REG - Public Power Corp - Annual Financial Report <Origin Href="QuoteRef">DEHr.AT</Origin> - Part 3
07/04/2017 18:40
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operations are based on information systems.Therefore they are
exposed to the risk of non-availability, data integrity corruption and unauthorized access to these systems. In order to
minimize these risks, the Group and the Parent Company take measures for the enhancement of their IT security.
The Group and the Parent Company believe that they currently have adequate security policies in place to cover risks
associated with the operation and maintenance of their IT infrastructure and perform regular audits of their systems.
However, there can be no assurances that they will be able to prevent technology failures or IT security breaches in a
timely manner or continue to have adequate insurance coverage to compensate for related losses (including litigation
claims, liability and data loss), which could disrupt their operations or harm their reputation and have a materially
adverse effect on their business.
Extraordinary events
Unexpected events, including natural disasters, fires, war, terrorist activities, strikes, etc., may lead to a breakdown or
the interruption of the operation of the Group's and the Parent Company's mines, the generation function and electricity
transmission and distribution. Additionally, adverse macroeconomic developments, as well as financial and operating
problems of basic suppliers, service providers and contractors may have a negative impact on the Group's and the Parent
Company's ability to purchase liquid fuels, spare parts and materials and may increase their operating costs.
The Group's and the Parent Company's operations are susceptible to industrial accidents, and employees or third parties may
suffer bodily injury or death as a result of such accidents. In particular, while the Group and the Parent Company believe
that their equipment has been well designed and manufactured and is subject to rigorous quality control tests, quality
assurance tests, and is in compliance with applicable health and safety standards and regulation, the design and
manufacturing process is ultimately controlled by their equipment suppliers or manufacturers or EPC contractors rather than
by the them, and there can be no assurance that accidents will not result during the installation or operation of this
equipment. Furthermore, the consequences of these events may create significant and long-lasting environmental or health
hazards and pollution and may be harmful or a nuisance to neighboring residents. The Group and the Parent Company may be
required to pay damages or fines, clean up environmental damage or dismantle power plants in order to comply with
environmental or health and safety regulations.
The Group and the Parent Company may also face civil liabilities or fines in the ordinary course of their business as a
result of damages to third parties caused by the natural and man-made disasters mentioned above. These liabilities may
result in the Group and the Parent Company being required to make indemnification payments in accordance with applicable
laws.
Licensing Risk
The procedures for obtaining and renewing authorizations and permits for the Group's and the Parent Company's activities
can be protracted and complex. Obtaining these authorizations is not routine and the conditions attached to obtaining them
are subject to change and may not be predictable. As a result, the Group and the Parent Company may incur significant
expenses in order to comply with the requirements associated with obtaining or renewing these authorizations. Failure to
obtain or renew the necessary licenses and permits might result in interruptions to some of the Group's and the Parent
Company's operations, including also the ability to obtain funding for their activities.
Any failure to obtain, maintain, renew, amend or extend all the administrative authorizations and licenses necessary for
the operation of their business and execution of their strategy, could have a material adverse effect on the Group's and
the Parent Company's business, strategic and financial planning, results of operations, financial condition and cash
flows.
Risk from impairment of Assets
In relation to the value of their participation in the share capital of subsidiaries and associates and the value of their
tangible assets, the Group and the Parent Company are exposed to the following risks:
• The risk from a significant change or / and the non-recoverability of the value of the Parent's Company, participation in
the share capital of subsidiaries and associates
• The risk from a significant change in the fair value of their tangible assets in the context of their periodic
reassessment.
Provision of guarantee to Subsidiaries
The Parent Company has a policy of reviewing on a case by case basis and only after the Decision of its Board of Directors
to provide guarantees or intercompany loans only to subsidiaries or associates. It is noted that, pursuant to article 23a
of L. 2190/20, the provision of guarantees in favor of subsidiaries is subject to the (prior or subsequent) approval of the
General Meeting of Shareholders.
Balances and Transactions With Related Parties
PPC balances with its subsidiaries and its associates as of December 31, 2016 and 2015 are as follows:
December 31, 2016 December 31, 2015
Receivables (Payables) Receivables (Payables)
Subsidiaries
IPTO S.A. 152,844 (807,989) 65,468 (824,137)
PPC Renewables S.A. 1,260 - 1,741 -
HEDNO S.A. 599,981 (1,028,540) 89,441 (347,258)
PPC Finance PLc - (6,173) - (6,169)
PPC Elektrik 542 (86) 239 (96)
PPC Bulgaria JSCO 38 (1,524) - (709)
754,66 (1,844,312) 156,889 (1,178,369)
Associates
Larco S.A. (energy, lignite and ash) 242,709 - 272,163 -
242,709 - 272,163 -
PPC's transactions with its subsidiaries and its associates as of December 31, 2016 and 2015 are as follows:
2016 2015
Invoiced to Invoiced from Invoiced to Invoiced from
Subsidiaries
IPTOS.A. 204,939 (1,217,093) 129,011 (1,367,353)
PPC Renewables S.A. 3,280 - 3,419 -
HEDNO S.A.(former PPC Rhodes S.A.) 1,144,839 (1,820,297) 1,247,817 (1,982,423)
PPC Finance PLc - (37,061) - (37,125)
PPC Elektrik 2,550 (833) 1,184 (3,300)
PPC Bulgaria JSCO 45 (32,532) - (6,379)
1,355,653 (3,107,816) 1,381,431 (3,396,580)
Associates
Larco S.A. 61,767 (6,396) 66,550 (4,907)
61,767 (6,396) 66,550 (4,907)
Guarantee in favor of the subsidiary PPC Renewables S.A.
As of December 31st 2016, the Parent Company has guaranteed total loans of Euro 8 mil., through account credit agreements.
As of December 31st 2016 PPC Renewables S.A. has used Euro 947.91, concerning letters of guarantee.
Guarantee in favor of the subsidiary IPTO SA
As of December 31st 2016 the Parent Company had provided guarantees for bilateral loans amounting to Euro 325 mil. The
provision of said guaranties has been approved by the Parent Company's General Shareholders Meeting.
Transactions and balances with other government owned entities
The following table presents purchases and balances with government owned entities Hellenic Petroleum ("ELPE") and National
Gas Company ("DEPA"), which are PPC's liquid fuel and natural gas suppliers, respectively and into which the Hellenic
Republic participates Additionally, purchases and balances with EMO, the Electricity Market Operator, are presented.
Purchases Balance
31.12.2016 31.12.2015 31.12.2016 31.12.2015
ELPE, purchases of liquid fuel - 107,837 85 8,176
DEPA, purchases of natural gas 265,499 324,493 105,314 67,632
265,499 432,330 105,399 75,808
December 31, 2016 December 31, 2015
Receivables (Payables) Receivables (Payables)
EMO S.A. 173,764 (128,312) 165,547 (57,891)
December 31, 2016 December 31, 2015
Invoiced to Invoiced from Invoiced to Invoiced from
EMO S.A. 1,384,468 (2,013,545) 1,945,418 (2,565,727)
Further to the above, PPC enters into transactions with many government owned or- nonprofit entities 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 remunerations (Board of Directors and General Managers) for the year ended December 31, 2016 and 2015 are as
follows
GROUP COMPANY
31.12.2016 31.12.2015 31.12.2016 31.12.2015
Remuneration of Board of Directors' members
- Remuneration of executive members 346 318 57 88
- Remuneration of non-executive members 37 51 - -
- Compensation / Extraordinary fees 80 30 - -
- Employer's Social Contributions 95 62 19 -
- Other Benefits 108 97 106 82
666 558 182 170
Remuneration of Deputy Managing Directors and GeneralManagers
- Regular remuneration 638 653 492 539
- Employer's Social Contributions 184 201 137 163
- Compensation / Extraordinary fees 14 - 14 -
836 854 643 702
1,502 1,412 825 872
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 executive members of the Board of
Director, the Deputy Managing Directors and the General Managers.
Corporate Social Responsibility and Sustainability - Non-financial Report
Sustainable Development Policy
PPC's strategic goal is to assure its sustainable operation and development satisfying, at the same time, the requests of
all interested parties in a balanced way, providing integrated, innovative, high quality services and products to its
customers, excellent work environment to its employees, mutual benefit relations to suppliers and collaborators, creation
of new financial values to shareholders, respect and protection of the environment, as well as economic growth and social
prosperity to society.
For the achievement of its strategic goal, PPC is committed to make constant efforts for the improvement of its economic,
environmental and social performance.
For this purpose, PPC is aiming at long-term enhancement of its economic value, through good corporate governance, acting
with transparency in all procedures and actions of its institutions. The Corporation's Administration participates in
identifying hazards and substantial issues of sustainable growth with the aim to deal with them in time and efficiently,
while the Strategy Department is responsible for the planning, coordination, monitoring and publication of Corporation's
actions on sustainable growth.
PPC's environmental strategy is harmonized with EU and Greek goals on energy policy for 2020 (the goals for 2020 are 20%
generation from RES, 20% energy saving and 20% reduction of greenhouse gas emissions), the institutional interventions on
climate change and the protection of the environment. For the implementation of its strategy, the Corporation has
established and updated the Environmental Business Plan, the implementation of which is assigned to the organizational
units having as an object the management of the environment. For achieving constant environmental performance, PPC develops
Environmental Management Systems and proceeds to the certification of its installations.
PPC applies responsible practices of personnel administration and cares for adopting a modern work environment based on
equal opportunities. PPC is committed to the assurance of its employees' health and safety by applying relevant Health and
Safety Management Systems at work, as well as by realizing equivalent training programs.
PPC makes every effort to prevent and fight corruption not only in the way of its operation, but also in the selection of
suppliers and collaborators. Additionally, it supports human rights and is clearly opposed to forced and compulsory child
labor, as well as to every form of discrimination.
PPC provides its services to the Country's consumers with responsibility, quality services and high level of service
provision applying practices that aim at the optimization of its customers' total benefit.
For the Corporation, offering to local communities is directly related to its business activity. For this purpose, PPC
implements significant actions that are addressed not only to local societies in which it is activating but also to the
entire society. Its significant social work includes series of actions which are realized in time and refer to athleticism,
civilization, health and education.
According to the present policy, dealing with PPC's operation as a whole contributes to face not only environmental and
social issues with responsibility but also to enhance the Corporation's economic value.
Business Model
PPC's Business Model aims to create value for its stakeholders. PPC invests on its employees, infrastructure, and the
development of new technologies and services. The Company communicates with stakeholders, by all available means, both at
national and local level, in order to identify its operational impacts and improve its performance, taking into account the
opinion, concerns, needs and recommendations of all interested parties. PPC ensures the development, specialization, and
health and safety of its employees, who contribute to the development of its operations. The Company supplies electricity
all over Greece, contributes to the development of renewable energy sources and the achievement of national goals, and
supports society.
Sustainability Issues Governance and Operational Framework
The PPC Board of Directors has appointed two of its members to be in charge of managing sustainable development issues. In
addition, it has set up the Corporate Social Responsibility Section that is part of the Strategy Department. Its mission is
to establish, develop and implement a Corporate Social Responsibility strategy that aims to meet the needs of stakeholders
in a balanced manner, while highlighting the actions and practices that show the Corporation's social face.
The Code of Corporate Governance provides a framework of principles and procedures that the Corporate Governance System of
the Corporation follows as regards management, shareholders, its Internal Audit System and risk management.
The Staff Regulations of PPC (SR/ PPC) regulates, inter alia, the rights and obligations of employees, the terms of
employment contracts, the relationships formed in the execution of work and the exercise of disciplinary power.
PPC implements a Training Management System for analyzing and identifying training needs, designing training courses,
selecting trainees and instructors, running training courses, and evaluating training activities (the training cycle).
Furthermore, PPC has developed quality, health and safety, and environmental management systems, which have been certified
respectively according to ISO 9001, OHSAS 18001 and ISO 14001, aiming at its optimal operation.
Materiality Analysis
PPC has identified the issues that are material for its sustainable development, taking into account international best
practices for the management and preparation of corporate responsibility reports. In that process involved the PPC
Management and representatives of all stakeholders.
The results presented in the following diagram illustrate the issues identified in the period 2016-2017.
PPCSustainabilityMaterial Issues
Economy1 Financial position / performance2 Procurement and supply chain management3 New markets and investments4 Regulatory issues5 Risk / crisis management6 Managing relations with subsidiaries7 Management of new energy market conditions Society8 Corporate governance, ethics and values9 Employee and third party health and safety 10 Job security11 Staff Training12 Work advancement / job satisfaction13 Lack of personnel14 Equality in the workplace15
Employee/management relations16 Customer Satisfaction / products and service assurance17 Shaping the public's consumer behavior18 Extroversion / PR19 Relationship / dialogue with local communities20 Engagement in public policy in Greece on energy issues21 Contractors / suppliers' Management22 Sponsorship23 Volunteerism among PPC staff Environment24 Climate change and greenhouse gas / particle emissions25 Dust26 Noise27 Waste28 Raw materials / fuel water29 Ecosystems /
biodiversity30 Rehabilitation of degraded land31 Visual / aesthetic nuisance32 Energy efficiency / new technologies33 RES development
Economy1 Financial position / performance2 Procurement and supply chain management3 New markets and
investments4 Regulatory issues5 Risk / crisis management6 Managing relations with subsidiaries7 Management
of new energy market conditions
Society8 Corporate governance, ethics and values9 Employee and third party health and safety 10 Job security11
Staff Training12 Work advancement / job satisfaction13 Lack of personnel14 Equality in the workplace15
Employee/management relations16 Customer Satisfaction / products and service assurance17 Shaping the public's
consumer behavior18 Extroversion / PR19 Relationship / dialogue with local communities20 Engagement in public
policy in Greece on energy issues21 Contractors / suppliers' Management22 Sponsorship23 Volunteerism among PPC
staff
Environment24 Climate change and greenhouse gas / particle emissions25 Dust26 Noise27 Waste28 Raw materials /
fuel water29 Ecosystems / biodiversity30 Rehabilitation of degraded land31 Visual / aesthetic nuisance32 Energy
efficiency / new technologies33 RES development
Performance 2016
Selective indices for the Company and Group 2016 performance are presented in the following table. Detailed data as well as
further PPC performance indicators are presented in the Corporate Social Responsibility and Sustainability Report 2016.
Total no. of employees (number of employees 31 December 2016) 18.902 10.6072
Female employees (%) 21% 21%
No. of employees with a collective labor agreement (%) 100% 100%
Total no. of accidents3 (number of employees) 98 604
Total no. of fatal accidents5 (number of employees) 3 16
Final judgements on incidents of human rights violation in the workplace (number of incidents) 0 07
Final judgements of criminal courts on matters falling within the criminal offenses of corruption, abuse of power, embezzlement, theft, infidelity, corruption, bribery, fraud, forgery, false testimony or falsification of documents, use of false testimonies and official secrecy violation (number of court decisions) 1 18
Donations and sponsorship9 (E '000) 1,200.2 852.93
Total amount of lignite levy payable to local communities (E '000) 25.8 25.8
Power outage frequency (SAIFI) (number of power outages per customer) 1,5 -
Average power outage duration (SAIDI) (annual power outage duration in minutes per customer) 95 -
Number of Power Plants (lignite centers, thermal power generation units, hydroelectric units, etc.) with certified Environmental Management Systems 20 20
CO2 emissions from electricity generation10 (in thousands of tons) 28,414 28,414
Greenhouse gas (CO2) trading rights (E mil ) 178.1 178.1
1 Data refer to the companies PPC, IPTO and HEDNO.
2 Full time employees - number of employees of PPC Renewables S.A. is included.
3 The methodology taken into account to calculate the indicators is the "European statistics on accidents at work (ESAW) -
Methodology - 2001 edition", which is also followed by the European Agency for Safety and Health at Work (EU-OSHA) and
EURELECTRIC.
The number of accidents includes all accidents occurring during employment of the permanent and seasonal/ temporary staff,
which caused absence from work for more than 3 calendar days. Accidents occurring while travelling to and from work or
cases of sickness, which are analyzed separately (from a statistical viewpoint), are not included.
4 Includes accidents that have been reported to the Occupational Health and Safety Department of PPC, by March 23, 2017.
5 Total number of worker fatalities in consonance with the «European statistics on accidents at work (ESAW) - Methodology -
2001 edition».
6 Includes accidents that have been reported to the Occupational Health and Safety Department of PPC, by March 23, 2017.
7 Final judgements of civil and criminal courts. The indicator relates to employees of PPC S.A., in the context of
exercising their duties by virtue of their status as employees of the company. The indicator relates to full-time,
temporary or seasonal employees excluding seconded employees, contractors and their staff.
8 The indicator relates to employees of PPC S.A., in the context of exercising their duties by virtue of their status as
employees of the company. The indicator relates to full-time, temporary or seasonal employees excluding seconded employees,
contractors and their staff.
9 The amount of donations / sponsorships concerns already accounted amounts from January 1 to December 31.
10 Emissions from facilities participating in the European Union Emissions Trading Scheme.
Statement of Corporate Governance
1. INTRODUCTION
STATEMENT OF CORPORATE GOVERNANCE
1. Code of Corporate Governance applying to the Company
Corporate Governance is a system of principles, based on which the optimal organization, administration and operation of
the a société anonyme, as well as the transparency in its relations with the shareholders and the safeguarding in general
of corporate interests are pursued.
The observance of the principles of corporate governance constitutes an essential commitment and priority of "Public Power
Corporation S.A." (PPC S.A. or the Company) due to its important role in the Greek economy, and the public interest
services it provides.
It is to be noted that the Company is governed by specific laws and regulations applicable to the corporations of the
wider public sector, as long as the Hellenic Republic, as the main shareholder, holds 51% of its share capital.
Consequently, its operations shall continue to be subject to the laws and regulations applicable to the companies of the
Greek public sector affecting specific procedures, as those concerning, indicatively but not limited to, personnel
remuneration policy. The said laws and regulations, to which the current competitors of the Company are not expected to be
subject, are likely to limit its operational flexibility and the implementation of the relevant "best practices" of
corporate governance.
Specifically, the Hellenic Republic holds directly and indirectly, through the Hellenic Republic Asset Development Fund
(TAIPED 1 ), 51.12% of PPC S.A. common registered shares. TAIPED holds 17% of the Company's share capital, which is
included in the aforementioned percentage held by the Hellenic Republic, since TAIPED is 100% owned by the Hellenic
Republic. In accordance with the Act of Legislative Content dated 7.9.2012, which was ratified by article 2 of Law
4092/2012 (OG A' 220/8.11.2012), the obligatory participation of the Hellenic Republic by at least 51% in the share capital
was abolished and the Company's Articles of Incorporation were adapted accordingly.
PPC prepares the current statement of Corporate Governance pursuant to the provisions of Article 43bb of Codified Law
2190/1920, as added with Article 2 of L. 4403/2016 (OG A' 125/07.07.2016) and applicable and where appropriate, in
accordance with the International Accounting Standards which have been established under the Regulation (EC)1606/2002.
PPC has drawn up and implements its own Code of Corporate Governance. Said Code was updated in March 2015 and is posted on
the Company's website (www.dei.gr).
The main axes of the Code of Corporate Governance implemented by PPC are the following:
Administration
Composition of the Governing Bodies, jurisdiction and functioning.
Committees of the Board of Directors and jurisdiction thereof.
Shareholders
Jurisdiction and operation of the General Meeting of Shareholders, shareholders' rights, briefing of the shareholders', as
well as reference to the information data required pursuant to article 10 par. 1 of Directive 2004/25/EC of the European
Parliament, as incorporated in Law 3461/2006.
Internal audit and risk management
Main characteristics of the Company's internal audit and risk management systems, regarding the procedure of preparing its
financial statements.
2. Corporate Governance Practices implemented by PPC in addition to Law (article 43bb par. 1 item a. sub item cc. of CL
2190/1920, as applicable) 2
1) The prohibition applied to the members of the Board of Directors concerning the conduct of competitive acts applied
for a period of two years following termination for any reason whatsoever of the term of office of the Board member or his
retirement from the Board of Directors (article 13 par.2 of Articles of Incorporation, Code of Corporate Governance
"Prohibition of competition - Participation in the Board of Directors of subsidiary companies").
2) The Board of Directors consists of different categories of members: eight (8) members, including the Chief Executive
Officer, elected by the General Meeting of shareholders of the company, two (2) members representing the Company's
employees are elected by direct and universal ballot and one (1) member designated by the Economic and Social Committee
(article 9 of Articles of Incorporation, Code of Corporate Governance "Composition of the Board of Directors"). This
particular composition of the Board of Directors and this approach of designating the Members of the Board constitute the
reason for not establishing until today the Committee of Candidatures' Designation of the Board of Directors based on the
applicable (as of October 2013) Greek Code of Corporate Governance for Listed Companies.
3) In case both positions of Chairman and CEO coincide to the same person, the Board of Directors shall also elect a Vice
Chairman (article 14 of Articles of Incorporation, Code of Corporate Governance "Chairman and Vice Chairman of the Board of
Directors").
4) Apart from the Board of Directors and the CEO, the Governing Bodies of the Company include the Management Board
(article 8 of Articles of Incorporation, article 3 of Rules of Operation, Code of Corporate Governance "Governing
Bodies").
5) There are Deputy CEOs reporting to the CEO (article 15a of Articles of Incorporation, Code of Corporate Governance
"Deputy Chief Executive Officers").
6) A Remunerations Committee has been established, consisting of three (3) non-executive members of the Board of
Directors, at least two (2) of them independent (article 17 of Articles of Incorporation, Code of Corporate Governance
"Remuneration and Compensation of Members").
7) A Management Contract is signed between PPC and the CEO (article 16 of Articles of Incorporation, Code of Corporate
Governance "Management Contract and follow-up of its implementation).
8) Persons of recognized standing or with specialized experience or expertise in specific areas may be employed as
Special Consultants, in order to support the CEO or the Deputy CEOs or the General Managers in carrying out their duties.
The number of special consultants shall not exceed ten (10). The employment/assignment contracts with the Special
Consultants are signed by the Chief Executive Officer, that decides upon the nature of their relationship with the Company
as well as upon the terms of such contracts, indicatively the duration of the contract, remuneration/fees and other
benefits (article 21 Rules of Operation of the Company, see below under 9).
9) Based on the Company's Rules of Operation as applicable which were approved by the Resolution of the BoD no
29/07.03.2017, the Members of the Board of Directors as well as any third person to whom any competencies of the Board have
been assigned by the latter, shall not be allowed to pursue own interests that are contrary to those of the Company.
Members of the Board as well as any third person to whom any competencies of the Board have been assigned, are required to
disclose promptly and adequately to the rest of the Board Members their own interests, that may arise from any transactions
of the Company which fall within the scope of their duties, as well as any conflict of own interests with those of the
Company or of any associated company, which may arise during the performance of their duties. In the event that such
conflict of interests is reported or occurs in accordance with the aforementioned, such Member of the Board shall have no
voting right during the relevant meeting of the Board. Any vote cast by such Member of the Board shall not be counted
toward a quorum and majority.
3. Description of internal audit and risk management systems in relation to the procedure of financial statements'
preparation
3.1 Safeguards at corporate level
The Internal Audit of the Company is performed by the Internal Audit Department (IAD). The IAD is supervised by the Audit
Committee which consists of two (2) at least non-executive members and one (1) independent non-executive member, that have
been appointed by the General Meeting of the Shareholders.
The members of the Audit Committee, in accordance with the Operation Rules of the Company, assume the obligations provided
for by law, as in effect in 2016, concerning corporate governance, including:
- the follow up of the financial information procedure
- the follow up of the effective operation of the internal audit and risk management systems, as well as the follow up
of the proper operation of the IAD
- the follow up of the process of compulsory audit of separate and consolidated financial statements
- the review and follow up of issues relating to the existence and preservation of the objectivity and independence of
chartered auditors-accountants concerning, in particular, other services rendered by them to the Company and its
subsidiaries
- the follow up of the execution of the Company's budget (BoD decision 128/18.7.2013 and
- the recommendation of the Board proposal to the General Meeting, for the appointment of Chartered Auditors-Accountants
The annual audit plan of the IAD is drawn up based on the determination, updating and assessment of the corporate risks of
the Group and taking into consideration the strategic goals of the Company and all developments concerning the Company and
its environment. The audit plan is submitted via the Audit Committee to the BoD for approval.
PPC's BoD assesses the main risks and uncertainties that PPC may face and a detailed reference to them is included in the
Annual Financial Report of the BoD.
Pursuant to the legislation in effect and specifically article 44 of Law 4449/2017, certain modifications have been
introduced regarding the obligations of the Audit Committee which are in effect starting from 2017.
3.2 Safeguards for information systems
The Company has developed a Framework of Information Systems Security within which the policies concerning Information
Systems Security are defined regarding information classification, security in matters of personnel, physical and
environmental security, management of communications and information systems operations, access control, development and
maintenance of information systems, business continuity management, compliance with the obligations deriving from the
regulatory-legislative framework.
Moreover, the roles and competencies concerning the information systems security are defined.
3.3 Safeguards for the procedure of preparing financial statements and reports
The basic areas where safeguards concerning the preparation of the Company's financial statements and financial reports are
implemented, are the following:
• Allocation of Competencies
The executives being involved have clearly defined roles and areas of responsibility, thus reinforcing the effectiveness of
the Internal Audit System.
• Procedures for accounting monitoring and drawing up of financial statements
ü Integrated policy principles for the operation of the Accounting Services of the Group.
ü Procedures in relation to the issuing of financial statements and their consolidation at Group level.
ü Regular follow up of the International Financial Reporting Standards, as these are adopted by the European Union, and the
respective adaptation of the accounting principles and policies of the Group, as required.
ü A special approval by the top executives of the Company is required for the posting of accounting entries, which concern
special, non-recurring accounting events.
ü Controls are being carried out by the Information Department on the information subsystems' data, before their
integration in the General Ledger.
ü Regular communication of the executives of the Finance Division with the Top Management and the Audit Committee for the
ratification and recording of important events affecting financial statements.
ü Regular communication of the Chartered Auditors with the Top Management and the Audit Committee with regard to the
progress and the results of the Company's compulsory audit.
• Procedures for property safekeeping
Safeguards are in place for the management of fixed assets, stock of materials and spare parts , cash and cheques and
customers' information systems. Indicatively we mention the existence of detailed procedures and audit mechanisms for
carrying out the annual materials' inventory.
• Transaction approval limits
The operation of all departments, at all management levels, as well as the Company Bodies' is governed by the Financial and
Administrative Jurisdictions System by which the jurisdictions in matters of approvals by the Governing Bodies and the
executives of the Company are defined..
4. Information required in accordance with article 10 par. 1 items c), d), f), g) and h) of Directive 2004/25/EC of the
European Parliament and of the Council, dated April 21st, 2004 concerning Takeover Bids - EXPLANATORY REPORT OF BOARD OF
DIRECTORS (Article 4, paragraph 7 & 8 of L. 3556/2007)
4.1 Share Capital Structure
The Company's share capital amounts to Euro 1,067,200,000 divided into 232,000,000 common registered shares corresponding
to 232,000,000 voting rights with a nominal value of Euro 4.60 each.
By resolution of the Shareholders' Extraordinary General Meeting on January 17, 2017, the company's share capital was
decreased by four hundred ninety-one million eight hundred forty thousand euros (E 491,840,000) along with a decrease of
the nominal value of the share by two euros and twelve cents (E 2.12) each and distribution in kind rather than in cash of
one (1) share of the societe anonyme with company name "HOLDING COMPANY ENERGIAKI S.A." and the distinctive title
"ENERGIAKI HOLDING S.A." of a nominal value of two euros and twelve cents (E 2.12) for each share held in the company.
Following the aforementioned decrease, the share capital of the company currently amounts to five hundred seventy-five
million three hundred sixty thousand euros (E 575,360,000), divided into two hundred thirty-two million (232,000,000)
common registered shares of a nominal value of two euros and forty-eight cents ( E2.48) each.
4.2 Restrictions in transferring Company shares
Article 8 of PPC's Articles of Incorporation which provided that the percentage of the Hellenic Republic in the PPC's share
capital could not be less than 51% of the shares with voting rights of the Company following any increase of the share
capital, was abolished pursuant to the Act of Legislative Content dated 7.9.2012 (which was ratified by article 2 of L
4092/2012).
4.3 Significant direct or indirect participations within the meaning of articles 9 to 11 of L. 3556/2007
As of December 31, 2016, the Hellenic Republic, HRADF and Silchester International Investors LLP have a significant
participation (over 5%).
11/4/2014 Hellenic Republic (1) 34.12%
11/4/2014 Hellenic Republic Asset Development Fund (HRADF) (1) 17.00%
13/9/2011 "SilchesterInternationalInvestorsLLP" acting as investment manager for its client 5.01%
- SilchesterInternationalInvestorsInternationalValueEquityTrust.
8/12/2011 "Silchester International Investors LLP" acting as investment manager for the following clients:- Silchester International Investors International Value Equity Trust,- Silchester International Investors International Value Equity Taxable Trust,- Silchester International Investors International Value Equity Group Trust,- Silchester International Investors Tobacco Free International Value Equity Trust, 13.80%
- The Calleva Trust.
(1) The Hellenic Republic controls, directly and indirectly through HRADF (which is wholly owned by the Hellenic
Republic), 51.12% of common registered shares of PPC S.A.
On April 8, 2014, the Greek ministerial committee for restructurings and privatizations decided the transfer, without
consideration, of 39,440,000 ordinary shares with voting rights corresponding to 17% of the existing share capital of PPC
S.A, by the Hellenic Republic to the HRADF, pursuant to the provisions of Law 3986/2011. On April 9, 2014, the transfer of
said shares by the Hellenic Republic to the HRADF was effected, following execution of an over-the-counter transaction.
4.4 Shares with special control rights
There are no shares granting special control rights, stricto sensu.
4.5 Voting rights restrictions
There are no restrictions on voting rights.
4.6 Agreements between Company's shareholders
The Company has no knowledge of agreements existing between its shareholders.
4.7 Regulations on appointing and replacing members of the Board of Directors
According to article 9 of the Company's Articles of Incorporation, the Company's Board of Directors is composed of eleven
(11) members, divided into executive and non-executive members, among which:
- Eight (8) members, including the Chief Executive Officer, are elected by the General Meeting of the shareholders of
the company. The Board of Directors shall elect from among the said members its Chairman and Vice Chairman, pursuant to
article 14 of the Company's Articles of Incorporation.
- Two (2) members representing the Company's employees are elected by direct and general ballot after having notified
the most Representative Trade Union (ASOP) of the Company.
- One (1) member, who is involved in bodies related to the Company's activities, is designated by the Economic and
Social Committee (ESC) and is appointed by decision of the Minister of Environment and Energy.
In the event that for any reason whatsoever any representative of the employees or the representative of ESC is not elected
or in the event any vacancy in the office of the aforesaid representatives is not promptly filled within the time limit of
two (2) months as of the notification of the agencies (ESC and ASOP), this shall not impede the constitution and
functioning of the Board of Directors.
According to article 9 par. 4 case a) of the Company's Articles of Incorporation, in case that for any reason whatsoever
there shall be a vacancy in the office of a Board Member elected in accordance with the procedure set forth in paragraph 2
case a) of the aforementioned article, the remaining members of the Board shall elect another member for the remaining term
of the member in the office of whom a vacancy has occurred, and such election is posted on the websites of the company and
of the General Electronic Commercial Registry (GECR or GEMI) and is announced by the Board of Directors at the next meeting
of the General Meeting.
4.8 Duties of the Board of Directors with regard to the issuance of new or the purchase of own shares
According to article 6 par.2 case a) of the Company's Articles of Incorporation, the Company may, increase the share
capital through the issuance of new shares. The amount of the increase cannot exceed the amount of the original share
capital or of the share capital which shall have been paid up on the date of the decision by the General Meeting on the
renewal of the relevant power of the Board of Directors.
The above mentioned authority of the BoD can be renewed by the General Meeting for a period that cannot exceed 5 years for
each renewal.
The provisions of article 16 and 16a of Codified Law 2190/1920, as amended and currently in force, provide for the
Company's ability to purchase own shares, with the Board of Directors responsibility following an approval of the General
Meeting of Shareholders, under the requirements specifically indicated by the above article.
There is no such provision in the Company's Articles of Incorporation, concerning specifically the Board of Directors'
competence for the purchase of own shares.
4.9 Significant agreements that become effective, are amended or are terminated in the event of change in control
A significant part of loan agreements provide that in case the Greek State's participation in the share capital of the
Company falls below 34% or 51%, or in case the State ceases to control the Company, it may lead to Mandatory Prepayment of
these loans or constitute an Event of Default.
In addition, the change in PPC's shareholders' structure, which will lead to a change in control over the Company is a
reason for an "Accelerated Put/Call Event" according to the Shareholders Agreement between PPC S.A. and TERNA ENERGY
relating to WASTE SYCLO S.A. This fact initiates the procedure of the "Accelerated Put/Call Notice". The Non Defaulting
Party may require to purchase all the shares of the Defaulting Party, or may proceed to the disposal of its shares to the
Defaulting Party, according to the foreseen procedure in the Shareholders Agreement.
With regard to the shareholders agreement with ALPIQ, based on which the subsidiary company under the trade name PPC
Bulgaria was established in Bulgaria, in the event of any change in the shareholder structure of one out of the two
shareholders which leads in a change of control over the company, the other shareholder may exercise his right to sell his
shares to the first shareholder, within 30 working days, pursuant to the procedure provided for in the shareholders
agreement.
4.10 Agreements with members of the Board of Directors or Company Personnel.
There are no share distribution plans to the members of the Board of Directors and/ or employees of the Company.
PPC has signed contracts for the provision of independent services with the Chairman and Chief Executive Officer Mr. E.
Panagiotakis, with the Deputy CEO Mr. K. Dologlou and with the Deputy CEO Mr. S. Goutsos.
5. Information on the functioning of the General Meeting of the shareholders and its main powers, as well as description of
the shareholders' rights and of their exercise
5.1 Shareholders' General Meeting competence
1. The Shareholders' General Meeting is the supreme authority of the Company and shall have the right to make decisions on
all matters concerning the Company, unless otherwise stipulated in the Articles of Incorporation, and more particularly to
decide regarding:
a) The amendment of the Articles of Incorporation. Such amendments are also deemed to include the increase or decrease of
the share capital, subject to the provisions of article 6 of the Articles of Incorporation and article 34 par. 2 of
Codified Law 2190/1920, as applicable. The decisions concerning amendments to the Articles of Incorporation shall be valid,
provided that the relevant amendment is not prohibited by an expressed provision of the Articles of Incorporation or by
law,
b) The election of Board Members, pursuant to article 9 of the Articles of Incorporation, of the Chief Executive Officer
and of the regular auditors,
c) The approval of the balance sheet of the Company,
d) The distribution of the annual profits,
e) The issuance of loan through bonds convertible into shares, subject to the provisions of article 6 of the Articles of
Incorporation. The issuance of bond loans non-convertible into shares shall be permitted also by virtue of a resolution of
the Board of Directors,
f) The merger, demerger, transformation, revival, extension of term or dissolution of the Company and
g) The appointment of liquidators.
2. Any holder of fully-paid up voting shares shall participate in the General Meeting of shareholders of the Company only
to the extent of the number of shares which he holds.
5.2 Convocation of the General Meeting
1. The Shareholders' General Meeting of the Company shall be convened by the Board of Directors and shall meet at the
seat of the Company and/or at any other place outside such seat, in accordance with the provisions of article 25 of
Codified Law 2190/1920, at least once a year, always within the first six months following the end of the financial year.
The Board of Directors may convene an Extraordinary Shareholders' General Meeting, whenever this is prescribed by special
provisions or whenever the Board considers it appropriate.
2. Within ten (10) days from the submission by the auditors of a request to the Chairman of the Board of Directors, the
Board of Directors shall be bound to convene the Shareholders' General Meeting having for items on the agenda those listed
in the submitted request.
5.3 Invitation to the General Meeting
1. The Invitation to the General Meeting, with the exception of repeat General Meetings and of meetings regarded as such,
shall clearly state at least the venue, date and time of the meeting, the items on the agenda, the shareholders entitled to
participate, as well as precise instructions about the way the shareholders shall be able to participate in the meeting and
exercise their rights in person or by proxy, or potentially through remote attendance (from a distance), shall be available
in a prominent place at the registered office of the Company and shall be published by posting on the website of the
Company and of the GECR, and in any case, as provided for by the law each time.
2. The General Meeting shall be convened at least twenty (20) days prior to the date set for the meeting, inclusive of
days legally excluded (holidays). The posting on the website of the GECR shall be made at least ten (10) full days prior to
such date and the posting on the website of the Company twenty (20) days prior to the date that the Company announced
without delay to the GECR the posting on the website. In the event of repeat General Meetings, the time limits set forth
herein are reduced by one half.
3. The day of publication of the notice of invitation to attend a General Meeting and the day on which such meeting shall
be held are not counted.
4. Besides the information of par.1 herein, the invitation shall also:
a) include at least the following information:
aa) shareholders rights of par. 2, 3, 6 and 7 of article 28 of the Articles of Incorporation, stating the time period
within which each right may be exercised, by the respective deadlines specified in the above paragraphs of article 28 of
the Articles of Incorporation or alternatively the closing date by which such rights may be exercised, on condition that
the detailed information is posted, with an explicit reference in the invitation, on the Company's website www.dei.gr, and
bb) the procedure for the exercise of the voting rights by proxy and more in particular the printed forms used by the
Company to this end, as well as the means and methods provided for in article 22 of the Articles of Incorporation, in order
that the Company receives electronic notifications of any appointment and revocation of proxy holders.
b) the record date as provided for in article 22 par. 2 of the Articles of Incorporation in accordance with article 28a
par. 4 of Codified Law 2190/1920, as applicable, pointing out that only those persons having the shareholding capacity on
such date shall have the participation and voting right at the General Meeting.
c) the location where the full text of documents and draft resolutions provided for in cases c) and d) of par. 5 of
article 22 of the Articles of Incorporation are made available, as well as their reception mode.
d) the Company's website address where the information of par. 5 of article 22 of the Articles of Incorporation is
posted.
5. The company publishes in the media mentioned in par. 1 herein a summary of the invitation containing at least the
precise address of the venue, the time and the hour of the meeting, the shareholders entitled to participate, as well as an
explicit reference to the address of the company's website where the full text of the invitation and the information
provided for in par. 3 of article 27 of Codified Law 2190/1920 are posted.
In case of enforcement of par. 2 article 39 of Codified Law 2190/1920 the publication in the media in accordance with the
above par. 1 herein shall contain at least a clear indication that any revised agenda shall be posted on the company's
website and in the media mentioned in the following section. Besides the publication in the media of par. 1 herein
including the company's website, the full text of the invitation shall also be published within the prescribed deadline of
par. 2, in such a way as to ensure rapid and non-discriminatory access to it, in the media that the Board of Directors
considers reasonably reliable for the effective diffusion of information to the investors, in particular at print and
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