Greek Economy & Market

The ongoing crisis and capital controls may have a negative effect on the functioning of the market and cause a delayin the implementation of the Group’s investment program in Greece. Expansion of the Group’s activity abroad is aimed at hedging the relevant risks. In this context, the company’s management continuously monitors developments in Greece and in co-operation with specialized associates and Group managers, designs and implements risk management measures to minimize any adverse impact.

Credit Risk

The Group because of the nature of its operations, is not exposed to significant credit risk from trade receivables. Continuous monitoring of these accounts enables the incorporation of the resulting information into credit control procedures.

Credit and trade risk regarding cash and other receivables is also low, since the Group transacts with credit institutions with adequate capital structure ratios, public and / or public-sector corporations as well as robust business groups.

Currency Risk

The Group, outside the Greek borders, is active in Eastern European countries and the United States, therefore it may be exposed to a risk arising from the fluctuations in the exchange rate of the euro with other currencies. In order to address this risk, the financial management department systematically monitors exchange rate changes and implements the required actions so that the Group’s cash and financial results are not adversely affected.

Interest Rate Risk

The Group’s policy is to minimize exposure to interest rate risk in the long-term financing of its operation. Under this policy, long-term loans received by the Group either bear a fixed interest rate or are hedged for their entire duration. Short-term loans bear a floating rate linked to the Euribor. Therefore, the Group is exposed to interest rate risk arising from its short-term debt as well as from the portion of long-term debt issued with floating interest rates.

Market Risk

The Groupis not exposed to market risk regarding its financial assets.

Liquidity Risk

The Group’s liquidity is judged to be satisfactory, since in addition to the existing cash reserves, the wind farms that are in operation generate satisfactory cash flows. The Group manages liquidity needs with regular cash planning, careful monitoring of long-term financial liabilities and methodical management of payments that are executed on a daily basis. Liquidity needs are monitored in different time periods.

Other Risks

• The Group is exposed to the short-term fluctuations of wind and hydrological data, without affecting the long-term profitability of its projects, since the implementation of the relevant investments is preceded by extensive studies concerning the long – term behavior of the above factors.
• The construction sector of TERNA ENERGY is subject to significant fluctuations, concerning its financial results, as construction activity involves increased volatility, mainly related to the ongoing renewal of the constructions backlog, which are mainly government entities.