REG - Public Power Corp - Annual Financial Report <Origin Href="QuoteRef">DEHr.AT</Origin> - Part 7

Public Power SAAnnouncement

07/04/2017 18:40

- Part 7: For the preceding part double click  ID:nRSG9898Bf 

improves on the problems arising, especially regarding the credit
risk undertaken by the Operator in case of cash deficits due to Load Representatives default in view of the market
opening. 
 
·     The EU Directive 2014/94 was incorporated into Greek Law via Law 4439/2016 for the development of alternative fuel
infrastructures in the EU in order to minimize the dependence from oil and liquid fossil fuels and the environmental
impacts in the transport sector. Electricity is included in the definition of alternative fuels. The minimum requirements
for the creation of alternative fuel infrastructures are set, including the recharging points of electric vehicles and of
natural gas and hydrogen (LNG and CNG) refueling points. 
 
3.         Basis of Preparation and principal accounting policies 
 
3.1.      basis of preparation 
 
Statement of compliance 
 
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as
adopted by the European Union. 
 
Approval of financial statements 
 
The Board of Directors of the Parent Company approved the accompanying financial statements for the year ended December 31,
2016 on April 7th , 2017. These financial statements are subject to approval by the Parent Company's General Shareholders
Meeting. 
 
Basis of preparation of financial statements 
 
The 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 will
continue as a going concern. The financial statements are presented in thousands of Euro and all values are rounded to the
nearest thousand, except when otherwise indicated. 
 
Basis of consolidation 
 
The consolidated financial statements include the financial statements of the Parent Company and its subsidiaries, drawn up
to December 31st each year. Subsidiaries (companies in which the Group directly or indirectly or through other subsidiaries
has an interest of more than one half of the voting rights or otherwise has power to exercise control over their
operations) have been consolidated. Subsidiaries are consolidated from the date on which effective control is transferred
to the Group and cease to be consolidated from the date on which control is transferred out of the Group. Losses within a
subsidiary are apportioned to the non-controlling interest even if that results in a deficit balance. A change in the
ownership interest of a subsidiary is accounted for as an equity transaction. All inter-company balances and transactions
have been fully eliminated as well as unrealized intra - group gains and losses. 
 
3.1. BASIS OF PREPARATION (CONTINUED) 
 
Where necessary, the accounting policies of subsidiaries have been revised to ensure consistency with the policies adopted
by the Group. It is noted that certain of the abovementioned requirements have not a retrospective effect, and due to this
reason the following differences are carried forward in certain instances from the previous basis of consolidation: 
 
·      Acquisitions of non-controlling interests, prior to January 1, 2010, were accounted for using the parent entity
extension method, whereby, the difference between the consideration and the book value of the share of net assets acquired
were recognized as goodwill. 
 
·      Losses incurred by the Group were not attributed to the non-controlling interest until the balance was reduced to
nil. Any further excess losses were attributed to the Parent Company, unless the non-controlling interest had a biding
obligation to cover these. 
 
In case that the Group loses control of a subsidiary then the following are : 
 
Derecognized : 
 
-        The assets (including the surplus value) and liabilities of the subsidiary 
 
-        The book value of the non-controlling interest 
 
-        The accumulated exchange differences, which have been recorded in Equity 
 
Recognized: 
 
-        The fair value of the price obtained 
 
-        The fair value of the remaining participation 
 
-        Any surplus or deficit in the income statement 
 
-        The Parent Company's share in the elements previously recognized in the comprehensive income statement, in the
income statement or the retained earnings where that is judged necessary. 
 
3.2.   CHANGES IN ACCOUNTING POLICIES and disclosures 
 
The accounting policies adopted are consistent with those of the previous financial year except for the following amended
IFRSs which have been adopted by the Group as of January 1st 2016: 
 
·     IAS 16 and IAS 38 (Amendments) "Clarification of Acceptable Methods of Depreciation and Amortisation" 
 
The amendment clarifies the principle of IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets that revenues
reflect the economic benefits generated by the operation of an entity (of which the asset is a part) instead of the
economic benefits consumed through the use of an asset. As a result, the ratio of revenue generated to total revenues
expected to be generated, can not be used for the depreciation of tangible fixed assets and can be used only in very
limited circumstances for the amortization of intangible assets 
 
·     IAS 19 Employee benefits (Amendment): Emplyee contributions 
 
The amendment applies to contributions from employees or third parties to defined benefit plans. The objective of the
amendment is to simplify the accounting treatment of 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. 
 
·     IFRS 11 Joint arrangements (Amendment): Joint Operations 
 
This amendment requires an investor to apply the principles of business combination accounting (according to IFRS 3) when
it acquires an interest in a joint operation that constitutes a 'business'. 
 
·     IAS 27 Separate Financial Statements (Amendment) 
 
This amendment allows entities to use the equity method to account for investments in subsidiaries, joint ventures and
associates in their separate financial statements and clarifies the definition of separate financial statements. 
 
·     IAS 1: Disclosure Initiative (Amendments) 
 
Amendments in IAS 1 further encourage entities to exercise their professional judgement in determining information to be
disclosed and the way they should be presented in their financial statements. These limited amendments to IAS 1 clarify,
rather than change significantly the existing requirements of IAS 1. The amendments relate to materiality, order of the
notes, subtotals and disaggregation, accounting policies and presentation of items of other comprehensive income (OCI). 
 
·     IFRS 10, IFRS 12 and IAS 28 (Amendments): "Investment Entities - Applying the Consolidation Exception" 
 
These amendments clarify three issues arising when applying the consolidation exception for investment entities. More
specifically, the exemption from presenting consolidated financial statements applies to a parent entity that is a
subsidiary of an investment entity, even 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 
 
3.2. CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES CONTINUED) 
 
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 in IAS 28 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. 
 
IASB has issued a new Cycle of Annual Improvements to IFRSs 2010 - 2012, which is a collection of amendments to IFRSs. The
amendments set out below, are effective for annual periods beginning on or after February 1st 2015 
 
·      IFRS 2 Share-based Payment: The amendment amends the definition of a 'vesting condition' and "market conditions" and
separately defines 'performance condition' and 'service condition'.(previously included in the definition of "vesting
condition". 
 
·      IFRS 3 Business combinations: The amendment clarifies that an obligation to pay contingent consideration in a
business acquisition that is not classified in equity, is subsequently measured at fair value through profit or loss
regardless of whether it falls within the scope of IFRS 9 Financial Instruments. 
 
·      IFRS 8 Operating Segments: The amendment requires from an entity to discloe the judgements made by management in
aggregating operating segments and clarifies that the entity should provide reconciliation between the total assets of
operating segments and total assets assets of the entity only if a regular reporting of the operating segment's assets is
presented. 
 
·      IFRS 13 Fair Value Measurement: The amendment on the basis of a conclusion of IFRS 13 clarifies that the adoption of
IFRS 13 and the amendment of IFRS 9 and IAS 39 did not remove the possibility of measuring short-term assets and
liabilities, for which there is no stated interest rate, at invoice amounts in cases where the impact of not discounting is
immaterial. 
 
·      IAS 16 Property Plant & Equipment :The amendment clarifies that when the value of an item of property, plant and
equipment is adjusted, its gross carrying amount is adjusted in a manner consistent with the adjustment of its book value. 
 
·      IAS 24 Related Party Disclosures: The standard is amended to include, as a related party, an entity that provides
key management personnel services to the reporting entity or to the parent of the reporting entity. 
 
·      IAS 38 Intangible Assets : The amendment clarifies that when the value of an intangible asset is adjusted, its gross
carrying amount is adjusted in a manner consistent with the adjustment of its book value. 
 
Finally, IASB has issued a new Cycle of Annual Improvements to IFRSs 2012 - 2014, which is a collection of amendments to
IFRSs. The amendments set out below, are effective for annual periods beginning on or after January 1st 2016. 
 
·      IFRS 5 Non-current Assets Held for Sale and Discontinued Operations: The amendment clarifies that, when an asset (or
disposal group) is reclassified from 'held for sale' to 'held for distribution', or vice versa, this does not constitute a
change to a plan of sale or distribution, but a continuation of the original plan. Therefore, there is no interruption to
the application of IFRS 5 requirements. The amendment also clarifies that changing the disposal method does not change the
classification date. 
 
·      IFRS 7 Financial Instruments: Disclosures: The amendment clarifies that a service contract that includes
remuneration may constitute continuing involvement in a financial instrument. The amendment also clarifies that the
disclosures of IFRS 7 regarding the offsetting of financial assets and liabilities is not required for condensed interim
financial statements. 
 
·      IAS 19 Employee Benefits: The amendment clarifies that on evaluating if an active high quality corporate bond market
exists, the evaluation is based on the currency in which the obligation is expressed, not in the country where the
obligation arises. When no active market for high quality corporate bonds in this currency exists, then the interest rates
on government bonds should be used. 
 
·      IAS 34 Interim Financial Reporting: The amendment clarifies that the required interim disclosures should be located
either in the interim financial statements or incorporated by cross-reference between the interim financial statements and
the point where they are included in the interim financial report (eg, the Management Report and the Risk Report). The IASB
has stated that other information in the interim financial report should be available to users on the same terms and at the
same time as the interim financial statements. If users do not have access to the other information in this way, the
interim financial report is incomplete. 
 
3.3.      SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES 
 
The preparation of financial statements requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Actual results may ultimately
differ from those estimates. The principle judgments and estimates referring to events the development of which could
significantly affect the items of the financial statements during the forthcoming twelve month period are as follows: 
 
3.3. SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES (CONTINUED) 
 
Post-retirement  benefits 
 
The Parent Company's employees and pensioners of the Group are entitled to the supply of electricity at reduced tariffs.
Such reduced tariffs to pensioners are considered to be retirement obligations and are calculated at the discounted value
of the future retirement benefits deemed to have accrued at year-end based on the employees earning retirement benefit
rights throughout their working life. The above mentioned obligations are calculated on the basis of financial and
actuarial assumptions. Further details, pertaining to the basic assumptions and estimates, are included in Note 30. 
 
Fair value and useful lives of property, plant and equipment 
 
The Group carries its property, plant and equipment at revalued amounts (estimated fair values) as determined by an
independent firm of appraisers. Revaluation is performed periodically (every three to five years). The determination of the
fair values of property, plant and equipment requires from management to make assumptions, estimates and judgements with
respect to the ownership, the value in use and the existence of any economic, functional and physical obsolescence of
property, plant and equipment. On December 31, 2014, the Group has conducted its latest revaluation of property, plant and
equipment. The management of the Group believe that any change in the fair value of tangible fixed assets will not have a
significant impact on the accompanying separate and consolidated financial statements of December 31st, 2016. Furthermore,
the management makes estimates regarding the total and the remaining useful live of fixed assets which are subject to
periodic review. Useful lives as estimated are included in Note 3.4. 
 
Impairment of property, plant and equipment 
 
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. The determination
of whether such indications exists, requires from Management to make assumptions and judgments with respect to external and
internal factors that may affect the recoverability of assets, as well as assumptions on the determination of the cash flow
generating units. 
 
Cost of dismantling of property, plant and equipment 
 
Based on the provisions of IAS 16 "Property, plant and equipment" the cost of an item of property, plant and equipment
includes, among others, the initial estimate of the costs required for the dismantling and removal of such an item. These
costs are quantified and recognized  in the financial statements in accordance with the provisions of IAS 37 "Provisions,
contingent liabilities and contingent assets". 
 
The management estimates that the cost of dismantling may, especially in the cases of lignite fired power plants as well as
gas fired stations, be funded by the proceeds of the materials that will result from such a dismantling and, on that basis
has not made any provision for such costs for all categories of the above mentioned power plants. 
 
Provisions for risks 
 
The Group is establishing  provisions  concerning claims by third parties against companies of the Group and which  might
lead to an outflow of resources for their settlement. The provision is established based on amounts claimed and the
possible outcome of the legal dispute. 
 
Provisions for trade receivables 
 
Provision for doubtful debts is established for individual high voltage customers on specific balances, when there are
indications that the debts will not be collected. For medium and low voltage customers, the Parent Company establishes a
general  provision for the total of their outstanding balances of more than 3 and 6 months respectively, per customer. This
policy is reviewed periodically in order to be readjusted according to  the prevailing circumstances. Additional details
are included in Note 20. 
 
Provisions for income taxes and recognition of deferred tax receivables 
 
Current provisions for income tax liabilities for current and prior years are calculated at the amounts expected to be paid
to the tax authorities, using the prevailing tax rates at the balance sheet date. Provision for income taxe includes
current taxes reported in the respective income tax returns and potential additional tax assessments that may be imposed by
the tax authorities upon settlement of the unaudited tax years on the basis of the findings of prior tax audits. The final
settlement of the income taxes might differ from the income taxes that have been accounted for in the financial statements.
From the year 2011 onwards, the Parent Company and several of its subsidiaries are audited for tax purposes by the
Certified Auditors Accountants in accordance with the provisions of Income Tax Legislation. The audit for the year 2016 is
ongoing and the relative tax conformity report will be issued after the publication of the financial statements for the
year 2016. If, at the completion of the tax audit, additional tax liabilities arise, we estimate that these will have no
material effect on the financial statements. Deferred taxes are recognized on carried forward tax losses to the extent that
it is probable that future taxable profits will occur to offset carried forward tax losses. Deferred tax receivables that
are recognized, require Management to make assessments as to the time and level of realization of future taxable profits. 
 
3.3. SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES (CONTINUED) 
 
Accounting treatment of a business activity's spin -off to a subsidiary 
 
The management proceeds to  significant  judgments regarding the proper presentation of the spin -off and contribution of a
segment by the Parent Company to a 100% subsidiary in exchange for shares, as the accounting treatment for similar
transactions between companies under common control is not explicitly provided for in IFRS. 
 
Provision for unbilled revenue 
 
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and the revenue
can be reliably measured. Revenue from all types of electricity sales is accounted for on an accrual basis. Especially for
low voltage customers at each balance sheet date, unbilled revenue is recorded to account for electricity delivered and
consumed by these customers but not yet billed. Unbilled revenue is estimated using certain assumptions with respect to
quantities of electricity consumed, network losses and average electricity sale prices. The actual amounts that will be
finally billed, may differ from those provided for. 
 
3.4.      Principal Accounting Policies 
 
Foreign currency translation 
 
The functional and reporting currency of all the Group entities is the Euro. Transactions involving other currencies are
converted into Euro using the exchange rates, which were in effect at the time of the transactions. At the balance sheet
dates, monetary assets and liabilities that are denominated in other currencies are adjusted to reflect the current
exchange rates at the balance sheet date. Gains or losses resulting from foreign currency adjustments are reflected in
foreign currency gains (losses), net, in the accompanying statements of income. Non-monetary items in foreign currency
which are valuated at acquisition cost are converted using the exchange rate of the date of acquisition. The non-monetary
elements which are measured at fair value in foreign currency are converted using the exchange rate of the fair value's
calculation date. The profit or loss from the conversion of non-monetary items is treated the same way as the profit or
loss from the conversion of fair value of these elements. 
 
Intangible assets 
 
Intangible assets include software and CO2 emission rights allowances. 
 
Software 
 
Software programs are measured at their acquisition cost minus accumulated depreciation and impairments. For all assets
retired or sold, their acquisition cost and related depreciation are removed from the accounts. Any gain or loss is
included in the statement of income. Software costs are amortized on a straight-line basis over a period of five years. 
 
CO2Emissions Rights 
 
The Parent Company acquires CO2 emission rights in order to meet its liability stemming from the actual CO2 emissions of
its generation units. This liability is measured at fair values to the extent that the Parent Company has the obligation to
cover its emissions through purchases (after the offset of any free CO2 emission rights held). Emission rights purchased
and held are recognized as intangible assets, at cost less any accumulated impairment losses. 
 
Tangible Assets 
 
Tangible assets are initially recognised at their acquisition cost which includes all direct attributable expenses for
their acquisition or construction. Subsequent to their initial recognition, tangible assets (with the exception of mines
and lakes which are valued at cost minus accumulated depreciation and eliminations) are valued at their fair values minus
accumulated depreciation and eliminations. Estimations of fair values are performed periodically by independent appraisers
(every three to five years) in order to ensure that fair value does not differ significantly from the net value of the
asset. The last assets' evaluation was completed on December 31st 2014. Any valuation increase is credited to the
revaluation surplus net of deferred taxes. At the date of revaluation, accumulated depreciation is offset against pre
depreciation accounting values and net amounts are restated according to revalued amounts. Any decrease is first offset
against an earlier valuation increase in respect of the same fixed asset and thereafter charged to the income statement.
Upon disposal of a revalued tangible asset, the relevant portion of the revaluation surplus is released from the
revaluation surplus directly to retained earnings. Repairs and maintenance are charged to expenses as incurred. Subsequent
expenditures are capitalized if they meet the recognition criteria as tangible assets. For all assets retired or sold,
their acquisition cost and related depreciation are removed from the accounts at the time of sale or retirement, and any
gain or loss is included in the statement of income. 
 
3.4. PRINCIPAL ACCOUNTING POLICIES (CONTINUED) 
 
Borrowing costs 
 
From January 1st, 2009, borrowing costs that are directly attributable to the acquisition, construction or production of a
qualifying asset that needs a substantial period of time to get ready for its intended use or sale, are capitalised as part
of the cost of the relevant assets. The new accounting policy is implemented on fixed assets recognized from January 1,
2009 herein (new constructions). All the remaining borrowing costs are recognized as expenses in the period in which they
are incurred. 
 
Depreciation 
 
Depreciation is calculated on a straight-line basis over the average estimated remaining useful economic life of the
assets. The useful lives (in years) applied for the calculation of depreciation, have as follows: 
 
 Buildings and Technical Works                         
 Buildings of general use                     50       
 Industrial buildingsDams                     40-5050  
 Machinery and Equipment                               
 Thermal power plants Gas Turbines            35-4035  
 Mines                                        20-40    
 Hydro power plants                           50       
 Autonomous diesel power plants               25       
 Transmission                                          
 Lines                                        35       
 Substations                                  35       
 Distribution                                          
 Substations                                  35       
 Low and medium voltage distribution network  35       
 Transportation assets                        15       
 Furniture, fixtures and equipment            5-25     
 
 
Mining activities 
 
The Parent Company owns and operates open-pit lignite mines. Land acquisition (mainly through expropriation) and initial
(pre-operational) development costs relating to mines are capitalized and amortized (upon commencement of the mines'
commercial operation) over the shorter of the life of the mine and twenty (20) years. Exploration, evaluation and ongoing
development costs are charged to the cost of lignite production as incurred. A provision for land restoration is
established for the Group's estimated current obligation for restoration and is calculated based on the surface disturbed
to date and the average cost of restoration per metric unit. It is accounted for at the present value of the related
obligation to restore land back to a beneficial use and is included both in fixed assets (mines) and in provisions. 
 
Investments in subsidiaries 
 
In the separate financial statements, investments in subsidiaries are accounted for at cost less any impairment losses. The
spin off and contribution of an activity from the Parent Company to a wholly owned subsidiary in exchange for shares, is
accounted for as a transaction between companies under common control. In cases of such transactions the shares received
are recognised as an addition to the cost of investment in the subsidiary with a value equivalent to the carrying value of
the net assets contributed at the transaction date. 
 
Investments in associates 
 
These are entities in which the Group has significant influence and which are neither a subsidiary nor a joint venture of
the Group. The Group's investments in associates are accounted for under the equity method. Investments in associates are
carried on the balance sheet at cost plus post-acquisition changes in the Group's share of net assets of the associate,
less possible provisions for any impairment in value. In case that the Group's share in an associate's losses is equal, or
exceeds its participation in the associate, the Group does not recognise the losses exceeding its participation. The income
statement reflects separately the Group's share on the results of its associates, while amounts that are recorded by the
associates directly to their equity are recognized directly to the Group's equity. Non - realised profit or loss resulting
from the transactions of the Group with said associates is eliminated to the extent of the interest in the associates. The
associates' accounting principles are adjusted, when necessary, in order to comply with those adopted by the Group. In the
separate financial statements such investments are accounted for at cost less any accumulated impairment losses. 
 
3.4. PRINCIPAL ACCOUNTING POLICIES (CONTINUED) 
 
Impairment of assets 
 
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such
indication exists, the Group makes an estimate of the asset's recoverable amount. An asset's recoverable amount is the
higher of an asset's or cash generating unit's fair value less cost to sell and its value in use and is determined for an
individual asset unless the asset does not generate cash inflows that are largely independent of those from other assets or
groups of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired
and is written down to its recoverable amount. In assessing value , the estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects current market assessment of the time value of money and the
risks specific to the asset. The fair value of sale (after the deduction of sales costs) is determined, in each case,
according to the implementation of a revaluation model. Impairment losses of continuing operations are recognized to the
income statement, except if the particular asset is valued in fair values and then the impairment loss is recognised as a
decrease of the already recognised surplus value. An assessment is made at each reporting date as to whether there is any
indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication
exists the recoverable amount is estimated. A previously recognized impairment loss is reversed only if there has been a
change in the estimates used to determine the assets' recoverable amount since the last impairment loss was recognized. 
 
That increased amount cannot exceed the carrying amount that would have been determined (net of depreciation), if no
impairment loss had been recognized for the asset in prior years. Such reversal is recognized in profit and loss unless the
asset is carried at fair value amounts in which case the reversal is treated as a revaluation increase. After such a
reversal the depreciation charge is adjusted in future periods to allocate the asset's revised carrying amount, less any
residual value, to be divided equally to future time spans on a systematic basis over its remaining useful life. 
 
Fair value measurement 
 
The Group measures financial instruments, such as, derivatives, and its available for sale investments at each balance
sheet date and non-financial assets such as investment properties, periodically (every 3-5 years) at fair value at each
balance sheet date. 
 
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The fair value measurement is based on the presumption that the
transaction to sell the asset or transfer the liability takes place either: 
 
·      In the principal market for the asset or liability, or 
 
·      In the absence of a principal market, in the most advantageous market for the asset or liability. 
 
The principal or the most advantageous market must be accessible to by the Group. 
 
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing
the asset or liability, assuming that market participants act in their economic best interest. 
 
The fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic
benefits by using the asset in its highest and best use or by selling it to another market participant that would use the
asset in its highest and best use. 
 
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available
to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. 
 
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within
the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value
measurement as a whole: 
 
Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities. 
 
Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is
directly or indirectly observable. 
 
Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is
unobservable. 
 
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines
whether transfers have occurred between Levels in the hierarchy by re-assessing categorization (based on the lowest level
input that is significant to the fair value measurement as a whole) at the end of each reporting period. 
 
The Group determines policies and procedures applied for both recurring measurements and assets held for distribution on
discontinued operations. 
 
Assets of substantial value, as tangible assets as well as substantial value liabilities are evaluated by the Group and the
Parent Company with the assistance of external valuators. External valuators involvement needs, are annually decided by the
Group, the selection criteria being market knowledge and expertise, reputation, independence and observance of professional
standards. 
 
3.4. PRINCIPAL ACCOUNTING POLICIES (CONTINUED) 
 
On each reporting date, the Group, according to its accounting policies, assesses if there is any change on the carrying
values of assets and liabilities being subject to periodic reassessment and revaluation. For the above mentioned
assessment, the management verifies considerable inputs applied to the last asset or liability evaluation, confirming data
used for the evaluation against contracts and other relevant documents. For disclosing fair values, the Group's assets and
liabilities are categorized according to their nature, characteristics, potential risks stemming from specific asset or
liability categories, as well as fair value hierarchy described above. 
 
Investments and other financial assets 
 
Financial assets falling under the scope of IAS 39 are classified based on their nature and their characteristics in
financial assets at fair value through profit and loss, loans and receivables, held-to-maturity investments, and
available-for-sale financial assets. When financial assets are recognized initially, they are measured at fair value, plus,
in the case of investments not at fair value through profit and loss, directly attributable transaction costs. The Group
determines the classification of its financial assets after initial recognition and, where allowed, re-evaluates this
designation at each financial year-end. All regular purchases and sales of financial assets are recognized on the trade
date, i.e. the date that the Group commits to purchase or sell the asset. Regular purchases or sales are purchases or sales
of financial assets that require delivery of assets within the period generally established by law or convention in the
market place. 
 
Financial assets at fair value through profit and loss 
 
This category includes financial assets classified as held for trading. Financial assets are classified as held for trading
if they are acquired for the purpose of selling in the near term unless they are designated as effective hedging
instruments. Gains or losses on investments held for trading are recognized in the income statement. 
 
Loans and receivables 
 
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. Such assets are carried at amortized cost using the effective interest method. Gains and losses are
recognized in income when the loans and receivables are derecognized or impaired, as well as through the amortization
process. 
 
Held - to - maturity investments 
 
Financial assets with fixed payments and fixed maturity are classified as held - to - maturity, when the Group has the
intention and the ability to hold them to maturity. Investments which are held for an infinite or non - defined maturity
cannot be classified into this category. 
 
Held - to - maturity investments are carried at amortized cost using the effective interest method. Gains and losses are
recognized in the income when the investments are derecognized or eliminated as well as through the amortization process. 
 
Available-for-sale investments 
 
Available-for-sale investments are those non-derivative financial assets that are not classified in any of the three
preceding categories. After initial recognition available-for sale investments are measured at fair value with gains or
losses being recognized as a separate component of equity. On disposal, impairment or de-recognition of the investment, the
cumulative gain or loss is transferred to the income statement. The fair value of investments that are actively traded in
organized financial markets is determined by reference to quoted market bid prices at the close of business on the balance
sheet date. For investments where there is no active market, fair value is determined using valuation techniques. Such
techniques include using recent arm's length market transactions; reference to the current market value of another
instrument, which is substantially the same; discounted cash flow analysis and option pricing models. When the fair value
cannot be determined reliably, the investments are measured at their acquisition cost. 
 
If an available-for-sale asset is impaired, an amount comprising the difference between its acquisition cost (net of any
principal payment and amortization) and its current fair value, less any impairment loss previously recognized in profit or
loss, is transferred from equity to the income statement. Impairment losses that have been recognized previously in the
income statement and relate to investments in shares are not reversed through the profit or loss. Reversals of impairment
losses on bonds are reversed through profit or loss if the increase in their fair value can be objectively related to an
event occurring after the impairment loss was recognized in profit or loss. 
 
Impairment of financial assets 
 
The Group assesses at each balance sheet date whether a financial asset or group of financial assets is impaired. 
 
3.4. PRINCIPAL ACCOUNTING POLICIES (CONTINUED) 
 
Assets carried at amortized cost 
 
If there is objective evidence that an impairment loss on loans and receivables carried at amortized cost has been
incurred, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of
estimated future cash flows (excluding future credit losses that have not been incurred). 
 
The cash flows are discounted at the financial asset's original effective interest rate (i.e. the effective interest rate
computed at initial recognition). The asset's carrying amount can be impaired either through disposal or through
establishment of a provision. The carrying amount of the asset is reduced through use of an allowance account. The amount
of the loss shall be recognized in profit or loss. The Group first assesses whether objective evidence of impairment exists
individually for financial assets that are deemed significant, while these which are not, are grouped and assessed as a
whole. If it is determined that no objective evidence of impairment exists for an individually assessed financial asset,
whether significant or not, the asset is included in a group of financial assets with similar credit risk characteristics
and that group of financial assets is collectively assessed for impairment. Assets that are individually assessed for
impairment and for which an impairment loss is or continues to be recognized are not included in a collective assessment
for impairment. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be associated
objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is
reversed. Any subsequent reversal of an impairment loss is recognized in the income statement, to the extent that the
carrying value of the asset does not exceed its amortized cost at the reversal date. 
 
Inventories 
 
Inventories include consumables, materials, lignite and liquid fuel. 
 
Materials and consumables 
 
Materials and consumables are stated at the lower of cost or net realizable value, which takes under   consideration the
net realizable value of the end product in which they are incorporated. The cost is determined   using the weighted average
method. These materials are recorded in inventory when purchased and then are   expensed or capitalized to plant, as
appropriate, when installed. 
 
Lignite (self-produced and purchased) 
 
The cost of lignite inventories which have been excavated / purchased but not yet consumed at the date of the financial
statements is stated at the balance sheet. Lignite inventories are stated at the lower of production cost / purchase cost
and net realizable value, which takes under consideration the net realizable value of the end product in which they are
incorporated with the cost being determined using the weighted average production / purchase cost method. Production /
purchase cost mainly consists of expenses incurred in order for lignite inventories to be used for electricity generation. 
 
Liquid fuel 
 
Liquid fuel is stated at the lower of cost and net realisable value which takes under consideration the net realisable
value of the end product in which it is incorporated. The cost of liquid fuel reflects purchase price plus any taxes (other
than VAT), levies and other costs necessary to bring it to its present location and condition and is determined using the
weighted average method for the period. Liquid fuel costs are expensed as consumed and are separately reflected in the
accompanying statements of income. 
 
Cash and cash equivalents 
 
The Group considers time deposits and other highly liquid investments with original maturity of three months or less, to be
cash equivalents. 
 
Share capital 
 
Share capital represents the par value of the Parent Company's shares fully issued and outstanding. Any proceeds in excess
of par value are recorded in share premium. Expenses related directly to new shares issuance are recognized directly to
Equity net of proceeds. 
 
3.4. PRINCIPAL ACCOUNTING POLICIES (CONTINUED) 
 
De-recognition of financial assets and liabilities 
 
Financial Receivables 
 
Financial receivables (or, where applicable a part of a financial receivable or part of a group of similar financial
receivables) are derecognized when: (1) the rights to receive cash flows from the asset have expired, (2) The Group retains
the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to
a third party under a "pass-through" arrangement and (3) The Parent Company/ Group has transferred its rights to receive
cash flows from the asset and either: (a) has transferred substantially all the risks and rewards of the assets, or (b) has
neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the
asset. Where the Group / Parent Company has transferred its rights to receive cash flows from an asset and has neither
transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the
asset is recognized to the extent of the Group's continuing involvement in the asset. Continuing involvement that takes the
form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and
the maximum amount of consideration that the Group could be required to repay. Where continuing involvement takes the form
of a written and/or purchase option (including a cash-settled option or similar provision) on the transferred asset, the
extent of the Group's continuing involvement is the amount of the transferred asset that the Group may repurchase, except
that in the case of a written put option (including a cash-settled option or similar provision) on an asset measured at
fair value, the extent of the Group's continuing involvement is limited to the lower of the fair value of the transferred
asset and the option exercise price. 
 
Financial liabilities 
 
Financial liabilities are derecognized when the obligation under the liability is discharged or cancelled or expires. Where
an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms
of an existing liability are substantially modified, such an exchange or modification is treated as a de-recognition of the
original liability and the recognition of a new liability, and the difference in the respective carrying amounts is
recognized in profit or loss. 
 
Offsetting of financial assets and liabilities 
 
Financial assets and liabilities are offset and the net amount is presented in the balance sheet only when the Group has a
legally enforceable right to set off the recognized amounts and intends to either settle such asset and liability on a net
basis or realize the asset and settle the liability simultaneously. 
 
Interest bearing loans and borrowings 
 
All loans and borrowings are initially recognized at cost, being the fair value of the consideration received net of issue
costs associated with the borrowing. After initial recognition, they are subsequently measured at amortized cost using the
effective interest rate method. Amortized cost is calculated by taking into account any issue costs. 
 
Provisions for risks and expenses, contingent liabilities and contingent claims 
 
Provisions are recognised when the Group has a present legal, contractual or constructive obligation as a result of past
events and it is probable that an outflow of resources embodying economic benefits will be required to settle this
obligation, and a reliable estimate of the amount of the obligation can be made. Provisions are reviewed at each balance
sheet date and adjusted to reflect the present value of the expenditure expected to be required to settle the obligation.
Contingent liabilities are not recognised in the financial statements but are disclosed unless the possibility of an
outflow of resources embodying economic benefits is remote. Contingent assets are not recognised in the financial
statements but are disclosed when an inflow of economic benefits is probable. 
 
Post-retirement benefits 
 
The Parent Company employees and pensioners of the Group  are entitled to the supply of electricity at reduced tariffs.
Such reduced tariffs to pensioners are considered to be retirement obligations and are calculated at the discounted value
of the future retirement benefits deemed to have accrued at year-end based on the employees 
 
earning retirement benefit rights steadily throughout the working period. Retirement obligations are calculated on the
basis of financial and actuarial assumptions. 
 
Net costs for the period are included in the payroll cost in the statements of income and consist of the present value of
the benefits earned in the year, decreased by the benefits offered to the pensioners. The retirement benefit obligations
are not funded. Unrecognized actuarial gains or losses of the projected benefit obligation at the beginning of each period
are recognized in the comprehensive statement of income. 
 
3.4. PRINCIPAL ACCOUNTING POLICIES (CONTINUED) 
 
Subsidies for fixed assets 
 
The Group obtains subsidies from the Hellenic Republic and from the European Union (through the investment budget of the
Hellenic Republic) in order to fund specific projects executed through a specific time period. Subsidies are recorded upon
collection and are reflected as deferred income in the accompanying balance sheet. Amortization is accounted for in
accordance with the remaining useful life of the related assets, and is included in depreciation and amortization in the
accompanying statements of income. 
 
Customers and producers contributions in the construction of fixed assets and Contributions of fixed assets from customers
and producers 
 
Customers and producers, who are connected with the transmission and distribution network, are required to participate in
the initial network connection cost (metering devices, lines, substations, etc.) or other type of infrastructure, through
the deposit of institutionally defined amounts or through fixed assets contribution (few cases). Until December 31, 2008,
due to the lack of detailed accounting guidance under current IFRS, the Group  has elected to record upon collection of
contribution from customers and producers., for the construction of assets needed for their connection with the network,
and were reflected in the Balance Sheet as deferred income. Their amortization was accounted for in accordance with the
remaining useful life of the related financed assets and was included in the depreciation and amortisation of the income
statement (the Group / Parent Company implemented the accounting policy used for contributions). From January 1st, 2009,
the Group / Parent Company implementing earlier the Interpretation 18 "Transfers of Assets from Customers" recognize the
cash and the assets received from customers and producers needed for their connection with the network, in fair values in
the Income Statement. For cash received until December 31st, 2008, the Group / Parent Company used the previous adopted
accounting policy. 
 
Derivative financial instruments and hedging 
 
The Parent Company uses derivative financial instruments to hedge its risks associated with interest rate, of foreign
currency and liquid fuel prices fluctuations consumed by the Parent Company. Such derivative financial instruments are
measured at fair value at the balance sheet date. The fair value of such derivatives is determined by reference to fair
values for similar instruments and is confirmed with the respective financial institutions with which the Parent Company
has concluded the relative contacts. The effective part of hedges that qualify for hedge accounting is recognized directly
to equity if it is related to cash flow hedges while the ineffective part is charged to the separate income statement. If
the hedge is related to effective fair value hedges, the gain or loss from remeasuring the derivative hedging instrument at
fair value is recognized in profit or loss and the gain or loss on the hedged item attributable to the hedged risk adjusts
the carrying amount of the hedged item and is also recognized in profit or loss. Under cash flow hedge accounting, when the
hedged transaction results in the recognition of non-financial asset or a non-financial liability, then, at the time the
asset or liability is recognized the associated gains or losses that had previously been recognized in equity are included
in the initial measurement of the acquisition cost or other carrying amount of the asset or liability. For all other cash
flow hedges, the gains or losses that are recognized in equity are transferred to the income statement in the same year in
which the hedged transaction affects the net profit and loss. For derivatives that do not qualify for hedge accounting, any
gains or losses arising from changes in fair value are taken directly to net profit or loss for the year. 
 
Certain derivatives, although characterized as effective hedges based on the Group's policies, do not meet the criteria for
hedge accounting in accordance with the provisions of IAS 39 and, therefore, gains or losses are recognized in the income
statement. 
 
Income taxes (current and deferred) 
 
Current Income Taxes 
 
Current income tax expense consists of income taxes for the current year based on the Parent Company's profits and on the
other companies of the Group as adjusted in their tax returns and, provisions for additional income taxes to cover
potential tax assessments which are likely to occur from tax audits by the tax authorities, using the enacted or
substantively enacted tax rates at the close of business on the balance sheet date. 
 
Deferred Income Taxes 
 
Deferred income tax is calculated, using the liability method, on all temporary differences at the balance sheet date
between the tax base and the book value of assets and liabilities. Deferred income tax liabilities are recognized for all
taxable temporary differences, except where the deferred income tax liability arises from initial recognition of goodwill
or of an asset or of a liability in a transaction that is not a business combination and, at the time of the transaction,
affects neither the accounting profit nor taxable profit or loss. Deferred tax assets are recognized for all deductible
temporary differences carried forward as well as unused tax credits and unused tax losses, to the extent that it is
possible that taxable profit will be available against the deductible temporary differences and the carried forward of
unused tax credits and unused tax losses can be utilized. 
 
3.4. PRINCIPAL ACCOUNTING POLICIES (CONTINUED) 
 
No deferred income tax asset relating to the deductible temporary differences is recognized when it arises from the initial
recognition of an asset or liability in a transaction that is not a business combination and, at the time of the
transaction, affects neither the accounting profit nor taxable profit or loss. Deferred tax assets are reviewed at each
balance sheet date and are reduced at the time where it is not considered possible that enough taxable profits will be
presented against which, a part or the total of assets can be utilized. Deferred income tax assets and liabilities are
measured at the tax rates that are expected to apply to the year when the asset is realized or the liability is settled,
based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date. Income tax
relating to items recognized directly in other comprehensive income is recognized in other comprehensive income  and not in
the income statement. 
 
Defined contribution plans 
 
The Parent Company and the Group recognize as an expense the contribution for the employees' services payable to IKA -ETAM
/TAP DEH, ETEA, TAYTEKO (defined contribution plans) and as a liability the amount that has not been paid yet. 
 
Revenue recognition 
 
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and the revenue
can be reliably measured. Revenues from all types of electricity sales are accounted for on an accrual basis. At each
balance sheet date, unbilled revenue is recorded to account for electricity delivered and consumed by customers but not yet
billed.  Deductions from reduced consumption of electricity as defined by specific return policies of the Group are
accounted when they can reliably be estimated (based on historical data, if available or on prior year's data). Revenues
from rendering of services is recognized based on the stage of completion of the service rendered and to the extent that
the related receivable will be collected. Revenue from interest is recognized within the period incurred and revenue from
dividends is recognized when the Group's right on such dividends is approved by the respective bodies of the companies'
that declare them. 
 
Electricity 
 
Electricity costs are expensed as purchased and separately reflected in the accompanying statement of income. 
 
Leases 
 
The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement at
inception date: whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the
arrangement conveys a right or use the asset. 
 
Group as a lessee 
 
Leases, which do not transfer to the Group substantially all the risks and rewards of ownership of the asset are classified
as operating leases. Operating lease payments are recognized as an expense in the statement of income on a straight line
basis over the lease term. 
 
Group as a lessor 
 
Leases where the Group does not transfer substantially all the risks and rewards of ownership of the asset are classified
as operating leases. Operating lease payments are recognized as revenue in the statement of income on a straight line basis
over the lease term. 
 
Earnings/ (Losses) per share 
 
The basic and diluted earnings per share, are computed by dividing net income by the weighted average number of shares
outstanding during the relevant year. The weighted average number of shares is derived by adding the existing shares, that
the share capital is divided, with the rights that the Parent Company owns and potentially could exercise. 
 
Subsequent events 
 
Post period-end events that provide additional information about the Group's position at the balance sheet date (adjusting
events), are reflected in the financial statements. Post-period-end events that are not adjusting events are disclosed in
the notes. 
 
Non-current Assets Held for Sale and Discontinued Operations 
 
The Group classifies a non-current asset (or disposal group) as held for sale, if its carrying amount will be recovered
principally through a sale transaction rather than through continuing use. In sale transactions, all  exchanges of non -
current assets for other non - current assets are included, if the transaction has a commercial substance. 
 
3.4. PRINCIPAL ACCOUNTING POLICIES (CONTINUED) 
 
The basic requirements for a non-current asset (or a disposal group) to be classified as held for sale are that it must be
available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such
assets / groups and its sale must be highly probable. 
 
Immediately, before the original  classification of the non - current asset or disposal group as held for sale , the
current asset or disposal group is evaluated according to the adopted IFRS's at the date of classification. 
 
Non - current assets (or a group of assets and liabilities) classified as held for sale will be measured at the lower of
its carrying amount and fair value less costs to sell and any possible resulting impairment losses will be recognized in
the income statement. Any subsequent increase in fair value will be recognized in the income statement, but not in excess
of the cumulative impairment loss which was previously recognized. 
 
No depreciation or amortization is recognized on a non-current asset (or non-current assets that are included in a disposal
group) from the date that is classified as held for sale. 
 
Operating Segment 
 
According to L.  4001/2011, the Group is obliged to prepare and integrate in its financial statements, accounting unbundled
financial statements for each segment. These include the Parent Company's activities in the Sectors of Mines, Generation,
Distribution, Supply. In 2011, the Transmission activity was transferred to IPTO which is a PPC's subsidiary, according to
the model of the Independent Transmission Operator and all organizational units as well as activities of HTSO that
pertained to management, operation, development and maintenance of the Transmission System apart from the Daily Ahead
Schedule. In 2012 the Distribution Activity was transferred to HEDNO. By the contribution of the General Division of 
Distribution as well as the Department of Islands' Region, to its subsidiary HEDNO, PPC has maintained the ownership of the
fixed assets as well as the assets of the Distribution Network and the Non- Interconnected Islands' Network. As a result,
information disclosures by operational segment  as well as the principles of segment as presented in IFRS 8 "Operating
Segment" are stated in Appendix 1. 
 
3.5.      new standards AND INTERPRETATIONS issued but not yet effective 
 
The new standards, amendments / improvements of standards or Interpretations listed below, 

- More to follow, for following part double click  ID:nRSG9898Bh