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PUBLIC POWER CORPORATION S.A. Annual Report 22011011 June 2012 ANNUAL REPORT 2011 01.01 - 31.12.2011 ATHENS, JUNE 2012 2011 Annual Report TABLE OF CONTENTS ΠΙΝΑΚΑΣ ΠΕΡΙΕΧΟΜΕΝΩΝ PART Α’ Page 1. Selected Financial & Operating Data 6 2. Company Information 9 3. Organizational Structure, Management - Corporate Governance, Employees 13 4. Share Capital - Dividend 15 5. Associates and Subsidiaries 17 PART Β’ 1. Annual Financial Report 21 - Statement of Members of the Board of Directors 23 - Executive Summary of the Board of Directors 25 - Consolidated and Separate Financial Statements 83 - Notes to the Financial Statements 99 - Appendix Ι - Unbundled Financial Statements 187 - Notes to the Unbundled Financial Statements 208 2. Distribution of Profits for the Year 2011 213 3. Condensed Financial Data and Information for the Year 01.01.2011 - 31.12.2011 215 4. Related Parties Transactions 227 5. Announcements to the ASE 2011 229 2011 Annual Report PART Α’ ΠΙΝΑΚΑΣ ΠΕΡΙΕΧΟΜΕΝΩΝ PUBLIC POWER CORPORATION S.A. Annual Report 2011 1. SELECTED FINANCIAL AND OPERATING DATA Summary Financials (Euro million) GROUP Δ% 2011 2010 Total Revenues 5,513.6 5,809.8 -5.1% EBITDA 769.4 1,497.7 -48.6% EBITDA Margin 14.0% 25.8% Profit/(Loss) before Taxes & 122.5 871.3 -85.9% Fin. Expenses (EBIT) EBIT Margin 2.2% 15.0% Net Income/(Loss) (148.9) 557.9 -126.7% EPS/(Loss) (In euro) (0.64) 2.40 -126.7% No of Shares (m.) 232 232 Net Debt 4,702.7 4,210.3 11.7% Summary Balance Sheet & Capex (Euro million) GROUP Δ% 2011 2010 Total Assets 16,644.8 16,200.4 2.7% Net Debt 4,702.7 4,210.3 11.7% Total Equity 6,448.7 6,769.5 -4.7% Capital expenditure 1,107.6 962.7 15.1% 6 PUBLIC POWER CORPORATION S.A. Annual Report 2011 PART Α΄- SELECTED FINANCIAL AND OPERATING DATA PARENT COMPANY Δ% 2011 2010 5,180.3 5,519.4 -6.1% 523.3 1,310.1 -60.1% 10.1% 23.7% (63.7) 744.9 -108.6% -1.2% 13.5% (272.9) 546.5 -149.9% (1.18) 2.36 -149.9% 232 232 4.355,7 4.213,2 3,4% PARENT COMPANY Δ% 2011 2010 15,455.8 16,171.2 -4.4% 4,355.7 4,213.2 3.4% 6,300.0 6,746.3 -6.6% 1,002.3 839.3 19.4% 7 2011 Annual Report PUBLIC POWER CORPORATION S.A. Annual Report 2011 PART Α΄- COMPANY INFORMATION 2. COMPANY INFORMATION 2.1 General Information PPC 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. 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 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.” 9 PUBLIC POWER CORPORATION S.A. Annual Report 2011 In accordance with the classification of the Hellenic Statistical Authority (EL.STAT - STAKOD 08), the economic activity of PPC S.A. comes under: Branch of Economic Activity (STAKOD 08) Total revenues 1.1.2011 - 31.12.2011 «Generation, transmission and distribution € 5,513.6 million of electric energy», 35.1 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 2001, following an increase of share capital and an offering of existing shares held by the Hellenic Republic, PPC’s shares were listed on the Athens Exchange. In parallel, GDRs were admitted to London Stock Exchange. The Hellenic Republic further reduced its stake in PPC through secondary offerings in December 2002 and October 2003 and now holds 51.12% of the company’s share capital. 2.3 Overview of Company’s activities PPC S.A. is Greece’s largest electricity generator and supplier, providing electricity to approximately 7.5 million customers. PPC currently holds assets in lignite mines, power generation, transmission and distribution. PPC’s current power portfolio consists of conventional thermal and hydroelectric power plants, as well as RES units, accounting for approximately 70% of the total installed capacity in the country. PPC is active in the RES sector through its subsidiary company “PPC Renewables S.A.”, with a portfolio of 22 wind farms, 12 small scale hydroelectric plants and 12 photovoltaic units of total installed capacity of 132 MW (also including 9 plants in which PPC Renewables participates through joint ventures). 10 PUBLIC POWER CORPORATION S.A. Annual Report 2011 PART Α΄- COMPANY INFORMATION Most of the country’s electricity is generated at power plants in Northern Greece, in close proximity to the majority of the lignite mines, which is the primary fuel source. Some of the islands, in close proximity to the mainland, such as the Ionian islands and certain Aegean islands, are connected to the mainland transmission system through submarine cables (“the Interconnected System”). The remaining islands, which are referred to as “the non-interconnected islands”, are served by autonomous generating power plants (oil-fired). In some of the islands, demand is also covered by RES facilities. The largest power plants in the non-interconnected islands are in Crete and Rhodes (with total thermal capacity exceeding 1000 MW). In 2011, PPC’s electricity generation including electricity imports, covered 70.1% of total demand. In addition, the Company imported 1.8 TWh in order to cover the needs of its customers. After the spin-off of the Transmission and Distribution segments, two 100% subsidiaries of PPC were created, namely IPTO S.A. (Independent Power Transmission Operator S.A.) and HEDNO S.A. (Hellenic Electricity Distribution Network Operator S.A.). IPTO S.A. is responsible for the management, operation, maintenance and development of the Hellenic Electricity Transmission System and its interconnections, while HEDNO S.A. is responsible for the management, operation, development and maintenance of the Hellenic Electricity Distribution Network.