8
9
Semi-annual Board of Directors Management Report
Group Sales
At the same time, significant progress is being
made in the opening up of the market, with private
suppliers steadily increasing their retail market
presence. As at 30.06.2016, private producers hold
a 9.72% share of the market, up from 5.37% at the
end of 2015.
Against this backdrop, the Group in 2016 continues
steadily to strengthen its presence in both the
wholesale and retail electricity market.
The decline in Natural Gas prices, the high efficiency
of the Group’s units and its ability to establish a
diversified and competitive NG purchasing portfolio,
drove a significant increase in the generation
of electricity from the Group’s plants in the first
semester of 2016 (up 50% relative to the same
period in 2015).
In parallel, PROTERGIA continues to steadily gain
ground against its direct retail market competitors
holding a market share of 2.4% as at 30.6.2016.
VARIANCE ANALYSIS
The effects on the Group’s sales, operating and
net profitability during the first semester 2016,
comparing to last year are presented bellow:
f) The project «Construction of an open-cycle, 1250 MW power plant»
in Iraq, with a contract value of $ 401.2 million, which in the first half of
2016 recorded a turnover of
€
11.8 million.
It should be noted that the backlog of the existing projects amounts
up to
€
1.092 million for the Group and
€
936 million for the Company.
Energy Sector
In the domestic market, demand for electricity continues to be
negatively affected by the weak performance of the Greek economy.
More specifically, in the first semester of 2016 electricity consumption
declined by 2.6%, despite its strong performance in June (+14.6%),
which was primarily driven by the change in climate conditions.
In terms of the generation mix, the reduced prices for natural gas
(“NG”) drove an increase in the participation of plants using this as
fuel and a corresponding reduction in the generation of electricity from
lignite-fired ones. More specifically, the first semester of 2016 saw a
sharp increase (+108%) in electricity generation from gas-fired plants,
in contrast to the generation from lignite fired plants, which declined
by 27% relative to the first semester of 2015. Generation of electricity
from hydropower plants and net electricity imports were also reduced,
by 24% and 12% respectively.
As a consequence of the above trend, the System Marginal Price
(SMP) for the first semester of 2016 declined to
€
42.5/MWh, down
20.3% from
€
53.3/MWh for the same period in 2015.
Board of Directors Semi – Annual Management Report
(According to 7/448/ 10.11.2007 resolution of the Capital Market Committee)
This report summarizes financial information for the Group and the Company
“MYTILINEOS HOLDINGS S.A.” for the period ended 30 June 2016, significant
events during that period and their effect on the interim financial statements. It
also presents the main risks and uncertainties that the Group companies may
face till the end of the year and significant related party transactions.
The present report contains financial details on the entity titled «MYTILINEOS
HOLDINGS S.A.» and its subsidiaries and associated companies for the first
semester of 2016. It describes major events that occurred in the same period
and their influence on interim financial statements. It also describes the main
hazards and risks that may be faced by the Group member companies in the
forthcoming semester; finally, it lists major transactions between the Company
and the persons associated with it.
Ι. REVIEW OF DEVELOPMENTS DURING THE FIRST HALF OF
2016 – PERFORMANCE AND FINANCIAL POSITION
In the first semester of 2016, the Greek economy shows signs of stabilisation
compared to the conditions of extreme uncertainty that characterised the same
period in 2015, yet prospects for growth remain particularly weak.
More specifically, the conclusion of the first evaluation of the programme agreed
last year reduces the risks for the Greek economy and is expected to increase li-
quidity in the market. At the same time, however, the new fiscal measures and the
increased taxation impact negatively on economic performance in 2016, while
the critical problem of the resolution of non-performing loans remains very much
a pending issue.
On the international front, the weakened growth rates in emerging markets and
especially in China, the widespread geopolitical instability and the deflationary
environment in Europe, result in scepticism as regards the prospects for global
growth. The UK’s impending exit from the EU and the weak position of the finan-
cial sector intensify concerns, while at the same time the environment of negative
interest rates gives rise to reservations as to the effectiveness of potential future
interventions by the Central Banks.
Acknowledging these challenges, MYTILINEOS Group remains strongly extro-
vert, leads developments in the opening up of the domestic energy market, bol-
sters the competitiveness of its Metallurgy Sector and promotes METKA’s further
penetration in new markets abroad with high growth rates.
Metallurgy and Mining Sector
In the first half of 2016, Aluminium prices remained weak, despite their gradual
recovery from the record-low levels posted in the third quarter of 2015.
In particular, the average price for Aluminium at the LME stood at $1,549/tn, post-
ing a decline by around 14% compared to the same period in the previous year,
while the Euro/USD parity remained virtually unchanged at 1.12. In the second
quarter of 2016, the downward trend in Aluminium prices that had prevailed since
early 2015 appears to have been reversed, as prices once again moved past the
$1,650/tn mark.
The market fundamentals show significant improvement, as demand continues
to grow at an annual rate of nearly 5%. In contrast, significant delays are observed
in the entry into operation of new production units, as a result of which the first
semester of 2016 posted the highest market balance deficit of the last 15 years.
In this environment, the Group remains focused on the optimisation of its cost
structure, through the implementation of its “Excellence” programme, thus im-
proving its competitiveness and absorbing successfully the pressure from the
reduced aluminium prices, while in parallel laying strong foundations for long-
term growth in the future.
EPC Sector (Construction)
The subsidiary company METKA S.A. showed a
positive performance during the first semester 2016.
The successful execution of its first project in Ghana
was reflected in the company’s financial results and
confirmed METKA’s dynamic entry in the energy
market of the sub-Saharan Africa. The company’s
penetration plan in the region continued with the
signature of another significant contract in Ghana,
valued at USD 174 m. The contract, which was an-
nounced in March 2016, includes the engineering,
procurement construction and commissioning of a
new Combined Cycle Power Plant of 192MW in Ta-
koradi.
At the same time, the subsidiary ,METKA, continued
its plan for the strategic expansion of its activities in
the Middle East, with a particular focus on the Ira-
nian market, where the removal of international bans
creates conditions for the construction of large-scale
energy projects. In this context, the company has
signed an MOU for the construction of a Combined
Cycle Power Plant with a total capacity of more than
900MW.
Finally, through its subsidiary METKA EGN, the
Group executed significant contracts in the UK and
Puerto Rico, marking the expansion of its activities
in solar PV power projects, on an international level.
The supplementary factors driving the subsidiary
company’s performance as described above are:
a) Τhe project «turn-key engineering, procurement
and construction (EPC), as well as operations and
maintenance (O&M) for a solar photovoltaic power
plant (solar PV ) in Puerto Rico, with a capacity of
57MW and a contract value of $ 89.6 million, which
in the current period recorded a turnover of
€
65.0
million.
b) The project «Construction and commissioning of
a power plant with a capacity of 724 MW» in Deir
Azzour of Syria, with a contract value of
€
687 million,
which in the current period recorded a turnover of
€
63.0 million.
c) The project «Construction of remaining infrastruc-
ture, permanent way, signaling-telecommanding,
telecommunications and electrical engineering
works for the tunnel facilities for the new railway line
Kiato-Rododafni» with a total budget of
€
273 million,
which in the first half of 2016 recorded a turnover of
€
25.6 million.
d) The project «Third fuel addition to the thermal
power plant of 1250 MW» in Iraq with a contract val-
ue of $ 166.5 million, which in the first half of 2016
recorded a turnover of
€
17.9 million.
e) The project «Construction of a 590,726 MW power
plant» in Algeria, with a contract value of
€
154 mil-
lion & DZD 2,311 million which in the first half of 2016
recorded a turnover of
€
15.8 million.
Amounts in mil.
€
Variance Analysis
Turnover 2015
636.5
Effect from:
Organic $/
€
eff.
3.3
Volumes
9.4
Premia & Prices
-37.0
LME
-18.7
Other
0.1
Energy
66.5
Zn-Pb discontinued operation
3.1
Zn-Pb commercial activity
-
EPC
2.9
LNG Trading
-30.4
Turnover 2016
635.8
