REG - Public Power Corp - Half-year Report <Origin Href="QuoteRef">DEHr.AT</Origin> - Part 4
26/09/2017 16:26
- Part 4: For the preceding part double click ID:nRSZ8836Rc
Interest and dividends received 143,408 43,729 150,588 69,419
Investments (299) (42) (150) -
Proceeds from the sale of IPTO S.A. 623,208 - 623,208 -
Discontinued operations (20,320) (88,504) - -
Net Cash used in Investing Activities 548,583 (271,264) 584,076 (145,045)
Cash Flows from Financing Activities
Net change in short term borrowings - (50,000) - (50,000)
Proceeds from interest bearing loans and borrowings 246,225 100,000 246,225 65,000
Principal payments of interest bearing loans and borrowings (469,167) (183,968) (469,167) (148,968)
Interest paid and loans' issuance fees (95,939) (106,804) (98,091) (108,389)
Dividends paid - - (46) -
Discontinued operations (109,650) 22,266 - -
Net cash used in Financing Activities (428,531) (218,506) (321,079) (242,357)
Net increase/ (decrease) in cash and cash equivalents 230,508 311,330 286,233 62,082
Cash and cash equivalents at the beginning of the period including IPTO S.A. 501,118 451,670 149,414 197,592
Cash and cash equivalents from discontinued operations (219,829) (188,433) - -
Cash and cash equivalents at the end of the period 511,797 574,567 435,647 259,674
The accompanying notes are an integral part of these interim, condensed, consolidated and separate financial statements.
SELECTED DISCLOSURE NOTES
1. Corporate Information
Public Power Corporation S.A. ("PPC" or the "Parent Company") was established in 1950 in Greece for an unlimited duration
as a State owned and managed corporation for electricity generation, transmission and distribution throughout Greece.
In 1999, the Hellenic Republic enacted Law 2773/1999 ("the Liberalization Law"), which provided for, among other
provisions, the transformation of PPC into a société anonyme. PPC's transformation to a société anonyme was effected on
January 1, 2001, by virtue of Presidential Decree 333/2000 and its duration was set for 100 years.
Effective December 2001, PPC's shares are listed on the Athens and the London Stock Exchanges.
In 2007 the Parent Company proceeded to the spin- off of its RES activity and its contribution to its wholly owned
subsidiary PPC Renewables S.A.
On December 1st 2011 the Parent Company proceeded to the spin - off of its General Division of Transmission and the
contribution to its wholly owned subsidiary "Independent Power Transmission Operator" (IPTO S.A.).
On June 15th the Parent Company lost control of the subsidiary IPTO SA while on June 20th 2017 the full ownership
unbundling of IPTO SA was completed as provided for in articles 142 et seq. Of Law 4389/2016.
On May 1st 2012 the spin -off of the General Division of Distribution was completed by its contribution to PPC's wholly
owned subsidiary "Hellenic Electricity Distribution Network Operator" (HEDNO S.A.).
The accompanying financial statements include the separate financial statements of PPC and the consolidated financial
statements of PPC and its subsidiaries ("the Group").
PPC headquarters are located at 30, Chalkokondili Street, Athens, 104 32 Greece.
At June 30th 2017, the number of staff employed by the Group was 17,663 (2016: 18,742 including 1,400 employees of IPTO
SA). At June 30th 2017, 90 employees of the Group (2016: 91 including 5 employees of IPTO SA), have been transferred to
several State agencies (ministries, organizations, etc.), out of which,86 were compensated by PPC (2016: 83 including 4
employees of IPTO SA). The total payroll cost of such employees, for the first six month period of 2017 amounted to Euro
1,717 (2016: Euro 1,650 including Euro 70 relating to IPTO SA). Additionally, PPC's transferred employees in EFKA (Greek
Single Social Security Institution) amounted to 272 on June 30th 2017, for which payroll amounted to Euro 5,865.
PPC Group generates electricity in its own 61 power generating stations of the Parent Company and from the additional
stations which belong to its wholly owned subsidiary PPC Renewables and distributes electricity to consumers through its
own distribution lines for Medium and Low voltage of 237,727 kilometres which are managed by its wholly owned subsidiary
"Hellenic Distribution Network Operator (HEDNO S.A.)". PPC Group has also constructed a 950 kilometres Network of High
Voltage lines pertaining to Distribution facilities and approximately 164 kilometres of urban fibre optics network
Lignite consumed by the Parent Company's lignite-fired power stations is extracted, mainly, from its own lignite mines.
2. Legal Framework
CHANGES IN THE LEGAL FRAMEWORK FOR THE ELECTRICITY MARKET - 1st Half 2017
GENERAL PROVISIONS FOR THE INTERNAL ELECTRICITY MARKET
· According to the Decision 33 of the Government's Council Economic Policy (OG B' 1472/25.05.2016) the HRADF's Asset
Development Plan (ADP) was approved. Specifically, for PPC, the potential sale of 17% of its shares is included in the
Asset Development Plan (ADP).
· According to the provisions of Law 4425/2016, the transfer of 34% of PPC's shares which the Greek State owns, to the
Public Holding Company under establishment will be effected. Law 4389/2016 "Urgent Provisions for the implementation of the
Financial Targets and Structural Reforms Agreement and other provisions" provides, among others, the following:
2. LEGAL FRAMEWORK (CONTINUED)
· The procedures and details of the full ownership unbundling of IPTO from PPC S.A. are set (articles 142-149 and
152). According to the specific articles, PPC must:
(a) Sell, through an international tender (Invitation to Submit an Expression of Interest), at least 20% of IPTO's shares
in a strategic investor who will be either (a) a Transmission system operator, member of the ENTSO-E, or a transmission
system operator participating in a transmission system operator being a member of ENTSO-E or (b) a consortium in which a
transmission system operator of case (a) will be participating
(b) Establish a holding company, to which it will transfer in kind 51% of IPTO's Shares. PPC will be initially the sole
shareholder of that company and later on PPC will transfer all shares of the company to its shareholders, through a share
capital decrease and a distribution in kind.
(c) Sell at least 25% of IPTO's shares in a Greek public company (named Public Holding Company ADMIE (IPTO) Société Anonyme
- P.H.C. ADMIE(IPTO)S.A.). The price per share for that sale will be equal to the price to be paid by the strategic
investor as above.
Following the amendment of the Law 4389/2016, by Law 4447/2016, the share price was deemed to be determined after the
valuation of 25% of the share capital of IPTO as an independent total. The valuation will be carried out by an independent
valuator, which will be jointly selected by P.H.C. ADMIE (IPTO) S.A. and PPC S.A..
The Share Purchase Agreement («SPA») should have been concluded by 28 February 2017, following the earlier transfer of
PPC's shares held in the Holding Company to its shareholders, while according to Law 4393/2016 the deadline for selecting
the Preferred Strategic Investor was shortened by one month and should have been be concluded until 31 October 2016.
In compliance with Law 4389/2016, the Invitation to Submit an Expression of Interest was issued and published following the
July 11th 2016 decision of the General Meeting of PPC S.A. Shareholders, which set and the percentage of sale of IPTO's
shares in a strategic investor to 24%.
Four companies submitted an Expression of Interest, as follows :
• China Southern Power Grid.
• China State Grid International Development Limited, Hong Kong,
• RTE International on behalf of RTE Reseau de Transport d'Electricite S.A., and
• TERNA - Rete Elettrica Nazionale S.p.A. in partnership with F2i SGR S.p.A,
China State Grid International Development Ltd was selected as the Preferred Strategic Investor offering a bid of Euro 320
mil. The sale of 24% of IPTO's shares to the preferred investor was approved by PPC's Shareholders General Meeting on
November 24th 2016, while the SPA was signed on December 16th 2016.
On January 17th 2017, the PPC's Shareholders General Meeting approved (a) the establishment of a 100% subsidiary company
under the name "Holding Company ENERGIAKI S.A. - (EN.SYM)", b) the contribution in kind of the 51% of IPTO's shares held by
PPC to EN.SYM as the initial share capital plus Euro 70 in cash and c) the reduction of PPC's share capital by an amount
equivalent to the initial share capital of EN.SYM and the distribution in kind of the shares of EN.SYM to existing
shareholders of PPC at their proportionate interest in the share capital of PPC.
Furthermore, with a subsequent amendment of Law 4389/2016 by Law 4467/2017, it was stipulated that immediately after PPC's
carve out to its shareholders of the shares that it holds in ADMIE (IPTO) Holding S.A. (former Holding Company ENERGIAKI
S.A.), P.H.C. ADMIE (IPTO) S.A. will acquire all the Shares of ADMIE (IPTO) Holding S.A. to be held by the Greek State and
HRADF.
In May 2017, PPC's General Shareholders Meeting approved the transfer of 25% of the share capital of IPTO to P.H.C. ADMIE
(IPTO) S.A. for a price determined by an independent valuator (Euro 295.6 million) as well as the Share Purchase Agreement
- SPA which was signed.
The aforementioned corporate actions were completed within the stipulated timeframes, while the introduction of ADMIE
(IPTO) Holding S.A. in the main securities market of the Athens Stock Exchange (ATHEX) was carried out.
2. LEGAL FRAMEWORK (CONTINUED)
More specifically, on June 15th 2017 PPC's shares were traded without the right to return in kind to the shareholders of
PPC of the shares of ADMIE (IPTO) HOLDING SA (51% of the share capital of IPTO SA), while on June 20th 2017, the transfer
of the 25% and 24% of the share capital of IPTO to P.H.C. ADMIE (IPTO) S.A. and to the Strategic Investor (State Grid
Europe Limited) respectively was completed.
· The articles of association of P.H.C. ADMIE (IPTO) S.A were approved, by which matters concerning the share capital,
the procedure for increasing or decreasing the share capital, the rights of the shareholder, the establishment,
convocation, and the responsibilities of the Shareholders General Meeting and the Board of Directors, the auditors, the
distribution of profits, the annual financial statements, its resolution and liquidation, its first fiscal year, as well as
any other relevant matter arising from current legislation on société anonymes are regulated. The Greek State is
represented by the Minister of Environment and Energy or his legal representative
· According to the Decision 35 (OG B' 1473/25.5.2016) of the Government's Council for Economic Policy for the
introduction of forward electricity products, the annual quantity of electricity for the future products to be auctioned in
2017 will amount to 681MWh/h (Volume : 5,966,056 MWh) (RAE Decision 619/2016). The allocation of that annual quantity in
individual future products with physical delivery will be effected through four auctions, as follows: 145 MWh/h on January
31st 2017, 145 MWh/h on April 26th 2017, 145 MWh/h on July 19th 2017 (According to an announcement by EMO) and 246 MWh/h on
October 18th 2017. Within 2017 three (3) auctions have been completed for a total 435 MW, with the product price ranging
between E37.37 / MWh and E43.05 /MWh. with the mid-price being at E41.26 / MWh
Up to this date and during the mechanism's implementation, a significant variation between the total quantity of use
declarations and load declarations, especially in low load hours was observed and therefore RAE made regulatory
interventions (Amendment of the relevant Code of Transactions) to ensure the proper use of those products, as base
products, discouraging the submission of extremely high declarations covering peak loads, to increase the secondary market
liquidity and to further strengthen the usage purpose of the forward products (RAE Decision 184/2017).
· Law 4472/2017 was passed, amending the provisions of L. 4389/2016 concerning :
a) Arrangements for the establishment of an Electricity Sale Mechanism by PPC, pursuant to auctions of forward electricity
products with physical delivery and
b) Arrangements for the implementation of the full ownership unbundling of IPTO SA, pursuant to Directive 2009/72 / EC
In particular, the following amendments are introduced:
a) The annual rates of decrease of PPC's share in the retail market of the interconnected system, until the year 2019 in
relation to its share in August 2015 shall be as follows:
• For the year 2016: Eight percentage points (8%), with PPC's share standing at 87.24%.
• For the year 2017: Twelve percentage points (12%), with PPC's share standing at 75.24%.
• For the year 2018: Thirteen percentage points (13%), with PPC's share standing at 62.24%.
• For the year 2019: Thirteen percentage points (13%), with PPC's share standing at 49.24%.
b) The annual quantity of electricity that will be auctioned per year will be equal with the following percentages on the
total electricity quantity for the Interconnected System of the previous year :
· For the year 2016 : Eight percentage points (8%)
· For the year 2017 : Sixteen percentage points (16%). Physical deliveries of four percentage points (4%) from the
quantity for the year 2017 will begin on December 1st 2017.
· For the year 2018 : Nineteen percentage points (19%). Physical deliveries of six percentage points (6%) from the
quantity for the year 2018 will begin on December 1st 2018.
· For the year 2019 : Twenty two percentage points (22%). Physical deliveries of nine percentage points (9%) from the
quantity for the year 2019 will begin on December 1st 2019.
The aforementioned were approved with Decision 58 of the Government's Council for Economic Policy (OG B' 1690/16.05.2017),
which includes the updated Implementation Plan for NOME Auctions. The mechanism to be applied in the first sub-period will
be a Special Purpose Regulated Mechanism, with the annual quantities of electricity auctioned to be equal to the
above-mentioned percentages multiplied by the total quantity of electricity for the interconnected system of the previous
year.
2. LEGAL FRAMEWORK (CONTINUED)
The joint ministerial decision setting the minimum price of the forward products to be auctioned (starting auction price)
will be reviewed in June of each year, taking into account the published financial statements of PPC SA. for the previous
year and the revised cost of CO2 emission rights prevailing in December of the previous year. It is noted that PPC's market
share reduction target until 2019 remain unchanged.
Concerning the methodology for determining the minimum bid price for the forward electricity products, to be auctioned,
RAE's Impact Report on the six - month implementation of NOME Auctions to be published on July 2017 will be taken into
account. In the event that the decrease of PPC's retail market share in the Interconnected System falls short of at least
two (2) percentage points of the reduction target for the corresponding semester, as determined by the division of the
annual target in the corresponding semesters, RAE will increase the quantities to be auctioned for the first (and not the
third, as was applicable) six month - period after the end of the six month reference period, by an equivalent increase in
the quantities to be auctioned during that six-month period. At the same time, an additional Joint Semi-Annual Impact
Report issued by the Greek Authorities and the Institutions is introduced in December 2017 and every six months thereafter,
which, taking into account the introduction of the Target Model in the electricity market and the full implementation of
structural measures for lignite, will evaluate (a) a possible adjustment of the NOME mechanism, including the modification
of forward electricity product quantities to be auctioned after the implementation of structural measures for lignite, and
(b) the possible need to adopt additional structural measures in line with the characteristics of PPC's power generating
stations portfolio.
Following the above, based on the Joint Ministerial Decision ÁÐÅÇË/Ã/Ö1/ïéê.178634 (Official Gazette B2278 / 04.07.2017),
the resulting minimum bid price for the auctioned forward electricity products (starting price) for June 2017 is set to
thirty-two euros and five cents per MWh (32.05 E / MWh) (compared to 37.37 E / MWh set in O.G. B2848 / 07.09.2016). Also,
based on Decision 68 of the Government's Council for Economic Policy, PPC's prepayment rate paid which is paid after the
primary auction, was set at 3% on the valuation of the distributed product.
· Decision 57 / 2017 of the Government's Council for Economic Policy, on the structural measures for PPC's access to
lignite was published, which concerns the binding remedial structural measures, which Greece will propose to the
Commission's Directorate General for Competition (DG Comp.) until November 2017 and to be implemented by June 2018 in
compliance with the decisions C (2008) 824) and C (2009) 6244 of the European Commission on PPC's monopoly access to
lignite, which became irreversible after the (2016) 733 and (2016) 748 decisions of the General Court of the European
Union. The binding remedial structural remedies will be designed in accordance with the following principles :
• The measures will include PPC's disinvestment of lignite power generating units to existing or new alternative
suppliers and other investors.
• PPC will not have any involvement or connection with any element of disinvestment, including preferential
electricity supply. In line with the Commission's communication on structural measures acceptable under Regulation 139/2004
and Regulation 802/2004, the purchaser (s) a) will be independent of and will not have any association with PPC and its
affiliated companies; b) have the financial resources, proven know-how and incentive to maintain and develop the
disinvested portfolio of power generating stations as a viable and active competitive power in relation to PPC and other
competitors, and c) on the basis of the information available, they would not cause or threaten to cause prima facie
competition concerns and they would not create a risk of delay in the implementation of the structural measures.
• Disinvestment will account for about 40% of PPC's lignite power generating capacity. The exact percentage will be
determined during technical discussions with the European Commission in accordance with the abovementioned decisions. The
disinvestment will include the associated lignite reserves, in accordance with paragraph 248.1 of the Commission's Decision
C (2008) 824, which states that "the Hellenic Republic could reallocate some of the rights currently enjoyed by PPC in this
case and given that the lignite reserves are connected to the nearby electricity generating units, access to the lignite
reserves should be combined with the transfer of the ownership or the franchise of the respective unit ". The disinvestment
will have equivalent economic characteristics to PPC's lignite power generating capacity, particularly in terms of
efficiency and life, reflecting the start and end of lignite power generating capacity.
2. LEGAL FRAMEWORK (CONTINUED)
· On September 6th 2017, RAE put into public consultation a proposal for a new Transitory Flexible Compensation
Mechanism following the expiration on April 30th 2017 of the Transitional Flexibility Compensation Mechanism. The new
proposed transitional mechanism differs from the previous one in that it will be purchasing and will concern two (2)
flexibility products, a three-hour and a one-hour, the cost of which will be derived from supply and demand, but will not
exceed the maximum of E 25000 / MW. The new mechanism is similar to the old one, since it entirely excludes lignite fired
units from the flexibility option and also discriminates against hydro power plants and benefits open and combined cycle
gas plants. RAE's consultation ended on September 22nd 2017.
HELLENIC ELECTRICITY TRANSMISSION SYSTEM (HETS)
· RAE by its Decision 404/2016, approved the Required Revenue of the HETS Operator for 2017 to the amount of Euro 202.6
mil. Based on the required revenue of 2017, the new use of transmission system charges were determined (RAE Decision
456/2016). Moreover, RAE by its Decision 253/2015 amended the provisions of the Grid Control Code and of the methodology
for the determination of the Required Revenue so that interconnection rights auction costs (clause Ð3) are taken into
account.
· With its 394/2016 decision (Use of Congestion Income, from the country's international interconnections access
rights, for the year 2017), RAE approved the use of Euro 46 mil., from the Reserve Account (Interconnections Transfer
Capacity Allocation according to article 178 of the Greek Grid Control Code For Electricity) that IPTO keeps, for the
reduction of the Annual Cost for the use of the Transmission System, for the year 2017.
· Following RAE's Decision 67/2017 (OG B 774 / 13.03.2017) RAE monitors and oversees the progress of the implementation
of the Markets and the elaboration on the individual Codes by the Market Operators and, within the framework of its
responsibilities, decides on the issuance of directions to the relevant Operators for the preparation of the Market Codes
provided for in Law 4425/2016, distinct for each of these Markets and communicates them to IPTO and EMO for their
respective actions.
· According to RAE's Decision 346/2017, the coefficients for the penalty calculation of the Transitory Flexibility
Compensation Mechanism as well as the Deviation Clearing Schedule were determined with appropriate modifications to the
Greek Electricity Transmission System Management Code and the Market Clearing Manual
· IPTO S.A. was certified as an Ownership Unbundled Transmission Operator in the context of its full ownership
unbundling from PPC S.A. and in compliance with the fact that it is now under the control of a person or persons from a
third country or third countries (RAE Decision 475/2017)
· For the year 2017 in the context of the Mechanism of Settlement between the Operators of the Transmission System, the
System Marginal Price was approved as the basis for calculating the cost of losses and the unit cost of losses at E48,7 /
MWh, according to IPTO's recommendation (RAE Decision 514/2016).
HELLENIC ELECTRICITY DISTRIBUTION NETWORK (HEDN)
· The Annual Cost and the Required Revenue for the use of HEDN were approved by RAE for 2017 by its Decision 454/2016,
amounting to Euro 753.7mil. and Euro 741.8 mil. respectively. Based on the required revenue of 2017, the new use of
distribution network charges were set (RAE Decision 455/2016).
· HEDNO published the announcement for the market opening in Rhodes island on January 2nd 2017, following the adoption
of all the necessary methodologies for the market operation in the NII (RAE Decisions 46/2016, 47/2016 and 238/2016) and
pursuant to L.4414/2016, according to which Rhodes island is no more integrated in the derogation regime for the supply of
electricity from January 1st 2017. It should be noted that the derogation (Decision 2015/536/EU) has been granted till the
full installation of the necessary infrastructure in the NII and, in any case, it expires on February 17th 2019
· With RAE's Decision 236/2017 (O.G. B 1871 / 30.05.2017) the Electricity Theft Manual was approved in accordance with
paragraph 23 of article 95 of the Electricity Distribution Network Code, which specifies the framework of locating
electricity thefts, the estimation methodology of the non-recorded energy and the procedure for collecting the
corresponding amounts.
2. LEGAL FRAMEWORK (CONTINUED)
Then with RAE's Decision 237/2017 (O.G. B 1946 / 07.06.2017), the framework, the general directions, the implementation
rules and any other necessary issues for the implementation of the provisions on the issue of electricity theft were
determined.
In particular, it was determined:
· The administratively determined price, the increment rate and the charges for the Network Operator's compensation for
the costs of tracking and managing the electricity thefts,
· The revenue allocation keys from established electricity thefts and the allocation of collected sums from electricity
thefts.
SPECIAL FEE FOR THE REDUCTION OF CO2 EMISSIONS (ETMEAR - ex RES Fee) and RES Special Account (ELAPE)
· Under the new RES operational support scheme (N. 4414/2016) and the provision for a new source of revenues for
the RES Special Account, electricity suppliers will be compelled to pay (from October 1st 2016) a compensation, to the
revenues of the RES special account, for the difference between the System Marginal Price (SMP) in the wholesale market and
the SMP that would had existed if the RES did not enter to the system (virtual SMP). Those costs will be determined in such
a way that the deficit of the Account will be reduced to zero at the end of the two year period 2016-2017, as the deficit
elimination at the end of 2017 is a commitment undertaken from the Greek State's part.
Specifically, for this extra charge, it was decided that the amount will be charged gradually to the Load Representatives
(Load Representatives Uplift Charge for RES Special Account) for the additional value of energy from RES stations, as the
latter is determined, based on the above methodology for the year 2016, will equal fifty percent (50%) of the charge
arising from the implementation of the methodology while for the year 2017 and then after will equal one hundred percent
(100%) of the charge (L. 4427/2016).
Due to the fact that from the implementation of this mechanism the resulting charges where very high, RAE, after the load
representatives' protests issued Decision 149/2017 establishing a maximum value for the hourly difference between the SMP
and the virtual SMP in order to lower the level of charges arising. RAE also established by the same Decision the
retroactive application of this threshold to all calculations from the date of the application of this mechanism. By
Decision 150/2017 RAE set a ceiling for this numerical difference at 15 E / MWh. Following the adoption of these decisions
the recalculation of charges arising from the mechanism is underway.
· RAE published the new charges for ETMEAR which are applicable from January 1st 2017 (RAE Decision 621/2016). In
specifying the allocation coefficients for the charges, the levels specified in the EU Guidelines on State Aid for the
environmental and energy sectors 2014-2020, as well as the provisions of Law 4414/2016 have been taken into account.
With its latest announcement on July 5th 2017, RAE announced that it had considered the necessity of adjusting ETEMAP's
charges at its plenary meeting on 29 June 2017 and decided that there was no need to review them in the present
circumstances.
RAE reached this Decision :
· After examining the evolution of revenues and expenses of ELAPE according to the "Monthly Report on the Special
Account of RES and CHP of the Interconnected System and Network - May 2017-settlement of April 2017" and found that ELAPE
continues to be surplus and its cumulative debt will be eliminated by the end of 2017
· ELAPE will remain in surplus throughout the year 2018
· The sharp and sudden fluctuations in ETMEAP charges bring a significant and multidimensional financial burden on all
final consumers and hence on the liquidity of the market.
It should be noted that the cumulative accounting debt of the RES Account of the Interconnected System and Network
according to Law 4414/2016 should be eliminated by the end of December 2017.
2. LEGAL FRAMEWORK (CONTINUED)
PUBLIC SERVICE OBLIGATIONS (PSOs)
· By RAE's Decision 640/2017 (O.G. B 3057 / 6.9.2017), the consideration due for the years 2015 - 2016 by Suppliers to
cover the cost of the SRT and of the Tariff for families with more than three children was approved.
• Respectively, with RAE's Decision 688/2017 (O.G. B 3058 / 6.9.2017), the temporary consideration to cover the costs of
providing PSOs in the Non-Interconnected Islands for the years 2014, 2015 and 2016 was approved.
Finally, with RAE's opinion 10/2017, the Authority issued an opinion to the Ministry of Environment and Energy on the
cumulative deficit of the PSO account created in the period 2012-2016, due to the fact that revenue remained stable from
2012 onwards according to Law 4067/2012.The Authority also submitted its proposals to cover this deficit by the year 2022.
A relevant reference for the above is also made in the "Major Risks-Uncertainties" section of the Board of Directors'
Interim Report.
OTHER ISSUES
· The maximum annual charge of electricity customers for covering Public Service Obligations (PSOs) was adjusted for
2017 amounting to Euro 773.795, according to the average annual change in the consumer price index, as published by the
Hellenic Statistical Authority (ELSTAT) (RAE Decision 241/2017).
The total consumptions of the beneficiaries of the Multi member family Tariff and of the Social Solidarity Tariff up to the
four-month consumption limits applicable to each category of beneficiaries are exempted from PSO charges, as well as the
four - month daylight consumption of 10,000 kWh for recipients of the Solidarity Service Invoice (Laws 4296/2014 and
4467/2017).
· The supply tariffs of PPC SA, as a Last Resort Electricity Supplier, were approved, for the fifth year of the service
(RAE Decision 223/2016) and uplift rates are as follows:
a) 5% for the HV customers on the wholesale market cost
b) 10% for MV customers on the current PPC's MV customer tariffs and
c) 10% for LV customers on the current PPC's LV customer tariffs
· The supply tariffs of PPC SA, as a Universal Service Electricity Supplier, were approved, for the fifth year of the
service (RAE Decision 226/2017) as follows:
The uplift rate amounts to 10% on the current PPC's LV customer tariffs (residential customers, as well as small businesses
with power not greater than 25kVA).
· As the appointment of PPC as the Last Resort and Universal Service Provider for a period of five (5) years expires on
March 22th 2018, RAE has issued relevant calls for expressions of interest and the regulation of the relevant terms and the
procedure used for the selection of the Last Resort and Universal Service Provider for a period of three (3) years
beginning on March 23rd 2018 (Decisions 573/2017 and 574/2017). It should be noted that in the absence of interest in the
invitations issued, the supplier with the largest market share per customer category is appointed by RAE's decision as the
provider of the Services.
· The Regulation on the Operation of the Energy Efficiency Obligation Scheme was approved, following Law 4342/2015
(Harmonization of the Greek legislation with the Energy Efficiency Directive 2012/27 / EU for the energy efficiency (OG B'
1242 / 11.04.2017). According to the Regulation, from January 1st 2017, an energy efficiency obligation scheme has been
introduced to ensure that energy distributors and / or energy suppliers in the retail market, which were designated as
obligated parties, achieve a cumulative energy savings target in the end-use by December 31st 2020. PPC SA, as an
electricity supplier, undertakes a savings target of 30 Ktoe (tonne of oil equivalent) for the year 2017
· With a Decision of the Minister of Environment and Energy (OG B' 1547 / 05.05.2017) the terms and conditions for the
development of photovoltaic plants by self-producers with energy and virtual energy offset were set out in. With virtual
clearing, it is possible to offset the electricity produced with the total electricity consumed by self-producers,
irrespective of the area it is produced and consumed. Also, the type and content of the Energy and Virtual Energy Clearing
Conventions have been determined. The implementation of energy netting or virtual energy netting will be extended in the
future, covering other renewable technologies also.
2. LEGAL FRAMEWORK (CONTINUED)
· The advance payments to the electricity suppliers in respect to the arrears of debts or other debts of the General
Government entities were approved (Decision of the Ministry of the Economy No.2/16456/DLD of Law 4455/23.02.2017). On March
8th 2017 an amount of Euro 50,000 was paid by the State Treasury to PPC. Subsequently, the granting of a cash advance to
the Public Power Corporation SA was approved, amounting to Euro 80,000 against the total annual liabilities of the central
administration bodies for the payment of electricity bills for the fiscal year 2017.
3. Basis of Preparation And principal accounting policies
3.1 basis of preparation
Basis of preparation of financial statements
The accompanying interim condensed consolidated and separate financial statements ("financial statements") for the six
month period ended June 30th 2017 have been prepared in accordance with IAS 34 "Interim Financial Reporting" which defines
the form and the content of the interim financial statements. The accompanying financial statements do not include all the
information and disclosures required in the annual financial statements and should be read in conjunction with the latest
annual financial statements as at December 31th 2016 made publicly available.
The accompanying financial statements have been prepared under the historical cost convention (except for tangible assets,
financial assets "held - for - sale" and derivative financial assets that have been measured at fair value), assuming that
PPC and its subsidiaries will continue as a going concern. The financial statements are presented in thousands of Euro and
all values are rounded to the nearest thousand, except when otherwise indicated.
Approval of Financial Statements: The Board of Directors approved the accompanying financial statements, on September 26th,
2017.
3.2 CHANGES IN ACCOUNTING POLICIES
The accounting policies applied to the separate and consolidated financial statements are the same as those applied to the
annual separate and consolidated financial statements for the year ended December 31st, 2016 with the exception of the
following revised standards and interpretations, that will be effective in subsequent periods.
IAS 12 (Amendments) "Recognition of deferred tax assets on unrealized losses"
The amendments clarify the accounting treatment for the recognition of deferred tax assets on unrealized losses arising
from debt securities measured at fair value. The Amendment applies to annual accounting periods beginning on or after
January 1st 2017 and has not been endorsed by the EU. The amendment is not expected to have a significant impact on the
Parent Company's and the Group's financial statements. The Group is in the process of assessing the impact of this
amendment on its financial statements.
IAS 7 Statement of Cash Flows (Amendment) "Disclosures"
The amendment introduces mandatory disclosures that enable users of financial statements to evaluate changes in liabilities
arising from financing activities. Based on the amendment to IAS 7, an entity is required to provide disclosures that
assist investors to evaluate changes in those liabilities from financing activities including changes in the cash flow
statement as well as changes from non-cash items. The amendment is effective for annual periods beginning on or after
January 1st 2017 and has not yet been adopted by the European Union.
The amendment is not expected to have a significant impact on the Parent Company's and the Group's financial statements.
The Group is in the process of assessing the impact of this amendment on its financial statements.
3.2 CHANGES IN ACCOUNTING POLICIES (CONTINUED)
Annual improvements to IFRS - Cycle 2014-2016
The amendments of the 2014 - 2016 cycle have been issued by the IASB on December 8th 2016. The below mentioned amendment is
effective for annual periods beginning on or after January 1st 2017 and has not yet been endorsed by the European Union.
This amendment is not expected to have a significant impact on the Parent Company's and the Group's financial statements
· IFRS 12 Disclosures of participations in other entities: Clarification of the purpose of the standard.
The amendment clarified the scope of the standard by specifying that the disclosure requirements of the standard other than
those in paragraphs B10-B16 apply to the entity's investments mentioned in Paragraph 5, that are classified as held for
sale, as held for distribution or as discontinued operations in accordance with IFRS 5 "Non-current Assets Held for Sale
and Discontinued Operations".
Standards and Interpretations mandatory for subsequent periods, with no early adoption by the Parent Company or the Group.
The below mentioned new Standards, Amendments and Interpretations have been issued but their adoption is mandatory for
subsequent periods. The Parent Company and the Group have not adopted them earlier.
· IFRS 9 Financial Instruments and subsequent adjustments to IFRS 9 - Classification and measurement
On July 24th 2014 IASB issued the final version of IFRS 9, which includes the classification and measurement, the
impairment and hedge accounting for financial assets and financial liabilities. The Standard will replace IAS 39 and all
earlier versions of IFRS 9. Financial assets are measured at amortized cost, at fair value through profit or loss, or at
fair value through other comprehensive income based on the business model of the entity for the management of financial
assets and contractual cash flows of financial assets.
With the exception for the entity's credit risk, the classification and measurement of financial liabilities has not
changed in relation to the existing requirements.
The application of IFRS 9 is mandatory for annual periods beginning on or after January 1st 2018 and has been endorsed by
the European Union on November 22nd 2016. The Group is in the process of assessing the impact of this standard on the
Group's financial statements.
· IFRS 14 Regulatory Deferral Accounts
On January 30th 2014, IASB issued the standard with the purpose of determining the financial reporting requirements for the
"Transitional Accounts of Regulated Activities" balances that arise when an entity provides goods or services to customers
at a price or a percentage that is subject to special regulation by the state
IFRS 14 allows an entity that adopts IFRS for the first time to continue to account, with minor changes, balances in the
"transition accounts of regulated activities" in accordance with previous accounting standards, both during the first IFRS
adoption as well as in subsequent financial statements. Balances and movements of these accounts are presented separately
in the statements of financial position, income statement and other comprehensive income while specific disclosures are
required. The new standard is effective for annual periods beginning on or after January 1st 2016 and is not adopted by the
European Union. The Group chose, according to the Standard, not to apply it.
· IFRS 15 Revenue from contracts with customers
IASB issued on May 28th 2014 IFRS 15 "Revenues from contracts with customers" and including amendments issued on September
11th 2015 is effective for annual periods beginning on or after January 1st 2018. It is the new Standard applied for
revenue recondition.
IFRS 15 replaces IAS 18, IAS 11 and IFRIC13, IFRIC 15, IFRIC 18 and SIC - 31.
The new standard establishes a five-step model that will apply to revenue recognition arising from a single customer
contract (with limited exceptions), regardless of the type of revenue transaction or industry.
3.2 CHANGES IN ACCOUNTING POLICIES (CONTINUED)
The requirements of the Standard will also apply to the recognition and measurement of gains and losses on the sale of
certain non-financial assets that are not produced by the entity's ordinary activities (eg, sales of property, plant and
equipment or intangible assets ). Extensive disclosures, including the analysis of total revenue, information on
performance obligations, changes in contract asset balances and contractual obligations between periods and key judgments
and estimates will be required. IFRS 15 was adopted by the European Union on 22 September 2016.
The Group is in the process of assessing the impact of this standard on the Group's financial statements.
Standards and Interpretations not yet endorsed by the European Union
- IFRS 16 "Leases"
On January 13th 2016 IASB issued IFRS 16 which replaces IAS 17. The purpose of the Standard is to ensure that lessees and
lessors provide useful information that reasonably discloses the substance of transactions in leases. IFRS 16 introduces a
single model for the accounting treatment on the part of the lessee requiring the lessee to recognize assets and
liabilities for all lease agreements with a maturity of more than 12 months, unless the underline assets is of non -
significant value. Regarding the accounting treatment by the lessor, IFRS 16 effectively intergrades the requirements of
IAS 17. Therefore, the lessor continues to categorize leases as operating or finance leases and to follow a different
accounting treatment for each type of contract. IFRS 16 is effective for annual periods beginning on or after January 1st
2019 and has not been endorsed by the European Union. The Group is in the process of assessing the impact of this standard
on the its financial statements.
- IFRS 17 "Insurance Contracts"
In May 18th 2017 IASB issued IFRS 17, which replaces IFRS 4..
IFRS 17 establishes the principles for the registration, valuation, presentation and disclosure of insurance contracts, in
order to provide a more uniform valuation and presentation approach for all insurance contracts.
IFRS 17 requires the measurement / valuation of insurance liabilities at current value using:
· unbiased expected weighted estimates of future cash flows based on updated assumptions,
· Discount rates reflecting the cash flow characteristics of contracts and estimates of the financial and
non-financial arising from the issue of policies.
· The new Standard is effective for annual periods beginning on or after January 1st 2021 and it has not yet been
endorsed by the European Union.
The Group is in the process of assessing the impact of this standard to its financial statements.
· IFRS 10 (Amendment) - "Consolidated Financial Statements" and IAS 28 "Investments in Associates and Joint Ventures"
- Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
The main consequence of the amendment adopted by the Council on 11 September 2014 is that the full profit or loss is
recognized when a transaction includes a business (whether it is hosted in a subsidiary or not). A partial gain or loss is
recognized when a transaction includes assets that do not constitute a business, even if those assets are housed in a
subsidiary. The amendment is effective for annual periods beginning on or after January 1st 2016 and it has not yet been
endorsed by the European Union. The Group is in the process of assessing the impact of applying the amendment to its
financial statements.
3.2 CHANGES IN ACCOUNTING POLICIES (CONTINUED)
· IFRS 2: Share - based Payments (Amendment) "Classification and measurement of Shared-based payment transactions"
The amendment clarifies the measurement basis for cash-settled, share-based payments and the accounting treatment for
modifications on terms that change an award that is cash-settled or equity-settled. It also introduces an exception to the
principles of IFRS 2 that will require an award to be treated as if it was wholly equity-settled, where an employer is
obliged to withhold an amount for the employee's tax obligation associated with a share-based payment and pay that amount
to the tax authority. The amendment is effective for annual periods beginning on or after January 1st, 2018 and has not yet
been endorsed by the European Union. The Group is in the process of assessing the effect of applying the amendment to its
financial statements.
· IFRS 4 (Amendment) - Applying the new IFRS 9 together with IFRS 4.
IASB issued in September 12th 2016 amendments to IFRS 4 to address the concerns arising from the application of the new
IFRS 9 before applying the new amended by the Board IFRS 4. The amendments introduce two approaches: overlapping and
postponement . The modified standard will:
· Allow insurance companies to recognize in other comprehensive income, rather than profit or loss, the volatility that
may arise when IFRS 9 is applied before new insurance contracts.
· Provide to insurance companies, an optional temporary exemption from the application of IFRS 9 until 2021.
The amendment is effective for annual periods beginning on or after January 1st, 2018 and has not yet been endorsed by the
European Union. The Group is in the process of assessing the effect of applying the amendment to its financial statements
· Clarifications to IFRS 15 - Revenue from Contracts with Customers
In April 2016, IASB issued clarifications to IFRS 15. The amendments to IFRS 15 do not alter the basic principles of the
Standard but provide clarifications as to the application of these principles. The amendments clarify how a performance
obligation is recognized in a contract, how it is determined whether an entity is the originator or the trustee, and how it
is determined whether the income from the grant of a license should be recognized at a particular time or over time. The
amendment is effective for annual periods beginning on or after January 1st, 2018 and has not yet been endorsed by the
European Union. The Group is in the process of assessing the effect of applying the amendment to its financial statements.
Annual Improvements to IFRS, 2014 - 2016 Cycle
The following amendments of the 2014 - 2016 cycle, were issued by the Council on December 8th 2016, are effective for
annual periods beginning on or after January 1st 2018 and have not yet been endorsed by the European Union. The following
amendments are not expected to have a material impact on the Company's (and / or the Group's) financial statements unless
otherwise stated
· IFRS 1 First Time Adoption of IFRSs
The amendment eliminates the "Short-term exemptions from IFRSs" provided in Appendix E of IFRS. 1 on the grounds that they
have now served their purpose and are no longer necessary
· IAS 28 (Amendment) "Measurement of investments in associates and Joint ventures at fair value".
The amendment clarifies that the option given, for investments in associates or joint ventures held by an entity that is a
qualifying asset management entity or other qualifying entity, to be measured at fair value through profit or loss is
available for each investment to an associate or joint venture separately at initial recognition.
· IAS 40 Investment Property (Amendment) "Transfers of Investment Property"
The amendment to IAS 40 which was issued by IASB on December 8th 2016, clarifies that an entity may transfer a property to
or from investment property when and only when there is evidence of change in use. A change in use occurs if the property
meets or ceases to meet, the definition of investment property. A change in management's intentions to use the property is
not in itself an indication of a change in use.
3.2 CHANGES IN ACCOUNTING POLICIES (CONTINUED)
The amendment is effective for annual periods beginning on or after January 1st, 2018 and has not yet been endorsed by the
European Union. The Group is in the process of assessing the effect of applying the amendment to its financial statements
· IFRIC 22 :Foreign currency transactions and advance consideration
IFRIC 22 clarifies the accounting treatment for transactions involving the collection or payment of foreign currency
advances. In particular, it applies to foreign currency transactions when an entity recognizes a non-monetary asset or a
non-monetary obligation arising from the payment or receipt of advances before the entity recognizes the related asset,
expense or income. According to the Interpretation, the date of the transaction for the purpose of determining the exchange
rate is the date of the initial recognition of the non-monetary prepayments for the asset or the obligation to receive an
advance. If there are multiple payments or receipts in advance, the transaction date is determined separately for each
payment or collection.
The interpretation is effective for annual periods beginning on or after January 1st, 2018 and has not yet been endorsed by
the European Union. The Group is in the process of assessing the effect of applying this interpretation to its financial
statements
· IFRIC 23 (Interpretation) "(Uncertainty over Income Tax Treatments"
IFRIC 23 applies to the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and
tax rates when there is uncertainty as to the correctness of the tax treatment in accordance with IAS 12. In this the case
should be considered:
· whether tax treatments should be considered collectively or individually and under the assumption that audits will
be carried out by the tax authorities having full knowledge of the relevant information
· the possibility that tax Authorities will accept the way taxable profit (tax loss), tax bases, unused tax losses,
unused tax credits and tax rates are determined and
· Reassessing judgments and assessments if circumstances change
The interpretation is effective for annual periods beginning on or after January 1st, 2019 and has not yet been endorsed by
the European Union. The Group is in the process of assessing the effect of applying this interpretation to its financial
statements
4. SEASONALITY OF OPERATIONS
PPC's operation is subject to intense seasonality due to the increased demand for electricity during the summer and winter
months, a trend which is not reflected in its operating results as these are affected by external factors (e.g. fuel
prices, hydrological conditions etc.).
5. DISCONTINUED OPERATIONS - OWNERSHIP UNBUNDLING
As described in Note 2, in December 31st 2016 the process of the ownership unbundling of the subsidiary IPTO S.A. was in
progress according to the provisions of Law. 4389/2016 (Articles 142-149 and 152).
The Group's and Parent Company's Management believed that as of December 31st 2016 the criteria of IFRS 5 "Non-current
assets held for sale and discontinued operations" and of IFRIC 17 "Distribution of Non-cash Assets to Owners" were met and
as a consequence, investment in IPTO S.A. was classified as held for sale and distribution accordingly (Discontinued
Operations).
In this context, on June 15th 2017 (ex-rights date) the Group lost 51% of the voting rights on the share capital of the
subsidiary IPTO SA, owned by its 100% subsidiary ADMIE (IPTO) HOLDING S.A., through the transfer to the existing
shareholders of PPC SA of the shares of ADMIE (IPTO) HOLDING S.A. that was held, while the full ownership unbundling was
completed on June 20th 2017 with the transfer of 25% and 24% of the share capital of IPTO S.A, to t P.H.C. ADMIE (IPTO)
S.A. and to the Strategic Investor (State Grid Europe Limited) respectively, resulting on the transfer of all assets and
liabilities classified as Discontinued operations. The total consideration for the transfer of the 49% of the share capital
of IPTO SA amounted to E 623,208.
5. DISCONTINUED OPERATIONS - OWNERSHIP UNBUNDLING (CONTINUED)
In the Parent Company's Income Statement, the profit from the transaction of the full ownership unbundling of the
subsidiary IPTO SA amounted to Euro 198,602, while it is noted that in the figures of 2016 a net amount of E 92.9 million
was recorded as PPC's revenue, representing a capital return (cash upstream)from IPTO SA to PPC. This capital return was
decided by the General Assembly of the shareholders of IPTO SA in 2016 and was effected in 2017.
In the Income Statement, in income from discontinued operations for the period 01.01.2017 - 15.06.2017 the income of IPTO
S.A. until June 15th 2017 is included.
Profit from the sale of IPTO SA after intra-group eliminations amounted to Euro 172,236 and is reflected in the results for
the first half of the year 2017.
Profit before tax from discontinued operations for the period 01.01.2017 - 15.06.2017 amounting to Euro 11,279, represents
profits before tax of IPTO S.A. for this period taking into account intra - group transactions.
In the following table an analysis of the Group's assets and liabilities from discontinued operations is presented as of
June 15th 2017.
Non - Current Assets
Property, plant and equipment and intangible assets 1,580,204
Other non - current assets 26,266
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