46
47
Statement of Corporate Governance
Member
Status
Evangelos Mytilineos
President of the Board & CEO - Executive
Ioannis Mytilineos
Vice President of the Board – Non-Executive
Georgios-Fanourios Kontouzoglou
Executive Director - Executive
Sofia Daskalaki-Mytilineou
Member of the Board – Non-Executive
Wade Burton
Member of the Board – Non-Executive
Apostolos Georgiades
Member of the Board - Independent – Non-Executive
Christos Zerefos
Member of the Board - Independent – Non-Executive
Michail Chandris
Member of the Board - Independent – Non-Executive
(ii)
The composition of the Board of Directors following 16.02.2015, when the Independent-Non Executive Member, Mr. Nikolaos Kara-
mouzis resigned without being replaced, was the following:
(iii)
The executive members deal with the daily issues of the Company’s manage-
ment and the supervision of the execution of the decisions made by the Board
of Directors, whereas the non-executive members are charged with supervising
the execution of the Board of Directors’ decisions as well as other issues or fields
of the Company that have been especially assigned to them by a decision of the
Board of Directors. The independent non-executive members are the members
that have no business transaction or other commercial relation with the Company,
which could influence their independent judgment. In that sense, it is impossible
to perceive as independent member of the Board of Directors any person that:
(a) has a business or other professional relation with the company or an associ-
ated one according to article 42e par.5 of c.l2190/1920, as applicable at each
case, which influences its business activity and especially when this person is
an important supplier of goods or services or a basic customer of the Company,
(b) is president or General Manager of the company or if he/she is president or
general manager or an executive member of the board of directors in an associ-
ated company according to article 42e par.5 of c.l2190/1920, as applicable at
each case, or has a relation of dependent or paid employment with the 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 applicable 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.
(iv)
The curricula vitae of the Board of Directors’ members are posted on the
Company’s website
.
(v)
The current Board of Directors was elected by the General Assembly on
08.05.2013 and its term ends on 08.05.2017. It comprises two executive, six non-
executive of which three independent members.
(vi)
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.
(vii)
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 inter-
nal audit:
i. Description of the main features of the risk man-
agement and internal audit systems
a. Risk Factors
By operating in three in three basic business sec-
tors, Metallurgy and Mines, Energy and Integrated
Energy Projects (EPC), the “Mytilineos Group (“The
Group”) is faced with a number of different risk fac-
tors.
Consequently, the Group’s exposure to these risk
factors can potentially influence its operation, its fi-
nancial 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
€
/$, the wider economic and financial environment
as well as the market of the final products of Alu-
minum.
In this context, the Group has developed a series of
actions in order to counterbalance its exposure to
the risks of the market, to improve the structuring of
the cost and ensure its liquidity.
These actions include:
-
Counterbalancing the risk stemming from the fluctuation of the
aluminum price with the use of various financing tools.
-
Counterbalancing the risk stemming from its exposure to the
fluctuations of the parity
€
/$ 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 pro-
cess.
-
Reevaluation of the Group’s credit policy as well as of the pro-
cedures 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 mate-
rials, while it also runs a continuous cost optimization and reduction
program.
Moreover, the Group’s operational results may be influenced by unfa-
vorable 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 counter-
balance 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 “Delphi – 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 producers.
Health, safety and environmental laws and regulations
The Group’s activities fall under the laws and regulations that are rel-
evant to health, safety and environmental protection.
The compliance cost with such regulations involves, among others,
either investments or the significant spending for actions relating to
the safe management of industrial wastes and measures for remedy-
ing 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 con-
struction 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 factor contributing to the warming
of our planet. A continuously increasing number of
governments, governmental bodies and commit-
tees have initiated or intend to pursue regulatory
and legislative changes in order to deal with the po-
tential risks of such phenomenon.
As a result of the EU regulatory amendments, the
Group’s operating margins might be affected by the
changes that could be put in place in its production
facilities having increased emissions of greenhous-
es 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 significant invest-
ments 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 defi-
cit or surplus in terms of CO2 emission rights man-
agement and due to its large energy consumptions
mainly because of the production of aluminum,
might recognize significant cost or revenue in future.
On the other hand, due to anyone of the aforemen-
tioned legislative changes relating 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 initia-
tives relevant to productivity and cost reduction in
order to improve the performance 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 regulatory framework matters. The
developments within this environment, which could
be translated into delays in the essential deregulation
of the energy market, might affect 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 energy
products.
