10
11
Semi-annual Board of Directors Management Report
At the same time, AoG will be able to obtain valua-
ble know-how in the recycling of metallurgical waste
thus enhancing its knowledge-base on environmen-
tal compliance in all markets in which Absorbing
Company operates.
• In June, MYTILINEOS Group and OTE Group
announced a strategic partnership in the retail elec-
tricity market. In this framework, COSMOTE and
Germanos stores enrich their customer services
portfolio with electricity supply from PROTERGIA,
the largest independent electricity producer in
Greece. Meanwhile, PROTERGIA strengthens its
points of sale and promotion network, making its
products available across Greece through more
than 450 COSMOTE and Germanos stores.
• METKA’s New EPC project in GHANA
METKA S.A. announced the signature of a new
EPC contract with Amandi Energy Limited for a new
power plant in Ghana. The contract signature took
place in London on 11 March 2016. The project will
be executed by METKA in consortium with General
Electric, and includes the engineering, procurement,
construction and commissioning of a 192MW com-
bined cycle power plant in Takoradi. The plant will
be implemented with capability to operate on both
natural gas and light crude oil, and will utilize the lat-
est advanced version of General Electric’s well prov-
en 9E gas turbine. The project will be constructed
in 28 months. The contract value for METKA is ap-
proximately $174 million.
ΙΙΙ PROSPECTS – RISKS AND
UNCERTAINTIES FOR THE SECOND
HALF OF 2016
1. Prospects for the second half of 2016
Metallurgy and Mining Sector
In the Metallurgy sector, the growth rate of global
aluminium demand is expected to remain strong
during 2016, thus helping support aluminium prices.
After the record-high levels attained at the end of
2014 and their rapid decline during 2015, Premia are
now stabilised at levels compatible with the current
LME prices for Aluminium.
At the same time, the margin for further reduction in
production cost has diminished, after the significant
decrease in energy prices, raw materials and trans-
portation during the previous period.
The developments regarding the market funda-
mentals, the performance of emerging economies
and especially of the Chinese economy, the ener-
gy costs and the evolution of the Euro/USD parity,
together with the monetary policy to be adopted
by the Central Banks, are expected to be the key
factors to drive developments in the sector in the
months ahead.
Against this international backdrop, the Group is fo-
cusing on further strengthening its competitiveness
and is expecting a stronger financial performance
from its Metallurgy sector in the second semester
of 2016.
The above indicators for the presented period on an annualized basis
as well as for the previous year are as follows:
EBITDA & EVA in thousands
€
.
II. Significant corporate events in the first six months
of the year
• On 31/12/2014 the transitional Capacity Assurance mechanism
expired. A new Flexibility Remuneration Mechanism, was expected
to come into force from 1/1/2015.However and despite the fact that
the public consultation process had been completed from January
2015, the final information required by the DG Competition of the EU
were sent with a significant delay (September 2015) by the Greek
authorities. Said delay had as result the lapse of time required to
set the new mechanism in force for the year 2015.Consequently, the
EBITDA of Mytilineos Group for the 1st half of 2015, are reduced by
the amount of approximately 22.3 mio
€
.
The transitional Flexibility Remuneration Mechanism was enacted and
entered into force from 1.5.2016, following the decision of the Euro-
pean Commission No. C (2016) 1791 final dated 31.3.2016, through
the article 150 of L. 4389/2016 in accordance to the provisions set in
the 3rd Memorandum between the Hellenic Republic and the Institu-
tions, as embodied in the L. 4336/2015.
According to the provisions of the aforementioned article, the duration
of the new transitional Flexibility Remuneration Mechanism is set for
twelve months, meaning up to 30.4.2017 (unless a new permanent
Capacity and/or Flexibility Mechanism comes into force at an earlier
date).
The remuneration of the transitional Flexibility Mechanism has been
set to forty five thousand (45.000) euros per MW of net installed ca-
pacity with a cap of fifteen million (15.000.000) euros per power plant.
The consultation held by the Regulating Authority for Energy (RAE)
regarding the implementation of the transitional Flexibility Remunera-
tion Mechanism was completed as of 18.7.2016. The Law expressly
stipulates that the remuneration provided by said mechanism is guar-
anteed from 1.5.2016, but will be collected from the entitled producers
after they have been registered in the Flexible Plants Registry. It is
noted that if said mechanism was put into force from 1.1.2016 (in-
stead of 1.5.2016), the EBITDA of Mytilineos Group would have been
increased by 12,6mil
€
.
• The shareholder of the Romanian company “REYCOM RECYCLING
S.A.” (“Reycom”) and the Board of Directors of the Greek company
“ALUMINIUM OF GREECE INDUSTRIAL AND COMMERCIAL SOCI-
ETE ANONYME ICSA” (“AoG”) respectively resolved on 30/05/2016
the merger of Reycom and AoG by way of AoG (hereinafter the “Ab-
sorbing Company”) absorbing Reycom (hereinafter the “Absorbed
Company”).
Τhe Cross Border Merger will strengthen the Absorbing Company of-
fering AoG the opportunity to diversify its sources of revenue as well
as its exposure to commodity prices which is currently concentrated
on Aluminium. By being able to produce Zn and Pb alongside Alu-
minium, Absorbing Company will diversify its sources of revenue at a
time that the price of its current product (Aluminium) is experiencing
increased pressure in the commodity markets.
Group Net Profit after minorities
Amounts in mil.
€
Variance Analysis
EBITDA 2015
118.7
Effect from:
Organic $/
€
eff.
3.3
Fuel Oil + NG + Steam
10.0
LNG
0.8
Volumes
0.1
Premia & Prices
-37.2
Opex & R/M
10.8
LME
-18.7
EPC
-7.2
Electricity
2.6
Other
-2.6
Energy Sector
20.7
Zn-Pb discontinued operation
0.1
EBITDA 2016
101.4
Amounts in mil.
€
Variance Analysis
Net Profit after Minorities 2015
32.8
Effect from:
Operating Results (EBIT)
-24.9
One - off Financial results
-
Net Financials
-1.3
Share in Associates Results
-0.1
Minorities
0.6
Discontinued Operations
0.4
Taxes
4.8
Net Profit after Minorities 2016
12.4
2016
2015
EBITDA
217.039
234.373
ROCE
14,00%
17,09%
ROE
2,01%
3,96%
EVA
120.352
164.810
Group EBITDA
The group evaluates its financial performance using the following generally
accepted Key Performance Indicators (KPI’s).
-EBITDA (Earnings Before Interest, Taxes, Depreciation & Amortization):
The Group defines “EBITDA” as Operating results before depreciation,
amortization, financial and investment results and before the effects of any
special factors such as:
a) the share in the EBITDA of associates when these are active in one of the
Group’s reported Business Sector and
b) the effects of eliminations of any profit or loss from asset construction
transactions of the Group with the above mentioned associates.
c) the effects of excise taxes such as those imposed on the R.E.S. and on
HPEPHC plants, under Law 4093/2012.
-
ROCE (Return On Capital Employed):
this ratio divides EBIT with the total
Capital Employed if the Group which is the sum of Equity, Total of Bank Loans
and Long Term Provisions.
- ROE (Return On Equity):
this ratio divides Earning
After Tax(EAT) with the Group’s Shareholders’
Equity.
- EVA (Economic Value Added):
this figure is
calculated by multiplying the difference of ROCE
and Cost of Capital with the Capital Employed as
defined above and reflects the amount added to the
economic value of the firm. In order to calculate the
Cost of Capital the group uses the WACC formula.
