METKA ANNUAL REPORT 2015 - page 34-35

34
35
Annual Report of the Board of Directors of the Company METKA S.A. On the consolidated
and Company Financial Statements For the financial year 2015
03
Index
2015
2014
2013
ROCE
20%
20%
21%
ROE
13%
18%
20%
EVA
104.095 thous.
91.813 thous.
82.358 thous.
C. Annual Report of the Board of Directors
of the Company METKA S.A. On the
consolidated and Company Financial
Statements For the financial year 2015
Shareholders Ladies and Gentlemen,
Pursuant to the provision of L.2190/1920 article 43a paragraph 3,
article 108 paragraph 3 and article 136 paragraph 2 and the provi-
sion of L.3556/2007 article 4 paragraphs 2c, 6, 7 and 8, as well
as, the resolution of the Board of the Hellenic Capital Committee
7/448/11.10.2007 article 2, 1/434/03.07.2007 and the Company’s
Articles of Association, we present to you the Annual Report of
the Board of Directors for the financial year from 01/01/2015 to
31/12/2015, which comprises of the audited consolidated and cor-
porate financial statements, the related notes and the Report of
the Auditors. This report provides summary information for the
Group and the Company (METKA S.A.), financial information aim-
ing in informing the shareholders and investors for the financial
position and performance, the overall developments and varia-
tions in the financial year under review (01/01/2015 to 31/12/2015),
significant events that took place and their impact on the finan-
cial statements. Furthermore, an analysis of potential risks and
uncertainties that the Group and the Company may face in the
future, the anticipated course and evolution of the group com-
panies, the corporate governance, the dividend policy as well as,
disclosure of the transactions between the Company and the re-
lated parties is provided.
This report accompanies the annual financial statements of fis-
cal year 2015 (01/01/2015 – 31/12/2015) and is included individu-
ally together with those statements as well as the declarations of
the members of the board of directors into the annual economic
report concerning the fiscal year 2015. Given that the Company
also composes consolidated financial statements, this report is
cohesive having as a main reference point the consolidated fi-
nancial information and referring to the corporate financial infor-
mation of METKA S.A. only where necessary or appropriate in
order to gain a better understanding of the content.
A. PERFORMANCE AND FINANCIAL POSITION
FOR 2015
Financial Information
In 2015 the Greek economy faced serious challenges, as after a
short-lived rebound in 2014, the country’s GDP change rate re-
turned to negative territory.
The climate of uncertainty that had taken shape since the last
quarter of the previous year deteriorated in the first half of 2015,
reaching a climax after the announcement of the Greek referen-
dum, the bank closure and the imposition of controls on – among
others – cash withdrawals from bank accounts, cross-border pay-
ments and capital movements.
The flow of adverse developments was stemmed by the agree-
ment reached in the Eurozone Summit of July 12, which in es-
sence confirmed the will of the Greek authorities to secure the
country’s future in the common currency zone.
The extreme level of concern regarding the funding and the
outlook of the Greek economy, the austerity measures that ac-
companied the new agreement in order to achieve the revised
fiscal targets, as well as the destabilisation of the banking system,
which led to a further contraction of funding to the domestic pri-
vate sector, were the main factors underlying the new downturn.
However, despite the challenges, the negative impact was
weaker than initially anticipated. According to the first estimates
of the Hellenic Statistical Authority (ELSTAT) the country’s GDP
recorded a decrease of 0.2% in 2015, featuring among others a
decrease in private investments and in imports and exports of
goods and services, mainly due to the capital controls.
Against an adverse economic environment in Greece, but also in
the countries of the Middle East and North Africa where METKA
has a significant activity in the recent years, the company’s per-
formance followed a satisfactory course in 2015.
Pursuing its strategic goal to develop its activities in sub-Saha-
ran Africa, METKA announced its first substantial project in the
region. It concerns the engineering-procurement-construction-
commissioning of a 250mwatt power plant with the BOOT meth-
od, a five-year time schedule and a budget of USD 360 million.
Also, through its subsidiary, METKA EGN, which was established
with an aim to evolve into a new leader in the solar power sector
on a global level, the Group has signed contracts for EPC and
O&M for seven solar photovoltaic power plants, valued at ap-
proximately Euro 112 million.
For yet another year, the professionalism, the high expertise and
the dedication of METKA’s employees had a significant contribu-
tion to the achievement of exceptional performance, in an envi-
ronment of intense uncertainty and continuous challenges.
The positive performance of the company is reflected in the fi-
nancial results of 2015, which confirm METKA’s resilience.
More specifically, the Group’s turnover for 2015 reached € 668.0
million compared to last year’s € 609.3 million, while the Com-
pany’s turnover for the same period mounted to € 411.9 million
compared to last year’s € 549.0 million.
The main factors which contributed to the Group’s above course
are :
a) The project «Engineering, Procurement and Construction
(EPC) of 250 MW power plant» in Ghana, with a contractual value
$ 360 million, which in the period under review recorded a turno-
ver of € 209.0 million.
b) Τhe continuation of the project «Construction of a thermal
power plant station of 1250 MW» in Iraq, with a contractual value
of $ 567.7 million which in the period under review recorded a
turnover of € 164.8 million.
c) The continuation of the project «Construction and com-
missioning of a 590,726 MW open-cycle, three turbine, dual
fueled power plant» in Hassi ‘Rmel, Algeria, with a contrac-
tual value of € 154 million and 2.311 million DZD, which in the
period under review recorded a turnover of € 60.5 million.
d) The continuation of the project «Construction of re-
maining infrastructure, permanent way, signaling-telecom-
manding, telecommunications and electrical engineering
works for the tunnel facilities for the new railway line Kiato-
Rododafni» with a contractual value of € 227 million, which
in the period under review recorded a turnover of € 43.3
million.
e) The continuation of the project «Construction of a power
plant station of 701 MW» in Deir Ali, Syria, with a contractual
value of € 673 million which in the period under review re-
corded a turnover of € 42.5 million.
f) The execution of the project «Defined metal structures of
the hull and turret for 62 LEOPARD 2A7 main battle tanks for
the Middle East market» of a contractual value € 56.5 mil-
lion, which in the period under review recorded a turnover
of € 30.2 million.
g) The « engineering, procurement, construction and com-
missioning of eight (8) mobile gas turbine power generation
units with a total output of 179.72 MW » in Algeria, with a
contractual value of $ 66 million, which in the period under
review recorded a turnover of € 23.1 million.
h) The «Construction and commissioning of an open-cycle,
natural-gas fired, two turbine power plant of 368.152 MW»
in Algeria with a contractual value of € 72 million and DZD
2.127 million, which in the period under review recorded a
turnover of € 19.1 million.
The Group’s and the company’s gross profit margin
reached 19.7 % and 18.3% respectively, while the EBITDA
(earnings before interest, taxes depreciation and amortiza-
tion) of the Group were € 116.4 million (17.42%). Accordingly
the Company›s EBITDA amounted to € 59.4 million (14.42%).
The Group›s net earnings after taxes and non-controlling
stakes amounted to € 68.9 million, and Company›s amount-
ed to € 17.3 million.
The Group’s net cash at hand at the end of FY 2015 reached
€ 150.5 million, a considerable increase, which despite the
negative economic climate remain on a high level.
The financial position of the Group on December 31, 2015
continues to be satisfying and reflects its economic stability
and its future perspectives. The total equity in December 31,
2015 amounted to € 551 million in comparison to the € 508
million of December 31 2014, demonstrating an increase by
8.5%.
It is the Group’s policy to constantly assess its results and
performance on a monthly basis, aiming to detect any de-
viations from its objectives and to adopt the required cor-
rective measures timely and effectively. The Group assesses
its performance by using financial performance indices, in
particular:
ROCE (Return on Capital Employed) – The index divides
the earnings before taxes, financial, investment results and
total depreciations with the total Group capital employed,
which is the sum of the equity, plus the total borrowing
obligations and the long term provisions.
ROE (Return on Equity) – The index divides the earn-
ings after tax by the Group Equity.
EVA (Economic Value Added) – This index can be deter-
mined by multiplying the Capital Employed with the differ-
ence (ROCE – Cost of Capital) and is the amount by which
the Group increases its economic value. The Group uses the
model of WACC «Weighted Average Cost of Capital» in or-
der to calculate the Cost of Capital.
The mean yield values of the Hellenic Republic Bonds during December 2015 were especially high and, therefore, not ap-
propriate to be used in such an assessment.
For this reason, the European bond index iboxx AA Corporate Overall 10+ EUR indices was used as a basis for the estimation
of the EVA index. Its average yield for the same period was 1,68%.
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