NEMESIS S.A. Annual Report 2007 Design - Production: 2007 2007

12A Irodou Attikou str., Annual Report Maroussi 151 24, Athens - GREECE Tel.: (+30) 210 809 4000, Fax: (+30) 210 809 4444 www.moh.gr

CMYK CORINTH REFINERIES S.A.

Annual Report 2007

TableTable of of contents contents

1 INFORMATION CONCERNING THIS ANNUAL REPORT AND THE COMPANY AUDITORS...... 6

2 SHAREHOLDERS’ RIGHTS ...... 8

2.1 General Information ...... 8

2.2 Dividend Taxation...... 9

3 MARKET INFORMATION AND STRUCTURE ...... 10

3.1 Structure of the Oil Refining Market in Greece ...... 10

3.2 Regulatory Framework ...... 11

3.3 Recent Developments in the International Oil Market ...... 14

4 COMPANY PROFILE ...... 15

4.1 General Information ...... 15

4.2 Background ...... 17

4.3 Company Activity - Fixed Assets ...... 19

4.4 Sales & Distribution Network – Customer Service ...... 20

4.5 Share Capital – Shareholder Structure ...... 20

4.6 Company Administration & Management ...... 21

4.7 Organization Chart...... 22

4.8 Personnel ...... 23

4.9 Capital Expenditure ...... 24

4.10 MOTOR OIL and Society ...... 27

5 PERFORMANCE REVIEW ...... 33

5.1 Company Activities ...... 33

5.2 Company Turnover and Earnings Review 2005 – 2007 ...... 36

5.3 Company Balance Sheet Review 2005 – 2007 ...... 40

5.4 Company Key Financial Ratios ...... 44

5.5 Company Cash Flow Statements ...... 45

5.6 Share Performance ...... 46

5.7 Consolidated Financial Statements ...... 47

❚ 4 ❚ annual report 6 AFFILIATED COMPANIES...... 55

6.1 Subsidiaries (direct participation) ...... 55

6.2 Subsidiaries (indirect participation)...... 56

6.3 Companies included in the Consolidated Financial Statements ...... 56

6.4 Related Companies...... 58

6.5 Other Subsidiaries ...... 59

6.6 BoD Report on Inter-company Transactions according to Corporate Governance Law 3016/2002 ...... 59

7 FUTURE PROSPECTS...... 60

7.1 Goals & Strategy ...... 60

7.2 Prospects ...... 61

8 DIVIDEND POLICY...... 63

9 APPENDIX ...... 65

Invitation to the Annual General Shareholders’ Meeting of May 29th, 2008 ...... 67

MOTOR OIL 2007 Published Figures and Information (Parent Company and Consolidated) ...... 68

MOTOR OIL 2007 Financial Statements (Parent Company and Consolidated) – Report of the Auditors ...... 70

Directors Report on MOTOR OIL 2007 (Parent Company and Consolidated) Financial Statements ...... 118

Law 3401/2005 Information Bulletin with year 2007 Company announcements ...... 134

annual report ❚ 5 ❚ 1. Information concerning this annual report and the company auditors

This Annual Report contains all the information and financial data needed for a proper assessment of the assets, the activities, the financial position, the profitability and the prospects of the Company "MOTOR OIL (HELLAS) CORINTH REFINERIES S.A" (henceforth called the "Company" or "MOTOR OIL"), on the part of the investors and their investment consultants.

Investors interested in additional information may inquire during working days and hours with Messrs. Spyros Balezos (Investor Relations Officer), Philip Malergos (Financial Controller) and Ioannis Dimakis (Corporate Announcements Officer and Shareholders’ Office Head) at the Company Headquarters, 12A Irodou Attikou str., Maroussi 151 24, (tel. ++ 30 210 8094194).

This Annual Report was compiled and distributed in accordance with the Hellenic Capital Market Commission decision 7/372/15.02.2006 as it is in force.

The following persons are responsible for the preparation of this Annual Report and the accuracy of the data contained herein:

◗ Petros Tzannetakis, Deputy Managing Director – Chief Financial Officer, 12A Irodou Attikou str., Maroussi 151 24, (tel. ++ 30 210 8094162).

◗ Spyros Balezos, Investor Relations Officer - Banking and Investments Manager, 12A Irodou Attikou str., Maroussi 151 24, (tel. ++ 30 210 8094169).

The Company’s Board of Directors declares that all its Members have reviewed the content of this Annual Report and jointly with its authors confirm that:

◗ All information and data contained in the Annual Report are complete, true, correct and accurate.

◗ There are no other data, neither have any events occurred, the concealment or omission of which might render the totality or part of the data and information contained in this Annual Report misleading.

◗ There are no legal disputes pending against the Company or the companies in which the Company has a controlling interest that might have serious consequences on its financial position.

❚ 6 ❚ annual report CORINTH REFINERIES S.A.

MOTOR OIL FINANCIAL STATEMENTS (PARENT COMPANY AND CONSOLIDATED), CERTIFIED PUBLIC ACCOUNTANTS, TAX AUDIT.

The Company is audited by Certified Public Accountants. The regular audit of the yearly financial statements (Parent Company and Consolidated) of the Company for 2005, 2006 and 2007 was carried out by the Auditing Firm DELOITTE, 250-254 Kifissias Avenue, Chalandri, tel. ++ 30 210 6781100 (Certified Public Accountant in charge Mr. George Cambanis Reg. No. ICPA (GR) 10761). The Auditor’s Report for the 2007 annual financial statements of the Company is with unqualified opinion with the exception of a matter of emphasis concerning note no. 29, regarding the current tax position of the Company and of the Group relating to its fiscal years not yet audited by the tax authorities, which has as follows: "The Company has not been subject to a tax audit for the years 2005 up to 2007. AVIN OIL S.A. has not been audited by the tax authorities for the years 2006 and 2007. OLYMPIC FUEL COMPANY S.A. has not been subject to a tax audit for the years from 2001 up to 2007 and a tax audit is currently in progress for the fiscal years 2001 up to 2006. HAFCO S.A. and KORINTHOS POWER S.A have not been audited by the tax authorities since their establishment (2002 and 2005 respectively)". The outcome of the tax audits cannot be estimated at present and, consequently, no provision has been made in the financial statements in relation to this issue.

Apart from the parent Company "MOTOR OIL (HELLAS) S.A.", the consolidated financial statements include under the "full consolidation" method the wholly owned subsidiaries "AVIN OIL S.A." and "MAKREON S.A." and under the "net equity" method the companies "OLYMPIC FUEL COMPANY S.A." (direct and indirect participation 28%), "HAFCO S.A." (indirect participation 50%) and "KORINTHOS POWER S.A." (direct participation 30%).

It is clarified that at the time of the preparation of the year 2007 consolidated financial statements of the Company, no audited financial statements were available for "OLYMPIC FUEL COMPANY S.A.", "HAFCO S.A.", "KORINTHOS POWER S.A." and "MAKREON S.A.". The contribution of the earnings of these four companies in the consolidated earnings after tax and after minorities of "MOTOR OIL (HELLAS) S.A." for the fiscal year 2007 is negligible.

A brief presentation of the companies included in the Consolidated Financial Statements of "MOTOR OIL (HELLAS) S.A." is available in Chapter 6 of this Annual Report.

An analysis of "MOTOR OIL (HELLAS) S.A." Financial Statements (Parent Company and Consolidated) for the fiscal years 2005, 2006 and 2007 is available in Chapter 5 "PERFORMANCE REVIEW". The Earnings Per Share (EPS) figures (Parent Company and Consolidated) based on the number of shares at year end as well as on the weighted number of shares according to IAS no. 33 "EPS" are also available in Chapter 5.

The published figures and information for the fiscal year 2007, the Financial Statements for the fiscal year 2007, the Report of the Auditor as well as the Report of the Board of Directors are presented in the Appendix of this Annual Report. The financial figures and information along with the interim financial statements as of 31.3.2007, 30.6.2007 (audited) and 30.9.2007, are available at the Company’s site at the electronic address www.moh.gr.

annual report ❚ 7 ❚ 2. SHAREHOLDERS’ RIGHTS

2.1. General

The last share capital increase in cash of the Company was effected in the context of its listing on the Athens Exchange (ATHEX) in 2001 with the issue of 5,275,380 new common registered shares through an Initial Public Offering at the price of € 10.30 per share. In addition, based on the December 19th, 2001 approval by the General Assembly of Company Shareholders and ruling K2-17690/14.1.2002 of the Ministry of Development the nominal value of its shares increased to € 0.30 each. As a result, the Company’s current Share Capital amounts to € 33,234,894 divided into 110,782,980 common registered shares.

Each Company share incorporates all the rights and obligations specified by Codified Law 2190/1920 and the Company Codified Memorandum and Articles of Association. Possession of a Company Share automatically denotes acceptance, on the part of its owner, of the Company Codified Memorandum and Articles of Association and of the lawful decisions of the General Assembly.

Company shares do not incorporate any special privileges of any sort and the Company has not issued any ownership stock or shares participating in earnings, neither any common or preference founders’ shares.

Shareholders’ responsibility is limited to the nominal value of the shares they own. Each share entitles its owner to a right on the Company’s property and proportionate participation in Company’s earnings in accordance with the Law and the Company Codified Memorandum and Articles of Association. The rights and obligations that accompany each share are transferred to every universal or special shareholder successor.

Shareholders exercise their rights in relation to Company management only through the General Assemblies.

Shareholders have a right in every future share capital increase of the Company, proportionally to their shareholding prior to the increase, as prescribed in article 13, paragraph 5 of the Codified Law 2190/1920.

Creditors of a shareholder and their successors may in no way cause the confiscation or placement of any restriction on the use or disposal of any Company asset or of Company accounting Ledgers, neither may they demand its distribution or its liquidation, nor may they in any way interfere in its administration or management.

Every shareholder regardless of his/her actual place of residence, is considered having his legal address at the Company’s headquarters and is subject to Greek Law with respect to his/her relations to the Company. Any difference or dispute between the Company on the one hand and its shareholders or any third party on the other belongs to the exclusive jurisdiction of the regular courts, while the Company may be sued only before the courts of its domicile.

Each share is indivisible and entitles its owner to the right of one vote. Joint owners of common shares must appoint in writing to the Company their representative who will represent them at the General Assembly of Company Shareholders. In case no common representative is appointed, the rights of joint owners of shares cannot be exercised at a General Assembly.

Every shareholder has the right to participate in a General Assembly either in person or through a fully authorized representative. In order to be able to participate in an Extraordinary or Ordinary General Assembly, a shareholder must block his/her shares with the Securities Dematerialization System (SAT) or the Athens Exchanges S.A (previously Central Securities Depository - CSD) at least five (5) days prior to the date of the General Assembly. Within the same deadline the Company must receive certification of this blocking placed on the shares as well as representation documentation in return for a receipt that is given to the shareholder or representative for his/her admission to the General Assembly. Those who fail to comply with these terms can only be admitted to the General Assembly by permission of the latter.

The shareholders have all those rights deriving from the amended Codified Law 2190/1920.

❚ 8 ❚ annual report CORINTH REFINERIES S.A.

Shareholders entitled to dividend are the ones who appear on the Shareholders’ Registry, which is kept by the Company, on the date the yearly financial statements are approved by the Ordinary General Assembly or on whichever date specified by the Ordinary General Assembly.

The first day of payment of the dividend is within two (2) months following the date of the Ordinary General Assembly that approved the annual financial statements. The place and method of payment is notified to the shareholders through announcements on the daily press.

Dividends not collected within five years since they became payable are written off in favor of the State.

All procedural matters regarding share blocking, so that shareholders may participate in General Assemblies, and dividend payment are provided for by the Regulation of Operation and Clearance of the Securities Dematerialization System of the Hellenic Exchanges S.A (previously Central Securities Depository) as this Regulation is in force.

2.2. Dividend taxation

Under Greek Corporate Law (Law 3296/2004 article 6 paragraph 4), as it is in force, the income tax rate for companies listed on the Athens Exchange (ATHEX) is 25% for the fiscal year 1.1.2007 – 31.12.2007 and is applied on taxable earnings prior to any appropriation. In this way, dividends are paid out from already taxed corporate earnings and, therefore, the shareholder has no further tax obligation on the dividend amount he collects.

The date on which the General Assembly approves the annual Financial Statements is regarded as the one that dividend income is generated.

It must be noted that, under Greek Corporate Law, in case a subsidiary proceeds with a dividend distribution from its earnings, the portion of the dividend attributable to the parent company can only be distributed by the latter to its shareholders during the next fiscal year (unless the parent company decides to distribute an interim dividend during the current fiscal year) and, consequently, this portion of dividend is recorded as income on next fiscal year’ s earnings of the parent company.

That part of parent company earnings accounted for as dividend income received by its subsidiaries can only be distributed to parent company shareholders in the next fiscal year following its collection.

annual report ❚ 9 ❚ 3. Market information and structure

3.1 Structure of the Oil Refining Market in Greece

3.1.1. General

Production of crude oil in Greece is extremely limited. The Prinos reserves at Kavala meet less than 1% of domestic demand and consequently nearly all of the country’s needs in crude oil are met by imports. Once processed in domestic refining units, crude oil is exported or sold in the domestic market.

The structure of the domestic oil market is shown in the following chart:

REFINING FUEL TRADING END CONSUMER

C R – BIG END CUSTOMERS U OIL REFINING – ARMED FORCES D COMPANIES E O EXPORTS I – MOTOR OIL L – HELLENIC PETROLEUM INTERNATIONAL SALES FUEL TRADING – Aviation Fuels COMPANIES – Bunkering Fuels P R EKO O BP DOMESTIC MARKET D U SHELL – Gas Stations C AVIN – Other Retail Sales T OTHERS – Industrial Sales I M P O R T Gas Stations S

❚ 10 ❚ annual report CORINTH REFINERIES S.A. 3.2. Regulatory Framework

3.2.1 General

Fuel production and distribution in Greece takes place within a peculiar regulatory framework. Until the mid-eighties there was significant state intervention. The Greek government set the pricing policy and ruled that petroleum product commercial enterprises could only get their supplies from the two state-owned refineries. Gradually the market was liberalized completely and currently its operation is regulated by the Law 3054/2002 as it has been amended and completed by Law 3335/2005. According to the regulatory framework a legal entity may obtain more than one license of oil refining, fuel trading, retail sales activities/gas stations operation etc. and perform these kinds of activities on condition that the licensee fulfills the requirements, as these are set by the law, for each separate activity.

3.2.2. Oil Refining

The relevant regulatory framework allows oil refining companies freely import and process crude oil and petroleum products from any country on condition that they pay taxes in accordance with European Union directives relating to imports from non European Union Member States.

3.2.3. Fuel Trading

For the Ministry of Development to grant an operating license to a Company, engaged in fuel trading, the latter must fulfill the following requirements: a) the Company share capital must exceed a preset limit, b) the Company must possess its own storage premises or must be entitled to the usage of storage premises the storage capacity of which is dependent upon the type of license the Company has applied for, c) the Company’ s technical installations must be suitable for the safe transport and distribution of the products, and d) the Company must possess a tank truck fleet with a minimum number of vehicles. The Law enforces restrictions regarding the usage of tank trucks and of the vessels which carry oil products from refineries.

Companies engaged in fuel trading may obtain finished products either from domestic refineries or through imports from any country under the sole condition that they pay taxes in accordance with European Union directives relating to imports from non EU Member States. According to the Law 3054/2002, as it has been amended and completed by Law 3335/2005, these companies may operate gas stations and have the right to be owners of land and gas station equipment. In addition, "independent" gas station owners may get their supplies directly from the refineries and/or through imports as well as from companies engaged in fuel trading.

3.2.4. Mandatory Reserves

According to the Law 3054/2002, as it has been amended and completed by Law 3335/2005, the importers of crude oil and petroleum products either domestic refineries, or companies engaged in fuel trading, or gas station owners, are obliged, as provided for by the relevant European Union directives, to maintain mandatory reserves equal to 90/365 of the previous calendar year’s net imports as a means to meet the domestic needs in periods of crises relating to the supply of fuel and the country’ s obligations in the context of its international responsibilities.

3.2.5. Pricing

Consumer prices of petroleum products are fully liberalised and determined by the fuel trading companies and gas station owners according to the type of services they offer and based on supply and demand prevailing conditions. For reasons relating to the protection of the consumers, refineries notify to the Ministry of Development the method they follow in determining the ex factory price, while companies engaged in petroleum product commerce notify the actual selling prices at which they supply the gas stations. The government has kept the right to impose price ceilings on a local or national level.

annual report ❚ 11 ❚ 3.2.6. Taxes

Law 2127/93 and Law 1642/86, as amended on January 1st, 1993, as well as Law 3336/2005 (in the context of the harmonization with the European Union Directive 2003/96/EU) which amended and completed the Law 2690/2001 deal with all issues relating to Excise Tax and VAT on fuels.

3.2.7. Allocation of the greenhouse gas emission allowances

Aiming at the reinforcement of the global endeavor to confront the danger of climate change, the Kyoto Protocol was officially put in force in 2005, defining legally binding objectives for the reduction of the greenhouse gas emissions in the developed countries. In the framework of the accomplishment of the objectives of the Protocol, the European Commission adopted the Directive 2003/87/EC, according to which, an Emission Trading Scheme (E.T.S) was established. The Directive calls on the Member States to submit comprehensive National Allocation Plans for the greenhouse gas emission allowances to the various activities covered by the Directive, and therefore to the relevant installations. The Emission Trading Scheme applies mainly to large scale combustion installations (most of which belong to the sectors of Power Generation, Oil Refining and Cement Production) with the objective for them to adopt the best practices energy wise as a means to reduce carbon dioxide (CO2 ) emissions. Hence, during the first phase of the implementation of the Emission Trading Scheme (2005-2007) the gas emission rights were allocated both for the existing and already operating units as well as for the units under construction. The second phase of the Emission Trading Scheme (2008–2012) calls for higher restrictions and as a result Greece has already decided to reduce its gas emission rights by 16% compared to the first phase.

3.2.8. Product Specifications

The specifications regarding oil products heading for the domestic market are defined in the Law 549/70 and its consequent ministerial decrees. Product testing regarding specifications fulfilment is carried out by the State General Chemical Laboratory. In the context of the European Union’s environmental protection policy, new specifications on sulphur content as well as other properties for gasoline and automotive diesel were established (Directive 98/70/EC as amended with 2003/17/EC), which are described in the table below. The implementation of the new specifications will take place in two stages, in years 2005 and 2009, while it should be noted that both types of fuel (50 and 10 ppm) must be available during the intervening time. The policy of the European Commission for fuels with "zero" (10 ppm) content of sulphur set the foundation for investing in desulphurization units, such as the Hydrocracking complex of MOTOR OIL which is in operation since 2005 producing fuels of the most advanced 2009 specifications, already facing strong demand coming from the European market. NEW SPECIFICATIONS (FOR GASOLINE & AUTOMOTIVE DIESEL) Effective from 1/1/2005 1/1/2009 Unleaded Gasoline Sulphur content (ppm) 50 max 1 10 max Aromatics (% vol.) 35 max 35 max Olefins (% vol. ) 18 max 18 max Benzene (% vol.) 1 max 1 max Oxygenates (% vol.) 2.7 max 2.7 max Automotive Diesel Density at 15oC (kg/l) 0.845 max 0.845 max Sulphur content (ppm) 50 max 1 10 max Cetane number 51 min 51 min Polyaromatics (% wt) 11 max 11 max Distillation at 95% vol. (oC) 360 max 360 max

1 As of January 1st, 2005, each European Union Member State must gradually make available gasoline and automotive diesel with maximum 10mg/kg sulphur content.

❚ 12 ❚ annual report CORINTH REFINERIES S.A.

The European policy for a greener environment is not limited to transportation fuels. The tendency for the minimization of gas emissions includes heating diesel as well as bunker fuels.

According to the European Legislation (Directive 1999/32/EC) the maximum sulphur content for heating diesel should be reduced to 0.1% from 0.2% effective January 1st, 2008. Following a recommendation of the Hellenic Ministry of Development, April 15th, 2008 was declared as the effective date for the application of the Directive in the case of Greece (that is after the end of the heating season 2007-2008).

As regards bunker fuels significant effort at European and worldwide level has been carried out by the International Maritime Organization (IMO). The organization, a main goal of which is to reduce shipping sector emissions, following the signing of the MARPOL protocol has set the maximum sulphur content at 4.5% and in the so-called "Sulphur Emission Control Areas" at 1.5%. The emission standards stated above have already been adopted at European level and currently bunker fuels with 1.5% sulphur content are used by all passenger ships while a decision has been taken for usage of 0.1% sulphur content fuels by all vessels at berth from 2010. In addition, a series of actions has been initiated by the IMO and the European Commission which are expected to result in the establishment of even lower emission standards for the shipping sector that will be applied by 2011-2012.

One of the most significant issues expected to influence future specifications of the products with particular reference to the transportation fuels is the introduction of BioFuels, namely, BioDiesel and BioEthanol, in the final product mix.

The European Commission directive 2003/30/EC has set an ambitious target for a market share of BioFuels equal to 5.75% of the transportation fuel market by the year 2010. This target is not easy to be met and huge efforts have been made intermingling all parameters capable to encourage bigger contribution of BioFuels.

Within the framework of its wider energy plan aiming at the transition to "low carbon fuels", the European Commission has suggested the amendment of the directives 1998/70/EC and 2003/17/EC concerning the quality of the transportation fuels as well as of the directive 2003/30/EC concerning the promotion of the BioFuels. The final decisions and guidelines on these matters are expected to be taken and adopted within 2008.

annual report ❚ 13 ❚ 3.3. Recent Developments in the International Oil Market

In 2007 the world economy exhibited a mixed pattern particularly during the last quarter when the U.S.A economy showed recession signs which were counterbalanced by the healthy economies of the developing countries. During the first months of the current year the economic pattern remained unchanged with the consequences from the problems of the subprime mortgage market in the U.S.A affecting international credit markets, investors and consumers. Nevertheless, it seems that although a recession of the U.S economy looks probable the positive prospects of the economies of China, India and Middle East countries remain unaffected.

World demand for crude oil increased by 0.9 million barrels per day (bpd) higher than the respective 2006 increase (0.7 million bpd). The markets which accounted mostly for this development were those of China and India.

World aggregate demand reached 84.8 million bpd according to data from OPEC. It must be noted that OPEC production was cut by 0.4 million bpd while non-OPEC countries (former Soviet Union, Latin America, Africa, Canada, China) production increased by 0.9 million bpd thus meeting the greater part of daily demand increase.

Oil prices demonstrated an upward trend in 2007 with the price of Brent climbing from approximately 50 USD/bbl in January to over 90 USD/bbl in December. The upward trend of crude prices was particularly noticeable during the last quarter of 2007 when the year high of 99.29 USD/bbl was recorded on November 21st, 2007. This development of crude prices was supported mainly by concerns about supply in conjunction with the demand increase mentioned previously, as well as the consequences stemming from various geopolitical tensions (Iraq, Iran, and Nigeria). The upward trend of crude prices carried on in the opening months of 2008 with the price of Brent reaching 116.49 USD/bbl on April 25th, 2008.

The petroleum product prices also increased during the year following a similar pattern to crude oil prices. The increase in the price of the gasoline is attributed to lower production due to the maintenance shutdowns of the U.S. refineries while that of the automotive diesel to the enforcement of new specifications calling for lower sulphur content - 15 ppm - effective since June 2006 in the U.S.

As a result of the above, the international refining margins reached at historic high levels in 2007 (Chapter 7 of this annual report).

❚ 14 ❚ annual report CORINTH REFINERIES S.A. 4. Company profile

4.1. General Information

MOTOR OIL is one of the most important industrial companies in Greece in the oil sector.

In 2002 the Company acquired 100% of "AVIN OIL S.A." (Henceforth called "AVIN OIL"), which ranks 4th amongst the fuel trading companies in the domestic market, thus obtaining a strong arm in retail sales.

MOTOR OIL is the only refining company that possesses a lubricants complex and together with Hellenic Petroleum’s Aspropyrgos refinery, are the only complex oil refineries in Greece. Besides the basic complexes (atmospheric distillation, catalytic reforming and hydrotreating) it includes other conversion units such as catalytic cracking (FCC), thermal cracking and hydrocracking.

The Company was founded in 1970 under the legal name "MOTOR OIL (HELLAS) LUBRICANT REFINERIES S.A." that was subsequently changed in 1972, following a decision of the General Assembly of Company Shareholders, into "MOTOR OIL (HELLAS) CORINTH REFINERIES S.A." - as accurately translated from Greek – which is the official trade name used in its transactions with foreign business entities.

The Company’ s headquarters are located in the municipality of Maroussi of Attica (registered address: 12A Irodou Attikou str.) and is registered as an incorporated firm ("Societé Anonyme") with the Prefecture of Athens, East Attica Sector, with Incorporated Company Registration number 1482/06/B/86/26.

The Company’ s term was set to 50 years, up to 7/5/2020. License number D3/A/4124/20.3.2001, issued by the Ministry of Development provides the Company the right to infinitely operate its premises in the area of Aghii Theodori of Corinth.

According to article 3 of the Codified Memorandum and Articles of Association of the Company, its corporate objectives are:

◗ To establish and operate industrial units for the production and processing of gasoline, light diesel, illuminating kerosene, fuel oil, heating gasoil, LPG (liquid petroleum gas), basic and final lubricants, mineral oils and other petroleum products and by-products of any kind as well as to establish units for the packaging and preservation thereof and develop the various types of products and by-products being produced or manufactured.

◗ In accordance with Decision nr 805/729/1970 of the Ministers of Coordination, Finance and Industry to carry on any commercial or industrial activities for the development or marketing, in Greece and abroad, with respect to the above mentioned products and any products, in general, being produced by the Company, i.e petroleum products and by- products and services to automobiles, vessels, aircraft and establish machine repair shops, motor inns, restaurants and coffee-shops and any other relevant activities.

◗ To acquire, purchase, store, import, export, be a broker with respect to, transport, sell and /or distribute crude oil, petroleum products and by-products and of other hydrocarbons, minerals and ores, chemicals (both organic and inorganic), and by-products and products used as substitutes therefore and generally to be involved in the marketing and distribution business and have any other activities which are necessary or useful for doing and developing such business.

◗ To establish and operate facilities for the production of steam and electric power as well as port facilities, hydraulic facilities, sewage facilities and other similar facilities serving the Company’ s objectives and the objectives of other companies to be established or of entities that are related or cooperate with the Company as well as to render various general services to these companies or entities.

◗ To establish and operate factories for the industrial processing and storage of LPG, packaging materials, and to perform any marketing related thereto as well as to perform any industrial or commercial activity or business relating to this purpose.

annual report ❚ 15 ❚ ◗ To hold, license and otherwise possess and manage in any way whatsoever trademarks, copyrights and letters patent, methods of elaboration/preparation of plans/designs, production methods, etc.

◗ To establish, operate and exploit liquid fuel outlets.

◗ To engage in the business of handling, transporting and disposing of hydrocarbon wastes.

◗ To establish other companies of any legal form with identical, similar or complementary objectives or companies simply useful in any way, even on an indirect manner, for the accomplishment of the objectives of the Company.

◗ To participate in and cooperate with other business entities/ groups of whatever form with similar, relevant, complementary or even simply useful in any way for the accomplishment, even on an indirect basis, of the objectives of the Company as well as to represent, directly or indirectly, Greek or foreign companies having similar objectives.

◗ To purchase, rent, and lease tangible and intangible assets as a means to fulfill the above mentioned objectives.

◗ To grant third party guarantees or ordinary guarantees or any security of any form whatsoever (real or personal) in favor of natural persons or legal entities and in general to perform any act that aims directly or indirectly at achieving any of the above mentioned objectives.

It is noted that the corporate objectives of the Company, as set forth in its Codified Memorandum and Articles of Association, have not been amended during the last five years.

According to the FTSE Dow Jones Industry Classification Benchmark (ICB), which has been adopted by Hellenic Exchanges S.A., the Company belongs to the "Oil and Gas" industry and specifically the "Exploration and Production" sub-sector.

❚ 16 ❚ annual report CORINTH REFINERIES S.A. 4.2. Background

The major milestones in the Company’s history are:

1970-1972

Foundation and beginning of operation of the refinery comprised of a crude oil refining unit, a basic lubricant production unit, a jetty with loading terminal, and truck loading terminals.

1975

Entrance in the fuel production with the addition of the Atmospheric Distillation Unit.

1978

Construction of the Catalytic Reforming Unit (further downstream processing of naphtha).

1980

Installation of the Catalytic Cracking Unit (further downstream processing of fuel oil to turn it into high value-added products).

1984

Construction of an Electric Power Production Unit that uses gaseous fuel as raw material. Right to sell energy to the domestic market.

1993

ISO 9002 accreditation for the entire spectrum of activities of the Company.

1996

Purchase of 50% of the Company’s shares by Aramco Overseas Company BV, 100% subsidiary of Saudi Arabian Oil Company (Saudi Aramco). Relocation of Company Headquarters to a modern building in Maroussi, Attica.

2000

Completion of investment projects aiming at the production of products in harmonization to European Union specifications for 2000. During the same year the Environmental Management System of the Company is certified according to the ISO 14001:1996.

2001

Installation of a new gas turbine in the electric power station. Upgrading of the lubricants’ vacuum unit. Company share capital increase through public offer of shares and listing on the Athens Exchange.

2002

Acquisition of 100% of AVIN OIL which engages in fuel trading in the domestic market.

2003

Certification of the Quality Management System of the Company for the whole spectrum of its activities according to the ISO 9001:2000.

annual report ❚ 17 ❚ 2004

Recertification of the Environmental Management System of the Company according to the ISO 14001:2000 with validity until 2007.

2005

Completion of the installation of the Hydrocracking Unit (Hydrocracker) for the production of the new clean fuels according to the specifications of the European Union not only of 2005 but also of 2009 (Auto Oil II). Acquisition of the stake of Aramco Overseas Company B.V. in the Company by Motor Oil Holdings S.A. Increase of the Company’s free float from 16.2% to 32.6% through a private placement to domestic and international institutional investors.

2006

Recertification of the Quality Management System of the Company according to the ISO 9001:2000 for the whole spectrum of its activities with validity for three more years (until 2009). Signing of an agreement with the Spanish firm "IBERDROLA S.A." for cooperation in the field of electric power through the company "KORINTHOS POWER S.A.". Further increase of the Company’s free float to 38.46% through a private placement to domestic and international institutional investors.

2007

Recertification of the Environmental Management System of the Company according to the ISO 14001:2004 with validity until 2010. Inclusion of the Company in the Greek Registry of enterprises the Eco-Management and Audit Scheme (EMAS) of which complies with the requirements of the European Regulation 761/2001.

❚ 18 ❚ annual report CORINTH REFINERIES S.A. 4.3. Company Activity – Fixed Assets

Together with its ancillary units and its fuel blending and oil movement facilities the refinery constitutes the largest private industrial complex in Greece and is considered one of the most flexible refineries in Europe.

Up until 1989 MOTOR OIL exported its entire production. From 1989 until today, following the liberalization of the market, the Company has acquired approximately 25% of the domestic market remaining at the same time a strong export refinery. Consequently, business risk is reduced through the geographical distribution of sales between domestic and foreign markets as well bunkering (shipping and aviation).

The refinery is one of the most modern industrial complexes, capable of processing low-quality raw material and turns it into high-value-added finished products. The refinery is vertically integrated to the highest degree possible and apart from the production units it has storage facilities with a capacity of 2.3 million cubic meters, loading premises and port installations consisting of three jetties with maximum berthing capacity of 450,000 tons.

The Company uses crude oil as its primary raw material to produce a full range of products, i.e, gasoline, diesel, fuel oil, asphalt, jet fuel and lubricants with the emphasis being placed on high-value-added products and on new-specification products thus catering to the needs of large companies engaged in petroleum product commercial activities in Greece and abroad. It is also the only producer of lubricants in Greece. The basic and final lubricants produced are approved by international organizations (ACEA, API) and by the United States Armed Forces.

Total covered area at refinery premises concerns mainly storage tanks and building complexes. These building complexes accommodate the monitoring equipment of the production facilities, the ancillary power stations, the maintenance-repair units, the storage premises for auxiliary production material – equipment, and management offices.

Most of those premises were built in the period 1972-1973. Major additions were effected gradually throughout the 1980s and the 1990s while large scale investments were completed during the five year period 2003–2007 amounting to € 563 million mainly concerning the construction and installation of the Hydrocracker Complex (detailed description in the section 4.9 of this Chapter).

Apart from refining activities, the Company engages in trading activities by buying and selling finished products taking advantage of any market opportunities whenever they arise.

The Company rents office space at the building at Maroussi (12A Irodou Attikou str., 151 24 Athens) where it houses its headquarters.

The Company has all required licenses relating to its operation while no administrative penalty has ever been imposed or is pending for any violation on these licenses.

It must also be stressed that there has never been an interruption in Company activities throughout the period since its foundation.

annual report ❚ 19 ❚ 4.4. Sales & Distribution Network – Customer Service

The bulk of the Company’s product output is delivered to its customers FOB at the refinery premises at Aghii Theodori. Part of the output targeted for consumption in the large cities is carried with vessels to third party premises, while the remainder is either carried through pipelines at the nearby storage tanks of AVIN OIL or delivered onto tank-trucks directly from the Truck Loading Terminal (TLT) of the refinery the operation of which commenced in 2004.

In 2007 as a means to enhance its market share in Northern Greece and to achieve better access to the markets of the Balkan countries, the Company secured a Truck Loading Terminal at the region of Kavala through a long - term lease.

The clientele of MOTOR OIL includes all large Greek companies engaged in petroleum product activities as well as companies engaged in ship refueling (bunkering), while significant part of the revenue is generated from exports to the countries of the East Mediterranean, the Balkans, the European Union etc.

Further to its commercial activities, the Company offers its customers various types of services taking full advantage of its infrastructure. These services include product storage facilities as well as crude oil refining for third parties.

It is also noted that MOTOR OIL participates in the share capital of "ATHENS AIRPORT FUEL PIPELINE COMPANY S.A." which constructed and operates the pipeline carrying fuel directly from the Aspropyrgos Hellenic Petroleum refinery to the new Athens Airport, and in the share capital of "OLYMPIC FUEL COMPANY S.A" which is assigned with the task to handle the fuel tanks and the supply of fuel within the new Athens Airport area (for the share participation percentages please see Chapter 6).

4.5. Share Capital – Shareholder Structure

The share capital of the Company amounts to € 33,234,894 divided into 110,782,980 common registered shares of a nominal value € 0.30 each. It must be noted that there is not any authorized but not yet issued share capital and no issue of shares which do not represent share capital has taken place. Moreover, there are not any outstanding convertible bonds to shares (or any other form of debt), and there are not any terms in the Codified Memorandum and Articles of Association relating to changes of share capital which are more restrictive than those specified by the law.

The Company’s shareholder structure is presented below: Shareholder Number of Shares % PETROVENTURE HOLDINGS LTD 56,499,320 51.00% PETROSHARES LIMITED 11,673,690 10.54% Free Float 42,609,970 38.46% TOTAL 110,782,980 100.00%

The two legal entities-shareholders of MOTOR OIL, PETROVENTURE HOLDINGS LTD and PETROSHARES LIMITED have their registered offices at Jersey, Channel Islands and they operate according to the 1991 Jersey law. MOTOR OIL HOLDINGS S.A., a Luxembourg based holding company owned by the Vardinoyannis family, is the controlling shareholder of PETROVENTURE HOLDINGS LTD and PETROSHARES LIMITED.

❚ 20 ❚ annual report CORINTH REFINERIES S.A. 4.6. Company Administration & Management

The composition of the Board of Directors of the Company is presented hereunder: First Name and Surname BoD Position Member Identity * 1. Vardis J. Vardinoyannis Chairman & Managing Director Executive 2. John V. Vardinoyannis Vice-Chairman Non-Executive 3. Panayotis N. Kontaxis Vice-Chairman Non-Executive 4. John N. Kosmadakis Deputy Managing Director Executive 5. Petros T. Tzannetakis Deputy Managing Director Executive 6. Demosthenes N. Vardinoyannis Member Non-Executive 7. Nikos Th. Vardinoyannis Member Non-Executive 8. George P. Alexandridis Member Non-Executive 9. George Th. Theodoroulakis Member Non-Executive 10. Despina N. Manolis Member Non-Executive 11. Antonis H. Theoharis Member Non-Executive Independent 12. Konstantinos V. Maraveas Member Non-Executive Independent

* According to Corporate Governance Law 3016/2002

The term of the above Board of Directors expires on the next Annual Ordinary General Assembly which will approve the Company Financial Statements of the fiscal year 2007.

The top executives of the Company are presented below:

◗ Vardis J. Vardinoyannis, Chairman & Managing Director. He is one of the founders of the Company and has been a member of the top management team since 1972. Apart from MOTOR OIL, he has exploited a wide array of entrepreneurial endeavours in Greece and abroad.

◗ John N. Kosmadakis, Deputy Managing Director, General Manager of Marketing. He has been working with the Company since 1978.

◗ Petros T. Tzannetakis, Deputy Managing Director, Chief Financial Officer. He has been working with the Company since 1986.

◗ Michael Stiakakis, Refinery Manufacturing General Manager. He has been working with the Company since 1982.

Mr. Constantinos Thanopoulos is the Internal Audit Manager.

Top Management and Administration remuneration for the fiscal year 2007 amounted to € 1,964 thousand while BoD members’ fees (included in Administrative Expenses) amounted to € 219.0 thousand. TOP MANAGEMENT REMUNERATION (amounts in thousand euros) 2005 2006 2007 Top Management and Administration Remuneration 1,852.0 2,409.0 1,964.0 BoD Members’ Fees 216.0 219.0 219.0 Total 2,068.0 2,628.0 2,183.0

annual report ❚ 21 ❚ Lubes Purchasing Production Department Department Department Department Maintenance Administration REFINERY REFINERY MANUFACTURING Fuels Fuels Quality Section Offsites Technical Technical Assurance Production Department Department Department Supply & Distribution Department Internal Audit OF THE BOARD VICE CHAIRMAN VICE CHAIRMAN Lubes Marketing Marketing Operations Department Department Department Fuels & Crude DEPUTY MANAGING DIRECTOR MANAGING Human Resources Department Administration & BOARD OF DIRECTORS BOARD & MANAGING DIRECTOR & MANAGING CHAIRMAN OF THE BOARD OF THE BOARD CHAIRMAN DEPUTY & Inter. & Inter. Section Control Systems Financial Financial Reporting Accounting Information Department Department Control Staff Accounting & MANAGING DIRECTOR MANAGING OF THE BOARD VICE CHAIRMAN VICE CHAIRMAN Investor Treasury Treasury Relations Insurance Banking & Investment Department Department Department Department Analysis Business Department Legal Department CORPORATE PLANNINGCORPORATE FINANCE MARKETING Planning Strategic Department 4.7. Organization Chart 4.7.

❚ 22 ❚ annual report CORINTH REFINERIES S.A. 4.8. Personnel

The Company is one of the biggest employers in Greece. The total employee headcount as of December 31, 2007 was 1,267 persons of whom 1,081 worked at the refinery and 186 at the Company headquarters. PERSONNEL HEADCOUNT (at year end) 2005 2006 2007 Refinery 971 1,011 1,081 Headquarters 186 186 186 TOTAL 1,157 1,197 1,267

The Company places particular emphasis on the employee educational background as this provides a comparative advantage against competition given the international and technologically advanced character of the refining sector. Today 20% of Company personnel have graduated from Institutions of Higher or Highest Education while intra-company educational programs are offered and seminars are held on a regular basis each year.

Company employees may take advantage of a comprehensive program of educational courses and seminars conducted in Greece or abroad (see section 4.10.4 Personnel Educational Programs). In this way continuous development of Company personnel is achieved to the benefit of MOTOR OIL and of society at large.

In addition, the Company places emphasis on the optimization of working conditions and above all on workforce safety, employing 3 doctors, medical personnel, and owning 4 fully equipped ambulances. As part of its interest in employee welfare, the Company offers its personnel and their families a private life insurance and medical care program covering all hospital treatment expenses that may arise as well as an additional pension scheme. These programs are considered to be innovative as a result of the benefits and compensations they provide. The Company has also a multi-member security section and a specialized safety technician who is assigned with the responsibility to supervise and secure hygiene and safety conditions at workplace as well as to prevent work accidents. As an aid to workplace accident prevention the Company owns 5 fire extinction vehicles and a multitude of stable and portable fire & smoke detection systems and extinguishers.

The accident prevention policy is implemented through the following methods:

◗ Strict adherence to legislation and internationally accepted codes, protocols and safety operation rules.

◗ Continuous improvement of all safety and hygiene control systems.

◗ Record keeping of all accidents, accident evaluation and adopting appropriate corrective action and preventive measures.

◗ Continuous upgrade of all resources relating to individual safety and fire prevention, combined with personnel training on the use of these resources.

annual report ❚ 23 ❚ 4.9. Capital Expenditure

During the last five year period 2003 - 2007 the Company’ s capital expenditure amounted to € 563 million and it includes the Hydrocracking complex investment completed in the period 2003 - 2005 aiming at the upgrading and expansion of the production units of the refinery, a series of construction works aiming at the increase of the capacity of storage premises as a means to support the increase in the volume of sales, and also projects aiming at the enhancement of the reliability and safety of the refinery. The breakdown of the Company’s capital expenditure per year is presented in the following graph:

CAPITAL EXPENDITURE 2003 - 2007 243

154

86 Million Euros 37 43

2003 2004 2005 2006 2007 YEAR

A) The major part of the investment projects undertaken in the period after 2003 aimed at the maximization of the refining margin. The most significant of these investments are presented below:

◗ Installation of a Hydrocracking Complex (capital expenditure € 350 million) for the production of the new "clean" fuels according to the specifications of the European Union not only for 2005 but also for 2009 (Auto Oil II). This unit enhanced the production capacity of the refinery with reference to diesel, of which there is a shortage in Greece and generally in Europe. The additional diesel production replaced refinery imports while the particular unit provided greater flexibility in maximizing the production of either diesel or gasolines according to seasonal demand.

In the context of this project the following units were constructed:

♦ A Mild Hydrocracker unit with a 37,000 bpd capacity.

♦ A Gasoil desulphurisation unit with a 32,000 bpd capacity.

♦ A hydrogen production unit with a 65,000 Nm3/hr capacity.

♦ A 150 kV substation for the connection of the refinery with the interconnected transmission system of electricity, as well as a new gas turbine with which the installed electricity capacity increased to 68 MW.

♦ A new complex for sulphur recovery.

Furthermore, extended revamp works in the existing distillation units (atmospheric and vacuum) as well as restructuring in the refinery utilities (new flare, new desalination units, water treatment, instrument air etc.) took place.

The Hydrocracker Complex commenced its operation in November 2005. All project objectives regarding delivery deadlines, quality of produced products and budgeted capital expenditure were met.

❚ 24 ❚ annual report CORINTH REFINERIES S.A.

More than 4.5 million man hours were required for the completion of this project. It is important to mention that throughout the duration of the project no working accident occurred. This is indicative of the emphasis placed by the Company on the aspect of safety at workplace.

In the context of the Hydrocracker project and through a series of upgrades, modifications and additions, the environmental terms of the refinery improved regarding both the gas emissions and the management of liquid wastes.

As a result of the Hydrocracker installation, the Nelson Complexity Index of the refinery increased significantly placing it among the most sophisticated and modern ones all over Europe, thus strengthening one of its key competitive advantages even more.

◗ The project for the upgrading of the lubricants complex commenced in 2007 with a budgeted capital expenditure of € 15 million and it is anticipated to maximize the base oils production as well as to the improve the quality of finished lube products. At the same time, selected facilities of the lube production complex have gradually been upgraded (for example all the dewaxing filters). It is noted that recent years investments have contributed to the increase of the volume of lube sales to over 200,000 metric tons in 2007 which is the highest in the Company’s history.

◗ The installation of an Advanced Process Control (APC) System, which is an extension of the Distributed Control System, contributes to the maximization of the refining profit margin since it constitutes a key factor for the increase in production of high value-added products, the rationalization of the utilization of the refinery production units and the operating cost containment. During the period 2004-2007, and in the context of a wider investment project of a total expenditure of € 8.8 million, the APC system was applied on the existing refinery units particularly on the Fluid Catalytic Cracking (FCC) unit after the changes in the operating mode (desulphurized feedstock) following the installation of the new Mild Hydrocracker. In 2007 the project continued with the application of an APC system on the Crude Distillation Unit as a means to yield the most profitable product mix on every feedstock and to secure optimum operating conditions.

B) With the objective to promote and sell all its refinery products at the optimum price, the Company continued its investment program in order to facilitate the increased volume of raw material and product flows by undertaking infrastructure projects with regard to its the distribution network, storage tanks and pipeline networks. Within this context, a refinery Truck Loading Terminal (TLT) was constructed and started to operate in the year 2004 (total expenditure € 20.5 million) improving customer service in the areas of Peloponnese and Western Greece, while three fixed roof tanks of an aggregate capacity of 105,000 cubic meters (total expenditure € 9.7 million) were put in operation in the first half of the year 2007. Furthermore, the project for the construction of six new tanks of an aggregate capacity of 130,000 cubic meters (budgeted expenditure € 16 million) is under way.

C) During the period 2005–2007 the Company completed, as part of its firm policy, a number of significant projects for the improvement of the environmental conditions and safety standards of the refinery.

◗ In 2006 the works for the upgrading of the Waste Water Treatment (WWT) Unit were completed with the installation of a new biological treatment unit and the thorough upgrading of the system of primary and secondary treatment. The capital expenditure for the project amounted to € 16 million and facilitates the increase of the capacity of the WWT Unit in order to serve the new Hydrocracker complex as well as to address extreme rainfall situations. Furthermore, provision has been made for the modernization of the installations with the employment of new technologies as a means to further improve waste water quality and enhance the mechanical availability of the unit.

◗ In 2005 along with the project of the Hydrocracker complex an important investment for the reduction of catalyst emissions from the Fluid Catalytic Cracking Unit (FCC) was completed (total budget € 10.9 million). The project included, among other things, the installation of an electrostatic precipitator on the flue gas of the FCC for the minimization of the catalyst emissions in the atmosphere by following the Best Available Techniques (BAT) adopted by the European Union with reference to the refineries.

◗ The significant expansion of the refinery premises and subsequently their spreading out towards its northern area dictated the relocation of the maintenance workshop and the construction of a new central warehouse. Furthermore, in order to secure safe driving conditions for the vehicles heading to the relocated refinery premises a new intersection was built at the old National Highway junction.

annual report ❚ 25 ❚ ◗ Following the completion of the above investments concerning the expansion and qualitative upgrading of its production units, the Company continued with investment projects aiming to improve energy efficiency. The replacement of two out of the four gas generators of the power cogeneration plant of the Company in the last two years has increased both the refinery power generation capacity and its relevant energy performance. The total capital expenditure for the installation of the two new gas generators amounted to € 8.2 million. Moreover, the investment project for the new water desalination unit with reverse osmosis technology (total capital budget € 2.5 million) was completed in the year 2007 and it is now operating at a significantly lower cost compared to the existing desalination units of the refinery.

For the year 2008 the capital expenditure of the Company is estimated at approximately € 80 million. The greater part of this expenditure concerns the construction of the new Crude Distillation Unit with 60,000 barrels per day (bdp) processing capacity the total capital expenditure of which will be approximately € 180 million. In January 2008 following an international tender, the project for the construction of the new CDU was awarded to the company "TECHNIP Italy". With the installation of the new crude unit the total capacity of the Refinery will exceed 170,000 bpd or 9.0 million MT per annum. Additional benefits are expected from the substitution of imported Straight Run Fuel Oil by own produced SRFO, the optimization of the crude supply, and the ability to process a greater variety of types of crude. The project is in the final stage of detailed engineering, procurement and construction. The new unit is expected to be put in operation at the beginning of 2010.

❚ 26 ❚ annual report CORINTH REFINERIES S.A. 4.10. MOTOR OIL and Society

4.10.1 Environment – Quality

From the beginning of its operation MOTOR OIL focused its efforts on the production of quality products having as major objective to satisfy the needs of its customers. Another Company objective is to offer its customers dependable quality products through total mobilization of its management and to resolve any potential problems before they arise.

As a result of the previously mentioned objectives, in 1992 the Company initiated the planning and development of a Quality Assurance System which covered all Company activities and fulfilled the requirements of the ISO 9002 standards. This system was firstly certified in December 1993.

Since then, the Quality System has become an integral part of MOTOR OIL operations.

The restructuring of the existing system started in 2002 in order to develop a new Quality Management System fulfilling the standards of the new ISO 9001:2000. The new system of the Company was certified in January 2003 by Bureau Veritas Quality International (BVQI) and also in March 2006 with validity until February 2009.

The commitment of the administration and the personnel of the Company for continuous quality improvement is universal. Within the framework of this commitment, in September 2006 the Laboratory of the refinery was accredited by the National Accreditation System with validity until September 2010.

Furthermore, in July 2007 within the framework of its commitment for continuous improvement of Environmental Management, the administration of the Company proceeded voluntarily with the annual Environmental Statement according to the European Regulation 761/2001 EMAS (Eco-Management and Audit Scheme) verified by Bureau Veritas. The Company is also included in the Registries of the Greek Ministry of Environment Urban Planning and Public Works and of the European Commission as provided for in article 7, paragraph 2 of ER 761/2001.

The adoption of methods and procedures that protect the environment comprise top priority for MOTOR OIL. The refinery operation conforms to the environmental regulation of the Ministry of Environment Urban Planning and Public Works and is fully harmonized with the most stringent international environmental standards. The employment of advanced processing methods that do not cause any environmental harm contributed to the refinery’ s certification with ISO 14001:1996 in December 2000 and was recertified in March 2007 with validity until January 2010.

It is important to note that MOTOR OIL is the unique refinery in Greece and one among only a handful in Europe with such a high complexity index which has been certified with both systems which are part of the Integrated Management System.

In order to accomplish and adhere to the above mentioned environmental objectives, the Company seeks to:

◗ Reduce its consumption needs for natural resources and energy while at the same time increase its self-produced energy capacity.

◗ Produce products and use technologies that are environment friendly.

◗ Control the management of gaseous emissions and continue the monitoring of the quality of the atmosphere.

◗ Promote recycling and effective management of solid and liquid waste.

◗ Tackle environmental emergencies through the development and implementation of emergency response plans such as the Oil Spill Contingency Plan.

Ultimately, the new Hydrocracker complex, the operation of which started in November 2005 producing gasoline and diesel with low sulphur content, has a decisive contribution to the Company’s environmental protection goals. Moreover, several other units such as sour water stripping, sulphur recovery, waste water treatment upgrading as well as energy saving projects, secure that the Company’s production facilities are environment friendly.

annual report ❚ 27 ❚ 4.10.2. Social responsibility

Corporate Social Responsibility (CSR) indicates a balanced approach to the economic, social and environmental impact of business operations that is consistent with the widely known triangle: "society – environment – economy". This is widely and universally accepted by responsible members of the global business community and underpins the main aspiration of any corporation in terms of creating value for its shareholders, while satisfying customers, ensuring employee welfare, protecting the environment and contributing to society. This encompasses the notion of sustainable development, the kind of development that pursues the meeting of today’s needs without putting at stake the availability of resources for future generations.

Customer Satisfaction

Economy

Value to

Environment Shareholders

Care for Human Society and Recourses Environment Development Society

Corporate Social Responsibility emerged as a prominent issue for the business world in the early 1990s, although social responsibility – in the sense of initiatives by businesses to integrate community and environmental activities into their programs – was adopted by businesses in both the United States and the European Union many years before the development and establishment of this concept as a part of modern business practice. In the past few years, the world’s major and most responsible businesses have begun to move away from the traditional approach – which confined their social role merely to donations for charitable causes, sponsorships of events and basic welfare measures for their employees – and is gradually adopting a systematic and strategic approach to Corporate Social Responsibility, both internally and externally. This strategy aims at a long-term increase in their performance, through practices that satisfy all stakeholders as illustrated by the triangle: "society – environment – economy".

MOTOR OIL operates in the oil sector, where the principles of Corporate Social Responsibility and sustainable development need to be particularly applied and respected, given that crude oil reserves are finite, and that their exploitation – from extraction and transportation, to refining and refined-product use – has environmental consequences that need to be effectively dealt with, using the latest available technology.

The Company fully acknowledges the importance of the above-mentioned issues and expresses its social responsibility by recognizing the extent of its obligations in this area, as expressed in its commitment to pursuing business activities with

❚ 28 ❚ annual report CORINTH REFINERIES S.A. due respect for people, the environment and the society. A natural consequence of this commitment is the adoption of a holistic approach to implementing Corporate Social Responsibility principles, fulfilling its obligations to all stakeholders (employees, shareholders, customers, suppliers and the society in general) and in respect of the environment.

Moreover, MOTOR OIL as a company listed on the Athens Exchange, ensures that its activities comply with the current code of business ethics and meet contemporary demands for more transparency through timely and accurate dissemination of information to all stakeholders.

As a founding member of the Hellenic Network for Corporate Social Responsibility, MOTOR OIL systematically supports the network’ s aims for the promotion of corporate social responsibility and the fostering of social cohesion by demonstrating compliance with "best practices".

The four areas of activities involved in the Corporate Social Responsibility programs, in accordance with internationally accepted standards– particularly the Global Reporting Initiative, whose main principles, directions and guidelines form the basis for the publication of Environmental and Social Reports – are:

◗ The Environment

◗ The Workplace

◗ The Society

◗ The Market

MOTOR OIL:

◗ As a responsible employer, cares about the career and personal development of its employees, invests in their training, and provides a creative and supportive workplace environment characterized by good team-work and mutual respect and conducive to initiative and innovation; where Health and Safety constitute major priorities that are secured through state-of-the-art technical support and management practices.

◗ Having a responsible attitude towards the environment, tries to ensure that its activities have the minimum possible impact on the environment, by having in place an effective Environmental Management System, using Best Available Techniques and other up-to-date systems for environmental protection and efficient energy saving and management.

◗ As a responsible member of society, seeks fruitful social dialogue, in a climate of mutual trust and respect, with the local communities in which it chiefly operates; it supports these communities, by participating in programs that enhance their economic, social and cultural life, and takes part in similar activities that benefit society as a whole.

◗ Having a responsible position in the market, respects market rules and produces top quality products; it focuses on relations of trust with its customers, suppliers and partners, and strives – through the systematic and consistent achievement of its business targets – to obtain the best possible return for its shareholders without compromising its corporate social responsibility standards.

annual report ❚ 29 ❚ Each one of these areas has its respective stakeholders. The diagram depicts the areas, the stakeholders and the current issues of interest MOTOR OIL activities focus on.

MANAGING CORPORATE SOCIAL RESPONSIBILITY

PEOPLE THE ENVIRONMENT Our people The general public ñ Health and Safety ñ Clean fuels ñ Equal opportunities ñ Carbon dioxide and other emissions ñ Training The The ñ Energy management ñ Discretionary benefits workplace environment ñ Solid and liquid Improving the Improving waste management work environment performance

The marketplace Society ñ Meeting the demand ñ Quality Promoting Ensuring a positive ñ Reliability responsible impact on society for petroleum products and ethical and the economy ñ Contribution ñ Integrity practices ñ Control/ to the economy Assessment ñ Contribution to society ñ Information STAKEHOLDERS THE PUBLIC ñ Shareholders ñ Consumers availability ñ Customers ñ Shareholders ñ Corporate governance ñ Suppliers ñ Non governmental ñ Partners organizations ñ Clubs and Unions

The CSR commitments of MOTOR OIL are implemented through specific policies, programs and activities in the framework of the overall strategy of the Company, and are fully detailed in the printed edition titled "Environmental and Social Report".

❚ 30 ❚ annual report CORINTH REFINERIES S.A.

4.10.3. Subsidies – Sponsorships

MOTOR OIL pursues its activities in ways that secure positive and productive interaction with the social environment which it operates in, contribute to the overall economic development of the country and benefit the neighboring to the Company’s production premises communities by creating job and business opportunities. Moreover, the Company reckons that apart from the production and supply of its products, its responsibility towards society is to be an active participant aiming to establish a social background with values and a future worth living in. A future rather more humane and optimistic. To this end, the Company supports with various subsidies and sponsorships the cultural life of the wider region adjacent to its production premises as well as the social aspects in general.

MOTOR OIL attempts to be close to society with responsibility, consistency and timeliness, according to its corporate objectives and values. The Company supports education, health, sports and culture, since it believes in these values which make life better and creative. In 2007 the Company carried on its social contribution, in line with a long time tradition which it has established as an active corporate citizen, with the following actions:

◗ supporting cultural, spiritual, athletic and social activities and initiatives,

◗ subsidizing educational and scientific institutes,

◗ sponsoring international sports events and athletic clubs,

◗ organizing educational visits at the Refinery,

◗ offering grants to hospitals and welfare church institutes,

◗ supporting non governmental organizations, associations and charitable organizations,

◗ contributing to the alleviation of the social needs of groups and individuals.

A detailed description of the grant, subsidy and sponsorship programs of MOTOR OIL for the year 2007 is available at the separate printed edition titled "Environmental and Social Report". Particular reference must be made to the project for the construction of the houses of the village Makistos, located close to the city of Ilia of Peloponnese, which were destroyed because of the summer 2007 forest fires. The greater part of the project will be funded by the Company.

4.10.4. Personnel Educational Programs

MOTOR OIL recognizes that its developing perspective and implementation of corporate strategy in an international and highly specialised sector such as that of crude oil, is closely related to the development of the skills and dexterities of its personnel. Therefore, the education and training of personnel, both in respect to personal development and professional skills, is a matter of strategic importance for MOTOR OIL for which significant investments are undertaken calling both for monetary resources and time.

The policy of the Company on training dictates a match between the post and the skills each member of the staff should possess with an ultimate goal to provide continuous, reliable, flexible and thorough professional training to the personnel. The seminars and training sessions are planned and programmed on an annual basis according to the educational needs as these may arise. In developing the annual training-educational plans a number of parameters are taken into consideration: corporate objectives and priorities, previous years’ training seminars, educational needs on specialised technical matters, workplace hygiene and workforce safety issues, Environmental Protection and Quality aspects, individual employee development needs.

annual report ❚ 31 ❚ The execution of educational programs is performed through a series of approaches involving:

◗ Organizing Intra-company educational seminars.

◗ Using Operator Training Simulators to secure reliable training of the staff of the Fluid Catalytic Cracker and Hydrocracker complexes.

◗ Offering a nine month long induction program to the staff of the production units.

◗ Supporting employee participation in seminars organized by internationally accredited educational and training bodies (Institute of Petroleum, Oxford Princeton Program) as well as conferences held in Greece or abroad organized by the ERTC (European Refining Technology Conference) and the CONCAWE (Conservation of Clean Air and Water in Europe) whose MOTOR OIL is a member of.

◗ Offering funding to employees wishing to continue academic studies or embark on postgraduate courses.

◗ Encouraging the personnel to attend foreign language lessons when required.

◗ Meeting the cost of subscriptions for technical magazines and professional societies.

In addition to providing on-the-job intra-company training seminars to its personnel, MOTOR OIL holds every year a series of educational sessions at the refinery to visiting university students who receive up to date information on various technical and commercial matters as well as advice on professional orientation.

Moreover, every year MOTOR OIL accommodates a large number of university students doing their practice, as part requirement of their studies, either at the refinery or the headquarters.

A detailed description on Environmental Protection issues, Personnel Training & Education issues etc. is available at the separate printed edition of MOTOR OIL titled "Environmental and Social Report".

❚ 32 ❚ annual report CORINTH REFINERIES S.A. 5. Performance review

5.1 Company Activities

Company turnover for 2007 amounted to € 3,719.1 million compared to € 3,629.7 million for 2006 and € 2,923.8 million for 2005 demonstrating an increase of 2.46% in 2007 over 2006. The analysis of Company turnover by product, type of activity (refining – trading) and geographical market during the last three year period is presented below: TURNOVER BREAKDOWN (amounts in million euros) 2005 2006 2007 Refining Production Domestic 827.4 1,681.7 1,681.0 Exports 1,181.3 1,177.9 1,495.6 Total Refining Production 2,008.7 2,859.6 3,176.6

Trading Activity Domestic 479.5 362.0 287.9 Export 435.6 408.1 254.6 Total Trading Activity 915.1 770.1 542.5 TOTAL TURNOVER 2,923.8 3,629.7 3,719.1 TURNOVER BREAKDOWN (% of total) 2005 2006 2007 Refining Production Domestic 28.3% 46.3% 45.2% Exports 40.4% 32.5% 40.2% Total Refining Production 68.7% 78.8% 85.4%

Trading Activity Domestic 16.4% 10.0% 7.7% Exports 14.9% 11.2% 6.9% Total Trading Activity 31.3% 21.2% 14.6% TOTAL TURNOVER 100.0% 100.0% 100.0% The refining production concerns the sales of products produced in the refinery of MOTOR OIL.

The trading activity concerns the sales generated as a result of imports of finished products from the international market and their resale in the domestic market and/or abroad. The Company has the flexibility to take full advantage of the favorable market conditions, whenever these arise, and is in a position to respond in any exceptional and unpredictable event meeting the increased demand in the domestic and international market with imports.

annual report ❚ 33 ❚ 5.1.1. Turnover

The major objective of MOTOR OIL is to achieve the optimum selling price for its products, to increase its market share in the Greek market and to penetrate the markets of emerging economies. To this end, MOTOR OIL has created a coherent sales and distribution network for the promotion of its products as a means to strengthen its presence in the region. It is important to note that the Company responds to customer demand without neglecting workplace hygiene, workforce safety and environmental protection issues. Through these moves MOTOR OIL aims to increase its profitability and maximize shareholder value.

The following tables include summary data of MOTOR OIL’ s turnover breakdown by type of activity, market and product for the last three years. It is clarified that the breakdown of the turnover in the three distinct markets presented below is based on the methodology adopted by the Company regarding the way it monitors the development of its sales, that is, using as criterion the location of final destination and consumption of the products. By Type of Activity (thousand ΜΤ) (million Euro) 2005 2006 2007 2005 2006 2007 Refining Production 5,492 6,797 7,263 2,008.7 2,859.6 3,176.6 Trading Activity 2,158 1,579 1,050 915.1 770.1 542.5 TOTAL 7,650 8,376 8,313 2,923.8 3,629.7 3,719.1 By Type of Market (thousand ΜΤ) (million Euro) 2005 2006 2007 2005 2006 2007 Domestic 3,238 3,272 3,065 1,306.9 1,552.5 1,488.9 Exports 3,160 3,589 3,848 1,259.2 1,586.0 1,750.2 Shipping – Aviation 1,252 1,515 1,401 357.7 491.2 480.0 TOTAL 7,650 8,376 8,313 2,923.8 3,629.7 3,719.1

Domestic Market

The domestic sales of the Company dropped in 2007 both by volume (6.33%) and value (4.09%) compared to the previous year due to the mild weather conditions which prevailed during the winter season in the beginning of the year.

Exports

In 2007 MOTOR OIL exports increased compared to the previous year both by volume (7.22%) and value (10.35%). This development further enhances the competitive advantage of the Company to sell its products to markets with stronger demand and higher margins.

Shipping - Aviation

The sales of the Company in this market decreased in 2007 both by volume (7.52%) and value (2.28%) compared to the previous year. Consistent to its objective for "effective promotion and sale of refinery products at the optimum price", the Company chose to place a comparatively greater proportion of diesels to exports due to better margins in this market.

❚ 34 ❚ annual report CORINTH REFINERIES S.A.

The above analysis reaffirms the Company’s strategy for dynamic presence in all three markets. Sales by Product Category Product (in thousand MT) 2005 2006 2007 Asphalt 132 169 205 Fuel Oil 1,549 1,975 1,934 Diesel (Automotive – Heating) 2,641 3,435 3,140 Jet Fuel 1,007 472 767 Gasoline 1,928 1,897 1,848 LPG 138 135 121 Lubricants 181 188 212 Other 74 105 86 TOTAL 7,650 8,376 8,313

The breakdown of the Company’ s production output by product category for the last three years is presented in the following table: Production Output By Product Category Product (in thousand MT) 2005 2006 2007 Lubricants 175 174 189 LPG 142 135 122 Gasoline 1,359 1,593 1,607 Jet Fuel 649 341 552 Diesel (Automotive – Heating) 1,390 2,481 2,531 Special Products 237 316 353 Fuel Oil 1,544 1,935 1,903 TOTAL 5,496 6,975 7,257

The Company’ s market share by product category in the domestic market is presented in the following table: MOTOR OIL MARKET SHARE BY PRODUCT CATEGORY IN THE GREEK MARKET 2005 2006 2007 Domestic Market LPG 21.7% 20.6% 22.8% Gasoline 26.5% 27.1% 21.2% Jet Fuel 0.6% 0.2% 5.9% Diesel (Automotive – Heating) 21.9% 22.4% 22.3% Fuel Oil 10.9% 9.4% 11.8% Asphalt 41.6% 38.2% 40.8% Domestic Market Total (Fuels) 21.4% 21.6% 20.6%

Shipping - Aviation Jet Fuel 29.2% 24.0% 19.3% Fuel Oil 25.3% 32.2% 28.2% Bunker Gasoil 18.5% 21.3% 22.2% Shipping – Aviation Total (Fuels) 24.8% 29.0% 25.7%

Lubricants 56.5% 53.0% 44.3% INLAND MARKET TOTAL 22.2% 23.4% 21.9%

annual report ❚ 35 ❚ 5.2. Company Turnover and Earnings Review 2005-2007

The development of Company earnings for the period 2005-2007 is presented below: (amounts in thousand euros) 2005 2006 2007 Turnover (Sales) 2,923,769 3,629,694 3,719,133 Less: Cost of Sales (before Depreciation) 2,660,561 3,384,207 3,448,591 Gross Profit (before depreciation) 1 263,208 245,487 270,542 % on turnover 9.00% 6.76% 7.27% Less: Administrative Expenses (before depreciation)1,2 14,376 19,280 21,588 % on turnover 0.49% 0.53% 0.58% Less: Selling Expenses (before depreciation) 1 12,776 12,729 15,051 % on turnover 0.44% 0.35% 0.40% Plus (Less): Other Operating Income (Expenses) -17,322 45,126 52,413 Earnings before Interest, Depreciation & Tax (EBITDA) 218,734 258,604 286,316 % on turnover 7.48% 7.12% 7.70% Plus: Income from Participations & Interest 4,773 6,574 5,053 Less: Interest & Related Expenses 12,461 32,307 37,038 Earnings before Depreciation & Tax 211,046 232,871 254,331 % on turnover 7.22% 6.42% 6.84% Less: Depreciation 22,516 43,272 45,919 Earnings Before Tax (EBT) 188,530 189,599 208,412 % on turnover 6.45% 5.22% 5.60% Less: Income Tax 3 57,843 62,125 53,729 Earnings after Tax (EAT) 130,687 127,474 154,683 % on turnover 4.47% 3.51% 4.16% Weighted number of shares 4 110,776,573 110,782,980 110,782,980 Number of shares at year end 110,782,980 110,782,980 110,782,980

PER SHARE DATA (in euros) 2005 2006 2007 Earnings before Depreciation and Tax 5 1.91 2.10 2.29 Earnings Before Tax 5 1.70 1.71 1.88 Earnings after Tax 5 1.18 1.15 1.40 Dividend per share 6 1.10 1.15 1.20

Notes:

1 The breakdown of depreciation charges relating to Cost of Sales and Administrative & Selling Expenses is available in the section "Depreciation" of the present chapter. 2 Administrative Expenses include BoD fees for 2005: € 216,000 - 2006: € 219,000 - 2007: € 219,000. 3 The Company has been audited for tax purposes until the fiscal year 2004 (included). The income tax for the fiscal year 2006 includes an amount of € 10.2 million which refers to the outcome of the statutory tax audit for the fiscal years 2000 – 2004 (5 years) of which an amount of € 5.7 million concerns additional tax relating to accounting differences and an amount of € 4.5 million concerns surcharges. The income tax for the fiscal year 2007 includes an amount of € 2.3 million which concerns taxation imposed retrospectively for the formation during previous fiscal years of a reserve, according to the Law 3220/2004, with final settlement of any relevant tax liability. 4 For the weighted number of shares the treasury shares in possession of the Company were taken into consideration. 5 Based on the weighted number of shares. It is noted that due to the small number of treasury shares in possession of the Company during the year 2005 the data per share would not differ in case the calculations were made using the number of shares at the year end. 6 The 2007 dividend amount per share relates to the proposal of the Company BoD to the General Assembly of Company Shareholders.

❚ 36 ❚ annual report CORINTH REFINERIES S.A.

❚ Turnover

In principle, the turnover increase or decrease of oil refining and trading companies is mainly a function of the following factors: a) Volume of Sales. b) Crude Oil and Petroleum Product prices. c) Euro / U.S Dollar parity.

The turnover of the Company in 2007 amounted to € 3,719.1 million from € 3,629.7 million in 2006 demonstrating a 2.46% increase. A positive catalyst for this development was the increase of the average prices of petroleum products by approximately 12% while negative catalysts were the sales volume (marginal drop by 0.75% from MT 8,376 thousand in 2006 to MT 8,313 thousand in 2007) as well as the devaluation of the USD in relation to the Euro (average parity) by approximately 9% .

With reference to specific products, in 2007 the sales volume of jet fuels increased by MT 295 thousand and was counterbalanced by an equal drop of the sales volume of diesel. From the rest products any positive or negative differences of sales volume were negligible as a percentage or, in those cases where the differences proved meaningful they concerned products with very low percentage contribution in the aggregate sales mix of Company.

It must be noted that the bulk of Company sales regards refining production comprising 85.4% of turnover in 2007 compared to 78.8% in 2006 and 68.7% in 2005. During the last three year period the contribution of trading activity was gradually restricted because of the high volatility of the relevant margins which in certain cases proved even negative (please see table below) and of the installation of the new Hydrocracker complex. This unit already completed 2 years of full operation facilitating the further enhancement of flexibility of the production procedure and contributing to the increase of the refining activity as a percentage of total Company turnover at the highest level over the recent years.

❚ Cost of Sales (before Depreciation) - Gross Profit

The Cost of Sales before depreciation increased at a lower rate in relation to Turnover (1.9% compared to 2.46%) amounting to € 3,448.6 million in 2007 from € 3,384.2 million in 2006 and as a result the Gross Profit (before depreciation) increased as an absolute figure by 10.21% from € 245,487 thousand in 2006 to € 270,542 thousand in 2007.

It must be noted that the Cost of Sales (before depreciation) includes the Refinery Operating Cost (ROC) which concerns mainly the cost of production. More specifically, the Refinery Operating Cost amounted to € 103,500 thousand in 2007 compared to € 95,900 thousand in 2006 the increase accounted for by expenses for third party services and the regular annual salary increase of the production staff.

Excluding the Refinery Operating Cost, the Gross Profit amounted to € 374 million in 2007 from € 341.4 million in 2006 (an increase of 9.5%) confirming the high level of profitability of the Company in terms of profit margin despite the notable devaluation of the USD against the Euro (it must be stressed that a significant part of the losses due to the weakening of the USD is recovered through Operating Income - see next page section "Other Operating Income").

The increase of the Gross Profit (before depreciation) noted above is attributed to the increase of the refining margins in 2007 compared to 2006, as well as to the ability of the Company to place its products, while at the same time demonstrating consistency in generating high level sales volumes, at the most profitable markets according to the prevailing conditions.

The development of the Company Gross Profit Margin in USD/MT for the last three years is shown below: GROSS PROFIT MARGIN (USD/MT) 2005 2006 2007 Refining Profit Margin 72.8 60.9 71.2 Trading Profit Margin 18.0 8.2 -3.1 Blended Profit Margin 57.4 51.0 61.8

annual report ❚ 37 ❚ ❚ Operating Expenses before depreciation (Administrative and Selling)

The Selling Expenses amounted to € 15,051 thousand in 2007 compared to € 12,729 thousand in 2006 (an increase of 18.24%). This development is attributed to the increase of transportation cost due to the escalation of fuel prices as well as to the increase of storage expenses.

The Administrative Expenses amounted to € 21,588 thousand in 2007 compared to € 19,280 thousand in 2006 (an increase of 11.97%). This development is mainly accounted for by the donations and grants (see Chapter 4).

❚ Other Operating Income (Expenses)

Other Operating Income (Expenses) relates mainly to the net difference of foreign exchange gains and losses which evolve during the fiscal year from the receivables and payables of the Company denominated in foreign currency. Due to the further weakening of the USD against the Euro in 2007, Other Operating Income amounted to € 52,413 thousand compared to € 45,126 thousand in the previous year.

It must be stressed that at operating level the Company has chosen to tackle the issue of USD volatility against the Euro by funding the assets of the Company with similar foreign exposure liabilities.

❚ Earnings before Interest, Depreciation and Tax (EBITDA)

Subsequent to the developments of Gross Margin and Operating Income detailed above, the Company Earnings Before Interest, Depreciation and Tax (EBITDA) increased in 2007 by 10.72% and amounted to € 286,316 thousand from € 258,604 thousand in 2006.

❚ Income from Participations and Investments

Income from participations and investments amounted to € 5.05 million out of which an amount of € 3.0 million concerns the dividend paid to the Company by the wholly owned subsidiary AVIN OIL from its 2006 earnings and an amount of € 1.7 million concerns interest income from bank deposits.

❚ Financial Expenses

In 2007 the financial expenses of the Company amounted to € 37 million from € 32.3 million in 2006. This development is attributed to the upward trend of interest rates during 2007.

❚ Depreciation

The depreciation charge in 2007 increased to € 45.9 million from € 43.3 million in 2006 leading to a further strengthening of the cash flow of the Company.

The breakdown of the depreciation charge relating to the Cost of Sales, Administrative Expenses and Selling Expenses of the last three years is presented in the next table: DEPRECIATION BREAKDOWN (amounts in thousand euros) 2005 2006 2007 Cost of Sales 22,062 42,806 45,622 Administrative Expenses 429 447 274 Selling Expenses 25 19 23 TOTAL DEPRECIATION 22,516 43,272 45,919

❚ 38 ❚ annual report CORINTH REFINERIES S.A.

❚ Earnings before Tax

Earnings before Tax (EBT) amounted to € 208.4 million in 2007 compared to € 189.6 million in 2006 demonstrating an increase of 9.92% and keeping the Company at a steady course of high profitability.

❚ Tax

The total amount of income tax in 2007 amounted to € 53,729 thousand compared to € 62,125 thousand in 2006. It is clarified that the mentioned amount of € 53,729 thousand includes an amount of € 2,289 thousand concerning taxation imposed retrospectively for the formation by the Company during previous fiscal years of a reserve, according to the Law 3220/2004, with final settlement of any relevant tax liability. Without taking into account the tax charge for the formation of the reserve according to the Law 3220/2004, the income tax of the Company as a percentage of Earnings before Tax (EBT) amounts to 24.68% since the amount of € 3.0 million relating to the AVIN OIL dividend is tax exempted.

❚ Earnings after Tax

Earnings after Tax (EAT) amounted to € 154.7 million in 2007 compared to € 127.5 million in 2006.

annual report ❚ 39 ❚ 5.3. Company Balance Sheet Review 2005 - 2007

ASSETS

The development of the balances of the Assets’ side of the Company Balance Sheet as of 31.12.2005, 31.12.2006 and 31.12.2007 is presented in the following table: ASSETS (amounts in thousand euros) 2005 2006 2007 Fixed Assets Intangible assets 871 559 1,229 Tangible Assets 698,065 691,481 687,174 Investments in subsidiaries and associates 38,608 38,528 38,678 Investments available for sale 927 927 927 Other long term receivables 969 1,280 2,823 Total Fixed Assets 739,440 732,775 730,831

Current Assets Inventories 308,225 182,122 339,916 Receivables Trade receivables 216,863 212,415 294,106 Other short term receivables 31,893 40,312 21,055 Total Receivables 248,756 252,727 315,161 Cash and cash equivalents 6,740 6,533 10,634 Total Current Assets 563,721 441,382 665,711 TOTAL ASSETS 1,303,161 1,174,157 1,396,542

❚ Intangible Assets

The balance of "Intangible Assets" concerns mainly expenses for the purchase of software.

❚ Tangible Assets

An analysis of the balance of "Tangible Assets" as of 31.12.2007 is included in note 14 of the disclosures on the financial statements for the year 2007 (please see Appendix). It is clarified that the noted cumulative € 42 million increase in the balance (at cost) of the Tangible Assets (€ 947 million as of 31.12.2007 compared to € 905 million as of 31.12.2006) relates to the investments effected by the Company in 2007 (please see section 4.9 of this annual report).

❚ Investments in Subsidiaries and Associates & available for sale

The balance of "Investments in Subsidiaries and Associates" as of 31.12.2007 corresponds to the value of the participation of MOTOR OIL in the companies "AVIN OIL" (€ 37.56 million), "OLYMPIC FUEL COMPANY S.A." (€ 0.9 million) and "KORINTHOS POWER S.A." (€ 0.2 million).

The balance of "Investments available for sale" as of 31.12.2007 amounts to € 927 thousand and corresponds to the value of the participation of MOTOR OIL in the company "ATHENS AIRPORT FUEL PIPELINE COMPANY S.A.".

Detailed reference to all above mentioned companies is provided in chapter 6 of this annual report while the percentages of the participation of MOTOR OIL in their share capital are presented in the following table: Company Name % participation AVIN OIL S.A. 100 % OLYMPIC FUEL COMPANY S.A. 14 % KORINTHOS POWER S.A . 30 % ATHENS AIRPORT FUEL PIPELINE COMPANY S.A. 16 %

❚ 40 ❚ annual report CORINTH REFINERIES S.A.

❚ Other Long-Term Receivables

The balance of "Other Long-Term Receivables" as of 31.12.2007 amounted to € 2,823 thousand compared to € 1,280 thousand as of 31.12.2006 and concerns prepayment of expenditure and guarantees.

❚ Inventories

The total value of inventories as of 31.12.2007 amounted to € 339,916 thousand compared to € 182,122 thousand as of 31.12.2006. Year-end inventories (finished goods, raw materials, consumables etc.) are valued at the lower value between the cost of purchase and the net realizable value at the end of each accounting period. It is noted that the cost of purchase is calculated based on the moving weighted average purchase price.

Furthermore, the Company keeps a stock of spare parts which were purchased for the purpose to be used in maintenance and repair works of its machinery. This stock concerns a large number of items, some of which are of high value and slow moving. The management of the refinery has declared that this situation is acceptable because these spare parts are accompanying items of the new machinery and of the equipment purchased by the Company in order to be in operational readiness.

It must be stressed that because of the nature of Company products economic obsolescence of inventories is ruled out while the volume of transactions (purchases – sales) effected during each accounting period eliminates the possibility of slowly moving stock, particularly, in relation to petroleum products.

It is emphasized that a firm Company policy is to always keep inventories at low level.

❚ Trade Receivables

The balance of "Trade Receivables" amounted to € 294,106 thousand as of 31.12.2007 compared to € 212,415 thousand as of 31.12.2006. The average collection period from the debtors of the Company is 29 days.

❚ Other short term receivables

The balance of "Other short term receivables" amounted to € 21,055 thousand as of 31.12.2007 compared to € 40,312 thousand as of 31.12.2006 and this mainly relates to receivables from VAT return and prepaid expenses.

❚ Cash and cash equivalents

As of 31.12.2007 the cash balances of the Company relating to its current and time deposits amounted to € 10,634 thousand compared to € 6,533 thousand as of 31.12.2006.

annual report ❚ 41 ❚ LIABILITIES & SHAREHOLDERS’ EQUITY

The development of the balances of the Liabilities & Shareholders’ Equity side of the Company Balance Sheet as of 31.12.2005, 31.12.2006 and 31.12.2007 is presented below: LIABILITIES & SHAREHOLDERS’ EQUITY (amounts in thousand euros) 2005 2006 2007 SHAREHOLDERS’ EQUITY Paid up share capital 33,235 33,235 33,235 Share premium Account 49,528 49,528 49,528 Reserves 75,374 77,136 75,166 Retained earnings 180,500 184,351 213,604 TOTAL SHAREHOLDERS’ EQUITY 338,637 344,250 371,533

LIABILITIES Long term liabilities Bond loans 329,880 287,048 246,120 Provision for retirement benefit obligation 45,275 46,488 37,186 Deferred tax liabilities 11,141 19,751 28,287 Other non current liabilities and deferred income 4,821 5,059 4,768 Total Long term Liabilities 391,117 358,346 316,361 Short term liabilities Suppliers and other trade payables 253,876 102,591 317,914 Bank loans 276,143 360,303 370,156 Provision for retirement benefit obligation 2,403 2,117 4,581 Tax payable 40,570 6,139 15,529 Deferred income 415 411 468 Total Short Term Liabilities 573,407 471,561 708,648 TOTAL LIABILITIES 964,524 829,907 1,025,009 TOTAL LIABILITIES & SHAREHOLDERS’ EQUITY 1,303,161 1,174,157 1,396,542

❚ Shareholders’ Equity

As of 31.12.2007 Shareholders’ Equity amounted to € 371,533 thousand compared to 344,250 thousand as of 31.12.2006. A detailed analysis of the development of the shareholders’ equity of the Company from January 1st, 2005 up until December 31st, 2007 is shown below: SHAREHOLDERS’ EQUITY (amounts in thousand euros) 2005 2006 2007 Shareholders’ Equity as of 1.1.2005, 1.1.2006 & 1.1.2007 respectively 301,992 338,637 344,250 Plus :Earnings after tax 130,687 127,474 154,683 Less: Dividends paid during the accounting year -94,155 -121,861 -127,400 Plus: Sale of treasury shares 113 0 0 Shareholders’ Equity as of 31.12.2005, 31.12.2006 & 31.12.2007 respectively 338,637 344,250 371,533

❚ 42 ❚ annual report CORINTH REFINERIES S.A.

❚ Long-Term Liabilities

As of 31.12.2007 the balance of this account amounted to € 316,361 thousand compared to € 358,346 thousand as of 31.12.2006.

The major part of this account mainly relates to two long-term loans of the Company the first of which for an amount of € 250 million with seven year duration and an option to extend it for two more years (it was received gradually according to the progress of the Hydrocracker project) and the second for an amount of USD 150 million with five year duration also with an option to extend it for two more years. The agreement for the first loan concerns the funding of the Hydrocracker project (signed in July 2004) while it matures on June 30th, 2011 with an option to extend its maturity for two more years (until 2013). The balance of this long-term loan as of 31.12.2007 amounts to € 145 million compared to € 175 million as of 31.12.2006. The repayments already effected concerning this loan total € 75 million (that is, one € 15 million installment in 2005, two € 15 million installments in 2006 and two € 15 million installments in 2007). Furthermore, an amount of € 30 million relating to the two € 15 million installments payable within 2008 is included in the account "Short Term Bank Loans" (please see relevant section below). The second loan concerns the refinancing of a long term loan for an amount of USD 150 million for the financing of the Company’ s working capital needs of a rather permanent nature. The refinancing was effected in December 2005. The new loan matures in December 2010 with an option to extend its repayment for two more years (until 2012).

❚ Suppliers and other trade payables

As of 31.12.2007 the balance of "Suppliers and other trade payables" amounted to € 317,914 thousand compared to € 102,591 thousand as of 31.12.2006. The average credit period received for the trade purchases of the Company is approximately 33 days.

❚ Short-Term Bank Loans

As of 31.12.2007 the balance of "Short term bank loans" amounted to € 370,156 thousand compared to € 360,303 thousand as of 31.12.2006. It is clarified that the balances of 31.12.2007 and of 31.12.2006 include respectively an amount of € 30 million concerning the installments payable within the following accounting period with regard to the bond loan of the Company for an initial amount of € 250 million.

It must be noted that as of 31.12.2007 the total net bank debt (long term and short term) of the Company was reduced to € 605,642 thousand from € 640,818 thousand as of 31.12.2006.

❚ Tax payable

The Company tax liabilities increased significantly to € 15,529 thousand as of 31.12.2007 from € 6,139 thousand as of 31.12.2006. This development, despite the reduction of the corporate tax rate to 25% from 29%, is attributed to the increased profitability of the Company in 2007 as well as to the additional tax imposed retrospectively for the formation during previous fiscal years of a reserve, according to the Law 3220/2004, with final settlement of any relevant tax liability.

annual report ❚ 43 ❚ 5.4. Company Key Financial Ratios

The key financial ratios of the Company for the period 2005 - 2007 are presented below: KEY FINANCIAL RATIOS 2005 2006 2007 Growth Ratios (%) Turnover (Sales) 50.9% 24.2% 2.5% Earnings Before Tax 13.1% 0.6% 9.9% Earnings after Tax 10.1% - 2.5% 21.3% Earnings Margin Ratios (%) Gross Profit Margin (before depreciation) 9.0% 6.8% 7.3% Net Profit Margin Before Tax 6.5% 5.2% 5.6% Net Profit Margin after Tax 4.5% 3.5% 4.2% Return on Capital Ratios (Before Tax) (%) Average Shareholders’ Equity 58.9% 55.5% 58.2% Average Total Assets 17.8% 17.9% 19.1% Liquidity Ratios (:1) Current Ratio 0.98 0.94 0.94 Quick Ratio 0.45 0.55 0.46 Efficiency Ratios (number of days) Average Collection Period 27.4 21.4 28.9 Average Payment Period 34.5 10.0 33.3 Inventory Turnover 43.8 20.2 37.1 Times Interest Earned EBIT / Interest Expense 10.67 7.07 6.95 Capital Structure Ratios (:1) Liabilities / Equity 2.85 2.41 2.76 Bank Debt / Equity 1.79 1.88 1.66

The turnover growth ratio shows a 2.5 % increase in sales in 2007 compared to 2006. The EBT and EAT growth ratios exhibited an increase of 9.9% and 21.3% respectively.

The gross profit margin (before depreciation) was 7.3% in 2007 from 6.8 % in 2006. The net profit margin (before tax) was 5.6% in 2007 compared to 5.2% in 2006 as a result of the development of the gross profit margin.

The return on average shareholders’ equity remained at a high level and strengthened further (2007: 58.2% compared to 2006: 55.5%). The same was the case for the return on average total assets (2007: 19.1% compared to 2006: 17.9%).

The current ratio remained unchanged at 0.94 between 2006 and 2007 while the quick ratio exhibited a marginal change from 0.55 in 2006 to 0.46 in 2007.

The average collection period stood at 28.9 days in 2007 compared to 21.4 days in 2006. The average payment period was 33.3 days in 2007 compared to 10 days in 2006. Furthermore, inventory turnover was 37.1 days in 2007 compared to 20.2 days in 2006.

The times interest earned ratio remained approximately at the same level with the previous year (2007: 6.95 compared to 7.07 in 2006).

The liabilities /equity ratio was 2.76 in 2007 compared to 2.41 in 2006.

The bank debt/ equity ratio improved to 1.66 in 2007 compared to 1.88 in 2006.

❚ 44 ❚ annual report CORINTH REFINERIES S.A.

DESCRIPTION OF KEY FINANCIAL RATIOS GROWTH RATIOS (%) Turnover (Sales) = [(Current Year’ s Turnover – Previous Year’ s Turnover ) / Previous Year’ s Turnover ] *100 Earnings Before Tax (EBT) = [(Current Year’ s EBT – Previous Year’ s EBT) / Previous Year’ s EBT] *100 Earnings after Tax (EAT) = [(Current Year’ s EAT – Previous Year’ s EAT) / Previous Year’ s EAT] *100 PROFIT MARGIN RATIOS (%) Gross Profit Margin (before depreciation) = [Gross Profit (before depreciation) / Turnover] * 100 Net Profit Margin before Tax = [ EBT / Turnover] * 100 Net Profit Margin after Tax = [ EAT / Turnover ] * 100 RETURN ON CAPITAL RATIOS (%) (before tax) Average Shareholders’ Equity = [Current Year’ s EBT /((Current Year’ s Shareholders’ Equity + Previous Year’ s Shareholders’ Equity)/2)]*100 Average Total Assets = {(Current Year’ s EBT + Interest & related Expenses) / [(Current Year’ s Total Assets + Previous Year’ s Total Assets ) / 2]}*100 LIQUIDITY RATIOS (:1) Current Ratio = (Current Assets / Current Liabilities) Quick Ratio = (Current Assets - Inventories) / (Current Liabilities) EFFICIENCY RATIOS (number of days) Receivables = [Debtors’ year end balance / Turnover]* 365 Payables = [Suppliers’ year end balance/Cost of Sales (before depreciation) excluding Refinery Operating Cost] * 365 Inventories = [Closing Stock of inventories/ Cost of Sales (before depreciation) excluding Refinery Operating Cost]* 365 CAPITAL STRUCTURE RATIOS Liabilities / Equity = (Long-Term Liabilities + Current Liabilities) / Shareholders’ Equity Bank Debt / Equity = (Long-Term Bank Loans + Short-Term Bank Loans + Current portion of Long Term Bank Loans ) / Shareholders’ Equity TIMES INTEREST EARNED RATIO Earnings before Interest and Tax / Interest Expenses = (EBT + Interest Expenses ) / (Net Interest Expenses) 5.5 Cash Flow Statements

The Company Cash Flow Statements for the fiscal year 2007 are included in the Appendix of this Annual Report (please see Appendix).

annual report ❚ 45 ❚ 5.6 Share Market Price Development

The closing of the market price of the share of the Company on the last business day of the Athens Exchange of each month of the year 2007, the total monthly share trading volume (both in quantity and value), and the closing prices of the ATHEX General and the Oil & Gas Indices on the respective dates, are presented in the following table: MOTOR OIL HELLAS INDICES CLOSING PRICES Date Share Closing TRANSACTION VOLUME ATHEX OIL & Price in shares In Euros GENERAL GAS 29/12/2006 19.52 2,863,645 56,992,494 4,394.13 4,602.04 31/1/2007 20.44 9,400,630 186,365,794 4,710.24 4,876.35 28/2/2007 19.60 6,439,791 131,700,495 4,503.96 4,566.86 30/3/2007 20.82 5,874,856 115,953,768 4,643.14 4,784.55 30/4/2007 21.02 3,263,568 68,647,742 4,736.83 4,920.33 31/5/2007 22.10 4,982,555 107,340,436 4,972.19 5,076.70 29/6/2007 19.44 4,298,117 87,689,775 4,843.78 4,981.07 31/7/2007 18.44 3,822,317 75,076,033 4,917.50 4,591.91 31/8/2007 18.00 2,715,931 48,094,179 4,912.53 4,437.34 28/9/2007 18.60 3,137,877 57,522,950 5,123.36 4,709.50 31/10/2007 17.06 2,847,645 51,137,990 5,334.50 4,450.81 30/11/2007 14.70 3,089,103 49,961,196 5,053.87 4,186.11 31/12/2007 15.80 2,469,712 39,334,091 5,178.83 4,476.18 The following diagrams show the development of the market price of MOTOR OIL share compared to the development of the Athens Exchange General Index (diagram no. 1) and the development of the Oil & Gas Index (diagram no. 2).

29 6.800 28 27 6.300 26 ATHEX General 25 5.800 24 23 5.300 22 21 4.800 Euros 20 19 4.300 18 29 17 MOH Share 3.800 6.800 16 28 15 3.300 27 14 6.300 26 13 Γενικός ∆είκτης Χ.Α. 2.800 7 7 7 007 007 25 /2007 8/2007 9 5.800 /11/200 /12/200 9 4 24 02/01/2 14/02/200 30/03/2007 17/05/2007 02/07/2 14/0 27/0 0 2 23 30 5.800 5.300 22 29 28 FTSE / ATHEX Oil & Gas 5.600 21 27 4.800 20 26 5.400 25 19 5.200 4.300 24 18 23 5.000 17 22 3.800 21 Mετοχή MOH 4.800 16 20 Euros 15 19 4.600 3.300 14 18 17 4.400 13 16 MOH Share 2.800 4.200 15 07 /2007 14 3 5/2007 8/2007 4.000 4/02/20 02/01/2007 131 30/0 17/0 02/07/2007 14/0 27/09/2007 09/11/2007 24/12/2007 12 3.800 7 7

/2007 3/2007 9 /11/200 /12/200 9 4 02/01/2007 14/02/2007 30/0 17/05/2007 02/07/2007 14/08/2007 27/0 0 2

❚ 46 ❚ annual report CORINTH REFINERIES S.A. 5.7. Consolidated Financial Statements

The development of MOTOR OIL consolidated financial figures for the accounting years 2005, 2006 and 2007 prepared in accordance with the International Financial Reporting Standards is presented in this section.

Apart from MOTOR OIL, which is the parent company, the Consolidated Financial Statements include the following firms:

◗ AVIN OIL AVENEP (full consolidation method, participation percentage - direct - 100%)

◗ MAKREON S.A. (full consolidation method, participation percentage - indirect - 100%)

◗ OLYMPIC FUEL COMPANY S.A. (net equity method, participation percentage -direct & indirect - 28%)

◗ HELLENIC AVIATION FUEL COMPANY –HAFCO- S.A. (net equity method, participation percentage -indirect- 50%)

◗ KORINTHOS POWER S.A. (net equity method, participation percentage - direct - 30%)

The regular audit of the Company’ s Consolidated Financial Statements for the fiscal years 2005 – 2007 was conducted by the Auditing Company DELOITTE, 250-254 Kifissias Avenue, Halandri, tel. ++ 30 210 6781100 (Certified Public Accountant in charge Mr. George Cambanis REG No. ICPA - GR - 10761).

annual report ❚ 47 ❚ 5.7.1 Consolidated Turnover and Earnings Review 2005 - 2007

The development of the Consolidated Turnover and Earnings during the accounting years 2005 – 2007 is presented in the following table: CONSOLIDATED YEARLY EARNINGS (amounts in thousand euros) 2005 2006 2007 Turnover (Sales) 3,237,376 3,977,091 4,069,996 Less: Cost of Sales (before depreciation)1 2,930,085 3,686,468 3,752,686 Gross Profit (before depreciation) 307,291 290,623 317,310 % on Turnover 9.49% 7.30% 7.80% Less: Administrative Expenses (before depreciation)1 22,038 26,882 30,700 % on Turnover 0.68% 0.68% 0.75% Less: Selling Expenses (before depreciation)1 40,834 43,947 47,943 % on Turnover 1.26% 1.11% 1.18% Plus (Less): Other Operating Income (Expenses) - 14,112 50,249 57,713 Earnings before Interest, Depreciation and Tax (EBITDA) 230,307 270,043 296,380 % on Turnover 7.11% 6.79% 7.28% Plus: Income from Investments / earnings from participations 1,640 4,282 2,175 Less: Interest and other related expenses 14,631 35,858 42,188 Earnings before Depreciation and Tax 217,316 238,467 256,367 % on Turnover 6.71% 6.00% 6.30% Less: Depreciation 25,959 47,300 50,381 Earnings Before Tax (EBT) 191,357 191,167 205,986 % on Turnover 5.91% 4.81% 5.06% Less: Income tax 2 59,722 63,576 56,129 Earnings after Tax (EAT) 131,635 127,591 149,857 % on Turnover 4.07% 3.21% 3.68% Weighted Number of Shares 3 110,776,573 110,782,980 110,782,980 Number of Shares at year end 110,782,980 110,782,980 110,782,980

DATA PER SHARE (in euros) 2005 2006 2007 Earnings before Depreciation and Tax 4 1.97 2.15 2.31 Earnings Before Tax 4 1.73 1.73 1.86 Earnings after Tax 4,5 1.19 1.15 1.35

Notes: 1 The breakdown of the depreciation charges relating to Cost of Sales, Administrative and Selling Expenses is presented in the section "Depreciation" of this chapter of the annual report. 2 The parent company MOTOR OIL has been audited for tax purposes until the fiscal year 2004. The income tax for the fiscal year 2006 includes an amount of € 10.2 million concerning the outcome of the statutory tax audit for the fiscal years 2000-2004. Furthermore, the income tax for the fiscal year 2007 includes an amount of € 2.3 million concerning taxation imposed retrospectively for the formation during previous fiscal years of a reserve, according to the Law 3220/2004, with final settlement of any relevant tax liability. The wholly owned subsidiary AVIN OIL has been audited for tax purposes until the fiscal year 2005. The income tax for the fiscal year 2007 includes an amount of € 2.1 million concerning the outcome of the statutory tax audit for the fiscal years 2003- 2005. OLYMPIC FUEL COMPANY S.A. has been audited for tax purposes until the fiscal year 2000. The companies HAFCO S.A., KORINTHOS POWER S.A. and the newly founded MAKREON S.A. have not been audited for tax purposes. 3 For the weighted number of shares the treasury shares in possession of the parent Company were taken into consideration. 4 Based on the weighted number of shares. It is noted that due to the small number of treasury shares in possession of the parent Company during the year 2005 the data per share would not differ in case the calculations were made using the number of shares at the year end. 5 There are no minority interests.

❚ 48 ❚ annual report CORINTH REFINERIES S.A.

❚ Consolidated Turnover

The Consolidated Turnover for 2007 amounted to € 4,070 million compared to € 3,977.1 million for 2006 demonstrating a 2.34% increase. This development is mainly attributed to the same factors which contributed to the increase in the turnover of the parent company MOTOR OIL.

The Consolidated Turnover breakdown by geographical market (domestic – exports) and type of activity (refining, trading & marketing) for the three year period 2005 – 2007 is presented in the following tables. It is clarified that the breakdown of the consolidated turnover in domestic and export markets, presented in the tables below, has been done on the basis of the location of final destination and consumption of the products CONSOLIDATED TURNOVER BY GEOGRAPHICAL MARKET (amounts in thousand euros) 2005 2006 2007 Domestic Sales 1,582,867 1,855,371 2,265,403 % on consolidated turnover 48.90% 46.65% 55.66% Export sales 1,654,509 2,121,720 1,804,593 % on consolidated turnover 51.10% 53.35% 44.34% TOTAL CONSOLIDATED TURNOVER 3,237,376 3,977,091 4,069,996 CONSOLIDATED TURNOVER BY TYPE OF ACTIVITY (amounts in thousand euros) 2005 2006 2007 Refining 2,008,662 2,859,651 3,176,593 % on consolidated turnover 62.05% 71.90% 78.05% Trading & Marketing 1,228,714 1,117,440 893,403 % on consolidated turnover 37.95% 28.10% 21.95% TOTAL CONSOLIDATED TURNOVER 3,237,376 3,977,091 4,069,996

❚ Cost of Sales (before depreciation) and Gross Profit

In 2007 consolidated Gross Profit (before depreciation) increased as an absolute figure by 9.18% compared to 2006 (€ 317,310 thousand from € 290,623 thousand) following a parallel course with the respective figure of the parent Company.

The analysis of consolidated Cost of Sales per type of activity is presented in the next table: (amounts in thousand euros) 2005 2006 2007 Refining 1,779,466 2,624,764 2,902,961 Trading & Marketing 1,150,619 1,061,704 849,725 COST OF SALES (BEFORE DEPRECIATION) TOTAL 2,930,085 3,686,468 3,752,686

❚ Operating Expenses before depreciation (Administrative and Selling)

Total operating expenses at consolidated level amounted to € 78,643 thousand in 2007 compared to € 70,829 thousand in 2006 (an increase of 11.03%).

❚ Other Operating Income (Expenses)

Other operating income (expenses) relates mainly to the net difference of foreign exchange gains and losses which evolve during the accounting year from the receivables and payables of the Group denominated in foreign currency. The increase of Operating Income (from € 50,249 thousand in 2006 to € 57,713 thousand in 2007) is attributed to the further weakening of the USD in relation to the Euro during 2007.

annual report ❚ 49 ❚ ❚ Earnings before Interest, Depreciation and Tax (EBITDA)

The consolidated Earnings Before Interest, Depreciation and Tax (EBITDA) increased in 2007 by 9.75% and amounted to € 296,380 thousand from € 270,043 thousand in 2006.

❚ Income from Investments / Earnings from Participations

Income from investments in 2007 amounted to € 2.2 million and it all concerned interest earned from bank deposits.

❚ Financial Expenses

In 2007 the financial expenses on a consolidated basis amounted to € 42,188 thousand from € 35,858 thousand in 2006. This development is attributed to the upward trend of interest rates during 2007.

❚ Depreciation

The breakdown of the depreciation charge on the various cost accounts is presented below: DEPRECIATION BREAKDOWN (amounts in thousand euros) 2005 2006 2007 Cost of sales 22,062 42,806 45,623 Administrative expenses 634 694 543 Selling expenses 3,263 3,800 4,215 TOTAL DEPRECIATION CHARGE 25,959 47,300 50,381

❚ Consolidated Earnings Before Tax

Consolidated Earnings Before Tax amounted to € 205,986 thousand in 2007 compared to € 191,167 thousand in 2006 (an increase of 7.75%) confirming the Group’ s steady course of high profitability.

❚ Tax

The income tax at Group level in 2007 amounted to € 56,129 thousand from € 63,576 thousand in 2006. It is noted that the tax amount for the fiscal year 2007 corresponds to the income tax of the parent Company, which as already mentioned includes additionally an amount of € 2.3 million for taxation imposed retrospectively for the formation during previous fiscal years of a reserve according to the Law 3220/2004 with final settlement of any relevant tax liability, and to the outcome of the tax audit for the fiscal years 2003 – 2005 of AVIN OIL which amounted to € 2.1 million.

❚ Consolidated Earnings After Tax

Earnings After Tax (EAT) at consolidated level amounted to € 149.9 million in 2007 compared to € 127.6 million in 2006.

❚ 50 ❚ annual report CORINTH REFINERIES S.A.

5.7.2. Consolidated Balance Sheet Review 2005-2007

The development of the balances of the accounts of the Consolidated Balance Sheet as of 31.12 of the years 2005 – 2007 is presented in the next tables:

ASSETS

(amounts in thousand euros) 2005 2006 2007 Fixed Assets Goodwill 16,200 16,200 16,200 Other intangible assets 3,553 4,129 4,435 Tangible Assets 733,951 729,751 731,123 Investments in subsidiaries and associates 3,664 3,646 3,586 Investments available for sale 927 927 927 Other long term receivables 11,965 11,158 14,923 Total Fixed Assets 770,260 765,811 771,194

Current Assets Inventories 314,344 187,522 346,213 Receivables Trade receivables 215,449 226,623 365,200 Other short term receivables 89,037 100,097 30,521 Total Receivables 304,486 326,720 395,721 Cash and cash equivalents 9,211 8,785 13,743 Total Current Assets 628,041 523,027 755,677 TOTAL ASSETS 1,398,301 1,288,838 1,526,871

❚ Goodwill and Other Intangible Assets

The amount of € 16,200 thousand relates to the net book value of the goodwill which arose from the acquisition of AVIN OIL in March 2002 (please see chapter 6).

The balance of "Other Intangible Assets" relates to expenses for the purchase of software of the parent Company and to the value of the rights to operate gas outlets on leasehold property of the wholly owned subsidiary AVIN OIL.

❚ Tangible Assets

An analysis of "Tangible Assets" as of 31.12.2007 is included in note 14 of the disclosures on the consolidated financial statements for the fiscal year 2007 (please see Appendix). It is clarified that the noted cumulative € 50.4 million increase in the balance (at cost) of the Tangible Assets (31.12.2007: € 1,018.8 million compared to 31.12.2006: € 968.4 million) relates to the 2007 capital expenditure of € 42 million of the parent Company (please see section 4.9 of this annual report) and the remainder to the investment plan of AVIN OIL which for 2007 was approximately € 8 million.

annual report ❚ 51 ❚ ❚ Investments in Subsidiaries and Associates & available for sale

"Investments in Subsidiaries and Associates" as of 31.12.2007 amounted to € 3,586 thousand and concerns the value of the participation of the Group in the companies "OLYMPIC FUEL COMPANY S.A" (€ 2,961 thousand), "HELLENIC AVIATION FUEL COMPANY (HAFCO) S.A" (€ 8 thousand), and "KORINTHOS POWER S.A." (€ 47 thousand) as these values evolve based on the Net Equity method, as well as the value of the participation of the Group in the companies "AVIN ALBANIA S.A" (€ 510 thousand) and "BRODERICO LTD" (€ 60 thousand).

"Investments available for sale" as of 31.12.2007 amounted to € 927 thousand and concerns the value of the participation of the Group in the company "ATHENS AIRPORT FUEL PIPELINE COMPANY S.A".

The percentages of the participation of the Group in the share capital of the above companies are presented below: Company’ s Legal Name % participation OLYMPIC FUEL COMPANY S.A 28% HELLENIC AVIATION FUEL COMPANY (HAFCO) S.A 50% KORINTHOS POWER S.A 30% ATHENS AIRPORT FUEL PIPELINE COMPANY S.A 16% AVIN ALBANIA S.A 100% MAKREON S.A. 100% BRODERICO LTD 100%

❚ Other Long Term receivables

As of 31.12.2007 "Other long term receivables" amounted to € 14,923 thousand from € 11,158 thousand as of 31.12.2006 concerning mainly prepaid expenses and guarantees.

❚ Inventories

As of 31.12.2007 the value of the inventories, on a consolidated basis, amounted to € 346,213 thousand compared to €187,522 thousand as of 31.12.2006. It is emphasized that a firm policy of the parent company is to always keep low level of inventories.

❚ Trade Receivables

As of 31.12.2007 "Trade Receivables", on a consolidated basis, amounted to € 365,200 thousand compared to € 226,623 thousand as of 31.12.2006.

❚ Other short term receivables

"Other short term receivables" as of 31.12.2007 amounted to € 30,521 thousand compared to € 100,097 thousand as of 31.12.2006 and mainly concerns receivables from VAT return and prepaid expenses.

❚ Cash and cash equivalents

As of 31.12.2007 cash balances, on a consolidated basis, amounted to € 13,743 thousand compared to € 8,785 thousand as of 31.12.2006 and concern current bank accounts and time deposits.

❚ 52 ❚ annual report CORINTH REFINERIES S.A.

LIABILITIES & SHAREHOLDERS’ EQUITY (amounts in thousand euros) 2005 2006 2007 SHAREHOLDERS’ EQUITY Paid up share capital 33,235 33,235 33,235 Share premium Account 49,528 49,528 49,528 Reserves 76,393 79,521 77,559 Retained earnings 176,395 178,997 203,416 TOTAL SHAREHOLDERS’ EQUITY 335,551 341,281 363,738

LIABILITIES Long term liabilities Bond loans 359,880 317,048 276,120 Provision for retirement benefit obligation 48,637 50,038 41,177 Deferred tax liabilities 11,660 20,248 28,830 Other non current liabilities and deferred income 6,007 6,317 6,083 Total Long term Liabilities 426,184 393,651 352,210 Short term liabilities Suppliers and other trade payables 274,641 123,388 344,677 Bank loans 317,935 421,543 445,631 Provision for retirement benefit obligation 2,526 2,160 4,618 Tax payable 41,049 6,404 15,529 Deferred income 415 411 468 Total Short Term Liabilities 636,566 553,906 810,923 TOTAL LIABILITIES 1,062,750 947,557 1,163,133 TOTAL LIABILITIES & SHAREHOLDERS’ EQUITY 1,398,301 1,288,838 1,526,871

❚ Consolidated Shareholders’ Equity

As of 31.12.2007 Consolidated Shareholders’ Equity amounted to € 363,738 thousand compared to € 341,281 thousand as of 31.12.2006. A detailed analysis of the development of the Consolidated Shareholders’ Equity from January 1st, 2005 up until December 31st, 2007 is offered below: CONSOLIDATED SHAREHOLDERS’ EQUITY (amounts in ’000 euros) 2005 2006 2007 Shareholders’ Equity as of 1.1.2005, 1.1.2006 & 1.1.2007 respectively 297,958 335,551 341,281 Plus : Consolidated Earnings after tax 131,635 127,591 149,857 Less: Dividends paid during the accounting year (parent company) -94,155 -121,861 -127,400 Plus: Sale of treasury shares (parent company) 113 0 0 Shareholders’ Equity as of 31.12.2005, 31.12.2006 & 31.12.2007 respectively 335,551 341,281 363,738

❚ Long-Term Liabilities

As of 31.12.2007 "Long term liabilities" amounted to € 352,210 thousand compared to € 393,651 thousand as of 31.12.2006. The substance of this balance relates to the two bond loans (one for an initial amount of € 250 million and one for an amount of USD 150 million) entered into by the parent company and detailed in section 5.3 of this annual report. The balance of "Bank Loans" both as of 31.12.2006 and 31.12.2007 includes a bond loan for an amount of € 30 million received by AVIN OIL in 2004 scheduled to be fully repaid in 2008 with an option to extend its repayment for one more year.

annual report ❚ 53 ❚ ❚ Suppliers and other trade payables

As of 31.12.2007 "Suppliers and other trade payables", on a consolidated basis, amounted to € 344,677 thousand compared to € 123,388 thousand as of 31.12.2006.

❚ Short-Term Bank Loans

As of 31.12.2007 "Short Term Bank Loans", on a consolidated basis, amounted to € 445,631 thousand from € 421,543 thousand as of 31.12.2006. The short term debt of the wholly owned subsidiary AVIN OIL increased during 2007 due to the higher average prices of the petroleum products which led to additional working capital requirements.

It is noted that as of 31.12.2007 the total net bank debt (long term and short term) of the Group was reduced to € 708,008 thousand compared to € 729,806 thousand as of 31.12.2006.

❚ Tax Payable

As of 31.12.2007 "Tax Payable", on a consolidated basis, amounted to € 15,529 thousand compared to € 6,404 thousand as of 31.12.2006, despite the reduction of the corporate tax rate to 25% from 29%. This development is attributed to the increased year 2007 profitability of MOTOR OIL and the additional tax imposed retrospectively for the formation during previous fiscal years of a reserve, according to the Law 3220/2004, with final settlement of any relevant tax liability, as well as to the additional charge due to the statutory tax audit of the fiscal years 2003-2005 of AVIN OIL.

5.7.3. Consolidated Cash Flow Statements

The Consolidated Cash Flow Statements for the fiscal year 2007 are included in the Appendix of this Annual Report (please see Appendix).

❚ 54 ❚ annual report CORINTH REFINERIES S.A. 6. Αffiliated companies

6.1. Subsidiaries (direct participation)

AVIN OIL Industrial, Commercial & Maritime Oil Company S.A

AVIN OIL Industrial, Commercial & Maritime Oil Company S.A was founded in Athens in 1977 and currently its headquarters are located at Maroussi (12A Irodou Attikou str., 151 24). The main activity of the company is the sale of liquid fuels, lubricants, LPG and asphalt which have a wide array of applications (transportation, industrial and household use).

The share capital of AVIN OIL amounts to € 5,709,480 divided into 1,942,000 common registered shares of a nominal value € 2.94 each. The last corporate action of the company concerned a share capital increase of € 509,208 with the issuance of 173,200 new common registered shares of a nominal value € 2.94 each. This share capital increase was effected through capitalization of reserves following a decision of the Annual Ordinary General Meeting dated June 5th, 2006 and was certified by the Board of Directors on June 9th, 2006.

The sole shareholder of the company is MOTOR OIL (HELLAS) S.A which in March 2002 purchased 100% of the shares of AVIN OIL in the context of a relevant condition set in the process of the introduction of its shares on the Athens Exchange.

The acquisition of AVIN OIL gave MOTOR OIL a strong arm in the retail sector of fuels and lubricants since the acquired company ranks fourth among its competitors in the Greek market with a market share of approximately 9%.

The gas stations network of AVIN OIL numbers approximately 560 units and several representatives all over Greece while at the same time the company owns tank-trucks and employs specialized technical personnel.

Moreover, AVIN OIL has built and operates a twin grand station at Megara (70 km outside Athens), located on the new section of the Athens–Corinth highway, which, besides fuelling, offers banking, catering, and car maintenance services, at both sides of the road.

The primary objective of AVIN OIL is the qualitative enhancement of its gas station network and the strengthening of its new endeavors. The participation of the company as a founding shareholder in the companies "HAFCO S.A" and "OLYMPIC FUEL COMPANY S.A" (section 6.3 of this chapter) fall within the context of the above mentioned objective.

AVIN OIL sells fuels in the Greek market mainly through its privately owned storage premises located at Aghii Theodoroi in Corinth. The operations of the premises started in 1987 and constitute a modern truck loading terminal fully equipped with safety and environment protection systems.

The major supplier of AVIN OIL is MOTOR OIL (section 6.6 of this chapter).

The personnel headcount of AVIN OIL as of 31.12.2007 amounted to 218 employees (2006: 214 employees).

The company is audited by certified public accountants (Auditing firm DELOITTE, Certified Public Accountant in charge for the year 2006 Mr. George Cambanis, ICPA - GR - 10761). The AVIN OIL annual financial statements (based on the International Financial Reporting Standards – IFRS), the report of the auditor and the management report of the Board of Directors for the fiscal year 2007 (Sales: € 826.3 million, Earnings (losses) for the accounting period: (€ 1.4 million), Total Assets: € 191.6 million, Shareholders’ Equity: € 13.7 million) are available at the AVIN OIL site at the electronic address www.avinoil.gr. It must be noted that the reasoning behind the year 2007 losses of the Company is the € 2.1 million additional charge relating to the statutory tax audit outcome for the fiscal years 2003, 2004 and 2005.

annual report ❚ 55 ❚ 6.2. Subsidiaries (indirect participation)

MAKREON S.A.

The company was founded in April 2007 with headquarters at Maroussi Athens (12A Irodou Attikou str., 151 24) and duration for 50 years. The objective of the company according to article 2 of its Codified Memorandum and Articles of Association is the establishment and operation of gas outlets in Greece, the marketing of fuels, the provision of catering services in gas outlets ground, the transportation of petroleum products and the engagement in business representation activities for domestic and international corporations which offer similar products, goods and services.

The share capital of the company amounts to € 60,000 divided into 6,000 common registered shares of a nominal value € 10 each. All the shares of the company belong to its founding shareholders AVIN OIL (5,999 shares) and MOTOR OIL (1 share).

6.3. Companies included in the Consolidated Financial Statements

A. OLYMPIC FUEL COMPANY S.A.

The company was founded in October 1998 at Athens with duration for 24 years (until 6.10.2022). The objective of the company, according to article 3 of its Codified Memorandum and Articles of Association, is to design, finance, construct and operate the aircraft fuel supply system and the storage facilities at the New International Athens Airport "Eleftherios Venizelos" at Spata of Attica, as well as to engage in other similar endeavors.

Following the decision of the Extraordinary General Meeting dated 12.12.2000, the headquarters of the company were relocated to Spata County and specifically to privately owned premises situated inside the Athens International Airport area on the 5th km of the Spata– Loutsa Avenue. The fixed assets of "OLYMPIC FUEL COMPANY S.A" include storage tanks of total capacity 24,000 m³, pipelines of total length 14km, 125 fuel supply pits and, a fully automated system to cater for fuel flow control as well as fire and environmental protection (hydrant system). The OFC premises as well as its methods of operation have been certified by IATA (International Air Transport Association), by the Athens International Airport, and by all international and national competent authorities.

The share capital of "OLYMPIC FUEL COMPANY S.A" amounts to € 6,457,000 divided into 220,000 common registered shares of nominal value € 29.347each while its current shareholder structure is as follows: Shareholder No of Shares % Participation OLYMPIC AIRWAYS SERVICES S.A. 145,200 66% MOTOR OIL (HELLAS) CORINTH REFINERIES S.A 30,800 14% AVIN OIL 30,800 14% BELGIAN FUELLING AND SERVICES COMPANY S.A./N.V. 11,000 5% HANSA CONSULT INGENIEURE GESSELSCHAFT MBH 2,200 1% Total 220,000 100%

The company is audited by Certified Public Accountants (Auditing firm DELOITTE, Auditor in charge Mr. Tilemachos Georgopoulos ICPA-GR-19271). The key financial figures of the company for the year 2007, based on the preliminary financial statements available to MOTOR OIL at the time of the preparation of the consolidated financial statements of the latter, are as follows: Sales: € 10.3 million, Earnings after Tax: € 1.2 million, Total Assets: € 26.8 million, Shareholders’ Equity: € 9.4 million.

❚ 56 ❚ annual report CORINTH REFINERIES S.A.

B. HAFCO S.A.

This company was founded in August 2002 with headquarters at Maroussi of Athens (12A Irodou Attikou str., 151 24 Maroussi), duration for 50 years and legal name "HAFCO S.A". The objective of the Company, according to article 3 of its Codified Memorandum and Articles of Association, is to render ground services relating to aircraft fuel supply at various airports located in Greece and abroad and in general to involve into jet fuel trading.

The share capital of "HAFCO S.A" amounts to € 2,017,000 divided into 201,700 common registered shares of nominal value € 10 each. The sole company shareholders are the companies AVIN OIL and TEXACO each of which is in possession of 100,850 common registered shares (50% of the share capital). The last corporate action of the company concerned a share capital increase for an amount of € 560,000 with the issuance of 56,000 new common registered shares of a nominal value € 10 each. This share capital increase was effected in cash following a decision of the Annual Ordinary General Meeting dated June 15h, 2007 and was certified by the Board of Directors on October 9th, 2007.

The company is audited by Certified Public Accountants (Auditor in charge Mr. Efstratios Paparides of SOL S.A, ICPA- GR-14351). The key financial figures of the company for the year 2007, based on the preliminary financial statements available to MOTOR OIL at the time of the preparation of the consolidated financial statements of the latter, are as follows: Sales: € 22,903 thousand, Earnings (losses) for the accounting period: (€ 585 thousand), Total Assets: € 5,156 thousand, Shareholders’ Equity: € 144 thousand.

C. KORINTHOS POWER S.A.

This company was founded on January 5th, 2005 at Maroussi of Athens (Irodou Attikou 12A str., 151 24) with duration for 50 years. The objective of the company according to article 4 of its Codified Memorandum and Articles of Association is the construction, operation and business exploitation of an electricity power production unit in the region of Aghii Theodoroi of the county of Corinth.

The initial share capital of the company amounted to € 200,000 divided into 20,000 registered shares of nominal value € 10 each. The founding shareholders of "KORINTHOS POWER S.A" were MOTOR OIL and AVIN OIL with participation percentages 70% and 30% respectively. On November 29th, 2006 AVIN OIL sold its entire "KORINTHOS POWER S.A" stake to "IBERDROLA S.A.". The same day MOTOR OIL sold 8,000 "KORINTHOS POWER S.A" shares (a stake of 40%) to "IBERDROLA S.A.".

As a result of the share transactions described above, "IBERDROLA S.A." with 14,000 shares (a stake of 70%) and "MOTOR OIL (HELLAS) S.A." with 6,000 shares (a stake of 30%) became the sole shareholders of "KORINTHOS POWER S.A.".

Following a decision of the Extraordinary General Shareholders Meeting dated January 5th, 2007 the share capital of the company increased by € 500,000 with the issuance of 50,000 new registered shares of a nominal value € 10 each. The share capital increase was effected in cash and was certified by the Board of Directors of "KORINTHOS POWER S.A." on February 12th, 2007.

Subsequent to the above mentioned share capital increase, the share capital of the company amounts to € 700,000 divided into 70,000 registered shares of nominal value € 10 each and the shareholders "IBERDROLA S.A." and "MOTOR OIL (HELLAS) S.A." own 49,000 (70%) and 21,000 (30%) shares respectively.

"KORINTHOS POWER S.A." owns a license for the generation of electricity for a combined cycle unit of 395.9 MW with fuel natural gas at Aghii Theodoroi.

annual report ❚ 57 ❚ 6.4. Related companies

ATHENS AIRPORT FUEL PIPELINE COMPANY S.A.

The company was founded in May 2000 at Maroussi (199 Kifisias Ave., zip code 151 25) with duration for 50 years. The objective of the ATHENS AIRPORT FUEL PIPELINE COMPANY S.A, according to article no. 3 of its Codified Memorandum and Articles of Association, is the execution of all works and activities relating to the design, financing, construction, completion, operation, maintenance and handling of the pipeline and its premises for the carrying of aircraft fuel from the "Hellenic Petroleum" (EL-PE) refinery at Aspropyrgos to the Athens International Airport "Eleftherios Venizelos" at Spata. The length of the pipeline is 53 km, the diameter is 26 cm and the advancement capacity is 300 m3 / hour.

This investment provides many environmental benefits as it contributes to the reduction of air pollution as well as the traffic relief at the greater Athens area (the aggregate distance covered every year by trucks carrying aircraft fuel to the airport was estimated at 2,000,000 km and the number of travels at 18,000). Additionally, due to the underground routing of the pipeline both the natural environment and the settlement will be unaffected.

The operation of the pipeline started in the beginning of 2004 and caters successfully for the fulfillment of jet fuel needs while the economic viability of the project is guaranteed as a result of increasing demand for jet fuel at the airport area.

The share capital of the "ATHENS AIRPORT FUEL PIPELINE COMPANY S.A" amounts to € 5,782,355 divided into 1,973,500 common registered shares of nominal value € 2.93 each.

The current shareholder structure of the company is as follows: Shareholder Number of Shares % Participation HELLENIC PETROLEUM S.A 986,750 50% MOTOR OIL (HELLAS) CORINTH REFINERIES S.A 315,760 16% OLYMPIC AIRWAYS SERVICES S.A 335,495 17% ATHENS INTERNATIONAL AIRPORT S.A 335,495 17% Total 1,973,500 100%

The company is audited by certified public accountants (Auditing firm DELOITTE, Auditor in charge Mr. Tilemachos Georgopoulos ICPA-GR-19271) while it prepared financial statements based on the International Financial Reporting Standards (IFRS) for the first time in 2006. For the fiscal year 2007 its Sales amounted to € 4,207 thousand and the Earnings after Tax (EAT) to € 1,714 thousand.

❚ 58 ❚ annual report CORINTH REFINERIES S.A. 6.5. Other Subsidiaries

A. AVIN ALBANIA S.A.

This company was founded on July 19th, 2001 by its sole shareholder AVIN OIL at Tirana of Albania. The share capital of AVIN ALBANIA amounts to € 481,000. The objective of the company is the sale of petroleum products and the promotion of AVIN OIL exports in Albania. AVIN ALBANIA remains dormant.

B. BRODERICO LIMITED

This company was founded in 2006 by its sole shareholder AVIN OIL with headquarters in Cyprus. The share capital of Broderico Limited amounts to € 60,000. The company engages in commerce, investments and the rendering of services. Broderico Limited has not commenced its operations.

6.6. BoD REPORT ON INTER-COMPANY TRANSACTIONS

The Board of Directors of MOTOR OIL compiled the annual report on inter-company business transactions with its related companies, according to article 42e of the Greek Codified Law 2190/1920, as provided for by article 2 par. 4 of Corporate Governance Law 3016/2002. The content of the report appears below:

MOTOR OIL (HELLAS) S.A sales of products and services to, and MOTOR OIL (HELLAS) S.A purchases of products and services from its related companies (amounts in thousand euros): Company MOH 2007 Receivables Balance MOH 2007 Liabilities Balance Sales to 31.12.06 31.12.07 Purchases from 31.12.06 31.12.07 AVIN OIL S.A 476,706 34,917 39,711 15 3 2 HAFCO S.A. 14,388 0 1,303 0 0 0

The transactions and the year end balances with AVIN OIL and HAFCO S.A concern usual business activities.

annual report ❚ 59 ❚ 7. Future Prospects

7.1. Goals & Strategy

The principal objective of MOTOR OIL for the next years is to establish itself as a major crude oil refining and trading company in the greater region of the East Mediterranean. Intermediate goals as a means for the Company to accomplish the principal objective are:

Ι) Maximization of the refining margin. The following tactics are adopted for the attainment of this goal:

◗ Meet all latest product specifications on time and in the most economical way utilizing the most up-to-date technology.

◗ Improve energy efficiency and thus reduce refinery operating cost.

◗ Fully automate refinery processing.

◗ Improve production efficiency and availability of production units.

ΙΙ) Effective promotion and sale of all refinery products at the optimum price. This goal can be attained through the following strategic moves:

◗ Maximize Company market share in the domestic market through the improvement of the distribution system.

◗ Expand sales of Company products to developing markets which present good potential of high profit margins.

◗ Enhancement and exploitation of the storage facilities of the Company as a means to meet demand for new products as well as to offer superior customer service.

ΙΙΙ) Operating the refinery with the highest possible degree of safety and placing heavy emphasis on the protection of the environment. This goal will be attained through the following tactics:

◗ Continuation of investments which help to maintain the high level of programs pertaining to the environment, the hygiene and the safety at workplace.

◗ Continuous upgrading of the reliability of the systems supporting the production units, such as power cogeneration plants and utility units.

◗ Reinforcement of the safety processes with reference to the production units by investing in automated safety systems the standards of which exceed those set by international regulations and best practices specifications.

◗ Continuation of personnel training programs through employment of the most technologically advanced systems such as operator training simulators.

❚ 60 ❚ annual report CORINTH REFINERIES S.A. 7.2. Prospects

MOTOR OIL has extended its leading technological superiority with the installation of sophisticated conversion complexes, namely the Hydrocracker and the Fluid Catalytic Cracker. The growth prospects of the Company for the 2008-2010 period involve the increase of its refining capacity on the back of the new Crude Distillation Unit which will be put in operation at the beginning of 2010. The Company endeavours currently under way are presented hereunder:

◗ The international tender for the award of the construction of the new Crude Distillation Unit (CDU) with 60,000 bpd processing capacity has been completed. The project was awarded to the company "TECHNIP Italy". The capital expenditure for the new unit will be approximately € 180 million. This project is part of the Refinery Expansion Program for which MOTOR OIL has invested significant funds over the recent years. Following the installation of the new crude unit the total capacity of the Refinery will exceed 170,000 bpd or 9.0 million MT per annum. Additional benefits are expected from the substitution of imported Straight Run Fuel Oil by own produced SRFO, the optimization of the crude supply, and the ability to process new types of crude.

◗ The connection of the Company to the natural gas network is in its final stage. The natural gas will be used for feedstock for the New Hydrogen Production Unit as well as for the thermal and energy needs of the refinery while at the same time it is expected to contribute to the improvement of the environmental conditions of the refinery.

◗ MOTOR OIL has expressed its interest to participate in the international tender called by the Hellenic Sugar Industry in pursuance of the latter to find a strategic partner for the conversion of two sugar plants to bioethanol production complexes. This tender falls within the framework of the commitment of the European Commission to lower carbon dioxide (CO2) emissions anticipated to render bioethanol usage in gasolines compulsory. As regards the key Company activity, the international average prices for the various types of crude and petroleum products for the period 2005-2007 are presented in the next tables: INTERNATIONAL AVERAGE CRUDE OIL PRICES ($/bbl) 2005 2006 2007 Dated Brent 54.53 65.18 72.50 Arab Light,fob 50.22 60.83 69.10 Urals,cif Med 50.66 61.37 69.50 Iranian Heavy,fob 48.39 59.14 67.76 Es Sider,fob 52.67 63.53 71.58 INTERNATIONAL AVERAGE PETROLEUM PRODUCT PRICES ($/MT) 2005 2006 2007 Naphtha 449 537 648 Unleaded Gasoline 515 610 686 Jet Kero / A1 (Aviation fuels) 546 633 695 Automotive Diesel 538 600 662 Heating Gasoil 497 577 643 Fuel Oil 1% 260 301 357 Fuel Oil 3.5% 221 280 341

The above prices set the basis for the profit margins of the oil refining and trading companies at international level.

annual report ❚ 61 ❚ The following table presents the refining margin of the refineries in the Mediterranean region compared to that of MOTOR OIL during the last three year period: REFINING MARGIN ($/MT) 2005 2006 2007 MOTOR OIL (HELLAS) S.A 72.8 60.9 71.2 Complex Cracking Mediterranean Refinery 63.4 57.3 69.4 Complex Hydrocracking Mediterranean Refinery (*) 63.6 66.8

(*) The Hydrocracking complex of MOTOR OIL commenced its operation in November 2005 and for this reason comparable figures are presented only for the years 2006 and 2007.

The estimates for domestic market demand per product category are presented in detail in the next table: DOMESTIC MARKET DEMAND ESTIMATES PER PRODUCT CATEGORY (thousand MT) 2005 2006 2007 2008 (Est.) Lubricants 144 140 155 154 Asphalt 275 391 365 375 LPG 355 346 330 323 Jet Kero / A1 (Aviation fuels) 1,228 1,290 1,335 1,390 Gasoline 3,965 4,034 4,136 4,240 Fuel Oil 5,376 5,599 5,682 5,462 Gasoils Heating gasoil 4,067 3,996 3,535 3,608 Automotive diesel 2,538 2,714 2,843 3,071 Bunker gasoil 1,304 1,297 1,308 1,293 TOTAL 19,252 19,807 19,689 19,916 % Change over previous year -0.6% 2.9% - 0.6% 1.15%

Demand for gasoline and automotive diesel increases every year on the back of a series of catalysts contributing decisively on this (new registrations of high cubic capacity engine vehicles, intensive use of the Attica Ring Road and the Rio–Antirrio Bridge by the drivers) therefore the same upward trend is expected to carry on in 2008. The penetration of natural gas in the energy balance of the country will affect domestic market demand for fuel oil as well as for heating gasoil although for the latter weather conditions during winter months remain the key factor influencing consumption. As regards bunker gasoil domestic market demand, a slight drop is anticipated in 2008. With reference to asphalt demand is expected to be lower than 2006 levels, thus confirming the stability phase the construction sector is going through, but in any case higher than 2007 levels. Demand for LPG is expected to remain weak due to its being gradually replaced by natural gas. Increase is expected in Jet Fuel demand yet at a controlled rate due to the attempts undertaken by the airliners aiming to achieve fuel cost savings through the introduction of modern aircrafts and engines.

❚ 62 ❚ annual report CORINTH REFINERIES S.A. 8. Dividend policy

The dividend policy is determined taking into consideration the Company earnings and the need for capital expenditure for new investment projects.

Over time the Company’ s dividend payout ratio is notably high and the respective percentages for the years 2005, 2006 and 2007 are shown in the table below: DIVIDEND POLICY (amounts in thousand Euros) 2005 2006 2007 Earnings after Tax 130,687 127,474 154,683 Total Dividend amount 121,861 127,400 132,940 Dividend as % on Earnings after Tax 93.25 % 99.94 % 85.94 %

The Company’ s Board of Directors will propose to the Annual General Shareholders Meeting the distribution of a dividend amount of € 1.20 per share from 2007 Company earnings.

It is noted that on 12.12.2007 the Company proceeded with the distribution of an interim dividend of € 0.20 per share, based on the interim financial statements dated 30.9.2007, as advance payment for the year 2007 dividend.

According to the Greek Corporate Law the minimum amount of dividend paid to Company shareholders cannot be lower than 35% of Earnings before Tax after the deduction of the corresponding income tax and the legal reserves.

The payment of the dividend is effected within two months from the date of the Annual Ordinary General Meeting of Company Shareholders which approved the Company’s financial statements.

The management of the Company aims to carry on the high dividend payout policy.

annual report ❚ 63 ❚

CORINTH REFINERIES S.A.

9. Appendix

◗ INVITATION TO THE ANNUAL GENERAL MEETING OF MAY 29TH, 2008

◗ MOTOR OIL 2007 PUBLISHED FIGURES AND INFORMATION (PARENT COMPANY AND CONSOLIDATED)

◗ MOTOR OIL 2007 FINANCIAL STATEMENTS (PARENT COMPANY AND CONSOLIDATED) – REPORT OF THE AUDITORS

◗ BoD REPORT ON MOTOR OIL 2007 FINANCIAL STATEMENTS (PARENT COMPANY AND CONSOLIDATED)

◗ LAW 3401/2005 INFORMATION BULLETIN WITH YEAR 2007 ANNOUNCEMENTS

appendix ❚ 65 ❚

CORINTH REFINERIES S.A. INVITATION TO THE ANNUAL ORDINARY GENERAL SHAREHOLDERS’ MEETING

Pursuant to a resolution of the Board of Directors and according to the provisions of the Law and of the Company’s Codified Memorandum and Articles of Association, the Company’s shareholders are invited to the Annual Ordinary General Meeting on Thursday May 29, 2008 at 12:30 hours, to be held at the NJV Athens Plaza Hotel, at A2 Vassileos Georgiou Street – Syntagma Square - Municipality of Athens, for discussion and decision on the following matters: 1. Presentation and approval of the Financial Statements of the Company (on parent Company and Consolidated basis) for the accounting year 2007 (1.1.2007-31.12.2007), together with the accompanying Reports of the Board of Directors and the Auditors. 2. Discharge of the members of the Board of Directors and the Auditors from any liability for damages with regard to the Financial Statements and activities during the above mentioned accounting year. 3. Election of the Members of the new Board of Directors as the term of service of the existing Board expires. 4. Approval of a dividend. 5. Election of two Chartered Auditors, that is, one ordinary and one substitute, for the accounting year 2008 and approval of their fees. 6. Approval of the fees paid to the Members of the Board of Directors for the accounting year 2007 and pre-approval of the fees for the accounting year 2008. 7. Amendment, supplementation, abolition and renumbering of various provisions of the Company’ s Memorandum and Articles of Association for adaptation to the Law 3604/2007. 8. Amendment of the following articles of the Company’ s Memorandum and Articles of Association for functional and reinstatement purposes: (a) 8, 26, 28 (the amendments concern provisions incompatible with the fact that the Company shares are listed on the Stock Exchange) (b) 29 (abolition of the requirement for an increased quorum in the case of a common bond loan) (c) 33 (reduction of the required majority vote percentage) and (d) 37 (abolition of the provision for the duration of the first accounting year). 9. Approval of the formation of a taxed reserve for an amount of € 3,629,713 concerning the capital expenditure of the Company in an investment project which more specifically related to (a) the introduction of natural gas to the refinery and (b) the installation of gas generators to the power plant of the refinery. Shareholders who wish to participate in the Annual Ordinary Shareholders’ Meeting, according to the Law and the Company’s Codified Memorandum and Articles of Association, must block their shares, through the User of their Securities Account at the Dematerialised Securities System (S.A.T) or the Hellenic Exchanges S.A (previously Central Securities Depository), and deposit the relevant certificate together with the legal documentation at the Headquarters of the Company, at least 5 days prior to the date of the Ordinary Shareholders’ Meeting, that is, until Friday May 23rd, 2008 (included). In case that the required quorum, according to the Law and the Company’s Codified Memorandum and Articles of Association, is not achieved and because of this reason a decision on certain matters of the agenda cannot be made, a First Repeat Shareholders’ Meeting will be held on Thursday June 12th, 2008 at 10:00 hours at the above mentioned Hotel NJV Athens Plaza (A2 Vassileos Georgiou Street – Syntagma Square). In case that a quorum is not achieved in the First Repeat Shareholders’ Meeting a Second Repeat Shareholders’ Meeting will follow on Tuesday June 24th, 2008 at 10:00 hours at the same Hotel. The relevant deadlines for the deposit of the share blocking certificates and the legal documentation at the Headquarters of the Company on behalf of the Shareholders are Friday June 6th, 2008 (for participation in the First Repeat Shareholders’ Meeting) and Wednesday June 18th, 2008 (for participation in the Second Repeat Shareholders’ Meeting).

Maroussi, April 17th, 2008. THE BOARD OF DIRECTORS

appendix ❚ 67 ❚ CORINTH REFINERIES S.A.

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❚ 70 ❚ appendix CORINTH REFINERIES S.A.

72 73 74 75 76-115 116-117

The financial statements of the Group and of the Company, set out on pages 72 to 115, were approved at the Board of Directors’ Meeting dated Monday February 25, 2008 and are subject to the approved of the Annual Ordinary General Meeting of the Company Shareholders.

appendix ❚ 71 ❚ The notes on pages 76-115 are an integral part of these Financial Statements

❚ 72 ❚ appendix CORINTH REFINERIES S.A.

The notes on pages 76-115 are an integral part of these Financial Statements

appendix ❚ 73 ❚ The notes on pages 76-115 are an integral part of these Financial Statements

❚ 74 ❚ appendix CORINTH REFINERIES S.A.

The notes on pages 76-115 are an integral part of these Financial Statements

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NEMESIS S.A. Annual Report 2007 Design - Production: 2007 2007

12A Irodou Attikou str., Annual Report Maroussi 151 24, Athens - GREECE Tel.: (+30) 210 809 4000, Fax: (+30) 210 809 4444 www.moh.gr

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