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Company or with its associated companies, (c) has a second degree
kindred relationship with or is the husband of an executive member of
the board of directors or of a manager or of a shareholder that has the
majority of the share capital of the Company or one of its associated
companies according to article 42e par.5 of c.l 2190/1920, as applica-
ble at each case, (d) has been appointed in accordance with article 18
par.3 of c.l 2190/1920. The independent non executive members can
submit separate reports to the General Assembly. Their attendance is
not compulsory if and when they participate in the Board of Directors
as members, representatives of the minority of shareholders and are
appointed as such.
(iii)
The curricula vitae of the Board of Directors’ members are posted
on the Company’s website
.
(iv)
Thecurrent Boardof Directorswas electedby theGeneral Assembly
on 08.05.2013 and its term ends on 08.05.2017. It comprises two
executive, seven non-executive of which four independent members.
(v)
The members of the Board of Directors – apart from the executive
ones that deal exclusively with the company’s activities – are
professionally active in their fields of specialization, as it can also be
verified by their CVs.
(vi)
The Company has adopted policies and principles for the
formation of the executive members’ of the BoD remuneration as well
as performance evaluation method for the calculation of the variable
fees of the BoD members and for the payment of their fees.
(C).
Risk Management and internal audit
Information concerning risk management and internal audit:
Description of the main features of the risk management and internal
audit systems
a. Risk Factors
By operating in three in three basic business sectors, Metallurgy and
Mines, Energy and Integrated Energy Projects (EPC), the “Mytilineos
Group (“The Group”) is faced with a number of different risk factors.
Consequently, theGroup’s exposure to these risk factors can potentially
influence its operation, its financial state or its operational results.
Apart from the risk factors that may be presented in other parts of the
annual management report of the Group, the following ones constitute
the basic risk factors that could significantly influence the results and
the financial state of the Group.
Market risk
The global financial conditions continue to present fluctuations. The
Group is faced with risks that stem from the fluctuations in the price of
LME, the parity
€
/$, the wider economic and financial environment as
well as the market of the final products of Aluminum.
In this context, the Group has developed a series of actions in order to
counterbalance its exposure to the risks of the market, to improve the
structuring of the cost and ensure its liquidity.
These actions include:
• Counterbalancing the risk stemming
from the fluctuation of the aluminum price
with the use of various financing tools.
• Counterbalancing the risk stemming
from its exposure to the fluctuations of the
parity
€
/$ with the use of derivatives
• Restructuring energy cost items.
Implementation of programs for the optimal
utilization of assets and implementation of
cost reduction programs.
• Processing plans for the improvement
of the production process.
• Reevaluation of the Group’s credit
policy as well as of the procedures
used for the appraisal of the customers’
creditworthiness.
Rising cost of raw materials or
unfavorable conjuncture
The Group’s operational results are
influenced by the rising cost of raw
materials like metallurgic coke, soda and
other basic materials as well as by the cost
of freights related to the transportation of
the aforementioned materials.
The Group tries to negotiate and “lock”
the main freight contracts with competitive
terms. At the same time, the Group has
implemented a new system of assessing
the prices for the procurement of raw
materials, while it also runs a continuous
cost optimization and reduction program.
Moreover, the Group’s operational
results may be influenced by unfavorable
conjuncture, when the drop in the price
of cost items that are linked with the price
of LME or the parity
€
/$ is not enough to
counterbalance the respective reduction in
the price of LME or the US Dollar during the
same period.
Availability of Greek bauxites and
Market Concentration
To meet the needs of Alumina the Group is
significantly dependent on the availability
of Greek bauxites. With the operation of its
own mines, through the 100% subsidiary
“Delfoi – Distomon SA”, the group meets
38-40% of its needs for Greek bauxites.
However, in the coming years there may be difficulties in terms
of licensing or drilling (finding) new bauxite deposits in Greece.
Moreover, the Greek bauxite market is already concentrated in
a small number of suppliers. On top of that, the possibility of a
further concentration of the market will have a negative impact
on the cost that the Group will have to bear for the procurement
of bauxite in the future.
For these reasons, the Group aims at negotiating multiyear
bauxite contracts and strategic alliances with the Greek produc-
ers.
Health, safety and environmental laws and regulations
The Group’s activities fall under the laws and regulations that
are relevant to health, safety and environmental protection.
The compliance cost with such regulations involves, among
others, either investments or the significant spending for ac-
tions relating to the safe management of industrial wastes and
measures for remedying environmental damages.
Environmental issues within our responsibility might arise in the
future in relation to our current facilities, facilities that we owned
in the past or facilities where we conducted our operations even
if the Management has not been or could not be aware of such
issues up to date or these issues have not been present yet.
Climate change and green house effect, relevant
legislation and regulations.
Energy is a significant raw material relevant to the activities of
our Group while it is considered that in the immediate future
it shall be an important source of revenue as well. Moreover,
the Group is active in the wider energy sector being involved
in the construction of integrated energy projects (EPC). There
is a widely spread belief that the consumption of the energy
that is generated by fossil fuel constitutes one of the main fac-
tor contributing to the warming of our planet. A continuously
increasing number of governments, governmental bodies and
committees have initiated or intend to pursue regulatory and
legislative changes in order to deal with the potential risks of
such phenomenon.
As a result of the EU regulatory amendments, the Group’s op-
erating margins might be affected by the changes that could
be put in place in its production facilities having increased
emissions of greenhouses gases and in its facilities with high
energy needs. Given the width of the scope of such changes,
the assessment of the eventual impact of the future legislation
and legislative framework for the climate change, as well as of
the European and international conventions and agreements
is unclear. The Group might be obliged to undertake signifi-
cant investments in the future in order to comply with the new,
amended legislation and the new regulations.
Finally, the Group, as a result of an eventual deficit or surplus in
terms of CO2 emission rights management and due to its large
energy consumptions mainly because of the production of alu-
minum, might recognize significant cost or revenue in future.
On the other hand, due to anyone of the
aforementioned legislative changes relat-
ing to the climate change, the Group might
be given opportunities in the EPC sector.
Failure of achieving the expected long
term benefits from productivity and
the cost reduction initiatives.
The Group has undertaken and will pursue
initiatives relevant to productivity and cost
reduction in order to improve the perfor-
mance and reduce the overall production
cost. All such actions may not be fulfilled or
the entire estimated savings might not be
achieved for various reasons beyond the
Group’s control.
Political, legal and regulatory issues
The Group’s activities in Greece relevant to
energy remain regulated , in a significant
degree, by the government and depend
on political decisions or legal and regula-
tory framework matters. The developments
within this environment, which could be
translated into delays in the essential de-
regulation of the energy market, might af-
fect the activities of the Group and its future
results as well as the value of its energy
assets or assets, the operation of which
requires an important consumption of en-
ergy products.
Moreover, the Group may be affected by
adverse political developments or develop-
ments relating to the regulatory framework
that could be connected to its EPC activi-
ties in areas outside Greece and mainly in
countries with political instability.
IT Safety
Our business operations are supported
by different software and data processing
systems. However, we cannot fully exclude
an eventual non availability of such sys-
tems or violation in terms of data safety.
We mitigate such risks by applying high
standards and taking measures in order to
obtain and ensure their availability, reliabil-
ity, confidentiality and traceability. In addi-
tion and in order to control eventual haz-
ards we regularly invest in the upgrading of
software, hardware and equipment and we
conduct regular internal and external au-
dits supported by international consulting
groups and we apply continuing progress
procedures.
Statement of Corporate Governance
