ANNUAL FINANCIAL REPORT for the Period
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TERNA ENERGY Industrial Commercial Technical Societe Anonyme 85 Mesogeion Ave., 115 26 Athens, Greece Societe Anonyme Reg. No. 318/06/Β/86/28 ANNUAL FINANCIAL REPORT for the period from 1st January to 31st December 2019 In accordance with Article 4, Law 3556/2007 and the relevant Executive Decisions of the Hellenic Capital Market Commission Board of Directors TERNA ENERGY GROUP Annual Financial Report for 2019 CONTENTS Ι. REPRESENTATIONS OF THE MEMBERS OF THE BOARD OF DIRECTORS ................................................................................ 4 ΙΙ. INDEPENDENT AUDITOR’S REPORT ...................................................................................................................................... 5 ΙΙΙ. ANNUAL MANAGEMENT REPORT OF THE BOARD OF DIRECTORS OF “TERNA ENERGY S.A.” ON CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS FOR FINANCIAL YEAR 2019 ........................................................................................... 10 CORPORATE GOVERNANCE STATEMENT ................................................................................................................................ 30 ΙV. ANNUAL SEPARATE AND CONSOLIDATED FINANCIAL STATEMENTS ............................................................................... 40 NOTES TO FINANCIAL STATEMENTS ...................................................................................................................................... 51 1 GENERAL INFORMATION ABOUT THE GROUP ............................................................................................................... 51 2 BASIS FOR THE PREPARATION OF FINANCIAL STATEMENTS ......................................................................................... 52 3 SIGNIFICANT ACCOUNTING ESTIMATES AND MANAGEMENT ASSESSMENTS .............................................................. 58 4 SUMMARY OF KEY ACCOUNTING PRINCIPLES ............................................................................................................... 62 5 CONSOLIDATED COMPANIES AS AT 31/12/2019 ........................................................................................................... 90 6 SEGMENT REPORTING ................................................................................................................................................... 95 7 BUSINESS COMBINATIONS ........................................................................................................................................... 102 8 INTANGIBLE ASSETS ..................................................................................................................................................... 104 9 RIGHT – OF – USE ASSETS ............................................................................................................................................ 106 10 PROPERTY, PLANT AND EQUIPMENT....................................................................................................................... 108 11 INVESTMENT PROPERTY .......................................................................................................................................... 111 12 INVESTMENTS IN SUBSIDIARIES .............................................................................................................................. 111 13 INVESTMENTS IN ASSOCIATES ................................................................................................................................. 115 14 INVESTMENTS IN JOINT ARRANGEMENTS .............................................................................................................. 116 15 INVESTMENTS IN EQUITY INTERESTS ...................................................................................................................... 117 16 OTHER LONG-TERM RECEIVABLES ........................................................................................................................... 118 17 FINANCIAL ASSETS – CONCESSIONS ........................................................................................................................ 119 18 INVENTORIES ........................................................................................................................................................... 121 19 TRADE RECEIVABLES ................................................................................................................................................ 121 20 PREPAYMENTS AND OTHER RECEIVABLES .............................................................................................................. 123 21 RECEIVABLES/(LIABILITIES) FROM CONTRACTS WITH CUSTOMERS ........................................................................ 125 22 CASH AND CASH EQUIVALENT ................................................................................................................................. 126 23 BORROWINGS .......................................................................................................................................................... 127 24 LEASE LIABILITIES ..................................................................................................................................................... 135 25 FINANCIAL DERIVATIVES .......................................................................................................................................... 135 26 PROVISIONS FOR EMPLOYEE COMPENSATION ....................................................................................................... 138 27 OTHER PROVISIONS ................................................................................................................................................. 140 2 TERNA ENERGY GROUP Annual Financial Report for 2019 28 GRANTS .................................................................................................................................................................... 141 29 EQUITY INSTRUMENTS HAVING A SUBSTANCE OF FINANCIAL LIABILITY ................................................................ 142 30 SUPPLIERS ................................................................................................................................................................ 145 31 ACCRUED AND OTHER SHORT-TERM LIABILITIES .................................................................................................... 146 32 SHARE CAPITAL AND SHARE PREMIUM ................................................................................................................... 146 33 RESERVES ................................................................................................................................................................. 147 34 EARNINGS PER SHARE ............................................................................................................................................. 149 35 INCOME TAX ............................................................................................................................................................ 149 36 TURNOVER ............................................................................................................................................................... 156 37 COST OF SALES, ADMINISTRATIVE AND RESEARCH AND DEVELOPMENT EXPENSES .............................................. 158 38 OTHER INCOME/EXPENSES...................................................................................................................................... 160 39 FINANCIAL INCOME/(EXPENSES) ............................................................................................................................. 161 40 PAYROLL COST ......................................................................................................................................................... 162 41 TRANSACTIONS WITH RELATED PARTIES................................................................................................................. 162 42 RISK MANAGEMENT POLICIES AND PROCEDURES .................................................................................................. 165 43 PRESENTATION OF FINANCIAL ASSETS AND LIABILITIES PER CATEGORY ................................................................ 170 44 LIABILITIES ARISING FROM FINANCING ACTIVITIES ................................................................................................. 171 45 FAIR VALUE MEASUREMENT ................................................................................................................................... 172 46 CAPITAL MANAGEMENT POLICIES AND PROCEDURES ............................................................................................ 174 47 EFFECTIVE LIENS ...................................................................................................................................................... 175 48 CONTINGENT ASSETS AND LIABILITIES .................................................................................................................... 175 49 SIGNIFICANT EVENTS AFTER THE REPORTING DATE OF STATEMENT OF FINANCIAL POSITION ............................. 180 50 APPROVAL OF FINANCIAL STATEMENTS ................................................................................................................. 184 3 TERNA ENERGY GROUP Annual Financial Report for 2019 Ι. REPRESENTATIONS OF THE MEMBERS OF THE BOARD OF DIRECTORS (under article 4, par. 2, Law 3556/2007) The below statements