TIDMPPCD
RNS Number : 1390H
Public Power Corporation S.A.
26 November 2015
PUBLIC POWER CORPORATION S.A.
Interim Condensed
Consolidated and Separate
Financial Statements
September 30, 2015
In accordance with
International Financial Reporting Standards
adopted by the European Union
The attached interim condensed separate and consolidated
financial statements have been approved by the Board of Directors
of Public Power Corporation S.A. on November 26(th) , 2015 and they
are available on the web site of Public Power Corporation S.A. at
www.dei.gr.
CHAIRMAN AND VICE CHIEF FINANCIAL ACCOUNTING
CHIEF EXECUTIVE CHAIRMAN OFFICER DEPARTMENT
OFFICER DIRECTOR
EMMANUEL M. GEORGE . GEORGE C. ANGELOPOULOS EFTHIMIOS
PANAGIOTAKIS ANDRIOTIS . KOUTROULIS
-- Attached pdf. file
To view the associated document please click on the link
below
http://www.rns-pdf.londonstockexchange.com/rns/1390H_-2015-11-26.pdf
Public Power Corporation S.A.
General Commercial Registry: 786301000
Chalkokondyli 30 - 104 32 Athens
Index
INTERIM CONDENSED CONSOLIDATED AND SEPARATE STATEMENTS OF
INCOME
INTERIM CONDENSED CONSOLIDATED AND SEPARATE STATEMENTS OF
COMPREHENSIVE INCOME
INTERIM CONDENSED FINANCIAL POSITION
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
INTERIM CONDENSED STATEMENT OF CHANGES IN EQUITY
INTERIM CONDENSED CONSOLIDATED AND SEPARATE STATEMENTS OF CASH
FLOWS
1................ Corporate Information
2................ Legal Framework
3................ Basis of Preparation And principal accounting
policies
3.1............ basis of preparation
3.2............ CHANGES IN ACCOUNTING POLICIES
4................ SEASONALITY OF OPERATIONS
5................ Income Taxes (current and deferred)
6................ investments in subsidiaries
7................ Investments In Associates
8................ balances and Transactions With Related
Parties
9................ net borrowing
10............. RESTATEMENTS AND RECLASSIFICATIONS
11............. FINANCIAL INSTRUMENTS AND FINANCIAL RISK
MANAGEMENT
12............. Commitments, AND Contingencies
12.1.......... OWNERSHIP OF PROPERTY
12.2.......... Litigation and Claims
12.3.......... ENVIRONMENTAL OBLIGATIONS
12.4.......... COMMITMENTS - INVESTMENTS
12.5.......... PPC RENEWABLES (PPCR)
12.6.......... IPTO S.A.
12.7.......... BUSINESS COLLABORATION
13............. SIGNIFICANT EVENTS
14............. SUBSEQUENT EVENTS
15............. SEGMENT INFORMATION
FIGURES AND INFORMATION
PUBLIC POWER CORPORATION S.A.
INTERIM CONDENSED CONSOLIDATED AND SEPARATE STATEMENTS OF
INCOME
FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 2015
GROUP COMPANY
------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------
Note (reclassified) (reclassified) (reclassified) (reclassified)
01.01.2015-30.09.2015 01.01.2014-30.09.2014 01.07.2015-30.09.2015 01.07.2014-30.09.2014 01.01.2015-30.09.2015 01.01.2014-30.09.2014 01.07.2015-30.09.2015 01.07.2014-30.09.2014
----------------------- ----------------------- ----------------------- ----------------------- ----------------------- ----------------------- ----------------------- -----------------------
REVENUES :
Revenue from energy
sales 4,320,561 4,287,023 1,492,514 1,540,190 4,310,346 4,278,154 1,488,973 1,536,306
Other sales 10 131,458 136,299 46,172 49,511 94,287 106,501 27,406 43,677
======================= ======================= ======================= ======================= ======================= ======================= ======================= =======================
4,452,019 4,423,322 1,538,686 1,589,701 4,404,633 4,384,655 1,516,379 1,579,983
EXPENSES:
Payroll cost 658,084 681,463 218,468 221,772 422,278 439,668 139,328 142,317
Fuel 719,486 958,582 337,475 402,101 719,486 958,582 337,475 402,101
Depreciation 559,006 448,036 182,784 151,439 501,417 398,775 163,140 134,989
Energy purchases 1,001,405 1,128,327 257,628 437,279 1,030,009 1,148,476 268,881 444,908
Transmission
system
usage - - - - 147,981 152,972 48,822 49,199
Distribution
network
usage - - - - 292,814 311,250 94,982 100,700
Emission
allowances 183,356 164,832 76,205 60,044 183,356 164,832 76,205 60,044
Other provisions 690,667 304,071 373,954 54,993 677,575 311,571 361,041 56,259
Financial expenses 201,574 209,867 65,124 69,534 182,940 189,754 58,945 62,879
Financial income (49,754) (44,207) (13,995) (10,971) (89,331) (68,405) (15,850) (12,513)
Other (income) /
expenses, 10 425,594 391,601 142,292 166,809 324,933 281,276 103,817 130,259
Share of Loss/
(Gain)
of associates and
joint ventures,
net (1,751) (1,183) (269) (40) - - - -
Impairment loss /
(gain) of
marketable
securities 1,132 1,600 854 360 1,132 1,600 854 360
Foreign currency
loss/ (gain) (92) 884 (194) (463) 260 899 149 (452)
PROFIT / (LOSS)
BEFORE
TAX 63,312 179,449 (101,640) 36,844 9,783 93,405 (121,410) 8,933
======================= ======================= ======================= ======================= ======================= ======================= ======================= =======================
Income tax expense 5 (57,415) (57,623) 1,947 (11,329) (32,833) (29,290) 5,305 (2,564)
----------------------- ----------------------- ----------------------- ----------------------- ----------------------- ----------------------- ----------------------- -----------------------
NET PROFIT / (LOSS) 5,897 121,826 (99,693) 25,515 (23,050) 64,115 (116,105) 6,369
======================= ======================= ======================= ======================= ======================= ======================= ======================= =======================
Attributed to:
======================= ======================= ======================= =======================
Owners of the
(MORE TO FOLLOW) Dow Jones Newswires
November 26, 2015 13:16 ET (18:16 GMT)
Parent 5,898 121,826 (99,694) 25,515
======================= ======================= ======================= =======================
Non - controlling
interests (1) - 1 -
======================= ======================= ======================= =======================
Earnings / (Losses)
per share, basic
and
diluted 0,03 0.53 (0.43) 0.11
======================= ======================= ======================= =======================
Weighted Average
number
of shares 232,000,000 232,000,000 232,000,000 232,000,000
======================= ======================= ======================= =======================
(All amounts in thousands of Euro - except share and per share
data)
Certain amounts have been reclassified and differ from the
published interim condensed consolidated and separate financial
statements of September 30, 2014 and reflect amendments which are
presented in note 10 of the interim report.
The accompanying notes are an integral part of these interim,
condensed, consolidated and separate financial statements.
PUBLIC POWER CORPORATION S.A.
INTERIM CONDENSED CONSOLIDATED AND SEPARATE STATEMENTS OF
COMPREHENSIVE INCOME
FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 2015
(All amounts in thousands of Euro)
GROUP COMPANY
---------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------
01.01.2015-30.09.2015 01.01.2014-30.09.2014 01.07.2015-30.09.2015 01.07.2014-30.09.2014 01.01.2015-30.09.2015 01.01.2014-30.09.2014 01.07.2015-30.09.2015 01.07.2014-30.09.2014
---------------------- ---------------------- ---------------------- ---------------------- ---------------------- ---------------------- ---------------------- ----------------------
Net profit /
(loss) for
the period 5,897 121,826 (99,693) 25,515 (23,050) 64,115 (116,105) 6,369
---------------------- ---------------------- ---------------------- ---------------------- ---------------------- ---------------------- ---------------------- ----------------------
Other
comprehensive
income
/ (loss) for the
period
Items of Other
Comprehensive
income to be
reclassified
to profit or
loss in
subsequent
periods
Foreign Currency
translation 117 - 131 - - - - -
---------------------- ---------------------- ---------------------- ---------------------- ---------------------- ---------------------- ---------------------- ----------------------
Net Other
Comprehensive
income / (loss)
to be
reclassified
to profit or
loss in
subsequent
periods 117 - 131 - - - - -
---------------------- ---------------------- ---------------------- ---------------------- ---------------------- ---------------------- ---------------------- ----------------------
Items of Other
Comprehensive
income/ (loss)
not to be
reclassified to
profit
or loss in
subsequent
periods
Deferred Tax on
the fixed
assets
revaluation
surplus,
due to the
change in the
income tax rate (65,238) - (65,238) - (56,132) - (56,132) -
---------------------- ---------------------- ---------------------- ---------------------- ---------------------- ---------------------- ---------------------- ----------------------
Net Other
Comprehensive
income / (loss)
not being
reclassified to
profit
or loss in
subsequent
periods (65,238) - (65,238) - (56,132) - (56,132) -
---------------------- ---------------------- ---------------------- ---------------------- ---------------------- ---------------------- ---------------------- ----------------------
Other
Comprehensive
income
/ (loss) for the
period
after tax (65,121) - (65,107) - (56,132) - (56,132) -
---------------------- ---------------------- ---------------------- ---------------------- ---------------------- ---------------------- ---------------------- ----------------------
Total
Comprehensive
income
/ (loss) after
tax (59,224) 121,826 (164,800) 25,515 (79,182) 64,115 (172,237) 6,369
---------------------- ---------------------- ---------------------- ---------------------- ---------------------- ---------------------- ---------------------- ----------------------
Attributable to:
====================== ====================== ====================== ======================
Owners of the
Parent (59,223) 121,826 (164,801) 25,515
====================== ====================== ====================== ======================
Non-controlling
interests (1) - 1 -
====================== ====================== ====================== ======================
The accompanying notes are an integral part of these interim,
condensed, consolidated and separate financial statements.
PUBLIC POWER CORPORATION S.A.
INTERIM CONDENSED FINANCIAL POSITION
AS OF SEPTEMBER 30, 2015
(All amounts in thousands of Euro)
GROUP COMPANY
------------------------ ------------------------
Note 30.09.2015 31.12.2014 30.09.2015 31.12.2014
----------- ----------- ----------- -----------
ASSETS
Non - Current Assets
:
Property, plant and
equipment, net 13,651,567 13,689,537 11,822,271 11,902,455
Intangible assets,
net 46,685 69,946 42,024 65,765
Available for sale
financial assets 1,261 2,394 1,261 2,394
Other non - current
assets 143,451 153,153 1,252,005 1,262,236
----------- ----------- ----------- -----------
Total non - current
assets 13,842,964 13,915,030 13,117,561 13,232,850
----------- ----------- ----------- -----------
Current Assets:
Materials, spare
parts and supplies,
net 725,749 737,763 548,320 559,078
Trade and other receivables
and other current
assets 2,391,312 2,119,892 2,179,088 1,953,514
Income tax receivable 21,044 21,445 - -
Restricted cash 135,023 144,720 135,023 144,720
Cash and cash equivalents 367,416 434,511 118,602 248,318
----------- ----------- ----------- -----------
Total current assets 3,640,544 3,458,331 2,981,033 2,905,630
----------- ----------- ----------- -----------
Total Assets 17,483,508 17,373,361 16,098,594 16,138,480
=========== =========== =========== ===========
EQUITY AND LIABILITIES
Equity :
Share capital 1,067,200 1,067,200 1,067,200 1,067,200
Share premium 106,679 106,679 106,679 106,679
Fixed assets' statutory
revaluation
surplus included
in share capital (947,342) (947,342) (947,342) (947,342)
Revaluation surplus 4,765,006 4,833,594 4,023,709 4,082,686
Reserves 26,048 25,931 118,168 118,168
Retained earnings 1,045,753 1,048,597 1,509,256 1,541,057
(MORE TO FOLLOW) Dow Jones Newswires
November 26, 2015 13:16 ET (18:16 GMT)
----------- ----------- ----------- -----------
6,063,344 6,134,659 5,877,670 5,968,448
----------- ----------- ----------- -----------
Non - controlling
interests 89 90 - -
----------- ----------- ----------- -----------
Total equity 6,063,433 6,134,749 5,877,670 5,968,448
----------- ----------- ----------- -----------
Non - Current Liabilities:
Long - term borrowings 9 4,704,961 4,851,491 4,584,638 4,763,477
Provisions 664,970 650,544 422,923 418,869
Other non - current
liabilities 2,925,904 3,011,149 2,693,151 2,796,257
----------- ----------- ----------- -----------
Total non - current
liabilities 8,295,835 8,513,184 7,700,712 7,978,603
----------- ----------- ----------- -----------
Current Liabilities
:
Trade and other payables
and other current
liabilities 2,197,440 1,971,805 1,963,987 1,806,881
Dividends payable 166 147 166 147
Income tax payable 188,078 74,932 181,608 71,908
Short - term borrowings 9 127,016 97,016 80,000 50,000
Current portion of
long - term borrowings 9 611,540 581,528 294,451 262,493
----------- ----------- ----------- -----------
Total current liabilities 3,124,240 2,725,428 2,520,212 2,191,429
----------- ----------- ----------- -----------
Total Equity and
Liabilities 17,483,508 17,373,361 16,098,594 16,138,480
=========== =========== =========== ===========
The accompanying notes are an integral part of these interim,
condensed, consolidated and separate financial statements.
PUBLIC POWER CORPORATION S.A.
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 2015
(All amounts in thousands of Euro)
Foreign
Fixed exchange,
Assets tax-free
Statutory and
Share Share Legal Revaluation Revaluation other Retained Non-Controlling Total
Capital Premium Reserve Surplus Surplus reserves Earnings Total Interests Equity
Balance,
January 1,
2014 1,067,200 106,679 107,491 4,186,763 (947,342) 33,019 849,763 5,403,573 - 5,403,573
========== ======== ======== ============ ============ ========== ========== ========== ================ ==========
- Net profit
for the
period - - - - - - 121,826 121,826 - 121,826
- Other - - - - - - - - - -
comprehensive
income /
(loss) for the
period after
tax
---------- -------- -------- ------------ ------------ ---------- ---------- ---------- ---------------- ----------
Total
Comprehensive
income
/ (loss) for
the period,
after tax - - - - - - 121,826 121,826 - 121,826
---------- -------- -------- ------------ ------------ ---------- ---------- ---------- ---------------- ----------
- Transfers
from
retirements
of fixed
assets - - - (23,147) - - 23,147 - - -
- Transfer to
non-taxable
reserves - - - - - 1,399 (1,399) - - -
-
Incorporation
of subsidiary - - - - - - - - 92 92
Balance,
September 30,
2014 1,067,200 106,679 107,491 4,163,616 (947,342) 34,418 993,337 5,525,399 92 5,525,491
========== ======== ======== ============ ============ ========== ========== ========== ================ ==========
Balance,
January 1,
2015 1,067,200 106,679 109,203 4,833,594 (947,342) (83,272) 1,048,597 6,134,659 90 6,134,749
========== ======== ======== ============ ============ ========== ========== ========== ================ ==========
- Net profit
for the
period - - - - - - 5,898 5,898 (1) 5,897
- Other
comprehensive
income /
(loss) for
the
period after
tax - - - (65,238) - 117 - (65,121) - (65,121)
---------- -------- -------- ------------ ------------ ---------- ---------- ---------- ---------------- ----------
Total
Comprehensive
income
/ (loss) for
the period,
after tax - - - (65,238) - 117 5,898 (59,223) (1) (59,224)
---------- -------- -------- ------------ ------------ ---------- ---------- ---------- ---------------- ----------
- Transfers
from
retirements
of fixed
assets - - - (2,845) - - 2,845 - - -
- Dividends - - - - - - (11,600) (11,600) - (11,600)
- Other
movements - - - (505) - - 13 (492) - (492)
Balance,
September 30,
2015 1,067,200 106,679 109,203 4,765,006 (947,342) (83,155) 1,045,753 6,063,344 89 6,063,433
========== ======== ======== ============ ============ ========== ========== ========== ================ ==========
The accompanying notes are an integral part of these interim,
condensed, consolidated and separate financial statements.
PUBLIC POWER CORPORATION S.A.
INTERIM CONDENSED STATEMENT OF CHANGES IN EQUITY
FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 2015
(All amounts in thousands of Euro)
Fixed
Assets Tax-free
Statutory and
Share Share Legal Revaluation Revaluation other Retained Total
Capital Premium Reserve Surplus Surplus reserves Earnings Equity
Balance, January
1, 2014 1,067,200 106,679 107,491 3,478,917 (947,342) 108,983 1,401,121 5,323,049
========== ========= ========= ============ ============= ========== ========== ==========
- Net profit for
the period - - - - - - 64,115 64,115
- Other - - - - - - - -
comprehensive
income / (loss)
for the
period, after tax
---------- --------- --------- ------------ ------------- ---------- ---------- ----------
Total
Comprehensive
income
/ (oss) for the
period,
after tax - - - - - - 64,115 64,115
---------- --------- --------- ------------ ------------- ---------- ---------- ----------
- Transfers from
retirements
of fixed assets - - - (23,147) - - 23,147 -
- Transfer to
non-taxable
reserves - - - - - 1,399 (1,399) -
- Other movements - - - - - - (1) (1)
Balance, September
30,
2014 1,067,200 106,679 107,491 3,455,770 (947,342) 110,382 1,486,983 5,387,163
========== ========= ========= ============ ============= ========== ========== ==========
Balance, January
1, 2015 1,067,200 106,679 109,203 4,082,686 (947,342) 8,965 1,541,057 5,968,448
========== ========= ========= ============ ============= ========== ========== ==========
- Net loss for the
(MORE TO FOLLOW) Dow Jones Newswires
November 26, 2015 13:16 ET (18:16 GMT)
period - - - - - - (23,050) (23,050)
- Other
comprehensive
income / (loss)
for the
period, after tax - - - (56,132) - - - (56,132)
---------- --------- --------- ------------ ------------- ---------- ---------- ----------
Total
Comprehensive
income
/ (loss) for the
period,
after tax - - - (56,032) - - (23,050) (79,182)
---------- --------- --------- ------------ ------------- ---------- ---------- ----------
- Transfers from
retirements
of fixed assets - - - (2,845) - - 2,845 -
- Dividends - - - - - - (11,600) (11,600)
- Other movements - - - - - - 4 4
Balance, September
30,
2015 1,067,200 106,679 109,203 4,023,709 (947,342) 8,965 1,509,256 5,877,670
========== ========= ========= ============ ============= ========== ========== ==========
The accompanying notes are an integral part of these interim,
condensed, consolidated and separate financial statements.
PUBLIC POWER CORPORATION S.A.
INTERIM CONDENSED CONSOLIDATED AND SEPARATE STATEMENTS OF CASH
FLOWS
FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 2015
(All amounts in thousands of Euro)
GROUP COMPANY
---------------------------------------------- ----------------------------------------------
01.01.2015-30.09.2015 01.01.2014-30.09.2014 01.01.2015-30.09.2015 01.01.2014-30.09.2014
---------------------- ---------------------- ---------------------- ----------------------
Cash Flows from
Operating
Activities
Profit before
tax 63,312 179,449 9,783 93,405
Adjustments :
Depreciation
and
amortization 621,360 505,127 558,101 451,898
Amortization of
customers'
contributions
and
subsidies (60,642) (57,091) (56,684) (53,123)
Interest
expense 184,670 190,648 166,614 171,383
Other
adjustments 415,264 55,005 365,852 46,260
Changes in
assets (692,358) (794,131) (647,053) (720,051)
Changes in
liabilities 217,110 92,700 162,125 2,793
Net Cash from
Operating
Activities 748,716 171,707 558,738 (7,435)
---------------------- ---------------------- ---------------------- ----------------------
Cash Flows from
Investing
Activities
Capital
expenditure
of fixed
assets and
software (572,267) (437,973) (465,193) (371,040)
Proceeds from
customers'
contributions
and
subsidies 3,140 5,918 3,140 5,917
Interest and
dividends
received 47,542 44,207 79,197 49,398
Investments (1,331) (1,093) (773) (21,900)
---------------------- ---------------------- ---------------------- ----------------------
Net Cash used in
Investing
Activities (522,916) (388,941) (383,629) (337,625)
---------------------- ---------------------- ---------------------- ----------------------
Cash Flows from
Financing
Activities
Net change in
short
term
borrowings 30,000 (270) 30,000 -
Proceeds from
interest
bearing loans
and
borrowings 35,000 1,049,363 - 1,049,363
Principal
payments
of interest
bearing
loans and
borrowings (157,779) (544,276) (153,006) (539,432)
Interest paid
and
loans'
issuance fees (188,535) (213,949) (170,238) (195,273)
Dividends paid (11,581) (7) (11,581) (7)
Net cash used in
Financing
Activities (292,895) 290,861 (304,825) 314,651
---------------------- ---------------------- ---------------------- ----------------------
Net increase/
(decrease)
in cash and
cash
equivalents (67,095) 73,627 (129,716) (30,409)
Cash and cash
equivalents
at the
beginning of
the period 434,511 260,278 248,318 185,513
---------------------- ---------------------- ---------------------- ----------------------
Cash and cash
equivalents
at the end of
the period 367,416 333,905 118,602 155,104
====================== ====================== ====================== ======================
The accompanying notes are an integral part of these interim,
condensed, consolidated and separate financial statements.
1. Corporate Information
Public Power Corporation S.A. ("PPC" or the "Parent Company")
was established in 1950 in Greece for an unlimited duration as a
State owned and managed corporation for electricity generation,
transmission and distribution throughout Greece.
In 1999, the Hellenic Republic enacted Law 2773/1999 ("the
Liberalization Law"), which provided for, among other provisions,
the transformation of PPC into a société anonyme. PPC's
transformation to a société anonyme was effected on January 1,
2001, by virtue of Presidential Decree 333/2000 and its duration
was set for 100 years.
Effective December 2001, PPC's shares are listed on the Athens
and the London Stock Exchanges.
In 2007 the Parent Company proceeded to the spin- off of its RES
activity and its contribution to its wholly owned subsidiary PPC
Renewables S.A.
On 01.12.2011 the Parent Company proceeded to the spin - off of
its General Division of Transmission and the contribution to its
wholly owned subsidiary "Independent Power Transmission Operator"
(IPTO S.A.).
On 01.05.2012 the spin -off of the General Division of
Distribution was completed by its contribution to PPC's wholly
owned subsidiary "Hellenic Electricity Distribution Network
Operator" (HEDNO S.A.).
The accompanying financial statements include the separate
financial statements of PPC and the consolidated financial
statements of PPC and its subsidiaries ("the Group").
PPC headquarters are located at 30, Chalkokondili Street,
Athens, 104 32 Greece.
As at September 30, 2015, the number of staff employed by the
Group was 18,350 (2014: 18,766). As at September 30, 2015, 97
employees of the Group (2014: 103), have been transferred to
several State agencies (ministries, organizations, etc.), out of
which, 93 were compensated by PPC (2014: 99). The total payroll
cost of these employees, for the nine month period ended September
30, 2015 amounted to Euro 2,406 (2014: Euro 2,767). Additionally,
as at September 30, 2015 the number of PPC's transferred employees
to TAYTEKO-TAP/DEI and IKA - TAP/DEI was 322, whose payroll cost
amounted to Euro 10,195.
PPC Group generates electricity from the 62 main power
generating stations of the Parent Company as well as from
additional stations (Wind Parks, Small Hydro stations and
Photovoltaic plants) that belong to its wholly owned subsidiary PPC
Renewables, transmits electricity through its 12,310 kilometres
long High voltage System, out of which 11,365 kilometres are owned
by its wholly owned subsidiary Independent Power Transmission
Operator (IPTO S.A.) and distributes electricity to consumers
through its 236,420 kilometres long Distribution Network of Medium
and Low voltage which are managed by its wholly owned subsidiary
"Hellenic Distribution Network Operator (HEDNO S.A.)".
Lignite consumed by the Parent Company's lignite-fired power
stations is extracted, mainly, from its own lignite mines.
Group PPC has also installed a fibre optics network of
approximately 2,153 kilometres along its transmission lines and
approximately 164 kilometres of urban fibre optics network.
2. Legal Framework
CHANGES IN THE LEGAL FRAMEWORK FOR THE ELECTRICITY MARKET FOR
THE NINE MONTH PERIOD OF 2015
GENERAL PROVISIONS FOR THE INTERNAL ELECTRICITY MARKET
-- By the Presidential Decree 24 (OG A' 20/27.01.2015) the
Ministry of Reconstruction of Production, Environment & Energy
was established, also integrating the Services of the former
Ministry of Environment, Energy and Climate Change along with
jurisdiction, institutions, positions and personnel as well as with
supervised bodies (among others PPC S.A.).
(MORE TO FOLLOW) Dow Jones Newswires
November 26, 2015 13:16 ET (18:16 GMT)
According to OG A' 114 (22-9-2015) the Ministry of
Reconstruction of Production, Environment and Energy was renamed to
Ministry of the Environment and Energy and also the Ministry for
the Rural Development and Food is reconstituted.
2. LEGAL FRAMEWORK (CONTINUED)
-- Law 4336/2015 introduces provisions for the energy and natural gas market in relation to:
-- RAE's jurisdiction on monitoring the account of entities
operating in the energy and the natural gas sectors as well as the
account of the Transmission System's and Distribution Network's
Operators, ensuring that there will be no cross subsidies between
the activities of generation, transmission, distribution and supply
of energy
-- Entities operating in the energy markets in the
interconnected system and network of the country, which will not be
allowed from 01.01.2020 to either generate or import - directly or
indirectly- energy quantities greater than 50% of the total energy
quantity either generated by domestic plants or imported, annually.
The Competition Commission will assess the possibility of achieving
the above mentioned objective by 01.01.2019 and in case of failure
to achieve this, it will propose appropriate measures. In case of
companies' non-compliance, fines amounting from 5% and up to 10% on
their previous year's annual turnover, will be imposed.
-- The Authorities' obligation to apply, until September 2015, a
regime for the temporary and permanent capacity payments' system.
The Authorities shall modify the regulations of the electricity
market in order to prevent the plants' forced operation below their
variable cost and shall enact laws concerning the offsetting of
payments between PPC and the market operator. Discontinuation
contracts, as adopted by the European Commission, will be
implemented. PPC's tariffs will be revised based on cost, replacing
among others, the 20% discount on the high voltage tariffs, with
tariffs based on the generation's marginal cost. The design of the
NOME auctions system will be discussed with the European
Commission, aiming to the reduction of PPC's wholesale and retail
market share by 25%. In case an agreement for the NOME auctions is
not plausible to be concluded until the end of October 2015, the
authorities will agree with the institutions on structural
measures, which will be immediately adopted and which will lead to
the same outcome as mentioned above, relating to both market shares
and timelines.
-- The obligation of the Authorities, until October 2015, to
take irreversible steps towards the privatization of the
electricity transmission system operator, IPTO, unless an
alternative plan with equivalent outcomes regarding competition and
investment prospects, is proposed, in accordance with the best
European practices and in agreement with the institutions for the
achievement of IPTO's full ownership unbundling. Moreover, they
will introduce a new plan for the upgrade of electricity networks,
in order to improve their performance, enhance interoperability and
reduce costs for consumers. The action roadmap for the electricity
market has to be completed until December 2017. In this context,
the balancing market should be completed by June 2017.
-- The Authorities' obligation, until October 2015, to revisit
the energy market's taxation framework as well as to reinforce
RAE's financial and operational independence.
-- The Authorities' obligation, until December 2015, to approve
a new framework supporting Renewable Energy Sources so as to
preserve their economic viability, establish a new scheme for the
upgrade of the energy Networks and to initiate the implementation
of the Roadmap for the harmonization of the energy market with the
European Target Model by December 2017.
-- In addition, by Law 4336/14.08.2015, the Greek State commits
to continue with the privatization program already in progress. The
Hellenic Republic Asset Development Fund's ( HRADF) BoD has already
approved the Asset Development Plan (ADP) which provides for the
privatization of assets already held by HRADF by 31.12.2014.
-- It is noted that the legislative process to apply the
provisions of L. 4336/14.08.2015 is in progress.
-- Law 4320/2015 (OG A'29/19.03.2015) "Provisions for immediate
actions to address the humanitarian crisis, the organization of
Government and Governmental Institutions and other provisions" has
entered into force. Specifically for the electricity sector, and in
combination with the Joint Ministerial Decision 494/2015, the
following provisions are enacted:
-- The supply of electricity, free of charge for up to 1200kWh
per four month period, for the year 2015, is provided for the
electricity needs of the households' main residence which resided
under extreme poverty conditions. This benefit will be financed
through the state budget. The abovementioned Joint Ministerial
Decision determines the value of electricity relating to supply
charges, regulated charges, ETMEAR, Special Consumption Tax and the
0,5% Special levy.
2. LEGAL FRAMEWORK (CONTINUED)
-- Reconnections free of charges for consumers whose connection
was terminated until January 31, 2015, as well as settlements of
overdue billings.
-- The terms and conditions for settling overdue billings, are
agreed, according to contracts between the Ministry of Labor and
Social Solidarity and the electricity suppliers.
-- The monetary value of the above mentioned benefits, will not
affect any other income prerequisites set out in order to receive
any other social or welfare benefits.
The eligibility criteria for the beneficiaries of the benefits,
according to the law's provisions, are specified in the Joint
Ministerial Decision 494 ( G B' 577 / 09.04.2015). Specifically,
the criteria related to the income thresholds for the beneficiaries
were further amended by the Joint Ministerial Decision 1082 (FIN
22220 -OG B' 938/22.05.2015). The new Joint Ministerial Decision
(Fin 861) amended the criteria regarding the beneficiaries for the
free reconnection and supply of electricity, regardless of their
inclusion or not in the Social Solidarity Tariff, as well the
method of charging their consumption to the electricity bills.
-- Law 4342/2015 was enacted ( G' A 143/09.11.2015) on the
adaptation of Directive 2012/27/EU on energy efficiency. According
to the provisions of the Law, the following are enacted a) a
framework of actions for the promotion of energy efficiency so as
for the country to contribute towards the achievement of the EU
2020 set target of twenty percent (20%) energy efficiency, as well
as to pave the way for further energy efficiency improvements
beyond 2020 and b) indicative national energy efficiency targets
for 2020, measures for their promotion and, rules, aiming to
overcome the energy market inefficiencies that impede the
well-functioning of the supply and usage of electricity.
Especially for the Supply activities :
-- Effective January 1, 2017, the energy efficiency obligation
framework shall be enacted, which ensures that energy distributors
and/or retail energy sales companies achieve a cumulative energy
saving target at the end-use until December 31, 2020.
-- Energy distributors and retail energy sales companies that
are responsible for the installation, operation and maintenance of
electricity, gas, heating, cooling and hot water for domestic
consumption meters, are required to provide individual meters -
reflecting the actual energy consumption and providing information
on the actual time of use - to the final consumers in a competitive
price. The costs for the installation of those meters may be
considered eligible for final consumers in the context of the
implementation of co-financed programs or other policy measures, as
long as the conditions laid down in the relevant Union legislation
are met.
-- Effective January 1 2016, energy distributors and retail
energy sales companies, are required, regardless of the
installation or not of a smart metering system, to the extent that
such data concerning the energy pricing and historical consumption
of the final consumers is available, to provide them to an energy
service provider designated by the final consumer on his request.
Energy distributors and retail energy sales companies are required
to post online the results of their actions to improve energy
efficiency every six (6) months.
HELLENIC ELECTRICITY DISTRIBUTION NETWORK (HEDN)
-- The distribution network operator (HEDNO), announced that the
market opening for the electrical systems of Crete and Rhodes
begins from 01.09.2015 under the provisions of the
Non-interconnected Islands (NII) Code. The announcement determines
the process of activating a Load Representative's participation
contract, as a Supplier in the NII, as well as the process of
initiating the operation of said Load Representative per NII
system. It is noted that, per HEDNO'S announcement, any Load
Representative, already operating in an NII system or several NII
systems and wishing to operate in any other NII system whenever
that is allowed in the near future, is to be treated as a new Load
Representative for that system and should follow, in a similar way,
the process of its operation initiation in the new NII system.
-- Concerning the Non Interconnected Islands Code and the Action
Plan of the HEDNO for the implementation of the necessary
infrastructure, the implementation time schedule is extended
regarding certain actions and activities, by almost a semester
compared to the provisions of the NII Code. In any case, the NII
Operator must complete the installation and certification of all
the Systems including I.T. so that all the Code's provisions to be
fully implemented till the 1st semester of 2020 (RAE Decision
330/2015).
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2. LEGAL FRAMEWORK (CONTINUED)
-- The HEDNO created a new web application for property fees, which upgrades and modernizes the communication with the Municipalities. The new web application will replace the real estate data changes of all Greece's Municipalities delivery method (by post) to HEDNO, drastically reducing bureaucracy and delays. Using security credentials, all the Municipalities will be able to input data modification files, to check any erroneous entries and make the necessary corrections.
-- With Decision 373/2015, RAE approved the Concession Contract
concerning the management of the Hellenic Electricity Distribution
Network, jointly submitted by the Owner and the Operator, setting
the obligation for both the Owner and the Operator to jointly
maintain a concession contract for the management of the HEDN,
exclusively for the regulation of issues concerning the calculation
and payment method of the annual compensation due to the Owner of
the HEDN. This compensation is part of the total annual revenue of
the distribution activity that HEDNO receives through the HEDN use
tariffs.
CODES AND MANUALS
-- Following IPTO's proposal, unit charges, uplift coefficients
and other parameters were determined for calculating the non-
compliance charges, due to irregular offers and declarations for
the calendar year 2015 (RAE Decision 1/2015). Specifically, for
2015, the numeric value for the tolerance BAL _TOL is amended,
while the remaining numerical values of the coefficients/
parameters used in the calculation of the non-compliance Charges
remain unchanged.
-- According to RAE's Decision 253/2015 (OG B' 1965/11-9-2015)
the Manual for the Market Settlement is amended concerning : a) the
calculation of the charge for the cross-border trade for each
allocation period to include charges for the cost of losses as well
as infrastructure usage for the cross-border trade with Turkey, b)
the calculation methodology of the required revenue of IPTO so that
amounts for Interconnection Rights minus costs for services
rendered relating to the concession of electricity transmission
rights in the interconnections of the Hellenic System with those of
neighboring countries, to reduce the Required Revenue. and c) the
special fee for the CO2 emissions reduction (ETMEAR), so that
collected amounts from load Representatives regarding ETMEAR, PSOs,
System use and the Transitional Assurance Capacity Mechanism to be
recovered by IPTO within the second month after the end of the
month in which those amounts relate.
PUBLIC SERVICE OBLIGATIONS (PSOs)
-- The highest annual customer charge per consumption point,
covering PSOs charges for the year 2015, was set to 793,525 Euro
(RAE Decision 106/2015). That limit is being annually readjusted
according to the respective annual change of the consumer prices
index, as published by the Hellenic Statistical Authority.
ETMEAR - SPECIAL FEE FOR THE REDUCTION OF CO(2) EMISSIONS (ex
RES Fee)
-- Following L.4254/2014, RAE began monitoring the progress of
integrating the necessary procedures for the implementation of the
above mentioned Law's provisions as well as assessing the effects
of the implementation, taking into account data provided by the
Monthly Bulletin Monitoring of the Special Account of EMO SA, by
monthly calculating and making publicly known, both inputs and
outputs relating to the balancing of the Special Account.
In the context of the above mentioned monitoring, RAE's Decision
(772/2014) was issued where ETMEAR's allocation coefficients are
readjusted and increased as well as the relative charges per
customer category, effective from 01.01.2015, aiming to a total
ETMEAR amount - for the year 2015 - of Euro 1,048.35 mil.
Following this decision, Law 4324/2015 annulled the above
mentioned decision by RAE, stating that, for the year 2015, the
unit charges for the ETMEAR will remain unchanged at the level set
for the year 2014. This regulation will be applied retroactively
from 1.1.2015. The amounts that have already been charged by
electricity suppliers, in excess of the law's provisions, will be
recalculated and any resulting differences will be offset or
included in the corresponding ETMEAR fee, in the next clearing
bill.
-- The highest annual customer charge per consumption point,
covering ETMEAR charges is being annually readjusted according to
the annual change of the consumer prices index, as published by the
Hellenic Statistical Authority. That charge, for the year 2015, was
set to 978,117 Euro (RAE Decision 105/2015) due to the 1.3%
decrease of the average consumer prices index for the year 2014
compared to that of 2013.
2. LEGAL FRAMEWORK (CONTINUED)
OTHER ISSUES
-- In December 2011, the EU adopted Regulation 1227/2011 on the
integrity and transparency of the wholesale energy market
(Regulation on Wholesale Energy Markets Integrity and Transparency
- REMIT). The REMIT Regulation applies to wholesale energy
products' trading and sets the framework for identifying and
avoiding abusive practices affecting wholesale energy markets
establishing rules for the obligatory publication of trading energy
products details in the wholesale market. In this context EMO
started the registration process with ACER (<<Agency for the
Cooperation of Energy Regulators>>), in order to be included
in the list of the Registered Reporting Mechanisms (RRMs). The
registration process was successfully completed and EMO was
certified and included in the list, given the ACER code
B0000118K.GR.
EMO, as an RRM, is ready to undertake on behalf of the
Participants, following an enforced agreement to EMO, in order to
be able to meet the reporting requirements to ACER ("REMIT
Reporting Service Agreement v0.2"), the obligation of sending the
relevant transaction reports for the Greek wholesale electricity
market, thus satisfying the REMIT regulation requirements.
-- The platform CEREMP (Central European Registry of Energy
Market Participants) was enabled for the registration of
participants in the wholesale energy markets according to the
provisions of the REMIT Regulation (RAE Announcement
02.27.2015).
-- After the appointment of EMO as the Competent Body for the
granting of aid in undertakings exposed in significant risk of
carbon leakage due to the cost of the Rights of the EU Emissions
Trading Scheme, which is passed on electricity price (aid for
indirect emissions cost) (Joint Ministerial Decision 21906 - OG
3304/09.12.2014), the Annual Compensation Settlement was announced
for the year 2014. Eligible companies may be informed for the
results concerning them through their authorized verification
Bodies, registered in the "Verification Bodies Register" of EMO
S.A.
-- In accordance with PPC's recommendation to RAE the uplift
percentages on PPC supply tariffs, in its capacity as Supplier of
Last Resort, for its third year of the service are decreased as
follows (RAE Decision 212/2015):
-- (a) by 5% for HV customers on the wholesale market cost
-- (b) by 10% for MV customers on the valid MT customers PPC tariffs (it was 12%)
-- (c) by 10% for LV customers on the valid LV customers PPC tariffs (it was 12%)
The uplift percentage on PPC's supply tariffs, in its capacity
as Universal Service Provider, is also maintained for its third
year of the service (RAE Decision 213/2015), i.e. 12% on the
applicable PPC tariffs for specific customer categories
(Residential customers and small businesses with power supply up to
25kVA).
-- RAE's contribution fees imposed on businesses operating in
the energy sector are adjusted annually, according to the annual
change in the consumer price index, as published by the Hellenic
Statistical Authority. Due to the decrease of 1.3% of the average
consumer price index for 2014 compared with that of 2013, the
amount of the annual contribution fee charged to suppliers,
depending on the total amount of their customers energy absorbed by
the System or by the Network, is set to 0.07EUR per absorbed MWh
for 2015 (RAE Decision 147/2015). The corresponding amount imposed
on electricity generators is set to 8.16EUR per MW of max net
capacity.
3. Basis of Preparation And principal accounting policies
3.1 basis of preparation
Basis of preparation of financial statements
The accompanying interim condensed consolidated and separate
financial statements for the nine month period ended September 30,
2015 have been prepared in accordance with IAS 34 "Interim
Financial Reporting" which defines the form and the content of the
interim financial statements. The accompanying financial statements
do not include all the information and disclosures required in the
annual financial statements and should be read in conjunction with
the latest annual financial statements as at December 31, 2014 made
publicly available.
The accompanying financial statements have been prepared under
the historical cost convention (except for tangible assets,
financial assets "held - for - sale" and derivative financial
assets that have been measured at fair value), assuming that PPC
and its subsidiaries will continue as a going concern. The
financial
3.2. CHANGES IN ACCOUNTING POLICIES (CONTINUED)
statements are presented in thousands of Euro and all values are
rounded to the nearest thousand, except when otherwise
indicated.
Approval of Financial Statements: The Board of Directors
approved the accompanying financial statements, on November 26(th)
, 2015.
3.2 CHANGES IN ACCOUNTING POLICIES
The accounting policies applied to the separate and consolidated
financial statements are the same as those applied to the annual
separate and consolidated financial statements for the year ended
December 31, 2014 with the exception of the following
interpretations that are effective as of 1 January 2015
onwards.
-- IAS 16 Property, Plant & Equipment and IAS 38 Intangible
assets (Amendment): Clarification of Acceptable Methods of
Depreciation and Amortization
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The amendment is effective for annual periods beginning on or
after 1 January 2016. 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
been endorsed by the EU. The management of the Group is in the
process of assessing the impact of this amendment on the Group's
financial statements.
-- IAS 19 Employee benefits (Amendment): Employee Contributions
The amendment is effective for annual periods beginning on or
after 1 February 2015. 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 management of the Group is in
the process of assessing the impact of this amendment on the
Group's financial statements.
-- IFRS 9 Financial Instruments and subsequent amendments to
IFRS 9 and IFRS 7- Classification and measurement
The standard is applied for annual periods beginning on or after
1 January 2018 with early adoption permitted. IFRS 9 replaces the
provisions of IAS 39, relating to classification and measurement of
financial assets and financial liabilities, and also includes a
model for expected credit losses, which replaces the model of
realized credit losses currently applicable. The standard
introduces an approach for hedge accounting based on principles,
addressing the inconsistencies and weaknesses of the current IAS
39. The standard has not yet been endorsed by the EU. The
management of the Group is in the process of assessing the impact
of this standard on the Group's financial statements.
-- IFRS 11 Joint arrangements (Amendment)
The amendment is effective for annual periods beginning on or
after 1 January 2016. This amendment requires of an investor to
apply the acquisition method (according to IFRS 3) when acquiring a
participation in a joint activity that is a business). The
amendment has not yet been endorsed by the EU. The management of
the Group is in the process of assessing the impact of this
amendment on the Group's financial statements.
-- IFRS 14 Regulatory Deferral Accounts
The standard is effective for annual periods beginning on or
after 1 January 2016. The aim of this interim standard is to
enhance the comparability of financial reporting by entities that
are engaged in rate-regulated 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. 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.
3.2. CHANGES IN ACCOUNTING POLICIES (CONTINUED)
-- IFRS 15 Revenue from Contracts with Customers
The standard is effective for annual periods beginning on or
after 1 January 2018. 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
balances between periods and key judgments and estimates. The
standard has not been yet endorsed by the EU. The management of the
Group is in the process of assessing the impact of this amendment
on the Group's financial statements.
-- IAS 27 Separate Financial Statements (Amendment)
The amendment is effective on or after 1 January 2016. 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 in some
jurisdictions the transition of separate financial statements to
IFRS, reducing compliance costs without reducing the information
available to investors. This amendment has not yet been endorsed by
the EU. The management of the Group is in the process of assessing
the impact of this amendment on the Group's financial
statements.
-- IFRS 10 Consolidated Financial Statements and IAS 28
Investments in Associates and Joint Ventures - (Amendment): 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 2016. The
amendments have not yet been endorsed by the EU. The management of
the Group is in the process of assessing the impact of this
amendment on the Group's financial statements.
-- 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 2016. 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. The management of the Group
is in the process of assessing the impact of this amendment on the
Group'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 2016. The narrow-focus
amendments to IAS 1 clarify, rather than significantly change,
existing IAS 1 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 management of the Group
is in the process of assessing the impact of this amendment on the
Group's financial statements.
3.2. CHANGES IN ACCOUNTING POLICIES (CONTINUED)
-- The IASB has issued the Annual Improvements to IFRSs 2010 -
2012 Cycle, which is a collection of amendments to IFRSs. The
amendments are effective for annual periods beginning on or after 1
February 2015.
-- 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.
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-- 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 2011 - 2013
Cycle, which is a collection of amendments to IFRSs. The amendments
are effective for annual periods beginning on or after 1 January
2015.
-- 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.
Finally, IASB has issued the Annual Improvements to IFRSs 2012 -
2014 Cycle, which is a collection of amendments to IFRSs. The
amendments are effective for annual periods beginning on or after 1
January 2016. These annual improvements have not yet been endorsed
by the EU. The Management of the Group is in the process of
assessing the impact of these amendments on the Group's 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.
3.2. CHANGES IN ACCOUNTING POLICIES (CONTINUED)
-- 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.
4. SEASONALITY OF OPERATIONS
The Company's operations are subject to seasonality due to the
increased demand for electricity during the summer and winter
months, a trend which might not be reflected in its operating
results as these are affected by external factors (e.g. fuel
prices, hydrological conditions etc.).
5. Income Taxes (current and deferred)
Group Company
----------------------- -----------------------
30.09.2015 30.09.2014 30.09.2015 30.09.2014
----------- ---------- ----------- ----------
Current income taxes 130,828 44,204 122,151 37,723
Deferred income
tax - Effect of
change in tax rate 25,596 - 26,119 -
Deferred income
tax (101,613) 13,175 (118,041) (8,677)
Additional taxes 2,604 244 2,604 244
Total income tax
expense 57,415 57,623 32,833 29,290
----------- ---------- ----------- ----------
According to L. 4334/2015, the income tax rate for legal
entities residing in Greece, increased to 29% from 26%, while at
the same time the tax prepayment increased to 100% from 80%. The
new tax rate is effective January 1, 2015 while the increase
concerning the tax prepayment, based on the provisions of L.
4336/2015, is effective from January 1, 2014.
Tax returns for the companies residing in Greece are filed
annually but profits or losses declared for tax purposes remain
provisional until such time, as the tax authorities audit the
returns and the records of the company and a final assessment is
issued. The Group establishes a provision, if deemed necessary, on
a per case and per company basis, against an event of additional
taxes being imposed by the tax authorities.
Based on the applicable Income Tax Code, which is in effect
since the fiscal year 2011, the certified auditors issue an "Annual
Tax Compliance Report" after conducting a tax audit at the same
time with the financial audit. The tax audit is conducted on
specific tax areas, determined by an audit program, in accordance
to the provisions of the tax law. Audit matters which are not
covered by the above mentioned decision are dealt in accordance to
ISAE 3000 "Assurance Engagements other than Audits or Reviews of
Historical Financial Information".
The Group's companies that are subject to the above mentioned
provisions are: PPC S.A., IPTO S.A., HEDNO S.A., and PPC Renewables
S.A.
Moreover, effective January 2014, the appropriate tax
authorities (Centre for Auditing Big Companies) have initiated a
tax audit of the Parent Company's fiscal years 2009, 2010 and 2011,
which is still in progress.
5. INCOME TAXES (CURRENT AND DEFERRED) (CONTINUED)
In the following table, the unaudited tax years of the Parent
Company and the subsidiaries of the Group are presented:
Company Country Unaudited
tax years
since
------------------------------------------- -------------- ----------
- PPC (Parent Company) Greece 2009
------------------------------------------- -------------- ----------
- PPC Renewables S.A. Greece 2012
------------------------------------------- -------------- ----------
- HEDNO S.A. Greece 2012
------------------------------------------- -------------- ----------
- IPTO S.A Greece 2009
------------------------------------------- -------------- ----------
- Arkadikos Ilios Ena S.A. Greece 2007
------------------------------------------- -------------- ----------
- Arkadikos Ilios Dio S.A. Greece 2007
------------------------------------------- -------------- ----------
- Iliako Velos Ena S.A. Greece 2007
------------------------------------------- -------------- ----------
- Iliako Velos Dio S.A. Greece 2007
------------------------------------------- -------------- ----------
- SOLARLAB S.A. Greece 2007
------------------------------------------- -------------- ----------
- Iliaka Parka Ditikis Makedonias Ena Greece 2007
S.A.
------------------------------------------- -------------- ----------
- Iliaka Parka Ditikis Makedonias Dio Greece 2007
S.A.
------------------------------------------- -------------- ----------
- PPC FINANCE PLC United Kingdom 2009
------------------------------------------- -------------- ----------
Cyprus 2011
* PPC QUANTUM ENERGY LTD
------------------------------------------- -------------- ----------
Bulgaria 2014
* PPC BULGARIA JSCo
------------------------------------------- -------------- ----------
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Turkey 2014
* PPC Elektrik Tedarik ve Ticaret A.S.
------------------------------------------- -------------- ----------
Greece 2007
* PHOIBE ENERGIAKH S.A.
------------------------------------------- -------------- ----------
As at 31.12.2013, the Parent Company recognized a deferred tax
liability on the difference between the accounting and tax basis of
the value of its investment in the subsidiary IPTO S.A. More
specifically, the value of the investment in PPC's tax books
amounts to Euro 38,444, while the respective value in the
accounting books amounts to Euro 916,376. By applying on the
difference of Euro 877,932 the 2013 applicable income tax rate of
26%, a deferred tax liability of Euro 228,262 was derived. On
September 2015, due to the income tax rate change from 26% to 29%,
the deferred tax liability was adjusted to Euro 254,600, while the
difference of Euro 26,338 was charged to the current income
statement.
Part of this surplus value arising in the tax books, of an
amount of Euro 589,615, originates from the reserve of Law
2941/2001 relating to the spanned off Transmission segment which
was transferred to IPTO S.A. in its capacity as a sole successor.
In accordance to paragraph 3, case (6), of article 98 of Law
4001/2011, all tax or accounting transactions which were conducted
by PPC and related to the segment and which relate to future
benefits or liabilities, are transferred to IPTO S.A.
Consequently, upon the disposal of IPTO S.A. and the payment by
the Parent Company of the respective income tax deriving from the
difference between the sale consideration and the tax book value,
the reserve of Law 2941/2001 (Euro 589,615) is considered as taxed
and thus IPTO S.A. in its capacity as a sole successor of PPC S.A.,
is eligible to transfer this reserve to retained earnings and thus
making it available for distribution without payment of any
additional income taxes.
6. investments in subsidiaries
The Parent Company's subsidiaries and the respective
participation carrying amounts are as follows:
Company
----------------------
30.09.2015 31.12.2014
---------- ----------
IPTO S.A 916,376 916,376
HEDNO S.A. 56,982 56,982
PPC Renewables S.A. 155,438 155,438
PPC FINANCE PLC 59 59
PPC BULGARIA JSCo 522 522
PPC ELEKTRİK TEDARİK
VE TİCARET A.S 1,350 687
PPC Quantum Energy Ltd 51 -
---------- ----------
Total 1,130,778 1,130,064
========== ==========
6. INVESTMENTS IN SUBSIDIARIES (CONTINUED)
In July 2015, the increase of the share capital of its wholly
owned subsidiary PPC ELEKTRIK TEDARIK VE TIC, by Euro 663, was
decided by the Parent Company. The additional share capital amount
was paid in August 2015.
Moreover, in August 2015, the Parent Company proceeded to the
initial payment of the share capital of its 51% subsidiary PPC
QUANTUM ENERGY LTD which amounted to Euro 51 (Note 12.7).
The consolidated financial statements include the financial
statements of PPC and its subsidiaries. The subsidiaries included
in the consolidation are the following (full consolidation
method):
Country Principal Activities
Name Ownership and Year
Interest of Incorporation
--------------------- ---------------------- ----------------- --------------------
30.09.2015 31.12.2014
---------- ----------
PPC Renewables Greece
S.A. 100% 100% - 1998 RES
Greece
HEDNO S.A. 100% 100% - 1999 HEDN
Greece
IPTO S.A. 100% 100% - 2000 HETS
Arkadikos Ilios Greece
Ena S.A. 100% 100% - 2007 RES
Arkadikos Ilios Greece
Dio S.A. 100% 100% - 2007 RES
Iliako Velos Ena Greece
S.A. 100% 100% - 2007 RES
Iliako Velos Dio Greece
S.A. 100% 100% - 2007 RES
Greece
Solarlab S.A. 100% 100% - 2007 RES
Iliaka Parka Ditikis
Makedonias Ena Greece
S.A. 100% 100% - 2007 RES
Iliaka Parka Ditikis
Makedonias Dio Greece
S.A. 100% 100% - 2007 RES
PPC Finance PLC 100% 100% UK - 2009 Financing Services
Engineering,
construction
and operation
PPC Quantum Energy Cyprus, of a power
Ltd 51% 51% 2011 plant
Bulgaria
PPC BULGARIA JSCo 85% 85% - 2014 Supply of power
PPC Elektrik Tedarik Turkey
ve Ticaret A.S. 100% 100% - 2014 Supply of power
PHOIBE ENERGIAKI Greece
S.A 100% 100% -2007 RES
7. Investments In Associates
The Group's and the Parent Company's associates as of September
30, 2015 and December 31, 2014 are as follows (equity method):
Group Company
---------------------- ----------------------
30.09.2015 31.12.2014 30.09.2015 31.12.2014
---------- ---------- ---------- ----------
Larco S.A. - - - -
PPC Renewables ROKAS
S.A. 2,191 2,326 - -
PPC Renewables TERNA
Energiaki S.A. 2,210 2,297 - -
PPC Renewables NANKO
Energy - MYHE Gitani
S.A. 1,623 1,639 - -
PPC Renewables MEK Energiaki
S.A. 1,467 1,241 - -
PPC Renewables ELTEV
AIFOROS S.A. 2,426 2,292 - -
PPC Renewables EDF EN
GREECE S.A. 11,145 10,683 - -
Aioliko Parko LOYKO S.A. 26 28 - -
Aioliko Parko MBAMBO
VIGLIES S.A. 29 31 - -
Aioliko Parko KILIZA
S.A. 29 30 - -
Aioliko Parko LEFKIVARI
S.A. 34 35 - -
Aioliko Parko AGIOS ONOUFRIOS
S.A. 35 36 - -
Renewable Energy Applications
LTD 29 27 - -
WASTE SYCLO S.A. 63 26 221 162
PPC Solar Solutions A.E. 975 974 980 980
22,282 21,665 1,201 1,142
========== ========== ========== ==========
In September 2015, the Parent Company participated in the share
capital increase of its associate (49%) Waste Syclo S.A. by Euro
59.
6. INVESTMENTS IN ASSOCIATES (CONTINUED)
The full list of the Group's and the Parent Company's associates
are as follows:
Ownership Country
Interest and year
of Incorporation
----------------------
Name Note 30.09.2015 31.12.2014 Principal
Activities
------------------------ ---- ---------- ---------- ----------------- --------------
Greece
Larco S.A. 11.45% 11.45% - 1989 Metallurgical
PPC Renewables ROKAS Greece
S.A. 49.00% 49.00% - 2000 RES
PPC Renewables TERNA Greece
Energiaki S.A. 49.00% 49.00% - 2000 RES
PPC Renewables NANKO
Energy - MYHE Gitani Greece
S.A. 49.00% 49.00% - 2000 RES
PPC Renewables MEK Greece
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Energiaki S.A. 49.00% 49.00% - 2001 RES
PPC Renewables ELTEV Greece
AIFOROS S.A. 49.00% 49.00% - 2004 RES
PPC Renewables EDF Greece
EN GREECE S.A. 49.00% 49.00% - 2007 RES
Greece
EEN VOIOTIA S.A. 1 46.60% 46.60% - 2007 RES
Aioliko Parko LOYKO Greece
S.A. 49.00% 49.00% - 2008 RES
Aioliko Parko MAMBO Greece
VIGLIES S.A. 49.00% 49.00% - 2008 RES
Aioliko Parko KILIZA Greece
S.A. 49.00% 49.00% - 2008 RES
Aioliko Parko LEFKIVARI Greece
A.E. 49.00% 49.00% - 2008 RES
Aioliko Parko AGIOS Greece
ONOUFRIOS S.A. 49.00% 49.00% - 2008 RES
Renewable energy Cyprus
applications LTD 49.00% 49.00% - 2010 RES
Greece Waste
Waste Syclo S.A. 49.00% 49.00% - 2011 Management
PPC Solar Solutions Greece
S.A. 49.00% 49.00% - 2014 RES
1. It is consolidated from the associate company PPC Renewables
EDF EN GREECE S.A. as it participates by 95% in its share
capital.
8. balances and Transactions With Related Parties
PPC balances with its subsidiaries and its associates as of
September 30, 2015 and December 31, 2014 are as follows:
September 30, December 31,
2015 2014
------------------------ ------------------------
Receivables (Payables) Receivables (Payables)
----------- ----------- ----------- -----------
Subsidiaries
- IPTO S.A. 63,515 (719,354) 306,804 (1,058,258)
- PPC Renewables
S.A. 1,420 (837) 5,583 (837)
- HEDNO S.A. 205,763 (419,018) 75,696 (192,711)
- PPC Finance
Plc - (15,544) - (6,171)
- PPC Elektrik 707 (252) - -
- PPC Bulgaria - (934) - -
=========== =========== =========== ===========
271,405 (1,155,939) 388,083 (1,257,977)
=========== =========== =========== ===========
Associates
LARCO (energy,
lignite and ash) 261,669 - 229,321 -
261,669 - 229,321 -
=========== =========== =========== ===========
PPC's transactions with its subsidiaries and associates, for the
period ended September 30, 2015 and September 30, 2014 respectively
are as follows:
30.09.2015 30.09.2014
------------------------ ------------------------
Invoiced Invoiced Invoiced Invoiced
to from to from
---------- ------------ ---------- ------------
Subsidiaries
- IPTO S.A.. 92,834 (1,025,420) 456,607 (1,600,043)
- PPC Renewables
S.A 2,474 - 2,565 -
- HEDNO S.A. 988,020 (1,514,815) 1,089,931 (1,599,414)
- PPC Finance
Plc - (27,872) - (24,572)
- PPC Elektrik 770 (2,208) - -
- PPC Bulgaria - (934) - -
---------- ------------ ---------- ------------
1,084,098 (2,571,249) 1,549,103 (3,224,029)
========== ============ ========== ============
Associates
LARCO S.A 52,677 (3,333) 61,399 (7,473)
---------- ------------ ---------- ------------
52,677 (3,333) 61,399 (7,473)
========== ============ ========== ============
8. BALANCES AND TRANSACTIONS WITH RELATED PARTIES
(CONTINUED)
Guarantee in favor of the subsidiary PPC Renewables S.A.
As of 30.09.2015, the Parent Company has guaranteed for a total
credit line of up to Euro 8 mil., through overdraft facilities. As
of 30.09.2015 PPC Renewables S.A. has used from the above mentioned
credit line an amount of Euro 875, which relates to letters of
guarantees.
Guarantee in favor of the subsidiary IPTO SA
As of 30.09.2015, the Parent Company has guaranteed IPTO's
bilateral loans for a total amount of Euro 325 mil. The above
mentioned guarantee was approved by the Parent Company's Annual
Shareholders' Meeting.
Transactions and balances with other companies into which the
Greek State participates
The following table presents transactions and balances with
Hellenic Petroleum ("ELPE S.A.") and National Gas Company ("DEPA
S.A."), which are PPC's liquid fuel and natural gas suppliers
respectively, and into which the Greek State participates.
Furthermore, transactions and balances with the Electricity Market
Operator ("EMO"), are presented.
Purchases Balance
------------------------ ------------------------
30.09.2015 30.09.2014 30.09.2015 31.12.2014
----------- ----------- ----------- -----------
ELPE, purchases
of liquid fuel 93,197 113,164 9,836 4,416
DEPA, purchases
of natural gas 206,353 249,763 39,836 29,987
----------- ----------- ----------- -----------
299,550 362,927 49,672 34,403
=========== =========== =========== ===========
30.09.2015 31.12.2014
----------------------- -----------------------
Receivables (Payables) Receivables (Payables)
----------- ---------- ----------- ----------
EMO S.A. 165,261 (42,608) 166,038 (65,349)
=========== ========== =========== ==========
30.09.2015 30.09.2014
---------------------- ----------------------
Invoiced Invoiced Invoiced Invoiced
to from to from
--------- ----------- --------- -----------
EMO S.A. 1,488,109 (1,991,961) 1,644,769 (2,123,167)
========= =========== ========= ===========
In addition to the above mentioned transactions, PPC enters into
commercial transactions with many state-owned entities, both profit
and nonprofit, within its normal course of business (sale of
electricity, services received, etc.). All transactions with
government owned entities are performed at arm's length terms.
Management remunerations
Management's remuneration (Board of Directors and General
Managers) for the nine month period ended September 30, 2015 and
2014 are as follows:
GROUP COMPANY
---------------------- ----------------------
30.09.2015 30.09.2014 30.09.2015 30.09.2014
---------- ---------- ---------- ----------
Remuneration of Board
of Directors' members
- Remuneration of executive
members 204 171 41 43
- Remuneration of non-executive
members 32 55 - -
- Compensation / Extraordinary
fees 27 27 - -
- Employer's Social
Contributions 44 38 - -
- Other Benefits 76 64 61 64
---------- ---------- ---------- ----------
383 355 102 107
---------- ---------- ---------- ----------
Remuneration of Deputy
Managing Directors and
General Managers
- Regular remuneration 496 513 411 470
- Employer's Social
Contributions 153 166 124 151
- Compensation / Extraordinary - - - -
fees
---------- ---------- ---------- ----------
649 679 535 621
---------- ---------- ---------- ----------
Total 1,032 1,034 637 728
========== ========== ========== ==========
8. BALANCES AND TRANSACTIONS WITH RELATED PARTIES
(CONTINUED)
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Remuneration to members of the Board of Directors, does not
include standard salaries and employer's social contribution,
relating to the representatives of employees that participate in
the Parent Company's Board of Directors. Also, it does not include
the benefit of the electricity supply based on the PPC personnel
tariff to the Board of Director members, the Deputy Managing
Directors and the General Managers.
9. net borrowing
During the nine month period ended September 30, 2015, the Group
proceeded to debt repayments amounting to Euro 177.8 mil. (Parent
Company: Euro 173 million)
In January 2015, the total credit line of an overdraft facility
by a commercial bank amounting to Euro 50 mil. was drawn by the
Parent Company.
The loans and borrowings of the Parent Company and the Group as
of 30.09.2015 are presented in the following table:
GROUP COMPANY
------------------------ ------------------------
30.09.2015 31.12.2014 30.09.2015 31.12.2014
----------- ----------- ----------- -----------
Bank Loans 2,351,588 2,388,538 2,204,231 2,271,406
Bonds Payable 3,003,260 3,087,959 2,713,158 2,797,856
Unamortized portion
of loans' issuance fees (38,347) (43,478) (38,300) (43,292)
----------- ----------- ----------- -----------
Total long term loans
and borrowings 5,316,501 5,433,019 4,879,089 5,025,970
----------- ----------- ----------- -----------
Less current portion
- Bank Loans 163,277 133,305 136,253 104,196
- Bonds Payable 456,991 456,991 166,879 166,879
Unamortized portion
of loans' issuance fees (8,728) (8,768) (8,681) (8,582)
----------- ----------- ----------- -----------
Total current portion
of loans and borrowings 611,540 581,528 294,451 262,493
----------- ----------- ----------- -----------
Non-current portion
of loans and borrowings 4,704,961 4,851,491 4,584,638 4,763,477
=========== =========== =========== ===========
Short term borrowings 127,016 97,016 80,000 50,000
Total loans and borrowings 5,443,517 5,530,035 4,959,089 5,075,970
=========== =========== =========== ===========
Credit rating
As of September 30,2015 PPC's credit rating from the rating
houses of Standard and Poor's (S&P) and ICAP is set to "CCC-"
with negative outlook and "C" respectively (31.12.2014 : credit
rating of "B" from both rating houses).
PPC's credit rating downgrades from S&P during 2015,
resulted following downgrades of the Greek State.
10. RESTATEMENTS AND RECLASSIFICATIONS
As at September 30, 2015, the Group and the Parent Company
proceeded to the reclassification of comparative figures in the
income statement, as follows:
Group Group
--------------- ----------------- --------------- --------------- ----------------- ---------------
01.01-30.09.14 Reclassification 01.01-30.09.14 01.07-30.09.14 Reclassification 01.07-30.09.14
Published effect Reclassified Published effect Reclassified
--------------- ----------------- --------------- --------------- ----------------- ---------------
Other Sales (137,842) 1,543 (136,299) (51,054) 1,543 (49,511)
Other
(income)/expenses 393,144 (1,543) 391,601 168,352 (1,543) 166,809
Parent Parent
Company Company
--------------- ----------------- --------------- --------------- ----------------- ---------------
01.01-30.09.14 Reclassification 01.01-30.09.14 01.07-30.09.14 Reclassification 01.07-30.09.14
Published effect Reclassified Published effect Reclassified
--------------- ----------------- --------------- --------------- ----------------- ---------------
Other Sales (98,202) (8,299) (106,501) (35,378) (8,299) (43,677)
Other
(income)/expenses 272,977 8,299 281,276 121,960 8,299 130,259
The above reclassifications were made for comparison reasons and
to provide better understanding of the financial statements.
11. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT
Fair value and fair value hierarchy
The Group uses the following hierarchy for determining and
disclosing the fair value of financial instruments by valuing
technique:
Level 1: quoted (unadjusted) prices in active markets for
identical assets or liabilities.
Level 2: other techniques for which all inputs which have a
significant effect on the recorded fair value are observable,
either directly or indirectly.
Level 3: techniques which use inputs that have a significant
effect on the recorded fair value that are not based on observable
market data.
During the reporting period there were no transfers between
level 1 and level 2 fair value measurement, and no transfers into
and out of level 3 fair value measurement.
The following tables present a comparison of the carrying amount
of the Group's and the Company's financial instruments that are
carried at amortized cost and their fair value as well as the
tangible fixed assets which are revalued periodically (the last
revaluation was conducted on 31.12.2014)
Carrying amount Fair value
Group 30.09.2015 31.12.2014 30.09.2015 31.12.2014
-----------
Non - financial
Assets
Property, plant
and equipment 13,651,567 13,689,537 13,651,567 13,689,537
Financial Assets
Trade receivables 2,088,203 1,772,670 2,088,203 1,772,670
Restricted
cash 135,023 144,720 135,023 144,720
Cash and cash
equivalents 367,416 434,511 367,416 434,511
Financial Liabilities
Long-term borrowings 5,316,501 5,433,019 5,201,309 5,314,018
Trade payables 1,715,241 1,672,772 1,715,241 1,672,772
Short term
borrowings 127,016 97,016 127,016 97,016
Carrying amount Fair value
Parent Company 30.09.2015 31.12.2014 30.09.2015 31.12.2014
Non - financial Assets
Property, plant and equipment 11,822,271 11,902,455 11,822,271 11,902,455
Financial Assets
Trade receivables 1,932,821 1,638,789 1,932,821 1,638,789
Restricted cash 135,023 144,720 135,023 144,720
Cash and cash equivalents 118,602 248,318 118,602 248,318
Financial Liabilities
Long-term borrowings 4,879,089 5,025,970 4,763,897 4,906,969
Trade payables 1,570,063 1,601,802 1,570,063 1,601,802
Short term borrowings 80,000 50,000 80,000 50,000
The fair value of investments available for sale, restricted
cash, cash and cash equivalents as well as financial derivative
instruments equals their carrying amount.
Fair value of trade receivables and trade payables approximate
their carrying amounts. Fair value of the remaining financial
assets and financial liabilities is based on future cash flows
discounted using either directly or indirectly observable inputs
and are within the Level 2 of the fair value hierarchy.
Fair value of tangible assets is included in level 3 of fair
value hierarchy.
11. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT
(CONTINUED)
As at September 30, 2015, the Group and the Parent Company held
the following financial instruments measured at fair value:
Fair value Fair value Hierarchy
Group and Parent Company 30.09.2015 31.12.2014
Financial Assets
Investments available for sale 1,261 2,394 Level 1
Financial derivative instruments (1,353) (3,565) Level 2
Macroeconomic conditions in Greece - Imposition of capital
Controls
By the Legislative Act of 28.06.2015 (OG 65 A / 28.06.2015) a
bank holiday was declared while capital controls were imposed. The
bank holiday ended on 20.07.2015, while capital controls remain in
effect. Capital controls include a daily limit for all ATM
withdrawals and restrictions on payments abroad, consequently,
affecting domestic transactions and transactions with foreign
suppliers and creditors. Thus, part of household customers,
corporate customers and of the public sector delay their
obligations payment, adversely affecting the Group's and the Parent
Company's cash flows. Moreover, a significant part of the Group's
and the Parent Company's debt is due to financial institutions
abroad. While capital controls imposed currently remain in force,
the Group and the Parent Company are required to seek the approval
of the competent authorities in order to use cash to serve their
debt. Finally, the Group's and the Parent Company's operations
depend to a significant extent from foreign suppliers. As long as
capital controls imposed remain
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in force, the Group and the Parent Company are required to seek
the approval of the competent authorities to use available cash to
serve payments to suppliers abroad.
The lack of liquidity of the Greek banking sector which led to
the imposition of capital controls, as well as uncertainty arising
from the Greek Fiscal crisis, has exacerbated economic uncertainty
in Greece, which has and may in the future continue to have adverse
effects on the operation, the activity, the financial condition and
the liquidity of the Group and the Parent Company.
On August 14, 2015, the Greek Parliament passed Law 4336/2015 on
the Third Program on the Greek Economy Support, amounting to Euro
86 bil. where the disbursement of the amount is provided in
installments upon achieving specific objectives. The first two
packages of prerequisite measures are already been approved by the
Greek Parliament.
In case of non-implementation of the support program, is not
possible to assess accurately any further impact on the Greek
economy and the impact on the activities, the operating results,
the financial condition and the cash flows of the Group and the
Parent Company.
12. Commitments, AND Contingencies
12.1. OWNERSHIP OF PROPERTY
Key issues relating to the ownership of the Group's assets are
as follows:
1. The Parent Company has completed the registration of its
property through a fixed assets registry. These assets (almost
entirely) are registered at the relevant land registries over the
country and the cadastral application is monitored. The update of
the existent in the company new integrated information system for
fixed assets management is in progress.
2. In a number of cases, expropriated land, as presented in the
expropriation statements, differs (in quantitative terms), with
what the Parent Company considers as its property.
3. Agricultural land acquired by the Parent Company through
expropriation in order to be used for the construction of
hydroelectric power plants, will be transferred to the State at no
charge, following a decision of the Parent Company's Board of
Directors and a related approval by the Ministry of Development, if
such land is no longer needed by the Parent Company for the
fulfilment of its purposes.
12. COMMITMENTS AND CONTINGENCIES (CONTINUED)
Property, plant and equipment of the Group are located all over
Greece. Currently, the Group does not carry any form of insurance
coverage on its property, plant and equipment (except for its
information technology equipment) resulting to the fact that if a
sizable damage is incurred to its property, it might affect its
profitability. Materials, spare parts as well as liabilities
against third parties are not insured. The Group is currently
evaluating the possibility - in the newly formed legal framework-
to conduct a tender for the selection of an insurance company to
cover for its assets as well as liabilities against third
parties.
12.2. Litigation and Claims
The Group is a defendant in several legal proceedings arising
from its operations. The total amount claimed as at September 30,
2015 amounts to Euro 1,610 mil. as further detailed below:
1. Claims with contractors, suppliers and other claims: A number
of contractors and suppliers have raised claims against the
Company.
These claims are either pending before courts or under
arbitration and mediation proceedings. The total amount involved is
Euro 668 mil. In most cases the Group has raised counter claims,
which are not reflected in the accounting records until the time of
collection.
2. Fire incidents and floods: A number of individuals have
raised claims against the Company for damages incurred as a result
of alleged electricity-generated fires and floods. The total amount
involved is Euro 43 mil. and Euro 11 mil., respectively.
3. Claims by employees: Employees are claiming the amount of
Euro 198 mil., for allowances and other benefits that according to
the employees should have been paid by PPC.
4. Litigation with PPC Personnel Insurance Organization
(PPC-PIO) (in Greek it is "OAP-DEI" i.e. PPC's Social Security
Fund): Until September 30, 2015, PPC Personnel Insurance
Organization (former "PPC PIO", TAYTEKO/IKA at present) had filed,
before the courts, seven (7) lawsuits against PPC, claiming an
amount in total of Euro 87.7 mil, of which six (6) are pending for
a total amount of Euro 28.3 mil.
5. General Federation of PPC Personnel (GENOP DEI) and
PanHellenic Federation of Retirees' (POS DEI) lawsuit against
PPC
GENOP DEI and POS DEI have filed a lawsuit against PPC in the
Multimember Court of First Instance in Athens. By the above
mentioned lawsuit they pursue that PPC will be obliged to pay to
third parties, who are not litigants, in particular the insurance
funds of IKA - ETAM and TAYTEKO the amount of Euro 634.8 mil. plus
interest, for the coverage of the resource, which according to the
lawsuit, the State did not pay to the above mentioned insurance
funds for the years 2010 and 2011. The lawsuit was scheduled to be
heard in the Multimember Court of First Instance in Athens on
September 18th, 2014 but it was postponed for February 23, 2017. In
view of the fact that the above mentioned lawsuit is based on
admissions which are in contrast with the provisions of Decision
13/2010 of the Supreme Court and Decision 668/2012 of the Athens
Court of Appeals, the Parent Company considers that the
possibilities of an adverse outcome for PPC, for the lawsuit in
question, are minimal and therefore, has not formed a
provision.
6. PPC's lawsuit against ETAA (former TSMEDE)
ETAA (former TSMEDE) by its Decision 7/2012 has imposed on PPC
the amount of Euro 27.4 mil. in application of article 4 of L.
3518/2006, as employer contributions due to the Main pension Branch
for the period 01.01.2007 - 30.04.2012 and pertaining to the
engineers insured before 01.01.1993 to the above mentioned
Insurance Fund, that have been employed by PPC for the above
mentioned period.
Against the above mentioned 7/2012 decision of the Insurance
Fund in question, PPC has filed the 05.09.2012 appeal to the Athens
Administrative Court of First Instance. The discussion of the
appeal took place on 03.11.2014 and the issuance of a decision is
expected.
Since its employees - who are engineers- are insured mandatorily
to PPC's Insurance Fund based on L. 4491/1966, thus resulting to
PPC paying on their behalf to the above mentioned Insurance Fund
the corresponding employer contributions while insurance for the
above mentioned engineers in ETAA is optional and is done by
choice, with them paying the corresponding insurance contributions
provided for engineers that are independently employed, the Parent
Company considers that the possibilities of a negative outcome of
its appeal are minimal and therefore has not established a
provision.
12. COMMITMENTS AND CONTINGENCIES (CONTINUED)
7. Lawsuits against HEDNO
The companies "KENTOR" (former "ENERGA") and "NEW APPLICATION"
(former "HELLAS POWER") have filed lawsuits before the MMCFA
against HEDNO, which were to be discussed on 12.02.15 and 19.02.15
respectively, by which they claim amounts of Euro 520.8 mil. and
Euro 361.3 mil., respectively. On 02.03.2015 both companies
resigned expressly and unreservedly from the above mentioned
lawsuits, by an out of court declaration.
8. Annulment requests against the request for proposal (RFP) by
PPC S.A. for the sale of 66 % IPTO's shares
Two annulment requests have been filed (one of them includes an
application of interim measures) against PPC's RfP for the sale of
66% of IPTO's (PPC's subsidiary) shares. The first request has been
filed by five trade unions and the second has been filed by the
PanHellenic Federation of Retirees' (POS DEI). The above mentioned
requests were discussed in front of the Council of State's Plenary
Session on December 5, 2014 and a decision is pending. It is noted
that apart from the above mentioned annulment requests, a relevant
lawsuit is pending in the civil courts with a court date of
11/05/2016 (the interim measures hearing has taken place on October
14, 2014 for which a rejection decision (247/2014) was issued) for
the annulment of PPC's BoD decision concerning the RfP
9. Lawsuits of IPTO against PPC.
IPTO has filed against PPC, two lawsuits for a total amount of
Euro 540 mil. for amounts due - according to IPTO- by the Parent
Company's participation in the wholesale electricity market.
In particular:
-- By its first lawsuit IPTO is asking for an amount of Euro
242.7 (with interest) for past due amounts which the Parent Company
collects from supply bills and conveys to IPTO, that in turn
conveys them to EMO (LAGIE). Total interest on the above mentioned
claims amounts to Euro 22.5 mil.
-- By its second lawsuit, IPTO is asking for the payment of Euro
232.6 mil. (with interest) for past due amounts which the Parent
Company collects from supply bills and conveys to IPTO. Total
interest on the above mentioned claims amounts to Euro 40.6
mil.
The lawsuits are scheduled to be heard on May 18, 2017 in the
Multimember Court of First Instance in Athens. The Parent Company
considering the possibility of paying interest on part of IPTO's
past due claims, has established a provision of Euro 30.3 mil. It
is noted that PPC will file lawsuits against IPTO as well.
For the above amounts the Group and the Parent Company have
established adequate provisions, which as at September 30, 2015
amounted approximately to Euro 176 mil. and 112 mil., respectively
(30.09.2014: Euro 153 mil. for the Group and 75 mil. for the Parent
Company), which are considered adequate for the expected losses,
possibly resulting by the above mentioned cases' final
judgement.
PPC's relation to its personnel's Social Security Funds
(MORE TO FOLLOW) Dow Jones Newswires
November 26, 2015 13:16 ET (18:16 GMT)
Despite the fact that under the current legislation the Group
does not have any obligation to cover in the future any deficit
whatsoever between income and expenses to PPC's personnel Social
Security Funds, there can be no assurance that this regime will not
change in the future.
Litigations Risk
The Group and the Parent Company are involved in several legal
proceedings arising from their operations, and any adverse outcome
against PPC or any other of the Group's companies may have a
negative impact on their business, financial condition and
reputation.
In addition, as a majority state owned utility, the Group is
subject to laws, rules and regulations designed to protect the
public interest, such as of public procurement or environmental
protection. Violation of legislation, rules or regulations, entail,
among others, criminal sanctions for the Board of Directors members
and executive officers as well as the employees of the companies
and utilities that are subject to those rules.
Simultaneously, the Group is one of the largest industrial
groups in Greece, with complex activities and operations across the
country. In the ordinary course of its business, from time to time,
competitors, suppliers, customers, owners of property adjacent to
the Group's properties, media outlets, activists, and ordinary
citizens, raise complaints (even to public prosecutors) about the
Group's operations and activities, to the extent they feel that
such activities and operations cause or are likely to cause
economic damage to their views and/or interests, businesses or
properties and, in the context of advancing those complaints, they
often file criminal complaints against the Group with the public
prosecutor on a variety of grounds and allegations or make public
allegations in the press, which the public prosecutor is obligated
to investigate further before they decide further actions,
including the closing of the case for lack of any conclusive
12. COMMITMENTS AND CONTINGENCIES (CONTINUED)
evidence. These practices have intensified during the recent
economic crisis, as public prosecutors and the general public have
generally become more sensitive to similar allegations, especially
against companies in which the Hellenic Republic is a major
shareholder and are viewed as operating in the public interest.
As a result, the Group and the Parent Company, their Board of
Directors members and directors, are presently and from time to
time, and could be in the future, subject to various criminal or
other investigations at various stages of procedural advancement on
a variety of grounds arising in connection with their activities in
the ordinary course of business. These investigations and legal
proceedings may be disruptive to the Group's and the Parent
Company's daily operations to the extent that the officers and
directors involved need to spend time and resources in connection
therewith. They may also adversely affect the Group's and the
Parent Company's reputation. To date, none of the proceedings
initiated against the Group and the Group's officers or directors
has resulted in any criminal convictions.
Litigation with " louminion of Greece" (ALOUMINION)
1. On 31.10.2013 with a majority of two to one (2/1) Decision
No.D1/1/2013, the Permanent Arbitration Court of RAE decided the
price for the supply of electricity to ALOUMINION S.A. at Euro
40,7/MWh for the period 01.07.2010 until 31.12.2013. At this price,
both the fixed and the variable energy costs are included, as well
as System Use Charges, Ancillary Services Charges, Public Service
Obligations, and state fees on behalf of RAE and HTSO/EMO, although
Renewable Energy/Gaseous Pollutants special fees/ETMEAR, Special
Electricity Tax, DETE and other taxes imposed, are not included.
The burden on the financial results of the third quarter of 2013,
imposed by the above mentioned Decision, as far as, the supply of
electricity to ALOUMINION is concerned, for the period 01.07.2010
until 30.9.2013 amounted to Euro 105.5 mil.
As the abovementioned Decision compels PPC to sell at a loss,
PPC filed an action for invalidity against it, which was scheduled
to be heard on 04.12.2014, and was postponed for 01.10.2015 and, in
addition, submitted a complaint for state aid before the European
Commission (December 2013).
The Commission, by a letter in June 2014, has notified PPC, that
it does not intend to further examine the complaint, given that,
according to the Commission, the complaint in question pertains to
amounts, which were determined, following an arbitration by an
arbitrary court, to which the parties resorted to, mutually, and
therefore it cannot constitute a "vehicle" of state aid, since it
is not a state entity. PPC has challenged the 22/8/2014
Commission's decision in front of the General Court of the European
Union (case T-639/2014).
On 17.04.2015 PPC was notified of a subsequent decision (dated
25.03.2015) of the European Commission, through which, the latter
concluded, in relation to the decision dated 12.06.2014, that PPC's
complaint, concerning illegal state aid towards ALOUMINION, does
not require further investigation concerning state aid but using a
different rationale. Specifically, the new decision is based mostly
on the fact that the decision to resort to arbitration met the
criteria of a private investor and therefore that it could not lead
to an illegal state aid.
On 20.05.2015 the General Court of the European Union passed on
to PPC an application by the European Community , by which the
latter requests the dismissal of the above mentioned trial, which
is pending following the T-639/14 complaint by PPC, reasoning that,
a decision is no longer necessary, since the Commission has issued
a subsequent decision dated 25.03.2015, replacing its previous
decision dated 12.06.2015. The Court had set a deadline for PPC to
answer by July 3(rd) , 2015, in relation to the above mentioned
dismissal. PPC filed a relevant memo (July 3(rd) , 2015) in front
of the General Court. It has also filed (on June 29(th) 2015) an
action for annulment according to art. 263 of the Treaty for the
Operation of the European Union, against the abovementioned
decision of the Commission, dated 25.03.2015 [Case SA 38101
(2015/NN) (former 2013/CP)].
2. State Aid of Euro 17.4 mil.
Furthermore case C-590/14 P is pending, relating to PPC's
petition for the annulment of the General Court's decision dated
8.10.2014 in case T-542/11 "ALOUMINION against Commission". This
decision has annulled the Commission's decision dated 13.07.2011,
which awarded to PPC an amount of EUR17.4 mil., for an illegal
state aid, as a result of the implementation of a favourable tariff
for the period January 2007 - March 2008. PPC has filed a memo,
answering both the Commission and ALOUMINION's claims in the case,
before the General Court on August 3, 2015. A hearing date is
pending. PPC submitted in October 2015 a written request to the
Court, to hold before an audience a hearing, regarding the case, in
accordance with Article 76.1 of the Court's Rules of Procedure.
12. COMMITMENTS AND CONTINGENCIES (CONTINUED)
3. ALOUMINION does not accept tariffs for the High Voltage
Customers, which were decided on PPC's 28.02.2014 General
Shareholders' Meeting and proceeds with a partial payment of the
amounts due to PPC for electricity consumption on its industrial
installations, calculating, by its statement, the supply tariff of
the energy consumed for the year 2014, on the basis of the
1/31.10.2013 Arbitration Decision.
In addition, ALOUMINION, in months of negotiations declined all
tariffs proposed by PPC, since 2013, including the tariff decided
by PPC's General Shareholders Meeting on 28.02.2014.
PPC by its Shareholders' General Meeting on 22.12.2014, decided
that, as far as High Voltage Customers that have not accepted the
tariff decided by its General Shareholders' Meeting on 28.02.2014:
"the Management should have been committed to take measures against
the companies not signing supply contracts for 2014". Following
that, PPC proceeded on 02.01.2015 to an order for the deactivation
of ALOUMINION's load meters and invited IPTO to proceed to all
necessary actions.
Following that ALOUMINION has filed the RAE I-191545/09.01.2015
complaint -application of interim measures- application of special
regulatory measures against PPC, which was notified to IPTO. PPC
asked that the complaint been dropped, ALOUMINION been ordered to
proceed in the immediate payment of all amounts due and the
infliction of administrative penalties to ALOUMINION.
RAE, by its letter to PPC and IPTO -notified to ALOUMINON-
recommended to all parties to not execute the above mentioned order
of deactivation.
Afterwards, on 28.04.2015 RAE, notified by a letter an excerpt
of its 11.03.2015 plenary session, by which the discussion and
decision on ALOUMINION's complaint is suspended until the resolving
of some issues relating to the quorum set by law in order for a
decision to be made on the above mentioned complaint.
On 20.03.2015 a document of the Competition Committee (CC) was
notified to PPC, by which CC asked the submission of PPC's views on
a memo submitted by ALOUMINION, with which the latter asked the CC,
on 25.02.2015, to apply interim measures (among others the
suspension of PPC's complaint regarding its supply relationship
dated 07.11.2013, as well as its January 2015 declaration of
discontinuation of representation of ALOUMINION's meters). PPC has
submitted the relevant data in time. The CC set 29.07.2015 as the
hearing date. In the hearing, the CC has postponed the hearing for
25.09.2015 and has issued a decision for a temporary suspension of
PPC's order to IPTO for the deactivation of ALOUMINION's load
meters and PPC's abstention from any activity for the interruption
of supply of energy to ALOUMINION, until the issuance of the
decision by CC.
(MORE TO FOLLOW) Dow Jones Newswires
November 26, 2015 13:16 ET (18:16 GMT)
At the set date of the hearing (25.09.2015), CC interrupted the
discussion of the case for 14.10.2015 (its next Meeting date) and
granted to PPC a deadline for submitting a commitment proposal
under the provision of par. 6 of article 25 of Law . 3959/2011 to
CC until 08.10.2015, in order for the Committee to evaluate the
commitments that PPC would undertake. This deadline was extended to
09.10.2015. On that date, PPC submitted the relevant commitments.
The rapporteur recommended the commitments' rejection as expressed,
due to the fact that (according to the recommendation) they were
not adequate and sufficient. Following an oral hearing of the case
on 15.10.2015, PPC submitted a new set of commitments undertaking
that : a) within ten (10) days of the notification of the CC's
decision, will proceed in recalling the order for the deactivation
of ALOUMINION's load meters which has been sent by PPC to
ALOUMINION and IPTO SA by its extrajudicial statements on
02.01.2015 and 19.01.2015 and b) that It will continue to supply
electricity to ALOUMUNION under the current terms and conditions,
and the issue of ALOUMINION's electricity tariffs, will be the
subject of direct negotiation between the parties or otherwise
resolving the dispute. Negotiations should be completed within
three (3) months from the date of CC's acceptance of the
commitments. Meanwhile PPC will refrain from adopting, and
generally taking any measures against ALOUMINION. Together with the
commitments that PPC submitted, there is a reference that these
commitments were submitted in accordance with the provision of par.
6 of Article 25 of Law. 3959/2011 and do not constitute an
admission of any competition law's infringement from PPC's part.
The notification of CC's relevant decision is expected.
12. COMMITMENTS AND CONTINGENCIES (CONTINUED)
Old Bank of Crete
The dispute with the old "Bank of Crete" is dating back to 1989,
when the bank was under liquidation. More precisely, by a mandatory
action of the then trustee of the Bank, PPC's deposits were
mandatorily converted to stake-holding in the share capital of the
Bank and to obligatory loan to the Bank. PPC by its July 22, 1991
lawsuit against the bank asked to be compensated for GRD 2.2
billion approximately, (Euro 6.5 mil.) for the reason that the
above mentioned Act of the trustee of the Bank was held
invalid.
Moreover, PPC had outstanding loan balances, received under six
(6) loan agreements for which it was agreed upon to be repaid
gradually. On June 10, 1991, although PPC has paid the overdue
installments, the Bank has terminated all of the above mentioned
loan agreements and thus on that date the claim against PPC became
overdue for the whole amount of the loans.
For that reason, against PPC's above mentioned lawsuit, the Bank
has proposed an offset of its claim resulting by the above
mentioned loans, amounting to GRD 4 bil. approximately, and
furthermore has asked the payment of this amount by PPC by its
lawsuit dated 28.12.1995. The Court of First Instance has postponed
the hearing of the Bank's lawsuit against PPC until the final
outcome of the hearing, which started with PPC's lawsuit against
the Bank.
The action was rejected by the Multimember Court of Athens and
PPC appealed against the said Decision of the Court, which was also
rejected by the Athens Appeal Court.
The above mentioned decision was brought to review by PPC before
the Supreme Court, which accepted it and in consequence the case
was again brought to trial before the Court of Appeals, which held
that an expert report should be drawn up. After the compilation of
the said expert report the Court's decision was held partially in
PPC's favor (Court of Appeals decision 2005).
However, a petition for review before the Supreme Court was
filed against the aforementioned Decision which was then accepted
by the Supreme Court and then was resubmitted to the Court of
Appeals which by its inconclusive decision (Nr 4093/2009) ordered
the completion of the expert report.
The official expert report was completed at the end of May
2012.
Following that, the hearing of the case would have taken place
on October 25, 2012, but it was postponed for September 26, 2013,
due to the strike of both judges and lawyers. The case was heard on
the abovementioned date and decision 3680/2014 of the Court of
Appeals was issued, which only partially accepts PPC's lawsuit
while essentially accepting the results of the ordered by the Court
above mentioned official expert report, as following:
a) The amount owed by the Bank of Crete to PPC at the time of
the filing of the lawsuit by PPC on 22.07.1991 amounted to GRD
1,268,027,987 and
b) The amount owed by PPC to the Bank of Crete on 01.07.1991 due
to the loan amounts becoming overdue by the Bank and after the
suggested by the Bank set off of its counterclaim against the
above-mentioned PPC's claim, amounted to GRD 2,532,936,698.
PPC intends to appeal against the above mentioned decision. It
is noted that until the final judgment on the appeal, the
discussion of the aforementioned (28 December 1995) lawsuit of the
Bank of Crete against PPC is pending.
In case that the Supreme Court accepts PPC's annulment, then it
will judge the case anew and the decision which it will issue will
be irrevocable. In case of a positive outcome for PPC, for which
there is an increased likelihood, then the case of the Bank against
PPC might be rejected.
Complaint against the European Commission's Decision regarding
lignite extraction rights
On May 13th, 2008, PPC filed before the General Court of the
European Union (General Court), an application for the annulment of
the Commission's decision of March 5, 2008 regarding the granting
by the Hellenic Republic of lignite extraction rights to PPC.
The Greek State has intervened before the aforementioned Court
in favour of PPC, while two competitors of PPC have intervened in
favour of the European Commission. Furthermore, on August 4, 2009,
the European Commission issued a decision (which was notified to
PPC on August 7, 2009), in which the measures for the compliance
with the decision of March 5, 2008 were defined as obligatory for
the Hellenic Republic.
The Commission's Decision made obligatory for the Hellenic
Republic the launching of public tender procedures for the
concession of lignite rights for the mines of Drama, llassona, Vevi
and Vegora to third parties excluding PPC, with the exception of
those cases where there were no other valid and binding offers.
The Hellenic Republic was also obliged, to ensure that the third
parties that would be awarded the relevant extraction rights, would
not sell to PPC the extracted lignite from the specific mines, with
the exception of those cases where there would be no other valid
and binding offers.
PPC submitted an application for the annulment of the said
decisions of the Commission before the CFI of the European
Communities. Furthermore, the Hellenic Republic has intervened
before the CFI in the said proceedings, in favour of PPC. The
hearing of the cases took place before the General Court on
February 2, 2012. The General Court of the European Union on
20.9.2012 issued decisions for both cases.
12. COMMITMENTS AND CONTINGENCIES (CONTINUED)
In particular, as far as case T-169/08 is concerned, the Court
has ruled the following:
-- State measures, which were in effect prior to the
liberalization of the energy market, are preserved and continue to
affect the lignite supply market, although PPC is not responsible
for other companies failing to gain access to lignite reserves.
-- PPC's part in the lignite's market was limited to the
exploitation of reserves for which extraction rights were
granted.
-- The Commission did not support that PPC abusively exploited
its dominant position in the above mentioned market.
-- The Commission did not prove that the advantageous access to
lignite was capable of creating a situation, in which PPC, simply
by exercising its lignite extraction rights would abuse its
dominant position in the energy wholesale supply market or could be
led to such abusive conduct.
The Commission simply noted that PPC still has a dominant
position.
-- It is not clear, only from the fact that PPC being in an
advantageous position opposite to its competitors, in consequence
of a state measure that this fact constitutes an abuse of dominant
position.
-- It is not clear that, in order to admit the existence of a
violation of article 86, para. 1 EC combined with article 82 EC, is
only adequate, to prove that a state measure falsifies competition
by creating a situation of inequality of opportunities, between
businesses without demanding the definition of abuse of dominant
position. Therefore it decided that granting to PPC the specific
rights is not against European Union's law [ art.106 para.1(special
or exclusive rights to public companies) combined with art. 102
(abuse of dominant position) of the Treaty for the operation of the
European Union].
As far as case T-421/09 was concerned, the Court has annulled as
irrelevant the above mentioned Commission's Decision of August 4,
2009, given that, it pertained to the executive part of the
violation ascertained in the decision of March 5, 2008.
The Commission appealed for the revision of the relevant
decisions before the General Court of the European Union (Cases
C-553/12 and C-554/12). The abovementioned appeals have been
notified to PPC on December 19, 2012.
On March 25, 2013 the companies "MYTILINEOS S.A - GROUP OF
COMPANIES", "PROTERGIA S.A." and "ALOUMINION S.A." filed before the
European Union Court, an intervention petition in favor of the
European Union and against PPC, for the annulment of the above
mentioned Decision of the Court of September 20(th) , 2012. The
hearing of the case took place on October 3, 2013.
(MORE TO FOLLOW) Dow Jones Newswires
November 26, 2015 13:16 ET (18:16 GMT)
On July 17, 2014, the Court of the European Union has issued a
decision on the annulment requests for the Commission, by accepting
them. In particular the Court of the European Union, by citing
cases, has accepted that for the application of the directives in
question of the union law it is required (but also enough) the
adoption of a measure, by which a member state exclusively grants
rights to a public company, creates an inequality of opportunities
between companies and thus it is able to drive the company to an
abuse of dominant position. The European Union's Court has not
accepted the Commission's request to judge the case in its
substance following the injunction of the decision in the first
degree but referred the case again to the General Court of the
European Union, in order for it to deliver a decision on the
remaining annulment reasons, which, although PPC had invoked in
front of the Court, the General Court had not examined.
PPC has submitted a memo with its observations to the Court
within the legal deadline. Following that the other litigants
"MYTILINEOS S.A - GROUP OF COMPANIES", "PROTERGIA S.A." and
"ALOUMINION" have filed relevant memos and the appointment of the
case's hearing is pending.
12. COMMITMENTS AND CONTINGENCIES (CONTINUED)
Alleged claims of EMO (LAGIE), against PPC S.A.
-- Implementation of methodology for the payments allocation to
generators due to deficits of the Day Ahead Schedule ( DAS )
It is noted that following the issuance of RAE's Decision
285/2013, EMO sent a letter to PPC, according to which an amount of
Euro 96.6 million is seemingly allocated to PPC, based on the
finalization of the methodology by RAE for fair allocation of
payments to cover deficits in the Day Ahead Schedule (DAS) created
by third party suppliers during 2011 and 2012.
In continuation to this letter, EMO allocating the total amount
of Euro 96.6 mil. in seven monthly installments starting from
August 2013, sent to PPC the related briefing notes amounting to
Euro 13.8 mil., each. PPC considers that EMO's alleged claim
violates fundamental principles of law, while simultaneously
neither the amount nor the reasons for this claim are
substantiated. In addition, the relevant RAE Decision has been
contested in court.
In particular, PPC has already filed an application for
annulment of RAE's Decision 285/2013, before the Council of State,
as well as, an action for suspension of such Decision, until a
final judgment is issued by the Council of State. The hearing for
the application for the annulment took place on March 18, 2014, and
the decision is pending. In the meantime, the Council of State has
issued an interim Decision (n. 62/2014), which suspended the
payment of 50% of the amount of Euro 96.6 mil., which is
attributable to PPC.
In spite of the assessment that there are reasonable chances for
a favorable outcome, following the intermediate decision of the
Supreme Court, PPC has recognized in its books a provision of 50%
of the amount of Euro 96.6 mil. due to the uncertainty of the
recoverability of this amount in the future.
In parallel EMO has filed a lawsuit in the Multimember Court of
First Instance for an amount of Euro 55 mil. which is the
equivalent of 4 equal installments out the total amount of Euro
96.6 mil. The hearing of this lawsuit has been scheduled for
December 9, 2015. Consequently and under the prerequisite that the
State Council will not have issued a final decision, by that date,
there is the prospect of postponing the above mentioned lawsuit
since the validity of RAE's Decision 285/2013, depends on the State
Council's decision, which constitutes the legal basis of the
dispute in the court. Consequently PPC has not established a
provision beyond the one mentioned previously.
Additionally, the company "ELPEDISON" by a lawsuit requests EMO
to be ordered to pay to "ELPEDISON" an amount of Euro 89.4 mil.
(with interest), stemming from its participation to DAS. The
lawsuit is founded to RAE's Decision 285/2013, according to its
second part, which forbids the practice of offsetting claims by
participating in DAS with claims from other causes. Specifically,
it claims that EMO's negligence to demand from PPC to stop the
practice of offsetting amounts not pertaining to the DAS market
leaded to EMO's inability to timely pay ELPEDISON which is why it
claims the above mentioned amounts from EMO.
EMO has asked PPC to participate in the trial as a procedural
guarantor asking with an incidental request that PPC is reprobated
to pay the above mentioned sums in case of defeat. The lawsuit was
scheduled to be heard in the Multimember Court of Piraeus on May
27, 2015, but was postponed for January 27, 2016. PPC considers
that there is the possibility of postponement of the hearing of the
EMO's lawsuit since a decision by the State Council is expected,
considering the validity of RAE's Decision 285/2013, which is the
legal base for the trial in the Court of First Instance.
Consequently, PPC has not established a provision.
-- Offsets of Photovoltaic Systems Producers in buildings
Moreover, the above mentioned Decision 285/2013 of RAE which
does not permit the netting of amounts that PPC owes to EMO based
on DAS settlement, including energy generated by PVs on rooftops,
with the amounts that PPC is contractually required to pay directly
to the generators in question, based on the feed - in tariff, leads
to delays in recovering the latter amounts from EMO.
Non implementation of an offset does not impact financial
results but will have a negative effect on cash flows, due to the
increased working capital needs, since PPC is obliged to await
payments in cash from EMO through the relevant special RES account.
The issue in question concerns amounts which range from Euro 11
mil. to Euro 31 mil. per month and the total amount to be recovered
could reach approximately Euro 120 mil. based on an estimated
eight-month waiting period. EMO has already filed both a claim and
an application for interim measures before the Court of First
Instance of Athens against PPC. On the application for interim
measures Decision 6022/2014 of the Multimember First Instance Court
of Athens was issued, ordering a temporary injunction on offsetting
amounts due from DAS with amounts claimed from other causes at a
rate of 50% of the amounts claimed. The hearing is scheduled for
January 12, 2017, nonetheless it is estimated that the matter will
be settled legislatively.
12. COMMITMENTS AND CONTINGENCIES (CONTINUED)
Corrective settlements of IPTO, concerning the Special Account
of art. 143, of Law 4001/2011
According to L.4152/2013, RES energy purchases in the
Interconnected System are disbursed though the market operation, on
the higher amount of either their income from DAS and Imbalances
settlements or the value of energy they inject to the system
multiplied by the weighted average variable cost of the
conventional thermal power plants. This amendment started being
applied from 14.08.2013, when RAE's Decision 366/2013 was published
in OG, amending the relevant articles of the Power Exchange Code
and specifying the methodology of calculations, with which the
provision of law was implemented. In October 2013, IPTO has sent to
PPC S.A. corrective clearing statements for May, June, July and
part of August of 2013, totaling to an amount of Euro 48.2 m, which
derived from the retrospective application of the relevant
methodology. For this amount, PPC considers that retrospective
application is not included in the relevant provisions of the Law
and thus has not recorded any relevant provision. For the above,
PPC S.A. has filed a lawsuit at the Multimember Athens Court, which
is scheduled to be discussed on 22.09.2016.
12.3. ENVIRONMENTAL OBLIGATIONS
Key uncertainties that may influence the final level of
environmental investment which the Group will be required to
undertake, over the forthcoming decade, include:
1. HPP Messochora (161.6 MW)
According to Greek Law 3481/2006, the environmental terms for
the continuation, completion and operation of the projects of the
Acheloos River Diversion Scheme to Thessaly, in which Messochora
HPP is included, were approved and their fulfilment is a
prerequisite for the implementation of the projects and for which
responsibility lies with the administrator, responsible for
construction and operation of the respective projects.
Following the publication of the Law for Public Projects, as
well as PPC's projects that have been auctioned and constructed or
were under construction and were related to projects of the
Acheloos River Diversion Scheme to Thessaly as well as energy
projects were allowed to operate or be completed, according to the
approved Administration Plan and the above-mentioned environmental
terms.
Based on the above-mentioned terms the continuation of the
project was allowed for the completion and operation of Messochora
HPP as well as the completion of the construction project of the
tunnel, which are already been completed and are finally delivered
by 17.06.2010.
After the publication of Law 3734/2009, matters concerning the
Messochora Hydroelectric Project are arranged. These matters
concern expropriation of areas in the Messochora HEP Reservoir,
expropriation of the Messochora Village and of the areas where it
will be relocated, as well as arranging compensations for the
affected inhabitants. All the above mentioned expropriations are
declared of great importance in the public's interest and their
settlement will allow the completion of the Project and the
operation of the Messochora Power Plant.
(MORE TO FOLLOW) Dow Jones Newswires
November 26, 2015 13:16 ET (18:16 GMT)
Following ruling No 141/2010 by the competent Suspension
Committee of the Council of State, the immediate cease of all works
has been ordered at all relevant projects, as well as the cease of
operation of all completed projects. Further developments, namely
the final judgment, will be issued by the Plenary of the Council of
State after taking into consideration the (11.09.2012) Decision of
the European Court of Justice, to which relevant preliminary
questions had been addressed referring to the compatibility of the
provisions of Law 3481/2006 with the European legal framework. The
Council of State by its recent Decision 26/2014 has decided to
annul the 567/14.09.2006 letter by EYDE/OSYE, by which and
according to the Court's Decision 3053/2009, it has been allowed,
under the provisions of L. 3481/2006, and the approved
environmental terms, the continuation of the diversion scheme in
total. The above mentioned decision by the Council of State
resulted to the inability to continue, complete and operate HPP
Messochora.
The Parent Company (PPC S.A.), considering that the
Hydroelectric Plant of Messochora is independent from the Acheloos
River Diversion to Thessaly Scheme and therefore it should not be
affected from the abovementioned issues and examining the
possibility to disengage Messochora Power Plant from the overall
Acheloos River Diversion Scheme, so that the Project can be dealt
with as an independent unit and have its own environmental terms,
independently from the other Projects of the Diversion Scheme,
proceeded to the review and the updating of the Environmental
Impact Assessment (EIA) for HPP Messochora.
After the completion of the approval process and the
publication, by the relevant OG (9.2014), of the Decisions for the
approval of Management Plans for River basins of the Western Sterea
Hellas Water District and the Thessaly Water District the EIA is
completed and submitted to the Directory of Environmental Permits
(DEP) of the Ministry of Environment, Energy and Climate Change, in
order to proceed to the issuance of the Environmental Impact
Assessment (EIA).
12. COMMITMENTS AND CONTINGENCIES (CONTINUED)
There is a consultation underway and the whole process is
expected to be completed by the end of December 2015.
After the publication of the Environmental Terms Decision, the
construction of the remaining works and the procedure for
expropriation of the remaining land will proceed, in order to make
it possible to start the operation of the Project, which is
estimated in 2018.
On September 30, 2015 the aggregate expenditure amount for HPP
Messochora amounted to Euro 280.5 mil., and an additional amount of
Euro 122 million is estimated to be required in order to complete
and operate the project, which is expected to operate in 2018.
2. Under IPPC (Integrated Pollution Prevention and Control)
Directive, the Reference Document on Best Available Techniques for
Large Combustion Plants - BREF LCP (with a thermal capacity greater
than 50 MW) was issued in July 2006. In accordance with the
European Directive 2001/80/EC, a pollutants emissions reduction
plan for existing Large Combustion Plants has been approved by the
Parent Company's Board of Directors, was submitted to the
authorities and has been incorporated in the National Emissions
Reduction Plan of the country for the period 2008-2015, according
to the provisions of the aforementioned Directive.
In December 2010, the new Directive (2010/75/ EC) was issued for
industrial emissions (Industrial Emissions Directive - IED),
revising Directives IPPC and 2001/80/ EC, which is effective from
06.01.2011.. Following the provisions of Article 32 of Directive
2010/75/EU, a Transitional National Emissions Reduction Plan
(TNERP) for the period 2016-2020 was elaborated and officially
submitted by the country to the EU at the end of 2012. The TNERP
was approved by the EU on November 26, 2013. On December 2013, PPC
submitted to the competent authority an application for several
changes to the TNERP, along with its declaration to use the limited
life-time derogation (Article 33) for certain Power Plants. After
the approval of the competent authority the revised TNERP was
resubmitted on March 18, 2014 by the country and was approved by
the EU on July 07, 2014. Finally, according to the above, SES Agios
Dimitrios, Meliti and Megalopolis A' and B' are included in the
TNERP, while SES Amyntaion and Kardia will use the limited
life-time derogation.
The revision process of the BREF LCP began in year 2010 and is
currently underway. After the finalization of the revision process
and the issuance of the, legally binding, conclusions of the
revised BREF LCP, which is expected during 2017, additional
investments for the main thermal power plants may be required.
3. The European Commission in December 2013 issued a proposal
for a new Directive on the limitation of emissions of certain
pollutants into the air from medium combustion plants (COM(2013)
919 final). The proposal applies to combustion plants of 1-50 MWth
and includes different combustion technologies (boilers, internal
combustion engines and gas turbines), as well as different fuels
(solid, liquid and gas). Currently, the proposal is under the
"trilogue" (European Commission, European Parliament and the
Council) negotiation procedure and is expected to be finalized
until the end of 2015 or the beginning of 2016. Despite the fact
that the Directive foresees time extensions for plants located in
SIS/MIS (application from 2025 for new plants and from 2030 for
existing ones), its adoption will significantly affect the
operation of the medium combustion plants located in the
non-interconnected Greek islands.
4. The extent of land contamination has to be assessed for many
of PPC's installations, following the provisions of art. 22 of
Directive 2010/75/EU. At present, there appears to be no
requirement for large-scale remediation projects at PPC's sites,
and it is unlikely that this will be required at the mining areas
or at the lignite-fired power stations for the foreseeable future.
Remediation, however, may be required, at some of the company's
oil-fired power stations in the future.
5. PPC has performed limited studies on the presence of
asbestos-containing materials, at its premises. Upon submission by
PPC of a full environmental impact assessment study, the Ministry
of Environment issued in May 2004 the environmental permit for the
construction and operation from PPC, in its premises in Ptolemaida
area of an environmentally - controlled landfill site for the
management and final disposal of asbestos containing construction
materials, from the plants of the Northern System.
6. During the operation of the Transmission Lines, Substations
and Hyperhigh Voltage Centers, there is no electromagnetic
radiation, but two separate fields, the magnetic and the electric
field. At places where the public or the Company's personnel might
find themselves close to the above mentioned lines and substations,
the values for those fields are substantially less than the limits.
Those limits were established by the International Commission on
Non Ionizing Radiation Protection (ICNIRP) in collaboration with
the World Health Organization (WHO). The above mentioned limits
have also been adopted by the European Union as well as the Greek
State.
12. COMMITMENTS AND CONTINGENCIES (CONTINUED)
It must be noted though, that the limits stated in the above
regulations for both fields do not constitute dangerous values, but
rather contain large safety factors, in order to cover for some
vagueness due to the limited knowledge about both the magnetic and
electric fields' influence in order to fulfil the requirement for
the prevention of any adverse impacts.
7. The Environmental Permit for Klidi Mine is expected to be issued.
8. Furthermore the Parent Company's Mine Environmental
Department has carried out all required procedures, for the renewal
of Environmental Permit for Amyntaio and Megalopolis Mines.
CO(2) Emissions
During March and May 2013, CO(2) emission licenses have been
issued for all 31 PPC installations, for the 3(rd) implementation
phase of the European Union Emissions Trading System (EU ETS phase
III, from 1 January 2013 to 31 December 2020).
By the end of March 2015, the verification of the annual
emissions reports regarding the year 2014 by accredited third party
verifiers was completed successfully and the reports were promptly
submitted to the Competent Authority. The total verified emissions
of all 31 bound plants of PPC for 2014 amounted to 39.2 Mt CO(2)
.
Emission Allowances (CO(2) )
According to the current European and National legislation,
during the 3(rd) implementation phase of the EU ETS (period
2013-2020), PPC is not entitled to free allocation of emission
allowances, with the exception of allowances allocated for
emissions corresponding to the generation of thermal power for
district heating.
In accordance with its verified CO(2) emissions for 2014, the
emission allowances that PPC delivered to the Greek part of the EU
Greenhouse Gas Emission Allowances Trading Registry (EU Registry)
to fulfil its compliance obligations for the year 2014 amounted to
39.2 Mt. During 2014, PPC has been allocated with about 150.6
thousand emission allowances for district heating emissions.
Based on provisional ex-post data, the CO(2) emissions of the
Parent Company's bound plants for the period 01.01.2015 -
30.09.2015 amount to 25.95 Mt. In addition, PPC's emissions for the
rest of the year (01.10.2015 - 31.12.2015) are estimated at 8.64
Mt. It should be noted that the emissions of 2015 will be
considered final by the end of March 2016, after the verification
of the annual emissions reports by accredited third party
verifiers. Consequently, the total CO(2) emissions that PPC will
have to deliver for compliance purposes for the period 01.01.2015 -
31.12.2015 are estimated at 34.59 Mt.
12.4. COMMITMENTS - INVESTMENTS
A new Steam Electric unit 660 MW in Ptolemaida
(MORE TO FOLLOW) Dow Jones Newswires
November 26, 2015 13:16 ET (18:16 GMT)
The drawing up by the Contractor of the studies for the Project
licensing and their submission to the Corporation for review have
been completed. n 24.04.2015, the Installation License of the
Project was issued by the Ministry of Reconstruction of Production,
Environment and Energy. On 01.07.2015 the Building Permit was and
the Contractor was informed accordingly. Following that, PPC paid
to the Contractor the first advance payment of EUR 198 mil. against
a Letter of Guarantee of Advance Payment of EUR 227 mil., which was
submitted to PPC by the Contractor, in order for the second stage
(construction) of the Project to start.
The construction on the Project will be completed within 50
months as from the date of issuance of the Building Permit and the
signing of the relevant Protocol for unhindered access to the
Worksite and the necessary utilities (water, power).
On 30.09.2015 the total expenditure for the Project amounted to
Euro 319 mil.
A new diesel engine Power Plant 115,4 W in South Rhodos burning
of heavy fuel oil with low sulphur content
Civil Works which begun in September 2014 at the area of main
facilities of the Power Station in accordance with the
Environmental Impact Assessment study and the new time schedule,
are in progress.
PPC and the Contractor continue the preventive maintenance of
engines, generators and transformers, which are temporarily stored
in Elefsis port. On November 9, 2015 the gradual transportation of
said equipment at the Project site has begun and is expected to be
completed until the end of 2015.
On 30.09.2015 the total expenditure for the project amounted to
Euro 112 mil.
12. COMMITMENTS AND CONTINGENCIES (CONTINUED)
new combined cycle unit at Megalopolis 811 W
All required works for putting the Unit into operation have been
completed. The trial operation of the Unit using natural gas, which
has been supplied by DESFA on 05.01.2015, is in progress.
The Unit is expected to enter commercial operation by the end of
2015 or early 2016.
On 30.09.2015 the total expenditure for the Project amounted to
Euro 506 mil.
HPP ILARION (157 MW)
In July 2012, PPC SA announced the successful tapping of the
diversion tunnel of the Ilarionas Hydroelectric Project and the
start of the Reservoir impoundment. The works in the Substation, as
well as the remaining works in the riverbed area downstream of the
Dam, have been completed, the Units tests have been finished and
the procedure in order to register in the Independent Power
Transmission Operator's Units Registry, which is to be completed
within the fourth quarter of 2015.
The Plant is expected to be set in commercial operation in the
first quarter of 2016.
The total installed capacity of the plant is 157 MW and it is
expected to generate, on an annual basis, approximately 330 GWh of
"clean" electricity.
On 30.09.2015 the total expenditure for the project amounted to
Euro 301 mil.
12.5. PPC RENEWABLES (PPCR)
Construction of Wind Park in Rethimnon
In March 2014, the construction of eight wind turbines, out of a
total of eleven, in the wind park of Rethimnon (Koprino) was
completed, since by its 13.02.2014 Temporary Order, followed by its
Decision 401/2014, the Suspension Committee of the Council of
State, ordered the cessation of construction and operation of three
non- installed wind turbines until the issuance of a decision on
the relevant suspension request, which has already been discussed
in the Council of State's Section E'. The decision was in PPC R's
favor.
In December 2014 the interconnection of the wind park to HEDNO's
network was initiated, following the issuance of a partial
operation license by Crete's Decentralized Administration. In
October 2015 the construction of the remaining three (3) wind
turbines was initiated by the Constructor, but works are delayed
due to reaction from the local community.
Hybrid Project in Ikaria
The project of 6.85 MW total capacity combines the utilization
of two renewable energy sources, Wind and Hydroelectric. The hybrid
project in Ikaria is expected to be completed and commence
operation in 2016.
Exploitation Rights of the geothermal fields
By decisions of the Deputy Minister for Environment, Energy and
Climate Change concerning the outcome of the Public International
Bidding Contest (tender date 07.09.2011) for the lease of rights of
exploitation of geothermal fields has been awarded in the following
areas:
a)Sousaki in the Corinthos prefecture, b) the Sperhios basin in
the Fthiotida prefecture, c) Akropotamos in the Kavala prefecture
and d) the island of Ikaria. The BoD has approved the acceptance of
leases, however, the notarial deeds have not been signed by the
Ministry yet. The deadline for signing the above notarial deeds
leases has been extended until December 31, 2015.
Production Licenses of two new Wind Parks in Rodopi
In October 2014, the Regulatory Authority of Energy issued the
production licenses for two new PPC Renewables' wind parks of 106
MW total capacity and a budgeted cost of Euro 127.2 mil.in the
Rodopi region. In June 2014 a new generation permit for a wind park
of 20MW capacity and a budgeted cost of Euro 24 mil. in an adjacent
position with the two above mentioned parks was issued.
Repowering of SHPP Louros
In March 2014, PPC Renewables issued a public tender concerning
the assignment of the project of the modernization and renovation
of SHHP LOUROS, of 8.84 MW nominal capacity, with a budgeted cost
of Euro 6.4 mil. and a submission deadline of June 24, 2014.
During the evaluation of the bids, new data arose as far as the
amendment of technical requirements is concerned, thus leading to
the annulment of the tender and its reissuance.
12. COMMITMENTS AND CONTINGENCIES (CONTINUED)
12.6. IPTO S.A.
New investments by IPTO in the Energy Transmission System
-- Electrical Interconnection of "NEA MAKRI - POLYPOTAMOS" and High Voltage Network in South Evia
Following yearly endeavors, the subterranean interconnection
section between the Nea Makri High Voltage Center to the
Polypotamos High Voltage Center was successfully electrified on
07/04/2015 while the overhead cable of the interconnection between
the Polypotamos High Voltage Center and South Evia (Evia 7 High
Voltage Center) was electrified on 24.07.2015 and was then
disabled. Minor problems which were observed during the trial run
are to be rectified in the near future.
-- High Voltage Center (HVC) in Aliveri
The construction of Aliveri's (GIS) HVC, which will serve the
new thermal power unit and RES generators in Evia, was concluded
and is in operation. The temporary as well as the final acceptance
of the HVC is pending.
-- High Voltage Center (HVC) in Megalopolis and connection with
the Transmission System (400 kV and 150 kV)
Within a time frame of only two years, IPTO constructed the new
High Voltage Center (HVC) of GIS type and open air insulation in
Megalopolis. The HVC was electrified in August 2013. The
construction of the 150 kV interconnecting transmission lines of
the HVC as well as both 400 kV transmission lines connecting the
HVC with the new natural gas unit of Megalopolis V, has been
concluded.
As far as the construction of the 400 kV interconnection lines
of the Megalopolis HVC to the Patra area and from there through
submarine and overhead transmission lines to the 400 kV Mainland
System, the approval of Environmental Terms was granted at May 23,
2014 and the completion of the land expropriations is pending. It
must be noted that there is a recourse against the Ministry of
Environment (currently the Ministry of Reconstruction of
Production, Environment & Energy) in the State Council against
the annulment of the obligatory land expropriations in the Antirio
area and objections to the construction of the transition station
in the area of the Patras University.
In order to override objections a modification for the
Environmental Study for the 400Kv transmission line (Athens -
Aheloos) - Interconnection to Antirio - Patras HVC - as well as for
the 400kV Patras HVC - Megalopolis HVC was submitted on August
6(th) , 2015 and on October 19(th) , respectively to the
appropriate authorities. At the same time preliminary construction
works are underway aiming to shorten the period of time needed for
completing the project.
-- Interconnection of Cyclades to the Mainland Transmission System
The contracts of the project have been signed since September
10, 2014 with the four contractors with a cost of Euro 231 mil.,
approximately. The submarine cables of the interconnection are
under construction, and the immersion of the Syros - Mykonos cable
as well as the Syros - Tinos cable have been completed, while the
immersion of the first section of the Lavrio - Syros cable will
begin soon. The construction of the civil engineer works has
started on the GIS station in Syros, the GIS station in Paros as
well as the GIS station in Lavrio. Civil engineer works in Mykonos
are suspended until the completion of excavations by the Kyklades
Archaelogical Service. The completion of the whole project is
scheduled for the end of July 2016 although in the current
circumstances, a realistic completion date falls within the first
semester of 2017.
-- Interconnection of Crete to the Mainland Transmission System
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IPTO has proceeded to preliminary actions for the implementation
of the project, aiming to achieve the interconnection within the
current decade. In the abovementioned context, a preliminary study
of the seabed in collaboration with the University of Patras, has
been conducted for the immersion of submarine cables. At the same
time several locations that have been deemed appropriate for the
construction of terminal stations were considered in Crete, without
being accepted by various local authorities in Crete. The Crete
Region and other local authorities, are indicating the Korakia
position along the borders of the Rethimnon and Heraklion provinces
as an acceptable position. The position is under consideration as
are positions in the mainland such as positions in Attica or the
Peloponnese.
12. COMMITMENTS AND CONTINGENCIES (CONTINUED)
-- Project for the reinforcement of the "Nea Santa" High Voltage Center (HVC)
The "Nea Santa" HVC is a project of extreme importance for the
Eastern Macedonia and Thrace areas. Through the "Nea Santa" HVC the
interconnection of the Hellenic Electricity Transmission System
with the Turkish one and the Bulgarian one (Maritsa) in the future,
the absorption of the total of the produced energy by the new RES
station in Thrace as well as the upgrade of the reliability of the
Northeastern System has been achieved.
The project is in the acceptance stage (150kV side and automated
substation system).
-- Construction project for the transmission line of 400 kV
between the Lagadas and Filippi HVCs.
In July 2014, the contract for the construction of the
transmission line 400 kV from the HVC Lagadas to the HVC Filippi,
with an approximate length of 110 km, was signed with ATERMON S.A.
as the contractor and a contractual price of Euro 26.7 mil. The
project is to be completed by early 2017.
Ten Year Network Development Plan (TYNDP) of the subsidiary IPTO
S.A.
By its Decision 560/25.11.2013 which was published in OG B'
3297/24.12.2013, RAE has approved the Ten Year Network Development
Plan (TYNDP) of the subsidiary IPTO S.A. for the period 2014-2023,
after having imposed some amendments concerning the schedule for
the Cyclades Interconnection (3(rd) phase). The approved TYNDP
2014-2023, was published in OG B' 556/05.03.2014, based on RAE's
Decision 77A/2014/18.02.2014.
From February 17, 2014 until March 17, 2014, IPTO has put into
public consultation the preliminary draft of the TYNPD 2015-2024.
Following that and after taking under consideration the outcome of
the above mentioned public consultation, IPTO submitted the Ten
Year Network Development Plan (TYNDP) for the period 2015-2024 to
RAE, following Decision 34/20.05.2014 of IPTO's BoD. In the context
of the approval process on June 16, 2014 RAE has submitted the
TYNPD 2015-2024 to a new public consultation, with a deadline of
July 18, 2014, and the final decision is pending. RAE has sent IPTO
of its O-59674/29.09.2014 letter by which it notifies IPTO its
remarks in the consultation and asks that it submits a revised
TYNDP for the period 2015-2024, in order to be approved. IPTO has
not proceeded to such submission but following an oral
communication with RAE, agreed upon the issuance of a preliminary
TYNDP for the period 2017-2026 and to submit it in public
consultation by the end of the current year.
Approval of the Annual Cost and Usage Charges for the Hellenic
Transmission System for 2015
RAE by its Decision 572/2014 approved the Allowed Revenue for
the regulated period 2015-2017 to Euro 254.7mil., 250.2 mil. and
261 mil. per year, respectively, as well as the required revenue
for the year 2015 amounting to Euro 215.1mil. A decision by RAE is
pending as far as the definition of the unit charges for the Use of
the System for 2015.
Use of Congestion Income, from the country's international
interconnections access rights, for the year 2015.
With its 571/2014 decision, RAE approved the use of Euro 25 mil.
from the Reserves Account (Interconnections Transfer Capacity
Allocation according to article 178 of the Greek Grid Control Code
For Electricity) that IPTO keeps for the reduction of the
Transmission System Annual Cost for the year 2015.
12.7. BUSINESS COLLABORATION
PPC's Participation in waste management tenders.
Waste Syclo, is a joint company by PPC S.A. and Terna Energy,
with Terna Energy owning 51% and PPC 49% of the share capital,
responsible for the study, construction of projects, provision of
all types of services related to waste management in general,
electricity generation from waste management, and urban and
industrial waste water treatment, within the territory of
Greece.
Waste Syclo submitted in May 6th 2014, an Expression of Interest
in Phase A' of the tender published by the municipality of Corfu
for the construction of an integrated solid waste management
facility of Corfu, and has been preselected to continue to Phase B'
when it will be tendered. At the same time the revision of the
framework for the management of Attica's waste is expected,
following the annulment of the previous tenders by the Attica
prefecture in December 2014, within the establishment of the new
National Waste Management framework, which has been published in
June 2015. The Regional Council of Attica adopted on 08.10.2015 the
2nd Revision of the Regional Waste Management Plan of Attica, which
was under consultation.
12. COMMITMENTS AND CONTINGENCIES (CONTINUED)
Business Collaboration with Quantum Corporation Ltd and the
former Bank of Cyprus
PPC - QUANTUM ENERGY LTD, is a company founded by PPC, Quantum
Corporation LTD and the Bank of Cyprus, with a share capital
participation of 51%, 40% and 9% respectively. This company has
been appointed as the contractor for the "EuroAsia Interconnector
Project", according to the regulatory provisions of the European
Regulation 347/2013. During October 2015 the company was renamed to
"EUROASIA INTERCONNECTOR LIMITED LTD", while the change in the
shareholder structure of the company is in progress, after the
relevant decision of the General Shareholders' Meeting for the
increase in share capital amounting to Euro 1,350 which has not yet
been completed. At present and until the preparation of a business
plan, PPC has decided not to participate in this share capital
increase.
Collaboration framework with DEPA S.A.
PPC covers its needs for natural gas by the new contract signed
on October 29(th) , 2012 with DEPA which pertains to the
procurement and transportation of natural gas through the Hellenic
Natural Gas System (HNGT).
Following DEPA's commitments, which were accepted by the
Competition Commission in relation to the existing contractual
quantitative obligations by DEPA's clients, the Parent Company
proceeded for the year 2015 to the readjustment of the Annual
Contractual Quantity according to its real needs.
Furthermore the Parent Company proceeded to the supply of small
quantities of natural gas through auctions (annual - 2015 and
quarterly - Q1 2015) held by DEPA, in application of the
Competition Commission's decisions.
Since 2013 - and until today - DEPA has proceeded to the
unilateral determination of the implementation of the new DESFA
tariffs on the contract between DEPA - PPC, as far as the usage
cost of borders' entry points is concerned, as well as the pricing
of natural gas purchases. The above mentioned charges have not been
accepted by PPC and the relevant amounts of the invoices issued by
DEPA, have not yet been paid. The negotiations between the parties
for the settlement of the aforementioned abeyance, are in their
final stages.
Furthermore, the certification of the relevant calculation
formulae by an independent verifier, in accordance with the long
term contracts between DEPA and its suppliers, is still pending for
the previous years (2012-2014).
Finally, following the publication of the revised Operational
Code for the National Gas System and in accordance to both the
contractual provisions as well as DEPA's commitments to the
Competition Commission, the latter has send to PPC a draft version
of the contract for the supply of natural gas without the inclusion
of transportation service through the national network. This draft
version is currently being negotiated.
Special Consumption Tax on Electricity
The tax audit by the Audit Department of Customs House and the
Piraeus Custom House D', in relation to the special consumption tax
on electricity for the period May 2010 to September 2012, has been
concluded.
The audit pertained to energy self-consumption by thermal
plants, mines and hydro power stations. In the context of the audit
result, the Parent Company paid via the due process, the related
special consumption tax for the aforementioned period while also
resorting to the Administrative Courts.
Moreover, the Parent Company, paid with recourse, the relevant
special consumption tax on self-consumption for the period October
2012 to August 2015 and is also including it in its monthly special
consumption tax returns, the relevant tax on self-consumption,
until a final decision by the court is issued.
The Group and PPC are subject to certain laws and regulations
generally applicable to companies of the broader public sector
As long as the Greek State, is the major shareholder of PPC,
holding 51% of its share capital (either directly or indirectly),
the Company shall, in some respects, continue to be considered a
public sector company in Greece. Therefore, its operations shall
continue to be subject to certain laws and regulations generally
applicable to public sector, affecting thus specific procedures,
including but not limited to personnel salaries, maximum level of
salaries, recruitments of employees, as well as the procurement
policies etc.
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The said laws and regulations, particularly within the framework
of the current financial conjecture and the relevant decisions of
the Central Administration, which are not expected to be applicable
to the Parent Company's current and future competitors, may limit
the Parent Company's operational flexibility and may also have
significant negative impact on its financial results, cash flow and
on business risk management.
It should be noted that the Group did not have for several years
(till today) the ability to recruit experienced personnel in the
range of its business activities while, today's average personnel
age is approximately 49 years. The Group's inability to recruit
specialized personnel affects negatively the ability of the new PPC
Group to elaborate and implement its strategy in the new
competitive and financial environment, as well as to adequately
staff basic supportive operations at the level of new
subsidiaries.
12. COMMITMENTS AND CONTINGENCIES (CONTINUED)
Finally, there is a risk of losing managers and experienced
personnel to the competition mainly because of restrictions on
remuneration policies. The viability and development of PPC Group
in the new business environment notably depend on the ability to
attract and maintain skilled and specialized personnel and
executives. According to L. 3833/2010 and L. 4057/2012 , concerning
the recruiting of permanent staff an approval of the
Interministerial Committee is necessary (AIC 33/2006), as well as
an allocative act of the Minister of the Interiors and
Administrative reorganization according to the 1:5 ratio (a
recruitment for every five employees leaving).By the above
mentioned and introduced by law hiring procedure, the Parent
Company's recruitment needs are significantly hindered, creating
critical lack of personnel and managers and may have a negative
impact on the implementation of the Groups' activity.
Risks and uncertainties stemming from L. 4336/2015
) IPTO
Currently, the competent authorities are in consultation with
Greece's Lenders regarding the ownership of IPTO. Law 4336/2015
provides that "... the authorities: a) will take irreversible
measures (including the announcement of the date for the submission
of binding offers) for the privatization of the electricity
transmission business, IPTO, unless an alternative plan, with
equivalent effects on competition and investment prospects,
according to the best European practices and in agreement with the
Institutions to achieve full ownership unbundling of IPTO (standard
delivery) is proposed. The final agreement is of utter priority for
the smooth implementation of Greece's third financial support
program
Considering the above, the proposed by the government new equity
structure provides for a share capital participation of 51% by the
Greek State and a participation of 49% by PPC (namely, the sale of
PPC's 51% participation in IPTO directly to the Greek State). This
would result in the loss of control by PPC in the new company,
whose financial figures will no longer be consolidated in the
financial statements of the PPC Group. More specifically,
-- Fixed assets of a value of Euro 1,537 mil, as well as loan
liabilities amounting to Euro 454 mil, will not be included
henceforth.
-- Operating profitability (EBITDA) of the new Group will be
reduced by EUR 200 mil. On an annual basis, as IPTO, being a
regulated electricity transmission company enjoys an especially
high amount of operational profitability, as well as very high
EBITDA margin...
-- As at 31.12.2014, the value IPTO's fixed assets (valued by an
independent valuation house) amounted to Euro 1,537 mil. Addionaly,
in the accounting books of the Parent Company, its participation in
IPTO amounts to Euro 916.4 mil.
-- For a significant portion of the Parent Company's loans, a
waiver should be approved by the banks for the sale of the 51%
share capital of IPTO, based on already included conditions in
existing loan agreements. At the same time, specific financial
indicators might not be met in the future, due to both the
significant reduction in the profitability as well as the capital
structure change of the new PPC Group, leading to the possibility
of early repayment of existing loans (including the relevant
indicators) and in any case creating additional difficulties in the
Group's future financing and development
In conclusion to the above, it is noted that any solution that
would be adopted by the Parties, should on the one hand provide for
the full ownership unbundling of IPTO and on the other hand not to
conflict with terms of existing loan agreements.
Ultimately, any agreement that would be reached, should provide
for a reasonable financial consideration, resulting from the
economic valuation of IPTO's shares at market terms. This financial
consideration, as required by existing loan agreements must be in
cash or highly liquid equivalents, otherwise it is likely to lead
to the early repayment of these loans.
) NOME auctions
Concerning the design and the implementation of the NOME auction
system following the respective French model, discussions and
negotiation with the Institutions, within the framework of L.4336 /
2015 are not yet completed. Therefore it is not known yet how NOME
like auctions will be implemented. The Law provides that "...the
Authorities will discuss with the European Comity the design of the
NOME auctions system, aiming to the reduction of PPC's wholesale
and retail market share by 25%, falling below 50% by 2020".Until
now the design concerns the implementation of auctions of
electricity products coming from PPC's lignite - fired plants.
12. COMMITMENTS AND CONTINGENCIES (CONTINUED)
For this process, PPC from the outset has set two
conditions:
-- First, the auction's starting price should cover PPC's full
cost plus a reasonable profit margin and
-- Secondly, energy from auctioned products should be channeled
to the domestic retail electricity market (end users) and indeed in
such a way as to avoid the clients' "cherry picking"
13. SIGNIFICANT EVENTS
High Voltage Tariffs
In the context of the February 28, 2014 Extraordinary General
Shareholders Meeting, the representative of the Majority
Shareholder, namely the Hellenic Republic, proposed and the General
Shareholders Meeting approved an extraordinary tariff discount of
10% to PPC's approved tariffs for all High Voltage customers with
the duration of one year plus one, effective 01.01.2014. Out of the
24 High Voltage supplies, that represent, in terms of consumption,
more than 99% of the total of High Voltage consumption, PPC
initially proceeded in signing 22 supply contracts.
In addition, in January 2015, PPC announced that, in applying
the decision of the Extraordinary General Shareholders Meeting of
December 22, 2014 and in view of securing the public interest the
Parent Company has reached an initial agreement with LARCO, for the
signing of a contract for the supply of electricity, from
01.01.2014 onwards according to PPC's General Shareholders' Meeting
of February 28, 2014, as well as methods of settling past
differences between the two companies.
Specifically, PPC's BoD by its decision dated 30.12.2014 has
decided to accept LARCO's proposal for the direct referral to
arbitration, according to the provisions of Civil Procedure, of the
dispute between the two companies relating to the energy supply
tariff for the sums due by LARCO until December 31, 2013 and the
signing of a supply contract with the above mentioned company with
a tariff in accordance with the decision of PPC's Extraordinary
Shareholders' Meeting of 28.02.2014, for the year 2014 as well as
the year 2015 and until the next convention of PPC's General
Meeting relevant to the matter of the High Voltage Tariffs. In the
above mentioned supply contract it is provided for that in two
months' time the two parties will agree on the settlement of
LARCO's debts for the period 01.01.2014 - 31.12.2014.
LARCO's General Shareholders' Meeting, by its 30.12.2014
decision, has also decided to sign the supply contract with PPC and
to refer to arbitration, according to the provisions of Civil
Procedure, about the dispute between the two companies. The parties
have signed an arbitration agreement, in order to determine the
price of supply of energy for the period 01.07.2010 - 31.12.2013
and in order for debts incurred by LARCO to be settled for the
period before 31.12.2013, according to the provisions of the Code
for Civil Procedure (Article 867 and subs) on 25.06.2015. At the
same date the contract for the supply of energy, was signed as
well.
Furthermore, it is assessed that, following the appointment of a
new Board of Directors in LARCO, the revisit of the tariff issue
for the period 01.07.2010 - 31.12.2013 is feasible, by using all
reconciliation means between the two companies and leaving the
arbitration procedure as the last resort.
On 05.11.2015, following written communication, LARCO was
invited, to proceed to the settlement of its debts relating to
electricity consumption for the period 01.01.2014 - 31.08.2015
until 20.11.2015. Since LARCO did not settle until 20.11.2015 its
debts, PPC intends to send an out of court letter to LARCO and to
IPTO, inviting IPTO to deactivate LARCO's load meters, setting at
the same time a tight deadline for the settlement of LARCO's
debts.
New tariffs for medium and low voltage customers
In August 2015, PPC's new tariffs for medium and low voltage
customers were approved. PPC's new tariffs policy follows modern
trends in the retail market and is designed in such a way in order
to meet consumer needs, through the new discount policy.
Furthermore, a loyalty program for residential customers paying
their bills on time and in full is launched. More specifically:
A. Creation of new corporate tariffs
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November 26, 2015 13:16 ET (18:16 GMT)