14
15
Semi-annual Board of Directors Management Report
shape a concrete opinion on the effectiveness of the
corporate systems, procedures and policies.
ii. The company’s statutory external auditors do not
offer other non auditing services to the company.
IV.SignificantRelatedPartyTransactions
The commercial transactions of the Group and
the Company with related parties during the first
semester of 2016, were realized under the common
commercial terms. The Group or any of its related
parties has not entered in any transactions that were
not in an arm’s length basis, and do not intent to
participate in such transactions in the future. No
transaction was under any special terms.
The tables bellow present the intercompany sales
and transactions, among the Parent Company and
its subsidiaries and associates and the executives
as at 30 June 2016.
also recognise opportunities in the EPC side of operations due to any of said, re-
vised or new, rules, regulations and legislation associated to the climate change.
Non realization of expected long-term benefits from productivity and
cost-reduction initiatives
The Group has undertaken, and may continue to undertake, productivity and
cost-reduction initiatives to improve performance and reduce its overall produc-
tion cost. There are always possibilities that these initiatives cannot all be com-
pleted or that estimated cost savings from such initiatives will not be realized in
total and in time for reasons that may not entirely lie on the Group’s control.
Political and regulatory issues
The Group’s activities that are associated with energy remain significantly regu-
lated in Greece and exposed to political, legal and regulatory framework issues.
Developments in this environment that could indicate delays in the substantial
deregulation of the energy market can be expected to have an impact on the
Group’s operations, forward - looking results and fair value of Energy Assets or
Assets for the operation of which significant amount of Energy is required.
In addition to that, the Group may also be affected by unfavourable develop-
ments regarding political and regulatory issues associated to its EPC activity held
in countries outside the Greek territory.
IT Security
Our business processes are supported by several software packages and data
processing systems. Nevertheless, we cannot fully rule out a lack of availability of
IT infrastructure or a breach in the security of our data.
We mitigate these risks by applying high security standards as well as taking
measures in order to achieve and assure availability, integrity, confidentiality
and traceability. In addition and in order to mitigate security related risks, we
regularly invest in hardware and software upgrades, execute periodic internal
and external IT audits by international consultant groups, and generally apply a
continuous improvement approach.
EPC related risks
The Group through its subsidiary METKA, is contractually exposed to risks re-
lated to the design, engineering, procurement, construction and deliver of ready-
to-operate energy facilities for an agreed price. Said risks involve mainly cost
overruns associated with:
• unanticipated increases in the costs of raw materials and equipment,
• equipment or mechanical failures,
• unforeseen construction conditions,
• delays caused by adverse weather conditions
• performance failure or defaults by suppliers or subcontractors
• additional works required as the customer changes its instructions or is
unable to provide on time and on schedule the required information relating to
the design or engineering of the project
Recent events in Turkey are expected to increase uncertainty levels in the wider
region, directly influencing economic sentiment and business and investment
decisions. Subsidiary METKA is closely monitoring developments in Turkey, tak-
ing all the necessary measures to avert potential risks.
Unexpected events
Unexpected events, including natural disasters, war or terrorist activities, un-
planned outages, supply disruptions, or failure of equipment or processes to
meet specifications may increase the cost of doing business or otherwise impact
the Group’s financial performance. Further, existing insurance arrangements
• the preparation of the financial statements and any other docu-
ments containing important disclosures of the company,
• the reliability, the credentials and the independency of Statutory Ex-
ternal Auditors.
• Cases of conflict of interest between the company and its BOD
members or Managers,
• the transactions and corporate affairs of the company with its affili-
ates and other entities in which the company’s BOD members hold
more that 10% interest or in which there is a holding interest by share-
holders of the company representing more than 10% of its share capi-
tal.
• the remuneration of the BOD members and the managers of the
company.
i. The BOD reviews on a constant basis the Corporate Strategy and
the main Enterprise Risks associated to this Strategy, especially being
active in a cyclical and dynamic environment. Additionally, it regularly
reviews the reports of the Audit Committee, therefore being able to
may not provide protection for all of the costs that
may arise from such events.
Pendency of proceedings
The Group, mainly via its subsidiaries, has been in-
volved in a number of cases against third parties, ei-
ther as complainant or as respondent. The outcome
of such cases may involve expenses or revenues
that can significantly affect the results as well as the
financial position of both the subsidiaries and the
Group alike.
b. Risk Management organization and
execution
The Group has defined risk as an occurrence of un-
certain or unplanned conditions that may affect its
overall operations, business activity, financial perfor-
mance as well as its strategy execution and goals
achievement.
A specific Risk Management approach is held in all
areas of activity where certain risks have been identi-
fied as follows:
(i) assessment of risk factors
(ii) design of the risk management policy
(iii) execution and evaluation of the risk policy
The Group has not established yet a concrete Risk
Management Organizational structure. However, its
line management is engaged in a continuous pro-
cess of identifying and primary assessing risks in
order to facilitate the Executive Committees of each
business sector and the BOD of each legal entity
in the design and approval of specific risk manage-
ment procedures and policies.
The Group is executing periodic internal audits to
ensure the proper and effective application of risk
identification and assessment processes and risk
management policies.
C. Internal Audit System
In addition to the points discussed elsewhere in this
Statement including those discussed for the respon-
sibilities of the Audit Committee, the Internal Audit
of the company is an independent organizational
structure with direct report line to the BOD. As part of
its responsibilities it evaluates and improves the risk
management and internal audit systems and veri-
fies the conformation of the company with the poli-
cies and procedures either suggested by the Rule of
Operations or imposed by the legal and regulatory
framework.
On a constant basis the internal audit system pro-
vides for the monitoring of:
• the effectiveness of the accounting and financial
systems of the company, the audit mechanisms, the
quality assurance, the health and safety, the envi-
ronmental treatments and the management of en-
terprise risks,
Benefits to executives at Group and Parent level
MYTILINEOS GROUP
MYTILINEOS S.A.
(Amounts in thousands
€
)
30/06/2016 30/06/2015
30/06/2016 30/06/2015
Short term employee benefits
- Wages and Salaries and BOD Fees
8.245
10.653
1.233
1.632
- Insurance service cost
317
306
132
129
8.562
10.959
1.365
1.761
Pension Benefits:
- Defined benefits scheme
-
2
-
-
- Defined contribution scheme
15
3
-
-
Total
8.578
10.964
1.365
1.761
