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ANNUAL REPORT FINANCE DIVISION 2010 30, Chalkokondili Str., GR 104 32 Athens, Tel. +30 210 5230301, Fax +30 210 5234379, www.dei.gr ANNNUAL REPORT 2010 JUNE 2011 ANNUAL REPORT JANUARY 1, 2010 - DECEMBER 31, 2010 TABLE OF CONTENTS 3.5. New standards and 33. Deferred customers’ PART Α interpretations issued but not contributions and yet effective ......................131 subsidies ............................171 4. Revenues ...........................134 34. Other non – current liabilities ............................171 1. Selected financial and 5. Payroll cost ........................135 35. Trade and other operating data ����������������������������9 6. Energy purchases ..............135 payables ............................172 7. Distribution 2. Company information ��������������11 36. Short-term borrowings ....172 network fees .....................136 37. Accrued and other current 3. Organizational structure, 8. Depreciation and liabilities ............................173 management, employees ��������17 amortization .....................136 38. Commitments, contingencies 9. Financial expenses ............137 4. Share capital – dividend �����������21 and litigation ....................174 10. Financial income ...............137 39. Financial risk 5. Associates and subsidiaries ������22 11. Other (income) expense, management ....................191 net .....................................138 40. Operating lease 12. Transmission - distribution arrangements ...................195 spin off ..............................138 41. Subsequent events ...........195 PART Β 13. Income taxes (current and deferred)............................140 APPENDIX I Unbundled financial 14. Tangible assets ..................144 statements ....................................197 A 15. Intangible assets, net .......150 Notes to the unbundled financial 16. Investments in statements ....................................216 subsidiaries ........................151 1. General information ............216 Annual financial report .................. 27 17. Investments in joint 2. Accounting unbundling ventures ............................153 methodology .......................216 B 18. Investments in associates ......................153 C 19. Balances and transactions Consolidated and separate with related parties ..........156 financial statments ........................ 93 20. Materials, spare parts and Distribution of profits Notes to the Financial Statements supplies, net ......................160 for the year 2010 .........................227 according to International Financial 21. Trade receivables, net .......160 Reporting Standards as endorsed by 22. Other receivables, net ......162 the European Union. D December 31, 2010 ......................111 23. Investments available for sale ...............................163 1. Corporate information ........111 Condensed financial data and 24. Cash and cash information for the year 2. Legal framework ..................112 equivalents ........................164 1.1.2010-31.12.2010 ...................231 3. Basis of preparation and principal accounting 25. Share capital .....................164 policies ..................................118 26. Legal reserve .....................164 E 3.1. Basis of preparation .........118 27. Other reserves...................165 3.2. Changes in accounting 28. Dividends ..........................165 Related parties transactions ........245 policies ...............................119 29. Interest bearing loans and 3.3. Significant accounting borrowings ........................166 F judgments and 30. Financial instruments .......168 estimates ...........................120 31. Post retirement benefits .. 168 3.4. Principal accounting Announcements policies ..............................121 32. Provisions ..........................170 to the ASE 2010 ...........................249 PART Α 9 1. Selected financial and operating data Summary Financials (Euro million) GROUP PARENT COMPANY 2010 2009 Δ% 2010 2009 Δ% Total Revenues 5,811.4 6,030.4 -3.6% 5,793.7 6,017.1 -3.7% EBITDA 1,497.7 1,677.5 -10.7% 1,483.2 1,668.1 -11.1% EBITDA Margin 25.8% 27.8% 25.6% 27.7% Profit/(Loss) before Taxes & Fin. 871.3 1,136.1 -23.3% 861.1 1,131.8 -23.9% Expenses (EBIT) EBIT Margin 15.0% 18.8% 14.9% 18.8% Net Income/(Loss) 557.9 693.3 -19.5% 546.5 690.7 -20.9% EPS/(Loss) (In 2.40 2.99 -19.7% 2.36 2.98 -20.8% euro) No of Shares (m.) 232 232 232 232 Net Debt 4,210.3 4,056.3 3.8% 4,213.2 4,064.6 3.7% Summary Balance Sheet & Capex (Euro million) GROUP PARENT COMPANY 2010 2009 Δ% 2010 2009 Δ% Total Assets 16,200.4 15,784.2 2.6% 16,171.2 15,768.9 2.6% Net Debt 4,210.3 4,056.3 3.8% 4,213.2 4,064.6 3.7% Total Equity 6,769.5 6,461.3 4.8% 6,746.3 6,449.2 4.6% Capital 962.7 1,103.6 -12.8% 928.1 1,088.3 -14.7% expenditure Selected financial and operating data 11 2. Company information 2.1 General Information PC was incorporated as a Societe Anonyme on 1st January 2001, under the Liberalisation Law (2773/1999). Until January 2001 PPC was wholly owned by the Hellenic Republic. P The corporate seat is in the Municipality of Athens, Greece. PPC’s executive offices are at 30 Chalkokondyli Street, 104 32 Athens, Greece. In accordance with article 3 of the Articles of Incorporation, currently the object of the Company is: a) the engagement in commercial and industrial activities in the energy sector, in Greece and abroad. These activities shall include, but not be limited to: • the study, supervision, construction, exploitation, maintenance and operation of power plants, as well as, of transmission and distribution networks, • the supply and sale of electricity, • the extraction, production and supply of energy raw materials, • the assignment to third parties, by virtue of contract, of any activity similar to those set forth herein above. b) the engagement in commercial and industrial activities in the telecommunications sector, the provision of services to third parties related to Projects study, management and supervision issues, the provision of services to third-party Companies on organization and information technology issues, as well as the exploitation of all kinds of assets held by the company. c) the establishment of companies, the participation in joint ventures, as well as, the acquisition of shares of other companies, Greek or foreign, and, in general, the participation in enterprises pursuing aims similar to those under (a) and (b) of this paragraph or, the activities of which (enterprises) are directly or indirectly related to the objective of the company or which have as objective the profitable use of the movable or immovable assets of the company and the exploitation of its resources. In order to attain the objectives referred to in the preceding paragraph, PPC S.A. may, in particular, a) conclude any kind of contracts or agreements with domestic or foreign natural or legal persons and inter- state organizations, b) participate in the capital of existing companies or in the capital of companies to be Company Information established in the future, grant loans to the said companies and furnish guarantees in their favor, c) issue any bonded loans of any nature whatsoever and participate in the share capital of companies to which the company has granted loans through the conversion or not of the bonds of the aforesaid loans into shares. The company may engage in any other action or activity in order to fulfill its objectives within the scope of the Articles of Incorporation hereof and of the standing provisions, in any commercial or other activity and perform any material or legal act, directly or indirectly connected with its objectives. The Company has secured the trademark No. 160076 “Public Power Corporation Societe Anonyme” and “P.P.C. S.A.” In accordance with the classification of the Hellenic Statistical Authority (EL.STAT) (STAKOD 03), the economic activity of PPC S.A. comes under: Branch of Economic Activity (STAKOD 08) Total revenues 1.1.2010 – 31.12.2010 «Generation, transmission and distribution of € 5,811.4 million electric energy», 35.1 Annual Report 2010 13 2.2 Historical background PPC was established in 1950 having as purpose to generate, transmit and distribute electricity throughout the Greek territory. Prior to the establishment of PPC, the right to generate, transmit and distribute electricity had been assigned by the Greek Government to private and municipal companies. PPC started its operation in 1953 by generating and selling electric energy to the abovementioned private and municipal companies. During the period 1957-1963, the Company bought out the above electric companies, including the Electric Company of Athens-Piraeus Ltd, which used to service the largest urban area of Greece and was generating a significant percentage of the total electricity consumed in the Greek market. The Laws 1559 and 2244 which were enacted in the years 1985 and 1994 respectively, provided for a relevant exception from PPC’s exclusive right in electricity generation mainly in order to give the right to industrial companies to generate electricity for their own use. Moreover, the said legislation allowed individuals to generate electricity from renewable sources and cogeneration exclusively for commercial use. By virtue of Law 2773/1999 concerning the liberalization of the electricity market and pursuant to the PD 333/2000, PPC, as of January 1st 2001, was converted into a societe anonyme wholly owned by the Greek State having as main purpose the generation and supply of electric energy. In December