annual financial statements for fy 2017 in … ifrs notes ____ 31122017.pdfinternational financial...

Annual Financial Statements for FY from January 1 to December 31, 2017

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ANNUAL FINANCIAL STATEMENTS

for FY 2017

In compliance with the International Financial Reporting Standards (IFRS)

It is hereby confirmed that the attached annual Financial Statements for the period 1/1–31/12/2017 are the ones approved by the Board of Directors of HELLENIC POST S.A. on July 12th, 2017.

As and on behalf of HELLENIC POST S.A.

Chairman of the BoD

Chief Executive Officer

Euphrosyne Stavraki

Ioannis Zaroliagkis


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TABLE OF CONTENT

Independent Auditor’s Report ....................................................................................................................... 4 Report of the Board of Directors ................................................................................................................... 9 Explanatory Report of the Board of Directors ............................................................................................ 19 Statement of Financial Position ................................................................................................................... 22 Statement of Comprehensive Income ......................................................................................................... 23 Statement of Changes in Equity .................................................................................................................. 24 Statement of Cash Flows.............................................................................................................................. 26 Notes to Financial Statements ..................................................................................................................... 27 1. General Information ......................................................................................................................... 27 2. Framework for Preparation of Financial Statements ..................................................................... 27

2.1. New Standards, Interpretations and Amendments to effective Standards .................. 28 2.1.1. New Standards, Interpretations, Revisions and Amendments to existing Standards that are effective and have been adopted by the European Union............ 28 2.1.2. New Standards, Interpretations, Revisions and Amendments to existing Standards that are not effective yet and have not been adopted by the European Union ................................................................................................................................ 29

2.2. Significant Accounting Judgements, Estimates and Assumptions ..................................... 31 2.3. The Company’s Going Concern ............................................................................................. 33

3. Summary of accounting policies ...................................................................................................... 36 3.1. General .............................................................................................................................. 36 3.2. Consolidation and investments in associates ................................................................. 36

3.2.1. Basis for Consolidation ......................................................................................... 36 3.2.2. Business Combinations ........................................................................................ 37 3.2.3. Associates…… ....................................................................................................... 37

3.3. Foreign Currency Translation .......................................................................................... 38 3.4. Recognition of Revenue and Expenses ........................................................................... 38 3.5. Other Intangible Assets ................................................................................................... 39 3.6. Property, Plant and Equipment ....................................................................................... 40 3.7. Leases ................................................................................................................................ 41

3.7.1. The Group as a Lessee ........................................................................................... 41 3.7.2. The Group as a Lessor ............................................................................................ 41

3.8. Impairment Test of Tangible and Intangible Assets ...................................................... 42 3.9. Investment Property ........................................................................................................ 42 3.10. Non-Current Assets Held for Sale and Discontinued Operations .................................. 43 3.11. Financial Assets ................................................................................................................ 43

3.11.1. Financial Assets Available for Sale ..................................................................... 43 3.11.2. Loans and Receivables ........................................................................................ 44 3.11.3. Fair Value.............................................................................................................. 44

3.12. Inventory .......................................................................................................................... 44 3.13. Income Tax ....................................................................................................................... 44

3.13.1. Current Income Tax ............................................................................................. 44 3.13.2. Deferred Income Tax ........................................................................................... 45

3.14. Cash and Cash Equivalent ................................................................................................ 45 3.15. Equity ................................................................................................................................ 45 3.16. Retirement Benefits and Short-term Employee Benefits ............................................... 46

3.16.1. Retirement Benefits ............................................................................................. 46 3.17. Financial Liabilities ........................................................................................................... 46 3.18. Other Provisions, Contingent Assets and Liabilities....................................................... 46 3.19. Rounding ........................................................................................................................... 47

4. The Group Structure ......................................................................................................................... 47 5. Financial Statements Items Analysis .............................................................................................. 48

5.1. Property, Plant and Equipment ....................................................................................... 48 5.2. Intangible Assets .............................................................................................................. 49 5.3. Investment Property ........................................................................................................ 50 5.4. Investments in Subsidiaries ............................................................................................ 50 5.5. Assets Available for Sale .................................................................................................. 50 5.6. Other Long-term Receivables .......................................................................................... 51 5.7. Deferred Tax Assets and Obligations .............................................................................. 51 5.8. Inventory .......................................................................................................................... 55 5.9. Trade and Other Receivables ........................................................................................... 55 5.10. Other Current Assets ........................................................................................................ 56 5.11. Advance Payments ........................................................................................................... 56 5.12. Cash and Cash Equivalent ................................................................................................ 56 5.13. Equity ................................................................................................................................ 57

5.13.1. Share Capital ........................................................................................................ 57 5.13.2. Reserves ............................................................................................................... 57


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5.14. Employee Termination Benefits ....................................................................................... 57 5.15. Other Long-term Liabilities .............................................................................................. 59 5.16. Long-term Provisions ....................................................................................................... 59 5.17. Bank Overdrafts ................................................................................................................ 60 5.18. Suppliers and Other Trade Liabilities .............................................................................. 60 5.19. Short-term Loan Liabilities .............................................................................................. 61 5.20. Advance Payment Liabilities ............................................................................................ 61 5.21. Income Statement Accounts Analysis ............................................................................. 61 5.22. Financial Income / Expenses ........................................................................................... 64 5.23. Income Tax ....................................................................................................................... 65 5.24. Related Parties Transactions ........................................................................................... 66 5.25. Receivables from the Universal Service .......................................................................... 67 5.26. Employee Benefits ............................................................................................................ 69 5.27. Transactions with Key Executives ................................................................................... 70 5.28. Contingent Assets – Liabilities ........................................................................................ 70 5.29. Guarantees ........................................................................................................................ 73

6. Risk Management Objectives and Policies ...................................................................................... 73 6.1. Currency Risk .................................................................................................................... 73 6.2. Interest rate risk sensitivity analysis .............................................................................. 73 6.3. Credit Risk Analysis .......................................................................................................... 74 6.4. Fair Value Hierarchy ......................................................................................................... 74 6.5. Liquidity Risk Analysis...................................................................................................... 75

7. Equity Management Policies and Procedures ................................................................................. 75 8. Post Statement of Financial Position Date Events.......................................................................... 76


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Independent Auditor’s Report

To the Shareholders of HELLENIC POST S.A.

Report on the Separate and Consolidated Financial Statements

We have audited the accompanying Separate and Consolidated Financial Statements of HELLENIC POST S.A. (the Company), which comprise the Separate and Consolidated Statement of Financial Position as at December 31, 2017, the Separate and Consolidated Statements of Comprehensive Income, Changes in Equity and Cash Flows for the year then ended and a summary of significant accounting policies and other explanatory information.

In our opinion, apart from the effects of the matters recorded in the paragraph “Basis for Qualified Opinion”, the accompanying Separate and Consolidated Financial Statements present fairly, in all material respects, the financial position of the Company and its subsidiaries (the Group) as at December 31, 2017, their financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards that have been adopted by the European Union.

Basis for Qualified Opinion

The following issues have arisen from our audit:

1. The Company and the Group account “Receivables from Universal Services” amounting to Euro 252.837 k pertains to receivables for compensation from the Greek State regarding the cost of providing the Universal Postal Services in Greece for years from 2013 to 2017. Since we were not in position to obtain sufficient and adequate audit evidence, we have, based on the International Financial Reporting Standards, certain reservations regarding the potential recognition, as at December 31, 2017, of the amount of Euro 82.905 k pertaining to the cost of the universal service for years 2013 - 2015, approved by the Hellenic Telecommunications and Post Commission (EETT), as well as the amount of Euro 124.934 k, of which an amount of Euro 101.759 k pertains to the cost of universal service for 2016 and 2017, while an amount of Euro 23.175 k pertains to financial revenue claimed by the Company from the Greek State for the delay in submitting the amounts for rendering the universal service from 2013 to 2015. Regarding the amount of Euro 82.905 k, no Joint Ministerial Decision regulating the payment of the amount to the Company has been issued defining the way of payment and no such provision has been included in the State Budget, regarding which it is necessary to complete the procedures with the European Commission in the context of the state aid measures. Regarding the amount Euro 124.934, EETT audit has not yet been finalized and no Joint Ministerial Decision regulating the payment of the amount to the Company has been issued. As far the aforementioned amounts are concerned, the Company and the Group have calculated deferred tax obligation totaling Euro 60.272 k. Given the aforementioned, the account “Receivables from Universal Services” is overstated by an amount of Euro 207.839 k, the account “Deferred tax obligation” is overstated by an amount of Euro 60.272 k, the equity is overstated by an amount of Euro 147.567 k (Euro 207.839 k receivables from the Universal Service less Euro 60.272 k pertaining to deferred tax obligation corresponding to this obligation) and the income statements for the closing and previous years are overstated by Euro 55.459 k and Euro 1.295 k respectively.

2. The Group and the subsidiary accounts “Trade and Other Receivables” and “Other Current Assets” include bad balances totally amounting to Euro 10.718 k, regarding which, no relative provision has been made for the purpose of covering losses from


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non-capitalization of part of these disputed receivables. Based on the results of our audit, we estimate that the provision made by the Group, standing at Euro 2.402 k is lower that the one that should have been made by Euro 8.316 k. Not making the required provision constitutes a deviation from the accounting principles under the International Financial Reporting Standards and, therefore, the value of the aforementioned receivables, the equity of the Group are overstated by Euro 8.316 k, while the income statement of the Group for the current year is overstated by Euro 385 and for the previous years – overstated by Euro 7.931 k.

3. The Group and the Company account “Property, Plant and Equipment” records acquisition value of real estate (land plots and building) totaling Euro 140.564 k. The Company has not conducted impairment test regarding its real estate amounting to Euro 140.564 k in order to define whether its accounting value is lower than its recoverable amount. Therefore, we have reservations regarding the proper valuation of the aforementioned assets and the contingent effect on the Group and the Company equity and income statements of the closing and previous years.

4. The account “Investments in Subsidiaries” of Euro 14,067 k pertains to acquisition value of the subsidiary, in which the Company holds participating interest of 99.98%. Moreover, the account “Receivables from Associates” includes trade receivables amounting to approximately Euro 9.700 k from the same subsidiary. The Company has not conducted impairment test regarding the value of its investment and receivables from the subsidiary in order to define whether their accounting value is lower than the recoverable amount. Therefore, we have reservations regarding the proper valuation of the accounts “Investments in Subsidiaries” and “Receivables from Associates” and the contingent effect on the Group and the Company equity and income statements of the closing and previous years.

5. The Company and the Group account “Deferred Tax Obligations” includes offset deferred tax assets amounting to Euro 6.957 k, whose collectability was not possible to estimate, given the current financial conditions and on-going financial losses. Therefore, we have reservations regarding the proper valuation of deferred tax obligations and the contingent effect on the Group and the Company equity and income statements of the closing and previous years.

We conducted our audit in accordance with International Standards on Auditing (ISAs) incorporated into the Greek Legislation. Our responsibilities under those standards are described in the Auditor’s Responsibilities for the Audit of the Separate and Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) incorporated into the Greek Legislation and ethical requirements relevant to the audit of separate and consolidated financial statements in Greece and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material Uncertainty Related to Going Concern

We draw your attention to the fact that the Company’s Total Equity, taking into account the effects of matters recorded in the paragraph “Basis for Qualified Opinion”, has been presented as negative and, therefore, there are effective the requirements for the application of Article 48 of the CL 2190/1920. Moreover, the Company’s current liabilities, taking into account the effect of matter 1 recorded in the paragraph “Basis for Qualified Opinion”, exceed its current assets by an amount of Euro 173.735 k. The conditions described in Note


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2.3. to Separate and Consolidated Financial Statements indicate the existence of material uncertainty regarding the Company’s ability to continue as a going concern. Our opinion is not qualified in respect of this matter.

Responsibilities of Management and Those Charged with Governance for the Separate and Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the separate and consolidated financial statements in accordance with International Financial Reporting Standards that have been adopted by the European Union and for such internal control as management determines is necessary to enable the preparation of separate and consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the separate and consolidated financial statements, management is responsible for assessing the Company’s and the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the management’s intention is to procced with liquidating the Company and the Group or discontinuing its operations or unless the management has no other realistic option but to proceed with those actions.

The Company’s Audit Committee (Article 44, Law 4449/2017) is responsible for overseeing the Company’s and the Group’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Separate and Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the separate and consolidated financial statements as an aggregate, are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs, incorporated into the Greek Legislation, will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to affect the economic decisions of users taken on the basis of these separate and consolidated financial statements.

As part of an audit in accordance with ISAs, incorporated into the Greek Legislation, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the separate and consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s and the Group’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the management.


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Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s and the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the separate and consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company and the Group to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the separate and consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Obtain sufficient appropriate audit evidence regarding financial information of entities or business activities within the Group for the purpose of expressing an opinion on the separate and consociated financial statements to be able to draw reasonable conclusions on which to base the auditor’s opinion. Our responsibility is to design, supervise and perform the audit of the Company and the Group. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Report on Other Legal and Regulatory Requirements

Taking into consideration the fact that under the provisions of Par. 5, Article 2 (part B), Law 4336/2015, management has the responsibility for the preparation of the Board of Directors’ Report, the following is to be noted:

1. In our opinion, the Board of Directors’ Report has been prepared in compliance with

the effective legal requirements of Article 43a and 107A, CL 2190/1920, and its content corresponds to the accompanying financial statements for the year ended as at 31/12/2017.

2. Based on the knowledge we acquired during our audit, we have not identified any

material misstatements in the Board of Directors’ Report in relation to the Company HELLENIC POST S.A. and its environment.

Athens, 12 July, 2018

Certified Auditor Accountant

Panagiotis Christopoulos

S.O.E.L. No. 28481


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Report of the Board of Directors

OF HELLENIC POST S.A. TO THE REGULAR GENERAL MEETING OF SHAREHOLDERS

Dear Shareholders,

We are submitting for your approval the Separate and Consolidated Financial Statements of HELLENIC POST S.A. ("ELTA" or the "Company") for FY 2017. The Financial Statements are presented in accordance with the International Financial Reporting Standards (IFRS), as adopted by the European Union. The Financial Statements are also in accordance with the 62784/2017 Circular of the Ministry of Economy and Development regarding the commercial publicity of the Annual Financial Statements that expire on 07/07/2016 onwards, in accordance with the provisions of Law 4403/2016 in combination with the provisions of Law 4308/2014.

1. The Group structure and the Company’s market position

HELLENIC POST Group of companies comprises the parent Company - HELLENIC POST S.A. and its subsidiaries: Tachimetafores ELTA S.A. (ELTA Courier) and KEK ELTA S.A. (ELTA's Vocational Training Center) - whose basic sizes have been incorporated in the current Report. In particular:

Tachimetafores ELTA S.A.: Tachimetafores ELTA S.A. was established 2000 and operates in Courier Services market. The parent Company holds a patriating interest of 99,98%, while a participating interest of 0,02% is held by the employees through the Panhellenic Federation of Postal Associations (P.F.P.A.).

KEK ELTA S.A.: KEK ELTA S.A. was established in 1998. Its main activities pertain to providing training and continuous development of ELTA's human resources. ELTA holds a participating interest of 70% in the share capital of KEK ELTA S.A., while a participating interest of 30% is held by the employees through the Panhellenic Federation of Postal Associations (P.F.P.A.).

2. Evolution of the Group's and Company's operations

The course of the Group economic development is reflected in the Consolidated Financial Statements for FY 2017, since the key financial sizes were formed as follows:

1. In 2017, the turnover at consolidated level stood at EURO 340,757 k versus EURO 342,870 k in 2016, presenting a decrease of 0.6%. The Parent Company turnover stood at EURO 310,750 k versus EURO 311,754 k in 2016, decreased by 0.3%.

2. Consolidated Gross Profit stood at EURO 43,189 k versus EURO 35,266 k in 2016. The Parent Company Gross Profit stood at EURO 35,129 k versus profit of EURO 28,722 k in 2016. The Group gross profit margin stood at 12.7% in 2017 versus 10.3% in the previous FY. The Company gross profit margin stood at 11.3% in 2017 versus 9.2% in the previous FY.

3. EBITDA for the Group rerecorded losses of EURO 6,706 k versus profit of EURO 14.342 k in 2016. Moreover, for the Parent Company, it stood at EURO 8,243 k versus profits of EURO 13.246 k in 2016. It is to be noted that income from deprecation of granted assets have been excluded from EBITDA calculation.

4. The Group Earnings Before Tax recorded profit of EURO 1,275 k versus profit of EURO 436 k in 2016. The Company Earnings Before Tax stood at profit of EURO 634 k versus profit of EURO 396 k in 2016.

3. Financial Position of the Company

The decrease in value of the Company financial assets within the recent years has imposed a significant burden on the Company Equity. The total equity stands at approximately EURO 14,012 k, representing 4.1% of the Company Share Capital. It is to be noted that the


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decrease in Equity has arisen from the previous years mainly following the recognition of impairment amounting to EURO 211.734 k of the Company’s participating interest in the Postbank S.A. as well as the recognition of loss amounting to EURO 9.094 k arising from the Company’s investments in PSI program, Buyback implemented regarding the held for sale government bonds in 2012.

Therefore, the Company’s Total Equity is lower than ½ of its paid up Share Capital given the impairment and thus, there are effective the conditions dictating the implementation of Article 47, CL 2190/1920. Moreover, in the nearest future there shall be also taken into account the provisions of Article 48 of the same Law that are applied when the total equity of the Company is lower than one tenth (1/10) of its Share Capital.

It is obvious that ELTA should sustain its profitability in the future. In this context, the Company Management is implementing a series of measures aimed at strengthening its turnover as well as at limiting its operating costs.

4. Financial and Non-Financial Performance

The key financial ratios of the Group and the Company for 2017 and 2016 are as follows:

2017 2016 2017 2016

Ι) Economic Structure

Capital ratio allocated to current assets 70,6% 66,5% 67,9% 64,0%

Capital ratio allocated to fixed assets 29,4% 33,5% 32,1% 36,0%

Economic self-sufficiency index 0,8% 3,5% 26,0% 5,7%

Index of foreign capital use 99,2% 96,6% 97,5% 94,6%

Fixed Asset Rate Rating (From Equity) 2,6% 10,2% 7,9% 14,9%

ΙΙ) Liquidity

Working capital ratio 110,8% 109,3% 109,9% 108,3%

Immediate cash ratio 13,3% 17,4% 11,9% 16,7%

ΙΙΙ) Efficiency

Gross Profit Margin Ratio 12,7% 10,3% 11,3% 9,2%

Net / Total profit margin ratio 0,4% 0,1% 0,2% 0,1%

Index of return on equity 29,7% 2,4% 4,5% 1,4%

ΙV) Effectiveness

Current asset turnover ratio 0,6 0,7 0,6 0,6

GROUP COMPANYFinancial Performance Indicators of ELTA Group & Company

The quality rates have been formed as follows:

Domestic Correspondence Quality Rates 2017

The annual results of GREX system, taking into account the exemptions imposed by the Hellenic Telecommunications and Post Commission (EETT), in compliance with the estimates of ELTA competent services in the end of 2017, are as follows:

Χ+1: 78,2% in 2017, 87,3% in 2016, 87,0% in 2015, 87,3% in 2014, versus 90,1% in 2013,

Χ+3: 98,0% in 2017, 99,0% in 2016, 99,1% in 2015, 99,6% in 2014, versus 99,8% in 2013.

Foreign Correspondence Quality Rates 2017

The annual results of foreign correspondence quality, taking into account the most recent measurements of UNEX τand IPC systems, are as follows:

Χ+3: 44.2% regarding inflowing correspondence and 64.1% regarding outflowing correspondence (2016: 52.7% and 71.0% respectively),


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Χ+5: 77.8% regarding inflowing correspondence and 88.4% regarding outflowing correspondence (2016: 81.2% and 92.8% respectively).

5. Our vision, values, strategies, basic resources, risks and uncertainties

Hellenic Post vision is, with experience and knowledge of two centuries, to combine citizens and businesses by providing them modern, complete and reliable services throughout the country, throughout the world. Therefore its mission is that the Hellenic Post, as the only and most reliable provider of simple, modern and quality post and logistics services, financial transactions and energy throughout the country, has the mission to contribute to the transition of the Greek economy to the new digital era.

Hellenic Post renders the aforementioned services in accordance with the Company’s fundamental values, which are:

- Best Customer Service

- Innovation and Change

- Respect & Personal Responsibility

- Social Responsibility

- Corporate Effectivity.

In particular, ELTA places their customers and their level of service at the center of attention. The customer-centric approach that has been adopted aims at constantly offering the customer the best quality of service in line with market needs but also European trends.

Furthermore, ELTA tries to successfully respond to their ever changing needs, promote innovation, develop new products at the cutting edge of technological developments and continuously enrich the services they provide. It is a priority for the company to continuously and successfully adapt to a dynamically changing environment.

Respect for the client, colleagues and the community with personal responsibility, as well as access to services of general financial interest for every business and citizen throughout the country, in accordance with the terms of rendering universal service, are key elements of the operation of ELTA.

The efficiency of operation through the achievement of business objectives yields revenue that develops the business while maintaining competitive cost and profitability.

ELTA key strategic objectives, which also constitutes the object of the “Strategic and Business Planning of ELTA 2018-2021”, reflect its desired course of development aimed at fulfilling its mission and constitute the criterion for successful application and implementation of its strategy.

ELTA key strategic objectives are:

- Ensuring the Company’s economic viability,

- Exploring possibilities for expanding the Company's operations,

- Optimizing internal efficiency and business procedures.

It is noted that under the effective legal and institutional framework, ELTA is the provider of Universal Postal Services in Greece. Law “On Postal Service, Electronic Communications and Other Provisions” 4053/2012, of the Ministry Postal Service for a period of 15 years from the start of full liberalization, ie till December 31, 2028.

Rendering the universal services identifies the nature of ELTA in respect of its place and role in the operations of the postal market in the sense of its commitment to the regulations


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regarding provisions of acceptable quality universal services at affordable prices to all the citizens. The result of this commitment – in line with the geographical layout of Greece - is maintaining and operating an extensive postal network with post offices and agencies throughout the country, offering services throughout the entire network range.

The main aim of ELTA is to remain the largest and most reliable player in the Greek postal market. The financial difficulties faced by the company in recent years combined with the adverse macroeconomic circumstances have made it imperative to design, adopt and implement specific actions to ensure economic viability and consequently the continuation of the work of ELTA.

These development actions under the "Strategic & Business Planning of ELTA 2018-2021" are expected to contribute positively to the increase of the company’s revenue flows with a direct impact on the improvement of profitability and liquidity.

ELTA invests especially in upgrading the skills of Human Resources aiming at a more efficient respond to new needs (new products, new technologies) that are shaped in the rapidly evolving postal environment.

Given the increase in e-commerce and digital substitution, the company is constantly investing in new technologies in order to be able to offer new combined high added value postal services.

The completion of the automation of the company's branch network combined with the automation process of the postal agencies contributes to the modernization and homogenization of the entire customer service network, thus ensuring both the absolute control of transactions and the implementation of a single, modern corporate profile of the Hellenic Posts.

Diversifying the product portfolio through the creation and support of new alternative revenue streams is a top priority for the business. This includes the Company’s dynamic entry into the electricity sales activity. The ability to reform and adapt to new trends and the development of multi-channel services are two of the most important success factors for postal businesses for the future.

Risks – Uncertainties

ELTA has been operating in a particularly difficult business environment in the recent years. Macroeconomic developments in Greece for many years create strong pressures on the postal market, leading both to declining consumer demand for postal services and to the continuing saving trend in the postal expenses by the businesses. In this context the businesses provide incentives to their clientele for electronical communication, reduce the frequency of postal items and shift letters to lower weight rages, resulting in a change in the pricing scale.

Developments at the same time in the regulatory environment through the full liberalization of the market and the rapid increase in competition imply large-scale price depression and profit margins. The fully liberalized market entails additional cases of loss of great customers, especially in large urban centers. Efforts are being made to re-integrate already lost customers into the clientele as well as to hold existing ones through responding to their individualized requirements. The immediate redefinition of commercial policy is expected to contribute to the targeted effort to reduce the rate of revenue reduction of the company, when required, based on the attractiveness/profitability of products and services.

The increasingly widespread electronic substitution (eg e-banking, e-statement, e-invoice) as well as electronic governance (a more prominent example being the exclusively electronic processing of tax returns) which is now being extended to the whole of the Greek State exerts further pressure on ELTA revenue from its kay business operations - correspondence - that represents 60% of the total revenue.


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Furthermore, the revenue of the financial products of ELTA (the second largest source of revenue of the business) with most significant the payback and the cooperation with Eurobank present a downward trend as a result of the economic crisis and competition in the industry, but also the penetration of internet banking and other technologies. Revenue from domestic checks, which had recorded an increase as an alternative to the imposition of capital controls, declines mainly as a result of their easing.

In December 2015, ELTA participated in the share capital increase of Attica Bank and received 10 m shares versus EURO 0,30 (total consideration of EURO 3 m.). The decrease in the share priced, recorded on Athens Stock Exchange (EURO 0,0365 as at 29/12/2017) has resulted in the relative losses under the valuation of this investment.

The most intense problem of the company is the tightness of cash reserves. The delay in collecting the net cost compensation of the Universal Service for the three-year period 2013-2015 and beyond 2016 (which has been submitted for verification to EETT) intensifies the pressure on the company's liquidity. The increasing pressure from great customers to lengthen credit time also contributes to the same direction.

The suppliers of a postal operator do not have a special negotiating power in their cooperation with the operator and therefore do not particularly affect the business conduct of the Hellenic Post.

Addressing the above risks and difficulties also has to do with the implementation of the completed Restructuring Plan “Strategic & Business Planning of ELTA 2018-2021”, which was approved by the 1745/12-04-2018 meeting of the Board of Directors of ELTA. More specifically, the objectives of the Strategic & Business Planning of ELTA 2018-2021 are specified in a set of measures that include:

- reduction of operating cost

- increase of share in Special Management services market

- redefinition of trade policy

- enhancement of share in Electricity market

- use of electronic commercial and customs clearance

- entry of new financial products

- organization of the network

- change of production procedures

- use of new technologies

- reorganization of organizational positions

- development of Human Resources

"Strategic & Business Planning ELTA 2018-2021" is a long-lasting and integrated business plan with concrete actions that recognizes and addresses the challenges of the market, exploits opportunities and ensures the company's going concern.

6. Additional Information

Environmental Issues


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Protecting the environment and contributing to the vision of sustainable development is a strategic choice for the Company. ELTA develops environmental actions and participates in international environmental programs.

The Company has subscribed to the Collective Alternative Packaging Management System of the Greek Recycling Recovery Company, it also pays the relevant for recycled packaging for the year 2018 in the Paper-Cardboard category (of a total weight of 20.199,08 kg.)

In addition, ELTA has been registered with the Greek Recycling Organization (EOAN) Packaging Producers Registry under the registration number 4990.

Labor Issues

In matters of employment, the Company applies equal opportunities policies (regardless of gender, etc.) and recognizes through the human resources management systems and processes the right of workers to enjoy equality, equal treatment and acceptance and respect by other workers and the executives of the Administration.

With regard to recruitment, transfer and posting, promotion, selection in positions of responsibility, payroll, principal and auxiliary compulsory insurance, and optional insurance, etc. the legislation and the General Staff Regulations are strictly enforced and there are no exclusions. On the other hand, in cases of disadvantaged workers, there are positive measures (eg in the case of temporary disability due to an accident at work, the allocation of certain social groups (for example, multi-ethnic, third-party, unemployed, etc.).

Promotions to positions of responsibility are performed in accordance with the Staff Regulations (which is a chapter of the General Staff Regulations), which regulates the procedure for the proclamation and coverage of positions of responsibility and special positions for a three-year term, the terms and conditions for participation , the candidates' selection criteria, the selection bodies of the candidates, the procedure for the placement of the persons selected in the post, their rights and obligations, and the obligation to assess them to achieve the rally secretariat corresponding to positions of responsibility.

In terms of facilities, the Company has a regulatory framework that provides extensive protection to workers with family or other obligations (reduced hours, permits, facilities, parental leave, parental leave, etc.) or workers in need of protection (illness, pregnancy, childbirth , briefs, etc.).

Trade union action is free and independent, is exercised by elected employee representatives and facilitated by trade union licenses and other facilities provided not only by labor legislation but also by the General Staff Regulations of ELTA under Article 18 of the Law 1264/1982, as amended and in force.

Training is provided indiscriminately to all the staff of the ELTA and covers thematic units for health and labor insurance, professional development and education, vocational training related to educational needs at the work place, programs designed and implemented by the World Postal Union, foreign language training as well as undergraduate and postgraduate programs of the Hellenic Open University or other Universities of the Greek Territory, following a decision of the Board of Directors. The training is implemented through the utilization of information technology, with modern and asynchronous tele-education methodologies using computer and with educational programs that follow the conventional training methodology in the room. Training is complemented by information and awareness-raising activities (workshops).

Education, training, awareness-raising actions, apart from the knowledge and skills they target as learning outcomes, seek to overturn stereotypical perceptions, enhance self-knowledge, self-esteem, self-esteem for learners. Similarly, in the cultivation of a value-based equality and parity climate. Also, in the direction of enhancing business policies and practices that seek to remove the constraints associated with the diversity of workers in the workplace.


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All human resource management and exploitation policies are inspired by the principles of equality, equal opportunities and non-discrimination. If non-discrimination and non-discrimination phenomena are detected, they are subject to the disciplinary control provisions of the General Staff Regulations.

ELTA S.A. is responsible for Health and Safety of employees through the Health and Safety at Work Department of the General Directorate of Human Resources, in which the Head of the Department is employed, two administrators, four Security Technicians (ST) and two Doctors of Labor (DL), who constitute the Internal Protection and Prevention Service (I.P.P.S) of ELTA SA.

Additionally, our Service in order to meet its obligations under the current legislation and for the coverage of its Health Service Operational Operations throughout Greece has concluded a contract for cooperation with a Technical Assistance Service (TA) and a Occupational Physician, recommending the External Service Protection and Prevention (E.S.P.P).

The work of the health and safety service is complemented by two Scientific Technicians (ST) and Occupational Health Practitioners (OHP) supervising the work of all Safety technicians and doctors at the same time as the Head of the Health and Safety at Work Service, IPPS ELTA & ESPP.

Scientific Technicians and Occupational Health Practitioners visiting the service functions inspect the workplace, make suggestions and recommendations to the workers written in the Guidance Book or verbally on safety and health issues and on the prevention of accidents at work.

They recommend the use of Personal Protective Equipment (PPE) as measures to prevent accidents at work and to eradicate occupational hazards. In addition, the D.L carries out and advises on the physical and mental health of employees, informs about first aid issues, proposes changes of job positions for workers or re-inserts of disadvantaged employees into the production process.

All Business Functions of ELTA S.A. have the documents in compliance with the current legislation, regarding Health and Safety Service, such as the Technical Security and Occupational Practitioner's (OP) Visits Schedule, Guidance Book, Written Assessment of Occupational Risks (W.A.O.R), Occupational Accident List, Employee Personal Medical Records, Certificate of Inspection of Electrical Installations, Fire Protection Certificate, First Aid Pharmacy and Work Accident List.

Finally, the Health and Safety Department ensures that every worker has adequate and appropriate health and safety education in the form of instructions and information, with the help of Circulars, appendices to existing WAORs, as well as with seminars or training programs.

Research & Development activities

ELTA has many years of experience in participating in EU co-funded projects, infrastructure projects and human resources education, and pay particular attention to research and development actions.

In the recent years Hellenic Posts have participated as end-user in proposals for innovative research and development projects co-funded by the EU. within the framework of the actions of the FP7, HORIZON, ERASMUS+ and CEF programs. The Company’s objective is to extend its operations to digital services and provide innovative services to its customers.

In 2017, among others, the Company was a candidate partner for proposed actions – on European and national level – for projects with object: e-delivery, eID, big data, drones sorting and transport systems, digital platforms for electricity providers, education agricultural distributors for first aid and health services, training with intercultural mediators in postal branches etc.


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In particular, within the framework of the Connecting Europe Facility (CEF) Program, which supports the development of trans-European networks of high performance, sustainability and efficiency in the transport, energy and digital services sectors, in 2017 ELTA participated in the implementation of the following co-funded projects related to Information & Communication Technologies with emphasis on digital services:

1. “NO Barriers in edeLivEry (NOBLE)”

In the period Ocotber 2016 – November 2017 in the framework of the European program “CEF Telecom” ELTA participated as partner in the project funded by the European Committee “NO Barriers in edeLivEry” (NOBLE)”.

The objective of the project was the development of digital services provision structures throughout the E.U. for the support of transactions and cooperation between citizens, businesses and public authorities.

One of the actions of the Program is the “Electronic delivery of documents – eDelivery”. Its objective is to increase the use of the Digital Service Infrastructure – DSI through the creation of additional access points throughout the E.U., aiming at the support of the cross-border transaction of electronic documents of citizens and businesses. The “eDelivery” pertains to the creation of a gate which allows the interoperability both on European level and between the state-members, not depending on the standards which are used for the digital services provision, in order for the guarantee of transactions to be effective.

The implementation of "NOBLE" was the establishment, operation and integration of the individual National Access Points (APs), to be used as a means of secure communication between national public bodies, especially in the context of the interconnection of their document management systems.

Project partners were public and private stakeholders from 4 European countries: Germany, France, Greece and Slovenia.

The project was successfully completed in 2017.

2. “Leveraging eID in the Private Sector (L.E.P.S.)”

The European Committee (Innovation and Networks Executive Agency - ΙΝΕΑ) approved the project “Leveraging eID in the Private Sector (L.E.P.S.)” in the framework of the European Program “CEF eID DSI”.

“LEPS” aims at the promotion of the use of (electronic identification - eID) in the private sector, especially in Spain and Greece, thus promoting the development of cross-border operations between these two counties and generally the other countries of Europe.

In particular, it will allow the use of the pan-European eID infrastructure for cross-border electronic identification and authentication via effective certified e-Delivery and e-Notifications services, electronic delivery and remote electronic signature, while complying with eIDAS specifications and rules.

The project coordinator is a business from Spain and the following participate as partners: i) three providers of electronic services for individual consumers and businesses (especially), including Hellenic Post (ELTA), ii) three universities with significant know-how and experience in EU-funded Research & Development projects and (iii) the Ministry of Administrative Reconstruction. The project is also supported by the Spanish Ministry of Finance and Civil Service (MINHAP).

The project is being implemented already since September 2017 and will be completed in November 2018.

Under the ERASMUS+ Program, in 2017 ELTA participated in projects with educational actions distinguished for their innovation. As a research and development project integrating new technologies into educational actions, it was as follows:


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3. Experiential Training in 3D Virtual (Extra-3D)

The project aims to the development of a simulation application based on real-life scenarios which incorporate serious games techniques to facilitate the development, assessment and certification of the knowledge, skills and competencies which are related to customer service in postal organizations, while it opens up further possibilities for horizontal generalization in any service-oriented business sector.

In general, it focuses on research, independent and experiential strategies through the development of innovative training techniques and tools which can positively influence employee access to lifelong learning experiences by providing new and effective tools for developing key competencies.

The project is addressed to front-office employees, who are the main sales force as well as contact persons. The efficiency of front office employees is vital to boosting the organization's brand, increasing market share, gathering user needs and feedback, as well as servicing and managing customer complaints.

Project coordinator is an enterprise from Greece and apart from ELTA and KEK-ELTA, postal operators and businesses from Cyprus, Romania, France, Portugal, Latvia and Greece participate as partners.

The project is being implemented already since September 2015 and will be completed in May 2018.

Company Branches

The postal infrastructure of the Company consists of 745 stores and distribution units and 657 agencies (1 agency A, 64 agencies B & 592 C class agencies). ELTA has additional 9 Distribution Units across the country, 9 Sorting Centers (4 fully automated) and 3 Parcel Customs Clearance Services.

Risk Management

Financial Risk Factors

The Group is exposed to not very high financial risks such as changes in exchange rates, interest rates, credit risk, liquidity risk and fair value risk from interest rate changes. The Group's overall risk management program focuses on the unpredictability of the financial markets and seeks to minimize their potential negative impact on the Group's financial performance.

Currency Risk

The Group operates internationally and is therefore exposed to currency risk, mainly due to the change in SDR. SDR is an exchange rate based on the average daily price of four major currencies and used for non-euro postal transactions as well as non-euro-zone air fares. This risk is not considered to be particularly important.

Credit Risk & Liquidity Risk

The Group does not have significant credit risk concentrations. A significant proportion of the Group's sales are made in cash, and credit sales are mainly made to the Greek State, DEKO, Banks and customers with an estimated credit history.

Risk of Changes in Fair Value Due to Changes in Interest Rates

The operating income and cash flows of the Group are not independent of changes in interest rates. The Group manages significant amounts and the income from financial activities is significant.

Policy regarding the permanent impairment of available-for-sale financial assets


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The Company's management follows the instructions of the IAS. 39 for the determination of the time of permanent impairment of the value of the shares. This determination requires a subjective judgment and the Company's Management makes estimates of what constitutes a significant or prolonged decline in the fair value of equity investments below their acquisition cost. In its judgment, the Company assesses, among other things, the factors for the shares traded on an organized stock market, the volatility of the share price. Impairment may be necessary when there is evidence of deterioration in the issuer's financial position, industry performance and business sector, operating and financial cash flows and technological change.

For equity investments that are classified as held for sale, an indication of impairment is a significant or prolonged decline in the fair value of the security relative to the initial cost.

Corporate Governance

The Group has adopted the Principles of Corporate Governance, as determined by the existing Greek legislation and the international practices. Corporate Governance, as a set of rules, principles and control mechanisms, on which the company’s operation and management are based, aims at transparency to the investment community, as well as ensuring the interests of the investors and of any person involved in its operation.

The Board of Directors of ELTA is comprised of 1 executive and 9 non-executive members Regarding the non-executive members, 3 members meet the conditions laid down by the provisions of Law 3016 / 2002 on Corporate Governance, and are independent members.

The Audit Committee is composed of non-executive BoD members and its mission is to conduct objective internal and external audits and facilitate effective communication between the auditing bodies and the Board of Directors. Its responsibilities include ensuring that the Company complies with the Corporate Governance rules, as well as facilitating the proper operation of the Internal Control System and monitoring the Internal Control Department of the Company.

Internal control is a basic and essential element of Corporate Governance. ELTA Internal Control Department is an independent organizational unit accountable to the BoD. Its responsibilities include assessing and improving risk management and internal control systems, as well as verifying compliance with the established policies and procedures stated in the Company’s Internal Regulations, current legislation (mainly stock exchange legislation) and the decisions of the Board of Directors.

The Company has established the Internal Control Department in complained with the Internal Regulations, directly applying the provisions of Law 3016/2002 on Corporate Governance. The responsibilities of the Internal Control Department are specified in Article 30 of ELTA Articles of Association. The Board of Directors has appointed an Internal Auditor, Mrs. Julia Pantazopoulou, a graduate of University of Piraeus, who is in charge of the organization of the Internal Control Department.

The Head of the Internal Control Department has been occupied in our Company under full time and exclusive employment contract.

As and on behalf of the Company’s Board of Directors

Chairman of the BoD

Chief Executive Officer

Euphrosyne Stavraki Ioannis Zaroliagkis


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Explanatory Report of the Board of Directors

To the Regular General Meeting of shareholder of the company “HELLENIC POST S.A.”

Ι. Composition of the Company share capital

The Company share capital amounts to three hundred forty million eight hundred fourteen thousand, three hundred and twenty-three Euro and eighty cents (EURO 340.814.323,80), divided into two hundred million four hundred seventy nine thousand and fourteen (200,479,014) common nominal shares with voting wrights of nominal value of one Euro and seventy cents (EURO 1,70) each.

Following the decrease in the value of financial assets within the pervious years, the Company Total Equity is lower than ½ of its paid up share capital and, therefore, there are effective the conditions for implementation of Article 47, CL 2190/1920.

Each share entitles its holder to one vote at the General Meeting.

The rights of the Company shareholders arising from their shares are proportional to the share capital, which corresponds to the paid up value of the share. Each share confers all the rights provided by law and the Articles of Association, in particular:

• Preference is given to disposing a percentage of one twentieth (1/20) of net profits for the formation of the legal reserves. In compliance with the legislation, this deduction ceases to be compulsory when it reaches an amount equal to at least one third (1/3) of the share capital. Therefore, the amount required for the payment of the first dividend is disposed, ie a percentage of at least six percent (6%) of the share capital, in accordance with Article 45, Law 2190/1920, in conjunction with the provisions of Article 3, Law 148/1967, as amended. The General Meeting freely disposes the remaining amount of net profits.

• Shareholders participate in net profits after the General Meeting has approved the annual financial statements. The amount approved for distribution is paid to the shareholders within two months starting from the date of the decision of the General Meeting approving the Annual Financial Statements.

• The withdrawal option regarding the contribution during the liquidation or, respectively, of the capital amortization corresponding to every share, if decided upon by the General Meeting.

• The pre-emption option at every share capital increase of the Company in cash and new shares.

• The right to receive a copy of the Financial Statements, the Independent Auditor’s Report and the Board of Directors Report.

• The right to participate in the General Meeting including the following rights: legitimacy, presence, participation in discussions, submission of proposals on the agenda, recording of views in the minutes and voting.

• The General Meeting of Shareholders reserves all the rights during liquidation (according to par. 4, Article 36 of the Articles of Association).

The liability of the Company’s shareholders is limited to the nominal value of their shares.

II. Restrictions on transfer of shares

Transfer of Company shares is performed as prescribed by law, stating the restriction that the participation of the Greek State in the effective ELTA share capital may not be lower than fifty-one percent (51%) of the voting right shares (according to par. 2, Article 5 of Articles of Association).


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III. Significant direct and indirect shareholdings within the meaning of PD 51/1992

Shareholders (natural persons or legal entities) that directly or indirectly hold more than 5% of the total number of shares at 31.12.2017 are presented in the table below as follows:

Name-Surname Percentage

Greek State 90%

Bank Eurobank Ergasias S.A. 10%

The voting rights of the shareholders pertaining to the Greek State have been transferred to HRADF since 2011. On 1/1/2018 (under Law 4389/2016, as currently effective following the amendments under Law 4512/2018) the participating interest of the Greek State in ELTA was transferred to the Hellenic Corporation of Assets and Participations S.A. (HCAP).

IV. Shares providing special control rights

There are no Company shares providing special control rights.

V. Restriction on voting right

The Company’s Articles of Association make no provisions for restriction on voting rights arising from the Company shares.

VI. Company shareholders agreements

The Company holds the agreement on cooperation with EFG Eurobank and Postbank S.A. which was extended in 2007 following the decisions of the Boards of Directors of both companies until 12.31.2021. The agreement states that ELTA constitutes a complementary network of Postbank S.A. so that the latter could ensure the geographical coverage required in the Greek Territory.

VII. Rules regulating BoD members appointments and replacements and amendments to Articles of Association

The rules stated in the Company Articles of Association regarding appointment and replacement of BoD members and the amendment to the Articles of Association are in compliance with the provisions of CL 2190/1920 apart from the participation of employees representatives in the BoD.

VIIΙ. BoD authorities regarding the issue of new shares or acquisition of equity shares

Α) Under Article 13 par. 1, cases b and c of CL 2190/1920 and in conjunction with Article 5 of the Articles of Association, the Board of Directors has the right, following a decision of the General Meeting, subject to the publication disclosures under Article 7b of CL 2190/1920, to increase the share capital though issuing new shares, following a decision made at a quorum and majority in compliance with the provisions of CL 2190/1920.

In this case, the share capital may be increased by the amount of capital paid up on the date the BoD was delegated this authority by the General Meeting. This authority of the Board of Directors may be renewed by the General Meeting for a period not exceeding five years for each renewal.

Β) According to the provisions of Article 13, par. 9, CL 2190 / 1920, a decision of the General Meeting may establish a stock option plan to the members of the BoD and the staff, in the form of stock options under specific terms. The General Meeting decision, in particular, defines the maximum number of shares to be issued, which, under the legislation, cannot exceed 1/10 of existing shares if the beneficiaries exercise their options, the price and conditions for disposal of the shares to the beneficiaries.


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Through its decisions, the BoD settles all the other relevant details not otherwise regulated by the General Meeting, issues the stock option certificates and, annually, in December, issues shares to the beneficiaries who have exercised their options, increasing the equity and verifying such increase.

C) Till presently, the General Meeting of Shareholders has made no decision on establishing share buyback program in accordance with the provisions of Article 16, CL 2190/1920.

IX. Significant agreements effective, amended or the terminated in case of change of control following public offering

There are no agreement effective, amended or the terminated in case of change of control following public offering.

X. Agreements with BoD members or the Company personnel

The Company has made no agreements with members of the Board of Directors or its personnel in respect of payment of compensation in case of resignation or without sound reason or cause, or termination of office tenure or employment due to public offering. As at December 31, 2017, the provisions made for compensations due to retirement and as a result of implementation of the provisions of CL 2112/1920, amounted to EURO 125.182 k for the Group and EURO 124.791 k for the Company. No compensation provision has been made in respect of the members of the Board of Directors.


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Statement of Financial Position

2017 2016 2017 2016

ASSETS

Non-current assets

Property, plant and equipment 5.1 156.987 164.098 156.474 163.538

Intangible assets 5.2 1.615 2.056 1.270 1.357

Investments property 5.3 5.280 5.280 5.280 5.280

Investments in subsidiaries 5.4 - - 14.067 14.067

Investments in associates 5.4 - - - -

Assets available for sale 5.5 530 3.855 530 3.855

Other long-term receivables 5.6 866 483 735 377

Deferred tax receivables 5.7 - - - -

Total 165.277 175.771 178.357 188.473

Current assets

Inventory 5.8 6.276 5.813 6.065 5.635

Trade and other receivables 5.9 69.750 73.001 50.953 55.129

Other current assets 5.10 19.714 17.078 16.547 14.389

Receivables from associates 5.24 - 9.701 10.231

Advance payments 5.11 310 230 310 230

Cash and cash equivalent 5.12 47.545 55.613 40.840 51.563

Assets held for sale 5.13 - - - -

Total 396.435 349.379 377.256 334.821

TOTAL ASSETS 561.712 525.150 555.612 523.293

EQUITY AND LIABILITIES

Equity

Share capital 5.13.1 340.814 340.814 340.814 340.814

Other reserves 0 499 499 57 57

Fair value reserves 5.13.2 (219.033) (220.867) (219.033) (220.867)

Reserves from actuarial losses 5.13.2 (8.090) (8.073) (8.045) (8.042)

Losses carried forward (109.941) (94.398) (99.782) (83.902)

Total 4.250 17.975 14.012 28.061

Non-controlling interest 37 23 - -

Total equity 4.287 17.998 14.012 28.061

Long-term liabilities

Long-term provisions 5.16 2.662 105 2.638 80

Employees termination benefits obligations 5.14 125.182 128.099 124.791 127.758

Long-term loan liabilities 5.20 - - - -

Other long-term liabilities 5.15 18.695 22.407 17.705 21.329

Total 199.680 187.483 198.449 186.118

Short-term liabilities

Overdraft bank account 5.17 117.210 116.854 117.210 116.854

Suppliers and other liabilities 5.18 14.499 9.949 8.890 7.149

Liabilities to associates 5.25 - - -

Advance payments 5.20 2.430 3.290 2.417 3.205

Short-term loan liabilities 5.19 15.015 15.139 11.674 11.794

Other short-term liabilities 5.18 208.593 174.437 202.961 170.113

Total 357.745 319.669 343.151 309.115

Total Liabilities 557.425 507.152 541.600 495.232

TOTAL EQUITY AND LIABILITIES 561.712 525.150 555.612 523.293

Amounts in thousand Euro Note

GROUP COMPANY

Potential differences are due to rounding.

The attached Notes on p.p. 27-77 constitute an integral part of the Annual Financial Statements.


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Statement of Comprehensive Income

1/1 -31/12/2017 1/1 -31/12/2016 1/1 -31/12/2017 1/1 -31/12/2016

Turnover 5.21 340.757 342.870 310.750 311.754

Cost of sales 5.21 (297.568) (307.604) (275.621) (283.032)

Gross profit 43.189 35.266 35.129 28.722

Other operating income 5.21 7.007 10.968 8.486 11.399

Administrative expenses 5.21 (28.126) (29.975) (23.937) (25.842)

Distribution expenses 5.21 (4.756) (4.931) (3.851) (4.059)

Other operating expenses 5.21 (29.421) (2.872) (29.003) (2.274)

EBITDA (12.107) 8.457 (13.176) 7.947

Financial income 5.22 1.094 12 1.093 7

Financial expenses 5.22 (8.253) (8.033) (7.823) (7.558)

(Loss)/Profit of associates 5.22 (2.635) - (2.635) -

Profit/(Loss) before tax 1.275 436 634 396

Income tax 5.23 (16.803) (14.636) (16.513) (13.979)

Profit/(Loss) after tax (15.528) (14.200) (15.880) (13.583)

Other comprehensive income

a) Transferred to profit and loss

Available for sale financial assets 5.5 1.687 (2.377) 1.687 (2.377)

Income tax recognised directly in Equity 5.7 147 (110) 147 (110)

b) Non-transferred to profit and loss

Other expenses recognised directly in Equity - - - -

Actuarial losses 5.14 (22) 3.202 (4) 3.224

Income tax recognised directly in Equity 5.7 6 (929) 1 (935)

Other comprehensive income after tax 1.818 (214) 1.831 (198)

Total comprehensive income after tax (13.709) (14.413) (14.048) (13.781)

Profit/(Loss) attributed to:

Owners of the parent (15.542) (14.126) (15.880) (13.583)

Non-controlling interest 14 (73) - -

Total (15.528) (14.200) (15.880) (13.583)

Total comprehensive income attributed to:

Owners of the parent (13.724) (14.340) (14.048) (13.781)

Non-controlling interest 14 (73) - -

Total (13.709) (14.413) (14.048) (13.781)

Amounts in thousand Euro Note GROUP COMPANY




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Statement of Changes in Equity The Group

Balance as at 1/1/2016 340.814 493 (11.276) (218.380) (79.338) 32.314 97 32.411

Profit and loss for the FY - - - - (15.061) (15.061) (73) (15.135)

Other total income after tax - 6 3.202 (2.487) - 721 - 721

Total comprehensive income after tax - - 3.202 (2.487) (15.061) (14.340) (73) (14.413)

Equity balance as at 31/12/2016 340.814 499 (8.073) (220.867) (94.398) 17.975 23 17.998

Balance as at 1/1/2017 340.814 499 (8.073) (220.867) (94.398) 17.975 23 17.998

Profit and loss for the FY - - - - (15.542) (15.542) 14 (15.528)

Other total income after tax - - (17) 1.834 - 1.817 - 1.817

Total comprehensive income after tax - - (17) 1.834 (15.542) (13.725) 14 (13.710)

Equity balance as at 31/12/2017 340.814 499 (8.090) (219.033) (109.941) 4.250 37 4.287

Amounts in thousand Euro Share Capital (Note 5.14.1)

Other reserves (Note 5.14.2)

Actuarial losses reserves (Note

5.14.2)

Financial instruments fair value differences

(Note 5.14.2)Retained earnings

Equity attributed to the owners of the

parent

Non-controlling interest Total equity

Potential differences are due to rounding. The attached Notes on p.p. 27-77 constitute an integral part of the Annual Financial Statements.


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The Company

Balance as at 1/1/2016 340.814 57 (11.265) (218.380) (69.385) 41.843

Profit and loss for the FY - - - - (14.518) (14.518)

Other total income after tax - - 3.224 (2.487) - 736

Total comprehensive income after tax - - 3.224 (2.487) (14.518) (13.781)

Equity balance as at 31/12/2016 340.814 57 (8.042) (220.867) (83.902) 28.061

Balance as at 1/1/2017 340.814 57 (8.042) (220.867) (83.902) 28.061

Profit and loss for the FY - - - - (15.880) (15.880)

Other total income after tax - - (4) 1.834 - 1.830

Total comprehensive income after tax - - (4) 1.834 (15.880) (14.049)

Equity balance as at 31/12/2017 340.814 57 (8.045) (219.033) (99.782) 14.012

Financial instruments fair value differences

(Note 5.14.2)Retained earnings

Equity attributed to the owners of the

parent Amounts in thousand Euro

Share Capital (Note 5.14.1)

Other reserves (Note 5.14.2)

Actuarial losses reserves (Note

5.14.2)



Annual Financial Statements for FY from January 1 to December 31 2017

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Statement of Cash Flows

2017 2016 2017 2016

Operating activities

Profit /(Loss) before tax 1.275 436 634 396

Plus / less adjustments for:

Depreciations 5.21 9.026 9.509 8.557 8.924

Amortization of grants 5.21 (3.625) (3.625) (3.625) (3.625)

(Profit) from sale of assets 5.21 (2) (12) (2) (12)

Loss from valuation of assets held for sale 5.25 (54.936) (46.823) (54.936) (46.823)

Loss from write off of other receivables 5.21 421 174 421 174

Loss from provision for bad trade receivables 5.21 32 424 - 394

Changes in obligat ions due to employees ret irement 5.14 4.289 5.859 4.289 5.859

Income from non-used previous years provisions (1.869) (3.061) (1.869) (3.061)

Financial income from Universal Service Obligation (USO) 5.25 (23.175) - (23.175) -

Expenses from provisions for contingent liabilit ies 5.21 2.557 - 2.557 -

Universal Service Obligation (USO) Clearing 2013-2015 5.25 22.915 - 22.915 -

Loss from ATTICA BANK stock valuation 5.5 2.635 - 2.635 -

Foreign currency translat ion differences 5.21 823 198 747 72

Credit interest and related income 5.22 (6) (7) (5) (7)

Debit interest and related expenses 5.22 8.177 7.901 7.823 7.558

Operating profit prior to changes in working capital (31.462) (29.025) (33.032) (30.150)

(Increase) in inventory 5.8 (462) 278 (430) 262

(Increase) in receivables 5.9 50 15.899 1.587 17.736

(Decrease) in liabilit ies (less banks) 5.18 3.159 2.986 (1.104) 1.630

Less:

Debit interest and related expenses paid 5.22 (8.054) (7.899) (7.700) (7.556)

Compensat ion paid to staff 5.14 (7.260) (4.352) (7.260) (4.352)

Total outflows from operating activities (a) (44.029) (22.114) (47.939) (22.432)

Investing activities

Acquisition of tangible and intangible fixed assets 5.1 (1.954) (1.293) (1.887) (1.083)

Acquisition of financial instruments available for sale 5.5 3.464 - 3.464 -

Total inflows/ (outflows) from investing activities (b) 1.512 (1.293) 1.577 (1.083)

Financing activities

Proceeds from Loans Issued / Taken 5.20. - 1.184 - -

Payment of loans 5.19 (1.189) (175) - -

Decrease in third parties liabilities (Pensions, post payments etc. ) 5.18 35.362 28.083 35.362 28.083

Total (outflows) from financing activities (c) 34.173 29.092 35.362 28.083

Net (decrease) in cash and cash equivalent (a) + (b) + (c) (8.345) 5.685 (11.000) 4.568

Opening cash and cash equivalent 5.12 (58.772) (64.457) (62.821) (67.390)

Closing cash and cash equivalent 5.12 (67.116) (58.772) (73.822) (62.821)

Change in cash available for the period 5.12 (8.345) 5.685 (11.000) 4.568

Amounts in thousand Euro NoteGROUP ΤΗΕ COMPANY




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Notes to Financial Statements

1. General Information

The Consolidated Financial Statements of HELLENIC POST S.A. (the "Group") and Individual parent company Financial Statements (the "Company" or "ELTA") have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board and adopted by the European Union.

HELLENIC POST S.A. is domiciled in Athens, Apellou 1 and is registered in the Companies Registry of Athens Prefecture UNDER Reg. Num. 1429-1401/B/86/1428 and General Electronic Commercial Registry (G.E.MI.) Num. 1092101000. The Company term started at the beginning of its operations (1/5/1970) and ends on April 30, 2105.

Within the context of strengthening and diversifying the Company's portfolio, ELTA submitted to the Regulatory Authority for Energy (RAE) an application for an Electricity Supply License, aiming to become an alternative provider to the liberalized market in Greece. The relevant application was approved in April 2016 by RAE's decision No. 18/2016 and concerns an annual permit of 350MW and is valid for 20 years with the possibility of relative extension.

The Company objective is as follows: 1) Provisions of universal postal services to everyone, anywhere in the Greek territory, 2) development, operation and exploitation of any kind of postal and technological infrastructure, 3) development of postal services, letter dispatch, collective letter dispatch, parcels dispatch, specific management tasks, direct mail, hybrid mail, and other services such as courier, document exchange and internal management services, data management, postcode services, data management services for the purposes of developing direct mail, integrated postal services, services combining new telecommunications technologies with elements of postal services, electronic mail, postal orders and all kinds of postal services in the broad sense at local, national and international level, 4) trade and supply of electricity and provision of all kinds of services related to these activities at national and international level, 5) provision of customs clearance services, 6) professional training and human resources management.

The Company website is: www.elta.gr.

The composition of the Board of Directors of ELTA was initially established as that of 10 members, on 01/09/2017 at the Extraordinary General Meeting of the Shareholders of ELTA and after the withdrawal of two members (Giannopoulou Triantafyllia and Delieza Vasiliki) and the replacement of one of them (Giannopoulou Triantafyllia by Papaioannou Vasilis). Currently, the composition of the Board of Directors is that of 8 members following the withdrawal of three more members (Veitis Panagiotis, Papaioannou Vasilis and Papageorgopoulos Dimitrios) and the replacement of the latter (by Xydis Kyriakos) and is as follows:

Chairman of the Board of Directors (Non-Executive Member) Chief Executive Officer (Executive Member)

Stavraki Euphrosyne Zaroliagkis Ioannis

Independent Non-Executive Members: Mpanioras Chirstos Staveris Nikolaos Non-Executive Members: Zafeirakis Konstantinos

Xydis Kyriakos Non-Executive Members - Union Representatives Mpakelas Ilias Pallas Konstantinos

The Financial Statements for FY ended December 31, 2017 were approved by the Board of Directors on 12 July, 2018.

2. Framework for Preparation of Financial Statements

Consolidated and Separate Financial Statements of ELTA for the period from 1 January to 31 December 2017 have been prepared in accordance with the International Financial Reporting Standards (IFRS).

The Financial Statements for the period January 1 - December 31, 2017 have been prepared under the historical cost convention as modified following the revaluation of certain assets and liabilities at fair value


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(eg Investment Property and Assets Available for Sale) and going concern principle. The Financial Statements for FY 2016 are in accordance with IFRS as issued by the International Accounting Standards Board (IASB), and their interpretations, as issued by the Interpretation Committee (I.F.R.I.C.) of the IASB and adopted by the European Union.

The preparation of consolidated financial statements in accordance with IFRS requires the use of certain critical accounting estimates and judgments by the Management under application of accounting principles. Moreover, it requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities as well as disclosure of contingent assets and liabilities as at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on the best knowledge of the Management with respect to current events and actions, actual results may differ from these estimates.

The reporting currency is Euro (currency of all the Group Companies domicile) and all the amounts are recorded in thousands unless otherwise stated.

The Group does not apply IAS 33 "Earnings per share" and IFRS 8 "Operating Segments", as their application is not mandatory for non-listed companies or for companies under listing on a regulated financial market.

No discontinued operations or segments are effective.

All the revised or newly issued Standards and interpretations applicable to the Group and effective on December 31, 2017 were taken into account under the preparation of the financial statements for the current period to the extent they were applicable.

The policies recorded below have been consistently applied to all the presented periods.

2.1. New Standards, Interpretations and Amendments to effective Standards

2.1.1. New Standards, Interpretations, Revisions and Amendments to existing Standards that are effective and have been adopted by the European Union

The following amendments and interpretations of the IFRS have been issued by the International Accounting Standards Board (IASB), adopted by the European Union, and their application is mandatory from or after 01/01/2017.

Amendments to IAS 7: “Disclosure Initiative” (effective for annual periods starting on or after 01/01/2017)

In January 2016, the IASB published narrow scope amendments to IAS 7. The objective of the amendments is to enable users of financial statements to evaluate changes in liabilities arising from financing activities. The amendments will require entities to provide disclosures that enable investors to evaluate changes in liabilities arising from financing activities, including changes arising from cash flows and non-cash changes. The amendments do not affect the consolidated/separate Financial Statements.

Amendments to IAS 12: “Recognition of Deferred Tax Assets for Unrealized Losses” (effective for annual periods starting on or after 01/01/2017)

In January 2016, the IASB published narrow scope amendments to IAS 12. The objective of the amendments is to clarify the accounting for deferred tax assets for unrealized losses on debt instruments measured at fair value. The amendments are not expected to affect the consolidated/separate Financial Statements.


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2.1.2. New Standards, Interpretations, Revisions and Amendments to existing Standards that are not effective yet and have not been adopted by the European Union

Τhe following new Standards, Revised Standards as well as the following Interpretations to the existing Standards have been publicized but have not taken effect yet or have not been adopted by the European Union.

IFRS 9 “Financial Instruments” (effective for annual periods starting on or after 01/01/2018)

In July 2014, the IASB issued the final version of IFRS 9. The package of improvements introduced by the final version of the Standard, includes a logical model for classification and measurement, a single, forward-looking “expected loss” impairment model and a substantially-reformed approach to hedge accounting. The Group will examine the impact of the above on its Financial Statements, though it is not expected to have any. The above have been adopted by the European Union with effective date of 01/01/2018.

IFRS 15 “Revenue from Contracts with Customers” (effective for annual periods starting on or after 01/01/2018)

In May 2014, the IASB issued a new Standard, IFRS 15. The Standard fully converges with the requirements for the recognition of revenue in both IFRS and US GAAP. The key principles on which the Standard is based are consistent with much of current practice. The new Standard is expected to improve financial reporting by providing a more robust framework for addressing issues as they arise, increasing comparability across industries and capital markets, providing enhanced disclosures and clarifying accounting for contract costs. The new Standard will supersede IAS 11 “Construction Contracts”, IAS 18 “Revenue” and several revenue related Interpretations. The Group will examine the impact of the above on its Financial Statements, though it is not expected to have any. The above have been adopted by the European Union with effective date of 01/01/2018.

Clarification to IFRS 15 “Revenue from Contracts with Customers” (effective for annual periods starting on or after 01/01/2018)

In April 2016, the IASB published clarifications to IFRS 15. The amendments to IFRS 15 do not change the underlying principles of the Standard, but clarify how those principles should be applied. The amendments clarify how to identify a performance obligation in a contract, how to determine whether a company is a principal or an agent and how to determine whether the revenue from granting a license should be recognized at a point in time or over time. The Group will examine the impact of the above on its Financial Statements, though it is not expected to have any. The above have been adopted by the European Union with effective date of 01/01/2018.

Amendments to IFRS 4: “Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts” (effective for annual periods starting on or after 01/01/2018)

In September 2016, the IASB published amendments to IFRS 4. The objective of the amendments is to address the temporary accounting consequences of the different effective dates of IFRS 9 Financial Instruments and the forthcoming insurance contracts Standard. The amendments to existing requirements of IFRS 4 permit entities whose predominant activities are connected with insurance to defer the application of IFRS 9 until 2021 (the “temporary exemption”) and also permit all issuers of insurance contracts to recognize in other comprehensive income, rather than profit or loss, the volatility that could arise when IFRS 9 is applied before the new insurance contracts Standard is issued (the “overlay approach”). The Group will examine the impact of the above on its Financial Statements, though it is not expected to have any. The above have been adopted by the European Union with effective date of 01/01/2018.


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IFRS 16 “Leases” (effective for annual periods starting on or after 01/01/2019)

In January 2016, the IASB issued a new Standard, IFRS 16. The objective of the project was to develop a new Leases Standard that sets out the principles that both parties to a contract, i.e. the customer (‘lessee’) and the supplier (‘lessor’), apply to provide relevant information about leases in a manner that faithfully represents those transactions. To meet this objective, a lessee is required to recognise assets and liabilities arising from a lease. The Group will examine the impact of the above on its Financial Statements, though it is not expected to have any. The above have been adopted by the European Union with effective date of 01/01/2019.

Annual Improvements to IFRSs – 2014-2016 Cycle (effective for annual periods starting on or after 01/01/2017 and 01/01/2018)

In December 2016, the IASB issued Annual Improvements to IFRSs – 2014-2016 Cycle, a collection of amendments to IFRSs, in response to several issues addressed during the 2014-2016 cycle. The issues included in this cycle are the following: IFRS 12: Clarification of the scope of the Standard, IFRS 1: Deletion of short-term exemptions for first-time adopters, IAS 28: Measuring an associate or joint venture at fair value. The amendments are effective for annual periods staring on or after 01/01/2017 regarding IFRS 12 and on or after 01/01/2018 regarding IFRS 1 and IAS 28. The Group will examine the impact of the above on its Financial Statements, though it is not expected to have any. The above have not been adopted by the European Union.

Amendment to IFRS 2: “Classification and Measurement of Share-based Payment Transactions” (effective for annual periods starting on or after 01/01/2018)

In June 2016, the IASB published narrow scope amendment to IFRS 2. The objective of this amendment is to clarify how to account for certain types of share-based payment transactions. More specifically, the amendments provide requirements on the accounting for the effects of vesting and non-vesting conditions on the measurement of cash-settled share-based payments, for share-based payment transactions with a net settlement feature for withholding tax obligation, as well as, a modification to the terms and conditions of a share-based payment that changes the classification of the transaction from cash-settled to equity-settled. The Group will examine the impact of the above on its Financial Statements, though it is not expected to have any. The above have not been adopted by the European Union.

Amendments to IAS 40: “Transfers of Investment Property” (effective for annual periods starting on or after 01/01/2018)

In December 2016, the IASB published narrow-scope amendments to IAS 40. The objective of the amendments is to reinforce the principle for transfers into, or out of, investment property in IAS 40, to specify that (a) a transfer into, or out of investment property should be made only when there has been a change in use of the property, and (b) such a change in use would involve the assessment of whether the property qualifies as an investment property. That change in use should be supported by evidence. The Group will examine the impact of the above on its Financial Statements, though it is not expected to have any. The above have not been adopted by the European Union.

IFRIC 22 “Foreign Currency Transactions and Advance Consideration” (effective for annual periods starting on or after 01/01/2018)

In December 2016, the IASB issued a new Interpretation, IFRIC 22. IFRIC 22 provides requirements about which exchange rate to use in reporting foreign currency transactions (such as revenue transactions) when payment is made or received in advance. The Group will examine the impact of the above on its Financial Statements, though it is not expected to have any. The above have not been adopted by the European Union.


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Amendments to IAS 28: “Long-term Interests in Associates and Joint Ventures” (effective for annual periods starting on or after 01/01/2019)

In October 2017, the IASB published narrow-scope amendments to IAS 28. The objective of the amendments is to clarify that companies account for long-term interests in an associate or joint venture – to which the equity method is not applied – using IFRS 9. The Group will examine the impact of the above on its Financial Statements, though it is not expected to have any. The above have not been adopted by the European Union.

Amendments to IFRS 9: “Prepayment Features with Negative Compensation” (effective for annual periods starting on or after 01/01/2019)

In October 2017, the IASB published narrow-scope amendments to IFRS 9. Under the existing requirements of IFRS 9, an entity would have measured a financial asset with negative compensation at fair value through profit or loss as the “negative compensation” feature would have been viewed as introducing potential cash flows that were not solely payments of principal and interest. Under the amendments, companies are allowed to measure particular prepayable financial assets with so-called negative compensation at amortized cost or at fair value through other comprehensive income if a specified condition is met. The Group will examine the impact of the above on its Financial Statements, though it is not expected to have any. The above have not been adopted by the European Union.

Annual Improvements to IFRSs – 2015-2017 Cycle (effective for annual periods starting on or after 01/01/2019)

In December 2017, the IASB issued Annual Improvements to IFRSs – 2015-2017 Cycle, a collection of amendments to IFRSs, in response to several issues addressed during the 2015-2017 cycle. The issues included in this cycle are the following: IFRS 3 - IFRS 11: Previously held interest in a joint operation, IAS 12: Income tax consequences of payments on financial instruments classified as equity, IAS 23: Borrowing costs eligible for capitalization. The amendments are effective for annual periods beginning on or after 1 January 2019. The Group will examine the impact of the above on its Financial Statements, though it is not expected to have any. The above have not been adopted by the European Union.

IFRIC 23 “Uncertainty over Income Tax Treatments” (effective for annual periods starting on or after 01/01/2019)

In June 2017, the IASB issued a new Interpretation, IFRIC 23. IAS 12 “Income Taxes” specifies how to account for current and deferred tax, but not how to reflect the effects of uncertainty. IFRIC 23 provides requirements that add to the requirements in IAS 12 by specifying how to reflect the effects of uncertainty in accounting for income taxes. The Group will examine the impact of the above on its Financial Statements, though it is not expected to have any. The above have not been adopted by the European Union.

IFRS 17 “Insurance Contracts” (effective for annual periods starting on or after 01/01/2021)

In May 2017, the IASB issued a new Standard, IFRS 17, which replaces an interim Standard, IFRS 4. The aim of the project was to provide a single principle-based standard to account for all types of insurance contracts, including reinsurance contracts that an insurer holds. A single principle-based standard would enhance comparability of financial reporting among entities, jurisdictions and capital markets. IFRS 17 sets out the requirements that an entity should apply in reporting information about insurance contracts it issues and reinsurance contracts it holds. The Group will examine the impact of the above on its Financial Statements, though it is not expected to have any. The above have not been adopted by the European Union.

2.2. Significant Accounting Judgements, Estimates and Assumptions


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The preparation of the financial statements in conformity with the International Financial Reporting Standards (IFRS) requires that the Management carries out estimates and assumptions, which may affect both the accounting balances of assets and liabilities, and the required disclosures for contingent liabilities on the date of preparation of the financial statements, as well as the amounts of income and expenses recognized in the period. The actual results may differ from the above estimates. The estimates and judgments applied in making decisions and in preparing the financial statements are based on historical information and assumptions which at present are considered appropriate. The estimates and judgments are reviewed on an ongoing basis in order to take into account current conditions, and the effect of any changes is recognized n the period in which the estimates are revised.

Judgments

The main judgments made by the Management (apart from those involving estimations which are presented below) and that have the most significant effect on the amounts recognized in the Financial Statements mainly relate to:

Classification of Investments

The Management decides on acquisition of an investment whether it should be classified as held to maturity, held for trading, carried at fair value through income statement, or available for sale. For investments deemed to be held to maturity, the Management ensures that the requirements of IAS 39 are met and, in particular, that the Group has intention and ability to hold these investments to maturity. The Group classifies investments as held for trading if they are acquired primarily for the purpose of making a short term profit. Classification of investments at fair value through income statement depends on the way the Management monitors the performance of these investments. When they are not classified as held for trading but have readily available reliable fair values and the changes in fair values are reported as part of profit or loss in the Management accounts, they are classified as at fair value through income statement. All the other investments are classified as available for sale.

Recovery of Accounts Receivable

The judgment of the management concerning the estimation of recoverability of accounts receivable constitutes a significant item for the assessment of the relevant balances as bad debts and the measurement of their potential impairment.

Obsolesce of Inventory

Inventory items are measured at the lower of historical cost and net realizable value. In order to estimate the net realizable value, the Management takes into account the most reliable evidence that is available when the valuation is performed.

Estimates and Assumptions

Certain amounts included in or affecting our financial statements and related disclosure must be estimated, requiring us to make assumptions with respect to values or conditions which cannot be known with certainty at the time the financial statements are prepared. A ‘‘critical accounting estimate’’ is one which is both important to the portrayal of the company’s financial position and results and requires the management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. The Group and the Company evaluate such estimates on an ongoing basis, based upon historical results and experience, consultation with experts, trends and other methods considered reasonable in the particular circumstances, as well as our projections as to how they might change in the future. Par. 3 “Summary of Accounting Policies” makes reference to the accounting policies selected as accounting estimates.

Impairment Test

The Group annually tests its assets for potential impairment and examines the events or conditions that make trigger impairment, such as a significant adverse change in the business environment or a decision to sell or dispose of a unit or an operational segment. Determining the existence of impairment requires an estimation of the recoverable amount of the respective unit, which is estimated using the discounted cash flow method.


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The recoverable amounts of cash generating units have been determined based on calculations of value in use. If the analysis shows that there is a need for impairment of the goodwill, the measurement of the impairment requires an estimation of fair values for each recognizable tangible or financial asset. In that case, cash flows are used, where it is deemed necessary. In addition, other recognizable intangible assets are tested for impairment with definite useful lives and subject to depreciation by comparing accounting value with the total of unpaid cash flows expected to be created by the asset. Moreover, intangible assets with indefinite useful lives are tested under fair value method such as discounted cash flows, as mentioned below (§ 3.7.3).

Income Tax

The Company and its subsidiaries are subject to the tax inspection of the relative tax authorities as till FY 2010. From 2011 onwards the Company is subject to safeguard tax clearance assessment performed by statutory auditor under the provisions of Article 82, par. 5 of the Income Tax Code. Significant judgements are required while determining the provision for income tax. There are a lot of transactions for which the accurate calculation of the tax is not possible in the normal course of business. The Company recognizes liabilities for anticipated tax matters, based on estimates for potential amounts due for additional taxes. When the expected final tax payable is different from the initial estimates in the financial statements the differences have an impact on the income tax and on the provisions for deferred taxation in the period when these amounts become final.

Provisions

Doubtful receivables are accounted in their estimated recoverable amount. Analysis for the calculation of the recoverable amounts is taking into consideration the Company’s knowledge for the clients' specific credit risk. Once the Company is aware that an account has a higher than normal credit risk (i.e. client's low credit rating, dispute regarding the existence or the amount of the liability etc), the account is analyzed and a write off amount is estimated if it is indicated by the specific circumstances.

Contingent Events

The Group is involved in litigation and claims in the normal course of operations. Management estimates that any resulting settlements would not materially affect the financial position of the Company as at 31 December 2017. However, the determination of contingent liabilities relating to the litigation and claims is a complex process that involves judgments as to the outcomes and interpretation of laws and regulations. Possible future changes to the judgments or the interpretations may increase or decrease the Group's contingent liabilities in the future.

Business Combinations

Upon initial recognition, assets and liabilities of the acquired entities are included in the Consolidated Financial Statements at fair values In measuring the fair value, the Management uses estimates of the future cash flows, but actual results may differ from those that have been estimated. Any change in the measurement after initial recognition affects the measurement of goodwill.

Useful Life of Depreciable Assets

The Management evaluates the useful life of depreciable assets in every period. On 31 December 2017 the Management believes that the useful lives of the assets are in line with their expected usefulness. However, it is to ne noted that the actual results may differ due to gradual technical depreciation, especially with respect to software and IT equipment.

2.3. The Company’s Going Concern


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As at December 31st, 2017, the Company’s Total Equity amounts to EURO 14.012 k, representing 4,1% of its Share Capital and, therefore, there are effective the requirements for the application of provisions of CL 2190/1920 (Articles 47 & 48). Within FY 2017, the issue of the Company's cash liquidity has become more obvious, as is also reflected in the fact that the current assets, apart from those pertaining to the Universal Service, cannot cover its short-term liabilities, which have recorded a significant increase, ie EURO 33.000 k, versus the previous year.

In order to address the issues in question as well as improve the financial and business operation of the Company, the Board of Directors of ELTA, at its meeting 1745/12-04-2018 meeting, outlined the strategic objectives of the Company through an Integrated Reorganization Plan "Strategic & Operational Plan ELTA 2018-2021 ". The key points of the Plan are related to the following:

i) Direct decrease in cash deficit, ii) Direct halting the rate of revenue reduction; and iii) Implementing direct interventions in operating costs.

Direct decrease in cash deficit is mainly based on undertaking actions aimed at reducing expenses. The contribution of cost containment becomes imperative in order to stabilize the Company’s financial results and improve its the cash flows.

Regarding actions aimed at cutting costs and reducing cash deficit, decreasing labor costs is a matter of primary importance:

- Voluntary withdrawal of staff with mature pension rights, who can receive a direct pension, - Decrease in payroll costs by 12.5%, - Decrease in the number of overtime payments made to the staff.

The joint Agreement signed between the Management and employees, mainly focused on the above actions, has achieved monthly savings of EURO 2.5 million in 2018.

Further cost-cutting actions concern signing of a new mobile telephony contract, transfer of a fixed telephone line network to VoIP, the rationalization of network siting, and the issuance of a telecommunications provider license.

Regarding the improvement of its cash liquidity, the cash inflows segment is also significant. During the year 2017, past non-performing receivables from the Greek State were collected, amounting to EURO 40 million, and efforts are being made in 2018 to eliminate the receivables of previous years from the wider Greek State. Furthermore, in the second quarter of 2018, the Company's Management made a significant effort on the collection of receivables from the Universal Service, which resulted in the collection of the amount of EURO 45 million versus the debts of the years 2013-2015, which helped significantly in improving the cash flow of Hellenic Post.

The Company has initiated procedures towards the Ministry of Digital Policy, Telecommunications and Information to ensure the disbursement of the remaining amount of EURO 82.9 million out of the total approved amount (EURO 127.9 million) by EETT for the years 2013-2015, highlighting that it is of vital importance for the Company's cash flow planning. The Company through the Ministry intends to notify and send all the necessary information to the EU which shows that the payment of the Net Cost of Universal Service, as verified by the competent Supervisory Authority (EETT) for the years 2013, 2014 and 2015, constitutes compensation compatible with the unifying institutional framework for State aid. Corresponding procedures will be followed for the years 2016 and 2017.

Hellenic Post's development activities focus on traditional sectors such as Special Management Services and financial products as well as on activities through which the company has taken an entering step into new markets as part of the diversification of its activities such as the sale of electricity and postal customs clearance.

Further operational development in the field of parcel and courier services is a top priority. Parcel and courier services are a field of introducing new premium products and through the desired synergies with the Courier's subsidiary. The Company is oriented to the ever-growing parcel market, which is reflected in the increase of domestic parcel revenue by 28% in 2017 compared to 2016, with the ultimate objective of


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making the company the largest and most reliable player in purchase of CEP (Courier, Express & Parcels) in Greece.

Courier - Express - Parcels (CEP) market is showing significant growth due to the modern requirements for the handling of envelopes, small packages and parcels as a consequence of the development of e - commerce, which intensifies the need for:

Provision of complex postal services with multiple special management options, Tracking of parcels and letters, A wide range of complementary services that assist customers both in terms of physical and

financial management of their parcels and letters.

Hellenic Post is also actively engaged in the electricity market, taking advantage of the obligation to reduce PPC's market share. Such practices are based on the following:

Strong brand name of ELTA in the market combined with the credibility resulting from the public character of the entity,

Extensive network of customer service across the Greek territory, Competitive, already effective pricing policy.

From licensing as a supplier in 2016 to the acquisition of a market share of about 1% of the market, a 2-year period has elapsed for ELTA, a short period of time compared to what other alternative suppliers needed to obtain a corresponding percentage.

"ELTA Energy" now includes, besides thousands of households, large commercial enterprises, industries and other organizations with presence all over Greece, thus Hellenic Post a strong alternative provider in the field of electricity trading and supply. A moderate objective over the next 4 years is to gain a 3.5% share of consumers, equivalent to 4.6% of energy consumption with the implementation of the relevant advertising and promotion plan.

In addition, ELTA operates in the postal customs clearance market in accordance with Joint Ministerial Decision 4092/2016. The above Joint Ministerial Decision now forms a new customs clearance environment for Greece managed by the Universal Service Provider, which requires new organization and infrastructure, while creating significant revenue prospects for both the Greek State and the Hellenic Post Office. This streamlined and effective framework responds to the explosive emancipation of e-commerce and allows for the growth of postal items to and from abroad as well as the creation of new prospects and partnerships with interested companies from all over the world. The Company's revenue from customs clearance amounts to EURO 1.350 k during the second half of 2017.

Importantly, however, is the focus on transactional correspondence, as preserving the profitability of postal operators presupposes the consolidation of their leading position in the market and the defense of market shares in their core business. New products ensure growth and diversification of turnover, but traditional mail judges to a large extent whether or not profits are achieved in the short term. In this context, they have a crucial role to play in directing the downward trend in business revenue:

both actions implemented to retain big scale customers,

as well as the redefinition of the broader pricing policy with the primary focus on gradually enhancing profitability from big scale customers through offering a targeted product portfolio.

The actions that fall into more detail in the reorganization of the Network are aimed both at lowering the operating costs, increasing the efficiency of the production units and optimizing the utilization of their production capacity. In this context, a significant number is already taking place, but further mergers and suspensions of production units, relocation of transaction stores and the creation of a parcel delivery box are planned in Distribution Units.

In order to facilitate operating cost decrease and improve the Company’s financial performance, its short-term debt to Attica Bank for the amount of EURO 11,500 k was following the relative decision of the Board of Directors of ELTA as of July 13, 2017. Following a request, made by ELTA, for a viable solution and in co-operation with the Bank, the overdraft account has been converted into a 10-year long-term loan


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(equivalent to a 7-year extension). Repayment of the installment also makes provisions for repayment of the capital, while the standard interest rate has declined retroactively by 1 April 2017 by around 4 percentage points. The relative benefit from the effective date of the decrease in the interest rate in 2017 amounts to EURO 328 k.

The actions proposed above are deemed necessary so that the Company could facilitate short-term and long-lasting sustainable development. In any case, ELTA Management will closely monitor the evolution of the key financial sizes so that it is ready to substantially intervene in any deviations from the projected objectives. The Management estimates that in achieving it, the financial position of the Company will stabilize, which will ensure its going concern.

3. Summary of accounting policies

3.1. General

The significant accounting policies used under the preparation of these financial statements are summarized below. It should be noted, as analytically presented in par. "2.3. Significant accounting judgments, estimates and assumptions" that accounting estimates and assumptions are used under the preparation of financial statements. Although these estimates are based on the Management's best knowledge of current events and actions, the actual results may ultimately differ from these estimates.

3.2. Consolidation and investments in associates

3.2.1. Basis for Consolidation

The Consolidated Financial Statements of Hellenic Post S.A. comprise the financial statements of the parent Company as well as the subsidiaries in which the parent company holds controlling interest at December 31, 2017. Subsidiaries are all the entities over which the Group has the power to control financial and operating policies. Hellenic Post S.A. estimates that it possess and exercises control when participating in an entity with more than half of the voting rights. In determining whether Hellenic Post S.A. has control over the voting rights of another entity, it examines the existence and the possible effect of potential voting rights that are currently exercisable or convertible.

All Group subsidiaries financial statements closing date is 31 December.

Subsidiaries are consolidated under the full consolidation method from the date on which the Group obtains control, and cease to be consolidated from the date on which it ceases to have control. The accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. Intercompany receivables and payables, transactions (revenues and expenses) and unrealized gains or losses among the companies under consolidation are eliminated. Non-controlling interests present the proportion profit or loss and net assets not belonging to the Group. Subsidiaries losses are attributed to non-controlling interest even if it generates negative balance of non-controlling interest. A change in participating interest in subsidiary without loss of control is a transaction among the shareholders. If the Group loses control over a subsidiary, it:

Derecognizes: Assets (including goodwill) and liabilities of the subsidiary Book value of non-controlling interest


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Cumulative translation differences, recorded in equity

Recognizes: Fair value of the consideration received Fair value of the remaining participating interest Any surplus or deficit in the Statement of Comprehensive Income The share of the parent in the items previously recognized in other comprehensive income, in the

statement of comprehensive income or retained earnings, where deemed necessary

In the Individual Financial Statements, investments in subsidiaries are carried at acquisition cost, unless there are indications of impairment.

3.2.2. Business Combinations

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the sum of the consideration transferred, valued at the date of acquisition at fair value, and the amount of any non-controlling interest in the acquiree. For each business combination, the acquirer measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the net identifiable assets acquired.

Expenses arising on acquisition are recognized in the Statement of Comprehensive Income. At the acquisition date, the Group assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and the conditions effective as at the acquisition date.

If business combinations are carried out gradually, the Group re-measures equity interest previously held in the acquiree at fair value at the acquisition date and the balance is transferred to the income statement.

Any contingent consideration to be transferred by the acquirer is recognized at fair value as at the acquisition date. Subsequent changes in the fair value of the contingent consideration which is deemed to be an asset or a liability, is recognized in accordance with IAS 39 either in the income statement or as a change to other comprehensive income. If contingent consideration is classified as equity, it will not be re-measured until it is finally settled within the equity.

Goodwill is initially measured at cost and constitutes the excess of the amount of the consideration transferred plus the amount recognized for non-controlling interest over the net identifiable assets acquired and liabilities assumed. If the consideration is lower than the fair value of net assets acquired, the balance is recognized in the income statement. After the initial recognition, goodwill is measured at cost less accumulated impairment losses. For impairment test purposes, the goodwill acquired in a business combination is allocated, from the acquisition date, to the Group's cash generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquired company have been allocated those cash generating units. When goodwill is a part of cash generating unit and a part of the operation within that unit, the goodwill associated with the disposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. In this case, the allocated goodwill is measured proportionally to the relative value of the operation that has been disposed of, and of the relative value of the part of the remaining cash generating unit.

3.2.3. Associates

These are entities in which the Group has influence, but which do not meet the requirements for qualifying as subsidiaries or interests in a joint venture. The assumptions used by the Group are that a percentage from 20% to 50% of voting rights in a company means significant influence over it. Investments in associates are recognized initially at cost and are then valued using the equity method. The goodwill is included in the carrying amount (cost) of the investment and is tested for impairment as part of investment. When a Group entity transacts with a Group associate, intercompany profits and losses are eliminated according to Group's participating interest in the relevant associate.

All subsequent changes in the participating interest in an associate are recognized in the carrying amount of the Group's investment. Changes arising from profits or losses that are generated by the associate are


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recognized in the account "(Loss)/Profit from investment in associates" in the Consolidated Statement of Comprehensive Income and, therefore, affect net results of the Group. These changes include subsequent depreciation of tangible assets, amortization of intangible assets, amortization or impairment of the fair value adjustments of assets and liabilities. On consolidation, the changes that have been directly recognized in equity of the associate and the related effect, such as those resulting from the accounting treatment of available-for-sale investments of associate are recognized in the consolidated equity of the Group. Any changes recognized directly in equity and not associated with the results, such as distribution of dividends or other transactions with shareholders of the associate, are recognized against the carrying value of the investment. No effect on the net result or equity is recognized in the context of these transactions. However, when the share of the Group's losses in an associate equals or exceeds the carrying amount of the investment, including any unsecured receivables, the Group does not recognize further losses, unless the investor has incurred obligations or made payments on behalf of the associate. Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the interest in associates. Unrealised losses are also eliminated unless the transaction provides evidence of losses due to a decrease in the value of the assets acquired by the joint venture. When the financial statements of the associate used in applying the equity method are prepared at a reporting date different from that of the parent, then adjustments are made to the associate's financial statements reflecting the effects of significant transactions or events that occur between that date and the date of the financial statements of the investing company. In any case, the difference between the reporting date of the associate and that of the investing company is more than three months. The accounting policies of the associates have been amended where necessary to ensure consistency with the policies adopted by the Group.

3.3. Foreign Currency Translation

The Consolidated Financial Statements are presented in Euro, the Parent Company’s functional currency. Each financial entity of the Group defines the functional currency and the elements included in the financial statements, of each entity. In the separate financial statements of the consolidated entities, the transaction in foreign currency is converted to the functional currency of each entity, using the exchange rates, prevailing on the date of the transaction. Transactions in foreign currency are converted into euros using the exchange rates prevailing on the transaction dates. Exchange gains and losses arising from such transactions and from the conversion of accounts with balances at year end exchange rates are recognized in the "Financial Income / (expenses)". Regarding transactions with foreign post offices and airlines performed not in Euro, Hellenic Post S.A. uses the effective SDR as the average daily price of four major currencies.

3.4. Recognition of Revenue and Expenses

Revenues are recognized when it is probable that future economic benefits will flow into the entity and these benefits can be measured reliably. The revenue is measured at the fair value of the consideration received and it is net of value added tax, returns, rebates and any kind of reduction after limiting the sales within the Group. The amount of revenue is considered that can be reliably measured when all contingencies relating to the sale have been resolved.

Sale of goods

Revenue from sale of goods is recognized when the significant risks and rewards of ownership of the goods have been passed to the buyer, usually on dispatch of those goods. For mobile telephony merchandise sales, there are effective contracts with mobile phone companies on sell the products through the Company's retail network.


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Revenue from letter-correspondence dispatch

This revenue category includes the revenues from large private and public sector clients, with whom the Company has signed contracts on handling their mail and the revenues from retail mail (postage and prepaid correspondence). A high proportion of such comes from the Company’s agencies located throughout the country. Provision of Services

Revenue from fixed price contracts is recognized based on the stage of completion of the transaction at the balance sheet date. Under the percentage of completion method, revenue is generally recognized based on service activity and performance to date as a percentage of total services to be performed. When the outcome of the transaction involving the rendering of services cannot be estimated reliably, revenue is recognized only to the extent that the following costs are recoverable. The amount of the selling price associated with an agreement for services to be provided subsequently recorded into deferred amount and is recognized as income over the period in which services are provided. This income (deferred income) is included in the item "Other Liabilities". In cases that original revenue estimates are changed, costs or the completion stage is revised. These revisions may result in increases or decreases in estimated revenue or costs and are shown as income in the period in which the circumstances which make it necessary for the revision to be disclosed by the Management.

Recognition of electric energy revenue

When deemed necessary, due to non-invoicing of customers whiten the closing year, the Company estimates the consumption of electricity and recognizes the relevant amount in its financial statements.

Income from interest

Income from interest is recognized using the effective interest method that is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset or liability. When a receivable is impaired, the Group reduces the carrying value of the amount expected to be recovered, which the amount is resulting from the estimated future cash flows discounted at the effective interest rate of the instrument and continues the periodic unwinding of the discount as interest income. Incomes from interest on loans that have been impaired are recognized using the original effective interest rate.

Income from dividends

Revenues from dividends are recognized when finalized the Group's right to receive payment from the shareholders.

Operating expenses are recognized in the income statement over the use of the service or the date of creation. Expenditure for warranties is recognized and charged against the related provision when the corresponding revenue is recognized.

3.5. Other Intangible Assets

An intangible asset is initially valued at historical cost. The cost of an intangible asset acquired in a business combination is part of the fair value of the asset on the acquisition date. After the initial recognition, intangible assets are valued at historical cost less accumulated depreciation and any impairment loss.


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Acquired licenses regarding software are capitalized based on the purchasing and installation expense. Intangible assets include the acquired software used in production or in management. Expenses related to the maintenance of the software are recorded in the expenses of the period they occurred. The useful lives of intangible assets are either definite or indefinite depending on their nature. Intangible assets with definite useful life are amortized over their useful life and depreciation commences when the asset is available for use and is recognized in the category of operating expenses. The period and depreciation method are reviewed at least in each fiscal year. If the expected useful life or the expected consumption rate of the future economic benefits embodied in the asset are changed, the amortization period or method are changed respectively. Such changes are accounted for as changes in accounting estimates. Intangible assets with indefinite useful lives are not amortized but are tested at least annually for impairment and to determine whether management's assessment of the indefinite useful lives of these intangible assets is supported. If not supported , the change in the useful life assessment from indefinite to limited is treated as a change in an accounting estimate in accordance with IAS 8. Gains or losses arising from the sale of an intangible asset are determined as the difference between the sale amount and the carrying amount of the asset and is recognized in the income statement in the item " Other income " or "Other expenses".

3.6. Property, Plant and Equipment

Buildings, technical equipment, furniture are shown at historical cost or at historical cost less any accumulated depreciation and any accumulated impairment losses. The cost also includes the cost of spare parts of some tangible assets that require replacement at regular intervals, if the criteria for acknowledgment are fulfilled. The artwork owned by the Group is not depreciated. The costs of daily maintenance of property, plant and equipment are recognized in profit or loss when incurred. If the carrying value of tangible assets has suffered depreciation or an impairment loss, it shall be recorded as described below. The gain or loss on sale of the land will be determined as the difference between the net disposal proceeds, if any, and the carrying amount of the asset and is recorded in profit or loss statement. Depreciation is calculated using the straight line method over the entire useful life of the assets. For works of art held by the company, no depreciation is calculated. The buildings that have been acquired through financial leases are depreciated throughout their estimated useful lives (determined in relation to comparable owned assets), if shorter. The useful lives (in years) of tangible assets of the Group are summarized below as follows:


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Property, plant and equipment category Years

Buildings & buildings fixed installations 10-40

Machinery & Mechanical equipment 6-14

Vehicles 5-9

Furniture-fixtures 5-8

Office machines/telephone devices 5

Printers / Hardware 3,3

The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate at every year end.

3.7. Leases

The assessment of whether an arrangement contains a lease, takes place at the beginning of the agreement, taking into account all available information and specific circumstances. After the beginning of the agreement, a reassessment takes place, as to whether it contains a Lease when any of the following occurs: a. There is a change in the terms of the contract, unless the change only renews or extends the agreement b. Renewal option is exercised or an extension is agreed unless term of the renewal or extension was initially included in the lease term c. There is a change in whether the settlement depends on a defined asset d. There is a significant change in the asset If an agreement is reassessed the accounting treatment for leases applies from the date the change in conditions involving reassessment for (a), (c) or (d), and from the date of renewal or extension period for case (b).

3.7.1. The Group as a Lessee

Leases where the Group does not transfer substantially all the risks and rewards of the asset are classified as operating leases. Initial direct costs incurred by lessors in negotiating and arranging an operating lease are added to the book value of the leased asset and are recognized over the lease term as the lease income. A corresponding amount is recognized as a liability of the lease regardless of whether some of the lease payments were paid in advance at the beginning of the lease. The subsequent accounting treatment for assets acquired through financial leasing contracts, e.g. the depreciation method used and the determination of useful life, is the same as that applied to comparable acquired, except leases, assets. The accounting treatment of the respective obligation relates to the gradual reduction of the basis of the minimum lease payments minus finance charges, which are recognized as an expense in finance costs. Financial charges are allocated over the lease period and represent a constant periodic rate of interest on the remaining balance of the liability. All other leases are treated as operating leases. Payments on operating leases are recognized as an expense on a straight (use link revenue and expense). The related costs, such as maintenance and insurance, are recognized as an expense when incurred.

3.7.2. The Group as a Lessor

Leases where the Group does not transfer substantially all the risks and rewards of the asset are classified as operating leases. Initial direct costs incurred by lessors in negotiating and arranging an operating lease are added to the book value of the leased asset and are recognized over the lease term as the lease income.


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3.8. Impairment Test of Tangible and Intangible Assets

Intangible and tangible assets are subject to impairment tests. For the purposes of assessing impairment, certain assets are grouped in the smallest identifiable group of assets that generates cash inflows from its use (CGUs). As a result, some assets are tested individually for impairment and some are tested as CGUs. The assets or CGU including other intangible assets with indefinite useful lives and assets not yet available for use are tested for impairment at least on an annual basis. The remaining assets and CGU tested for impairment whenever there are indications that the carrying value may not be recoverable. The impairment loss is the amount by which the carrying value of assets or CGU exceeds its recoverable value. Recoverable amount of an asset or CGU is the higher of fair value and value in use (implied by evaluating discounted future cash flows of the asset of CGU).

All the assets are subsequently reassessed for cases where the impairment loss initially recognized may not exist.

3.9. Investment Property

Investment Property comprises investments that concern all property items (including land, buildings, parts of buildings) held by the Group either to earn rentals from their lease or to increase their value (capital ), or for both. These investments are not held for: (a) being used in the production or materials/services or for administrative purposes, and (b) for sale in the ordinary course of business. Investment property is initially recognised at cost which includes any expenditure directly attributable to the acquisition of the asset. Subsequently, investment property is measured at fair value. Fair value is determined by independent valuers with sufficient experience of the location and nature of the investment property.

The book value recognized in the Group's Financial Statements reflects the market conditions at the date of the Financial Position. Any gain or loss resulting from a change in the fair value of the investment is recognized in the income statement for the year when it arises.

Real estate property transfers to the category of investment property are made only when there is a change in use, evidenced by the end of owner-occupation by the Group or the end of construction or development of an operating lease to third party. Real estate property transfers from the category of investment property are made only when there is a change in use, evidenced by commencement of owner-occupation by the Group or the commencement of development with a view to sale.

For a transfer from the category of investment property recorded at fair value and classified as owner-occupied property or inventories, the deemed cost of property for subsequent accounting is the fair value at the date of change in use. If an owner-occupied property item is transferred to the category of investment property, the Group applies the accounting treatment required by IAS 16 until the date of change in use. For a transfer of an asset that was previously classified as reserves in the category of investment property, any difference between the fair value of the property item at that date and its previous carrying amount is recognized in the income statement. When the Group completes the construction or development of a self-constructed investment property item, any difference between the fair value of the property at that date and its previous carrying amount is recognized in the income statement. An investment property item is written off (written off from the Statement of Financial Position) on disposal or when the investment property item is permanently withdrawn from use and no future economic benefits are expected to arise from the disposal of the investment.


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Gains or losses arising from withdrawal disposal of investment property item pertain to the balance between the net disposal proceeds and the carrying amount of the asset and are recognized in the period when the asset was withdrawn or disposed.

3.10. Non-Current Assets Held for Sale and Discontinued Operations

Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value less selling costs. Non-current assets and disposal groups are classified as held for sale if their carrying amount is expected to be recovered through a sale transaction rather than through continuing use. This condition is met only when the sale is highly anticipated and non-current asset or group of assets for sale are available for immediate sale in their present condition, or the Management is committed to the disposal and the disposal is expected to be recognized as completed within one year from the date of classification.

3.11. Financial Assets

The Group’s financial instruments are classified under the following categories:

Loans and Receivables

Financial Assets Available for Sale

Financial assets are classified based on their substance and the purpose for which they were acquired. The category into which every financial instrument has been classified differs from the others, since, depending on the category into which it is classified, different rules apply with regard to the valuation and the method of recognition either in the Income Statement, or in the Other Comprehensive Income.

Financial assets are recognized following the application of settlement date accounting.

Impairment is assessed at least at every financial statements preparation date or when there is objective evidence that a financial asset or group of financial assets have suffered impairment or not.

3.11.1. Financial Assets Available for Sale

Financial Assets Available for Sale include non-derivative financial assets, which are either designated as belonging to this category or which cannot be classified under any of the above categories. All financial assets included in this category are carried at fair value, when it can be reliably determined, with changes in fair value being recognized in equity after the calculation of every tax effect. The Management follows the guidance of IAS 39 for determining when a share has been permanently impaired. This determination requires judgment and the Management makes estimates of what constitutes a significant or prolonged decline in the fair value of the equity investments below their acquisition cost. The Company assesses, among other factors, regarding shares traded on a regulated stock market, the (volatility) of the share price. The impairment may be appropriate when there is evidence of worsening economic conditions regarding the issuer, the segment's performance, operational and financing cash flows or changes in technology. Upon disposal or impairment of available for sale assets, any cumulative gains or losses previously recognized in equity are recognized in the income statement. In the event of impairment, the amount of cumulative losses transferred from equity and recognized in the income statement is the balance between the acquisition cost (net of repayments of capital and amortization) and its fair value less any impairment loss previously recognized. Impairment losses on equity classified as Held for Sale and recognised in the income statement for investment are not reversed through the income statement. Losses previously recognized in the financial statements of previous years and which arose from impaired debt instruments are reversed through the income statement if the increase (reversal of impairment) is related to an event occurring after the impairment was recognized in the Statement of Comprehensive Income.


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3.11.2. Loans and Receivables

Loans and receivables are non-derivative financial assets with fixed determinants and payments that are not quoted in an active market. They arise when the Group provides money, goods or services directly to a debtor with no commercial intent. Loans and receivables are measured at amortized cost using the effective interest method, less any provision for impairment. Any change in the value of loans and receivables is recognized in profit or loss when the loans and receivables are written off or reduce their value or during the period of depreciation.

Certain receivables are tested for impairment per individual requirement (for example for each customer) where the collection of the receivable is classified overdue at the date of the financial statements or in cases where objective evidence indicates the need for impairment . Other receivables are grouped and tested for impairment in their entirety. These groups have in common the characteristic geographical distribution, activity sector of contractors and, if applicable, other similar credit risk characteristics that characterize them.

Loans and receivables and the loans are included in current assets, except those maturing after 12 months from the balance sheet date. These are characterized as non-current assets. At the balance sheet, they are classified as trade and other receivables and comprise the biggest part of the financial assets of the Group.

3.11.3. Fair Value

Fair value of investments effective in an active market is demonstrated by reference to quoted prices on the reporting date. If the market for an investment is not active, HELLENIC POST S.A. determines the fair value using valuation techniques. The objective of using a valuation technique is to establish what the transaction price would have been on the measurement date in an arm's length transaction motivated by standard business considerations. Valuation techniques include the use of the recent arm's length transactions, reference to the current fair value of a substantially similar instrument, analysis of discounted cash flows and option pricing models.

3.12. Inventory

Inventories include raw materials, materials and goods purchased. Cost includes all costs incurred in bringing the inventories to their present location and condition, which are directly attributable to the production process, as well as a part of general expenses associated with the production, which is absorbed in the normal capacity of the production facilities. The financial cost is not taken into account. At the Financial Position date, inventories are valued at the lowest level between cost of acquisition and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business activities, minus estimated cost which is necessary to make the sale. Cost is determined using the First In-First Out (FIFO) method.

3.13. Income Tax

3.13.1. Current Income Tax

The current tax asset / liability includes obligations or receivables by the tax authorities relating to the current or previous reporting periods have not been paid until the Financial Position date. Calculated according to the tax rates and tax laws applicable to the fiscal period to which they relate, based on the taxable profit for the year. All changes to the current tax assets or liabilities are recognized as tax expense in the income statements.


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3.13.2. Deferred Income Tax

Deferred income tax is calculated on the liability method focuses on temporary differences. This involves comparing the accounting value of assets and liabilities of the consolidated financial statements with their respective tax bases. Deferred tax assets are recognized to the extent that it is likely to be offset against future income taxes. Deferred tax liabilities are recognized for all taxable temporary differences. In addition and in accordance with IAS 12, deferred tax is not recognized in relation to goodwill. No deferred tax is recognized on temporary differences associated with investments in subsidiaries if reversal of these temporary differences can be controlled by the company while it is expected that the temporary difference will not reverse in the future. In addition, tax losses can be carried to subsequent periods and tax credits to the Group are recognized as deferred tax assets. No deferred tax is recognized under initial recognition of an asset or liability in a transaction that is not a business combination and at the time of the transaction, affects neither the accounting profit nor taxable profit or loss. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which they will settle the asset or liability, based on tax rates that have been enacted or substantively enacted by the Financial Position date. Most changes in deferred tax assets or liabilities are recognized as tax expense in the results. Only changes in deferred tax assets or liabilities related to changes in the value of the asset or liability that is charged directly to equity are charged or credited directly to equity. The Group recognizes a previously unrecognized deferred tax asset to the extent that it is probable that future taxable profit will allow the recovery of the deferred tax asset. Deferred tax assets are reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of the deferred tax asset.

3.14. Cash and Cash Equivalent

Cash and cash equivalents comprise cash at bank and cash available and short term highly liquid investments such as money market securities and bank deposits with original maturities of three months or less. The market values of financial assets are stated at fair value through profit or loss. For the purpose of the Consolidated Cash Flow statement, cash and cash equivalents consist of cash and cash equivalents as defined above, excluding the outstanding balances of bank overdrafts.

3.15. Equity

Share capital is determined using the nominal value of the shares issued. Ordinary shares are classified as equity. The share capital increase through cash payment includes any share premium account in the original version of the share capital. Any transaction costs associated with the issuance of the shares and any related income tax benefit resulting deducted from the share capital increase. If the entity acquired their own equity instruments, those instruments (the "shares") are deducted from equity. If such shares are subsequently reissued, the consideration received (net of related transaction costs and the related income tax benefit) included in equity attributable to shareholders. According to the purchase, sale, issue or cancellation of own equity instruments of the entity do not recognize any profit or loss.


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The revaluation reserve comprises gains and losses due to the revaluation of certain financial assets and tangible assets. Exchange differences on translation are included in the translation reserve. Retained earnings include the current results and those of previous periods as disclosed in the income statement.

3.16. Retirement Benefits and Short-term Employee Benefits

3.16.1. Retirement Benefits

Retirement benefits are payable when employment is terminated by the Group for employee retirement. According to the HELLENIC POST S.A. Interior Regulations, all the employees are occupied under the indefinite terms of employment. Termination of the contract is performed only for serious misconduct, in which case no compensation is payable. Married women status is changed under the effective legal provisions. The Company has an obligation to compensate workers resulting under the provisions of Law 2112/1920. The calculation is performed by a qualified actuary using the projected credit unit method. All actuarial gains and losses at January 1, 2005, which is IFRS transition date, have been recorded. In accordance with the revised IAS 19, the Company recognizes any actuarial gains or losses directly in Other Comprehensive Income. Under the current collective labor agreements, the maximum compensation limit regarding the HELLENIC POST S.A. employees is EUR 30.070,15 (absolute number). The calculation of retirement benefit obligations has taken this factor into account.

3.17. Financial Liabilities

Financial liabilities are recognized when the Group has entered into a contractual agreement of instrument and derecognized when the Group is exempted from or is canceled or expires. Interest is recognized as an expense in "Finance Costs" in the Statement of Comprehensive Income”. Trade payables are recognized initially at their nominal value and subsequently measured at amortized cost less settlement payments. Dividends to shareholders are included in "Other current financial liabilities' when the dividends are approved by the General Meeting of Shareholders. Gains and losses are recognized in the Statement of Comprehensive Income when the liabilities are written off, as well as through the amortization. When an existing financial liability is exchanged with another liability of different form with the same lender but with substantially different terms, or the terms of an existing liability are substantially modified, for example an exchange or modification, it is treated as a write off of the original liability and the recognition of a new liability. Any difference in the respective numerical amounts is recognized in the Statement of Comprehensive Income.

3.18. Other Provisions, Contingent Assets and Liabilities

Provisions are recognized when a present obligation is likely to lead to an outflow of economic resources for the Group, in the case that this outflow can be reliably estimated. The timing or amount of the outflow may be uncertain. A present obligation arises from the presence of a legal or constructive obligation resulting from past events, for example, product warranties, legal disputes or onerous contracts. Restructuring provisions are recognized only if a detailed formal plan has been developed and implemented, or management has at least announced the features of the program to those who are affected by it. Provisions are not recognized for future operating losses. When some or all of the expenditure required to settle a provision, is expected to be reimbursed by another party, the reimbursement will be recognized when, and only when, it is virtually certain that


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reimbursement will be received if the entity settles the obligation and the obligation is treated as a separate asset. The amount recognized for the reimbursement shall not exceed the amount of the provision. The expense relating to a provision is presented in results, net of the amount recognized for the reimbursement. A provision is used only for expenditures for which it originally formed a prediction. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. Provisions are measured at the expected cost required to determine the present obligation, based on the most reliable evidence available at the balance sheet date, including the risks and uncertainties associated with the present obligation. When the effect of the time value of money is material, the amount of the provision is the present value of the expenditures expected to be required to settle the obligation. The pre-tax discount rate reflects current market assessments of the time value of money and the risks specific to the liability. The rate does not reflect risks for which future cash flow estimates have been adjusted. When the method of discounting is used, the carrying amount of a provision increases in each period to reflect the passage of time. This increase is recognized as borrowing cost in the results. When a number of similar obligations exist, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognized even if the likelihood of an outflow to an element included in the class of obligations may be small. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision will be reversed. In such cases where the possible outflow of economic resources as a result of present obligations is considered improbable, or the amount of the provision cannot be estimated reliably, no liability is recognized in the consolidated Statement of financial Position, unless considered in the context of the business combination. These contingent liabilities are recognized as part of allocating the cost of acquiring the assets and liabilities in the business combination. Subsequently they are measured at the highest amount of a comparable provision as described above and at the amount initially recognized, less any depreciation. Possible inflows of economic benefits for the Group that do not yet meet the criteria of an asset are considered contingent assets.

3.19. Rounding

Differences between the amounts presented in the Financial Statements and the respective amounts presented in the Notes are due to rounding.

4. The Group Structure

The Group structure of HELLENIC POST S.A. on December 31, 2017 is presented below as follows:

Company State Percentage Consolidation Method Participation

ELTA S.A. GREECE Parent - -

Tachimetafores ELTA S.A. GREECE 99,98% Full consolidation Direct

Bank Eurobank Ergasias S.A. GREECE 70,00% Full consolidation Direct


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5. Financial Statements Items Analysis

It is to be noted that potentially arising differences in the sums in the tables included in the Notes, presented below, are due to rounding.

5.1. Property, Plant and Equipment

Property, plant and equipment are measured in subsequent periods at cost less any accumulated depreciation and any impairment losses. As at December 31, 2017, the following real estate property items of the Company were deposited to the Deposits and Loans Fund: (i) Kessariani's property at 45 Adrianoupolis Street, (ii) Patras property in Zaimis and Mezonos Street, iii) Kryoneri Attiki property at 128 Lefkis Street, iv) Piraeus property at 36, Filonos Street and v) Athens property in Lenorman and Constantinoupoleos streets. Change in the Group property, plant and equipment regarding 2017 and 2016 are presented below as follows:

Land assets Buildings Mechanical equipment

Vehicles Furniture and other equipment

Assets under construction

Total

Net Book Value as at 1/1/2016 82.845 63.575 21.261 1.331 1.949 320 171.281Additions - 7 53 857 518 1.435Transfers - 479 - - 142 (621) -Assets written off - - (48) (1) (36) - (84)Disposals of assets - - - (410) - - (410)Depreciation expenses - (3.419) (3.686) (640) (872) - (8.617)Assets written off depreciation - - 46 411 36 - 493Net Book Value as at 31/12/2016 82.845 60.642 17.574 744 2.076 217 164.098Additions - - 3 36 668 506 1.213

Transfers - 380 - - 77 (457) -Assets written off - - (28) (10) (718) - (756)Disposals of assets - - - (11) (31) - (42)Depreciation expenses - (3.260) (3.657) (517) (891) - (8.324)Assets written off/ disposed of depreciation - - 28 21 749 - 798Net Book Value as at 31/12/2017 82.845 57.762 13.919 264 1.930 266 156.987

Amounts in thousand Euro

GROUP

Land assets Buildings Mechanical equipment



Total

Gross book value 82.845 117.344 57.528 24.989 85.047 320 368.072Accumulated depreciation and impairment - (53.770) (36.267) (23.660) (83.094) - (196.791)Net Book Value as at 1/1/2016 82.845 63.574 21.261 1.330 1.953 320 171.281Gross book value 82.845 117.829 57.481 24.666 85.976 217 369.013Accumulated depreciation and impairment - (57.189) (39.908) (23.889) (83.929) - (204.915)Net Book Value as at 31/12/2016 82.845 60.641 17.572 777 2.047 217 164.098Gross book value 82.845 118.210 57.455 24.664 86.021 266 369.460Accumulated depreciation and impairment - (60.449) (43.537) (24.368) (84.120) - (212.474)Net Book Value as at 31/12/2017 82.845 57.761 13.918 296 1.901 266 156.987

Amounts in thousand Euro GROUP

Changes in the Company fixed asserts in 2017 and 2015 are as follows:


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Land assets

Buildings Mechanical equipment



Total

Net Book Value as at 1/1/2016 82.845 63.463 21.256 1.195 1.529 320 170.608Additions - - 40 742 518 1.300Transfers - 479 - - 142 (621) -Assets written off - - (48) (1) (36) - (84)

Disposals of assets - - - (419) - - (419)Depreciation expenses - (3.395) (3.686) (576) (712) - (8.369)Assets written off depreciation - - 46 419 36 - 501Net Book Value as at 31/12/2016 82.845 60.547 17.569 659 1.700 217 163.538Additions - - 3 2 506 474 984Transfers - 380 - - 77 (457) -Assets written off - - (28) (10) (718) - (756)Disposals of assets - - - - - - -Depreciation expenses - (3.208) (3.655) (465) (719) - (8.047)

Assets written off depreciation - - 28 10 718 - 756Net Book Value as at 31/12/2017 82.845 57.719 13.917 195 1.564 234 156.474


ΤΗΕ COMPANY

Land assets

Buildings Mechanical equipment



Total

Gross book value 82.845 117.039 57.513 23.736 82.088 320 363.540

Accumulated depreciation and impairment - (53.576) (36.257) (22.541) (80.559) - (192.932)Net Book Value as at 1/1/2016 82.845 63.462 21.256 1.197 1.529 320 170.608Gross book value 82.845 117.517 57.466 23.357 82.936 217 364.338Accumulated depreciation and impairment - (56.971) (39.897) (22.697) (81.235) - (200.800)Net Book Value as at 31/12/2016 82.845 60.547 17.569 660 1.701 217 163.538Gross book value 82.845 117.898 57.440 23.348 82.800 234 364.565

Accumulated depreciation and impairment - (60.179) (43.524) (23.153) (81.236) - (208.091)Net Book Value as at 31/12/2017 82.845 57.719 13.916 196 1.564 234 156.474

Amounts in thousand Euro ΤΗΕ COMPANY

It is to be noted that, in accordance with IAS 36, there are indications of impairment of the Company land plots and buildings. There are certain indications that the market value of the assets has been reduced as a result of both - the prolonged downturn in the reals estate property market, and passage of time.

However, the Management estimates that the implementation of ELTA Action Plan 2018 – 2021, and the resulting improvement in profitability and liquidity (see pages 36 - 38) will stabilize the Company and facilitate its recovery. In the current economic environment, the value of the Company's fixed assets is expected to increase and, therefore, no impairment of its assets is effective within the current year.

5.2. Intangible Assets

The Group and the Company intangible assets are analysed as follows:

THE GROUP THE COMPANY

Net book value as at 1/1/2016

2.430 1.468

Additions 518 444Amortization amount (892) (555)Net book value as at 31/12/2016

2.056 1.357

Additions 511 424Amortization amount (952) (511)Net book value as at 31/12/2017

1.615 1.270

Amounts in thousand Euro Software programs Software programs


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5.3. Investment Property

In 2017, the book values of Investment Property recorded in the Statement of Financial Position have undergone no changes versus those recorded last year.

As at December 31, 2017, investment property comprises the real estate items (land plots) located in the prefectures of Attica, Thessaloniki, Magnesia, Karditsa, Larissa and Evros.

5.4. Investments in Subsidiaries

The parent Company investments in subsidiaries are presented below as follows:


31/12/2017 31/12/2016DIRECT

PARTICIPATING INTEREST

CONSOLIDATION METHOD

COUNTRY OF DOMICILE

OPERATING SEGMENT

Tachimetafores ELTAS.A. 14.067 14.067 99,98% Full consolidation Greece Courier services

KEK ELTA S.A. 126 126 70,00% Full consolidation Greece Staff training

Less: Accumulatedprovision (126) (126)Total investments in subsidiaries 14.067 14.067

Tachimetafores ELTA S.A.: Tachimetafores ELTA S.A. was established in May 2000 and operates in Courier Services market. The parent Company holds a patriating interest of 99,98%, while a participating interest of 0,02% is held by the employees through the Panhellenic Federation of Postal Associations (P.F.P.A.).

As at December 31, 2017, the share capital of the subsidiary stands at Euro 14.070.008,45 divided into 479. 387 common shares with voting rights of nominal value Euro 29,35 each.

KEK ELTA S.A.: KEK ELTA S.A. was established on June 19, 1998. Its main activities pertain to providing training and continuous development of ELTA's human resources. ELTA holds a participating interest of 70% in the share capital of KEK ELTA S.A. by 70%, while a participating interest of 30% is held by the employees through the Panhellenic Federation of Postal Associations (P.F.P.A.). As at December 31, 2017, the share capital of the subsidiary stands at Euro 180.000 (6.000 shares of EURO 30,00 in absolute numbers). The Company has fully impaired its participating interest in KEK ELTA S.A. (Euro 126 k).

5.5. Assets Available for Sale

Changes in the Group Assets Available for Sale are as follows:

Amounts in thousand Euro 2017 2016

Opening balance 3.855 6.231

Sales (3.438) -Increase in Equity from fair value adjustments 114 (2.377)

Closing balance 530 3.855

THE GROUP - THE COMPANY

The amount of EURO 3.438 k of available for sale assets pertains to the disposal of the total of Mutual Funds (Treasury, Bonds and Shares) other than the Shareholders Equity, as decided at the Meeting of the Board of Directors as at 1699/16.02.2017. The disposal of the aforementioned Mutual Funds resulted in profits amounting to EURO 1.088 k (see Note 5.22).

In 2017, the change (increase) of Euro 114 k in the fair value is analysed as follows: Bonds – increase of Euro 11 k, Securities – increase of Euro 75 k and Mutual Funds - increase of Euro 28 k. Respectively, in 2016, change (decrease) of Euro 2.377 k in the fair value is analysed as follows: Bonds - decrease Euro 7 k, Securities – decrease Euro 2.500 k (valuation of the Company’s investment in Attica Bank) and Mutual Funds - increase of Euro 130 k.


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The Group assets available for sale comprise the following basic categories of assets:


Bonds 20 9

Securities 367 292

Mutual Funds 143 3.554

Total 530 3.855

All the financial assets available for sale are measured at fair value. On December 31, 2017, the Company's portfolio includes detachable GDP securities issued by the Greek State of estimated value equaling the nominal value of the bonds that were exchanged under the PSI process. Moreover, it includes Available Mutual Funds and Shareholders Equity.

5.6. Other Long-term Receivables

2017 2016 2017 2016

Guarantees from rentals 403 374 333 321Guarantees from utilities 463 109 402 56Total 866 483 735 377

Amounts in thousand Euro THE GROUP THE COMPANY

Other Long-term Receivables pertaining to guarantees are expected to be collected at the end of the lease contracts maturity.

5.7. Deferred Tax Assets and Obligations

Deferred income tax is calculated in respect of temporary differences, using the tax rates expected to apply at the date of recovery or settlement. The amounts presented in the Statement of financial Position are estimated to be recovered or settled after December 31, 2017. For the calculation of deferred taxes, the tax rate for 2017, ie 29%, was applied (POL 1159/2015). Deferred tax assets are recognized for all temporary differences to the extent there might arise future taxable profits with which to offset deferred tax assets and are reduced to the extent it is no longer obvious that the projected future tax relief will be ensured. Changes in deferred tax assets and obligations of the Group before and after the offsetting are as follows:


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Deferred Tax Asset

Deferred Tax Liability

Deferred Tax Asset


Property, plant and equipment 60 (25.740) 51 (27.351)

Intangible assets - (86) (72) (140)

Financial assets available for sale 2.236 - 2.088 -

Transferred non-used tax losses - - - -

Investments property - (1.531) - (999)

Participating interest in associates - - - -

Inventory 870 - 870 -

Trade and other receivables - (73.322) - (57.317)

Employee end of service benefits obligations 36.302 - 37.149 -

State grants 4.526 - 5.512 -

Suppliers and other liabilities 248 - 430 -

Provisions 2.555 - 2.907 -

Total 47.539 (100.679) 48.935 (85.807)

Offsetting 47.539 (100.679) 48.935 (85.807)

Net deferred tax assets (53.141) (36.873)


THE GROUP

Changes in the Company deferred tax assets and obligations before and after offsetting are analysed as follows:

Deferred Tax Asset


Deferred Tax Asset


Property, plant and equipment - (25.740) - (27.351)

Intangible assets - (88) - (140)

Financial assets available for sale 2.236 - 2.088 -


Investments property - (1.531) - (999)


Inventory 870 - 870 -

Trade and other receivables - (73.322) - (57.317)

Employee end of service benefits obligations 36.188 - 37.050 -

State grants 4.526 - 5.512 -

Suppliers and other liabilities 248 - 430 -

Provisions 2.555 - 2.907 -

Total 47.365 (100.681) 48.857 (85.807)

Offsetting 47.365 (100.681) 48.857 (85.807)

Net deferred tax assets (53.316) (36.950)


THE COMPANY

2017 2016

Changes in the Group deferred taxes in 2017 are analysed as follows:


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1/1/2017Recognised in Other

Comprehensive Income

Recognised in Profit and Loss 31/12/2017

Deferred tax assets (liabilities)

Property, plant and equipment (26.768) - 1.088 (25.680)

Intangible assets (213) - 126 (86)

Financial assets available for sale 2.088 147 - 2.236


Investments property (1.531) - - (1.531)


Inventory 870 - - 870

Trade and other receivables (57.317) - (16.005) (73.322)

Employee end of service benefits obligations 37.149 5 (851) 36.303

State grants 5.512 - (986) 4.526

Suppliers and other liabilities 430 - (182) 248

Provisions 2.907 1 (353) 2.554

Total (36.873) 154 (16.421) (53.141)

Analysed as: - - - -

Deferred tax asset 48.956 - () 47.478

Deferred tax liability (85.829) - - (100.619)


THE GROUP

Changes in the Group deferred taxes in 2016 are analysed as follows:



Recognised in Profit and Loss

31/12/2016


Property, plant and equipment (28.161) - 861 (27.300)


Financial assets available for sale 2.199 (110) - 2.088

Transferred non-used tax losses 609 - (609)

Investments property (999) - - (999)

Participating interest in associates 821 - 49 870

Inventory (43.738) (935) (12.644) (57.317)

Trade and other receivables 37.631 6 (489) 37.149

Employee end of service benefits obligations 6.265 - (753) 5.512

State grants 1.090 - (660) 430

Suppliers and other liabilities - - - -

Provisions 3.301 - (394) 2.907

Total (21.270) (1.039) (14.564) (36.873)

Analysed as:

Deferred tax asset 51.916 - () 48.956



THE GROUP

Changes in the Company deferred taxes in 2017 are analysed as follows:


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Property, plant and equipment (26.819) - 1.079 (25.740)


Financial assets available for sale 2.088 147 - 2.236


Investments property (1.531) - - (1.531)


Inventory 870 - - 870

Trade and other receivables (57.317) - (16.005) (73.322)


State grants 5.512 - (986) 4.526

Suppliers and other liabilities 430 - (182) 248

Provisions 2.907 1 (353) 2.554

Total (36.950) 148 (16.513) (53.316)

Analysed as: - - - -

Deferred tax asset 48.857 148 - 47.365



THE COMPANY

Changes in the Company deferred taxes in 2016 are analysed as follows:





Property, plant and equipment (28.215) - 863 (27.351)


Financial assets available for sale 2.199 (110) - 2.088


Investments property (999) - - (999)

Participating interest in associates 821 - 49 870

Inventory (43.738) (935) (12.644) (57.317)

Trade and other receivables 37.548 - (498) 37.050


State grants 1.090 - (660) 430

Suppliers and other liabilities - - - -

Provisions 3.301 - (394) 2.907

Total (21.926) (1.045) (13.979) (36.950)

Analysed as:

Deferred tax asset 51.223 - - 48.857



THE COMPANY


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5.8. Inventory

The Group and the Company Inventory is analysed as follows:

2017 2016 2017 2016

Telephone cards 987 1.027 987 1.027Other goods 4.718 4.601 4.718 4.601Consumables 3.167 2.761 2.956 2.582Assets spare parts 405 426 405 426Total 9.277 8.815 9.066 8.637Provisions for impairment of other receivables (3.002) (3.002) (3.002) (3.002)Total net realizable value 6.276 5.813 6.065 5.635


Provisions for impairment of goods refer to absolute and slow moving inventory.

The Group has no pledged inventory.

5.9. Trade and Other Receivables

The Group and the Company Trade and Other Receivables are analysed as follows:

2017 2016 2017 2016

Domestic clients 47.801 51.564 37.022 42.584Foreign clients 1.303 2.517 178 199Postbank - - - -Doubtful and bad clients 2.576 2.568 946 946Receivables from international offsetting 21.232 20.574 21.232 20.574Domestic Postal Commission 32 33 32 33Notes postdated 203 203 - -Cheques collectible (postdated) 607 987 18 12Cheques postdated 58 58 58 58Courier agents payments 6.872 6.177 - -Less: Provision for impairment of trade receivables (10.933) (11.679) (8.531) (9.277)Total 69.750 73.001 50.953 55.129



International Offsetting Receivables pertain to universal options and commissions from postal services rendered in foreign countries. Receivables and liabilities generated in the foreign countries are governed by the International Postal Union and are based on international agreements. Recovering such receivables is performed within an average period of approximately 18 months. Given that the receivables recovering period is not expected greatly exceed the next twelve months, the receivables are not recorded in long-term accounts. Reference to SDR is made is made in §6.1 “Currency Risks”. Receivables from Domestic Clients include balances with OAEE (Euro 6.510 k) for which (see. Note. 5.28. "Contingent Assets - Liabilities") the Company has taken all the necessary legal actions aimed at achieving their collectability.

Changes in provisions are presented below as follows:

2017 2016 2017 2016

Balance 1/1 11.678 12.819 9.277 10.425Unused amounts of provisions reversed

(745) (1.141) (746) (1.148)

Balance as at 31/12 10.933 11.678 8.531 9.277

Amounts in thousands €GROUP COMPANY


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5.10. Other Current Assets

Other Current Assets are analysed as follows:

2017 2016 2017 2016

Receivables from employees 30 29 30 29

Advance payment - withhold tax for the Greek State 399 1.306 272 1.089

Restricted deposit accounts 6.413 6.694 6.042 6.335

Other miscellaneous debtors 14.054 10.665 11.386 8.553

Bad debtors 19.835 19.455 19.835 19.455

Less: Provisions for impairment of other receivables (21.017) (21.073) (21.017) (21.073)

Total 19.714 17.078 16.547 14.389

Amounts in thousand Euro THE COMPANYTHE GROUP

Regarding FY 2017, on consolidated basis, the amount of Other Miscellaneous Debtors, mainly includes receivables from the Manpower Employment Organization (O.A.E.D.) EURO 1.760 k, Eurobank (for POS) EURO 2.983 k, the National Telecommunications and Post Commission (Ε.Ε.Τ.Τ.) - EURO 610 k, the Hellenic Lottery - EURO 455 k, Western Union - EURO 68 k, courier servicers clients - EURO 318 k, other financial services EURO 549 k, electric energy income collectible - EURO 1.420 k, acquisition of electric energy to be delivered EURO 259 k, door-to-door prepaid services - EURO 451 k, prepaid insurance - EURO 151 k as well as from robberies – malpractices and counterfeit - fake banknotes of EURO 1.158 k.

Regarding FY 2016, on consolidated basis, the amount of Other Miscellaneous Debtors, mainly includes receivables from the Manpower Employment Organization (O.A.E.D.) EURO 2.410 k, Eurobank (for POS) EURO 948 k, the National Telecommunications and Post Commission (Ε.Ε.Τ.Τ.) - EURO 405 k, the Hellenic Lottery - EURO 658 k, Western Union - EURO 639 k, courier servicers clients - EURO 313 k, door-to-door prepaid services - EURO 479 k, prepaid insurance - EURO 213 k as well as from robberies – malpractices and counterfeit - fake banknotes of EURO 1.351 k.

Restricted Cash Accounts include deposits that have been blocked for the issue of third parties letters of guarantee for good performance of projects and participation in tenders.

5.11. Advance Payments

Advance Payments include receivables from advance payments to suppliers (mainly domestic) regarding the assets, standing, as at December 31, 2017, at Euro 310 k (December 31, 2016: Euro 230 k).

5.12. Cash and Cash Equivalent

The Group and the Company Cash and Cash Equivalent are analysed as follows:

2017 2016 2017 2016

Cash 17.165 22.835 16.901 22.690

Cash available at bank accounts 30.380 32.778 23.939 28.874

Total Cash and Cash Equivalent 47.545 55.613 40.840 51.563

Overdraft bank accounts (117.210) (116.854) (117.210) (116.854)

Interest on overdraft bank accounts 2.548 2.470 2.548 2.470

Cash Available in the Statement of Cash Flows (67.116) (58.772) (73.822) (62.821)




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As at December 31, 2017, as well as December 31, 2016, the Company does not have available amounts in short-tem time deposits (2-10 days). The total of the Company’s cash available is directed to decrease the balances of overdraft limit of the Deposits and Loans Fund.

The Group cash available have given rise to interest (revenue) amounting to EURO 6 k. (31 December, 2016: EURO 7 k) (see Note 5.22.).

It is to be noted that the Company’s total Cash and Cash Equivalents in the Statement of Cash Flows also include the balance of the Overdraft Bank Account, standing at EURO 117.210 k in 2017 and EURO 116.854 k in 2016. The amounts in question also include interest amounting to EURO 2.548 k regarding 2017 and EURO 2.470 k regarding 2016.

5.13. Equity

5.13.1. Share Capital

As at December 31, 2017, the Company Share Capital stands at Euro 340.814 k (December 31, 2016: Euro 340.814 k) divided into 200.479.014 (December 31, 2016: 200.479.014) common nominal shares of nominal value Euro 1,70 each (absolute number).

5.13.2. Reserves

Changes in the Group Reserves are analysed as follows:

Amounts in thousand Euro Financial instruments fair value reserves

Extraordinary reserves

Actuarial (loss)/profit

reserves Total

PublishedBalance as at January 1, 2016 (218.380) 493 (11.275) (229.163)Changes within the FY (2.487) 6 3.202 721Balance as at December 31, 2016 (220.867) 500 (8.074) (228.442)Balance as at January 1, 2017 (220.867) 500 (8.074) (228.442)Changes within the FY 1.834 - (17) 1.817Balance as at December 31, 2017 (219.033) 500 (8.090) (226.624)

THE GROUP

Changes in the Company Reserves are analysed as follows:

Amounts in thousand Euro Financial instruments fair value reserves

Actuarial (loss)/profit

reserves

Other reserves

Total

PublishedBalance as at January 1, 2016 (218.380) (11.265) 57 (229.588)Changes within the FY (2.487) 3.224 - 736Balance as at December 31, 2016 (220.867) (8.042) 57 (228.851)Balance as at January 1, 2017 (220.867) (8.042) 57 (228.851)Changes within the FY 1.834 (4) - 1.830Balance as at December 31, 2017 (219.033) (8.045) 57 (227.021)

THE COMPANY

The item “Fair Value Reserves” also includes the proportionate deferred taxes.

Changes in the Group and the Company Equity are analytically presented in the Statement of Changes in Equity in the current Financial Statements.

5.14. Employee Termination Benefits

Employee retirement benefits: The provision for employee retirement benefits is rerecorded in the Financial Statements in accordance with IAS 19 and is based on an independent actuarial study concerning the Company. When retiring, the Company employees receive 100% compensation of the liability that would be be paid based on the Greek labor legislation provided, however, that the compensation does not


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exceed the maximum limit of compensation, which, as at December 31, 2017, stands at EURO 30.070,15 (absolute number) (31 December 2016: EURO 30.070,15).

The Company records in the profit and loss the accrued benefits in every period as well as the respective increase in retirement obligations. The payments of benefits made in every period to retirees are charged against this obligation.

The Company has commissioned recognised independent actuaries to conduct assessment of the Company's obligations arising from its obligation to pay retirement compensation. The basic assumptions of the actuarial study as at December 31, 2017 are presented below as follows:

2017 2016

Prepayment Rate 1,33% 1,41%

Increase in Benefits Ceiling 0% 0%

Wages Increase 0% 0%

Based on amended IAS 19, actuarial gains and losses are recognised as a total in the Statement of Comprehensive Income and are not transferred to profit and loss.

The amounts recognised in the Statement of Financial Position based on future salary increases and inflation, as arising from the actuarial studies, are analysed as follows:

Amounts in thousands €

Βenefits Obligations Agreement 2017 2016 2017 2016

Net initial obligation of the period 128.099 129.764 127.758 129.475

Actuarial (profit) on other income 22 (3.202) 4 (3.224)

Paid Benefits (7.260) (4.352) (7.260) (4.352)

Total expense recognized in the income statement

4.321 5.889 4.289 5.859

Present value of the liability at period end 125.182 128.099 124.791 127.758

GROUP COMPANY

The amounts recognised in the Income Statement are as follows:


Net period pension cost components: 2017 2016 2017 2016

Current employment cost 2.679 3.146 2.653 3.122

Financial cost 1.642 2.743 1.636 2.737

Regular charge to the profit and loss 4.321 5.889 4.289 5.859

Total charge to the profit and loss 4.321 5.889 4.289 5.859


The aforementioned results depend on the assumptions (financial and demographic), presented in the actuarial study. Therefore, the following is effective as at 31/12/2017:

If a discount rate, higher by 0,5% had been used, the present value of liability would have been lower by approximately 4,1%.

If a discount rate, lower by 0,5% had been used, the present value of liability would have been higher by approximately 4,5%.

If an estimate for employee fees increase, higher than 0,5% had been used, the present value of liability would have been higher by approximately 0,4%.

If an estimate for employee fees increase, lower than 0,5% had been used, the present value of liability would have been lower by approximately 0,7%.


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If an estimate for employee fees ceiling, higher than 0,5% had been used, the present value of liability would have been higher by approximately 3,5%.

If an estimate for employee fees ceiling, lower than 0,5% had been used, the present value of liability would have been lower by approximately 3,5%.

5.15. Other Long-term Liabilities

The Group and the Company Other Long-term Liabilities are analysed as follows:

2017 2016 2017 2016

Long-term part of fixed assets investments grants 17.683 21.307 17.683 21.307Other long-term liabilities 1.012 1.100 22 22Total 18.695 22.407 17.705 21.329


Changes in the Government Grants mainly pertaining to financing modernization and restructuring projects of post offices are analysed as follows:

Balance as at January 1, 2016 24.932Recognised in the Statement of Comprehensive Income (Note 5.22) (3.625)Balance as at 31/12/2016 21.307Balance as at January 1, 2017 21.307Recognised in the Statement of Comprehensive Income (Note 5.22) (3.625)Balance as at 31/12/2017 17.683

THE GROUP - THE COMPANY Amounts in thousand Euro

Other Long-term Liabilities pertain to real estate property lease guarantees. Real estate property items leased by the Company have been recognised as operating leases. Rentals of non-cancelable operating leases are payable as follows:

2017 2016 2017 2016

Under 1 year 10.116 10.455 9.680 9.960

2 to 5 years 37.463 38.533 35.850 36.852

Over 5 years 23.286 24.066 23.200 23.904

Total 70.864 73.054 68.730 70.716



5.16. Long-term Provisions

Long-term Provisions made by the Group and the Company as at December 31, 2017, are analysed as follows:

Amounts in thousand Euro Provisions for tax

inspection differences

Provisions for legal cases

Provisions for compensation

Other provisions

Total

Balance as at 1/1/2016 10 80 - 15 105

Balance as at 31/12/2016 10 80 - 15 105

Aditional Provissions - - - 2.557 2.557

Balance as at 31/12/2017 10 80 - 2.572 2.662

THE GROUP


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Amounts in thousand Euro Provisions for tax

inspection differences

Provisions for legal cases

Provisions for compensation

Other provisions

Total

Balance as at 1/1/2016 - 80 - - 80

Balance as at 31/12/2016 - 80 - - 80

Aditional Provissions - - - 2.557 2.557

Balance as at 31/12/2017 - 80 - 2.557 2.638

THE COMPANY

Additional provisions amounting to EURO 2.557 k pertain to contingent liabilities (see Note 5.28) arising from the court cases verses the Company.

5.17. Bank Overdrafts

The aforementioned category includes the balances of overdrafts established by the Deposit and Loans Fund, regarding the balances of the relative post due interest.

On December 31, 2017, the balance of Overdraft Bank Account stood at EURO EURO 117.210 k (2016: EURO 116.854 k). On 31/12/2017, net liability to the Deposits and Loans Fund stood at EURO 114.661 k (the remaining amount pertains to the interest amounting to EURO 2.548 k), while on 31/12/2016, net liability stood at EURO 114.385 k (interest EURO 2.470 k).

It is to be noted that the effective overdraft limit for ELTA in respect of its account in the Deposits and Loans Fund (Government Gazette 1478/14-7-2015) stands at EURO 115.000 k.

5.18. Suppliers and Other Trade Liabilities

Suppliers and Other Trade Liabilities as well as the Other Short-term Liabilities of the Group and the Company are analysed as follows:

Suppliers Amounts in thousand Euro 2017 2016 2017 2016

Domestic suppliers 13.495 9.930 7.929 7.149

Foreign suppliers 1.002 18 961 -Cheques payable 1 1 - -Total 14.499 9.949 8.890 7.149


Other Short-term Liabilities

Amounts in thousand Euro 2017 2016 2017 2016

Legal Entities Duty 78.340 72.049 78.340 72.049Fees attributed to third parties 65.175 29.747 65.175 29.747Domestic postal services duty 5.057 4.448 5.057 4.448Obligations under international offsetting 18.230 19.851 18.230 19.851

Income carried forward 2.519 3.179 2.499 3.179Accrued expenses 3.460 3.220 1.421 1.212Other credit transit accounts 95 90 95 90VAT & other taxes 3.145 3.911 3.305 3.841Accrued employee fees 860 1.487 854 1.483Liabilities to the Greek State 1.682 1.145 1.315 1.145

Liabilities due to employee retirement 1.146 655 1.146 655Liabilities to Eurobank Ergasias Bank 9.397 16.359 9.397 16.359Pension funds 6.051 7.396 5.881 7.248Other guarantees 5.747 5.547 5.747 5.547Other liabilities 7.688 5.353 4.497 3.260

Total 208.593 174.437 202.961 170.113

THE COMPANYTHE GROUP


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The fair values of trade and other liabilities are not separately presented , since given their term, the Management believes that the carrying values recognized in Economy Class constitute a reasonable approximation of their fair values.

ELTA has undertaken payment of pensions of the Organization for Agricultural Insurance (OGA), the Social Insurance Institute (IKA) and welfare benefits as well as the collecting and returning the payment of utilities, such as PPC, EYDAP, OTE, COSMOTE. Therefore, at the end of every month, the company records high cash available with a corresponding increase in liabilities. Pensions are paid on the first day of the following month. The change in this available to third parties (Corporate Cheques, Third Parties Collectibles, Domestic Postal Cheques) in the Statement of Cash Flows refer to a separate category, since those availables are not inflows / outflows from operating activities of the Group, although revenue from the interest management benefits the Company.

EFKA is the main insurance fund of the Company. The Company pays the employer's contributions that are recognized as expenses in profit and loss when incurred. The Company’s obligation is limited to payment of the monthly contribution.

The Company pays employer contributions to the Occupational Insurance Fund (TEA-ELTA). The purpose of this fund is to provide a lump sum to its members upon retirement. The Company’s obligation is limited to payment of the monthly contribution. The Company has no obligation to cover future deficits of the Fund. The total amount of the contributions on annual basis for 2017 stands at EURO 4.109 k, while the balance of the liability at December 31, 2017 is EURO 368 k.

The increase in the amount of other short-term liabilities recorded in 2017 is due to third parties collectibles which, in the beginning if the following year, are allocated to the relative beneficiaries.

5.19. Short-term Loan Liabilities

The Company’s short-term loan liabilities pertain to the short-term loan from the Bank of Attica. The loan does not include a legal commitment of the Company’s assets. During FY 2017, the Company paid the interest for the amount of EURO 818 k (2016: EURO 1.146 k). The decrease in nearest was achieved following conversion of short-tem debt (overdraft account) into debt equivalent of a long-term 10-year loan (with a 7-year extension), following the relative decision of the Board of Directors as at July 13, 2017. At approximately the same rate, capital is now being repaid, while the base interest rate is reduced retroactively from April 1, 2017 by about 4 percentage points.

5.20. Advance Payment Liabilities

Advance Payments are analysed as follows:

2017 2016 2017 2016

Clients advance payments 1.945 1.995 1.945 1.995

Other advance payments 485 1.295 472 1.210

Total 2.430 3.290 2.417 3.205



5.21. Income Statement Accounts Analysis

Turnover

The Group and the Company turnover is analysed per major category as follows:


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2017 2016 2017 2016

Mail 178.528 192.637 178.528 192.637

Parcels 17.696 15.440 17.696 15.440

Financial 45.689 47.363 45.689 47.363

Goods 1.914 1.873 1.914 1.873

Philatelic 3.137 2.862 3.137 2.862

Other operating income 3.746 3.319 4.862 4.703

Courier services 31.006 32.457 - -

Training services 116 43 - -

Total 340.757 342.870 310.750 311.754



Cost of Sale – Administrative Expenses – Distribution Expenses

The Group Cost of Sale, Administrative Expenses and Distribution Expenses regarding FY 2017 and revised and publicized FY 2016 are presented below as follows:

2017

Amounts in thousand Euro Cost of sales Administrative

costs Distribution

costsTotal

Cost of sold goods 1.391 121 19 1.532

Cost of consumables 6.399 556 89 7.044

Cost of consumed spare parts 785 68 11 864

Employees fees and expenses 191.120 16.986 2.756 210.862

Third parties fees and expenses 29.184 4.094 825 34.103

Utilities 24.940 2.154 356 27.450

Taxes - Duties 2.698 249 42 2.989

Miscellaneous expenses 32.025 3.086 525 35.637

Depreciation 8.161 742 122 9.026

Operating provisions 3.896 338 54 4.289

Self-production (3.031) (270) (44) (3.345)

Total 297.568 28.126 4.756 330.450

THE GROUP

2016

Amounts in thousand Euro Cost of sales Administrative

costs Distribution

costsTotal



Cost of consumed spare parts 1.576 144 23 1.743



Utilities 26.152 2.487 401 29.040

Taxes - Duties 3.004 292 48 3.343


Depreciation 8.555 821 133 9.509


Self-production (1.307) (126) (21) (1.454)

Total 307.604 29.975 4.931 342.510

THE GROUP


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The Company Cost of Sale, Administrative Expenses and Distribution Expenses regarding FY 2017 and revised and publicized FY 2016 are presented below as follows:

2017

Amounts in thousand Euro Cost of sales Administrative costs

Distribution costs

Total



Cost of consumed spare parts 785 68 11 864



Utilities 24.844 2.158 347 27.349

Taxes - Duties 2.521 219 35 2.775


Depreciation 7.773 675 109 8.557


Self-production (2.955) (257) (41) (3.253)

Total 275.621 23.937 3.851 303.409

THE COMPANY

2016

Amounts in thousand Euro Cost of sales Administrative costs

Distribution costs

Total



Cost of consumed spare parts 1.576 144 23 1.743



Utilities 24.933 2.276 358 27.567

Taxes - Duties 2.780 254 40 3.074


Depreciation 8.071 737 116 8.924


Self-production (1.220) (111) (17) (1.349)

Total 283.032 25.842 4.059 312.932

THE COMPANY

Other Revenue/Expenses

The Group and the Company Other Revenue is analysed as follows:


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2017 2016 2017 2016

Income from grants 180 306 180 306Income form real estate leases 124 264 409 400Income from grants amortization 3.625 3.625 3.625 3.625Forfeitures of guarantees 453 103 26 38Participation of third parties in advertisement expenses 52 187 52 187Income from commissions - intermediaries 15 129 15 129Income from foreign currency translation differences 178 35 178 35Terminal dues on previous years international settlements 1.038 2.482 1.038 2.482Income from previous years provisions 1.869 3.061 1.869 3.061Profit from disposal of tangible assets 2 12 2 12Other income (528) 765 1.093 1.125Total 7.007 10.968 8.486 11.399


Grants

Grants are received for professional training seminars conducted by the Company under L.A.E.K. program of O.A.E.D. The Company deducts from the monthly payroll a percentage of 0.45% (this is a mandatory levy, withheld together with IKA levies and applies to all the companies). The amount may be returned to the Company in the form of financing, in case the Company holds training seminars doe its employees. For this purpose, the Company has established the subsidiary KEK ELTA S.A. The revenue is recognised in the year when the expenses are incurred.

Previous years terminal dues

The Company is a member of the International Postal Union, through which debts and receivables of individual post offices are settled around the world. On contractual basis, receivables and liabilities are to be settled within a certain margin: From 6 months to 3 years (average period of approximately 18 months). Since the liquidation of assets and liabilities is delayed beyond the year, regarding the following years, the account "Previous years terminal dues" (Revenue) and the account Previous years terminal expenses” (Expenses) are used for this liquidation.

The Group and the Company Other Operating Expenses are analysed as follows:

2017 2016 2017 2016

Expenses from provisions for doubtful receivables 2.557 - 2.557 -Foreign currency translation differences 925 106 925 106Loss from fair value revaluation of investment property - - - -Terminal dues on previous years international settlements 257 833 155 822Expenses from provisions for thefts and burglaries 724 288 724 288Other previous years expenses 817 1.125 619 677Other extraordinary and non-operating expenses 1.141 265 1.072 199Other extraordinary losses 62 83 17 19Tax fines and surcharges 21 11 17 3Total 29.421 2.872 29.003 2.274



5.22. Financial Income / Expenses

The Group and the Company Financial Income and Expenses are analysed as follows:


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Financial Income

Amounts in thousands € 2017 2016 2017 2016

Income from debt securities 1.088 - 1.088 -

Income from interest on deposits 6 7 5 7

Foreign currency translation differences - 5 - -

Financial Income from Universal Service Obligation (USO) 23.175 - 23.175 -

Total 24.269 12 24.268 7

GROUP COMPANY

Financial Expenses and Impairment of Securities


Other interest - expenses 6.904 7.061 6.551 6.717

Capital movements expenses 1.218 763 1.218 763

Other bank expenses 26 30 25 30

Commissions on letters of guarantee 30 47 30 47

Foreign currency translation differences 75 131 - -

Total Financial Expenses 8.253 8.033 7.823 7.558

Differences impairment (losses) on assets held for sale 2.635 - 2.635 -

Total 10.888 8.033 10.458 7.558


Income from Securities pertains to income from disposal of the Company Mutual Funds (other than Shareholders Equity ) following the decision of the BoD Meeting held as at 1699/16.02.2017 (see Note 5.5.).

Credit and debit interest mainly pertains to interest on bank deposits, as well as other bank charges (expenses). The Capital Movement Costs pertain to expenses for sound financial operation of the company and, in particular, financing of its branches.

Impairment of securities is due to valuation of shares held by ELTA at Attica Bank as at 31/12/2017, when the price of share stood at EURO 0,0365 and, therefore, accounting valuation of the financial position of ELTS stood at EURO 365 k. The relative balancer of EURO 2.635.000 in respect of EURO 3 million was accounted for as impairment of securities.

5.23. Income Tax

Income tax has been calculated using the average rate applicable for the entire FY 2017, i.e. 29% (POL 1159/2015) 29% - 2016: 29%.

The amount of tax on earnings before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the consolidated companies. The difference between the expected tax expense based on the effective tax rate of the Company and the tax expenses actually recognised in the profit and loss and Statement of Comprehensive Income is as follows:

Amounts in thousand Euro Note 2017 2016 2015 2016

Current tax expenses (382) (71) - -Deferred tax 5.7. (16.421) (14.564) (16.513) (13.979)Total (16.803) (14.636) (16.513) (13.979)



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Earnings before tax 1.275 436 634 396Tax rate 29% 29% 29% 29%Expected tax expenses under the effective tax rate (370) (126) (184) (115)Non-deductible expenses (3.032) (3.835) (2.929) (3.559)Permanent differences from IFRS adjustment entries 2.156 2.249 2.156 2.249Amounts taxed in the previous years 108 124 108 124Non-transferred tax losses - 2.170 - 2.170Non-recognised tax losses (15.661) (14.588) (15.661) (14.588)Other (3) (330) (3) (260)Recovery of previous years tax losses - (609) - -Actual tax expenses (net) (16.803) (14.636) (16.513) (13.979)Weighted tax rate -1318% -3356% -2606% -3534%


In FY 2017, the Company and the Group have been subject to tax audit in compliance with the provisions of Article 65 § Α, Law 4174/2013. This audit is in progress and the relative tax certificate is expected to be issued after the publication of the Financial Statements for 2017.

5.24. Related Parties Transactions

None of the transactions includes special terms and conditions and no guarantee was given or received. The services from and to related parties are rendered in accordance with the price lists applicable to non-related parties.

The Company's transactions with the KEK ELTA S.A. pertain to professional training of the Company's personnel and office rental.

The Company's transactions with Tachimetafores ELTA S.A. (ELTA Courier) pertain to using the Company's network for rendering rapid courier services (door to door), seconded staff salaries and rentals of offices and other spaces.

Balances are settled in cash. The Company has made no provisions in respect of the aforementioned FYs for doubtful debts relating to the amounts owed by related parties.

Intracompany Disposals/Acquisitions and Receivables/Liabilities are analysed as follows:

Amounts in thousand Euro ELTA S.A. ΚΕΚ ELTA S.A. Tachimetafores ELTA S.A. TOTAL

ELTA S.A. * 609 5.335 5.945

ΚΕΚ ELTA S.A. 285 * 1 286

Tachimetafores ELTA S.A. 2.803 8 * 2.811

TOTAL 3.088 618 5.337 9.042

INTRACOMPANY DISPOSALS / ACQUISITIONS 2017

SELLER

BU

YER


ELTA S.A. * 383 2.333 2.716

ΚΕΚ ELTA S.A. 354 * 2 356

Tachimetafores ELTA S.A. 2.841 25 * 2.866

TOTAL 3.195 408 2.335 5.938BU

YER

INTRACOMPANY DISPOSALS / ACQUISITIONS 2016

SELLER


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ELTA S.A. * 125 9.575 9.701

ΚΕΚ ELTA S.A. 263 * 4 267

Tachimetafores ELTA S.A. - 3 * 3

TOTAL 263 128 9.579 9.971

INTRACOMPANY RECEIVABLES / LIABILITIES 2017

LIABILITY

REC

EIV

AB

LE


ELTA S.A. * 308 9.923 10.231

ΚΕΚ ELTA S.A. 376 * 17 393

Tachimetafores ELTA S.A. - 3 * 3

TOTAL 376 311 9.940 10.627

LIABILITY

REC

EIV

AB

LE

INTRACOMPANY RECEIVABLES / LIABILITIES 2016

5.25. Receivables from the Universal Service

As till 2012, the compensation regarding the cost of providing the Universal Postal Services was offset given the exclusive rights of the Company to settle the dispatch of letters, whose weight did not exceed 50 grams. Following the implementation of the Third Postal Services Directive and under Law 4053/2012 “On Postal Market, Electronic Communication Issues and Other Provisions”, the Greek postal market has been fully liberalized as from 01/01/2013. Based on this Law, ELTA has become the provider of Universal Postal Services in Greece for 15 years from the start of the full liberalization act, i.e. until December 31st, 2028.

The same Law (Article 8) sets out the financing for the Universal Services. In particular, it defines the procedures regarding the compensation for the cost of the Universal Services, which shall comply with the European Postal Services Directive and the legislation regarding the competition. The net costs of rendering the Universal Services burdens the provider of the Universal Services regarding the part of providing postal services within the Universal Services, the providers of postal services within the Universal Services and the State Budget.

Article 8 of Law 4053/2012 states that the joint decision of the Ministers of Finance and Infrastructure, Transport and Networks specifies the part of the net cost of the Universal Service burdening State Budget, which is directly attributable to the beneficiary. Taking into account the recommendations issue by the Hellenic Telecommunications and Post Commission (EETT), the same decision defines the way of allocating the net cost burdening the postal service providers. EETT also becomes responsible for collecting and returning the corresponding amounts to the beneficiary.

The Ministry of Infrastructure, Transport and Networks has prepared a joint ministerial draft decision on compensation of the Universal Services provider (ELTA) and, in October 2012, acting together with the Hellenic Republic Asset Development Fund S.A. (TAIPED), disclosed it to the Directorate-General for Competition (DG Comp) of the European Commission. As a result of comments - questions from the European Commission, relevant responses and consultation it was decided to focus on calculating the net cost of Universal Service.

In view of the examples provided by other EU-member countries, regarding which the European Commission has already decided that the compensation of the provider of the Universal Service granted to the respective providers of the Universal Services complies with the EU State Grants Regulations, the company tries to justify the reasoning behind its receivables from the Universal Services.

For these purposes, the Greek State assigned to an independent consultant the preparation of the reporting and methodology calculation model regarding the net cost of the Universal Services. Following


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successive discussions and improvements made in order to meet the demands of the European Commission, on 06/03/2013, the European Commission approved the methodology for calculating the net cost of the Universal Services.

The European Commission, on the basis of its Decision C (2014) 5436, 1/8/2014, as published in the Official Journal of the European Union, has decided not to raise any objection to the compensation granted to ELTA in the form of direct grants from the State Budget to provide the Universal Service under the transitional regime for 2013-2014 or 2013-2015 as the amount of EURO 15 million. At this point, the Ministry of Infrastructure, Transport and Network Ministry's letter of 3/6/2014 to the Ministry of Finance on political acceptance of the proposal of the European Commission (based on a pre-notification, to this draft, JMD (Joint Ministerial Decisions) of Ministry of Infrastructure, Transport and Networks and Finance) to cover the net cost of JM through a Service of General Economic Interest (SGEI) for the period 2013-2014.

Based on the tender procedures, an independent research firm was commissioned to calculate the net universal service cost according to the model of calculation of Law 4053/2012: "The net cost of universal postal service obligations is calculated as the difference between the net cost of the service provider the universal postal service referred to in Article 6 under universal postal service obligations and the operating costs of the same postal universal service provider". The calculation takes into account intangible and commercial benefits of the universal service provider. Based on the model of the above study, the net cost of Universal Service for the period 2013-2017 was estimated at EURO 252.839 k (2017: EURO 78.111 k (including an amount of EURO 23.175 k that pertains to the universal service financing cost for the period 2013-2015), 2016: EURO 46.823 k, 2013-2015: EURO 127.905 k based on as of 845/006/26-03-2018 decision of ΕΕΤΤ (see Note 74).

On 19/4/2017, a “Universal Postal Service Award Agreement” was signed between the Ministry of Digital Policy, Telecommunications and Information and the Hellenic Post. The contract entered into force on 19/4/2015, covers a period of sex years and regulates all the details under which the universal service is provided by the Hellenic Post. It should be noted that until the signing of this contract, equivalent effect had the “Contract of Administration between Hellenic State and Hellenic Post” signed on 8/11/2010 between the Ministry of Infrastructure, Transport and Networks and the Hellenic Post, with effect for a period of 6 years starting from 18/4/2009.

By adopting an amendment to the recent Law 4463/2017 of the Ministry of Digital Policy, Telecommunications & Information on "Measures to reduce the cost of installing high-speed electronic communications - Harmonization of legislation in Directive 2014/61 / EU and other provisions" (Law 4463 / 2017), it is stipulated that the amount of the universal service indemnity for the first three years (2013, 2014 and 2015) will be determined on the recommendation of the competent regulator, the Hellenic Telecommunications and Post Commission (EETT).

Pursuant to article 14 of Law 4463/30 March 2017, paragraph 6 is added to article 8 of Law 4053/2012, which "sets a transition period for the compensation of the universal service for the years 2013, 2014 and 2015. For the transitional period stage, the ELTA submits to EETT the calculation of the net cost of providing universal service for the years 2013, 2014 and 2015 by 30 June 2017. EETT then checks the submitted data and verifies the net cost of provision according to the provisions in force of the universal postal service of the above years at measure. EETT-verified net cost of providing the universal postal service for 2013, 2014 and 2015 may not exceed fifteen (15) million per year and is covered by the State Budget as a Service of General Economic Interest (SGEI) as a whole. The amount is attributable directly to the beneficiary of the USP. By a joint decision of the Ministers of Finance and Digital Policy, Telecommunications and Information, the time and manner of its performance, the necessary supporting documents and any necessary detail shall be determined. The new universal postal service provision contract between the Greek State and the USP will apply retroactively from the expiry date of the previous one, ie from 19 April 2015."

In the beginning of August a Law was introduced, which, by virtue of paragraph 1 of article 39 of Chapter E, amends the fourth subparagraph of paragraph 6 of article 8 of Law 4053/2012, as amended by paragraph 1 of article 14 of Law 4463 / 2017, as follows: "From the EETT verified by EETT net cost for the provision of the universal postal service for the years 2013, 2014 and 2015, the State Budget covers up to fifteen million euros per year as a Service of General Economic Interest (SGEI) ".


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Based on the above, and considering that the Universal Service requirements are directly related to its proper functioning, the Company takes all necessary action with a view to the approval by the competent authorities of the Universal Service Compensation for the year 2016 (submitting in 2017 to EETT the study on the methodology and the net cost of universal service in 2017).

As at 16/4/2018 EETT disclosed to the Hellenic Post its Decision 845/006/26-03-2018 on the "Annual Cost of Universal Postal Service Verification Report 2013, 2014 and 2015" according to which the final verified cost for the provision of universal services for the period 2013-2015 is set at EURO 127.904.956. The total balance of EURO 22.915k for the period 2013-2015 between the amount requested by the Hellenic Post and the amount verified by EETT respectively reduces both - the amount of accumulated receivables for the Universal Service and the Income Statement and Equity of the entity. As at 16/5/2018, the Ministry of Digital Policy, Telecommunications and Information following its decision 7118/2018 approved and proceeded with the disbursement to ELTA of the amount of EURO 22.500k against debts for the Universal Postal Service for the period 2013-2015. As at 12/6/2018, the Ministry of Digital Policy, Telecommunications and Information following its decision 2678/2018 approved and proceeded with the disbursement to ELTA of an additional amount of EURO 22.50k against debts for the Universal Postal Service for the period 2013-2015. As at 29/6/2018, the study on the methodology and the net cost of Universal Service for 2017 was submitted to EETT. It should be noted that the study for 2017 includes, in addition to the net universal service cost of EURO 54.936k, an amount of EURO 23.175k as the cost of financing that had burdened ELTA due to the lack of compensation for the provision of universal postal service of the past years. This amount is calculated on the basis of EETT already approve cost of universal postal services for 2013-2015. Analytical presentation of the Net Cost of Universal Service for 2017 is presented in the following table:

Amounts in thousands €

CategoriesUniversal Services

Non-Universal Services Total

Income 192.408 126.828 319.236 284.921 -34.316Expenses 226.055 106.357 332.412 242.397 -90.015Intangible Benefits 0 0 0 -764 -764Result -33.647 20.471 -13.176 41.760 54.936

Claimant Compensation for Funding Pending Approved Universal Service Cost

23.175

Provision of Universal Service 78.111

TABLE OF UNIVERSAL SERVICES L.4053 / 2012 FY 2017 (Amounts in Euro)

ELTA with Universal Service Obligation

ELTA without Universal Service

Obligation

Net Cost of Universal Service

5.26. Employee Benefits

The Group and the Company Employee Benefits are as follows:

2017 2016 2017 2016Wages, salaries, bonus 152.084 164.275 148.956 161.103Social security expenses (Ι.Κ.Α.) 51.046 54.643 49.925 53.645Similar employee benefits 7.733 4.808 7.656 4.706Total 210.862 223.726 206.536 219.454



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In 2017, the Company deposited to the retiring employees a compensation amount of EURO EURO 7.260 k (2016: EURO 4.352 k), (Note 5.14). The increase in question is due to employees leaving service as arises from the result of implementing the Common Framework Agreement signed between the Management and Employees on July 20, 2017.

The number of headcount on 31/12/2017 and 31/12/2016 for the Group and the Company is as follows:

Amounts in thousand Euro 2017 2016 2017 2016Regular employees 6.345 6.585 6.180 6.418Seasonal employees 284 601 284 601Total 6.629 7.186 6.464 7.019


It is to be noted that the number seasonal time employees is the average of the corresponding annual number and the number of part-time employees that has been calculated as the ratio between of four-hour employment and full-time employment.

5.27. Transactions with Key Executives

Key Executives fees are analysed as follows:

Category Description 1/1-31/12/2017 1/1-31/12/2016 1/1-31/12/2017 1/1-31/12/2016

Salaries 207 182 93 71Cost of social security 44 31 19 13BoD members fees 109 78 56 78Salaries 529 411 268 220Cost of social security/TEA ELTA 141 141 78 68

1.042 842 527 450Total


BoD members

Key Executives

No loans have been granted to the Company Key Executives.

5.28. Contingent Assets – Liabilities

The contingent cases regarding the Company as at December 31, 2017, are analysed as follows:

A. Third parties receivables versus HELLENIC POST S.A.:

The amounts recorded below are presented in absolute numbers.

1. A group of ELTA retired former employees claim court lawsuits regarding the balance in the compensation they received under their withdrawal from ELTA, in compliance with the Law 2112/1920, amounting to EURO 9.435 k. Based on the currently effective legislation, it is estimated that all the lawsuits will be rejected, as they were previously rejected at the First Instance Court. Moreover, two Arbitration decisions have been issued, deeming the issue final.

2. Joint Venture of the companies that undertook the implementation of the project "buildings new automated Sorting Centre of Attica (KDA)” claim an additional consideration of EURO 17.800.000 plus VAT and interest through 15 lawsuits pending at First Instance Court after the referral of the Court of Appeals. These lawsuits are to be heard on 27/09/2018 and 13/12/2018. It is not expected that the lawsuits will be accepted in their entirety.

3. Joint Venture of the companies has filed a lawsuit against ELTA to the Second Instance Court, which was dealt with under labor differences procedures following being postponed for hearing on 10.30.2012, requesting the amount of EURO 171.851,06, pertaining, as the joint venture claims, to the fees for additional services rendered in relation to the contract extension between the Joint Venture and ELTA S.A. The lawsuit was dismissed on procedural grounds in the First Instance Court and was brought back for hearing following being postponed on 12.11.2015 and scheduled, following the lawyers strike, to 03.11.2016, when it was heard and the issue of the decision, favorable to ELTA, is pending.

4. The Societe Anonyme that has undertaken, under the contractual agreement, procurement and installation of computer equipment and software to support ELTA Operating Services as well as provision


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of support and maintenance of the equipment, has filed a lawsuit against ELTA amounting to EURO 1.072.008,53, as the effective balance of the agreed price, on education services. The lawsuit was heard at the Athens Court of Appeal and a decision was made, obliging ELTA to pay the amount of EURO 1.417.980,23. The decision was disclosed to ELTA on 24/07/2017, with the payment claque amounting to EURO EURO 2.378.718,16, inducing the daily interest rates starting from 31/12/2007 as well as the relative court expenses. The appeal was made against the lest decision and the hearing is pending.

5. A former General Manager of ELTA claims an amount of EURO 3.400.000 as his copyright for the use of the Postal Code, which, as he considers (unfounded in our opinion), he had created. The lawsuit had been heard at the First Instance Court of Athens and was rejected. The claimant has filed an appeal against the decision scheduled for hearing on 07/12/2017 at the Athens Court of Appeal and the issue of the new decision, expected to be positive for ELTA, is pending.

6. The company that has undertaken supply of equipment for ELTA Centers, Airport and Athens, as well as technical support - maintenance for six (6) years after the warranty period, filed a lawsuit to the First Instance Court of Athens claiming the amount of EURO 1.179.885 pertaining to non-collected invoices issued for replacement of worn parts and consumables supplied to ELTA during the warranty period. The case has been heard and the decision has been issued. ELTA has made an appeal against this decision that had been scheduled for hearing on 17.11.2016 at Athens Court of Appeal and was rescheduled 08/03/2018. The appeal is expected to be accepted.

7. The company that has undertaken acquisition and construction of the Sorting Centre in Thessaloniki on behalf of K.E.D., to which ELTA had commissioned this project on its account, filed a lawsuit against the Company, pending at the First Instance Court of Thessaloniki, requesting the amount of EURO 400.000. The lawsuit was to be heard on 05.16.2016 and was postponed till 30.10.2017 due to the strike of the lawyers, when it was heard and the decision is pending. No positive outcome is expected.

8. Groups of employees have filed notions ELTA, seeking compensation for non-used days of annual leave in FYs 2010-2013, at 100% surcharges. The amount claimed stands at EURO 993.686. The claims have been scheduled for hearing at First Instance Court of Athens on 24/05/2016, 08/06/2016 and 02/05/2017. The first two claims have been rescheduled for 25/10/2017 and 27/11/2017. The third claim, which was heard on 02/05/2017, pertains to an amount of EURO 17.194,35 and was accepted in its entirety. An appeal was made against the decision and the hearing date at the First Instance Court of Athens has not been defined yet. The claims scheduled to be heard on At the court meting scheduled for 25/10/2017, the claims were [postponed to be heard on 29/01/2019. The claim scheduled for 27/11/2017, was heard and the decision is pending. On 15/04/2018, the claims regarding the amount of EURO 52.573,05 was heard and the decision is pending. Since the issue of leave compensation regarding all the years in question had been regulated by the Common Agreement between the Employees and the Company, and a part of compensation has already been paid in the context of the aforementioned Agreement, it is expected that the claims will be rejected at least as far as half of the required amount is concerned.

9. Groups of employees have filed lawsuits against ELTA to Athens Court of Appeal, claiming compensation for the displacement already made for the period between January 2012 and November 2015. The total amount requested stands at EURO 224,245.11. The lawsuits were heard on 02/03/2018 and 19/03/2018 and a decision is pending. It is expected that they will be accepted to a certain extent given the previous court decisions regarding the similar cases.

10. The company has filed a lawsuit against ELTA and the subsidiary company Tachimetafores ELTA S.A. for the amount of EURO 1.687.713,18, which it claims to be liable jointly and severally for counterfeits for parcels traded through the companies of ELTA Group. This claim is totally vague, unproven and, in particular, the examination, conducted on sample basis by both companies, have proved it to be wrong. For this reason, the plaintiff itself proposed postponing the hearing of the aforementioned lawsuit till 09/03/2017, when it was rescheduled for 14/03/2019. It is to be expected that the particular lawsuit, which does not burden LTA in its entirety, will not be accepted.

B. HELLENIC POST S.A. receivables versus third parties:

1. The National Telecommunications and Post Commission (EETT) imposed files on ELTA for special license fees cumulatively for 2003, 2004 and 2005 amounting to EURO 1.450.889,39. EETT decisions were argued by ELTA and questioned by the State Council. Regarding the duties for 2003, amounting to EURO


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428.250,04, ELTA lawsuit was accepted at the Second Instance Court and the return of the amount was decided on July 15, 2016. Regarding the duties for 2004, ELTA lawsuit was rejected by the Administrative Court of Appeal and ELTA has made an appeal which is likely to be accepted in substance. Regarding the duties for 2005, the Administrative Court and Court of Appeal are in favor of ELTA. By decision of the Council of State, after the appeal of EETT, the case is referred to further hearing at the Administrative Court of Appeal on 03/04/2017, following the second postponement. If ELTA lawsuit is finally accepted, the amounts already paid by ELTA can be recovered from the Commission.

2. ELTA has filed a lawsuit against its former employee and his spouse regarding recovery of loss from his cash deposits with the Bank of Crete and return of benefit gained from these deposits, which stand at approximately EURO 733.675,72. A decision awarding the amount of EURO 699.652,01 to ELTA was issued under num. 5465/2007 by Athens Court of Appeal. This decision has challenged by the defendants who appealed to the Supreme Court, and the case was referred for retrial to the Court of Appeal. The appeal was rejected and, thereby, challenged by the defendants and scheduled for hearing 10/12/2015 and the relative decision was issued, rejecting the appeal. Thus, the decision in favor of ELTA is final and all the legal means are going to be used to facilitate collecting the receivables.

3. ELTA has filed a lawsuit to the Administrative Court of Athens against the Greek State for the amount of EURO 6.509.508,16 owed to ELTA by the defendant for postage charges. The lawsuit was adjudicated on 28/04/2015 and a decision was made to transfer the case to the Administrative First Instance Court, where the case is pending for hearing. The lawsuit is expected to be accepted, given that the project had been implemented and delivered to the contracting authority.

4. ELTA has filed a lawsuit to the Administrative Court of Athens against the Greek State and the General Secretariat of Media and Communications (G.G.M.E.) for the amount of EURO 7.308.941,83, owed to ELTA from November 2013 till August 2015 by the defendants jointly and severally for postage charges related to the dispatch of specific forms made by ELTA through their network, which (the forms) in accordance with the legislation, are funded by the G.G.M.E. and, therefore, by the Greek State. The aforementioned debtors have recognised their debts in respect of an amount of EURO 6.606.132,94, which was collected. Apart from the aforementioned amount, there is another pending debt, standing at EURO 1.869,711,06, of the same origin as the previously mentioned one, through referring to a subsequent period. The second amount will also be paid, since the debtors have recognized their debts.

5. ELTA has filed claims against its former Agents and Employees in respect of the amounts defrauded by them during their employment and collaborations. As far as the amounts in question are concerned, colleting the amount of EURO 373.426,54 is considered certain.

6. ELTA has filed a lawsuit against the Joint Venture for the amount of EURO 949.233,31, accruing interest as from 31/05/2005, seeking the payment of this amount for the defects in the project undertaken by the company, as mentioned in B.2. case. The lawsuit is to be heard in the First Instance Court of Athens on 27/09/2018 and is expected to be accepted.

C. Third parties receivables versus Tachimetafores ELTA S.A. (ELTA Courier)

The lawsuit against the company as of 27.7.2007 αfor the amount of EURO 301.599 was heard on 25/1/2012, while a relative claim was also made by Tachimetafores ELTA S.A. (ELTA Courier) for EURO 79.937. Under the preliminary decision, an expert has been appointed. The result of the trial is questionable and therefore, no relative provision was made in the financial statements of Tachimetafores ELTA S.A.

D. Tachimetafores ELTA S.A. (ELTA Courier) receivables versus third parties

Regarding Tachimetafores ELTA S.A. (ELTA Courier) claim for an amount of EURO 601 k from a public body was rejected by Athens Court of Appeal, while initially it had been accepted and was based on invoices and 2 contractual agreements. The reasoning was that the aforementioned agreements were irregular, since no organizational procedure defined by the Greek State was followed. Currently, a lawsuit regarding unjust enrichment is being prepared and expected to be accepted regarding the total of the amount.


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5.29. Guarantees

The guarantees granted at the Group and the Company levels are analysed as follows:


Guarantees provided in favor of third parties 1.196 1.111 147 147

Letters of guarantee for participation in tenders 6 6 6 6Bank letters of guarantee 9 11 - -Good performance letters of guarantee 6.667 8.602 4.596 6.816Total 7.878 9.730 4.749 6.969


6. Risk Management Objectives and Policies

The Group is exposed to financial risks such as fluctuations in exchange rates, interest rates, credit risk, liquidity risk and fair value interest rate risk. The Group's overall risk management program focuses on unpredictability of financial markets and seeks to minimize potential adverse effects on the financial performance of the Group. The Group's financial instruments are composed of bank deposits, short-term financial products of high liquidity traded at Stock Exchange, trade receivables and payables, investments in securities, dividends collectible, assets and liabilities from leases.

6.1. Currency Risk

The Group operates at the global level and, therefore, is exposed to foreign exchange risk arising primarily from changes in the Special Drawing Right (SDR). SDR is an international unit of account (not currency) which was created by the International Monetary Fund (IMF) in 1969 to support the Bretton Woods exchange rate system. Currently, SDR is used only as a unit of account of the IMF and other international organizations, between them and the International Postal Union. SDR is a kind of a “basket” for five currencies (euro, dollar, pound, yen, yuan). The percentage of each currency in the mix is determined every five years by the IMF in order to reflect the relative importance of these currencies in international trade and economy. As from October 1, 2016, SDR «basket” also includes Chinese Yuan Renminbi (RMB). Every participating currency exchange rates were determined as follows: Dollar 41.73% Euro 30.93%, RMB 10,92%, Yen 8,33% and GBP 8,09%. The rate of SDR to official currencies of all the countries is announced daily in the International Monetary Fund official website (www.imf.org). The balances between ELTA and the Post Services of the countries outside the Eurozone, such as estimates of receivables or payables, are settled under SDR. The corresponding collections or payments are made in the currency of every country after the conversion that uses SDR as the exchange rate of the day the transaction. The exchange rate risk of this type arises from SDR rates versus Euro and is partly offset by corresponding obligations of the same unit of account. The Group's exposure to foreign exchange risk varies during the year depending on the volume of transactions in SDR. This risk is not assessed as significant. No financial assets are kept in monetary assets other than Euro.

6.2. Interest rate risk sensitivity analysis

The Group operating income and cash flows do not depend dependent of changes in market interest rates. The Group manages significant amounts and the income arising from financing activities is significant. The


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Group has significant interest bearing items and the obligation to repay short-term debt is also interest-bearing. As at 31 December, 2017, the Group has no interest rate swaps.

6.3. Credit Risk Analysis

The Group's exposure to credit risk is limited to financial assets (instruments). The Group has no significant concentrations of credit risk. A substantial part of the Group sales are carried out in cash, while sales on credit basis are mainly performed with the Greek State, utilities, banks and customers with high credit ranking. Credit assessments are performed for all the clients requiring credit beyond a certain amount. The Company does not require collateral on clients’ assets. Investments are made only in directly liquid securities and only with counterparties, whose credit rating is the same or better than that of the Company. The Group closely monitors its receivables, either individually or by group, and incorporates this information in credit controls. The Group's policy is to collaborate only with reputable clients. The Group Management considers that all the above financial assets that are not impaired as at the previous reporting date of the financial statements are of high credit quality, including the amounts due. None of the financial assets of the Group are secured by mortgage or other form of credit insurance.

6.4. Fair Value Hierarchy

The Company has adopted amended IFRS 7 "Financial Instruments: Disclosures". The revised Standard requires additional disclosures about fair value of financial instruments and liquidity risk. In particular, according to this modification, the items of every category of financial instruments in the Statement of Financial Position, measured at fair value, shall, for disclosure purposes, be classified into the following three levels, depending on the quality of the inputs used to estimate of their fair value:

- Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities,

- Level 2 – Inputs, other than quoted prices, are included in level 1 that are observable for the asset or liability directly or indirectly.

- Level 3 – Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The Company financial instruments measured at fair value are classified into the following three levels:

Level 1 Level 2 Level 3 Financial assets at fair value - - -Financial assets available for sale 510 20 -

Level 1 Level 2 Level 3 Financial assets at fair value - - -Financial assets available for sale 3.846 9 -

Amounts in thousand Euro 2016

Amounts in thousand Euro 2017


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6.5. Liquidity Risk Analysis

The Group manages its liquidity needs by carefully monitoring the long-term financial liabilities as well as the daily payments. Liquidity needs are monitored in various time periods, on a daily and weekly basis and on a rolling 30-day period. Maturity of financial liabilities as at December 31, 2017, regarding the Group, is analysed as follows:

Under 6 months 6 to 12 months 1 to 5 years Over 5 years Bank loans 15.015 - - -Trade liabilities 14.457 42 - -Other liabilities 208.966 2.057 22 990Total 238.438 2.098 22 990

THE GROUP

Amounts in thousand Euro Short-term Long-term

The respective maturity of financial liabilities as at December 31, 2016, regarding the Group, is analysed as follows:

Under 6 months 6 to 12 months 1 to 5 years Over 5 years Bank loans 15.139 - - -Trade liabilities 9.931 18 - -Other liabilities 175.718 2.009 22 1.078Total 200.788 2.027 22 1.078

THE GROUP


Maturity of financial liabilities as at December 31, 2017, regarding the Company, is analysed as follows:

Under 6 months 6 to 12 months 1 to 5 years Over 5 years Bank loans 11.674 - - -Trade liabilities 8.890 - - -Other liabilities 205.378 - 22 -Total 225.942 - 22 -

THE COMPANY


Maturity of financial liabilities as at December 31, 2016, regarding the Company, is analysed as follows:

Under 6 months 6 to 12 months 1 to 5 years Over 5 years Bank loans 11.794 - - -Trade liabilities 7.149 - - -Other liabilities 173.318 - 22 -Total 192.260 - 22 -

THE COMPANY


The above contractual maturity dates reflect the gross cash flows, which may differ from the accounting value of liabilities as at the Financial Position date.

7. Equity Management Policies and Procedures

The Group objectives in respect of equity management can be summarized as follows:

Ensure the Group ability regarding the going-concern principle, and

Ensure a satisfactory return for its shareholders,


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pricing the products and services in proportion to the risk level.

The Group capital for FYs 2017 and 2016 is analysed as follows:


Loans & Obligations to Third Parties 280.796 238.237

less: the Group cash and cash equivalents 47.545 55.613

Net Liability 233.251 182.624

Plus: Equity 4.287 17.998

Total Equity & Net Liability 237.538 200.621

Leverage Ratio 98% 91%

The Group defines the amount of capital in relation to the total capital structure, eg equity and financial liabilities. The Group manages its capital structure and makes adjustments when the financial position and risk profile of the existing assets have changed. In order to maintain or adjust the capital structure, the Group may adjust the amount of payments, issue share capital or sell assets in order to decrease its liabilities.

Given the fact that the Group uses the third parties cash available, it has low bank borrowings. For this reason, third parties borrowing obligations are added to Loans. The remaining amount of EURO 280.787 k includes bank loan of EURO 132.224 k (2016: EURO 131.993 k.). The balance of EURO 148.563 k (2016: EURO 106.244 k) pertains to amounts to third parties.

8. Post Statement of Financial Position Date Events

As at 1/1/2018 (according to Law 4389/2016 as currently effective following the amendments to Law 4512/2018) the Hellenic State's participation in ELTA was transferred to the Hellenic Corporation of Assets and Participations S.A. (HCAP).

As at 16/4/2018, EETT disclosed to the Hellenic Post its Decision 845/006/26-03-2018 on the "Annual Cost of Universal Postal Service Verification Report 2013, 2014 and 2015" according to which the final verified cost for the provision of universal services for the period 2013-2015 is set at EURO 127.904.956.

The following events took place during the period April - May 2018: i) reverse split of the common shares of Attica Bank and decrease in the nominal value of common share; and ii) increase in the share capital of the Bank through cash payment and preference rights of the old shareholders. Hellenic Post did not participate in the share capital increase, while after the reverse split the financial position of ELTA in Attica Bank stood at 705,218 common shares.

As at 16/5/2018, the Ministry of Digital Policy, Telecommunications and Information following its decision as of 7118/2018 approved and proceeded with the disbursement to ELTA of the amount of EURO 22.500 k against debts for the Universal Postal Service for the period 2013-2015.

As at 12/6/2018, the Ministry of Digital Policy, Telecommunications and Information following its decision as of 8678/2018 approved and proceeded with the disbursement to ELTA of an additional amount of EURO 22.500 k against debts for the Universal Postal Service for the period 2013-2015. The above amounts were used to reduce the liabilities from the courier amounts collected.

As at 29/6/2018, the study on the methodology and the net cost of Universal Service for the year 2017 was submitted to EETT. It should be noted that the study for 2017 includes, in addition to the net universal service cost of EURO 54.936 and an amount amounting to EURO 23.175 k as the cost of financing that burdened ELTA due to the lack of compensation for the provision of universal postal service of the past years.

Apart from the above, there are no other events that may have a significant impact on the financial position or operation of the Group or the Company. It is certified that the Annual Financial Statements for the period 1/1-31/12/2017 are those approved by the Board of Directors of HELLENIC POST S.A. as at July 12, 2018.


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THE DESIGNEES

The Chairman of the BoD

The Chief Executive Officer

Euphrosyne Stavraki Ioannis Zaroliagkis ID Num.: Χ 068788 ID Num.: ΑΜ 064974

The Chief Financial Officer

The Chief Accountant

Dimitrios Stergiou Athanasia Anifantaki ID Num.: ΑK 647899 First Class License Num. 0071630

annual financial statements for fy 2017 in … ifrs notes ____ 31122017.pdfinternational financial...

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