METKA GROUP | ANNUAL REPORT 2014 - page 112-113

111
110
Annual Financial Statements
41.5 Cash Flow Risk and fair value risk due to changes in
Interest Rate
The operating income and cash flow of Group is essentially indepen-
dent from changes at prices of interest rate. The Group does not pos-
sess short-term and long term debt, nor significant interest investment.
Group’s borrowing in 31 December 2014 is
4.440 th. and concerns
short-term borrowing. (See note 27, for further information).
Group’s policy is to continuously monitor interest rate trends and it’s
financing needs
The following table illustrates the sensitivity of net result for the year
and Group’s equity to a reasonable possible change in interest rate
by + 3% or – 3% (2013: +/- 3%). These changes are considered
to be reasonably possible based on observation of current market
conditions.
Amounts in thousands
31/12/2014
31/12/2013
3% -3% +0,5% -0,5%
Earnings before tax
(137)
137
(1,279)
1,279
Equity
(101)
101
(946)
946
41.6 Market Risk
The Group’s risk from changes in Group securities is considered
immaterial.
41.7 Other risks and uncertainties
a) Project’s performance and procurement risk
Possible risks which may arise from commercial transactions of Group
is the delay in procurement of plant and equipment and the delay by
subcontractors in the completion of construction work which may re-
sult in overall delay of the completion of the projects undertaken and
therefore the imposition of penalties for breaching the contractual
terms.
Due to the nature of its projects, the Group is exposed to risks related
to the design, procurement, and commissioning of power plants. The
risks are due to:
- Mechanical damages to equipment
- Unforeseen construction circumstances
- Delays due to bad weather
- Unforeseen cost increases of material and equipment
Due to the Group’s long – standing experience, the strict selection of
sub-contractors and suppliers, the Audit Division and the quality as-
surance of these, is not exposed to major risks regarding the proper
implementation of works and supplies that assigns. In addition, guar-
antees are required from co-suppliers, in the form of bank assurance
(performance, supply materials, etc.).
b) Insurance Risk
The insurance risk arises from the Compa-
ny’s activities and is associated with vari-
ous events, including accidents, injuries,
damage in equipment and force majeure
events. All of the above events are most
likely to cause delays and in worst-case
cease of work. Any such developments
would hinder the financial position and re-
sults of the Group.
In order to address the above risks, the
Group proceeds to the 100% insurance
against such risks to cover the total value
of projects and activities with all-risk insur-
ance policies (Erection All Risks & Con-
struction All Risks), including civil liability,
employer liability, machinery, vehicles etc
to renowned international insurance firms.
However, the existing insurance policies
cannot always fully cover possible damag-
es from unexpected events such as natural
disaster, war or terrorist attacks.
c) Risks arising from geopolitical
factors
Apart from the Group’s activity in Syria,
there is no foreseeable risk for the Com-
pany due to geopolitical factors. Concern-
ing the activity in Syria, it should be clear
that METKA is not subjected into investor’s
risks but to the risks of a manufacturer with
assured funding and confirmed credit.
Nevertheless, the postponement of works
for a certain period, the necessity for ex-
tremely high safety measures, our extend-
ed presence in the Project, the increased
freight and insurance charges, and the
extraordinary, in general, conditions under
which the Project continues today, have
increased significantly the cost although
not to a degree which hinders its continu-
ation, expecting of course a compensation
from the client for all proven over-expenses
which are imposed to us for reasons out-
side our responsibility.
42. Fair value of financial instruments
Analysis of financial assets and financial liabilities is as follows:
Group METKA
METKA S.A.
2014
2013
2014
2013
(Amounts in thousands
)
Non current assets
-
-
Financial Assets Available for Sale
31
32
22
23
Other Long-term Receivables
78,241
37,088
72,650
30,626
Total
78,272
37,119
72,672
30,650
Current assets
-
-
Financial assets at fair value through profit or loss
2,500
1,167
2,500
-
Trade and other receivables
401,603
526,351
365,052
463,641
Cash and cash equivalents
288,314
134,542
192,866
56,398
Total
692,416
662,060
560,417
520,039
Non-Current Liabilities
-
-
Long-term debt
2,090
2,403
-
-
Other long-term liabilities
38,186
63,640
38,186
63,451
Total
40,277
66,043
38,186
63,451
Current Liabilities
-
-
Short-term debt
2,350
7,252
-
4,840
Trade and other payables
297,857
235,671
288,761
224,230
Total
300,207
242,923
288,761
229,070
Fair Value Chain
The funds of each type of financial instruments of the balance
sheet, valued at the fair value, for disclosure reasons, should be
registered at the following three levels, depending on their data
quality used for the evaluation of the fair value:
• Level 1:
Investments that are valued at fair value based
on quoted (unadjusted) prices in active markets for iden-
tical assets or liabilities.
• Level 2:
Investments that are valued at fair value, using
valuation techniques for which all inputs, which have a
significant fair value, are based (either directly or indirect-
ly) on observable market data.
• Level 3:
Investments that are val-
ued at fair value, using valuation
techniques, in which the data, sig-
nificantly affecting the fair value, are
not based on observable market
data.
The financial instruments of the Group and
the Company, valued at the fair value on a
recurring basis, are registered at the follow-
ing three levels:
1...,92-93,94-95,96-97,98-99,100-101,102-103,104-105,106-107,108-109,110-111 114-115,116-117,118-119,120-121,122-123,124-125,126-127,128-129,130
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