101
100
Annual Financial Statements
These leases are capitalized at the inception of the lease at the lower of
the fair value of the asset and the present value of the minimum lease
payments. Each lease payment is apportioned between the reduction
of the liability and the finance charge so that a fixed interest rate on
the remaining financial liability is achieved. The relevant liabilities from
leases, net of financial expenses, are reported as liabilities. The part of
the financial expense that relates to finance leases is recognized in the
income statement during the term of the lease. Fixed assets acquired
through finance leases are depreciated over the shorter of their useful
life and the lease term.
Lease agreements where the lessor transfers the right of use of an
asset for an agreed period of time, without transferring, however, the
risks and rewards of ownership of the fixed asset are classified as op-
erating leases. Payments made with respect to operating leases (net
of any incentives offered by the lessor) are recognised in the income
statement proportionately throughout the term of the lease.
Group Company as lessor:
When fixed assets are leased through
financial leasing, the present value of the lease is recognized as a re-
ceivable. The difference between the gross amount of the receivable
and its present value is registered as a deferred financial income. The
income from the lease is recognized in the period’s results during the
lease using the net investment method, which represents a constant
periodic return.
Fixed assets that are leased through operating leases are included
in the balance sheet’s tangible assets. They are depreciated during
their expected useful life on a basis consistent with similar self-owned
tangible assets. The income from the lease (net of possible incentives
given to the lessees) is recognized using the constant method during
the period of the lease.
3.24 Construction contracts
Construction contracts refer to the construction of assets or a group
of affiliated assets specifically for customers according to the terms
provided for in the relevant contracts and whose execution usually
lasts for a period of over one fiscal year.
The expenses that refer to the contract are recognized when occur.
In the case where the result of one construction contract may not by
reliably valuated, and especially in the case where the project is at a
premature state, then:
• The income must be recognized only to the extent that the contrac-
tual cost may be recovered, and
• The contractual cost must be recognized in the expenses of the
period in which it was undertaken.
Thus, for such contracts income is recognized in order for the profit
from the specific project to equal zero.
When the result of a construction contract can be valuated reliably, the
contract’s income and expenses are recognized during the contract’s
duration, respectively as income and expense.
The Group uses the “percentage of com-
pletion” method to define the appropriate
income and expense amount that will be
recognized in a specific period.
The completion stage is measured based
on the contractual cost that has been re-
alized up to the balance sheet date com-
pared to the total estimated construction
cost of each project.
When it is likely for the total contract cost to
exceed the total income, then the expected
loss is directly recognized in the period’s
results as an expense.
For the calculation of the cost realized until
the end of the period, any expenses related
to future activities regarding the contract
are excluded and appear as a project un-
der construction. The total cost that was
realized and the profit/loss that was recog-
nized for each contract is compared with
the progressive invoices until the end of the
period.
When the realized expenses plus the net
profit (less the losses) that have been rec-
ognized, exceed the progressive invoices,
the difference appears as a receivable from
construction contract customers in the ac-
count “Customers and other receivables”.
When the progressive invoices exceed the
realized expenses plus the net profit (less
the losses) that have been recognized,
the balance appears as a liability towards
construction contract customers in the ac-
count “Suppliers and other liabilities”.
3.25 Dividend distribution
The distribution of dividends to the share-
holders of the parent company is rec-
ognized as a liability in the consolidated
financial statements at the date on which
the distribution is approved by the General
Meeting of the shareholders.
3.26 Proforma figure “Operating Earnings
before Financial & Investment results, Tax,
Depreciation & Amortization” (Group EBITDA)
Pro forma figures (EBITDA, EBITDA margin, free cash flow, net
debt) are not governed by the International Financial Report-
ing Standards (IFRS). Thus, these figures are calculated and
presented by the Group in a way that provides a more fair view
of the financial performance of its Business Sectors. The Group
defines “Group EBITDA” as the Operating Earnings before any
interest income and expenses, investment results, deprecia-
tion, amortization and before the effects of any special factors.
“Group EBITDA” is an important indicator used by Mytilineos
Group to manage the Group’s operating activities and to meas-
ure the performance of the individual segments.
The special factors that affect the Group’s net profit / (losses)
and EBITDA are the following:
The Group’s share in the EBITDA of associates when these are
active in one of its reported Business Segments.
• The Group’s share on the profit from the construction of fixed
assets on account of subsidiaries and associates when these
are active in one of its reported Business Segments.
It is noted that the Group financial statements, prepared ac-
cording to IAS 1 and IAS 28, include:
The Group’s profit realized in connection with the construction
of fixed assets on account of subsidiaries and associates, when
these are active in one of its reported Business Segments. Such
profits are deducted from the Group’s equity and fixed assets
and released in the Group accounts over the same period as
depreciation is charged. Consequently, for the calculation of
EBITDA (operational results before depreciation), the Group
does not eliminate the profit from the construction of fixed as-
sets as its recovery through their use will effect only the profit
after depreciation.
• The Group states that the calculation of “Group EBITDA” may
differ from the calculation method used by other companies/
groups. However, “Group EBITDA” is calculated with consist-
ency in each financial reporting period and any other financial
analysis presented by the Group. Specifically financial results
contain interest income/expense, while investment results con-
tain gains/loss of financial assets at fair value through profit and
loss, share of results in associates companies and gains/losses
from the disposal of financial assets (such as subsidiaries and
associates).
Finally, the proforma figure “Group EBITDA” should not be
confused with the figure “Earnings before income tax, finan-
cial results, depreciation and amortization” calculated for the
purposes of 6/448/11.10.2007 resolution of the Hellenic Capital
Committee, according to Circular No. 34, as the purpose of the
latter is not to define proforma figures like EBITDA despite the
familiar terminology used.
3.27 CO2 emission Liability
CO2 emissions are recognized according
to the net liability approach through which,
the Group recognizes liabilities from CO2
emissions when the actual emissions ex-
ceed the distributed emission rights from
E.U. The liability is measured at fair value to
the extent that the Group has the obligation
of covering the deficit through the market.
Emission rights acquired over the required
quantities for covering the deficit are rec-
ognized as intangible assets at cost.
3.28 Hedging Accounting
The Group uses Derivative financial instru-
ments such as Commodity Futures and
Currency Forwards in order to mitigate the
risk related to its business activities along
with the risk related to the funding of such
activities.
At inception of the hedging transaction, the
Group validates the hedging relationship
between the underlying and the hedging
instrument as far as its risk management
strategy is concerned. The Group also veri-
fies the hedging efficiency from the begin-
ning of the hedging relationship and on a
continuing basis.
All derivative financial instruments are ini-
tially recognized at fair value as at the date
of settlement and are valued on a mark - to
- market basis on each balance sheet date.
The result of this valuation is recognized as
an asset when positive and as a liability
when negative.
When a derivative financial instrument is
no longer regarded as hedging instrument
any difference in its fair value is recognized
in profit and loss.
There are three kinds of hedges:
A. Fair Value Hedging
Fair value hedging is regarded when hedg-
ing the exposure in the fluctuations of the
fair value of a recognized asset, liabil-
ity, contingent liability or part of them that
could have a negative impact on results.
When hedging accounting, concerning fair
value hedge, is followed then any profit or
loss from revaluation is recognized in profit
and loss.
