON THERMOELECTRIC S.A.

Transcription

1 HERON THERMOELECTRIC S.A. 85, Messogeion Ave., GR Athens General Commercial Registry of Companies No SA Register No 56860/01/B/04/254 ANNUAL FINANCIAL REPORT for the year 1 st of January to 31 st of December 2014

2 CONTENTS I. AUDITOR S REPORT... 3 II. ANNUAL MANAGEMENT REPORT OF THE BOARD OF DIRECTORS FOR THE FINANCIAL YEAR III. ANNUAL FINANCIAL STATEMENTS AS AT 31 DECEMBER ESTABLISHMENT AND COMPANY ACTIVITY BASIS FOR THE PRESENTATION OF THE FINANCIAL STATEMENTS SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES INTANGIBLE ASSETS TANGIBLE FIXED ASSETS OTHER LONG-TERM RECEIVABLES INVENTORIES TRADE RECEIVABLES OTHER RECEIVABLES CASH AND CASH EQUIVALENTS PROVISIONS FOR STAFF RETIREMENT INDEMNITIES PROVISIONS FOR DISMANTLEMENT SUPPLIERS ACCRUED AND OTHER LIABILITIES SHARE CAPITAL RESERVES INCOME TAX REVENUE COST OF GOODS SOLD, ADMINISTRATIVE AND SELLING EXPENSES PERSONΝEL COST AUDITORS FEES OTHER INCOME / (EXPENSE) FINANCIAL INCOME/ (EXPENSE) TRANSACTIONS WITH RELATED PARTIES RISK MANAGEMENT POLICIES AND OBJECTIVES PRESENTATION OF FINANCIAL ASSETS AND LIABILITIES PER CATEGORY CAPITAL MANAGEMENT POLICIES AND PROCEDURES EXISTING ENCUMBRANCES AND OTHER LIENS COMMITMENTS AND CONTINGENT LIABILITIES EVENTS AFTER THE BALANCE SHEET DATE

3 I. AUDITOR S REPORT Independent Certified Auditor s Accountant s Report (This report is a free translation of the Greek Original) To the Shareholders of HERON THERMOELECTRIC SOCIETE ANONYME Report on the Financial Statements We have audited the accompanying financial statements of HERON THERMOELECTRIC SOCIETE ANONYME ( the Company ), which comprise the statement of financial position as at December 31, 2014, the statement of comprehensive income, statement of changes in equity and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards as adopted by the European Union and for such internal controls as management determines is necessary to enable the preparation of 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 financial statements based on our audit. We conducted our audit in accordance with International Standards of Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the 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 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 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 financial statements present fairly, in all material respects, the financial position of HERON THERMOELECTRIC SOCIETE ANONYME as at December 31, 2014, and of 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. Report on Other Legal and Regulatory Requirements We confirm that the information given in the Directors Report is consistent with the accompanying financial statements and complete in the context of the requirements of articles 43a and 37 of Codified Law 2190/1920.

4 Athens, May 29, 2015 THE CERTIFIED AUDITOR ACCOUNTANT VASSILIOS KAMINARIS S.O.E.L. No ERNST & YOUNG (HELLAS) CERTIFIED AUDITORS ACCOUNTANTS S.A. Chimarras 8B str, Marousi Athens S.O.E.L. R.N

5 Share capital 6,416,000 85, Messogeion Ave., GR Athens General Commercial Electronic Registry No SA Register No 56860/01/B/04/254 Board of Directors Konstantinos MICHALAKIS Franck NEEL Sophia DIMITRAKOPOULOU Charles HERTOGHE Emmanouil MOUSTAKAS Agostino SCORNAJENCHI Chairman of the Board Member of the Board Member of the Board Member of the Board Member of the Board Member of the Board Auditor Ernst & Young (HELLAS) Certified Auditors Accountants S.A. 5

6 II. ANNUAL MANAGEMENT REPORT OF THE BOARD OF DIRECTORS FOR THE FINANCIAL YEAR 2014 Dear Shareholders, MANAGEMENT REPORT To the Ordinary General Meeting of Shareholders On the 2014 year balance sheet and results Period 1/1/ /12/2014 We have the honour to present you for your approval the financial statements of the year 1/1-31/12/2014 of our company and give you the following explanations. 1. Main financial indicators On 31 st December 2014, the financial position of the company is deemed satisfactory. The owner s equity amounted to 45,965 thousand compared to 36,432 thousand in The Company s main financial ratios for 2014 and 2013 fiscal years are as follows: Financial structure ratios (All amounts are presented in thousand Euro) 31/12/ /12/2013 Current assets 45, % 36, % Total assets 73,716 68,408 Non-current assets 27, % 31, % Total assets 73,716 68,408 The above ratios show the proportion of outstanding capital and fixed assets. Equity 39, % 36, % Total liabilities 33,908 31,608 The above ratio shows the Company s financial adequacy. Total liabilities 33, % 31, % Total equity & liabilities 73,716 68,408 Equity 39, % 36, % Total equity & liabilities 73,716 68,408 The above ratios show the Company s leverage. Equity 39, % 36, % Non-current assets 27,751 31,976 This ratio shows the ratio of corporate intangible assets financing by owner s equity. Current assets 45, % 36, % Current liabilities 28,791 25,833 6

7 This ratio shows the Company's ability to meet its Current liabilities using current assets. Working capital 17, % 10, % Current assets 45,965 36,432 This ratio reflects the portion of current assets that is financed by the surplus of Owner's Equity and Non Current liabilities. Return on equity and performance ratios 31/12/ /12/2013 Year net results before tax 10, % 5, % Sales of stocks & services 111,349 64,883 This ratio presents the performance of the company without including other results. Year net results before tax 10, % 5, % Total income 111,856 65,760 This ratio reflects the company s total performance in comparison with its total income. Year net results before tax 10, % 5, % Equity 39,808 36,800 This ratio presents the return on equity of the company. Gross profit 12, % 7,312 11,27% Sales of stocks & services 111,349 64,883 This ratio reflects the gross profit as a percentage of the company s sales. 2. Overview of Greek Power Market In the Greek Energy market several changes have been implemented and particularly concerning natural Gas producers. One of the changes concerned the implementation of RAE s decision 338/2013, leading to the abolition of 30% rule on 1 January 2014, which allowed the IPPs to bid 30% of their total capacity below the variable cost, this led to an increase of the SMP by 39% compared to 2013; another notable change was the abolition of Cost Recovery 0% margin on variable cost in July The demand for electricity remained relatively stable (+0.34% compared to 2013), but the supply of local electricity producers decreased by 14.57% compared to 2013; the difference of demand and local production was covered by imports which presented a remarkable increase of 319% compared to 2013 mainly due to high Greek SMP. In addition to the above mentioned changes it has to be noted that DEPA has issued a credit note for Gas to all IPPs following the Gas price reduction by 15% of the Russian pipeline gas 7

8 from GAZPROM. This credit note had a retroactive effect from mid IPPs reduced their bids by ~8% following this event. A more detailed analysis of the figures is presented below Production TWh Demand TWh Imports/Exports 8,8 17% NWK production 4,5 9% Lignite 22,7 45% Distribution NWK 41,2 82% RES 4,2 8% Hydro 3,9 8% Natural Gas 6,3 13% Oil 0,0 0% Lignite Oil Natural Gas Hydro RES Imports/Exports NWK production HV Customers 6,8 13% Own consumption 0,3 1% System Losses 1,2 2% HV Customers Distribution NWK Pumping Mines 0,8 2% Mines System Losses Own consumption Pumping 0,2 0% In the chart below we can see that the total production from Local Producers has decreased by 14.4%. The main sector affected was natural gas plants (withdrawal of 30% rule and cost recovery mechanism) which dropped by 43% compared to 2013 followed by a drop of 30.7% of Hydro plants mainly due to the fact that 2013 was a year of intense rain. 8

9 Energy mix The total capacity of the Greek energy sector rises to a total POWER of MW which are broken down as per the below chart. The predominant power plant owner is PPC owning of Conventional and Hydro plants, the break down between PPC and IPP installed MW percentage to the energy mix is presented below. LAGIE energy report December % of Thermal Gas plants in Greece are over 20 years old, making it necessary to include new power plants into the energy mix. 9

10 Gas Consumption Gas consumption during 2014 has decreased by 34% (9,9 TWh thermal). This decrease is a reflection of the change in market rules already described above which led the IPPs to produce less after January Collectively Gas plants consumed less Natural Gas by 37% (10,3 TWh) compared to Industrial Gas consumption presented an increase of 5.5% (0.42TWh) compared to 2013 Imports/Exports The import-export balance has increased within 2014 by 4 times compared to 2013 ( MWh in 2014). Albania, Bulgaria and FYROM trade balance increased by 47%, 43% and 139% respectively; while from Italy net exports of MWh in 2013 switched into net imports of within 2014 and net exports to Turkey decreased by 75%. The interconnection cable with Italy has been restored since mid-july 2014 providing a bearish factor for the CCGT production and preventing increase of the SMP Delta% IMPORTS % ALBANIA % BULGARIA % ITALY % FYROM % TURKEY % EXPORTS % ALBANIA % BULGARIA % ITALY % FYROM % TURKEY % 3. Company Overview HERON THERMOELECTRIC SOCIETE ANONYME (namely HERON I ) is part of the Joint Venture 50% between two big players of Energy Sector: GDF SUEZ as a French partner and GEK TERNA as a Greek partner, as well. GDF SUEZ. Group has been built historically through the privatization of the national public gas company at In the course of time, it has progressively left production and retails as 10

11 of manufactured gas, in order to dedicate to trade, transport and delivery of natural gas. Then, it grew through the merger between GAZ DE FRANCE and SUEZ. More precisely, after the liberalization of Energy Market in Europe, GDF SUEZ has included among its business the energy production and energy trading, as well. GDF SUEZ employs around 218,000 people worldwide. The Group is listed on the Brussels, Luxembourg and Paris stock exchanges and is represented in the main international indices: CAC 40, BEL 20, DJ Stoxx 50, Euronext 100, FTSE Eurotop 100, MSCI Europe, ASPI Eurozone and ECPI Ethical Index EMU. GEK TERNA. In 2002 GEK is transformed into a Holding Company, and its constructions sector is transferred to TERNA. In 2008 GEK absorbed the holding sector of TERNA and was remanded to GEK TERNA. The Group has business in several sectors: constructions, energy, real estate, industrial and concessions, too. The Group, during the last year, has managed to strengthen significantly its position in countries other than Greece, as an important part of its revenues stems from countries of the S.E. Europe and the Middle East, due to the recent developments in these countries. Being one of the three main private Electricity Producers and the largest private Supplier of electricity, HERON THERMOELECTRIC SA has the same structure as other players in Energy Sector. More precisely, the Company owns an Open Cycle Gas Turbine (OCGT) power plant, located 4 km south of the city of Thiva, in the region of Voiotia. The station holds a significant advantage for the Greek Interconnected Transmission System: immediate ignition with maximum capacity performance within only 20 minutes. The efficiency of the plant using natural gas is high and amounts to 40%, in continuous full load operation conditions. The actual average annual efficiency rate, taking into consideration start-up and stop cycles, as well as the operation of the units in partial load, amounts to 38%. 11

12 4. Organization General Manager Regulatory Affairs Secretary Legal Counsel Commercial Manager Finance Manager Power Plant Manager Ethics & Compliance Sales (500/600 GWh/year Accounting HSE Manager Controlling 5. Economical and Financial highlights The turnover amounted to 111,349 thousand compared to 64,883 thousand in Earnings before interest, tax, depreciation and amortization (EBITDA) amounted to 15,225 thousand compared to 10,349 thousand in Earnings after income tax stood at 8,002 thousand compared to 2,726 thousand in Earnings per share stood at 24, 37 compared to 8, 30 per share in The total assets (which includes non-current and current) amount to 73,716 thousand (compared to 68,408 thousand in 2013). Company liabilities amount to 33,908 thousand compared to 31,608 in Company cash amounts to 7,004 thousand and has been placed in bank deposits ( 4,741 thousand in 2013). 6. Real estate of the company The company owns 5 plots at the area "HARAINTINI", Thiva, where its power plant is also located. 7. Important events having occurred after year-end until preparation date of this report 12

13 On February 13, 2015 the company Independent Transmission System Operator (ADMIE) S.A. submitted a lawsuit before the Multimember First Instance Court of Athens against the Company HERON THERMOELECTRIC S.A. demanding the payment of the total outstanding amount of ,90 plus default interest totaling ,40. The outstanding amount relates to energy services that must be paid by HERON THERMOELECTRIC SOCIETE ANONYME to ADMIE as a load representative (Electricity Supplier). Hearing date has been set for May 28, Specifically under the Electric Power System Operation Code, Load Representatives are required to proceed to payments not only for the energy they acquire from the system, based on Day Ahead Scheduling, but also for other costs associated with end customers, such as Public Utility Services, Renewable Energy Special Fee, Charges for the use of the System, the Capacity Assurance Mechanism, as well as the Special Consumption Tax on Natural Gas. On the other hand under the Power Transmission System Operation Code, the producers are entitled to compensation not only for energy production injected into the system, but also for other products and services, such Ancillary Services, Deviations and payments under the Capacity Assurance Mechanism. The Company apart from being a Load Representative (supplier) is also a producer. The calculation of obligations and requirements, as well as the process of settling debits and credits relative to those mechanisms of the Power Transmission System Operation Code, is made by ADMIE. In addition, debits and credits of ADMIE for the aforementioned electricity services, are paid within one to three months after the month in respect. Due to delay of repayment of these services, ADMIE proceeded with a lawsuit against the Company. On the same legal basis HERON THERMOELECTRIC S.A. has a total claim of ,89, against ADMIE, about past due invoices by April 30, On this basis, the Company will proceed with immediate legal action against the company ADMIE S.A. The Company's Management believes that this development does not affect the financial statements of , as the above mentioned amount of ,90 already appears as a liability in the financial statements while in respect of the default interest, on the same legal basis, the Company will have nearly equal claim. Besides the above until the preparation date of this report no other important event has occurred. Dear Shareholders, Following the foregoing, we kindly request you to approve the balance sheet and the results of 2014 year. Athens, 26 March 2015 On behalf of the Board of Directors, The Chairman Konstantinos MICHALAKIS 13

14 III. ANNUAL FINANCIAL STATEMENTS AS AT 31 DECEMBER 2013 (1 January - 31 December 2014) According to the International Financial Reporting Standards The Financial Statements were approved by the Board of Directors of HERON THERMOELECTRIC S.A. (hereinafter the Company ) on 26 March 2015 and have been published on the website of the Company, where they will remain available to investors for at least a 5-years period from the date they are prepared and published. It is noted that the Data and Information published in the press aim at providing readers with general information on the company s financial position and results but do not provide a full picture of the company s financial position and results according to the IFRS. It is stressed that the attached financial statements are subject to the approval of the Annual General Meeting of the Company's shareholders, deadline of which, is set to the 30/06/2015 according to Law 2190/20. The Annual General Meeting of the Company's shareholders has the power to amend the attached financial statements. 14

15 HERON THERMOELECTRIC S.A. STATEMENT OF FINANCIAL POSITION 31 st December 2014 (All amounts are in thousand Euros, unless otherwise stated) ASSETS Note Non-current assets Intangible assets Tangible fixed assets 5 27,609 31,752 Other long-term receivables Total non-current assets 27,751 31,976 Current assets Inventories 7 1,713 1,714 Trade receivables 8 36,735 29,682 Prepayments and others receivables Income tax assets - - Cash and cash equivalents 10 7,004 4,741 Total current assets 45,965 36,432 TOTAL ASSETS 73,716 68,408 EQUITY & LIABILITIES Share Capital 15 6,416 11,416 Reserves Profit/(Loss)for the current year 8,008 2,726 Profit carried forward 25,062 22,467 Total equity 39,808 36,800 Non - Current liabilities Provision for staff retirement indemnities Provision for dismantlement Deferred tax liabilities 17 4,595 5,268 Total Non - Current liabilities 5,117 5,775 Current liabilities Suppliers 13 21,690 18,618 Prepayments, Accrued and other short-term payables 14 5,540 5,336 Income Tax payable 1,561 1,879 Total current liabilities 28,791 25,833 TOTAL EQUITY & LIABILITIES 73,716 68,408 15

16 HERON THERMOELECTRIC S.A. STATEMENT OF COMPREHENSIVE INCOME 31 st December 2014 (All amounts are presented in thousand Euro, unless otherwise stated) Note Revenue ,349 64,883 Cost of goods sold 19 (99,121) (57,571) Gross profit/(loss) 12,228 7,312 Administrative and selling expenses 19 (1,235) (1,045) Other income / (expenses) 22 (72) (360) Net financial income Net financial expenses 23 (115) (109) Earnings/ (loss) before income tax 18 10,841 5,857 Income tax 17 (2,839) (3,131) Earnings/(loss) after income tax 8,002 2,726 Other Comprehensive Income (not to be recycled in profit and loss) Actuarial gains 8 3 Income tax (2) 0 Income tax 6 3 TOTAL COMPREHENSIVE INCOME 8,008 2,729 16

17 HERON THERMOELECTRIC S.A. STATEMENT OF CASH FLOWS 31 st December 2014 (All amounts are presented in thousand Euro, unless otherwise stated) Note Cash flows from operating activities Earnings/(loss) before income tax 10,841 5,857 Adjustments for reconciliation of net flows from operating activities Depreciation 4, 5 4,304 4,442 Impairment of trade receivables Provisions Other non-cash adjustments 1,734 (307) Interest and related income 24 (35) (59) Interest charges and related expenses Operating profit before changes in working capital 17,706 10,720 (Increase)/decrease in: Inventories 1 - Trade receivables (9,640) (9,141) Prepayments and other short-term receivables (218) (19) (Increase)/decrease in: Suppliers 3,072 1,923 Accrued and other short-term payables 204 1,355 (Increase)/ decrease in other long-term receivables and payables 1 1 Income tax payments (3,721) (1,495) Net cash flows from operating activities 7,405 3,344 Cash flows from investing activities (Purchases)/ sales of tangible assets (80) (88) Interest and related income received Cash flows from investing activities (45) (29) Cash flows from financing activities Net change in share capital (5,000) (5,000) Net change in long-term loans - - Interest charges and related paid-up expenses (97) (94) Cash flows from financing activities (5,097) (5,094) Net increase/ (decrease) in cash 2,263 (1,779) Cash and cash equivalents at the beginning of the year 4,741 6,520 Cash and cash equivalents at year end 7,004 4,741

18 HERON THERMOELECTRIC S.A. STATEMENT OF CHANGES IN EQUITY 31 st December 2013 (All amounts are presented in thousand Euro, unless otherwise stated) Share Capital Reserves Profit carried forward Total 1 st January , ,467 39, Return of share capital (5,000) - - (5,000) Total comprehensive income - (11) 2,726 2, st December , ,193 36,800 1 st January , ,193 36, Return of share capital (5,000) - - (5,000) Total comprehensive income - 6 8,002 8,008 Formation of statutory Reserves 125 (125) - Transfers- Other movements 31 st December , ,070 39,808 -

19 1 ESTABLISHMENT AND COMPANY ACTIVITY HERON THERMOELECTRIC S.A. is a company incorporated in Greece and it was set up in 2001, initially as a general partnership and then it was converted into a société anonyme in It has its registered office at 85, Messogeion Avenue, Athens, Greece and its term is set at fifty (50) years. The company is registered at the Greek Société Anonyme Registry under No 56860/01/B/04/254 and at the General Commercial Electronic Registry under No Its main activity is the construction, installation and operation of thermoelectric open cycle power plants (using gas and fuel oil). 2 BASIS FOR THE PRESENTATION OF THE FINANCIAL STATEMENTS a) Preparation basis of financial statements The attached financial statements have been prepared on the basis of the historic cost principle. The attached financial statements have been prepared in compliance with IFRS, as adopted by the European Union. There are no standards that have been adopted before their effective date. b) Statutory Financial Statements The Company is obliged by applicable laws (article 134(1b) of Codified Law 2190/1920) to prepare its Financial Statements pursuant to the IFRS that have been adopted by the European Union. The Company keeps its accounting books in accordance with the provisions of tax laws, as it has the relevant right. Subsequently, adjustment entries are made so as to have the attached financial statements prepared in line with the IFRS. The company is jointly controlled by GEK TERNA S.A., a company listed on the Athens Stock Exchange and GDF SUEZ S.A., a company listed in the Paris stock exchange, and its financial statements are incorporated in their consolidated financial statements under the proportionate method. c) New standards, amendments of standards and interpretations The accounting principles applied during the preparation of the financial statements are the same as those followed for the preparation of the financial statements for the period ended on December, , except for the adoption of new standards and interpretations, whose application is mandatory for periods beginning on 1 January I. From January 1 st 2014 the company adopted new standards, amendments of standards and interpretations as follows: IAS 28 Investments in Associates and Joint Ventures (Revised) As a consequence of the new IFRS 11 Joint arrangements and IFRS 12 Disclosure of Interests in Other Entities, IAS 28 Investments in Associates, has been renamed IAS 28 Investments in Associates and Joint Ventures, and describes the application of the equity method to investments in joint ventures in addition to associates. The specific amendment does not affect company s financial statements. IAS 32 Financial Instruments: Presentation (Amended) - Offsetting Financial Assets and Financial Liabilities These amendments clarify the meaning of currently has a legally enforceable right to set-off. The amendments also clarify the application of the IAS 32 offsetting criteria to settlement systems (such as central clearing house systems) which apply gross settlement mechanisms that are not simultaneous. The specific amendment does not affect company s financial statements. IFRS 10 Consolidated Financial Statements, IAS 27 Separate Financial Statements 19

20 IFRS 10 replaces the portion of IAS 27 Consolidated and Separate Financial Statements that addresses the accounting for consolidated financial statements. It also addresses the issues raised in SIC-12 Consolidation Special Purpose Entities. IFRS 10 establishes a single control model that applies to all entities including special purpose entities. The changes introduced by IFRS 10 will require management to exercise significant judgment to determine which entities are controlled and therefore are required to be consolidated by a parent, compared with the requirements that were in IAS 27. The specific standard does not affect company s financial statements. IFRS 11 Joint Arrangements IFRS 11 replaces IAS 31 Interests in Joint Ventures and SIC-13 Jointly-controlled Entities Nonmonetary Contributions by Venturers. IFRS 11 removes the option to account for jointly controlled entities (JCEs) using proportionate consolidation. Instead, JCEs that meet the definition of a joint venture must be accounted for using the equity method. The specific standard does not affect company s financial statements. IFRS 12 Disclosures of Interests in Other Entities IFRS 12 includes all of the disclosures that were previously in IAS 27 related to consolidated financial statements, as well as all of the disclosures that were previously included in IAS 31 and IAS 28. These disclosures relate to an entity s interests in subsidiaries, joint arrangements, associates and structured entities. A number of new disclosures are also required. The specific standard does not affect company s financial statements. IAS 39 Financial Instruments (Amended): Recognition and Measurement - Novation of Derivatives and Continuation of Hedge Accounting Under the amendment there would be no need to discontinue hedge accounting if a hedging derivative was novated, provided certain criteria are met. The IASB made a narrow-scope amendment to IAS 39 to permit the continuation of hedge accounting in certain circumstances in which the counterparty to a hedging instrument changes in order to achieve clearing for that instrument. The specific amendment does not affect company s financial statements. IAS 36 Impairment of Assets (Amended) Recoverable Amount Disclosures for Non- Financial Assets These amendments remove the unintended consequences of IFRS 13 on the disclosures required under IAS 36. In addition, these amendments require disclosure of the recoverable amounts for the assets or CGUs for which impairment loss has been recognized or reversed during the period. The specific amendment does not affect company s financial statements. IFRIC Interpretation 21: Levies The Interpretations Committee was asked to consider how an entity should account for liabilities to pay levies imposed by governments, other than income taxes, in its financial statements. This Interpretation is an interpretation of IAS 37 Provisions, Contingent Liabilities and Contingent Assets. IAS 37 sets out criteria for the recognition of a liability, one of which is the requirement for the entity to have a present obligation as a result of a past event (known as an obligating event). The Interpretation clarifies that the obligating event that gives rise to a liability to pay a levy is the activity described in the relevant legislation that triggers the payment of the levy. The specific interpretation does not affect company s financial statements. II. Standards issued but not yet effective and not early adopted IAS 16 Property, Plant & Equipment and IAS 38 Intangible assets (Amendment): Clarification of Acceptable Methods of Depreciation and Amortization The amendment is effective for annual periods beginning on or after 1 January This amendment clarifies the principle in IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets that revenue reflects a pattern of economic benefits that are generated from operating a business (of which the asset is part) rather than the economic benefits that are consumed through use of the asset. As a result, the ratio of revenue generated to total revenue expected to be generated cannot be used to depreciate property, plant and equipment and may only be used in very limited circumstances to amortize intangible assets. The amendment has not yet been endorsed by the EU. The Company is in the process of examining the possible effects of this amendment on its financial statements. 20

21 IAS 16 Property, Plant & Equipment and IAS 41 Agriculture (Amendment): Bearer Plants The amendment is effective for annual periods beginning on or after 1 January Bearer plants will now be within the scope of IAS 16 Property, Plant and Equipment and will be subject to all of the requirements therein. This includes the ability to choose between the cost model and revaluation model for subsequent measurement. Agricultural produce growing on bearer plants (e.g., fruit growing on a tree) will remain within the scope of IAS 41 Agriculture. Government grants relating to bearer plants will now be accounted for in accordance with IAS 20 Accounting for Government Grants and Disclosure of Government Assistance, instead of in accordance with IAS 41. The amendment has not yet been endorsed by the EU. This amendment is not expected to impact the Company's financial statements. IAS 19 Employee benefits (Amended): Employee Contributions The amendment is effective for annual periods beginning on or after 1 February The amendment applies to contributions from employees or third parties to defined benefit plans. The objective of the amendment is to simplify the accounting for contributions that are independent of the number of years of employee service, for example, employee contributions that are calculated according to a fixed percentage of salary. The Company is in the process of examining the possible effects of this amendment on its financial statements. IFRS 9 Financial Instruments Classification and measurement The standard is applied for annual periods beginning on or after 1 January 2018 with early adoption permitted. The final phase of IFRS 9 reflects all phases of the financial instruments project and replaces IAS 39 Financial Instruments: Recognition and Measurement and all previous versions of IFRS 9. The standard introduces new requirements for classification and measurement, impairment, and hedge accounting. The standard has not yet been endorsed by the EU. The Company is in the process of examining the possible effects of this standard on its financial statements. IFRS 11 Joint arrangements (Amendment): Accounting for Acquisitions of Interests in Joint Operations The amendment is effective for annual periods beginning on or after 1 January IFRS 11 addresses the accounting for interests in joint ventures and joint operations. The amendment adds new guidance on how to account for the acquisition of an interest in a joint operation that constitutes a business in accordance with IFRS and specifies the appropriate accounting treatment for such acquisitions. The amendment has not yet been endorsed by the EU. This amendment is not expected to impact the Company's financial statements. IFRS 14 Regulatory Deferral Accounts The standard is effective for annual periods beginning on or after 1 January The aim of this interim standard is to enhance the comparability of financial reporting by entities that are engaged in rateregulated activities, whereby governments regulate the supply and pricing of particular types of activity. This can include utilities such as gas, electricity and water. Rate regulation can have a significant impact on the timing and amount of an entity s revenue. The IASB has a project to consider the broad issues of rate regulation and plans to publish a Discussion Paper on this subject in Pending the outcome of this comprehensive Rate-regulated Activities project, the IASB decided to develop IFRS 14 as an interim measure. IFRS 14 permits first-time adopters to continue to recognize amounts related to rate regulation in accordance with their previous GAAP requirements when they adopt IFRS. However, to enhance comparability with entities that already apply IFRS and do not recognize such amounts, the standard requires that the effect of rate regulation must be presented separately from other items. An entity that already presents IFRS financial statements is not eligible to apply the standard. This standard has not yet been endorsed by the EU. The Company is in the process of examining the possible effects of this standard on its financial statements. IFRS 15 Revenue from Contracts with Customers The standard is effective for annual periods beginning on or after 1 January IFRS 15 establishes a five-step model that will apply to revenue earned from a contract with a customer (with limited exceptions), regardless of the type of revenue transaction or the industry. The standard s requirements will also apply to the recognition and measurement of gains and losses on the sale of some non-financial assets that are not an output of the entity s ordinary activities (e.g., sales of property, plant and equipment or intangibles). Extensive disclosures will be required, including disaggregation of total revenue; information about performance obligations; changes in contract asset and liability account 21

22 balances between periods and key judgments and estimates. The standard has not been yet endorsed by the EU. The Company is in the process of examining the possible effects of this standard on its financial statements. IAS 27 Separate Financial Statements (amended) The amendment is effective from 1 January This amendment will allow entities to use the equity method to account for investments in subsidiaries, joint ventures and associates in their separate financial statements and will help some jurisdictions move to IFRS for separate financial statements, reducing compliance costs without reducing the information available to investors. This amendment has not yet been endorsed by the EU. This amendment is not expected to impact the Company's financial statements. Amendment in IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture The amendments address an acknowledged inconsistency between the requirements in IFRS 10 and those in IAS 28, in dealing with the sale or contribution of assets between an investor and its associate or joint venture. The main consequence of the amendments is that a full gain or loss is recognized when a transaction involves a business (whether it is housed in a subsidiary or not). A partial gain or loss is recognized when a transaction involves assets that do not constitute a business, even if these assets are housed in a subsidiary. The amendments will be effective from annual periods commencing on or after 1 January The amendments have not yet been endorsed by the EU. These amendments are not expected to impact the Company's financial statements. The IASB has issued the Annual Improvements to IFRSs Cycle, which is a collection of amendments to IFRSs. The amendments are effective for annual periods beginning on or after 1 February These amendments are not expected to impact the Company's financial statements. IFRS 2 Share-based Payment: This improvement amends the definitions of 'vesting condition' and 'market condition' and adds definitions for 'performance condition' and 'service condition' (which were previously part of the definition of 'vesting condition'). IFRS 3 Business combinations: This improvement clarifies that contingent consideration in a business acquisition that is not classified as equity is subsequently measured at fair value through profit or loss whether or not it falls within the scope of IFRS 9 Financial Instruments. IFRS 8 Operating Segments: This improvement requires an entity to disclose the judgments made by management in applying the aggregation criteria to operating segments and clarifies that an entity shall only provide reconciliations of the total of the reportable segments' assets to the entity's assets if the segment assets are reported regularly. IFRS 13 Fair Value Measurement: This improvement in the Basis of Conclusion of IFRS 13 clarifies that issuing IFRS 13 and amending IFRS 9 and IAS 39 did not remove the ability to measure short-term receivables and payables with no stated interest rate at their invoice amounts without discounting if the effect of not discounting is immaterial. IAS 16 Property Plant & Equipment: The amendment clarifies that when an item of property, plant and equipment is revalued, the gross carrying amount is adjusted in a manner that is consistent with the revaluation of the carrying amount. IAS 24 Related Party Disclosures: The amendment clarifies that an entity providing key management personnel services to the reporting entity or to the parent of the reporting entity is a related party of the reporting entity. IAS 38 Intangible Assets: The amendment clarifies that when an intangible asset is revalued the gross carrying amount is adjusted in a manner that is consistent with the revaluation of the carrying amount. The IASB has issued the Annual Improvements to IFRSs Cycle, which is a collection of amendments to IFRSs. The amendments are effective for annual periods beginning on or after 1 January The Company is in the process of examining the possible effects of these amendments/upgrades on its financial statements. 22

23 IFRS 3 Business Combinations: This improvement clarifies that IFRS 3 excludes from its scope the accounting for the formation of a joint arrangement in the financial statements of the joint arrangement itself. IFRS 13 Fair Value Measurement: This improvement clarifies that the scope of the portfolio exception defined in paragraph 52 of IFRS 13 includes all contracts accounted for within the scope of IAS 39 Financial Instruments: Recognition and Measurement or IFRS 9 Financial Instruments, regardless of whether they meet the definition of financial assets or financial liabilities as defined in IAS 32 Financial Instruments: Presentation. IAS 40 Investment Properties: This improvement clarifies that determining whether a specific transaction meets the definition of both a business combination as defined in IFRS 3 Business Combinations and investment property as defined in IAS 40 Investment Property requires the separate application of both standards independently of each other. The IASB has issued the Annual Improvements to IFRSs Cycle, which is a collection of amendments to IFRSs. The amendments are effective for annual periods beginning on or after 1 January These annual improvements have not yet been endorsed by the EU. The Company is in the process of examining the possible effects of these amendments/upgrades on its financial statements. IFRS 5 Non-current Assets Held for Sale and Discontinued Operations: The amendment clarifies that changing from one of the disposal methods to the other (through sale or through distribution to the owners) should not be considered to be a new plan of disposal, rather it is a continuation of the original plan. There is therefore no interruption of the application of the requirements in IFRS 5. The amendment also clarifies that changing the disposal method does not change the date of classification. IFRS 7 Financial Instruments: Disclosures: The amendment clarifies that a servicing contract that includes a fee can constitute continuing involvement in a financial asset. Also, the amendment clarifies that the IFRS 7 disclosures relating to the offsetting of financial assets and financial liabilities are not required in the condensed interim financial report. IAS 19 Employee Benefits: The amendment clarifies that market depth of high quality corporate bonds is assessed based on the currency in which the obligation is denominated, rather than the country where the obligation is located. When there is no deep market for high quality corporate bonds in that currency, government bond rates must be used. IAS 34 Interim Financial Reporting: The amendment clarifies that the required interim disclosures must either be in the interim financial statements or incorporated by cross-reference between the interim financial statements and wherever they are included within the greater interim financial report (e.g., in the management commentary or risk report). The Board specified that the other information within the interim financial report must be available to users on the same terms as the interim financial statements and at the same time. If users do not have access to the other information in this manner, then the interim financial report is incomplete. IFRS 10, IFRS 12 and IAS 28: Investment Entities: Applying the Consolidation Exception (Amendments) The amendments address three issues arising in practice in the application of the investment entities consolidation exception. The amendments are effective for annual periods beginning on or after 1 January The amendments clarify that the exemption from presenting consolidated financial statements applies to a parent entity that is a subsidiary of an investment entity, when the investment entity measures all of its subsidiaries at fair value. Also, the amendments clarify that only a subsidiary that is not an investment entity itself and provides support services to the investment entity is consolidated. All other subsidiaries of an investment entity are measured at fair value. Finally, the amendments to IAS 28 Investments in Associates and Joint Ventures allow the investor, when applying the equity method, to retain the fair value measurement applied by the investment entity associate or joint venture to its interests in subsidiaries. These amendments have not yet been endorsed by the EU. These amendments are not expected to impact the Company's financial statements. IAS 1: Disclosure Initiative (Amendment) The amendments to IAS 1 Presentation of Financial Statements further encourage companies to apply professional judgment in determining what information to disclose and how to structure it in their financial statements. The amendments are effective for annual periods beginning on or after 1 January The narrow-focus amendments to IAS clarify, rather than significantly change, existing IAS 1 23

24 requirements. The amendments relate to materiality, order of the notes, subtotals and disaggregation, accounting policies and presentation of items of other comprehensive income (OCI) arising from equity accounted Investments. These amendments have not yet been endorsed by the EU. The Company is in the process of examining the possible effects of this amendment on its financial statements. 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The main accounting policies adopted during the preparation of the attached financial statements are the following: a) Intangible Assets Intangible assets mainly consist of software costs and all expenses incurred to develop the software in order to bring it to operating condition. Amortization on software is accounted for based on the straight line method for a period of five years. b) Tangible Fixed Assets The land, buildings, machinery and vehicles are measured at cost less accumulated depreciation and any provisions for impairment. Repairs and maintenance are booked as expenses during the year in which they are incurred. Significant improvements are capitalized in the cost of the respective fixed assets provided that they augment the useful economic life, increase the production level or improve the efficiency of the respective fixed assets. Tangible fixed asset items are eliminated from the balance sheet on disposal or withdrawal or when no further economic benefits are expected from their continued use. Gains or losses resulting from the elimination of an asset from the balance sheet are included in the income statement of the financial year in which the fixed asset in question is eliminated. Depreciation is calculated according to the straight-line method using rates that approximate the relevant useful economic life of the respective assets. Fixed assets under construction include fixed assets that are work in progress and are recorded at cost. Fixed assets under construction are not depreciated until the asset is completed and put into operation. c) Finance and Operating Leases The Company as lessee Finance leases, which essentially transfer to the Company all the risks and returns related to the leased fixed asset, are capitalized during the inception of the lease based on the leased asset s fair value or, if it is lower, on the present value of the minimal leases. Payments for finance leases are allocated between the financial expenses and the reduction of the financing liability, in order to achieve a fixed interest rate on the remaining portion of the liability. The financial expenses are debited directly to the net earnings. Capitalized leased fixed assets are depreciated based on straight line method during the useful life of the asset. Leases where the lessor maintains all the risks and returns related to ownership of the fixed asset, are recorded as operating leases. The payments of operating leases are recognized as expense in the net earnings on a constant basis for the duration of the lease. The Company as lessor Leases where the Company does not transfer substantially all the risks and rewards of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognized over the lease term in the same way that revenues from rents are recognized. Contingent rents are recognized as revenue in the period in which they are acquired. d) Impairment of Non-Financial Assets The book values of long-term assets, other than tangible fixed assets with an indefinite life, are reviewed for impairment purposes when facts or changes in circumstances imply that the book 24

25 value may not be recoverable. When the book value of an asset exceeds its recoverable amount, the respective impairment loss is recorded in the net earnings. The recoverable amount is defined as the largest between the fair value minus the sale cost and the value in use. The fair value minus the sale cost is the plausible income from the sale of an asset, in which all parties have full knowledge and willingness, after the deduction of each additional direct sales cost for the asset. The value in use consists of the net present value of future estimated cash flows expected to occur from the continuous use of the asset and from the income expected to arise from its sale at the end of its estimated useful economic life. In order to determine the impairment, the asset items are grouped at the lowest level for which cash flows can be recognized separately. A reversal of an impairment for the value of assets accounted for in previous years, takes place only when there are sufficient indications that such impairment no longer exists or it has been reduced. In these cases the above reversal is treated as income in net earnings. The Management estimates that there is no trigger event and thus no calculation of the assets recoverable amounts has been performed. e) Inventories Inventories include spare parts and other material. Inventories are valued at the lower of cost and net realizable value. A provision for impairment is made if it is deemed necessary. f) Receivables accounts Short-term receivables are accounted for at their nominal value less the provisions for doubtful receivables, while long-term receivables are valued at net amortized cost based on the effective interest rate method. At each date of the financial statements, all overdue or doubtful receivables are reviewed in order to determine the necessity for a provision for doubtful receivables. The balance of the specific provision for doubtful receivables is appropriately adjusted at each balance sheet date in order to reflect the estimated relevant risks. Each write-off of customer balances is debited to the existing provision for doubtful receivables. g) Cash and Cash Equivalents The Company considers time deposits and other highly liquid investments with an initial maturity less than three months, as cash and cash equivalents. For the compilation of the cash flow statements, cash and cash equivalents consist of cash, deposits in banks and cash and cash equivalents as defined above. h) Financial liabilities All long-term liabilities are recognised at amortized cost. Interest expenses are recognized on an accruals basis. We note that interest on loans related to the construction of fixed assets and inventories, whose construction requires a significant period of time, increase the value of relevant assets, based on IAS 23. The capitalization of interest is disrupted when the asset is ready for operation. i) Provisions for Staff Retirement Indemnities According to the provisions of L. 2112/1920, the Company reimburses its retiring or dismissed employees, and the amount of the relevant indemnities depends on the years of service, the level of wages and the reason for exit from employment (dismissal or retirement). The liabilities for staff retirement indemnities are calculated using the discounted value of future benefits that have accrued at the end of the year, based on the recognition of the employees benefit rights during the duration of their expected working years. The above liabilities are calculated based on the financial and actuarial assumptions and are defined using the projected unit method of actuarial valuation. Net retirement costs for the period are included in the net earnings or other conrehensive income, as the case may be, and consist of the present value of benefits that have accrued during the year, the interest on the benefits liability, the cost of prior service, the actuarial profit or loss and any other additional retirement costs. The prior service costs are recognized 25