ANNUAL FINANCIAL REPORT - Terna Energy · ANNUAL FINANCIAL REPORT ... separate and consolidated...

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Société Anonyme Commercial Technical Company 85 Mesogeion Ave., 115 26 Athens SA Reg. No. 318/06/Β/86/28 ANNUAL FINANCIAL REPORT for the period from January 1st to December 31st 2014 In accordance with article 4 of L. 3556/2007 and the relevant executive Decisions by the Board of the Hellenic Capital Market Commission

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Transcript of ANNUAL FINANCIAL REPORT - Terna Energy · ANNUAL FINANCIAL REPORT ... separate and consolidated...

  • SocitAnonymeCommercialTechnicalCompany85MesogeionAve.,11526Athens

    SAReg.No.318/06//86/28

    ANNUALFINANCIALREPORT

    fortheperiod

    fromJanuary1sttoDecember31st2014

    Inaccordancewitharticle4ofL.3556/2007andtherelevantexecutiveDecisionsbytheBoardoftheHellenicCapitalMarketCommission

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    CONTENTS

    .STATEMENTSBYMEMBERSOFTHEBOARDOFDIRECTORS..................................................................................3.AUDITREPORTBYINDEPENDENTCERTIFIEDAUDITORACCOUNTANT................................................................4.ANNUALMANAGEMENTREPORTOFTHEBOARDOFDIRECTORSFORFINANCIALYEAR2014...........................6CORPORATEGOVERNANCESTATEMENT................................................................................................................13V.ANNUALFINANCIALSTATEMENTSPARENTANDCONSOLIDATEDOF31DECEMBER2014..............................21STATEMENTOFCASHFLOWS..................................................................................................................................261 ESTABLISHMENT&ACTIVITYOFTHECOMPANY...............................................................................................302 BASISFORTHEPRESENTATIONOFTHEFINANCIALSTATEMENTS.....................................................................303 SUMMARYOFKEYACCOUNTINGPRINCIPLES...................................................................................................384 GROUPSTRUCTURE............................................................................................................................................495 INFORMATIONREGARDINGOPERATINGSEGMENTS........................................................................................546 INTANGIBLEFIXEDASSETS.................................................................................................................................577 TANGIBLEFIXEDASSETS.....................................................................................................................................608 INVESTMENTASSETS..........................................................................................................................................649 PARTICIPATIONINASSOCIATECOMPANIES.......................................................................................................6410OTHERLONGTERMRECEIVABLES.....................................................................................................................6411INVENTORIES......................................................................................................................................................6512TRADERECEIVABLESANDPREPAYMENTSANDOTHERRECEIVABLES...............................................................6513AGREEMENTSFORTHECONSTRUCTIONOFTECHNICALWORKS......................................................................6714CASH&CASHEQUIVALENTS...........................................................................................................................6715LONGTERMLOANS............................................................................................................................................6716FINANCIALDERIVATIVES....................................................................................................................................6817PROVISIONSFORSTAFFRETIREMENTINDEMNITIES.........................................................................................6918OTHERPROVISIONS............................................................................................................................................7019GRANTS..............................................................................................................................................................7120FINANCIALLIABILITIES........................................................................................................................................7221SUPPLIERS...........................................................................................................................................................7222ACCRUEDANDOTHERLIABILITIES.....................................................................................................................7323SHORTTERMLOANS..........................................................................................................................................7324SHARECAPITAL...................................................................................................................................................7325EARNINGSPERSHARE........................................................................................................................................7426DIVIDENDS..........................................................................................................................................................7427INCOMETAX.......................................................................................................................................................7428COSTOFSALES,ADMINISTRATIVEANDRESEARCH&DEVELOPMENTEXPENSES.............................................7829OTHERINCOME/(EXPENSES)..............................................................................................................................7930FINANCIALINCOME/(EXPENSES)........................................................................................................................8031PAYROLLCOST....................................................................................................................................................8132TRANSACTIONSWITHRELATEDPARTIES...........................................................................................................8133AIMANDPOLICIESOFRISKMANAGEMENT.......................................................................................................8234POLICIESANDPROCEDURESFORCAPITALMANAGEMENT...............................................................................8735EXISTINGCOLLATERALASSETS...........................................................................................................................8836SIGNIFICANTEVENTSDURINGTHEPERIOD.......................................................................................................8837SIGNIFICANTEVENTSAFTERTHEREPORTINGPERIOD......................................................................................8938CONTINGENTLIABILITIES....................................................................................................................................89V.DATAANDINFORMATIONFORTHEPERIOD1.131.12.2014.............................................................................90

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    .STATEMENTSBYMEMBERSOFTHEBOARDOFDIRECTORS(accordingtoarticle4par.2ofLaw3556/2007)

    We

    1. GeorgePeristeris,ChairmanoftheBoard

    2. EmmanuelMaragoudakis,ChiefExecutiveOfficer

    3. GeorgeSpyrou,ExecutiveMemberoftheBoard

    STATETHAT

    Tothebestofourknowledge:

    a.Theannualcompanyandconsolidated financialstatementsofTERNAENERGYABETE for theperiod from

    January1st2014toDecember31st2014,whichwerepreparedinaccordancewiththeaccountingstandardsin

    effect,giveatruepictureoftheassetsandliabilities,theshareholdersequityandtheresultsfortheperiodof

    theGroupandCompany,aswellasofthecompaniesincludedintheconsolidationandconsideredaggregately

    asawhole,and

    b.TheBoardofDirectorsReportdepictsinatruemannertheperformance,developmentsandpositionofthe

    Companyaswellasofthecompanies included intheconsolidationasawhole,alongwiththedescriptionof

    themajorrisksanduncertaintiestheGroupfaces.

    Athens,27March2015

    ChairmanoftheBoard ChiefExecutiveOfficer Boardmember

    GeorgePeristeris EmmanuelMaragoudakis GeorgeSpyrou

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    .AUDITREPORTBYINDEPENDENTCERTIFIEDAUDITORACCOUNTANT

    TotheShareholdersofTERNAENERGYSOCIETEANONYMECOMMERCIALTECHNICALCOMPANYS.A.ReportontheFinancialStatementsWe have audited the accompanying separate and consolidated financial statements of TERNA ENERGYSOCIETE ANONYME INDUSTRIAL COMMERCIAL TECNHNICAL COMPANY S.A. and its subsidiaries, whichcomprise the separate and consolidated statementof financialposition as atDecember31,2014, and theseparate and consolidated statement of comprehensive income, statement of changes in equity andstatementofcashflowsfortheyearthenended,andasummaryofsignificantaccountingpoliciesandotherexplanatoryinformation.ManagementsResponsibilityfortheSeparateandConsolidatedFinancialStatementsManagement is responsible for the preparation and fair presentation of these separate and consolidatedfinancial statements in accordancewith International Financial Reporting Standards, and for such internalcontrol asmanagement determines is necessary to enable the preparation of separate and consolidatedfinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.AuditorsResponsibilityOurresponsibility istoexpressanopinionontheseseparateandconsolidatedfinancialstatementsbasedonouraudit.Weconductedouraudit inaccordancewith InternationalStandardsonAuditing.Thosestandardsrequire that we comply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether the separate and consolidated financial statements are free from materialmisstatement.Anaudit involvesperformingprocedurestoobtainauditevidenceabouttheamountsanddisclosures intheseparateandconsolidatedfinancialstatements.Theproceduresselecteddependontheauditors judgment,including the assessment of the risks ofmaterialmisstatement of the separate and consolidated financialstatements,whetherdue to fraudorerror. Inmaking thoseriskassessments, theauditorconsiders internalcontrol relevant to theentityspreparationand fairpresentationof theseparateandconsolidated financialstatements inorder todesign auditprocedures that are appropriate in the circumstances,butnot for thepurposeofexpressinganopinionontheeffectivenessoftheentitys internalcontrol.Anauditalso includesevaluating theappropriatenessofaccountingpoliciesusedand the reasonablenessofaccountingestimatesmade by management, as well as evaluating the overall presentation of the separate and consolidatedfinancialstatements.Webelievethattheauditevidencewehaveobtained issufficientandappropriatetoprovideabasisforourauditopinion.OpinionInouropinion,theseparateandconsolidatedfinancialstatementspresentfairly, inallmaterialrespects,thefinancial position of company TERNA ENERGY SOCIETE ANONYME INDUSTRIAL COMMERCIAL TECNHNICALCOMPANYS.A.anditssubsidiariesasatDecember31,2014,anditsfinancialperformanceanditscashflowsfortheyearthenendedinaccordancewithInternationalFinancialReportingStandards.

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    ReportonOtherLegalandRegulatoryRequirementsa) TheBoardofDirectorsReport includesa statementof thecorporategovernance thatprovidesall the

    informationrequiredbyParagraph3dofarticle43aofLaw2190/1920.

    b) WeverifiedtheagreementandcorrespondenceofthecontentoftheBoardofDirectorsReportwiththeabovementioned separate and consolidated Financial Statements, in the scopeof the requirementsofArticles43a,108and37ofLaw2190/1920.

    Athens,March30th,2015TheCharteredAccountant

    GeorgiosDeligiannisSOELReg.No:15791

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    .ANNUALMANAGEMENTREPORTOFTHEBOARDOFDIRECTORSFORFINANCIALYEAR2014

    DearShareholders,According to theprovisionsofC.L.2190/1920 (article43par.3,article107par.3andarticle136,par.2)aswell as L. 3556/2007 article 4 par. 2(c), 6, 7& 8 and the decision issued by the Hellenic CapitalMarketCommission under No. 7/448/11102007 article 2 and the Companys Articles of Association,we herebysubmit the annual management report by the board of directors for the present financial year from01/01/2014 to31/12/2014,which includes theauditedcompanyandconsolidated financialstatements, thenotesonthefinancialstatementsandtheauditreportbythecertifiedauditorsaccountants..FinancialDevelopments&PerformancefortheReportingPeriodIn2014,theGreekeconomydemonstratedsignsofareversalinitscourseofcontractionforthefirsttimeinrecentyears.IntheRESsector,thenewregulatory framework (NewDeal)clarifiesthebroadercontextoftheCompanysoperationsandinvestments,andalsosolidifiestheviabilityofthesystem,followingtheremovalofstructuralweaknesseswhichhadbroughttheRESsectorinacriticalpoint.Inthe internationalmarketplace,theRenewableEnergySourcessectorcontinuestoremainoneofthemostdynamicbusinesssectors.TERNAENERGY continues todynamically invest in this sector,witha total installed capacityof640MW inGreeceandabroad.TheGrouphasinstallationsof386MWinGreece,138MWintheUSA,86MWinPolandand30MWinBulgaria.Atthesametime,theGrouphasRESinstallationscurrentlyunderconstructionwithacapacityof95MW(79MWinGreeceand16MWinPoland).TheCompanysconstructionbusinesssegmentcontinuestorenderservicestoexternalcustomersaswellasfortheconstructionoftheCompanysownprojectsorofitssubsidiaries.Fortheyear2014,theGroupsconsolidatedsalesamountedto158.2mileurocomparedto139.6milin2013,postinga13.3% increasemainlydueto increased incomefromthesaleofenergyandtheentrance intothebusinessofenergy trading.Operatingprofit (EBITDA)amounted to74mileurocompared to69.9mil in thepreviousyear,increasedby6%duetotheGroupsincreasedcapacityintheenergysector.Earningsbeforetaxamounted to 12.1mil, increased by 22% compared to the previous year due to the increase in capacity.Earningsaftertaxandminorityinterestamountedto5.5mileuro,postinga34.1%decrease.As regards to the resultsof the individualsectors:Theenergy sectorgeneratedsalesof110.3millioneuro,postinga4.3%increasecomparedtotheyear2013,whereastheenergytradingsegmentpostedrevenuesof12.3 million euro. The operating profitability before depreciation and amortization of the energy sectoramounted to 73.7million euro,posting an increaseof 5.1% versus the year 2013,whereas the respectiveprofitabilityintheenergytradingbusinesswasmarginalgiventheshortperiodduringwhichthisactivitywascarriedoutin2014.TERNA ENERGYs construction activity towards third parties presented sales amounting to 35.5mil euro,postinga5% increaseversus theyear2013.Operatingearnings (EBITDA)of thesectoramounted to0.3mileuro compared to0.3mileuroofoperating loss in thepreviousyear.Thebacklogof constructionprojectstowardsthirdpartiesattheendof2014amountedto95.4mileuro.

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    TheGroups financialposition remains constantly satisfactory, as its cash& cash equivalents amounted to168.8mileuro,whilebankdebtamountedto423.3mileuro,resultinginanetdebtposition(cashminusbankdebt)atthelevelof254.5mileuro.The Company continues to implement its growth and investment plan, which strengthens its steadilygeneratedcashflowsandprofitabilityoverthelongrun.TheBoardofDirectorsof theCompany intends toproposenodividenddistribution to theAnnualOrdinaryShareholdersMeeting. Furthermore, the Company intends to propose a capital return to its shareholdersamountingto0.09europershare.B.Significanteventsduringfinancialyear2014Duringtheyear2014theconstructionof7windparkswascompletedwithtotal118.1MWcapacity,andnewOperationLicensesoftotal53.9MWcapacitywereissued.InPoland, theGroupproceededwith theacquisitionof threecompanieswhichhold installation licensesofWindParkswithatotal16MWcapacity,whereasduringAugust2014operationscommenced inawindparkwith12MWcapacity.Furthermore, theGroupentered intoanewbusiness, the tradingofelectricenergy,via theacquisitionofacompanyinSerbiaandtheestablishmentofacompanyinFYROM.Followingitsselectionasthepreferredbidderoftherelevantauctionin2013,theGroupsignedanagreementwiththePeripheryofPeloponnesefortheTotalWasteManagementofthePeloponnesePeripheryviaSDIT(PPP).ThecontractualagreementhasbeensubmittedtotheCourtofAudit.Finally, theGroup signed an agreement for theproject Study, financing, installation,operational support,maintenance and technical administration of the unified automatic system for the collection of ticketpayments for the companies of the Group OASA through SDIT. The project will be implemented inpartnershipwiththeKoreanGroupLGCNS.C.SignificantEventsaftertheendoffinancialyear2014In thebeginningof2015, theoperation licensesof2windparks inGreece,of total40.2MWcapacity,wereissued.TheGroupcommencedtheconstructionof3windparksinPoland,oftotal16MWcapacity.D.RisksandUncertaintiesTheGroupsactivitiesaresubjecttoseveralrisksanduncertainties,suchasmarketrisk(volatilityinexchangerates,interestrates,marketpricesetc.),creditriskandliquidityrisk,windandweatherconditions.Inordertohandlesuchfinancialrisks,theGrouphasariskmanagementprogramthataimsatminimizingthenegativeeffectonthefinancialresultsofthegroupthatemergesfromtheinabilitytopredictfinancialmarketsandthevolatilityofthecostandsalesvariables.The financial instrumentsusedby theGroupmainly consistofbankdeposits, tradedebtors and creditors,otherreceivableandpayableaccounts,longtermandshorttermloans,aswellasderivatives.FollowingistheeffectofbasicrisksanduncertaintiesontheGroupsactivitiespresented.CreditriskTheGroupcontinuouslycontrolsitsreceivables,eitherseparatelyorbygroupanditincorporatestheresultinginformationinitscreditcontrol.

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    The totalofreceivablesof theenergysectorconcerns thebroaderpublicsector,nationally (includingLAGIEandHEDNO)andabroad,whilethesameappliesforthemajorityofreceivablesoftheconstructionsector.The Group, traditionally, by nature of its operations, is not exposed to significant credit risk from tradereceivables, apart from possible overdue payments. However, the special RES account for LAGIE, throughwhichthereceivablesoftheGroupinGreeceareredeemed,presentedin2013asignificantdeficitasaresultoftheunprecedentedcrisisfacedbytheGreekeconomyduringthelatestyears.Inthiscontext,thecollectionoftheGroup'sreceivablesfromLAGIEandHEDNOpostedaseriousdelay.InMarch2014,theLaw4254wasenactedimposingretroactivereductionofsellingpricesforelectricityby10%forwindparksandby35%forphotovoltaicparks.Fromtheabovementionedprovisions,theGroup'slossofaccruedreceivablessettlesat6.56million,amountforwhichithasalreadymadeanequalprovisioninthefinancialstatements.Creditriskforcashequivalents,aswellasforotherreceivablesisnegligible,giventhattherelevantpartiesarereliablebankswithhighqualitycapitalstructure,theGreekstateorcompaniesofthebroaderpublicsectororpowerfulbusinessgroups.TheGroupsmanagement considers thatall theabovementioned financial assets, forwhich thenecessaryimpairmentshavetakenplace,areofhighcreditquality.ForeignexchangeriskApartfromGreece,theGroupoperates inEasternEuropeandtheUnitedStatesofAmericaandtherefore itmaybeexposed to foreignexchange risk thatmay result from theexchange rateof theeuroagainstothercurrencies. This type of risk may arise only from trade transactions in foreign currency, from financialinvestments in foreign currency, as well as from net investments in foreign entities. Tomanage foreignexchangerisk,thegroupsfinancialmanagementdepartmentensuresthatthegroupscapitalmanagementisprotectedfromrisksfromchangesinexchangerates.With regards to the companys transactionswith foreign entities, suchprimarily take placewith Europeangroupswherethesettlementcurrencyistheeuroandthereforesuchtransactionsarenotexposedtoforeignexchangerisk.InterestrateriskTheGroupspolicyistominimizeitsexposuretointerestrateriskwithregardstolongtermfinancing.Inthecontextofthispolicy,the longterm loansreceivedbytheGroupareeitherunderfixed interestratesorarehedgedforinterestrateriskforalmostthewholeoftheirduration.Therefore,30%oftheGroupslongtermdebt is under fixed interest rates, 30% refers to floating interest rate loans that have been hedgedwithderivativesthroughwhich futurepaymentsof fixed interestrateareexchangedwith future floating interestratereceipts,while40%isunderfloatinginterestrateseitherlinkedtoeuribororwibor.TheGroupstotalshorttermdebt is ineurounderfloating interestrates linkedtoeuribor.Shortterm loansareprimarilyreceivedasbridgefinancingduringthephaseofimplementationandconstructionoftheGroupsinvestments.Therelevantloansarerepaideitherwhentherelevantgovernmentgrantsarereceivedorthroughlongtermloansduringthecompletionofconstructionandcommencementofoperationofthewindparks.Theseloansareexpectedtoberepaidwithinoneyear,whilenewshorttermloansareexpectedtobereceivedtofinancetheconstructionofnewwindparks.ThereforetheGroup isexposedto interestrateriskarising fromshorttermdebtandthepartoflongtermdebtthatisunderfloatinginterestrates.

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    SensitivityanalysisofinterestrateriskTheGroupspolicyistominimizeitsexposuretocashflowriskfrominterestrateswithregardstoitslongtermfinancing. In the context of this policy, longterm loans are a) fixed rate, b) floating rate hedged throughderivativesandc)floatingratelinkedtoeuriborandwibor.Amongthese,thefixedrateloansandfloatingrateloanshedgedthroughderivativesarenotexposedtointerestraterisk,whilefloatingrateloansareexposedtosuchrisk.ThefollowingtablepresentsthesensitivityoftheyearsresultsagainsttheGroupsdebtanddeposits,toaninterestratechangeof+20%20%(2013:+/20%aswell).Theinterestratechangesexaminedareconsideredtofluctuateonareasonablebasisgiventherecentmarketconditionand,untiltoday,appearstableinrelationtothepreviousyear.

    2014 2013

    Amountsinthousands 20% (20%) 20% (20%)

    ResultaftertaxGroup (100) 100 (96) 96

    ResultaftertaxCompany (19) 19 (18) 18

    TheGroupisnotexposedtootherinterestraterisks.AnalysisofmarketriskTheGroup isnotexposed tomarket riskwith regards to its financialassets,apart froma longterm liabilityamountingto6,058thousandeuro,thefuturecashflowsofwhichare linkedtotheEurozone inflationrateexcluding tobacco.According to the currentmarket conditions, the risk of change in the fair value of theliabilityisconsideredlimited.AnalysisofliquidityriskTheGroups liquidity isconsideredsatisfactory,asapartfromexistingcashandcashequivalents,windparkscurrently inoperation create satisfactory cash flows.Net cash flows fromoperatingactivitiesamounted to59.3mil euro during 2014 compared to 44.1mil euro in 2013. TheGroupmanages its liquidity needs byapplyingacautiouscashflowplanning,bycarefullymonitoringthebalanceoflongtermfinancialliabilitiesaswellasby systematicallymanaging thepaymentswhich takeplaceonadailybasis.The liquidityneedsaremonitoredatdifferent time zones,onadailyandweeklybasis,aswellason thebasisofamoving30dayperiod.Theliquidityneedsforthenext6monthsandthenextyeararedefinedmonthly.Thecompanymaintainscashandcashequivalentsinbanks,inordertocoveritsliquidityneedsforperiodsupto30days.Thecapitalformidtermliquidityneedsisreleasedfromthecompanystermdeposits.OtherrisksanduncertaintiesThecompany remainsexposed to shortterm fluctuationsofwindandhydrologicdata,a facthowever thatdoesnot affect the longterm efficiencyof itsprojects, asprior to the implementationof the investmentsextensivestudiestakeplacewithregardstothelongtermbehaviorofsuchfactors.

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    TheconstructionsectorofTERNAENERGYissubjecttosignificantfluctuations,bothwithregardstoturnoverand with regards to the profitability of each construction project, because the construction activity,particularly of specialized companies such as ours, entails increased volatility that ismainly related to theongoing renewalof thebacklogof construction agreements towards thirdparties,which aremainlyPublicentities..Prospects&OutlookTheprospectsofTERNAENERGYGroupfortheyear2015arepositivegiventhat(a)theconstructionofalargenumberofnewRESprojectswascompleted in2014and theseprojectsareexpected togenerate revenueswithin2015whereas (b)newprojectsof total95MWcapacityareconstructedand (c)new investmentsarematuringintermsoflicensingandfinancing,andwillbeinitiatedoverthefollowingperiod.F.TreasurySharesDuringtheperiod01/01/201431/12/2014,theCompanyboughtback1,833,828shareswithanominalvalueof550,148.40euroandvalueof4,903,549.98euro.ThetotalnumberoftreasurysharesheldbytheCompanyasof31/12/2014hadreachedthenumberof2,383,843shares, i.e.2.1807%ofthetotalsharecapital,withatotalacquisitioncostof6,171,173.33euro.G.TransactionswithRelatedPartiesAccordingto I.A.S.24,asrelatedpartiesareconsideredsubsidiaries,companieswith jointownershipand/orManagementwiththecompany,associatecompaniesaswellastheparentcompanyandthesubsidiariesoftheparentcompany,andalsomembersoftheBoardofDirectorsandthecompanysseniorexecutives.TheCompanyprocuresgoodsandservicesfromitsrelatedcompanies,whileitalsosuppliesgoodsandservicestothem.Transactionsandbalancesfor2014areasfollows:

    TERNAENERGYSA SALES PURCHASES RECEIVABLE LIABILITY

    SUBSIDIARIES

    IWECOCHONOSLASITHICRETESA 120,000 86,253 440,810

    TERNAENERGYEVROUSA 380,000 169,388 4,574,317

    ENERGIAKISERVOUNIOUSA 310,000 8,281 1,349,600

    AIOLIKIPANORAMATOSDERVENOCHORIONSA 1,118,197 704,012

    AIOLIKIILIOKASTROUSA 3,311,835 11,891,759

    AIOLIKIRACHOULASDERVENOCHORIONSA 1,196,000 7,902,337

    ENERGIAKIDERVENOCHORIONSA 269,533

    ENERGIAKIFERRONEVROUSA 351,869 39,975

    AIOLIKIDERVENITRAIANOUPOLEOSSA 4,345,277 1,365,600 AIOLIKIPASTRAATTIKISSA 6,593,033 11,031,199 ENERGIAKIXIROVOUNIOUSA 493,176 5,982,111 VATHYCHORIENAPHOTOVOLTAICSA 377,111 2,678,991 EUROWINDSA 107,500 132,225 TERNAENERGEIAKIAIGIORGISSA 10,359,621 12,434,865

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    ENERGIAKINEAPOLOEOSLAKONIASSA 2,300,000

    DELTAAXIOUENERGEIAKIS,A, 45,730

    TERNAENERGYTHALASSIAWINDPARKSS,A, 6,836 TERNAENERGYWINDPARKSXIROKAMPOSAKRATASSA 118,922 VATHYCHORIPERVALLONTIKISA 29,405 CHRYSOUPOLIENERGEIAKILTD 10,549 ALISTRATIENERGYLTD 14,016 ORCHOMENOSENERGEIAKHLTD 3,290 MALESINAENERGEIAKHLTD 3,890 LAGADASENERGEIAKHSA 4,087 TERNAILIAKIVOIOTIASSA 700 VATHYCHORIDYOENERGEIAKI 3,040,344 TERNAAIOLIKIXEROVOUNIOUSA 1,061 GEOTHERMIKIENERGEIAKHANAPTYXIAKISA 1,265 TERNAENERGYOVERSEASLTD 79,274 GPENERGYLTD 20,000 GeneralandLimitedPartnerships 392,197

    PARENT

    GEKTERNASA 33,887 172,249 41,681 14,871

    OTHERRELATEDPARTIES

    VIOMEKSA 13,600

    TERNASA 492,233 159,475 24,155 151,158

    JointventuresinwhichTERNASAparticipates 8,173,241 5,833,824 5,614,342J/VRAILROADWORKSSATERNAENERGYSA 69,285 ILIOCHORASA 3,710 4,563 7,075,435GEKYPIRESIESSA 5,620 3,001EKTONONSA 1,269 10,010 9,741

    VIPATHESSALONIKISSA 25,200 200

    HERONTHERMOELECTRICSA 217,620 21,970 127,826Regardingtheabovetransactions,thefollowingclarificationsareprovided:SalesofTERNAENERGYSAto:

    IWECOCHONOSSAof120,000euroforRESmaintenanceservices TERNAENERGYEVROUSAof380,000euroforRESmaintenanceservices ENERGIAKISERVOUNIOUSAof310,000euroforRESmaintenanceservices AIOLIKI PANORAMATOS DERVENOCHORION SA of 1,118,197 euro of which 305,000 euro for RES

    maintenanceservices,224,120euroforinterestexpensesand589,077forconstructionservices AIOLIKI ILIOKASTROU SA of 3,311,835 euro of which 100,000 euro for RESmaintenance services,

    441,100euroforinterestexpensesand2,770,735forconstructionservices AIOLIKI RACHOULAS DERVENOCHORION SA of 1,196,000 euro of which 216,000 euro for RES

    maintenanceservicesand980,000forconstructionservices ENERGIAKI DERVENOCHORION SA of 269,533 euro of which 235,000 euro for RES maintenance

    servicesand34,533euroforinterestexpenses

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    ENERGIAKIFERRONEVROUSAof351,869euroofwhich65,000euro forRESmaintenance services,159,407euroforinterestexpensesand127,462forconstructionservices

    AIOLIKI DERVENI TRAIANOUPOLEOS SA of 4,345,277 euro of which 3,992,000 euro for RESmaintenanceservicesand353,277euroforinterestincome

    AIOLIKIPASTRAATTIKISSAof6,593,033euroofwhich113,333euro forRESmaintenance services,420,592euroforinterestexpensesand6,059,107forconstructionservices,

    ENERGIAKI XIROVOUNIOU SA of 493,176 euro ofwhich 46,000 euro forRESmaintenance services,317,176euroforinterestexpensesand130,000forconstructionservices,

    VATHYCHORI ENAPHOTOVOLTAIC SAof377,111 euroofwhich250,000 euro forRESmaintenanceservicesand127,111euroforinterestexpenses,

    EUROWINDSAof107,500euroforRESmaintenanceservices TERNAENERGEIAKIAIGIORGISSAof10,359,621euroofwhich1,824,178forconstructionservices

    and8.535,443forassetssale.PurchasesofTERNAENERGYSA:

    toIWECOCHONOSSAof86,253euroforinterestexpenses fromTERNAENERGYEVROUSAof169,388euroforinterestexpenses fromENERGIAKISERVOUNIOUSAof8,281euroforinterestexpenses

    SalesofTERNAENERGYSAto:

    GEKTERNASAof33,887euroforotherservices TERNA SAof492,233euro,ofwhich59,164euro for interestexpenses,79,590euro formachinery

    leasingexpenses,84,717euroforexpensesand268,762euroforconstructionservices JointVenturesinwhichTERNASAparticipatesof8,173,241euroforconstructionservices ILIOCHORASAof3,710euroforleasingexpenses

    PurchasesofTERNAENERGYSAfrom:

    GEKTERNASAof172,249euroforpropertyleasingexpenses VIOMEKSAof13,600euroforleasingexpenses TERNA SAof 159,475 euro,ofwhich 1,330 euro forother services, 84,220 euromachinery leasing

    expenses,and73,925euroforpurchaseofmaterials GEKSERVICESSAof5,620euroforotherservices EKTONONSAof1,269euroforotherservices VIPATHESSALONIKISAof25,200euroforleasingexpenses HERONTHERMOELECTRICSAof81,007euroforotherservices

    TransactionswithBoardmembersThe total remuneration toBoardmembers amounted to1,288,000euro,ofwhich1,025,000euro concernBoardremunerationwhile263,000euroconcerntheprovisionofservices.

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    CORPORATEGOVERNANCESTATEMENT

    1.CorporateGovernanceCodeThe company applies all the established rules of the legislative, regulatory and other authorities,withoutexceptions, on all of its activities and operations.Moreover, it has adopted internal rules and businesspractices that contribute to the adherence to transparency principles, professional ethics and prudentmanagementofallcompanyresourcesatallmanagementlevels,tothebenefitofitsshareholdersandrelatedparties. The overall above rules and practices are incorporated in the CorporateGovernance Code (CGC),whichwaspreparedbythecompany,inlinewiththeprovisionsofLaw3873/2010.TheCodehasbeenpostedonthecompanyswebsitewww.ternaenergy.com.2.CorporategovernancerulesandpracticesTheCGCstates,withclarityandaccuracy,thefollowingcorporategovernancerulesandpracticesindetail:BoardofDirectorsThe role, alongwith its responsibilities andduties to set and apply the companys strategywith thebasicobjectiveofprotecting the interestofallShareholders,are clearlydefined.As thehighestauthority in thecompanysmanagement,theBoardofDirectorsdecidesonallthecorporateaffairs,apartfromthosethatfallundertheresponsibilityoftheGeneralMeeting.Specifically,theresponsibilitiesoftheBoardofDirectorsinclude: thelongtermstrategicandmidtermbusinessplanningofthecompany decisionsofstrategicimportance,suchasacquisitions,mergers,liquidations,highbudgetinvestments theplanningofthegeneral,aswellasthespecific,basicpoliciesforthecompanysoperation theapproval,supervisionandevaluationoftheimplementationofannualprojectsandbudgets ensuringthereliabilityandcompletenessoftheaccountingfinancialsystemsanddataandthecompany

    financialstatementsderivedfromsuch ensuringthesmoothandproperoperationoftheappropriatesystemsandmechanismsforthecompanys

    internal audit, adhering to the companys legal operational framework, as well as assessing andmanagingthebusinessrisksitfaces

    thecontinuouseffortfortheavoidanceorprudenthandlingofapossibleconflictofinterestoftheBoardof Directors or its members or basic shareholders with the interests of the company, by adoptingtransparencyandmonitoringrulesonitstransactions

    theselectionoftheManagingDirectorandtheremainingmembersoftheBoard,whicharealsoevaluatedontheiroverallactivity

    defining the remunerationofBoardmembers andproposing their approvalby theGeneralMeetingofShareholders,aswellasdecidingontheremunerationofthecompanysseniorexecutives

    decidingonthecompanysorganizationalstructure,managementsystemsandprocedures,aswellastheamendmentofsuch,whendeemednecessarybythecompanysinternalandexternaloperationconditions

    theestablishmentandeffort toensure theproperoperationof committees specifiedby theCorporateGovernancePrinciples(AuditCommitteeandNominationandRemunerationCommittee)

    theestablishmentof collectivebodieswhendeemednecessary for the improvementof the companysefficiencyandoperation

  • 14

    the definition and effort to lay out and apply basic company values and principles, including those ofcorporategovernance,throughoutitsoverallrelationshipwithallrelatedparties.

    TheOrdinaryGeneralMeeting of Shareholders of the 24thMay 2012 elected a new Board ofDirectors tomanagetheCompanyforafiveyearperiodfromthedateofitselection,termwhichisautomaticallyextendeduntiltheAnnualGeneralMeetingtobeconvenednolaterthan30.06.2017.ThecompositionofthenewBoardofDirectorsisasfollows:1. GeorgePeristerisofTheodoros ChairmanExecutiveMember2. GeorgePerdikarisofGerasimos ViceChairmanExecutiveMember3. EmmanuelMaragoudakisofVasilios ChiefExecutiveOfficerExecutiveMember4. GeorgeSpyrouofSymeon ExecutiveDirectorExecutiveMember5. MichaelGourzisofAlexandros ExecutiveMember6. PanagiotisPothosofGeorge ExecutiveMember7. TheodorosTagasofChristos NonExecutiveMember8. AristeidisNtasisofKonstantinos IndependentNonExecutiveMember9. NikolaosKalamarasofDionysios IndependentNonExecutiveMemberTheresponsibilityofCompanySecretarywasappointedtotheManagingDirectorMr.GeorgeSpyrou.TheCVsoftheBoardMembersarepostedonthecompanyswebsite.DuringtheexerciseoftheirdutiesandtheBoardmeetingsin2014,theBoardmembersexhibiteddiligenceof a prudent businessman, dedicated the sufficient time needed for the efficient management of thecompany,actedwithintegrity,accountabilityandproperjudgment,avoidingactionsthatcouldendangerthecompanys competitiveness or conflict its interests.Also, they protected the confidentiality of informationthey had privileged access to and ensured the prompt and simultaneous provision of information to allshareholders and interest investorson issues that could affect theirdecision to realize any transactiononcompanyshares.DuringtheBoardmeetingsanditsactivities,theBoardwassupportedbytheCompanySecretaryMr.GeorgeSpyrou,theresponsibilitiesofwhicharedescribedintheCGC.ChairmanoftheBoardofDirectorsTheChairmanrepresentsthebasicinstrumentforapplyingCorporateGovernancePrinciplesinthecompany,with responsibility, among others, for the efficient operation of the Board of Directors and the activeparticipationofall itsmembers inmakingandreviewingtheapplicationofbusinessdecisions,aswellasforthesmoothcommunicationbetweenthecompanyanditsshareholders.TheChairmans responsibilities includeconveningandaddressing theBoardsactivitieson the issuesof thedailyagendapreparedbytheChairmanhimselfaccordingtothecompanysneedsandtherelevantrequestsbyotherBoardmembers,theprovisionfortheefficientcoordinationandsmoothcommunicationbetweenallBoardmembers, aswell asbetween the company and its shareholders investors,which isbasedon theprompt, clear and reliable provision of information towards Board members on the total activities andoperationof thecompany,aswellasensuring thesmooth incorporationofothermembers to theBoardofDirectorsand theirmotivation inorder toencourage theiractiveand substantialparticipation in corporateaffairsandthedecisionmakingprocess.

  • 15

    TheBoardofDirectorsissupportedbyCommittees,whichcarryanadvisoryrole,butwhichalsocarryaheavyweightinthedecisionmakingprocessoftheBoard.TheCommitteesareasfollows:NominationandRemunerationCommitteeThe Nomination and Remuneration Committee consists of threemembers and its role is to explore andproposethepropernomineesforelectioninthecompanysBoardofDirectors,aswellastoproposepoliciesandsystemsthatdefineremunerationforallcompanylevels.TheCommittees responsibilities, in relation toproposingnominees,mainly includedefining the companysrequirementsasregardstothesizeandcompositionofitsBoardofDirectors,definingtherole,responsibilitiesand skills of each position within the Board of Directors, the periodic review of the Boards size andcompositionandthesubmissionofproposalsforchangesimprovementswhendeemednecessary.In relation to its responsibilities on remuneration issues, the Nomination and Remuneration Committeeconvenesforsuchat leasttwiceayearandwheneverelsedeemednecessary.Itprocessesandproposesthesystem that defines remuneration of employees, Boardmembers and senior executives, it prepares andsubmitstotheBoardproposalsforthecorporateremunerationpolicyandassessesitsapplicationaccordingtotherelevantannualremunerationreportanditpreparestheproposalsthatmustbesubmittedbytheBoardtotheGeneralMeetingofshareholdersforapproval.The Committee, which is formed by the followingmembers: EmmanuelMaragoudakis CEO, executivemember, Theodoros Tagas nonexecutive member and Aristeidis Ntasis independent nonexecutivemember, convened once during the year and confirmed that no change occurred in the Companysremunerationpolicyduring2014.InvestmentCommitteeThemidlongtermstrategicplanningforthecompanysdevelopmentincludes,amongstothers,thefollowinginvestmentpolicyinordertoachieveandmaintainitsbusinessobjectivesthroughtime.The companys Board ofDirectors is the responsible body that sets and applies investment policy. In thiscontexttheBoardbases itsdecisionsontheappropriateproposalssubmittedbythe InvestmentCommitteewith regards toacquisitions,mergers,strategicalliances,highbudget investments, liquidationofassetsandanyotheractionofstrategicimportancethatmayaffectthecapitalstructureandfuturedevelopmentofthecompany.TheInvestmentCommitteeconvenesonceeveryquarterandatanyothertimedeemednecessaryfortheBoardtomakeinvestmentdecisions.TheInvestmentCommittee(I.C.)consistsoffivemembers,whilethree(3)membersfromthecompanysandits parents Boards participate in it together with two (2) senior executives or advisors of the company,accordingtothe issuetobediscussed.TheChairmanandManagingDirectoroftheparentcompanymaybemembers of the Investment Committee. As is the case of other company committees, the I.C. has thecharacter of providing proposals and notmaking decisions. Its basic responsibilities include preparing theinvestment policy and longterm investment plan of the company, evaluating and approving theimplementationof theannual investmentplan,aswellasanynew significant investment that is separatelysubmitted,examiningthecompanyscapitaladequacytoimplementeachinvestmentproposal,evaluatingthebusiness risks associatedwith such and evidencing its objective and confirming that its implementation isincludedintheapplicationmeasuresofthecompanysapprovedbusinessstrategy.

  • 16

    TheCommittee,whichisformedbythefollowingBoardmembers:EmmanuelMaragoudakisCEO,Executivemember,GeorgeSpyrouAdvisoronMandate,ExecutivememberandMichaelGourzisExecutivemember,duringitsmeetings,examinedtheimplementationprogressoftheCompanysplannedinvestments.AuditCommitteeTheAuditCommitteesupportstheBoardofDirectorsinfulfillingitsresponsibilitytoensurecomplianceofthecompanysbodiesandactionswiththeprovisionsofthe legal institutionalregulatoryframeworkandtheCorporateGovernancePrinciplesthatgovern itsoperation,thecompletenessandreliabilityoraccounting,ITandadministrativesystemsofthecompanyandthederivedbysuchpublishedfinancialstatementsandotherreports,aswellas thesmoothandeffectiveoperationofall thecompanyscontrolmechanisms inorder topromptlyidentify,apartfromtheabove,businessrisksandhandlesuchprudentlyandeffectively.TheAuditCommitteeconvenesatleastfourtimesayearandwheneverelseitdeemsnecessary.Itinvitestheordinaryauditortoitsmeetingatleasttwiceayeartoprovideclarificationsexplanationsonitsactivityanditscommentsconclusionsonthefinancialstatementsandthegeneralfinancialinformationofthecompany.TheAuditCommitteehasthefollowing,bysubject,basicresponsibilities:It oversees the production procedure of the companys financial statements and other financial reports,examinestheirreliabilityandprovidesforthesmoothoperationoftheinternalcontrolsactivitiesprovidingitssupport, and also periodically reviews the adequacy and reliability of internal control mechanisms andmechanisms for themanagementofbusiness riskswith the following criteria: theprompt identificationofbusinessriskandthequickresponsetohandlesuch.Itinvestigatespossibletransactionsofthecompanywithany relatedparty indetailand submits relevant reports to theBoardofDirectors inorder toevaluate thepossibilityofpresentconflictsofinterestwithcompletetransparencyandtopreventpossibledamageorlossforthecompany.Also, theAudit Committee receives the reports of the InternalAuditDivision, assesses their contents andproposestheheadoftheDivisiontotheBoardofDirectors,evaluatestheeffectivenessandefficiencyofsuch,andbasedontheaboveproposesthecontinuityorterminationofhis/herresponsibilities.TheAuditCommitteemonitorstheconductofactivitiesbytheordinaryauditorandassesseswhethersuchisinaccordancewiththerelevantlegalregulatoryframework,theinternationalstandardsandbestpractices.Italso examines and evaluates the adequacy of knowledge, professional consistency, independence andeffectivenessoftheordinaryauditor,andbasedonsuchproposestotheBoardofDirectorsthecontinuanceorterminationoftherelationshipwiththeordinaryauditor.The Audit Committee consists of at least three (3) nonexecutive Board members, of which one (1) isindependent. At least one (1) of the threemembersmust have adequate knowledge and experience inaccountingandauditing issues.TheCGCalsostatesthatthenonexecutiveChairmanoftheBoardmaybeamemberoftheAuditCommitteeandtheChairmanofsuchaswell.ItsmembersareelectedbytheGeneralMeetingofShareholdersaccordingtoarticle37ofLaw3693/2008.TheAuditCommitteemembersthatwereelectedbytheGeneralMeetingof24May2012arethefollowing:TheodorosTagasnonExecutivememberAristeidisNtasisindependentnonExecutivememberNikolaosKalamarasindependentnonExecutivemember

  • 17

    TheAuditCommitteeconvenedfour(4)timesduring2014, itexercisedallof itsresponsibilitiesandtasks, itcooperatedwith the companys InternalAuditDepartment andprovided the appropriate guidance for thecontinuationoftheauditbysubjectandpriority.Itdiscussedwiththeheadofthecompanys internalauditabout itsfindingsandconclusionsandconfirmedthecorrectnessofthepreparationprocedureforthefinancialstatements.3.InternalControlandRiskManagementTheinternalcontrolsystemisdefinedasthesumofrulesandmeasuresappliedbythecompany,whichaimatthepreventiveand restrictivecontrolofoperationsandproceduresatall levelsof thecompanyshierarchyandorganizationalstructure,inordertoensure:thelegalityandsecurityofmanagementandtransactions,theaccuracy and reliability of published financial statements and any other financial information andannouncement,aswellastheeffectivenessofthecompanysoperationalsystemsandactivities.TheBoardemploys the internalcontrolsystemsoas toprotect thecompanysassets,estimate theevidentrisksarising fromallof itsoperationsandprovideaccurateand complete information to shareholderswithregardstotheactualconditionandprospectsofthecompany,aswellasthemanner inwhichdetectedrisksarehandled.To implement the above, the Board defines the operational context of the internal control, approves theconductandevaluationproceduresofitsresultsanddecidesonitscomposition,adheringtotherelevantlegalandregulatoryframework.Itestablishesaspecialinternalauditdivision,whichisindependent,isnotsubjectto anyhierarchy in relation to anyotherorganizationaldivision and is supervisedby the companysAuditCommittee.With the contribution of theAudit Committee, it evaluates the adequacy and effectiveness of the specialinternal audit division and the extent to which its reports are utilized by the Board for the continuousimprovement of the companys operation at all levels ant the effective management of business risks.Moreover,theAuditCommitteemaintainsdirectandregularcontactwiththeexternalauditors,inordertobysystematicallyinformedontheadequacyandreliabilityregardingtheoperationoftheinternalcontrolandriskmanagementsystems,aswellastheaccuracyandreliabilityofthefinancialinformation.Theevaluationandmanagementofrisksduring2014isdescribedintherelevantparagraphofthecompanysAnnualFinancialReport.4.RelationsCommunicationwithShareholdersInvestorsTheBoardofDirectorsemphasizesgreatlyonprotectingtherightsofallcompanyShareholders,byfacilitatingtheinformationtheyreceiveonthedevelopmentofcorporateaffairsandbyencouragingtheirparticipationintheGeneralMeetings,wheretheyhavetheopportunitytocommunicatedirectlywithManagement,submitquestionstheymayhaveandcontributetothefinalpositioningofthecompanysstrategicdirections.ThecompanyhasaspecialInvestorRelationsandShareholdersServiceDepartment,whichensuresthedirect,responsibleandcompleteprovisionofinformation,aswellasthefacilitationofshareholderstoexercisetheirrights.In the same context, theChairmanof theBoardand/orManagingDirectormay realize individualmeetingswith company shareholders that own a significant share of its capital,with the objective to providemoredetailed information on corporate governance issues. They also collect the views stated by shareholders,transfer such to the remainingBoardmembersandensure that theprinciplesandproceduresofcorporategovernanceandanyotherinformationusefulforshareholdersandinvestorsarepromptlyavailableandeasilyaccessiblethroughuptodatemeans.

  • 18

    5.GeneralMeetingofShareholdersThecompanyadherestothetotalrelevanttermsandprovisionsstipulatedbytheeffectivelegalregulatoryframeworkas regards to theGeneralMeetingof itsShareholders,withparticulardedicationon reinforcingtheir ability to smoothly exercise their rights, based on the completeness, accuracy and clarity of theinformation such receive promptly by the relevant company bodies, through all means available to thecompany.Aiming at the largest possible presence of its shareholders (institutional and private) during the GeneralMeeting,thecompanypromptlyannounces,throughanyappropriatemeans,thedailyagendaissues,thedateand locationwhere theGeneralMeetingwillconvene.To facilitate theiractiveparticipation in theGeneralMeetingsactivities, itprovidescomplete informationonthemanneranddeadlineforexercisingtherighttolistissuesonthedailyagenda,aswellastosubmitquestions.Also,itinformsshareholdersaboutthenumberofsharesandvotingrights,thevotingproceduresandoffersanyotherrequiredsupplementarydocumentinordertoconducttheGeneralMeetingsactivitiesmosteffectively.MembersoftheBoardofDirectors,thecompanyauditorsandanyotherseniorcompanyexecutive,whoareconsideredessentialfortheprovisionofdetailedinformationandclarificationsonshareholdersinquiries,arepresentattheGeneralMeetings.6.Disclosureof information requiredby items (c), (d), (f), (h)and (i)ofpar.1article10of thedirective

    2004/25/ECTherequiredinformationisalreadyincludedinanothersectionoftheManagementReportthatreferstotheadditionalinformationofarticle4par.7ofLaw3556/2007.7.CompliancewiththeprovisionsoftheCodeTheBoardofDirectorshascompliedwiththeprovisionsoftheCorporateGovernanceCodeduring2014.Additionally,theChairmanoftheBoD,Mr.GeorgePeristeris,afterremindingtheMembersoftheobligationoftheCompanytoprepareExplanatoryReportpursuanttopar.7thArticle4ofN.3556/2007,readsthereport,thecontentsofwhichhasasfollows:

  • 19

    EXPLANATORYREPORTOFTHEBOARDOFDIRECTORSINACCORDANCEWITHARTICLE4OFLAW3556/2007

    The present Explanatory Report of the Board of Directors is submitted towards the Ordinary GeneralShareholdersMeeting,accordingtoparagraph8article4ofL.3556/2007andhasbeenprepared,accordingtothosestipulatedinparagraph7ofarticle4ofthesamelaw.a)StructureofShareCapitalTheCompanyssharecapitalamountedtothirtytwomillion,sevenhundredandninetyfourthousand,threehundred and twenty euro (32,794,320 ) divided into one hundred and ninemillion, three hundred andfourteenthousandandfourhundred(109,314,400)commonregisteredvotingshareswithanominalvalueofthirtycents(0.30)each.TheCompanyssharesarelistedandtradedontheMainMarketoftheAthensStockExchange.All the rightsandobligations statedby Lawand theCompanysArticlesofAssociationemanate fromeachshare.b)LimitationstothetransferofCompanysharesThe transfer of Company shares takes place according to Law and there is no limitation to their transferaccordingtotheArticlesofAssociation.c)SignificantdirectorindirectparticipationaccordingtothedefinitionoftheprovisionsofL.3556/2007Shareholderswhichduring31/12/2014heldapercentagelargerthan5%,basedonthetotalissuedshares,arepresentedinthefollowingtable:NAMEOFSHAREHOLDER SHARES PERCENTAGEGEKTERNASA 45,051,059 41.212%(directly)GeorgePeristeris 26,981,012 24.682%YorkGlobalFinanceOffshoreBDH (Luxembourg)Sarl 8,412,606 7.696%d)SharesprovidingspecialcontrolrightsAccordingtotheCompanysArticlesofAssociationtherearenosharesthatprovidespecialcontrolrights.e)LimitationstovotingrightsAccordingtotheCompanysArticlesofAssociationtherearenolimitationsofvotingrightsemanatingfromitsshares.f)AgreementsbetweenCompanyShareholdersTo theCompanysknowledge, therearenoagreementsbetween itsShareholders,which imply limitation tothetransferofitssharesortotheexerciseofvotingrightsemanatingfromitsshares.

  • 20

    g) Rules for appointment and replacement of Board Members and amendments of the Articles ofAssociationTheCompanysArticlesofAssociationhavebeen conformed to theprovisionsof L. ,3604/2007and theirprovisions do not differ from those stipulated by C.L. 2190/20, as in effect, both with regards to theappointmentandreplacementofBoardMembersandwithregardstotheamendmentofitsarticles.h)AuthorityoftheBoardofDirectorsfortheissuanceofnewsharesorthepurchaseoftreasurysharesAccording to thosestipulatedbypar.2article5of theArticlesofAssociation, theGeneralMeetingmaybymeansofitsdecision,assignauthoritytotheBoardofDirectorstoincreasebymeansofitsdecision,thesharecapitalaccordingtothosestipulatedbyC.L.2190/20.According to the provisions of article 13 par. 13 of C.L. 2190/20, as in effect, the Board ofDirectorsmayincreasethesharecapitalbyissuingnewsharesinthecontextofimplementingtheapprovedbytheGeneralMeetingStockOptionPlan,fortheacquisitionofCompanysharesbythebeneficiaries.According to theprovisionsof article16ofC.L.2190/1920, as in effect, following approvalof theGeneralMeeting,theCompanymaywiththeresponsibilityoftheBoardofDirectors,acquirethroughtheAthensStockExchange, itsownsharesonconditionthatthenominalvalueofsharesacquired, includingsharespreviouslyacquiredandmaintainedbytheCompany,doesnotexceed10%ofitspaidupsharecapital.The Company, bymeans of the resolution of the AnnualGeneralMeeting of Shareholders on 29/4/2014,renewedthesharebuybackprogram,uptothepercentageof10%of itssharecapitalforaperiodoftwentyfourmonths,namelyuntil28/4/2016.i) Importantagreementsput intoeffect,amendedor terminated incaseofchange incontrol followingatenderofferThere are no agreements which are put into effect, amended or terminated in case of change in theCompanyscontrolfollowingatenderoffer.j)AgreementsofMembersoftheBoardofDirectorsortheCompanysEmployeesTherearenoagreementsof theCompanywithmembersof itsBoardofDirectorsor itsemployees,whichincludethepaymentofindemnity,specificallyincaseofresignationorterminationwithoutreasonablecauseorterminationoftermoremploymentduetoatenderoffer.

  • 21

    V.ANNUALFINANCIALSTATEMENTSPARENTANDCONSOLIDATEDOF31DECEMBER2014

    (1January31December2014)AccordingtotheInternationalFinancialReportingStandardsTheaccompanyingFinancialStatementswereapprovedbytheBoardofDirectorsofTERNAENERGYABETEon27/3/2015andhavebeenpublishedbybeingpostedontheinternetatthewebsitewww.ternaenergy.com,aswellastheAthensExchangewebsite,inwhichtheyremainatthedisposaloftheinvestmentcommunityforatleast5yearssincetheirpublication.It isnotedthatthepublished inthepressDataandInformationderivedfromtheFinancialStatements,aimatprovidingthereaderwithcertaingeneralfinancial informationbutdonotprovideafullpictureofthefinancialpositionandtheresultsoftheCompanyandGroup, inaccordancewiththeInternationalFinancialReportingStandards(IFRS).

  • 22

    TERNAENERGYGROUPSTATEMENTOFFINANCIALPOSITION31DECEMBER2014(AllamountsareexpressedinthousandEuro,unlessstatedotherwise)

    GROUP COMPANY

    Note 31Dec 31Dec 31Dec 31Dec 2014 2013 2014 2013ASSETSNoncurrentassetsIntangibleassets 6 30,091 28,524 1,318 1,449Tangibleassets 7 806,873 770,109 110,339 123,132Investmentproperty 8 575 785 575 785Participationinsubsidiaries 216,120 199,098Participationsinassociates 9 5,542 5,541 5,401 5,401Participationinjointventures 260 279Otherlongtermreceivables 10 10,956 10,685 27,982 44,870

    Receivablesfromderivatives 16 325 1,443 Otherinvestments 1,886 1,882 1,886 1,882Deferredtaxassets 28 4,885 3,981 789

    Totalnoncurrentassets 861,133 822,950 363,881 377,685

    CurrentassetsInventories 11 2,464 4,027 2,113 3,575Tradereceivables 12 52,769 46,953 42,745 36,111ReceivablesaccordingtoIAS11 13 3,630 2,858 4,374 5,479Prepaymentsandotherreceivables 12 49,591 86,392 24,661 19,932Incometaxreceivables 1,884 660 1,701 515

    Otheritems Cashandequivalents 14 168,803 124,630 54,037 37,385

    Totalcurrentassets 279,141 265,520 129,631 102,997

    TOTALASSETS 1,140,274 1,088,470 493,512 480,682

    EQUITYANDLIABILITIESShareholders'equitySharecapital 24 32,794 32,794 32,794 32,794Sharepremium 229,085 238,407 229,085 238,726Reserves 27,234 32,881 20,674 27,885Retainedearnings 46,086 44,262 35,456 34,359

    Total 335,199 348,344 318,009 333,764

    Noncontrollinginterests 3,046 2,634

    Totalequity 338,245 350,978 318,009 333,764

    LongtermliabilitiesLongtermloans 15 324,947 295,163 55,615 51,333

  • 23

    Otherfinancialliabilities 20 40,847 35,217 Liabilitiesfromderivatives 16 5,553 2,320 638 378Otherprovisions 18 8,157 4,511 930 899Provisionforstaffindemnities 17 313 422 295 397Grants 19 265,833 271,376 44,712 46,622Deferredtaxliabilities 27 4,325 3,790 13 Otherlongtermliabilities

    Totallongtermliabilities 649,975 612,799 102,203 99,629

    ShorttermliabilitiesSuppliers 21 21,587 25,352 13,018 17,760Shorttermloans 23 67,322 36,914 39,610 2,215Longtermliabilitiesfallingdueinthenextperiod 15

    31,074 34,744

    4,706

    8,065

    Longtermfinancialliabilitiesfallingdueinthenextperiod 20

    3,091 2,879

    LiabilitiesaccordingtoIAS11 13 2,706 3,060 2,889 5,131

    Accruedandothershorttermliabilities22

    22,841 19,498

    13,077

    14,118

    Incometaxpayable 3,433 2,246

    Totalshorttermliabilities 152,054 124,693 73,300 47,289

    Totalliabilities 802,029 737,492 175,503 146,918 TOTALLIABILITIESANDEQUITY 1,140,274 1,088,470 493,512 480,682

  • 24

    TERNAENERGYGROUP STATEMENTOFCOMPREHENSIVEINCOME

    31DECEMBER2014 (AllamountsareexpressedinthousandEuro,unlessstatedotherwise)

    GROUP

    COMPANY

    Note 1.131.12 1.131.121.131.12

    1.131.12

    2014 2013 2014 2013Continuedactivities Turnover 158,251 139,595 76,192 75,479Costofsales 28 (108,553) (91,175) (60,441) (60,876)

    Grossprofit 49,698 48,420 15,751 14,603

    Administrative&distributionexpenses 28 (13,447) (12,831) (8,199) (7,211)Research&developmentexpenses 28 (2,016) (2,489) (1,963) (2,413)Otherincome/(expenses) 29 9,277 2,199 3,784 1,104

    Operatingresults 43,512 35,299 9,373 6,083

    Financialincome/(expenses) 30 (31,340) (25,404) (7,791) (4,451)

    EARNINGSBEFORETAX 12,172 9,895 1,582 1,632 Incometaxexpense 27 (6,325) (5,540) (2,467) (1,288)

    NETEARNINGSFORTHEPERIOD 5,847 4,355 (885) 344

    OtherincomerecognizeddirectlyinEquityfrom: Foreignexchangedifferencesfromincorporationofforeignunits (644) (851) Actuarialincome/lossesfromdefinedbenefitplans 125 34 114 32Income/expensesfromhedgingofcashflows (4,072) 2,956 (260) 160Expensesofcapitalincrease (121) (305) (108) (123)

    IncometaxrecognizeddirectlyinEquity 702 48 66 119Otherincomefortheperiodnetofincometax (4,010) 1,882 (188) 188

    TOTALCOMPREHENSIVEINCOMEFORTHEPERIOD 1,837 6,237 (1,073) 532

  • 25

    Netresultsattributedto: Shareholdersoftheparentfromcontinuedactivities 5,551 4,101 Noncontrollinginterestsfromcontinuedactivities 296 254

    5,847 4,355

    Totalincomeattributedto: Shareholdersoftheparentfromcontinuedactivities 1,541 5,983 Noncontrollinginterestsfromcontinuedactivities 296 254

    1,837 6,237

    Earningspershare(inEuro) Fromcontinuedactivitiesattributedtoshareholdersoftheparent 26 0.0512 0.0376Averageweightednumberofshares Basic 108,447,509 108,991,933

  • 26

    TERNAENERGYGROUP

    STATEMENTOFCASHFLOWS 31DECEMBER2014 (AllamountsareexpressedinthousandEuro,unlessstatedotherwise)

    GROUP COMPANY

    1.131.12 1.131.12 1.131.12 1.131.122014 2013 2014 2013

    Cashflowfromoperatingactivities Earningsfortheperiodbeforetax 12,172 9,895 1,582 1,632 Adjustmentsfortheagreementofnetflowsfromoperatingactivities Depreciation 41,240 36,337 8,256 8,300Provisions 512 6,700 200 2,462Interestandrelatedincome (1,969) (3,180) (2,601) (4,020)Interestandotherfinancialexpenses 33,309 28,584 10,392 8,471Resultsfromintangibleandtangibleassetsandinvestmentproperties 210 138 210 138Amortizationofgrants (8,987) (8,726) (1,880) (2,722)Foreignexchangedifferences (1,695) 447 Operatingprofitbeforeworkingcapitalchanges 74,792 70,195 16,159 14,261

    (Increase)/Decreasein: Inventories 1,564 (723) 1,462 (616)Tradereceivables (5,816) 595 771 (1,578)Prepayments and other short termreceivables (12,391) (16,263) (6,658) (5,344)Increase/(Decrease)in:Suppliers (775) (3,345) (4,741) (3,341)Accrualsandothershorttermliabilities 3,343 7,111 (1,881) (7,787)Otherlongtermreceivablesandliabilities 5,630 (7,768) 6Incometaxpayments (7,054) (5,693) (2,772) (2,231)

    Netcashinflowfromoperatingactivities 59,293 44,109 2,340 (6,630)

    Cashflowfrominvestmentactivities: (Purchases)/Sales of tangible and intangibleassets (58,130) (35,959) (1,632) (1,088)Collectionofgrants 44,306 91,067 420 14,305Interestandrelatedincomereceived 2,365 2,579 4,081 2,646Netchangeinprovidedloans 6,862 3,948 16,888 24,932(Purchases) / sales of participations andsecurities 15 (1,901) (17,007) 11,885

    Cashoutflowsforinvestmentactivities (4,582) 59,734 2,750 52,680

  • 27

    Cashflowsfromfinancingactivities Returnofsharecapital (11,661) (9,375) (11,461) (9,375)Decreaseofsharecapitalofsubsidiary PurchaseofTreasuryShares (4,903) (8,902) (4,903) (8,902)Netchangeoflongtermloans 1,336 5,549 588 (13,802)Netchangeofshorttermloans 29,966 (57,361) 37,048 2,079Dividendspaid Interestpaid (23,800) (23,317) (9,710) (6,221)Changeinfinancialliabilities (1,340) (12,239)

    Cashoutflowsforfinancingactivities (10,402) (105,645) 11,562 (36,221)

    Effectofexchangeratechangesoncash&cashequivalents (136) (346) Netincrease/(decrease)incash 44,173 (2,148) 16,652 9,829Cash&cashequivalentsatthebeginningoftheperiod 124,630 126,778 37,385 27,556Cash&cashequivalentsattheendoftheperiod 168,803 124,630 54,037 37,385

  • 28

    TERNAENERGYS.A.STATEMENTOFCHANGESINEQUITY31DECEMBER2014(AllamountsareexpressedinthousandEuro,unlessstatedotherwise)

    ShareCapital SharePremium ReservesRetainedEarnings Total

    1January2013 32,796 261,204 21,775 35,739 351,514

    Totalcomprehensiveincome/(losses)fortheperiod (123) 311 344 532CapitalizationofReserves 11,100 (11,100) ReturnofShareCapital (9,839) 459 (9,380)CancellationofTreasuryShares (1,263) (11,255) 12,518 Creationofreservesfromretainedearnings 1,724 (1,724) Dividends PurchaseofTreasuryShares (8,902) (8,902)

    TransfersOthermovements

    31December2013 32,794 238,726 27,885 34,359 333,764

    1January2014 32,794 238,726 27,885 34,359 333,764Totalcomprehensiveincome/(losses)fortheperiod (108) (80) (885) (1,073)Issueofsharecapital 9,839 (9,839) ReturnofShareCapital (9,839) (9,839)CancellationofTreasuryShares Creationofreservesfromretainedearnings 653 (653) Taxationofreserves (2,783) 2,783 Dividends PurchaseofTreasuryShares (4,903) (4,903)

    TransfersOthermovements 306 (98) (148) 60

    31December2014 32,794 229,085 20,674 35,456 318,009

  • 29

    TERNAENERGYS.A.GROUP STATEMENTOFCHANGESINEQUITY31DECEMBER2014(AllamountsareexpressedinthousandEuro,unlessstatedotherwise)

    ShareCapital SharePremium ReservesRetainedEarnings

    Subtotal

    Noncontrollinginterests Total

    1January2013 32,796 261,067 19,290 47,495 360,648 2,329 362,977Total comprehensive income/(losses)fortheperiod (305) 2,187 4,101 5,983 254 6,237

    Issuanceofsharecapital 11,100 (11,100) 52 52

    CapitalizationofReserves 7,329 (7,329)

    ReturnofShareCapital (9,839) 459 (9,380) (9,380)

    CancellationofTreasuryShares (1,263) (11,255) 12,518

    PurchaseofTreasuryShares (8,902) (8,902) (8,902)

    Dividends

    TransfersOthermovements (5) (5) (1) (6)

    31December2013 32,794 238,407 32,881 44,262 348,344 2,634 350,978

    1January2014 32,794 238,407 32,881 44,262 348,344 2,634 350,978Total comprehensive income/(losses)fortheperiod (121) (3,889) 5,551 1,541 296 1,837

    Issueofsharecapital 9,839 (9,839) 123 123

    Formationofreserves 5,818 (5,818)

    Taxationofreserves (2,783) 2,783

    ReturnofShareCapital (9,839) (9,839) (9,839)

    CancellationofTreasuryShares PurchaseofTreasuryShares (4,903) (4,903) (4,903)

    Dividends

    TransfersOthermovements 638 110 (692) 56 (7) 49

    31December2014 32,794 229,085 27,234 46,086 335,199 3,046 338,245

  • TERNAENERGYGROUPNOTESONTHEANNUALFINANCIALSTATEMENTSOFTHEPARENTCOMPANYANDGROUP,FOR31stDECEMBER2014(AllamountsinthousandEuro,unlessstatedotherwise)

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    1 ESTABLISHMENT&ACTIVITYOFTHECOMPANYTheTERNAENERGYSAGroupofcompanies(hereinaftertheGrouporTERNAENERGY)isaGreekgroupofcompaniesmainlyengagedintheenergyandconstructionsector.TheGroupsactivityintheenergysectorisrelatedtotheconstructionandexploitationofrenewablesourcesofwindandhydroelectricenergyaswellasto theoperationofphotovoltaicparks.TheCompany isalsoengaged in the research for theoperationandconstructionofprojectsrelatedtootherrenewableenergysources(RES).TERNAENERGYhasa class6 contractor certificateand itsactivity in the construction sector relates to theconstructionofprivateandpublicprojectsasamaincontractororsubcontractoror through jointventures.BasedontheGreeklegislationineffect,companieswhoholdaclass6certificate,undertakepublicworkswithan initialcontractingprice from5.25 to44.00millionorup to60.00million through jointventuresandprivateorselffinancedindependentlybudgeted,eitherasmaincontractorsorassubcontractorsorthroughjointventures.TERNAENERGYisthecontinuationoftheTechnicalConstructionsCompany(ETKASA),whichwasestablishedin1949(Gov.Gaz.166/21.06.1949),andwhichduring1999absorbedTERNAENERGYSA.Thelatterhadbeenestablishedin1997(Gov.Gaz.6524/11.09.1997),andisbasedinAthens,85MesogeionAve.TheCompany is listedonAthensExchange.TheparentcompanyofTERNAENERGY,which isalso listedonAthensExchange,isGEKTERNASAandwhichon31/12/2014owned41.212%oftheCompanyssharecapital.2 BASISFORTHEPRESENTATIONOFTHEFINANCIALSTATEMENTSa)BasisforthePreparationofthefinancialstatementsThe accompanying separate and consolidated financial statements have been prepared according to theInternational Financial Reporting Standards (IFRS) that have been issued by the International AccountingStandardsBoard(IASB)andtheInterpretations issuedbytheStandardInterpretationsCommitteeandwhichhavebeenadoptedbytheEuropeanUnion.b)StatutoryFinancialStatementsUntilthe31stofDecember2004TERNAENERGYSAanditsGreeksubsidiarieskepttheiraccountingbooksandprepared financial statementsaccording to theprovisionsof L.2190/1920and the tax legislation ineffect.From January 1st, 2005 they are obliged, according to the legislation in effect, to prepare their StatutoryFinancialStatementsaccordingtotheIFRSthathavebeenadoptedbytheEuropeanUnion.TheCompanyandtheGreekcompaniesoftheGroupcontinuetokeeptheiraccountingbooksinaccordancewiththeprovisionsofthetax laws,astheyhavetherighttodoso.OffbalancesheetadjustmentsarethenmadeinordertopreparetheaccompanyingfinancialstatementsinaccordancewiththeIFRS.

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    c)NewStandards,InterpretationsandAmendmentsThe accountingprinciples applied for thepreparationof the financial statements are the samewith thoseapplied for the preparation of the annual financial statements of the Company and the Group as of 31December2013,apartfromtheadoptionofnewaccountingstandards.TheGrouphasfullyadoptedall IFRSand interpretationswhichuptothepreparationdateofthe financialstatementshadbeenendorsedbytheEuropeanUnionandwhoseapplicationwasmandatory,accordingtothe InternationalAccountingStandardsBoard(IASB),forthefinancialperiodthatendedon31December2014.

    i. NewStandards,Interpretations,RevisionsandAmendmentstoexistingStandardsthatareineffectandhavebeenendorsedbytheEuropeanUnion

    ThefollowingamendmentsandInterpretationsofIFRSwereissuedbytheInternationalAccountingStandardsBoard(IASB)andtheirapplicationismandatoryfrom01.01.2014orafter.ThemostimportantStandardsandInterpretationsaredescribedasfollows: IFRS 10 Consolidated Financial Statements, IFRS 11 JointArrangements, IFRS 12 Disclosure of

    Interests in other Entities, IAS 27 Separate Financial Statements and IAS 28 Investments inAssociatesandJointVentures

    InMay 2011 the IASB issued three new Standards and specifically IFRS 10, IFRS 11 and IFRS 12. IFRS 10ConsolidatedFinancialStatements includesaconsolidationmodelthatdefinescontrolasthebasis fortheconsolidationofalltypesofentities.IFRS10replacesIAS27ConsolidatedandSeparateFinancialStatementsand SIC 12 Consolidation Special Purpose Entities. IFRS 11 JointArrangementsdefines theprinciplesregardingthefinancialinformationofmembersthatparticipateinajointarrangement.IFRS11replacesIAS31Participations in JointVentures and SIC 13 Jointly Controlled Entities NonMonetary Contributions byVenturers.IFRS12DisclosuresofInterestsinotherEntitiescombines,enhancesandreplacesthedisclosurerequirements for subsidiaries, jointly controlled companies, associates and nonconsolidated entities. As aresultoftheabovenewStandards,theIASBalsoissuedtheamendedIAS27underthetitleIAS27SeparateFinancial Statementsand theamended IAS28under the title IAS28 Investments inAssociatesand JointVentures.ThestandardshavenoeffectontheconsolidatedFinancialStatements. TransitionGuidance:ConsolidatedFinancialStatements,JointArrangements,DisclosuresofInterestsin

    otherEntities:TransitionGuidance(AmendmentstoIFRS10,IFRS11andIFRS12)InJune2012,theIASBproceededwithissuingtheaboveguidancewhichprovidesclarificationsregardingthetransitionprovisionsofIFRS10.TheamendmentsalsoprovideadditionalfacilitationsduringthetransitiontoIFRS10, IFRS11and IFRS12by reducing the requirements forprovidingadjusted comparative informationonly during the previous comparative period. Also, as regards to the disclosures for nonconsolidatedcompanies, the amendments remove the requirement to present comparative information. The standardshavenoeffectontheconsolidatedFinancialStatements. InvestmentEntities(AmendmentstoIFRS10,IFRS12andIAS27)InOctober2012,theIASB issuedamendmentstoIFRS10,IFRS11andIAS27.Theamendmentsapplytothecategoryof investment entities. The IASBuses the term Investment Entities to refer to entitieswhosebusinesspurpose is to invest fundssolely forreturns fromcapitalappreciation, investment incomeorboth.Investmententitiesmustevaluate theperformanceof their investmentsona fairvaluebasis.Suchentities

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    32

    could include private equity organizations, venture capital organizations, pension funds, sovereignwealthfunds andother investment funds. It isdefined, as anexception to the requirementsof IFRS10 regardingconsolidation,that investmententitieswillmeasurespecificsubsidiariesatfairvaluethroughprofitand lossandwillnot consolidate such,byproviding thenecessarydisclosures.The standardshavenoeffecton theconsolidatedFinancialStatements. AmendmentstoIAS32"FinancialInstruments:Presentation"Offsettingfinancialassetsandfinancial

    liabilitiesInDecember 2011, the IASB proceeded to the issuance of amendments to IAS 32 "Financial Instruments:Presentation"inordertoprovideclarificationsontherequirementsoftheStandardwithrespecttooffsettingcasesforfinancialassetsandfinancialliabilitiesintheStatementofFinancialPosition.TheamendmentshavenoeffectontheconsolidatedFinancialStatements. Amendments to IAS36" ImpairmentofAssets ' Disclosures for theRecoverableAmountofNon

    FinancialAssetsInMay2013,theIASBproceededwiththeissuanceofanamendmentoflimitedscopeofIAS36"ImpairmentofAssets".Thepresentamendmentspecifiesthedisclosuresthatshouldbemaderegardingtherecoverableamountofanassetthathasbeenimpaired,ifthisamountisbasedonfairvaluelessthecostsofselling.ThestandardhasnoeffectontheconsolidatedFinancialStatements. AmendmentstoIAS39"FinancialInstruments:RecognitionandMeasurement"Replacingderivatives

    andinhibitionofhedgeaccountingIn June 2013, the IASB proceededwith the issuance of amendments of limited scope of IAS 39 "FinancialInstruments:RecognitionandMeasurement".Theobjectiveoftheproposedamendmentsistheintroductionofanexemptionof limitedscope,withrespecttothe inhibitionofhedgeaccounting inaccordancewiththeprinciplesofIAS39.Specifically,ifcertainconditionsaremet,anexceptionisproposedifthecounterpartyofaderivative,whichhasbeendesignatedasahedginginstrument,isreplacedbyaprimecontractor,asaresultofchanges in lawsor regulations.Relevant exceptionwillbe included in IFRS 9 "Financial Instruments ". ThestandardhasnoeffectontheconsolidatedFinancialStatements. IFRIC21LeviesInMay2013,theIASBproceededtotheissuanceofIFRIC21.Theinterpretationclarifieswhenanentityshouldrecognize the obligation to pay the levy imposed by the State, in its Financial Statements. IFRIC 21 is aninterpretationofIAS37"Provisions,ContingentLiabilitiesandContingentAssets".IAS37setsoutthecriteriafortherecognitionofaliability,oneofwhichisthepresentobligationresultingfromapastevent,knownasobligatingevent.Theinterpretationstatesthattheobligatingeventthatcreatesanobligationforthepaymentof the levy is the action described in the relevant legislation that results to the payment of the levy. ThestandardshavenoeffectontheconsolidatedFinancialStatements.ii. NewStandards,Interpretations,revisionsandamendmentsofexistingStandardswhicharenotyet

    ineffectorapprovedbytheEuropeanUnionThe followingnewStandardsandRevisionsofStandards,aswellas the following Interpretations toexistingstandards, have been published.However they are not yet in effect or approved by the EuropeanUnion.Specifically:

  • TERNAENERGYGROUPNOTESONTHEANNUALFINANCIALSTATEMENTSOFTHEPARENTCOMPANYANDGROUP,FOR31stDECEMBER2014(AllamountsinthousandEuro,unlessstatedotherwise)

    33

    IFRS9"FinancialInstruments"(effectiveforannualperiodsbeginningonorafter01/01/2018)

    InJuly2014theIASBissuedthefinalversionofIFRS9.Theimprovementsmadetothenewstandardrefertotheexistenceofa logicalmodel regarding theclassificationandmeasurement,asingleproactivemodel forexpectedlossesfromimpairmentandalsoasubstantiallyreformedapproachforhedgeaccounting.TheGroupwillconsidertheimpactofalltheaboveintheFinancialStatementsoftheGroup,althoughitisnotexpectedtohaveanyimpact.ThesehavenotbeenadoptedbytheEuropeanUnion.

    - IFRS14"RegulatoryDeferralAccounts"(effectivefrom01.01.2016)InJanuary2014,issuedanewstandard,IFRS14.Theobjectiveofthisintermediatestandardistoenhancethefinancial reports comparability of companies that have regulated activities. Inmany countries there aresectorsthataresubjecttospecificrulesaccording towhichgovernmentauthoritiesregulatethesupplyandpricing of certain types of activities entities . The Groupwill consider the impact of all the above in theFinancial Statements of theGroup, although it is not expected to incur any impact. These have not beenadoptedbytheEuropeanUnion.

    - IFRS15"RevenuefromContractswithCustomers"(effectiveforannualperiodsbeginningonorafter01/01/2017)

    InMay2014,theIASBissuedanewstandard,IFRS15.Thisstandardisfullyharmonizedwiththerequirementsfor the recognitionof revenue inaccordancewith IFRSandAmericanaccountingprinciples (USGAAP).Thenew standard is been formed to replace IAS 18 Revenue, IAS 11 Construction Contracts and someinterpretations that are related to revenues. The Groupwill consider the impact of all the above in theFinancialStatementsoftheGroup,eventhough itnotexpectedtobeany.ThesehavenotbeenadoptedbytheEuropeanUnion.

    - StandardsAnnual Improvementsperiod20102012 (forannualperiodsbeginningonorafter07/01/2014)

    The IASB issued inDecember 2013 in the publication "Annual Improvements in the International FinancialReportingStandardsperiod20102012",whichisconsistedofaseriesofadjustmentsin8Standardsanditispart of the scheme for the annual improvements in standards. The amendments are effective for annualperiodsbeginningonorafterJuly1,2014,althoughtheeconomicentitiesareallowedtoapplythemearlier.The topics included in this cycleof changes are as follows: IFRS2:Definitionof vesting conditions, IFRS3:Accounting treatmentofpotentialconsideration inbusinesscombinations, IFRS8:Aggregationofoperatingsegments,IFRS8:Alignmentofreportablesegmentsassetswiththeassetsofthecompany,IFRS13:Currentassets and liabilities IAS 7: Interest paid that are capitalized, IAS 16 / IAS 38: Revaluation methodproportionate recastof accumulateddepreciation and IAS24: Key Executives. TheGroupwill consider theimpactofalltheaboveintheFinancialStatementsoftheGroup,althoughitnotexpectedtohaveany.ThesewereadoptedbytheEuropeanUnioninDecember2014.

  • TERNAENERGYGROUPNOTESONTHEANNUALFINANCIALSTATEMENTSOFTHEPARENTCOMPANYANDGROUP,FOR31stDECEMBER2014(AllamountsinthousandEuro,unlessstatedotherwise)

    34

    - StandardsAnnual Improvementsperiod20112013 (forannualperiodsbeginningonorafter01/07/2014)

    TheIASB issued inDecember2013 inthepublicationof"Annual Improvements intheInternationalFinancialReportingStandardsperiod20112013",whichisconsistedofaseriesofadjustmentsin4Standardsanditispartoftheschemefortheannual improvements inthestandards.TheamendmentsareeffectiveforannualperiodsbeginningonorafterJuly1,2014,althougheconomicentitiesareallowedtoapplythemearlier.Thetopicsincludedinthiscycleofchangesareasfollows:IFRS1:TheconceptofexistingIFRS,IFRS3:Exemptionstojointventures,IFRS13:Applicationcasesofparagraph52(excludingportfolio),andIAS40:Clarificationofthe interdependenceofIFRS3BusinessCombinationsandIAS40Investmentproperty intheclassificationofpropertyasinvestmentpropertyorasowneroccupiedproperty.TheGroupwillconsidertheimpactofalltheaboveintheFinancialStatementsoftheGroup,althoughitisnotexpectedtobeany.ThesewereadoptedbytheEuropeanUnioninDecember2014.

    - StandardsAnnual Improvementsperiod20122014 (forannualperiodsbeginningonorafter01/01/2016)

    TheIASBissuedinSeptember2014inthepublicationof"AnnualImprovementsintheInternationalFinancialReportingStandardsperiod20122014",whichisconsistedofaseriesofadjustmentsin4Standardsanditispartoftheschemeforannual improvements instandards.TheamendmentsareeffectiveforannualperiodsbeginningonorafterJanuary1,2016,althoughtheeconomicentitiesareallowedtoapplythemearlier.Thetopicsincludedinthiscycleofchangesareasfollows:IFRS5:Changesinthemethodsofsale,IFRS7:ServiceContractsandapplicationof IFRS7 requirements in the InterimFinancialStatements, IAS19:Discount rate,andIAS34:Informationdisclosureintheinterimfinancialreport.TheGroupwillconsidertheimpactofalltheabove intheFinancialStatementsoftheGroup,although it isnotexpectedtobeany.ThesehavenotbeenadoptedbytheEuropeanUnion. AmendmenttoIAS19"EmployeeBenefits"DefinedBenefitPlan:Employeecontributions(effective

    from01/07/2014)InNovember2013,theIASBproceededtotheissuanceofanamendmentoflimitedscopeofIAS19"EmployeeBenefits" with title Defined benefit plan: Employee Contributions (Amendments to IAS 19). The presentamendmentappliestocontributionsmadebyemployeesorthirdpartieswithrespecttodefinedbenefitplans.The purpose of this amendment is to reduce the complexity of the accounting treatment of thosecontributionsthatareindependentoftheemployee'syearsofservice,suchasthecontributionscalculatedasafixedpercentageofpayroll.TheGroupwillexaminetheeffectoftheabovementionedontheconsolidatedFinancial Statements although no effect is expected. The abovewere adopted by the European Union inDecember2014.

    - AmendmenttoIAS27:"theequitymethodintheindividualFinancialStatements"(effectiveforannualperiodsbeginningonorafter01/01/2016)

    In August 2014, the IASB issued a limited scope amendment to IAS 27 "equitymethod in the individualFinancial Statements". By this amendment, a company has the option to measure its investments insubsidiaries, jointventuresandassociatesundertheequitymethod intheseparate financialstatements,anoptionthatupuntiltheadoptionofthisamendmentwasnotineffect.TheGroupwillconsidertheimpactofalltheaboveintheFinancialStatementsoftheGroup,althoughitisnotexpectedtobeany.ThesehavenotbeenadoptedbytheEuropeanUnion.

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    35

    - Amendments to IFRS10and IAS28:"SalesorContributionsofAssetsamongan investorandtheAssociateorJointVenture"(effectiveforannualperiodsbeginningonorafter01/01/2016)

    InSeptember2014,theIASBissuedalimitedpurpose"SalesorAssetscontributionsbetweenaninvestorandtheassociateor jointventure" (Amendmentsto IFRS10and IAS28).Theamendmentwillbeappliedbytheeconomic entities for future sales or contributions of assets that are conducted in the annual periodsbeginning on or after 01/01/2016. Earlier application is permitted, with the necessary disclosure of therespectiveearlyadoption intheFinancialStatements.TheGroupwillconsiderthe impactofalltheabove intheFinancialStatementsoftheGroup,although itnotexpectedtobeany.ThesehavenotbeenadoptedbytheEuropeanUnion.

    - AmendmentstoIAS16andIAS41:"Agriculture:fruitplantations"(effectiveforannualperiodsbeginningonorafter01/01/2016)

    In June 2014, the IASB issued amendments throughwhich changes incur in the financial reporting of fruitplantations. With this modification, it was decided that the fruitful plantations used solely to increaseproduction,shouldbeaccountedforinthesamewayastangibleassets(IAS16).Thereforetheamendmentsinclude the fruitful plantationswithin the scope of IAS 16 instead of IAS 41. The production developed infruitfulplantationsremainswithinthescopeofIAS41.TheGroupwillconsidertheimpactofalltheaboveinthe Financial Statements, although and it isnotexpected tobe any.Thesehavenotbeen adoptedby theEuropeanUnion.

    - Amendments to IAS 16 and IAS 38: "Clarifications regarding the Acceptable DepreciationMethods"(effectiveforannualperiodsbeginningonorafter01/01/2016)

    InMay2014,theIASBissuedamendmentstoIAS16andIAS38.IAS16andIAS38establishtheprinciplessoastobeclarifiedthewayinwhichdepreciationistreatedintheexpectedpatternofconsumptionofthefutureeconomicbenefitsembodiedintheasset.TheIASBhasclarifiedthattheutilizationofthemethodsbasedonrevenuesforthecalculationofanassetsdepreciationisnotappropriate,becausetherevenuesgeneratedbyanactivity that involves theuseofanassetgenerally reflect factorsother than the consumptionof futureeconomicbenefitsembodiedintheasset.TheGroupwillconsidertheimpactofalltheaboveintheFinancialStatementsoftheGroup,althoughitisnotexpectedtobeany.ThesehavenotbeenadoptedbytheEuropeanUnion.

    - Amendments to IFRS 11, "Accounting treatment of participations acquisitions in jointoperations"(effectiveforannualperiodsbeginningonorafter01/01/2016)

    InMay 2014, the IASB issued amendments to IFRS 11. These amendments added new guidance on theaccountingtreatmentoftheacquisitioninajointactivitythatconstitutesaneconomicentityandspecifytheappropriateaccountingtreatmentforsuchacquisitions.TheGroupwillconsidertheimpactofalltheaboveintheFinancialStatementsoftheGroup,althoughitisnotexpectedtobeany.ThesehavenotbeenadoptedbytheEuropeanUnion.

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    36

    - AmendmentstoIAS1:"DisclosureInitiative"(effectiveforannualperiodsbeginningonorafter01/01/2016)

    In December 2014, the IASB issued amendments to IAS 1. These amendments intend to resolve issuesregardingtheexistingpresentationanddisclosurerequirementsandensuretheabilitytoexercise judgmentbytheeconomicentitiesinthepreparationoftheFinancialStatements.TheGroupwillconsidertheimpactofalltheaboveintheFinancialStatementsoftheGroup,althoughitisnotexpectedtobeany.(tobeadjustedtoeachGroup/Company).ThesehavenotbeenadoptedbytheEuropeanUnion.

    - AmendmentstoIFRS10,IFRS12andIAS28"InvestmentEntities:ApplyingtheexceptionoftheUnification"(effectiveforannualperiodsbeginningonorafter01/01/2016)

    InDecember2014, the IASB issuedamendmentsof limitedobjective to IFRS10, IFRS12and IAS28.Theseamendmentsintroduceclarificationsregardingtheaccountingrequirementsofinvestmententities,whiletheyprovide exemptions in specific cases, which will reduce the costs associated with the implementation ofstandards. TheGroupwill consider the impact of all the above in the Financial Statements of theGroup,althoughitisnotexpectedtobeany.ThesehavenotbeenadoptedbytheEuropeanUnion.d) ApprovalofFinancialStatementsTheaccompanyingannualconsolidatedfinancialstatementswereapprovedbytheBoardofDirectorsoftheParentCompanyonMarch27th2015.UseofEstimatesTheGroupmakesestimations,assumptionsand judgments inordertochoosethebestaccountingprinciplesrelatedtothefutureevolutionofeventsandtransactions.Theseestimations,assumptionsandjudgmentsarecontinuouslyassessed inorder to reflect current informationand riskandarebasedon themanagementsexperiencerelatedtolevel/volumeoftransactionsorevents.Themainassumptionsandjudgmentsthatmayaffectthefinancialstatementsinthecoming12monthsareasfollows:a) Recognition of income from construction contracts: The Group uses the percentage of completionmethod to recognize revenue from construction contracts, in accordance with IAS 11. According to thismethod theconstructioncostasofeachbalance sheetdate iscompared to thebudgeted totalcostof theprojectinordertodeterminethepercentageofcompletionoftheproject.Thecumulatedeffectof therestatements/reassessmentsof the totalbudgetedcostof theprojectsand thetotalcontractualpayment(recognitionofworkoverandabovethecontract)isrecordedinthefinancialyearsduringwhich such restatements arise. The total budgeted cost and the total contractual payment of theprojectsarisefromestimationproceduresandarereassessedandreviewedateachbalancesheetdate.b) Provisionfor incometax:Theprovisionfor incometaxaccordingtoIAS12 iscalculatedwiththeestimationoftaxestobepaidtotaxauthoritiesand includes thecurrent incometax foreach financialyearandaprovision foradditionaltaxesthatmayoccur fromtaxaudits.The finalsettlementof incometaxmaydifferfromtherelevantamountsrecognizedinthefinancialstatements.

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    37

    c) Provisionforenvironmentalrehabilitation:TheGroupcreatesaprovisionagainst itsrelevant liabilitiesfordismantlementoftechnicalequipmentofwindparksandenvironmentalrehabilitation,thatarisebasedonthewrittenenvironmentallegislationorbytheGroupsrestrictivepractices.Theenvironmentalrehabilitationprovisionreflectsthepresentvalue(basedonanappropriatediscountrate),atthebalancesheetdateoftherehabilitationliabilitylesstheestimatedrecoverablevalueofmaterialestimatedtobedismantledandsold.d) Valuationof inventories:For thevaluationof inventories, theGroupestimatesaccording tostatisticaldataandmarket conditions, theexpected salepricesand the finalizationanddistribution costof suchpercategoryofinventories.e) Impairmentofassetsand recovery:TheGroupperformsevaluationof the technological, institutionaland financial developments by examining indications of impairment of all assets (fixed, trade and otherreceivables, financialassetsetc.)aswellas their recovery.Also, the installation licensesofwindparks thathavenotbeen set inoperationare subject toanannual impairment review.Theestablishmentofpossibleimpairmentrequires,amongothers,estimationofthevalue inuse,which isestimatedusingthediscountedcashflowmethod.Duringtheapplicationofthismethod,theGroupreliesonaseriesoffactors,whichincludefuture operating results as well as market data. The estimation of future operating results is based onefficiencyestimationsofthewindparksaccordingtowindstatisticaldataandhistoricaldataoncomparableunits.f) Provision for staff indemnities:TheGroup,according to IAS19,performsestimationsofassumptionsbasedonwhichtheactuarialprovisionforstaffindemnitiesiscalculated.g) Depreciationoffixedassets:Forthecalculationofdepreciations,theGroupreviewstheusefuleconomiclife and residual value of tangible and intangible fixed assets based on the technological, institutional andfinancialdevelopments,aswellastheexperiencefromtheiruse.h) Acquisitionofcompanies:TheGroupconsolidatesallcompaniesitacquiresfromthedatewhencontrolonsuch isacquired. Incasewhere theacquisitiondependson the realizationofaseriesof futureeventsconditions, the company examineswhether according to the actual events it has acquired control on therelevantcompanies.Incaseofacompanyacquisition,itisexaminedwhethertheacquiredcompanymeetsthedefinitionofabusinessaccordingto IFRS3.Abusinesscompanyusuallyconsistsof inflows,proceduresthatareappliedonsuchinflowsandresultingoutflowsthatareusedorwillbeusedforthegenerationofincome.Incasewhereacompanyacquiredisassessednottoconsistofacompleteseriesofactivitiesandassetswiththeformofacompany,thentheacquisitionisaccountedforasanacquisitionofassetsandnotofacompany.i) Fairvalueof financialassetsand liabilities:TheGroupappliesestimationof the fairvalueof financialassetsandliabilities.j) FinancialLiabilities:TheGrouphas issuedfinancialsecurities, inthecontextofataxequity investmentprogram(note19),thepaymentsofwhichdependonthefuturereturnsonspecificGroup investments.Thisfinancialliabilityismeasuredatamortizedcostwiththeeffectiveinterestratemethod.

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    38