87
86
Annual Financial Statements
Financial assets are recognized initially at cost, which represents
their fair value (plus, in certain cases, directly attributable transaction
costs). The Group determines the classification of its financial assets
after initial recognition and, where allowed and appropriate, re-evalu-
ates this designation at each financial year-end.
(i) Financial assets at fair value through profit and loss: Financial as-
sets are classified as held for trading if they are acquired for the pur-
pose of selling in the near term. Gains or losses on investments held
for trading are recognized in income.
(ii) Loans and receivables: Loans and receivables which are gener-
ated form the Group’s operations (and are beyond the Group’s normal
credit terms) are carried at amortized cost using the effective interest
method. Gains and losses are recognized in the income statement
when the loans and receivables are derecognized or impaired, as well
as through the amortization process.
(iii) Held-to-maturity investments: Financial assets with fixed or de-
terminable payments and fixed maturity are classified as held-to-ma-
turity when the Group has the positive intention and ability to hold
to maturity. Investments intended to be held for an undefined period
are not included in this classification. Held-to-maturity investments are
carried at amortized cost using the effective interest method. For in-
vestments carried at amortized cost, gains and losses are recognized
in income when the investments are derecognized or impaired, as well
as through the amortization process.
• Recoverability of receivables accounts
Short term receivables are presented in their nominal value, net of pro-
visions for potential non collectible accounts, while long-term receiva-
bles (balances that deviate from the normal credit terms) are meas-
ured at amortized cost based on the effective interest rate method.
At each balance sheet date all potentially uncollectible accounts are
assessed individually for purposes of determining the appropriate al-
lowance for doubtful accounts. The balance of such allowance for
doubtful accounts is appropriately adjusted at each balance sheet
date in order to reflect the possible risks. Any amount written-off with
respect to customer account balances is charged against the existing
allowance for doubtful accounts. Any amount provided for in respect
to customer account balances is charged in the profit and loss state-
ment.
• Impairment of inventories
Provision for slow moving, damaged or obsolete inventories is made
when necessary. The impairments at the net realizable value of inven-
tories are charged in the profit and loss statement in the period the
occur.
• Classification of a lease as operating or financial.
Leases where all the risks and rewards of ownership are retained by
the lessor are classified as operating leases. Payments made under
operating leases (net of any incentives received from the lessor) are
charged to the income statement on a straight-line basis over the pe-
riod of the lease. Leases of property, plant and equipment where the
Group has substantially all the risks and rewards of ownership are
classified as finance leases.
3.8.2 Assumptions and estimations
The presentation of the value of specific
assets and liabilities in the financial state-
ments requires the use of estimations that
are based on assumptions relating to the
values and conditions not known with cer-
tainty during the compilation date of the
financial statements. The Group continu-
ously evaluates the estimations it makes
based on historical data, the research of
specialized consultants, the trends and
methods considered appropriate for the
estimation of specific conditions as well
as estimations regarding how the assump-
tions made may change in the future.
The accounting principles, applied by the
Group for the reporting period are con-
sistent with the accounting principles ap-
plied for fiscal year 2013. In addition to the
abovementioned and more specifically for
the Annual Financial Statements of 2014
the following are noted.
• Possible reductions in Goodwill
The Group test goodwill for impairment
annually and whenever events or circum-
stances make it more likely than not that an
impairment may have occurred, such as a
significant adverse change in the business
climate or a decision to sell or dispose of
a reporting unit. Determining whether an
impairment has occurred requires valua-
tion of the respective reporting unit, which
we estimate using a discounted cash flow
method. When available and as appropri-
ate, we use comparative market multiples
to corroborate discounted cash flow re-
sults. In applying this methodology, we rely
on a number of factors, including actual
operating results, future business plans,
economic projections and market data.
If this analysis indicates goodwill impaired,
measuring the impairment requires a fair
value estimate of each identified tangible
and intangible asset. In this case we sup-
plement the cash flow approach discussed
above with independent appraisals, as ap-
propriate.
We test other identified intangible assets
with defined useful lives and subject to
amortization by comparing the carrying
amount to the sum of undiscounted cash
flows expected to be generated by the as-
set. We test intangible assets with indefinite
lives annually for impairment using a fair value method such as
discounted cash flows.
The Group tests annually whether goodwill has suffered any
impairment, in accordance with the accounting policy stated
in note 3.6. The recoverable amounts of cash-generating units
have been determined based on value-in-use calculations,
these calculation require the use of accounting estimates.
• Budget of construction contracts
The treatment for income and expenses of a construction con-
tract, depends on whether the final result of the contract can be
reliably estimated. When the result of a construction contract
can be estimated reliably then all income and expenses related
to the contract are recognized as such during the time period
of the contract. The Group uses the percentage of completion
method to determine the appropriate amount of income and
expense to be recognized in each period. The percentage of
completion is calculated as the contracted cost realized over
the total budgeted cost of construction for each project.
• Income Tax
Group and company is subject to income taxes in numerous ju-
risdictions. Significant estimates are required in determining the
provision for income taxes. There are many transactions and
calculations for which the ultimate tax determination is uncer-
tain during the ordinary course of business. Group and com-
pany recognises liabilities for anticipated tax audit issues based
on estimates of whether additional taxes will be due. Where the
final tax outcome of these matters is different from the amounts
that were initially recorded, such differences will impact the in-
come tax and deferred tax provisions in the period in which
such determination is made.
• Provisions
Doubtful accounts
are reported at the amounts likely to be
recoverable based on historical experience of customer default.
As soon as it is learned that a particular account is subject to a
risk over and above the normal credit risk (e.g., low creditwor-
thiness of customer, dispute as to the existence or the amount
of the claim, etc.), the account is analyzed and written down if
circumstances indicate the receivable is uncollectible.
Provisions for environmental rehabilitation
are reported at
the amounts that are likely to be claimed against the Group in
order to settle the liability
• Contingencies
The Group is involved in litigation and claims in the normal
course of operations. Management is of the opinion that any re-
sulting settlements would not materially affect the financial po-
sition of the Group as at December 31, 2014. However, the de-
termination of contingent liabilities relating to the litigation and
claims is a complex process that involves judgments as to the
outcomes and interpretation of laws and regulations. Changes
in the judgments or interpretations may re-
sult in an increase or decrease in the Com-
pany’s contingent liabilities in the future.
3.9 Prior year financial state-
ments’ restatement
Accounting policy change
During the fiscal year 2014, the Group,
changed its accounting policy concerning
the assessment of cash and cash equiva-
lents, as stated in paragraph 47 of IAS 7.
In particular, the Group, reassessed these
elements as to include in cash and cash
equivalents of Statement of Cash Flows,
the balance of cash deposits and cash at
hand (cash registry) as stated in the State-
ment of Financial Position.
Based on the above, the Group includes in
cash and cash equivalents, of Statement of
Cash Flows, the balance of cash deposits
and cash at hand (cash registry), as stated
by IAS 8, according to which an entity can
make an accounting policy change if this
change results to more relevant and reli-
able information about the effects of trans-
actions, on the entity’s financial position,
financial performance, or cash flows.
Prior period accounting error
On 17/12/2014, ADMIE sent briefing notes
to the subsidiary company Aluminium
of Greece (henceforth the “Subsidiary”)
which regarded the issuance of a credit
invoice relating to the Excise Tax (ET) for
Gas consumed by the Combined Heat
and Power (CHP) Cogeneration Plant for
the period from 28/11/2012 until 31/10/2013
(henceforth the “Period”) which amounts
to
€
17.4m (see note 4.36.2, Contingent Li-
abilities). Regarding the above mentioned,.
The Subsidiary recognized in the Financial
Statements of the years 2012 and 2013, a
liability (deducted from ADMIE’s receivable
balance) of
€
9.1m, receivables of
€
2.8m
and cost of
€
6.3m.
During the Period, ADMIE would issue
fee notes to the Subsidiary, pursuant to
which the latter was compensated for the
ET charged for the total amount of Natural
Gas consumed during the CHP process,
thus corresponding to the station’s gen-
eration of both useful heat and electricity.
Moreover, based on the Private Agreement
