METKA GROUP | ANNUAL REPORT 2014 - page 30-31

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3. Annual Report of the Board of Directors
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
provision 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 01/01/2014 to 31/12/2014, which comprises of the audited
consolidated and corporate financial statements, the related
notes and the Report of the Auditors. This report provides sum-
mary information for the Group and the Company (METKA S.A.),
financial information aiming in informing the shareholders and
investors for the financial position and performance, the overall
developments and variations in the financial year under review
(01/01/2014 to 31/12/2014), significant events that took place
and their impact on the financial 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 companies, the corporate governance,
the dividend policy as well as, disclosure of the transactions
between the Company and the related parties is provided.
This report accompanies the annual financial statements of fis-
cal year 2014 (01/01/2014 – 31/12/2014) and is included indi-
vidually together with those statements as well as the declara-
tions of the members of the board of directors into the annual
economic report concerning the fiscal year 2014. Given that the
Company also composes consolidated financial statements,
this report is cohesive having as a main reference point the
consolidated financial information and referring to the corporate
financial information of METKA S.A. only where necessary or ap-
propriate in order to gain a better understanding of the content.
A. PERFORMANCE AND FINANCIAL POSITION
FOR 2014
Financial Information
In 2014 economic activity in Greece resumed positive growth
rates, after six years of severe recession. According to revised
quarterly GDP data, the Greek economy grew by 0.75% on a
yearly basis – a performance better than earlier forecasts which
projected a growth rate of 0.6%.
The increased foreign demand for services and the gradual
recovery of private consumption were the main drives of GDP
growth throughout the year. The continued consolidation of
public finances, reflected in the elimination of the high fiscal
and current account deficits, as well as the stabilization of the
banking system laid the groundwork for the improvement of the
economic climate.
Following this trend, during the first semester of 2014 Greek
Government Bond yields as well as borrowing costs for Greek
businesses in the international capital markets followed a down-
ward course. This allowed the country’s successful return in the
markets and helped Greek banks and businesses gain access
to capital market funding.
Among the positive developments regarding the
improvement of liquidity in the Greek economy,
was the completion of the Comprehensive As-
sessment and stress tests performed by the Eu-
ropean Central Bank on the four largest banks
in Greece. The test results confirmed the capi-
tal adequacy of the system and increased the
expectations for a gradual, modest easing of
banks’ credit policies, for the first time since the
onset of the global financial crisis.
In the two-month period of October – November
2014 the rate of credit contraction to businesses
slowed by one percentage point, reaching the
levels of 3,6% - 3,8%. However, the banking sys-
tem continued to face significant challenges, with
first and foremost the need to address a large
stock of non-performing loans. Consequently,
credit expansion towards the real economy re-
mained on negative grounds, impeding the re-
covery of economic activity.
SinceOctober 2014 the economic and investment
climate in Greece deteriorated markedly, as
reflected in the steep rise of 10-year GGB yields to
more than 9%. The increased concern of markets
regarding the progress of structural reforms and
fiscal consolidation in Greece, combined with a
possibility of the country’s early disengagement
from the financial support program were factors
that contributed to this development.
Delays in reaching an agreement regarding the
review of the Greek Economic Adjustment Pro-
gram, followed by the escalation of political un-
certainty towards the end of the year had a nega-
tive effect in economic activity. The deterioration
of economic sentiment, consumer confidence
and lending terms for businesses, the gradual
fall in of investment and the difficulties in the im-
plementation of the state budget, were phenom-
ena that marked the last weeks of 2014.
Throughout the year METKA continued to
successfully implement its international contracts,
while effectively handling the challenges created
by the unstable environment in Middle East
markets.
The company accelerated the execution of its projects abroad,
achieving high operating margins and establishing its leading
position in the global EPC market. It also managed to limit its
exposure to the high-risk region of Iraq through an agreement
with its partner, SEPCO III, which is now responsible for the ex-
ecution of the project in Al-Anbar, while METKA has undertaken
the provision of technical support on a fee basis.
In 2014 METKA confirmed its strategic objective to explore op-
portunities in the domestic market, focusing on infrastructure
projects. A significant step in this direction was the official award
of the
227 m. project by ERGOSE, for the construction of the
Kiato – Rododafni railway line.
For one more year the high professionalism, expert know – how
and commitment of its people remained a key contributing fac-
tor in METKA’s successful activity, despite the continuing chal-
lenges of the external environment.
The joint effort of the company’s management and employees
is reflected in the results of the reference period.
More specifically, the Group’s turnover for 2014 reached
609,3
million compared to last year’s
606,5 million, while the Com-
pany’s turnover for the same period mounted to
549,0 million
compared to last year’s
404,4 million.
The main factors which contributed to the Group’s above course
are :
a) The «Construction and commissioning of a 724 MW power
plant» in Deir Azzour, Syria, with a contractual value of
687
million, which in the period under review recorded a turnover of
121,0 million.
b) The «Construction and commissioning of a 590,726 MW
open-cycle, three turbine, dual fueled power plant» in Hassi
‘Rmel, Algeria, with a contractual value of
154 million and
2.311 million DZD, which in the period under review recorded a
turnover of
101,0 million.
c) Τhe continuation of the project «Construction of a thermal
power plant station of 1250 MW» in Iraq, with a contractual value
of $401,2 million which in the period under review recorded a
turnover of
76,8 million.
d) The continuation of the project «Construction and commis-
sioning of a 143 MW power plant» in Zarka, Jordan, with a con-
tractual value of $ 143 million and 11 million JOD, which in the
period under review recorded a turnover of
64,6 million.
e) The continuation of the project «Con-
struction 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 recorded a turnover of
52,3
million.
f) The «Construction and commissioning of
an open-cycle, natural-gas fired, two tur-
bine power plant of 368,152 MW» in Alge-
ria with a contractual value of
72 million
and DZD 2.127 million, which in the period
under review recorded a turnover of
44,2
million.
and g) The «Construction of 8 mobile gen-
erators of 179,72 MW
» in Algeria, with a
contractual value of
$66 million, which in
the period under review recorded a turn-
over of
26,9 million.
The Group’s and the company’s gross
profit margin reached 19,0 % and 18,8% re-
spectively, while the EBITDA (earnings be-
fore interest, taxes depreciation and amor-
tization) of the Group were
103,9 million
(17,05%). Accordingly the Company’s
EBITDA amounted
88,8 million (16,17%).
The Group’s net earnings after taxes and
non-controlling stakes amounted to
90,2
million, and Company’s amounted to
73,9 million.
The Group’s net cash at hand at the end of
FY 2014 reached
283,87 million, a consid-
erable increase, which despite the negative
economic climate remain on a high level.
The financial position of the Group on De-
cember 31, 2014 continues to be satisfy-
ing and reflects its economic stability and
its future perspectives. The total equity in
December 31, 2014 amounted to
508
million in comparison to the
450 million
of December 31 2013, demonstrating an
increase by 12,9%.
Annual Report of the Board of Directors
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