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Annual Financial Statements
After the initial recognition, the surplus value is valued at cost less any accumu-
lated impairment losses. The surplus value is not depreciated, but is reviewed on
an annual basis for possible decrease in its value (impairment), if there are events
that indicate such a loss according to IAS 36.
Goodwill is allocated to cash-generating units for the purpose of impairment test-
ing. A cash generated unit is the smallest identifiable group of assets generating
cash inflows independently and represents the level used by the Group to organ-
ise and present each activities and results in its internal reporting. Impairment
is determined for goodwill by assessing the recoverable amount of the cash-
generating units, to which the goodwill relates. Where the recoverable amount
(typically the value in use) of the cash-generating units is less than their carrying
amount an impairment loss is recognised. Impairment losses relating to goodwill
cannot be reversed in future periods. The Group performs its annual impairment
test of goodwill as at 31 December.
In the case where acquisition cost is less than the company’s stake in the ac-
quired company’s net assets, the former recalculates the acquisition cost and
valuates the assets, liabilities and contingent liabilities of the acquired company.
Any difference prevailing after the recalculation is recognized directly in the in-
come statement as a profit.
Software:
Software licenses are valued in cost of acquisition less accumulated
depreciation. Depreciation is calculated using the straight line method during the
assets’ useful life that range from 1 to 3 years.
Production, Installation and Operation Licenses of Renewable Energy As-
sets and Thermal Energy Assets:
The different types of licenses entitles the
group either with the right to construct an energy asset or the right to produce
and sell energy. Current market conditions provide adequate evidence about
the recoverable amount of such licenses. Therefore the Group has recognized
licenses as intangible assets at fair value less depreciation and less any provi-
sion for impairment. The Group runs impairment tests on a yearly basis using the
following methodology:
i)
Attach possibility factors according to management estimation regarding
the construction of assets under license
i)
Runs Discounted Cash Flows (DCF) methodology using assumptions
prevailing at the energy market. The period regarded by the management for
provisions exceeds the five years encouraged by IAS 36 as, especially for the
renewable energy assets, there is satisfactory visibility for a substantially longer
period.
ii)
The final recoverable amount is calculated for a total portfolio of either re-
newable or thermal energy assets by multiplying the overall possibility factor with
the outcome of the DCF valuation.
iii)
Finally, the Group compares the recoverable value calculated to be the val-
ue-in-use of the assets with their carrying amounts. When the recoverable value
is less than the carrying amount an equal impairment provision is charged to the
income statement.
Legal rights to explore mines:
The legal rights to explore mines concern rights
that the group has acquired mining mineral reserves in several geographical ar-
eas. In cost of the mining rights, apart from nominal value of the rights, any cost
that relates to the initial evaluation of the rehabilitation cost of the area where work
has been done, the commitment of the Group either during the acquirement of
the right or as a result of its use for a certain time period. The depreciation time
period that is adopted by the Group does not exceed 10 years.
Right of Use of Tangible Assets:
Rights of exploitation of tangible assets that
are granted in the frames of conventions of manufacture of work (compensative
profits) are valued in cost of acquisition, which equals their fair value at the date
of their concession, less accumulated depreciation. Depreciation is calculated
using the “production units method”.
Research and Development Expenses :
Research and Development expen-
ditures are recognized as expenses when they are realized. The expenses which
arise from the developing programs (related to the design and the test of new or
improved products) are capitalized if it is possible to produced future economic
benefit. The other development expenditures are booked as an expense in the
results when they are realized. Previous years’ de-
velopment expenditures recognized as expenses,
can not be capitalized in the future fiscal years. The
capitalized development expenses are depreciated
from the beginning of the product’s economic life
using the straight line method during the period of
the product’s future economic benefits. The Group’s
depreciation period doesn’t exceed the 5 years.
Land Stripping & Restoration expenses :
Land
Stripping & Restoration expenses are capitalized
and amortized using the unit of production method.
Borrowing costs:
Borrowing costs that are directly
attributable to the acquisition, construction or pro-
duction of a qualifying asset shall be capitalized as
part of the cost of that asset. The amount of bor-
rowing costs eligible for capitalization shall be deter-
mined in accordance with IAS 23.
3.7 Impairment of Assets
Assets with an indefinite useful life are not depreciat-
ed and are subject to an impairment review annually
and when some events suggest that the book value
may not be recoverable any resulting difference is
charged to the period’s results. Assets that are de-
preciated are subject to an impairment review when
there is evidence that their value will not be recover-
able. The recoverable value is the greater between
the net sales value and the value in use. An impair-
ment loss is recognized by the company when the
book value of these assets (or cash generating unit-
CGU) is greater than its recoverable amount.
Net sales value is the amount received from the sale
of an asset at an arm’s length transaction in which
participating parties have full knowledge and partici-
pate voluntarily, after deducting any additional direct
cost for the sale of the asset, while value in use is
the present value of estimated future cash flows that
are expected to flow into the company from the use
of the asset and from its disposal at the end of its
estimated useful life.
3.8 Important accounting decisions, es-
timations and assumptions
The compilation of financial statements according to
IFRS requires the management to make decisions,
perform estimations and use assumptions that af-
fect the amounts presented in the financial state-
ments, the assets, liabilities, income and expenses.
The actual results may differ due to such estima-
tions. Estimations are continuously enhanced and
are based on historical data and other factors, such
as expectations for future events expected to realize
under current conditions.
3.8.1 Accounting decisions
During the implementation procedure for accounting policies, deci-
sions are made by the management, which relate to the following:
• Classification of investments
Management classifies Financial assets in the scope of IAS 39 based
on their nature and their characteristics at the following four catego-
ries:
• financial assets at fair value through profit and loss,
• loans and receivables,
• held-to-maturity investments, and
• available-for-sale investments.
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 deter-
minable payments and fixed maturity are classified as held-to-maturity
when the Group has the positive intention and ability to hold to matu-
rity. Investments intended to be held for an undefined period are not
included in this classification. Held-to-maturity investments are car-
ried at amortized cost using the effective interest method. For invest-
ments 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
provisions for potential non collectible accounts, while long-term re-
ceivables (balances that deviate from the normal credit terms) are
measured at amortized cost based on the effective interest rate meth-
od. At each balance sheet date all potentially uncollectible accounts
are assessed individually for purposes of determining the appropri-
ate allowance 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 statements requires the use
of estimations that are based on assumptions re-
lating to the values and conditions not known with
certainty during the compilation date of the financial
statements. The Group continuously 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 regard-
ing how the assumptions made may change in the
future.
The accounting principles, applied by the Group for
the reporting period are consistent with the account-
ing principles applied for fiscal year 2014. In ad-
dition to the abovementioned and more specifically
for the Annual Financial Statements of 2015 the fol-
lowing are noted:
•
Possible reductions in Goodwill
The Group test goodwill for impairment annually and
whenever events or circumstances make it more
likely than not that an impairment may have oc-
curred, 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 valuation of the respective re-
porting unit, which we estimate using a discounted
cash flow method. When available and as appropri-
ate, we use comparative market multiples to cor-
roborate discounted cash flow results. 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, meas-
uring the impairment requires a fair value estimate
of each identified tangible and intangible asset. In
this case we supplement the cash flow approach
discussed above with independent appraisals, as
appropriate.
We test other identified intangible assets with de-
fined useful lives and subject to amortization by
comparing the carrying amount to the sum of un-
discounted cash flows expected to be generated by
the asset. We test intangible assets with indefinite
lives annually for impairment using a fair value meth-
od such as discounted cash flows.
The Group tests annually whether goodwill has suf-
fered any impairment, in accordance with the ac-
counting policy stated in note 3.6. The recoverable
amounts of cash-generating units have been de-
termined based on value-in-use calculations, these
calculation require the use of accounting estimates.
